Note to Financial Statement

Siam Investment Fund
29 December 2003


SIAM INVESTMENT FUND

Directors' Report: Interim 30 September 2003

Confidence in the Thai economy and stockmarket was set back in the first quarter
of 2003 by the combined effects of the conflict in Iraq and the outbreak of
SARS. The most visible impact on the local economy was a sharp slowdown in
tourist and business arrivals which had an adverse effect on the hotel and
hospitality industry.  Initial fears that the economy would be slow to recover
proved unfounded and the economy has bounced back with renewed vigour. For the
year as a whole, GDP growth is expected to exceed 6.0%, representing both
acceleration in growth from 2002 and a second consecutive year of growth topping
the ASEAN league tables. Growth is being driven by both domestic and external
demand.



The key feature of Thai domestic demand in 2003 has been the broadening of the
demand drivers with reduced dependence on consumer spending and private
construction and larger contributions from manufacturing investment and public
sector spending. The more widespread recovery in private investment has
reflected the steady improvements in industry capacity utilization, combined
with a greater willingness amongst Thai banks to resume commercial lending.
Increases in public spending are being underpinned by higher than expected
growth in tax revenues, in turn reflecting increased economic activity and
improved tax collection.



A further boost to business and consumer confidence has been the continued low
interest rate environment, in turn facilitated by a benign inflationary outlook.



The rosy picture of the Thai economy is further reinforced by the strong current
account position, rising international reserves, improving financial positions
within the once beleaguered banking sector and the impressive gains of share
prices on the Stock Exchange of Thailand.



Going forward, the outlook for the Thai economy in 2004 remains broadly
positive. Barring a significant shock such as a second SARS outbreak or a
material terrorist event, there appears to be little on the horizon to dislodge
the current economic momentum.



As with the economy, the stockmarket started the period under review cautiously.
In the event, signs of a strong economic rebound underpinned a sustained rally
in stock prices which carried the SET Index to a six year high in late
September. In the six months to 30 September, the SET Index climbed an
impressive 59%, making Thailand one of the best performing markets regionally
and globally.



Though the Thai stockmarket has undergone a significant rerating in price terms,
the expansion in PE multiples has contributed only a part. An important driver
has been the better than expected earnings performances of listed companies.



Going forward, the prospects for Thai equities are encouraging. Strong economic
growth is expected to translate into further solid earnings performances, while
interest rates are expected to remain at low levels.



The Fund's net asset value has witnessed significant appreciation throughout the
period under review and this has justified the payment of significant dividends
to shareholders. A policy of returning gains to shareholders through dividends
will be continued.



James Marshall

28 December 2003


                      This information is provided by RNS
            The company news service from the London Stock Exchange