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Previous: TOYOTA MOTOR CREDIT CORP, 424B3, 1998-09-28 |
Next: ACM GOVERNMENT OPPORTUNITY FUND INC, NSAR-B, 1998-09-28 |
MERRILL LYNCH
GLOBAL
ALLOCATION
FUND, INC.
FUND LOGO
Quarterly Report
July 31, 1998
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Statements and other information herein are as dated and are subject
to change. Please see the Fund's prospectus for a description of
risks associated with global investments.
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 7/31/98
<CAPTION>
Percent of Fund's Net Assets Reference Portfolio
7/31/98 4/30/98 Percentages
<S> <C> <C> <C>
North & South American Equities 19.6%* 19.6%* 36.0%
European Equities 12.3 10.7 11.0
Pacific Basin Equities 7.6 7.2 13.0
Total Equities 39.5 37.5 60.0
US Dollar Denominated Fixed-Income Securities 46.0 39.6 24.0
US Issuers 26.9 27.3 --
Non-US Issuers 19.1 12.3 --
Non-US Dollar Denominated Fixed-Income Securities 9.4 9.7 16.0
Total Fixed-Income Securities 55.4++ 49.3++ 40.0
Cash & Cash Equivalents 5.1 13.2 --
<FN>
*Includes value of Financial Futures Contracts.
++Includes Preferred Stock.
Merrill Lynch Global Allocation Fund, Inc., July 31, 1998
DEAR SHAREHOLDER
For the quarter ended July 31, 1998, Merrill Lynch Global Allocation
Fund, Inc.'s Class A, Class B, Class C and Class D Shares had total
investment returns of -3.99%, -4.31%, -4.34% and -4.12%,
respectively. (Fund results do not reflect sales charges, and would
be lower if sales charges were included. Complete performance
information can be found on pages 4 and 5 of this report to
shareholders.)
Equity and Bond Market Volatility
Increase
After reaching a high in mid-April, the US equity market sold off
and reached a low in mid-June, concurrent with increasing concerns
regarding the prospects for US corporations in the wake of a
deepening recession in Japan and ongoing financial crises throughout
Asia. The US stock market subsequently rallied sharply, but the
surge was dominated by the largest capitalization growth stocks. The
unmanaged Standard & Poor's 500 Composite Index (S&P 500) hit an all-
time high in mid-July, but broader stock market averages could not
keep pace. Larger-capitalization stocks dominated the short-lived
rally, with small-capitalization and mid-capitalization issues
underperforming their larger counterparts. By the end of July, US
stocks began to sell off sharply. The S&P 500 nevertheless ended the
quarter up a modest 1.2%.
Outside of the United States, stock markets turned in mixed
performances for the July quarter. As measured by the unmanaged
Financial Times/Standard & Poor's--Actuaries World Index (Ex-US),
international equity markets declined 0.9% in US dollar terms during
the period. Some of the larger European stock markets, such as
Germany, rose, while the UK stock market declined. The Japanese
stock market declined in US dollar terms during the quarter.
Emerging markets were the worst-performing markets during the July
quarter. Stock markets of petroleum-producing countries performed
especially poorly as crude oil prices declined even further. In
addition to energy, the widespread decline in commodity prices put
great pressure on economies in commodity-producing countries. The
impact of this trend can be seen in the currency weakness of the
United States' closest trading partners, Canada and Mexico. The
Canadian dollar weakened approximately 5.5% relative to the US
dollar during the quarter, while the Mexican peso weakened
approximately 4.7%.
US dollar strength was not limited to those currencies of commodity-
producing economies. As noted, Japanese stocks had a negative total
return in US dollar terms for the quarter. In local currency terms,
the unmanaged Nikkei 225 Index had a modestly positive return for
the period. However, the yen weakened over 9% relative to the US
dollar during the period, which resulted in a 3.8% decline for the
Nikkei 225 in US dollar terms.
Portfolio Matters
During the July quarter, the Fund modestly increased its total
equity exposure from 37.5% to 39.5%. We increased exposure in all
three major regions, although the sum of the greater European
exposure was the result of appreciation in our holdings. (Please
refer to the "Summary of Fund's Overall Asset Mix" table on page 1
of this report to shareholders.)
During the July quarter, we also increased the Fund's total fixed-
income exposure from 49.3% to 55.4%. We added to positions in US
dollar-denominated securities of several emerging markets issuers.
For example, in Malaysia we purchased the US dollar-denominated
bonds of Petroliam Nasional BHD, the national petroleum company, and
Telekom Malaysia BHD, the national telephone company. In addition,
we purchased US dollar-denominated debt issued by the Russian
Federation, and other Russian issuers to a lesser degree.
As of July 31, 1998, new investments in Russia accounted for 1.5% of
the Fund's net assets. Subsequent to our purchase, a financial
crisis began in Russia, which led to a devaluation of the ruble and
the restructuring of ruble-denominated short-term debt. Although
none of our investments were directly involved in the devaluation
and debt restructuring, their market prices declined quickly and
substantially, especially following the close of the July quarter.
We believe that the current prices for the Fund's Russian holdings
more than reflect the problems plaguing the Russian economy at this
time, notwithstanding the stunning severity and speed with which
financial conditions have deteriorated.
As of July 31, 1998, 8.9% of the Fund's investments was in emerging
markets securities, with most of the exposure in US dollar-
denominated debt of emerging markets issuers. While we would have
preferred to purchase all of these issues at today's lower prices,
we continue to see value in emerging markets debt. We believe that
we now are presented with buying opportunities similar to those that
occurred for Latin American debt in 1994/1995 and the US banking
sector in 1990. Contrarian investors in those sectors who were
willing to ride out those difficult periods were rewarded handsomely
over the longer term.
Similarly, we also perceived value in the beleaguered small-
capitalization and mid-capitalization stock market sectors in the
United States. While our investments in these stocks hampered the
Fund's performance thus far in 1998, as value-oriented investors we
could not justify purchasing shares of large-capitalization growth
stocks as they attained ever-higher (and harder to justify)
price/earnings multiples. Current valuations for many small-
capitalization and mid-capitalization issues are extremely
attractive, and some buying opportunities may even emerge for large-
capitalization issues. Accordingly, although the present market
environment is a difficult one, we believe that the patience of
longer-term, value-oriented investors such as Merrill Lynch Global
Allocation Fund will ultimately be rewarded.
In Conclusion
We thank you for your investment in Merrill Lynch Global Allocation
Fund, Inc., and we look forward to reviewing our outlook and
strategy with you again in our upcoming annual report to
shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Bryan N. Ison)
Bryan N. Ison
Senior Vice President and
Portfolio Manager
September 14, 1998
Merrill Lynch Global Allocation Fund, Inc., July 31, 1998
PERFORMANCE DATA
About Fund
Performance
Investors are able to purchase shares of the Fund through the
Merrill Lynch Select Pricing SM System, which offers four pricing
alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 5.25% and bear no ongoing distribution or account
maintenance fees. Class A Shares are available only to eligible
investors.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.75% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after approximately 8 years. (There is no initial
sales charge for automatic share conversions.)
* Class C Shares are subject to a distribution fee of 0.75% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 5.25% and
an account maintenance fee of 0.25% (but no distribution fee).
None of the past results shown should be considered a representation
of future performance. Figures shown in the "Recent Performance
Results" and "Average Annual Total Return" tables assume
reinvestment of all dividends and capital gains distributions at net
asset value on the ex-dividend date. Investment return and principal
value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Dividends paid to each
class of shares will vary because of the different levels of
account maintenance, distribution and transfer agency fees
applicable to each class, which are deducted from the income
available to be paid to shareholders.
</TABLE>
<TABLE>
Recent
Performance
Results
<CAPTION>
12 Month 3 Month Since Inception
Total Return Total Return Total Return
<S> <C> <C> <C>
ML Global Allocation Fund, Inc.--Class A Shares* + 3.64% -3.99% +233.61%
ML Global Allocation Fund, Inc.--Class B Shares* + 2.52 -4.31 +202.66
ML Global Allocation Fund, Inc.--Class C Shares* + 2.53 -4.34 + 56.45
ML Global Allocation Fund, Inc.--Class D Shares* + 3.38 -4.12 + 61.26
US Stocks: Standard & Poor's 500 Index** +19.28 +1.18 +389.65/+161.20++
Non-US Stocks: Financial Times/Standard & Poor's--
Actuaries World Index (Ex-US)*** + 1.42 -0.90 +61.15/+30.08++
US Bonds: ML Government Index GA05**** + 6.73 +1.72 +108.50/+33.90++
Non-US Bonds: Salomon Brothers World Government
Bond Index (Ex-US)***** + 3.71 -0.40 +109.05/+18.93+++
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included. Total
investment returns are based on changes in net asset values for the
periods shown, and assume reinvestment of all dividends and capital
gains distributions at net asset value on the ex-dividend date. The
Fund's inception dates are: Class A Shares and Class B Shares,
2/03/89; and Class C Shares and Class D Shares, 10/21/94.
**An unmanaged broad-based index comprised of common stocks.
***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 ten
government bond indexes, excluding the United States.
++Since inception total returns are from 2/03/89 to 7/31/98 and
10/21/94 to 7/31/98, respectively.
+++Since inception total returns are from 1/31/89 to 7/31/98 and
10/21/94 to 7/31/98, respectively.
</TABLE>
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/98 + 7.67% + 2.02%
Five Years Ended 6/30/98 +12.36 +11.15
Inception (2/3/89) through 6/30/98 +13.83 +13.18
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/98 + 6.60% + 2.83%
Five Years Ended 6/30/98 +11.23 +11.23
Inception (2/3/89) through 6/30/98 +12.67 +12.67
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 6/30/98 + 6.54% + 5.60%
Inception (10/21/94) through 6/30/98 +13.34 +13.34
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 6/30/98 + 7.42% + 1.78%
Inception (10/21/94) through 6/30/98 +14.24 +12.59
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
Merrill Lynch Global Allocation Fund, Inc., July 31, 1998
Portfolio
Abbreviations
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.
ARS Agentinean Peso
CAD Canadian Dollar
CHF Swiss Franc
DEM German Deutschemark
ECU European Currency Unit
ESP Spanish Peseta
FRF French Franc
GBP Great Britain Pound
JPY Japanese Yen
NLG Netherlands Guilder
NOK Norwegian Krone
NZD New Zealand Dollar
SEK Swedish Kroner
USD United States Dollar
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Percent of
COUNTRY Industries Held Common Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Argentina Banking 467,900 Banco Frances del Rio de la
Plata S.A. (ADR)* (USD) $ 11,254,989 $ 11,668,256 0.1%
2,133,900 Banco Rio de La Plata S.A.
(ADR)* (USD) 22,946,904 24,806,588 0.2
--------------- --------------- ------
34,201,893 36,474,844 0.3
Oil--Related 480,000 Yacimientos Petroliferos
Fiscales S.A. (ADR)* (USD) 10,296,490 14,040,000 0.1
Total Common Stocks in Argentina 44,498,383 50,514,844 0.4
Australia Beverages 1,999,379 Foster's Brewing Group Limited 3,509,519 4,478,269 0.0
Building Materials 718,547 Pioneer International Limited 1,814,681 1,674,847 0.0
Foods 5,566,000 Goodman Fielder Wattie Ltd. 5,875,419 7,094,980 0.1
Insurance 1,903,135 GIO Australia Holdings, Ltd. 3,728,816 4,952,355 0.0
5,222,319 HIH Winterthur International
Holdings Ltd. 8,852,531 8,178,465 0.1
--------------- --------------- ------
12,581,347 13,130,820 0.1
Metals & Mining 8,102,904 M.I.M. Holdings Ltd. 6,735,707 3,836,401 0.0
7,000,000 Normandy Mining Limited 5,975,965 5,396,230 0.0
18,990,927 Pasminco Limited 20,078,100 15,331,565 0.1
8,700,000 WMC Limited 29,191,616 26,087,646 0.2
--------------- --------------- ------
61,981,388 50,651,842 0.3
Multi-Industry 1,661,317 Lend Lease Corporation Limited 27,855,090 35,698,047 0.3
2,300,000 Pacific Dunlop, Ltd. 5,753,464 4,223,203 0.1
--------------- --------------- ------
33,608,554 39,921,250 0.4
Resources 9,133,404 Broken Hill Proprietary
Co., Ltd. 99,981,934 74,039,803 0.6
Tobacco 103,620 Rothmans Holdings, Ltd. 390,312 638,408 0.0
1,002,300 WD & HO Wills Holdings, Ltd. 1,123,869 2,238,898 0.0
--------------- --------------- ------
1,514,181 2,877,306 0.0
Total Common Stocks
in Australia 220,867,023 193,869,117 1.5
Austria Banking 203,400 Bank Austria AG 6,298,337 16,107,991 0.1
Total Common Stocks in Austria 6,298,337 16,107,991 0.1
Brazil Telecommunications 145,000 Telecomunicacoes Brasileiras
S.A.--Telebras (ADR)* (USD) 17,197,000 17,626,563 0.1
Total Common Stocks in Brazil 17,197,000 17,626,563 0.1
Canada Beverages 1,900,000 Cott Corp. (USD) 15,484,918 14,962,500 0.1
Metals--Non-Ferrous 1,427,400 Inco Ltd. (USD) 29,691,234 15,612,188 0.1
Multi-Industry 280,000 Semi-Tech Corporation (Class A) 4,108,297 37,165 0.0
Paper 3,250,000 Repap Enterprises Inc. (USD) 12,879,320 422,500 0.0
Telecommunications 1,165,200 Rogers Cantel Mobile
Communications Inc. (Class B) 22,391,633 13,339,328 0.1
1,260,900 Rogers Cantel Mobile
Communications Inc. (Class B)
(USD) 20,941,379 14,342,738 0.1
4,543,700 Rogers Communications Inc.
(Class B) 39,359,870 37,693,290 0.4
--------------- --------------- ------
82,692,882 65,375,356 0.6
Telecommunications 100,000 Newbridge Networks Corp. (USD) 2,161,190 2,100,000 0.0
& Equipment
Total Common Stocks in Canada 147,017,841 98,509,709 0.8
Finland Metals 738,438 Outokumpu Oyj 10,823,686 8,334,052 0.1
Paper & Forest 964,985 Enso Oyj 8,072,452 9,301,878 0.1
Products 2,909,250 Metsa Serla Oyj 'B' 23,657,400 23,952,640 0.2
639,478 UPM-Kymmene Oyj 12,090,735 16,327,400 0.1
--------------- --------------- ------
43,820,587 49,581,918 0.4
Total Common Stocks in Finland 54,644,273 57,915,970 0.5
France Automobiles 46,568 Peugeot S.A. 5,610,594 9,199,581 0.1
Banking 119,155 Banque Nationale de
Paris S.A. 5,267,865 11,050,262 0.1
173,900 Compagnie Financiere de
Paribas S.A. 9,343,179 19,101,878 0.1
291,386 Societe Generale de
France S.A. 31,513,313 70,171,104 0.6
--------------- --------------- ------
46,124,357 100,323,244 0.8
Electronics 75,299 STMicroelectronics N.V. 3,487,840 4,928,593 0.0
Energy & Petroleum 377,186 Elf Aquitaine (Elf) S.A. 44,620,371 48,895,653 0.3
Engineering & 133,844 Bouygues S.A. 12,353,616 26,710,441 0.2
Construction
Industrial 61,000 Alcatel Alsthom Cie Generale
d'Electricite S.A. 7,236,780 12,122,254 0.1
Insurance 147,915 AXA--UAP S.A. 9,471,187 20,266,067 0.2
Metals--Steel 1,477,394 Usinor-Sacilor S.A. 22,060,574 20,638,424 0.2
Multi-Industry 85,162 EuraFrance S.A. 30,279,790 49,557,629 0.4
Total Common Stocks in France 181,245,109 292,641,886 2.3
Germany Automotive 527,260 Volkswagen AG 28,614,929 47,463,776 0.4
Banking 55,680 Bayerische Vereinsbank AG 1,339,965 5,259,623 0.0
411,357 Deutsche Bank AG 34,026,271 32,381,209 0.3
132,450 Dresdner Bank AG 7,678,657 8,080,306 0.1
--------------- --------------- ------
43,044,893 45,721,138 0.4
Capital Goods 369,636 Kloeckner-Werke AG 17,229,762 27,746,082 0.2
Chemicals 351,035 BASF AG 13,431,500 16,135,570 0.1
776,934 Bayer AG 29,992,002 35,253,626 0.3
101,451 Henkel KGaA 4,390,556 8,043,065 0.1
742,125 Hoechst AG 27,123,815 33,048,243 0.2
--------------- --------------- ------
74,937,873 92,480,504 0.7
Electrical 141,569 Siemens AG 9,741,171 10,515,190 0.1
Equipment
Engineering & 32,565 Philipp Holzmann AG 12,268,030 6,921,321 0.1
Construction
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., July 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Percent of
COUNTRY Industries Held Common Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Germany Metals--Steel 172,193 Thyssen AG $ 37,040,112 $ 41,099,763 0.3%
(concluded)
Retail 29,472 Karstadt AG 10,289,552 13,845,294 0.1
Utilities 452,843 VEBA AG 30,191,107 26,735,179 0.2
Total Common Stocks in Germany 263,357,429 312,528,247 2.5
Hong Kong Banking 900,737 HSBC Holdings PLC 14,386,653 21,974,299 0.1
899,577 HSBC Holdings PLC (GBP) 27,212,308 22,414,112 0.2
--------------- --------------- ------
41,598,961 44,388,411 0.3
Multi-Industry 7,059,500 Hutchison Whampoa Ltd. 44,936,689 33,897,847 0.3
Total Common Stocks
in Hong Kong 86,535,650 78,286,258 0.6
Hungary Oil & Gas Producers 242,045 Mol Magyar Olay-es Gazipari
Reszvenytarsasag
(GDR)** (USD) 6,554,067 7,418,679 0.1
Total Common Stocks in Hungary 6,554,067 7,418,679 0.1
Indonesia Paper & Pulp 4,671,800 Asia Pacific Resources
International Holdings Ltd.
(NY Registered Shares)(USD) 25,834,218 6,715,713 0.1
553,765 Asia Pulp & Paper Company
Ltd. (ADR)* (USD) 6,368,298 5,260,768 0.0
--------------- --------------- ------
32,202,516 11,976,481 0.1
Tobacco 19,327,000 P.T. Hanjaya Mandala
Sampoerna (Foreign) 28,087,780 5,054,754 0.0
Total Common Stocks
in Indonesia 60,290,296 17,031,235 0.1
Ireland Building & 631,423 CRH PLC (GBP) 6,857,511 8,385,443 0.1
Construction
Total Common Stocks
in Ireland 6,857,511 8,385,443 0.1
Italy Banking 910,440 Istituto Bancario San Paolo
di Torino S.p.A. 5,771,867 15,898,465 0.1
308,400 Istituto Mobiliare Italiano
S.p.A. (Ordinary) 2,291,807 5,648,963 0.0
--------------- --------------- ------
8,063,674 21,547,428 0.1
Multi-Industry 41,311,990 MontEdison S.p.A. 31,345,924 52,487,316 0.4
Telecommunications 2,251,300 Telecom Italia Mobile
S.p.A.--RISP 2,379,178 8,593,727 0.1
11,749,314 Telecom Italia S.p.A.--RISP 37,250,046 69,316,401 0.6
--------------- --------------- ------
39,629,224 77,910,128 0.7
Total Common Stocks in Italy 79,038,822 151,944,872 1.2
Japan Automobiles & 3,282,000 Suzuki Motor Corp. 30,510,247 29,059,730 0.2
Equipment
Beverages 1,570,000 Chukyo Coca-Cola Bottling
Co., Ltd. 16,445,371 13,499,065 0.1
663,000 Hokkaido Coca-Cola Bottling
Co., Ltd. 8,836,164 6,815,888 0.1
790,000 Kinki Coca-Cola Bottling
Co., Ltd. 11,999,955 8,805,123 0.1
1,243,000 Mikuni Coca-Cola Bottling
Co., Ltd. 17,391,669 21,383,558 0.2
1,426,400 Sanyo Coca-Cola Bottling
Co., Ltd. 17,532,122 13,923,323 0.1
--------------- --------------- ------
72,205,281 64,426,957 0.6
Capital Goods 2,736,000 Fuji Heavy Industries, Ltd. 11,273,188 15,607,227 0.1
12,900,000 Kawasaki Heavy Industries, Ltd. 35,297,925 28,577,362 0.2
7,875,000 Mitsubishi Heavy
Industries, Inc. 44,268,610 29,330,218 0.2
--------------- --------------- ------
90,839,723 73,514,807 0.5
Chemicals 34,000 Shin-Etsu Chemical Co., Ltd. 657,132 564,901 0.0
Consumer Products 50,000 Amway Japan Limited
(Premium Exchangeable
Participating Shares)(USD) 721,750 321,875 0.0
Electrical 1,124,000 Chudenko Corp. 30,032,358 22,332,156 0.2
Construction 1,386,000 Kinden Corporation 21,348,708 15,131,340 0.1
34,000 Taihei Dengyo Kaisha, Ltd. 637,020 122,631 0.0
--------------- --------------- ------
52,018,086 37,586,127 0.3
Electrical 788,000 Murata Manufacturing Co., Ltd. 25,168,052 26,839,460 0.2
Equipment
Electronics 1,299,000 Hitachi Ltd. 9,381,584 8,129,429 0.1
Financial 9,387,000 Daiwa Securities Co., Ltd. 46,956,803 40,875,202 0.3
Services 928,000 Kokusai Securities Co., Ltd. 6,296,169 9,816,435 0.1
879,000 Nomura Securities Co., Ltd. 11,893,928 10,253,479 0.1
1,720,000 Wako Securities Co., Ltd. 4,377,152 2,274,282 0.0
--------------- --------------- ------
69,524,052 63,219,398 0.5
Industrial 28,000 Miura Kogyo Co., Ltd. 466,635 319,446 0.0
17,400 Nitto Kohki Co., Ltd. 488,740 176,469 0.0
--------------- --------------- ------
955,375 495,915 0.0
Insurance 743,000 Chiyoda Fire & Marine
Insurance Co., Ltd. 2,796,009 2,695,272 0.0
2,897,000 Dai-Tokyo Fire & Marine
Insurance Co., Ltd. 17,990,037 10,027,691 0.1
125,000 Dowa Fire & Marine Insurance
Co., Ltd. 441,340 376,428 0.0
3,743,000 Fuji Fire & Marine Insurance
Co., Ltd. 13,980,452 7,903,184 0.1
4,865,000 Koa Fire & Marine Insurance
Co., Ltd. 24,748,402 17,176,532 0.1
765,000 Mitsui Marine & Fire Insurance
Co., Ltd. 5,730,161 3,971,963 0.0
3,508,000 Nichido Fire & Marine Insurance
Co., Ltd. 20,622,267 19,428,176 0.2
4,816,000 Nippon Fire & Marine Insurance
Co., Ltd. 20,479,413 18,837,245 0.2
999,000 Nisshin Fire & Marine Insurance
Co., Ltd. 2,688,731 2,628,037 0.0
7,315,000 Sumitomo Marine & Fire Insurance
Co., Ltd. 46,067,731 42,132,780 0.3
2,713,000 Tokio Marine & Fire Insurance
Co., Ltd. 28,580,732 27,421,115 0.2
5,000,000 Yasuda Fire & Marine Insurance
Co., Ltd. 25,976,040 23,710,627 0.2
--------------- --------------- ------
210,101,315 176,309,050 1.4
Office Equipment 1,612,000 Canon, Inc. 23,455,745 36,826,584 0.3
Packaging & 1,103,000 Toyo Seikan Kaisha, Ltd. 25,118,395 14,859,384 0.1
Containers
Pharmaceuticals 1,261,000 Sankyo Pharmaceuticals
Co., Ltd. 28,124,373 28,284,112 0.2
384,000 Taisho Pharmaceuticals
Co., Ltd. 7,984,458 7,709,242 0.1
--------------- --------------- ------
36,108,831 35,993,354 0.3
Restaurants 647,000 Mos Food Services, Inc. 12,121,005 7,524,818 0.1
618,000 Ohsho Food Service Corp. 10,180,663 5,476,220 0.0
--------------- --------------- ------
22,301,668 13,001,038 0.1
Retail Stores 460,000 Ito Yokado Co., Ltd. 21,319,319 22,195,916 0.2
100,000 Sangetsu Co., Ltd. 3,160,832 1,250,952 0.0
--------------- --------------- ------
24,480,151 23,446,868 0.2
Total Common Stocks in Japan 693,547,387 604,594,877 4.8
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., July 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Percent of
COUNTRY Industries Held Common Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Mexico Finance 6,054 Grupo Financiero Inbursa,
S.A. de C.V. (ADR)* (USD) $ 121,464 $ 85,846 0.0%
Foods 700,000 Grupo Industrial Maseca,
S.A. de C.V. (ADR)* (USD) 7,969,925 8,093,750 0.1
Multi-Industry 433,800 Grupo Carso, S.A. de C.V.
(ADR)* (USD) 3,832,850 3,643,920 0.0
Telecommunications 433,800 Global Telecommunications
Solutions, Inc. (ADR)* (USD) 2,060,550 2,672,208 0.0
Total Common Stocks in Mexico 13,984,789 14,495,724 0.1
Netherlands Chemicals 574,304 Akzo Nobel N.V. 17,876,528 29,264,992 0.2
288,070 European Vinyls Corp.
International N.V. 11,384,340 4,280,258 0.0
--------------- --------------- ------
29,260,868 33,545,250 0.2
Electronics 442,765 Philips Electronics N.V. 22,551,548 35,874,208 0.3
Distribution
Forest Products 1,824,457 Koninklijke KNP N.V. 40,980,634 44,392,452 0.4
Insurance 958,493 Internationale Nederlanden
Groep N.V. 15,908,091 72,498,698 0.6
Miscellaneous-- 10,000 Koninklijke Ten Cate N.V. 501,699 404,866 0.0
Manufacturing
Oil & Gas Producers 93,987 Royal Dutch Petroleum Co. 4,994,672 4,798,698 0.0
Steel 161,800 Ispat International N.V. 4,382,262 2,565,437 0.0
607,392 Ispat International N.V.
(NY Registered Shares)(USD) 12,730,758 9,186,804 0.1
--------------- --------------- ------
17,113,020 11,752,241 0.1
Transportation 111,846 Koninklijke Pakhoed N.V. 4,339,539 3,407,355 0.0
Total Common Stocks
in the Netherlands 135,650,071 206,673,768 1.6
New Financial Services 3,085,700 Brierley Investments Limited 1,988,414 1,468,139 0.0
Zealand
Natural Gas 1,477,104 Natural Gas Corporation
Suppliers Holdings Limited 1,043,960 1,314,894 0.0
Total Common Stocks
in New Zealand 3,032,374 2,783,033 0.0
Norway Banking 4,785,400 Christiania Bank Og Kreditkasse 10,697,335 23,266,103 0.2
2,434,000 Den Norske Bank ASA 7,189,721 13,349,354 0.1
--------------- --------------- ------
17,887,056 36,615,457 0.3
Computer Software 151,848 Merkantildata ASA 1,801,167 2,021,690 0.0
Oil & Gas Producers 781,330 Saga Petroleum ASA 11,845,630 10,350,798 0.1
Total Common Stocks in Norway 31,533,853 48,987,945 0.4
Philip- Banking 2,000,000 East-West Banking Corp. 20,000,000 20,500,000 0.2
pines
Multi-Industry 6,335,520 Ayala Corporation 1,948,253 1,466,696 0.0
Total Common Stocks
in the Philippines 21,948,253 21,966,696 0.2
Portugal Banking 896,372 Banco Comercial Portugues,
S.A. (BCP)(Registered) 13,334,852 28,859,286 0.2
Total Common Stocks in Portugal 13,334,852 28,859,286 0.2
Russia Telecommunications 1,611,800 PLD Telekom Inc. (USD) 10,028,238 11,282,600 0.1
74,500 PLD Telekom Inc. (Warrants)
(a)(USD) 111,750 230,950 0.0
18,700 PLD Telekom Inc. (Warrants)
(a)(USD) 30,855 60,775 0.0
Total Common Stocks in Russia 10,170,843 11,574,325 0.1
South Metals--Steel 716,660 Pohang Iron & Steel Co., Ltd. 28,695,627 30,532,398 0.2
Korea
Telecommunications 2,893 SK Telecom Co., Ltd. 1,016,559 1,658,826 0.0
1,006,587 SK Telecom Co., Ltd.
(ADR)* (USD) 5,226,630 7,801,049 0.1
--------------- --------------- ------
6,243,189 9,459,875 0.1
Utilities--Electric 200,000 Korea Electric Power
Corporation 2,429,353 2,847,844 0.0
Total Common Stocks
in South Korea 37,368,169 42,840,117 0.3
Spain Insurance 66,778 Mapfre S.A. 1,272,758 2,427,889 0.0
Utilities--Electric 1,252,677 Endesa S.A. 24,873,809 27,625,261 0.2
Total Common Stocks in Spain 26,146,567 30,053,150 0.2
Sweden Appliances 1,377,295 Electrolux AB 'B' Free 14,120,645 22,065,910 0.2
Automobiles & 43,916 Scania AB (Warrants)(a) 60,444 57,617 0.0
Equipment 391,430 Volvo AB 'B' Shares 12,386,419 12,122,627 0.1
--------------- --------------- ------
12,446,863 12,180,244 0.1
Industrial 119,420 SKF AB 'A' 2,217,257 1,868,056 0.0
Insurance 826,201 Skandia Forsakring AB Free 4,703,429 14,174,762 0.1
Metals--Steel 1,227,828 Avesta Sheffield AB 10,687,487 5,328,281 0.1
Multi-Industry 192,784 Svedala Industri AB Free 2,531,671 4,134,386 0.0
Paper & Forest 411,853 Mo och Domsjo AB (Class B) 10,072,522 11,040,591 0.1
Products 885,017 Stora Kopparbergs Bergslags AB 9,945,034 12,392,694 0.1
--------------- --------------- ------
20,017,556 23,433,285 0.2
Total Common Stocks in Sweden 66,724,908 83,184,924 0.7
Switzer- Banking 20,222 Banque Cantonale de Geneve 6,737,471 6,470,008 0.1
land
Electronic Components 69,850 Swatch Group AG (The)(Registered) 9,809,595 11,866,011 0.1
Pharmaceuticals 8,212 Novartis AG (Registered) 12,794,237 13,862,196 0.1
1,369 Roche Holding AG 13,060,644 14,753,542 0.1
--------------- --------------- ------
25,854,881 28,615,738 0.2
Total Common Stocks
in Switzerland 42,401,947 46,951,757 0.4
Thailand Holding Company 1,373,300 BEC World Public Co.,
Ltd. (Foreign) 8,876,272 5,567,432 0.0
Total Common Stocks in Thailand 8,876,272 5,567,432 0.0
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., July 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Percent of
COUNTRY Industries Held Common Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Banking 1,995,969 National Westminster Bank
Kingdom PLC $ 30,482,643 $ 34,613,296 0.3%
Building & 689,324 Jarvis PLC 8,184,444 7,330,271 0.1
Construction
Chemicals 1,470,000 Inspec Group PLC 4,431,923 5,290,824 0.0
Computers 80,403 Misys PLC 1,210,322 3,847,525 0.0
Environmental 1,240,000 Waste Management International
PLC (ADR)* (USD) 11,399,133 13,330,000 0.1
Food & Beverage 1,756,839 Allied Domecq PLC 12,616,881 16,095,456 0.1
672,142 Bass PLC 9,822,359 10,919,269 0.1
--------------- --------------- ------
22,439,240 27,014,725 0.2
Holding Company 8,595,618 BTR PLC 35,874,337 21,656,144 0.2
Insurance 914,657 Royal & Sun Alliance
Insurance Group PLC 9,762,677 9,965,883 0.1
Manufacturing-- 3,527,699 LucasVarity PLC 11,264,222 12,350,615 0.1
Automotive Supplies
Metals & Mining 858,223 Rio Tinto PLC 12,434,329 9,659,883 0.1
Multi-Industry 6,250 Hanson PLC (ADR)* (USD) 353,583 160,938 0.0
Oil--Related 156,646 Shell Transport & Trading Co. PLC 1,071,922 1,004,590 0.0
Pharmaceuticals 716,673 SmithKline Beecham PLC 8,050,842 8,336,312 0.1
Retail--Food 967,650 J. Sainsbury PLC 6,001,425 8,516,946 0.0
1,610,493 Safeway PLC 9,038,358 9,511,507 0.1
--------------- --------------- ------
15,039,783 18,028,453 0.1
Retail Stores 301,675 Signet Group PLC (ADR)* (USD) 461,861 5,920,372 0.0
Steel 3,909,076 British Steel PLC 9,053,760 8,042,025 0.1
Telecommunications 568,677 Cable & Wireless PLC 4,292,301 7,340,505 0.1
3,207,333 Ionica Group PLC 14,843,620 2,256,295 0.0
1,526,667 Ionica PLC (Warrants)(a) -- 24,976 0.0
--------------- --------------- ------
19,135,921 9,621,776 0.1
Tobacco 2,787,884 B.A.T. Industries PLC 23,744,589 30,832,213 0.2
12,500 Imperial Tobacco Group
PLC (ADR)* (USD) 238,391 210,635 0.0
--------------- --------------- ------
23,982,980 31,042,848 0.2
Total Common Stocks in
the United Kingdom 224,633,922 227,216,480 1.8
United Aerospace & Defense 9,565 Raytheon Company (Class A) 307,416 518,303 0.0
States
Apparel 700,000 Fruit of the Loom, Inc.
(Class A) 18,572,062 21,831,250 0.2
Automobiles 150,000 General Motors Corp. 5,384,509 10,846,875 0.1
Automotive 550,000 Collins & Aikman Group Inc. 3,887,538 3,437,500 0.0
Banking 1,064,870 Banc One Corp. 18,939,028 55,040,468 0.4
259,000 Banknorth Group, Inc. 1,865,422 9,032,625 0.1
950,000 Golden State Bancorp Inc. 1,992,403 4,393,750 0.0
950,000 Golden State Bancorp Inc.
(Warrants)(a) 11,239,754 26,184,375 0.2
770,194 Golden State Bancorp Inc.
(Warrants)(a) -- 15,596,429 0.1
1,400,000 KeyCorp 20,571,401 47,600,000 0.4
865,800 Mellon Bank Corp. 17,209,199 58,333,275 0.5
199,425 Oriental Financial Group 3,509,880 7,814,967 0.1
1,520,000 Republic New York Corp. 33,998,213 90,155,000 0.7
--------------- --------------- ------
109,325,300 314,150,889 2.5
Broadcasting/Cable 49,450 People's Choice TV Corp.
(Warrants)(a) 226,458 495 0.0
Building Products 500,000 Chicago Bridge & Iron Company
N.V. (NY Registered Shares)(USD) 8,322,525 6,531,250 0.1
567,892 Flowserve Corporation 14,089,137 12,387,144 0.1
--------------- --------------- ------
22,411,662 18,918,394 0.2
Business Data 200,000 Imation Corp. 3,443,597 3,162,500 0.0
Processing
Business Data 1,100,000 Information Resources, Inc. 13,123,717 15,606,250 0.1
Systems
Chemicals 300,000 Geon Company (The) 5,955,557 6,731,250 0.1
Commercial 1,200,000 Cendant Corporation 21,748,522 20,775,000 0.2
Services
Communication 530,000 ADC Telecommunications, Inc. 9,120,074 17,721,875 0.1
Equipment
Computer Services 200,000 Electronic Data Systems Corp. 8,356,515 7,037,500 0.1
Computer Software 337,500 Boole & Babbage, Inc. 1,329,492 7,762,500 0.1
2,400,000 Inprise Corporation 33,535,053 14,775,000 0.1
700,000 Oracle Corporation 13,629,360 18,550,000 0.1
--------------- --------------- ------
48,493,905 41,087,500 0.3
Computers & 2,100,000 Iomega Corporation 13,953,057 11,156,250 0.1
Technology 1,092,300 Komag, Inc. 18,786,335 3,481,706 0.0
1,125,300 Silicon Graphics, Inc. 16,988,580 12,518,963 0.1
500,000 Stratus Computer, Inc. 9,130,512 14,375,000 0.1
--------------- --------------- ------
58,858,484 41,531,919 0.3
Construction & 200,000 Hovnanian Enterprises, Inc.
Housing (Class A) 1,750,602 1,950,000 0.0
Construction 500,000 TJ International, Inc. 8,846,801 11,625,000 0.1
Products
Consumer-- 90,770 Ascent Entertainment Group, Inc. 631,090 992,797 0.0
Miscellaneous
Containers 504,000 Stone Container Corporation 6,194,634 6,583,500 0.1
Electronics 900,000 3Com Corporation 25,640,310 22,218,750 0.2
2,300,000 Cabletron Systems, Inc. 34,233,860 26,593,750 0.2
1,832,800 Checkpoint Systems, Inc. 20,531,875 18,900,750 0.1
1,250,000 MEMC Electronic Materials, Inc. 24,090,092 12,343,750 0.1
870,000 Millipore Corporation 25,993,028 21,097,500 0.2
850,000 Motorola, Inc. 46,443,770 44,412,500 0.3
1,500,000 Silicon Valley Group, Inc. 26,544,734 20,906,250 0.2
--------------- --------------- ------
203,477,669 166,473,250 1.3
Energy & Petroleum 1,079,400 Arch Coal, Inc. 28,887,320 21,925,313 0.2
46,400 Mitchell Energy Development
Corp. (Class A) 675,717 849,700 0.0
174,350 Mitchell Energy Development
Corp. (Class B) 2,755,451 3,138,300 0.0
50,000 Murphy Oil Corp. 1,688,446 2,215,625 0.0
1,500,000 Occidental Petroleum Corporation 28,058,743 33,375,000 0.3
15,000 Plains Resources, Inc. 85,955 268,125 0.0
1,402,978 Santa Fe Energy Resources, Inc. 7,579,573 12,363,744 0.1
2,000,000 TransTexas Gas Corp. 30,359,821 14,000,000 0.1
200,000 USX-Marathon Group 3,413,440 6,825,000 0.0
--------------- --------------- ------
103,504,466 94,960,807 0.7
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., July 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Percent of
COUNTRY Industries Held Common Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Fertilizers 164,700 IMC Global Inc. $ 5,248,656 $ 4,210,144 0.0%
States
(continued)
Financial Services 163,600 American Capital
Strategies, Ltd. 2,454,000 3,691,225 0.0
1,972,900 Anthracite Capital, Inc. 29,662,250 23,674,800 0.2
--------------- --------------- ------
32,116,250 27,366,025 0.2
Forest Products 394,200 Deltic Timber Corporation 11,221,223 9,165,150 0.1
Gaming 1,235,000 Scientific Games Holdings
Corp. (c) 27,568,304 24,545,625 0.2
Healthcare Services 360,000 Advocat, Inc. 3,422,500 2,160,000 0.0
450,000 Baxter International, Inc. 9,088,023 26,887,500 0.2
1,452,400 Beverly Enterprises, Inc. 11,847,541 14,614,775 0.1
600,000 Humana, Inc. 11,121,655 16,312,500 0.1
2,200,000 Oxford Health Plans, Inc. 46,828,521 17,600,000 0.2
1,427,000 PharMerica, Inc. 10,371,317 9,275,500 0.1
--------------- --------------- ------
92,679,557 86,850,275 0.7
Industrial 100,000 American Standard, Inc. 2,986,000 4,762,500 0.0
15,000 Bar Technologies Ltd.
(Warrants)(a) 838,256 825,000 0.0
179,802 Cooper Industries, Inc. 6,534,892 9,428,367 0.1
2,830,246 Crown Packaging Holdings Ltd. 1,433,657 28,302 0.0
--------------- --------------- ------
11,792,805 15,044,169 0.1
Insurance 100,000 Aetna Inc. 9,042,500 6,931,250 0.1
410,000 American General Corp. 10,594,632 28,008,125 0.2
186,300 Horace Mann Educators, Inc. 2,143,167 5,821,875 0.0
1,947,500 Risk Capital Holdings Inc. 34,313,406 48,444,063 0.4
--------------- --------------- ------
56,093,705 89,205,313 0.7
Metals & Mining 305,000 Aluminum Company of America 13,814,815 21,140,313 0.1
1,400,000 Battle Mountain Gold Company 8,838,297 6,562,500 0.1
1,100,000 Commonwealth Industries Inc. 17,690,878 9,143,750 0.1
100,000 National Steel Corp. 905,000 975,000 0.0
850,000 Newmont Mining Corporation 31,553,907 16,043,750 0.1
400,000 Nucor Corporation 18,363,133 17,400,000 0.1
132,800 Reynolds Metals Co. 5,801,771 6,972,000 0.1
--------------- --------------- ------
96,967,801 78,237,313 0.6
Metals--Non-Ferrous 700,000 USEC Inc. 9,975,000 9,975,000 0.1
Multi-Industry 90,000 Loews Corp. 3,984,675 7,256,250 0.1
Multimedia & 20,000 Unifi Communications, Inc.
Telecommunications (Warrants)(a) 1,166,800 2 0.0
Natural Resources 210,519 Freeport-McMoRan Copper &
Gold, Inc. (Class B) 3,665,657 3,118,313 0.0
Oil & Gas Producers 200,000 Rowan Companies Inc. 4,866,580 2,825,000 0.0
245,410 Texaco Inc. 6,627,069 14,923,996 0.1
600,000 Tom Brown, Inc. 10,596,357 9,937,500 0.1
100,000 Transocean Offshore Inc. 3,863,220 3,943,750 0.1
--------------- --------------- ------
25,953,226 31,630,246 0.3
Oil Services 200,000 Diamond Offshore Drilling Inc. 5,150,000 6,562,500 0.1
200,000 Input/Output, Inc. 4,367,760 3,112,500 0.0
2,500,000 Noble Drilling Corp. 16,505,558 47,187,500 0.3
300,000 Tidewater Inc. 13,101,460 8,700,000 0.1
--------------- --------------- ------
39,124,778 65,562,500 0.5
Paper 160,200 Boise Cascade Corporation 4,225,000 4,485,600 0.0
165,000 Fort James Corporation 3,091,744 5,568,750 0.1
240,000 Louisiana-Pacific Corp. 5,273,733 4,785,000 0.0
--------------- --------------- ------
12,590,477 14,839,350 0.1
Publishing 300,000 Reader's Digest Association,
Inc. (Class A) 7,030,450 8,475,000 0.1
Real Estate 2,574,465 Catellus Development Corp. 22,351,219 41,995,960 0.3
2,077,300 Security Capital Group Inc.
(Class B) 53,272,300 52,062,331 0.4
--------------- --------------- ------
75,623,519 94,058,291 0.7
Real Estate 672,600 AMB Property Corporation 14,750,344 16,058,325 0.1
Investment Trusts 382,713 Apartment Investment &
Management Co. 10,766,036 14,543,094 0.1
91,991 Horizon Group Properties, Inc. 551,946 448,456 0.0
3,042,500 Imperial Credit Commercial
Mortgage Investment Corp. 42,303,825 32,706,875 0.3
1,200,000 Meditrust Corporation 32,369,109 27,000,000 0.2
689,300 Mid-America Realty Investments 6,631,756 6,893,000 0.1
1,939,825 Prime Retail, Inc. 20,518,585 23,520,378 0.2
400,000 Taubman Centers, Inc. 3,512,161 5,225,000 0.0
920,000 Walden Residential Properties,
Inc. (Warrants)(a) 1,125,068 1,035,000 0.0
500,000 Wilshire Real Estate Investment
Trust Inc. 8,000,000 8,343,750 0.1
--------------- --------------- ------
140,528,830 135,773,878 1.1
Restaurants 1,400,000 Brinker International, Inc. 15,416,635 27,300,000 0.2
300,000 Buffets, Inc. 2,952,350 4,125,000 0.1
900,000 Darden Restaurants Inc. 6,376,075 15,581,250 0.1
--------------- --------------- ------
24,745,060 47,006,250 0.4
Retail 206,500 Coinstar Inc. 311,636 1,884,313 0.0
850,000 Heilig-Meyers Company 11,224,247 11,156,250 0.1
--------------- --------------- ------
11,535,883 13,040,563 0.1
Retail-- 1,530,000 Ugly Duckling Corporation 20,563,125 11,283,750 0.1
Automotive
Retail Stores 416,900 Buttrey Food & Drug Stores Co. 3,241,636 6,201,388 0.1
1,110,000 Filene's Basement Corp. 10,092,619 4,648,125 0.0
300,000 J. Baker, Inc. 5,134,145 3,093,750 0.0
300,000 Sotheby's Holdings, Inc.
(Class A) 3,674,432 6,656,250 0.1
700,000 Toys 'R' Us, Inc. 15,851,134 15,925,000 0.1
--------------- --------------- ------
37,993,966 36,524,513 0.3
Savings Banks 572,886 Sovereign Bancorp, Inc. 1,552,137 9,166,176 0.1
Semiconductors 3,235,500 Cypress Semiconductor
Corporation 25,899,931 24,266,250 0.2
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., July 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Percent of
COUNTRY Industries Held Common Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Telecommunications 352,400 ALLTEL Corporation $ 7,189,068 $ 14,778,775 0.1%
States 300,000 Allen Telecom Inc. 3,338,218 2,700,000 0.0
(concluded) 27,750 American Telecasting Inc.
(Warrants)(a) -- 278 0.0
2,500 CAI Wireless Systems, Inc. -- -- 0.0
32,037 CS Wireless Systems, Inc. 123,681 3 0.0
1,375,800 CellNet Data Systems, Inc. 12,252,498 11,178,375 0.1
120,363 CellNet Data Systems, Inc.
(Warrants)(a) 13,716,570 3,009,075 0.0
700,000 DSC Communications Corporation 10,612,018 21,218,750 0.2
100,000 Frontier Corporation 1,601,530 3,356,250 0.0
2,770,200 General Communication, Inc.
(Class A) 18,631,175 12,812,175 0.1
1,800,000 Glenayre Technologies, Inc. 20,679,415 14,625,000 0.1
1,000,000 QUALCOMM, Inc. 51,761,109 62,312,500 0.5
47,000 United USN Inc. (Class A)
(Warrants)(a) 5,840,131 3,713,000 0.1
14,113 United USN Inc. (Warrants)(a) 1,084,937 677,424 0.0
1,255,000 Western Wireless Corporation 15,610,218 26,119,688 0.2
13,500 Wireless One, Inc. (Warrants)(a) 70,944 135 0.0
18,315 Wireless One, Inc. (Warrants)(a) 18,315 183 0.0
--------------- --------------- ------
162,529,827 176,501,611 1.4
Textiles 2,600,000 Burlington Industries, Inc. 34,175,185 27,137,500 0.2
Tobacco 1,875,700 DIMON, Inc. 29,253,130 20,398,238 0.1
Transportation 455,500 Consolidated Freightways Corp. 6,962,919 5,295,188 0.0
170,000 J.B. Hunt Transport
Services, Inc. 2,380,000 5,015,000 0.0
250,000 Union Pacific Corporation 11,295,571 10,500,000 0.1
--------------- --------------- ------
20,638,490 20,810,188 0.1
Utilities-- 1,250,000 Allegheny Energy, Inc. 27,315,551 34,062,500 0.3
Electric & Gas 115,650 Atmos Energy Corp. 1,445,257 3,382,763 0.0
47,570 BayCorp Holdings, Ltd. 2,549,753 318,124 0.0
603,100 Central and South West
Corporation 11,630,764 15,341,356 0.1
4,044,726 Citizens Utilities Company
(Class B) 35,740,884 35,391,353 0.3
4,112,285 El Paso Electric Company 21,589,496 37,524,601 0.3
1,780,000 Entergy Corporation 47,516,856 48,727,500 0.4
300,000 FPL Group, Inc. 9,104,538 18,243,750 0.1
2,077,900 Houston Industries, Inc. 41,943,083 58,051,331 0.5
1,500,000 Niagara Mohawk Power Corp. 23,789,306 22,781,250 0.2
1,892,100 Potomac Electric Power Company 43,091,787 45,646,913 0.3
1,257,100 Texas Utilities Co. 40,643,415 50,362,569 0.4
1,148,800 Unicom Corporation 27,549,620 39,705,400 0.3
--------------- --------------- ------
333,910,310 409,539,410 3.2
Total Common Stocks in the
United States 2,009,749,335 2,306,930,147 18.2
Total Investments in
Common Stocks 4,513,505,283 4,985,460,475 39.3
Equity Closed-End Funds
Austria Financial Services 320,000 Austria Fund (USD) 2,642,431 4,020,000 0.1
Total Equity Closed-End Funds
in Austria 2,642,431 4,020,000 0.1
Indonesia Financial Services 25,600 Jakarta Growth Fund (USD) 158,080 70,400 0.0
Total Equity Closed-End Funds
in Indonesia 158,080 70,400 0.0
Ireland Financial Services 150,000 Irish Investment Fund, Inc. (USD) 1,086,041 3,084,375 0.0
Total Equity Closed-End Funds
in Ireland 1,086,041 3,084,375 0.0
Italy Financial Services 150,000 Italy Fund (USD) 1,198,520 2,175,000 0.0
Total Equity Closed-End Funds
in Italy 1,198,520 2,175,000 0.0
South Financial Services 125,000 Fidelity Advisor Korea Fund
Korea (The)(USD) 1,088,750 546,875 0.0
200,000 Korea Equity Fund (USD) 1,369,598 550,000 0.0
1,400,528 Korea Fund, Inc. (USD) 19,847,163 10,066,295 0.1
200,000 Korean Investment Fund,
Inc. (USD) 1,561,000 612,500 0.0
Total Equity Closed-End Funds in
South Korea 23,866,511 11,775,670 0.1
Total Investments in
Equity Closed-End Funds 28,951,583 21,125,445 0.2
Preferred Stocks
Australia Publishing 600,000 News Corporation Limited
(The)(ADR)* (USD) 10,451,056 15,262,500 0.2
Total Preferred Stocks
in Australia 10,451,056 15,262,500 0.2
Germany Chemicals 138,305 Henkel KGaA 5,886,677 12,675,690 0.1
Machinery & Equipment 15,713 Jungheinrich AG 3,186,845 2,880,201 0.0
Medical Equipment 23,079 Fresenius AG 4,710,619 4,074,673 0.0
Multi-Industry 450,000 RWE AG 8,725,424 17,205,510 0.2
Total Preferred Stocks
in Germany 22,509,565 36,836,074 0.3
Norway Financial Services 175,000 A/S Eksportfinans (8.70%)(USD) 4,377,500 4,790,625 0.0
Total Preferred Stocks
in Norway 4,377,500 4,790,625 0.0
Portugal Banking 181,400 BCP International Bank
(8% Convertible)(USD) 13,480,528 21,768,000 0.2
Total Preferred Stocks
in Portugal 13,480,528 21,768,000 0.2
Spain Banking 225,000 Santander Overseas Bank (8%
Convertible, Series D) (USD) 5,463,250 5,793,750 0.0
Total Preferred Stocks in Spain 5,463,250 5,793,750 0.0
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., July 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Percent of
COUNTRY Industries Held Preferred Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Banking 870,000 California Federal Bank
States (9.125%, Series A) $ 21,735,500 $ 24,033,750 0.2%
55,000 California Federal Bank
(10.625%, Series B) 5,500,000 5,981,250 0.0
--------------- --------------- ------
27,235,500 30,015,000 0.2
Cable Television 1,000,000 Diva Systems Corp.
(Convertible, Series C) 8,410,000 15,000,000 0.1
1,000,000 Diva Systems Corp.
(Convertible, Series D) 11,440,000 15,000,000 0.1
--------------- --------------- ------
19,850,000 30,000,000 0.2
Financial Services 619,900 Golden State Bancorp Inc.
(8.75% Convertible, Series E) 15,070,337 48,662,150 0.4
Natural Resources 150,000 Cyprus Amax Minerals Co.
(Convertible, Series A) 9,188,313 6,431,250 0.1
348,700 Freeport-McMoRan Copper & Gold,
Inc. (5% Convertible, Series A) 7,918,834 6,516,331 0.1
219,000 Freeport-McMoRan Inc. (3.50%
Convertible--Gold, Series B) 7,703,330 4,667,438 0.0
--------------- --------------- ------
24,810,477 17,615,019 0.2
Publishing 198,500 Reader's Digest Association, Inc.
(8.25% Convertible, Class A) 4,652,344 5,359,500 0.0
Real Estate 476,800 Apartment Investment & Management
Investment Trusts Trusts Co.(9.375%, Series G) 11,751,900 11,824,640 0.1
97,300 Carramerica Realty Corp. (8.55%,
Series C) 2,398,445 2,396,012 0.0
400,000 Crown American Realty Trust
(11%, Series A) 20,000,000 21,350,000 0.2
139,200 First Union Real Estate
Investments (8.40% Convertible,
Series A) 3,480,000 3,967,200 0.0
350,000 National Health Investors, Inc.
(8.50% Convertible) 8,750,000 9,187,500 0.1
717,500 Prime Retail, Inc. (10.50%) 16,366,161 19,372,500 0.2
50,000 Walden Residential Properties,
Inc. (Series B) 1,418,750 1,400,000 0.0
1,078,000 Walden Residential Properties,
Inc. (9.20% Convertible,
Series S) 26,269,636 27,084,750 0.2
--------------- --------------- ------
90,434,892 96,582,602 0.8
Utilities 77,600 Citizens Utilities Company
(5% Convertible) 3,398,931 3,409,550 0.0
Total Preferred Stocks in
the United States 185,452,481 231,643,821 1.8
Total Investments in
Preferred Stocks 241,734,380 316,094,770 2.5
<CAPTION>
Currency Face
Denomination Amount Fixed-Income Securities
<S> <S> <S> <C> <S> <C> <C> <C>
Argentina Banking USD 45,000,000 Banco Rio de la Plata S.A.,
8.75% due 12/15/2003 36,900,950 45,787,500 0.4
Food/Dairy USD 23,500,000 Mastellone Hermanos S.A.,
Products 11.75% due 4/01/2008 23,687,500 23,735,000 0.2
Government City of Buenos Aires:
Obligations ARS 33,600,000 10.50% due 5/28/2004 29,664,583 29,583,087 0.2
USD 38,000,000 11.25% due 4/11/2007 37,715,000 38,950,000 0.3
USD 11,479,000 11.25% due 4/11/2007
(Regulation S) 11,620,029 11,765,975 0.1
Republic of Argentina (p):
USD 119,000,000 9.75% due 9/19/2027 93,895,625 114,478,000 0.9
USD 97,375,000 Floating Rate Bonds,
Series L, 6.625% due
3/31/2005 (d) 72,175,063 88,075,687 0.7
USD 80,000,000 Floating Rate Discount
Notes, 6.437% due 3/31/2023 54,980,845 66,600,000 0.5
USD 85,000,000 Global Bonds, 11.375% due
1/30/2017 82,988,125 93,075,000 0.7
USD 30,000,000 Par `L' Bonds, 5.75% due
3/31/2023 18,750,353 22,668,750 0.2
--------------- --------------- ------
401,789,623 465,196,499 3.6
Telecom- USD 25,000,000 CTI Holdings S.A., 0/11.50%
munications due 4/15/2008 (b) 14,586,109 14,000,000 0.1
Total Fixed-Income Securities
in Argentina 476,964,182 548,718,999 4.3
Brazil Banking USD 16,500,000 Banco Nacional de
Desenvolvimiento Economico e
Social, 9% due 9/24/2007 14,685,000 15,345,000 0.1
Broad- USD 5,000,000 Abril S.A., 12% due 10/25/2003 5,006,250 5,062,500 0.0
casting/
Media
Government USD 35,000,000 Brazil Exit Bonds, 6% due
Obligations 9/15/2013 (p) 20,070,486 27,300,000 0.2
Republic of Brazil:
USD 2,718,300 Floating Rate Bonds,
6.875% due 1/01/2001 (d) 1,855,182 2,613,645 0.0
USD 58,010,500 Floating Rate 'C' Bonds,
7.34% due 4/15/2014 (p) 42,003,057 44,378,032 0.4
USD 10,000,000 Par 'L' Bonds, 5.50% due
4/15/2024 (p) 6,100,000 7,162,500 0.1
--------------- --------------- ------
70,028,725 81,454,177 0.7
Industrial Globo Comunicacoes e
Partcipacoes S.A.:
USD 11,000,000 10.625% due 6/21/2004 10,596,250 11,027,500 0.1
USD 13,000,000 10.625% due 12/05/2008 12,954,500 11,911,250 0.1
--------------- --------------- ------
23,550,750 22,938,750 0.2
Metals USD 35,000,000 CSN Iron Panama S.A.,
9.125% due 6/01/2007 32,850,000 30,143,750 0.2
Paper & USD 9,500,000 Celulose Nipo-Brasileira,
Forest 9.375% due 12/21/2003 9,222,500 9,215,000 0.1
Products
Utilities USD 32,250,000 Espirito Santo-Escelsa,
10% due 7/15/2007 31,726,875 28,218,750 0.2
Total Fixed-Income Securities
in Brazil 187,070,100 192,377,927 1.5
Canada Cable/ CAD 7,545,000 Rogers Cablesystem Inc.,
Telecommuni- 9.65% due 1/15/2014 4,397,424 5,307,738 0.1
cations CAD 5,000,000 Rogers Communications Inc.,
Convertible Bonds,
7.50% due 9/01/1999 3,394,000 3,301,699 0.0
--------------- --------------- ------
7,791,424 8,609,437 0.1
Industrial USD 68,500,000 International Semi-Tech
Microelectronics, Inc.,
0/11.50% due 8/15/2003 (b) 53,362,558 16,440,000 0.1
Industrial-- USD 28,000,000 Ainsworth Lumber Company,
Services 12.50% due 7/15/2007+++ 27,270,182 30,450,000 0.2
Paper & CAD 2,000,000 MacMillan Bloedel Limited,
Forest Convertible Bonds, 5% due
Products 5/01/2007 1,024,416 1,148,128 0.0
Real Estate CAD 16,501,370 First Place Tower, Inc.,
Convertible Bonds, 10.64% due
12/15/2005 (e) 26,453,947 37,781,873 0.3
Total Fixed-Income Securities
in Canada 115,902,527 94,429,438 0.7
Cayman Multi- USD 50,000,000 Beta Finance Inc., 0.20% due
Islands Industry 5/27/2000 50,476,659 49,075,000 0.4
Total Fixed-Income Securities
in the Cayman Islands 50,476,659 49,075,000 0.4
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., July 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Currency Face Percent of
COUNTRY Industries Denomination Amount Fixed-Income Securities Cost Value Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
Chile Utilities-- Empresa Electricidad del
Electric Norte:
USD 28,500,000 10.50% due 6/15/2005 $ 28,625,000 $ 27,645,000 0.2%
USD 2,500,000 10.50% due 6/15/2005
(Regulation S) 2,440,000 2,425,000 0.0
Total Fixed-Income Securities
in Chile 31,065,000 30,070,000 0.2
China Multi- USD 20,250,000 Guangdong Investment Finance
Industry Inc., Convertible Bonds,
1% due 7/07/2002 19,257,412 14,377,500 0.1
USD 2,500,000 Shanghai Industrial
Investment Treasury Co.,
Convertible Bonds, 1%
due 2/24/2003 2,170,198 2,100,000 0.0
USD 21,000,000 Shanghai Investment Holding
Co., Convertible Bonds,
1% due 6/12/2002 19,173,750 17,692,500 0.2
--------------- --------------- ------
40,601,360 34,170,000 0.3
Utilities-- USD 26,900,000 Huaneng Power International
Electric PLC, Convertible Bonds,
1.75% due 5/21/2004 23,912,988 22,663,250 0.2
Total Fixed-Income Securities
in China 64,514,348 56,833,250 0.5
France Automobiles FRF 5,500 Peugeot S.A., Convertible
Bonds, 2% due 1/01/2001 992,341 1,286,685 0.0
Banking ECU 2,000,000 Credit Local de France, 0%
due 10/16/2001 (b) 2,095,939 1,930,801 0.0
Insurance FRF 147,071 Finaxa, Convertible Bonds,
3% due 1/01/2007 19,057,835 21,735,086 0.2
Real Estate FRF 184,000,000 Societe Fonciere Lyonnaise
S.A., Convertible Bonds,
4% due 10/31/2004 31,087,057 36,989,770 0.3
Total Fixed-Income Securities
in France 53,233,172 61,942,342 0.5
Germany Banking DEM 2,310,000 Commerzbank AG, Floating
Rate Convertible Bonds,
0% due 12/31/2000 (b) 1,556,456 4,117,346 0.0
USD 5,000,000 Landes Kredit Bank, 7.875%
due 4/15/2004 4,972,068 5,438,500 0.1
--------------- --------------- ------
6,528,524 9,555,846 0.1
Electrical USD 1,000,000 Siemens AG, 8% due 6/24/2002 1,027,467 1,056,250 0.0
Equipment
Financial USD 5,875,000 Veba International Finance
Services (with Warrants), 6% due
4/06/2000 (a) 2,965,841 5,801,562 0.0
Government DEM 31,000,000 Bundesrepublik Deutschland,
Obligations 5.75% due 8/20/1998 22,444,131 17,439,134 0.2
Government DEM 55,000,000 Freie Hansestadt Hamburg,
Obligations 6.08% due 11/29/2018 31,730,765 33,058,757 0.3
--Regional DEM 64,000,000 Land Baden-Weurttemberg,
6.20% due 11/22/2013 37,148,769 38,666,292 0.3
DEM 170,500,000 Land Hessen, 6% due 11/29/2013 98,586,862 101,619,342 0.8
DEM 110,000,000 Mecklenberg-Vorpommern,
6.15% due 6/16/2023 61,012,437 65,560,866 0.5
DEM 134,950,000 Nordrhein-Westfalen,
6.125% due 12/21/2018 77,420,913 80,772,716 0.6
Rheinland-Pfalz:
DEM 33,000,000 5.75% due 2/24/2014 18,324,663 19,482,710 0.2
DEM 64,000,000 6.08% due 11/29/2018 36,935,547 37,784,650 0.3
DEM 47,000,000 Sachsen-Anhalt, 6% due
1/10/2014 26,915,615 27,748,102 0.2
--------------- --------------- ------
388,075,571 404,693,435 3.2
Total Fixed-Income Securities
in Germany 421,041,534 438,546,227 3.5
Hong Kong Multi- USD 16,000,000 First Pacific Capital Ltd
Industry Convertible Bonds, 2% due
3/27/2002 15,689,402 14,360,000 0.1
USD 16,000,000 Hutchinson Delta Finance,
Convertible Bonds, 7% due
11/08/2001 16,640,000 16,320,000 0.1
Hutchison Whampoa Ltd.:
USD 49,250,000 7.45% due 8/01/2017 41,025,000 39,892,500 0.3
USD 17,250,000 7.50% due 8/01/2027 14,317,500 13,860,375 0.1
--------------- --------------- ------
87,671,902 84,432,875 0.6
Real Estate USD 22,980,000 Hysan Development Company
Limited, Convertible
Bonds, 6.75% due 6/01/2000 (n) 27,044,800 21,601,200 0.2
Utilities-- USD 26,250,000 Cathay International Ltd.,
Infrastructure 13% due 4/15/2008 26,118,750 22,575,000 0.2
Total Fixed-Income Securities
in Hong Kong 140,835,452 128,609,075 1.0
India Chemicals Indian Petrochemicals Ltd.,
Convertible Bonds:
USD 23,500,000 2.50% due 3/11/2002 23,996,563 22,912,500 0.2
USD 37,600,000 2.50% due 3/11/2002
(Regulation S) 37,681,905 36,660,000 0.3
Total Fixed-Income Securities
in India 61,678,468 59,572,500 0.5
Indonesia Paper & USD 35,000,000 APP Global Finance (V) Ltd.,
Forest Convertible Bonds, 2%
Products due 7/25/2000 35,406,500 29,137,500 0.2
USD 3,000,000 APP International Finance,
10.25% due 10/01/2000 2,550,000 2,550,000 0.0
USD 7,650,000 APP International Finance
VII (Mauritius), Convertible
Bonds, 3.50% due 4/30/2003 6,196,500 5,508,000 0.1
USD 3,965,000 PT Indah Kiat Pulp & Paper,
8.875% due 11/01/2000 3,300,863 3,053,050 0.0
Total Fixed-Income Securities
in Indonesia 47,453,863 40,248,550 0.3
Italy Government USD 5,000,000 Republic of Italy, 8.75% due
Obligations 2/08/2001 5,373,050 5,382,500 0.0
Total Fixed-Income Securities
in Italy 5,373,050 5,382,500 0.0
Japan Banking JPY 1,990,000,000 AB International (Cayman)
Trust, Convertible
Preference Shares, 0.50% due
8/01/2007 11,572,219 12,605,400 0.1
JPY 8,991,000,000 Fuji International Finance
Trust, Convertible
Preference Shares, 0.25% due
2/01/2002 57,009,671 24,585,981 0.2
USD 22,750,000 MBL International Finance
(Bermuda), Convertible
Bonds, 3% due 11/30/2002 21,868,437 21,783,125 0.2
JPY 5,410,000,000 Sumitomo Bank International
Finance NV, Convertible
Bonds, 0.75% due 5/31/2001 44,571,881 42,321,218 0.3
--------------- --------------- ------
135,022,208 101,295,724 0.8
Beverages JPY 1,268,000,000 Kinki Coca-Cola Bottling
Co., Ltd., 0.85% due 12/30/2003 11,282,608 9,655,936 0.1
JPY 1,706,000,000 Sanyo Coca-Cola Bottling
Inc., #1 Convertible Bonds,
0.90% due 6/30/2003 15,043,212 12,282,728 0.1
JPY 552,000,000 Shikoku Coca-Cola Bottling
Co., Ltd., #1 Convertible
Bonds, 2.40% due 3/29/2002 5,152,497 4,604,777 0.0
--------------- --------------- ------
31,478,317 26,543,441 0.2
Capital JPY 500,000,000 Kawasaki Heavy Industries,
Goods Convertible Bonds, 0.50%
due 9/30/1998 4,566,161 3,435,445 0.0
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., July 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Currency Face Percent of
COUNTRY Industries Denomination Amount Fixed-Income Securities Cost Value Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
Japan Chemicals Shin-Etsu Chemical Co., Ltd.,
(concluded) Convertible Bonds:
JPY 148,000,000 #5, 1.30% due 3/31/1999 $ 1,577,446 $ 1,403,669 0.0%
JPY 301,000,000 #6, 0.40% due 9/30/2005 2,987,802 2,754,739 0.0
USD 4,700,000 Shin-Etsu Chemical Co.,
Ltd. (with Warrants),
3.375% due 8/08/2000 (a) 3,274,060 4,394,500 0.0
--------------- --------------- ------
7,839,308 8,552,908 0.0
Electrical JPY 1,204,000,000 Matsushita Electric Works,
Equipment Ltd., #9 Convertible Bonds,
1% due 11/30/2005 12,091,160 9,368,612 0.1
Electronics JPY 650,000,000 Matsushita Electric Industrial
Co., Ltd., #5 Convertible
Bonds, 1.30% due 3/29/2002 6,133,347 6,614,746 0.1
Government JPY 9,145,000,000 Japanese Government Bond,
Obligations #112 (10-Year Issue), 5% due
9/21/1998 78,634,451 63,676,296 0.5
Insurance JPY 456,000,000 Mitsui Marine & Fire Insurance
Co., Ltd., #3 Convertible
Bonds, 0.70% due 3/31/2003 3,786,983 3,361,994 0.0
JPY 117,000,000 Nichido Fire & Marine Insurance
Co., Ltd., #5 Convertible Bonds,
1% due 3/31/2003 1,109,381 860,997 0.0
Nisshin Fire & Marine Insurance
Co., Ltd., Convertible
Bonds:
JPY 900,000,000 #1, 0.65% due 3/31/2004 7,132,646 5,869,159 0.1
JPY 1,572,000,000 #2, 0.75% due 3/31/2006 12,292,248 9,859,688 0.1
Sumitomo Marine & Fire Insurance
Co., Ltd., Convertible
Bonds:
JPY 300,000,000 #3, 1.10% due 3/29/2002 2,522,005 2,533,749 0.0
JPY 1,527,000,000 #4, 1.20% due 3/31/2004 13,104,977 13,213,915 0.1
JPY 588,000,000 Yasuda Fire & Marine Insurance
Co., Ltd., #3 Convertible Bonds,
0.60% due 3/30/2001 4,903,719 4,233,437 0.0
--------------- --------------- ------
44,851,959 39,932,939 0.3
Pharma- JPY 4,000,000,000 Yamanouchi Pharmaceutical Co.,
ceuticals Ltd., Convertible Bonds,
1.625% due 3/31/2000 (n)++ 41,915,632 33,991,000 0.3
Total Fixed-Income Securities
in Japan 362,532,543 293,411,111 2.3
Malaysia Oil-- USD 44,060,000 Petroliam Nasional BHD, 7.625%
Related due 10/15/2026 34,629,861 33,485,600 0.3
Telecommuni- Telekom Malaysia BHD,
cations Convertible Bonds:
USD 3,000,000 4% due 10/03/2004 2,523,750 2,190,000 0.0
USD 57,150,000 4% due 10/03/2004
(Regulation S) 49,611,712 41,719,500 0.3
USD 9,000,000 7.875% due 8/01/2025 7,222,500 7,184,970 0.1
USD 41,250,000 7.875% due 8/01/2025
(Regulation S) 32,567,812 31,824,375 0.3
--------------- --------------- ------
91,925,774 82,918,845 0.7
Total Fixed-Income Securities
in Malaysia 126,555,635 116,404,445 1.0
Mexico Oil--Related Petroleos Mexicanos:
USD 46,500,000 9.25% due 3/30/2018 42,663,750 42,780,000 0.4
USD 45,150,000 8.625% due 12/01/2023 25,007,000 39,167,625 0.3
USD 15,000,000 9.50% due 9/15/2027 14,449,470 14,306,250 0.1
Total Fixed-Income Securities
in Mexico 82,120,220 96,253,875 0.8
Nether- Telecommuni- USD 37,000,000 Cellco Finance N.V., 15% due
lands cations 8/01/2005 37,000,000 37,832,500 0.3
Total Fixed-Income Securities
in the Netherlands 37,000,000 37,832,500 0.3
New Government NZD 60,000,000 New Zealand Government Bond,
Zealand Obligations 6.50% due 2/15/2000 34,811,718 30,562,165 0.2
NZD 95,000,000 New Zealand Index Linked Notes,
4.50% due 2/15/2016 57,126,627 49,452,535 0.4
Total Fixed-Income Securities
in New Zealand 91,938,345 80,014,700 0.6
Philip- Multi- AC International Finance,
pines Industry Convertible Bonds:
USD 26,750,000 0% due 12/08/2000 (b) 21,317,367 21,266,250 0.2
USD 18,000,000 0.50% due 7/30/2002 16,802,763 17,460,000 0.1
Total Fixed-Income Securities
in the Philippines 38,120,130 38,726,250 0.3
Russia Government USD 18,000,000 City of St. Petersburg, 9.50%
Obligations due 6/18/2002 13,986,500 13,050,000 0.1
Russian Federation Bonds:
USD 37,550,000 11% due 7/24/2018 26,344,546 25,346,250 0.2
USD 142,750,000 12.75% due 6/24/2028 131,353,237 117,055,000 0.9
USD 9,000,000 12.75% due 6/24/2028
(Regulation S) 8,178,750 7,380,000 0.1
--------------- --------------- ------
179,863,033 162,831,250 1.3
Oil & Gas USD 7,500,000 Lukinter Finance,
Producers Convertible Bonds, 3.50% due
5/06/2002 6,514,625 6,431,250 0.0
Telecommuni- USD 17,900,000 Moscow City Telephone
cations Network, 12.50% due 3/19/2001 15,361,625 14,767,500 0.1
PLD Telekom Inc.,
Convertible Bonds (j):
USD 74,500,000 0/14% due 6/01/2004 (b) 71,296,849 74,500,000 0.6
USD 18,700,000 9% due 6/01/2006 18,756,250 20,219,375 0.2
--------------- --------------- ------
105,414,724 109,486,875 0.9
Utilities USD 26,250,000 Mosenergo Finance BV, 8.375%
due 10/09/2002 20,921,300 18,243,750 0.1
Total Fixed-Income Securities
in Russia 312,713,682 296,993,125 2.3
Singapore Multi- USD 11,290,000 Far East Livingston Shipyards,
Industry Convertible Bonds, 1.50%
due 5/02/2001 9,273,312 9,173,125 0.1
Keppel Corporation Limited,
Redeemable Cumulative
Convertible Preference Shares:
USD 48,500,000 2% due 8/12/2002 48,492,500 43,165,000 0.3
USD 7,500,000 2% due 8/12/2002
(Regulation S) 6,979,577 6,675,000 0.1
--------------- --------------- ------
64,745,389 59,013,125 0.5
Tele- USD 43,500,000 Fullerton Global Corp.,
communi- Convertible Bonds, 0% due
cations 4/02/2003 (b) 39,842,326 40,346,250 0.3
Total Fixed-Income Securities
in Singapore 104,587,715 99,359,375 0.8
South Insurance USD 23,150,000 LibLife International,
Africa Convertible Bonds, 6.50% due
9/30/2004 24,897,750 23,439,375 0.2
Total Fixed-Income Securities
in South Africa 24,897,750 23,439,375 0.2
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., July 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Currency Face Percent of
COUNTRY Industries Denomination Amount Fixed-Income Securities Cost Value Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
South Banking Export Import Bank Korea:
Korea USD 4,000,000 6.50% due 2/10/2002 $ 2,780,000 $ 3,440,000 0.0%
USD 21,000,000 Series D, 6.50% due
11/15/2006 16,459,400 16,590,000 0.2
Koram Bank Ltd.,
Convertible Bonds:
USD 1,500,000 0.25% due 8/26/2007 1,447,500 975,000 0.0
USD 5,750,000 0.25% due 8/26/2007
(Regulation S) 5,183,494 3,737,500 0.0
USD 10,000,000 Korea Development Bank,
6.625% due 11/21/2003 8,047,500 8,226,400 0.1
--------------- --------------- ------
33,917,894 32,968,900 0.3
Electronics Samsung Electronics Co.,
Convertible Bonds (b):
USD 6,000,000 0% due 12/31/2007 6,130,437 4,740,000 0.0
USD 50,500,000 0% due 12/31/2007
(Regulation S) 47,119,532 40,147,500 0.3
--------------- --------------- ------
53,249,969 44,887,500 0.3
Energy Ssangyong Oil Refining Co.,
Related Ltd., Convertible Bonds:
USD 9,755,000 3% due 12/31/2004 7,206,837 4,487,300 0.0
USD 16,535,000 3.75% due 12/31/2008 17,448,950 13,062,650 0.1
--------------- --------------- ------
24,655,787 17,549,950 0.1
Government USD 33,000,000 Republic of Korea, 8.875%
Obligations due 4/15/2008 31,577,195 31,102,500 0.2
Machinery & CHF 10,000,000 Medison Co., Convertible
Equipment Bonds, 0.25% due 3/06/2002 6,352,418 6,412,409 0.1
Metals--Steel Pohang Iron & Steel
Industries Co., Ltd.:
USD 6,485,000 7.375% due 5/15/2005 4,474,650 5,220,425 0.0
USD 5,000,000 7.125% due 11/01/2006 3,800,000 3,900,000 0.0
--------------- --------------- ------
8,274,650 9,120,425 0.0
Multi- CHF 5,250,000 Daewoo Corporation,
Industry Convertible Bonds, 0.125% due
12/31/2001 3,590,050 2,784,865 0.0
Telecommuni- SK Telekom Co. Ltd.:
cations USD 23,350,000 7.75% due 4/29/2004 19,287,100 19,964,250 0.2
USD 16,000,000 7.625% due 4/15/2007 13,080,000 12,709,885 0.1
--------------- --------------- ------
32,367,100 32,674,135 0.3
Utilities-- Korea Electric Power Corp.,
Electric Global Bonds:
USD 7,000,000 10% due 4/01/2001 6,632,500 6,728,750 0.1
USD 30,000,000 10% due 4/01/2001 30,000,000 28,782,000 0.2
USD 45,000,000 6.375% due 12/01/2003 34,280,000 35,820,000 0.3
USD 40,750,000 Convertible Bonds, 5% due
8/01/2001 38,392,275 34,637,500 0.3
--------------- --------------- ------
109,304,775 105,968,250 0.9
Total Fixed-Income Securities
in South Korea 303,289,838 283,468,934 2.2
Taiwan Appliances Teco Electric and Machine,
Convertible Bonds (b):
USD 35,500,000 0% due 3/19/2003 35,560,625 34,790,000 0.3
USD 4,500,000 0% due 3/19/2003
(Regulation S) 4,427,812 4,410,000 0.0
--------------- --------------- ------
39,988,437 39,200,000 0.3
Computers USD 27,300,000 First International Computer,
Inc., Convertible Bonds,
0% due 10/16/2002 (b) 29,132,565 28,392,000 0.2
Industrial USD 13,800,000 GVC Corporation, Convertible
Bonds, 0% due 5/21/2002 (b) 14,751,255 14,835,000 0.1
USD 5,000,000 Lite-On Technology Corp.,
Convertible Bonds, 0% due
12/15/2002 (b) 5,154,933 5,062,500 0.1
USD 4,500,000 Taiwan Semiconductor
Manufacturing Co., Convertible
Bonds, 0% due 7/03/2002 (b) 4,948,000 4,972,500 0.0
--------------- --------------- ------
24,854,188 24,870,000 0.2
Total Fixed-Income Securities
in Taiwan 93,975,190 92,462,000 0.7
Thailand Metals-- USD 44,000,000 NSM Steel Inc., 12% due 2/01/2006 39,981,202 37,400,000 0.3
Steel
Total Fixed-Income Securities
in Thailand 39,981,202 37,400,000 0.3
United Banking USD 36,000,000 ING Bank N.V. (London), 0%
Kingdom due 2/12/1999 (b) 36,000,000 37,440,000 0.3
Cable/ USD 14,000,000 Comcast UK Cable Partners Ltd.,
Telecom- 0/11.20% due 11/15/2007 (b) 10,270,959 11,970,000 0.1
munications
Financial GBP 11,600,000 Liberty International Holdings
Services PLC, Convertible Bonds,
5.50% due 4/30/2009 14,179,895 20,448,364 0.2
Food & GBP 13,500,000 Allied-Lyons PLC, Convertible
Beverage Bonds, 6.75% due 7/07/2008 21,002,665 22,472,505 0.2
Government United Kingdom Treasury Gilt:
Obligations GBP 60,000,000 9.75% due 8/27/2002 112,868,044 109,644,720 0.9
GBP 20,000,000 Convertible Bonds, 9.50%
due 10/25/2004 37,627,645 38,446,000 0.3
--------------- --------------- ------
150,495,689 148,090,720 1.2
Industrial USD 4,655,000 HIH Capital Ltd., Convertible
Bonds (Bearer), 7.50%
due 9/25/2006 3,031,037 3,444,700 0.0
Multi- GBP 10,375,000 English China Clays PLC,
Industry Convertible Bonds, 6.50% due
9/30/2003 16,486,753 16,443,927 0.1
Telecommuni- USD 43,750,000 International Cabletel, Inc.,
cations Series B, 0/11.50% due
2/01/2006 (b) 33,385,802 36,421,875 0.3
USD 39,000,000 Ionica PLC, 0/15% due 5/01/2007
(b)(m) 22,574,833 7,020,000 0.1
USD 20,250,000 Millicom International
Cellular S.A., 0/13.50% due
6/01/2006 (b) 13,921,248 16,048,125 0.1
NTL Inc.:
USD 14,000,000 0/10.75% due 4/01/2008 (b) 14,158,264 14,171,850 0.1
USD 9,250,000 9.50% due 4/01/2008 15,088,593 14,943,837 0.1
--------------- --------------- ------
99,128,740 88,605,687 0.7
Textiles GBP 2,500,000 Coats Viyella PLC, Convertible
Bonds, Series B, 6.25%
due 8/09/2003 3,535,704 3,885,500 0.0
Utilities-- GBP 10,000,000 National Grid Co. PLC,
Electric Convertible Bonds, 4.25% due
2/17/2008 16,554,000 18,934,786 0.1
Total Fixed-Income Securities
in the United Kingdom 370,685,442 371,736,189 2.9
United Agricul- USD 12,000,000 Sun World International, Inc.,
States tural 11.25% due 4/15/2004 12,000,000 13,140,000 0.1
Airlines USD 15,000,000 Trans World Airlines, 11.375%
due 3/01/2006 15,000,000 14,962,500 0.1
Banking USD 14,250,000 Ocwen Federal Bank, 12% due
6/15/2005 14,250,000 15,532,500 0.1
Bio- USD 7,200,000 Cetus Corporation (Euro),
technology Convertible Bonds, 5.25% due
5/21/2002 5,220,250 6,930,000 0.0
Chemicals USD 9,000,000 Philipp Brothers Chemicals
Inc., 9.875% due 6/01/2008 9,000,000 9,180,000 0.1
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., July 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Currency Face Percent of
COUNTRY Industries Denomination Amount Fixed-Income Securities Cost Value Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
United Consumer-- USD 14,000,000 Zeta Consumer Products,
States Products 11.25% due 11/30/2007 $ 14,000,000 $ 8,400,000 0.1%
(continued)
Financial USD 6,500,000 Emergent Group, Inc., Series
Services B,10.75% due 9/15/2004 6,434,375 4,940,000 0.1
USD 4,500,000 Hawthorne Financial Corp.,
12.50% due 12/31/2004 4,500,000 4,736,250 0.0
--------------- --------------- ------
10,934,375 9,676,250 0.1
Food & USD 15,000,000 Tom's Food Inc., 10.50%
Beverage due 11/01/2004 15,000,000 15,150,000 0.1
Healthcare USD 14,000,000 American Retirement Corp.,
Convertible Bonds, 5.75%
due 10/01/2002 14,000,000 13,230,000 0.1
Healthcare USD 7,000,000 Oxford Health Plans, Inc.,
Services 11% due 5/15/2005 7,000,000 6,580,000 0.0
Home- USD 29,500,000 Beazer Homes USA, Inc., 9% due
building & 3/01/2004 27,597,000 29,426,250 0.2
Construction
Industrial USD 8,000,000 Bar Technologies Ltd., 13.50%
due 4/01/2001 7,412,450 8,780,000 0.1
USD 21,750,000 Crown Packaging Enterprises,
0/14% due 8/01/2006 (b) 9,646,568 1,087,500 0.0
--------------- --------------- ------
17,059,018 9,867,500 0.1
Metals-- USD 2,442,500 Rouge/Worthington Industries,
Steel Inc. (Convertible, Series
DECS) 38,015,300 25,035,625 0.2
Mining USD 10,500,000 AEI Holding Co., 10% due
11/15/2007 10,570,000 10,395,000 0.1
Oil--Related PDV America, Inc.:
USD 35,000,000 7.25% due 8/01/1998 34,856,150 35,000,000 0.2
USD 10,000,000 7.75% due 8/01/2000 10,062,500 10,012,500 0.1
--------------- --------------- ------
44,918,650 45,012,500 0.3
Real Estate USD 13,957,282 RTC Commercial Mortgage,
Class C, 8.25% due
12/25/2020 (d) 13,743,490 13,957,282 0.1
USD 41,500,000 Security Capital U.S.
Realty, Convertible Bonds, 2%
due 5/22/2003 33,546,675 33,511,250 0.3
--------------- --------------- ------
47,290,165 47,468,532 0.4
Real Estate USD 25,500,000 Alexander Haagen Properties,
Investment Inc., Exchangeable Debentures,
Trusts 7.25% due 12/27/2003 25,291,250 25,468,125 0.2
USD 4,500,000 Capstone Capital Corp.,
Convertible Bonds, 6.55% due
3/14/2002 4,165,284 4,342,500 0.0
USD 7,000,000 Centerpoint Properties Corp.,
Convertible Bonds, 8.22%
due 1/15/2004 7,000,000 12,810,000 0.1
USD 30,000,000 First Union Real Estate
Investments, 8.875% due
10/01/2003 29,756,100 30,000,000 0.3
USD 25,000,000 First Washington Realty,
Exchangeable Debentures,
8.25% due 6/26/1999 25,000,000 29,000,000 0.2
Health & Retirement Properties
Trust, Convertible Bonds:
USD 40,000,000 7.25% due 10/01/2001 40,000,000 39,600,000 0.3
USD 15,000,000 7.50% due 10/01/2003 15,000,000 14,850,000 0.1
LTC Properties, Inc.,
Convertible Bonds:
USD 10,000,000 8.25% due 1/01/1999 10,000,000 11,625,000 0.1
USD 8,000,000 8.50% due 1/01/2001 8,000,000 9,300,000 0.1
USD 25,000,000 Leperq Corporate Income Fund,
Exchangeable Secured
Notes, 8% due 3/17/2004 25,000,000 25,156,250 0.2
USD 12,500,000 Liberty Realty Properties,
8.40% due 7/01/2001 12,500,000 15,250,000 0.1
Malan Realty Investors, Inc.,
Convertible Bonds:
USD 27,000,000 8.50% due 7/01/2003 27,000,000 28,046,250 0.2
USD 4,750,000 9.50% due 7/15/2004 3,859,375 4,744,062 0.0
USD 9,415,000 Meditrust, Convertible Bonds,
8.54% due 7/01/2000 9,602,637 7,896,831 0.1
USD 5,000,000 Mid-Atlantic Realty Trust,
Convertible Bonds, 7.625%
due 9/15/2003 4,875,000 6,031,250 0.1
USD 22,000,000 National Health Investors, Inc.,
Convertible Bonds,
7.75% due 1/01/2001 22,000,000 20,020,000 0.2
USD 17,000,000 Nationwide Health Properties Inc.,
Convertible Bonds,
6.25% due 1/01/1999 16,800,000 17,595,000 0.1
USD 12,000,000 Ocwen Asset Investment Corp.,
11.50% due 7/01/2005 12,000,000 11,910,000 0.1
USD 31,500,000 Omega Healthcare Investors Inc.,
Convertible Bonds,
8.50% due 2/01/2001 31,552,500 34,807,500 0.3
USD 5,500,000 Sizeler Property Investors, Inc.,
Convertible Bonds, 8%
due 7/15/2003 5,505,000 5,390,000 0.0
--------------- --------------- ------
334,907,146 353,842,768 2.8
Retail-- USD 4,500,000 Krystal Co. (The), 10.25% due
Food 10/01/2007 4,545,000 4,612,500 0.0
Retail-- USD 22,500,000 Coinstar Inc., 0/13% due
Miscellaneous 10/01/2006 (b)(k) 19,245,932 19,237,500 0.2
Savings USD 21,400,000 First Federal Financial
Bank Corporation, 11.75% due
10/01/2004 21,401,250 23,540,000 0.2
Semi- Cypress Semiconductor Corp.,
conductors Convertible Bonds:
USD 5,500,000 6% due 10/01/2002 4,727,500 4,785,000 0.0
USD 1,900,000 6% due 10/01/2002
(Regulation S) 1,698,500 1,653,000 0.0
--------------- --------------- ------
6,426,000 6,438,000 0.0
Telecommuni- CAI Wireless Systems, Inc.:
cations USD 60,000,000 13% due 1/29/1999 60,000,000 60,000,000 0.5
USD 94,025,000 12.25% due 9/15/2002 63,879,250 24,446,500 0.2
USD 30,000,000 12% due 10/01/2005 1,000,000 300,000 0.0
USD 122,500,000 CS Wireless Systems Inc.,
0/11.375% due 3/01/2006 (b)(l) 69,124,853 30,625,000 0.2
USD 15,500,000 Call Net Enterprises Inc.,
0/13.25% due 12/01/2004 (b) 13,100,534 14,957,500 0.1
USD 120,363,000 CellNet Data Systems, Inc.,
0/14% due 10/01/2007 (b)(h) 54,841,542 64,695,112 0.5
Centennial Communications
Corp. (b):
USD 40,000,000 0/14% due 1/01/2005 21,999,249 21,000,000 0.2
USD 11,925,186 0/9% due 7/01/2006 10,394,335 10,076,782 0.1
Geotek Communications, Inc.:
USD 24,650,000 Convertible Bonds, 12% due
2/15/2001 23,973,875 92,437 0.0
USD 95,858,000 Series B, 0/15% due
7/15/2005 (b) 58,630,582 9,585,800 0.1
USD 17,000,000 Heartland Wireless
Communications Inc., 14% due
10/15/2004 12,885,000 6,630,000 0.0
USD 32,500,000 Nextel Communications Inc.,
0/9.95% due 2/15/2008 (b) 20,909,884 21,571,875 0.2
USD 53,000,000 People's Choice T.V.
Corporation, 0/13.125% due
6/01/2004 (b)(o) 30,072,862 16,960,000 0.1
Telegroup Inc.:
USD 21,750,000 0/10.50% due 11/01/2004 (b) 18,247,395 17,182,500 0.1
USD 22,000,000 Convertible Bonds, 8% due
4/15/2005 22,000,000 23,760,000 0.2
USN Communications Inc. (b):
USD 12,697,035 0/9% due 1/13/2006 10,232,709 9,205,350 0.1
USD 32,032,000 Series B, 0/14.625% due
8/15/2004 19,527,209 25,625,600 0.2
USD 20,000,000 Unifi Communications, Inc.,
14% due 3/01/2004 (g) 18,984,194 2,800,000 0.0
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., July 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Currency Face Percent of
COUNTRY Industries Denomination Amount Fixed-Income Securities Cost Value Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
United Telecommuni- USD 55,000,000 United International
States cations Holdings, Inc., 0/10.75%
(concluded) (concluded) due 2/15/2008 (b)(f) $ 34,183,308 $ 34,375,000 0.3%
United USN, Inc. (b):
USD 17,000,000 0/14% due 9/15/2003 (i) 11,456,877 11,985,000 0.1
USD 35,000,000 Convertible Bonds, 0/9%
due 9/30/2004 31,586,313 24,500,000 0.2
USD 15,500,000 Winstar Communications Inc.,
0/14% due 10/15/2005 (b) 10,800,991 12,555,000 0.1
Wireless One Inc.:
USD 44,050,000 13% due 10/15/2003 22,563,375 7,929,000 0.1
USD 34,750,000 0/13.50% due 8/01/2006 (b) 7,028,301 4,517,500 0.0
--------------- --------------- ------
647,422,638 455,375,956 3.6
Trans- USD 10,625,000 Eletson Holdings Inc., 9.25%
portation-- due 11/15/2003 10,558,437 10,890,625 0.1
Shipping USD 19,250,000 Teekay Shipping Corporation,
8.32% due 2/01/2008 18,252,500 19,635,000 0.2
--------------- --------------- ------
28,810,937 30,525,625 0.3
Trucking USD 28,250,000 Ameritruck Distribution,
12.25% due 11/15/2005 26,444,325 17,656,250 0.1
US Federal National Mortgage
Government Association (d):
& Agency USD 4,780,017 8% due 10/01/2024 4,564,169 4,953,292 0.0
Obligations USD 8,856,413 8% due 12/01/2024 8,700,042 9,177,458 0.1
US Treasury Inflation
Indexed Notes:
USD 220,500,000 3.625% due 7/15/2002 219,900,271 222,028,217 1.7
USD 125,000,000 3.375% due 1/15/2007 123,217,917 124,282,140 1.0
US Treasury Notes & Bonds:
USD 150,000,000 6.125% due 8/31/1998 (c) 149,890,625 150,087,891 1.2
USD 200,000,000 5.75% due 12/31/1998 198,992,025 200,375,000 1.6
USD 750,000,000 5.875% due 2/28/1999 747,746,094 751,875,000 5.9
USD 300,000,000 5.875% due 2/15/2000 294,964,844 301,612,500 2.4
USD 100,000,000 6% due 8/15/2000 100,078,125 100,922,000 0.8
--------------- --------------- ------
USD 55,000,000 7.875% due 8/15/2001 53,943,600 58,523,300 0.5
1,901,997,712 1,923,836,798 15.2
Utilities-- Niagara Mohawk Power Corp.:
Electric USD 17,000,000 7.375% due 7/01/2003 16,932,850 17,170,000 0.2
USD 6,500,000 0/8.50% due 7/01/2010 (b) 4,299,672 4,582,500 0.0
--------------- --------------- ------
21,232,522 21,752,500 0.2
Total Fixed-Income Securities
in the United States 3,314,288,220 3,136,804,554 24.7
Venezuela Finance USD 8,443,000 CANTV Finance Ltd., 9.25% due
2/01/2004 8,231,925 7,851,990 0.1
Total Fixed-Income Securities
in Venezuela 8,231,925 7,851,990 0.1
Total Investments in
Fixed-Income Securities 6,966,526,192 6,717,964,231 52.9
Short-Term Securities
Indonesia Certificates UBS Singapore:
of USD 90,000,000,000 25% due 8/17/1998 5,901,639 6,923,077 0.0
Deposit USD 110,000,000,000 30% due 8/24/1998 8,333,333 8,461,539 0.1
USD 140,000,000,000 34% due 8/27/1998 10,071,943 10,769,231 0.1
Total Short-Term Investments
in Indonesia 24,306,915 26,153,847 0.2
United Commercial USD 59,000,000 CIT Group Holdings, Inc.
States Paper*** (The), 5.50% due 8/07/1998 58,945,917 58,945,917 0.5
USD 35,021,000 General Motors Acceptance
Corp., 5.69% due 8/03/1998 35,009,929 35,009,929 0.3
USD 24,615,000 Monsanto Company, 5.51% due
8/03/1998 24,607,465 24,607,465 0.2
USD 41,395,000 UBS Finance (Delaware) Inc.,
5.51% due 8/04/1998 41,375,993 41,375,993 0.3
--------------- --------------- ------
159,939,304 159,939,304 1.3
US USD 5,238,000 Federal Home Loan
Government Mortgage Corp., 5.48% due
Agency 8/18/1998 5,224,445 5,224,445 0.0
Obligations***
Total Short-Term Investments
in the United States 165,163,749 165,163,749 1.3
Total Investments in
Short-Term Securities 189,470,664 191,317,596 1.5
<CAPTION>
OPTIONS Nominal Value Premiums
PURCHASED Covered by Options Issue Paid
<S> <C> <S> <C> <C> <C>
Put Options 25,000 ADC Telecommunications, Inc.,
Purchased expiring August 1998
at USD 20 12,750 1,562 0.0
Total Options Purchased 12,750 1,562 0.0
Total Investments 11,940,200,852 12,231,964,079 96.4
OPTIONS Premiums
WRITTEN Received
Call Options 400,000 3Com Corporation, expiring
Written October 1998 at USD 27.50 (1,237,958) (700,000) 0.0
500,000 3Com Corporation, expiring
January 1999 at USD 35 (2,453,668) (656,250) 0.0
530,000 ADC Telecommunications, Inc.,
expiring August 1998 at
USD 20 (1,249,308) (7,420,000) (0.2)
100,000 Allen Telecom Inc., expiring
December 1998 at USD 12.50 (146,995) (43,750) 0.0
50,000 Baxter International, Inc.,
expiring November 1998 at
USD 60 (148,495) (193,750) 0.0
200,000 Baxter International, Inc.,
expiring November 1998 at
USD 65 (933,969) (325,000) 0.0
1,465,000 Cypress Semiconductors
Corporation, expiring January
1999 at USD 10 (1,732,672) (640,937) 0.0
200,000 Electronic Data Systems
Corporation, expiring January
1999 at USD 45 (993,967) (250,000) 0.0
200,000 Glenayre Technologies Inc.,
expiring March 1999 at
USD 10 (306,490) (225,000) 0.0
230,000 Golden State BanCorp, expiring
October 1998 at USD 40 (820,634) (57,500) 0.0
50,000 Golden State BanCorp, expiring
October 1998 at USD 45 (117,246) (62,500) 0.0
100,000 Humana Inc., expiring November
1998 at USD 27.50 (284,490) (218,750) 0.0
100,000 Input/Output Inc., expiring
August 1998 at USD 25 (284,490) (25,000) 0.0
100,000 J.B. Hunt Transport Corp.,
expiring August 1998 at USD 25 (290,740) (487,500) 0.0
70,000 J.B. Hunt Transport Corp.,
expiring November 1998 at
USD 35 (199,143) (78,750) 0.0
200,000 Mellon Bank Corp., expiring
September 1998 at USD 65 (1,193,960) (1,225,000) 0.0
155,000 Mellon Bank Corp., expiring
September 1998 at USD 70 (706,204) (542,500) 0.0
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., July 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
OPTIONS WRITTEN Nominal Value Premiums Percent of
(concluded) Covered by Options Issue Received Value Net Assets
<S> <C> <S> <C> <C> <C>
Call Options 120,000 Millipore Corp., expiring
Written October 1998 at USD 35 $ (394,537) $ (22,500) 0.0%
(concluded) 250,000 Millipore Corp., expiring
January 1999 at USD 35 (542,982) (171,875) 0.0
560,000 Mitsubishi Heavy Industries,
Inc., expiring September
1998 at JPY 3,632.70 (140,721) (8,103) 0.0
200,000 Motorola, Inc., expiring
October 1998 at USD 60 (1,196,960) (187,500) 0.0
250,000 Motorola, Inc., expiring
January 1999 at USD 55 (1,736,192) (1,093,750) 0.0
400,000 Motorola, Inc., expiring
January 1999 at USD 60 (1,670,464) (1,000,000) 0.0
100,000 Newbridge Networks Corp.,
expiring December 1998
at USD 25 (215,743) (187,500) 0.0
450,000 Noble Drilling Corp., expiring
September 1998 at USD 35 (1,461,461) (112,500) 0.0
300,000 Oracle Corporation, expiring
January 1999 at USD 30 (890,970) (618,750) 0.0
400,000 Oracle Corporation, expiring
January 1999 at USD 35 (1,306,706) (350,000) 0.0
200,000 Oxford Healthcare Corp.,
expiring August 1998 at USD 15 (618,979) (25,000) 0.0
100,000 Oxford Healthcare Corp.,
expiring August 1998 at USD 22.50 (309,490) (6,250) 0.0
15,000 Plains Resources, Inc.,
expiring October 1998 at USD 22.50 (37,236) (8,438) 0.0
190,000 Potomac Electric Power Co.,
expiring August 1998 at
USD 25 (282,616) (47,500) 0.0
200,000 QUALCOMM Inc., expiring
January 1999 at USD 55 (1,468,951) (2,525,000) 0.0
250,000 QUALCOMM Inc., expiring
January 1999 at USD 60 (1,630,025) (2,406,250) 0.0
50,000 QUALCOMM Inc., expiring
January 1999 at USD 70 (360,988) (268,750) 0.0
50,000 QUALCOMM Inc., expiring
January 1999 at USD 80 (242,242) (137,500) 0.0
100,000 Reader's Digest Association,
Inc., expiring October 1998
at USD 30 (122,996) (100,000) 0.0
100,000 Rowan Companies Inc., expiring
October 1998 at USD 35 (222,117) (25,000) 0.0
250,000 Silicon Graphics, Inc., expiring
August 1998 at USD 12.50 (554,981) (46,875) 0.0
100,000 Silicon Valley Group, expiring
December 1998 at USD 17.50 (171,994) (100,000) 0.0
250,000 Silicon Valley Group, expiring
December 1998 at USD 20 (429,985) (156,250) 0.0
25,000 Texaco Inc., expiring October
1998 at USD 60 (130,496) (78,125) 0.0
100,000 Tidewater, Inc., expiring
January 1999 at USD 40 (521,983) (93,750) 0.0
100,000 TransOcean Offshore, ASA,
expiring August 1998 at USD 45 (434,485) (31,250) 0.0
100,000 Western Wireless Corp.,
expiring November 1998 at USD 25 (324,489) (143,750) 0.0
Total Options Written (30,521,218) (23,104,353) (0.2)
Total Investments, Net of Options Written $11,909,679,634 12,208,859,726 96.2
===============
Short Sales (Proceeds--$25,236,484)++ (25,875,805) (0.2)
Variation Margin on Financial Futures Contracts++++ 3,498,130 0.0
Unrealized Appreciation on Forward Foreign Exchange Contracts++++++ 3,659,503 0.1
Other Assets Less Liabilities 495,173,265 3.9
--------------- ------
Net Assets $12,685,314,819 100.0%
=============== ======
Net Asset Value: Class A--Based on net assets of $1,871,186,860 and
130,258,024 shares outstanding $ 14.37
===============
Class B--Based on net assets of $8,672,036,466 and
613,182,269 shares outstanding $ 14.14
===============
Class C--Based on net assets of $650,601,848 and
46,559,818 shares outstanding $ 13.97
===============
Class D--Based on net assets of $1,491,489,645 and
103,943,235 shares outstanding $ 14.35
===============
<FN>
*American Depositary Receipts (ADR).
**Global Depositary Receipts (GDR).
***Commercial Paper and certain US Government Agency Obligations
are traded on a discount basis. The interest rates shown reflect the
discount rates paid at July 31, 1998.
++Covered short sales entered into as of July 31, 1998 were as
follows:
Common
Shares Issue Value
1,248,000 Yamanouchi Pharmaceuticals Co., Ltd. $ (25,875,805)
--------------
Total (Proceeds--$25,236,484) $ (25,875,805)
==============
++++Financial futures contracts purchased as of July 31, 1998 were as
follows:
Number of Expiration
Contracts Issue Exchange Date Value
282 Hang Seng Index Hang Seng August 1998 $ 14,314,397
2,835 Nikkei 225 OSAKA September 1998 321,084,112
------------
Total Financial Futures Contracts Purchased
(Total Contract Price--$315,965,184) $335,398,509
============
Financial futures contracts sold as of July 31, 1998 were as
follows:
Number of Expiration
Contracts Issue Exchange Date Value
280 Japanese Govern-
ment Bond Tokyo September 1998 $258,832,814
275 Standard & Poor's
500 Index NYSE September 1998 77,206,250
200 US Treasury Bond NYSE September 1998 22,712,500
------------
Total Financial Futures Contracts Sold
(Total Contract Price--$360,489,185) $358,751,564
============
++++++Forward foreign exchange contracts as of July 31, 1998 were as
follows:
Unrealized
Foreign Expiration Appreciation
Currency Sold Date (Depreciation)
CHF 40,000,000 August 1998 $ 370,639
ESP 1,000,000,000 August 1998 39,489
ESP 1,000,000,000 September 1998 (36,259)
FRF 631,000,000 August 1998 (380,014)
FRF 553,000,000 September 1998 (689,493)
GBP 165,000,000 August 1998 (977,130)
GBP 47,000,000 September 1998 (131,820)
GBP 8,500,000 October 1998 253,470
JPY 24,000,000,000 August 1998 7,755,445
NLG 202,000,000 August 1998 (550,835)
NLG 80,000,000 September 1998 (580,365)
NOK 172,000,000 August 1998 (347,571)
SEK 450,000,000 September 1998 (1,066,053)
--------------
Total Unrealized Appreciation on Forward
Foreign Exchange Contracts--Net
(USD Commitment--$989,729,544) $ 3,659,503
==============
+++Represents a pay-in-kind security which may pay interest in additional
shares/face.
(a)Warrants entitle the Fund to purchase a predetermined number of
shares of stock/face amount of bonds and are non-income producing.
The purchase price and number of shares of stock/face amount of
bonds are subject to adjustment under certain conditions 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 futures contracts.
(d)Subject to principal paydowns as a result of prepayments or
refinancings of the 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. Corporation.
(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.
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., July 31, 1998
COMMON STOCK PORTFOLIO CHANGES
For the Quarter Ended July 31, 1998
Additions
Allen Telecom Inc.
Bank Austria AG
Banque Cantonale de Geneve
Brierley Investments Limited
Cendant Corporation
Deutsche Bank AG
Dresdner Bank AG
East-West Banking Corp.
HIH Winterthur International Holdings Ltd.
Horizon Group Properties, Inc.
Jarvis PLC
*Lloyds TSB PLC
Mol Magyar Olay-es Gazipari
Reszvenytarsasag (GDR)
Meditrust Corporation
Merkantildata ASA
Newbridge Networks Corp.
Roche Holding AG
Royal & Sun Alliance Insurance Group PLC
Royal Dutch Petroleum Co.
Security Capital Group Inc. (Class B)
Shell Transport & Trading Co. PLC
Siemens AG
*TNT Post Group N.V.
Telecomunicacoes Brasileiras S.A.--
Telebras (ADR)
USEC Inc.
Union Pacific Corporation
VEBA AG
Volvo AB 'B' Shares
Deletions
Accor S.A.
Energy Group PLC
Energy Group PLC (ADR)
ITT Industries Inc.
Ionica PLC
Limited, Inc. (The)
Liz Claiborne, Inc.
*Lloyds TSB PLC
Matthew Clark PLC
Oerlikon-Buehrle Holding Ltd.
Roberts Pharmaceutical Corporation
Royal PTT Nederland N.V.
*TNT Post Group N.V.
US Surgical Corp.
Unilever PLC
Western Atlas, Inc.
[FN]
*Added and deleted in the same quarter.
PORTFOLIO INFORMATION
Worldwide
Investments
As of 7/31/98
Breakdown of Stocks &
Fixed-Income Securities by Percent of
Country Net Assets
United States* 46.0%
Japan 7.1
Germany 6.3
Argentina 4.7
United Kingdom 4.7
France 2.8
South Korea 2.6
Russia 2.4
Netherlands 1.9
Australia 1.7
Brazil 1.6
Hong Kong 1.6
Canada 1.5
Italy 1.2
Malaysia 1.0
Mexico 0.9
Singapore 0.8
Taiwan 0.7
Sweden 0.7
Indonesia* 0.6
New Zealand 0.6
Philippines 0.5
India 0.5
Finland 0.5
China 0.5
Norway 0.4
Portugal 0.4
Cayman Islands 0.4
Switzerland 0.4
Thailand 0.3
Spain 0.2
Chile 0.2
South Africa 0.2
Austria 0.2
Ireland 0.1
Venezuela 0.1
Hungary 0.1
[FN]
*Includes investments in short-term securities.
Ten Largest Holdings Percent of
(Equity Investments) Net Assets
Republic New York Corp. 0.7%
Broken Hill Proprietary Co., Ltd. 0.6
Internationale Nederlanden
Groep N.V. 0.6
Societe Generale de France S.A. 0.6
Telecom Italia S.p.A.--RISP 0.6
QUALCOMM, Inc. 0.5
Mellon Bank Corp. 0.5
Houston Industries, Inc. 0.5
Banc One Corp. 0.4
MontEdison S.p.A. 0.4
Ten Largest Industries Percent of
(Equity Investments) Net Assets
Banking++ 5.7%
Utilities--Electric & Gas 3.2
Insurance 3.2
Telecommunications 3.1
Multi-Industry 1.6
Electronics 1.4
Real Estate Investment Trusts 1.1
Energy & Petroleum 1.0
Chemicals 1.0
Metals & Mining 1.0
[FN]
++Includes savings banks.
Merrill Lynch Global Allocation Fund, Inc., July 31, 1998
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
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
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