MERRILL LYNCH
GLOBAL SMALLCAP
FUND, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Quarterly Report
March 31, 1999
<PAGE>
MERRILL LYNCH GLOBAL SMALLCAP FUND, INC.
Worldwide Investments As of 3/31/99
Country of Percent of
Ten Largest Equity Holdings Origin Net Assets
Sanyo Coca-Cola Bottling Co., Ltd. ....... Japan 3.3%
Four Seasons Hotels Inc. ................. Canada 2.5
Union Tool Co., Ltd. ..................... Japan 2.3
Commercial Federal Corporation ........... United States 2.0
Aruze Corporation ........................ Japan 1.9
Roland Corporation ....................... Japan 1.9
Corinthian Colleges, Inc. ................ United States 1.8
SPX Corporation .......................... United States 1.7
Visio Corporation ........................ United States 1.6
John Fairfax Holdings Limited ............ Australia 1.6
Percent of
Ten Largest Industries Net Assets
Computer Software & Systems .................................... 7.5%
Banking & Finance .............................................. 6.2
Entertainment & Recreation ..................................... 5.1
Machinery ...................................................... 4.9
Telecommunications ............................................. 4.0
Insurance ...................................................... 3.7
Beverages ...................................................... 3.6
Media & Related ................................................ 3.1
Financial Services ............................................. 3.1
Engineering & Construction ..................................... 3.1
<PAGE>
Merrill Lynch Global SmallCap Fund, Inc., March 31, 1999
DEAR SHAREHOLDER
During the quarter ended March 31, 1999, the North American equity markets
produced mixed returns as small-capitalization issues underperformed relative to
large-capitalization stocks. The total return provided by the unmanaged Russell
2000 Index of US small-capitalization stocks was -5.42% for the quarter compared
to a total return of +4.98% for the unmanaged Standard & Poor's (S&P) 500
Composite Index. The price performance of the US segment of the Morgan Stanley
Capital International (MSCI) World Small Cap Index was -0.98% for the same
period.
Small-capitalization stocks in the major European markets also underperformed
relative to large-capitalization issues. The best-performing markets were Norway
and the United Kingdom, which rose +10.84% and +8.97%, respectively, while the
weakest markets were Finland and Germany, which posted double-digit negative
price performance for the quarter. All small-capitalization markets in the
Pacific Rim posted strong gains, with the exception of Hong Kong. (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, unless
otherwise noted, and are for the three-month period ended March 31, 1999.)
During the March quarter, the Fund outperformed the MSCI benchmark. For the
three months ended March 31, 1999, total returns for Merrill Lynch Global
SmallCap Fund, Inc.'s Class A, Class B, Class C and Class D Shares were +4.03%,
+3.69%, +3.84% and +4.04%, respectively. The price performance of the MSCI World
Small Cap Index for the quarter was -0.98%. Beneficial to the Fund's performance
was stock selection in the United States, Japan, Canada, Germany and
Switzerland. The Fund's performance was hindered by underweighted positions in
Japan, Singapore and the United Kingdom and by overweighted positions in Germany
and the United States. Furthermore, Fund performance was hurt by stock selection
in Norway and the United Kingdom. Fund exposure to emerging markets was limited,
but proved nominally beneficial to overall performance.
In the United States, our stock selection in the energy and services sectors
improved Fund returns relative to the benchmark. However, stock selection in the
technology, capital equipment and consumer goods sectors reduced returns
relative to the benchmark. Overall, our industry allocation among US sectors had
a nominally positive effect on performance.
In the Continental European markets, stock selection in the capital equipment
and consumer goods sectors enhanced performance, while stock selection in the
finance sector reduced returns. In the United Kingdom, the Fund's overweighted
position in capital equipment was beneficial to performance, while stock
selection in the capital equipment and services sectors reduced returns relative
to the benchmark. In Japan, the Fund's stock selection in the capital equipment,
consumer goods and finance sectors improved performance, while underweighted
positions and stock selection in the services sector reduced returns.
Portfolio Matters
Looking ahead, the global economic outlook for the rest of the year remains
uncertain. In addition to divergent trends between the United States and the
rest of the world, the economic impact of the Year 2000 (Y2K) problem, in
particular on the technology sector, is an additional variable that makes
economic forecasting difficult this year.
There are some initial indications that the Asian economies are bottoming out,
although recovery may be elusive. The Japanese government and the corporate
sector have demonstrated signs of reform and restructuring. However, at this
early stage, it is difficult to assert that the increase in economic activity in
Asia represents a turnaround for these economies and not merely a restocking
impact following the collapse in 1998. It will take several months before we can
judge the implications. We also believe that the turnaround process will be slow
and will be played out over a few years rather than a few quarters.
Consequently, we continue to remain underweighted in Asia.
As expected, after the initial euphoria over the launch of the euro, European
markets have focused on the difficulties of running a common fiscal and monetary
policy. The problems are worsened by the slowdown in many of these economies,
particularly in Germany. We believe that if the economies slow down further,
modest interest rate cuts are likely. However, in the absence of economic
strength, equity markets are likely to tread water. We expect to continue our
current neutral weighting in Europe and to focus on stock selection.
The US economy continues to surprise on the upside. Recent price increases in a
number of commodities, such as energy and steel, have raised some fears of
inflation, although we believe such concerns are premature. We anticipate the US
economy will show strong growth in the first half of 1999. We will review our
underweighted position in technology as the Y2K problem manifests in lower
technology spending.
We continue to be opportunistic regarding the emerging markets. We expect that
Brazil, Malaysia and Indonesia may provide interesting investment opportunities
as the financial crisis abates. Valuations in the communications and financial
sectors are presently extremely inexpensive relative to other markets.
In Conclusion
We believe there are good opportunities in the stocks of small-capitalization
companies for global investors with a long-term focus. We believe a unified
European economic marketplace will provide a continued impetus for earnings
growth for many small companies. In the US market, small stocks appear to be the
most attractive sector in terms of valuations and earnings growth prospects. In
our opinion, the Pacific Rim will still continue to encounter short-term
adjustments, but the long-term fundamentals are in place for sustained equity
appreciation.
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
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
May 10, 1999
================================================================================
After more than 20 years of service, Arthur Zeikel recently retired as Chairman
of Merrill Lynch Asset Management, L.P. (MLAM). Mr. Zeikel served as President
of MLAM from 1977 to 1997 and as Chairman since December 1997. Mr. Zeikel is one
of the country's most respected leaders in asset management and presided over
the growth of Merrill Lynch's asset management business. During his tenure,
client assets under management grew from $300 million to over $500 billion. Mr.
Zeikel will remain on Merrill Lynch Global SmallCap Fund, Inc.'s Board of
Directors. We are pleased to announce that Terry K. Glenn has been elected
President and Director of the Fund. Mr. Glenn has held the position of Executive
Vice President of MLAM since 1983.
Mr. Zeikel's colleagues at MLAM join the Fund's Board of Directors in wishing
him well in his retirement from Merrill Lynch and are pleased that he will
continue as a member of the Fund's Board of Directors.
================================================================================
2 & 3
<PAGE>
Merrill Lynch Global SmallCap Fund, Inc., March 31, 1999
PERFORMANCE DATA
About Fund Performance
Investors are able to purchase shares of the Fund through the Merrill
Lynch Select Pricing(SM) System, which offers four pricing alternatives:
o Class A Shares incur a maximum initial sales charge (front-end load) of
5.25% and bear no ongoing distribution or account maintenance fees. Class
A Shares are available only to eligible investors, 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 distribution fee of 0.75% and an account maintenance fee of
0.25%. These shares automatically convert to Class D Shares after
approximately 8 years. (There is no initial sales charge for automatic
share conversions.)
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 representation of
future performance. Figures shown in the "Recent Performance Results" and
"Average Annual Total Return" tables assume reinvestment of all dividends
and capital gains distributions at net asset value on the ex-dividend
date. Investment return and principal value of shares will fluctuate so
that shares, when redeemed, may be worth more or less than their original
cost. Dividends paid to each class of shares will vary because of the
different levels of account maintenance, distribution and transfer agency
fees applicable to each class, which are deducted from the income
available to be paid to shareholders.
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 -5.25% +4.03% +9.89%
- -------------------------------------------------------------------------------------------------
ML Global SmallCap Fund, Inc. Class B Shares -6.21 +3.69 +2.75
- -------------------------------------------------------------------------------------------------
ML Global SmallCap Fund, Inc. Class C Shares -6.18 +3.84 +4.87
- -------------------------------------------------------------------------------------------------
ML Global SmallCap Fund, Inc. Class D Shares -5.46 +4.04 +6.66
=================================================================================================
</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
Class A & Class C Shares, from 10/21/94 to 3/31/99 and Class B & Class D
Shares, from 8/05/94 to 3/31/99.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
Year Ended 3/31/99 -5.25% -10.22%
- --------------------------------------------------------------------------------
Inception (10/21/94) through 3/31/99 +2.15 + 0.91
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
Year Ended 3/31/99 -6.21% -9.96%
- --------------------------------------------------------------------------------
Inception (8/05/94) through 3/31/99 +0.59 +0.59
- --------------------------------------------------------------------------------
* 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 3/31/99 -6.18% -7.12%
- --------------------------------------------------------------------------------
Inception (10/21/94) through 3/31/99 +1.08 +1.08
- --------------------------------------------------------------------------------
* 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 3/31/99 -5.46% -10.42%
- --------------------------------------------------------------------------------
Inception (8/05/94) through 3/31/99 +1.40 + 0.23
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
4 & 5
<PAGE>
Merrill Lynch Global SmallCap Fund, Inc., March 31, 1999
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 Engineering & 3,080 Falck A/S $ 155,193 $ 252,162 0.6%
Construction
--------------------------------------------------------------------------------------------------------------------
Total Investments in Denmark 155,193 252,162 0.6
====================================================================================================================================
Estonia Telecommunications 16,000 AS Eesti Telekom (Registered Shares)
(GDR)** 347,982 351,200 0.8
--------------------------------------------------------------------------------------------------------------------
Total Investments in Estonia 347,982 351,200 0.8
====================================================================================================================================
Finland Telecommunications 53,300 Teleste Oyj 470,233 478,135 1.0
--------------------------------------------------------------------------------------------------------------------
Total Investments in Finland 470,233 478,135 1.0
====================================================================================================================================
France Commercial Services 920 Penauille Polyservices SA 209,544 249,578 0.6
--------------------------------------------------------------------------------------------------------------------
Electronics & 3,977 Cie des Signaux SA 206,620 249,304 0.6
Electrical Equipment
--------------------------------------------------------------------------------------------------------------------
Financial Services 538 Societe EuraFrance SA 155,057 258,754 0.6
--------------------------------------------------------------------------------------------------------------------
Healthcare & Medical 20,370 LVL Medical SA 474,090 316,809 0.7
--------------------------------------------------------------------------------------------------------------------
Information Processing 2,983 GFI Informatique SA 337,769 367,217 0.8
--------------------------------------------------------------------------------------------------------------------
Retail 1,895 Guilbert SA 296,818 286,736 0.6
--------------------------------------------------------------------------------------------------------------------
Retail--Apparel 13,090 Etam Developpment SA 405,848 472,532 1.0
--------------------------------------------------------------------------------------------------------------------
Total Investments in France 2,085,746 2,200,930 4.9
====================================================================================================================================
Germany Food Services 2,775 Kamps AG 132,354 289,425 0.6
--------------------------------------------------------------------------------------------------------------------
Healthcare & Medical 1,958 Fresenius AG (Preferred) 387,399 386,208 0.9
2,920 Rhoen-Klinikum AG 271,722 321,905 0.7
--------- --------- ---
659,121 708,113 1.6
--------------------------------------------------------------------------------------------------------------------
Internet Software 700 FortuneCity.com, Inc. 11,529 13,580 0.0
--------------------------------------------------------------------------------------------------------------------
Machine Tools & 9,090 Walter AG 267,472 250,524 0.5
Machinery
--------------------------------------------------------------------------------------------------------------------
Machinery & 10,070 Jungheinrich AG (Preferred) 204,236 122,441 0.3
Equipment
--------------------------------------------------------------------------------------------------------------------
Media & Related 145 EM.TV & Merchandising AG 137,406 124,589 0.3
1,615 Kinowelt Medien AG 400,671 279,279 0.6
14,900 PrimaCom AG (ADR)* 242,125 259,819 0.6
--------- --------- ---
780,202 663,687 1.5
--------------------------------------------------------------------------------------------------------------------
Steel 4,746 Kloeckner-Werke AG 427,492 312,898 0.7
--------------------------------------------------------------------------------------------------------------------
Textiles & Apparel 1,424 Escada AG (Preferred) 238,074 200,078 0.4
--------------------------------------------------------------------------------------------------------------------
Transportation 21,215 Koegel Fahrzeugwerke AG (Preferred) 274,548 252,221 0.6
--------------------------------------------------------------------------------------------------------------------
Total Investments in Germany 2,995,028 2,812,967 6.2
====================================================================================================================================
Italy Banking & Finance 16,000 Banca Popolare di Bergamo Credito
Varesino SpA 330,476 406,381 0.9
44,000 Banca Popolare di Milano SpA 399,136 410,401 0.9
--------- --------- ---
729,612 816,782 1.8
--------------------------------------------------------------------------------------------------------------------
Textiles & Apparel 43,600 Simint SpA 392,709 280,381 0.6
--------------------------------------------------------------------------------------------------------------------
Total Investments in Italy 1,122,321 1,097,163 2.4
====================================================================================================================================
Netherlands Computer Software & 24,762 ICT Automatisering NV 239,889 508,493 1.1
Systems 28,880 LCI Computer Group NV 415,048 343,349 0.8
--------- --------- ---
654,937 851,842 1.9
--------------------------------------------------------------------------------------------------------------------
Financial Services 13,496 Internatio Mueller NV 309,652 276,414 0.6
4,570 Van Der Moolen Holdings NV 342,472 293,886 0.7
--------- --------- ---
652,124 570,300 1.3
--------------------------------------------------------------------------------------------------------------------
Human Resources 18,470 Vedior NV 'A' 362,305 428,193 1.0
--------------------------------------------------------------------------------------------------------------------
Manufacturing 40,260 DOCdata NV 459,298 278,483 0.6
--------------------------------------------------------------------------------------------------------------------
Telecommunications 10,000 United Pan-Europe Communications NV
(UPC) (ADR)* 320,780 382,500 0.8
--------------------------------------------------------------------------------------------------------------------
Total Investments in the Netherlands 2,449,444 2,511,318 5.6
====================================================================================================================================
Norway Computer Software & 47,653 Merkantildata ASA 294,082 429,056 0.9
Systems
--------------------------------------------------------------------------------------------------------------------
Computer Technology 108,500 Agresso Group ASA 487,587 358,434 0.8
--------------------------------------------------------------------------------------------------------------------
Total Investments in Norway 781,669 787,490 1.7
====================================================================================================================================
Spain Machinery 10,140 Azkoyen SA 260,051 298,641 0.7
--------------------------------------------------------------------------------------------------------------------
Total Investments in Spain 260,051 298,641 0.7
====================================================================================================================================
Sweden Diversified 37,000 Mandator AB 164,270 208,711 0.5
--------------------------------------------------------------------------------------------------------------------
Engineering & 17,546 Svedala Industria AB 230,417 306,756 0.7
Construction
--------------------------------------------------------------------------------------------------------------------
Forest Products/ 472,500 Rottneros AB 729,456 287,829 0.6
Paper & Packaging
--------------------------------------------------------------------------------------------------------------------
Total Investments in Sweden 1,124,143 803,296 1.8
====================================================================================================================================
Switzerland Advertising 1,020 Edipresse SA (Bearer) 221,274 234,896 0.5
--------------------------------------------------------------------------------------------------------------------
Banking & Finance 1,715 Banque Cantonale de Geneve SA 540,989 304,342 0.7
--------------------------------------------------------------------------------------------------------------------
Electronics & 98 Kudelski SA (Bearer) 78,474 391,628 0.9
Electrical Equipment
--------------------------------------------------------------------------------------------------------------------
Retail 1,505 The Selecta Group SA (Registered) 298,852 479,105 1.0
--------------------------------------------------------------------------------------------------------------------
Total Investments in Switzerland 1,139,589 1,409,971 3.1
====================================================================================================================================
United Kingdom Electronics 48,028 Johnson Matthey PLC 518,113 360,455 0.8
--------------------------------------------------------------------------------------------------------------------
Energy 57,553 Expro International Group PLC 476,994 233,155 0.5
--------------------------------------------------------------------------------------------------------------------
Engineering & 59,350 Ashtead Group PLC 235,297 201,161 0.4
Construction 34,116 Jarvis PLC 253,918 307,803 0.7
48,000 WS Atkins PLC 397,104 314,536 0.7
--------- --------- ---
886,319 823,500 1.8
--------------------------------------------------------------------------------------------------------------------
Insurance 66,000 Independent Insurance Group PLC 289,689 287,615 0.6
--------------------------------------------------------------------------------------------------------------------
</TABLE>
6 & 7
<PAGE>
Merrill Lynch Global SmallCap Fund, Inc., March 31, 1999
SCHEDULE OF INVESTMENTS (continued) (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 Medical Supplies 22,900 Seton Scholl Healthcare Group PLC $ 291,772 $ 297,533 0.7%
(concluded) --------------------------------------------------------------------------------------------------------------------
Total Investments in the United Kingdom 2,462,887 2,002,258 4.4
====================================================================================================================================
Total Investments in Europe 15,394,286 15,005,531 33.2
====================================================================================================================================
NORTH AMERICA
====================================================================================================================================
Canada Hotels 27,384 Four Seasons Hotels Inc. 319,909 1,147,941 2.5
--------------------------------------------------------------------------------------------------------------------
Total Investments in Canada 319,909 1,147,941 2.5
====================================================================================================================================
United States Aerospace--Defense & 10,500 Heico Corporation (Class A) 240,294 224,437 0.5
Equipment
--------------------------------------------------------------------------------------------------------------------
Banking & Finance 40,000 Commercial Federal Corporation 909,582 927,500 2.0
20,000 Peoples Heritage Financial Group, Inc. 361,169 358,750 0.8
32,000 Virginia Capital Bancshares, Inc. 410,500 404,000 0.9
----------- ----------- ----
1,681,251 1,690,250 3.7
--------------------------------------------------------------------------------------------------------------------
Biotechnology 18,000 Guilford Pharmaceuticals Inc. 242,250 200,250 0.4
--------------------------------------------------------------------------------------------------------------------
Building & 10,000 U.S. Home Corporation 297,520 326,250 0.7
Construction
--------------------------------------------------------------------------------------------------------------------
Cement 9,800 Giant Cement Holding, Inc. 138,238 166,600 0.4
--------------------------------------------------------------------------------------------------------------------
Chemicals 22,000 Crompton & Knowles Corporation 408,100 346,500 0.8
--------------------------------------------------------------------------------------------------------------------
Computer Equipment 20,000 Cadence Design Systems, Inc. 501,182 515,000 1.1
--------------------------------------------------------------------------------------------------------------------
Computer Software & 5,000 Fore Systems, Inc. 79,375 94,375 0.2
Systems 16,000 Iron Mountain Inc. 468,338 499,000 1.1
20,000 The Learning Company, Inc. 490,987 580,000 1.3
6,963 Sterling Commerce, Inc. 235,241 214,112 0.5
26,600 Visio Corporation 705,744 744,800 1.6
----------- ----------- ----
1,979,685 2,132,287 4.7
--------------------------------------------------------------------------------------------------------------------
Consulting Services 18,700 The Corporate Executive Board Company 355,300 488,537 1.1
--------------------------------------------------------------------------------------------------------------------
Educational Services 37,500 Corinthian Colleges, Inc. 675,000 820,312 1.8
--------------------------------------------------------------------------------------------------------------------
Electrical Instruments & 9,000 Sanmina Corporation 448,500 571,500 1.3
Controls
--------------------------------------------------------------------------------------------------------------------
Electronics 15,000 Cymer, Inc. 280,938 298,125 0.7
7,500 Gentex Corporation 97,500 161,250 0.4
25,000 Helix Technology Corporation 493,675 381,250 0.8
----------- ----------- ----
872,113 840,625 1.9
--------------------------------------------------------------------------------------------------------------------
Energy 14,000 Louis Dreyfus Natural Gas Corporation 209,941 203,000 0.5
--------------------------------------------------------------------------------------------------------------------
Entertainment & 42,000 Dover Downs Entertainment, Inc. 578,704 651,000 1.4
Recreation 11,700 United International Holdings, Inc.
(Class A) 312,350 506,025 1.1
----------- ----------- ----
891,054 1,157,025 2.5
--------------------------------------------------------------------------------------------------------------------
Food 25,000 Aurora Food, Inc. 450,302 409,375 0.9
--------------------------------------------------------------------------------------------------------------------
Healthcare--Products & 30,000 PSS World Medical, Inc. 442,969 260,625 0.6
Services 10,000 SangStat Medical Corporation 210,000 123,125 0.2
9,000 Superior Consultant Holdings Corporation 255,375 307,125 0.7
----------- ----------- ----
908,344 690,875 1.5
--------------------------------------------------------------------------------------------------------------------
Information Services 400 Ziff-Davis Inc.--ZDNet 7,600 14,400 0.0
--------------------------------------------------------------------------------------------------------------------
Insurance 26,000 HCC Insurance Holdings, Inc. 448,016 500,500 1.1
30,250 Provident American Corporation 390,755 363,000 0.8
----------- ----------- ----
838,771 863,500 1.9
--------------------------------------------------------------------------------------------------------------------
Internet Software 500 Autobytel.com, Inc. 11,500 20,875 0.0
900 Autoweb.com, Inc. 12,600 32,006 0.1
2,800 Covad Communications, Inc. 50,400 184,100 0.4
5,000 MiningCo.com, Inc. 275,000 447,500 1.0
----------- ----------- ----
349,500 684,481 1.5
--------------------------------------------------------------------------------------------------------------------
Internetworking 100 Critical Path, Inc. 2,400 7,700 0.0
--------------------------------------------------------------------------------------------------------------------
Machine Tools & 15,000 SPX Corporation 681,174 756,562 1.7
Machinery
--------------------------------------------------------------------------------------------------------------------
Medical Services 10,000 Medical Manager Corporation 231,250 231,250 0.5
--------------------------------------------------------------------------------------------------------------------
Metals 15,000 Stillwater Mining Company 310,600 395,625 0.9
--------------------------------------------------------------------------------------------------------------------
Oil--Domestic 15,000 Cabot Oil & Gas Corporation (Class A) 264,188 216,562 0.5
--------------------------------------------------------------------------------------------------------------------
Oil & Gas Producers 10,000 Vintage Petroleum, Inc. 72,568 90,000 0.2
--------------------------------------------------------------------------------------------------------------------
Oil Field Services 30,000 UTI Energy Corporation 253,058 318,750 0.7
--------------------------------------------------------------------------------------------------------------------
Paper & Forest 12,000 Bowater Inc. 510,880 475,500 1.1
Products
--------------------------------------------------------------------------------------------------------------------
Petroleum Equipment & 30,000 Ocean Energy, Inc. 172,125 204,375 0.5
Services 45,000 Santa Fe Energy Resources, Inc. 311,603 329,063 0.7
----------- ----------- ----
483,728 533,438 1.2
--------------------------------------------------------------------------------------------------------------------
Pharmaceuticals 3,000 Biomatrix, Inc. 164,678 234,000 0.5
11,900 COR Therapeutics, Inc. 132,024 118,256 0.3
20,000 Vertex Pharmaceuticals, Inc. 561,875 497,500 1.1
----------- ----------- ----
858,577 849,756 1.9
--------------------------------------------------------------------------------------------------------------------
Real Estate 30,000 Arden Realty, Inc. 646,800 667,500 1.5
7,000 Boston Properties, Inc. 202,545 221,375 0.5
----------- ----------- ----
849,345 888,875 2.0
--------------------------------------------------------------------------------------------------------------------
Restaurants 15,000 Outback Steakhouse, Inc. 320,000 489,375 1.1
--------------------------------------------------------------------------------------------------------------------
Retail 10,000 Department 56, Inc. 274,992 304,375 0.7
--------------------------------------------------------------------------------------------------------------------
Steel 50,000 LTV Corporation 393,839 268,750 0.6
--------------------------------------------------------------------------------------------------------------------
Total Investments in the United States 17,001,544 18,171,722 40.3
====================================================================================================================================
Total Investments in North America 17,321,453 19,319,663 42.8
====================================================================================================================================
</TABLE>
8 & 9
<PAGE>
Merrill Lynch Global SmallCap Fund, Inc., March 31, 1999
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<TABLE>
<CAPTION>
Shares Percent of
PACIFIC BASIN Industries Held Investments Cost Value Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Australia Insurance 132,000 QBE Insurance Group Limited $ 516,506 $ 546,511 1.2%
--------------------------------------------------------------------------------------------------------------------
Media & Related 300,000 John Fairfax Holdings Limited 526,772 739,440 1.6
--------------------------------------------------------------------------------------------------------------------
Telecommunications 112,500 AAPT Limited 242,833 334,170 0.7
88,800 Cable & Wireless Optus Limited 120,967 205,966 0.5
----------- ----------- -----
363,800 540,136 1.2
--------------------------------------------------------------------------------------------------------------------
Total Investments in Australia 1,407,078 1,826,087 4.0
====================================================================================================================================
Hong Kong Consumer Products 499,000 Lerado Group (Holding) Co. Ltd. 56,848 45,718 0.1
--------------------------------------------------------------------------------------------------------------------
Distribution--
Wholesale 488,000 China Hong Kong Photo Products
Holdings, Ltd. 46,202 41,562 0.1
--------------------------------------------------------------------------------------------------------------------
Diversified 168,000 Beijing Enterprises Holdings Ltd. 225,576 223,295 0.5
--------------------------------------------------------------------------------------------------------------------
Food 300,000 Cafe De Coral Holdings Ltd. 95,614 84,200 0.2
--------------------------------------------------------------------------------------------------------------------
Investment Holding
Company 122,000 Shanghai Industrial Holdings Ltd. 226,273 214,107 0.5
--------------------------------------------------------------------------------------------------------------------
Oil & Gas Producers 2,100,000 CNPC (Hong Kong) Limited 219,128 227,631 0.5
--------------------------------------------------------------------------------------------------------------------
Real Estate 1,800,000 China Overseas Land & Investment 240,148 178,853 0.4
157,500 China Resources Enterprise Limited 219,571 229,663 0.5
----------- ----------- -----
459,719 408,516 0.9
--------------------------------------------------------------------------------------------------------------------
Traffic Management
Systems 1,350,000 Zhejiang Expressway Co. Ltd. 'H' 223,114 229,953 0.5
--------------------------------------------------------------------------------------------------------------------
Total Investments in Hong Kong 1,552,474 1,474,982 3.3
====================================================================================================================================
India Telecommunications 10,000 Mahanagar Telephone Nigam Ltd. (GDR)** 127,500 106,250 0.2
--------------------------------------------------------------------------------------------------------------------
Total Investments in India 127,500 106,250 0.2
====================================================================================================================================
Indonesia Tobacco 600,000 PT Hanjaya Mandala Sampoerna 405,629 495,349 1.1
--------------------------------------------------------------------------------------------------------------------
Total Investments in Indonesia 405,629 495,349 1.1
====================================================================================================================================
Japan Beverages 67,800 Sanyo Coca-Cola Bottling Co., Ltd. 916,029 1,490,614 3.3
--------------------------------------------------------------------------------------------------------------------
Entertainment & 28,000 Roland Corporation 605,338 849,992 1.9
Recreation
--------------------------------------------------------------------------------------------------------------------
Financial Services 12,000 Jafco Co., Ltd. 305,142 558,092 1.2
--------------------------------------------------------------------------------------------------------------------
Machinery 20,000 Aruze Corporation 612,588 872,653 1.9
13,500 Union Tool Co., Ltd. 513,306 1,044,521 2.3
----------- ----------- -----
1,125,894 1,917,174 4.2
--------------------------------------------------------------------------------------------------------------------
Manufacturing 45,000 Fujitec Co., Ltd. 311,039 366,058 0.8
23,000 Nichicon Corporation 299,238 313,124 0.7
----------- ----------- -----
610,277 679,182 1.5
--------------------------------------------------------------------------------------------------------------------
Medical Supplies 17,000 Kawasumi Laboratories, Inc. 295,001 261,627 0.6
--------------------------------------------------------------------------------------------------------------------
Pharmaceuticals 19,000 Kissei Pharmaceutical Co., Ltd. 298,556 385,591 0.9
--------------------------------------------------------------------------------------------------------------------
Steel 80,000 Yodogawa Steel Works, Ltd. 311,996 307,796 0.7
--------------------------------------------------------------------------------------------------------------------
Total Investments in Japan 4,468,233 6,450,068 14.3
====================================================================================================================================
New Zealand Entertainment & 75,000 Sky City Limited 258,964 307,584 0.7
Recreation
--------------------------------------------------------------------------------------------------------------------
Paper & Forest 75,000 Carter Holt Harvey Limited 67,095 70,488 0.2
Products
--------------------------------------------------------------------------------------------------------------------
Transportation 75,000 Tranz Rail Holdings Limited 139,447 160,200 0.3
--------------------------------------------------------------------------------------------------------------------
Total Investments in New Zealand 465,506 538,272 1.2
====================================================================================================================================
Singapore Beverages 40,000 Fraser & Neave Limited (Ordinary) 119,980 142,526 0.3
--------------------------------------------------------------------------------------------------------------------
Internetworking 1,100 Pacific Internet Ltd. 46,082 63,387 0.1
--------------------------------------------------------------------------------------------------------------------
Total Investments in Singapore 166,062 205,913 0.4
====================================================================================================================================
South Korea Shipbuilding & 49,010 Hanjin Heavy Industries 225,586 227,061 0.5
--------------------------------------------------------------------------------------------------------------------
Repairing
Total Investments in South Korea 225,586 227,061 0.5
====================================================================================================================================
Total Investments in the Pacific Basin 8,818,068 11,323,982 25.0
====================================================================================================================================
Total Investments $41,533,807 45,649,176 101.0
===========
Unrealized Depreciation on Forward Foreign Exchange Contracts--Net*** (34,986) (0.1)
Liabilities in Excess of Other Assets (418,410) (0.9)
----------- -----
Net Assets $45,195,780 100.0%
=========== =====
====================================================================================================================================
Net Asset Value: Class A--Based on net assets of $3,251,368 and 360,153
shares outstanding $ 9.03
===========
Class B--Based on net assets of $32,830,436 and 3,650,633
shares outstanding $ 8.99
===========
Class C--Based on net assets of $2,682,441 and 300,848
shares outstanding $ 8.92
===========
Class D--Based on net assets of $6,431,535 and 713,073
shares outstanding $ 9.02
===========
====================================================================================================================================
</TABLE>
* American Depositary Receipts (ADR).
** Global Depositary Receipts (GDR).
*** Forward foreign exchange contracts as of March 31, 1999 were as
follows:
- --------------------------------------------------------------------------------
Foreign Currency Expiration Unrealized
Sold Date Depreciation
- --------------------------------------------------------------------------------
(Yen) 250,792,500 May 1999 $(34,986)
- --------------------------------------------------------------------------------
Total Unrealized Depreciation on Forward
Foreign Exchange Contracts--Net
(US$ Commitment--$2,100,000) $(34,986)
========
- --------------------------------------------------------------------------------
10 & 11
<PAGE>
Merrill Lynch Global SmallCap Fund, Inc., March 31, 1999
EQUITY PORTFOLIO CHANGES
Additions
For the Quarter Ended March 31, 1999
AS Eesti Telekom (Registered Shares) (GDR)
*Adva AG Optical Networking
*Albany Molecular Research, Inc.
*Allgon AB 'B'
*Antec Corporation
*Argosy Education Group Inc. 'A'
Aruze Corporation
Aurora Food, Inc.
Autobytel.com, Inc.
Autoweb.com, Inc.
*Avis Rent A Car, Inc.
Banca Popolare di Milano SpA
Beijing Enterprises Holdings Limited
CNPC (Hong Kong) Limited
*CareMatrix Corporation
China Resources Enterprise Limited
Corinthian Colleges, Inc.
The Corporate Executive Board Company
Covad Communications, Inc.
Critical Path, Inc.
Cymer, Inc.
*Debitel AG
EM.TV & Merchandising AG
*Entercom Communications Corporation
*Equant NV (NY Registered Shares)
Etam Developpment SA
Fore Systems, Inc.
FortuneCity.com, Inc.
Hanjin Heavy Industries
Heico Corporation (Class A)
Helix Technology Corporation
*Hyperion Solutions Corporation
Kinowelt Medien AG
LCI Computer Group NV
LTV Corporation
Lerado Group (Holding) Co. Ltd.
Mahanagar Telephone Nigam Ltd. (GDR)
*MarketWatch.com, Inc.
*Mede America Corporation
Medical Manager Corporation
*Medion AG
*MicroFinancial, Inc.
MiningCo.com, Inc.
*Modem Media.Poppe Tyson, Inc.
*Morphosys AG
*Nvidia Corporation
Ocean Energy, Inc.
*OneMain.com, Inc.
*Onyx Software Corporation
Pacific Internet Ltd.
Peoples Heritage Financial Group, Inc.
*Perot Systems Corporation (Class A)
PrimaCom AG (ADR)
*Prodigy Communications Corporation
Provident American Corporation
*Rambus, Inc.
Santa Fe Energy Resources, Inc.
*Serena Software, Inc.
Shanghai Industrial Holdings Ltd.
*Societe Air France SA
*Speed International, Inc.
Superior Consultant Holdings Corporation
*Synstar PLC
Teleste Oyj
*Tut Systems, Inc.
UTI Energy Corporation
*Ultratech Stepper, Inc.
United International Holdings, Inc. (Class A)
United Pan-Europe Communications NV (UPC) (ADR)
Van Der Moolen Holdings NV
Vedior NV 'A'
Vertex Pharmaceuticals, Inc.
Vintage Petroleum, Inc.
Virginia Capital Bancshares, Inc.
Zhejiang Expressway Co. Ltd. 'H'
Ziff-Davis Inc. -- ZDNet
Deletions
AEA Technology PLC
Abengoa SA
Aderans Company Limited
*Adva AG Optical Networking
*Albany Molecular Research, Inc.
*Allgon AB 'B'
American National Insurance Company
AmerUs Life Holdings, Inc. (Class A)
Amway Japan Limited (ADR)
Anglo Irish Bank Corporation PLC
*Antec Corporation
*Argosy Education Group Inc. 'A'
*Avis Rent A Car, Inc.
Bodycote International PLC
CNF Transportation, Inc.
Cambridge Technology Partners, Inc.
*CareMatrix Corporation
Compagnie Plastic Omnium SA
DVI, Inc.
*Debitel AG
Dickson Concepts International Limited
*Entercom Communications Corporation
*Equant NV (NY Registered Shares)
Fiskars Oy (Class A)
Golden State Bancorp, Inc.
Greencore Group PLC
Gryphon Holdings, Inc.
*Hyperion Solutions Corporation
IDG Books Worldwide, Inc.
IMRglobal Corporation
Independence Community Bank Corporation
Jardine Strategic Holdings Limited
Koninklijke Pakhoed NV
Leon de Bruxelles SA
Lycos, Inc.
*MarketWatch.com, Inc.
*Mede America Corporation
*Medion AG
Meitec Corporation
Micro Focus Group PLC
*MicroFinancial, Inc.
Misys PLC
*Modem Media.Poppe Tyson, Inc.
*Morphosys AG
Mos Food Service, Inc.
Network Associates, Inc.
*Nvidia Corporation
*OneMain.com, Inc.
*Onyx Software Corporation
PT Indosat (ADR)
*Perot Systems Corporation (Class A)
Platinum Technology International, Inc.
*Prodigy Communications Corporation
*Rambus, Inc.
SCI Systems, Inc.
SRL, Inc.
Sanyo Shinpan Finance Co., Ltd.
Savile Systems PLC (ADR)
Scios, Inc.
*Serena Software, Inc.
*Societe Air France SA
*Speed International, Inc.
Sunrise Assisted Living, Inc.
*Synstar PLC
TOC Co., Ltd.
Tektronix, Inc.
Tokyo Style Co., Ltd.
Tom Brown, Inc.
*Tut Systems, Inc.
Twentsche Kabel Holding NV
uBid, Inc.
*Ultratech Stepper, Inc.
Unique International NV
Valora Holding AG
Vitasoy International Holdings Ltd.
Wegener Arcade NV
*Added and deleted in the same quarter.
12 & 13
<PAGE>
Merrill Lynch Global SmallCap Fund, Inc., March 31, 1999
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
Donald Cecil, Director
Roland M. Machold, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Arthur Zeikel, Director
Edward D. Zinbarg, Director
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
- --------------------------------------------------------------------------------
Gerald M. Richard, Treasurer, Norman R. Harvey, Senior Vice President and Philip
M. Mandel, Secretary of Merrill Lynch Global SmallCap Fund, Inc. have recently
retired. Their colleagues at Merrill Lynch Asset Management, L.P join the Fund's
Board of Directors in wishing Messrs. Richard, Harvey and Mandel well in their
retirements.
- --------------------------------------------------------------------------------
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
14
<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 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 #18177-3/99
[LOGO] Printed on post-consumer recycled paper
