MERRILL LYNCH
GLOBAL SMALLCAP
FUND, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Quarterly Report
March 31, 1998
<PAGE>
MERRILL LYNCH GLOBAL SMALLCAP FUND, INC.
Officers and
Directors
Arthur Zeikel, President and Director
Donald Cecil, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Edward D. Zinbarg, Director
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Senior Vice President
Hubertus Aarts, Vice President
R. Elise Baum, Vice President
Donald C. Burke, Vice President
Grace Pineda, Vice President
James E. Russell, Vice President
Gerald M. Richard, Treasurer
Philip M. Mandel, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
<PAGE>
Merrill Lynch Global SmallCap Fund, Inc., March 31, 1998
DEAR SHAREHOLDER
The quarter ended March 31, 1998 was positive for most capital markets
worldwide, despite periods of volatility. Investors continued to focus on the
impact that the financial crisis in Asia would have on economic growth
worldwide. In the United States, sentiment fluctuated between a variety of
outlooks. At times, US stock and bond prices reflected expectations that the
slowdown in Asian economic growth would lead to a sharp decline in US business
activity and, ultimately, a deflationary environment. The deterioration of
economic conditions in Japan was of particular concern. During other periods, US
investors appeared to expect that the positive trends of a moderately expanding
economy, declining unemployment, enhanced productivity and corporate profits
growth would continue, unimpeded by the devel opments in Asia. To date, there
have been only a few signs that Asia's troubles are influencing US economic
activity.
The Federal Open Market Committee did not change monetary policy at its meeting
in early February. Subsequently, in his Humphrey-Hawkins testimony before
Congress, Federal Reserve Board Chairman Alan Greenspan indicated that monetary
policy might remain steady for some time. This raised conerns among those US
bond investors who had expected imminent monetary policy easing. However,
subsequent data releases suggested that US economic growth would remain
moderate, which stabilized the bond market.
As 1998 progresses, it is likely that investor focus will remain on
developments in Asia, their potential impact on the US economy, and the Federal
Reserve Board's response to them.
Portfolio Matters
For the quarter ended March 31, 1998, the total returns for Merrill Lynch Global
SmallCap Fund, Inc.'s Class A, Class B, Class C and Class D Shares were +14.57%,
+14.17%, +14.20% and +14.50%, respectively. (Fund results shown do not reflect
sales charges, and would be lower if sales charges were included. Complete
performance information, including average annual total returns, can be found on
pages 4 and 5 of this report to shareholders.) The Fund outperformed its
benchmark, the unmanaged Salomon Brothers Extended Market Index, which returned
+13.04% in US dollar terms for the three months ended March 31, 1998. Although
the Fund outperformed in the United States, Europe and Japan, the Fund's overall
performance was hindered by continued asset allocation to emerging markets.
In Conclusion
We thank you for your investment in Merrill Lynch Global SmallCap Fund, Inc.,
and we look forward to reviewing our outlook and strategy in our upcoming annual
report to shareholders.
Sincerely,
/s/ Arthur Zeikel
Arthur Zeikel
President
/s/ Kenneth Chiang
Kenneth Chiang
Senior Portfolio Manager
/s/ Hubertus Aarts
Hubertus Aarts
Vice President and
Co-Portfolio Manager
European Investments
/s/ R. Elise Baum
R. Elise Baum
Vice President and
Co-Portfolio Manager
North American Investments
/s/ Grace Pineda
Grace Pineda
Vice President and
Co-Portfolio Manager
Emerging Markets Investments
/s/ James Russell
James Russell
Vice President and
Co-Portfolio Manager
Japanese Investments
May 7, 1998
================================================================================
Effective April 15, 1998, Kenneth Chiang is responsible for the day-to-day
management of Merrill Lynch Global SmallCap Fund, Inc. Mr. Chiang has been First
Vice President of Merrill Lynch Asset Management, L.P. ("MLAM") since 1998.
Previously, he was a partner at Samuel Asset Management from 1997 to 1998. Prior
thereto, Mr. Chiang served as Vice President and Portfolio Manager of MLAM from
1993 to 1997.
================================================================================
Worldwide Investments
As of 3/31/1998
Country Percent of
Ten Largest Equity Holdings of Origin Net Assets
Paxson Communications Corp. ........... United States 1.3%
Vimpel-Communications (ADR) ........... Russia 1.2
Metromedia International Group, Inc. .. United States 1.2
Centrais Eletricas de Santa Catarina
S.A. (CELESC) 'B' (Preferred) ....... Brazil 1.1
Paints & Chemicals Industries
Co. S.A.E. (GDR)..... ............... Egypt 1.1
Four Seasons Hotels Ltd. .............. Canada 1.1
Grupo Radio Centro,
S.A. de C.V. (ADR)... ............... Mexico 1.0
QPLInternational Holdings Ltd. ........ Hong Kong 1.0
TKC Corporation........................ Japan 1.0
KSB AG (Preferred) .................... Germany 0.9
Percent of
Ten Largest Industries Net Assets
Computer Software .......................................... 6.2%
Telecommunications & Equipment ............................. 3.6
Insurance .................................................. 3.4
Metals ..................................................... 2.9
Computer Services .......................................... 2.9
Retailing .................................................. 2.9
Natural Resources .......................................... 2.6
Electronics ................................................ 2.5
Manufacturing .............................................. 2.3
Engineering & Construction ................................. 2.3
2 & 3
<PAGE>
Merrill Lynch Global SmallCap Fund, Inc., March 31, 1998
PERFORMANCE DATA
About Fund Performance
Investors are able to purchase shares of the Fund through the Merrill Lynch
Select PricingSM System, which offers four pricing alternatives:
o Class A Shares incur a maximum initial sales charge (front-end load) of
5.25% and bear no ongoing distribution or account main tenance fees. Class
A Shares are available only to eligible investors, as detailed in the
Fund's prospectus. If you were a Class A shareholder prior to October 21,
1994, your Class A Shares were redesignated to Class D Shares on October
21, 1994, which, in the case of certain eligible investors, were
simultaneously exchanged for Class A Shares.
o 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 4 D Shares after
approximately 8 years. (There is no initial sales charge for automatic
share conversions.)
o 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.
o 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 represen tation of future
performance. Figures shown in the "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.
Recent
Performance
Results*
<TABLE>
<CAPTION>
12 Month 3 Month Since Inception
Total Return Total Return Total Return
=================================================================================================
<S> <C> <C> <C>
ML Global SmallCap Fund, Inc. Class A Shares +4.50% +14.57% +15.98%
- -------------------------------------------------------------------------------------------------
ML Global SmallCap Fund, Inc. Class B Shares +3.35 +14.17 + 9.56
- -------------------------------------------------------------------------------------------------
ML Global SmallCap Fund, Inc. Class C Shares +3.34 +14.20 +11.78
- -------------------------------------------------------------------------------------------------
ML Global SmallCap Fund, Inc. Class D Shares +4.22 +14.50 +12.82
=================================================================================================
</TABLE>
* Investment results shown do not reflect sales charges; results shown would
be lower if a sales charge was included. Total investment returns are
based on changes in net asset values for the periods shown, and assume
reinvestment of all dividends and capital gains distributions at net asset
value on the ex-dividend date. The Fund's inception dates are: Class A
Shares and Class CShares, 10/21/94; and Class B Shares and Class D Shares,
8/05/94.
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
Year Ended 3/31/98 +4.50% -0.99%
- --------------------------------------------------------------------------------
Inception (10/21/94) through 3/31/98 +4.40 +2.78
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
Year Ended 3/31/98 +3.35% -0.64%
- ------------------------------------------------------------------------------
Inception (8/5/94) through 3/31/98 +2.53 +2.28
- ------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 4% and is reduced to 0% after
4 years.
** Assuming payment of applicable contingent deferred sales charge.
================================================================================
% Return % Return
Without CDSC With CDSC**
================================================================================
Class C Shares*
================================================================================
Year Ended 3/31/98 +3.34% +2.34%
- ------------------------------------------------------------------------------
Inception (10/21/94) through 3/31/98 +3.29 +3.29
- ------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 1% and is reduced to 0% after
1 year.
** Assuming payment of applicable contingent deferred sales charge.
================================================================================
% Return % Return
Without CDSC With CDSC**
================================================================================
Class D Shares*
================================================================================
Year Ended 3/31/98 +4.22% -1.25%
- ------------------------------------------------------------------------------
Inception (8/5/94) through 3/31/98 +3.36 +1.84
- ------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
4 & 5
<PAGE>
Merrill Lynch Global SmallCap Fund, Inc., March 31, 1998
SCHEDULE OF INVESTMENTS (in US dollars)
<TABLE>
<CAPTION>
Shares Percent of
EUROPE Industries Held Investments Cost Value Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Denmark Electrical & Electronics 3,200 Bang & Olufsen Holding A/S (Class B) $ 193,720 $ 202,267 0.2%
------------------------------------------------------------------------------------------------------------------
Security Services 7,800 Falck A/S 393,022 450,925 0.5
------------------------------------------------------------------------------------------------------------------
Total Investments in Denmark 586,742 653,192 0.7
====================================================================================================================================
Finland Holding Company 2,066 Fiskars OY AB (Class A) 106,683 254,284 0.3
-----------------------------------------------------------------------------------------------------------------
Total Investments in Finland 106,683 254,284 0.3
====================================================================================================================================
France Computer Software 3,144 Altran Technologies S.A. 344,319 398,940 0.5
18,500 Business Objects S.A. (ADR) (a) 225,015 277,500 0.3
---------- ----------- ------
569,334 676,440 0.8
------------------------------------------------------------------------------------------------------------------
Distribution 2,800 Guilbert S.A. 437,291 477,491 0.5
------------------------------------------------------------------------------------------------------------------
Electrical Components 12,000 Cofidur S.A. 488,534 401,519 0.5
------------------------------------------------------------------------------------------------------------------
Holding Company 862 Societe EuraFrance S.A. 260,859 427,621 0.5
------------------------------------------------------------------------------------------------------------------
Plastics 2,437 Compagnie Plastic Omnium S.A. 289,123 329,319 0.4
------------------------------------------------------------------------------------------------------------------
Restaurants 3,000 Leon de Bruxelles S.A. 238,620 312,778 0.3
Total Investments in France 2,283,761 2,625,168 3.0
====================================================================================================================================
Germany Auto & Truck 3,735 Koegel Fahrzeugwerke AG (Preferred) 483,355 477,239 0.5
16,800 SAI Automotive AG 200,468 259,231 0.3
---------- ----------- ------
683,823 736,470 0.8
------------------------------------------------------------------------------------------------------------------
Insurance 4,000 AXA Colonia Konzern AG 444,359 487,277 0.5
----------------------------------------------------------------------------------------------------------------
Machine Tools & Machinery 2,120 Walter AG 574,925 685,241 0.8
----------------------------------------------------------------------------------------------------------------
Machinery & Engineering 8,033 Kloeckner Werke AG 723,566 598,017 0.7
----------------------------------------------------------------------------------------------------------------
Manufacturing 3,680 Escada AG (Preferred) 610,130 529,984 0.6
3,087 KSB AG (Preferred) 442,057 822,309 0.9
---------- ----------- ------
1,052,187 1,352,293 1.5
------------------------------------------------------------------------------------------------------------------
Retail Specialty 13,794 Moebel Walther AG 590,239 425,695 0.5
------------------------------------------------------------------------------------------------------------------
Total Investments in Germany 4,069,099 4,284,993 4.8
====================================================================================================================================
Ireland Foods 59,608 Greencore Group PLC 299,101 336,303 0.4
------------------------------------------------------------------------------------------------------------------
Total Investments in Ireland 299,101 336,303 0.4
====================================================================================================================================
Italy Banking & Finance 12,000 Banca Popolare di Bergamo Credito
Varesino S.p.A. 253,121 274,756 0.3
------------------------------------------------------------------------------------------------------------------
Textile & Apparel 32,000 Societa Italiana Manufatti
(SIMINT) S.p.A. 244,585 338,229 0.4
------------------------------------------------------------------------------------------------------------------
Total Investments in Italy 497,706 612,985 0.7
====================================================================================================================================
Netherlands Building & Construction 15,441 NBM-Amstelland NV 410,332 483,505 0.5
------------------------------------------------------------------------------------------------------------------
Computer Software 17,455 DOCdata NV 254,624 498,786 0.6
34,320 ICT Automatisering NV 332,485 712,047 0.8
---------- ----------- ------
587,109 1,210,833 1.4
------------------------------------------------------------------------------------------------------------------
Electrical Equipment 7,799 Twentsche Kabel Holding NV 309,938 303,390 0.3
------------------------------------------------------------------------------------------------------------------
Engineering & Construction 10,497 Volker Wessels Stevin NV 223,247 349,866 0.4
------------------------------------------------------------------------------------------------------------------
Holding Company 15,152 Internatio-Muller NV 306,486 539,947 0.6
------------------------------------------------------------------------------------------------------------------
Industrial Services 16,531 Koninklijke Pakhoed NV 624,374 595,440 0.7
------------------------------------------------------------------------------------------------------------------
Total Investments in the Netherlands 2,461,486 3,482,981 3.9
====================================================================================================================================
Norway Computer Software 6,182 ContextVision AB 93,624 109,603 0.1
8,684 Merkantildata ASA 205,273 432,233 0.5
---------- ----------- ------
298,897 541,836 0.6
------------------------------------------------------------------------------------------------------------------
Newspaper/Publishing 16,244 Schibsted ASA 337,559 287,995 0.3
------------------------------------------------------------------------------------------------------------------
Total Investments in Norway 636,456 829,831 0.9
====================================================================================================================================
Poland Engineering & Construction 54,607 Elektrim Towarzystwo Handlowe S.A. 189,787 680,806 0.8
------------------------------------------------------------------------------------------------------------------
Total Investments in Poland 189,787 680,806 0.8
====================================================================================================================================
Portugal Retail Sales 9,122 Establecimentos Jeronimo Martins
& Filho S.A. 106,068 375,583 0.4
------------------------------------------------------------------------------------------------------------------
Total Investments in Portugal 106,068 375,583 0.4
====================================================================================================================================
Russia Cellular Telephones 24,360 Vimpel-Communications (ADR) (a) 733,336 1,084,020 1.2
------------------------------------------------------------------------------------------------------------------
Utilities--Communications 652 Nizhnovenergo 42,380 16,952 0.0
------------------------------------------------------------------------------------------------------------------
Total Investments in Russia 775,716 1,100,972 1.2
====================================================================================================================================
Spain Building & Construction 5,900 Abengoa S.A. 423,726 526,954 0.6
------------------------------------------------------------------------------------------------------------------
Manufacturing 3,042 Azkoyen S.A. 390,077 442,473 0.5
------------------------------------------------------------------------------------------------------------------
Total Investments in Spain 813,803 969,427 1.1
====================================================================================================================================
Sweden Computer Services 16,000 Gruppen Mandator AB (B Shares) 369,072 457,939 0.5
29,600 International Business Systems AB 351,277 402,275 0.5
---------- ----------- ------
720,349 860,214 1.0
------------------------------------------------------------------------------------------------------------------
Engineering & Construction 17,546 Svedala Industri AB 230,417 353,839 0.4
------------------------------------------------------------------------------------------------------------------
Forest Products/Paper & 629,500 Rottneros Bruks AB Free 970,956 520,404 0.6
Packaging
------------------------------------------------------------------------------------------------------------------
Holding Company 19,500 Kinnevik AB (B Shares) 441,120 455,528 0.5
------------------------------------------------------------------------------------------------------------------
Hotels 9,395 Scandic Hotels AB 170,526 295,374 0.3
------------------------------------------------------------------------------------------------------------------
Total Investments in Sweden 2,533,368 2,485,359 2.8
====================================================================================================================================
Switzerland Advertising 1,720 Edipresse S.A. (Bearer) 371,998 606,820 0.7
------------------------------------------------------------------------------------------------------------------
Banking 1,715 Banque Cantonale de Geneve 540,989 531,818 0.6
------------------------------------------------------------------------------------------------------------------
Electronics 40 Kudelski S.A. 186,667 254,911 0.3
------------------------------------------------------------------------------------------------------------------
Industrials 1,972 Oerlikon-Buehrle Holdings AG 212,627 347,863 0.4
------------------------------------------------------------------------------------------------------------------
Medical Supplies 109 Disetronic Holding AG 244,616 317,239 0.3
------------------------------------------------------------------------------------------------------------------
Paper & Forest Products 14,800 Mercer International, Inc. 235,767 144,300 0.2
------------------------------------------------------------------------------------------------------------------
Retailing 585 Grands Magasins Jelmoli S.A. 318,680 705,259 0.8
------------------------------------------------------------------------------------------------------------------
Total Investments in Switzerland 2,111,344 2,908,210 3.3
====================================================================================================================================
</TABLE>
6 & 7
<PAGE>
Merrill Lynch Global SmallCap Fund, Inc., March 31, 1998
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in US dollars)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EUROPE Shares Percent of
(concluded) Industries Held Investments Cost Value Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
United Kingdom Aerospace 17,700 DONCASTERS PLC (ADR) (a) $ 323,541 $ 462,413 0.5%
-----------------------------------------------------------------------------------------------------------------
Beverages 131,500 Matthew Clark PLC 1,188,993 458,420 0.5
-----------------------------------------------------------------------------------------------------------------
Building & Construction 57,600 Jarvis PLC 368,278 620,737 0.7
----------------------------------------------------------------------------------------------------------------
Chemicals 194,346 Inspec Group PLC 730,295 788,252 0.9
----------------------------------------------------------------------------------------------------------------
Computer Services 11,062 Misys PLC 109,377 552,489 0.6
----------------------------------------------------------------------------------------------------------------
Computers 71,522 Acorn Group PLC 105,055 237,344 0.3
128,000 Skillsgroup PLC 403,664 547,046 0.6
---------- ----------- ------
508,719 784,390 0.9
-----------------------------------------------------------------------------------------------------------------
Electronic Components 14,613 Fairey Group PLC 123,276 143,764 0.2
-----------------------------------------------------------------------------------------------------------------
Employee Services 127,475 Corporate Services Group PLC 384,653 518,097 0.6
-----------------------------------------------------------------------------------------------------------------
Industrial Services 48,000 Select Appointments (Holdings) PLC 467,928 582,444 0.6
-----------------------------------------------------------------------------------------------------------------
Insurance 18,500 Independent Insurance Group PLC 406,004 519,351 0.6
-----------------------------------------------------------------------------------------------------------------
Merchandising 40,582 Smith (W.H.) Group PLC 245,484 376,125 0.4
-----------------------------------------------------------------------------------------------------------------
Metals 50,288 Johnson Matthey PLC 546,365 519,181 0.6
-----------------------------------------------------------------------------------------------------------------
Oil Services 57,553 Expro International Group PLC 476,994 518,948 0.6
-----------------------------------------------------------------------------------------------------------------
Pharmaceuticals 133,580 Oxford Molecular Group PLC 677,515 432,089 0.5
-----------------------------------------------------------------------------------------------------------------
Rental Services 81,400 Ashtead Group PLC 190,835 330,152 0.4
-----------------------------------------------------------------------------------------------------------------
Textiles 92,949 Dewhirst Group PLC 261,268 410,487 0.4
-----------------------------------------------------------------------------------------------------------------
Total Investments in the
United Kingdom 7,009,525 8,017,339 9.0
===================================================================================================================================
Total Investments in Europe 24,480,645 29,617,433 33.3
===================================================================================================================================
LATIN
AMERICA
===================================================================================================================================
Argentina Retailing 24,889 Grimoldi S.A. 95,150 60,988 0.1
-----------------------------------------------------------------------------------------------------------------
Total Investments in Argentina 95,150 60,988 0.1
-----------------------------------------------------------------------------------------------------------------
Brazil Utilities--Electric 822,478 Centrais Eletricas de Santa Catarina
S.A. (CELESC) 'B' (Preferred) 729,222 983,877 1.1
-----------------------------------------------------------------------------------------------------------------
Total Investments in Brazil 729,222 983,877 1.1
-----------------------------------------------------------------------------------------------------------------
Mexico Banking 350,850 Grupo Financiero Banorte, S.A. de C.V.
(Class B) 387,614 568,545 0.6
-----------------------------------------------------------------------------------------------------------------
Broadcasting--Media 64,118 Grupo Radio Centro, S.A. de C.V.
(ADR) (a) 765,803 909,674 1.0
-----------------------------------------------------------------------------------------------------------------
Engineering & 242,450 Grupo Profesional Planeacion y
Construction Proyectos, S.A. de C.V. (Class B) 1,079,551 596,445 0.7
-----------------------------------------------------------------------------------------------------------------
Total Investments in Mexico 2,232,968 2,074,664 2.3
===================================================================================================================================
Venezuela Textiles 68,880 Sudamtex de Venezuela S.A.C.A.
(ADR) (a) 984,000 309,960 0.4
-----------------------------------------------------------------------------------------------------------------
Total Investments in Venezuela 984,000 309,960 0.4
===================================================================================================================================
Total Investments in Latin America 4,041,340 3,429,489 3.9
===================================================================================================================================
MIDDLE EAST/
AFRICA
===================================================================================================================================
Egypt Industrial--Other 83,200 Paints & Chemicals Industries
Co. S.A.E. (GDR) (b) 977,600 963,040 1.1
-----------------------------------------------------------------------------------------------------------------
Total Investments in Egypt 977,600 963,040 1.1
===================================================================================================================================
South Africa Newspaper/Publishing 41,035 Nasionale Pers Beperk 468,429 338,257 0.4
-----------------------------------------------------------------------------------------------------------------
Retailing 472,110 Metro Cash & Carry Ltd. 453,637 450,120 0.5
-----------------------------------------------------------------------------------------------------------------
Total Investments in South Africa 922,066 788,377 0.9
===================================================================================================================================
Total Investments in the Middle
East/Africa 1,899,666 1,751,417 2.0
===================================================================================================================================
NORTH
AMERICA
===================================================================================================================================
Canada Leisure 27,384 Four Seasons Hotels Ltd. 319,909 941,686 1.1
-----------------------------------------------------------------------------------------------------------------
Mining 32,925 Cambior Inc. 457,703 226,359 0.2
-----------------------------------------------------------------------------------------------------------------
Total Investments in Canada 777,612 1,168,045 1.3
===================================================================================================================================
United States Apparel 50,100 Norton McNaughton, Inc. 538,399 241,106 0.3
-----------------------------------------------------------------------------------------------------------------
Auto--Related 13,200 Meritor Automotive, Inc. 328,880 350,625 0.4
26,100 Miller Industries, Inc. 245,591 190,856 0.2
27,000 Walbro Corp. 494,287 324,000 0.4
---------- ----------- ------
1,068,758 865,481 1.0
-----------------------------------------------------------------------------------------------------------------
Banking & Finance 7,087 Charter One Financial, Inc. 117,313 472,171 0.5
27,930 Civic Bancorp 330,916 516,705 0.6
---------- ----------- ------
448,229 988,876 1.1
-----------------------------------------------------------------------------------------------------------------
Biotechnology 6,150 Biomatrix, Inc. 86,814 181,425 0.2
11,900 COR Therapeutics, Inc. 132,024 145,775 0.2
10,600 Cephalon, Inc. 109,748 147,738 0.2
14,400 Genome Therapeutics Corporation 123,171 123,300 0.1
18,300 Magainin Pharmaceuticals, Inc. 193,027 100,650 0.1
33,000 NABI, Inc. 222,517 99,000 0.1
33,575 NeoRx Corp. 227,194 179,416 0.2
6,800 Neurogen Corporation 90,746 102,425 0.1
8,800 Scios, Inc. 64,850 107,250 0.1
---------- ----------- ------
1,250,091 1,186,979 1.3
-----------------------------------------------------------------------------------------------------------------
Broadcasting 99,300 Paxson Communications Corp. 1,030,960 1,104,713 1.3
-----------------------------------------------------------------------------------------------------------------
Building & Building 11,400 Giant Cement Holding, Inc. 159,638 302,100 0.3
Materials
3,300 Oakwood Homes Corporation 76,173 120,863 0.1
16,200 Ryland Group, Inc. 232,566 447,525 0.5
2,800 Southern Energy Homes, Inc. 33,888 33,775 0.1
12,300 Toll Brothers, Inc. 247,648 345,938 0.4
---------- ----------- ------
749,913 1,250,201 1.4
-----------------------------------------------------------------------------------------------------------------
</TABLE>
8 & 9
<PAGE>
Merrill Lynch Global SmallCap Fund, Inc., March 31, 1998
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<TABLE>
<CAPTION>
NORTH AMERICA Shares Percent of
(concluded) Industries Held Investments Cost Value Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
United States Computer Software 46,300 Ardent Software, Inc. $ 326,081 $ 653,987 0.7%
(continued) 8,800 BISYS Group, Inc. (The) 285,737 308,550 0.4
18,825 Boole & Babbage, Inc. 269,919 458,859 0.5
4,900 Cylink Corporation 70,702 69,825 0.1
10,150 Harbinger Corporation 211,075 380,625 0.4
5,000 Learning Company, Inc. (The) 96,337 115,625 0.1
8,700 Software Spectrum, Inc. 122,887 189,225 0.2
3,963 Sterling Commerce, Inc. 56,142 183,784 0.2
27,300 Structural Dynamics Research Corp. 541,710 679,087 0.8
---------- ----------- ------
1,980,590 3,039,567 3.4
-----------------------------------------------------------------------------------------------------------------
Computers & Computer 10,700 Ikos Systems, Inc. 106,112 70,887 0.1
Services 37,200 Mentor Graphics Corporation 383,458 365,025 0.4
25,300 Phoenix Technologies Ltd. 343,972 302,019 0.3
4,750 Storage Technology Corporation 203,274 361,297 0.4
---------- ----------- ------
1,036,816 1,099,228 1.2
-----------------------------------------------------------------------------------------------------------------
Data Processing 27,000 Axiom, Inc. 336,250 168,750 0.2
5,800 National Data Corporation 204,138 241,062 0.3
12,600 Primark Corporation 348,261 538,650 0.6
69,600 Sybase, Inc. 1,106,807 669,900 0.7
---------- ----------- ------
1,995,456 1,618,362 1.8
-----------------------------------------------------------------------------------------------------------------
Diversified 18,000 ACX Technologies, Inc. 383,079 430,875 0.5
-----------------------------------------------------------------------------------------------------------------
Electronics 43,800 C.P. Clare Corp. 362,400 602,250 0.7
13,500 CHS Electronics, Inc. 285,750 250,594 0.3
12,500 DII Group, Inc. 150,183 268,750 0.3
18,200 ESCO Electronics Corporation 316,504 300,300 0.3
5,600 Hadco Corporation 250,098 221,550 0.2
7,800 Triumph Group, Inc. 225,918 346,125 0.4
---------- ----------- ------
1,590,853 1,989,569 2.2
-----------------------------------------------------------------------------------------------------------------
Environmental Control 14,114 BHA Group Inc. (Class A) 198,583 245,231 0.3
31,100 Envirosource, Inc. 113,803 72,891 0.1
---------- ----------- ------
312,386 318,122 0.4
-----------------------------------------------------------------------------------------------------------------
Gaming 15,800 WMS Industries, Inc. 307,818 494,737 0.6
-----------------------------------------------------------------------------------------------------------------
Healthcare-- 27,400 Magellan Health Services, Inc. 776,534 712,400 0.8
Products/Services 32,500 MedPartners, Inc. 328,107 333,125 0.4
46,800 Ramsay Health Care, Inc. 287,902 152,100 0.2
9,500 Sierra Health Services, Inc. 300,093 378,812 0.4
---------- ----------- ------
1,692,636 1,576,437 1.8
-----------------------------------------------------------------------------------------------------------------
Industrial Outsourcing 18,000 APAC TeleServices, Inc. 248,778 232,875 0.3
50,700 SITEL Corporation 474,026 646,425 0.7
---------- ----------- ------
722,804 879,300 1.0
-----------------------------------------------------------------------------------------------------------------
Insurance 6,600 American National Insurance Co. 570,555 644,325 0.7
5,000 AmerUs Life Holdings Inc. (Class A) 164,375 161,875 0.2
20,000 Gryphon Holdings, Inc. 307,500 345,000 0.4
9,200 HCC Insurance Holdings, Inc. 152,585 211,600 0.3
20,100 PXRE Corp. 452,775 623,100 0.7
300 Trenwick Group, Inc. 10,987 11,175 0.0
---------- ----------- ------
1,658,777 1,997,075 2.3
-----------------------------------------------------------------------------------------------------------------
Investment Management 4,800 Waddell & Reed Financial, Inc. (Class A) 111,824 124,800 0.1
-----------------------------------------------------------------------------------------------------------------
Leisure 13,000 Callaway Golf Company 367,509 377,000 0.4
-----------------------------------------------------------------------------------------------------------------
Machinery 14,000 AGCO Corporation 328,730 415,625 0.5
19,000 Stewart & Stevenson Services, Inc. 447,526 456,000 0.5
---------- ----------- ------
776,256 871,625 1.0
-----------------------------------------------------------------------------------------------------------------
Manufacturing 18,000 Foamex International Inc. 256,500 316,125 0.3
-----------------------------------------------------------------------------------------------------------------
Medical 33,600 HCIA Inc. 421,327 487,200 0.6
15,300 Vivus, Inc. 408,381 179,775 0.2
---------- ----------- ------
829,708 666,975 0.8
-----------------------------------------------------------------------------------------------------------------
Metals 8,150 Applied Industrial Technologies, Inc. 155,388 219,541 0.3
15,800 Castle (A.M.) & Company 291,876 365,375 0.4
17,700 Citation Corporation 238,490 393,825 0.4
17,400 Commonwealth Industries, Inc. 327,256 297,975 0.3
23,000 Shiloh Industries, Inc. 307,437 500,250 0.6
6,700 Wolverine Tube, Inc. 192,590 268,837 0.3
---------- ----------- ------
1,513,037 2,045,803 2.3
-----------------------------------------------------------------------------------------------------------------
Natural Resources 22,700 Benton Oil and Gas Company 427,019 251,119 0.3
18,300 Brown (Tom), Inc. 210,967 409,462 0.5
15,200 Forcenergy Inc. 340,500 402,800 0.5
12,100 Louis Dreyfus Natural Gas Corp. 213,955 220,825 0.2
22,000 Plains Resources, Inc. 137,500 374,000 0.4
15,500 TransTexas Gas Corp. 170,500 243,156 0.3
40,263 Zemex Corporation 344,670 382,498 0.4
---------- ----------- ------
1,845,111 2,283,860 2.6
-----------------------------------------------------------------------------------------------------------------
Office Equipment 21,400 Danka Business Systems PLC (ADR) (a)(d) 387,875 391,888 0.4
-----------------------------------------------------------------------------------------------------------------
Restaurants 21,500 Au Bon Pain Company, Inc. (Class A) 138,629 180,062 0.2
-----------------------------------------------------------------------------------------------------------------
Retailing 20,000 Baker (J.), Inc. 187,041 156,250 0.2
9,200 Department 56, Inc. 213,397 349,600 0.4
18,200 Fingerhut Companies, Inc. 364,195 472,062 0.5
19,500 Micro Warehouse, Inc. 332,347 318,094 0.4
---------- ----------- ------
1,096,980 1,296,006 1.5
-----------------------------------------------------------------------------------------------------------------
Steel 3,600 Novamerican Steel Inc. 39,000 46,350 0.0
-----------------------------------------------------------------------------------------------------------------
Telecommunications & 7,200 Allen Telecom Inc. 127,512 113,400 0.1
Equipment 90,000 Applied Digital Access, Inc. 455,178 720,000 0.8
14,000 Comdial Corporation 87,175 152,250 0.2
9,000 DSP Communications, Inc. 124,304 153,562 0.2
</TABLE>
10 & 11
<PAGE>
Merrill Lynch Global SmallCap Fund, Inc., March 31, 1998
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<TABLE>
<CAPTION>
NORTH AMERICA Shares Percent of
(concluded) Industries Held Investments Cost Value Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
United States Telecommunications & 4,500 Harmonic Lightwaves, Inc. $ 68,800 $ 70,875 0.1%
(concluded) Equipment (concluded) 12,300 MasTec, Inc. 303,503 387,450 0.4
68,400 Metromedia International Group, Inc. 810,535 1,038,825 1.2
36,300 Network Equipment Technologies, Inc. 535,212 589,875 0.6
---------- ----------- ------
2,512,219 3,226,237 3.6
-----------------------------------------------------------------------------------------------------------------
Transportation 12,550 Air Express International Corporation 227,985 332,575 0.4
10,000 Circle International Group, Inc. 252,349 265,000 0.3
---------- ----------- ------
480,334 597,575 0.7
-----------------------------------------------------------------------------------------------------------------
Wire & Cable Products 28,500 Anixter International Inc. 462,092 525,469 0.6
7,600 General Cable Corporation 159,600 344,850 0.4
---------- ----------- ------
621,692 870,319 1.0
-----------------------------------------------------------------------------------------------------------------
Total Investments in the United
States 27,744,239 32,375,253 36.5
===================================================================================================================================
Total Investments in North America 28,521,851 33,543,298 37.8
===================================================================================================================================
PACIFIC
BASIN
===================================================================================================================================
Hong Kong Appliances 332,000 Guangdong Kelon Electrical Holdings
Company Ltd. (Class H) 471,804 385,648 0.4
-----------------------------------------------------------------------------------------------------------------
Cement Manufacturers 1,188,000 Anhui Conch Cement Co. Ltd. (Class H) 353,773 263,727 0.3
-----------------------------------------------------------------------------------------------------------------
Electrical Equipment 1,368,000 Harbin Power Equipment Company Ltd. 248,460 190,687 0.2
-----------------------------------------------------------------------------------------------------------------
Electronic Components 1,805,400 QPL International Holdings Ltd. 1,714,961 897,108 1.0
-----------------------------------------------------------------------------------------------------------------
Foods/Food Processing 6,570,700 Tingyi (Cayman Islands) Holdings Co. 1,145,650 780,207 0.9
-----------------------------------------------------------------------------------------------------------------
Packaging 2,787,400 Sinocan Holdings Ltd. 931,340 500,063 0.6
-----------------------------------------------------------------------------------------------------------------
Telecommunications 276,000 Smartone Telecommunications 539,754 781,905 0.9
-----------------------------------------------------------------------------------------------------------------
Total Investments in Hong Kong 5,405,742 3,799,345 4.3
===================================================================================================================================
Indonesia Banking--International 606,000 PT Bank Bali (Foreign) 634,023 61,301 0.0
-----------------------------------------------------------------------------------------------------------------
Consumer--Goods 1,589,080 PT Wicaksana Overseas International 1,186,891 78,076 0.1
-----------------------------------------------------------------------------------------------------------------
Total Investments in Indonesia 1,820,914 139,377 0.1
===================================================================================================================================
Japan Automobile Parts 23,000 Murakami Corporation 309,120 100,240 0.1
-----------------------------------------------------------------------------------------------------------------
Beverages 79,000 Hokkaido Coca-Cola Bottling Co., Ltd. 1,298,058 712,353 0.8
81,400 Sanyo Coca-Cola Bottling Co., Ltd. 1,118,168 782,928 0.9
---------- ----------- ------
2,416,226 1,495,281 1.7
-----------------------------------------------------------------------------------------------------------------
Chemicals 33,000 Canon Chemicals, Inc. 573,804 317,403 0.4
45,000 Shin-Etsu Polymer Co., Ltd. 188,582 165,690 0.2
---------- ----------- ------
762,386 483,093 0.6
-----------------------------------------------------------------------------------------------------------------
Computer Services 15,000 Sumisho Computer Systems Corp. 249,015 287,421 0.3
51,700 TKC Corporation 1,374,367 846,904 1.0
---------- ----------- ------
1,623,382 1,134,325 1.3
-----------------------------------------------------------------------------------------------------------------
Construction 89,600 Japan Foundation Engineering Co., Ltd. 1,735,016 653,754 0.7
164,000 Yondenko Corp. 1,510,731 617,403 0.7
---------- ----------- ------
3,245,747 1,271,157 1.4
-----------------------------------------------------------------------------------------------------------------
Consumer Electricals 49,000 Roland Corporation 1,175,635 729,035 0.8
-----------------------------------------------------------------------------------------------------------------
Electrical Equipment 16,000 Shinmei Electric Co. 799,257 218,816 0.2
-----------------------------------------------------------------------------------------------------------------
Electronic Components 35,000 Chiyoda Integre Co., Ltd. 220,393 142,020 0.2
-----------------------------------------------------------------------------------------------------------------
Foods/Food Processing 20,000 Ariake Japan Co., Ltd. 711,101 525,999 0.6
-----------------------------------------------------------------------------------------------------------------
Industrials 17,400 Nitto Kohki Company Ltd. 488,740 193,508 0.2
-----------------------------------------------------------------------------------------------------------------
Iron & Steel 193,000 Nippon Chutetsukan K.K. 1,196,396 464,082 0.5
-----------------------------------------------------------------------------------------------------------------
Metal Fabrication 124,000 Toyo Kohan Co., Ltd. 1,057,406 792,005 0.9
-----------------------------------------------------------------------------------------------------------------
Pollution Control 48,000 Organo Corporation 464,813 172,408 0.2
-----------------------------------------------------------------------------------------------------------------
Real Estate 53,000 Keihanshin Real Estate Co. Ltd. 525,507 227,006 0.3
57,680 TOC Company Ltd. 596,958 485,434 0.5
---------- ----------- ------
1,122,465 712,440 0.8
-----------------------------------------------------------------------------------------------------------------
Restaurants 34,000 Mos Food Services, Inc. 976,502 441,990 0.5
83,000 Ohsho Food Service Corp. 2,244,318 767,133 0.9
---------- ----------- ------
3,220,820 1,209,123 1.4
-----------------------------------------------------------------------------------------------------------------
Retail Specialty 52,000 ADO Electric Industrial Co., Ltd. 1,520,682 382,928 0.4
-----------------------------------------------------------------------------------------------------------------
Services 49,000 Ichinen Co., Ltd. 1,148,129 405,020 0.5
-----------------------------------------------------------------------------------------------------------------
Trading 34,000 Japan CBM Corp. 1,197,480 776,676 0.9
-----------------------------------------------------------------------------------------------------------------
Trucking 108,000 Nippon Konpo Unyu Soko Co. 1,045,185 661,407 0.7
-----------------------------------------------------------------------------------------------------------------
Total Investments in Japan 23,725,363 11,869,563 13.4
===================================================================================================================================
Malaysia Advertising 221,000 Seni Jaya Corporation BHD 708,918 136,983 0.1
-----------------------------------------------------------------------------------------------------------------
Newspaper/Publishing 143,000 New Straits Times Press BHD 602,724 224,545 0.3
-----------------------------------------------------------------------------------------------------------------
Total Investments in Malaysia 1,311,642 361,528 0.4
===================================================================================================================================
New Zealand Agriculture 959,650 Wrightson Ltd. 705,431 312,709 0.3
-----------------------------------------------------------------------------------------------------------------
Chemicals 146,000 Fernz Corporation Ltd. 439,021 403,179 0.5
-----------------------------------------------------------------------------------------------------------------
Textiles 176,150 Lane Walker Rudkin Industries, Ltd. 196,618 116,745 0.1
-----------------------------------------------------------------------------------------------------------------
Total Investments in New Zealand 1,341,070 832,633 0.9
===================================================================================================================================
Philippines Financial Services 46,128 Far East Bank & Trust Company 82,959 61,064 0.1
-----------------------------------------------------------------------------------------------------------------
Total Investments in the Philippines 82,959 61,064 0.1
===================================================================================================================================
Thailand Financial Services 93,200 Industrial Finance Corporation
of Thailand 179,847 54,684 0.1
-----------------------------------------------------------------------------------------------------------------
Transportation 62,000 Thoresen Thai Agency PLC 'Express'
(Warrants) (c) 0 3,005 0.0
-----------------------------------------------------------------------------------------------------------------
Total Investments in Thailand 179,847 57,689 0.1
===================================================================================================================================
Total Investments in the Pacific
Basin 33,867,537 17,121,199 19.3
===================================================================================================================================
</TABLE>
12 & 13
<PAGE>
Merrill Lynch Global SmallCap Fund, Inc., March 31, 1998
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<TABLE>
<CAPTION>
SOUTHEAST Shares Percent of
ASIA Industries Held Investments Cost Value Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
India Financial Services 24,764 Industrial Credit & Investment
Corporation of India Ltd.
(ICICI) (GDR) (b) $ 277,849 $ 377,651 0.4%
====================================================================================================================================
Total Investments in Southeast Asia 277,849 377,651 0.4
====================================================================================================================================
<CAPTION>
SHORT-TERM Face
SECURITIES Amount Issue
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Commercial Paper* US$ 2,317,000 General Motors Acceptance Corp.,
6.13% due 4/01/1998 2,317,000 2,317,000 2.6
------------------------------------------------------------------------------------------------------------------
Total Investments in Short-Term
Securities 2,317,000 2,317,000 2.6
====================================================================================================================================
Total Investments $95,405,888 88,157,487 99.3
===========
Unrealized Appreciation on Forward Foreign Exchange Contracts ** 206,184 0.2
Other Assets Less Liabilities 459,190 0.5
----------- -----
Net Assets $88,822,861 100.0%
=========== =====
====================================================================================================================================
Net Asset Value: Class A-Based on net assets of $4,261,789 and 437,330 shares outstanding $ 9.75
===========
Class B-Based on net assets of $67,274,116 and 7,011,727
shares outstanding $ 9.59
===========
Class C-Based on net assets of $4,704,247 and 491,571 shares outstanding $ 9.57
===========
Class D-Based on net assets of $12,582,709 and 1,295,727
shares outstanding $ 9.71
===========
</TABLE>
(a) American Depositary Receipts (ADR).
(b) Global Depositary Receipts (GDR).
(c) Warrants entitle the Fund to purchase a predetermined
number of shares of stock/face amount of bonds at a
predetermined price until the expiration date.
(d) Consistent with the general policy of the Securities and
Exchange Commission, the nationality or domicile of an
issuer for determination of foreign issuer status may be
(i) the country under whose laws the issuer is
organized, (ii) the country in which the issuer's
securities are principally traded, or (iii) the country
in which the issuer derives a significant proportion (at
least 50%) of its revenue or profits from goods produced
or sold, investments made, or services performed in the
country, or in which at least 50% of the assets of the
issuer are situated.
* Commercial Paper is traded on a discount basis; the
interest rate shown is the discount rate paid at the
time of purchase by the Fund.
** Forward foreign exchange contracts as of March 31, 1998
were as follows:
<TABLE>
<CAPTION>
Foreign Currency Expiration Unrealized
Purchased Date Appreciation
---------------------------------------------------------------------------------
<S> <C> <C>
(yen) 551,685,961 April 1998 $206,184
---------------------------------------------------------------------------------
Total Unrealized Appreciation on Forward Foreign Exchange
Contracts--Net (US$ Commitment-$4,360,159) $206,184
========
---------------------------------------------------------------------------------
</TABLE>
EQUITY PORTFOLIO CHANGES
For the Quarter Ended March 31, 1998
Additions APAC TeleServices, Inc.
AXA Colonia Konzern AG
Abengoa S.A.
AmerUS Life Holdings Inc. (Class A)
Ardent Software, Inc.
Azkoyen S.A.
Banca Popolare di Bergamo Credito
Varesino S.p.A.
Bang & Olufsen Holding A/S (Class B)
*Bank Bali (Foreign)
Banque Cantonale de Geneve
Callaway Golf Company
ContextVision AB DSP Communications, Inc.
Danka Business Systems PLC (ADR)
ESCO Electronics Corporation
Falck A/S
Foamex International Inc.
Forcenergy Inc.
Gruppen Mandator AB (B Shares)
Guilbert S.A.
HCC Insurance Holdings, Inc.
Hadco Corporation
Harmonic Lightwaves, Inc.
*Helvetia Patria Holding (Registered)
ICT Automatisering NV
Independent Insurance Group PLC
International Business Systems AB
Jarvis PLC
Kinnevik AB (B Shares)
Kudelski S.A.
Learning Company, Inc. (The)
Leon de Bruxelles S.A.
Louis Dreyfus Natural Gas Corp.
MedPartners, Inc.
Meritor Automotive, Inc.
Miller Industries, Inc.
SAI Automotive AG
Skillsgroup PLC
Societa Italiana Manufatti (SIMINT) S.p.A.
Southern Energy Homes, Inc.
Trenwick Group, Inc.
Waddell & Reed Financial, Inc. (Class A)
Deletions Aim Services Co., Ltd.
Alpha Industries, Inc.
Banco Ganadero S.A. (Class A)
(Preferred) (ADR)
*Bank Bali (Foreign)
Banque Cantonale Vaudois (BCV)
Betrand Faure S.A.
Carli Grey International A/S
Castorama Dubois Investissements S.C.A.
Clondalkin Group PLC
Companhia de Tecidos Norte de Minas
S.A. (COTEMINAS)(Preferred)
Consorcio Alimentos Fabril Pacifico S.A.
Empresa Nacional de Comercio S.A.
Estacionamientos Subterraneos,
S.A. (Ordinary)
Farah, Inc.
Fotolabo S.A.
Gilead Sciences, Inc.
Haven Bancorp, Inc.
*Helvetia Patria Holding (Registered)
Huhtamaki OY
Kanto Biomedical Laboratory Co.
Kalmar Industries AB
Logica PLC
Metromail Corporation
Miura Co., Ltd.
Nitori Co.
Nu Horizons Electronics Corp.
Olicom A/S
Pharmaceutical Product
Development, Inc.
Physician Computer Network, Inc.
Platinum Technology, Inc.
Premier Farnell PLC
Reliastar Financial Corporation
Saurer AG (Registered)
Showa Corporation
Sommer-Allibert S.A.
Sukegawa Electric Co.
Su-Raj Diamonds Ltd.
Towa Corporation
Union des Assurances Federales S.A.
VISX, Inc.
VMARK Software, Inc.
Vallourec S.A.
Vanstar Corporation
Wang Laboratories, Inc.
* Added and deleted in the same quarter.
14 & 15
<PAGE>
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 re port should not be
considered a representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Statements and other information
herein are as dated and are subject to change.
Merrill Lynch
Global SmallCap
Fund, Inc.
Box 9011
Princeton, NJ
08543-9011 #18177-3/98
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