MERRILL LYNCH
GLOBAL
CONVERTIBLE
FUND, INC.
FUND LOGO
Quarterly Report
July 31, 1997
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.
Statements and other information herein are as dated and are subject
to change.
<PAGE>
Merrill Lynch
Global Convertible
Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
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
Joseph T. Monagle Jr., Senior Vice President
Donald C. Burke, Vice President
Harry E. Dewdney, Vice President and Portfolio Manager
Gerald M. Richard, Treasurer
Lawrence A. Rogers, Secretary
<PAGE>
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
TO OUR SHAREHOLDERS
The quarter ended July 31, 1997 witnessed a continuation of the
financial trends seen since the start of 1997. This included sharply
higher equity markets in the United States as well as in most global
markets, bond prices in the United States pushing higher along with
most other world bond markets, and a firmer US dollar. Overall, this
was a rather favorable environment for global convertible funds.
The key factor during the July quarter which led to a good deal of
the exuberance was the Humphrey-Hawkins testimony by Federal Reserve
Board Chairman Alan Greenspan before Congress in July. This round of
testimony was a most positive assessment of the US economy
indicating healthy growth, invisible inflation and strong corporate
earnings growth with no apparent strain on the economy. Chairman
Greenspan also indicated that he saw no need to raise interest rates
in the near term, but that the Federal Reserve Board must always
watch for signs of renewed inflation. It remains to be seen when and
if Federal Reserve Board policy will change in coming weeks, but as
of now the picture of the economy is quite encouraging.
During the July quarter, European equity and bond markets also were
quite firm, in some cases exceeding the gains in the United States.
However, the strong US dollar has cut into these gains when
investment returns are translated back into US dollars. In July, a
positive month for most markets, the US dollar's rise of another 5%
against most European currencies was a negative factor for dollar-
based investors.
In Asia, the Japanese equity markets continue to be a disappointment
with scant returns so far in 1997. For example, the Nikkei 225 Index
returned only +5.01% through July 31, 1997. Recent economic data has
been weaker than expected. This, combined with scandals and
unfavorable banking results and problems, has led to investor
pessimism. However, the yen-denominated convertible market has had
some support with certain Fund holdings such as Sony Corp.,
Matsushita Electric Industrial Co. and Tokyo Electron Ltd. scoring
excellent gains.
<PAGE>
During the quarter ended July 31, 1997, our strategy was to maintain
a relatively low cash position (5.82% of net assets as of July 31,
1997) to take advantage of the current bullish environment. Our
largest holdings continue to be in the United States (64% of net
assets) because of the strong equity market performance and current
outlook. At the same time, the strong US dollar has made it
practical to limit non-dollar holdings. Nevertheless, we maintained
offshore holdings so as to have exposure to markets that appear
attractive. Our largest exposure outside the United States is in
Japan (18% of net assets) with other lesser allocations in France,
the United Kingdom, Holland and Hong Kong. These global holdings
give our Fund a good degree of exposure in markets and issues that
we believe offer attractive total return potential. While the
Japanese market has lagged most others worldwide, our holdings
performed well, as mentioned. It is our opinion that the Japanese
equity market will recover and rally as the economic, political and
financial climate improves.
For the calendar year-to-date period ended July 31, 1997, the Fund's
Class A, Class B, Class C and Class D Shares had total returns of
+15.8%, +15.0%, +15.0% and +15.6%, respectively. This compares
favorably not only with the Lipper Overseas Fund Average of +11.27%,
but also with the Domestic Lipper Convertible Securities Fund
Average of +15.39% for the same period. (Complete performance
information, including average annual total returns, can be found on
pages 4--7 of this report to shareholders.)
It is our opinion that worldwide conditions in the coming weeks will
be rather volatile but still favorable for the Fund. Interest rates
are likely to be steady to lower in the United States with higher
equity markets prevailing, albeit at a slower rate than we have
seen, and economic conditions will likely continue to be
encouraging. We will continue to search out those areas and
opportunities on a worldwide basis to seek to provide attractive
total returns.
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 in the months and years ahead.
Sincerely,
<PAGE>
(Arthur Zeikel)
Arthur Zeikel
President
(Harry E. Dewdney)
Harry E. Dewdney
Vice President and
Portfolio Manager
August 22, 1997
PERFORMANCE DATA
About Fund
Performance
Investors are 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
maintenance 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. (There is no initial
sales charge for automatic share conversions.)
* 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.
<PAGE>
* Class D Shares incur a maximum initial sales charge of 5.25% and
an account maintenance fee of 0.25% (but no distribution fee).
None of the past results shown should be considered a representation
of future performance. Figures shown in the "Average Annual Total
Return" tables as well as the total returns and cumulative total
returns in the "Performance Summary" tables assume reinvestment of
all dividends and capital gains distributions at net asset value on
the ex-dividend date. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
<TABLE>
Performance
Summary--
Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <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
1995 10.29 10.27 -- 1.280 +12.54
1996 10.27 10.54 0.190 0.388 + 8.40
1/1/97--7/31/97 10.54 12.09 -- 0.099 +15.77
------ ------
Total $1.225 Total $4.128
Cumulative total return as of 7/31/97: +107.56%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures do not include any sales charge; results would be lower if
sales charge was included.
</TABLE>
<PAGE>
<TABLE>
Performance
Summary--
Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <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
1995 10.35 10.35 -- 1.146 +11.30
1996 10.35 10.63 0.190 0.272 + 7.26
1/1/97--7/31/97 10.63 12.15 -- 0.064 +14.98
------ ------
Total $1.225 Total $3.427
Cumulative total return as of 7/31/97: +93.43%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures do not reflect deduction of any sales charge; results
would be lower if sales charge was deducted.
</TABLE>
<TABLE>
Performance
Summary--
Class C Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $10.74 $10.33 $0.029 $0.162 - 2.03%
1995 10.33 10.34 -- 1.146 +11.43
1996 10.34 10.60 0.190 0.277 + 7.12
1/1/97--7/31/97 10.60 12.13 -- 0.055 +15.03
------ ------
Total $0.219 Total $1.640
Cumulative total return as of 7/31/97: +34.51%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures do not reflect deduction of any sales charge; results
would be lower if sales charge was deducted.
</TABLE>
<PAGE>
PERFORMANCE DATA (concluded)
<TABLE>
Performance
Summary--
Class D Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $10.69 $10.30 $0.029 $0.170 - 1.78%
1995 10.30 10.29 -- 1.252 +12.34
1996 10.29 10.55 0.190 0.365 + 8.04
1/1/97--7/31/97 10.55 12.09 -- 0.092 +15.59
------ ------
Total $0.219 Total $1.879
Cumulative total return as of 7/31/97: +37.80%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures do not include sales charge; results would be lower if
sales charge was included.
</TABLE>
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/97 +16.20% +10.10%
Five Years Ended 6/30/97 +10.45 + 9.27
Inception (11/4/88) through 6/30/97 + 8.30 + 7.63
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
<PAGE>
Class B Shares*
Year Ended 6/30/97 +14.87% +10.87%
Five Years Ended 6/30/97 + 9.29 + 9.29
Inception (2/26/88) through 6/30/97 + 6.87 + 6.87
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 6/30/97 +14.82% +13.82%
Inception (10/21/94) through 6/30/97 +10.02 +10.02
[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*
Year Ended 6/30/97 +15.88% +9.80%
Inception (10/21/94) through 6/30/97 +11.01 +8.81
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
<TABLE>
Recent
Performance
Results
<CAPTION>
12 Month 3 Month
7/31/97 4/30/97 7/31/96 % Change % Change
<S> <C> <C> <C> <C> <C>
ML Global Convertible Fund, Inc. Class A Shares* $12.09 $10.83 $10.25 +20.11%(1) +11.63%
ML Global Convertible Fund, Inc. Class B Shares* 12.15 10.92 10.32 +19.87(1) +11.26
ML Global Convertible Fund, Inc. Class C Shares* 12.13 10.90 10.30 +19.91(1) +11.28
ML Global Convertible Fund, Inc. Class D Shares* 12.09 10.84 10.26 +19.99(1) +11.53
Dow Jones Industrial Average** 8,222.61 7,008.99 5,528.91 +48.72 +17.32
S&P 500 Index** 954.29 801.34 639.95 +49.12 +19.09
++Japan Nikkei Dow Jones 225** 20,331.43 19,151.12 20,692.83 - 1.75 + 6.16
London Financial Times Index** 4,907.50 4,436.00 3,703.20 +32.52 +10.63
ML Global Convertible Fund, Inc. Class A Shares--Total Return* +24.07(2) +11.63
ML Global Convertible Fund, Inc. Class B Shares--Total Return* +22.71(3) +11.26
ML Global Convertible Fund, Inc. Class C Shares--Total Return* +22.67(4) +11.28
ML Global Convertible Fund, Inc. Class D Shares--Total Return* +23.70(5) +11.53
Dow Jones Industrial Average--Total Return** +51.75 +17.83
S&P 500 Index--Total Return** +52.02 +19.58
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
**An unmanaged broad-based Index comprised of common stocks.
++Index is expressed in base currency terms (yen).
(1)Percent change includes reinvestment of $0.190 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.346 per share ordinary
income dividends and $0.190 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.252 per share ordinary
income dividends and $0.190 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.244 per share ordinary
income dividends and $0.190 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.325 per share ordinary
income dividends and $0.190 per share capital gains distributions.
</TABLE>
<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 Food/Beverage/Tobacco 10,000 ConAgra Inc. $ 309,079 $ 703,125 2.30%
States & Household
Metals & Mining 10,000 WHX Corp. 179,350 90,000 0.29
Retail Stores 22,500 Home Depot, Inc. 707,041 1,122,187 3.66
<PAGE>
Total Investments in United States
Common Stocks 1,195,470 1,915,312 6.25
Convertible Preferred Stocks
Canada Oil & Gas Producers 10,000 Occidental Petroleum Corp., Pfd.,
Series A 580,600 960,000 3.13
Total Investments in Canadian
Convertible Preferred Stocks 580,600 960,000 3.13
United Data Processing 20,000 UNISYS Corp., $3.75 Pfd., Series A 1,233,875 851,250 2.78
States
Insurance 10,000 American General Corp., Pfd. 523,200 695,000 2.27
15,000 St. Paul Companies, Inc., Pfd. 784,736 1,059,375 3.46
------------ ------------ -------
1,307,936 1,754,375 5.73
Metals & Mining 30,000 USX Capital Trust I, Pfd. 1,387,500 1,460,625 4.77
20,000 WHX Corp., Pfd., Series B 1,000,150 770,000 2.51
------------ ------------ -------
2,387,650 2,230,625 7.28
Real Estate 20,000 Merry Land & Investment Company,
Investment Trust Inc., Pfd. 509,463 560,000 1.83
Total Investments in United States
Convertible Preferred Stocks 5,438,924 5,396,250 17.62
Face
Amount Convertible Bonds
United Automobile US$ 1,500,000 The Pep Boys--Manny, Moe & Jack,
States Parts 4% due 9/01/1999 1,461,250 1,537,500 5.02
Computer 500,000 Cray Research, Inc., 6.125% due
Services 2/01/2011 510,000 392,500 1.28
Industrial 1,000,000 Rouse Co., 5.75% due 7/23/2002 882,200 1,045,000 3.41
Insurance 500,000 Aegon N.V., 4.75% due 11/01/2004 626,250 1,340,000 4.37
Natural Gas 1,000,000 Consolidated Natural Gas Co.,
7.25% due 12/15/2015 1,045,000 1,105,000 3.61
Oil & Related 1,000,000 Pennzoil Co., 4.75% due 10/01/2003 1,147,500 1,330,000 4.34
Pharmaceuticals 1,500,000 Alza Corp., 5% due 5/01/2006 1,531,250 1,603,125 5.23
<PAGE>
Retail Stores 1,000,000 Home Depot, Inc., 3.25% due
10/01/2001 1,023,250 1,183,750 3.87
Transportation 600,000 Alaska Air Group, Inc., 6.50% due
6/15/2005 625,500 852,750 2.78
Total Investments in United States
Convertible Bonds 8,852,200 10,389,625 33.91
Total Investments in North American
Securities 16,067,194 18,661,187 60.91
<CAPTION>
PACIFIC Shares
BASIN Held Common Stocks
Hong Kong Utilities--Electric 50,000 Shandong Huaneng Power Company Ltd.
(ADR) (a) 503,000 571,875 1.87
Total Investments in Hong Kong
Common Stocks 503,000 571,875 1.87
Japan Financial Services 10,000 Daiwa Securities Co., Ltd. 109,055 68,608 0.23
10,000 Nikko Securities Co., Ltd. 91,790 54,937 0.18
10,000 Yamaichi Securities Co., Ltd. 94,005 21,941 0.07
------------ ------------ -------
294,850 145,486 0.48
Machinery 20,000 Shimadzu Corp. 156,900 99,072 0.32
Trading 50,000 Marubeni Corp. 241,883 208,439 0.68
Total Investments in Japanese
Common Stocks 693,633 452,997 1.48
Face
Amount Convertible Bonds
Hong Kong Food & US $ 1,000,000 Dairy Farms International Holdings
Beverage Ltd., 6.50% due 5/10/2049 905,000 745,000 2.43
Total Investments in Hong Kong
Convertible Bonds 905,000 745,000 2.43
Japan Auto & YEN 25,000,000 No. 2 Toyota Motor Corp., 1.20% due
Truck 1/28/1998 286,365 394,515 1.28
Chemicals 50,000,000 No. 6 Sumitomo Bakelite Co., Ltd.,
1.20% due 9/29/2006 521,478 556,962 1.82
<PAGE>
Electronics 40,000,000 No. 2 Kokusai Electric Co., 1.30%
due 9/30/2002 452,059 459,072 1.50
50,000,000 No. 5 Matsushita Electric Industrial
Co., 1.30% due 3/29/2002 513,387 641,350 2.09
50,000,000 No. 11 Sharp Corp., 1.50% due
9/30/1998 551,096 449,367 1.47
30,000,000 No. 2 Tokyo Electron Ltd., 0.90%
due 9/30/2003 343,548 594,177 1.94
------------ ------------ -------
1,860,090 2,143,966 7.00
Food & 14,000,000 No. 1 Sanyo Coca-Cola Bottling,
Beverage Inc., 0.90% due 6/30/2003 146,267 117,789 0.38
50,000,000 No. 3 Sapporo Breweries, Ltd.,
1.20% due 12/18/2009 525,379 413,502 1.35
------------ ------------ -------
671,646 531,291 1.73
Industrial 30,000,000 No. 3 Sony Corp., 1.40% due 9/30/2003 361,653 539,241 1.76
Machinery 40,000,000 No. 8 Matsushita Electric Works,
Ltd., 2.70% due 5/31/2002 470,637 533,333 1.74
Retail Stores 50,000,000 No. 1 Taiyo Company Ltd., 2.50% due
2/28/2002 594,601 418,565 1.37
Total Investments in Japanese
Convertible Bonds 4,766,470 5,117,873 16.70
Total Investments in Pacific Basin
Securities 6,868,103 6,887,745 22.48
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
WESTERN Shares Percent of
EUROPE Industries Held Common Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Business Services 71,944 Cordiant PLC (Ordinary) $ 170,504 $ 155,953 0.51%
Kingdom
Total Investments in United Kingdom
Common Stocks 170,504 155,953 0.51
<CAPTION>
Face
Amount Convertible Bonds
France Leisure Frf 4,200,000 Euro Disney SCA, 6.75% due 10/01/2001 686,298 763,057 2.49
Pharmaceuticals 7,000 Sanofi S.A., 4% due 1/01/2000 (Units) 498,434 807,144 2.63
<PAGE>
Total Investments in French
Convertible Bonds 1,184,732 1,570,201 5.12
United Food & Pound 500,000 Allied-Lyons PLC, 6.75%
Kingdom Beverage Sterling due 7/07/2008 858,247 801,640 2.62
US$ 500,000 Grand Metropolitan PLC, 6.50% due
1/31/2000 552,500 715,000 2.33
Total Investments in United Kingdom
Convertible Bonds 1,410,747 1,516,640 4.95
Total Investments in Western European
Securities 2,765,983 3,242,794 10.58
SHORT-TERM
SECURITIES Issue
Commercial US$ 1,285,000 General Motors Acceptance Corp.,
Paper* 5.81% due 8/01/1997 1,285,000 1,285,000 4.19
US Government 500,000 US Treasury Bills, 5.08% due
Obligations* 8/21/1997 498,589 498,589 1.63
Total Investments in Short-Term
Securities 1,783,589 1,783,589 5.82
Total Investments $ 27,484,869 30,575,315 99.79
============
Other Assets Less Liabilities 63,045 0.21
------------ -------
Net Assets $ 30,638,360 100.00%
============ =======
Net Asset Class A--Based on net assets of $3,801,135 and
Value: 314,294 shares outstanding $ 12.09
============
Class B--Based on net assets of $18,770,480 and
1,544,294 shares outstanding $ 12.15
============
Class C--Based on net assets of $1,117,040 and
92,103 shares outstanding $ 12.13
============
Class D--Based on net assets of $6,949,705 and
574,727 shares outstanding $ 12.09
============
<PAGE>
<FN>
(a)American Depositary Receipts (ADR).
*Commercial Paper and certain US Government Obligations are traded
on a discount basis; the interest rates shown are the discount rates
paid at the time of purchase by the Fund.
</TABLE>