Interim Results

Siam Investment Fund 16 December 1999 President's Report Siam Investment Fund, Sept. 30, 1999 unaudited financial report Most shareholders will be aware that, in the period under review, the Fund invested in 10,000,000 convertible preferred shares with free warrants issued by TISCO Finance Pcl. There was a powerful rally in financial shares soon after the placement and the share/warrant package for which the fund paid 10 Baht traded to a peak of 90 Baht in June. The Fund sold 10% of its investment into the rally. The balance of the position is being held with a medium term view, though the Board of the Fund has authorised the gradual sale of the warrants as market sentiment improves. The TISCO Finance investment, in conjunction with a rally in the overall market, pushed the Fund's net asset value as high as $16 per share before correcting back to $9.71 at the close of the half year. Turnover in the Fund's shares increased dramatically as the rally brought in a broad range of new shareholders. As you can see from the accompanying financial statements, the Fund retains relatively large positions in a few companies which we believe will perform well as Thailand emerges from the financial crisis in which it has been embroiled for the past two years. TISCO Finance, for example, is fully recapitalised and is actively growing its retail mortgage and consumer loan portfolio. Corporate loans have been deemphasised and restructuring of all troubled loans has either been completed or is well underway. Brokerage revenues remain strong and the investment banking and fee revenues are also at record levels. With regard to the other companies in which the fund has significant exposure, Nation Multimedia has seen a steady increase in its revenues from advertising, and continues to improve its financial position quarter to quarter. It remains, in our view, the most interesting play on the media business in Thailand and we expect a substantial change in value once its restructuring efforts are seen to be successful by the broader market. SE-ED also continues to shine quietly as its expansion strategy during the downturn begins to bear fruit. Singer remains the only established nationwide network for the delivery of consumer goods in Thailand and its business is improving each quarter. Progress at APR, the potash mine project in Udon Thani, continues apace. All approvals are currently in place to commence mining, with the exception of the environmental impact statement, which is expected to be accepted in early 2000. The structured financing package is being assembled, so far without incident, so it is still anticipated that production will commence at the end of the year 2002. PATO Chemical remains solid and paid a 1.5 Baht dividend this year. On the unlisted side of the portfolio, Acron has doubled the capacity of its existing acrylic sheet production facility and its revenues should reach 520 million Baht in 1999, up from 370 million Baht in 1998. Northbridge has recommenced expansion of its community in Phnom Penh and has announced the signing of an MOU with the NASDAQ listed Asia Properties Ltd. whereby API would acquire Northbridge for cash and shares. It has been a busy half year, and there are clear signals that the Thailand economy has begun to move up and off the bottom. The rate of recovery is expected to be slower than some of the other regional economies as Thailand has still not fully recapitalised its financial system and the real economy is hampered by a lack of true restructuring in the corporate sector. However the direction is clear and the SIF portfolio is well positioned to increase in value as the economic recovery takes hold. Gene Davis Bangkok SLAM INVESTMENT FUND (FORMERLY 'THE SOUTHEAST ASIA FRONTIER FUND') CONSOLIDATED INCOME AND EXPENDITURE ACCOUNT FOR THE SIX-MONTH PERIOD ENDED 30 SEPTEMBER 1999 1998 Note US$ US$ Income Gain on foreign exchange forward contracts - 311,144 Interest income 36,317 159,219 Dividend income 69,698 71,872 Total income 106,015 542,235 Expenses Advisory, fees 11 (250,685) (250,685) Administrative expenses (85,904) (90,395) Total expenses (336,589) (341,080) Net(loss) profit for the period (230,574) 201,155 (Loss) Earnings per share (0.09) 0.08 The accounting policies and the notes on pages 1 to 14 form an integral part of these financial statements. SIAM INVESTMENT FUND (FORMERLY 'THE SOUTHEAST ASIA FRONTIER FUND') CONSOLIDATED BALANCE SHEET AS AT 30 SEPTEMBER 1999 1998 Notes US$ US$ Investments 4 22,048,197 10,821,673 Pre-operating expenses-net 5 73,285 122,185 Current assets Cash and cash equivalents 2,132,077 5,832,168 Accounts receivable 21,419 503,744 Other assets 3,092 20,703 Total current assets 2,156,588 6,356,615 Current liabilities Amount due to brokers - (28,111) Accrued expenses (8,500) (8,000) Total current liabilities (8,500) (36,111) Net current assets 2,148,088 6,320,504 Net assets 24,269,570 17,264,362 Net assets financed by: Share capital 6 12,500 12,500 Share premium 7 24,987,500 24,987,500 Capital reserves 8 (561,312) (9,355,731) Revenue reserves 9 (169,118) 1,620,093 Total shareholders' funds 24,269,570 17,264,362 Net asset value per share 10 9.71 6.91 For and on behalf of Siam Investment Fund: ............................. Director The accounting policies and the notes on pages 1 to 14 form an integral part of these financial statements. SIAM INVESTMENT FUND (FORMERLY 'THE SOUTHEAST ASIA FRONTIER FUND') CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS FOR THE SIX-MONTH PERIOD ENDED 30 SEPTEMBER Share Share Capital Revenue capital Premium reserve reserve Total Balance at 1 April 1998 12,500 24,987,500 (5,309,019) 1,418,938 21,109,919 Profit for the period - - - 201,155 201,155 Net unrealised loss on valuation of investments - - (3,944,449) - (3,944,449) Net unrealised gain (loss) on foreign exchange relating to carrying value of investments - - 31,709 - 31,709 Net realised loss on sale of investments - - (133,972) - (133,972) Balance at 30 Sept.1998 12,500 24,987,500 (9,355,731) 1,620,093 17,264,362 Balance at 1 April 1999 12,500 24,987,500 (8,349,083) 61,456 16,712,373 Loss for the period - - - (230,574) (230,574) Net unrealised gain on valuation - - 7,713,008 - 7,713,008 of investments Net loss on value of investment-other than temporary decline in value - - (500,000) - (500,000) Net realised gain on foreign exchange - - 27,839 - 27,839 Net unrealised gain (loss) on foreign exchange relating to carrying value of investments - - (1,403,713) - (1,403,713) Net realised gain on sale of investments - - 1,950,637 - 1,950,637 Balance at 30 Sept.1999 12,500 24,987,500 (561,312) (169,118) 24,269,570 The accounting policies and the notes on pages 1 to 14 form an integral part of these financial statements. SIAM INVESTMENT FUND (FORMERLY 'THE SOUTHEAST ASIA FRONTIER FUND') CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX-MONTH PERIOD ENDED 30 SEPTEMBER 1999 1998 US$ US$ Cash flows from operating activities: (Loss) profit for the period (230,574) 201,155 Amortisation of pre-operating expenses 24,518 24,518 Net realised gain on sale of investments 1,950,637 (133,972) Net realised gain on foreign exchange 27,839 - 1,772,420 91,701 Changes in assets and liabilities: Other assets 62,423 42,905 Accounts receivable (19,703) (422,582) Amount due to brokers - (356,882) Total cash (used by) provided from operating activities 42,720 (736,559) Cash flows from investing activities: Investment in listed and unlisted investments (3,642,043) (3,953,054) Total cash used in investing activities (3,642,043) (3,953,054) (Decrease) increase in cash and cash equivalents for period (1,826,903) (4,597,912) Cash and cash equivalents at beginning of the period 3,958,980 10,430,080 Cash and cash equivalents at end of the period 2,132,077 5,832,168 The accounting policies and the notes on pages 1 to 14 form an integral part of these financial statements. SIAM INVESTMENT FUND (FORMERLY 'THE SOUTHEAST ASIA FRONTIER FUND') NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 SEPTEMBER 1999 AND 1998 1 Business activities Siam Investment Fund ('the Company') is a closed-end investment company and was incorporated as an exempted company with limited liability in the Cayman Islands on 22 February 1996. The Company obtained a listing for its shares on the London Stock Exchange on 25 April 1996. The Company's investment objective is to achieve long-term capital appreciation through investments primarily in unlisted companies, joint ventures and projects. Previously, such investments were in the Southeast Asian region; however, following a change in mandate, approved at a shareholders meeting held on 6 March 1998, the Company may now invest up to 100% of its capital in companies in Thailand, either listed or unlisted. On 3 February 1997, the Company set up a wholly owned subsidiary operating in Thailand, SEAFF (Thailand) Limited, to serve as an investment vehicle for the Company's investment in Energy and Power Technology Company (refer Note 4). 2 Duration The Company may be dissolved on 31 March 2006. However, with the approval from the holders of at least two-thirds of the shares of the Company, approved at or prior to the annual general meeting in 2006, the term of the Company may be extended for an additional two years to 31 March 2008. 3 Significant accounting policies a) Principles of consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, SEAFF (Thailand) Limited collectively referred to as the Group. All significant intercompany accounts and transactions have been eliminated. b) Cash equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. c) Investments The company's income, which will be derived from investments and interest on deposits (excluding capital gains) after paying fees and other expenses of the company, may be distributed to Shareholders in the form of dividend. It is the intention of the Directors that dividends will not be paid out of unrealised gains. Realised gains (net of any realised losses or unrealised provisions for losses) may be distributed, if approved by the Board, provided that the company generally expects that it will reinvest the original cost of each realised investment. As a result of this dividend policy, realised and unrealised gains and losses on investments, including those relating to foreign exchange translation of the original cost of investment into US Dollars at the balance sheet date, are taken directly to the capital reserves account. Any distributions to shareholders are recorded on the ex-dividend date. All securities for which market quotations are readily available are valued at the closing market price. Securities for which market quotations are not readily available are valued by the Directors at cost to the Fund or at a valuation based on third-party transactions in the same or in similar investments or at fair market value taking into consideration the cost of the investments, the quoted prices of investments of comparable publicly traded companies, market conditions, the underlying collateral, financial data and projections of the issuer of any relevant securities, and such other factors as the Directors may deem relevant. Investment transactions are accounted for on the trade date. Realised gains and losses from securities transactions are reported on an identified cost basis. Dividend and interest income is accounted for on an accrual basis. Discounts on securities purchased are amortised over the life of the respective securities. d) Pre-operating expenses Expenses relating to the organisation of the Company have been deferred and are being amortised on a straight line basis over five years. e) Foreign currency transactions Transactions denominated in foreign currencies are translated into United States dollars at the rates of exchange ruling on the transaction dates. All assets and liabilities expressed in foreign currencies at the balance sheet date are translated into United States dollars at the rate of exchange ruling at that date. Realised and unrealised gains and losses on translation of foreign currencies relating to the carrying value of investments are taken directly to the capital reserves account. All other realised and unrealised gains and losses on translation of foreign currencies are included in the income and expenditure account. f) Interest income Interest income is recognised under the accrual basis. For the period ended 30 September 1999, interest income arising from cash and cash equivalents was US$ 36,317 (1998: US$ 159,219) and no interest income arising from investments. 4 Investments 1999 1998 US$ US$ Listed securities, at market value 15,965,133 3,871,248 Unlisted securities, at Directors valuation 6,083,064 6,950,425 Investments - net 22,048,197 10,821,673 Cost of investments 22,012,842 18,645,492 Certain investments are held in the name of related parties. An analysis of the Company's investments is as follows: 1999 Market Cost Value Industry % holding US$ US$ 4.1 Listed investments Pato Chemical Industry Public Co., Ltd (a) Chemicals 8.10% 2,134,161 1,073,072 Nation Multimedia Group Public Co.Ltd. (b) Publishing 12.50% 4,600,715 3,760,952 SE-Education Public Co. Ltd. Publishing 19.50% 2,091,339 1,404,374 TISCO Finance Public Co. Ltd. Finance 1.56% 2,466,916 5,265,163 Singer (Thailand) Electrical Public Co.Ltd. products 1.31% 262,927 491,355 Asia Pacific Resources Ltd. Mining 0.60% 438,361 422,839 TISCO Finance Public Co. Ltd. Warrants 1.56% - 3,034,915 Miscellaneous Investments - Nil - - 569,047 512,463 12,563,466 15,965,133 1998 Market % of net assets Cost Value of the Fund % holding US$ US$ 1999 1998 4.1 Listed investments Pato Chemical Industry Public Co., Ltd (a) 8.10% 2,134,161 1,101,105 4.42 6.38 Nation Multimedia Group Public Co.Ltd. (b) 11.34% 3,110,811 1,597,932 15.50 9.26 SE-Education Public Co. Ltd. 21.07% 2,077,060 816,005 5.79 4.73 TISCO Finance Public Co. Ltd. - - - 21.69 - Singer (Thailand) Public Co.Ltd. 1.31% 262,927 178,058 2.02 1.03 Asia Pacific Resources Ltd. - - - 1.74 - TISCO Finance Public Co. Ltd. - - - 12.51 - Miscellaneous Investments - 467,181 178,148 2.12 1.03 8,052,140 3,871,248 65.79 22.43 4.2 Unlisted investments 4.2.1 Equity investments 1999 Directors' Cost valuation Industry % holding US$ US$ Northbridge Communities Intl. Ltd. (c) School 6.25% 2,462,569 1,526,252 Acron Plastic Industry Co.Ltd. (a) Chemical 35.9% 1,506,183 756,174 Energy and Power Technologies Ltd. (d) Energy 44.0% 369,259 250,000 Manager Media Group Public Co.Ltd Publishing 9.7% 59,815 59,596 Samakkhisan (Dokya) Co.Ltd. Publishing - 51,550 51,587 4,449,376 2,643,609 1998 Directors' % of net assets Cost valuation of the Fund % holding US$ US$ 1999 1998 Northbridge Communities Ltd. (c) 6.25% 2,462,569 1,576,293 6.29 9.13 Acron Plastic Industry Co.Ltd. (a) 35.9% 1,506,183 775,853 3.12 4.49 Energy and Power Technologies Ltd. (d) 44.0% 500,000 250,000 1.03 1.45 Manager Media Group Public Co.Ltd - - - 0.25 - Samakkhisan (Dokya) Co.Ltd. - 51,550 53,279 0.21 0.31 4,520,302 2,655,425 10.90 15.38 4.2.2 Debt investments 1999 Directors' Cost valuation Industry % holding US$ US$ Convertible term loan to Monterey Pizza Co.Ltd.(e) Foods - 2,000,000 500,000 Convertible term debenture to Asia Pacific Resources Potash Ltd. (f) Fertiliser - 2,000,000 2,000,000 Variable Rate Note Bank Thai Plc Banking 1,000,000 939,455 Units in the Emerging Markets Liquid Investment Portfolio; at market value - - - - 5,000,000 3,439,455 Investments - net 22,012,842 22,048,197 1998 Directors' % of net assets Cost valuation of the Fund % holding US$ US$ 1999 1998 Convertible term loan to Monterey Pizza Co.Ltd.(e) - 2,000,000 1,000,000 2.06 5.79 Convertible term debenture to Asia Pacific Resources Ltd. (f) - 2,000,000 2,000,000 8.24 11.58 Variable Rate Note Bank Thai Plc - - 3.87 - Units in the Emerging Markets Liquid Investment Portfolio; at market value - 2,073,050 1,295,000 - 7.50 6,073,050 4,295,000 14.17 24.87 Investments - net 18,645,492 10,821,673 90.86 62.68 (a) Pato Chemical Industry, Public Co.. Ltd. and Acron Plastic Industry Co.. Ltd. The Company's Investment in 1,133,995 shares of Pato has been split into two Investments for disclosure purposes on the basis that the Company has the right to convert 799,105 Pato shares into 2,370,000 Acron shares at any time up to and including the date of an initial public offering, of the Acron shares. Pato is currently the majority shareholder of Acron. As it is the intention of the Company to exercise the right of conversion and the associated Pato shares are being held in escrow prior to being converted into Acron shares, the appropriate portion of the cost of the Pato shares that is convertible into Acron shares has been disclosed as an investment in Acron. (b) Nation Multimedia Group Public Co., Ltd. At a meeting of the Board of Directors of the Company held on 4 March 1999, the Board approved Subscription to 1 for 1 rights issue offered to all shareholders in the Nation Multimedia Group ('Nation'). As a result, the company currently holds 14,001,000 Nation foreign registered shares or 12.5% of the capital of Nation. Nation is currently in negotiations with a foreign direct investment firm to acquire substantially all of the authorized but not issued shares of Nation. After taking up the rights issue, the Company had approximately 25% of its assets invested in Nation. This is acceptable under the Company's articles as the limit per investment (being 20% of the Company's net assets) is not restricted by rights issues of an existing investment. (c) Northbridge Communities Ltd. Northbridge has spent the last four years establishing two world class international Schools, acquiring a land bank of over 400 acres in three sites and securing regulatory, and other approvals to develop these sites. The founding of the schools, the acquisition of the land banks and the permits to operate were the first steps in the Northbridge concept of developing school-based international communities. The Investment climate for real estate related projects continues to be difficult. The company continues to operate using a minimum of personnel to continue to operate the schools and manage the existing real estate, while not moving, forward on any other planned developments. Northbridge should be well placed when the situation changes and foreign investment begins to return to Asian region. Since Northbridge provides the infrastructure support primarily to foreign investors in the form of schools, housing, clubs, etc. it must wait until that investment returns. Northbridge has signed a Memorandum of Understanding with an American company listed on the NASDAQ ('ASPZ')in June 1999 agreeing to further consider the merit of swapping shares in Northbridge for shares in the American company. Northbridge's management have met with potential investors, brokers and market makers in the United States. Discussions and due diligence on both sides continue. Thailand The International School Eastern Seaboard (ISE) opened the 1998/99 academic year with 306 students. The enrollment has grown to 340 students in late January 1999. Demand is steady as the number of expatriate employees in the immediate area has leveled off. The school anticipates a modest surplus of funds at the end of this fiscal year, for the first time. The staffing plan and budget expenditures are being held at the present levels for the 1999/00 school year. There continues to be a demand for housing at the Burapha Golf Club. One international company is leasing 10 homes built by Northbridge at Burapha. Northbridge is involved in discussions with mortgage brokers in the United States with an aim to purchase some of the other existing units at Burapha and refinance the school debt. Two lenders have expressed interest in this project. Northbridge does not see a demand for additional housing units at this time. Cambodia The Northbridge International School Cambodia (NISC) opened in September 1997 with 14 students. It completed its first school year in June 1998 with 34 students. The second school year opened in August 1998 with 42 students and the school currently enrolls 66 (January 1999) students. In its year and one-half of operation, NISC has established itself as an excellent international school and has seen a marked increase in interest from expatriate and Khmer families living in Phnom Penh. With the formation of the government in November 1998, many of the NGO projects previously put on hold have been restarted. New families are slowly beginning to come back to Phnom Penn. The school continues to run a small operational deficit, but looks likely to be able to pay its own expenses in the second half of 1999. Northbridge Communities Ltd. has entered into negotiations with the Department of State of the United States of America to sell a portion of Northbridge's assets in Phnom Penh to provide a more secure embassy site, and these discussions are ongoing in both Phnom Penh and in Washington. Northbridge has signed a Memorandum of Understanding with an American company listed on the NASDAQ ('ASPZ') in June 1999 agreeing to further consider the merit of swapping shares in Northbridge for shares in the American company. Northbridge's management have met with potential investors, brokers and market makers in the United States. Discussions and due diligence on both sides continue. Hanoi, Vietnam The investment license, received on January 21, 1997, allows Northbridge to develop the first phase of 86 hectares within a total project allocation of 273 hectares. The master plan containing 300 housing units, a commercial area, golf and an international school has been revised to represent the declining demand anticipated in the greater Hanoi area. In its negotiations with the Vietnamese government on a restructuring of the agreement the company has received de-facto permission to delay the start of the project. Additionally, the requested changes which would significantly reduce the cost of the project and enhance its overall feasibility have been well-received by the government. Discussions are on-going at this time. Some of the requested changes include; 100% foreign ownership of the project (vs. 60% today), ability to sub-lease the land to other projects within the development, reduced land rent, lower land compensation paid to farmers and enhanced tax incentives. The Vietnamese are very concerned about the slowdown in foreign investment and cancellation of prior foreign commitments and are moving quickly to change the regulations inhibiting foreign investment. (d) Energy and Power Technologies Ltd. Energy and Power Technologies Ltd. (EPT) has not commenced operations. Currently negotiations are underway to sell some of the equipment. The investment has been valued at 50% of original cost. (e) Monterey Pizza Co., Ltd. The convertible term loan to Monterey Pizza Co., Ltd. ('Monterey') is denominated in US$ and carries interest at six month US$ LIBOR, payable every six months. The loan is secured by the major shareholders of the company and was repayable in full prior to 20 December 1998. As part of the loan agreement, the Company has the right to convert a portion of the term loan into Monterey Shares equivalent to 250,000 Monterey shares (with par value of Baht 100 per share) which have been placed in escrow. Monterey has experienced financial difficulties in 1997 and 1998. Interest has not been paid when due. The Company has stopped accruing interest since December 1997. A legal demand for payment of principal and accrued interest has been made to Monterey as well as to 2 directors who have guaranteed the loan. Based on the current financial position of Monterey, the investment has been valued at 25% of original cost. (f) Asia Pacific Resources Ltd. The convertible term debenture to Asia Pacific Resources Ltd. ('APQ') is denominated in US$ and secured by Pacific Corporate Trust Company, as Trustee. The debenture matures on 13 August 2000 and carries interest at 10%. As part of the debenture agreement, the Company has the right to convert the term debenture into 736,214 APQ shares. APQ shares are listed on the Toronto Stock Exchange. The market value of APQ common share as at 30 September 1999 was US$ 1.458 per share. Credit risk The Company has significant investments in Thailand, Cambodia and Vietnam with limited or developing capital markets and which may involve greater risk than investments in more developed markets. The prices of such investments may be volatile. The yields of emerging market debt obligations reflect, amongst other matters, perceived credit risk. The consequences of political, social or economic changes in these markets may have disruptive effects on the market prices of the Company's investments and the income they generate. Interest rate-risk The debenture to Asia Pacific Resources Ltd. carry interest at 13%. The investment is, therefore, exposed to interest rate risk. The loan to Monterey Pizza Co., Ltd. carries interest at six month LIBOR and the investment is accordingly not exposed to interest rate risk. The Company does not have any other assets or liabilities which expose the Company to interest rate risk. Currency risk All of the Company's equity investments where the investee company is incorporated in Thailand are subject to currency risk as the investee shares are denominated in Thai Baht. The Company's debt investments are mostly denominated in US$ and is thus not exposed to currency risk. Fair values Listed and unlisted investments are stated at market values and Directors' valuations respectively. At 30 September 1999, in the opinion of the directors, the carrying values of the listed and unlisted investments approximate their fair values. Additional information related to all investments of the Group which account for more than 5% of net assets as at 30 September 1999 is as follows: EPS per Market Value/ latest Directors Cost of audited Valuation % of issued investment accounts Investment Industry share capital US$ US$ US$ PATO Chemicals 8.1% 2,134,161 0.08889 1,073,072 NATION Publishing 12.5% 4,600,716 0.00611 3,760,952 SE - ED Publishing 19.5% 2,091,339 0.01074 1,404,374 Northbridge International School 6.25% 2,462,569 0.23369 1,526,252 Acron* Plastics 35.9% 1,506,183 0.05909 756,174 TISCO Finance 1.56% 2,466,916 0.60488 5,265,163 *Following conversion (refer to Note 4(a)), at 30 September 1999, Acron has not been classified as an associated company and equity accounting has not been adopted. The Group received dividends from the above investments during the period from 1 April 1999 to 30 September 1999 totalling US$69,698 (1998 : US$71,872). 5 Unamortised pre-operating expenses Pre-operating expenses comprise legal and other professional charges incurred in setting up the Company. 1999 1998 US$ US$ Pre-operating expenses at beginning of the period 97,803 146,703 Less: Amortisation charge for the period 24,518 24,518 Pre-operating, expenses at end of the period 73,285 122,185 6 Share capital 1999 1998 US$ US$ Authorised 10,000,000 ordinary shares of US$ 0.005 each 50,000 50,000 Issued and fully paid 2,500,000 ordinary shares of US$ 0.005 each 12,500 12,500 7 Share Premium 1999 1998 US$ US$ Arising on the issue of 2,500,000 ordinary shares at a premium of US$ 10.295 per share, fully paid 25,737,500 25,737,500 Less: Placement fee - (750,000) (750,000) 24,987,500 24,987,500 8 Capital reserves 1999 1998 US$ US$ Balance brought forward (8,349,083) (5,309,019) Net realised gain(loss) on sale of investments 1,950,637 (133,972) Net unrealised gain(loss) on valuation of investments 7,713,008 (3,944,449) Net loss on value of investment - other than temporary decline in value (500,000) - Net realised gain on foreign exchange 27,839 - Net unrealised (loss) gain on foreign exchange relating to carrying value of investments (1,403,713) 31,709 Balance carried forward (561,312) (5,309,019) 9 Revenue reserves 1999 1998 US$ US$ Balance brought forward 61,456 1,418,938 (Loss) profit for the year (230,574) 201,155 Balance carried forward (169,118) 1,620,093 10 Net asset value per share The calculation of the net asset value per share is based on the net assets of US$ 24,269,570 (1998 : US$ 17,264,362) divided by the number of shares, being 2,500,000. 11 Advisory and performance fees Frontier Fund Management Co., a company incorporated in the Cayman Islands serves as the investment adviser to the Company and receives the following: (i) a monthly advisory fee in an amount equal to 2% per annum of the contributed capital (defined as the aggregate paid-up share capital of the Company, inclusive of share premium) of the Fund; and (ii) a performance fee of 20% of the amounts by which distributions to shareholders exceed a cumulative compound rate of return on the Company's contributed capital of 12% per annum. Advisory fees totalling US$ 250,685 (1998 : US$ 250,685) were charged for the period. No performance fees (1998 : Nil) were charged for the period. 12 Custodial and administrative fees Under a custodial agreement with Citibank, N.A. (Hong Kong Branch)('Citibank'), Citibank acts as custodian for the Company, and is entitled to receive a fee from the Company, computed and paid monthly in arrears, comprising the following: (i) a fee calculated at a maximum rate of 0.12% per annum of the value of the portion held by the custodian, and (ii) a transaction fee of US$ 120 per transaction. Under an administrative agreement with Bank of Butterfield International (Cayman) Ltd. ('Butterfield'), Butterfield acts as administrator of the Company, and is entitled to receive a fee from the Company calculated and payable quarterly in arrears at a rate of US$ 100 per hour on a time spent basis, subject to a minimum of US$ 7,500 per year. Custodial and administrative fees totalling US$ 727 and US$ 3,750 respectively (1998 US$ 1,470 and US$ 3,750) were charged for the period. 13 Directors' fees and reimbursements The Company's Articles of Association provide that the Company may pay up to an aggregate of US$ 100,000 per year to its Directors. In addition, the Company reimburses Directors for travel and out-of-pocket expenses incurred in connection with Board of Directors meetings and meetings of committees of the Board of Directors. 14 Directors The non-executive directors during the period ended 30 September 1999 were as follows: Eugene S. Davis M.L. Plaichumpol Kitiyakara Van Huong, Nguyen David Roberts Kiatchai Sophastienphong (Resigned on 14 October 1998) Vanchai Ariyabuddhiphongs (Appointed on 19 November 1998) 15 Directors' interest in contracts of significance Mr. Eugene S. Davis is a director and shareholder of Finansa Investment Advisors Limited, a shareholder in Finansa Fund Management Ltd., ('FFM'), the investment advisor to the Company. Mr. Davis is also a director of FFM. 16 Interest in shares Shareholders who held an interest of 3% or more in the Company as of 30 September 1999 were as follows: Shareholder Number of shares Percentage MGTB Nominees Limited 2,500,000 100% 17 Taxation The Company is exempt from Cayman Islands income tax and accordingly its only liability is the payment of an annual registration fee to the government of the Cayman Islands, amounting to US$ 500 per annum. It is possible that the Company could be assessed for income tax in other jurisdictions. No assessments have been raised and the Directors consider the likelihood of a significant tax liability arising to be remote. 18 Change of name Following an Extraordinary General Meeting of the Company held on 30 October 1998 the name of the Company was changed from 'The Southeast Asia Frontier Fund' to 'Siam Investment Fund'. 19 Approval of financial statements The financial statements were approved by the authorised directors on 28 October 1999.

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