"The Directors of the Fund advised the Bermuda Stock Exchange on 28 May 2001 that they wished to suspend temporarily the calculation of the Net Asset Value of the Fund. Accordingly, issues and redemptions of shares in the Fund (the "Shares") were suspended and no transfers of Shares have been registered since then.
The Directors of the Fund and Martin Currie Investment Management Ltd. are continuing their discussions with China Securities Co., Ltd ("CSC"), the State Administration of Foreign Exchange and the China Securities Regulatory Commission. These discussions concern the clarification of certain issues relating to the conversion of RMB to US dollars to meet outstanding service charge payments of approximately US$5.35 million owing to the Fund's Mauritian subsidiary by CSC under the Investment Services and Returns Agreement (the "Agreement").
In addition, the parties are working together to present proposals to Shareholders in the Fund (the "Shareholders") to restructure the Fund and the arrangements under the Agreement. If agreed, these proposals would enable Shareholders who do not wish to have an exposure to the Chinese A share market to exit the Fund at an appropriate Net Asset Value. The intention is that the reconstructed Fund will be a closed ended listed vehicle which will enable investors to be exposed exclusively to the A share market. The reconstructed fund will include an ability to return cash to investors at such time as convertibility of RMB is permitted to satisfy contractual entitlements.
It is anticipated that such reconstruction would be carried out in conjunction with an offer of further Shares for new investors who also wish to gain an exposure to the A Share market. A further press announcement will be issued to Shareholders as soon as possible. This will describe in more detail the changes being contemplated to the structure of both the Fund and the Agreement.
Given the current regulatory framework in China, however, no assurance can be given that that it will be possible to restructure the arrangements under the Agreement.
Using an indicative net asset value of the Fund (which fully values as a contingent asset the service charge of approximately US$5.35 million owed by CSC under the Agreement) together with the deposit repayable to the Fund under the Agreement and the Fund's other liquid assets, the Net Asset Value per Share as at 16 August 2001 was US$9.78. On this basis, the net asset value of the Fund has risen by 4.0% in the calendar year to date compared to the HCI index which has fallen 3.5% during the same period.
Please contact either of the below with any questions.
Enquiries:
Julian Livingston Phone (00-44-131-479-5975)
Martin Currie Investment Management Ltd.
jlivingston@martincurrie.com
Edith G. Conyers Phone (001-441-296-1300)
Forum Securities Services Ltd
ede-conyers@forum-financial.com