MERRILL LYNCH
SHORT-TERM
GLOBAL INCOME
FUND, INC.
FUND LOGO
Annual Report
December 31, 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
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
Donald Cecil and Edward H. Meyer, Directors of Merrill Lynch Short-
Term Global Income Fund, Inc. have recently retired. The Fund's
Board of Directors wishes Mr. Cecil and Mr. Meyer well in their
retirements.
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., December 31, 1999
DEAR SHAREHOLDER
Fiscal Year in Review
Throughout the fiscal year ended December 31, 1999, we concentrated
the Fund's global investments in high credit-quality securities with
maturities of less than two years. Our currency exposure was
generally hedged back into US dollars. Our strategies led the Fund
to meet its primary objective of seeking to provide a relatively
high level of current income. As global yields steadily rose, the
portfolio's low duration (0.20 years--0.50 years) had a limited
negative impact on the Fund.
Among our holdings were AAA-rated and AA-rated securities issued by
corporations and supranational entities denominated in the Greek
drachma, Polish zloty and South African rand. These positions
greatly enhanced the Fund's level of current income, while the
currencies these securities were denominated in remained stable or
appreciated. In order to seek to protect the Fund from extreme
adverse currency movements, we used a variety of hedging strategies
to limit our downside risk.
During the year, we followed a conservative approach to managing our
currency risk. We actively implemented tactical trading positions in
various currency pairs. As a result, hedging costs were reduced and
we were able to provide incremental income. We invested in some
countries, such as Canada and New Zealand, where short-term interest
rates were below those in the United States, hedging the foreign
currency exposure into US dollars. This strategy positively
contributed to the Fund's total returns. For the year ended December
31, 1999, the Fund's Class A, Class B, Class C and Class D Shares
had total returns of +5.51%, +3.87%, +3.64% and +4.57%,
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--6 of this report.)
Market Review
North America
On November 16, 1999, the Federal Open Market Committee (FOMC)
raised its target for the Federal Funds rate by 25 basis points
(0.25%) to 5.50%. The US central bank also adopted a neutral bias
toward its near-term monetary policy. This adjustment to interest
rates was made in an effort to restrain the expansion of US economic
activity and to control the emergence of cost pressures. Gross
domestic product (GDP) growth in the United States for the third
quarter of 1999 was 5.7% because of the substantial increases in
investment and private consumption. The extremely tight labor
markets in large part caused some moderate acceleration in consumer
prices. The US bond market suffered as persistent growth created
fears that the FOMC would raise interest rates further in 2000. The
two-year US Government note yield rose to more than 6.2% by December
31, 1999.
Europe
The European Central Bank (ECB) increased the refinance rate in the
Eurozone, which is comprised of the member-countries of the European
Monetary Union (EMU), by 0.5% to 3.0% in November. Reduced concerns
of a recession and deflation within the Euro-area justified the
modified rates. Consumer confidence and growing export demand among
the EMU-member nations added to growth of 1.0% for the third
quarter. Upward pressure on energy prices and a weaker currency led
to inflation of 1.6% for November. Rising interest rates and the
belief that Eurozone growth will be substantial caused two-year
sovereign yields to move higher, closing the period at 4.208%.
Pacific Basin
The positive impact on the Japanese economy from the low interest
rate policy was partially offset by the strength of the yen.
Downward movements in consumption, business and housing investment
contributed to negative 1.0% growth for the third quarter.
Inflationary risks in Japan remain virtually non-existent with the
consumer price index (CPI) near zero. Expectations of increased
issuance and some signs of a recovering economy have had a negative
impact on the Japanese government bond market.
Economic Outlook
The Federal Reserve Board raised interest rates 0.25% in the first
quarter of 2000 to slow down the pace of economic activity. The FOMC
has demonstrated they will preemptively combat any signs of
inflation. Consistent improvement in payroll employment and strong
consumer spending and confidence may help the US economy achieve GDP
growth above 5.0% for the first quarter of 2000. The rise in oil
prices, consumer demand and the weakness of the US dollar relative
to the Japanese yen may lead to a modestly higher inflation rate of
near 3.0%.
Interest rates should move higher in the Eurozone during 2000 as a
result of the prospects for above-average growth and the upward
pressure on prices. We believe there could be a need for a
tightening of monetary policy in the region as early as the first
half of 2000. An increase in industrial production, a steady fall in
unemployment and an improving export sector may add to growth of
1.3% in the Euro area for the first quarter. The Eurozone CPI is
likely to move close to 1.5%, in large part because of upward
pressure from the volatile components of the index, such as food and
energy.
The results of year-end economic indicators could adversely impact
expectations of a fast recovery in Japan. The government's fiscal
packages, a pickup in industrial production and an improvement in
exports to Asia should contribute to unimpressive growth of 0.7% for
1999. The Bank of Japan (BOJ) is likely to keep the overnight
discount rate close to zero. Deflationary risks have not abated as
wholesale prices continue to decline. There are some signs of
stabilization in labor demand and household spending. Further fiscal
stimulus from the Japanese government may exert substantial upward
pressure on bond yields in the near future.
New Zealand was the Fund's largest investment outside of the United
States. This position was maintained because of anticipation of a
stronger currency, higher commodity prices, its high credit quality
and attractive yields. Some of the interest rate uncertainty has
passed, with the Reserve Bank of New Zealand (RBNZ) increasing
interest rates at the November 17, 1999, meeting by 50 basis points
to 5.0%. Several hikes in the official cash rate are likely
throughout 2000. Electoral uncertainty has also been removed as a
negative for the market with a new coalition government voted into
power in November. GDP is likely to reach 3.5% by the end of 2000.
Domestic demand and a recovering export sector may lead to an
anticipated rebound in the economy. Since we expect higher bond
yields in New Zealand, the Fund will remain invested in low duration
securities.
Currency Outlook
The euro rallied to E1.0894 in October, but then weakened
significantly to close the year at the low of E1.0062 relative to
the US dollar. The ECB's perceived lack of concern over the fall in
the euro and capital flows out of European assets contributed to the
strength of the US dollar. The Japanese yen traded in a YEN 101.64--
YEN 107.60 range for the three-month period ended December 31, 1999.
Aggressive hedging by Japanese corporations, the upsurge in the
Nikkei stock average and expectations of an economic recovery in
Japan has had an extremely positive influence on the Japanese yen's
value against most major currencies.
The disappointing performance of the euro should persist even with
the expectations of positive European growth and the beginning of a
tightening cycle in Eurozone. The strength of the US economy,
investment flows out of Europe and the growing perception of a poor
political and regulatory environment in the euro area should keep
the euro weak. In Japan, long-term concerns about the stability of
the fiscal situation and the deterioration in business investment
may hurt the Japanese yen. Official US and Japanese desires for a
strong dollar, interest rate differentials as well as the growing
likelihood of substantial and concerted intervention should support
the US dollar relative to the Japanese yen.
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 report to
shareholders.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President
(Edward F. Gobora)
Edward F. Gobora
Vice President and
Senior Portfolio Manager
February 14, 2000
To reduce shareholder expenses, Merrill Lynch Short-Term Global
Income Fund, Inc. will no longer be printing and mailing quarterly
reports to shareholders. We will continue to provide you with
reports on a semi-annual and annual basis.
Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 1999
PERFORMANCE DATA
About Fund
Performance
Investors are able to purchase shares of the Fund through the
Merrill Lynch Select Pricing SM System, which offers four pricing
alternatives:
* 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.
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/99 +5.51% +1.29%
Five Years Ended 12/31/99 +5.63 +4.77
Inception (10/21/94) through 12/31/99 +5.14 +4.32
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/99 +3.87% -0.11%
Five Years Ended 12/31/99 +4.45 +4.45
Inception (8/03/90) through 12/31/99 +3.32 +3.32
*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 12/31/99 +3.64% +2.64%
Five Years Ended 12/31/99 +3.97 +3.97
Inception (10/21/94) through 12/31/99 +3.46 +3.46
*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 12/31/99 +4.57% +0.39%
Five Years Ended 12/31/99 +5.05 +4.19
Inception (8/03/90) through 12/31/99 +3.89 +3.44
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
Total Return
Based on a
$10,000
Investment
A line graph depicting the growth of an investment in the
Fund's Class A Shares and Class C Shares compared to 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** 12/99
ML Short-Term Global Income Fund, Inc.++--
Class A Shares* $ 9,600 $12,459
ML Short-Term Global Income Fund, Inc.++--
Class C Shares* $10,000 $11,935
ML Global Government Bond Index++++ $10,000 $12,645
Salomon Brothers World Government
One--Three Year Bond Index++++++ $10,000 $14,237
A line graph depicting the growth of an investment in the
Fund's Class B Shares and Class D Shares compared to 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:
8/03/90** 12/99
ML Short-Term Global Income Fund, Inc.++--
Class B Shares* $10,000 $13,597
ML Short-Term Global Income Fund, Inc.++--
Class D Shares* $ 9,600 $13,752
ML Global Government Bond Index++++ $10,000 $18,479
Salomon Brothers World Government
One--Three Year Bond Index++++++ $10,000 $18,485
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commencement of operations.
++ML Short-Term Global Income Fund, Inc. invests, under normal
circumstances, in debt securities denominated in at least three
different currencies, including the US dollar.
++++This unmanaged Index is comprised of global government bonds
maturing in one to three years.
++++++This unmanaged Index is comprised of global government bonds
maturing in one to three years hedged into US dollars. The starting
date for the Index in the Class A & Class C Shares' graph is from
10/31/94 and in the Class B & Class D Shares' graph is from 7/31/90.
Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 1999
PERFORMANCE DATA (concluded)
<TABLE>
Recent
Performance
Results*
<CAPTION>
3 Month 12 Month Since Inception Standardized
As of December 31, 1999 Total Return Total Return Total Return 30-Day Yield
<S> <C> <C> <C> <C>
ML Short-Term Global Income Fund, Inc. Class A Shares +1.69% +5.51% +29.77% 3.98%
ML Short-Term Global Income Fund, Inc. Class B Shares +1.36 +3.87 +35.97 3.35
ML Short-Term Global Income Fund, Inc. Class C Shares +1.33 +3.64 +19.35 3.20
ML Short-Term Global Income Fund, Inc. Class D Shares +1.64 +4.57 +43.25 3.73
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included. Total
investment returns are based on changes in net asset values for the
periods shown, and assume reinvestment of all dividends and capital
gains distributions at net asset value on the payable date. The
Fund's since inception periods are from 10/21/94 for Class A & Class
C Shares and from 8/03/90 for Class B & Class D Shares.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Face Maturity Interest Percent of
COUNTRY Amount Date Issue Rate++ Value Net Assets
<S> <S> <C> <C> <S> <C> <C> <C>
Australia NZ$ 4,700,000 2/12/2001 New South Wales Treasury Corporation (1) 5.25 % $ 2,416,995 2.6%
5,870,000 12/18/2000 Toyota Finance Australia (2) 7.25 3,076,114 3.4
Total Investments in Australia (Cost--$5,626,893) 5,493,109 6.0
Austria US$ 1,700,000 2/05/2001 Deutsche Bank Finance NV (2) 6.375 1,693,710 1.9
Total Investments in Austria (Cost--$1,701,020) 1,693,710 1.9
Canada 2,600,000 1/30/2001 Canadian Government Bond (1) 5.50 2,572,908 2.8
C$ 8,750,000 9/15/2000 European Investment Bank (2) 6.625 6,071,909 6.7
US$ 4,300,000 1/14/2001 Shell Canada Ltd. (4) 8.875 4,393,353 4.8
Total Investments in Canada (Cost--$12,945,220) 13,038,170 14.3
Germany ZAR 2,285,000 4/26/2000 Commerzbank AG (2) 13.00 371,025 0.4
PLN 9,900,000 3/24/2000 LB Baden-Wuerttemberg (2) 19.75 2,387,506 2.6
Total Investments in Germany (Cost--$2,995,883) 2,758,531 3.0
Greece GRD 404,000,000 6/15/2000 European Investment Bank (2) 8.80++ 1,226,133 1.4
Total Investments in Greece (Cost--$1,324,892) 1,226,133 1.4
Norway Nok 40,550,000 1/10/2000 Unibank Time Deposits (2) 6.25 5,066,217 5.6
Total Investments in Norway (Cost--$5,455,328) 5,066,217 5.6
Poland PLN 3,400,000 5/22/2000 European Bank Reconstruction and
Development (2) 18.625 822,010 0.9
Total Investments in Poland (Cost--$914,226) 822,010 0.9
South ZAR 2,560,000 3/03/2000 General Electric Capital Corp. (5) 13.75 416,219 0.5
Africa
Total Investments in South Africa (Cost--$418,427) 416,219 0.5
Sweden US$ 4,400,000 10/16/2000 Swedish Export Credit (2) 6.25 4,399,146 4.8
Total Investments in Sweden (Cost--$4,445,760) 4,399,146 4.8
United Pound 2,570,000 7/14/2000 International Bank for Reconstruction
Kingdom Sterling and Development (2) 6.875 4,143,234 4.6
Total Investments in the United Kingdom
(Cost--$4,187,206) 4,143,234 4.6
United US$ 4,000,000 2/03/2000 Abbey National NA (2) 6.15 3,978,817 4.3
States 1,700,000 1/15/2001 Associates Corporation NA (2) 5.85 1,684,700 1.8
4,000,000 1/19/2000 CSW Credit Inc. (2) 6.35 3,988,711 4.4
4,000,000 1/25/2000 Den Danske Corp. (2) 6.35 3,984,478 4.4
4,000,000 1/10/2000 Dresdner US Finance (2) 6.23 3,995,154 4.4
1,500,000 1/19/2000 Federal Home Loan Banks (3) 5.80 1,496,133 1.6
3,000,000 1/11/2000 Federal Home Loan Mortgage Corporation (3) 5.65 2,996,233 3.3
NZ$ 7,300,000 9/26/2000 Federal National Mortgage Association (3) 7.00 3,830,710 4.2
US$ 2,958,000 1/03/2000 General Motors Acceptance Corp. (5) 5.00 2,958,000 3.2
4,000,000 1/18/2000 Goldman Sachs Group, Inc. (2) 6.46 3,989,233 4.4
4,000,000 2/04/2000 J.P. Morgan and Company (2) 5.94 3,978,880 4.4
4,000,000 1/11/2000 Morgan Stanley, Dean Witter & Co. (2) 6.00 3,994,667 4.4
3,400,000 3/15/2001 NationsBank Corp. (2) 5.75 3,357,296 3.7
4,000,000 1/21/2000 Paccar Financial (2) 6.30 3,987,400 4.4
4,000,000 2/01/2000 Santander Finance, Inc. (2) 5.97 3,980,763 4.4
Total Investments in the United States
(Cost--$52,183,593) 52,201,175 57.3
OPTIONS Nominal Value
PURCHASED Covered by Options
Currency Call 3,360,541 Euro Dollar, expiring January 2000 at PLN 4.3 9,746 0.0
Options 1,278,388 Euro Dollar, expiring February 2000 at GRD 340 383 0.0
Purchased 848,568 US Dollar, expiring January 2000 at ZAR 6.23 1,358 0.0
Total Options Purchased (Premiums Paid--$50,622) 11,487 0.0
Total Investments (Cost--$92,249,070) 91,269,141 100.3
Unrealized Depreciation on Forward Foreign Exchange Contracts++++ (140,758) (0.2)
Liabilities in Excess of Other Assets (98,119) (0.1)
------------ ------
Net Assets $ 91,030,264 100.0%
============ ======
Corresponding industry groups for securities (percent of net
assets):
(1)Sovereign Government Obligations--5.4%
(2)Financial Services--77.3%
(3)Sovereign/Regional Government Obligations--Agency--9.1%
(4)Petroleum Company--4.8%
(5)Financial Company--3.7%
++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 December 31, 1999.
++++Forward foreign exchange contracts as of December 31, 1999 were
as follows:
Unrealized
Expiration Appreciation
Foreign Currency Sold Date (Depreciation)
C$ 9,184,918 January 2000 $ (144,912)
EURO 3,250,000 January 2000 8,645
EURO 1,200,000 February 2000 81,540
Pound Sterling 2,229,058 January 2000 20,396
Nok 37,755,772 January 2000 78,253
NZ$ 18,588,809 January 2000 (184,680)
------------
Total Unrealized Depreciation on Forward
Foreign Exchange Contracts--Net
(US$ Commitment--$28,712,484) $ (140,758)
============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 1999
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of December 31, 1999
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$92,198,448) $ 91,257,654
Options purchased, at value (premiums paid--$50,622) 11,487
Cash 288,797
Foreign cash 2,313,027
Receivables:
Interest $ 1,827,207
Capital shares sold 70,899
Forward foreign exchange contracts 258 1,898,364
-------------
Prepaid registration fees 167,731
-------------
Total assets 95,937,060
-------------
Liabilities: Unrealized depreciation on forward foreign exchange contracts 140,758
Payables:
Dividends to shareholders 275,177
Capital shares redeemed 195,024
Distributor 59,123
Investment adviser 44,377 573,701
-------------
Accrued expenses and other liabilities 4,192,337
-------------
Total liabilities 4,906,796
-------------
Net Assets: Net assets $ 91,030,264
=============
Net Assets Class A Shares of Common Stock, $.10 par value,
Consist of: 1,000,000,000 shares authorized $ 769
Class B Shares of Common Stock, $.10 par value,
1,000,000,000 shares authorized 1,079,872
Class C Shares of Common Stock, $.10 par value,
300,000,000 shares authorized 181
Class D Shares of Common Stock, $.10 par value,
300,000,000 shares authorized 102,282
Paid-in capital in excess of par 105,510,347
Accumulated realized capital losses on investments
and foreign currency transactions--net (14,539,128)
Unrealized depreciation on investments and foreign
currency transactions--net (1,124,059)
-------------
Net assets $ 91,030,264
=============
Net Asset Class A--Based on net assets of $60,177 and 7,685
Value: shares outstanding $ 7.83
=============
Class B--Based on net assets of $83,085,019 and 10,798,717
shares outstanding $ 7.69
=============
Class C--Based on net assets of $13,728 and 1,810 shares
outstanding $ 7.58
=============
Class D--Based on net assets of $7,871,340 and 1,022,819
shares outstanding $ 7.70
=============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Year Ended December 31, 1999
<S> <S> <C> <C>
Investment Income: Interest and discount earned $ 6,457,590
Expenses: Account maintenance and distribution fees--Class B $ 729,431
Investment advisory fees 583,841
Transfer agent fees--Class B 243,749
Accounting services 103,742
Professional fees 88,435
Registration fees 73,379
Printing and shareholder reports 64,552
Directors' fees and expenses 45,481
Custodian fees 22,212
Account maintenance fees--Class D 22,176
Transfer agent fees--Class D 18,022
Account maintenance and distribution fees--Class C 87
Transfer agent fees--Class C 42
Pricing fees 34
Transfer agent fees--Class A 29
Other 6,422
-------------
Total expenses before reimbursement 2,001,634
Reimbursement of expenses (20,942)
-------------
Total expenses after reimbursement 1,980,692
-------------
Investment income--net 4,476,898
-------------
Realized & Realized gain (loss) from:
Unrealized Gain Investments--net (114,538)
(Loss) on Foreign currency transactions--net 854,395 739,857
Investments & -------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions--Net: Investments--net (756,476)
Foreign currency transactions--net (393,451) (1,149,927)
------------- -------------
Net realized and unrealized loss on
investments and foreign currency transactions (410,070)
-------------
Net Increase in Net Assets Resulting from Operations $ 4,066,828
=============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 1999
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Year Ended
December 31,
Increase (Decrease) in Net Assets: 1999 1998
<S> <S> <C> <C>
Operations: Investment income--net $ 4,476,898 $ 6,025,113
Realized gain (loss) on investments and foreign
currency transactions--net 739,857 (193,436)
Change in unrealized appreciation/depreciation on investments
and foreign currency transactions--net (1,149,927) 540,945
------------- -------------
Net increase in net assets resulting from operations 4,066,828 6,372,622
------------- -------------
Dividends & Investment income--net:
Distributions to Class A (673) (431)
Shareholders: Class B (4,056,637) (5,311,497)
Class C (439) (1,613)
Class D (419,149) (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 (4,476,898) (6,025,113)
------------- -------------
Capital Share Net decrease in net assets derived from capital
Transactions: share transactions (29,537,953) (53,051,958)
------------- -------------
Net Assets: Total decrease in net assets (29,948,023) (52,704,449)
Beginning of year 120,978,287 173,682,736
------------- -------------
End of year $ 91,030,264 $ 120,978,287
============= =============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Class A
For the
Period For the
The following per share data and ratios have been derived Nov. 1, Year
from information provided in the financial statements. 1995 to Ended
For the Year Ended 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,
Operating beginning of period $ 7.80 $ 7.76 $ 7.89 $ 7.91 $ 7.93 $ 8.11
Performance: -------- -------- -------- -------- -------- --------
Investment income--net .39 .38 .42 .54 .09 .49
Realized and unrealized gain
(loss) on investments and foreign
currency transactions--net .03 .04 (.13) (.06) (.02) (.12)
-------- -------- -------- -------- -------- --------
Total from investment operations .42 .42 .29 .48 .07 .37
-------- -------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.39) (.37) (.39) (.44) (.09) (.27)
Return of capital--net -- (.01) (.03) (.06) -- (.28)
-------- -------- -------- -------- -------- --------
Total dividends and
distributions (.39) (.38) (.42) (.50) (.09) (.55)
-------- -------- -------- -------- -------- --------
Net asset value,
end of period $ 7.83 $ 7.80 $ 7.76 $ 7.89 $ 7.91 $ 7.93
======== ======== ======== ======== ======== ========
Total Investment Based on net asset
Return:** value per share 5.51% 5.49% 3.77% 6.29% .92%+++ 4.62%
======== ======== ======== ======== ======== ========
Ratios to Average Expenses, net of reimbursement 1.13% -- -- -- -- --
Net Assets: ======== ======== ======== ======== ======== ========
Expenses 1.14% .84% .76% .95% 1.02%* .96%
======== ======== ======== ======== ======== ========
Investment income--net 4.78% 4.75% 5.39% 6.45% 6.91%* 6.75%
======== ======== ======== ======== ======== ========
Supplemental Net assets, end of period
Data: (in thousands) $ 60 $ 7 $ 18 $ 3 $ 75 $ 66
======== ======== ======== ======== ======== ========
Portfolio turnover 67.22% 174.18% 287.81% 349.34% 25.09% 312.13%
======== ======== ======== ======== ======== ========
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 1999
<TABLE>
FINANCIAL HIGHLIGHTS (concluded)
<CAPTION>
Class B
For the
Period For the
The following per share data and ratios have been derived Nov. 1, Year
from information provided in the financial statements. 1995 to Ended
For the Year Ended 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,
Operating beginning of period $ 7.72 $ 7.69 $ 7.81 $ 7.90 $ 7.93 $ 8.10
Performance: -------- -------- -------- -------- -------- --------
Investment income--net .32 .31 .35 .44 .08 .47
Realized and unrealized gain
(loss) on investments and foreign
currency transactions--net (.03) .03 (.12) (.09) (.03) (.15)
-------- -------- -------- -------- -------- --------
Total from investment operations .29 .34 .23 .35 .05 .32
-------- -------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.32) (.30) (.32) (.38) (.08) (.24)
Return of capital--net -- (.01) (.03) (.06) -- (.25)
-------- -------- -------- -------- -------- --------
Total dividends and
distributions (.32) (.31) (.35) (.44) (.08) (.49)
-------- -------- -------- -------- -------- --------
Net asset value,
end of period $ 7.69 $ 7.72 $ 7.69 $ 7.81 $ 7.90 $ 7.93
======== ======== ======== ======== ======== ========
Total Investment Based on net asset value
Return:** per share 3.87% 4.52% 3.08% 4.52% .66%+++ 3.96%
======== ======== ======== ======== ======== ========
Ratios to Average Expenses, net of reimbursement 1.91% -- -- -- -- --
Net Assets: ======== ======== ======== ======== ======== ========
Expenses 1.93% 1.65% 1.62% 1.74% 1.80%* 1.73%
======== ======== ======== ======== ======== ========
Investment income--net 4.17% 3.99% 4.59% 5.62% 6.13%* 5.95%
======== ======== ======== ======== ======== ========
Supplemental Net assets, end of period
Data: (in thousands) $ 83,085 $110,989 $160,096 $239,419 $376,049 $398,136
======== ======== ======== ======== ======== ========
Portfolio turnover 67.22% 174.18% 287.81% 349.34% 25.09% 312.13%
======== ======== ======== ======== ======== ========
<CAPTION>
Class C
For the
Period For the
The following per share data and ratios have been derived Nov. 1, Year
from information provided in the financial statements. 1995 to Ended
For the Year Ended 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,
Operating beginning of period $ 7.61 $ 7.58 $ 7.67 $ 7.72 $ 7.74 $ 8.10
Performance: -------- -------- -------- -------- -------- --------
Investment income--net .30 .29 .35 .38 .08 .35
Realized and unrealized gain
(loss) on investments and foreign
currency transactions--net (.03) .03 (.09) (.01) (.02) (.28)
-------- -------- -------- -------- -------- --------
Total from investment operations .27 .32 .26 .37 .06 .07
-------- -------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.30) (.28) (.32) (.37) (.08) (.21)
Return of capital--net -- (.01) (.03) (.05) -- (.22)
-------- -------- -------- -------- -------- --------
Total dividends and
distributions (.30) (.29) (.35) (.42) (.08) (.43)
-------- -------- -------- -------- -------- --------
Net asset value,
end of period $ 7.58 $ 7.61 $ 7.58 $ 7.67 $ 7.72 $ 7.74
======== ======== ======== ======== ======== ========
Total Investment Based on net asset value
Return:** per share 3.64% 4.37% 3.42% 4.93% .78%+++ .89%
======== ======== ======== ======== ======== ========
Ratios to Average Expenses, net of reimbursement 2.08% -- -- -- -- --
Net Assets: ======== ======== ======== ======== ======== ========
Expenses 2.10% 1.76% 1.60% 1.73% 1.83%* 1.83%
======== ======== ======== ======== ======== ========
Investment income--net 4.01% 3.94% 4.46% 5.23% 6.09%* 5.99%
======== ======== ======== ======== ======== ========
Supplemental Net assets, end of period
Data: (in thousands) $ 14 $ 17 $ 344 $ 155 $ 103 $ 109
======== ======== ======== ======== ======== ========
Portfolio turnover 67.22% 174.18% 287.81% 349.34% 25.09% 312.13%
======== ======== ======== ======== ======== ========
<CAPTION>
Class D
For the
Period For the
The following per share data and ratios have been derived Nov. 1, Year
from information provided in the financial statements. 1995 to Ended
For the Year Ended 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>
Per Share Net asset value,
Operating beginning of period $ 7.72 $ 7.70 $ 7.81 $ 7.90 $ 7.93 $ 8.11
Performance: -------- -------- -------- -------- -------- --------
Investment income--net .37 .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 .35 .37 .29 .39 .06 .35
-------- -------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.37) (.34) (.37) (.42) (.09) (.26)
Return of capital--net -- (.01) (.03) (.06) -- (.27)
-------- -------- -------- -------- -------- --------
Total dividends and
distributions (.37) (.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
Return:** value per share 4.57% 4.96% 3.77% 5.09% .75%+++ 4.40%
======== ======== ======== ======== ======== ========
Ratios to Average Expenses, net of reimbursement 1.36% -- -- -- -- --
Net Assets: ======== ======== ======== ======== ======== ========
Expenses 1.38% 1.10% 1.08% 1.20% 1.27%* 1.20%
======== ======== ======== ======== ======== ========
Investment income--net 4.73% 4.54% 5.13% 6.13% 6.67%* 6.49%
======== ======== ======== ======== ======== ========
Supplemental Net assets, end of period
Data: (in thousands) $ 7,871 $ 9,965 $ 13,225 $ 17,948 $ 24,240 $ 26,619
======== ======== ======== ======== ======== ========
Portfolio turnover 67.22% 174.18% 287.81% 349.34% 25.09% 312.13%
======== ======== ======== ======== ======== ========
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 1999
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. 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. If the seller defaults and the fair value of the
collateral declines, liquidation of the collateral by the Fund may
be delayed or limited.
(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.
* 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 be 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: .55%
of the Fund's average daily net assets not exceeding $2 billion;
.525% of average daily net assets in excess of $2 billion but not
exceeding $4 billion; .50% of average daily net assets in excess of
$4 billion but not exceeding $6 billion; .475% of average daily net
assets in excess of $6 billion but not exceeding $10 billion; .45%
of average daily net assets in excess of $10 billion but not
exceeding $15 billion; and .425% of average daily net assets in
excess of $15 billion. For the year ended December 31, 1999, MLAM
earned fees of $583,841, of which $20,942 was voluntarily waived.
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 year
ended December 31, 1999, MLAM paid MLAM U.K. a fee of $51,587
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 .25% .50%
Class C .25% .55%
Class D .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.
Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 1999
NOTES TO FINANCIAL STATEMENTS (concluded)
For the year ended December 31, 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 $32
For the year ended December 31, 1999, MLPF&S received contingent
deferred sales charges of $39,288 and $78 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 year ended December 31, 1999 were $60,298,726 and
$20,635,571, respectively.
Net realized gains (losses) for the year ended December 31, 1999 and
net unrealized losses as of December 31, 1999 were as follows:
Realized
Gains Unrealized
(Losses) Losses
Investments:
Long-term $ (9,654) $ (551,683)
Short-term (101,071) (389,111)
Options purchased (3,813) --
------------ ------------
Total investments (114,538) (940,794)
------------ ------------
Currency transactions:
Options written 326,019 --
Options purchased (634,665) (39,135)
Forward foreign exchange
contracts 3,041,730 (140,758)
Foreign currency transactions (1,878,689) (3,372)
------------ ------------
Total currency transactions 854,395 (183,265)
------------ ------------
Total $ 739,857 $ (1,124,059)
============ ============
As of December 31, 1999, net unrealized depreciation for Federal
income tax purposes aggregated $940,794, of which $243,674 related
to appreciated securities and $1,184,468 related to depreciated
securities. At December 31, 1999, the aggregate cost of investments
for Federal income tax purposes was $92,198,448.
Transactions in options written for the year ended December 31,
1999, were as follows:
Nominal Value
Covered by Premiums
Call Options Written Written Options Received
Outstanding call options written,
beginning of year 3,850,000 $ 15,263
Options written 15,674,402 87,421
Options exercised (960,372) (3,073)
Options expired (15,309,239) (71,945)
Options closed (3,254,791) (27,666)
------------ ------------
Outstanding call options written,
end of year -- $ --
============ ============
Nominal Value
Covered by Premiums
Put Options Written Written Options Received
Outstanding put options written,
beginning of year 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 year -- $ --
============ ============
4. Capital Share Transactions:
Net decrease in net assets derived from capital share transactions
was $29,537,953 and $53,051,958, for the years ended December 31,
1999 and December 31, 1998, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Year Dollar
Ended December 31, 1999 Shares Amount
Shares sold 11,121 $ 86,990
Shares issued to shareholders in
reinvestment of dividends 49 381
------------ ------------
Total issued 11,170 87,371
Shares redeemed (4,326) (33,725)
------------ ------------
Net increase 6,844 $ 53,646
============ ============
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 Year Dollar
Ended December 31, 1999 Shares Amount
Shares sold 887,097 $ 6,869,129
Shares issued to shareholders in
reinvestment of dividends 271,086 2,087,239
------------ ------------
Total issued 1,158,183 8,956,368
Automatic conversion of shares (45,242) (348,398)
Shares redeemed (4,692,713) (36,135,499)
------------ ------------
Net decrease (3,579,772) $(27,527,529)
============ ============
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 Year Dollar
Ended December 31, 1999 Shares Amount
Shares sold 1,322 $ 10,009
Shares issued to shareholders in
reinvestment of dividends 43 329
------------ ------------
Total issued 1,365 10,338
Shares redeemed (1,815) (13,787)
------------ ------------
Net decrease (450) $ (3,449)
============ ============
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 Year Dollar
Ended December 31, 1999 Shares Amount
Shares sold 45,769 $ 355,609
Shares issued to shareholders in
reinvestment of dividends 32,399 249,526
Automatic conversion of shares 45,229 348,398
------------ ------------
Total issued 123,397 953,533
Shares redeemed (391,177) (3,014,154)
------------ ------------
Net decrease (267,780) $ (2,060,621)
============ ============
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. Capital Loss Carryforward:
At December 31, 1999, the Fund had a capital loss carryforward of
approximately $14,906,000, of which $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, $143,000 expires in
2006 and $111,000 expires in 2007. This amount will be available to
offset like amounts of any future taxable gains. Expired capital
loss carryforward in the amount of $32,232,090 has been reclassified
to paid-in capital in excess of par.
Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 1999
<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
liabilities, including the schedule of investments, of Merrill Lynch
Short-Term Global Income Fund, Inc. as of December 31, 1999, the
related statements of operations for the year then ended and changes
in net assets for each of the years in the two-year period then
ended and the financial highlights for the periods presented. These
financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at December
31, 1999 by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Merrill Lynch Short-Term Global Income Fund, Inc. as of December 31,
1999, 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 18, 2000
</AUDIT-REPORT>
IMPORTANT TAX INFORMATION (unaudited)
None of the ordinary income distributions paid monthly by Merrill
Lynch Short-Term Global Income Fund, Inc. during the fiscal year
ended December 31, 1999 qualify for the dividends received deduction
for corporations. Additionally, there were no long-term capital
gains distributions paid during the year.
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.
Listed at right are the percentages of total assets of the Fund
invested in Federal obligations as of the end of each quarter of the
fiscal year:
For the Percentage of
Quarter Ended Federal Obligations*
March 31, 1999 0.00%
June 30, 1999 15.60%
September 30, 1999 0.00%
December 31, 1999 1.63%
*For the 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 Association.
Repurchase agreements are not included in this calculation.
Of the Fund's ordinary income dividends paid during the fiscal year
ended December 31, 1999, 2.18% was attributable to Federal
obligations. In calculating the foregoing percentage, expenses of
the Fund have been allocated on a pro rata basis.
Please retain this information for your records.
