MERRILL LYNCH
EMERGING TIGERS
FUND, INC.
FUND LOGO
Semi-Annual Report
May 31, 1998
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.
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.
Map Depicting the Fund's Asset Allocation As A Percentage
of Net Assets as of May 31, 1998
India 15.6%
Indonesia 2.4%
Malaysia 17.5%
Thailand 8.5%
Singapore 19.5%
China 13.3%
Indochina 1.0%
Philippines 9.1%
[FN]
*Total may not equal 100%.
Merrill Lynch Emerging Tigers Fund, Inc., May 31, 1998
DEAR SHAREHOLDER
Investment Review
The quarter ended May 31, 1998 proved to be a difficult period for
the emerging tiger stock markets. As expected, these markets gave
back all the gains of the previous quarter, falling on average 28%
in US dollar terms. Japan became a new and larger threat to smaller
Asian economies. The lack of economic reform in Tokyo has made
earlier dire predictions of a YEN 150/US dollar exchange rate appear
conservative. The ramifications to the rest of Asia of a weak yen,
combined with the withdrawal of Japanese credit, have sent markets
from Thailand to Hong Kong reeling.
As the threat of a Chinese renminbi devaluation increases, so does
the risk premium on all the regional currencies, in particular, the
Hong Kong dollar. During the May quarter, we increased our position
in Thailand, while decreasing our exposure in China. We also
increased the Fund's position in Malaysia, although we are still
heavily underweighted in this market.
The stock markets in The People's Republic of China were hit equally
hard as concerns over China's ability to sustain high economic
growth have brought the issue of a renminbi devaluation back into
the light. Recent remarks made by the head of China's central bank,
Dai Xianglong, highlighting the difficulty Chinese exports are
experiencing from the depreciating yen, may indicate a rethinking of
China's commitment to a firm renminbi. The one area where growth
should continue unabated is domestic infrastructure. The high
profile and job-creating aspect of infrastructure investment should
make this the most resilient sector for the near future.
Accordingly, the majority of our Fund positions in China will
continue to focus on this sector.
After strong gross domestic product (GDP) growth of 5.6% in the
first quarter of 1998, growth in Singapore has slowed sharply.
Although the Ministry of Trade and Industry has retained its
2.5%--4% GDP growth forecast for 1998, it seems highly unlikely that
this could be attained. The domestic economy is collapsing and non-oil
domestic exports showed a decline of 1.6% year-over-year in April.
The Singapore market has declined over 30% since the beginning of
the second quarter of 1998. Competitiveness has been a key driver
for corporate profitability and stock market performance in the
past. The Monetary Authority of Singapore seems to subscribe to this
view, and as a result, the Singapore dollar has depreciated with the
weakening yen and softening export growth. We have also seen the
beginning of consolidation in the financial system through large-
scale mergers and acquisitions. The Fund continues to be
underweighted in the Singapore market. We have unwound our currency
hedge on the Singapore dollar, benefitting from the weakness in the
currency.
The Malaysian stock market declined by over 30% since the beginning
of the May quarter as a result of poor policy response and the
problems in Japan. Monetary policy remains disappointing, with the
Malaysian central bank continuing to increase assistance to
financial institutions. The health of the banking system continues
to deteriorate, with non-performing loans in the system approaching
double-digit levels and expected to rise further. The government
announced the creation of the Asset Management Corporation (AMC)
that will be privately funded and acquire non-performing loans from
commercial banks. The AMC's objective would be to earn a profit from
reselling loans by either rehabilitating the borrower's businesses
or salvaging value from the underlying assets. The Fund continued to
be underweighted in the Malaysian market, with holdings in highly
defensive companies with strong balance sheets.
The Thai economy continues to decline sharply from tight liquidity
conditions. Unemployment is increasing rapidly and is expected to
breach 6% this year. Exports continue to be weak, but we are seeing
a trade surplus from collapsing imports. Recapitalization began with
the two premier Thai banks (Bangkok Bank Public Company Ltd. and
Thai Farmers Bank Public Company Limited) successfully raising about
US$2 billion. The second phase of the recapitalization process has
also begun with the second tier banks issuing large cash calls.
In Thailand, the announcement of new massive equity issues and
concerns over the Japanese economy have led to the market declining
by over 35% since the beginning of the May quarter. In addition, the
Thai baht has also weakened by about 10%. We selectively increased
our exposure to the Thai market by adding the two premier banks and
the Electricity Generating Public Co. Ltd., an independent power
producer. We moved out of our convertible bonds where yield spreads
over Treasury issues had narrowed considerably since we bought them,
as there was little upside left in the bonds.
The resignation of President Suharto in Indonesia and replacement by
his long-time friend Habibie has brought temporary calm to the
Indonesian markets. Habibie has done an admirable job in trying to
distance himself from Suharto. He has embraced the International
Monetary Fund (IMF) conditions and displaced Suharto's children from
positions in the government. Unfortunately, the honeymoon may be
short-lived, as the economy is likely to enter into hyperinflation.
The banking and corporate systems are essentially bankrupt. Until
monopolies are dismantled and banks recapitalized, there is little
hope for economic stability. The Fund is currently underweighted in
this market because we believe that it has probably the most
distressed economy in the region. Our exposure to the country is
through one company, Gulf Indonesia Resources Ltd., an oil and gas
company traded on the New York Stock Exchange, and therefore a US
dollar earner.
The Philippines has proven one of the most resilient markets in the
past few months, although its currency has not been immune from the
contagion. The country's relative lack of external debt is in part
because of its adherence to an earlier IMF assistance program. Its
banking system remains sound and should be able to survive the
regional crisis without a large-scale recapitalization. We increased
our Philippine holdings slightly over the May quarter and maintained
an overweighted position.
Investment Outlook and Strategy
As stated in our last report to shareholders, we expect the Asian
markets to continue to experience very deep retrenchments in the
coming year. Those countries that will allow asset prices to clear
(such as Singapore) and those taking the necessary reforms (as seen
in Thailand) should be among the first to recover. The recent
weakness in the Japanese yen has added yet another unpredictable
element of concern to the region's markets that may prolong and
deepen the current crisis. Adding to the economic unrest is the
rising political risk as both India and Pakistan engage in competing
claims to the brotherhood of nuclear powers.
In general, we prefer to remain in the larger, more liquid markets
that have cash levels and are in a position to benefit over the long
term from the present economic clearing. Our purchases were focused
on defensive export markets and banks that were selling well below
their adjusted book values. It is possible that the markets will
have a technical rebound in the next few weeks. At current share
prices, value can be found, in our opinion, in various stocks around
the region.
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
(Kara Tan Bhala)
Kara Tan Bhala
Senior Vice President and
Portfolio Manager
June 26, 1998
Merrill Lynch Emerging Tigers Fund, Inc., May 31, 1998
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).
None of the past results shown should be considered a representation
of future performance. Figures shown in the "Average Annual Total
Return" 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 Since Inception
Total Return Total Return Total Return
<S> <C> <C> <C>
ML Emerging Tigers Fund, Inc. Class A Shares -53.80% -17.02% -49.96%++
ML Emerging Tigers Fund, Inc. Class B Shares -54.23 -17.23 -55.76
ML Emerging Tigers Fund, Inc. Class C Shares -54.27 -17.25 -55.83
ML Emerging Tigers Fund, Inc. Class D Shares -53.88 -16.95 -55.10
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included. Total
investment returns are based on changes in net asset values for the
periods shown, and assume reinvestment of all dividends and capital
gains distributions at net asset value on the ex-dividend date. The
Fund's inception dates are: Class A Shares, 3/4/94; and Class B,
Class C and Class D Shares, 6/10/96.
++Performance results for Class A Shares prior to June 10, 1996 are
for the period when the Fund was closed-end.
</TABLE>
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/98 -46.61% -49.41%
Inception (3/4/94) through 3/31/98 -11.96 -13.12
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/98 -47.16% -49.27%
Inception (6/10/96) through 3/31/98 -29.89 -31.06
[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*
Year Ended 3/31/98 -47.15% -47.68%
Inception (6/10/96) through 3/31/98 -29.94 -29.94
[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*
Year Ended 3/31/98 -46.75% -49.54%
Inception (6/10/96) through 3/31/98 -29.38 -31.46
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
Merrill Lynch Emerging Tigers Fund, Inc., May 31, 1998
<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 Appliances 1,453,000 Guangdong Kelon Electrical Holdings
Co., Ltd. (Class H) $ 1,884,097 $ 1,387,649 2.5%
Conglomerates 496,000 Shanghai Industrial Holdings Ltd. 1,257,387 1,392,269 2.5
Infrastructure 263,000 ++New World Infrastructure Ltd. 711,034 465,006 0.8
US$ 1,611,000 New World Infrastructure Ltd.,
5% due 7/15/2001 2,023,074 1,433,790 2.5
------------ ------------ ------
2,734,108 1,898,796 3.3
Mining 22,880 ++Yanzhou Coal Mining Co. Ltd. (ADR)* 360,360 247,390 0.5
Telecommunications 838,500 ++China Telecom (Hong Kong) Limited 1,313,410 1,498,771 2.7
Utilities-- 2,876,000 Beijing Datang Power Generation
Electric & Gas Company Limited (Class H) 1,637,223 1,011,434 1.8
Total Long-Term Investments in China 9,186,585 7,436,309 13.3
India Banking & 77,600 State Bank of India (GDR)** 1,187,470 1,086,400 1.9
Financial 45,181 Housing Development Finance
Corporation Ltd. 2,812,530 3,431,579 6.1
------------ ------------ ------
4,000,000 4,517,979 8.0
Oil Services 60,900 Hindustan Petroleum Corporation Ltd. 659,510 538,561 1.0
Pharmaceuticals 38,400 Ranbaxy Laboratories Limited 704,268 542,458 1.0
Telecommunications 168,000 ++Mahanagar Telephone Nigam
Ltd. (GDR)** 2,008,944 2,205,000 3.9
25,000 ++Videsh Sanchar Nigam Ltd. (GDR)** 387,500 296,875 0.5
56,000 ++Videsh Sanchar Nigam Ltd. (GDR)**(b) 924,000 665,000 1.2
------------ ------------ ------
3,320,444 3,166,875 5.6
Total Long-Term Investments
in India 8,684,222 8,765,873 15.6
Indochina Mutual Funds 133,800 ++Vietnam Frontier Fund 1,378,140 535,200 1.0
Total Long-Term Investments
in Indochina 1,378,140 535,200 1.0
Indonesia Oil--Related 109,200 ++Gulf Indonesia Resources Ltd. (ADR)* 2,303,596 1,358,175 2.4
Total Long-Term Investments
in Indonesia 2,303,596 1,358,175 2.4
Malaysia Banking & Financial 301,000 Public Bank BHD 'Foreign' 177,871 117,731 0.2
Building & 43,000 I.J.M. Corp. BHD 83,169 19,061 0.0
Construction
Consumer Products 655,500 Amway (Malaysia) Holdings BHD 2,577,576 1,350,313 2.4
Industrial 813,575 O.Y.L. Industries BHD 3,647,513 2,110,840 3.8
Insurance 1,278,000 MNI Holdings BHD 3,982,108 1,999,479 3.6
Leisure 297,000 Berjaya Sports Toto BHD 630,655 623,429 1.1
173,000 Genting BHD 613,496 451,108 0.8
85,000 Resorts World BHD 205,223 131,877 0.2
635,000 Sime Darby BHD 809,941 506,675 0.9
------------ ------------ ------
2,259,315 1,713,089 3.0
Publishing & 1,333,000 Star Publications (Malaysia) BHD 3,528,662 1,717,085 3.1
Broadcasting
Telecommunications 169,000 Telekom Malaysia BHD 422,936 387,797 0.7
Utilities-- 331,000 ++YTL Power International BHD 302,732 249,437 0.4
Electric & Gas
Wire & Cable US$ 230,000 Leader Universal Holdings BHD,
2.75% due 5/05/2004 167,750 164,450 0.3
Total Long-Term Investments
in Malaysia 17,149,632 9,829,282 17.5
Philippines Conglomerates 6,157,200 ++Benpres Holdings Corp. 2,433,121 1,141,103 2.0
Infrastructure 146,000 ++International Container Terminal
Services, Inc. 21,362 21,045 0.0
Real Estate 4,405,250 Ayala Land Corporation 2,264,614 1,502,434 2.7
Restaurants 1,365,000 Jollibee Foods Corporation
(Warrants)(a) 700,869 597,297 1.1
Retail 7,486,346 SM Prime Holdings, Inc. 1,229,712 1,329,621 2.4
Utilities-- 174,956 Manila Electric Co. (MERALCO) 'B' 983,374 517,888 0.9
Electric & Gas
Total Long-Term Investments
in the Philippines 7,633,052 5,109,388 9.1
Singapore Airlines 269,000 Singapore Airlines Ltd. 'Foreign' 2,565,787 1,495,338 2.7
Banking & Financial 97,500 Development Bank of Singapore Ltd. 848,944 588,613 1.0
62,400 United Overseas Bank Ltd. 'Foreign' 344,062 244,304 0.5
------------ ------------ ------
1,193,006 832,917 1.5
Electronics 27,000 ++Creative Technology Ltd. 652,190 533,250 0.9
280,500 Elec & Eltek International
Company Ltd. 1,306,174 1,262,250 2.2
1,988,000 Natsteel Electronics Ltd. 3,820,503 3,493,557 6.2
------------ ------------ ------
5,778,867 5,289,057 9.3
Industrial 863,000 Clipsal Industries Ltd. 2,200,509 1,104,640 2.0
Publishing & 216,664 Singapore Press Holdings
Broadcasting Ltd. 'Foreign' 2,539,866 1,774,236 3.2
Real Estate 119,000 City Developments Ltd. 708,622 430,335 0.8
Total Long-Term Investments
in Singapore 14,986,657 10,926,523 19.5
Thailand Banking & 211,800 Bangkok Bank Public Company Ltd.
Financial 'Foreign' 512,742 433,156 0.8
US$ 168,000 Bangkok Bank Public Company Ltd.,
1.50% due 8/07/2006 151,405 149,520 0.3
92,000 Thai Farmers Bank Public Company
Limited 'Foreign' 196,197 140,258 0.2
------------ ------------ ------
860,344 722,934 1.3
Industrial US$ 738,000 Banpu Public Company Ltd., 2.75%
due 4/10/2003 455,744 505,530 0.9
Oil--Related 175,600 PTT Exploration and Production
Public Company Ltd. 'Foreign' 1,551,345 1,523,550 2.7
Publishing & 225,400 BEC World Public Company Ltd.
Broadcasting 'Foreign' 1,016,396 905,176 1.6
Telecommunications 137,600 Advanced Info Service Public Co.
Ltd. 'Foreign' 703,037 750,421 1.3
Utilities-- 226,000 Electricity Generating Public
Electric & Gas Co. Ltd. 'Foreign' 399,030 364,155 0.7
Total Long-Term Investments
in Thailand 4,985,896 4,771,766 8.5
Total Long-Term Investments 66,307,780 48,732,516 86.9
</TABLE>
Merrill Lynch Emerging Tigers Fund, Inc., May 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Face Value Percent of
COUNTRY Amount Short-Term Securities Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
United States Commercial $ 2,500,000 Atlantic Asset Securitization
Paper*** Corporation, 5.54% due 6/11/1998 $ 2,495,383 $ 2,495,383 4.4%
2,228,000 General Motors Acceptance Corp.,
5.69% due 6/01/1998 2,227,296 2,227,296 4.0
2,000,000 Riverwoods Funding Corp.,
5.55% due 6/16/1998 1,994,758 1,994,758 3.6
Total Investments in
Short-Term Securities 6,717,437 6,717,437 12.0
Total Investments $ 73,025,217 55,449,953 98.9
============
Other Assets Less Liabilities 643,372 1.1
------------ ------
Net Assets $ 56,093,325 100.0%
============ ======
<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.
See Notes to Financial Statements.
++Non-income producing security.
(a)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 and are non-income producing.
(b)The security may be offered and sold to "qualified institutional
buyers" under Rule 144A of the Securities Act of 1933.
</TABLE>
PORTFOLIO INFORMATION
As of May 31, 1998
Percent of
Ten Largest Equity Holdings Net Assets
Natsteel Electronics Ltd. 6.2%
Housing Development Finance Corporation Ltd. 6.1
Mahanagar Telephone Nigam Ltd. (GDR) 3.9
O.Y.L. Industries BHD 3.8
MNI Holdings BHD 3.6
Singapore Press Holdings Ltd. 'Foreign' 3.2
Star Publications (Malaysia) BHD 3.1
Ayala Land Corporation 2.7
China Telecom (Hong Kong) Limited 2.7
Singapore Airlines Ltd. 'Foreign' 2.7
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of May 31, 1998
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$73,025,217) (Note 1a) $ 55,449,953
Cash 719
Receivables:
Securities sold $ 927,170
Forward foreign exchange contracts (Note 1c) 447,962
Dividends 122,538
Capital shares sold 73,309
Interest 35,243 1,606,222
------------
Deferred organization expenses (Note 1f) 12,520
Prepaid registration fees and other assets (Note 1f) 56,130
------------
Total assets 57,125,544
------------
Liabilities: Payables:
Securities purchased 367,694
Capital shares redeemed 357,360
Investment adviser (Note 2) 48,176
Distributor (Note 2) 8,181 781,411
------------
Accrued expenses and other liabilities 250,808
------------
Total liabilities 1,032,219
------------
Net Assets: Net assets $ 56,093,325
============
Net Assets Class A Common Stock, $0.10 par value,
Consist of: 100,000,000 shares authorized $ 644,612
Class B Common Stock, $0.10 par value,
150,000,000 shares authorized 94,524
Class C Common Stock, $0.10 par value,
50,000,000 shares authorized 41,287
Class D Common Stock, $0.10 par value,
100,000,000 shares authorized 26,171
Paid-in capital in excess of par 105,944,799
Accumulated distributions in excess of investment
income--net (Note 1g) (544,226)
Accumulated realized capital losses on investments
and foreign currency transactions--net (Note 6) (32,536,684)
Unrealized depreciation on investments and foreign
currency transactions--net (17,577,158)
------------
Net assets $ 56,093,325
============
Net Asset Class A--Based on net assets of $44,945,755 and 6,446,123
Value: shares outstanding $ 6.97
============
Class B--Based on net assets of $6,494,209 and 945,242
shares outstanding $ 6.87
============
Class C--Based on net assets of $2,833,137 and 412,873
shares outstanding $ 6.86
============
Class D--Based on net assets of $1,820,224 and 261,713
shares outstanding $ 6.96
============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Emerging Tigers Fund, Inc., May 31, 1998
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended May 31, 1998
<S> <S> <C> <C>
Investment Income Interest and discount earned $ 505,378
(Notes 1d & 1e): Dividends 396,723
------------
Total income 902,101
------------
Expenses: Investment advisory fees (Note 2) $ 332,985
Transfer agent fees--Class A (Note 2) 81,339
Custodian fees 59,819
Printing and shareholder reports 58,798
Accounting services (Note 2) 54,052
Professional fees 38,844
Registration fees (Note 1f) 33,436
Account maintenance and distribution fees--Class B (Note 2) 32,019
Directors' fees and expenses 19,210
Account maintenance and distribution fees--Class C (Note 2) 15,262
Transfer agent fees--Class B (Note 2) 10,566
Amortization of organization expenses (Note 1f) 5,381
Transfer agent fees--Class C (Note 2) 4,903
Pricing fees 2,783
Transfer agent fees--Class D (Note 2) 2,603
Account maintenance fees--Class D (Note 2) 2,192
Other 5,055
------------
Total expenses 759,247
------------
Investment income--net 142,854
------------
Realized & Realized gain (loss) from:
Unrealized Investments--net (15,075,914)
Gain (Loss) on Foreign currency transactions--net 947,091 (14,128,823)
Investments & ------------
Foreign Currency Change in unrealized depreciation on:
Transactions--Net Investments--net 4,776,002
(Notes 1b, 1c, Foreign currency transactions--net 31,220 4,807,222
1e & 3): ------------ ------------
Net realized and unrealized loss on
investments and foreign currency transactions (9,321,601)
------------
Net Decrease in Net Assets Resulting from Operations $ (9,178,747)
============
See Notes to Financial Statements.
</TABLE>
<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: 1998 1997
<S> <S> <C> <C>
Operations: Investment income (loss)--net $ 142,854 $ (452,390)
Realized loss on investments and foreign currency
transactions--net (14,128,823) (17,401,788)
Change in unrealized appreciation/depreciation on
investments and foreign currency transactions--net 4,807,222 (51,862,701)
------------ ------------
Net decrease in net assets resulting from operations (9,178,747) (69,716,879)
------------ ------------
Dividends to Investment income--net:
Shareholders Class A (90,623) (75,491)
(Note 1g): Class D -- (126)
In excess of investment income--net:
Class A -- (486,711)
Class D -- (813)
------------ ------------
Net decrease in net assets resulting from dividends
to shareholders (90,623) (563,141)
------------ ------------
Capital Share Net decrease in net assets derived from capital share
Transactions transactions (7,210,867) (56,250,234)
(Note 4): ------------ ------------
Net Assets: Total decrease in net assets (16,480,237) (126,530,254)
Beginning of period 72,573,562 199,103,816
------------ ------------
End of period $ 56,093,325 $ 72,573,562
============ ============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Emerging Tigers Fund, Inc., May 31, 1998
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Class A
For the For the
The following per share data and ratios Six Period
have been derived from information Months March 4,
provided in the financial statements. Ended For the Year 1994++ to
May 31, Ended November 30, Nov. 30,
Increase (Decrease) in Net Asset Value: 1998++++ 1997++++ 1996 1995 1994
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 8.12 $ 15.59 $ 13.40 $ 14.47 $ 14.18
Operating -------- -------- -------- -------- --------
Performance: Investment income (loss)--net .02 (.04) .05 .03 .12
Realized and unrealized gain
(loss) on investments and
foreign currency
transactions--net (1.16) (7.38) 2.15 (.96) .19
-------- -------- -------- -------- --------
Total from investment operations (1.14) (7.42) 2.20 (.93) .31
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.01) (.01) (.01) (.12) --
In excess of investment income--net -- (.04) -- -- --
Realized gain on investments--net -- -- -- (.02) --
-------- -------- -------- -------- --------
Total dividends and distributions (.01) (.05) (.01) (.14) --
-------- -------- -------- -------- --------
Capital charge resulting from
issuance of Common Stock -- -- -- --+++++ (.02)
-------- -------- -------- -------- --------
Net asset value, end of period $ 6.97 $ 8.12 $ 15.59 $ 13.40 $ 14.47
======== ======== ======== ======== ========
Total Investment Based on net asset value per share (14.03%)+++ (47.76%) 16.43% (6.23%) 2.05%+++
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses 2.13%* 1.69% 1.36% 1.32% 1.32%*
Net Assets: ======== ======== ======== ======== ========
Investment income (loss)--net .58%* (.27%) .23% .24% 1.12%*
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 44,946 $ 63,760 $193,545 $294,830 $318,414
Data: ======== ======== ======== ======== ========
Portfolio turnover 40.75% 35.63% 44.09% 18.84% 9.10%
======== ======== ======== ======== ========
Average commission rate paid++++++ $ .0046 $ .0085 $ .0086 -- --
======== ======== ======== ======== ========
<CAPTION>
Class B Class C
The following per share data
and ratios have been derived For the For the For the For the
from information provided Six For the Period Six For the Period
in the financial statements. Months Year June 10, Months Year June 10,
Ended Ended 1996++ to Ended Ended 1996++ to
Increase (Decrease) in May 31, Nov. 30, Nov. 30, May 31, Nov. 30, Nov. 30,
Net Asset Value: 1998++++ 1997++++ 1996 1998++++ 1997++++ 1996
<S> <S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value,
Operating beginning of period $ 8.03 $ 15.53 $ 15.53 $ 8.02 $ 15.52 $ 15.53
Performance: -------- -------- -------- -------- -------- --------
Investment loss--net (.02) (.15) (.05) (.02) (.11) (.05)
Realized and unrealized gain
(loss) on investments and foreign
currency transactions--net (1.14) (7.35) .05 (1.14) (7.39) .04
-------- -------- -------- -------- -------- --------
Total from investment operations (1.16) (7.50) -- (1.16) (7.50) (.01)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 6.87 $ 8.03 $ 15.53 $ 6.86 $ 8.02 $ 15.52
======== ======== ======== ======== ======== ========
Total Investment Based on net asset value
Return:** per share (14.45%)+++ (48.29%) .00%+++ (14.46%)+++ (48.32%) (.06%)+++
======== ======== ======== ======== ======== ========
Ratios to Average Expenses 3.17%* 2.75% 2.67%* 3.16%* 2.83% 2.68%*
Net Assets: ======== ======== ======== ======== ======== ========
Investment loss--net (.43%)* (1.20%) (.99%)* (.44%)* (1.01%) (.98%)*
======== ======== ======== ======== ======== ========
Supplemental Net assets, end of period
Data: (in thousands) $ 6,494 $ 4,887 $ 3,719 $ 2,833 $ 2,870 $ 887
======== ======== ======== ======== ======== ========
Portfolio turnover 40.75% 35.63% 44.09% 40.75% 35.63% 44.09%
======== ======== ======== ======== ======== ========
Average commission
rate paid++++++ $ .0046 $ .0085 $ .0086 $ .0046 $ .0085 $ .0086
======== ======== ======== ======== ======== ========
<CAPTION>
Class D
For the For the
Six For the Period
Months Year June 10,
The following per share data and ratios have been derived Ended Ended 1996++ to
from information provided in the financial statements. May 31, Nov. 30, Nov. 30,
Increase (Decrease) in Net Asset Value: 1998++++ 1997++++ 1996
<S> <S> <C> <C> <C>
Per Share Net asset value, beginning of period $ 8.10 $ 15.58 $ 15.53
Operating -------- -------- --------
Performance: Investment income (loss)--net .01 (.04) (.01)
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net (1.15) (7.41) .06
-------- -------- --------
Total from investment operations (1.14) (7.45) .05
-------- -------- --------
Less dividends:
Investment income--net -- --+++++ --
In excess of investment income--net -- (.03) --
-------- -------- --------
Total dividends -- (.03) --
-------- -------- --------
Net asset value, end of period $ 6.96 $ 8.10 $ 15.58
======== ======== ========
Total Investment Based on net asset value per share (14.07%)+++ (47.91%) .32%+++
Return:** ======== ======== ========
Ratios to Average Expenses 2.39%* 2.01% 1.88%*
Net Assets: ======== ======== ========
Investment income (loss)--net .38%* (.30%) (.34%)*
======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 1,820 $ 1,057 $ 953
Data: ======== ======== ========
Portfolio turnover 40.75% 35.63% 44.09%
======== ======== ========
Average commission rate paid++++++ $ .0046 $ .0085 $ .0086
======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of operations.
++++Based on average shares outstanding.
++++++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 rates shown.
+++Aggregate total investment return.
+++++Amount is less than $0.01 per share.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Emerging Tigers Fund, Inc., May 31, 1998
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.
(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.
* Financial futures contracts--The Fund may purchase or sell
financial 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. Distributions in
excess of net investment income are due primarily to differing tax
treatments for foreign currency transactions.
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 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
Maintenance Distribution
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, 1998, 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 $1,259 $18,429
Class D $1,368 $19,182
Merrill Lynch Emerging Tigers Fund, Inc., May 31, 1998
NOTES TO FINANCIAL STATEMENTS (concluded)
For the six months ended May 31, 1998, MLPF&S received contingent
deferred sales charges of $8,451 and $3,685 relating to transactions
in Class B and Class C Shares, respectively.
In addition, MLPF&S received $30,418 in commissions on the execution
of portfolio security transactions for the Fund for the six months
ended May 31, 1998.
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 securi-
ties, for the six months ended May 31, 1998 were $28,461,209 and
$21,284,435, respectively.
Net realized gains (losses) for the six months ended May 31, 1998
and net unrealized losses as of May 31, 1998 were as follows:
Realized Unrealized
Gains (Losses) Losses
Long-term investments $(15,075,927) $(17,575,264)
Short-term investments 13 --
Forward foreign exchange
contracts 1,142,363 --
Foreign currency transactions (195,272) (1,894)
------------ ------------
Total $(14,128,823) $(17,577,158)
============ ============
As of May 31, 1998, net unrealized depreciation for Federal income
tax purposes aggregated $17,575,264, of which $1,332,428 related to
appreciated securities and $18,907,692 related to depreciated
securities. At May 31, 1998, the aggregate cost of investments for
Federal income tax purposes was $73,025,217.
4. Capital Share Transactions:
Net decrease in net assets derived from capital share transactions
was $7,210,867 and $56,250,234 for the six months ended May 31, 1998
and the year ended November 30, 1997, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Six Months Dollar
Ended May 31, 1998 Shares Amount
Shares sold 1,397,130 $ 10,943,586
Shares issued to shareholders in
reinvestment of dividends 6,992 55,589
------------ -------------
Total issued 1,404,122 10,999,175
Shares redeemed (2,808,528) (22,172,044)
------------ -------------
Net decrease (1,404,406) $ (11,172,869)
============ =============
Class A Shares for the Year Dollar
Ended November 30, 1997 Shares Amount
Shares sold 690,781 $ 7,889,564
Shares issued to shareholders in
reinvestment of dividends 23,243 357,947
------------ -------------
Total issued 714,024 8,247,511
Shares redeemed (5,274,309) (71,433,932)
------------ -------------
Net decrease (4,560,285) $ (63,186,421)
============ =============
Class B Shares for the Six Months Dollar
Ended May 31, 1998 Shares Amount
Shares sold 1,008,612 $ 7,893,092
Shares redeemed (671,106) (5,311,270)
Automatic conversion of shares (762) (6,083)
------------ -------------
Net increase 336,744 $ 2,575,739
============ =============
Class B Shares for the Year Dollar
Ended November 30, 1997 Shares Amount
Shares sold 720,863 $ 7,993,947
Shares redeemed (347,593) (4,704,429)
Automatic conversion of shares (4,293) (46,751)
------------ -------------
Net increase 368,977 $ 3,242,767
============ =============
Class C Shares for the Six Months Dollar
Ended May 31, 1998 Shares Amount
Shares sold 340,320 $ 2,560,197
Shares redeemed (285,191) (2,222,887)
------------ -------------
Net increase 55,129 $ 337,310
============ =============
Class C Shares for the Year Dollar
Ended November 30, 1997 Shares Amount
Shares sold 458,542 $ 5,177,237
Shares redeemed (157,967) (2,128,264)
------------ -------------
Net increase 300,575 $ 3,048,973
============ =============
Class D Shares for the Six Months Dollar
Ended May 31, 1998 Shares Amount
Shares sold 230,108 $ 1,800,816
Automatic conversion of shares 754 6,083
------------ -------------
Total issued 230,862 1,806,899
Shares redeemed (99,692) (757,946)
------------ -------------
Net increase 131,170 $ 1,048,953
============ =============
Class D Shares for the Year Dollar
Ended November 30, 1997 Shares Amount
Shares sold 204,766 $ 2,315,219
Automatic conversion of shares 4,265 46,751
Shares issued to shareholders in
reinvestment of dividends 48 740
------------ -------------
Total issued 209,079 2,362,710
Shares redeemed (139,676) (1,718,263)
------------ -------------
Net increase 69,403 $ 644,447
============ =============
5. Commitments:
At May 31, 1998, the Fund had entered into foreign exchange
contracts under which it agreed to purchase various foreign
currencies with an approximate value of $364,000.
6. Capital Loss Carryforward:
At November 30, 1997, the Fund had a net capital loss carryforward
of approximately $18,408,000, of which $1,115,000 expires in 2003
and $17,293,000 expires in 2005. This amount will be available to
offset like amounts of any future taxable gains.
EQUITY PORTFOLIO CHANGES
For the Quarter Ended May 31, 1998
Additions
Bangkok Bank Public Company Ltd. 'Foreign'
*Development Bank of Singapore (Class A)
Electricity Generating Public Co. Ltd. 'Foreign'
Hindustan Petroleum Corporation Ltd.
International Container Terminal Services, Inc.
Natsteel Electronics Ltd.
Ranbaxy Laboratories Limited
Telekom Malaysia BHD
Thai Farmers Bank Public Company Limited 'Foreign'
YTL Power International BHD
Yanzhou Coal Mining Co. Ltd. (ADR)
Deletions
*Development Bank of Singapore (Class A)
Guangdong Investments, Ltd.
P.T. Davomas Abadi 'Foreign'
Venture Manufacturing (Singapore) Ltd.
YTL Corporation BHD
[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
Norman R. Harvey, Senior Vice President
Kara W.Y. Tan Bhala, Senior Vice President and
Portfolio Manager
Donald C. Burke, Vice President
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
