MERRILL LYNCH
GLOBAL
CONVERTIBLE
FUND, INC.
FUND LOGO
Semi-Annual Report
April 30, 1998
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.
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
Daniel A. Luchansky, Vice President
Gerald M. Richard, Treasurer
Lawrence A. Rogers, Secretary
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
PROXY
RESULTS
<TABLE>
Merrill Lynch Global Convertible Fund, Inc. shareholders voted on
the following proposal. The proposal was approved at a
special shareholder's meeting on April 7, 1998. The description of
the proposal and number of shares voted are as follows:
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
1. To consider and act upon a proposal to approve
the Agreement and Plan of Reorganization between
the Fund and Merrill Lynch Convertible Fund, Inc. 1,252,771 22,320 94,904
</TABLE>
Merrill Lynch Global Convertible Fund, Inc., April 30, 1998
TO OUR SHAREHOLDERS
During the quarter ended April 30, 1998, most global convertible
markets, with the exception of those in the Asian region, realized
notably positive results. US stocks moved steadily higher in the
quarter, recovering after a short, but sharp, downturn in early
January. These impressive gains can be attributed to a variety of
factors including: continued low inflation, aided by declining
energy prices and downward price pressure from Asian imports; high
liquidity among the investing public, as evidenced by record mutual
fund inflows; positive demographic trends; and strong economic
growth. Not surprisingly, these events continue to foster an
increase in investor confidence. Furthermore, the decline of most
Asian markets during the quarter has not yet spread to other global
markets. The European equity markets' performance surpassed that of
the United States, with some indexes posting impressive returns of
more than 20%.
Notwithstanding the historically high stock valuations now afforded
to stocks, the positive economy is seen as just right by equity
investors. The domestic bond market, however, had slightly negative
returns during the quarter, with bond yields rising over the 6%
level for the first time since early December 1997. Since bond
investors traditionally have a contrarian opinion toward a robust
economy, rapid growth and a tight labor market are seen as possible
harbingers of inflation.
For the quarter ended April 30, 1998, the majority of Merrill Lynch
Global Convertible Fund, Inc. remained in domestic issues, at 54% of
net assets. We continued to maintain some exposure to European
markets through our holdings in Great Britain and Finland. Our
exposure to the Pacific Basin remained limited at approximately 9%
of net assets because of continuing uncertainty about the prospect
for recovery in this region.
For the quarter ended April 30, 1998, the Fund's Class A, Class B,
Class C and Class D Shares had total returns of +8.95%, +8.66%,
+8.69% and +8.97%, respectively. The Fund outperformed the Lipper
Overseas Global Convertible Funds Average of 20 funds, which had a
return of +7.79% for the April quarter. The Fund's outperformance is
partially attributable to the strong price gains of some of our
larger holdings, most notably AEGON N.V. and WHX Corp., whose common
stock appreciated 41% and 31%, respectively. (Fund results shown do
not reflect sales charges and would be lower if sales charges were
included. Complete performance information, including average annual
total returns, can be found on pages 3 and 4 of this report to
shareholders.)
We implemented a variety of changes to the portfolio this quarter,
including the addition of Assisted Living Concepts, Inc., a leading
operator of assisted-living residences; Magna International, Inc., a
supplier of original equipment components to the auto industry; and
Metsa-Serla OY, the leading paper company of Finland. We took
profits and eliminated AEGON N.V., Alaska Air Corporation and Sanofi
S.A. from the portfolio since they reached our price targets and the
convertibles reached absolute price levels that no longer provided
downside protection from declines in the common stock price.
Currently, we remain somewhat cautious toward equities, but continue
to view the climate for convertible securities as favorable. We
remain partial toward domestic issues, but are committed to search
globally for appropriate investments. With current equity prices
near the high end of historical valuation ranges (25 times
price/earnings ratio and 6 times price/book value per share for the
unmanaged Standard & Poor's 500 Composite Index), we intend to
remain defensively postured as we place an emphasis on higher
premium, less equity-sensitive, higher credit quality convertible
issues. Compared to equities, convertible securities' total returns
historically capture about three-quarters of a stock market's
advance, but only participate in about half of a market's decline
while having a substantially higher current yield. In addition,
compared to the fixed-income universe, convertible securities are
consistently ranked among the best-performing subcategories as
measured by Lipper Analytical Services over all measured time
periods. For these reasons, we continue to believe that convertible
issues are likely to offer exceptional upside potential during firm
equity and bond markets, while offering a degree of protection when
market conditions become negative.
In Conclusion
This will be our final shareholder report for Merrill Lynch Global
Convertible Fund, Inc. Effective May 11, 1998, Merrill Lynch Global
Convertible Fund, Inc. merged with Merrill Lynch Convertible Fund,
Inc. We thank you for past participation, and we look forward to
your participation in Merrill Lynch Convertible Fund, Inc.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Daniel A. Luchansky)
Daniel A. Luchansky
Vice President and Portfolio Manager
June 8, 1998
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.
* 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 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.
Merrill Lynch Global Convertible Fund, Inc., April 30, 1998
PERFORMANCE DATA (concluded)
<TABLE>
Recent
Performance
Results
<CAPTION>
Ten Years/ Standardized
12 Month 3 Month Since Inception 30-day Yield
Total Return Total Return Total Return As of 4/30/98
<S> <C> <C> <C> <C>
ML Global Convertible Fund, Inc. Class A Shares* +21.54% + 8.95% +125.99% 1.35%
ML Global Convertible Fund, Inc. Class B Shares* +20.21 + 8.66 +106.10 0.41
ML Global Convertible Fund, Inc. Class C Shares* +20.14 + 8.69 + 45.21 0.39
ML Global Convertible Fund, Inc. Class D Shares* +21.23 + 8.97 + 49.79 1.11
Dow Jones Industrial Average** +31.57 +15.10 +463.73/+500.24/+152.56
S&P 500 Index** +41.07 +13.84 +423.55/+466.16/+157.86
Japan Nikkei Dow Jones 225**++ -18.33 - 5.94 -44.04/-42.99/-21.40
London Financial Times Index** +33.64 + 8.61 +223.19/+228.95/+95.47
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included. Total
investment returns are based on changes in net asset values for the
periods shown, and assume reinvestment of all dividends and capital
gains distributions at net asset value on the ex-dividend date. The
Fund's ten-year/inception dates are: Class A Shares, 11/04/88; Class
B Shares, ten years ended 4/30/98; and Class C and Class D Shares,
10/21/94.
**An unmanaged broad-based index comprised of common stocks. Ten
year/since inception total returns are: from 11/04/88 to 4/30/98;
for the ten years ended 4/30/98; and from 10/21/94 to 4/30/98,
respectively.
++Index is expressed in base currency terms (yen).
</TABLE>
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/98 +21.74% +15.35%
Five Years Ended 3/31/98 +10.13 + 8.95
Inception (11/04/88) through 3/31/98 + 8.87 + 8.25
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/98 +20.53% +16.53%
Five Years Ended 3/31/98 + 9.00 + 9.00
Ten Years Ended 3/31/98 + 7.52 + 7.52
[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 3/31/98 +20.37% +19.37%
Inception (10/21/94) through 3/31/98 +10.99 +10.99
[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 3/31/98 +21.45% +15.08%
Inception (10/21/94) through 3/31/98 +11.94 +10.20
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
NORTH Shares Value Percent of
AMERICA Industries Held Common Stocks Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C>
Canada Metals & Mining 20,000 Inco, Limited $ 364,012 $ 351,250 1.35%
Total Investments in Canadian
Common Stocks 364,012 351,250 1.35
United Consumer Products 10,000 RJR Nabisco Holdings Corp. 320,600 278,125 1.07
States
Pharmaceuticals 1,091 ++Crescendo Pharmaceuticals Corp. 12,547 13,365 0.05
Total Investments in United States
Common Stocks 333,147 291,490 1.12
Convertible Preferred Stocks
United Oil & Gas 7,000 Lomak Petroleum, Inc., $5.75 Pfd. (b) 350,000 293,125 1.13
States Producers 10,000 Occidental Petroleum Corp., Pfd.,
Series A 580,600 757,500 2.91
------------ ------------ -------
930,600 1,050,625 4.04
Real Estate 20,000 Merry Land & Investment Company,
Investment Trust Inc., Pfd. 509,462 537,500 2.06
Retail 10,000 Kmart Corp., Financing I, Pfd. 556,850 657,500 2.53
Steel 30,000 USX Capital Trust I, Pfd. 1,387,500 1,531,875 5.89
20,000 WHX Corp., Pfd., Series B 993,700 1,082,500 4.16
------------ ------------ -------
2,381,200 2,614,375 10.05
Total Investments in United States
Convertible Preferred Stocks 4,378,112 4,860,000 18.68
Face
Amount Convertible Bonds
United Assisted Assisted Living Concepts, Inc.:
States Living US$ 300,000 6% due 11/01/2002 300,000 320,250 1.23
200,000 5.625% due 5/01/2003 200,000 191,250 0.74
------------ ------------ -------
500,000 511,500 1.97
Automobile Parts 500,000 Magna International, Inc., 4.875%
due 2/15/2005 (b) 500,000 566,250 2.18
1,500,000 The Pep Boys--Manny, Moe & Jack, 4%
due 9/01/1999 1,461,250 1,470,000 5.65
------------ ------------ -------
1,961,250 2,036,250 7.83
Banking 435,000 BankAtlantic Bancorp, Inc., 5.625%
due 12/01/2007 435,000 517,650 1.99
Construction 300,000 New World Infrastructure, 1% due
4/15/2003 300,000 282,750 1.09
Consumer Products 500,000 Sunbeam Corporation, 5%* due
3/25/2018 (b) 187,117 153,750 0.59
</TABLE>
Merrill Lynch Global Convertible Fund, Inc., April 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (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>
United Environmental US$ 600,000 U.S. Filter Corp., 4.50% due
States 12/15/2001 $ 636,000 $ 642,750 2.47%
(concluded)
Health Services 800,000 PhyCor, Inc., 4.50% due 2/15/2003 744,000 726,000 2.79
Medical 800,000 ThermoTrex Corp., 3.25% due 11/01/2007 800,000 736,000 2.83
Equipment
Mining 250,000 Coeur D'Alene Mines Corp., 7.25% due
10/31/2005 (b) 183,750 229,687 0.88
Office Supplies 600,000 US Office Products Co., 5.50% due
5/15/2003 549,000 562,500 2.16
Oil Service 500,000 Key Energy Group, Inc., 5% due 9/15/2004 417,150 418,750 1.61
Pharmaceuticals 500,000 Alza Corp., 5% due 5/01/2006 522,500 690,625 2.66
Restaurants 350,000 Hometown Buffet, Inc., 7% due 12/01/2002 351,750 456,750 1.76
Retail Stores 250,000 The Home Depot, Inc., 3.25% due
10/01/2001 254,687 388,750 1.49
Scientific 500,000 Thermo Instrument Systems, Inc., 4%
Instruments due 1/15/2005 500,000 552,500 2.12
Total Investments in United States
Convertible Bonds 8,342,204 8,906,212 34.24
Total Investments in North American
Securities 13,417,475 14,408,952 55.39
PACIFIC Shares
BASIN Held Common Stocks
Hong Kong Utilities-- 50,000 Shandong Huaneng Power Company
Electric Ltd. (ADR)(a) 503,000 362,500 1.39
Total Investments in Hong Kong
Common Stocks 503,000 362,500 1.39
Face
Amount Convertible Bonds
Japan Chemicals YEN 50,000,000 No. 6 Sumitomo Bakelite Co., Ltd.,
1.20% due 9/29/2006 521,478 490,382 1.88
Electronics 50,000,000 No. 5 Matsushita Electric Industrial
Co., 1.30% due 3/29/2002 513,387 507,422 1.95
30,000,000 No. 3 Sony Corp., 1.40% due 9/30/2003 361,653 462,133 1.78
30,000,000 No. 2 Tokyo Electron Ltd., 0.90% due
9/30/2003 343,548 379,658 1.46
------------ ------------ -------
1,218,588 1,349,213 5.19
Food & 14,000,000 No. 1 Sanyo Coca-Cola Bottling, Inc.,
Beverage 0.90% due 6/30/2003 146,267 100,939 0.39
Total Investments in Japanese
Convertible Bonds 1,886,333 1,940,534 7.46
Total Investments in Pacific Basin
Securities 2,389,333 2,303,034 8.85
WESTERN
EUROPE
Finland Paper US$ 100,000 Metsa-Serla OY, 4.375% due 10/15/2002 103,250 106,750 0.41
Total Investments in Finnish
Convertible Bonds 103,250 106,750 0.41
United Food & Pound 500,000 Allied-Lyons PLC, 6.75% due 7/07/2008 858,247 883,435 3.40
Kingdom Beverage Sterling
Total Investments in United Kingdom
Convertible Bonds 858,247 883,435 3.40
Total Investments in Western
European Securities 961,497 990,185 3.81
SHORT-TERM
SECURITIES Issue
Commercial US$ 1,297,000 Associates Corp. of North America,
Paper** 5.56% due 5/01/1998 1,297,000 1,297,000 4.98
1,297,000 General Electric Capital Corp., 5.56%
due 5/01/1998 1,297,000 1,297,000 4.99
1,297,000 General Motors Acceptance Corp.,
5.56% due 5/01/1998 1,297,000 1,297,000 4.99
------------ ------------ -------
3,891,000 3,891,000 14.96
US Government 4,259,000 US Treasury Bills, 3.75% due 5/07/1998 4,256,338 4,256,338 16.36
Obligations**
Total Investments in Short-Term
Securities 8,147,338 8,147,338 31.32
Total Investments $ 24,915,643 25,849,509 99.37
============
Other Assets Less Liabilities 162,966 0.63
------------ -------
Net Assets $ 26,012,475 100.00%
============ =======
<FN>
(a)American Depositary Receipts (ADR).
(b)The security may be offered and sold to "qualified institutional
buyers" under Rule 144A of the Securities Act of 1933.
++Non-income producing security .
*Represents a zero coupon bond; the interest rate shown is the
effective yield at the time of purchase.
**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.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Convertible Fund, Inc., April 30, 1998
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of April 30, 1998
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$24,915,643) (Note 1a) $ 25,849,509
Foreign cash (Note 1b) 107,065
Receivables:
Securities sold $ 746,736
Interest 135,167
Dividends 12,580
Capital shares sold 2,491 896,974
------------
Prepaid expenses and other assets (Note 1f) 44,033
------------
Total assets 26,897,581
------------
Liabilities: Payables:
Capital shares redeemed 52,978
Distributor (Note 2) 15,122
Investment adviser (Note 2) 14,150 82,250
------------
Accrued expenses and other liabilities 802,856
------------
Total liabilities 885,106
------------
Net Assets: Net assets $ 26,012,475
============
Net Assets Class A Shares of Common Stock, $0.10 par value, 100,000,000
Consist of: shares authorized $ 30,073
Class B Shares of Common Stock, $0.10 par value, 100,000,000
shares authorized 136,894
Class C Shares of Common Stock, $0.10 par value, 100,000,000
shares authorized 9,099
Class D Shares of Common Stock, $0.10 par value, 100,000,000
shares authorized 54,216
Paid-in capital in excess of par 19,938,008
Accumulated distributions in excess of investment income--net
(Note 1g) (313,151)
Undistributed realized capital gains on investments and foreign
currency transactions--net 5,221,421
Unrealized appreciation on investments and foreign currency
transactions--net 935,915
------------
Net assets $ 26,012,475
============
Net Asset Class A--Based on net assets of $3,404,637 and 300,727 shares
Value: outstanding $ 11.32
============
Class B--Based on net assets of $15,459,015 and 1,368,941 shares
outstanding $ 11.29
============
Class C--Based on net assets of $1,024,797 and 90,989 shares
outstanding $ 11.26
============
Class D--Based on net assets of $6,124,026 and 542,156 shares
outstanding $ 11.30
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended April 30, 1998
<S> <S> <C> <C>
Investment Interest and discount earned (net of $849 foreign withholding tax) $ 356,287
Income Dividends (net of $150 foreign withholding tax) 302,978
(Notes 1d & 1e): ------------
Total income 659,265
------------
Expenses: Investment advisory fees (Note 2) $ 87,914
Account maintenance and distribution fees--Class B (Note 2) 81,609
Professional fees 38,720
Registration fees (Note 1f) 37,221
Printing and shareholder reports 36,379
Accounting services (Note 2) 29,199
Directors' fees and expenses 27,402
Transfer agent fees--Class B (Note 2) 20,643
Custodian fees 8,974
Account maintenance fees--Class D (Note 2) 7,807
Transfer agent fees--Class D (Note 2) 6,995
Account maintenance and distribution fees--Class C (Note 2) 5,633
Transfer agent fees--Class A (Note 2) 3,754
Pricing fees 2,845
Transfer agent fees--Class C (Note 2) 1,504
Other 3,796
------------
Total expenses 400,395
------------
Investment income--net 258,870
------------
Realized & Realized gain (loss) from:
Unrealized Gain Investments--net 4,906,913
(Loss) on Foreign currency transactions--net (61,209) 4,845,704
Investments & ------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions--Net Investments--net (2,421,036)
(Notes 1b, 1c, Foreign currency transactions--net 2,526 (2,418,510)
1e & 3): ------------ ------------
Net realized and unrealized gain on investments and foreign
currency transactions 2,427,194
------------
Net Increase in Net Assets Resulting from Operations $ 2,686,064
============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Convertible Fund, Inc., April 30, 1998
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the
Months Ended Year Ended
April 30, October 31,
Increase (Decrease) in Net Assets: 1998 1997
<S> <S> <C> <C>
Operations: Investment income--net $ 258,870 $ 1,052,103
Realized gain on investments and foreign currency
transactions--net 4,845,704 3,352,084
Change in unrealized appreciation/depreciation on investments
and foreign currency transactions--net (2,418,510) 3,163,032
------------ ------------
Net increase in net assets resulting from operations 2,686,064 7,567,219
------------ ------------
Dividends & Investment income--net:
Distributions to Class A -- (339,437)
Shareholders Class B -- (569,149)
(Note 1g): Class C -- (57,198)
Class D -- (168,936)
In excess of investment income--net:
Class A -- (14,383)
Class B -- (24,118)
Class C -- (2,424)
Class D -- (7,159)
Realized gain on investments--net:
Class A (478,086) (371,547)
Class B (2,387,534) (771,279)
Class C (163,285) (84,137)
Class D (907,417) (171,039)
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (3,936,322) (2,580,806)
------------ ------------
Capital Share Net decrease in net assets derived from capital share transactions (1,659,554) (45,343,049)
Transactions ------------ ------------
(Note 4):
Net Assets: Total decrease in net assets (2,909,812) (40,356,636)
Beginning of period 28,922,287 69,278,923
------------ ------------
End of period $ 26,012,475 $ 28,922,287
============ ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Class A
The following per share data and ratios For the
have been derived from information Six Months
provided in the financial statements. Ended
April 30, For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1998++ 1997++ 1996++ 1995 1994
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.87 $ 10.54 $ 10.71 $ 10.75 $ 11.08
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .15 .33 .32 .42 .33
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net .96 1.47 .62 .11 (.27)
-------- -------- -------- -------- --------
Total from investment operations 1.11 1.80 .94 .53 .06
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net -- (.24) (.48) (.46) (.30)
In excess of investment income--net -- (.01) -- -- --
Realized gain on investments--net (1.66) (.22) (.63) (.11) (.09)
-------- -------- -------- -------- --------
Total dividends and distributions (1.66) (.47) (1.11) (.57) (.39)
-------- -------- -------- -------- --------
Net asset value, end of period $ 11.32 $ 11.87 $ 10.54 $ 10.71 $ 10.75
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 10.89%+++ 17.79% 9.34% 5.10% .61%
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses 2.24%* 1.81% 1.57% 1.38% 1.66%
Net Assets: ======== ======== ======== ======== ========
Investment income--net 2.64%* 3.01% 3.05% 4.03% 2.97%
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 3,404 $ 3,466 $ 17,741 $ 23,634 $ 7,850
Data: ======== ======== ======== ======== ========
Portfolio turnover 71.90% 33.42% 14.72% 101.12% 38.04%
======== ======== ======== ======== ========
Average commission rate paid++++ $ .0523 $ .0607 $ .0679 -- --
======== ======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effect of sales loads.
++Based on average shares outstanding.
++++For fiscal years beginning on or after September 1, 1995, the
Fund is required to disclose its average commission rate per share
for purchases and sales of equity securities. The "Average
Commission Rate Paid" includes commissions paid in foreign
currencies, which have been converted into US dollars using the
prevailing exchange rate on the date of the transaction. Such
conversions may significantly affect the rate shown.
+++Aggregrate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Convertible Fund, Inc., April 30, 1998
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
<CAPTION>
Class B
The following per share data and ratios For the
have been derived from information Six Months
provided in the financial statements. Ended
April 30, For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1998++ 1997++ 1996++ 1995 1994
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.90 $ 10.61 $ 10.77 $ 10.80 $ 11.13
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .09 .21 .21 .37 .21
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net .96 1.49 .62 .05 (.25)
-------- -------- -------- -------- --------
Total from investment operations 1.05 1.70 .83 .42 (.04)
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net -- (.18) (.36) (.34) (.20)
In excess of investment income--net -- (.01) -- -- --
Realized gain on investments--net (1.66) (.22) (.63) (.11) (.09)
-------- -------- -------- -------- --------
Total dividends and distributions (1.66) (.41) (.99) (.45) (.29)
-------- -------- -------- -------- --------
Net asset value, end of period $ 11.29 $ 11.90 $ 10.61 $ 10.77 $ 10.80
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 10.31%+++ 16.56% 8.13% 4.01% (.37%)
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses 3.27%* 2.87% 2.64% 2.37% 2.69%
Net Assets: ======== ======== ======== ======== ========
Investment income--net 1.61%* 1.92% 1.98% 2.95% 1.95%
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 15,459 $ 17,730 $ 38,830 $ 58,660 $ 53,121
Data: ======== ======== ======== ======== ========
Portfolio turnover 71.90% 33.42% 14.72% 101.12% 38.04%
======== ======== ======== ======== ========
Average commission rate paid++++ $ .0523 $ .0607 $ .0679 -- --
======== ======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effect of sales loads.
++Based on average shares outstanding.
++++For fiscal years beginning on or after September 1, 1995, the
Fund is required to disclose its average commission rate per share
for purchases and sales of equity securities. The "Average
Commission Rate Paid" includes commissions paid in foreign
currencies, which have been converted into US dollars using the
prevailing exchange rate on the date of the transaction. Such
conversions may significantly affect the rate shown.
+++Aggregrate total investment return.
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
<CAPTION>
Class C
The following per share data and ratios For the For the
have been derived from information Six Months Period
provided in the financial statements. Ended Oct.21, 1994++
April 30, For the Year Ended October 31, to Oct. 31,
Increase (Decrease) in Net Asset Value: 1998++++ 1997++++ 1996++++ 1995 1994++++
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.87 $ 10.59 $ 10.75 $ 10.81 $ 10.74
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .09 .21 .21 .36 --
Realized and unrealized gain on investments
and foreign currency transactions--net .96 1.47 .62 .05 .07
-------- -------- -------- -------- --------
Total from investment operations 1.05 1.68 .83 .41 .07
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net -- (.17) (.36) (.36) --
In excess of investment income--net -- (.01) -- -- --
Realized gain on investments--net (1.66) (.22) (.63) (.11) --
-------- -------- -------- -------- --------
Total dividends and distributions (1.66) (.40) (.99) (.47) --
-------- -------- -------- -------- --------
Net asset value, end of period $ 11.26 $ 11.87 $ 10.59 $ 10.75 $ 10.81
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 10.32%+++ 16.40% 8.14% 3.89% .65%+++
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses 3.29%* 2.89% 2.65% 2.41% 5.64%*
Net Assets: ======== ======== ======== ======== ========
Investment income (loss)--net 1.64%* 1.91% 1.97% 2.99% (1.74%)*
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 1,025 $ 1,112 $ 4,123 $ 4,598 $ 203
Data: ======== ======== ======== ======== ========
Portfolio turnover 71.90% 33.42% 14.72% 101.12% 38.04%
======== ======== ======== ======== ========
Average commission rate paid++++++ $ .0523 $ .0607 $ .0679 -- --
======== ======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effect of sales loads.
++Commencement of operations.
++++Based on average shares outstanding.
++++++For fiscal years beginning on or after September 1, 1995, the
Fund is required to disclose its average commission rate per share
for purchases and sales of equity securities. The "Average
Commission Rate Paid" includes commissions paid in foreign
currencies, which have been converted into US dollars using the
prevailing exchange rate on the date of the transaction. Such
conversions may significantly affect the rate shown.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Convertible Fund, Inc., April 30, 1998
<TABLE>
FINANCIAL HIGHLIGHTS (concluded)
<CAPTION>
Class D
The following per share data and ratios For the For the
have been derived from information Six Months Period
provided in the financial statements. Ended Oct.21, 1994++
April 30, For the Year Ended October 31, to Oct. 31,
Increase (Decrease) in Net Asset Value: 1998++++ 1997++++ 1996++++ 1995 1994++++
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.86 $ 10.55 $ 10.72 $ 10.76 $ 10.69
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .13 .30 .31 .42 --
Realized and unrealized gain on investments
and foreign currency transactions--net .97 1.47 .61 .09 .07
-------- -------- -------- -------- --------
Total from investment operations 1.10 1.77 .92 .51 .07
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net -- (.23) (.46) (.44) --
In excess of investment income--net -- (.01) -- -- --
Realized gain on investments--net (1.66) (.22) (.63) (.11) --
-------- -------- -------- -------- --------
Total dividends and distributions (1.66) (.46) (1.09) (.55) --
-------- -------- -------- -------- --------
Net asset value, end of period $ 11.30 $ 11.86 $ 10.55 $ 10.72 $ 10.76
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 10.81%+++ 17.41% 9.07% 4.87% .65%+++
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses 2.49%* 2.09% 1.77% 1.62% 5.13%*
Net Assets: ======== ======== ======== ======== ========
Investment income (loss)--net 2.38%* 2.69% 2.85% 3.79% (1.24%)*
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 6,124 $ 6,614 $ 8,585 $ 3,499 $ 179
Data: ======== ======== ======== ======== ========
Portfolio turnover 71.90% 33.42% 14.72% 101.12% 38.04%
======== ======== ======== ======== ========
Average commission rate paid++++++ $ .0523 $ .0607 $ .0679 -- --
======== ======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effect of sales loads.
++Commencement of operations.
++++Based on average shares outstanding.
++++++For fiscal years beginning on or after September 1, 1995, the
Fund is required to disclose its average commission rate per share
for purchases and sales of equity securities. The "Average
Commission Rate Paid" includes commissions paid in foreign
currencies, which have been converted into US dollars using the
prevailing exchange rate on the date of the transaction. Such
conversions may significantly affect the rate shown.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
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
diversified, open-end management investment company. These unaudited
financial statements reflect all adjustments which are, in the
opinion of management, necessary to a fair statement of the results
for the interim period presented. All such adjustments are of a
normal recurring nature. 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
broadest 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.
(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) assets or liabilities 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
operations 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.
Merrill Lynch Global Convertible Fund, Inc., April 30, 1998
NOTES TO FINANCIAL STATEMENTS (continued)
* Financial futures contracts--The Fund may purchase or sell
financial futures contracts and options on such futures contracts
for the purpose of hedging the market risk on existing securities 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.
* 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 by imposed on interest, dividends, and capital
gains at various rates.
(e) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Dividend income is recorded on the ex-
dividend dates. Dividends from foreign securities where the ex-
dividend date may have passed are subsequently recorded when the
Fund has determined the ex-dividend date. Interest income (including
amortization of discount) is recognized on the accrual basis.
Realized gains and losses on security transactions are determined on
the identified cost basis.
(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. Distributions in
excess of net investment income are due primarily to differing tax
treatments for foreign currency transactions.
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.
Pursuant to 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.
For the six months ended April 30, 1998, 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 $ 10
Class D $77 $945
For the six months ended April 30, 1998, MLPF&S received contingent
deferred sales charges of $2,391 and $239 relating to transactions
in Class B and Class C Shares, respectively.
In addition, MLPF&S received $3,306 in commissions on the execution
of portfolio security transactions for the Fund for the six months
ended April 30, 1998.
During the six months ended April 30, 1998, the Fund paid Merrill
Lynch Security Pricing Service, an affiliate of MLPF&S, $76 for
security price quotations to compute the net asset value of the
Fund.
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, MLFDS, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended April 30, 1998 were $16,864,276 and
$25,066,032, respectively.
Net realized gains (losses) for the six months ended April 30, 1998
and net unrealized gains as of April 30, 1998 were as follows :
Realized
Gains Unrealized
(Losses) Gains
Long-term investments $ 5,578,799 $ 933,866
Short-term investments 29 --
Short sales (671,915) --
Foreign currency transactions (61,209) 2,049
------------ ------------
Total $ 4,845,704 $ 935,915
============ ============
As of April 30, 1998, net unrealized appreciation for Federal income
tax purposes aggregated $933,866, of which $1,410,234 related to
appreciated securities and $476,368 related to depreciated
securities. At April 30, 1998, the aggregate cost of investments for
Federal income tax purposes was $24,915,643.
4. Capital Share Transactions:
Net decrease in net assets derived from capital share transactions
were $1,659,554 and $45,343,049 for the six months ended April 30,
1998 and the year ended October 31, 1997, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Six Months Dollar
Ended April 30, 1998 Shares Amount
Shares sold 31,621 $ 344,581
Shares issued to shareholders in
reinvestment of distributions 41,966 428,466
------------ ------------
Total issued 73,587 773,047
Shares redeemed (64,849) (706,694)
------------ ------------
Net increase 8,738 $ 66,353
============ ============
Class A Shares for the Year Dollar
Ended October 31, 1997 Shares Amount
Shares sold 1,031,544 $ 11,066,318
Shares issued to shareholders in
reinvestment of dividends
and distributions 59,638 620,254
------------ ------------
Total issued 1,091,182 11,686,572
Shares redeemed (2,482,772) (26,937,299)
------------ ------------
Net decrease (1,391,590) $(15,250,727)
============ ============
Class B Shares for the Six Months Dollar
Ended April 30, 1998 Shares Amount
Shares sold 76,238 $ 814,073
Shares issued to shareholders in
reinvestment of distributions 177,101 1,809,979
------------ ------------
Total issued 253,339 2,624,052
Shares redeemed (374,560) (4,099,771)
------------ ------------
Net decrease (121,221) $ (1,475,719)
============ ============
Merrill Lynch Global Convertible Fund, Inc., April 30, 1998
NOTES TO FINANCIAL STATEMENTS (concluded)
Class B Shares for the Year Dollar
Ended October 31, 1997 Shares Amount
Shares sold 314,434 $ 3,542,687
Shares issued to shareholders in
reinvestment of dividends
and distributions 99,185 1,040,450
------------ ------------
Total issued 413,619 4,583,137
Automatic conversion of shares (28,947) (322,485)
Shares redeemed (2,553,205) (28,269,334)
------------ ------------
Net decrease (2,168,533) $(24,008,682)
============ ============
Class C Shares for the Six Months Dollar
Ended April 30, 1998 Shares Amount
Shares sold 13,585 $ 150,763
Shares issued to shareholders in
reinvestment of distributions 13,085 133,469
------------ ------------
Total issued 26,670 284,232
Shares redeemed (29,352) (321,229)
------------ ------------
Net decrease (2,682) $ (36,997)
============ ============
Class C Shares for the Year Dollar
Ended October 31, 1997 Shares Amount
Shares sold 45,903 $ 515,280
Shares issued to shareholders in
reinvestment of dividends
and distributions 11,375 118,943
------------ ------------
Total issued 57,278 634,223
Shares redeemed (352,854) (3,888,088)
------------ ------------
Net decrease (295,576) $ (3,253,865)
============ ============
Class D Shares for the Six Months Dollar
Ended April 30, 1998 Shares Amount
Shares sold 49,631 $ 576,648
Shares issued to shareholders in
reinvestment of distributions 60,837 620,538
------------ ------------
Total issued 110,468 1,197,186
Shares redeemed (125,953) (1,410,377)
------------ ------------
Net decrease (15,485) $ (213,191)
============ ============
Class D Shares for the Year Dollar
Ended October 31, 1997 Shares Amount
Shares sold 40,916 $ 459,749
Automatic conversion of shares 29,028 322,485
Shares issued to shareholders in
reinvestment of dividends
and distributions 23,285 243,244
------------ ------------
Total issued 93,229 1,025,478
Shares redeemed (349,497) (3,855,253)
------------ ------------
Net decrease (256,268) $ (2,829,775)
============ ============
5. Commitments:
At April 30, 1998, the Fund had entered into foreign exchange
contracts under which it had agreed to sell various foreign
currencies with an approximate value of $748,000.
6. Acquisition of the Fund by Merrill Lynch Convertible
Fund, Inc.:
On May 11, 1998, Merrill Lynch Convertible Fund, Inc. acquired all
of the net assets of the Fund pursuant to a plan of reorganization.
The acquisition was accomplished by a tax-free exchange of 2,709,866
Common Stock shares of the Fund for 1,792,015 Common Stock shares of
Merrill Lynch Convertible Fund, Inc. The Fund's net assets on that
date of $24,651,436, including $838,915 of unrealized appreciation
and $30,089 of accumulated net realized capital losses, were
combined with those of Merrill Lynch Convertible Fund, Inc. The
aggregate net assets of Merrill Lynch Convertible Fund, Inc.
immediately after the acquisition amounted to $114,949,653.
