MERRILL LYNCH
EMERGING TIGERS
FUND, INC.
FUND LOGO
Quarterly Report
August 31, 1996
Investing in emerging market securities involves a number of risk
factors and special considerations, including restrictions on
foreign investments and on repatriation of capital invested in
emerging markets,currency fluctuations, and potential price
volatility and less liquidity of securities traded in emerging
markets. In addition, there may be less publicly available
information about the issuers of securities, and such issuers may
not be subject to accounting, auditing and financial reporting
standards and requirements comparable to those to which US companies
are subject. Therefore, the Fund is designed as a long-term
investment for investors capable of assuming the risks of investing
in emerging markets. The Fund should be considered as a vehicle for
diversification and not as a complete investment program. Please
refer to the prospectus for details.
<PAGE>
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Statements and other information herein are as dated and are subject
to change.
Merrill Lynch
Emerging Tigers Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MERRILL LYNCH EMERGING TIGERS FUND, INC.
Asset Allocation
As a Percentage* of
Net Assets as of
August 31, 1996
<PAGE>
Map Depicting the Fund's Asset Allocation As A Percentage* of
Net Assets as of August 31, 1996
INDIA 5.4%
SRI LANKA 0.6%
INDONESIA 8.9%
MALASIA 31.0%
THAILAND 11.1%
SINGAPORE 17.1%
CHINA 2.5%
PHILIPPINES 14.3%
INDOCHINA 0.9%
[FN]
*Total may not equal 100%.
DEAR SHAREHOLDER
We are pleased to provide you with this first quarterly report for
Merrill Lynch Emerging Tigers Fund, Inc. As we announced in our May
31, 1996 semi-annual report to shareholders, on June 10, 1996
Merrill Lynch Emerging Tigers Fund, Inc. converted to open-end
status; that is, the Fund's shares are redeemable at net asset value
at any time. In addition, the Fund became available through the
Merrill Lynch Select Pricing SM System; therefore clients can now
purchase shares with an upfront sales charge (Class A or Class D),
or at net asset value, subject to a contingent deferred sales charge
and/or an annual distribution fee (Class B or Class C). Shareholders
of the closed-end Fund became Class A shareholders with this change.
See "About Fund Performance" on pages 4 and 5 of this report to
shareholders for a complete description of each class of shares
available.
Investment Activities
During the quarter ended August 31, 1996, the "emerging tigers"
markets fell by about 4%. Concerns about current account deficits in
certain countries, slowing export growth and a likely interest rate
increase in the United States continued to deter investors. There
were new concerns about the possibility that Asia, after 15 years of
extraordinary economic growth, has finally reached a stage of much
lower growth. The declines in the emerging tiger stock markets were
reflected in the Fund's total returns for the August quarter. During
the quarter, the total return for Merrill Lynch Emerging Tigers
Fund, Inc.'s Class A Shares was -5.03%. Total returns for Class B,
Class C and Class D Shares were -4.06%, -4.12% and -3.93%,
respectively, since inception (June 10, 1996) through August 31,
1996. (Results shown do not reflect sales charges and would be lower
if sales charges were included. Complete performance information,
including average annual total returns, can be found on pages 4--6
of this report to shareholders.)
<PAGE>
In contrast to the positive results of some Hong Kong companies, the
latest round of earnings from companies in The People's Republic of
China were uninspiring. In particular, earnings for companies in the
important petrochemical sector were disappointing because of falling
product prices in China. In terms of the economy, it appeared that
the government is moving in the direction of further monetary policy
easing. However, the Chinese do not want a repeat of the boom and
bust cycles which occurred in the late 1980s and early 1990s. It is
likely that the government will ease credit selectively and
moderately. The Fund's direct exposure to China is concentrated in
the shares of Guangdong Investments, Ltd.
The release of July current account figures for Malaysia provided
some relief for investor pessimism since the figures showed a
surplus for the second consecutive month. The surplus was caused
mainly by a significant fall in imports rather than an increase in
exports. The stronger Malaysian ringgit relative to the yen also
reduced the value of imports as compared to last year. The central
bank has not yet moved to lower interest rates because it believes
that credit and monetary growth remain too strong. However,
interbank interest rates declined slightly, causing one bank to
lower base lending rates. It appears that the rate of growth for the
Malaysian economy has slowed.
As economic overheating fears subside in the second half of this
year, investor concerns will start to focus on corporate earnings.
The earnings outlook will be discounted to reflect the sluggish
macroeconomic conditions. If the Malaysian central bank does slow
the rate of money supply growth, its stock market is likely to be
negatively affected. Over the past years, the Malaysian market was
shown to be liquidity-driven. The Fund is still underweighted in the
Malaysian market, and most of its holdings are in the banking and
consumer sectors.
Concerns about a slowing economy, arising from a decline in the
electronics sector globally, caused a retrenchment in the Singapore
index during the quarter ended August 31, 1996. The 2.1% fall in
June of non-oil exports, versus a market consensus of 10% growth, is
the first decline registered since December 1991. Most economists
are revising forecasts of gross domestic product (GDP) growth for
1996 to about 7.7% from 8.7%. Corporate earnings growth has been
generally lower than expectations.
Thailand's economy was beset by a range of woes. In the forefront
was the high current account deficit, which stands at about 8% of
GDP. Connected to this problem is the recently reported decline in
export growth. This drop in export growth engendered arguments about
the structural economic adjustments--from low value-added industries
to higher value-added industries--which are necessary in order for
Thailand to become more globally competitive.
<PAGE>
In addition, there is the problem of its pegged currency which, over
the years, led to high inflation and consequently to a rising real
effective exchange rate. There are questions about the
sustainability of the baht peg. There are also concerns about the
oversupply in the property market. Finally, the latest corporate
results showed earnings growth to be in single digits, as opposed to
the forecasted 20% or more. Needless to say, forecasts for 1997 were
adjusted down accordingly, and these various concerns led to a sharp
decline in the Stock Exchange of Thailand Index over the past two
months. The Fund was neutral weighted to the benchmark in this
market over the past year. The overweighting in the banking sector
proved advantageous as earnings and valuations are much better than
for other companies.
In the Philippines, the economy exhibited some strength in the
second quarter of 1996 with GDP growth of about 5.7%. Similar to the
other Asian countries, there was some slowing in export growth,
mainly in the electronics sector. However, earnings growth continued
to be strong and valuations remained relatively reasonable. In
addition, the economy is still engaged in its secular growth phase.
During the quarter ended August 31, 1996, the Indonesian stock
market lost some of the gains which it made in the first half of
1996. The decline can be attributed to political uncertainty
following the riots in Jakarta which were instigated by members of
the opposition party. There are two issues which concern investors:
the president's successor and the expansion of democracy. President
Suharto's health was questioned when he went to Germany to have a
heart condition evaluated. He is currently 78 years old and has not
named a successor. If Indonesia was a true democracy, succession
would not be a big issue. However, after two decades of autocratic
rule, it is hard to imagine a smooth transition of power. Suharto
also indicated by his actions against the opposition party that he
is unwilling to expand the reaches of democracy.
On Indonesia's economic front, the central bank has to keep interest
rates high in order to fight inflationary pressures. Money supply
growth was also unacceptably high, and corporate earnings results
were mixed. Consumer companies had disappointing earnings because of
increasing competition. Some companies that manufacture cyclical
products, such as cement, had better-than-expected results.
The Fund's largest holdings in Indonesia are in tobacco and
infrastructure-related issues. We began shifting out of the consumer
sector because of declining profit margins, increasing competition
and falling market shares.
<PAGE>
In India, there was little movement toward budget reforms during the
quarter ended August 31, 1996. Although infrastructure development
is constantly discussed, the government still has not initiated
policies which will lead to an actual inflow of direct foreign
investment. There was no discussion of fiscal reform apart from
raising more taxes from the corporate sector through the imposition
of a minimum alternate tax of 12.9%. This tax, and a further
reduction in import duties, will lead to a fall in earnings growth.
An easing liquidity environment may offset lower earnings growth in
the short term.
Investment Outlook and
Strategy
The Asian markets have been lackluster since 1993. Valuations at
that time had expanded beyond supportable levels. Therefore, we
expected share prices to fall until a valuation adjustment had taken
place. We believe that valuations have been realigned to reasonable
levels because the price/earnings ratio of the emerging tiger
countries is no longer at a premium to the price/earnings ratio of
the United States. However, investors are now concerned about
current account deficits in certain countries and slowing export
growth. Analysts believe that economic growth in Asia will no longer
reach the levels seen in the past ten years. Naturally, the Asian
economies have matured, and growth in some of the more mature
countries will not reach lofty levels. Although Asian economic
growth rates are still the highest in the world, investors are
currently adjusting to slower economic growth rates and more
moderate earnings growth rates.
We continued to be overweighted in the Philippines during the
quarter ended August 31, 1996. Looking ahead, we are likely to
increase our holdings in Malaysia and decrease our holdings in
Indonesia and Singapore. The cash position of the Fund declined from
10% of net assets to 8% during the three-month period ended August
31, 1996.
In Conclusion
We thank you for your investment in Merrill Lynch 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
<PAGE>
(Kara Tan Bhala)
Kara Tan Bhala
Vice President and Portfolio Manager
September 26, 1996
PERFORMANCE DATA
About Fund
Performance
Investors are able to purchase shares of the Fund through the
Merrill Lynch Select Pricing SM System, which offers four pricing
alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 5.25% and bear no ongoing distribution or account
maintenance fees. Class A Shares are available only to eligible
investors.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.75% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after approximately 8 years. (There is no initial
sales charge for automatic share conversions.)
* Class C Shares are subject to a distribution fee of 0.75% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 5.25% and
an account maintenance fee of 0.25% (but no distribution fee).
<PAGE>
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
<TABLE>
Recent
Performance
Results*
<CAPTION>
12 Month 3 Month
8/31/96 5/31/96++ 8/31/95 % Change % Change++
<S> <C> <C> <C> <C> <C>
Class A Shares $14.93 $15.72 $14.61 +2.19% -5.03%
Class B Shares 14.90 15.53 -- -- -4.06
Class C Shares 14.89 15.53 -- -- -4.12
Class D Shares 14.92 15.53 -- -- -3.93
Class A Shares--Total Return +2.27(1) -5.03
Class B Shares--Total Return -- -4.06
Class C Shares--Total Return -- -4.12
Class D Shares--Total Return -- -3.93
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
++Investment results shown for Class B, Class C and Class D Shares
are since inception (6/10/96).
(1)Percent change includes reinvestment of $0.011 per share ordinary
income dividends.
</TABLE>
<TABLE>
Performance
Summary--
Class A Shares++
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
3/4/94--12/31/94 $14.18 $14.02 -- -- +0.12%
1995 14.02 14.09 -- $0.148 +0.58
1/1/96--8/31/96 14.09 14.93 -- 0.011 +5.96
------
Total $0.159
Cumulative total return as of 8/31/96: +6.70%**
<PAGE>
<FN>
++Performance results for per share net asset value of Class A
Shares prior to June 10, 1996 are for the period when the Fund was
closed-end.
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable date, and do not
include sales charge; results would be lower if sales charge
was included.
</TABLE>
PERFORMANCE DATA (concluded)
Average Annual
Total Return++
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/96 +4.38% -1.10%
Inception (3/04/94) through 6/30/96 +4.53 +2.13
[FN]
++Performance results for per share net asset value of Class A
Shares prior to June 10, 1996 are for the period when the Fund was
closed-end.
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
Aggregate
Total Return
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Inception (6/10/96) through 6/30/96 -0.13% -4.12%
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (6/10/96) through 6/30/96 -0.19% -1.19%
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after one year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Inception (6/10/96) through 6/30/96 -0.13% -5.37%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Held/ Percent of
COUNTRY Industries Face Amount Long-Term Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
China Conglomerates 7,502,000 Guangdong Investments, Ltd. (a) $ 5,099,086 $ 5,384,907 2.5%
Total Long-Term Investments in China 5,099,086 5,384,907 2.5
India Auto & Truck 151,566 Tata Engineering Locomotive Co. (GDR)** 2,164,511 2,481,893 1.1
Cement 126,000 Gujarat Ambuja Cement (GDR)** 1,000,612 1,260,000 0.6
Engineering 283,500 Larsen & Toubro Ltd. (GDR)** 4,446,625 4,309,200 2.0
Financial Services 191,400 Industrial Credit & Investment
Corporation of India Ltd. (GDR)** 2,225,025 2,189,616 1.0
Pharmaceuticals 190,200 Dr. Reddy's Labs (GDR)** 1,860,500 1,426,500 0.7
Total Long-Term Investments in India 11,697,273 11,667,209 5.4
<PAGE>
Indochina Other 75,000 Southeast Asia Frontier Fund 397,500 367,500 0.2
141,300 Vietnam Frontier Fund 1,455,390 1,413,000 0.7
Total Long-Term Investments in Indochina 1,852,890 1,780,500 0.9
Indonesia Banking 868,600 P.T. Bank International Indonesia 1,588,559 2,003,177 0.9
Building & 5,840,000 P.T. Citra Marga Nusaphala 3,865,245 3,741,192 1.7
Construction
Insurance 3,374,000 P.T. Lippo Life Insurance 3,795,842 2,881,913 1.3
Miscellaneous-- 468,900 P.T. Modern Photo Film 2,335,560 1,556,992 0.7
Consumer
Telecommunications 56,600 P.T. Telekomunikasi Indonesia (Persero)
(ADR)* 1,178,424 1,577,725 0.7
Tobacco 797,750 P.T. Hanjaya Mandala Sampoerna 2,732,085 7,682,794 3.6
Total Long-Term Investments in
Indonesia 15,495,715 19,443,793 8.9
Malaysia Automobiles 52,000 Edaran Otomobil Nasional BHD 502,584 542,362 0.2
Banking 1,681,000 Affin Holdings BHD 2,686,851 3,843,750 1.8
801,600 Arab-Malaysian Merchant Bank BHD 3,624,193 5,466,624 2.5
3,498,666 Public Bank BHD 'Foreign' 5,612,875 6,708,771 3.1
------------ ------------ ------
11,923,919 16,019,145 7.4
Building & 1,907,000 I.J.M. Corp. BHD 3,299,946 3,564,915 1.6
Construction
Conglomerates 2,491,000 Renong BHD 3,554,229 3,637,372 1.7
US$ 1,530,000 Renong BHD, 2.50% due 1/15/2005 1,671,525 1,686,825 0.8
------------ ------------ ------
5,225,754 5,324,197 2.5
Engineering & US$ 4,225,000 United Engineering, Ltd., 2%
Construction due 3/01/2004 4,903,317 5,175,625 2.4
Industrial 462,250 O.Y.L. Industries BHD 2,555,207 4,450,417 2.0
46,225 O.Y.L. Industries BHD 'A' (New) 278,240 442,260 0.2
------------ ------------ ------
2,833,447 4,892,677 2.2
<PAGE>
Leisure 2,802,000 Berjaya Sports TOTO BHD 4,855,754 10,397,344 4.8
693,000 Genting BHD 6,482,532 5,115,212 2.3
776,000 Resorts World BHD 4,528,444 4,233,633 2.0
------------ ------------ ------
15,866,730 19,746,189 9.1
Real Estate 980,000 IOI Properties BHD 3,555,471 2,948,492 1.4
1,217,500 Land & General BHD (Ordinary) 1,521,420 2,227,134 1.0
------------ ------------ ------
5,076,891 5,175,626 2.4
Telecommun- 534,000 Telekom Malaysia BHD 4,134,868 4,712,773 2.2
ications US$ 2,090,000 Telekom Malaysia BHD, 4% due
10/03/2004 2,116,225 2,142,250 1.0
------------ ------------ ------
6,251,093 6,855,023 3.2
Total Long-Term Investments in
Malaysia 55,883,681 67,295,759 31.0
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Shares Held/ Percent of
COUNTRY Industries Face Amount Long-Term Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Philippines Banking US$ 3,790,000 Metro Bank & Trust Company,
2.75% due 9/10/2000 $ 4,813,078 $ 4,813,300 2.2%
65,715 Metropolitan Bank and Trust Company 413,464 1,570,026 0.7
------------ ------------ ------
5,226,542 6,383,326 2.9
Beverages 1,041,040 San Miguel Corp. 'B' 3,470,251 3,402,482 1.6
Conglomerates 219,900 Benpres Holdings Corp. (GDR)** 2,159,018 1,539,300 0.7
Engineering & 5,475,600 DMCI Holdings Inc. 3,519,079 3,976,927 1.8
Construction
Food & Beverage 4,040,800 Universal Robina Corp. 3,047,558 2,046,659 0.9
International 4,134,900 International Container Terminal
Trade Services, Inc. 3,955,596 2,528,991 1.2
Real Estate US$ 1,315,000 AC International Finance, 1.74%
due 12/08/2000 (c) 1,221,532 1,222,950 0.6
2,182,500 Ayala Land, Inc. 'B' 2,334,585 2,794,868 1.3
------------ ------------ ------
3,556,117 4,017,818 1.9
<PAGE>
Retail 7,486,346 SM Prime Holdings, Inc. 1,229,713 1,802,904 0.8
9,670,000 Uniwide Holdings, Inc. 1,792,055 2,070,031 1.0
------------ ------------ ------
3,021,768 3,872,935 1.8
Utilities--Electric 432,159 Manila Electric Co. (MERALCO) 'B' 2,913,550 3,320,488 1.5
Total Long-Term Investments in the
Philippines 30,869,479 31,088,926 14.3
Singapore Airlines 516,000 Singapore Airlines Ltd. 'Foreign' 4,907,692 5,465,558 2.5
Banking 541,000 Development Bank of Singapore Ltd. 5,490,536 6,345,703 2.9
785,400 United Overseas Bank Ltd. 5,694,869 7,537,428 3.5
------------ ------------ ------
11,185,405 13,883,131 6.4
Beverages 196,000 Fraser & Neave Ltd. 1,858,848 1,978,531 0.9
Industrial 635,000 Clipsal Industries Ltd. 1,767,649 1,765,300 0.8
Publishing & 339,800 Singapore Press Holdings Ltd. 4,867,466 5,894,021 2.7
Broadcasting
Real Estate 350,000 City Developments Ltd. 2,826,650 2,911,068 1.3
1,593,000 DBS Land Ltd. 4,715,480 5,299,808 2.5
------------ ------------ ------
7,542,130 8,210,876 3.8
Total Long-Term Investments in
Singapore 32,129,190 37,197,417 17.1
Sri Lanka Finance 259,333 Development Finance Corp. 2,049,710 1,215,989 0.6
Total Long-Term Investments in
Sri Lanka 2,049,710 1,215,989 0.6
Thailand Banking US$ 1,992,000 Bangkok Bank Public Company Ltd.,
3.25% due 3/03/2004 2,321,875 2,161,320 1.0
171,920 Bangkok Bank Public Company Ltd.
'Foreign' 1,558,359 2,174,482 1.0
123,400 Siam City Bank Ltd. 298,991 243,873 0.1
US$ 2,500,000 Siam Commercial Bank Public Co.,
3.25% due 1/24/2004 3,218,480 2,737,500 1.3
428,100 Thai Farmers Bank, Ltd. 'Foreign' 2,866,724 4,534,814 2.1
53,512 Thai Farmers Bank, Ltd. 'Foreign'
(Warrants)(b) 53,003 52,877 0.0
------------ ------------ ------
10,317,432 11,904,866 5.5
<PAGE>
Building & 144,000 Land & House Public Co. 'Foreign' 3,150,860 2,071,779 1.0
Construction
Communications 85,000 Advanced Info Services PLC 761,241 1,115,415 0.5
Financial Services 323,600 Finance One Co., Ltd. 'Foreign' 193,850 1,598,814 0.7
Mutual Funds 7,260,000 Ruam Pattana Fund II 'Foreign' 4,971,848 4,232,609 2.0
Oil--Related 229,500 PTT Exploration and Production Public
Co. 'Foreign' 1,835,627 3,138,617 1.4
Total Long-Term Investments in
Thailand 21,230,858 24,062,100 11.1
Total Long-Term Investments 176,307,882 199,136,600 91.8
Face Amount Short-Term Securities
United Commercial US$ 4,803,000 General Electric Capital Corp.,
States Paper*** 5.30% due 9/03/1996 4,803,000 4,803,000 2.2
8,000,000 McKenna Triangle National Corp.,
5.40% due 9/13/1996 7,988,000 7,988,000 3.7
------------ ------------ ------
12,791,000 12,791,000 5.9
US Government 4,000,000 Federal Home Loan Mortgage Corp.,
& Agency 5.15% due 9/05/1996 3,998,856 3,998,856 1.9
Obligations***
Total Investments in Short-Term
Securities 16,789,856 16,789,856 7.8
Total Investments $193,097,738 215,926,456 99.6
============
Other Assets Less Liabilities 882,756 0.4
------------ ------
Net Assets $216,809,212 100.0%
============ ======
Net Asset Value: Class A--Based on net assets of $212,926,148 and 14,265,804 shares
outstanding $ 14.93
============
Class B--Based on net assets of $2,780,659 and 186,615 shares
outstanding $ 14.90
============
Class C--Based on net assets of $734,180 and 49,304 shares
outstanding $ 14.89
============
Class D--Based on net assets of $368,225 and 24,675 shares
outstanding $ 14.92
============
<PAGE>
<FN>
*American Depositary Receipts (ADR).
**Global Depositary Receipts (GDR).
***Commercial Paper and certain US Government & Agency
Obligations are traded on a discount basis; the interest rates shown
are the discount rates paid at the time of purchase by the Fund.
(a)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.
(b)Warrants entitle the Fund to purchase a predetermined number of
shares of Common Stock. The purchase price and number of shares
are subject to adjustment under certain conditions until the
expiration date.
(c)Represents a zero coupon or step bond; the interest rate shown
is the effective yield at the time of purchase by the Fund.
</TABLE>
EQUITY PORTFOLIO CHANGES
For the Quarter Ended August 31, 1996
Additions
Edaran Otomobil Nasional BHD
Industrial Credit & Investment
Corporation of India Ltd. (GDR)
O.Y.L. Industries BHD 'A' (New)
Thai Farmers Bank, Ltd. 'Foreign'
(Warrants)
Uniwide Holdings, Inc.
Deletions
Guangshen Railway Co., Ltd. (ADR)
Hong Leong Credit BHD
P.T. Indonesian Satellite Corp. (ADR)
P.T. Kalbe Farma
P.T. Mayorah Indah
Renong BHD (ICULS)
Renong BHD (Warrants)
Shanghai Petrochemical Co., Ltd. (ADR)
<PAGE>
PORTFOLIO INFORMATION
As of August 31, 1996
Percent of
Ten Largest Equity Holdings Net Assets
Berjaya Sports TOTO BHD 4.8%
P.T. Hanjaya Mandala Sampoerna 3.6
United Overseas Bank Ltd. 3.5
Public Bank BHD 'Foreign' 3.1
Development Bank of Singapore Ltd. 2.9
Singapore Press Holdings Ltd. 2.7
Arab-Malaysian Merchant Bank BHD 2.5
Singapore Airlines Ltd. 'Foreign' 2.5
Guangdong Investments, Ltd. 2.5
DBS Land Ltd. 2.5
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
James W. Harshaw, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Wall Street
Boston, Massachusetts 02109
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
