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Previous: MERRILL LYNCH GLOBAL ALLOCATION FUND INC, NSAR-B, 1997-12-24 |
Next: AMERICAN GOVERNMENT INCOME PORTFOLIO INC, NSAR-B, 1997-12-24 |
MERRILL LYNCH
GLOBAL
ALLOCATION
FUND, INC.
FUND LOGO
Annual Report
October 31, 1997
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Statements and other information herein are as dated and are subject
to change.
Merrill Lynch
Global Allocation
Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MERRILL LYNCH GLOBAL ALLOCATION FUND, INC.
<TABLE>
Summary of
Fund's Overall
Asset Mix
As of 10/31/97
<CAPTION>
Percent of Fund's Net Assets Reference Portfolio
10/31/97 7/31/97 Percentages
<S> <C> <C> <C>
North & South American Equities 19.1%* 19.3% 36.0%
European Equities 11.2 9.3 11.0
Pacific Basin Equities 6.9 5.4 13.0
Total Equities 37.2 34.0 60.0
US Dollar Denominated Fixed-Income Securities 37.9 34.3 24.0
US Issuers 25.9 25.7 --
Non-US Issuers 12.0 8.6 --
Non-US Dollar Denominated Fixed-Income Securities 9.2 8.1 16.0
Total Fixed-Income Securities 47.1++ 42.4++ 40.0
Cash & Cash Equivalents 15.7 23.6 --
<FN>
*Includes value of Stock Index Futures.
++Includes Preferred Stock.
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1997
DEAR SHAREHOLDER
Fiscal Year in Review
The "Comparative Performance Results" table below details the
performance for each class of shares of Merrill Lynch Global
Allocation Fund, Inc. for various time periods compared to that of
the Fund's unmanaged Benchmark Index. As long-term shareholders may
recall, the Benchmark Index consists of US stocks (as represented by
the Standard & Poor's 500 Composite Index), foreign stocks
(Financial Times/Standard & Poor's--Actuaries World Index (Ex-US)),
US Government 5-year bonds (ML Government Index GA05), and foreign
bonds (Salomon Brothers World Government Bond Index (Ex-US)). A
brief description of each of these indexes can be found in the
"Recent Performance Results" table on page 7 of this report to
shareholders.
As the table shows, total returns for each class of Fund shares were
greater than those of the unmanaged Benchmark Index for each of the
time periods shown. At the same time, the Fund exhibited relatively
modest volatility of returns. For example, for the 12-month period
ended October 31, 1997, we have calculated that the Fund's
volatility of total returns was less than one-half of the volatility
of either US stocks or foreign stocks. At the same time, the Fund
experienced less volatility than foreign bonds. Only US Government
bond returns were less volatile than the Fund's returns. These
results demonstrate that our investment strategies successfully
managed risk while achieving an attractive total return during the
fiscal year.
To further illustrate this point, we calculated the drop from the
historical peak of the per share net asset value of the Fund's Class
A Shares (October 6, 1997) to their recent trough, which occurred
shortly after the close of the Fund's fiscal year on November 12,
1997. During this period, per share net asset value for the Fund's
Class A Shares declined by 4.2%. In contrast, the unmanaged Standard
& Poor's 500 declined 6.7% during the period (and by 10.8% from its
own peak to trough). Other major stock markets registered sharp
declines during the Fund's recent peak-to-trough period. For
example, the unmanaged Nikkei 225 Index of Japanese stocks declined
13.4%, and the UK and German stock markets declined 10.8% and 14.9%,
respectively. Emerging stock markets experienced even greater losses
in value, as seen in the 34.6% decline in the unmanaged Hang Seng
Index in Hong Kong and the 18.5% drop in the Mexican stock market.
(Fund results 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 4--7
of this report to shareholders.)
Bond Investments
At October 31, 1996, the end of the prior fiscal year, the Fund had
an approximate 42.3% position in fixed-income securities, and we
ended the 1997 fiscal year with a 47.1% fixed-income exposure. This
increased investment in fixed-income issues took place largely in
the final quarter of the fiscal year. Throughout most of the fiscal
year, we were steadily reducing exposure to Latin American debt and
US corporate bond investments, and steadily increasing holdings in
US Treasury and agency securities, thereby improving the quality of
our investments but sacrificing some current income.
However, in the last quarter of the fiscal year, turmoil in emerging
stock markets spilled over into emerging bond markets, creating
attractive values. As a result, we began to increase our investment
in Latin American bonds once again, primarily through purchases of
US dollar-denominated sovereign debt of Argentina, Brazil and
Mexico.
We reduced the Fund's European bond investments during the fiscal
year from 13.4% of net assets to 8.2%. This reduction resulted from
profit taking in many holdings as European bond markets reached
levels that we viewed as fairly valued.
Equity Investments
The Fund's equity investments increased during the fiscal year,
beginning the period at 32.9% of net assets and ending it at 37.2%.
As was the case with bonds, this increased exposure largely occurred
in the final quarter of the fiscal year.
During the year, we moved from a significant underweighting in the
Japanese stock market to a slight overweighting, relative to the
Benchmark Index. Japanese stocks did not provide positive returns
for the Fund this fiscal year. However, we believe that the Japanese
stock market today offers good absolute and relative value.
Our US stock exposure was virtually unchanged over the course of the
fiscal year. Although our significant underweighting of US stocks
hindered performance, our overweight positions in banks and
financial services stocks in general enhanced total returns.
However, we believe that this sector's relative returns may be
approaching peak levels, and we have reduced our exposure over the
course of the year. We modestly increased the Fund's European equity
positions during the fiscal year. Recently, we took advantage of
weak markets during the October quarter to add to positions in
European stocks.
The Fund's exposure to emerging equity markets has been minimal
throughout the fiscal year, which helped enhance returns and limit
volatility, especially during the final months of the fiscal year.
As prices weakened during the October quarter, we were buyers of
equities in Hong Kong, Argentina, Indonesia and South Korea.
However, our equity investments in these markets were very modest,
and our overall emerging markets equity exposure remains small.
In addition to purchasing some emerging markets stocks during the
October quarter, we purchased US dollar-denominated convertible
bonds and convertible preferred stocks in Singapore, South Korea,
Hong Kong, the Philippines, Malaysia and India. These senior
securities have less downside risk than their equity counterparts
but, at the same time, have commensurately less appreciation
potential.
Currency Exposure
We began the fiscal year with significant hedges against a weakening
yen and Deutschemark as well as other European currencies. During
the course of the fiscal year, we removed these hedges as the US
dollar strengthened and the risk of foreign currency depreciation
decreased. In general, our hedging strategies helped the Fund's
performance by reducing currency losses during the fiscal year.
In Conclusion
The Fund came into the fiscal fourth quarter in a conservative
posture, with a relatively high cash position and a low equity
position compared to the Fund's Benchmark Index. Equity markets
around the world were very volatile, with sharp declines followed by
some recovery in the United States and Western Europe, and sharp
declines with little or no recovery in Asia.
We took advantage of lower prices to increase the Fund's equity
weighting in the United States and Western Europe. We also bought
equities and convertible securities in Japan and East Asia, and we
bought US dollar-denominated bonds in Latin America, among other
investments. As a result, we ended the October quarter still with a
significant, but lowered, cash position, and a less-conservative
asset mix.
We thank you for your investment in Merrill Lynch Global Allocation
Fund, Inc., and we look forward to serving your financial needs
throughout the Fund's new fiscal year and beyond.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Bryan N. Ison)
Bryan N. Ison
Senior Vice President and
Portfolio Manager
December 12, 1997
<TABLE>
Comparative
Performance
Results
<CAPTION>
Total Investment Returns for the Periods Ending 10/31/97
3 Months 1 Year 3 Years* 5 Years*
<S> <C> <C> <C> <C>
ML Global Allocation Fund, Inc. Class A Shares 0.00% +16.08% +16.23% +14.48%
ML Global Allocation Fund, Inc. Class B Shares -0.32 +14.82 +15.01 +13.31
ML Global Allocation Fund, Inc. Class C Shares -0.26 +14.84 +15.03 NA
ML Global Allocation Fund, Inc. Class D Shares -0.06 +15.76 +15.92 NA
Benchmark Index -2.48 +14.01 +13.94 +12.84
<FN>
*Annualized.
Fund results shown do not reflect sales charges; results shown would
be lower if a sales charge was included. Past performance is not
predictive of future results.
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1997
PERFORMANCE DATA
About Fund Performance
Investors are able to purchase shares of the Fund through the
Merrill Lynch Select Pricing SM System, which offers four pricing
alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 5.25% and bear no ongoing distribution or account
maintenance fees. Class A Shares are available only to eligible
investors.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.75% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after approximately 8 years. (There is no initial
sales charge for automatic share conversions.)
* Class C Shares are subject to a distribution fee of 0.75% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 5.25% and
an account maintenance fee of 0.25% (but no distribution fee).
None of the past results shown should be considered a representation
of future performance. Figures shown in the "Average Annual Total
Return" tables as well as the total returns and cumulative total
returns in the "Performance Summary" tables assume reinvestment of
all dividends and capital gains distributions at net asset value on
the ex-dividend date. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
Total Return
Based on a $10,000
Investment
A line graph depicting the growth of an investment in the
Fund's Class A Shares and Class B Shares compared to growth of
an investment in the Financial Times/Standard & Poor's--
Actuaries World Index. Beginning and ending values are:
2/3/89** 10/97
ML Global Allocation Fund, Inc.++--
Class A Shares* $ 9,475 $30,496
ML Global Allocation Fund, Inc.++--
Class B Shares* $10,000 $29,427
Financial Times/Standard & Poor's--
Actuaries World Index++++ $10,000 $21,102
A line graph depicting the growth of an investment in the
Fund's Class C Shares and Class D Shares compared to growth of
an investment in the Financial Times/Standard & Poor's--
Actuaries World Index. Beginning and ending values are:
10/21/94** 10/97
ML Global Allocation Fund, Inc.++--
Class C Shares* $10,000 $15,220
ML Global Allocation Fund, Inc.++--
Class D Shares* $ 9,475 $14,771
Financial Times/Standard +& Poor's--
Actuaries World Index++++ $10,000 $14,632
[FN]
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commencement of operations.
++ML Global Allocation Fund, Inc. invests in a portfolio of US and
foreign issues, whose composition varies with respect to types of
securities and markets in response to changing market and economic
trends.
++++This unmanaged capitilization-weighted Index is comprised of
2,200 equities from 24 countries in 12 regions, including the
United States.
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 9/30/97 +19.62% +13.34%
Five Years Ended 9/30/97 +15.01 +13.78
Inception (2/3/89) through 9/30/97 +14.70 +13.99
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/97 +18.44% +14.44%
Five Years Ended 9/30/97 +13.86 +13.86
Inception (2/3/89) through 9/30/97 +13.54 +13.54
[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 9/30/97 +18.42% +17.42%
Inception (10/21/94) through 9/30/97 +16.10 +16.10
[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 9/30/97 +19.36% +13.10%
Inception (10/21/94) through 9/30/97 +17.03 +14.90
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
Merrill Lynch Global Allocation Fund, Inc., October 31, 1997
PERFORMANCE DATA (concluded)
<TABLE>
Performance
Summary--
Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
2/3/89--12/31/89 $10.00 $10.76 $0.199 $0.484 +14.64%
1990 10.76 9.89 0.237 0.854 + 1.88
1991 9.89 11.05 0.196 1.409 +28.75
1992 11.05 11.53 0.038 0.816 +12.19
1993 11.53 13.23 0.194 0.508 +21.01
1994 13.23 12.23 0.140 0.605 - 2.00
1995 12.23 13.88 0.341 0.872 +23.72
1996 13.88 14.55 0.530 1.001 +16.19
1/1/97--10/31/97 14.55 15.92 -- 0.358 +11.92
------ ------
Total $1.875 Total $6.907
Cumulative total return as of 10/31/97: +221.88%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures do not include sales charge; results would be lower if
sales charge was included.
</TABLE>
<TABLE>
Performance
Summary--
Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
2/3/89--12/31/89 $10.00 $10.75 $0.199 $0.392 +13.58%
1990 10.75 9.88 0.237 0.741 + 0.84
1991 9.88 11.03 0.196 1.300 +27.47
1992 11.03 11.47 0.038 0.731 +11.06
1993 11.47 13.11 0.194 0.409 +19.69
1994 13.11 12.12 0.140 0.479 - 2.89
1995 12.12 13.73 0.341 0.735 +22.39
1996 13.73 14.36 0.530 0.855 +14.95
1/1/97--10/31/97 14.36 15.65 -- 0.283 +10.98
------ ------
Total $1.875 Total $5.925
Cumulative total return as of 10/31/97: +194.27%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures do not reflect deduction of any sales charge; results
would be lower if sales charge was deducted.
</TABLE>
<TABLE>
Performance
Summary--
Class C Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $12.91 $12.07 $0.140 $0.368 - 2.58%
1995 12.07 13.63 0.341 0.771 +22.38
1996 13.63 14.23 0.530 0.876 +15.01
1/1/97--10/31/97 14.23 15.50 -- 0.291 +10.99
------ ------
Total $1.011 Total $2.306
Cumulative total return as of 10/31/97: +52.20%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures do not reflect deduction of any sales charge; results
would be lower if sales charge was deducted.
</TABLE>
<TABLE>
Performance
Summary--
Class D Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $13.07 $12.24 $0.140 $0.383 - 2.35%
1995 12.24 13.87 0.341 0.845 +23.29
1996 13.87 14.54 0.530 0.968 +15.96
1/1/97--10/31/97 14.54 15.89 -- 0.340 +11.66
------ ------
Total $1.011 Total $2.536
Cumulative total return as of 10/31/97: +55.88%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures do not include sales charge; results would be lower if
sales charge was included.
</TABLE>
<TABLE>
Recent
Performance
Results
<CAPTION>
Net Asset Value Total Return
10/31/97 7/31/97 10/31/96 12-Month 3-Month
<S> <C> <C> <C> <C> <C>
ML Global Allocation Fund, Inc. Class A Shares* $15.92 $15.92 $15.17 +16.08%(1) 0.00%
ML Global Allocation Fund, Inc. Class B Shares* 15.65 15.70 14.95 +14.82(2) - 0.32
ML Global Allocation Fund, Inc. Class C Shares* 15.50 15.54 14.83 +14.84(3) - 0.26
ML Global Allocation Fund, Inc. Class D Shares* 15.89 15.90 15.15 +15.76(4) - 0.06
US Stocks: Standard & Poor's 500 Index** +32.09 - 3.73
Non-US Stocks: Financial Times/Standard & Poor's--
Actuaries World Index (Ex-US)*** + 4.09 -10.16
US Bonds: ML Government Index GA05**** + 7.53 + 2.00
Non-US Bonds: Salomon Brothers World Government Bond Index (Ex-US)***** - 0.31 + 5.20
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
**An unmanaged broad-based index comprised of common stocks. Total
investment returns for unmanaged indexes are based on estimates.
***An unmanaged capitalization-weighted index comprised of over
1,800 companies in 24 countries, excluding the United States.
****An unmanaged index designed to track the total return of the
current coupon five-year US Treasury bond.
*****An unmanaged market capitalization-weighted index tracking 10
government bond indexes, excluding the United States.
(1)Percent change includes reinvestment of $0.996 per share ordinary
income dividends and $0.530 per share capital gains distributions.
(2)Percent change includes reinvestment of $0.845 per share ordinary
income dividends and $0.530 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.859 per share ordinary
income dividends and $0.530 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.959 per share ordinary
income dividends and $0.530 per share capital gains distributions.
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1997
Portfolio
Abbreviations
Merrill Lynch Global Allocation Fund, Inc., October 31, 1997
To simplify the currency denominations of Merrill Lynch Global
Allocation Fund, Inc.'s portfolio holdings in the Schedule of
Investments, we have abbreviated the currencies according to the
list at right.
CAD Canadian Dollar
CHF Swiss Franc
DEM German Deutschemark
DKR Danish Krone
ECU European Currency Unit
ESP Spanish Peseta
FRF French Franc
GBP Great Britain Pound
IDR Indonesian Rupiah
JPY Japanese Yen
NLG Netherlands Guilder
NOK Norwegian Krone
NZD New Zealand Dollar
PHP Philippine Peso
SEK Swedish Kroner
USD United States Dollar
ZAL South African Rand
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Value Percent of
COUNTRY Industries Held Common Stocks Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Argentina Banking 1,013,200 ++Banco Rio de La Plata
S.A.(ADR)++++ (USD) $ 10,830,050 $ 10,638,600 0.1%
Oil--Related 480,000 Yacimientos Petroliferos
Fiscales S.A. (ADR)++++ (USD) 10,296,490 15,360,000 0.1
Total Common Stocks
in Argentina 21,126,540 25,998,600 0.2
Australia Banking 2,645,800 Westpac Banking Corp. 5,614,396 15,446,784 0.1
Beverages 1,999,379 Foster's Brewing Group
Limited 3,509,519 3,806,358 0.0
Building & 1,636,577 Lend Lease Corporation
Construction Limited 27,280,912 33,603,037 0.3
Building Materials 690,547 Pioneer International
Limited 1,744,554 1,830,762 0.0
Diversified 8,614,452 Broken Hill Proprietary
Co., Ltd. 95,060,491 85,644,106 0.6
Foods 7,916,000 Goodman Fielder Wattie Ltd. 8,324,587 12,167,826 0.1
Insurance 1,803,135 GIO Australia Holdings, Ltd. 3,207,015 4,627,861 0.0
Metals & Mining 3,102,904 M.I.M. Holdings Ltd. 2,639,750 2,734,822 0.0
2,795,439 Pasminco Limited 3,044,304 3,469,073 0.0
6,000,000 WMC Limited 20,064,490 21,364,530 0.2
--------------- --------------- ------
25,748,544 27,568,425 0.2
Multi-Industry 1,500,000 Pacific Dunlop, Ltd. 4,092,789 3,212,083 0.0
Tobacco 1,689,800 Rothmans Holdings, Ltd. 6,042,681 8,364,175 0.1
1,242,300 WD & HO Wills Holdings, Ltd. 1,389,502 1,532,905 0.0
--------------- --------------- ------
7,432,183 9,897,080 0.1
Total Common Stocks
in Australia 182,014,990 197,804,322 1.4
Canada Beverages 1,900,000 Cott Corp.(USD) 15,484,918 19,475,000 0.1
Metals--Non-Ferrous 1,000,000 Inco Ltd. (USD) 22,852,818 20,625,000 0.2
Multi-Industry 280,000 ++Semi-Tech Corporation
(Class A) 4,108,297 337,900 0.0
Paper 3,250,000 ++Repap Enterprises Inc.(USD) 12,879,320 507,813 0.0
Telecommunications 200,000 BCE Telecommunications,
Inc. (USD) 3,375,484 5,587,500 0.0
1,165,200 ++Rogers Cantel Mobile
Communications Inc.
(Class B)+++ 22,391,633 19,437,922 0.1
1,160,900 ++Rogers Cantel Mobile
Communications Inc.
(Class B) (USD)+++ 19,836,379 19,590,187 0.2
4,543,700 ++Rogers Communications Inc.
(Class B) 39,359,870 30,964,379 0.2
--------------- --------------- ------
84,963,366 75,579,988 0.5
Total Common Stocks
in Canada 140,288,719 116,525,701 0.8
Finland Metals 576,930 Outokumpu OY 8,651,262 8,600,893 0.1
Paper & Forest 770,930 Enso OY 6,578,864 7,328,686 0.0
Products 2,909,250 Metsa Serla OY 'B' 23,657,400 25,628,437 0.2
442,079 UPM-Kymmene OY 8,170,266 9,774,525 0.1
--------------- --------------- ------
38,406,530 42,731,648 0.3
Telecommunication 75,000 Nokia Corp. (ADR)++++ (USD) 2,482,938 6,618,750 0.0
Equipment 186,360 Nokia OY 8,998,615 16,453,080 0.1
--------------- --------------- ------
11,481,553 23,071,830 0.1
Total Common Stocks
in Finland 58,539,345 74,404,371 0.5
France Automobiles 79,132 Peugeot S.A. 9,062,870 8,963,260 0.1
Banking 216,620 Banque Nationale de
Paris S.A. 9,576,811 9,581,631 0.1
173,900 Compagnie Financiere de
Paribas S.A. 9,343,179 12,636,029 0.1
540,386 Societe Generale de
France S.A. 56,680,843 74,051,160 0.5
--------------- --------------- ------
75,600,833 96,268,820 0.7
Consumer Products 17,097 Christian Dior S.A. 1,744,296 1,898,019 0.0
Electronics 75,299 ++SGS-Thomson Microelectronics
N.V. 3,487,840 5,361,707 0.0
Energy & Petroleum 75,828 Elf Aquitaine (Elf) S.A. 7,353,249 9,391,360 0.1
Engineering & 212,968 Bouygues S.A. 20,353,497 19,948,434 0.1
Construction
Foods/Food Processing 61,600 Groupe Danone S.A. 9,786,153 9,424,319 0.1
Hotel/Leisure 47,466 Accor S.A. 6,649,847 8,842,755 0.1
Industrial 195,846 Alcatel Alsthom Cie Generale
d'Electricite S.A. 18,263,077 23,644,201 0.1
Insurance 503,171 Assurances Generales de
France S.A. (AGF) 16,032,715 26,489,575 0.2
314,456 Axa S.A.--UAP 19,659,982 21,545,554 0.1
--------------- --------------- ------
35,692,697 48,035,129 0.3
Metals/Steel 1,275,580 Usinor-Sacilor S.A. 19,472,262 21,130,597 0.2
Multi-Industry 36,933 EuraFrance S.A. 10,437,805 15,048,676 0.1
Retail--Home Improvement 54,440 Castorama Dubois
Investissements S.C.A. 7,307,525 5,675,358 0.0
Telecommunications 216,056 ++France Telecom S.A. 6,817,602 8,181,271 0.1
Utilities--Water 7,663 Compagnie Generale
des Eaux S.A. 835,034 891,912 0.0
Total Common Stocks
in France 232,864,587 282,705,818 2.0
Germany Automotive 199,256 Daimler-Benz AG 13,553,254 13,599,590 0.1
37,883 Volkswagen AG 16,398,475 22,442,170 0.1
--------------- --------------- ------
29,951,729 36,041,760 0.2
Banking 55,680 Bayerische Vereinsbank AG 1,339,965 3,237,021 0.0
Capital Goods 369,636 ++Kloeckner-Werke AG 17,229,762 28,365,765 0.2
Chemicals 224,385 BASF AG 7,802,958 7,631,255 0.1
419,934 Bayer AG 15,484,588 14,770,076 0.1
101,451 Henkel KGaA 4,390,556 4,954,296 0.0
--------------- --------------- ------
27,678,102 27,355,627 0.2
Engineering & 32,565 ++Philipp Holzmann AG 12,268,030 9,182,039 0.1
Construction
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1997
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Value Percent of
COUNTRY Industries Held Common Stocks Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Germany Insurance 11,790 Muenchener
(concluded) Rueckversicherungs
-Gesellschaft AG $ 3,429,320 $ 3,440,835 0.0%
Metals/Steel 169,415 Thyssen AG 36,439,456 37,475,965 0.3
Retail 29,472 Karstadt AG 10,289,552 10,280,333 0.1
Telecommunications 197,100 Deutsche Telekom AG 3,748,649 3,701,139 0.0
Utilities 189,775 Veba AG 9,611,569 10,602,510 0.1
Total Common Stocks
in Germany 151,986,134 169,682,994 1.2
Hong Kong Agriculture 31,924,000 C.P. Pokphand Co. Ltd.
(Ordinary) 11,031,647 7,640,285 0.1
Banking 901,676 HSBC Holdings PLC 14,386,653 20,413,105 0.1
Conglomerates 5,304,500 Hutchison Whampoa Ltd. 34,916,054 36,712,904 0.2
Total Common Stocks
in Hong Kong 60,334,354 64,766,294 0.4
Indonesia Paper & Pulp 4,671,800 ++Asia Pacific Resources
International Holdings Ltd.
(NY Registered Shares)
(USD)+++ 25,834,218 18,395,213 0.2
1,420,000 Asia Pulp & Paper Company
Ltd. (ADR)++++ (USD) 16,330,000 16,152,500 0.1
--------------- --------------- ------
42,164,218 34,547,713 0.3
Tobacco 7,500,000 Sampoerna International
Finance Company B.V. 11,856,769 13,109,331 0.1
Total Common Stocks
in Indonesia 54,020,987 47,657,044 0.4
Ireland Building & 631,423 CRH PLC (GBP) 6,857,511 7,616,189 0.1
Construction
Total Common Stocks
in Ireland 6,857,511 7,616,189 0.1
Italy Banking 3,130,440 Istituto Bancario San
Paolo di Torino S.p.A. 19,845,879 23,796,012 0.2
1,813,400 Istituto Mobiliare Italiano
S.p.A. (Ordinary) 13,339,979 16,247,412 0.1
--------------- --------------- ------
33,185,858 40,043,424 0.3
Insurance 906,772 Assicurazioni Generali
S.p.A. 16,525,125 20,310,877 0.1
10,694,743 Istituto Nazionale delle
Assicurazioni (INA) S.p.A. 16,063,214 17,246,523 0.1
--------------- --------------- ------
32,588,339 37,557,400 0.2
Multi-Industry 9,117,595 ++Compagnie Industriali
Riunite S.p.A. (CIR) 7,816,550 7,284,148 0.1
67,959,595 MontEdison S.p.A. 52,812,846 55,258,897 0.4
--------------- --------------- ------
60,629,396 62,543,045 0.5
Publishing 3,000,000 ++Seat S.p.A. 1,088,139 1,207,243 0.0
8,666,863 ++Seat S.p.A.--RISP 2,411,987 2,272,115 0.0
--------------- --------------- ------
3,500,126 3,479,358 0.0
Telecommunications 3,958,000 TIM S.p.A. 1,395,818 14,709,575 0.1
3,751,300 TIM S.p.A.--RISP 3,831,835 7,703,285 0.1
5,198,888 Telecom Italia S.p.A. 12,145,121 32,643,036 0.2
8,322,588 Telecom Italia S.p.A.--RISP 15,895,748 33,688,307 0.2
--------------- --------------- ------
33,268,522 88,744,203 0.6
Total Common Stocks
in Italy 163,172,241 232,367,430 1.6
Japan Automobiles & 3,282,000 Suzuki Motor Corp. 30,510,247 34,946,843 0.3
Equipment
Automotive 2,508,000 Fuji Heavy Industries,
Ltd. 10,432,063 9,993,611 0.1
Beverages 1,415,000 Chukyo Coca-Cola Bottling
Co., Ltd. 15,370,052 11,182,514 0.1
663,000 Hokkaido Coca-Cola Bottling
Co., Ltd. 8,836,164 6,894,185 0.0
790,000 Kinki Coca-Cola Bottling
Co., Ltd. 11,999,955 9,463,439 0.1
1,243,000 Mikuni Coca-Cola Bottling
Co., Ltd. 17,391,669 17,371,600 0.1
1,197,700 Sanyo Coca-Cola Bottling
Co., Ltd. 16,669,629 14,546,560 0.1
--------------- --------------- ------
70,267,469 59,458,298 0.4
Capital Goods 10,900,000 Kawasaki Heavy Industries,
Ltd. 30,706,775 25,388,903 0.2
6,375,000 Mitsubishi Heavy Industries,
Inc. 38,324,849 31,342,026 0.2
--------------- --------------- ------
69,031,624 56,730,929 0.4
Chemicals 34,000 Shin-Etsu Chemical Co., Ltd. 657,132 831,545 0.0
Consumer Products 50,000 Amway Japan Limited
(Premium Exchangeable
Participating Shares) (USD) 721,750 731,250 0.0
Electrical 1,124,000 Chudenko Corp. 30,032,358 27,396,390 0.2
Construction 1,386,000 Kinden Corporation 21,348,708 17,294,734 0.1
34,000 Taihei Dengyo Kaisha, Ltd. 637,020 156,975 0.0
--------------- --------------- ------
52,018,086 44,848,099 0.3
Electrical Equipment 593,000 Murata Manufacturing
Co., Ltd. 19,275,913 24,073,205 0.2
Financial Services 4,989,000 Daiwa Securities Co., Ltd. 30,211,613 30,213,726 0.2
211,000 Kokusai Securities Co., Ltd. 1,472,698 1,527,078 0.0
879,000 Nomura Securities Co., Ltd. 11,893,928 10,237,085 0.1
1,720,000 ++Wako Securities Co., Ltd. 4,377,152 4,507,113 0.0
--------------- --------------- ------
47,955,391 46,485,002 0.3
Industrial 28,000 Miura Kogyo Co., Ltd. 466,635 302,803 0.0
14,500 Nitto Kohki Co., Ltd. 488,740 254,513 0.0
--------------- --------------- ------
955,375 557,316 0.0
Insurance 743,000 Chiyoda Fire & Marine
Insurance Co., Ltd. 2,796,009 2,701,032 0.0
2,897,000 Dai-Tokyo Fire & Marine
Insurance Co., Ltd. 17,990,037 12,435,338 0.1
125,000 Dowa Fire & Marine
Insurance Co., Ltd. 441,340 500,166 0.0
3,743,000 Fuji Fire & Marine
Insurance Co., Ltd. 13,980,452 11,956,676 0.1
4,865,000 Koa Fire & Marine
Insurance Co., Ltd. 24,748,402 25,294,277 0.2
765,000 Mitsui Marine & Fire
Insurance Co., Ltd. 5,730,161 4,505,615 0.0
3,508,000 Nichido Fire & Marine
Insurance Co., Ltd. 20,622,267 22,674,619 0.2
4,816,000 Nippon Fire & Marine
Insurance Co., Ltd. 20,479,413 18,589,335 0.1
999,000 Nisshin Fire & Marine
Insurance Co., Ltd. 2,688,731 2,808,934 0.0
7,315,000 Sumitomo Marine & Fire
Insurance Co., Ltd. 46,067,731 48,803,178 0.3
2,368,000 Tokio Marine & Fire
Insurance Co., Ltd. 25,707,953 23,638,632 0.2
5,000,000 Yasuda Fire & Marine
Insurance Co., Ltd. 25,976,040 27,743,116 0.2
--------------- --------------- ------
207,228,536 201,650,918 1.4
Office Equipment 1,612,000 Canon, Inc. 23,455,745 39,156,809 0.3
Packaging & 1,103,000 Toyo Seikan Kaisha, Ltd. 25,118,395 17,341,902 0.1
Containers
Pharmaceuticals 1,061,000 Sankyo Pharmaceuticals
Co., Ltd. 23,391,365 35,040,097 0.2
384,000 Taisho Pharmaceuticals Co. 7,984,458 9,838,782 0.1
--------------- --------------- ------
31,375,823 44,878,879 0.3
Restaurants 600,000 Mos Food Services, Inc. 11,492,811 8,035,937 0.1
548,000 Ohsho Food Service Corp. 9,428,814 5,971,883 0.0
--------------- --------------- ------
20,921,625 14,007,820 0.1
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1997
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Value Percent of
COUNTRY Industries Held Common Stocks Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Japan Retail Stores 460,000 Ito Yokado Co., Ltd. $ 21,319,319 $ 22,883,288 0.2%
(concluded) 100,000 Sangetsu Co., Ltd. 3,160,832 1,622,161 0.0
--------------- --------------- ------
24,480,151 24,505,449 0.2
Total Common Stocks
in Japan 634,405,325 620,197,875 4.4
Mexico Conglomerates 433,800 Grupo Carso, S.A. de
C.V. (ADR)++++ (USD) 3,832,850 5,422,500 0.0
Finance 6,054 Grupo Financiero Inbursa,
S.A. de C.V. (ADR)++++ (USD) 121,464 102,918 0.0
Foods 700,000 Grupo Industrial Maseca
(ADR)++++ (USD) 7,969,925 10,193,750 0.1
Telecommunications 433,800 Global Telecommunications
Solutions, Inc.
(ADR)++++ (USD) 2,060,550 2,765,475 0.0
Total Common Stocks
in Mexico 13,984,789 18,484,643 0.1
Netherlands Banking 360,279 ABN AMRO Holding N.V. 6,828,977 7,260,545 0.1
Chemicals 143,576 Akzo N.V. 17,876,528 25,315,612 0.2
288,070 European Vinyls Corp.
International N.V. 11,384,340 7,156,465 0.0
--------------- --------------- ------
29,260,868 32,472,077 0.2
Electronics 299,483 Philips Electronics N.V. 10,810,709 23,462,229 0.2
Distribution
Forest Products 869,088 Koninklijke KNP N.V 19,707,929 19,798,824 0.1
Insurance 958,493 Internationale Nederlanden
Groep N.V. 15,908,091 40,262,437 0.3
Miscellaneous-- 10,000 Koninklijke Ten Cate 501,699 480,363 0.0
Manufacturing
Steel 161,800 ++Ispat International N.V.
(NY Registered Shares) (USD) 4,382,262 4,127,977 0.0
Telecommunications 750,916 Royal PTT Nederland N.V. 26,855,248 28,717,641 0.2
Transportation 111,846 Koninklijke Pakhoed N.V. 4,339,539 3,666,326 0.0
Total Common Stocks in
the Netherlands 118,595,322 160,248,419 1.1
New Zealand Natural Gas Suppliers 1,477,104 Natural Gas Corporation
Holdings Limited 1,043,960 2,330,065 0.0
Total Common Stocks in
New Zealand 1,043,960 2,330,065 0.0
Norway Banking 4,785,400 Christiania Bank Og
Kreditkasse 10,697,335 19,122,478 0.1
2,434,000 Den Norske Bank ASA 7,189,721 11,011,531 0.1
Total Common Stocks
in Norway 17,887,056 30,134,009 0.2
Philippines Multi-Industry 3,028,000 Ayala Corporation 1,117,717 1,121,481 0.0
Total Common Stocks in
the Philippines 1,117,717 1,121,481 0.0
Portugal Telecommunications 41,000 ++Telecel-Comunicacaoes
Pessoais, S.A. 2,073,605 3,710,302 0.0
Total Common Stocks
in Portugal 2,073,605 3,710,302 0.0
South Korea Steel 150,900 Pohang Iron & Steel Co.,
Ltd. (ADR)++++ (USD) 2,414,023 2,452,125 0.0
Telecommunications 700,800 ++SK Telecom Co., Ltd.
(ADR)++++ (USD) 3,662,367 3,854,400 0.0
Utilities--Electric 495,300 Korea Electric Power
Corporation (ADR)++++ (USD) 3,801,972 4,055,269 0.1
Total Common Stocks in
South Korea 9,878,362 10,361,794 0.1
Spain Banking 86,000 Corporacion Bancaria de
Espana S.A. (Argentaria) 3,351,129 4,784,028 0.0
Energy & Petroleum 147,623 Repsol S.A. 5,580,104 6,199,658 0.0
212,500 Repsol S.A. (ADR)++++ (USD) 6,126,375 9,031,250 0.1
--------------- --------------- ------
11,706,479 15,230,908 0.1
Insurance 33,389 Mapfre S.A. 1,272,758 1,528,653 0.0
Manufacturing 173,000 ++Grupo Fosforera Espanola S.A. 1,501,871 267,986 0.0
Utilities--Electric 1,235,325 Endesa S.A. 20,999,424 23,303,205 0.2
141,800 Iberdrola I S.A. 793,768 1,698,671 0.0
--------------- --------------- ------
21,793,192 25,001,876 0.2
Total Common Stocks
in Spain 39,625,429 46,813,451 0.3
Sweden Appliances 222,953 Electrolux AB 'B' Free 9,775,237 18,475,862 0.1
Automotive & Equipment 43,916 Scania AB (Warrants) (a) 60,444 43,436 0.0
Industrial 119,420 SKF AB 'A' 2,217,257 2,665,589 0.0
Insurance 329,563 Skandia Forsakring AB Free 9,003,098 15,417,224 0.1
Metals/Steel 887,529 Avesta Sheffield AB 8,590,616 6,643,092 0.1
Multi-Industry 192,784 Svedala Industri AB Free 2,531,671 3,787,809 0.0
Paper & Forest 297,445 Mo och Domsjo AB (Class B) 7,181,896 8,070,537 0.1
Products 642,035 Stora Kopparbergs
Bergslags AB 7,084,794 8,881,754 0.1
--------------- --------------- ------
14,266,690 16,952,291 0.2
Total Common Stocks
in Sweden 46,445,013 63,985,303 0.5
Switzerland Electronic Components 69,850 Societe Suisse pour la
Microelectronique
et l'Horlogerie AG
(Registered) 9,809,595 9,184,862 0.1
Financial Services 34,954 CS Holdings AG (Registered) 3,513,437 4,940,650 0.0
Machinery 12,180 Saurer AG (Registered) 5,954,865 8,082,178 0.1
Multi-Industry 301,993 Oerlikon-Buehrle Holding Ltd. 32,057,825 38,736,472 0.3
Pharmaceuticals 29,068 Novartis AG (Registered) 39,100,010 45,679,774 0.3
Photographic Services 9,869 Fotolabo S.A. 4,104,691 2,404,486 0.0
Total Common Stocks
in Switzerland 94,540,423 109,028,422 0.8
Thailand Holding Company 1,373,300 BEC World Public Co.,
Ltd. (Foreign) 8,876,272 6,916,866 0.1
Total Common Stocks
in Thailand 8,876,272 6,916,866 0.1
United Banking 899,577 HSBC Holdings PLC (GBP) 27,212,308 22,410,586 0.2
Kingdom 884,956 National Westminster
Bank PLC 9,683,612 12,723,041 0.1
--------------- --------------- ------
36,895,920 35,133,627 0.3
Beverages 1,451,980 Cadbury Schweppes PLC 11,384,259 14,615,050 0.1
Chemicals 759,778 Imperial Chemical
Industries PLC 11,810,389 11,216,511 0.1
1,470,000 Inspec Group PLC 4,431,923 5,906,242 0.0
--------------- --------------- ------
16,242,312 17,122,753 0.1
Computers 436,453 Misys PLC 5,613,530 11,001,208 0.1
Conglomerates 6,250 Hanson PLC (ADR)++++ (USD) 353,583 159,375 0.0
Energy & Related 724,323 Energy Group PLC 7,684,595 7,381,880 0.0
6,250 Energy Group PLC
(ADR)++++ (USD) 226,417 252,344 0.0
--------------- --------------- ------
7,911,012 7,634,224 0.0
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1997
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Value Percent of
COUNTRY Industries Held Common Stocks Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Environmental 1,194,500 ++Waste Management
Kingdom International PLC
(concluded) (ADR)++++ (USD) $ 11,101,063 $ 8,212,188 0.1%
Food & Beverage 1,498,814 Allied Domecq PLC 10,394,260 12,232,606 0.1
650,505 Bass PLC 8,302,679 9,035,858 0.1
631,110 Matthew Clark PLC 6,157,510 2,593,938 0.0
--------------- --------------- ------
24,854,449 23,862,402 0.2
Glass 3,451,777 Pilkington PLC 6,954,694 8,743,959 0.1
Holding Company 7,602,145 BTR PLC 28,078,103 25,666,134 0.2
Manufacturing-- 4,731,768 LucasVarity PLC 15,226,664 16,233,239 0.1
Automotive Supplies
Merchandising 1,023,673 W.H. Smith Group PLC
(Class A) 6,255,529 6,491,446 0.0
Metals & Mining 858,223 Rio Tinto PLC 12,434,329 11,057,318 0.1
Retail Stores 691,675 Signet Group PLC
(ADR)++++ (USD) 2,194,907 10,029,288 0.1
Retail/Food 8,235,525 Asda Group PLC 15,096,762 21,414,671 0.1
2,209,750 Sainsbury (J.) PLC 13,705,005 18,442,706 0.1
2,761,101 Tesco PLC 14,814,819 22,106,330 0.2
--------------- --------------- ------
43,616,586 61,963,707 0.4
Steel 1,500,000 British Steel PLC 4,081,599 3,975,912 0.0
Telecommunications 2,245,417 British Telecommunications
PLC (Ordinary) 14,760,954 17,064,091 0.1
1,598,955 Cable & Wireless PLC 10,985,936 12,768,257 0.1
917,333 ++Ionica PLC 4,556,654 4,770,645 0.0
2,290,000 ++Ionica PLC (r) 10,286,966 11,832,448 0.1
1,565,667 Ionica PLC (Warrants) (a)(r) -- 1,472,654 0.0
4,702,580 Unilever PLC 22,970,885 35,027,374 0.3
--------------- --------------- ------
63,561,395 82,935,469 0.6
Tobacco 2,787,884 B.A.T. Industries PLC 23,744,589 24,390,316 0.2
411,705 Gallaher Group PLC 1,712,347 1,978,788 0.0
12,500 Imperial Tobacco Group
PLC (ADR)++++ (USD) 238,391 149,219 0.0
--------------- --------------- ------
25,695,327 26,518,323 0.2
Utilities--Water 1,548,165 Southwest Water PLC 11,855,933 22,154,130 0.1
Total Common Stocks in
the United Kingdom 334,311,194 393,509,752 2.8
United States Apparel 700,000 ++Fruit of the Loom, Inc.
(Class A) 18,572,062 18,243,750 0.2
100,000 Liz Claiborne, Inc. 2,016,276 5,068,750 0.0
--------------- --------------- ------
20,588,338 23,312,500 0.2
Automobiles 165,308 Ford Motor Company 4,906,268 7,221,893 0.0
150,000 General Motors Corp. 5,691,925 9,628,125 0.1
--------------- --------------- ------
10,598,193 16,850,018 0.1
Automotive 400,000 ++Collins & Aikman Group Inc. 2,792,538 3,875,000 0.0
Banking 400,000 BB&T Corporation 7,717,728 21,775,000 0.2
129,500 Banknorth Group, Inc. 1,865,422 7,737,625 0.1
407,100 CoreStates Financial Corp. 14,288,085 29,616,525 0.2
350,000 First Chicago NBD
Corporation 10,902,245 25,462,500 0.2
900,000 First Commerce Corp. 22,726,556 57,825,000 0.4
950,000 ++Golden State Bancorp Inc. 13,232,157 31,587,500 0.2
770,194 Golden State Bancorp Inc.
(Warrants) (a) -- 16,847,994 0.1
900,000 KeyCorp 26,457,055 55,068,750 0.4
1,125,800 Mellon Bank Corp. 21,852,555 58,049,063 0.4
397,125 Oriental Financial Group 6,989,400 10,548,633 0.0
760,000 Republic New York Corp. 33,998,213 80,417,500 0.6
--------------- --------------- ------
160,029,416 94,936,090 2.8
Broadcasting/Cable 49,450 People's Choice TV Corp.
(Warrants) (a) 226,458 495 0.0
Building Products 81,700 ++CBI Industries, Inc. 1,381,235 1,445,069 0.0
567,892 Flowserve Corporation 14,089,137 16,894,787 0.1
--------------- --------------- ------
15,470,372 18,339,856 0.1
Business Data Systems 1,400,000 ++Information Resources,
Inc.+++ 16,553,312 22,750,000 0.2
Chemicals 300,000 The Geon Company 5,955,557 6,506,250 0.1
Computer Services 240,000 Electronic Data Systems Corp. 9,927,011 9,285,000 0.1
Computer Software 225,000 Boole & Babbage, Inc. 1,329,492 6,468,750 0.0
2,400,000 ++Borland International
Corp.+++ 33,535,053 22,500,000 0.2
--------------- --------------- ------
34,864,545 28,968,750 0.2
Computers & 614,300 ++FileNet Corporation 8,153,432 13,821,750 0.1
Technology 998,000 ++Komag, Inc. 17,615,478 17,153,125 0.1
500,000 ++Stratus Computer, Inc. 9,130,512 17,687,500 0.2
200,000 ++Unisys Corp. 1,970,986 2,662,500 0.0
--------------- --------------- ------
36,870,408 51,324,875 0.4
Construction & 300,000 ++K. Hovnanian Enterprises,
Housing Inc. (Class A) 2,795,933 2,231,250 0.0
Construction 700,000 TJ International, Inc. 12,547,379 15,837,500 0.1
Products
Consumer-- 90,770 ++Ascent Entertainment
Miscellaneous Group, Inc. 631,090 896,354 0.0
400,000 ++Department 56, Inc. 8,951,325 12,075,000 0.1
--------------- --------------- ------
9,582,415 12,971,354 0.1
Containers 1,008,000 Stone Container Corporation 12,596,036 12,159,000 0.1
Electronics 1,600,000 Checkpoint Systems, Inc. 17,710,635 25,600,000 0.2
1,050,000 ++MEMC Electronic
Materials, Inc. 21,050,365 21,065,625 0.1
750,300 ++Silicon Graphics, Inc. 12,303,605 11,020,031 0.1
1,000,000 ++Silicon Valley Group, Inc. 18,066,194 28,500,000 0.2
--------------- --------------- ------
69,130,799 86,185,656 0.6
Energy & Petroleum 610,900 Arch Coal, Inc. 16,543,746 16,341,575 0.1
46,400 Mitchell Energy Development
Corp. (Class A) 675,717 1,165,800 0.0
174,350 Mitchell Energy Development
Corp. (Class B) 2,755,451 4,358,750 0.0
50,000 Murphy Oil Corp. 1,688,446 2,896,875 0.0
1,500,000 Occidental Petroleum Corp. 28,058,743 41,812,500 0.3
235,828 ++Plains Resources, Inc. 1,381,815 4,716,560 0.1
1,440,078 Santa Fe Energy Resources,
Inc. 7,768,521 18,811,019 0.1
1,034,500 ++TransTexas Gas Corp. 14,373,642 19,655,500 0.2
500,000 USX-Marathon Group 8,761,976 17,875,000 0.1
--------------- --------------- ------
82,008,057 127,633,579 0.9
Financial Services 163,600 ++American Capital
Strategies, Ltd. 2,454,000 2,863,000 0.0
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1997
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Value Percent of
COUNTRY Industries Held Common Stocks Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
United States Forest Products 14,300 Deltic Timber Corporation $ 392,321 $ 403,081 0.0%
(continued)
Gaming 1,235,000 ++Scientific Games
Holdings Corp. (c)+++ 27,568,304 26,629,688 0.2
Health Care 600,000 ++Oxford Health Plans, Inc. 16,429,590 15,487,500 0.1
Cost Containment
Healthcare Services 360,000 ++Advocat, Inc.+++ 3,422,500 3,555,000 0.0
90,000 Allegiance Corporation 760,858 2,497,500 0.0
450,000 Baxter International, Inc. 9,088,023 20,812,500 0.1
1,600,000 ++Beverly Enterprises, Inc. 18,056,405 23,900,000 0.2
600,000 Columbia/HCA Healthcare
Corp. 17,051,556 16,950,000 0.1
700,000 ++Humana, Inc. 13,206,455 14,700,000 0.1
1,225,740 US Surgical Corp. 27,641,430 33,018,371 0.3
185,600 United Healthcare
Corporation 6,009,630 8,595,600 0.1
--------------- --------------- ------
95,236,857 124,028,971 0.9
Industrial 100,000 ++American Standard, Inc. 2,986,000 3,575,000 0.0
15,000 Bar Technologies Ltd.
(Warrants) (a) 838,256 750,000 0.0
179,802 Cooper Industries, Inc. 6,534,892 9,372,179 0.1
2,830,246 ++Crown Packaging Holdings
Ltd. (q) 1,433,657 28,302 0.0
--------------- --------------- ------
11,792,805 13,725,481 0.1
Insurance 200,000 ACE, Ltd. 7,051,748 18,587,500 0.1
350,000 Aetna Inc. 28,167,500 24,871,875 0.2
510,000 American General Corp. 13,187,448 26,010,000 0.2
114,000 The Hartford Financial
Services Group Inc. 4,188,594 9,234,000 0.0
387,500 Horace Mann Educators, Inc. 9,196,189 21,796,875 0.2
400,200 Lincoln National Corp. 14,468,475 27,513,750 0.2
350,000 PartnerRe Holdings, Ltd. 6,790,237 14,350,000 0.1
1,927,500 ++Risk Capital Holdings
Inc.+++ 33,900,906 41,923,125 0.3
--------------- --------------- ------
116,951,097 184,287,125 1.3
Manufacturing 200,000 ITT Industries Inc. 4,175,065 6,312,500 0.0
Metals & Mining 305,000 Aluminum Co. of America 13,814,815 22,265,000 0.2
1,100,000 Battle Mountain Gold Company 7,231,967 6,737,500 0.1
624,500 Commonwealth Industries Inc. 11,725,173 10,772,625 0.1
1,350,000 Lukens Inc.+++ 25,689,657 24,300,000 0.2
600,000 ++National Steel Corp. 5,445,549 9,900,000 0.1
600,000 Newmont Mining Corporation 23,399,952 21,000,000 0.1
400,000 Nucor Corporation 18,363,133 20,900,000 0.1
132,800 Reynolds Metals Co. 5,801,771 8,092,500 0.0
--------------- --------------- ------
111,472,017 123,967,625 0.9
Multi-Industry 90,000 Loews Corp. 3,984,675 10,051,875 0.1
Multimedia & 512,800 ++U S West Media Group 7,933,766 12,948,200 0.1
Telecommunications 20,000 Unifi Communications Inc.
(Warrants) (a)(q) 1,166,800 400,000 0.0
--------------- --------------- ------
9,100,566 13,348,200 0.1
Natural Resources 349,765 ++Alumax, Inc. 7,240,312 11,367,362 0.1
210,519 Freeport-McMoRan Copper
& Gold Inc. (Class B) 3,665,657 5,026,141 0.0
--------------- --------------- ------
10,905,969 16,393,503 0.1
Oil Services 200,000 Diamond Offshore
Drilling Inc. 5,150,000 12,450,000 0.1
2,500,000 ++Noble Drilling Corp. 16,505,558 88,906,250 0.6
150,000 Tidewater Inc. 5,807,066 9,853,125 0.1
150,000 ++Western Atlas, Inc. 9,013,408 12,928,125 0.1
--------------- --------------- ------
36,476,032 124,137,500 0.9
Paper 160,200 Boise Cascade Corporation 4,225,000 5,546,925 0.0
265,316 Fort James Corporation 4,971,450 10,529,729 0.1
240,000 Louisiana-Pacific Corp. 5,273,733 5,040,000 0.0
--------------- --------------- ------
14,470,183 21,116,654 0.1
Petroleum 707,031 Monterey Resources, Inc. 6,627,069 14,096,431 0.1
Pharmaceuticals/ 250,000 ++Alteon, Inc. 1,968,199 1,578,125 0.0
Biotechnology
Photography 160,000 Eastman Kodak Company 8,746,145 9,580,000 0.1
Pollution Control 1,246,900 ++Waste Management Inc. 31,997,538 29,146,287 0.2
Publishing 250,000 Gannett Co., Inc. 5,935,736 13,140,625 0.1
201,500 New York Times Co. (Class A) 4,801,503 11,032,125 0.1
350,000 Reader's Digest Association,
Inc. (Class A) 8,229,300 7,962,500 0.0
--------------- --------------- ------
18,966,539 32,135,250 0.2
Real Estate 2,574,465 ++Catellus Development Corp. 22,351,219 44,248,617 0.3
Real Estate 730,000 Ambassador Apartments Inc. 11,272,615 15,649,375 0.1
Investment 446,800 Imperial Credit Commercial
Trusts Mortgage Investment Corp. 6,702,000 7,316,350 0.1
661,300 Mid-America Realty
Investments+++ 6,444,676 6,902,319 0.1
1,839,825 Prime Retail, Inc.+++ 21,062,587 27,482,386 0.2
400,000 Taubman Centers, Inc. 3,641,641 5,000,000 0.0
50,000 Walden Residential
Properties, Inc. 1,418,750 1,400,000 0.0
920,000 Walden Residential
Properties, Inc.
(Warrants) (a) 1,125,068 1,150,000 0.0
--------------- --------------- ------
51,667,337 64,900,430 0.5
Restaurants 1,500,000 ++Brinker International, Inc. 16,515,025 21,000,000 0.1
500,000 ++Buffets, Inc. 5,071,633 5,187,500 0.0
2,100,000 Darden Restaurants Inc. 15,622,713 23,887,500 0.2
--------------- --------------- ------
37,209,371 50,075,000 0.3
Retail 206,500 ++Coinstar Inc. (q) 311,636 2,039,187 0.0
1,295,000 ++Ugly Duckling Corporation 18,183,750 15,378,125 0.1
--------------- --------------- ------
18,495,386 17,417,312 0.1
Retail Stores 608,500 Baker (J.), Inc. 10,187,765 4,335,562 0.0
416,900 ++Buttrey Food & Drug
Stores Co. 3,241,636 4,585,900 0.0
1,110,000 ++Filene's Basement Corp.+++ 10,092,619 8,116,875 0.1
700,000 The Limited, Inc. 12,951,591 16,493,750 0.1
361,800 ++Payless Cashways, Inc. 3,975,907 65,124 0.0
400,000 Sotheby's Holdings, Inc.
(Class A) 4,879,559 7,500,000 0.1
700,000 ++Toys 'R' Us, Inc. 16,081,734 23,843,750 0.2
--------------- --------------- ------
61,410,811 64,940,961 0.5
Savings Banks 274,796 Downey Savings & Loan
Association 2,516,927 7,213,395 0.0
477,405 Sovereign Bancorp, Inc. 1,552,137 8,473,939 0.1
--------------- --------------- ------
4,069,064 15,687,334 0.1
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1997
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Value Percent of
COUNTRY Industries Held Common Stocks Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
United States Telecommunications 642,800 ++360 Communications
(concluded) Company $ 9,933,360 $ 13,579,150 0.1%
200,000 AT&T Corp. 6,268,550 9,787,500 0.1
300,000 ++AirTouch Communications,
Inc. 6,812,219 11,587,500 0.1
27,750 American Telecasting Inc.
(Warrants) (a) -- 277 0.0
32,037 ++CS Wireless Systems, Inc. 123,681 320 0.0
1,375,800 ++CellNet Data Systems, Inc. 12,252,498 13,328,062 0.1
185,700 Comsat Corp. 3,677,677 4,247,887 0.0
800,000 ++DSC Communications Corp. 12,249,518 19,500,000 0.1
500,000 Frontier Corporation 8,023,581 10,812,500 0.1
1,104,500 GTE Corp. 45,189,166 46,872,219 0.3
1,287,800 ++General Communication, Inc.
(Class A)+++ 9,336,550 9,658,500 0.1
1,094,100 ++Geotek Communications, Inc. 5,883,636 3,897,731 0.0
3,000,000 Geotek Communications, Inc.
(Warrants) (a)(q) 14,200,634 1,500,000 0.0
1,600,000 ++Glenayre Technologies, Inc. 21,915,406 20,600,000 0.1
75,140 ++Nextel Communications Inc. 1,212,489 1,972,425 0.0
1,611,800 ++PLD Telekom Inc. 10,028,238 12,491,450 0.1
810,000 ++QUALCOMM, Inc. 41,047,522 45,663,750 0.3
225,000 ++Telegroup Inc. 2,250,000 2,418,750 0.0
47,000 United USN Inc. (Warrants)
(a)(q) 5,840,131 5,734,000 0.1
1,255,000 ++Western Wireless Corporation 15,610,218 22,276,250 0.2
18,315 Wireless One, Inc.
(Warrants) (a) 18,315 4,579 0.0
--------------- --------------- ------
231,873,389 255,932,850 1.8
Textiles 2,825,200 ++Burlington Industries,
Inc.+++ 37,451,653 42,201,425 0.3
Transportation 900,000 J.B. Hunt Transport
Services, Inc. 12,600,052 13,837,500 0.1
Utilities 4,004,680 Citizens Utilities Company
(Class B) 35,740,884 39,796,507 0.3
1,404,400 Potomac Electric Power
Company 31,388,446 31,511,225 0.2
--------------- --------------- ------
67,129,330 71,307,732 0.5
Utilities-- 1,250,000 Allegheny Power System, Inc. 27,315,551 35,312,500 0.3
Electric 115,650 Atmos Energy Corp. 1,445,257 2,920,162 0.0
& Gas 47,570 BayCorp Holdings, Ltd. 2,549,753 356,775 0.0
125,000 CMS Energy Corp. 2,290,025 4,562,500 0.0
1,101,000 Centerior Energy Corp. 12,953,094 14,313,000 0.1
603,100 Central and South West
Corporation 11,630,764 13,004,344 0.1
100,000 Consolidated Edison
Company, Inc. 2,923,495 3,425,000 0.0
4,512,285 ++El Paso Electric Company+++ 23,689,496 28,483,799 0.2
1,780,000 Entergy Corp. 47,516,856 43,498,750 0.3
475,000 FPL Group, Inc. 14,363,265 24,551,562 0.2
2,177,900 Houston Industries, Inc. 43,848,083 47,369,325 0.3
1,500,000 ++Niagara Mohawk Power Corp. 23,789,306 14,531,250 0.1
1,144,600 Texas Utilities Co. 36,647,663 41,062,525 0.3
1,148,800 Unicom Corporation 27,549,620 32,166,400 0.2
--------------- --------------- ------
278,512,228 305,557,892 2.1
Total Common Stocks in
the United States 1,855,021,578 2,548,563,022 18.0
Total Investments in
Common Stocks 4,249,011,453 5,234,934,167 37.0
Equity Closed-End Funds
Austria Financial Services 320,000 Austria Fund (USD) 2,642,432 3,040,000 0.0
Total Equity Closed-End
Funds in Austria 2,642,432 3,040,000 0.0
Indonesia Financial Services 25,600 Jakarta Growth Fund (USD) 158,080 144,000 0.0
Total Equity Closed-End
Funds in Indonesia 158,080 144,000 0.0
Ireland Financial Services 150,000 Irish Investment Fund,
Inc. (USD) 1,086,041 2,362,500 0.0
Total Equity Closed-End
Funds in Ireland 1,086,041 2,362,500 0.0
Italy Financial Services 150,000 Italy Fund (USD) 1,198,520 1,425,000 0.0
Total Equity Closed-End
Funds in Italy 1,198,520 1,425,000 0.0
South Korea Financial Services 125,000 ++The Fidelity Advisor
Korea Fund (USD) 1,088,750 601,562 0.0
200,000 ++Korea Equity Fund (USD) 1,369,598 737,500 0.0
1,400,528 ++Korea Fund, Inc. (USD) 19,847,163 11,466,823 0.1
200,000 ++Korean Invesment Fund,
Inc. (USD) 1,561,000 887,500 0.0
Total Equity Closed-End
Funds in South Korea 23,866,511 13,693,385 0.1
Spain Financial Services 300,100 Growth Fund of Spain,
Inc. (USD) 2,630,827 4,651,550 0.1
Total Equity Closed-End
Funds in Spain 2,630,827 4,651,550 0.1
Total Investments in
Equity Closed-End Funds 31,582,411 25,316,435 0.2
Preferred Stocks
Australia Publishing 600,000 The News Corporation Ltd.
(ADR)++++ (USD) 10,451,056 10,650,000 0.1
Total Preferred Stocks
in Australia 10,451,056 10,650,000 0.1
Austria Banking 203,400 ++Bank Austria Finance Inc. 6,298,337 9,305,004 0.1
Total Preferred Stocks
in Austria 6,298,337 9,305,004 0.1
Germany Chemicals 494,411 Henkel KGaA 20,929,927 25,725,123 0.2
Multi-Industry 450,000 RWE AG 8,725,424 16,272,310 0.1
Total Preferred Stocks
in Germany 29,655,351 41,997,433 0.3
New Zealand Financial Services 3,085,700 Brierly Investments,
Ltd. (9% Convertible) 1,988,414 2,116,327 0.0
Total Preferred Stocks
in New Zealand 1,988,414 2,116,327 0.0
Norway Financial Services 175,000 A/S Eksportfinans (8.70%
Convertible) (USD) 4,377,500 4,725,000 0.0
Total Preferred Stocks
in Norway 4,377,500 4,725,000 0.0
Portugal Banking 966,528 BCP International Bank
(8% Convertible) (USD) 58,597,712 70,435,728 0.5
Total Preferred Stocks
in Portugal 58,597,712 70,435,728 0.5
Spain Banking 225,000 Santander Overseas Bank
(8% Convertible, Series D)
(USD) 5,463,250 5,864,062 0.0
Total Preferred Stocks
in Spain 5,463,250 5,864,062 0.0
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1997
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Value Percent of
COUNTRY Industries Held Preferred Stocks Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
United States Banking 870,000 California Federal Bank
(9.125%, Series A) $ 21,735,500 $ 23,109,375 0.2%
55,000 California Federal Bank
(10.625%, Series B) 5,500,000 5,940,000 0.0
--------------- --------------- ------
27,235,500 29,049,375 0.2
Cable Television 1,000,000 ++Diva Systems Corp.
(Convertible, Series C) (r) 8,410,000 11,000,000 0.1
1,000,000 ++Diva Systems Corp.
(Convertible, Series D) (q) 11,440,000 11,000,000 0.1
--------------- --------------- ------
19,850,000 22,000,000 0.2
Financial Services 619,900 Golden State Bancorp Inc.
(8.75% Convertible,
Series E) 15,070,337 51,451,700 0.4
Natural Resources 150,000 Cyprus Amax Minerals Co.
(Convertible, Series A) 9,188,313 7,075,500 0.0
348,700 Freeport-McMoRan Copper &
Gold, Inc. (Convertible) 7,918,834 8,804,675 0.1
219,000 Freeport-McMoRan Inc.
(Convertible--Gold) 7,703,330 6,159,375 0.0
--------------- --------------- ------
24,810,477 22,039,550 0.1
Real Estate 400,000 Crown American Realty
Investment Trust (11%, Series A) 20,000,000 21,700,000 0.1
Trusts 139,200 First Union Real Estate
Investments (8.40%
Convertible, Series A) 3,480,000 7,308,000 0.1
350,000 National Health Investors,
Inc. (8.50% Convertible) 8,750,000 12,075,000 0.1
717,500 Prime Retail, Inc.
10.50%)+++ 16,366,161 19,193,125 0.1
1,078,000 Walden Residential
Properties, Inc. (9.20%,
Series S) 26,269,636 27,623,750 0.2
--------------- --------------- ------
74,865,797 87,899,875 0.6
Steel 2,442,500 Rouge/Worthington
Industries, Inc.
(Convertible, Series DECS) 38,015,300 38,469,375 0.3
Utilities 77,600 Citizens Utilities Company
(5% Convertible) 3,398,931 3,686,000 0.0
Total Preferred Stocks
in the United States 203,246,342 254,595,875 1.8
Total Investments in
Preferred Stocks 320,077,962 399,689,429 2.8
Currency Face
Denomination Amount Fixed-Income Securities
Argentina Banking Banco Rio de la Plata S.A.:
USD 45,000,000 8.75% due 12/15/2003 36,900,950 44,550,000 0.3
USD 30,000,000 (Class 3), 8.50% due
7/15/1998 30,225,000 29,400,000 0.2
--------------- --------------- ------
67,125,950 73,950,000 0.5
Government USD 38,000,000 City of Buenos Aires,
Obligations 11.25% due 4/11/2007 (q) 37,715,000 37,240,000 0.3
Republic of Argentina (p):
USD 191,500,000 9.75% due 9/19/2027 156,380,000 155,115,000 1.1
USD 98,400,000 Floating Rate Bonds,
Series L, 6.678% due
3/31/2005 (d) 72,934,800 84,132,000 0.6
USD 80,000,000 Floating Rate Discount
Notes, 6.875%
due 3/31/2023 54,779,110 63,296,000 0.5
USD 85,000,000 Global Bonds, 11.375%
due 1/30/2017 82,988,125 82,875,000 0.6
USD 30,000,000 Par 'L' Bonds, 5.50%
due 3/31/2023 18,700,565 20,400,000 0.1
--------------- --------------- ------
423,497,600 443,058,000 3.2
Total Fixed-Income
Securities in Argentina 490,623,550 517,008,000 3.7
Australia Mining USD 11,500,000 Murrin Murrin Holdings
Property, 9.375%
due 8/31/2007 (q) 11,500,000 11,787,500 0.1
Total Fixed-Income
Securities in Australia 11,500,000 11,787,500 0.1
Brazil Government USD 35,000,000 Brazil Exit Bonds, 6% due
Obligations 9/15/2013 (p) 19,912,221 25,550,000 0.2
Republic of Brazil:
USD 3,469,700 Floating Rate Bonds,
6.687% due 1/01/2001 (d) 2,367,996 3,190,389 0.0
USD 71,500,000 Global Bonds, 10.125%
due 5/15/2027 (p) 50,235,000 53,982,500 0.4
USD 10,000,000 Par `L' Bonds, 5% due
4/15/2024 (p) 6,100,000 6,500,000 0.0
--------------- --------------- ------
78,615,217 89,222,889 0.6
Metals USD 31,500,000 CSN Panama Iron S.A.,
9.125% due 6/01/2007 30,135,000 25,830,000 0.2
Natural USD 5,000,000 Companhia Vale Do Rio Doce,
Resources 10% due 4/02/2004 (q) 4,993,860 4,875,000 0.0
Utilities USD 28,500,000 Espirito Santo--Escelsa,
10% due 7/15/2007 (q) 28,464,375 25,650,000 0.2
Total Fixed-Income
Securities in Brazil 142,208,452 145,577,889 1.0
Canada Cable/ CAD 7,545,000 Rogers Cablesystem Inc.,
Telecom- 9.65% due 1/15/2014 4,397,424 5,610,412 0.0
munications CAD 5,000,000 Rogers Communications Inc.,
Convertible Bonds,
7.50% due 9/01/1999 3,394,000 3,522,751 0.0
--------------- --------------- ------
7,791,424 9,133,163 0.0
Industrial-- USD 28,000,000 Ainsworth Lumber Company,
Services 12.50% due 7/15/2007 (q) (s) 27,226,640 28,280,000 0.2
Natural USD 10,500,000 Sifto Canada, Inc., 8.50%
Resources due 7/15/2000 10,352,688 10,605,000 0.1
Paper & CAD 2,000,000 MacMillan Bloedel Limited,
Forest Products Convertible Bonds, 5% due
5/01/2007 1,024,416 1,263,576 0.0
Real Estate CAD 16,501,370 First Place Tower, Inc.,
Convertible Bonds, 10.28%
due 12/15/2015 (e) 26,352,962 42,170,038 0.3
Total Fixed-Income
Securities in Canada 72,748,130 91,451,777 0.6
Cayman Islands Financial USD 37,000,000 APP Global Finance (V)
Services Ltd., 2% due 7/25/2000 (q) 37,406,500 34,780,000 0.3
USD 17,250,000 Guangdong Investment
Finance Inc., 1% due
7/07/2002 15,569,375 15,697,500 0.1
Total Fixed-Income
Securities in the
Cayman Islands 52,975,875 50,477,500 0.4
China Financial USD 12,750,000 Shangai Investment Holding
Services Co., 1% due 6/12/2002 11,681,250 12,144,375 0.1
Industrial USD 1,750,000 Huaneng Power International
PLC, 1.75% due 5/21/2004 1,607,500 1,662,500 0.0
Total Fixed-Income
Securities in China 13,288,750 13,806,875 0.1
France Automobiles FRF 5,500 Peugeot S.A., Convertible
Bonds, 2% due 1/01/2001 992,341 1,101,813 0.0
Banking ECU 2,000,000 Credit Local de France,
0% due 10/16/2001 (b) 1,994,211 1,857,265 0.0
FRF 58,000 Societe Generale de France
S.A., Convertible Bonds,
3.50% due 1/01/2000 (g) 7,499,838 8,269,905 0.1
--------------- --------------- ------
9,494,049 10,127,170 0.1
Financial USD 230,000 Societe Fonciere Lyonnaise
Services S.A., Convertible Bonds,
4% due 10/31/2004 31,087,057 31,637,467 0.2
Industrial FRF 30,000 Alcatel Alsthom, Convertible
Bonds, 2.50% due 1/01/2004 3,926,887 4,964,441 0.0
Insurance FRF 35,500 Finaxa, Convertible Bonds,
3% due 1/01/2001 9,060,172 10,622,290 0.1
Total Fixed-Income
Securities in France 54,560,506 58,453,181 0.4
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1997
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Currency Face Value Percent of
COUNTRY Industries Denominations Amount Fixed-Income Securities Cost (Note 1a) Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
Germany Banking DEM 2,310,000 Commerzbank AG, Floating
Rate Convertible
Bonds, 0% due
6/15/2001 (b) $ 1,556,456 $ 3,679,670 0.0%
USD 5,000,000 Landes Kredit Bank, 7.875%
due 4/15/2004 4,972,067 5,465,750 0.1
USD 13,750,000 Nordeutsche Landesbank
Girozentrale,
3% due 2/11/2003 12,600,000 12,581,250 0.1
--------------- --------------- ------
19,128,523 21,726,670 0.2
Building USD 41,100,000 Tarkett AG, 9% due
Materials 3/01/2002 39,413,750 41,511,000 0.3
Financial USD 5,875,000 Veba International
Services Finance (with Warrants),
6% due 4/06/2000 (a) 2,965,841 5,833,875 0.0
Government Bundesrepublik Deutscheland:
Obligations DEM 31,000,000 5.75% due 8/20/1998 22,444,131 18,278,123 0.1
DEM 215,500,000 7.375% due 1/03/2005 140,126,980 139,791,233 1.0
--------------- --------------- ------
162,571,111 158,069,356 1.1
Government DEM 55,000,000 Freie Hansestadt Hamburg,
Obligations-- 6.08% due 11/29/2018 31,730,765 32,870,182 0.2
Regional DEM 64,000,000 Land Baden-Wuerttemberg,
6.20% due 11/22/2013 37,148,769 38,769,839 0.3
DEM 170,500,000 Land Hessen, 6% due
11/29/2013 (c) 98,586,862 101,709,232 0.7
DEM 110,000,000 Mecklenberg-Vorpommern,
6.15% due 6/16/2023 (c) 61,012,437 65,036,916 0.5
DEM 134,950,000 Nordrhein-Westfalen, 6.125%
due 12/21/2018 (c) 77,420,913 80,886,838 0.6
Rheinland-Pfalz:
DEM 33,000,000 5.75% due 2/24/2014 18,324,663 19,607,000 0.1
DEM 64,000,000 6.08% due 11/29/2018 36,935,547 38,174,525 0.3
DEM 47,000,000 Sachsen-Anhalt, 6% due
1/10/2014 26,915,615 27,733,853 0.2
--------------- --------------- ------
388,075,571 404,788,385 2.9
Industrial USD 1,000,000 Siemens Capital Corp.
(with Warrants),
8% due 6/24/2002 (a) 1,318,750 1,854,100 0.0
Total Fixed-Income
Securities in Germany 613,473,546 633,783,386 4.5
Hong Kong Banking USD 17,500,000 Bank of East Asia, Convertible
Bonds, 2% due 7/19/2003 (n) 20,833,400 17,806,250 0.1
USD 11,500,000 First Pacific Company Ltd.,
2% due 3/27/2002 10,759,600 10,810,000 0.1
--------------- --------------- ------
31,593,000 28,616,250 0.2
Real Estate USD 24,980,000 Hysan Development
Company Limited,
Convertible Bonds, 6.75%
due 6/01/2000 (n) 29,762,300 24,730,200 0.2
USD 19,000,000 Sino Land Company Ltd.,
Convertible Bonds,
5% due 2/26/2001 (n) 18,316,875 16,435,000 0.1
--------------- --------------- ------
48,079,175 41,165,200 0.3
Total Fixed-Income
Securities in Hong Kong 79,672,175 69,781,450 0.5
India Chemicals USD 22,500,000 Indian Petrochemicals Ltd.,
2.50% due 3/11/2002 (q) 23,009,062 22,050,000 0.2
USD 30,250,000 Indian Petrochemicals Ltd.,
2.50% due 3/11/2002
(Regulation S) 30,516,342 29,645,000 0.2
Total Fixed-Income
Securities in India 53,525,404 51,695,000 0.4
Indonesia Paper & USD 19,500,000 APP International Finance,
Forest 11.75% due 10/01/2005 19,500,000 19,792,500 0.1
Products
Total Fixed-Income Securities
in Indonesia 19,500,000 19,792,500 0.1
Italy Government USD 5,000,000 Republic of Italy, 8.75%
Obligations due 2/08/2001 5,373,050 5,437,500 0.0
USD 32,985,000 Republic of Italy/INA,
Convertible Bonds,
5% due 6/28/2001 32,779,000 35,293,950 0.3
Total Fixed-Income
Securities in Italy 38,152,050 40,731,450 0.3
Japan Banking USD 13,250,000 Bank of Tokyo-Mitsubishi
Convertible Bonds,
3% due 11/30/2002 13,300,625 13,541,500 0.1
Beverages JPY 1,268,000,000 Kinki Coca-Cola Bottling
Co., Ltd., #1 Convertible
Bonds, 0.85% due 12/30/2003 11,282,608 10,495,466 0.1
JPY 1,408,000,000 Sanyo Coca-Cola Bottling
Inc., #1 Convertible Bonds,
0.90% due 6/30/2003 12,966,065 11,150,620 0.1
JPY 479,000,000 Shikoku Coca-Cola Bottling
Co., Ltd., #1 Convertible
Bonds, 2.40% due 3/29/2002 4,558,416 4,207,836 0.0
--------------- --------------- ------
28,807,089 25,853,922 0.2
Capital JPY 500,000,000 Kawasaki Heavy Industries,
Goods Convertible Bonds,
0.50% due 9/30/1998 4,566,161 4,117,794 0.0
Chemicals USD 4,700,000 Shin-Etsu Chemical Co.,
Ltd., Convertible Bonds
(with Warrants), 3.375%
due 8/08/2000 (a) 3,274,060 4,361,130 0.1
Shin-Etsu Chemical Co.,
Ltd., Convertible Bonds:
JPY 148,000,000 #5, 1.30% due 3/31/1999 1,577,446 2,052,375 0.0
JPY 301,000,000 #6, 0.40% due 9/30/2005 2,987,802 3,851,077 0.0
--------------- --------------- ------
7,839,308 10,264,582 0.1
Electrical JPY 1,204,000,000 Matsushita Electric
Equipment Works, Ltd., #9 Convertible
Bonds, 1% due 11/30/2005 12,091,160 10,516,596 0.1
Electronics JPY 650,000,000 Matsushita Electric
Industrial Co., Ltd.,
#5 Convertible Bonds, 1.30%
due 3/29/2002 6,133,347 6,921,221 0.0
Financial JPY 5,313,000,000 Fuji International
Services Finance Trust, 0.25%
due 2/01/2002 37,032,237 35,579,112 0.2
JPY 3,528,000,000 Sumitomo Bank International
Finance NV,
Convertible Bonds, 0.75%
due 5/31/2001 30,168,480 29,240,050 0.2
--------------- --------------- ------
67,200,717 64,819,162 0.4
Government JPY 17,395,000,000 Japanese Government Bond
Obligations #112 (10-Year Issue),
5% due 9/21/1998 149,822,891 150,420,951 1.1
Insurance JPY 456,000,000 Mitsui Marine & Fire
Insurance Co., Ltd.,
#3 Convertible Bonds,
0.70% due 3/31/2003 3,786,983 3,728,874 0.0
JPY 117,000,000 Nichido Fire & Marine
Insurance Co., Ltd.,
#5 Convertible Bonds,
1% due 3/31/2003 1,109,381 1,002,496 0.0
Nisshin Fire & Marine
Insurance Co., Ltd.,
Convertible Bonds:
JPY 800,000,000 #1, 0.65% due 3/31/2004 6,412,341 6,056,069 0.1
JPY 1,572,000,000 #2, 0.75% due 3/31/2006 12,292,248 11,481,707 0.1
Sumitomo Marine & Fire
Insurance Co., Ltd.,
Convertible Bonds:
JPY 300,000,000 #3, 1.10% due 3/29/2002 2,522,005 3,007,237 0.0
JPY 1,527,000,000 #4, 1.20% due 3/31/2004 13,104,977 14,862,241 0.1
JPY 588,000,000 Yasuda Fire & Marine
Insurance Co., Ltd.,
#3 Convertible Bonds,
0.60% due 3/30/2001 4,903,719 4,915,897 0.0
--------------- --------------- ------
44,131,654 45,054,521 0.3
Pharma- JPY 4,000,000,000 Yamanouchi Pharmaceutical
ceuticals Co., Ltd., Convertible
Bonds, 1.625% due
3/31/2000 (n) 41,915,632 39,763,747 0.3
Total Fixed-Income
Securities in Japan 375,808,584 371,273,996 2.6
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Currency Face Value Percent of
COUNTRY Industries Denominations Amount Fixed-Income Securities Cost (Note 1a) Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
Malaysia Telecommuni- Telekom Malaysia BHD,
cations Convertible Bonds:
USD 3,000,000 4% due 10/03/2004 (q) $ 2,523,750 $ 2,415,000 0.0%
USD 49,500,000 4% due 10/03/2004
(Regulation S) 43,761,775 39,847,500 0.3
Total Fixed-Income
Securities in Malaysia 46,285,525 42,262,500 0.3
Mexico Government USD 54,000,000 United Mexican States,
Obligations 11.50% due 5/15/2026 (p) 55,695,000 57,445,200 0.4
Oil & Petroleos Mexicanos:
Related USD 45,150,000 8.625% due 12/01/2023 (r) 25,007,000 36,684,375 0.2
USD 9,000,000 9.50% due 9/15/2027 (q) 8,989,470 8,100,000 0.1
--------------- --------------- ------
33,996,470 44,784,375 0.3
Total Fixed-Income
Securities in Mexico 89,691,470 102,229,575 0.7
New Zealand Government NZD 44,000,000 New Zealand Index Linked
Obligations Notes, 4.50% due 2/15/2016 27,358,590 26,981,339 0.2
Total Fixed-Income
Securities in New Zealand 27,358,590 26,981,339 0.2
Philippines Financial PHP 13,000,000 AC International Finance,
Services 0% due 12/08/2000 (b) 9,911,909 9,750,000 0.1
Total Fixed-Income
Securities in the Philippines 9,911,909 9,750,000 0.1
Russia Telecommuni- PLD Telekom, Inc.,
cations Convertible Bonds:
USD 74,500,000 0/14% due 6/01/2004
(b)(j)(q) 64,663,486 71,520,000 0.5
USD 18,700,000 9% due 6/01/2006 (j)(q) 18,756,250 22,635,415 0.2
Total Fixed-Income
Securities in Russia 83,419,736 94,155,415 0.7
Singapore Industrial Keppel Corporation Limited,
Convertible Bonds:
USD 2,500,000 1.50% due 5/02/2001 2,060,000 2,050,000 0.0
USD 50,000,000 2% due 8/12/2002 (q) 49,872,500 45,750,000 0.3
USD 2,250,000 2% due 8/12/2002
(Regulation S) 2,123,125 2,058,750 0.0
--------------- --------------- ------
54,055,625 49,858,750 0.3
Retail USD 12,000,000 Dairy Farm International
Holdings Ltd. (Convertible
Preferred), 6.50% due
5/10/2049 9,525,875 9,000,000 0.1
Total Fixed-Income
Securities in Singapore 63,581,500 58,858,750 0.4
South Africa Metals ZAL 21,520,000 Samancor Ltd., Convertible
Bonds, 7% due 6/30/2004 20,753,175 20,659,200 0.1
Total Fixed-Income
Securities in South Africa 20,753,175 20,659,200 0.1
South Korea Banking Koram Bank Ltd.:
USD 1,500,000 0.25% due 8/26/2007 (q) 1,447,500 1,380,000 0.0
USD 3,600,000 0.25% due 8/26/2007
(Regulation S) 3,393,875 3,312,000 0.0
--------------- --------------- ------
4,841,375 4,692,000 0.0
Electronics Samsung Electronics Co.,
Convertible Bonds (b):
USD 8,500,000 0% due 12/31/2007 (q) 8,211,250 7,097,500 0.1
USD 46,500,000 0% due 12/31/2007
(Regulation S) 43,484,532 38,130,000 0.3
--------------- --------------- ------
51,695,782 45,227,500 0.4
Energy Ssangyong Oil Refining,
Related Convertible Bonds:
USD 10,685,000 3% due 12/31/2004 7,887,437 5,876,750 0.0
USD 16,535,000 3.75% due 12/31/2008 17,448,950 13,393,350 0.1
--------------- --------------- ------
25,336,387 19,270,100 0.1
Utilities-- USD 33,315,000 Korea Electric &
Electric Power Company, 5% due
8/01/2001 32,149,731 29,816,925 0.2
Total Fixed-Income
Securities in South Korea 114,023,275 99,006,525 0.7
Switzerland Chemicals USD 24,945,000 Ciba-Geigy Corp.,
Convertible Bonds, 6.25%
due 3/15/2016 25,632,050 25,443,900 0.2
Trading CHF 3,750,000 Daewoo Corporation,
Convertible Bonds,
0.125% due 12/31/2001 2,483,186 2,499,104 0.0
Total Fixed-Income
Securities in Switzerland 28,115,236 27,943,004 0.2
Taiwan Industrial USD 13,800,000 GVC Corporation, 0% due
5/21/2002 (b) (q) 13,794,000 14,352,000 0.1
Total Fixed-Income
Securities in Taiwan 13,794,000 14,352,000 0.1
United Cable/ USD 14,000,000 Comcast UK Cable Partners
Kingdom Telecom- Ltd., 0/11.20% due 11/15/2007
munications (b) 9,414,951 10,535,000 0.1
Diamond Cable Communications
PLC (b):
USD 7,600,000 0/11.75% due 12/15/2005 5,601,452 5,662,000 0.0
USD 2,250,000 0/10.75% due
2/15/2007 (q) 1,345,995 1,451,250 0.0
--------------- --------------- ------
16,362,398 17,648,250 0.1
Financial GBP 11,600,000 Liberty International
Services Holdings PLC, Convertible
Bonds, 5.50% due 4/30/2009 14,179,895 19,265,558 0.1
Food & GBP 13,500,000 Allied-Lyons PLC,
Beverage Convertible Bonds, 6.75%
due 7/07/2008 21,002,665 22,760,838 0.2
Government United Kingdom Treasury
Obligations Gilt:
GBP 60,000,000 10% due 9/08/2003 115,077,375 116,635,140 0.8
GBP 20,000,000 9.50% due 10/25/2004 37,627,645 38,878,380 0.3
--------------- --------------- ------
152,705,020 155,513,520 1.1
Industrial USD 4,655,000 HIH Capital Ltd., Convertible
Bonds (Bearer),
7.50% due 9/25/2006 3,031,037 3,770,550 0.0
Multi- GBP 10,375,000 English China Clays PLC,
Industry Convertible Bonds,
6.50% due 9/30/2003 16,476,672 16,882,947 0.1
Telecommuni- USD 39,000,000 Ionica PLC, 0/15% due
cations 5/01/2007 (b)(m) 20,333,014 21,060,000 0.2
USD 20,250,000 Millicom International
Cellular S.A., 0/13.50%
due 6/01/2006 (b) 12,619,316 15,187,500 0.1
USD 17,750,000 TeleWest Communications
PLC, 0/11% due 10/01/2007 (b) 12,829,621 13,046,250 0.1
--------------- --------------- ------
45,781,951 49,293,750 0.4
Textiles GBP 2,500,000 Coats Viyella PLC,
Convertible Bonds, Series B,
6.25% due 8/09/2003 3,535,704 3,868,965 0.0
Total Fixed-Income
Securities in the
United Kingdom 273,075,342 289,004,378 2.0
United Agricultural USD 14,000,000 Sun World International,
States Inc., 11.25% due
4/15/2004 (q) 14,000,000 14,770,000 0.1
Banking USD 14,250,000 Ocwen Federal Bank, 12%
due 6/15/2005 14,250,000 15,817,500 0.1
Biotech- USD 7,200,000 Cetus Corporation (Euro),
nology Convertible Bonds,
5.25% due 5/21/2002 5,220,250 6,984,000 0.1
Cable Adelphia Communications
Corporation (q):
USD 5,000,000 9.25% due 10/01/2002 5,000,000 4,987,500 0.0
USD 1,500,000 10.50% due 7/15/2004 1,500,000 1,563,750 0.0
--------------- --------------- ------
6,500,000 6,551,250 0.0
Financial USD 9,000,000 Emergent Group Inc.,
Services 10.75% due 9/15/2004 (q) 8,934,375 8,820,000 0.1
Financial USD 10,000,000 Ford Capital BV, 9.375%
Services-- due 1/01/1998 10,037,900 10,054,000 0.1
Captive
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1997
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Currency Face Value Percent of
COUNTRY Industries Denominations Amount Fixed-Income Securities Cost (Note 1a) Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
United Food & USD 15,000,000 Tom's Food Inc., 10.50%
States Beverage due 11/01/2004 (q) $ 15,000,000 $ 15,150,000 0.1%
(continued)
Healthcare USD 17,500,000 American Retirement
Corp., 5.75% due 10/01/2002 17,500,000 17,456,250 0.1
USD 1,000,000 Novacare, Inc.,
Convertible Bonds, 5.50%
due 1/15/2000 857,500 947,500 0.0
--------------- --------------- ------
18,357,500 18,403,750 0.1
Home- USD 32,500,000 Beazer Homes USA, Inc.,
building & 9% due 3/01/2004 30,597,000 32,500,000 0.2
Construction
Industrial USD 21,750,000 Crown Packaging Enterprises,
0/14% due 8/01/2006 (b) 8,561,524 1,087,500 0.0
USD 68,500,000 International Semi-Tech
Microelectronics, Inc.,
0/11.50% due 8/15/2003 (b) 48,990,100 32,880,000 0.2
USD 4,500,000 Port Royal Holdings Inc.,
10.25% due 10/01/2007 (q) 4,500,000 4,522,500 0.1
USD 4,000,000 WMX Technologies, Inc., 2%
due 1/24/2005 3,483,128 3,335,200 0.0
--------------- --------------- ------
65,534,752 41,825,200 0.3
Oil & PDV America, Inc.:
Related USD 35,000,000 7.25% due 8/01/1998 34,856,150 34,518,750 0.2
USD 10,000,000 7.75% due 8/01/2000 10,062,500 10,037,500 0.1
--------------- --------------- ------
44,918,650 44,556,250 0.3
Real Estate USD 23,128,168 RTC Commercial Mortgage,
Class C, 8.25%
due 12/25/2020 (d) 22,773,900 23,128,169 0.2
Real Estate USD 25,500,000 Alexander Haagen Properties,
Investment Inc., Exchangeable
Trusts Debentures, 7.25% due
12/27/2003 (q) 25,291,250 24,671,250 0.2
USD 4,500,000 Capstone Capital Corp.,
6.55% due 3/14/2002 4,108,502 4,218,750 0.0
USD 7,000,000 Centerpoint Properties Corp.,
Convertible Bonds,
8.22% due 1/15/2004 7,000,000 12,608,750 0.1
USD 30,000,000 First Union Real Estate,
8.875% due 10/01/2003 29,756,100 29,325,000 0.2
USD 25,000,000 First Washington Realty,
Exchangable Debentures,
8.25% due 6/27/1999 (r) 25,000,000 27,500,000 0.2
Health & Retirement Properties
Trust, Convertible Bonds:
USD 40,000,000 7.25% due 10/01/2001 40,000,000 41,100,000 0.3
USD 15,000,000 7.50% due 10/01/2003 15,000,000 15,525,000 0.1
LTC Properties, Inc.,
Convertible Bonds:
USD 10,000,000 8.25% due 1/01/1999 10,000,000 11,362,500 0.1
USD 9,000,000 8.50% due 1/01/2001 9,000,000 11,396,250 0.1
USD 12,500,000 8% due 7/01/2001 12,500,000 16,375,000 0.1
USD 25,000,000 Lepercq Corporate Income
Fund, Exchangeable
Secured Notes, 8% due
3/17/2004 (r) 25,000,000 29,187,500 0.2
Malan Realty Investors,
Inc., Convertible Bonds:
USD 27,000,000 8.50% due 7/01/2003 (q) 27,000,000 27,810,000 0.2
USD 4,750,000 9.50% due 7/15/2004 3,859,375 4,797,500 0.0
USD 9,415,000 Meditrust, Convertible
Bonds, 8.54% due 7/01/2000 9,602,637 12,015,894 0.1
USD 5,000,000 Mid-Atlantic Realty Trust,
Convertible Bonds,
7.625% due 9/15/2003 4,875,000 6,000,000 0.0
USD 22,000,000 National Health Investors,
Convertible Bonds,
7.75% due 1/01/2001 22,000,000 26,372,500 0.2
USD 23,000,000 Nationwide Health Properties
Inc., Convertible Bonds,
6.25% due 1/01/1999 22,800,000 23,057,500 0.2
USD 34,000,000 Omega Healthcare Investors
Inc., Convertible Bonds,
8.50% due 2/01/2001 34,052,500 42,287,500 0.3
USD 5,500,000 Sizeler Property Investors,
Inc., Convertible Bonds,
8% due 7/15/2003 5,505,000 5,417,500 0.0
--------------- --------------- ------
332,350,364 371,028,394 2.6
Resources USD 12,000,000 Freeport-McMoRan Resources,
8.75% due 2/15/2004 11,116,875 12,480,000 0.1
Retail-- USD 25,000,000 Coinstar Inc., 0/13% due
Miscellaneous 10/01/2006 (b)(k)(q) 19,388,383 19,750,000 0.1
Savings Bank USD 21,400,000 First Federal Financial
Corporation, 11.75% due
10/01/2004 21,401,250 23,754,000 0.2
Steel USD 8,000,000 Bar Technologies Ltd.,
3.50% due 4/01/2001 7,412,450 8,680,000 0.1
Telecommuni- USD 15,500,000 Call Net Enterprises, Inc.,
cations 0/13.25% due 12/01/2004 (b) 11,925,333 13,988,750 0.1
USD 120,363,000 CellNet Data Systems, Inc.,
0/14% due 10/01/2007
(b)(h)(q) 56,295,601 60,181,500 0.4
Geotek Communications, Inc.:
USD 99,000,000 0/15% due 7/15/2005 (b) 54,876,852 58,905,000 0.4
USD 22,650,000 Convertible Bonds, 12%
due 2/15/2001 (r) 22,463,875 18,912,750 0.1
USD 41,750,000 International Cabletel,
Series B, 0/11.50% due
2/01/2006 (b) 29,313,581 30,686,250 0.2
USD 35,750,000 Nextel Communications,
Inc., 0/9.75% due
8/15/2004 (b) 27,941,919 30,119,375 0.2
USD 13,000,000 Salem Communications
Corp., 9.50% due
10/01/2007 (q) 13,183,750 13,000,000 0.1
Telegroup Inc. (q):
USD 5,000,000 0/10.50% due 11/01/2004 (b) 3,871,095 3,712,500 0.0
USD 22,000,000 8% due 4/15/2005 22,000,000 24,200,000 0.2
USD 20,000,000 Unifi Communications, Inc.,
14% due 3/01/2004 (g)(q) 18,901,570 18,600,000 0.1
USD 41,650,000 United International
Holdings, Inc., 0% due
11/15/1999 (b)(f) 30,592,576 34,153,000 0.3
United USN, Inc. (b)(q):
USD 47,000,000 0/14% due 9/15/2003 (i) 28,060,805 32,430,000 0.3
USD 35,000,000 Convertible Bonds, 0/9%
due 9/30/2004 29,571,849 28,525,000 0.2
Winstar Communications Inc.:
USD 25,500,000 0/14% due 10/15/2005 (b) 16,292,308 17,850,000 0.1
USD 9,750,000 14.50% due 10/15/2005 (q) 11,177,363 11,261,250 0.1
USD 10,000,000 Winstar Equipment, 12.50%
due 3/15/2004 (q) 10,000,000 10,400,000 0.1
--------------- --------------- ------
386,468,477 406,925,375 2.9
Trans- USD 10,625,000 Eletson Holdings Inc.,
portation-- 9.25% due 11/15/2003 10,558,437 10,731,250 0.1
Shipping USD 19,250,000 Teekay Shipping Corporation,
8.32% due 2/01/2008 18,252,500 19,538,750 0.1
--------------- --------------- ------
28,810,937 30,270,000 0.2
Trucking USD 21,000,000 Ameritruck Distribution,
12.25% due 11/15/2005 20,718,075 21,945,000 0.2
US Federal National Mortgage
Government & Association (d):
Agency USD 6,913,881 8% due 10/01/2024 6,601,676 7,181,794 0.0
Obligations USD 13,782,986 8% due 12/01/2024 13,539,630 14,286,892 0.1
US Treasury Inflation
Indexed Notes:
USD 120,000,000 3.625% due 7/15/2002 119,354,400 120,702,293 0.9
USD 125,000,000 3.375% due 1/15/2007 123,217,917 125,232,138 0.9
US Treasury Notes & Bonds:
USD 341,100,000 6% due 5/31/1998(c) 339,137,636 342,031,203 2.4
USD 150,000,000 6.125% due 8/31/1998(c) 149,890,625 150,679,687 1.1
USD 200,000,000 5.75% due 12/31/1998 198,992,025 200,328,000 1.4
USD 750,000,000 5.875% due 2/28/1999 747,746,094 752,220,000 5.3
USD 300,000,000 5.875% due 2/15/2000 (c) 294,964,844 301,277,343 2.1
USD 100,000,000 6% due 8/15/2000 100,078,125 100,797,000 0.7
USD 55,000,000 7.875% due 8/15/2001 53,943,600 58,892,900 0.4
--------------- --------------- ------
2,147,466,572 2,173,629,250 15.3
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1997
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Currency Face Value Percent of
COUNTRY Industries Denominations Amount Fixed-Income Securities Cost (Note 1a) Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
United Video USD 94,025,000 CAI Wireless Systems,
States Services/ Inc., 12.25% due
(concluded) Telecommuni- 9/15/2002 $ 63,879,250 $ 26,797,125 0.2%
cations USD 122,500,000 CS Wireless Systems,
Inc., 0/11.375% due
3/01/2006 (b)(l) 61,250,805 33,075,000 0.2
USD 17,000,000 Heartland Wireless
Communications Inc.,
14% due 10/15/2004 12,885,000 7,990,000 0.1
USD 53,430,000 People's Choice T.V.
Corp., 0/13.125% due
6/01/2004 (b)(o) 25,921,874 19,501,950 0.1
Wireless One Inc.:
USD 27,750,000 13% due 10/15/2003 18,688,125 12,487,500 0.1
USD 16,250,000 0/13.50% due 8/01/2006 (b) 3,457,928 4,306,250 0.0
--------------- --------------- ------
186,082,982 104,157,825 0.7
Total Fixed-Income
Securities in the
United States 3,417,340,692 3,411,179,963 24.1
Total Investments in
Fixed-Income Securities 6,205,387,472 6,272,003,153 44.3
Short-Term Securities
Switzerland Certificates UBS Singapore:
of IDR 30,000,000,000 13.30% due 11/24/1997 8,287,293 8,356,546 0.1
Deposit IDR 28,050,000,000 13.50% due 11/26/1997 7,727,273 7,813,370 0.1
IDR 37,450,000,000 15% due 11/26/1997 10,460,894 10,431,755 0.1
IDR 73,700,000,000 13.25% due 12/03/1997 20,644,258 20,529,248 0.1
IDR 168,000,000,000 16.20% due 12/29/1997 46,280,992 46,796,657 0.3
--------------- --------------- ------
93,400,710 93,927,576 0.7
Time USD 113,000,000 United Bank of Switzerland,
Deposits-- 5.75% due 11/03/1997 113,000,000 113,000,000 0.8
Foreign
Total Short-Term Securities
in Switzerland 206,400,710 206,927,576 1.5
United Commercial USD 20,000,000 A.I. Credit Corp.,
States Paper* 5.47% due 11/13/1997 19,963,533 19,963,533 0.1
USD 32,340,000 AlliedSignal Inc.,
5.50% due 11/13/1997 32,280,710 32,280,710 0.2
Associates Corp. of
North America:
USD 30,000,000 5.51% due 12/03/1997 29,853,067 29,853,067 0.2
USD 70,000,000 5.48% due 12/16/1997 69,520,500 69,520,500 0.5
USD 50,000,000 BBV Finance (Delaware),
Inc., 5.50% due 11/21/1997 49,847,222 49,847,222 0.3
Bayerische Vereinsbank AG:
USD 40,000,000 5.49% due 11/14/1997 39,920,700 39,920,700 0.3
USD 60,000,000 5.475% due 12/08/1997 59,662,375 59,662,375 0.4
CIT Group Holdings, Inc.
(The):
USD 50,000,000 5.50% due 11/17/1997 49,877,778 49,877,778 0.3
USD 50,000,000 5.50% due 12/23/1997 49,602,778 49,602,778 0.3
USD 100,000,000 Caisse des Depots et
Consignations, 5.50% due
11/14/1997 99,801,389 99,801,389 0.7
Ciesco, L.P.:
USD 15,000,000 5.52% due 12/05/1997 14,921,800 14,921,800 0.1
USD 25,000,000 5.50% due 12/09/1997 24,854,861 24,854,861 0.2
Commerzbank US Finance Inc.:
USD 39,000,000 5.50% due 11/24/1997 38,862,958 38,862,958 0.3
USD 61,125,000 5.51% due 11/24/1997 60,909,823 60,909,823 0.4
USD 100,000,000 Delaware Funding Corp.,
5.52% due 11/19/1997 99,724,000 99,724,000 0.7
USD 50,000,000 Deutsche Bank Financial,
Inc., 5.48% due 11/07/1997 49,954,333 49,954,333 0.3
USD 50,000,000 Dresdner US Finance Inc.,
5.52% due 11/04/1997 49,977,000 49,977,000 0.3
USD 50,000,000 du Pont (E.I.) de Nemours,
Co., 5.48% due 11/06/1997 49,961,944 49,961,944 0.3
USD 10,000,000 Eastman Kodak Company, 5.48%
due 11/07/1997 9,990,867 9,990,867 0.1
USD 100,000,000 Eiger Capital Corp., 5.52%
due 11/10/1997 99,862,000 99,862,000 0.7
USD 50,000,000 Ford Motor Credit Co., 5.48%
due 12/09/1997 49,710,778 49,710,778 0.3
France Telecom S.A.:
USD 20,000,000 5.50% due 12/03/1997 19,902,222 19,902,222 0.1
USD 20,550,000 5.50% due 12/18/1997 20,402,440 20,402,440 0.1
USD 100,000,000 General Electric Capital PLC,
5.49% due 12/02/1997 99,527,250 99,527,250 0.7
General Electric Company PLC:
USD 50,000,000 5.53% due 11/05/1997 49,969,278 49,969,278 0.4
USD 50,000,000 5.48% due 12/01/1997 49,771,667 49,771,667 0.4
USD 50,000,000 Goldman Sachs Group L.P.,
5.53% due 11/12/1997 49,915,514 49,915,514 0.4
IBM Credit Corp.:
USD 50,000,000 5.47% due 11/19/1997 49,863,250 49,863,250 0.4
USD 50,000,000 5.50% due 12/11/1997 49,694,444 49,694,444 0.4
USD 75,000,000 International Lease Finance
Corporation,
5.48% due 11/14/1997 74,851,583 74,851,583 0.5
KFW International
Finance Inc.:
USD 18,000,000 5.47% due 11/03/1997 17,994,530 17,994,530 0.1
USD 25,000,000 5.48% due 11/05/1997 24,984,778 24,984,778 0.2
USD 29,977,000 Matterhorn Capital Corp.,
5.51% due 11/04/1997 29,963,236 29,963,236 0.2
MetLife Funding Corp.:
USD 65,566,000 5.49% due 11/04/1997 65,536,004 65,536,004 0.5
USD 25,000,000 5.51% due 11/25/1997 24,908,167 24,908,167 0.2
USD 45,000,000 Monsanto Company, 5.50% due
11/10/1997 44,938,125 44,938,125 0.3
USD 50,000,000 Morgan Stanley Group Inc.,
5.49% due 11/18/1997 49,870,375 49,870,375 0.4
USD 100,000,000 National Australia Funding
(Delaware) Inc.,
5.48% due 12/08/1997 99,436,778 99,436,778 0.7
USD 100,000,000 Societe Generale N.A., 5.53%
due 12/19/1997 99,262,667 99,262,667 0.7
Transamerica Finance Corp.:
USD 50,000,000 5.49% due 11/17/1997 49,878,000 49,878,000 0.4
USD 26,000,000 5.52% due 12/03/1997 25,872,427 25,872,427 0.2
USD 50,000,000 UBS Finance (Delaware) Inc.,
5.50% due 11/06/1997 49,961,806 49,961,806 0.4
USD 100,000,000 Vereinsbanken Finance
(Deleware) Inc.,
5.50% due 11/03/1997 99,969,444 99,969,444 0.7
USD 43,000,000 The Walt Disney Company,
5.49% due 11/05/1997 42,973,770 42,973,770 0.3
Xerox Credit Corp.:
USD 8,070,000 5.50% due 11/06/1997 8,063,835 8,063,835 0.1
USD 23,225,000 5.49% due 11/13/1997 23,182,498 23,182,498 0.2
USD 56,000,000 5.49% due 12/12/1997 55,649,860 55,649,860 0.4
--------------- --------------- ------
2,325,404,364 2,325,404,364 16.4
US Federal Home Loan
Government Mortgage Corp.:
Agency USD 9,471,000 5.41% due 11/12/1997 9,455,344 9,455,344 0.1
Obligations* USD 20,324,000 5.395% due 12/04/1997 20,223,489 20,223,489 0.1
USD 35,000,000 Federal National Mortgage
Association, 5.41% due
11/06/1997 34,973,701 34,973,701 0.2
--------------- --------------- ------
64,652,534 64,652,534 0.4
Total Short-Term Securities
in the United States 2,390,056,898 2,390,056,898 16.8
Total Investments in
Short-Term Securities 2,596,457,608 2,596,984,474 18.3
Total Investments 13,402,516,906 14,528,927,658 102.6
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1997
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
OPTIONS Nominal Value Premiums Value Percent of
WRITTEN Covered by Uptions Issue Received (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Call Options 100,000 Aetna Inc., expiring
Written January 1998 at USD 85 $ (465,734) $ (87,500) 0.0%
100,000 Aetna Inc., expiring
January 1998 at USD 90 (734,475) (43,750) 0.0
150,000 Aetna Inc., expiring
April 1998 at USD 75 (914,219) (806,250) 0.0
1,000,000 GTE Corp., expiring
December 1997 at USD 42.50 (2,844,904) (1,750,000) 0.0
350,000 QUALCOMM Inc., expiring
January 1998 at USD 55 (2,308,173) (2,450,000) 0.0
50,000 QUALCOMM Inc., expiring
January 1998 at USD 70 (217,243) (106,250) 0.0
50,000 QUALCOMM Inc., expiring
November 1997 at USD 60 (129,746) (106,250) 0.0
250,000 Waste Management Inc.,
expiring January
1998 at USD 30 (476,859) (78,125) 0.0
Total Options Written (8,091,353) (5,428,125) 0.0
Total Investments, Net of Options Written $13,394,425,553 14,523,499,533 102.6
===============
Short Sales (Proceeds--$28,700,782)** (34,793,111) (0.3)
Unrealized Depreciation on Forward Foreign Exchange Contracts*** (26,323,675) (0.2)
Variation Margin on Financial Futures Contracts**** 3,823,820 0.0
Liabilities in Excess of Other Assets (303,171,455) (2.1)
--------------- ------
Net Assets $14,163,035,112 100.0%
=============== ======
<FN>
++Non-income producing security.
++++American Depositary Receipts.
*Commercial Paper and certain US Government Agency Obligations are
traded on a discount basis. The interest rates shown are the rates
in effect at October 31, 1997.
**Covered Short Sales entered into as of October 31, 1997 were as
follows:
Common Value
Shares Issue (Note 1i)
1,413,000 Yamanouchi Pharmaceutical Co., Ltd. $(34,793,111)
Total (Proceeds--$28,700,782) $(34,793,111)
============
***Forward Foreign Exchange Contracts sold as of October 31, 1997
were as follows:
Unrealized
Appreciation
Foreign Expiration (Depreciation)
Currency Sold Date (Notes 1a & 1c)
CHF 51,000,000 November 1997 $ (1,070,938)
CHF 47,000,000 January 1998 (811,800)
ESP 1,000,000,000 November 1997 (165,466)
ESP 2,000,000,000 February 1998 27,868
FRF 579,000,000 November 1997 (3,527,936)
FRF 195,000,000 December 1997 (1,106,535)
FRF 380,000,000 January 1998 (697,652)
GBP 26,000,000 November 1997 (1,703,754)
GBP 206,000,000 December 1997 (14,331,148)
NLG 72,000,000 November 1997 (1,308,363)
NLG 26,000,000 December 1997 (176,554)
NLG 78,000,000 January 1998 (688,977)
NOK 105,000,000 November 1997 (377,191)
SEK 380,000,000 January 1998 (385,229)
Total Unrealized Depreciation on Forward
Foreign Exchange Contracts--Net
(USD Commitment--$810,925,698) $(26,323,675)
============
****Financial Futures Contracts purchased as of October 31, 1997
were as follows:
Number of Expiration Value
Contracts Issue Exchange Date (Note 1a)
375 Hang Seng Index Hang Seng November 1997 $ 25,687,257
3,256 Nikkei 225 OSAKA December 1997 445,834,456
50 Standard & Poor's
500 Index NYSE December 1997 23,100,000
Total Financial Futures Contracts Purchased
(Total Contract Price--$542,627,412) $494,621,713
============
Financial Futures Contracts sold as of October 31, 1997 were as
follows:
Number of Expiration Value
Contracts Issue Exchange Date (Note 1a)
280 Japanese
Government Bond Tokyo December 1997 $304,200,982
60 Standard & Poor's
500 Index NYSE December 1997 27,720,000
200 US Treasury Bond NYSE December 1997 22,350,000
Total Financial Futures Contracts Sold
(Total Contract Price--$346,002,346) $354,270,982
============
(a)Warrants entitle the Fund to purchase a predetermined number of
shares of stock/face amount of bonds at a predetermined price until
the expiration date.
(b)Represents a zero coupon or step bond. The interest rate on a
step bond represents the fixed rate of interest that will commence
its accrual on a predetermined date until maturity.
(c)All or a portion of security held as collateral in connection
with open financial future contracts.
(d)Subject to principal paydowns as a result of prepayments or
refinancings of underlying mortgage instruments. As a result, the
average life may be less than the original maturity.
(e)Each $10 face amount contains 40 shares of First Place Tower,
Inc.
(f)Each $1,000 face amount contains one warrant of United
International Holdings, Inc.
(g)Each $1,000 face amount contains one warrant of Unifi
Communications, Inc.
(h)Each $1,000 face amount contains four warrants of CellNet Data
Systems, Inc.
(i)Each $1,000 face amount contains one warrant of United USN, Inc.
(j)Each $1,000 face amount contains one warrant of PLD Telekom, Inc.
(k)Each $1,000 face amount contains one warrant of Coinstar, Inc.
(l)Each $1,000 face amount contains 1.1 shares of common stock of CS
Wireless Systems, Inc.
(m)Each $1,000 face amount contains one warrant of Ionica PLC.
(n)Securities held as collateral in connection with covered short
sales.
(o)Each $1,000 face amount contains one warrant of People's Choice
T.V. Corp.
(p)Represents a Brady Bond. Brady Bonds are securities which have
been issued to refinance commercial bank loans and other debt. The
risk associated with these instruments is the amount of any
uncollateralized principal or interest payments since there is a
high default rate of commercial bank loans by countries issuing
these securities.
(q)The security may be offered and sold to "qualified institutional
buyers" under Rule 144A of the Securities Act of 1933.
(r)Restricted securities as to resale. The value of the Fund's
investments in restricted securities was approximately $136,590,000,
representing 1.0% of net assets.
Acquisition Value
Issue Date(s) Cost (Note 1a)
Diva Systems Corp. 7/17/1996--
(Converitble, Series C) 8/22/1996 $ 8,410,000 $ 11,000,000
First Washington Realty,
Exchangable Debentures,
8.25% due 6/27/1999 6/27/1994 25,000,000 27,500,000
Geotek Communications,
Inc., Convertible Bonds, 3/01/1996--
12% due 2/15/200 3/31/1996 22,463,875 18,912,750
Ionica PLC 2/25/1997 10,286,966 11,832,448
Ionica PLC (Warrants) 2/25/1997 -- 1,472,654
Leperq Corporate Income
Fund, Exchangeable Secured
Notes, 8% due 3/17/2004 3/18/1997 25,000,000 29,187,500
Petroleos Mexicanos, 5/24/1996--
8.625% due 12/01/2023 8/01/1996 25,007,000 36,684,375
Total $116,167,841 $136,589,727
============ ============
(s)Represents a pay-in-kind security which may pay interest in
additional shares/face.
+++Investments in companies 5% or more of whose outstanding
securities are held by the Fund (such companies are defined as
"Affiliated Companies" in section 2 (a) (3) of the Investment
Company Act of 1940)are as follows:
Net Share Net Dividend
Industry Affiliate Activity Cost Income
Healthcare Advocat, Inc. -- -- ++
Services
Paper & Pulp Asia Pacific Resources
International
Holdings Ltd. (NY
Registered Shares) 2,002,200 $ 7,508,250 ++
Computer Borland International
Software Corp. -- -- ++
Textiles Burlington
Industries, Inc. -- -- ++
Utilities-- El Paso Electric
Electric & Company -- -- ++
Gas
Retail Stores Filene's Basement Corp. -- -- ++
Metals & Lukens Inc. -- -- $1,350,000
Mining
Real Estate Mid-America Realty
Investment Investments -- (171,964) 581,944
Trusts
Real Estate Prime Retail, Inc. 588,500 7,080,026 1,899,328
Investment
Trusts
Real Estate Prime Retail, Inc.
Investment (10.50%) (118,000) 2,950,000 2,069,813
Trusts
Insurance Risk Capital
Holdings Inc. 638,000 10,505,000 ++
Telecommu- Rogers Cantel Mobile
nications Communications Inc.
(Class B) 1,165,200 22,391,633 ++
Telecommu- Rogers Cantel Mobile
nications Communications Inc.
(Class B) (USD) 1,160,900 19,836,379 ++
Gaming Scientific Games
Holdings Corp. -- -- ++
++Non-income producing security.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1997
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of October 31, 1997
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$13,402,516,906)
(Note 1a) $14,528,927,658
Foreign cash (Note 1c) 184,731,673
Deposits on short sales (Note 1i) 52,215,639
Receivables:
Interest $ 105,789,488
Securities sold 42,282,878
Capital shares sold 15,285,433
Dividends 10,428,962
Variation margin (Note 1d) 3,823,820
Options written 914,219
Principal paydowns 174,777 178,699,577
---------------
Prepaid registration fees and other assets (Note 1g) 2,858,415
---------------
Total assets 14,947,432,962
---------------
Liabilities: Common stocks sold short, at market value
(proceeds--$28,700,782) (Note 1i) 34,793,111
Options written, at value (premiums paid--$8,091,353)
(Notes 1a & 1d) 5,428,125
Unrealized depreciation on forward foreign exchange
contracts (Note 1d) 26,323,675
Payables:
Securities purchased 639,889,506
Custodian bank (Note 1k) 29,082,387
Capital shares redeemed 25,056,168
Distributor (Note 2) 9,508,198
Investment adviser (Note 2) 8,081,652
Forward foreign exchange contracts (Note 1d) 805,020 712,422,931
---------------
Accrued expenses and other liabilities 5,430,008
---------------
Total liabilities 784,397,850
---------------
Net Assets: Net assets $14,163,035,112
===============
Net Assets Class A Shares of Common Stock, $0.10 par value,
Consist of: 450,000,000 shares authorized $ 13,395,622
Class B Shares of Common Stock, $0.10 par value,
2,000,000,000 shares authorized 63,109,447
Class C Shares of Common Stock, $0.10 par value,
200,000,000 shares authorized 4,332,712
Class D Shares of Common Stock, $0.10 par value,
900,000,000 shares authorized 9,311,545
Paid-in capital in excess of par 11,714,319,740
Undistributed investment income--net 260,070,062
Undistributed realized capital gains on investments and
foreign currency transactions--net 1,059,345,958
Unrealized appreciation on investments and foreign
currency transactions--net 1,039,150,026
---------------
Net assets $14,163,035,112
===============
Net Asset Class A--Based on net assets of $2,132,253,943
Value: and 133,956,220 shares outstanding $ 15.92
===============
Class B--Based on net assets of $9,879,603,597
and 631,094,470 shares outstanding $ 15.65
===============
Class C--Based on net assets of $671,466,862 and
43,327,119 shares outstanding $ 15.50
===============
Class D--Based on net assets of $1,479,710,710 and
93,115,446 shares outstanding $ 15.89
===============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Year Ended October 31, 1997
<S> <S> <C> <C>
Investment Interest and discount earned (net of $136,135
Income foreign withholding tax) $ 604,947,856
(Notes 1e & 1f): Dividends (net of $5,718,574 foreign withholding tax) 106,585,253
Other 15,978,217
---------------
Total income 727,511,326
---------------
Expenses: Investment advisory fees (Note 2) $ 99,812,816
Account maintenance and distribution fees--Class B (Note 2) 94,703,295
Transfer agent fees--Class B (Note 2) 11,959,689
Account maintenance and distribution fees--Class C (Note 2) 5,392,525
Account maintenance fees--Class D (Note 2) 3,232,450
Custodian fees 2,440,432
Transfer agent fees--Class A (Note 2) 2,209,961
Transfer agent fees--Class D (Note 2) 1,398,918
Interest on short sales (Note 1i) 1,056,723
Printing and shareholder reports 1,032,534
Registration fees (Note 1g) 941,142
Dividends on short sales (Note 1i) 808,558
Transfer agent fees--Class C (Note 2) 732,201
Accounting services (Note 2) 718,491
Professional fees 186,802
Directors' fees and expenses 36,137
Pricing fees 23,168
Other 100,152
---------------
Total expenses before reimbursement 226,785,994
Reimbursement of expenses (Note 2) (11,605,587)
---------------
Total expenses after reimbursement 215,180,407
---------------
Investment income--net 512,330,919
---------------
Realized & Realized gain from:
Unrealized Gain Investments--net $ 1,067,656,865
(Loss) on Foreign currency transactions--net 187,279,376 1,254,936,241
Investments & ---------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions--Net Investments--net 104,999,111
(Notes 1c, 1d, Foreign currency transactions--net (25,089,022) 79,910,089
1f & 3): --------------- ---------------
Net realized and unrealized gain on
investments and foreign currency transactions 1,334,846,330
---------------
Net Increase in Net Assets Resulting from Operations $ 1,847,177,249
===============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1997
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Year Ended
October 31,
Increase (Decrease) in Net Assets: 1997 1996
<S> <S> <C> <C>
Operations: Investment income--net $ 512,330,919 $ 473,459,716
Realized gain on investments and foreign currency
transactions--net 1,254,936,241 653,947,236
Change in unrealized appreciation/depreciation on
investments and foreign currency transactions--net 79,910,089 547,826,040
--------------- ---------------
Net increase in net assets resulting from operations 1,847,177,249 1,675,232,992
--------------- ---------------
Dividends & Investment income--net:
Distributions to Class A (111,208,977) (108,106,998)
Shareholders Class B (435,557,200) (425,282,978)
(Note 1h): Class C (23,496,200) (11,381,642)
Class D (64,960,694) (34,542,355)
Realized gain on investments--net:
Class A (79,203,184) (45,054,853)
Class B (378,949,932) (206,613,317)
Class C (17,801,965) (3,762,020)
Class D (45,374,563) (8,531,078)
--------------- ---------------
Net decrease in net assets resulting from dividends
and distributions to shareholders (1,156,552,715) (843,275,241)
--------------- ---------------
Capital Share Net proceeds from issuance of capital shares 1,540,268,692 2,041,810,853
Transactions Net proceeds from issuance of capital shares resulting
(Note 4): from reorganization -- 523,182,823
--------------- ---------------
Net increase in net assets derived from capital
share transactions 1,540,268,692 2,564,993,676
--------------- ---------------
Net Assets: Total increase in net assets 2,230,893,226 3,396,951,427
Beginning of year 11,932,141,886 8,535,190,459
--------------- ---------------
End of year* $14,163,035,112 $11,932,141,886
=============== ===============
<FN>
*Undistributed investment income--net (Note 1j) $ 260,070,062 $ 188,632,757
=============== ===============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
The following per share data and ratios
have been derived from information
provided in the financial statements. Class A
For the Year Ended October 31,
Increase (Decrease) in
Net Asset Value: 1997++ 1996++ 1995++ 1994 1993
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value,
Operating beginning of year $ 15.17 $ 14.21 $ 13.07 $ 13.52 $ 11.92
Performance: ----------- ----------- ----------- ----------- -----------
Investment income--net .71 .78 .79 .60 .39
Realized and unrealized
gain (loss) on investments
and foreign currency
transactions--net 1.57 1.59 1.04 (.31) 2.14
----------- ----------- ----------- ----------- -----------
Total from investment
operations 2.28 2.37 1.83 .29 2.53
----------- ----------- ----------- ----------- -----------
Less dividends and
distributions:
Investment income--net (.88) (.98) (.39) (.51) (.81)
Realized gain on
investments--net (.65) (.43) (.30) (.23) (.12)
----------- ----------- ----------- ----------- -----------
Total dividends and
distributions (1.53) (1.41) (.69) (.74) (.93)
----------- ----------- ----------- ----------- -----------
Net asset value,
end of year $ 15.92 $ 15.17 $ 14.21 $ 13.07 $ 13.52
=========== =========== =========== =========== ===========
Total Investment Based on net asset
Return:* value per share 16.08% 17.81% 14.81% 2.14% 22.61%
=========== =========== =========== =========== ===========
Ratios to Average Expenses, net of
Net Assets: reimbursement .83% .86% .90% .89% .93%
=========== =========== =========== =========== ===========
Expenses .91% .93% .90% .89% .93%
=========== =========== =========== =========== ===========
Investment income--net 4.64% 5.31% 5.98% 4.60% 3.90%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of year
Data: (in thousands) $ 2,132,254 $ 1,841,974 $ 1,487,805 $ 1,357,906 $ 917,806
=========== =========== =========== =========== ===========
Portfolio turnover 55.42% 51.26% 36.78% 57.04% 50.35%
=========== =========== =========== =========== ===========
Average commission rate
paid++++ $ .0307 $ .0048 -- -- --
=========== =========== =========== =========== ===========
<CAPTION>
The following per share data and ratios
have been derived from information
provided in the financial statements. Class B
For the Year Ended October 31,
Increase (Decrease) in
Net Asset Value: 1997++ 1996++ 1995++ 1994 1993
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value,
Operating beginning of year $ 14.95 $ 14.01 $ 12.91 $ 13.38 $ 11.83
Performance: ----------- ----------- ----------- ----------- -----------
Investment income--net .55 .62 .65 .46 .28
Realized and unrealized
gain (loss) on investments
and foreign currency
transactions--net 1.52 1.59 1.01 (.31) 2.11
----------- ----------- ----------- ----------- -----------
Total from investment
operations 2.07 2.21 1.66 .15 2.39
----------- ----------- ----------- ----------- -----------
Less dividends and
distributions:
Investment income--net (.72) (.84) (.26) (.39) (.72)
Realized gain on
investments--net (.65) (.43) (.30) (.23) (.12)
----------- ----------- ----------- ----------- -----------
Total dividends and
distributions (1.37) (1.27) (.56) (.62) (.84)
----------- ----------- ----------- ----------- -----------
Net asset value,
end of year $ 15.65 $ 14.95 $ 14.01 $ 12.91 $ 13.38
=========== =========== =========== =========== ===========
Total Investment Based on net asset
Return:* value per share 14.82% 16.71% 13.54% 1.13% 21.42%
=========== =========== =========== =========== ===========
Ratios to Average Expenses, net of
Net Assets: reimbursement 1.85% 1.87% 1.93% 1.91% 1.95%
=========== =========== =========== =========== ===========
Expenses 1.93% 1.95% 1.93% 1.91% 1.95%
=========== =========== =========== =========== ===========
Investment income--net 3.62% 4.29% 4.96% 3.58% 2.87%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of year
Data: (in thousands) $ 9,879,603 $ 8,660,279 $ 6,668,499 $ 6,457,130 $ 4,299,545
=========== =========== =========== =========== ===========
Portfolio turnover 55.42% 51.26% 36.78% 57.04% 50.35%
=========== =========== =========== =========== ===========
Average commission rate
paid++++ $ .0307 $ .0048 -- -- --
=========== =========== =========== =========== ===========
<FN>
*Total investment returns exclude the effects of sales loads.
++Based on average shares outstanding during the year.
++++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 rate on the date of the transaction. Such
conversions may significantly affect the rate shown.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1997
<TABLE>
FINANCIAL HIGHLIGHTS (concluded)
<CAPTION>
Class C
The following per share data and ratios For the
have been derived from information provided Period
in the financial statements. For the Year Oct. 21, 1994++
Ended October 31, to Oct. 31,
Increase (Decrease) in Net Asset Value: 1997++++ 1996++++ 1995++++ 1994
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 14.83 $ 13.94 $ 12.91 $ 12.91
Operating ---------- ---------- ---------- ----------
Performance: Investment income--net .54 .61 .64 .01
Realized and unrealized gain (loss)
on investments and foreign currency
transactions--net 1.52 1.58 1.02 (.01)
---------- ---------- ---------- ----------
Total from investment operations 2.06 2.19 1.66 --
---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.74) (.87) (.33) --
Realized gain on investments--net (.65) (.43) (.30) --
---------- ---------- ---------- ----------
Total dividends and distributions (1.39) (1.30) (.63) --
---------- ---------- ---------- ----------
Net asset value, end of period $ 15.50 $ 14.83 $ 13.94 $ 12.91
========== ========== ========== ==========
Total Investment Based on net asset value per share 14.84% 16.68% 13.58% .00%+++
Return:** ========== ========== ========== ==========
Ratios to Average Expenses, net of reimbursement 1.86% 1.88% 1.95% 2.44%*
Net Assets: ========== ========== ========== ==========
Expenses 1.94% 1.95% 1.95% 2.44%*
========== ========== ========== ==========
Investment income--net 3.60% 4.24% 4.80% 3.71%*
========== ========== ========== ==========
Supplemental Net assets, end of period (in thousands) $ 671,467 $ 385,753 $ 102,361 $ 7,347
Data: ========== ========== ========== ==========
Portfolio turnover 55.42% 51.26% 36.78% 57.04%
========== ========== ========== ==========
Average commission rate paid++++++ $ .0307 $ .0048 -- --
========== ========== ========== ==========
<CAPTION>
Class D
The following per share data and ratios For the
have been derived from information provided Period
in the financial statements. For the Year Oct. 21, 1994++
Ended October 31, to Oct. 31,
Increase (Decrease) in Net Asset Value: 1997++++ 1996++++ 1995++++ 1994
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 15.15 $ 14.19 $ 13.08 $ 13.07
Operating ---------- ---------- ---------- ----------
Performance: Investment income--net .68 .77 .77 .01
Realized and unrealized gain on
investments and foreign
currency transactions--net 1.55 1.57 1.01 --
---------- ---------- ---------- ----------
Total from investment operations 2.23 2.34 1.78 .01
---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.84) (.95) (.37) --
Realized gain on investments--net (.65) (.43) (.30) --
---------- ---------- ---------- ----------
Total dividends and distributions (1.49) (1.38) (.67) --
---------- ---------- ---------- ----------
Net asset value, end of period $ 15.89 $ 15.15 $ 14.19 $ 13.08
========== ========== ========== ==========
Total Investment Based on net asset value per share 15.76% 17.59% 14.43% .08%+++
Return:** ========== ========== ========== ==========
Ratios to Average Expenses, net of reimbursement 1.08% 1.10% 1.16% 1.69%*
Net Assets: ========== ========== ========== ==========
Expenses 1.16% 1.18% 1.16% 1.69%*
========== ========== ========== ==========
Investment income--net 4.38% 5.04% 5.63% 4.46%*
========== ========== ========== ==========
Supplemental Net assets, end of period (in thousands) $1,479,711 $1,044,136 $ 256,525 $ 4,968
Data: ========== ========== ========== ==========
Portfolio turnover 55.42% 51.26% 36.78% 57.04%
========== ========== ========== ==========
Average commission rate paid++++++ $ .0307 $ .0048 -- --
========== ========== ========== ==========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
+++Aggregate total investment return.
++Commencement of operations.
++++Based on average shares outstanding during the year.
++++++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.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1997
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Global Allocation Fund, Inc. (the "Fund") is
registered under the Investment Company Act of 1940 as a non-
diversified, open-end management investment company. The Fund offers
four classes of shares under the Merrill Lynch Select Pricing SM
System. Shares of Class A and Class D are sold with a front-end
sales charge. Shares of Class B and Class C may be subject to a
contingent deferred sales charge. All classes of shares have
identical voting, dividend, liquidation and other rights and the
same terms and conditions, except that Class B, Class C and Class D
Shares bear certain expenses related to the account maintenance of
such shares, and Class B and Class C Shares also bear certain
expenses related to the distribution of such shares. Each class has
exclusive voting rights with respect to matters relating to its
account maintenance and distribution expenditures. The following is
a summary of significant accounting policies followed by the Fund.
(a) Valuation of investments--Portfolio securities which are traded
on stock exchanges are valued at the last sale price on the exchange
on which such securities are traded, as of the close of business on
the day the securities are being valued or, lacking any sales, at
the last available bid price. Securities traded in the over-the-
counter market are valued at the last available bid price prior to
the time of valuation. In cases where securities are traded on more
than one exchange, the securities are valued on the exchange
designated by or under the authority of the Board of Directors as
the primary market. Securities which are traded both in the over-the-
counter market and on a stock exchange are valued according to the
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 readily 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) Repurchase agreements--The Fund invests in US Government
securities pursuant to repurchase agreements with financial
institutions that have, in the opinion of Merrill Lynch Asset
Management, L.P. ("MLAM"), substantial capital relative to the
Fund's exposure, or have provided the Fund with a third-party
guaranty or other credit enhancement. Under such agreements, the
financial institution agrees to repurchase the security at a
mutually agreed upon time and price. The Fund takes possession of
the underlying securities, marks to market such securities and, if
necessary, receives additions to such securities daily to ensure
that the contract is fully collateralized.
(c) 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.
(d) 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.
* Options--The Fund is authorized to purchase and write covered call
and 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 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.
* Financial futures contracts--The Fund may purchase or sell
interest rate 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.
(e) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required. Under the applicable foreign tax law, a
withholding tax may be imposed on interest, dividends, and capital
gains at various rates.
(f) 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.
(g) Prepaid registration fees--Prepaid registration fees are charged
to expense as the related shares are issued.
(h) Dividends and distributions--Dividends and distributions paid by
the Fund are recorded on the ex-dividend dates.
(i) Short sales--When the Fund engages in a short sale, an amount
equal to the proceeds 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 market value of the
short sale. The Fund maintains a segregated account of securities as
collateral for the short sales. The Fund is exposed to market risk
based on the amount, if any, that the market value of the stock
exceeds the market value of the securities in the segregated
account.
(j) Reclassification--Generally accepted accounting principles
require that certain components of net assets be adjusted to reflect
permanent differences between financial and tax reporting.
Accordingly, current year's permanent book/tax differences of
$194,329,457 have been reclassified between undistributed net
realized capital gains and undistributed net investment income.
These reclassifications have no effect on net assets or net asset
values per share.
(k) Custodian bank--The Fund recorded an amount payable to the
Custodian Bank resulting from a timing difference of security
transaction settlements.
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Fund has entered into an Investment Advisory Agreement with
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 of 0.75%, on an annual basis,
of the average daily value of the Fund's net assets. MLAM has agreed
to waive a portion of its fee payable by the Fund so that such fee
is reduced for average daily net assets of the Fund in excess of
$2.5 billion from the annual rate of 0.75% to 0.70%, from 0.70% to
0.65% for average daily net assets in excess of $5 billion, from
0.65% to 0.625% for average daily net assets in excess of $7.5
billion, and from 0.625% to 0.60% for average daily net assets in
excess of $10 billion. For the year ended October 31, 1997, MLAM
earned fees of $99,812,816, of which $11,605,587 was voluntarily
waived. MLAM has entered into a sub-advisory agreement with Merrill
Lynch Asset Management U.K., Ltd. ("MLAM U.K."), an affiliate of
MLAM, pursuant to which MLAM pays MLAM U.K. a fee computed at the
rate of 0.10% of the average daily net assets of the Fund for
providing investment advisory services to MLAM with respect to the
Fund. For the year ended October 31, 1997, MLAM paid MLAM U.K. a fee
of $10,062,279 pursuant to such agreement.
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:
Merrill Lynch Global Allocation Fund, Inc., October 31, 1997
NOTES TO FINANCIAL STATEMENTS (continued)
Account Maintenance Fee Distribution 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 year ended October 31, 1997, MLFD earned underwriting
discounts and direct commissions 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 $ 47,810 $ 658,064
Class D $237,188 $3,005,210
For the year ended October 31, 1997, MLPF&S received contingent
deferred sales charges of $12,451,911 and $215,161 relating to
transactions in Class B and Class C Shares, respectively.
Furthermore, MLPF&S received contingent deferred sales charges of
$6,066 relating to transactions subject to front end sales charge
waivers in Class D Shares.
In addition, MLPF&S received $238,952 in commissions on the
execution of portfolio security transactions for the Fund for the
year ended October 31, 1997.
For the year ended October 31, 1997, the Fund paid Merrill Lynch
Security Pricing Service, an affiliate of MLPF&S, $683 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 year ended October 31, 1997 were $7,283,894,845 and
$5,636,369,251, respectively.
Net realized and unrealized gains (losses) as of October 31, 1997
were as follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
Long-term investments $1,077,375,774 $1,125,883,886
Short-term investments (6,026) 526,866
Short sales investments 10,882,530 (6,092,329)
Options written 542,106 2,663,228
Financial futures contracts (21,137,519) (56,274,335)
Forward foreign exchange contracts 233,507,856 (26,323,675)
Foreign currency transactions (46,228,480) (1,233,615)
-------------- --------------
Total $1,254,936,241 $1,039,150,026
============== ==============
As of October 31, 1997, net unrealized appreciation for Federal
income tax purposes aggregated $1,107,182,968, of which
$1,531,855,563 related to appreciated securities and $424,672,595
related to depreciated securities. At October 31, 1997, the
aggregate cost of investments for Federal income tax purposes was
$13,416,316,565.
Transactions in call options written for the year ended October 31,
1997 were as follows:
Nominal Value Premiums
Covered Received
Outstanding call options written,
beginning of year -- --
Options written 4,400,000 $ 13,146,846
Options closed (2,350,000) (5,055,493)
----------- -------------
Outstanding call options written,
end of year 2,050,000 $ 8,091,353
=========== =============
Transactions in put options written for the year ended October 31,
1997 were as follows:
Nominal Value Premiums
Covered Paid
Outstanding put options written,
beginning of year -- --
Options written 100,000 $ 374,830
Options closed (100,000) (374,830)
----------- -------------
Outstanding put options written,
end of year -- $ --
=========== =============
4. Capital Share Transactions:
Net increase in net assets derived from capital share transactions
was $1,540,268,692 and $2,564,993,676 for the years ended October
31, 1997 and October 31, 1996, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Year Dollar
Ended October 31, 1997 Shares Amount
Shares sold 29,258,107 $ 446,649,910
Shares issued to shareholders in reinvest-
ment of dividends and distributions 11,603,933 170,013,343
------------ --------------
Total issued 40,862,040 616,663,253
Shares redeemed (28,298,487) (435,986,811)
------------ --------------
Net increase 12,563,553 $ 180,676,442
============ ==============
Class A Shares for the Year Dollar
Ended October 31, 1996 Shares Amount
Shares sold 26,663,921 $ 385,379,581
Shares issued to shareholders in
reinvestment of dividends and
distributions 9,842,522 136,704,200
Shares issued resulting from
reorganization 732,464 12,726,168
------------ --------------
Total issued 37,238,907 534,809,949
Shares redeemed (20,574,819) (298,410,953)
------------ --------------
Net increase 16,664,088 $ 236,398,996
============ ==============
Class B Shares for the Year Dollar
Ended October 31, 1997 Shares Amount
Shares sold 121,098,572 $1,825,730,372
Shares issued to shareholders in
reinvestment of dividends and
distributions 49,478,020 713,661,687
------------ --------------
Total issued 170,576,592 2,539,392,059
Shares redeemed (108,673,162) (1,647,892,648)
Automatic conversion of shares (10,144,962) (152,808,738)
------------ --------------
Net increase 51,758,468 $ 738,690,673
============ ==============
Class B Shares for the Year Dollar
Ended October 31, 1996 Shares Amount
Shares sold 132,348,586 $1,887,208,023
Shares issued to shareholders in
reinvestment of dividends and
distributions 40,325,041 553,386,648
Shares issued resulting from
reorganization 9,028,794 47,981,055
------------ --------------
Total issued 181,702,421 2,488,575,726
Shares redeemed (75,996,626) (1,087,870,352)
Automatic conversion of shares (3,687,016) (52,616,493)
------------ --------------
Net increase 102,018,779 $1,348,088,881
============ ==============
Class C Shares for the Year Dollar
Ended October 31, 1997 Shares Amount
Shares sold 21,707,656 $ 324,717,339
Shares issued to shareholders in
reinvestment of dividends and
distributions 2,575,436 36,957,125
------------ --------------
Total issued 24,283,092 361,674,464
Shares redeemed (6,974,368) (104,951,727)
------------ --------------
Net increase 17,308,724 $ 256,722,737
============ ==============
Class C Shares for the Year Dollar
Ended October 31, 1996 Shares Amount
Shares sold 20,590,847 $ 291,762,498
Shares issued to shareholders in
reinvestment of dividends and
distributions 987,843 13,590,987
Shares issued resulting from
reorganization 91,170 1,203,359
------------ --------------
Total issued 21,669,860 306,556,844
Shares redeemed (2,995,301) (42,705,296)
------------ --------------
Net increase 18,674,559 $ 263,851,548
============ ==============
Class D Shares for the Year Dollar
Ended October 31, 1997 Shares Amount
Shares sold 22,634,091 $ 346,497,021
Automatic conversion of shares 10,015,861 152,808,738
Shares issued to shareholders in
reinvestment of dividends and
distributions 6,415,926 94,133,358
------------ --------------
Total issued 39,065,878 593,439,117
Shares redeemed (14,860,090) (229,260,277)
------------ --------------
Net increase 24,205,788 $ 364,178,840
============ ==============
Merrill Lynch Global Allocation Fund, Inc., October 31, 1997
NOTES TO FINANCIAL STATEMENTS (concluded)
Class D Shares for the Year Dollar
Ended October 31, 1996 Shares Amount
Shares sold 20,921,971 $ 291,938,712
Automatic conversion of shares 2,961,136 52,616,493
Shares issued to shareholders in
reinvestment of dividends and
distributions 2,670,340 37,606,934
Shares issued resulting from
reorganization 32,998,082 461,272,241
------------ --------------
Total issued 59,551,529 843,434,380
Shares redeemed (8,715,593) (126,780,129)
------------ --------------
Net increase 50,835,936 $ 716,654,251
============ ==============
5. Commitments:
At October 31, 1997, the Fund had entered into foreign exchange
contracts, in addition to the contracts listed on the Schedule of
Investments, under which it had agreed to purchase and sell various
foreign currencies with approximate values of $146,479,000 and
$46,422,000, respectively.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
Merrill Lynch Global Allocation Fund, Inc.:
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments, of Merrill Lynch
Global Allocation Fund, Inc. as of October 31, 1997, the related
statements of operations for the year then ended and changes in net
assets for each of the years in the two-year period then ended, and
the financial highlights for each of the years in the five-year
period then ended. These financial statements and the financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at October
31, 1997 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Merrill Lynch Global Allocation Fund, Inc. as of October 31, 1997,
the results of its operations, the changes in its net assets, and
the financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
December 17, 1997
</AUDIT-REPORT>
PORTFOLIO INFORMATION (unaudited)
Worldwide
Investments
As of 10/31/97
Breakdown of Stocks &
Fixed-Income Securities by Percent of
Country Net Assets
United States* 60.7%
Japan 7.0
Germany 6.0
United Kingdom 4.8
Argentina 3.9
Switzerland* 2.5
France 2.4
Italy 1.9
Australia 1.6
Canada 1.4
Netherlands 1.1
Brazil 1.0
Hong Kong 0.9
South Korea 0.9
Mexico 0.8
Russia 0.7
Finland 0.5
Portugal 0.5
Indonesia 0.5
Sweden 0.5
Singapore 0.4
Spain 0.4
India 0.4
Cayman Islands 0.4
Malaysia 0.3
Norway 0.2
New Zealand 0.2
South Africa 0.1
Taiwan 0.1
China 0.1
Austria 0.1
Philippines 0.1
Ireland 0.1
Thailand 0.1
[FN]
*Includes investments in short-term securities.
Ten Largest Industries Percent of
(Equity Investments) Net Assets
Banking++ 4.8%
Telecommunications 3.8
Insurance 3.6
Utilities--Electric & Gas 2.1
Energy & Petroleum 1.2
Financial Services 1.1
Metals & Mining 1.0
Healthcare Services 0.9
Oil Services 0.9
Retail Stores 0.8
Ten Largest Holdings Percent of
(Equity Investments) Net Assets
Noble Drilling Corp. 0.6%
Broken Hill Proprietary Co., Ltd. 0.6
Republic New York Corp. 0.6
Societe Generale de France S.A. 0.5
Mellon Bank Corp. 0.4
First Commerce Corp. 0.4
MontEdison S.p.A. 0.4
KeyCorp 0.4
Sumitomo Marine &Fire
Insurance Co., Ltd. 0.3
Houston Industries, Inc. 0.3
[FN]
++Includes savings banks.
Merrill Lynch Global Allocation Fund, Inc., October 31, 1997
IMPORTANT TAX INFORMATION (unaudited)
<TABLE>
The following information summarizes all per share distributions
paid by Merrill Lynch Global Allocation Fund, Inc. during its
taxable year ended October 31, 1997:
<CAPTION>
Qualifying Domestic Interest From Domestic Non-Qualifying Total Long-Term
Record Date Payable Date Ordinary Income Federal Obligations Ordinary Income Ordinary Income Capital Gains
<S> <C> <C> <C> <C> <C> <C>
Class A Shares:
12/12/96 12/20/96 $.053895 $.014332 $.569392 $.637619 $.530227
7/02/97 7/11/97 $.022368 $.028759 $.306839 $.357966 --
Class B Shares:
12/12/96 12/20/96 $.047452 $.012619 $.501321 $.561392 $.530227
7/02/97 7/11/97 $.017706 $.022764 $.242877 $.283347 --
Class C Shares:
12/12/96 12/20/96 $.048028 $.012772 $.507407 $.568207 $.530227
7/02/97 7/11/97 $.018154 $.023340 $.249024 $.290518 --
Class D Shares:
12/12/96 12/20/96 $.052314 $.013912 $.522691 $.618917 $.530227
7/02/97 7/11/97 $.021273 $.027351 $.291819 $.340443 --
</TABLE>
The qualifying domestic ordinary income qualifies for the dividends
received deduction for corporations.
The law varies in each state as to whether and what percentage of
dividend income attributable to Federal obligations is exempt from
state income tax. We recommend that you consult your tax adviser to
determine if any portion of the dividends you received is exempt
from state income tax.
Listed below is the percentage of total assets of the Fund invested
in Federal obligations as of the end of each quarter of the fiscal
year:
Percentage of
Quarter Ended Federal Obligations*
January 31, 1997 7.56%
April 30, 1997 14.78%
July 31, 1997 13.51%
October 31, 1997 12.73%
[FN]
*For the purposes of this calculation, Federal obligations include
US Treasury Notes, USTreasury Bills, and US Treasury Bonds. Also
included are obligations issued by the following agencies: Banks for
Cooperatives, Federal Intermediate Credit Banks, Federal Land Banks,
Federal Home Loan Banks, and the Student Loan Marketing Association.
Repurchase agreements are not included in this calculation.
Please retain this information for your records.
COMMON STOCK PORTFOLIO CHANGES (unaudited)
For the Quarter Ended October 31, 1997
Additions
ABN AMRO Holding N.V.
Aetna Inc.
*Allianz AG
American Capital Strategies, Ltd.
Ayala Corporation
BASF AG
B.A.T. Industries PLC
BEC World Public Co., Ltd. (Foreign)
*BEC World Public Co., Ltd. (Local)
*BMW AG
Banco Rio de La Plata S.A. (ADR)
Banque Nationale de Paris S.A.
Battle Mountain Gold Company
Bayer AG
British Telecommunications PLC
(Ordinary)
Broken Hill Proprietary Co., Ltd.
CBI Industries, Inc.
CRH PLC
Chiyoda Fire & Marine Insurance
Co., Ltd.
Christian Dior S.A.
Columbia/HCA Healthcare Corp.
Commonwealth Industries Inc.
Compagnie Generale des Eaux S.A.
Daimler-Benz AG
Daiwa Securities Co., Ltd.
Deltic Timber Corporation
Dowa Fire & Marine Insurance Co., Ltd.
Endesa S.A.
Energy Group PLC (ADR)
Foster's Brewing Group Limited
France Telecom S.A.
Fuji Heavy Industries, Ltd.
Imperial Credit Commercial Mortgage
Investment Corp.
Ispat International N.V. (NY Registered
Shares)
Kawasaki Heavy Industries, Ltd.
Kokusai Securities Co., Ltd.
Korea Electric Power Corporation (ADR)
Louisiana-Pacific Corp.
M.I.M. Holdings Ltd.
Muenchener Rueckversicherungs-
Gesellschaft AG
*NEC Corporation
Natural Gas Corporation Holdings Limited
*Nestle S.A.
Newmont Mining Corporation
Nisshin Fire & Marine Insurance
Co., Ltd.
Oxford Health Plans, Inc.
Pasminco Limited
Pioneer International Limited
Pohang Iron & Steel Co., Ltd. (ADR)
Potomac Electric Power Company
Repsol S.A.
Rio Tinto PLC
*Roche Holdings AG
SK Telecom Co., Ltd. (ADR)
Sainsbury (J.) PLC
Sampoerna International Finance
Company B.V.
Sovereign Bancorp, Inc.
Unilever PLC
Veba AG
WMC Limited
Wako Securities Co., Ltd.
Walden Residential Properties, Inc.
Deletions
*Allianz AG
*BEC World Public Co., Ltd. (Local)
*BMW AG
Banco Bilbao Vizcaya S.A.
Banco Comerciale Portugues
Banker's Corp.
CAI Wireless Systems Inc.
Cabot Oil & Gas Corp. (Class A)
Citizens Utilities Company (Class A)
Deutsche Lufthansa AG
Grand Metropolitan PLC (ADR)
Guinness PLC
Maruichi Steel Tube Ltd.
Mercantile Bancorporation Inc.
Merck & Co., Inc.
Mid-Atlantic Realty Trust Co.
Millennium Chemicals Inc.
*NEC Corporation
*Nestle S.A.
Pennzoil Co.
*Roche Holdings AG
Tornet Fastighets AB
Unilever Capital Corp. PLC
[FN]
*Added and deleted in the same quarter.
Merrill Lynch Global Allocation Fund, Inc., October 31, 1997
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
Norman R. Harvey, Senior Vice President
Bryan N. Ison, Senior Vice President and Portfolio Manager
Donald C. Burke, Vice President
Dennis W. Stattman, Vice President
Gerald M. Richard, Treasurer
James W. Harshaw, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
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