1
EXHIBIT (17)(e)
MERRILL LYNCH GLOBAL HOLDINGS, INC.
Worldwide
Investments
As of 5/31/98
PERCENT OF
TEN LARGEST INDUSTRIES NET ASSETS
Banking....................... 11.3%
Software -- Computer.......... 7.7
Retail Specialty.............. 7.3
Electronics................... 6.7
Chemicals..................... 5.8
Insurance..................... 5.3
Multi-Industry................ 5.0
Communications Equipment...... 4.8
Pharmaceuticals............... 4.0
Electrical Equipment.......... 2.9
COUNTRY OF PERCENT OF
TEN LARGEST EQUITY HOLDINGS ORIGIN NET ASSETS
SAP AG (Preferred) ...................... Germany 3.9%
Siebe PLC ............................... United Kingdom 2.4
Home Depot, Inc. ........................ United States 2.3
Capita Group PLC ........................ United Kingdom 2.3
Mercury General Corp. ................... United States 2.3
Pfizer, Inc. ............................ United States 2.2
Stone Container Corporation ............. United States 2.1
Akzo Nobel N.V. ......................... Netherlands 2.0
SKW Trostberg AG ........................ Germany 2.0
The Royal Bank of Scotland Group
PLC ................................... United Kingdom 2.0
2
MERRILL LYNCH GLOBAL HOLDINGS, INC., MAY 31, 1998
DEAR SHAREHOLDER
For the quarter ended May 31, 1998, the total returns for Merrill Lynch Global
Holdings, Inc.'s Class A, Class B, Class C and Class D Shares were +4.24%,
+4.01%, +4.03% and +4.19%, respectively. The Fund outperformed the unmanaged
Morgan Stanley Capital International World Index, which had a total return of
+3.88%. (Complete performance information can be found on pages 4 and 5 of this
report to shareholders.)
Early in the May quarter, we started to restructure the portfolio in an effort
to improve overall investment returns. For some time we have anticipated that
business and social conditions in the developing countries of Asia would not be
significantly improving in the near future. This has negative implications for
industrial and commodity-oriented companies, including energy companies. One
such implication is a slowing of global real economic growth resulting from the
recessions in the developing countries of Asia as well as in Japan.
Consequently, in the energy sector we eliminated holdings in Philip Services
Corp., Global Industries Ltd., Transocean Offshore Inc., Yacimientos
Petroliferos Fiscales S.A. (YPF), Enterprise Oil PLC, Fred Olsen Energy ASA and
PTT Exploration and Production Public Co. In the basic steel industry sector, we
eliminated our positions in Ispat International N.V. and Kennametal, Inc.
because of our concerns about shortfalls in earnings as real growth on a global
basis is reduced by the recessions in major developing economies in Asia.
In addition, large steel producers in Asia are likely to take market share from
producers in other countries as a result of the rapid and steep depreciation of
some of the Asian currencies. After a review of the companies and local
economies, we eliminated all of the equity holdings in Thailand, Malaysia and
Indonesia. Fortunately, the stock markets of these countries and most of the
eliminated holdings had risen to recent high stock price levels in March 1998
when we were liquidating the positions. Consequently, we significantly reduced
the portfolio's exposures to Asian companies, as well as basic industry and
energy companies, during March.
We added seven companies to the portfolio during the May quarter. These were SAP
AG, Microsoft Corporation, National Westminster Bank PLC, Royal & Sun Alliance
Insurance Group PLC, Cap Gemini S.A., Groupe Danone S.A. and Sprint Corporation.
SAP AG is the largest holding in the portfolio. In our opinion, this German
software firm is the leading company in what we anticipate to be one of the
largest and most rapidly growing markets over the next five years. Business
organizations of all sizes, all over the globe, appear to be moving their
operational systems onto networked business applications where tens of thousands
of employees, suppliers and customers can communicate over either the public
telecommunication systems or the Internet to carry on their business. We added
Microsoft Corporation because of the rapid growth the company is likely to
experience as it gains market share in the large-scale enterprise computer
software market, while maintaining a healthy share of the personal computer
operational and applications software markets. We purchased shares of Cap
Gemini S.A. in France since this organization is one of the global leaders in
technology systems consulting and is growing rapidly. We added National
Westminster Bank PLC and Royal & Sun Alliance Insurance Group PLC as
attractively valued investments where their respective managements are working
to improve returns by restructuring their businesses. Also, we anticipate that
these companies will be involved in mergers and acquisitions activity in the
United Kingdom as the financial services industries are rationalized, in a
manner similar to what has happened in the United States over the last 15 years.
Groupe Danone S.A. in France is a leading food and beverage manufacturer and
distributor. Management is doing an outstanding job of improving rates of return
and earnings growth by restructuring the company, in our view. Finally, Sprint
Corporation is an attractively valued long distance telecommunications and
digital cellular services company.
IN CONCLUSION
We plan to work steadily toward improving the returns and risk profile of
Merrill Lynch Global Holdings, Inc. We believe that significant progress was
made during the May quarter by reducing the portfolio's exposure to companies in
Asia and to companies in the energy and industrial sectors that may experience
declines in earnings relative to expectations. We appreciate your investment in
Merrill Lynch Global Holdings, Inc., and we look forward to updating you on our
progress in future shareholder reports.
Sincerely,
/s/ Arthur Zeikel
- -----------------
Arthur Zeikel
President
/s/ Lawrence R. Fuller
- ----------------------
Lawrence R. Fuller
Senior Vice President and
Portfolio Manager
July 2, 1998
2
3
OFFICERS AND
DIRECTORS
Arthur Zeikel, President and Director
Donald Cecil, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Edward D. Zinbarg, Director
Terry K. Glenn, Executive Vice President
Lawrence R. Fuller, Senior Vice President and
Portfolio Manager
Norman R. Harvey, Senior Vice President
Philip L. Kirstein, Senior Vice President
Donald C. Burke, Vice President
Gerald M. Richard, Treasurer
Philip M. Mandel, Secretary
CUSTODIAN
The Chase Manhattan Bank, N. A.
Global Securities Services
4 Chase MetroTech Center, 18th Floor
Brooklyn, NY 11245
TRANSFER AGENT
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
3
4
MERRILL LYNCH GLOBAL HOLDINGS, INC., MAY 31, 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.
RECENT
PERFORMANCE
RESULTS*
TEN YEARS/
12 MONTH 3 MONTH SINCE INCEPTION
TOTAL RETURN TOTAL RETURN TOTAL RETURN
- ------------------------------------------------------------------------------------------------
ML GLOBAL HOLDINGS, INC. CLASS A SHARES +11.02% +4.24% +170.88%
- ------------------------------------------------------------------------------------------------
ML GLOBAL HOLDINGS, INC. CLASS B SHARES + 9.93 +4.01 +140.64
- ------------------------------------------------------------------------------------------------
ML GLOBAL HOLDINGS, INC. CLASS C SHARES + 9.90 +4.03 + 44.18
- ------------------------------------------------------------------------------------------------
ML GLOBAL HOLDINGS, INC. CLASS D SHARES +10.73 +4.19 + 48.31
- ------------------------------------------------------------------------------------------------
WORLD STOCK INDEX** +20.02 +3.88 +181.14/+163.35/+74.48
- ------------------------------------------------------------------------------------------------
* Investment results shown for each of the Company's classes of shares do not
reflect sales charges; results shown would be lower if a sales charge was
included. The Company's total reinvestment 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 Company's ten-year/since inception dates are: Class A Shares, ten years
ended 5/31/98; Class B Shares, 10/21/88; and Class C and Class D Shares,
10/21/94.
**The Morgan Stanley Capital International World Stock Index is an unmanaged US
dollar-denominated index of world stock markets compiled by Capital
International Perspective S.A. and published in Morgan-Stanley Capital
International Perspective. Ten years/since inception total returns are: for
the ten years ended 5/31/98; from 10/31/88 to 5/31/98; and from 10/31/94 to
5/31/98, respectively.
4
5
5
AVERAGE ANNUAL
TOTAL RETURN
% RETURN WITHOUT % RETURN WITH
SALES CHARGE SALES CHARGE**
- --------------------------------------------------------------------
CLASS A SHARES*
- --------------------------------------------------------------------
Year Ended 3/31/98 +18.31% +12.10%
- --------------------------------------------------------------------
Five Years Ended 3/31/98 +12.48 +11.27
- --------------------------------------------------------------------
Ten Years Ended 3/31/98 +10.33 + 9.73
- --------------------------------------------------------------------
* Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% RETURN % RETURN
WITHOUT CDSC WITH CDSC**
- ------------------------------------------------------------------------
CLASS B SHARES*
- ------------------------------------------------------------------------
Year Ended 3/31/98 +17.06% +13.06%
- ------------------------------------------------------------------------
Five Years Ended 3/31/98 +11.30 +11.30
- ------------------------------------------------------------------------
Inception (10/21/88) through 3/31/98 + 9.62 + 9.62
- ------------------------------------------------------------------------
* 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 +17.05% +16.05%
- ------------------------------------------------------------------------
Inception (10/21/94) through 3/31/98 +10.88 +10.88
- ------------------------------------------------------------------------
* 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 +18.02% +11.83%
- --------------------------------------------------------------------------
Inception (10/21/94) through 3/31/98 +11.78 +10.05
- --------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
6
MERRILL LYNCH GLOBAL HOLDINGS, INC., MAY 31, 1998
SCHEDULE OF INVESTMENTS (IN US DOLLARS)
LATIN Shares
AMERICA Industries Held Investments Cost
- ------------------------------------------------------------------------------------------------------------------------
Argentina BANKING 146,875 Banco de Galicia y Buenos Aires S.A.(ADR)* $ 3,084,280
-------------------------------------------------------------------------------------------------------
MULTI-INDUSTRY 278,810 Compania Naviera Perez Companc S.A.C.F.I.M.F.A. 1,023,485
-------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN ARGENTINA 4,107,765
===========
-------------------------------------------------------------------------------------------------------
Brazil FOREST PRODUCTS 100,000 Aracruz Celulose S.A. (ADR)* 1,835,000
-------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS 30,000,000 Telecommunicacoes Brasileiras S.A. -- Telebras PN
(Preferred) 1,069,928
-------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN BRAZIL 2,904,928
==========
-------------------------------------------------------------------------------------------------------
Mexico CHEMICALS 150,000 DESC, Sociedad de Fomento Industrial,S.A. de C.V.
(ADR)* 4,366,491
------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES 2,000,000 +Grupo Financiero Banorte, S.A. de C.V. (Class B) 2,113,918
----------
TOTAL INVESTMENTS IN MEXICO 6,480,409
- ------------------------------------------------------------------------------------------------------------------------
Panama BANKING 75,000 Banco Latinoamericano de Exportaciones, S.A.
(E Shares) 3,704,425
------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN PANAMA 3,704,425
==========
------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN LATIN AMERICA 17,197,527
==========
- ------------------------------------------------------------------------------------------------------------------------
MIDDLE
EAST
- ------------------------------------------------------------------------------------------------------------------------
Israel COMMUNICATIONS EQUIPMENT 150,000 +NICE -- Systems Ltd. (ADR)* 3,331,379
----------
TOTAL INVESTMENTS IN THE MIDDLE EAST 3,331,379
==========
- ------------------------------------------------------------------------------------------------------------------------
NORTH
AMERICA
- ------------------------------------------------------------------------------------------------------------------------
Canada CHEMICALS 300,000 Agrium, Inc. 4,041,373
-------------------------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT 20,000 Northern Telecom Ltd. 294,975
-------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN CANADA 4,336,348
==========
- ------------------------------------------------------------------------------------------------------------------------
United States BANKING 120,000 Bank of New York, Inc. (The) 3,130,284
95,000 Northern Trust Corporation 3,777,776
65,000 Wachovia Corporation 4,173,125
----------
11,081,185
-------------------------------------------------------------------------------------------------------
Communications Equipment 97,500 +Cisco Systems, Inc. 3,206,875
-------------------------------------------------------------------------------------------------------
Electronics 85,000 Intel Corp. 1,087,344
90,000 Texas Instruments Inc. 2,012,563
----------
3,099,907
-------------------------------------------------------------------------------------------------------
Environmental Control 200,000 +US Filter Corp. 6,297,223
-------------------------------------------------------------------------------------------------------
Insurance 150,000 Mercury General Corp. 3,010,895
80,000 PMI Group, Inc. (The) 4,385,425
----------
7,396,320
-------------------------------------------------------------------------------------------------------
LATIN Value Percent of
AMERICA Industries (Note 1a) Net Assets
- -------------------------------------------------------------------
Argentina BANKING $ 3,010,938 0.7%
---------------------------------------------
MULTI-INDUSTRY 1,536,981 0.4
---------------------------------------------
4,547,919 1.1
- -------------------------------------------------------------------
Brazil FOREST PRODUCTS 1,350,000 0.3
---------------------------------------------------
TELECOMMUNICATIONS 3,182,332 0.8
---------------------------------------------
4,532,332 1.1
- -------------------------------------------------------------------
Mexico CHEMICALS 3,393,750 0.8
---------------------------------------------------
FINANCIAL SERVICES 2,723,250 0.6
---------------------------------------------
6,117,000 1.4
- -------------------------------------------------------------------
Panama BANKING 2,512,500 0.6
---------------------------------------------
2,512,500 0.6
---------------------------------------------------
17,709,751 4.2
- -------------------------------------------------------------------
MIDDLE
EAST
- -------------------------------------------------------------------
Israel COMMUNICATIONS EQUIPMENT 5,446,875 1.3
---------------------------------------------
5,446,875 1.3
- -------------------------------------------------------------------
NORTH
AMERICA
- -------------------------------------------------------------------
Canada CHEMICALS 4,249,175 1.0
---------------------------------------------------
COMMUNICATIONS EQUIPMENT 1,280,000 0.3
---------------------------------------------
5,529,175 1.3
- -------------------------------------------------------------------
United States BANKING 7,335,000 1.7
6,697,500 1.6
5,204,063 1.2
---------- ----
19,236,563 4.5
---------------------------------------------------
COMMUNICATIONS EQUIPMENT 7,361,250 1.7
---------------------------------------------------
ELECTRONICS 6,066,875 1.4
4,623,750 1.1
---------- ----
10,690,625 2.5
---------------------------------------------------
ENVIRONMENTAL CONTROL 6,087,500 1.4
---------------------------------------------------
INSURANCE 9,571,875 2.3
6,015,000 1.4
---------- ----
15,586,875 3.7
6
7
MERRILL LYNCH GLOBAL HOLDINGS, INC., MAY 31, 1998
SCHEDULE OF INVESTMENTS (IN US DOLLARS)
- ------------------------------------------------------------------------------------------------------------------------
United MEDICAL TECHNOLOGY 50,000 +Boston Scientific Corp. 2,291,520
States 100,000 Johnson & Johnson 5,281,813
----------
7,573,333
-------------------------------------------------------------------------------------------------------
PACKAGING 500,000 +Stone Container Corporation 6,133,680
-------------------------------------------------------------------------------------------------------
PHARMACEUTICALS 25,000 Bristol-Myers Squibb Co. 2,432,138
90,000 Pfizer, Inc. 2,529,031
----------
4,961,169
-------------------------------------------------------------------------------------------------------
RETAIL 150,000 +Federated Department Stores, Inc. 4,921,701
-------------------------------------------------------------------------------------------------------
RETAIL SPECIALTY 110,000 CVS Corporation 5,633,409
125,000 Home Depot, Inc. 3,653,625
200,000 +OfficeMax, Inc. 3,112,630
450,000 +PETsMART Inc. 6,002,962
----------
18,402,626
-------------------------------------------------------------------------------------------------------
SOFTWARE -- COMPUTER 25,000 +Microsoft Corporation 2,272,500
-------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS 60,000 Sprint Corporation 4,260,474
-------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN THE UNITED STATES 79,606,993
==========
-------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN NORTH AMERICA 83,943,341
==========
- ------------------------------------------------------------------------------------------------------------------------
PACIFIC BASIN/
ASIA
- ------------------------------------------------------------------------------------------------------------------------
Australia BROADCASTING & PUBLISHING 351,883 News Corp., Ltd. (Ordinary) 1,873,092
-------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN AUSTRALIA 1,873,092
==========
- ------------------------------------------------------------------------------------------------------------------------
Hong Kong MULTI-INDUSTRY 400,000 Hutchison Whampoa Ltd. 1,949,838
-------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN HONG KONG 1,949,838
==========
- ------------------------------------------------------------------------------------------------------------------------
Japan BROADCASTING & PUBLISHING 300,000 Tokyo Broadcasting System, Inc. 3,736,661
-------------------------------------------------------------------------------------------------------
COMPUTERS 300,000 NEC Corporation 3,767,865
60,000 Tokyo Electron Ltd. 1,883,701
----------
5,651,566
-------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT 200,000 Matsushita Electric Industrial Co. 2,837,637
250,000 Sumitomo Electric Industry, Ltd. 2,791,441
----------
5,629,078
-------------------------------------------------------------------------------------------------------
ELECTRONICS 30,000 Keyence Corp. 2,162,440
90,000 Murata Manufacturing Co., Ltd. 2,616,519
30,000 Sony Corp. 2,723,742
----------
7,502,701
-------------------------------------------------------------------------------------------------------
INSURANCE 200,000 Tokio Marine & Fire Insurance Co., Ltd. 2,445,116
-------------------------------------------------------------------------------------------------------
MACHINERY & EQUIPMENT 500,000 Mitsubishi Heavy Industries Ltd. 3,654,177
-------------------------------------------------------------------------------------------------------
MACHINERY & MACHINE TOOLS 350,000 Minebea Co., Ltd. 2,942,184
-------------------------------------------------------------------------------------------------------
Value Percent of
Industries (Note 1a) Net Assets
---------------------------------------------------
MEDICAL TECHNOLOGY 3,187,500 0.8
6,906,250 1.6
---------- ----
10,093,750 2.4
---------- ----
PACKAGING 8,875,000 2.1
---------------------------------------------------
PHARMACEUTICALS 2,687,500 0.6
9,433,125 2.2
---------- ----
12,120,625 2.8
---------------------------------------------------
RETAIL 7,771,875 1.8
---------------------------------------------------
RETAIL SPECIALTY 7,720,625 1.8
9,820,313 2.3
3,287,500 0.8
4,443,750 1.1
---------- ----
25,272,188 6.0
---------------------------------------------------
SOFTWARE -- COMPUTER 2,120,313 0.5
---------------------------------------------------
TELECOMMUNICATIONS 4,305,000 1.0
---------------------------------------------------
129,521,564 30.4
---------------------------------------------------
135,050,739 31.7
- -------------------------------------------------------------------
PACIFIC BASIN/
ASIA
- -------------------------------------------------------------------
Australia BROADCASTING & PUBLISHING 2,171,479 0.5
---------- ----
2,171,479 0.5
- -------------------------------------------------------------------
Hong Kong MULTI-INDUSTRY 2,090,727 0.5
---------- ----
2,090,727 0.5
- -------------------------------------------------------------------
Japan BROADCASTING & PUBLISHING 3,733,747 0.9
---------------------------------------------------
COMPUTERS 3,055,475 0.7
1,906,963 0.5
---------------------------------------------------
4,962,438 1.2
---------------------------------------------------
ELECTRICAL EQUIPMENT 3,134,932 0.7
2,613,045 0.6
---------- ----
5,747,977 1.3
---------------------------------------------------
ELECTRONICS 3,616,729 0.9
2,606,906 0.6
2,535,394 0.6
---------- ----
8,759,029 2.1
---------------------------------------------------
INSURANCE 1,895,406 0.4
---------------------------------------------------
MACHINERY & EQUIPMENT 1,740,826 0.4
---------------------------------------------------
MACHINERY & MACHINE TOOLS 3,592,531 0.8
---------------------------------------------------
8
MERRILL LYNCH GLOBAL HOLDINGS, INC., MAY 31, 1998
SCHEDULE OF INVESTMENTS (CONCLUDED) (IN US DOLLARS)
PACIFIC BASIN/ Shares
ASIA (concluded) Industries Held Investments Cost
- ------------------------------------------------------------------------------------------------------------------------------------
Japan MERCHANDISING 40,000 Ito-Yokado Co., Ltd. $ 1,760,352
(concluded) 150,000 Marui Co., Ltd. 2,736,736
------------
4,497,088
-----------------------------------------------------------------------------------------------------------------
PHOTOGRAPHY 100,000 Canon Inc. 1,758,792
-----------------------------------------------------------------------------------------------------------------
REAL ESTATE 200,000 Mitsui Fudosan Co., Ltd. 2,474,245
-----------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS 400 Nippon Telephone & Telegraph Corp. (Ordinary) 3,217,188
TOTAL INVESTMENTS IN JAPAN 43,508,796
- -----------------------------------------------------------------------------------------------------------------------------------
Singapore BANKING 380,000 Overseas Chinese Banking Corp. 3,284,321
-----------------------------------------------------------------------------------------------------------------
CONSTRUCTION & HOUSING 330,000 City Development Ltd. 2,201,466
-----------------------------------------------------------------------------------------------------------------
NEWSPAPER/PUBLISHING 242,440 Singapore Press Holdings Limited 2,976,641
TOTAL INVESTMENTS IN SINGAPORE 8,462,428
-----------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN THE PACIFIC BASIN/ASIA 55,794,154
- -----------------------------------------------------------------------------------------------------------------------------------
WESTERN
EUROPE
-----------------------------------------------------------------------------------------------------------------
Denmark COMPUTERS 100,000 +Olicom A/S 3,069,952
TOTAL INVESTMENTS IN DENMARK 3,069,952
-----------------------------------------------------------------------------------------------------------------
Finland COMMUNICATIONS EQUIPMENT 100,000 Nokia OY AS 'A' 2,382,226
TOTAL INVESTMENTS IN FINLAND 2,382,226
-----------------------------------------------------------------------------------------------------------------
France ELECTRONICS 70,000 +ST Microelectronics (NY Registered Shares)(a) 4,033,757
-----------------------------------------------------------------------------------------------------------------
FOOD 15,000 Groupe Danone S.A. 3,569,363
-----------------------------------------------------------------------------------------------------------------
INFORMATION PROCESSING 50,000 Cap Gemini S.A. 5,924,235
-----------------------------------------------------------------------------------------------------------------
OIL -- RELATED 50,000 Societe Nationale Elf Aquitane S.A. 4,845,082
-----------------------------------------------------------------------------------------------------------------
SOFTWARE -- COMPUTER 180,000 Dassault Systemes S.A. 2,382,131
-----------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN FRANCE 20,754,568
- ------------------------------------------------------------------------------------------------------------------------------------
Germany BANKING 70,000 Deutsche Bank AG 4,697,032
------------------------------------------------------------------------------------------------------------------
CHEMICALS 210,000 SKW Trostberg AG 5,676,684
-----------------------------------------------------------------------------------------------------------------
MACHINERY & EQUIPMENT 19,600 Heidelberger Druckmaschinen AG 1,052,231
-----------------------------------------------------------------------------------------------------------------
MULTI-INDUSTRY 110,000 Veba AG 5,056,239
-----------------------------------------------------------------------------------------------------------------
SOFTWARE -- COMPUTER 30,000 SAP AG (Preferred) 13,035,644
-----------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN GERMANY 29,517,830
- ------------------------------------------------------------------------------------------------------------------------------------
Italy RETAIL SPECIALTY 125,000 Gucci Group N.V. 8,151,212
-----------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN ITALY 8,151,212
- -----------------------------------------------------------------------------------------------------------------------------------
Netherlands CHEMICALS 41,000 Akzo Nobel N.V. 5,917,636
-----------------------------------------------------------------------------------------------------------------
PACIFIC BASIN/ Value Percent of
ASIA (concluded) Industries (Note 1a) Net Assets
- -------------------------------------------------------------------
Japan MERCHANDISING $ 1,993,643 0.5%
(concluded) 2,302,442 0.5
----------- ----------
4,296,085 1.0
PHOTOGRAPHY 2,383,704 0.6
-------------------------------------------------
REAL ESTATE 1,619,474 0.4
-------------------------------------------------
TELECOMMUNICATIONS 3,293,846 0.8
-------------------------------------------------
42,025,063 9.9
- -------------------------------------------------------------------
Singapore BANKING 1,510,460 0.4
-------------------------------------------------
CONSTRUCTION & HOUSING 1,193,365 0.3
-------------------------------------------------
NEWSPAPER/PUBLISHING 1,985,313 0.5
-------------------------------------------------
4,689,138 1.2
-------------------------------------------------
50,976,407 12.1
- -------------------------------------------------------------------
WESTERN
EUROPE
- -------------------------------------------------------------------
Denmark COMPUTERS 2,862,500 0.7
-------------------------------------------------
2,862,500 0.7
- -------------------------------------------------------------------
Finland COMMUNICATIONS EQUIPMENT 6,498,662 1.5
- ------------------------------------------------------------------
6,498,662 1.5
- -------------------------------------------------------------------
France ELECTRONICS 5,416,250 1.3
-------------------------------------------------
FOOD 4,043,675 1.0
-------------------------------------------------
INFORMATION PROCESSING 7,471,553 1.8
-------------------------------------------------
OIL -- RELATED 6,952,811 1.6
-------------------------------------------------
SOFTWARE -- COMPUTER 8,403,614 2.0
-------------------------------------------------
32,287,903 7.7
- -------------------------------------------------------------------
Germany BANKING 6,033,670 1.4
-------------------------------------------------
CHEMICALS 8,543,771 2.0
-------------------------------------------------
MACHINERY & EQUIPMENT 1,708,126 0.4
-------------------------------------------------
MULTI-INDUSTRY 7,234,568 1.7
-------------------------------------------------
SOFTWARE -- COMPUTER 16,666,667 3.9
-------------------------------------------------
40,186,802 9.4
- -------------------------------------------------------------------
Italy RETAIL SPECIALTY 5,671,875 1.3
-------------------------------------------------
5,671,875 1.3
- -------------------------------------------------------------------
Netherlands CHEMICALS 8,580,636 2.0
8
9
MERRILL LYNCH GLOBAL HOLDINGS, INC., MAY 31, 1998
SCHEDULE OF INVESTMENTS (CONCLUDED) (IN US DOLLARS)
9
PACIFIC BASIN/ Shares
ASIA (concluded) Industries Held Investments Cost
- -----------------------------------------------------------------------------------------------------------------------------
Netherlands ELECTRICAL EQUIPMENT 70,000 Philips Electronics N.V. 2,440,144
(continued) ------------------------------------------------------------------------------------------------------------
SOFTWARE -- COMPUTER 120,000 +Baan Company N.V. 1,283,764
------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN THE NETHERLANDS 9,641,544
- ------------------------------------------------------------------------------------------------------------------------------
Portugal BUILDING PRODUCTS 200,000 Cimpor -- Cimentos de Portugal S.A. 4,062,517
------------------------------------------------------------------------------------------------------------
FINANCE 170,000 BPI -- SGPS S.A. (Registered Shares) 3,235,660
------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN PORTUGAL 7,298,177
- -------------------------------------------------------------------------------------------------------------------------------
Spain SERVICES 400,000 Prosegur Compania de Seguridad S.A. 4,176,481
------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SPAIN 4,176,481
- ------------------------------------------------------------------------------------------------------------------------------
Sweden ENVIRONMENTAL CONTROL 325,000 Munters AB 3,401,427
------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SWEDEN 3,401,427
- ------------------------------------------------------------------------------------------------------------------------------
Switzerland PHARMACEUTICALS 500 Roche Holdings Ltd. 2,907,780
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SWITZERLAND 2,907,780
- ------------------------------------------------------------------------------------------------------------------------------
United Kingdom AUTOMOBILE PARTS 911,944 BBA Group PLC 5,114,591
------------------------------------------------------------------------------------------------------------
BANKING 385,000 National Westminster Bank PLC (Ordinary) 7,320,642
500,000 Royal Bank of Scotland Group PLC (The) 5,132,385
----------
12,453,027
------------------------------------------------------------------------------------------------------------
BUILDING 611,111 Berkeley Group PLC (The) 6,564,040
------------------------------------------------------------------------------------------------------------
COMPUTER SERVICES 1,100,000 Capita Group PLC 5,091,189
------------------------------------------------------------------------------------------------------------
ELECTRONICS 2,100,000 Astec (BSR) PLC 3,743,542
------------------------------------------------------------------------------------------------------------
INSURANCE 500,000 Royal & Sun Alliance Insurance Group PLC 6,672,402
------------------------------------------------------------------------------------------------------------
MULTI-INDUSTRY 399,999 Siebe PLC 4,107,799
------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN THE UNITED KINGDOM 43,746,590
------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN WESTERN EUROPE 135,047,787
------------------------------------------------------------------------------------------------------------
PACIFIC BASIN/ Value Percent of
ASIA (concluded) Industries (Note 1a) Net Assets
- ------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Electrical Equipment 6,662,516 1.6
------------------------------------------------------------------------------------
Software -- Computer 5,564,299 1.3
------------------------------------------------------------------------------------
20,807,451 4.9
- ------------------------------------------------------------------------------------------------------
Portugal Building Products 7,666,173 1.8
------------------------------------------------------------------------------------
Finance 6,893,528 1.6
------------------------------------------------------------------------------------
14,559,701 3.4
- ------------------------------------------------------------------------------------------------------
Spain Services 5,060,782 1.2
------------------------------------------------------------------------------------
5,060,782 1.2
- ------------------------------------------------------------------------------------------------------
Sweden Environmental Control 3,821,330 0.9
------------------------------------------------------------------------------------
3,821,330 0.9
- ------------------------------------------------------------------------------------------------------
Switzerland Pharmaceuticals 5,151,136 1.2
------------------------------------------------------------------------------------
5,151,136 1.2
- ------------------------------------------------------------------------------------------------------
United Kingdom Automobile Parts 7,930,169 1.9
------------------------------------------------------------------------------------
Banking 7,028,747 1.7
------------------------------------------------------------------------------------
8,434,855 2.0
---------- ---
------------------------------------------------------------------------------------
15,463,602 3.7
Building 7,726,964 1.8
------------------------------------------------------------------------------------
Computer Services 9,744,950 2.3
------------------------------------------------------------------------------------
Electronics 3,220,581 0.8
------------------------------------------------------------------------------------
Insurance 5,298,296 1.2
------------------------------------------------------------------------------------
Multi-Industry 10,017,385 2.4
------------------------------------------------------------------------------------
59,401,947 14.1
------------------------------------------------------------------------------------
196,310,089 46.3
------------------------------------------------------------------------------------
SHORT-TERM Face
SECURITIES Amount Issue
- ---------------------------------------------------------------------------------------------------------------------------------
UNITED COMMERCIAL PAPER** US$ 18,439,000 General Motors Acceptance Corp., 18,433,171 18,433,171 4.3
5.69% due 6/01/1998
STATES TOTAL INVESTMENTS IN SHORT-TERM 18,433,171 18,433,171 4.3
SECURITIES
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS $313,747,359 423,927,032 99.9
============
OTHER ASSETS LESS LIABILITIES 544,705 0.1
------------ ------
NET ASSETS $424,471,737 100.0%
============ ======
* American Depositary Receipts (ADR).
** Commercial Paper is traded on a discount basis; the interest rates shown a
the discount rates paid at the time of purchase by the Company.
+ Non-income producing security.
(a) Formerly known as SGS-Thomson Microelectronics N.V.
See Notes to Financial Statements.
10
MERRILL LYNCH GLOBAL HOLDINGS, INC., MAY 31, 1998
STATEMENT OF ASSETS AND LIABILITIES
As of May 31, 1998
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS: Investments, at value (identified cost -- $313,747,359) (Note 1a).................. $423,927,032
Cash............................................................................... 391
Receivables:
Dividends........................................................................ $ 1,392,853
Capital shares sold.............................................................. 452,799 1,845,652
------------ ------------
Prepaid registration fees and other assets (Note 1f)............................... 26,247
------------
Total assets....................................................................... 425,799,322
------------
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES: Payables:
Capital shares redeemed.......................................................... 535,062
Investment adviser (Note 2)...................................................... 345,473
Distributor (Note 2)............................................................. 59,962 940,497
----------
Accrued expenses and other liabilities............................................. 387,088
------------
Total liabilities.................................................................. 1,327,585
------------
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS: Net assets......................................................................... $424,471,737
============
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS Class A Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized ... $ 2,295,078
CONSIST OF: Class B Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized ... 446,851
Class C Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized ... 45,924
Class D Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized ... 69,609
Paid-in capital in excess of par................................................... 296,467,529
Accumulated distributions in excess of investment income -- net (Note 1g) ....... (885,887)
Undistributed realized capital gains on investments and
foreign currency transactions -- net .......................................... 15,841,967
Unrealized appreciation on investments and foreign currency transactions -- net . 110,190,666
------------
Net assets......................................................................... $424,471,737
============
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET Class A -- Based on net assets of $343,858,613 and 22,950,784 shares outstanding.. $ 14.98
VALUE: ============
Class B -- Based on net assets of $63,711,748 and 4,468,514 shares outstanding.... $ 14.26
============
Class C -- Based on net assets of $6,519,390 and 459,244 shares outstanding .... $ 14.20
============
Class D -- Based on net assets of $10,381,986 and 696,086 shares outstanding .... $ 14.91
============
- -----------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
10
11
11
STATEMENT OF OPERATIONS
For the Six Months Ended May 31, 1998
- -----------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME Dividends (net of $316,911 foreign withholding tax)............ $ 3,159,453
(NOTES 1d & 1e): Interest and discount earned................................... 712,372
------------
Total income................................................... 3,871,825
------------
- -----------------------------------------------------------------------------------------------------------------------
EXPENSES: Investment advisory fees (Note 2).............................. $ 2,115,404
Transfer agent fees -- Class A (Note 2)........................ 462,833
Account maintenance and distribution fees -- Class B (Note 2).. 328,970
Custodian fees................................................. 121,049
Transfer agent fees -- Class B (Note 2)........................ 98,442
Printing and shareholder reports............................... 83,426
Accounting services (Note 2)................................... 43,040
Registration fees (Note 1f).................................... 37,838
Professional fees.............................................. 34,740
Account maintenance and distribution fees -- Class C (Note 2).. 31,699
Directors' fees and expenses................................... 19,313
Transfer agent fees -- Class D (Note 2)........................ 12,213
Account maintenance fees -- Class D (Note 2)................... 11,302
Transfer agent fees -- Class C (Note 2)........................ 9,824
Pricing fees................................................... 7,553
Other.......................................................... 7,679
-----
Total expenses ................................................ 3,425,325
---------
Investment income -- net....................................... 446,500
-------
- -----------------------------------------------------------------------------------------------------------------------
REALIZED & Realized gain (loss) from:
UNREALIZED GAIN Investments -- net............................................. 16,172,017
(LOSS) ON Foreign currency transactions -- net........................... (313,114) 15,858,903
INVESTMENTS & ----------
FOREIGN CURRENCY Change in unrealized appreciation/depreciation on:
TRANSACTIONS -- NET Investments -- net............................................. 36,360,792
Foreign currency transactions -- net 72,956 36,433,748
---------- ------------
(NOTES 1b, 1c, Net realized and unrealized gain on investments and foreign
1e & 3): currency transactions.......................................... 52,292,651
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........... $ 52,739,151
============
- -----------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
12
MERRILL LYNCH GLOBAL HOLDINGS, INC., MAY 31, 1998
STATEMENTS OF CHANGES IN NET ASSETS
For the Six For the
Months Ended Year Ended
May 31, November 30,
Increase (Decrease) in Net Assets: 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------
Operations: Investment income (loss) -- net........................................ $ 446,500 $ (1,351,232)
Realized gain on investments and foreign currency transactions--net.... 15,858,903 50,941,976
Change in unrealized appreciation/depreciation on investments
and foreign currency transactions -- net .............................. 36,433,748 (17,243,096)
------------ ------------
Net increase in net assets resulting from operations................... 52,739,151 32,347,648
------------ ------------
- -----------------------------------------------------------------------------------------------------------------------------
Dividends & Investment income -- net:
Distributions to Class A.............................................................. -- (472,191)
Shareholders Class C.............................................................. -- (24)
(Note 1g): Class D.............................................................. -- (3,962)
In excess of investment income -- net:
Class A.............................................................. -- (2,756,330)
Class C.............................................................. -- (141)
Class D.............................................................. -- (23,124)
Realized gain on investments -- net:
Class A.............................................................. (39,878,951) (20,709,718)
Class B.............................................................. (7,314,996) (2,278,771)
Class C.............................................................. (664,387) (49,977)
Class D.............................................................. (999,340) (245,755)
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders.......................................... (48,857,674) (26,539,993)
------------ ------------
- -----------------------------------------------------------------------------------------------------------------------------
Capital Share Net decrease in net assets derived from capital share transactions..... (5,590,774) (27,845,951)
Transactions ------------ ------------
(Note 4):
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets: Total decrease in net assets........................................... (1,709,297) (22,038,296)
Beginning of period.................................................... 426,181,034 448,219,330
------------ ------------
End of period.......................................................... $424,471,737 $426,181,034
============ ============
- -----------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
12
13
13
FINANCIAL HIGHLIGHTS
Class A+
----------------------------------------------
For the Six
The following per share data and ratios have been derived Months Ended For the Year Ended November 30,
from information provided in the financial statements. May 31, -------------------------------
Increase (Decrease) in Net Asset Value: 1998 1997 1996
-------------------------------------------------------------------------------------------------------------------------------
Per Share Net asset value, beginning of period............................. $ 15.05 $ 15.12 $ 13.87
Operating -------- -------- --------
Performance: Investment income (loss) -- net................................. .03 (.02) .13
Realized and unrealized gain on investments and foreign currency
transactions -- net............................................. 1.66 .86 1.87
-------- -------- --------
Total from investment operations ................................ 1.69 .84 2.00
-------- -------- --------
Less dividends and distributions:
Investment income -- net...................................... -- (.02) --
In excess of investment income -- net......................... -- (.10) --
Realized gain on investments -- net........................... (1.76) (.79) (.75)
-------- -------- --------
Total dividends and distributions................................ (1.76) (.91) (.75)
-------- -------- --------
Net asset value, end of period................................... $ 14.98 $ 15.05 $ 15.12
======== ======== ========
--------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share .............................. 13.31%# 6.04% 15.20%
Return:** ======== ======== ========
--------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses......................................................... 1.44%* 1.39% 1.37%
Net Assets: ======== ======== ========
Investment income (loss) -- net................................. .39%* (.12%) .92%
======== ======== ========
--------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) ........................ $ 343,859 $ 344,940 $ 398,310
Data: ======== ========= =========
Portfolio turnover............................................... 17.45% 54.50% 41.14%
======== ========= =========
Average commission rate paid++................................... $ .0227 $ .0103 $ .0063
======== ========= =========
--------------------------------------------------------------------------------------------------------------------------------
Class A+
-------------------
1995 1994
- ------------------------------------------------------------------------------------------------------------
Per Share Net asset value, beginning of period............................. $ 12.82 $ 13.07
-------- --------
Operating Investment income (loss) -- net................................. .05 .03
Performance: Realized and unrealized gain on investments and foreign currency
transactions -- net............................................. 1.52 .53
-------- --------
Total from investment operations ................................ 1.57 .56
-------- --------
Less dividends and distributions:
Investment income -- net...................................... (.01) (.01)
In excess of investment income -- net......................... -- --
Realized gain on investments -- net........................... (.51) (.80)
-------- --------
Total dividends and distributions................................ (.52) (.81)
------- --------
Net asset value, end of period................................... $ 13.87 $ 12.82
======= ========
- ------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share .............................. 12.92% 4.39%
Return:** ======= ========
- ------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses......................................................... 1.51% 1.44%
Net Assets: ======= ========
Investment income (loss) -- net................................. .41% .23%
======= ========
- ------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) ........................ $327,270 $330,132
Data: ======== ========
Portfolio turnover............................................... 44.64% 40.18%
======== ========
Average commission rate paid++................................... -- --
======== ========
- ------------------------------------------------------------------------------------------------------------
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Based on average shares outstanding.
++ For fiscal years beginning on or after September 1, 1995, the Company 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.
14
FINANCIAL HIGHLIGHTS (concluded)
Class B##
---------------------------------------------
For the
Six Months For the Year Ended November 30,
The following per share data and ratios have been derived Ended -------------------------------
from information provided in the financial statements. May 31,
1998 1997 1996
---------------------------------------------
Increase (Decrease) in Net Asset Value:
- -----------------------------------------------------------------------------------------------------------------------------------
Per Share Net asset value, beginning of period........................... $ 14.31 $ 14.40 $ 13.38
Operating -------- -------- --------
Performance: Investment loss -- net........................................ (.04) (.17) (.02)
Realized and unrealized gain on investments and foreign currency
transactions -- net........................................... 1.59 .84 1.79
---- --- ----
Total from investment operations .............................. 1.55 .67 1.77
---- --- ----
Less distributions from realized gain on investments -- net.... (1.60) (.76) (.75)
----- ---- ----
Net asset value, end of period................................. $ 14.26 $ 14.31 $ 14.40
======== ======== =========
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share ............................ 2.77%# 4.98% 13.97%
Return:*** ===== ==== =====
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses....................................................... 2.47%* 2.42% 2.40%
Net Assets: ==== ==== ====
Investment loss -- net........................................ (.64%)* (1.11%) (.11%)
==== ===== ====
- -----------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) ...................... $ 63,712 $ 66,791 $ 44,311
Data: ======== ======== ========
Portfolio turnover............................................. 17.45% 54.50% 41.14%
===== ===== =====
Average commission rate paid##................................. $ .0227 $ .0103 $ .0063
======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
1995 1994
-------------------------
Per Share Net asset value, beginning of period........................... $ 12.50 $ 12.74
Operating -------- --------
Performance: Investment loss -- net........................................ (.08) (.10)
Realized and unrealized gain on investments and foreign currency
transactions -- net........................................... 1.47 .52
---- ---
Total from investment operations .............................. 1.39 .42
---- ---
Less distributions from realized gain on investments -- net.... (.51) (.66)
---- ----
Net asset value, end of period................................. $ 13.38 $ 12.50
===== ========
- ---------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share ............................ 11.78% 3.32%
Return:*** ===== ====
- ---------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses....................................................... 2.55% 2.48%
Net Assets: ==== ====
Investment loss -- net........................................ (.63%) (.80%)
- ---------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) ...................... $ 44,387 $ 49,647
Data: ======== ========
Portfolio turnover............................................. 44.64% 40.18%
======== ========
- ---------------------------------------------------------------------------------------------------------------------
Average commission rate paid##................................. -- --
======== ========
- ---------------------------------------------------------------------------------------------------------------------
Class C##
----------------------------------------------
For the
Six Months For the Year Ended November 30,
The following per share data and ratios have been derived Ended -------------------------------
from information provided in the financial statements. May 31,
Increase (Decrease) in Net Asset Value: 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Per Share Net asset value, beginning of period $ 14.28 $14.41 $13.38
Operating ------- ----- ----
Performance: Investment loss -- net....................................... (.04) (.17) (.01)
------- ----- ----
Realized and unrealized gain (loss) on investments and
foreign currency transactions -- net.......................... 1.59 .83 1.79
------- ----- ----
Total from investment operations ............. ............... 1.55 .66 1.78
------- ----- ----
Less dividends and distributions:
Investment income -- net.................... ............... -- -- ** --
In excess of investment income -- net....... ............... -- -- ** --
Realized gain on investments -- net......... ............... (1.63) (.79) (.75)
------- ----- ----
Total dividends and distributions............. ............... (1.63) (.79) (.75)
------- ----- ----
Net asset value, end of period................ ............... $ 14.20 $ 14.28 $14.41
======== ======== ======
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share .......... ................ 12.75%# 4.96% 14.05%
Return:*** ===== ==== =====
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses.................................... ................. 2.48%* 2.43% 2.41%
Net Assets: ==== ==== ====
Investment loss -- net....................... ............... (.63%)* (1.09%) (.09%)
==== ===== ====
- -----------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) ..... ............... $ 6,519 $ 5,964 $ 910
Data: ======== ======== =====
Portfolio turnover............................ ............... 17.45% 54.50% 41.14%
===== ===== =====
Average commission rate paid++++................ ............. $ .0227 $ .0103 $.0063
======== ======== ======
- -----------------------------------------------------------------------------------------------------------------------------------
------------
For the
Period
Oct. 21,
1994# to
Nov. 30,
1995 1994
- -------------------------------------------------------------------------------------------------------------
Per Share Net asset value, beginning of period ......................... 12.51 $ 13.08
Operating ----- -------
Performance: Investment loss -- net....................................... (.08) (.02)
----- -------
Realized and unrealized gain (loss) on investments and
foreign currency transactions -- net......................... 1.46 (.55)
----- -------
Total from investment operations ............. ............... 138 (.57)
----- -------
Less dividends and distributions:
Investment income -- net.................... ............... -- --
In excess of investment income -- net....... ............... -- --
Realized gain on investments -- net......... ............... (.51) --
----- -------
Total dividends and distributions............. ............... (.51) --
----- -------
Net asset value, end of period................ ............... 13.38 $12.51
===== ======
- -------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share .......... 11.69% (4.36%)#
Return:*** ===== =====
- -------------------------------------------------------------------------------------------------------------
14
15
15
Ratios to Average Expenses.................................... ................. 2.55% 3.00%*
Net Assets: ==== ====
Investment loss -- net....................... ............... (.63%) (1.31%)*
==== =====
- -------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) ..... ............... $ 376 $ 177
Data: ====== =======
Portfolio turnover............................ ............... 44.64% 40.18%
===== =====
Average commission rate paid##.................. ............. -- --
===== =====
- -------------------------------------------------------------------------------------------------------------
Class D##
----------------------------------------------
For the
Six Months For the Year Ended November 30,
The following per share data and ratios have been derived Ended -------------------------------
from information provided in the financial statements. May 31,
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Per Share Net asset value, beginning of period.......... ....... $ 14.97 $ 15.04 $ 13.84 $ 12.81
Operating -------- ------- ------- --------
Performance: Investment income (loss) -- net.............. ....... .01 (.06) .09 .02
Realized and unrealized gain (loss) on investments and
foreign currency transactions -- net................. 1.66 .87 1.86 1.52
-------- -------- ------- --------
Total from investment operations ............. ...... 1.67 .81 1.95 1.54
-------- -------- ------- --------
Less dividends and distributions:
Investment income -- net.................... ..... -- (.01) -- -- **
In excess of investment income -- net....... ..... -- (.08) -- --
Realized gain on investments -- net......... ..... (1.73) (.79) (.75) (.51)
-------- -------- ------- --------
Total dividends and distributions............. ....... (1.73) (.88) (.75) (.51)
-------- -------- ------- --------
Net asset value, end of period................ ....... $ 14.91 $ 14.97 $ 15.04 $ 13.84
======== ========= ======== ========
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share ........... ....... 13.17%# 5.80% 14.86% 12.73%
Return:*** ======== ========= ======== =======
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses.................................... .......... 1.69%* 1.64% 1.63% 1.76%
Net Assets: ======== ========= ======== ========
Investment income (loss) -- net.............. ........ .16%* (.39%) .60% .18%
======== ========= ======== ========
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) ..... ........ $ 10,382 $ 8,486 $ 4,688 $ 3,459
Data: ======== ========= ======== ========
Portfolio turnover............................ ........ 17.45% 54.50% 41.14% 44.64%
======== ========= ======== ========
Average commission rate paid##................ ...... $ .0227 $ .0103 $ .0063 --
======== ========= ======== ========
- ------------------------------------------------------------------------------------------------------------------------------------
------------
For the
Period
Oct. 21,
1994# to
Nov. 30,
1994
--------------
Per Share Net asset value, beginning of period.......... ...... $ 13.39
Operating --------
Performance: Investment income (loss) -- net.............. ...... (.01)
Realized and unrealized gain (loss) on investments an
foreign currency transactions -- net................ (.57)
--------
Total from investment operations ............. ...... (.58)
--------
Less dividends and distributions:
Investment income -- net.................... ..... --
In excess of investment income -- net....... ..... --
Realized gain on investments -- net......... ..... --
--------
Total dividends and distributions............. ....... --
--------
Net asset value, end of period................ ....... 12.81
========
- ----------------------------------------------------------------------------------------
Total Investment Based on net asset value per share ........... ....... (4.33%)#
Return:*** ========
- ----------------------------------------------------------------------------------------
Ratios to Average Expenses.................................... .......... 2.23%*
Net Assets: ========
Investment income (loss) -- net.............. ........ (.67%)*
========
- ----------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) ..... ........ 1,591
Data: ========
Portfolio turnover............................ ........ 40.18%
========
Average commission rate paid##................ ...... --
========
- ----------------------------------------------------------------------------------------
* Annualized.
** Amount is less than $.01 per share.
*** Total investment returns exclude the effects of sales loads.
# Commencement of operations.
## Based on average shares outstanding.
+ Aggregate total investment return.
++ For fiscal years beginning on or after September 1, 1995, the Company 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.
See Notes to Financial Statements.
16
MERRILL LYNCH GLOBAL HOLDINGS, INC., MAY 31, 1998
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES:
Merrill Lynch Global Holdings, Inc. (the "Company") 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 Company 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 Company.
(a) Valuation of securities -- 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
Company'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 Company 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.
- - Options -- The Company is authorized to write covered call options and
purchase put options. When the Company writes an option, an amount equal to the
premium received by the Company 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 Company enters into a closing
transaction), the Company 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.
- - Forward foreign exchange contracts -- The Company 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
Company's records. However, the effect on operations is recorded from the date
the Company enters into such contracts. Premium or discount is amortized over
the life of the contracts.
- - Foreign currency options and futures -- The Company 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
Company, sold by the Company but not yet delivered, or committed or anticipated
to be purchased by the Company.
- - Financial futures contracts -- The Company 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 Company deposits and maintains as collateral such initial margin
as required by the exchange on which the transaction is effected. Pursuant to
the contract, the Company 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 Company as
unrealized gains or losses. When the contract is closed, the Company 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.
(d) Income taxes -- It is the Company'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 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 Company has determined the ex-dividend date. Interest income 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
Company are recorded on the ex-dividend dates. Distributions in excess of net
investment income are due primarily to differing tax treatments for post-October
losses.
2. INVESTMENT ADVISORY AGREEMENT AND TRANSACTIONS WITH AFFILIATES:
The Company 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
16
17
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wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner. The Company 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.
As compensation for its services to the Company, MLAM receives monthly
compensation at the annual rate of 1.0% of the average daily net assets of the
Company.
Pursuant to the Distribution Plans adopted by the Company in accordance with
Rule 12b-1 under the Investment Company Act of 1940, the Company 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 Company. 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 May 31, 1998, MLFD earned underwriting discounts and
direct commissions and MLPF&S earned dealer concessions on sales of the
Company's Class A and Class D Shares as follows:
- ---------------------------------------
MLFD MLPF&S
- ---------------------------------------
Class A.................. $377 $5,101
Class D.................. $169 $2,649
- ---------------------------------------
For the six months ended May 31, 1998, MLPF&S received contingent deferred sales
charges of $70,109 and $436 relating to transactions in Class B and Class C
Shares, respectively.
In addition, MLPF&S received $22,910 in commissions on the
execution of portfolio security transactions for the Company for the six months
ended May 31, 1998.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a wholly-owned subsidiary
of ML & Co., acts as the Company's transfer agent.
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MERRILL LYNCH GLOBAL HOLDINGS, INC., MAY 31, 1998
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
Accounting services are provided to the Company by MLAM at cost. Certain
officers and/or directors of the Company 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 May 31, 1998 were $71,507,813 and $125,312,834, respectively.
Net realized gains (losses) for the six months ended May 31, 1998, and net
unrealized gains as of May 31, 1998 were as follows:
- ------------------------------------------------------------
REALIZED UNREALIZED
GAINS (LOSSES) GAINS
- -------------------------------------------------------------
Long-term investments ....... $ 16,172,314 $110,179,673
Short-term investments ...... (297) --
Foreign currency transactions (313,114) 10,993
------------ ------------
Total ....................... $ 15,858,903 $110,190,666
============ ============
As of May 31, 1998, net unrealized appreciation for Federal income tax purposes
aggregated $110,179,673, of which $129,886,898 related to appreciated securities
and $19,707,225 related to depreciated securities. The aggregate cost of
investments at May 31, 1998 for Federal income tax purposes was $313,747,359.
4. CAPITAL SHARE TRANSACTIONS:
A net decrease in net assets derived from capital share transactions was
$5,590,774 and $27,845,951 for the six months ended May 31, 1998 and for the
year ended November 30, 1997, respectively.
Transactions in capital shares for each class were as follows:
- --------------------------------------------------------------------------
CLASS A SHARES FOR THE SIX MONTHS DOLLAR
ENDED MAY 31, 1998 SHARES AMOUNT
- --------------------------------------------------------------------------
Shares sold ................................ 2,356,191 $ 33,543,431
Shares issued to shareholders in
reinvestment of distributions .............. 2,864,459 36,521,854
--------- ----------
Total issued......... 5,220,650 70,065,285
Shares redeemed...... (5,190,359) (74,029,821)
----------- ------------
Net increase (decrease) 30,291 $(3,964,536)
========= ===========
- --------------------------------------------------------------------------
- ------------------------------------------------------------------------------
CLASS A SHARES FOR THE YEAR DOLLAR
ENDED NOVEMBER 30, 1997 SHARES AMOUNT
- ------------------------------------------------------------------------------
Shares sold ............................... 10,593,236 $ 157,598,934
Shares issued to shareholders in
reinvestment of dividends and distributions 1,586,229 22,175,485
----------- -------------
Total issued .............................. 12,179,465 179,774,419
Shares redeemed ........................... (15,605,732) (236,649,109)
----------- -------------
Net decrease .............................. (3,426,267) $ (56,874,690)
=========== =============
- ------------------------------------------------------------------------------
- -------------------------------------------------------------------
CLASS B SHARES FOR THE SIX MONTHS DOLLAR
ENDED MAY 31, 1998 SHARES AMOUNT
- -------------------------------------------------------------------
Shares sold .................... 468,999 $ 6,108,572
Shares issued to shareholders in
reinvestment of distributions .. 528,258 6,439,464
-------- ------------
Total issued ................... 997,257 12,548,036
Automatic conversion of shares . (223,767) (3,050,906)
Shares redeemed ................ (972,257) (13,318,523)
-------- ------------
Net decrease ................... (198,767) $ (3,821,393)
======== ============
- ------------------------------------------------------------------
CLASS B SHARES FOR THE YEAR DOLLAR
ENDED NOVEMBER 30, 1997 SHARES AMOUNT
- -----------------------------------------------------------------
Shares sold .................... 4,144,750 $ 57,686,337
Shares issued to shareholders in
reinvestment of distributions .. 148,413 1,993,180
---------- -----------
Total issued ................... 4,293,163 59,679,517
Automatic conversion of shares . (126,229) (1,871,700)
Shares redeemed ................ (2,575,781) (37,239,859)
---------- -----------
Net increase ................... 1,591,153 $ 20,567,958
========== ============
- -----------------------------------------------------------------
- ---------------------------------------------------------------
CLASS C SHARES FOR THE SIX MONTHS DOLLAR
ENDED MAY 31, 1998 SHARES AMOUNT
- ---------------------------------------------------------------
Shares sold .................... 154,676 $ 2,035,357
Shares issued to shareholders in
reinvestment of distributions .. 50,102 608,239
-------- -----------
Total issued ................... 204,778 2,643,596
Shares redeemed ................ (163,299) (2,212,239)
-------- -----------
Net increase ................... 41,479 $ 431,357
======== ===========
CLASS C SHARES FOR THE YEAR DOLLAR
ENDED NOVEMBER 30, 1997 SHARES AMOUNT
- ---------------------------------------------------------------
Shares sold .................... 590,713 $ 8,199,909
Shares issued to shareholders in
reinvestment of distributions .. 3,548 47,542
-------- -----------
Total issued ................... 594,261 8,247,451
Shares redeemed ................ (239,693) (3,447,217)
-------- -----------
Net increase ................... 354,568 $ 4,800,234
======== ===========
- ----------------------------------------------------------------
CLASS D SHARES FOR THE SIX MONTHS DOLLAR
ENDED MAY 31, 1998 SHARES AMOUNT
- ----------------------------------------------------------------
Shares sold .................... 145,869 $ 1,989,950
Shares issued to shareholders in
reinvestment of dividends and
distributions .................. 72,194 917,589
Automatic conversion of shares . 214,215 3,050,906
-------- -----------
Total issued ................... 432,278 5,958,445
Shares redeemed ................ (302,962) (4,194,647)
-------- -----------
Net increase ................... 129,316 $ 1,763,798
======== ===========
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19
19
- ---------------------------------------------------------------
CLASS D SHARES FOR THE YEAR DOLLAR
ENDED NOVEMBER 30, 1997 SHARES AMOUNT
- ---------------------------------------------------------------
Shares sold .................... 898,998 $13,541,614
Shares issued to shareholders in
reinvestment of dividends and
distributions .................. 18,140 252,873
Automatic conversion of shares . 120,997 1,871,700
--------- -----------
Total issued......... .......... 1,038,135 15,666,187
Shares redeemed...... .......... (783,014) (12,005,640)
--------- -----------
Net increase ................... 255,121 $ 3,660,547
========= ===========
- ---------------------------------------------------------------
PORTFOLIO CHANGES
For the Quarter Ended May 31, 1998
ADDITIONS Cap Gemini S.A. National Westminster Bank PLC (Ordinary) SAP AG (Preferred)
Groupe Danone S.A. Royal & Sun Alliance Insurance Group Sprint Corporation
Microsoft Corporation PLC
- ------------------------------------------------------------------------------------------------------------------------------------
DELETIONS Bangkok Bank Public Company Ltd Kennametal, Inc. Siam Cement Public Co. Ltd. (The)(Foreign
CITIC Pacific Ltd. Land & General BHD (Ordinary) Registered)
Commerce Asset-Holding BHD Nichiei Co. Ltd. Sime Darby BHD
CommScope Inc. P.T. Jaya Real Property Sungei Way Holdings BHD
Enterprise Oil PLC PTT Exploration and Production Public Total Access Communication Public Co. Ltd
Fred Olsen Energy ASA Co. (PTTEP) Transocean Offshore Inc.
Global Industries Ltd. Philip Services Corp. Yacimientos Petroliferos Fiscales S.A.
Ispat International N.V. Sensonor A/S (YPF)(ADR)