THE ASIA TIGERS FUND, INC.
Annual Report
October 31, 1997
ADVANTAGE ADVISERS, INC.
<PAGE>
The Asia Tigers Fund, Inc.
November 21, 1997
Dear Fund Shareholder,
We are pleased to present you with the audited financial statements of The Asia
Tigers Fund, Inc. (the "Fund") for the fiscal year ended October 31, 1997.
Beginning on page 2, the Fund's Investment Adviser provides a detailed look at
the Fund's allocations and investments, as well as the economic and market
conditions of the Asian region.
As you are probably already aware, this has been an extremely challenging period
for the Fund. The Fund's net asset value ("NAV") closed at $9.68 per share on
October 31, 1997, returning negative 22.2% over the period and outperforming its
benchmark, the MSCI Asia Free Ex-Japan Index which was down 30.5% over the same
time period. Since its inception, the Fund has provided its shareholders with
broad, dollar-based exposure to the emerging equity markets of the Asian Pacific
basin and the Indian subcontinent. As of October 31, 1997, the Fund held 102
issues in 13 Asian countries.
Many significant events have transpired in the region over the last year. Hong
Kong's change in sovereignty earlier in the year from British to Chinese rule
came and went with much anticipation, but little volatility. More recently,
currency devaluations throughout the Asia Pacific basin have impacted
performance. As is expected in this region, both political and economic events
can lead to short-term volatility. The Investment Adviser expects to see further
volatility in the short-term, primarily as a result of countries raising their
domestic interest rates in an effort to stabilize their currencies. In spite of
the volatility these markets have experienced in the last year, the Investment
Adviser remains optimistic about the region's long-term growth potential.
On behalf of the Board of Directors, thank you for your participation in the
Fund.
Sincerely,
/s/ Alan Rappaport
Alan Rappaport
Chairman
<PAGE>
Report of the Investment Adviser The Asia Tigers Fund, Inc.
Performance
The twelve-month period ended October 31, 1997, was volatile for the Asia
Ex-Japan equity investor. The regional benchmark which The Asia Tigers Fund,
Inc. (the "Fund") uses for comparison purposes, the MSCI AC Asia Ex Japan Free
index, tumbled 30.5%. During the same period, the Fund's net asset value (NAV)
based return was negative 22.2%.
Six of the thirteen markets in which the Fund invests lost more than 40% in U.S.
dollar terms during the year. Thailand and Bangladesh were the worst performing
equity markets in the region, as these markets each lost more than 65% of their
value in the twelve months ended October 31, 1997. Malaysia and the Philippines
also performed poorly over the period, with each market falling more than 50%.
Korea and Indonesia both lost more than 40%. Even Singapore, once considered a
"safe haven" market within southeast Asia, was badly affected by the regional
selloff, dropping 32% of its value in U.S. dollar terms. Hong Kong's 17.5% fall
and Taiwan's 1.8% loss made these two "greater China" markets relatively strong
performers in a regional context. Only four of the Fund's thirteen markets
managed to register gains for the period. The small-capitalization markets of
China, Sri Lanka and Pakistan each rose between 20% and 30%, while the Indian
market rose 18%.
During the past year, currencies played a much larger role in the region's
investment performance than in the past. Although already reflected in the
performance figures cited above, the negative impact on the U.S.-dollar based
Asian investor makes currency movements over the past twelve months worthy of
special attention. Two currencies, the Thai Baht and the Indonesian Rupiah, each
lost more than 55% of their value against the U.S. dollar, while the Malaysian
Ringgit and Philippine Peso both lost more than 30%. North Asian currencies
suffered as well; the Korean Won fell 16% and the Taiwan dollar lost 12%. The
only currency exposure that did not hurt the Fund's investors during the period
was the Hong Kong dollar, which held its value despite strong attacks by
currency speculators.
- --------------------------------------------------------------------------------
The Fund's net asset value is calculated weekly and published in The Wall Street
Journal every Monday under the heading, "Closed End Funds." The Fund's NAV is
also published in The New York Times on Mondays and in Barron's on Saturdays.
The Fund is listed on the New York Stock Exchange under ticker symbol GRR.
If you have any questions or would like an update on the Fund, please call our
toll-free phone number, (800) 421-4777. This number provides a recorded monthly
market review as well as specific details about the Fund, its portfolio and
performance.
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2
<PAGE>
Country Allocation
The Fund shifted its geographic allocation during the twelve-month period.
Allocations are made between countries in the region based on the Investment
Adviser's view of changing underlying economic conditions and relative equity
valuations. Since the end of October 1996, larger changes in the Fund's country
weights include an investment increase in Taiwan and India and a decrease in
Malaysia and Thailand. The Fund's cash level rose over the year from a low of
6.0% to 9.1% of total investments at year end. The charts below indicate the
Fund's breakdown at the end of the Fund's last two fiscal years.
[THE FOLLOWING DATA WAS DISPLAYED AS PIE CHARTS IN THE PRINTED MATTER]
October 31, 1997 October 31, 1996
Bangladesh 0.0% Sri Lanka 0.1%
Sri Lanka 0.2 Bangladesh 0.2
China 1.3 China 0.0
Pakistan 1.3 Pakistan 0.3
Philippines 1.5 Philippines 3.2
Thailand 2.0 Thailand 6.9
Hong Kong 32.0 Hong Kong 29.8
Korea 4.0 Korea 4.1
Indonesia 5.3 Indonesia 3.8
Malaysia 6.9 Malaysia 18.5
Cash (U.S.) 9.1 Cash (U.S.) 6.0
Taiwan 14.5 Taiwan 10.6
Singapore 10.9 Singapore 9.3
India 11.0 India 7.2
Regional Outlook
On July 2, 1997, the Thai Baht's devaluation brought the beginning of a new,
harsh economic reality to southeast Asia's fast-growing economies. The
unexpected currency devaluations across Asia immediately lowered living
standards. Imported goods at fiscal year end 1997 cost the Asian consumer much
more than they did in 1996. To bring stability back to each country's currency,
domestic interest rates will be kept unusually high. Higher domestic interest
rates will slow economic growth from its prior fast pace. During the next twelve
months, we believe the Asian equity investor can expect disappointing results,
including lower-than-expected economic and corporate profit growth combined with
higher-than-expected inflation.
In addition to the regional currency factors, external threats to Asian markets,
such as potential downside volatility on Wall Street and the continued outflow
of investment in Asia, provide additional cause for concern in the short-term.
As a prudent strategy, we intend to maintain a relatively high level of cash in
the Fund. We do not expect there to be any major incentive to change this view
in the immediate future.
3
<PAGE>
We believe China remains the region's bright spot on the economic map. China is
the largest and most important economy in the region and is in the fortunate
position to lower interest rates in order to stimulate economic growth. China's
strong growth will likely help the region in maintaining its growth advantage
over the more developed economies of the West.
The Investment Adviser believes that the Asian markets remain arguably the best
region in the world for long-term growth of equity capital, but the near-term
outlook will remain challenging and difficult. Looking forward to 1998, we
intend to position the portfolio, relative to the regional benchmark, to be
overweight in India, Pakistan, Sri Lanka, Bangladesh and China. We intend to
have a neutral position in both Hong Kong and Taiwan. We will remain somewhat
cautious and underweight in the five other markets where the Fund invests,
namely, Thailand, Malaysia, Philippines, Indonesia, and Korea.
Other
At a special meeting of the Fund held on September 30, 1997, the Fund's
shareholders approved a new Investment Management Agreement for the Fund with
Advantage Advisers, Inc. ("Advantage"), the Fund's Investment Manager, and a new
Investment Advisory Agreement among the Fund, Advantage and Barclays Global
Investors International Inc., the Fund's Investment Adviser. The new agreements
took effect upon the closing on November 3, 1997 of the sale of Oppenheimer &
Co., Inc. to CIBC Wood Gundy Securities Corp.
As another current matter, in response to recent amendments to Maryland
corporate law, the Board of Directors recently reviewed various corporate
governance provisions in the Fund's By-Laws and approved amendments to the
Fund's By-Laws to (1) increase the percentage of stockholder voting power that
is required to call a special meeting of its stockholders to a majority of the
votes entitled to be at the meeting and (2) reduce the minimum permissible board
committee size to one director.
The following comments provide the investor with a brief summary of the
Investment Adviser's view on the Fund's target markets and on some of the stocks
which make up the portfolio.
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Bangladesh
US$0.08 million, Less than 0.1% of the Fund's total investments, as of October
31, 1997.
The Fund's Bangladesh exposure was focused on one company listed on the Dhaka
Stock Exchange. Because Bangladesh has one of the lowest per capita incomes in
the world, some of the most severe cases of poverty occur there. On the other
hand, prospects for large leaps in prosperity are perhaps easier to achieve and
worthy of investors' attention.
Beximco Pharmaceuticals is the fourth largest company on the Dhaka Stock
Exchange. Beximco Pharmaceuticals dominates the local pharmaceutical market
distributing antibiotics, anti-ulcers, anti-rheumatics, anti-allergenics,
anti-depressants and vitamins.
- --------------------------------------------------------------------------------
China
US$2.5 million, 1.3% of the Fund's total investments, as of October 31, 1997.
During the 15th Party Congress, President Jiamg Zemin set priorities for China
for the next five years. First, China will begin to address the problem of its
state owned enterprises through privatizations, mergers and bankruptcies. Jiang
made it clear that unemployment will rise as part of this
4
<PAGE>
process. In addition, China will reduce its armed forces by 500,000 during the
next three years. Democratic elections will be expanded to villages and some
urban areas and the government's role in business will be reduced.
Most of the Fund's greater China exposure is in Hong Kong-based firms that are
significantly active in China, also known as "H-shares". The Fund holds one
"H-share", a Chinese mainland state-owned enterprise which has listed a minority
stake on the Hong Kong stock exchange.
Beijing Datang Power Generation Company develops, constructs, owns and operates
coal-fired electric power plants in northern China. The company is in a key
position to benefit from the rapid development occurring in the metropolitan
area surrounding China's capital city.
- --------------------------------------------------------------------------------
Hong Kong
US$63.2 million, 32.0% of the Fund's total investments, as of October 31, 1997.
Hong Kong's sovereignty changed to China from Britain during the the Fund's
fiscal year, ending 150 years of British rule. Early in the period, both
property and stock prices were strong, setting a series of new record highs.
More recently, the Hong Kong Monetary Authority aggressively defended the value
of the Hong Kong dollar against currency speculators by raising overnight
borrowing rates as high as 300%. Hong Kong authorities have made it clear that
they will endure higher domestic interest rates in order to defend the value of
their currency. Property prices will likely fall in a high interest rate
environment. In October, the new Chief Executive, C. H. Tung, gave his first
policy address to the Special Administrative Region and declared improvements in
housing, education and social welfare as his priority objectives. For example,
Mr. Tung intends to boost home ownership from 52% currently to 70% in ten years
time.
Hutchison Whampoa was the Fund's largest holding in Hong Kong as well as the
biggest single holding as a percentage of total net assets. Hutchison Whampoa,
the second largest listed company in Hong Kong by market capitalization, has
operations in property, container terminals, telecommunication, retail/hotels,
infrastructure, and investments. The company has the highest estimated three
year earnings growth rate among all the Hong Kong conglomerates.
- --------------------------------------------------------------------------------
India
US$21.8 million, 11.0% of the Fund's total investments, as of October 31, 1997.
Southeast Asia's difficulties have made the Indian subcontinent a relatively
more insulated, attractive home for investment. India's economy is experiencing
a cyclical upturn in economic growth and, as a result, strong corporate profits
of 15% - 35% are likely to follow. Although the Indian currency may experience
some devaluation pressure, it is likely to be less severe than in southeast Asia
given the smaller representation of exports in the Indian economy.
The Fund's largest position in India was NIIT Limited. NIIT is one of India's
largest and most successful computer software and training companies. The
company carefully allocates capital among its operating divisions in order to
maximize profits to shareholders. We expect NIIT's success to continue for the
foreseeable future.
5
<PAGE>
- --------------------------------------------------------------------------------
Indonesia
US$10.5 million, 5.3% of the Fund's total investments, as of October 31, 1997.
The Indonesian Rupiah was caught in the recent currency turmoil of southeast
Asia. In October 1997, the International Monetary Fund (IMF) offered a
multi-billion dollar rescue package in an effort to restore investor confidence
and set the economy back on course. In exchange for the assistance, the
government announced the permanent closure of 16 smaller banks. As the world's
fourth most populous country, Indonesia offers enormous opportunity for the
long-term investor.
Telekomunikasi Indonesia was the Fund's largest investment in this nation of
some 200 million people. The company is the dominant provider of both local and
long distance telephone services. Over the medium term, we believe it will
continue to benefit from its dominant market position, access-line growth and
productivity gains.
- --------------------------------------------------------------------------------
Korea
US$7.8 million, 4.0% of the Fund's total investments, as of October 31, 1997.
The Korean economy has recently suffered. Over-expansion, large debt and a
downturn in many of its cyclical businesses have forced a large number of Korean
companies to declare bankruptcy. Seven of Korea's largest business groups (known
locally as Chaebols) are currently operating under bankruptcy protection. In May
of this year, 10 people, including three former bank presidents, four
legislators and the chairman of Hanbo Steel Company were sentenced to jail terms
ranging from 3 to 15 years for their role in the "bribes for loans" case
surrounding the collapse of Hanbo Steel. The Korean Won remains under severe
devaluation pressure as investors have serious concerns about the problems which
exist in the Korean financial system.
Pohang Iron & Steel is one of the world's largest and most efficient producers
of steel. The Korean government has a majority stake in the company and it
enjoys a near-monopoly position in its domestic market. In addition, as the
domestic price of steel in Korea remains below the international price, a
liberalization of prices will help the company's bottom line. We believe the
stock is currently very attractively priced at less than 5 times 1998's
consensus forecast earnings.
- --------------------------------------------------------------------------------
Malaysia
US$13.6 million, 6.9% of the Fund's total investments, as of October 31, 1997.
Malaysia stands apart from the rest of the region as having the worst government
policy response to the region's currency crisis. Prime Minister Dr. Mahathir
labeled foreign investors, "manipulators, saboteurs and racists out to wreck the
Malaysian economy." For a three-day period, the Malaysian government imposed
capital controls which damaged the credibility of the country's financial
system. Despite the poor policy response, Malaysia has achieved remarkable
economic growth that has averaged in excess of 8% for the past decade.
6
<PAGE>
The Fund's largest Malaysian investment was Petronas Gas. Petronas Gas is
responsible for the processing and transmission of natural gas owned and
extracted by its parent company, Petronas. The company has stable earnings
growth forecast for the foreseeable future, as virtually all of its revenue is
derived from predetermined reservation and flowrate charges.
- --------------------------------------------------------------------------------
Pakistan
US$2.5 million, 1.3% of the Fund's total investments, as of October 31, 1997.
Pakistan's new Prime Minister is working diligently to put Pakistan's strained
government finances in order. International focus on Pakistan's reforms should
assist in putting the country on firmer footing for sustainable economic growth
in the future.
The Fund's largest holding in Pakistan was Pakistan State Oil, the country's
largest oil marketing company. The company's near-monopoly domestic position has
allowed it to win key contracts such as the fuel supply agreement for the 1,292
MW Hub power station.
- --------------------------------------------------------------------------------
Philippines
US$3.1 million, 1.5% of the Fund's total investments, as of October 31, 1997.
The Philippine Peso was caught up in the regional currency crisis and has lost
more than 30% of its value against the U.S. dollar over the last year. Going
forward, the Philippines should be least affected by the asset deflation
occurring in most other Asian economies. Because the economy was the "sick man
of Asia" for much of the boom decades of the 1970's and 1980's, financial assets
did not inflate as much as in the neighboring "tiger" economies. In addition,
the Philippines represents one of the best examples of a fully functioning
democracy in Asia. In 1998, the country will elect a new President to replace
outgoing President Ramos.
In the Philippines, the Fund's top holding was Philippine Long Distance
Telephone (PLDT). PLDT, the country's dominant long distance phone company, has
significant U.S. dollar revenues and is less adversely affected by the Peso
devaluation than most Philippine companies.
- --------------------------------------------------------------------------------
Singapore
US$21.5 million, 10.9% of the Fund's total investments, as of October 31, 1997.
Singapore is consistently ranked one of the most competitive economies in the
world. The City-State offers excellent infrastructure, a highly educated
workforce and a stable political environment. Although the Singapore dollar was
not insulated from the downturn in Asian currencies, the underlying economic
fundamentals suggest the currency should appreciate, not depreciate, against the
U.S. dollar. Singapore's savings rate has consistently hovered around 50% and
the government regularly runs a budget surplus.
The Fund's largest position in Singapore was Overseas Chinese Banking Corp.
(OCBC). OCBC is the largest bank in Singapore and the country's third largest
stock by market capitalization. The company operates a total of 100 branches, 59
domestic and 41 overseas, and has extensive subsidiaries as well as a
substantial landbank.
7
<PAGE>
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Sri Lanka
US$0.4 million, 0.2% of the Fund's total investments, as of October 31, 1997.
Since 1983, Sri Lanka has existed under a cloud from civil war in the north of
the country. The conflict has imposed high costs on the country, not only in
lives lost, but in the budgetary strain of financing a significant military
effort.
The Fund maintains a modest strategic exposure in Sri Lanka in light of the good
growth possibilities, as the country adopts market-oriented policies. John
Keells Holdings is a broadly diversified conglomerate with a focus on operating
tourist facilities and services.
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Taiwan
US$28.7 million, 14.5% of the Fund's total investments, as of October 31, 1997.
Taiwan's economy is improving. Industrial output and money supply are growing
from a low level. In addition, as domestic deposit rates have fallen, stocks
have received a boost. Although earnings growth will be modest at about 10% in
1997 and the market valuations appear stretched at a price earnings ratio of 27,
the positive liquidity environment and recovering economy make Taiwan an
important component of the portfolio.
The Fund's largest holding in Taiwan was Cathay Life Insurance. Cathay Life is
Taiwan's oldest and largest life insurance company with a dominant share of the
insurance market. The company has become Taiwan's largest landowner with an
estimated asset base valued at NT$646 billion as of the end of 1996.
- --------------------------------------------------------------------------------
Thailand
US$3.9 million, 2.0% of the Fund's total investments, as of October 31, 1997.
Thailand has been a poor performing market with attacks made on its currency due
to slower-than-expected exports and a high current account deficit. Persistent
high real interest rates had a negative impact on corporate earnings and
exacerbated asset quality concerns in the finance and property sectors. In
recent months, the current deficit is improving.
In Thailand, the Fund's largest holding was PTT Exploration & Production Public
(PTT&E). PTT&E is a gas exploration company with significant proven reserves and
U.S. dollar revenues. We believe the stock has performed exceptionally well in
difficult market conditions.
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Barclays Global Investors International Inc.
Hong Kong
November 1997
8
<PAGE>
<TABLE>
Schedule of Investments The Asia Tigers Fund, Inc.
October 31, 1997
<CAPTION>
Number Percent
of Shares Security of Holdings Cost Value
============================================================================================================================
<C> <S> <C> <C> <C>
COMMON STOCKS 88.73%
BANGLADESH 0.04%
Health/Personal Care 0.04%
30,000 Beximco Pharmaceuticals(1) ...................................... $ 116,527 $ 82,917
------------ ------------
TOTAL BANGLADESH ................................................ 116,527 82,917
------------ ------------
CHINA 1.28%
Utilities - Electric & Gas 1.28%
5,000,000 Beijing Datang Power Generation(1) .............................. 2,038,035 2,522,149
------------ ------------
TOTAL CHINA ..................................................... 2,038,035 2,522,149
------------ ------------
HONG KONG 31.97%
Banking 5.86%
575,000 Hang Seng Bank .................................................. 6,050,672 5,001,455
290,200 HSBC Holdings ................................................... 3,501,330 6,568,583
------------ ------------
9,552,002 11,570,038
------------ ------------
Multi-Industry 13.07%
270,000 Beijing Enterprises Holdings(1).................................. 1,503,950 902,735
2,000,000 China Resources Enterprise ...................................... 3,649,399 5,484,059
850,000 Citic Pacific ................................................... 3,754,230 4,067,775
1,450,000 Hutchison Whampoa ............................................... 9,036,787 10,033,628
1,200,000 Shanghai Industrial Holdings .................................... 6,477,919 5,339,197
------------ ------------
24,422,285 25,827,394
------------ ------------
Real Estate 7.95%
950,000 Cheung Kong Holdings ............................................ 6,398,342 6,604,475
700,000 New World Development ........................................... 3,803,433 2,462,653
900,000 Sun Hung Kai Properties ......................................... 8,239,523 6,635,194
------------ ------------
18,441,298 15,702,322
------------ ------------
Utilities - Electric & Gas 5.09%
1,300,000 China Light & Power ............................................. 6,573,127 6,843,433
950,000 Hong Kong Electric Holdings ..................................... 3,472,477 3,219,298
------------ ------------
10,045,604 10,062,731
------------ ------------
TOTAL HONG KONG ................................................. 62,461,189 63,162,485
------------ ------------
</TABLE>
9
<PAGE>
<TABLE>
Schedule of Investments (continued) The Asia Tigers Fund, Inc.
October 31, 1997
<CAPTION>
Number Percent
of Shares Security of Holdings Cost Value
============================================================================================================================
<C> <S> <C> <C> <C>
COMMON STOCKS (continued)
INDIA 11.05%
Automobiles 1.04%
1,050 Bajaj Auto ...................................................... $ 19,483 $ 16,709
70,000 Mahindra & Mahindra ............................................. 801,942 695,775
40,000 Punjab Tractors ................................................. 825,702 846,313
3,600 Tata Engineering & Locomotive ................................... 51,080 31,526
40,000 TVS Suzuki ...................................................... 523,680 460,551
------------ ------------
2,221,887 2,050,874
------------ ------------
Banking 0.23%
140,000 Bank of Baroda .................................................. 582,367 464,812
300 Oriental Bank of Commerce ....................................... 738 489
------------ ------------
583,105 465,301
------------ ------------
Building Materials & Components 0.83%
209,975 Gujarat Ambuja Cement ........................................... 1,882,828 1,645,414
------------ ------------
Business/Public Service 1.51%
170,000 NIIT ............................................................ 1,059,888 2,990,349
------------ ------------
Chemicals 1.64%
260,000 Reliance Industries ............................................. 1,259,322 1,347,558
90,000 Reliance Industries GDR ......................................... 1,667,250 1,890,000
------------ ------------
2,926,572 3,237,558
------------ ------------
Electricals & Electronics 0.38%
640,000 Crompton Greaves ................................................ 2,897,811 752,279
------------ ------------
Energy Sources 1.33%
200,000 Hindustan Petroleum ............................................. 2,114,604 2,625,827
------------ ------------
Health/Personal Care 2.41%
30,000 Dr Reddy's Laboratories ......................................... 181,657 271,587
64,000 Hindustan Lever ................................................. 1,535,165 2,262,995
114,000 Ranbaxy Labs .................................................... 2,302,706 2,219,222
------------ ------------
4,019,528 4,753,804
------------ ------------
Metals - Non Ferrous 0.60%
63,000 Indian Aluminium ................................................ 320,832 199,205
292,788 Indian Aluminium GDR ............................................ 1,552,367 988,160
------------ ------------
1,873,199 1,187,365
------------ ------------
</TABLE>
10
<PAGE>
<TABLE>
Schedule of Investments (continued) The Asia Tigers Fund, Inc.
October 31, 1997
<CAPTION>
Number Percent
of Shares Security of Holdings Cost Value
============================================================================================================================
<C> <S> <C> <C> <C>
COMMON STOCKS (continued)
INDIA(continued)
Telecommunications 1.04%
235,000 Mahanagar Telephone Nigam ....................................... $ 1,902,853 $ 1,636,364
30,000 Videsh Sanchar Nigam GDR1 ....................................... 461,250 414,000
------------ ------------
2,364,103 2,050,364
------------ ------------
Textiles & Apparel 0.04%
25,000 Arvind Mills .................................................... 83,396 72,176
------------ ------------
TOTAL INDIA ..................................................... 22,026,921 21,831,311
------------ ------------
INDONESIA 5.32%
Automobiles 0.30%
800,000 Astra International ............................................. 1,459,569 593,620
------------ ------------
Banking 0.48%
2,800,000 Bank Internasional Indonesia .................................... 1,865,615 601,942
1,560,000 Bank Pan Indonesia .............................................. 840,736 346,186
222,856 Bank Pan Indonesia Warrants (Exp. date 6/26/00)1 ................ 0 5,564
------------ ------------
2,706,351 953,692
------------ ------------
Beverage & Tobacco 0.65%
450,000 Gudang Garam .................................................... 1,908,322 1,273,232
------------ ------------
Energy Sources 0.32%
30,000 Gulf Indonesia Resources ADR1 ................................... 647,101 630,000
------------ ------------
Food & Household Products 0.80%
500,000 Daya Guna Samudera .............................................. 732,591 644,937
942,000 Indofoods Sukses Makmur1 ........................................ 1,222,255 940,693
------------ ------------
1,954,846 1,585,630
------------ ------------
Forest Products & Paper 0.47%
2,374,535 Indah Kiat Pulp & Paper ......................................... 1,343,768 905,683
199,960 Indah Kiat Pulp & Paper Warrants (Exp. date 7/01/02)1 ........... 0 16,640
------------ ------------
1,343,768 922,323
------------ ------------
Insurance 0.36%
5,413,200 Asuransi Lippo Life ............................................. 3,041,018 713,251
------------ ------------
Multi-Industry 0.27%
3,000,000 Mulia Industrindo ............................................... 1,673,873 540,915
------------ ------------
</TABLE>
11
<PAGE>
<TABLE>
Schedule of Investments (continued) The Asia Tigers Fund, Inc.
October 31, 1997
<CAPTION>
Number Percent
of Shares Security of Holdings Cost Value
============================================================================================================================
<C> <S> <C> <C> <C>
COMMON STOCKS (continued)
INDONESIA (continued)
Telecommunications 1.67%
170,000 Telekomunikasi Indonesia ADR .................................... $ 5,436,999 $ 3,304,375
------------ ------------
TOTAL INDONESIA ................................................. 20,171,847 10,517,038
------------ ------------
KOREA 3.96%
Appliance & Household Durables 0.60%
30,000 Samsung Electronics ............................................. 2,842,222 1,190,021
------------ ------------
Chemicals 0.29%
50,000 LG Chemical ..................................................... 871,601 569,948
------------ ------------
Electrical & Electronics 0.15%
5,000 LG Information & Communication .................................. 431,580 286,010
------------ ------------
Electronic Components & Instruments 0.29%
35,000 LG Semiconductor ................................................ 1,506,248 576,684
------------ ------------
Energy Sources 0.34%
50,000 Yukong .......................................................... 1,125,394 673,575
------------ ------------
Metals - Steel 0.83%
37,000 Pohang Iron & Steel ............................................. 3,137,905 1,638,084
------------ ------------
Telecommunications 0.89%
3,782 SK Telecom ...................................................... 2,848,857 1,281,784
9,766 Sungmi Telecom Electronics ...................................... 1,076,576 475,650
------------ ------------
3,925,433 1,757,434
------------ ------------
Utilities Electric & Gas 0.57%
70,000 Korea Electric Power ............................................ 2,369,164 993,782
4,380 Samchully ....................................................... 342,038 133,443
------------ ------------
2,711,202 1,127,225
------------ ------------
TOTAL KOREA ..................................................... 16,551,585 7,818,981
------------ ------------
</TABLE>
12
<PAGE>
<TABLE>
Schedule of Investments (continued) The Asia Tigers Fund, Inc.
October 31, 1997
<CAPTION>
Number Percent
of Shares Security of Holdings Cost Value
============================================================================================================================
<C> <S> <C> <C> <C>
COMMON STOCKS (continued)
MALAYSIA 6.47%
Banking 0.59%
300,000 Malayan Banking ................................................. $ 2,844,784 $ 1,160,942
------------ ------------
Beverage & Tobacco 0.51%
125,000 Rothmans of Pall Mall ........................................... 1,181,806 1,003,075
------------ ------------
Building Materials & Components 0.40%
1,200,000 Sungei Way Holdings ............................................. 1,799,689 791,960
------------ ------------
Leisure & Tourism 0.40%
1,000,000 Magnum .......................................................... 1,811,735 782,961
------------ ------------
Machinery & Engineering 0.60%
500,000 United Engineers ................................................ 3,086,952 1,184,941
------------ ------------
Misc. Materials & Commodities 0.48%
400,000 Kuala Lumpur Kepong ............................................. 1,020,369 959,952
------------ ------------
Multi-Industry 1.43%
510,000 Berjaya Sports Toto ............................................. 2,291,277 1,392,230
1,000,000 Sime Darby ...................................................... 2,860,537 1,439,928
------------ ------------
5,151,814 2,832,158
------------ ------------
Utilities Electric & Gas 2.06%
500,000 Malakoff ........................................................ 2,099,535 1,199,940
700,000 Petronas Gas .................................................... 2,200,160 1,889,906
450,000 Tenaga Nasional ................................................. 2,126,630 971,951
------------ ------------
6,426,325 4,061,797
------------ ------------
TOTAL MALAYSIA .................................................. 23,323,474 12,777,786
------------ ------------
PAKISTAN 1.25%
Energy Sources 1.25%
800,000 Hub Power ....................................................... 1,072,395 1,068,945
130,000 Pakistan State Oil .............................................. 891,944 1,403,218
------------ ------------
1,964,339 2,472,163
------------ ------------
TOTAL PAKISTAN .................................................. 1,964,339 2,472,163
------------ ------------
</TABLE>
13
<PAGE>
<TABLE>
Schedule of Investments (continued) The Asia Tigers Fund, Inc.
October 31, 1997
<CAPTION>
Number Percent
of Shares Security of Holdings Cost Value
============================================================================================================================
<C> <S> <C> <C> <C>
COMMON STOCKS (continued)
PHILIPPINES 1.55%
Beverage & Tobacco 0.29%
520,000 San Miguel-B .................................................... $ 1,779,389 $ 579,408
------------ ------------
Construction & Housing 0.11%
2,600,000 D M Consunji Holdings1 .......................................... 813,613 205,360
------------ ------------
Real Estate 0.72%
1,000,000 Ayala Land ...................................................... 568,370 387,870
3,800,000 Filinvest Land1 ................................................. 1,353,894 343,018
4,000,000 SM Prime ........................................................ 931,651 699,577
------------ ------------
2,853,915 1,430,465
------------ ------------
Telecommunications 0.43%
35,000 Philippine Long Distance Telephone ADR .......................... 1,099,095 848,750
------------ ------------
TOTAL PHILIPPINES ............................................... 6,546,012 3,063,983
------------ ------------
SINGAPORE 10.90%
Automobiles 1.00%
450,000 Cycle & Carriage ................................................ 4,047,665 1,971,429
------------ ------------
Banking 3.01%
200,000 Development Bank of Singapore ................................... 2,354,342 1,866,667
735,224 Overseas Chinese Bank Corporation ............................... 6,667,547 4,084,578
------------ ------------
9,021,889 5,951,245
------------ ------------
Beverage & Tobacco 0.74%
290,000 Fraser & Neave .................................................. 2,548,116 1,454,603
------------ ------------
Broadcasting/Publishing 0.59%
85,000 Singapore Press Holdings ........................................ 1,539,992 1,171,111
------------ ------------
Electronic Components & Instruments 1.48%
50,000 Creative Technology1 ............................................ 1,225,344 1,269,841
215,000 Elec & Eltek International ...................................... 987,262 1,548,000
79,000 Natsteel Electronics1 ........................................... 73,926 115,867
------------ ------------
2,286,532 2,933,708
------------ ------------
</TABLE>
14
<PAGE>
<TABLE>
Schedule of Investments (continued) The Asia Tigers Fund, Inc.
October 31, 1997
<CAPTION>
Number Percent
of Shares Security of Holdings Cost Value
============================================================================================================================
<C> <S> <C> <C> <C>
COMMON STOCKS (continued)
SINGAPORE (continued)
Real Estate 1.67%
650,000 City Developments ............................................... $ 4,665,813 $ 2,723,809
228,000 City Developments Warrants (Expiration date 7/18/98)1 ........... 1,129,164 570,362
------------ ------------
5,794,977 3,294,171
------------ ------------
Telecommunications 1.12%
1,400,000 Singapore Telecommunications .................................... 2,140,876 2,222,222
------------ ------------
Transportation - Air 1.29%
340,000 Singapore Airlines .............................................. 3,141,362 2,547,301
------------ ------------
TOTAL SINGAPORE ................................................. 30,521,409 21,545,790
------------ ------------
SRI LANKA 0.22%
Financial Services 0.11%
52,000 Development Finance Corporation of Ceylon ....................... 297,714 220,092
------------ ------------
Multi-Industry 0.11%
44,000 John Keells Holdings ............................................ 255,026 224,509
------------ ------------
TOTAL SRI LANKA ................................................. 552,740 444,601
------------ ------------
TAIWAN 12.75%
Banking 0.65%
400,000 First Commercial Bank ........................................... 1,622,116 1,292,407
------------ ------------
Chemicals 2.49%
3,099,500 Formosa Plastics Corporation .................................... 7,080,891 4,927,154
------------ ------------
Data Processing 1.66%
2,400,001 Acer Incorporation1 ............................................. 4,810,928 3,287,885
------------ ------------
Electrical & Electronics 0.86%
400,000 Hon Hai Precision Industry1 ..................................... 2,174,160 1,693,053
------------ ------------
</TABLE>
15
<PAGE>
<TABLE>
Schedule of Investments (continued) The Asia Tigers Fund, Inc.
October 31, 1997
<CAPTION>
Number Percent
of Shares Security of Holdings Cost Value
============================================================================================================================
<C> <S> <C> <C> <C>
COMMON STOCKS (continued)
TAIWAN (continued)
Electronic Components & Instruments 0.61%
600,000 United Microelectronics1 ........................................ $ 1,452,906 $ 1,201,939
------------ ------------
Insurance 3.16%
1,400,000 Cathay Life Insurance ........................................... 7,193,365 6,242,326
------------ ------------
Metals - Steel 1.05%
2,700,000 China Steel ..................................................... 2,868,743 2,067,528
------------ ------------
Real Estate 2.27%
2,500,000 Cathay Construction ............................................. 3,983,307 2,665,590
2,900,000 Pacific Construction1 ........................................... 2,571,626 1,808,401
------------ ------------
6,554,933 4,473,991
------------ ------------
TOTAL TAIWAN .................................................... 33,758,042 25,186,283
------------ ------------
THAILAND 1.97%
Banking 0.57%
170,000 Bangkok Bank Public ............................................. 1,917,666 589,839
195,000 Thai Farmer's Bank Public ....................................... 1,864,849 531,598
------------ ------------
3,782,515 1,121,437
------------ ------------
Building Materials & Components 0.20%
47,000 Siam Cement ..................................................... 2,261,927 398,364
------------ ------------
Electronic Components & Instruments 0.22%
51,000 Delta Electronics Public ........................................ 424,528 429,740
------------ ------------
Energy Sources 0.59%
115,000 PTT Exploration & Production Public ............................. 1,513,251 1,168,526
------------ ------------
Utilities Electric & Gas 0.39%
462,000 Electricity Generating Public ................................... 1,243,273 767,138
------------ ------------
TOTAL THAILAND .................................................. 9,225,494 3,885,205
------------ ------------
TOTAL COMMON STOCKS ............................................. 229,257,614 175,310,692
</TABLE>
16
<PAGE>
<TABLE>
Schedule of Investments (continued) The Asia Tigers Fund, Inc.
October 31, 1997
<CAPTION>
Par Value Percent
($000) Security of Holdings Cost Value
============================================================================================================================
<C> <S> <C> <C> <C>
COMMON STOCKS (continued)
MALAYSIA
Telecommunications 0.41%
1,000 Telekom Malaysia 4.00%, 10/03/04 ................................ $ 1,054,375 $ 805,000
------------ ------------
TAIWAN
Electrical & Electronics 1.76%
3,300 Taiwan Semiconductors Zero Coupon Bond, 07/03/021 ............... 3,627,265 3,481,500
------------ ------------
TOTAL CONVERTIBLE BONDS ......................................... 4,681,640 4,286,500
------------ ------------
SHORT-TERM OBLIGATIONS 9.10%
TIME DEPOSIT 6.58%
13,000 Chase Manhattan Bank London Time Deposit 5.00%, 11/3/97 ........ $ 13,000,000 $ 13,000,000
------------ ------------
TOTAL TIME DEPOSIT .............................................. 13,000,000 13,000,000
------------ ------------
UNITED STATES TREASURY BILL 2.52%
5,000 U.S. Treasury Bill 5.35%, 11/20/97 .............................. 4,986,436 4,986,790
------------ ------------
TOTAL UNITED STATES TREASURY BILL ............................... 4,986,436 4,986,790
------------ ------------
TOTAL SHORT-TERM OBLIGATIONS .................................... 17,986,436 17,986,790
------------ ------------
TOTAL INVESTMENTS(2) .....................................100.00% $251,925,690 $197,583,982
============ ============
- ---------------
Footnotes and Abbreviations
ADR - American Depository Receipts
GDR - Global Depository Receipts
(1) Non-income producing security
(2) Aggregate cost for Federal income tax purposes is $252,227,170.
The aggregate gross unrealized appreciation (depreciation) for all securities is as follows:
Excess of value over tax cost $ 11,984,232
Excess of tax cost over value (66,627,420)
------------
$(54,643,188)
============
</TABLE>
See accompanying notes to financial statements.
17
<PAGE>
Statement of Assets and Liabilities The Asia Tigers Fund, Inc.
October 31, 1997
<TABLE>
Assets
<S> <C>
Investments, at value (Cost $251,925,690) .................................... $ 197,583,982
Cash (including $737,829 of foreign currency holdings with a cost of $745,314) 1,192,912
Receivables:
Dividends ................................................................ 130,232
Interest ................................................................. 8,467
Unamortized organization costs ............................................... 26,263
Prepaid expenses ............................................................. 93,837
-------------
Total Assets ............................................................. 199,035,693
-------------
Liabilities
Due to Investment Manager .................................................... 197,765
Due to Administrator ......................................................... 39,553
Accrued expenses ............................................................. 209,459
-------------
Total Liabilities ........................................................ 446,777
Net Assets ................................................................... $ 198,588,916
=============
NET ASSET VALUE PER SHARE ($198,588,916/20,514,984) .......................... $9.68
=============
Net assets consist of:
Capital stock, $0.001 par value; 20,514,984 shares issued
and outstanding (100,000,000 shares authorized) .......................... $ 20,515
Paid-in capital .............................................................. 285,743,977
Accumulated net realized loss on investments and
foreign currency related transactions .................................... (32,820,898)
Net unrealized depreciation in value of investments and on translation of
other assets and liabilities denominated in foreign currencies ........... (54,354,678)
-------------
$ 198,588,916
=============
</TABLE>
See accompanying notes to financial statements.
18
<PAGE>
Statement of Operations The Asia Tigers Fund, Inc.
For the Year Ended October 31, 1997
<TABLE>
<S> <C> <C>
Investment Income
Dividends (Net of taxes withheld of $241,491) .................................................................... $ 3,564,094
Interest ......................................................................................................... 1,444,935
------------
Total Investment Income ..................................................................................... 5,009,029
------------
Expenses
Management fees ................................................................................. $ 2,691,353
Custodian fees .................................................................................. 554,001
Administration fees ............................................................................. 538,271
Legal fees ...................................................................................... 143,152
Insurance ....................................................................................... 137,205
Audit fees ...................................................................................... 75,999
Transfer agent fees ............................................................................. 72,001
NYSE fees ....................................................................................... 32,324
Amortization of organizational costs ............................................................ 24,327
Directors' fees ................................................................................. 23,700
Printing ........................................................................................ 20,954
Interest expense ................................................................................ 1,903
Miscellaneous ................................................................................... 15,001
------------
Total expenses .............................................................................................. 4,330,191
------------
Net Investment Income ....................................................................................... 678,838
------------
Net Realized and Unrealized Gain (Loss) On Investments,
Foreign Currency Holdings and Translation of Other Assets
and Liabilities Denominated In Foreign Currencies:
Net realized gain (loss) from:
Security transactions (Net of foreign taxes withheld of $208,086) ............................................ 4,063,044
Foreign currency related transactions ........................................................................ (806,358)
------------
3,256,686
Net change in unrealized depreciation in value of investments, foreign currency holdings
and translation of other assets and liabilities denominated in foreign currencies ................................ (60,720,179)
------------
Net realized and unrealized loss on investments, foreign currency holdings and translation
of other assets and liabilities denominated in foreign currencies ............................................... (57,463,493)
------------
Net decrease in net assets resulting from operations ............................................................. $(56,784,655)
============
</TABLE>
See accompanying notes to financial statements.
19
<PAGE>
<TABLE>
Statement of Changes in Net Assets The Asia Tigers Fund, Inc.
<CAPTION>
For the Year For the Year
Ended Ended
October 31, 1997 October 31, 1996
---------------- ----------------
<S> <C> <C>
Increase (Decrease) In Net Assets
Operations
Net investment income ................................................... $ 678,838 $ 1,084,483
Net realized gain (loss) on investments and foreign currency
related transactions ................................................ 3,256,686 (2,266,009)
Net change in unrealized appreciation (depreciation) in value of
investments, foreign currency holdings and translation of other
assets and liabilities denominated in foreign currencies ............ (60,720,179) 11,276,163
------------- -------------
Net increase (decrease) in net assets resulting from operations.. (56,784,655) 10,094,637
------------- -------------
Distributions to shareholders from
Net investment income ($0.00 and $0.08 per share, respectively) ......... (53,053) (1,661,714)
In excess of net investment income ($0.04 per share) .................... (767,547) --
------------- -------------
Net decrease in net assets from distributions ....................... (820,600) (1,661,714)
Total increase (decrease) in net assets ................................. (57,605,255) 8,432,923
------------- -------------
Net Assets
Beginning of year ....................................................... 256,194,171 247,761,248
------------- -------------
End of year (including undistributed net investment income of
$257,188 as of October 31, 1996) .................................. $ 198,588,916 $ 256,194,171
============= =============
</TABLE>
See accompanying notes to financial statements.
20
<PAGE>
Financial Highlights The Asia Tigers Fund, Inc.
For a Share Outstanding throughout Each Period
<TABLE>
<CAPTION>
For the Period
November 29, 1993
(Commencement
For the For the For the of Operations)
Year Ended Year Ended Year Ended Through
October 31,1997 October 31, 1996 October 31, 1995 October 31, 1994
--------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period .......... $ 12.49 $ 12.08 $ 13.89 $ 13.97(1)
-------- -------- -------- --------
Net investment income ......................... 0.03 0.05 0.09 0.05
Net realized and unrealized gains (losses)
on investments, foreign currency
holdings, and translation of other
assets and liabilities denominated
in foreign currencies. ..................... (2.80) 0.44 (1.67) (0.11)
-------- -------- -------- --------
Net increase (decrease) from investment
operations ................................. (2.77) 0.49 (1.58) (0.06)
-------- -------- -------- --------
Less Distributions:
Dividends from net investment income ....... (0.00)++ (0.08) (0.06) (0.02)
In excess of net investment income ......... (0.04) -- -- --
Distributions from net realized gains ...... -- -- (0.17) --
-------- -------- -------- --------
Total dividends and distributions ............. (0.04) (0.08) (0.23) (0.02)
-------- -------- -------- --------
Net asset value, end of period. ............... $ 9.68 $ 12.49 $ 12.08 $ 13.89
======== ======== ======== ========
Per share market value, end of period ......... $ 7.94 $ 10.38 $ 10.38 $ 12.38
Total Investment Return Based on
Market Value(2) ............................... (23.23)% 0.59% (14.17)% (11.65)%
Ratios/Supplemental Data:
Net assets, end of period (in 000s) ........... $198,589 $256,194 $247,761 $284,910
Ratios of expenses to average net assets ...... 1.60% 1.60% 1.65% 1.60%(3)
Ratios of net investment income to
average net assets. ........................ 0.25% 0.41% 0.71% 0.38%(3)
Portfolio turnover. ........................... 95.38% 91.57% 77.88% 45.51%
Average commission rate paid+ ................. $ 0.0096 $ 0.0084 N/A N/A
</TABLE>
1 Initial public offering price $15.00 per share less underwriting discount
of $0.98 per share and offering costs of $0.05 per share.
2 Total investment return is calculated assuming a purchase of common stock
at the current market price on the first day and a sale at the current
market price on the last day of each period reported, except that for the
period ended October 31, 1994, total investment return is based on a
beginning of period price of $14.02 (initial offering price of $15.00 less
underwriting discount of $0.98). Dividends and distributions, if any, are
assumed, for purposes of this calculation, to be reinvested at prices
obtained under the Fund's dividend reinvestment plan. Total investment
return does not reflect brokerage commissions or sales charges and is not
annualized.
3 Annualized
+ Computed by dividing the total amount of brokerage commissions paid by the
total number of shares of investment securities purchased and sold during
the period for which commissions were charged as required by the SEC for
fiscal years beginning on or after September 1, 1995.
++ Less than $0.01 per share.
See accompanying notes to financial statements.
21
<PAGE>
Notes to Financial Statements The Asia Tigers Fund, Inc.
October 31, 1997
NOTE A: Summary of Significant Accounting Policies
The Asia Tigers Fund, Inc. (the "Fund") was incorporated in Maryland on
September 23, 1993 and commenced operations on November 29, 1993. The Fund is
registered under the Investment Company Act of 1940, as amended, as a closed-end
non-diversified management investment company. Prior to commencing its
operations on November 29, 1993, the Fund had no activities other than the sale
of 3,567 shares of common stock to CIBC Oppenheimer Corp. ("CIBC Oppenheimer"),
formerly known as Oppenheimer & Co,. Inc., and 3,567 shares of capital stock to
Barclays Global Investors International Inc. ("BGI"). At October 31, 1997, CIBC
Oppenheimer and BGI each owned 3,567 shares of the Fund's common stock.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
Significant accounting policies are as follows:
Portfolio Valuation. Investments are stated at value in the accompanying
financial statements. In valuing the Fund's assets, all securities for which
market quotations are readily available are generally valued:
(i) at the last sale price prior to the time of determination if there was
a sale on the date of determination,
(ii) at the mean between the last current bid and asked prices if there was
no sales price on such date and bid and asked quotations are available, and
(iii) at the bid price if there was no sales price on such date and only
bid quotations are available.
Securities for which sales prices and bid and asked quotations are not available
on the date of determination may be valued at the most recently available prices
or quotations under policies adopted by the Board of Directors. Investments in
short-term debt securities having a maturity of 60 days or less are valued at
amortized cost which approximates market value. All other securities and assets
are carried at fair value as determined in good faith by, or under the direction
of, the Board of Directors. The net asset value per share of the Fund is
calculated weekly and at the end of each month.
Investment Transactions and Investment Income. Investment transactions are
accounted for on the trade date. The cost of investments sold is determined by
use of the specific identification method for both financial reporting and
income tax purposes. Interest income is recorded on an accrual basis; dividend
income is recorded on the ex-dividend date or when known. The collectibility of
income receivable from foreign securities is evaluated periodically, and any
resulting allowances for uncollectible amounts are reflected currently in the
determination of investment income.
Tax Status. No provision is made for U.S. Federal income or excise taxes as it
is the Fund's intention to continue to qualify as a regulated investment company
and to make the requisite distributions to its shareholders which will be
sufficient to relieve it from all or substantially all Federal income and excise
taxes.
At October 31, 1997, the Fund had a net capital loss carryover of $32,519,420,
which is available to offset future net realized gains on securities
transactions to the extent provided for in the Internal Revenue Code.
22
<PAGE>
Notes to Financial Statements (continued) The Asia Tigers Fund, Inc.
October 31, 1997
Of the aggregate capital losses, $30,672,532 will expire in the year 2003 and
$1,846,888 will expire in the year 2004.
Dividend and interest income from non-U.S. sources received by the Fund is
generally subject to non-U.S. withholding taxes. Such withholding taxes may be
reduced or eliminated under the terms of applicable U.S. income tax treaties.
Foreign Currency Translation. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:
(i) market value of investment securities, assets and liabilities at the
current rates of exchange on the valuation date; and
(ii) purchases and sales of investment securities, income and expenses at
the relevant rates of exchange prevailing on the respective dates of such
transactions.
The Fund does not generally isolate the effect of fluctuations in foreign
currency rates from the effect of fluctuations in the market prices of equity
securities. The Fund reports certain realized gains and losses on foreign
currency related transactions as components of realized gains and losses for
financial reporting purposes, whereas such gains and losses are included in or
are a reduction of ordinary income for Federal income tax purposes.
Securities denominated in currencies other than U.S. dollars are subject to
changes in value due to fluctuations in foreign exchange. Foreign security and
currency transactions involve certain considerations and risks not typically
associated with those of domestic origin as a result of, among other factors,
the level of governmental supervision and regulation of foreign securities
markets and the possibilities of political or economic instability, the fact
that foreign securities markets may be smaller and less developed, and the fact
that securities, tax and corporate laws may have only recently developed or are
in developing stages, and laws may not exist to cover all contingencies or to
protect investors adequately.
Distribution of Income and Gains. The Fund intends to distribute annually to
shareholders substantially all of its net investment income, including foreign
currency gains, and to distribute annually any net realized capital gains in
excess of net realized capital losses (including any capital loss carryovers).
An additional distribution may be made to the extent necessary to avoid payment
of a 4% federal excise tax.
Distributions to shareholders are recorded 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/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 reclassification. 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.
23
<PAGE>
Notes to Financial Statements (continued) The Asia Tigers Fund, Inc.
October 31, 1997
During the year ended October 31, 1997, the Fund reclassified $877,675 from
accumulated net realized loss on investments and foreign currency related
transactions to undistributed net investment income as a result of permanent
book and tax differences primarily relating to foreign currency losses, foreign
withholding taxes and gains on sales of passive foreign investment companies. In
addition, the fund reclassified ($767,547) from distribution in excess of net
investment income to paid-in capital. Net investment income and net assets were
not affected by the change.
Loans of Portfolio Securities. The Fund may lend portfolio securities from time
to time. When the Fund lends its securities, it continues to earn dividends on
such securities loaned. The cash collateral received from the borrower is
required to be at least equal at all times to 105 percent of the market value of
the securities (outside the U.S.) loaned, which are marked-to-market daily. Such
collateral is invested in short term instruments by the lending agent and any
interest income in excess of agency fees and of a predetermined rebate to the
borrowers is retained by the Fund. For the year ended October 31, 1997, net
earnings to the Fund from investment of such collateral was $16,308 after
deducting borrowers' rebate and agency fees of $281,643 and $16,299
respectively. At October 31, 1997, the Fund had no securities on loan.
Other. Costs incurred by the Fund in connection with its organization are being
amortized on a straight line basis over a five-year period beginning with the
commencement of operations of the Fund.
NOTE B: Management, Investment Advisory, and Administrative Services
On November 3, 1997 CIBC Wood Gundy Securities Corp., the broker-dealer
subsidiary of The Canadian Imperial Bank of Commerce, acquired all of the stock
of Oppenheimer Holdings, the indirect parent of Advantage Advisers, Inc., the
Fund's Investment Manager. In connection with the acquisition, CIBC Wood Gundy
Securities Corp. was merged into Oppenheimer & Co., Inc., whose name was changed
to CIBC Oppenheimer Corp. ("CIBC Oppenheimer").
Advantage Advisers, Inc., a subsidiary of CIBC Oppenheimer, serves as the Fund's
Investment Manager under the terms of a management agreement (the "Management
Agreement"), and BGI serves as the Fund's Investment Adviser under the terms of
an investment advisory agreement (the "Advisory Agreement"). Pursuant to the
Management Agreement, the Investment Manager supervises the Fund's investment
program, including advising and consulting with the Fund's Investment Adviser.
Pursuant to the Advisory Agreement, the Investment Adviser is responsible on a
day-to-day basis for investing the Fund's portfolio in accordance with its
investment objective and policies. For its services, the Investment Manager
receives from the Fund monthly fees at an annual rate of 1.00% of the Fund's
average weekly net assets and the Investment Adviser receives from the
Investment Manager monthly fees at an annual rate of 0.50% of the Fund's average
weekly net assets. For the year ended October 31, 1997, fees paid to the
Investment Manager amounted to $2,691,353, of which the Investment Manager
informed the Fund it paid $1,345,676 to the Investment Adviser.
CIBC Oppenheimer serves as the Fund's administrator (the "Administrator"). The
Administrator provides certain administrative services to the Fund. For its
services, the Administrator receives a monthly fee at an annual rate of 0.20% of
the value of the Fund's average weekly net assets. For the year ended October
31, 1997, these fees amounted to $538,271. The Administrator subcontracts
certain of the services it is required to perform under the Administration
Agreement of PFPC Inc.
24
<PAGE>
Notes to Financial Statements (concluded) The Asia Tigers Fund, Inc.
October 31, 1997
The Fund pays each of its directors who is not a director, officer or employee
of the Investment Manager, the Investment Adviser, the Administrator or any
affiliate thereof an annual fee of $5,000 plus up to $700 for each Board of
Directors meeting attended. In addition, the Fund reimburses the directors for
travel and out-of-pocket expenses incurred in conection with Board of Directors
meetings.
NOTE C: Portfolio Activity
Purchases and sales of securities other than short-term obligations aggregated
$227,552,300 and $229,626,732, respectively, for the year ended October 31,
1997.
NOTE D: Other
At October 31, 1997, substantially all of the Fund's assets were invested in
Asian securities. The Asian securities markets are substantially smaller, less
developed, less liquid, and more volatile than the major securities markets in
the United States. Consequently, acquisitions and dispositions involve special
risks and considerations not present with respect to U.S. securities.
Additionally, the Fund owned securities of certain companies in India, Indonesia
and Pakistan valued at approximately $5,473,819 which were in the process of
being registered in the name of the Fund. Significant delays are common in
registering the transfer of securities in these countries, and such transfers
can take a year or longer. Securities regulations in these countries normally
preclude the Fund from selling such securities until the completion of the
registration process.
- --------------------------------------------------------------------------------
U.S. Federal Taxation Notice (unaudited)
The Fund paid foreign taxes of $449,576 during the fiscal year ended October 31,
1997, which it intends to pass through pursuant to Section 853 of the Internal
Revenue Code, to its shareholders, which is deemed to be foreign source income
for tax information reporting purposes. During the same year, the Fund
distributed $820,600 of foreign source income.
- --------------------------------------------------------------------------------
25
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Report of Independent Accountants The Asia Tigers Fund, Inc.
To the Board of Directors and Shareholders of
The Asia Tigers Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the schedule 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 Asia Tigers Fund, Inc. (the
"Fund") at October 31, 1997, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the three years in the
period then ended and for the period November 29, 1993 (commencement of
operations) to October 31, 1994, in conformity with generally accepted
accounting principles.
These financial statements and financial highlights (hereafter referred to as
the "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, 1997 by correspondence with the custodian, provide a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
December 19, 1997
26
<PAGE>
Results of Annual Shareholder Meeting The Asia Tigers Fund, Inc.
Annual Meeting
The Fund held its Annual Meeting of Shareholders on February 21, 1997. At the
meeting, shareholders elected each of the nominees proposed for election to the
Fund's Board of Directors and ratified the selection of Price Waterhouse LLP as
the independent accountants of the Fund for the year ending October 31, 1997.
The following table provides information concerning the matters voted on at the
meeting:
I. Election of Directors
Nominee Votes For Votes Against Votes Abstained
------- --------- ------------- ---------------
Jeswald W. Salacuse 13,397,263 0 476,522
Robert A. Blum 13,406,606 0 467,179
Effective November 3, 1997 Robert A. Blum, the President of the Fund, resigned
as a member of the Board of Directors of the Fund to comply with certain
provisions of the Investment Company Act of 1940 in connection with the
acquisition of Oppenheimer & Co., Inc. by CIBC Wood Gundy Securities Corp. At
October 31, 1997, in addition to Jeswald W. Salacuse, the other directors of the
Fund were as follows:
Alan H. Rappaport
Charles F. Barber
Leslie H. Gelb
II. Ratification of Price Waterhouse LLP as the Independent Accountants of the
Fund
Votes For Votes Against Votes Abstained
--------- ------------- ---------------
13,538,757 191,062 143,966
Special Meeting
The Fund held a Special Meeting of Shareholders on September 30, 1997, of which
a new Investment Management Agreement, with Advantage Advisers, Inc. and a new
Investment Advisory Agreement with Barclays Global Investors International Inc.
were approved. The following table provides information concerning the matters
voted on at the meeting:
I. Approval of a new Management Agreement
Votes For Votes Against Votes Abstained
--------- ------------- ---------------
11,891,379 1,479,318 1,260,400
II. Approval of a new Investment Advisory Agreement
Votes For Votes Against Votes Abstained
--------- ------------- ---------------
12,644,942 723,227 1,262,927
27
<PAGE>
Dividends and Distributions The Asia Tigers Fund, Inc.
Dividend Reinvestment and Cash Purchase Plan
The Fund intends to distribute annually to shareholders substantially all of its
net investment income, and to distribute any net realized capital gains at least
annually. Net investment income for this purpose is income other than net
realized long- and short-term capital gains net of expenses.
Pursuant to the Dividend Reinvestment and Cash Purchase Plan (the "Plan"),
shareholders whose shares of Common Stock are registered in their own names will
be deemed to have elected to have all distributions automatically reinvested by
the Plan Agent in Fund shares pursuant to the Plan, unless such shareholders
elect to receive distributions in cash. Shareholders who elect to receive
distributions in cash will receive all distributions in cash paid by check in
dollars mailed directly to the shareholder by PNC Bank, National Association, as
dividend paying agent. In the case of shareholders such as banks, brokers or
nominees, that hold shares for others who are beneficial owners, the Plan Agent
will administer the Plan on the basis of the number of shares certified from
time to time by the shareholders as representing the total amount registered in
such shareholders' names and held for the account of beneficial owners that have
not elected to receive distributions in cash. Investors that own shares
registered in the name of a bank, broker or other nominee should consult with
such nominee as to participation in the Plan through such nominee, and may be
required to have their shares registered in their own names in order to
participate in the Plan.
The Plan Agent serves as agent for the shareholders in administering the Plan.
If the directors of the Fund declare an income dividend or a capital gains
distribution payable either in the Fund's Common Stock or in cash,
nonparticipants in the Plan will receive cash and participants in the Plan will
receive Common Stock, to be issued by the Fund or purchased by the Plan Agent in
the open market, as provided below. If the market price per share on the
valuation date equals or exceeds net asset value per share on that date, the
Fund will issue new shares to participants at net asset value; provided,
however, that if the net asset value is less than 95% of the market price on the
valuation date, then such shares will be issued at 95% of the market price. The
valuation date will be the dividend or distribution payment date or, if that
date is not a New York Stock Exchange trading day, the next preceding trading
day. If net asset value exceeds the market price of Fund shares at such time, or
if the Fund should declare an income dividend or capital gains distribution
payable only in cash, the Plan Agent will, as agent for the participants, buy
Fund shares in the open market, on the New York Stock Exchange or elsewhere, for
the participants' accounts on, or shortly after, the payment date. If, before
the Plan Agent has completed its purchases, the market price exceeds the net
asset value of a Fund share, the average per share purchase price paid by the
Plan Agent may exceed the net asset value of the Fund's shares, resulting in the
acquisition of fewer shares than if the distribution had been paid in shares
issued by the Fund on the dividend payment date. Because of the foregoing
difficulty with respect to open-market purchases, the Plan provides that if the
Plan Agent is unable to invest the full dividend amount in open-market purchases
during the purchase period or if the market discount shifts to a market premium
during the purchase period, the Plan Agent will cease making open-market
purchases and will receive the uninvested portion of the dividend amount in
newly issued shares at the close of business on the last purchase date.
Participants have the option of making additional cash payments to the Plan
Agent, annually, in any amount from $100 to $3,000, for investment in the Fund's
Common Stock. The Plan Agent will use all such funds received from participants
to purchase Fund shares in the open market on or about February 15.
28
<PAGE>
Any voluntary cash payment received more than 30 days prior to this date will be
returned by the Plan Agent, and interest will not be paid on any uninvested cash
payment. To avoid unnecessary cash accumulations, and also to allow ample time
for receipt and processing by the Plan Agent, it is suggested that participants
send in voluntary cash payments to be received by the Plan Agent approximately
ten days before an applicable purchase date specified above. A participant may
withdraw a voluntary cash payment by written notice, if the notice is received
by the Plan Agent not less than 48 hours before such payment is to be invested.
The Plan Agent maintains all shareholder accounts in the Plan and furnishes
written confirmations of all transactions in an account, including information
needed by shareholders for personal and tax records. Shares in the account of
each Plan participant will be held by the Plan Agent in the name of the
participant, and each shareholder's proxy will include those shares purchased
pursuant to the Plan.
There is no charge to participants for reinvesting dividends or capital gains
distributions or voluntary cash payments. The Plan Agent's fees for the
reinvestment of dividends and capital gains distributions and voluntary cash
payments will be paid by the Fund. There will be no brokerage charges with
respect to shares issued directly by the Fund as a result of dividends or
capital gains distributions payable either in stock or in cash. However, each
participant will pay a pro rata share of brokerage commissions incurred with
respect to the Plan Agent's open market purchases in connection with the
reinvestment of dividends and capital gains distributions and voluntary cash
payments made by the participant. Brokerage charges for purchasing small amounts
of stock for individual accounts through the Plan are expected to be less than
the usual brokerage charges for such transactions, because the Plan Agent will
be purchasing stock for all participants in blocks and prorating the lower
commission thus attainable.
The receipt of dividends and distributions under the Plan will not relieve
participants of any income tax that may be payable on such dividends or
distributions.
Experience under the Plan may indicate that changes in the Plan are desirable.
Accordingly, the Fund and the Plan Agent reserve the right to terminate the Plan
as applied to any voluntary cash payments made and any dividend or distribution
paid subsequent to notice of the termination sent to members of the Plan at
least 30 days before the record date for such dividend or distribution. The Plan
also may be amended by the Fund or the Plan Agent, but (except when necessary or
appropriate to comply with applicable law, rules or policies of a regulatory
authority) only by at least 30 days' written notice to participants in the Plan.
All correspondence concerning the Plan should be directed to the Plan Agent at
400 Bellevue Parkway, Wilmington, Delaware 19809.
29
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<PAGE>
THE ASIA TIGERS FUND, INC.
INVESTMENT MANAGER:
ADVANTAGE ADVISERS, INC.
INVESTMENT ADVISER:
BARCLAYS GLOBAL INVESTORS
INTERNATIONAL INC.
ADMINISTRATOR:
CIBC OPPENHEIMER CORP.
SUB-ADMINISTRATOR:
PFPC INC.
TRANSFER AGENT:
PNC BANK, NATIONAL ASSOCIATION
CUSTODIAN:
THE CHASE MANHATTAN BANK
