MERRILL LYNCH
GLOBAL SMALLCAP
FUND, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Quarterly Report
September 30, 1999
<PAGE>
MERRILL LYNCH GLOBAL SMALLCAP FUND, INC.
Worldwide Investments As of 9/30/99
Country Percent of
Ten Largest Holdings of Origin Net Assets
PrimaCom AG (ADR) ............... Germany 3.0%
Kingston Communication
(Hull) PLC .................... United Kingdom 1.9
Luminant Worldwide Corporation .. United States 1.7
Stanley Leisure PLC ............. United Kingdom 1.7
Doutor Coffee Co., Ltd. ......... Japan 1.6
Union Tool Co. .................. Japan 1.4
Emmis Communications
Corporation (Class A) ......... United States 1.3
Trintech Group PLC (ADR) ........ Germany 1.3
SPX Corporation ................. United States 1.3
ICT Automatisering NV ........... Netherlands 1.2
Percent of
Ten Largest Industries Net Assets
Computer Software & Systems...... 8.3%
Media & Related.................. 7.0
Telecommunications............... 3.9
Banking & Finance................ 3.6
Financial Services............... 3.4
Leisure.......................... 3.3
Entertainment & Recreation....... 3.1
Restaurants...................... 2.9
Electronics...................... 2.8
Manufacturing.................... 2.6
<PAGE>
Merrill Lynch Global SmallCap Fund, Inc., September 30, 1999
DEAR SHAREHOLDER
During the quarter ended September 30, 1999, the North American equity markets
produced weaker returns relative to the previous quarter. The total return
provided by the unmanaged Russell 2000 Index of US small cap stocks was -6.32%
for the September quarter compared to a total return of -6.24% for the unmanaged
Standard & Poor's 500 Com posite Index. The price return of the US segment of
the unmanaged benchmark Morgan Stanley Capital Inter national (MSCI) World Small
Cap Index was -2.42% for the same three-month period.
Small-capitalization stocks in the major European markets had strong returns
relative to large-capitalization issues. The best-performing market was Italy,
which rose +10.09%, while the weakest markets were the Netherlands and Germany,
which posted returns of -6.12% and -3.58%, respectively, for the quarter. In the
Pacific Rim, the small cap markets of Japan and Australia posted strong gains of
+13.14% and +4.92%, respectively. Hong Kong and Singapore produced weaker
returns of -4.38% and -18.14%, respectively. (References to securities markets
of all countries in this letter to shareholders correspond to those countries'
market weightings in the MSCI World Small Cap Index and are for the three-month
period ended September 30, 1999.)
For the three months ended September 30, 1999, total returns for Merrill Lynch
Global SmallCap Fund, Inc.'s Class A, Class B, Class C and Class D Shares were
+4.40%, +4.14%, +4.17% and +4.41%, respectively. The price return of the MSCI
World Small Cap Index for the September quarter was +2.43%. (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 4 and 5 of this report to
shareholders.)
Beneficial to the Fund's perfor mance was stock selection in Japan, Germany,
Switzerland, the United Kingdom and the United States. The Fund's performance
was hindered by overweighted positions in the Netherlands and by stock selection
in Australia, Canada and France. The Fund continues to benefit from a strong
new-issue market.
In the United States, the Fund's stock selection in the services sector
improved returns relative to the benchmark. However, an overweighted position
and stock selection in the finance sector reduced returns. Overall, the Fund's
industry allocation and stock selection among US sectors had a nominally
positive effect on performance.
In the Continental European markets, stock selection in the capital equipment
sector in Germany and Switzerland enhanced performance. However, stock selection
in the service sector in France and the Netherlands reduced returns. In the
United Kingdom, our stock selection in the business and public services industry
was beneficial to overperformance relative to the benchmark. In Japan, stock
selection and sector selection in the materials sector, as well as stock
selection in the capital equipment sector also enhanced performance.
Investment Strategy
Low global inflation, a strong US economy and a recovery process in the Asian
economies continue to provide strong underpinnings for global financial markets.
However, the interest rate outlook in the United States carries a rising bias,
and we are facing an uncertain investment climate in front of the Year 2000 date
change for most computer systems. As a result, we expect the financial markets
to be particularly volatile for the balance of 1999 and into early 2000. We will
continue to focus on investing in companies with quality management,
above-average earnings growth and high barriers to entry in defendable niches.
We reduced our overall exposure in Europe, consolidating our investments in a
smaller number of concentrated holdings. We are also guarded about the prospects
for further valuation upside and interest rate catalysts with the already low
interest rates across Europe. In the United States, we have been underweighted
in technology stocks relative to the benchmark while being somewhat neutral
against other major sectors. We recently reduced holdings in resource and
commodity companies since we remain skeptical about a genuine Asian recovery
upon which much of the recent performance of these stocks has been predicated.
We will continue to invest in high-quality businesses with strong managements in
the United States. We expect to maintain our neutral stance across the United
States and Europe. We are finding value in the United Kingdom, and we are
evaluating some quality long-term franchise businesses.
In the Pacific Rim, we continue to be underweighted relative to the benchmark
because of concerns about upcoming quarter-on-quarter comparisons for economic
activity and earnings. We believe that while Asia may have bottomed, the
prospects for growth may prove to be more elusive as the pace of genuine
corporate restructuring has been only gradual.
In Conclusion
For investors with a long-term focus, we believe opportunities are abundant in
small company stocks globally. Small cap stock valuations in relation to growth
prospects continue to be very attractive compared to those of larger companies.
Furthermore, we believe that many small cap companies will emerge as tomorrow's
industry leaders as a result of superior innovation and technology.
We thank you for your continued interest in Merrill Lynch Global SmallCap Fund,
Inc., and we look forward to reviewing our strategy with you in our upcoming
semi-annual report to shareholders.
Sincerely,
/s/ Terry K. Glenn
Terry K. Glenn
President and Director
/s/ Kenneth Chiang
Kenneth Chiang
Senior Vice President and
Senior Portfolio Manager
November 4, 1999
2 & 3
<PAGE>
Merrill Lynch Global SmallCap Fund, Inc., September 30, 1999
PERFORMANCE DATA
About Fund Performance
Investors are able to purchase shares of the Fund through the Merrill Lynch
Select Pricing(SM) System, which offers four pricing alternatives:
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. However, in the case of certain eligible investors, the shares
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 distribu tion 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.)
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 "Recent Performance Results" and
"Average Annual Total Return" tables assume rein vestment 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>
3 Month 12 Month Since Inception
As of September 30, 1999 Total Return Total Return Total Return
==========================================================================================
<S> <C> <C> <C>
ML Global SmallCap Fund, Inc. Class A Shares +4.40% +48.17% +32.89%
- ------------------------------------------------------------------------------------------
ML Global SmallCap Fund, Inc. Class B Shares +4.14 +46.68 +23.67
- ------------------------------------------------------------------------------------------
ML Global SmallCap Fund, Inc. Class C Shares +4.17 +46.74 +26.15
- ------------------------------------------------------------------------------------------
ML Global SmallCap Fund, Inc. Class D Shares +4.41 +47.91 +28.89
==========================================================================================
</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 since inception periods are from
10/21/94 for Class A & Class CShares and from 8/05/94 for Class B & Class
D Shares.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
Year Ended 9/30/99 +48.17% +40.39%
- --------------------------------------------------------------------------------
Inception (10/21/94) through 9/30/99 + 5.92 + 4.77
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
Year Ended 9/30/99 +46.68% +42.68%
- --------------------------------------------------------------------------------
Five Years Ended 9/30/99 + 4.61 + 4.61
- --------------------------------------------------------------------------------
Inception (8/05/94) through 9/30/99 + 4.21 + 4.21
- --------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 4% and is reduced to 0% after
4 years.
** Assuming payment of applicable contingent deferred sales charge.
================================================================================
% Return % Return
Without CDSC With CDSC**
================================================================================
Class C Shares*
================================================================================
Year Ended 9/30/99 +46.74% +45.74%
- --------------------------------------------------------------------------------
Inception (10/21/94) through 9/30/99 + 4.81 + 4.81
- --------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 1% and is reduced to 0% after
1 year.
** Assuming payment of applicable contingent deferred sales charge.
================================================================================
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class D Shares*
================================================================================
Year Ended 9/30/99 +47.91% +40.15%
- --------------------------------------------------------------------------------
Five Years Ended 9/30/99 + 5.44 + 4.31
- --------------------------------------------------------------------------------
Inception (8/05/94) through 9/30/99 + 5.05 + 3.95
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
SCHEDULE OF INVESTMENTS (in US dollars)
<TABLE>
<CAPTION>
Shares Percent of
EUROPE Industries Held Investments Value Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Austria Beverages 4,533 BBAG Oesterreichische Brau-Beteiligungs AG $ 205,841 0.4%
-----------------------------------------------------------------------------------------------------------------
Total Investments in Austria 205,841 0.4
- ------------------------------------------------------------------------------------------------------------------------------------
Finland Electronic Components 17,200 Perlos Oyj 231,549 0.4
-----------------------------------------------------------------------------------------------------------------
Total Investments in Finland 231,549 0.4
- ------------------------------------------------------------------------------------------------------------------------------------
France Beverages 10,900 Laurent-Perrier Group SA 394,393 0.8
-----------------------------------------------------------------------------------------------------------------
Financial Services 538 Societe Eurafrance SA 332,073 0.6
-----------------------------------------------------------------------------------------------------------------
Retail--Apparel 13,090 Etam Developpement SA 484,777 1.0
-----------------------------------------------------------------------------------------------------------------
Total Investments in France 1,211,243 2.4
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Computer Software & 49,700 Trintech Group PLC (ADR)* 639,888 1.3
Systems
-----------------------------------------------------------------------------------------------------------------
Healthcare & Medical 1,958 Fresenius AG (Preferred) 337,977 0.7
2,920 Rhoen-Klinikum AG 332,499 0.6
--------- ---
670,476 1.3
-----------------------------------------------------------------------------------------------------------------
Internet Software 2,000 Fantastic Corporation 110,677 0.2
-----------------------------------------------------------------------------------------------------------------
Machine Tools & Machinery 9,090 Walter AG 196,374 0.4
-----------------------------------------------------------------------------------------------------------------
Machinery & Equipment 6,183 Jungheinrich AG (Preferred) 81,920 0.2
-----------------------------------------------------------------------------------------------------------------
Media & Related 6,460 Kinowelt Medien AG 357,486 0.7
6,460 Kinowelt Medien AG (Rights) 2,750 0.0
54,900 PrimaCom AG (ADR)* 1,496,025 3.0
--------- ---
1,856,261 3.7
-----------------------------------------------------------------------------------------------------------------
Steel 4,746 Kloeckner-Werke AG 404,055 0.8
-----------------------------------------------------------------------------------------------------------------
Toys 9,200 Zapf Creation AG 330,434 0.6
-----------------------------------------------------------------------------------------------------------------
Transportation 21,215 Koegel Fahrzeugwerke AG (Preferred) 212,675 0.4
-----------------------------------------------------------------------------------------------------------------
Total Investments in Germany 4,502,760 8.9
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
4 & 5
<PAGE>
Merrill Lynch Global SmallCap Fund, Inc., September 30, 1999
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<TABLE>
<CAPTION>
EUROPE Shares Percent of
(concluded) Industries Held Investments Value Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ireland Airlines 7,300 Ryanair Holdings PLC (ADR)* $ 335,800 0.7%
-----------------------------------------------------------------------------------------------------------------
Total Investments in Ireland 335,800 0.7
- ------------------------------------------------------------------------------------------------------------------------------------
Italy Publishing 40,000 Class Editori SpA 342,672 0.7
-----------------------------------------------------------------------------------------------------------------
Textiles & Apparel 43,600 Simint SpA 331,290 0.6
-----------------------------------------------------------------------------------------------------------------
Total Investments in Italy 673,962 1.3
- ------------------------------------------------------------------------------------------------------------------------------------
Netherlands Computer Software & 24,762 ICT Automatisering NV 624,536 1.2
Systems 28,880 LCI Computer Group NV 282,754 0.6
28,880 LCI Technology Group NV 3,073 0.0
13,300 Meta4 NV 181,169 0.4
---------- ----
1,091,532 2.2
-----------------------------------------------------------------------------------------------------------------
Financial Services 14,058 Internatio-Muller NV 309,683 0.6
-----------------------------------------------------------------------------------------------------------------
Food Merchandising 12,500 Laurus NV 286,004 0.6
-----------------------------------------------------------------------------------------------------------------
Telecommunications 5,000 United Pan-Europe Communications NV (UPC)(ADR)* 304,688 0.6
-----------------------------------------------------------------------------------------------------------------
Telephone Communications 20,600 Versatel Telecom International NV 223,610 0.4
-----------------------------------------------------------------------------------------------------------------
Total Investments in the Netherlands 2,215,517 4.4
- ------------------------------------------------------------------------------------------------------------------------------------
Norway Computer Software & 47,653 Merkantildata ASA 488,922 1.0
Systems 12,578 Merkantildata ASA (Rights) (a) 195 0.0
-----------------------------------------------------------------------------------------------------------------
Total Investments in Norway 489,117 1.0
- ------------------------------------------------------------------------------------------------------------------------------------
Spain Machinery 20,280 Azkoyen SA 220,136 0.4
-----------------------------------------------------------------------------------------------------------------
Total Investments in Spain 220,136 0.4
- ------------------------------------------------------------------------------------------------------------------------------------
Sweden Engineering & 25,000 Svedala Industri AB 491,273 0.9
Construction
-----------------------------------------------------------------------------------------------------------------
Forest Products/ 472,500 Rottneros Bruks AB Fria 438,301 0.9
Paper & Packaging
-----------------------------------------------------------------------------------------------------------------
Total Investments in Sweden 929,574 1.8
- ------------------------------------------------------------------------------------------------------------------------------------
Switzerland Advertising 1,020 Edipresse SA (Bearer) 455,054 0.9
600 PubliGroupe SA 416,700 0.8
---------- ----
871,754 1.7
-----------------------------------------------------------------------------------------------------------------
Banking & Finance 1,715 Banque Cantonale de Geneve (BCG) 340,305 0.7
-----------------------------------------------------------------------------------------------------------------
Chemicals 1,100 Clariant AG (Registered) 498,069 1.0
-----------------------------------------------------------------------------------------------------------------
Electronics & 98 Kudelski SA (Bearer) 366,081 0.7
Electrical Equipment
-----------------------------------------------------------------------------------------------------------------
Manufacturing 1,656 Gerberit International AG (Registered) 463,124 0.9
-----------------------------------------------------------------------------------------------------------------
Medical Equipment 2,300 Gretag Imaging Group (Registered) 258,823 0.5
-----------------------------------------------------------------------------------------------------------------
Retail 2,100 Distefora Holding AG 279,664 0.6
1,505 The Selecta Group (Registered) 581,236 1.1
---------- ----
860,900 1.7
-----------------------------------------------------------------------------------------------------------------
Total Investments in Switzerland 3,659,056 7.2
- ------------------------------------------------------------------------------------------------------------------------------------
United Kingdom Energy 57,553 Expro International Group PLC 317,392 0.6
-----------------------------------------------------------------------------------------------------------------
Engineering & 34,116 Jarvis PLC 155,849 0.3
Construction 48,000 WS Atkins PLC 396,668 0.8
---------- ----
552,517 1.1
-----------------------------------------------------------------------------------------------------------------
Insurance 66,000 Independent Insurance Group PLC 297,699 0.6
-----------------------------------------------------------------------------------------------------------------
Leisure 200,000 Stanley Leisure PLC 867,547 1.7
-----------------------------------------------------------------------------------------------------------------
Media & Related 90,000 Saatchi and Saatchi PLC 310,243 0.6
-----------------------------------------------------------------------------------------------------------------
Medical Supplies 22,900 Seton Scholl Healthcare Group PLC 269,541 0.5
-----------------------------------------------------------------------------------------------------------------
Telecommunications 139,600 Kingston Communication (Hull) PLC 944,517 1.9
-----------------------------------------------------------------------------------------------------------------
Total Investments in the United Kingdom 3,559,456 7.0
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in Europe 18,234,011 35.9
- ------------------------------------------------------------------------------------------------------------------------------------
LATIN AMERICA
- ------------------------------------------------------------------------------------------------------------------------------------
Brazil Metals & Mining 10,000 Companhia Vale do Rio Doce SA `A' (Preferred) 213,021 0.4
-----------------------------------------------------------------------------------------------------------------
Total Investments in Latin America 213,021 0.4
- ------------------------------------------------------------------------------------------------------------------------------------
NORTH AMERICA
- ------------------------------------------------------------------------------------------------------------------------------------
Canada Hotels 13,384 Four Seasons Hotels Inc. 487,436 0.9
-----------------------------------------------------------------------------------------------------------------
Mining 13,200 Inco Limited 282,150 0.6
-----------------------------------------------------------------------------------------------------------------
Telecommunications 13,500 Clearnet Communications Inc. (Class A) 243,000 0.5
-----------------------------------------------------------------------------------------------------------------
Total Investments in Canada 1,012,586 2.0
- ------------------------------------------------------------------------------------------------------------------------------------
United States Aerospace-- 10,500 HEICO Corporation (Class A) 202,125 0.4
Defense & Equipment 30,000 The Titan Corporation 431,250 0.8
---------- ----
633,375 1.2
-----------------------------------------------------------------------------------------------------------------
Banking & Finance 15,000 AMCORE Financial, Inc. 308,437 0.6
18,900 Commercial Federal Corporation 370,912 0.7
20,000 Peoples Heritage Financial Group, Inc. 332,500 0.7
32,000 Virginia Capital Bancshares, Inc. 472,000 0.9
---------- ----
1,483,849 2.9
-----------------------------------------------------------------------------------------------------------------
Biotechnology 27,000 Guilford Pharmaceuticals Inc. 405,000 0.8
-----------------------------------------------------------------------------------------------------------------
Cable Television Services 14,600 Insight Communications Company, Inc. 418,837 0.8
-----------------------------------------------------------------------------------------------------------------
Cement 9,800 Giant Cement Holding, Inc. 224,787 0.4
-----------------------------------------------------------------------------------------------------------------
</TABLE>
6 & 7
<PAGE>
Merrill Lynch Global SmallCap Fund, Inc., September 30, 1999
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<TABLE>
<CAPTION>
NORTH AMERICA Shares Percent of
(concluded) Industries Held Investments Value Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
United States Chemicals 25,000 CK Witco Corporation $ 364,062 0.7%
(concluded) -----------------------------------------------------------------------------------------------------------------
Commercial Services 28,500 Luminant Worldwide Corporation 876,375 1.7
-----------------------------------------------------------------------------------------------------------------
Computer Equipment 20,000 Cadence Design Systems, Inc. 265,000 0.5
8,000 Navigant Consulting, Inc. 371,000 0.8
---------- ----
636,000 1.3
-----------------------------------------------------------------------------------------------------------------
Computer Related Products 1,000 Foundry Networks, Inc. 126,000 0.2
-----------------------------------------------------------------------------------------------------------------
Computer Software & 16,000 Iron Mountain Inc. 542,000 1.1
Systems 7,000 Mercury Computer Systems, Inc. 237,125 0.5
13,963 Sterling Commerce, Inc. 259,188 0.5
15,000 Symantec Corporation 539,063 1.1
6,000 Transaction Systems Architects, Inc. (Class A) 161,625 0.3
---------- ----
1,739,001 3.5
-----------------------------------------------------------------------------------------------------------------
Consulting Services 14,750 The Corporate Executive Board Company 597,375 1.2
79,900 Nextera Enterprises, Inc. (Class A) 284,644 0.6
---------- ----
882,019 1.8
-----------------------------------------------------------------------------------------------------------------
Consumer Products 8,300 barnesandnoble.com inc. 159,775 0.3
-----------------------------------------------------------------------------------------------------------------
Data Processing 10,000 Deltek Systems, Inc. 161,875 0.3
-----------------------------------------------------------------------------------------------------------------
Distribution 20,000 WESCO International, Inc. 282,500 0.6
-----------------------------------------------------------------------------------------------------------------
Educational Services 14,000 Corinthian Colleges, Inc. 259,000 0.5
-----------------------------------------------------------------------------------------------------------------
Electronics 25,000 Gentex Corporation 515,625 1.0
10,000 Helix Technology Corporation 331,875 0.7
---------- ----
847,500 1.7
-----------------------------------------------------------------------------------------------------------------
Energy 1,000 Louis Dreyfus Natural Gas Corporation 21,437 0.0
-----------------------------------------------------------------------------------------------------------------
Entertainment & 32,000 Dover Downs Entertainment, Inc. 444,000 0.9
Recreation 40,000 The Topps Company, Inc. 300,000 0.6
---------- ----
744,000 1.5
-----------------------------------------------------------------------------------------------------------------
Financial Services 10,000 City National Corporation 335,625 0.7
-----------------------------------------------------------------------------------------------------------------
Gold 30,000 Homestake Mining Company 275,625 0.5
-----------------------------------------------------------------------------------------------------------------
Healthcare-- 15,000 SangStat Medical Corporation 318,750 0.6
Products & Services 2,000 Superior Consultant Holdings Corporation 23,500 0.1
---------- ----
342,250 0.7
-----------------------------------------------------------------------------------------------------------------
Healthcare Services 7,500 Healtheon Corporation 277,500 0.5
-----------------------------------------------------------------------------------------------------------------
Insurance 18,850 Provident American Corporation 283,928 0.6
-----------------------------------------------------------------------------------------------------------------
Internet Software 8,400 Covad Communications Group, Inc. 365,925 0.7
14,900 Keynote Systems, Inc. 372,500 0.8
---------- ----
738,425 1.5
-----------------------------------------------------------------------------------------------------------------
Leisure 6,000 UnitedGlobalCom, Inc. (Class A) 432,750 0.9
-----------------------------------------------------------------------------------------------------------------
Machine Tools & 10,300 Jore Corporation 122,956 0.2
Machinery 7,000 SPX Corporation 635,250 1.3
---------- ----
758,206 1.5
-----------------------------------------------------------------------------------------------------------------
Media & Related 10,000 Emmis Communications Corporation (Class A) 660,625 1.3
4,000 Young Broadcasting Inc. (Class A) 208,500 0.4
---------- ----
869,125 1.7
-----------------------------------------------------------------------------------------------------------------
Metals 16,500 Newmont Mining Corporation 426,938 0.9
-----------------------------------------------------------------------------------------------------------------
Oil & Gas Producers 20,000 Vintage Petroleum, Inc. 270,000 0.5
-----------------------------------------------------------------------------------------------------------------
Oil Field Services 15,000 UTI Energy Corp. 291,563 0.6
-----------------------------------------------------------------------------------------------------------------
Petroleum Equipment & 15,000 Ocean Energy Inc. 152,813 0.3
Services 46,000 Santa Fe Snyder Corporation 414,000 0.8
---------- ----
566,813 1.1
-----------------------------------------------------------------------------------------------------------------
Radio 18,900 Salem Communications Corporation (Class A) 481,950 0.9
-----------------------------------------------------------------------------------------------------------------
Real Estate 15,000 Arden Realty, Inc. 326,250 0.7
7,000 Boston Properties, Inc. 214,812 0.4
---------- ----
541,062 1.1
-----------------------------------------------------------------------------------------------------------------
Restaurants 20,000 Outback Steakhouse, Inc. 508,750 1.0
-----------------------------------------------------------------------------------------------------------------
Steel 16,500 Steel Dynamics, Inc. 255,750 0.5
-----------------------------------------------------------------------------------------------------------------
Technology 15,000 Aspen Technology, Inc. 145,312 0.3
20,000 IMRglobal Corp. 163,750 0.3
4,000 Novellus Systems, Inc. 269,750 0.5
---------- ----
578,812 1.1
-----------------------------------------------------------------------------------------------------------------
Textiles 20,000 Donna Karan International Inc. 170,000 0.3
-----------------------------------------------------------------------------------------------------------------
Toys 6,300 eToys Inc. 418,950 0.8
-----------------------------------------------------------------------------------------------------------------
Transportation--Airlines 15,000 Atlantic Coast Airlines Holdings, Inc. 264,375 0.5
-----------------------------------------------------------------------------------------------------------------
Total Investments in the United States 19,353,789 38.1
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in North America 20,366,375 40.1
- ------------------------------------------------------------------------------------------------------------------------------------
PACIFIC BASIN
- ------------------------------------------------------------------------------------------------------------------------------------
Australia Media & Related 200,000 John Fairfax Holdings Limited 514,562 1.0
-----------------------------------------------------------------------------------------------------------------
Mining 320,000 Lihir Gold Limited 350,784 0.7
-----------------------------------------------------------------------------------------------------------------
Telecommunications 110,000 AAPT Limited 351,482 0.7
-----------------------------------------------------------------------------------------------------------------
Total Investments in Australia 1,216,828 2.4
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
8 & 9
<PAGE>
Merrill Lynch Global SmallCap Fund, Inc., September 30, 1999
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<TABLE>
<CAPTION>
PACIFIC BASIN Shares Percent of
(concluded) Industries Held Investments Value Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Hong Kong Consumer Products 499,000 Lerado Group (Holding) Co. $ 91,864 0.2%
-----------------------------------------------------------------------------------------------------------------
Distribution--Wholesale 488,000 China (Hong Kong) Photo Products Holdings, Ltd. 59,683 0.1
-----------------------------------------------------------------------------------------------------------------
Real Estate 133,000 Wheelock and Company, Limited 171,222 0.3
-----------------------------------------------------------------------------------------------------------------
Telecommunications & 146,000 City Telecom (HK) Ltd. 107,136 0.2
Equipment
-----------------------------------------------------------------------------------------------------------------
Total Investments in Hong Kong 429,905 0.8
- ------------------------------------------------------------------------------------------------------------------------------------
India Computer Software & 7,200 BFL Software Limited 146,688 0.3
Systems
-----------------------------------------------------------------------------------------------------------------
Telecommunications 10,000 Mahanagar Telephone Nigam Ltd. (GDR)** 97,500 0.2
-----------------------------------------------------------------------------------------------------------------
Total Investments in India 244,188 0.5
- ------------------------------------------------------------------------------------------------------------------------------------
Indonesia Auto--Related 400,000 PT Astra International 118,848 0.2
-----------------------------------------------------------------------------------------------------------------
Food Processing 200,000 PT Indofood Sukses Makmur 190,276 0.4
-----------------------------------------------------------------------------------------------------------------
Tobacco 160,000 PT Hanjaya Mandala Sampoerna 283,794 0.6
-----------------------------------------------------------------------------------------------------------------
Total Investments in Indonesia 592,918 1.2
- ------------------------------------------------------------------------------------------------------------------------------------
Japan Automobiles 1,000 Jac Co., Ltd. 372,145 0.7
-----------------------------------------------------------------------------------------------------------------
Beverages 9,387 Coca-Cola West Japan Company Limited 432,255 0.8
-----------------------------------------------------------------------------------------------------------------
Computer Equipment 4,000 AM Japan Co., Ltd. 133,446 0.3
-----------------------------------------------------------------------------------------------------------------
Containers 3,600 Fuji Seal, Inc. 358,613 0.7
-----------------------------------------------------------------------------------------------------------------
Electronics 40,000 Ushio Inc. 571,375 1.1
-----------------------------------------------------------------------------------------------------------------
Entertainment & 14,000 Roland Corporation 490,743 1.0
Recreation
-----------------------------------------------------------------------------------------------------------------
Financial Services 50,000 Ichiyoshi Securities Co., Ltd. 343,013 0.7
5,000 Jafco Co., Ltd. 420,543 0.8
----------- -----
763,556 1.5
-----------------------------------------------------------------------------------------------------------------
Human Resources 12,000 Pasona Softbank, Inc. 558,218 1.1
-----------------------------------------------------------------------------------------------------------------
Internet Software 1,000 InterQ Inc. 296,025 0.6
-----------------------------------------------------------------------------------------------------------------
Machinery 4,000 Aruze Corporation 334,179 0.7
7,500 Union Tool Co. 729,490 1.4
----------- -----
1,063,669 2.1
-----------------------------------------------------------------------------------------------------------------
Manufacturing 42,000 Fujitec Co., Ltd. 564,421 1.1
12,000 Nichicon Corporation 304,483 0.6
----------- -----
868,904 1.7
-----------------------------------------------------------------------------------------------------------------
Restaurants 7,800 Doutor Coffee Co., Ltd. 806,315 1.6
-----------------------------------------------------------------------------------------------------------------
Retail--Stores 25,000 Sangetsu Co., Ltd. 538,013 1.1
-----------------------------------------------------------------------------------------------------------------
Steel 80,000 Yodogawa Steel Works, Ltd. 372,145 0.7
-----------------------------------------------------------------------------------------------------------------
Total Investments in Japan 7,625,422 15.0
- ------------------------------------------------------------------------------------------------------------------------------------
Malaysia Leisure 300,000 Sime Darby BHD 347,368 0.7
-----------------------------------------------------------------------------------------------------------------
Total Investments in Malaysia 347,368 0.7
- ------------------------------------------------------------------------------------------------------------------------------------
New Zealand Entertainment & 75,000 Sky City Limited 284,555 0.6
Recreation
-----------------------------------------------------------------------------------------------------------------
Paper & Forest Products 75,000 Carter Holt Harvey Limited 90,206 0.2
-----------------------------------------------------------------------------------------------------------------
Restaurants 250,000 Restaurant Brands New Zealand Limited 167,765 0.3
-----------------------------------------------------------------------------------------------------------------
Total Investments in New Zealand 542,526 1.1
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in the Pacific Basin 10,999,155 21.7
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments (Cost--$44,334,466) 49,812,562 98.1
Other Assets Less Liabilities 983,915 1.9
----------- -----
Net Assets $50,796,477 100.0%
=========== =====
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value: Class A--Based on net assets of $5,272,609 and 482,721 shares outstanding $ 10.92
===========
Class B--Based on net assets of $34,990,358 and 3,232,523 shares outstanding $ 10.82
===========
Class C--Based on net assets of $2,904,607 and 270,655 shares outstanding $ 10.73
===========
Class D--Based on net assets of $7,628,903 and 699,949 shares outstanding $ 10.90
===========
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* American Depositary Receipts (ADR).
** Global Depositary Receipts (GDR).
(a) The rights may be exercised until 10/07/1999.
10 & 11
<PAGE>
Officers and Directors
Terry K. Glenn, President and Director
Donald Cecil, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Arthur Zeikel, Director
Edward D. Zinbarg, Director
Robert C. Doll, Senior Vice President
Kenneth Chiang, Senior Vice President and
Senior Portfolio Manager
Hubertus Aarts, Vice President
James E. Russell, Vice President
Donald C. Burke, Vice President and
Treasurer
Susan B. Baker, 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
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.
Merrill Lynch
Global SmallCap
Fund, Inc.
Box 9011
Princeton, NJ
08543-9011 18177--9/99
[RECYCLE LOGO] Printed on post-consumer recycled paper
