MERRILL
LYNCH
GLOBAL
CONVERTIBLE
FUND, INC.
FUND LOGO
Semi-Annual Report April 30, 1994
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.
Merrill Lynch
Global Convertible
Fund, Inc.
Box 9011
Princeton, New Jersey
08543-9011
MERRILL LYNCH GLOBAL CONVERTIBLE FUND, INC.
Officers and
Directors
Arthur Zeikel, President and Director
Kenneth S. Axelson, Director
Herbert I. London, Director
Robert R. Martin, Director
Joseph L. May, Director
Andre F. Perold, Director
Terry K. Glenn, Executive Vice President
N. John Hewitt, Senior Vice President
Donald C. Burke, Vice President
Harry E. Dewdney, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
<PAGE>
Custodian
State Street Bank & Trust Company
P.O. Box 351
Boston, Massachusetts 02101
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
TO OUR SHAREHOLDERS
Most US and international investors will remember February 4,
1994 as the most important date so far this year because the
Federal Reserve Board began to tighten interest rates after a
long hiatus. Since then, there have been three more tightenings
and most fiscal experts believe more are coming in the near
future. Yields on US Treasury securities of one year or longer
have risen by 90 basis points--140 basis points (0.90%--
1.40%). As a result, Government and corporate bond prices have
fallen rapidly. We believe that investors will be rather
skeptical about returning to the bond market until there is a
feeling that the Federal Reserve Board has stopped the tightening
process, an event that is probably some time away. While the US
economy continues to recover, the first calendar quarter of 1994
has seen a slower pace than in the last quarter of 1993, and we
foresee an economic growth rate of 3% to 3.5%, coupled with a
rather low inflation rate for the rest of 1994. Inflation fears
have certainly played a part in the higher interest rate moves,
but so far, inflation appears to be under control.
On the equity front in the United States, higher interest rates
have caused lower equity prices with most equity indexes
registering negative returns for 1994 year-to-date, following
sharply higher prices in December 1993 and January 1994.
Overseas, most world equity and fixed-income markets were
encountering sell-offs even before February 4, 1994 and began
to move even lower thereafter. Emerging markets, the stars of 1993,
have seen difficult times. Hong Kong, for example, has fallen over
23% since the start of 1994. One bright spot in Asia has been the
Japanese equity market, which has been up over 13% in local terms
and up over 23% in US dollar terms.
Since February 4, the environment for both bonds and equities,
including convertibles, has been rather poor. During such times,
preservation of capital is most important. Total returns for the
Fund's Class A and Class B Shares declined modestly for the April
quarter. We hope to improve on this performance if the market
environment improves in the months ahead. (Complete performance
information, including average annual total returns, can be
found on pages 3 and 4 of this report to shareholders.)
<PAGE>
Portfolio Strategy
During the April quarter, we have basically maintained our asset
allocation with roughly 60% of our portfolio in US issues and 40%
outside of the United States. At slightly over 20%, the Japanese
portion of our portfolio has helped mitigate the drop in the
Fund's net asset value caused by general market conditions. The
rather strong equity markets in Japan, the continued move toward
lower interest rates there and the strong Japanese yen versus the
US dollar have benefited our portfolio.
During early April, we committed a portion of our cash reserves
by buying primarily US issues because we believed equity markets
had sold off rather sharply during March and that stability would
return. In fact, April did bring a rally in the Dow Jones
Industrial Average from 3625 to 3681.
While the present environment in US and worldwide financial
markets appears to be turbulent, it is our opinion that it will
stabilize in coming weeks and that at present market levels,
there are very interesting opportunities for investments
worldwide on a selective basis, although proper timing is an
important factor. Even though interest rates appear to be headed
higher in the United States, there will be a point at which the
Federal Reserve Board is likely to weigh factors carefully, so as
not to interfere with the economic recovery, especially if
inflation remains under control. This, together with the
expectation of better corporate earnings, leads us to believe
that equity prices in the United States could go higher later
this year. Other world markets could see a recovery phase on a
selective basis as well, depending on financial and economic
developments.
We thank you for your ongoing interest in Merrill Lynch Global
Convertible Fund, Inc., and we look forward to assisting you with
your financial needs and objectives in the months and years
ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Harry E. Dewdney)
Harry E. Dewdney
Vice President and Portfolio Manager
June 7, 1994
<PAGE>
PERFORMANCE DATA
None of the past results shown should be considered a representation of
future performance. Investment return and principal value of Class A and
Class B Shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
<TABLE>
Recent Performance Results*
<CAPTION>
12 Month 3 Month
4/30/94 1/31/94 4/30/93 % Change % Change
<S> <C> <C> <C> <C> <C>
ML Global Convertible Fund, Inc. Class A Shares $10.66 $11.01 $10.53 + 2.01%(1) - 3.18%
ML Global Convertible Fund, Inc. Class B Shares 10.72 11.07 10.59 + 2.00(1) - 3.16
ML Global Convertible Fund, Inc. Class A Shares--Total Return + 5.04(2) - 2.77(3)
ML Global Convertible Fund, Inc. Class B Shares--Total Return + 4.04(4) - 2.99(5)
Dow Jones Industrial Average** 3,681.69 3,978.36 3,427.55 + 7.41 - 7.46
S&P 500 Index** 450.91 481.61 440.19 + 2.44 - 6.37
Japan Nikkei Dow Jones 225** 19,725.25 20,229.12 20,919.18 - 5.71 - 2.49
London Financial Times Index** 3,125.30 3,491.80 2,813.10 +11.10 -10.50
<FN>
* Investment results shown for the 3-month and 12-month periods are before the deduction of
any sales charges.
** An unmanaged broad-based Index comprised of common stocks.
(1) Percent change includes reinvestment of $0.081 per share capital gains distributions.
(2) Percent change includes reinvestment of $0.316 per share ordinary income dividends and
$0.081 per share capital gains distributions.
(3) Percent change includes reinvestment of $0.045 per share ordinary income dividends.
(4) Percent change includes reinvestment of $0.215 per share ordinary income dividends and
$0.081 per share capital gains distributions.
(5) Percent change includes reinvestment of $0.019 per share ordinary income dividends.
</TABLE>
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/94 +8.53% +4.18%
Five Years Ended 3/31/94 +7.91 +7.04
Inception (11/4/88) through 3/31/94 +7.66 +6.85
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/94 +7.48% +3.48%
Five Years Ended 3/31/94 +6.80 +6.80
Inception (2/26/88) through 3/31/94 +6.16 +6.16
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced
to 0% after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
<TABLE>
PERFORMANCE DATA (concluded)
<CAPTION>
Performance Summary--Class A Shares
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
11/4/88--12/31/88 $ 9.97 $ 9.76 $0.173 $0.101 + 0.68%
1989 9.76 9.50 0.431 0.483 + 6.83
1990 9.50 8.20 0.047 0.497 - 8.07
1991 8.20 9.06 0.151 0.382 +17.22
1992 9.06 9.67 0.123 0.267 +11.12
1993 9.67 10.68 0.081 0.327 +14.74
1/1/94--4/30/94 10.68 10.66 -- 0.045 + 0.23
------ ------
Total $1.006 Total $2.102
Cumulative total return as of 4/30/94: +48.10%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
include sales charge; results would be lower if sales charge was included.
<CAPTION>
Performance Summary--Class B Shares
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
2/26/88--12/31/88 $10.00 $ 9.77 $ 0.173 $0.313 + 2.63%
1989 9.77 9.51 0.431 0.376 + 5.68
1990 9.51 8.25 0.047 0.373 - 8.94
1991 8.25 9.12 0.151 0.284 +15.99
1992 9.12 9.74 0.123 0.166 + 9.99
1993 9.74 10.74 0.081 0.228 +13.48
1/1/94--4/30/94 10.74 10.72 -- 0.019 - 0.01
------ ------
Total $1.006 Total $1.759
Cumulative total return as of 4/30/94: +42.98%**
<PAGE>
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains distributions
at net asset value on the ex-dividend date, and do not reflect deduction of any
sales charge; results would be lower if sales charge was deducted.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Value Percent of
Industries Held Common Stocks Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
NORTH AMERICA
United States
Chemicals 5,000 Dow Chemical Co. $ 314,725 $ 313,750 0.75%
10,000 Witco Corp. 290,600 292,500 0.69
----------- ----------- -------
605,325 606,250 1.44
Foods 10,000 Archer-Daniels-Midland Co. 240,075 230,000 0.55
Forest Products/ 20,000 Federal Paper Board Co. 451,250 425,000 1.01
Paper & Packaging 7,000 International Paper Co. 469,490 456,750 1.09
----------- ----------- -------
920,740 881,750 2.10
Metals & Mining 20,000 Wheeling-Pittsburg Corp. 332,450 330,000 0.79
Oil & Related 10,000 Exxon Corp. 615,700 628,750 1.50
Pharmaceuticals 10,000 Merck & Co. 298,200 296,250 0.70
Total Investments in United States Common Stocks 3,012,490 2,973,000 7.08
<CAPTION>
Convertible Preferred Stocks
<S> <C> <S> <C> <C> <C>
Canada
Oil & Gas Producers 10,000 Occidental Petroleum Corp., Pfd., Series A 500,700 452,500 1.08
Total Investments in Canadian
Convertible Preferred Stocks 500,700 452,500 1.08
United States
Automotive Parts 3,000 Goodrich (B.F.) Company, $3.50 Pfd. 164,550 150,000 0.36
Chemicals 20,000 Ashland Oil Inc., $6.25 Pfd. 1,065,800 1,280,000 3.05
Data Processing 20,000 UNISYS Corp., $3.75 Pfd., Series A 1,233,875 797,500 1.90
Food/Beverage/ 30,000 ConAgra Inc., Pfd., Class E 998,025 922,500 2.20
Tobacco & Household
Forest Products/ 10,000 Federal Paper Board Co., Pfd. 489,550 450,000 1.07
Paper & Packaging 5,000 James River Corp. of Virginia, $3.375 Pfd., Series K 223,000 198,125 0.47
----------- ----------- -------
712,550 648,125 1.54
Metals & Mining 10,000 USX Corp., $3.25 Pfd. 505,800 500,000 1.19
5,000 Wheeling-Pittsburg Corp., Series K 256,650 300,000 0.71
----------- ----------- -------
762,450 800,000 1.90
Transportation 20,000 Delta Airlines, Inc. 1,010,350 980,000 2.33
Total Investments in United States
Convertible Preferred Stocks 5,947,600 5,578,125 13.28
<CAPTION>
Face
Amount Convertible Bonds
<S> <S> <C> <S> <C> <C> <C>
Canada
Oil & Related US$ 1,000,000 Amoco Canada Petro Co., Ltd., 7.375% due 9/01/2013 1,199,000 1,150,000 2.74
Total Investments in Canadian Convertible Bonds 1,199,000 1,150,000 2.74
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Face Value Percent of
Industries Amount Convertible Bonds Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
NORTH AMERICA (concluded)
United States
Building &
Construction US$ 500,000 Masco Corp., 5.25% due 2/15/2012 $ 436,250 $ 450,000 1.07%
Computer Services 500,000 Cray Research, Inc., 6.125% due 2/01/2011 510,000 425,000 1.01
Electronics 1,700,000 Texas Instruments, Inc., 2.75% due 9/29/2002 1,673,875 1,755,250 4.18
Food & Beverage 1,000,000 American Brands Inc., 5.75% due 4/11/2005 1,167,500 1,145,000 2.72
Forest Products/ 500,000 Mead Corp., 6.75% due 9/15/2012 474,750 492,500 1.17
Paper & Packaging
Leisure 400,000 Eastman Kodak Co., 6.375% due 7/01/2001 421,000 412,000 0.98
Metals & Mining 1,200,000 Homestake Mining Co., 5.50% due 6/23/2000 1,257,000 1,254,000 2.99
300,000 USX Corp., 7.00% due 6/15/2017 285,600 261,000 0.62
----------- ----------- -------
1,542,600 1,515,000 3.61
<PAGE>
Multi-Industry 1,000,000 Ogden Corp., 5.75% due 10/20/2002 935,500 860,000 2.04
Natural Gas 500,000 Consolidated Natural Gas Co., 7.25% due 12/15/2015 606,250 507,500 1.21
Oil & Related 1,600,000 Pennzoil Co., 4.75% due 10/01/2003 1,614,625 1,440,000 3.43
Real Estate 500,000 Rockefeller Center Properties, Inc., 8.00% due
12/31/2000 520,000 445,000 1.06
Retail Stores 1,250,000 Home Depot Inc., 4.50% due 2/15/1997 1,453,750 1,406,250 3.35
Textiles 250,000 Fieldcrest Cannon, Inc., 6.00% due 3/15/2012 160,000 222,500 0.53
Total Investments in United States
Convertible Bonds 11,516,100 11,076,000 26.36
Total Investments in North American Securities 22,175,890 21,229,625 50.54
<CAPTION>
Shares
PACIFIC BASIN Held Common Stocks
<S> <S> <C> <S> <C> <C> <C>
Japan
Financial Services 10,000 Daiwa Securities Co., Ltd. 109,055 156,235 0.37
10,000 ++Nikko Securities Co., Ltd. 91,790 119,878 0.29
6,000 Nomura Securities Co., Ltd. 94,803 130,294 0.31
10,000 ++Yamaichi Securities Co., Ltd. 94,005 84,013 0.20
----------- ----------- -------
389,653 490,420 1.17
Machinery 20,000 Shimadzu Corp. 156,900 135,010 0.32
5,000 ++Sodick Co., Ltd. 94,250 41,761 0.10
----------- ----------- -------
251,150 176,771 0.42
Total Investments in Japanese Common Stocks 640,803 667,191 1.59
<CAPTION>
Face
Amount Convertible Bonds
<S> <S> <C> <S> <C> <C> <C>
Australia
Banking US$ 750,000 Lend Lease Finance International, 4.75% due
6/01/2003 848,437 828,750 1.97
Total Investments in Australian Convertible Bonds 848,437 828,750 1.97
Japan
Automotive yen 15,000,000 No. 2 Mazda Motors, Ltd., 1.70% due 3/31/1998 131,050 136,779 0.33
Banking 30,000,000 No. 2 Bank of Tokyo, Ltd., 1.30% due 9/30/1994 301,264 299,204 0.71
Building &
Construction 25,000,000 No. 2 Nichiei Construction Co., Ltd., 1.50%
due 4/30/1999 195,234 227,474 0.54
25,000,000 No. 5 Nichiei Construction Co., Ltd., 1.70%
due 10/31/2002 261,132 254,495 0.61
----------- ----------- -------
456,366 481,969 1.15
<PAGE>
Business Services 50,000,000 No. 8 SECOM, 4.20% due 9/30/1994 520,105 517,834 1.23
Chemicals 20,000,000 No. 6 Sekisui Plastic Co., Ltd., 2.00% due 9/29/2000 217,190 210,278 0.50
Computer Services 5,000,000 No. 5 CSK Corp., 3.80% due 3/19/1999 38,344 49,376 0.12
5,000,000 No. 6 CSK Corp., 3.90% due 3/20/2001 38,344 49,376 0.12
----------- ----------- -------
76,688 98,752 0.24
Electronics 50,000,000 No. 7 Fujitsu Ltd., 4.30% due 9/29/1995 505,414 516,852 1.23
15,000,000 No. 2 Kyushu Matsushita Electric Co., Inc., 1.50%
due 3/31/1999 158,941 161,099 0.38
50,000,000 No. 11 Sharp Corp., 1.50% due 9/30/1998 504,281 571,386 1.36
----------- ----------- -------
1,168,636 1,249,337 2.97
Food & Household 15,000,000 No. 4 Asahi Breweries, Ltd., 2.10% due 10/21/1997 138,779 140,169 0.33
Products 35,000,000 No. 3 Itoham Foods, Inc., 1.80% due 2/28/2003 336,922 299,548 0.71
45,000,000 No. 4 Kikkoman, 1.60% due 12/29/2000 468,167 458,092 1.09
30,000,000 No. 6 Meiji Milk Products, 2.10% due 9/30/2002 303,887 291,834 0.69
35,000,000 No. 2 Skylark Co., Ltd., 1.60% due 6/28/1996 305,539 370,738 0.88
----------- ----------- -------
1,553,294 1,560,381 3.70
Health &
Personal Care 15,000,000 No. 2 Dai-Ichi Kogyo Seiyaku Co., Ltd., 2.00%
due 3/31/1997 162,367 143,412 0.34
15,000,000 No. 3 EISAI Co., Ltd., 4.20% due 3/31/1998 183,945 171,268 0.41
----------- ----------- -------
346,312 314,680 0.75
Leisure 50,000,000 No. 4 Canon Co., 1.20% due 12/20/2005 553,669 564,999 1.35
30,000,000 No. 2 Tokyo Dome Co., Ltd., 1.70% due 1/31/1997 303,458 281,812 0.67
----------- ----------- -------
857,127 846,811 2.02
Metals & Mining 25,000,000 No. 2 Godo Steel Co., Ltd., 2.60% due 3/29/2002 256,657 250,565 0.60
Multi-Industry 30,000,000 No. 5 Asahi Glass Co., Ltd., 1.90% due 12/26/2008 294,461 320,723 0.76
40,000,000 No. 4 Sony Corp., 1.40% due 3/31/2005 278,956 371,819 0.89
----------- ----------- -------
573,417 692,542 1.65
Oil & Related 20,000,000 No. 4 Nippon Oil Co., Ltd., 1.70% due 3/31/2003 147,642 166,257 0.40
Real Estate 15,000,000 No. 12 Mitsui Real Estate Development Co., Ltd.,
1.40% due 9/30/2003 148,558 127,493 0.30
Transportation 30,000,000 No. 4 All Nippon Airways Co., Ltd., 1.00%
due 3/31/2004 312,259 321,313 0.77
50,000,000 No. 6 Yamato Transport Co., Ltd., 1.70% due 9/30/2002 539,151 552,226 1.31
----------- ----------- -------
851,410 873,539 2.08
<PAGE>
Total Investments in Japanese Convertible Bonds 7,605,716 7,826,421 18.63
Total Investments in Pacific Basin Securities 9,094,956 9,322,362 22.19
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Shares Value Percent of
Industries Held Common Stocks Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
WESTERN EUROPE
United Kingdom
Business Services 71,944 Saatchi & Saatchi Co., PLC $ 217,005 $ 140,604 0.33%
Total Investments in United Kingdom
Common Stocks 217,005 140,604 0.33
<CAPTION>
Face
Amount Convertible Bonds
<S> <S> <C> <S> <C> <C> <C>
France
Leisure Ffr 4,200,000 Euro Disney SCA, 6.75% due 10/01/2001 686,297 613,055 1.46
Total Investments in French Convertible Bonds 686,297 613,055 1.46
Switzerland
Banking US$ 700,000 CS Holdings, 4.875% due 11/19/2002 890,750 918,750 2.19
Total Investments in Swiss Convertible Bonds 890,750 918,750 2.19
United Kingdom
Business Services Pound 500,000 Hanson Trust PLC, 9.50% due 1/31/2006 869,996 874,912 2.08
Ster-
ling
Food & Beverage 500,000 Allied-Lyons PLC, 6.75% due 7/07/2008 817,944 808,631 1.92
550,000 Northern Foods PLC, 6.75% due 8/08/2008 867,775 797,837 1.90
----------- ----------- -------
1,685,719 1,606,468 3.82
Oil & Related 800,000 EE Finance, 8.75% due 6/27/2006 1,258,880 1,212,000 2.89
Transportation 300,000 P&O Steam Navigation Co., 7.25% due 5/19/2003 477,653 528,356 1.26
Total Investments in United Kingdom
Convertible Bonds 4,292,248 4,221,736 10.05
<PAGE>
Total Investments in Western European
Securities 6,086,300 5,894,145 14.03
<CAPTION>
Face
Amount Short-Term Securities
<S> <S> <C> <S> <C> <C> <C>
United States
Commercial Paper* US$ 322,000 General Electric Capital Corp., 3.53% due 5/02/1994 321,937 321,937 0.77
US Government & US Treasury Bills:
Agency Obli- 1,000,000 3.37% due 5/05/1994 999,532 996,162 2.37
gations* 3,500,000 3.50% due 5/12/1994 3,495,917 3,495,917 8.32
----------- ----------- -------
4,495,449 4,492,079 10.69
Total Investments in Short-Term Securities 4,817,386 4,814,016 11.46
Total Investments $42,174,532 41,260,148 98.22
===========
Unrealized Depreciation on Forward Foreign Exchange Contracts** (66,036) (0.16)
Other Assets Less Liabilities 812,848 1.94
----------- -------
Net Assets $42,006,960 100.00%
=========== =======
<FN>
++Non-income producing security.
*Commercial Paper and certain US Government & Agency Obligations are traded
on a discount basis; the interest rates shown are the discount rates paid
at the time of purchase by the Fund.
**Forward foreign exchange contracts as of April 30, 1994 are as follows:
Unrealized
Foreign Currency Sold Expiration Date Depreciation
yen 300,000,000 June 1994 $(48,607)
yen 150,000,000 July 1994 (17,429)
Total Unrealized Depreciation--Net on Forward Foreign
Exchange Contracts (US$ Commitment--$4,370,673) $(66,036)
========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of April 30, 1994
<S> <S> <C> <C>
Assets: Investments, at value (identified cost -- $42,174,532) (Note 1a) $41,260,148
Cash 529
Receivables:
Securities sold $ 401,996
Interest 336,681
Capital shares sold 305,787
Dividends 9,562 1,054,026
-----------
Prepaid expenses and other assets (Note 1f) 43,855
-----------
Total assets 42,358,558
-----------
Liabilities: Unrealized depreciation on forward foreign exchange contracts (Note 1b) 66,036
Payables:
Capital shares redeemed 142,348
Distributor (Note 2) 28,547
Investment adviser (Note 2) 21,358 192,253
-----------
Accrued expenses and other liabilities 93,309
-----------
Total liabilities 351,598
-----------
Net Assets: Net assets $42,006,960
===========
Net Assets Class A Common Stock, $0.10 par value, 100,000,000 shares authorized $ 51,543
Consist of: Class B Common Stock, $0.10 par value, 100,000,000 shares authorized 340,616
Paid-in capital in excess of par 42,059,371
Overdistributed investment income--net (106,940)
Undistributed realized capital gains on investments and foreign currency transactions--net 640,173
Unrealized depreciation on investments and foreign currency transactions--net (977,803)
-----------
Net assets $42,006,960
===========
Net Asset Class A--Based on net assets of $5,496,634 and 515,434 shares outstanding $ 10.66
Value: ===========
Class B--Based on net assets of $36,510,326 and 3,406,157 shares outstanding $ 10.72
===========
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended April 30, 1994
<S> <S> <C> <C>
Investment Interest and discount earned (net of $5,738 foreign withholding tax) $ 640,894
Income Dividends (net of $534 foreign withholding tax) 239,296
(Notes 1d & 1e): -----------
Total investment income 880,190
-----------
Expenses: Distribution fees--Class B (Note 2) $ 166,308
Investment advisory fees (Note 2) 124,187
Printing and shareholder reports 45,991
Professional fees 31,616
Registration fees (Note 1f) 29,719
Accounting services (Note 2) 29,057
Directors' fees and expenses 22,742
Transfer agent fees--Class B (Note 2) 19,160
Custodian fees 12,061
Transfer agent fees--Class A (Note 2) 2,364
Other 2,830
-----------
Total expenses 486,035
-----------
Investment income--net 394,155
===========
Realized & Realized gain from:
Unrealized Gain Investments--net $ 602,967
(Loss) on Foreign currency transactions--net 13,934 616,901
Investments & -----------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions--Net Investments--net (1,460,728)
(Notes 1b, 1d & 3): Foreign currency transactions--net (148,565) (1,609,293)
----------- -----------
Net realized and unrealized loss on investments and foreign currency transactions (992,392)
-----------
Net Decrease in Net Assets Resulting from Operations $ (598,237)
===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the Year
Months Ended Ended
Increase (Decrease) in Net Assets: April 30, 1994 Oct. 31, 1993
<S> <S> <C> <C>
Operations: Investment income--net $ 394,155 $ 310,807
Realized gain on investments and foreign currency transactions--net 616,901 303,814
Change in unrealized appreciation/depreciation on investments and foreign
currency transactions--net (1,609,293) 2,506,720
----------- -----------
Net increase (decrease) in net assets resulting from operations (598,237) 3,121,341
----------- -----------
Dividends & Investment income--net:
Distributions to Class A (95,927) (59,079)
Shareholders Class B (476,748) (236,220)
(Note 1g): Realized gain on investments--net:
Class A (36,293) (37,814)
Class B (244,249) (223,267)
----------- -----------
Net decrease in net assets resulting from dividends and distributions
to shareholders (853,217) (556,380)
----------- -----------
Capital Share Net increase in net assets derived from capital share transactions 9,069,864 15,565,778
Transactions ----------- -----------
(Note 4):
Net Assets: Total increase in net assets 7,618,410 18,130,739
Beginning of period 34,388,550 16,257,811
----------- -----------
End of period* $42,006,960 $34,388,550
=========== ===========
<FN>
*Undistributed (overdistributed) investment income--net $ (106,940) $ 71,580
=========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. For the Six Class A
Months Ended For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: April 30, 1994 1993 1992 1991 1990
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.08 $ 9.79 $ 9.39 $ 8.37 $ 9.95
Operating ------- ------- ------- ------- -------
Performance: Investment income--net .18 .23 .21 .25 .38
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net (.29) 1.45 .68 1.22 (1.11)
------- ------- ------- ------- -------
Total from investment operations (.11) 1.68 .89 1.47 (.73)
------- ------- ------- ------- -------
Less dividends and distributions:
Investment income--net (.22) (.23) (.25) (.37) (.42)
Realized gain on investments--net (.09) (.16) (.24) (.08) (.43)
------- ------- ------- ------- -------
Total dividends and distributions (.31) (.39) (.49) (.45) (.85)
------- ------- ------- ------- -------
Net asset value, end of period $ 10.66 $ 11.08 $ 9.79 $ 9.39 $ 8.37
======= ======= ======= ======= =======
Total Investment Based on net asset value per share (1.03%)++ 17.64% 10.00% 18.09% (7.86%)
Return:** ======= ======= ======= ======= =======
Ratios to Average Expenses, net of reimbursement 1.66%* 2.22% 2.47% 2.47% 2.39%
Net Assets: ======= ======= ======= ======= =======
Expenses 1.66%* 2.22% 2.86% 2.87% 2.39%
======= ======= ======= ======= =======
Investment income--net 2.95%* 2.36% 2.61% 3.16% 4.55%
======= ======= ======= ======= =======
Supplemental Net assets, end of period (in thousands) $5,497 $ 4,557 $ 2,283 $ 448 $ 162
Data: ======= ======= ======= ======= =======
Portfolio turnover 18.51% 26.02% 4.91% 18.02% 22.76%
======= ======= ======= ======= =======
<PAGE>
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. For the Six Class B
Months Ended For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: April 30, 1994 1993 1992 1991 1990
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.13 $ 9.84 $ 9.44 $ 8.39 $ 9.95
Operating ------- ------- ------- ------- -------
Performance: Investment income--net .11 .13 .12 .18 .29
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net (.27) 1.46 .67 1.20 (1.10)
------- ------- ------- ------- -------
Total from investment operations (.16) 1.59 .79 1.38 (.81)
------- ------- ------- ------- -------
Less dividends and distributions:
Investment income--net (.16) (.14) (.15) (.25) (.32)
Realized gain on investments--net (.09) (.16) (.24) (.08) (.43)
------- ------- ------- ------- -------
Total dividends and distributions (.25) (.30) (.39) (.33) (.75)
------- ------- ------- ------- -------
Net asset value, end of period $ 10.72 $ 11.13 $ 9.84 $ 9.44 $ 8.39
======= ======= ======= ======= =======
Total Investment Based on net asset value per share (1.43%)++ 16.45% 8.77% 16.79% (8.68%)
Return:** ======= ======= ======= ======= =======
Ratios to Average Expenses, excluding distribution fees and net
Net Assets: of reimbursement 1.68%* 2.26% 2.49% 2.50% 2.41%
======= ======= ======= ======= =======
Expenses, net of reimbursement 2.68%* 3.26% 3.49% 3.50% 3.41%
======= ======= ======= ======= =======
Expenses 2.68%* 3.26% 3.96% 3.88% 3.41%
======= ======= ======= ======= =======
Investment income--net 1.93%* 1.32% 1.53% 2.25% 3.51%
======= ======= ======= ======= =======
Supplemental Net assets, end of period (in thousands) $36,510 $29,831 $13,975 $14,973 $18,296
Data: ======= ======= ======= ======= =======
Portfolio turnover 18.51% 26.02% 4.91% 18.02% 22.76%
======= ======= ======= ======= =======
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Aggregate total investment returns.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Global Convertible Fund, Inc. (the "Fund") is
registered under the Investment Company Act of 1940 as a non-
diversified, open-end management investment company. The Fund
offers both Class A and Class B Shares. Class A Shares are sold
with a front-end sales charge. Class B Shares may be subject to a
contingent deferred sales charge. Both classes of shares have
identical voting, dividend, liquidation and other rights and the
same terms and conditions, except that Class B Shares bear
certain expenses related to the account maintenance fee and
distribution fee of such shares and have exclusive voting rights
with respect to matters relating to such account maintenance
distribution expenditures. The following is a summary of
significant accounting policies followed by the Fund.
(a) Valuation of investments--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 quoted bid price in the over-the-counter market 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 Fund's Directors as
the primary market. Securities traded both in over-the-counter
market and on a stock exchange are valued based upon the prices
or quotes obtained from the broadest and most representative
market. Short-term securities are valued at amortized cost, which
approximates market. Options which are traded on exchanges are
valued at their last sale price as of the close of such exchanges
or, lacking any sales, at the last available bid price.
Securities 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 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) such transactions expressed in
foreign currencies into US dollars. Realized and unrealized gains
or losses from investments include the effects of foreign
exchange rates on investments.
<PAGE>
The Fund is authorized to enter into forward foreign exchange
contracts as a hedge against either specific transactions or
portfolio positions. Such contracts are not entered on the Fund's
records. However, the effect on operations is recorded from the
date the Fund enters into such contracts. Premium or discount is
amortized over the life of the contracts.
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.
(c) Options--The Fund can write covered call options and
purchase 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 sold through an exercise of an option, the
related premium received (or paid) is deducted from (or added to)
the basis 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.
(d) 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.
(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 date, except that if the ex-dividend date has
passed, certain dividends from foreign securities are recorded as
soon as the Fund is informed of 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.
<PAGE>
(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 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 Asset Management, L.P. ("MLAM"). Effective January
1, 1994, the investment advisory business of MLAM was reorganized
from a corporation to a limited partnership. Both prior to and
after the reorganization, ultimate control of MLAM was vested
with Merrill Lynch & Co., Inc. ("ML & Co."). The general partner
of MLAM is Princeton Services, Inc., an indirect wholly-owned
subsidiary of Merrill Lynch & Co. The limited partners are ML &
Co. and Merrill Lynch Investment Management, Inc. ("MLIM"), which
is also an indirect wholly-owned subsidiary of ML & Co. The Fund
has also entered into a Distribution Agreement and a Distribution
Plan with Merrill Lynch Funds Distributor, Inc. ("MLFD" or
"Distributor"), a wholly-owned subsidiary of MLIM.
MLAM is responsible for the management of the Fund's portfolio
and provides the necessary personnel, facilities, equipment and
certain other services necessary to the operations of the Fund.
For such services, the Fund pays a monthly fee at the annual rate
of 0.65% of the average daily value of the Fund's net assets.
Certain of the states in which the shares of the Fund are
qualified for sale impose limitations on the expenses of the
Fund. The most restrictive annual expense limitation requires
that the Investment Adviser reimburse the Fund to the extent the
Fund's expenses (excluding interest, taxes, distribution fees,
brokerage fees and commissions, and extraordinary items) exceed
2.5% of the Fund's first $30 million of average daily net assets,
2.0% of the Fund's next $70 million of average daily net assets,
and 1.5% of the average daily net assets in excess thereof.
MLAM's obligation to reimburse the Fund is limited to the amount
of the management fee.
No fee payment will be made to MLAM during any fiscal year that
will cause such expenses to exceed the most restrictive expense
limitation at the time of such payment.
<PAGE>
Pursuant to a distribution plan (the "Distribution Plan") adopted
by the Fund in accordance with Rule 12b-1 under the Investment
Company Act, the Fund pays the Distributor ongoing account
maintenance and distribution fees which are accrued daily and
paid monthly at the annual rates of 0.25% and 0.75%,
respectively, of the average daily net assets of the Class B
Shares of the Fund. Pursuant to a sub-agreement with the
Distributor, Merrill Lynch also provides account maintenance and
distribution service to the Fund. The ongoing account maintenance
fee compensates the Distributor and Merrill Lynch for providing
account maintenance services to Class B shareholders. As
authorized by the Plan, the Distributor has entered into an
agreement with Merrill Lynch, Pierce, Fenner & Smith Inc.
("MLPF&S"), an affiliate of MLIM, which provides for the
compensation of MLPF&S for providing distribution-related
services to the Fund. For the six months ended April 30, 1994,
MLFD earned $166,308 under the Plan, all of which was paid to
MLPF&S pursuant to the agreement.
For the six months ended April 30, 1994, MLFD earned underwriting
discounts of $1,588, and MLPF&S earned dealer concessions of
$17,859 on sales of the Fund's Class A Shares.
MLPF&S received contingent deferred sales charges of $22,031 for
the sale of Class B Shares and $1,090 in commissions on the
execution of portfolio security transactions for the Fund during
the period.
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 MLAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of MLIM, MLPF&S, FDS, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term
securities, for the six months ended April 30, 1994 were
$12,593,605 and $5,924,233, respectively.
Net realized and unrealized gains (losses) as of April 30, 1994
were as follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
Long-term investments $ 603,233 $ (911,014)
Short-term investments (266) (3,370)
Foreign currency transactions 20,782 2,617
Forward foreign exchange contracts (6,848) (66,036)
---------- -----------
Total $ 616,901 $ (977,803)
========== ===========
<PAGE>
As of April 30, 1994, net unrealized depreciation for Federal
income tax purposes aggregated $914,384, of which $1,020,774
related to appreciated securities and $1,935,158 related to
depreciated securities. At April 30, 1994, the aggregate cost of
investments for Federal income tax purposes was $42,174,532.
4. Capital Share Transactions:
Net increase in net assets derived from capital share
transactions were $9,069,864 and $15,565,778 for the six months
ended April 30, 1994 and the year ended October 31, 1993,
respectively.
Transactions in capital shares for Class A and Class B were as
follows:
Class A Shares for the Six Months Dollar
Ended April 30, 1994 Shares Amount
Shares sold 190,483 $ 2,076,542
Shares issued to shareholders in
reinvestment of dividends and
distributions 9,850 104,545
---------- -----------
Total issued 200,333 2,181,087
Shares redeemed (96,306) (1,044,479)
---------- -----------
Net increase 104,027 $ 1,136,608
========== ===========
Class A Shares for the Year Dollar
Ended October 31, 1993 Shares Amount
Shares sold 344,076 $ 3,672,869
Shares issued to shareholders in
reinvestment of dividends and
distributions 7,421 74,878
---------- -----------
Total issued 351,497 3,747,747
Shares redeemed (173,369) (1,757,328)
---------- -----------
Net increase 178,128 $ 1,990,419
========== ===========
<PAGE>
Class B Shares for the Six Months Dollar
Ended April 30, 1994 Shares Amount
Shares sold 1,070,403 $11,743,371
Shares issued to shareholders in
reinvestment of dividends and
distributions 52,288 510,610
---------- -----------
Total issued 1,122,691 12,253,981
Shares redeemed (396,000) (4,320,725)
---------- -----------
Net increase 726,691 $ 7,933,256
========== ===========
Class B Shares for the Year Dollar
Ended October 31, 1993 Shares Amount
Shares sold 1,924,389 $20,699,900
Shares issued to shareholders in
reinvestment of dividends and
distributions 33,583 338,734
---------- -----------
Total issued 1,957,972 21,038,634
Shares redeemed (698,109) (7,463,275)
---------- -----------
Net increase 1,259,863 $13,575,359
========== ===========
