MERRILL LYNCH
SHORT-TERM
GLOBAL INCOME
FUND, INC.
FUND LOGO
Annual Report
December 31, 1995
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.
<PAGE>
Merrill Lynch
Short-Term Global
Income Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MERRILL LYNCH SHORT-TERM GLOBAL INCOME FUND, INC.
Important Tax
Information
(unaudited)
Of the monthly cash distributions paid by Merrill Lynch Short-Term
Global Income Fund, Inc. in November and December 1995, 50.58%
represents income from foreign sources.
Additionally, the Fund incurred foreign taxes which it has elected to
pass through to its shareholders. Your share of the Fund's total
foreign taxes paid or withheld is .77% multiplied by cash distributions
paid in November and December 1995.
The foreign taxes paid or withheld represent taxes incurred by the
Fund on interest received by the Fund from foreign sources. Foreign
taxes paid or withheld should be included as foreign source taxable
income with an offsetting deduction from gross income or as a credit
for taxes paid to foreign governments. You should consult your tax
adviser regarding the appropriate treatment of foreign taxes paid.
Additionally, during November and December 1995, the Fund invested
in Federal obligations. The law varies in each state as to whether
and what percentage of dividend income attributable to Federal
obligations is exempt from state income tax. We recommend that
you consult your tax adviser to determine if any portion of the
dividends you received is exempt from state income tax.
Of the monthly cash distributions paid by the Fund during November
and December 1995, 6.84% of the distributions were attributable
to Federal obligations. In calculating the foregoing percentages,
Fund expenses have been allocated on a pro rata basis.
<PAGE>
For purposes of this calculation, Federal obligations include US
Treasury Notes, US Treasury Bills, and US Treasury Bonds. Also,
included are obligations issued by the following agencies: Banks for
Cooperatives, Federal Intermediate Credit Banks, Federal Land Banks,
Federal Home Loan Banks, and the Student Loan Marketing Asso-
ciation. Repurchase agreements are not included in this calculation.
Finally, there were no long-term capital gains distributed by the
Fund during November and December 1995.
Please retain this information for your records.
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 MetroTech Center, 18th Floor
Brooklyn, New York 11245
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
Transfer Agency Mutual Fund Operations
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
<PAGE>
DEAR SHAREHOLDER
Merrill Lynch Short-Term Global Fund,
Inc. changed its fiscal year-end to
December 31 from October 31. There-
fore, we are providing you with the
annual report that covers the period
from November 1, 1995 to December 31,
1995. The Fund's December 31, 1996
annual report will cover the full
12-month period.
Fiscal Period in Review
For the fiscal period (November 1, 1995--
December 31, 1995), global fixed-income
markets continued to improve while the
Fund was conservatively positioned
in higher-yielding dollar bloc markets.
In fact, we added to the Fund's position
in New Zealand as yield spreads con-
tinued to widen versus the United States.
The US dollar maintained stability
although recent reductions in short-
term interest rates by the Federal
Reserve Board have capped its advance.
Our strategy of remaining primarily
hedged into the US dollar enhanced the
Fund's performance during the fiscal
year as interest rate differentials are
strongly in favor of the US currency.
Economic and Political Review
Since our last report to shareholders,
international bond markets continued
to respond positively to lower short-term
international interest rates brought on
by central bank easings. As the US mar-
ket traded strongly, other European
markets followed, with higher-yielding
markets outperforming in general.
In the United States, bond markets con-
tinued their positive trend as expecta-
tions of a budget deficit reduction plan
and non-inflationary economic growth
pushed interest rates to yield levels
below 6.20% on the 30-year Treasury
bond. The Dow Jones Industrials rallied
through the 5,000 level on November 30,
1995 after passing the 4,000 mark only
nine months before.
<PAGE>
To pressure the US administration to
concede to its version of the budget,
Congress refused to raise the debt ceil-
ing and delayed passing a continuing
resolution. These developments led to a
temporary partial shutdown of Govern-
ment operations and raised the risk of a
debt default. The default was avoided
on November 10, 1995 when Congress
passed a bill to raise the debt ceiling by
$67 billion to $4.967 trillion through
December 12. Republican leaders
Newt Gingrich and Robert Dole and
President Clinton have showed a will-
ingness to compromise on their
respective positions.
European Union (EU) finance ministers
met several times throughout the period
to discuss specifics of European Mone-
tary Union (EMU). Concerns over the
timing of EU and the ability of certain
countries to meet the Maastricht Treaty
criteria led to increased volatility in Euro-
pean bond markets. The EU's central
bank, the European Monetary Institute,
projects unity on January 1, 1999, with
the actual currency going into circu-
lation in 2002.
In December the main focus for the
markets remained the US budget negoti-
ations. While certain concessions were
made by Democrats and Republicans, a
full agreement has yet to be reached.
Because of the breakdown in communi-
cations between the two parties, the
partial Federal Government shutdown
has led to delays in the publishing of
economic data releases. A reduction in
the Federal Funds rate by 25 basis points
(0.25%) led both the US dollar and the
Treasury market to post impressive gains.
This monetary easing was prompted by
a favorable outlook on inflation and a
moderation in economic activity.
<PAGE>
A subdued inflationary environment
enabled the majority of Europe to ease
monetary conditions as well. For exam-
ple, the most noticeable was a 50 basis
point reduction in interest rates by the
Bundesbank. The Bundesbank cited
Deutschemark strength and below tar-
get money supply growth as influencing
its decision. In December, the strikes in
France were resolved while the govern-
ment's popularity continued to move
lower. The approval of Italy's budget led
Prime Minister Dini to tender his resig-
nation, which was refused by President
Scalfaro. Dini was asked to remain in
office until after a parliamentary debate
in the new year. This debate should
decide the composition of the next gov-
ernment. With regard to EU, "Euro" was
agreed upon as the name for the official
currency of the EMU.
Market Review
The outcome of the US budget negotia-
tions will have a significant impact in
determining the direction of the US dol-
lar at the start of 1996. In our opinion,
the US currency should be positively
affected by the decline of the Japanese
trade surplus, Japanese investors diver-
sifying into foreign assets, interest rate
differentials and the probability of a
weaker Deutschemark in response to
slower growth in Germany.
Slow growth and low inflation in indus-
trialized countries could allow central
banks to reduce short-term interest rates
further. The US market has already dis-
counted reduced US government spend-
ing and lower official rates while the
current fundamental outlook for US
Treasury securities is still positive.
Upcoming economic releases will be
watched closely as investors try to esti-
mate the extent of future Bundesbank
easings, if any. European markets could
benefit from expectations of a single
currency within Europe as reductions
in interest rates and convergence in
higher-yielding markets could occur. The
Japanese government bond market is
vulnerable to any evidence of an eco-
nomic recovery which would likely shift
asset allocations toward equities at the
expense of bonds.
<PAGE>
In Conclusion
Looking ahead, we will maintain our
positions in higher-yielding global mar-
kets to seek a high level of current
income shareholders. In order to partially
offset the Fund's hedging costs, we will
actively manage our hedging strategy.
Cross-currency hedges, as opposed to
costlier currency and option strategies,
will be implemented whenever appro-
priate in order to enhance our currency
management profile.
We thank you for your continued invest-
ment 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 and
Senior Portfolio Manager
(Edward F. Gobora)
Edward F. Gobora
Vice President and Portfolio Manager
(David B. Walter)
David B. Walter
Vice President and Portfolio Manager
(Stephen Yardley)
Stephen Yardley
Vice President and Portfolio Manager
<PAGE>
February 2, 1996
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:
*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, as detailed in the Fund's prospectus. If
you were a Class A shareholder prior to October 21, 1994,
your Class A Shares were redesignated to Class D Shares on
October 21, 1994, which, in the case of certain eligible
investors, were simultaneously exchanged for Class A Shares.
*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).
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. 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.
<PAGE>
Total Return
Based on a
$10,000
Investment
A line graph depicting growth of an investment in the Fund's
Class A Shares and Class C Shares compered to the growth of an
investment in the ML Global Government Bond Index and the
Salomon Brothers World Government One--Three Year Bond Index.
Beginning and ending values are:
10/21/94** 12/95
ML Short-Term Global Income Fund, Inc.++--
Class A Shares*+++ $ 9,600 $10,148
ML Short-Term Global Income Fund, Inc.++--
Class C Shares* $10,000 $10,167
ML Global Government Bond Index++++ $10,000 $11,077
Salomon Brothers World Government One--
Three Year Bond Index++++++ $10,000 $11,159
[FN]
*Assuming maximum sales charge, transaction costs and
other operating expenses, including advisory fees.
**Commencement of Operations.
++ML Short-Term Global Income Fund, Inc. invests, 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 were redesignated to Class D
Shares on October 21, 1994.
<PAGE>
A line graph depicting growth of an investment in the Fund's
Class B Shares and Class D Shares compered to the growth of an
investment in the ML Global Government Bond Index and the
Salomon Brothers World Government One--Three Year Bond Index.
Beginning and ending values are:
8/3/90** 12/95
ML Short-Term Global Income Fund, Inc.++--
Class B Shares* $10,000 $11,624
ML Short-Term Global Income Fund, Inc.++--
Class D Shares*+++ $ 9,600 $11,491
ML Global Government Bond Index++++ $10,000 $16,190
Salomon Brothers World Government One--
Three Year Bond Index++++++ $10,000 $14,487
[FN]
*Assuming maximum sales charge, transaction costs and
other operating expenses, including advisory fees.
**Commencement of Operations.
++ML Short-Term Global Income Fund, Inc. invests, 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 were redesignated to Class D
Shares on October 21, 1994.
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/95 +7.14% +2.85%
Inception (10/21/94) through 12/31/95 +4.76 +1.24
<PAGE>
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/95 +6.31% +2.31%
Five Years Ended 12/31/95 +2.37 +2.37
Inception (8/3/90) through 12/31/95 +2.82 +2.82
[FN]
*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 12/31/95 +3.48% +2.50%
Inception (10/21/94) through 12/31/95 +1.40 +1.40
[FN]
*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 12/31/95 +6.87% +2.60%
Five Years Ended 12/31/95 +2.91 +2.07
Inception (8/3/90) through 12/31/95 +3.38 +2.60
[FN]
*Maximum sales charge is 4%.
**Assuming maximum 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>
10/21/94--12/31/94 $8.11 $7.90 -- $0.103 -1.33%
1995 7.90 7.91 -- 0.537 +7.14
------
Total $0.640
Cumulative total return as of 12/31/95: +5.71%**
<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
1994 8.63 7.89 -- 0.463 -3.30
1995 7.89 7.90 -- 0.474 +6.31
------
Total $3.494
Cumulative total return as of 12/31/95: +16.24%**
<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>
Performance
Summary--
Class C Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
10/21/94--12/31/94 8.11 7.89 -- 0.079 -1.74%
1995 7.89 7.72 -- 0.435 +3.48
------
Total $0.514
Cumulative total return as of 12/31/95: +1.67%**
<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
1994 8.64 7.89 -- 0.506 -2.91
1995 7.89 7.90 -- 0.517 +6.87
------
Total $3.760
Cumulative total return as of 12/31/95: +19.70%**
<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
include sales charge; results would be lower if sales charge
was included.
***As a result of the implementation of the Merrill Lynch Select
Pricing SM System, Class A Shares of the Fund outstanding prior to
October 21, 1994 were redesignated to Class D Shares.
</TABLE>
<TABLE>
Recent
Performance
Results
<CAPTION>
12 Month 3 Month
12/31/95 9/30/95 12/31/94 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares* $7.91 $7.92 $7.90 +0.13% -0.13%
Class B Shares* 7.90 7.91 7.89 +0.13 -0.13
Class C Shares* 7.72 7.73 7.89 -2.15 -0.13
Class D Shares* 7.90 7.91 7.89 +0.13 -0.13
Class A Shares--Total Return* +7.14(1) +1.58(2)
Class B Shares--Total Return* +6.31(3) +1.49(4)
Class C Shares--Total Return* +3.48(5) +1.47(6)
Class D Shares--Total Return* +6.87(7) +1.64(8)
Class A Shares--Standardized 30-day Yield 4.59%
Class B Shares--Standardized 30-day Yield 3.99%
Class C Shares--Standardized 30-day Yield 3.95%
Class D Shares--Standardized 30-day Yield 4.35%
<FN>
*Investment results shown do not reflect sales charges;
results shown would be lower if a sales charge was included.
(1)Percent change includes reinvestment of $0.537 per share
ordinary income dividends.
(2)Percent change includes reinvestment of $0.155 per share
ordinary income dividends.
(3)Percent change includes reinvestment of $0.474 per share
ordinary income dividends.
(4)Percent change includes reinvestment of $0.137 per share
ordinary income dividends.
(5)Percent change includes reinvestment of $0.435 per share
ordinary income dividends.
(6)Percent change includes reinvestment of $0.134 per share
ordinary income dividends.
(7)Percent change includes reinvestment of $0.517 per share
ordinary income dividends.
(8)Percent change includes reinvestment of $0.149 per share
ordinary income dividends.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Maturity Interest Value Percent of
COUNTRIES Face Amount Date Issue Rate++ (Note 1a) Net Assets
<S> <C> <C> <S> <C> <C> <C>
Australia A$ 65,220,000 3/15/97 Commonwealth Bank of Australia (3) 12.50% $ 51,378,349 12.83%
27,300,000 4/01/97 New South Wales Treasury Corp. (3) 12.50 21,534,943 5.38
Total Investments in Australia
(Cost--$73,316,197) 72,913,292 18.21
Canada C$ 10,870,000 2/08/96 Canadian Treasury Bill (1) 5.46 7,918,775 1.98
65,050,000 3/07/96 Canadian Treasury Bill (1) 5.50 47,203,328 11.79
13,650,000 3/21/96 Ontario Treasury Bill (3) 5.55 9,879,566 2.46
Total Investments in Canada
(Cost--$64,306,190) 65,001,669 16.23
Ireland Iep 12,230,000 7/30/96 Irish Gilt (1) 9.00 20,030,112 5.00
Total Investments in Ireland
(Cost--$20,007,622) 20,030,112 5.00
Italy Lit 5,735,000,000 1/01/96 Buoni Poliennali del Tesoro
(Italian Government Bonds) (1) 12.00 3,600,205 0.90
25,000,000,000 10/01/96 Buoni Poliennali del Tesoro
(Italian Government Bonds) (1) 9.00 15,657,729 3.91
Total Investments in Italy
(Cost--$18,680,213) 19,257,934 4.81
New Zealand NZ$ 21,500,000 2/07/96 New Zealand Treasury Bill (1) 8.67 13,935,434 3.48
14,130,000 3/06/96 New Zealand Treasury Bill (1) 8.56 9,098,393 2.27
20,930,000 3/20/96 New Zealand Treasury Bill (1) 8.53 13,433,740 3.36
Total Investments in New Zealand
(Cost--$36,418,129) 36,467,567 9.11
Spain Pta 2,000,000,000 2/28/97 Bonos del Estado (Spanish Government Bonds) (1) 9.00 16,494,845 4.12
Total Investments in Spain
(Cost--$16,014,575) 16,494,845 4.12
<PAGE>
Sweden Skr 91,000,000 2/21/96 Swedish Treasury Bill (1) 8.80 13,570,838 3.39
Total Investments in Sweden
(Cost--$13,343,484) 13,570,838 3.39
United Pound 11,800,000 12/30/96 General Electric Capital Corp. (2) 8.25 18,636,489 4.65
Kingdom Sterling
Total Investments in the United Kingdom
(Cost--$19,134,699) 18,636,489 4.65
United US$ 15,000,000 1/02/96 CS First Boston Inc., Repurchase Agreement*
States purchased on 12/26/95 (2) 5.80 15,000,000 3.74
14,000,000 1/02/96 Chemical Bank, Repurchase Agreement*
purchased on 12/29/95 (2) 5.80 14,000,000 3.50
19,000,000 1/04/96 du Pont (E.I.) de Nemours & Co.,
Commercial Paper (2) 5.80 18,993,878 4.74
8,000,000 1/02/96 Goldman Sachs, Ltd., Repurchase Agreement*
purchased on 12/29/95 (2) 5.75 8,000,000 2.00
15,000,000 1/02/96 Morgan (J.P.) & Co., Inc., Repurchase Agreement*
purchased on 12/26/95 (2) 5.76 15,000,000 3.74
10,000,000 1/02/96 PaineWebber Inc., Repurchase Agreement*
purchased on 12/29/95 (2) 5.75 10,000,000 2.50
14,731,794 1/02/96 Schweizerischer Bankverein SBC (Swiss Bank),
Repurchase Agreement* purchased on 12/29/95 (2) 5.85 14,731,794 3.68
34,790,000 1/15/96 US Treasury Note (1) 9.25 34,839,054 8.70
Total Investments in the United States
(Cost--$130,945,623) 130,564,726 32.60
Total Investments (Cost--$392,166,732) 392,937,472 98.12
Unrealized Depreciation on Forward Foreign Exchange Contracts++++ (944,597) (0.24)
Other Assets Less Liabilities 8,474,386 2.12
------------ -------
Net Assets $400,467,261 100.00%
============ =======
<FN>
Corresponding industry groups for securities (percent of net assets):
(1)Sovereign Government Obligations--48.90%
(2)Financial Services--28.55%
(3)Sovereign//Regional Government Obligations--Agency--20.67%
*Repurchase Agreements are fully collaterized by
US Government & Agency Obligations.
<PAGE>
++Certain Commercial Paper, US Treasury and Foreign Treasury
Obligations are traded on a discount basis; the interest
rates shown represent the yield-to-maturity at the time
of purchase by the Fund. Other securities bear interest at
the rates shown, payable at fixed dates or upon maturity.
Interest rates on floating rate securities are adjusted
periodically based on appropriate indexes; the interest rates
shown are those in effect at December 31, 1995.
++++Forward Foreign Exchange Contracts as of December 31, 1995
were as follows:
Unrealized
Appreciation
Expiration (Depreciation)
Date (Note 1d)
Foreign Currency Purchased
C$ 15,385,831 January 1996 $ 8,373
Lit 5,735,000,000 January 1996 2,388
NZ$ 27,911,894 January 1996 12,770
Total (US$ Commitment--$33,096,213) $ 23,531
---------
Foreign Currency Sold
A$ 99,097,350 January 1996 $(362,949)
C$ 103,883,919 January 1996 669,498
DM 6,592,370 January 1996 (57,752)
Iep 11,521,867 January 1996 (251,465)
Pound
Sterling 12,713,999 January 1996 (250,084)
Lit 30,351,652,811 January 1996 (188,110)
NZ$ 55,617,991 January 1996 (355,493)
Pta 2,086,502,351 January 1996 (29,034)
Skr 88,920,978 January 1996 (142,739)
Total (US$ Commitment--$277,691,370) $(968,128)
---------
Total Unrealized Depreciation--Net on
Forward Foreign Exchange Contracts $(944,597)
=========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of December 31, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$392,166,732) (Note 1a) $392,937,472
Receivables:
Interest $ 8,056,353
Capital shares sold 4,301,541
Securities sold 248,790
Forward foreign exchange contracts (Note 1d) 52,351 12,659,035
------------
Prepaid registration fees and other assets (Note 1g) 147,009
------------
Total assets 405,743,516
------------
Liabilities: Unrealized depreciation on forward foreign exchange contracts (Note 1d) 944,597
Payables:
Capital shares redeemed 1,844,711
Dividends to shareholders (Note 1h) 1,519,257
Distributor (Note 2) 254,365
Investment adviser (Note 2) 194,585 3,812,918
------------
Accrued expenses and other liabilities 518,740
------------
Total liabilities 5,276,255
------------
Net Assets: Net assets $400,467,261
============
Net Assets Class A Shares of Common Stock, $0.10 par value, 1,000,000,000 shares authorized $ 955
Consist of: Class B Shares of Common Stock, $0.10 par value, 1,000,000,000 shares authorized 4,758,825
Class C Shares of Common Stock, $0.10 par value, 300,000,000 shares authorized 1,331
Class D Shares of Common Stock, $0.10 par value, 300,000,000 shares authorized 306,663
Paid-in capital in excess of par 439,081,534
Accumulated realized capital losses on investments and foreign currency
transactions--net (Note 6) (43,498,147)
Unrealized depreciation on investments and foreign currency transactions--net (183,900)
------------
Net assets $400,467,261
============
<PAGE>
Net Asset Class A--Based on net assets of $75,554 and 9,552 shares outstanding $ 7.91
Value: ============
Class B--Based on net assets of $376,049,275 and 47,588,247 shares outstanding $ 7.90
============
Class C--Based on net assets of $102,794 and 13,308 shares outstanding $ 7.72
============
Class D--Based on net assets of $24,239,638 and 3,066,629 shares outstanding $ 7.90
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Period November 1, 1995 to December 31, 1995
<S> <S> <C> <C>
Investment Interest and discount earned (net of $40,386 foreign withholding tax) $ 5,546,212
Income (Notes
1e & 1f):
Expenses: Account maintenance and distribution fees--Class B (Note 2) 491,057
Investment advisory fees (Note 2) 384,228
Transfer agent fees--Class B (Note 2) 151,565
Professional fees 68,788
Printing and shareholder reports 49,500
Registration fees (Note 1g) 22,713
Directors' fees and expenses 19,900
Custodian fees 17,003
Account maintenance fees--Class D (Note 2) 10,866
Transfer agent fees--Class D (Note 2) 8,478
Accounting services (Note 2) 7,967
Account maintenance and distribution fees--Class C (Note 2) 217
Transfer agent fees--Class C (Note 2) 56
Transfer agent fees--Class A (Note 2) 23
Other 5,175
------------
Total expenses 1,237,536
------------
Investment income--net 4,308,676
------------
<PAGE>
Realized & Realized gain (loss) from:
Unrealized Investments--net $ (490,361)
Gain (Loss) Foreign currency transactions--net 2,750,019 2,259,658
on Invest- ------------
ments & Change in unrealized appreciation/depreciation on:
Foreign Investments--net (5,061,545)
Currency Foreign currency transactions--net 1,559,602 (3,501,943)
Transactions ------------ ------------
- --Net Net realized and unrealized loss on investments and foreign currency transactions (1,242,285)
(Notes 1c, ------------
1d, 1f & 3): Net Increase in Net Assets Resulting from Operations $ 3,066,391
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Period For the
Nov. 1, 1995 to Year Ended
Increase (Decrease) in Net Assets: Dec. 31, 1995 Oct. 31, 1995
<S> <S> <C> <C>
Operations: Investment income--net $ 4,308,676 $ 34,243,785
Realized gain (loss) on investments and foreign currency transactions--net 2,259,658 (17,288,580)
Change in unrealized appreciation/depreciation on investments and
foreign currency transactions--net (3,501,943) 423,350
------------ ------------
Net increase in net assets resulting from operations 3,066,391 17,378,555
------------ ------------
Dividends to Investment income--net:
Shareholders Class A (829) (1,391)
(Note 1h): Class B (4,016,322) (15,511,689)
Class C (1,650) (1,005)
Class D (289,875) (1,111,053)
Return of capital--net:
Class A -- (1,474)
Class B -- (16,438,660)
Class C -- (1,065)
Class D -- (1,177,448)
------------ ------------
Net decrease in net assets resulting from dividends to shareholders (4,308,676) (34,243,785)
------------ ------------
<PAGE>
Capital Share Net decrease in net assets derived from capital share transactions (23,220,490) (357,893,795)
Transactions ------------ ------------
(Note 4):
Net Assets: Total decrease in net assets (24,462,775) (374,759,025)
Beginning of period 424,930,036 799,689,061
------------ ------------
End of period $400,467,261 $424,930,036
============ ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Class A
For the For the
The following per share data and ratios have been derived Period For the Period
from information provided in the financial statements. Nov. 1, 1995 Year Ended Oct. 21, 1994++
to Dec. 31, October 31, to Oct. 31,
Increase (Decrease) in Net Asset Value: 1995++++ 1995++++ 1994++++
<S> <S> <C> <C> <C>
Per Share Net asset value, beginning of period $ 7.93 $ 8.11 $ 8.11
Operating -------- -------- --------
Performance: Investment income--net .09 .49 .01
Realized and unrealized loss on investments and
foreign currency transactions--net (.02) (.12) --
-------- -------- --------
Total from investment operations .07 .37 .01
-------- -------- --------
Less dividends:
Investment income--net (.09) (.27) --
Return of capital--net -- (.28) (.01)
-------- -------- --------
Total dividends (.09) (.55) (.01)
-------- -------- --------
Net asset value, end of period $ 7.91 $ 7.93 $ 8.11
======== ======== ========
Total Based on net asset value per share .91%+++ 4.63% .12%+++
Investment ======== ======== ========
Return:**
Ratios to Expenses 1.02%* .96% .97%*
Average ======== ======== ========
Net Assets: Investment income--net 6.91%* 6.75% 6.28%*
======== ======== ========
<PAGE>
Supplemental Net assets, end of period (in thousands) $ 75 $ 66 $ 59
Data: ======== ======== ========
Portfolio turnover 25.09% 312.13% 259.50%
======== ======== ========
<CAPTION>
Class B
The following per share data and ratios have For the For the
been derived from information provided in the Period Period
financial statements. Nov. 1, 1995 Dec. 28, 1990
to Dec. 31, For the Year Ended October 31, to Oct. 31,
Increase (Decrease) in Net Asset Value: 1995++++ 1995++++ 1994++++ 1993 1992 1991
<S> <S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 7.93 $ 8.10 $ 8.65 $ 8.85 $ 9.84 $ 9.92
Operating ---------- ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .08 .47 .50 .57 .72 .77
Realized and unrealized loss on investments
and foreign currency transactions--net (.03) (.15) (.58) (.20) (.99) (.08)
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations .05 .32 (.08) .37 (.27) .69
---------- ---------- ---------- ---------- ---------- ----------
Less dividends:
Investment income--net (.08) (.24) -- -- -- (.77)
Return of capital--net -- (.25) (.47) (.57) (.72) --
---------- ---------- ---------- ---------- ---------- ----------
Total dividends (.08) (.49) (.47) (.57) (.72) (.77)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 7.90 $ 7.93 $ 8.10 $ 8.65 $ 8.85 $ 9.84
========== ========== ========== ========== ========== ==========
Total Based on net asset value per share .62%+++ 4.00% (1.02%) 4.63% (3.00%) 6.93%+++
Investment ========== ========== ========== ========== ========== ==========
Return:**
Ratios to Expenses, excluding account maintenance and
Average distribution fees 1.05%* .98% .77% .79% .75% .77%*
========== ========== ========== ========== ========== ==========
Net Assets: Expenses 1.80%* 1.73% 1.52% 1.60% 1.50% 1.52%*
========== ========== ========== ========== ========== ==========
Investment income--net 6.13%* 5.95% 5.68% 7.26% 7.60% 9.11%*
========== ========== ========== ========== ========== ==========
Supplemental Net assets, end of period (in thousands) $ 376,049 $ 398,136 $ 750,750 $1,664,602 $3,182,520 $5,918,769
========== ========== ========== ========== ========== ==========
Data: Portfolio turnover 25.09% 312.13% 259.50% 284.62% 120.77% 153.72%
========== ========== ========== ========== ========== ==========
<PAGE>
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
++++Based on average shares outstanding during the period.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS (concluded)
<CAPTION>
Class C
For the For the
The following per share data and ratios have been derived Period For the Period
from information provided in the financial statements. Nov. 1, 1995 Year Ended Oct. 21, 1994++
to Dec. 31, October 31, to Oct. 31,
Increase (Decrease) in Net Asset Value: 1995++++ 1995++++ 1994++++
<S> <S> <C> <C> <C>
Per Share Net asset value, beginning of period $ 7.74 $ 8.10 $ 8.11
Operating ---------- ---------- ----------
Performance: Investment income--net .08 .35 .01
Realized and unrealized loss on investments
and foreign currency transactions--net (.02) (.28) (.01)
---------- ---------- ----------
Total from investment operations .06 .07 --
---------- ---------- ----------
Less dividends:
Investment income--net (.08) (.21) --
Return of capital--net -- (.22) (.01)
---------- ---------- ----------
Total dividends (.08) (.43) (.01)
---------- ---------- ----------
Net asset value, end of period $ 7.72 $ 7.74 $ 8.10
========== ========== ==========
Total Based on net asset value per share .73%+++ .93% .00%+++
Investment ========== ========== ==========
Return:**
Ratios to Expenses, excluding account maintenance and distribution fees 1.03%* 1.03% 1.34%*
Average ========== ========== ==========
Net Assets: Expenses 1.83%* 1.83% 2.14%*
========== ========== ==========
Investment income--net 6.09%* 5.99% 5.63%*
========== ========== ==========
<PAGE>
Supplemental Net assets, end of period (in thousands) $ 103 $ 109 $ 1
Data: ========== ========== ==========
Portfolio turnover 25.09% 312.13% 259.50%
========== ========== ==========
<CAPTION>
Class D
The following per share data and ratios have For the For the
been derived from information provided in the Period Period
financial statements. Nov. 1, 1995 Dec. 28, 1990
to Dec. 31, For the Year Ended October 31, to Oct. 31,
Increase (Decrease) in Net Asset Value: 1995++++ 1995++++ 1994++++ 1993 1992 1991
<S> <S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 7.93 $ 8.11 $ 8.66 $ 8.85 $ 9.85 $ 9.92
Operating ---------- ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .09 .52 .54 .61 .77 .82
Realized and unrealized loss on investments
and foreign currency transactions--net (.03) (.17) (.58) (.19) (1.00) (.07)
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations .06 .35 (.04) .42 (.23) .75
---------- ---------- ---------- ---------- ---------- ----------
Less dividends:
Investment income--net (.09) (.26) -- -- -- (.82)
Return of capital--net -- (.27) (.51) (.61) (.77) --
---------- ---------- ---------- ---------- ---------- ----------
Total dividends (.09) (.53) (.51) (.61) (.77) (.82)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 7.90 $ 7.93 $ 8.11 $ 8.66 $ 8.85 $ 9.85
========== ========== ========== ========== ========== ==========
Total Based on net asset value per share .73%+++ 4.43% (.51%) 5.28% (2.60%) 7.53%+++
Investment ========== ========== ========== ========== ========== ==========
Return:**
Ratios to Expenses, excluding account maintenance and
Average distribution fees 1.02%* .95% .76% .73% .75% .76%*
Net Assets: ========== ========== ========== ========== ========== ==========
Expenses 1.27%* 1.20% 1.01% .98% 1.00% .96%*
========== ========== ========== ========== ========== ==========
Investment income--net 6.67%* 6.49% 6.19% 7.24% 8.11% 9.70%*
========== ========== ========== ========== ========== ==========
Supplemental Net assets, end of period (in thousands) $ 24,240 $ 26,619 $ 48,879 $ 99,037 $ 188,623 $ 399,416
Data: ========== ========== ========== ========== ========== ==========
Portfolio turnover 25.09% 312.13% 259.50% 284.62% 120.77% 153.72%
========== ========== ========== ========== ========== ==========
<PAGE>
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
++++Based on average shares outstanding during the period.
+++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 also 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 sig-
nificant accounting policies followed by the Fund.
(a) Valuation of investments--Portfolio securities which are traded
on stock exchanges are valued at the last sale price on the exchange
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. Securities traded in the over-the-counter
market are valued at the last available bid price prior to the time of
valuation. Options written are valued at the last sale price in the
case of exchange-traded options or, in the case of options traded in
the over-the-counter market, the last asked price. Options purchased
are valued at the last bid price in the case of exchange-traded
options or, in the case of options traded in the over-the-counter
market, the last bid price. Short-term securities are valued at amor-
tized cost, which approximates market value. Other investments,
including futures contracts and related options, are stated at market
value. Securities and assets for which market value quotations are
not available are valued at their fair value as determined in good
faith by or under the direction of the Fund's Board of Directors.
<PAGE>
(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) assets or liabilities expressed in foreign
currencies into US dollars. Realized and unrealized gains or losses
from investments include the effects of foreign exchange rates on
investments.
NOTES TO FINANCIAL STATEMENTS (continued)
(d) Derivative financial instruments--The Fund may engage in vari-
ous portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the debt and currency
markets. Losses may arise due to changes in the value of the con-
tract or if the counterparty does not perform under the contract.
* Forward foreign exchange contracts--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.
* Foreign currency options and futures--The Fund may also pur-
chase 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>
* Options--The Fund is authorized to purchase and write call
and put options. When the Fund writes 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 purchased or sold through an exercise of an
option, the related premium paid (or received) is added to (or de-
ducted from) the basis of the security acquired or deducted from
(or added to) the proceeds 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
paid or received (or gain or loss to the extent the cost of the closing
transaction exceeds the premium paid or received).
Written and purchased options are non-income producing
investments.
* 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 un-
realized 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.
(e) Income taxes--It is the Fund's policy to comply with the require-
ments of the Internal Revenue Code applicable to regulated invest-
ment 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.
(f) Security transactions and investment income--Security trans-
actions are recorded on the dates the transactions are entered into
(the trade dates). Interest income (including amortization of dis-
count) is recognized on the accrual basis. Realized gains and losses
on security transactions are determined on the identified cost basis.
(g) Prepaid registration fees--Prepaid registration fees are charged
to expense as the related shares are issued.
<PAGE>
(h) 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. A portion of the ordinary income distributions
paid by the Fund during the fiscal year ended October 31, 1995 was
characterized as a return of capital.
(i) Reclassification--Generally accepted accounting principles
require that certain components of net assets be reclassified to
reflect permanent differences beteween financial reporting and tax
purposes. Accordingly, current period's permanent book/tax differ-
ences of $1,668,353 have been reclassified from accumulated net
realized capital losses to paid-in capital in excess of par. These
reclassifications have no effect on net assets or net assets 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"). The general partner of
MLAM is Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner. The Fund has also entered into a Distribution
Agreement and Distribution Plans with Merrill Lynch Funds
Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned subsidi-
ary of Merrill Lynch Group, Inc.
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 Agree-
ment (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
MLAM with respect to the Fund in an amount to be determined from
time to time by MLAM and MLAM U.K. but in no event in excess of
the amount that MLAM actually receives for providing services to
the Fund. For the period November 1, 1995 to December 31, 1995,
MLAM paid MLAM U.K. a fee of $31,481 pursuant to such Agreement.
The most restrictive annual expense limitation requires that MLAM
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. MLAM's obligation to reimburse the Fund is limited to the
amount of the investment advisory fee. No fee payment will be made
to MLAM during any fiscal year which will cause such expenses to
exceed expense limitations at the time of such payment.
<PAGE>
Pursuant to the distribution plans ("the Distribution Plans")
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 annual rates based upon the
average daily net assets of the shares as follows:
Account
Maintenance Fee Distribution 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 distribu-
tion fee compensates the Distributor and MLPF&S for providing
shareholder and distribution-related services to Class B and
Class C shareholders.
For the period November 1, 1995 to December 31, 1995, MLFD did
not earn underwriting discounts and MLPF&S did not earn dealer
concessions on sales of the Fund's Class A and Class D Shares.
For the period November 1, 1995 to December 31, 1995, MLPF&S
received contingent deferred sales charges of $22,991 and $1,000
relating to transactions in Class B and Class C Shares, respectively.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a 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, PSI, MLPF&S, MLFDS, MLFD, MLAM U.K. and/or
ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the period November 1, 1995 to December 31, 1995 were $51,101,164
and $115,211,607, respectively.
Net realized and unrealized gains (losses) as of December 31, 1995
were as follows:
<PAGE>
Realized Unrealized
Gains Gains
(Losses) (Losses)
Investments:
Long-term $ (592,622) $ 296,679
Short-term 102,261 474,061
Options written -- --
---------- ----------
Total investments (490,361) 770,740
---------- ----------
Currency transactions:
Options purchased (142,508) --
Options written 118,698 --
Forward foreign exchange contracts 2,384,086 (944,597)
Foreign currency transactions 389,743 (10,043)
---------- ----------
Total currency transactions 2,750,019 (954,640)
---------- ----------
Total $2,259,658 $ (183,900)
========== ==========
NOTES TO FINANCIAL STATEMENTS (concluded)
Transactions in call options written for the period November 1, 1995
to December 31, 1995 were as follows:
Premiums
Par Value Received
Outstanding call options written at
beginning of period -- --
Options written $ 195,486,000 $ 217,825
Options exercised (22,760,000) (45,974)
Options expired (172,726,000) (171,851)
--------------- ---------------
Outstanding call options written
at end of period $ -- $ --
=============== ===============
Transactions in put options written for the period November 1, 1995
to December 31, 1995 were as follows:
Premiums
Par Value Received
<PAGE>
Outstanding put options written at
beginning of period -- --
Options written $ 109,259,000 $ 137,040
Options exercised (9,104,000) (22,760)
Options expired (100,155,000) (114,280)
--------------- ---------------
Outstanding put options written
at end of period $ -- $ --
=============== ===============
As of December 31, 1995, net unrealized appreciation for Federal
income tax purposes aggregated $770,740, of which $2,451,898
related to appreciated securities and $1,681,158 related to depreciated
securities. At December 31, 1995, the aggregate cost of investments
for Federal income tax purposes was $392,166,732.
4. Capital Share Transactions:
Net (decrease) in net assets derived from capital share transac-
tions was $(23,220,490) and $(357,893,795) for the period November 1,
1995 to December 31, 1995 and the year ended October 31, 1995,
respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Period Dollar
November 1, 1995 to December 31, 1995 Shares Amount
Shares sold 1,115 $ 8,833
Shares issued to shareholders in
reinvestment of dividends 123 975
------------ ---------------
Net increase 1,238 $ 9,808
============ ===============
Class A Shares for the Year Dollar
Ended October 31, 1995 Shares Amount
Shares sold 19,710 $ 156,702
Shares issued to shareholders in
reinvestment of dividends 306 2,424
------------ ---------------
Total issued 20,016 159,126
Shares redeemed (18,948) (150,761)
------------ ---------------
Net increase 1,068 $ 8,365
============ ===============
<PAGE>
Class B Shares for the Period Dollar
November 1, 1995 to December 31, 1995 Shares Amount
Shares sold 620,889 $ 4,905,975
Shares issued to shareholders in
reinvestment of dividends 398,231 3,149,817
------------ ---------------
Total issued 1,019,120 8,055,792
Automatic conversion of shares (18,623) (147,125)
Shares redeemed (3,644,789) (28,831,450)
------------ ---------------
Net decrease (2,644,292) $ (20,922,783)
============ ===============
Class B Shares for the Year Dollar
Ended October 31, 1995 Shares Amount
Shares sold 1,165,649 $ 8,282,644
Shares issued to shareholders in
reinvestment of dividends 2,111,691 16,712,284
------------ ---------------
Total issued 3,277,340 24,994,928
Automatic conversion of shares (44,087) (350,642)
Shares redeemed (45,649,821) (361,409,238)
------------ ---------------
Net decrease (42,416,568) $ (336,764,952)
============ ===============
Class C Shares for the Period Dollar
November 1, 1995 to December 31, 1995 Shares Amount
Shares sold 12,066 $ 93,387
Shares issued to shareholders in
reinvestment of dividends 122 945
------------ ---------------
Total issued 12,188 94,332
Shares redeemed (12,969) (100,120)
------------ ---------------
Net decrease (781) $ (5,788)
============ ===============
Class C Shares for the Year Dollar
Ended October 31, 1995 Shares Amount
Shares sold 77,597 $ 607,611
Shares issued to shareholders in
reinvestment of dividends 10 76
------------ ---------------
Total issued 77,607 607,687
Shares redeemed (63,628) (499,869)
------------ ---------------
Net increase 13,979 $ 107,818
============ ===============
<PAGE>
Class D Shares for the Period Dollar
November 1, 1995 to December 31, 1995 Shares Amount
Shares sold 11,529 $ 91,195
Shares issued to shareholders in
reinvestment of dividends 33,954 268,726
Automatic conversion of shares 18,623 147,125
------------ ---------------
Total issued 64,106 507,046
Shares redeemed (354,944) (2,808,773)
------------ ---------------
Net decrease (290,838) $ (2,301,727)
============ ===============
Class D Shares for the Year Dollar
Ended October 31, 1995 Shares Amount
Shares sold 141,026 $ 1,012,351
Shares issued to shareholders in
reinvestment of dividends 142,590 1,231,159
Automatic conversion of shares 44,065 350,642
------------ ---------------
Total issued 327,681 2,594,152
Shares redeemed (3,000,651) (23,839,178)
------------ ---------------
Net decrease (2,672,970) $ (21,245,026)
============ ===============
5. Commitments:
At December 31, 1995, the Fund had entered into foreign exchange
contracts, in addition to the contracts listed on the Schedule of
Investments, under which it had agreed to sell various foreign
currency with an approximate value of $3,618,000.
6. Capital Loss Carryforward:
At December 31, 1995, the Fund had a capital loss carryforward of
approximately $44,580,000, of which $32,232,000 expires in
1999, $10,816,000 expires in 2001, $1,042,000 expires in 2002,
and $490,000 expires in 2003. This amount will be available to
offset like amounts of any future taxable gains.
<PAGE>
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
Merrill Lynch Short-Term Global Income Fund, Inc.:
We have audited the accompanying statement of assets and liabili-
ties, including the schedule of investments, of Merrill Lynch Short-
Term Global Income Fund, Inc. as of December 31, 1995, the related
statements of operations for the two-month period then ended and
changes in net assets for the two-month period then ended and for
the year ended October 31, 1995, 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 per-
form 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 December 31, 1995 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting princi-
ples 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 December
31, 1995, 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
February 2, 1996
</AUDIT-REPORT>
