<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
GENERAL INFORMATION
- --------------------------------------------------------------------------------
THE FUND
The Singapore Fund, Inc. (the "Fund") is a non-diversified, closed-end
management investment company. Its primary investment objective is capital
appreciation, which it seeks through investment primarily in Singapore equity
securities, and to a lesser degree, investment in equity securities issued by
companies in ASEAN Group countries and Cambodia. The ASEAN Group currently is
composed of Brunei, Indonesia, Laos, Malaysia, Myanmar (formerly Burma), the
Philippines, Singapore, Thailand and Vietnam. The Fund's Investment Manager is
DBS Asset Management (United States) Pte. Ltd. (the "Manager"), an indirectly
wholly owned subsidiary of The Development Bank of Singapore, Ltd. Daiwa
International Capital Management (Singapore) Limited provides the Manager with
advice regarding investments.
SHAREHOLDER INFORMATION
The Fund's shares are listed on the New York Stock Exchange ("NYSE") and the
Osaka Securities Exchange ("OSE"). The Fund understands that its shares may
trade periodically on certain exchanges other than the NYSE or the OSE, but the
Fund has not listed its shares on those other exchanges and does not encourage
trading on those exchanges.
The Fund's NYSE trading symbol is "SGF". Weekly comparative net asset value
(NAV) and market price information about the Fund is published each Monday in
THE WALL STREET JOURNAL, each Sunday in THE NEW YORK TIMES, and each Saturday in
BARRON'S, and also in many other newspapers. The Fund's weekly NAV is also
available by calling (800) 933-3440 or (201) 915-3020.
INQUIRIES
It is the policy of the Fund to respond to inquiries about its portfolio
holdings and performance. Such inquiries should be directed to the Fund's
Manager in Singapore at (011-65) 220-1111, or to the Fund at (800) 426-5523 or
(781) 575-2000. Inquiries concerning your share account should be directed to
the Fund at the latter number noted above. All written inquiries should be
directed to the Fund, c/o Daiwa Securities Trust Company, One Evertrust Plaza,
9th Floor, Jersey City, New Jersey 07302.
RESTRICTION ON BENEFICIAL OWNERSHIP BY SINGAPORE RESIDENTS
The Fund expects to continue to qualify for a Singapore income tax exemption
granted to non-Singapore resident investors with respect to certain types of
income derived from Singapore sources. In order for the Fund to be treated as a
non-Singapore resident, and therefore qualify for this exemption, not more than
5% of the Fund's issued share capital may be beneficially owned, directly or
indirectly, by Singapore residents. For this reason, the Fund's Board of
Directors has restricted, and in the future may prohibit, the transfer of the
Fund's shares to residents of Singapore.
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
A Dividend Reinvestment and Cash Purchase Plan (the "Plan") is available to
provide Shareholders with automatic reinvestment of dividends and capital gain
distributions in additional Fund shares. The Plan also allows you to make
optional semi-annual cash investments in the Fund's shares through the State
Street Bank and Trust Company (the "Plan Agent"). A brochure fully describing
the Plan's terms and conditions is available from the Plan Agent by calling
(800) 426-5523 or (781) 575-2000, or by writing The Singapore Fund, Inc., c/o
State Street Bank and Trust Company, P.O. Box 8200, Boston, MA 02266-8200.
<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
May 21, 1998
DEAR SHAREHOLDERS,
We are pleased to present the Semi-Annual Report of The Singapore Fund, Inc.
(the "Fund") for the six months ended April 30, 1998.
STOCK MARKET REVIEW
The Asian financial crisis appeared to reach its zenith in the middle of
January 1998 and subsequently recovered. At the height of the meltdown, the
Indonesian Rupiah had fallen by 80% in a matter of twelve weeks and the Jakarta
Composite Index had fallen by a staggering 81% over the same period. This
collapse in confidence in the Indonesian currency occurred as a direct result of
the Indonesian government's resistance towards the IMF assistance program. In
the immediate aftermath of the decoupling of the Thai Baht peg to the US Dollar,
Indonesia had been praised by the IMF for its good policy response in the face
of the regional currency crisis. However, it soon became clear that President
Suharto had a separate domestic agenda which would hinder the wholesale adoption
of the tough IMF measures. The other regional currencies suffered from the
contagion effect and were also heavily sold down. In general, the regional
currency adjustments reflected underlying problems of a heavy reliance on
foreign short-term flows to service current account deficits, and inadequate
bank supervision resulting in excessive credit growth and over-investment in the
property sector. The hysteria and subsequent collapse of investor confidence
fueled the crisis, exacerbating the fall in the markets. These factors peculiar
to Asia could not be mitigated by a favorable US interest rate environment.
For the Singapore stock market, the selling was also very drastic, despite
the fact that Singapore has one of the highest national savings rates in the
world and little reliance on foreign debt or equity funding. The fact that
Singapore is so small and so close to both Indonesia and Malaysia left Singapore
exposed to the intensity of the regional currency meltdown. An overheated
residential property market with a large supply overhang worsened matters. With
the pressure on the currency, three-month interbank rates rose to a high of 16%
in January 1998 before settling back to between 8 to 9% by the end of January,
still much higher than the usual 3.8 to 4.0% range before this regional currency
crisis started in June 1997. Prime lending rates followed suit, with the local
banks raising the rates by 150 basis points to 7.5%. From the end of October
1997, the Singapore Dollar weakened by 8.2% against the US Dollar but actually
strengthened against its ASEAN neighbors' currencies by between 12% to 22%, and
by 184% against the Indonesian Rupiah.
With greater reliance on short-term foreign capital inflows to finance an
expansionary economic policy, the other regional markets were, naturally, also
badly affected. The Malaysian stock market sold down when United Engineers
Malaysia announced that they had purchased a 32% stake in the parent company
Renong. This was widely seen as a bailout for the major shareholders of Renong.
This incident served to crystallize investors' fears that the Malaysian
government would attempt to help the large Malaysian corporate stakeholders at
the expense of the minority shareholders. The Thai and Filipino markets also
sold down in this period.
However, in the period from the middle of January to March 1998, markets
staged a strong and largely unanticipated rebound. The key factor that changed
investors from panic-selling to near panic-buying in a matter of a fortnight was
Thailand. The Thai government showed a strong resolve to implement the IMF
reform measures. This stood both the Thai Baht, as well as the Thai stock
market, in good stead. The Thai currency, and thus the stock market, were the
first to turn around. In the month of January, the Thai market as measured by
the SET Index rose by 21.3% in US Dollar terms. The other ASEAN group bourses
posted declines. Investor sentiment was comforted somewhat by the Thai example.
Towards the end of January, the selling slowed as the currencies stabilized.
More positive developments in Thailand as well as Korea and Indonesia calmed the
2
<PAGE>
THE SINGAPORE FUND, INC.
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markets somewhat. In Korea, the announcement of the largest ever IMF-led
financial rescue package and the government's move to increase foreign
shareholding limits to 55% for capital markets helped turnaround sentiment.
There was also the successful negotiation for the rollover of short-term foreign
debt in both Korea and Indonesia. In Thailand, the central bank announced the
lifting of the two tier market for the Thai Baht. The central bank pointed out
that the Baht had been relatively stable in the last two weeks January despite
the volatility in the Indonesian Rupiah and the Korean Won. Currency markets
stabilized and staged a rebound. This, in turn, allowed investors to calm down
and realize that valuations in the equity markets were very attractive. In a
number of cases, stocks were trading at substantial discounts to replacement
costs. With the buying in equity markets, currencies strengthened further, which
in turn improved investors' sentiment.
The rebound was very sharp. The Malaysian market was the best performer with
a 48.9% bounce in February, followed by the Thai market (+30.6%). All the other
ASEAN markets also posted strong gains with the Singapore, Indonesian, and
Filipino markets rising by 19.9%, 17.8%, and 24.4%, respectively. The Indonesian
market actually appreciated by 52.1% by February 10th but gave up a significant
portion of this rise because the government's stance towards the IMF changed
significantly during the month. As the Indonesian presidential elections drew
nearer, President Suharto grew increasingly hostile towards the IMF. He also
announced that he had appointed economist Professor Steven Henke to study the
feasibility of setting up a currency board. The IMF's criticism of such a policy
brought the strong market rally in Indonesia to a halt.
In March 1998, with the stabilization in sentiment, and thus the currencies,
investors' focus returned to local issues. In Singapore, a local residential
property developer launched a project at a 15% discount to prevailing market
prices. This caused a flurry of interest and all of the units that were up for
sale were purchased within a week. During the same week, DBS Bank surprised the
market and cut its prime lending rate by 50 basis points to 7%. This caused a
surge of buying in property stocks as the share prices were at a deep discount
to the physical market. However, towards the end of the month, it became
apparent that the Japanese economy was having serious difficulties in
extricating itself from its domestic slowdown. This had a knock-on effect on the
rest of Asia, and both currencies as well as the market indices declined with
light volume. In Malaysia, the move to restructure the financial sector
continued with Rashid Hussein Bank announcing their intention to merge with Sime
Bank. However, this deal took about six weeks to finance and this caused
sentiment towards the Malaysian market to soften somewhat. This was not helped
by the announcement of a number of bankruptcies in Malaysia during the same
period. In Indonesia, the government's stance towards the IMF predictably became
more accommodating after President Suharto was elected for another 5-year term
and this gave the stock market a boost. In Thailand, the market was impacted by
the large scale capital raising by Thai corporates in a move to clean up their
balance sheets. In the Philippines, the market was sidetracked by the intense
campaigning of the presidential candidates.
In April, the ASEAN markets retreated. Generally, there was little
institutional interest in the markets and this could be seen by the very low
daily volumes posted on the bourses. In Singapore, the DBS50 index declined by
5.5% in US Dollar terms. After the run-up in the property sector at the end of
March, the failure of the other Big Four banks to lower their prime lending
rates caused investors to turn somewhat bearish. Sentiment in Singapore was
further affected by the selldown in the Malaysian stock market. Investors were
realizing that the market had actually run ahead of valuations and that most
stocks were forecast to post declining if not negative earnings for the next two
years. Selling volumes were modest but persistent. In the Philippines,
Indonesia, and Thailand, volumes were also very low. In Indonesia, the
government took on a pro-IMF stance. Despite this, the market declined by 9.0%
for the month, as investors were unnerved by the persistent and increasingly
widespread student protest.
3
<PAGE>
THE SINGAPORE FUND, INC.
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It was a semi-annual period with two segments. From October 1997 to the
middle of January 1998, markets were bashed down in conjunction with the
currencies. However, once the currencies were allowed to stabilize, investors
switched from near-panic selling to near-panic buying. This is because investors
were caught with portfolios that were initially extremely underweight and were
rapidly brought back to more neutral weightings. For the six months, the
Singapore market, as measured by the DSB50 Index, increased marginally by 0.3%
in US Dollar terms. The Thai market fell by 2.2%, while the Malaysian market
fell by 15.7%. The largest casualty was the Indonesian market, which fell by
59.0%. Largely because the stock market was ignored in the face of the ongoing
presidential elections, the Philippine market rose by 5.7%.
FUND PERFORMANCE
As of April 30, 1998, the Fund's net asset value ("NAV") per share was USD
7.49. This represents a fall of 6.3% from the NAV per share of USD 7.99 at the
end of October 1997. The Fund underperformed the DBS50 Index by 6.5% in USD
terms. During this period, the performance of the DBS50 Index was distorted by
the 8% rise by index heavy-weight Singapore Telecoms, which accounted for a
massive 37.9% of the DBS50 Index. The Fund compared favorably against two other
relevant indices, the Straits Times Industrial Index and MSCI Singapore Free
Index, which fell by 6.5% and 9.9%, respectively.
In the second fiscal quarter, the Fund recovered some ground from a poor
first quarter despite the large cash position. The Fund held this defensive
stance because of the economic turmoil in the region. However, in January, the
Fund bought into the market because valuations were at distress levels. The
magnitude and speed of the bounce in the stock markets at the beginning of
February was in the Fund management's opinion too optimistic and the Fund
actively pared down its weightings as stock markets appreciated. Since markets
have been gradually retreating in the months of March and April on very thin
volumes, the Fund has been slowly returning its portfolio weightings to a more
neutral position.
The Fund ended the period with a high cash and equivalents position of 49.3%
of its net assets.
ECONOMIC PERFORMANCE
In the first quarter of 1998, GDP growth slowed to 5.6% from 7.6% in the
fourth quarter of 1998. The Ministry of Trade and Industry is still sticking
with its full year forecast of 2.5-4.5% GDP growth for 1998. However, consensus
estimates by private sector economists are below the official forecast at 2%.
The ministry has stated that this full year forecast assumes no major worsening
in the external climate. The breakdown of the GDP figure in the first quarter of
1998 is shown below:
<TABLE>
<CAPTION>
SECTOR 1Q98 1Q97
- ---------------------------------------- ------ ------
<S> <C> <C>
Manufacturing........................... 6.1% -5.3%
Finance & Business Services............. 6.3 10.6
Commerce................................ 1.2 2.9
Transport & Communication............... 6.1 8.1
Construction............................ 10.8 9.5
Overall................................. 5.6 4.2
</TABLE>
With first quarter GDP growth of 5.6% and a full year forecast of between
2.5 to 4.5%, the Ministry of Trade and Industry is implying that GDP growth for
the remaining three quarters of the year will slow to between 1.5 to 4.0%. The
economy has slowed down from the 7.6% GDP growth posted in the fourth quarter of
1997 and from the full year 1997 GDP growth number of 7.8%. The ministry has
indicated that this quarter-on-quarter
4
<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
moderation was anticipated and that they expect the economy to slow further in
the second and third quarters of 1998. This would naturally occur as the impact
of the regional problems filters through to the Singapore economy.
In particular, hub services, such as transport and financial activities,
that are highly exposed to regional demand are expected to slow further. The
commerce segment represented by sectors such as retail trade, hotels, and
restaurants will similarly be hit by the decline in visitor arrivals and weaker
consumer sentiment. In these sectors, businesses surveyed about the business
outlook for the six months to September 1998 were very bearish.
However, the Ministry of Trade and Industry expects three sectors to better
weather the regional economic slowdown. The manufacturing sector is expected to
be boosted by strong growth in the US and Europe. The construction sector is
also expected to do relatively better, benefiting from the substantial number of
public sector projects that have been awarded in the last two years. Projects
like the North-East Mass Rapid Transit line, Terminal 3 at Changi International
Airport, and the new exposition centre in Changi would all help support the
construction sector. Lastly, deregulation in the telecommunications sector and
the subsequent competition between the incumbent and the new entrant has proven
to be extremely good for business, with penetration rates for mobile phone users
having nearly doubled in the last year to slightly over 24%.
For the remainder of 1998, prospects are mixed. The problems in Indonesia as
noted above are potentially very destructive. Singapore is too small and too
close to Indonesia both geographically as well as economically to be immune from
any Indonesian political or social unrest. Even if the situation in Indonesia
were to calm, the regional economies are expected to slow as a result of the
financial turmoil. However, the industrialized economies are expected to post
healthy growth, with the exception of Japan.
MARKET OUTLOOK AND STRATEGY
The Fund's management continues to expect the Asian markets to trade in a
range over the next few months. Upside will be capped as the inflow of foreign
capital is still fickle. Asian corporates, many of them actually insolvent, need
huge amounts of capital to rebuild their balance sheets, let alone to grow.
Foreign investors still await deeds to match words on the part of the Asian
governments to liberalize and restructure the economy, especially the financial
institutions. As governments pursue in earnest the painful exercise of weeding
out the weaker institutions, worker retrenchments and debt write-offs will be
larger than expected. The pain may be deemed not worth the political cost. In
any case, the adjustment has only just begun. Backtracking on earlier promises
is a distinct possibility. The above bearish view, however, can be moderated by
the fact that further losses in Asia are also probably limited. Most investors
are either underweight or unweighted in Asia. In addition, ample liquidity in
the OECD economies is supportive of equity markets in general.
On a longer-term perspective, this economic meltdown in Asia has no previous
precedent. The slowdown in regional economies is less than twelve months old.
For the great majority of corporates across Asia, earnings are going to be
declining if not negative over the next two to three years. Governments are
trying to grapple with setting appropriate fiscal, monetary and exchange rate
policies, having lost a fixed nominal exchange rate anchor. Policy action is
unlikely to be swift or decisive because of the fear of inflicting pain on the
real economy and the electorate. Thus, the ASEAN equity markets are likely to
remain weak and volatile. The Fund's management holds the view that there will
be some technical rebounds but they would succumb to profit-taking. The recent
extreme volatility in the Asian and international markets has shaken investors'
confidence in equity markets. From a technical standpoint, markets have fallen
through strong key term support levels. For confidence to
5
<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
return and markets to make sustainable gains, economic and earnings fundamentals
must reassert themselves. Looking further out, the Fund's management would seek
sustained currency stability before going into a fully invested position for the
portfolio.
In this regard, the Fund's management is confident that the ASEAN economies
would regain their footing. The fundamental reasons often put forward in the
past to explain the Asian growth miracle are intact. Asia remains an environment
where governments are pro-business, savings are high, people are hard-working
and self-reliant, and economies are market-oriented. Exports remain the key
economic drivers of the region. The recent falls in currency levels would in
time enable Asia to regain its competitiveness and get back on the economic
growth curve.
The Fund will slowly buy back into the markets as stability returns to the
banking sector and currency markets. The companies that the Fund would look to
buy are those with very strong balance sheets and trading at great discounts to
valuations. The Fund would utilize the portfolio's high cash holdings to slowly
return to a fully invested position. The Fund has not invested, and presently
does not intend to invest, in derivative securities. The Fund hedged its
currency risk by holding U.S. dollar-denominated securities and cash.
The Fund continues to review the current status of its exposure to the Year
2000 computer issue. Like other investment companies and financial and business
organizations, the Fund could be adversely affected if the computer systems used
by the Fund's service providers do not properly address this problem prior to
January 1, 2000. After analysis of these issues, the management of the Fund does
not anticipate that the transition to the 21st Century will have any material
impact on the Fund's operations. In addition, the management of the Fund has
sought assurances from the Fund's service providers that they are taking all
necessary steps to ensure that their computer systems will accurately reflect
the year 2000, and the management of the Fund will continue to monitor the
situation. At this time, however, no assurances can be given that the Fund's
service providers have anticipated every step necessary to avoid any adverse
effect to their respective operations, and consequently to the Fund,
attributable to the Year 2000 problem.
PORTFOLIO MANAGEMENT
Mr. Tan Seng Hock was appointed as the Fund's portfolio manager in May 1996,
and is responsible for the day-to-day management of the Fund's portfolio. Mr.
Tan joined DBS Asset Management Ltd., of which the Fund's Manager, DBS Asset
Management (United States) Pte. Ltd. is a wholly-owned subsidiary, in November
1995 as an Investment Manager. From 1987 to 1994, Mr. Tan was Head of
Investments at ANZ Investments Ltd. and Fund Manager--International and Strategy
at Norwich Union Investment Management in New Zealand.
The Fund's management would like to thank you for your participation in The
Singapore Fund, Inc. and would be pleased to hear from you.
<TABLE>
<S> <C>
Sincerely,
[SIGNATURE] [SIGNATURE]
SHUICHI KOMORI RONNIE TEO HENG HOCK
CHAIRMAN OF THE BOARD PRESIDENT
</TABLE>
6
<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
APRIL 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
- -------------------------------------------
COMMON STOCKS AND WARRANTS--51.88%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------
<C> <S> <C>
SINGAPORE--51.88%
BANKS & FINANCIAL SERVICES--7.41%
1,000,000 Hong Leong Asia Ltd.*.............. $ 839,646
900,000 United Overseas Bank Ltd.
(Foreign)+........................ 4,261,364
------------
5,101,010
------------
BUILDING MATERIALS--2.29%
1,200,000 Natsteel Ltd....................... 1,575,758
------------
COMMUNICATION--MEDIA--1.60%
100,000 Singapore Press Holdings Ltd....... 1,104,798
------------
CONSTRUCTION ENGINEERING--2.28%
2,922,000 Amtek Engineering Ltd.............. 1,567,992
------------
DIVERSIFIED--1.70%
1,000,000 Singapore Technologies Industrial
Corporation++..................... 1,167,929
------------
ELECTRICAL PRODUCTS & COMPUTERS--0.82%
368,000 Clipsal Industries Holdings Ltd.... 529,920
74,000 Clipsal Industries Holdings Ltd.
Warrants 1998(1)*................. 33,300
------------
563,220
------------
FOOD, BEVERAGE, TOBACCO--5.10%
900,000 Cerebos Pacific Ltd................ 1,863,636
368,000 Fraser & Neave Ltd................. 1,649,495
------------
3,513,131
------------
HOTELS--0.95%
1,250,000 Hotel Properties Ltd............... 654,987
------------
</TABLE>
- -------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------
<C> <S> <C>
INDUSTRIAL--5.13%
2,369,000 CSA Holdings Ltd................... $ 1,091,774
1,850,000 Lung Kee Metal Holdings Ltd........ 1,868,500
700,000 Wing Tai Holdings Ltd.*............ 570,076
------------
3,530,350
------------
MACHINERY--0.65%
152,000 Keppel Fels Ltd.................... 447,172
------------
PROPERTY DEVELOPMENT--9.32%
300,000 City Developments Ltd.............. 1,297,349
1,970,000 Keppel Land Ltd.++................. 2,338,131
150,000 Keppel Land Ltd. Warrants
2000++(2)......................... 34,564
1,062,000 Singapore Land Ltd................. 2,748,864
------------
6,418,908
------------
RETAIL--2.04%
3,613,500 Courts (Singapore) Ltd............. 1,402,969
------------
SHIPYARDS--5.91%
1,512,500 Keppel Corporation Ltd.*++......... 4,067,708
------------
TELECOMMUNICATIONS--5.48%
1,500,000 Singapore Telecommunications
Ltd.++............................ 2,575,758
2,700,000 Thakral Corporation Ltd............ 1,201,500
------------
3,777,258
------------
TRANSPORTATION--MARINE--1.20%
845,000 Osprey Maritime Ltd................ 448,106
</TABLE>
7
<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONCLUDED)
APRIL 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
COMMON STOCKS AND WARRANTS (CONCLUDED)
- -------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------
<C> <S> <C>
TRANSPORTATION--MARINE (CONCLUDED)
350,000 Sembawang Marine & Logistics
Ltd.++............................ $ 377,841
------------
825,947
------------
Total Common Stocks and Warrants
(Cost--$56,635,754).......................... 35,719,137
------------
</TABLE>
- -------------------------------------------
TIME DEPOSITS--48.79%
- -------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000)
- ----------
<C> <S> <C>
U.S. DOLLAR--45.36%
107 Bank of New York, 3.60% due
5/01/98........................... 107,023
31,127 Citibank, Singapore, 4.75% due
05/01/98.......................... 31,127,033
------------
Total U.S. Dollar Time Deposits................ 31,234,056
------------
</TABLE>
TIME DEPOSITS (CONCLUDED)
- -------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) VALUE
- ---------- ------------
<C> <S> <C>
SINGAPORE DOLLAR--3.43%
3,740 Citibank, Singapore, 4.25% due
05/01/98.......................... 2,360,815
------------
Total Time Deposits
(Cost--$33,582,282).......................... 33,594,871
------------
Total Investments--100.67%
(Cost--$90,218,036).......................... 69,314,008
Liabilities in excess of other assets--
(0.67)%...................................... (464,062)
------------
NET ASSETS (Applicable to 9,195,287 shares of
capital stock outstanding; equivalent to
$7.49 per share)--100.00%.................... $ 68,849,946
------------
------------
</TABLE>
- ------------------------
* Non-income producing securities.
+ Foreign shares of the above issue are those held by non-Singapore
residents. Ownership of such shares is generally limited and subject to a
premium to local shares (those held by residents of Singapore).
++ Deemed to be an affiliated issuer.
(1) Each warrant entitles holders to buy one share of Common Stock for SGD
2.03
(2) Each warrant entitles holders to buy one share of Common Stock for SGD
3.00.
See accompanying notes to financial statements.
8
<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
TEN LARGEST COMMON STOCK
CLASSIFICATIONS HELD
APRIL 30, 1998 (UNAUDITED)
- -------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- ----------------------------------- ----------
<S> <C>
Property Development*.............. 9.32%
Banks & Financial Services......... 7.41
Shipyards.......................... 5.91
Telecommunications................. 5.48
Industrial......................... 5.13
Food, Beverage, Tobacco............ 5.10
Building Materials................. 2.29
Construction Engineering........... 2.28
Retail............................. 2.04
Diversified........................ 1.70
- ------------------------
* Includes value of warrants.
</TABLE>
TEN LARGEST COMMON STOCK
POSITIONS HELD
APRIL 30, 1998 (UNAUDITED)
- -------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
ISSUE NET ASSETS
- ----------------------------------- ----------
<S> <C>
United Overseas Bank Ltd.
(Foreign).......................... 6.19%
Keppel Corporation Ltd............. 5.91
Singapore Land Ltd................. 3.99
Singapore Telecommunications
Ltd................................ 3.74
Keppel Land Ltd.................... 3.40
Lung Kee Metal Holdings Ltd........ 2.71
Cerebos Pacific Ltd................ 2.71
Fraser & Neave Ltd................. 2.39
Natsteel Ltd....................... 2.29
Amtek Engineering Ltd.............. 2.28
</TABLE>
9
<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS
Investment in securities, at value:
Unaffiliated securities
(cost--$78,220,471)..................... $ 61,327,834
Affiliated securities
(cost--$11,997,565)..................... 7,986,174 $ 69,314,008
------------
Cash denominated in foreign currency
(cost--$362,339).......................... 349,815
Receivable for securities sold............. 159,410
Interest and dividends receivable.......... 147,156
Prepaid expenses........................... 21,415
-------------
Total assets............................. 69,991,804
-------------
LIABILITIES
Payable for securities purchased........... 747,471
Payable to investment manager.............. 124,176
Payable to investment adviser.............. 49,280
Payable to administrator................... 11,575
Accrued expenses and other liabilities..... 209,356
-------------
Total liabilities........................ 1,141,858
-------------
NET ASSETS
Capital stock, $0.01 par value per share;
total 100,000,000 shares authorized;
9,195,287 shares issued and outstanding... 91,953
Paid-in capital in excess of par value..... 107,816,972
Undistributed net investment income........ 475,539
Accumulated net realized loss on
investments and foreign currency
transactions.............................. (18,617,524)
Net unrealized depreciation on investments
and other assets and
liabilities denominated in foreign
currency.................................. (20,916,994)
-------------
Net assets applicable to shares
outstanding............................. $ 68,849,946
-------------
-------------
NET ASSET VALUE PER SHARE............ $ 7.49
-------------
-------------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends:
Unaffiliated securities (net of
withholding taxes of--$39,838).......... $ 351,484
Affiliated securities.................... -- $ 351,484
-------------
Interest................................... 847,114
-------------
Total investment income.................. 1,198,598
-------------
EXPENSES:
Investment management fee.................. 261,088
Investment advisory fee.................... 129,053
Administration fee......................... 74,075
Custodian fees and expenses................ 56,288
Legal fees and expenses.................... 52,070
Osaka Securities Exchange fees and
expenses.................................. 35,034
Audit and tax services..................... 30,895
Reports and notices to shareholders........ 29,776
Insurance expense.......................... 18,256
Directors' fees and expenses............... 15,969
Transfer agency fee and expenses........... 10,413
Other...................................... 10,142
-------------
Total expenses........................... 723,059
-------------
NET INVESTMENT INCOME........................ 475,539
-------------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM
INVESTMENT ACTIVITIES AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized gains (losses) on investments:
Unaffiliated securities.................. (10,092,581)
Affiliated securities.................... 25,607 (10,066,974)
-------------
Net realized foreign currency transaction
gains..................................... 248,526
Net change in unrealized appreciation
(depreciation) on investments in equity
securities................................ 4,495,492
Net change in unrealized appreciation
(depreciation) on translation of
short-term investments, cash and other
assets and liabilities denominated in
foreign currency.......................... 245,957
-------------
Net realized and unrealized losses from
investment activities and foreign currency
transactions................................ (5,076,999)
-------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS.................................. $ (4,601,460)
-------------
-------------
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS
ENDED FOR THE YEAR
APRIL 30, ENDED
1998 OCTOBER 31,
(UNAUDITED) 1997
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income (loss)............... $ 475,539 $ (326,059)
Net realized gain (loss) on:
Investments.............................. (10,066,974) (8,799,076)
Foreign currency transactions............ 248,526 (2,016,662)
Net change in unrealized appreciation
(depreciation) on:
Investments in equity securities......... 4,495,492 (27,448,111)
Translation of short-term investments and
other assets and liabilities denominated
in foreign currency..................... 245,957 (204,090)
------------- -------------
Net decrease in net assets resulting from
operations................................ (4,601,460) (38,793,998)
------------- -------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
FROM:
Net realized gains from investment and
foreign currency transactions............. -- (3,481,087)
------------- -------------
FROM CAPITAL STOCK TRANSACTIONS:
Sale of capital stock resulting from:
Reinvestment of dividends................ -- 121,735
------------- -------------
Net decrease in net assets................. (4,601,460) (42,153,350)
NET ASSETS:
Beginning of period........................ 73,451,406 115,604,756
------------- -------------
End of period (including undistributed net
investment income of $475,539 and $0,
respectively)............................. $ 68,849,946 $ 73,451,406
------------- -------------
------------- -------------
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Singapore Fund, Inc. (the "Fund") was incorporated in Maryland on May
31, 1990 and commenced operations on July 31, 1990. It is registered with the
Securities and Exchange Commission as a closed-end, non-diversified management
investment company.
The following significant accounting policies are in conformity with
generally accepted accounting principles for investment companies. Such policies
are consistently followed by the Fund in the preparation of its financial
statements. The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts and disclosures in the financial statements.
Actual reporting results could differ from those estimates.
VALUATION OF INVESTMENTS--Securities which are listed on foreign stock
exchanges and for which market quotations are readily available are valued at
the last sale price on the exchange on which the securities are traded, as of
the close of business on the day the securities are being valued or, lacking any
sales on such day, at the closing price quoted for such securities. However, if
bid and asked quotations are available, such securities are valued at the mean
between the last current bid and asked prices, rather than at such quoted
closing price. Securities that are traded over-the-counter, if bid and asked
price quotations are available, are valued at the mean between the current bid
and asked prices, or, if such quotations are not available, are valued as
determined in good faith by the Board of Directors (the "Board") of the Fund. In
instances where quotations are not readily available or where the price as
determined by the above procedures is deemed not to represent fair market value,
fair value will be determined in such manner as the Board may prescribe.
Short-term investments having a maturity of 60 days or less are valued at
amortized cost, except where the Board determines that such valuation does not
represent the fair value of the investment. All other securities and assets are
valued at fair value as determined in good faith by, or under the direction of,
the Board.
FOREIGN CURRENCY TRANSLATION--The books and records of the Fund are
maintained in U.S. dollars as follows: (1) the foreign currency market value of
investment securities and other assets and liabilities stated in foreign
currencies are translated at the exchange rates prevailing at the end of the
period; and (2) purchases, sales, income and expenses are translated at the rate
of exchange prevailing on the respective dates of such transactions. The
resulting exchange gains and losses are included in the Statement of Operations.
The Fund does not generally isolate the effect of fluctuations in foreign
exchange rates from the effect of fluctuations in the market price of
securities.
TAX STATUS--The Fund intends to continue to distribute substantially all of
its taxable income and to comply with the minimum distribution and other
requirements of the Internal Revenue Code applicable to regulated investment
companies. Accordingly, no provision for federal income or excise taxes is
required. During the six months ended April 30, 1998, the Fund was subject to
withholding tax, ranging from 26% to 30%, on certain income from its
investments.
The Fund continues to meet the conditions required to qualify for the
exemption from Singapore income tax, available to non-Singapore residents who
are beneficiaries of funds managed by approved fund managers, in respect of
certain types of income. Accordingly, no provision for Singapore income tax is
required.
13
<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME--Investment transactions are
recorded on the trade date (the date upon which the order to buy or sell is
executed). Realized and unrealized gains and losses from security and foreign
currency transactions are calculated on the identified cost basis. Dividend
income and corporate actions are recorded generally on the ex-date, except for
certain dividends and corporate actions involving foreign securities which may
not be recorded on the ex-date, but recorded as soon as the Fund acquires
information regarding such dividends or corporate actions after such date.
Interest income is recorded on an accrual basis.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS--The Fund records dividends and
distributions payable to its shareholders on the ex-dividend date. The amount of
dividends and distributions from net investment income and net realized capital
gains are determined in accordance with federal income tax regulations, which
may differ from generally accepted accounting principles. These book basis/tax
basis ("book/tax") differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the capital accounts based on their federal tax-basis
treatment; temporary differences do not require reclassifications. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income or distributions in excess of net
realized capital gains. To the extent they exceed net investment income and net
realized capital gains for tax purposes, they are reported as distributions of
paid-in capital.
FORWARD FOREIGN CURRENCY CONTRACTS--The Fund may enter into forward foreign
currency exchange contracts in connection with planned purchases or sales of
securities or to hedge the U.S. dollar value of its assets denominated in a
particular currency, subject to a maximum limitation of 20% of the value of its
total assets committed to the consummation of such forward foreign currency
contracts. In addition, the Fund will not take positions in foreign forward
currency contracts where the settlement commitment exceeds the value of its
assets denominated in the currency of the contract. If the Fund enters into
forward foreign currency contracts, its custodian or subcustodian will maintain
cash or readily marketable securities in a segregated account of the Fund in an
amount equal to the value of the Fund's total assets committed to the
consummation of such contracts. Risks may arise upon entering into these
contracts from the potential inability of counterparties to meet the terms of
their contracts and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar.
INVESTMENT MANAGER AND INVESTMENT ADVISOR
The Fund has entered into an Investment Management Agreement (the
"Management Agreement") with DBS Asset Management (United States) Pte. Ltd. (the
"Manager"). Pursuant to the Management Agreement, the Manager makes investment
management decisions relating to the Fund's assets. For such services, the Fund
pays the Manager a monthly fee at an annual rate of 0.80% of the first $50
million of the Fund's average weekly net assets and 0.66% of the Fund's average
weekly net assets in excess of $50 million. In addition, as permitted by the
Management Agreement, the Fund reimburses the Manager for its out-of-pocket
expenses related to the
14
<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Fund. During the six months ended April 30, 1998, no such expenses were paid to
the Manager. During the six months ended April 30, 1998, brokerage commissions
of $90,365 were paid by the Fund to DBS Securities (Singapore), an affiliate of
the Manager, in connection with portfolio transactions.
The Fund has entered into an Investment Advisory Agreement (the "Advisory
Agreement") with Daiwa International Capital Management (Singapore) Limited (the
"Adviser"), which provides general and specific investment advice to the Manager
with respect to the Fund's assets. The Fund pays the Adviser a monthly fee at an
annual rate of 0.40% of the first $50 million of the Fund's average weekly net
assets and 0.34% of the Fund's average weekly net assets in excess of $50
million. In addition, as permitted by the Advisory Agreement, the Fund
reimburses the Adviser for its out-of-pocket expenses related to the Fund.
During the six months ended April 30, 1998, no such expenses were paid to the
Adviser. During the six months ended April 30, 1998, brokerage commissions of
$76,811 were paid by the Fund to Daiwa Securities (Singapore), an affiliate of
the Adviser, in connection with portfolio transactions.
ADMINISTRATOR AND CUSTODIAN AND OTHER RELATED PARTIES
Daiwa Securities Trust Company ("DSTC"), an affiliate of the Adviser,
provides certain administrative services to the Fund. For such services, the
Fund pays DSTC a monthly fee at an annual rate of 0.20% of the Fund's average
weekly net assets, with a minimum annual fee of $150,000. In addition, as
permitted by the Administration Agreement, the Fund reimburses the Administrator
for its out-of-pocket expenses related to the Fund. However, for the six months
ended April 30, 1998, there were no out-of-pocket expenses incurred by the
Administrator.
DSTC also acts as custodian for the Fund's assets and appoints subcustodians
for the Fund's assets held outside of the United States. DSTC has appointed The
Development Bank of Singapore, Ltd. ("DBS Bank"), an affiliate of the Manager,
to act as the subcustodian for all of the cash and securities of the Fund held
in Singapore. As compensation for its services as custodian, DSTC receives a
monthly fee and reimbursement of out-of-pocket expenses related to the Fund.
Such expenses include the fees and out-of-pocket expenses of each of the
subcustodians. During the six months ended April 30, 1998, DSTC earned $8,671
and DBS Bank earned $11,860 from the Fund for their respective custodial
services.
At April 30, 1998, the Fund owed to DSTC $11,575 and $22,771 for
administration and custodian fees, respectively. The latter amount includes fees
and expenses payable to DBS Bank totalling $19,038.
During the six months ended April 30, 1998, the Fund paid or accrued $49,590
for legal services, in connection with the Fund's on-going operations, to a law
firm of which the Fund's Assistant Secretary is a partner.
INVESTMENTS IN SECURITIES AND FEDERAL INCOME TAX MATTERS
The aggregate cost of investments at April 30, 1998 for federal income tax
purposes was $57,845,130, excluding $33,582,282 of short-term investments. At
April 30, 1998, the net unrealized depreciation on investments, excluding
short-term securities, of $22,125,993 was composed of gross appreciation of
$132,224 for those
15
<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
- --------------------------------------------------------------------------------
investments having an excess of value over cost, and gross depreciation of
$22,258,217 for those investments having an excess of cost over value. For the
six months ended April 30, 1998, the total aggregate cost of purchases and net
proceeds from sales of portfolio securities, excluding the short-term
securities, were $38,457,261 and $35,944,330, respectively.
At October 31, 1997, the Fund had a capital loss carryover of $8,799,076,
which expires in the year 2005.
CONCENTRATION OF RISK
At April 30, 1998, the Fund had approximately 49% of its net assets invested
in time deposits of a first-tier U.S. financial institution located in
Singapore. While there is currently no rating system for Singapore debt
securities, the Fund invests only in short-term debt securities which the
Manager believes to be of high quality and subject to relatively low risk of
loss of principal or interest.
Investments in countries in which the Fund may invest may involve certain
considerations and risks not typically associated with U.S. investments as a
result of, among others, the possibility of future political and economic
developments and the level of governmental supervision and regulation of the
securities markets in which the Fund invests.
CAPITAL STOCK
There are 100,000,000 shares of $0.01 par value common stock authorized.
During the year ended October 31, 1997, 10,324 shares were issued as a result of
the reinvestment of dividends paid to those shareholders electing to reinvest
dividends.
Of the 9,198,287 shares outstanding at April 30, 1998, Daiwa Securities
America Inc., an affiliate of the Adviser and DSTC, owned 14,086 shares.
16
<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding during each period is
presented below:
<TABLE>
<CAPTION>
FOR THE
SIX
MONTHS
ENDED
APRIL 30, FOR THE YEARS ENDED OCTOBER 31,
1998 --------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period................. $ 7.99 $ 12.59 $ 13.42 $ 18.49 $ 17.23 $ 10.38
---------- ---------- ---------- ---------- ---------- ----------
Net investment income (loss)......................... 0.05 (0.04) (0.07) (0.07) (0.01) (0.14)
Net realized and unrealized gains (losses) on
investments and foreign currency transactions....... (0.55) (4.18) 0.21 (1.43) 2.66 7.32
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net asset value resulting
from operations..................................... (0.50) (4.22) 0.14 (1.50) 2.65 7.18
---------- ---------- ---------- ---------- ---------- ----------
Less: dividends and distributions to shareholders
Net realized gains from investments and foreign
currency transactions............................. -- -- (0.97) (2.89) (1.03) (0.33)
Dilutive effect of rights offering................... -- -- -- (0.64) (0.30) --
---------- ---------- ---------- ---------- ---------- ----------
Offering costs charged to paid-in capital in excess
of par value........................................ -- -- -- (0.04) (0.06) --
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period....................... $ 7.49 $ 7.99 $ 12.59 $ 13.42 $ 18.49 $ 17.23
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Per share market value, end of period................ $ 7.375 $ 8.750 $ 12.125 $ 13.500 $ 18.000 $ 19.750
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Total investment return:
Based on market price at beginning and end of
period, assuming reinvestment of dividends*....... (15.71)% (25.51)% (3.54)% (6.89)% (0.19)% 99.02%
Based on net asset value at beginning and end of
period, assuming reinvestment of dividends*....... (6.26)% (34.49)% 0.76% (10.06)% 18.39% 71.46%
Ratios and supplemental data:
Net assets, end of period (in millions)............ $ 68.8 $ 73.5 $115.6 $122.9 $126.1 $ 87.8
Ratios to average net assets of:
Expenses+........................................ 2.11%** 1.87% 1.85% 2.01% 1.90% 2.42%
Net investment income (loss)+.................... 1.39%** (0.29)% (0.48)% (0.49)% (0.08)% (1.05)%
Portfolio turnover................................. 106.37% 78.74% 62.78% 62.85% 82.12% 90.19%
Average commission rate per share.................. $ 0.0100 $0.0204 $0.0194 N/A N/A N/A
</TABLE>
- --------------------------
* For the years ended October 31, 1995 and 1994, the total investment
return includes the benefit of shares resulting from the exercise of
the rights.
+ Ratios for the year ended October 31, 1993 include the amortization of
certain initial and non-recurring expenses totaling $32,519, related
to the listing of the Fund's shares on the Osaka Securities Exchange.
If such expenses had not been included, the ratios of expenses and of
net investment loss to average net assets would have been 2.38% and
(1.01)%, respectively.
** Annualized.
17
<PAGE>
- ----------------------------------------
BOARD OF DIRECTORS
Shuichi Komori, CHAIRMAN
David G. Harmer
Ronnie Teo Heng Hock
Alfred C. Morley
Oren G. Shaffer
- --------------------------------------------
OFFICERS
Ronnie Teo Heng Hock
PRESIDENT
Daniel F. Barry
VICE PRESIDENT
Lawrence Jacob
SECRETARY
Sean J. Peters
TREASURER
John A. Koopman
ASSISTANT TREASURER
Laurence E. Cranch
ASSISTANT SECRETARY
- --------------------------------------------
ADDRESS OF THE FUND
c/o Daiwa Securities Trust Company
One Evertrust Plaza, 9th Floor
Jersey City, New Jersey 07302
- --------------------------------------------
INVESTMENT MANAGER
DBS Asset Management (United States) Pte. Ltd.
INVESTMENT ADVISER
Daiwa International Capital Management
(Singapore) Limited
ADMINISTRATOR AND CUSTODIAN
Daiwa Securities Trust Company
TRANSFER AGENT AND REGISTRAR
State Street Bank and Trust Company
LEGAL COUNSEL
Rogers & Wells LLP
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
- --------------------------------------------
Notice is hereby given in accordance with
Section 23(c) of the Investment Company Act of 1940 that from time to time the
Fund may purchase shares of its common stock in the open market at prevailing
market prices.
This report is sent to shareholders of the Fund for their information. It is not
a prospectus, circular or representation intended for use in the purchase or
sale of shares of the Fund or of any securities mentioned in the report.
The financial information included herein is taken from the records of the Fund
without examination by independent accountants who do not express an opinion
thereon.
THE
SINGAPORE
FUND, INC.
[LOGO]
Semi-Annual Report
April 30, 1998
