EMERGING TIGERS
FUND, INC.
FUND LOGO
Annual Report
November 30, 1995
Officers and Directors
Arthur Zeikel, President and Director
Donald Cecil, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Edward D. Zinbarg, Director
Terry K. Glenn, Executive Vice President
Donald C. Burke, Vice President
Kara W.Y. Tan Bhala, Vice President and
Portfolio Manager
Gerald M. Richard, Treasurer
Michael J. Hennewinkel, Secretary
<PAGE>
Custodian
Brown Brothers Harriman & Co.
40 Wall Street
Boston, MA 02109
Transfer Agent
State Street Bank and Trust Company
Two Heritage Drive
Quincy, MA 02171
NYSE Symbol
TGF
Investing in emerging market securities involves a number of risk
factors and special considerations, including restrictions on
foreign investments and on repatriation of capital invested in
emerging markets, currency fluctuations, and potential price
volatility and less liquidity of securities traded in emerging
markets. In addition, there may be less publicly available
information about the issuers of securities, and such issuers may
not be subject to accounting, auditing and financial reporting
standards and requirements comparable to those to which US companies
are subject. Therefore, the Fund is designed as a long-term
investment for investors capable of assuming the risks of investing
in emerging markets. The Fund should be considered as a vehicle for
diversification and not as a complete investment program. Please
refer to the prospectus for details.
This report, including the financial information herein, is
transmitted to the shareholders of Emerging Tigers Fund, Inc. for
their information. It is not a prospectus, circular or
representation intended for use in the purchase of shares of the
Fund or any securities mentioned in the report. Past performance
results shown in this report should not be considered a
representation of future performance. Statements and other
information herein are as dated and are subject to change.
<PAGE>
Emerging Tigers Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
EMERGING TIGERS FUND, INC.
Asset Allocation
As a Percentage* of
Net Assets as of
November 30, 1995
A map depicting the following percentages:
Pakistan 0.3%
India 1.7%
Sri Lanka 0.5%
Indonesia 11.4%
Malaysia 29.8%
Thailand 14.6%
Singapore 19.9%
Hong Kong 1.7%
Vietnam 0.9%
Philippines 13.2%
[FN]
*Total may not equal 100%.
<PAGE>
DEAR SHAREHOLDER
Investor sentiment regarding the "emerging tiger" stock markets did
not improve during the six months ended November 30, 1995. Although
interest rates in the United States, Europe and Japan declined
during the period, which typically results in higher share prices
for the emerging tiger stock markets, global investor interest
remained focused on US equities. In addition, ongoing political and
economic troubles in Mexico led investors to view all emerging
markets with caution.
These developments are reflected in Emerging Tigers Fund, Inc.'s
total investment return for the six-month period ended November 30,
1995 of -9.95%, based on a decline in per share net asset value from
$14.88 to $13.40. The Fund's total return for the 12 months ended
November 30, 1995 was -6.23%, based on a change in per share net
asset value from $14.47 to $13.40, and assuming reinvestment of
$0.148 per share income dividends.
Investment Activities
At 29.8% of net assets, Malaysia continues to be the Fund's largest
country weighting, although it is underweighted relative to several
market-weighted indexes of emerging tiger stock markets. We took
advantage of share price weakness and added to positions in
Malaysian blue chip and convertible issues during the six-month
period. It appears that the Malaysian economy has peaked during this
business cycle. A higher rate of inflation has led to higher
interest rates, which have depressed share prices. With the prospect
that the central bank may increase the statutory reserve requirement
for banks, which would discourage corporate loan growth, it is likely
that there will be even less liquidity available for common stock
investment. In addition, there is pressure on the currency, given
the country's large current account deficit.
We view Malaysia's current difficulties as a period of adjustment,
with the government and central bank working to engineer a "soft
landing" for the economy. Over the longer term, we believe the
country will again resume a stable rate of growth, which would
benefit stock prices. Furthermore, while prices of real estate-
related stocks have fallen out of investor favor in the high
interest rate environment, we continue to believe that our Malaysian
investments in this area--Land and General BHD and IOI Properties
BHD--which are well-managed and in strong financial positions, will
emerge intact from the current difficulties. The Fund is
underweighted in the Malaysian property sector.
<PAGE>
The Fund's next-largest country weighting is Singapore at 19.9% of
net assets, which is a neutral exposure. Our Singapore holdings are
largely in banks and large blue chip companies, whose share prices
usually perform in line with economic activity. Therefore, the
slowdown in the country's gross domestic product (GDP) growth over
the past several months has led to price declines for these
investments. However, on the positive side, monetary authorities
appear to have inflation under control. We also expect that
corporate earnings growth will be slower in 1996, but will likely
approximate 16%. At the same time, the stock market appears
attractively valued, with price/earnings ratios slightly below
historic averages.
Thailand's stock market has declined as an overheating economy has
led to a tight monetary policy and higher interest rates. At this
point, it appears that the negative economic developments may be
fully reflected in share prices, with valuations down to attractive
levels. The negative impact has been greatest for property-related
companies, whose shares corrected sharply. At the end of November,
the Fund held only one real estate-related stock in Thailand, Land &
House Public Co., which we believe will prosper once again under
more favorable economic conditions. In our banking holdings, we
switched some of our positions from common to convertible stock,
since we believe the convertibles offered a more attractive tradeoff
between risk and potential return.
We remain overweighted in the Philippines at 13.2% of net assets,
which was one of the worst-performing stock markets over the past
six months. The country is not making a smooth transition from a
heavily regulated, centrally controlled economy to a market-
oriented, decentralized one. However, we believe that the
Philippines is still in the very early stages of this process, and
that over the longer term our investments there will be rewarding.
Inflation has also become a near-term problem, since a series of
natural disasters has driven up food prices, although prices for
manufactured and consumer goods are stable.
During the six-month period ended November 30, 1995, we sold most of
the Fund's investment in Petron Corp. This energy company, which was
previously state-owned, is not faring well in a highly competitive
free-market environment. The Fund had been invested in both
Universal Robina Corp. and its parent company, JG Summit Holdings.
Preferring not to own shares of the parent company, we sold our
investment in JG Summit. Universal Robina offers more direct
exposure to the consumer sector as a manufacturer of snack foods. We
believe that the food and beverage industry in the Philippines will
fare well in the near term.
Indonesia accounted for 11.4% of net assets at November month-end.
We took advantage of price strength and trimmed our position in P.T.
Hanjaya Mandala Sampoerna. We utilized the proceeds of this sale to
establish a position in P.T. Telekomunikasi Indonesia, the newly
listed telephone company.
<PAGE>
In India, political uncertainties, rising interest rates and a
devaluing currency have led to stock market weakness. Although we
expect that investors will continue to question the prospect for
further market-oriented reform in the run-up to the 1996 general
election, the worst of the economic developments may now be over.
Therefore, we would view further share price weakness as a buying
opportunity.
The outlook for The People's Republic of China has become more
positive over the past six months. It appears that the government
has achieved a soft landing for the economy. Monetary policy may be
eased in 1996, which suggests that liquidity may improve in the
second half of the year. On the political front, President Jiang has
solidified and consolidated his power base. With its improved
economic prospects and a successor to Deng Xiao Peng apparently
chosen, we are seeking to expand our investments in China through
the purchase of companies whose shares are traded on the Hong Kong
stock exchange.
In Conclusion
We thank you for your investment in Emerging Tigers Fund, Inc., and
we look forward to reviewing our outlook and strategy with you again
in our next report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Kara Tan Bhala)
Kara Tan Bhala
Vice President and Portfolio Manager
January 3, 1996
<PAGE>
Proxy Results
During the six-month period ended November 30, 1995, Emerging Tigers
Fund, Inc. shareholders voted on the following proposals. The
proposals were approved at a special shareholders' meeting on June
23, 1995. The description of each proposal and number of shares
voted are as follows:
<TABLE>
<CAPTION>
Shares Voted Shares Voted
For Without Authority
<S> <S> <C> <C>
1. To elect the Fund's Board of Directors: Donald Cecil 19,857,413 959,549
Edward H. Meyer 19,817,398 999,564
Charles C. Reilly 19,825,982 990,980
Richard R. West 19,866,989 949,973
Arthur Zeikel 19,857,742 959,220
Edward D. Zinbarg 19,827,525 989,437
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the independent auditors of
the Fund to serve for the current fiscal year. 19,833,891 451,830 531,242
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Held/ Value Percent of
COUNTRY Industries Face Amount Long-Term Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Hong Kong Diversified 8,188,000 Guangdong Investments, Ltd. (a) $ 4,664,929 $ 4,922,709 1.6%
Telecommunications 1,425,000 Chengdu Telecommunications Cable
Co., Ltd. (a) 522,889 254,254 0.1
Total Long-Term Investments in
Hong Kong 5,187,818 5,176,963 1.7
India Conglomerates 167,660 ++Reliance Industries Ltd. (GDS)** 4,009,564 2,347,240 0.8
Industrial 168,000 ++Grasim Industries Ltd. (GDS)** 3,929,176 2,772,000 0.9
<PAGE>
Total Long-Term Investments in India 7,938,740 5,119,240 1.7
Indonesia Banking 1,070,000 P.T. Bank International Indonesia 3,433,918 3,421,375 1.2
Food 5,405,280 P.T. Mayorah Indah 4,220,499 3,669,813 1.2
Miscellaneous 1,072,500 P.T. Modern Photo Film 4,824,568 6,107,096 2.1
--Consumer
Oil & Gas 675,000 P.T. Medco Energi Corp. 1,369,628 1,167,871 0.4
Pharmaceuticals 895,000 P.T. Kalbe Farma 3,291,992 2,842,203 1.0
Telecommunications 33,930 P.T. Indonesian Satellite (ADR)* 1,236,227 1,162,103 0.4
43,600 P.T. Telekomunikasi Indonesia 784,800 915,600 0.3
------------ ------------ ------
2,021,027 2,077,703 0.7
Tobacco 1,443,250 P.T. Hanjaya Mandala Sampoerna 4,653,191 14,476,752 4.9
Total Long-Term Investments in
Indonesia 23,814,823 33,762,813 11.5
Malaysia Banking 2,325,000 Affin Holdings BHD 3,729,854 4,198,108 1.4
705,000 Arab-Malaysian Merchant Bank BHD 5,998,580 7,295,979 2.5
US$ 705,000 Arab-Malaysian Merchant Bank BHD,
7.50% due 11/20/1999 275,015 344,648 0.1
3,704,000 Public Bank BHD 'Foreign' 7,807,184 6,892,521 2.3
------------ ------------ ------
17,810,633 18,731,256 6.3
Building & 2,740,000 I.J.M. Corp. BHD 4,750,479 4,580,170 1.6
Construction 435,000 Mancon BHD 1,220,183 1,972,206 0.7
------------ ------------ ------
5,970,662 6,552,376 2.3
Conglomerates 1,977,000 Renong BHD 2,734,884 2,883,856 1.0
US$ 3,930,000 Renong BHD, 2.50% due 1/15/2005 4,197,771 4,283,700 1.5
------------ ------------ ------
6,932,655 7,167,556 2.5
Engineering & US$ 4,615,000 United Engineering, Ltd., 2.00%
Construction due 3/01/2004 5,079,750 5,122,650 1.7
Financial 485,000 Gadek (Malaysia) BHD 3,184,601 2,103,292 0.7
Services 360,000 Hong Leong Credit BHD 2,500,160 1,433,471 0.5
1,120,000 MBF Capital BHD 1,723,307 1,108,299 0.4
------------ ------------ ------
7,408,068 4,645,062 1.6
<PAGE>
Industrial 571,250 O.Y.L. Industries BHD 3,175,467 4,166,420 1.4
Leisure 4,050,000 Berjaya Sports TOTO BHD 7,048,287 8,302,779 2.8
1,004,000 Genting BHD 8,993,452 8,668,480 2.9
1,110,000 Resorts World BHD 6,244,618 5,426,375 1.8
------------ ------------ ------
22,286,357 22,397,634 7.5
Property 940,000 IOI Properties BHD 3,569,593 2,056,771 0.7
2,599,500 Land & General BHD (Ordinary) 6,123,665 5,175,429 1.8
------------ ------------ ------
9,693,258 7,232,200 2.5
Telecommunications 2,218,333 Leader Universal Cable BHD 6,441,541 5,903,311 2.0
479,000 Telekom Malaysia BHD 3,653,965 3,569,131 1.2
US$ 2,465,000 Telekom Malaysia BHD, 4.00% due
10/03/2004 2,143,414 2,347,913 0.8
------------ ------------ ------
12,238,920 11,820,355 4.0
Total Long-Term Investments in
Malaysia 90,595,770 87,835,509 29.8
Pakistan Telecommunications 11,619 ++Pakistan Telecommunications
(GDS)**++++ 2,088,748 883,044 0.3
Total Long-Term Investments in
Pakistan 2,088,748 883,044 0.3
Philippines Banking 336,832 Metropolitan Bank and Trust Company 5,946,041 5,760,838 1.9
Beverages 1,911,000 San Miguel Corp. 'B' 6,266,549 6,135,066 2.1
Conglomerates 475,200 Benpres Holdings Corp. ++++ 4,665,600 2,318,976 0.8
1,367,998 First Philippine Holdings Corp. 4,493,099 2,718,742 0.9
------------ ------------ ------
9,158,699 5,037,718 1.7
Food & Beverage 8,970,600 Universal Robina Corp. 6,366,160 3,771,320 1.3
International 9,520,000 ++International Container Terminals 8,623,792 4,457,099 1.5
Trade
Oil Service 500,000 Petron Corp. 348,120 229,314 0.1
<PAGE>
Real Estate 1,365,000 ++C & P Homes, Inc. 685,741 873,830 0.3
Retail 16,874,455 SM Prime Holdings, Inc. 2,934,587 4,643,458 1.6
Telecommunications 62,300 Philippine Long Distance Telephone
Co. (ADR)* 3,947,892 3,488,800 1.2
Utilities-- 567,000 Manila Electric Co. (MERALCO) 'B' 4,835,445 4,377,374 1.5
Electric
Total Long-Term Investments in
the Philippines 49,113,026 38,774,817 13.2
Singapore Airlines 800,000 Singapore Airlines Ltd. 'Foreign' 6,909,839 7,489,362 2.6
Banking 862,000 Development Bank of Singapore Ltd. 8,490,069 10,087,234 3.4
1,190,400 United Overseas Bank Ltd. 8,386,382 10,722,043 3.6
------------ ------------ ------
16,876,451 20,809,277 7.0
Beverages 260,000 Fraser & Neave Ltd. 2,967,255 3,097,872 1.1
Conglomerates 292,000 Keppel Corporation Ltd. 2,342,401 2,402,270 0.8
Electronics 4,339,000 I.P.C. Corp. 4,251,585 3,061,918 1.0
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Shares Held/ Value Percent of
COUNTRY Industries Face Amount Long-Term Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Singapore Industrial 1,000,000 Clipsal Industries Ltd. $ 2,776,748 $ 2,550,000 0.9%
(concluded)
Marine/Offshore 918,000 Sembawang Maritime Ltd. 4,104,038 2,682,383 0.9
Oil Services
Publishing & 538,800 Singapore Press Holdings Ltd. 7,372,253 8,521,447 2.9
Broadcasting
Real Estate 2,593,000 DBS Land Ltd. 7,468,172 8,054,851 2.7
Total Long-Term Investments in
Singapore 55,068,742 58,669,380 19.9
<PAGE>
Sri Lanka Finance 259,333 Developing Finance Corp. 2,049,710 1,389,545 0.5
Total Long-Term Investments in
Sri Lanka 2,049,710 1,389,545 0.5
Thailand Banking 669,500 Bangkok Bank Company Ltd. 'Foreign' 5,337,954 7,134,235 2.4
US$ 2,023,000 Bangkok Bank Public Company Ltd.,
3.25% due 3/03/2004 2,076,120 2,033,115 0.7
2,580,000 Siam City Bank Ltd. 2,508,343 2,795,427 0.9
817,000 The Thai Farmers Bank, Ltd. 'Foreign' 5,008,884 7,276,660 2.5
------------ ------------ ------
14,931,301 19,239,437 6.5
Building & 402,000 Land & House Public Co. 'Foreign' 8,497,026 5,914,115 2.0
Construction
Communications 105,000 Advanced Info Services PLC 1,639,895 1,669,980 0.6
Financial Services 1,182,600 Finance One Co., Ltd. 'Foreign' 6,874,800 7,382,433 2.5
Mutual Funds 10,101,400 Ruam Pattana Fund II 'Foreign' 6,657,773 5,723,457 2.0
Oil--Related 330,500 PTT Exploration 'Foreign' 2,616,233 3,075,030 1.0
Total Long-Term Investments in
Thailand 41,217,028 43,004,452 14.6
Vietnam Mutual Funds 291,300 ++Vietnam Frontier Fund 3,000,390 2,767,350 0.9
Total Long-Term Investments in
Vietnam 3,000,390 2,767,350 0.9
Total Long-Term Investments 280,074,795 277,383,113 94.1
Short-Term Securities
United Commercial US$ 10,789,000 General Electric Capital Corp.,
States Paper*** 5.90% due 12/01/1995 10,789,000 10,789,000 3.6
5,000,000 Goldman Sachs Group L.P., 5.73%
due 12/21/1995 4,984,083 4,984,083 1.7
------------ ------------ ------
15,773,083 15,773,083 5.3
Total Investments in Short-Term
Securities 15,773,083 15,773,083 5.3
<PAGE>
Total Investments $295,847,878 293,156,196 99.4
============
Other Assets Less Liabilities 1,673,912 0.6
------------ ------
Net Assets $294,830,108 100.0%
============ ======
<FN>
*American Depositary Receipts (ADR).
**Global Depositary Shares (GDS).
***Commercial Paper is traded on a discount basis; the interest
rates shown are the discount rates paid at the time of purchase by
the Fund.
(a)Security is regarded as an investment in China. A company is
considered to be in an emerging market Asia-Pacific country 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 assets or activities located in such countries.
++Non-income producing security.
++++Restricted securities as to resale. The value of the Fund's
investment in restricted securities was approximately $3,202,000,
representing 1.1% of net assets.
<CAPTION>
Acquisition Value
Issue Date Cost (Note 1a)
<S> <C> <C> <C>
Benpres Holdings Corp. 10/27/1994 $4,665,600 $2,318,976
Pakistan Telecommunications
(GDS) 9/16/1994 2,088,748 883,044
Total $6,754,348 $3,202,020
========== ==========
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<CAPTION>
As of November 30, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$295,847,878) (Note 1a) $293,156,196
Foreign cash 18
Receivables:
Securities sold $ 1,950,015
Dividends 641,761
Interest 133,313 2,725,089
------------
Deferred organization expenses (Note 1f) 33,982
Prepaid expenses and other assets 3,950
------------
Total assets 295,919,235
------------
<PAGE>
Liabilities: Payables:
Securities purchased 257,317
Investment adviser (Note 2) 239,489 496,806
------------
Accrued expenses and other liabilities 592,321
------------
Total liabilities 1,089,127
------------
Net Assets: Net assets $294,830,108
============
Capital: Common Stock, $0.10 par value, 200,000,000 shares authorized
(Note 4) $ 2,200,706
Paid-in capital in excess of par 309,254,995
Undistributed investment income--net 234,058
Accumulated realized capital losses on investments and
foreign currency transactions--net (Note 6) (14,173,401)
Unrealized depreciation on investments and foreign currency
transactions--net (2,686,250)
------------
Net assets--Equivalent to $13.40 per share based on 22,007,055
shares of capital stock outstanding (market price--$11.75) $294,830,108
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Year Ended November 30, 1995
<S> <S> <C> <C>
Investment Income Dividends (net of $790,472 foreign withholding tax) $ 3,593,828
(Notes 1d & 1e): Interest and discount earned (net of $3,254 foreign withholding tax) 1,196,139
------------
Total income 4,789,967
------------
<PAGE>
Expenses: Investment advisory fees (Note 2) 3,068,007
Custodian fees 582,036
Transfer agent fees 123,569
Accounting services (Note 2) 73,536
Professional fees 50,711
Printing and shareholder reports 47,113
Listing fees 44,567
Directors' fees and expenses 30,376
Pricing services 5,808
Amortization of organization expenses (Note 1f) 2,357
Other 19,968
------------
Total expenses 4,048,048
------------
Investment income--net 741,919
------------
Realized & Realized loss from:
Unrealized Gain Investments--net $(14,173,400)
(Loss) on Foreign currency transactions--net (111,172) (14,284,572)
Investments & ------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions--Net Investments--net (6,777,468)
(Notes 1b, 1c, Foreign currency transactions--net 1,423 (6,776,045)
1e & 3): ------------ ------------
Net Decrease in Net Assets Resulting from Operations $(20,318,698)
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Period
For the Year March 4,
Ended 1994++ to
Increase (Decrease) in Net Assets: Nov. 30, 1995 Nov. 30, 1994
<S> <S> <C> <C>
Operations: Investment income--net $ 741,919 $ 2,717,563
Realized gain (loss) on investments and foreign
currency transactions--net (14,284,572) 150,581
Change in unrealized appreciation/depreciation on
investments and foreign currency transactions--net (6,776,045) 4,089,795
------------ ------------
Net increase (decrease) in net assets resulting from
operations (20,318,698) 6,957,939
------------ ------------
<PAGE>
Dividends & Investment income--net (2,727,906) --
Distributions to Realized gain on investments--net (536,928) --
Shareholders ------------ ------------
(Note 1g): Net decrease in net assets resulting from dividends and
distributions to shareholders (3,264,834) --
------------ ------------
Capital Stock Net proceeds from issuance of Common Stock -- 311,850,000
Transactions Offering and underwriting costs resulting from the
(Notes 1f & 4): issuance of Common Stock (96) (494,208)
------------ ------------
Net increase (decrease) in net assets resulting from
capital stock transactions (96) 311,355,792
------------ ------------
Net Assets: Total increase (decrease) in net assets (23,583,628) 318,313,731
Beginning of period 318,413,736 100,005
------------ ------------
End of period* $294,830,108 $318,413,736
============ ============
<FN>
*Undistributed investment income--net (Note 1h) $ 234,058 $ 2,717,563
============ ============
++Commencement of Operations.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
For the Period
The following per share data and ratios have been derived For the Year March 4,
from information provided in the financial statements Ended 1994++ to
November 30, November 30,
Increase (Decrease) in Net Asset Value: 1995 1994
<S> <S> <C> <C>
Per Share Net asset value, beginning of period $ 14.47 $ 14.18
Operating ------------ ------------
Performance: Investment income--net .03 .12
Realized and unrealized gain (loss) on investments and
foreign currency transactions--net (.96) .19
------------ ------------
Total from investment operations (.93) .31
------------ ------------
Less dividends and distributions to Common Stock shareholders:
Investment income--net (.12) --
Realized gain on investments--net (.02) --
------------ ------------
Total dividends and distributions to Common Stock shareholders (.14) --
------------ ------------
Capital charge resulting from issuance of Common Stock --++++ (.02)
------------ ------------
Net asset value, end of period $ 13.40 $ 14.47
============ ============
Market price per share, end of period $ 11.75 $ 12.75
============ ============
Total Investment Based on market price per share (6.68%) (15.00%)+++
Return:** ============ ============
Based on net asset value per share (6.23%) 2.05%+++
============ ============
Ratios to Average Expenses 1.32% 1.32%*
Net Assets: ============ ============
Investment income--net .24% 1.12%*
============ ============
Supplemental Net assets, end of period (in thousands) $ 294,830 $ 318,414
Data: ============ ============
Portfolio turnover 18.84% 9.10%
============ ============
<FN>
*Annualized.
**Total investment returns based on market value, which can be
significantly greater or lesser than the net asset value, may result
in substantially different returns. Total investment returns exclude
the effects of sales loads.
++Commencement of Operations.
++++Amount is less than $0.01 per share.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
<PAGE>
1. Significant Accounting Policies:
Emerging Tigers Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 as a non-diversified, closed-end
management investment company. 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 or at such time as the Board of Directors
deems conversion to be in the best interest of the shareholders. The
Fund determines and makes available the net asset value of its
Common Stock on a weekly basis. The Fund's Common Stock is listed on
the New York Stock Exchange under the symbol TGF. The following is a
summary of significant accounting policies followed by the Fund.
(a) Valuation of investments--Portfolio securities which are traded
on stock exchanges are valued at the last sale price on the exchange
on which such securities are traded, as of the close of business on
the day the securities are being valued or, lacking any sales, at
the last available bid price. Securities traded in the over-the-
counter market are valued at the last available bid price prior to
the time of valuation. In cases where securities are traded on more
than one exchange, the securities are valued on the exchange
designated by or under the authority of the Board of Directors as
the primary market. Securities 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. Options written are valued
at the last sale price in the case of exchange-traded options or, in
the case of options traded in the over-the-counter market, the last
asked price. Options purchased are valued at the last sale price in
the case of exchange-traded options or, in the case of options
traded in the over-the-counter market, the last bid price. Short-
term securities are valued at amortized cost, which approximates
market value. Other investments, including futures contracts and
related options, are stated at market value. Securities and assets
for which market value quotations are not available are valued at
their fair value as determined in good faith by or under the
direction of the Fund's Board of Directors.
(b) Foreign currency transactions--Transactions denominated in
foreign currencies are recorded at the exchange rate prevailing when
recognized. Assets and liabilities denominated in foreign currencies
are valued at the exchange rate at the end of the period. Foreign
currency transactions are the result of settling (realized) or
valuing (unrealized) assets or liabilities expressed in foreign
currencies into US dollars. Realized and unrealized gains or losses
from investments include the effects of foreign exchange rates on
investments.
(c) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the equity, debt, and
currency markets. Losses may arise due to changes in the value of
the contract or if the counterparty does not perform under the
contract.
<PAGE>
* Options--The Fund is authorized to write and purchase call and put
options. When the Fund writes an option, an amount equal to the
premium received by the Fund is reflected as an asset and an
equivalent liability. The amount of the liability is subsequently
marked to market to reflect the current market value of the option
written.
When a security is purchased or sold through an exercise of an
option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option
expires (or the Fund enters into a closing transaction), the Fund
realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
* Forward foreign exchange contracts--The Fund is authorized to
enter into forward foreign exchange contracts as a hedge against
either specific transactions or portfolio positions. Such contracts
are not entered on the Fund's records. However, the effect on
operations is recorded from the date the Fund enters into such
contracts. Premium or discount is amortized over the life of the
contracts.
* Foreign currency options and futures--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-US dollar denominated
securities owned by the Fund, sold by the Fund but not yet
delivered, or committed or anticipated to be purchased by the Fund.
* Financial futures contracts--The Fund may purchase or sell
interest rate futures contracts and options on such futures
contracts for the purpose of hedging the market risk on existing
securities or the intended purchase of securities. Futures contracts
are contracts for delayed delivery of securities at a specific
future date and at a specific price or yield. Upon entering into a
contract, the Fund deposits and maintains as collateral such initial
margin as required by the exchange on which the transaction is
effected. Pursuant to the contract, the Fund agrees to receive from
or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are
known as variation margin and are recorded by the Fund as unrealized
gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of
the contract at the time it was opened and the value at the time it
was closed.
<PAGE>
(d) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required. Under the applicable foreign tax law, a
withholding tax may be imposed on interest, dividends, and capital
gains at various rates.
(e) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Dividend income is recorded on the ex-
dividend dates except that if the ex-dividend date has passed,
certain dividends from foreign securities are recorded as soon as
the Fund is informed of the ex-dividend date. Interest income
(including amortization of discount and premiums) is recognized on
the accrual basis. Realized gains and losses on security
transactions are determined on the identified cost basis.
NOTES TO FINANCIAL STATEMENTS (concluded)
(f) Deferred organization expenses and offering expenses--Deferred
organization expenses are charged to expense on a straight-line
basis over a five-year period beginning with the commencement of
operations. Direct expenses relating to the public offering of the
Common Stock were charged to capital at the time of issuance.
(g) Dividends and distributions--Dividends and distributions paid by
the Fund are recorded on the ex-dividend dates.
(h) Reclassification--Generally accepted accounting principles
require that certain components of net assets be reclassified to
reflect permanent differences between financial reporting and tax
purposes. Accordingly, current year's permanent book/tax differen-
ces of $497,518 have been reclassified from accumulated net realized
capital losses to undistributed net investment income. These
reclassifications have no effect on net assets or net asset value
per share.
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
<PAGE>
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee of 1.00%, on an annual basis,
of the average weekly value of the Fund's net assets.
For the year ended November 30, 1995, Merrill Lynch, Pierce, Fenner
& Smith Inc. ("MLPF&S") earned $14,389 in commissions on the
execution of portfolio security transactions.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, MLPF&S, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended November 30, 1995 were $54,730,372 and
$61,595,379, respectively.
Net realized and unrealized gains (losses) as of November 30, 1995
were as follows:
Realized Unrealized
Losses Gains (Losses)
Long-term investments $(14,173,400) $ (2,691,682)
Foreign currency transactions (111,172) 5,432
------------ ------------
Total $(14,284,572) $ (2,686,250)
============ ============
As of November 30, 1995, net unrealized depreciation for Federal
income tax purposes aggregated $2,691,682, of which $31,116,823
related to appreciated securities and $33,808,505 related to
depreciated securities. At November 30, 1995, the aggregate cost of
investments for Federal income tax purposes was $295,847,878.
4. Capital Share Transactions:
At November 30, 1995, the Fund had one class of Common Stock, par
value $0.10 per share of which 200,000,000 shares were authorized.
During the year ended November 30, 1995, shares issued and
outstanding remained constant at 22,007,055. At November 30, 1995,
total paid-in capital amounted to $311,455,701.
<PAGE>
5. Commitments:
At November 30, 1995, the Fund had entered into foreign exchange
contracts under which it agreed to sell various foreign currencies
with an approximate value of $1,552,000.
6. Capital Loss Carryforward:
At November 30, 1995, the Fund had a capital loss carryforward of
approximately $13,598,000, all of which expires in 2003. This amount
is available to offset like amounts of any future taxable gains.
7. Subsequent Event:
On December 19, 1995, the Board of Directors of the Fund declared an
ordinary income dividend in the amount of $0.011270 per share
payable on January 12, 1996 to shareholders of record as of December
29, 1995.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
Emerging Tigers Fund, Inc.:
We have audited the accompanying statement of assets, liabilities
and capital, including the schedule of investments, of Emerging
Tigers Fund, Inc. as of November 30, 1995, the related statements of
operations for the year then ended and changes in net assets and the
financial highlights for the year then ended and the period March 4,
1994 (commencement of operations) to November 30, 1994. These
financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at November
30, 1995, by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
<PAGE>
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Emerging Tigers Fund, Inc. as of November 30, 1995, the results of
its operations, the changes in its net assets, and the financial
highlights for the respective stated periods in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
January 5, 1996
</AUDIT-REPORT>
IMPORTANT TAX INFORMATION (unaudited)
The following information summarizes all per share distributions
paid by Emerging Tigers Fund, Inc. during its taxable year ended
November 30, 1995:
<TABLE>
<CAPTION>
Interest Domestic Foreign Total Foreign Taxes Long-Term
Record Payable From Federal Non-Qualifying Source Ordinary Paid or Capital
Date Date Obligations Ordinary Income Income Income Withheld Gains
<S> <C> <C> <C> <C> <C> <C> <C>
12/30/94 1/13/95 $.000321 $.101717 $.046316 $.148354 $.022495 $--
</TABLE>
The foreign taxes paid or withheld represent taxes incurred by the
Fund on dividends received by the Fund from foreign sources. Foreign
taxes paid or withheld should be included in taxable income with an
offsetting deduction from gross income or as a credit for taxes paid
to foreign governments. You should consult your tax adviser
regarding the appropriate treatment of foreign taxes paid.
The law varies in each state as to whether and what percentage of
dividend income attributable to Federal obligations is exempt from
state income tax. We recommend that you consult your tax adviser to
determine if any portion of the dividends you received is exempt
from state income tax.
Please retain this information for your records.
PER SHARE INFORMATION (unaudited)
<PAGE>
<TABLE>
Per Share
Selected Quarterly
Financial Data*
<CAPTION>
Dividends /Distributions
Net Realized Unrealized Net Investment Capital
Investment Gains Gains Income Gains
For the Period Income (Losses) (Losses) Common Common
<S> <C> <C> <C> <C> <C>
March 4, 1994++ to May 31, 1994 $.07 $(.01) $ .34 -- --
June 1, 1994 to August 31, 1994 .04 .01 .94 -- --
September 1, 1994 to November 30, 1994 .01 .01 (1.10) -- --
December 1, 1994 to February 28, 1995 .01 (.22) (.87) $.12 $.02
March 1, 1995 to May 31, 1995 -- (.28) 1.91 -- --
June 1, 1995 to August 31, 1995 .01 (.11) (.17) -- --
September 1, 1995 to November 30, 1995 .01 (.03) (1.19) -- --
<CAPTION>
Net Asset Value Market Price**
For the Period High Low High Low Volume***
<S> <C> <C> <C> <C> <C>
March 4, 1994++ to May 31, 1994 $14.56 $13.99 $15.125 $12.75 2,761
June 1, 1994 to August 31, 1994 15.64 14.01 14.875 12.375 2,091
September 1, 1994 to November 30, 1994 16.12 14.32 14.75 12.125 2,317
December 1, 1994 to February 28, 1995 14.31 12.17 12.375 13.50 3,520
March 1, 1995 to May 31, 1995 14.88 12.49 10.75 10.125 2,595
June 1, 1995 to August 31, 1995 15.58 14.46 14.375 12.375 2,770
September 1, 1995 to November 30, 1995 14.47 12.62 13.00 11.125 2,892
<FN>
++Commencement of Operations.
*Calculations are based upon shares of Common Stock outstanding at
the end of each period.
**As reported in the consolidated transaction reporting system.
***In thousands.
</TABLE>
EQUITY PORTFOLIO CHANGES (unaudited)
For the Six Months Ended November 30, 1995
Additions
C & P Homes, Inc.
Fraser & Neave Ltd.
Grasim Industries Ltd. (GDS)
IOI Properties BHD
Metropolitan Bank and Trust Company (Shares)
P.T. Telekomunikasi Indonesia
*Reliance Industries Ltd. (GDS)
<PAGE>
Deletions
Affin Holdings BHD (Rights)
India Cements, Ltd.
JG Summit Holdings
Jurong Shipyard Ltd.
Kim Hin Industry BHD
Malaysian Airlines System BHD
Mancon BHD 'A'
Pan Pacific Asia BHD
P.T. Indah Kiat Pulp & Paper Corp.
*Reliance Industries Ltd. (GDS)
Shangri-La Asia, Ltd.
[FN]
*Added and deleted in the same quarter.
PORTFOLIO INFORMATION (unaudited)
As of November 30, 1995
Percent of
Ten Largest Holdings Net Assets
P.T. Hanjaya Mandala Sampoerna 4.9%
United Overseas Bank Ltd. 3.6
Development Bank of Singapore Ltd. 3.4
Genting BHD 2.9
Singapore Press Holdings Ltd. 2.9
Berjaya Sports TOTO BHD 2.8
DBS Land Ltd. 2.7
Singapore Airlines Ltd. 'Foreign' 2.6
Finance One Co., Ltd. 'Foreign' 2.5
Arab-Malaysian Merchant Bank BHD 2.5
