EMERGING TIGERS FUND INC, N-2/A, 1994-01-14

EMERGING TIGERS FUND INC
N-2/A, 1994-01-14

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<PAGE>

As filed with the Securities and Exchange Commission on January 14, 1994
Securities Act File No. 33-51701
Investment Company Act File No. 811-7135

=========================================================================

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
Form N-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 /x/
PRE-EFFECTIVE AMENDMENT NO. 1 /x/
POST-EFFECTIVE AMENDMENT NO. / /
AND/OR
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 /x/
AMENDMENT NO. 1 /x/
----------------
EMERGING TIGERS FUND, INC.
(Exact name of registrant as specified in charter)
---------------------------
800 Scudders Mill Road
Plainsboro, New Jersey 08536
(Address of Principal Executive Offices)
(609) 282-2000
(Registrant's Telephone Number, including Area Code)
Arthur Zeikel
Emerging Tigers Fund, Inc.
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Mailing Address, Box 9011, Princeton, New Jersey 08543-9011
(Name and Address of Agent for Service)
---------------------------

Copies to:

Michael J. Hennewinkel Thomas R. Smith, Jr.
Fund Asset Management Brown & Wood
Box 9011 One World Trade Center
Princeton, New Jersey 08543 New York, New York 10048-0557

Approximate date of proposed offering: As soon as practicable after
the effective date of this Registration Statement.

If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following./ /

The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
the Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.

=========================================================================
<PAGE>

EMERGING TIGERS FUND, INC.
-----------------

CROSS REFERENCE SHEET
Pursuant to Rule 404(c)

Item Number, Form N-2 Caption in Prospectus
--------------------- ---------------------

Part A - INFORMATION REQUIRED IN A PROSPECTUS

1. Outside Front Cover Page Cover Page
2. Inside Front and Outside
Back Cover Pages Cover Page, Underwriting
3. Fee Table and Synopsis Fee Table
4. Financial Highlights Not Applicable
5. Plan of Distribution Underwriting
6. Selling Shareholders Not Applicable
7. Use of Proceeds Use of Proceeds
8. General Description of the Registrant The Fund; Investment
Objective and Policies;
Other Investment Policies
and Practices
9. Management Directors and Officers;
Investment Advisory and
Management Arrangements
10. Capital Stock, Long-Term Debt
and Other Securities Not Applicable
11. Defaults and Arrears on
Senior Securities Not Applicable
12. Legal Proceedings
13. Table of Contents of the Statement
of Additional Information Not Applicable

Part B - INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION

14. Cover Page Not Applicable
15. Table of Contents Not Applicable
16. General Information and History Not Applicable
17. Investment Objectives and Policies Investment Objective and
Policies; Other Invest-
ment Policies and Prac-
tices; Investment Re-
strictions
18. Management Directors and Officers;
Investment Advisory and
Management Arrangements
19. Control Persons and Principal Holders Investment Advisory and
of Securities Management Arrangements
20. Investment Advisory and Other Services Investment Advisory and
Management Arrangements;
Underwriting; Transfer
Agent, Dividend Disburs-
ing Agent and Registrar,
Custodian; Experts
21. Brokerage Allocation and
Other Practices Portfolio Transactions
22. Tax Status Taxes
23. Financial Statements Statement of Assets,
Liabilities and Capital

Part C - OTHER INFORMATION

Information required to be included in Part C is set forth under
the appropriate Item, so numbered, in Part C to this Registration
Statement.

<PAGE>

Information contained herein is subject to completion or amendment.
A registration statement relating to these securities has been filed
with the Securities and Exchange Commission. These securities may not
be sold nor may offers to buy be accepted prior to the time the
registration statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any State in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.

SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JANUARY 14, 1994

PROSPECTUS
----------
Shares
EMERGING TIGERS FUND, INC.
Common Stock
------------

Emerging Tigers Fund, Inc. is a non-diversified, closed-end
management investment company seeking long-term capital
appreciation by investing primarily in equity securities of
companies in designated emerging market countries located in Asia
and the Pacific Basin ("Asia-Pacific countries"). For purposes
of its investment objective, the Fund may invest in the
securities of companies in all countries in Asia and the Pacific
Basin other than Japan, Taiwan, Australia, New Zealand and Hong
Kong. Under current market conditions, the Fund intends to
emphasize investments in companies in Malaysia, India, Thailand,
Singapore, China, the Philippines, Indonesia, Pakistan and Sri
Lanka. The investment objective of the Fund reflects the belief
that the securities markets of the emerging market Asia-Pacific
countries present attractive investment opportunities as a result
of the economic development in such region. Under normal market
conditions at least 65% of the Fund's total assets will be
invested in equity securities of companies in emerging market
Asia-Pacific countries. The Fund may also invest up to 35% of
its total assets in debt securities of companies or governments
in emerging market Asia-Pacific countries. There can be no
assurance that the Fund's investment objective will be achieved.

Investments in securities of companies in emerging market
Asia-Pacific countries involve special considerations and risks
which are not typically present in investments in the securities
of U.S. companies. The Fund may invest up to 35% of its assets
in debt securities that are in the lower rating categories or
unrated and may be in default as to payment of principal and/or
interest at the time of acquisition by the Fund. Such securities
generally involve greater volatility of price and risks to
principal and income than securities in the higher rating
categories. The Fund may invest without limitation in securities
that are not readily marketable. Shares of closed-end investment
companies frequently trade at a discount from their net asset
value. This risk may be greater for investors expecting to sell
their shares in a relatively short period after completion of the
public offering. See "Risk Factors and Special Considerations."

Prior to this offering, there has been no public market for
the Fund's shares. The Fund will apply to have its shares listed
on the New York Stock Exchange under the symbol "TGF." However,
during an initial period which is not expected to exceed four
weeks from the date of this Prospectus, the Fund's shares will
not be listed on any securities exchange. During such period,
Merrill Lynch, Pierce, Fenner & Smith Incorporated does not
intend to make a market in the Fund's shares. Consequently, it
is anticipated that an investment in the Fund will be illiquid
during such period. The Investment Adviser of the Fund is Fund
Asset Management, an affiliate of Merrill Lynch Asset
Management. This Prospectus sets forth concisely information
about the Fund that a prospective investor ought to know before
investing and should be read and retained for future reference.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMIS-
SION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

<TABLE>
<CAPTION>
Maximum Price Maximum Proceeds to
to Public(1) Sales Load(1)(2) the Fund(3)

<S> <C> <C> <C>
Per Share.......... $15.00 $ $
Total(4)........... $ $ $

</TABLE>
(footnotes on next page)
----------------------------
The shares are offered by Merrill Lynch, subject to prior
sale, when, as and if issued by the Fund and accepted by Merrill
Lynch, subject to approval of certain legal matters by counsel
for Merrill Lynch and certain other conditions. Merrill Lynch
reserves the right to withdraw, cancel or modify such offer and
to reject orders in whole or in part. It is expected that
delivery of the shares will be made in New York, New York on or
about -------, 1994.
----------------------------
Merrill Lynch & Co.
----------------------------
The date of this Prospectus is -------------, 1994

<PAGE>
(Continued from cover page)

(1) The "Maximum Price to Public" and "Maximum Sales Load" per
share will be reduced to $-------, for purchases in single
transactions of between ----- and ----- shares and to
$----, for purchases in single transactions of ----- or
more shares. See "Underwriting."
(2) The Fund and the Investment Adviser have agreed to indemnify
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch") against certain liabilities, including liabilities
under the Securities Act of 1933. See "Underwriting."
(3) Before deducting organizational and offering costs payable
by the Fund estimated at $-------.
(4) The Fund has granted Merrill Lynch an option, exercisable
for 45 days after the date hereof, to purchase up to an
additional ------- shares to cover over-allotments. If all
such shares are purchased, the total Maximum Price to
Public, Maximum Sales Load and Proceeds to the Fund will be
$-----, $----- and $-----, respectively. See
"Underwriting."

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-
ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE
MARKET PRICE OF THE FUND'S COMMON STOCK AT LEVELS ABOVE THOSE
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZATION, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

2
<PAGE>
PROSPECTUS SUMMARY

The following summary should be read in conjunction with the
more detailed information appearing elsewhere in this Prospectus.

The Fund Emerging Tigers Fund, Inc. (the "Fund")
is a newly organized, non-diversified,
closed-end management investment company
investing primarily in equity securities
of companies in designated emerging
market Asia-Pacific countries. See "The
Fund."

Conversion to
Open-End Status The Fund's Articles of Incorporation
require the Board of Directors to submit
a proposal to convert the Fund to an
open-end investment company to
shareholders during the first quarter of
1996. However, if in the Board's
discretion, conversion at that time
would not be in the best interests of
the shareholders of the Fund, the Board
retains the right to withhold the
proposal until such time as the Board
deems conversion to be in the best
interests of the shareholders.
Conversion to an open-end investment
company would make the Common Stock
redeemable in cash upon demand by
shareholders at the next determined net
asset value. So as not to force the
Fund to liquidate portfolio securities
at a disadvantageous time, in order to
meet requests for redemption, the Fund
is authorized to borrow up to 20% of its
total asset value for the purpose of
redeeming its shares. If shareholder
approval of conversion to an open-end
investment company is not obtained, the
Fund will continue as a closed-end
investment company. See "The 1996 Vote
to Convert to Open-End Status."

The Offering The Fund is offering --------------
shares of Common Stock at a maximum
initial offering price of $15.00 per
share, except that the price will be
reduced to $----- for purchases in
single transactions of between ----- and
----- shares and to ----- for purchases
in single transactions of ----- or more
shares. The shares are being offered by
Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"). Merrill
Lynch has been granted an option,
exercisable for 45 days from the date of
this Prospectus, to purchase up to -----
--------- additional shares of Common
Stock to cover over-allotments. See
"Underwriting."

Investment Objective and
Policies
The investment objective of the Fund is
to seek long-term capital appreciation
by investing primarily in equity
securities of companies in designated
emerging market countries located in
Asia and the Pacific Basin ("Asia-
Pacific countries"). For purposes of
its investment objective, the Fund may
invest in the securities of companies in
all countries in Asia and the Pacific
Basin other than Japan, Taiwan,
Australia, New Zealand and Hong Kong.
Under current market conditions, the
Fund intends to emphasize investments in
companies in Malaysia, India, Thailand,
Singapore, China, the Philippines,
Indonesia, Pakistan and Sri Lanka. The
objective of the Fund reflects the
belief that the securities markets of
the emerging market Asia-Pacific
countries present attractive investment
opportunities as a result of the
economic development in such region.

The economies of a number of the
emerging market Asia-Pacific countries
have been among the most rapidly growing
economies in the world in recent years.
The economies of certain Asia-Pacific
countries such as Malaysia, India,
3
<PAGE>
Thailand, Singapore, China, the
Philippines, Indonesia, Pakistan and Sri
Lanka began to make significant economic
progress during such time. This
regional growth has often resulted from
government policies directed towards
market-oriented economic reform and, in
particular, seeking to encourage the
development of labor-intensive, export-
oriented industries. There also has
been growth resulting from an increase
in domestic demand. In addition,
certain Asia-Pacific countries have been
introducing deregulatory reforms to
encourage development of their
securities markets and, in varying
degrees, permit foreign investment. A
number of these securities markets have
been undergoing rapid growth. While
investments in the emerging market Asia-
Pacific countries are subject to
considerable risks (see "Risk Factors
and Special Considerations"), the Fund
believes that the above developments in
the region present attractive investment
opportunities.

The Fund is authorized to employ a
variety of investment techniques to
hedge against market and currency risk,
although at the present time suitable
hedging instruments may not be available
with respect to securities of companies
or governments in emerging market Asia-
Pacific countries on a timely basis and
on acceptable terms. Furthermore, even
if hedging techniques are available, the
Fund will only engage in hedging
activities from time to time and may not
necessarily be engaging in hedging
activities when market or currency
movements occur.

Listing Prior to this offering, there has been
no public market for the shares of the
Fund. The Fund will apply to have its
shares listed on the New York Stock
Exchange. However, during an initial
period which is not expected to exceed
four weeks from the date of this
Prospectus, the Fund's shares will not
be listed on any securities exchange.
During such period, Merrill Lynch does
not intend to make a market in the
Fund's shares. Consequently, it is
anticipated that an investment in the
Fund will be illiquid during such
period. See "Underwriting."
4
<PAGE>

Investment Adviser
Fund Asset Management, L.P., is the
Fund's investment adviser (the
"Investment Adviser") and is responsible
for the management of the Fund's
investment portfolio and for providing
administrative services to the Fund.
For its services, the Fund pays the
Investment Adviser a monthly fee at the
annual rate of 1.00% of the Fund's
average weekly net assets. The
Investment Adviser is a wholly-owned
subsidiary of Merrill Lynch Investment
Management, Inc., doing business as
Merrill Lynch Asset Management ("MLAM"),
an indirect, wholly-owned subsidiary of
Merrill Lynch & Co., Inc. ("ML & Co.").
The Investment Adviser, or MLAM, acts as
the investment adviser for over 90 other
registered management investment
companies. The Investment Adviser also
offers portfolio management and
portfolio analysis services to
individuals and institutions. As of
December 31, 1993, the Investment
Adviser and MLAM had a total of
approximately $----- billion in
investment company and other portfolio
assets under management, including
accounts of certain affiliates of the
Investment Adviser. See "Investment
Advisory and Management Arrangements."

Dividends and
Distributions It is the Fund's intention to distribute
all of its net investment income.
Dividends from such net investment
income are paid at least annually. All
net realized long-term and short-term
capital gains, if any, will be
distributed to the Fund's shareholders
at least annually. See "Dividends and
Distributions."

Automatic Dividend
Reinvestment Plan All dividends and capital gains
distributions automatically will be
reinvested in additional shares of the
Fund unless a shareholder elects to
receive cash. Shareholders whose shares
are held in the name of a broker or
nominee should contact such broker or
nominee to confirm that they may
participate in the Fund's dividend
reinvestment plan. See "Automatic
Dividend Reinvestment Plan."

Mutual Fund Investment
Option Purchasers of shares of the Fund in this
offering will have an investment option
consisting of the right to reinvest the
net proceeds from a sale of such shares
(the "Original Shares") in Class A
initial sales charge shares of certain
Merrill Lynch-sponsored open-end mutual
funds ("Eligible Class A Shares") at
their net asset value, without the
imposition of the initial sales charge,
if the conditions set forth below are
satisfied. First, the sale of the
Original Shares must be made through
Merrill Lynch, and the net proceeds
therefrom must be reinvested immediately
in Eligible Class A Shares. Second, the
Original Shares must have either been
acquired in this offering or be shares
representing reinvested dividends from
shares acquired in this offering.
Third, the Original Shares must have
been maintained continuously in a
Merrill Lynch securities account.
Fourth, there must be a minimum purchase
of $250 to be eligible for the
investment option. Class A shares of
certain of the mutual funds may be
subject to an account maintenance fee at
an annual rate of up to 0.25% of the
average daily net asset value of such
mutual fund. See "Mutual Fund
Investment Option."

5
<PAGE>
Custodian ------------ will act as custodian for
the Fund's assets and will employ
foreign sub-custodians approved by the
Fund's Board of Directors in accordance
with regulations of the Securities and
Exchange Commission. See "Custodian."

Transfer Agent, Dividend
Disbursing Agent and
Registrar ------------- will act as transfer
agent, dividend disbursing agent and
registrar for the Fund. See "Transfer
Agent, Dividend Disbursing Agent and
Registrar."

Risk Factors and
Special Considerations The Fund is a newly organized, non-
diversified, closed-end management
investment company and has no operating
history. As described under "Listing"
above, it is anticipated that an
investment in the Fund will be illiquid
prior to the listing of the Fund's
shares on the New York Stock Exchange.
See "Underwriting." Shares of closed-
end investment companies frequently
trade at a discount from their net asset
value. This risk may be greater for
investors expecting to sell their shares
in a relatively short period after
completion of the public offering.
Accordingly, the Common Stock of the
Fund is designed primarily for long-term
investors and should not be considered a
vehicle for trading purposes.

International Investing. Investing on
an international basis and in countries
with smaller capital markets involves
certain risks not involved in domestic
investments, including fluctuations in
foreign exchange rates, future political
and economic developments, and the
possible imposition of exchange controls
or other foreign governmental laws or
restrictions. In addition, with respect
to certain foreign countries, there is
the possibility of expropriation of
assets, confiscatory taxation, political
or social instability or diplomatic
developments which could affect
investments in those countries.
Individual foreign economies may differ
favorably or unfavorably from the U.S.
economy in such respects as growth of
gross national product, rates of
inflation, capital reinvestment,
resources, self-sufficiency and balance
of payments position. These risks are
often heightened for investments in
smaller capital markets such as emerging
market Asia-Pacific countries.
Moreover, most of the securities held by
the Fund will not be registered with the
Securities and Exchange Commission, nor
will the issuers thereof be subject to
the reporting requirements of such
agency. Accordingly, there may be less
publicly available information about a
foreign company than about a U.S.
company and such foreign companies may
not be subject to accounting, auditing
and financial reporting standards and
requirements comparable to those of U.S.
companies. As a result, certain
investment measurements, such as
price/earning ratios, as used in the
U.S., may not be applicable to certain
smaller capital markets. An investment
in the Fund should not be considered a
balanced investment program.

Foreign markets have different clearance
and settlement procedures, and in
certain markets there have been times
when settlements have failed to keep
pace with the volume of securities
transactions, making it difficult to
conduct such transactions. Delays in
settlement could result in temporary
periods when assets of the Fund are
uninvested and no return is earned
thereon. The inability of the Fund to
make intended security purchases due to
settlement problems could
6
<PAGE>
cause the Fund to miss attractive
investment opportunities. The inability
of the Fund to dispose of a portfolio
security due to settlement problems
could result either in losses to the
Fund or possible liability to a
purchaser to whom the Fund is unable to
make timely delivery of securities.

Investing in Securities Markets of
Emerging Market Asia-Pacific Countries.
The securities markets of emerging
market Asia-Pacific countries are not as
large as the U.S. securities markets and
have substantially less liquidity with
high price volatility. Such markets are
in the early stages of development and
there is a high concentration of market
capitalization and trading volume in a
small number of issuers representing a
limited number of industries. These
factors along with certain U.S. and
foreign regulations may have an adverse
impact on the investment performance of
the Fund. Further, the legal systems in
certain emerging market Asia-Pacific
countries have caused issues of
shareholders rights and liabilities to
be less clear than in the U.S. Such
uncertainty may have an adverse impact
on the Fund.

Restrictions on Foreign Investments.
Some emerging market Asia-Pacific
countries prohibit or impose substantial
restrictions on investments in their
capital markets, particularly their
equity markets, by foreign entities such
as the Fund. Certain countries may
restrict investment opportunities in
issuers or industries deemed important
to national interests. Substantial
limitations may exist in certain
countries with respect to the Fund's
ability to repatriate investment income,
capital or proceeds of sales of
securities by foreign investors. The
Fund could be adversely affected by
delays in, or a refusal to grant, any
required governmental approval for
repatriation of capital as well as by
the application to the Fund of any
restrictions on investments.

No Rating Criteria for Debt Securities;
Investment in Distressed Securities.
The Fund has established no rating
criteria for the debt securities in
which it may invest. In addition, the
Fund may invest in debt securities that
are in default as to payment of interest
and/or principal at the time of
acquisition by the Fund. Securities
rated in medium to low rating categories
of nationally recognized statistical
rating organizations such as Standard &
Poor's Corporation ("S&P") and Moody's
Investors Service, Inc. ("Moody's") and
unrated securities of comparable quality
are speculative with respect to the
capacity to pay interest and repay
principal in accordance with the terms
of the security and generally involve a
greater volatility of price than
securities in higher rated categories.
Investment in Distressed Securities is
speculative and involves significant
risk. See "Risk Factors and Special
Considerations-Risks of Debt Securities-
No Rating Criteria for Debt Securities"
and "-Distressed Securities."

Sovereign Debt. Investment in sovereign
debt involves a high degree of risk.
The governmental entity that controls
the repayments of sovereign debt may not
be able or willing to repay the
principal and/or interest when due in
accordance with the terms of such debt.
A governmental entity's willingness or
ability to repay principal and interest
due in a timely manner may be affected
by, among other factors, its cash flow
situation, the extent of its foreign
reserves, the availability of sufficient
foreign exchange on the date a payment
is due, the relative size of the debt
service burden to the economy as a
whole, the governmental entity's policy
towards the International Monetary Fund
and the
7
<PAGE>
political constraints to which a
governmental entity may be subject.
Consequently, governmental entities may
default on their sovereign debt.
Holders of sovereign debt, including the
Fund, may be requested to participate in
the rescheduling of such debt and to
extend further loans to governmental
entities. There is no bankruptcy
proceeding by which sovereign debt in
which a governmental entity has
defaulted may be collected. See "Risk
Factors and Special Considerations-
Certain Risks of Debt Securities-
Sovereign Debt."

Other Investment Management Techniques.
The Fund may use various other
investment management techniques that
also involve special considerations
including engaging in hedging
transactions, repurchase agreements and
purchase and sale contracts, short
sales, lending of portfolio securities,
and investing in private placements,
convertible securities, warrants,
distressed securities and others.
Certain of these investment techniques
are considered highly speculative and
involve great risk. See "Other
Investment Policies and Practices" and
"Risk Factors and Special
Considerations."

Illiquid Securities. The Fund may
invest in illiquid securities, for which
there may be no or only a limited
trading market and for which a low
trading volume of a particular security
may result in abrupt and erratic price
movements. The Fund may encounter
substantial delays and could incur
losses in attempting to resell illiquid
securities. If the shareholders of the
Fund vote to convert the Fund to an
open-end investment company, the Fund
will be limited in the portion of its
assets that may be invested in illiquid
securities. See "Risk Factors and
Special Considerations-Conversion to
Open-End Status."

Withholding and Other Taxes. Income and
capital gains on securities held by the
Fund may be subject to withholding and
other taxes imposed by certain emerging
market Asia-Pacific countries, which
would reduce the return to the Fund on
those securities. The imposition of
such taxes and the rates imposed are
subject to changes. The Fund intends to
elect, when eligible, to "pass through"
to the Fund's shareholders, as a
deduction or credit, the amount of
foreign taxes paid by the Fund. The
taxes passed through to shareholders
will be included in each shareholder's
income. Certain shareholders, including
non-U.S. shareholders, will not be
entitled to the benefit of a deduction
or credit with respect to foreign taxes
paid by the Fund. Other foreign taxes,
such as transfer taxes, may be imposed
on the Fund, but would not give rise to
a credit, or be eligible to be passed
through to shareholders. See "Taxes."

Foreign Subcustodians and Securities
Depositories. Rules adopted under the
Investment Company Act permit the Fund
to maintain its foreign securities and
cash in the custody of certain eligible
non-U.S. banks and securities
depositories. Certain banks in foreign
countries may not be eligible
subcustodians for the Fund, in which
event the Fund may be precluded from
purchasing securities in which it would
otherwise invest, and other banks that
are eligible foreign subcustodians may
be recently organized or otherwise lack
extensive operating experience.

Borrowings to Meet Redemptions. In the
event it converts to an open-end
investment company, the Fund is
authorized to borrow up to 20% of its
total assets in order to meet
redemptions so as not to force the Fund
to liquidate
8
<PAGE>
securities at a disadvantageous time.
Any such borrowings will create expenses
for the Fund.

Non-Diversified Classification. The
Fund is classified as a "non-
diversified" investment company under
the Investment Company Act, which means
that the Fund is not limited by the
Investment Company Act in the proportion
of its assets that may be invested in
the securities of a single issuer.
However, the Fund intends to comply with
the diversification requirements imposed
by the Internal Revenue Code of 1986, as
amended (the "Code"), for qualification
as a regulated investment company. As a
non-diversified investment company, the
Fund may invest a greater proportion of
its assets in the securities of a
smaller number of issuers and, as a
result, will be subject to greater risk
of loss with respect to its portfolio
securities.

Conversion to Open-End Status. The
Fund's Articles of Incorporation require
the Board of Directors to submit a
proposal to convert the Fund to an open-
end investment company during the first
quarter of 1996, unless the Board of
Directors determines that conversion at
that time would not be in the best
interest of shareholders. Conversion to
open-end status would require possibly
disadvantageous changes to the Fund's
investment policies and could have an
adverse effect on the management of the
Fund's investment portfolio. See "The
1996 Vote to Convert to Open-End
Status."

Antitakeover Provisions. The Fund's
Articles of Incorporation include
provisions that could have the effect of
limiting the ability of other entities
or persons to acquire control of the
Fund or to change the composition of its
Board of Directors and could have the
effect of depriving shareholders of an
opportunity to sell their shares at a
premium over prevailing market prices by
discouraging a third party from seeking
to obtain control of the Fund. See
"Description of Shares-Certain
Provisions of the Articles of
Incorporation."

Operating Expenses. The Fund's
estimated annual operating expenses are
higher than those of many other
investment companies investing
exclusively in the securities of U.S.
issuers. The operating expenses are,
however, believed by the Investment
Adviser to be comparable to expenses of
other closed-end management investment
companies that invest primarily in the
securities of companies in emerging
market Asia-Pacific countries.
9
<PAGE>

<TABLE>
<CAPTION>
FEE TABLE
<S> <C>
Shareholder Transaction Expenses
Maximum Sales Load (as a percentage of offering price) . %(a)
Dividend Reinvestment and Cash Purchase Plan Fees None
Annual Expenses (as a percentage of net assets attributable to
Common Stock)(b)
Management Fees(c) . %
Interest Payments on Borrowed Funds None
Other Expenses . %
-----

Total Annual Expenses . %
=====
</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Example 1 year 3 years 5 years 10 years
------ ------- ------- --------
An investor would pay the
following expenses on a $1,000
investment, including the
maximum front-end sales load of
$ and assuming (1)
total annual expenses of %
and (2) a 5% annual return
throughout the periods: $ $ $ $

---------------
(a) Reduced to % for purchases in single transactions of between and shares
and to % for purchases in single transactions of or more shares. See the
cover page of this Prospectus and "Underwriting."
(b) The expenses set forth in this table do not include expenses associated with
leverage, since neither the manner of leverage nor the cost of leverage has been
determined at the date of this Prospectus. See "Other Investment Policies and
Practices."
(c) See "Investment Advisory and Management Arrangements."

</TABLE>

The foregoing Fee Table is intended to assist investors
in understanding the costs and expenses that a shareholder in the
Fund will bear directly or indirectly. The expenses set forth
under "Other Expenses" in the Fee Table above are based on
estimated amounts through the end of the Fund's first fiscal year
on an annualized basis. The Example set forth above assumes
reinvestment of all dividends and distributions and utilizes a 5%
annual rate of return as mandated by Securities and Exchange
Commission regulations. The Example should not be considered a
representation of future expenses or annual rates of return, and
actual expenses or annual rates of return may be more or less
than those assumed for purposes of the Example.
10
<PAGE>

THE FUND

Emerging Tigers Fund, Inc. (the "Fund") is a newly
organized, non-diversified, closed-end management investment
company. The Fund was incorporated under the laws of the State
of Maryland on December --, 1993, and has registered under the
Investment Company Act of 1940, as amended (the "Investment
Company Act"). See "Description of Shares." The Fund's
principal office is located at 800 Scudders Mill Road,
Plainsboro, New Jersey 08536, and its telephone number is (609)
282-2000.

THE 1996 VOTE TO CONVERT TO OPEN-END STATUS

The Fund's Articles of Incorporation require the Board of
Directors to submit a proposal to convert the Fund to an open-end
investment company to shareholders during the first quarter of
1996. However, if in the Board's discretion, conversion at that
time would not be in the best interest of shareholders of the
Fund, the Board of Directors retains the right to withhold such
proposal until such time as the Board deems conversion to be in
the best interest of the shareholders. Approval of such a
proposal would require the affirmative vote of a majority of the
outstanding shares entitled to be voted thereon. Shareholders of
an open-end investment company may require the company to redeem
their shares at any time (except in certain circumstances as
authorized by the Investment Company Act) at the next determined
net asset value of such shares, less such redemption charges, if
any, as might be in effect at the time of redemption.
Accordingly, open-end investment companies are subject to
continuous asset in-flows and out-flows that can complicate
portfolio management. All redemptions will be made in cash. If
shareholders vote to convert the Fund to open-end status it is
anticipated that redemption of shares of the Fund will may be
subject to a redemption charge of up to 2%, and may be subject to
an ongoing account maintenance fee at an annual rate of up to
0.25% of the average daily net asset value of the Fund.

In considering whether to submit such proposal to
shareholders, the Fund's Board of Directors will consider a
number of factors, including the affect on the Fund's investment
policies and portfolio management and whether shares of the Fund
have historically, and continue to, trade at a discount from
their net asset value. For example, in light of the position of
the Securities and Exchange Commission (the "Commission") that
illiquid securities and certain securities subject to legal or
contractual limitations on resale not exceed 15% of the total
assets of a registered open-end investment company, any attempt
to convert the Fund to an open-end company will have to take into
account the percentage of such securities in the Fund's portfolio
at the time, and other relevant factors. The Fund cannot predict
whether, on this basis, it would be able to effect any such
conversion or whether, if relief from the Commission's position
were required, it could be obtained.

If the Fund is converted to an open-end investment company,
it could be required to liquidate portfolio securities to meet
requests for redemption and the shares would no longer be listed
on the New York Stock Exchange. If a large volume of shares is
offered for redemption at one time the Fund could be forced to
liquidate portfolio securities at a disadvantageous time causing
a loss to the Fund. To prevent such a loss, the Fund is
authorized to borrow up to 20% of its net asset value for
purposes of redeeming shares of the Fund. The necessity to
liquidate portfolio securities could affect the Fund's ability to
meet its investment objective or to use investment policies and
techniques that are more appropriate for a fixed portfolio than a
portfolio subject to cash in-flows and out-flows. If the Fund
converts to open-end status, it may commence a continuous
offering of its shares as is the case with most mutual funds.

In the event shareholder approval of the proposal to convert
to an open-end fund is not obtained, the Fund will continue as a
closed-end investment company.

11
<PAGE>
USE OF PROCEEDS

The net proceeds of this offering will be approximately
$----------- (or approximately $------------ assuming Merrill
Lynch exercises the over-allotment option in full) after payment
of the sales load and organizational and offering costs.

The net proceeds of the offering will be invested in
accordance with the Fund's investment objective and policies
between approximately three and six months after completion of
the offering of the shares of Common Stock, depending on market
conditions and the availability of appropriate securities.
Pending such investment, it is anticipated that the proceeds will
be invested in U.S. Government securities or high grade corporate
debt securities. See "Investment Objective and Policies."

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the Fund is to seek long-term
capital appreciation by investing primarily in equity securities
of companies in designated emerging market countries located in
Asia and the Pacific Basin ("Asia-Pacific countries"). For
purposes of its investment objective, the Fund considers emerging
market Asia-Pacific countries to be all countries in Asia and the
Pacific Basin other than Japan, Taiwan, Australia, New Zealand
and Hong Kong. Under current market conditions, the Fund intends
to emphasize investments in companies in Malaysia, India,
Thailand, Singapore, China, the Philippines, Indonesia, Pakistan
and Sri Lanka. Under normal market conditions at least 65% of
the Fund's total assets will be invested in equity securities of
companies in emerging market Asia-Pacific countries. This
investment objective is a fundamental policy of the Fund and may
not be changed without the approval of the holders of a majority
of the Fund's outstanding voting securities, as defined in the
Investment Company Act. The Fund is authorized to employ a
variety of investment techniques to hedge against market and
currency risk, although suitable hedging instruments may not be
available on a timely basis and on acceptable terms. There can
be no assurance that the Fund's investment objective will be
achieved.

The Fund may also seek capital appreciation through
investment of up to 35% of its total assets in debt securities of
companies or governments in emerging market Asia-Pacific
countries. Such debt securities may be lower rated or unrated
obligations of corporate or sovereign issuers. The Fund's
investments in high yield securities will include debt
securities, preferred stocks and convertible securities which are
rated in the lower rating categories of the established rating
services ("Baa" or lower by Moody's Investors Service, Inc.
("Moody's") and "BBB" or lower by Standard & Poor's Corporation
("S&P"), or in unrated U.S. and non-U.S. securities considered by
the Investment Adviser to be of comparable quality, Securities
rated below "Baa" by Moody's or below "BBB" by S&P, and unrated
securities of comparable quality, are commonly known as "junk
bonds." In addition, the Fund may invest in debt securities that
are in default as to the payment of interest and/or principal at
the time of acquisition by the Fund ("Distressed Securities").
The Fund will invest in Distressed Securities only when the
Investment Adviser believes it is reasonably likely that the
issuer of the securities will make an exchange offer or will be
the subject of a plan of reorganization. Capital appreciation in
debt securities may arise as a result of a favorable change in
relative foreign exchange rates, in relative interest rate
levels, or in the creditworthiness of issuers. The receipt of
income from such debt securities is incidental to the Fund's
objective of long-term capital appreciation.

The economies of a number of the emerging market Asia-
Pacific countries have been among the most rapidly growing
economies in the world in recent years. The economies of such
countries as India, Thailand, Malaysia, Indonesia, which,
together with Singapore, the Philippines and Brunei, are members
of the Association of Southeast Asian Nations ("ASEAN"), began to
emerge, making significant economic progress. This regional
growth has resulted from government policies directed towards
market-oriented economic reform and, in particular, seeking to
encourage the development of labor-intensive, export-oriented
industries. There also has been growth resulting from an
increase in domestic demand. In addition, certain Asia-Pacific
countries have been introducing deregulatory reforms to encourage
development of their securities markets and, in varying degrees,
permit foreign investment. A number of these securities markets
have been undergoing rapid growth. While investments in
securities of companies in emerging market Asia-Pacific countries
are subject to considerable risks (see "Risk
12
<PAGE>
Factors and Special Considerations"), the objective of the Fund
reflects the belief that the securities markets of emerging
market Asia-Pacific countries present attractive investment
opportunities.

Investment in shares of Common Stock of the Fund offers
several benefits. Many investors, particularly individuals, lack
the information or capability to invest in emerging market Asia-
Pacific countries. The Fund offers investors the possibility of
obtaining capital appreciation through a professionally managed,
diversified portfolio comprised of securities of emerging market
Asia-Pacific issuers. In managing such portfolio, the Investment
Adviser will provide the Fund and its shareholders with
professional analysis of investment opportunities and the use of
professional money management techniques. Unlike many
intermediary investment vehicles, such as closed-end investment
companies that are limited to investment in a single country, the
Fund has the ability to diversify investment risk among the
capital markets of a number of countries.

The Fund will normally seek to diversify investments among
at least three emerging market Asia-Pacific countries. However,
the Fund is not limited as to the percentage of assets it may
invest per country. The allocation of the Fund's assets among
the various securities markets of the emerging Asia-Pacific
countries will be determined by the Investment Adviser.

In accordance with its investment objective, the Fund will
not seek to benefit from anticipated short-term fluctuations in
currency exchange rates. The Fund may, from time to time, invest
in debt securities with relatively high yields notwithstanding
that the Fund may not anticipate that such securities will
experience substantial capital appreciation. Such income can be
used, however, to offset the operating expenses of the Fund. For
a description of the risks involved in investing in high yield
debt see "Risk Factors and Special Considerations-Certain Risks
of Debt Securities."

The Fund may invest in debt securities ("sovereign debt")
issued or guaranteed by emerging market Asia-Pacific governments
(including emerging market Asia-Pacific countries, provinces and
municipalities) or their agencies and instrumentalities
("governmental entities"), debt securities issued or guaranteed
by international organizations designated or supported by
multiple foreign governmental entities (which are not obligations
of foreign governments) to promote economic reconstruction or
development ("supranational entities"), debt securities issued by
corporations or financial institutions or debt securities issued
by the U.S. Government or an agency or instrumentality thereof.

Supranational entities include international organizations
designated or supported by governmental entities to promote
economic reconstruction or development and international banking
institutions and related governmental agencies. Examples include
the International Bank for Reconstruction and Development (the
"World Bank") and the Asian Development Bank. The governmental
members or "stockholders" of a supranational entity usually make
initial capital contributions to the supranational entity and in
many cases are committed to make additional capital contributions
if the supranational entity is unable to repay its borrowings.

A company ordinarily will be considered to be in an emerging
market Asia-Pacific country when it is organized in, or the
primary trading market of its securities is located in, an
emerging market Asia-Pacific country. The Fund may consider a
company to be in an emerging market Asia-Pacific country, without
reference to such company's domicile or to the primary trading
market of its securities, when at least 50% of the company's non-
current assets, capitalization, gross revenues or profits in any
one of the two most recent fiscal years represents (directly or
indirectly through subsidiaries) assets or activities located in
such countries. The Fund may acquire securities of companies in
emerging market Asia-Pacific countries that are denominated in
currencies other than an emerging Asia Pacific currency. The
Fund also may consider a debt security that is denominated in an
emerging market Asia-Pacific currency to be a security of a
company in an emerging market Asia-Pacific country without
reference to the principal trading market of the security or to
the location of its issuer. The Fund may consider investment
companies or other pooled investment vehicles to be located in
the country or countries in which they primarily make their
portfolio investments.

Equity investments of the Fund include, but are not limited
to, stocks, preferred stocks, American Depository Receipts
("ADRs"), Global Depository Receipts ("GDRs"), International
Depository Receipts ("IDRs"),
13
<PAGE>
debt securities convertible into common stock, warrants, joint
venture interests, equity securities of other investment
companies and venture capital funds, limited partnership
interests and other securities ordinarily considered to be equity
securities. The equity securities in which the Fund may invest
include direct investments. Such securities are not listed on an
exchange and do not have any active trading market. The Fund may
invest in unsponsored ADRs. The issuers of unsponsored ADRs are
not obligated to disclose material information in the United
States, and therefore, there may not be a correlation between
such information and the market value of such ADRs. The Fund may
also invest in venture capital investments and illiquid privately
placed securities.

The Fund reserves the right, as a temporary defensive
measure in anticipation of investment in emerging market Asia-
Pacific countries, to hold cash or cash equivalents (in U.S.
dollars or foreign currencies) and short-term securities
including money market securities denominated in U.S. dollars or
foreign currencies ("Temporary Investments").

Description of Certain Investments

Warrants. The Fund may invest in warrants, which are
securities permitting, but not obligating, their holder to
subscribe for other securities. Warrants do not carry with them
the right to dividends or voting rights with respect to the
securities that they entitle their holders to purchase, and they
do not represent any rights in the assets of the issuer. As a
result, an investment in warrants may be considered more
speculative than certain other types of investments. In
addition, the value of a warrant does not necessarily change with
the value of the underlying securities and a warrant ceases to
have value if it is not exercised prior to its expiration date.

Illiquid Securities. The Fund may invest in securities that
lack an established secondary trading market or otherwise are
considered illiquid. Liquidity of a security relates to the
ability to dispose easily of the security and the price to be
obtained upon disposition of the security, which may be less than
a comparable more liquid security. Illiquid sovereign debt and
corporate fixed income securities may trade at a discount from
comparable, more liquid investments. In addition, the Fund may
invest in privately placed securities which may or may not be
freely transferable under the laws of the applicable jurisdiction
or due to contractual restrictions on resale. See "Private
Placements" below.

Distressed Securities. The Fund may invest in distressed
securities, which are securities which are currently in default
or in risk of default at the time of acquisition. Such
investment involves significant risk. The Fund only will make
such investments when the Investment Adviser believes it is
reasonably likely that the issuer of the securities will make an
exchange offer or will be the subject of a plan of
reorganization; however, there can be no assurance that such an
exchange offer will be made or that such a plan of reorganization
will be adopted. A significant period of time may pass between
the time at which the Fund makes its investment in Distressed
Securities and the time that any such exchange offer or plan of
reorganization is completed. During this period, it is unlikely
that the Fund will receive any interest payments on the
Distressed Securities. In addition, as a result of the Fund's
participation in negotiations with respect to any exchange offer
or plan of reorganization with respect to an issuer of Distressed
Securities, the Fund may be precluded from disposing of such
securities.

Convertible Securities. A convertible security is a bond,
debenture, note, preferred stock or other security that may be
converted into or exchanged for a prescribed amount of common
stock of the same or a different issuer within a particular
period of time at a specified price or formula. A convertible
security entitles the holder to receive interest generally paid
or accrued on debt or the dividend paid on preferred stock until
the convertible security matures or is redeemed, converted or
exchanged. Convertible securities have several unique investment
characteristics such as (1) higher yields than common stocks, but
lower yields than comparable nonconvertible securities, (2) a
lesser degree of fluctuation in value than the underlying stock
since they have fixed income characteristics, and (3) the
potential for capital appreciation of the market price if the
underlying common stock increases. A convertible security might
be subject to redemption at the option of the issuer at a price
established in the convertible security's governing instrument.
If a convertible security held by the Fund is called for
redemption, the Fund may be required to permit the issuer to
redeem the security, convert it into the underlying common stock
or sell it to a third party.
14
<PAGE>

Private Placements. The Fund may invest in securities of
companies or governments of emerging market Asia-Pacific
countries that are sold in private placement transactions between
their issuers and their purchasers and that are neither listed on
an exchange nor traded in other established markets. In many
cases, privately placed securities will be subject to contractual
or legal restrictions on transfer. As a result of the absence of
a public trading market, privately placed securities may in turn
be less liquid or illiquid and more difficult to value than
publicly traded securities. To the extent that privately placed
securities may be resold in privately negotiated transactions,
the prices realized from the sales could, due to illiquidity, be
less than those originally paid by the Fund or less than their
fair value. In addition, issuers whose securities are not
publicly traded may not be subject to the disclosure and other
investor protection requirements that may be applicable if their
securities were publicly traded. If any privately placed
securities held by the Fund are required to be registered under
the securities laws of one or more jurisdictions before being
resold, the Fund may be required to bear the expenses of
registration. Certain of the Fund's investments in private
placements may consist of direct investments and may include
investments in smaller, less-seasoned companies, which may
involve greater risks. These companies may have limited product
lines, markets or financial resources, or they may be dependent
on a limited management group. In addition, in the event the
Fund sells such securities, any capital gains realized on such
transactions may be subject to higher rates of taxation than
taxes payable on the sale of listed securities.

Indexed and Inverse Securities. The Fund may invest in
securities whose potential return is based on the change in
particular measurements of value or rate (an "index"). As an
illustration, the Fund may invest in a security that pays
interest and returns principal based on the change in an index of
interest rates or of the value of a precious or industrial metal.
Interest and principal payable on a security may also be based on
relative changes among particular indices. In addition, the Fund
may invest in securities whose potential investment return is
inversely based on the change in particular indices. For
example, the Fund may invest in securities that pay a higher rate
of interest and principal when a particular index decreases and
pay a lower rate of interest and principal when the value of the
index increases. To the extent that the Fund invests in such
types of securities, it will be subject to the risks associated
with changes in the particular indices, which may include reduced
or eliminated interest payments and losses of invested principal.

Certain indexed securities, including certain inverse
securities, may have the effect of providing a degree of
investment leverage, because they may increase or decrease in
value at a rate that is a multiple of the changes in applicable
indices. As a result, the market value of such securities will
generally be more volatile than the market values of fixed-rate
securities. The Fund believes that indexed securities, including
inverse securities, represent flexible portfolio management
instruments that may allow the Fund to seek potential investment
rewards, hedge other portfolio positions, or vary the degree of
portfolio leverage relatively efficiently under different market
conditions.

Investment in Other Investment Companies and Venture Capital
Funds. The Fund may invest in other investment companies and
venture capital funds whose investment objectives and policies
are consistent with those of the Fund. In accordance with the
Investment Company Act, the Fund may invest up to 10% of its
total assets in securities of other investment companies. In
addition, under the Investment Company Act the Fund may not own
more than 3% of the total outstanding voting stock of any
investment company and not more than 5% of the value of the
Fund's total assets may be invested in the securities of any
investment company. If the Fund acquires shares in investment
companies or venture capital funds, shareholders would bear both
their proportionate share of expenses in the Fund (including
management and advisory fees) and, indirectly, the expenses of
such investment companies or venture capital funds (including
management and advisory fees). Investment in such venture
capital funds involves substantial risk of loss to the Fund of
its entire investment.

15
<PAGE>
OTHER INVESTMENT POLICIES AND PRACTICES

Portfolio Strategies Involving Options and Futures

The Fund is authorized to engage in various portfolio
strategies to hedge its portfolio against adverse movements in
equity, debt and currency markets. The Fund has authority to
write (i.e., sell) covered put and call options on its portfolio
securities, purchase put and call options on securities and
engage in transactions in stock index options, stock index
futures and financial futures, and related options on such
futures. The Fund may also deal in forward foreign exchange
transactions and foreign currency options and futures, and
related options on such futures. Each of these portfolio
strategies is described below. Although certain risks are
involved in options and futures transactions (as discussed in
"Risk Factors and Special Considerations-Hedging"), the
Investment Adviser believes that, because the Fund will engage in
options and futures transactions only for hedging purposes, the
options and futures portfolio strategies of the Fund will not
subject the Fund to the risks frequently associated with the
speculative use of options and futures transactions. While the
Fund's use of hedging strategies is intended to reduce
volatility, the net asset value of Fund shares will fluctuate.

There can be no assurance that the Fund's hedging
transactions will be effective. Suitable hedging instruments may
not be available with respect to securities of companies in
emerging market Asia-Pacific countries on a timely basis and on
acceptable terms. Furthermore, the Fund will only engage in
hedging activities from time to time and will not necessarily
engage in hedging transactions when movements in any particular
equity, debt and currency markets occur.

Set forth below are descriptions of certain hedging
strategies in which the Fund is authorized to engage.

Writing Covered Options. The Fund is authorized to write
(i.e., sell) covered call options on the securities in which it
may invest and to enter into closing purchase transactions with
respect to certain of such options. A covered call option is an
option where the Fund in return for a premium gives another party
a right to buy specified securities owned by the Fund at a
specified future date and price set at the time of the contract.
The principal reason for writing options is to attempt to
realize, through the receipt of premiums, a greater return than
would be realized on the securities alone. By writing covered
call options the Fund gives up the opportunity, while the option
is in effect, to profit from any price increase in the underlying
security above the option exercise price. In addition, the
Fund's ability to sell the underlying security will be limited
while the option is in effect unless the Fund effects a closing
purchase transaction. A closing purchase transaction cancels out
the Fund's position as the writer of an option by means of an
offsetting purchase of an identical option prior to the
expiration of the option it has written. Covered call options
serve as a partial hedge against the price of the underlying
security declining.

The Fund also may write put options which give the holder of
the option the right to sell the underlying security to the Fund
at the stated exercise price. The Fund will receive a premium
for writing a put option which increases the Fund's return. The
Fund writes only covered put options, which means that so long as
the Fund is obligated as the writer of the option it will,
through its custodian, have deposited and maintained cash, cash
equivalents, U.S. Government securities or other high grade
liquid debt securities denominated in U.S. dollars or non-U.S.
currencies with a securities depository with a value equal to or
greater than the exercise price of the underlying securities. By
writing a put, the Fund will be obligated to purchase the
underlying security at a price that may be higher than the market
value of that security at the time of exercise for as long as the
option is outstanding. The Fund may engage in closing
transactions in order to terminate put options that it has
written. The Fund will not write put options if the aggregate
value of the obligations underlying the put options shall exceed
50% of the Fund's net assets.

Purchasing Options. The Fund is authorized to purchase put
options to hedge against a decline in the market value of its
securities. By buying a put option the Fund has a right to sell
the underlying security at the exercise price, thus limiting the
Fund's risk of loss through a decline in the market value of the
security until the put option expires. The amount of any
appreciation in the value of the underlying security will be
partially offset by the amount of the premium paid for the put
option and any related transaction costs. Prior to its
expiration, a
16
<PAGE>
put option may be sold in a closing sale transaction and profit
or loss from the sale will depend on whether the amount received
is more or less than the premium paid for the put option plus the
related transaction costs. A closing sale transaction cancels
out the Fund's position as the purchaser of an option by means of
any offsetting sale of an identical option prior to the
expiration of the option it has purchased.

In certain circumstances, the Fund may purchase call options
on securities held in its portfolio on which it has written call
options or on securities which it intends to purchase. The Fund
will not purchase options on securities (including stock index
options discussed below) if as a result of such purchase, the
aggregate cost of all outstanding options on securities held by
the Fund would exceed 5% of the market value of the Fund's total
assets.

Stock Index Options and Futures and Financial Futures. The
Fund is authorized to engage in transactions in stock index
options and futures and financial futures, and related options on
such futures. The Fund may purchase or write put and call
options on stock indices to hedge against the risks of marketwide
stock price movement in the securities in which the Fund invests.
Options on indices are similar to options on securities except
that on exercise or assignment, the parties to the contract pay
or receive an amount of cash equal to the difference between the
closing value of the index and the exercise price of the option
times a specified multiple. The Fund may invest in stock index
options based on a broad market index or based on a narrow index
representing an industry or market segment.

The Fund may also purchase and sell stock index futures
contracts and financial futures contracts ("futures contracts")
as a hedge against adverse changes in the market value of its
portfolio securities as described below. A futures contract is
an agreement between two parties which obligates the purchaser of
the futures contract to buy and the seller of a futures contract
to sell a security for a set price on a future date. Unlike most
other futures contracts, a stock index futures contract does not
require actual delivery of securities but results in cash
settlement based upon the difference in value of the index
between the time the contract was entered into and the time of
this settlement. The Fund may effect transactions in stock index
futures contracts in connection with the equity securities in
which it invests and in financial futures contracts in connection
with the debt securities in which it invests. Transactions by
the Fund in stock index futures and financial futures are subject
to limitations as described below under "Restrictions on the Use
of Futures Transactions".

The Fund may sell futures contracts in anticipation of or
during a market decline to attempt to offset the decrease in
market value of the Fund's securities portfolio that might
otherwise result. When the Fund is not fully invested in the
securities markets and anticipates a significant market advance,
it may purchase futures in order to gain rapid market exposure
that may in part or entirely offset increases in the cost of
securities that the Fund intends to purchase. As such purchases
are made, an equivalent amount of futures contracts will be
terminated by offsetting sales. The Investment Adviser does not
consider purchases of futures contracts to be a speculative
practice under these circumstances. It is anticipated that, in a
substantial majority of these transactions, the Fund will
purchase such securities upon termination of the long futures
position, whether the long position is the purchase of a futures
contract or the purchase of a call option or the writing of a put
option on a future, but under unusual circumstances (e.g., the
Fund experiences a significant amount of redemptions or there is
a change in market conditions), a long futures position may be
terminated without the corresponding purchase of securities.

The Fund also has authority to purchase and write call and
put options on futures contracts and stock indices in connection
with its hedging activities. Generally, these strategies are
utilized under the same market and market sector conditions
(i.e., conditions relating to specific types of investments) in
which the Fund enters into futures transactions. The Fund may
purchase put options or write call options on futures contracts
and stock indices rather than selling the underlying futures
contract in anticipation of a decrease in the market value of its
securities. Similarly, the Fund may purchase call options, or
write put options on futures contracts and stock indices, as a
substitute for the purchase of such futures to hedge against the
increased cost resulting from an increase in the market value of
securities which the Fund intends to purchase.

The Fund may engage in options and futures transactions on
U.S. and foreign exchanges and in options in the over-the-counter
markets ("OTC options"). Exchange-traded contracts are third-
party contracts (i.e.,
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performance of the parties' obligations is guaranteed by an
exchange or clearing corporation) which, in general, have
standardized strike prices and expiration dates. OTC options
transactions are two-party contracts with prices and terms
negotiated by the buyer and seller. See "Restrictions on OTC
Options" below for information as to restrictions on the use of
OTC options.

Foreign Currency Hedging. The Fund has authority to deal in
forward exchange among currencies of the different countries in
which it will invest and multinational currency units as a hedge
against possible variations in the foreign exchange rates among
these currencies. This is accomplished through contractual
agreements to purchase or sell a specified currency at a
specified future date (up to one year) and price set at the time
of the contract. The Fund's dealings in forward foreign exchange
will be limited to hedging involving either specific transactions
or portfolio positions. Transaction hedging is the purchase or
sale of forward foreign currency with respect to specific
receivables or payables of the Fund accruing in connection with
the purchase and sale of its portfolio securities, the sale and
redemption of shares of the Fund or the payment of dividends and
distributions by the Fund. Position hedging is the sale of
forward foreign currency with respect to portfolio security
positions denominated or quoted in such foreign currency. The
Fund has no limitation on transaction hedging. The Fund will not
speculate in foreign forward exchange. If the Fund enters into a
position hedging transaction, the Fund's custodian will place
cash or liquid debt securities in a separate account of the Fund
in an amount equal to the value of the Fund's total assets
committed to the consummation of such forward contract. If the
value of the securities placed in the separate account declines,
additional cash or securities will be placed in the account so
that the value of the account will equal the amount of the Fund's
commitment with respect to such contracts. Hedging against a
decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent
losses if the prices of such securities decline. Such
transactions also preclude the opportunity for gain if the value
of the hedged currency should rise. Moreover, it may not be
possible for the Fund to hedge against a devaluation that is so
generally anticipated that the Fund is not able to contract to
sell the currency at a price above the devaluation level it
anticipates. Investors should be aware that in certain emerging
market Asia-Pacific countries no forward market for foreign
currencies currently exists or such market may be closed to
investment by the Fund.

The Fund is also authorized to 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-U.S. 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. As an illustration, the
Fund may use such techniques to hedge the stated value in U.S.
dollars of an investment in a Philippine peso denominated
security. In such circumstances, for example, the Fund may
purchase a foreign currency put option enabling it to sell a
specified amount of Philippine peso for dollars at a specified
price by a future date. To the extent the hedge is successful, a
loss in the value of the Philippine peso relative to the dollar
will tend to be offset by an increase in the value of the put
option. To offset, in whole or in part, the cost of acquiring
such a put option, the Fund may also sell a call option which, if
exercised, requires it to sell a specified amount of Philippine
pesos for dollars at a specified price by future date (a
technique called a "straddle"). By selling such a call option in
this illustration, the Fund gives up the opportunity to profit
without limit from increases in the relative value of the
Philippine peso to the dollar. The Investment Adviser believes
that "straddles" of the type which may be utilized by the Fund
constitute hedging transactions and are consistent with the
policies described above.

Certain differences exist between these foreign currency
hedging instruments. Foreign currency options provide the holder
thereof the right to buy or sell a currency at a fixed price on a
future date. A futures contract on a foreign currency is an
agreement between two parties to buy and sell a specified amount
of currency for a set price on a future date. Futures contracts
and options on futures contracts are traded on boards of trade or
futures exchanges. The Fund will not speculate in foreign
currency options, futures or related options. Accordingly, the
Fund will not hedge a currency substantially in excess of the
market value of the securities which it has committed or
anticipates to purchase which are denominated in such currency
and, in the case of securities which have been sold by the Fund
but not yet delivered, the proceeds thereof in its denominated
currency. The Fund may not incur potential net liabilities of
more than 20% of its total assets from foreign currency options,
futures or related options.

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Restrictions on the Use of Futures Transactions.
Regulations of the Commodity Futures Trading Commission
applicable to the Fund provide that the futures trading
activities described herein will not result in the Fund being
deemed a "commodity pool" under such regulations if the Fund
adheres to certain restrictions. In particular, the Fund may
purchase and sell futures contracts and options thereon (i) for
bona fide hedging purpose, and (ii) for non-hedging purposes, if
the aggregate initial margin and premiums required to establish
positions in such contracts and options does not exceed 5% of the
liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any such
contracts and options.

When the Fund purchases a futures contract, or writes a put
option or purchases a call option thereon, an amount of cash and
cash equivalents will be deposited in a segregated account with
the Fund's custodian so that the amount so segregated, plus the
amount of initial and variation margin held in the account of its
broker, equals the market value of the futures contract, thereby
ensuring that the use of such futures contract is unleveraged.

Other Investment Policies and Practices

Non-Diversified Status. The Fund is classified as non-
diversified within the meaning of the Investment Company Act,
which means that the Fund is not limited by such Act in the
proportion of its assets that it may invest in securities of a
single issuer. The Fund's investments will be limited, however,
in order to qualify as a "regulated investment company" for
purposes of the Internal Revenue Code of 1986, as amended (the
"Code"). See "Taxes". To qualify, the Fund will comply with
certain requirements, including limiting its investments so that
at the close of each quarter of the taxable year (i) not more
than 25% of the market value of the Fund's total assets will be
invested in the securities of a single issuer and (ii) with
respect to 50% of the market value of its total assets, not more
than 5% of the market value of its total assets will be invested
in the securities of a single issuer, and the Fund will not own
more than 10% of the outstanding voting securities of a single
issuer. A fund which elects to be classified as "diversified"
under the Investment Company Act must satisfy the foregoing 5%
and 10% requirements with respect to 75% of its total assets. To
the extent that the Fund assumes large positions in the
securities of a small number of issuers, the Fund's net asset
value may fluctuate to a greater extent than that of a
diversified company as a result of changes in the financial
condition or in the market's assessment of the issuers, and the
Fund may be more susceptible to any single economic, political or
regulatory occurrence than a diversified company.

Standby Commitment Agreements. The Fund may from time to
time enter into standby commitment agreements. Such agreements
commit the Fund, for a stated period of time, to purchase a
stated amount of a fixed income security which may be issued and
sold to the Fund at the option of the issuer. The price and
coupon of the security is fixed at the time of commitment. The
Fund will enter into such agreements only for the purpose of
investing in the security underlying the commitment at a yield
and price that is considered advantageous to the Fund. The Fund
will at all times maintain a segregated account with its
custodian of cash, cash equivalents, U.S. Government securities
or other high grade liquid debt securities denominated in U.S.
dollars or non-U.S. currencies in an aggregate amount equal to
the purchase price of the securities underlying the commitment.

There can be no assurance that the securities subject to a
standby commitment will be issued and the value of the security,
if issued, on the delivery date may be more or less than its
purchase price. Because of the issuance of the security
underlying the commitment is at the option of the issuer, the
Fund may bear the risk of a decline in the value of such security
and may not benefit from an appreciation in the value of the
security during the commitment period.

The purchase of a security subject to a standby agreement
and the related commitment fee will be recorded on the date which
the security can reasonably be expected to be issued, and the
value of the security will thereafter be reflected in the
calculation of the Fund's net asset value. The cost basis of the
security will be adjusted by the amount of the commitment fee.
In the event the security is not issued, the commitment fee will
be recorded as income on the expiration date of the standby
commitment.

Repurchase Agreements and Purchase and Sale Contracts. The
Fund may invest in securities pursuant to repurchase agreements
or purchase and sale contracts. Repurchase agreements may be
entered into only with a
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member bank of the Federal Reserve System or a primary dealer in
U.S. Government securities. Purchase and sale contracts may be
entered into only with financial institutions which have capital
of at least $50 million or whose obligations are guaranteed by an
entity having capital of at least $50 million. Under such
agreements, the other party agrees, upon entering into the
contract with the Fund, to repurchase the security at a mutually
agreed upon time and price in a specified currency, thereby
determining the yield during the term of the agreement. This
results in a fixed rate of return insulated from market
fluctuations during such period although it may be affected by
currency fluctuations. In the case of repurchase agreements, the
prices at which the trades are conducted do not reflect the
accrued interest on the underlying obligations; whereas, in the
case of purchase and sale contracts, the prices take into account
accrued interest. Such agreements usually cover short periods,
often less than one week. Repurchase agreements may be construed
to be collateralized loans by the purchaser to the seller secured
by the securities transferred to the purchaser. In the case of a
repurchase agreement, as a purchaser, the Fund will require the
seller to provide additional collateral if the market value of
the securities falls below the repurchase price at any time
during the term of the repurchase agreement; the Fund does not
have the right to seek additional collateral in the case of
purchase and sale contracts. In the event of default by the
seller under a repurchase agreement construed to be a
collateralized loan, the underlying securities are not owned by
the Fund but constitute only collateral for the seller's
obligation to pay the repurchase price. Therefore, the Fund may
suffer time delays and incur costs or possible losses in
connection with the disposition of the collateral. A purchase
and sale contract differs from a repurchase agreement in that the
contract arrangements stipulate that the securities are owned by
the Fund. In the event of a default under such a repurchase
agreement or under a purchase and sale contract, instead of the
contractual fixed rate of return, the rate of return to the Fund
shall be dependent upon intervening fluctuations of the market
values of such securities and the accrued interest on the
securities. In such event, the Fund would have rights against
the seller for breach of contract with respect to any losses
resulting from market fluctuations following the failure of the
seller to perform. While the substance of purchase and sale
contracts is similar to repurchase agreements, because of the
different treatment with respect to accrued interest and
additional collateral, management believes that the purchase and
sale contracts are not repurchase agreements as such term is
understood in the banking and brokerage community.

Short Sales. The Fund may make short sales of securities.
A short sale is a transaction in which the Fund sells a security
it does not own in anticipation that the market price of that
security will decline. The Fund expects to make short sales both
as a form of hedging to offset potential declines in long
positions in similar securities and in order to maintain
portfolio flexibility.

When the Fund makes a short sale, it must borrow the
security sold short and deliver it to the broker-dealer through
which it made the short sale as collateral for its obligation to
deliver the security upon conclusion of the sale. The Fund may
have to pay a fee to borrow particular securities and is often
obligated to pay over any payments received on such borrowed
securities.

The Fund's obligation to replace the borrowed security will
be secured by collateral deposited with the broker-dealer,
usually cash, U.S. government securities or other high grade
liquid securities similar to those borrowed. The Fund will also
be required to deposit similar collateral with its custodian to
the extent, if any, necessary so that the value of both
collateral deposits in the aggregate is at all times equal to at
least 100% of the current market value of the security sold
short. Depending on arrangements made with the broker-dealer
from which it borrowed the security regarding payment over of any
payments received by the Fund on such security, the Fund may not
receive any payments (including interest) on its collateral
deposited with such broker-dealer.

If the price of the security sold short increases between
the time of the short sale and the time the Fund replaces the
borrowed security, the Fund will incur a loss; conversely, if the
price declines, the Fund will realize a gain. Any gain will be
decreased, and any loss increased, by the transaction costs
described above. Although the Fund's gain is limited to the
price at which it sold the security short, its potential loss is
theoretically unlimited.

Lending Portfolio Securities. The Fund may from time to
time lend securities from its portfolio, with a value not
exceeding 331/3% of its total assets, to banks, brokers and other
financial institutions and receive collateral in cash or
securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities which will be
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<PAGE>
maintained at all times in an amount equal to at least 100% of
the current market value of the loaned securities. The purpose
of such loans is to permit the borrower to use such securities
for delivery to purchasers when such borrower has sold short. If
cash collateral is received by the Fund, it is invested in short-
term money market securities, and a portion of the yield received
in respect of such investment is retained by the Fund.
Alternatively, if securities are delivered to the Fund as
collateral, the Fund and the borrower negotiate a rate for the
loan premium to be received by the Fund for lending its portfolio
securities. In either event, the total yield on the Fund's
portfolio is increased by loans of its portfolio securities. The
Fund will have the right to regain record ownership of loaned
securities to exercise beneficial rights such as voting rights,
subscription rights and rights to dividends, interest or other
distributions. Such loans are terminable at any time. The Fund
may pay reasonable finder's, administrative and custodial fees in
connection with such loans.

When-Issued and Forward Commitment Securities. The Fund may
purchase securities on a "when-issued" basis. When such
transactions are negotiated, the price is fixed at the time the
commitment is made, but delivery and payment for the securities
take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the
Fund will enter into when-issued and forward commitments only
with the intention of actually receiving or delivering the
securities, as the case may be. If the Fund disposes of the
right to acquire a when-issued security prior to its acquisition
or disposes of its right to deliver or receive against a forward
commitment, it can incur a gain or loss. At the time the Fund
enters into a transaction on a when-issued or forward commitment
basis, it will segregate with the custodian cash or other liquid
high grade debt securities with a value of not less than the
value of the when-issued or forward commitment securities. The
value of these assets will be monitored daily to ensure that
their marked to market value will at all time exceed the
corresponding obligations of the Fund. There is always a risk
that the securities may not be delivered, and the Fund may incur
a loss. Settlements in the ordinary course, which may take
substantially more than five business days, are not treated by
the Fund as when-issued or forward commitment transactions and
accordingly are not subject to the foregoing restrictions.

INVESTMENT RESTRICTIONS

Investment Restrictions

The Fund has adopted the following restrictions and policies
relating to the investment of its assets and its activities,
which are fundamental policies and may not be changed without the
approval of the holders of a majority of the Fund's outstanding
voting securities (which for this purpose and under the
Investment Company Act means the lesser of (i) 67% of the shares
represented at a meeting at which more than 50% of the
outstanding shares are represented or (ii) more than 50% of the
outstanding shares). The Fund may not:

1. Invest more than 25% of its assets, taken at
market value at the time of each investment, in the
securities of issuers in any particular industry (excluding
the U.S. Government and its agencies and instrumentalities).

2. Make investments for the purpose of exercising
control or management. Investments by the Fund in wholly-
owned investment entities created under the laws of certain
countries will not be deemed the making of investments for
the purpose of exercising control of management.

3. Purchase or sell real estate, commodities or
commodity contracts, provided that the Fund may invest in
securities secured by real estate or interests therein or
issued by companies that invest in real estate or interests
therein, and the Fund may purchase and sell financial
futures contracts and options thereon.

4. Make loans to other persons, except that the
acquisition of bonds, debentures, loan participations or
other corporate debt securities and investment in government
obligations, or participations therein, short-term
commercial paper, certificates of deposit, bankers'
acceptances and repurchase
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<PAGE>
agreements and purchase and sale contracts shall not be
deemed to be the making of a loan, and except further that
the Fund may lend its portfolio securities as set forth in
(5) below.

5. Lend its portfolio securities in excess of 331/3%
of its total assets, taken at market value; provided that
such loans may only be made in accordance with the
guidelines set forth above.

6. Issue senior securities (including borrowing
money) except that in the event it converts to an open-end
investment company, the Fund is authorized to borrow up to
20% of its total assets in order to meet redemptions; or
pledge its assets other than to secure such issuances or in
connection with hedging transactions, short sales, when-
issued and forward commitment transactions and similar
investment strategies.

7. Underwrite securities of other issuers except
insofar as the Fund technically may be deemed an underwriter
in selling portfolio securities.

8. Purchase or sell interests (including leases) in
oil, gas or other mineral exploration or development
programs, except that the Fund may invest in securities
issued by companies that engage in oil, gas or other mineral
exploration or development activities.

9. Invest more than 25% of its total assets in the
securities of issuers in any one industry, provided that
this limitation shall not apply with respect to obligations
issued or guaranteed by the U.S. Government or by its
agencies or instrumentalities.

An additional investment restrictions adopted by the Fund,
which may be changed by the Board of Directors, provides that the
Fund may not:

1. Purchase any securities on margin, except that the
Fund may obtain such short-term credit as may be necessary for
the clearance of purchases and sales of portfolio securities.
The payment by the Fund of initial or variation margin in
connection with futures or related options transactions, if
applicable, shall not be considered the purchase of a security on
margin.

Portfolio securities of the Fund generally may not be
purchased from, sold or loaned to the Investment Adviser or its
affiliates or any of their directors, officers or employees,
acting as principal, unless pursuant to a rule or exemptive order
under the Investment Company Act.

Because of the affiliation of the Investment Adviser with
the Fund, the Fund is prohibited from engaging in certain
transactions involving the Investment Adviser's affiliate,
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch") or its affiliates except for brokerage transactions
permitted under the Investment Company Act involving only usual
and customary commissions or transactions pursuant to an
exemptive order under the Investment Company Act. See "Portfolio
Transactions". Without such an exemptive order, the Fund would
be prohibited from engaging in portfolio transactions with
Merrill Lynch or its affiliates acting as principal and from
purchasing securities in public offerings which are not
registered under the Securities Act of 1933, as amended, in which
such firms or any of their affiliates participate as an
underwriter or dealer.

RISK FACTORS AND SPECIAL CONSIDERATIONS

General

Because the Fund intends to invest primarily in equity
securities of companies in emerging market Asia-Pacific
countries, an investor in the Fund should be aware of certain
risk factors and special considerations relating to investing in
such securities. More generally, the investor should also be
aware of risks and considerations related to international
investing and investing in smaller capital markets, each of which
may involve risks which are not
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<PAGE>
typically associated with investments in securities of U.S.
companies. Consequently, an investment in the Fund should not be
considered a balanced investment program.

Investing on an International Basis and in Countries with Smaller
Capital Markets

Investing on an international basis and in countries with
smaller capital markets involves certain risks not involved in
domestic investments, including fluctuations in foreign exchange
rates, future political and economic developments, and the
possible imposition of exchange controls or other foreign
governmental laws or restrictions. Since the Fund will invest
heavily in securities denominated or quoted in currencies other
than the U.S. dollar, changes in foreign currency exchange rates
will affect the value of securities in the portfolio and the
unrealized appreciation or depreciation of investments. In
addition, with respect to certain foreign countries, there is the
possibility of expropriation of assets, confiscatory taxation,
political or social instability or diplomatic developments which
could affect investments in those countries. Moreover,
individual foreign economies may differ favorably or unfavorably
from the U.S. economy in such respects as growth of gross
national product, rates of inflation, capital reinvestment,
resources, self-sufficiency and balance of payments position.
Certain foreign investments may also be subject to foreign
withholding taxes. These risks are often heightened for
investments in smaller capital markets and emerging market Asia-
Pacific countries.

Most of the securities held by the Fund will not be
registered with the Securities and Exchange Commission, nor will
the issuers thereof be subject to the reporting requirements of
such agency. Accordingly, there may be less publicly available
information about a foreign company than about a U.S. company,
and such foreign companies may not be subject to accounting,
auditing and financial reporting standards and requirements
comparable to those of U.S. companies. As a result, traditional
investment measurements, such as price/earnings ratios, as used
in the United States, may not be applicable to certain smaller
capital markets. Foreign companies, and companies in smaller
capital markets in particular, are not generally subject to
uniform accounting, auditing and financial reporting standards or
to practices and requirements comparable to those applicable to
domestic companies. Foreign markets also have different
clearance and settlement procedures, and in certain markets there
have been times when settlements have failed to keep pace with
the volume of securities transactions, making it difficult to
conduct such transactions. Delays in settlement could result in
temporary periods when assets of the Fund are uninvested and no
return is earned thereon. The inability of the Fund to make
intended security purchases due to settlement problems could
cause the Fund to miss attractive investment opportunities. The
inability to dispose of a portfolio security due to settlement
problems could result either in losses to the Fund due to
subsequent declines in the value of such portfolio security or,
if the Fund has entered into a contract to sell the security,
could result in possible liability to the purchaser. Brokerage
commissions and other transaction costs on foreign securities
exchanges are generally higher than in the United States. There
is generally less government supervision and regulation of
exchanges, brokers and issuers in foreign countries than there is
in the United States.

The operating expense ratio of the Fund can be expected to
be higher than that of an investment company investing
exclusively in U.S. securities since the expenses of the Fund,
such as management and advisory fees and custodial costs, are
higher. In addition, the Fund will incur costs associated with
the exchange of currencies.

Risks Relating to Investment in Emerging Market Asia-Pacific
Countries' Securities Markets and Economies

The securities markets of emerging Asia-Pacific countries
are not as large as the U.S. securities markets and have
substantially less trading volume, resulting in a lack of
liquidity with high price volatility. Certain markets are in
only the earliest stages of development. There is also a high
concentration of market capitalization and trading volume in a
small number of issuers representing a limited number of
industries, as well as a high concentration of investors and
financial intermediaries. Many of such markets also may be
affected by developments with respect to more established markets
in the region, such as in Japan and Hong Kong. Brokers in
emerging market Asia-Pacific countries typically are fewer in
number and less capitalized then brokers in the United States.
These factors, combined with the U.S. regulatory requirements for
closed-end companies and the restrictions on foreign investment
discussed below, result in potentially fewer investment
opportunities for the Fund and may have an adverse impact on the
investment performance of the Fund.

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<PAGE>
The investment objective of the Fund reflects the belief
that the economies of the emerging market Asia-Pacific countries
will continue to grow in such a fashion as to provide attractive
investment opportunities. At the same time, emerging economies
present certain risks that do not exist in more established
economies; especially significant is that political and social
uncertainties exist for many of the emerging market Asia-Pacific
countries. In addition, the governments of many of such
countries, such as Indonesia, have a heavy role in regulating and
supervising the economy. Another risk common to most such
countries is that the economy is heavily export oriented and,
accordingly, is dependent upon international trade. The
existence of overburdened infrastructure and obsolete financial
systems also present risks in certain countries, as do
environmental problems. Certain economies also depend to a
significant degree upon exports of primary commodities and,
therefore, are vulnerable to changes in commodity prices which,
in turn, may be affected by a variety of factors.

The legal systems in certain emerging market Asia-Pacific
countries also may have an adverse impact on the Fund. For
example, while the potential liability of a shareholder in a U.S.
corporation with respect to acts of the corporation is generally
limited to the amount of the shareholder's investment, the notion
of limited liability is less clear in certain emerging market
Asia-Pacific countries. Similarly, the rights of investors in
emerging market Asia-Pacific companies may be more limited than
those of shareholders of U.S. corporations. It may be difficult
or impossible to obtain and/or enforce a judgment in an emerging
market Asia-Pacific country.

Certain of the risks associated with international
investments and investing in smaller capital markets are
heightened for investments in emerging market Asia-Pacific
countries. For example, some of the currencies of emerging
market Asia-Pacific countries have experienced devaluations
relative to the U.S. dollar, and major adjustments have been made
periodically in certain of such currencies. Certain countries,
such as India, face serious exchange constraints. In addition as
mentioned above, governments of many emerging market Asia-Pacific
countries have exercised and continue to exercise substantial
influence over many aspects of the private sector. In certain
cases, the government owns or controls many companies, including
the largest in the country. Accordingly, government actions in
the future could have a significant effect on economic conditions
in emerging market Asia-Pacific countries, which could affect
private sector companies and the Fund, as well as the value of
securities in the Fund's portfolio.

In addition to the relative lack of publicly available
information about emerging market Asia-Pacific issuers and the
possibility that such issuers may not be subject to the same
accounting, auditing and financial reporting standards as U.S.
companies, inflation accounting rules in some emerging market
Asia-Pacific countries require, for companies that keep
accounting records in the local currency, for both tax and
accounting purposes, that certain assets and liabilities be
restated on the company's balance sheet in order to express items
in terms of currency of constant purchasing power. Inflation
accounting may indirectly generate losses or profits for certain
emerging market Asia-Pacific companies.

Satisfactory custodial services for investment securities
may not be available in some emerging market Asia-Pacific
countries, which may result in the Fund incurring additional
costs and delays in providing transportation and custody services
for such securities outside such countries.

As a result, management of the Fund may determine that,
notwithstanding otherwise favorable investment criteria, it may
not be practicable or appropriate to invest in a particular
emerging market Asia-Pacific country. The Fund may invest in
countries in which foreign investors, including management of the
Fund, have had no or limited prior experience.

Restrictions on Foreign Investments

Some emerging market Asia-Pacific countries prohibit or
impose substantial restrictions on investments in their capital
markets, particularly their equity markets, by foreign entities
such as the Fund. As illustrations, certain countries may
require governmental approval prior to investments by foreign
persons or limit the amount of investment by foreign persons in a
particular company or limit the investment by foreign persons to
only a specific class of securities of a company which may have
less advantageous terms (including price) than securities of the
24
<PAGE>
company available for purchase by nationals. Certain countries
may restrict investment opportunities in issuers or industries
deemed important to national interests.

The manner in which foreign investors may invest in
companies in certain emerging market Asia-Pacific countries, as
well as limitations on such investments, also may have an adverse
impact on the operations of the Fund. For example, the Fund may
be required in certain of such countries to invest initially
through a local broker or other entity and then have the shares
purchased re-registered in the name of the Fund. Re-registration
may in some instances not be able to occur on a timely basis,
resulting in a delay during which the Fund may be denied certain
of its rights as an investor, including rights as to dividends or
to be made aware of certain corporate actions. There also may be
instances where the Fund places a purchase order but is
subsequently informed, at the time of re-registration, that the
permissible allocation of the investment to foreign investors has
been filled, depriving the Fund of the ability to make its
desired investment at that time.

Substantial limitations may exist in certain countries with
respect to the Fund's ability to repatriate investment income,
capital or proceeds of sales of securities by foreign investors.
The Fund could be adversely affected by delays in, or a refusal
to grant, any required governmental approval for repatriation of
capital, as well as by the application to the Fund of any
restrictions on investments.

A number of publicly traded closed-end investment companies
have been organized to facilitate indirect foreign investment in
emerging market Asia-Pacific countries, and certain of such
countries, such as Thailand and South Korea, have specifically
authorized such funds. There also are investment opportunities
in certain of such countries in pooled vehicles that resemble
open-end investment companies. In accordance with the Investment
Company Act, not more than 5% of the Fund's assets may be
invested in any one such company. This restriction on
investments in securities of investment companies may limit
opportunities for the Fund to invest indirectly in certain
emerging market Asia-Pacific countries. Shares of certain
investment companies may at times be acquired only at market
prices representing premiums to their net asset values. If the
Fund acquires shares of investment companies or of venture
capital funds, shareholders would bear both their proportionate
share of expenses in the Fund (including management and advisory
fees) and, indirectly, the expenses of such investment companies
or venture capital funds.

Certain Risks of Debt Securities

No Rating Criteria for Debt Securities. The Fund has
established no rating criteria for the debt securities in which
it may invest and such securities may not be rated at all for
creditworthiness. Securities rated in the medium to low rating
categories of nationally recognized statistical rating
organizations such as Standard & Poor's Corporation ("S&P") and
Moody's Investors Service, Inc. ("Moody's"), unrated securities
of comparable quality (such lower rated and unrated securities
are referred to herein as "high yield/high risk securities") are
speculative with respect to the capacity to pay interest and
repay principal in accordance with the terms of the security and
generally involve a greater volatility of price than securities
in higher rating categories. See "Ratings of Fixed Income
Securities-- Appendix A". These securities are commonly referred
to as "junk" bonds. In purchasing such securities, the Fund will
rely on the Investment Adviser's judgment, analysis and
experience in evaluating the creditworthiness of an issuer of
such securities. The Investment Adviser will take into
consideration, among other things, the issuer's financial
resources, its sensitivity to economic conditions and trends, its
operating history, the quality of the issuer's management and
regulatory matters.

The market values of high yield/high risk securities tend to
reflect individual issuer developments to a greater extent than
do higher rated securities, which react primarily to fluctuations
in the general level of interest rates. Issuers of high
yield/high risk securities may be highly leveraged and may not
have available to them more traditional methods of financing.
Therefore, the risk associated with acquiring the securities of
such issuers generally is greater than is the case with higher
rated securities. For example, during an economic downturn or a
sustained period of rising interest rates, issuers of high
yield/high risk securities may be more likely to experience
financial stress especially if such issuers are highly leveraged.
During such periods, service of debt obligations also may be
adversely affected by specific issuer developments, or the
issuer's inability to meet specific projected
25
<PAGE>
business forecasts, or the unavailability of additional
financing. The risk of loss due to default by the issuer is
significantly greater for the holders of high yield/high risk
securities because such securities may be unsecured and may be
subordinated to other creditors of the issuer.

High yield/high risk securities may have call or redemption
features which would permit an issuer to repurchase the
securities from the Fund. If a call were exercised by the issuer
during a period of declining interest rates, the Fund likely
would have to replace such called securities with lower yielding
securities, thus decreasing the net investment income to the Fund
and dividends to shareholders.

The Fund may have difficulty disposing of certain high
yield/high risk securities because there may be a thin trading
market for such securities. To the extent that a secondary
trading market for high yield/high risk securities does exist, it
is generally not as liquid as the secondary market for higher
rated securities. Reduced secondary market liquidity may have an
adverse impact on market price and the Fund's ability to dispose
of particular issues when necessary to meet the Fund's liquidity
needs or in response to a specific economic event such as a
deterioration in the creditworthiness of the issuer. Reduced
secondary market liquidity for certain high yield/high risk
securities also may make it more difficult for the Fund to obtain
accurate market quotations for purposes of valuing the Fund's
portfolio. Market quotations are generally available on many
high yield/high risk securities only from a limited number of
dealers and may not necessarily represent firm bids of such
dealers of prices for actual sales. The Fund's Directors, or the
Investment Adviser will carefully consider the factors affecting
the market for high yield, high risk, lower rated securities in
determining whether any particular security is liquid or illiquid
and whether current market quotations are readily available.

Adverse publicity and investor perceptions, which may not be
based on fundamental analysis, also may decrease the value and
liquidity of high yield/high risk securities, particularly in a
thinly traded market. Factors adversely affecting the market
value of high yield/high risk securities are likely to adversely
affect the Fund's net asset value. In addition, the Fund may
incur additional expenses to the extent it is required to seek
recovery upon a default on a portfolio holding or participate in
the restructuring of the obligations.

Sovereign Debt. Certain emerging market Asia-Pacific
countries, such as the Philippines and India, owe significant
amounts of debt to commercial banks and foreign governments.
Investment in sovereign debt involves a high degree of risk. The
governmental entity that controls the repayment of sovereign debt
may not be able or willing to repay the principal and/or interest
when due in accordance with the terms of such debt. A
governmental entity's willingness or ability to repay principal
and interest due in a timely manner may be affected by, among
other factors, its cash flow situation, the extent of its foreign
reserves, the availability of sufficient foreign exchange on the
date a payment is due, the relative size of the debt service
burden to the economy as a whole, the governmental entity's
policy towards the International Monetary Fund and the political
constraints to which a governmental entity may be subject.
Governmental entities may also be dependent on expected
disbursements from foreign governments, multilateral agencies and
others abroad to reduce principal and interest arrearages on
their debt. The commitment on the part of these governments,
agencies and others to make such disbursements may be conditioned
on a governmental entity's implementation of economic reforms
and/or economic performance and the timely service of such
debtor's obligations. Failure to implement such reforms, achieve
such levels of economic performance or repay principal or
interest when due may result in the cancellation of such third
parties' commitments to lend funds to the governmental entity,
which may further impair such debtor's ability or willingness to
timely service its debts. Consequently, governmental entities
may default on their sovereign debt.

Holders of sovereign debt, including the Fund, may be
requested to participate in the rescheduling of such debt and to
extend further loans to governmental entities. There is no
bankruptcy proceeding by which sovereign debt on which a
governmental entity has defaulted may be collected in whole or in
part.

The sovereign debt instruments in which the Fund may invest
involve great risk and are deemed to be the equivalent in terms
of quality to high yield/high risk securities discussed above and
are subject to many of the same risks as such securities.
Similarly, the Fund may have difficulty disposing of certain
sovereign debt obligations because there may be a thin trading
market for such securities.
26
<PAGE>

Distressed Securities. Investment in Distressed Securities
is speculative and involves significant risk. The Fund only will
make such investments when the Investment Adviser believes it is
reasonably likely that the issuer of the securities will make an
exchange offer or will be the subject of a plan of
reorganization; however, there can be no assurance that such an
exchange offer will be made or that such a plan of reorganization
will be adopted. In addition, a significant period of time may
pass between the time at which the Fund makes its investment in
Distressed Securities and the time that any such exchange offer
or plan of reorganization is completed. During this period, it
is unlikely that the Fund will receive any interest payments on
the Distressed Securities, the Fund will be subject to
significant uncertainty as to whether or not the exchange offer
or plan of reorganization will be completed, and the Fund may be
required to bear certain expenses to protect its interest in the
course of negotiations surrounding any potential exchange offer
or plan of reorganization. In addition, even if an exchange
offer is made or a plan of reorganization is adopted with respect
to Distressed Securities held by the Fund, there can be no
assurance that the securities or other assets received by the
Fund in connection with such exchange offer or plan of
reorganization will not have a lower value or income potential
than anticipated when the investment was made. Moreover, any
securities received by the Fund upon completion of an exchange
offer or plan of reorganization may be restricted as to resale.
In addition, as a result of the Fund's participation in
negotiations with respect to any exchange offer or plan of
reorganization with respect to an issuer of Distressed
Securities, the Fund may be precluded from disposing of such
securities.

Hedging Strategies

The Fund may engage in various portfolio strategies to seek
to hedge against movements in the equity markets, interest rates
and exchange rates between currencies by the use of options,
futures, options on futures and forward currency transactions.
However, suitable hedging instruments may not be available with
respect to emerging market Asia-Pacific securities on a timely
basis and on acceptable terms. Furthermore, even if hedging
techniques are available, the Fund will only engage in hedging
activities from time to time and may not necessarily be engaging
in hedging activities when market or currency movements occur.
Hedging transactions in foreign markets are also subject to the
risk factors associated with foreign investments generally, as
discussed above. Investors should be aware that the forward
currency market for the purchase of U.S. dollars in most, if not
all, emerging market Asia-Pacific countries is not highly
developed, and that, in certain emerging market Asia-Pacific
countries, no forward market for foreign currencies currently
exists or such market may be closed to investment by the Fund.

Utilization of options and futures transactions involves the
risk of imperfect correlation in movements in the prices of
options and futures and movements in the prices of the securities
or currencies which are the subject of the hedge. If the price
of the options and futures moves more or less than the prices of
the hedged security or currency, the Fund will experience a gain
or loss which will not be completely offset by movements in the
prices of the subject of the hedge. The successful use of
options and futures also depends on the Investment Adviser's
ability to predict correctly price movements in the market
involved in a particular options or futures transaction.

Prior to exercise or expiration, an exchange-traded options
or futures position can only be terminated by entering into a
closing purchase or sale transaction. This requires a secondary
market on an exchange for call or put options of the same series.
The Fund will enter into options or futures transactions on an
exchange only if there appears to be a liquid secondary market
for such options or futures. However, there can be no assurance
that a liquid secondary market for such options or futures
contract will exist at any specific time. Thus, it may not be
possible to close an option or futures position. The Fund will
acquire only over-the-counter options for which management
believes the Fund can receive on each business day at least two
independent bids or offers (one of which will be from an entity
other than a party to the option), unless a quotation from only
one dealer is available, in which case only that dealer's price
will be used, or which can be sold at a formula price provided
for in the over-the-counter option agreement. In the case of a
futures position or an option on a futures position written by
the Fund in the event of adverse price movements, the Fund would
continue to be required to make daily cash payments of variation
margin. In such situations, if the Fund has insufficient cash,
it may have to sell portfolio securities to meet daily variation
margin requirements at a time when it may be disadvantageous to
do so. In addition, the Fund may be required to take or make
delivery of the currency or security underlying the futures
contracts it holds. The
27
<PAGE>
inability to close options and futures positions also could have
an adverse impact on the Fund's ability to hedge effectively its
portfolio. There is also the risk of loss by the Fund of margin
deposits in the event of bankruptcy of a broker with whom the
Fund has an open position in a futures contract or related
option. The risk of loss from investing in futures transactions
is theoretically unlimited.

The exchanges on which the Fund intends to conduct options
transactions generally have established limitations governing the
maximum number of call or put options on the same underlying
security or currency (whether or not covered) which may be
written by a single investor, whether acting alone or in concert
with others (regardless of whether such options are written on
the same or different exchanges or are held or written on one or
more accounts or through one or more brokers). "Trading limits"
are imposed on the maximum number of contracts which any person
may trade on a particular trading day. An exchange may order the
liquidation of positions found to be in violation of these
limits, and it may impose other sanctions or restrictions.

Illiquid Investments

The Fund may invest in illiquid securities. Investment of
the Fund's assets in relatively illiquid securities may restrict
the ability of the Fund to dispose of its investments in a timely
fashion and for a fair price as well as its ability to take
advantage of market opportunities. The risks associated with
illiquidity will be particularly acute in situations in which the
Fund's operations require cash, such as when the Fund repurchases
shares or pays dividends or distributions, and could result in
the Fund borrowing to meet short-term cash requirements or
incurring capital losses on the sale of illiquid investments.
Further, companies whose securities are not publicly traded are
not subject to the disclosure and other investor protection
requirements which would be applicable if their securities were
publicly traded.

Withholding and Other Taxes

Income and capital gains on securities held by the Fund may
be subject to withholding and other taxes imposed by emerging
market Asia-Pacific countries, which would reduce the return to
the Fund on those securities. The Fund intends to elect, when
eligible, to "pass-through" to the Fund's shareholders, as a
deduction or credit, the amount of foreign taxes paid by the
Fund. The taxes passed through to shareholders will be included
in each shareholder's income. Certain shareholders, including
non-U.S. shareholders, will not be entitled to the benefit of a
deduction or credit with respect to foreign taxes paid by the
Fund. Other taxes, such as transfer taxes, may be imposed on the
Fund, but would not give rise to a credit, or be eligible to be
passed through to shareholders.

Foreign Subcustodians and Securities Depositories

Rules adopted under the Investment Company Act permit the
Fund to maintain its foreign securities and cash in the custody
of certain eligible non-U.S. banks and securities depositories.
Certain banks in foreign countries may not be eligible
subcustodians for the Fund under such rules, in which event the
Fund may be precluded from purchasing securities in which it
would otherwise invest, and other banks that are eligible foreign
subcustodians may be recently organized or otherwise lack
extensive operating experience. In addition, in certain
countries there may be legal restrictions or limitations on the
ability of the Fund to recover assets held in custody by foreign
subcustodians in the event of the bankruptcy of the subcustodian.

Borrowings to Meet Redemptions

In the event it converts to an open-end investment company,
the Fund is authorized to borrow up to 20% of its total assets in
order to meet redemptions so as not to force the Fund to
liquidate securities at a disadvantageous time. Any such
borrowing will create expenses for the Fund.

28
<PAGE>
Net Asset Value Discount; Non-Diversification

The Fund is a newly organized company with no prior
operating history. Prior to this offering, there has been no
public market for the Fund's Common Stock. Shares of closed-end
investment companies have in the past frequently traded at a
discount from their net asset values and initial offering price.
This characteristic of shares of a closed-end fund is a risk
separate and distinct from the risk that a fund's net asset value
will decrease. The Fund cannot predict whether its own shares
will trade at, below or above net asset value. This risk of loss
associated with purchasing shares of a closed-end investment
company is more pronounced for investors who purchase in the
initial public offering and who wish to sell their shares in a
relatively short period of time.

The Fund is classified as a non-diversified investment
company under the Investment Company Act, which means that the
Fund is not limited by the Investment Company Act in the
proportion of its assets that may be invested in the obligations
of a single issuer. The Fund, however, intends to comply with
the diversification requirements imposed by the Code for
qualification as a regulated investment company. Thus, the Fund
may invest a greater proportion of its assets in the securities
of a smaller number of issuers and, as a result, will be subject
to greater risk of loss with respect to its portfolio securities.
See "Taxes" and "Investment Restrictions."

Conversion to Open-End Status

The Fund's Articles of Incorporation require the Board of
Directors to submit a proposal to convert the Fund to an open-end
investment company during the first quarter of 1996, unless the
Board of Directors determines that conversion at that time would
not be in the best interest of shareholders. Conversion to an
open-end status would require possibly disadvantageous changes to
the Fund's investment policies and could have an adverse effect
on the management of the Fund's investment portfolio. See "The
1996 Vote to Convert to Open-End Status."

Anti-Takeover Provisions

The Fund's Articles of Incorporation contain certain anti-
takeover provisions that may have the effect of limiting the
ability of other persons to acquire control of the Fund. In
certain circumstances, these provisions might also inhibit the
ability of holders of Common Stock to sell their shares at a
premium over prevailing market prices. The Fund's Board of
Directors has determined that these provisions are in the best
interests of shareholders. See "Description of Shares--Certain
Provisions of the Articles of Incorporation."

Operating Expenses

The Fund's estimated annual operating expenses are higher
than those of many other investment companies investing
exclusively in the securities of U.S. issuers. The operating
expenses are, however, believed by the Investment Adviser to be
comparable to expenses of other closed-end management investment
companies that invest primarily in the securities of companies in
emerging market Asia-Pacific countries.

SELECTED ECONOMIC AND MARKET DATA

The Asian continent covers approximately one-fifth of the
earth's surface and is home to more than half the world's
population. It is among the most economically diverse areas of
the world, with economies ranging from that of Japan, a leading
industrialized nation, to that of impoverished and politically
volatile Cambodia.

In between are the "emerging market" countries of Asia, and
even among them there is significant economic diversity.
Singapore, for example, has well developed industrial, financial
and service sectors but limited natural resources. China and
India are less industrialized but have vast land areas and
abundant natural resources, including electricity, oil and gas,
as well as mineral resources, the largest of which are coal, iron
ore, tin ore and tungsten.

29
<PAGE>

The Investment Adviser anticipates investing initially in
companies based in nine of the emerging market Asia-Pacific
countries: China, India, Indonesia, Malaysia, Pakistan, the
Philippines, Singapore, Sri Lanka and Thailand. The sub-region
formed by grouping these nine countries, which includes portions
of Central, East and Southeast Asia, extends from Pakistan's
border with Iran in the west to the eastern-most point of
Manchurian China, the eastern coastline of the Philippines and
the southeastern extremities of the Indonesia archipelago. For
ease of reference herein, these nine countries are sometimes
referred to collectively as the "sub-regional Asian countries,"
and the area that consists of only the sub-regional Asian
countries is sometimes referred to as the "Asian sub-region."
Since the Investment Adviser does not plan initially to invest in
any other countries or territories of the region (e.g., Hong
Kong, Japan, Korea or Taiwan), all such other countries and
territories are excluded from the meaning of the foregoing
defined terms as used herein. Data on the United States is
presented for comparative purposes.

The following is a discussion of (1) the development of the
economies in the Asian sub-region, (2) certain conditions
indicating continued growth in the sub-region and (3) the
development of and recent activity on the sub-region's securities
markets.

Economic Development of the Asian Sub-region

Industrialization: 1970-1992. Since 1970, there has been
a downward shift in the percentage of GDP accounted for by the
agricultural sector in the sub-regional Asian countries and a
commensurate increase in output by the industrial sector and, to
a lesser extent, the services sector. See Table 1 below. The
most noteworthy industrialization has taken place in Indonesia.
With the support of pro-business governmental policies,
Indonesia's industrial sector grew from 19% to 41% of its GDP
over the period 1970 through 1991. Similarly, Malaysia, which
had a largely agricultural economy in the early 1980s, is now the
world's largest producer of air conditioners, and in 1992
manufactured products accounted for approximately 45% of its
total exports. The Philippino economy is shifting to industry far
more slowly but is expected to benefit from certain market-
oriented reforms and the development of basic infrastructure such
as electrical power facilities.

30
<PAGE>
<TABLE>
TABLE 1

BREAKDOWN OF GDP: PERCENTAGES FOR AGRICULTURE,
INDUSTRY AND SERVICES: 1970 AND 1991

Agriculture (%) Industry*(%) Services(%)
--------------- ------------ -----------

1970 1991 1970 1991 1970 1991
---- ---- ---- ---- ---- ----

<S> <C> <C> <C> <C> <C> <C>
China . . . . . . 34 27 38 42 28 32
India . . . . . . 45 31 22 27 33 41
Indonesia . . . . 45 19 19 41 36 39
Malaysia . . . . 29 N/A 25 N/A 46 N/A
Pakistan . . . . 37 26 22 26 41 49
Philippines . . . 30 21 32 34 39 44
Singapore . . . . 2 0 30 38 68 62
Sri Lanka . . . . 28 27 24 25 48 48
Thailand . . . . 26 12 25 39 49 49

------------
Source: The World Bank -- World Development Report, 1993.

* Includes construction.
</TABLE>

Growth Rates: 1980-1992. According to data from the
International Monetary Fund, eight of the ten fastest growing
economies in the developing world are located in Asia. As shown
in Table 2 below, the average annual economic growth of each of
the sub-regional Asian countries (except for that of the
Philippines) significantly out-paced that of the United States
over the last decade and through 1992. As discussed below, the
leading factor contributing to economic growth in the sub-region
has been export performance. See "Trade and Exports." The
fastest growing economy of any of the sub-regional Asian
countries over this period was that of China, with an average
annual growth rate of 9.7%. China's growth rate was followed by
that of Thailand, with an average annual growth rate of 7.9%
fueled by significant tourism as well as automobile sales and
credit growth, and then Singapore, which had an average annual
growth rate of 6.5%. In comparison, the average annual growth
rate of the United States over this period was 2.6%.

31
<PAGE>
<TABLE>

TABLE 2

REAL GDP

<CAPTION>
Average Real GDP
Growth for the Period Nominal GDP
1980-1992 1992
--------------------- ------------
(%) (US$ billions)

<S> <C> <C>
China . . . . . . . . . . . . . . . 9.7 435**
Thailand*. . . . . . . . . . . . . . 7.9 104
Singapore. . . . . . . . . . . . . . 6.5 46
Pakistan . . . . . . . . . . . . . . 6.1 48
Malaysia*. . . . . . . . . . . . . . 5.9 55
Indonesia. . . . . . . . . . . . . . 5.6 126
India* . . . . . . . . . . . . . . . 5.3 266
Sri Lanka. . . . . . . . . . . . . . 4.0 10
Philippines. . . . . . . . . . . . . 1.0 52
United States. . . . . . . . . . . . 2.6 5,951
---------------
Source (except as hereinafter noted): World Bank: World
Development Report 1993; International Monetary Fund, World
Economic Outlook, May 1993 and October 1993, International
Monetary Fund, International Financial Statistics Yearbook 1993.

* India source: Centre for Monitoring Indian Economy, August
1993; Malaysia source: Bank Negara, Annual Report 1992;
Thailand source: Bank of Thailand.
** China: GNP.

</TABLE>

Measured over the five-year period ended -----------------,
GDP growth ranged between 5 and 13% in China, Thailand, Malaysia,
Singapore and Indonesia. In the Philippines, economic growth was
constrained by political instability and severely deficient
infrastructure during this period. There has been recent
progress, however, including the implementation of certain
market-oriented policies and the development of certain basic
infrastructure such as power generation.

32
<PAGE>
Stages of Development: Existing levels of economic
development differ widely among the sub-regional Asian countries.
One measure of economic development is GDP per capita, and
Singapore's GDP per capita is far higher than that of any other
country in this group, as shown in Table 3. At 1991, Singapore
had the highest GDP per capita of the "four tigers" (Hong Kong,
Korea, Singapore and Taiwan) and among all Asian countries was
second only to Japan. Although its economic strength is broad-
based, Singapore has been notably successful in shipping, export
finance and, more recently, the manufacture and export of
electronics/computer products. The other countries in the sub-
region are at earlier stages in their economic development but,
even among them, there are wide variations. Malaysia's GDP per
capita, for example, is more than that of Thailand and the
Philippines combined and almost seven times that of India.

<TABLE>

TABLE 3

1991 GDP PER CAPITA

<CAPTION>
GDP
Per Capita
Country/Territory (US$)
----------------- ----------

<S> <C>
Singapore. . . . . . . . . . . . . . . . . . . . 14,210
Malaysia . . . . . . . . . . . . . . . . . . . . 2,520
Thailand . . . . . . . . . . . . . . . . . . . . 1,570
Philippines. . . . . . . . . . . . . . . . . . . 730
Indonesia. . . . . . . . . . . . . . . . . . . . 610
Sri Lanka. . . . . . . . . . . . . . . . . . . . 500
Pakistan . . . . . . . . . . . . . . . . . . . . 400
China. . . . . . . . . . . . . . . . . . . . . . 370
India. . . . . . . . . . . . . . . . . . . . . . 330
United States. . . . . . . . . . . . . . . . . . 22,240
----------------------
Source: World Bank; World Development Report 1993.

</TABLE>
33
<PAGE>
Conditions Indicating Continued Growth

While numerous variables will affect the economic progress
of countries in the sub-region, the Investment Adviser has
identified certain fundamental conditions that indicate continued
growth:

Young Work Forces and Competitive Wages. The sub-regional
Asian countries have young populations. As shown in Table 4,
each such country has a greater percentage of persons under 15
years old and a smaller percentage of persons over 65 years old
than has the United States.

<TABLE>
TABLE 4

DEMOGRAPHIC STRUCTURE: 1991

<CAPTION>
% of % of % of 1991 Average
Population Population Population Manufacturing
Under 15 15-64 65 and hourly wage
Country/Territory Years Years Above cost in US$
----------------- ---------- ---------- ---------- -------------

<S> <C> <C> <C> <C>
China . . . . . . 27 66 7 0.27
Singapore . . . . 23 71 6 4.39
Thailand . . . . 32 66 2 0.60
Malaysia . . . . 39 59 2 1.69
Philippines . . . 39 59 2 0.64
Indonesia . . . . 36 60 4 0.22
Pakistan . . . . 44 54 2
Sri Lanka . . . . 32 64 4
India . . . . . . 36 60 4 N/A
United States . . 22 66 12 15.27

---------------

Source: The World Bank - World Development Report, 1993.
Source: Data Resources Inc. - McGraw Hill.

</TABLE>

The relatively high percentage of young people in the sub-
regional Asian countries indicates a plentiful potential supply
of new labor force participants. In this respect, India,
Indonesia, Malaysia, Pakistan, the Philippines, Sri Lanka and
Thailand are particularly well-positioned. The larger this
percentage, the lower the likelihood of significant upward
pressure on wage rates over the medium term, which should help
ensure a continuation of the current, favorable cost structure
these countries enjoy relative to that of the United States and
Japan. The Investment Adviser believes that the sub-region's
large pool of disciplined and low cost (and in parts of East
Asia, well educated) labor, will continue to attract high levels
of capital investment by firms based in the industrialized
countries. See "Established Networks for Direct Foreign
Investment" below. It should be noted that the poorer countries
in particular will need to maintain a sufficient level of overall
economic activity in order to provide employment opportunities to
new applicants to the work force. If this cannot be achieved,
the export of labor may occur, which has in fact happened in the
case of the Philippines. Direct investment and the establishment
of labor intensive industries, such as textiles, have had a
favorable impact on job creation in the sub-regional Asian
countries. Such investment may be deterred, however, by the
absence of basic infrastructure such as energy, telephone lines,
ports, roads and railways, as has occurred in the Philippines
with shortages of electricity.

High Savings Rates; Infrastructure. If the sub-regional
Asian countries are to reach their economic potential, a
substantial investment in infrastructure will be required,
particularly in the poorer of these countries. One example of the
inadequate infrastructure is the low penetration rate of
telephone lines per 1,000 population that exists in China, India,
Indonesia, Malaysia, Pakistan and Thailand, as shown in Table 5.
Several of the sub-regional Asian countries should have the means
to overcome the deficiency in infrastructure because of their
high domestic savings rates, which are also shown in Table 5.

A high rate of savings is generally associated with strong
investment, rising productivity and faster GDP growth. As of
1991, the percentage of savings to GDP in each sub-regional Asian
country was higher than that of
34
<PAGE>
the United States. Singapore, with savings equal to 47% of GDP,
followed by China at 39% and Indonesia at 36%, in particular
compare favorably with the United States, where savings was 15%
of GDP at 1991. The savings rates of Sri Lanka, Pakistan, India
and the Philippines are the lowest in the region and, in the
opinion of the Investment Adviser, will need to be improved if
investment, and resulting growth, is to accelerate in such
countries. It should be noted, that the lack of financial
intermediaries capable of channelling available funds between
savers and investors may constrain growth in the short term.

<TABLE>
TABLE 5

SAVINGS AND INFRASTRUCTURE
<CAPTION>
1991
1991 Telephone lines
Savings as per 1000
% of GDP* population**
---------- ---------------

<S> <C> <C>
Singapore. . . . . . . . . . . . . . . . . 47 384
China . . . . . . . . . . . . . . . . . . 39 13
Indonesia. . . . . . . . . . . . . . . . . 36 5
Thailand . . . . . . . . . . . . . . . . . 32 23
Malaysia . . . . . . . . . . . . . . . . . 30 89
Philippines. . . . . . . . . . . . . . . . 19 N/A
India. . . . . . . . . . . . . . . . . . . 19 6
Sri Lanka. . . . . . . . . . . . . . . . . 13 N/A
Pakistan . . . . . . . . . . . . . . . . . 12 8
United States. . . . . . . . . . . . . . . 15 545
---------------

* Source (except as hereinafter noted): World Bank: World Bank
Development Report 1993.
** Source (except as hereinafter noted): World Economic Forum,
World Competitiveness Report and Emerging Economics Report,
1993; Pakistan source: The Economist, Oct. 30 - Nov. 5, 1993
(based on 1992 statistics).

</TABLE>

Established Networks for Direct Foreign Investment. Direct
foreign investment has supported economic growth in the Asian
sub-region. With the rapid appreciation of the Yen since the end
of 1985, Japanese investment flows have increased considerably.
Japanese firms have built significant regional networks of
manufacturing affiliates in the sub-region (most notably in
electronics). Table 6 shows the level of investment by the
United States and Japan in Asia as of 1990.

<TABLE>

TABLE 6

DIRECT INVESTMENT FROM THE U.S AND JAPAN
(US$ in Millions)

1990
--------

<S> <C>
From United States. . . . . . . . . . . . . . . . . . . $ 22,890
% of U.S. total . . . . . . . . . . . . . . . . . . . . 5.4%
From Japan. . . . . . . . . . . . . . . . . . . . . . . $ 47,519
% of Japanese total . . . . . . . . . . . . . . . . . . 15.3%
---------------
Sources: United States data: U.S. Department of Commerce --
Survey of Current Business; Japan data: Ministry of Finance --
Monthly Finance Review, cumulative flows since 1951 to March 1991
(end of fiscal year).

</TABLE>
35
<PAGE>

The Investment Adviser believes that companies based in Singapore,
following the example of Japanese companies, will also become
significant direct investors in the sub-region and that Singapore's
future growth will be based on expansion of its companies in some of the
poorer Asian countries, such as China, India and Vietnam, which have
large consumer markets and low-cost labor.

The Investment Adviser believes that in addition to increasing the
availability of capital, direct foreign investment confers a number of
benefits which enhance the long-term growth potential of the recipient
countries, including, among others, (1) the mobilization of domestic
savings for productive purposes in joint ventures between multi-national
corporations and local companies, (2) the improvement of local training
and education as local employees are exposed to modern production
techniques and established training methods, (3) the modernization of
management and accounting, (4) a transfer of technology and (5) the
promotion of exports.

Trade and Exports. The growth of most countries in the Asian sub-
region has been tied to strong export performance, including exports by
foreign manufacturing facilities operating in such countries. During
the 1980s, a significant portion of exports from Asia was shipped to the
United States and Europe, which resulted in severe trade account
imbalances. The appreciation of the Japanese Yen since the end of 1985,
together with increasingly persistent attempts on the part of various
United States administrations to lower Asian trade barriers, has
resulted in a shift in the pattern of trade. Table 7 shows that in 1992
42.3% of Asian exports went to markets in Asia, while 46.4% of total
Asian imports were from the countries in Asia. The Investment Adviser
believes that the growth of intra-Asian trade will benefit the sub-
region by providing stable growth and insulation from external shocks.

36
<PAGE>
<TABLE>
TABLE 7

INTRA-ASIAN TRADE, 1992
(US$ in millions)

Exports from: To:
Hong Singa- Indo- Malay- Philip-
Japan Korea Taiwan Kong pore nesia sia pines
----- ----- ----- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Japan -- 17,786 21,166 20,779 12,981 5,582 8,128 3,520
Korea 11,599 -- 2,262 5,909 3,222 1,935 1,136 746
Taiwan 9,449 1,315 -- 11,243 2,752 1,335 2,245 1,092
Hong Kong 6,262 1,938 4,219 -- 3,130 734 832 1,108
Singapore 2,813 1,626 1,545 4,591 -- 1,868 5,699 684
Indonesia 11,607 1,385 1,345 869 2,878 -- 534 176
Malaysia 5,401 1,389 1,270 1,549 9,391 506 -- 477
Philippines 2,020 27 283 426 251 40 208 --
Thailand 5,686 533 618 1,507 2,823 283 842 155
China 11,691 2,435 NA 37,464 2,029 471 645 209
India 1,850 434 199 685 425 160 322 71
Pakistan 557 170 -- 572 127 94 75 27
Sri Lanka 138 41 7 18 46 2 5 2

Imports from Asia 68,378 28,868 32,907 85,022 39,882 12,914 20,591 8,238
Total Imports 232,947 81,405 67,926 123,430 76,129 27,606 39,927 16,140
Asian/World Total(%) 29.4 35.5 48.4 68.9 52.4 46.8 51.6 51.0

(table continued)

Exports from: To:

Asian/
World
Thai- Paki- Sri Exports Total Total
land China India stan Lanka to Asia Exports (%)
----- ----- ----- ----- ----- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Japan 10,384 11,967 1,488 1,300 359 113,781 339,991 33.5
Korea 1,532 2,654 438 372 210 31,433 74,790 42.0
Taiwan 2,248 NA 191 N/A N/A 31,870 80,723 39.5
Hong Kong 1,059 35,412 330 73 280 55,024 119,512 46.0
Singapore 2,700 1,124 1,105 132 255 23,755 49,604 47.9
Indonesia 335 1,613 59 80 42 20,801 33,840 61.5
Malaysia 1,490 772 430 370 109 22,675 40,709 55.7
Philippines 109 146 20 4 3 3,530 10,274 34.4
Thailand -- 386 65 70 100 12,896 32,473 39.7
China 893 -- 158 551 104 55,995 86,220 64.9
India 304 164 -- 47 192 4,614 20,683 22.3
Pakistan 114 54 136 -- 85 1,820 6,494 28.0
Sri Lanka 20 5 12 30 -- 200 2,570 7.8

Imports from Asia 21,054 54,238 4,284 376,376 888,819 42.3
Total Imports 40,686 81,739 23,638 811,575
Asian/World Total (%) 51.7 66.4 18.1 46.4

-----------------

Sources: Direction of Trade Statistics 1993, International Monetary Fund; Taiwan source:
Financial Statistics of the Central Bank of the ROC.

</TABLE>

37
<PAGE>

Rising Per Capita Incomes. Overall economic activity in the Asian
sub-region has been supported by a rising trend in per capita GDP. See
Table 3 above. This trend is especially significant in light of the
fact that the sub-region contains three of the world's four most
populous nations: China (1.15 billion), India (866 million) and
Indonesia (181 million). As shown on Table 8, the population of the
nine sub-regional countries combined is almost 10 times larger than that
of United States. As such, on a per capita GDP basis there remains
great potential for future growth in the sub-region, particularly in the
poorer countries, including China, India, Indonesia, Pakistan, the
Philippines, Sri Lanka and Thailand. The Investment Adviser believes
that these conditions will lead to increased consumption and the growth
of local markets for a wide range of products, both imported and locally
manufactured.

<TABLE>

TABLE 8

POPULATION: 1991

<CAPTION>
Population
Country/Territory (millions)
----------------- ----------
<S> <C>
China* 1,150
India 866
Indonesia 181
Pakistan 116
Philippines 63
Thailand 57
Malaysia 18
Sri Lanka 17
Singapore 3
-----
Total 2,471
=====
United States 253

----------------------
Source: The World Bank - World Development Report 1993.
*Source: The Statistical Yearbook of the Republic of China, 1992.

</TABLE>

38
<PAGE>
Securities Markets in the Asian Sub-region

The first stock exchange in the Asian sub-region was established in
Bombay, India in 1875. Since then, stock exchanges have been formed in
the other countries of the sub-region including, most recently, the
Shenzhen Exchange in China which has operated since only 1991. Although
varying in size and maturity, most of the stock exchanges in the sub-
region, for a wide variety of historical and/or ideological reasons,
have at some time been subject to restrictions on foreign ownership.

Up until 1987, investment in Indonesia was effectively closed to
foreigners, and India has only recently authorized direct access for
approved international institutional investors. Many companies in
China, India, Indonesia, Malaysia, the Philippines, Singapore and
Thailand have foreign investment restrictions which can result in
foreign owned stock trading at a substantial premium or discount to
locally-owned shares. Foreign investment restrictions may be subject to
change. For example, the Securities Exchange Commission of Thailand is
currently studying various proposals to permit foreigners to hold local
stock without voting rights. If adopted, such proposals could have the
effect of reducing or eliminating the premium at which many foreign
owned stocks presently trade. This could have an adverse effect on the
Fund if it purchases such stocks at a premium prior to such adoption.
It is uncertain whether or when such a change may be implemented.

Average daily volume can be much lower in the sub-region's markets
than a typical day's trading volume in the United States, particularly
in the small and medium capitalization sectors of the lesser developed
stock markets. Since the mid 1980s, however, stock market activity
throughout the region, both with respect to daily trading volume and the
number of securities traded, has gained momentum. Turnover on the Thai
stock market, for example, more than doubled between 1991 and 1992. The
Thai stock market is typically regarded as a liquidity-driven market
with a high degree of retail business compared with western markets,
where institutional investors account for a much larger share of total
trades.

In terms of market capitalization, Malaysia is the largest stock
market in the Asian sub-region, followed by Thailand and India. Most of
the markets in the sub-region markets have seen significant expansion in
the number of listed companies. Indonesia experienced the largest
percentage increase in new listings between 1983 and 1992, increasing
from 19 companies to 155. The number of listed companies on the Stock
Exchange of Thailand increased from 88 to 305 over the same period.

The stock market of each sub-regional Asian country has seen
positive returns over the past four calendar years, although such
returns cannot be assured in the future. These markets in general do
not move together. For example, during the period 1989 to 1992, the
best performing market was India and the worst was Indonesia, while for
the first nine months of 1993 the best performing market was Indonesia
and the worst was India. The stock markets in Indonesia, Malaysia and
the Philippines are at high levels which may not be sustainable.
Accordingly, to the extent that the Fund purchases securities at present
levels in these and other high performing Asian stock markets, there may
be a greater risk that the value of such securities may decline.

39
<PAGE>

<TABLE>
TABLE 9

DEVELOPMENT OF CERTAIN ASIAN STOCK MARKETS
1983 - 1992

Annual Trading Number of Market Cap
Value Listed Dec. 31,
U.S.$ Millions Companies U.S.$ Billions
-------------- ------------------ --------------
EXCHANGE Local Index 1983 1992 1983 1992 1983 1992
-------- ----------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
China N/A N/A 13,363 N/A 53 N/A 18*
India SE Bombay Index 2,377 20,597 3,118 6,700 7 65
Indonesia JSE Composite 11 3,903 19 155 0.1 12
Malaysia KLSE Composite 3,398 21,730 204 366 23 94
Philippines Manila Com/Ind Index 483 3,104 208 170 1 14
Singapore DDS 50 5,588 14,084 118 163 16 49
Thailand SET 381 72,060 88 305 1 58
-----------------
Sources: Emerging Stock Markets Factbook 1993; International Finance Corp.
*As of June 30, 1993, market capitalization was approximately $38 billion and $13 billion on the
Shanghai Securities Exchange and the Shenzhen Stock Exchange, respectively.

</TABLE>

Certain privatization initiatives and relaxation of laws relating to
foreign investment in certain sectors should present future investment
opportunities and should be conducive to continued infusions of foreign
capital. Malaysia, for example, has implemented a major privatization
plan which has included, among other things, the stock offerings of
Proton (automobile manufacturer) and Tenaga Nasionale (power supplier).
In Indonesia, the pro-business government recently passed laws enabling
foreign investors to hold up to 49% of the equity securities of
Indonesian banks. For a discussion of privatization initiatives in
China, see "Conditions Indicating Continued Growth -- Certain
Developments in China."

DIRECTORS AND OFFICERS

The Directors and executive officers of the Fund and their principal
occupations during the last five years are set forth below. Unless
otherwise noted, the address of each Director and executive officer is
800 Scudders Mill Road, Plainsboro, New Jersey 08536.

ARTHUR ZEIKEL (1)(2) -- President, Director and Chief Investment
Officer of the Investment Adviser and of Merrill Lynch Asset Management, L.P.
("MLAM"); President and Director of Princeton Services, Inc.; Executive Vice
President of Merrill Lynch & Co., Inc. since 1990; Executive Vice President
of Merrill Lynch since 1990 and a Senior Vice President thereof from 1985 to
1990; Director of Merrill Lynch Funds Distributor, Inc. ("MLFD").

(to be completed by Amendment)

TERRY K. GLENN -- Executive Vice President (1)(2) -- Executive Vice
President of the Investment Adviser and of MLAM since 1983; President of
MLFD since 1986 and a Director thereof since 1991.

40
<PAGE>
---------------
(1) Interested person, as defined in the Investment Company Act, of the
Fund.
(2) Such Director or officer is a director, trustee or officer of one or
more other investment companies for which the Investment Adviser or
MLAM acts as investment adviser.

The Fund pays each Director not affiliated with the Investment
Adviser a fee of $---------- per year plus $---------- per meeting
attended, together with such Director's actual out-of-pocket expenses
relating to attendance at meetings. The Fund also compensates members
of its audit committee, which consists of all of the Directors not
affiliated with the Investment Adviser, an annual fee of $----------;
the chairman of the audit committee receives an additional annual fee of
$----------.

INVESTMENT ADVISORY AND MANAGEMENT ARRANGEMENTS

The Investment Adviser is an affiliate of MLAM, which
is an indirect, wholly-owned subsidiary of Merrill Lynch & Co., Inc.
("ML & Co."). The Investment Adviser will provide the Fund with
investment advisory and management services. The Investment Adviser or
MLAM acts as the investment adviser for over 90 other registered
investment companies. The Investment Adviser also offers portfolio
management and portfolio analysis services to individuals and
institutions. As of December 31, 1993, the Investment Adviser and MLAM
had a total of approximately $----- billion in investment company and
other portfolio assets under management, including accounts of certain
affiliates of the Investment Adviser. In addition to such assets under
management, as of that date ML & Co. and its subsidiaries held assets
aggregating over $500 billion on behalf of their customers. The
principal business address of the Investment Adviser is 800 Scudders
Mill Road, Plainsboro, New Jersey 08536.

The Investment Advisory Agreement between the Fund and the
Investment Adviser (the "Investment Advisory Agreement") provides that,
subject to the direction of the Board of Directors of the Fund, the
Investment Adviser is responsible for the actual management of the
Fund's portfolio. The responsibility for making decisions to buy, sell
or hold a particular security rests with the Investment Adviser, subject
to review by the Board of Directors.

The Investment Adviser provides the portfolio management for the
Fund. Such portfolio management will consider analyses from various
sources (including brokerage firms with which the Fund does business),
make the necessary investment decisions, and place orders for
transactions accordingly. The Investment Adviser also will be
responsible for the performance of certain administrative and management
services for the Fund.

For the services rendered, the facilities furnished and the expenses
assumed by the Investment Adviser under the Investment Advisory
Agreement, the Fund will pay a monthly fee at the annual rate of 1.00%
of the Fund's average weekly net assets ("average weekly net assets"
means the average weekly value of the total assets of the Fund minus the
sum of (i) accrued liabilities of the Fund and (ii) any accrued and
unpaid interest on outstanding borrowings). For purposes of this
calculation, average weekly net assets are determined at the end of each
month on the basis of the average net assets of the Fund for each week
during the month. The assets for each weekly period are determined by
averaging the net assets at the last business day of a week with the net
assets at the last business day of the prior week.

The Investment Advisory Agreement obligates the Investment Adviser
to provide investment advisory services and to pay all compensation of
and furnish office space for officers and employees of the Fund
connected with investment and economic research, trading and investment
management of the Fund, as well as the compensation of all Directors of
the Fund who are affiliated persons of the Investment Adviser or any of
its affiliates. The Fund pays all other expenses incurred in the
operation of the Fund, including, among other things, expenses for legal
and auditing services, taxes, costs of printing proxies, stock
certificates and shareholder reports, listing fees, charges of the
custodian and the transfer agent, dividend disbursing agent and
41
<PAGE>
registrar, Securities and Exchange Commission fees, fees and expenses of
unaffiliated Directors, accounting and pricing costs, insurance,
interest, brokerage costs, litigation and other extraordinary or
non-recurring expenses, mailing and other expenses properly payable by
the Fund. Accounting services are provided to the Fund by the
Investment Adviser, and the Fund reimburses the Investment Adviser for
its costs in connection with such services.

Securities held by the Fund also may be held by or be appropriate
investments for other funds for which the Investment Adviser or MLAM
acts as an advisor or by investment advisory clients of MLAM. Because
of different investment objectives or other factors, a particular
security may be bought for one or more clients when one or more clients
are selling the same security. If purchases or sales of securities for
the Fund or other funds for which the Investment Adviser or MLAM acts as
investment adviser or for their advisory clients arise for consideration
at or about the same time, transactions in such securities will be made,
insofar as feasible, for the respective funds and clients in a manner
deemed equitable to all. To the extent that transactions on behalf of
more than one client of the Investment Adviser or MLAM during the same
period may increase the demand for securities being purchased or the
supply of securities being sold, there may be an adverse effect on
price.

Unless earlier terminated as described below, the Investment
Advisory Agreement will remain in effect until ----------, 1996, and
from year to year thereafter if approved annually (a) by the Board of
Directors of the Fund or by a majority of the outstanding shares of the
Fund and (b) by a majority of the Directors who are not parties to such
contract or interested persons (as defined in the Investment Company
Act) of any such party. Such contract is not assignable and may be
terminated without penalty on 60 days' written notice at the option of
either party thereto or by the vote of the shareholders of the Fund.

PORTFOLIO TRANSACTIONS

Subject to policies established by the Board of Directors of the
Fund, the Investment Adviser is primarily responsible for the execution
of the Fund's portfolio transactions. In executing such transactions,
the Investment Adviser seeks to obtain the best results for the Fund,
taking into account such factors as price (including the applicable fee,
commission or spread), size of order, difficulty of execution and
operational facilities of the firm involved, the firm's risk in
positioning a block of securities and the provision of supplemental
investment research by the firm. While the Investment Adviser generally
seeks reasonably competitive fees, commissions or spreads, the Fund does
not necessarily pay the lowest fee, commission or spread available.

The Fund has no obligation to deal with any broker or dealer in
execution of transactions in portfolio securities. Subject to obtaining
the best price and execution, securities firms which provide
supplemental investment research to the Investment Adviser, including
Merrill Lynch, may receive orders for transactions by the Fund.
Information so received will be in addition to and not in lieu of the
services required to be performed by the Investment Adviser under the
Investment Advisory Agreement and the expenses of the Investment Adviser
will not necessarily be reduced as a result of the receipt of such
supplemental information.

The Fund anticipates that its brokerage transactions involving
securities of companies domiciled in countries other than the United
States generally will be conducted primarily on the principal stock
exchanges of such countries. Brokerage commissions and other
transaction costs on foreign stock exchange transactions are generally
higher than in the United States, although the Fund will endeavor to
achieve the best net results in effecting its portfolio transactions.
There is generally less governmental supervision and regulation of
foreign stock exchanges and brokers than in the United States.

42
<PAGE>
The Fund will invest in certain securities traded in the
over-the-counter market and, where possible, intends to deal directly
with the dealers who make markets in the securities involved, except in
those circumstances where better prices and execution are available
elsewhere. Under the Investment Company Act, except as permitted by
exemptive order, persons affiliated with the Fund are prohibited from
dealing with the Fund as principals in the purchase and sale of
securities. Since transactions in the over-the-counter market usually
involve transactions with dealers acting as principals for their own
account, the Fund will not deal with affiliated persons, including
Merrill Lynch and its affiliates, in connection with such transactions.
In addition, the Fund may not purchase securities during the existence
of any underwriting syndicate for such securities of which Merrill Lynch
is a member except pursuant to procedures approved by the Board of
Directors of the Fund which comply with rules adopted by the Securities
and Exchange Commission. To the extent Merrill Lynch is active in
distributions of securities of companies in emerging market Asia-Pacific
countries, the Fund may be disadvantaged in that it may not purchase
securities in such distributions. An affiliated person of the Fund may
serve as its broker in over-the-counter transactions conducted on an
agency basis.

The Fund's ability and decisions to purchase and sell portfolio
securities may be affected by foreign laws and regulations relating to
the convertibility and repatriation of assets.

Portfolio Turnover

Generally, the Fund does not purchase securities for short-term
trading profits. However, the Fund may dispose of securities without
regard to the time they have been held when such actions, for defensive
or other reasons, appear advisable to the Investment Adviser. While it
is not possible to predict turnover rates with any certainty, at present
it is anticipated that the Fund's annual portfolio turnover rate, under
normal circumstances, will be less than -----%. (The portfolio turnover
rate is calculated by dividing the lesser of purchases or sales of
portfolio securities for the particular fiscal year by the monthly
average of the value of the portfolio securities owned by the Fund
during the particular fiscal year. For purposes of determining this
rate, all securities whose maturities at the time of acquisition are one
year or less are excluded.)

DIVIDENDS AND DISTRIBUTIONS

It is the Fund's intention to distribute all of its net investment
income. Dividends from such net investment income are paid at least
annually. All net realized long-term or short-term capital gains, if
any, are distributed at least annually to holders of Common Stock. From
time to time, the Fund may declare a special distribution at or about
the end of the calendar year in order to comply with a Federal income
tax requirement that certain percentages of its ordinary income and
capital gains be distributed during the calendar year.

Under the Investment Company Act, the Fund is not permitted to issue
senior securities unless immediately after such issuance the Fund has an
asset coverage of 300% of the aggregate outstanding principal amount of
senior securities. Additionally, under the Investment Company Act, the
Fund may not declare any dividend or other distribution upon any class
of its capital stock, or purchase any such capital stock, unless the
aggregate amount of senior securities of the Fund has, at the time of
the declaration of any such dividend or distribution or at the time of
any such purchase, an asset coverage of at least 300% after deducting
the amount of such dividend, distribution, or purchase price, as the
case may be.

See "Automatic Dividend Reinvestment Plan" for information
concerning the manner in which dividends and distributions to holders of
Common Stock may be reinvested automatically in shares of Common Stock
of the Fund. Dividends and distributions may be taxable to shareholders
whether they are reinvested in shares of the Fund or received in cash.

43
<PAGE>
TAXES

The Fund intends to elect to qualify for the special tax treatment
afforded regulated investment companies ("RICs") under the Internal
Revenue Code of 1986, as amended (the "Code"). If it so qualifies, the
Fund (but not its shareholders) will not be subject to Federal income
tax on the part of its net ordinary income and net realized capital
gains which it distributes to shareholders. The Fund intends to
distribute substantially all of such income.

Dividends paid by the Fund from its ordinary income and
distributions of the Fund's net realized short-term capital gains
(together referred to hereafter as "ordinary income dividends") are
taxable to shareholders as ordinary income. Distributions made from the
Fund's net realized long-term capital gains ("capital gain dividends")
are taxable to shareholders as long-term capital gains, regardless of
the length of time the shareholder has owned Fund shares. Distributions
in excess of the Fund's earnings and profits will first reduce the
adjusted tax basis of a holder's shares and, after such adjusted tax
basis is reduced to zero, will constitute capital gains to such holder
(assuming the shares are held as a capital asset). Any loss upon the
sale or exchange of Fund shares held for six months or less, however,
will be treated as long-term capital loss to the extent of any capital
gain dividends received by the shareholder.

Dividends are taxable to shareholders even though they are
reinvested in additional shares of the Fund. Not later than 60 days
after the close of its taxable year, the Fund will provide its
shareholders with a written notice designating the amounts of any
ordinary income or capital gain dividends. Distributions attributable to
any dividend income earned by the Fund will be eligible for the
dividends received deduction allowed to corporations under the Code, if
certain requirements are met. If the Fund pays a dividend in January
which was declared in the previous October, November or December to
shareholders of record on a specified date in one of such months, then
such dividend will be treated for tax purposes as being paid by the Fund
and received by its shareholders on December 31 of year in which such
dividend was declared.

Ordinary income dividends paid by the Fund to shareholders who are
nonresident aliens or foreign entities will be subject to a 30% U.S.
withholding tax under existing provisions of the Code applicable to
foreign individuals and entities unless a reduced rate of withholding or
a withholding exemption is provided under applicable treaty law.
Nonresident shareholders are urged to consult their own tax advisers
concerning the applicability of the U.S. withholding tax.

Under certain provisions of the Code, some shareholders may be
subject to a 31% withholding tax on reportable dividends, capital gain
dividends and redemption payments ("backup withholding"). Generally,
shareholders subject to backup withholding will be those for whom a
certified taxpayer identification number is not on file with the Fund or
who, to the Fund's knowledge, have furnished an incorrect number. When
establishing an account, an investor must certify under penalty of
perjury that such number is correct and that such investor is not
otherwise subject to backup withholding.

Dividends and interest received by the Fund may give rise to
withholding and other taxes imposed by foreign countries. Tax
conventions between certain countries and the United States may reduce
or eliminate such taxes. Shareholders may be able to claim U.S. foreign
tax credits with respect to such taxes, subject to certain provisions
and limitations contained in the Code. For example, certain retirement
accounts cannot claim foreign tax credits on investments in foreign
securities held in the Fund. If more than 50% in value of the Fund's
total assets at the close of its taxable year consists of securities of
foreign corporations, the Fund will be eligible, and intends, to file an
election with the Internal Revenue Service pursuant to which
shareholders of the Fund will be required to include their proportionate
share of such withholding taxes in their U.S. income tax returns as
gross income, treat such proportionate share as taxes paid by them, and
deduct such proportionate share in computing their taxable incomes or,
alternatively, use them as foreign tax credits against their U.S. income
taxes. No deductions for foreign taxes, however, may be claimed by
noncorporate shareholders who do
44
<PAGE>
not itemize deductions. A shareholder that is a nonresident alien
individual or a foreign corporation may be subject to U.S. withholding
tax on the income resulting from the Fund's election described in this
paragraph but may not be able to claim a credit or deduction against
such U.S. tax for the foreign taxes treated as having been paid by such
shareholder. The Fund will report annually to its shareholders the
amount per share of such withholding taxes.

The Code requires a RIC to pay a nondeductible 4% excise tax to the
extent the RIC does not distribute, during each calendar year, 98% of
its ordinary income, determined on a calendar year basis, and 98% of its
capital gains, determined, in general, on an October 31 year end, plus
certain undistributed amounts from previous years. While the Fund
intends to distribute its income and capital gains in the manner
necessary to avoid imposition of the 4% excise tax, there can be no
assurance that sufficient amounts of the Fund's taxable income and
capital gains will be distributed to avoid entirely the imposition of
the tax. In such event, the Fund will be liable for the tax only on the
amount by which it does not meet the foregoing distribution
requirements.

The Fund may invest up to 10% of its total assets in securities of
closed-end investment companies. If the Fund purchases shares of an
investment company (or similar investment entity) organized under
foreign law, the Fund will be treated as owning shares in a passive
foreign investment company ("PFIC") for U.S. Federal income tax
purposes. The Fund may be subject to U.S. Federal income tax, and an
additional tax in the nature of interest (the "interest charge"), on a
portion of distributions from such company and on gain from the
disposition of the shares of such company (collectively referred to as
"excess distributions"), even if such excess distributions are paid by
the Fund as a dividend to its shareholders. The Fund may be eligible to
make an election with respect to certain PFICs in which it owns shares
that will allow it to avoid the taxes on excess distributions. However,
such election may cause the Fund to recognize income in a particular
year in excess of the distributions received from such PFICs.
Alternatively, under proposed regulations which, when finalized, are
expected to apply retroactively, the Fund may elect to "mark to market"
at the end of each taxable year all shares that it holds in PFICs. If
it makes this election, the Fund will recognize as ordinary income any
increase in the value of such shares. Unrealized losses, however, will
not be recognized. By making the mark-to-market election, the Fund can
avoid imposition of the interest charge with respect to its
distributions from PFICs, but in any particular year may be required to
recognize income in excess of the distributions it receives from PFICs
and its proceeds from dispositions of PFIC stock.

Tax Treatment of Options, Futures and Forward Foreign Exchange
Transactions

The Fund may write, purchase or sell options, futures and forward
foreign exchange contracts. Options, futures or forward foreign
exchange contracts that are "Section 1256 contracts" will be marked to
market" for Federal income tax purposes at the end of each taxable year,
i.e., each such options, futures or forward foreign exchange contract
will be treated as sold for its fair market value on the last day of the
taxable year. Unless such contract is a non-equity option or a
regulated futures contract for a non-U.S. currency and the Fund elects
to have gain or loss in connection with the contract treated as ordinary
gain or loss under Code Section 988 (as described below), gain or loss
attributable to Section 1256 contracts will be 60% long-term and 40%
short-term capital gain or loss. The mark-to-market rules outlined
above, however, will not apply to certain transactions entered into by
the Fund solely to reduce the risk of changes in price or interest or
currency exchange rates with respect to its investments.

A forward foreign exchange contract that is a Section 1256 contract
will be marked to market, as described above. However, the character of
gain or loss from such a contract will generally be ordinary under Code
Section 988. The Fund may, nonetheless, elect to treat the gain or loss
from certain forward foreign exchange contracts as capital. In this
case, gain or loss realized in connection with a forward foreign
exchange contract that is a Section 1256 contract will be characterized
as 60% long-term and 40% short-term capital gain or loss.
45
<PAGE>

Code Section 1092, which applies to certain "straddles", may affect
the taxation of the Fund's options, futures and interest rate
transactions and its short sales of securities. Under Section 1092, the
Fund may be required to postpone recognition for tax purposes of losses
incurred in certain closing transactions in options and futures
contracts, interest rate swaps and certain short sales of securities.

One of the requirements for qualification as a RIC is that less than
30% of the Fund's gross income may be derived from gains from the sale
or other disposition of securities held for less than three months.
Accordingly, the Fund may be restricted in effecting closing
transactions within three months after entering into an options or
futures contract.

Special Rules for Certain Foreign Currency Transactions. In
general, gains from "foreign currencies" and from foreign currency
options, foreign currency futures and forward foreign exchange contracts
relating to investments in stock, securities or foreign currencies will
be qualifying income for purposes of determining whether the Fund
qualifies as a RIC. It is currently unclear, however, who will be
treated as the issuer of a foreign currency instrument or how foreign
currency options, foreign currency futures and forward foreign currency
contracts will be valued for purposes of the RIC diversification
requirements applicable to the Fund. The Fund may request a private
letter ruling from the Internal Revenue Service on some or all of these
issues.

Under Code Section 988, special rules are provided for certain
transactions in a foreign currency other than the taxpayer's functional
currency (i.e., unless certain special rules apply, currencies other
than the U.S. dollar). In general, foreign currency gains or losses
from certain debt instruments, from certain forward contracts, from
futures contracts that are not "regulated futures contracts" and from
unlisted options will be treated as ordinary income or loss under Code
Section 988. In certain circumstances, the Fund may elect capital gain
or loss treatment for such transactions. Regulated futures contracts,
as described above, will be taxed under Code Section 1256 unless
application of Section 988 is elected by the Fund. In general, however,
Code Section 988 gains or losses will increase or decrease the amount of
the Fund's investment company taxable income available to be distributed
to shareholders as ordinary income. Additionally, if Code Section 988
losses exceed other investment company taxable income during a taxable
year, the Fund would not be able to make any ordinary dividend
distributions, and any distributions made before the losses were
realized but in the same taxable year would be recharacterized as a
return of capital to shareholders, thereby reducing the basis of each
shareholder's Fund shares. These rules and the mark-to-market rules
described above, however, will not apply to certain transactions entered
into by the Fund solely to reduce the risk of currency fluctuations with
respect to its investments.

The Treasury Department has authority to issue regulations
concerning the recharacterization of principal and interest payments
with respect to debt obligations issued in hyperinflationary currencies,
which may include the currencies of certain developing Asia-Pacific
countries in which the Fund intends to invest. No such regulations have
been issued.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury regulations presently in effect.
For the complete provisions, reference should be made to the pertinent
Code sections and the Treasury regulations promulgated thereunder. The
Code and the Treasury regulations are subject to change by legislative
or administrative action either prospectively or retroactively.

Ordinary income and capital gain dividends may also be subject to
state and local taxes.

Certain states exempt from state income taxation dividends paid by
RICs that are derived from interest on U.S. Government obligations.
State law varies as to whether dividend income attribute to U.S.
Government obligations is exempt from state income tax.

46
<PAGE>
Shareholders are urged to consult their own tax advisers regarding
specific questions as to Federal, foreign, state or local taxes.
Foreign investors should consider applicable foreign taxes in their
evaluations of an investment in the Fund.
-------------------

AUTOMATIC DIVIDEND REINVESTMENT PLAN

Pursuant to the Fund's Automatic Dividend Reinvestment Plan (the
"Plan"), unless a shareholder otherwise elects, all dividend and capital
gains distributions will be reinvested automatically by
, as agent for shareholders in administering the Plan (the "Plan
Agent"), in additional shares of Common Stock of the Fund. Shareholders
who elect not to participate in the Plan will receive all distributions
in cash paid by check mailed directly to the shareholder of record (or,
if the shares are held in street or other nominee name, then to such
nominee) by , as dividend paying agent. Such
participants may elect not to participate in the Plan and to receive all
distributions of dividends and capital gains in cash by sending written
instructions to , as dividend paying agent, at the address
set forth below. Participation in the Plan is completely voluntary and
may be terminated or resumed at any time without penalty by written
notice if received by the Plan Agent not less than ten days prior to any
dividend record date; otherwise such termination will be effective with
respect to any subsequently declared dividend or distribution.

Whenever the Fund declares an ordinary income dividend or a capital
gain dividend (collectively referred to as "dividends") payable either
in shares or in cash, non-participants in the Plan will receive cash,
and participants in the Plan will receive the equivalent in shares of
Common Stock. The shares will be acquired by the Plan Agent for the
participant's account, depending upon the circumstances described below,
either (i) through receipt of additional unissued but authorized shares
of Common Stock from the Fund ("newly issued shares") or (ii) by
purchase of outstanding shares of Common Stock on the open market
("open-market purchases") on the New York Stock Exchange or elsewhere.
If on the payment date for the dividend, the net asset value per share
of the Common Stock is equal to or less than the market price per share
of the Common Stock plus estimated brokerage commissions (such condition
being referred to herein as "market premium"), the Plan Agent will
invest the dividend amount in newly issued shares on behalf of the
participant. The number of newly issued shares of Common Stock to be
credited to the participant's account will be determined by dividing the
dollar amount of the dividend by the net asset value per share on the
date the shares are issued, provided that the maximum discount from the
then current market price per share on the date of issuance may not
exceed 5%. If on the dividend payment date the net asset value per
share is greater than the market value (such condition being referred to
herein as "market discount"), the Plan Agent will invest the dividend
amount in shares acquired on behalf of the participant in open-market
purchases. Prior to the time the shares of Common Stock commence
trading on the New York Stock Exchange, participants in the Plan will
receive any dividends in newly issued shares.

In the event of a market discount on the dividend payment date, the
Plan Agent will have until the last business day before the next date on
which the shares trade on an "ex-dividend" basis or in no event more
than 30 days after the dividend payment date (the "last purchase date")
to invest the dividend amount in shares acquired in open-market
purchases. If, before the Plan Agent has completed its open-market
purchases, the market price of a share of Common Stock exceeds the net
asset value per share, the average per share purchase price paid by the
Plan Agent may exceed the net asset value of the Fund's shares,
resulting in the acquisition of fewer shares than if the dividend had
been paid in newly issued shares on the dividend payment date. Because
of the foregoing difficulty with respect to open-market purchases, the
Plan provides that if the Plan Agent is unable to invest the full
dividend amount in open-market purchases during the purchase period or
if the market discount shifts to a market premium during the purchase
period, the Plan Agent will cease making open-market
47
<PAGE>
purchases and will invest the uninvested portion of the dividend amount
in newly issued shares at the close of business on the last purchase
date.

The Plan Agent maintains all shareholders' accounts in the Plan and
furnishes written confirmation of all transactions in the accounts,
including information needed by shareholders for tax records. Shares in
the account of each Plan participant will be held by the Plan Agent on
behalf of the Plan participant, and each shareholder's proxy will
include those shares purchased or received pursuant to the Plan. The
Plan Agent will forward all proxy solicitation materials to participants
and vote proxies for shares held pursuant to the Plan in accordance with
the instructions of the participants.

In the case of shareholders such as banks, brokers or nominees which
hold shares for others who are the beneficial owners, the Plan Agent
will administer the Plan on the basis of the number of shares certified
from time to time by the record shareholders as representing the total
amount registered in the record shareholder's name and held for the
account of beneficial owners who are to participate in the Plan.

There will be no brokerage charges with respect to shares issued
directly by the Fund as a result of dividends or capital gains
distributions payable either in shares or in cash. However, each
participant will pay a pro rata share of brokerage commissions incurred
with respect to the Plan Agent's open-market purchases in connection
with the reinvestment of dividends.

The automatic reinvestment of dividends and distributions will not
relieve participants of any Federal, state or local income tax that may
be payable (or required to be withheld) on such dividends. See "Taxes."

Shareholders participating in the Plan may receive benefits not
available to shareholders not participating in the Plan. If the market
price plus commissions of the Fund's shares is above the net asset
value, participants in the Plan will receive shares of the Fund at less
than they could otherwise purchase them and will have shares with a cash
value greater than the value of any cash distribution they would have
received on their shares. If the market price plus commissions is below
the net asset value, participants will receive distributions in shares
with a net asset value greater than the value of any cash distribution
they would have received on their shares. However, there may be
insufficient shares available in the market to make distributions in
shares at prices below the net asset value. Also, since the Fund does
not redeem its shares, the price on resale may be more or less than the
net asset value. See "Taxes" for a discussion of tax consequences of
the Plan.

Experience under the Plan may indicate that changes are desirable.
Accordingly, the Fund reserves the right to amend or terminate the Plan.
There is no direct service charge to participants in the Plan; however,
the Fund reserves the right to amend the Plan to include a service
charge payable by the participants.

All correspondence concerning the Plan should be directed to the
Plan Agent at -------------------------.

MUTUAL FUND INVESTMENT OPTION

Purchasers of shares of the Fund in this offering will have an
investment option consisting of the right to reinvest the net proceeds
from a sale of such shares (the "Original Shares") in Class A initial
sales charge shares of certain Merrill Lynch- sponsored open-end mutual
funds ("Eligible Class A Shares") at their net asset value, without the
imposition of the initial sales charge, if the conditions set forth
below are satisfied. First, the sale of the Original Shares must be
made through Merrill Lynch, and the net proceeds therefrom must be
reinvested immediately in Eligible Class A Shares. Second, the Original
Shares must either have been acquired in this offering or be shares
representing reinvested dividends from shares acquired in this offering.
Third, the Original Shares must have been maintained continuously in a
Merrill Lynch securities account. Fourth, there
48
<PAGE>
must be a minimum purchase of $250 to be eligible for the investment
option. Class A shares of certain of the mutual funds may be subject to
an account maintenance fee at an annual rate of up to 0.25% of the
average daily net asset value of such mutual fund. The Eligible Class A
Shares may be redeemed at any time at the next determined net asset
value, subject in certain cases to a redemption fee. Prior to the time
the shares commence trading on the New York Stock Exchange, the
distributor for the mutual funds will advise Merrill Lynch financial
consultants as to those mutual funds which offer the investment option
described above.

NET ASSET VALUE

Net asset value per share is determined at 4:15 P.M., New York time,
on the last business day in each week. For purposes of determining the
net asset value of a share of Common Stock, the value of the securities
held by the Fund plus any cash or other assets (including interest
accrued but not yet received) minus all liabilities (including accrued
expenses) and the aggregate liquidation value of any outstanding shares
of preferred stock is divided by the total number of shares of Common
Stock outstanding at such time. Expenses, including the fees payable to
the Investment Adviser, are accrued daily.

The Fund determines and makes available for publication the net
asset value of its shares weekly. Currently, the net asset values of
shares of publicly traded, closed-end investment companies are published
in Barron's and in the Monday editions of The Wall Street Journal and
The New York Times.

Portfolio securities which are traded on stock exchanges are valued
at the last sale price 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 prices obtained from one or more
dealers in the over-the-counter market prior to the time of valuation.
Portfolio securities which are traded both in the over-the-counter
market and on a stock exchange are valued according to the broadest and
most representative market. Other investments, including futures
contracts and related options, are stated at market value. Securities
and assets for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the
direction of the Board of Directors of the Fund.

Certain portfolio securities (other than short-term obligations but
including listed issues) may be valued on the basis of prices furnished
by one or more pricing services which determine prices for normal,
institutional-size trading units of such securities using market
information, transactions for comparable securities and various
relationships between securities which are generally recognized by
institutional traders. Rights or warrants to acquire stock, or stock
acquired pursuant to the exercise of a right or warrant, may be valued
taking into account various factors such as original cost to the Fund,
earnings and net worth of the issuer, market prices for securities of
similar issuers, assessment of the issuer's future prosperity,
liquidation value or third party transactions involving the issuer's
securities. Securities for which there exist no price quotations or
valuations and all other assets are valued at fair value as determined
in good faith by or an behalf of the Board of Directors of the Fund.

DESCRIPTION OF SHARES

The Fund is authorized to issue 200,000,000 shares of capital stock,
par value $.10 per share, all of which shares initially are classified
as Common Stock. The Board of Directors is authorized, however, to
classify and reclassify any unissued shares of capital stock by setting
or changing the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications or terms or
conditions of redemption. The Fund may reclassify an amount of unissued
capital stock into one or more additional or other classes or series in
accordance with limitations set forth in the Investment Company Act.

49
<PAGE>
Shares of Common Stock, when issued and outstanding, will be fully
paid and non-assessable. Shareholders are entitled to share pro rata in
the net assets of the Fund available for distribution to shareholders
upon liquidation of the Fund. Shareholders are entitled to one vote for
each share held.

The Fund will send unaudited reports at least semi-annually and
audited annual financial statements to all of its shareholders.

As of ----------, 1994, there were ----- shares issued and
outstanding, all of which were owned by the Investment Adviser.

Certain Provisions of the Articles of Incorporation

The Fund's Articles of Incorporation include provisions that could
have the effect of limiting the ability of other entities or persons to
acquire control of the Fund or to change the composition of its Board of
Directors and could have the effect of depriving shareholders of an
opportunity to sell their shares at a premium over prevailing market
prices by discouraging a third party from seeking to obtain control of
the Fund. A Director may be removed from office with or without cause
but only by vote of the holders of at least 662/3% of the shares
entitled to be voted on the matter.

In addition, the Articles of Incorporation require the favorable
vote of the holders of at least 662/3% of the Fund's shares of capital
stock, then entitled to be voted, voting as a single class, to approve,
adopt or authorize the following:

(i) a merger or consolidation or statutory share exchange of
the Fund with any other corporation,

(ii) a sale of all or substantially all of the Fund's assets
(other than in the regular course of the Fund's
investment activities), or

(iii) a liquidation or dissolution of the Fund,

unless such action has been approved, adopted or authorized by the
affirmative vote of at least two-thirds of the total number of Directors
fixed in accordance with the by-laws of the Fund, in which case the
affirmative vote of a majority of the Fund's shares of capital stock is
required. Following any issuance of preferred stock by the Fund, it is
anticipated that the approval, adoption or authorization of the
foregoing also would require the favorable vote of a majority of the
Fund's shares of preferred stock then entitled to be voted, voting as a
separate class.

In addition, conversion of the Fund to an open-end investment
company would require an amendment to the Fund's Articles of
Incorporation. The amendment would have to be determined to be in the
best interest of the shareholders of the Fund by the Board of Directors
prior to its submission to shareholders. Such an amendment would
require the favorable vote of the holders of at least 662/3% of the
Fund's outstanding shares (including any preferred stock) entitled to be
voted on the matter, voting as a single class (or a majority of such
shares if the amendment previously was approved, adopted or authorized
by at least two-thirds of the total number of Directors fixed in
accordance with the Fund's by-laws), and, assuming preferred stock is
issued, the affirmative vote of a majority of outstanding shares of
preferred stock of the Fund, voting as a separate class. Such a vote
also would satisfy a separate requirement in the Investment Company Act
that the change be
50
<PAGE>
approved by the shareholders. Shareholders of an open-end investment
company may require the company to redeem their shares of common stock
at any time (except in certain circumstances as authorized by or under
the Investment Company Act) at their net asset value, less such
redemption charge, if any, as might be in effect at the time of a
redemption. All redemptions will be made in cash. If the Fund is
converted to an open-end investment company, it could be required to
liquidate portfolio securities to meet requests for redemption and the
shares no longer would be listed on a stock exchange. Conversion to an
open-end investment company also would require redemption of all
outstanding shares of preferred stock and would require changes in
certain of the Fund's investment policies and restrictions, such as
those relating to the borrowing of money and the purchase of illiquid
securities.

The Board of Directors has determined that the 662/3% voting
requirements described above, which are greater than the minimum
requirements under Maryland law or the Investment Company Act, are in
the best interests of shareholders generally. Reference should be made
to the Articles of Incorporation on file with the Securities and
Exchange Commission for the full text of these provisions.

CUSTODIAN

-------------------- will act as the custodian for the Fund's assets
and will employ foreign sub-custodians approved by the Fund's Board of
Directors in accordance with regulations of the Securities and Exchange
Commission.

UNDERWRITING

Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch")
has agreed, subject to the terms and conditions of a Purchase Agreement
with the Fund and the Investment Adviser, to purchase shares of Common
Stock from the Fund. Merrill Lynch is committed to purchase all of such
shares if any are purchased.

Merrill Lynch has advised the Fund that it proposes initially to
offer the shares to the pubic at the public offering price set forth on
the cover page of this Prospectus, except that the price will be reduced
to $---------- per share for purchases in single transactions of between
---------- and ---------- shares ($----------for purchases in single
transactions of ---------- or more shares). Merrill Lynch also has
advised the Fund that it may offer shares to certain dealers at the
initial offering price set forth in the preceding sentence less a
concession not in excess of $---------- per share ($---------- per share
for purchases in single transactions of between ----- and ----- shares
and $---------- for purchases in single transactions of ---------- or
more shares). Merrill Lynch may allow, and such dealers may reallow, a
discount on sales to certain other dealers not in excess of $----------
per share. After the initial public offering, the public offering
price, concession and discount may be changed. Investors must pay for
any shares of Common Stock purchased in the initial public offering on
or before ---------------, 1994. The maximum sales load of $----------
per share is equal to -----%, the sales load of $----per share is equal
to -----% and the sales load of $---------- per share is equal to ---
--% of the respective initial public offering prices.

The Fund has granted Merrill Lynch an option, exercisable for 45
days after the date hereof, to purchase up to --------- additional
shares of Common Stock to cover over-allotments, if any, at the initial
offering price less the sales load.

Prior to this offering, there has been no public market for the
shares of the Fund. The Fund's shares have been approved for listing on
the New York Stock Exchange. However, during an initial period which
is not expected to exceed three weeks from the date of this Prospectus,
the Fund's shares will not be listed on any securities exchange.
Additionally, during such period, Merrill Lynch does not intend to make
a market in the Fund's shares, although a limited market may develop.
Consequently, it is anticipated that an investment in the
51
<PAGE>
Fund will be illiquid during such period. In order to meet the
requirements for listing, Merrill Lynch has undertaken to sell lots of
100 or more shares to a minimum of 2,000 beneficial owners.

The Fund anticipates that Merrill Lynch from time to time may act as
a broker in connection with the execution of the Fund's portfolio
transactions.

Merrill Lynch is an affiliate of the Investment Adviser of the Fund.
Merrill Lynch's principal business address is Merrill Lynch World
Headquarters, World Financial Center, North Tower, New York, New York
10281-1305.

The Fund and the Investment Adviser have agreed to indemnify Merrill
Lynch against certain liabilities including liabilities under the
Securities Act of 1933.

TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND REGISTRAR

The transfer agent, dividend disbursing agent and registrar for the
shares of the Fund is -------------------.

LEGAL OPINIONS

Certain legal matters in connection with the shares offered hereby
will be passed upon for the Fund and Merrill Lynch by Brown & Wood, New
York, New York. Brown & Wood will rely as to matters of Maryland law on
the opinion of Ginsburg, Feldman and Bress, Chartered, Washington, D.C.

EXPERTS

The statement of assets, liabilities and capital of the Fund
included in this Prospectus has been so included in reliance on the
report of ---------------------, independent auditors, and on their
authority as experts in auditing and accounting.

52
<PAGE>
INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholder of
EMERGING TIGERS FUND, INC.

We have audited the accompanying statement of assets, liabilities
and capital of Emerging Tigers Fund, Inc. as of ----------, 1994. This
financial statement is the responsibility of the Fund's management. Our
responsibility is to express an opinion on this financial statement
based on our audit.

We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statement. 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 audit provides a reasonable basis for
our opinion.

In our opinion, such statement of assets, liabilities and capital
presents fairly, in all material respects, the financial position of
Emerging Tigers Fund, Inc. as of ----------, 1994, in conformity with
generally accepted accounting principles.

----------, 1994

53
<PAGE>
EMERGING TIGERS FUND, INC.

STATEMENT OF ASSETS, LIABILITIES AND CAPITAL

---------------, 1994

ASSETS

Cash . . . . . . . . . . . . . . . . . . . $
Deferred organization and offering
costs (Note 1) . . . . . . . . . . . . . -----
Total Assets . . . . . . . . . . .

LIABILITIES

Deferred organization and offering
costs (Note 1) . . . . . . . . . . . . . -----
NET ASSETS . . . . . . . . . . . . . . . . . . $
=====

CAPITAL

Common Stock, par value $.10 per share;
200,000,000 shares authorized; 7,055
shares issued and outstanding (Note 1) . $
Paid in Capital in excess of par . . . . -----
Total Capital-Equivalent of $
net asset value per share of
Common Stock (Note 1) . . . . . . . $
=====

Notes to Statement of Assets, Liabilities and Capital

Note 1. Organization

The Fund was incorporated under the laws of the State of Maryland on
December --, 1993, as a closed-end, non-diversified management
investment company and has had no operations other than the sale to Fund
Asset Management, L.P. (the "Investment Adviser") of an aggregate of
shares for $ on
, 1994.

Deferred organization costs will be amortized on a straight-line
basis over a five-year period beginning with the commencement of
operations of the Fund. Direct costs relating to the public offering of
the Fund's shares will be charged to capital at the time of issuance.

Note 2. Management Arrangements

The Fund has engaged the Investment Adviser to provide investment
advisory and management services to the Fund. The Investment Adviser
will receive a monthly fee at the annual rate of 1.00% of the Fund's
average weekly net assets plus the proceeds of any outstanding
borrowings used for leverage.

54
<PAGE>
Note 3. Federal Income Taxes

The Fund intends to qualify as a "regulated investment company" and
as such (and by complying with the applicable provisions of the Internal
Revenue Code of 1986, as amended) will not be subject to Federal income
tax on taxable income (including realized capital gains) that is
distributed to shareholders.

55
<PAGE>
APPENDIX A
RATINGS OF FIXED INCOME SECURITIES

Description of Corporate Bond Ratings of Moody's Investors
Service, Inc. ("Moody's"):

Aaa Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and generally are
referred to as "gilt-edge." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

Aa Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally
are known as high grade bonds. They are rated lower than the best
bonds because margins of protection may not be as large as with Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than with Aaa securities.

A Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium-grade obligations. Factors
giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to
impairment sometime in the future.

Baa Bonds which are rated Baa are considered medium-grade obligations,
i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.

Ba Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate
and thereby not well safeguarded during both good and bad times over
the future. Uncertainty of position characterizes bonds in this
class.

B Bonds which are rated B generally lack characteristics of a
desirable investment. Assurance of interest and principal payments
or of maintenance of other terms of the contract over any long
period of time may be small.

Caa Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect
to principal or interest.

Ca Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other
marked shortcomings.

C Bonds which are rated C are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects
of ever attaining any real investment standing.

<PAGE>
The modifier 1 indicates that the bond ranks in the higher end of
its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the issue ranks in the lower
end of its rating category.

Description of Moody's Preferred Stock Ratings

Because of the fundamental differences between preferred stocks and
bonds, a variation of the bond rating symbols is being used in the
quality ranking of preferred stocks. The symbols, presented below, are
designed to avoid comparison with bond quality in absolute terms. It
should always be borne in mind that preferred stocks occupy a junior
position to bonds within a particular capital structure and that these
securities are rated within the universe of preferred stocks.

Preferred stock rating symbols and their definitions are as follows:

aaa An issue which is rated "aaa" is considered to be a top-quality
preferred stock. This rating indicates good asset protection and
the least risk of dividend impairment within the universe of
preferred stocks.

aa An issue which is rated "aa" is considered a high-grade preferred
stock. This rating indicates that there is reasonable assurance
that earnings and asset protection will remain relatively well
maintained in the foreseeable future.

a An issue which is rated "a" is considered to be an upper-medium
grade preferred stock. While risks are judged to be somewhat
greater than in the "aaa" and "aa" classifications, earnings and
assets protection are, nevertheless, expected to be maintained at
adequate levels.

baa An issue which is rated "baa" is considered to be medium grade,
neither highly protected nor poorly secured. Earnings and asset
protection appear adequate at present but may be questionable over
any great length of time.

ba An issue which is rated "ba" is considered to have speculative
elements and its future cannot be considered well assured. Earnings
and asset protection may be very moderate and not well safeguarded
during adverse periods. Uncertainty of position characterizes
preferred stocks in this class.

b An issue which is rated "b" generally lacks the characteristics of a
desirable investment. Assurance of dividend payments and
maintenance of other terms of the issue over any long period of time
may be small.

caa An issue which is rated "caa" is likely to be in arrears on dividend
payments. This rating designation does not purport to indicate the
future status of payments.

ca An issue which is rated "ca" is speculative in a high degree and is
likely to be in arrears on dividends with little likelihood of
eventual payment.

c This is the lowest rated class of preferred or preference stock.
Issues so rated can be regarded as having extremely poor prospects
of ever attaining any real investment standing.

Note: Moody's may apply numerical modifiers 1, 2 and 3 in each
rating classification from "aa" through "b" in its preferred stock
rating system. The modifier 1 indicates that the security ranks in the
higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the issue ranks in
the lower end of its generic rating category.
A-2
<PAGE>

Description of Corporate Bond Ratings of Standard & Poor's Corporation
("S&P"):

AAA Bonds rated AAA have the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.

AA Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the higher-rated issues only in small
degree.

A Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
bonds in higher-rated categories.

BBB Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit
adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for bonds in this
category than in higher-rated categories.

BB,B,
CCC,
CC Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with the terms of the
obligation. BB indicates the lowest degree of speculation and CC
the highest degree of speculation. While such bonds likely will
have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse
conditions.

C The C rating is reserved for income bonds on which no interest is
being paid.

D Bonds rated D are in default, and payment of interest and/or
repayment of principal is in arrears.

NR Indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does
not rate a particular type of bond as a matter of policy.

Plus (+) or Minus (-): The ratings from AA to B may be modified by
the addition of a plus or minus sign to show relative standing within
the major rating categories.

Description of Standard & Poor's Preferred Stock Ratings

A Standard & Poor's preferred stock rating is an assessment of the
capacity and willingness of an issuer to pay preferred stock dividends
and any applicable sinking fund obligations. A preferred stock rating
differs from a bond rating inasmuch as it is assigned to an equity
issue, which issue is intrinsically different from, and subordinated to,
a debt issue. Therefore, to reflect this difference, the preferred
stock rating symbol will normally not be higher than the bond rating
symbol assigned to, or that would be assigned to, the senior debt of the
same issuer.

The preferred stock ratings are based on the following
considerations:

I. Likelihood of payment -- capacity and willingness of the issuer to
meet the timely payment of preferred stock dividends and any
applicable sinking fund requirements in accordance with the terms of
the obligation;

II. Nature of, and provisions of, the issue;

A-3
<PAGE>
III. Relative position of the issue in the event of bankruptcy,
reorganization, or other arrangements affecting creditors' rights.

AAA This is the highest rating that may be assigned by Standard & Poor's
to a preferred stock issue and indicates an extremely strong
capacity to pay the preferred stock obligations.

AA A preferred stock issue rated "AA" also qualifies as a high-quality
fixed income security. The capacity to pay preferred stock
obligations is very strong, although not as overwhelming as for
issues rated "AAA."

A An issue rated "A" is backed by a sound capacity to pay the
preferred stock obligations, although it is somewhat more
susceptible to the adverse effects of changes in circumstances and
economic conditions.

BBB An issue rated "BBB" is regarded as backed by an adequate capacity
to pay the preferred stock obligations. Whereas it normally
exhibits adequate protection parameters, adverse economic conditions
or changing circumstances are more likely to lead to a weakened
capacity to make payments for a preferred stock in this category
than for issues in "A" Category.

BB,B,
CCC Preferred stock rated "BB," "B," and "CCC" are regarded, on balance,
as predominately speculative with respect to the issuer's capacity
to pay preferred stock obligations. "BB" indicates the lowest degree
of speculation and "CCC" the highest degree of speculation. While
such issues will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.

CC The rating "CC" is reserved for a preferred stock issue in arrears
on dividends or sinking fund payments but that is currently paying.

C A preferred stock rated "C" is a non-paying issue.

D A preferred stock rated "D" is a non-paying issue with the issuer in
default on debt instruments.

NR indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not
rate a particular type of obligation as a matter of policy.

Plus (+) or minus (-): To provide more detailed indications of
preferred stock quality, the ratings from "AA" to "CCC" may be modified
by the addition of a plus or minus sign to show relative standing within
the major rating categories.

The preferred stock ratings are not a recommendation to purchase,
sell or hold a security inasmuch as market price is not considered in
arriving at the rating. Preferred stock ratings are wholly unrelated to
Standard & Poor's earnings and dividend rankings for common stocks.

The ratings are based on current information furnished to Standard &
Poor's by the issuer or obtained by Standard & Poor's from other sources
it considers reliable. The ratings may be changed, suspended,or
withdrawn as a result of changes in, or unavailability of, such
information.

A-4
<PAGE>
APPENDIX B

OPTIONS AND FUTURES TRANSACTIONS

Reference is made to the discussion under the caption "Other
Investment Policies and Practices--Portfolio Strategies Involving
Options and Futures" above for information with respect to various
portfolio strategies involving such portfolio strategies.

Writing Covered Options

The writer of a covered call option has no control over when he may
be required to sell his securities since he may be assigned an exercise
notice at any time prior to the termination of his obligation as a
writer. If an option expires unexercised, the writer realizes a gain in
the amount of the premium. Such a gain, of course, may be offset by a
decline in the market value of the underlying security during the option
period. If a call option is exercised, the writer realizes a gain or
loss from the sale of the underlying security.

Put Options on Portfolio Securities

The Fund writes only covered put options which means that so long as
the Fund is obligated as the writer of the option it will, through its
custodian, have deposited and maintained cash, cash equivalents, U.S.
government securities or other high grade liquid debt with the Fund's
custodian with a value equal to or greater than the exercise price of
the underlying securities. By writing a put, the Fund will be obligated
to purchase the underlying security at a price that may be higher than
the market value of that security at the time of exercise for as long as
the option is outstanding. The Fund may engage in closing transactions
in order to terminate put options that it has written.

Options Markets

The options in which the Fund invests may be options issued by The
Options Clearing Corporation (the "Clearing Corporation") which are
currently traded on the Chicago Board Options Exchange, American Stock
Exchange, Philadelphia Stock Exchange, Pacific Stock Exchange, New York
Stock Exchange or Midwest Stock Exchange. An option position may be
closed out only on an exchange which provides a secondary market for an
option of the same series. If a secondary market does not exist, it
might not be possible to effect closing transactions in particular
options, with the result, in the case of a covered call option, that the
fund will not be able to sell the underlying security until the option
expires or it delivers the underlying security upon exercise. Reasons
for the absence of a liquid secondary market on an exchange include the
following: (i) there may be insufficient trading interest in certain
options; (ii) restrictions may be imposed by an exchange on opening
transactions or closing transactions or both; (iii) trading halts,
suspensions or other restrictions may be imposed with respect to
particular classes or series of options or underlying securities; (iv)
unusual or unforeseen circumstances may interrupt normal operations on
an exchange; (v) the facilities of an exchange or the Clearing
Corporations may not at all times be adequate to handle current trading
volume; or (vi) one or more exchanges could, for economic or other
reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in
which event the secondary market on that exchange (or in that class or
series of options) would cease to exist, although outstanding options on
that exchange that had been issued by the Clearing Corporation as a
result of trade on that exchange would continue to be exercisable in
accordance with their terms.

The Fund may also enter into OTC options, which are two-party
contracts with price and terms negotiated between the buyer and seller.
The staff of the Commission has taken the position that OTC options

<PAGE>
and the assets used as cover for written OTC options are illiquid
securities. However, if the OTC option is sold by the Fund to a primary
U.S. government securities dealer recognized by the Federal Reserve Bank
of New York and the Fund has the unconditional contractual right to
repurchase such OTC option from the dealer at a predetermined price,
then the Fund will treat as illiquid such amount of the underlying
securities as is equal to the repurchase price less the amount by which
the option is "in-the-money" (i.e., current market value of the
underlying security minus the option's strike price). The repurchase
price with the primary dealers is typically a formula price which is
generally based on a multiple of the premium received for the option,
plus the amount by which the option is "in-the-money." This Policy is
not a fundamental policy of the Fund and may be amended by the Directors
of the Fund without the approval of the Fund's shareholders. However,
the Fund will not change or modify this policy prior to the change or
modification by the Commission staff of its position.

Financial Futures and Options Thereon

The purchase or sale of a futures contract differs from the purchase
or sale of a security in that no price or premium is paid or received.
Instead, an amount of cash or securities acceptable to the broker and
the relevant contract market, which varies, but is generally about 5% of
the contract amount, must be deposited with the broker. This amount is
known as "initial margin" and represents a "good faith" deposit assuring
the performance of both the purchaser and seller under the futures
contract. Subsequent payments to and from the broker, called "variation
margin," are required to be made on a daily basis as the price of the
futures contracts fluctuates making the long and short positions in the
futures contracts more or less valuable, a process known as "mark to the
market." At any time prior to the settlement date of the futures
contract, the position may be closed out by taking an opposite position
which will operate to terminate the position in the futures contract. A
final determination of variation margin is then made, additional cash is
required to be paid to or released by the broker and the purchaser
realizes a loss or gain. In addition, a nominal commission is paid on
each completed sale transaction.

The Fund has received an order from the Commission exempting it from
the provisions of Section 17(f) of the Investment Company Act in
connection with its strategy of investing in futures contracts. Section
17(f) relates to the custody of securities and other assets of an
investment company and may be deemed to prohibit certain arrangements
between the Fund and commodities brokers with respect to initial and
variation margin.

Risk Factors in Options and Futures Transactions

In the case of a futures position or an option on a futures position
written by the Fund, in the event of adverse price movements, the Fund
would continue to be required to make daily cash payments of variation
margin. In such situations, if the Fund has insufficient cash, it may
have to sell portfolio securities to meet daily variation margin
requirements at a time when it may be disadvantageous to do so. In
addition, the Fund may be required to take or make delivery of the
securities underlying futures contracts it holds. The inability to
close options and futures positions also could have an adverse impact on
the Fund's ability to hedge effectively its portfolio.

The exchanges on which the Fund intends to conduct its options
transactions have generally established limitations governing the
maximum number of call or put options on the same underlying security
(whether or not covered) which may be written by a single investor,
whether acting alone or in concert with others (regardless of whether
such options are written on the same or different exchanges or are held
or written on one or more accounts or through one or more brokers).
"Trading limits" are imposed on the maximum number of contracts which
any person may trade on a particular trading day. An exchange may order
the liquidation of positions found to be in violation of these limits,
and it may impose other sanctions or restrictions. The
B-2
<PAGE>
Investment Adviser does not believe that these trading and position
limits will have any adverse impact on the portfolio strategies for
hedging the Fund's portfolio.

B-3

<PAGE>
==============================
No person has been authorized
to give any information or to
make any representations not
contained in this Prospectus
and, if given or made, such
information or representations
must not be relied upon as
having been authorized. This
Prospectus does not constitute
an offering of any securities
other than the registered
securities to which it relates
or an offer to any person in
any State or jurisdiction of
the United States or any
country where such offer would
be unlawful.
-----
TABLE OF CONTENTS
Page
----
Prospectus Summary . . . . . .
Fee Table . . . . . . . . . . .
The Fund . . . . . . . . . . .
Use of Proceeds . . . . . . . .
The 1996 Vote to Convert to
Open-End Status . . . . . . .
Investment Objective and
Policies . . . . . . . . . .
Other Investment Policies and
Practices . . . . . . . . . .
Investment Restrictions . . . .
Risk Factors and Special
Considerations . . . . . . .
Selected Economic and Market
Data . . . . . . . . . . . .
Directors and Officers . . . .
Investment Advisory and Manage-
ment Arrangements . . . . . . .
Portfolio Transactions
Dividends and Distributions . .
Taxes . . . . . . . . . . . . .
Automatic Dividend
Reinvestment Plan . . . . . .
Mutual Fund Investment Option .
Net Asset Value . . . . . . . .
Description of Shares . . . . .
Custodian . . . . . . . . . . .
Underwriting . . . . . . . . .
Transfer Agent, Dividend
Disbursing Agent and
Registrar . . . . . . . . . .
Legal Opinions . . . . . . . .
Experts . . . . . . . . . . . .
Independent Auditors' Report .
Statement of Assets,
Liabilities and Capital . . .
Appendix A . . . . . . . . . .
Appendix B . . . . . . . . . .
-------------

Until ----------, 1994 (90
days after the commencement of
the offering), all dealers
effecting transactions in the
Common Stock, whether or not
participating in this
distribution, may be required
to deliver a Prospectus. This
delivery requirement is in
addition to the obliga-
tion of dealers to deliver a
Prospectus when acting as
underwriters and with respect
to their unsold allotments or
subscriptions.

=============================
Code # -----

============================

---------- Shares

EMERGING TIGERS FUND, INC.

Common Stock

---------------

PROSPECTUS

---------------

Merrill Lynch & Co.

----------, 1994

==============================

<PAGE>
PART C

OTHER INFORMATION

Item 24. Financial Statements and Exhibits.

(1) Financial Statements

Independent Auditors' Report

Statement of Assets, Liabilities and Capital as of -------,
1994

(2) Exhibits:

(a) --Articles of Incorporation**
(b) --Form of By-Laws
(c) --Not applicable
(d)(1) --Specimen certificate for Common Stock*
(d)(2) --Portions of the Articles of Incorporation
and the By-Laws of the Registrant defining
the rights of holders of shares of the
Registrant.*
(e) --Form of Dividend Reinvestment Plan
(f) --Not applicable
(g) --Form of Investment Advisory Agreement
between the Fund and Fund Asset
Management, L.P.
(h)(1) --Form of Purchase Agreement*
(2) --Merrill Lynch Standard Dealer Agreement
(i) --Not applicable
(j) --Custodian Contract between the Fund and *
(k) --Registrar, Transfer Agency and Service
Agreement between the Fund and
*
(l) --Opinion and Consent of Brown & Wood, counsel
to the Fund*
(m) --Not applicable
(n) --Consent of , independent auditors for
the Fund*
(o) --Not applicable
(p) --Certificate of Fund Asset Management, L.P.*
(q) --Not applicable

---------------
*To be filed by amendment.
** Previously filed.

<PAGE>

Item 25. Marketing Arrangements.

See Exhibit (h).

Item 26. Other Expenses of Issuance and Distribution.

The following table sets forth the estimated expenses to be incurred
in connection with the offering described in this Registration
Statement:

Registration Fees . . . . . . . . . . . . . . . . $ *
Stock Exchange listing fee . . . . . . . . . . . *
Printing (other than stock certificates) . . . . . *
Engraving and printing stock certificates . . . . *
Fees and expenses of qualifications under state
securities laws (including fees of counsel) . . *
Legal fees and expenses . . . . . . . . . . . . . *
Accounting fees and expenses *
NASD fees . . . . . . . . . . . . . . . . . . *
Miscellaneous . . . . . . . . . . . . . . . . . . *
---
Total . . . . . . . . . . . . . . . . . . $ *
===
---------------
* To be provided by amendment.

Item 27. Persons Controlled by or Under Common Control with Registrant.

The information in the Prospectus under the caption "Investment
Advisory and Management Arrangements" and in Note l to the Statement of
Assets, Liabilities and Capital is incorporated herein by reference.

Item 28. Number of Holders of Securities.

There will be one record holder of the Common Stock, par value $.10
per share, as of the effective date of this Registration Statement.

Item 29. Indemnification.

Section 2-18 of the General Corporation Law of the State of
Maryland, Article VI of the Fund's Articles of Incorporation, Article VI
of the Fund's By-Laws and the Investment Advisory Agreement to be filed
as Exhibit (g) provide for indemnification.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be provided to directors, officers and
controlling persons of the Fund, pursuant to the foregoing provisions or
otherwise, the Fund has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Fund of expenses incurred or paid by a
director, officer or controlling person of the Fund in connection with
any successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Fund will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.

C-2
<PAGE>
Reference is made to Section Six of the Purchase Agreement, a form
of which is filed as Exhibit (h) (l) hereto, for provisions relating to
the indemnification of the underwriter.

Item 30. Business and Other Connections of the Investment Adviser.

Fund Asset Management, L.P. (the "Investment Adviser") acts as
investment adviser for the following registered investment companies:
Apex Municipal Fund, Inc., CBA Money Fund, CMA Government Securities
Fund, CMA Money Fund, CMA Multi-State Municipal Series Trust, CMA
Tax-Exempt Fund, CMA Treasury Fund, The Corporate Fund Accumulation
Program, Inc., Corporate High Yield Fund, Inc., Corporate High Yield
Fund II, Inc., Financial Institutions Series Trust, Income Opportunities
Fund 1999, Inc., Income Opportunities Fund 2000, Inc., Merrill Lynch
Basic Value Fund, Inc., Merrill Lynch California Municipal Series Trust,
Merrill Lynch Corporate Bond Fund, Inc., Merrill Lynch Federal
Securities Trust, Merrill Lynch Funds for Institutions Series, Merrill
Lynch Institutional Tax-Exempt Fund, Merrill Lynch Multi-State Municipal
Series Trust, Merrill Lynch Multi-State Limited Maturity Municipal
Series Trust, Merrill Lynch Municipal Bond Fund, Inc., Merrill Lynch
Phoenix Fund, Inc., Merrill Lynch Special Value Fund, Inc., Merrill
Lynch World Income Fund, Inc., MuniAssets Fund, Inc., MuniBond Income
Fund, Inc., The Municipal Fund Accumulation Program, Inc., MuniEnhanced
Fund, Inc., MuniInsured Fund, Inc., MuniVest California Insured Fund,
Inc., MuniVest Florida Fund, MuniVest Fund, Inc., MuniVest Fund II,
Inc., MuniVest Michigan Insured Fund, Inc., MuniVest New Jersey Fund,
Inc., MuniVest New York Insured Fund, Inc., MuniVest Pennsylvania
Insured Fund, MuniYield Arizona Fund, Inc., MuniYield Arizona Fund II,
Inc., MuniYield California Fund, Inc., MuniYield California Insured
Fund, Inc., MuniYield California Insured Fund II, Inc., MuniYield
Florida Fund, MuniYield Florida Insured Fund, MuniYield Fund, Inc.,
MuniYield Insured Fund, Inc., MuniYield Insured Fund II, Inc., MuniYield
Michigan Fund, Inc., MuniYield Michigan Insured Fund, Inc., MuniYield
New Jersey Fund, Inc., MuniYield New Jersey Insured Fund, Inc.,
MuniYield New York Insured Fund, Inc. MuniYield New York Insured Fund
II, Inc., MuniYield New York Insured Fund III, Inc., MuniYield
Pennsylvania Fund, MuniYield Quality Fund, Inc., MuniYield Quality Fund
II, Inc., Senior High Income Portfolio, Inc., Senior High Income
Portfolio II, Inc., Taurus MuniCalifornia Holdings, Inc. and Taurus
MuniNewYork Holdings, Inc. The address of each of these investment
companies is Box 9011, Princeton, New Jersey 08543-9011, except that the
address of Merrill Lynch Funds for Institutional Series and Merrill
Lynch Institutional Tax-Exempt Fund is One Financial Center, 15th Floor,
Boston, Massachusetts 02111-2646. The address of the Investment Adviser
and its affiliate, Merrill Lynch Asset Management, L.P., ("MLAM"), also,
is Box 9011, Princeton, New Jersey 08543-9011. The address of Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and Merrill Lynch
& Co., Inc. ("ML & Co.") is North Tower, World Financial Center, 250
Vesey Street, New York, New York 10281-1213.

Set forth below is a list of each officer and director of the
Investment Adviser indicating each business, profession, vocation or
employment of a substantial nature in which each such person has been
engaged since December --, 1991 for his own account or in the capacity
of director, officer, employee, partner or trustee. In addition, Mr.
Zeikel is President and Director, Mr. Richard is Treasurer and Mr.
Glenn is Executive Vice President of all or substantially all of the
investment companies described in the preceding paragraph and also hold
the same positions with all or substantially all of the investment
companies advised by MLAM as they do with those advised by the
Investment Adviser. Messrs. Durnin, Giordano, Harvey, Hewitt and
Monagle are directors or officers of one or more of such companies.
C-3
<PAGE>

<TABLE>
<CAPTION>
Other Substantial
Position(s) with the Business, Profession,
Name Investment Adviser Vocation or Employment
---- -------------------- ----------------------

<S> <C> <C>
Arthur Zeikel . . . . . . President and Director President and Director of MLAM;
Director of Merrill Lynch Funds
Distributor, Inc. ("MLFD"); Executive
Vice President of ML & Co.; Executive
Vice President of Merrill Lynch

Terry K. Glenn . . . . . Executive Vice President Executive Vice President of MLAM;
and Director President and Director of MLFD;
President of Princeton Administrators,
Inc.

Bernard J. Durnin . . . . Senior Vice President Senior Vice President of MLAM

Vincent R. Giordano . . . Senior Vice President Senior Vice President of MLAM

Elizabeth Griffin . . . . Senior Vice President Senior Vice President of MLAM

Norman R. Harvey . . . . Senior Vice President Senior Vice President of MLAM

N. John Hewitt . . . . . Senior Vice President Senior Vice President of MLAM

Philip L. Kirstein . . . Senior Vice President, Senior Vice President, General
General Counsel and Counsel, Director and Secretary
Secretary of MLAM; Director of MLFD

Ronald M. Kloss . . . . . Senior Vice President Senior Vice President and
and Controller Controller of MLAM

Joseph T. Monagle . . . . Senior Vice President Senior Vice President of MLAM

Gerald M. Richard . . . . Senior Vice President Senior Vice President and
and Treasurer Treasurer of MLAM; Vice President
and Treasurer of MLFD

Richard L. Rufener . . . Senior Vice President Senior Vice President of MLAM; Vice
President of MLFD

Ronald L. Welburn . . . . Senior Vice President Senior Vice President of MLAM

Anthony Wiseman . . . . . Senior Vice President Senior Vice President of MLAM
</TABLE>

Item 31. Location of Accounts and Records.

All accounts, books and other documents required to be maintained by
Section 31 (a) of the Investment Company Act of 1940 and the rules
promulgated thereunder are maintained at the offices of the Registrant
(800 Scudders Mill Road, Plainsboro, New Jersey 08536), its investment
adviser (800 Scudders Mill Road, Plainsboro, New Jersey 08536), and its
custodian and transfer agent ( ).

C-4
<PAGE>
Item 32. Management Services.

Not applicable.

Item 33. Undertakings.

(a) Registrant undertakes to suspend offering of the shares of
Common Stock covered hereby until it amends its Prospectus contained
herein if (1) subsequent to the effective date of this Registration
Statement, its net asset value per share of Common Stock declines more
than 10 percent from its net asset value per share of Common Stock as of
the effective date of this Registration Statement, or (2) its net asset
value per share of Common Stock increases to an amount greater than its
net proceeds as stated in the Prospectus contained herein.

(b) Registrant undertakes that:

(1) For the purpose of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of a registration statement in reliance
upon Rule 430A and contained in the form of prospectus filed by the
Registrant pursuant to Rule 497(h) under the Securities Act shall be
deemed to be part of the registration statement as of the time it
was declared effective.

(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains
a form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

C-5
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Plainsboro and State of New
Jersey, on the 12th day of January, 1994.

EMERGING TIGERS FUND, INC.
(Registrant)

By: Philip L. Kirstein *
-----------------------------------
(Philip L. Kirstein, President)

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the date(s) indicated.

Signatures Title Date
---------- ----- ----

Philip L. Kirstein*
---------------------- President (Principal
(Philip L. Kirstein) Executive Officer)
and Director

/s/ Mark B. Goldfus Treasurer (Principal January 12, 1994
-------------------- Financial and Account-
(Mark B. Goldfus) ing Officer) and Director

Michael J. Hennewinkel*
----------------------- Secretary and Director
(Michael J. Hennewinkel)

*/s/ Mark B. Goldfus January 12, 1994
--------------------
(Mark B. Goldfus
Attorney-in-Fact)

C-6
<PAGE>

EXHIBIT INDEX

EXHIBIT
-------

(b) Form of By-Laws
(e) Form of Dividend Reinvestment Plan
(g) Form of Investment Advisory Agreement
between the Fund and Fund Asset Management, L.P
(h)(2) Merrill Lynch Standard Dealer Agreement

C-7

<PAGE>
DRAFT 1/11/94
-------------

BY-LAWS

EMERGING TIGER FUND, INC.

ARTICLE I

Offices
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Section 1. Principal Office. The principal office of the
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Corporation shall be in the City of Baltimore, State of Maryland.

Section 2. Principal Executive Office. The principal executive
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office of the Corporation shall be at 800 Scudders Mill Road,

Plainsboro, New Jersey 08536.

Section 3. Other Offices. The Corporation may have such other
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offices in such places as the Board of Directors may from time to time

determine.

ARTICLE II

Meetings of Stockholders
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Section 1. Annual Meeting. The annual meeting of the stockholders
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of the Corporation for the election of directors and for the transaction

of such other business as may properly be brought before the meeting

shall be held on such day in --------- of each year as shall be

designated annually by the Board of Directors.

Section 2. Special Meetings. Special meetings of the
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stockholders, unless otherwise provided by law or by the Charter,

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may be called for any purpose or purposes by a majority of the Board of

Directors, the President, or on the written request of the holders of

the outstanding shares of capital stock of the Corporation entitled to

vote at such meeting to the extent permitted by Maryland law.

Section 3. Place of Meetings. The annual meeting and any special
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meeting of the stockholders shall be held at such place within the

United States as the Board of Directors may from time to time determine.

Section 4. Notice of Meetings; Waiver of Notice. Notice of the
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place, date and time of the holding of each annual and special meeting

of the stockholders and the purpose or purposes of each special meeting

shall be given personally or by mail, not less than ten nor more than

ninety days before the date of such meeting, to each stockholder

entitled to vote at such meeting and to each other stockholder entitled

to notice of the meeting. Notice by mail shall be deemed to be duly

given when deposited in the United States mail addressed to the

stockholder at his address as it appears on the records of the

Corporation, with postage thereon prepaid.

Notice of any meeting of stockholders shall be deemed waived by any

stockholder who shall attend such meeting in person or by proxy, or who

shall, either before or after the meeting, submit a signed waiver of

notice which is filed with the records of the meeting. When a meeting

is adjourned to another time and place, unless the Board of Directors,

after the adjournment, shall fix a new record date for an adjourned

meeting, or the adjournment is
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for more than one hundred and twenty days after the original record

date, notice of such adjourned meeting need not be given if the time and

place to which the meeting shall be adjourned were announced at the

meeting at which the adjournment is taken.

Section 5. Quorum. At all meetings of the stockholders, the
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holders of a majority of the shares of stock of the Corporation entitled

to vote at the meeting, present in person or by proxy, shall constitute

a quorum for the transaction of any business, except as otherwise

provided by statute or by the Charter. In the absence of a quorum no

business may be transacted, except that the holders of a majority of the

shares of stock present in person or by proxy and entitled to vote may

adjourn the meeting from time to time, without notice other than

announcement thereat except as otherwise required by these ByLaws, until

the holders of the requisite amount of shares of stock shall be so

present. At any such adjourned meeting at which a quorum may be present

any business may be transacted which might have been transacted at the

meeting as originally called. The absence from any meeting, in person

or by proxy, of holders of the number of shares of stock of the

Corporation in excess of a majority thereof which may be required by the

laws of the State of Maryland, the Investment Company Act of 1940, as

amended, or other applicable statute, the Charter, or these By-Laws, for

action upon any given matter shall not prevent action at such meeting

upon any other matter or matters which may properly come before the

meeting, if there shall be present

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thereat, in person or by proxy, holders of the number of shares of stock

of the Corporation required for action in respect of such other matter

or matters.

Section 6. Organization. At each meeting of the stockholders, the
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Chairman of the Board (if one has been designated by the Board), or in

his absence or inability to act, the President, or in the absence or

inability to act of the Chairman of the Board and the President, a Vice

President, shall act as chairman of the meeting. The Secretary, or in

his absence or inability to act, any person appointed by the chairman of

the meeting, shall act as secretary of the meeting and keep the minutes

thereof.

Section 7. Order of Business. The order of business at all
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meetings of the stockholders shall be as determined by the chairman of

the meeting.

Section 8. Voting. Except as otherwise provided by statute or the
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Charter, each holder of record of shares of stock of the Corporation

having voting power shall be entitled at each meeting of the

stockholders to one vote for every share of such stock standing in his

name on the record of stockholders of the Corporation as of the record

date determined pursuant to Section 9 of this Article or if such record

date shall not have been so fixed, then at the later of (i) the close of

business on the day on which notice of the meeting is mailed or (ii) the

thirtieth day before the meeting.

Each stockholder entitled to vote at any meeting of stockholders

may authorize another person or persons to act for him by

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a proxy signed by such stockholder or his attorney-in-fact. No proxy

shall be valid after the expiration of eleven months from the date

thereof, unless otherwise provided in the proxy. Every proxy shall be

revocable at the pleasure of the stockholder executing it, except in

those cases where such proxy states that it is irrevocable and where an

irrevocable proxy is permitted by law. Except as otherwise provided by

statute, the Charter or these By-Laws, any corporate action to be taken

by vote of the stockholders (other than the election of directors, which

shall be by a plurality of votes cast) shall be authorized by a majority

of the total votes cast at a meeting of stockholders by the holders of

shares present in person or represented by proxy and entitled to vote on

such action.

If a vote shall be taken on any question other than the election of

directors, which shall be by written ballot, then unless required by

statute or these By-Laws, or determined by the chairman of the meeting

to be advisable, any such vote need not be by ballot. On a vote by

ballot, each ballot shall be signed by the stockholder voting, or by his

proxy, if there be such proxy, and shall state the number of shares

voted.

Section 9. Fixing of Record Date. The Board of Directors may set
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a record date for the purpose of determining stockholders entitled to

vote at any meeting of the stockholders. The record date, which may not

be prior to the close of business on the day the record date is fixed,

shall be not more than ninety nor less than ten days before the date of

the meeting of the stockholders.

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All persons who were holders of record of shares at such time, and not

others, shall be entitled to vote at such meeting and any adjournment

thereof.

Section 10. Inspectors. The Board may, in advance of any meeting
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of stockholders, appoint one or more inspectors to act at such meeting

or any adjournment thereof. If the inspectors shall not be so appointed

or if any of them shall fail to appear or act, the chairman of the

meeting may, and on the request of any stockholder entitled to vote

thereat shall, appoint inspectors. Each inspector, before entering upon

the discharge of his duties, shall take and sign an oath to execute

faithfully the duties of inspector at such meeting with strict

impartiality and according to the best of his ability. The inspectors

shall determine the number of shares outstanding and the voting powers

of each, the number of shares represented at the meeting, the existence

of a quorum, the validity and effect of proxies, and shall receive

votes, ballots or consents, hear and determine all challenges and

questions arising in connection with the right to vote, count and

tabulate all votes, ballots or consents, determine the result, and do

such acts as are proper to conduct the election or vote with fairness to

all stockholders. On request of the chairman of the meeting or any

stockholder entitled to vote thereat, the inspectors shall make a report

in writing of any challenge, request or matter determined by them and

shall execute a certificate of any fact found by them. No director or

candidate for the
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office of director shall act as inspector of an election of directors.

Inspectors need not be stockholders.

Section 11. Consent of Stockholders in Lieu of Meeting.
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Except as otherwise provided by statute or the Charter, any action

required to be taken at any annual or special meeting of stockholders,

or any action which may be taken at any annual or special meeting of

such stockholders, may be taken without a meeting, without prior notice

and without a vote, if the following are filed with the records of

stockholders meetings: (i) a unanimous written consent which sets forth

the action and is signed by each stockholder entitled to vote on the

matter and (ii) a written waiver of any right to dissent signed by each

stockholder entitled to notice of the meeting but not entitled to vote

thereat.

ARTICLE III

Board of Directors
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Section 1. General Powers. Except as otherwise provided in the
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Charter, the business and affairs of the Corporation shall be managed

under the direction of the Board of Directors. All powers of the

Corporation may be exercised by or under authority of the Board of

Directors except as conferred on or reserved to the stockholders by law

or by the Charter or these By-Laws.

Section 2. Number of Directors. The number of directors shall be
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fixed from time to time by resolution of the Board of Directors adopted

by a majority of the Directors then in office;

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provided, however, that the number of directors shall in no event be

less than three nor more than fifteen. Any vacancy created by an

increase in Directors may be filled in accordance with Section 6 of this

Article III. No reduction in the number of directors shall have the

effect of removing any director from office prior to the expiration of

his term unless such director is specifically removed pursuant to

Section 5 of this Article III at the time of such decrease. Directors

need not be stockholders.

Section 3. Election and Term of Directors. Directors shall be
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elected annually, by written ballot at the annual meeting of

stockholders, or a special meeting held for that purpose. The term of

office of each director shall be from the time of his election and

qualification until the annual election of directors next succeeding his

election and until his successor shall have been elected and shall have

qualified, or until his death, or until he shall have resigned, or until

December 31 of the year in which he shall have reached seventy-two years

of age, or until he shall have been removed as hereinafter provided in

these By-Laws, or as otherwise provided by statute or the Charter.

Section 4. Resignation. A director of the Corporation may resign
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at any time by giving written notice of his resignation to the Board or

the Chairman of the Board or the President or the Secretary. Any such

resignation shall take effect at the time specified therein or, if the

time when it shall become effective shall not be specified therein,

immediately upon its receipt;

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and, unless otherwise specified therein, the acceptance of such

resignation shall not be necessary to make it effective.

Section 5. Removal of Directors. Any director of the Corporation
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may be removed (with or without cause) by the stockholders by a vote of

sixty-six and two-thirds percent (66 2/3%) of the outstanding shares of

capital stock then entitled to vote in the election of such director.

Section 6. Vacancies. Subject to the provisions of the Investment
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Company Act of 1940, as amended, any vacancies in the Board, whether

arising from death, resignation, removal, an increase in the number of

directors or any other cause, shall be filled by a vote of a majority of

the Board of Directors then in office, regardless of whether they

constitute a quorum.

Section 7. Place of Meetings. Meetings of the Board may be held
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at such place as the Board may from time to time determine or as shall

be specified in the notice of such meeting.

Section 8. Regular Meeting. Regular meetings of the Board may be
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held without notice at such time and place as may be determined by the

Board of Directors.

Section 9. Special Meetings. Special meetings of the Board may be
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called by two or more directors of the Corporation or by the Chairman of

the Board or the President.

Section 10. Telephone Meetings. Members of the Board of Directors
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or of any committee thereof may participate in a meeting by means of a

conference telephone or similar communications equipment if all persons

participating in the meeting can

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hear each other at the same time. Subject to the provisions of the

Investment Company Act of 1940, as amended, participation in a meeting

by these means constitutes presence in person at the meeting.

Section 11. Notice of Special Meetings. Notice of each special
--------------------------

meeting of the Board shall be given by the Secretary as hereinafter

provided, in which notice shall be stated the time and place of the

meeting. Notice of each such meeting shall be delivered to each

director, either personally or by telephone or any standard form of

telecommunication, at least twenty-four hours before the time at which

such meeting is to be held, or by first-class mail, postage prepaid,

addressed to him at his residence or usual place of business, at least

three days before the day on which such meeting is to be held.

Section 12. Waiver of Notice of Meetings. Notice of any special
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meeting need not be given to any director who shall, either before or

after the meeting, sign a written waiver of notice which is filed with

the records of the meeting or who shall attend such meeting. Except as

otherwise specifically required by these By-Laws, a notice or waiver of

notice of any meeting need not state the purposes of such meeting.

Section 13. Quorum and Voting. One-third, but not less than two,
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of the members of the entire Board shall be present in person at any

meeting of the Board in order to constitute a quorum for the transaction

of business at such meeting, and except as otherwise expressly required

by statute, the Charter,

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these By-Laws, the Investment Company Act of 1940, as amended, or other

applicable statute, the act of a majority of the directors present at

any meeting at which a quorum is present shall be the act of the Board.

In the absence of a quorum at any meeting of the Board, a majority of

the directors present thereat may adjourn such meeting to another time

and place until a quorum shall be present thereat. Notice of the time

and place of any such adjourned meeting shall be given to the directors

who were not present at the time of the adjournment and, unless such

time and place were announced at the meeting at which the adjournment

was taken, to the other directors. At any adjourned meeting at which a

quorum is present, any business may be transacted which might have been

transacted at the meeting as originally called.

Section 14. Organization. The Board may, by resolution adopted by
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a majority of the entire Board, designate a Chairman of the Board, who

shall preside at each meeting of the Board. In the absence or inability

of the Chairman of the Board to preside at a meeting, the President or,

in his absence or inability to act, another director chosen by a

majority of the directors present, shall act as chairman of the meeting

and preside thereat. The Secretary (or, in his absence or inability to

act, any person appointed by the Chairman) shall act as secretary of the

meeting and keep the minutes thereof.

Section 15. Written Consent of Directors in Lieu of a Meeting.
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Subject to the provisions of the Investment Company Act of 1940, as

amended, any action required or permitted to be taken

<PAGE>

at any meeting of the Board of Directors or of any committee thereof may

be taken without a meeting if all members of the Board or committee, as

the case may be, consent thereto in writing, and the writings or writing

are filed with the minutes of the proceedings of the Board or committee.

Section 16. Compensation. Directors may receive compensation for
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services to the Corporation in their capacities as directors or

otherwise in such manner and in such amounts as may be fixed from time

to time by the Board.

Section 17. Investment Policies. It shall be the duty of the
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Board of Directors to direct that the purchase, sale, retention and

disposal of portfolio securities and the other investment practices of

the Corporation are at all times consistent with the investment policies

and restrictions with respect to securities investments and otherwise of

the Corporation, as recited in the Prospectus of the Corporation

included in the registration statement of the Corporation relating to

the initial public offering of its capital stock, as filed with the

Securities and Exchange Commission (or as such investment policies and

restrictions may be modified by the Board of Directors, or, if required,

by majority vote of the stockholders of the Corporation in accordance

with the Investment Company Act of 1940, as amended) and as required by

the Investment Company Act of 1940, as amended. The Board however, may

delegate the duty of management of the assets and the administration of

its day to day operations to an individual or

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corporate management company and/or investment adviser pursuant to a

written contract or contracts which have obtained the requisite

approvals, including the requisite approvals of renewals thereof, of the

Board of Directors and/or the stockholders of the Corporation in accord-

ance with the provisions of the Investment Company Act of 1940, as

amended.

ARTICLE IV

Committees
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Section 1. Executive Committee. The Board may, by resolution
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adopted by a majority of the entire board, designate an Executive

Committee consisting of two or more of the directors of the Corporation,

which committee shall have and may exercise all the powers and authority

of the Board with respect to all matters other than:

(a) the submission to stockholders of any action requiring

authorization of stockholders pursuant to statute or the Charter;

(b) the filling of vacancies on the Board of Directors;

Board or on any committee of the Board, including the Executive

Committee;

(d) the approval or termination of any contract with an investment

adviser or principal underwriter, as such terms are defined in the

Investment Company Act of 1940, as amended, or the taking of any other

action required to be taken by the Board of Directors by the Investment

Company Act of 1940, as amended;

<PAGE>

(e) the amendment or repeal of these By-Laws or the adoption of

new By-Laws;

(f) the amendment or repeal of any resolution of the Board which

by its terms may be amended or repealed only by the Board;

(g) the declaration of dividends and except, to the extent

permitted by law, the issuance of capital stock of the Corporation; and

(h) the approval of any merger or share exchange which does not

require stockholder approval.

The Executive Committee shall keep written minutes of its

proceedings and shall report such minutes to the Board. All such

proceedings shall be subject to revision or alteration by the Board;

provided, however, that third parties shall not be prejudiced by such

revision or alteration.

Section 2. Other Committees of the Board. The Board of Directors
-----------------------------

may from time to time, by resolution adopted by a majority of the whole

Board, designate one or more other committees of the Board, each such

committee to consist of two or more directors and to have such powers

and duties as the Board of Directors may, by resolution, prescribe.

Section 3. General. One-third, but not less than two, of the
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members of any committee shall be present in person at any meeting of

such committee in order to constitute a quorum for the transaction of

business at such meeting, and the act of a majority present shall be the

act of such committee. The Board may designate a chairman of any

committee and such chairman or any

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two members of any committee may fix the time and place of its meetings

unless the Board shall otherwise provide. In the absence or

disqualification of any member of any committee, the member or members

thereof present at any meeting and not disqualified from voting, whether

or not he or they constitute a quorum, may unanimously appoint another

member of the Board of Directors to act at the meeting in the place of

any such absent or disqualified member. The Board shall have the power

at any time to change the membership of any committee, to fill all

vacancies, to designate alternate members to replace any absent or

disqualified member, or to dissolve any such committee. Nothing herein

shall be deemed to prevent the Board from appointing one or more

committees consisting in whole or in part of persons who are not

directors of the Corporation; provided, however, that no such committee

shall have or may exercise any authority or power of the Board in the

management of the business or affairs of the Corporation except as may

be prescribed by the Board.

ARTICLE V

Officers, Agents and Employees
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Section 1. Number of Qualifications. The officers of the
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Corporation shall be a President, who shall be a director of the

Corporation, a Secretary and a Treasurer, each of whom shall be elected

by the Board of Directors. The Board of Directors may elect or appoint

one or more Vice Presidents and may also appoint

<PAGE>

such other officers, agents and employees as it may deem necessary or

proper. Any two or more offices may be held by the same person, except

the offices of President and Vice President, but no officer shall

execute, acknowledge or verify any instrument in more than one capacity.

Such officers shall be elected by the Board of Directors each year at

its first meeting held after the annual meeting of stockholders, each to

hold office until the next meeting of the stockholders and until his

successor shall have been duly elected and shall have qualified, or

until his death, or until he shall have resigned, or have been removed,

as hereinafter provided in these By-Laws. The Board may from time to

time elect, or delegate to the President the power to appoint, such

officers (including one or more Assistant Vice Presidents, one or more

Assistant Treasurers and one or more Assistant Secretaries) and such

agents, as may be necessary or desirable for the business of the

Corporation. Such officers and agents shall have such duties and shall

hold their offices for such terms as may be prescribed by the Board or

by the appointing authority.

Section 2. Resignations. Any officer of the Corporation may
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resign at any time by giving written notice of resignation to the Board,

the Chairman of the Board, President or the Secretary. Any such

resignation shall take effect at the time specified therein or, if the

time when it shall become effective shall not be specified therein,

immediately upon its receipt; and, unless otherwise specified therein,

the acceptance of such resignation shall be necessary to make it

effective.

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Section 3. Removal of Officer, Agent or Employee. Any officer,
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agent or employee of the Corporation may be removed by the Board of

Directors with or without cause at any time, and the Board may delegate

such power of removal as to agents and employees not elected or

appointed by the Board of Directors. Such removal shall be without

prejudice to such person's contract rights, if any, but the appointment

of any person as an officer, agent or employee of the Corporation shall

not of itself create contract rights.

Section 4. Vacancies. A vacancy in any office, whether arising
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from death, resignation, removal or any other cause, may be filled for

the unexpired portion of the term of the office which shall be vacant,

in the manner prescribed in these By-Laws for the regular election or

appointment to such office.

Section 5. Compensation. The compensation of the officers of the
------------

Corporation shall be fixed by the Board of Directors, but this power may

be delegated to any officer in respect of other officers under his

control.

Section 6. Bonds or Other Security. If required by the Board, any
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officer, agent or employee of the Corporation shall give a bond or other

security for the faithful performance of his duties, in such amount and

with such surety or sureties as the Board may require.

Section 7. President. The President shall be the chief executive
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officer of the Corporation. In the absence of the Chairman of the Board

(or if there be none), he shall preside at

<PAGE>

all meetings of the stockholders and of the Board of Directors. He

shall have, subject to the control of the Board of Directors, general

charge of the business and affairs of the Corporation. He may employ

and discharge employees and agents of the Corporation, except such as

shall be appointed by the Board, and he may delegate these powers.

Section 8. Vice President. Each Vice President shall have such
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powers and perform such duties as the Board of Directors or the

President may from time to time prescribe.

Section 9. Treasurer. The Treasurer shall:
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(a) have charge and custody of, and be responsible for, all the

funds and securities of the Corporation, except those which the Cor-

poration has placed in the custody of a bank or trust company or member

of a national securities exchange (as that term is defined in the

Securities Exchange Act of 1934, as amended) pursuant to a written

agreement designating such bank or trust company or member of a national

securities exchange as custodian of the property of the Corporation;

(b) keep full and accurate accounts of receipts and disbursements

in books belonging to the Corporation;

credit of the Corporation;

(d) receive, and give receipts for, moneys due and payable, to the

Corporation from any source whatsoever;

<PAGE>

(e) disburse the funds of the Corporation and supervise the

investment of its funds as ordered or authorized by the Board, taking

proper vouchers therefor; and

(f) in general, perform all the duties incident to the office of

Treasurer and such other duties as from time to time may be assigned to

him by the Board or the President.

Section 10. Secretary. The Secretary shall:
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(a) keep or cause to be kept in one or more books provided for the

purpose, the minutes of all meetings of the Board, the committees of the

Board and the stockholders;

(b) see that all notices are duly given in accordance with the

provisions of these By-Laws and as required by law;

and affix and attest the seal to all stock certificates of the

Corporation (unless the seal of the Corporation on such certificates

shall be a facsimile, as hereinafter provided) and affix and attest the

seal to all other documents to be executed on behalf of the Corporation

under its seal;

(d) see that the books, reports, statements, certificates and

other documents and records required by law to be kept and filed are

properly kept and filed; and

(e) in general, perform all the duties incident to the office of

Secretary and such other duties as from time to time may be assigned to

him by the Board or the President.

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Section 11. Delegation of Duties. In case of the absence of any
--------------------

officer of the Corporation, or for any other reason that the Board may

deem sufficient, the Board may confer for the time being the powers or

duties, or any of them, of such officer upon any other officer or upon

any director.

ARTICLE VI

Indemnification
---------------

Each officer and director of the Corporation shall be indemnified

by the Corporation to the full extent permitted under the General Laws

of the State of Maryland, except that such indemnity shall not protect

any such person against any liability to the Corporation or any

stockholder thereof to which such person would otherwise be subject by

reason of willful misfeasance, bad faith, gross negligence or reckless

disregard of the duties involved in the conduct of his office. Absent a

court determination that an officer or director seeking indemnification

was not liable on the merits or guilty of willful misfeasance, bad

faith, gross negligence or reckless disregard of the duties involved in

the conduct of his office, the decision by the Corporation to indemnify

such person must be based upon the reasonable determination of

independent legal counsel or the vote of a majority of a quorum of the

directors who are neither "interested persons," as defined in Section

2(a)(19) of the Investment Company Act of 1940, as amended, nor parties

to the proceeding ("non-party independent directors"), after review of

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<PAGE>

the facts, that such officer or director is not guilty of willful

misfeasance, bad faith, gross negligence or reckless disregard of the

duties involved in the conduct of his office.

Each officer and director of the Corporation claiming

indemnification within the scope of this Article VI shall be entitled to

advances from the Corporation for payment of the reasonable expenses

incurred by him in connection with proceedings to which he is a party in

the manner and to the full extent permitted under the General Laws of

the State of Maryland; provided, however, that the person seeking

indemnification shall provide to the Corporation a written affirmation

of his good faith belief that the standard of conduct necessary for

indemnification by the Corporation has been met and a written

undertaking to repay any such advance, if it should ultimately be

determined that the standard of conduct has not been met, and provided

further that at least one of the following additional conditions is met:

(a) the person seeking indemnification shall provide a security in form

and amount acceptable to the Corporation for his undertaking; (b) the

Corporation is insured against losses arising by reason of the advance;

independent legal counsel in a written opinion shall determine, based on

a review of facts readily available to the Corporation at the time the

advance is proposed to be made, that there is reason to believe that the

person seeking indemnification will ultimately be found to be entitled

to indemnification.

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The Corporation may purchase insurance on behalf of an officer or

director protecting such person to the full extent permitted under the

General Laws of the State of Maryland, from liability arising from his

activities as officer or director of the Corporation. The Corporation,

however, may not purchase insurance on behalf of any officer or director

of the Corporation that protects or purports to protect such person from

liability to the Corporation or to its stockholders to which such

officer or director would otherwise be subject by reason of willful

misfeasance, bad faith, gross negligence, or reckless disregard of the

duties involved in the conduct of his office.

The Corporation may indemnify or purchase insurance to the extent

provided in this Article VI on behalf of an employee or agent who is not

an officer or director of the Corporation.

ARTICLE VII

Capital Stock
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Section 1. Stock Certificates. Each holder of stock of the
------------------

Corporation shall be entitled upon request to have a certificate or

certificates, in such form as shall be approved by the Board, repre-

senting the number of shares of stock of the Corporation owned by him,

provided, however, that certificates for fractional shares will not be

delivered in any case. The certificates representing shares of stock

shall be signed by or in the name of the Corporation by the President or

a Vice President and by the Secretary or an Assistant Secretary or the

Treasurer or an

<PAGE>

Assistant Treasurer and sealed with the seal of the Corporation. Any or

all of the signatures or the seal on the certificate may be a facsimile.

In case any officer, transfer agent or registrar who has signed or whose

facsimile signature has been placed upon a certificate shall have ceased

to be such officer, transfer agent or registrar before such certificate

shall be issued, it may be issued by the Corporation with the same

effect as if such officer, transfer agent or registrar were still in

office at the date of issue.

Section 2. Books of Account and Record of Stockholders. There
-------------------------------------------

shall be kept at the principal executive office of the Corporation

correct and complete books and records of account of all the business

and transactions of the Corporation. There shall be made available upon

request of any stockholder, in accordance with Maryland law, a record

containing the number of shares of stock issued during a specified

period not to exceed twelve months and the consideration received by the

Corporation for each such share.

Section 3. Transfers of Shares. Transfers of shares of stock of
-------------------

the Corporation shall be made on the stock records of the Corporation

only by the registered holder thereof, or by his attorney thereunto

authorized by power of attorney duly executed and filed with the

Secretary or with a transfer agent or transfer clerk, and on surrender

of the certificate or certificates, if issued, for such shares properly

endorsed or accompanied by a duly executed stock transfer power and the

payment of all taxes

23
<PAGE>

thereon. Except as otherwise provided by law, the Corporation shall be

entitled to recognize the exclusive right of a person in whose name any

share or shares stand on the record of stockholders as the owner of such

share or shares for all purposes, including, without limitation, the

rights to receive dividends or other distributions, and to vote as such

owner, and the Corporation shall not be bound to recognize any equitable

or legal claim to or interest in any such share or shares on the part of

any other person.

Section 4. Regulations. The Board may make such additional rules
-----------

and regulations, not inconsistent with these By-Laws, as it may deem

expedient concerning the issue, transfer and registration of

certificates for shares of stock of the Corporation. It may appoint, or

authorize any officer or officers to appoint, one or more transfer

agents or one or more transfer clerks and one or more registrars and may

require all certificates for shares of stock to bear the signature or

signatures of any of them.

Section 5. Lost, Destroyed or Mutilated Certificates. The holder
-----------------------------------------

of any certificates representing shares of stock of the Corporation

shall immediately notify the Corporation of any loss, destruction or

mutilation of such certificate, and the Corporation may issue a new

certificate of stock in the place of any certificate theretofore issued

by it which the owner thereof shall allege to have been lost or

destroyed or which shall have been mutilated, and the Board may, in its

discretion, require

24
<PAGE>

such owner or his legal representatives to give to the Corporation a

bond in such sum, limited or unlimited, and in such form and with such

surety or sureties, as the Board in its absolute discretion shall

determine, to indemnify the Corporation against any claim that may be

made against it on account of the alleged loss or destruction of any

such certificate, or issuance of a new certificate. Anything herein to

the contrary notwithstanding, the Board, in its absolute discretion, may

refuse to issue any such new certificate, except pursuant to legal

proceedings under the laws of the State of Maryland.

Section 6. Fixing of a Record Date for Dividends and Distri-
------------------------------------------------

butions. The Board may fix, in advance, a date not more than ninety
-------

days preceding the date fixed for the payment of any dividend or the

making of any distribution or the allotment of rights to subscribe for

securities of the Corporation, or for the delivery of evidences of

rights or evidences of interests arising out of any change, conversion

or exchange of common stock or other securities, as the record date for

the determination of the stockholders entitled to receive any such

dividend, distribution, allotment, rights or interests, and in such case

only the stockholders of record at the time so fixed shall be entitled

to receive such dividend, distribution, allotment, rights or interests.

Section 7. Information to Stockholders and Others. Any stock-
--------------------------------------

holder of the Corporation or his agent may inspect and copy during usual

business hours the Corporation's By-Laws, minutes of

25
<PAGE>

the proceedings of its stockholders, annual statements of its affairs,

and voting trust agreements on file at its principal office.

ARTICLE VIII

Seal
----

The seal of the Corporation shall be circular in form and shall

bear, in addition to any other emblem or device approved by the Board of

Directors, the name of the Corporation, the year of its incorporation

and the words "Corporate Seal" and "Maryland". Said seal may be used by

causing it or a facsimile thereof to be impressed or affixed or in any

other manner reproduced.

ARTICLE IX

Fiscal Year
-----------

Unless otherwise determined by the Board, the fiscal year of the

Corporation shall end on the --th day of ------------.

ARTICLE X

Depositories and Custodians
---------------------------

Section 1. Depositories. The funds of the Corporation shall be
------------

deposited with such banks or other depositories as the Board of

Directors of the Corporation may from time to time determine.

Section 2. Custodians. All securities and other investments shall
----------

be deposited in the safekeeping of such banks or other companies as the

Board of Directors of the Corporation may

26
<PAGE>

from time to time determine. Every arrangement entered into with any

bank or other company for the safekeeping of the securities and

investments of the Corporation shall contain provisions complying with

the Investment Company Act of 1940, as amended, and the general rules

and regulations thereunder.

ARTICLE XI

Execution of Instruments
------------------------

Section 1. Checks, Notes, Drafts, etc. Checks, notes, drafts,
--------------------------

acceptances, bills of exchange and other orders or obligations for the

payment of money shall be signed by such officer or officers or person

or persons as the Board of Directors by resolution shall from time to

time designate.

Section 2. Sale or Transfer of Securities. Stock certificates,
------------------------------

bonds or other securities at any time owned by the Corporation may be

held on behalf of the Corporation or sold, transferred or otherwise

disposed of subject to any limits imposed by these By-Laws and pursuant

to authorization by the Board and, when so authorized to be held on

behalf of the Corporation or sold, transferred or otherwise disposed of,

may be transferred from the name of the Corporation by the signature of

the President or a Vice President or the Treasurer or pursuant to any

procedure approved by the Board of Directors, subject to applicable law.

27
<PAGE>

ARTICLE XII

Independent Public Accountants
------------------------------

The firm of independent public accountants which shall sign or

certify the financial statements of the Corporation which are filed with

the Securities and Exchange Commission shall be selected annually by the

Board of Directors and ratified by the stockholders in accordance with

the provisions of the Investment Company Act of 1940, as amended.

ARTICLE XIII

Annual Statement
----------------

The books of account of the Corporation shall be examined by an

independent firm of public accountants at the close of each annual

period of the Corporation and at such other times as may be directed by

the Board. A report to the stockholders based upon each such

examination shall be mailed to each stockholder of record of the

Corporation on such date with respect to each report as may be

determined by the Board, at his address as the same appears on the books

of the Corporation. Such annual statement shall also be available at

the annual meeting of stockholders and be placed on file at the Corpor-

ation's principal office in the State of Maryland. Each such report

shall show the assets and liabilities of the Corporation as of the close

of the annual or quarterly period covered by the report and the

securities in which the funds of the Corporation were then invested.

Such report shall also show the Corporation's income

28
<PAGE>

and expenses for the period from the end of the Corporation's preceding

fiscal year to the close of the annual or quarterly period covered by

the report and any other information required by the Investment Company

Act of 1940, as amended, and shall set forth such other matters as the

Board or such firm of independent public accountants shall determine.

ARTICLE XIV

Amendments
----------

These By-Laws or any of them may be amended, altered or repealed at

any regular meeting of the stockholders or at any special meeting of the

stockholders by a favorable vote of the holders of at least sixty-six

and two-thirds percent (66 2/3%) of the outstanding shares of capital

stock of the Corporation entitled to be voted on the matter, provided

that notice of the proposed amendment, alteration or repeal be contained

in the notice of such special meeting. These By-Laws may also be

amended, altered or repealed by the affirmative vote of a majority of

the Board of Directors at any regular or special meeting of the Board of

Directors, except any particular By-Law which is specified as not

subject to alteration or repeal by the Board of Directors, subject to

the requirements of the Investment Company Act of 1940, as amended.

29
<PAGE>

<PAGE> EMERGING TIGERS FUND, INC.
TERMS AND CONDITIONS OF
AUTOMATIC DIVIDEND REINVESTMENT PLAN

1. Appointment of Agent. You, , will act as Agent for
--------------------- ------------
me, and will open an account for me under the Dividend Reinvestment Plan
(the "Plan") in the same name as my present shares of common stock, par
value $.10 per share ("Common Stock"), of EMERGING TIGERS FUND, INC.
(the "Fund") are registered, and automatically will put into effect for
me the dividend reinvestment option of the Plan as of the first record
date for a dividend or capital gains distribution (collectively referred
to herein as a "dividend"), payable at the election of shareholders in
cash or shares of Common Stock.

2. Dividends Payable in Common Stock. My participation in the
-----------------------------------
Plan constitutes an election by me to receive dividends in shares of
Common Stock whenever the Fund declares a dividend. In such event, the
dividend amount automatically shall be made payable to me entirely in
shares of Common Stock which shall be acquired by the Agent for my
account, depending upon the circumstances described in paragraph 3,
either (i) through receipt of additional shares of unissued but
authorized shares of Common Stock from the Fund ("newly-issued shares")
as described in paragraph 6 or (ii) by purchase of outstanding shares of
Common Stock on the open market ("open-market purchases") as described
in paragraph 7.

3. Determination of Whether Newly-Issued Shares or Open-Market
--------------------------------------------------------------
Purchases. If on the payment date for the dividend (the "valuation
---------
date"), the net asset value per share of the Common Stock, as defined in
paragraph 8, is equal to or less than the market price per share of the
Common Stock, as defined in paragraph 8, plus estimated brokerage
commissions (such condition being referred to herein as "market
premium"), the Agent shall invest the dividend amount in newly-issued
shares on my behalf as described in paragraph 6. If on the valuation
date, the net asset value per share is greater than the market value
(such condition being referred to herein as "market discount"), the
Agent shall invest the dividend amount in shares acquired on my behalf
in open-market purchases as described in paragraph 7.

4. Purchase Period for Open-Market Purchases. In the event of a
------------------------------------------
market discount on the valuation date, the Agent shall have until the
last business day before the next ex-dividend date with respect to the
shares of Common Stock or in no event more than 30 days after the
valuation date (the "last purchase date") to invest the dividend amount
in shares acquired in open-market purchases except where temporary
curtailment or suspension of
1
<PAGE>
purchases is necessary to comply with applicable provisions of Federal
securities laws.

5. Failure to Complete Open-Market Purchases During Purchase
---------------------------------------------------------------
Period. If the Agent is unable to invest the full dividend amount in
------
open-market purchases during the purchase period because the market
discount has shifted to a market premium or otherwise, the Agent will
invest the uninvested portion of the dividend amount in newly-issued
shares at the close of business on the last purchase date as described
in paragraph 4; except that the Agent may not acquire newly-issued
shares after the valuation date under the foregoing circumstances unless
it has received a legal opinion that registration of such shares is not
required under the Securities Act of 1933 or unless the shares to be
issued are registered under such Act.

6. Acquisition of Newly-Issued Shares. In the event that all or
-----------------------------------
part of the dividend amount is to be invested in newly-issued shares,
you automatically shall receive such newly-issued shares of Common
Stock, including fractions, for my account, and the number of additional
newly-issued shares of Common Stock to be credited to my account shall
be determined by dividing the dollar amount of the dividend on my shares
to be invested in newly-issued shares by the net asset value per share
of Common Stock on the date the shares are issued (the valuation date in
the case of an initial market premium or the last purchase date in case
the Agent is unable to complete open-market purchases during the
purchase period); provided, that the maximum discount from the then
current market price per share on the date of issuance shall not exceed
5%.

7. Manner of Making Open-Market Purchases. In the event that the
---------------------------------------
dividend amount is to be invested in shares of Common Stock acquired in
open-market purchases, you shall apply the amount of such dividend on my
shares (less my pro rata share of brokerage commissions incurred with
respect to your open-market purchases) to the purchase on the open
market of shares of the Common Stock for my account. Open-market
purchases may be made on any securities exchange where the Common Stock
is traded, in the over-the-counter market or in negotiated transactions
and may be on such terms as to price, delivery and otherwise as you
shall determine. My funds held by you uninvested will not bear
interest, and it is understood that, in any event, you shall have no
liability in connection with any inability to purchase shares within 30
days after the initial date of such purchase as herein provided, or with
the timing of any purchases affected. You shall have no responsibility
as to the value of the Common Stock acquired for my account. For the
purposes of cash investments you may commingle my funds with those of
other shareholders of the Fund for whom you similarly act as Agent, and
the average price (including brokerage commissions) of all shares
purchased
2
<PAGE>
by you as Agent on the open market shall be the price per share
allocable to me in connection with open-market purchases.

8. Meaning of Market Price and Net Asset Value. For all purposes
--------------------------------------------
of the Plan: (a) the market price of the Common Stock on a particular
date shall be the last sales price on the New York Stock Exchange (the
"Exchange") on that date, or, if there is no sale on the Exchange on
that date, then the mean between the closing bid and asked quotations
for such stock on the Exchange on such date and (b) net asset value per
share of the Common Stock on a particular date shall be as determined by
or on behalf of the Fund.

9. Registration of Shares Acquired Pursuant to the Plan. You may
------------------------------------------------------
hold my shares of Common Stock acquired pursuant to the Plan, together
with the shares of other shareholders of the Fund acquired pursuant to
the Plan, in noncertificated form in your name or that of your nominee.
You will forward to me any proxy solicitation material and will vote any
shares so held for me only in accordance with the proxy returned by me
to the Fund. Upon my written request, you will deliver to me, without
charge, a certificate or certificates for the full shares held by you
for my account.

10. Confirmations. You will confirm to me each acquisition made
-------------
for my account as soon as practicable but not later than 60 days after
the date thereof.

11. Fractional Interests. Although from time to time I may have an
--------------------
undivided fractional interest (computed to three decimal places) in a
share of the Fund, no certificates for a fractional share will be
issued. However, dividends and distributions on fractional shares will
be credited to my account. In the event of termination of my account
under the Plan, you will adjust for any such undivided fractional
interest in cash at the market value of the Fund's shares at the time of
termination less the pro rata expense of any sale required to make such
an adjustment.

12. Stock Dividends or Share Purchase Rights. Any stock dividends
-----------------------------------------
or split shares distributed by the Fund on shares held by you for me
will be credited to my account. In the event that the Fund makes
available to its shareholders rights to purchase additional shares or
other securities, the shares held for me under the Plan will be added to
other shares held by me in calculating the number of rights to be issued
to me.

13. Service Fee. Your service fee for handling capital gains
-----------
distributions or income dividends will be paid by the Fund. I will be
charged for my pro rata share of brokerage commissions on all open-
market purchases.

3
<PAGE>
14. Termination of Account. I may terminate my account under the
-----------------------
Plan by notifying you in writing. Such termination will be effective
immediately if my notice is received by you not less than ten days prior
to any dividend or distribution record date; otherwise, such termination
will be effective on the first trading day after the payment date for
such dividend or distribution with respect to any subsequent dividend or
distribution. The Plan may be terminated by you or by the Fund upon
notice in writing mailed to me at least 90 days prior to any record date
for the payment of any dividend or distribution by the Fund. Upon any
termination you will cause a certificate or certificates for the full
shares held for me under the Plan and cash adjustment for any fraction
to be delivered to me without charge. If I elect by notice to you in
writing in advance of such termination to have you sell part or all of
my shares and remit the proceeds to me, you are authorized to deduct
brokerage commissions for this transaction from the proceeds.

15. Amendment of Plan. These terms and conditions may be amended
------------------
or supplemented by you or by the Fund at any time or times but, except
when necessary or appropriate to comply with applicable laws or the
rules or policies of the Securities and Exchange Commission or any other
regulatory authority, only by mailing to me appropriate written notice
at least 90 days prior to the effective date thereof. The amendment or
supplement shall be deemed to be accepted by me unless, prior to the
effective date thereof, you receive written notice of the termination of
my account under the Plan. Any such amendment may include an
appointment by you in your place and stead of a successor Agent under
these terms and conditions, with full power and authority to perform all
or any of the acts to be performed by the Agent under these terms and
conditions. Upon any such appointment of an Agent for the purpose of
receiving dividends and distributions, the Fund will be authorized to
pay to such successor Agent, for my account, all dividends and
distributions payable on Common Stock of the Fund held in my name or
under the Plan for retention or application by such successor Agent as
provided in these terms and conditions.

16. Extent of Responsibility of Agent. At all times you shall act
----------------------------------
in good faith and you agree to use your best efforts within reasonable
limits to insure the accuracy of all services performed under this
Agreement and to comply with applicable laws, but you assume no
responsibility and you shall not be liable for loss or damage due to
errors unless such error is caused by your negligence, bad faith, or
willful misconduct or that of your employees.

17. Governing Law. These terms and conditions shall be governed by
-------------
and construed in accordance with the laws of the State of New York
without regard to its conflicts of laws provisions.

<PAGE>
INVESTMENT ADVISORY AGREEMENT

AGREEMENT made this day of , 1994, by and between

EMERGING TIGERS FUND, INC., a Maryland corporation (the "Fund"), and

FUND ASSET MANAGEMENT, L.P., a Delaware limited partnership (the

"Investment Adviser").

W I T N E S S E T H:
-------------------

WHEREAS, the Fund is engaged in business as a closed-end management

investment company registered under the Investment Company Act of 1940,

as amended (the "Investment Company Act"); and

WHEREAS, the Investment Adviser is engaged principally in rendering

management and investment advisory services and is registered as an

investment adviser under the Investment Advisers Act of 1940, as

amended; and

WHEREAS, the Fund desires to retain the Investment Adviser to

provide management and investment advisory services to the Fund in the

manner and on the terms hereinafter set forth; and

WHEREAS, the Investment Adviser is willing to provide management

and investment advisory services to the Fund on the terms and conditions

hereinafter set forth;

NOW, THEREFORE, in consideration of the premises and the covenants

hereinafter contained, the Fund and the Investment Adviser hereby agree

as follows:

<PAGE>

ARTICLE I
---------

Duties of the Investment Adviser
--------------------------------

The Fund hereby employs the Investment Adviser to act as a manager

of and an investment adviser to the Fund and to furnish, or arrange for

its affiliates to furnish, the management and investment advisory ser-

vices described below, subject to the policies of, review by and overall

control of, the Board of Directors of the Fund, for the period and on

the terms and conditions set forth in this Agreement. The Investment

Adviser hereby accepts such employment and agrees during such period, at

its own expense, to render, or arrange for the rendering of, such

services and to assume the obligations herein set forth for the

compensation provided for herein. The Investment Adviser and its

affiliates for all purposes herein shall be deemed to be independent

contractors and, unless otherwise expressly provided or authorized,

shall have no authority to act for or represent the Fund in any way or

otherwise be deemed agents of the Fund.

(a) Management and Administrative Services. The Investment
-----------------------------------------

Adviser shall perform (or arrange for its affiliates to perform) the

management and administrative services necessary for the operation of

the Fund, including administering shareholder accounts and handling

shareholder relations. The Investment Adviser shall provide the Fund

with office space, facilities, equipment and necessary personnel and

such other services as the Investment Adviser, subject to review by the

Board of Directors,

<PAGE>

from time to time shall determine to be necessary or useful to perform

its obligations under this Agreement. The Investment Adviser, also on

behalf of the Fund, shall conduct relations with custodians,

depositories, transfer agents, pricing agents, dividend disbursing

agents, other shareholder servicing agents, accountants, attorneys,

underwriters, brokers and dealers, corporate fiduciaries, insurers,

banks and such other persons in any such other capacity deemed to be

necessary or desirable. The Investment Adviser generally shall monitor

the Fund's compliance with investment policies and restrictions as set

forth in filings made by the Fund under the Federal securities laws.

The Investment Adviser shall make reports to the Board of Directors of

its performance of obligations hereunder and furnish advice and

recommendations with respect to such other aspects of the business and

affairs of the Fund as it shall determine to be desirable.

(b) Investment Advisory Services. The Investment Adviser shall
----------------------------

provide (or arrange for its affiliates to provide) the Fund with such

investment research, advice and supervision as the latter from time to

time may consider necessary for the proper supervision of the assets of

the Fund, shall furnish continuously an investment program for the Fund

and shall determine from time to time which securities shall be

purchased, sold or exchanged and what portion of the assets of the Fund

shall be held in the various securities in which the Fund invests,

options, futures,

<PAGE>

options on futures or cash, subject always to the restrictions of the

Articles of Incorporation and the By-Laws of the Fund, as amended from

time to time, the provisions of the Investment Company Act and the

statements relating to the Fund's investment objective, investment

policies and investment restrictions as the same are set forth in

filings made by the Fund under the Federal securities laws. The

Investment Adviser shall make decisions for the Fund as to foreign

currency matters. The Investment Adviser shall make decisions for the

Fund as to the manner in which voting rights, rights to consent to

corporate action and any other rights pertaining to the Fund's portfolio

securities shall be exercised. Should the Directors at any time,

however, make any definite determination as to investment policy and

notify the Investment Adviser thereof in writing, the Investment Adviser

shall be bound by such determination for the period, if any, specified

in such notice or until similarly notified that such determination has

been revoked. The Investment Adviser, on behalf of the Fund, shall take

all actions which it deems necessary to implement the investment poli-

cies determined as provided above, and in particular to place all orders

for the purchase or sale of portfolio securities for the Fund's account

with brokers or dealers selected by it, and to that end, the Investment

Adviser is authorized as the agent of the Fund to give instructions to

the custodian of the Fund as to deliveries of securities and payments of

cash for the account of the Fund. In

<PAGE>

connection with the selection of such brokers or dealers and the placing

of such orders with respect to assets of the Fund, the Investment

Adviser is directed at all times to seek to obtain execution and prices

within the policy guidelines determined by the Board of Directors and

set forth in filings made by the Fund under the Federal securities laws.

Subject to this requirement and the provisions of the Investment Company

Act, the Securities Exchange Act of 1934, as amended, and other

applicable provisions of law, the Investment Adviser may select brokers

or dealers with which it or the Fund is affiliated.

Investment Adviser is a limited partnership and its limited partners are

Merrill Lynch & Co., Inc. and Fund Asset Management, Inc. and its

general partner is Princeton Services, Inc. The Investment Adviser will

notify the Fund of any change in the membership of the partnership

within a reasonable time after such change.

ARTICLE II
----------

Allocation of Charges and Expenses
----------------------------------

(a) The Investment Adviser. The Investment Adviser shall provide
-----------------------

the staff and personnel necessary to perform its obligations under this

Agreement, shall assume and pay or cause to be paid all expenses

incurred in connection with the maintenance of such staff and personnel,

and, at its own expense, shall provide the office space, facilities,

equipment and

<PAGE>

necessary personnel which it is obligated to provide under Article I

hereof, and shall pay all compensation of officers of the Fund and all

Directors of the Fund who are affiliated persons of the Investment

Adviser.

(b) The Fund. The Fund assumes, and shall pay or cause to be
---------

paid, all other expenses of the Fund including, without limitation:

taxes, expenses for legal and auditing services, costs of printing

proxies, stock certificates, shareholder reports and prospectuses,

charges of the custodian, any sub-custodian and transfer agent, expenses

of portfolio transactions, Securities and Exchange Commission fees,

expenses of registering the shares under Federal, state and foreign

laws, fees and actual out-of-pocket expenses of Directors who are not

affiliated persons of the Investment Adviser, accounting and pricing

costs (including the daily calculation of the net asset value),

insurance, interest, brokerage costs, litigation and other extraordinary

or non-recurring expenses, and other expenses properly payable by the

Fund. It also is understood that the Fund will reimburse the Investment

Adviser for its costs incurred in providing accounting services to the

Fund.

ARTICLE III
-----------

Compensation of the Investment Adviser
--------------------------------------

(a) Investment Advisory Fee. For the services rendered, the
-------------------------

facilities furnished and the expenses assumed by the

<PAGE>

Investment Adviser, the Fund shall pay to the Investment Adviser at the

end of each calendar month a fee based upon the average weekly value of

the net assets of the Fund at the annual rate of ----% of the average

weekly net assets of the Fund plus the proceeds of any outstanding

borrowings ("average weekly net assets" means the average weekly value

of the total assets of the Fund, minus the sum of (i) accrued

liabilities of the Fund, (ii) any accrued and unpaid interest on

outstanding borrowings). For purposes of this calculation, average

weekly net assets are determined at the end of each month on the basis

of the average net assets of the Fund for each week during the month.

The assets for each weekly period are determined by averaging the net

assets at the last business day of a week with the net assets at the

last business day of the prior week. If this Agreement becomes effec-

tive subsequent to the first day of a month or terminates before the

last day of a month, compensation for that part of the month this

Agreement is in effect shall be prorated in a manner consistent with the

calculation of the fee as set forth above. Subject to the provisions of

subsection (b) hereof, payment of the Investment Adviser's compensation

for the preceding month shall be made as promptly as possible after

completion of the computations contemplated by subsection (b) hereof.

During any period when the determination of net asset value is suspended

by the Board of Directors, the average net asset value of a share for

the last week prior to such suspension

<PAGE>

for this purpose shall be deemed to be the net asset value at the close

of each succeeding week until it again is determined.

(b) Expense Limitations. In the event the operating expenses of
--------------------

the Fund, including amounts payable to the Investment Adviser pursuant

to subsection (a) hereof, for any fiscal year ending on a date on which

this Agreement is in effect, exceed the expense limitations applicable

to the Fund imposed by applicable state securities laws or regulations

thereunder, as such limitations may be raised or lowered from time to

time, the Investment Adviser shall reduce its management and investment

advisory fee by the extent of such excess and, if required pursuant to

any such laws or regulations, will reimburse the Fund in the amount of

such excess; provided, however, that to the extent permitted by law,
-------- -------

there shall be excluded from such expenses the amount of any interest,

taxes, brokerage fees and commissions and extraordinary expenses

(including but not limited to legal claims and liabilities and

litigation costs and any indemnification related thereto) paid or

payable by the Fund. Whenever the expenses of the Fund exceed a pro

rata portion of the applicable annual expense limitations, the estimated

amount of reimbursement under such limitations shall be applicable as an

offset against the monthly payment of the fee due to the Investment

Adviser. Should two or more such expense limitations be applicable as

at the end of the last business day of the

<PAGE>

month, that expense limitation which results in the largest reduction in

the Investment Adviser's fee shall be applicable.

ARTICLE IV
----------

Limitation of Liability of the Investment Adviser
-------------------------------------------------

The Investment Adviser shall not be liable for any error of

judgment or mistake of law or for any loss arising out of any investment

or for any act or omission in the management of the Fund, except for

willful misfeasance, bad faith or gross negligence in the performance of

its duties, or by reason of reckless disregard of its obligations and

duties hereunder. As used in this Article IV, the term "Investment

Adviser" shall include any affiliates of the Investment Adviser

performing services for the Fund contemplated hereby and directors,

officers and employees of the Investment Adviser and of such affiliates.

ARTICLE V
---------

Activities of the Investment Adviser
------------------------------------

The services of the Investment Adviser to the Fund are not to be

deemed to be exclusive; the Investment Adviser and any person controlled

by or under common control with the Investment Adviser (for purposes of

this Article V referred to as "affiliates") are free to render services

to others. It is understood that Directors, officers, employees and

shareholders of the Fund are or may become interested in the Investment

9
<PAGE>

Adviser and its affiliates, as directors, officers, employees, partners

and shareholders or otherwise, and that directors, officers, employees,

partners and shareholders of the Investment Adviser and its affiliates

are or may become similarly interested in the Fund, and that the

Investment Adviser and directors, officers, employees, partners and

shareholders of its affiliates may become interested in the Fund as

shareholders or otherwise.

ARTICLE VI
----------

Duration and Termination of this Agreement
------------------------------------------

This Agreement shall become effective as of the date first above

written and shall remain in force until ------------, 1996 and

thereafter, but only so long as such continuance specifically is

approved at least annually by (i) the Board of Directors of the Fund, or

by the vote of a majority of the outstanding voting securities of the

Fund, and (ii) a majority of those Directors who are not parties to this

Agreement or interested persons of any such party cast in person at a

meeting called for the purpose of voting on such approval.

This Agreement may be terminated at any time, without the payment

of any penalty, by the Board of Directors or by the vote of a majority

of the outstanding voting securities of the Fund, or by the Investment

Adviser, on sixty days' written notice to the other party. This

Agreement shall terminate automatically in the event of its assignment.

<PAGE>

ARTICLE VII
-----------

Amendments of this Agreement
----------------------------

This Agreement may be amended by the parties only if such amendment

specifically is approved by (i) the vote of a majority of outstanding

voting securities of the Fund, and (ii) a majority of those Directors

who are not parties to this Agreement or interested persons of any such

party cast in person at a meeting called for the purpose of voting on

such approval.

ARTICLE VIII
------------

Definitions of Certain Terms
----------------------------

The terms "vote of a majority of the outstanding voting

securities", "assignment", "affiliated person" and "interested person",

when used in this Agreement, shall have the respective meanings

specified in the Investment Company Act and the rules and regulations

thereunder, subject, however, to such exemptions as may be granted by

the Securities and Exchange Commission under said Act.

<PAGE>

ARTICLE IX
----------

Governing Law
-------------

This Agreement shall be governed by and construed in accordance

with the laws of the State of New York and the applicable provisions of

the Investment Company Act. To the extent that the applicable laws of

the State of New York, or any of the provisions herein, conflict with

the applicable provisions of the Investment Company Act, the latter

shall control.

IN WITNESS WHEREOF, the parties hereto have executed and delivered

this Agreement as of the date first above written.

EMERGING TIGERS FUND, INC.

By:
------------------------------
Authorized Signatory

FUND ASSET MANAGEMENT, L.P.

By: Princeton Services, Inc.

By:
------------------------------
Authorized Signatory

<PAGE>
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, N.Y. 10281-1305

STANDARD DEALER AGREEMENT
-------------------------

Dear Sirs:

In connection with public offerings of securities underwritten by
us, or by a group of underwriters (the "Underwriters") represented by
us, you may be offered the opportunity to purchase a portion of such
securities, as principal, at a discount from the offering price
representing a selling concession or reallowance granted as
consideration for services rendered by you in the sale of such
securities. We request that you agree to the following terms and
provisions, and make the following representations, which, together with
any additional terms and provisions set forth in any wire or letter sent
to you in connection with a particular offering, will govern all such
purchases of securities and the reoffering thereof by you.

Your subscription to, or purchase of, such securities will
constitute your reaffirmation of this Agreement.

1. When we are acting as representative (the "Representative") of
the Underwriters in offering securities to you, it should be understood
that all offers are made subject to prior sale of the subject
securities, when, as and if such securities are delivered to and
accepted by the Underwriters and subject to the approval of legal
matters by their counsel. In such cases, any order from you for
securities will be strictly subject to confirmation and we reserve the
right in our uncontrolled discretion to reject any order in whole or in
part. Upon release by us, you may reoffer such securities at the
offering price fixed by us. With our consent, you may allow a discount,
not in excess of the reallowance fixed by us, in selling such securities
to other dealers, provided that in doing so you comply with the Rules of
Fair Practice of the National Association of Securities Dealers, Inc.
(the "NASD"). Upon our request, you will advise us of the identity of
any dealer to whom you allow such a discount and any Underwriter or
dealer from whom you receive such a discount. After the securities are
released for sale to the public, we may vary the offering price and
other selling terms.
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<PAGE>

2. You represent that you are a dealer actually engaged in the
investment banking or securities business and that you are either (i) a
member in good standing of the NASD or (ii) a dealer with its principal
place of business located outside the United States, its territories or
possessions and not registered under the Securities Exchange Act of 1934
(a "non-member foreign dealer") or (iii) a bank not eligible for
membership in the NASD. If you are a non-member foreign dealer, you
agree to make no sales of securities within the United States, its
territories or its possessions or to persons who are nationals thereof
or residents therein. Non-member foreign dealers and banks agree, in
making any sales, to comply with the NASD's interpretation with respect
to free-riding and withholding. In accepting a selling concession where
we are acting as Representative of the Underwriters, in accepting a
reallowance from us whether or not we are acting as such Representative,
and in allowing a discount to any other person, you agree to comply with
the provisions of Section 24 of Article III of the Rules of Fair
Practice of the NASD, and, in addition, if you are a non-member foreign
dealer or bank, you agree to comply, as though you were a member of the
NASD, with the provisions of Sections 8 and 36 of Article III of such
Rules of Fair Practice and to comply with Section 25 of Article III
thereof as that Section applies to a non-member foreign dealer or bank.
You represent that you are fully familiar with the above provisions of
the Rules of Fair Practice of the NASD.

3. If the securities have been registered under the Securities Act
of 1933 (the "1933 Act"), in offering and selling such securities you
are not authorized to give any information or make any representation
not contained in the prospectus relating thereto. You confirm that you
are familiar with the rules and policies of the Securities and Exchange
Commission relating to the distribution of preliminary and final
prospectuses, and you agree that you will comply therewith in any
offering covered by this Agreement. If we are acting as Representative
of the Under- writers, we will make available to you, to the extent made
available to us by the issuer of the securities, such number of copies
of the prospectus or offering documents, for securities not registered
under the 1933 Act, as you may reasonably request.

4. If we are acting as Representative of the Underwriters of
securities of an issuer that is not required to file reports under the
Securities Exchange Act of 1934 (the "1934 Act"), you agree that you
will not sell any of the securities to any account over which you have
discretionary authority.

5. Payment for securities purchased by you is to be made at our
office, One Liberty Plaza, 165 Broadway, New York, N.Y.
10006 (or at such other place as we may advise), at the offering
2
<PAGE>
price less the concession allowed to you, on such date as we may advise,
by certified or official bank check in New York Clearing House funds (or
such other funds as we may advise), payable to our order, against
delivery of the securities to be purchased by you. We shall have
authority to make appropriate arrangements for payment for and/or
delivery through the facility of The Depository Trust Company or any
such other depository or similar facility for the securities.

6. In the event that, prior to the completion of the distribution
of securities covered by this Agreement, we purchase in the open market
or otherwise any securities delivered to you, if we are acting as
Representative of the Underwriters, you agree to repay to us for the
accounts of the Underwriters the amount of the concession allowed to you
plus brokerage commissions and any transfer taxes paid in connection
with such purchase.

7. At any time prior to the completion of the distribution of
securities covered by this Agreement you will, upon our request as
Representative of the Underwriters, report to us the amount of
securities purchased by you which then remains unsold and will, upon our
request, sell to us for the account of one or more of the Underwriters
such amount of such unsold securities as we may designate, at the
offering price less an amount to be determined by us not in excess of
the concession allowed to you.

8. If we are acting as Representative of the Underwriters, upon
application to us, we will inform you of the states and other
jurisdictions of the United States in which it is believed that the
securities being offered are qualified for sale under, or are exempt
from the requirements of, their respective securities laws, but we
assume no responsibility with respect to your right to sell securities
in any jurisdiction. We shall have authority to file with the
Department of State of the State of New York a Further State Notice with
respect to the securities, if necessary.

9. You agree that in connection with any offering of securities
covered by this Agreement you will comply with the applicable provisions
of the 1933 Act and the 1934 Act and the applicable rules and
regulations of the Securities and Exchange Commission thereunder, the
applicable rules and regulations of the NASD, and the applicable rules
of any securities exchange having jurisdiction over the offering.

10. We shall have full authority to take such action as we may
deem advisable in respect of all matters pertaining to any offering
covered by this Agreement. We shall be under no liability to you except
for our lack of good faith and for obligations assumed by us in this
Agreement, except that you do
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<PAGE>
not waive any rights that you may have under the 1933 Act or the rules
and regulations thereunder.

11. Any notice from us shall be deemed to have been duly given if
mailed or transmitted by any standard form of written telecommunications
to you at the above address or at such other address as you shall
specify to us in writing.

12. With respect to any offering of securities covered by this
Agreement, the price restrictions contained in Paragraph 1 hereof and
the provisions of Paragraphs 6 and 7 hereof shall terminate as to such
offering at the close of business on the 45th day after the securities
are released for sale or, as to any or all such provisions, at such
earlier time as we may advise. All other provisions of this Agreement
shall remain operative and in full force and effect with respect to such
offering.

13. This Agreement shall be governed by the laws of the State of
New York.

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<PAGE>
Please confirm your agreement hereto by signing the enclosed
duplicate copy hereof in the place provided below and returning such
signed duplicate copy to us at World Headquarters, North Tower, World
Financial Center, New York, N.Y. 10281-1305, Attention: Corporate
Syndicate. Upon receipt thereof, this instrument and such signed
duplicate copy will evidence the agreement between us.

Very truly yours,

MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED

By: /s/ Fred F. Hessinger
-------------------------------
Name: Fred F. Hessinger

Confirmed and accepted as of the
day of , 19

-----------------------------------------
Name of Dealer

-----------------------------------------
Authorized Officer or Partner
(if not Officer or Partner,
attach copy of
Instrument of Authorization)
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