MERRILL LYNCH
DRAGON FUND, INC.
FUND LOGO
Quarterly Report
March 31, 1996
Officers and Directors
Arthur Zeikel, President and Director
Donald Cecil, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Edward D. Zinbarg, Director
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Senior Vice President
Donald C. Burke, Vice President
Kara W.Y. Tan Bhala, Vice President and Portfolio Manager
Gerald M. Richard, Treasurer
James W. Harshaw, Secretary
<PAGE>
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
Investing in emerging market securities involves a number of risk
factors and special considerations, including restrictions on
foreign investments and on repatriation of capital invested in
emerging markets, currency fluctuations, and potential price
volatility and less liquidity of securities traded in emerging
markets. In addition, there may be less publicly available
information about the issuers of securities, and such issuers may
not be subject to accounting, auditing and financial reporting
standards and requirements comparable to those to which US companies
are subject. Therefore, the Fund is designed as a long-term
investment for investors capable of assuming the risks of investing
in emerging markets. The Fund should be considered as a vehicle for
diversification and not as a complete investment program. Please
refer to the prospectus for details.
<PAGE>
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
Dragon Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MERRILL LYNCH DRAGON FUND, INC.
Map Depicting the Fund's Asset Allocation As a Percentage* of Net
Assets as of March 31, 1996
INDIA 0.6%
INDONESIA 6.6%
SINGAPORE 12.2%
MALAYSIA 13.0%
THAILAND 10.8%
HONG KONG 39.9%
SOUTH KOREA 4.7%
TAIWAN 0.5%
PHILIPPINES 5.3%
[FN]
*Total may not equal 100%.
<PAGE>
DEAR SHAREHOLDER
The "dragon" stock markets began 1996 on an upbeat note. Stock
markets throughout the region rose during January based on
expectations of lower US interest rates. However, as US interest
rates actually rose in February, the dragon stock markets began to
consolidate and experienced a sharp correction in March. (As defined
in Merrill Lynch Dragon Fund, Inc.'s prospectus, the dragon stock
markets consist of all the stock markets in Asia and the Pacific
Basin other than Japan, Australia and New Zealand.)
There is a widespread perception (especially among US-based
investors) that share prices of the smaller Asian stock markets are
closely tied to the price action of the 30-year US Treasury bond, a
belief which is reinforced by the pegging of many Asian currencies
to the US dollar. Although the correlation between the dragon stock
markets and the 30-year Treasury bond was very small from 1982 to
1993, over the past two years it has been increasing as a greater
number of US investors participate in these stock markets. However,
interest rate uncertainties notwithstanding, the dragon stock
markets rose 9.67% in the three months ended March 31, 1996, as
measured by the unmanaged Morgan Stanley Capital International
Combined Far East Free (Ex-Japan) Index. Merrill Lynch Dragon Fund,
Inc. underperformed this Index in the March quarter, with total
returns for Class A, Class B, Class C and Class D Shares of +7.82%,
+7.45%, +7.54% and +7.73%, respectively. (See the "Recent
Performance Results" table on page 4 of this report to shareholders.
Fund results do not reflect sales charges, and would be lower if
sales charges were included. Complete performance information,
including average annual total returns, can be found on pages 4--6
of this report to shareholders.)
Hong Kong continues to be the Fund's largest country weighting. The
Hong Kong stock market did not rise as strongly as other Asian
dragon stock markets because of concerns of higher US interest
rates. In the near term, the threat of higher interest rates is
likely to continue to hang over the Hong Kong stock market. However,
we believe that two important positive intermediate-term factors are
currently overlooked by investors. First, corporate earnings growth
is likely to be strong in 1997. Second, we expect that an economic
recovery will occur this year in The People's Republic of China, and
in turn, Hong Kong.
However, the tensions between the Republic of China (Taiwan) and
China have raised new concerns about Hong Kong's prospects as the
1997 reunification with China approaches, and caused further
declines in Hong Kong share prices. Now that Mr. Lee Teng-Lui has
been elected Taiwan's president, both countries have begun to make
some conciliatory moves, and it does not appear likely that China
will attempt a military takeover of Taiwan.
<PAGE>
Our position in Hong Kong is an overweighted one relative to several
market-weighted indexes of dragon stock markets at 39.9% of net
assets, up from 36.7% at the end of December. During the March
quarter we established a new position in convertible bonds issued by
Henderson Capital International, a property developer with projects
in China. By purchasing the company's con-vertible bonds, we
participate in the upside potential associated with a growing
Chinese economy along with the downside protection typically
associated with convertibles.
Our 13.0% position in Malaysia is an underweighted one, and down
slightly from the close of the previous quarter since we did not
commit the Fund's cash inflows to maintaining our weighting there.
We restructured our Malaysian holdings somewhat during the March
quarter, reducing our position in Malaysian International Shipping
Co. BHD (whose near-term earnings prospects are lackluster) and
investing the proceeds in our existing telecommunications
investments.
The Malaysian economy appears to be slowing (industrial production
is down slightly), although bank loan and money supply growth
continue to be high. The current account showed a surplus in
December 1995 although most recent February figures showed a
deficit. We will focus our research efforts in Malaysia in the
months ahead, and may increase positions there if share valuations
become more attractive and if it appears that the economy is cooling
down.
Economic growth continues to be positive in Singapore, one of the
few countries in the region with a current account surplus.
Investors continue to perceive Singapore as a "safe haven" among the
smaller Asian markets, since there are a number of well-managed
companies there with good returns on equity. Our 12.2% exposure is a
neutral weighting. Valuations are still attractive on a historical
basis, and 1996 earnings growth prospects appear to be sound. Our
largest investments in Singapore are in banks and real estate
companies.
Thailand has been among Asia's worst-performing stock markets as
investors anticipated that the economy was overheating. However, the
central bank has followed a prudent monetary policy since last year,
and we expect that it will take further measures to curb money
supply growth. As a result, we expect that interest rates will begin
to decline once clearer signs of an economic slowdown emerge. The
political environment has also turned more positive, with the
cabinet reshuffled and the upper house of parliament appointed with
few objections. As is the case in Malaysia, we are waiting for a
slowdown in economic growth to develop, as well as for more
attractive share valuations, before increasing investments in
Thailand. However, the choice of stocks and liquidity are poor in
Thailand, and may restrict our ability to expand our holdings from
our current position of 10.8% of net assets.
<PAGE>
We have maintained our 5.3% exposure in the Philippines, which is an
overweighted position, since we continue to believe that the country
is successfully positioning itself for a long-term economic upturn.
During the March quarter, we greatly reduced our investment in C & P
Homes, a builder of low-income housing, and purchased shares of DMCI
Holdings Inc., a construction company involved in large and
profitable infrastructure projects.
Our slight underweighting in Indonesia is virtually unchanged at
6.6% of net assets. During the quarter we added a new Indonesian
holding, P.T. Citra Marga Nusaphala Persada, a toll road developer
and operator. We also cut back on holdings in the consumer sector,
which had become slightly overvalued, in our view.
In Conclusion
As of March 31, the Fund had a 6.6% cash reserve position, which is
somewhat higher than the 5.8% cash position as of December 31, 1995,
but down from a high of nearly 10% in February 1996. We do not
foresee making any significant changes in country weightings in the
quarter ahead unless there is strong evidence of a slowdown in
Malaysia and, to a lesser extent, Thailand. However, as relative
valuations and fundamentals change among sectors and individual
companies within each country, we expect that our investments will
also shift as we seek the most attractive opportunities.
We thank you for your investment in Merrill Lynch Dragon Fund, Inc.,
and we look forward to reviewing our outlook and strategy with you
again in our next report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Kara Tan Bhala)
Kara Tan Bhala
Vice President and Portfolio Manager
April 23, 1996
<PAGE>
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 5.25% and bear no ongoing distribution or account
maintenance fees. Class A Shares are available only to eligible
investors, as detailed in the Fund's prospectus. If you were a Class
A shareholder prior to October 21, 1994, your Class A Shares were
redesignated to Class D Shares on October 21, 1994, which, in the
case of certain eligible investors, were simultaneously exchanged
for Class A Shares.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.75% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after 8 years.
* Class C Shares are subject to a distribution fee of 0.75% 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 5.25% and
an account maintenance fee of 0.25% (but no distribution fee).
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
<PAGE>
<TABLE>
Recent
Performance
Results*
<CAPTION>
12 Month 3 Month
3/31/96 12/31/95 3/31/95 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $17.24 $15.99 $14.45 +19.31% +7.82%
Class B Shares 17.17 15.98 14.38 +19.40 +7.45
Class C Shares 16.98 15.79 14.28 +18.91 +7.54
Class D Shares 17.29 16.05 14.47 +19.49 +7.73
Class A Shares--Total Return +20.65(1) +7.82
Class B Shares--Total Return +19.59(2) +7.45
Class C Shares--Total Return +19.61(3) +7.54
Class D Shares--Total Return +20.52(4) +7.73
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
(1)Percent change includes reinvestment of $0.176 per share ordinary
income dividends.
(2)Percent change includes reinvestment of $0.025 per share ordinary
income dividends.
(3)Percent change includes reinvestment of $0.091 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.136 per share ordinary
income dividends.
</TABLE>
<TABLE>
Performance
Summary--
Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $17.43 $15.05 $0.241 $0.251 -10.82%
1995 15.05 15.99 -- 0.176 + 7.44
1/1/96--3/31/96 15.99 17.24 -- -- + 7.82
------ ------
Total $0.241 Total $0.427
Cumulative total return as of 3/31/96: + 3.31%**
<PAGE>
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
include any sales charge; results would be lower if sales charge was
included.
</TABLE>
<TABLE>
Performance
Summary--
Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
5/29/92--12/31/92 $10.00 $10.13 -- $0.020 + 1.50%
1993 10.13 18.74 $0.006 0.103 +86.15
1994 18.74 15.03 0.241 0.122 -17.86
1995 15.03 15.98 -- 0.025 + 6.49
1/1/96--3/31/96 15.98 17.17 -- -- + 7.45
------ ------
Total $0.247 Total $0.270
Cumulative total return as of 3/31/96: +77.59%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
<TABLE>
Performance
Summary--
Class C Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $17.29 $14.92 $0.241 $0.229 -10.98%
1995 14.92 15.79 -- 0.091 + 6.46
1/1/96--3/31/96 15.79 16.98 -- -- + 7.54
------ ------
Total $0.241 Total $0.320
Cumulative total return as of 3/31/96: +1.91%**
<PAGE>
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
<TABLE>
Performance
Summary--
Class D Shares***
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
5/29/92--12/31/92 $10.00 $10.12 -- $0.080 + 2.02%
1993 10.12 18.77 $0.006 0.182 +87.46
1994 18.77 15.08 0.241 0.211 -17.24
1995 15.08 16.05 -- 0.136 + 7.35
1/1/96--3/31/96 16.05 17.29 -- -- + 7.73
------ ------
Total $0.247 Total $0.609
Cumulative total return as of 3/31/96: +83.04%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
include sales charges; results would be lower if sales charge was
included.
***As a result of the implementation of the Merrill Lynch Select
Pricing SM System, Class A Shares of the Fund outstanding prior to
October 21, 1994 were redesignated to Class D Shares.
</TABLE>
PERFORMANCE DATA (concluded)
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/96 +20.65% +14.32%
Inception (10/21/94) through 3/31/96 + 2.28 - 1.47
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/96 +19.59% +15.59%
Inception (5/29/92) through 3/31/96 +16.13 +15.96
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 3/31/96 +19.61% +18.61%
Inception (10/21/94) through 3/31/96 + 1.32 + 1.32
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 3/31/96 +20.52% +14.20%
Inception (5/29/92) through 3/31/96 +17.04 +15.41
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US Dollars)
<CAPTION>
Face Amount/ Percent of
COUNTRIES Industries Shares Held Long-Term Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Hong Kong Banking 1,200,000 Dao Heng Bank Group Ltd. $ 5,245,523 $ 4,965,089 0.3%
8,071,000 Guoco Group, Ltd. 35,028,436 44,456,245 2.7
4,220,006 HSBC Holdings, Ltd. 48,249,181 63,294,634 3.8
-------------- -------------- ------
88,523,140 112,715,968 6.8
Conglomerates 6,745,000 Citic Pacific Ltd. 22,796,209 26,163,693 1.6
19,488,250 First Pacific Company Limited 20,688,888 27,717,966 1.7
26,584,000 Guangdong Investment, Ltd. 13,874,520 16,842,720 1.0
US$ 3,436,000 Guangdong Investment, Ltd.,
4.50% due 10/07/1998 (b) 4,364,557 4,286,410 0.3
10,042,000 Hutchison Whampoa, Ltd. 43,438,391 63,363,020 3.9
3,537,000 Swire Pacific Ltd. 'A' 20,320,090 31,098,526 1.9
7,228,000 Swire Pacific Ltd. 'B' 9,490,519 9,906,491 0.6
-------------- -------------- ------
134,973,174 179,378,826 11.0
Electrical 9,063,000 Innovative International
Equipment Holdings Ltd. 3,948,192 2,724,525 0.2
Electronic/ 12,200,000 ASM Pacific Technology 4,026,946 11,594,259 0.7
Semiconductors
Insurance 23,683,000 National Mutual Asia, Ltd. 11,198,241 21,588,460 1.3
Leisure 6,370,000 Hong Kong & Shanghai Hotels 5,697,738 10,418,994 0.6
Packaging 14,000,000 M.C. Packaging (HK), Ltd. 6,547,529 5,249,547 0.3
Publishing & 7,600,000 South China Morning Post Holdings 4,440,430 4,962,503 0.3
Broadcasting 4,401,000 Television Broadcasts Ltd. 17,630,137 16,189,352 1.0
-------------- -------------- ------
22,070,567 21,151,855 1.3
Real Estate 9,666,000 Cheung Kong Holdings Ltd. 53,327,250 68,114,430 4.1
US$15,900,000 Henderson Capital International,
5% due 10/27/1996 (b) 17,032,175 16,814,250 1.0
4,779,739 New World Development Co., Ltd. 14,857,690 22,248,591 1.4
US$ 2,910,000 New World Development Co., Ltd.,
4.375% due 12/11/2000 (b) 3,327,755 3,091,875 0.2
6,207,100 Sun Hung Kai Properties, Ltd. 40,790,596 55,578,184 3.4
3,973,000 Wharf Holdings Ltd. 14,713,572 15,000,207 0.9
US$ 9,840,000 Wharf Holdings Ltd., 5% due
7/15/2000 (b) 9,335,976 11,463,600 0.7
-------------- -------------- ------
153,385,014 192,311,137 11.7
<PAGE>
Telecommunications 12,220,000 ABC Communications Holdings Ltd. 3,501,176 2,401,655 0.1
26,776,615 Hong Kong Telecommunications, Ltd. 49,908,972 53,490,910 3.3
-------------- -------------- ------
53,410,148 55,892,565 3.4
Utilities-- 4,851,200 China Light & Power Co., Ltd. 22,444,036 21,891,244 1.3
Electric & Gas 10,990,656 Hong Kong & China Gas Co. (The) 15,087,452 21,671,516 1.3
-------------- -------------- ------
37,531,488 43,562,760 2.6
Total Long-Term Investments
in Hong Kong 521,312,177 656,588,896 39.9
India Chemicals 472,300 Mardia Chemicals Ltd. 2,130,094 490,385 0.0
Consumer--Durables 456,000 IFB Industries Ltd. 3,998,000 1,665,508 0.1
Finance 66,210 Housing Development Finance 6,346,656 6,318,716 0.4
Pharmaceuticals 99,200 Ranbaxy Laboratories Limited 2,000,872 1,928,483 0.1
Steel Mills 2,871 Essar Steel Limited 8,186 2,685 0.0
Total Long-Term Investments in India 14,483,808 10,405,777 0.6
Indonesia Banking 1,731,500 P.T. Bank International Indonesia 7,163,359 7,297,935 0.5
Food 11,614,032 P.T. Mayorah Indah 6,796,338 8,572,617 0.5
Infrastructure 12,500,000 P.T. Citra Marga Nusaphala Persada 16,468,814 16,179,932 1.0
Miscellaneous 1,877,250 P.T. Modern Photo Film 5,624,954 10,201,573 0.6
--Consumer
Pharmaceuticals 2,213,300 P.T. Kalbe Farma 7,833,184 6,747,866 0.4
Telecommunications 143,190 P.T. Indonesian Satellite Corp.
(Indosat) (ADR)* 5,040,414 4,886,359 0.3
196,500 P.T. Telekomunikasi Indonesia (ADR)* 3,708,723 6,066,938 0.4
-------------- -------------- ------
8,749,137 10,953,297 0.7
<PAGE>
Tobacco 4,574,500 P.T. Hanjaya Mandala Sampoerna 4,200,216 47,810,082 2.9
Total Long-Term Investments in
Indonesia 56,836,002 107,763,302 6.6
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US Dollars)
<CAPTION>
Face Amount/ Percent of
COUNTRIES Industries Shares Held Long-Term Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Malaysia Banking 4,256,000 Affin Holdings BHD $ 6,646,052 $ 9,594,305 0.6%
1,507,200 Arab-Malaysian Merchant Bank BHD 7,134,948 19,968,835 1.2
3,202,000 Malayan Banking BHD 11,414,612 29,886,178 1.8
4,504,000 Public Bank BHD (Foreign) 7,039,913 12,401,515 0.8
-------------- -------------- ------
32,235,525 71,850,833 4.4
Building & 5,200,000 I.J.M. Corp. BHD 6,266,933 9,048,843 0.5
Construction
Conglomerates 6,668,000 Renong BHD 7,833,973 10,865,003 0.7
993,600 Renong BHD (Preferred) 391,104 282,931 0.0
621,000 Renong BHD (Warrants)(a) 164,410 157,184 0.0
US$ 9,025,000 Renong BHD, 2.50% due 1/15/2005 (b) 9,994,404 10,333,625 0.6
-------------- -------------- ------
18,383,891 21,638,743 1.3
Finance 938,000 Hong Leong Credit BHD 6,877,505 4,414,554 0.3
Food 1,721,700 Nestle Malaysia BHD 7,333,320 15,320,645 0.9
Leisure 4,154,000 Berjaya Sports TOTO BHD 9,941,909 12,485,822 0.8
1,281,500 Genting BHD 11,837,879 11,606,229 0.7
2,980,000 Resorts World BHD 10,407,072 16,971,327 1.0
-------------- -------------- ------
32,186,860 41,063,378 2.5
Real Estate 4,156,000 Land & General BHD 5,065,849 11,012,537 0.7
Telecommunications 4,211,000 Leader Universal Cable BHD 6,925,897 11,990,983 0.7
1,631,000 Telekom Malaysia BHD 10,798,393 15,029,583 0.9
US$10,450,000 Telekom Malaysia BHD, 4% due
10/03/2004 (b) 10,262,023 11,312,125 0.7
-------------- -------------- ------
27,986,313 38,332,691 2.3
<PAGE>
Transportation 489,333 Malaysian International
Shipping Co. BHD (Foreign) 954,661 1,383,718 0.1
Total Long-Term Investments
in Malaysia 137,290,857 214,065,942 13.0
Philippines Banking 362,400 Philippine Commercial Inter-
national Bank 3,076,660 4,160,735 0.3
Beverages 6,246,240 San Miguel Corporation 'B' 10,222,586 21,035,940 1.3
Conglomerates 1,184,183 Benpres Holdings Corp. (GDR)** 10,003,486 7,330,093 0.4
Construction 13,269,300 DMCI Holdings Inc. 8,083,825 8,632,916 0.5
International Trade 16,566,770 International Container Terminal 8,867,496 9,668,704 0.6
Real Estate 4,822,500 Ayala Land, Inc. 'B' 5,508,954 7,843,714 0.5
161,300 C & P Homes 132,597 121,916 0.0
-------------- -------------- ------
5,641,551 7,965,630 0.5
Retail 50,408,475 SM Prime Holdings 10,093,708 15,047,306 0.9
Telecommunications 37,880 Philippine Long Distance Telephone
Co. (ADR)* 2,282,813 2,017,110 0.1
Utilities-- 1,357,950 Manila Electric Co. (MERALCO) 'B' 6,429,540 12,004,839 0.7
Electric & Gas
Total Long-Term Investments in
the Philippines 64,701,665 87,863,273 5.3
Singapore Airlines 1,862,000 Singapore Airlines Ltd. (Foreign) 13,953,626 19,321,393 1.2
Automotive 1,610,000 Cycle & Carriage, Ltd. 7,464,505 18,537,313 1.1
Banking 2,534,000 Development Bank of Singapore
Ltd. (Foreign) 26,031,743 31,157,214 1.9
1,366,866 Overseas Chinese Banking Corp.
(Foreign) 8,900,801 18,360,887 1.1
2,690,704 United Overseas Bank (Foreign) 18,536,290 27,155,648 1.7
-------------- -------------- ------
53,468,834 76,673,749 4.7
Beverages 1,509,600 Fraser & Neave Ltd. 17,616,785 17,059,446 1.0
<PAGE>
Conglomerates 3,139,200 ACMA Ltd. 8,074,466 9,772,350 0.6
Publishing 1,142,400 Singapore Press Holdings Ltd.
& Broadcasting (Foreign) 11,734,325 22,815,522 1.4
Real Estate 2,085,000 City Development Ltd. 16,881,415 18,523,454 1.1
4,686,000 DBS Land Ltd. 14,497,491 17,984,648 1.1
-------------- -------------- ------
31,378,906 36,508,102 2.2
Total Long-Term Investments in
Singapore 143,691,447 200,687,875 12.2
South Korea Electronics 26,800 Samsung Electronics Co. 3,589,980 3,152,135 0.2
8,077 Samsung Electronics Co. (New Shares) 1,060,300 940,483 0.0
36,225 Samsung Electronics Co. (New Shares)
(Preferred) (GDR)** 1,528,309 1,159,206 0.1
120,199 Samsung Electronics Co.
(Preferred) (GDR)** 5,989,164 4,327,160 0.3
-------------- -------------- ------
12,167,753 9,578,984 0.6
Retail 103,804 Shinsegae Department Stores Co. 3,397,081 7,365,311 0.5
11,284 Shinsegae Department Stores Co. (New) 615,022 751,593 0.0
-------------- -------------- ------
4,012,103 8,116,904 0.5
Steel 143,600 Pohang Iron & Steel Co., Ltd. 13,187,601 11,949,532 0.7
Telecommunications 37,458 Korea Mobile Telecommunications Corp. 12,202,949 22,986,244 1.4
Utilities-- 587,680 Korean Electric & Power Corp. 19,069,823 24,519,224 1.5
Electric & Gas
Total Long-Term Investments in
South Korea 60,640,229 77,150,888 4.7
Taiwan Closed-End Funds 343,300 The R.O.C. Taiwan (ADR)* 2,904,850 3,561,738 0.2
Electronic/ 377,000 Advanced Semiconductor Engineering,
Semiconductors Inc. (GDR)** 5,892,909 4,147,000 0.3
Total Long-Term Investments in Taiwan 8,797,759 7,708,738 0.5
<PAGE>
Thailand Banking 1,597,360 Bangkok Bank Public Company Ltd.
(Foreign) 9,808,224 21,526,056 1.3
US$14,764,000 Bangkok Bank Public Company Ltd.,
3.25% due 3/03/2004 (b) 16,298,872 17,089,330 1.1
3,453,333 Industrial Finance Corp. of Thailand 5,771,637 12,592,415 0.8
884,347 Siam Commercial Bank Public Co.
(Foreign) 7,195,502 13,599,946 0.8
US$ 9,791,000 Siam Commercial Bank Public Co.,
3.25% due 1/24/2004 (b) 10,884,329 12,140,840 0.7
1,652,300 Thai Farmers Bank, Ltd. (Foreign) 15,531,720 19,384,891 1.2
-------------- -------------- ------
65,490,284 96,333,478 5.9
Financial 1,834,800 Finance One Co., Ltd. (Foreign) 12,567,383 13,744,637 0.8
Services 1,698,000 Phatra Thanakit Co., Ltd. 15,255,671 15,613,793 1.0
-------------- -------------- ------
27,823,054 29,358,430 1.8
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US Dollars)
<CAPTION>
Percent of
COUNTRIES Industries Shares Held Long-Term Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Thailand Mutual Funds 15,977,000 Ruam Pattana Fund II $ 6,993,984 $ 10,290,379 0.6%
(concluded)
Oil & Gas 1,331,500 PITT Exploration 12,867,796 16,887,832 1.0
Real Estate 936,000 Land & House Public Co. (Foreign) 7,122,664 15,433,056 0.9
Telecommunications 510,000 Advanced Information Service 7,561,746 9,783,591 0.6
Total Long-Term Investments in
Thailand 127,859,528 178,086,766 10.8
Total Long-Term Investments 1,135,613,472 1,540,321,457 93.6
Face
Amount Short-Term Securities
<S> <S> <C> <S> <C> <C> <C>
United Commercial US$31,117,000 Associates Corp. of North America,
States Paper*** 5.48% due 4/01/1996 31,107,527 31,107,527 1.9
50,000,000 Goldman Sachs Group L.P., 5.35%
due 4/25/1996 49,806,806 49,806,806 3.0
-------------- -------------- ------
80,914,333 80,914,333 4.9
<PAGE>
US Government 28,415,000 Federal National Mortgage
& Agency Association, 5.13% due 4/11/1996 28,366,410 28,366,410 1.7
Obligations***
Total Investments in Short-Term
Securities 109,280,743 109,280,743 6.6
Total Investments $1,244,894,215 1,649,602,200 100.2
==============
Liabilities in Excess of Other Assets (2,825,712) (0.2)
-------------- ------
Net Assets $1,646,776,488 100.0%
============== ======
Net Asset Value: Class A--Based on net assets of $44,686,298 and
2,592,754 shares outstanding $ 17.24
==============
Class B--Based on net assets of $1,222,956,765
and 71,205,938 shares outstanding $ 17.17
==============
Class C--Based on net assets of $62,496,556 and
3,681,097 shares outstanding $ 16.98
==============
Class D--Based on net assets of $316,636,869 and
18,317,650 shares outstanding $ 17.29
==============
<FN>
*American Depositary Receipts (ADR).
**Global Depositary Receipts (GDR).
***Commercial Paper and certain US Government & Agency Obligations
are traded on a discount basis; the interest rates shown are the
discount rates paid at the time of purchase by the Fund.
(a)Warrants entitle the Fund to purchase a predetermined number of
shares of Common Stock. The purchase price and number of shares are
subject to adjustment under certain conditions until the expiration
date.
(b)Convertible security.
</TABLE>
PORTFOLIO INFORMATION
<PAGE>
Investments
As of 3/31/96
Ten Largest Equity Holdings Percent of
Represented in the Portfolio Net Assets
Cheung Kong Holdings, Ltd. 4.1%
Hutchison Whampoa, Ltd. 3.9
HSBC Holdings, Ltd. 3.8
Sun Hung Kai Properties, Ltd. 3.4
Hong Kong Telecommunications, Ltd. 3.3
P.T. Hanjaya Mandala Sampoerna 2.9
Guoco Group, Ltd. 2.7
Development Bank of Singapore Ltd. 1.9
Swire Pacific Ltd. 'A' 1.9
Malayan Banking BHD 1.8
Ten Largest Industries Percent of
Represented in the Portfolio Net Assets
Banking 22.6%
Real Estate 16.0
Conglomerates 13.3
Telecommunications 8.5
Utilities--Electric & Gas 4.8
Leisure 3.1
Tobacco 2.9
Publishing & Broadcasting 2.7
Beverages 2.3
Food 1.4
EQUITY PORTFOLIO CHANGES
For the Quarter Ended March 31, 1996
Additions
City Development Ltd.
DMCI Holdings Inc.
Dao Heng Bank Group Ltd.
Fraser & Neave Ltd.
P.T. Citra Marga Nusaphala Persada
Renong BHD (Preferred)
Renong BHD (Warrants)
Samsung Electronics Co.
Samsung Electronics Co. (New Shares)
Samsung Electronics Co. (New Shares)
(Preferred) (GDR)
<PAGE>
Deletions
Fraser & Neave Ltd. (Warrants)
I.P.C. Corp.
International Engineering Co. Ltd.
Pakistan Telecommunications (GDR)
Pernas International Hotels & Properties
BHD (Warrants)
Reliance Industries (ADR)
Sembawang Maritime Ltd.
