<PAGE>
THE SINGAPORE FUND, INC.
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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) 536-9490, 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 Comapny, P.O. Box 8200, Boston, MA 02266-8200.
<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
GENERAL INFORMATION (CONCLUDED)
- --------------------------------------------------------------------------------
A brief summary of the material aspects of the Plan follows:
WHO CAN PARTICIPATE IN THE PLAN? If you wish to participate and your shares
are held in your name, no action is required on your part, as you are
AUTOMATICALLY ENROLLED by the Plan Agent. However, if your shares are held in
the name of a brokerage firm, bank or nominee, you should instruct your nominee
to participate in the Plan on your behalf. If your nominee is unable to
participate in the Plan for you, you should request that your shares be
registered in your name, so that you may participate directly in the Plan.
MAY I WITHDRAW FROM THE PLAN? If your shares are held in your name and you
wish to receive all dividends and capital gain distributions in cash rather than
in shares, you may withdraw from the Plan without penalty at any time by
contacting the Plan Agent. If your shares are held in nominee name, you should
be able to withdraw from the Plan without penalty at any time by sending written
notice to your nominee. If you withdraw, you will receive a share certificate
for all full shares or, if you wish, the Plan Agent will sell your shares and
send you the proceeds, after the deduction of brokerage commissions. The Plan
Agent will convert any fractional shares to cash at the then-current market
price and send to you a check for the proceeds.
HOW ARE THE DIVIDENDS AND DISTRIBUTIONS REINVESTED? If the market price of
the Fund's shares on the payment date should equal or exceed their net asset
value per share, the Fund will issue new shares to you at the higher of net
asset value or 95% of the then-current market price. If the market price is
lower than net asset value per share, the Fund will issue new shares to you at
the market price. If the dividends or distributions are declared and payable as
cash only, you will receive shares purchased for you by the Plan Agent on the
NYSE or otherwise on the open market to the extent available.
WHAT IS THE CASH PURCHASE FEATURE? The Plan also allows shareholders to make
optional cash investments in Fund shares semi-annually through the Plan Agent in
any amount from $100 to $3,000. The Plan Agent will purchase shares for you on
the NYSE or otherwise on the open market twice a year, on or about February 15th
and August 15th. Plan participants should send in voluntary cash payments to be
received by the Plan Agent approximately ten days before the applicable purchase
date. The Plan Agent will return any cash payments received more than thirty
days prior to the applicable date. You may withdraw a voluntary cash payment by
written notice, if the notice is received by the Plan Agent not less that two
business days before the purchase date.
IS THERE A COST TO PARTICIPATE? There are no Plan charges or brokerage
charges for shares issued directly by the Fund. However, each participant will
pay a pro rata portion of brokerage commissions for shares purchased on the NYSE
or on the open market by the Plan Agent. For purchases from voluntary cash
payments, participants must pay a nominal service fee of $0.75 for each
investment in addition to a pro rata portion of the brokerage commission.
WHAT ARE THE TAX IMPLICATIONS? The automatic reinvestment of dividends and
distributions does not relieve you of any income tax which may be payable (or
required to be withheld) on such dividends and distributions. In addition, the
Plan Agent will reinvest dividends for foreign participants and for any
participants subject to federal backup withholding after the deduction of the
amounts required to be withheld.
PLEASE NOTE THAT, IF YOU PARTICIPATE IN THE PLAN THROUGH A BROKERAGE
ACCOUNT, YOU MAY NOT BE ABLE TO CONTINUE AS A PARTICIPANT IF YOU TRANSFER THOSE
SHARES TO ANOTHER BROKER. CONTACT YOUR BROKER OR NOMINEE OR THE PLAN AGENT TO
ASCERTAIN WHAT IS THE BEST ARRANGEMENT FOR YOU TO PARTICIPATE IN THE PLAN.
2
<PAGE>
THE SINGAPORE FUND, INC.
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December 4, 1998
DEAR SHAREHOLDERS,
We are pleased to present the Annual Report of The Singapore Fund, Inc. (the
"Fund") for the fiscal year ended October 31, 1998.
STOCK MARKET REVIEW
For the year ended October 31, 1998, the Singapore market, as measured by
the DBS50 Index (the "DBS50"), fell by 7.5% in U.S. Dollar ("USD") terms. The
Malaysian, Thai, Philippine and Indonesian markets fell by 45.9%, 17.3%, 15.4%
and 71.5%, respectively.
Over the last fifteen months, the ASEAN markets had experienced their
sharpest declines over the last decade. Currency depreciations in excess of 30%
were commonplace. What began in Thailand in July 1997 became an avalanche that
first engulfed Asia, then, other emerging economies in Latin America and Russia,
and finally looked set to hobble the previously unaffected growing economies of
the U.S. and Europe. Between July 1, 1997 to early September 1998, the ASEAN
markets plunged more than 70% in USD terms. Singapore, despite its better
fundamentals, also fell more than 50%.
In Asia, there was an amalgam of problems arising from an overvalued
exchange rate, heavy reliance on short-term foreign capital to service current
account deficits, and inadequate banking supervision, which resulted in
excessive credit growth and over-investment in non-productive assets like the
property sector. The sharp devaluation of the Asian currencies and collapse of
their stock markets were only a part of the adjustment process.
As short-term capital fled the markets, the tremendous outflow of funds
created a vicious cycle of currency depreciation, high interest rates, credit
contraction and real economic pain. With the exception of Singapore, the rest of
the ASEAN countries moved into economic contraction by mid-1998, and more
companies became crippled by huge foreign exchange losses and high debt burden,
adding to corporate bankruptcy risks as well as risks to the banking systems. By
the third quarter of 1998, Singapore had also fallen into economic contraction.
The economic difficulties grew into social and political unrest. In
Indonesia, mass unemployment and poverty led to the downfall of President
Suharto. In Malaysia, the sacking of former Deputy Prime Minister Anwar Ibrahim
must, in part, be attributed to the conflicting views on the methods of reviving
the economy. Relations between the neighboring countries were also strained, as
the countries' leaders sought to protect their own domestic interests ahead of
regional cooperation. In particular, relations between Singapore and Malaysia
were highly strained. Singapore was seen as contributing to the capital flight
and currency selldown in Malaysia through offering high offshore Malaysian
Ringgit deposit rates, and providing a platform for short-selling of Malaysian
equities through the Singapore-based exchange, the Central Limit Order Book
("CLOB"). The issue was finally settled when Malaysia imposed capital controls
on investments in Malaysia and restricted the convertibility of its currency to
prevent short-term capital outflows. As a result, Singapore-based banks stopped
accepting Ringgit deposits and the CLOB was closed. The continued use of the
Singapore port by Malaysian exporters was also a sore point with the Malaysian
authorities, as it sought to boost its income through port activities.
3
<PAGE>
THE SINGAPORE FUND, INC.
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In late August, with the regional markets still reeling from economic
pressures and an apparent lack of forceful action by the Japanese government to
revive its ailing economy, Russia announced a debt moratorium and widened the
trading band for its currency. This sparked a huge selldown in emerging markets
debt and equity issues.
While the negative events were impacting the markets, interest rates in the
region had already started on a downtrend. The ability to lower interest rates
was aided by strong current account surpluses that supported the currencies from
continued capital outflows. When the U.S. Federal Reserve arranged the bailout
of a major U.S. hedge fund, Long Term Capital Management, amid announcements of
huge trading losses and provisions by major banks, it signaled that the Asian
contagion had infected not only the other emerging markets, but was close to
causing a global financial crisis. Therefore, a shift from a tight to an easy
monetary stance by the developed countries was now deemed necessary. The
markets' expectations were surpassed by two U.S. Federal Funds rate cuts of 25
basis points each, one of which was in between FOMC meetings. The surprise rate
cut, coupled with the strengthening of the Japanese Yen and accompanied by an
unprecedented 60 trillion Yen bank re-capitalization package, sparked off a
tremendous rally in the Asian markets, where gains of more than 30% were
achieved from their lows in September.
The rallies in the Asian markets reflected more than pure event-driven
speculative buying of Asian equities. The U.S. Federal Reserve signaled that it
would be willing to do what was necessary to avert a sharp slowdown in global
growth. Lower interest rates improved the relative valuation of equities
vis-a-vis the other asset classes. The favorable global interest rate
environment also allowed Asian interest rates to fall further without weakening
the currencies. The pressure on the Hong Kong Dollar ("HK$") peg and Chinese
Yuan had also been alleviated. These factors warranted a re-rating of the Asian
markets, which had previously been battered beyond fundamentals.
FUND PERFORMANCE
As October 31, 1998, the Fund's net asset value ("NAV") per share was USD
7.09. This represents a decrease of 11.3% from the NAV per share of USD 7.99 at
the end of the previous fiscal year. The Fund under-performed by 4.6% against
the DBS50, which dropped by 6.7% in the year. The DBS50 showed better
performance versus the other broader Singapore stock market indices because of
the performance of heavy weight Singapore Telecom stock (representing almost 40%
of the index), which returned 8.6% in the period. The Straits Times and MSCI
Singapore Free indices fell by 22.8% and 22.5%, respectively. For portfolio risk
management reasons, the Fund's Manager does not hold more than 10% of any stock
in the portfolio. Against these broader market indices, the Fund outperformed by
about 12% in the fiscal year ended October 31, 1998.
The Fund's out-performance against the broader market came from the
significant underweight position in equities throughout most of the fiscal year
until the last two months of the period. The portfolio equity exposure was
increased back to around 65% when interest rates started to fall sharply in
Singapore in the month of September. From September to the end of October, the
Fund managed to mirror the index performance with the 65% invested position
because of positive sector and stock selections. The Fund ended the year with
equity weighting of 57% of net assets.
4
<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
ECONOMIC PERFORMANCE
For the third quarter of 1998, Singapore registered its first quarterly
economic contraction since 1986. The economy contracted 0.7%, with growth in all
sectors moderating. The contraction followed a significant slowdown in second
quarter growth at 1.8% after a relatively robust first quarter growth of 6.2%.
Official growth estimates range from 0.5 to 1.0% for 1998 and from -1.0 to 1.0%
for 1999.
The key manufacturing sector declined 4.5% in the third quarter as the
cyclical downturn in the global electronics sector was exacerbated by the weak
global economy. Growth in the financial and business services sector moderated
to 1.7%, reflecting the prevailing cutback in regional economic activity and
significant slowdown in the domestic real estate segment. Manufacturing
investment commitments totaled 1.8 billion Singapore Dollars (S$) in the third
quarter with foreign commitments accounting for 72%. Cumulative commitments for
the first nine months of 1998 amounted to S$5.7 billion, down 17% from the same
period in 1997.
Singapore's total trade contracted by 9.2% in the third quarter and 4.6% for
the first nine months of 1998. Imports contracted 16.9% in the third quarter and
10.9% for the first nine months of 1998. Industrial production fell by 4.5% in
the third quarter. The key non-oil domestic exports grew a marginal 1.4% in the
third quarter but fell 4.8% in October, leaving an export-led recovery very much
in the balance. Loans to non-bank customers fell by 1.3% in September, the first
decline in 10 years, reflecting the cautious stance adopted by banks in the
difficult economic environment. Non-performing loans of Singaporean banks rose
to 6.6% of total loans in September from 2.6% in January 1998.
Malaysia experienced a deeper economic contraction of 6.8% in the second
quarter after contracting 2.8% in the first quarter of 1998. With the capital
controls in place and a mildly expansionary budget for 1999 (with the fiscal
deficit estimated at Malaysian Ringgitts 16.1 billion or 6.1% of Gross National
Product), Malaysia has estimated a 1% GDP growth for 1999. In the meantime,
industrial production has remained depressed at 10.9% in August. Exports in USD
terms fell by 16% in July-August while imports fell by 33%.
Thailand's manufacturing production index and private investment index
continued to decline in July by 14.0% and 19.3%, respectively, after declines of
15.7% and 14.4%, respectively, in the second quarter. Exports in USD terms fell
by 11% in the third quarter, while imports fell by 33%.
The Philippine economy contracted 1.2% in the second quarter, as the key
agriculture sector declined 11.5% from the prolonged drought. Manufacturing
production continued to slide 12.1% in July after falling 10.6% in the second
quarter. Exports in USD terms remained strong at 17.5% in August, while imports
continued its decline at 24.6%.
Indonesia's economy contracted further by 17.4% in the third quarter after
contracting 16.8% in the second quarter. Exports in USD terms fell by 6.4% in
July-August while imports fell by 33%. Year-on-year inflation appears to have
peaked out at 82.4% in September with October's inflation at 79.4%.
Faced with the continuing sharp deterioration of their economies, reform
packages aimed at rehabilitating the financial sector and facilitating corporate
debt restructuring were unveiled by the Indonesian, Malaysian and Thai
governments in the third quarter of 1998. The cost of these packages is expected
to be borne by government bond issues, foreign private investments, local and
foreign institutions and supportive foreign governments. The success of banking
sector reforms and recapitalization are essential for the lending activities to
start and the economies to recover.
5
<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
MARKET OUTLOOK
Asian equities rose by about 50% from their lows since the end of August.
The Yen strengthened, Japan announced yet another banking package and the U.S.
Federal Reserve announced a surprise interest rate cut in between council
meetings.
The economic fundamentals have not changed much. All the issues that were
extensively discussed are still there--contraction in domestic growth, rising
unemployment, questionable corporate earnings growth, further asset price
deflation, huge debts and large recapitalization of banks required. The external
environment is now more unfavorable with growth in the U.S. and Europe slowing
down, and this development, coupled with a weaker USD, means that an export-led
recovery for Asia would be more difficult. Additionally, the exposures of the
developed world's banks to leveraged hedge funds and emerging markets have hurt
their balance sheets and made them more risk-averse in extending credit.
HOWEVER, THE BALANCE OF RISK HAS PROBABLY SHIFTED. The U.S. Fed easing has
signaled that it would be willing to do what is necessary to avert a rapid
slowdown in global growth. Lower interest rates improve the relative valuation
of equities vis-a-vis the other asset classes. A favorable global interest rate
environment allows Asian interest rates to fall as well without weakening the
currencies. The pressure on the HK$ peg and Chinese Yuan has been alleviated.
While the lowering of interest rates and narrowing of spreads are the
initial steps, this must be translated to loan growth if the credit creation
process is to restart in any meaningful way. And for the banking system to be
able to expand, the debt overhang facing emerging Asia must first be reduced.
New lending is unlikely to be extended until bank capital is restored.
In Japan, the unprecedented 60 trillion Yen package seeks to protect
depositors and facilitate bank capital injections preferably through voluntary
applications, in the hope of alleviating the severe credit crunch resulting from
continued deterioration in the banks' capital base. Investors remain skeptical
of the package. The package lacks well-defined conditions for capital injection,
with applicant banks given much leeway in their assessment and classification of
non-performing loans and the valuation of equity holdings (cost method). In
addition, since the application is voluntary, bank management has little
incentive to seek capital injections. As Japan addresses its banking problems,
this is likely to have an adverse economic effect when banks recall loans to
stay within solvency limits. Nonetheless, the package represents a positive step
forward and IBJ's application for capital has been favorably received by the
market as an indication that the others would also come forward.
In Singapore, restructuring has begun in earnest. The Committee On
Singapore's Competitiveness has made various recommendations to help Singapore
companies compete both in the short term and in the long term. The short term
objective is to help Singapore companies save up to 15% on business costs, and
measures include a reduction in wages by up to 15%, income tax rate cuts or
rebates, and cuts in rentals, telecommunications, electricity and port service
charges. Longer term objectives are to maintain manufacturing and services as
Singapore's twin engines of growth and to become Asia's premier services hub
with targeted new growth areas in health care, education, media and information
technology. The measures are expected to be accepted by the government and
implemented in 1999.
On the corporate front, government-linked agencies have also started on
merger and restructuring exercises, including the purchase of POSBank by the
Development Bank of Singapore for combined total assets of S$93 billion. Other
significant events were the merger of Singapore Technologies Industrial
Corporation and
6
<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
Sembawang Corporation to form SembCorp Industries, one of the largest
infrastructure and engineering groups in Singapore and Asia, and the
restructuring and cost-cutting exercise of the Keppel Group from which it
intends to save S$100 million in costs annually.
These costs measures will help Singaporean companies tide over the current
tough external environment and position themselves to benefit from the eventual
recovery in the regional and global economies.
Is the recent stock market rally sustainable? The Fund's management knows
that "bear" markets have long days of despondency and short, sharp days of
elation. Caution is still advisable. With the Singapore economy expected to
contract further in the fourth quarter of 1998 and remain depressed into the
first half of 1999, the stock market's performance is likely to be more
restrained after the recent strong bounce from its lows. In the 1985-86
manufacturing recession, the stock market did not recover strongly until the
economy bottomed out and started to recover in the first quarter of 1986. The
Singapore economy is still in the process of bottoming out. However, the lower
interest rate environment will provide a floor to stock market valuations. On a
historical basis, valuations based on the yield gap appear attractive.
PORTFOLIO STRATEGY
The Fund's management will maintain an approximate 85% invested position in
the next few months. In the shorter term, the bias is for the markets to move
higher, as interest rates and positive policy announcements is made around Asia
and especially Singapore. For the time being, the Fund will refrain from being
fully invested for risk management reasons, as global event risks from
Indonesia, Japan, Brazil and Russia remain. The Fund intends to keep some cash
for buying in any sharp market selldown, should any event risk occur.
Over the next year, the Fund's management intends to increasingly build up
exposure to companies with good earnings growth arising from restructuring and
cost-cutting exercises. These companies will also gain significant market share
and produce quality and strong profits as the economy finally recovers and
enters the next cycle. These companies will form the backbone of the Fund's
investment program as Singapore goes into the next century as a financial center
and high value-added manufacturing economy. Some exposure to the other ASEAN
markets will be considered on a strictly stock basis. On a balance and risk
adjusted basis, Singapore equities remain more than the other ASEAN equities.
The Fund has not invested, and presently does not intend to invest in
derivative securities. Although foreign currency hedging is permitted by the
Fund's investment policies, the Fund has not engaged in any foreign currency
hedging.
THE YEAR 2000 ISSUE
The Fund continues to review the current status of its exposure to the Year
2000 computer issue. The Fund does not itself own or directly use any computers
in conducting its business. Instead it relies on various service providers to
conduct its business and its service providers may use or depend on computers to
provide services to the Fund. 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. The Fund's Board of Directors has adopted a
Year 2000 plan which involves: (1) collecting information regarding the Year
2000 preparations of its service providers, through a questionnaire prepared,
and distributed by the Fund's management, (2) assessing the information provided
by the service providers, and (3) if necessary, adopting measures to replace
service providers who fail to indicate that they will
7
<PAGE>
THE SINGAPORE FUND, INC.
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become Year 2000 compliant on a timely basis. As of December 3, 1998, the Fund
had been advised by each of its service providers that it has adopted a Year
2000 plan, completed an internal assessment of its computer systems, and begun
implementation of procedures to bring its mission-critical systems into Year
2000 compliance. Based on the information, management of the Fund does not
anticipate that the transition to the 21st Century will have any material impact
on the Fund's operations; however, management of the Fund will continue to
monitor the situation. In addition, however, no assurance can be given that the
Fund's service providers have anticipated every step necessary to avoid any
adverse effect on 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]
MASAYASU OHI RONNIE TEO HENG HOCK
CHAIRMAN OF THE BOARD PRESIDENT
</TABLE>
8
<PAGE>
THE SINGAPORE FUND, INC.
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PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
- -------------------------------------------
COMMON STOCKS--56.94%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------
<C> <S> <C>
SINGAPORE--56.94%
BANKS & FINANCIAL SERVICES--8.66%
1,380,000 Overseas Union Bank Ltd.
(Foreign)*........................ $ 3,758,920
400,000 United Overseas Bank Ltd.
(Foreign)*........................ 1,885,746
------------
5,644,666
------------
BUILDING MATERIALS--1.75%
1,200,000 NatSteel Ltd....................... 1,138,843
------------
CONSTRUCTION ENGINEERING--2.14%
3,222,000 Amtek Engineering Ltd.............. 1,399,833
------------
ELECTRICAL PRODUCTS & COMPUTERS--4.77%
65,000 Creative Technology Ltd.+.......... 949,344
27,000 Elec & Eltek International Company
Ltd............................... 135,000
500,000 Natsteel Electronics Ltd.++........ 1,029,149
300,000 Venture Manufacturing Ltd.......... 998,336
------------
3,111,829
------------
FOOD, BEVERAGE, TOBACCO--10.02%
1,346,000 Cerebos Pacific Ltd................ 2,455,266
1,273,000 Fraser & Neave Ltd................. 4,079,374
------------
6,534,640
------------
INDUSTRIAL--6.93%
928,000 Clipsal Industries Holdings Ltd.... 872,320
3,700,000 Singapore Technologies Engineering
Ltd.++............................ 3,648,240
------------
4,520,560
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------
<C> <S> <C>
RETAIL--3.93%
3,613,500 Courts (Singapore) Ltd............. $ 1,157,959
2,700,000 Thakral Corporation Ltd............ 1,404,000
------------
2,561,959
------------
SHIPYARDS--8.01%
273,000 Jurong Shipyard Ltd.++............. 1,177,667
2,012,500 Keppel Corporation Ltd.++.......... 4,043,107
------------
5,220,774
------------
TELECOMMUNICATIONS--7.54%
400,000 CSA Holdings Ltd................... 155,297
350,000 Datacraft Asia Ltd. ............... 1,127,000
2,100,000 Singapore Telecommunications
Ltd.++............................ 3,636,532
------------
4,918,829
------------
TRANSPORTATION--AIR--0.94%
100,000 Singapore Airlines Ltd.
(Foreign)*++...................... 616,257
------------
TRANSPORTATION--MARINE--2.25%
1,476,378 SembCorp Industries Ltd.**++....... 1,464,823
------------
Total Singapore Common Stocks.................. 37,133,013
------------
Total Common Stocks (Cost--$48,897,862)........
37,133,013
------------
</TABLE>
9
<PAGE>
THE SINGAPORE FUND, INC.
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PORTFOLIO OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
- -------------------------------------------
TIME DEPOSITS--44.72%
- -------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) VALUE
- ---------- ------------
<C> <S> <C>
SINGAPORE DOLLAR--15.83%
16,750 Citibank, Singapore, 1.375% due
11/2/98........................... $ 10,322,131
------------
U.S. DOLLAR--28.89%
68 Bank of New York Time Deposit,
3.60% due 11/2/98................. 68,141
18,771 Citibank, Singapore, 4.31% due
11/2/98........................... 18,771,230
------------
Total U.S. Dollar Time Deposits................ 18,839,371
------------
Total Time Deposits (Cost--$29,167,968)........
29,161,502
------------
Total Investments--101.66%
(Cost--$78,065,830).......................... 66,294,515
Liabilities in excess of other
assets--(1.66)%.............................. (1,084,512)
------------
NET ASSETS (Applicable to 9,195,287 shares of
capital stock outstanding; equivalent to
$7.09 per share)--100.00%.................... $ 65,210,003
------------
------------
</TABLE>
- ------------------------
* Foreign shares of the above issues 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).
** Effective October 5, 1998, Singapore Tech. Industrial Corp. and Sembawang
Corp. Ltd. merged to form SembCorp. Industries Ltd.
+ Non-income producing securities.
++ Deemed to be an affiliated issuer.
- -------------------------------------------
TEN LARGEST COMMON STOCK CLASSIFICATIONS HELD
OCTOBER 31, 1998
- -------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- ----------------------------------- ----------
<S> <C>
Food, Beverage, Tobacco............ 10.02%
Banks & Financial Services......... 8.66
Shipyards.......................... 8.01
Telecommunications................. 7.54
Industrial......................... 6.93
Electrical Products & Computers.... 4.77
Retail............................. 3.93
Transportation--Marine............. 2.25
Construction Engineering........... 2.14
Building Materials................. 1.75
</TABLE>
- -------------------------------------------
TEN LARGEST COMMON STOCK
POSITIONS HELD
OCTOBER 31, 1998
- -------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
ISSUE NET ASSETS
- ----------------------------------- ----------
<S> <C>
Fraser & Neave Ltd................. 6.26%
Keppel Corporation Ltd............. 6.20
Overseas Union Bank Ltd.
(Foreign).......................... 5.76
Singapore Tech. Engineering Ltd.... 5.59
Singapore Telecommunications
Ltd................................ 5.58
Cerebos Pacific Ltd................ 3.77
United Overseas Bank Ltd.
(Foreign).......................... 2.89
Sembcorp Industries Ltd............ 2.25
Thakral Corporation Ltd............ 2.15
Amtek Engineering Ltd.............. 2.15
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS
Investment in securities, at value:
Unaffiliated securities
(cost--$61,172,314)..................... $ 50,678,740
Affiliated securities
(cost--$16,893,516)..................... 15,615,775 $ 66,294,515
------------
Receivable for securities sold............. 5,878,771
Interest and dividends receivable.......... 91,219
Prepaid expenses........................... 52,209
-------------
Total assets............................. 72,316,714
-------------
LIABILITIES
Payable for securities purchased........... 6,871,403
Payable to investment manager.............. 51,821
Payable to investment adviser.............. 21,546
Payable to administrator................... 12,500
Accrued expenses and other liabilities..... 149,441
-------------
Total liabilities........................ 7,106,711
-------------
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........ 953,672
Accumulated net realized loss on
investments............................... (31,878,895)
Net unrealized depreciation on investments
and other assets and liabilities
denominated in foreign currency........... (11,773,699)
-------------
Net assets applicable to shares
outstanding............................. $ 65,210,003
-------------
-------------
NET ASSET VALUE PER SHARE............ $ 7.09
-------------
-------------
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest................................... $ 1,401,657
Dividends:
Unaffiliated securities (net of
withholding taxes of--$123,722)......... $ 668,903
Affiliated securities (net of withholding
taxes of--$59,295)...................... 168,761 837,664
------------- -------------
Total investment income.................. 2,239,321
-------------
EXPENSES:
Investment management fee and expenses..... 495,861
Investment advisory fee.................... 241,099
Administration fee......................... 150,000
Custodian fees and expenses................ 112,151
Reports and notices to shareholders........ 90,171
Audit and tax services..................... 63,200
Osaka Securities Exchange fees and
expenses.................................. 60,649
Legal fees and expenses.................... 58,265
Insurance expense.......................... 33,055
Directors' fees and expenses............... 28,042
Transfer agency fee and expenses........... 24,648
Other...................................... 26,993
-------------
Total expenses........................... 1,384,134
-------------
NET INVESTMENT INCOME........................ 855,187
-------------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM
INVESTMENT ACTIVITIES AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized losses on investments:
Unaffiliated securities.................. (20,721,520)
Affiliated securities.................... (2,358,299) (23,079,819)
-------------
Net realized foreign currency transaction
gains..................................... 98,485
Net change in unrealized appreciation
(depreciation) on investments in equity
securities................................ 13,647,260
Net change in unrealized appreciation
(depreciation) on translation of
short-term investments, cash and other
assets and liabilities denominated in
foreign currency.......................... 237,484
-------------
Net realized and unrealized losses from
investment activities and foreign currency
transactions................................ (9,096,590)
-------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS.................................. $ (8,241,403)
-------------
-------------
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
OCTOBER 31,
-------------------------------
1998 1997
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income (loss)............... $ 855,187 $ (326,059)
Net realized gain (loss) on:
Investments.............................. (23,079,819) (8,799,076)
Foreign currency transactions............ 98,485 (2,016,662)
Net change in unrealized appreciation
(depreciation) on:
Investments in equity securities......... 13,647,260 (27,448,111)
Translation of short-term investments and
other assets and liabilities denominated
in foreign currency..................... 237,484 (204,090)
------------- -------------
Net decrease in net assets resulting from
operations................................ (8,241,403) (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................. (8,241,403) (42,153,350)
NET ASSETS:
Beginning of year.......................... 73,451,406 115,604,756
------------- -------------
End of year (including undistributed net
investment income of $953,672 and $0,
respectively)............................. $ 65,210,003 $ 73,451,406
------------- -------------
------------- -------------
</TABLE>
See accompanying notes to financial statements.
13
<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 fluctations 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 year ended October 31, 1998, the Fund was subject to
withholding tax of 26% 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.
14
<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
be recorded after the ex-date, but recorded as soon as the Fund acquires
information regarding such dividends or corporate actions. 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 Fund. During the year ended October 31, 1998, expenses
of $16,080 were paid to the Manager, representing
15
<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
reimbursement to the Manager of costs relating to the attendance by its
employees at meetings of the Fund's Board. During the year ended October 31,
1998, there were no brokerage commissions paid by the Fund to affiliates 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 year ended October 31, 1998, no such expenses were paid to the
Adviser. During the year ended October 31, 1998, brokerage commissions of
$304,600 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 year ended
October 31, 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 year ended October 31, 1998, DSTC earned $14,845 and
DBS Bank earned $97,306 from the Fund for their respective custodial services.
At October 31, 1998, the Fund owed to DSTC $12,500 and $23,159 for
administration and custodian fees, respectively. The latter amount includes fees
and expenses payable to DBS Bank totalling $21,928.
During the year ended October 31, 1998, the Fund paid or accrued $47,939 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
For federal income tax purposes, the cost of securities owned at October 31,
1998 was $49,728,094, excluding $29,167,968 of short term investments. At
October 31, 1998, the net unrealized depreciation on investments, excluding
short-term securities, of $12,595,081 was composed of gross appreciation of
$2,485,384 for those investments having an excess of value over cost, and gross
depreciation of $15,080,465 for those
16
<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
investments having an excess of cost over value. For the year ended October 31,
1998, the total aggregate cost of purchases and net proceeds from sales of
portfolio securities, excluding the short-term securities, were $76,797,237 and
$69,009,353, respectively.
At October 31, 1998, the Fund had a capital loss carryover of $31,048,663,
of which $8,799,076 expires in the year 2005 and $22,249,587 expires in the year
2006.
To reflect reclassifications arising from permanent book/tax differences for
the year ended October 31, 1998, net realized foreign currency transaction gains
of $98,485 were reclassified from accumulated net realized loss on investments
to undistributed net investment income.
CONCENTRATION OF RISK
At October 31, 1998, the Fund had approximately 45% 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 9,195,287 shares outstanding at October 31, 1998, Daiwa Securities
America Inc., an affiliate of the Adviser and DSTC, owned 14,086 shares.
SUBSEQUENT EVENT
On December 3, 1998, a dividend was declared by the Board. The distribution
of $0.1050 per share is payable on December 31, 1998, to shareholders of record
at the close of business on December 14, 1998. The New York Stock Exchange has
determined that the ex-dividend date is December 10, 1998.
17
<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding during each year is
presented below:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED OCTOBER 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year............................ $ 7.99 $ 12.59 $ 13.42 $ 18.49 $ 17.23
---------- ---------- ---------- ---------- ----------
Net investment income (loss).................................. 0.09 (0.04) (0.07) (0.07) (0.01)
Net realized and unrealized gains (losses) on investments and
foreign currency transactions................................ (0.99) (4.18) 0.21 (1.43) 2.66
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net asset value resulting from
operations................................................... (0.90) (4.22) 0.14 (1.50) 2.65
---------- ---------- ---------- ---------- ----------
Less: dividends and distributions to shareholders
Net realized gains from investments and foreign currency
transactions............................................... -- (0.38) (0.97) (2.89) (1.03)
---------- ---------- ---------- ---------- ----------
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 year.................................. $ 7.09 $ 7.99 $ 12.59 $ 13.42 $ 18.49
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Per share market value, end of year........................... $ 6.375 $ 8.750 $ 12.125 $ 13.500 $ 18.000
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return:
Based on market price at beginning and end of year, assuming
reinvestment of dividends*................................. (27.14)% (25.51)% (3.54)% (6.89)% (0.19)%
Based on net asset value at beginning and end of year,
assuming reinvestment of dividends*........................ (11.26)% (34.49)% 0.76% (10.06)% 18.39%
Ratios and supplemental data:
Net assets, end of year (in millions)....................... $ 65.2 $ 73.5 $115.6 $122.9 $126.1
Ratios to average net assets of:
Expenses.................................................. 2.23% 1.87% 1.85% 2.01% 1.90%
Net investment income (loss).............................. 1.38% (0.29)% (0.48)% (0.49)% (0.08)%
Portfolio turnover.......................................... 208.56% 78.74% 62.78% 62.85% 82.12%
Average commission rate per share........................... $0.0103 $0.0204 $0.0194 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.
18
<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and
Board of Directors of
The Singapore Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Singapore Fund, Inc. (the
"Fund") at October 31, 1998, the results of its operations for the year then
ended, the changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the five years in the period then
ended, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at October
31, 1998 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
December 4, 1998
19
<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
TAX INFORMATION
- --------------------------------------------------------------------------------
The Fund is required by Subchapter M of the Internal Revenue Code of 1986,
as amended, to advise you within 60 days of the Fund's fiscal year end (October
31, 1998) as to the federal tax status of distributions received by you during
such fiscal year. There were no dividend payments or foreign tax credits with
respect to the fiscal year 1997.
However, on December 3, 1998, the Board of Directors of the Fund declared a
total distribution of $0.1050 per share which represents a dividend from
ordinary income.
During the Fund's fiscal year ended October 31, 1998, the Fund paid $183,017
in foreign taxes. The Fund has elected to give the benefit of the foreign tax
credit to its shareholders.
Because the Fund's fiscal year is not the calendar year, a notification will
be sent to shareholders in respect of calendar year 1998. This notification,
which will reflect the amount of income from foreign sources to be used by
calendar year taxpayers on their federal income tax returns, as well as the
amount of any foreign tax credit available to its shareholders, will be made in
conjunction with Form 1099 DIV and will be mailed in January 1999.
SHAREHOLDERS ARE STRONGLY ADVISED TO CONSULT THEIR OWN TAX ADVISERS WITH
RESPECT TO THE TAX CONSEQUENCES OF THEIR INVESTMENT IN THE FUND.
20
<PAGE>
THE SINGAPORE FUND, INC.
- ----------------------------------------------------------------------
RESULTS OF ANNUAL MEETING OF STOCKHOLDERS (UNAUDITED)
- --------------------------------------------------------------------------------
On June 4, 1998, the Annual Meeting of Stockholders of The Singapore Fund,
Inc. (the "Fund") was held and the following matters were voted upon and passed.
(1) Election of two Class I Directors to the Board of Directors of the Fund, to
serve for a term expiring on the date on which the Annual Meeting of
Stockholders is held in the year 2001, and the election of one Class II Director
to the Board of Directors of the Fund, to serve for a term expiring on the date
on which the Annual Meeting of Stockholders is held in the year 1999.
<TABLE>
<CAPTION>
NUMBER OF SHARES/VOTES
- -----------------------------------------------------------
PROXY AUTHORITY
CLASS I VOTED FOR WITHHELD
- ----------------------- --------- -----------------------
<S> <C> <C>
David G. Harmer 7,238,137 228,004
Oren G. Shaffer 7,213,695 252,446
<CAPTION>
CLASS II
- -----------------------
<S> <C> <C>
Ronnie Teo Heng Hock 7,218,888 247,253
</TABLE>
In addition to the three Directors elected or re-elected at the Meeting,
Alfred C. Morley and Shuichi Komori* were the other members of the Board who
continued to serve as Directors of the Fund.
(2) To ratify the selection of PricewaterhouseCoopers LLP (formerly, Price
Waterhouse LLP) as independent accountants of the Fund for its fiscal year
ending October 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF SHARES/VOTES
- ---------------------------------------
VOTED FOR VOTED AGAINST ABSTENTIONS
- --------- --------------- -----------
<S> <C> <C>
7,279,127 128,803 58,211
</TABLE>
- ------------------------
* Mr. Komori is no longer a Director of the Fund. Mr. Komori resigned as
Chairman and as a Director in September, 1998. Mr. Masayasu Ohi was elected in
September, 1998 as the Fund's Chairman and a Director by the remaining members
of the Board to replace Mr. Komori. Under the Fund's By-Laws, Mr. Ohi must
stand for election as Director at the next Annual Meeting of Stockholders,
which will be held in June, 1999.
21
<PAGE>
- ----------------------------------------
BOARD OF DIRECTORS
Masayasu Ohi, CHAIRMAN
David G. Harmer
Alfred C. Morley
Oren G. Shaffer
Ronnie Teo Heng Hock
- --------------------------------------------
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
PricewaterhouseCoopers 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
SINGAPORE
FUND, INC.
[LOGO]
Annual Report
October 31, 1998
