EMERGING TIGERS
FUND, INC.
FUND LOGO
Semi-Annual Report
May 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 asa complete investment program. Please
refer to the prospectus for details.
<PAGE>
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.
Emerging Tigers Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
EMERGING TIGERS FUND, INC.
Map Depicting the Fund's Asset Allocation As a Percentage* of Net
Assets as of May 31, 1996
INDIA 3.3%
SRI LANKA 0.4%
INDONESIA 9.6%
MALAYSIA 29.1%
THAILAND 12.9%
SINGAPORE 16.4%
VIETNAM 0.4%
CHINA 4.8%
PHILIPPINES 12.3%
INDOCHINA 0.1%
[FN]
*Total may not equal 100%.
<PAGE>
DEAR SHAREHOLDER
The investment outlook for the "emerging tiger" stock markets
stabilized during the six months ended May 31, 1996. At the
beginning of the period, greater investor interest in US equities,
combined with further political and economic troubles in Mexico, led
to share price declines in other emerging stock markets. However,
investors began to view the emerging tiger stock markets more
positively as 1996 began, which resulted in higher share prices in
January and February. The rally came to an abrupt end with the March
release of stronger-than-expected employment data in the United
States, which rekindled fears of higher inflation and rising
interest rates. Since that time, through May month-end, the emerging
tiger stock markets have been trading in a relatively narrow range.
These market conditions are reflected in the Fund's investment
returns. For the six-month period ended May 31, 1996, Emerging
Tigers Fund, Inc.'s total investment return was +17.40%, based on a
change in per share net asset value from $13.40 to $15.72, and
assuming reinvestment of $0.011 per share income dividends.
Investment Activities
Malaysia remains the Fund's largest weighting at 29.1% of net
assets, although it is underweighted relative to several market-
weighted indexes of emerging tiger stock markets. Malaysian economic
growth has been improving thus far in 1996, following a period of
monetary policy tightening that had slowed the economy somewhat at
the end of 1995. Although we believe that further monetary policy
tightening is needed to contain inflationary pressures, it appears
that the government is unwilling at this time to cut off economic
growth through higher interest rates. However, if the economy
continues to expand at an inflationary pace, higher interest rates
may become necessary by the end of 1996. With the prospect of rising
interest rates and slowing economic growth, our investments in
Malaysia focus on conglomerates and infrastructure-related stocks.
In Thailand, the core rate of inflation is beginning to decline. The
Thai central bank has pursued a tight monetary policy since last
year, and we believe that this trend will continue until the end of
1996. On the political front, the recent cabinet reshuffling had
little effect on share prices. On the other hand, tight monetary
policy has had a detrimental effect on share prices as investors
await signs that the economy has bottomed. Our 12.9% exposure in
Thailand is a slightly underweighted one. We believe that current
share prices more than discount the current difficulties in the Thai
banking industry; therefore, we are overweighting Thai banks in the
Fund's portfolio.
<PAGE>
The Indonesian stock market had been a strong performer earlier this
year as corporate earnings reports--especially for textile and
cigarette companies--were generally at or above expectations.
However, the Indonesian stock market has been negatively impacted by
the uncertainty in the US interest rate environment. The stock
market is now relatively inexpensive by historical standards at 15
times 1996 earnings, but consumer-related stocks are somewhat
overvalued at 20 times 1996 earnings. Therefore, we sold some of our
consumer stocks and purchased shares of infrastructure-related
companies which are trading at 14 times 1996 earnings. Two new
Indonesian holdings are P.T. Citra Marga Nusaphala, a toll road
operator and P.T. Lippo Life Insurance. Our 9.6% exposure in
Indonesia is virtually a market weighting.
In the Philippines, fourth-quarter corporate results for the 1996
fiscal year were good, with companies reporting profits growth
averaging 28%. However, profits for food and beverage companies
(such as Fund holdings San Miguel Corp. and Universal Robina Corp.)
have been squeezed because of higher raw material prices. In
contrast, banks and real estate companies have done well, such as
Fund investments Metropolitan Bank and Trust Company and Ayala Land,
Inc. The Philippine economy grew at an approximate 4.7% rate in the
first calendar quarter of 1996. Inflation generally remains under
control except for a spike upward in January because of higher food
prices. Interest rates are virtually unchanged, and we expect them
to fall by 1996 year-end if inflation remains under control. As a
result, we continue to overweight investment in the Philippines at
12.3% of net assets, with our holdings focused in the infrastructure
and consumer sectors.
Our 3.3% exposure in India is a slightly underweighted one. Indian
share prices rebounded at the beginning of 1996, then fell when it
became apparent that the general election would result in a
coalition government. Nevertheless, we expect that India will
continue to pursue more market-oriented policies. We added a new
investment in India, Tata Engineering Locomotive Co. Since the Fund
at this time is not able to invest directly in India, currently we
invest only in Euroconvertibles and global depositary receipts of
Indian companies--which often trade at premiums to their common
stock counterparts--we have been unable to significantly increase
the Fund's 3.3% underweighted exposure in India.
The Singapore stock market declined in May when the government
announced measures to reduce speculation in the property market, and
subsequently has been in a narrow trading range. Lackluster
corporate earnings results have also kept share prices from
appreciating. The Fund has investments in two Singapore real estate
companies, DBS Land Ltd. and City Developments Ltd.,a new
investment. We believe these investments will be positive long-term
performers as the new government measures drive speculators from the
real estate market. Furthermore, underlying demand for housing
remains strong.
<PAGE>
In The People's Republic of China, 1995 corporate earnings reports
were very poor. However, we believe that most of the bad news is
already reflected in share prices. Investors generally expect the
Chinese economy to recover in 1996, and interest rates have already
begun to fall as selected credit controls are eased. We expect a
slow and steady economic recovery in China, which will be reflected
in moderate stock market rallies. Therefore, the Fund has a 4.8%
overweighted position in China.
In Conclusion
As reported in the "Proxy Results" section on page 3 of this report
to shareholders, Emerging Tigers Fund, Inc.'s shareholders approved
the Fund's conversion to open-end status. This change took effect on
June 10, 1996. As a result, we will now begin to provide
shareholders with quarterly reports, as well as semi-annual and
annual reports. In addition, the Fund will now be known as "Merrill
Lynch Emerging Tigers Fund, Inc."
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Kara Tan Bhala)
Kara Tan Bhala
Vice President and Portfolio Manager
July 3, 1996
Proxy Results
<PAGE>
During the six-month period ended May 31, 1996, Emerging Tigers
Fund, Inc. shareholders voted on the following proposals. The
proposals were approved at a special shareholders' meeting on April
23, 1996. 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 20,358,489 801,062
Edward H. Meyer 20,310,175 849,375
Charles C. Reilly 20,326,342 833,209
Richard R. West 20,361,486 798,065
Arthur Zeikel 20,351,684 801,867
Edward D. Zinbarg 20,323,838 835,713
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
2. To select Deloitte & Touche LLP as the Fund's independent auditors. 20,351,562 418,237 389,752
<CAPTION>
Shares Voted Shares Voted Shares Voted Broker
For Against Abstain No-Vote
<S> <C> <C> <C> <C>
3. Proposal to convert the Fund from a closed-end investment
company to an open-end investment company. 11,086,181 918,409 390,618 8,764,343
4. Proposal to amend the fundamental investment restrictions
of the Fund. 11,185,433 714,328 495,446 8,764,343
5. Proposal to approve the Amended Investment Advisory Agreement. 11,191,130 688,504 515,574 8,764,343
</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> <S> <C> <S> <C> <C> <C>
China Chemicals 120,000 Shanghai Petrochemical Co., Ltd.
(ADR)* $ 3,730,471 $ 3,510,000 1.0%
Conglomerates 14,502,000 Guangdong Investments, Ltd. (a) 9,018,305 9,465,813 2.7
Property US$ 3,100,000 Henderson Capital International,
5% due 3/28/1997 3,318,951 2,728,000 0.8
<PAGE>
Transportation 46,500 ++Guangshen Railway Co., Ltd. (ADR)* 883,500 918,375 0.3
Total Long-Term Investments in China 16,951,227 16,622,188 4.8
India Auto & Truck 144,900 Tata Engineering Locomotive Co.
(GDR)** 1,999,620 2,608,200 0.8
Cement 126,000 Gujarat Ambuja Cement (GDR)** 1,000,612 1,480,500 0.4
Engineering 283,500 ++++Larsen & Toubro Ltd. (GDR)** 4,446,625 5,670,000 1.6
Pharmaceuticals 190,200 Dr. Reddy's Labs (GDR)** 1,860,500 1,664,250 0.5
Total Long-Term Investments in India 9,307,357 11,422,950 3.3
Indochina Other 75,000 Southeast Asia Frontier Fund 397,500 375,000 0.1
Total Long-Term Investments in
Indochina 397,500 375,000 0.1
Indonesia Banking 619,000 P.T. Bank International Indonesia 2,082,810 3,231,700 0.9
Building & 4,050,000 P.T. Citra Marga Nusaphala 5,335,615 6,599,485 1.9
Construction
Food 2,058,280 P.T. Mayorah Indah 1,562,123 1,257,740 0.4
Insurance 1,687,000 P.T. Lippo Life Insurance 2,744,414 2,748,971 0.8
Miscellaneous-- 681,900 P.T. Modern Photo Film 3,183,511 3,333,473 1.0
Consumer
Pharmaceuticals 122,000 P.T. Kalbe Farma 506,286 292,967 0.1
Telecommunications 33,930 P.T. Indonesian Satellite Corp.
(ADR)* 1,236,227 1,162,103 0.3
47,600 P.T. Telekomunikasi Indonesia (Persero)
(ADR)* 907,040 1,451,800 0.4
------------ ------------ ------
2,143,267 2,613,903 0.7
Tobacco 1,055,250 P.T. Hanjaya Mandala Sampoerna 3,525,114 13,111,436 3.8
Total Long-Term Investments in
Indonesia 21,083,140 33,189,675 9.6
<PAGE>
Malaysia Banking 2,325,000 Affin Holdings BHD 3,729,854 5,493,592 1.6
578,800 Arab-Malaysian Merchant Bank BHD 4,976,410 7,823,188 2.3
3,704,000 Public Bank BHD `Foreign' 7,807,184 10,012,815 2.9
------------ ------------ ------
16,513,448 23,329,595 6.8
Building & 2,740,000 I.J.M. Corp. BHD 4,750,479 4,696,516 1.4
Construction
Conglomerates 1,977,000 Renong BHD 2,734,883 3,293,680 0.9
395,400 Renong BHD (ICULS) 155,639 121,454 0.0
247,125 Renong BHD (Warrants)(b) 65,427 67,695 0.0
US$ 3,930,000 Renong BHD, 2.50% due 1/15/2005 4,197,771 4,480,200 1.3
------------ ------------ ------
7,153,720 7,963,029 2.2
Engineering & US$ 6,115,000 United Engineering, Ltd., 2% due
Construction 3/01/2004 6,887,250 7,338,000 2.1
Financial Services 360,000 Hong Leong Credit BHD 2,500,160 1,701,241 0.5
Industrial 571,250 O.Y.L. Industries BHD 3,175,467 5,673,608 1.6
Leisure 4,050,000 Berjaya Sports TOTO BHD 7,048,287 13,056,668 3.8
1,004,000 Genting BHD 8,993,452 8,524,149 2.5
1,110,000 Resorts World BHD 6,244,618 6,401,282 1.8
------------ ------------ ------
22,286,357 27,982,099 8.1
Real Estate 1,227,000 IOI Properties BHD 4,493,439 3,857,409 1.1
3,167,500 Land & General BHD (Ordinary) 7,645,086 7,484,281 2.2
------------ ------------ ------
12,138,525 11,341,690 3.3
Telecommuni- 719,000 Telekom Malaysia BHD 5,509,071 6,565,158 1.9
cations US$ 3,765,000 Telekom Malaysia BHD, 4% due
10/03/2004 3,567,489 4,009,725 1.2
------------ ------------ ------
9,076,560 10,574,883 3.1
Total Long-Term Investments in
Malaysia 84,481,966 100,600,661 29.1
Philippines Banking US$ 5,075,000 Metro Bank & Trust Company, 2.75% due
9/10/2000 6,329,453 6,546,750 1.9
94,582 ++Metropolitan Bank and Trust Company 1,036,330 2,840,355 0.8
------------ ------------ ------
7,365,783 9,387,105 2.7
<PAGE>
Beverages 1,565,740 San Miguel Corp. 'B' 4,985,204 5,420,791 1.6
Conglomerates 309,200 ++++Benpres Holdings Corp. (GDR) 3,035,782 2,550,900 0.7
Engineering & 8,151,800 ++DMCI Holdings Inc. 5,126,105 6,003,143 1.7
Construction
Food & Beverage 5,665,800 Universal Robina Corp. 4,182,152 3,197,037 0.9
International 6,381,000 International Container Terminal
Trade Services, Inc. 5,959,106 4,454,983 1.3
Real Estate 2,165,000 Ayala Land, Inc. 'B' 3,496,924 3,727,047 1.1
Retail 11,129,346 SM Prime Holdings, Inc. 1,753,958 2,724,859 0.8
Utilities-- 492,000 Manila Electric Co. (MERALCO) 'B' 4,242,986 5,034,813 1.5
Electric
Total Long-Term Investments in the
Philippines 40,148,000 42,500,678 12.3
Singapore Airlines 800,000 Singapore Airlines Ltd. 'Foreign' 6,909,839 8,235,712 2.4
Banking 862,000 Development Bank of Singapore Ltd. 8,490,069 10,220,376 3.0
1,190,400 United Overseas Bank Ltd. 8,386,382 10,817,977 3.1
------------ ------------ ------
16,876,451 21,038,353 6.1
Beverages 312,000 Fraser & Neave Ltd. 2,967,255 3,389,137 1.0
Industrial 1,000,000 Clipsal Industries Ltd. 2,776,748 2,600,000 0.7
Publishing & 538,800 Singapore Press Holdings Ltd. 7,372,253 10,098,914 2.9
Broadcasting
Real Estate 350,000 City Developments Ltd. 2,826,650 2,683,706 0.8
2,593,000 DBS Land Ltd. 7,468,172 8,615,719 2.5
------------ ------------ ------
10,294,822 11,299,425 3.3
Total Long-Term Investments in
Singapore 47,197,368 56,661,541 16.4
<PAGE>
Sri Lanka Finance 259,333 Development Finance Corp. 2,049,710 1,420,889 0.4
Total Long-Term Investments in
Sri Lanka 2,049,710 1,420,889 0.4
</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> <S> <C> <S> <C> <C> <C>
Thailand Banking 429,920 Bangkok Bank Company Ltd. 'Foreign' $ 3,548,699 $ 6,253,382 1.8%
US$ 4,242,000 Bangkok Bank Public Company Ltd.,
3.25% due 3/03/2004 4,652,235 5,090,400 1.5
1,086,800 Siam City Bank Ltd. 1,183,461 1,277,957 0.4
US$ 2,500,000 Siam Commercial Bank Public Co.,
3.25% due 1/24/2004 3,218,480 3,187,500 0.9
759,100 Thai Farmers Bank, Ltd. 'Foreign' 4,691,337 8,701,146 2.5
------------ ------------ ------
17,294,212 24,510,385 7.1
Building & 212,700 Land & House Public Co. 'Foreign' 4,530,005 3,362,846 1.0
Construction
Communications 85,000 Advanced Info Services PLC 761,240 1,431,225 0.4
Financial Services 487,600 Finance One Co., Ltd. 'Foreign' 292,093 3,661,818 1.1
Mutual Funds 10,101,400 Ruam Pattana Fund II 'Foreign' 6,657,773 6,587,870 1.9
Oil-Related 330,500 PTT Exploration and Production
Public Co. 'Foreign' 2,616,233 4,937,905 1.4
Total Long-Term Investments in
Thailand 32,151,556 44,492,049 12.9
Vietnam Mutual Funds 141,300 ++Vietnam Frontier Fund 1,455,390 1,483,650 0.4
Total Long-Term Investments in
Vietnam 1,455,390 1,483,650 0.4
Total Long-Term Investments 255,223,214 308,769,281 89.3
Face Amount Short-Term Securities
<PAGE>
United Commercial US$ 10,851,000 Ford Motor Credit Co., 5.40% due
States Paper*** 6/03/1996 10,851,000 10,851,000 3.1
15,000,000 International Securitization Corp.,
5.30% due 6/26/1996 14,949,208 14,949,208 4.3
10,000,000 PHH Corp., 5.31% due 6/10/1996 9,989,675 9,989,675 2.9
Total Investments in Short-Term
Securities 35,789,883 35,789,883 10.3
Total Investments $291,013,097 344,559,164 99.6
============
Other Assets Less Liabilities 1,322,548 0.4
------------ ------
Net Assets $345,881,712 100.0%
============ ======
<FN>
*American Depositary Receipts (ADR).
**Global Depositary Receipts (GDR).
***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.
(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.
++Non-income producing security.
++++Restricted securities as to resale. The value of the Fund's
investment in restricted securities was approximately $8,221,000,
representing 2.4% of net assets.
<CAPTION>
Acquisition Value
Issue Date Cost (Note 1a)
<S> <S> <C> <C>
Benpres Holdings Corp. (GDR) 2/28/1996 $3,035,782 $2,550,900
Larsen & Toubro Ltd. (GDR) 3/01/1996 4,446,625 5,670,000
Total $7,482,407 $8,220,900
========== ==========
<PAGE>
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<CAPTION>
As of May 31, 1996
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$291,013,097)
(Note 1a) $344,559,164
Cash 7
Foreign cash (Note 1b) 1,525,697
Receivables:
Securities sold $ 3,841,107
Dividends 463,439
Interest 351,568 4,656,114
------------
Deferred organization expenses (Note 1f) 33,982
Prepaid expenses and other assets 4,040
------------
Total assets 350,779,004
------------
Liabilities: Payables:
Securities purchased 4,522,084
Investment adviser (Note 2) 311,870 4,833,954
------------
Accrued expenses and other liabilities 63,338
------------
Total liabilities 4,897,292
------------
Net Assets: Net assets $345,881,712
============
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 90,684
Accumulated realized capital losses on investments and foreign
currency transactions--net (Note 6) (19,201,400)
Unrealized appreciation on investments and foreign currency
transactions--net 53,536,727
------------
Net assets--Equivalent to $15.72 per share based on 22,007,055
shares of capital stock outstanding (market price--$15.50) $345,881,712
============
<PAGE>
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended May 31, 1996
<S> <S> <C> <C>
Investment Income Dividends (net of $188,859 foreign withholding tax) $ 1,244,807
(Notes 1d & 1e): Interest and discount earned (net of $257 foreign withholding tax) 972,581
------------
Total income 2,217,388
------------
Expenses: Investment advisory fees (Note 2) 1,685,023
Custodian fees 221,001
Transfer agent fees 62,038
Accounting services (Note 2) 35,956
Professional fees 32,600
Printing and shareholder reports 31,527
Directors' fees and expenses 14,907
Registration fees (Note 1f) 13,579
Amortization of organization expenses (Note 1f) 5,032
Pricing services 3,278
Other 7,802
------------
Total expenses 2,112,743
------------
Investment income--net 104,645
------------
Realized & Realized loss from:
Unrealized Gain Investments--net $ (4,962,484)
Investments & Foreign currency transactions--net (65,515) (5,027,999)
(Loss) on ------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions--Net Investments--net 56,237,749
(Notes 1b, 1c, Foreign currency transactions--net (14,772) 56,222,977
1e & 3): ------------ ------------
Net Increase in Net Assets Resulting from Operations $ 51,299,623
============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the
Six Months For the Year
Ended Ended
Increase (Decrease) in Net Assets: May 31, 1996 Nov. 30, 1995
<S> <S> <C> <C>
Operations: Investment income--net $ 104,645 $ 741,919
Realized loss on investments and foreign currency
transactions--net (5,027,999) (14,284,572)
Change in unrealized appreciation/depreciation
on investments and foreign currency transactions--net 56,222,977 (6,776,045)
------------ ------------
Net increase (decrease) in net assets resulting from operations 51,299,623 (20,318,698)
------------ ------------
Dividends & Investment income--net (248,019) (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 (248,019) (3,264,834)
------------ ------------
Capital Stock Offering and underwriting costs resulting from the issuance
Transactions of Common Stock -- (96)
(Notes 1f & 4): ------------ ------------
Net decrease in net assets resulting from capital stock
transactions -- (96)
------------ ------------
Net Assets: Total increase (decrease) in net assets 51,051,604 (23,583,628)
Beginning of period 294,830,108 318,413,736
------------ ------------
End of period* $345,881,712 $294,830,108
============ ============
<FN>
*Undistributed investment income--net $ 90,684 $ 234,058
============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
For the For the
The following per share data and ratios have been derived Six Months For the Year Period March 4,
from information provided in the financial statements. Ended Ended 1994++ to
May 31, November 30, November 30,
Increase (Decrease) in Net Asset Value: 1996 1995 1994
<S> <S> <C> <C> <C>
Per Share Net asset value, beginning of period $ 13.40 $ 14.47 $ 14.18
Operating --------- --------- ---------
Performance: Investment income--net .00++++ .03 .12
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net 2.33 (.96) .19
--------- --------- ---------
Total from investment operations 2.33 (.93) .31
--------- --------- ---------
Less dividends and distributions to Common Stock
shareholders:
Investment income--net (.01) (.12) --
Realized gain on investments--net -- (.02) --
--------- --------- ---------
Total dividends and distributions to Common Stock
shareholders (.01) (.14) --
--------- --------- ---------
Capital charge resulting from issuance of Common Stock -- .00++++ (.02)
--------- --------- ---------
Net asset value, end of period $ 15.72 $ 13.40 $ 14.47
========= ========= =========
Market price per share, end of period $ 15.50 $ 11.75 $ 12.75
========= ========= =========
Total Investment Based on market price per share 32.02%+++ (6.68%) (15.00%)+++
Return:** ========= ========= =========
Based on net asset value per share 17.40%+++ (6.23%) 2.05%+++
========= ========= =========
Ratios to Average Expenses 1.25%* 1.32% 1.32%*
Net Assets: ========= ========= =========
Investment income--net .06%* .24% 1.12%*
========= ========= =========
Supplemental Net assets, end of period (in thousands) $ 345,882 $ 294,830 $ 318,414
Data: ========= ========= =========
Portfolio turnover 22.48% 18.84% 9.10%
========= ========= =========
Average commission rate paid+++++ $ .0088 -- --
========= ========= =========
<PAGE>
<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.
+++++For fiscal years beginning on or after September 1, 1995, the
Fund is required to disclose its average commission rate per share
for purchases and sales of equity securities.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
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. These unaudited financial statements
reflect all adjustments which are, in the opinion of management,
necessary to a fair statement of the results for the interim period
presented. All such adjustments are of a normal recurring nature.
The Fund's Articles of Incorporation required 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. As a result, the Fund converted to an
open-end management investment company effective June 10, 1996. 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.
<PAGE>
(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.
* 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.
<PAGE>
* 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.
(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.
(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.
<PAGE>
(g) Dividends and distributions--Dividends and distributions paid by
the Fund are recorded on the ex-dividend dates.
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.
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 six months ended May 31, 1996, Merrill Lynch, Pierce, Fenner
& Smith Inc. ("MLPF&S") earned $9,800 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, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended May 31, 1996 were $68,301,911 and
$88,191,869, respectively.
Net realized and unrealized gains (losses) as of May 31, 1996 were
as follows:
Unrealized
Realized Gains
Losses (Losses)
Long-term investments $(4,962,484) $53,546,067
Foreign currency transactions (65,515) (9,340)
----------- -----------
Total $(5,027,999) $53,536,727
=========== ===========
As of May 31, 1996, net unrealized appreciation for Federal income
tax purposes aggregated $53,546,067, of which $62,511,943 related
to appreciated securities and $8,965,876 related to depreciated
securities. At May 31, 1996, the aggregate cost of investments for
Federal income tax purposes was $291,013,097.
<PAGE>
4. Capital Share Transactions:
At May 31, 1996, the Fund had one class of Common Stock, par value
$0.10 per share of which 200,000,000 shares were authorized. During
the six months ended May 31, 1996, shares issued and outstanding
remained constant at 22,007,055. At May 31, 1996, total paid-in-
capital amounted to $311,455,701.
5. Commitments:
At May 31, 1996, the Fund had entered into foreign exchange
contracts under which it had agreed to purchase and sell various
foreign currency with approximate values of $375,000 and $2,861,000.
6. Capital Loss Carryforward:
At November 30, 1995, the Fund had a net capital loss carryforward
of approximately $13,598,000, all of which expires in 2003. This
amount is available to offset like amouts of any future taxable
gains.
PORTFOLIO INFORMATION
As of May 31, 1996
Percent of
Ten Largest Equity Holdings Net Assets
P.T. Hanjaya Mandala Sampoerna 3.8%
Berjaya Sports TOTO BHD 3.8
United Overseas Bank Ltd. 3.1
Development Bank of Singapore Ltd. 3.0
Singapore Press Holdings Ltd. 2.9
Public Bank BHD 'Foreign' 2.9
Guangdong Investments, Ltd. 2.7
Thai Farmers Bank, Ltd. 'Foreign' 2.5
DBS Land Ltd. 2.5
Genting BHD 2.5
EQUITY PORTFOLIO CHANGES
For the Six Months Ended May 31, 1996
<PAGE>
Additions
Ayala Land, Inc. 'B'
City Developments Ltd.
DMCI Holdings Inc.
Dr. Reddy's Labs (GDR)
Guangshen Railway Co., Ltd. (ADR)
Gujarat Ambuja Cement (GDR)
Larsen & Toubro Ltd. (GDR)
P.T. Citra Marga Nusaphala
P.T. Lippo Life Insurance
Renong BHD (ICULS)
Renong BHD (Warrants)
Shanghai Petrochemical Co., Ltd. (ADR)
Southeast Asia Frontier Fund
Tata Engineering Locomotive Co. (GDR)
Deletions
C & P Homes, Inc.
Chengdu Telecommunications Cable Co., Ltd.
First Philippine Holdings Corp.
Gadek (Malaysia) BHD
Grasim Industries Ltd. (GDS)
I.P.C. Corp.
Keppel Corporation Ltd.
Leader Universal Cable BHD
MBF Capital BHD
Mancon BHD
P.T. Medco Energi Corp.
Pakistan Telecommunications (GDS)
Petron Corp.
Philippine Long Distance Telephone Co. (ADR)
Reliance Industries Ltd. (GDS)
Sembawang Maritime Ltd.
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
<PAGE>
Custodian
Brown Brothers Harriman & Co.
40 Wall Street
Boston, Massachusetts 02109
Transfer Agent
State Street Bank and Trust Company
Two Heritage Drive
Quincy, Massachusetts 02171
