MERRILL LYNCH
GLOBAL
ALLOCATION
FUND, INC.
FUND LOGO
Quarterly Report
January 31, 1999
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 1/31/99
<CAPTION>
Percent of Fund's Net Assets Reference Portfolio
1/31/99 10/31/98 Percentages
<S> <C> <C> <C>
North & South American Equities 23.5%* 24.0%* 36.0%
European Equities 10.7 12.1 11.0
Pacific Basin Equities 11.8 9.9 13.0
Total Equities 46.0 46.0 60.0
US Dollar Denominated Fixed-Income Securities 43.2 44.4 24.0
US Issuers 19.9 22.7 --
Non-US Issuers 23.3 21.7 --
Non-US Dollar Denominated Fixed-Income Securities 5.0 4.0 16.0
Total Fixed-Income Securities 48.2++ 48.4++ 40.0
Cash & Cash Equivalents 5.8 5.6 --
<FN>
*Includes value of Financial Futures Contracts.
++Includes Preferred Stock.
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., January 31, 1999
DEAR SHAREHOLDER
For the three months ended January 31, 1999, Merrill Lynch Global
Allocation Fund, Inc.'s Class A, Class B, Class C and Class D Shares
had total returns of +5.87%, +5.63%, +5.53% and +5.73%,
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 6 and 7 of this report to
shareholders.)
Investment Approach
In February 1999, Merrill Lynch Global Allocation Fund celebrated
the completion of its tenth year. Throughout the Fund's history, our
aim has been to own securities that offer the best investment value
in the world's markets. The Fund historically has spread risk across
many equity and fixed-income securities of a large number of issuers
located in a number of countries (36 as of January 31, 1999). We
have sought to add to the portfolio those securities that offer the
best risk/return tradeoff from the perspective of the Fund's total
holdings. In doing so, the Fund has taken advantage of well-
researched portfolio theory, which holds that individual securities
that may be perceived as having a higher level of risk can be
combined together to create a lower-risk portfolio, as long as the
securities are not highly correlated with each other. This strategy
of selecting high potential return securities with low correlations
is designed to allow the Fund to produce competitive returns with
acceptable risk.
We proceed from the viewpoint that when buying securities it is
preferable to buy them at a lower price than a higher one and, when
selling, a higher price is preferable to a lower one. This common-
sense view is far from universally applied in the securities
markets. While its long-term benefits are self evident, it often has
unpleasant consequences in the near term. Specifically, in the case
of buying, low prices often result from a series a price declines,
which in turn generally follow bad news. Both of these factors can
discourage buyers while motivating sellers. This is the crux of many
investments that offer good value: they are unpopular. While falling
prices, bad news and unpopularity certainly do not automatically
characterize a good investment, they often do accompany an
attractively low price.
Throughout the course of the Fund's history, there have been many
instances when the Fund purchased unpopular securities that not only
increased in price, but also regained their popularity. More often
than not, these purchases declined in value before they appreciated.
Some examples of such unpopular purchases that proved to be good
investments for the Fund include:
* US bank and thrift stocks during the asset quality problems of the
early 1990s.
* European government bonds during the European currency crisis in
1992.
* US pharmaceutical and healthcare stocks during the Clinton Admini-
stration's initiative to reform healthcare in 1994.
* US dollar-denominated Latin American government bonds
during the Mexican peso crisis of 1994--1995.
Currently, the Fund is invested in some unpopular securities that we
believe offer attractive investment potential: emerging market
securities in general and, in particular, fixed-income securities
that are US dollar denominated.
Emerging Markets Begin to
Recover
Merrill Lynch Global Allocation Fund, Inc. has invested in emerging
markets issues in varying amounts for at least the past four years.
Historically, the Fund has never had a large exposure to equities of
emerging market issuers; its emerging markets investments have
emphasized fixed-income securities, generally sovereign (government)
bonds denominated in US dollars. This continues to be the case. For
example, as of January 31, 1999, the Fund's emerging markets equity
exposure was small, with Hong Kong the largest single country
exposure at 0.8% of net assets.
Our preference for debt securities over equities of emerging markets
issuers reflects our view that they offer a return potential similar
to that of equities for a lower level of risk. In addition to high
current income, emerging markets debt securities have capital
appreciation potential, since most of our purchases are made at
prices that are below par, and in some cases far below par. The
Fund's emerging markets exposure has varied over time, with greater
allocations typically during or after periods of price weakness.
Conversely, we use periods of price strength to take profits and
reduce weightings. At this time, we do not believe that it is
desirable to sell those emerging markets investments that are still
at depressed prices, although we have sold some of our profitable
holdings.
We think that it is important to note that securities of emerging
market issuers are not all the same. While some investors appear to
have indiscriminately lumped together securities of many issuers,
the merits and risks of emerging markets securities vary widely.
They literally span the world in terms of financial, economic,
political and cultural differences. For example, a factor as basic
as direct currency risk relative to the US dollar is completely
different in a security that is US dollar-denominated than it is in
one denominated in a local currency.
As of January 31, 1999, the Fund's largest emerging markets fixed-
income exposure was Argentina at 6.2% of net assets. We view
Argentina as attractive because of its sound currency policy (the
currency board has successfully fixed the peso to the US dollar),
responsible fiscal policies, democratic government and sound banking
system. There are also expectations that its current BB credit
rating will someday improve to investment grade. At 3.4% of net
assets, South Korea was our second-largest emerging markets fixed-
income allocation, with investments in corporate as well as
sovereign debt. Before the Asian economic and financial crises
struck, South Korean sovereign debt had an A credit rating. In the
wake of the crises, its debt was downgraded, but recently was
upgraded back to investment grade by all of the major rating
agencies. With the resulting price appreciation, the Fund took
profits and reduced its South Korean investments somewhat. As for
our South Korean corporate bond investments, they are all issued by
large, well-known, sound South Korean companies. At 2.9% of net
assets, Malaysia was the Fund's third-largest emerging markets fixed-
income exposure as of the end of January. Our Malaysian investments
are in US dollar-denominated bonds of large investment-grade
corporate issuers. Our most recent investment activities have
involved taking profits in our Malaysian holdings, since their
prices have risen well above our purchase prices.
Unfortunately, the Fund has also invested in the fixed-income
securities of several Russian issuers. The market prices of these
holdings performed very poorly in the summer and early autumn of
1998. However, prices recently began to appreciate, although they
are still substantially lower than the Fund's purchase prices. None
of our Russian investments are in default. However, the prices of
these securities, which are marked to market like all the securities
in the Fund, are very low. We believe that the depressed prices and
very high current yields offered by these holdings support the
Fund's continued investment. Also, it is important to be mindful
that Russia is now benefiting from a growing trade surplus and
industrial production has been expanding recently. All of the Fund's
Russian fixed-income investments are US dollar denominated, and most
of the holdings are Eurobonds issued by the Russian government. They
are not old Soviet-era debts which, in contrast, are not being paid
currently by the Russian government.
Merrill Lynch Global Allocation Fund, Inc., January 31, 1999
Stocks in United States
As noted previously, throughout the Fund's history, we have
emphasized investments that offer the best value for a given amount
of risk. Currently, few large-capitalization stocks in the United
States are selling at prices that represent good investment value,
in our opinion. Conversely, there are an increasing number of small-
and mid-capitalization companies in the United States that represent
attractive values. The Fund's US common stock holdings currently
emphasize these small and mid cap issues. Unfortunately, from the
perspective of 1998 investment performance, these issues have been
out of investor favor. However, when we consider the amount of
profits, cash flow and book value that many small and mid cap issues
offer per dollar of share price, we believe that they present more
attractive long-term investment opportunities than their large cap
counterparts.
Increase in Japanese Investments
After underweighting Japanese investments throughout the Fund's
history, over the past two years, we have been increasing the Fund's
Japanese equity exposure. We do not know when economic growth in
Japan will resume, nor can we pinpoint when Japanese stocks will
again provide superior returns. However, we do believe that at
current prices Japanese stocks offer many intriguing long-term
investment opportunities. We plan to discuss our Japanese
investments in more detail in our next report to shareholders.
Investments in Continental European Equities
Continental European equities represent another important area of
investment for the Fund at 10.6% of net assets spread across 13
countries as of the end of the January quarter. In past years, the
Fund has often had substantial investments in European bonds. Over
the past two years, we took profits in these investments and
virtually eliminated our holdings in European bonds. With interest
rates low, we believe that European equities offer greater return
potential than fixed-income investments. Increasing economic and
monetary integration can reduce costs and broaden markets for a wide
range of European companies. At the same time, we are cognizant that
Europe will have to meet the challenges of an aging population and
high unemployment in a number of countries in the years ahead.
However, these problems may actually allow and promote more
simulative economic policies. Furthermore, we believe that European
companies will increasingly focus on strategies that will enable
them to successfully compete in the global marketplace.
Investments in US Treasury Issues
Another significant allocation for the Fund in recent years has been
US Treasury securities. As US interest rates have fallen and new
investment opportunities became available, we reduced the Fund's US
Treasury holdings somewhat to 9.2% of net assets as of the end of
January. Some of these issues are relatively short term, with
maturities under two years. The rest are US Treasury Inflation
Indexed Notes (TIPs), which have interest rates and principal values
that are effectively indexed to the Consumer Price Index. These
securities currently have yields that represent unusually small
discounts to other Treasury issues of comparable maturities. This
means that holders of TIPs receive the majority of the
interest that is available on traditional US Treasury securities
without exposure to accelerating inflation, if it occurs. In our
view, this represents an attractive risk/return tradeoff for the
Fund.
In Conclusion
We thank you for your continued investment in Merrill Lynch Global
Allocation Fund, Inc., and we look forward to reviewing our outlook
and strategy with you again in our next report to shareholders.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
Executive Vice President
(Bryan N. Ison)
Bryan N. Ison
Senior Vice President and
Portfolio Manager
March 17, 1999
Officers and
Directors
Arthur Zeikel, President and Director
Donald Cecil, Director
Roland M. Machold, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Edward D. Zinbarg, Director
Terry K. Glenn, Executive Vice President
Bryan N. Ison, Senior Vice President and Portfolio Manager
Dennis W. Stattman, Vice President
Donald C. Burke, Vice President and Treasurer
Phillip Gillespie, Secretary
Gerald M. Richard, Treasurer and Norman R. Harvey, Senior Vice
President of Merrill Lynch Global Allocation Fund, Inc. have
recently retired. Their colleagues at Merrill Lynch Asset
Management, L.P. join the Fund's Board of Directors in wishing Mr.
Richard and Mr. Harvey well in their retirements.
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
Merrill Lynch Global Allocation Fund, Inc., January 31, 1999
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>
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* - 0.03% + 5.87% +225.65%
ML Global Allocation Fund, Inc.--Class B Shares* - 1.02 + 5.63 +194.16
ML Global Allocation Fund, Inc.--Class C Shares* - 1.03 + 5.53 + 51.98
ML Global Allocation Fund, Inc.--Class D Shares* - 0.29 + 5.73 + 57.18
US Stocks: Standard & Poor's 500 Index** +32.49 +16.86 +463.22/+200.44++
Non-US Stocks: Financial Times/Standard & Poor's--
Actuaries World Index (Ex-US)*** +11.29 + 8.46 + 63.91/+32.31++
US Bonds: ML Government Index GA05**** + 8.35 - 0.37 +121.76/+42.41++
Non-US Bonds: Salomon Brothers World Government
Bond Index (Ex-US)***** +15.16 - 0.86 +137.14/+34.92+++
<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 since inception periods are Class A & Class B Shares, from
2/03/89 to 1/31/99 and Class C & Class D Shares, from 10/21/94 to
1/31/99.
**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 1/31/99 and
10/21/94 to 1/31/99, respectively.
+++Since inception total returns are from 1/31/89 to 1/31/99 and
10/21/94 to 1/31/99, respectively.
</TABLE>
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/98 + 0.63% - 4.65%
Five Years Ended 12/31/98 + 9.56 + 8.39
Inception (2/3/89) through 12/31/98 +12.54 +11.93
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/98 - 0.42% - 3.98%
Five Years Ended 12/31/98 + 8.46 + 8.46
Inception (2/3/89) through 12/31/98 +11.40 +11.40
[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 12/31/98 - 0.42% - 1.31%
Inception (10/21/94) through 12/31/98 +10.26 +10.26
[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 12/31/98 + 0.37% - 4.90%
Inception (10/21/94) through 12/31/98 +11.13 + 9.71
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
Merrill Lynch Global Allocation Fund, Inc., January 31, 1999
Portfolio
Abbreviations
To simplify the currency denmoniations 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 Argentian Peso
CAD Canadian Dollar
CHF Swiss Franc
EUR Euro Dollar
GBP Great Britain Pound
IDR Indonesian Rupiah
JPY Japanese Yen
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 SA (ADR)++(USD) $ 11,254,989 $ 7,310,938 0.1%
2,433,900 Banco Rio de la Plata SA
(ADR)++(USD) 25,177,689 20,840,269 0.2
-------------- -------------- ------
36,432,678 28,151,207 0.3
Oil--Related 480,000 YPF Sociedad Anonima (ADR)++(USD) 10,296,490 15,300,000 0.2
Total Common Stocks in Argentina 46,729,168 43,451,207 0.5
Australia Beverages 499,379 Foster's Brewing Group Limited 916,122 1,464,559 0.0
Building 718,547 Pioneer International Limited 1,814,681 1,460,688 0.0
Materials
Foods 5,566,000 Goodman Fielder Limited 5,875,419 5,382,990 0.1
Insurance 6,423,848 HIH Insurance Limited 10,503,236 9,278,606 0.1
8,764,000 HIH Insurance Limited
(Installment Receipts)(k) 8,334,519 7,430,119 0.1
-------------- -------------- ------
18,837,755 16,708,725 0.2
Metals & 10,000,000 Normandy Mining Limited 8,030,489 8,678,960 0.1
Mining 24,900,927 Pasminco Limited 24,889,527 19,390,850 0.2
8,700,000 WMC Limited 29,191,616 26,717,004 0.3
-------------- -------------- ------
62,111,632 54,786,814 0.6
Multi-Industry 3,162,634 Lend Lease Corporation Limited 26,521,530 41,820,041 0.5
2,300,000 Pacific Dunlop Limited 5,753,464 3,972,100 0.0
-------------- -------------- ------
32,274,994 45,792,141 0.5
Resources 9,309,046 Broken Hill Proprietary
Company Limited 101,391,675 68,288,071 0.8
Tobacco 592,149 W.D. & H.O. Wills Holdings Limited 668,811 1,617,633 0.0
Total Common Stocks in Australia 223,891,089 195,501,621 2.2
Austria Banking 203,400 Bank Austria AG 6,298,337 9,001,914 0.1
Total Common Stocks in Austria 6,298,337 9,001,914 0.1
Brazil Telecommunications 530,000 Telecomunicacoes Brasileiras SA--
Telebras (ADR)++(USD) 39,394,134 33,356,875 0.4
Total Common Stocks in Brazil 39,394,134 33,356,875 0.4
Canada Beverages 1,900,000 Cott Corporation (USD) 15,484,918 6,175,000 0.0
Metals-- 1,427,400 Inco Limited (USD) 29,691,234 15,076,913 0.2
Non-Ferrous
Telecommuni- 1,165,200 Rogers Cantel Mobile
cations Communications Inc. 'B' 22,391,634 17,825,245 0.2
1,260,900 Rogers Cantel Mobile
Communications Inc. 'B'(USD) 20,941,379 19,622,756 0.2
2,893,700 Rogers Communications, Inc. 'B' 23,726,839 40,722,599 0.5
67,059,852 78,170,600 0.9
-------------- -------------- ------
Total Common Stocks in Canada 112,236,004 99,422,513 1.1
Finland Metals 738,438 Outokumpu Oyj 10,823,686 6,871,431 0.1
Paper & 2,909,250 Metsa-Serla Oyj 'B' 23,657,400 20,138,643 0.2
Forest Products 449,845 Stora Enso Oyj 'A' 3,506,504 3,859,262 0.0
1,799,671 Stora Enso Oyj 'R' 14,510,982 16,174,753 0.2
548,478 UPM-Kymmene Oyj 10,217,646 14,315,495 0.2
-------------- -------------- ------
51,892,532 54,488,153 0.6
Total Common Stocks in Finland 62,716,218 61,359,584 0.7
France Automobiles 46,568 PSA Peugeot Citroen 5,610,594 7,905,667 0.1
Banking 119,155 Banque Nationale de Paris (BNP) 5,267,865 10,810,607 0.1
149,509 Compagnie Financiere de Paribas 8,107,385 14,251,676 0.2
147,499 Societe Generale 'A' 15,148,456 26,446,335 0.3
-------------- -------------- ------
28,523,706 51,508,618 0.6
Energy & 207,624 Elf Aquitaine SA 26,815,026 22,477,358 0.3
Petroleum
Industrial 244,500 Alcatel (ADR)++(USD) 4,208,043 5,623,500 0.1
Insurance 97,630 AXA 6,394,807 14,159,029 0.1
277,598 CNP Assurances 7,729,298 7,903,807 0.1
-------------- -------------- ------
14,124,105 22,062,836 0.2
Metals--Steel 1,477,394 Usinor SA 22,060,574 18,861,151 0.2
Multi-Industry 49,657 Societe Eurafrance SA 19,457,147 29,865,905 0.3
Total Common Stocks in France 120,799,195 158,305,035 1.8
Germany Automotive 207,026 Volkswagen AG 11,732,042 16,233,878 0.2
Banking 263,857 Deutsche Bank AG 21,925,956 14,926,332 0.2
132,450 Dresdner Bank AG 7,678,657 5,410,953 0.0
108,616 HypoVereinsbank 5,184,800 7,050,325 0.1
-------------- -------------- ------
34,789,413 27,387,610 0.3
Capital Goods 369,636 Kloeckner-Werke AG 17,229,762 25,167,776 0.3
Chemicals 377,381 Bayer AG 15,239,702 14,410,678 0.2
101,451 Henkel KGaA 4,390,556 6,734,906 0.1
495,625 Hoechst AG 18,935,461 21,260,052 0.2
-------------- -------------- ------
38,565,719 42,405,636 0.5
Electrical 285,465 Siemens AG 18,655,461 20,262,802 0.2
Equipment
Engineering & 32,565 Philipp Holzmann AG 12,268,030 4,323,707 0.0
Construction
Metals--Steel 148,815 Thyssen AG 32,698,586 25,162,414 0.3
Utilities 385,848 VEBA AG 25,707,381 22,943,880 0.3
Total Common Stocks in Germany 191,646,394 183,887,703 2.1
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., January 31, 1999
<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>
Hong Kong Banking 900,737 HSBC Holdings PLC $ 14,386,653 $ 22,493,723 0.2%
Multi-Industry 7,059,500 Hutchison Whampoa Limited 44,936,689 50,109,376 0.6
Total Common Stocks in Hong Kong 59,323,342 72,603,099 0.8
Hungary Oil & 302,914 MOL Magyar Olaj-es Gazipari Rt. 8,160,139 8,398,291 0.1
Gas Producers (GDR)++++(USD)
Total Common Stocks in Hungary 8,160,139 8,398,291 0.1
Indonesia Paper & Pulp 2,184,800 Asia Pacific Resources
International Holdings Ltd. 'A' 8,320,430 955,850 0.0
553,765 Asia Pulp & Paper Company
Ltd. (ADR)++(USD) 6,368,297 4,014,796 0.1
-------------- -------------- ------
14,688,727 4,970,646 0.1
Tobacco 19,327,000 PT Hanjaya Mandala Sampoerna Tbk 28,087,780 12,377,966 0.1
Total Common Stocks in Indonesia 42,776,507 17,348,612 0.2
Ireland Building & 367,018 CRH PLC (GBP) 4,012,326 5,997,034 0.1
Construction
Total Common Stocks in Ireland 4,012,326 5,997,034 0.1
Italy Multi- 30,971,990 Montedison SpA 23,376,406 31,456,578 0.4
Industry
Telecommuni- 6,511,641 Telecom Italia SpA 27,017,500 43,966,991 0.5
cations
Total Common Stocks in Italy 50,393,906 75,423,569 0.9
Japan Automobiles & 3,282,000 Suzuki Motor Corporation 30,510,247 35,619,917 0.4
Equipment
Beverages 1,570,000 Chukyo Coca-Cola Bottling Co., Ltd. 16,445,371 17,187,909 0.2
663,000 Hokkaido Coca-Cola Bottling Co., Ltd. 8,836,164 7,754,386 0.1
691,000 Kinki Coca-Cola Bottling Co., Ltd. 10,472,103 9,056,450 0.1
1,243,000 Mikuni Coca-Cola Bottling Co., Ltd. 17,391,669 28,755,332 0.3
1,426,400 Sanyo Coca-Cola Bottling Co., Ltd. 17,532,122 26,251,256 0.3
-------------- -------------- ------
70,677,429 89,005,333 1.0
Capital Goods 12,900,000 Kawasaki Heavy Industries Ltd. 35,297,925 28,067,595 0.3
7,875,000 Mitsubishi Heavy Industries, Ltd. 44,268,610 31,898,220 0.4
-------------- -------------- ------
79,566,535 59,965,815 0.7
Chemicals 34,000 Shin-Etsu Chemical Co., Ltd. 657,132 827,485 0.0
Consumer 50,000 Amway Japan Ltd. (Premium
Products Exchangeable Participating
Shares)(USD) 721,750 346,875 0.0
Electrical 1,124,000 Chudenko Corporation 30,032,358 22,425,869 0.3
Construction 1,386,000 Kinden Corporation 21,348,708 19,106,966 0.2
-------------- -------------- ------
51,381,066 41,532,835 0.5
Electrical 788,000 Murata Manufacturing Co., Ltd. 25,168,052 36,526,660 0.4
Equipment
Electronics 1,299,000 Hitachi Ltd. 9,381,584 9,328,044 0.1
Financial 9,387,000 Daiwa Securities Co. Ltd. 46,956,803 34,551,393 0.4
Services 879,000 The Nomura Securities Co., Ltd. 11,893,928 7,665,170 0.1
1,720,000 Wako Securities Co., Ltd. 4,377,152 2,041,280 0.0
-------------- -------------- ------
63,227,883 44,257,843 0.5
Industrial 28,000 Miura Co., Ltd. 466,635 381,906 0.0
Insurance 743,000 The Chiyoda Fire & Marine
Insurance Company,Limited 2,796,009 2,472,833 0.0
2,897,000 The Dai-Tokyo Fire and Marine
Insurance Co., Ltd. 17,990,037 9,791,202 0.1
125,000 The Dowa Fire & Marine
Insurance Co., Ltd. 441,340 477,296 0.0
3,743,000 The Fuji Fire and Marine Insurance
Company, Limited 13,980,452 7,113,889 0.1
4,865,000 The Koa Fire & Marine Insurance
Co., Ltd. 24,748,402 15,731,338 0.2
765,000 Mitsui Marine & Fire Insurance
Company, Ltd. 5,730,161 3,947,368 0.0
3,508,000 The Nichido Fire & Marine
Insurance Co., Ltd. 20,622,267 17,618,438 0.2
4,816,000 The Nippon Fire & Marine
Insurance Co., Ltd. 20,479,413 16,525,490 0.2
999,000 The Nisshin Fire and Marine
Insurance Company,Limited 2,688,731 2,903,870 0.0
7,315,000 The Sumitomo Marine & Fire
Insurance Co., Ltd. 46,067,731 43,281,046 0.5
2,713,000 The Tokio Marine & Fire
Insurance Co. Ltd. 28,580,732 30,797,730 0.4
5,000,000 The Yasuda Fire & Marine
Insurance Co. Ltd. 25,976,040 25,455,796 0.3
-------------- -------------- ------
210,101,315 176,116,296 2.0
Office 1,612,000 Canon, Inc. 23,455,745 34,865,669 0.4
Equipment
Packaging & 1,103,000 Toyo Seikan Kaisha, Ltd. 25,118,395 20,868,593 0.3
Containers
Pharmaceuticals 1,261,000 Sankyo Company, Ltd. 28,124,373 26,352,167 0.3
384,000 Taisho Pharmaceutical Company, Ltd. 7,984,458 10,765,738 0.1
-------------- -------------- ------
36,108,831 37,117,905 0.4
Restaurants 647,000 Mos Food Service, Inc. 12,121,005 7,678,535 0.1
618,000 Ohsho Food Service 10,180,663 6,882,611 0.1
-------------- -------------- ------
22,301,668 14,561,146 0.2
Retail Stores 460,000 Ito-Yokado Co., Ltd. 21,319,319 28,918,129 0.4
100,000 Sangetsu Co., Ltd. 3,160,832 1,616,787 0.0
-------------- -------------- ------
24,480,151 30,534,916 0.4
Total Common Stocks in Japan 673,324,418 631,857,238 7.3
Mexico Foods 700,000 Grupo Industrial Maseca, SA de
CV (ADR)++(USD) 7,969,925 8,531,250 0.2
Multi-Industry 433,800 Grupo Carso, SA de CV (ADR)++(USD) 3,832,850 2,476,391 0.0
Telecommunications 433,800 Carso Global Telecom (ADR)++(USD) 2,060,550 3,394,398 0.0
Total Common Stocks in Mexico 13,863,325 14,402,039 0.2
Netherlands Chemicals 511,804 Akzo Nobel NV 15,945,293 20,443,990 0.2
225,570 European Vinyls Corporation
International NV 8,625,195 1,791,838 0.0
-------------- -------------- ------
24,570,488 22,235,828 0.2
Electronics 319,466 Koninklijke (Royal) Philips
Distribution Electronics NV 18,100,712 23,201,921 0.3
Insurance 382,530 ING Groep NV 6,488,268 22,269,076 0.2
Packaging 1,459,566 Buhrmann NV 30,706,655 24,016,575 0.3
Steel 161,800 Ispat International NV 4,382,262 1,230,191 0.0
799,183 Ispat International NV
(NY Registered Shares)(USD) 13,831,820 6,043,821 0.1
-------------- -------------- ------
18,214,082 7,274,012 0.1
Total Common Stocks
in the Netherlands 98,080,205 98,997,412 1.1
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., January 31, 1999
<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>
New Natural Gas 1,227,104 Natural Gas Corporation
Zealand Suppliers Holdings Limited $ 867,270 $ 1,287,594 0.0%
Total Common Stocks in New Zealand 867,270 1,287,594 0.0
Norway Banking 4,785,400 Christiania Bank Og Kreditkasse 10,697,335 20,959,347 0.2
2,434,000 Den Norske Bank ASA 7,189,721 10,402,124 0.1
-------------- -------------- ------
17,887,056 31,361,471 0.3
Computer 668,518 Merkantildata ASA 8,071,807 8,074,210 0.1
Software
Oil & Gas 781,330 Saga Petroleum ASA 11,845,630 7,414,572 0.1
Producers
Total Common Stocks in Norway 37,804,493 46,850,253 0.5
Philip- Banking 2,000,000 East-West Banking Corp. 20,000,000 19,500,000 0.3
pines
Multi-Industry 6,335,520 Ayala Corporation 1,948,253 2,023,732 0.0
Total Common Stocks
in the Philippines 21,948,253 21,523,732 0.3
Portugal Banking 796,372 Banco Comercial Portugues, SA (BCP)
(Registered Shares) 11,879,677 24,978,902 0.3
Banking-- 50 Banco Portugues do Atlantico (BPA) 1,244 953 0.0
International
Total Common Stocks in Portugal 11,880,921 24,979,855 0.3
Russia Telecommuni- 1,611,800 PLD Telekom Inc. (USD) 10,028,238 3,122,863 0.0
cations 18,700 PLD Telekom Inc. (Warrants)(a)(USD) 30,855 5,610 0.0
149,000 PLD Telekom Inc. (Warrants)(a)(USD) 111,750 37,250 0.0
Total Common Stocks in Russia 10,170,843 3,165,723 0.0
South Metals--Steel 716,660 Pohang Iron & Steel Company Ltd. 28,695,627 44,299,843 0.5
Korea
Telecommuni- 2,980 SK Telecom Co. Ltd. 1,016,559 2,281,798 0.0
cations 1,036,785 SK Telecom Co. Ltd. (ADR)++(USD) 5,226,630 10,562,243 0.2
-------------- -------------- ------
6,243,189 12,844,041 0.2
Total Common Stocks in South Korea 34,938,816 57,143,884 0.7
Spain Insurance 66,778 Corporacion Mapfre 1,272,758 1,502,711 0.0
Total Common Stocks in Spain 1,272,758 1,502,711 0.0
Sweden Appliances 937,679 Electrolux AB 'B' 10,152,244 14,557,618 0.2
Automobiles & 43,916 Scania AB (Warrants)(a) 60,444 68,744 0.0
Equipment 391,430 Volvo AB 'B' 12,386,419 10,672,442 0.1
-------------- -------------- ------
12,446,863 10,741,186 0.1
Industrial 119,420 SKF AB 'A' 2,217,257 1,501,599 0.0
Insurance 1,022,258 Skandia Forsakrings AB 7,716,720 16,657,698 0.2
Metals--Steel 901,522 Avesta Sheffield AB 7,672,265 2,926,494 0.1
Multi-Industry 192,784 Svedala Industri AB 2,531,671 2,918,796 0.0
Paper & Forest 411,853 Mo och Domsjo AB (MoDo) 'B' 10,072,522 10,753,687 0.1
Products
Total Common Stocks in Sweden 52,809,542 60,057,078 0.7
Switzer- Banking 20,222 Banque Cantonale de Geneve (BCG) 6,737,471 3,988,841 0.0
land 89,227 Credit Suisse Group (Registered
Shares) 10,117,486 14,205,919 0.2
-------------- -------------- ------
16,854,957 18,194,760 0.2
Banking & 51,616 UBS AG 10,538,909 16,690,204 0.2
Financial
Pharmaceuticals 8,212 Novartis AG (Registered Shares) 12,794,237 15,365,320 0.2
Total Common Stocks in Switzerland 40,188,103 50,250,284 0.6
Thailand Holding 1,373,300 BEC World Public Company
Companies Limited 'Foreign' 8,876,272 7,220,060 0.1
Total Common Stocks in Thailand 8,876,272 7,220,060 0.1
United Banking 874,699 Barclays PLC 13,450,733 19,535,457 0.2
Kingdom 1,286,880 National Westminster Bank PLC 22,066,945 23,584,588 0.3
-------------- -------------- ------
35,517,678 43,120,045 0.5
Building & 325,351 Jarvis PLC 3,797,606 3,232,463 0.0
Construction
Food & Beverage 1,256,839 Allied Domecq PLC 9,162,332 9,680,071 0.1
672,142 Bass PLC 9,822,359 9,051,090 0.1
-------------- -------------- ------
18,984,691 18,731,161 0.2
Holding 8,595,618 BTR PLC 35,874,337 15,350,850 0.2
Companies
Insurance 718,942 Allied Zurich AG 9,828,117 11,068,561 0.1
1,758,447 Royal & Sun Alliance
Insurance Group PLC 17,511,089 13,341,274 0.2
-------------- -------------- ------
27,339,206 24,409,835 0.3
Manufacturing-- 1,270,861 Lucas Varity PLC 3,986,954 6,052,323 0.1
Automotive
Supplies
Retail--Food 1,610,493 Safeway PLC 9,038,358 7,206,948 0.1
Retail Stores 301,675 Signet Group PLC (ADR)++(USD) 461,861 5,675,261 0.0
Steel 3,909,076 British Steel PLC 9,053,760 8,586,061 0.1
Telecommuni- 568,677 Cable & Wireless PLC 4,292,301 8,213,487 0.1
cations
Total Common Stocks in the
United Kingdom 148,346,752 140,578,434 1.6
United Aerospace & 9,565 Raytheon Company (Class A) 307,416 533,249 0.0
States Defense
Apparel 700,000 Fruit of the Loom, Inc. (Class A) 18,572,062 10,150,000 0.1
Banking 195,100 Banco Santander Puerto Rico 4,194,650 4,109,294 0.1
465,000 Bank One Corporation 7,980,784 24,354,375 0.3
259,000 Banknorth Group, Inc. 1,865,422 7,543,375 0.1
2,760,939 Golden State Bancorp Inc. 27,171,636 51,595,048 0.6
2,440,239 Golden State Bancorp Inc.
(Warrants)(a) 4,603,013 10,294,758 0.1
770,194 Golden State Bancorp Inc.
(Warrants)(a) 0 8,712,820 0.1
1,400,000 KeyCorp 20,571,401 44,625,000 0.5
765,800 Mellon Bank Corporation 15,383,225 51,308,600 0.6
265,900 Oriental Financial Group Inc. 3,509,880 8,608,513 0.1
1,520,000 Republic New York Corporation 33,998,213 55,670,000 0.6
-------------- -------------- ------
119,278,224 266,821,783 3.1
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., January 31, 1999
<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 Building 500,000 Chicago Bridge & Iron Company NV
States Products (NY Registered Shares) $ 8,322,525 $ 5,687,500 0.1%
(continued) 567,892 Flowserve Corporation 14,089,137 9,547,684 0.1
-------------- -------------- ------
22,411,662 15,235,184 0.2
Business Data 621,500 Imation Corp. 9,905,939 9,672,094 0.1
Processing
Business Data 2,000,000 Information Resources, Inc. 19,613,837 17,250,000 0.2
Systems
Chemicals 200,000 The Geon Company 3,796,275 4,800,000 0.1
Commercial 1,000,000 Cendant Corporation 15,284,061 21,750,000 0.2
Services
Computer 1,300,000 FileNET Corporation 5,900,936 13,162,500 0.2
Software 300,000 Hyperion Solutions Corporation 5,400,575 5,606,250 0.1
2,400,000 Inprise Corporation 33,535,053 12,300,000 0.1
300,000 PLATINUM technology
International, Inc. 3,985,707 3,975,000 0.0
-------------- -------------- ------
48,822,271 35,043,750 0.4
Computers & 2,000,000 Iomega Corporation 10,010,893 14,250,000 0.2
Technology 750,000 Komag, Incorporated 12,619,584 8,250,000 0.1
1,100,000 Silicon Graphics, Inc. 16,560,378 22,825,000 0.2
-------------- -------------- ------
39,190,855 45,325,000 0.5
Construction & 200,000 Hovnanian Enterprises, Inc. (Class A) 1,750,602 1,762,500 0.0
Housing
Construction 500,000 TJ International, Inc. 8,846,801 12,062,500 0.1
Products
Consumer-- 90,770 Ascent Entertainment Group, Inc. 631,090 1,089,240 0.0
Miscellaneous
Electronics 2,300,000 Cabletron Systems, Inc. 34,233,860 24,006,250 0.3
2,101,000 Checkpoint Systems, Inc. 23,069,827 22,323,125 0.3
1,198,400 MEMC Electronic Materials, Inc. 23,009,552 10,635,800 0.1
1,020,000 Millipore Corporation 27,923,143 31,173,750 0.4
1,656,900 Silicon Valley Group, Inc. 27,105,826 27,131,738 0.3
400,000 Tektronix, Inc. 6,399,134 10,125,000 0.1
-------------- -------------- ------
141,741,342 125,395,663 1.5
Energy & 1,079,400 Arch Coal, Inc. 28,887,320 13,762,350 0.2
Petroleum 46,400 Mitchell Energy & Development
Corp. (Class A) 675,716 545,200 0.0
174,350 Mitchell Energy & Development
Corp. (Class B) 2,755,451 2,201,169 0.0
50,000 Murphy Oil Corporation 1,688,446 1,825,000 0.0
1,500,000 Occidental Petroleum Corporation 28,058,743 22,593,750 0.3
15,000 Plains Resources Inc. 85,955 170,625 0.0
1,402,978 Santa Fe Energy Resources, Inc. 7,579,573 8,154,810 0.1
1,000,000 TransTexas Gas Corporation 16,636,708 1,937,500 0.0
200,000 USX-Marathon Group 3,413,440 4,550,000 0.1
-------------- -------------- ------
89,781,352 55,740,404 0.7
Finance 250,000 Friedman, Billings, Ramsey
Group, Inc. (Class A) 1,536,900 1,593,750 0.0
Financial 163,600 American Capital Strategies, Ltd. 2,454,000 2,863,000 0.0
Services 1,972,900 Anthracite Capital, Inc. 29,662,250 13,563,687 0.2
-------------- -------------- ------
32,116,250 16,426,687 0.2
Forest Products 394,200 Deltic Timber Corporation 11,221,223 9,411,525 0.1
Gaming 1,235,000 Scientific Games Holdings Corp. (c) 27,568,304 21,303,750 0.2
Healthcare 300,000 Advocat, Inc. 2,852,500 1,631,250 0.0
Services 100,000 Baxter International Inc. 2,110,285 7,093,750 0.1
2,004,700 Beverly Enterprises, Inc. 15,182,383 11,401,731 0.1
2,100,000 Humana Inc. 32,795,915 37,537,500 0.4
137,577 LTC Healthcare Inc. 619,051 386,935 0.0
1,900,000 Oxford Health Plans, Inc. 38,599,541 33,012,500 0.4
57,300 Sierra Health Services, Inc. 930,912 1,081,538 0.0
350,000 United HealthCare Corporation 11,247,018 15,662,500 0.2
-------------- -------------- ------
104,337,605 107,807,704 1.2
Industrial 15,000 Bar Technologies Ltd. (Warrants)(a) 838,256 825,000 0.0
Information 485,200 Billing Concepts Corp. 4,642,750 4,912,650 0.1
Processing
Insurance 2,498,000 AGCO Corporation 19,259,883 18,422,750 0.2
186,300 Horace Mann Educators Corporation 2,143,166 4,471,200 0.0
1,947,500 Risk Capital Holdings, Inc. 34,313,406 39,923,750 0.5
-------------- -------------- ------
55,716,455 62,817,700 0.7
Machinery 700,000 Weatherford International, Inc. 12,643,639 12,337,500 0.1
Metals & Mining 155,000 Alcoa Inc. 8,643,584 12,961,875 0.2
1,400,000 Battle Mountain Gold Company 8,838,297 5,162,500 0.1
1,100,000 Commonwealth Industries, Inc. 17,690,878 12,443,750 0.1
850,000 Newmont Mining Corporation 31,553,907 15,034,375 0.2
400,000 Nucor Corporation 18,363,133 19,600,000 0.2
66,400 Reynolds Metals Company 2,836,501 3,245,300 0.0
245,000 The Timken Company 4,388,743 5,313,438 0.1
-------------- -------------- ------
92,315,043 73,761,238 0.9
Metals-- 600,000 USEC Inc. 8,550,000 8,700,000 0.1
Non-Ferrous
Metals--Steel 245,000 Worthington Industries, Inc. 2,948,283 3,384,063 0.0
Multi-Industry 90,000 Loews Corporation 3,984,675 7,576,875 0.1
Natural 210,519 Freeport-McMoRan Copper
Resources & Gold, Inc. (Class B) 3,665,657 2,078,875 0.0
Oil & Gas 900,000 Rowan Companies. Inc. 12,395,215 7,931,250 0.1
Producers 600,000 Tom Brown, Inc. 10,596,357 5,700,000 0.0
300,000 Transocean Offshore Inc. 9,669,913 7,668,750 0.1
-------------- -------------- ------
32,661,485 21,300,000 0.2
Oil Field 201,900 Veritas DGC Inc. 2,715,091 2,511,131 0.0
Equipment
Oil Services 200,000 Diamond Offshore Drilling, Inc. 5,150,000 4,600,000 0.0
2,700,000 Input/Output, Inc. 24,438,350 17,212,500 0.2
2,780,000 Noble Drilling Corporation 20,861,045 37,182,500 0.4
350,000 Schlumberger Limited 19,517,500 16,668,750 0.2
300,000 Tidewater Inc. 13,101,460 6,487,500 0.1
-------------- -------------- ------
83,068,355 82,151,250 0.9
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., January 31, 1999
<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 Paper 160,200 Boise Cascade Corporation $ 4,225,000 $ 4,816,012 0.1%
States 165,000 Fort James Corporation 3,091,744 5,919,375 0.1
(concluded) 240,000 Louisiana-Pacific Corporation 5,273,733 4,815,000 0.0
-------------- -------------- ------
12,590,477 15,550,387 0.2
Pollution 500,000 Safety Kleen Corp. 5,574,398 7,562,500 0.1
Control
Publishing 300,000 The Reader's Digest
Association, Inc. (Class A) 7,030,450 8,625,000 0.1
Real Estate 2,574,465 Catellus Development Corporation 22,351,219 39,582,399 0.5
3,633,600 Security Capital Group
Incorporated (Class B) 78,475,062 45,874,200 0.5
3,453,682 Security Capital U.S. Realty 30,909,352 28,320,192 0.3
700,000 United Dominion Realty Trust, Inc. 8,034,273 6,912,500 0.1
-------------- -------------- ------
139,769,906 120,689,291 1.4
Real Estate 1,638,300 AMB Property Corporation 35,614,536 36,247,387 0.4
Investment 382,713 Apartment Investment & Management
Trusts Company (Class A) 10,766,036 14,303,898 0.2
100,000 CarrAmerica Realty Corporation 2,264,699 2,200,000 0.0
455,000 Equity Office Properties Trust 11,602,500 11,602,500 0.2
91,991 Horizon Group Properties, Inc. 551,946 413,959 0.0
3,042,500 Imperial Credit Commercial
Mortgage Investment Corp. 42,303,825 28,903,750 0.3
3,500,000 Meditrust Companies 68,896,350 54,906,250 0.6
63,400 National Health Investors, Inc. 1,621,138 1,747,463 0.0
874,400 Nationwide Health Properties, Inc. 17,980,378 18,143,800 0.2
2,039,825 Prime Retail, Inc. 21,446,145 18,358,425 0.2
400,000 Taubman Centers, Inc. 3,512,161 5,200,000 0.1
920,000 Walden Residential Properties,
Inc. (Warrants)(a) 1,125,068 920,000 0.0
-------------- -------------- ------
217,684,782 192,947,432 2.2
Retail 206,500 Coinstar, Inc. 311,636 2,942,625 0.0
850,000 Heilig-Meyers Company 11,224,247 5,578,125 0.1
-------------- -------------- ------
11,535,883 8,520,750 0.1
Retail-- 1,000,000 Ugly Duckling Corporation 13,010,625 4,625,000 0.1
Automotive
Retail Stores 1,110,000 Filene's Basement Corporation 10,092,619 2,636,250 0.1
300,000 J. Baker, Inc. 5,134,145 1,771,875 0.0
700,000 Toys 'R' Us, Inc. 15,851,134 10,500,000 0.1
-------------- -------------- ------
31,077,898 14,908,125 0.2
Savings Banks 572,886 Sovereign Bancorp, Inc. 1,552,137 7,268,491 0.1
Semiconductors 2,885,500 Cypress Semiconductor Corporation 22,983,735 28,855,000 0.3
Telecommuni- 300,000 Allen Telecom Inc. 3,338,218 2,025,000 0.0
cations 8,143,458 CAI Wireless Systems, Inc. 1,560,093 9,161,390 0.1
485,300 CellNet Data Systems, Inc. 3,506,438 3,943,062 0.1
120,363 CellNet Data Systems, Inc.
(Warrants)(a) 13,716,570 932,813 0.0
2,770,200 General Communication, Inc.
(Class A) 18,631,175 13,158,450 0.2
2,500,000 Glenayre Technologies, Inc. 25,609,813 12,500,000 0.1
137,500 Leap Wireless International, Inc. 653,125 790,625 0.0
800,000 QUALCOMM Incorporated 40,357,662 52,600,000 0.6
47,000 United USN Inc. (Class A)
(Warrants)(a) 5,840,131 470 0.0
14,113 United USN Inc. (Warrants)(a) 1,084,937 141 0.0
526,600 Western Wireless Corporation
(Class A) 5,914,750 13,724,513 0.2
18,315 Wireless One, Inc. (Warrants)(a) 18,315 183 0.0
-------------- -------------- ------
120,231,227 108,836,647 1.3
Textiles 2,600,000 Burlington Industries, Inc. 34,175,185 17,225,000 0.2
Tobacco 1,875,700 DIMON Incorporated 29,253,130 12,426,512 0.1
Transportation 500,000 J.B. Hunt Transport Services, Inc. 7,721,406 12,875,000 0.1
450,000 Union Pacific Corporation 19,534,654 23,146,875 0.3
-------------- -------------- ------
27,256,060 36,021,875 0.4
Utilities-- 47,570 BayCorp Holdings, Ltd. 2,549,753 220,011 0.0
Electric & Gas 4,105,623 Citizens Utilities Company (Class B) 35,740,872 32,075,180 0.4
4,037,285 El Paso Electric Company 21,195,746 32,802,941 0.4
1,590,000 Entergy Corporation 42,223,912 46,805,625 0.5
1,127,900 Houston Industries Incorporated 22,955,631 34,259,962 0.4
1,500,000 Niagara Mohawk Power Corporation 23,789,306 22,968,750 0.3
1,117,500 Potomac Electric Power Company 26,018,509 26,051,719 0.3
523,800 Unicom Corporation 12,074,658 18,660,375 0.2
-------------- -------------- ------
186,548,387 213,844,563 2.5
Total Common Stocks in the
United States 1,880,738,040 1,859,437,638 21.3
Total Investments in
Common Stocks 4,003,486,770 3,983,310,992 45.7
Equity Closed-End Funds
Austria Financial 320,000 The Austria Fund (USD) 2,642,432 3,180,000 0.0
Services
Total Equity Closed-End Funds
in Austria 2,642,432 3,180,000 0.0
Indonesia Financial 25,600 Jakarta Growth Fund (USD) 158,080 57,600 0.0
Services
Total Equity Closed-End Funds
in Indonesia 158,080 57,600 0.0
Ireland Financial 150,000 Irish Investment Fund (USD) 1,086,041 3,206,250 0.1
Services
Total Equity Closed-End Funds
in Ireland 1,086,041 3,206,250 0.1
Italy Financial 150,000 Italy Fund (USD) 1,198,520 2,240,625 0.0
Services
Total Equity Closed-End Funds
in Italy 1,198,520 2,240,625 0.0
South Financial 125,000 Fidelity Advisor Korea Fund (USD) 1,088,750 734,375 0.0
Korea Services 200,000 Korea Equity Fund (USD) 1,369,598 775,000 0.0
1,400,528 Korea Fund (USD) 19,847,163 13,217,483 0.2
200,000 Korean Investment Fund (USD) 1,561,000 900,000 0.0
Total Equity Closed-End Funds
in South Korea 23,866,511 15,626,858 0.2
Total Investments in
Equity Closed-End Funds 28,951,584 24,311,333 0.3
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., January 31, 1999
<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>
Australia Publishing 600,000 The News Corporation Limited
(ADR)++(USD) $ 10,451,056 $ 16,800,000 0.2%
Total Preferred Stocks in Australia 10,451,056 16,800,000 0.2
Germany Chemicals 138,305 Henkel KGaA 5,886,677 9,495,385 0.1
Machinery & 157,130 Jungheinrich AG 3,186,845 1,943,591 0.0
Equipment
Medical Equipment 31,335 Fresenius AG 6,199,809 5,771,219 0.1
Multi-Industry 450,000 RWE AG 8,725,424 14,043,150 0.2
Total Preferred Stocks in Germany 23,998,755 31,253,345 0.4
Norway Financial 175,000 A/S Eksportfinans (8.70%)(USD) 4,377,500 4,900,000 0.1
Services
Total Preferred Stocks in Norway 4,377,500 4,900,000 0.1
Portugal Banking 181,400 BCP International Bank
(8% Convertible)(USD) 13,480,528 21,790,675 0.2
Total Preferred Stocks in Portugal 13,480,528 21,790,675 0.2
Spain Banking 188,100 Santander Overseas Bank
(8% Convertible, Series D)(USD) 4,568,425 4,831,819 0.0
Total Preferred Stocks in Spain 4,568,425 4,831,819 0.0
United Banking 140,000 California Federal Bank
States (9.125%, Series A) 3,485,500 3,692,500 0.0
Cable 1,000,000 Diva Systems Corp.
Television (Convertible, Series C) 8,410,000 5,000,000 0.1
1,000,000 Diva Systems Corp.
(Convertible, Series D) 11,440,000 5,000,000 0.1
-------------- -------------- ------
19,850,000 10,000,000 0.2
Natural 150,000 Cyprus Amax Minerals Co.
Resources (Convertible, Series A) 9,188,313 5,081,250 0.1
Freeport-McMoRan Copper & Gold Inc.:
219,000 (3.50% Convertible-Gold, Series B) 7,703,330 3,723,000 0.0
348,700 (5% Convertible, Series A) 7,918,834 5,535,612 0.1
-------------- -------------- ------
24,810,477 14,339,862 0.2
Publishing 198,500 Reader's Digest Association,
Inc. (Trust Automatic
Common Exchange Securities)
(Convertible) 4,652,344 5,570,406 0.1
Railroads 40,000 Union Pacific Capital Trust
(6.25% Convertible) 1,793,600 1,990,000 0.0
Real Estate 476,800 Apartment Investment &
Investment Management Co. (9.375%, Series G) 11,751,900 10,728,000 0.1
Trusts 298,746 Bradley Real Estate Inc.
(8.40% Convertible, Series A) 6,852,856 6,983,188 0.1
97,300 Carramerica Realty Corp.
(8.55%, Series C) 2,398,445 2,164,925 0.0
400,000 Crown American Realty Trust
(11%, Series A) 20,000,000 19,525,000 0.2
139,200 First Union CV PFA
(8.40% Convertible, Series A) 3,480,000 2,801,400 0.0
350,000 National Health Investors, Inc.
(8.50% Convertible) 8,750,000 8,837,500 0.1
717,500 Prime Retail, Inc. (10.50%) 16,366,161 17,623,594 0.2
Walden Residential Properties, Inc.:
50,000 (9.16% Convertible, Series B) 1,418,750 1,162,500 0.0
1,078,000 (9.20% Convertible, Series S) 26,269,636 23,446,500 0.3
-------------- -------------- ------
97,287,748 93,272,607 1.0
Utilities 77,600 Citizens Utilities Trust
(5% Convertible) 3,398,931 3,142,800 0.0
Total Preferred Stocks
in the United States 155,278,600 132,008,175 1.5
Total Investments
in Preferred Stocks 212,154,864 211,584,014 2.4
Currency Face
Denomination Amount Fixed-Income Securities
Argentina Banking USD 45,000,000 Banco Rio de la Plata SA, 8.75%
due 12/15/2003 36,900,950 41,400,000 0.5
Food/ USD 23,500,000 Mastellone Hermanos SA, 11.75%
Dairy due 4/01/2008 23,687,500 19,270,000 0.2
Products
Government City of Buenos Aires:
Obliga- ARS 36,550,000 10.50% due 5/28/2004 31,996,453 27,240,374 0.3
tions USD 38,000,000 11.25% due 4/11/2007 37,715,000 33,440,000 0.4
USD 14,229,000 11.25% due 4/11/2007
(Regulation S) 13,888,779 12,521,520 0.1
Republic of Argentina:
USD 131,271,000 6.187% due 3/31/2005 (d)(l)(n) 96,814,548 104,688,622 1.2
USD 85,000,000 11.375% due 1/30/2017 82,988,125 77,881,250 0.9
USD 185,750,000 9.75% due 9/19/2027 141,356,855 152,779,375 1.8
USD 30,000,000 Par 'L' Bonds, 5.75% due
3/31/2023 (l) 18,786,154 20,850,000 0.2
USD 80,000,000 Series L, 6.437% due
3/31/2023 (l) 55,087,021 54,400,000 0.6
-------------- -------------- ------
478,632,935 483,801,141 5.5
Total Fixed-Income Securities
in Argentina 539,221,385 544,471,141 6.2
Brazil Banking Banco Nacional de Desenvolvimiento
Economico e Social:
USD 7,500,000 9% due 9/24/2007 6,675,000 4,350,000 0.0
USD 61,100,000 15.224% due 6/16/2008 39,616,937 41,242,500 0.5
-------------- -------------- ------
46,291,937 45,592,500 0.5
Government Republic of Brazil:
Obliga- USD 35,000,000 Exit Bonds, 6% due 9/15/2013 (l) 20,187,780 21,000,000 0.2
tions USD 10,000,000 Par 'L' Bonds, 5.50% due
4/15/2024 (d)(l) 6,100,000 5,437,500 0.1
-------------- -------------- ------
26,287,780 26,437,500 0.3
Indust- USD 9,500,000 Companhia Vale Do Rio Doce,
rial 10% due 4/02/2004 8,265,000 8,265,000 0.1
USD 13,000,000 Globo Comunicacoes e Participacoes
SA, 10.625% due 12/05/2008 12,954,500 6,110,000 0.1
-------------- -------------- ------
21,219,500 14,375,000 0.2
Utilities USD 32,250,000 Espirito Santo-Escelsa,
10% due 7/15/2007 31,726,875 17,415,000 0.2
Total Fixed-Income Securities
in Brazil 125,526,092 103,820,000 1.2
Canada Cable/ CAD 7,545,000 Rogers Cablesystem Inc., 9.65%
Telecom- due 1/15/2014 4,397,424 5,383,932 0.1
munica- CAD 3,000,000 Rogers Communications, Inc.,
tions 7.50% due 9/01/1999
(Convertible Bonds) 2,041,006 2,071,192 0.0
-------------- -------------- ------
6,438,430 7,455,124 0.1
Indust- USD 17,100,000 Ainsworth Lumber Company,
rial 12.50% due 7/15/2007+++ 16,668,015 17,100,000 0.2
--Services
Paper & CAD 2,000,000 MacMillan Bloedel Ltd., 5% due
Forest 5/01/2007(Convertible Bonds) 1,024,416 1,099,338 0.0
Products
Real CAD 16,501,370 First Place Tower, Inc.,
Estate 10.92% due 12/15/2015
(Convertible Bonds)(e) 26,874,771 29,505,761 0.3
Total Fixed-Income Securities
in Canada 51,005,632 55,160,223 0.6
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., January 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Currency
Denomina- Face Percent of
COUNTRY Industries tion Amount Fixed-Income Securities Cost Value Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
Cayman Multi- USD 50,000,000 Beta Finance Corp., 0.20%
Islands Industry due 5/27/2000 $ 51,191,648 $ 50,170,000 0.6%
Total Fixed-Income Securities
in the Cayman Islands 51,191,648 50,170,000 0.6
Chile Utilities-- Empresa Electricidad del Norte:
Electric USD 28,500,000 10.50% due 6/15/2005 28,625,000 17,100,000 0.2
USD 11,800,000 10.50% due 6/15/2005
(Regulation S) 8,904,750 7,080,000 0.1
Total Fixed-Income Securities
in Chile 37,529,750 24,180,000 0.3
China Multi- USD 18,300,000 Shanghai Industrial
Industry Investment Treasury Co., 1%
due 2/24/2003 (Convertible Bonds) 12,667,385 13,816,500 0.2
USD 4,450,000 Shanghai Investment Holdings,
1% due 6/12/2002
(Convertible Bonds) 4,103,654 3,571,125 0.0
-------------- -------------- ------
16,771,039 17,387,625 0.2
Utilities USD 55,250,000 Huaneng Power International PLC,
--Electric 1.75% due 5/21/2004
(Convertible Bonds) 45,890,393 46,410,000 0.5
Total Fixed-Income Securities
in China 62,661,432 63,797,625 0.7
France Insurance EUR 77,059 Finaxa, 3% due 1/01/2007
(Convertible Bonds) 9,985,472 12,286,241 0.1
Real EUR 164,800,000 Societe Fonciere Lyonnaise SA,
Estate 4% due 10/31/2004 (Convertible Bonds) 28,280,170 33,460,553 0.4
Total Fixed-Income Securities
in France 38,265,642 45,746,794 0.5
Germany Elec- USD 1,000,000 Siemens AG, 8% due 6/24/2002 1,027,467 1,071,250 0.0
trical
Equipment
Financial USD 5,875,000 Veba International Finance
Services (with Warrants), 6% due
4/06/2000 (a) 2,965,841 5,875,000 0.1
Total Fixed-Income Securities
in Germany 3,993,308 6,946,250 0.1
Hong Multi- USD 17,250,000 First Pacific Capital Ltd., 2% due
Kong Industry 3/27/2002 (Convertible Bonds) 16,927,221 15,180,000 0.2
USD 16,000,000 Hutchison Delta Finance,
7% due 11/08/2001
(Convertible Bonds) 16,640,000 16,800,000 0.2
Hutchison Whampoa Limited:
USD 49,250,000 7.45% due 8/01/2017 41,025,000 42,108,750 0.5
USD 24,400,000 7.50% due 8/01/2027 19,671,062 20,496,000 0.2
-------------- -------------- ------
94,263,283 94,584,750 1.1
Utilities USD 21,750,000 Cathay International Ltd., 13%
--Infra- due 4/15/2008 21,618,750 6,090,000 0.0
structure
Total Fixed-Income Securities
in Hong Kong 115,882,033 100,674,750 1.1
Indonesia Paper & USD 7,650,000 APP Finance VII Mauritius,
Forest 3.50% due 4/30/2003 6,196,500 3,805,875 0.1
Products (Convertible Bonds)
USD 35,000,000 APP Global Finance V Ltd.,
2% due 7/25/2000
(Convertible Bonds) 35,135,500 27,475,000 0.3
USD 3,965,000 PT Indah Kiat Pulp & Paper,
8.875% due 11/01/2000 3,300,862 2,577,250 0.0
Total Fixed-Income Securities
in Indonesia 44,632,862 33,858,125 0.4
Japan Banking JPY 1,990,000,000 Asahi Bank, Ltd., 0.50% due
8/01/2007(Convertible Bonds) 11,572,219 17,584,494 0.2
JPY 8,991,000,000 Fuji International Finance Trust,
0.25% due 2/01/2002 (Convertible
Preference Shares) 57,009,671 31,315,402 0.4
USD 23,250,000 MBL International Finance (Bermuda),
3% due 11/30/2002
(Convertible Bonds) 22,298,437 23,947,500 0.3
JPY 5,410,000,000 Sumitomo Bank International
Finance NV, 0.75% due 5/31/2001
(Convertible Bonds) 44,571,881 54,318,670 0.6
-------------- -------------- ------
135,452,208 127,166,066 1.5
Beverages JPY 1,711,000,000 Kinki Coca-Cola Bottling Co.,
Ltd., #1, 0.85% due 12/30/2003
(Convertible Bonds) 15,008,695 15,818,068 0.2
JPY 1,706,000,000 Sanyo Coca-Cola Bottling Co.,
Ltd., #1, 0.90% due
6/30/2003 (Convertible Bonds) 15,066,042 20,994,892 0.2
JPY 582,000,000 Shikoku Coca-Cola Bottling Co.,
Ltd., #1, 2.40% due 3/29/2002
(Convertible Bonds) 5,406,026 6,356,553 0.1
-------------- -------------- ------
35,480,763 43,169,513 0.5
Chemicals Shin-Etsu Chemical Co., Ltd.
(Convertible Bonds):
JPY 148,000,000 #5, 1.30% due 3/31/1999 1,577,446 2,125,559 0.0
JPY 301,000,000 #6, 0.40% due 9/30/2005 2,987,802 3,908,755 0.0
USD 4,700,000 Shin-Etsu Chemical Co., Ltd.
(with Warrants), 3.375%
due 8/08/2000 (a) 3,274,060 4,488,500 0.1
-------------- -------------- ------
7,839,308 10,522,814 0.1
Elec- JPY 1,339,000,000 Matsushita Electric Works, Ltd.,
trical #9, 1% due 11/30/2005
Equipment (Convertible Bonds) 13,252,580 12,494,109 0.1
Elec- JPY 650,000,000 Matsushita Electric Industrial
tronics Company, Ltd., #5, 1.30% due
3/29/2002 (Convertible Bonds) 6,133,347 7,155,143 0.1
Financial JPY 862,000,000 Kokusai Securities Co., Ltd.,
Services 1.25% due 9/30/2013
(Convertible Bonds) 7,747,314 7,894,995 0.1
Indus- JPY 1,492,000,000 Fuji Heavy Indstries, #4, 0.90%
trial due 9/30/2003 (Convertible Bonds) 13,672,391 16,423,805 0.2
JPY 923,000,000 Toyoda Automatic Loom Works, #2,
0.35% due 9/30/2003
(Convertible Bonds) 8,689,380 8,588,631 0.1
-------------- -------------- ------
22,361,771 25,012,436 0.3
Insur- JPY 456,000,000 Mitsui Marine & Fire Insurance
ance Company, Ltd., #3, 0.70% due
3/31/2003 (Convertible Bonds) 3,786,983 3,886,275 0.0
JPY 117,000,000 Nichido Fire & Marine Insurance
Co., Ltd., #5, 1% due 3/31/2003
(Convertible Bonds) 1,109,381 996,130 0.0
Nisshin Fire and Marine Insurance
Company, Limited (Convertible Bonds):
JPY 900,000,000 #1, 0.65% due 3/31/2004 7,132,646 6,803,406 0.1
JPY 1,626,000,000 #2, 0.75% due 3/31/2006 12,682,239 12,165,635 0.1
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., January 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Currency
Denomina- Face Percent of
COUNTRY Industries tion Amount Fixed-Income Securities Cost Value Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
Japan Insurance Sumitomo Marine & Fire Insurance
(con- (concluded) Co., Ltd. (Convertible Bonds):
cluded) JPY 300,000,000 #3, 1.10% due 3/29/2002 $ 2,522,005 $ 2,902,477 0.0%
JPY 1,527,000,000 #4, 1.20% due 3/31/2004 13,104,977 14,773,607 0.2
JPY 588,000,000 Yasuda Fire & Marine Insurance
Co. Ltd., #3, 0.60% due 3/30/2001
(Convertible Bonds) 4,903,719 4,996,078 0.1
-------------- -------------- ------
45,241,950 46,523,608 0.5
Total Fixed-Income Securities
in Japan 273,509,241 279,938,684 3.2
Malaysia Oil-- Petroliam Nasional Berhad:
Related USD 24,950,000 7.125% due 8/15/2005 16,615,125 21,550,562 0.2
USD 74,125,000 7.75% due 8/15/2015 40,801,875 52,628,750 0.6
USD 117,464,000 7.625% due 10/15/2026 76,021,344 83,399,440 1.0
-------------- -------------- ------
133,438,344 157,578,752 1.8
Tele- Telekom Malaysia Berhad:
communi- USD 3,000,000 4% due 10/03/2004
cations (Convertible Bonds) 2,523,750 2,220,000 0.0
USD 62,350,000 4% due 10/03/2004
(Convertible Bonds)
(Regulation S) 52,446,837 46,139,000 0.5
USD 5,250,000 7.875% due 8/01/2025 4,213,125 3,806,250 0.1
USD 61,825,000 7.875% due 8/01/2025
(Regulation S) 42,609,110 44,823,125 0.5
-------------- -------------- ------
101,792,822 96,988,375 1.1
Total Fixed-Income Securities
in Malaysia 235,231,166 254,567,127 2.9
Mexico Oil-- Petroleos Mexicanos:
Related USD 61,500,000 9.25% due 3/30/2018
(Regulation S) 54,948,750 47,355,000 0.5
USD 45,150,000 8.625% due 12/01/2023 25,007,000 33,862,500 0.4
Total Fixed-Income Securities
in Mexico 79,955,750 81,217,500 0.9
New Govern- NZD 15,000,000 New Zealand Index Linked Notes,
Zealand ment Series 216, 4.50% due 2/14/2016 8,418,821 8,434,717 0.1
Obligations
Total Fixed-Income Securities
in New Zealand 8,418,821 8,434,717 0.1
Philip- Multi- AC International Finance
pines Industry (Convertible Bonds):
USD 26,750,000 0% due 12/08/2000 (b) 22,113,484 22,336,250 0.2
USD 4,750,000 0.50% due 7/30/2002 4,373,252 4,702,500 0.1
Total Fixed-Income Securities
in the Philippines 26,486,736 27,038,750 0.3
Russia Govern- USD 64,400,000 City of St. Petersburg, 9.50% due
ment 6/18/2002 22,912,562 16,100,000 0.2
Obliga- Russian Federation Bonds:
tions USD 13,800,000 9.25% due 11/27/2001
(Regulation S) 7,349,645 5,244,000 0.1
USD 116,300,000 8.75% due 7/24/2005 26,747,198 29,656,500 0.3
USD 142,750,000 12.75% due 6/24/2028 131,353,237 45,680,000 0.5
USD 31,900,000 12.75% due 6/24/2028
(Regulation S) 16,836,300 10,208,000 0.1
-------------- -------------- ------
205,198,942 106,888,500 1.2
Oil & Gas USD 13,250,000 Lukinter Finance, 3.50%
Producers due 5/06/2002 (Convertible Bonds) 11,016,687 4,902,500 0.1
Tele- PLD Telekom Inc. (i):
communi- USD 74,500,000 14% due 6/01/2004 74,500,000 40,975,000 0.5
cations USD 18,700,000 9% due 6/01/2006
(Convertible Bonds) 18,756,250 9,350,000 0.1
-------------- -------------- ------
93,256,250 50,325,000 0.6
Utilities USD 56,850,000 Mosenergo Finance BV, 8.375%
due 10/09/2002 28,102,613 10,517,250 0.1
Total Fixed-Income Securities
in Russia 337,574,492 172,633,250 2.0
Singapore Multi- USD 11,290,000 Far East Livingston Shipyards,
Industry 1.50% due 5/02/2001
(Convertible Bonds) 9,273,312 9,878,750 0.1
Keppel Corporation Limited
(Redeemable Cumulative
Convertible Preference Shares):
USD 47,500,000 2% due 8/12/2002 47,492,500 46,075,000 0.5
USD 5,000,000 2% due 8/12/2002 (Regulation S) 4,599,690 4,850,000 0.1
-------------- -------------- ------
61,365,502 60,803,750 0.7
Tele- USD 38,250,000 Fullerton Global Corp., 0% due
communi- 4/02/2003(Convertible Bonds)(b) 35,544,153 35,526,600 0.4
cations
Total Fixed-Income Securities
in Singapore 96,909,655 96,330,350 1.1
South Insurance USD 36,300,000 LibLife International, 6.50% due
Africa 9/30/2004 (Convertible Bonds) 37,208,125 32,942,250 0.4
Total Fixed-Income Securities
in South Africa 37,208,125 32,942,250 0.4
South Banking Export-Import Bank of Korea:
Korea USD 4,000,000 6.50% due 2/10/2002 2,780,000 3,680,000 0.0
USD 21,000,000 Series D, 6.50% due 11/15/2006 16,459,400 19,005,000 0.2
Koram Bank Ltd. (Convertible Bonds):
USD 1,500,000 0.25% due 8/26/2007 1,447,500 1,245,000 0.0
USD 5,750,000 0.25% due 8/26/2007 (Regulation S) 5,291,426 4,772,500 0.1
Korea Development Bank:
USD 7,500,000 7.125% due 9/17/2001 6,374,100 7,327,800 0.1
USD 10,000,000 6.625% due 11/21/2003 8,047,500 9,426,300 0.1
-------------- -------------- ------
40,399,926 45,456,600 0.5
Elec- Samsung Electronics Co.
tronics (Convertible Bonds):
USD 7,000,000 0.25% due 12/31/2006
(Regulation S) 5,676,375 8,330,000 0.1
USD 1,500,000 0% due 12/31/2007 (b) 1,548,018 1,485,000 0.0
USD 36,000,000 0% due 12/31/2007
(Regulation S)(b) 33,204,532 35,640,000 0.4
-------------- -------------- ------
40,428,925 45,455,000 0.5
Energy Ssangyong Oil Refining Co.
Related (Convertible Bonds):
USD 9,755,000 3% due 12/31/2004 7,206,837 5,560,350 0.1
USD 16,535,000 3.75% due 12/31/2008 17,448,950 16,535,000 0.2
-------------- -------------- ------
24,655,787 22,095,350 0.3
Machinery CHF 10,000,000 Medison Co., 0.25% due 3/06/2002
& Equipment (Convertible Bonds) 6,433,041 7,537,865 0.1
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., January 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Currency
Denomina- Face Percent of
COUNTRY Industries tion Amount Fixed-Income Securities Cost Value Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
South Metals-- Pohang Iron & Steel Company Ltd.:
Korea Steel USD 6,485,000 7.375% due 5/15/2005 $ 4,474,650 $ 5,860,819 0.1%
(concluded) USD 5,000,000 7.125% due 11/01/2006 3,800,000 4,356,250 0.0
-------------- -------------- ------
8,274,650 10,217,069 0.1
Multi- CHF 5,250,000 Daewood Corporation, 0.125%
Industry due 12/31/2001 (Convertible Bonds) 3,642,719 3,217,682 0.0
Tele- Korea Telecom:
communi- USD 3,350,000 7.50% due 6/01/2006 2,202,625 3,049,270 0.0
cations USD 19,000,000 7.625% due 4/15/2007 15,407,100 17,907,500 0.2
USD 40,000,000 SK Telecom Co. Ltd., 7.75%
due 4/29/2004 31,591,662 37,600,000 0.5
-------------- -------------- ------
49,201,387 58,556,770 0.7
Utilities-- Korea Electric Power Corp.:
Electric USD 40,750,000 5% due 8/01/2001
(Convertible Bonds) 38,392,275 38,712,500 0.4
USD 9,250,000 8% due 7/01/2002 8,044,570 9,111,250 0.1
USD 10,600,000 7% due 10/01/2002 9,179,140 9,964,000 0.1
USD 45,000,000 6.375% due 12/01/2003 34,280,000 40,893,750 0.5
USD 5,000,000 6% due 12/01/2026 3,786,500 4,525,000 0.1
USD 3,300,000 7% due 2/01/2027 2,450,250 3,019,500 0.0
-------------- -------------- ------
96,132,735 106,226,000 1.2
Total Fixed-Income Securities
in South Korea 269,169,170 298,762,336 3.4
Thailand Metals USD 44,000,000 NSM Steel Inc., 12% due 2/01/2006 40,139,219 7,920,000 0.1
--Steel
Total Fixed-Income Securities
in Thailand 40,139,219 7,920,000 0.1
Turkey Tele- USD 37,000,000 Cellco Finance NV, 15% due 8/01/2005 37,000,000 34,965,000 0.4
communi-
cations
Total Fixed-Income Securities
in Turkey 37,000,000 34,965,000 0.4
United Financial GBP 11,600,000 Liberty International Holdings PLC,
Kingdom Services 5.50% due 4/30/2009
(Convertible Bonds) 14,179,895 19,001,896 0.2
Tele- USD 29,200,000 International Cabletel, Inc.,
communi- Series B, 0/11.50% due
cations 2/01/2006 (b) 23,573,206 25,112,000 0.3
USD 10,000,000 Millicom International Cellular,
0/13.50% due 6/01/2006 (b) 7,308,564 7,250,000 0.1
GBP 14,250,000 NTL Incorporated, 0/10.75%
due 4/01/2008 (b) 12,677,644 15,912,918 0.2
-------------- -------------- ------
43,559,414 48,274,918 0.6
Total Fixed-Income Securities
in the United Kingdom 57,739,309 67,276,814 0.8
United Airlines USD 15,000,000 Trans World Airlines, 11.375%
States due 3/01/2006 15,000,000 8,100,000 0.1
Banking USD 14,250,000 Ocwen Federal Bank FSB, 12%
due 6/15/2005 14,250,000 12,967,500 0.1
Bio- USD 7,200,000 Cetus Corporation, 5.25% due
technology 5/21/2002 (Convertible Bonds) 5,220,250 6,984,000 0.1
Chemicals USD 9,000,000 Philipp Brothers Chemical,
9.875% due 6/01/2008 9,000,000 8,685,000 0.1
Financial USD 4,500,000 Hawthorne Financial Corp., 12.50%
Services due 12/31/2004 4,500,000 4,365,000 0.1
Food & USD 15,000,000 Tom's Foods Inc., 10.50% due
Beverage 11/01/2004 15,000,000 14,175,000 0.2
Health- USD 17,450,000 American Retirement Corp.,
care 5.75% due 10/01/2002
(Convertible Bonds) 17,174,000 15,268,750 0.2
Indust- USD 8,000,000 Bar Technologies Ltd., 13.50%
rial due 4/01/2001 7,412,450 8,460,000 0.1
USD 25,000,000 CTI Holdings SA, 0/11.50% due
4/15/2008 (b) 15,433,318 9,250,000 0.1
USD 13,700,000 Camargo Correa, 8.75% due 7/22/2005 11,841,750 9,110,500 0.1
-------------- -------------- ------
34,687,518 26,820,500 0.3
Metals USD 2,442,500 Worthington Industries, Inc.
--Steel (Convertible, Series DECS), 7.25% 38,015,300 28,088,750 0.3
Oil-- USD 6,500,000 PDV America Inc., 7.75% due
Related 8/01/2000 6,540,625 6,248,125 0.1
Real USD 53,100,000 Security Capital U.S. Realty, 2%
Estate due 5/22/2003 (Convertible Bonds) 43,598,701 40,356,000 0.5
Real USD 25,500,000 Alexander Haagen Properties, Inc.,
Estate 7.25% due 12/27/2003 (Exchangeable
Investment Debentures) 25,291,250 24,543,750 0.3
Trusts USD 6,500,000 Centerpoint Properties Trust, 8.22%
due 1/15/2004 (Convertible Bonds) 6,500,000 11,602,500 0.1
USD 25,000,000 First Washington Realty, 8.25%
due 6/27/1999(Exchangeable
Debentures) 25,000,000 29,000,000 0.3
HRPT Properties Trust
(Convertible Bonds):
USD 40,000,000 7.25% due 10/01/2001 40,000,000 37,950,000 0.4
USD 15,000,000 Series A, 7.50% due 10/01/2003 15,000,000 13,950,000 0.2
USD 4,500,000 Healthcare Realty Trust, Inc.,
6.55% due 3/14/2002
(Convertible Bonds) 4,205,446 4,061,250 0.0
LTC Properties, Inc.
(Convertible Bonds):
USD 10,000,000 8.25% due 9/30/1999 10,000,000 9,975,000 0.1
USD 8,000,000 8.50% due 1/01/2001 8,000,000 7,980,000 0.1
USD 3,700,000 8.25% due 7/01/2001 3,644,500 3,589,000 0.0
USD 25,000,000 Leperq Corporate Income Fund,
8% due 3/17/2004
(Exchangeable Secured Notes) 25,000,000 24,312,500 0.3
USD 12,500,000 Liberty Property LP, 8.40% due
7/01/2001 12,500,000 14,812,500 0.2
USD 27,000,000 Malan Realty Investors, Inc.,
8.50% due 7/15/2003
(Convertible Bonds) 27,000,000 26,122,500 0.3
USD 9,415,000 Meditrust Corporation,
8.54% due 7/01/2000
(Convertible Bonds) 9,602,637 9,061,937 0.1
USD 5,000,000 Mid-Atlantic Realty Trust,
7.625% due 9/15/2003
(Convertible Bonds) 4,875,000 4,818,750 0.1
USD 22,000,000 National Health Investors, Inc.,
7.75% due 1/01/2001
(Convertible Bonds) 22,000,000 20,460,000 0.2
USD 32,800,000 Omega Healthcare Investors, Inc.,
8.50% due 2/01/2001
(Convertible Bonds) 32,846,000 34,645,000 0.4
USD 5,500,000 Sizeler Property Investors, Inc.,
8% due 7/15/2003 (Convertible Bonds) 5,505,000 5,183,750 0.1
-------------- -------------- ------
276,969,833 282,068,437 3.2
Retail USD 14,500,000 Coinstar, Inc., 0/13% due
10/01/2006 (b)(j) 13,252,229 13,050,000 0.2
Retail-- USD 3,445,000 Ugly Duckling Corporation,
Automotive 12% due 10/15/2003 3,100,500 3,100,500 0.0
Savings USD 21,400,000 FirstFed Financial Corp.,
Banks 11.75% due 10/01/2004 21,401,250 23,219,000 0.3
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., January 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Currency
Denomina- Face Percent of
COUNTRY Industries tion Amount Fixed-Income Securities Cost Value Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
United Semi- Cypress Semiconductor Corporation
States conductors (Convertible Bonds):
(concluded) USD 3,800,000 6% due 10/01/2002 $ 3,294,500 $ 3,462,750 0.0%
USD 3,600,000 6% due 10/01/2002
(Regulation S) 3,092,550 3,280,500 0.0
-------------- -------------- ------
6,387,050 6,743,250 0.0
Tele- CAI Wireless Systems, Inc.:
communi- USD 30,000,000 10.50% due 10/14/2000 30,000,000 29,400,000 0.3
cations USD 50,000,000 13% due 10/14/2000 50,000,000 49,250,000 0.6
USD 81,795,736 13% due 10/14/2004 59,437,154 15,541,190 0.2
USD 122,500,000 CS Wireless Systems Inc.,
Series B, 0/11.375% due
3/01/2006 (b)(m) 74,853,578 22,050,000 0.3
USD 120,363,000 CellNet Data Systems, Inc.,
0/14% due 10/01/2007 (b) 59,722,978 34,905,270 0.4
Centennial Communications Corp. (b):
USD 40,000,000 0/14% due 1/01/2005 23,525,832 17,200,000 0.2
USD 11,925,186 0/9% due 7/01/2006 10,770,054 6,916,608 0.1
USD 118,922,000 Geotek Communications, Inc.,
Series B, 0/15% due
7/15/2005 (b) 62,888,627 38,055,040 0.4
Heartland Wireless
Communications, Inc.:
USD 4,210,000 13% due 4/15/2003 1,178,800 799,900 0.0
USD 13,000,000 Series B, 14% due 10/15/2004 9,665,000 3,120,000 0.0
USD 53,000,000 People's Choice TV Corporation,
0/13.125% due 6/01/2004 (b)(g) 33,275,000 9,805,000 0.1
Telegroup Inc.:
USD 5,000,000 12% due 2/01/1999 5,000,000 4,962,500 0.1
USD 21,750,000 0/10.50% due 11/01/2004 (b) 19,160,587 10,875,000 0.1
USD 22,000,000 8% due 4/15/2005
(Convertible Bonds) 22,000,000 4,400,000 0.1
USN Communications, Inc.:
USD 12,500,000 17% due 2/15/1999 12,500,000 12,312,500 0.1
USD 32,032,000 Series B, 0/14.625% due
8/15/2004 (b) 20,201,944 960,960 0.0
USD 12,697,035 Series B, 0/9% due 1/13/2006 (b) 10,688,736 63,485 0.0
USD 33,000,000 United International Holdings,
Series B, 0/10.75% due
2/15/2008 (b)(f) 21,601,770 21,780,000 0.3
United USN Inc. (b):
USD 17,000,000 0/14% due 9/15/2003 (h) 12,406,754 510,000 0.0
USD 35,000,000 0/9% due 9/30/2004
(Convertible Bonds) 33,007,710 175,000 0.0
Wireless One, Inc.:
USD 12,500,000 13% due 4/15/1999 12,500,000 12,343,750 0.1
USD 44,050,000 13% due 10/15/2003 22,563,375 3,964,500 0.0
USD 34,750,000 0/13.50% due 8/01/2006 (b) 8,656,976 2,432,500 0.0
-------------- -------------- ------
615,604,875 301,823,203 3.4
Trucking USD 28,250,000 Ameritruck Distribution
Corp., 12.25% due 11/15/2005 26,444,325 1,412,500 0.0
US US Treasury Inflation Indexed Notes:
Govern- USD 135,000,000 3.375% due 1/15/2007 133,163,156 135,767,379 1.6
ment USD 30,000,000 3.625% due 1/15/2008 29,759,464 30,102,089 0.3
Obli- US Treasury Notes & Bonds (c):
gations USD 400,000,000 5.875% due 2/28/1999 398,683,594 400,328,000 4.6
USD 230,000,000 5.875% due 2/15/2000 226,233,594 232,803,700 2.7
-------------- -------------- ------
787,839,808 799,001,168 9.2
Total Fixed-Income Securities
in the United States 1,953,986,264 1,602,476,683 18.4
Venezuela Finance USD 8,443,000 CANTV Finance Ltd., 9.25%
due 2/01/2004 8,231,925 5,952,315 0.1
Total Fixed-Income Securities
in Venezuela 8,231,925 5,952,315 0.1
Total Investments in
Fixed-Income Securities 4,531,469,657 3,999,280,684 45.8
Short-Term Securities
Indonesia Certi- UBS Singapore:
ficates IDR 60,000,000,000 27% due 2/08/1999 7,523,511 6,741,573 0.1
of IDR 30,000,000,000 26% due 2/11/1999 3,797,468 3,370,787 0.0
Deposit IDR 27,000,000,000 26% due 2/16/1999 3,406,940 3,033,708 0.0
IDR 60,000,000,000 26% due 2/16/1999 7,594,937 6,741,573 0.1
IDR 50,000,000,000 27% due 2/16/1999 6,250,000 5,617,978 0.1
IDR 35,000,000,000 30% due 2/22/1999 4,216,867 3,932,584 0.1
IDR 25,000,000,000 30% due 2/26/1999 2,881,844 2,808,989 0.0
Total Short-Term Investments
in Indonesia 35,671,567 32,247,192 0.4
United Commer- USD 86,528,000 Ford Motor Credit Company,
States cial 4.83% due 2/01/1999 86,504,782 86,504,782 1.0
Paper+++++USD 100,000,000 General Electric Capital Corp.,
4.83% due 2/01/1999 99,973,167 99,973,167 1.1
Total Short-Term Investments
in the United States 186,477,949 186,477,949 2.1
Total Investments in
Short-Term Securities 222,149,516 218,725,141 2.5
Total Investments 8,998,212,391 8,437,212,164 96.7
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., January 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
OPTIONS Nominal Value Premiums Percent of
WRITTEN Covered by Options Issue Received Value Net Assets
<S> <C> <S> <C> <C> <C>
Call Options 60,000 Baxter International, Inc.,
Written expiring February 1999 at USD 65 $ (159,445) $ (397,500) 0.0%
200,000 Glenayre Technologies, Inc.,
expiring March 1999 at USD 10 (306,490) (50,000) 0.0
Total Options Written (465,935) (447,500) 0.0
Total Investments, Net of Options Written $ 8,997,746,456 8,436,764,664 96.7
===============
Foreign Time Deposits* 5,459,438 0.1
Variation Margin on Financial Futures Contracts** 2,777,089 0.0
Unrealized Appreciation on Forward Foreign Exchange Contracts--Net*** 24,810,031 0.3
Other Assets Less Liabilities 255,993,318 2.9
--------------- ------
Net Assets $ 8,725,804,540 100.0%
=============== ======
Net Asset Value: Class A--Based on net assets of $1,376,220,844 and
108,034,577 shares outstanding $ 12.74
===============
Class B--Based on net assets of $5,713,027,896 and
455,730,038 shares outstanding $ 12.54
===============
Class C--Based on net assets of $413,998,970 and
33,461,892 shares outstanding $ 12.37
===============
Class D--Based on net assets of $1,222,556,830 and
96,076,291 shares outstanding $ 12.72
===============
<FN>
(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)Floating Rate Note.
(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.
(g)Each $1,000 face amount contains one warrant of People's Choice
TV Corporation.
(h)Each $1,000 face amount contains one warrant of United USN Inc.
(i)Each $1,000 face amount contains one warrant of PLD Telekom Inc.
(j)Each $1,000 face amount contains one warrant of Coinstar, Inc.
(k)Receipts evidence payment by the Fund of 62% of the purchase
price of common stock of HIH Insurance Limited. The Fund is
obligated to pay the remaining 38%, approximately $5,344,000, over
the next year.
(l)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.
(m)Each $1,000 face amount contains 1.1 shares of common stock of
CS Wireless Systems Inc.
(n)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.
++American Depositary Receipts (ADR).
++++Global Depositary Receipts (GDR).
+++Represents a pay-in-kind security which may pay interest in
additional face.
+++++Commercial Paper is traded on a discount basis. The interest
rates shown reflect the discount rates paid at January 31, 1999.
*Foreign time deposits bear interest at 4.50% and 4.55% with both
maturing on 2/16/1999.
**Financial futures contracts purchased as of January 31, 1999 were
as follows:
Number of Expiration
Contracts Issue Exchange Date Value
1,948 Nikkei 225 OSAKA March 1999 $ 245,091,503
-------------
Total Financial Futures Contracts Purchased
(Total Contract Price--$246,316,391) $ 245,091,503
=============
Financial futures contracts sold as of January 31, 1999 were as
follows:
Number of Expiration
Contracts Issue Exchange Date Value
224 Japanese Govern-
ment Bond Tokyo March 1999 $ 248,349,499
375 Standard & Poor's
500 Index NYSE March 1999 120,140,625
200 US Treasury Bond NYSE March 1999 23,837,500
-------------
Total Financial Futures Contracts Sold
(Total Contract Price--$393,873,367) $ 392,327,624
=============
***Forward foreign exchange contracts as of January 31, 1999
were as follows:
Foreign Expiration Unrealized
Currency Sold Date Appreciation
CHF 47,000,000 March 1999 $ 649,421
EUR 47,952,746 February 1999 1,784,531
EUR 106,165,275 March 1999 2,649,397
GBP 41,000,000 February 1999 1,998,470
GBP 66,000,000 March 1999 330,950
JPY 31,000,000,000 February 1999 3,013,557
JPY 37,000,000,000 March 1999 13,618,769
NOK 122,000,000 February 1999 136,597
NOK 50,000,000 March 1999 56,636
SEK 400,000,000 March 1999 571,703
-------------
Total Unrealized Appreciation on Forward
Foreign Exchange Contracts--Net
(USD Commitment--$1,069,870,144) $ 24,810,031
=============
Merrill Lynch Global Allocation Fund, Inc., January 31, 1999
COMMON STOCK PORTFOLIO CHANGES
For the Quarter Ended January 31, 1999
Additions
Banco Santander Puerto Rico
Equity Office Properties Trust
Hyperion Solutions Corporation
*Lend Lease Corporation Limited
PLATINUM technology International, Inc.
*Panfon Hellenic Telecom Co.
*Smurfit-Stone Container Corporation
Stora Enso Oyj 'A'
The Timken Company
Worthington Industries, Inc.
Deletions
3Com Corporation
Aetna Inc.
Alcatel Alsthom Cie Generale
d'Electricite SA
Allegheny Energy, Inc.
American General Corporation
BASF AG
Boole & Babbage, Inc.
Brierley Investments Limited
Central & South West Corporation
Compania Anonima Nacional Telefonos de
Venezuela (CANTV)(ADR)
Consolidated Freightways Corporation
Cooper Industries, Inc.
E.I. du Pont de Nemours and Company
Electronic Data Systems Corporation
GIO Australia Holdings, Ltd.
General Motors Corporation
HSBC Holdings PLC
Kokusai Securities Co., Ltd.
Koninklijke Pakhoed NV
Koninklijke Ten Cate NV
Korea Electric Power Corporation
*Lend Lease Corporation Limited
M.I.M. Holdings Limited
Misys PLC
Motorola, Inc.
National Steel Corp.
Newbridge Networks Corporation
Nitto Kohki Co., Ltd.
Oracle Corporation
*Panfon Hellenic Telecom Co.
PharMerica, Inc.
Rio Tinto PLC
STMicroelectronics NV
Shell Transport & Trading Co., PLC
SmithKline Beecham PLC
*Smurfit-Stone Container Corporation
SpeedFam International, Inc.
Stone Container Corporation
Stora Kopparbergs Bergslags AB
Swatch Group AG (Registered)
Taihei Dengyo Kaisha, Ltd.
Telecom Italia Mobile SpA-RISP
Texas Utilities Company
Wilshire Real Estate Investment Trust
<FN>
*Added and deleted in the same quarter.
PORTFOLIO INFORMATION
Worldwide
Investments
As of 1/31/99
Breakdown of Stocks &
Fixed-Income Securities by Percent of
Country Net Assets
United States* 43.3%
Japan 10.5
Argentina 6.7
South Korea 4.3
Malaysia 2.9
Germany 2.6
Australia 2.4
United Kingdom 2.4
France 2.3
Russia 2.0
Hong Kong 1.9
Canada 1.7
Brazil 1.6
Netherlands 1.1
Singapore 1.1
Mexico 1.1
Indonesia* 1.0
Italy 0.9
China 0.7
Finland 0.7
Sweden 0.7
Norway 0.6
Switzerland 0.6
Cayman Islands 0.6
Philippines 0.6
Portugal 0.5
Turkey 0.4
South Africa 0.4
Chile 0.3
Thailand 0.2
Ireland 0.2
Austria 0.1
New Zealand 0.1
Hungary 0.1
Venezuela 0.1
Spain** 0.0
<FN>
*Includes investments in short-term securities.
**Holdings are less than 0.1%.
Ten Largest Holdings Percent of
(Equity Investments) Net Assets
Broken Hill Proprietary Company
Limited 0.8%
Republic New York Corporation 0.6
Meditrust Companies 0.6
QUALCOMM Incorporated 0.6
Golden State Bancorp Inc. 0.6
Mellon Bank Corporation 0.6
Hutchison Whampoa Limited 0.6
Entergy Corporation 0.5
Security Capital Group
Incorporated (Class B) 0.5
KeyCorp 0.5
Ten Largest Industries Percent of
(Equity Investments) Net Assets
Banking++ 6.3%
Insurance 3.8
Telecommunications 3.4
Utilities--Electric & Gas 2.5
Real Estate Investment Trusts 2.2
Multi-Industry 1.9
Electronics 1.6
Metals & Mining 1.5
Real Estate 1.4
Healthcare Services 1.2
<FN>
++Includes savings banks.
</TABLE>
