The Asia Tigers Fund, Inc.
Annual Report
October 31, 2000
ADVANTAGE ADVISERS, INC.
<PAGE>
The Asia Tigers Fund, Inc.
December 21, 2000
Dear 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, 2000.
The Fund's net asset value ("NAV") closed at $9.55 per share on October 31,
2000, representing a decline of 12.7% during the 12 months ended October 31,
2000, outperforming the MSCI AC Asia Free ex-Japan Index (the Fund's benchmark),
which fell 21.4%.
The disappointing performance of the Asia ex-Japan equity markets during the
past 12 months reflects the combined effects of renewed political uncertainty
and a slowdown in the momentum for reform in the region, as well as a sharp
correction in the Nasdaq market in the U.S.
While the financial markets declined, non-Japan Asia continued its cyclical
economic expansion in the 12 months ended October 31, 2000, due to such factors
as solid export growth, low interest rates, low inflation, and in many cases,
increased government spending.
The Fund's Investment Manager believes that in the long term, the outlook for
the Asian markets will depend on growth trends in their economies, as well as
the degree of progress these countries are able to make in the areas of
structural reform in both the public and private sectors.
In the following pages, the Investment Manager provides a detailed look at the
Fund's portfolio, as well as a discussion of the economic and market conditions
in the region.
On behalf of the Board of Directors, thank you for your participation in the
Fund.
Sincerely,
/s/ Bryan McKigney
Bryan McKigney
President and Secretary
1
<PAGE>
THE ASIA TIGERS FUND, INC.
Report of the Investment Manager
--------------------------------------------------------------------------------
PERFORMANCE
During the twelve-month period ended October 31, 2000, Asia ex-Japan equity
markets turned in a disappointing performance, succumbing to a combination of
slowing reform momentum, a sharp correction in the Nasdaq market in the U.S.,
and renewed political uncertainty. For the year ended October 31, 2000, the MSCI
AC Asia Free ex-Japan Index - the regional benchmark that The Asia Tigers Fund,
Inc. (the "Fund") uses for comparison purposes - declined 21.4%, while the total
return of the Fund based on the Fund's net asset value per share ("NAV") dropped
12.7%.
Six of the ten markets in which the Fund invests recorded losses of 27% or more
in U.S. dollar terms during the 12 months ended October 31, 2000, with three
registering losses of 48% or greater. Only one market, Malaysia, managed to
squeeze out a gain, of 0.3%, during this period. Hong Kong and India were the
next best performers, managing losses of 3.8% and 12.1%, respectively.
During the past few years, currency movements have played a significant role in
portfolio performance. During the 12 months ended October 31, 2000, Southeast
Asian currencies -- most notably in Indonesia, the Philippines, and Thailand --
came under renewed pressure, rekindling memories of June 1997-October 1998
(approximately the period of the Asian Crisis). Perhaps not surprisingly, these
three countries are generally seen as showing the least progress in tackling
structural reform issues, such as (1) bad debts in their banking systems and (2)
government corruption. Malaysia, which probably would have experienced currency
weakness as well, has been protected by its government's foreign exchange
controls since September 1998.
Asian Market Returns for the Twelve Months Ended October 31, 2000
US$ returns Local currency returns
Hong Kong -3.8% -3.5%
Taiwan -27.5% -26.1%
India -12.1% -5.1%
Singapore* -14.0% -9.3%
Korea -34.7% -38.1%
Thailand* -48.0% -40.3%
Philippines* -52.8% -39.9%
Malaysia* 0.3% 0.3%
China* -29.6% -29.4%
Indonesia* -57.9% -42.3%
* Market indices used to calculate these returns reflect transactions that
are free of foreign ownership limits or legal restrictions at the country
level.
Source: FactSet, an online database of financial and market data derived from
many sources.
2
<PAGE>
THE ASIA TIGERS FUND, INC.
--------------------------------------------------------------------------------
COUNTRY ALLOCATION
During the twelve-month period ended October 31, 2000, the biggest
percentage-point shift in the Fund's country allocation was an increase in Hong
Kong, from 27.8% to 34.0%, and a decrease of similar magnitude in Korea, from
21.7% to 16.7%. Among smaller markets, allocations to the Philippines and
Indonesia were both reduced, while the Fund's miniscule weightings in Pakistan
and Sri Lanka were liquidated completely. Regarding Malaysia, it should be noted
that the country was only re-admitted to the Morgan Stanley Capital
International (MSCI) Indices on May 31, 2000. Hence, although Malaysia's overall
weighting was raised from 2.5% to 4%, in effect, the Fund actually moved from an
overweight position in the first seven months of the Fund's fiscal year ended
October 31, 2000, to underweight as of May 31, 2000, as Malaysia's benchmark
weighting increased from 0% to more than 9%.
Hong Kong remained, by far, the single largest country allocation at 34.0% of
the portfolio's holdings on October 31, 2000.
The Fund's cash weighting remained relatively unchanged at 0.7% on October 31,
2000, the same percentage weighting as on October 31, 1999
COUNTRY HOLDINGS*
October 31, 2000
Hong Kong 34.00%
Korea 16.70%
Taiwan 16.6%
India 13.5%
Singapore 10.6%
Thailand 2.2% [PIE CHART OMITTED]
Malaysia 4.0%
Philippines 0.4%
Indonesia 1.1%
China 0.70%
Pakistan 0.0%
Sri Lanka 0.0%
Cash 0.7%
*Percent of Fund's Net Assets
--------------------------------------------------------------------------------
Note: The percentages in the above tabulation add to 100.5%, the 0.5%
reflecting the net result of share purchase and sale transactions that remained
in process at the close of business on October 31, 2000.
--------------------------------------------------------------------------------
3
<PAGE>
THE ASIA TIGERS FUND, INC.
COUNTRY HOLDINGS* (continued)
October 31, 1999
Hong Kong 27.8%
Korea 21.7%
Taiwan 16.7%
India 12.1%
Singapore 10.4%
Thailand 3.0% [PIE CHART OMITTED]
Malaysia 2.5%
Philippines 2.3%
Indonesia 2.0%
Pakistan 0.4%
China 0.3%
Sri Lanka 0.1%
Cash 0.7%
*Percent of Fund's Net Assets
--------------------------------------------------------------------------------
REGIONAL OUTLOOK
During the twelve months ended October 31, 2000, non-Japan Asia continued its
cyclical economic expansion, underpinned by solid export growth, low interest
rates, low inflation, and, in many cases, increased government spending.
Nevertheless, during the year, external conditions started to become more
challenging. Oil prices, which remained at extraordinarily high levels of
$30-$35 per barrel during the year, have clearly raised the region's energy
bill. With the "crisis" now behind it, Asia has resumed its role as the
fastest-growing energy consumer in the world. In addition, the U.S. Federal
Reserve moved increasingly toward tight money during the period, raising
interest rates six times between June 1999 and June 2000. Although Hong Kong,
with its currency tied to the U.S. dollar, is the country most directly impacted
by U.S. monetary policy, the entire region would feel the economic effects if
the U.S. economy were to slow down too quickly (i.e., experience a hard economic
landing).
For long-term investors in Asia, however, the key focus, post-Crisis, continues
to be on the region's progress in structural reform, encompassing progressive
changes both at the macro level (i.e., effective bankruptcy laws, regulatory
reforms, anti-corruption measures) and micro level, more specifically, improving
corporate governance. In our view, if pre-Crisis Asia was a "growth story," then
post-Crisis Asia has evolved into a "growth-plus-restructuring/reform story,"
and increasingly, both growth and reform must be present to attract sustained
investor interest.
REFORM MOMENTUM FALTERS
Unfortunately, since the beginning of calendar 2000, there has been little
discernible progress in tackling Asia's structural problems, the disappointment
over which has been reflected in the region's faltering stock markets. The
reasons for the loss of momentum are largely country-specific, making
4
<PAGE>
THE ASIA TIGERS FUND, INC.
it difficult to generalize across the region. For example, in South Korea,
despite the positive steps that have been taken, there have actually been very
few bankruptcies, even though it is estimated that roughly 25% of listed
companies are not adequately servicing interest payments. The Korean government
certainly did not help ward off complacency last April, when government
officials declared the crisis was "officially over." On the other hand, Taiwan
is suffering because of a new, inexperienced, and politically naive President
who is trying to institute reform measures in the face of an
opposition-dominated Parliament. The open disagreement between the two parties
has raised the political temperature - and uncertainty - for the entire market.
In Southeast Asia, with the exception of Singapore, other countries are in
various states of political uncertainty. In Indonesia, President Wahid's efforts
to reign in the military appear to be unraveling, as he has become bogged down
in several of his own scandals. In the Philipppines, President Estrada was
impeached in November on charges of corruption and cronyism, and a trial was
scheduled for December. While Thailand does not currently exhibit the political
crisis conditions of the Philippines or Indonesia, the country is scheduled to
have presidential elections in January, with the ruling party facing a
formidable challenge. In short, without a major positive catalyst, it is
unlikely that the smaller Southeast Asian markets will attract significant
investor interest, at least in the short term. Although there will continue to
be selected stock-picking opportunities, the markets are, in general, too small,
too illiquid, and too structurally risky to be taken seriously by large global
investment funds.
NASDAQ'S SLIDE HITS ASIAN TECHNOLOGY
In addition to rising political uncertainty and stalled reform efforts, we
believe that the more immediate reason that Asian markets performed poorly this
year was the impact of the sharp correction in the Nasdaq market in the U.S.
Indeed, in the several months prior to the Nasdaq's fall (which began in earnest
in April 2000), Asia's technology, telecommunications, and media sectors were
the only ones actually performing well. Thus, with valuations in the technology
sector being adjusted downward this year, there have been very few choices left
for investors in Asia.
It is not entirely illogical that a downward adjustment in valuations of U.S.
technology stocks should negatively impact Asian technology shares. However, on
closer examination, in our view, some stark differences can be observed,
indicating that such a tight relationship may not be warranted. First, in terms
of valuation, Asia's technology stocks, with only a few exceptions, never
approached the valuation levels of their U.S. counterparts. Nevertheless, most
Asian shares were sold down just as aggressively. In addition, Asian technology
is, for the most part, an "outsourcing" story, where U.S. multinationals seeking
to cut their costs, outsource various stages of production to Asian companies.
It can be convincingly argued that if U.S. technology is about to experience a
slowdown, then the pressure for cost-cutting should become even more intense,
accelerating the outsourcing trend.
5
<PAGE>
THE ASIA TIGERS FUND, INC.
OUTLOOK FOR 2001
In forecasting the outlook for Asian equity markets in 2001, much depends on
one's view of whether or not the U.S. economy will have a "soft" or "hard"
landing. With most of Asia still experiencing weak consumer demand and, hence,
being highly dependent on exports to drive gross domestic product (GDP) growth,
any sharp slowdown in demand from the U.S. would be very negative. Also, if U.S.
equity markets continue to melt down to the levels that the most extreme
pessimists predict, there is no question that Asian markets would be dragged
down as well.
Nevertheless, we find more reasons to be optimistic than pessimistic about Asia
over the next 12 months. First, valuations are at levels not seen since the
immediate post-Crisis period, while at the same time, all non-Japan Asian
countries have made notable fundamental progress in the past two years. Given
that non-Japan Asia is well known for over-shooting on both the up and down
sides, we believe that Asian markets have indeed over-discounted their current
valuations.
Fundamentally, there is a growing consensus, even within OPEC, that oil prices
will fall - perhaps even sharply - next year, a trend that would clearly bode
well for almost all of Asia (Indonesia and Malaysia being minor exceptions,
since they are oil exporters). If, as expected, the U.S. Federal Reserve will be
easing interest rates sometime in the first half of 2001, we believe that this
would be another positive development for the Asian markets.
Finally, there is also growing evidence that pro-reform initiatives may be
getting back on track in Asia. A recent trip to Asia has provided indications
that corporate governance efforts, slowly but surely, seem to be improving in
countries such as Korea and Malaysia. Perhaps even more so than in the U.S.,
Asian governments are highly sensitive to their equity markets, and the past
year cannot help but be a major wake-up call that the crisis is indeed not
"over" and that far more needs to be done.
CHINA
US$1.4 MILLION, 0.7% OF THE FUND'S TOTAL INVESTMENTS AS OF OCTOBER 31, 2000
Although 2000 may have been a tough year overall for non-Japan Asia, China is
likely to remember it as a year of several key successes. First, the U.S.
government finally decided to grant it permanent normalized trade relation
status. The country also appears to be well on its way to entry into the World
Trade Organization, although the final vote will not take place until sometime
in 2001.
Domestically, the Chinese economy moved convincingly out of deflation, and GDP
growth is likely to easily register more than 7% for the full calendar year
2000. A key driver of the economy has been government spending. Government
officials know that both consumer spending and foreign direct investment must be
revived if high growth rates are to remain sustainable.
6
<PAGE>
THE ASIA TIGERS FUND, INC.
More than in any other Asian country, China's government also saw the most
headway during the year with its privatization program. Such progress remains
essential, too, if the government is to succeed in its efforts to reform
state-owned enterprises. During the year, the shares in two of its three
state-owned oil-and-gas companies were successfully listed - Petrochina and
SinoPec. Both companies are attractive restructuring stories that are benefiting
from the current high oil price environment.
The Fund's biggest China exposure is China Mobile, the country's dominant
nationwide mobile phone company, with an 83% market share. In the six months
ended June 30, 2000, China Mobile's reported net income more than doubled to
8.72 billion yuan, from 4 billion yuan a year earlier. The company's subscriber
base rose 38% to 21.6 million at June 30, 2000, from 15.6 million in December
1999. This past October, the company completed the purchase of seven mobile
phone networks from its state-controlled parent, a transaction valued at US$34
billion.
HONG KONG
US$64 MILLION, 34.0% OF THE FUND'S TOTAL INVESTMENTS AS OF OCTOBER 31, 2000
Hong Kong remained in a deflationary mode during calendar year 2000, lead by a
weak commercial property market that was marked by falling rental rates, and
projected oversupply (except for the office sector). Although retail sales
started the year strong, they began trailing off in the second quarter after the
"dot-com" bubble burst. With credit growth virtually non-existent, banks
launched a mortgage price war which saw mortgage rates decline to over 200 basis
points (i.e., 2%) below the prime rate. Bright spots for Hong Kong included: (1)
tourist arrivals, which increased 16.5% in the January-September 2000 period vs.
the similar period in 1999; and (2) exports, which registered an 18% increase in
the January-September 2000 period versus the same period a year earlier. Hong
Kong's relatively good corporate governance, political stability and lack of
technology hardware stocks all helped it to outperform almost all other Asian
markets during calendar year 2000.
Hutchison Whampoa remains the Fund's single largest holding in the country.
Arguably the premier conglomerate in non-Japan Asia, Hutchison's activities
include telecommunications, property, port operations, and a number of retail
businesses. However, the company's core strength, as well as over half of its
net asset value, lies in its wireless telecommunications operation. The company
is by far the biggest investor in Europe's telecommunications market, bidding on
several mobile licenses across the continent. Hutchison's earnings can be quite
volatile, due to frequent asset sales taken above the line (i.e., items treated
as part of the company's ordinary operations). For example, in the first half of
calendar 2000, reported net income quadrupled to HK$31.3 billion from HK$7.8
billion in the first half of 1999. About HK$25.6 billion of the total 2000
profit was attributable to one-time gains.
7
<PAGE>
THE ASIA TIGERS FUND, INC.
INDIA
US$25.4 MILLION, 13.5% OF THE FUND'S TOTAL INVESTMENTS AS OF OCTOBER 31, 2000
India has also faced a challenging year, with issues including investor
disappointment over fiscal reform, currency weakness, and the sharp correction
in the U.S. Nasdaq market. The 2000 calendar year began on a promising note,
with a reported solid GDP growth of 6.4% for the fiscal year ended March 31,
2000, followed by interest rate reductions by the Reserve Bank of India (the
country's central bank). Unfortunately, this was subsequently reversed as the
rupee came under selling pressure in response to the slowing of capital inflows
and a rising import bill. Although both inflation and interest rates were moving
up through the middle of the calendar year 2000, we believe that both have now
stabilized at levels of 5.5%-6.5% and 8%-9%, respectively. In terms of
structural issues, foreign investors have signaled that they are not happy with
the pace of reform, and wish to see it accelerated. Frankly, in our view, the
government's efforts are very much a mixed bag, with solid progress taking place
in several areas (e.g., telecommunications), while certain areas, such as
privatization of state-owned assets, need to be stepped up.
Infosys Technologies continues to be a major holding of the Fund, second only to
Hutchison Whampoa. In early October, Infosys announced that second fiscal
quarter earnings (July-September 2000) surged by 134% to 1.54 billion rupees
from 657.1 million rupees in the previous year's second quarter. In the third
quarter of 2000, revenues reported soared by 113% to 4.64 billion rupees from
2.17 billion rupees in the second quarter of 2000. Infosys appears to have been
able to successfully tap into India's large pool of cost-efficient engineers to
produce world-class software, scaling up rapidly to meet clients' demands.
Infosys reported adding 27 new clients during its second fiscal quarter
(July-September 2000) compared to 32 in the first quarter.
INDONESIA
US$2.1 MILLION, 1.1% OF THE FUND'S TOTAL INVESTMENTS AS OF OCTOBER 31, 2000
One year after the first free presidential elections in its history, Indonesia
is continuing to struggle to build democratic institutions that will ensure
stability for the country. Among many challenges the government faces, one of
the most pressing is to re-capitalize its banking system, the funds for which
would have to come from the state-owned IBRA (the Indonesian bank restructuring
agency) selling recently-seized state-owned assets. More broadly, President
Abdurrahman Wahid must also continue striving to reign in the military and
further establish the rule of law in Indonesia. Although some progress has been
made in all of these endeavors over the past 12 months, progress needs to be
much more rapid. Until that is observed, the stock market is likely to continue
to languish while the currency, the rupiah, remains under pressure.
The Fund's holdings in Indonesia are mainly centered on the local clove
cigarette ("kretek") industry, as Gudang Garam and HM Sampoerna (two companies
in this industry) have consistently earned the highest returns on capital among
all listed companies in the country. Fairly stable
8
<PAGE>
THE ASIA TIGERS FUND, INC.
demand for their products translates into solid pricing power, and with their
ample cash-generating ability, neither company is highly dependent on the
domestic banking system. During the first nine months of 2000, HM Sampoerna's
reported revenues surged 31% to Rph. 6 trillion, from Rph. 4.6 trillion for the
same period in 1999. In Gudang Garam's most recently released numbers, its
first-half 2000 profit rose 8% to 1.18 trillion rupiah from 1.09 trillion
rupiah in the first half of 1999. First-half sales reported by Gudang Garam rose
12.8% to 6.76 trillion rupiah from 5.8 trillion rupiah a year earlier.
KOREA
US$31.5 MILLION, 16.7% OF THE FUND'S TOTAL INVESTMENTS AS OF OCTOBER 31, 2000
In our opinion, Korea is forecast to achieve a second straight year of 10%-plus
GDP growth, a remarkable achievement given the depths to which the economy
plunged during the region's economic crisis. Export growth has been stellar,
having surged 24.7% during the first ten months of 2000 vs. the same period a
year ago to US$142.8 billion from US$114.5 billion, on the back of 20%-plus
year-over-year growth in industrial production. In fact, with growth so robust,
much of the concern has been about the economy potentially overheating. However,
although inflation has edged up during 2000, it remains in a modest 2%-3%
year-over-year range.
A much bigger problem for Korea has been its lack of progress in clearing bad
loans from the banking system and forcing insolvent companies into bankruptcy.
Far too many non-performing loans continue to get rolled over, which only serves
to compound the cost for the banks, increase uncertainty, and serve as a drag on
the entire economy. Recently, there have been signs that the Korean government
is finally getting tougher on this issue. For example, within the past two
months, it published a list of approximately 50 "non-viable companies," in
effect, indicating that these companies would never return to profitability, and
that the government would no longer assist their survival. Despite this action,
we do not expect any quick solution to the bad-debt problem. Nevertheless, we
expect to see an increasing number of high-profile Korean bankruptcies in 2001,
which, ironically, we believe should be interpreted as positive for the economy.
The Fund has a significant holding in Samsung Electronics, the world's largest
manufacturer of computer memory chips, as well as a producer of mobile phones
and network equipment. Third-quarter 2000 net profit surged 146% to 1.7 trillion
won from 691 million won on a larger-than-expected price surge that began in
June as PC manufacturers stockpiled chips in anticipation of strong year-end
demand. Although the recent slump in chip prices will negatively impact earnings
for the balance of the year, the company is still expected to report stellar 80%
earnings-per-share growth for 2000.
9
<PAGE>
THE ASIA TIGERS FUND, INC.
MALAYSIA
US$7.6 MILLION, 4% OF THE FUND'S TOTAL INVESTMENTS AS OF OCTOBER 31, 2000
The biggest event for Malaysia during 2000 was being reinstated into the Morgan
Stanley Capital International (MSCI) Indices on May 31, 2000. In anticipation of
this event, the equity market rose roughly 10% during the first five months of
the year, only to correct sharply, falling almost 18% by the end of October, as
most foreign investors remained cautious. Overall, Malaysia benefited from the
same trends as many Asian countries - a burgeoning trade surplus as exports
surged 20.3% during the first ten months of the year while inflation remained
dormant, at 1.5%-2%. However, domestic demand continued to be weak, a point
clearly reflected in overall weak corporate earnings. Both political
policy-making risk and corporate governance risk remain key issues for the
Malaysian equity market. Although in its budget announced in late October, the
government announced that the 10% exit levy would be waived for investments held
more than one year, it also stated that the currency peg would not be eliminated
"for the foreseeable future." (Pegging is considered negative, since many view
the Malaysian government as being too interventionist in the country's economy.)
Of the Fund's holdings in Malaysia, the single biggest position continues to be
blue-chip heavyweight Malayan Bank. Malaysia's banking sector has been
undergoing a government-orchestrated consolidation during the past year, as the
government is winnowing down the number of players from the previous 20-plus to
10 today, to perhaps only five or six in the future. However, as Malaysia's
leading bank, Malayan Bank is expected to, if anything, emerge stronger. The
bank recently announced financials for its fiscal year ended June 30, 2000. Its
reported net income rose 40% to 1.36 billion ringgit from 970 million ringgit in
the fiscal year ended June 30, 1999. Both increased lending and lower loan-loss
provisions contributed to the solid earnings result.
PHILIPPINES
US$0.8 MILLION, 0.4% OF THE FUND'S TOTAL INVESTMENTS AS OF OCTOBER 31, 2000
During the past year, the Estrada Administration has nearly brought the
Philippine economy to its knees, as the budget deficit has ballooned, key reform
measures have stalled, and by October, both consumer and business confidence hit
lows not seen since the collapse of the Marcos regime more than a decade ago.
Foreign direct investment has all but dried up, also hitting a 10-year low.
However, the impeachment and scheduled trial of President Estrada have provided
new hope for progress on reform.
The Fund holds only two small positions in the Philippines, one being Philippine
Long Distance Telephone (PLDT). PLDT was acquired by new management in the
fourth quarter of 1998 and has been undergoing a major transformation to become
a profit-oriented, commercially-driven company managed within the parameters of
sound corporate governance. Recently, the company announced results for the
third quarter of 2000, with reported revenues increasing 13.4% to 15.8 billion
pesos from 13.9 billion pesos in the third quarter of 1999. However, net profit
plunged 61% to 385 mil-
10
<PAGE>
THE ASIA TIGERS FUND, INC.
lion pesos from 988 million pesos in the previous year's third quarter, mainly
because of soaring marketing costs for its mobile phone subsidiary, Smart, and
restructuring charges related to its Piltel subsidiary. The results were in line
with analysts' expectations.
SINGAPORE
US$19.9 MILLION, 10.6% OF THE FUND'S TOTAL INVESTMENTS AS OF OCTOBER 31, 2000
Together with Hong Kong, Singapore is the market that institutional investors
traditionally flock to when risk premiums rise. This past year has been no
exception. No other equity market in Asia can boast of a better combination of
political stability, sound policy-making, and good corporate governance. Exports
have soared this year - up 22.3% in the first 10 months of the year vs. the same
period a year earlier - on the back of Singapore's burgeoning electronics
industry, while interest rates have remained low and inflation quiescent at
1%-2%. Although the Hong Kong equity market has outperformed Singapore this
year, this can mainly be attributed - in our view - to the latter's growing
presence in the semiconductor and electronics contract manufacturing industries.
Over the medium to long term, Singapore's strategic positioning should probably
prove superior to that of Hong Kong.
A key sector in the Fund's Singapore exposure is the banking industry, with
holdings in DBS Group, Overseas-Chinese Banking Corporation (OCBC), and Overseas
Union Bank (OUB). Although loan growth in Singapore remains anemic, the key
rationale for being "long" the sector is the potential for industry
restructuring. The government has made it known that it will be easing capital
adequacy requirements to conform with international standards, while making it
mandatory for banks to dispose of their non-core, non-financial assets. Such
moves would unlock tremendous value in the Singapore banks. During the first
half of 2000, all three banks recorded earnings increases, with OCBC, OUB, and
DBS Group registering net profit gains of 52%, 34%, and 7.5%, respectively.
However, in all three cases, a sharp reduction in loan-loss provisions - rather
than increased business - was a key driver behind the improved bottom line.
TAIWAN
US$31.3 MILLION, 16.6% OF THE FUND'S TOTAL INVESTMENTS AS OF OCTOBER 31, 2000
Taiwan saw historic political change in 2000, as Chen Shui-bian of the
Democratic People's Party (DPP), was elected President, the first time a
non-Kuomintang (KMT) candidate failed to win the presidency in Taiwan's modern
history. Unfortunately, the KMT still dominates the legislative branch, with 115
members in the 221-person Parliament. The inability of Chen to work with the
KMT-controlled Parliament has led to political gridlock in a country where
strong leadership and a unified front are essential in dealing with pressing
issues, not the least of which is the relationship with China. The situation
deteriorated further in October and November, with the KMT attempting to
orchestrate the ouster of President Chen. The political uncertainty has been
negatively impacting the stock market.
11
<PAGE>
THE ASIA TIGERS FUND, INC.
Perhaps more than any other Asian market, Taiwan has also been hit by the
Nasdaq's sharp correction, with sharp falls in the shares of foundries Taiwan
Semiconductor (TSMC) and United Microelectronics (UMC). Taiwan continues to
register extremely robust export growth, surging 24.8% for the period January
through October 2000 vs. the same period of 1999, led by the electronics sector.
However, with a slowdown expected, sentiment has turned negative on the sector.
Nevertheless, we believe that Taiwan boasts some of the highest-quality, most
globally-cost-competitive electronics companies in the world, and that the
medium to longer-term outlook remains bright.
The key focus in Taiwan remains the technology sector, with the Fund's
fourth-largest holding being Taiwan Semiconductor, the world's largest dedicated
semiconductor foundry. TSMC is also seen as being the industry leader in process
technology and other leading-edge foundry services. The company recently
announced stellar nine-months results (January-September 2000), with reported
net profit surging 168% to NT$43.6 billion from NT$16.2 billion in the first
nine months of 1999. Revenues rose 127% to NT$112.4 billion in January-September
2000, from NT$49.4 billion in the same period of 1999.
THAILAND
US$4.2 MILLION, 2.2% OF THE FUND'S TOTAL INVESTMENTS AS OF OCTOBER 31, 2000
Similar to much of Asia, Thailand has been suffering from a loss of "reform
momentum," the negative impact of which is being reflected in both its equity
market and its currency, the baht. Although the volume of non-performing loans
has been falling more or less steadily during the year, its rate as a percentage
of all loans outstanding remains high, and banks have yet to resume lending in a
significant way. According to government figures, Thailand's rate of
non-performing loans as of September 30, 2000 had fallen to 22.8%, down sharply
from the August 1999 peak of 50%.
The still-high level of bad loans in the financial system means that most banks
remain wary of granting fresh, new loans - a stalemate that is having negative
repercussions for economic growth. It is undoubtedly a key reason why the
government has revised its GDP growth forecast downward to only 4% for the
fiscal year ended December 31, 2000. Moreover, the weakened baht has renewed
pressure on those companies with unhedged U.S. dollar borrowings. One bright
spot, of course, is that the weak baht does help Thailand's exporters. As with
most Asian countries, exports have been a saving grace for Thailand this year,
up 19.2% through October 2000 vs. the first 10 months of 1999, to US$57.1
billion from US$51.4 billion. Finally, it is also worth noting that Thailand has
a presidential election slated for January. Although the country is generally
perceived as being more politically stable than Indonesia or the Philippines,
given the country's past track record of electoral corruption (e.g., paying
people to vote a certain way), the potential for problems continues. With the
economy weak and voter sentiment at a low ebb, the ruling Democratic party is
expected to face a stiff challenge from the opposition Thai Rak Thai party.
The Fund's key holdings in Thailand largely center on the telecommunications
sector. Advanced
12
<PAGE>
THE ASIA TIGERS FUND, INC.
Information Service, TelecomAsia, and Shin Satellite make up nearly two-thirds
of the Fund's Thailand exposure. Advanced Information Service recently announced
stellar third-quarter 2000 results, with reported net profit more than doubling
to 1.94 billion baht from 882 million baht in the third quarter of 1999.
Advanced Information Service has reported about 1.6 million subscribers, or 46%
of total mobile phone users in Thailand. TelecomAsia, although still recording
losses, reported a third-quarter 2000 loss that narrowed 39% from a year earlier
to 4.62 billion baht from 7.57 billion baht a year earlier. Finally, Shin
Satellite reported a profit of 98 million baht in the third quarter of 2000, vs.
a loss of 380 million baht a year earlier. Shin Satellite returned to
profitability in the third quarter after posting a loss a year earlier. The
company benefited from strong growth in its transponder business, a slashing of
foreign debt, and growth in its Internet unit.
Punita Kumar-Sinha
/s/ Punita Kumar-Sinha
Portfolio Manager
Advantage Advisers, Inc.
13
<PAGE>
THE ASIA TIGERS FUND, INC.
--------------------------------------------------------------------------------
SHARE REPURCHASE PROGRAM
In December 1999, the Board of Directors of the Fund authorized the Fund to
repurchase from time to time in the open market up to 1,000,000 shares of the
Fund's common stock. Subsequently in October 2000, the Board authorized the Fund
to repurchase up to an additional 1,000,000 shares of the Fund's common stock
from time to time in the open market. As such, the total number of shares of the
Fund authorized for repurchase under the Fund's repurchase program is 2,000,000.
The Fund's Board directed management to repurchase the Fund's shares at such
times and in such amounts as management believes will enhance shareholder value,
subject to review by the Fund's Board of Directors. During the year ended
October 31, 2000, the Fund repurchased a total of 798,200 shares of its common
stock. (For details regarding shares repurchased by the Fund, see Note D to the
Financial Statements).
In accordance with the Board's directions, the Fund may from time to time
repurchase additional shares of its common stock in the open market.
AMENDMENT OF BY-LAWS
During May 2000, the Board of Directors of the Fund reviewed and approved
certain amendments to the Fund's by-laws that have been recommended by Maryland
counsel to the Fund. For example, the provisions relating to timely notice for
proposals to be brought before an annual meeting of stockholders (other than a
proposal under Rule 14a-8 of the Securities Exchange Act of 1934 to be included
in the Fund's proxy statement) have been amended. As amended, a stockholder's
notice generally must be delivered to the Fund not less than 90 days nor more
than 120 days prior to the first anniversary of the preceding year's annual
meeting. In addition, upon recommendation of the Fund's Maryland counsel, other
changes to certain by-law provisions were made to conform to the by-law
provisions of more recently incorporated Maryland corporations.
--------------------------------------------------------------------------------
14
<PAGE>
THE ASIA TIGERS FUND, INC.
Schedule of Investments October 31, 2000
COMMON STOCKS (96.53% of holdings)
<TABLE>
<CAPTION>
Number Percent of
of Shares Security Holdings Cost Value
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
China 0.74%
Coal 0.33%
2,286,000 Yanzhou Coal Mining Company Limited ............... $ 680,376 $ 608,213
---------- ----------
Energy Sources 0.41%
36,800 Petrochina Company Limited ADR .................... 625,613 779,700
---------- ----------
Total China ....................................... 1,305,989 1,387,913
---------- ----------
Hong Kong 33.99%
Banking 4.02%
398,800 Hang Seng Bank Limited ............................ 3,629,591 4,691,614
207,600 HSBC Holdings PLC ................................. 2,365,858 2,888,140
---------- ----------
5,995,449 7,579,754
---------- ----------
Business/Public Service 0.09%
258,000 Computer & Technologies Holdings Limited .......... 548,682 176,984
---------- ----------
Computers 0.26%
576,000 Legend Holdings Limited ........................... 648,566 487,447
---------- ----------
Consumer Goods & Services 1.39%
1,409,000 Li & Fung Limited ................................. 939,840 2,619,631
---------- ----------
Electronic Components & Instruments 0.11%
1,280,000 TCL International Holdings Limited+ ............... 658,280 208,437
---------- ----------
Energy Sources 0.81%
65,000 China Petroleum and Chemical Corporation ADR+ ..... 1,341,925 1,275,625
2,565,000 Sinopec Shanghai Petrochemical Company Limited .... 378,435 259,822
---------- ----------
1,720,360 1,535,447
---------- ----------
Financial Services 0.68%
298,800 Dah Sing Financial Group .......................... 1,190,105 1,283,472
---------- ----------
</TABLE>
15
<PAGE>
THE ASIA TIGERS FUND, INC.
Schedule of Investments (continued) October 31, 2000
COMMON STOCKS (continued)
<TABLE>
<CAPTION>
Number Percent of
of Shares Security Holdings Cost Value
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Hong Kong (continued)
Food & Household Products 0.29%
1,230,000 Ng Fung Hong Limited ............................. $ 702,222 $ 544,108
----------- -----------
Internet 0.09%
16,000 chinadotcom corporation (U.S.)+ .................. 344,000 162,000
----------- -----------
Manufacturing 0.33%
714,000 Esprit Holdings Limited .......................... 552,231 613,386
----------- -----------
Media 0.39%
134,000 Television Broadcasts Limited .................... 617,722 733,658
----------- -----------
Multi-Industry 9.23%
328,000 China Resources Enterprise Limited ............... 500,375 370,099
1,372,900 Hutchison Whampoa Limited ........................ 8,430,372 17,031,424
----------- -----------
8,930,747 17,401,523
----------- -----------
Real Estate 8.47%
762,000 Cheung Kong Holdings Limited ..................... 5,477,040 8,427,042
530,000 Great Eagle Holdings Limited ..................... 773,211 761,123
1,138,000 Kerry Properties Limited ......................... 1,683,814 1,305,950
662,600 Sun Hung Kai Properties Limited .................. 3,710,355 5,479,895
----------- -----------
11,644,420 15,974,010
----------- -----------
Retailing 0.95%
3,056,000 Giordano International Limited ................... 1,114,805 1,792,691
----------- -----------
Telecommunications 5.56%
610,500 Asia Satellite Telecommunications Holdings Limited 1,995,829 1,236,812
950,000 China Mobile (Hong Kong) Limited+ ................ 2,096,579 6,120,977
4,048,440 Pacific Century Cyberworks Limited+ .............. 7,629,671 3,114,584
----------- -----------
11,722,079 10,472,373
----------- -----------
</TABLE>
16
<PAGE>
THE ASIA TIGERS FUND, INC.
Schedule of Investments (continued) October 31, 2000
COMMON STOCKS (continued)
<TABLE>
<CAPTION>
Number Percent of
of Shares Security Holdings Cost Value
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Hong Kong (continued)
Textiles & Apparel 0.19%
1,958,000 Glorious Sun Enterprises Limited ..................... $ 748,406 $ 293,738
600,000 Softbank Investment International (Strategic) Limited+ 1,051,525 55,392
----------- -----------
1,799,931 349,130
----------- -----------
Transportation 0.57%
512,000 Cathay Pacific Airways Limited ....................... 824,084 928,940
100,000 MTR Corporation Limited .............................. 121,520 148,096
----------- -----------
945,604 1,077,036
----------- -----------
Utilities - Electric & Gas 0.56%
119,400 CLP Holdings Limited ................................. 623,656 557,271
1,310,000 Huaneng Power International Incorporated ............. 499,253 508,110
----------- -----------
1,122,909 1,065,381
----------- -----------
Total Hong Kong ...................................... 51,197,952 64,076,468
----------- -----------
India 13.50%
Automobiles 0.09%
51,000 Punjab Tractors Limited .............................. 342,015 173,030
----------- -----------
Banking 0.11%
45,200 ICICI Bank Limited Sponsored ADR*+ ................... 436,767 214,700
----------- -----------
Beverages & Tobacco 0.73%
85,000 ITC Limited .......................................... 1,381,536 1,382,044
----------- -----------
Business/Public Service 6.06%
57,626 Infosys Technologies Limited ......................... 1,473,823 8,818,439
75,376 NIIT Limited ......................................... 1,722,779 2,536,881
150,000 Vans Information & Investment Services Limited+ ..... 344,037 60,832
----------- -----------
3,540,639 11,416,152
----------- -----------
Chemicals 1.04%
301,872 Reliance Industries .................................. 1,078,166 1,953,308
----------- -----------
</TABLE>
17
<PAGE>
THE ASIA TIGERS FUND, INC.
Schedule of Investments (continued) October 31, 2000
COMMON STOCKS (continued)
<TABLE>
<CAPTION>
Number Percent of
of Shares Security Holdings Cost Value
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
India (continued)
Construction & Housing 0.00%
1,320 Larsen & Toubro Limited ............................. $ 8,196 $ 4,174
----------- -----------
Energy Sources 0.53%
435,000 Hindustan Petroleum Corporation Limited 2,053,443 993,026
----------- -----------
Health/Personal Care 1.32%
656,000 Hindustan Lever Limited ............................. 2,782,444 2,488,879
----------- -----------
Metals - Steel 0.32%
294,500 Tata Iron & Steel Company Limited ................... 1,109,668 609,430
----------- -----------
Technology 0.76%
219,269 Satyam Computer Services Limited .................... 917,473 1,438,002
----------- -----------
Telecommunications 2.54%
151,520 HCL Technologies Limited ............................ 2,146,531 3,847,185
65,500 Shyam Telecom Limited ............................... 545,941 333,512
81,200 Videsh Sanchar Nigam Limited GDR+ ................... 1,365,470 598,850
----------- -----------
4,057,942 4,779,547
----------- -----------
Total India ......................................... 17,708,289 25,452,292
----------- -----------
Indonesia 1.10%
Beverages & Tobacco 0.77%
876,500 PT Gudang Garam ..................................... 1,479,301 941,114
427,500 PT Hanjaya Mandala Sampoerna ........................ 1,038,010 502,404
----------- -----------
2,517,311 1,443,518
----------- -----------
Telecommunications 0.33%
118,800 PT Telekomunikasi Indonesia ADR ..................... 825,336 623,700
----------- -----------
Total Indonesia ..................................... 3,342,647 2,067,218
----------- -----------
</TABLE>
18
<PAGE>
THE ASIA TIGERS FUND, INC.
Schedule of Investments (continued) October 31, 2000
COMMON STOCKS (continued)
<TABLE>
<CAPTION>
Number Percent of
of Shares Security Holdings Cost Value
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Korea 16.46%
Appliance & Household Durables3.84%
57,810 Samsung Electronics+ ........................... $5,352,126 $7,242,132
---------- ----------
Banking 2.81%
119,722 H & CB ......................................... 2,191,248 2,878,591
154,062 Kookmin Bank ................................... 1,982,046 1,760,709
64,600 Shinhan Bank ................................... 592,131 647,420
---------- ----------
4,765,425 5,286,720
---------- ----------
Beverages & Tobacco 0.52%
21,840 Hite Brewery Company Limited ................... 675,782 977,280
---------- ----------
Business/Public Service 0.02%
1,358 Locus Corporation+ ............................. 34,247 30,562
---------- ----------
Chemicals 0.64%
123,030 LG Chemical Limited ............................ 1,543,927 1,211,372
---------- ----------
Construction & Housing 0.55%
29,550 Kumkang Korea Chemical Company Limited ......... 1,870,562 1,044,316
---------- ----------
Electrical & Electronics 0.49%
28,900 Samsung ElectroMechanics Company Limited ....... 1,253,256 924,800
---------- ----------
Electronic Components & Instruments 0.07%
21,310 Hyundai Electronics Industries Company Limited . 465,783 130,951
---------- ----------
Financial Services 0.20%
17,300 Kookmin Credit Card Company Limited+ ........... 489,381 377,178
---------- ----------
Food & Household Products 0.39%
13,130 Cheil Jedang Corporation ....................... 945,135 384,377
</TABLE>
19
<PAGE>
THE ASIA TIGERS FUND, INC.
Schedule of Investments (continued) October 31, 2000
COMMON STOCKS (continued)
<TABLE>
<CAPTION>
Number Percent of
of Shares Security Holdings Cost Value
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Korea (continued)
Food & Household Products (continued)
4,360 Lotte Confectionery Company Limited .......... $ 708,963 $ 356,466
----------- -----------
1,654,098 740,843
----------- -----------
Internet 0.26%
135,046 Korea Next Education Services Incorporated ... 903,982 492,695
----------- -----------
Machinery & Engineering 0.51%
40,200 Halla Climate Control Company ................ 1,315,012 950,664
----------- -----------
Metals - Steel 0.76%
16,500 Pohang Iron & Steel Company Limited .......... 712,299 965,205
30,000 Pohang Iron & Steel Company Limited ADR ...... 982,500 474,375
----------- -----------
1,694,799 1,439,580
----------- -----------
Telecommunications 3.22%
35,600 Korea Telecom Corporation .................... 2,081,697 2,096,879
18,670 SK Telecom Company Limited ................... 1,746,017 3,980,198
----------- -----------
3,827,714 6,077,077
----------- -----------
Transportation - Air 0.00%
5 Korean Air Corporation Limited ............... 53 26
----------- -----------
Utilities - Electric & Gas 2.18%
183,680 Korea Electric Power Corporation ............. 6,033,505 4,101,514
----------- -----------
Total Korea .................................. 31,879,652 31,027,710
----------- -----------
Malaysia 4.03%
Banking 0.76%
358,100 Malayan Banking .............................. 814,556 1,432,400
----------- -----------
Electrical Components & Instruments 1.20%
180,000 Malayan Pacific Industries ................... 1,740,482 1,018,421
351,000 Unisem ....................................... 1,667,237 1,237,737
----------- -----------
3,407,719 2,256,158
----------- -----------
</TABLE>
20
<PAGE>
THE ASIA TIGERS FUND, INC.
Schedule of Investments (continued) October 31, 2000
COMMON STOCKS (continued)
<TABLE>
<CAPTION>
Number Percent of
of Shares Security Holdings Cost Value
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Malaysia (continued)
Investment Company 0.31%
99,800 iShares MSCI Malaysia (Free) Index Fund ........ $ 632,667 $ 573,850
---------- ----------
Leisure & Tourism 1.09%
333,000 Genting ........................................ 1,345,588 850,026
687,000 Resorts World .................................. 1,608,340 1,202,250
---------- ----------
2,953,928 2,052,276
---------- ----------
Multi-Industry 0.40%
574,00 Berjaya Sports Toto ............................ 1,179,583 755,263
---------- ----------
Telecommunications 0.17%
106,000 Telekom Malaysia ............................... 348,804 326,368
---------- ----------
Utilities - Electric & Gas 0.10%
60,000 Tenaga Nasional ................................ 187,074 194,211
---------- ----------
Total Malaysia ................................. 9,524,331 7,590,526
---------- ----------
Philippines 0.42%
Media 0.31%
755,600 ABS-CBN Broadcasting Corporation ............... 881,120 583,503
---------- ----------
Telecommunications 0.11%
14,000 Philippine Long Distance Telephone ADR ......... 276,489 217,000
---------- ----------
Total Philippines .............................. 1,157,609 800,503
---------- ----------
Singapore 7.87%
Banking 2.57%
91,500 DBS Group Holdings Limited ..................... 1,184,904 1,078,432
390,000 Overseas-Chinese Banking Corporation Limited ... 1,807,688 2,487,047
263,800 Overseas Union Bank Limited .................... 1,137,085 1,276,718
---------- ----------
4,129,677 4,842,197
---------- ----------
</TABLE>
21
<PAGE>
THE ASIA TIGERS FUND, INC.
Schedule of Investments (continued) October 31, 2000
COMMON STOCKS (continued)
<TABLE>
<CAPTION>
Number Percent of
of Shares Security Holdings Cost Value
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Singapore (continued)
Broadcasting/Publishing 1.12%
148,000 Singapore Press Holdings Limited ............. $ 1,520,290 $ 2,115,128
----------- -----------
Electronic Components & Instruments 1.05%
16,550 Chartered Semiconductor Manufacturing
Limited ADR+ ............................... 946,908 769,575
100 Natsteel Electronics Limited ................. 479 260
125,600 Venture Manufacturing (Singapore) Limited .... 534,099 1,215,738
----------- -----------
1,481,486 1,985,573
----------- -----------
Food & Household Products 0.24%
644,000 Want Want Holdings (U.S.) .................... 853,136 447,580
22,800 Want Want Holdings-Warrants (U.S.)
expire 10/24/2004+ ........................... 1,140 4,332
----------- -----------
854,276 451,912
----------- -----------
Machinery & Engineering 0.07%
80,000 Singapore Technologies Engineering Limited ... 128,090 128,907
----------- -----------
Real Estate 0.58%
236,600 City Developments Limited .................... 856,548 1,091,192
----------- -----------
Technology 0.45%
505,000 Omni Industries Limited ...................... 546,642 851,107
----------- -----------
Telecommunications 0.27%
36,720 Datacraft Asia Limited (U.S.) ................ 248,403 251,532
148,000 Singapore Telecommunications Limited ......... 248,207 245,220
----------- -----------
496,610 496,752
----------- -----------
Transportation - Air 1.52%
288,000 Singapore Airlines Limited ................... 2,276,030 2,869,669
----------- -----------
Total Singapore .............................. 12,289,649 14,832,437
----------- -----------
</TABLE>
22
<PAGE>
THE ASIA TIGERS FUND, INC.
Schedule of Investments (continued) October 31, 2000
COMMON STOCKS (continued)
<TABLE>
<CAPTION>
Number Percent of
of Shares Security Holdings Cost Value
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Taiwan 16.46%
Business/Public Service 0.13%
162,400 Mercuries Data System Limited+ ................. $ 546,788 $ 253,907
----------- -----------
Chemicals 1.32%
2,081,246 Nan Ya Plastics Corporation .................... 3,054,035 2,480,742
----------- -----------
Computers 0.32%
733,750 Acer Incorporated .............................. 1,554,945 608,808
----------- -----------
Data Processing and Reproduction 0.61%
754,320 Compal Electronics Incorporated ................ 1,819,448 1,151,331
----------- -----------
Electrical & Electronics 6.27%
243,600 Compeq Manufacturing Company Limited ........... 1,425,355 920,099
534,600 Hon Hai Precision Industry Company Limited ..... 2,454,136 2,797,133
2,492,395 Taiwan Semiconductor Manufacturing Company
Limited+ ..................................... 8,579,681 7,562,065
551,590 Winbond Electronics Corporation+ ............... 1,332,954 534,513
----------- -----------
13,792,126 11,813,810
----------- -----------
Electronic Components & Instruments 3.76%
965,473 Advanced Semiconductor Engineering Incorporated+ 1,806,375 1,108,949
63,747 Ambit Microsystems Corporation ................. 511,359 296,039
400,889 Asustek Computer Incorporated* ................. 3,289,118 1,998,239
169,110 Macronix International Company Limited+ ........ 403,027 240,838
170,000 Nanya Technology Corporation+ .................. 397,033 130,526
750 Ritek Corporation + ............................ 3,145 1,440
98,950 Sunplus Technology Company Limited ............. 493,516 422,758
123,500 Synnex Technology International Corporation .... 606,447 260,000
49,400 Synnex Technology International Corporation
144A GDR+ .................................... 879,795 407,550
1,254,841 United Microelectronics Corporation+ ........... 3,459,912 2,214,425
----------- -----------
11,849,727 7,080,764
----------- -----------
</TABLE>
23
<PAGE>
THE ASIA TIGERS FUND, INC.
Schedule of Investments (continued) October 31, 2000
COMMON STOCKS (continued)
<TABLE>
<CAPTION>
Number Percent of
of Shares Security Holdings Cost Value
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Taiwan (continued)
Insurance 0.75%
789,280 Cathay Life Insurance Company Limited ......... $ 2,180,005 $ 1,417,283
----------- -----------
Metals - Steel 0.63%
2,040,000 China Steel Corporation ....................... 1,342,761 1,181,053
----------- -----------
Telecommunications 0.86%
465,000 Chunghwa Telecom Company Limited+ ............. 1,743,516 1,353,251
134,894 Zyxel Communications Corporation .............. 522,435 275,635
----------- -----------
2,265,951 1,628,886
----------- -----------
Textiles & Apparel 1.11%
2,543,520 Far Eastern Textile Limited ................... 2,139,549 2,094,664
----------- -----------
Transportation - Air 0.38%
2,049,600 EVA Airways Corporation+ ...................... 1,120,048 707,524
----------- -----------
Utilities - Electric & Gas 0.32%
716,803 Phoenixtec Power Company Limited .............. 1,352,054 601,404
----------- -----------
Total Taiwan .................................. 43,017,437 31,020,176
----------- -----------
Thailand 1.84%
Building Materials & Components 0.21%
41,200 Siam Cement PLC+ .............................. 683,597 387,567
----------- -----------
Energy Sources 0.23%
179,600 PTT Exploration & Production PLC .............. 809,242 440,736
----------- -----------
Telecommunications 1.40%
123,300 Advanced Information Service PLC+ ............. 762,105 1,014,192
862,300 Shin Satellite PLC ............................ 696,305 543,713
</TABLE>
24
<PAGE>
THE ASIA TIGERS FUND, INC.
Schedule of Investments (continued) October 31, 2000
COMMON STOCKS (continued)
<TABLE>
<CAPTION>
Number Percent of
of Shares Security Holdings Cost Value
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thailand (continued)
Telecommunications (continued)
1,804,400 TelecomAsia Corporation PLC Limited+ .... $ 1,721,526 $ 1,086,494
352,705 TelecomAsia Corporation PLC Rights
expire April 2002**+ ................. 0 0
------------ ------------
3,179,936 2,644,399
------------ ------------
Total Thailand .......................... 4,672,775 3,472,702
------------ ------------
United States 0.12%
Telecommunications 0.12%
10,885 UTStarcom Incorporated+ ................. 223,444 217,700
------------ ------------
Total United States ..................... 223,444 217,700
------------ ------------
Total Common Stocks ..................... $176,319,774 $181,945,645
------------ ------------
</TABLE>
25
<PAGE>
THE ASIA TIGERS FUND, INC.
Schedule of Investments (continued) October 31, 2000
PREFERRED STOCKS (0.36% of holdings)
<TABLE>
<CAPTION>
Number Percent of
of Shares Security Holdings Cost Value
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Preferred Stock 0.36%
Thailand 0.36%
Banking 0.36%
1,641,000 Siam Commercial Bank PLC - 5.25% Preferred + ..... $1,095,109 $ 680,487
---------- ----------
Total Thailand ................................... 1,095,109 680,487
---------- ----------
Total Preferred Stock ............................ $1,095,109 $ 680,487
---------- ----------
</TABLE>
26
<PAGE>
THE ASIA TIGERS FUND, INC.
Schedule of Investments (continued) October 31, 2000
CONVERTIBLE BONDS (3.11% of holdings)
<TABLE>
<CAPTION>
Par Value Percent of
($000) Security Holdings Cost Value
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Korea 0.27%
Utilities - Electric & Gas 0.27%
500 Korea Deposit Insurance 2.25%, 10/11/05 ...... $ 500,000 $ 517,200
------------ ------------
Total Korea .................................. 500,000 517,200
------------ ------------
Singapore 2.70%
Banking 1.49%
1,500 Finlayson Global Zero Coupon Bond,
02/19/04 ..................................... 1,588,620 2,819,100
------------ ------------
Telecommunications 1.21%
2,150 Fullerton Global Corp Zero Coupon Bond,
04/02/03 ..................................... 2,061,280 2,275,345
------------ ------------
Total Singapore .............................. 3,649,900 5,094,445
------------ ------------
Taiwan 0.14%
Electronic Components & Instruments 0.14%
250 Macronix International Company
Limited 1%, 02/01/05 ......................... 328,772 258,775
------------ ------------
Total Taiwan ................................. 328,772 258,775
------------ ------------
TOTAL CONVERTIBLE BONDS ...................... $ 4,478,672 $ 5,870,420
------------ ------------
TOTAL INVESTMENTS++ 100.00% $181,893,555 $188,496,552
============ ============
</TABLE>
27
<PAGE>
THE ASIA TIGERS FUND, INC.
Schedule of Investments (concluded) October 31, 2000
Footnotes and Abbreviations
ADR- American Depository Receipts
GDR- Global Depository Receipts
* Passive Foreign Investment Company.
** Security has been fair valued as determined by or under
the direction of the Board of Directors.
+ Non-income producing security.
++ Aggregate cost for Federal income tax purposes is
$182,513,577.
The aggregate gross unrealized appreciation
(depreciation) for all securities is as follows:
Excess of value over tax cost $44,253,326
Excess of tax cost over value (38,270,351)
-----------
$ 5,982,975
===========
See accompanying notes to financial statements.
28
<PAGE>
THE ASIA TIGERS FUND, INC.
Statement of Assets and Liabilities October 31, 2000
<TABLE>
<S> <C>
ASSETS
Investments, at value (Cost $181,893,555) ................................. $ 188,496,552
Cash (including $1,429,876 of foreign currency holdings
with a cost of $1,461,602) ........................................... 1,393,853
Receivables:
Dividends .......................................................... 121,756
Interest ........................................................... 2,682
Securities sold .................................................... 1,306,817
Prepaid expenses .......................................................... 5,666
-------------
Total Assets ............................................ 191,327,326
-------------
LIABILITIES
Deferred foreign withholding taxes payable ................................ 879,177
Payable for securities purchased .......................................... 1,292,955
Due to Investment Manager ................................................. 167,464
Due to Administrator ...................................................... 33,494
Accrued expenses .......................................................... 750,643
-------------
Total Liabilities ....................................... 3,123,733
-------------
Net Assets ............................................................... $ 188,203,593
=============
NET ASSET VALUE PER SHARE ($188,203,593/19,716,784 issued and outstanding) $ 9.55
=============
NET ASSETS CONSIST OF:
Capital stock, $0.001 par value; 20,514,984 shares issued
(100,000,000 shares authorized) ...................................... $ 20,515
Paid-in capital ........................................................... 285,743,977
Cost of 798,200 shares repurchased ........................................ (7,507,999)
Undistributed net investment income ....................................... 5,656,753
Accumulated net realized loss on investments .............................. (101,399,331)
Net unrealized appreciation in value of investments and on translation of
other assets and liabilities denominated in foreign currencies (net of
deferred foreign withholding taxes of $879,177) ...................... 5,689,678
-------------
$ 188,203,593
=============
</TABLE>
See accompanying notes to financial statements.
29
<PAGE>
THE ASIA TIGERS FUND, INC.
Statement of Operations For the Year Ended
October 31, 2000
<TABLE>
<S> <C> <C>
Investment Income
Dividends (Net of taxes withheld of $320,150) ........................ $ 10,616,141
Interest ............................................................. 101,851
------------
Total Investment Income ............................ 10,717,992
------------
Expenses
Management fees ...................................................... $ 2,554,237
Custodian fees ....................................................... 696,182
Administration fees .................................................. 510,848
Legal fees ........................................................... 190,190
Insurance ............................................................ 104,073
Audit and tax fees ................................................... 96,188
Transfer agent fees .................................................. 49,699
NYSE fees ............................................................ 32,340
Directors' fees ...................................................... 31,999
Printing ............................................................. 22,799
Interest expense ..................................................... 15,167
Miscellaneous ........................................................ 19,101
------------
Total Expenses ..................................... 4,322,823
------------
Net Investment Income .............................. 6,395,169
------------
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 capital gains tax of $640,744) ..................... 6,727,169
Foreign currency related transactions ............................................ (251,042)
------------
6,476,127
------------
Net change in unrealized appreciation in value of investments, foreign
currency holdings and translation of other assets and liabilities
denominated in foreign currencies
(net of decrease in deferred foreign withholding taxes of $120,764) .............. (41,759,763)
------------
Net realized and unrealized loss on investments, foreign currency holdings
and translation of other assets and liabilities denominated in foreign currencies (35,283,636)
------------
Net decrease in net assets resulting from operations ................................... $(28,888,467)
============
</TABLE>
See accompanying notes to financial statements.
30
<PAGE>
THE ASIA TIGERS FUND, INC.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Year For the Year
Ended Ended
October 31, 2000 October 31, 1999
--------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income .............................................. $ 6,395,169 $ 822,638
Net realized gain on investments and foreign currency
related transactions ............................................ 6,476,127 17,242,446
Netchange in unrealized appreciation (depreciation) in value of
investments, foreign currency holdings and translation of other
assets and liabilities denominated in foreign currencies ........ (41,759,763) 53,271,491
------------- -------------
Net increase (decrease) in net assets resulting from operations .... (28,888,467) 71,336,575
------------- -------------
Distributions to Shareholders from
Net investment income ($0.07 and $0.01 per share) respectively ..... (1,477,079) (205,150)
------------- -------------
Net decrease in net assets from distributions ...................... (1,477,079) (205,150)
------------- -------------
Capital Share Transactions
Shares repurchased under stock repurchase plan (798,200 shares) ... (7,507,999) --
------------- -------------
Net decrease in net assets resulting from capital share transactions (7,507,999) --
------------- -------------
Total increase (decrease) in net assets ............................ (37,873,545) 71,131,425
NET ASSETS
Beginning of year .................................................. 226,077,138 154,945,713
------------- -------------
End of year (including undistributed net investment income
of $5,656,753 and $1,463,323, respectively) ..................... $ 188,203,593 $ 226,077,138
============= =============
</TABLE>
See accompanying notes to financial statements.
31
<PAGE>
THE ASIA TIGERS FUND, INC.
Financial Highlights
For a Share Outstanding throughout Each Period
<TABLE>
<CAPTION>
For the For the For the For the For the
Year Ended Year Ended Year Ended Year Ended Year Ended
October 31, 2000 October 31, 1999 October 31, 1998 October 31, 1997 October 31, 1996
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ... $ 11.02 $ 7.55 $ 9.68 $ 12.49 $ 12.08
-------- -------- -------- -------- --------
Net investment income .................. 0.32 0.04 0.08 0.03 0.05
Net realized and unrealized gains
(losses) on investments, foreign
currency holdings, and translation
of other assets and liabilities
denominated in foreign currencies ... (1.86)** 3.44** (2.21) (2.80) 0.44
-------- -------- -------- -------- --------
Net increase (decrease) from
investment operations ............... (1.54) 3.48 (2.13) (2.77) 0.49
-------- -------- -------- -------- --------
Less Distributions:
Dividends from net investment
income ........................ (0.07) (0.01) -- (0.00)+ (0.08)
In excess of net investment
income ........................ -- -- -- (0.04) --
-------- -------- -------- -------- --------
Total dividends and distributions (0.07) (0.01) -- (0.04) (0.08)
-------- -------- -------- -------- --------
Capital share transactions
Anti-dilutive effect of Share
Repurchase program ............... 0.14 -- -- -- --
-------- -------- -------- -------- --------
Total capital share transactions ....... 0.14 -- -- -- --
-------- -------- -------- -------- --------
Net asset value, end of period ......... $ 9.55 $ 11.02 $ 7.55 $ 9.68 $ 12.49
-------- -------- -------- -------- --------
Per share market value, end of period .. $ 7.13 $ 8.63 $ 6.13 $ 7.94 $ 10.38
Total Investment Return Based
on Market Value* .................... (16.82)% 41.03% (22.83)% (23.23)% 0.59%
Ratios/Supplemental Data:
Net assets, end of period (in 000s) .... $188,204 $226,077 $154,946 $198,589 $256,194
Ratios of expenses to average net assets 1.69% 1.70% 1.74% 1.60% 1.60%
Ratios of net investment income
to average net assets ............... 2.50% 0.43% 0.99% 0.25% 0.41%
Portfolio turnover ..................... 31.42% 92.44% 93.47% 95.38% 91.57%
</TABLE>
* 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. 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.
** Net of foreign withholding taxes of $0.03 and $0.06 per share for the
years ended October 31, 2000 and October 31, 1999 respectively.
+ Less than $0.01 per share.
See accompanying notes to financial statements.
32
<PAGE>
THE ASIA TIGERS FUND, INC.
Notes to Financial Statements October 31, 2000
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.
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America 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.
33
<PAGE>
THE ASIA TIGERS FUND, INC.
Notes to Financial Statements (continued) October 31, 2000
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, 2000, the Fund had a net capital loss carryover of $100,779,312,
which is available to offset future net realized gains on securities
transactions to the extent provided for in the Internal Revenue Code. Of the
aggregate capital losses, $7,999,612 will expire in the year 2003, $1,846,888
will expire in the year 2004 and $90,932,812 will expire in the year 2006.
During the year ended October 31, 2000, the Fund utilized $7,321,863 of capital
losses carried forward from prior periods.
Dividend and interest income from non-U.S. sources received by the Fund are
generally subject to non-U.S. withholding taxes. In addition, the Fund may be
subject to capital gains tax in certain countries in which it invests. Such
withholding taxes may be reduced or eliminated under the terms of applicable
U.S. income tax treaties with some of these countries. The Fund accrues such
taxes when the related income is earned.
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
34
<PAGE>
THE ASIA TIGERS FUND, INC.
Notes to Financial Statements (continued) October 31, 2000
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 accounting principles generally accepted in the United
States of America. 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.
During the year ended October 31, 2000, the Fund reclassified $724,660 from
accumulated net realized gain on investments to undistributed net investment
income as a result of permanent book and tax differences primarily relating to
net realized foreign currency losses and capital gains tax. Net investment
income and net assets were not affected by the reclassification.
35
<PAGE>
THE ASIA TIGERS FUND, INC.
Notes to Financial Statements (continued) October 31, 2000
NOTE B: MANAGEMENT, INVESTMENT ADVISORY, AND ADMINISTRATIVE SERVICES
Advantage Advisers, Inc. ("Advantage"), a subsidiary of CIBC World Markets Corp.
("CIBC WM"), serves as the Fund's Investment Manager under the terms of a
management agreement (the "Management Agreement"). Pursuant to the Management
Agreement, the Investment Manager supervises the Fund's investment program and,
effective July 1, 1999, assumed the portfolio management responsibilities for
the Fund. Prior to July 1, 1999, AXA Asset Management Partenaires ("AAMP") acted
as the Fund's Investment Adviser pursuant to an investment advisory agreement
among Advantage, AAMP and the Fund. For its services, AAMP was entitled to
receive from the Investment Manager monthly fees at an annual rate of 0.50% of
the Fund's average weekly net assets.
For its services, the Investment Manager receives monthly fees at an annual rate
of 1.00% of the Fund's average weekly net assets. For the year ended October 31,
2000, fees paid to the Investment Manager amounted to $2,554,237.
CIBC WM, an indirect wholly-owned subsidiary of Canadian Imperial Bank of
Commerce, 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, 2000, these fees amounted to $510,848. At October 31, 2000, CIBC WM owned
3,567 shares of the Fund's common stock.
The Fund pays each of its directors who is not a director, officer or employee
of the Investment Manager, 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 connection with Board of Directors meetings.
NOTE C: PORTFOLIO ACTIVITY
Purchases and sales of securities other than short-term obligations aggregated
$78,248,133 and $88,738,985, respectively, for the year ended October 31, 2000.
36
<PAGE>
THE ASIA TIGERS FUND, INC.
Notes to Financial Statements (continued) October 31, 2000
NOTE D: CAPITAL STOCK
During the year ended October 31, 2000, the Fund purchased 798,200 shares of
capital stock in the open market at a total cost of $7,507,999. The weighted
average discount of these purchases, comparing the purchase price to the net
asset value at the time of purchase, was 27.46%. These shares were puchased
pursuant to the Fund's Stock Repurchase Plan approved by the Fund's Board of
Directors at a special meeting held on December 10, 1999, authorizing the Fund
to purchase up to 1,000,000 shares of its capital stock. The shares purchased
are held in treasury.
At a meeting held on October 17, 2000, the Fund's Board of Directors authorized
the Fund to purchase up to an additional 1,000,000 shares of its capital stock.
Subsequent to October 31, 2000, the Fund made additional purchases aggregating
25,000 shares through December 7, 2000, of capital stock in the open market at a
total cost of $175,850. The weighted average discount of these purchases was
25.46%.
NOTE E: OTHER
At October 31, 2000, 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 of Asian
securities involve special risks and considerations not present with respect to
U.S. securities.
--------------------------------------------------------------------------------
U.S. FEDERAL TAXATION NOTICE (unaudited)
The Fund paid foreign taxes of $960,894 during the fiscal year ended October 31,
2000, 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.
--------------------------------------------------------------------------------
37
<PAGE>
THE ASIA TIGERS FUND, INC.
Report of Independent Accountants
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, 2000, 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 five years in the period
then ended, in conformity with accounting principles generally accepted in the
United States of America. 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 auditing standards generally accepted in
the United States of America 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, 2000 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
December 20, 2000
38
<PAGE>
THE ASIA TIGERS FUND, INC.
Dividends and Distributions
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 the 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
39
<PAGE>
THE ASIA TIGERS FUND, INC.
Dividends and Distributions (continued)
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.
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
40
<PAGE>
THE ASIA TIGERS FUND, INC.
Dividends and Distributions (concluded)
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.
41
<PAGE>
THE ASIA TIGERS FUND, INC.
This page intentionally left blank.
42
<PAGE>
THE ASIA TIGERS FUND, INC.
This page intentionally left blank.
43
<PAGE>
THE ASIA TIGERS FUND, INC.
Investment Manager:
Advantage Advisers, Inc., a subsidiary
of CIBC World Markets Corp.
Administrator:
CIBC World Markets Corp.
Sub-Administrator:
PFPC Inc.
Transfer Agent:
PFPC Inc.
Custodian:
The Chase Manhattan Bank
