MERRILL
LYNCH
GLOBAL
CONVERTIBLE
FUND, INC.
FUND LOGO
Quarterly Report July 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
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 and Portfolio Manager
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
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
<PAGE>
TO OUR SHAREHOLDERS
The quarter ended July 31, 1994 appears to have been one in which
investors spent most of their time attempting to gauge the potential
for further monetary policy tightening by the Federal Reserve
Board. There were the concerns that interest rates would continue to
be increased, and then investors sought to interpret the comments
made by Federal Reserve Board Chairman Alan Greenspan at the
Humphrey-Hawkins semi-annual hearings in late July. During this
testimony, it appears that while Chairman Greenspan left the door
open on further Federal Funds rate increases over the near term, his
inflation projections appeared rather favorable. The sharp rally in
both bond and equity markets on July 29, 1994 seemed to indicate
that investors feel the worst could be over in the near term with
regard to interest rate hikes. Obviously, financial markets will
continue to be on edge in coming weeks since it is always possible
that the Federal Reserve Board will wind up tightening monetary
policy to an excessive degree, slowing the economy more than needed
to keep inflation under control.
The US economy is showing signs of slowing to some degree, and at
the same time earnings reports for the second quarter generally have
been quite favorable with some positive surprises along the way. The
latest economic figures seem to indicate that the economy is not
overheating. June housing starts dropped close to 10%, and mortgage
applications declined in July mostly in response to higher interest
rates. Jobless claims have risen, and July chain store sales are
showing signs of sluggishness. All these signs suggest a moderate
gross domestic product growth of around 3% in coming months. It
remains to be seen whether the Federal Reserve Board will take all
these factors into account in their interest rate deliberations in
coming weeks.
Overseas, most world markets have shown declines in the July
quarter, although mostly of a minor nature. European markets have
been rather lackluster even though some economies like the United
Kingdom are improving rather favorably. In Asia, Japan continues to
benefit from firmer equity and bond markets, and Hong Kong has
rallied approximately 5% over the last three months.
During the July quarter, our total returns for Class A Shares and
Class B Shares have improved modestly as conditions were a bit more
favorable and the environment was a little better. Year-to-date, we
still show positive results and hope to improve on this in coming
months.
<PAGE>
Portfolio Strategy
Our asset allocation has been relatively unchanged during the July
quarter, with the Japanese portion still holding at 21% of our
portfolio. As was the case earlier in the year, the firm equity and
bond markets in Japan and the strong Japanese yen versus the US
dollar have helped our overall performance. We have taken advantage
of the volatility in US markets by committing cash reserves to some
US equity investments and then selling some in improving market
conditions. While other world markets appear poised to head higher
in coming weeks, it is our opinion that most of the movements will
come as a result of stronger markets in the United States during the
rest of the summer. As a result, we envision that assets we commit
in the weeks ahead will be largely to US investments. Of course,
there could be offshore markets and issues that appear attractive,
and we will be ready to take advantage of such opportunities as they
arise. While there are some signs of market stabilization, we will
continue to focus on the Federal Reserve Board, since its actions
will certainly affect domestic and worldwide markets.
In Conclusion
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
August 22, 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.
<PAGE>
<TABLE>
Recent
Performance
Results*
<CAPTION>
12 Month 3 Month
7/31/94 4/30/94 7/31/93 % Change % Change
<S> <C> <C> <C> <C> <C>
ML Global Convertible Fund, Inc. Class A Shares $10.74 $10.66 $10.69 + 1.24%(1) + 0.75%
ML Global Convertible Fund, Inc. Class B Shares 10.80 10.72 10.75 + 1.23(1) + 0.75
ML Global Convertible Fund, Inc. Class A Shares--Total Return + 4.28(2) + 1.22(3)
ML Global Convertible Fund, Inc. Class B Shares--Total Return + 3.26(4) + 0.96(5)
Dow Jones Industrial Average** 3,764.50 3,681.69 3,539.47 + 6.36 + 2.25
S&P 500 Index** 458.26 450.91 448.13 + 2.26 + 1.63
Japan Nikkei Dow Jones 225** 20,449.39 19,725.25 20,380.14 + 0.34 + 3.67
London Financial Times Index** 3,082.60 3,125.30 2,926.50 + 5.33 - 1.37
<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 $0.320 per share ordinary
income dividends and $0.081 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.050 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.216 per share ordinary
income dividends and $0.081 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.023 per share ordinary
income dividends.
</TABLE>
<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--7/31/94 10.68 10.74 -- 0.095 + 1.45
------ ------
Total $1.006 Total $2.152
<PAGE>
Cumulative total return as of 7/31/94: +49.90%**
<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--7/31/94 10.74 10.80 -- 0.042 + 0.95
------ ------
Total $1.006 Total $1.782
Cumulative total return as of 7/31/94: +44.36%**
<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>
<PAGE>
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/94 +4.05% -0.11%
Five Years Ended 6/30/94 +7.58 +6.71
Inception (11/4/88) through 6/30/94 +7.30 +6.53
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/94 +3.07% -0.93%
Five Years Ended 6/30/94 +6.48 +6.48
Inception (2/26/88) through 6/30/94 +5.86 +5.86
[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>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
NORTH Shares Percent of
AMERICA Industries Held Common Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Beverages 10,000 PepsiCo, Inc. $ 303,100 $ 305,000 0.69%
States
Chemicals 5,000 Witco Corp. 145,300 145,625 0.33
Metals & 10,000 Wheeling-Pittsburgh Corp. 179,350 188,750 0.43
Mining
Oil & Related 10,000 Exxon Corp. 615,700 595,000 1.34
Photography 4,633 Eastman Kodak Co. 214,595 224,121 0.51
Total Investments in United
States Common Stocks 1,458,045 1,458,496 3.30
<PAGE>
<CAPTION>
Convertible Preferred Stocks
<S> <S> <C> <S> <C> <C> <C>
Canada Oil & Gas 10,000 Occidental Petroleum Corp., Pfd.,
Producers Series A 500,700 445,000 1.01
Total Investments in Canadian
Convertible Preferred Stocks 500,700 445,000 1.01
United Automotive 3,000 Goodrich (B.F.) Company, $3.50 Pfd. 164,550 150,750 0.34
States Parts
Chemicals 20,000 Ashland Oil Inc., $6.25 Pfd. 1,065,800 1,192,500 2.69
Data 20,000 UNISYS Corp., $3.75 Pfd., Series A 1,233,875 657,500 1.49
Processing
Food /Beverage 30,000 ConAgra Inc., Pfd., Class E 998,025 1,001,250 2.26
/Tobacco &
Household
Forest Products 10,000 Federal Paper Board Co., Pfd. 489,550 500,000 1.13
/Paper & 5,000 James River Corp. of Virginia,
Packaging $3.375 Pfd. A, Series K 223,000 200,625 0.45
----------- ----------- -------
712,550 700,625 1.58
Metals & Mining 10,000 USX Corp., $3.25 Pfd. 505,800 516,250 1.17
5,000 Wheeling-Pittsburgh Corp., Series K 256,650 326,875 0.74
----------- ----------- -------
762,450 843,125 1.91
Transportation 20,000 Delta Airlines, Inc., $3.50 Pfd. C 1,010,350 940,000 2.12
Total Investments in United States
Convertible Preferred Stocks 5,947,600 5,485,750 12.39
<CAPTION>
Face Amount Convertible Bonds
<S> <S> <S> <C> <S> <C> <C> <C>
Canada Oil & Related US$ 1,000,000 Amoco Canada Petro Co., Ltd.,
7.375% due 9/01/2013 1,199,000 1,210,000 2.73
Total Investments in Canadian
Convertible Bonds 1,199,000 1,210,000 2.73
United Building & US$ 500,000 Masco Corp., 5.25% due 2/15/2012 436,250 440,000 0.99
States Construction
Computer 500,000 Cray Research, Inc., 6.125% due
Services 2/01/2011 510,000 399,375 0.90
<PAGE>
Electronics 1,700,000 Texas Instruments, Inc., 2.75%
due 9/29/2002 1,673,875 1,717,000 3.88
Food & Beverage 1,000,000 American Brands Inc., 5.75% due
4/11/2005 1,167,500 1,137,500 2.57
Forest Products 500,000 Mead Corp., 6.75% due 9/15/2012 474,750 500,000 1.13
/ Paper &
Packaging
Metals & Mining 1,200,000 Homestake Mining Co., 5.50% due
6/23/2000 1,257,000 1,260,000 2.85
300,000 USX Corp., 7.00% due 6/15/2017 285,600 271,500 0.61
----------- ----------- -------
1,542,600 1,531,500 3.46
Multi-Industry 1,000,000 Ogden Corp., 5.75% due 10/20/2002 935,500 865,000 1.95
Natural Gas 500,000 Consolidated Natural Gas Co., 7.25%
due 12/15/2015 606,250 512,500 1.16
Oil & Related 1,600,000 Pennzoil Co., 4.75% due 10/01/2003 1,614,625 1,424,000 3.21
Real Estate 500,000 Rockefeller Center Properties,
Inc., 8.00% due 12/31/2000 520,000 437,500 0.99
Retail Stores 1,250,000 Home Depot Inc., 4.50% due
2/15/1997 1,453,750 1,393,750 3.15
Textiles 250,000 Fieldcrest Cannon, Inc., 6.00%
due 3/15/2012 160,000 207,500 0.47
Total Investments in United
States Convertible Bonds 11,095,100 10,565,625 23.86
Total Investments in North
American Securities 20,200,445 19,164,871 43.29
<CAPTION>
PACIFIC Shares
BASIN Held Common Stocks
<S> <S> <C> <S> <C> <C> <C>
Japan Financial 10,000 Daiwa Securities Co., Ltd. 109,055 159,872 0.36
Services 10,000 Nikko Securities Co., Ltd. 91,790 123,901 0.28
6,000 Nomura Securities Co., Ltd. 94,803 132,494 0.30
10,000 Yamaichi Securities Co., Ltd. 94,005 89,928 0.20
----------- ----------- -------
389,653 506,195 1.14
<PAGE>
Machinery 20,000 Shimadzu Corp. 156,899 148,881 0.34
5,000 Sodick Co., Ltd. 94,250 42,966 0.10
----------- ----------- -------
251,149 191,847 0.44
Total Investments in Japanese
Common Stocks 640,802 698,042 1.58
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
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 $ 825,000 1.86%
Total Investments in Australian
Convertible Bonds 848,437 825,000 1.86
Japan Automotive Yen 15,000,000 No. 2 Mazda Motors, Ltd., 1.70%
due 3/31/1998 131,050 143,136 0.32
Banking 30,000,000 No. 2 Bank of Tokyo, Ltd., 1.30%
due 9/30/1994 301,264 299,161 0.68
Building & 25,000,000 No. 2 Nichiei Construction Co.,
Construction Ltd., 1.50% due 4/30/1999 195,234 228,817 0.52
25,000,000 No. 5 Nichiei Construction Co.,
Ltd., 1.70% due 10/31/2002 261,132 247,302 0.56
----------- ----------- -------
456,366 476,119 1.08
Business 50,000,000 No. 8 SECOM, 4.20% due 9/30/1994 520,105 529,576 1.20
Services
Chemicals 20,000,000 No. 6 Sekisui Plastic Co., Ltd.,
2.00% due 9/29/2000 217,190 220,823 0.50
Computer 5,000,000 No. 5 CSK Corp., 3.80% due
Services 3/19/1999 38,344 50,959 0.12
5,000,000 No. 6 CSK Corp., 3.90% due
3/20/2001 38,344 50,260 0.11
----------- ----------- -------
76,688 101,219 0.23
<PAGE>
Electronics 50,000,000 No. 7 Fujitsu Ltd., 4.30% due
9/29/1995 505,415 517,086 1.17
15,000,000 No. 2 Kyushu Matsushita Electric
Co., Inc., 1.50% due 3/31/1999 158,941 168,166 0.38
50,000,000 No. 11 Sharp Corp., 1.50% due
9/30/1998 504,281 594,525 1.34
----------- ----------- -------
1,168,637 1,279,777 2.89
Food & 15,000,000 No. 4 Asahi Breweries, Ltd., 2.10%
Household due 10/21/1997 138,779 146,583 0.33
Products 35,000,000 No. 3 Itoham Foods, Inc., 1.80%
due 2/28/2003 336,922 310,901 0.70
45,000,000 No. 4 Kikkoman, 1.60% due 12/29/2000 468,167 464,029 1.05
30,000,000 No. 6 Meiji Milk Products, 2.10%
due 9/30/2002 303,887 299,760 0.68
35,000,000 No. 2 Skylark Co., Ltd., 1.60%
due 6/28/1996 305,539 358,463 0.81
----------- ----------- -------
1,553,294 1,579,736 3.57
Health & 15,000,000 No. 2 Dai-Ichi Kogyo Seiyaku Co.,
Personal Care Ltd., 2.00% due 3/31/1997 162,367 146,283 0.33
15,000,000 No. 3 EISAI Co., Ltd., 4.20% due
3/31/1998 183,945 172,512 0.39
----------- ----------- -------
346,312 318,795 0.72
Leisure 50,000,000 No. 4 Canon Co., 1.20% due
12/20/2005 553,669 584,532 1.32
30,000,000 No. 2 Tokyo Dome Co., Ltd., 1.70%
due 1/31/1997 303,458 288,669 0.65
----------- ----------- -------
857,127 873,201 1.97
Machinery 60,000,000 No. 5 Toppan Printing Co. Ltd.,
1.90% due 11/30/2001 642,844 621,103 1.40
Metals & Mining 25,000,000 No. 2 Godo Steel Co., Ltd., 2.60%
due 3/29/2002 256,657 265,538 0.60
Multi-Industry 30,000,000 No. 5 Asahi Glass Co., Ltd., 1.90%
due 12/26/2008 294,461 327,338 0.74
40,000,000 No. 4 Sony Corp., 1.40% due
3/31/2005 278,956 376,499 0.85
----------- ----------- -------
573,417 703,837 1.59
Oil & Related 20,000,000 No. 4 Nippon Oil Co., Ltd., 1.70%
due 3/31/2003 147,642 172,062 0.38
<PAGE>
Real Estate 15,000,000 No. 12 Mitsui Real Estate Develop-
ment Co., Ltd., 1.40% due 9/30/2003 148,558 130,396 0.29
Transportation 30,000,000 No. 4 All Nippon Airways Co., Ltd.,
1.00% due 3/31/2004 312,259 325,839 0.74
50,000,000 No. 6 Yamato Transport Co., Ltd.,
1.70% due 9/30/2002 539,151 564,049 1.27
----------- ----------- -------
851,410 889,888 2.01
Total Investments in Japanese
Convertible Bonds 8,248,561 8,604,367 19.43
Total Investments in Pacific Basin
Securities 9,737,800 10,127,409 22.87
<CAPTION>
WESTERN Shares
EUROPE Held Common Stocks
<S> <S> <C> <S> <C> <C> <C>
United Business 71,944 Saatchi & Saatchi Co., PLC 217,005 158,692 0.36
Kingdom Services
Total Investments in United Kingdom
Common Stocks 217,005 158,692 0.36
<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 686,298 628,519 1.42
Total Investments in French
Convertible Bonds 686,298 628,519 1.42
Switzerland Banking US$ 700,000 CS Holdings, 4.875% due 11/19/2002 890,750 920,500 2.08
Total Investments in Swiss
Convertible Bonds 890,750 920,500 2.08
United Business Pound 500,000 Hanson Trust PLC, 9.50% due 1/31/2006 869,996 848,375 1.92
Kingdom Services Sterling
Food & Beverage 500,000 Allied-Lyons PLC, 6.75% due
7/07/2008 817,944 829,094 1.87
550,000 Northern Foods PLC, 6.75% due
8/08/2008 867,775 735,965 1.66
----------- ----------- -------
1,685,719 1,565,059 3.53
<PAGE>
Oil & Related 800,000 EE Finance, 8.75% due 6/27/2006 1,258,880 1,212,405 2.74
Transportation 300,000 P&O Steam Navigation Co., 7.25% due
5/19/2003 477,653 498,613 1.12
Total Investments in United Kingdom
Convertible Bonds 4,292,248 4,124,452 9.31
Total Investments in Western
European Securities 6,086,301 5,832,163 13.17
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Face Percent of
Amount Short-Term Securities Cost Value Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
United Commercial US$ 1,573,000 General Electric Capital Corp.,
States Paper* 4.20% due 8/01/1994 $ 1,572,633 $ 1,572,633 3.55%
US Government US Treasury Bills:
& Agency 1,200,000 3.78% due 8/25/1994 1,196,724 1,196,724 2.70
Obligations* 6,000,000 4.27% due 10/13/1994 5,946,625 5,946,040 13.44
----------- ----------- -------
7,143,349 7,142,764 16.14
Total Investments in Short-
Term Securities 8,715,982 8,715,397 19.69
Total Investments $44,740,528 43,839,840 99.02
===========
Unrealized Appreciation on Forward Exchange Contracts** 41,801 0.09
Other Assets Less Liabilities 392,019 0.97
----------- -------
Net Assets $44,273,660 100.00%
=========== =======
Net Asset Class A--Based on net assets of $5,957,846 and
Value: 554,570 shares outstanding $ 10.74
===========
Class B--Based on net assets of $38,315,814 and
3,548,448 shares outstanding $ 10.80
===========
<PAGE>
<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 July 31, 1994 are as follows:
Unrealized
Foreign Currency Sold Expiration Date Appreciation
Yen200,000,000 September 1994 41,801
Total Unrealized Appreciation--Net on Forward Foreign
Exchange Contracts (US$ Commitment--$2,047,607) $ 41,801
=========
</TABLE>
<PAGE>
