MERRILL
LYNCH
SHORT-TERM
GLOBAL
INCOME
FUND, INC.
Quarterly Report January 31, 1994
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.
Merrill Lynch
Short-Term Global
Income Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MERRILL LYNCH SHORT-TERM GLOBAL INCOME FUND, INC.
Officers and
Directors
Arthur Zeikel, President and Director
Donald Cecil, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Terry K. Glenn, Executive Vice President
Joseph T. Monagle, Jr., Senior Vice President
Alex V. Bouzakis, Vice President
Donald C. Burke, Vice President
Edward F. Gobora, Vice President
David B. Walter, Vice President
Stephen Yardley, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
<PAGE>
Custodian
The Chase Manhattan Bank, N.A.
Global Securities Services
Chase Metro Tech Center
Brooklyn, New York 11245
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
DEAR SHAREHOLDER
The global bond markets continued to be affected by divergent economic
growth prospects among the industrialized nations. Lagging economies,
low inflation, and the prospect of further declines in short-term in-
terest rates continue to bolster most of the continental European bond
markets. In sharp contrast, US economic growth continues to strengthen.
The Canadian government bond market performed especially well as
investors' appetites for Canadian fixed-income securities have been
whetted by widespread expectations that Canadian bonds would continue
to outperform their US counterparts. These expectations have been
reinforced by better inflation performance and persistent high un-
employment levels in Canada, along with further easing of short-
term interest rates by the Bank of Canada.
The Australian government bond market also had relatively strong
performance as signs that improving economic growth, accompanied by
low inflation, attracted investors to Australian bonds in which
they were generally underweighted.
European bond markets were generally mixed with the high-yielding bonds
outpacing the core group. Spanish bonds rallied in the wake of improving
inflation and a cut in their intervention rate. Danish bond prices im-
proved resulting in a further narrowing of the yield spread over Germany
after its central bank lowered the discount rate and inflation remained
below that in Germany. In Sweden, lower-than-expected inflation, passage
of the 1994 budget, and cautious Riksbank (Sweden's central bank) easing
combined to bolster Swedish bond returns. The performance of the core
European bond markets was dampened, particularly in Germany, as traders
and investors scaled back their expectations for near-term monetary
easing by the Bundesbank. The weakness in Germany spread to other core
markets, where yields had already narrowed in on German levels.
In Japan, the Japanese government bond market sold off sharply as investors
became concerned about the prospect of increased issuance as a consequence
of upcoming fiscal stimulus measures, and on prospects of another cut in
the official discount rate.
<PAGE>
The Mexican bond market had a much improved outlook following the passage
of the North American Free Trade Agreement in November. Falling sovereign
spreads contributed to improved market performance as these countries
implemented or furthered economic and political reform.
Investment Strategy
Although overweighted for most of the January quarter in European,
Australian, New Zealand and Canadian bonds, during January we reduced
our core European and Canadian positions and reallocated assets primarily
to the US Treasury market in response to the narrowing of yield spreads,
the continuing unstable situation in Russia, and the cost of hedging
foreign currency exposures. The US dollar continued its rise against
the Japanese yen. For most of the quarter, the dollar also firmed against
most European currencies. During December, the Australian and Canadian
dollars strengthened against the US dollar. Toward the end of January,
the US dollar weakened against most European currencies and the yen.
We remain essentially hedged into US dollars. We have, however, selective-
ly added currency exposure through various techniques as an offset to our
hedging costs.
In Conclusion
We thank you for your continued investment in Merrill Lynch Short-Term
Global Income Fund, Inc., and we look forward to reviewing our outlook
with you again in our next report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Joseph T. Monagle Jr.)
Joseph T. Monagle, Jr.
Senior Vice President
(Alex V. Bouzakis)
Alex V. Bouzakis
Vice President
(David B. Walter)
David B. Walter
Vice President
(Stephen Yardley)
Stephen Yardley
Vice President
March 3, 1994
<PAGE>
PERFORMANCE DATA
None of the past results shown should 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.
<TABLE>
Recent
Performance
Results*
<CAPTION> 12 Month 3 Month
1/31/94 10/31/93 1/31/93 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $8.64 $8.66 $8.71 -0.80% -0.23%
Class B Shares 8.64 8.65 8.70 -0.69 -0.12
Class A Shares--Total Return +6.53(1) +1.41(2)
Class B Shares--Total Return +6.12(3) +1.40(4)
Class A Shares--Standardized 30-day Yield 4.77%
Class B Shares--Standardized 30-day Yield 4.37%
<FN>
*Investment results shown for the 3-month and 12-month periods are before the deduction of any sales charges.
(1)Percent change includes reinvestment of $0.622 per share ordinary income dividends.
(2)Percent change includes reinvestment of $0.141 per share ordinary income dividends.
(3)Percent change includes reinvestment of $0.578 per share ordinary income dividends.
(4)Percent change includes reinvestment of $0.130 per share ordinary income dividends.
</TABLE>
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/93 +6.69% +3.49%
Inception (8/3/90)
through 12/31/93 +4.27 +3.35
[FN]
*Maximum sales charge is 3.0%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/93 +6.15% +3.15%
Inception (8/3/90)
through 12/31/93 +3.66 +3.44
[FN]
*Maximum contingent deferred sales charge is 3.0% and is reduced to
0% after 3 years.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
PERFORMANCE DATA (concluded)
<TABLE>
Performance
Summary--
Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
8/3/90--12/31/90 $10.00 $9.93 -- $0.436 +3.73%
1991 9.93 9.68 -- 0.941 +7.23
1992 9.68 8.70 -- 0.735 -2.79
1993 8.70 8.64 -- 0.625 +6.69
1/1/94--1/31/94 8.64 8.64 -- 0.028 +0.55
------
Total $2.765
Cumulative total return as of 1/31/94: +15.99%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains distributions at net asset value on
the payable date, and do not include sales charge; results would be lower if sales charge was included.
</TABLE>
<TABLE>
Performance
Summary--
Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
8/3/90--12/31/90 $10.00 $9.93 -- $0.404 +3.40%
1991 9.93 9.68 -- 0.885 +6.63
1992 9.68 8.69 -- 0.687 -3.39
1993 8.69 8.63 -- 0.581 +6.15
1/1/94--1/31/94 8.63 8.64 -- 0.025 +0.64
------
Total $2.582
Cumulative total return as of 1/31/94: +13.80%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains distributions at net asset value on
the payable date, and do not reflect deduction of any sales charge; results would be lower if sales
charge was deducted.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Maturity Interest Percent of
COUNTRIES Face Amount Date Issue Rate++ Value Net Assets
<S> <S> <C> <C> <S> <C> <C> <C>
Australia A$ 67,500,000 3/14/95 Queensland Treasury Corp., Global Notes (3) 8.00% $ 49,375,008 3.19%
5,700,000 3/01/96 New South Wales Treasury Corp. (3) 8.50 4,279,925 0.27
19,550,000 7/15/96 Australian Government Bonds (1) 13.00 16,254,308 1.05
92,575,000 1/15/97 Western Australia Treasury Corp. (3) 10.00 73,064,708 4.72
Total Investments in Australia
(Cost--$139,265,436) 142,973,949 9.23
Belgium Bf 800,000,000 11/25/96 Belgium Government Bonds (1) 6.25 22,708,595 1.46
Total Investments in Belgium (Cost--$22,572,292) 22,708,595 1.46
Canada C$ 99,246,000 2/01/96 Canadian Government Bonds (1) 6.00 77,103,168 4.98
84,000,000 8/01/96 Canadian Government Bonds (1) 6.50 66,158,395 4.28
Total Investments in Canada (Cost--$180,963,640) 143,261,563 9.26
Denmark Dkr 142,000,000 8/10/95 Government of Denmark (1) 9.25 22,164,160 1.43
400,000,000 2/10/96 Government of Denmark (1) 6.00 60,045,929 3.88
Total Investments in Denmark (Cost--$82,507,510) 82,210,089 5.31
Finland Fmk 200,000,000 9/15/96 Finnish Government Bond (1) 6.50 37,255,753 2.41
Total Investments in Finland (Cost--$34,975,887) 37,255,753 2.41
France Ffr 108,000,000 10/12/95 French Government "B-TAN" (1) 5.50 18,338,795 1.18
147,999,960 4/25/96 French Government "OAT" STRIPS (1) 9.14++++ 22,445,492 1.45
140,000,000 10/25/96 French Government "OAT" STRIPS (1) 5.34++++ 20,668,500 1.34
Total Investments in France (Cost--$63,515,182) 61,452,787 3.97
Italy Lit 29,200,000,000 9/07/94 A/S Eksport Finans (Indexed to Lit/Ffr) (a) (1) 8.00 18,361,422 1.19
10,000,000,000 5/01/96 Buoni Poliennali del Tesoro (Italian
Government Bond) (1) 11.50 6,253,945 0.40
58,000,000,000 6/01/96 Buoni Poliennali del Tesoro (Italian
Government Bond) (1) 11.00 36,077,865 2.33
35,900,000,000 8/01/96 Buoni Poliennali del Tesoro (Italian
Government Bond) (1) 10.00 21,987,890 1.42
100,000,000,000 10/01/96 Buoni Poliennali del Tesoro (Italian
Government Bond) (1) 9.00 60,233,004 3.89
Total Investments in Italy
(Cost--$147,499,958) 142,914,126 9.23
Mexico Mxn 9,885,560 5/04/94 Mexican Cetes (1) 10.75++++ 3,098,473 0.20
136,528,700 6/02/94 Mexican Cetes (1) 10.75++++ 42,418,904 2.74
8,771,320 6/30/94 Mexican Cetes (1) 10.72++++ 2,704,019 0.17
40,086,600 7/07/94 Mexican Cetes (1) 10.72++++ 12,335,928 0.80
Total Investments in Mexico (Cost--$60,560,746) 60,557,324 3.91
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Maturity Interest Percent of
COUNTRIES Face Amount Date Issue Rate++ Value Net Assets
<S> <S> <C> <C> <S> <C> <C> <C>
New NZ$ 95,210,000 12/21/94 New Zealand Treasury Bonds (1) 5.49%++++ $51,906,569 3.35%
Zealand
53,185,000 11/15/95 New Zealand Government Bonds (1) 8.00 31,824,287 2.06
Total Investments in New Zealand
(Cost--$80,429,199) 83,730,856 5.41
Spain Pta 5,000,000,000 7/15/95 Bonos del Estado (Spanish Government Bonds) (1) 11.40 37,338,796 2.41
3,000,000,000 4/15/96 Bonos del Estado (Spanish Government Bonds) (1) 13.45 23,841,824 1.54
2,500,000,000 7/15/96 Bonos del Estado (Spanish Government Bonds) (1) 11.90 19,481,653 1.26
3,000,000,000 8/30/96 Bonos del Estado (Spanish Government Bonds) (1) 11.85 23,495,547 1.52
5,800,000,000 11/30/96 Bonos del Estado (Spanish Government Bonds) (1) 10.55 44,561,026 2.88
Total Investments in Spain (Cost--$155,851,604) 148,718,846 9.61
Sweden Skr 625,000,000 9/01/95 Government of Sweden (1) 11.50 84,789,181 5.48
175,000,000 1/23/97 Government of Sweden (1) 10.75 24,785,892 1.60
Total Investments in Sweden (Cost--$110,526,242) 109,575,073 7.08
United Pound 10,000,000 6/27/94 Swiss Bank Corp., Medium-Term Notes (2) 10.45 15,261,117 0.99
Kingdom Sterling 27,000,000 11/15/96 UK Gilt (1) 10.00 45,261,767 2.92
Total Investments in the United Kingdom
(Cost--$62,622,900) 60,522,884 3.91
United US$ 74,309,330 2/01/94 Lehman Brothers, Repurchase Agreement*
States purchased on 1/13/94 (2) 3.10 74,309,330 4.80
89,000,000 10/15/94 Plus Capital Co. (2) 7.375 89,445,000 5.78
72,000,000 12/07/94 Plus Capital Co. (2) 5.625 71,964,000 4.65
Total Investments in the United States
(Cost--$235,309,330) 235,718,330 15.23
<PAGE>
Total Investments (Cost--$1,336,099,215) 1,331,600,175 86.02
Call Options Written (Premium Received--$73,642)** (21,606) (0.00)
Put Options Written (Premiums Received--$439,154)*** (458,704) (0.03)
Unrealized Depreciation on Forward Foreign Exchange Contracts+++ (9,969,180) (0.64)
Other Assets Less Liabilities 226,881,912 14.65
-------------- ------
Net Assets $1,548,032,597 100.00%
============== ======
Net Asset Value: Class A--Based on net assets of $89,424,685 and 10,347,720
shares outstanding $ 8.64
Class B--Based on net assets of $1,458,607,912 and 168,815,767 ==============
shares outstanding $ 8.64
==============
<FN>
*Repurchase Agreements are fully collateralized by US Government &
Agency Obligations.
**Call Options Written as of January 31, 1994 are as follows:
Par Value Premiums
Subject to Call Issue Received Value
$25,000,000 A$ currency call option, strike
price .7200, expiring 2/01/94 $17,500 $ (2,500)
22,400,000 C$ currency call option, strike
price 1.300, expiring 2/01/94 8,960 0
22,400,000 DM currency call option, strike
price 1.734, expiring 2/02/94 17,920 0
44,900,000 DM currency call option, strike
price 1.7340, expiring 2/01/94 17,960 (17,960)
39,500,000 Lit currency put option, DM
currency call option, strike
price Lit/DM .992, expiring
2/02/94 11,302 (1,146)
------- --------
Total Call Options Written $73,642 $(21,606)
======= ========
<PAGE>
***Put Options Written as of Janaury 31, 1994 are as follows:
Par Value Premiums
Subject to Put Issue Received Value
$25,000,000 A$ currency put option, strike
price .7000, expiring 2/01/94 $27,500 $(2,500)
22,400,000 A$ currency put option, strike
price .7000, expiring 2/04/94 20,160 (8,960)
22,400,000 A$ currency put option, strike
price .685, expiring 2/10/94 29,120 (2,240)
22,400,000 C$ currency put option, strike
price 1.3225, expiring 2/01/94 14,560 (149,408)
22,400,000 C$ currency put option, strike
price 1.3225, expiring 2/02/94 20,160 (133,280)
44,900,000 DM currency put option, strike
price 1.7425, expiring 2/04/94 71,840 (71,840)
44,900,000 DM currency put option, strike
price 1.755, expiring 2/04/94 49,390 (22,450)
22,400,000 DM currency put option, strike
price 1.761, expiring 2/02/94 32,480 (4,480)
31,000,000 Pta currency put option, strike
price 143, expiring 2/02/94 37,200 (3,100)
22,400,000 Pta currency put option, strike
price 143.75, expiring 2/09/94 40,320 (17,920)
39,500,000 Lit currency call option, DM
currency put option, strike price
Lit/DM 960, expiring 2/02/94 15,823 (1,146)
22,400,000 NZ$ currency put option, strike
price .565, expiring 2/02/94 22,400 (8,960)
22,400,000 Pound sterling currency put
option, strike price 1.470,
expiring 2/08/94 24,640 (17,920)
15,000,000 Pound sterling currency put
option, DM currency call option
strike price Pound sterling/
DM 2.59, expiring 2/02/94 13,436 (2,250)
17,500,000 Pound sterling currency put
option, strike price 1.485,
expiring 2/04/94 20,125 (12,250)
-------- ---------
Total Put Options Written $439,154 $(458,704)
======== =========
++Certain Commercial Paper, US Treasury and Foreign Treasury Obligations are traded on a discount basis; the interest rates shown
represent the yield-to-maturity at the time of purchase by the Fund. Other securities bear interest at the rates shown, payable at
fixed dates or upon maturity. Interest rates on floating rate securities are adjusted periodically based on appropriate indexes.
The interest rates shown are those in effect at January 31, 1994.
++++Represents the yield-to-maturity on this zero coupon issue.
Corresponding industry groups for securities (percent of net assets):
(1) Sovereign Government Obligations--61.62%
(2) Financial Services--16.22%
(3) Sovereign/Regional Government Obligations--Agency--8.18%
<PAGE>
+++Forward Foreign Exchange Contracts as of January 31, 1994 are as follows:
Unrealized
Expiration Appreciation
Date (Depreciation)
Foreign Currency Purchased
A$ 11,180,906 March 1994 $ 37,076
Bf 1,003,631,392 March 1994 (5,286)
C$ 28,402,800 February 1994 (227,431)
C$ 29,568,000 March 1994 68,734
DM 408,198,603 February 1994 158,115
Dkr 172,103,542 February 1994 115,392
ECU 85,770,113 February 1994 492,406
Lit 339,711,995 February 1994 (1,334)
NZ$ 74,111,663 February 1994 849,449
NZ$ 111,911,073 March 1994 (141,456)
-----------
Total (US$ Commitment--$539,871,025) $ 1,345,665
-----------
Foreign Currency Sold
A$ 100,074,349 February 1994 200,549
A$ 103,331,236 March 1994 (760,065)
Bf 1,823,261,233 March 1994 (821,260)
C$ 47,996,965 February 1994 57,204
C$ 267,163,191 March 1994 959,559
DM 242,176,896 February 1994 1,590,814
DM 124,920,581 March 1994 (41,919)
Dkr 464,686,864 February 1994 (316,193)
Dkr 302,847,500 March 1994 (327,046)
ECU 85,770,113 February 1994 374,214
Fmk 203,059,882 March 1994 (1,043,899)
Frf 376,703,798 March 1994 (193,619)
Pound sterling 42,224,338 February 1994 (470,535)
Lit 248,552,110,324 February 1994 (1,287,800)
Nlg 93,611,118 February 1994 645,228
NZ$ 279,422,137 February 1994 (2,162,928)
NZ$ 40,407,685 March 1994 (139,851)
Pta 10,702,055,617 February 1994 (1,575,484)
Pta 10,785,350,237 March 1994 (2,225,163)
Skr 274,317,361 February 1994 (2,174,974)
Skr 591,049,124 March 1994 (1,601,677)
------------
Total (US$ Commitment--$1,641,131,420) $(11,314,845)
------------
Total Unrealized Depreciation--Net, on
Forward Foreign Exchange Contracts $ (9,969,180)
============
(a)Indexed instrument for which the principal amount due at maturity
is affected by the relative value of the foreign reference rates.
</TABLE>
<PAGE>
