MERRILL LYNCH
GLOBAL
ALLOCATION
FUND, INC.
FUND LOGO
Annual Report
October 31, 2000
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 10/31/00
<CAPTION>
Percent of Fund's Net Assets Reference Portfolio
10/31/00 4/30/00 Percentages
<S> <C> <C> <C>
North & South American Equities 36.2%* 34.5%* 36.0%
European Equities 10.4 8.5 11.0
Pacific Basin Equities 14.8 15.2 13.0
Total Equities 61.4 58.2 60.0
US Dollar Denominated Fixed-Income Securities 21.4 23.5 24.0
US Issuers 12.3 11.7 --
Non-US Issuers 9.1 11.8 --
Non-US Dollar Denominated Fixed-Income Securities 9.0 5.0 16.0
Total Fixed-Income Securities 30.4++ 28.5++ 40.0
Cash & Cash Equivalents 8.2 13.3 --
*Includes value of Financial Futures Contracts.
++Includes Preferred Stock.
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 2000
DEAR SHAREHOLDER
Fiscal Year in Review
The Fund delivered solid returns to investors on both an absolute
and relative basis for the 12-month period ended October 31, 2000.
Merrill Lynch Global Allocation Fund, Inc.'s Class A, Class B, Class
C and Class D Shares had total returns of +10.20%, +9.05%, +9.07%
and +9.86%, respectively. (Fund results shown do not reflect sales
charges and would be lower if sales charges were included. Complete
performance information can be found on pages 5 - 7 of this report
to shareholders.) The Fund's Reference Portfolio* had a +1.89%
return for the same period. The Fund benefited from broad-based
strength among its holdings, while our value-oriented investment
approach generally proved successful. The Fund outperformed all four
components of its benchmark unmanaged Reference Portfolio for the
year ended October 31, 2000. The unmanaged Standard & Poor's (S&P)
500 Index had a total return of +6.09%; the unmanaged Financial
Times/ S&P - Actuaries World Index (Ex-US) declined by 1.89%; the
Merrill Lynch Treasury Index GA05 returned +6.57%; and the unmanaged
Salomon Brothers World Government Bond Index (Ex-US) declined by
9.70%.
The reasons for the Fund's performance success during the fiscal
year ended October 31, 2000 were broad-based and characterized
mainly by the continuation of the Fund's historic commitment to
resisting high equity valuation levels and seeking value in
individual stocks. During the fiscal year, value-oriented investors
enjoyed a strong resurgence after lagging growth stock investors in
the previous two years. In this period, the Fund's US stock
portfolio bore very little resemblance to the composition of the
benchmark S&P 500 Index because the Fund had been unable to find
value in the most expensive stocks that made up the majority of the
Index's capitalization. Instead, we concentrated the Fund's US stock
holdings in small- and mid-capitalization stocks, which
significantly outperformed larger-capitalization issues. Also, the
Fund was underweighted in technology stocks, which ultimately
punished many of their holders.
The Fund's overall asset mix began the 12-month period
conservatively positioned with 52.2% of net assets invested in
equities, 34.9% in fixed-income securities, and 12.9% in cash and
cash equivalents. On October 31, 1999, the Fund's weighting in the
US (and Canadian) dollar was 72.5%, including both dollar-
denominated assets and the portion of assets hedged back into
dollars. On October 31, 2000, the Fund's equity allocation was
closer to its benchmark weighting than it had been in years. At
October 31, 2000, we had increased the Fund's equity weighting to
61.4% of net assets, with the Fund's US equity position representing
35.3% of net assets, an increase from 23.2% of net assets as of
October 31, 1999. There has been a decrease in the Fund's asset
allocation in fixed-income securities from 34.9% of net assets as of
October 31, 1999 to 30.4% of net assets as of the fiscal year-end.
Early in the year, we took profits in many of the Fund's fixed-
income positions as emerging markets strengthened.
*The unmanaged benchmark index is a weighted index comprised of 36%
of the unmanaged Standard & Poor's 500 Index, 24% Financial
Times/Standard & Poor's - Actuaries World Index (Ex-US), 24% Merrill
Lynch Treasury Index GA05, and 16% Salomon Brothers World Government
Bond Index (Ex-US). Descriptions of these indexes can be found on
page 7 of this report to shareholders in the "Recent Performance
Results" section.
The Fund's cash reserves decreased to 8.2% of net assets over the 12-
month period ended October 31, 2000. The Fund ended the period with
an overall US (and Canadian) dollar exposure of 73.5% of the Fund's
net assets, which is essentially unchanged from its weighting at
October 31, 1999. Over the past few years, the Fund has been
consistently overweighted in US dollars as compared to its benchmark
Reference Portfolio. During the fiscal year, the Fund's exposure to
the euro remained essentially unchanged, while its exposure to the
yen decreased slightly.
The increase in the Fund's US stock portfolio from 23.2% of net
assets as of October 31, 1999 to 3.29% of net assets as of October
31, 2000 can be attributed to the acquisition of a number of stocks
in a relatively small group of attractively priced, out-of-favor
sectors such as energy, real estate, utilities, insurance, and banks
and thrifts that far out-performed the S&P 500 Index. Particularly
strong individual contributors to performance included CONSOL Energy
Inc.; Noble Drilling Corporation; Catellus Development Corporation;
ACE Limited; Oxford Health Plans, Inc.; and QUALCOMM Incorporated.
The Fund's performance compared to its peers was positive. The
average total return of the Lipper Global Flexible Funds for the 12
months ended October 31, 2000 was +8.85%.
Investment Environment
The six-month period began with global economic growth continuing on
its positive trend, as evidenced by strong production data across
the Group of Seven Industrialized Nations and rising employment
figures. The US economy enjoyed exceptional strength and continued
to exhibit a generally strong currency. Early in May, US
unemployment statistics for April were released indicating the
lowest unemployment rate since 1970. The US bond market fell in
reaction to this data, and most growth and technology stocks also
declined. Oil prices moved sharply higher, lending foundation to
concerns about rising inflation. The continued growth of the US
economy caused the US Federal Reserve Board to increase the Federal
Funds rate by 50 basis points (0.50%) to 6.50% on May 16, 2000, the
third interest rate increase in the year 2000 and the sixth increase
of this tightening cycle. European economies also grew as
unemployment in Europe continued its declining trend and the
European Central Bank revised its prediction for growth this year
upward to 3%. By the end of May, most world equity markets fell to
their lowest levels in three months because of fears of economic
overheating resulting from strong consumption and investment demand
at a time of low unemployment.
Beginning in early June, with the Federal Reserve Board's interest
rate increases behind them, US investors began to observe more
benign inflation data. The economy appeared to be slowing as the US
unemployment rate rose unexpectedly, fueling expectations that
further interest rate increases would not be likely. Bond markets
began a rally, which continued through the end of the period. A move
back into growth stocks began, limiting the relative performance of
value investors during the summer. Generally, world equity markets
continued to improve through the end of August. An exception to this
was Japan, where equity markets rose steadily in June and then fell
back to its calendar-year lows by early August as investors became
increasingly concerned about the possibility of an increase in
interest rates by the Bank of Japan. The equity markets in Japan
continued to decline through the end of October.
Another phenomenon during the summer of 2000 was the decoupling of
telecommunications stocks from the general rally in technology.
During this period of price weakness, we added several
telecommunications names to the Fund's US equity portfolio including
WorldCom, Inc., AT&T Corp., Verizon Communications and Comcast
Corporation. A significant percentage of these new equity
investments were made through a "buy and write" strategy wherein we
acquired the stocks at near 52-week lows and wrote (sold) calls
against part or all of the position. Option premiums were generally
high. During this period, we also added some high-quality, euro-
denominated fixed-income securities with fairly short maturities.
The relatively quiet and stable summer of this six-month period was
followed by volatility in most world markets throughout September
and October. In September, global equity markets reacted negatively
to general concerns regarding slower profit growth. Also, crude oil
prices reached 10-year highs in September and continued to touch
levels above $35 per barrel through much of October. A number of
companies began revising their revenue forecasts downward as US
economic growth decelerated. Profit concerns continued throughout
October as many companies released earnings below expectations. When
Lucent Technologies and Intel Corporation failed to meet
expectations, the technology, media and telecommunications ("TMT")
sectors experienced sharp declines. By mid-October, Japan's Nikkei
225 stock index fell to a 19-month low as a result of particularly
harsh earnings estimate downgrades for Japanese and Asian TMT
companies. At the same time, US stocks had their biggest decline in
six months as rising tensions in the Middle East further worried
earnings-conscious investors.
News that third-quarter gross domestic growth had slowed to a rate
of 2.7% was further confirmation of a decelerating US economy. (This
figure was later revised to 2.4%.) US Treasury markets reacted
positively to this news; however, credit markets overall
deteriorated in response to a sharp rise in credit risk. Emerging
market credit spreads were driven somewhat wider by renewed concerns
over currency stability in both Latin America and Southeast Asia.
The euro fell to record lows against the US dollar in mid-October.
Overall, value stocks dramatically outperformed growth stocks, and
the Fund's position in many traditional value-oriented companies
contributed to its outperformance compared to both the benchmark
index and its Lipper peer group.
Portfolio Matters
For the six-month period ended October 31, 2000, Merrill Lynch
Global Allocation Fund, Inc.'s Class A, Class B, Class C and Class D
Shares had total returns of +4.23%, +3.69%, +3.77% and +4.11%,
respectively, outperforming the Reference Portfolio's return of
-1.33% for the same six-month period. The Fund's returns exceeded the
return of each component of its Reference Portfolio for the period
with the exception of the US Treasury bond component, which returned
+6.05% for the same period.
With 61.4% of Merrill Lynch Global Allocation Fund, Inc.'s net
assets invested in equities at October 31, 2000, the Fund is
slightly overweighted compared to its Reference Portfolio weighting
in equities (60%). The Fund was underweighted in fixed-income
securities with 28.5% of the Fund invested in bonds worldwide as
compared to its Reference Portfolio's weighting of 40%. During the
six-month period ended October 31, 2000, we decreased the Fund's
fixed-income weighting in US dollar-denominated bonds and increased
its exposure to the US equity markets and non-dollar denominated
bonds. (For a complete breakdown, see the "Summary of Fund's Overall
Asset Mix" table on page 1 of this report to shareholders.)
Merrill Lynch Global Allocation Fund, Inc., October 31, 2000
Equity Investments
During the six-month period ended October 31, 2000, we increased the
Fund's US stock position to 32.9% of net assets, while the European
stock position increased to 10.4% of net assets, and the Pacific
Basin equity weighting slightly decreased to 14.8% of net assets.
Approximately 10.9% of the Fund's net assets were invested in
convertible securities, a decrease from the 13% of net assets as of
April 30, 2000. Convertible securities are classified as part of the
Fund's fixed-income securities, although some of these securities
tend to perform more like equity securities than fixed-income
holdings.
The increase in the Fund's US stock portfolio from 30.5% of net
assets as of April 30, 2000 to 32.9% of net assets as of October 31,
2000 can be largely attributed to its acquisition of a number of
stocks in the financial and telecommunications sectors. We also
purchased energy stocks at attractive prices and valuations even
though the underlying commodity was near a 10-year high. During the
period, we sold some technology holdings that had appreciated and
added telecommunications stocks we previously described.
Fixed-Income Investments
During the six-month period, we increased the Fund's fixed-income
holdings in high-quality euro-denominated fixed-income investments
of sovereign and supranational issuers. Nevertheless, as a result of
decreases in holdings in fixed-income securities of US and Pacific
Basin issuers, fixed-income holdings as a percentage of net assets
generally remained essentially unchanged at 30.4% of net assets. On
October 31, 2000, the Fund's net weighting in the US dollar was
about 73%, including both dollar-denominated assets and the portion
of assets hedged back into dollars. The Fund's cash and cash
equivalent position was lower at 8.2% of net assets by October 31,
2000.
In Conclusion
We thank you for your investment in Merrill Lynch Global Allocation
Fund, Inc., and we look forward to reviewing our outlook and
strategy with you in our next report to shareholders.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Director
(Bryan N. Ison)
Bryan N. Ison
Senior Vice President and
Portfolio Manager
(Dennis Stattman)
Dennis Stattman
Vice President and
Portfolio Manager
December 7, 2000
<TABLE>
PROXY RESULTS
<CAPTION>
During the six-month period ended October 31, 2000, Merrill Lynch
Global Allocation Fund, Inc.'s shareholders voted on the following
proposals. The proposals were approved at a shareholders' meeting on
July 25, 2000. The description of each proposal and number of shares
voted are as follows:
Shares Voted
For
<S> <S> <C>
1.To elect the Fund's Board of Directors: Terry K. Glenn 405,098,399
Ronald W. Forbes 404,973,327
Cynthia A. Montgomery 405,035,236
Charles C. Reilly 404,918,015
Kevin A. Ryan 405,029,647
Roscoe S. Suddarth 405,033,497
Richard R. West 405,051,625
Arthur Zeikel 404,815,126
Edward D. Zinbarg 404,942,054
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the Fund's
independent auditors for the current fiscal year. 391,884,687 4,499,091 19,265,922
3. To convert the Fund to "master/feeder" structure. 361,492,260 20,418,104 33,739,335
</TABLE>
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. The Fund's Investment Adviser voluntarily waived a
portion of its management fee. Without such a waiver, the Fund's
performance would have been lower.
Merrill Lynch Global Allocation Fund, Inc., October 31, 2000
PERFORMANCE DATA (concluded)
Total Return
Based on a $10,000
Investment
A line graph depicting the growth of a $10,0000 investment
in Merrill Lynch Global Allocation Fund, Inc. Class A and
Class B Shares* with the growth of the same investment in
the Financial Times/Standard & Poor's--Actuaries World
Index++++. The beginning and ending values are:
10/90 10/00
ML Global Allocation Fund
Class A Shares* $ 9,475 $35,703
ML Global Allocation Fund
Class B Shares* $10,000 $34,013
Financial Times/Standard & Poor's
--Actuaries World Index++++ $10,000 $33,309
A line graph depicting the growth of a $10,0000 investment
in Merrill Lynch Global Allocation Fund, Inc. Class C and
Class D Shares* with the growth of the same investment in
the Financial Times/Standard & Poor's--Actuaries World
Index++++. The beginning and ending values are:
10/90 10/00
ML Global Allocation Fund
Class C Shares* $10,000 $19,642
ML Global Allocation Fund
Class D Shares* $ 9,475 $19,501
Financial Times/Standard & Poor's
--Actuaries World Index++++ $10,000 $21,920
*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*
One Year Ended 9/30/00 +12.50% + 6.59%
Five Years Ended 9/30/00 +12.91 +11.70
Ten Years Ended 9/30/00 +14.72 +14.11
*Maximum sales charge is 5.25%. (Prior to October 21, 1994, Class A
Shares were offered at a higher sales charge. Thus, actual returns
would have been lower than shown for the ten-year period.)
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
One Year Ended 9/30/00 +11.37% + 7.39%
Five Years Ended 9/30/00 +11.77 +11.77
Ten Years Ended 9/30/00 +13.55 +13.55
*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*
One Year Ended 9/30/00 +11.34% +10.35%
Five Years Ended 9/30/00 +11.77 +11.77
Inception (10/21/94) through 9/30/00 +12.27 +12.27
*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*
One Year Ended 9/30/00 +12.24% + 6.34%
Five Years Ended 9/30/00 +12.64 +11.43
Inception (10/21/94) through 9/30/00 +13.16 +12.14
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<TABLE>
Recent
Performance
Results
<CAPTION>
Ten Years/
6-Month 12-Month Since Inception
As of October 31, 2000 Total Return Total Return Total Return
<S> <C> <C> <C>
ML Global Allocation Fund, Inc.--Class A Shares* +4.23% +10.20% +276.84%
ML Global Allocation Fund, Inc.--Class B Shares* +3.69 + 9.05 +240.10
ML Global Allocation Fund, Inc.--Class C Shares* +3.77 + 9.07 + 96.42
ML Global Allocation Fund, Inc.--Class D Shares* +4.11 + 9.86 +105.82
US Stocks: Standard & Poor's 500 Index** -1.03 + 6.09 +490.85/+242.76
Non-US Stocks: Financial Times/Standard & Poor's--
Actuaries World Index (Ex-US)*** -7.99 - 1.89 +113.50/+51.52
US Bonds: ML Treasury Index GA05**** +6.05 + 6.57 +95.25/+48.41
Non-US Bonds: Salomon Brothers World Government
Bond Index (Ex-US)***** -3.05 - 9.70 +84.39/+19.24
*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
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
DEM German Deutschemark
EUR Euro
FRF French Franc
GBP Great Britain Pound
JPY Japanese Yen
NZD New Zealand Dollar
SEK Swedish Kroner
USD United States Dollar
Merrill Lynch Global Allocation Fund, Inc., October 31, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Percent of
COUNTRY Industries Held Common Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Argentina Banking 467,900 Banco Frances SA (ADR)++ (USD) $ 11,254,989 $ 10,235,313 0.2%
Total Common Stocks in Argentina 11,254,989 10,235,313 0.2
Australia Foods 5,566,000 Goodman Fielder Limited 5,875,419 3,605,377 0.1
Insurance 13,791,044 HIH Insurance Limited 21,830,645 2,179,688 0.0
Metals & Mining 10,321,100 Normandy Mining Limited 8,253,188 4,974,006 0.1
25,900,927 Pasminco Limited (c) 25,771,262 10,737,488 0.2
8,265,000 WMC Limited 27,620,232 31,586,557 0.5
--------------- --------------- ------
61,644,682 47,298,051 0.8
Multi-Industry 2,229,404 Lend Lease Corporation Limited 18,820,504 26,091,935 0.4
2,300,000 Pacific Dunlop Limited 5,753,464 1,835,464 0.0
--------------- --------------- ------
24,573,968 27,927,399 0.4
Resources 5,501,890 Broken Hill Proprietary Company
Limited 55,300,906 53,315,185 0.8
Steel 1,375,472 OneSteel Limited (c) 558,595 655,748 0.0
Total Common Stocks in Australia 169,784,215 134,981,448 2.1
Austria Banking 203,400 Bank Austria AG 6,298,337 10,990,617 0.2
Total Common Stocks in Austria 6,298,337 10,990,617 0.2
Bermuda Insurance 1,250,000 ACE Limited 22,477,835 49,062,500 0.8
285,000 XL Capital Ltd. (Class A) 12,824,126 21,909,375 0.3
Total Common Stocks in Bermuda 35,301,961 70,971,875 1.1
Brazil Forest Products 9,740 Aracruz Celulose SA (ADR)++ (USD) 140,163 146,100 0.0
Oil--Integrated 5,210 Petroleo Brasileiro SA--Petrobras 98,037 150,963 0.0
Telecommunications 32,491 Tele Norte Leste Participacoes
SA (ADR)++ (USD) 283,218 718,863 0.0
276,000 Telecomunicacoes Brasileiras
SA-Telebras (Preferred
Block)(ADR)++ (USD) 11,455,396 20,217,000 0.3
159,496 Telefonica SA (ADR)++ (USD)(c) 10,078,183 9,240,800 0.2
--------------- --------------- ------
21,816,797 30,176,663 0.5
Total Common Stocks in Brazil 22,054,997 30,473,726 0.5
Canada Beverages 611,100 Cott Corporation (USD)(c) 3,827,710 3,647,503 0.1
Insurance 36,650 Industrial Alliance Life
Insurance Company 399,860 809,885 0.0
Metals--Non-Ferrous 800,000 Inco Limited (USD)(c) 15,029,476 12,350,000 0.2
Real Estate 2,042,100 TrizecHahn Corporation 32,529,807 30,503,869 0.5
Retail Stores 1,365,500 Hudson's Bay Company 13,640,358 12,069,829 0.1
Telecommunications 1,165,200 Rogers Wireless Communications
Inc. 'B' (b)(c) 22,391,634 24,413,278 0.4
681,300 Rogers Wireless Communications
Inc. 'B' (USD)(b)(c) 10,867,699 14,179,556 0.2
--------------- --------------- ------
33,259,333 38,592,834 0.6
Total Common Stocks in Canada 98,686,544 97,973,920 1.5
Denmark Commercial Services 89,915 ISS A/S (c) 5,753,198 5,529,387 0.1
Total Common Stocks in Denmark 5,753,198 5,529,387 0.1
Finland Paper & Forest 1,357,104 Metsa-Serla Oyj 'B' 10,825,543 8,512,082 0.1
Products 489,513 Stora Enso Oyj 'R' 3,884,586 5,020,426 0.1
215,856 UPM-Kymmene Oyj 5,071,933 6,101,701 0.1
Total Common Stocks in Finland 19,782,062 19,634,209 0.3
France Automobiles 41,136 PSA Peugeot Citroen 7,768,565 7,566,112 0.1
Banking 91,472 Banque Nationale de Paris (BNP) 3,010,080 7,877,217 0.1
95,000 Societe Generale 'A' 2,439,315 5,386,922 0.1
--------------- --------------- ------
5,449,395 13,264,139 0.2
Building & 49,513 Compagnie de Saint Gobain 6,101,903 6,542,689 0.1
Construction
Chemicals 201,310 Aventis SA 9,930,228 14,503,580 0.2
Diversified 53,691 Vivendi 5,122,620 3,854,569 0.1
Leisure 18,019 Accor SA 747,979 728,518 0.0
Metals--Steel 619,611 Usinor SA 7,702,989 6,748,592 0.1
Multi-Industry 10,085 Societe Eurafrance SA 3,717,680 6,056,291 0.1
Telecommunications 244,500 Alcatel (ADR)++ (USD) 4,208,043 15,250,688 0.2
46,671 France Telecom SA 5,272,475 4,873,587 0.1
--------------- --------------- ------
9,480,518 20,124,275 0.3
Total Common Stocks in France 56,021,877 79,388,765 1.2
Germany Banking 63,313 Deutsche Bank AG (Registered Shares) 5,230,159 5,205,418 0.1
103,474 HypoVereinsbank 4,158,426 5,674,485 0.1
--------------- --------------- ------
9,388,585 10,879,903 0.2
Capital Goods 192,719 Kloeckner-Werke AG 1,392,608 3,691,679 0.1
Chemicals 175,986 Bayer AG 7,166,432 7,622,369 0.1
57,106 Henkel KGaA 2,421,203 2,976,787 0.0
--------------- --------------- ------
9,587,635 10,599,156 0.1
Multi-Industry 210,784 RWE AG 8,200,170 8,468,509 0.1
463,772 Thyssen Krupp AG 10,805,054 6,643,274 0.1
--------------- --------------- ------
19,005,224 15,111,783 0.2
Telecommunications 116,715 Deutsche Telekom AG
(Registered Shares) 5,719,356 4,357,762 0.1
Utilities 274,001 Veba AG 15,857,196 13,911,371 0.2
Total Common Stocks in Germany 60,950,604 58,551,654 0.9
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Percent of
COUNTRY Industries Held Common Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Hong Kong Banking 1,133,659 HSBC Holdings PLC $ 6,688,836 $ 15,771,307 0.2%
Multi-Industry 2,820,950 Hutchison Whampoa Limited 13,781,517 35,085,093 0.6
Total Common Stocks in Hong Kong 20,470,353 50,856,400 0.8
Indonesia Paper & Pulp 2,700,000 Asia Pacific Resources
International Holdings
Ltd. 'A' (c) 7,030,787 3,543,750 0.1
553,765 Asia Pulp & Paper Company
Ltd. (ADR)++ (USD)(c) 6,368,298 969,089 0.0
--------------- --------------- ------
13,399,085 4,512,839 0.1
Tobacco 17,332,000 PT Hanjaya Mandala Sampoerna Tbk 24,746,565 20,368,803 0.3
Total Common Stocks in Indonesia 38,145,650 24,881,642 0.4
Ireland Banking 1,153,482 Bank of Ireland 7,338,003 8,706,341 0.1
Total Common Stocks in Ireland 7,338,003 8,706,341 0.1
Israel Telecommunications 550,000 ECI Telecom Limited
& Equipment (US Registered Shares)(USD) 14,929,680 12,925,000 0.2
Total Common Stocks in Israel 14,929,680 12,925,000 0.2
Italy Banking 3,101,128 Banca Intesa SpA 12,001,369 12,853,444 0.2
Insurance 347,616 Assicurazioni Generali 10,031,937 11,417,274 0.2
Oil & Gas 1,740,449 ENI SpA 10,721,454 9,411,805 0.2
Producers
Telecommunications 345,374 Telecom Italia Mobile (TIM) SpA 2,835,123 2,933,245 0.0
1,421,192 Telecom Italia SpA
(Registered Shares) 5,340,139 7,721,501 0.1
--------------- --------------- ------
8,175,262 10,654,746 0.1
Total Common Stocks in Italy 40,930,022 44,337,269 0.7
Japan Automobiles & 3,282,000 Suzuki Motor Corporation 30,510,247 35,167,506 0.5
Equipment
Banking 201,000 The Asahi Bank, Ltd. 580,449 791,556 0.0
Banking & 1,720,000 Shinko Securities Co., Ltd. 4,377,152 5,229,783 0.1
Financial
Beverages 1,500,000 Chukyo Coca-Cola Bottling
Co., Ltd. 15,603,941 12,377,507 0.2
539,200 Coca-Cola West Japan Company
Limited 12,213,714 18,370,034 0.3
603,000 Hokkaido Coca-Cola Bottling
Co., Ltd. 8,131,905 4,970,235 0.1
691,000 Kinki Coca-Cola Bottling
Co., Ltd. 10,472,103 7,277,681 0.1
1,143,000 Mikuni Coca-Cola Bottling 15,815,229 12,551,122 0.2
--------------- --------------- ------
62,236,892 55,546,579 0.9
Capital Goods 12,900,000 Kawasaki Heavy Industries Ltd. (c) 35,297,925 13,350,124 0.2
7,875,000 Mitsubishi Heavy Industries, Ltd. 44,268,610 30,579,723 0.5
--------------- --------------- ------
79,566,535 43,929,847 0.7
Electrical 1,157,000 Chudenko Corporation 30,014,026 12,153,851 0.2
Construction 3,018,000 Kinden Corporation 33,535,540 19,790,164 0.3
--------------- --------------- ------
63,549,566 31,944,015 0.5
Electrical 103,000 Murata Manufacturing Co., Ltd. 3,081,369 12,319,626 0.2
Equipment
Electronics 1,299,000 Hitachi Ltd. 9,381,584 13,919,132 0.2
Financial 3,720,000 Daiwa Securities Group Inc. 13,118,782 41,189,486 0.6
Services 927,000 Kokusai Securities Co., Ltd. 7,739,975 7,810,605 0.1
835,000 The Nomura Securities Co., Ltd. 11,012,965 17,703,315 0.3
--------------- --------------- ------
31,871,722 66,703,406 1.0
Industrial 28,000 Miura Co., Ltd. 466,635 376,188 0.0
Insurance 1,814,000 The Chiyoda Fire & Marine
Insurance Company, Limited 5,689,193 4,851,067 0.1
7,366,000 The Dai-Tokyo Fire and Marine
Insurance Co., Ltd. 30,725,803 21,519,864 0.3
1,179,000 The Dowa Fire & Marine
Insurance Co., Ltd. 3,063,032 2,807,400 0.0
7,655,000 The Koa Fire & Marine
Insurance Co., Ltd. 31,355,822 28,323,290 0.4
3,765,000 Mitsui Marine and Fire
Insurance Company, Ltd. 18,235,822 19,102,574 0.3
6,111,000 The Nichido Fire & Marine
Insurance Co., Ltd. 31,455,545 31,565,198 0.5
5,834,000 The Nippon Fire & Marine
Insurance Co., Ltd. 22,988,843 21,692,499 0.3
999,000 The Nisshin Fire and Marine
Insurance Company, Limited 2,688,731 2,104,314 0.0
10,415,000 The Sumitomo Marine & Fire
Insurance Co., Ltd. 60,440,502 63,525,872 1.0
2,804,000 The Tokio Marine & Fire
Insurance Co. Ltd. 29,620,271 30,970,089 0.5
8,204,000 The Yasuda Fire & Marine
Insurance Co. Ltd. 39,745,679 42,301,053 0.6
--------------- --------------- ------
276,009,243 268,763,220 4.0
Office Equipment 707,000 Canon, Inc. 9,065,660 28,036,542 0.5
Packaging & 1,103,000 Toyo Seikan Kaisha, Ltd. 25,118,395 18,688,067 0.3
Containers
Pharmaceuticals 1,261,000 Sankyo Company, Ltd. 28,124,373 27,774,567 0.4
384,000 Taisho Pharmaceutical Company, Ltd. 7,984,458 11,042,769 0.2
--------------- --------------- ------
36,108,831 38,817,336 0.6
Restaurants 647,000 Mos Food Service, Inc. 12,121,005 5,913,600 0.1
618,000 Ohsho Food Service 10,180,663 5,659,859 0.1
--------------- --------------- ------
22,301,668 11,573,459 0.2
Retail Stores 460,000 Ito-Yokado Co., Ltd. 21,319,319 20,769,301 0.3
100,000 Sangetsu Co., Ltd. 3,160,832 1,343,530 0.0
--------------- --------------- ------
24,480,151 22,112,831 0.3
Telecommunications 740 Nippon Telegraph & Telephone
Corporation (NTT) 11,492,964 6,729,737 0.1
Total Common Stocks in Japan 690,199,063 660,648,830 10.1
Mexico Foods 700,000 Grupo Industrial Maseca
SA de CV (ADR)++ (USD) 7,969,925 2,187,500 0.0
Total Common Stocks in Mexico 7,969,925 2,187,500 0.0
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Percent of
COUNTRY Industries Held Common Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Netherlands Broadcasting & 131,730 Wolters Kluwer NV 'A' $ 2,915,057 $ 2,961,073 0.0%
Publishing
Chemicals 311,668 Akzo Nobel NV 10,457,914 14,172,710 0.2
Electrical Equipment 78,351 Koninklijke (Royal)
Philips Electronics NV 2,750,030 3,075,461 0.1
Human Resources 230,891 Vedior NV 'A' 3,161,391 3,434,591 0.1
Insurance 190,500 ING Groep NV 5,893,141 13,065,974 0.2
Multi-Industry 55,714 Hagemeyer NV 1,249,133 1,315,166 0.0
Oil 207,413 Royal Dutch Petroleum Company 13,274,014 12,286,890 0.2
Packaging 221,466 Buhrmann NV 4,542,223 6,044,410 0.1
Real Estate 186,600 Security Capital U.S.
Realty (ADR)++ (USD)(c) 2,639,680 3,918,600 0.1
2,210,960 Security Capital U.S.
Realty (USD)(c) 37,890,837 46,209,064 0.7
--------------- --------------- ------
40,530,517 50,127,664 0.8
Steel 600,655 Ispat International NV
(NY Registered Shares)(USD) 8,985,796 2,327,538 0.0
Total Common Stocks in the
Netherlands 93,759,216 108,811,477 1.7
New Zealand Natural Gas Suppliers 408,784 Natural Gas Corporation
Holdings Limited 262,807 238,502 0.0
Total Common Stocks in New Zealand 262,807 238,502 0.0
Norway Application 21,295 Hands ASA (c) 69,196 66,858 0.0
Development Software
Computer Software 339,969 Merkantildata ASA 3,859,744 1,601,058 0.0
Total Common Stocks in Norway 3,928,940 1,667,916 0.0
Philippines Multi-Industry 9,123,148 Ayala Corporation 1,948,253 1,070,164 0.0
Total Common Stocks in the
Philippines 1,948,253 1,070,164 0.0
Portugal Banking 2,171,860 Banco Comercial Portugues, SA
(BCP)(Registered Shares) 6,370,736 10,842,716 0.2
Electrical 1,594,152 Electricidade de Portugal, SA (EDP) 4,131,404 4,323,850 0.0
Construction
Total Common Stocks in Portugal 10,502,140 15,166,566 0.2
Russia Telecommunications 47,330 Metromedia International
(Warrants)(h)(USD) 0 5,206 0.0
47,330 Metromedia International
(Warrants)(h)(USD) 111,750 2,840 0.0
11,880 Metromedia International
(Warrants)(h)(USD) 30,855 713 0.0
Total Common Stocks in Russia 142,605 8,759 0.0
South Korea Electronics 570 Samsung Electronics 41,248 71,407 0.0
Metals--Steel 525,000 Pohang Iron & Steel Company Ltd. 22,371,025 30,507,692 0.4
1,450,000 Pohang Iron & Steel Company
Ltd. (ADR)++ (USD) 23,878,533 22,928,125 0.4
--------------- --------------- ------
46,249,558 53,435,817 0.8
Telecommunications 18,840 SK Telecom Co. Ltd. 805,981 4,016,440 0.1
100,000 SK Telecom Co. Ltd.
(ADR)++ (USD)(g) 383,420 2,506,250 0.0
--------------- --------------- ------
1,189,401 6,522,690 0.1
Total Common Stocks in South Korea 47,480,207 60,029,914 0.9
Spain Banking 932,571 Banco Santander Central Hispano
SA (ADR)++ (USD) 9,558,854 9,500,567 0.1
Petroleum--Domestic 15,503 Repsol-YPF, SA 318,306 245,987 0.0
Telecommunications 439,654 Telefonica SA (c) 9,174,886 8,373,462 0.1
Utilities--Electric 624,659 Endesa SA 12,058,015 10,165,651 0.2
Total Common Stocks in Spain 31,110,061 28,285,667 0.4
Sweden Appliances 566,447 Electrolux AB 'B' 7,706,999 7,122,986 0.1
Banking 627,330 Skandinaviska Enskilda
Banken (SEB) 'A' 6,854,601 7,387,719 0.1
Engineering & 100,655 SKF AB 'B' 1,463,836 1,491,743 0.0
Construction
Metals--Steel 866,592 Avesta Sheffield AB 7,299,931 2,577,288 0.1
Multi-Industry 192,784 Svedala Industri AB 2,531,671 2,866,748 0.0
Total Common Stocks in Sweden 25,857,038 21,446,484 0.3
Switzerland Insurance 19,959 Zurich Financial Services AG 9,960,380 9,657,019 0.1
Pharmaceuticals 1,181 Roche Holding AG (Genuss) 11,366,008 10,784,728 0.2
Total Common Stocks in Switzerland 21,326,388 20,441,747 0.3
United Aerospace 1,973,375 Rolls-Royce PLC 6,081,130 5,129,313 0.1
Kingdom
Banking 519,431 Barclays PLC 11,105,651 14,874,121 0.2
675,744 HSBC Holdings PLC 7,693,089 9,635,854 0.1
1,417,053 Lloyds TSB Group PLC 15,587,089 14,445,073 0.2
--------------- --------------- ------
34,385,829 38,955,048 0.5
Building & 1,449,004 Hanson PLC 7,623,640 7,648,399 0.1
Construction 325,351 Jarvis PLC 3,797,606 890,554 0.0
--------------- --------------- ------
11,421,246 8,538,953 0.1
Consumer Products 4,179,009 Unilever PLC 23,016,353 28,293,630 0.4
Energy 1,996,536 British Energy PLC 7,252,062 5,218,506 0.1
Financial Services 735,435 Abbey National PLC 10,141,330 10,155,968 0.2
920,035 Alliance & Leicester PLC 9,287,439 7,868,939 0.1
--------------- --------------- ------
19,428,769 18,024,907 0.3
Food & Beverage 523,871 Allied Domecq PLC 2,178,364 2,710,040 0.0
993,654 Bass PLC 13,207,988 9,732,259 0.2
874,225 Diageo PLC 5,621,783 8,257,851 0.1
--------------- --------------- ------
21,008,135 20,700,150 0.3
Food 1,554,999 J Sainsbury PLC 7,987,444 8,744,159 0.1
Merchandising
Foods/Food 1,247,167 Cadbury Schweppes PLC 7,352,771 7,714,908 0.1
Processing
Holding Companies 3,908,221 Invensys PLC 8,475,249 9,335,585 0.1
Insurance 848,967 CGU PLC 11,732,006 11,366,278 0.2
503,226 Prudential Corporation PLC 6,797,165 6,773,909 0.1
602,063 Royal & Sun Alliance Insurance
Group PLC 4,901,101 4,288,224 0.1
--------------- --------------- ------
23,430,272 22,428,411 0.4
Manufacturing 1,179,776 Williams PLC 6,215,540 5,653,404 0.1
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Percent of
COUNTRY Industries Held Common Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Merchandising 1,017,398 Boots Company PLC $ 7,833,909 $ 8,125,500 0.1%
Kingdom
(concluded) Oil--Related 2,046,720 BP Amoco PLC 14,254,737 17,371,586 0.3
Restaurants &
Food Service 1,284,594 Whitbread PLC 11,383,771 9,466,697 0.1
Retail--Food 627,465 Kingfisher PLC 4,825,541 3,753,905 0.1
658,088 Safeway PLC 3,668,078 2,737,821 0.0
--------------- --------------- ------
8,493,619 6,491,726 0.1
Retail Stores 301,675 Signet Group PLC (ADR)++ (USD) 461,861 7,391,038 0.1
Telecommunications 827,744 British Telecommunications PLC 12,049,990 9,711,894 0.2
244,895 Cable & Wireless PLC 3,977,087 3,467,217 0.1
6,605,713 Vodafone AirTouch PLC 29,551,818 27,505,507 0.4
--------------- --------------- ------
45,578,895 40,684,618 0.7
Total Common Stocks in the
United Kingdom 264,061,592 268,268,139 4.0
United Banking 315,000 Charter One Financial, Inc. 5,264,771 7,225,313 0.1
States 516,200 East West Bancorp, Inc. 5,162,000 9,711,013 0.2
2,881,133 Golden State Bancorp Inc. 28,216,747 75,269,600 1.2
3,710,433 Golden State Bancorp Inc.
"Litigation Tracking" (Warrants)(h) 6,126,457 4,869,943 0.1
1,170,000 KeyCorp 17,184,961 28,884,375 0.4
360,000 Mellon Financial Corporation 3,215,775 17,370,000 0.3
634,000 National City Corporation 13,603,115 13,551,750 0.2
757,200 Riggs National Corporation 8,498,851 8,471,175 0.1
800,000 Santander BanCorp 12,583,683 12,200,000 0.2
200,000 U.S. Bancorp 4,159,795 4,837,500 0.1
--------------- --------------- ------
104,016,155 182,390,669 2.9
Business Data 1,797,600 Information Resources, Inc. (b)(c) 17,180,740 9,381,225 0.1
Services
Chemicals 250,000 IMC Global Inc. 3,304,416 3,234,375 0.1
Coal 1,262,300 CONSOL Energy Inc. 12,375,016 21,380,206 0.3
Commercial 380,000 Billing Concepts Corp. (c) 3,610,000 1,128,125 0.0
Services 1,400,000 Cendant Corporation (c) 16,721,730 16,800,000 0.3
--------------- --------------- ------
20,331,730 17,928,125 0.3
Computer Services 900,000 Computer Associates
International, Inc. 26,572,600 28,687,500 0.4
300,000 Electronic Data Systems Corporation 12,121,500 14,081,250 0.2
--------------- --------------- ------
38,694,100 42,768,750 0.6
Computer Software 1,200,000 Hyperion Solutions Corporation (c) 15,858,222 16,650,000 0.3
1,506,000 Inprise Corporation (c) 18,692,609 9,600,750 0.1
100,000 MIPS Technologies, Inc. (Class B)(c) 4,481,364 3,518,750 0.1
--------------- --------------- ------
39,032,195 29,769,500 0.5
Computers & 552,700 Compaq Computer Corporation 14,880,547 16,807,607 0.3
Technology 1,314,900 Silicon Graphics, Inc. (c) 7,031,794 5,917,050 0.1
--------------- --------------- ------
21,912,341 22,724,657 0.4
Data Storage 1,423,200 Imation Corp. (c) 29,086,949 28,197,150 0.4
Electronics 1,000,000 Advanced Micro Devices, Inc. (c) 28,884,215 22,625,000 0.3
399,000 Agilent Technologies, Inc. (c) 16,138,553 18,478,688 0.3
276,000 Benchmark Electronics, Inc. (c) 3,763,927 11,109,000 0.2
1,800,000 Checkpoint Systems, Inc. (b)(c) 18,823,936 14,287,500 0.2
750,000 Electronics for Imaging, Inc. (c) 15,998,337 11,578,125 0.2
1,900,000 Iomega Corporation (c) 9,089,303 9,329,000 0.1
750,000 Komag, Incorporated (c) 12,619,584 1,359,375 0.0
--------------- --------------- ------
105,317,855 88,766,688 1.3
Energy & 100,000 Anadarko Petroleum Corporation 3,085,337 6,405,000 0.1
Petroleum 1,800,000 Arch Coal, Inc. 22,039,335 19,575,000 0.3
216,000 Chevron Corporation 15,939,092 17,739,000 0.3
1,401,800 Key Energy Services, Inc. (c) 5,138,523 12,616,200 0.2
700,000 Noble Affiliates, Inc. 24,498,165 25,681,250 0.4
1,700,000 Occidental Petroleum Corporation 30,663,713 33,787,500 0.5
423,000 Ocean Energy Inc. (c) 5,329,530 5,869,125 0.1
900,000 Rowan Companies, Inc. (c) 12,552,160 22,668,750 0.3
450,000 Tom Brown, Inc. (c) 7,847,801 10,293,750 0.2
1,400,000 USX-Marathon Group 30,755,073 38,062,500 0.6
952,850 Unocal Corporation 26,479,248 32,516,006 0.5
--------------- --------------- ------
184,327,977 225,214,081 3.5
Financial Services 700,000 MetLife, Inc. 9,975,000 19,337,500 0.3
Food Merchandising 322,500 Albertson's, Inc. 6,980,295 7,639,219 0.1
Foods 2,934,700 Tyson Foods, Inc. (Class A) 34,281,093 32,831,956 0.5
Forest Products 648,400 Deltic Timber Corporation (b) 16,395,497 12,603,275 0.2
Healthcare 575,000 Aetna Inc. 32,407,847 33,242,188 0.5
Services 7,045,600 Beverly Enterprises, Inc. (b)(c) 29,887,540 35,228,000 0.5
46,100 Humana Inc. (c) 331,229 558,963 0.0
626,200 Oxford Health Plans, Inc. (c) 8,254,078 21,095,113 0.3
553,600 Sierra Health Services, Inc. (c) 7,658,188 3,010,200 0.0
--------------- --------------- ------
78,538,882 93,134,464 1.3
Household Products 100,000 The Procter & Gamble Company 5,515,500 7,143,750 0.1
Information 900,000 Unisys Corporation (c) 9,897,760 11,475,000 0.2
Processing
Insurance 629,900 The Allstate Corporation 13,068,007 25,353,475 0.4
1,968 American International Group, Inc. 120,464 192,864 0.0
1,496,400 Arch Capital Group Ltd. (b)(c) 25,445,356 23,381,250 0.4
1,250,000 Horace Mann Educators Corporation 17,307,417 21,015,625 0.3
1,100,000 John Hancock Financial
Services, Inc. (c) 18,366,010 34,787,500 0.5
--------------- --------------- ------
74,307,254 104,730,714 1.6
Machinery 500,000 Chicago Bridge & Iron Company NV
(NY Registered Shares) 8,322,525 7,906,250 0.1
530,000 Flowserve Corporation 13,144,284 10,666,250 0.2
350,000 Ingersoll-Rand Company 12,219,626 13,212,500 0.2
1,600,000 McDermott International, Inc. 12,419,752 15,500,000 0.2
726,800 Parker-Hannifin Corporation 24,752,720 30,071,350 0.5
--------------- --------------- ------
70,858,907 77,356,350 1.2
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Percent of
COUNTRY Industries Held Common Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Manufacturing 300,000 Pentair, Inc. $ 7,696,899 $ 8,943,750 0.1%
States
(continued) Medical Equipment 254,400 Packard BioScience Company (c) 2,289,600 4,181,700 0.1
Metals & Mining 360,000 Alcoa Inc. 5,176,249 10,327,500 0.2
1,723,400 Battle Mountain Gold Company (c) 9,518,246 2,369,675 0.0
667,400 Commonwealth Industries, Inc. 8,936,918 3,754,125 0.1
1,300,000 Newmont Mining Corporation 36,292,452 17,631,250 0.3
--------------- --------------- ------
59,923,865 34,082,550 0.6
Metals--Steel 700,000 Nucor Corporation 28,318,902 24,281,250 0.4
2,442,500 Rouge Industries, Inc. (Class A) 38,015,300 5,190,313 0.1
625,500 The Timken Company 10,253,813 8,796,094 0.1
1,750,000 Worthington Industries, Inc. 20,114,016 16,734,375 0.3
--------------- --------------- ------
96,702,031 55,002,032 0.9
Multi-Industry 302,875 Honeywell International Inc. 10,741,726 16,298,461 0.3
400,000 Pall Corporation 8,136,891 8,625,000 0.1
--------------- --------------- ------
18,878,617 24,923,461 0.4
Office Equipment 900,000 Xerox Corporation 18,740,140 7,593,750 0.1
Oil & Gas 475,000 EOG Resources, Inc. 12,931,138 18,703,125 0.3
Producers
Oil--Integrated 150,000 Amerada Hess Corporation 9,872,249 9,300,000 0.1
92,400 Texaco Inc. 5,402,369 5,457,375 0.1
--------------- --------------- ------
15,274,618 14,757,375 0.2
Oil Services 600,000 Diamond Offshore Drilling, Inc. 17,133,401 20,737,500 0.3
1,100,000 Input/Output, Inc. (c) 8,747,796 9,281,250 0.1
50,000 Kerr-McGee Corporation 3,316,000 3,265,625 0.1
150,000 Noble Drilling Corporation (c) 796,875 6,234,375 0.1
300,000 Tidewater Inc. 10,892,460 13,856,250 0.2
150,000 Veritas DGC Inc. (c) 2,017,155 4,500,000 0.1
--------------- --------------- ------
42,903,687 57,875,000 0.9
Packaging & 2,200,000 Crown Cork & Seal Company, Inc. 35,777,442 20,075,000 0.3
Containers 200,000 Sonoco Products Company 3,410,000 3,862,500 0.1
--------------- --------------- ------
39,187,442 23,937,500 0.4
Paper 1,600,000 Louisiana-Pacific Corporation 20,503,341 13,600,000 0.2
1,300,000 Packaging Corp. of America (c) 14,967,516 19,093,750 0.3
--------------- --------------- ------
35,470,857 32,693,750 0.5
Paper & Forest 750,000 Boise Cascade Corporation 21,201,347 21,515,625 0.3
Products 600,000 Bowater Incorporated 27,475,052 32,475,000 0.5
--------------- --------------- ------
48,676,399 53,990,625 0.8
Petroleum 225,500 Devon Energy Corporation 5,351,822 11,365,200 0.2
92,100 Murphy Oil Corporation 5,204,000 5,336,044 0.1
--------------- --------------- ------
10,555,822 16,701,244 0.3
Real Estate 15,200 Security Capital Group
Incorporated (Class A)(b)(c) 9,443,000 13,680,000 0.2
2,700,000 Security Capital Group
Incorporated (Class B)(b)(c) 51,076,767 51,468,750 0.8
400,000 The St. Joe Company 5,837,815 8,075,000 0.1
--------------- --------------- ------
66,357,582 73,223,750 1.1
Real Estate 1,598,300 AMB Property Corporation 34,744,536 37,560,050 0.6
Investment
Trusts 1,972,900 Anthracite Capital, Inc. (b) 29,662,250 14,550,137 0.2
250,000 CarrAmerica Realty Corporation 5,332,260 7,390,625 0.1
2,200,000 Catellus Development Corporation (c) 18,681,432 40,012,500 0.6
550,000 Equity Office Properties Trust 13,346,703 16,568,750 0.3
200,000 Equity Residential Properties Trust 8,022,760 9,412,500 0.1
500,000 Federal Realty Investment Trust 10,072,500 9,625,000 0.1
10,502,500 Meditrust Companies (b) 102,146,585 28,881,875 0.4
1,524,400 Nationwide Health Properties, Inc. 29,805,322 22,770,725 0.3
500,000 Simon Property Group, Inc. 12,036,530 11,156,250 0.2
900,000 United Dominion Realty Trust, Inc. 10,018,651 9,450,000 0.1
--------------- --------------- ------
273,869,529 207,378,412 3.0
Retail Stores 1,400,000 Office Depot, Inc. (c) 10,058,728 11,637,500 0.2
700,000 Toys 'R' Us, Inc. (c) 15,851,134 12,031,250 0.2
--------------- --------------- ------
25,909,862 23,668,750 0.4
Semiconductors 569,000 Lattice Semiconductor
Corporation (c) 12,754,461 16,643,250 0.3
343,500 National Semiconductor
Corporation (c) 8,103,440 8,931,000 0.1
--------------- --------------- ------
20,857,901 25,574,250 0.4
Telecommunications 350,000 AT&T Corp. 12,348,000 8,115,625 0.1
118,922 Beneficial Interest in the
Liquidating Trust of Geotek
Communications, Inc. (Units)(i) 0 1,783,830 0.0
300,000 Comcast Corporation (Class A)(c) 10,058,338 12,206,250 0.2
2,770,200 General Communication, Inc.
(Class A)(b)(c) 18,631,175 21,555,619 0.3
2,024,000 Metromedia International
Group, Inc. (c) 14,719,813 7,529,280 0.1
225,000 QUALCOMM Incorporated (c) 6,026,531 14,653,125 0.2
1,100,000 RCN Corporation (c) 19,803,817 19,456,250 0.3
100,000 Sprint Corporation 3,515,500 2,550,000 0.0
400,000 Verizon Communications 16,451,785 23,125,000 0.4
1,400,000 WorldCom, Inc. (c) 49,755,859 33,162,500 0.5
--------------- --------------- ------
151,310,818 144,137,479 2.1
Telecommunications 650,000 ALLTEL Corporation 33,734,400 41,884,375 0.6
& Equipment
Textiles 4,820,700 Burlington Industries, Inc. (b)(c) 43,222,014 6,025,875 0.1
858,000 Unifi, Inc. (c) 8,878,511 7,453,875 0.1
--------------- --------------- ------
52,100,525 13,479,750 0.2
Tires & Rubber 650,000 The Goodyear Tire & Rubber Company 13,269,650 12,025,000 0.2
Tobacco 3,100,000 DIMON Incorporated (b) 32,623,172 9,493,750 0.1
Transportation 1,700,000 Airborne Freight Corporation 31,017,879 17,212,500 0.3
92,413 Florida East Coast Industries,
Inc. (Class B)(c) 2,942,158 3,147,818 0.1
563,200 J.B. Hunt Transport Services, Inc. 7,495,695 7,356,800 0.1
650,000 Union Pacific Corporation 26,558,596 30,468,750 0.5
--------------- --------------- ------
68,014,328 58,185,868 1.0
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Percent of
COUNTRY Industries Held Common Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Utilities-- 600,000 Edison International $ 9,827,180 $ 14,325,000 0.2%
States Electric 2,280,000 El Paso Electric Company (c) 11,970,000 27,337,200 0.4
(concluded) 1,000,000 Entergy Corporation 24,853,913 38,312,500 0.6
235,200 Exelon Corporation 6,113,806 14,141,400 0.2
540,000 TXU Corp. 16,209,433 20,013,750 0.3
--------------- --------------- ------
68,974,332 114,129,850 1.7
Utilities-- 1,410,000 Niagara Mohawk Holdings Inc. (c) 22,129,837 22,560,000 0.3
Electric & Gas
Waste Management 900,000 Waste Management, Inc. 14,064,146 18,000,000 0.3
Total Common Stocks in the
United States 2,134,776,859 2,155,134,750 32.9
Total Investments in
Common Stocks 3,941,027,586 4,003,843,981 61.1
Equity Closed-End Funds
Austria Financial Services 320,000 The Austria Fund (USD) 2,642,432 2,680,000 0.0
Total Equity Closed-End
Funds in Austria 2,642,432 2,680,000 0.0
Indonesia Financial Services 25,600 Jakarta Growth Fund (USD)(c) 158,080 30,400 0.0
Total Equity Closed-End Funds
in Indonesia 158,080 30,400 0.0
Ireland Financial Services 150,000 Irish Investment Fund (USD) 1,086,041 2,278,125 0.0
Total Equity Closed-End Funds
in Ireland 1,086,041 2,278,125 0.0
South Korea Financial Services 81,262 Fidelity Advisor Korea Fund (USD)(c) 708,885 584,274 0.0
200,000 Korea Equity Fund (USD)(c) 1,369,598 525,000 0.0
1,400,528 Korea Fund (USD)(c) 19,847,163 15,419,813 0.3
200,000 Korean Investment Fund (USD)(c) 1,561,000 925,000 0.0
Total Equity Closed-End Funds in
South Korea 23,486,646 17,454,087 0.3
Total Investments in
Equity Closed-End Funds 27,373,199 22,442,612 0.3
Preferred Stocks
Australia Banking & Financial 307,600 National Australia Bank (7.875%
Convertible)(USD) 7,685,166 7,747,675 0.1
Total Preferred Stocks in Australia 7,685,166 7,747,675 0.1
Cayman Finance 3,804,000,000 TB Finance (Cayman) Ltd.
Islands (2.75% Convertible)(JPY) 26,440,211 29,743,246 0.5
Total Preferred Stocks in the
Cayman Islands 26,440,211 29,743,246 0.5
Germany Chemicals 93,661 Henkel KGaA 4,594,420 5,612,665 0.1
Total Preferred Stocks in Germany 4,594,420 5,612,665 0.1
Portugal Banking 181,400 BCP International Bank
(8% Convertible)(USD) 13,480,528 17,233,000 0.3
Total Preferred Stocks in Portugal 13,480,528 17,233,000 0.3
United Cable Television 1,000,000 Diva Systems Corp.
States (Convertible, Series C)(e) 8,410,000 9,000,000 0.1
1,000,000 Diva Systems Corp.
(Convertible, Series D)(g) 11,440,000 9,000,000 0.1
--------------- --------------- ------
19,850,000 18,000,000 0.2
Chemicals 4,260,000 Hercules Trust II (6.50%
Convertible) 2,482,480 2,552,805 0.0
Metals & Mining Freeport-McMoRan Copper & Gold Inc.:
219,000 (3.50% Convertible-Gold, Series B) 7,703,330 3,887,250 0.1
348,700 (7% Convertible, Series A) 7,918,834 3,835,700 0.1
--------------- --------------- ------
15,622,164 7,722,950 0.2
Real Estate 476,800 Apartment Investment &
Investment Trusts Management Co. (9.375%, Series G) 11,751,900 9,953,200 0.2
97,300 CarrAmerica Realty Corporation
(8.55%, Series C) 2,398,445 2,025,056 0.0
400,000 Crown American Realty Trust
(11%, Series A) 17,800,000 15,300,000 0.2
139,200 First Union Real Estate
(8.40% Convertible, Series A) 3,480,000 2,844,900 0.1
1,000,000 First Washington Realty Trust,
Inc. (9.75%, Series A) 25,000,000 32,250,000 0.5
350,000 National Health Investors,
Inc. (8.50% Convertible) 8,750,000 4,746,875 0.1
717,500 Prime Retail, Inc. (10.50%) 16,366,161 3,094,219 0.0
--------------- --------------- ------
85,546,506 70,214,250 1.1
Transportation 40,000 Union Pacific Capital Trust
(6.25% Convertible) 1,793,600 1,735,000 0.0
Total Preferred Stocks in the
United States 125,294,750 100,225,005 1.5
Total Investments in
Preferred Stocks 177,495,075 160,561,591 2.5
<CAPTION>
Currency Face
Denomination Amount Fixed-Income Securities
<S> <S> <S> <C> <S> <C> <C> <C>
Argentina Banking USD 24,250,000 Banco Rio de la Plata, 8.75% due
12/15/2003 18,137,700 23,522,500 0.3
Food/Dairy USD 23,500,000 Mastellone Hermanos SA, 11.75%
Products due 4/01/2008 23,687,500 15,745,000 0.2
Government City of Buenos Aires:
Obligations ARS 12,500,000 10.50% due 5/28/2004 10,712,793 10,377,075 0.2
USD 3,700,000 11.25% due 4/11/2007 (g) 3,672,250 3,268,062 0.1
USD 6,760,800 Republic of Argentina, 6.812%
due 3/31/2005 (a)(f)(j) 4,316,457 5,907,249 0.1
--------------- --------------- ------
18,701,500 19,552,386 0.4
Total Fixed-Income Securities
in Argentina 60,526,700 58,819,886 0.9
Brazil Banking Banco Nacional de Desenvolvimiento
Economico e Social:
USD 7,500,000 9% due 9/24/2007 6,675,000 6,600,000 0.1
USD 11,040,000 12.193% due 6/16/2008 (a) 6,822,000 10,191,278 0.2
--------------- --------------- ------
13,497,000 16,791,278 0.3
Construction USD 6,350,000 Camargo Correa, 8.75% due 7/22/2005 5,392,125 6,264,612 0.1
Government Republic of Brazil (j):
Obligations USD 31,939,000 11% due 8/17/2040 25,718,604 24,513,182 0.4
USD 10,000,000 Par Z, 6% due 4/15/2024 (a) 6,100,000 6,550,000 0.1
--------------- --------------- ------
31,818,604 31,063,182 0.5
Tele- USD 13,000,000 Globo Comunicacoes e Participacoes,
communications Ltd., 10.625% due 12/05/2008 (g) 12,954,500 10,790,000 0.2
Utilities USD 32,250,000 Espirito Santo-Escelsa, 10% due
7/15/2007 31,726,875 25,155,000 0.3
Total Fixed-Income Securities
in Brazil 95,389,104 90,064,072 1.4
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Currency Shares Percent of
COUNTRY Industries Denomination Held Fixed-Income Securities Cost Value Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
Chile Utilities-- USD 10,000,000 Edelnor, 7.75% due 3/15/2006 $ 5,500,000 $ 2,700,000 0.0%
Electric Empresa Electricidad del Norte:
USD 28,500,000 10.50% due 6/15/2005 (g) 28,625,000 8,550,000 0.1
USD 15,800,000 10.50% due 6/15/2005
(Regulation S) 11,354,750 4,740,000 0.1
Total Fixed-Income Securities
in Chile 45,479,750 15,990,000 0.2
France Banking FRF 15,250,000 Baden Wurtt L-Finance, 6%
due 5/10/2002 2,130,192 1,983,044 0.0
Real Estate EUR 19,879,352 Societe Fonciere Lyonnaise SA,
4% due 10/31/2004
(Convertible Bonds) 22,381,675 17,269,852 0.3
Total Fixed-Income Securities
in France 24,511,867 19,252,896 0.3
Germany Banking Rheinische Hypothekenbank:
EUR 16,000,000 4.25% due 3/22/2001 14,330,909 13,506,933 0.2
EUR 40,000,000 5.50% due 5/02/2002 36,362,906 33,967,265 0.5
--------------- --------------- ------
50,693,815 47,474,198 0.7
Finance-- DEM 42,300,000 Helaba International Finance
Other PLC, 5.75% due 11/30/2001 20,222,125 18,370,042 0.3
Government DEM 10,900,000 City of Vienna, 5.125% due 2/15/2002 5,148,528 4,708,776 0.1
Obligations EUR 47,000,000 Deutsche Bundesbahn, 8.50%
due 7/02/2001 43,529,182 40,589,087 0.6
Deutsche Bundespost:
EUR 16,600,000 5.75% due 4/02/2001 15,200,008 14,080,403 0.2
EUR 26,500,000 8.375% due 6/01/2001 25,116,836 22,842,682 0.4
DEM 17,000,000 Fannie Mae, 5% due 2/16/2001 7,857,715 7,360,650 0.1
EUR 152,000,000 KFW International Finance,
3.125% due 7/16/2001 146,595,180 126,817,898 1.9
--------------- --------------- ------
243,447,449 216,399,496 3.3
Supra- EUR 10,000,000 Council of Europe, 9% due
national 11/14/2001 9,526,474 8,786,434 0.1
International Bank Reconstruction
and Development:
DEM 7,000,000 4.625% due 12/18/2001 3,298,318 3,007,246 0.1
DEM 5,600,000 4.75% due 4/29/2002 2,661,109 2,404,612 0.0
--------------- --------------- ------
15,485,901 14,198,292 0.2
Total Fixed-Income Securities
in Germany 329,849,290 296,442,028 4.5
Hong Kong Financial USD 11,350,000 Hutchison Delta Finance, 7% due
Services 11/25/2001 (Convertible Bonds) 11,804,000 13,449,750 0.2
Multi- USD 7,230,000 First Pacific Capital Corp.,
Industry 2% due 3/27/2002
(Convertible Bonds) 7,175,387 8,061,450 0.1
Hutchison Whampoa Limited:
USD 49,250,000 7.45% due 8/01/2017 41,025,000 44,817,500 0.7
USD 14,650,000 7.50% due 8/01/2027 11,578,562 13,166,688 0.2
--------------- --------------- ------
59,778,949 66,045,638 1.0
Total Fixed-Income Securities
in Hong Kong 71,582,949 79,495,388 1.2
Indonesia Paper & USD 6,100,000 APP Finance VII
Forest Mauritius, 3.50% due 4/30/2003
Products (Convertible Bonds) 4,618,500 2,562,000 0.0
Total Fixed-Income Securities
in Indonesia 4,618,500 2,562,000 0.0
Japan Automotive JPY 960,000,000 Fuji Heavy Industries, #4,
0.90% due 9/30/2003
(Convertible Bonds) 10,137,327 13,231,981 0.2
JPY 1,200,000,000 Toyoda Automatic Loom Works,
#2, 0.35% due 9/30/2003
(Convertible Bonds) 11,309,650 12,429,710 0.2
--------------- --------------- ------
21,446,977 25,661,691 0.4
Banking JPY 3,861,000,000 Fuji International Finance
Trust, 0.25% due 2/01/2002
(Convertible Preference Shares) 21,976,854 29,349,116 0.5
USD 16,500,000 MBL International Finance
(Bermuda), 3% due
11/30/2002 (Convertible Bonds) 15,522,188 17,077,500 0.2
JPY 2,626,000,000 Sumitomo Bank International
Finance NV, 0.75% due
5/31/2001 (Convertible Bonds) 22,642,612 26,935,800 0.4
--------------- --------------- ------
60,141,654 73,362,416 1.1
Beverages JPY1,762,000,000 Kinki Coca-Cola Bottling
Co., Ltd., #1, 0.85% due
12/30/2003 (Convertible Bonds) 15,500,305 16,685,667 0.3
JPY 582,000,000 Shikoku Coca-Cola Bottling
Co., Ltd., #1, 2.40% due
3/29/2002 (Convertible Bonds) 5,406,026 5,383,460 0.1
--------------- --------------- ------
20,906,331 22,069,127 0.4
Electrical JPY1,339,000,000 Matsushita Electric Works,
Equipment Ltd., #9, 1% due 11/30/2005
(Convertible Bonds) 13,252,580 14,654,318 0.2
Electronics JPY 650,000,000 Matsushita Electric Industrial
Company, Ltd., #5, 1.30%
due 3/29/2002 (Convertible Bonds) 6,133,347 11,697,500 0.1
Total Fixed-Income Securities
in Japan 121,880,889 147,445,052 2.2
Malaysia Energy & Petroliam Nasional Berhad:
Petroleum USD 69,725,000 7.75% due 8/15/2015 (g) 37,589,875 63,275,437 1.0
USD 103,314,000 7.625% due 10/15/2026 65,240,977 90,787,177 1.4
--------------- --------------- ------
102,830,852 154,062,614 2.4
Telecommuni- Telekom Malaysia Berhad:
cations USD 24,100,000 4% due 10/03/2004
(Convertible Bonds) 18,016,938 20,726,000 0.3
USD 20,825,000 7.875% due 8/01/2025 10,239,735 18,664,406 0.3
--------------- --------------- ------
28,256,673 39,390,406 0.6
Total Fixed-Income Securities
in Malaysia 131,087,525 193,453,020 3.0
Mexico Energy & USD 10,150,000 Petroleos Mexicanos, 8.625%
Petroleum due 12/01/2023 (g) 4,315,500 8,881,250 0.1
Total Fixed-Income Securities
in Mexico 4,315,500 8,881,250 0.1
New Zealand Government NZD 15,000,000 New Zealand Index Linked Notes,
Obligations 4.50% due 2/15/2016 8,418,821 6,348,217 0.1
Total Fixed-Income Securities
in New Zealand 8,418,821 6,348,217 0.1
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Currency Shares Percent of
COUNTRY Industries Denomination Held Fixed-Income Securities Cost Value Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
Russia Government USD 1,500,000 City of St. Petersburg,
Obligations 9.50% due 6/18/2002 $ 241,875 $ 1,368,750 0.0%
Oil-- USD 12,750,000 Lukinter Finance, 3.50% due 5/06/2002
Related (Convertible Bonds) 11,475,927 13,738,125 0.2
Total Fixed-Income Securities
in Russia 11,717,802 15,106,875 0.2
Singapore Multi- Keppel Corporation Limited
Industry (Redeemable Cumulative Convertible
Preference Shares):
USD 11,950,000 2% due 8/12/2002 (g) 11,942,500 12,935,875 0.2
USD 1,300,000 2% due 8/12/2002 (Regulation S) 1,303,464 1,407,250 0.0
--------------- --------------- ------
13,245,964 14,343,125 0.2
Telecommuni- USD 8,300,000 Fullerton/Singapore Telecom, 0%
cations due 4/02/2003 (Convertible Bonds)(d) 8,001,627 8,777,250 0.2
Total Fixed-Income Securities
in Singapore 21,247,591 23,120,375 0.4
South Africa Insurance USD 35,050,000 Liberty Life International,
6.50% due 9/30/2004
(Convertible Bonds) 35,834,688 32,508,875 0.5
Total Fixed-Income Securities
in South Africa 35,834,688 32,508,875 0.5
South Korea Banking Koram Bank Ltd. (Convertible Bonds):
USD 1,500,000 0.25% due 8/26/2007 (g) 1,447,500 1,725,000 0.0
USD 5,750,000 0.25% due 8/26/2007 (Regulation S) 6,138,392 6,612,500 0.1
--------------- --------------- ------
7,585,892 8,337,500 0.1
Energy Ssangyong Oil Refining Co.:
Related USD 9,755,000 3% due 12/31/2004
(Convertible Bonds) 7,206,838 6,974,825 0.1
USD 4,340,000 3.75% due 12/31/2008 4,489,350 5,229,700 0.1
--------------- --------------- ------
11,696,188 12,204,525 0.2
Utilities-- USD 6,065,000 Korea Electric Power Corp.,
Electric 5% due 8/01/2001
(Convertible Bonds) 5,015,444 5,913,375 0.1
Total Fixed-Income Securities
in South Korea 24,297,524 26,455,400 0.4
United Cable GBP 14,250,000 Telewest Communications PLC,
Kingdom Television 0/9.875% due 4/15/2009 (d) 9,259,860 9,259,860 0.1
Finance USD 2,750,000 Swiss Life Finance, 2% due 5/20/2005 2,641,875 2,774,062 0.1
Government United Kingdom:
Obligations EUR 20,750,000 4.25% due 1/29/2001 19,382,210 17,541,726 0.3
EUR 31,300,000 9.125% due 2/21/2001 28,893,223 26,807,887 0.4
--------------- --------------- ------
48,275,433 44,349,613 0.7
Real Estate GBP 12,250,000 Liberty International PLC, 5.50%
due 4/30/2009 (Convertible Bonds) 15,274,103 18,832,394 0.3
Supra- EUR 15,900,000 European Investment Bank, 6%
national due 4/04/2001 14,722,276 13,504,939 0.2
Tele- USD 23,200,000 International Cabletel, Inc.,
communications 0/11.50% due 2/01/2006 (d) 22,510,207 20,416,000 0.3
Total Fixed-Income Securities
in the United Kingdom 112,683,754 109,136,868 1.7
United Communi- USD 6,350,000 Cordillera Communications Corporation,
States cations 8% due 9/05/2001 (e) 4,318,000 4,318,000 0.1
Electronics USD 9,400,000 Mosel Vitelic Inc., 1% due
2/02/2005 (Convertible Bonds)(g) 9,385,000 8,906,500 0.1
Finance USD 19,110,000 APP Finance VI, 0% due
11/18/2012 (d) 1,960,310 1,863,225 0.0
USD 2,250,000 Bell Atlantic Financial,
5.75% due 4/01/2003
(Convertible Bonds) 2,235,938 2,162,812 0.0
--------------- --------------- ------
4,196,248 4,026,037 0.0
Finance-- USD 50,000,000 CC (USA) Inc., 0% due
Other 9/14/2001 (d)(e) 50,000,000 49,920,000 0.8
Financial EUR 37,000,000 General Electric
Services Capital Corp., 3.75% due 9/21/2001 32,034,456 31,047,588 0.5
USD 3,445,000 Ugly Duckling Corporation, 12%
due 10/23/2003 3,093,610 3,100,500 0.0
--------------- --------------- ------
35,128,066 34,148,088 0.5
Food & USD 15,000,000 Tom's Foods Inc.,
Beverage 10.50% due 11/01/2004 15,000,000 10,650,000 0.2
Healthcare USD 17,450,000 American Retirement Corp.,
5.75% due 10/01/2002
(Convertible Bonds) 17,174,000 11,560,625 0.2
Industrial USD 27,600,000 CTI Holdings SA, 0/11.50% due
4/15/2008 (d) 20,402,294 12,765,000 0.2
Internet At Home Corporation
Service (Convertible Bonds):
Provider USD 2,250,000 4.75% due 12/15/2006 1,440,000 1,397,812 0.0
USD 51,100,000 0.525% due 12/28/2018 22,288,863 20,280,312 0.3
--------------- --------------- ------
23,728,863 21,678,124 0.3
Packaging & Crown Cork & Seal Company, Inc.:
Containers USD 7,300,000 7.125% due 9/01/2002 5,885,625 5,785,250 0.1
USD 11,750,000 8% due 4/15/2023 8,209,895 6,462,500 0.1
USD 11,120,000 7.50% due 12/15/2096 6,799,975 6,004,800 0.1
USD 5,100,000 Crown Cork & Seal SA, 6.75% due
12/15/2003 3,582,750 3,672,000 0.0
--------------- --------------- ------
24,478,245 21,924,550 0.3
Real Estate Security Capital U.S. Realty
(Convertible Bonds):
USD 53,100,000 2% due 5/22/2003 (g) 47,051,094 44,769,938 0.7
USD 3,650,000 2% due 5/22/2003 (Regulation S) 2,902,870 3,077,406 0.1
--------------- --------------- ------
49,953,964 47,847,344 0.8
Real Estate USD 25,500,000 Alexander Haagen Properties, Inc.,
Investment 7.25% due 2/27/2003
Trusts (Exchangeable Debentures) 25,291,250 24,735,000 0.4
HRPT Properties Trust
(Convertible Bonds):
USD 40,000,000 7.25% due 10/01/2001 40,000,000 39,000,000 0.6
USD 15,000,000 7.50% due 10/01/2003 15,000,000 13,650,000 0.2
USD 4,500,000 Healthcare Realty Trust, Inc.,
6.55% due 3/14/2002
(Convertible Bonds) 4,360,700 4,052,813 0.1
LTC Properties, Inc.
(Convertible Bonds):
USD 8,000,000 8.50% due 1/01/2001 8,000,000 6,800,000 0.1
USD 3,700,000 8.25% due 7/01/2001 3,644,500 3,052,500 0.1
USD 25,000,000 Leperq Corporate Income Fund,
8% due 3/17/2004
(Exchangeable Secured Notes)(g) 25,000,000 24,000,000 0.4
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Currency Face Percent of
COUNTRY Industries Denomination Amount Fixed-Income Securities Cost Value Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
United Real USD 27,000,000 Malan Realty Investors, Inc.,
States Estate 8.50% due 7/15/2003
(concluded) Investment (Convertible Bonds)(g) $ 27,000,000 $ 23,490,000 0.4%
Trusts USD 5,000,000 Mid-Atlantic Realty Trust,
7.625% due 9/15/2003
(concluded) (Convertible Bonds) 4,875,000 5,212,500 0.1
National Health Investors,
Inc. (Convertible Bonds):
USD 8,625,000 7.75% due 1/01/2001 8,625,000 7,805,625 0.1
USD 4,500,000 7% due 2/01/2004 3,351,130 2,475,000 0.0
USD 5,500,000 Sizeler Property Investors,
Inc., 8% due 7/15/2003
(Convertible Bonds) 5,505,000 4,950,000 0.1
--------------- --------------- ------
170,652,580 159,223,438 2.6
Restaurants USD 15,300,000 Advantica Restaurant Group,
11.25% due 1/15/2008 8,396,752 7,688,250 0.1
Semi- USD 29,000,000 Conexant Systems Inc., 4%
conductors due 2/01/2007 (Convertible
Bonds) 19,097,242 17,617,500 0.3
Steel USD 14,500,000 Republic Technologies, 13.75%
due 7/15/2009 8,313,830 2,175,000 0.0
Tele- USD 14,450,000 Metricom Inc., 13% due 2/15/2010 11,347,100 8,670,000 0.1
communi- USD 132,057,413 Metromedia International Group,
cations 0/10.50% due 9/30/2007 (d) 108,119,569 70,320,572 1.1
USD 44,000,000 United International Holdings,
0/10.75% due 2/15/2008 (d) 30,807,994 27,280,000 0.4
USD 17,000,000 United USN Inc., 0/14% due
9/15/2003 (c)(d)(g) 13,822,784 1,275,000 0.0
--------------- --------------- ------
164,097,447 107,545,572 1.6
US Government & Fannie Mae:
Agency USD 915,000 5.625% due 3/15/2001 917,395 911,139 0.0
Obligations USD 930,000 5.125% due 2/13/2004 912,209 892,512 0.0
USD 163,000,000 US Treasury Inflation
Indexed Notes, 3.375% due
1/15/2007 (k) 161,930,593 173,064,605 2.6
US Treasury Notes:
USD 380,000 5% due 4/30/2001 375,320 377,507 0.0
USD 120,000 5.75% due 6/30/2001 120,711 119,456 0.0
USD 9,500,000 5.50% due 8/31/2001 9,395,352 9,434,640 0.1
--------------- --------------- ------
173,651,580 184,799,859 2.7
Total Fixed-Income Securities
in the United States 797,974,111 706,793,887 10.8
Total Investments in
Fixed-Income Securities 1,901,416,365 1,831,876,089 27.9
Total Long-Term Investments 6,047,312,225 6,018,724,273 91.8
Short-Term Securities
United Commercial USD 24,300,000 General Electric Capital Corp.,
States Paper** 6.64% due 11/01/2000 24,300,000 24,300,000 0.4
USD 15,000,000 J.P. Morgan Securities Inc.,
6.48% due 11/10/2000 14,975,700 14,975,700 0.2
Total Investments in
Commercial Paper 39,275,700 39,275,700 0.6
US USD 20,000,000 Federal Home Loan Banks,
Government 6.40% due 11/01/2000 20,000,000 20,000,000 0.3
Agency Obligations**
Total Investments in US Government
Agency Obligations 20,000,000 20,000,000 0.3
Total Short-Term Investments 59,275,700 59,275,700 0.9
<CAPTION>
OPTIONS Nominal Value Premiums
PURCHASED Covered by Options Issue Paid
<S> <C> <S> <C> <C>
Call Options 13,300 Standard & Poor's 500 Index,
Purchased expiring December 2000
at USD 1500 1,242,220 987,525 0.0
Total Options Purchased 1,242,220 987,525 0.0
Total Investments 6,107,830,145 6,078,987,498 92.7
OPTIONS Premiums
WRITTEN Received
Call Options 150,000 ACE Limited, expiring November 2000
Written at USD 30 (432,985) (1,443,750) 0.0
100,000 ALLTEL Corporation, expiring
January 2001 at USD 60 (399,597) (725,000) 0.0
100,000 AT&T Corp., expiring January 2001
at USD 35 (384,487) (31,250) 0.0
100,000 AT&T Corp., expiring January 2001
at USD 40 (328,239) (18,750) 0.0
100,000 Advanced Micro Devices, Inc.,
expiring January 2001 at USD 40 (496,983) (62,500) 0.0
399,000 Agilent Technologies, Inc., expiring
January 2001 at USD 50 (2,293,894) (2,044,875) (0.1)
200,000 Albertson's, Inc., expiring March 2001
at USD 25 (331,103) (375,000) 0.0
25,000 Benchmark Electronics, Inc., expiring
January 2001 at USD 55 (224,243) (46,875) 0.0
300,000 Comcast Corporation (Class A),
expiring January 2001 at USD 37.5 (1,071,864) (1,800,000) 0.0
100,000 Computer Associates International,
Inc., expiring November 2000 at USD 35 (209,493) (62,500) 0.0
100,000 Computer Associates International,
Inc., expiring January 2001
at USD 30 (421,986) (450,000) 0.0
100,000 Computer Associates International,
Inc., expiring January 2001
at USD 35 (271,991) (250,000) 0.0
100,000 ECI Telecom Limited
(US Registered Shares),
expiring November 2000 at USD 35 (500,108) (25,000) 0.0
50,000 ECI Telecom Limited
(US Registered Shares),
expiring November 2000 at USD 40 (245,122) (12,500) 0.0
300,000 Electronic Data Systems
Corporation, expiring
December 2000 at USD 42.5 (1,540,948) (1,912,500) 0.0
25,000 Electronics for Imaging, Inc.,
expiring January 2001
at USD 25 (114,871) (10,937) 0.0
300,000 Honeywell International Inc.,
expiring January 2001
at USD 40 (903,470) (4,275,000) (0.1)
20,000 Hyperion Solutions Corporation,
expiring February 2001
at USD 35 (99,397) (5,000) 0.0
172,000 National Semiconductor Corporation,
expiring May 2001
at USD 30 (733,207) (989,000) 0.0
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
OPTIONS Nominal Value Premiums Percent of
WRITTEN (concluded) Covered by Options Issue Received Value Net Assets
<S> <C> <S> <C> <C>
Call Options 100,000 Noble Affiliates, Inc., expiring
Written November 2000 at
(concluded) USD 35 $ (274,991) $ (312,500) 0.0%
100,000 Noble Affiliates, Inc., expiring
February 2001 at USD 40 (436,615) (412,500) 0.0
100,000 Noble Affiliates, Inc., expiring
February 2001 at USD 45 (406,246) (243,750) 0.0
200,000 Office Depot, Inc., expiring
January 2001 at USD 7.5 (282,740) (300,000) 0.0
200,000 Oxford Health Plans, Inc.,
expiring November 2000
at USD 25 (643,978) (2,100,000) 0.0
100,000 Oxford Health Plans, Inc.,
expiring May 2001 at USD 37.5 (473,784) (575,000) 0.0
23,000 Pall Corporation, expiring
December 2000 at USD 22.5 (36,684) (20,125) 0.0
100,000 Pall Corporation, expiring
December 2000 at USD 25 (196,993) (25,000) 0.0
100,000 The Procter & Gamble Company,
expiring January 2001
at USD 60 (471,984) (1,300,000) 0.0
100,000 Sprint Corporation, expiring
January 2001 at USD 40 (396,987) (50,000) 0.0
400,000 Unisys Corporation, expiring
January 2001 at USD 12.5 (756,734) (975,000) 0.0
400,000 Unisys Corporation, expiring
January 2001 at USD 15 (581,740) (500,000) 0.0
100,000 Unisys Corporation, expiring
April 2001 at USD 15 (174,874) (212,500) 0.0
200,000 Verizon Communications, expiring
January 2001 at USD 45 (690,061) (2,350,000) (0.1)
50,000 Verizon Communications, expiring
January 2001 at USD 55 (160,995) (287,500) 0.0
50,000 Verizon Communications, expiring
April 2001 at USD 50 (198,493) (562,500) 0.0
100,000 WorldCom, Inc., expiring January
2001 at USD 45 (346,988) (18,750) 0.0
Total Options Written (17,534,875) (24,785,562) (0.3)
Total Investments, Net of Options Written $ 6,090,295,270 6,054,201,936 92.4
===============
Foreign Time Deposits* 286,527,129 4.4
Variation Margin on Financial Futures Contracts*** 313,467 0.0
Unrealized Appreciation on Forward Foreign Exchange Contracts--Net**** 12,664,291 0.2
Other Assets Less Liabilities 200,799,647 3.0
--------------- ------
Net Assets $ 6,554,506,470 100.0%
=============== ======
(a)Floating rate note.
(b)Investment in companies of 5% or more of whose outstanding
securities are held by the Fund (such companies are defined as
"Affiliated Companies" in Section 2 (a)(3) of the Investment Company
Act of 1940) are as follows:
Net Share Net Dividend
Industry Affiliate Activity Cost Income
Real Estate Anthracite
Investment Capital, Inc. 1,972,900 $ 29,662,250 $ 1,716,423
Trusts
Insurance Arch Capital
Group Ltd. 1,496,400 25,445,356 ++
Healthcare Beverly
Services Enterprises, Inc. 3,105,400 5,828,395 ++
Textiles Burlington
Industries, Inc. 1,213,400 4,652,853 ++
Electronics Checkpoint
Systems, Inc. -- (1,163,801) ++
Tobacco DIMON
Incorporated 1,224,300 3,370,042 541,170
Forest Deltic Timber
Products Corporation 318,400 7,023,904 142,200
Telecommuni- General
cations Communication,
Inc. (Class A) -- -- ++
Business Data Information
Services Resources, Inc. -- -- ++
Real Estate Meditrust
Investment Companies 5,726,400 23,047,777 2,120,600
Trusts
Telecommuni- Rogers Wireless
cations Communications
Inc. 'B' -- -- ++
Telecommuni- Rogers Wireless
cations Communications
Inc. 'B' (USD) (579,600) (10,073,680) ++
Real Estate Security Capital
Group
Incorporated
(Class A) 15,200 9,443,000 ++
Real Estate Security Capital
Group
Incorporated
(Class B) (933,600) (27,398,295) ++
++Non-income producing security.
(c)Non-income producing security.
(d)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.
(e)Restricted securities as to resale. The value of the Fund's
investment in restricted securities was $63,238,000, representing
1.0% of net assets.
Acquisition
Issue Date(s) Cost Value
CC (USA) Inc., 0%
due 9/14/2001 12/21/1999 $ 50,000,000 $ 49,920,000
Cordillera Communications
Corporation, 8%
due 9/05/2001 8/31/2000 4,138,000 4,318,000
Diva Systems Corp.
(Convertible Preferred, 7/17/1996 -
Series C) 8/22/1996 8,410,000 9,000,000
------------- ------------
Total $ 62,548,000 $ 63,238,000
============= ============
(g)The security may be offered and sold to "qualified institutional
buyers" under Rule 144A of the Securities Act of 1933.
(h)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.
(i)Geotek Communications, Inc. reorganized as a result of Chapter 11
Bankruptcy. As a result, each holder will receive its pro-rata share
of Units of Beneficial Interest in the Liquidating Trust of Geotek
Communications, Inc.
(j)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.
(k)All or a portion of security held as collateral in connection
with open financial futures contracts.
++American Depositary Receipts (ADR).
*Foreign time deposits bear interest at 4.72%, 4.69% and 4.82% and
mature on 11/03/2000, 11/10/2000 and 11/17/2000, respectively.
**Commercial Paper and certain US Government Agency Obligations are
traded on a discount basis; the interest rates shown reflect the
discount rates paid at October 31, 2000.
***Financial futures contracts purchased as of October 31, 2000 were
as follows:
Number of Expiration
Contracts Issue Exchange Date Value
285 Nikkei 225 OSAKA December 2000 $ 37,846,872
30 Standard & Poor's
500 Index NYSE December 2000 10,801,500
-------------
Total Financial Futures Contracts Purchased
(Total Contract Price--$53,750,524) $ 48,648,372
=============
Financial futures contracts sold as of October 31, 2000 were as
follows:
Number of Expiration
Contracts Issue Exchange Date Value
170 Japanese
Government Bond Tokyo December 2000 $207,599,597
------------
Total Financial Futures Contracts Sold
(Total Contract Price--$203,733,126) $207,599,597
============
****Forward foreign exchange contracts as of October 31, 2000 were
as follows:
Unrealized
Foreign Expiration Appreciation
Currency Sold Date (Depreciation)
CHF 40,000,000 December 2000 $ (13,689)
GBP 97,000,000 November 2000 92,575
GBP 16,000,000 December 2000 (39,680)
JPY 32,000,000,000 November 2000 9,206,044
JPY 37,000,000,000 December 2000 3,352,369
SEK 178,000,000 November 2000 66,672
-------------
Total Unrealized Appreciation on Forward
Foreign Exchange Contracts--Net
(USD Commitment--$852,088,552) $ 12,664,291
=============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 2000
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of October 31, 2000
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$6,106,587,925) $ 6,077,999,973
Options purchased, at value (cost--$1,242,220) 987,525
Unrealized appreciation on forward foreign exchange contracts 12,664,291
Foreign cash 123,724,734
Cash 9,264,272
Foreign time deposits 286,527,129
Receivables:
Securities sold $ 113,907,531
Interest 31,774,892
Dividends 5,832,940
Forward foreign exchange contracts 3,306,712
Options written 2,803,337
Capital shares sold 2,270,088
Variation margin 313,467 160,208,967
---------------
Prepaid registration fees and other assets 2,555,077
---------------
Total assets 6,673,931,968
---------------
Liabilities: Options written, at value (premiums received--$17,534,875) 24,785,562
Payables:
Securities purchased 53,259,734
Capital shares redeemed 28,198,851
Investment adviser 4,065,744
Distributor 3,754,146 89,278,475
---------------
Accrued expenses and other liabilities 5,361,461
---------------
Total liabilities 119,425,498
---------------
Net Assets: Net assets $ 6,554,506,470
===============
Net Assets Class A Shares of Common Stock, $.10 par value, 450,000,000
Consist of: shares authorized $ 8,542,860
Class B Shares of Common Stock, $.10 par value, 2,000,000,000
shares authorized 25,711,504
Class C Shares of Common Stock, $.10 par value, 200,000,000
shares authorized 2,260,562
Class D Shares of Common Stock, $.10 par value, 900,000,000
shares authorized 9,830,837
Paid-in capital in excess of par 5,838,348,243
Undistributed realized capital gains on investments
and foreign currency transactions--net 712,561,650
Unrealized depreciation on investments and foreign
currency transactions--net (42,749,186)
---------------
Net assets $ 6,554,506,470
===============
Net Asset Class A--Based on net assets of $1,224,612,690 and
Value: 85,428,597 shares outstanding $ 14.33
===============
Class B--Based on net assets of $3,611,061,365 and
257,115,037 shares outstanding $ 14.04
===============
Class C--Based on net assets of $312,568,136 and
22,605,617 shares outstanding $ 13.83
===============
Class D--Based on net assets of $1,406,264,279 and
98,308,366 shares outstanding $ 14.30
===============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Year Ended October 31, 2000
<S> <S> <C> <C>
Investment Interest and discount earned (net of $49,636
Income: foreign withholding tax) $ 217,507,747
Dividends (net of $4,018,378 foreign withholding tax) 81,224,081
Dividends from affiliated companies 4,520,393
Other 613,040
---------------
Total income 303,865,261
---------------
Expenses: Investment advisory fees $ 53,234,817
Account maintenance and distribution fees--Class B 41,534,514
Transfer agent fees--Class B 6,569,650
Account maintenance fees--Class D 3,273,649
Account maintenance and distribution fees--Class C 3,196,112
Custodian fees 1,807,682
Transfer agent fees--Class A 1,787,439
Transfer agent fees--Class D 1,783,399
Accounting services 794,421
Transfer agent fees--Class C 531,460
Professional fees 192,730
Pricing fees 121,122
Directors' fees and expenses 38,119
---------------
Total expenses before reimbursement 114,865,114
Reimbursement of expenses (3,453,631)
---------------
Total expenses after reimbursement 111,411,483
---------------
Investment income--net 192,453,778
---------------
Realized & Realized gain (loss) from:
Unrealized Investments--net 775,335,618
Gain (Loss) on Foreign currency transactions--net (60,638,278) 714,697,340
Investments & ---------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions--Net: Investments--net (284,904,660)
Foreign currency transactions--net 24,938,690 (259,965,970)
--------------- ---------------
Net Increase in Net Assets Resulting from Operations $ 647,185,148
===============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 2000
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Year Ended
October 31,
Increase (Decrease) in Net Assets: 2000 1999
<S> <S> <C> <C>
Operations: Investment income--net $ 192,453,778 $ 337,589,612
Realized gain on investments and foreign
currency transactions--net 714,697,340 609,909,185
Change in unrealized appreciation/depreciation on
investments and foreign currency transactions--net (259,965,970) 923,750,972
--------------- ---------------
Net increase in net assets resulting from operations 647,185,148 1,871,249,769
--------------- ---------------
Dividends & Investment income--net:
Distributions to Class A (62,430,654) (57,727,266)
Shareholders: Class B (165,142,390) (162,008,358)
Class C (12,440,726) (11,648,684)
Class D (57,795,148) (48,673,340)
In excess of investment income--net:
Class A (15,377) --
Class B (40,676) --
Class C (3,064) --
Class D (14,235) --
Realized gain on investments--net:
Class A (98,577,261) (112,720,460)
Class B (340,791,661) (494,148,058)
Class C (24,950,070) (36,790,295)
Class D (93,915,528) (99,226,016)
--------------- ---------------
Net decrease in net assets resulting from
dividends and distributions to shareholders (856,116,790) (1,022,942,477)
--------------- ---------------
Capital Share Net decrease in net assets derived from
Transactions: capital share transactions (589,724,952) (3,573,473,024)
--------------- ---------------
Net Assets: Total decrease in net assets (798,656,594) (2,725,165,732)
Beginning of year 7,353,163,064 10,078,328,796
--------------- ---------------
End of year* $ 6,554,506,470 $ 7,353,163,064
=============== ===============
*Undistributed investment income--net $ -- $ 105,355,140
=============== ===============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
The following per share data and ratios have been derived Class A++
from information provided in the financial statements. For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value,
Operating beginning of year $ 14.79 $ 13.25 $ 15.92 $ 15.17 $ 14.21
Performance: ----------- ----------- ----------- ----------- -----------
Investment income--net .48 .67 .67 .71 .78
Realized and unrealized gain
(loss) on investments and
foreign currency transactions--net .90 2.53 (1.28) 1.57 1.59
----------- ----------- ----------- ----------- -----------
Total from investment operations 1.38 3.20 (.61) 2.28 2.37
----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.71) (.61) (.86) (.88) (.98)
In excess of investment
income--net --++++ -- -- -- --
Realized gain on
investments--net (1.13) (1.05) (1.20) (.65) (.43)
----------- ----------- ----------- ----------- -----------
Total dividends and
distributions (1.84) (1.66) (2.06) (1.53) (1.41)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year $ 14.33 $ 14.79 $ 13.25 $ 15.92 $ 15.17
=========== =========== =========== =========== ===========
Total Investment Based on net asset value
Return:* per share 10.20% 26.30% (4.43%) 16.08% 17.81%
=========== =========== =========== =========== ===========
Ratios to Average Expenses, net of reimbursement .88% .91% .84% .83% .86%
Net Assets: =========== =========== =========== =========== ===========
Expenses .93% .97% .93% .91% .93%
=========== =========== =========== =========== ===========
Investment income--net 3.40% 4.86% 4.62% 4.64% 5.31%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of year
Data: (in thousands) $ 1,224,613 $ 1,305,473 $ 1,513,999 $ 2,132,254 $ 1,841,974
=========== =========== =========== =========== ===========
Portfolio turnover 195.46% 26.95% 49.67% 55.42% 51.26%
=========== =========== =========== =========== ===========
*Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
++++Amount is less than $.01 per share.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 2000
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
<CAPTION>
The following per share data and ratios have been derived Class B++
from information provided in the financial statements. For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value,
Operating beginning of year $ 14.52 $ 13.01 $ 15.65 $ 14.95 $ 14.01
Performance: ----------- ----------- ----------- ----------- -----------
Investment income--net .33 .52 .52 .55 .62
Realized and unrealized gain
(loss) on investments and
foreign currency
transactions--net .88 2.49 (1.26) 1.52 1.59
----------- ----------- ----------- ----------- -----------
Total from investment operations 1.21 3.01 (.74) 2.07 2.21
----------- ----------- ----------- ----------- -----------
Less dividends and
distributions:
Investment income--net (.56) (.45) (.70) (.72) (.84)
In excess of investment
income--net --++++ -- -- -- --
Realized gain on
investments--net (1.13) (1.05) (1.20) (.65) (.43)
----------- ----------- ----------- ----------- -----------
Total dividends and
distributions (1.69) (1.50) (1.90) (1.37) (1.27)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year $ 14.04 $ 14.52 $ 13.01 $ 15.65 $ 14.95
=========== =========== =========== =========== ===========
Total Investment Based on net asset value
Return:* per share 9.05% 25.08% (5.37%) 14.82% 16.71%
=========== =========== =========== =========== ===========
Ratios to Average Expenses, net of reimbursement 1.90% 1.94% 1.86% 1.85% 1.87%
Net Assets: =========== =========== =========== =========== ===========
Expenses 1.95% 1.99% 1.95% 1.93% 1.95%
=========== =========== =========== =========== ===========
Investment income--net 2.40% 3.84% 3.60% 3.62% 4.29%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of year
Data: (in thousands) $ 3,611,061 $ 4,496,037 $ 6,743,780 $ 9,879,603 $ 8,660,279
=========== =========== =========== =========== ===========
Portfolio turnover 195.46% 26.95% 49.67% 55.42% 51.26%
=========== =========== =========== =========== ===========
*Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
++++Amount is less than $.01 per share.
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
<CAPTION>
The following per share data and ratios have been derived Class C++
from information provided in the financial statements. For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value,
Operating beginning of year $ 14.33 $ 12.86 $ 15.50 $ 14.83 $ 13.94
Performance: ----------- ----------- ----------- ----------- -----------
Investment income--net .32 .51 .51 .54 .61
Realized and unrealized gain
(loss) on investments and
foreign currency
transactions--net .87 2.46 (1.24) 1.52 1.58
----------- ----------- ----------- ----------- -----------
Total from investment
operations 1.19 2.97 (.73) 2.06 2.19
----------- ----------- ----------- ----------- -----------
Less dividends and
distributions:
Investment income--net (.56) (.45) (.71) (.74) (.87)
In excess of investment
income--net --++++ -- -- -- --
Realized gain on
investments--net (1.13) (1.05) (1.20) (.65) (.43)
----------- ----------- ----------- ----------- -----------
Total dividends and
distributions (1.69) (1.50) (1.91) (1.39) (1.30)
----------- ----------- ----------- ----------- -----------
Net asset value,
end of year $ 13.83 $ 14.33 $ 12.86 $ 15.50 $ 14.83
=========== =========== =========== =========== ===========
Total Investment Based on net asset
Return:* value per share 9.07% 25.05% (5.38%) 14.84% 16.68%
=========== =========== =========== =========== ===========
Ratios to Average Expenses, net of reimbursement 1.91% 1.95% 1.88% 1.86% 1.88%
Net Assets: =========== =========== =========== =========== ===========
Expenses 1.95% 2.01% 1.96% 1.94% 1.95%
=========== =========== =========== =========== ===========
Investment income--net 2.36% 3.84% 3.61% 3.60% 4.24%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of year
Data: (in thousands) $ 312,568 $ 322,238 $ 503,556 $ 671,467 $ 385,753
=========== =========== =========== =========== ===========
Portfolio turnover 195.46% 26.95% 49.67% 55.42% 51.26%
=========== =========== =========== =========== ===========
*Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
++++Amount is less than $.01 per share.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Allocation Fund, Inc., October 31, 2000
<TABLE>
FINANCIAL HIGHLIGHTS (concluded)
<CAPTION>
The following per share data and ratios have been derived Class D++
from information provided in the financial statements. For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value,
Operating beginning of year $ 14.77 $ 13.23 $ 15.89 $ 15.15 $ 14.19
Performance: ----------- ----------- ----------- ----------- -----------
Investment income--net .44 .64 .64 .68 .77
Realized and unrealized gain
(loss) on investments and foreign
currency transactions--net .90 2.52 (1.28) 1.55 1.57
----------- ----------- ----------- ----------- -----------
Total from investment
operations 1.34 3.16 (.64) 2.23 2.34
----------- ----------- ----------- ----------- -----------
Less dividends and
distributions:
Investment income--net (.68) (.57) (.82) (.84) (.95)
In excess of investment
income--net --++++ -- -- -- --
Realized gain on
investments--net (1.13) (1.05) (1.20) (.65) (.43)
----------- ----------- ----------- ----------- -----------
Total dividends and
distributions (1.81) (1.62) (2.02) (1.49) (1.38)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year $ 14.30 $ 14.77 $ 13.23 $ 15.89 $ 15.15
=========== =========== =========== =========== ===========
Total Investment Based on net asset value
Return:* per share 9.86% 26.01% (4.63%) 15.76% 17.59%
=========== =========== =========== =========== ===========
Ratios to Average Expenses, net of reimbursement 1.13% 1.16% 1.10% 1.08% 1.10%
Net Assets: =========== =========== =========== =========== ===========
Expenses 1.18% 1.21% 1.18% 1.16% 1.18%
=========== =========== =========== =========== ===========
Investment income--net 3.11% 4.61% 4.40% 4.38% 5.04%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of year
Data: (in thousands) $1,406,264 $1,229,415 $1,316,994 $1,479,711 $1,044,136
=========== =========== =========== =========== ===========
Portfolio turnover 195.46% 26.95% 49.67% 55.42% 51.26%
=========== =========== =========== =========== ===========
*Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
++++Amount is less than $.01 per share.
See Notes to Financial Statements.
</TABLE>
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 conformity with accounting
principles generally accepted in the United States of America, 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. If the seller defaults and the fair value of the
collateral declines, liquidation of the collateral by the Fund may
be delayed or limited.
(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 investment strategies to increase or decrease the level of
risk to which the Fund is exposed more quickly and efficiently than
transactions in other types of instruments. 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.
Merrill Lynch Global Allocation Fund, Inc., October 31, 2000
NOTES TO FINANCIAL STATEMENTS (continued)
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. Distributions in
excess of net investment income are due primarily to differing tax
treatments for foreign currency transactions.
(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--Accounting principles generally accepted in
the United States of America require that certain components of net
assets be adjusted to reflect permanent differences between
financial and tax reporting. Accordingly, the current year's
permanent book/tax differences of $73,352 have been reclassified
between undistributed net realized capital gains and accumulated
distributions in excess of net investment income and $277,507 has
been reclassified between undistributed net realized capital gains
and paid-in capital in excess of par. 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 Investment Managers, L.P. ("MLIM"). The general
partner of MLIM 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 FAM Distributors,
Inc. ("FAMD" or the "Distributor"), which is a wholly-owned
subsidiary of Merrill Lynch Group, Inc.
MLIM 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. MLIM 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, 2000, MLIM earned fees of
$53,234,817, of which $3,453,631 was waived. MLIM has entered into a
sub-advisory agreement with Merrill Lynch Investment Managers U.K.,
Ltd. ("MLIM U.K."), an affiliate of MLIM, pursuant to which MLIM
pays MLIM 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 MLIM with respect to the Fund. For the year ended
October 31, 2000, MLIM paid MLIM U.K. a fee of $6,573,809 pursuant
to such agreement.
Pursuant to the Distribution Plans adopted by the Fund in accordance
with Rule 12b-1 under the Investment Company Act of 1940, the Fund
pays the Distributor ongoing account maintenance and distribution
fees. The fees are accrued daily and paid monthly at annual rates
based upon the average daily net assets of the shares as follows:
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, 2000, FAMD 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:
FAMD MLPF&S
Class A $ 4,446 $ 55,613
Class D $17,444 $248,311
For the year ended October 31, 2000, MLPF&S received contingent
deferred sales charges of $3,319,016 and $38,737 relating to
transactions in Class B and Class C Shares, respectively.
Furthermore, MLPF&S received contingent deferred sales charges of
$100,864 and $52,725 relating to transactions subject to front-end
sales charge waivers in Class A and Class D Shares, respectively.
In addition, MLPF&S received $442,160 in commissions on the
execution of portfolio security transactions for the Fund for the
year ended October 31, 2000.
For the year ended October 31, 2000, the Fund paid Merrill Lynch
Security Pricing Service, an affiliate of MLPF&S, $152 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 MLIM.
Certain officers and/or directors of the Fund are officers and/or
directors of MLIM, PSI, MLIM U.K., FDS, FAMD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended October 31, 2000 were $13,271,853,596 and
$14,396,369,582, respectively.
Net realized gains (losses) for the year ended October 31, 2000 and
net unrealized gains (losses) as of October 31, 2000 were as
follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
Long-term investments $ 766,231,657 $ (28,587,952)
Short-term investments (10,103) --
Options purchased -- (254,695)
Options written 7,667,353 (7,250,687)
Financial futures contracts 1,446,711 (8,968,623)
Forward foreign exchange
contracts 76,177,754 12,664,291
Foreign currency transactions (136,816,032) (10,351,520)
-------------- --------------
Total $ 714,697,340 $ (42,749,186)
============== ==============
As of October 31, 2000, net unrealized depreciation for Federal
income tax purposes aggregated $67,761,408, of which $900,418,565
related to appreciated securities and $968,179,973 related to
depreciated securities. At October 31, 2000, the aggregate cost of
investments, including options, for Federal income tax purposes was
$6,121,963,344.
Merrill Lynch Global Allocation Fund, Inc., October 31, 2000
NOTES TO FINANCIAL STATEMENTS (concluded)
Transactions in call options written for the year ended October 31,
2000 were as follows:
Nominal Value Premiums
Covered Received
Outstanding call options written,
beginning of year -- --
Options written 8,223,427 $ 30,323,564
Options expired (940,227) (3,726,302)
Options closed (2,119,200) (9,062,387)
-------------- --------------
Outstanding call options
written,end of year 5,164,000 $ 17,534,875
============== ==============
4. Capital Share Transactions:
Net decrease in net assets derived from capital share transactions
was $589,724,952 and $3,573,473,024 for the years ended October 31,
2000 and October 31, 1999, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Year Ended Dollar
October 31, 2000 Shares Amount
Shares sold 13,403,721 $ 190,332,069
Shares issued resulting from
reorganization 83,682 1,187,919
Shares issued to shareholders in
reinvestment of dividends and
distributions 10,889,017 148,138,385
-------------- --------------
Total issued 24,376,420 339,658,373
Shares redeemed (27,187,196) (385,836,798)
-------------- --------------
Net decrease (2,810,776) $ (46,178,425)
============== ==============
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 B Shares for the Year Ended Dollar
October 31, 2000 Shares Amount
Shares sold 21,290,093 $ 297,553,239
Shares issued resulting from
reorganization 3,358,711 47,233,660
Shares issued to shareholders in
reinvestment of dividends and
distributions 32,130,281 428,911,107
-------------- --------------
Total issued 56,779,085 773,698,006
Automatic conversion of shares (23,847,702) (336,609,291)
Shares redeemed (85,452,940) (1,192,004,947)
-------------- --------------
Net decrease (52,521,557) $ (754,916,232)
============== ==============
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 C Shares for the Year Ended Dollar
October 31, 2000 Shares Amount
Shares sold 3,008,129 $ 41,269,269
Shares issued resulting from
reorganization 1,265,374 17,521,231
Shares issued to shareholders in
reinvestment of dividends and
distributions 2,419,185 31,817,948
-------------- --------------
Total issued 6,692,688 90,608,448
Shares redeemed (6,580,252) (90,469,564)
-------------- --------------
Net increase 112,436 $ 138,884
============== ==============
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 D Shares for the Year Ended Dollar
October 31, 2000 Shares Amount
Shares sold 9,530,270 $ 135,640,126
Automatic conversion of shares 23,442,612 336,609,291
Shares issued resulting from
reorganization 319,363 4,550,494
Shares issued to shareholders in
reinvestment of dividends and
distributions 9,721,639 132,160,866
-------------- --------------
Total issued 43,013,884 608,960,777
Shares redeemed (27,966,242) (397,729,956)
-------------- --------------
Net increase 15,047,642 $ 211,230,821
============== ==============
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)
============== ==============
5. Short-Term Borrowings:
On December 3, 1999, the Fund, along with certain other funds
managed by MLIM and its affiliates, entered into a $1,000,000,000
credit agreement with Bank of America, N.A. and certain other
lenders. The Fund may borrow under the credit agreement to fund
shareholder redemptions and other lawful purposes other than for
leverage. The Fund may borrow up to the maximum amount allowable
under the Fund's current prospectus and statement of additional
information, subject to various other legal, regulatory or
contractual limits. The Fund pays a commitment fee of .09% per annum
based on the Fund's pro rata share of the unused portion of the
facility. Amounts borrowed under the facility bear interest at a
rate equal to, at each fund's election, the Federal Funds rate plus
.50% or a base rate as determined by Bank of America, N.A. The Fund
did not borrow under the facility during the year ended October 31,
2000.
6. Commitments:
At October 31, 2000, the Fund had entered into a foreign exchange
contract, in addition to the contracts listed on the Schedule of
Investments, under which it had agreed to sell foreign currency with
an approximate value of $180,000.
7. Reorganization Plan:
On July 24, 2000, the Fund acquired all of the net assets of Merrill
Lynch Asset Growth Fund, Inc., Merrill Lynch Asset Income Fund, Inc.
and the Global Opportunity Portfolio of The Asset Program, Inc.
pursuant to a plan of reorganization. The acquisition was
accomplished by a tax-free exchange of the following capital shares:
Common
Stock Shares
Exchanged
Merrill Lynch Asset Growth Fund, Inc. 615,350
Merrill Lynch Asset Income Fund, Inc. 863,104
Global Opportunity Portfolio of The Asset
Program, Inc. 4,581,614
In exchange for these shares, the Fund issued 5,027,130 Common Stock
shares. As of that date, net assets of the acquired funds, including
unrealized appreciation and accumulated net realized capital losses,
were as follows:
Accumulated
Net
Net Unrealized Realized
Assets Appreciation Losses
Merrill Lynch Asset Growth
Fund, Inc. $ 5,988,939 $ 850,264 $ (46,858)
Merrill Lynch Asset Income
Fund, Inc. $ 8,686,936 $ 273,903 $ (1,786)
Global Opportunity
Portfolio of the Asset
Program, Inc. $ 55,817,430 $ 8,005,935 $ (228,862)
The aggregate net assets of the Fund immediately after the
acquisition amounted to $6,926,130,640.
8. Subsequent Event:
On December 1, 2000, the Fund's Board of Directors declared an
ordinary income dividend and a long-term capital gains distribution
payable on December 19, 2000 to shareholders of record as of
December 13, 2000 as follows:
Long-Term
Ordinary Capital
Income Gains
Class A $.537295 $1.282528
Class B $.460309 $1.282528
Class C $.463895 $1.282528
Class D $.519594 $1.282528
Merrill Lynch Global Allocation Fund, Inc., October 31, 2000
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, 2000, 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 auditing standards
generally accepted in the United States of America. 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, 2000 by
correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures.
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, 2000,
the results of its operations, the changes in its net assets, and
the financial highlights for the respective stated periods in
conformity with accounting principles generally accepted in the
United States of America.
Deloitte & Touche LLP
Princeton, New Jersey
December 19, 2000
<TABLE>
IMPORTANT TAX INFORMATION (unaudited)
<CAPTION>
The following information summarizes all per share distributions
paid by Merrill Lynch Global Allocation Fund, Inc. during its
taxable year ended October 31, 2000:
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:
12/14/1999 12/20/1999 $.063032 $.052355 $.364922 $.619626 $1.099935 $.007485 $.489340
07/05/2000 07/11/2000 $.025221 $.007807 $.114274 $.104667 $ .251969 $.002745 --
Class B Shares:
12/14/1999 12/20/1999 $.058534 $.048619 $.338879 $.575405 $1.021437 $.007485 $.489340
07/05/2000 07/11/2000 $.017694 $.005477 $.080168 $.073428 $ .176767 $.002745 --
Class C Shares:
12/14/1999 12/20/1999 $.058620 $.048691 $.339378 $.576253 $1.022942 $.007485 $.489340
07/05/2000 07/11/2000 $.017960 $.005559 $.081373 $.074532 $ .179424 $.002745 --
Class D Shares:
12/14/1999 12/20/1999 $.061962 $.051467 $.358727 $.609107 $1.081263 $.007485 $.489340
07/05/2000 07/11/2000 $.023472 $.007265 $.106345 $.097405 $ .234487 $.002745 --
++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.
Please retain this information for your records.
Merrill Lynch Global Allocation Fund, Inc., October 31, 2000
PORTFOLIO INFORMATION (unaudited)
Worldwide
Investments
As of 10/31/00
Breakdown of Stocks &
Fixed-Income Securities by Percent of
Country Net Assets
United States* 46.1%
Japan 12.3
United Kingdom 5.7
Germany 5.5
Malaysia 3.0
Australia 2.2
Hong Kong 2.0
Brazil 1.9
Netherlands 1.7
South Korea 1.6
France 1.5
Canada 1.5
Bermuda 1.1
Argentina 1.1
Italy 0.7
South Africa 0.5
Portugal 0.5
Cayman Islands 0.5
Spain 0.4
Indonesia 0.4
Singapore 0.4
Sweden 0.3
Switzerland 0.3
Finland 0.3
Chile 0.2
Russia 0.2
Israel 0.2
Austria 0.2
Mexico 0.1
Ireland 0.1
New Zealand 0.1
Denmark 0.1
Norway** 0.0
Philippines** 0.0
*Includes investments in short-term securities.
**Holdings are less than 0.1%.
Ten Largest Holdings Percent of
(Equity Investments) Net Assets
Golden State Bancorp Inc. 1.2%
The Sumitomo Marine & Fire
Insurance Co., Ltd. 1.0
Broken Hill Proprietary Company
Limited 0.8
Security Capital Group Incorporated
(Class B) 0.8
ACE Limited 0.8
Security Capital U.S. Realty (USD) 0.7
The Yasuda Fire & Marine Insurance
Co. Ltd. 0.6
ALLTEL Corporation 0.6
Daiwa Securities Group Inc. 0.6
Catellus Development Corporation 0.6
Ten Largest Industries Percent of
(Equity Investments) Net Assets
Insurance 7.6%
Banking 5.1
Telecommunications 4.7
Energy & Petroleum 3.5
Real Estate Investment Trusts 3.0
Real Estate 2.4
Financial Services 1.9
Utilities--Electric 1.9
Metals--Steel 1.9
Electronics 1.7
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Charles C. Reilly, Director
Kevin A. Ryan, Director
Roscoe S. Suddarth, Director
Richard R. West, Director
Arthur Zeikel, Director
Edward D. Zinbarg, Director
Robert C. Doll, Jr., Senior Vice President
Bryan N. Ison, Senior Vice President and Portfolio Manager
Dennis W. Stattman, Vice President and Portfolio Manager
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
