Interim Results
Siam Investment Fund
17 December 2001
SIAM INVESTMENT FUND
President's Report - Interim 9/30/2001
The question every investor is facing in the last quarter of 2001 is: what
will be the impact from the events of 9/11? Thailand had already been hit to
a degree by the global slowdown that was already underway and this will
inevitably worsen in the immediate backwash of worldwide events. We would
expect Thailand's export sectors to be slow in recovering to former levels,
especially in the area of technology and related components. Tourism is also
likely to suffer and this will have ripple effects throughout the economy. The
Bank of Thailand has revised its earlier GDP growth targets for 2002 down to
1-2% on the heels of expected GDP growth of 1.5% this year.
Despite the the obvious gloom and doom, it has to be said that Thailand
remains relatively insulated, when compared with many of the other
economies in Asia. Thai exports are more diversified and lower value added
than exports from North Asian countries. Because of this 'old economy'' bias,
we do expect some muting of the effects of the decline in global export demand.
Furthermore, the Thaksin government is implementing a series of aggressive
initiatives to stimulate domestic demand; this should serve to cushion the
impact of a slowdown in the export-related Sectors.
The political stability of this government is unprecedented and will allow
speedier policy implementation than previous governments have exhibited.
Corporate Thailand is also much better placed than it was in 1997 to
withstand an economic slowdown. The combination of deleveraged corporate
balance sheets, less foreign currency debt, low real interest rates and
genuine cost cutting have put the corporate sector (ex-banks) in
relatively safe waters. Unexpectedly low oil prices and the 'neutral'
nature of Thailand could provide some incremental stability to the
economy.
In short, while we view the events unfolding post 9/11 with some serious
concerns, we view Thailand as somewhat buffered from many of the risks we see
arising from the attack. Clearly, however, only time will tell.
Gene Davis
December 1, 2001
SIAM INVESTMENT FUND UNAUDITED
STATEMENT OF INCOME
FOR THE 6-MONTH PERIOD ENDED 30 SEPTEMBER
2001 2000
Note US$ US$
Income
Interest income 162,489 160,947
Dividend income 340,010 159,386
Other income 136,400 -
Gain on foreign exchange forward
contracts - 628,902
Total Income 638,899 949,235
Expenses
Advisory fees 11.1 (249,996) (250,339)
Administrative expenses 12 (100,778 (112,153)
Total expenses (350,774) (362,492)
Net income for the period 288,125 586,743
Earnings per share 0.12 0.23
The accounting policies and the notes on pages 5 to 18 form an integral
part of these financial statements.
1
SIAM INVESTMENT FUND UNAUDITED
BALANCE SHEET
AS AT 30 SEPTEMBER
2001 2000
Notes US$ US$
Investments 4 17,299,411 18,544,185
Current assets
Cash and cash equivalents 335,289 1,103,918
Forward contract receivable, net 5 123,362 -
Interest receivable 1,019,639 493,416
Other assets 3,083 7,658
Total current assets 1,481,373 1,604,992
Current liabilities
Accrued expenses (30,132) (15,382)
Total current liabilities (30,132) (15,382)
Net current assets 1,451,241 1,589,610
Net assets 18,750,652 20,133,795
Net assets financed by:
Share capital 6 12,500 12,500
Share premium 7 24,987,500 24,987,500
Capital reserves 8 (6,845,816) (5,196,890)
Revenue reserves 9 596,468 330,685
Total shareholders' funds 18,750,652 20,133,795
Net asset value per share 10 7.50 8.05
For and on behalf of Siam Investment Fund:
Gene Davis
Director
The accounting policies and the notes on pages 5 to 18 form an integral
part of these financial statements.
2
SIAM INVESTMENT FUND UNAUDITED
STATEMENT OF CHANGES IN NET ASSETS
FOR THE 6-MONTH PERIOD ENDED 30 SEPTEMBER
Share Share Capital Revenue
capital premium reserve reserve Total
Balance at
1 April 2000 12,500 24,987,500 7,728,552 (256,058) 32,472,494
Net income for
the period - - - 586,743 586,743
Net unrealised
loss on
valuation
of investments - - (11,074,255) - (11,074,255)
Net realised
loss on foreign
exchange - - (121,237) - (121,237)
Net unrealised
loss on foreign
exchange
relating to
carrying
value of
investments - - (1,960,712) - (1,960,712)
Net realised
gain on sale
of
investments - - 230,762 - 230,762
Balance at
30 September
2000 12,500 24,987,500 (5,196,890) 330,685 20,133,795
Balance at
1 April 2001 12,500 24,987,500 (6,244,675) 308,343 19,063,668
Net income
for the period - - - 288,125 288,125
Net unrealised
loss on
valuation
of
investments - - (1,760,654) - (1,760,654)
Net realised
loss on foreign
exchange - - (152,539) - (152,539)
Net unrealised
gain on foreign
exchange
relating to
carrying
value of
investments - - 447,464 - 447,464
Net realised
gain on sale
of investments - - 864,588 - 864,588
Balance at
30 September
2001 12,500 24,987,500 (6,845,816) 596,468 18,750,652
The accounting policies and the notes on pages 5 to 18 form an integral
part of these financial statements.
3
SIAM INVESTMENT FUND UNAUDITED
STATEMENT OF CASH FLOWS
FOR THE 6-MONTH PERIOD ENDED 30 SEPTEMBER
2001 2000
US$ US$
Cash flows from operating activities:
Net income for the period 288,125 586,743
Net realised gain on sale of investments 864,588 230,762
Net realised loss on foreign exchange (152,539) (121,237)
1,000,174 696,268
Changes in assets and liabilities:
Accounts receivable - 663,825
Forward contract receivable, net - 17,836
Other assets 9,250 4,663
Interest receivable (266,728) (151,459)
Accrued expenses 19,106 (8,083)
Amount due to broker - (23,677)
Total cash provided from
operating activities 761,802 1,199,373
Cash flows from Investing activities:
Investment in listed and unlisted
investments (697,754) (2,070,484)
Total cash used in investing activities (697,754) (2,070,484)
Cash flows from financing activities:
Dividend payment - (2,500,000)
Increase (decrease) in cash and cash
equivalents for period 64,048 (3,371,111)
Cash and cash equivalents at beginning
of the period 271,241 4,475,029
Cash and cash equivalents at end of
the period 335,289 1,103,918
The accounting policies and the notes on pages 5 to 18 form an integral
part of these financial statements.
4
SIAM INVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS
30 SEPTEMBER 2001 AND 2000
1 Business activities
Siam Investment Fund ('the Fund') is a closed-end investment fund and
was incorporated as an exempted company with limited liability in the
Cayman Islands on 22 February 1996. The Fund obtained a listing for
its shares on the London Stock Exchange on 25 April 1996. The Fund'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 Fund may now invest up
to 100% of its capital in listed and unlisted companies in Thailand.
On 3 February 1997, the Fund set up a wholly owned subsidiary
operating in Thailand, SEAFF (Thailand) Limited, to serve as an
investment vehicle for the Fund's investment in Energy and Power
Technology Company (refer Note 4).
2 Duration
The Fund may be dissolved on 31 March 2006. However, with the approval
from the holders of at least two-thirds of the shares of the Fund,
approved at or prior to the annual general meeting in 2006, the term
of the Fund may be extended for an additional two years to 31 March
2008.
3 Significant accounting policies
a) Basis of preparation
The financial statements have been prepared in accordance with and
are generally consistent with International Accounting Standards.
These require the Fund's Directors to make estimates and
assumptions that affect the reported amounts and disclosure in the
financial statements. Actual results could differ from these
estimates. The financial statements are prepared under the
historical cost convention as modified by the revaluation of
certain marketable securities and investment properties.
5
b) Cash equivalents
The Fund considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
c) Investments
The Fund's income, which is 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) 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.
6
e) Interest Income
Interest income is recognised under the accrual basis. For the
period ended 30 September 2001, interest income arising from cash
and cash equivalents was US$ 13,041 (2000 : US$ 122,759) and
interest income arising from investments was US$ 149,448 (2000:
US$ 38,188).
4 Investments
2001 2000
US$ US$
Listed securities, at market value 13,398,066 14,347,337
Unlisted securities, at Directors valuation 3,901,345 4,196,848
Investments - net 17,299,411 18,544,185
Cost of investments 22,663,439 21,179,364
The cost of investments shown above and in 4.1 and 4.2 below reflect
the cost at the date of acquisition and do not include any subsequent
foreign exchange adjustments.
7
An analysis of the Fund's investments is as follows:
2001
Market
Industry % holding Cost value
US$ US$
4.1 Listed investments
Nation Multimedia
Group Public
Co., Ltd. Publishing 9.64% 4,720,635 3,087,529
SE - Education
Public Co., Ltd Publishing 19.37% 2,057,458 3,406,278
TISCO Finance
Public Co., Ltd (a) Finance 2.37% 1,203,758 1,051,264
Thai Military Bank
Public Co., Ltd Banking 0.20% 1,267,692 424,686
Bangkok Bank
Public Co., Ltd Banking 0.06% 796,383 639,014
Samart Corporation
Public Co., Ltd Communication - - -
Telecom Asia Corp
Public Co., Ltd Communication 0.03% 626,869 182,577
Advanced Info Services
Public Co., Ltd. Communication 0.01% 204,798 206,278
The Siam Cement
Public Co., Ltd Building 0.03% 512,943 365,919
2000
Market % of net assets
Industry % holding Cost value of the Fund
US$ US$ 2001 2000
4.1 Listed investments
Nation Multimedia
Group Public
Co., Ltd. Publishing 9.90% 4,849,387 6,336,247 16.47 31.47
SE - Education
Public Co., Ltd Publishing 20.00% 2,124,187 1,618,293 18.17 8.04
TISCO Finance
Public Co., Ltd (a)Finance 5.26% 2,466,916 3,406,478 5.60 16.92
Thai Military Bank
Public Co., Ltd Banking 0.20% 1,267,692 578,540 2.26 2.87
Bangkok Bank
Public Co., Ltd Banking - - - 3.41 -
Samart Corporation
Public Co., Ltd
Communication 0.66% 512,484 213,422 - 1.06
Telecom Asia Corp
Public Co., Ltd
Communication 0.01% 445,008 217,787 0.97 1.08
Advanced Info Services
Public Co., Ltd.
Communication - - - 1.10 -
The Siam Cement
Public Co., Ltd Building 0.03% 512,943 250,415 1.95 1.24
8
2001
Market
Industry % holding Cost value
US$ US$
4.1 Listed investments(continued)
Singer(Thailand)
Public Co., Ltd Electrical
Products 1.80% 367,996 349,345
Compass East Industry (Thailand)
Public Co., Ltd Electrical
Products 0.46% 270,572 375,614
K.R.Precision
Public Co.,Ltd Electrical
Components 0.49% 251,925 104,610
Hana Microelectronics
Public Co., Ltd Electrical
Components 0.15% 428,575 230,560
KCE Electronics
Public Co., Ltd Electrical
Components 0.76% 368,808 211,435
Delta Electronics (Thailand)
Public Co., Ltd Electrical
Components 0.06% 363,737 288,361
Cal-Comp Electronic
Public Co., Ltd Electrical
Components 0.12% 241,490 164,798
2000
Market % of net assets
Industry % holding Cost value of the Fund
US$ US$ 2001 2000
Singer(Thailand
Public Co.Ltd Electrical
Products 1.60% 328,058 215,627 1.86 1.07
Compass East Industry(Thailand)
Public Co., Ltd Electrical
Products 0.48% 279,935 287,636 2.00 1.43
K.R.Precision
Public Co.,Ltd Electrical
Components - - - 0.56 -
Hana Microelectronics
Public Co., Ltd Electrical
Components - - - 1.23 -
KCE Electronics
Public Co., Ltd Electrical
Components - - - 1.13 -
Delta Electronics(Thailand)
Public Co., Ltd Electrical
Components 0.01% 81,999 59,995 1.54 0.30
Cal-Comp Electronic
Public Co., Ltd Electrical
Components - - - 0.88 -
9
2001
Market
Industry % holding Cost value
US$ US$
Phoenix Pulp and Paper
Public Co., Ltd Pulp
& Paper 0.48% 460,610 422,896
Serm Suk
Public Co., Ltd Food
& Beverages 0.59% 286,121 502,816
Thai Union Frozen Products
Public Co., Ltd Food
& Beverages 0.83% 336,680 425,744
Thai Airways International
Public Co., Ltd Transportation 0.04% 335,100 234,014
Miscellaneous investments Nil - 660,359 641,718
Asia Pacific Resources Potash
Ltd Fertilizer - 438,361 82,610
Total -listed investments 16,200,870 13,398,066
2000
Market % of net assets
Industry % holding Cost value of the Fund
US$ US$ 2001 2000
Phoenix Pulp and Paper
Public Co., Ltd Pulp
& Paper 0.32% 307,424 321,707 2.26 1.60
Serm Suk
Public Co., Ltd Food
& Beverages 1.03% 500,340 477,709 2.68 2.37
Thai Union Frozen Products
Public Co., Ltd Food
& Beverages - - - 2.27 -
Thai Airways International
Public Co., Ltd Transportation - - - 1.25 -
Miscellaneous investments Nil - 121,437 118,568 3.42 0.59
Asia Pacific Resources Potash
Ltd Fertilizer - 438,361 244,913 0.44 1.22
Total-listed investments 14,236,171 14,347,337 71.45 71.26
10
4.2 Unlisted investments
4.2.1 Equity investments
2001
Directors'
Industry % holding Cost valuation
US$ US$
Northbridge Communities
Ltd(b) International
School 6.25% 2,462,569 1,401,345
Energy and Power
Technologies Ltd Energy - - -
Manager Media Group
Public Co., Ltd (c) Publishing - - -
Samakkhisan(Dokya)
Co., Ltd Publishing - - -
Total-unlisted equity investment 2,462,569 1,401,345
2000
Directors' % of net assets
Industry % holding Cost valuation of the Fund
US$ US$ 2001 2000
Northbridge Communities
Ltd(b) International
School 6.25% 2,462,569 1,482,096 7.47 7.36
Energy and Power
Technologies Ltd Energy 46.0% 369,259 106,785 - 0.53
Manager Media Group
Public Co.,Ltd(c) Publishing 3.49% 59,815 57,872 - 0.29
Samakkhisan(Dokya)
Co., Ltd Publishing 6.21% 51,550 50,095 - 0.25
Total-unlisted equity investment 2,943,193 1,696,848 7.47 8.43
11
4.2.2 Debt investments
2001
Directors'
Industry % holding Cost valuation
US$ US$
Convertible term loan to
Monterey Pizza Co.,Ltd(d) Foods - 2,000,000 500,000
Convertible term debenture to
Asia Pacific Resources
Ltd(e) Potash Fertilizer 2,000,000 2,000,000
Total-unlisted debt investments 4,000,000 2,500,000
Total-unlisted investments 6,462,569 3,901,345
Investments-net 22,663,439 17,299,411
2000
Directors' % of net assets
Industry % holding Cost valuation of the Fund
US$ US$ 2001 2000
Convertible term loan
to Monterey Pizza Co.,
Ltd(d) Foods - 2,000,000 500,000 2.67 2.48
Convertible term
debenture to
Asia Pacific Resources
Ltd.(e) Potash Fertilizer - 2,000,000 2,000,000 10.67 9.93
Total-unlisted debt investments 4,000,000 2,500,000 13.34 12.41
Total-unlisted investments 6,943,193 4,196,848 20.81 20.84
Investments-net 21,179,364 18,544,185 92.26 92.10
12
(a) TISCO Finance Public Company Limited.
TISCO Finance Public Company Limited ('TISCO') is incorporated in Thailand as
a public company and is listed on the Stock Exchange of Thailand. TISCO
completed a recapitalization on June 1, 1999 after the Ministry of Finance
approved the Tier 1 capital support scheme, by issuing Baht 6 billion preferred
shares. Every preferred share is entitled to one warrant with exercise right
to convert it into a preferred share held by the Ministry within the first 3
years at cost.
Preferred shares can be converted into common shares every quarter-end at the
ratio of 1:1. Both preferred shares and warrants are listed on the Stock
Exchange of Thailand. The successful recapitalization process guarantees
TISCO's ability to maintain its capital adequacy ratio in accordance with the
Regulations of the Bank of Thailand. Initial investment was 10 million
preferred shares and warrants. The Company's holdings have been reduced to
4.5 million preferred shares representing approximately 6% of the Company's
portfolio.
(h) Northbridge Communities Ltd.
Northbridge Communities Ltd. ('NCL') operates international schools and related
property developments in Thailand and Cambodia.
The operation from both sites has been doing well since July 2001. International
School Eastern Seaboard (ISE) in Thailand has generated a cash surplus, which
will be applied to their loan with a bank, Northbridge International School
Cambodia (NISC) in Cambodia recorded a loss last year but should break even this
year. Houses in Thailand are fully rented. Construction of apartment
facilities in Cambodia has been completed and 15 of the 16 units are rented out.
The Thai Export-Import Bank has indicated an interest in providing,
US$1.2 million financing for the housing development in Cambodia. This project
will include 11 houses, 7 of which will be leased out and 4 will be sold.
(c) Manager Media Group Public Co., Ltd. and Samakkhisan (Dokya) Co., Ltd.
These investments were acquired from the Financial Sector Restructuring
Authority ('FRA') as part of the FRA's auction of assets acquired by the FRA
following the Ministry of Finance's closure of 56 finance companies. The
investments have been fully provided for as at 30 September 2001.
13
(d) Monterey Pizza Co., Ltd.
The convertible term loan to Monterey Pizza Co., Ltd. ('Monterey') is
denominated in US$ and carries interest at six month US$ LIBOR, payable every
six months. The loan is secured by the major shareholders of Monterey 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 since 1997. 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. The
court ruled in favor of the Company's demand for Baht 108 million. The
defendants have been asked by the court to settle with the company. The loan
has already been written down to US$ 500,000.
(e) 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 was originally due to mature on 13 August 2000 but
this was subsequently extended by one year. The debenture carries interest at
10%. As part of the debenture agreement, the Company has the right to convert
the term debenture into APQ shares at US$ 2.32 per share. APQ shares are
listed on the Toronto Stock Exchange. The market value of APQ common share as
at 30 September 2001 was US$ 0.28486 (2000: US$1.27) per share.
Credit risk
The Fund has significant investments in Thailand which may involve greater
risk than investments in more developed markets, The prices of such
investments may be volatile. The yields of emerging market debt obligations
reflect, amongst other matters, perceived credit risk. The consequences of
political, social or economic changes in Thailand may have disruptive effects
on the market prices of the Company's investments and the income they
generate.
Currency risk
All of the Fund's equity investments where, the investee company is
incorporated in Thailand are subject to currency risk as the investee shares
are denominated in Thai Baht. The Fund's debt investments are denominated in
US$ and is thus not exposed to currency risk.
14
Fair values
Listed and unlisted investments are stated at market values and
Directors' valuations respectively. At 30 September 2001, 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 2001 is as
follows:
EPS per Market value/
Cost of latest audited Directors'
% of issued investment accounts valuation
Investment Industry Share capital US$ US$ US$
Equity
investments
NATION Publishing 9.64% 4,720,635 0.0119 3,087,529
SE - ED Publishing 19.37% 2,057,458 0.0962 3,406,278
TISCO Finance 2.37% 1,203,758 0.0206 1,051,264
Northbridge International
School 6.25% 2,462,569 (0.3993) 1,401,345
The Group received dividends from the above investments during the period
totaling US$ 340,010 (2000: US$ 159,386).
Debt investments
APQ Potash Fertilizer - 2,000,000 - 2,000,000
5 Forward foreign exchange contracts
The Fund has, from time to time, entered into off-balance sheet forward
foreign exchange and option contracts to buy and sell specified amounts of
foreign currencies in the future at a pre-determined exchange rate. The
contracts were entered into in order to hedge the Fund's assets denominated
in Thai Baht.
As at 30 September 2001 there are no the contractual amount of outstanding
forward foreign exchange contracts. (2000: US$ 5 million).
6 Share capital
2001 2000
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
15
7 Share Premium
2001 2000
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
2001 2000
US$ US$
Balance brought forward (6,244,675) 7,728,552
Net realised gain on sale of investments 864,588 230,762
Net unrealised loss on valuation of investments (1,760,654) (11,074,255)
Net realised loss on foreign exchange (152,539) (121,237)
Net unrealised gain (loss) on foreign exchange
relating to carrying value of investments 447,464 (1,960,712)
Balance carried forward (6,845,816) (5,196,890)
9. Revenue reserves
2001 2000
US$ US$
Balance brought forward 308,343 (256,058)
Net income for the period 288,125 586,743
Balance carried forward 596,468 330,685
10 Net asset value per share
The calculation of the net asset value per share is based on the net assets of
US$ 18,750,652 (2000: US$ 20,133,795) divided by the number of shares, being
2,500,000.
16
11 Related party transactions
11.1 Advisory and performance fees
Finansa Fund Management Ltd, a related company incorporated in the Cayman
Islands, serves as the investment adviser to the Fund 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 Fund, 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 Fund's contributed capital of 12%
per annum.
Advisory fees totaling US$ 249,996 (2000 : US$ 250,339) were charged for the
period. No performance fees (2000: Nil) were charged for the period.
11.2 Directors' fee and reimbursements
The Fund's Articles of Association provide that the Fund may pay up to an
aggregate of US$ 100,000 per year to its Directors. For the period ended 30
September 2001, an amount of US$ 50,000 (2000 : US$ 50,000) was approved for
payment to the Directors. In addition, the Fund 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.
11.3 Directors' interest in contracts of significance
Mr. Eugene S. Davis is a director and shareholder of Finansa Investment
Advisors Ltd., a shareholder in Finansa Fund Management Ltd., ('FFM'), the
investment advisor to the Fund. Mr. Davis is also a director of FFM.
12 Custodial and administrative fees
Under a custodial agreement with Citibank, N.A. (Hong Kong Branch)
('Citibank'), acts as custodian for the Fund, and is entitled to receive a
fee from the Fund, computed and paid monthly in arrears, comprising the
following: (i) a fee calculated at 3.5 - 7.0 basis points per annum of the
value of the portion held by the custodian; and (ii) a transaction fee of
US$ 35 - US$ 90 per transaction.
Under an administrative agreement with Bank of Butterfield International
(Cayman) Ltd. ('Butterfield'), Butterfield acts as administrator of the
Fund, and is entitled to receive a fee from the Fund 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 totaling US$3,733 and US$3,750
respectively (2000: US$1,783 and US$ 3,750) were charged for the period.
17
13 Directors
The non-executive directors during the period ended 30 September 2001 were as
follows:
Eugene S. Davis
M.L. Plaichumpol Kitiyakara
Van Huong Nguyen
David Roberts
Enghug Nontikarn
14 Interest in shares
Shareholders who held an interest of 3% or more in the Fund as of 30 September
2001 were as follows:
Shareholder Number of shares Percentage
Citivic Nominees Limited 2,500,000 100%
(formerly MGTB Nominees Limited)
15 Taxation
The Fund 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 Fund 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
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