MERRILL LYNCH
GLOBAL
ALLOCATION
FUND, INC.
FUND LOGO
Annual Report
October 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 10/31/99
<CAPTION>
Percent of Fund's Net Assets Reference Portfolio
10/31/99 7/31/99 Percentages
<S> <C> <C> <C>
North & South American Equities 26.5%* 25.0%* 36.0%
European Equities 8.8 8.5 11.0
Pacific Basin Equities 16.9 16.6 13.0
Total Equities 52.2 50.1 60.0
US Dollar Denominated Fixed-Income Securities 29.5 33.1 24.0
US Issuers 12.1 12.1 --
Non-US Issuers 17.4 21.0 --
Non-US Dollar Denominated Fixed-Income Securities 5.4 5.3 16.0
Total Fixed-Income Securities 34.9++ 38.4++ 40.0
Cash & Cash Equivalents 12.9 11.5 --
<FN>
*Includes value of Financial Futures Contracts.
++Includes Preferred Stock.
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1999
DEAR SHAREHOLDER
Fiscal Year in Review
For the 12 months ended October 31, 1999, Merrill Lynch Global
Allocation Fund, Inc.'s Class A, Class B, Class C and Class D Shares
had total returns of +26.30%, +25.08%, +25.05% and +26.01%,
respectively. This represents a substantial outperformance relative
to the Fund's benchmark unmanaged Composite Index, which returned
+13.97% for the same period. This Composite Index is a market-
weighted index consisting of the following unmanaged indexes: the
Standard & Poor's 500 Index (US stocks), the FT/S&P Actuaries World
Index (Ex-US) (non-US stocks), the Merrill Lynch Five-Year US
Treasury Bond Index (US bonds), and the Salomon Smith Barney Non-
Dollar World Government Bond Index (non-US bonds). The +26.30% total
return of the Fund's Class A Shares for the fiscal year was in line
with the best-performing components of the Composite Index: the S&P
500 Index, which rose 25.67% for the period, and the FT/S&P
Actuaries World Index (Ex-US), which increased 26.60% during the
fiscal year, and was far above the performance of the fixed-income
components of the benchmark index. (Fund performance does not
reflect sales charges and would be lower if sales charges were
included. Complete performance information can be found on pages
4--6 of this report to shareholders.)
The primary reason for the Fund's outperformance relative to the
Composite Index was its fixed-income positions. Many of these had
experienced temporary price weakness in the prior fiscal year. The
fixed-income holdings that helped the Fund's performance fall into
three categories: Convertible securities (most notably in Asia), US
dollar-denominated bonds of non-US issuers, and US Treasury bonds.
The convertible securities were helped by strength in the equity
markets, especially in Asia. The latter two categories warrant
further discussion.
In the category of US dollar-denominated bonds of non-US issuers,
our holdings in South Korea were exceptionally profitable (including
bonds issued by the Republic of Korea, Korea Development Bank, Korea
Export-Import Bank, Korea Electric Power Corp., SK Telecom and Korea
Telecom). In addition to a high level of current income, these bonds
appreciated so significantly that we took profits and sold out of
them by fiscal year-end. Other notable outperformers in this
category include bonds of the Russian Federation as well as those
issued by the City of St. Petersburg and Mosenergo Finance BV (the
finance arm of the electric utility for the city of Moscow). For
example, the City of St. Petersburg bonds produced significant
capital gains in addition to their on-time payments of the 9.5%
coupon for a total return of +262%. Russian debt has never
represented more than a small percentage of the Fund, and because of
the extraordinary appreciation in our Russian debt investments, we
have reduced holdings to approximately 1% of net assets as of
October 31, 1999. In Malaysia, the investment-grade rated bonds of
Petroliam Nasional Berhad (Petronas), the state oil company, also
enjoyed significant appreciation during the fiscal year; we also
took profits and reduced our investment during the fiscal year.
We continue to believe that selected US dollar-denominated bonds of
non-US issuers offer attractive value at current yield spreads
relative to US Treasury securities. However, prices of many of these
securities have appreciated to levels where these spreads are less
attractive than those that prevailed during the crisis atmosphere of
a year ago. Accordingly, the Fund reduced its total position in
these investments to 17.4% of net assets on October 31, 1999, down
from approximately 22% on October 31, 1998.
The Fund's Treasury bond investments, which comprised approximately
12% of the portfolio at the beginning of the fiscal year,
outperformed most other US Treasury issues for two reasons. First,
many of our holdings had less than two years to maturity, and so
were less susceptible to price declines from the general rise in
interest rates over the course of the year. Second, we also invested
in US Treasury Inflation Protected Securities, whose principal value
is indexed to the Consumer Price Index and was therefore somewhat
insulated from most of the negative effects of the interest rate
increases.
Our non-US equity investments also aided the Fund's performance for
the fiscal year. On average, returns on non-US equities exceeded
those of US equities. Some Asian stock markets were particularly
strong, especially the Japanese stock market, whose appreciation
took many investors by surprise. The Fund benefited from beginning
the fiscal year overweighted in Japan relative to the Composite
Index and continued to have an overweight Japanese exposure at
fiscal year-end. The Fund's Japanese investments are in both
equities and convertible bonds.
One area in which the Fund's performance lagged that of the
Composite Index was the US stock market. Our value-oriented style of
investing did not keep pace with the returns of large-capitalization
growth stocks, which investors continued to favor for most of the
fiscal year. Our US stock investments earned returns that were good
in absolute terms, but their returns were lower than those of the
unmanaged S&P 500.
Investment Activities in the
October Quarter
For the quarter ended October 31, 1999, we continued the process of
taking profits in both equity and fixed-income holdings that we
began in the spring of 1999. We modestly reduced fixed-income and
equity investments while increasing cash reserves somewhat to
approximately 16% in early October. At that point, we began to take
advantage of the price declines that had occurred for equity and
fixed-income investments and put part of these cash reserves to
work. As a result, by the end of October, the Fund's asset mix was
as follows: 52.2% equities (an increase from 50.1% at the end of the
July quarter), 34.9% fixed income (down slightly from 37.5% as of
July 31), and 12.9% cash reserves (up slightly from the 11.5 level
on July 31). (See "Summary of the Fund's Asset Mix" table on page 1
of this report to shareholders.)
Shareholders should note that as of October 31, 1999, 11.5% of the
Fund's net assets were invested in convertible bonds, which tend to
perform somewhat like equities (although the degree of equity
sensitivity varies). In addition, as noted above, 17.4% of net
assets were invested in US dollar-denominated non-convertible bonds
of non-US issuers.
We actively manage the Fund's currency exposure. Over the past few
years, the Fund has been consistently overweight in US dollars as
compared to its benchmark Composite Index. The Fund remains
overweight in dollars, but we increased the Fund's exposure to
foreign currencies during the quarter.
Specifically, we increased the Fund's holdings of euros, primarily
through the purchase of short-term securities and deposits
denominated in euros. Until this quarter, the Fund had been
significantly underweight in euros (which had been the right
investment stance). We became less comfortable with the Fund's heavy
overweight US dollar position because of the United States' need for
external financing, brought about by the simultaneous booms in US
consumption and investment--combined with a very low savings rate.
We are concerned that the resulting external financing need will be
more difficult and expensive to meet as economic growth provides non-
US investors with their own domestic investment opportunities and
reduces investments in US securities motivated by a "flight to
quality." This does not imply that we are bearish on the US dollar's
prospects; rather, we are just not comfortable maintaining the
Fund's previous level of overweighting for the US currency given
macroeconomic conditions.
In Conclusion
We thank you for your investment in Merrill Lynch Global Allocation
Fund, Inc., and we look forward to serving your investment needs
throughout the Fund's new fiscal year and beyond.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Director
(Bryan N. Ison)
Bryan N. Ison
Senior Vice President and
Portfolio Manager
December 14, 1999
To reduce shareholder expenses, Merrill Lynch Global Allocation
Fund, Inc. will no longer be printing and mailing quarterly reports
to shareholders. We will continue to provide you with reports on a
semi-annual and annual basis.
Merrill Lynch Global Allocation Fund, Inc., October 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.
Total Return
Based on a $10,000
Investment
A line graph depicting the growth of an investment in the
Fund's Class A Shares & Class B Shares compared to growth of
an investment in the Financial Times/Standard & Poor's--Actuaries
World Index. Beginning and ending values are:
10/89 10/99
ML Global Allocation Fund, Inc.++--
Class A Shares* $ 9,475 $33,666
ML Global Allocation Fund, Inc.++--
Class B Shares* $10,000 $32,104
Financial Times/Standard & Poor's--
Actuaries World Index++++ $10,000 $28,750
A line graph depicting the growth of an investment in the
Fund's Class C Shares & Class D Shares compared to growth of
an investment in the Financial Times/Standard & Poor's--Actuaries
World Index. Beginning and ending values are:
10/21/94** 10/99
ML Global Allocation Fund, Inc.++--
Class C Shares* $10,000 $18,009
ML Global Allocation Fund, Inc.++--
Class D Shares* $ 9,475 $17,751
Financial Times/Standard & Poor's--
Actuaries World Index++++ $10,000 $21,353
[FN]
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commencement of operations.
++ML Global Allocation Fund, Inc. invests in a portfolio of US and
foreign issues, whose composition varies with respect to types of
securities and markets in response to changing market and economic
trends.
++++This unmanaged capitalization-weighted Index is comprised of
2,200 equities from 24 countries in 12 regions, including the United
States.
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 9/30/99 +31.01% +24.13%
Five Years Ended 9/30/99 +13.35 +12.13
Ten Years Ended 9/30/99 +13.35 +12.74
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/99 +29.71% +25.71%
Five Years Ended 9/30/99 +12.21 +12.21
Ten Years Ended 9/30/99 +12.19 +12.19
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 9/30/99 +29.74% +28.74%
Inception (10/21/94) through 9/30/99 +12.46 +12.46
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 9/30/99 +30.72% +23.85%
Inception (10/21/94) through 9/30/99 +13.36 +12.13
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
Merrill Lynch Global Allocation Fund, Inc., October 31, 1999
PERFORMANCE DATA (concluded)
<TABLE>
Recent
Performance
Results
<CAPTION>
Ten Years/
3-Month 12-Month Since Inception
As of October 31, 1999 Total Return Total Return Total Return
<S> <C> <C> <C>
ML Global Allocation Fund, Inc.--Class A Shares* +0.14% +26.30% +255.31%
ML Global Allocation Fund, Inc.--Class B Shares* -0.14 +25.08 +221.02
ML Global Allocation Fund, Inc.--Class C Shares* -0.07 +25.05 + 80.09
ML Global Allocation Fund, Inc.--Class D Shares* +0.14 +26.01 + 87.34
US Stocks: Standard & Poor's 500 Index** +2.90 +25.67 +415.25/+223.08
Non-US Stocks: Financial Times/Standard & Poor's--
Actuaries World Index (Ex-US)*** +6.20 +26.60 +89.50/+54.43
US Bonds: ML Treasury Index GA05**** +0.72 - 2.57 +94.46/+39.26
Non-US Bonds: Salomon Brothers World Government
Bond Index (Ex-US)***** +2.40 - 2.96 +138.93/+32.05
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included. Total
investment returns are based on changes in net asset values for the
periods shown, and assume reinvestment of all dividends and capital
gains distributions at net asset value on the ex-dividend date. The
Fund's ten year/since inception periods are for ten years for Class
A & Class B Shares and from 10/21/94 for Class C & Class D Shares.
**An unmanaged broad-based index comprised of common stocks. Ten
years/since inception total returns are for ten years and from
10/21/94, respectively.
***An unmanaged capitalization-weighted index comprised of 1,631
companies in 28 countries, excluding the United States. Ten
years/since inception total returns are for ten years and from
10/21/94, respectively.
****An unmanaged index designed to track the total return of the
current coupon five-year US Treasury bond. Ten years/since inception
total returns are for ten years and from 10/21/94, respectively.
*****An unmanaged market capitalization-weighted index tracking ten
government bond indexes, excluding the United States. Ten
years/since inception total returns are for ten years and from
10/21/94, respectively.
</TABLE>
PORTFOLIO INFORMATION
Worldwide
Investments
As of 10/31/99
Breakdown of Stocks &
Fixed-Income Securities by Percent of
Country Net Assets
United States* 37.6%
Japan 14.2
Argentina 4.7
Germany 3.1
Malaysia 2.8
Brazil 2.7
Australia 2.6
United Kingdom 2.6
Hong Kong 2.5
South Korea 2.1
Mexico 1.6
Canada 1.6
France 1.6
Netherlands 1.3
Indonesia 1.2
Russia 1.1
Italy 0.7
Cayman Islands 0.7
Singapore 0.6
China 0.6
Sweden 0.5
Portugal 0.4
South Africa 0.4
Finland 0.4
Bermuda 0.4
Switzerland 0.4
Chile 0.3
Norway 0.2
Austria 0.2
Thailand 0.1
New Zealand 0.1
Hungary 0.1
Spain** 0.0
Venezuela** 0.0
Ireland** 0.0
Philippines** 0.0
[FN]
*Includes investments in short-term securities.
**Holdings are less than 0.1%.
Ten Largest Holdings Percent of
(Equity Investments) Net Assets
Murata Manufacturing Co., Ltd. 1.2%
Daiwa Securities Group Inc. 1.1
Broken Hill Proprietary Company
Limited 1.0
Noble Drilling Corporation 0.8
The Sumitomo Marine & Fire
Insurance Co., Ltd. 0.8
Hutchison Whampoa Limited 0.7
Security Capital Group Incorporated
(Class B) 0.7
Suzuki Motor Corporation 0.7
Golden State Bancorp Inc. 0.7
Republic New York Corporation 0.6
Ten Largest Industries Percent of
(Equity Investments) Net Assets
Banking 5.7%
Insurance 5.6
Telecommunications 3.2
Real Estate Investment Trusts 3.0
Utilities--Electric & Gas 2.7
Financial Services 2.2
Metals & Mining 2.0
Multi-Industry 1.7
Real Estate 1.5
Electronics 1.4
Merrill Lynch Global Allocation Fund, Inc., October 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Value Percent of
COUNTRY Industries Held Common Stocks (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C>
Argentina Banking 467,900 Banco Frances SA (ADR)++ (USD) $ 10,235,313 0.2%
2,433,900 Banco Rio de la Plata SA (ADR)++ (USD) 31,336,463 0.4
--------------- ------
41,571,776 0.6
Government Obligations 11,000 Republic of Argentina (Warrants) (a) 247,500 0.0
Total Common Stocks in Argentina 41,819,276 0.6
Australia Building Materials 718,547 Pioneer International Limited 1,569,467 0.0
Foods 5,566,000 Goodman Fielder Limited 5,139,421 0.1
Insurance 15,827,044 HIH Insurance Limited 15,017,205 0.2
Metals &Mining 10,321,100 Normandy Mining Limited 7,821,247 0.1
25,900,927 Pasminco Limited 24,740,565 0.3
8,700,000 WMC Limited 37,285,276 0.5
--------------- ------
69,847,088 0.9
Multi-Industry 2,160,000 Lend Lease Corporation Limited 24,817,929 0.3
2,300,000 Pacific Dunlop Limited 3,236,854 0.1
--------------- ------
28,054,783 0.4
Resources 7,201,890 Broken Hill Proprietary Company Limited 74,327,952 1.0
Total Common Stocks in Australia 193,955,916 2.6
Austria Banking 203,400 Bank Austria AG 10,101,222 0.1
Total Common Stocks in Austria 10,101,222 0.1
Bermuda Insurance 1,450,000 Ace Limited 28,184,375 0.4
Total Common Stocks in Bermuda 28,184,375 0.4
Brazil Telecommunications 445,000 Telecomunicacoes Brasileiras SA--Telebras
(Preferred Block) (ADR)++ (USD) 34,654,375 0.5
Total Common Stocks in Brazil 34,654,375 0.5
Canada Beverages 1,900,000 Cott Corporation (USD) (f) 8,193,750 0.1
Insurance 180,500 Clarica Life Insurance Co. 2,919,997 0.1
616,000 Canada Life Financial Corporation 8,101,958 0.1
--------------- ------
11,021,955 0.2
Metals--Non-Ferrous 800,000 Inco Limited (USD) 16,200,000 0.2
Retail Stores 700,000 Hudson's Bay Company 9,516,041 0.1
Telecommunications 1,165,200 Rogers Cantel Mobile Communications
Inc. 'B' (f)(j) 33,264,274 0.5
1,260,900 Rogers Cantel Mobile Communications
Inc. 'B' (USD) (f)(j) 36,172,069 0.5
150,000 Rogers Communications, Inc. 'B' (f) 3,038,336 0.0
--------------- ------
72,474,679 1.0
Total Common Stocks in Canada 117,406,425 1.6
Finland Metals 343,705 Outokumpu Oyj 3,928,729 0.0
Paper & Forest 1,811,920 Metsa-Serla Oyj 'B' 16,390,023 0.2
Products 449,845 Stora Enso Oyj 'R' 5,907,589 0.1
142,512 UPM-Kymmene Oyj 4,491,693 0.1
--------------- ------
26,789,305 0.4
Total Common Stocks in Finland 30,718,034 0.4
France Automobiles 46,568 PSA Peugeot Citroen 8,928,692 0.1
Banking 195,135 Banque Nationale de Paris (BNP) 17,118,237 0.3
39,260 Banque Nationale de Paris (Warrants)(BNP) (a) 231,805 0.0
38,670 Societe Generale 'A' 8,409,727 0.1
--------------- ------
25,759,769 0.4
Industrial 244,500 Alcatel (ADR)++ (USD) 7,503,094 0.1
Insurance 277,598 CNP Assurances 8,166,044 0.1
Metals--Steel 525,585 Usinor SA 7,294,292 0.1
Multi-Industry 30,680 Societe Eurafrance SA 18,501,402 0.3
Oil--Related 118,632 Total Fina SA 'B' 16,015,567 0.2
Total Common Stocks in France 92,168,860 1.3
Germany Automotive 101,383 Volkswagen AG 5,986,029 0.1
Banking 161,850 Deutsche Bank AG (Registered) 11,596,701 0.2
132,450 Dresdner Bank AG (Registered) 6,783,658 0.1
164,480 HypoVereinsbank 10,782,887 0.1
--------------- ------
29,163,246 0.4
Capital Goods 364,336 Kloeckner-Werke AG (f) 30,066,693 0.4
Chemicals 178,090 Bayer AG 7,278,242 0.1
29,267 Celanese AG (f) 462,748 0.0
101,451 Henkel KGaA 5,990,044 0.1
292,665 Hoechst AG 12,867,780 0.2
--------------- ------
26,598,814 0.4
Electrical Equipment 61,450 Siemens AG 5,510,142 0.1
Engineering & 32,565 Philipp Holzmann AG (f) 4,721,364 0.0
Construction
Metals--Steel 480,042 Thyssen Krupp AG (f) 11,352,516 0.1
Utilities 221,920 Veba AG 11,983,866 0.2
Total Common Stocks in Germany 125,382,670 1.7
</TABLE>
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 Argentinean Peso
CHF Swiss Franc
EUR Euro
GBP Great Britain Pound
JPY Japanese Yen
NOK Norwegian Krone
NZD New Zealand Dollar
SEK Swedish Kroner
USD United States Dollar
Merrill Lynch Global Allocation Fund, Inc., October 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Value Percent of
COUNTRY Industries Held Common Stocks (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C>
Hong Kong Banking 2,121,658 HSBC Holdings PLC $ 25,534,181 0.4%
Multi-Industry 5,400,000 Hutchison Whampoa Limited 54,215,471 0.7
Total Common Stocks in Hong Kong 79,749,652 1.1
Hungary Oil & Gas Producers 232,571 MOL Magyar Olaj-es Gazipari
Rt. (GDR)++++ (USD)(f) 4,558,392 0.1
Total Common Stocks in Hungary 4,558,392 0.1
Indonesia Paper & Pulp 1,461,600 Asia Pacific Resources International
Holdings Ltd. 'A' (f) 1,096,200 0.0
553,765 Asia Pulp & Paper Company Ltd.
(ADR)++ (USD)(f) 3,841,765 0.1
110,753 Asia Pulp & Paper Company Ltd. (Warrants)(a) 96,930 0.0
--------------- ------
5,034,895 0.1
Tobacco 19,327,000 PT Hanjaya Mandala Sampoerna Tbk (f) 45,025,538 0.6
Total Common Stocks in Indonesia 50,060,433 0.7
Italy Multi-Industry 7,941,107 Montedison SpA 14,141,261 0.2
Oil & Gas Producers 1,678,249 ENI SpA 9,803,216 0.1
Telecommunications 5,261,641 Telecom Italia SpA (Registered) 25,815,199 0.4
Total Common Stocks in Italy 49,759,676 0.7
Japan Automobiles & 3,282,000 Suzuki Motor Corporation 49,862,727 0.7
Equipment
Banking 201,000 The Asahi Bank, Ltd. 1,785,210 0.0
Beverages 1,500,000 Chukyo Coca-Cola Bottling Co., Ltd. 17,825,628 0.3
539,104 Coca-Cola West Japan Company Limited 23,992,351 0.3
603,000 Hokkaido Coca-Cola Bottling Co., Ltd. 8,160,684 0.1
691,000 Kinki Coca-Cola Bottling Co., Ltd. 11,929,790 0.2
1,143,000 Mikuni Coca-Cola Bottling 24,118,549 0.3
--------------- ------
86,027,002 1.2
Capital Goods 12,900,000 Kawasaki Heavy Industries Ltd. 17,693,266 0.3
7,875,000 Mitsubishi Heavy Industries, Ltd. 30,892,720 0.4
--------------- ------
48,585,986 0.7
Chemicals 34,000 Shin-Etsu Chemical Co., Ltd. 1,402,263 0.0
Consumer Products 31,200 Amway Japan Limited 317,206 0.0
Electrical 1,157,000 Chudenko Corporation 20,707,481 0.3
Construction 1,386,000 Kinden Corporation 12,761,941 0.2
--------------- ------
33,469,422 0.5
Electrical Equipment 672,000 Murata Manufacturing Co., Ltd. 86,368,693 1.2
Electronics 1,299,000 Hitachi Ltd. 14,041,559 0.2
Financial Services 8,012,000 Daiwa Securities Group Inc. 85,529,982 1.1
879,000 The Nomura Securities Co., Ltd. 14,509,485 0.2
1,720,000 Wako Securities Co., Ltd. (f) 5,213,121 0.1
--------------- ------
105,252,588 1.4
Industrial 28,000 Miura Co., Ltd. 417,878 0.0
Insurance 743,000 The Chiyoda Fire & Marine Insurance
Company, Limited 2,814,933 0.0
2,897,000 The Dai-Tokyo Fire and Marine
Insurance Co., Ltd. 14,726,740 0.2
125,000 The Dowa Fire & Marine Insurance Co., Ltd. 395,645 0.0
3,743,000 The Fuji Fire and Marine Insurance
Company, Limited 8,903,356 0.1
4,865,000 The Koa Fire & Marine Insurance Co., Ltd. 19,878,093 0.3
765,000 Mitsui Marine and Fire Insurance Company, Ltd. 5,070,161 0.1
3,508,000 The Nichido Fire & Marine Insurance Co., Ltd. 21,567,504 0.3
4,816,000 The Nippon Fire & Marine Insurance Co., Ltd. 19,077,383 0.2
999,000 The Nisshin Fire and Marine Insurance
Company, Limited 2,970,362 0.0
7,315,000 The Sumitomo Marine & Fire Insurance Co., Ltd. 56,479,714 0.8
2,713,000 The Tokio Marine & Fire Insurance Co. Ltd. 35,519,326 0.5
5,000,000 The Yasuda Fire & Marine Insurance Co. Ltd. 33,857,663 0.5
--------------- ------
221,260,880 3.0
Office Equipment 1,612,000 Canon, Inc. 45,610,972 0.6
Packaging & Containers 1,103,000 Toyo Seikan Kaisha, Ltd. 24,015,058 0.3
Pharmaceuticals 1,261,000 Sankyo Company, Ltd. 35,921,446 0.5
384,000 Taisho Pharmaceutical Company, Ltd. 15,984,653 0.2
--------------- ------
51,906,099 0.7
Restaurants 647,000 Mos Food Service, Inc. 8,687,895 0.1
618,000 Ohsho Food Service 9,069,058 0.1
--------------- ------
17,756,953 0.2
Retail Stores 460,000 Ito-Yokado Co., Ltd. 36,796,470 0.5
100,000 Sangetsu Co., Ltd. 1,985,421 0.0
--------------- ------
38,781,891 0.5
Total Common Stocks in Japan 826,862,387 11.2
Mexico Foods 700,000 Grupo Industrial Maseca SA de CV (ADR)++ (USD) 4,812,500 0.1
Multi-Industry 433,800 Grupo Carso, SA de CV (ADR)++ (USD)(f) 3,561,498 0.0
Telecommunications 433,800 Carso Global Telecom (ADR)++ (USD)(f) 5,530,950 0.1
Total Common Stocks in Mexico 13,904,948 0.2
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Value Percent of
COUNTRY Industries Held Common Stocks (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C>
Netherlands Chemicals 231,430 Akzo Nobel NV $ 9,954,166 0.1%
225,570 European Vinyls Corporation
International NV (f) 2,014,362 0.0
--------------- ------
11,968,528 0.1
Foods 41,999 Koninklijke Ahold NV 1,288,425 0.0
Insurance 321,530 ING Groep NV 18,943,791 0.3
Packaging 1,509,895 Buhrmann NV 25,999,386 0.4
Real Estate 1,867,760 Security Capital U.S. Realty (USD)(f) 28,203,176 0.4
Steel 161,800 Ispat International NV 1,691,371 0.0
799,183 Ispat International NV (NY Registered
Shares)(USD) 8,291,524 0.1
--------------- ------
9,982,895 0.1
Total Common Stocks in the Netherlands 96,386,201 1.3
New Zealand Natural Gas Suppliers 227,104 Natural Gas Corporation Holdings Limited 197,575 0.0
Total Common Stocks in New Zealand 197,575 0.0
Norway Banking 2,434,000 Den Norske Bank ASA 9,424,975 0.1
Computer Software 668,518 Merkantildata ASA 5,662,664 0.1
Total Common Stocks in Norway 15,087,639 0.2
Philippines Multi-Industry 7,602,624 Ayala Corporation 1,898,283 0.0
Total Common Stocks in the Philippines 1,898,283 0.0
Portugal Banking 584,372 Banco Comercial Portugues, SA (BCP)
(Registered Shares) 16,441,345 0.2
Banking--International 250 Banco Portugues do Atlantico (BPA) (f) 963 0.0
Total Common Stocks in Portugal 16,442,308 0.2
Russia Telecommunications 74,500 PLD Telekom Inc. (Warrants) (a)(USD) 3,725 0.0
93,200 PLD Telekom Inc. (Warrants) (a)(i)(USD) 4,660 0.0
Total Common Stocks in Russia 8,385 0.0
South Korea Metals--Steel 375,000 Pohang Iron & Steel Company Ltd. 45,938,281 0.6
Telecommunications 1,884 SK Telecom Co. Ltd. 2,176,263 0.0
1,434,584 SK Telecom Co. Ltd. (ADR)++ (USD)(i) 18,739,254 0.3
--------------- ------
20,915,517 0.3
Total Common Stocks in South Korea 66,853,798 0.9
Spain Insurance 66,778 Corporacion Mapfre 1,136,542 0.0
Utilities--Electric 169,142 Endesa SA 3,381,642 0.0
Total Common Stocks in Spain 4,518,184 0.0
Sweden Appliances 370,529 Electrolux AB 'B' 7,373,711 0.1
Automobiles & Equipment 391,430 Volvo AB 'B' 10,093,298 0.1
Metals--Steel 901,522 Avesta Sheffield AB 4,255,455 0.1
Multi-Industry 192,784 Svedala Industri AB 3,392,025 0.0
Paper & Forest Products 411,853 Mo och Domsjo AB (MoDo) 'B' 12,094,215 0.2
Total Common Stocks in Sweden 37,208,704 0.5
Switzerland Banking 20,222 Banque Cantonale de Geneve (BCG) 3,924,027 0.1
Banking & Financial 23,179 UBS AG (Registered Shares) 6,739,141 0.1
Pharmaceuticals 8,924 Novartis AG (Registered Shares) 13,338,612 0.2
Total Common Stocks in Switzerland 24,001,780 0.4
Thailand Holding Companies 1,373,300 BEC World Public Company Limited 'Foreign' 8,549,727 0.1
Total Common Stocks in Thailand 8,549,727 0.1
United Banking 194,482 Barclays PLC 5,947,844 0.1
Kingdom 581,581 Lloyds TSB Group PLC 8,033,997 0.1
--------------- ------
13,981,841 0.2
Building & Construction 325,351 Jarvis PLC 1,389,985 0.0
Building Materials 855,307 Blue Circle Industries PLC 3,720,791 0.1
Diversified Companies 1,018,229 Rentokil Initial PLC 3,389,016 0.0
Financial Services 398,483 Alliance & Leicester PLC 5,808,849 0.1
Food & Beverage 756,839 Allied Domecq PLC 4,249,100 0.1
728,148 Bass PLC 7,990,767 0.1
--------------- ------
12,239,867 0.2
Foods/Food Processing 537,889 Unilever PLC 4,984,527 0.1
Holding Companies 1,349,209 Invensys PLC 6,622,435 0.1
Insurance 378,527 Allied Zurich PLC 4,567,215 0.1
620,845 CGU PLC 9,035,023 0.1
1,723,230 Royal & Sun Alliance Insurance Group PLC 11,711,457 0.1
--------------- ------
25,313,695 0.3
Mortgages 489,278 Northern Rock PLC 3,305,162 0.0
Oil--Related 1,360,327 Shell Transport & Trading Company 10,417,471 0.1
Pharmaceuticals 254,807 Glaxo Wellcome PLC 7,512,509 0.1
Publishing 760,271 Reed International PLC 4,430,616 0.1
Restaurants & 327,207 Whitbread PLC 3,572,001 0.1
Food Service
Retail--Food 1,610,493 Safeway PLC 5,049,630 0.1
Retail Stores 288,908 Marks & Spencer PLC 1,327,960 0.0
301,675 Signet Group PLC (ADR)++ (USD) 7,655,003 0.1
--------------- ------
8,982,963 0.1
Telecommunications 810,619 Cable & Wireless PLC 9,461,363 0.1
Total Common Stocks in the United Kingdom 130,182,721 1.8
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Value Percent of
COUNTRY Industries Held Common Stocks (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C>
United Aerospace & Defense 150,000 Raytheon Company (Class B) $ 4,368,750 0.1%
States
Banking 471,100 Banco Santander Puerto Rico 8,420,913 0.1
360,000 Bank One Corporation 13,522,500 0.2
259,000 Banknorth Group, Inc. 8,741,250 0.1
1,800,000 East West Bancorp, Inc. 22,050,000 0.3
2,310,939 Golden State Bancorp Inc. (f) 48,240,852 0.7
2,940,239 Golden State Bancorp Inc.
"Litigation Tracking" (Warrants) (a) 2,756,474 0.0
770,194 Golden State Bancorp Inc. (Warrants) (a) 7,942,626 0.1
1,170,000 KeyCorp 32,686,875 0.5
1,150,000 Mellon Financial Corporation 42,478,125 0.6
750,000 Republic New York Corporation 47,390,625 0.6
--------------- ------
234,230,240 3.2
Building Products 500,000 Chicago Bridge & Iron Company NV
(NY Registered Shares) 6,093,750 0.1
530,000 Flowserve Corporation 8,943,750 0.1
--------------- ------
15,037,500 0.2
Business Data 501,500 Imation Corp. (f) 15,389,781 0.2
Processing
Business Data Systems 1,797,600 Information Resources, Inc. (f)(j) 18,650,100 0.2
Coal 1,352,500 CONSOL Energy Inc. 15,722,813 0.2
Commercial Services 1,060,081 Cendant Corporation (f) 17,491,337 0.2
Computer Software 1,000,000 FileNET Corporation (f) 16,500,000 0.2
583,600 Hyperion Solutions Corporation (f) 14,188,775 0.2
2,400,000 Inprise Corporation (f) 8,925,000 0.1
--------------- ------
39,613,775 0.5
Computers & Technology 550,000 Compaq Computer Corporation 10,450,000 0.1
1,900,000 Iomega Corporation (f) 5,818,750 0.1
750,000 Komag, Incorporated (f) 1,242,188 0.0
300,000 NCR Corporation (f) 9,937,500 0.1
1,500,000 Silicon Graphics, Inc. (f) 11,625,000 0.2
--------------- ------
39,073,438 0.5
Construction & Housing 200,000 Hovnanian Enterprises, Inc. (Class A)(f) 1,275,000 0.0
Construction Products 365,000 TJ International, Inc. 11,315,000 0.1
Containers 100,200 Crown Cork & Seal Company, Inc. 2,398,538 0.0
Electronics 509,000 Benchmark Electronics, Inc. (f) 8,144,000 0.1
750,000 Cabletron Systems, Inc. (f) 12,421,875 0.2
1,800,000 Checkpoint Systems, Inc. (f)(j) 13,500,000 0.2
73,800 Intel Corporation 5,710,275 0.1
568,400 MEMC Electronic Materials, Inc. (f) 8,099,700 0.1
555,000 Millipore Corporation 17,690,625 0.2
1,669,600 Silicon Valley Group, Inc. (f)(j) 20,870,000 0.3
--------------- ------
86,436,475 1.2
Energy & Petroleum 915,000 Arch Coal, Inc. 10,236,563 0.1
2,435,800 Key Energy Services, Inc. (f) 10,961,100 0.2
46,400 Mitchell Energy & Development Corp. (Class A) 1,107,800 0.0
174,350 Mitchell Energy & Development Corp. (Class B) 4,151,709 0.1
50,000 Murphy Oil Corporation 2,803,125 0.0
1,400,000 Occidental Petroleum Corporation 31,937,500 0.4
1,402,978 Santa Fe Snyder Corporation (f) 12,100,685 0.2
530,000 USX-Marathon Group 15,436,250 0.2
--------------- ------
88,734,732 1.2
Financial Services 1,972,900 Anthracite Capital, Inc. (j) 13,440,381 0.2
741,200 Ugly Duckling Corporation (f) 6,439,175 0.1
--------------- ------
19,879,556 0.3
Foods 800,000 Tyson Foods, Inc. (Class A) 12,200,000 0.2
Forest Products 330,000 Deltic Timber Corporation 7,404,375 0.1
Gaming 1,235,000 Scientific Games Holdings Corp. (c)(f)(j) 21,458,125 0.3
Healthcare Services 3,940,200 Beverly Enterprises, Inc. (f) 15,514,538 0.2
1,900,000 Oxford Health Plans, Inc. (f) 22,325,000 0.3
1,042,600 Sierra Health Services, Inc. (f) 7,624,013 0.1
--------------- ------
45,463,551 0.6
Industrial 15,000 Bar Technologies Ltd. (Warrants) (a)(i) 300,000 0.0
Information Processing 380,000 Billing Concepts Corp. (f) 1,900,000 0.0
350,000 Xerox Corporation 9,800,000 0.1
--------------- ------
11,700,000 0.1
Insurance 590,000 Aetna Inc. 29,647,500 0.4
325,000 CIGNA Corporation 24,293,750 0.3
186,300 Horace Mann Educators Corporation 5,251,331 0.1
1,947,500 Risk Capital Holdings, Inc. (f)(j) 25,439,219 0.3
--------------- ------
84,631,800 1.1
Machinery 1,350,000 AGCO Corporation 14,512,500 0.2
390,000 Weatherford International, Inc. (f) 13,211,250 0.2
--------------- ------
27,723,750 0.4
Metals & Mining 180,000 Alcoa Inc. 10,935,000 0.2
1,400,000 Battle Mountain Gold Company 3,762,500 0.1
612,000 Commonwealth Industries, Inc. 6,081,750 0.1
1,150,000 Newmont Mining Corporation 25,228,125 0.3
340,000 Nucor Corporation 17,637,500 0.2
800,000 The Timken Company 14,350,000 0.2
--------------- ------
77,994,875 1.1
Metals--Steel 678,700 Worthington Industries, Inc. 11,240,969 0.2
Multi-Industry 90,000 Loews Corporation 6,378,750 0.1
Natural Gas Pipelines 300,000 IMC Global Inc. 3,825,000 0.1
Natural Resources 210,519 Freeport-McMoRan Copper & Gold,
Inc. (Class B) 3,513,036 0.1
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Value Percent of
COUNTRY Industries Held Common Stocks (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C>
United Oil & Gas Producers 700,000 Rowan Companies, Inc. (f) $ 10,893,750 0.2%
States 600,000 Tom Brown, Inc. (f) 8,100,000 0.1
(concluded) 300,000 Transocean Offshore Inc. 8,156,250 0.1
--------------- ------
27,150,000 0.4
Oil Field Equipment 201,900 Veritas DGC Inc. (f) 2,839,219 0.0
Oil Services 200,000 Diamond Offshore Drilling, Inc. 6,350,000 0.1
1,568,000 Input/Output, Inc. (f) 8,232,000 0.1
2,630,000 Noble Drilling Corporation (f) 58,353,125 0.8
230,000 Schlumberger Limited 13,929,375 0.2
300,000 Tidewater Inc. 9,000,000 0.1
--------------- ------
95,864,500 1.3
Paper 620,000 Louisiana-Pacific Corporation 7,866,250 0.1
Pollution Control 1,514,000 Safety-Kleen Corp. (f) 17,316,375 0.3
Real Estate 2,394,465 Catellus Development Corporation (f) 28,134,964 0.4
3,633,600 Security Capital Group Incorporated
(Class B)(f)(j) 49,962,000 0.7
--------------- ------
78,096,964 1.1
Real Estate 1,598,300 AMB Property Corporation 31,766,213 0.4
Investment 27,500 Apartment Investment & Management
Trusts Company (Class A) 1,034,688 0.0
300,000 Avalonbay Communities, Inc. 9,693,750 0.1
145,800 CarrAmerica Realty Corporation 3,244,050 0.0
337,808 CenterPoint Properties Corporation 11,020,986 0.2
500,800 Equity Office Properties Trust 11,080,200 0.2
250,000 Equity Residential Properties Trust 10,453,125 0.2
500,000 Federal Realty Investment Trust 9,093,750 0.1
3,042,500 Imperial Credit Commercial Mortgage
Investment Corp. (j) 32,897,031 0.5
4,776,100 Meditrust Companies 38,507,306 0.5
1,524,400 Nationwide Health Properties, Inc. 25,247,875 0.4
2,039,825 Prime Retail, Inc. 16,191,111 0.2
400,000 Simon Property Group, Inc. 9,225,000 0.1
700,000 United Dominion Realty Trust, Inc. 7,656,250 0.1
--------------- ------
217,111,335 3.0
Retail 800,000 Heilig-Meyers Company 3,500,000 0.1
Retail Stores 300,000 J. Baker, Inc. 1,687,500 0.0
700,000 Toys 'R' Us, Inc. (f) 9,887,500 0.1
--------------- ------
11,575,000 0.1
Savings Banks 256,500 Capitol Federal Financial 2,556,984 0.0
Telecommunications 300,000 Allen Telecom Inc. (f) 2,718,750 0.0
40,000 Centennial Communication Corporation
(Warrants) (a) 400 0.0
2,770,200 General Communication, Inc. (Class A) (f)(j) 13,331,588 0.2
700,000 Glenayre Technologies, Inc. (f) 2,078,125 0.0
1,023,977 Metromedia International Group, Inc. (f) 3,775,913 0.1
180,000 QUALCOMM Incorporated (f) 40,083,750 0.5
--------------- ------
61,988,526 0.8
Textiles 3,607,300 Burlington Industries, Inc. (f)(j) 13,301,919 0.2
Tobacco 1,875,700 DIMON Incorporated 6,564,950 0.1
Transportation 486,100 J.B. Hunt Transport Services, Inc. 6,258,538 0.1
314,900 The St. Joe Company 7,518,238 0.1
450,000 Union Pacific Corporation 25,087,500 0.3
--------------- ------
38,864,276 0.5
Utilities--Electric 2,725,000 Citizens Utilities Company (Class B) (f) 31,507,813 0.4
& Gas 3,937,285 El Paso Electric Company (f)(j) 35,927,726 0.5
1,460,000 Entergy Corporation 43,708,750 0.6
1,410,000 Niagara Mohawk Holdings Inc. (f) 22,383,750 0.3
400,000 Potomac Electric Power Company 10,975,000 0.2
1,057,900 Reliant Energy, Inc. 28,827,775 0.4
200,000 Texas Utilities Company 7,750,000 0.1
458,800 Unicom Corporation 17,577,775 0.2
--------------- ------
198,658,589 2.7
Total Common Stocks in the United States 1,706,706,153 23.2
Total Investments in Common Stocks 3,807,328,099 51.8
Equity Closed-End Funds
Austria Financial Services 320,000 The Austria Fund (USD) 2,780,000 0.1
Total Equity Closed-End Funds in Austria 2,780,000 0.1
Indonesia Financial Services 25,600 Jakarta Growth Fund (USD) (f) 83,200 0.0
Total Equity Closed-End Funds in Indonesia 83,200 0.0
Ireland Financial Services 150,000 Irish Investment Fund (USD) 2,456,250 0.0
Total Equity Closed-End Funds in Ireland 2,456,250 0.0
Italy Financial Services 150,000 Italy Fund (USD) 2,100,000 0.0
Total Equity Closed-End Funds in Italy 2,100,000 0.0
South Korea Financial Services 81,262 Fidelity Advisor Korea Fund (USD) (f) 685,648 0.0
200,000 Korea Equity Fund (USD) (f) 862,500 0.0
1,400,528 Korea Fund (USD) (f) 17,856,732 0.3
200,000 Korean Investment Fund (USD) (f) 1,312,500 0.0
Total Equity Closed-End Funds in South Korea 20,717,380 0.3
Total Investments in Equity Closed-End Funds 28,136,830 0.4
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Value Percent of
COUNTRY Industries Held Preferred Stocks (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C>
Germany Chemicals 138,305 Henkel KGaA $ 9,372,059 0.1%
Machinery & Equipment 96,465 Jungheinrich AG 1,200,952 0.0
Medical Equipment 23,235 Fresenius AG 3,795,863 0.1
Multi-Industry 450,000 RWE AG 14,277,654 0.2
Total Preferred Stocks in Germany 28,646,528 0.4
Portugal Banking 181,400 BCP International Bank (8% Convertible)(USD) 18,684,200 0.2
Total Preferred Stocks in Portugal 18,684,200 0.2
United Cable Television 1,000,000 Diva Systems Corp. (Convertible, Series C) (l) 4,000,000 0.1
States 1,000,000 Diva Systems Corp. (Convertible, Series D) (i) 4,000,000 0.1
--------------- ------
8,000,000 0.2
Natural Resources 150,000 Cyprus Amax Minerals Co. (Convertible,
Series A) 7,546,875 0.1
Freeport-McMoRan Copper & Gold Inc.:
219,000 (3.50% Convertible-Gold, Series B) 4,202,063 0.0
348,700 (5% Convertible, Series A) 5,600,994 0.1
--------------- ------
17,349,932 0.2
Railroads 40,000 Union Pacific Capital Trust
(6.25% Convertible) 1,940,000 0.0
Real Estate Investment 476,800 Apartment Investment & Management Co.
Trusts (9.375%, Series G) 9,536,000 0.1
298,746 Bradley Real Estate Inc. (8.40%
Convertible, Series A) 6,441,711 0.1
97,300 CarrAmerica Realty Corporation
(8.55%, Series C) 1,836,538 0.0
400,000 Crown American Realty Trust (11%, Series A) 16,000,000 0.2
139,200 First Union Real Estate (8.40% Convertible,
Series A) 2,801,400 0.1
1,000,000 First Washington Realty Trust, Inc. (9.75%,
Series A) 25,687,500 0.4
350,000 National Health Investors, Inc. (8.50%
Convertible) 5,643,750 0.1
717,500 Prime Retail, Inc. (10.50%) 14,439,688 0.2
Walden Residential Properties, Inc.:
50,000 (9.16% Convertible, Series B) 1,203,125 0.0
1,078,000 (9.20%, Series S) 17,113,250 0.2
--------------- ------
100,702,962 1.4
Utilities 77,600 Citizens Utilities Trust (5% Convertible) 3,889,700 0.0
Total Preferred Stocks in the United States 131,882,594 1.8
Total Investments in Preferred Stocks 179,213,322 2.4
<CAPTION>
Currency Face
Denomination Amount Fixed-Income Securities
<S> <S> <S> <C> <S> <C> <C>
Argentina Banking USD 45,000,000 Banco Rio de la Plata, 8.75% due 12/15/2003 41,287,500 0.6
Food/Dairy USD 23,500,000 Mastellone Hermanos SA, 11.75% due 4/01/2008 18,095,000 0.2
Products
Government City of Buenos Aires:
Obligations ARS 36,550,000 10.50% due 5/28/2004 27,974,178 0.4
USD 38,000,000 11.25% due 4/11/2007 (i) 31,540,000 0.4
USD 14,229,000 11.25% due 4/11/2007 (Regulation S) 12,521,520 0.2
Republic of Argentina:
USD 89,760,000 6.812% due 3/31/2005 (d)(h)(k) 79,455,552 1.1
USD 12,500,000 11.375% due 1/30/2017 11,906,250 0.1
USD 33,000,000 9.75% due 9/19/2027 27,703,500 0.4
USD 65,000,000 Series L, 6.875% due 3/31/2023 (d)(k) 49,179,000 0.7
--------------- ------
240,280,000 3.3
Total Fixed-Income Securities in Argentina 299,662,500 4.1
Brazil Banking Banco Nacional de Desenvolvimiento
Economico e Social:
USD 7,500,000 9% due 9/24/2007 6,000,000 0.1
USD 68,500,000 13.64% due 6/16/2008 (d) 59,512,800 0.8
--------------- ------
65,512,800 0.9
Government Republic of Brazil:
Obligations USD 19,257,000 14.50% due 10/15/2009 20,001,283 0.3
USD 9,500,000 10.125% due 5/15/2027 7,326,875 0.1
USD 32,666,760 Exit Bonds, 6% due 9/15/2013 (k) 19,600,056 0.2
USD 10,000,000 Par 'L' Bonds, 5.75% due 4/15/2024 (d)(k) 5,958,000 0.1
--------------- ------
52,886,214 0.7
Industrial USD 13,700,000 Camargo Correa, 8.75% due 7/22/2005 11,987,500 0.2
USD 13,000,000 Globo Comunicacoes e Participacoes,
Ltd., 10.625% due 12/05/2008 (i) 9,685,000 0.1
--------------- ------
21,672,500 0.3
Utilities USD 32,250,000 Espirito Santo-Escelsa, 10% due 7/15/2007 23,945,625 0.3
Total Fixed-Income Securities in Brazil 164,017,139 2.2
Cayman Multi-Industry USD 50,000,000 Beta Finance Corp., 0.20% due 5/27/2000 (i) 48,750,000 0.7
Islands
Total Fixed-Income Securities in the
Cayman Islands 48,750,000 0.7
Chile Utilities-- Empresa Electricidad del Norte:
Electric USD 28,500,000 10.50% due 6/15/2005 (i) 12,825,000 0.2
USD 15,800,000 10.50% due 6/15/2005 (Regulation S) 7,110,000 0.1
USD 10,000,000 7.75% due 3/15/2006 3,500,000 0.0
Total Fixed-Income Securities in Chile 23,435,000 0.3
China Utilities-- USD 42,350,000 Huaneng Power International PLC, 1.75%
Electric due 5/21/2004 (Convertible Bonds) 40,656,000 0.6
Total Fixed-Income Securities in China 40,656,000 0.6
France Real Estate EUR 20,489,148 Societe Fonciere Lyonnaise SA, 4% due
10/31/2004 (Convertible Bonds) 22,945,107 0.3
Total Fixed-Income Securities in France 22,945,107 0.3
Germany Financial EUR 20,000,000 KFW International Finance, Inc., 3.125%
Services due 7/16/2001 20,703,124 0.3
Government EUR 47,000,000 Bundes Republic Deutschland, 2.975%
Obligations due 4/06/2000 (d) 49,312,378 0.7
Total Fixed-Income Securities in Germany 70,015,502 1.0
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Currency Face Value Percent of
COUNTRY Industries Denomination Amount Fixed-Income Securities (Note 1a) Net Assets
<S> <S> <S> <C> <S> <C> <C>
Hong Kong Multi-Industry USD 17,250,000 First Pacific Capital Ltd., 2% due
3/27/2002 (Convertible Bonds) $ 16,991,250 0.2%
USD 16,000,000 Hutchison Delta Finance, 7% due 11/08/2001
(Convertible Bonds) 18,080,000 0.3
Hutchison Whampoa Limited:
USD 49,250,000 7.45% due 8/01/2017 43,093,750 0.6
USD 24,400,000 7.50% due 8/01/2027 21,045,000 0.3
Total Fixed-Income Securities in Hong Kong 99,210,000 1.4
Indonesia Paper & Forest USD 7,650,000 APP Finance VII Mauritius, 3.50% due 4/30/2003
Products (Convertible Bonds) 4,398,750 0.0
USD 34,000,000 APP Global Finance V Ltd., 2% due 7/25/2000
(Convertible Bonds)(i) 33,660,000 0.5
Total Fixed-Income Securities in Indonesia 38,058,750 0.5
Japan Banking JPY 3,381,000,000 Fuji International Finance Trust, 0.25% due
2/01/2002 (Convertible Preference Shares) 36,482,112 0.5
USD 16,500,000 MBL International Finance (Bermuda), 3% due
11/30/2002 (Convertible Bonds) 20,707,500 0.3
JPY 2,330,000,000 Sumitomo Bank International Finance NV,
0.75% due 5/31/2001(Convertible Bonds) 30,393,248 0.4
--------------- ------
87,582,860 1.2
Beverages JPY 1,711,000,000 Kinki Coca-Cola Bottling Co., Ltd., #1, 0.85%
due 12/30/2003 (Convertible Bonds) 20,513,620 0.2
JPY 582,000,000 Shikoku Coca-Cola Bottling Co., Ltd., #1,
2.40% due 3/29/2002 (Convertible Bonds) 6,028,774 0.1
--------------- ------
26,542,394 0.3
Chemicals JPY 301,000,000 Shin-Etsu Chemical Co., Ltd., #6, 0.40%
due 9/30/2005 (Convertible Bonds) 6,235,949 0.1
Electrical JPY 1,339,000,000 Matsushita Electric Works, Ltd., #9, 1%
Equipment due 11/30/2005 (Convertible Bonds) 13,600,624 0.2
Electronics JPY 650,000,000 Matsushita Electric Industrial Company,
Ltd., #5, 1.30% due 3/29/2002
(Convertible Bonds) 8,743,766 0.1
Financial JPY 862,000,000 Kokusai Securities Co., Ltd.,
Services 1.25% due 9/30/2013 (Convertible Bonds) 15,460,771 0.2
Industrial JPY 960,000,000 Fuji Heavy Industries, #4, 0.90% due 9/30/2003
(Convertible Bonds) 16,159,601 0.2
CHF 1,400,000 Nissin Kogyo Co. Ltd., 0.125% due 3/31/2003
(Convertible Bonds) 1,440,934 0.0
JPY 1,200,000,000 Toyoda Automatic Loom Works, #2, 0.35% due
9/30/2003 (Convertible Bonds) 12,879,340 0.2
--------------- ------
30,479,875 0.4
Insurance Nisshin Fire & Marine Insurance Co., Ltd.
(Convertible Bonds):
JPY 900,000,000 #1, 0.65% due 3/31/2004 8,330,136 0.1
JPY 851,000,000 #2, 0.75% due 3/31/2006 7,999,041 0.1
JPY 1,527,000,000 Sumitomo Marine & Fire Insurance Co.,
Ltd., #4, 1.20% due 3/31/2004
(Convertible Bonds) 18,673,748 0.3
--------------- ------
35,002,925 0.5
Total Fixed-Income Securities in Japan 223,649,164 3.0
Malaysia Oil--Related Petroliam Nasional Berhad:
USD 69,725,000 7.75% due 8/15/2015 (i) 60,660,750 0.8
USD 103,314,000 7.625% due 10/15/2026 86,783,760 1.2
--------------- ------
147,444,510 2.0
Telekom Malaysia Berhad:
Telecommuni- USD 45,750,000 4% due 10/03/2004 (Convertible Bonds) 37,515,000 0.5
cations USD 20,825,000 7.875% due 8/01/2025 17,805,375 0.3
--------------- ------
55,320,375 0.8
Total Fixed-Income Securities in Malaysia 202,764,885 2.8
Mexico Government USD 27,000,000 United Mexican States, 6.25% due 12/31/2019 (k) 20,233,800 0.3
Obligations
Oil--Related Petroleos Mexicanos:
USD 57,000,000 9.25% due 3/30/2018 (Regulation S) 48,592,500 0.6
USD 45,150,000 8.625% due 12/01/2023 (i) 35,442,750 0.5
--------------- ------
84,035,250 1.1
Total Fixed-Income Securities in Mexico 104,269,050 1.4
New Zealand Government NZD 15,000,000 New Zealand Index Linked Notes, Series
Obligations 216, 4.50% due 2/14/2016 7,524,028 0.1
Total Fixed-Income Securities in New Zealand 7,524,028 0.1
Russia Government USD 51,850,000 City of St. Petersburg, 9.50% due 6/18/2002 29,813,750 0.4
Obligations Russia Federation Bonds:
USD 55,000,000 8.75% due 7/24/2005 (i) 25,850,000 0.4
USD 29,900,000 12.75% due 6/24/2028 (Regulation S) 16,370,250 0.2
--------------- ------
72,034,000 1.0
Oil & Gas USD 13,250,000 Lukinter Finance, 3.50% due 5/06/2002
Producers (Convertible Bonds) 9,540,000 0.1
Utilities USD 4,700,000 Mosenergo Finance BV, 8.375% due 10/09/2002 2,914,000 0.0
Total Fixed-Income Securities in Russia 84,488,000 1.1
Singapore Industrial USD 7,250,000 Keppel Fels Energy and Infrastructure,
1.50% due 5/02/2001 (Convertible Bonds) 6,380,000 0.1
Multi-Industry Keppel Corporation Limited (Redeemable
Cumulative Convertible Preference Shares):
USD 15,200,000 2% due 8/12/2002 (i) 15,504,000 0.2
USD 1,300,000 2% due 8/12/2002 (Regulation S) 1,326,000 0.0
--------------- ------
16,830,000 0.2
Telecommuni- USD 18,400,000 Fullerton Global Corp., 0% due 4/02/2003
cations (Convertible Bonds) (b) 18,676,000 0.3
Total Fixed-Income Securities in Singapore 41,886,000 0.6
South Africa Insurance USD 35,050,000 LibLife International, 6.50% due 9/30/2004
(Convertible Bonds) 32,947,000 0.4
Total Fixed-Income Securities in South Africa 32,947,000 0.4
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Currency Face Value Percent of
COUNTRY Industries Denomination Amount Fixed-Income Securities (Note 1a) Net Assets
<S> <S> <S> <C> <S> <C> <C>
South Korea Banking Koram Bank Ltd. (Convertible Bonds):
USD 1,500,000 0.25% due 8/26/2007 (i) $ 1,485,000 0.0%
USD 5,750,000 0.25% due 8/26/2007 (Regulation S) 5,692,500 0.1
--------------- ------
7,177,500 0.1
Electronics USD 13,210,000 Samsung Electronics Co., 0% due 12/31/2007
(Regulation S) (Convertible Bonds) (b) 17,899,550 0.3
Energy Related Ssangyong Oil Refining Co.:
USD 9,755,000 3% due 12/31/2004 (Convertible Bonds) 7,316,250 0.1
USD 13,190,000 3.75% due 12/31/2008 14,443,050 0.2
--------------- ------
21,759,300 0.3
Utilities USD 17,750,000 Korea Electric Power Corp., 5% due
--Electric 8/01/2001 (Convertible Bonds) 16,995,625 0.2
Total Fixed-Income Securities in South Korea 63,831,975 0.9
Thailand Metals--Steel USD 32,822,240 NSM Steel Inc., 12% due 2/01/2006 (i) 1,641,112 0.0
Total Fixed-Income Securities in Thailand 1,641,112 0.0
United Financial GBP 12,250,000 Liberty International PLC, 5.50% due
Kingdom Services 4/30/2009 (Convertible Bonds) 20,562,066 0.3
Telecommuni- USD 26,200,000 International Cabletel, Inc., 0/11.50% Z
cations due 2/01/2006 (b) 22,794,000 0.3
GBP 14,250,000 NTL Incorporated, 0/10.75% due 4/01/2008 (b) 15,263,802 0.2
--------------- ------
38,057,802 0.5
Total Fixed-Income Securities in the
United Kingdom 58,619,868 0.8
United Airlines USD 14,000,000 Trans World Airlines, 11.375% due 3/01/2006 5,600,000 0.1
States
Financial EUR 5,000,000 General Electric Capital Corporation,
Services 3% due 2/08/2001 5,187,338 0.1
USD 3,445,000 Ugly Duckling Corporation, 12% due 10/15/2003 3,272,750 0.0
USD 3,700,000 Hawthorne Financial Corp., 12.50% due 12/31/2004 3,357,750 0.1
--------------- ------
11,817,838 0.2
Food & USD 15,000,000 Tom's Foods Inc., 10.50% due 11/01/2004 12,750,000 0.2
Beverage
Healthcare USD 17,450,000 American Retirement Corp., 5.75% due
10/01/2002 (Convertible Bonds) 10,295,500 0.1
Industrial USD 25,000,000 CTI Holdings SA, 0/11.50% due 4/15/2008 (b) 12,375,000 0.2
Metals--Steel USD 2,442,500 Worthington Industries, Inc. (Convertible,
Series DECS), 7.25% 12,212,500 0.2
Real Estate Security Capital U.S. Realty
(Convertible Bonds)(j):
USD 53,100,000 2% due 5/22/2003 (i) 39,161,250 0.5
USD 3,650,000 2.50% due 5/22/2003 (Regulation S) 2,691,875 0.0
--------------- ------
41,853,125 0.5
Real Estate USD 25,500,000 Alexander Haagen Properties, Inc., 7.25%
Investment due 12/27/2003 (Exchangeable Debentures) 24,177,188 0.3
Trusts HRPT Properties Trust (Convertible Bonds):
USD 40,000,000 7.25% due 10/01/2001 38,700,000 0.5
USD 15,000,000 7.50% due 10/01/2003 13,800,000 0.2
USD 4,500,000 Healthcare Realty Trust, Inc., 6.55% due
3/14/2002 (Convertible Bonds) 3,960,000 0.1
LTC Properties, Inc. (Convertible Bonds):
USD 8,000,000 8.50% due 1/01/2001 7,520,000 0.1
USD 3,700,000 8.25% due 7/01/2001 3,385,500 0.0
USD 25,000,000 Leperq Corporate Income Fund, 8% due 3/17/2004
(Exchangeable Secured Notes) (i) 24,015,625 0.3
USD 5,675,000 Liberty Property LP, 9% due 7/01/2001
(Convertible Bonds) 6,526,250 0.1
USD 27,000,000 Malan Realty Investors, Inc., 8.50% due
7/15/2003 (Convertible Bonds) (i) 24,840,000 0.3
USD 9,415,000 Meditrust Corporation, 8.54% due 7/01/2000
(Convertible Bonds) 9,038,400 0.1
USD 5,000,000 Mid-Atlantic Realty Trust, 7.625% due
9/15/2003 (Convertible Bonds) 5,118,750 0.1
National Health Investors, Inc.
(Convertible Bonds):
USD 22,000,000 7.75% due 1/01/2001 19,800,000 0.3
USD 4,500,000 7% due 2/01/2004 3,060,000 0.0
USD 27,800,000 Omega Healthcare Investors, Inc., 8.50%
due 2/01/2001 (Convertible Bonds) 25,854,000 0.4
USD 5,500,000 Sizeler Property Investors, Inc., 8% due
7/15/2003 (Convertible Bonds) 5,018,750 0.1
--------------- ------
214,814,463 2.9
Savings Banks USD 21,400,000 FirstFed Financial Corp., 11.75% due
10/01/2004 22,256,000 0.3
Steel USD 8,500,000 Republic Technology, 13.75% due 7/15/2009 (i)(m) 7,862,500 0.1
Telecommuni- USD 120,363,000 CellNet Data Systems, Inc., 0/14% due
cations 10/01/2007 (b) 21,665,340 0.3
Centennial Communications Corporation (b):
USD 40,000,000 0/14% due 1/01/2005 14,400,000 0.2
USD 11,925,186 0/9% due 7/01/2006 (l) 5,366,334 0.1
USD 118,922,000 Geotek Communications, Inc., 0/15% due
7/15/2005 (b)(f) 49,947,240 0.7
USD 132,057,412 Metromedia International Group, Inc.,
0/10.50% due 9/30/2007 (b)(l) 66,028,706 0.9
USD 32,032,000 USN Communications, Inc., 0/14.625%
due 8/15/2004 (b)(f)(i) 1,601,600 0.0
USD 30,000,000 United International Holdings, 0/10.75%
due 2/15/2008 (b)(e) 17,100,000 0.2
USD 17,000,000 United USN Inc., 0/14% due 9/15/2003
(b)(f)(g)(i) 850,000 0.0
--------------- ------
176,959,220 2.4
US Government USD 135,000,000 US Treasury Inflation Indexed Notes,
Obligations 3.375% due 1/15/2007 135,676,772 1.8
USD 95,000,000 US Treasury Notes, 5.875% due 2/15/2000 (c) 95,163,400 1.3
--------------- ------
230,840,172 3.1
Total Fixed-Income Securities in the
United States 759,636,318 10.3
Venezuela Finance USD 3,743,000 CANTV Finance Ltd., 9.25% due 2/01/2004 3,218,981 0.0
Total Fixed-Income Securities in Venezuela 3,218,981 0.0
Total Investments in Fixed-Income Securities 2,391,226,379 32.5
Total Long-Term Investments
(Cost--$6,173,489,997) 6,405,904,630 87.1
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Currency Face Value Percent of
COUNTRY Denomination Amount Short-Term Securities (Note 1a) Net Assets
<S> <S> <S> <C> <S> <C> <C>
United Commercial USD 20,153,000 CSW Credit Inc., 5.29% due 11/04/1999 $ 20,138,193 0.3%
States Paper** USD 30,000,000 E.I. du Pont de Nemours and Company,
5.30% due 12/03/1999 29,849,833 0.4
USD 25,000,000 Eastman Kodak Company, 5.30% due 11/23/1999 24,911,667 0.4
USD 25,696,000 General Motors Acceptance Corp.,
5.38% due 11/01/1999 25,688,320 0.4
USD 10,000,000 National Rural Utilities Cooperative
Finance Corp., 5.30% due 11/19/1999 9,970,556 0.1
USD 15,530,000 SBC Communications Inc., 5.29% due 11/24/1999 15,472,949 0.2
USD 25,000,000 Shell Oil Company, 5.27% due 11/01/1999 24,992,680 0.3
USD 15,000,000 Wal-Mart Stores, Inc., 5.30% due 11/29/1999 14,933,750 0.2
Total Investments in Short-Term Securities
(Cost--$165,957,948) 165,957,948 2.3
Total Investments (Cost--$6,339,447,945) 6,571,862,578 89.4
Foreign Time Deposits* 581,339,932 7.9
Variation Margin on Financial Futures Contracts*** 474,743 0.0
Unrealized Depreciation on Forward Foreign Exchange Contracts--Net**** (16,977,505) (0.2)
Other Assets Less Liabilities 216,463,316 2.9
--------------- ------
Net Assets $ 7,353,163,064 100.0%
=============== ======
<FN>
++American Depositary Receipts (ADR).
++++Global Depositary Receipts (GDR).
*Foreign time deposits bear interest at 4.53%, 2.56% and 4.531% and
mature on 11/02/1999, 11/05/1999 and 11/23/1999, respectively.
**Commercial Paper is traded on a discount basis. The interest rates
shown reflect the discount rates paid at October 31, 1999.
***Financial futures contracts purchased as of October 31, 1999 were
as follows:
Number of Expiration Value
Contracts Issue Exchange Date (Notes 1a & 1d)
587 Nikkei 225 OSAKA December 1999 $ 101,173,892
-------------
Total Financial Futures Contracts Purchased
(Total Contract Price--$98,865,528) $ 101,173,892
=============
Financial futures contracts sold as of October 31, 1999 were as
follows:
Number of Expiration Value
Contracts Issue Exchange Date (Notes 1a & 1d)
170 Japanese
Government Bond Tokyo March 2000 $213,486,476
230 Standard & Poor's
500 Index NYSE December 1999 79,131,500
------------
Total Financial Futures Contracts Sold
(Total Contract Price--$288,607,106) $292,617,976
============
****Forward foreign exchange contracts as of October 31, 1999 were
as follows:
Unrealized
Appreciation
Foreign Expiration (Depreciation)
Currency Sold Date (Note 1d)
CHF 40,000,000 November 1999 $ (239,007)
GBP 81,000,000 December 1999 1,550,290
JPY 44,000,000,000 November 1999 (11,691,933)
JPY 27,000,000,000 December 1999 (4,948,553)
JPY 8,000,000,000 January 2000 (1,384,529)
NOK 72,000,000 November 1999 (41,212)
SEK 260,000,000 November 1999 (222,561)
------------
Total Unrealized Depreciation on Forward
Foreign Exchange Contracts--Net
(USD Commitment--$943,831,671) $(16,977,505)
============
(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 $1,000 face amount contains one warrant of United
International Holdings.
(f)Non-income producing security.
(g)Each $1,000 face amount contains one warrant of United USN Inc.
(h)Subject to principal paydowns as result of prepayments or
refinancings of the underlying mortgage instruments. As a result,
the average life may be less than the original maturity.
(i)The security may be offered and sold to "qualified institutional
buyers" under Rule 144A of the Securities Act of 1933.
(j)Investment companies 5% or more of whose outstanding securities
are held by the Fund (such companies are defined as "Affiliated
Companies" in Section 2 (a)(3) of the Investment Company Act of
1940) are as follows:
<CAPTION>
Dividend/
Net Share/ Net Interest
Industry Affiliate Face Activity Cost Income
<S> <S> <C> <C> <C>
Financial Anthracite
Services Capital, Inc. -- -- $2,288,564
Textiles Burlington
Industries, Inc. 1,037,300 $4,393,976 ++
Electronics Checkpoint
Systems, Inc. (301,000) (3,082,090) ++
Utilities-- El Paso Electric
Electric & Gas Company (175,000) (918,750) ++
Telecommuni- General
cations Communication,
Inc. (Class A) -- -- ++
Real Estate Imperial Credit
Investment Commercial
Trusts Mortgage
Investment Corp. -- -- 3,498,875
Business Data Information
Systems Resources, Inc. (102,400) (1,633,097) ++
Insurance Risk Capital
Holdings, Inc. -- -- ++
Telecommuni- Rogers Cantel
cations Mobile
Communications
Inc. 'B' -- -- ++
Telecommuni- Rogers Cantel
cations Mobile
Communications
Inc. 'B' (USD) -- -- ++
Gaming Scientific Games
Holdings Corp. -- -- ++
Real Estate Security Capital
Group Incorpor-
ated (Class B) -- -- ++
Real Estate Security Capital U.S.
Realty (Convertible
Bonds):
2% due 5/22/2003 2,100,000 3,475,309 1,637,047
2.50% due
5/22/2003 3,650,000 2,762,652 77,367
Electronics Silicon Valley
Group, Inc. (130,400) (2,887,788) ++
++Non-income producing security.
(k)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.
(l)Restricted securities as to resale. The value of the Fund's
investment in restricted securities was approximately $75,395,000,
representing 1.0% of net assets.
Acquisition Value
Issue Date(s) Cost (Note 1a)
Centennial Communications
Corporation, 0/9% due
7/01/2006 1/13/1998 $ 11,363,317 $ 5,366,334
Diva Systems Corp. 7/17/1996--
(Convertible, Series C) 8/22/1996 8,410,000 4,000,000
Metromedia International
Group, Inc., 0/10.50%
due 9/30/2007 10/01/1999 103,473,602 66,028,706
------------ ------------
Total $123,246,919 $ 75,395,040
============ ============
(m)Each $1,000 face amount contains one warrant of Republic
Technology.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1999
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of October 31, 1999
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$6,339,447,945)
(Note 1a) $ 6,571,862,578
Foreign cash (Note 1c) 311,907,057
Foreign time deposits (Note 1c) 581,339,932
Receivables:
Securities sold $ 132,922,689
Interest 45,499,897
Dividends 8,767,708
Capital shares sold 3,213,420
Principal paydowns 600,242
Variation margin (Note 1d) 474,743 191,478,699
---------------
Prepaid registration fees and other assets (Note 1g) 7,562,823
---------------
Total assets 7,664,151,089
---------------
Liabilities: Unrealized depreciation on forward foreign exchange
contracts (Note 1d) 16,977,505
Payables:
Securities purchased 259,121,052
Capital shares redeemed 20,472,933
Investment adviser (Note 2) 4,941,711
Distributor (Note 2) 4,074,566
Forward foreign exchange contracts (Note 1d) 296,672 288,906,934
---------------
Accrued expenses and other liabilities 5,103,586
---------------
Total liabilities 310,988,025
---------------
Net Assets: Net assets $ 7,353,163,064
===============
Net Assets Class A Shares of Common Stock, $.10 par value, 450,000,000
Consist of: shares authorized $ 8,823,937
Class B Shares of Common Stock, $.10 par value, 2,000,000,000
shares authorized 30,963,659
Class C Shares of Common Stock, $.10 par value, 200,000,000
shares authorized 2,249,318
Class D Shares of Common Stock, $.10 par value, 900,000,000
shares authorized 8,326,072
Paid-in capital in excess of par 6,432,908,567
Undistributed investment income--net 105,355,140
Undistributed realized capital gains on investments and foreign
currency transactions--net 556,449,689
Unrealized appreciation on investments and foreign
currency transactions--net 208,086,682
---------------
Net assets $ 7,353,163,064
===============
Net Asset Class A--Based on net assets of $1,305,472,987 and 88,239,373
Value: shares outstanding $ 14.79
===============
Class B--Based on net assets of $4,496,036,853 and 309,636,594
shares outstanding $ 14.52
===============
Class C--Based on net assets of $322,237,973 and 22,493,181
shares outstanding $ 14.33
===============
Class D--Based on net assets of $1,229,415,251 and 83,260,724
shares outstanding $ 14.77
===============
See Notes to Financial Statements.
<CAPTION>
STATEMENT OF OPERATIONS
For the Year Ended October 31, 1999
<S> <S> <C> <C>
Investment Interest and discount earned (net of $94,511 foreign
Income withholding tax) $ 376,821,040
(Notes 1e & 1f): Dividends (net of $5,010,758 foreign withholding tax) 85,869,647
Interest and dividends from Affiliated Companies 7,501,853
Other 2,481,148
---------------
Total income 472,673,688
---------------
Expenses: Investment advisory fees (Note 2) $ 61,370,937
Account maintenance and distribution
fees--Class B (Note 2) 52,225,942
Transfer agent fees--Class B (Note 2) 9,886,119
Account maintenance and distribution
fees--Class C (Note 2) 3,728,640
Account maintenance fees--Class D (Note 2) 3,058,510
Transfer agent fees--Class A (Note 2) 2,216,469
Custodian fees 1,971,143
Transfer agent fees--Class D (Note 2) 1,968,741
Printing and shareholder reports 963,910
Transfer agent fees--Class C (Note 2) 751,006
Accounting services (Note 2) 582,004
Professional fees 541,217
Registration fees (Note 1g) 89,633
Pricing fees 47,851
Directors' fees and expenses 45,537
Dividends on short sales (Note 1i) 266
Other 262,136
---------------
Total expenses before reimbursement 139,710,061
Reimbursement of expenses (Note 2) (4,625,985)
---------------
Total expenses after reimbursement 135,084,076
---------------
Investment income--net 337,589,612
---------------
Realized & Realized gain (loss) from:
Unrealized Investments--net 624,671,724
Gain (Loss) on Foreign currency transactions--net (14,762,539) 609,909,185
Investments & ---------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions--Net Investments--net 920,408,063
(Notes 1c, 1d, Foreign currency transactions--net 3,342,909 923,750,972
1f & 3): --------------- ---------------
Net realized and unrealized gain on investments and
foreign currency transactions 1,533,660,157
---------------
Net Increase in Net Assets Resulting from Operations $ 1,871,249,769
===============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1999
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Year Ended
October 31,
Increase (Decrease) in Net Assets: 1999 1998
<S> <S> <C> <C>
Operations: Investment income--net $ 337,589,612 $ 501,610,053
Realized gain on investments and foreign currency
transactions--net 609,909,185 649,011,781
Change in unrealized appreciation/depreciation on
investments and foreign currency transactions--net 923,750,972 (1,754,814,316)
--------------- ---------------
Net increase (decrease) in net assets resulting
from operations 1,871,249,769 (604,192,482)
--------------- ---------------
Dividends & Investment income--net:
Distributions to Class A (57,727,266) (113,534,042)
Shareholders Class B (162,008,358) (435,917,299)
(Note 1h): Class C (11,648,684) (31,817,454)
Class D (48,673,340) (80,421,353)
Realized gain on investments--net:
Class A (112,720,460) (159,001,453)
Class B (494,148,058) (747,330,007)
Class C (36,790,295) (52,244,261)
Class D (99,226,016) (112,523,476)
--------------- ---------------
Net decrease in net assets resulting from
dividends and distributions to shareholders (1,022,942,477) (1,732,789,345)
--------------- ---------------
Capital Share Net decrease in net assets derived from capital
Transactions share transactions (3,573,473,024) (1,747,724,489)
(Note 4): --------------- ---------------
Net Assets: Total decrease in net assets (2,725,165,732) (4,084,706,316)
Beginning of year 10,078,328,796 14,163,035,112
--------------- ---------------
End of year* $ 7,353,163,064 $10,078,328,796
=============== ===============
<FN>
*Undistributed investment income--net (Note 1j) $ 105,355,140 --
=============== ===============
See Notes to Financial Statements.
<CAPTION>
FINANCIAL HIGHLIGHTS
The following per share data and ratios have been derived
from information provided in the financial statements. Class A++
For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of year $ 13.25 $ 15.92 $ 15.17 $ 14.21 $ 13.07
Performance: ----------- ----------- ----------- ----------- -----------
Investment income--net .67 .67 .71 .78 .79
Realized and unrealized gain
(loss) on investments and
foreign currency transactions--net 2.53 (1.28) 1.57 1.59 1.04
----------- ----------- ----------- ----------- -----------
Total from investment operations 3.20 (.61) 2.28 2.37 1.83
----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.61) (.86) (.88) (.98) (.39)
Realized gain on investments--net (1.05) (1.20) (.65) (.43) (.30)
----------- ----------- ----------- ----------- -----------
Total dividends and distributions (1.66) (2.06) (1.53) (1.41) (.69)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year $ 14.79 $ 13.25 $ 15.92 $ 15.17 $ 14.21
=========== =========== =========== =========== ===========
Total Investment Based on net asset value per share 26.30% (4.43%) 16.08% 17.81% 14.81%
Return:* =========== =========== =========== =========== ===========
Ratios to Average Expenses, net of reimbursement .91% .84% .83% .86% .90%
Net Assets: =========== =========== =========== =========== ===========
Expenses .97% .93% .91% .93% .90%
=========== =========== =========== =========== ===========
Investment income--net 4.86% 4.62% 4.64% 5.31% 5.98%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of year
Data: (in thousands) $ 1,305,473 $ 1,513,999 $ 2,132,254 $ 1,841,974 $ 1,487,805
=========== =========== =========== =========== ===========
Portfolio turnover 26.95% 49.67% 55.42% 51.26% 36.78%
=========== =========== =========== =========== ===========
<FN>
*Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1999
FINANCIAL HIGHLIGHTS (concluded)
<TABLE>
The following per share data and ratios have been derived
from information provided in the financial statements. Class B++
For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of year $ 13.01 $ 15.65 $ 14.95 $ 14.01 $ 12.91
Performance: ----------- ----------- ----------- ----------- -----------
Investment income--net .52 .52 .55 .62 .65
Realized and unrealized gain
(loss) on investments and
foreign currency transactions--net 2.49 (1.26) 1.52 1.59 1.01
----------- ----------- ----------- ----------- -----------
Total from investment operations 3.01 (.74) 2.07 2.21 1.66
----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.45) (.70) (.72) (.84) (.26)
Realized gain on investments--net (1.05) (1.20) (.65) (.43) (.30)
----------- ----------- ----------- ----------- -----------
Total dividends and distributions (1.50) (1.90) (1.37) (1.27) (.56)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year $ 14.52 $ 13.01 $ 15.65 $ 14.95 $ 14.01
=========== =========== =========== =========== ===========
Total Investment Based on net asset value per share 25.08% (5.37%) 14.82% 16.71% 13.54%
Return:* =========== =========== =========== =========== ===========
Ratios to Average Expenses, net of reimbursement 1.94% 1.86% 1.85% 1.87% 1.93%
Net Assets: =========== =========== =========== =========== ===========
Expenses 1.99% 1.95% 1.93% 1.95% 1.93%
=========== =========== =========== =========== ===========
Investment income--net 3.84% 3.60% 3.62% 4.29% 4.96%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of year
Data: (in thousands) $ 4,496,037 $ 6,743,780 $ 9,879,603 $ 8,660,279 $ 6,668,499
=========== =========== =========== =========== ===========
Portfolio turnover 26.95% 49.67% 55.42% 51.26% 36.78%
=========== =========== =========== =========== ===========
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. Class C++
For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of year $ 12.86 $ 15.50 $ 14.83 $ 13.94 $ 12.91
Performance: ---------- ---------- ---------- ---------- ----------
Investment income--net .51 .51 .54 .61 .64
Realized and unrealized gain
(loss) on investments and
foreign currency transactions--net 2.46 (1.24) 1.52 1.58 1.02
---------- ---------- ---------- ---------- ----------
Total from investment operations 2.97 (.73) 2.06 2.19 1.66
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.45) (.71) (.74) (.87) (.33)
Realized gain on investments--net (1.05) (1.20) (.65) (.43) (.30)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (1.50) (1.91) (1.39) (1.30) (.63)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 14.33 $ 12.86 $ 15.50 $ 14.83 $ 13.94
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share 25.05% (5.38%) 14.84% 16.68% 13.58%
Return:* ========== ========== ========== ========== ==========
Ratios to Average Expenses, net of reimbursement 1.95% 1.88% 1.86% 1.88% 1.95%
Net Assets: ========== ========== ========== ========== ==========
Expenses 2.01% 1.96% 1.94% 1.95% 1.95%
========== ========== ========== ========== ==========
Investment income--net 3.84% 3.61% 3.60% 4.24% 4.80%
========== ========== ========== ========== ==========
Supplemental Net assets, end of year
Data: (in thousands) $ 322,238 $ 503,556 $ 671,467 $ 385,753 $ 102,361
========== ========== ========== ========== ==========
Portfolio turnover 26.95% 49.67% 55.42% 51.26% 36.78%
========== ========== ========== ========== ==========
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. Class D++
For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of year $ 13.23 $ 15.89 $ 15.15 $ 14.19 $ 13.08
Performance: ---------- ---------- ---------- ---------- ----------
Investment income--net .64 .64 .68 .77 .77
Realized and unrealized gain (loss)
on investments and foreign
currency transactions--net 2.52 (1.28) 1.55 1.57 1.01
---------- ---------- ---------- ---------- ----------
Total from investment operations 3.16 (.64) 2.23 2.34 1.78
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.57) (.82) (.84) (.95) (.37)
Realized gain on investments--net (1.05) (1.20) (.65) (.43) (.30)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (1.62) (2.02) (1.49) (1.38) (.67)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 14.77 $ 13.23 $ 15.89 $ 15.15 $ 14.19
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share 26.01% (4.63%) 15.76% 17.59% 14.43%
Return:* ========== ========== ========== ========== ==========
Ratios to Average Expenses, net of reimbursement 1.16% 1.10% 1.08% 1.10% 1.16%
Net Assets: ========== ========== ========== ========== ==========
Expenses 1.21% 1.18% 1.16% 1.18% 1.16%
========== ========== ========== ========== ==========
Investment income--net 4.61% 4.40% 4.38% 5.04% 5.63%
========== ========== ========== ========== ==========
Supplemental Net assets, end of year
Data: (in thousands) $1,229,415 $1,316,994 $1,479,711 $1,044,136 $ 256,525
========== ========== ========== ========== ==========
Portfolio turnover 26.95% 49.67% 55.42% 51.26% 36.78%
========== ========== ========== ========== ==========
<FN>
*Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1999
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Global Allocation Fund, Inc. (the "Fund") is
registered under the Investment Company Act of 1940 as a non-
diversified, open-end management investment company. The Fund's
financial statements are prepared in accordance with generally
accepted accounting principles, which may require the use of
management accruals and estimates. The Fund offers four classes of
shares under the Merrill Lynch Select Pricing SM System. Shares of
Class A and Class D are sold with a front-end sales charge. Shares
of Class B and Class C may be subject to a contingent deferred sales
charge. All classes of shares have identical voting, dividend,
liquidation and other rights and the same terms and conditions,
except that Class B, Class C and Class D Shares bear certain
expenses related to the account maintenance of such shares, and
Class B and Class C Shares also bear certain expenses related to the
distribution of such shares. Each class has exclusive voting rights
with respect to matters relating to its account maintenance and
distribution expenditures. The following is a summary of significant
accounting policies followed by the Fund.
(a) Valuation of investments--Portfolio securities that are traded
on stock exchanges are valued at the last sale price on the exchange
on which such securities are traded, as of the close of business on
the day the securities are being valued or, lacking any sales, at
the last available bid price. Securities traded in the over-the-
counter market are valued at the last available bid price prior to
the time of valuation. In cases where securities are traded on more
than one exchange, the securities are valued on the exchange
designated by or under the authority of the Board of Directors as
the primary market. Securities that are traded both in the over-the-
counter market and on a stock exchange are valued according to the
broadest and most representative market. Options written or
purchased are valued at the last sale price in the case of exchange-
traded options. In the case of options traded in the over-the-
counter market, valuation is the last asked price (options written)
or the last bid price (options purchased). Short-term securities are
valued at amortized cost, which approximates market value. Other
investments, including financial futures contracts and related
options, are stated at market value. Securities and assets for which
market value quotations are not readily available are valued at
their fair value as determined in good faith by or under the
direction of the Fund's Board of Directors.
(b) Repurchase agreements--The Fund invests in securities pursuant
to repurchase agreements. Under such agreements, the counterparty
agrees to repurchase the security at a mutually agreed upon time and
price. The Fund takes possession of the underlying securities, marks
to market such securities and, if necessary, receives additional
securities daily to ensure that the contract is fully
collateralized.
(c) Foreign currency transactions--Transactions denominated in
foreign currencies are recorded at the exchange rate prevailing when
recognized. Assets and liabilities denominated in foreign currencies
are valued at the exchange rate at the end of the period. Foreign
currency transactions are the result of settling (realized) or
valuing (unrealized) assets or liabilities expressed in foreign
currencies into US dollars. Realized and unrealized gains or losses
from investments include the effects of foreign exchange rates on
investments.
(d) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the equity, debt, and
currency markets. Losses may arise due to changes in the value of
the contract or if the counterparty does not perform under the
contract.
* Forward foreign exchange contracts--The Fund is authorized to
enter into forward foreign exchange contracts as a hedge against
either specific transactions or portfolio positions. Such contracts
are not entered on the Fund's records. However, the effect on
operations is recorded from the date the Fund enters into such
contracts.
* Foreign currency options and futures--The Fund may also purchase
or sell listed or over-the-counter foreign currency options, foreign
currency futures and related options on foreign currency futures as
a short or long hedge against possible variations in foreign
exchange rates. Such transactions may be effected with respect to
hedges on non-US dollar denominated securities owned by the Fund,
sold by the Fund but not yet delivered, or committed or anticipated
to be purchased by the Fund.
* Options--The Fund is authorized to purchase and write covered call
and put options. When the Fund writes an option, an amount equal to
the premium received by the Fund is reflected as an asset and an
equivalent liability. The amount of the liability is subsequently
marked to market to reflect the current value of the option written.
When a security is purchased or sold through an exercise of an
option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option
expires (or the Fund enters into a closing transaction), the Fund
realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
* Financial futures contracts--The Fund may purchase or sell
financial futures contracts and options on such futures contracts
for the purpose of hedging the market risk on existing securities or
the intended purchase of securities. Futures contracts are contracts
for delayed delivery of securities at a specific future date and at
a specific price or yield. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin
and are recorded by the Fund as unrealized gains or losses. When the
contract is closed, the Fund records a realized gain or loss equal
to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.
(e) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required. Under the applicable foreign tax law, a
withholding tax may be imposed on interest, dividends, and capital
gains at various rates.
(f) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Dividend income is recorded on the ex-
dividend dates. Dividends from foreign securities where the ex-
dividend date may have passed are subsequently recorded when the
Fund has determined the ex-dividend date. Interest income (including
amortization of discount) is recognized on the accrual basis.
Realized gains and losses on security transactions are determined on
the identified cost basis.
(g) Prepaid registration fees--Prepaid registration fees are charged
to expense as the related shares are issued.
(h) Dividends and distributions--Dividends and distributions paid by
the Fund are recorded on the ex-dividend dates.
(i) Short sales--When the Fund engages in a short sale, an amount
equal to the proceeds received by the Fund is reflected as an asset
and an equivalent liability. The amount of the liability is
subsequently marked to market to reflect the market value of the
short sale. The Fund maintains a segregated account of securities as
collateral for the short sales. The Fund is exposed to market risk
based on the amount, if any, that the market value of the stock
exceeds the market value of the securities in the segregated
account.
(j) Reclassification--Generally accepted accounting principles
require that certain components of net assets be adjusted to reflect
permanent differences between financial and tax reporting.
Accordingly, current year's permanent book/tax differences of
$47,823,176 have been reclassified between undistributed net
realized capital gains and undistributed net investment income.
These reclassifications have no effect on net assets or net asset
values per share.
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Fund has entered into an Investment Advisory Agreement with
Merrill Lynch Asset Management, L.P. ("MLAM"). The general partner
of MLAM is Princeton Services, Inc. ("PSI"), an indirect wholly-
owned subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is
the limited partner. The Fund has also entered into a Distribution
Agreement and Distribution Plans with Merrill Lynch Funds
Distributor ("MLFD" or the "Distributor"), a division of Princeton
Funds Distributor, Inc. ("PFD"), which is a wholly-owned subsidiary
of Merrill Lynch Group, Inc.
MLAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee of .75%, on an annual basis,
of the average daily value of the Fund's net assets. MLAM has agreed
to waive a portion of its fee payable by the Fund so that such fee
is reduced for average daily net assets of the Fund in excess of
$2.5 billion from the annual rate of .75% to .70%, from .70% to .65%
for average daily net assets in excess of $5 billion, from .65% to
.625% for average daily net assets in excess of $7.5 billion, and
from .625% to .60% for average daily net assets in excess of $10
billion. For the year ended October 31, 1999, MLAM earned fees of
$61,370,937, of which $4,625,985 was voluntarily waived. MLAM has
entered into a sub-advisory agreement with Merrill Lynch Asset
Management U.K., Ltd. ("MLAM U.K."), an affiliate of MLAM, pursuant
to which MLAM pays MLAM U.K. a fee computed at the rate of .10% of
the average daily net assets of the Fund for providing investment
advisory services to MLAM with respect to the Fund. For the year
ended October 31, 1999, MLAM paid MLAM U.K. a fee of $6,089,987
pursuant to such agreement.
Merrill Lynch Global Allocation Fund, Inc., October 31, 1999
NOTES TO FINANCIAL STATEMENTS (continued)
Pursuant to the Distribution Plans adopted by the Fund in accordance
with Rule 12b-1 under the Investment Company Act of 1940, the Fund
pays the Distributor ongoing account maintenance and distribution
fees. The fees are accrued daily and paid monthly at annual rates
based upon the average daily net assets of the shares as follows:
Account Distribution
Maintenance Fee Fee
Class B .25% .75%
Class C .25% .75%
Class D .25% --
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("MLPF&S"), a subsidiary of ML &
Co., also provides account maintenance and distribution services to
the Fund. The ongoing account maintenance fee compensates the
Distributor and MLPF&S for providing account maintenance services to
Class B, Class C and Class D shareholders. The ongoing distribution
fee compensates the Distributor and MLPF&S for providing shareholder
and distribution-related services to Class B and Class C
shareholders.
For the year ended October 31, 1999, MLFD earned underwriting
discounts and direct commissions and MLPF&S earned dealer
concessions on sales of the Fund's Class A and Class D Shares as
follows:
MLFD MLPF&S
Class A $ 5,246 $ 69,974
Class D $14,609 $214,054
For the year ended October 31, 1999, MLPF&S received contingent
deferred sales charges of $10,510,572 and $145,149 relating to
transactions in Class B and Class C Shares, respectively.
In addition, MLPF&S received $323,941 in commissions on the
execution of portfolio security transactions for the Fund for the
year ended October 31, 1999.
For the year ended October 31, 1999, the Fund paid Merrill Lynch
Security Pricing Service, an affiliate of MLPF&S, $141 for security
price quotations to compute the net asset value of the Fund.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of
ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of MLAM, PSI, FDS, PFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended October 31, 1999 were $2,036,913,819 and
$6,137,055,204, respectively.
Net realized gains (losses) for the year ended October 31, 1999 and
net unrealized gains (losses) as of October 31, 1999 were as
follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
Long-term investments $ 591,995,972 $ 232,414,633
Short-term investments 5,693 --
Options written 5,164,667 --
Financial futures contracts 27,505,392 (1,702,506)
Forward foreign exchange contracts (12,156,846) (16,977,505)
Foreign currency transactions (2,605,693) (5,647,940)
-------------- --------------
Total $ 609,909,185 $ 208,086,682
============== ==============
As of October 31, 1999, net unrealized appreciation for Federal
income tax purposes aggregated $208,271,595, of which $1,130,889,015
related to appreciated securities and $922,617,420 related to
depreciated securities. At October 31, 1999, the aggregate cost of
investments for Federal income tax purposes was $6,363,590,983.
Transactions in call options written for the year ended October 31,
1999 were as follows:
Nominal Value Premiums
Covered Received
Outstanding call options written,
beginning of year 8,316,927 $ 24,104,716
Options written 1,765,000 3,376,860
Options exercised (4,704,577) (13,595,598)
Options expired (2,992,350) (8,334,784)
Options closed (2,385,000) (5,551,194)
-------------- --------------
Outstanding call options
written, end of year -- $ --
============== ==============
4. Capital Share Transactions:
Net decrease in net assets derived from capital share transactions
was $3,573,473,024 and $1,747,724,489 for the years ended October
31, 1999 and October 31, 1998, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the
Year Ended Dollar
October 31, 1999 Shares Amount
Shares sold 12,530,177 $ 175,810,684
Shares issued to shareholders in
reinvestment of dividends and
distributions 12,137,132 155,646,841
-------------- --------------
Total issued 24,667,309 331,457,525
Shares redeemed (50,661,390) (688,089,821)
-------------- --------------
Net decrease (25,994,081) $ (356,632,296)
============== ==============
Class A Shares for the
Year Ended Dollar
October 31, 1998 Shares Amount
Shares sold 18,655,199 $ 271,738,900
Shares issued to shareholders in
reinvestment of dividends and
distributions 17,209,249 244,114,543
-------------- --------------
Total issued 35,864,448 515,853,443
Shares redeemed (55,587,214) (789,412,836)
-------------- --------------
Net decrease (19,722,766) $ (273,559,393)
============== ==============
Class B Shares for the
Year Ended Dollar
October 31, 1999 Shares Amount
Shares sold 24,632,963 $ 336,673,892
Shares issued to shareholders in
reinvestment of dividends and
distributions 44,920,983 562,403,690
-------------- ---------------
Total issued 69,553,946 899,077,582
Automatic conversion of shares (13,301,061) (182,957,856)
Shares redeemed (264,775,335) (3,496,502,022)
-------------- --------------
Net decrease (208,522,450) $(2,780,382,296)
============== ===============
Class B Shares for the
Year Ended Dollar
October 31, 1998 Shares Amount
Shares sold 60,460,630 $ 875,915,458
Shares issued to shareholders in
reinvestment of dividends and
distributions 73,891,197 1,032,137,910
-------------- ---------------
Total issued 134,351,827 1,908,053,368
Automatic conversion of shares (15,413,728) (214,503,471)
Shares redeemed (231,873,525) (3,216,714,130)
-------------- --------------
Net decrease (112,935,426) $(1,523,164,233)
============== ===============
Class C Shares for the
Year Ended Dollar
October 31, 1999 Shares Amount
Shares sold 2,256,896 $ 30,629,684
Shares issued to shareholders in
reinvestment of dividends and
distributions 3,391,680 41,849,550
-------------- --------------
Total issued 5,648,576 72,479,234
Shares redeemed (22,315,085) (290,085,046)
-------------- --------------
Net decrease (16,666,509) $ (217,605,812)
============== ==============
Class C Shares for the
Year Ended Dollar
October 31, 1998 Shares Amount
Shares sold 9,924,944 $ 142,791,336
Shares issued to shareholders in
reinvestment of dividends and
distributions 5,395,282 74,521,891
-------------- --------------
Total issued 15,320,226 217,313,227
Shares redeemed (19,487,655) (266,727,805)
-------------- --------------
Net decrease (4,167,429) $ (49,414,578)
============== ==============
Class D Shares for the
Year Ended Dollar
October 31, 1999 Shares Amount
Shares sold 7,993,663 $ 111,583,389
Automatic conversion of shares 13,089,544 182,957,856
Shares issued to shareholders in
reinvestment of dividends and
distributions 10,005,348 128,232,463
-------------- --------------
Total issued 31,088,555 422,773,708
Shares redeemed (47,370,107) (641,626,328)
-------------- --------------
Net decrease (16,281,552) $ (218,852,620)
============== ==============
Merrill Lynch Global Allocation Fund, Inc., October 31, 1999
NOTES TO FINANCIAL STATEMENTS (concluded)
Class D Shares for the
Year Ended Dollar
October 31, 1998 Shares Amount
Shares sold 14,494,815 $ 213,305,917
Automatic conversion of shares 15,180,911 214,503,471
Shares issued to shareholders in
reinvestment of dividends and
distributions 11,776,663 167,004,527
-------------- --------------
Total issued 41,452,389 594,813,915
Shares redeemed (35,025,559) (496,400,200)
-------------- --------------
Net increase 6,426,830 $ 98,413,715
============== ==============
5. Commitments:
At October 31, 1999, the Fund had entered into foreign exchange
contracts, in addition to the contracts listed on the Schedule of
Investments, under which it had agreed to purchase and sell various
foreign currencies with approximate values of $7,342,000 and
$21,208,000, respectively.
6. Subsequent Event:
On December 1, 1999, the Fund's Board of Directors declared an
ordinary income dividend and a long-term capital gains distribution
payable on December 20, 1999 to shareholders of record as of
December 14, 1999 as follows:
Ordinary Long-Term
Income Capital Gains
Class A $1.099935 $.489340
Class B 1.021437 .489340
Class C 1.022942 .489340
Class D 1.081263 .489340
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
Merrill Lynch Global Allocation Fund, Inc.:
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments, of Merrill Lynch
Global Allocation Fund, Inc. as of October 31, 1999, the related
statements of operations for the year then ended and changes in net
assets for each of the years in the two-year period then ended, and
the financial highlights for each of the years in the five-year
period then ended. These financial statements and the financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at October
31, 1999 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Merrill Lynch Global Allocation Fund, Inc. as of October 31, 1999,
the results of its operations, the changes in its net assets, and
the financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
December 16, 1999
</AUDIT-REPORT>
Merrill Lynch Global Allocation Fund, Inc., October 31, 1999
IMPORTANT TAX INFORMATION (unaudited)
<TABLE>
The following information summarizes all per share distributions
paid by Merrill Lynch Global Allocation Fund, Inc. during its
taxable yearended October 31, 1999:
<CAPTION>
Domestic Interest Domestic Foreign
Qualifying From Foreign Non-Qualifying Total Taxes Long-Term
Ordinary Federal Source Ordinary Ordinary Paid or Capital
Record Date Payable Date Income Obligations Income Income Income Withheld Gains++
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A Shares:
12/16/98 12/24/98 $.030428 $.035665 -- $.221849 $.287942 -- $.960976
7/07/99 7/15/99 $.022396 $.020017 $.145418 $.222796 $.410627 $.002706 --
Class B Shares:
12/16/98 12/24/98 $.021919 $.025692 -- $.159810 $.207421 -- $.960976
7/07/99 7/15/99 $.018030 $.016114 $.117067 $.179361 $.330572 $.002706 --
Class C Shares:
12/16/98 12/24/98 $.021785 $.025535 -- $.158836 $.206156 -- $.960976
7/07/99 7/15/99 $.018017 $.016102 $.116982 $.179231 $.330332 $.002706 --
Class D Shares:
12/16/98 12/24/98 $.028491 $.033395 -- $.207730 $.269616 -- $.960976
7/07/99 7/15/99 $.021402 $.019128 $.138965 $.212911 $.392406 $.002706 --
<FN>
++All of the long-term capital gains distributions paid by the Fund
are subject to the 20% tax rate.
</TABLE>
The qualifying domestic ordinary income qualifies for the dividends
received deduction for corporations.
The foreign taxes paid or withheld represent taxes incurred by the
Fund on dividends received by the Fund from foreign sources. Foreign
taxes paid or withheld should be included as taxable income with an
offsetting deduction from gross income or as a credit for taxes paid
to foreign governments. You should consult your tax adviser
regarding the appropriate treatment of foreign taxes paid.
The law varies in each state as to whether and what percentage of
dividend income attributable to Federal obligations is exempt from
state income tax. We recommend that you consult your tax adviser to
determine if any portion of the dividends you received is exempt
from state income tax.
Listed at right are the percentages of total assets of the Fund
invested in Federal obligations as of the end of each quarter of the
fiscal year:
For the Percentage of
Quarter Ended Federal Obligations*
January 31, 1999 8.83%
April 30, 1999 3.22%
July 31, 1999 2.92%
October 31, 1999 3.01%
[FN]
*For the purposes of this calculation, Federal obligations include
US Treasury Notes, US Treasury Bills and US Treasury Bonds. Also
included are obligations issued by the following agencies: Banks for
Cooperatives, Federal Intermediate Credit Banks, Federal Land Banks,
Federal Home Loan Banks and the Student Loan Marketing Association.
Repurchase agreements are not included in this calculation.
Please retain this information for your records.
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
Donald Cecil, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Arthur Zeikel, Director
Edward D. Zinbarg, Director
Robert C. Doll, Senior 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
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
