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.
FUND LOGO
Annual Report
October 31, 1994
<PAGE>
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
Edward D. Zinbarg, 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
Custodian
The Chase Manhattan Bank, N.A.
Global Securities Services
4 Chase Metro Tech Center, 18th Floor
Brooklyn, New York 11245
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
DEAR SHAREHOLDER
Concerns of increasing economic growth and inflationary pressures
continued to prompt volatility in world bond markets during the
October quarter. In addition, the weakness of the US dollar in
foreign exchange markets prolonged the bond market declines.
Early in the period, the possibility of continued monetary policy
tightening by the US Federal Reserve Board was predominant in the
minds of investors. In addition, in the United States, inflationary
expectations surfaced again with the announcement of significant
upward revisions in industrial production and capacity utilization
for the May--July period. This negative attitude permeated global
bond markets in general and led to greater losses in less liquid
markets. Investor sentiment again deteriorated as the report of
better-than-expected growth in gross domestic product for the
three months ended September 30, combined with evidence of a
still-robust manufacturing sector and renewed US dollar weakness,
all rekindled concerns that US short-term interest rates would
soon resume their upward trend.
<PAGE>
In general, stronger-than-anticipated economic growth indicators
in major industrialized countries during the latter part of the
year, ended the trend of global monetary easings. Most European
bond markets sold off in line with the US Treasury market based
on the continued fears that global economic expansion would lead
to the onset of higher inflation and monetary tightening, even
among the core European countries. European markets, however, did
stabilize somewhat in September and October.
Market Review
On August 11, 1994, the European markets were jolted by
unexpected interest rate hikes in Sweden and Italy that sent
prices sharply lower across Europe. The moves were largely
attributed to currency defense even though the central banks
called the moves preemptive strikes against inflation. Reaction
to the hikes was that long-term yields in both markets went
higher and the currencies were weakened, which was not the
response that the central banks had anticipated.
The European markets had a disappointing reaction to the 50 basis
point (0.50%) rise in short-term US interest rates on August 16,
1994, posting initial gains but grinding lower over the following
days. The initial uptick generated no follow-through buying and a
continued lack of real interest left long-term German bonds to
drift lower. The front end of the German market performed better,
falling slightly and then drawing support from media speculation
that the Bundesbank would ease again sooner rather than later
because it would not want to be seen as interfering with the
October elections. The weak performance by the US dollar even
after the Federal Reserve Board moved up interest rates continued
to perplex many market participants.
The trade pact signed by the US and Japan on September 30, 1994
removed the immediate threat of either a trade war or renewed
effort by the Clinton Administration to encourage further yen
appreciation. Trade agreements were signed concerning Japanese
imports of plate glass, medical and telecommunications equipment,
and insurance. The negotiations, however, failed to produce an
agreement to increase Japanese imports on US cars and parts.
On September 24, 1994, Mexico approved its ninth anti-inflationary
pact entitled The Pact for Well-Being Stability and Growth (PABEC).
The success of this pact in reducing inflation is a result of a
combination of sound exchange rate policy and a stringent fiscal
and monetary policy.
<PAGE>
The US dollar set new all-time lows against the Japanese yen and
two-year lows against the Deutschemark in October, as concerns
about the popularity of the Clinton Administration and the effect
of mid-term elections in Washington entered the marketplace. In
addition, an incomplete settlement of US/Japan trade talks and
concerns the Bundesbank could raise rates after the German
elections also helped to push down the US dollar. Of note, the
pound sterling strengthened as a result of a base rate increase
on September 12, 1994, which significantly reduced the risk
premium associated with owning British financial assets. In this
period, until the end of October, the pound sterling appreciated
3.4% against the US dollar and 2.7% against the Deutschemark.
On October 16, 1994, German voters narrowly returned the
incumbent government to power, giving Chancellor Helmut Kohl's
conservative-liberal coalition an advantage of 10 seats in the
federal parliament. The return to power of the Kohl-led coalition
should ensure continued progress towards German deficit reduction.
The Reserve Bank of Australia raised official rates by 100 basis
points on October 24, 1994. The move was seen as a preemptive
strike against inflation.
In the weeks ahead, investors will continue to access global
economic data and inflationary trends in order to gauge whether
further increases in short-term interest rates are imminent.
Fiscal Year in Review
The fiscal year ended October 31, 1994 was characterized by weak
bond markets worldwide and US dollar weakness in foreign exchange
markets. The slide in bond prices began in earnest with the
February monetary policy tightening by the US Federal Reserve
Board. Despite the six successive increases in the Federal Funds
rate that occurred during the fiscal year, stronger-than-expected
economic results kept concerns of higher inflation alive. Price
weakness soon spread to other world bond markets. At the same
time, the US dollar remained persistently weak.
During the fiscal year, as interest rates trended higher
globally, the Fund remained conservatively positioned with the
majority of bond purchases under two years in final maturity. For
the dollar bloc countries, money market securities were our
primary investment vehicle as our view of rising short-term
interest rates proved correct. In the European bloc, we reduced
the Fund's bond exposure in mid-year as unexpected economic
growth placed the European central banks "on hold" with regard
to monetary easing policies. These strategies helped to moderate
the negative effect of declining bond prices on the Fund's total
returns for the fiscal year.
<PAGE>
For the most part, the Fund's European investment positions were
hedged into US dollars, as economic fundamentals appeared to
support a stronger US currency. Although this strategy hampered
performance for the fiscal year, we believe that it will benefit
the Fund over the longer term.
Looking ahead, we will remain conservatively positioned as bond
yields, though attractive relative to current inflation, may have
not as yet peaked for this cycle.
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
(Alex V. Bouzakis)
Alex V. Bouzakis
Vice President
(Edward F. Gobora)
Edward F. Gobora
Vice President
(David B. Walter)
David B. Walter
Vice President
(Stephen Yardley)
Stephen Yardley
Vice President
December 8, 1994
PERFORMANCE DATA
About Fund
Performance
Since October 21, 1994, investors have been able to purchase
shares of the Fund through the Merrill Lynch Select Pricing SM
System, which offers four pricing alternatives:
<PAGE>
Class A Shares incur a maximum initial sales charge (front-end load)
of 4% and bear no ongoing distribution or account maintenance fees.
Class A Shares are available only to eligible investors. 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.
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 0.50% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after 10 years.
Class C Shares are subject to a distribution fee of 0.55% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
Class D Shares
incur a maximum initial sales charge of 4% and an account
maintenance fee of 0.25% (but no distribution fee).
Performance data for the Fund's Class B and Class D Shares are
presented in the "Performance Summary" and "Average Annual
Total Return" tables on page 5. Data for all of the Fund's
shares, including Class A and Class C Shares, are presented in
the "Recent Performance Results" table.
The "Recent Performance Results" table on page 6 shows
investment results before the deduction of any sales charges for
Class B and Class D Shares for the 12-month and 3-month periods
ended October 31, 1994 and for the Class A and Class C Shares for
the period since inception through October 31, 1994. All data in
this table assume imposition of the actual total expenses
incurred by each class of shares during the relevant period.
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.
Total Return
Based on a
$10,000
Investment
GRAPHIC MATERIAL APPEARS HERE. SEE APPENDIX: ITEM 1.
<PAGE>
Average Annual
Total Return
[CAPTION]
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/94 +0.02% -3.74%
Inception (8/3/90) through 9/30/94 +2.54 +2.54
[FN]
*Maximum contingent deferred sales charge is 4.0% and
is reduced to 0% after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 9/30/94 +0.54% -3.48%
Inception (8/3/90) through 9/30/94 +3.10 +2.09
[FN]
*Maximum sales charge is 4.0%. On 10/21/94, Class A Shares
converted to Class D Shares.
**Assuming maximum sales charge.
[FN]
<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--10/31/94 8.63 8.10 -- 0.369 -1.76
Total $2.926
Cumulative total return as of 10/31/94: +11.08%**
<PAGE>
<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>
<TABLE>
Performance
Summary--
Class D 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--10/31/94 8.64 8.11 -- 0.403 -1.35
Total $3.140
Cumulative total return as of 10/31/94: +13.79%**
<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.
***As a result of the implementation of the Merrill Lynch Select Pricing System SM,
Class A Shares of the Fund outstanding prior to October 21, 1994 have been
redesignated Class D Shares.
</TABLE>
<PAGE>
PERFORMANCE DATA (concluded)
<TABLE>
Recent
Performance
Results
<CAPTION>
12 Month 3 Month
10/31/94 7/31/94++ 10/31/93 % Change % Change++
<S> <C> <C> <C> <C> <C>
Class A Shares* $8.11 $8.11 -- -- -0.00%
Class B Shares* 8.10 8.18 $8.65 -6.36% -0.98
Class C Shares* 8.10 8.11 -- -- -0.12
Class D Shares* 8.11 8.19 8.66 -6.35 -0.86
Class A Shares--Total Return* -- +0.12
Class B Shares--Total Return* -1.02(1) +0.38(2)
Class C Shares--Total Return* -- -0.00
Class D Shares--Total Return* -0.51(3) +0.63(4)
Class B Shares--Standardized 30-day Yield 5.75%
Class D Shares--Standardized 30-day Yield 6.03%
<FN>
*Investment results shown do not reflect sales charges;
results shown would be lower if a sales charge was included.
++Investment results shown for Class A and Class C Shares
are since inception (10/21/94).
(1)Percent change includes reinvestment of $0.474 per share
ordinary income dividends.
(2)Percent change includes reinvestment of $0.110 per share
ordinary income dividends.
(3)Percent change includes reinvestment of $0.517 per share
ordinary income dividends.
(4)Percent change includes reinvestment of $0.121 per share
ordinary income dividends.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Maturity Interest Value Percent of
Face Amount Date Issue Rate++ (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
COUNTRIES
Australia
A$ 43,800,000 7/15/96 Victoria Treasury Corp. (3) 12.50% $ 34,219,678 4.28%
Total Investments in Australia (Cost--$34,991,935) 34,219,678 4.28
<PAGE>
Canada
C$ 39,046,000 2/01/96 Canadian Government Bonds (1) 6.00 28,469,538 3.56
62,300,000 3/15/96 Canadian Government Bonds (1) 4.75 44,553,973 5.57
22,850,000 8/01/96 Canadian Government Bonds (1) 6.50 16,582,851 2.08
Total Investments in Canada (Cost--$89,130,522) 89,606,362 11.21
European
Currency Units
ECU 18,200,000 1/21/97 United Kingdom Government Bonds (1) 5.25 21,889,134 2.74
Total Investments in European Currency Units
(Cost--$21,942,153) 21,889,134 2.74
Germany
DM 33,700,000 9/20/96 Bundesobligation (1) 8.50 23,246,397 2.91
Total Investments in Germany (Cost--$23,428,386) 23,246,397 2.91
Italy
Lit 28,700,000,000 10/01/96 Buoni Poliennali del Tesoro (Italian
Government Bond) (1) 9.00 18,091,653 2.26
60,200,000,000 1/01/97 Buoni Poliennali del Tesoro (Italian
Government Bond) (1) 8.50 37,240,018 4.66
39,000,000,000 3/21/95 Cassaddi Risparmio Delle Provincie Lombarde (2) 7.96++++ 24,490,672 3.06
Total Investments in Italy (Cost--$78,544,206) 79,822,343 9.98
Mexico
MxP 154,802,510 11/03/94 Mexican Cetes (1) 13.50++++ 45,016,345 5.63
156,418,660 11/30/94 Mexican Cetes (1) 13.50++++ 44,993,019 5.62
27,344,000 2/02/95 Testobonos (3) 5.00 26,853,175 3.36
Total Investments in Mexico (Cost--$117,336,825) 116,862,539 14.61
New Zealand
NZ $ 91,485,000 11/15/95 New Zealand Government Bonds (1) 8.00 55,918,556 6.99
25,400,000 11/15/96 New Zealand Government Bonds (1) 9.00 15,673,583 1.96
Total Investments in New Zealand (Cost--$68,533,873) 71,592,139 8.95
<PAGE>
Spain
Pta 8,400,000,000 11/30/96 Bonos del Estado (Spanish Government Bonds) (1) 10.55 67,323,381 8.42
Total Investments in Spain (Cost--$64,532,118) 67,323,381 8.42
Sweden
Skr 225,000,000 9/20/95 Swedish Treasury Bill (1) 9.3279++++ 28,936,794 3.62
Total Investments in Sweden (Cost--$27,246,355) 28,936,794 3.62
United Kingdom
Pound 12,500,000 9/01/97 United Kingdom Gilt (1) 8.75 20,660,063 2.58
Sterling
Total Investments in the United Kingdom
(Cost--$19,996,260) 20,660,063 2.58
United States
US$ 45,000,000 11/01/94 First Boston Corp. (The), Repurchase
Agreement* purchased on 10/31/94 (2) 4.75 45,000,000 5.63
44,392,165 11/01/94 Lehman Brothers, Repurchase Agreement* purchased on
10/31/94 (2) 4.70 44,392,165 5.55
43,000,000 11/01/94 Morgan (J.P.) & Co., Inc., Repurchase Agreement*
purchased on 10/31/94 (2) 4.75 43,000,000 5.38
42,000,000 11/01/94 PaineWebber Inc., Repurchase Agreement*
purchased on 10/31/94 (2) 4.70 42,000,000 5.25
72,000,000 12/07/94 Plus Capital Co., Ltd. Structured Note,
Principal Linked to U.S. $/Peso exchange rate,
collateralized by Mexican Cetes and other Peso
permitted investments (2)**+++ 5.625 71,820,000 8.98
22,500,000 9/30/96 US Treasury Notes (1) 6.50 22,383,990 2.80
74,300,000 8/15/97 US Treasury Notes (1) 6.50 73,255,194 9.16
Total Investments in the United States
(Cost--$342,445,688) 341,851,349 42.75
Total Investments (Cost--$888,128,321) 896,010,179 112.05
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Expiration Strike Value Percent of
Par Value Date Issue Price (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Currency Put
Options Written
US$ 22,800,000 Nov. 1994 Japanese Yen $ 98.80 $ (2,280) 0.0%
22,700,000 Nov. 1994 New Zealand Dollar 0.605 (2,270) 0.0
<PAGE>
Total Options Written (Premiums Received--$37,510) (4,550) 0.0
Total Investments, Net of Options Written (Cost--$888,090,811) 896,005,629 112.05
Unrealized Depreciation on Forward Foreign Exchange Contracts++++++ (5,488,836) (0.69)
Liabilities in Excess of Other Assets (90,827,732) (11.36)
------------ -------
Net Assets $799,689,061 100.00%
============ =======
<FN>
Corresponding industry groups for securities (percent of net assets):
(1)Sovereign Government Obligations--70.56%
(2)Financial Services--33.85%
(3)Sovereign/Regional Government Obligations--Agency--7.64%
*Repurchase Agreements are fully collateralized by US Government & Agency Obligations.
**Indexed instrument for which the principal amount due at maturity is affected by the
relative value of the foreign currencies indicated.
+++Restricted Security.
++Certain Commercial Paper, US Treasury and Foreign Treasury Obligations are traded on
a discount basis; the interest rates shown represent the yield-to-maturity at the time
of purchase by the Fund. Other securities bear interest at the rates shown, payable at
fixed dates or upon maturity. Interest rates on floating rate securities are adjusted
periodically based on appropriate indexes.
The interest rates shown are those in effect at October 31, 1994.
++++Represents the yield-to-maturity on this zero coupon issue.
++++++Forward Foreign Exchange Contracts as of October 31, 1994 are as follows:
Unrealized
Expiration Appreciation
Date (Depreciation)
(Note 1c)
Foreign Currency Purchased
A$ 18,447,584 November 1994 $ 116,497
DM 256,275,757 November 1994 3,239,038
DM 100,409,595 December 1994 (125,778)
ECU 18,019,895 November 1994 562,310
Pound
Sterling 30,108,673 November 1994 658,539
Lit 89,430,767,500 November 1994 849,004
Total (US$ Commitment--$375,342,399) $ 5,299,610
------------
<PAGE>
Foreign Currency Sold
A$ 66,325,815 November 1994 $ (286,196)
C$ 61,456,481 November 1994 342,728
DM 364,047,538 November 1994 (4,296,610)
DM 98,201,185 December 1994 434,734
ECU 36,197,201 November 1994 (666,929)
Pound
Sterling 30,621,175 November 1994 (1,425,508)
Lit 99,696,599,898 November 1994 (1,590,756)
Lit 72,872,240,060 December 1994 (956,314)
NZ$ 116,841,074 November 1994 (863,300)
Pta 4,163,107,398 November 1994 221,102
Pta 4,615,018,593 December 1994 (833,962)
Skr 235,300,447 November 1994 (787,964)
Yen 2,282,250,000 December 1994 (105,978)
Yen 2,263,606,200 January 1995 26,507
Total (US$ Commitment--$820,107,197) $(10,788,446)
------------
Total Unrealized Depreciation--Net on
Forward Foreign Exchange Contracts $ (5,488,836)
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of October 31, 1994
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$888,128,321) (Note 1a) $896,010,179
Cash 1,356,778
Foreign demand deposits (Note 1c) 1,917,916
Receivables:
Interest $ 18,979,539
Forward foreign exchange contracts (Note 1c) 1,314,079
Capital shares sold 573,279
Securities sold 329,253
Options written 12,540 21,208,690
------------
Deferred organization expenses (Note 1h) 13,344
Prepaid registration fees and other assets (Note 1h) 159,771
------------
Total assets 920,666,678
------------
<PAGE>
Liabilities: Options written, at value (premiums received--$37,510) (Notes 1a & 1d) 4,550
Unrealized depreciation on forward foreign exchange contracts (Note 1c) 5,488,836
Payables:
Securities purchased 100,735,829
Capital shares redeemed 11,734,384
Dividends to shareholders (Note 1i) 1,386,792
Distributor (Note 2) 478,698
Investment adviser (Note 2) 365,599 114,701,302
------------
Accrued expenses and other liabilities 782,929
------------
Total liabilities 120,977,617
------------
Net Assets: Net assets $799,689,061
============
Net Assets Class A Shares of Common Stock, $.10 par value, 1,000,000,000
Consist of: shares authorized $ 725
Class B Shares of Common Stock, $.10 par value, 1,000,000,000
shares authorized 9,264,911
Class C Shares of Common Stock, $.10 par value, 300,000,000 shares authorized 11
Class D Shares of Common Stock, $.10 par value, 300,000,000 shares authorized 603,044
Paid-in capital in excess of par 833,013,549
Accumulated realized capital losses from investments and foreign currency
transactions--net (Note 7) (46,087,873)
Unrealized appreciation on investments and foreign currency transactions--net 2,894,694
------------
Net assets $799,689,061
============
Net Asset Class A--Based on net assets of $58,746 and 7,246 shares outstanding $ 8.11
Value: ============
Class B--Based on net assets of $750,750,254 and 92,649,107 shares outstanding $ 8.10
============
Class C--Based on net assets of $891 and 110 shares outstanding $ 8.10
============
Class D--Based on net assets of $48,879,170 and 6,030,437 shares outstanding $ 8.11
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Year Ended October 31, 1994
<S> <S> <C> <C>
Investment Income
(Notes 1f & 1g): Interest and discount earned (net of $1,187,404 foreign withholding tax) $ 91,665,474
<PAGE>
Expenses: Distribution fees--Class B (Note 2) 9,169,467
Investment advisory fees (Note 2) 6,995,186
Transfer agent fees--Class B (Note 2) 1,508,625
Custodian fees 915,093
Transfer agent fees--Class D (Note 2) 84,882
Printing and shareholder reports 81,390
Accounting services (Note 2) 65,501
Registration fees (Note 1h) 60,572
Professional fees 43,558
Directors' fees and expenses 35,029
Amortization of organization expenses (Note 1h) 17,792
Other 29,035
------------
Total expenses 19,006,130
------------
Investment income--net 72,659,344
------------
Realized & Realized loss from:
Unrealized Gain Investments--net $(11,175,541)
(Loss) on Foreign currency transactions (81,749,077) (92,924,618)
Investments & ------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions--Net Investments--net 25,296,245
(Notes 1c, 1g & 3): Foreign currency transactions (15,265,580) 10,030,665
------------ ------------
Net realized and unrealized loss on investments and foreign
currency transactions (82,893,953)
------------
Net Decrease in Net Assets Resulting from Operations $(10,234,609)
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Year Ended October 31,
Increase (Decrease) in Net Assets: 1994 1993
<S> <S> <C> <C>
Operations: Investment income--net $ 72,659,344 $ 160,519,519
Realized loss on investments and foreign currency transactions--net (92,924,618) (253,242,731)
Change in unrealized appreciation/depreciation on investments and
foreign currency transactions--net 10,030,665 188,784,948
-------------- --------------
Net increase (decrease) in net assets resulting from operations (10,234,609) 96,061,736
-------------- --------------
<PAGE>
Distributions to Return of capital--net:
Shareholders Class A (58) (9,820,087)
(Note 1i): Class B (68,086,994) (150,699,432)
Class C (1) 0
Class D (4,572,291) 0
-------------- --------------
Net decrease in net assets resulting from distributions to shareholders (72,659,344) (160,519,519)
-------------- --------------
Capital Share Net decrease in net assets derived from capital share transactions (881,055,998) (1,543,047,053)
Transactions -------------- --------------
(Note 4):
Net Assets: Total decrease in net assets (963,949,951) (1,607,504,836)
Beginning of year 1,763,639,012 3,371,143,848
--------------- --------------
End of year $ 799,689,061 $1,763,639,012
=============== ==============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
The following per share data Class A Class B
and ratios have been derived For the For the For the
from information provided in Period Period Period
the financial statements. Oct. 21, Dec. 28 Aug. 3
1994++ to 1990 to 1990++ to
Increase (Decrease) in Net Oct. 31, For the Year Ended October 31, Oct. 31, Dec. 27,
Asset Value: 1994** 1994** 1993 1992 1991 1990
<S> <S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of period $ 8.11 $ 8.65 $ 8.85 $ 9.84 $ 9.92 $ 10.00
Performance: ---------- ---------- ---------- ---------- ---------- ----------
Investment income--net .01 .50 .57 .72 .77 .39
Realized and unrealized loss
on investments and foreign
currency transactions--net -- (.58) (.20) (.99) (.08) (.08)
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations .01 (.08) .37 (.27) .69 .31
---------- ---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Return of capital--net (.01) (.47) (.57) (.72) -- --
Investment income--net -- -- -- -- (.77) (.39)
---------- ---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.01) (.47) (.57) (.72) (.77) (.39)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 8.11 $ 8.10 $ 8.65 $ 8.85 $ 9.84 $ 9.92
========== ========== ========== ========== ========== ==========
<PAGE>
Total Investment Based on net asset value per share .12%+++ (1.02%) 4.63% (3.00%) 6.93%+++ 3.40%+++
Return:*** ========== ========== ========== ========== ========== ==========
Ratios to Average
Net Assets: Expenses, excluding account
maintenance and distribution fees .97%* .77% .79% .75% .77%* .76%*
========== ========== ========== ========== ========== ==========
Expenses .97%* 1.52% 1.60% 1.50% 1.52%* 1.51%*
========== ========== ========== ========== ========== ==========
Investment income--net 6.28%* 5.68% 7.26% 7.60% 9.11%* 9.75%*
========== ========== ========== ========== ========== ==========
Supplemental Net assets, end of period
(in thousands) $ 59 $ 750,750 $1,664,602 $3,182,520 $5,918,769 $2,796,301
Data: ========== ========== ========== ========== ========== ==========
Portfolio turnover 428.17% 428.17% 284.62% 120.77% 153.72% 19.40%
========== ========== ========== ========== ========== ==========
<CAPTION>
The following per share data Class C Class D
and ratios have been derived For the For the For the
from information provided in Period Period Period
the financial statements. Oct. 21, Dec. 28 Aug. 3
1994++ to 1990 to 1990++ to
Increase (Decrease) in Net Oct. 31, For the Year Ended October 31, Oct. 31, Dec. 27,
Asset Value: 1994** 1994** 1993 1992 1991 1990
<S> <S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of period $ 8.11 $ 8.66 $ 8.85 $ 9.85 $ 9.92 $ 10.00
Performance: ---------- ---------- ---------- ---------- ---------- ----------
Investment income--net .01 .54 .61 .77 .82 .42
Realized and unrealized loss on
investment and foreign
currency transactions--net (.01) (.58) (.19) (1.00) (.07) (.08)
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations -- (.04) .42 (.23) .75 .34
---------- ---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Return of capital--net (.01) (.51) (.61) (.77) -- --
Investment income--net -- -- -- -- (.82) (.42)
---------- ---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.01) (.51) (.61) (.77) (.82) (.42)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 8.10 $ 8.11 $ 8.66 $ 8.85 $ 9.85 $ 9.92
========== ========== ========== ========== ========== ==========
Total Investment Based on net asset value per share .00%+++ (.51%) 5.28% (2.60%) 7.53%+++ 3.73%+++
Return:*** ========== ========== ========== ========== ========== ==========
<PAGE>
Ratios to Average Expenses, excluding account
Net Assets: maintenance and distribution fees 1.34%* .76% .73% .75% .76%* .75%*
========== ========== ========== ========== ========== ==========
Expenses 2.14%* 1.01% .98% 1.00% .96%* .75%*
========== ========== ========== ========== ========== ==========
Investment income--net 5.63%* 6.19% 7.24% 8.11% 9.70%* 10.51%*
========== ========== ========== ========== ========== ==========
Supplemental Net assets, end of period
Data: (in thousands) $ 1 $ 48,879 $ 99,037 $ 188,623 $ 399,416 $ 211,006
========== ========== ========== ========== ========== ==========
Portfolio turnover 428.17% 428.17% 284.62% 120.77% 153.72% 19.40%
========== ========== ========== ========== ========== ==========
<FN>
*Annualized.
**Based on average shares outstanding during the period.
***Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Short-Term Global Income Fund, Inc. (the "Fund")
is registered under the Investment Company Act of 1940 as a non-
diversified, open-end management investment company. The Fund
offers four classes of shares under the Merrill Lynch Select Pricing
SM System. Shares of Class A and Class D are sold with a front-end
sales charge. Shares of Class B and Class C may be subject to a
contingent deferred sales charge. All classes of shares have
identical voting, dividend, liquidation and other rights and the
same terms and conditions, except that Class B, Class C and Class
D Shares bear certain expenses related to the account maintenance of
such shares and Class B and Class C Shares bear certain expenses
related to the distribution of such shares. Each class has exclusive
voting rights with respect to matters relating to its account
maintenance and distribution expenditures. The following is a
summary of significant accounting policies followed by the Fund.
<PAGE>
(a) Valuation of securities--Securities traded in the over-the-
counter market are valued at the last available bid price or yield
equivalents obtained from one or more dealers in the over-the-
counter market prior to the time of valuation. Portfolio securities
which are traded on stock exchanges are valued at the last sale
price on the principal market on which such securities are traded,
as of the close of business on the day the securities are being
valued or, lacking any sales, at the last available bid price.
Options traded on exchanges are valued at the last bid price for
options purchased and the last sale price for options written.
Options traded in the over-the-counter market are valued at the
last asked price for options written and the last bid price for
options purchased. Other investments, including futures contracts
and related options, are stated at market value or otherwise at
the fair value at which it is expected they may be resold, as
determined in good faith by or under the direction of the Board of
Directors. Securities and assets for which market quotations are not
readily available are valued at fair value as determined in
good faith by or under the direction of the Fund's Board of
Directors.
(b) Repurchase agreements--The Fund invests in US Government
securities pursuant to repurchase agreements with a member bank of
the Federal Reserve System or a primary dealer in US Government
securities. Under such agreements, the bank or primary dealer agrees
to repurchase the security at a mutually agreed upon time and price.
The Fund takes possession of the underlying securities, marks to
market such securities and, if necessary, receives additions to such
securities daily to ensure that the contract is fully collateralized.
(c) Foreign currency transactions--Transactions denominated in
foreign currencies are recorded at the exchange rate prevailing
when recognized. Assets and liabilities denominated in foreign
currencies are valued at the exchange rate at the end of the
period. Foreign currency transactions are the result of settling
(realized) or valuing (unrealized) receivables or payables
expressed in foreign currencies into US dollars. Realized and
unrealized gains or losses from investments include the effects of
foreign exchange rates on investments.
The Fund is authorized to enter into forward foreign exchange
contracts as a hedge against either specific transactions or
portfolio positions. Such contracts are not entered on the Fund's
records. However, the effect on operations is recorded from the
date the Fund enters into such contracts. Premium or discount is
amortized over the life of the contracts.
The Fund may also purchase or sell listed or over-the-counter
foreign currency options, foreign currency futures and related
options on foreign currency futures as a short or long hedge against
possible variations in foreign exchange rates. Such transactions
may be effected with respect to hedges on non-US dollar denominated
securities owned by the Fund, sold by the Fund but not yet
delivered, or committed or anticipated to be purchased by the Fund.
<PAGE>
(d) Options--When the Fund sells an option, an amount equal to the
premium received by the Fund is reflected as an asset and an
equivalent liability. The amount of the liability is subsequently
marked to market to reflect the current value of the option
written. When a security is sold through an exercise of an option,
the related premium received is deducted from the basis of the
security sold. When an option expires (or the Fund enters into a
closing transaction), the Fund realizes a gain or loss on the
option to the extent of the premiums received (or gain or loss to
the extent the cost of the closing transaction is less than or
exceeds the premium received).
Written and purchased options are non-income producing investments.
(e) Financial futures contracts--The Fund may purchase or sell
financial futures contracts and options on such futures contracts
as a hedge against adverse changes in the interest rate. A futures
contract is an agreement between two parties to buy and sell a
security, respectively, for a set price on a future date. Upon
entering into a contract, the Fund deposits and maintains as
collateral such initial margin as required by the exchange on which
the transaction is effected. Pursuant to the contract, the
Fund agrees to receive from or pay to the broker an amount of cash
equal to the daily fluctuation in value of the contract. Such
receipts or payment are known as variation margin and are recorded
by the Fund as unrealized gains or losses. When the contract is
closed, the Fund records a realized gain or loss equal to the
difference between the value of the contract at the time it was
opened and the value at the time it was closed.
(f) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income
to its shareholders. Therefore, no Federal income tax provision
is required. Under the applicable foreign tax law, a withholding
tax may be imposed on interest and capital gains at various
rates.
(g) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are
entered into (the trade dates). Interest income (including
amortization of discount) is recognized on the accrual basis.
Realized gains and losses on security transactions are determined
on the identified cost basis.
(h) Deferred organization expenses and prepaid registration fees--
Deferred organization expenses are charged to expense over a
five-year period. Prepaid registration fees are charged to expense
as the related shares are issued.
<PAGE>
(i) Dividends and distributions--Dividends from net investment
income, excluding transaction gains/losses, are declared daily and
paid monthly. Distributions of capital gains are recorded on the
ex-dividend dates. All of the ordinary income distributions paid
by the Fund during the fiscal year ended October 31, 1994 are
characterized as a return of capital.
(j) Reclassifications--Generally accepted accounting principles
require that differences between accumulated net realized capital
losses for financial reporting and tax purposes, if permanent, be
reclassified to paid-in capital. In connection with the adoption
of this accounting method, prior years' permanent book/tax
differences of $105,249,721 have been reclassified from accumulated
realized capital losses to paid in capital. These reclassifications
have no effect on net assets or net asset values per share.
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Fund has entered into an Investment Advisory Agreement with
Merrill Lynch Asset Management, L.P. ("MLAM"). Effective
January 1, 1994, the investment advisory business of MLAM was
reorganized from a corporation to a limited partnership. Both
prior to and after the reorganization, ultimate control of MLAM
was vested with Merrill Lynch & Co., Inc. ("ML & Co."). The
general partner of MLAM is Princeton Services, Inc. ("PSI"), an
indirect wholly-owned subsidiary of ML & Co. The limited partners
are ML & Co. and Merrill Lynch Investment Management, Inc.
("MLIM"), which is also an indirect wholly-owned subsidiary of
ML & Co. The Fund has also entered into a Distribution Agreement
and a Distribution Plan with Merrill Lynch Funds Distributor,
Inc. ("MLFD" or "Distributor"), a wholly-owned subsidiary of MLIM.
<PAGE>
MLAM is responsible for the management of the Fund's portfolio
and provides the necessary personnel, facilities, equipment and
certain other services necessary to the operations of the Fund.
For such services, the Fund pays a monthly fee based upon the
average daily value of the Fund's net assets, at the following
annual rates: 0.55% of the Fund's average daily net assets not
exceeding $2 billion; 0.525% of average daily net assets in
excess of $2 billion but not exceeding $4 billion; 0.50% of
average daily net assets in excess of $4 billion but not
exceeding $6 billion; 0.475% of average daily net assets in
excess of $6 billion but not exceeding $10 billion; 0.45% of
average daily net assets in excess of $10 billion but not
exceeding $15 billion; and 0.425% of average daily net assets in
excess of $15 billion. MLAM has entered into a Sub-Advisory
Agreement (the "Agreement") with Merrill Lynch Asset Management
U.K., Ltd. ("MLAM U.K."), an affiliate of MLAM, pursuant to
which MLAM pays MLAM U.K. a fee for providing investment advisory
services to the Investment Adviser with respect to the Fund in an
amount to be determined from time to time by the Investment
Adviser and MLAM U.K. but in no event in excess of the amount
that the Investment Adviser actually receives for providing
services to the Fund. For the year ended October 31, 1994, MLAM
paid MLAM U.K. a fee of $633,170 pursuant to such Agreement. The
most restrictive annual expense limitation requires that the
Investment Adviser reimburse the Fund to the extent the Fund's
expenses (excluding interest, taxes, distribution fees,
brokerage fees and commissions, and extraordinary items) exceed
2.5% of the Fund's first $30 million of average daily net
assets, 2.0% of the next $70 million of average daily net assets,
and 1.5% of the average daily net assets in excess thereof. The
Investment Adviser's obligation to reimburse the Fund is limited
to the amount of the investment advisory fee. No fee payment will
be made to the Investment Adviser during any fiscal year which
will cause such expenses to exceed expense limitations at the
time of such payment.
NOTES TO FINANCIAL STATEMENTS (concluded)
Pursuant to a distribution plan (the "Distribution Plan") adopted
by the Fund in accordance with Rule 12b-1 under the Investment
Company Act of 1940, the Fund pays the Distributor ongoing
account maintenance and distribution fees. The fees are accrued
daily and paid monthly at the annual rates based upon the average
daily net assets of the shares as follows:
<PAGE>
Account Distribution
Maintenance Fee Fee
Class B 0.25% 0.50%
Class C 0.25% 0.55%
Class D 0.25% --
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co.,
also provides account maintenance and distribution services to
the Fund. The ongoing account maintenance fee compensates the
Distributor and MLPF&S for providing account maintenance services
to Class B, Class C and Class D shareholders. The ongoing
distribution fee compensates the Distributor and MLPF&S for
providing shareholder and distribution-related services to Class
B and Class C shareholders.
For the year ended October 31, 1994, MLFD earned underwriting
discounts and MLPF&S earned dealer concessions on sales of the
Fund's Class A and Class D shares as follows:
MLFD MLPF&S
Class A $ -- $ --
Class D $1,110 $10,678
MLPF&S received contingent deferred sales charges of $2,449,809
relating to transactions in Class B Shares.
Financial Data Services, Inc. ("FDS"), an indirect wholly-owned
subsidiary of ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of MLAM, MLIM, PSI, MLFD, FDS, MLPF&S and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term
securities, for the year ended October 31, 1994 were
$4,490,166,539 and $5,312,697,739, respectively.
Net realized and unrealized gains (losses) as of October 31, 1994
were as follows:
<PAGE>
Realized Unrealized
Gains (Losses) Gains (Losses)
Investments:
Long-term $ (11,896,187) $ 7,916,612
Short-term -- (34,754)
Options purchased -- --
Options written 720,646 --
----------------- ---------------
Total investments (11,175,541) 7,881,858
----------------- ---------------
Currency transactions:
Options purchased $ (2,077,387) $ --
Options written 9,500,070 32,960
Forward foreign exchange contracts (78,925,539) (5,488,836)
Financial futures contracts -- --
Foreign currency transactions (10,246,221) 468,712
----------------- ---------------
Total currency transactions (81,749,077) (4,987,164)
----------------- ---------------
Total $ (92,924,618) $ 2,894,694
================= ===============
Transactions in call options written for the year ended
October 31, 1994 were as follows:
Par Value
Covered by Premiums
Written Options Received
Outstanding call options written at
beginning of year $ 112,433,062 $ 117,877
Options written 139,574,324,396 8,539,959
Options exercised (3,559,832,290) (2,116,754)
Options expired (136,126,925,168) (6,541,082)
----------------- ---------------
Outstanding call options written at
end of year $ -- $ --
================= ===============
Transactions in put options written for the year ended
October 31, 1994 were as follows:
<PAGE>
Par Value
Covered by Premiums
Written Options Received
Outstanding put options written at
beginning of year $ 290,900,000 $ 451,290
Options written 17,505,822,404 16,723,870
Options exercised (2,187,569,949) (3,014,188)
Options expired (15,563,652,455) (14,123,462)
----------------- ---------------
Outstanding put options written at
end of year $ 45,500,000 $ 37,510
================= ===============
As of October 31, 1994, net unrealized appreciation for Federal
income tax purposes aggregated $5,925,546, of which $11,088,467
related to appreciated securities and $5,162,921 related to
depreciated securities. At October 31, 1994, the aggregate cost
of investments, for Federal income tax purposes was $890,084,633.
4. Capital Share Transactions:
Net decrease in net assets derived from capital share
transactions was $881,055,998 and $1,543,047,053 for the years
ended October 31, 1994 and October 31, 1993, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Period Dollar
October 21, 1994+ to October 31, 1994 Shares Amount
Shares sold 14,261 $ 115,671
----------------- ---------------
Total issued 14,261 115,671
Shares redeemed (7,015) (56,902)
----------------- ---------------
Net increase 7,246 $ 58,769
================= ===============
[FN]
++Commencement of Operations.
Class B Shares for the Year Dollar
Ended October 31, 1994 Shares Amount
Shares sold 3,848,634 $ 32,411,047
Shares issued to shareholders in
reinvestment of dividends
and distributions 4,300,343 36,195,588
----------------- ---------------
Total issued 8,148,977 68,606,635
Shares redeemed (107,865,898) (904,426,466)
----------------- ---------------
Net decrease (99,716,921) $ (835,819,831)
================= ===============
<PAGE>
Class B Shares for the Year Dollar
Ended October 31, 1993 Shares Amount
Shares sold 7,412,975 $ 64,618,337
Shares issued to shareholders in
reinvestment of dividends
and distributions 9,259,655 80,642,973
----------------- ---------------
Total issued 16,672,630 145,261,310
Shares redeemed (183,937,694) (1,602,365,191)
----------------- ---------------
Net decrease (167,265,064) $(1,457,103,881)
================= ===============
Class C Shares for the Period Dollar
October 21, 1994+ to October 31, 1994 Shares Amount
Shares sold 111 $ 900
----------------- ---------------
Total issued 111 900
Shares redeemed (1) (8)
----------------- ---------------
Net increase 110 $ 892
================= ===============
[FN]
++Commencement of Operations.
Class D Shares for the Year Dollar
Ended October 31, 1994 Shares Amount
Shares sold 377,878 $ 3,322,360
Shares issued to shareholders in
reinvestment of dividends
and distributions 303,155 2,425,102
----------------- ---------------
Total issued 681,033 5,747,462
Shares redeemed (6,093,190) (51,043,291)
----------------- ---------------
Net decrease (5,412,157) (45,295,829)
================= ===============
<PAGE>
Class D Shares for the Year Dollar
Ended October 31, 1993 Shares Amount
Shares sold 987,673 $ 8,606,847
Shares issued to shareholders in
reinvestment of dividends
and distributions 637,595 5,555,072
----------------- ---------------
Total issued 1,625,268 14,161,919
Shares redeemed (11,493,409) (100,105,091)
----------------- ---------------
Net decrease (9,868,141) $ (85,943,172)
================= ===============
As a result of the implementation of the Merrill Lynch Select
Pricing System SM, Class A Shares of the Fund outstanding prior to
October 21, 1994, have been redesignated Class D Shares. There
were 6,102,407 shares redesignated amounting to $59,847,781.
5. Commitments:
At October 31, 1994, the Fund entered into forward foreign
exchange contracts under which it had agreed to purchase and sell
foreign currency with a value of approximately $23,651,000 and
$329,000, respectively.
6. Subsequent Event:
On November 17, 1994, the Fund's Board of Directors declared an
ordinary income dividend to shareholders in the amount of
$.035765 per Class A Share, $0.35217 per Class B Share, $0.02772
per Class C Share, and $0.038535 per Class D Share, payable on
November 18, 1994 to shareholders of record as of November 17,
1994.
7. Capital Loss Carryforward:
At October 31, 1994, the Fund had a capital loss carryforward of
approximately $43,048,000, of which $32,232,000 expires in 2000
and $10,816,000 expires in 2002. This amount will be available to
offset like amounts of any future taxable gains.
INDEPENDENT AUDITORS' REPORT
<PAGE>
The Board of Directors and Shareholders,
Merrill Lynch Short-Term Global Income Fund, Inc.:
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments, of Merrill
Lynch Short-Term Global Income Fund, Inc. as of October 31, 1994,
the related statements of operations for the year then ended and
changes in net assets for each of the years in the two-year
period then ended, and the financial highlights for the periods
presented. These financial statements and the financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and the financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned at October 31, 1994 by correspondence with the
custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial
highlights present fairly, in all material respects, the
financial position of Merrill Lynch Short-Term Global Income
Fund, Inc. as of October 31, 1994, the results of its operations,
the changes in its net assets, and the financial highlights for
the respective stated periods in conformity with generally
accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
December 12, 1994
<PAGE>
IMPORTANT TAX INFORMATION (unaudited)
All of the ordinary income distributions paid by Merrill Lynch
Short-Term Global Income Fund, Inc. during the fiscal year ended
October 31, 1994 are characterized as a return of capital. The
tax reporting treatment of a return of capital is different from
that of a taxable distribution. Rather than being included in
your current taxable income, a return of capital will reduce the
cost basis in your shares of the Fund.
Please retain this information for your records.
APPENDIX: ITEM 1.
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the Fund's
Class B and Class D Shares compared to growth of an investment in
the ML Global Government Bond and the Salomon Brothers World
Government One-Three Year Bond Index. Beginning and ending values
are:
8/3/90** 10/31/94
ML Short-Term Global Income
Fund, Inc.++--
Class B Shares* $10,000 $11,108
ML Short-Term Global Income
Fund, Inc.++--
Class D Shares*+++ $9,600 $10,924
ML Global Government Bond
Index++++ $10,000 $14,642
Salomon Brothers World
Government One-Three
Year Bond Index++++++ $10,000 $12,981
[FN]
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commencement of Operations.
++ML Short-Term Global Income Fund will invest, under
normal circumstances, in debt securities denominated in
at least three different currencies, including the US dollar.
++++This unmanaged Index is comprised of 189 global government
bonds maturing in one to three years.
++++++This unmanaged Index is comprised of global government bonds
maturing in one to three years hedged into US dollars.
+++Class A Shares transferred to Class D Shares on October 21, 1994.
<PAGE>
