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JARDINE FLEMING
CHINA REGION FUND, INC.
SEMI-ANNUAL REPORT
JUNE 30, 2001
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THIS REPORT, INCLUDING THE FINANCIAL STATEMENTS HEREIN, IS SENT TO THE
SHAREHOLDERS OF THE FUND FOR THEIR INFORMATION. IT IS NOT A PROSPECTUS, CIRCULAR
OR REPRESENTATION INTENDED FOR USE IN THE PURCHASE OR SALE OF SHARES OF THE FUND
OR OF ANY SECURITIES MENTIONED IN THIS REPORT.
JFCRM-SR-01 F01-051 6/30/01
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JARDINE FLEMING
CHINA REGION FUND, INC.
CONTENTS
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PAGE
Objectives 1
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Management 1
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Market Information 1
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Highlights 2
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Chairman's Statement 3
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Investment Review 4
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Major Holdings 8
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Investment Portfolio 10
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Statement of Assets and Liabilities 15
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Statement of Operations 16
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Statements of Changes in Net Assets 17
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Financial Highlights 18
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Notes to Financial Statements 19
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Results of the Annual Shareholders Meeting 23
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Dividend Reinvestment and Cash Purchase Plan 24
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Directors and Administration 25
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JARDINE FLEMING
CHINA REGION FUND, INC.
OBJECTIVES
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Jardine Fleming China Region Fund, Inc. (the "Fund") seeks to achieve
long-term capital appreciation through investments primarily in equity
securities of companies with substantial assets in, or revenues derived from,
the People's Republic of China (PRC or China), Hong Kong, Taiwan, and
Macau--collectively, the China Region.
The Fund provides investors with an opportunity to participate in the
growing economies of the China Region, especially that of the PRC, although
investments are expected to be predominantly in securities listed on the Stock
Exchange of Hong Kong. Hong Kong enterprises have made substantial investments
in the PRC, in Guangdong Province in particular, where abundant cheap labor and
land are available. Hong Kong is also the largest trading partner of the PRC.
The economies of the PRC, Hong Kong, Taiwan, and Macau have become
increasingly linked over the past 10 years and are expected to become further
integrated now that Hong Kong and Macau have reverted to Chinese sovereignty.
Investments made by the Fund will seek to take advantage of opportunities
resulting from this linkage among the China Region markets.
MANAGEMENT
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JF International Management Inc. ("JFIM") (formerly Jardine Fleming
International Management Inc.) is the investment management company appointed to
advise and manage the Fund's portfolio. With the completion of the merger
between Robert Fleming Holdings Ltd. and The Chase Manhattan Corporation
("Chase") in October 2000, and the subsequent merger between Chase and J.P.
Morgan & Co. Incorporated in January 2001, JFIM became part of J.P. Morgan Chase
& Co. ("JPMC"), one of the world's premier financial services institutions. In
asset management, JPMC will operate globally under the name of JPMorgan Fleming
Asset Management ("JPMFAM"), although in Asia it will use the sub-brand JF Asset
Management. Funds under management for the global asset management business was
US$611 billion as of June 30, 2001. The investment philosophy of JPMFAM is to
maintain two distinct and separate investment processes for their equity
products.
Chung Man Wing is the portfolio manager of the Fund. Mr. Chung joined JFIM
in late 2000 as head of the Greater China team. Previously, he was chief
investment officer at HSBC Asset Management (Asia).
MARKET INFORMATION
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THE FUND IS LISTED ON THE NEW YORK STOCK EXCHANGE (SYMBOL JFC).
THE SHARE PRICE IS PUBLISHED IN
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_ The Wall Street Journal (daily)
_ The Asian Wall Street Journal (daily)
_ Reuters (page JFC)
THE NET ASSET VALUE IS PUBLISHED IN
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_ The Wall Street Journal under "Closed-End Funds" (every Monday)
_ The Asian Wall Street Journal under "Closed-End Funds" (every Monday)
_ South China Morning Post in Hong Kong (first Thursday of every month)
_ Reuters (page JFC)
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JARDINE FLEMING
CHINA REGION FUND, INC.
HIGHLIGHTS
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JUNE 30, 2001 December 31, 2000
US$ US$
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Net Assets $53.1 MILLION $56.2 million
Net Asset Value Per Share $9.06 $9.34
MARKET DATA
Share Price on the
New York Stock Exchange $7.75 $7.06
Discount to Net Asset Value -14.5% -24.4%
TOTAL RETURN FOR THE PERIOD ENDED JUNE 30, 2001
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Net Asset Value -3.0%
Share Price +9.7%
JFC Benchmark Index* -8.2%
MSCI Hong Kong Index (Total) -15.8%
BNP Prime Peregrine China Index +17.5%
Taiwan Weighted Index -1.1%
NET ASSET VALUE AND SHARE PRICE VS. TARGET INDEX
[GRAPHICS OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Net Asset Value Share Price JFC Benchmark Index*
7/16/92** 100.00 100.00 100.00
Sep-92 100.90 80.00 79.10
Dec-92 109.30 93.00 90.20
Mar-93 120.50 108.90 94.30
Jun-93 122.30 120.10 83.10
Sep-93 128.40 126.80 84.70
Dec-93 189.00 187.40 129.00
Mar-94 136.60 136.10 91.10
Jun-94 124.00 123.30 82.80
Sep-94 133.00 129.80 94.10
Dec-94 115.70 94.30 72.20
Mar-95 109.40 94.30 67.10
Jun-95 111.90 92.30 69.30
Sep-95 112.90 94.40 68.80
Dec-95 103.00 84.50 63.30
Mar-96 110.10 95.10 70.70
Jun-96 112.00 87.70 71.50
Sep-96 112.20 85.60 74.70
Dec-96 132.80 95.30 97.40
Mar-97 134.00 99.50 99.70
Jun-97 170.30 124.90 114.40
Sep-97 167.70 124.00 116.20
Dec-97 110.00 82.90 83.70
Mar-98 107.60 80.80 83.70
Jun-98 72.70 54.20 63.50
Sep-98 60.80 40.90 56.90
Dec-98 69.90 46.80 61.40
Mar-99 69.70 47.80 62.50
Jun-99 90.40 74.40 80.70
Sep-99 84.11 56.86 75.59
Dec-99 110.11 72.07 90.23
Mar-00 118.43 75.28 96.66
Jun-00 98.52 66.73 85.48
Sep-00 95.35 66.00 79.73
Dec-00 87.30 60.33 71.12
1-Mar 84.59 60.73 69.80
1-Jun 84.69 66.20 65.30
* JFC Benchmark: MSCI Golden Dragon Index (Total)
Prior to March 2001: 25% Taiwan Weighted Index, 20% BNP Prime Peregrine China
Index, 50% MSCI Hong Kong Index, 5% HSBC
Prior to March 1999: 60% Hong Kong All Ordinaries Index, 30% Credit Lyonnais
Securities Asia All China B Index, 10% Taiwan Weighted
Index
Prior to January 1997: Peregrine Greater China Index
** Commencement of operations
Source: JF
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JARDINE FLEMING
CHINA REGION FUND, INC.
CHAIRMAN'S STATEMENT
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Dear Fellow Shareholders:
In February this year, the Board approved the adoption of the MSCI Golden
Dragon Index as the Fund's benchmark with commencement date on March 1, 2001.
The Board believes that the new benchmark can better measure the Fund's
investment management performance. The Board stressed that the Fund would not be
seeking to replicate the performance of the new index but will continue to be
actively managed to invest in the best opportunities in the China Region.
China Region equity market performance was mixed in 1H 2001. Hong Kong
disappointed as the Hang Seng Index fell 13.6% despite the potential support of
tumbling U.S. interest rates. Taiwan rose at first but later fell back to end
1.1% down, a victim of falling global demand for technology products, especially
semiconductors. Direct China plays on the other hand had an excellent quarter.
Spurred by the meteoric rise of the small domestic-oriented Shanghai and
Shenzhen B share markets, Hong Kong H shares and Red Chips gained 42.3% and
11.9%, respectively.
In these challenging, volatile markets the Fund outperformed in 1H, down
3.0% in NAV terms versus an 8.2% decline in the Jardine Fleming China Region
Fund benchmark. On account of our share buyback program described below, the
Fund's share price did much better than the NAV, rising 9.7% as the discount
narrowed.
Looking ahead, we believe that facing an uncertain global outlook, investors
will focus even more on sustainable growth. As such, the China Region remains
very attractive. We have increased exposure to better quality, direct China
plays listed in Mainland China and Hong Kong. This has been at the expense of
Taiwan which we have underweighted on a tactical basis, although the long-term
investment case for that country is still sound. We are confident that our
disciplined yet flexible investment approach that acknowledges the volatile
nature of emerging asset classes will generate good long-term returns for our
shareholders.
Following the expiration of the tender offer on December 18, 2000, the Fund
resumed its repurchase program in January this year. During the six months ended
June 30, 2001, the Fund repurchased a total of 148,000 shares in the open market
at a per-share weighted average discount to net asset value of 20.12%.
Apart from using share buybacks as an ongoing and permanent mechanism to
address the discount, the Board of Directors is also committed, beginning in
2001, to implement a partial tender offer or similar transaction if the Fund's
shares trade at an average discount to net asset value in excess of 20% for any
13-week period, limited to one such transaction in each calendar year. In
recognition of the fact that the average discount to net asset value for the
Fund's shares exceeded 20% during the first thirteen weeks of 2001, the Board of
Directors initiated a tender offer to acquire up to 20% of the Fund's
outstanding shares of common stock which commenced on June 11, 2001 and remained
open through July 9, 2001. Pursuant to this tender offer, the Fund purchased a
total of 1,172,856 shares, representing 20% of the Fund's issued and outstanding
shares, at a price equal to 95% of the Fund's net asset value per share on the
closing date of July 9, 2001.
The Board noted that the discount of the Fund has improved since May this
year to a level below 20%. The Board will continue to actively manage the
discount to net asset value at which the Fund's shares trade in the market.
Respectfully submitted,
/s/ Signature
The Rt. Hon. The Earl of Cromer
Chairman
July 27, 2001
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JARDINE FLEMING
CHINA REGION FUND, INC.
INVESTMENT REVIEW
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Dear Fellow Shareholders:
The environment facing global equity markets was challenging during the
first half amid the slowdown in the U.S. economy and uncertain demand outlook
for technology/capital goods. Within the China Region, Hong Kong's Hang Seng
Index fell by 13.6%, while Taiwan's Weighted Index was down 1.1%. On the other
hand, the two smaller, domestic-oriented China B share markets in Shanghai and
Shenzhen were boosted by strong domestic liquidity and unexpectedly positive
policy support. The Shanghai B Index and the Shenzhen B Index were up 142.7% and
168.3%, respectively.
As a result of these mixed returns and the high intra-period volatility in
the Region's markets, the net asset value of the Fund was down 3.0% although the
share price rose 9.7% as the discount narrowed. This compares with an 8.2%
decline in the Jardine Fleming China Region Fund benchmark.
In Hong Kong, the fall in the Hang Seng Index was disappointing given the
aggressive interest rate cuts in the U.S. and Hong Kong. Low nominal interest
rate failed to excite demand given the persistent deflation and continued
economic restructuring. Consumer confidence was still low amid worsening
unemployment. Affected by the slowdown in the U.S., external trade deteriorated.
As a result, GDP growth projections were revised down and earnings forecasts for
major blue chip companies were reduced. Overall sentiment towards the
traditional, blue chip market therefore remained cautious. On the other hand,
the Hong Kong equity market actually became two-tiered during the period.
Outside of the blue chips, the China-related H shares and Red Chip stocks
outperformed on the back of good macroeconomic numbers from Mainland China,
expectations of positive news (China's WTO entry and Beijing's bid to host the
2008 Olympiad) and speculative liquidity inflows in wake of the strong
performance of the domestic Chinese B share markets. The Hang Seng China
Enterprises Index and the Hang Seng China Affiliated Corporate Index were up
42.3% and 11.9%, respectively.
Investment sentiment continued to be bullish in Mainland China given the
strong economic dynamics. Although export growth momentum started to be affected
by the slowdown in the U.S., China's trade surplus was still remarkably
resilient when compared with other Asian economies. More importantly, foreign
direct investment continued to be attracted by China's vast market potential.
Private consumption as well as public spending recovered visibly and were the
key drivers behind the 7.8% GDP growth during the first half. As a result, the B
share markets were boosted by powerful domestic investors interest. The
unexpected policy relaxation in February, which formally allowed participation
in B shares by domestic hard currency holders, was a significant watershed. It
reaffirmed the Chinese government's commitment to deepening financial market
reforms. It also fueled expectation of eventual unification of the A and B
shares markets. As a result, B shares were propelled to virtually uncharted
territories in late May, the lingering issue of poor corporate governance
notwithstanding.
The small year-to-date decline in the Taiwan Weighted Index did not reflect
the intra-period market volatility and the deteriorating economic and political
environment. After the rebound at the beginning of the year, which lifted the
Index above the 6,100 level in mid February, investment sentiment worsened
rapidly. First, export orders and industrial production plunged on the back of
falling information technology investment spending by the U.S., which had a
direct impact on Taiwan's electronic exports. For example, export orders
contracted by 14% year-on-year in May, which was the most severe monthly decline
since March 1990. Subsequently, heavyweight electronic stocks fell sharply as
corporate earnings from the U.S. technology sector continued to disappoint over
the second quarter and as growth outlook became uncertain. The drop in stock
prices triggered margin call-related, indiscriminate selling by local
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JARDINE FLEMING
CHINA REGION FUND, INC.
INVESTMENT REVIEW (CONTINUED)
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financial institutions and corporate investors. There was further instability on
the political front as former President Lee teamed up with President Chen. This
intensified the conflict between the administration and a still powerful
opposition party with the Legislative Yuan election approaching. This
unfortunately led to policy indecisiveness and dented confidence further. As a
result, the currency has been under tremendous pressure amid signs of capital
flight and the Taiwan Weighted Index now looks set to test new lows.
OUTLOOK
In Hong Kong, reported economic numbers continued to be sluggish as economic
recovery proves to be slow and narrow-based. Although property sales picked up
marginally, asset prices remained under pressure. Despite multiple cuts in
nominal interest rates, real interest rates remained high, owing to continued
deflation, and investment demand was still weak. Given the slowdown in the U.S.,
external trade moderated. Employment prospects have not improved, with the
unemployment rate staying stubbornly high at 4.6% in June. Overall, economists
have been revising down their growth projections and Hong Kong's GDP growth for
this year is likely to be at a sub-trend level of around 3%.
Mainland China's economic outlook remains bright. GDP momentum continues to
be strong, as witnessed by the surprisingly strong 7.8% quarter-on-quarter
growth in the second quarter. Although the continued economic slowdown in the
U.S. has started to affect China's export growth and the trade surplus may
shrink this year, buoyant consumer demand and renewed fiscal stimulus have
compensated for this. Furthermore, China's imminent WTO accession will translate
into significant benefits to the Chinese economy. In the short-term, capital
inflows will escalate further as more and more multinationals establish
themselves in China. In fact, foreign direct investment flows have been surging
even before the official WTO entry, posting 20% plus year-on-year growth in
recent months. We estimate that foreign direct investment alone may contribute 1
percentage point to China's GDP growth. Over the longer term, WTO will mean
increased foreign competition and new MODUS OPERANDI for domestic enterprises.
Corporate restructuring, albeit painful at times, will accelerate and reach
virtually all segments of the economy. In order to stay competitive, Chinese
enterprises will have to downsize and raise capital. This process will offer
numerous investment opportunities for the Fund and eventually give rise to a
more efficient Chinese corporate sector.
In Taiwan, the near term macro outlook has deteriorated sharply. Hurt by the
slowdown in the U.S. economy in general and the retrenchment of global
technology demand in particular, Taiwan's exports and industrial production have
plummeted. As a result, GDP growth decelerated to a 26-year slow pace of 1.06%
year-on-year in the first quarter of 2001. Rapidly worsening employment
prospects and tight credit policy by the banks have led to sluggish consumption
and investment and a mini credit crunch is possible. On the other hand,
anecdotal evidence suggests that capital flows across the straits into China
have been on the rise as Taiwanese investors are lured by the better prospect in
the Mainland. As such, the New Taiwan Dollar currency has been under downward
pressure despite Taiwan's enormous foreign exchange reserves. Added to the
economic woes is an inexperienced administration, which is often at odds with a
powerful opposition party. This political quagmire has been reflected in
economic policy inertia and will culminate in the Legislative Yuan elections at
the end of the year.
As far as the equity markets are concerned, the timing of the U.S. recovery
and restructuring and reforms in China will be the two key factors that
determine share price performance. After a series of interest rate reductions,
the U.S. economy in general and capital goods demand in particular are expected
to show signs of revival towards the end of the year. If this becomes apparent,
general investor sentiment
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JARDINE FLEMING
CHINA REGION FUND, INC.
INVESTMENT REVIEW (CONTINUED)
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should improve. In particular, blue chip stocks in Hong Kong and export-oriented
electronic and technology stocks in Taiwan should stabilize. As for China,
healthy economic growth plus strong commitment to restructuring will continue to
attract investors. Further financial market opening will stimulate an equity
investment culture among domestic investors while increasing access to the China
growth story for foreign investors. As a result, market breadth and depth will
improve and China-related shares as a group should provide satisfactory returns.
Given our assessment of the overall macro environment and our expectation of
returns from the different markets and asset classes, we have adopted several
asset allocation changes within the Fund. In Hong Kong, while we have maintained
the overall level of investments in the market, we have reduced our exposure to
the blue chip stocks while increasing our investment in good quality mid-cap
companies. While we continue to be positive about the financial strength and
transparency of the major Hong Kong blue chip companies over the long run, their
share price performance in the near and medium term is likely to be lackluster
given the slow economy. On the other hand, selected mid-cap companies, including
some of the coming new issues, exhibit more exciting earnings growth potential.
Often these companies are increasing their business exposure in China while
their stocks are still undervalued given their strong prospects.
We have significantly increased our investment in various types of China
shares. The unexpected opening of the B share market to domestic investors
indicates faster pace of capital market reform and has since then lifted the
profile and market turnover of the B shares in Shanghai and Shenzhen. While the
issue of corporate governance remains, selected B shares have now become viable
investment candidates for fundamental-oriented investors, especially with
relatively lower valuations to their A share counterparts. From a bottom up
perspective, we have built positions in a handful of better quality B shares,
with a preference for those that are exposed to the flourishing domestic
consumer sector. The Hong Kong-listed H shares in general carry the same
corporate governance and transparency risk as the B shares. Nonetheless, the
valuation argument is compelling as they are trading at steep discount to A
shares and even to B shares. With improving liquidity, some of the better
quality H shares become investable while providing investors with genuine
exposure to the fast growing Chinese economy. Therefore we have been gradually
increasing our investments in selected H shares. With regard to the Red Chip
stocks, we intend to increase our overweight as many of them are undergoing
corporate restructuring, which should streamline their businesses and improve
return to shareholders. Also from a capital market perspective, the Red Chips
will be able to secure cheap financing if their plans to issue CDR ("Chinese
Depository Receipt") are approved by the Chinese regulatory authorities. In
terms of share price performance, Red Chips have lagged the B and H shares and
this renders the attractive Red Chip "catch-up" plays.
On the other hand, we have tactically reduced our exposure to the Taiwanese
market. Despite recent weak performance, near term potential upside is very
limited. The growth outlook is still very uncertain while corporate earnings
projections are still too optimistic. We are also wary that the political
picture will remain murky until at least the end of the year. As such, we expect
the Taiwanese market to underperform Hong Kong and China shares over the next
few months. Nonetheless, we remain constructive towards the leading Taiwanese
technology companies over the long run as they continue to benefit from the
trend of outsourcing despite current weak demand. When global IT demand
eventually recovers and when the domestic political uncertainty settles, these
world-class companies will perform better. As such, the long-term investment
case for Taiwan remains intact, in our view, and we are maintaining our core
strategic positions in a handful of long-term winners.
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JARDINE FLEMING
CHINA REGION FUND, INC.
INVESTMENT REVIEW (CONTINUED)
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To conclude, given the uncertain global outlook, investors will focus even
more on sustainable homegrown growth stories. As such, we believe that investors
will soon recognize the long-term attraction of the China Region, with China's
adoption into the WTO serving as the catalyst. In the short-term, abundant
domestic liquidity and further development in terms of corporate restructuring
and capital market reforms will provide lucrative investment opportunities
amongst Hong Kong and China shares. As such we are proactively positioning the
Fund to benefit from these positive developments and are therefore increasing
our exposure to the better quality, direct China plays, especially those that
are listed in Mainland China and Hong Kong. We shall adopt a disciplined yet
flexible investment approach, while acknowledging the fact that trading pattern
of certain stocks may be volatile given the emerging nature of the asset
classes.
We are confident that this strategy will generate good return to our
shareholders over the long-term.
Respectfully submitted,
/s/ Signature
A. Douglas Eu
President
July 27, 2001
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JARDINE FLEMING
CHINA REGION FUND, INC.
MAJOR HOLDINGS
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AT JUNE 30, 2001
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% of Net
Assets
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HUTCHISON WHAMPOA 7.6
One of Hong Kong's leading conglomerates, controlling 60% and 50% of the
container ports in Hong Kong and Shanghai, respectively. Hutchison should
benefit from an increase in PRC exports.
CHEUNG KONG HOLDINGS 5.9
One of Hong Kong's premier property companies with significant property
developments in Hong Kong and the PRC. Cheung Kong has been discussing numerous
property and infrastructure projects in China.
CHINA UNICOM 4.4
China Unicom provides telecommunications services in the PRC. Its services
include cellular, paging, long distance, data, and Internet services.
SUN HUNG KAI PROPERTIES 4.0
Hong Kong's premier and largest property company with an investment
properties portfolio of over 15 million square feet and a property development
landbank in excess of 30 million square feet. Although primarily focused in Hong
Kong, SHK Properties has been gradually expanding its property exposure to three
strategic locations in China -- Beijing, Shanghai, and Guangzhou.
CHINA MOBILE (HONG KONG) 4.0
Owns and operates cellular network businesses with a combined 93% market
share in six provinces in China. With limited competition on the horizon, the
company is expected to grow significantly. It is the only listed PRC
telecommunications stock in Hong Kong included in the Hang Seng Index.
BEIJING CAPITAL INTERNATIONAL AIRPORT 3.5
Beijing Capital International Airport operates both aeronautical and
non-aeronautical business in the Beijing airport.
CHINA RESOURCES ENTERPRISE 3.3
China Resources Enterprise develops and invests in real estate and
infrastructural projects, provides cold storage servcies, and manufactures beer,
food, building materials, and chemical products. It also distributes food
products and operates supermarkets.
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JARDINE FLEMING
CHINA REGION FUND, INC.
MAJOR HOLDINGS (CONTINUED)
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AT JUNE 30, 2001
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% of Net
Assets
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BANK OF EAST ASIA 2.6
Bank of East Asia provides general banking and related financial services.
CHINA EVERBRIGHT 2.5
China Everbright provides investment banking, commercial banking, corporate
finance, and investment advisory services. It also invests in properties and
provides insurance, brokerage, secretarial, and money lending services.
COFCO INTERNATIONAL 2.4
COFCO International operates food processing businesses. It processes and
refines edible oil and fats, produces wine and beverage as well as flour
including wheat and other grain products. In addition, it trades food products.
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TOTAL MAJOR HOLDINGS 40.2
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JARDINE FLEMING
CHINA REGION FUND, INC.
INVESTMENT PORTFOLIO
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AT JUNE 30, 2001 (UNAUDITED)
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Holdings Market
(in shares Value
Description or par) (in US$)
--------------------------------------------------------------------------------------------------------
COMMON STOCKS (UNLESS OTHERWISE NOTED)
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CHINA (7.6%)
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COMMUNICATION EQUIPMENT (1.2%)
Eastern Communications 'B' 350,000 606,200
--------------------------------------------------------------------------------------------------------
CONTAINERS & PACKAGING (1.1%)
China International Marine Container 'B' 300,000 606,169
--------------------------------------------------------------------------------------------------------
HOUSEHOLD DURABLES (1.1%)
CSG Technology Holdings 'B' 510,000 578,669
--------------------------------------------------------------------------------------------------------
MACHINERY (1.6%)
Shanghai Zhenhua Port Machinery 'B' 599,200 837,682
--------------------------------------------------------------------------------------------------------
REAL ESTATE (2.6%)
China Vanke 'B' 500,000 646,811
* Shanghai Lujiazui Finance and Trade Zone Development 'B' 650,000 737,750
--------------------------------------------------------------------------------------------------------
1,384,561
--------------------------------------------------------------------------------------------------------
TOTAL CHINA 4,013,281
========================================================================================================
HONG KONG (76.3%)
--------------------------------------------------------------------------------------------------------
AIRLINES (1.1%)
China National Aviation 2,950,000 567,322
--------------------------------------------------------------------------------------------------------
AUTOMOBILES (1.5%)
* Denway Motors 2,150,000 771,815
--------------------------------------------------------------------------------------------------------
BANKS (3.7%)
Bank of East Asia 600,261 1,392,949
Hang Seng Bank 55,000 564,117
--------------------------------------------------------------------------------------------------------
1,957,066
--------------------------------------------------------------------------------------------------------
BUSINESS & PUBLIC SERVICES (1.0%)
Arcontech 3,350,000 545,463
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JARDINE FLEMING
CHINA REGION FUND, INC.
INVESTMENT PORTFOLIO (CONTINUED)
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AT JUNE 30, 2001 (UNAUDITED)
--------------------------------------------------------------------------------------------------------
Holdings Market
(in shares Value
Description or par) (in US$)
--------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES (1.1%)
Yanzhou Coal Mining 'H' 1,300,000 600,015
--------------------------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS (1.9%)
* Digital China Holdings 1,900,000 992,654
--------------------------------------------------------------------------------------------------------
DISTRIBUTORS (3.3%)
China Resources Enterprise 1,050,000 1,770,238
--------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIALS (15.4%)
China Everbright 1,400,000 1,301,315
* Guangzhou Investment 10,500,000 1,144,260
Guoco Group ++ 200,000 1,171,825
Hutchison Whampoa 400,600 4,044,623
JCG Holdings 900,000 536,552
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8,198,575
--------------------------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (4.4%)
* China Unicom 1,350,000 2,353,907
--------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES (2.3%)
Beijing Datang Power Generation 'H' 1,800,000 617,324
Huaneng Power International 'H' 1,000,000 612,195
--------------------------------------------------------------------------------------------------------
1,229,519
--------------------------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (1.7%)
* Travelsky Technology 'H' 900,000 911,562
--------------------------------------------------------------------------------------------------------
FOOD PRODUCTS (4.0%)
COFCO International 5,650,000 1,267,661
* Global Bio-chem Technology Group 4,200,000 861,561
--------------------------------------------------------------------------------------------------------
2,129,222
--------------------------------------------------------------------------------------------------------
GAS UTILITIES (3.6%)
Hong Kong & China Gas 922,427 1,158,976
* Wah Sang Gas Holdings 666,000 764,212
--------------------------------------------------------------------------------------------------------
1,923,188
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JARDINE FLEMING
CHINA REGION FUND, INC.
INVESTMENT PORTFOLIO (CONTINUED)
--------------------------------------------------------------------------------------------------------
AT JUNE 30, 2001 (UNAUDITED)
--------------------------------------------------------------------------------------------------------
Holdings Market
(in shares Value
Description or par) (in US$)
--------------------------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE (2.4%)
China Travel International 6,500,000 1,225,031
* China Travel International Warrants (expire 6/30/03) 1,235,200 39,591
--------------------------------------------------------------------------------------------------------
1,264,622
--------------------------------------------------------------------------------------------------------
INSURANCE (0.7%)
China Insurance International Holdings 1,018,000 345,868
--------------------------------------------------------------------------------------------------------
MARINE (1.9%)
China Shipping Development 'H' 5,300,000 1,019,257
--------------------------------------------------------------------------------------------------------
METALS & MINING (4.3%)
Angang New Steel 'H' 6,000,000 1,061,566
China Rare Earth Holdings 3,500,000 1,234,006
--------------------------------------------------------------------------------------------------------
2,295,572
--------------------------------------------------------------------------------------------------------
MISCELLANEOUS (0.0%)
* Health Asia MediCentres Beijing + 1,000,000 0
--------------------------------------------------------------------------------------------------------
OIL & GAS (2.2%)
China Petroleum & Chemical 'H' 3,000,000 600,015
* CNOOC 600,000 569,245
--------------------------------------------------------------------------------------------------------
1,169,260
--------------------------------------------------------------------------------------------------------
REAL ESTATE (10.8%)
Cheung Kong Holdings++ 285,000 3,105,849
New World Development 410,000 499,372
Sun Hung Kai Properties 235,000 2,116,561
--------------------------------------------------------------------------------------------------------
5,721,782
--------------------------------------------------------------------------------------------------------
SPECIALTY RETAIL (1.5%)
Giordano International 1,500,000 778,866
--------------------------------------------------------------------------------------------------------
TRANSPORTATION INFRASTRUCTURE (3.5%)
Beijing Capital International Airport 'H' 6,000,000 1,884,664
--------------------------------------------------------------------------------------------------------
-- 12 --
[LOGO]
JARDINE FLEMING
CHINA REGION FUND, INC.
INVESTMENT PORTFOLIO (CONTINUED)
--------------------------------------------------------------------------------------------------------
AT JUNE 30, 2001 (UNAUDITED)
--------------------------------------------------------------------------------------------------------
Holdings Market
(in shares Value
Description or par) (in US$)
--------------------------------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (4.0%)
* China Mobile (Hong Kong) 400,000 2,112,875
--------------------------------------------------------------------------------------------------------
TOTAL HONG KONG 40,543,312
========================================================================================================
TAIWAN (7.5%)
--------------------------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS (0.0%)
Ambit Microsystems 1,154 4,828
Asustek Computer++ 214 903
--------------------------------------------------------------------------------------------------------
5,731
--------------------------------------------------------------------------------------------------------
ELECTRICAL AND EQUIPMENT (0.0%)
Phoenixtec Power 786 639
--------------------------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (1.9%)
Hon Hai Precision Industry 170,600 896,852
* Wintek 141,570 131,989
--------------------------------------------------------------------------------------------------------
1,028,841
--------------------------------------------------------------------------------------------------------
SEMICONDUCTOR EQUIPMENT & PRODUCTS (5.6%)
Powerchip Semiconductor 900,000 564,624
* Taiwan Semiconductor Manufacturing 540,114 1,003,988
* United Microelectronics 400,840 532,047
* Via Technologies 500 3,456
Winbond Electronics 1,000,000 839,384
--------------------------------------------------------------------------------------------------------
2,943,499
--------------------------------------------------------------------------------------------------------
TEXTILES & APPAREL (0.0%)
Far Eastern Textile 336 187
--------------------------------------------------------------------------------------------------------
TOTAL TAIWAN 3,978,897
========================================================================================================
-- 13 --
[LOGO]
JARDINE FLEMING
CHINA REGION FUND, INC.
INVESTMENT PORTFOLIO (CONTINUED)
--------------------------------------------------------------------------------------------------------
AT JUNE 30, 2001 (UNAUDITED)
--------------------------------------------------------------------------------------------------------
Holdings Market
(in shares Value
Description or par) (in US$)
--------------------------------------------------------------------------------------------------------
UNITED KINGDOM (0.0%)
--------------------------------------------------------------------------------------------------------
BANKS (0.0%)
HSBC Holdings (HKD) 188 2,224
--------------------------------------------------------------------------------------------------------
TOTAL UNITED KINGDOM 2,224
========================================================================================================
UNITED STATES (7.5%)
--------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENT (7.5%)
Citibank Time Deposit, 3.45%, 7/3/01 4,000,000 4,000,000
--------------------------------------------------------------------------------------------------------
TOTAL UNITED STATES 4,000,000
========================================================================================================
TOTAL INVESTMENTS
(98.9% of Net Assets) (Cost $51,670,531) 52,537,714
========================================================================================================
Other assets less liabilities 584,985
========================================================================================================
NET ASSETS 53,122,699
========================================================================================================
Aggregate cost is the same for federal income tax purposes. The aggregate
unrealized gain for all securities is as follows:
Excess of market value over cost 3,920,219
Excess of cost over market value (3,053,036)
--------------------------------------------------------------------------------------------------------
Net unrealized gain 867,183
========================================================================================================
HKD Hong Kong dollar
* Non-income producing security.
+ At fair value as determined under the supervision of the Board of Directors.
++ Passive Foreign Investment Company.
See accompanying notes to financial statements.
-- 14 --
[LOGO]
JARDINE FLEMING
CHINA REGION FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
---------------------------------------------------------------------------------------------------
AT JUNE 30, 2001 (UNAUDITED)
---------------------------------------------------------------------------------------------------
(in US$)
---------------------------------------------------------------------------------------------------
ASSETS
---------------------------------------------------------------------------------------------------
Investments at value (Note 2) (cost $51,670,531) 52,537,714
Cash (including foreign currencies with a cost of $701,922 and value of $702,124) 808,576
Dividends receivable 127,230
Prepaid insurance premiums 4,270
Interest receivable 383
---------------------------------------------------------------------------------------------------
TOTAL ASSETS 53,478,173
---------------------------------------------------------------------------------------------------
LIABILITIES
---------------------------------------------------------------------------------------------------
Accrued expenses payable 232,174
Due to Investment Adviser (Note 4) 114,313
Payable for foreign withholding tax 8,987
---------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 355,474
---------------------------------------------------------------------------------------------------
NET ASSETS 53,122,699
===================================================================================================
NET ASSETS CONSIST OF:
Common stock, $0.01 par value
(100,000,000 shares authorized;
5,864,280 shares issued and outstanding) 58,643
Paid-in capital 107,737,085
Accumulated net investment loss (288,974)
Accumulated realized loss on investments
and foreign currency transactions, net of distributions (55,251,407)
Accumulated net unrealized gain on investments,
and foreign currency holdings, and other assets
and liabilities denominated in foreign currencies 867,352
---------------------------------------------------------------------------------------------------
NET ASSETS 53,122,699
===================================================================================================
NET ASSET VALUE PER SHARE ($53,122,699 / 5,864,280) 9.06
===================================================================================================
See accompanying notes to financial statements.
-- 15 --
[LOGO]
JARDINE FLEMING
CHINA REGION FUND, INC.
STATEMENT OF OPERATIONS
----------------------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 2001 (UNAUDITED)
----------------------------------------------------------------------------------------------
(in US$)
----------------------------------------------------------------------------------------------
INVESTMENT INCOME (LOSS) (Note 2)
----------------------------------------------------------------------------------------------
Dividend (net of foreign withholding tax of $19,238) 683,241
Interest 24,828
----------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 708,069
----------------------------------------------------------------------------------------------
EXPENSES
----------------------------------------------------------------------------------------------
Investment advisory fees (Note 4) 348,268
Audit and legal fees 286,370
Administration and accounting fees (Note 4) 173,876
Directors' fees and expenses 81,073
Custodian fees 48,482
Shareholder report and meeting expenses 25,582
Shareholder service fees 13,677
Registration fees 11,157
Other expenses 8,558
----------------------------------------------------------------------------------------------
TOTAL EXPENSES 997,043
----------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (288,974)
==============================================================================================
REALIZED AND UNREALIZED LOSS ON INVESTMENTS, FOREIGN CURRENCY
HOLDINGS AND OTHER ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES
----------------------------------------------------------------------------------------------
NET REALIZED LOSS (Note 2)
Investments (1,131,497)
Foreign currency transactions (186,921)
NET CHANGE IN UNREALIZED LOSS (Note 2)
Investments (275,786)
Foreign currency holdings and other assets and liabilities
denominated in foreign currencies (1,253)
----------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS,
FOREIGN CURRENCY HOLDINGS AND OTHER ASSETS
AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES (1,595,457)
==============================================================================================
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS (1,884,431)
----------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
-- 16 --
[LOGO]
JARDINE FLEMING
CHINA REGION FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
-------------------------------------------------------------------------------------
Six Months Ended
June 30, 2001 Year Ended
(in US$) December 31, 2000
(unaudited) (in US$)
-------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment loss (288,974) (351,218)
Net realized gain (loss) on investments
transactions (1,131,497) 12,557,051
Net realized loss on foreign
currency transactions (186,921) (170,467)
Net change in unrealized
loss on investments,
foreign currency holdings
and other assets and liabilities
denominated in foreign currencies (277,039) (36,458,161)
-------------------------------------------------------------------------------------
Net decrease in net assets resulting
from operations (1,884,431) (24,422,795)
-------------------------------------------------------------------------------------
CAPITAL SHARES REPURCHASED (NOTE 5) (1,143,189) (26,677,840)
=====================================================================================
TOTAL DECREASE IN NET ASSETS (3,027,620) (51,100,635)
Net Assets:
Beginning of period 56,150,319 107,250,954
-------------------------------------------------------------------------------------
End of period 53,122,699 56,150,319
=====================================================================================
See accompanying notes to financial statements.
-- 17 --
[LOGO]
JARDINE FLEMING
CHINA REGION FUND, INC.
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
For the
Six Months
Ended For the For the For the For the For the
June 30, Year Ended Year Ended Year Ended Year Ended Year Ended
2001 December 31, December 31, December 31, December 31, December 31,
(in US$) 2000 1999 1998 1997 1996
(unaudited) (in US$) (in US$) (in US$) (in US$) (in US$)
------------------------------------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period 9.34 11.78 7.50 11.81 14.31 11.17
============================================================================================================
Net investment income
(loss) (0.05) (0.06) 0.03 0.02 (0.01) 0.03
Net realized and
unrealized gain (loss)
on investment and
foreign currency-
related transactions (0.28) (2.73) 4.29 (4.33) (2.45) 3.13
------------------------------------------------------------------------------------------------------------
Total from investment
operations (0.33) (2.79) 4.32 (4.31) (2.46) 3.16
============================================================================================================
Dividends from net
investment income -- -- (0.04) -- (0.04) (0.02)
============================================================================================================
Capital shares repurchased
(Note 5) 0.05 0.35 -- -- -- --
============================================================================================================
NET ASSET VALUE, END OF
PERIOD 9.06 9.34 11.78 7.50 11.81 14.31
============================================================================================================
Market value, end of
period 7.75 7.06 8.44 5.50 9.75 11.38
============================================================================================================
TOTAL INVESTMENT RETURN
Per share market value 9.8% (16.3%) 54.2% (43.6%) (13.9%) 13.9%
Per share net asset
value (3.0%) (20.7%) 57.6% (36.5%) (17.2%) 28.3%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period 53,122,699 56,150,319 107,250,954 68,288,936 107,494,855 130,224,095
Ratio of total expenses
to average net assets 3.58%* 2.02% 2.28% 2.49% 1.68% 2.18%
Ratio of net investment
income (loss) to
average net assets (1.04%)*+ (0.36%) 0.37% 0.24% (0.05%) 0.26%
Portfolio turnover rate 107.9% 94.8% 90.8% 111.9% 102.6% 44.4%
Number of shares
outstanding at end of
period (in thousands) 5,864 6,012 9,101 9,101 9,101 9,101
* Annualized.
+ The ratio of total expenses to average net assets for the six months ended
June 30, 2001 is relatively higher than that of previous years due to the
decrease of fund size and increased legal expenses as a result of tender
offers and share repurchases.
See accompanying notes to financial statements.
-- 18 --
[LOGO]
JARDINE FLEMING
CHINA REGION FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
JUNE 30, 2001
--------------------------------------------------------------------------------
1. ORGANIZATION AND CAPITAL
Jardine Fleming China Region Fund, Inc. (the "Fund") was incorporated in
the State of Maryland on May 22, 1992, and is registered as a
non-diversified, closed-end management investment company under the
Investment Company Act of 1940. The Fund commenced operations on July 16,
1992.
2. SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies, which are in conformity
with accounting principles generally accepted in the United States of
America for investment companies, are consistently followed by the Fund in
the preparation of its financial statements.
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 these estimates.
I) SECURITY VALUATION
All securities for which market quotations are readily available are
valued at the last sales price prior to the time of determination, or,
if no sales price is available at that time, at the mean between the
last current bid and asked prices. Securities that are traded
over-the-counter are valued, if bid and asked quotations are
available, at the mean between the current bid and asked prices.
Investments in short-term debt securities having a maturity of 60 days
or less are valued at amortized cost. All other securities and assets
are valued at fair value as determined in good faith by the Board of
Directors. In valuing the Fund's assets, quotations of foreign
securities in a foreign currency are translated to U.S. dollar
equivalents at the exchange rate in effect on the valuation date.
II) U.S. FEDERAL INCOME TAXES
No provision for federal income taxes is required since the Fund
intends to continue to qualify as a regulated investment company and
distribute all of its taxable income. In 2000, the Fund utilized
$12,490,066 of capital loss carryforwards for federal income tax
purposes. As of December 31, 2000, the Fund has capital loss
carryforwards for federal income tax purposes of $53,865,512, of which
$42,188,945 expires in 2006 and $11,676,567 expires in 2007. The Fund
intends to retain gains realized in future periods that may be offset
by available capital loss carryforward.
In order for the Fund's capital accounts and distributions to
shareholders to reflect the tax character of certain transactions, the
following reclassifications were made during the year ended December
31, 2000. The reclassifications relate primarily to the current net
operating loss. The results of operations and net assets were not
affected by the increases/(decreases) to these accounts.
Undistributed net investment income $ 351,218
Undistributed net realized gain 103,430
Paid-in-capital (454,648)
-- 19 --
[LOGO]
JARDINE FLEMING
CHINA REGION FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
III) FOREIGN CURRENCY TRANSLATION
The books and records of the Fund are maintained in United States
dollars. Foreign currency amounts are translated into U.S. dollars at
the mid-market price of such currencies against U.S. dollars as
follows:
o investments, other assets, and liabilities at the prevailing rates
of exchange on the valuation date;
o investment transactions and investment income at the prevailing
rates of exchange on the dates of such transactions.
Although the net assets of the Fund are presented at the foreign
exchange rates and market values at the close of the period, the Fund
does not isolate that portion of the results of operations arising as
a result of changes in the foreign exchange rates from the
fluctuations arising from changes in the market prices of the
securities held at period-end. Similarly, the Fund does not isolate
the effect of changes in foreign exchange rates from the fluctuations
arising from changes in the market prices of securities sold during
the period. Accordingly, realized and unrealized foreign currency
gains (losses) are included in the reported net realized and
unrealized gains (losses) on investments.
Unrealized currency gains (losses) from valuing foreign currency
denominated assets and liabilities at period-end exchange rates are
reflected as a component of accumulated net unrealized gain (loss) on
investments, foreign currency holdings, and other assets and
liabilities denominated in foreign currencies.
IV) DISTRIBUTION OF INCOME AND GAINS
The Fund intends to distribute to shareholders, at least annually,
substantially all of its net investment income and expects to
distribute annually any net long-term capital gains in excess of net
short-term capital losses. An additional distribution may be made to
the extent necessary to avoid the payment of a 4% federal excise tax.
Income and capital gain distributions are determined in accordance
with federal income tax regulations and may differ from those
determined in accordance with generally accepted accounting
principles.
V) OTHER
Security transactions are accounted for on the date the securities are
purchased or sold. Realized gains and losses on the sale of investment
securities are determined on the identified cost basis. Interest
income is recognized on the accrual basis. Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
Portfolio turnover rate is calculated by dividing the lesser of
purchases and sales of investment securities having maturities greater
than one year at the time of acquisition by the average monthly market
value of those investment securities.
-- 20 --
[LOGO]
JARDINE FLEMING
CHINA REGION FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS
Consistent with its investment objective, the Fund engages in the
following transactions practices. The investment objective, policies,
program, and risk factors of the Fund are described more fully in the
Fund's Prospectus.
I) FOREIGN TRANSACTIONS
Foreign security and currency transactions may involve certain
considerations and risks not typically associated with those of U.S.
dollar denominated transactions as a result of, among other factors,
the level of governmental supervision and regulation of foreign
securities markets and the possibility of political or economic
instability.
II) OTHER
During the six months ended June 30, 2001, the Fund made purchases of
$57,558,576 and sales of $61,872,238 of investment securities other
than short-term investments. There were no purchases or sales of U.S.
government securities.
4. RELATED PARTY TRANSACTIONS
I) JF International Management Inc. (formerly Jardine Fleming
International Management Inc.) (the "Adviser"), provides investment
advisory services to the Fund under the terms of an investment advisory
agreement. Under the investment advisory agreement, the Adviser is paid
a fee, computed weekly and payable monthly, at the annual rate of 1.25%
of the first $75 million and 1.00% of the excess over $75 million of
the Fund's weekly net assets.
II) Prior to June 1, 2001, T. Rowe Price Associates, Inc., the former
Administrator provided administrative services to the Fund under an
Administrative Services Agreement. The former Administrator received a
fee, payable monthly, at an annual rate of 0.10% of the first $250
million, 0.075% of the next $250 million and 0.05% of the excess over
$500 million of the Fund's average weekly net assets, subject to a
minimum annual fee of $200,000, plus reimbursement for certain
out-of-pocket expenses. The former Administrator also received an
annual fee of $85,000 for fund accounting services pursuant to an
Accounting Services Agreement. At June 30, 2001, $24,069 was payable to
the former Administrator.
III) Effective June 1, 2001 PFPC Inc. (the "Administrator") provides
administrative and accounting services to the Fund under an
Administrative and Accounting Services Agreement. The Administrator
receives a fee, payable monthly, at an annual rate of 0.135% of the
first $100 million, 0.095% of the next $50 million, 0.08% of the next
$50 million and 0.065% of the excess over $200 million of the Fund's
average weekly net assets, subject to a minimum annual fee of $138,000,
plus reimbursement for certain out-of-pocket expenses. At June 30,
2001, $11,342 was payable to the Administrator.
IV) During the six months ended June 30, 2001, the Fund paid $85,832 in
brokerage commissions to Jardine Fleming Broking Ltd. and Jardine
Fleming Securities Ltd., affiliated brokers/dealers.
-- 21 --
[LOGO]
JARDINE FLEMING
CHINA REGION FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
5. CAPITAL SHARE TRANSACTIONS
During the year ended December 31, 2000, the Fund's Board of Directors
authorized the Fund to purchase shares of its common stock from Fund
shareholders, as described below. Any purchase of shares by the Fund has
the effect of increasing the net asset value per share of the Fund's
remaining shares outstanding. All shares purchased by the Fund are
thereafter considered authorized and unissued.
I) SHARE REPURCHASE PROGRAM
The Fund was authorized to repurchase up to 10% of its issued and
outstanding shares in the open market through May 9, 2001. Repurchases
were made only when the Fund's shares were trading at less than net
asset value and at such times and amounts as were believed to be in
the best interest of the Fund's shareholders. During the year ended
December 31, 2000, the Fund paid $4,202,902 to repurchase 512,400
shares, at a per-share weighted average discount to net asset value of
24.08%.
Through May 9, 2001, the Fund paid $1,143,189 to repurchase 148,000
shares, at a per-share weighted average discount to net asset value of
20.12%.
II) TENDER OFFER
Pursuant to a tender offer that closed on December 18, 2000, the Fund
purchased 30% of its outstanding common stock at a price equal to 95%
of the Fund's net asset value per share on the closing date. The Fund
acquired 2,576,692 shares for a total cost of $22,474,938 in cash.
Additionally, the Fund's Board of Directors has announced its intent,
beginning in 2001, to implement a partial tender offer or similar
transaction if the Fund's shares trade at an average discount to net
asset value in excess of 20% for any 13-week period, limited to one
such transaction per year.
6. SUBSEQUENT EVENT
I) SHARE REPURCHASE PROGRAM
On July 23, 2001, the Fund's Board of Directors authorized the Fund to
repurchase up to 469,142 shares in the open market during 2001 and
2002.
II) TENDER OFFER
Pursuant to a tender offer that closed on July 9, 2001, the Fund
purchased 20% of its outstanding common stock at a price equal to 95%
of the Fund's net asset value per share on the closing date. The Fund
acquired 1,172,856 shares for a total cost of $9,699,167 in cash.
-- 22 --
[LOGO]
JARDINE FLEMING
CHINA REGION FUND, INC.
RESULTS OF THE ANNUAL SHAREHOLDERS MEETING
--------------------------------------------------------------------------------
The Fund held its annual shareholders meeting on May 10, 2001. At the meeting,
shareholders elected each of the nominees proposed for election to the Fund's
Board of Directors. The following tables provide information concerning the
matters voted on at the meeting:
NOMINEE VOTES FOR VOTES ABSTAINED TOTAL VOTING SHARES
------- --------- --------------- -------------------
A. Douglas Eu 4,537,243 215,899 4,753,142
Ng Yook Man 4,671,973 81,169 4,753,142
-- 23 --
[LOGO]
JARDINE FLEMING
CHINA REGION FUND, INC.
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
--------------------------------------------------------------------------------
THE FUND OPERATES AN OPTIONAL DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN (THE
"PLAN") WHEREBY:
a) shareholders may elect to receive dividend and capital gain distributions
in the form of additional shares of the Fund (the Share Distribution
Plan).
b) shareholders may make optional payments (any amount between $100 and
$3,000) which will be used to purchase additional shares in the open
market (the Share Purchase Plan).
FOR A COPY OF THE PLAN BROCHURE, AS WELL AS A DIVIDEND REINVESTMENT
AUTHORIZATION CARD, PLEASE CONTACT:
State Street Bank & Trust Company
(the Plan Agent):
P. O. Box 8200
Boston, Massachusetts 02266-8200
Telephone No: 800-426-5523 (toll-free)
The following should be noted with respect to the Plan:
If you participate in the Share Distribution Plan, whenever the Board of
Directors of the Fund declares an income dividend or net capital gain
distribution, you will automatically receive your distribution in newly issued
shares (cash will be paid in lieu of fractional shares) if the market price of
the shares on the date of the distribution is at or above the net asset value of
the shares. The number of shares to be issued to you by the Fund will be
determined by dividing the amount of the cash distribution to which you are
entitled (net of any applicable withholding taxes) by the greater of the net
asset value (NAV) per share on such date or 95% of the market price of a share
on such date. If the market price of the shares on such a distribution date is
below the NAV, the Plan Agent will, as agent for the participants, buy shares on
the open market, on the New York Stock Exchange or elsewhere, for the
participant's account on, or after, the payment date. There is no service charge
for purchases under this Plan.
For U.S. federal income tax purposes, shareholders receiving newly issued shares
pursuant to the Share Distribution Plan will be treated as receiving income or
capital gains in an amount equal to the fair market value (determined as of the
distribution date) of the shares received and will have a cost basis equal to
such fair market value. Shareholders receiving a distribution in the form of
shares purchased in the open market pursuant to the Plan will be treated as
receiving a distribution of the cash distribution that such shareholder would
have received had the shareholder not elected to have such distribution
reinvested and will have a cost basis in such shares equal to the amount of the
distribution.
There will be no brokerage charge to participants for shares issued directly by
the Fund under the Plan. Each participant will pay a pro rata share of brokerage
commissions incurred with respect to the Plan Agent's open market purchases of
shares in connection with the Plan. The Fund will pay the fees of the Plan Agent
for handling the Plan.
You may terminate your account under the Share Distribution Plan by notifying
the Plan Agent in writing. The Plan may be terminated by the Plan Agent or the
Fund with notice to you at least 30 days prior to any record date for the
payment of any distribution by the Fund. Upon any termination, the Plan Agent
will deliver a certificate or certificates for the full shares held for you
under the Plan and a cash adjustment for any fractional shares.
You also have the option of instructing the Plan Agent to make semiannual cash
purchases of shares in the open market. There is a service charge of $1.25 for
each purchase under this Share Purchase Plan.
-- 24 --
[LOGO]
JARDINE FLEMING
CHINA REGION FUND, INC.
DIRECTORS AND ADMINISTRATION
--------------------------------------------------------------------------------
OFFICERS AND DIRECTORS THE RT. HON. THE EARL OF CROMER - DIRECTOR AND
CHAIRMAN OF THE BOARD
A. Douglas Eu - Director, President, and Treasurer
Alexander R. Hamilton - Director
Julian M. I. Reid - Director
Anthony J. Morgan - Secretary
John P. Falco - Assistant Secretary
INVESTMENT ADVISER JF INTERNATIONAL MANAGEMENT INC.
P.O. Box 3151
Road Town, Tortola
British Virgin Islands
ADMINISTRATOR PFPC INC.
400 Bellevue Parkway
Wilmington, Delaware 19809
U.S.A.
CUSTODIAN CITIBANK N.A.
NEW YORK:
111 Wall Street, 16th Floor
New York, New York 10005
U.S.A.
HONG KONG:
Citibank Tower
Citibank Plaza
3 Garden Road
Hong Kong
INDEPENDENT ACCOUNTANTS PRICEWATERHOUSECOOPERS LLP
250 West Pratt Street
Baltimore, Maryland 21201
U.S.A.
LEGAL COUNSEL CLEARY, GOTTLIEB, STEEN & HAMILTON
NEW YORK:
1 Liberty Plaza, 43rd Floor
New York, New York 10006
U.S.A.
HONG KONG:
39th Floor, Bank of China Tower
1 Garden Road
Hong Kong
REGISTRAR, TRANSFER AGENT, AND STATE STREET BANK & TRUST COMPANY
DIVIDEND PAYING AGENT P. 0. Box 8200
Boston, Massachusetts 02266-8200
U.S.A.
NOTICE IS HEREBY GIVEN IN ACCORDANCE WITH SECTION 23(C) OF THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED, THAT FROM TIME TO TIME THE FUND MAY PURCHASE
SHARES OF ITS COMMON STOCK IN THE OPEN MARKET.
-- 25 --