MERRILL
LYNCH
GLOBAL
CONVERTIBLE
FUND, INC.
FUND LOGO
Quarterly Report January 31, 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
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 1713
Boston, Massachusetts 02101
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
TO OUR SHAREHOLDERS
The year began on a strong note with equity markets in the United States
quite firm as the Dow Jones Industrial Average set a new all-time high,
closing the month of January at 3978.36, up from 3754.09 at year-end.
With the sharp rise in gross domestic product of 5.9% in the fourth
quarter of 1993, it appears that first-quarter growth in 1994 will be
more subdued, in the 2.75%--3.25% range. The Federal Reserve Board
should be able to maintain its interest rate policy at current rates,
perhaps tightening a bit later in the year as a precautionary stance.
Inflation still appears to be under control, and 1994 appears to be
starting much as 1993 ended. It is our opinion that these general
conditions seem to provide a favorable environment for convertible
bonds, as was the case in 1993.
Overseas, equity markets in the emerging markets have cooled but conditions
appear favorable for further upward movement, although probably at a less
hectic pace than in 1993. In Europe, markets still look rather encouraging,
with Great Britain showing signs of improved economic conditions and stable
to lower interest rates, conditions which provided continued good returns
for sterling convertible bonds in January. Countries such as France and
Germany are still in economic slowdowns, with Germany reluctant to lower
interest rates because of concerns about the weakness in the Deutschemark
and high money supply growth. It appears that a cut in official German
interest rates will occur in late February.
In Japan, while the equity market was very volatile and hectic because
of political and economic conditions, the month of January brought some
stability and sharp recovery as the political situation eased and fiscal
stimulus measures are proposed. The government and private sector financial
leaders are proposing a large package of housing industry aids as well as
tax cuts. There is growing evidence that global investors are moving assets
from emerging and other Asian markets back into Japan as signs appear that
the worst of Japanese economic conditions could be over. The Japanese equity
market is responding in a positive way to all of these conditions as well
as to continued lower interest rates.
<PAGE>
Portfolio Strategy
Our asset allocation remained virtually unchanged during the quarter ended
January 31, 1994, with US holdings and offshore holdings representing 58%
and 42% of net assets, respectively. We continue to maintain our 20% ex-
posure in Japan, with mostly yen-denominated convertible bonds that have
benefited from the firm Japanese equity market in late January, the con-
tinued low interest rate climate in Japan and the strong Japanese yen versus
the US dollar. Our United Kingdom holdings of 12% also moved stronger on
higher equity markets and a firm British pound.
It is our opinion that the climate for investing in convertible securities
will continue to be good in coming months, with many parts of the world
offering continued and new opportunities for global investment. At the
same time, should there be any minor setbacks in US or foreign equity
markets, we believe the defensive posture of convertible bonds will limit
the impact of these declines to some degree.
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
March 3, 1994
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
1/31/94 10/31/93 1/31/93 % Change % Change
<S> <C> <C> <C> <C> <C>
ML Global Convertible Fund, Inc. Class A Shares $11.01 $11.08 $9.83 +12.86%(1) + 0.13%(1)
ML Global Convertible Fund, Inc. Class B Shares 11.07 11.13 9.89 +12.78(1) + 0.22(1)
ML Global Convertible Fund, Inc. Class A Shares--Total Return +16.36(2) + 1.79(3)
ML Global Convertible Fund, Inc. Class B Shares--Total Return +15.19(4) + 1.61(5)
Dow Jones Industrial Average** 3,978.36 3,680.59 3,310.03 +20.19 + 8.09
S&P 500 Index** 481.61 467.83 438.78 + 9.76 + 2.95
Japan Nikkei Dow Jones 225** 20,229.12 19,702.57 17,133.64 +18.07 + 2.67
London Financial Times Index** 3,491.80 3,171.00 2,851.60 +22.45 +10.12
<PAGE>
<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 $0.327 per share ordinary income dividends and
$0.081 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.177 per share ordinary income dividends and
$0.081 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.228 per share ordinary income dividends and
$0.081 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.149 per share ordinary income dividends and
$0.081 per share capital gains distributions.
</TABLE>
Average Annual
Total Return % Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/93 +14.74% +10.15%
Five Years Ended 12/31/93 + 7.98 + 7.10
Inception (11/4/88) through
12/31/93 + 7.86 + 7.01
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/93 +13.48% +9.48%
Five Years Ended 12/31/93 + 6.86 +6.86
Inception (2/26/88) through
12/31/93 + 6.31 +6.31
[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 Summary--Class A Shares
<CAPTION>
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--1/31/94 10.68 11.01 -- -- + 3.09
------ ------
Total $1.006 Total $2.057
Cumulative total return as of 1/31/94: +52.32%**
<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 include sales charge; results would be lower if sales charge
was included.
</TABLE>
<TABLE>
Performance Summary--Class B Shares
<CAPTION>
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--1/31/94 10.74 11.07 -- -- + 3.07
------ ------
Total $1.006 Total $1.740
Cumulative total return as of 1/31/94: +47.39%**
<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>
NORTH Shares Percent of
AMERICA Industries Held Convertible Preferred Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Canada Oil & Gas Producers 10,000 Occidental Petroleum Corp., Pfd., Series A $ 500,700 $ 496,250 1.28%
Total Investments in Canadian
Convertible Preferred Stocks 500,700 496,250 1.28
<PAGE>
United Automotive Parts 3,000 Goodrich (B.F.) Company, $3.50 Pfd. 164,550 151,500 0.39
States
Chemicals 20,000 Ashland Oil Inc., $6.25 Pfd. 1,065,800 1,295,000 3.33
Data Processing 20,000 UNISYS Corp., $3.75 Pfd., Series A 1,233,875 1,000,000 2.57
Food/Beverage/ 30,000 ConAgra Inc., Pfd., Class E 998,025 937,500 2.41
Tobacco & Household
Forest Products/ 10,000 Federal Paper Board Co., Pfd. 489,550 535,000 1.38
Paper & Packaging 5,000 James River Corp. of Virginia, $3.375
Pfd., Series K 223,000 225,625 0.58
--------- --------- -----
712,550 760,625 1.96
Metals & Mining 10,000 USX Corp., $3.25 Pfd. 505,800 588,750 1.52
5,000 Wheeling-Pittsburg Corp., Series K 256,650 380,000 0.98
--------- --------- -----
762,450 968,750 2.50
Total Investments in United States
Convertible Preferred Stocks 4,937,250 5,113,375 13.16
<CAPTION>
Face
Amount Convertible Bonds
<S> <S> <C> <S> <C> <C> <C>
Canada Oil & Related US$ 1,000,000 Amoco Canada Petro Co., Ltd., 7.375% due
9/01/2013 1,199,000 1,177,500 3.03
Total Investments in Canadian Convertible
Bonds 1,199,000 1,177,500 3.03
United Appliances & 250,000 Zenith Electronics Corp., 6.25% due 4/01/2011 196,875 175,938 0.45
States Household Durables
Building & 500,000 Masco Corp., 5.25% due 2/15/2012 436,250 530,000 1.36
Construction
Chemicals 550,000 Witco Corp., 5.50% due 3/15/2012 471,500 649,000 1.67
Computer Services 500,000 Cray Research, Inc., 6.125% due 2/01/2011 510,000 445,000 1.15
Electronics 1,700,000 Texas Instruments, Inc., 2.75% due 9/29/2002 1,673,875 1,759,500 4.53
Food & Beverage 1,000,000 American Brands Inc., 5.75% due 4/11/2005 1,167,500 1,155,000 2.97
Forest Products/ 500,000 Mead Corp., 6.75% due 9/15/2012 474,750 523,750 1.35
Paper & Packaging
Leisure 400,000 Eastman Kodak Co., 6.375% due 7/01/2001 421,000 438,000 1.13
<PAGE>
Metals & Mining 300,000 USX Corp., 7.00% due 6/15/2017 285,600 289,500 0.75
Multi-Industry 1,000,000 Ogden Corp., 5.75% due 10/20/2002 935,500 930,000 2.39
Natural Gas 500,000 Consolidated Natural Gas Co., 7.25%
due 12/15/2015 606,250 565,625 1.46
Oil & Related 1,600,000 Pennzoil Co., 4.75% due 10/01/2003 1,614,625 1,600,000 4.12
Real Estate 500,000 Rockefeller Center Properties, Inc., 8.00%
due 12/31/2000 520,000 497,500 1.28
Retail Stores 1,250,000 Home Depot Inc., 4.50% due 2/15/1997 1,453,750 1,468,750 3.78
Textiles 250,000 Fieldcrest Cannon, Inc., 6.00% due 3/15/2012 160,000 211,250 0.54
Total Investments in United States
Convertible Bonds 10,927,475 11,238,813 28.93
Total Investments in North American
Securities 17,564,425 18,025,938 46.40
<CAPTION>
PACIFIC Shares
BASIN Held Common Stocks
<S> <S> <C> <S> <C> <C> <C>
Japan Financial Services 10,000 Daiwa Securities Co., Ltd. 109,055 164,643 0.42
10,000 Nikko Securities Co., Ltd. 91,790 129,691 0.34
6,000 Nomura Securities Co., Ltd. 94,803 128,035 0.33
10,000 Yamaichi Securities Co., Ltd. 94,005 81,678 0.21
--------- --------- -----
389,653 504,047 1.30
Machinery 20,000 Shimadzu Corp. 156,900 125,276 0.32
5,000 Sodick Co., Ltd. 94,250 35,412 0.09
--------- --------- -----
251,150 160,688 0.41
Total Investments in Japanese Common Stocks 640,803 664,735 1.71
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
PACIFIC
BASIN Face Percent of
(concluded) Industries Amount Convertible Bonds Cost Value Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
Australia Banking US$ 750,000 Lend Lease Finance International, 4.75% due
6/01/2003 $ 848,437 $ 943,125 2.43%
Total Investments in Australian Convertible
Bonds 848,437 943,125 2.43
<PAGE>
Japan Automotive Yen 15,000,000 No. 2 Mazda Motors, Ltd., 1.70% due 3/31/1999 131,050 128,725 0.33
Banking 30,000,000 No. 2 Bank of Tokyo, Ltd., 1.30% due 9/30/1994 301,264 289,735 0.75
Building & 25,000,000 No. 2 Nichiei Construction Co., Ltd., 1.50%
Construction due 4/30/1999 195,234 225,349 0.58
25,000,000 No. 5 Nichiei Construction Co., Ltd., 1.70%
due 10/31/2002 261,132 244,895 0.63
--------- --------- -----
456,366 470,244 1.21
Business Services 50,000,000 No. 8 SECOM, 4.20% due 9/30/1994 520,105 514,625 1.32
Chemicals 20,000,000 No. 6 Sekisui Plastic Co., Ltd., 2.00%
due 9/29/2000 217,190 191,869 0.49
Computer Services 5,000,000 No. 5 CSK Corp., 3.80% due 3/19/1999 38,344 45,990 0.12
5,000,000 No. 6 CSK Corp., 3.90% due 3/20/2001 38,344 45,530 0.12
--------- --------- -----
76,688 91,520 0.24
Electronics 15,000,000 No. 2 Kyushu Matsushita Electric Co., Inc.,
1.50% due 3/31/1999 158,941 158,802 0.41
50,000,000 No. 11 Sharp Corp., 1.50% due 9/30/1998 504,281 523,363 1.35
--------- --------- -----
663,222 682,165 1.76
Food & Household 15,000,000 No. 4 Asahi Breweries, Ltd., 2.10%
Products due 10/21/1997 138,779 135,762 0.35
35,000,000 No. 3 Itoham Foods, Inc., 1.80% due 2/28/2003 336,922 294,564 0.76
45,000,000 No. 4 Kikkoman, 1.60% due 12/29/2000 468,167 430,050 1.11
30,000,000 No. 6 Meiji Milk Products, 2.10% due 9/30/2002 303,887 279,801 0.72
35,000,000 No. 2 Skylark Co., Ltd., 1.60% due 6/28/1996 305,539 346,072 0.89
--------- --------- -----
1,553,294 1,486,249 3.83
Health & 15,000,000 No. 2 Dai-Ichi Kogyo Seiyaku Co., Ltd., 2.00%
Personal Care due 3/31/1997 162,367 136,037 0.35
15,000,000 No. 3 EISAI Co., Ltd., 4.20% due 3/31/1998 183,945 171,358 0.44
--------- --------- -----
346,312 307,395 0.79
Leisure 30,000,000 No. 2 Tokyo Dome Co., Ltd., 1.70%
due 1/31/1997 303,458 262,693 0.67
15,000,000 No. 1 Yamaha Corp., 1.40% due 3/31/1997 150,737 130,933 0.34
--------- --------- -----
454,195 393,626 1.01
Machinery 15,000,000 No. 1 Shibuya Kogyo Co., Ltd., 2.10%
due 6/28/1996 128,413 133,140 0.34
15,000,000 No. 2 Sumitomo Precision Products Co., 2.00%
due 9/30/1997 130,739 129,691 0.33
--------- --------- -----
259,152 262,831 0.67
<PAGE>
Metals & Mining 25,000,000 No. 2 Godo Steel Co., Ltd., 2.60%
due 3/29/2002 256,657 228,799 0.59
Multi-Industry 30,000,000 No. 5 Asahi Glass Co., Ltd., 1.90%
due 12/26/2008 294,461 299,393 0.77
40,000,000 No. 4 Sony Corp., 1.40% due 3/31/2005 278,956 353,937 0.91
--------- --------- -----
573,417 653,330 1.68
Oil & Related 20,000,000 No. 4 Nippon Oil Co., Ltd., 1.70%
due 3/31/2003 147,642 162,252 0.42
Real Estate 15,000,000 No. 12 Mitsui Real Estate Development Co.,
Ltd., 1.40% due 9/30/2003 148,558 125,552 0.32
Transportation 30,000,000 No. 4 All Nippon Airways Co., Ltd., 1.80%
due 3/31/2003 254,706 244,481 0.63
50,000,000 No. 6 Yamato Transport Co., Ltd., 1.70%
due 9/30/2002 539,151 515,085 1.33
--------- --------- -----
793,857 759,566 1.96
Total Investments in Japanese
Convertible Bonds 6,898,969 6,748,483 17.37
Total Investments in Pacific Basin Securities 8,388,209 8,356,343 21.51
<CAPTION>
WESTERN
EUROPE Shares
Held Common Stocks
<S> <S> <C> <S> <C> <C> <C>
United Business 71,944 Saatchi & Saatchi Co., PLC 217,005 151,092 0.39
Kingdom Services
Total Investments in United Kingdom
Common Stocks 217,005 151,092 0.39
<CAPTION>
Face
Amount Convertible Bonds
<S> <S> <S> <C> <S> <C> <C> <C>
France Leisure Ffr 4,200,000 Euro Disney SCA, 6.75% due 10/01/2001 686,298 487,475 1.25
Total Investments in French Convertible Bonds 686,298 487,475 1.25
Switzerland Banking US$ 700,000 CS Holdings, 4.875% due 11/19/2002 890,750 1,099,000 2.83
Total Investments in Swiss Convertible Bonds 890,750 1,099,000 2.83
United Business Pound 500,000 Hanson Trust PLC, 9.50% due 1/31/2006 869,996 945,063 2.43
Kingdom Services Sterling
Food & 500,000 Allied-Lyons PLC, 6.75% due 7/07/2008 817,944 898,185 2.31
Beverage 550,000 Northern Foods PLC, 6.75% due 8/08/2008 867,775 878,683 2.26
--------- --------- -----
1,685,719 1,776,868 4.57
Oil & Related 800,000 EE Finance, 8.75% due 6/27/2006 1,258,880 1,287,086 3.32
Transportation 300,000 P&O Steam Navigation Co., 7.225%
due 5/19/2003 477,653 551,287 1.42
Total Investments in United Kingdom
Convertible Bonds 4,292,248 4,560,304 11.74
Total Investments in Western European
Securities 6,086,301 6,297,871 16.21
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in U.S. dollars)
<CAPTION>
Face Percent of
Amount Short-Term Securities Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Commercial Paper* US$ 847,000 General Electric Capital Corp., 3.15%
States due 2/01/1994 $847,000 $847,000 2.18%
US Government & 1,000,000 Federal Home Loan Bank, 3.00% due 3/21/1994 996,000 996,000 2.56
Agency Obligations* US Treasury Bills:
1,000,000 3.11% due 2/17/1994 998,618 998,664 2.57
1,000,000 3.05% due 3/03/1994 997,458 997,474 2.57
1,000,000 2.94% due 4/07/1994 994,692 994,637 2.56
2,000,000 2.95% due 4/07/1994 1,989,347 1,989,275 5.12
----------- ----------- ------
5,976,115 5,976,050 15.38
Total Investments in Short-Term Securities 6,823,115 6,823,050 17.56
Total Investments $38,862,050 39,503,202 101.68
===========
Unrealized Appreciation on Forward Foreign Exchange Contracts** 21,792 0.06
Liabilities in Excess of Other Assets (674,983) (1.74)
----------- ------
Net Assets $38,850,011 100.00%
=========== ======
<PAGE>
Net Asset Value: Class A--Based on net assets of $4,905,109 and 445,341
shares outstanding. $ 11.01
===========
Class B--Based on net assets of $33,944,902 and 3,066,105
shares outstanding. $ 11.07
===========
<FN>
*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 January 31, 1994 are as follows:
Unrealized
Foreign Currency Sold Expiration Date Appreciation
Yen 300,000,000 February 1994 $21,792
Total Unrealized Appreciation--Net, on Forward Foreign
Exchange Contracts (US$ Commitment--$2,782,673) $21,792
=======
</TABLE>
