MERRILL LYNCH
DRAGON FUND, INC.
FUND LOGO
Semi-Annual Report
June 30, 2000
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.
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
Printed on post-consumer recycled paper
MERRILL LYNCH DRAGON FUND, INC.
Asset Allocation
As a Percentage* of
Net Assets as of
June 30, 2000
INDIA 7.9%
INDONESIA 0.7%
SINGAPORE 12.2%
MALAYSIA 2.4%
THAILAND 2.7%
CHINA 9.5%
HONG KONG 22.9%
TAIWAN 18.3%
SOUTH KOREA 19.9%
PHILIPPINES 1.1%
*Total may not equal 100%.
Merrill Lynch Dragon Fund, Inc., June 30, 2000
DEAR SHAREHOLDER
For the six-month period ended June 30, 2000, Merrill Lynch Dragon
Fund, Inc.'s Class A, Class B, Class C and Class D Shares had total
returns of -13.96%, -14.51%, -14.49% and -14.14%, respectively. The
unmanaged benchmark Morgan Stanley Capitalization (MSCI) Far East
Composite (Ex-Japan) Index had a total return of -14.15% for the
same 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 4 and 5 of this report to
shareholders.)
During the six months ended June 30, 2000, the Fund's performance
and volatility were significantly affected by its overweighted
positions in technology and telecommunications. Globally, technology
and telecommunications sectors rose sharply in the first quarter,
continuing on last year's gains, before retreating in the second
quarter. Many of our largest holdings reached multinational status
and their share price movements reflected this as their movements
correlated with the global volatility. The underlying fundamentals
of our holdings continue to strengthen despite the recent correction
and appear increasingly attractive to us as investors. We expect the
current domestic concerns in India, South Korea and Taiwan should
turn around in the second half of the year and could present an
additional positive surprise to these markets.
Investment Strategy
In Hong Kong, we were underweight in the real estate and banking
sectors, both of which turned in a disappointing first half. During
the period, property prices remained soft and bank margins were
squeezed because of rising interest rates. Our portfolio is
concentrated in several large, blue-chip companies such as Hutchison
Whampoa Ltd. and Cable & Wireless Ltd., which continued to project
strong growth and proactive management strategies to the benefit of
shareholders. Our 9.5% weighting in China is primarily comprised of
our positions in China Mobile (Hong Kong) Limited, a mobile
telephony company, and Legend Holdings Limited, the leading personal
computer manufacturer in China. Both firms have continually beat
analysts' expectations of growth and show no signs of slowing down.
Recent economic news out of China has shown a resurgence in economic
growth led by consumer spending.
Despite extremely attractive valuations and strengthening
fundamentals, South Korea's stock market continued to perform
poorly. Domestic concerns over the investment trust companies,
illiquidity and rising interest rates overwhelmed the otherwise
positive news on the economy and North Korean relations. Looking
ahead, we believe these concerns will abate and domestic confidence
return. Three of the Fund's holdings, SK Telecom Co., Ltd., Samsung
Electronics and Korea Telecom Corporation, all were affected by the
volatility in their respective global sectors. The Fund also has a
sizeable exposure to the country's leading banks, which are among
the most inexpensive in the developed world.
Taiwan is the Fund's third-largest country allocation and has held
up well in the past six months considering the large concentration
of electronics companies in the market. One reason has been the
strong earnings numbers coming out of the sector despite the global
macro concerns. Recent meetings with company managements reinforce
our belief that there is limited capacity available in the domestic
foundry sectors and that backlogs are increasing. Two of our largest
holdings remain Taiwan Semiconductor Manufacturing Company and
United Microelectronics Corporation Ltd., the world's two largest
dedicated foundries. More recently, the market has weakened over
domestic concerns regarding the new government. We view these as
short-term market concerns and believe the market will begin to
refocus on the strong earnings we expect to see in the second half
of the year.
Our Singapore holdings were primarily in the banking and technology
sectors. The economy continued to improve in the first half of 2000,
buoyed by strong gross domestic product growth and increased retail
spending. DBS Group Holdings Limited, the largest bank group in the
country, has continued its reorganization to the benefit of
shareholders. After much anticipation, a more formal timeline was
announced regarding the divestiture by banks of all nonbank
holdings. We believe this will serve as the catalyst for more
restructuring efforts by the entire sector to the benefit of equity
investors.
Elsewhere in the region, Indian software development companies
experienced an extremely volatile share price ride as their
valuations ranged from the absurdly high to extremely cheap. These
companies have become preeminent in their field globally and
comprise the bulk of our Indian exposure. The smaller markets of
Thailand, Indonesia and the Philippines continue to offer little
interest to the equity investor. Most disappointing has been
Thailand. Thailand was the first to enter into crisis, the first to
announce reforms, and now appears to be one of the last to implement
them successfully. Our exposure remains minimal in these markets,
and we do not foresee this changing in the near future.
In Conclusion
The Fund was affected significantly in the first half of the year by
the trends in telecommunications and technology stocks worldwide.
Looking ahead to the second half of 2000, we believe these factors
will have a reduced impact on our holdings as investors will refocus
on company-specific fundamentals. Recently, there has been continued
positive news flow from China regarding its economy and the
resurgence of consumer spending. If the trend continues, it may be a
significant source of upward surprise to the earnings of many of our
companies. In closing, we remain very optimistic on the outlook of
the dragon countries and our stocks for the rest of the year.
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,
(Terry K. Glenn)
Terry K. Glenn
President and Director
(Kara Tan Bhala)
Kara Tan Bhala
Senior Vice President and
Portfolio Manager
August 17, 2000
Merrill Lynch Dragon Fund, Inc., June 30, 2000
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. 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 0.75% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after approximately 8 years. (There is no initial
sales charge for automatic share conversions.)
* 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. 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 ex-dividend date. Investment return and principal
value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Dividends paid to each
class of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
<TABLE>
Recent
Performance
Results*
<CAPTION>
6 Month 12 Month Since Inception
As of June 30, 2000 Total Return Total Return Total Return
<S> <C> <C> <C>
ML Dragon Fund, Inc. Class A Shares -13.96% +10.87% -16.29%
ML Dragon Fund, Inc. Class B Shares -14.51 + 9.66 +37.68
ML Dragon Fund, Inc. Class C Shares -14.49 + 9.60 -21.06
ML Dragon Fund, Inc. Class D Shares -14.14 +10.48 +46.80
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included. Total
investment returns are based on changes in net asset values for the
periods shown, and assume reinvestment of all dividends and capital
gains distributions at net asset value on the ex-dividend date. The
Fund's inception periods are from 10/21/94 for Class A & Class C
Shares and from 5/29/92 for Class B & Class D Shares.
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/00 +10.87% +5.05%
Five Years Ended 6/30/00 -2.31 -3.36
Inception (10/21/94) through 6/30/00 -3.07 -3.99
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/00 +9.66% +5.66%
Five Years Ended 6/30/00 -3.33 -3.33
Inception (5/29/92) through 6/30/00 +4.03 +4.03
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 6/30/00 +9.60% +8.60%
Five Years Ended 6/30/00 -3.34 -3.34
Inception (10/21/94) through 6/30/00 -4.07 -4.07
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 6/30/00 +10.48% +4.68%
Five Years Ended 6/30/00 - 2.54 -3.59
Inception (5/29/92) through 6/30/00 + 4.86 +4.16
*Maximum sales charge is 5.25%. (Prior to October 21, 1994, Class D
Shares (formerly Class A Shares) were offered at a higher than
maximum sales charge. Thus, actual returns would have been lower
than noted for the inception period.)
**Assuming maximum sales charge.
Merrill Lynch Dragon Fund, Inc., June 30, 2000
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Percent of
COUNTRIES Industries Held Long-Term Investments Value Net Assets
<S> <S> <C> <S> <C> <C>
China Computers 10,658,300 Legend Holdings Limited $ 10,322,908 2.8%
Internet 48,500 ++SINA.com 1,230,688 0.3
Telecommunications 1,308,527 ++China Mobile (Hong Kong) Limited 11,540,445 3.2
47,300 ++China Mobile (Hong Kong) Limited (ADR)(a) 8,410,531 2.3
152,500 ++China Unicom Limited (ADR)(a) 3,240,625 0.9
-------------- ------
23,191,601 6.4
Total Long-Term Investments in China 34,745,197 9.5
Hong Kong Conglomerates 1,441,110 Hutchison Whampoa Limited 18,117,171 5.0
273,000 Li & Fung Limited 1,386,836 0.4
650,000 Swire Pacific Limited 'A' 3,810,630 1.1
887,300 Wharf (Holdings) Ltd. 1,587,859 0.4
-------------- ------
24,902,496 6.9
Electronics 852,000 Johnson Electric Holdings Limited 8,087,950 2.2
Publishing & 647,000 Television Broadcasts Ltd. 4,315,934 1.2
Broadcasting
Real Estate 2,000,000 Cheung Kong (Holdings) Ltd. 22,000,436 6.1
1,200,000 Sun Hung Kai Properties Ltd. 8,620,579 2.4
-------------- ------
30,621,015 8.5
Retail 2,866,328 Giordano International Limited 4,357,239 1.2
Telecommunications 496,226 Cable & Wireless HKT Ltd. 10,668,859 2.9
Total Long-Term Investments in Hong Kong 82,953,493 22.9
India Banking 167,510 ++Housing Development Finance Corporation
Ltd. (HDFC) 2,096,289 0.5
170,000 ICICI Ltd. (ADR)(a) 3,187,500 0.9
-------------- ------
5,283,789 1.4
Cement 59,800 ++Gujarat Ambuja Cements Limited 261,033 0.1
Computer Software 34,800 ++HCL Technologies Limited 1,003,667 0.3
5,100 Mastek Limited 184,301 0.0
68,800 NIIT Limited 3,404,154 0.9
6,582 ++Pentamedia Graphics Ltd. 86,775 0.0
10,486 SSI Limited 667,656 0.2
84,351 Satyam Computer Services Limited 5,631,205 1.6
31,419 Satyam Computer Services Limited (New Shares) 2,097,507 0.6
-------------- ------
13,075,265 3.6
Publishing & 167,120 ++Zee Telefilms Ltd. 1,676,157 0.5
Broadcasting
Retail 77,500 Hindustan Lever Limited 4,920,636 1.3
Telecommunications 229,700 Videsh Sanchar Nigam Ltd. (GDR)(b) 3,502,925 1.0
Total Long-Term Investments in India 28,719,805 7.9
Indonesia Retail 1,890,000 PT Ramayana Lestari Sentosa Tbk 1,209,255 0.3
Tobacco 924,500 PT Hanjaya Mandala Sampoerna Tbk 1,341,462 0.4
Total Long-Term Investments in Indonesia 2,550,717 0.7
Malaysia Banking 513,000 Commerce Asset-Holding Berhad 1,485,000 0.4
270,000 Malayan Banking Berhad 1,094,211 0.3
-------------- ------
2,579,211 0.7
Building & 43,000 IJM Corporation Bhd 40,058 0.0
Construction
Leisure 767,000 Genting Berhad 2,825,789 0.8
207,000 Resorts World Berhad 566,526 0.2
-------------- ------
3,392,315 1.0
Tobacco 309,400 British American Tobacco Berhad 2,524,053 0.7
Total Long-Term Investments in Malaysia 8,535,637 2.4
Philippines Publishing & 1,769,670 ABS-CBN Broadcasting Corporation 2,190,084 0.6
Broadcasting
Telecommunications 98,920 Philippine Long Distance Telephone Company (ADR)(a) 1,755,830 0.5
Total Long-Term Investments in the Philippines 3,945,914 1.1
Singapore Airlines 383,000 Singapore Airlines Limited 3,787,912 1.0
Banking 741,862 DBS Group Holdings Limited 9,525,354 2.6
521,000 Oversea-Chinese Banking Corporation Ltd. 3,585,830 1.0
-------------- ------
13,111,184 3.6
Electronics 416,885 Datacraft Asia Limited 3,668,588 1.0
905,000 NatSteel Electronics Ltd. 2,774,147 0.8
347,000 Venture Manufacturing (Singapore) Ltd. 3,532,215 1.0
-------------- ------
9,974,950 2.8
Engineering & 1,737,000 Singapore Technologies Engineering Ltd. 2,551,752 0.7
Construction
Publishing & 442,334 Singapore Press Holdings Ltd. 6,907,471 1.9
Broadcasting
Semiconductors 59,883 ++Chartered Semiconductor Manufacturing
Limited (ADR)(a) 5,419,412 1.5
104,000 ++St Assembly Test Services Limited (ADR)(a) 2,665,000 0.7
-------------- ------
8,084,412 2.2
Total Long-Term Investments in Singapore 44,417,681 12.2
</TABLE>
Merrill Lynch Dragon Fund, Inc., June 30, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Shares Held/ Percent of
COUNTRIES Industries Face Amount Long-Term Investments Value Net Assets
<S> <S> <C> <S> <C> <C>
South Banking 378,419 Kookmin Bank $ 4,819,219 1.3%
Korea 462,460 Shinhan Bank 4,354,907 1.2
-------------- ------
9,174,126 2.5
Computer Software 84,930 ++Haansoft Inc. 1,374,845 0.4
Food 41,260 Cheil Jedang Corporation 1,890,887 0.5
Semiconductors 45,470 Samsung Electronics 15,047,582 4.1
US$ 2,710,000 Samsung Electronics Co. (Regulation S), 0%*
due 12/31/2007 7,940,300 2.2
-------------- ------
22,987,882 6.3
Steel 89,950 Pohang Iron & Steel Company Ltd. (ADR)(a) 2,158,800 0.6
Telecommunications 186,000 Korea Telecom Corporation (ADR)(a) 8,997,750 2.5
58,400 SK Telecom Co., Ltd. 19,117,060 5.3
-------------- ------
28,114,810 7.8
Utilities-- 116,510 Korea Electric Power Corporation 3,615,386 1.0
Electric & Gas 154,250 Korea Electric Power Corporation (ADR)(a) 2,843,984 0.8
-------------- ------
6,459,370 1.8
Total Long-Term Investments in South Korea 72,160,720 19.9
Taiwan Banking 5,717,000 ++Chinatrust Commercial Bank 4,955,971 1.4
1,501,000 ++Polaris Securities Co., Ltd. 1,364,545 0.4
-------------- ------
6,320,516 1.8
Electronics 1,510,000 ++Acer Inc. 2,818,994 0.8
352,240 Asustek Computer Inc. 2,904,836 0.8
774,200 Hon Hai Precision Industry 6,987,909 1.9
383,600 ++Systex Corporation 1,345,091 0.3
118,900 ++Systex Corporation (GDR)(b) 1,405,398 0.4
-------------- ------
15,462,228 4.2
Plastics 1,515,000 Nan Ya Plastic Corporation 3,049,675 0.8
Retail 552,480 President Chain Store Corp. 2,062,831 0.6
93,105 Synnex Technology International Corporation (GDR)(b) 1,945,895 0.5
-------------- ------
4,008,726 1.1
Semiconductors 3,259,695 ++Taiwan Semiconductor Manufacturing Company 15,451,803 4.3
2,691,000 ++United Microelectronics Corporation, Ltd. 7,470,146 2.1
600,000 ++Via Technologies Inc. 9,253,247 2.5
-------------- ------
32,175,196 8.9
Textiles 4,397,300 Far Eastern Textile Ltd. 5,453,794 1.5
Total Long-Term Investments in Taiwan 66,470,135 18.3
Thailand Banking 2,759,000 ++Thai Farmers Bank Public Company Limited `Foreign' 2,321,147 0.6
Oil & Gas 436,053 PTT Exploration and Production Public Company
Limited 'Foreign' 2,112,175 0.6
Telecommunications 331,062 ++Advanced Info Service Public Company Limited
'Foreign' 4,118,757 1.2
1,000,000 ++TelecomAsia Corporation Public Company Limited
'Foreign' 1,108,987 0.3
315,789 TelecomAsia Corporation Public Company Limited
(Warrants)*** 0 0.0
-------------- ------
5,227,744 1.5
Total Long-Term Investments in Thailand 9,661,066 2.7
Total Long-Term Investments (Cost--$259,272,557) 354,160,365 97.6
Short-Term Investments
Commercial US$ 2,176,000 Associates Corporation of North America, 7% due
Paper** 7/03/2000 2,175,154 0.6
1,572,000 General Motors Acceptance Corp., 7.13% due 7/03/2000 1,571,377 0.4
-------------- ------
3,746,531 1.0
Total Short-Term Investments (Cost--$3,746,531) 3,746,531 1.0
Total Investments (Cost--$263,019,088) 357,906,896 98.6
Other Assets Less Liabilities 5,032,373 1.4
-------------- ------
Net Assets $ 362,939,269 100.0%
============== ======
++Non-income producing security.
(a)American Depositary Receipts (ADR).
(b)Global Depositary Receipts (GDR).
*Represents a zero coupon bond.
**Commercial Paper is traded on a discount basis; the interest rates
shown reflect the discount rates paid at the time of purchase by the
Fund.
***Warrants entitle the Fund to purchase a predetermined number of
shares of common stock and are non-income producing. The purchase
price and number of shares are subject to adjustment under certain
conditions until the expiration date.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Dragon Fund, Inc., June 30, 2000
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of June 30, 2000
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$263,019,088) $ 357,906,896
Cash 1,495
Foreign cash 7,568,858
Receivables:
Securities sold $ 12,215,422
Dividends 471,901
Capital shares sold 117,764 12,805,087
-------------
Prepaid registration fees and other assets 69,721
-------------
Total assets 378,352,057
-------------
Liabilities: Payables:
Securities purchased 12,827,865
Capital shares redeemed 1,216,282
Investment adviser 285,262
Distributor 200,084
Reorganization costs 119,102 14,648,595
-------------
Accrued expenses and other liabilities 764,193
-------------
Total liabilities 15,412,788
-------------
Net Assets: Net assets $ 362,939,269
=============
Net Assets Class A Shares of Common Stock, $.10 par value, 100,000,000
Consist of: shares authorized $ 541,917
Class B Shares of Common Stock, $.10 par value, 200,000,000
shares authorized 1,721,380
Class C Shares of Common Stock, $.10 par value, 100,000,000
shares authorized 207,949
Class D Shares of Common Stock, $.10 par value, 100,000,000
shares authorized 846,114
Paid-in capital in excess of par 442,277,476
Accumulated investment loss--net (2,113,525)
Accumulated distributions in excess of investment income--net (446,121)
Accumulated realized capital losses on investments and foreign
currency transactions--net (163,734,822)
Accumulated distributions in excess of realized capital gains on
investments and foreign currency transactions--net (11,169,131)
Unrealized appreciation on investments and foreign currency
transactions--net 94,808,032
-------------
Net assets $ 362,939,269
=============
Net Asset Class A--Based on net assets of $60,782,068 and 5,419,174
Value: shares outstanding $ 11.22
=============
Class B--Based on net assets of $185,580,603 and 17,213,801
shares outstanding $ 10.78
=============
Class C--Based on net assets of $22,082,684 and 2,079,493
shares outstanding $ 10.62
=============
Class D--Based on net assets of $94,493,914 and 8,461,138
shares outstanding $ 11.17
=============
See Notes to Financial Statements.
<CAPTION>
STATEMENT OF OPERATIONS
<S> <S> <C> <C>
For the Six Months Ended June 30, 2000
Investment Dividends (net of $162,050 foreign withholding tax) $ 1,935,022
Income: Interest and discount earned 209,169
-------------
Total income 2,144,191
Expenses: Investment advisory fees $ 1,963,345
Account maintenance and distribution fees--Class B 1,222,314
Custodian fees 309,257
Transfer agent fees--Class B 238,288
Account maintenance and distribution fees--Class C 121,732
Account maintenance fees--Class D 103,585
Transfer agent fees--Class D 66,049
Accounting services 53,489
Registration fees 35,927
Transfer agent fees--Class A 35,718
Professional fees 34,335
Transfer agent fees--Class C 23,835
Printing and shareholder reports 22,252
Directors' fees and expenses 12,508
Pricing fees 1,794
Other 13,288
-------------
Total expenses 4,257,716
-------------
Investment loss--net (2,113,525)
-------------
Realized & Realized gain (loss) from:
Unrealized Gain Investments--net 25,255,998
(Loss) on Foreign currency transactions--net (205,258) 25,050,740
Investments & -------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions Investments--net (76,635,156)
--Net: Foreign currency transactions--net (42,752) (76,677,908)
------------- -------------
Net Decrease in Net Assets Resulting from Operations $ (53,740,693)
=============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Dragon Fund, Inc., June 30, 2000
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the
Months Ended Year Ended
June 30, December 31,
Increase (Decrease) in Net Assets: 2000 1999
<S> <S> <C> <C>
Operations: Investment loss--net $ (2,113,525) $ (1,900,215)
Realized gain on investments and foreign currency
transactions--net 25,050,740 18,344,640
Change in unrealized appreciation/depreciation on investments
and foreign currency transactions--net (76,677,908) 181,600,502
------------- -------------
Net increase (decrease) in net assets resulting from operations (53,740,693) 198,044,927
------------- -------------
Capital Share Net decrease in net assets derived from capital share
Transactions: transactions (15,652,802) (65,943,858)
------------- -------------
Net Assets: Total increase (decrease) in net assets (69,393,495) 132,101,069
Beginning of period 432,332,764 300,231,695
------------- -------------
End of period $ 362,939,269 $ 432,332,764
============= =============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Class A++
For the
Six
The following per share data and ratios have been derived Months
from information provided in the financial statements. Ended
June 30, For the Year Ended December 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 13.04 $ 7.24 $ 8.81 $ 18.09 $ 15.99
Operating -------- -------- -------- -------- ----------
Performance: Investment income (loss)--net (.02) .02 .14 .12 .14
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net (1.80) 5.78 (1.57) (7.51) 2.03
-------- -------- -------- -------- ----------
Total from investment operations (1.82) 5.80 (1.43) (7.39) 2.17
-------- -------- -------- -------- ----------
Less dividends and distributions:
Investment income--net -- -- (.11) -- --
In excess of investment income--net -- -- (.03) -- --
Realized gain on investments--net -- -- -- (1.68) (.07)
In excess of realized gain on
investments--net -- -- -- (.21) --
-------- -------- -------- -------- ----------
Total dividends and distributions -- -- (.14) (1.89) (.07)
-------- -------- -------- -------- ----------
Net asset value, end of period $ 11.22 $ 13.04 $ 7.24 $ 8.81 $ 18.09
======== ======== ======== ======== ==========
Total Investment Based on net asset value per share (13.96%)+++ 80.11% (16.22%) (40.77%) 13.59%
Return:** ======== ======== ======== ======== ==========
Ratios to Average Expenses 1.46%* 1.49% 1.46% 1.35% 1.33%
Net Assets: ======== ======== ======== ======== ==========
Investment income (loss)--net (.33%)* .19% 1.78% .73% .78%
======== ======== ======== ======== ==========
Supplemental Net assets, end of period (in thousands) $ 60,782 $ 34,211 $ 13,961 $ 14,431 $ 49,943
Data: ======== ======== ======== ======== ==========
Portfolio turnover 38.29% 88.37% 99.85% 21.11% 30.63%
======== ======== ======== ======== ==========
*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 Dragon Fund, Inc., June 30, 2000
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
<CAPTION>
Class B++
For the
Six
The following per share data and ratios have been derived Months
from information provided in the financial statements. Ended
June 30, For the Year Ended December 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 12.61 $ 7.07 $ 8.58 $ 17.89 $ 15.98
Operating -------- -------- -------- -------- ----------
Performance: Investment income (loss)--net (.08) (.07) .06 (.04) (.04)
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net (1.75) 5.61 (1.52) (7.38) 2.02
-------- -------- -------- -------- ----------
Total from investment operations (1.83) 5.54 (1.46) (7.42) 1.98
-------- -------- -------- -------- ----------
Less dividends and distributions:
Investment income--net -- -- (.04) -- --
In excess of investment income--net -- -- (.01) -- --
Realized gain on investments--net -- -- -- (1.68) (.07)
In excess of realized gain on
investments--net -- -- -- (.21) --
-------- -------- -------- -------- ----------
Total dividends and distributions -- -- (.05) (1.89) (.07)
-------- -------- -------- -------- ----------
Net asset value, end of period $ 10.78 $ 12.61 $ 7.07 $ 8.58 $ 17.89
======== ======== ======== ======== ==========
Total Investment Based on net asset value per share (14.51%)+++ 78.36% (17.06%) (41.40%) 12.41%
Return:** ======== ======== ======== ======== ==========
Ratios to Average Expenses 2.43%* 2.58% 2.54% 2.39% 2.36%
Net Assets: ======== ======== ======== ======== ==========
Investment income (loss)--net (1.36%)* (.82%) .73% (.26%) (.24%)
======== ======== ======== ======== ==========
Supplemental Net assets, end of period (in thousands) $185,580 $278,334 $206,809 $374,914 $1,157,944
Data: ======== ======== ======== ======== ==========
Portfolio turnover 38.29% 88.37% 99.85% 21.11% 30.63%
======== ======== ======== ======== ==========
<CAPTION>
Class C++
For the
Six
The following per share data and ratios have been derived Months
from information provided in the financial statements. Ended
June 30, For the Year Ended December 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 12.42 $ 6.97 $ 8.46 $ 17.68 $ 15.79
Operating -------- -------- -------- -------- ----------
Performance: Investment income (loss)--net (.08) (.07) .06 (.04) (.04)
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net (1.72) 5.52 (1.50) (7.29) 2.00
-------- -------- -------- -------- ----------
Total from investment operations (1.80) 5.45 (1.44) (7.33) 1.96
-------- -------- -------- -------- ----------
Less dividends and distributions:
Investment income--net -- -- (.04) -- --
In excess of investment income--net -- -- (.01) -- --
Realized gain on investments--net -- -- -- (1.68) (.07)
In excess of realized gain on
investments--net -- -- -- (.21) --
-------- -------- -------- -------- ----------
Total dividends and distributions -- -- (.05) (1.89) (.07)
-------- -------- -------- -------- ----------
Net asset value, end of period $ 10.62 $ 12.42 $ 6.97 $ 8.46 $ 17.68
======== ======== ======== ======== ==========
Total Investment Based on net asset value per share (14.49%)+++ 78.19% (17.05%) (41.38%) 12.43%
Return:** ======== ======== ======== ======== ==========
Ratios to Average Expenses 2.43%* 2.56% 2.54% 2.41% 2.37%
Net Assets: ======== ======== ======== ======== ==========
Investment income (loss)--net (1.34%)* (.85%) .75% (.28%) (.23%)
======== ======== ======== ======== ==========
Supplemental Net assets, end of period (in thousands) $ 22,083 $ 26,436 $ 15,431 $ 22,111 $ 62,113
Data: ======== ======== ======== ======== ==========
Portfolio turnover 38.29% 88.37% 99.85% 21.11% 30.63%
======== ======== ======== ======== ==========
*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 Dragon Fund, Inc., June 30, 2000
<TABLE>
FINANCIAL HIGHLIGHTS (concluded)
<CAPTION>
Class D++
For the
Six
The following per share data and ratios have been derived Months
from information provided in the financial statements. Ended
June 30, For the Year Ended December 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 13.01 $ 7.24 $ 8.80 $ 18.11 $ 16.05
Operating -------- -------- -------- -------- ----------
Performance: Investment income (loss)--net (.03) --++++ .11 .09 .09
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net (1.81) 5.77 (1.55) (7.51) 2.04
-------- -------- -------- -------- ----------
Total from investment operations (1.84) 5.77 (1.44) (7.42) 2.13
-------- -------- -------- -------- ----------
Less dividends and distributions:
Investment income--net -- -- (.09) -- --
In excess of investment income--net -- -- (.03) -- --
Realized gain on investments--net -- -- -- (1.68) (.07)
In excess of realized gain on
investments--net -- -- -- (.21) --
-------- -------- -------- -------- ----------
Total dividends and distributions -- -- (.12) (1.89) (.07)
-------- -------- -------- -------- ----------
Net asset value, end of period $ 11.17 $ 13.01 $ 7.24 $ 8.80 $ 18.11
======== ======== ======== ======== ==========
Total Investment Based on net asset value per share (14.14%)+++ 79.70% (16.38%) (40.89%) 13.29%
Return:** ======== ======== ======== ======== ==========
Ratios to Average Expenses 1.65%* 1.77% 1.72% 1.61% 1.58%
Net Assets: ======== ======== ======== ======== ==========
Investment income (loss)--net (.52%)* (.02%) 1.48% .53% .53%
======== ======== ======== ======== ==========
Supplemental Net assets, end of period (in thousands) $ 94,494 $ 93,352 $ 64,031 $115,318 $ 297,179
Data: ======== ======== ======== ======== ==========
Portfolio turnover 38.29% 88.37% 99.85% 21.11% 30.63%
======== ======== ======== ======== ==========
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
++++Amount is less than $.01 per share.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Dragon 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 accounting principles generally accepted
in the United States of America, which may require the use of
management accruals and estimates. These unaudited financial
statements reflect all adjustments, which are, in the opinion of
management, necessary to a fair statement of the results for the
interim period presented. All such adjustments are of a normal,
recurring nature. The Fund offers four classes of shares under the
Merrill Lynch Select Pricing SM System. Shares of Class A and Class D
are sold with a front-end sales charge. Shares of Class B and Class
C may be subject to a contingent deferred sales charge. All classes
of shares have identical voting, dividend, liquidation and other
rights and the same terms and conditions, except that Class B, Class
C and Class D Shares bear certain expenses related to the account
maintenance of such shares, and Class B and Class C Shares also bear
certain expenses related to the distribution of such shares. Each
class has exclusive voting rights with respect to matters relating
to its account maintenance and distribution expenditures. The
following is a summary of significant accounting policies followed
by the Fund.
(a) Valuation of investments--Portfolio securities that are traded
on stock exchanges are valued at the last sale price on the exchange
on which such securities are traded, as of the close of business on
the day the securities are being valued or, lacking any sales, at
the last available bid price. Securities traded in the over-the-
counter market are valued at the last available bid price prior to
the time of valuation. In cases where securities are traded on more
than one exchange, the securities are valued on the exchange
designated by or under the authority of the Board of Directors as
the primary market. Securities that are traded both in the over-the-
counter market and on a stock exchange are valued according to the
broadest and most representative 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 other assets for which market
value quotations are not available are valued at their fair value as
determined in good faith by or under the direction of the Fund's
Board of Directors.
(b) 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 write put and covered call
options and purchase put and call options. When the Fund sells 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
market 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
received or paid (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.
Merrill Lynch Dragon Fund, Inc., June 30, 1996
NOTES TO FINANCIAL STATEMENTS (continued)
* 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 at 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.
(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) 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 substantially 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, dividends, and capital
gains at various rates.
(e) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Dividend income is recorded on the ex-
dividend dates. Dividends from foreign securities where the ex-
dividend date may have passed are subsequently recorded when the
Fund has determined the ex-dividend date. 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.
(f) Prepaid registration fees--Prepaid registration fees are charged
to expense as the related shares are issued.
(g) Dividends and distributions--Dividends and distributions paid by
the Fund are recorded on the ex-dividend dates. Distributions in
excess of net investment income are due primarily to differing tax
treatments for post-October losses. Distributions in excess of
realized capital gains are due primarily to differing tax treatments
for post-October losses.
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 of 1.00%, on an annual basis,
of the average daily value of the Fund's net assets.
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% .75%
Class C .25% .75%
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 six months ended June 30, 2000, FAMD earned underwriting
discounts and direct commissions, and MLPF&S earned dealer con-
cessions on sales of the Fund's Class A and Class D Shares as
follows:
FAMD MLPF&S
Class A $ 100 $ 364
Class D $3,742 $41,784
For the six months ended June 30, 2000, MLPF&S received contingent
deferred sales charges of $164,874 and $9,795 relating to
transactions in Class B and Class C Shares, respectively.
Furthermore, MLPF&S received contingent deferred sales charges of
$200 relating to transactions subject to front-end sales charges
waivers in Class D Shares.
In addition, MLPF&S received $147,262 in commissions on the
execution of portfolio security transactions for the Fund for the
six months ended June 30, 2000.
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 MLIM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of MLIM, PSI, FDS, FAMD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended June 30, 2000 were $146,982,564 and
$197,305,624, respectively.
Net realized gains (losses) for the six months ended June 30, 2000
and net unrealized gains (losses) as of June 30, 2000 were as
follows:
Realized Unrealized
Gains Gains
(Losses) (Losses)
Long-term investments $ 25,255,998 $ 94,887,808
Foreign currency transactions (205,258) (79,776)
------------- ------------
Total $ 25,050,740 $ 94,808,032
============= ============
As of June 30, 2000 net unrealized appreciation for Federal income
tax purposes aggregated $94,887,808, of which $117,007,591 related
to appreciated securities and $22,119,783 related to depreciated
securities. At June 30, 2000, the aggregate cost of investments for
Federal income tax purposes was $263,019,088.
4. Capital Share Transactions:
Net decrease in net assets derived from capital share transactions
was $15,652,802 and $65,943,858 for the six months ended June 30,
2000 and for the year ended December 31, 1999, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Six Months Dollar
Ended June 30, 2000 Shares Amount
Shares sold 9,083,755 $ 108,035,177
Shares issued resulting from
reorganization 2,810,747 30,606,287
------------ -------------
Total issued 11,894,502 138,641,464
Shares redeemed (9,098,229) (109,337,694)
------------ -------------
Net increase 2,796,273 $ 29,303,770
============ =============
Class A Shares for the Year Dollar
Ended December 31, 1999 Shares Amount
Shares sold 19,484,180 $ 173,308,347
Shares redeemed (18,788,481) (168,061,348)
------------ -------------
Net increase 695,699 $ 5,246,999
============ =============
Class B Shares for the Six Months Dollar
Ended June 30, 2000 Shares Amount
Shares sold 1,809,855 $ 21,396,446
Shares issued resulting from
reorganization 659,140 6,907,384
------------ -------------
Total issued 2,468,995 28,303,830
Shares redeemed (4,650,553) (55,469,345)
Automatic conversion of shares (2,682,276) (29,886,282)
------------ -------------
Net decrease (4,863,834) $ (57,051,797)
============ =============
Class B Shares for the Year Dollar
Ended December 31, 1999 Shares Amount
Shares sold 4,518,837 $ 41,312,257
Shares redeemed (11,235,174) (94,563,428)
Automatic conversion of shares (440,785) (3,858,030)
------------ -------------
Net decrease (7,157,122) $ (57,109,201)
============ =============
Merrill Lynch Dragon Fund, Inc., June 30, 2000
NOTES TO FINANCIAL STATEMENTS (concluded)
Class C Shares for the Six Months Dollar
Ended June 30, 2000 Shares Amount
Shares sold 1,030,237 $ 11,944,265
Shares issued resulting from
reorganization 196,010 2,023,083
------------ -------------
Total issued 1,226,247 13,967,348
Shares redeemed (1,275,780) (15,006,604)
------------ -------------
Net decrease (49,533) $ (1,039,256)
============ =============
Class C Shares for the Year Dollar
Ended December 31, 1999 Shares Amount
Shares sold 2,134,250 $ 18,368,755
Shares redeemed (2,219,846) (18,697,878)
------------ -------------
Net decrease (85,596) $ (329,123)
============ =============
Class D Shares for the Six Months Dollar
Ended June 30, 2000 Shares Amount
Shares sold 273,150 $ 3,462,002
Automatic conversion of shares 2,591,244 29,886,282
Shares issued resulting from
reorganization 161,747 1,754,023
------------ -------------
Total issued 3,026,141 35,102,307
Shares redeemed (1,742,422) (21,967,826)
------------ -------------
Net increase 1,283,719 $ 13,134,481
============ =============
Class D Shares for the Year Dollar
Ended December 31, 1999 Shares Amount
Shares sold 2,238,966 $ 21,079,512
Automatic conversion of shares 428,850 3,858,030
------------ -------------
Total issued 2,667,816 24,937,542
Shares redeemed (4,333,778) (38,690,075)
------------ -------------
Net decrease (1,665,962) $ (13,752,533)
============ =============
5. Short-Term Borrowings:
On December 3, 1999, the Fund, along with certain other funds
managed by MLIM, entered into a one-year, unsecured $1,000,000,000
credit agreement with The Bank of New York and certain other
institutions party thereto. The funds may borrow money for temporary
or emergency purposes to fund shareholder redemptions. The agreement
bears interest at the Federal Funds rate plus .50%. The Fund did not
borrow from the facility during the six months ended June 30, 2000.
6. Commitments:
At June 30, 2000, the Fund had entered in foreign exchange
contracts, under which it had agreed to purchase and sell various
foreign currencies with approximate values of $7,504,000 and
$2,479,000, respectively.
7. Capital Loss Carryforward:
On December 31, 1999, the Fund had a net capital loss carryforward
of approximately $154,210,000, all of which expires in 2006. This
amount will be available to offset like amounts of any future
taxable gains.
8. Acquisition of Merrill Lynch Emerging Tigers Fund, Inc.:
On May 19, 2000, the Fund acquired all of the net assets of Merrill
Lynch Emerging Tigers Fund, Inc. pursuant to a plan of
reorganization. The acquisition was accomplished by a tax-free
exchange of 4,941,206 shares of common stock of Merrill Lynch
Emerging Tigers Fund, Inc. for 3,827,645 shares of common stock of
the Fund. Merrill Lynch Emerging Tigers Fund, Inc.'s net assets on
that date of $41,290,777, including $1,618,645 of unrealized
appreciation and $42,456,525 of accumulated net realized capital
losses, were combined with those of the Fund. The aggregate net
assets immediately after the acquisition amounted to $364,308,701.
PORTFOLIO INFORMATION
Investments
As of 6/30/00
Percent of
Ten Largest Equity Holdings Net Assets
Cheung Kong (Holdings) Ltd. 6.1%
China Mobile (Hong Kong) Limited* 5.5
SK Telecom Co., Ltd. 5.3
Hutchison Whampoa Limited 5.0
Taiwan Semiconductor Manufacturing Company 4.3
Samsung Electronics 4.1
Cable & Wireless HKT Ltd. 2.9
Legend Holdings Limited 2.8
DBS Group Holdings Limited 2.6
Via Technologies Inc. 2.5
*Represents combined holdings.
Percent of
Ten Largest Industries Net Assets
Telecommunications 20.1%
Electronics 15.6
Semiconductors 11.1
Real Estate 8.5
Banking 8.4
Conglomerates 6.9
Computers 4.7
Computer Software 4.0
Retail 3.4
Publishing & Broadcasting 2.5
Merrill Lynch Dragon Fund, Inc., June 30, 2000
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
Charles C. Reilly, Director
Richard R. West, Director
Arthur Zeikel, Director
Edward D. Zinbarg, Director
Robert C. Doll, Jr., Senior Vice President
Kara W.Y. Tan Bhala, Senior Vice President and
Portfolio Manager
Donald C. Burke, Vice President and Treasurer
Phillip Gillespie, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
