MERRILL LYNCH
SHORT-TERM
GLOBAL INCOME
FUND, INC.
FUND LOGO
Semi-Annual Report
June 30, 1999
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Statements and other information herein are as dated and are subject
to change.
Merrill Lynch
Short-Term Global
Income Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MERRILL LYNCH SHORT-TERM GLOBAL INCOME FUND, INC.
Officers and
Directors
Terry K. Glenn, President and Director
Donald Cecil, Director
Roland M. Machold, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Arthur Zeikel, Director
Edward D. Zinbarg, Director
Joseph T. Monagle Jr., Senior Vice President
Edward F. Gobora, Vice President
Donald C. Burke, Vice President and Treasurer
Barbara G. Fraser, Secretary
Custodian
The Chase Manhattan Bank N.A.
Global Securities Services
4 Chase MetroTech Center, 18th Floor
Brooklyn, NY 11245
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
Merrill Lynch Short-Term Global Income Fund, Inc., June 30, 1999
DEAR SHAREHOLDER
Economic Environment
For the past nine months, the US Federal Reserve Board had a neutral
policy stance, lowering short-term interest rates 75 basis points
(0.75%) in an effort to promote a recovery in the world economy.
However, on May 18, 1999, the Federal Reserve Board shifted to a
tightening bias at its Federal Open Market Committee (FOMC) meeting.
Then, at the end of the June quarter, the Federal Reserve Board
raised its target for the Federal Funds rate by 25 basis points to
5%. These changes were caused by prospects for an improved global
environment and fears of inflation. Two-year US Treasury yields rose
from 4.987% to 5.511% in response to increased expectations of
higher official rates.
The European Central Bank (ECB) lowered rates 50 basis points on
April 8 in response to slower growth, upward pressure on
unemployment and weak industrial production in the Eurozone, which
is comprised of the 11 countries in the European Monetary Union
(EMU). The ECB's stimulative stance toward monetary policy,
including both low interest rates and tolerance of an undervalued
euro, was employed to counter the sustained slowdown of the Eurozone
economy. Pronounced weakness in Germany and Italy largely
contributed to yields in the region staying relatively low. The euro
weakened substantially during the June quarter. Concerns over the
EMU stability pact, the Kosovo crisis and the need for a competitive
currency caused the euro to move lower.
In Japan, the unexpected 1.9% rise in first quarter gross domestic
product (GDP) signaled the first positive quarter in over a year,
perhaps signaling an inflection point in the longest recession in
post-war history. Economic conditions in Japan have shown some signs
of improvement in industrial production, public investment and
construction expenditures. The economy is still under negative
pressure as unemployment is near historical highs and GDP growth may
only reach 0.4% in 1999. The Economic Planning Agency admits that
the economy remains in a severe state, but it notes that government
measures are halting the decline. The yen traded in a 118.75--121.10
range relative to the US dollar during the period. The deep
recession in Japan and an official desire for a weaker exchange rate
caused the yen to modestly decline relative to the US dollar.
Portfolio Strategy
During the quarter ended June 30, 1999, we concentrated the Fund's
global investments in high-credit quality securities with maturities
of less than two years. Additionally, we generally hedged our
currency exposure back to US dollars. As interest rates rose and the
US dollar strengthened, these strategies enhanced the Fund's total
returns during the June quarter by providing a relatively high level
of current income with limited net asset value fluctuation. For the
three months ended June 30, 1999, the Fund's Class A, Class B, Class
C and Class D Shares had total returns of +1.03%, +0.83%, +0.78% and
+0.97%, respectively. (Results shown do not reflect sales charges
and would be lower if sales charges were included. Complete
performance information can be found on pages 4 and 5 of this
report.)
Given our objective of providing a high level of current income and
our outlook for upward pressure on global yields, we are maintaining
positions in high-quality, short-term securities that yield at or
above US dollar-issued securities. On June 30, 1999, we held
sovereign, agency and corporate issues in Canada, Greece, Iceland,
Norway, Poland, the United Kingdom and the United States.
The United Kingdom and Norway were the Fund's largest investments
outside of the United States. We established these positions because
of expectations of lower interest rates in these countries, their
high credit quality and attractive yields. The United Kingdom cut
its key interest rate by 50 basis points to 5.00% during the June
quarter. This adjustment to monetary policy was implemented as a
result of sluggish growth, low inflation and strength of the British
pound. Throughout the June quarter, the Norges Bank lowered the key
deposit rate 100 basis points to 6.0%. Despite the significant
appreciation of the Norwegian krona relative to the euro, interest
rates have been adjusted gradually.
In response to our foreign exchange outlook, it is expected the
portfolio's currency exposure will generally be fully hedged back to
the US dollar. In New Zealand and Canada, with short-term interest
rates below those in the United States, hedging the exposure back
into US dollars adds value to the Fund since the Fund will earn the
interest rate differential. We recently added positions in AAA-rated
securities denominated in Greek drachma and Polish zloty. Finally,
we expect to continue to actively pursue opportunities to reduce
hedging costs while seeking to maintain the stability of the Fund's
net asset values.
Economic Outlook
Heightened expectations of an increase in US interest rates, which
could occur as soon as the August 24, 1999 FOMC meeting, are the
result of the upside risks of growth and consumer prices. The pace
of adjustments to monetary policy depends on how quickly the economy
responds to higher interest rates and the reaction of the asset
markets. Domestic demand, supportive financial conditions and an
improvement in labor productivity are likely to be positive for the
US economy. GDP is expected to be near 4.0% for this year while
inflation is likely to stay below 2.5%.
We expect the Japanese economy to show tentative signs of recovery
as a result of easier monetary conditions and a weaker yen, although
the government's aggressive GDP target of 0.5% for 1999 could be
difficult to achieve. The labor market situation has deteriorated
over recent months as corporations have embarked on more determined
rounds of restructuring. Japanese policymakers may need more
supplementary budget packages and tax cuts in order to stimulate
firmer demand. Expectations of a return to modest growth should
cause interest rates to rise as the yen depreciates in order to
assist competitiveness.
The outlook for EMU is still a concern for the ECB as there are few
signs of a recovery in the major countries in the region (Germany,
France and Italy). Deteriorating budget deficits within EMU have
caused concern in the market. The ECB will most likely leave
interest rates unchanged in response to its commitment to price
stability and a strong euro. Historically high consumer confidence
and a gradual improvement in Eurozone exports should contribute to
growth of 2.0% this year.
In Greece, it has been difficult for the population to endorse the
attacks on Yugoslavia for social, political and economic reasons.
Despite the fact that many uncertainties still surround the Balkan
crisis, there is virtually no risk that Greece will distance itself
from NATO or the European Union. The need for lower interest rates
and a stable exchange rate in preparation for EMU entry will support
the near-term outlook for the currency and drachma-denominated
assets. In Poland, the privatization process, improving growth
prospects and relatively high yields should be positive for the
zloty.
Currency Outlook
We expect the euro to be under pressure in response to little
evidence of core Eurozone economies recovering, the reduced
credibility of the ECB, and the possibility of lingering tensions in
Yugoslavia. Central bank officials have stated that the weakness of
the euro is not encouraged, but it is positive for growth prospects.
It is essential that the euro gain the confidence of international
investors or the currency risks moving to parity against the US
dollar.
The yen has been slow to depreciate since the beginning of the June
quarter. The Japanese have been reluctant to diversify out of yen-
denominated instruments. The recent adverse price movements in
foreign bonds have made owning them unattractive for yen-based
investors. Policymakers have accepted the need for yen weakness in
order to stimulate export growth. The US commitment to a strong
dollar policy, further intervention by the Bank of Japan to sell the
yen, interest rate differentials and stagnant growth from Japan
should be supportive for the US dollar.
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 and strategy with you again in our next quarterly report to
shareholders.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President
(Edward F. Gobora)
Edward F. Gobora
Vice President and
Senior Portfolio Manager
August 12, 1999
Merrill Lynch Short-Term Global Income Fund, Inc., June 30, 1999
PERFORMANCE DATA
About Fund
Performance
Investors are able to purchase shares of the Fund through the
Merrill Lynch Select Pricing SM System, which offers four pricing
alternatives:
* 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. However, in the case of certain
eligible investors, the shares 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 approximately 10 years. (There is no initial
sales charge for automatic share conversions.)
* 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. Figures shown in the "Recent Performance
Results" and "Average Annual Total Return" tables assume
reinvestment of all dividends and capital gains distributions at net
asset value on the payable date. Investment return and principal
value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Dividends paid to each
class of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
<TABLE>
Recent
Performance
Results*
<CAPTION>
Standardized
12 Month 3 Month Since Inception 30-Day Yield
Total Return Total Return Total Return As of 6/30/99
<S> <C> <C> <C> <C>
ML Short-Term Global Income Fund, Inc. Class A Shares +5.36% +1.03% +25.62% 4.90%
ML Short-Term Global Income Fund, Inc. Class B Shares +4.39 +0.83 +33.00 4.30
ML Short-Term Global Income Fund, Inc. Class C Shares +4.21 +0.78 +16.89 4.10
ML Short-Term Global Income Fund, Inc. Class D Shares +4.96 +0.97 +39.56 4.66
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included. Total
investment returns are based on changes in net asset values for the
periods shown, and assume reinvestment of all dividends and capital
gains distributions at net asset value on the payable date. The
Fund's since inception periods arefrom 10/21/94 for Class A & Class
C Shares and from 8/03/90 for Class B & Class D Shares.
</TABLE>
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/99 +5.36% +1.14%
Inception (10/21/94) through 6/30/99 +4.98 +4.07
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/99 +4.39% +0.39%
Five Years Ended 6/30/99 +3.80 +3.80
Inception (8/03/90) through 6/30/99 +3.25 +3.25
[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 6/30/99 +4.21% +3.21%
Inception (10/21/94) through 6/30/99 +3.38 +3.38
[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 6/30/99 +4.96% +0.76%
Five Years Ended 6/30/99 +4.34 +3.49
Inception (8/03/90) through 6/30/99 +3.81 +3.34
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
Merrill Lynch Short-Term Global Income Fund, Inc., June 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Face Maturity Interest Value Percent of
COUNTRIES Amount Date Issue Rate++ (Note 1a) Net Assets
<S> <S> <C> <C> <S> <C> <C> <C>
Australia NZ$ $ 4,700,000 2/12/01 New South Wales Treasury Corporation (1) 5.25 % $ 2,463,013 2.33%
5,870,000 12/18/00 Toyota Finance Australia (2) 7.25 3,166,264 3.00
Total Investments in Australia
(Cost--$5,626,894) 5,629,277 5.33
Canada US$ 2,600,000 1/30/01 Canadian Government Bond (1) 5.50 2,586,347 2.45
C$ 8,750,000 9/15/00 European Investment Bank (2) 6.625 5,989,055 5.66
US$ 4,300,000 1/14/01 Shell Canada Ltd. (4) 8.875 4,479,654 4.24
Total Investments in Canada
(Cost--$12,945,219) 13,055,056 12.35
Germany PLN 9,900,000 3/24/00 LB Baden-Wuerttemberg (2) 19.75 2,616,014 2.48
Total Investments in Germany
(Cost--$2,622,776) 2,616,014 2.48
Greece GRD 404,000,000 6/15/00 European Investment Bank (2) 9.21 1,283,732 1.21
Total Investments in Greece
(Cost--$1,324,892) 1,283,732 1.21
Iceland ISK 379,600,000 10/13/99 Svenska Handelsbank Time Deposits (2) 8.50 5,094,618 4.82
Total Investments in Iceland
(Cost--$5,202,138) 5,094,618 4.82
Norway Nok 122,000,000 9/15/99 Norwegian Treasury Bill (1) 6.50 15,538,916 14.70
40,550,000 1/10/00 Unibank Time Deposits (2) 6.25 5,155,753 4.88
Total Investments in Norway
(Cost--$21,090,953) 20,694,669 19.58
Poland PLN 3,400,000 5/22/00 European Bank Reconstruction and
Development (2) 18.625 903,198 0.85
Total Investments in Poland
(Cost--$914,226) 903,198 0.85
Sweden Pound 2,520,000 12/08/99 Kingdom of Sweden (1) 6.25 3,984,312 3.77
Sterling
US$ 4,400,000 10/16/00 Swedish Export Credit (2) 6.25 4,404,571 4.17
Total Investments in Sweden
(Cost--$8,609,304) 8,388,883 7.94
United Pound 2,135,000 8/10/99 Abbey National Treasury Service (2) 6.00 3,364,488 3.18
Kingdom Sterling
Total Investments in the United Kingdom
(Cost--$3,554,467) 3,364,488 3.18
United US$ 1,700,000 1/15/01 Associates Corporation of North America (2) 5.85 1,693,965 1.60
States 8,000,000 8/13/99 Federal Home Loan Banks (3) 5.014 7,953,082 7.52
12,000,000 7/29/99 Federal Home Loan Mortgage Corporation (3) 4.896 11,955,107 11.31
2,595,000 7/07/99 Federal National Mortgage Association (3) 4.861 2,592,928 2.45
Pound 3,200,000 8/10/99 General Electric Capital Corp. (5) 7.00 5,049,346 4.78
Sterling
US$ 4,781,000 7/01/99 General Motors Acceptance Corp. (5) 5.709 4,781,000 4.52
9,000,000 7/01/99 Student Loan Marketing Association (3) 4.664 9,000,000 8.52
Total Investments in the United States
(Cost--$43,311,937) 43,025,428 40.70
OPTIONS Nominal Value
PURCHASED Covered by Options
Currency Call 2,683,200 Euro Dollar, expiring July 1999 at e1.04 2,952 0.00
Options 1,280,588 Greek Drachma, expiring August 1999 at GRD330 2,817 0.00
Purchased 893,840 Polish Zloty, expiring July 1999 at PLN4.15 3,128 0.00
2,667,204 Polish Zloty, expiring July 1999 at PLN4.16 8,002 0.01
Total Options Purchased (Premiums Paid
--$28,648) 16,899 0.01
Total Investments (Cost--$105,231,454) 104,072,262 98.45
Unrealized Appreciation on Forward Foreign Exchange Contracts++++ 1,116,567 1.06
Other Assets Less Liabilities 521,235 0.49
------------ -------
Net Assets $105,710,064 100.00%
============ =======
<FN>
Corresponding industry groups for securities (percent of net
assets):
(1)Sovereign Government Obligations--23.25%
(2)Financial Services--31.85%
(3)Sovereign/Regional Government Obligations--Agency--29.80%
(4)Petroleum Company--4.24%
(5)Financial Company--9.30%
++Commercial Paper and certain US Treasury and Foreign Treasury
Obligations are traded on a discount basis; the interest rates shown
reflect the yield-to-maturity at the time of purchase by the Fund.
Other securities bear interest at the rates shown, payable at the
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 June 30, 1999.
++++Forward foreign exchange contracts as of June 30, 1999 were as
follows:
Unrealized
Appreciation
Foreign Currency Expiration (Depreciation)
Purchased Date (Note 1d)
Nok 23,381,456 July 1999 $ (21,335)
NZ$ 2,362,419 July 1999 (53,662)
(US$ Commitment--$4,298,277) $ (74,997)
Foreign Currency Sold
C$ 9,184,918 July 1999 $ 87,085
E 3,447,470 July 1999 21,411
E 1,250,000 August 1999 6,802
ISK 379,600,000 July 1999 22,616
Pound 7,916,058 July 1999 280,466
Sterling
Nok 191,067,228 July 1999 540,424
NZ$ 13,546,273 July 1999 232,760
(US$ Commitment--$61,282,909) $ 1,191,564
-----------
Total Unrealized Appreciation on Forward
Foreign Exchange Contracts--Net $ 1,116,567
===========
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Short-Term Global Income Fund, Inc., June 30, 1999
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of June 30, 1999
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$105,202,806) (Note 1a) $ 104,055,363
Options purchased, at value (premiums paid--$28,648)(Notes 1a & 1d) 16,899
Unrealized appreciation on forward foreign exchange contracts (Note 1d) 1,116,567
Cash 990
Foreign cash (Note 1c) 264,506
Receivables:
Interest $ 2,999,932
Forward foreign exchange contracts (Note 1d) 63,659 3,063,591
-------------
Prepaid registration fees and other assets (Note 1g) 185,510
-------------
Total assets 108,703,426
-------------
Liabilities: Payables:
Securities purchased 2,139,010
Capital shares redeemed 389,295
Dividends to shareholders (Note 1h) 163,583
Distributor (Note 2) 62,429
Investment adviser (Note 2) 48,499
Forward foreign exchange contracts (Note 1d) 12,050
Options purchased (Note 1d) 5,479 2,820,345
-------------
Accrued expenses and other liabilities 173,017
-------------
Total liabilities 2,993,362
-------------
Net Assets: Net assets $ 105,710,064
=============
Net Assets Class A Shares of Common Stock, $0.10 par value, 1,000,000,000
Consist of: shares authorized $ 235
Class B Shares of Common Stock, $0.10 par value, 1,000,000,000
shares authorized 1,256,309
Class C Shares of Common Stock, $0.10 par value, 300,000,000
shares authorized 86
Class D Shares of Common Stock, $0.10 par value, 300,000,000
shares authorized 116,143
Paid-in capital in excess of par 152,097,904
Accumulated realized capital losses on investments and foreign
currency transactions--net (Note 6) (47,679,065)
Unrealized depreciation on investments and foreign currency
transactions--net (81,548)
-------------
Net assets $ 105,710,064
=============
Net Asset Class A--Based on net assets of $18,280 and 2,347 shares
Value: outstanding $ 7.79
=============
Class B--Based on net assets of $96,739,126 and 12,563,087
shares outstanding $ 7.70
=============
Class C--Based on net assets of $6,493 and 855 shares
outstanding $ 7.59
=============
Class D--Based on net assets of $8,946,165 and 1,161,427
shares outstanding $ 7.70
=============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended June 30, 1999
<S> <S> <C> <C>
Investment Income Interest and discount earned $ 3,198,332
(Notes 1e & 1f):
Expenses: Account maintenance and distribution fees--Class B (Note 2) $ 385,211
Investment advisory fees (Note 2) 308,024
Transfer agent fees--Class B (Note 2) 126,420
Accounting services (Note 2) 66,251
Professional fees 37,393
Printing and shareholder reports 31,666
Registration fees (Note 1g) 29,911
Directors' fees and expenses 22,042
Custodian fees 13,497
Account maintenance fees--Class D (Note 2) 11,568
Transfer agent fees--Class D (Note 2) 9,188
Account maintenance and distribution fees--Class C (Note 2) 49
Transfer agent fees--Class C (Note 2) 23
Transfer agent fees--Class A (Note 2) 20
Pricing fees 10
Other 2,646
-------------
Total expenses 1,043,919
-------------
Investment income--net 2,154,413
-------------
Realized & Realized gain (loss) from:
Unrealized Gain Investments--net 130,366
(Loss) on Foreign currency transactions--net (298,356) (167,990)
Investments & -------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions--Net Investments--net (963,125)
(Notes 1c, 1d, Foreign currency transactions--net 855,709 (107,416)
1f & 3): ------------- -------------
Net realized and unrealized loss on investments and foreign
currency transactions (275,406)
-------------
Net Increase in Net Assets Resulting from Operations $ 1,879,007
=============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Short-Term Global Income Fund, Inc., June 30, 1999
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the
Months Ended Year Ended
June 30, Dec. 31,
Increase (Decrease) in Net Assets: 1999 1998
<S> <S> <C> <C>
Operations: Investment income--net $ 2,154,413 $ 6,025,113
Realized loss on investments and foreign currency
transactions--net (167,990) (193,436)
Change in unrealized appreciation/depreciation on investments
and foreign currency transactions--net (107,416) 540,945
------------- -------------
Net increase in net assets resulting from operations 1,879,007 6,372,622
------------- -------------
Dividends & Investment income--net:
Distributions to Class A (440) (431)
Shareholders Class B (1,952,433) (5,311,497)
(Note 1h): Class C (219) (1,613)
Class D (201,321) (506,824)
Return of capital--net:
Class A -- (15)
Class B -- (186,847)
Class C -- (57)
Class D -- (17,829)
------------- -------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (2,154,413) (6,025,113)
------------- -------------
Capital Share Net decrease in net assets derived from capital share
Transactions transactions (14,992,817) (53,051,958)
(Note 4): ------------- -------------
Net Assets: Total decrease in net assets (15,268,223) (52,704,449)
Beginning of period 120,978,287 173,682,736
------------- -------------
End of period $ 105,710,064 $ 120,978,287
============= =============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Class A
For the For the
Six Period For the
The following per share data and ratios have been derived Months Nov. 1, Year
from information provided in the financial statements. Ended For the Year Ended 1995 to Ended
June 30, December 31, Dec. 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996++ 1995++ 1995++
<S> <S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of
Operating period $ 7.80 $ 7.76 $ 7.89 $ 7.91 $ 7.93 $ 8.11
Performance: -------- -------- -------- -------- -------- --------
Investment income--net .17 .38 .42 .54 .09 .49
Realized and unrealized gain
(loss) on investments and foreign
currency transactions--net (.01) .04 (.13) (.06) (.02) (.12)
-------- -------- -------- -------- -------- --------
Total from investment operations .16 .42 .29 .48 .07 .37
-------- -------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.17) (.37) (.39) (.44) (.09) (.27)
Return of capital--net -- (.01) (.03) (.06) -- (.28)
-------- -------- -------- -------- -------- --------
Total dividends and distributions (.17) (.38) (.42) (.50) (.09) (.55)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 7.79 $ 7.80 $ 7.76 $ 7.89 $ 7.91 $ 7.93
======== ======== ======== ======== ======== ========
Total Investment Based on net asset value per
Return:** share 2.13%+++ 5.49% 3.77% 6.29% .92%+++ 4.62%
======== ======== ======== ======== ======== ========
Ratios to Average Expenses 1.14%* .84% .76% .95% 1.02%* .96%
Net Assets: ======== ======== ======== ======== ======== ========
Investment income--net 4.51%* 4.75% 5.39% 6.45% 6.91%* 6.75%
======== ======== ======== ======== ======== ========
Supplemental Net assets, end of period (in
Data: thousands) $ 18 $ 7 $ 18 $ 3 $ 75 $ 66
======== ======== ======== ======== ======== ========
Portfolio turnover 55.21% 174.18% 278.81% 349.34% 25.09% 312.13%
======== ======== ======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Based on average shares outstanding.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Short-Term Global Income Fund, Inc., June 30, 1999
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
<CAPTION>
Class B
For the For the For the
Six Period
The following per share data and ratios have been derived Months Nov. 1, Year
from information provided in the financial statements. Ended For the Year Ended 1995 to Ended
June 30, December 31, Dec. 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996++ 1995++ 1995++
<S> <S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of
Operating period $ 7.72 $ 7.69 $ 7.81 $ 7.90 $ 7.93 $ 8.10
Performance: -------- -------- -------- -------- -------- --------
Investment income--net .14 .31 .35 .44 .08 .47
Realized and unrealized gain
(loss) on investments and foreign
currency transactions--net (.02) .03 (.12) (.09) (.03) (.15)
-------- -------- -------- -------- -------- --------
Total from investment operations .12 .34 .23 .35 .05 .32
-------- -------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.14) (.30) (.32) (.38) (.08) (.24)
Return of capital--net -- (.01) (.03) (.06) -- (.25)
-------- -------- -------- -------- -------- --------
Total dividends and distributions (.14) (.31) (.35) (.44) (.08) (.49)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 7.70 $ 7.72 $ 7.69 $ 7.81 $ 7.90 $ 7.93
======== ======== ======== ======== ======== ========
Total Investment Based on net asset value per
Return:** share 1.61%+++ 4.52% 3.08% 4.52% .66%+++ 3.96%
======== ======== ======== ======== ======== ========
Ratios to Average Expenses 1.91%* 1.65% 1.62% 1.74% 1.80%* 1.73%
Net Assets: ======== ======== ======== ======== ======== ========
Investment income--net 3.80%* 3.99% 4.59% 5.62% 6.13%* 5.95%
======== ======== ======== ======== ======== ========
Supplemental Net assets, end of period
Data: (in thousands) $ 96,739 $110,989 $160,096 $239,419 $376,049 $398,136
======== ======== ======== ======== ======== ========
Portfolio turnover 55.21% 174.18% 287.81% 349.34% 25.09% 312.13%
======== ======== ======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Based on average shares outstanding.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
<CAPTION>
Class C
For the For the
Six Period For the
The following per share data and ratios have been derived Months Nov. 1, Year
from information provided in the financial statements. Ended For the Year Ended 1995 to Ended
June 30, December 31, Dec. 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996++ 1995++ 1995++
<S> <S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of
Operating period $ 7.61 $ 7.58 $ 7.67 $ 7.72 $ 7.74 $ 8.10
Performance: -------- -------- -------- -------- -------- --------
Investment income--net .13 .29 .35 .38 .08 .35
Realized and unrealized gain
(loss) on investments and foreign
currency transactions--net (.02) .03 (.09) (.01) (.02) (.28)
-------- -------- -------- -------- -------- --------
Total from investment operations .11 .32 .26 .37 .06 .07
-------- -------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.13) (.28) (.32) (.37) (.08) (.21)
Return of capital--net -- (.01) (.03) (.05) -- (.22)
-------- -------- -------- -------- -------- --------
Total dividends and distributions (.13) (.29) (.35) (.42) (.08) (.43)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 7.59 $ 7.61 $ 7.58 $ 7.67 $ 7.72 $ 7.74
======== ======== ======== ======== ======== ========
Total Based on net asset value per
Investment share 1.50%+++ 4.37% 3.42% 4.93% .78%+++ .89%
Return:** ======== ======== ======== ======== ======== ========
Ratios to Average Expenses 2.08%* 1.76% 1.60% 1.73% 1.83%* 1.83%
Net Assets: ======== ======== ======== ======== ======== ========
Investment income--net 3.62%* 3.94% 4.46% 5.23% 6.09%* 5.99%
======== ======== ======== ======== ======== ========
Supplemental Net assets, end of period (in
Data: thousands) $ 7 $ 17 $ 344 $ 155 $ 103 $ 109
======== ======== ======== ======== ======== ========
Portfolio turnover 55.21% 174.18% 287.81% 349.34% 25.09% 312.13%
======== ======== ======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Based on average shares outstanding.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Short-Term Global Income Fund, Inc., June 30, 1999
<TABLE>
FINANCIAL HIGHLIGHTS (concluded)
<CAPTION>
Class D
For the For the
Six Period For the
The following per share data and ratios have been derived Months Nov. 1, Year
from information provided in the financial statements. Ended For the Year Ended 1995 to Ended
June 30, December 31, Dec. 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996++ 1995++ 1995++
<S> <S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of
Operating period $ 7.72 $ 7.70 $ 7.81 $ 7.90 $ 7.93 $ 8.11
Performance: -------- -------- -------- -------- -------- --------
Investment income--net .16 .35 .40 .48 .09 .52
Realized and unrealized gain
(loss) on investments and foreign
currency transactions--net (.02) .02 (.11) (.09) (.03) (.17)
-------- -------- -------- -------- -------- --------
Total from investment operations .14 .37 .29 .39 .06 .35
-------- -------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.16) (.34) (.37) (.42) (.09) (.26)
Return of capital--net -- (.01) (.03) (.06) -- (.27)
-------- -------- -------- -------- -------- --------
Total dividends and distributions (.16) (.35) (.40) (.48) (.09) (.53)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 7.70 $ 7.72 $ 7.70 $ 7.81 $ 7.90 $ 7.93
======== ======== ======== ======== ======== ========
Total Investment Based on net asset value per
Return:** share 1.88%+++ 4.96% 3.77% 5.09% .75%+++ 4.40%
======== ======== ======== ======== ======== ========
Ratios to Average Expenses 1.36%* 1.10% 1.08% 1.20% 1.27%* 1.20%
Net Assets: ======== ======== ======== ======== ======== ========
Investment income--net 4.35%* 4.54% 5.13% 6.13% 6.67%* 6.49%
======== ======== ======== ======== ======== ========
Supplemental Net assets, end of period
Data: (in thousands) $ 8,946 $ 9,965 $ 13,225 $ 17,948 $ 24,240 $ 26,619
======== ======== ======== ======== ======== ========
Portfolio turnover 55.21% 174.18% 287.81% 349.34% 25.09% 312.13%
======== ======== ======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Based on average shares outstanding.
+++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's
financial statements are prepared in accordance with generally
accepted accounting principles, which may require the use of
management accruals and estimates. These unaudited financial
statements reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results for the
interim period presented. All such adjustments are of a normal
recurring nature. 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 significant accounting policies followed
by the Fund.
(a) Valuation of investments--Portfolio securities that 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. In cases where securities are traded on more
than one exchange, the securities are valued on the exchange
designated by or under the authority of the Board of Directors as
the primary market. Options written or purchased are valued at the
last sale price in the case of exchange-traded options. In the case
of options traded in the over-the-counter market, valuation is the
last asked price (options written) or the last bid price (options
purchased). Short-term securities are valued at amortized cost,
which approximates market value. Other investments, including
futures contracts and related options, are stated at market value.
Securities and assets for which market quotations are not 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) 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.
(d) Derivative financial instruments--The Fund may engage in various
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
contract 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.
* Foreign currency options and futures--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.
Merrill Lynch Short-Term Global Income Fund, Inc., June 30, 1999
NOTES TO FINANCIAL STATEMENTS (continued)
* 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
deducted 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 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.
(e) 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 by imposed on interest and capital gains at various rates.
(f) 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.
(g) Prepaid registration fees--Prepaid registration fees are charged
to expense as the related shares are issued.
(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 net investment income dividends
paid by the Fund for the year ended December 31, 1998 is
characterized as a return of capital.
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 ("MLFD" or the "Distributor"), a division of Princeton
Funds Distributor, Inc. ("PFD"), which is a wholly-owned subsidiary
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
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 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 the six months ended June 30, 1999, MLAM paid MLAM
U.K. a fee of $23,797 pursuant to such Agreement.
Pursuant to 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 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 Incorporated ("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 six months ended June 30, 1999, MLFD earned underwriting
discounts and MLPF&S earned dealer concessions on sales of the
Fund's Class D Shares as follows:
MLFD MLPF&S
Class D $4 $23
For the six months ended June 30, 1999, MLPF&S received contingent
deferred sales charges of $18,288 and $49 relating to transactions
in Class B and Class C Shares, respectively.
Financial Data Services, Inc. ("FDS"), 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, FDS, PFD, MLAM U.K., and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended June 30, 1999 were $45,600,492 and
$12,254,070, respectively.
Net realized gains (losses) for the six months ended June 30, 1999
and net unrealized gains (losses) as of June 30, 1999 were as
follows:
Realized Unrealized
Gains Gains
(Losses) (Losses)
Investments:
Long-term $ (27,689) $ (355,550)
Short-term 159,735 (791,893)
Options purchased (1,680) --
------------ ------------
Total investments 130,366 (1,147,443)
------------ ------------
Currency transactions:
Options written 302,493 --
Options purchased (337,454) (11,749)
Forward foreign exchange
contracts 1,223,504 1,116,567
Foreign currency
transactions (1,486,899) (38,923)
------------ ------------
Total currency transactions (298,356) 1,065,895
------------ ------------
Total $ (167,990) $ (81,548)
============ ============
As of June 30, 1999, net unrealized depreciation for Federal income
tax purposes aggregated $1,147,443, of which $1,284,541 related to
appreciated securities and $137,098 related to depreciated
securities. At June 30, 1999, the aggregate cost of investments for
Federal income tax purposes was $105,202,806.
Transactions in options written for the six months ended June 30,
1999 were as follows:
Nominal Value
Covered by Premiums
Call Options Written Written Options Received
Outstanding call options
written, beginning of period 3,850,000 $ 15,263
Options written 7,950,370 50,015
Options expired (11,800,370) (65,278)
------------ ------------
Outstanding call options
written, end of period -- $ --
============ ============
Nominal Value
Covered by Premiums
Put Options Written Written Options Received
Outstanding put options
written, beginning of period 10,500,000 $ 17,078
Options written 10,561,207 220,137
Options expired (21,061,207) (237,215)
------------ ------------
Outstanding put options
written, end of period -- $ --
============ ============
4. Capital Share Transactions:
Net decrease in net assets derived from capital share transactions
was $14,992,817 and $53,051,958, for the six months ended June 30,
1999 and the year ended December 31, 1998, respectively.
Merrill Lynch Short-Term Global Income Fund, Inc., June 30, 1999
NOTES TO FINANCIAL STATEMENTS (concluded)
Transactions in capital shares for each class were as follows:
Class A Shares for the Six Months Dollar
Ended June 30, 1999 Shares Amount
Shares sold 4,010 $ 31,277
Shares issued to shareholders in
reinvestment of dividends 21 164
------------ ------------
Total issued 4,031 31,441
Shares redeemed (2,525) (19,695)
------------ ------------
Net increase 1,506 $ 11,746
============ ============
Class A Shares for the Year Dollar
Ended December 31, 1998 Shares Amount
Shares sold 2,330 $ 18,100
Shares issued to shareholders in
reinvestment of dividends and
distributions 49 383
------------ ------------
Total issued 2,379 18,483
Shares redeemed (3,799) (29,521)
------------ ------------
Net decrease (1,420) $ (11,038)
============ ============
Class B Shares for the Six Months Dollar
Ended June 30, 1999 Shares Amount
Shares sold 529,041 $ 4,083,746
Shares issued to shareholders in
reinvestment of dividends 120,217 927,246
------------ ------------
Total issued 649,258 5,010,992
Automatic conversion of shares (24,976) (192,608)
Shares redeemed (2,439,684) (18,815,735)
------------ ------------
Net decrease (1,815,402) $(13,997,351)
============ ============
Class B Shares for the Year Dollar
Ended December 31, 1998 Shares Amount
Shares sold 2,168,042 $ 16,681,600
Shares issued to shareholders in
reinvestment of dividends and
distributions 361,212 2,777,966
------------ ------------
Total issued 2,529,254 19,459,566
Automatic conversion of shares (59,307) (455,694)
Shares redeemed (8,897,683) (68,428,445)
------------ ------------
Net decrease (6,427,736) $(49,424,573)
============ ============
Class C Shares for the Six Months Dollar
Ended June 30, 1999 Shares Amount
Shares issued to shareholders in
reinvestment of dividends 21 $ 164
Shares redeemed (1,426) (10,835)
------------ ------------
Net decrease (1,405) $ (10,671)
============ ============
Class C Shares for the Year Dollar
Ended December 31, 1998 Shares Amount
Shares sold 186,138 $ 1,411,639
Shares issued to shareholders in
reinvestment of dividends and
distributions 142 1,078
------------ ------------
Total issued 186,280 1,412,717
Shares redeemed (229,410) (1,739,574)
------------ ------------
Net decrease (43,130) $ (326,857)
============ ============
Class D Shares for the Six Months Dollar
Ended June 30, 1999 Shares Amount
Shares sold 42,264 $ 326,085
Shares issued to shareholders in
reinvestment of dividends 14,380 110,913
Automatic conversion of shares 24,970 192,608
------------ ------------
Total issued 81,614 629,606
Shares redeemed (210,786) (1,626,147)
------------ ------------
Net decrease (129,172) $ (996,541)
============ ============
Class D Shares for the Year Dollar
Ended December 31, 1998 Shares Amount
Shares sold 44,879 $ 345,959
Shares issued to shareholders in
reinvestment of dividends and
distributions 40,344 310,437
Automatic conversion of shares 59,280 455,694
------------ ------------
Total issued 144,503 1,112,090
Shares redeemed (572,114) (4,401,580)
------------ ------------
Net decrease (427,611) $ (3,289,490)
============ ============
5. Commitments:
At June 30, 1999, 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 purchase foreign currency
with an approximate value of $398,000.
6. Capital Loss Carryforward:
At December 31, 1998, the Fund had a capital loss carryforward of
approximately $47,027,000, of which $32,232,000 expires in 1999,
$10,816,000 expires in 2001, $1,042,000 expires in 2002, $490,000
expires in 2003, $1,015,000 expires in 2004, $1,289,000 expires in
2005 and $143,000 expires in 2006. This amount will be available to
offset like amounts of any future taxable gains.
