MERRILL LYNCH
GLOBAL
HOLDINGS, INC.
[FUND LOGO]
STRATEGIC
Performance
Annual Report
November 30, 1997
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Company unless
accompanied or preceded by the Company'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 Holdings, Inc.
Box 9011
Princeton, NJ
08543-9011 #10176 -- 11/97
[RECYCLE LOGO]
Printed on post-consumer recycled paper
MERRILL LYNCH GLOBAL HOLDINGS, INC.
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, Senior Vice President
Philip L. Kirstein, Senior Vice President
Edward F. Korff, Senior Vice President and
Portfolio Manager
Donald C. Burke, Vice President
Gerald M. Richard, Treasurer
Philip M. Mandel, Secretary
Custodian
The Chase Manhattan Bank
Global Securities Services
4 Chase MetroTech Center, 18th Floor
Brooklyn, NY 11245
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
Merrill Lynch Global Holdings, Inc., November 30, 1997
DEAR SHAREHOLDER
Fiscal Year in Review
For the quarter ended November 30, 1997, total returns for Merrill
Lynch Global Holdings, Inc.'s Class A, Class B, Class C and Class D
Shares were -3.28%, -3.51%, -3.51% and -3.36%, respectively. During
the same period, the total return of the unmanaged Morgan Stanley
Capital International World Index (MSCI) was +1.60%, in US dollar
terms. For the year ended November 30, 1997, total returns for the
fund's Class A, Class B, Class C and Class D Shares were +6.04%,
+4.98%, +4.96% and +5.80%, respectively, underperforming the unmanaged
MSCI World Index which returned +12.54% over the same period.
The underperformance, in both the November quarter and the year
relative to the Index, was a direct consequence of an overweighted
asset allocation in Asian (ex Japan) markets. While we had reduced
these positions during the past six months, the declines in the
remaining holdings negatively impacted overall fund results. The
currency turmoil, which began in Thailand during July and spread
throughout the region, was the primary impetus for severe equity
market declines in the Asian region. For example, during the fund's
fourth fiscal quarter, Indonesia's currency declined 31%, South Korea
54%, Malaysia 43%, Thailand 36% and Hong Kong 26%. The severity of the
various currency devaluations surprised equity investors.
Elsewhere in the world, our investments performed well. In the
European, Japanese and US markets, our holdings outperformed the
respective market indexes. More than 80% of the fund's invested assets
were in these markets.
Economic Outlook
The severity of the currency devaluations and the resulting impact on
the economies and equity markets in the Association of Southeast Asian
Nations (ASEAN) region was the major event for global investors during
the past year. Initially, it was thought that the effects would be
contained within the region. It was believed that any impact on the
United States would be minimal and essentially positive. Cheaper
imports, the result of devaluations, would mean fewer inflationary
pressures and less reason for the Federal Reserve Board to raise
domestic interest rates. Moreover, only about 4% of US exports went to
ASEAN economies and thus a slowdown in those economies would not have
a significantly negative effect on the US economy. Also, capital
flight from the various Asian economies could exert downward rate
pressure in the US bond market, benefiting domestic growth potential.
However, currency concerns soon spread to the other Asian economies
and then to Latin America and emerging Europe. The probability of a
greater impact on the United States and other developed economies
increased. Altogether, Asian economies account for nearly 30% of US
exports. Similarly, 40% of Japanese exports go to other Asian nations.
Therefore, the slowdown in those economies and the decreased
purchasing power therein could have a meaningful impact on worldwide
economic growth in 1998.
Thus, it appears that the significant devaluation of most Asian
currencies, the dramatic slowdown in those economies and the extent
to which this "Asian contagion" spreads are likely to be extremely
important for global investors in 1998. The outlook is unclear in that
full details of the International Monetary Fund's (IMF) imposed
disciplines are unknown, as is the extent to which countries will
adhere to them. What is clear is that whatever one had forecast for
1998 global economic growth as recently as a month ago must be revised
downward. This has implications for corporate profits growth and
equity markets performance.
Corporations around the world will have limited pricing power. The
currency devaluations, slower economic growth and intensified
competition are all likely to negatively affect revenue growth. US
corporations could also face increased cost pressures. With
unemployment at the lowest level in decades, wage/benefit cost
pressures could increase. The combination could lead to profit margin
shrinkage and lower earnings growth. One result of this is that
companies with the most visible earnings prospects could receive
increased investor focus. Another is that we expect a continuation of
the worldwide merger and acquisition activity that has increased so
significantly recently. Corporations are likely to attempt to buy
revenue growth and to reduce costs through restructuring.
The global economic outlook is less certain than it has been for some
time. Much depends on the economic policies being formulated in Asia
and the ultimate responses to them. Because of this, we expect
continued and even increased volatility in the world's equity markets.
We will continue to focus on high-quality companies, paying particular
attention to valuation levels.
Investment Environment
Japan
The Japanese economy and stock market have continued to suffer as
investor concerns about the stability of the domestic financial system
have escalated. The recent collapse of several major financial
institutions and the deepening Asian currency crisis contributed to
the negative sentiment.
Japan's economic problems are not new, but Japanese policymakers'
failure to grasp the root cause of the current financial troubles was
once again sharply highlighted in recent months. Japan's banking
system is unique in the sense that the health of the banking sector is
so heavily dependent on the levels of its stock market. Given their
high level of cross-shareholdings, Japanese banks have been relying on
unrealized gains in their securities holdings to meet international
capital adequacy ratios. Therefore, as the Japanese stock market
continues to fall, the balance sheets of Japanese banks weaken as they
lose their financial cushion of unrealized gains. This undermines
their ability to sustain capital adequacy ratios, which forces them to
cut back on new lending. Small-to-medium-sized companies, which rely
on bank borrowing to finance their businesses, are unable to borrow;
bankruptcies increase; the economy weakens; and the stock market
erodes further. Many economists believe this scenario explains why
Japan's economic recovery failed to broaden out into the small-to-
medium-sized companies sector (which accounts for about two-thirds of
the economy) after the bubble burst in early 1990. Despite economists'
warnings of a potential "credit crunch" developing in the financial
sector, Japanese authorities pushed ahead with fiscal tightening since
last April by raising the sales tax and cutting public works spending.
Their failure to recognize the severity of the "credit crunch"
problems has led to the serious consequences of today.
In the wake of three major financial failures in November (Yamaichi
Securities, the fourth largest brokerage house; Sanyo Securities, the
seventh largest; and Hokkaido Takushoku Bank, Japan's tenth largest
commercial bank), the Japanese government came under heavy pressure to
stabilize the financial sector and to restore investor confidence.
Authorities promised a new economic package, which may include use of
public funds to support the financial system. Preliminary details of
the package, on which market attention is now focused, have not yet
been fully disclosed. However, current sentiment suggests that the
government is unlikely to provide any decisive and bold measures to
quickly end the current crisis, given the political climate in Japan.
Japan must undergo dramatic changes to deregulate its economy and
allow more competition. Until such policies are formulated, the market
could be weak and quite volatile.
We cut back our already low Japanese exposure during the November
quarter. We trimmed our positions in Tokyo Electron Ltd., Keyence
Corp., Sumitomo Electric Industry, Ltd. and Ito-Yokado Co., Ltd., and
sold Aoyama Trading Co., Sony Music Entertainment Inc., Mitsui & Co.,
Hitachi Ltd., Sanwa Bank, Ltd. and Bank of Tokyo -- Mitsubishi. The
only purchases we made during the November quarter were Sony Corp. and
Nichiei Co. Ltd. Nichiei is a consumer finance company that has
consistently demonstrated strong performance even in the current weak
economic climate.
As Japanese banks are becoming more reluctant to extend credit,
an increasing number of small-to-medium-sized companies that cannot
obtain funding turn to Nichiei Co. Ltd.
Asia (ex Japan)
Asia's economic turmoil deepened in the past three months as the
currency crisis spread to North Asian countries (Hong Kong, South
Korea and Taiwan). The Hong Kong market, which had been thought to be
spared from the contagious effect of Asian problems, was also brought
down in October by persistent speculative attacks on the Hong Kong
dollar. South Korea, the world's eleventh largest economy, has faced a
significant crisis of confidence as the currency collapse revealed its
structural weakness.
Consequently, all Asian equity markets have fallen dramatically since
July (from a 36% decline in Hong Kong to a 47% decline in Malaysia in
local currency terms). There is the general perception that a
significant recovery is not expected soon in these regions. Because
currencies have not yet stabilized in most markets and economists are
still revising downward their growth forecasts for the next two years,
corporate profits are likely to suffer. More importantly, investors
are concerned about the Asian governments' slow and disappointing
responses to the crisis. After the currency debacle, few countries
have yet to come up with credible restructuring plans.
Against this backdrop, we reduced our Asian weighting during the
November quarter by trimming our holdings in Hong Kong and China Gas
Company Ltd. and Sung Hung Kai Properties, Ltd. in Hong Kong. We also
closed out our position in Swire Pacific, Ltd. in Hong Kong. In other
markets, we sold Telekom Malaysia BHD in Malaysia and P.T. Bimantara
Citra in Indonesia. We also sold Lend Lease Corp. in Australia and
Telecom Corp. of New Zealand Ltd.
Sharp declines in Asian currencies and the resultant equity price
declines have negatively impacted the fund's overall performance since
July, although the importance of Asian markets in the fund's overall
portfolio has significantly diminished as a result of the combined
effects of our selling and the collapse in currency and stock prices.
However, the performance of the fund's Pacific Basin portfolio for the
fiscal year ended November 30, 1997 was in line with our benchmark,
the unmanaged MSCI Pacific Basin Index, because our underperformance
in Asian markets (ex Japan) was offset by our outperformance in the
Japanese market.
Europe
Economic activity in Europe has continued to proceed as forecast in
earlier shareholder reports. Growth had been primarily export-led, but
signs of increased domestic activity became apparent over the course
of the year. Restructuring efforts have led to cost reductions and
surprisingly strong corporate profits growth, allowing stock markets
to perform well in this environment.
Equity prices rose almost 10% in September across most European
markets. However, concerns about the impact of the Asian situation
took hold, resulting in broad declines in October and November. We
believe the actual economic impact will be less than that on the
United States, and that both gross domestic product and corporate
profits growth will exceed those in the United States during 1998.
During the November quarter, the unmanaged Morgan Stanley Capital
International European Index gained 5.4% in US dollar terms (2.4% in
local currency terms), excluding dividends. Our European holdings
gained 4.5% on the same basis. For the fiscal year, our European
portfolio increased 400 basis points (4.00%) more than the benchmark.
The fund's November quarterly performance was particularly hurt by a
30% decline in Gucci Group N.V., which was hurt by its large Asian
exposure, and by declines in Dassault Systemes S.A., Enterprise Oil
PLC and Sensonor A/S. Dassault Systemes S.A. had almost tripled since
our purchase and underwent some profit-taking. Enterprise Oil PLC
extended its production profile, and Sensonor A/S delayed a product
introduction.
We sold our position in ISS International Service System A/S, Autoliv,
Inc. and PizzaExpress PLC because of their valuations. We eliminated
Mannesmann AG because of heightened competition in its telecom
business, and Harvey Nichols PLC because of concern about future sales
growth. We initiated investments in Munters AB, a world leader in the
provision of products and services for commercial indoor
humidification, and Fred Olsen Energy ASA, an offshore drilling and
floating platform company.
Americas
In our August report to shareholders, we cited moderate economic
growth, benign inflation and continued strong profits growth as the
primary reasons pundits had dubbed the US economy the "Goldilocks
economy." Everything was just right over the very near term, and the
Asian turmoil and the strengthening dollar were forecast to place
continuing downward pressure on inflation and interest rates. These
factors supported the favorable trends in the equity market. However,
we did caution that "if everything is just right, the next change
presumably is for the worse." As we forewarned, the change for the
worse has occurred. Economic problems have spread beyond the
relatively small ASEAN region as has the realization that the world's
more developed economies could be quite significantly affected.
Corporate and country growth expectations have been reduced.
Quantification of the impact is difficult because the IMF imposed
disciplines are not fully known. Until remedial policies are
formulated in Asia, the impact of deteriorating conditions there upon
the US economy is unclear. Because of this, continued volatility in
the US equity market is anticipated.
During the November quarter, our banking and insurance holdings
benefited the portfolio. Each position gained more than twice the 6.2%
rise in the US market. Pfizer, Inc. also performed well, rising 27%.
Fund performance was hurt by declines in Intel Corp., Texas
Instruments Inc. and Oracle Corporation of 17%, 17% and 14%,
respectively. Technology companies could be more negatively impacted
by the Asian turmoil than those in other industries. The portfolio was
further concentrated during the November quarter. We eliminated Forest
Laboratories, Inc. but initiated a position in Stone Container
Corporation.
South American markets were particularly volatile during the November
quarter. For example, the Argentine and Brazilian markets each
declined more than 35% during the last half of October. The markets
did rebound somewhat in November, but overall our holdings in the
region hurt quarterly performance.
In Conclusion
We thank you for your investment in Merrill Lynch Global Holdings,
Inc., and we look forward to reviewing our outlook and strategy with
you again in our upcoming report to shareholders.
Sincerely,
/S/ARTHUR ZEIKEL
Arthur Zeikel
President
/S/EDWARD F. KORFF
Edward F. Korff
Senior Vice President and Portfolio Manager
January 14, 1998
<TABLE>
<CAPTION>
IMPORTANT TAX INFORMATION (unaudited)
The following information summarizes all per share distributions paid by Merrill Lynch Global Holdings, Inc. (the "Company")
during its taxable year ended November 30, 1997:
Qualifying Domestic Foreign Total Foreign Taxes Long-Term
Record Payable Domestic Non-Qualifying Source Ordinary Paid or Capital
Date Date Ordinary Income Ordinary Income Income Income Withheld Gains
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A Shares 12/19/96 12/30/96 $.035198 $.080455 $.113034 $.228687 $.023643 $.684245
Class B Shares 12/19/96 12/30/96 $.011335 $.025908 $.036399 $.073642 $.023643 $.684245
Class C Shares 12/19/96 12/30/96 $.016649 $.038056 $.053466 $.108171 $.023643 $.684245
Class D Shares 12/19/96 12/30/96 $.029645 $.067763 $.095201 $.192609 $.023643 $.684245
All of the foreign taxes paid or withheld represent taxes incurred by the Company on dividends received by the Company from
foreign sources. Foreign taxes paid or withheld should be included in taxable income with an offsetting deduction from gross
income or as a credit for taxes paid to foreign governments. You should consult your tax adviser regarding the appropriate
treatment of foreign taxes paid.
Please retain this information for your records.
</TABLE>
PERFORMANCE DATA
About Fund
Performance
Investors are able to purchase shares of the fund through the Merrill
Lynch Select PricingSM System, which offers four pricing alternatives:
[bullet] 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.
[bullet] 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.)
[bullet] 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.
[bullet] 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 "Average
Annual Total Return" tables as well as the total returns and
cumulative total returns in the "Performance Summary" tables assume
reinvestment of all dividends and capital gains distributions at net
asset value on the exdividend 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>
<CAPTION>
Recent
Performance
Results
12 Month 3 Month
11/30/97 8/31/97 11/30/96 % Change % Change
<S> <C> <C> <C> <C> <C>
ML Global Holdings, Inc. Class A Shares* $15.05 $15.56 $15.12 +4.41%(1) -3.28%
ML Global Holdings, Inc. Class B Shares* 14.31 14.83 14.40 +4.44(1) -3.51
ML Global Holdings, Inc. Class C Shares* 14.28 14.80 14.41 +4.16(1) -3.51
ML Global Holdings, Inc. Class D Shares* 14.97 15.49 15.04 +4.42(1) -3.36
ML Global Holdings, Inc. Class A Shares -- Total Return* +6.04(2) -3.28
ML Global Holdings, Inc. Class B Shares -- Total Return* +4.98(3) -3.51
ML Global Holdings, Inc. Class C Shares -- Total Return* +4.96(4) -3.51
ML Global Holdings, Inc. Class D Shares -- Total Return* +5.80(5) -3.36
World Stock Index -- Total Return** +12.54 +1.60
* Investment results shown do not reflect sales charges; results shown would be lower if a sales charge was included.
** The Morgan Stanley Capital International World Stock Index is an unmanaged US dollar-denominated index of world stock
markets compiled by Capital International Perspective S.A. and published in Morgan-Stanley Capital International
Perspective.
(1) Percent change includes reinvestment of $0.684 per share capital gains distributions.
(2) Percent change includes reinvestment of $0.229 per share ordinary income dividends and $0.684 per share capital gains
distributions.
(3) Percent change includes reinvestment of $0.074 per share ordinary income dividends and $0.684 per share capital gains
distributions.
(4) Percent change includes reinvestment of $0.108 per share ordinary income dividends and $0.684 per share capital gains
distributions.
(5) Percent change includes reinvestment of $0.193 per share ordinary income dividends and $0.684 per share capital gains
distributions.
</TABLE>
[GRAPHIC OMITTED: LINE CHART OF TOTAL RETURN BASED ON A $10,000 INVESTMENT]
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the Fund's Class A
Shares compared to growth of an investment in the Morgan Stanley Capital
International World Stock Index. Beginning and ending values are:
11/87 11/97
ML Global Holdings, Inc.+--
Class A Shares* $9,475 $25,642
Morgan Stanley Capital International
World Stock Index++ $10,000 $28,136
A line graph depicting the growth of an investment in the Fund's Class B
Shares compared to growth of an investment in the Morgan Stanley Capital
International World Stock Index. Beginning and ending values are:
10/21/88* 11/97
ML Global Holdings, Inc.+--
Class B Shares* $10,000 $21,340
Morgan Stanley Capital International
World Stock Index++ $10,000 $22,834
A line graph depicting the growth of an investment in the fund's Class C
and Class D Shares compared to growth of an investment in the Morgan
Stanley Capital International World Stock Index. Beginning and ending
values are:
10/21/94** 11/97
ML Global Holdings, Inc.+--
Class C Shares* $10,000 $12,788
ML Global Holdings, Inc.+--
Class D Shares* $9,475 $12,417
Morgan Stanley Capital International
World Stock Index++ $10,000 $15,129
* Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
** Commencement of operations.
+ ML Global Holdings, Inc. invests in an internationally diversified
portfolio of securities.
++ This unmanaged market capitalization-weighted Index is comprised of a
representative sampling of stocks of large-, medium-, and
small-capitalization companies in 22 countries, including the United
States. The Morgan Stanley Capital International World Stock Index
performance data is as of October's month-end.
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 9/30/97 +21.34% +14.97%
Five Years Ended 9/30/97 +14.15 +12.92
Ten Years Ended 9/30/97 + 8.92 + 8.33
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/97 +20.04% +16.04%
Five Years Ended 9/30/97 +12.99 +12.99
Inception (10/21/88)
through 9/30/97 +10.03 +10.03
* 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 9/30/97 +20.04% +19.04%
Inception (10/21/94)
through 9/30/97 +12.32 +12.32
* 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 9/30/97 +21.06% +14.71%
Inception (10/21/94)
through 9/30/97 +13.24 +11.18
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
<TABLE>
<CAPTION>
Performance
Summary --
Class A Shares
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
7/2/84 -- 12/31/84 $9.15 $9.32 -- $0.170 + 3.68%
1985 9.32 12.28 -- 0.340 +36.05
1986 12.28 14.28 $1.270 0.300 +30.25
1987 14.28 11.52 3.638 0.372 + 6.54
1988 11.52 11.01 1.275 0.337 +10.04
1989 11.01 11.77 1.492 0.212 +23.53
1990 11.77 10.28 0.188 0.261 - 9.20
1991 10.28 11.67 0.221 0.123 +17.12
1992 11.67 11.27 0.817 0.063 + 4.28
1993 11.27 13.14 0.443 0.371 +24.08
1994 13.14 12.18 0.514 0.007 - 3.25
1995 12.18 13.32 0.584 0.164 +15.56
1996 13.32 14.08 0.684 0.229 +12.61
1/1/97 -- 11/30/97 14.08 15.05 -- -- + 6.89
Total $11.126 Total $2.949
Cumulative total return as of 11/30/97: +392.72%**
* Figures may include short-term capital gains distributions.
** Figures do not include sales charge; results would be lower if sales charge was included.
</TABLE>
<TABLE>
<CAPTION>
Performance
Summary --
Class B Shares
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/88 -- 12/31/88 $11.29 $11.00 $0.388 $0.147 + 2.22%
1989 11.00 11.71 1.492 0.138 +22.33
1990 11.71 10.20 0.188 0.166 -10.18
1991 10.20 11.56 0.221 0.036 +16.02
1992 11.56 11.09 0.817 0.001 + 3.15
1993 11.09 12.94 0.443 0.219 +22.87
1994 12.94 11.87 0.514 -- - 4.20
1995 11.87 12.82 0.584 0.164 +14.37
1996 12.82 13.51 0.684 0.074 +11.33
1/1/97 -- 11/30/97 13.51 14.31 -- -- + 5.92
Total $5.331 Total $0.945
Cumulative total return as of 11/30/97: +113.40%**
* Figures may include short-term capital gains distributions.
** Figures do not include sales charge; results would be lower if sales charge was deducted.
</TABLE>
<TABLE>
<CAPTION>
Performance
Summary --
Class C Shares
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94 -- 12/31/94 $13.08 $11.87 $0.514 -- - 5.23%
1995 11.87 12.82 0.584 $0.164 +14.37
1996 12.82 13.48 0.684 0.108 +11.37
1/1/97 -- 11/30/97 13.48 14.28 -- -- + 5.93
Total $1.782 Total $0.272
Cumulative total return as of 11/30/97: +27.88%**
* Figures may include short-term capital gains distributions.
** Figures do not include sales charge; results would be lower if sales charge was deducted.
</TABLE>
<TABLE>
<CAPTION>
Performance
Summary --
Class D Shares
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94 -- 12/31/94 $13.39 $12.18 $0.514 $0.003 - 5.09%
1995 12.18 13.29 0.584 0.164 +15.32
1996 13.29 14.04 0.684 0.193 +12.29
1/1/97 -- 11/30/97 14.04 14.97 -- -- + 6.62
Total $1.782 Total $0.360
Cumulative total return as of 11/30/97: +31.05%**
* Figures may include short-term capital gains distributions.
** Figures do not include sales charge; results would be lower if sales charge was included.
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (in US dollars)
LATIN Shares Value Percent of
AMERICA Industries Held Investments Cost (Note 1a) Net Assets
<S> <C> <C> <C> <C> <C> <C>
Argentina Banking 125,000 Banco de Galicia y Buenos Aires
S.A. (ADR)* $3,084,280 $2,898,438 0.7%
Energy 100,000 Yacimientos Petroliferos Fiscales
S.A. (YPF) (ADR)* 2,354,250 3,356,250 0.8
Multi-Industry 278,810 Compania Naviera Perez Companc
S.A.C.F.I.M.F.A. 1,023,485 1,985,922 0.4
------------- ------------- ------
Total Investments in Argentina 6,462,015 8,240,610 1.9
============= ============= ======
Brazil Forest Products 100,000 Aracruz Celulose S.A. (ADR)* 1,835,000 1,437,500 0.3
& Paper
Telecommunications 30,000,000 Telecommunicacoes Brasileiras
S.A. -- Telebras PN (Preferred) 1,069,928 3,148,215 0.8
------------- ------------- ------
Total Investments in Brazil 2,904,928 4,585,715 1.1
============= ============= ======
Mexico Banking 2,000,000 +Grupo Financiero Banorte, S.A.
de C.V. (Class B) 2,113,918 2,778,793 0.7
Multi-Industry 125,000 DESC, Sociedad de Fomento
Industrial S.A. de C.V. (ADR)* 3,668,116 4,695,313 1.1
------------- ------------- ------
Total Investments in Mexico 5,782,034 7,474,106 1.8
============= ============= ======
Panama Banking 75,000 Banco Latinoamericano de
Exportaciones, S.A. (E Shares) 3,704,425 3,046,875 0.7
------------- ------------- ------
Total Investments in Panama 3,704,425 3,046,875 0.7
============= ============= ======
Total Investments in Latin America 18,853,402 23,347,306 5.5
============= ============= ======
MIDDLE
EAST
Israel Electrical & 150,000 +NICE -- Systems Ltd. (ADR)* 3,331,379 6,562,500 1.5
Electronics ------------- ------------- ------
Total Investments in the Middle
East 3,331,379 6,562,500 1.5
============= ============= ======
NORTH
AMERICA
Canada Chemicals 300,000 Agrium, Inc. 4,041,373 3,024,874 0.7
Telecommunications 50,000 Northern Telecom Ltd. 1,474,875 4,490,625 1.1
------------- ------------- ------
Total Investments in Canada 5,516,248 7,515,499 1.8
============= ============= ======
United States Banking 120,000 Bank of New York, Inc. (The) 3,130,284 6,450,000 1.5
95,000 Northern Trust Corporation 3,777,776 5,907,813 1.4
65,000 Wachovia Corporation 4,173,125 5,005,000 1.2
------------- ------------- ------
11,081,185 17,362,813 4.1
Business & Public 25,000 +Microsoft Corp. 512,083 3,535,938 0.8
Services 300,000 +Molten Metal Technology, Inc. 4,511,661 84,375 0.0
150,000 +Oracle Corporation 2,653,264 4,987,500 1.2
175,000 +US Filter Corp. 5,537,286 5,490,625 1.3
------------- ------------- ------
13,214,294 14,098,438 3.3
Electronics/ 65,000 +Cisco Systems, Inc. 3,206,875 5,602,188 1.3
Components 85,000 Intel Corp. 1,087,344 6,598,125 1.6
90,000 Texas Instruments Inc. 2,012,563 4,432,500 1.0
------------- ------------- ------
6,306,782 16,632,813 3.9
Energy Sources 400,000 +Global Industries Ltd. 3,636,351 6,400,000 1.5
125,000 Transocean Offshore Inc. 3,606,055 5,929,688 1.4
------------- ------------- ------
7,242,406 12,329,688 2.9
Health & Personal 100,000 Johnson & Johnson 5,281,813 6,293,750 1.5
Care 55,000 Merck & Co., Inc. 3,287,350 5,200,938 1.2
90,000 Pfizer, Inc. 2,529,031 6,547,500 1.5
125,000 Pharmacia & Upjohn Inc. 4,720,980 4,218,750 1.0
------------- ------------- ------
15,819,174 22,260,938 5.2
Insurance 150,000 Mercury General Corp. 3,010,895 7,500,000 1.8
80,000 The PMI Group, Inc. 4,385,425 5,200,000 1.2
------------- ------------- ------
7,396,320 12,700,000 3.0
Machinery & Equipment 150,000 Harnischfeger Industries, Inc. 5,717,313 5,728,125 1.3
125,000 Kennametal, Inc. 5,048,372 6,585,937 1.6
------------- ------------- ------
10,765,685 12,314,062 2.9
Merchandising 110,000 CVS Corporation 5,633,409 7,301,250 1.7
150,000 +Federated Department Stores, Inc. 4,921,701 6,834,375 1.6
125,000 Home Depot, Inc. 3,653,625 6,992,187 1.7
450,000 +PETsMART, Inc. 6,002,962 3,515,625 0.8
------------- ------------- ------
20,211,697 24,643,437 5.8
Packaging 200,000 Stone Container Corporation 2,586,246 2,500,000 0.6
Railroads 125,000 Illinois Central Corp. 3,777,500 4,507,812 1.0
Telecommunications 1 +CommScope Inc. 12 11 0.0
Equipment ------------- ------------- ------
Total Investments in the United
States 98,401,301 139,350,012 32.7
============= ============= ======
Total Investments in North America 103,917,549 146,865,511 34.5
============= ============= ======
PACIFIC
BASIN/ASIA
Australia Broadcasting & 351,883 News Corp., Ltd. (Ordinary) 1,873,092 1,883,281 0.4
Publishing ------------- ------------- ------
Total Investments in Australia 1,873,092 1,883,281 0.4
============= ============= ======
Hong Kong Multi-Industry 500,000 CITIC Pacific Ltd. 2,539,752 1,992,290 0.5
400,000 Hutchison Whampoa Ltd. 1,949,838 2,665,011 0.6
------------- ------------- ------
4,489,590 4,657,301 1.1
Real Estate 200,000 Sun Hung Kai Properties, Ltd. 1,247,335 1,526,560 0.4
Utilities -- Gas 1,500,000 Hong Kong and China Gas Company
Ltd. 1,987,876 2,697,353 0.6
------------- ------------- ------
Total Investments in Hong Kong 7,724,801 8,881,214 2.1
============= ============= ======
Indonesia Construction & 3,256,000 P.T. Jaya Real Property 3,095,258 403,081 0.1
Housing
Telecommunications 60,000 P.T. Telekomunikasi Indonesia
(ADR)* 1,190,805 877,500 0.2
Textiles 1,374,500 P.T. Indorama Synthetics (Foreign) 988,303 708,992 0.2
------------- ------------- ------
Total Investments in Indonesia 5,274,366 1,989,573 0.5
============= ============= ======
Japan Broadcasting & 300,000 Tokyo Broadcasting System, Inc. 3,736,661 4,561,129 1.1
Publishing
Cable & Wire 250,000 Sumitomo Electric Industry, Ltd. 2,791,441 3,350,313 0.8
Data Processing & 100,000 Canon Inc. 1,758,792 2,413,793 0.6
Reproduction
Electrical & 30,000 Keyence Corp. 2,162,440 4,373,041 1.0
Electronics
200,000 Matsushita Electric Industrial Co. 2,837,637 3,119,122 0.7
90,000 Murata Manufacturing Co., Ltd. 2,616,519 2,701,411 0.6
300,000 NEC Corporation 3,767,865 3,173,981 0.7
30,000 Sony Corp. 2,723,743 2,562,696 0.6
70,000 Tokyo Electron Ltd. 2,215,190 2,682,602 0.6
------------- ------------- ------
16,323,394 18,612,853 4.2
Financial Services -- 15,000 Nichiei Co. Ltd. 1,398,379 1,645,768 0.4
Consumer
Insurance 270,000 Tokio Marine & Fire Insurance Co.,
Ltd. 3,338,891 2,560,345 0.6
Machinery & 350,000 Minebea Co., Ltd. 2,942,184 3,894,984 0.9
Engineering 500,000 Mitsubishi Heavy Industries Ltd. 3,654,177 1,967,085 0.5
------------- ------------- ------
6,596,361 5,862,069 1.4
Merchandising 40,000 Ito-Yokado Co., Ltd. 1,760,352 1,805,643 0.4
150,000 Marui Co., Ltd. 2,736,736 2,351,097 0.6
------------- ------------- ------
4,497,088 4,156,740 1.0
Real Estate 200,000 Mitsui Fudosan Co., Ltd. 2,474,245 2,115,987 0.5
Telecommunications 400 Nippon Telephone & Telegragh Corp.
(Ordinary) 3,217,188 3,291,536 0.8
------------- ------------- ------
Total Investments in Japan 46,132,440 48,570,533 11.4
============= ============= ======
Malaysia Banking 1,440,799 Commerce Asset-Holding BHD 2,027,950 777,023 0.2
150,083 Commerce Asset-Holding BHD
(Warrants)(a) 95,215 16,360 0.0
------------- ------------- ------
2,123,165 793,383 0.2
Building Materials 1,000,000 Sungei Way Holdings BHD 2,085,002 401,606 0.1
Forest Products 1,500,000 Land & General BHD (Ordinary) 2,275,824 473,322 0.1
Multi-Industry 800,000 Sime Darby BHD 2,837,011 803,213 0.2
------------- ------------- ------
Total Investments in Malaysia 9,321,002 2,471,524 0.6
============= ============= ======
Singapore Banking 380,000 Overseas Chinese Banking Corp. 3,284,321 2,279,809 0.5
Broadcasting & 190,000 Singapore Press Holdings Limited 2,976,641 2,602,086 0.6
Publishing
Construction & 330,000 City Development Ltd. 2,201,466 1,627,403 0.4
Housing ------------- ------------- ------
Total Investments in Singapore 8,462,428 6,509,298 1.5
============= ============= ======
Thailand Banking 200,000 Bangkok Bank Public Company Ltd. 2,049,723 597,758 0.2
Building Materials 60,000 The Siam Cement Public Co. Ltd.
(Foreign Registered) 2,167,775 472,229 0.1
Energy Sources 130,000 PTT Exploration and Prodution
Public Co. (PTTEP) 1,587,284 1,444,085 0.3
Telecommunications 600,000 Total Access Communication Public
Co. Ltd. 2,433,299 786,000 0.2
------------- ------------- ------
Total Investments in Thailand 8,238,081 3,300,072 0.8
============= ============= ======
Total Investments in the Pacific
Basin/Asia 87,026,210 73,605,495 17.3
============= ============= ======
WESTERN
EUROPE
Finland Telecommunications 95,600 Nokia OY AS 'A' 3,283,620 7,824,151 1.8
------------- ------------- ------
Total Investments in Finland 3,283,620 7,824,151 1.8
============= ============= ======
France Banking 46,000 Cetelem S.A. 4,689,077 5,907,327 1.4
Business & Public 180,000 Dassault Systemes S.A. 2,382,131 4,787,802 1.1
Services
Energy 50,000 Societe Nationale Elf Aquitane S.A. 4,845,082 5,802,626 1.4
------------- ------------- ------
Total Investments in France 11,916,290 16,497,755 3.9
============= ============= ======
Germany Banking 70,000 Deutsche Bank AG 4,697,032 4,488,604 1.0
Multi-Industry 210,000 SKW Trostberg AG 5,676,684 7,256,775 1.7
120,000 Veba AG 5,406,473 7,130,060 1.7
------------- ------------- ------
11,083,157 14,386,835 3.4
------------- ------------- ------
Total Investments in Germany 15,780,189 18,875,439 4.4
============= ============= ======
Italy Textiles 125,000 Gucci Group N.V. 8,151,212 5,085,937 1.2
------------- ------------- ------
Total Investments in Italy 8,151,212 5,085,937 1.2
============= ============= ======
Netherlands Business & Public 140,000 +Baan Company N.V. 2,254,885 10,060,386 2.4
Services
Chemicals 41,000 Akzo Nobel N.V. 5,917,636 7,212,963 1.7
Electrical & 70,000 Philips Electronics N.V. 2,440,144 4,625,101 1.1
Electronics
Merchandising 216,342 Koninklijke Ahold N.V. 3,698,668 5,769,991 1.3
Total Investments in the
Netherlands 14,311,333 27,668,441 6.5
Norway Automobiles 389,300 +Sensonor A/S 2,900,899 1,678,344 0.4
Oil -- Integrated 90,000 +Fred Olsen Energy ASA 1,819,982 1,915,000 0.5
------------- ------------- ------
Total Investments in Norway 4,720,881 3,593,344 0.9
============= ============= ======
Portugal Building Products 200,000 Cimpor -- Cimentos de Portugal
S.A. 4,062,517 5,065,483 1.2
Finance 200,000 BPI -- SGPS S.A. (Registered
Shares) 3,773,829 4,445,061 1.0
------------- ------------- ------
Total Investments in Portugal 7,836,346 9,510,544 2.2
============= ============= ======
Spain Business & Public 400,000 Prosegur Compania de Seguridad
Services S.A. 4,176,481 3,998,658 1.0
------------- ------------- ------
Total Investments in Spain 4,176,481 3,998,658 1.0
============= ============= ======
Sweden Environmental 325,000 +Munters AB 3,401,427 3,115,003 0.7
Control ------------- ------------- ------
Total Investments in Sweden 3,401,427 3,115,003 0.7
============= ============= ======
Switzerland Health & Personal 1,000 Roche Holdings Ltd. 5,320,796 8,953,129 2.1
Care ------------- ------------- ------
Total Investments in Switzerland 5,320,796 8,953,129 2.1
============= ============= ======
United Kingdom Banking 500,000 The Royal Bank of Scotland Group
PLC 5,132,385 5,734,701 1.3
Business & Public 1,200,000 Capita Group PLC 5,471,985 6,629,011 1.6
Services
Electronics 2,100,000 Astec (BSR) PLC 3,743,542 4,085,027 1.0
Energy 404,575 British Petroleum Co. PLC 2,100,965 5,519,220 1.3
500,000 Enterprise Oil PLC 3,604,380 4,917,864 1.1
------------- ------------- ------
5,705,345 10,437,084 2.4
Home Building 611,111 The Berkeley Group PLC 6,564,040 6,875,277 1.6
Multi-Industry 911,944 BBA Group PLC 5,114,591 5,774,969 1.4
399,999 Siebe PLC 4,107,799 7,255,515 1.7
------------- ------------- ------
9,222,390 13,030,484 3.1
Steel 200,000 +Ispat International N.V. 5,087,777 4,478,663 1.0
------------- ------------- ------
Total Investments in the United
Kingdom 40,927,464 51,270,247 12.0
============= ============= ======
Total Investments in Western
Europe 119,826,039 156,392,648 36.7
============= ============= ======
<CAPTION>
SHORT-TERM Face
SECURITIES Amount Issue
<S> <C> <C> <C> <C> <C> <C>
United States Commercial $15,460,000 General Motors Acceptance Corp.,
Paper** 5.75% due 12/01/1997 15,455,061 15,455,061 3.6
------------- ------------- ------
Total Investments in Short-Term
Securities 15,455,061 15,455,061 3.6
============= ============= ======
Total Investments $348,409,640 422,228,521 99.1
=============
Other Assets Less Liabilities 3,952,513 0.9
------------- ------
Net Assets $426,181,034 100.0%
============= ======
* American Depositary Receipts (ADR).
** Commercial Paper is traded on a discount basis; the interest rates shown are the discount rates paid at
the time of purchase by the Company.
(a) Warrants entitle the Company to purchase a predetermined number of shares of common stock. The purchase
price and number of shares are subject to adjustment under conditions until the expiration date.
+ Non-income producing security.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
As of November 30, 1997
<S> <C> <C> <C>
Assets: Investments, at value (identified cost -- $348,409,640) (Note 1a) $422,228,521
Cash 58,051
Foreign cash (Note 1b) 273
Receivables:
Securities sold $5,254,025
Dividends 387,390
Capital shares sold 117,958 5,759,373
------------
Prepaid registration fees and other assets (Note 1f) 26,247
------------
Total assets 428,072,465
------------
Liabilities: Payables:
Capital shares redeemed 775,371
Investment adviser (Note 2) 332,693
Securities purchased 281,585
Distributor (Note 2) 58,667 1,448,316
------------
Accrued expenses and other liabilities 443,115
------------
Total liabilities 1,891,431
------------
Net Assets: Net assets $426,181,034
============
Net Assets Class A Shares of Common Stock, $0.10 par value, 100,000,000 shares
Consist of: authorized $2,292,050
Class B Shares of Common Stock, $0.10 par value, 100,000,000 shares
authorized 466,729
Class C Shares of Common Stock, $0.10 par value, 100,000,000 shares
authorized 41,777
Class D Shares of Common Stock, $0.10 par value, 100,000,000 shares
authorized 56,677
Paid-in capital in excess of par 302,058,532
Accumulated distributions in excess of investment income -- net (Note 1g) (1,332,387)
Undistributed realized capital gains on investments and foreign currency
transactions -- net 48,840,738
Unrealized appreciation on investments and foreign currency transactions
-- net 73,756,918
------------
Net assets $426,181,034
============
Net Asset Class A -- Based on net assets of $344,940,056 and 22,920,493 shares
Value: outstanding $15.05
============
Class B -- Based on net assets of $66,791,027 and 4,667,281 shares
outstanding $14.31
============
Class C -- Based on net assets of $5,964,338 and 417,765 shares
outstanding $14.28
============
Class D -- Based on net assets of $8,485,613 and 566,770 shares
outstanding $14.97
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Year Ended November 30, 1997
<S> <C> <C> <C>
Investment Income Dividends (net of $649,557 foreign withholding tax) $5,202,879
(Notes 1d & 1e): Interest and discount earned (net of $192 foreign withholding tax) 870,387
------------
Total income 6,073,266
------------
Expenses: Investment advisory fees (Note 2) $4,776,233
Transfer agent fees -- Class A (Note 2) 869,198
Account maintenance and distribution fees -- Class B (Note 2) 705,358
Custodian fees 296,296
Transfer agent fees -- Class B (Note 2) 176,881
Printing and shareholder reports 161,774
Accounting services (Note 2) 115,158
Professional fees 81,191
Registration fees (Note 1f) 61,141
Account maintenance and distribution fees -- Class C (Note 2) 54,363
Directors' fees and expenses 37,937
Pricing fees 19,365
Account maintenance fees -- Class D (Note 2) 18,694
Transfer agent fees -- Class D (Note 2) 16,820
Transfer agent fees -- Class C (Note 2) 14,484
Other 19,605
------------
Total expenses 7,424,498
------------
Investment loss -- net (1,351,232)
------------
Realized & Realized gain (loss) from:
Unrealized Gain Investments -- net 51,342,484
(Loss) on Foreign currency transactions -- net (400,508) 50,941,976
Investments & ------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions -- Net Investments -- net (17,185,490)
(Notes 1b, 1c, Foreign currency transactions -- net (57,606) (17,243,096)
1e & 3): ------------ ------------
Net realized and unrealized gain on investments and foreign currency
transactions 33,698,880
------------
Net Increase in Net Assets Resulting from Operations $32,347,648
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
For the Year Ended
November 30,
Increase (Decrease) in Net Assets: 1997 1996
<S> <C> <C> <C>
Operations: Investment income (loss) -- net $(1,351,232) $3,358,903
Realized gain on investments and foreign currency transactions -- net 50,941,976 22,566,229
Change in unrealized appreciation/depreciation on investments and foreign
currency transactions -- net (17,243,096) 32,273,292
------------ ------------
Net increase in net assets resulting from operations 32,347,648 58,198,424
------------ ------------
Dividends & Investment income -- net:
Distributions to Class A (472,191) --
Shareholders Class C (24) --
(Note 1g): Class D (3,962) --
In excess of investment income -- net:
Class A (2,756,330) --
Class C (141) --
Class D (23,124) --
Realized gain on investments -- net:
Class A (20,709,718) (17,594,423)
Class B (2,278,771) (2,476,721)
Class C (49,977) (26,025)
Class D (245,755) (192,712)
------------ ------------
Net decrease in net assets resulting from dividends and distributions to
shareholders (26,539,993) (20,289,881)
------------ ------------
Capital Share Net increase (decrease) in net assets derived from capital share transactions (27,845,951) 34,818,380
Transactions ------------ ------------
(Note 4):
Net Assets: Total increase (decrease) in net assets (22,038,296) 72,726,923
Beginning of year 448,219,330 375,492,407
============ ============
End of year* $426,181,034 $448,219,330
============ ============
* Undistributed (accumulated distributions of) investment income -- net $(1,332,387) $1,827,409
============ ============
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following per share data
and ratios have been derived Class A+
from information provided in
the financial statements. For the Year Ended November 30,
1997 1996 1995 1994 1993
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $15.12 $13.87 $12.82 $13.07 $11.78
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income (loss) -- net (.02) .13 .05 .03 .04
Realized and unrealized gain on
investments and foreign currency
transactions -- net .86 1.87 1.52 .53 2.07
---------- ---------- ---------- ---------- ----------
Total from investment operations .84 2.00 1.57 .56 2.11
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income -- net (.02) -- (.01) (.01) --
In excess of investment income -- net (.10) -- -- -- --
Realized gain on investments -- net (.79) (.75) (.51) (.80) (.82)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.91) (.75) (.52) (.81) (.82)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $15.05 $15.12 $13.87 $12.82 $13.07
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share 6.04% 15.20% 12.92% 4.39% 19.16%
Return:* ========== ========== ========== ========== ==========
Ratios to Average Expenses 1.39% 1.37% 1.51% 1.44% 1.43%
Net Assets: ========== ========== ========== ========== ==========
Investment income (loss) -- net (.12%) .92% .41% .23% .32%
========== ========== ========== ========== ==========
Supplemental Net assets, end of year (in thousands) $344,940 $398,310 $327,270 $330,132 $256,203
Data: ========== ========== ========== ========== ==========
Portfolio turnover 54.50% 41.14% 44.64% 40.18% 56.98%
========== ========== ========== ========== ==========
Average commission rate paid++++ $.0103 $.0063 -- -- --
========== ========== ========== ========== ==========
<CAPTION>
The following per share data
and ratios have been derived Class B+
from information provided in
the financial statements. For the Year Ended November 30,
1997 1996 1995 1994 1993
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $14.40 $13.38 $12.50 $12.74 $11.62
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment loss -- net (.17) (.02) (.08) (.10) (.08)
Realized and unrealized gain on
investments and foreign currency
transactions -- net .84 1.79 1.47 .52 2.02
---------- ---------- ---------- ---------- ----------
Total from investment operations .67 1.77 1.39 .42 1.94
---------- ---------- ---------- ---------- ----------
Less distributions from realized gain on
investments -- net (.76) (.75) (.51) (.66) (.82)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $14.31 $14.40 $13.38 $12.50 $12.74
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share 4.98% 13.97% 11.78% 3.32% 17.87%
Return:* ========== ========== ========== ========== ==========
Ratios to Average Expenses 2.42% 2.40% 2.55% 2.48% 2.46%
Net Assets: ========== ========== ========== ========== ==========
Investment loss -- net (1.11%) (.11%) (.63%) (.80%) (.72%)
========== ========== ========== ========== ==========
Supplemental Net assets, end of year (in thousands) $66,791 $44,311 $44,387 $49,647 $34,241
Data: ========== ========== ========== ========== ==========
Portfolio turnover 54.50% 41.14% 44.64% 40.18% 56.98%
========== ========== ========== ========== ==========
Average commission rate paid++++ $.0103 $.0063 -- -- --
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales loads.
+ Based on average shares outstanding.
++++ For fiscal years beginning on or after September 1, 1995, the Company is required to disclose its
average commission rate per share for purchases and sales of equity securities. The "Average Commission
Rate Paid" includes commissions paid in foreign currencies, which have been converted into US dollars
using the prevailing exchange rate on the date of the transaction. Such conversions may significantly
affect the rate shown.
See Notes to Financial Statements.
<CAPTION>
Class C++
For the
The following per share data Period
and ratios have been derived Oct. 21,
from information provided in 1994+ to
the financial statements. For the Year Ended Nov. 30, Nov. 30,
1997 1996 1995 1994
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $14.41 $13.38 $12.51 $13.08
Operating ---------- ---------- ---------- ----------
Performance: Investment loss -- net (.17) (.01) (.08) (.02)
Realized and unrealized gain (loss) on
investments and foreign currency
transactions -- net .83 1.79 1.46 (.55)
---------- ---------- ---------- ----------
Total from investment operations .66 1.78 1.38 (.57)
---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income -- net -- +++++ -- -- --
In excess of investment income -- net -- +++++ -- -- --
Realized gain on investments -- net (.79) (.75) (.51) --
---------- ---------- ---------- ----------
Total dividends and distributions (.79) (.75) (.51) --
---------- ---------- ---------- ----------
Net asset value, end of period $14.28 $14.41 $13.38 $12.51
========== ========== ========== ==========
Total Investment Based on net asset value per share 4.96% 14.05% 11.69% (4.36%)++++
Return:** ========== ========== ========== ==========
Ratios to Average Expenses 2.43% 2.41% 2.55% 3.00%*
Net Assets: ========== ========== ========== ==========
Investment loss -- net (1.09%) (.09%) (.63%) (1.31%)*
========== ========== ========== ==========
Supplemental Net assets, end of period (in thousands) $5,964 $910 $376 $177
Data: ========== ========== ========== ==========
Portfolio turnover 54.50% 41.14% 44.64% 40.18%
========== ========== ========== ==========
Average commission rate paid++++++ $.0103 $.0063 -- --
========== ========== ========== ==========
<CAPTION>
Class D++
For the
The following per share data Period
and ratios have been derived Oct. 21,
from information provided in 1994+ to
the financial statements. For the Year Ended Nov. 30, Nov. 30,
1997 1996 1995 1994
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $15.04 $13.84 $12.81 $13.39
Operating ---------- ---------- ---------- ----------
Performance: Investment income (loss) -- net (.06) .09 .02 (.01)
Realized and unrealized gain (loss) on
investments and foreign currency
transactions -- net .87 1.86 1.52 (.57)
---------- ---------- ---------- ----------
Total from investment operations .81 1.95 1.54 (.58)
---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income -- net (.01) -- --+++++ --
In excess of investment income -- net (.08) -- -- --
Realized gain on investments -- net (.79) (.75) (.51) --
---------- ---------- ---------- ----------
Total dividends and distributions (.88) (.75) (.51) --
---------- ---------- ---------- ----------
Net asset value, end of period $14.97 $15.04 $13.84 $12.81
========== ========== ========== ==========
Total Investment Based on net asset value per share 5.80% 14.86% 12.73% (4.33%)++++
Return:** ========== ========== ========== ==========
Ratios to Average Expenses 1.64% 1.63% 1.76% 2.23%*
Net Assets: ========== ========== ========== ==========
Investment income (loss) -- net (.39%) .60% .18% (.67%)*
========== ========== ========== ==========
Supplemental Net assets, end of period (in thousands) $8,486 $4,688 $3,459 $1,591
Data: ========== ========== ========== ==========
Portfolio turnover 54.50% 41.14% 44.64% 40.18%
========== ========== ========== ==========
Average commission rate paid++++++ $.0103 $.0063 -- --
========== ========== ========== ==========
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Commencement of operations.
++ Based on average shares outstanding.
++++ Aggregate total investment return.
+++++ Amount is less than $.01 per share.
++++++ For fiscal years beginning on or after September 1, 1995, the Company
is required to disclose its average commission rate per share for
purchases and sales of equity securities. The "Average Commission
Rate Paid" includes commissions paid in foreign currencies, which
have been converted into US dollars using the prevailing exchange
rate on the date of the transaction. Such conversions may significantly affect the rate shown.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Holdings, Inc., November 30, 1997
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Global Holdings, Inc. (the "Company") is registered
under the Investment Company Act of 1940 as a diversified, open-end
management investment company. The Company offers four classes of
shares under the Merrill Lynch Select PricingSM System. Shares of
Class A and Class D are sold with a front-end sales charge. Shares of
Class B and Class C may be subject to a contingent deferred sales
charge. All classes of shares have identical voting, dividend,
liquidation and other rights and the same terms and conditions, except
that Class B, Class C and Class D Shares bear certain expenses related
to the account maintenance of such shares, and Class B and Class C
Shares also bear certain expenses related to the distribution of such
shares. Each class has exclusive voting rights with respect to matters
relating to its account maintenance and distribution expenditures. The
following is a summary of significant accounting policies followed by
the Company.
(a) Valuation of securities -- Portfolio securities which are traded
on stock exchanges are valued at the last sale price on the exchange
on which such securities are traded, as of the close of business on
the day the securities are being valued or, lacking any sales, at the
last available bid price. Securities traded in the over-the-counter
market are valued at the last available bid price prior to the time of
valuation. In cases where securities are traded on more than one
exchange, the securities are valued on the exchange designated by or
under the authority of the Board of Directors as the primary market.
Securities which are traded both in the over-the-counter market and on
a stock exchange are valued according to the broadest and most
representative market. Options written are valued at the last sale
price in the case of exchange-traded options or, in the case of
options traded in the over-the-counter market, the last asked price.
Options purchased are valued at the last sale price in the case of
exchange-traded options or, in the case of options traded in the over-
the-counter market, the last bid price. Short-term securities are
valued at amortized cost, which approximates market value. Other
investments, including futures contracts and related options, are
stated at market value. Securities and assets for which market value
quotations are not available are valued at their fair value as
determined in good faith by or under the direction of the Company's
Board of Directors.
(b) Foreign currency transactions -- Transactions denominated in
foreign currencies are recorded at the exchange rate prevailing when
recognized. Assets and liabilities denominated in foreign currencies
are valued at the exchange rate at the end of the period. Foreign
currency transactions are the result of settling (realized) or valuing
(unrealized) assets or liabilities expressed in foreign currencies
into US dollars. Realized and unrealized gains or losses from
investments include the effects of foreign exchange rates on
investments.
(c) Derivative financial instruments -- The Company may engage in
various portfolio strategies to seek to increase its return by hedging
its portfolio against adverse movements in the equity, debt and
currency markets. Losses may arise due to changes in the value of the
contract or if the counterparty does not perform under the contract.
[bullet] Options -- The Company is authorized to write covered call
options and purchase put options. When the Company writes an option,
an amount equal to the premium received by the Company 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 Company
enters into a closing transaction), the Company 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.
[bullet] Forward foreign exchange contracts -- The Company 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 Company's records. However, the
effect on operations is recorded from the date the Company enters into
such contracts. Premium or discount is amortized over the life of the
contracts.
[bullet] Foreign currency options and futures -- The Company 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
Company, sold by the Company but not yet delivered, or committed or
anticipated to be purchased by the Company.
[bullet] Financial futures contracts -- The Company may purchase or
sell interest rate futures contracts and options on such futures
contracts for the purpose of hedging the market risk on existing
securities or the intended purchase of securities. Futures contracts
are contracts for delayed delivery of securities at a specific future
date and at a specific price or yield. Upon entering into a contract,
the Company deposits and maintains as collateral such initial margin
as required by the exchange on which the transaction is effected.
Pursuant to the contract, the Company 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 Company as unrealized gains or losses.
When the contract is closed, the Company records a realized gain or
loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
(d) Income taxes -- It is the Company'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.
(e) 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 Company has
determined the ex-dividend date. Interest income is recognized on the
accrual basis. Realized gains and losses on security transactions are
determined on the identified cost basis.
(f) Prepaid registration fees -- Prepaid registration fees are charged
to expense as the related shares are issued.
(g) Dividends and distributions -- Dividends and distributions paid by
the Company are recorded on the ex-dividend dates. Distributions in
excess of net investment income are due primarily to differing tax
treatments for post-October losses.
(h) Reclassification -- Generally accepted accounting principles
require that certain components of net assets be adjusted to reflect
permanent differences between financial and tax reporting.
Accordingly, current year's permanent book/tax differences of
$1,447,208 have been reclassified between undistributed net realized
capital gains and accumulated distributions in excess of net
investment income. These reclassifications have no effect on net
assets or net asset values per share.
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Company has entered into an Investment Advisory Agreement with
Merrill Lynch Asset Management L.P. ("MLAM"). The general partner of
MLAM is Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner. The Company has also entered into a Distribution
Agreement and Distribution Plans with Merrill Lynch Funds Distributor,
Inc. ("MLFD" or "Distributor"), a wholly-owned subsidiary of Merrill
Lynch Group, Inc.
As compensation for its services to the Company, MLAM receives monthly
compensation at the annual rate of 1.0% of the average daily net
assets of the Company.
Pursuant to the Distribution Plans adopted by the Company in
accordance with Rule 12b-1 under the Investment Company Act of 1940,
the Company pays the Distributor ongoing account maintenance and
distribution fees. The fees are accrued daily and paid monthly at
annual rates based upon the average daily net assets of the shares as
follows:
Account Distribution
Maintenance Fee Fee
Class B 0.25% 0.75%
Class C 0.25% 0.75%
Class D 0.25% --
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co., also
provides account maintenance and distribution services to the Company.
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 year ended November 30, 1997, MLFD earned underwriting
discounts and direct commissions and MLPF&S earned dealer concessions
on sales of the Company's Class A and Class D Shares as follows:
MLFD MLPF&S
Class A $841 $12,568
Class D $223 $3,499
For the year ended November 30, 1997, MLPF&S received contingent
deferred sales charges of $339,089 and $2,200 relating to transactions
in Class B and Class C Shares, respectively.
In addition, MLPF&S received $130,458 in commissions on the execution
of portfolio security transactions for the Company for the year ended
November 30, 1997.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a wholly-owned
subsidiary of ML & Co., acts as the Company's transfer agent.
Accounting services are provided to the Company by MLAM at cost.
Certain officers and/or directors of the Company are officers and/or
directors of MLAM, PSI, MLFDS, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended November 30, 1997 were $249,563,304 and
$283,973,274, respectively.
Net realized and unrealized gains (losses) as of November 30, 1997
were as follows:
Realized Unrealized
Gains Gains
(Losses) (Losses)
Long-term investments $51,344,229 $73,818,881
Short-term investments (1,745) --
Foreign currency transactions (400,508) (61,963)
------------- -------------
Total $50,941,976 $73,756,918
============= =============
As of November 30, 1997, net unrealized appreciation for Federal
income tax purposes aggregated $73,571,492, of which $112,057,022
related to appreciated securities and $38,485,530 related to
depreciated securities. The aggregate cost of investments at November
30, 1997 for Federal income tax purposes was $348,657,029.
4. Capital Share Transactions:
A net increase (decrease) in net assets derived from capital share
transactions was $(27,845,951) and $34,818,380 for the years ended
November 30, 1997 and November 30, 1996, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Year Dollar
Ended November 30, 1997 Shares Amount
Shares sold 10,593,236 $157,598,934
Shares issued to shareholders
in reinvestment of dividends
and distributions 1,586,229 22,175,485
------------- -------------
Total issued 12,179,465 179,774,419
Shares redeemed (15,605,732) (236,649,109)
------------- -------------
Net decrease (3,426,267) $(56,874,690)
============= =============
Class A Shares for the Year Dollar
Ended November 30, 1996 Shares Amount
Shares sold 11,176,887 $157,434,230
Shares issued to shareholders
in reinvestment of distributions 1,233,289 16,242,414
------------- -------------
Total issued 12,410,176 173,676,644
Shares redeemed (9,655,805) (136,577,975)
------------- -------------
Net increase 2,754,371 $37,098,669
============= =============
Class B Shares for the Year Dollar
Ended November 30, 1997 Shares Amount
Shares sold 4,144,750 $57,686,337
Shares issued to shareholders
in reinvestment of distributions 148,413 1,993,180
------------- -------------
Total issued 4,293,163 59,679,517
Automatic conversion of shares (126,229) (1,871,700)
Shares redeemed (2,575,781) (37,239,859)
------------- -------------
Net increase 1,591,153 $20,567,958
============= =============
Class B Shares for the Year Dollar
Ended November 30, 1996 Shares Amount
Shares sold 617,667 $8,295,124
Shares issued to shareholders
in reinvestment of distributions 174,046 2,205,170
------------- -------------
Total issued 791,713 10,500,294
Shares redeemed (1,011,647) (13,729,276)
Automatic conversion of shares (20,731) (275,360)
------------- -------------
Net decrease (240,665) $(3,504,342)
============= =============
Class C Shares for the Year Dollar
Ended November 30, 1997 Shares Amount
Shares sold 590,713 $8,199,909
Shares issued to shareholders
in reinvestment of dividends
and distributions 3,548 47,542
------------- -------------
Total issued 594,261 8,247,451
Shares redeemed (239,693) (3,447,217)
------------- -------------
Net increase 354,568 $4,800,234
============= =============
Class C Shares for the Year Dollar
Ended November 30, 1996 Shares Amount
Shares sold 54,247 $725,543
Shares issued to shareholders
in reinvestment of distributions 1,898 24,054
------------- -------------
Total issued 56,145 749,597
Shares redeemed (21,017) (286,099)
------------- -------------
Net increase 35,128 $463,498
============= =============
Class D Shares for the Year Dollar
Ended November 30, 1997 Shares Amount
Shares sold 898,998 $13,541,614
Shares issued to shareholders
in reinvestment of dividends
and distributions 18,140 252,873
Automatic conversion of shares 120,997 1,871,700
------------- -------------
Total issued 1,038,135 15,666,187
Shares redeemed (783,014) (12,005,640)
------------- -------------
Net increase 255,121 $3,660,547
============= =============
Class D Shares for the Year Dollar
Ended November 30, 1996 Shares Amount
Shares sold 1,072,031 $14,751,733
Shares issued to shareholders
in reinvestment of distributions 13,662 179,386
Automatic conversion of shares 19,948 275,360
------------- -------------
Total issued 1,105,641 15,206,479
Shares redeemed (1,043,928) (14,445,924)
------------- -------------
Net increase 61,713 $760,555
============= =============
5. Commitments:
On November 30, 1997, the Company had entered into foreign exchange
contracts under which it had agreed to purchase and sell various
foreign currencies with approximate values of $171,000 and $5,278,000,
respectively.
6. Subsequent Event:
On December 1, 1997, the Company's Board of Directors declared an
ordinary income dividend in the amount of $.274225 per Class A Share,
$.115003 per Class B Share, $.135529 per Class C Share and $.241836
per Class D Share and a long-term capital gain distribution in the
amount of $1.489670 per share for all four classes of shares, payable
on December 30, 1997 to shareholders of record as of December 19,
1997.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
Merrill Lynch Global Holdings, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of Merrill Lynch Global
Holdings, Inc. as of November 30, 1997, the related statements of
operations for the year then ended and changes in net assets for each
of the years in the two-year period then ended, and the financial
highlights for each of the years in the five-year period then ended.
These financial statements and the financial highlights are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and the financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned at November 30, 1997, by
correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Merrill Lynch Global Holdings, Inc. as of November 30, 1997, the
results of its operations, the changes in its net assets, and the
financial highlights for the respective stated periods in conformity
with generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
January 14, 1998
PORTFOLIO INFORMATION (unaudited)
Worldwide
Investments
As of 11/30/97
Country of Percent of
Ten Largest Equity Holdings Origin Net Assets
Baan Company N.V. Netherlands 2.4%
Roche Holdings Ltd. Switzerland 2.1
Nokia OY AS 'A' Finland 1.8
Mercury General Corp. United States 1.8
CVS Corporation United States 1.7
SKW Trostberg AG Germany 1.7
Siebe PLC United Kingdom 1.7
Akzo Nobel N.V. Netherlands 1.7
Veba AG Germany 1.7
Home Depot, Inc. United States 1.7
Percent of
Ten Largest Industries Net Assets
Banking 10.8%
Business & Public Services 9.4
Multi-Industry 9.3
Merchandising 8.1
Health & Personal Care 7.3
Electrical & Electronics 6.8
Telecommunications 4.9
Energy 4.6
Electronics/Components 3.9
Insurance 3.6
PORTFOLIO CHANGES (unaudited)
For the Quarter Ended November 30, 1997
Additions
*China Telecom
*France Telecom S.A.
Fred Olsen Energy ASA
Munters AB
Nichiei Co. Ltd.
Sony Corp.
Stone Container Corporation
Deletions
Agros Holdings S.A.
Agros Holdings S.A. (Series D)
Aoyama Trading Co.
Autoliv, Inc.
Bank of Tokyo -- Mitsubishi
*China Telecom
*France Telecom S.A.
Forest Laboratories, Inc.
Harvey Nichols PLC
Hitachi Ltd.
Hyundai Engineering and
Construction Co.
ISS International Service System A/S
(Class B)
Lend Lease Corp.
Mannesmann AG
Mitsui & Co.
P.T. Bimantara Citra
PizzaExpress PLC
Sanwa Bank, Ltd.
Sony Music Entertainment Inc.
Swire Pacific Ltd. 'A'
Telecom Corp. of New Zealand Ltd.
(Class C)(ADR)
Telekom Malaysia BHD
*Added and deleted in the same quarter.
