Exhibit 17(f)

MERRILL LYNCH SHORT-TERM GLOBAL INCOME FUND, INC.

Plan of Reorganization

The Board of Directors of the Fund approved an Agreement and Plan of Reorganization providing that Merrill Lynch Low Duration Fund (“Low Duration Fund”), a series of Merrill Lynch Investment Managers Funds, Inc., will acquire substantially all of the assets and assume substantially all of the liabilities of the Fund in exchange for newly issued shares of common stock of Low Duration Fund. After the completion of this transaction, the Fund will be dissolved and will terminate its registration as an investment company under the Investment Company Act of 1940, as amended.

If the Reorganization takes place, Fund stockholders will be entitled to receive the same class of shares of Low Duration Fund (i.e., Class A, Class B, Class C or Class D) as such stockholder held in the Fund immediately prior to the Reorganization. The distribution fees for Class B and Class C shares of Low Duration Fund are higher than the corresponding fees for the Fund’s shares. However, the lower total operating expense of Low Duration Fund after the Reorganization are expected to offset higher fees.

A special meeting of the stockholders of the Fund to consider the Reorganization has been called for April 25, 2002. The record date for determining the stockholders of the Fund entitled to receive notice of and to vote at such meeting is February 28, 2002. If all of the requisite approvals are obtained, it is anticipated that the Reorganization will take place in the second calendar quarter of 2002.

Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 2001

DEAR SHAREHOLDER

Fiscal Year in Review

International fixed-income yields moved lower for much of the year driven by the slowdown in US economic activity. Surprisingly, the exceptionally aggressive stance adopted by the Federal Reserve Board, as it cut interest rates throughout the year, produced only a very limited decline in long-term yields. The entire decline in bond yields was concentrated at the short end of the maturity spectrum, leading to a substantial steepening of the yield curve.

The action of the Federal Reserve Board was a dominant factor in terms of how other central banks responded. With the US leading the way, we concentrated the Fund’s assets in the United States, focusing on short-dated high-quality (AAA and AA) bonds. There was limited exposure to European, Canadian, Australian, South African and Polish bonds during the year. It was very difficult to significantly improve the Fund’s level of current income without exposure to considerable currency risks, which had the potential to undermine the increased level of income.

Given our outlook that the US dollar would strengthen against most currencies, or certainly not weaken, we adopted a very conservative approach to currency management. We maintained the Fund close to 100% exposure to the US dollar, on a currency basis for much of the year, with exposure out of the dollar being very limited because of the tendency for the US dollar to appreciate.

Despite being long duration for much of the time, performance was adversely affected by the rapid retracement in two-year — three-year US bond yields during November and December 2001. This correction reduced the level of performance that was attained previously.

For the year ended December 31, 2001, the Fund’s Class A, Class B, Class C and Class D Shares had total returns of +3.89%, +3.05%, +2.90% and +3.50%, respectively. For the year ended December 31, 2001, the Fund’s unmanaged benchmarks, the Salomon Brothers World Government One — Three year Bond Index and the Merrill Lynch Global Government Bond Index had total returns of +6.31% and +2.00%, respectively. The Fund also modestly underperformed the unmanaged Salomon Smith Barney Three-Month Eurodeposit Index (in US dollar terms), which had a return of +4.41% for the same 12-month period. (Fund results shown do not reflect sales charges and would be lower if sales charges were included. Complete performance information can be found on pages 5 — 7 of this report.)

In addition, from at least 1998 and continuing until 2001, the Fund benefited from certain foreign exchange transactions that positively affected the Fund’s performance. For the three-year period ended December 31, 2001, the impact of these foreign exchange transactions on the Fund’s performance was an approximate aggregate increase of +3.55% for Class A Shares, +3.66% for Class B Shares, +3.72% for Class C Shares and +3.78% for Class D Shares. It is not expected that foreign exchange transactions will benefit the Fund to this extent in the future.

Market Review
North America

Throughout the period, the Federal Reserve Board continued its policy of reducing interest rates, reacting to the slowdown in economic activity and the shocking events of September 11, 2001. During the last six months, three-month interest rates were reduced from 3.5% to 1.75%, the lowest level in 40 years. With third-quarter gross domestic product growth shrinking 1.3%, consumer-spending contracting and unemployment rising to 5.7%, US Government officials obviously were concerned with averting a prolonged recession. As a result of the acceleration in easing of monetary policy by the Federal Reserve Board, US two-year yields fell from 4.25% at the start of the third quarter of 2001, to a low point of 2.3% in November, before correcting to 3.02% at the end of December 2001.

Europe

In the Eurozone, the European Central Bank (ECB) followed the Federal Reserve Board, although its actions throughout the year were somewhat harder to predict. Growth in Europe was adversely affected by events in the United States, but at the same time inflation remained

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Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 2001

stubbornly high, only peaking and turning lower in the second half of 2001. Interest rates were reduced from 4.5% to 3.25%, as the consumer price index fell from 3.4% to 2.1% and as Eurozone growth fell to 1.3% in the third quarter. Much of the inflationary decline was because of falling energy prices, while gross domestic product was affected by the poor performance of the German economy. German government two-year yields fell and rose in line with those of the United States, although the magnitude was smaller; 4.35% at the end of the second quarter of 2001, down to 2.96%, closing the year at 3.62%.

Pacific Basin

The Japanese yield curve steepened, with weakness occurring at the long end of the curve. The Japanese market differed from other major markets as it suffered from very little volatility and a relatively small rise in yields during the period. The last six months was dominated by concerns about future issuance and a breach in Prime Minister Koizumi’s promised debt cap of 30 trillion yen. These fears diminished to some extent in December 2001 when it was announced that the “shadow budget” would be cut by 17.7% in 2002, the lowest level seen in 13 years. At the beginning of December, Moody’s Investors Service downgraded Japanese sovereign debt from Aa2 to Aa3, following downgrades by Standard & Poor’s, Inc. and Fitch, Inc. from AA+ to AA at the end of November 2001. Therefore, Japanese two-year government yields were held in a 0.06% — 0.16% range.

The big story of the last six months in the currency markets was the yen. After appreciating to YEN 115.83 at the time of the September crisis, it weakened to YEN 132 at year end, a decline of 13.9%. Much of this decline took place once the currency broke through the technical barrier of YEN 126 in early December, with the Japanese authorities tacitly condoning a weaker currency in order to boost exports. This move helped the euro/yen to strengthen, exceeding its highs earlier in the year of 113.69, to close at 117.14. However, the euro struggled against the dollar through the year and was confined to a trading range of 0.88 - 0.92 much of the time.

Economic Outlook

The degree to which the Federal Reserve Board eased interest rates throughout the year exceeded all market forecasts. With the Federal Funds rate at 1.75%, investors currently do not believe there is further need or chance that interest rates will fall further. On a notional basis this is understandable, but should core inflation fall, then the Federal Reserve Board could reasonably target a real Federal Funds rate of zero, and in a deflationary environment, a Federal Funds rate as low as 0.5% is possible.

However, our preferred outlook is that the economic recovery is building and that the Federal Reserve Board might cut interest rates once more, but this will not allow US bonds to rally significantly. We expect the spread between cash rates and two-year bonds will hold toward current levels, as investors anticipate a turn in Federal Reserve Board policy later in 2002.

Turning to Europe, we believe inflation is likely to fall further, as a result of base effects and falling energy prices. This should provide room for the ECB to cut interest rates in response to sluggish growth. Finally, we see no change in policy from the Bank of Japan, which means the risk is toward a steeper yield curve should the supply of bonds exceed the stated cap.

Currency Outlook

The market expectation for much of last year was one of euro strength and yen weakness and half of this proved to be correct with the yen depreciating. Expectations are similarly biased this year. We believe that the Japanese authorities would like to see the yen weaken further relative to the US dollar, providing greater scope for exporters. The outlook regarding the euro is more mixed. Its performance will be determined more by the development of the US economy. A stronger-than-expected recovery will lead to a strong dollar and, conversely, to a weak euro. Thus, in general, we favor dollar strength.

Investment Outlook

Given the Fund’s objective to provide a high level of current income and since our outlook is for little change in US monetary policy for the first

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Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 2001

half of 2002, we are maintaining positions in high-quality, short-term securities. However, the issue of contention is that even though short-dated US bonds appear attractive on a relative yield basis, the market will be subject to a high degree of volatility. With the medium-term outlook for the US dollar to appreciate, currency exposures within the Fund will, for the majority of the time, be fully hedged back to the US dollar. We will continue to actively pursue opportunities to reduce our hedging costs, while seeking to maintain stability in the Fund’s net asset value.

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
President and Director

Ian Frost
Senior Vice President and
Portfolio Manager

February 7, 2002

The Fund’s transfer agency fee schedule has been amended. Under the revised schedule, the fees payable to Financial Data Services, Inc., the transfer agent for the Fund, now range from $16 to $23 per shareholder account (depending upon the level of service required) or 0.10%of account assets for certain accounts that participate in certain fee-based programs.

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Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 2001

PERFORMANCE DATA

About Fund Performance

	Investors are able to purchase shares of the Fund through the Merrill Lynch Select PricingSM 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. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 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. The Fund’s Investment Adviser voluntarily waived a portion of its management fee. Without such waiver, the Fund’s performance would have been lower.

Recent Performance Results*

10 Year/

6-Month

12-Month

Since Inception

Standardized

As of December 31, 2001

Total Return

Total Return

Total Return

30-Day Yield

ML Short-Term Global Income Fund, Inc. Class A Shares

+0.88

%

+3.89

%

+45.29

%

1.41

%

ML Short-Term Global Income Fund, Inc. Class B Shares

+0.45

+3.05

+35.57

0.62

ML Short-Term Global Income Fund, Inc. Class C Shares

+0.43

+2.90

+31.18

0.62

ML Short-Term Global Income Fund, Inc. Class D Shares

+0.61

+3.50

+42.99

1.17

* 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 ten-year/since inception periods are from 10/21/94 for Class A & Class C Shares and ten years for Class B & Class D Shares, respectively.

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Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 2001

PERFORMANCE DATA (concluded)

TOTAL RETURN BASED ON A $10,000 INVESTMENT

*	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 12/31/91.

Past performance is not indicative of future results.

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Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 2001

Average Annual Total Return

	% Return Without			% Return With
	Sales Charge			Sales Charge**
Class A Shares*
One Year Ended 12/31/01		+3.89	%		-0.26	%
Five Years Ended 12/31/01		+5.27			+4.42
Inception (10/21/94) through 12/31/01		+5.33			+4.73

*	Maximum sales charge is 4%.
**	Assuming maximum sales charge.

	% Return			% Return
	Without CDSC			With CDSC**
Class B Shares*
One Year Ended 12/31/01		+3.05	%		-0.95	%
Five Years Ended 12/31/01		+4.23			+4.23
Ten Years Ended 12/31/01		+3.09			+3.09

*	Maximum contingent deferred sales charge is 4% and is reduced to 0% after four years.
**	Assuming payment of applicable contingent deferred sales charge.

	% Return			% Return
	Without CDSC			With CDSC**
Class C Shares*
One Year Ended 12/31/01		+2.90	%		+1.90	%
Five Years Ended 12/31/01		+4.22			+4.22
Inception (10/21/94) through 12/31/01		+3.84			+3.84

*	Maximum contingent deferred sales charge is 1% and is reduced to 0% after one year.
**	Assuming payment of applicable contingent deferred sales charge.

	% Return Without			% Return With
	Sales Charge			Sales Charge**
Class D Shares*
One Year Ended 12/31/01		+3.50	%		-0.64	%
Five Years Ended 12/31/01		+4.80			+3.95
Ten Years Ended 12/31/01		+3.64			+3.22

*	Maximum sales charge is 4%.
**	Assuming maximum sales charge.

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Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 2001

SCHEDULE OF INVESTMENTS (in US dollars)

	Face		Maturity			Interest						Percent of
COUNTRY	Amount		Date		Issue	Rate*				Value		Net Assets
New Zealand	NZ$	3,500,000		3/15/2002	Toyota Finance of New Zealand (2)		6.25	%		$	1,460,927		2.3	%
					Total Investments in New Zealand (Cost—$1,502,611)						1,460,927		2.3
South Africa	ZAR	5,630,000		1/22/2002	International Bank for Reconstruction and Development (2)		16.00				470,770		0.7
					Total Investments in South Africa (Cost—$767,241)						470,770		0.7
United States	US$	3,000,000		2/26/2002	Asian Development Bank (2)		5.25				3,016,020		4.6
		3,000,000		2/28/2002	Autobahn Schnell (3)		7.375				3,026,970		4.7
		3,000,000		9/26/2002	Barclays Bank PLC (2)		2.62				3,000,000		4.6
		3,000,000		6/24/2002	Bayerische Landesbank Girozentrale (2)		1.89				2,975,790		4.6
		1,282,000		7/02/2002	Beta Finance Corp. (4)		6.625				1,301,615		2.0
		3,000,000		9/17/2002	Council of Europe (2)		6.375				3,090,120		4.8
		5,000,000		2/11/2002	Dexia Municipal Agency (3)		3.50				4,990,700		7.7
		6,450,000		2/13/2004	Fannie Mae (3)		5.125				6,670,719		10.3
		2,325,000		10/04/2002	General Electric Capital Corp. (4)		6.50				2,398,621		3.7
		3,000,000		3/01/2002	Halifax Corporation (4)		4.75				2,992,020		4.6
		3,000,000		12/04/2002	International Bank for Reconstruction and Development (2)		6.00				3,095,790		4.8
		3,360,000		3/25/2002	Kingdom of Belgium (1)		6.50				3,394,272		5.2
		1,668,000		12/12/2002	Landesbank Baden-Wuerttemberg (2)		6.00				1,720,590		2.7
		3,500,000		3/19/2002	Lloyd (2)		3.80				3,500,000		5.4
		5,000,000		3/11/2002	Nederlandse Waterschapbs (3)		1.90				4,984,400		7.7
		3,000,000		12/09/2002	United Kingdom (1)		7.25				3,134,265		4.8
					Total Investments in the United States (Cost—$53,165,308)						53,291,892		82.2
	Total Investments (Cost—$55,435,160)										55,223,589		85.2
	Unrealized Appreciation on Forward Foreign Exchange Contracts**										92,354		0.1
	Other Assets Less Liabilities										9,514,527		14.7
	Net Assets								$		64,830,470		100.0%

         Corresponding industry groups for securities (percent of net assets):

(1)	Sovereign Government Obligations—10.0%.
(2)	Financial Services—34.5%.
(3)	Sovereign/Regional Government Obligations—Agency—30.4%.
(4)	Financial Company—10.3%.
*	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, 2001.
**	Forward foreign exchange contracts as of December 31, 2001 were as follows:

		Unrealized
Foreign	Settlement	Appreciation
Currency Sold	Date	(Depreciation)
NZ$        3,500,000	January 2002	$	(9,485	)
ZAR       6,000,000	January 2002		101,839
Total Unrealized Appreciation on Forward Foreign Exchange Contracts—Net (US$ Commitment—$2,048,561)		$	92,354

See Notes to Financial Statements.

8

STATEMENT OF ASSETS AND LIABILITIES

As of December 31, 2001
Assets:
	Investments, at value (identified cost—$55,435,160)					$	55,223,589
	Unrealized appreciation on forward foreign exchange contracts						92,354
	Cash						8,854,368
	Interest receivable						979,622
	Prepaid fees and other assets						118,533
	Total assets						65,268,466
Liabilities:
	Payables:
		Capital shares redeemed	$	260,508
		Dividends to shareholders		40,442
		Investment adviser		26,944
		Distributor		17,676			345,570
	Accrued expenses and other liabilities						92,426
	Total liabilities						437,996
Net Assets:
	Net assets					$	64,830,470
Net Assets Consist of:
	Class A Shares of Common Stock, $.10 par value, 1,000,000,000 shares authorized					$	3,709
	Class B Shares of Common Stock, $.10 par value, 1,000,000,000 shares authorized						121,629
	Class C Shares of Common Stock, $.10 par value, 300,000,000 shares authorized						5,873
	Class D Shares of Common Stock, $.10 par value, 300,000,000 shares authorized						695,439
	Paid-in capital in excess of par						67,903,827
	Undistributed investment income—net		$	753,748
	Accumulated realized capital losses on investments and foreign currency transactions—net			(4,506,196	)
	Unrealized depreciation on investments and foreign currency transactions—net			(147,559	)
	Total accumulated losses—net						(3,900,007	)
	Net assets					$	64,830,470
Net Asset Value:
	Class A—Based on net assets of $296,587 and 37,094 shares outstanding					$	8.00
	Class B—Based on net assets of $9,534,544 and 1,216,287 shares outstanding					$	7.84
	Class C—Based on net assets of $453,846 and 58,730 shares outstanding					$	7.73
	Class D—Based on net assets of $54,545,493 and 6,954,388 shares outstanding					$	7.84

See Notes to Financial Statements.

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Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 2001

STATEMENT OF OPERATIONS

For the Year Ended December 31, 2001
Investment Income:
	Interest (net of $2,406 foreign withholding tax)					$	3,388,472
Expenses:
	Investment advisory fees		$	384,016
	Account maintenance and distribution fees—Class B			162,377
	Transfer agent fees—Class D			131,202
	Account maintenance fees—Class D			118,785
	Professional fees			109,259
	Accounting services			100,943
	Transfer agent fees—Class B			70,861
	Registration fees			68,680
	Printing and shareholder reports			52,103
	Custodian fees			20,475
	Directors’ fees and expenses			18,694
	Account maintenance and distribution fees—Class C			2,576
	Pricing fees			2,306
	Transfer agent fees—Class C			1,027
	Transfer agent fees—Class A			908
	Other			15,227
	Total expenses before reimbursement			1,259,439
	Reimbursement of expenses			(34,911	)
	Total expenses after reimbursement						1,224,528
	Investment income—net						2,163,944
Realized & Unrealized Gain (Loss) on Investments & Foreign Currency Transactions—Net:
	Realized gain (loss) on:
		Investments—net		548,120
		Foreign currency transactions—net		(1,221,030	)		(672,910	)
	Change in unrealized appreciation/depreciation on:
		Investments—net		(246,473	)
		Foreign currency transactions—net		1,118,703			872,230
	Net Increase in Net Assets Resulting from Operations					$	2,363,264

See Notes to Financial Statements.

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Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 2001

STATEMENTS OF CHANGES IN NET ASSETS

			For the Year Ended
			December 31,
Increase (Decrease) in Net Assets:			2001			2000
Operations:
	Investment income—net		$	2,163,944		$	3,976,215
	Realized gain (loss) on investments and foreign currency transactions—net			(672,910	)		1,199,963
	Change in unrealized appreciation/depreciation on investments and foreign currency transactions—net			872,230			95,268
	Net increase in net assets resulting from operations			2,363,264			5,271,446
Dividends to Shareholders:
	Investment income—net:
		Class A		(12,042	)		(3,574	)
		Class B		(669,549	)		(3,102,026	)
		Class C		(7,715	)		(3,539	)
		Class D		(1,525,580	)		(867,076	)
	Net decrease in net assets resulting from dividends to shareholders			(2,214,886	)		(3,976,215	)
Capital Share Transactions:
	Net decrease in net assets derived from capital share transactions			(8,464,615	)		(19,178,788	)
Net Assets:
	Total decrease in net assets			(8,316,237	)		(17,883,557	)
	Beginning of year			73,146,707			91,030,264
	End of year*		$	64,830,470		$	73,146,707
	*Undistributed investment income—net		$	753,748			—

See Notes to Financial Statements.

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Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 2001

FINANCIAL HIGHLIGHTS

The following per share data and ratios			Class A
have been derived from information
provided in the financial statements.			For the Year Ended December 31,
Increase (Decrease) in Net Asset Value:			2001			2000			1999			1998			1997
Per Share Operating Performance:
	Net asset value, beginning of year		$	7.98		$	7.83		$	7.80		$	7.76		$	7.89
	Investment income—net			.27			.44			.39			.38			.42
	Realized and unrealized gain (loss) on investments and foreign currency transactions—net			.03			.15			.03			.04			(.13	)
	Total from investment operations			.30			.59			.42			.42			.29
	Less dividends:
		Investment income—net		(.28	)		(.44	)		(.39	)		(.37	)		(.39	)
		Return of capital—net		—			—			—			(.01	)		(.03	)
	Total dividends			(.28	)		(.44	)		(.39	)		(.38	)		(.42	)
	Net asset value, end of year		$	8.00		$	7.98		$	7.83		$	7.80		$	7.76
Total Investment Return:*
	Based on net asset value per share			3.89	%		7.77	%		5.51	%		5.49	%		3.77	%
Ratios to Average Net Assets:
	Expenses, net of reimbursement			1.33	%		1.18	%		1.13	%		—			—
	Expenses			1.38	%		1.23	%		1.14	%		.84	%		.76	%
	Investment income—net			3.52	%		5.52	%		4.78	%		4.75	%		5.39	%
Supplemental Data:
	Net assets, end of year (in thousands)		$	297		$	202		$	60		$	7		$	18
	Portfolio turnover			268.11	%		79.69	%		67.22	%		174.18	%		287.81	%

* Total investment returns exclude the effects of sales charges.

See Notes to Financial Statements.

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Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 2001

FINANCIAL HIGHLIGHTS (continued)

The following per share data and ratios			Class B
have been derived from information
provided in the financial statements.			For the Year Ended December 31,
Increase (Decrease) in Net Asset Value:			2001			2000			1999			1998			1997
Per Share Operating Performance:
	Net asset value, beginning of year		$	7.82		$	7.69		$	7.72		$	7.69		$	7.81
	Investment income—net			.21			.37			.32			.31			.35
	Realized and unrealized gain (loss) on investments and foreign currency transactions—net			.03			.13			(.03	)		.03			(.12	)
	Total from investment operations			.24			.50			.29			.34			.23
	Less dividends:
		Investment income—net		(.22	)		(.37	)		(.32	)		(.30	)		(.32	)
		Return of capital—net		—			—			—			(.01	)		(.03	)
	Total dividends			(.22	)		(.37	)		(.32	)		(.31	)		(.35	)
	Net asset value, end of year		$	7.84		$	7.82		$	7.69		$	7.72		$	7.69
Total Investment Return:*
	Based on net asset value per share			3.05	%		6.68	%		3.87	%		4.52	%		3.08	%
Ratios to Average Net Assets:
	Expenses, net of reimbursement			2.11	%		1.94	%		1.91	%		—			—
	Expenses			2.16	%		1.99	%		1.93	%		1.65	%		1.62	%
	Investment income—net			3.02	%		4.82	%		4.17	%		3.99	%		4.59	%
Supplemental Data:
	Net assets, end of year (in thousands)		$	9,534		$	38,940		$	83,085		$	110,989		$	160,096
	Portfolio turnover			268.11	%		79.69	%		67.22	%		174.18	%		287.81	%

* Total investment returns exclude the effects of sales charges.

See Notes to Financial Statements.

13

Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 2001

FINANCIAL HIGHLIGHTS (continued)

The following per share data and ratios				Class C
have been derived from information
provided in the financial statements.				For the Year Ended December 31,
Increase (Decrease) in Net Asset Value:				2001			2000			1999			1998			1997
Per Share Operating Performance:
		Net asset value, beginning of year		$	7.72		$	7.58		$	7.61		$	7.58		$	7.67
		Investment income—net			.22			.36			.30			.29			.35
		Realized and unrealized gain (loss) on investments and foreign currency transactions—net			.01			.14			(.03	)		.03			(.09	)
		Total from investment operations			.23			.50			.27			.32			.26
		Less dividends:
			Investment income—net		(.22	)		(.36	)		(.30	)		(.28	)		(.32	)
			Return of capital—net		—			—			—			(.01	)		(.03	)
	Total dividends				(.22	)		(.36	)		(.30	)		(.29	)		(.35	)
	Net asset value, end of year			$	7.73		$	7.72		$	7.58		$	7.61		$	7.58
Total Investment Return:*
		Based on net asset value per share			2.90	%		6.81	%		3.64	%		4.37	%		3.42	%
Ratios to Average Net Assets:
		Expenses, net of reimbursement			2.20	%		1.98	%		2.08	%		—			—
		Expenses			2.25	%		2.03	%		2.10	%		1.76	%		1.60	%
		Investment income—net			2.33	%		4.79	%		4.01	%		3.94	%		4.46	%
Supplemental Data:
		Net assets, end of year (in thousands)		$	454		$	48		$	14		$	17		$	344
		Portfolio turnover			268.11	%		79.69	%		67.22	%		174.18	%		287.81	%

* Total investment returns exclude the effects of sales charges.

See Notes to Financial Statements.

14

Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 2001

FINANCIAL HIGHLIGHTS (concluded)

The following per share data and ratios			Class D
have been derived from information
provided in the financial statements.			For the Year Ended December 31,
Increase (Decrease) in Net Asset Value:			2001			2000			1999			1998			1997
Per Share Operating Performance:
	Net asset value, beginning of year		$	7.83		$	7.70		$	7.72		$	7.70		$	7.81
	Investment income—net			.26			.41			.37			.35			.40
	Realized and unrealized gain (loss) on investments and foreign currency transactions—net			.01			.13			(.02	)		.02			(.11	)
	Total from investment operations			.27			.54			.35			.37			.29
	Less dividends:
		Investment income—net		(.26	)		(.41	)		(.37	)		(.34	)		(.37	)
		Return of capital—net		—			—			—			(.01	)		(.03	)
	Total dividends			(.26	)		(.41	)		(.37	)		(.35	)		(.40	)
	Net asset value, end of year		$	7.84		$	7.83		$	7.70		$	7.72		$	7.70
Total Investment Return:*
	Based on net asset value per share			3.50	%		7.26	%		4.57	%		4.96	%		3.77	%
Ratios to Average Net Assets:
	Expenses, net of reimbursement			1.59	%		1.43	%		1.36	%		—			—
	Expenses			1.64	%		1.48	%		1.38	%		1.10	%		1.08	%
	Investment income—net			3.14	%		5.32	%		4.73	%		4.54	%		5.13	%
Supplemental Data:
	Net assets, end of year (in thousands)		$	54,545		$	33,957		$	7,871		$	9,965		$	13,225
	Portfolio turnover			268.11	%		79.69	%		67.22	%		174.18	%		287.81	%

* Total investment returns exclude the effects of sales charges.

See Notes to Financial Statements.

15

Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 2001

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 conformity with accounting principles generally accepted in the United States of America, 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 investment strategies to increase or decrease the level of risk to which the Fund is exposed more quickly and efficiently than transactions in other types of instruments. 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

16

Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 2001

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 payments 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). Realized gains and losses on security transactions are determined on the identified cost basis. Interest income is recognized on the accrual basis. As required, effective January 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing all premiums and discounts on debt securities. The cumulative effect of this accounting change had no impact on total net assets of the Fund, but resulted in a $9,002 reduction in cost of securities (which in return results in a corresponding $9,002 decrease in net unrealized depreciation and a corresponding $9,002 decrease in undistributed net investment income), based on securities held by the Fund as of December 31, 2000.

The effect of this change for the year ended December 31, 2001 was to decrease net investment income by $50,942, decrease net unrealized depreciation by $6,302 and decrease net realized capital losses by $53,643. The statement of changes in net assets and financial highlights for prior periods have not been restated to reflect this change in presentation.

(g)  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.

(h)  Reclassification —Accounting principles generally accepted in the United States of America require that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. Accordingly, the current year’s permanent book/tax differences of $813,692 have been reclassified between accumulated net realized capital losses and undistributed net investment income and $10,319,571 has been reclassified between paid-in capital in excess of par and undistributed net investment income. These reclassifications have no effect on net assets or net asset values per share.

2.     Investment Advisory Agreement and Transactions with Affiliates:

The Fund has entered into an Investment Advisory Agreement with Merrill Lynch Investment Managers, L.P. (“MLIM”). The general partner of MLIM 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 FAM Distributors, Inc. (“FAMD” or the “Distributor”), which is a wholly-owned subsidiary of Merrill Lynch Group, Inc.

MLIM 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, 2001, MLIM earned fees of $384,016 of which $34,911 was waived. MLIM has entered into a

17

Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 2001

NOTES TO FINANCIAL STATEMENTS (continued)

         Sub-Advisory Agreement with Merrill Lynch Asset Management U.K., Ltd. (“MLAM U.K.”), an affiliate of MLIM, pursuant to which MLIM pays MLAM U.K. a fee in an amount to be determined from time to time by MLIM and MLIM U.K. but in no event in excess of the amount that MLIM actually receives. For the year ended December 31, 2001, MLIM paid MLAM U.K. a fee of $32,293 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.

For the year ended December 31, 2001, FAMD earned underwriting discounts and MLPF&S earned dealer concessions on sales of the Fund’s Class D Shares as follows:

	FAMD		MLPF&S
Class D	$	905	$	10,959

For the year ended December 31, 2001, MLPF&S received contingent deferred sales charges of $19,231 relating to transactions in Class B Shares.

For the year ended December 31, 2001, Merrill Lynch Security Pricing Service, an affiliate of MLPF&S, earned $254 for providing security price quotations to compute the Fund’s net asset value.

Financial Data Services, Inc. (“FDS”), a wholly-owned subsidiary of ML & Co., is the Fund’s transfer agent.

Prior to January 1, 2001, FAM provided accounting services to the Fund at its cost and the Fund reimbursed FAM for these services. FAM continues to provide certain accounting services to the Fund. The Fund reimburses FAM at its cost for such services. For the year ended December 31, 2001, the Fund reimbursed FAM an aggregate of $22,952 for the above-described services. The Fund entered into an agreement with State Street Bank and Trust Company (“State Street”), effective January 1, 2001, pursuant to which State Street provides certain accounting services to the Fund. The Fund pays a fee for these services.

Certain officers and/or directors of the Fund are officers and/or directors of MLIM, PSI, FDS, FAMD, MLAM U.K., and/or ML & Co.

3.     Investments:

Purchases and sales of investments, excluding short-term securities, for the year ended December 31, 2001 were $104,155,819 and $123,594,849, respectively.

Net realized gains (losses) for the year ended December 31, 2001 and net unrealized gains (losses) as of December 31, 2001 were as follows:

		Realized			Unrealized
		Gains			Gains
		(Losses)			(Losses)
Investments:
	Long-term	$	424,051		$	(240,346	)
	Short-term		124,069			28,775
Total investments			548,120			(211,571	)
Currency transactions:
	Forward foreign exchange contracts		(23,160	)		92,354
	Foreign currency transactions		(1,197,870	)		(28,342	)
Total currency transactions			(1,221,030	)		64,012
Total		$	(672,910	)	$	(147,559	)

As of December 31, 2001, net unrealized depreciation for Federal income tax purposes aggregated $217,872, of which $139,704 related to appreciated securities and $357,576 related to depreciated securities. At December 31, 2001, the aggregate cost of investments for Federal income tax purposes was $55,441,461.

4.     Capital Share Transactions:

Net decrease in net assets derived from capital share transactions was $8,464,615 and $19,178,788 for the years ended December 31, 2001 and December 31, 2000, respectively.

18

Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 2001

NOTES TO FINANCIAL STATEMENTS (continued)

Transactions in capital shares for each class were as follows:

Class A Shares for the
Year Ended				Dollar
December 31, 2001	Shares			Amount
Shares sold		52,304		$	418,635
Shares issued to shareholders in reinvestment of dividends		1,053			8,436
Total issued		53,357			427,071
Shares redeemed		(41,617	)		(333,440	)
Net increase		11,740		$	93,631

Class A Shares for the
Year Ended				Dollar
December 31, 2000	Shares			Amount
Shares sold		226,565		$	1,780,244
Shares issued to shareholders in reinvestment of dividends		365			2,892
Total issued		226,930			1,783,136
Shares redeemed		(209,261	)		(1,642,884	)
Net increase		17,669		$	140,252

Class B Shares for the Year				Dollar
Ended December 31, 2001	Shares			Amount
Shares sold		183,617		$	1,440,656
Shares issued to shareholders in reinvestment of dividends		41,149			323,131
Total issued		224,766			1,763,787
Automatic conversion of shares		(3,437,930	)		(27,005,543	)
Shares redeemed		(547,725	)		(4,300,325	)
Net decrease		(3,760,889	)	$	(29,542,081	)

Class B Shares for the Year				Dollar
Ended December 31, 2000	Shares			Amount
Shares sold		77,505		$	598,929
Shares issued to shareholders in reinvestment of dividends		205,726			1,589,513
Total issued		283,231			2,188,442
Automatic conversion of shares		(3,742,110	)		(28,956,922	)
Shares redeemed		(2,362,662	)		(18,233,140	)
Net decrease		(5,821,541	)	$	(45,001,620	)

Class C Shares for the Year				Dollar
Ended December 31, 2001	Shares			Amount
Shares sold		54,258		$	420,301
Shares issued to shareholders in reinvestment of dividends		813			6,294
Total issued		55,071			426,595
Shares redeemed		(2,504	)		(19,432	)
Net increase		52,567		$	407,163

Class C Shares for the Year				Dollar
Ended December 31, 2000	Shares			Amount
Shares sold		14,627		$	111,183
Shares issued to shareholders in reinvestment of dividends		334			2,550
Total issued		14,961			113,733
Shares redeemed		(10,608	)		(80,950	)
Net increase		4,353		$	32,783

Class D Shares for the Year				Dollar
Ended December 31, 2001	Shares			Amount
Shares sold		75,176		$	590,403
Shares issued to shareholders in reinvestment of dividends		114,533			900,006
Automatic conversion of shares		3,434,927			27,005,543
Total issued		3,624,636			28,495,952
Shares redeemed		(1,007,789	)		(7,919,280	)
Net increase		2,616,847		$	20,576,672

Class D Shares for the Year				Dollar
Ended December 31, 2000	Shares			Amount
Shares sold		49,411		$	380,754
Shares issued to shareholders in reinvestment of dividends		70,907			549,927
Automatic conversion of shares		3,741,580			28,956,922
Total issued		3,861,898			29,887,603
Shares redeemed		(547,176	)		(4,237,806	)
Net increase		3,314,722		$	25,649,797

19

Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 2001

NOTES TO FINANCIAL STATEMENTS (concluded)

5.     Short-Term Borrowings:

The Fund, along with certain other funds managed by MLIM and its affiliates, is a party to a $1,000,000,000 credit agreement with Bank One, N.A. and certain other lenders. The Fund may borrow under the credit agreement to fund shareholder redemptions and for other lawful purposes other than for leverage. The Fund may borrow up to the maximum amount allowable under the Fund’s current prospectus and statement of additional information, subject to various other legal, regulatory or contractual limits. The Fund pays a commitment fee of  .09% per annum based on the Fund’s pro rata share of the unused portion of the credit agreement. Amounts borrowed under the credit agreement bear interest at a rate equal to, at each fund’s election, the Federal Funds rate plus .50% or a base rate as determined by Bank One, N.A. On November 30, 2001, the credit agreement was renewed for one year under the same terms. The Fund did not borrow under the credit agreement during the year ended December 31, 2001.

6.     Distribution to Shareholders:

The tax character of distributions paid during the fiscal years ended December 31, 2001 and December 31, 2000 was as follows:

		12/31/2001		12/31/2000
Distributions paid from:
	Ordinary income	$	2,214,886	$	3,976,215
Total taxable distributions		$	2,214,886	$	3,976,215

As of December 31, 2001, the components of accumulated losses on a tax basis were as follows:

Undistributed ordinary income—net	$	852,403
Undistributed long-term capital gains—net		—
Total undistributed earnings—net		852,403
Capital loss carryforward		(4,360,151)	*
Unrealized losses—net		(392,259)	**
Total accumulated losses—net	$	(3,900,007	)

*

On December 31, 2001, the Fund had a net capital loss carryforward of approximately $4,360,151, of which $1,041,863 expires in 2002; $490,361 expires in 2003; $1,015,207 expires in 2004; $1,288,726 expires in 2005; $142,956 expires in 2006; $110,946 expires in 2007 and $270,092 expires in 2008. This amount will be available to offset like amounts of any future taxable gains.

**

The difference between book-basis and tax-basis net unrealized gains (losses) is attributable primarily to the realization for tax purposes of unrealized gains (losses) on certain futures and forward foreign currency contracts, the difference between book and tax amortization methods for premiums and discounts on fixed-income securities, and the deferral of post-October capital losses for tax purposes.

7.     Reorganization Plan:

On January 24, 2002, the Fund’s Board of Directors approved a plan of reorganization, subject to shareholder approval and certain other conditions, whereby Merrill Lynch Low Duration Fund will acquire all of the assets and will assume all of the liabilities of the Fund in exchange for newly-issued shares of Merrill Lynch Low Duration Fund. The funds are registered, open-end management investment companies with similar investment objectives. Merrill Lynch Low Duration Fund is registered as diversified and is administered by Fund Asset Management, L.P., an affiliate of MLIM.

20

Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 2001

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, 2001, 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 each of the years 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 auditing standards generally accepted in the United States of America. 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, 2001 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, 2001, the results of its operations, the changes in its net assets, and the financial highlights for the respective stated periods in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP
New York, New York
February 14, 2002

21

Merrill Lynch Short-Term Global Income Fund, Inc., December 31, 2001

OFFICERS AND DIRECTORS

				Number of	Other
				Portfolios in	Director-
	Position(s)	Length		Fund Complex	ships
	Held	of Time		Overseen by	Held by
Name, Address & Age	with Fund	Served	Principal Occupation(s) During Past 5 Years	Director	Director
Interested Director
Terry K. Glenn* 800 Scudders Mill Road Plainsboro, NJ 08536 Age: 61	President and Director	1999 to present	Chairman, Americas Region since 2001, and Executive Vice President since 1983 of Fund Asset Management (“FAM”) and Merrill Lynch Investment Managers, L.P. (“MLIM”); President of FAM Distributors, Inc. (“FAMD”) since 1986 and Director thereof since 1991; Executive Vice President and Director of Princeton Services, Inc. (“Princeton Services”) since 1993; President of Princeton Administrators, L.P. since 1988; Director of Financial Data Services, Inc., since 1985.	196	None

* Mr. Glenn is a director, trustee or member of an advisory board of certain other investment companies for which FAM or MLIM acts as investment adviser. Mr. Glenn is an “interested person,” as described in the Investment Company Act, of the Fund based on his positions as Chairman (Americas Region) and Executive Vice President of FAM and MLIM; President of FAMD; Executive Vice President of Princeton Services; and President of Princeton Administrators, L.P. The Director’s term is unlimited.

				Number of	Other
				Portfolios in	Director-
	Position(s)	Length		Fund Complex	ships
	Held	of Time		Overseen by	Held by
Name, Address & Age	with Fund	Served*	Principal Occupation(s) During Past 5 Years	Director	Director
Independent Directors
Ronald W. Forbes 1400 Washington Avenue Albany, New York 12222 Age: 61	Director	1977 to present	Professor Emeritus of Finance, School of Business, University of New York at Albany since 2000; and Professor thereof from 1989 to 2000.	57	None
Cynthia A. Montgomery Harvard Business School Soldiers Field Road Boston, MA 02163 Age: 49	Director	1995 to present	Professor, Harvard Business School since 1989.	57	Unum- Provident Corporation; Newell Rubbermaid Inc.
Charles C. Reilly 9 Hampton Harbor Road Hampton Bays, NY 11946 Age: 70	Director	1990 to present	Self-employed financial consultant since 1990.	57	None
Kevin A. Ryan 127 Commonwealth Avenue Chestnut Hill, MA 02467 Age: 69	Director	1992 to present	Founder and currently Director Emeritus of The Boston University Center for the Advancement of Ethics and Character and Director thereof from 1989 to 1999; Professor from 1982 to 1999 at Boston University	57	Charter Education Partnership; Council for Ethical and Spiritual Education.
Roscoe S. Suddarth 7403 MacKenzie Court Bethesda, MD 20817 Age: 66	Director	2000 to present	Former President, Middle East Institute from 1995 to 2001.	57	None
Richard R. West Box 604 Genoa, NV 89411 Age: 63	Director	1978 to present	Professor of Finance since 1984, and currently Dean Emeritus of New York University Leonard N. Stern School of Business Administration	70	Bowne & Co., Inc.; Vornado Realty Trust; Alexander’s Inc.
Edward D. Zinbarg 5 Hardwell Road Short Hills, NJ 07078-2117 Age: 67	Director	1994 to present	Self-employed financial consultant since 1994.	57	None

* The Director’s term is unlimited.

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	Position(s)	Length
	Held	of Time
Name, Address & Age	with Fund	Served	Principal Occupation(s) During Past 5 Years
Fund Officers
Donald C. Burke P.O. Box 9011 Princeton, NJ 08543-9011 Age: 41	Vice President and Treasurer	Vice President since 1993 and Treasurer since 1999	First Vice President of FAM and MLIM since 1997 and the Treasurer thereof since 1999; Senior Vice President and Treasurer of Princeton Services since 1999; Vice President of FAMD since 1999; Vice President of FAM and MLIM from 1990 to 1997; Director of Taxation of MLIM since 1990.
Ian Frost P.O. Box 9011 Princeton, NJ 08543-9011 Age: 37	Senior President and Portfolio Manager	Vice present	2001 to Director (Global Fixed Income) of the Investment Adviser since 1998 and Portfolio Manager thereof since 1999; Fixed Income Portfolio Manager of Picktek Asset Management from 1997 to 1999; independent futures trader from 1995 to 1997.
Phillip S. Gillespie P.O. Box 9011 Princeton, NJ 08543-9011 Age: 37	Secretary	2001 to present	First Vice President of MLIM since 2001; Director of MLIM from 1999 to 2000; Vice President of MLIM in 1999; Attorney associated with the Manager and FAM from 1998 to 1999; Assistant General Counsel LGT Asset Management, Inc. from 1997 to 1998; Senior Counsel and Attorney in the Division of Investment Management and the Office of General Counsel at the U.S. Securities and Exchange Commission from 1993 to 1997.

Custodian
J.P. Morgan Chase Bank
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

Further information about the Fund’s Officers and Directors is available in the Fund’s Statement of Additional Information, which can be obtained without charge by calling 1-800-MER-FUND.

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