MERRILL LYNCH
EMERGING TIGERS
FUND, INC.
FUND LOGO
Semi-Annual Report
May 31, 1997
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 invest-
ment 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
May 31, 1997
Map depicting the Fund's Asset Allocation As a Percentage* of Net
Assets as of May 31, 1997
<PAGE>
INDIA 3.6%
INDONESIA 12.3%
MALAYSIA 31.1%
THAILAND 3.4%
SINGAPORE 15.4%
CHINA 12.8%
INDOCHINA 0.8%
PHILIPPINES 13.8%
[FN]
*Total may not equal 100%.
DEAR SHAREHOLDER
For the three-month period ended May 31, 1997, Merrill Lynch
Emerging Tigers Fund, Inc.'s Class A, Class B, Class C and Class D
Shares had total returns of -9.19%, -9.47%, -9.42% and -9.26%,
respectively, compared to a -12.82% total return for the unmanaged
Southeast Asia Emerging Markets Index. (Fund results shown do not
reflect sales charges, and would be lower if sales charges were
included. Complete performance information, including average annual
and aggregate total returns, can be found on pages 4 and 5 of this
report to shareholders.)
Overshadowing the performances of the Asian tiger stock markets
during the May quarter were the ongoing problems in Thailand. The
Thai economy continues to weaken, but the government must keep
interest rates high to support the baht peg. These factors,
exacerbated by an oversupply of residential as well as commercial
real estate, have led to a collapse in the Thai real estate market
which, in turn, caused problems for the banks. As a result, the
stock market performed poorly. Investor concerns regarding
Thailand's prospects spilled over into other emerging tiger stock
markets. However, in our view, investors are incorrectly perceiving
that most emerging tiger economies are experiencing difficulties to
the same extent as Thailand.
Portfolio Matters
In Malaysia, the stock market corrected sharply because the
government announced measures aimed at cooling down overheating
property and stock markets. Bank lending has become slightly more
restrictive, and banks are expected to be more circumspect in making
loans for property or stock investment. Although we do expect that
the Malaysian economy will experience a significant cyclical
downturn over the next six months, we believe that any recession may
be a mild one. Therefore, in our view, investors have overreacted to
developments in Malaysia. Nevertheless, with restrictions on
liquidity, the Malaysian stock market is likely to remain weak in
the months ahead. Our strategy in this environment is to remain
underweighted in Malaysia relative to the unmanaged Southeast Asia
Emerging Markets Index, with holdings focused on defensive issues,
such as newspaper publishing companies, utilities and conglomerates.
<PAGE>
The Singapore stock market has been virtually flat as investors
await a convincing pick-up in business activity. Economic data have
been mixed, and provide no evidence of a clear growth trend for
industrial production and exports. However, the Singapore dollar has
been weakening relative to the US dollar, which should improve
export activity over the longer term. Although we continue to view
Singapore as having one of the best-managed economies in Southeast
Asia, once a recovery takes hold, we do not expect the country's
gross domestic product (GDP) to grow as strongly as other emerging
tiger economies. We are underweighted in Singapore, and continue to
favor investments in banks and premier property developers.
There was a sharp correction in the Philippines stock market as
investors became concerned about the prospects for the real estate
market, a rising current account deficit, high growth of bank
lending and a potential overheating of the economy. Furthermore,
investors also perceived that the Philippines would experience the
same economic woes as Thailand. In our view, the challenges facing
the Philippines economy are different and far less serious. The
Philippines is at an earlier stage of economic development than
Thailand. The percentage of GDP made up by bank loans is much lower
in the Philippines than in Thailand. While the Philippines is
experiencing double-digit export growth, Thailand's exports are
declining. The Philippines' GDP growth for the first quarter of 1997
was a stronger-than-expected 6.2%; at the same time, the rate of
inflation has declined. Currently, corporate earnings growth for
1997 is estimated at 25%.
From a macroeconomic standpoint, the positive factors in the
Philippines far outweigh near-term difficulties, in our view.
Therefore, we remain positive regarding the country's long-term
prospects, and are maintaining our overweighted position relative to
the unmanaged Southeast Asia Emerging Markets Index. Our holdings
continue to focus on consumer- and infrastructure-related holdings.
Political difficulties clouded the investment environment in
Indonesia for much of the May quarter. Although the riots preceding
the election at May month-end were disruptive, their occurrence was
not out of the ordinary. Furthermore, as expected, the ruling Golkar
party won an overwhelming victory in the elections. As a result, the
political environment settled down and the stock market rallied
convincingly following the elections. Economic fundamentals and
corporate flows of funds remain positive in Indonesia. Interest
rates may begin to trend lower as inflationary pressures seem to be
subdued. In addition, corporate earnings growth is forecast at 28%
in 1997, and stocks are relatively inexpensive based on historical
valuations. We are maintaining the Fund's overweighted position in
Indonesia, with investments focused on bank, finance and consumer
companies.
<PAGE>
One of the best-performing stock markets during the May quarter was
The People's Republic of China. The Fund's exposure to China is
through so-called "red chips;" that is, Chinese companies that are
majority owned by the Chinese government or a Chinese government
agency, and whose shares trade on the Hong Kong stock market. The
Chinese economy continues to recover, and as credit conditions are
loosened, investor liquidity is flowing into the stock market.
During the May quarter, we added two new red chips to the Fund's
portfolio: the conglomerates China Merchants Hai Hong Holdings and
Beijing Enterprises Holdings Limited. Beijing Enterprises is the
flagship company for the city of Beijing, and we purchased its
shares on an initial public offering.
The Fund has a neutral weighting in India. Although liquidity and
interest rates are likely to continue to improve, we expect earnings
growth for large, well-established corporations to be lackluster.
However, attractive investment opportunities are available in
individual companies, such as Videsh Sanchar Nigam Ltd., whose
shares we purchased during the May quarter. We expect this
international telephone company to experience strong growth as
business activity in India accelerates in the years ahead.
As we mentioned at the opening of this letter to shareholders,
Thailand continues to experience serious problems. The baht has been
under pressure over the past three months, and we do not believe
that the currency's peg to the US dollar will last much longer. We
remain underweighted in Thailand, and have hedged part of our
currency exposure there. Our Thai investments are extremely
defensive. For example, our largest holding in Thailand is PTT
Exploration and Production Public Co., an oil and gas company whose
revenues are denominated in US dollars and therefore insulated from
the negative effects of currency devaluation. In our view, it is
unlikely that the Thai economy will recover in 1997.
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,
<PAGE>
(Arthur Zeikel)
Arthur Zeikel
President
(Kara Tan Bhala)
Kara Tan Bhala
Vice President and Portfolio Manager
June 26, 1997
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.)
<PAGE>
* Class C Shares are subject to a distribution fee of 0.75% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 5.25% and
an account maintenance fee of 0.25% (but no distribution fee).
None of the past results shown should be considered a representation
of future performance. Figures shown in the "Aggregate and Average
Annual Total Return" tables as well as the total returns and
cumulative total returns in the "Performance Summary" tables assume
reinvestment of all dividends and capital gains distributions at net
asset value on the ex-dividend date. Investment return and principal
value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Dividends paid to each
class of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
<TABLE>
Recent
Performance
Results*
<CAPTION>
12 Month 3 Month
5/31/97 2/28/97 5/31/96++ % Change++ % Change
<S> <C> <C> <C> <C> <C>
Class A Shares++++ $15.11 $16.64 $15.72 -3.88% -9.19%
Class B Shares 15.01 16.58 15.53 -3.35 -9.47
Class C Shares 15.00 16.56 15.53 -3.41 -9.42
Class D Shares 15.09 16.63 15.53 -2.83 -9.26
Class A Shares++++--Total Return -3.59(1) -9.19
Class B Shares--Total Return -3.35 -9.47
Class C Shares--Total Return -3.41 -9.42
Class D Shares--Total Return -2.64(2) -9.26
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
++Investment results and net asset values shown for Class B, Class C
and Class D Shares are since their inception on 6/10/96.
++++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.
(1)Percent change includes reinvestment of $0.046 per share ordinary
income dividends.
(2)Percent change includes reinvestment of $0.030 per share ordinary
income dividends.
</TABLE>
<PAGE>
<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
1996 14.09 15.79 -- 0.057 +12.40
1/1/97--5/31/97 15.79 15.11 -- -- - 4.31
------
Total $0.205
Cumulative total return as of 5/31/97: +8.31%**
<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 do not include sales charge; results would be lower if
sales charge was included.
</TABLE>
<TABLE>
Average Annual
Total Return++
<CAPTION>
% Return Without % Return With
Sales Charge Sales Charge**
<S> <C> <C>
Class A Shares*
Year Ended 3/31/97 +1.01% -4.29%
Inception (3/04/94) through 3/31/97 +3.59 +1.79
<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.
</TABLE>
<PAGE>
Aggregate
Total Return
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Inception (6/10/96) through 3/31/97 -0.32% -4.31%
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (6/10/96) through 3/31/97 -0.45% -1.45%
[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 3/31/97 +0.20% -5.06%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
<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>
China Conglomerates 98,000 ++Beijing Enterprises Holdings
Limited $ 159,657 $ 571,709 0.3%
944,000 China Merchants Hai Hong Holdings 970,837 1,717,914 1.1
1,452,000 China Resources Enterprise Ltd. 1,769,640 5,097,367 3.2
4,254,000 Guangdong Investments, Ltd. (a) 2,954,541 5,627,710 3.5
716,000 Shanghai Industrial Holdings Ltd. 1,815,100 4,001,394 2.5
------------ ------------ ------
7,669,775 17,016,094 10.6
Infrastructure 789,000 New World Infrastructure Ltd. 2,044,350 2,459,260 1.5
US$ 290,000 New World Infrastructure Ltd., 5%
due 7/15/2001 356,220 358,150 0.2
------------ ------------ ------
2,400,570 2,817,410 1.7
Real Estate 1,284,400 China Overseas Land & Investment Ltd. 646,537 886,879 0.5
Investment
Total Long-Term Investments in China 10,716,882 20,720,383 12.8
India Consumer Products 185,800 IFB Industries Ltd. 220,350 140,324 0.1
Financial Services 45,181 Housing Development Finance
Corporation Ltd. 2,812,530 4,002,152 2.5
Telecommunications 81,000 Videsh Sanchar Nigam Ltd. (GDR)** 1,311,500 1,668,600 1.0
Total Long-Term Investments in
India 4,344,380 5,811,076 3.6
Indochina Mutual Funds 75,000 ++Southeast Asia Frontier Fund 397,500 150,000 0.1
141,300 ++Vietnam Frontier Fund 1,455,390 1,201,050 0.7
Total Long-Term Investments in
Indochina 1,852,890 1,351,050 0.8
Indonesia Automobiles 544,500 P.T. Astra International 1,725,285 2,083,032 1.3
Banking 3,959,214 P.T. Bank International Indonesia 1,839,448 3,257,272 2.0
351,932 P.T. Bank International Indonesia
(Warrants) (b) 45,227 130,292 0.1
------------ ------------ ------
1,884,675 3,387,564 2.1
Building & 3,087,000 P.T. Citra Marga Nusaphala 2,104,158 3,079,381 1.9
Construction
Food 2,166,000 P.T. Davomas Abadi 'Foreign' 1,889,664 2,628,425 1.6
Insurance 1,865,000 P.T. Lippo Life Insurance 2,009,704 2,339,881 1.5
Retail 3,303,000 P.T. Great River International 2,090,725 2,004,083 1.2
<PAGE>
Telecommunications 56,600 P.T. Telekomunikasi Indonesia
(Persero) (ADR)* 1,178,424 1,881,950 1.2
Tobacco 600,500 P.T. Hanjaya Mandala Sampoerna 1,136,474 2,426,949 1.5
Total Long-Term Investments in
Indonesia 14,019,109 19,831,265 12.3
Malaysia Automobiles 257,000 Edaran Otomobil Nasional BHD 2,496,003 2,240,387 1.4
Banking 545,600 Arab-Malaysian Merchant Bank BHD 2,567,396 3,453,165 2.1
750,600 Arab-Malaysian Merchant Bank BHD
(Convertible Preferred) 303,089 225,610 0.2
US$ 750,600 Arab-Malaysian Merchant Bank BHD, 5%
due 4/15/2002 303,089 379,752 0.2
2,340,666 Public Bank BHD 'Foreign' 3,805,917 3,670,975 2.3
------------ ------------ ------
6,979,491 7,729,502 4.8
Building & 1,766,000 I.J.M. Corp. BHD 3,074,469 4,042,075 2.5
Construction
Conglomerates 538,000 Malaysian Plantations BHD 1,299,479 728,127 0.5
2,316,500 Renong BHD 3,385,244 3,319,561 2.0
------------ ------------ ------
4,684,723 4,047,688 2.5
Consumer Products 340,500 Amway (Malaysia) Holdings BHD 2,073,026 2,141,509 1.3
Forest US$ 2,610,000 Aokam Perdana BHD, 3.50% due
Products 6/13/2004 (Convertible) 1,978,945 1,657,350 1.0
Industrial 482,475 O.Y.L. Industries BHD 2,684,830 3,341,718 2.1
Infrastructure 444,344 United Engineers (Malaysia) Ltd. 3,056,177 3,590,551 2.2
Insurance 576,000 MNI Holdings 3,132,208 2,590,876 1.6
Leisure 1,675,000 Berjaya Sports TOTO BHD 3,012,325 7,800,931 4.9
Publishing 807,000 Star Publications (Malaysia) BHD 2,992,748 3,212,324 2.0
Real Estate 194,000 IOI Properties BHD 637,390 447,894 0.3
561,000 Malaysian Resources Corp. BHD 2,261,208 1,607,834 1.0
------------ ------------ ------
2,898,598 2,055,728 1.3
<PAGE>
Telecommuni- 31,680 Telekom Malaysia BHD 214,755 234,555 0.1
cations US$ 1,850,000 Telekom Malaysia BHD, 4% due
10/03/2004 1,907,725 1,720,500 1.1
------------ ------------ ------
2,122,480 1,955,055 1.2
Utilities-- 813,000 Tenaga Nasional BHD 3,736,135 3,721,638 2.3
Electric
Total Long-Term Investments in
Malaysia 44,922,158 50,127,332 31.1
Philippines Banking 180,000 ++Equitable Banking Corp. 782,002 683,112 0.4
US$ 6,000,000 MBI Finance Ltd., 7.79% due
12/18/2001 (c) 4,269,865 4,290,000 2.7
------------ ------------ ------
5,051,867 4,973,112 3.1
Beverages 763,224 San Miguel Corp. 'B' 2,393,916 2,302,706 1.4
Conglomerates 219,900 ++Benpres Holdings Corp. (GDR)** (d) 2,159,018 1,550,757 1.0
Engineering & 4,317,600 ++DMCI Holdings Inc. 2,795,089 2,621,693 1.7
Construction
International 4,898,850 ++International Container Terminal
Trade Services, Inc. 3,128,793 2,649,283 1.6
Real Estate US$ 1,315,000 AC International Finance, 1.74% due
12/08/2000 (c) 1,235,844 1,127,612 0.7
1,478,125 Ayala Land, Inc. 'B' 1,256,677 1,178,012 0.7
------------ ------------ ------
2,492,521 2,305,624 1.4
Retail 7,486,346 SM Prime Holdings, Inc. 1,229,712 2,130,838 1.3
7,370,000 ++Uniwide Holdings, Inc. 1,365,817 1,566,300 1.0
------------ ------------ ------
2,595,529 3,697,138 2.3
Utilities-- 377,857 Manila Electric Co. (MERALCO) 'B' 2,022,512 2,122,307 1.3
Electric
Total Long-Term Investments in the
Philippines 22,639,245 22,222,620 13.8
</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 Airlines 234,000 Singapore Airlines Ltd. 'Foreign' $ 2,304,198 $ 1,997,761 1.2%
<PAGE>
Banking 319,000 Development Bank of Singapore Ltd. 3,263,344 3,995,871 2.5
429,400 United Overseas Bank Ltd. 3,440,067 4,417,201 2.7
------------ ------------ ------
6,703,411 8,413,072 5.2
Beverages 121,000 Fraser & Neave Ltd. 1,152,442 965,290 0.6
Electronics 415,000 Elec & Eltek International
Company Ltd. 2,050,708 2,448,500 1.5
Industrial 635,000 Clipsal Industries Ltd. 1,767,649 2,476,500 1.5
Publishing & 150,800 Singapore Press Holdings Ltd. 2,269,422 3,007,558 1.9
Broadcasting
Real Estate 308,000 City Developments Ltd. 2,470,546 2,866,620 1.8
782,000 DBS Land Ltd. 2,246,172 2,736,179 1.7
------------ ------------ ------
4,716,718 5,602,799 3.5
Total Long-Term Investments in
Singapore 20,964,548 24,911,480 15.4
Thailand Banking US$ 1,844,000 Bangkok Bank Public Company Ltd.,
3.25% due 3/03/2004 2,156,115 1,548,960 1.0
64,620 Bangkok Bank Public Company Ltd.
'Foreign' 637,125 570,940 0.4
------------ ------------ ------
2,793,240 2,119,900 1.4
Mutual Funds 2,245,000 Ruam Pattana Fund II 'Foreign' 1,569,255 703,253 0.4
Oil--Related 187,200 PTT Exploration and Production
Public Co. 'Foreign' 1,508,700 2,586,217 1.6
Total Long-Term Investments in
Thailand 5,871,195 5,409,370 3.4
Total Long-Term Investments 125,330,407 150,384,576 93.2
<CAPTION>
Face
Amount Short-Term Securities
United Commercial US$ 386,000 General Electric Capital Corp., 5.29%
States Paper*** due 8/11/1997 381,916 385,653 0.2
8,075,000 General Motors Acceptance Corp., 5.62%
due 6/02/1997 8,072,479 8,072,479 5.0
------------ ------------ ------
8,454,395 8,458,132 5.2
<PAGE>
US Government 3,000,000 Federal Home Loan Mortgage Corp.,
& Agency 5.37% due 6/09/1997 2,995,973 2,995,973 1.9
Obligations***
Total Investments in Short-Term
Securities 11,450,368 11,454,105 7.1
Total Investments $136,780,775 161,838,681 100.3
============
Unrealized Depreciation on Forward Foreign Exchange Contracts**** (731) 0.0
Liabilities in Excess of Other Assets (431,544) (0.3)
------------ ------
Net Assets $161,406,406 100.0%
============ ======
<FN>
(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 bond; the interest rate shown is the
effective yield at the time of purchase by the Fund.
(d)The security may be offered and sold to "qualified institutional
buyers" under Rule 144A of the Securities Act of 1933.
++Non-income producing security.
*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 purchase by the Fund.
****Forward foreign exchange contracts sold as of May 31, 1997 were
as follows:
Unrealized
Foreign Expiration Depreciation
Currency Sold Date (Note 1c)
THB 25,444,848 August 1997 $ (731)
Total Unrealized Depreciation on Forward
Foreign Exchange Contracts--Net
(US$ Commitment--$963,820) $ (731)
=========
<PAGE>
See Notes to Financial Statements.
</TABLE>
PORTFOLIO INFORMATION
As of May 31, 1997
Percent of
Ten Largest Equity Holdings Net Assets
Berjaya Sports TOTO BHD 4.9%
Guangdong Investments, Ltd. 3.5
China Resources Enterprise Ltd. 3.2
United Overseas Bank Ltd. 2.7
I.J.M. Corp. BHD 2.5
Housing Development Finance Corporation Ltd. 2.5
Shanghai Industrial Holdings Ltd. 2.5
Development Bank of Singapore Ltd. 2.5
Tenaga Nasional BHD 2.3
Public Bank BHD 'Foreign' 2.3
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of May 31, 1997
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$136,780,775) (Note 1a) $161,838,681
Cash 915
Receivables:
Securities sold $ 188,074
Interest 120,474
Dividends 88,160
Capital shares sold 47,822 444,530
------------
Deferred organization expenses (Note 1f) 23,251
Prepaid registration fees and other assets (Note 1f) 24,573
------------
Total assets 162,331,950
------------
<PAGE>
Liabilities: Unrealized depreciation on forward foreign exchange contracts
(Note 1c) 731
Payables:
Capital shares redeemed 631,417
Investment adviser (Note 2) 130,915
Distributor (Note 2) 2,437 764,769
------------
Accrued expenses and other liabilities 160,044
------------
Total liabilities 925,544
------------
Net Assets: Net assets $161,406,406
============
Net Assets Class A Common Stock, $0.10 par value, 100,000,000 shares
Consist of: authorized $ 1,043,711
Class B Common Stock, $0.10 par value, 150,000,000 shares
authorized 17,089
Class C Common Stock, $0.10 par value, 50,000,000 shares
authorized 2,472
Class D Common Stock, $0.10 par value, 100,000,000 shares
authorized 5,062
Paid-in capital in excess of par 136,740,265
Accumulated investment loss--net (747,596)
Accumulated realized capital losses on investments and foreign
currency transactions --net (Note 6) (712,139)
Unrealized appreciation on investments and foreign currency
transactions--net 25,057,542
------------
Net assets $161,406,406
============
Net Asset Class A--Based on net assets of $157,706,101 and 10,437,105
Value: shares outstanding $ 15.11
============
Class B--Based on net assets of $2,565,657 and 170,889
shares outstanding $ 15.01
============
Class C--Based on net assets of $370,799 and 24,720
shares outstanding $ 15.00
============
Class D--Based on net assets of $763,849 and 50,625
shares outstanding $ 15.09
============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended May 31, 1997
<S> <S> <C> <C>
Investment Income Dividends (net of $44,490 foreign withholding tax) $ 455,683
(Notes 1d & 1e): Interest and discount earned 314,495
------------
Total income 770,178
------------
Expenses: Investment advisory fees (Note 2) 924,716
Custodian fees 199,531
Transfer agent fees--Class A (Note 2) 130,407
Printing and shareholder reports 72,582
Registration fees (Note 1f) 32,867
Professional fees 30,581
Accounting services (Note 2) 29,970
Account maintenance and distribution fees--Class B (Note 2) 18,179
Directors' fees and expenses 17,495
Amortization of organization expenses (Note 1f) 4,942
Account maintenance and distribution fees--Class C (Note 2) 3,786
Transfer agent fees--Class B (Note 2) 3,475
Pricing fees 3,427
Transfer agent fees--Class C (Note 2) 836
Account maintenance fees--Class D (Note 2) 809
Transfer agent fees--Class D (Note 2) 477
Other 8,561
------------
Total expenses 1,482,641
------------
Investment loss--net (712,463)
------------
Realized & Realized gain (loss) from:
Unrealized Investments--net $ 484,902
Gain (Loss) on Foreign currency transactions--net (82,035) 402,867
Investments & ------------
Foreign Currency Change in unrealized appreciation on:
Transactions--Net Investments--net (4,413,808)
(Notes 1b, 1c, Foreign currency transactions--net (6,971) (4,420,779)
1e & 3): ------------ ------------
Net realized and unrealized loss on investments and foreign
currency transactions (4,017,912)
------------
Net Decrease in Net Assets Resulting from Operations $ (4,730,375)
============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the
Months Ended Year Ended
May 31, November 30,
Increase (Decrease) in Net Assets: 1997 1996
<S> <S> <C> <C>
Operations: Investment income (loss)--net $ (712,463) $ 625,383
Realized gain on investments and foreign currency transactions
--net 402,867 12,974,980
Change in unrealized appreciation/depreciation on investments
and foreign currency transactions--net (4,420,779) 32,164,571
------------ ------------
Net decrease in net assets resulting from operations (4,730,375) 45,764,934
------------ ------------
Dividends to Investment income--net:
Shareholders Class A (562,202) (248,019)
(Note 1g): Class D (938) --
------------ ------------
Net decrease in net assets resulting from dividends to
shareholders (563,140) (248,019)
------------ ------------
Capital Share Net decrease in net assets derived from capital share transactions (32,403,895) (141,243,207)
Transactions ------------ ------------
(Note 4):
Net Assets: Total decrease in net assets (37,697,410) (95,726,292)
Beginning of period 199,103,816 294,830,108
------------ ------------
End of period* $161,406,406 $199,103,816
============ ============
<FN>
*Undistributed (accumulated) investment income (loss)--net $ (747,596) $ 528,007
============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Class A
For the For the
The following per share data and ratios have Six Period
been derived from information provided in the Months March 4,
financial statements. Ended For the Year 1994++ to
May 31, Ended November 30, Nov. 30,
Increase (Decrease) in Net Asset Value: 1997++++ 1996 1995 1994
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 15.59 $ 13.40 $ 14.47 $ 14.18
Operating -------- -------- -------- --------
Performance: Investment income (loss)--net (.06) .05 .03 .12
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net (.37) 2.15 (.96) .19
-------- -------- -------- --------
Total from investment operations (.43) 2.20 (.93) .31
-------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.05) (.01) (.12) --
Realized gain on investments--net -- -- (.02) --
-------- -------- -------- --------
Total dividends and distributions (.05) (.01) (.14) --
-------- -------- -------- --------
Capital charge resulting from issuance of Common
Stock -- -- --+++++ (.02)
-------- -------- -------- --------
Net asset value, end of period $ 15.11 $ 15.59 $ 13.40 $ 14.47
======== ======== ======== ========
Total Investment Based on net asset value per share (2.79%)+++ 16.43% (6.23%) 2.05%+++
Return:** ======== ======== ======== ========
Ratios to Average Expenses 1.58%* 1.36% 1.32% 1.32%*
Net Assets: ======== ======== ======== ========
Investment income (loss)--net (.74%)* .23% .24% 1.12%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $157,706 $193,545 $294,830 $318,414
Data: ======== ======== ======== ========
Portfolio turnover 17.45% 44.09% 18.84% 9.10%
======== ======== ======== ========
Average commission rate paid++++++ $ .0114 $ .0086 -- --
======== ======== ======== ========
<CAPTION>
Class B Class C Class D
The following per share data and For the For the For the For the For the For the
ratios have been derived from Six Period Six Period Six Period
information provided in the Months June 10, Months June 10, Months June 10,
financial statements. Ended 1996++ to Ended 1996++ to Ended 1996++ to
May 31, Nov. 30, May 31, Nov. 30, May 31, Nov. 30,
<PAGE> Increase (Decrease) in Net Asset Value: 1997++++ 1996 1997++++ 1996 1997++++ 1996
<S> <S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 15.53 $ 15.53 $ 15.52 $ 15.53 $ 15.58 $ 15.53
Operating -------- -------- -------- -------- -------- --------
Performance: Investment loss--net (.14) (.05) (.15) (.05) (.07) (.01)
Realized and unrealized gain (loss)
on investments and foreign currency
transactions--net (.38) .05 (.37) .04 (.39) .06
-------- -------- -------- -------- -------- --------
Total from investment operations (.52) -- (.52) (.01) (.46) .05
-------- -------- -------- -------- -------- --------
Less dividends from investment
income--net -- -- -- -- (.03) --
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 15.01 $ 15.53 $ 15.00 $ 15.52 $ 15.09 $ 15.58
======== ======== ======== ======== ======== ========
Total Investment Based on net asset value per share (3.35%)+++ .00%+++ (3.35%)+++ (.06%)+++(2.95%)+++ .32%+++
Return:** ======== ======== ======== ======== ======== ========
Ratios to Average Expenses 2.61%* 2.67%* 2.64%* 2.68%* 1.84%* 1.88%*
Net Assets: ======== ======== ======== ======== ======== ========
Investment loss--net (1.82%)* (.99%)* (1.87%)* (.98%)* (1.01%)* (.34%)*
======== ======== ======== ======== ======== ========
Supplemental Net assets, end of period
Data: (in thousands) $ 2,565 $ 3,719 $ 371 $ 887 $ 764 $ 953
======== ======== ======== ======== ======== ========
Portfolio turnover 17.45% 44.09% 17.45% 44.09% 17.45% 44.09%
======== ======== ======== ======== ======== ========
Average commission rate paid++++++ $ .0114 $ .0086 $ .0114 $ .0086 $ .0114 $ .0086
======== ======== ======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
++++Based on average shares outstanding during the period.
++++++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. The
"Average Commission Rate Paid" includes commissions paid in
foreign currencies, which have been converted into US
dollars using the prevailing exchange rate on the date of
the transaction. Such conversions may significantly affect
the rate shown.
+++Aggregate total investment return.
+++++Amount is less than $0.01 per share.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Emerging Tigers Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 as a non-diversified, open-
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 offers four classes of shares under the
Merrill Lynch Select Pricing SM System. Shares of Class A and Class
D are sold with a front-end sales charge. Shares of Class B and
Class C may be subject to a contingent deferred sales charge. All
classes of shares have identical voting, dividend, liquidation and
other rights and the same terms and conditions, except that Class B,
Class C and Class D Shares bear certain expenses related to the
account maintenance of such shares, and Class B and Class C Shares
also bear certain expenses related to the distribution of such
shares. Each class has exclusive voting rights with respect to
matters relating to its account maintenance and distribution
expenditures. The following is a summary of significant accounting
policies followed by the Fund.
(a) Valuation of investments--Portfolio securities 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.
* 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.
<PAGE>
* 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. Dividends from foreign securities where the ex-
dividend date may have already passed are subsequently recorded when
the Fund has determined the ex-dividend date. Interest income
(including amortization of discount) is recognized on the accrual
basis. Realized gains and losses on security transactions are
determined on the identified cost basis.
(f) Deferred organization expenses and prepaid registration fees--
Deferred organization expenses are charged to expense on a straight-
line basis over a five-year period beginning with the commencement
of operations. Prepaid registration fees are charged to expense as
the related shares are issued.
(g) Dividends and distributions--Dividends and distributions paid by
the Fund are recorded on the ex-dividend dates.
<PAGE>
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. The Fund has also entered into a Distribution
Agreement and Distribution Plans with Merrill Lynch Funds
Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned
subsidiary of Merrill Lynch Group, Inc.
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 at the annual rate of 1.00% of
the average daily net assets of the Fund.
Pursuant to the distribution plans (the "Distribution Plans")
adopted by the Fund in accordance with Rule 12b-1 under the
Investment Company Act of 1940, the Fund pays the Distributor
ongoing account maintenance and distribution fees. The fees are
accrued daily and paid monthly at annual rates based upon the
average daily net assets of the shares as follows:
Account Distribution
Maintenance Fee Fee
Class B 0.25% 0.75%
Class C 0.25% 0.75%
Class D 0.25% --
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co.,
also provides account maintenance and distribution services to the
Fund. The ongoing account maintenance fee compensates the
Distributor and MLPF&S for providing account maintenance services to
Class B, Class C and Class D shareholders. The ongoing distribution
fee compensates the Distributor and MLPF&S for providing shareholder
and distribution-related services to Class B and Class C
shareholders.
For the six months ended May 31, 1997, MLFD earned underwriting
discounts and direct commissions and MLPF&S earned dealer
concessions on sales of the Fund's Class A and Class D Shares as
follows:
MLFD MLPF&S
Class A $2,592 $12,769
Class D $ 471 $ 3,373
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
For the six months ended May 31, 1997, MLPF&S received contingent
deferred sales charges of $32,114 and $190 relating to transactions
in Class B and Class C Shares, respectively. Furthermore, MLPF&S
received contingent deferred sales charges of $11,907 relating to
transactions subject to front end sales charge waivers in Class A
Shares.
In addition, MLPF&S received $9,599 in commissions on the execution
of portfolio security transactions for the Fund for the six months
ended May 31, 1997.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a wholly-
owned subsidiary of ML & Co., is the Fund's transfer agent.
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, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended May 31, 1997 were $31,578,866 and
$77,584,473, respectively.
Net realized and unrealized gains (losses) as of May 31, 1997 were
as follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
Long-term investments $ 484,954 $25,054,170
Short-term investments (52) 3,736
Forward foreign exchange
contracts -- (731)
Foreign currency transactions (82,035) 367
----------- -----------
Total $ 402,867 $25,057,542
=========== ===========
As of May 31, 1997, net unrealized appreciation for Federal income
tax purposes aggregated $25,057,906, of which $32,410,098 related to
appreciated securities and $7,352,192 related to depreciated
securities. At May 31, 1997, the aggregate cost of investments for
Federal income tax purposes was $136,780,775.
<PAGE>
4. Capital Share Transactions:
Net decrease in net assets derived from capital share transactions
was $32,403,895 and $141,243,207 for the six months ended May 31,
1997 and the year ended November 30, 1996, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Six Months Dollar
Ended May 31, 1997 Shares Amount
Shares sold 178,383 $ 2,834,401
Shares issued to shareholders
in reinvestment of dividends 23,243 357,947
------------- -------------
Total issued 201,626 3,192,348
Shares redeemed (2,175,335) (33,950,359)
------------- -------------
Net decrease (1,973,709) $ (30,758,011)
============= =============
Class A Shares for the Year Dollar
Ended November 30, 1996 Shares Amount
Shares sold 376,008 $ 5,726,244
Shares redeemed (9,972,249) (152,370,175)
------------- -------------
Net decrease (9,596,241) $(146,643,931)
============= =============
Class B Shares for the Six Months Dollar
Ended May 31, 1997 Shares Amount
Shares sold 118,042 $ 1,887,038
Automatic conversion of shares (1,182) (19,410)
Shares redeemed (185,492) (2,877,004)
------------- -------------
Net decrease (68,632) $ (1,009,376)
============= =============
Class B Shares for the
Period June 10, 1996++ to Dollar
November 30, 1996 Shares Amount
Shares sold 294,088 $ 4,450,564
Automatic conversion of shares (1,966) (29,132)
Shares redeemed (52,601) (796,992)
------------- -------------
Net increase 239,521 $ 3,624,440
============= =============
<PAGE>
[FN]
++Commencement of Operations.
Class C Shares for the
Six Months Ended Dollar
May 31, 1997 Shares Amount
Shares sold 53,943 $ 877,792
Shares redeemed (86,392) (1,366,701)
------------- -------------
Net decrease (32,449) $ (488,909)
============= =============
Class C Shares for the
Period June 10, 1996++ to Dollar
November 30, 1996 Shares Amount
Shares sold 61,472 $ 937,156
Shares redeemed (4,303) (64,508)
------------- -------------
Net increase 57,169 $ 872,648
============= =============
[FN]
++Commencement of Operations.
Class D Shares for the
Six Months Ended Dollar
May 31, 1997 Shares Amount
Shares sold 35,441 $ 558,652
Shares issued to shareholders
in reinvestment of dividends 48 740
Automatic conversion of shares 1,179 19,410
------------- -------------
Total issued 36,668 578,802
Shares redeemed (47,183) (726,401)
------------- -------------
Net decrease (10,515) $ (147,599)
============= =============
Class D Shares for the
Period June 10, 1996++ to Dollar
November 30, 1996 Shares Amount
<PAGE>
Shares sold 119,709 $ 1,774,038
Automatic conversion of shares 1,964 29,132
------------- -------------
Total issued 121,673 1,803,170
Shares redeemed (60,533) (899,534)
------------- -------------
Net increase 61,140 $ 903,636
============= =============
[FN]
++Commencement of Operations.
5. Commitments:
At May 31, 1997, the Fund had entered into foreign exchange
contracts, in addition to the contracts listed on the Schedule of
Investments, under which it agreed to sell various foreign currency
with an approximate value of $188,137.
6. Capital Loss Carryforward:
At November 30, 1996, the Fund had a net capital loss carryforward
of approximately $1,115,000, all of which expires in 2003. This
amount will be available to offset like amounts of any future
taxable gains.
EQUITY PORTFOLIO CHANGES
For the Quarter Ended May 31, 1997
Additions
Arab-Malaysian Merchant Bank BHD
(Convertible Preferred)
Beijing Enterprises Holdings Limited
China Merchants Hai Hong Holdings
Equitable Banking Corp.
P.T. Astra International
P.T. Great River International
*Pacific Ports Co.
Telekom Malaysia BHD
Videsh Sanchar Nigam Ltd. (GDR)
*Zhejiang Expressway Co.
Deletions
<PAGE>
Guangdong Tannery Ltd.
Larsen & Toubro Ltd. (GDR)
*Pacific Ports Co.
Thai Farmers Bank, Ltd. 'Foreign'
(Warrants)
Tingyi (Cayman Islands) Holding Co.
Universal Robina Corp.
*Zhejiang Expressway Co.
[FN]
*Added and deleted in the same quarter.
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 Water Street
Boston, MA 02109
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
