MERRILL LYNCH
GLOBAL
CONVERTIBLE
FUND, INC.
FUND LOGO
Annual Report
October 31, 1995
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.
<PAGE>
Merrill Lynch
Global Convertible
Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MERRILL LYNCH GLOBAL CONVERTIBLE FUND, INC.
Officers and
Directors
Arthur Zeikel, President and Director
James H. Bodurtha, 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
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
<PAGE>
Important Tax
Information
Of the ordinary income distributions paid quarterly by
Merrill Lynch Global Convertible Fund, Inc. during the year
ended October 31, 1995, 15.52% qualifies for the dividends-
received deduction for corporations. Additionally, the Fund
distributed long-term capital gains of $0.029068 per share to
shareholders of record as of December 16, 1994.
The law varies in each state as to whether and what percent-
age of dividend income attributable to Federal obligations is
exempt from state income tax. We recommend that you con-
sult your tax adviser to determine if any portion of the
dividends you received is exempt from state income tax.
Listed below are the percentages of the Fund's total assets
invested in Federal obligations as of the end of each quar-
ter of the fiscal year.
For the Quarter Ended Federal Obligations*
January 31, 1995 16.80%
April 30, 1995 12.60%
July 31, 1995 13.10%
October 31, 1995 4.50%
Of the Fund's dividends paid quarterly to shareholders from
ordinary income during the year ended October 31, 1995,
8.39% was attributable to Federal obligations. In calculating
the foregoing percentage, expenses of the Fund have been
allocated on a pro rata basis.
[FN]
*For purposes of this calculation, Federal obligations include US Treasury
Notes, US Treasury Bills, and US Treasury Bonds. Also included are obliga-
tions issued by the following agencies: Banks for Cooperatives, Federal
Intermediate Credit Banks, Federal Land Banks, Federal Home Loan Banks,
and the Student Loan Marketing Association. Repurchase agreements are
not included in this calculation.
<PAGE>
TO OUR SHAREHOLDERS
With the US equity averages reaching
all time highs and long-term interest
rates falling dramatically (as evidenced
by the US government 30-year bond
yield at levels not seen since the
Federal Reserve Board began tighten-
ing rates in February 1994), investors
have had many reasons to be pleased
thus far in 1995. Some of the factors
creating this environment include a
stable inflation rate, an economy that
appears to be under control, a some-
what firmer US dollar in recent weeks
and a rather healthy liquidity flow
into mutual funds, especially equity
mutual funds.
While there has been some apprehen-
sion concerning a sell-off in equity
markets and higher interest rates,
these events have not materialized
and any drops in equity markets have
been rather small and short in dura-
tion, especially since investors are
continually looking to invest available
assets.
There are still expectations that the
Federal Reserve Board may ease once
or twice during the rest of 1995 as
gross domestic product (GDP) remains
below potential levels and inflation
pressures remain small. At the same
time, credit demand is fading as
consumers ease off on some pur-
chases, after higher levels earlier in
the year. One of the near-term threats
to both bond and equity markets in
the United States could be the high
level of bullish sentiment pervading
most investor arenas, a situation that
certainly merits observation.
<PAGE>
Overseas, equity markets have gener-
ally been firm, although most major
markets have performed sharply below
the levels in the United States. Correc-
tions occurred in most European
markets in September and October
from the summer's best levels. In Asia,
major markets were rather diverse
with the Hong Kong Hang Seng Index
up over 19% in 1995 while the Tokyo
Nikkei 225 Index was down over 10%
for the same period. Obviously, mar-
kets in Asia are subject to their own
developments. In Japan, equity
markets were adversely affected by
economic conditions, political con-
siderations, the general malaise in
the banking sector, earthquakes and
most recently Daiwa Bank's trading
scandal.
Portfolio Strategy
During the Fund's fiscal year, we
increased our US allocation from 62%
of net assets to 72% because of very
strong US equity markets and our
opinion that this sector would provide
greater total returns. Our next-largest
exposure, Japan, was reduced from
19% to 15% because of the lackluster
performance in that country. We
maintained positions in Hong Kong,
the United Kingdom and France and
added positions in Holland, Mexico
and China. Our net assets rose from
approximately $61 million on October
31, 1994 to approximately $90 million
on October 31, 1995 after reaching
a high of over $160 million during
June 1995.
This rather sharp fluctuation in net
assets brought about heavy activity
in buying and selling portfolio posi-
tions during the fiscal year. It enabled
us to change strategy as needed and
also allowed us to create realized
trading profits by selling certain
positions that appeared to be ahead
of general market conditions.
<PAGE>
Fiscal Year in Review
For the year ended October 31, 1995,
the Fund's Class A, Class B, Class C
and Class D Shares had total returns
of +5.10%, +4.01%, +3.89% and
+4.89%, respectively, as compared
to a +26.39% total return for the
unmanaged Standard & Poor's 500
Average. The shortfall in the Fund's
performance relative to the S&P 500
can be attributed to several factors.
First, the Fund's global investment
mandate hampered performance,
since most world equity markets,
especially Japan, performed well
below the US equity market. However,
we maintained a greater-than-normal
allocation to US convertibles during
the year, which enhanced total return.
Furthermore, several times over the
course of the year we shifted US
investments from lower-yielding,
lower-premium issues that are more
equity-oriented to higher-yielding,
higher-premium issues which would
respond favorably in a declining inter-
est rate environment. This strategy
helped to enhance the performance
of our US investments.
Second, we did not anticipate the
very sharp upswings in the US equity
market in 1995. As a result, the Fund
had higher cash positions that
ordinarily would not be warranted.
Third, convertible securities do not
usually track equity market indexes
such as the S&P 500, but can be
expected to appreciate to a lesser
degree. This was the case during the
Fund's fiscal year. Convertible securi-
ties offer a degree of upside potential
but also tend to have some downside
price protection in sharply declining
equity markets.
<PAGE>
In Conclusion
It is our opinion that the coming
weeks and months will continue to
offer attractive total return potentials
both in the United States and abroad,
although total returns in the United
States may be less dramatic than has
been the case thus far in 1995. Other
world markets should show improve-
ment, and we do expect the Japanese
equity market to become firmer as
problems there ease and government
stimulation improves the business
climate.
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 in the months
and years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Harry E. Dewdney)
Harry E. Dewdney
Vice President and Portfolio Manager
December 4, 1995
<PAGE>
PERFORMANCE DATA
About Fund
Performance
Since October 21, 1994, investors have been able to purchase shares
of the Fund through the Merrill Lynch Select Pricing SM System,
which offers four pricing alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 5.25% and bear no ongoing distribution or account mainte-
nance fees. Class A Shares are available only to eligible investors.
* Class B Shares are subject to a maximum contingent deferred
sales charge of 4% if redeemed during the first year, decreasing 1%
each year thereafter to 0% after the fourth year. In addition, Class
B Shares are subject to a distribution fee of 0.75% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after approximately 8 years.
* Class C Shares are subject to a distribution fee of 0.75% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 5.25% and
an account maintenance fee of 0.25% (but no distribution fee).
Performance data for all of the Fund's shares are presented in the
"Total Return Based on a $10,000 Investment"graphs and the
"Recent Performance Results" and "Performance Summary"
tables on pages 4-7. Data for the Fund's Class A and Class B
Shares are presented in the "Average Annual Total Return" table on pages 4
and 5. Data for Class C and Class D Shares are also presented in the
"Aggregate Total Return" table on page 5.
The "Recent Performance Results" table shows investment results
before the deduction of any sales charges for all of the Fund's shares
for the 12-month and 3-month periods ended October 31, 1995.
All data in this table assume imposition of the actual total expenses
incurred by each class of shares during the relevant period.
None of the past results shown should be considered a representa-
tion 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. 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.
<PAGE>
PERFORMANCE DATA (continued)
Total Return
Based on a
$10,000
Investment
A line graph depicting growth of an investment in the Fund's
Class A Shares compared to the growth of an investment in the
S&P 500 Total Return Index. Beginning and ending values are:
11/4/88** 10/95
ML Global Convertible Fund, Inc.++--
Class A Shares* $ 9,475 $14,993
S&P 500 Total Return Index++++ $10,000 $26,091
A line graph depicting growth of an investment in the Fund's
Class B Shares compared to the growth of an investment in the
S&P 500 Total Return Index. Beginning and ending values are:
2/26/88** 10/95
ML Global Convertible Fund, Inc.++--
Class B Shares* $10,000 $15,032
S&P 500 Total Return Index++++ $10,000 $27,610
A line graph depicting growth of an investment in the Fund's
Class C and Class D Shares compared to the growth of an investment
in the S&P 500 Total Return Index. Beginning and ending
values are:
<PAGE>
10/21/94** 10/95
ML Global Convertible Fund, Inc.++--
Class C Shares* $10,000 $10,457
ML Global Convertible Fund, Inc.++--
Class D Shares* $ 9,475 $10,002
S&P 500 Total Return Index++++ $10,000 $12,850
[FN]
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commencement of Operations.
++ML Global Convertible Fund, Inc. invests primarily in an
internationally diversified portfolio of convertible debt
securities, convertible preferred stocks and "synthetic"
convertible securities consisting of a combination of debt
securities or preferred stock and warrants or options.
++++This unmanaged broad-based Index is comprised of common
stocks.
Past performance is not predictive of future performance.
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 9/30/95 + 6.84% +1.23%
Five Years Ended 9/30/95 +10.90 +9.71
Inception (11/4/88) through 9/30/95 + 7.00 +6.17
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/95 +5.73% +1.73%
Five Years Ended 9/30/95 +9.76 +9.76
Inception (2/26/88) through 9/30/95 +5.65 +5.65
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0% after
4 years.
**Assuming payment of applicable contingent deferred sales charge.
Aggregate
Total Return
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (10/21/94) through 9/30/95 +5.63% +4.63%
[FN]
*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*
Inception (10/21/94) through 9/30/95 +6.53% +0.94%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
<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
1994 10.68 10.29 0.029 0.304 - 0.54
1/1/95--10/31/95 10.29 10.71 -- 0.369 + 7.67
------ ------
Total $1.035 Total $2.730
Cumulative total return as of 10/31/95: +58.23%**
<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
1994 10.74 10.35 0.029 0.205 - 1.45
1/1/95--10/31/95 10.35 10.77 -- 0.271 + 6.67
------ -------
Total $1.035 Total $ 2.216
Cumulative total return as of 10/31/95: +50.32%**
<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 reflect deduction of any sales charge; results would be
lower if sales charge was deducted.
</TABLE>
PERFORMANCE DATA (concluded)
<TABLE>
Performance
Summary--
Class C Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $10.74 $10.33 $0.029 $0.162 - 2.03%
1/1/95--10/31/95 10.33 10.75 -- 0.276 + 6.74%
------ ------
Total $0.029 Total $0.438
Cumulative total return as of 10/31/95: +4.57%**
<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>
Performance
Summary--
Class D Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $10.69 $10.30 $0.029 $0.170 - 1.78%
1/1/95--10/31/95 10.30 10.72 -- 0.349 + 7.47
------ ------
Total $0.029 Total $0.519
Cumulative total return as of 10/31/95: +5.56%**
<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>
Recent
Performance
Results
<CAPTION>
12 Month 3 Month
10/31/95 7/31/95 10/31/94 % Change % Change
<S> <C> <C> <C> <C> <C>
ML Global Convertible Fund, Inc. Class A Shares* $10.71 $11.06 $10.75 - 0.09%(1) -3.16%
ML Global Convertible Fund, Inc. Class B Shares* 10.77 11.10 10.80 - 0.00(1) -2.97
ML Global Convertible Fund, Inc. Class C Shares* 10.75 11.08 10.81 - 0.27(1) -2.98
ML Global Convertible Fund, Inc. Class D Shares* 10.72 11.06 10.76 - 0.09(1) -3.07
ML Global Convertible Fund, Inc. Class A Shares--Total Return* + 5.10(2) -1.28(3)
ML Global Convertible Fund, Inc. Class B Shares--Total Return* + 4.01(4) -1.50(5)
ML Global Convertible Fund, Inc. Class C Shares--Total Return* + 3.89(6) -1.54(7)
ML Global Convertible Fund, Inc. Class D Shares--Total Return* + 4.87(8) -1.27(9)
Dow Jones Industrial Average** 4,755.48 4,708.47 3,908.12 +21.68 +1.00
S&P 500 Index** 581.50 562.06 472.35 +23.11 +3.46
Japan Nikkei Dow Jones 225** 17,654.64 16,677.53 19,989.60 -11.68 +5.86
London Financial Times Index** 3,529.10 3,463.30 3,097.40 +13.94 +1.90
<FN>
*Investment results shown do not reflect any sales charges;
results shown would be lower if a sales charge was included.
**An unmanaged broad-based Index comprised of common stocks.
(1)Percent change includes reinvestment of $0.029 per share
capital gains distributions.
(2)Percent change includes reinvestment of $0.542 per share
ordinary income dividends and $0.029 per share capital
gains distributions.
(3)Percent change includes reinvestment of $0.210 per share
ordinary income dividends.
(4)Percent change includes reinvestment of $0.422 per share
ordinary income dividends and $0.029 per share capital
gains distributions.
<PAGE>
(5)Percent change includes reinvestment of $0.165 per share
ordinary income dividends.
(6)Percent change includes reinvestment of $0.438 per share
ordinary income dividends and $0.029 per share capital
gains distributions.
(7)Percent change includes reinvestment of $0.161 per share
ordinary income dividends.
(8)Percent change includes reinvestment of $0.519 per share
ordinary income dividends and $0.029 per share capital
gains distributions.
(9)Percent change includes reinvestment of $0.201 per share
ordinary income dividends.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
LATIN Shares Value Percent of
AMERICA Industries Held Common Stocks Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Mexico Utilities--Communications 20,000 Telefonos de Mexico, S.A. de C.V.
(TELMEX) (ADR) (a) $ 756,200 $ 550,000 0.61%
Total Investments in Latin American
Securities 756,200 550,000 0.61
NORTH
AMERICA
United States Metals & Mining 10,000 WHX Corp. 179,350 103,750 0.11
Retail Stores 70,741 Home Depot, Inc. 3,249,362 2,635,102 2.92
Total Investments in United States
Common Stocks 3,428,712 2,738,852 3.03
Convertible Preferred Stocks
Canada Oil & Gas Producers 25,000 Occidental Petroleum Corp., Pfd.,
Series A 1,371,600 1,412,500 1.56
Total Investments in Canadian
Convertible Preferred Stocks 1,371,600 1,412,500 1.56
<PAGE>
United States Chemicals 20,000 Ashland Oil Inc., $6.75 Pfd. 1,065,800 1,095,000 1.21
Data Processing 20,000 UNISYS Corp., $3.75 Pfd., Series A 1,233,875 550,000 0.61
Food/Beverage/
Tobacco & Household 30,000 ConAgra Inc., Pfd., Class E 998,025 1,177,500 1.30
Insurance 25,000 American General Corp., Pfd. 1,306,729 1,293,750 1.43
25,000 St. Paul Companies, Inc., Pfd. 1,307,892 1,350,000 1.49
----------- ----------- -------
2,614,621 2,643,750 2.92
Metals & Mining 50,000 USX Corp., $3.25 Pfd. 2,413,750 2,362,500 2.61
35,500 WHX Corp., Pfd. 1,630,980 1,566,438 1.73
20,000 WHX Corp., Pfd. B 1,000,150 840,000 0.93
----------- ----------- -------
5,044,880 4,768,938 5.27
Real Estate
Investment Trust 50,000 Merry Land & Investment Company,
Inc., Pfd. 1,261,637 1,368,750 1.52
Transportation 20,000 Delta Airlines, Inc., $3.50 Pfd. C 1,010,350 1,107,500 1.23
Total Investments in United States
Convertible Preferred Stocks 13,229,188 12,711,438 14.06
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
NORTH AMERICA Face Value Percent of
(concluded) Industries Amount Convertible Bonds Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
United States Automobile Parts US$ 3,010,000 The Pep Boys--Manny, Moe & Jack, 4%
due 9/01/1999 $ 2,938,775 $ 2,829,400 3.13%
Building & 3,050,000 Masco Corp., 5.25% due 2/15/2012 2,678,000 2,828,875 3.13
Construction
Chemicals 1,950,000 Ashland Oil Inc., 6.75% due 7/01/2014 1,914,000 1,930,500 2.13
Computer Services 500,000 Cray Research, Inc., 6.125% due 2/01/2011 510,000 388,125 0.43
Environmental 3,250,000 Browning-Ferris Industries, Inc., 6.25%
Control due 8/15/2012 3,246,250 3,233,750 3.58
<PAGE>
Industrial 2,000,000 Rouse Co., 5.75% due 7/23/2002 1,699,000 1,940,000 2.15
Insurance 2,000,000 Aegon N.V., 4.75% due 11/01/2004 2,420,250 2,685,000 2.97
Leisure 3,289,850 Time Warner Inc., 8.75% due 1/10/2015 3,405,412 3,425,556 3.79
Machine 2,500,000 Cooper Industries, Inc., 7.05% due
Diversified 1/01/2015 2,572,500 2,525,000 2.79
Metals & Mining 2,000,000 Homestake Mining Co., 5.50% due 6/23/2000 2,044,250 2,000,000 2.21
2,000,000 USX Corp., 7% due 6/15/2017 1,823,850 1,875,000 2.08
----------- ----------- -------
3,868,100 3,875,000 4.29
Natural Gas 3,200,000 Consolidated Natural Gas Co., 7.25%
due 12/15/2015 3,180,750 3,328,000 3.68
Oil & Related 3,000,000 Pennzoil Co., 4.75% due 10/01/2003 2,814,750 2,827,500 3.13
Transportation 2,200,000 Alaska Air Group, Inc., 6.50% due 6/15/2005 2,284,750 2,040,500 2.26
Total Investments in United States
Convertible Bonds 33,532,537 33,857,206 37.46
Total Investments in
North American Securities 51,562,037 50,719,996 56.11
PACIFIC Shares
BASIN Held Common Stocks
Hong Kong Utilities--Electric 70,000 Shandong Huaneng Power Company Ltd.
(ADR) (a) 704,200 560,000 0.62
Total Investments in Hong Kong
Common Stocks 704,200 560,000 0.62
Japan Financial Services 10,000 Daiwa Securities Co., Ltd. 109,055 117,647 0.13
10,000 Nikko Securities Co., Ltd. 91,790 93,530 0.10
10,000 Yamaichi Securities Co., Ltd. 94,005 52,549 0.06
----------- ----------- -------
294,850 263,726 0.29
Machinery 20,000 Shimadzu Corp. 156,900 111,373 0.13
Trading 50,000 Marubeni Corp. 241,883 244,118 0.27
Total Investments in Japanese
Common Stocks 693,633 619,217 0.69
<PAGE>
Face
Amount Convertible Bonds
Hong Kong Food & Beverage US$ 2,000,000 Dairy Farms International Holdings Ltd.,
6.50% due 5/10/2049 1,977,000 1,505,000 1.67
Real Estate 3,500,000 Wharf Capital Ltd., 5% due 7/15/2000 3,640,000 3,718,750 4.11
Total Investments in Hong Kong
Convertible Bonds 5,617,000 5,223,750 5.78
Japan Auto & Truck YEN 50,000,000 No. 2 Toyota Motor Corp., 1.20%
due 1/28/1998 572,731 522,059 0.58
Chemicals 100,000,000 No. 6 Sumitomo Chemical Co., 1.20%
due 9/29/2006 1,042,946 1,160,784 1.28
Electronics 30,000,000 No. 3 Matsushita Electric Industrial Co.,
1.40% due 9/30/1996 362,443 313,235 0.35
50,000,000 No. 5 Matsushita Electric Industrial Co.,
1.30% due 3/29/2002 513,387 505,882 0.56
50,000,000 No. 6 Matsushita Electric Industrial Co.,
1.40% due 3/31/2004 568,638 505,392 0.56
75,000,000 No. 11 Sharp Corp., 1.50% due 9/30/1998 803,237 792,647 0.88
----------- ----------- -------
2,247,705 2,117,156 2.35
Food & Beverage 100,000,000 No. 9 Asahi Breweries, Ltd., 0.95%
due 12/26/2002 1,114,675 996,079 1.10
50,000,000 No. 1 Sanyo Coco-Cola Bottling, Inc.,
0.90% due 6/30/2003 522,384 480,882 0.53
50,000,000 No. 3 Sapporo Breweries, Ltd., 1.20%
due 12/18/2009 525,379 488,235 0.54
----------- ----------- -------
2,162,438 1,965,196 2.17
Industrial 50,000,000 No. 4 NGK Spark Plug Co., Ltd., 1.30%
due 3/29/2002 534,324 544,118 0.60
90,000,000 No. 3 Sony Corp., 1.40% due 9/30/2003 1,061,745 943,235 1.05
----------- ----------- -------
1,596,069 1,487,353 1.65
Leisure 50,000,000 No. 5 Canon Co., 1% due 12/20/2002 639,008 588,235 0.65
Machinery 100,000,000 No. 8 Matsushita Electric Works, Ltd.,
2.70% due 5/31/2002 1,228,409 1,119,608 1.24
30,000,000 No. 9 NEC Corp., 1.90% due 3/30/2001 380,163 405,000 0.45
30,000,000 No. 2 Nippondenso Co., Ltd., 1.20%
due 12/26/1997 337,449 317,353 0.35
----------- ----------- -------
1,946,021 1,841,961 2.04
<PAGE>
Pharmaceuticals 80,000,000 No. 3 Sankyo Co., Ltd., 0.70% due
3/30/2001 872,081 852,549 0.94
Retail Stores 30,000,000 No. 4 Best Denki Co., Ltd., 1.90%
due 2/28/2002 311,038 319,706 0.35
50,000,000 No. 1 Taiyo Company Ltd., 2.50% due
2/28/2002 594,601 509,314 0.56
----------- ----------- -------
905,639 829,020 0.91
Transportation 50,000,000 No. 6 Keihan Electric Railway Co., Ltd.,
1% due 3/31/2003 539,009 480,882 0.53
50,000,000 No. 1 Nankai Electric Railway Co., Ltd.,
2.70% due 3/30/2001 593,306 523,529 0.58
50,000,000 No. 6 Yamato Transport Co., Ltd., 1.70%
due 9/30/2002 539,151 531,863 0.59
----------- ----------- -------
1,671,466 1,536,274 1.70
Total Investments in Japanese
Convertible Bonds 13,656,104 12,900,587 14.27
Total Investments in Pacific
Basin Securities 20,670,937 19,303,554 21.36
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
WESTERN Shares Value Percent of
EUROPE Industries Held Common Stocks Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C>
United Kingdom Business Services 71,944 ++Cordiant PLC (Ordinary) (b) $ 217,005 $ 98,988 0.11%
Total Investments in United Kingdom
Common Stocks 217,005 98,988 0.11
Face Amount Convertible Bonds
France Auto & Truck Ffr 10,000 Peugeot S.A., 2% due 1/01/2001 (Units) 1,851,331 1,979,732 2.19
Leisure 4,200,000 Euro Disney SCA, 6.75% due 10/01/2001 686,297 733,954 0.81
Pharmaceuticals 7,000 Sanofi S.A., 4% due 1/01/2000 (Units) 498,434 523,083 0.58
Total Investments in French
Convertible Bonds 3,036,062 3,236,769 3.58
<PAGE>
United Kingdom Business Pound 1,000,000 Hanson Trust PLC, 9.50% due 1/31/2006 1,651,296 1,593,361 1.76
Services Sterling
Food & Pound 1,000,000 Allied-Lyons PLC, 6.75% due 7/07/2008 1,676,191 1,526,148 1.69
Beverage Sterling
US$ 1,500,000 Grand Metropolitan PLC, 6.50% due
1/31/2000 1,612,500 1,695,000 1.88
Pound 550,000 Northern Foods PLC, 6.75% due 8/08/2008 867,775 726,304 0.80
Sterling ----------- ----------- -------
4,156,466 3,947,452 4.37
Oil & 1,200,000 EE Finance, 8.75% due 6/27/2006 1,860,229 1,878,822 2.08
Related
Total Investments in United Kingdom
Convertible Bonds 7,667,991 7,419,635 8.21
Total Investments in Western European
Securities 10,921,058 10,755,392 11.90
Face Amount Short-Term Securities
United States Commercial Paper* US$ 4,068,000 General Electric Capital Corp., 5.85%
due 11/01/1995 4,068,000 4,068,000 4.50
US Government & US Treasury Bills:
Agency Obligations* 2,500,000 5.18% due 11/16/1995 2,494,604 2,494,604 2.76
1,733,000 5.20% due 11/16/1995 1,729,245 1,729,245 1.91
----------- ----------- -------
4,223,849 4,223,849 4.67
Total Investments in Short-Term Securities 8,291,849 8,291,849 9.17
Total Investments $92,202,081 89,620,791 99.15
===========
Unrealized Appreciation on Forward Foreign Exchange Contracts** 193,435 0.21
Other Assets Less Liabilities 577,152 0.64
----------- -------
Net Assets $90,391,378 100.00%
=========== =======
<PAGE>
<FN>
++Non-income producing security.
(a)American Depositary Receipts (ADR).
(b)Formerly Saatchi & Saatchi Co., PLC.
*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 October 31, 1995 are as follows:
<CAPTION>
Unrealized
Appreciation
(Depreciation)
Foreign Currency Sold Expiration Date (Note 1c)
<S> <S> <C>
Frf 2,500,000 December 1995 $ (786)
YEN 500,000,000 November 1995 194,221
Total Unrealized Appreciation--Net on Forward Foreign
Exchange Contracts (US$ Commitment--$5,623,096) $193,435
========
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of October 31, 1995
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$92,202,081) (Note 1a) $ 89,620,791
Unrealized appreciation on forward foreign exchange contracts (Note 1c) 193,435
Cash 544
Receivables:
Interest $ 809,769
Capital shares sold 201,129
Dividends 14,167 1,025,065
-----------
Prepaid expenses (Note 1f) 29,297
------------
Total assets 90,869,132
------------
Liabilities: Payables:
Capital shares redeemed 267,863
Distributor (Note 2) 59,158
Investment adviser (Note 2) 53,838 380,859
------------
Accrued expenses and other liabilities 96,895
------------
Total liabilities 477,754
------------
<PAGE>
Net Assets: Net assets $ 90,391,378
============
Net Assets Class A Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized $ 220,620
Consist of: Class B Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized 544,624
Class C Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized 42,774
Class D Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized 32,636
Paid-in capital in excess of par 87,164,944
Undistributed investment income--net 931,245
Undistributed realized capital gains on investments and foreign currency
transactions--net 3,843,618
Unrealized depreciation on investments and foreign currency transactions--net (2,389,083)
------------
Net assets $ 90,391,378
============
Net Asset Class A--Based on net assets of $23,633,829 and 2,206,197 shares outstanding $ 10.71
Value: ============
Class B--Based on net assets of $58,659,692 and 5,446,237 shares outstanding $ 10.77
============
Class C--Based on net assets of $4,598,551 and 427,738 shares outstanding $ 10.75
============
Class D--Based on net assets of $3,499,306 and 326,365 shares outstanding $ 10.72
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
For the Year Ended October 31, 1995
<S> <C> <C> <C>
Investment Interest and discount earned (net of $20,462 foreign withholding tax) $ 5,414,906
Income Dividends (net of $726 foreign withholding tax) 991,934
(Notes 1d & 1e): ------------
Total income 6,406,840
------------
<PAGE>
Expenses: Account maintenance and distribution fees--Class B (Note 2) $ 881,358
Investment advisory fees (Note 2) 779,627
Transfer agent fees--Class B (Note 2) 277,707
Printing and shareholder reports 151,132
Registration fees (Note 1f) 99,085
Professional fees 94,953
Transfer agent fees--Class A (Note 2) 66,621
Account maintenance and distribution fees--Class C (Note 2) 54,473
Accounting services (Note 2) 47,336
Directors' fees and expenses 46,681
Custodian fees 42,370
Transfer agent fees--Class C (Note 2) 18,499
Transfer agent fees--Class D (Note 2) 9,526
Account maintenance fees--Class D (Note 2) 8,311
Pricing fees 4,654
Other 6,938
------------
Total expenses 2,589,271
------------
Investment income--net 3,817,569
------------
Realized & Realized gain from:
Unrealized Gain Investments--net 3,843,632
(Loss) on Foreign currency transactions--net 756,724 4,600,356
Investments & ------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions--Net Investments--net (1,499,846)
(Notes 1b, 1c, Foreign currency transactions--net 313,800 (1,186,046)
1e & 3): ------------ ------------
Net realized and unrealized gain on investments and foreign currency transactions 3,414,310
------------
Net Increase in Net Assets Resulting from Operations $ 7,231,879
============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Year Ended October 31,
Increase (Decrease) in Net Assets: 1995 1994
<S> <C> <C> <C>
Operations: Investment income--net $ 3,817,569 $ 914,075
Realized gain on investments and foreign currency transactions--net 4,600,356 806,359
Change in unrealized appreciation/depreciation on investments and foreign
currency transactions--net (1,186,046) (1,834,527)
------------ ------------
Net increase (decrease) in net assets resulting from operations 7,231,879 (114,093)
------------ ------------
Dividends & Investment income--net:
Distributions to Class A (983,944) (148,368)
Shareholders Class B (2,414,489) (616,538)
(Note 1g): Class C (162,116) --
Class D (132,498) --
Realized gain on investments--net:
Class A (133,107) (36,309)
Class B (832,533) (244,353)
Class C (20,618) --
Class D (14,017) --
------------ ------------
Net decrease in net assets resulting from dividends and distributions
to shareholders (4,693,322) (1,045,568)
------------ ------------
Capital Share Net increase in net assets derived from capital share transactions 26,499,640 28,124,292
Transactions ------------ ------------
(Note 4):
Net Assets: Total increase in net assets 29,038,197 26,964,631
Beginning of year 61,353,181 34,388,550
------------ ------------
End of year* $ 90,391,378 $ 61,353,181
============ ============
<FN>
*Undistributed investment income--net (Note 1h) $ 931,245 $ 220,749
============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
The following per share data and ratios have been derived Class A
from information provided in the financial statements. For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1995 1994 1993 1992 1991
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 10.75 $ 11.08 $ 9.79 $ 9.39 $ 8.37
Operating ---------- --------- -------- -------- --------
Performance: Investment income--net .42 .33 .23 .21 .25
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net .11 (.27) 1.45 .68 1.22
---------- --------- -------- -------- --------
Total from investment operations .53 .06 1.68 .89 1.47
---------- --------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.46) (.30) (.23) (.25) (.37)
Realized gain on investments--net (.11) (.09) (.16) (.24) (.08)
---------- --------- -------- -------- --------
Total dividends and distributions (.57) (.39) (.39) (.49) (.45)
---------- --------- -------- -------- --------
Net asset value, end of year $ 10.71 $ 10.75 $ 11.08 $ 9.79 $ 9.39
========== ========= ======== ======== ========
Total Investment Based on net asset value per share 5.10% 0.61% 17.64% 10.00% 18.09%
Return:** ========== ========= ======== ======== ========
Ratios to Average Expenses, net of reimbursement 1.38% 1.66% 2.22% 2.47% 2.47%
Net Assets: ========== ========= ======== ======== ========
Expenses 1.38% 1.66% 2.22% 2.86% 2.87%
========== ========= ======== ======== ========
Investment income--net 4.03% 2.97% 2.36% 2.61% 3.16%
========== ========= ======== ======== ========
Supplemental Net assets, end of year (in thousands) $ 23,634 $ 7,850 $ 4,557 $ 2,283 $ 448
Data: ========== ========= ======== ======== ========
Portfolio turnover 101.12% 38.04% 26.02% 4.91% 18.02%
========== ========= ======== ======== ========
<PAGE>
<CAPTION>
The following per share data and ratios have been derived Class B
from information provided in the financial statements. For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1995 1994 1993 1992 1991
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 10.80 $ 11.13 $ 9.84 $ 9.44 $ 8.39
Operating ---------- --------- -------- -------- --------
Performance: Investment income--net .37 .21 .13 .12 .18
Realized and unrealized gain (loss) on
investments and foreign currency transactions--net .05 (.25) 1.46 .67 1.20
---------- --------- -------- -------- --------
Total from investment operations .42 (.04) 1.59 .79 1.38
---------- --------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.34) (.20) (.14) (.15) (.25)
Realized gain on investments--net (.11) (.09) (.16) (.24) (.08)
---------- --------- -------- -------- --------
Total dividends and distributions (.45) (.29) (.30) (.39) (.33)
---------- --------- -------- -------- --------
Net asset value, end of year $ 10.77 $ 10.80 $ 11.13 $ 9.84 $ 9.44
========== ========= ======== ======== ========
Total Investment Based on net asset value per share 4.01% (.37%) 16.45% 8.77% 16.79%
Return:** ========== ========= ======== ======== ========
Ratios to Average Expenses, excluding account maintenance and
Net Assets: distribution fees and net of reimbursement 1.37% 1.69% 2.26% 2.49% 2.50%
========== ========= ======== ======== ========
Expenses, net of reimbursement 2.37% 2.69% 3.26% 3.49% 3.50%
========== ========= ======== ======== ========
Expenses 2.37% 2.69% 3.26% 3.96% 3.88%
========== ========= ======== ======== ========
Investment income--net 2.95% 1.95% 1.32% 1.53% 2.25%
========== ========= ======== ======== ========
Supplemental Net assets, end of year (in thousands) $ 58,660 $ 53,121 $ 29,831 $ 13,975 $ 14,973
Data: ========== ========= ======== ======== ========
Portfolio turnover 101.12% 38.04% 26.02% 4.91% 18.02%
========== ========= ======== ======== ========
<PAGE>
<CAPTION>
Class C Class D
For the For the
For the Period For the Period
The following per share data and ratios have been derived Year Oct. 21, Year Oct. 21,
from information provided in the financial statements. Ended 1994++ to Ended 1994++ to
Oct. 31, Oct. 31, Oct. 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 1995 1994++++ 1995 1994++++
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.81 $ 10.74 $ 10.76 $ 10.69
Operating -------- -------- -------- --------
Performance: Investment income--net .36 -- .42 --
Realized and unrealized gain on investments and
foreign currency transactions--net .05 .07 .09 .07
-------- -------- -------- --------
Total from investment operations .41 .07 .51 .07
-------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.36) -- (.44) --
Realized gain on investments--net (.11) -- (.11) --
-------- -------- -------- --------
Total distributions and distributions (.47) -- (.55) --
-------- -------- -------- --------
Net asset value, end of period $ 10.75 $ 10.81 $ 10.72 $ 10.76
======== ======== ======== ========
Total Investment Based on net asset value per share 3.89% .65%+++ 4.87% .65%+++
Return:** ======== ======== ======== ========
Ratios to Average Expenses, excluding account maintenance and
Net Assets: distribution fees 1.41% 4.64%* 1.37% 4.88%*
======== ======== ======== ========
Expenses 2.41% 5.64%* 1.62% 5.13%*
======== ======== ======== ========
Investment income--net 2.99% (1.74%)* 3.79% (1.24%)*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 4,598 $ 203 $ 3,499 $ 179
Data: ======== ======== ======== ========
Portfolio turnover 101.12% 38.04% 101.12% 38.04%
======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
++++Based on average shares outstanding during the period.
+++Aggregate total investment return.
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 four
classes of shares under the Merrill Lynch Select Pricing SM System.
Shares of Class A and Class D are sold with a front-end sales charge.
Shares of Class B and Class C may be subject to a contingent deferred
sales charge. All classes of shares have identical voting, dividend,
liquidation and other rights and the same terms and conditions,
except that Class B, Class C and Class D Shares bear certain expenses
related to the account maintenance of such shares, and Class B and
Class C Shares also bear certain expenses related to the distribution
of such shares. Each class has exclusive voting rights with respect
to matters relating to its account maintenance and distribution
expenditures. The following is a summary of significant accounting
policies followed by the Fund.
(a) Valuation of 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 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 broad-
est 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 Fund's Board of Directors.
<PAGE>
(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.
(c) Derivative financial instruments--The Fund 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.
* Forward foreign exchange contracts--The Fund is authorized to
enter into forward foreign exchange contracts as a hedge against
either specific transactions or portfolio positions. Such contracts
are not entered on the Fund's records. However, the effect on opera-
tions is recorded from the date the Fund enters into such contracts.
Premium or discount is amortized over the life of the contracts.
* Foreign currency options and futures--The Fund may also purchase
or sell listed or over-the-counter foreign currency options, foreign
currency futures and related options on foreign currency futures as
a short or long hedge against possible variations in foreign exchange
rates. Such transactions may be effected with respect to hedges on
non-US dollar denominated securities owned by the Fund, sold by
the Fund but not yet delivered, or committed or anticipated to be
purchased by the Fund.
* Financial futures contracts--The Fund may purchase or sell
interest rate futures contracts and options on such futures con-
tracts for the purpose of hedging the market risk on existing securi-
ties or the intended purchase of securities. Futures contracts are
contracts for delayed delivery of securities at a specific future date
and at a specific price or yield. Upon entering into a contract, the
Fund deposits and maintains as collateral such initial margin as
required by the exchange on which the transaction is effected.
Pursuant to the contract, the Fund agrees to receive from or pay
to the broker an amount of cash equal to the daily fluctuation in
value of the contract. Such receipts or payments are known as
variation margin and are recorded by the Fund as unrealized
gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of
the contract at the time it was opened and the value at the time
it was closed.
<PAGE>
* Options--The Fund is authorized to 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 purchased or sold through an exercise of
an option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted
from (or added to) the proceeds of the security sold. When an
option expires (or the Fund enters into a closing transaction), the
Fund realizes a gain or loss on the option to the extent of the
premiums received or paid (or gain or loss to the extent the cost
of the closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing
investments.
(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 trans-
actions 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 divi-
dends from foreign securities are recorded as soon as the Fund is
informed of the ex-dividend date. Interest income (including amor-
tization of discount) 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 Fund are recorded on the ex-dividend dates.
(h) Reclassification--Generally accepted accounting principles
require that certain differences between undistributed net realized
capital gains for financial reporting and tax purposes, if permanent,
be reclassified to undistributed net investment income. Accord-
ingly, current year's permanent book/tax differences of $585,974
have been reclassified from undistributed net realized capital gains
to undistributed net investment income. These reclassifications have
no effect on net assets or net asset values per share.
<PAGE>
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"). 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 Fund 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.
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 MLAM 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.
Pursuant to the distribution plans ("the Distribution Plans") adopted
by the Fund in accordance with Rule 12b-1 under the Investment
Company Act of 1940, the Fund pays the Distributor ongoing account
maintenance and distribution fees. The fees are accrued daily and
paid monthly at annual rates based upon the average daily net
assets of the shares as follows:
Account Distribution
Maintenance Fee Fee
Class B 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 Fund. The ongoing account maintenance fee compensates the
Distributor and MLPF&S for providing account maintenance
services to Class B, Class C and Class D shareholders. The ongoing
distribution fee compensates the Distributor and MLPF&S for
providing shareholder and distribution-related services to Class B
and Class C shareholders.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
For the year ended October 31, 1995, MLFD earned underwriting
discounts and MLPF&S earned dealer concessions on sales of the
Fund's Class A and Class D Shares as follows:
MLFD MLPF&S
Class A $1,587 $17,943
Class D $4,666 $57,847
For the year ended October 31, 1995, MLPF&S received contingent
deferred sales charges of $329,050 and $3,929 relating to transactions
in Class B and Class C Shares, respectively.
In addition, MLPF&S received $4,200 in commissions on the execu-
tion of portfolio security transactions for the Fund for the year
ended October 31, 1995.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), 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 MLAM, PSI, MLPF&S, MLFDS, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended October 31, 1995 were $126,341,654 and
$95,552,264, respectively.
Net realized and unrealized gains (losses) as of October 31, 1995
were as follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
Long-term investments $ 3,844,159 $(2,581,290)
Short-term investments (527) --
Foreign currency transactions 1,037,678 (1,228)
Forward foreign exchange contracts (280,954) 193,435
----------- -----------
Total $ 4,600,356 $(2,389,083)
=========== ===========
<PAGE>
As of October 31, 1995, net unrealized depreciation for Federal
income tax purposes aggregated $2,581,290, of which $1,954,618
related to appreciated securities and $4,535,908 related to depreciated
securities. At October 31, 1995, the aggregate cost of investments
for Federal income tax purposes was $92,202,081.
4. Capital Share Transactions:
Net increase in net assets derived from capital share transactions
was $26,499,640 and $28,124,292 for the years ended October 31,
1995 and October 31, 1994, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Year Dollar
Ended October 31, 1995 Shares Amount
Shares sold 4,429,386 $47,904,765
Shares issued to shareholders in reinvest-
ment of dividends and distributions 91,827 983,674
----------- -----------
Total issued 4,521,213 48,888,439
Shares redeemed (3,044,979) (33,329,139)
----------- -----------
Net increase 1,476,234 $15,559,300
=========== ===========
Class A Shares for the Year Dollar
Ended October 31, 1994 Shares Amount
Shares sold 552,279 $ 5,969,087
Shares issued to shareholders in reinvest-
ment of dividends and distributions 13,838 147,006
----------- -----------
Total issued 566,117 6,116,093
Shares redeemed (247,561) (2,665,037)
----------- -----------
Net increase 318,556 $ 3,451,056
=========== ===========
Class B Shares for the Year Dollar
Ended October 31, 1995 Shares Amount
Shares sold 7,306,514 $77,802,488
Shares issued to shareholders in
reinvestment of dividends
and distributions 244,737 2,595,029
----------- -----------
Total issued 7,551,251 80,397,517
Automatic conversion of shares (159,520) (1,700,100)
Shares redeemed (6,861,967) (75,080,334)
----------- -----------
Net increase 529,764 $ 3,617,083
=========== ===========
<PAGE>
Class B Shares for the Year Dollar
Ended October 31, 1994 Shares Amount
Shares sold 3,053,210 $33,198,057
Shares issued to shareholders in
reinvestment of dividends
and distributions 62,480 619,865
----------- -----------
Total issued 3,115,690 33,817,922
Shares redeemed (878,683) (9,525,443)
----------- -----------
Net increase 2,237,007 $24,292,479
=========== ===========
Class C Shares for the Year Dollar
Ended October 31, 1995 Shares Amount
Shares sold 1,012,755 $10,768,784
Shares issued to shareholders in
reinvestment of dividends
and distributions 13,905 149,071
----------- -----------
Total issued 1,026,660 10,917,855
Shares redeemed (617,701) (6,780,755)
----------- -----------
Net increase 408,959 $ 4,137,100
=========== ===========
Class C Shares for the Period
October 21, 1994++ to Dollar
October 31, 1994 Shares Amount
Shares sold 18,780 $ 202,593
Shares redeemed (1) (11)
----------- -----------
Net increase 18,779 $ 202,582
=========== ===========
[FN]
++Commencement of Operations.
Class D Shares for the Year Dollar
Ended October 31, 1995 Shares Amount
Shares sold 593,147 $ 6,348,782
Automatic conversion of shares 160,026 1,700,100
Shares issued to shareholders in
reinvestment of dividends
and distributions 10,076 107,975
----------- -----------
Total issued 763,249 8,156,857
Shares redeemed (453,469) (4,970,700)
----------- -----------
Net increase 309,780 $ 3,186,157
=========== ===========
<PAGE>
Class D Shares for the Period Dollar
October 21, 1994++ to October 31, 1994 Shares Amount
Shares sold 16,586 $ 178,186
Shares redeemed (1) (11)
----------- -----------
Net increase 16,585 $ 178,175
=========== ===========
[FN]
++Commencement of Operations.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
Merrill Lynch Global Convertible Fund, Inc.:
We have audited the accompanying statement of assets and liabili-
ties, including the schedule of investments, of Merrill Lynch Global
Convertible Fund, Inc. as of October 31, 1995, 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 Fund's management. Our responsibility is
to express an opinion on these financial statements and the finan-
cial 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 October 31, 1995, by correspondence with the custodian
and broker. An audit also includes assessing the accounting princi-
ples 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.
<PAGE>
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Merrill Lynch Global Convertible Fund, Inc. as of October 31, 1995,
the results of its operations, the changes in its net assets, and the
financial highlights for the respective stated period in conformity
with generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
December 4, 1995
</AUDIT-REPORT>
