JAKARTA GROWTH FUND, INC.
November 14, 2000
To Our Shareholders:
We present the Semi-Annual Report of the Jakarta Growth Fund, Inc. (the
"Fund") for the six months ended September 30, 2000. The Net Asset Value per
Share ("NAV") of the Fund on September 30, 2000 was $1.32, representing a
decrease of 41.1% and 21.0% for the past six months and past quarter,
respectively. The closing market price of the Fund on September 30, 2000 on
the Boston Stock Exchange was $1.375, representing a premium of 4.2% to the
NAV. The Fund's total net assets amounted to $6,609,354 on September 30, 2000.
The Jakarta Stock Exchange Composite Index (the "JCI Index") decreased
from 583.3 to 421.3, or 27.8%, during the six months ended September 30, 2000.
Including the Indonesian Rupiah (the "Rupiah") depreciation of 13.5% during
the six months, this represented a total net decrease of 37.5% in United
States dollar terms. For the quarter ended September 30, 2000, the JCI Index
decreased by 18.2%, in both local currency and U.S. dollar terms.
The Portfolio
At September 30, 2000, the Fund had invested 92.2% of its total net
assets in Indonesian equities.
The Fund had significant holdings in the Telecommunications, Consumer
Goods and Distribution, and Retail sectors of 25.3%, 21.6%, and 7.8%,
respectively.
Indonesian Economy
Gross Domestic Product ("GDP") data for the second quarter of 2000
reflected a continued increase in domestic demand, albeit the growth remained
low. Real GDP grew by 4.1% year-on-year ("yoy"), while household consumption
grew by 2.6%. However, investment increased sharply by 21% since the beginning
of the year, which is a positive development.
Astra International Inc.'s local motorcycle sales in June to August 2000
almost doubled (89% yoy), and passenger car sales grew by 600% yoy, reflecting
renewed consumer confidence despite the political uncertainty.
Inflation increased to 5.8% yoy during the third quarter of 2000, despite
the sharp currency depreciation over the same period. The 30 day Sertificate
of Bank Indonesia rates remained at approximately 13.5% level since July, when
it had been raised due to pressure on the Rupiah.
In the three month period, June through August 2000, the trade surplus
continued to strengthen to $8.5 billion from $6.9 billion during the
corresponding period last year. This was the result of export growth of 30%
(oil exports grew by 47.4% yoy, while non-oil exports also grew by a strong
25.8% yoy). Imports grew by 30% as well, reflecting higher cost of oil imports
but also increased imports of chemicals and machinery, as domestic demand
continued its slow rise.
Indonesian Politics
The political situation remained volatile throughout the third quarter.
Spurred by critics of the President, the Parliament passed an interpolation
motion designed to question the President on his firing of two cabinet
ministers. Both sides escalated the tension with some tense rhetoric, and the
President initially refused to answer any questions.
This moved the showdown to the August People's Consultative Assembly
("MPR") special session, where it seemed likely that the President's opponents
might succeed in passing a no-confidence motion on his accountability speech,
thereby effectively ending his tenure.
The President showed his considerable political skills in defusing the
situation. First, he apologized for his personal shortcomings. Second, he laid
the blame for the poor performance of his government solely on the members of
the coalition for having thrust ineffective cabinet ministers on him. Third,
he proposed to give Ms. Megawati a greater administrative role in government.
Not only did these three actions defuse the situation and gain him
another year, the President also managed to get a free hand in choosing an
entirely new cabinet.
The later part of the quarter demonstrated that the President still has
very little control over the actual levers of power in the country. While he
was addressing the United Nations ("UN") in New York, three UN officials were
killed in West Timor while ostensibly under the protection of the Indonesian
Armed Forces. At almost the same time, a huge bomb blast blew up a portion of
the Jakarta Stock Exchange Building in the heart of Jakarta.
The ex-President refused to appear at his own trial in a direct challenge
to the government, even though the President has promised to pardon him if
proven guilty. The stock market reflected concern as people began to notice
the coincidence between the dates of Suharto's trial and bomb blasts in
Jakarta.
The Indonesian Stock Market
The stock market continued to be bearish during the third quarter of
2000, with the Jakarta Composite Index ("JCI") losing 82 points to close at
421.3. The stock market began its new bout of weakness after the announcement
of the new cabinet. The currency, meanwhile, held ground during the quarter.
Part of the reason was that it was oversold in the late June as investors
focused on the impending MPR session with its threat to impeach the President.
Despite rhetoric from the new economics and finance ministers, the stock
market was unimpressed and the JCI began its long decline toward the 400
level.
Several other unrelated incidents also began to dampen investor
sentiment. The absence of the rule of law in Indonesia was quite apparent. The
judiciary could not start the trial of Ex-President Suharto because he refused
to testify at his own corruption trial. One of the chief suspects in the Bank
Bali scandal was set scot-free by the judges despite what appeared to be
strong evidence.
Despite all the political chaos and the social upheaval, the economy
continued its modest recovery. First half results of companies exposed to
domestic consumption were stronger than expected at the operating level. As a
rule, most companies that the Fund follows exceeded sales and operating
profits expectations by 10% or more. Earnings per share were more volatile
because of foreign exchange translation losses on foreign debt.
The domestic automobile market continued to rebound and aided the
performance of Astra International Inc. and Astra Otoparts. Tobacco, consumer
goods, retail, and pharmaceutical companies all surprised the stock market
with higher earnings.
Paper and Pulp sector, in particular Indah Kiat, also benefited from the
industry up cycle. Tjiwi Kimia's results were somewhat disappointing as paper
prices have struggled to work their way up while the pulp prices are rising.
The Agribusiness and Mining sectors continue to lag due to depressed commodity
prices.
The Telecommunication sector continued to suffer from the indecision
regarding privatization and deregulation. The new Economics Minister made the
right noises about privatization, but the stock market is jaded over plans
that never materialize. The Government's latest thinking is to sell off
Indonesian Satellite Corporation ("Indosat") completely, privatize more of
Telekomunikasi Indonesian ("PT Telkom"), and deregulate the entire
Telecommunications sector by accelerating the loss of monopolies and inviting
foreign players. This seems quite appropriate for a policy, but implementation
is another issue. After more than one month in power, the new ministers still
cannot agree on who should overlook the state-owned enterprises. This
highlights the lucrative nature of the state-owned companies for government
officials to the detriment of the taxpayer.
Indonesian Bank Restructuring Agency ("IBRA") appeared to be stirring
again. IBRA sold a skyscraper pledged to it by the Salim Group, for 34 million
Malaysian Ringgits to Singaporean investors. A small amount of restructured
loans was also sold but it does not appear that the agency will meet its
target of generating 18 trillion Rupiah in the current fiscal year.
Investment Strategy
While the market is probably near its low as foreign investors remained
sidelined, the Fund expects a strong market rebound to materialize only with
definitive progress in judicial reforms, in appeasing regional discontent, and
in addressing safety factors.
Given the still uncertain outlook of the political situation and its huge
influence over the Indonesian stock market, the Fund continues to favor an
overweight position in the Consumer Goods and Distribution sector.
The Fund expects to maintain a neutral to slight overweight position in
the telecommunications stocks as their valuations look cheap relative to their
peers in the region, especially after the recent price correction. Indosat may
outperform PT Telkom if the Rupiah's volatility stays high, but fear of
competition and margin erosion from the implementation of voice over internet
protocol and recent deregulation allowing both PT Telkom and Indosat to
compete freely both in the fixed line and cellular businesses may cap
Indosat's price performance.
For the Banking sector, the Fund expects to remain underweight with our
portfolio exposure limited to approximately 50% of its neutral index
weighting. The favored stocks are Bank Central Asia ("BCA") and Bank Pan
Indonesia for their relatively healthier financial position.
Within the Mining, and Oil and Gas sectors, the Fund prefers Medco Energi
International and Aneka Tambang due to stable resource prices and better
corporate governance. Selective stocks like Astra International Inc. and Astra
Otoparts offer good values.
Given the still volatile JCI and Rupiah, the Fund will continue to buy on
weakness some of our key holdings with preference towards the Consumer,
Telecommunication and basic industries sectors, while also maintaining a
decent exposure to the stocks with bigger proportion of U.S. dollar revenue
(approximately 20-25% of the portfolio gradually over time).
Proposed Merger
On September 18, 2000, The Indonesia Fund, Inc. (the "Indonesia Fund")
and the Fund announced an agreement in principle to merge the Fund with and
into the Indonesia Fund, which will be the surviving fund. The Indonesia Fund
is a closed-end, non-diversified management investment company that seeks
total return, consisting of long-term capital appreciation and current income,
through investing primarily in Indonesian equity securities.
In the proposed merger, each share of common stock of the Fund will
convert into an equal dollar amount of shares of the Indonesia Fund based on
the net asset value per share of each Fund on the closing date of the
transaction and fractional shares will convert into cash. Following the
closing, Credit Suisse Asset Management, LLC, the investment manager of the
Indonesia Fund, will continue as the investment manager of the combined Fund
pursuant to the terms of its existing investment management agreement with the
Indonesia Fund. The merger is subject to shareholder approval, the continued
listings of the shares of the Indonesia Fund on the New York Stock Exchange at
the time of the merger (the "NYSE"), and other customary closing conditions.
Shareholders of each Fund will be asked to approve the merger transaction
at special shareholders' meetings which are scheduled for December 18, 2000.
Shareholders will receive proxy materials prior to the special shareholders'
meeting.
The Indonesia Fund's average market capitalization for the 30 consecutive
trading day period ended August 31, 2000 approximated the $15,000,000 minimum
under the continued listing standards of the NYSE. However, after giving
effect to the merger and based on current market prices, the Indonesia Fund's
market capitalization is expected to total approximately $20 million. In light
of the proposed merger transaction and the expected increase in assets, the
NYSE has indicated that it will continue to maintain the Indonesia Fund's
listing, subject to satisfaction of the listing standards at the time the
merger is consummated and thereafter. Shares of the Fund are listed for
trading on the Boston Stock Exchange. It is anticipated that the surviving
Fund will trade only on the NYSE.
On a personal note, George H. Chittenden, who served as a Director of the
Fund since its inception, passed away in September 2000. The Board of
Directors expresses its condolences to Mr. Chittenden's family and greatly
appreciates all the valuable contributions made by Mr. Chittenden on behalf of
the Fund and its shareholders.
We appreciate your continuing support of your Fund.
Sincerely,
Nobuo Katayama
SHAREHOLDERS ACCOUNT INFORMATION
Shareholders whose accounts are held in their own name may contact the Fund's
transfer agent, State Street Bank and Trust Company at (800) 426-5523 for
information concerning their accounts.
<PAGE>
JAKARTA GROWTH FUND, INC.
FUND HIGHLIGHTS-SEPTEMBER 30, 2000
(Unaudited)
KEY STATISTICS:
Net Assets............................................... $6,609,354
Net Asset Value per Share................................ $1.32
Closing BSE Market Price................................. $1.375
Percentage Change in Net Asset Value per Share*.......... (41.1%)
Percentage Change in BSE Market Price*................... (40.5%)
MARKET INDEX:
RUPIAH U.S.$
------ -----
Jakarta Stock Exchange Composite Index*.................. (27.8%) (37.5%)
*From April 1, 2000 through September 30, 2000
ASSET ALLOCATION:
Indonesian Stocks........................................ 92.2%
Cash and Cash Equivalents................................ 7.5
-----
Total Investments........................................ 99.7
Other Assets Less Liabilities, Net....................... 0.3
Total.................................................... 100.0%
=====
INDUSTRY DIVERSIFICATION:
% of
Net Assets
----------
Telecommunications................................................ 25.3
Consumer Goods and Distribution................................... 21.6
Retail............................................................ 7.8
Food and Beverage................................................. 5.7
Pharmaceuticals................................................... 5.5
Paper and Pulp.................................................... 4.1
Cement............................................................ 4.0
Banking........................................................... 3.4
Mining............................................................ 3.2
Conglomerate...................................................... 3.0
Manufacturing..................................................... 2.9
Oil and Gas....................................................... 2.3
Agribusiness...................................................... 2.0
Commercial Services............................................... 0.8
Non-Ferrous Metals................................................ 0.6
TEN LARGEST EQUITY HOLDINGS BY MARKET VALUE
Market % of
Security Value Net Assets
-------- ---------- ----------
Telekomunikasi Indonesia............................ $1,262,104 19.1
Gudang Garam........................................ 821,555 12.4
Indonesian Satellite Corporation.................... 410,979 6.2
Indofood Sukses Makmur.............................. 356,796 5.4
H.M. Sampoerna...................................... 334,886 5.1
Tempo Scan Pacific.................................. 286,036 4.3
Astra International Inc............................. 270,291 4.1
Ramayana Lestari Sentosa............................ 264,849 4.0
Indah Kiat Paper and Pulp........................... 230,018 3.5
Semen Gresik........................................ 223,984 3.4
<PAGE>
JAKARTA GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% of
Market Net
Shares Cost Value Assets
------------- --------- --------- ------
<S> <C> <C> <C> <C>
INDONESIAN EQUITY SECURITIES
Agribusiness
Astra Agro Niaga Lestari...................................... 672,000 $230,976 $ 89,805 1.4
Palm oil
Cahaya Kalbar................................................. 787,500 651,197 39,577 0.6
------------- ------------ -------
Palm oil
Total Agribusiness............................................ 882,173 129,382 2.0
------------- ------------ -------
Banking
Bank Central Asia+............................................ 540,000 91,731 96,528 1.5
Commercial bank
Bank Pan Indonesia............................................ 1,140,000 42,116 27,995 0.4
Commercial bank
Lippo Bank.................................................... 11,650,000 467,620 99,800 1.5
------------- ------------ -------
Commercial bank
Total Banking................................................. 601,467 224,323 3.4
------------- ------------ -------
Cement
Indocement Tunggal Prakarsa................................... 218,500 82,905 37,810 0.6
Cement manufacturer
Semen Gresik.................................................. 322,000 290,933 223,984 3.4
------------- ------------ -------
Cement manufacturer
Total Cement.................................................. 373,838 261,794 4.0
------------- ------------ -------
Conglomerate
Astra Graphia................................................. 515,000 41,081 28,823 0.4
Service and consultation, equipment and office machinery
contractor service
Bimantra Citra................................................ 1,622,000 385,291 168,592 2.6
------------- ------------ -------
Media telecommunications and transportation
Total Conglomerate............................................ 426,372 197,415 3.0
------------- ------------ -------
Commercial Services
Citra Munya Nusaphala Persada................................. 1,000,000 82,928 51,970 0.8
------------- ------------ -------
Toll road operator and developer
Consumer Goods and Distribution
Astra International Inc....................................... 1,020,000 408,361 270,291 4.1
Automobiles and motorcycles
Gudang Garam.................................................. 686,000 781,898 821,555 12.4
Cigarettes
H.M. Sampoerna................................................ 260,500 623,120 334,886 5.1
------------- ------------ -------
Cigarettes
Total Consumer Goods and Distribution......................... 1,813,379 1,426,732 21.6
------------- ------------ -------
See notes to financial statements
</TABLE>
<PAGE>
JAKARTA GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS-(Continued)
SEPTEMBER 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% of
Market Net
Shares Cost Value Assets
------------- --------- --------- ------
<S> <C> <C> <C> <C>
Food and Beverage
Indofood Sukses Makmur........................................ 3,675,000 $742,945 $ 356,796 5.4
Food processor
Mayora Indah.................................................. 500,000 26,733 22,844 0.3
------------- ------------ -------
Candies and cookies
Total Food and Beverage....................................... 769,678 379,640 5.7
------------- ------------ -------
Manufacturing
Astra Otoparts+............................................... 225,000 42,780 35,337 0.5
Automotive and motorcycle parts
Intikeramik Alamasri Industries+.............................. 1,050,500 214,511 41,396 0.7
Porcelain tile
Kedawung Setia Industry Ltd................................... 962,500 83,049 32,432 0.5
Metal, aluminum, cardboard and enamel
Sunson Textile Manufacturer................................... 1,613,000 133,469 80,143 1.2
------------- ------------ -------
Yarn, cloth and other products
Total Manufacturing........................................... 473,809 189,308 2.9
------------- ------------ -------
Mining
Aneka Tambang................................................. 1,365,000 172,884 154,352 2.4
Mining
Tambang Timah................................................. 300,000 126,332 55,169 0.8
------------- ------------ -------
Tin mining
Total Mining.................................................. 299,216 209,521 3.2
------------- ------------ -------
Non-Ferrous Metals
International Nickel Indonesia................................ 59,000 43,867 40,501 0.6
------------- ------------ -------
Nickel and associated mineral products
Oil and Gas
Medco Energi International.................................... 1,395,000 169,685 156,948 2.3
------------- ------------ -------
Support services for oil and natural gas
Paper and Pulp
Indah Kiat Paper and Pulp..................................... 1,721,205 620,380 230,018 3.5
Pulp and paper products
Pabrik Kertas Tjiwi Kimia..................................... 428,000 71,832 43,753 0.6
------------- ------------ -------
Writing and printing paper
Total Paper and Pulp.......................................... 692,212 273,771 4.1
------------- ------------ -------
Pharmaceuticals
Kalbe Farma................................................... 1,130,000 85,110 76,151 1.2
Pharmaceuticals
Tempo Scan Pacific............................................ 795,000 1,671,405 286,036 4.3
------------- ------------ -------
Pharmaceuticals
Total Pharmaceuticals......................................... 1,756,515 362,187 5.5
------------- ------------ -------
See notes to financial statements
</TABLE>
<PAGE>
JAKARTA GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS--(Continued)
SEPTEMBER 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% of
Principal Market Net
Amount Cost Value Assets
------------- --------- --------- ------
<S> <C> <C> <C> <C>
Retail
Hero Supermarket.............................................. 100,000 $ 18,585 $16,448 0.3
Supermarkets
Matahari Putra Prima.......................................... 1,415,000 121,185 88,892 1.3
Department stores
Multipolar Corporation........................................ 3,227,500 323,890 143,772 2.2
Computer equipment
Ramayana Lestari Sentosa...................................... 530,000 322,698 264,849 4.0
------------- ------------ -------
Department store
Total Retail.................................................. 786,358 513,961 7.8
------------- ------------ -------
Telecommunications
Indonesian Satellite Corporation (Indosat).................... 505,000 836,465 410,979 6.2
International telecommunications
Telekomunikasi Indonesia...................................... 3,974,720 2,051,026 1,262,104 19.1
------------- ------------ -------
Domestic telecommunications
Total Telecommunications...................................... 2,887,491 1,673,083 25.3
------------- ------------ -------
TOTAL INVESTMENTS IN INDONESIAN EQUITY SECURITIES............. 12,058,988 6,090,536 92.2
------------- ------------ -------
Principal
INVESTMENTS IN SHORT-TERM SECURITIES Amount
Time Deposit ---------
Royal Bank of Canada call account 6.6875%, due 10/02/00....... $500,000 500,000 500,000 7.5
------------- ------------ -------
TOTAL INVESTMENTS IN SHORT-TERM SECURITIES.................... 500,000 500,000 7.5
------------- ------------ -------
TOTAL INVESTMENTS............................................. 12,558,988 6,590,536 99.7
OTHER ASSETS LESS LIABILITIES, NET............................ 18,968 18,818 0.3
------------- ------------ -------
NET ASSETS.................................................... $12,577,956 $6,609,354 100.0
============= ============ =======
______________
+Non-income producing security.
Portfolio securities and foreign currency holdings
were translated at the following exchange rate
as of September 30, 2000
Indonesian Rupiah IDR 8,755.00 = $1.00
See notes to financial statements
</TABLE>
<PAGE>
JAKARTA GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments in securities, at market value (cost-$12,058,988)............................. $ 6,090,536
Investments in short-term securities, at market value (cost-$500,000)..................... 500,000
Cash...................................................................................... 67,984
Receivable for investments sold........................................................... 82,530
Receivable for dividends and interest, net of withholding taxes........................... 7,165
-----------
Total Assets................................................................. 6,748,215
-----------
LIABILITIES:
Payable for investments purchased......................................................... 22,898
Accrued management fee.................................................................... 5,906
Other accrued expenses.................................................................... 110,057
-----------
Total Liabilities............................................................ 138,861
-----------
NET ASSETS:
Capital stock (par value of 5,017,564 shares of capital stock outstanding, authorized
100,000,000, par value $0.10 each).................................................... 501,756
Paid-in capital........................................................................... 52,674,471
Accumulated net realized loss on investments and foreign currency transactions............ (40,444,780)
Unrealized net depreciation on investments and foreign exchange........................... (5,968,602)
Accumulated undistributed net investment loss............................................. (153,491)
-----------
Net Assets................................................................... $ 6,609,354
===========
Net asset value per share................................................................. $1.32
===========
See notes to financial statements
</TABLE>
<PAGE>
JAKARTA GROWTH FUND, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
INCOME:
<S> <C> <C>
Dividend income (less $20,853 withholding taxes)................................ $118,167
Interest income................................................................. 16,894
--------
Total Income........................................................... $ 135,061
EXPENSES:
Custodian fees.................................................................. 70,855
Legal fees...................................................................... 48,058
Management fee.................................................................. 44,968
Directors' fees and expenses.................................................... 37,122
Registration fees............................................................... 19,398
Shareholder reports............................................................. 17,568
Annual meeting expenses......................................................... 12,565
Transfer agency fees............................................................ 10,503
Auditing and tax reporting fees................................................. 6,728
Miscellaneous................................................................... 2,562
Insurance fees.................................................................. 1,830
--------
Total Expenses......................................................... 272,157
-----------
NET INVESTMENT LOSS............................................................. (137,096)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:
Realized loss on investments and foreign currency transactions:
Net realized loss on investments................................................ (739,345)
Net realized loss on foreign exchange........................................... (2,572,304)
-----------
Net realized loss on investments and foreign exchange........................... (3,311,649)
-----------
Change in net unrealized appreciation on translation of foreign currency and
other assets and liabilities denominated in foreign currency................ 1,058,275
Change in net unrealized depreciation on investments............................ (2,239,056)
-----------
Net realized and unrealized loss on investments and foreign exchange............ (4,492,430)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS............................ ($4,629,526)
===========
See notes to financial statements
</TABLE>
<PAGE>
JAKARTA GROWTH FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six For the
Months Ended Year
September 30, 2000 Ended
(Unaudited) March 31, 2000
------------------ --------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Net investment loss..................................................... $ (137,096) $ (309,208)
Net realized gain (loss) on investments................................. (739,345) 293,664
Net realized loss on foreign exchange................................... (2,572,304) (3,924,134)
Change in net unrealized appreciation (depreciation) on
investments and foreign exchange.................................... (1,180,781) 5,143,740
------------------ --------------
Increase (decrease) in net assets derived from
investment activities and net increase (decrease) in net assets..... (4,629,526) 1,204,062
NET ASSETS:
Beginning of period..................................................... 11,238,880 10,034,818
------------------ --------------
End of period (including accumulated net investment loss of $153,491 and
$16,395, respectively).............................................. $ 6,609,354 $11,238,880
================== ==============
See notes to financial statements
</TABLE>
<PAGE>
JAKARTA GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS-(Unaudited)
1. Significant Accounting Policies
Jakarta Growth Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940 as a non-diversified, closed-end management investment
company. The Fund was incorporated in Maryland on January 29, 1990 and
investment operations commenced on April 19, 1990. The following is a summary
of significant accounting policies followed by the Fund.
(a) Valuation of Securities--Investments traded on stock exchanges are
valued at the last sale price on the principal market on which such securities
are traded as of the close of business on the day the securities are being
valued or, lacking any sales, at the last available bid price. Securities
traded in the over-the-counter market are valued at the last reported sales
price as of the close of business on the day the securities are being valued
or, if none is available, at the mean of the bid and offer price at the close
of the day. Securities for which market quotations are not readily available
and restricted securities are valued in good faith at fair value using methods
determined by the Board of Directors. In determining fair value, consideration
is given to cost, operating and other financial data. Short-term debt
securities which mature in 60 days or less are valued at amortized cost if
their original maturity at the date of purchase was 60 days or less, or by
amortizing their value on the 61st day prior to maturity if their term to
maturity at the date of purchase exceeded 60 days. Securities and other
assets, including futures contracts and related options, are stated at market
value or otherwise at fair value as determined in good faith by or under the
direction of the Board of Directors of the Fund.
(b) Foreign Currency Transactions--Transactions denominated in Indonesian
rupiah ("Rupiah") are recorded in the Fund's records at the current prevailing
rate at the time of the transaction. Asset and liability accounts that are
denominated in Rupiah are adjusted to reflect the current exchange rate at the
end of the period. Transaction gains or losses resulting from changes in the
exchange rate during the reporting period or upon settlement of foreign
currency transactions are included in operations for the current period.
The net assets of the Fund are presented at the exchange rate and market
values at the end of the period. The Fund isolates that portion of the change
in unrealized appreciation (depreciation) included in the statement of
operations arising as a result of changes in Rupiah rates at September 30,
2000 on investments and other assets and liabilities. Net realized foreign
exchange gains or losses includes foreign exchange gains or losses arising
from sales of portfolio securities, sales and maturities of short-term
securities, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the amounts of
dividends, interest, and foreign withholding taxes recorded on the Fund's
books, and the United States dollar equivalent of the amounts actually
received or paid.
(c) Security Transactions, Investment Income, Distributions to
Shareholders--Security transactions are accounted for on the trade date.
Dividend income and distributions are recorded on the ex-dividend date and
interest income is recorded on the accrual basis. Realized gains and losses on
the sale of investments are calculated on the identified cost basis.
Distributions from net investment income and net realized gains are
determined in accordance with Federal income tax regulations, which may differ
from generally accepted accounting principles. To the extent these "book/tax"
differences are permanent in nature (i.e., that they result from other than
timing of recognition-"temporary"), such accounts 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 realized gains for financial reporting purposes, but not for tax
purposes, are reported as distributions in excess of net realized gains.
(d) Capital Account Reclassification--For the year ended March 31, 2000,
the Fund's undistributed net investment loss and accumulated net realized loss
were decreased by $306,112 and $136,453, respectively, with an offsetting
decrease in additional paid in capital of $442,565. This adjustment was
primarily the result of the reclassification of net foreign currency losses,
and a net operating loss.
(e) Income Taxes--A provision for United States income taxes has not been
made since it is the intention of the Fund to qualify as a regulated
investment company under the Internal Revenue Code of 1986 as amended and to
distribute within the allowable time limit all taxable income to its
shareholders.
Under Indonesian tax laws, a withholding tax is imposed on dividends and
interest income from Indonesian sources at a maximum rate of 15% and such
withholding taxes are reflected as a reduction of the related revenue. There
is no withholding tax on realized gains. In addition, the Fund is subject to a
tax at a rate of 0.1% on the gross sales proceeds on the disposition of equity
securities listed on the Indonesian stock exchanges.
<PAGE>
JAKARTA GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS--(Unaudited) (Continued)
(f) Use of Estimates in Financial Statement Preparation--The preparation
of financial statements in accordance with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts and disclosures in the financial statements. Actual
results could differ from these estimates.
(g) Concentration of Risk--A significant portion of the Fund's net assets
consists of Indonesian securities which involve certain considerations and
risks not typically associated with investments in the United States. In
addition to the smaller size, less liquidity and greater volatility, the
Indonesian securities market is less developed than the U.S. securities market
and there is often substantially less publicly available information about
Indonesian issuers than there is about U.S. issuers. Future economic and
political developments in Indonesia could adversely affect the liquidity or
value, or both, of securities in which the Fund is invested. Further, the Fund
may be exposed to currency devaluation and other exchange rate fluctuations.
2. Management Agreement and Transactions With Affiliated Persons
Nomura Asset Management U.S.A. Inc. (the "Manager") acts as the Manager
of the Fund pursuant to a management agreement. Under the agreement, the
Manager provides all office space, facilities and personnel necessary to
perform its duties. Pursuant to such management agreement, the Manager has
retained its parent company, Nomura Asset Management Co., Ltd. (the
"Investment Advisor"), to act as investment advisor for the Fund. Pursuant to
the investment advisory agreement, the Investment Advisor has retained its
subsidiary Nomura Asset Management Singapore Limited (the "Sub-Advisor") to
act as investment sub-advisor to the Fund.
As compensation for its services to the Fund, the Manager receives a
monthly fee, at the annual rate of 1.10% of the value of the Fund's average
weekly net assets. Effective June 30, 2000, the Manager voluntarily reduced
its management fee from 1.1% to 1.0% of the Fund's average weekly net assets.
This reduction will remain in effect until May 31, 2001 unless NAM U.S.A. and
the Board of Directors mutually agree to reinstate the full management fee.
For services performed under the Investment Advisory Agreement, the Investment
Advisor receives a monthly fee from the Manager at the annual rate of 0.50% of
the Fund's average weekly net assets. For services performed under the terms
of the Investment Sub-Advisory Agreement, the Sub-Advisor receives a monthly
fee from the Investment Advisor at the annual rate of 0.25% of the Fund's
average weekly net assets. Under the Management Agreement, the Fund paid or
accrued fees to the Manager of $44,968 for the six months ended September 30,
2000. Under the Investment Advisory Agreement, the Manager informed the Fund
that the Investment Adviser earned fees of $21,321 for the six months ended
September 30, 2000 of which $10,661 were paid to the Sub-Advisor. At September
30, 2000, the fee payable to the Manager, by the Fund, was $5,906.
Certain officers and/or directors of the Fund are officers and/or
directors of the Manager. The Nomura Securities Co., Ltd. (the Manager's
indirect parent) earned $5,224 in commissions on the execution of portfolio
security transactions for the six months ended September 30, 2000. The Fund
pays each Director not affiliated with the Manager an annual fee of $5,000
plus $500 per meeting attended, together with such Director's actual expenses
related to attendance at meetings. Such fees and expenses for unaffiliated
Directors aggregated $37,122 for the six months ended September 30, 2000.
3. Purchases and Sales of Investments
Purchases and sales of investments, exclusive of investments in foreign
currencies and short-term securities, for the six months ended September 30,
2000 were $2,122,720 and $1,821,452, respectively.
As of September 30, 2000, net unrealized depreciation on investments,
exclusive of investments in foreign currency and short-term securities, for
Federal income tax purposes was $5,968,452 of which $44,453 related to
appreciated securities and $6,012,905 related to depreciated securities. The
aggregate cost of investments, exclusive of investments in foreign currencies
and short-term securities, of $500,000 at September 30, 2000 for Federal
income tax purposes was $12,058,988.
The Fund has a capital loss carryforward as of March 31, 2000 of
$36,067,758 of which $1,217,005 expires March 31, 2001, $5,504,417 expires
March 31, 2002, $1,284,915 expires March 31, 2003, $1,711,790 expires March
31, 2005, $6,504,011 expires March 31, 2006, $17,301,899 expires March 31,
2007 and $2,543,721 expires March 31, 2008.
Capital losses and currency losses incurred after October 31, within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. Accordingly, the Fund incurred and elected to defer capital
losses of $1,046,864, and $16,395 currency losses for the year ended March 31,
2000.
<PAGE>
JAKARTA GROWTH FUND, INC.
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share of common stock outstanding
throughout the period.
<TABLE>
<CAPTION>
For the Six
Months Ended
September 30, 2000 For the Year Ended March 31,
---------------------------------------------------------
(Unaudited) 2000 1999 1998 1997 1996
------------------ ---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period................. $2.24 $2.00 $2.43 $10.12 $9.11 $7.69
------------------ ---------- ---------- ----------- ---------- ----------
Net investment income (loss)..................... (0.03) (0.06) (0.04) 0.03 0.01 0.06
Net realized and unrealized gain (loss) on
investments and foreign currency.............. (0.89) 0.30 (0.39) (7.70) 1.00 1.47
------------------ ---------- ---------- ----------- ---------- ----------
Total from investment operations................. (0.92) 0.24 (0.43) (7.67) 1.01 1.53
------------------ ---------- ---------- ----------- ---------- ----------
Distributions to shareholders from:
Net investment income............................ - - - (0.02) - (0.11)
------------------ ---------- ---------- ----------- ---------- ----------
Total distributions.................................. - - - (0.02) - (0.11)
------------------ ---------- ---------- ----------- ---------- ----------
Net asset value, end of period....................... $1.32 $2.24 $2.00 $2.43 $10.12 $9.11
================== ========== ========== =========== ========== ==========
Market value, end of period.......................... $1.375 $2.3125 $2.1875 $4.0625 $8.875 $9.250
Total investment return+............................. (40.5%) 5.7% (46.2%) (54.0%) (4.1%) 15.3%
Net asset value total return++....................... (41.1%) 12.0% (17.7%) (75.3%) 11.1% 20.0%
Ratio to average net assets/supplemental data:
Net assets, end of period (in 000)............... $6,609 $11,239 $10,035 $12,208 $50,788 $45,693
Operating expenses............................... 6.50% + 3.89% 4.66% 2.60% 2.07% 1.94%
Net investment income............................ (3.27%)+ 2.37% (1.94%) 0.53% 0.12% 0.70%
Portfolio turnover............................... 23% 46% 11% 68% 35% 44%
</TABLE>
+ Based on market value per share, adjusted for reinvestment of
distribution and capital share transactions. Total return does not
reflect sales commissions.
++ Based on net asset value per share, adjusted for reinvestment of
distribution and capital share transactions. Total return does not
reflect sales commissions.
+ Annualized
<PAGE>
JAKARTA GROWTH FUND, INC.
SUPPLEMENTAL PROXY INFORMATION (Unaudited)
The 2000 Annual Meeting of the Shareholders of the Fund was held on at
the Fund's offices, 180 Maiden Lane, New York, New York on August 15, 2000.
The purpose of the meeting was to elect six Directors to serve for the ensuing
year; to consider and act upon a proposal to ratify the selection of
PricewaterhouseCoopers LLP as independent accountants of the Fund for its
fiscal year ending March 31, 2001; to consider and act upon a proposal to
approve a new Management Agreement between the Fund and Nomura Asset
Management U.S.A. Inc.; to consider and act upon a proposal to approve a new
Investment Advisory Agreement between Nomura Asset Management U.S.A. Inc. and
Nomura Asset Management, Co., Ltd.; to consider and act upon a proposal to
approve a new Investment Sub-Advisory Agreement between Nomura Asset
Management Co., Ltd. and Nomura Asset Management Singapore Limited, and to
transact such other business as may properly come before the Meeting or any
adjournment thereof.
At the Meeting, the following persons were elected by the shareholders to
serve as Directors of the Fund: William G. Barker, Jr., George H. Chittenden,
Nobuo Katayama, Chor Weng Tan, Arthur R. Taylor, and John F Wallace. The
shareholders ratified the selection of PricewaterhouseCoopers LLP, to serve as
the Fund's independent accountants for the fiscal year ending March 31, 2001.
The shareholders approved a new Management Agreement between the Fund and
Nomura Asset Management U.S.A. Inc., approved a new Invesment Advisory
Agreement between Nomura Asset Management U.S.A. Inc., and Nomura Asset
Management Co., Ltd., and approved a new Investment Sub-Advisory Agreement
between Nomura Asset Management Co., Ltd. and Nomura Asset Management
Singapore Limited. No other business was transacted at the meeting.
The results of the voting at the Annual Meeting are as follows:
1. To elect the Fund's Board of Directors:
<TABLE>
<CAPTION>
% of % of
Shares Voted outstanding Shares Voted outstanding
For Shares Withhold Authority Shares
------------ ----------- ------------------ -----------
<S> <C> <C> <C> <C>
William G. Barker, Jr...................... 2,947,478 58.7 107,747 2.1
George H. Chittenden*...................... 2,950,377 58.8 104,848 2.0
Nobuo Katayama............................. 2,949,490 58.8 105,735 2.0
Chor Weng Tan.............................. 2,952,380 58.8 102,845 2.0
Arthur R. Taylor........................... 2,947,878 58.7 107,347 2.1
John F. Wallace............................ 2,947,978 58.7 107,247 2.1
*Mr. Chittenden passed away in September, 2000.
</TABLE>
2. To ratify the selection of PricewaterhouseCoopers LLP as the independent
accountants of the Fund:
<TABLE>
<CAPTION>
% of % of % of
Shares Voted outstanding Shares Voted outstanding Shares outstanding
For Shares Against Shares Abstained Shares
------------ ----------- ------------ ----------- --------- ------------
<S> <C> <C> <C> <C> <C>
3,025,826 60.3 23,615 0.4 5,784 0.1
</TABLE>
3. To approve a new Management Agreement between the Fund and Nomura Asset
Management U.S.A. Inc.:
<TABLE>
<CAPTION>
% of % of % of
Shares Voted outstanding Shares Voted outstanding Shares outstanding
For Shares Against Shares Abstained Shares
------------ ----------- ------------ ----------- --------- ------------
<S> <C> <C> <C> <C> <C>
2,997,800 59.8 42,234 0.8 15,191 0.2
</TABLE>
4. To approve a new Investment Advisory Agreement between Nomura Asset
Management U.S.A. Inc. and Nomura Asset Management Co., Ltd.:
<TABLE>
<CAPTION>
% of % of % of
Shares Voted outstanding Shares Voted outstanding Shares outstanding
For Shares Against Shares Abstained Shares
------------ ----------- ------------ ----------- --------- ------------
<S> <C> <C> <C> <C> <C>
2,997,098 59.7 42,537 0.8 15,590 0.3
</TABLE>
5. To approve a new Investment Sub-Advisory Agreement between Nomura Asset
Management Co., Ltd. and Nomura Asset Management Singapore Limited:
<TABLE>
<CAPTION>
% of % of % of
Shares Voted outstanding Shares Voted outstanding Shares outstanding
For Shares Against Shares Abstained Shares
------------ ----------- ------------ ----------- --------- ------------
<S> <C> <C> <C> <C> <C>
3,000,902 59.8 38,733 0.8 15,590 0.2
</TABLE>
BOARD OF DIRECTORS ----------------------------------
William G. Barker, Jr. ==================================
Nobuo Katayama ----------------------------------
Chor Weng Tan
Arthur R. Taylor
John F Wallace
OFFICERS
Nobuo Katayama, President
Keisuke Haruguchi, Vice President
David G. Stoeffel, Vice President
John J. Boretti, Secretary and Treasurer
Rita Chopra, Assistant Treasurer
MANAGER
Nomura Asset Management U.S.A. Inc. JAKARTA
180 Maiden Lane Growth
New York, New York 10038-4936 Fund, Inc.
Internet Address
www.nomura-asset.com
INVESTMENT ADVISOR
Nomura Asset Management Co., Ltd.
1-14, 2-chome Nihonbashi, Chuo-ku,
Tokyo 103-8260, Japan
INVESTMENT SUB-ADVISOR
Nomura Asset Management Singapore Limited
6 Battery Road
Singapore 049909
CUSTODIAN
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109-3661
DIVIDEND PAYING AGENT, TRANSFER
AGENT AND REGISTRAR
State Street Bank and Trust Company
P.O. Box 8209
Boston, Massachusetts 02266-8209
COUNSEL SEMI-ANNUAL REPORT
Brown & Wood LLP
One World Trade Center SEPTEMBER 30, 2000
New York, New York 10048-0557
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036-2798
JAKARTA GROWTH FUND, INC. ----------------------------------
180 MAIDEN LANE ==================================
NEW YORK, NEW YORK 10038-4936 ----------------------------------
This Report, including the Financial Statements, is transmitted to the
Shareholders of Jakarta Growth Fund, Inc. for their information. This is not a
prospectus, circular or representation intended for use in the purchase of
shares of the Fund or any securities mentioned in the Report.
The accompanying Financial Statements, including the Schedule of Investments,
have not been examined by the Fund's independent accountants,
PricewaterhouseCoopers LLP, and accordingly, they express no opinion thereon.
