SCHEDULE 14A
PROXY STATEMENT
PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by Registrant [X]
Filed by Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential for Use of the Commission Only as permitted by Rule 14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11c or Rule 14a-12
JF China Region Fund, Inc.
--------------------------
(Name of Registrant as Specified in Its Charter)
_______________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies: ____________
(2) Aggregate number of securities to which transaction applies: _______________
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11. (Set forth the amount on which the filing fee is
calculated and state how it was determined):________________________________
(4) Proposed maximum aggregate value of transaction:____________________________
(5) Total fee paid:_____________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:_____________________________________________________
(2) Form, Schedule or Registration Statement No.:_______________________________
(3) Filing Party: ______________________________________________________________
(4) Date Filed: ________________________________________________________________
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JF CHINA REGION FUND, INC.
301 Bellevue Parkway
Wilmington, Delaware 19809
April 6, 2004
Dear Stockholder:
I have pleasure in enclosing the Notice of Annual Meeting of Stockholders of the
JF China Region Fund, Inc. (the "Fund") which will be held on Thursday, May 13,
2004 at 10:00 a.m. at One Liberty Plaza, 39th Floor Conference Center, New York,
New York 10006.
There are some important items on which you are being asked to vote. I strongly
urge you to read the enclosed Notice and Proxy Statement, then vote, sign, date
and return the proxy card in the postage-paid envelope provided.
The Board has reviewed the proposals being voted on and believes they are in the
best interest of the stockholders of the Fund. Therefore, we RECOMMEND THAT YOU
VOTE "FOR" THE PROPOSALS.
My fellow directors and I wish to extend to you an invitation to attend this
year's Annual Meeting of Stockholders and I very much hope that you will be able
to do so.
The Fund has retained a professional proxy solicitation firm, INVESTOR
CONNECT(TM), to assist in the solicitation of proxies. In the event that you do
not vote your shares, you may receive a phone call from INVESTOR CONNECT asking
for your participation in the voting process. If you have any questions
concerning the proxy, please feel free to call INVESTOR CONNECT at
1-800-870-0587.
Yours faithfully,
/s/ The Rt. Hon the Earl of Croner
THE RT. HON. THE EARL OF CROMER
Chairman
JFCRM-PS-04
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JF CHINA REGION FUND, INC.
301 Bellevue Parkway
Wilmington, Delaware 19809
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 13, 2004
To the Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders (the "Meeting")
of JF China Region Fund, Inc. (the "Fund") will be held at One Liberty Plaza,
39th Floor Conference Center, New York, New York 10006, on Thursday, May 13,
2004, at 10:00 a.m. for the following purposes:
(1) to elect two directors of the Fund, each to hold office for the term
indicated and until his successor shall have been elected and
qualified;
(2) to consider and act upon a proposal to approve a change in the Fund's
fundamental policies to permit the Fund to borrow money up to 20% of
the Fund's net assets (not including the amount borrowed) for
investment purposes; and
(3) to consider and act upon such other business as may properly come
before the Meeting or any adjournments or postponements thereof.
Wednesday, March 24, 2004 was fixed by the Board of Directors as the record date
for determination of stockholders entitled to notice of, and to vote at, the
Meeting or any adjournments or postponements thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Philip Jones
Secretary
Wilmington, Delaware
April 6, 2004
YOUR VOTE IS IMPORTANT
Whether or not you plan to attend the Fund's Annual Meeting,
please execute and return the enclosed proxy promptly in the postage-paid
envelope provided.
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JF CHINA REGION FUND, INC.
301 Bellevue Parkway
Wilmington, DE 19809
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of JF China Region Fund, Inc. (the "FUND") of proxies to be
voted at the Annual Meeting of Stockholders (the "MEETING") of the Fund to be
held at One Liberty Plaza, 39th Floor Conference Center, New York, NY 10006, on
Thursday, May 13, 2004, at 10:00 a.m., and at any adjournments or postponements
thereof, for the following purposes:
(1) to elect two directors of the Fund, each to hold office for the term
indicated and until his successor shall have been elected and qualified;
(2) to consider and act upon a proposal to approve a change in the Fund's
fundamental policies to permit the Fund to borrow money up to 20% of the
Fund's net assets (not including the amount borrowed) for investment
purposes; and
(3) to consider and act upon such other business as may properly come before
the Meeting or any adjournments or postponements thereof.
The enclosed proxy and this Proxy Statement are first being sent to the Fund's
stockholders on or about April 6, 2004.
THE FUND WILL FURNISH, WITHOUT CHARGE, COPIES OF THE ANNUAL REPORT TO
STOCKHOLDERS UPON REQUEST. REQUESTS FOR COPIES OF SUCH REPORTS SHOULD BE
DIRECTED TO:
Equiserve Trust Company, N.A.
P.O. Box 8200
Boston, MA 02266-8200
800-426-5523
The cost of soliciting proxies and preparing the proxy materials will be borne
by the Fund. In order to ensure that sufficient shares of Common Stock are
represented at the Meeting to permit approval of the proposals outlined in the
Proxy Statement, the Fund has retained the services of Investor Connect(TM) to
assist it in soliciting proxies for a fee of $7,500 plus reimbursement of
out-of-pocket expenses. The Fund will request securities brokers, custodians,
nominees, and fiduciaries to forward solicitation material to the beneficial
owners of stock held of record and will reimburse them for their reasonable
out-of-pocket expenses in forwarding such solicitation material. In addition,
proxies may be solicited personally or by telephone or facsimile by directors,
officers, and employees of the Fund without additional compensation to them.
The Board of Directors has selected Jo Anne Bennick and Jack P. Huntington, and
each of them, to act as proxies with full power of substitution. All properly
executed proxies received prior to the Meeting will be voted at the Meeting in
accordance with the instructions marked thereon or otherwise as provided
therein. Unless instructions to the contrary are marked, shares represented by
the proxies will be voted "FOR" each proposal. Any proxy may be revoked at any
time prior to the exercise thereof by submitting another proxy bearing a later
date or by giving written notice to the Secretary of the Fund at the Wilmington,
Delaware address indicated above or by voting in person at the Meeting.
The Board of Directors has fixed the close of business on March 24, 2004, as the
record date for the determination of stockholders entitled to notice of, and to
vote at, the Meeting or any adjournment or postponement thereof. At that date,
there were outstanding and entitled to vote 4,585,160 shares of Common Stock,
par value $0.01 per share. Stockholders of the Fund on that date will be
entitled to one vote on each matter to be voted for each share held (and one
such vote for each director to be elected for each share held), with no shares
having cumulative voting rights. Abstentions and "broker non-votes" (as defined
below) are counted for purposes of determining whether a quorum is present for
purposes of convening the meeting. "Broker non-votes" are shares held by a
broker or nominee for which an executed proxy is received by the Fund but are
not voted as to one or more proposals because instructions have not been
received from the beneficial owners or persons entitled to vote, and the broker
or nominee does not have discretionary voting power. Abstentions and broker
non-votes will not be counted as "votes cast" on any proposal, and, abstentions
and broker non-votes will have no effect on the result of the votes related to
Proposal 1, but will have the effect of a vote "AGAINST" Proposal 2.
The principal executive offices of the Fund are located at 301 Bellevue Parkway,
Wilmington, DE 19809, USA.
PRINCIPAL HOLDERS
Although the Fund does not have information concerning the beneficial ownership
of shares held in the names of Depository Trust Company Participants, as of
March 24, 2004*, to the knowledge of the Fund, the following were the record
owner or beneficial owner of 5% or more of the outstanding shares of the Fund.
NUMBER OF SHARES AND
TITLE OF CLASS NAME AND ADDRESS NATURE OF OWNERSHIP PERCENT OF CLASS
--------------------------------------------------------------------------------------------
Common Stock Cede & Co FAST 4,512,692 98.42%
The Depository Trust Company (record)
55 Water Street, 25th Floor
New York, NY 10041-0001
--------------------------------------------------------------------------------------------
Common Stock Citigroup Inc.** 232,649 5.07%
399 Park Avenue (beneficial)
New York, NY 10043
--------------------------------------------------------------------------------------------
* As of such date, the Directors and officers as a group owned less than 1% of the
outstanding shares of the Fund.
** Information as to beneficial ownership of Citigroup Inc. is based on a report filed with
the Securities and Exchange Commission (the "SEC") on January 7, 2004.
PROPOSAL 1
ELECTION OF DIRECTORS
There are five members on the current Board of Directors. Two of the current
members of the Board of Directors, Mr. A. Douglas Eu and Mr. Simon J. Crinage
(the "Nominees") have been nominated to serve for terms as indicated below and
until their successors are elected and qualified.
Mr. A. Douglas Eu was last elected by the stockholders at the 2001 Annual
Meeting on May 10, 2001 to serve as Class II director for a term of three years.
In accordance with the terms of his election, his term expires at the 2004
Annual Meeting. Mr. A. Douglas Eu has been nominated to serve as a Class II
director for a three-year term and until his successor shall have been elected
and qualified.
Mr. Simon J. Crinage was first appointed to serve as a director on August 1,
2003. He has been nominated to serve as a Class III director for a one-year term
and until his successor shall have been elected and qualified.
2
It is intended that all proxies received, unless otherwise indicated, will be
voted "FOR" the election of the Nominees. The affirmative vote of a plurality of
all the votes cast at the Meeting (at which a quorum is present) is required to
elect the Nominees. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" EACH
NOMINEE.
The Board knows of no reason why the Nominees listed will be unable to serve. If
a Nominee should become unable to serve, the proxies will be voted for the
election of such person as may be designated by the Board to replace such
Nominee.
Mr. A. Douglas Eu has been the Chief Operations Officer and the Secretary of JF
International Management, Inc. (the "INVESTMENT ADVISER") since 1992 and was
appointed as Director of the Investment Adviser effective September 25, 2002.
The Investment Adviser is part of J.P. Morgan Chase & Co., one of the world's
largest financial services institutions. In asset management, J.P. Morgan Chase
& Co. operates globally under the name of JP Morgan Fleming Asset Management
Limited. Mr. Simon J. Crinage has been Vice President of JP Morgan Fleming Asset
Management Limited since September 1, 2000. Mr. A. Douglas Eu and Mr. Simon J.
Crinage are each considered an "interested person" within the meaning of Section
2(a)(19) of the Investment Company Act of 1940, as amended, (the "1940 Act")
because of their affiliation with the Investment Adviser.
The following table presents information concerning the Nominees, the current
Board of Directors and Officers of the Fund. The information includes their
positions and principal occupations during the last five years.
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TERM OF NUMBER OF
OFFICE AND FUNDS IN FUND
LENGTH OF COMPLEX
NAME, ADDRESS AND POSITION(S) HELD TIME PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER DIRECTORSHIPS
DOB WITH FUND(1) SERVED(1) DURING PAST 5 YEARS DIRECTOR* HELD BY DIRECTOR
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INDEPENDENT DIRECTORS
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The Rt. Hon. The Earl of Chairman and Since 1994 Chairman of the Board of the 1 Director of Schroder
Cromer Director, Class I Fund; Chief Executive Asia Pacific Fund
6 Sloane Terrace Officer of Cromer Associates Limited, Business Link
Mansions Limited (family business); Somerset Limited and
London, SW1X 9DG Chairman of Lloyd Western Provident
United Kingdom George-Standard Chartered Association; former
DOB: 6/3/46 China Fund Limited and Director of Inchcape
Philippine Discovery Pacific Limited,
Investment Company Limited A1HQ.com Inc. and Korea
(consulting). Asia Fund Limited.
------------------------------------------------------------------------------------------------------------------------------------
Alexander Reid Hamilton Director, Class I Since 1994 Director of Citic Pacific 1 See Principal
P.O. Box 12343 Limited (infrastructure), Occupation.
General Post Office Cosco Pacific Limited
Hong Kong (container shipping), Esprit
DOB: 10/4/41 Holdings Limited (clothing
retail), Cosco International
Holdings Limited
(infrastructure), Shangri-La
Asia Limited (hotels) and
Octopus Cards Limited
(financial services).
------------------------------------------------------------------------------------------------------------------------------------
Julian M.I. Reid Director, Class III Since 1998 Director of 3aFund Inc. 1 Director and Chairman
10 Frere Felix de Valois of the Board of Saffron
Street Fund, Inc; Director and
Port Louis, Mauritius Chairman of Morgan's
DOB: 8/7/44 Walk Properties Ltd.
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3
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TERM OF NUMBER OF
OFFICE AND FUNDS IN FUND
LENGTH OF COMPLEX
NAME, ADDRESS AND POSITION(S) HELD TIME PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER DIRECTORSHIPS
DOB WITH FUND(1) SERVED(1) DURING PAST 5 YEARS DIRECTOR* HELD BY DIRECTOR
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INTERESTED DIRECTORS
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A. Douglas Eu Director, Class II, Since 1997 Director, Chief Operations 1 None.
21st Floor, Chater House Treasurer, Officer and Secretary of the
8 Connaught Road Nominee Investment Adviser; Chief
Central Executive Officer of JF
Hong Kong Funds; Director of JF Asset
DOB: 8/27/61 Management Limited.
------------------------------------------------------------------------------------------------------------------------------------
Simon J. Crinage Director, Class III, Since 2003 Vice President, JPMorgan 1 None.
Finsbury Dials President, Fleming Asset Management
20 Finsbury Street Nominee since September 2000. Prior
London EC2Y 9AQ to that, Director of J.P.
United Kingdom Morgan Asset Management (UK)
DOB: 5/10/65 Limited.
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OFFICERS WHO ARE NOT DIRECTORS
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Philip Jones Secretary Since 2004 Associate, JPMorgan Fleming N/A N/A
Finsbury Dials Asset Management since March
20 Finsbury Street 2003. Prior to that, Senior
London EC2Y 9AQ Associate of the ING Group.
United Kingdom
DOB: 4/4/48
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* JF China Region Fund, Inc. is not a part of a fund complex.
(1) The Class II director has been nominated for a three-year term that expires at the 2007 Annual Meeting. Class I directors will
serve until the 2006 Annual Meeting. Class III directors will serve until the 2005 Annual Meeting.
The following table sets forth the dollar range of equity securities in the Fund
beneficially owned by each Director and Nominee as of March 1, 2004:
DOLLAR RANGE OF EQUITY
NAME OF DIRECTOR SECURITIES IN THE FUND(1)(2)
--------------------------------------------------------------------------------
INTERESTED DIRECTORS
--------------------------------------------------------------------------------
Simon Crinage None
--------------------------------------------------------------------------------
A. Douglas Eu None
--------------------------------------------------------------------------------
INDEPENDENT DIRECTORS(3)
--------------------------------------------------------------------------------
The Rt. Hon. The Earl of Cromer $10,001 - $50,000
--------------------------------------------------------------------------------
A. R. Hamilton $1 - $10,000
--------------------------------------------------------------------------------
Julian M.I. Reid $1 - $10,000
--------------------------------------------------------------------------------
(1) Valuation as of March 1, 2004.
(2) JF China Region Fund,Inc. is not a part of a fund complex.
(3) "Independent Directors" is defined as those directors who are not
"interested persons" within the meaning of Section 2(a)(19) of the 1940
Act.
During the fiscal year ended December 31, 2003, the Board of Directors held a
total of six meetings. The Board has an Audit Committee. The Audit Committee met
twice during the fiscal year ended December 31, 2003. At present, the Audit
Committee members are Messrs. Hamilton and Reid, and The Rt. Hon. The Earl of
Cromer. The Audit Committee meets with the Fund's independent accountants to
review whether satisfactory accounting procedures are being followed by the Fund
and whether internal accounting controls are adequate to inform itself with
regard to non-audit services performed
4
by the independent accountants and to review fees charged by the independent
accountants. The Audit Committee also recommends to the Board of Directors the
selection of independent accountants. All of the directors attended all the
Board and Committee meetings (including committees other than the Audit
Committee) for which they were eligible to attend.
The Board also has a Management Engagement Committee which is composed of all of
the Independent Directors. The Management Engagement Committee evaluates the
investment performance of the Fund's portfolio and considers the renewal of the
Fund's investment management contract, generally for an additional one-year
period. The Management Engagement Committee met once during the fiscal year
ended December 31, 2003.
The Board of Directors has a Nominating Committee composed of the Fund's three
Independent (as such term is defined by the NYSE Listing Standards) Directors,
Messrs. Hamilton and Reid, and the Rt. Hon. The Earl of Cromer. The Nominating
Committee did not meet during the fiscal year ended December 31, 2003. The
Nominating Committee is responsible for identifying individuals believed to be
qualified to become Independent Directors and recommending to the Board of
Directors such nominees to stand for election at the Fund's annual meeting of
stockholders and to fill any vacancies on the Board. The Fund's Nominating
Committee has a charter which is attached as Exhibit A to this Proxy Statement.
The Fund's Nominating Committee believes that it is in the best interest of the
Fund and its stockholders to obtain highly qualified candidates to serve as
members of the Board of Directors. The Nominating Committee has not established
a formal process for identifying candidates where a vacancy exists on the Board.
In nominating candidates, the Nominating Committee shall take into consideration
such factors as it deems appropriate. These factors may include judgment, skill,
diversity, experience with investment companies and other organizations of
comparable purpose, complexity, size and subject to similar legal restrictions
and oversight, the interplay of the candidate's experience with the experience
of other Board members, and the extent to which the candidate would be a
desirable addition to the Board and any committees thereof.
The Fund's Nominating Committee will consider director candidates recommended by
stockholders and submitted in accordance with applicable law and procedures as
described in this Proxy Statement (see "Deadline For Stockholder Proposals"
below).
The Fund does not have a formal policy regarding Board member attendance at the
Annual Meeting of Stockholders. However, all of the Directors of the Fund then
in office attended the May 8, 2003 Annual Meeting of Stockholders.
COMPENSATION OF DIRECTORS AND OFFICERS
A Director or officer of the Fund who is also an officer or employee of the
Investment Adviser receives no remuneration from the Fund. The Directors of the
Fund do not receive any pension or retirement benefits from the Fund or the
Investment Adviser.
The table below sets forth the compensation paid by the Fund to its Directors
who received such compensation for the year ended December 31, 2003:
--------------------------------------------------------------------------------------------------------------------
PENSION OR
RETIREMENT
AGGREGATE BENEFITS ACCRUED ESTIMATED TOTAL COMPENSATION
COMPENSATION AS PART OF FUND ANNUAL BENEFITS FROM FUND
NAME OF PERSON, POSITION FROM FUND EXPENSES UPON RETIREMENT PAID TO DIRECTORS
--------------------------------------------------------------------------------------------------------------------
The Rt. Hon. The Earl of Cromer,
Chairman and Director $22,252 None None $22,252
--------------------------------------------------------------------------------------------------------------------
A. R. Hamilton, Director $18,253 None None $18,253
--------------------------------------------------------------------------------------------------------------------
Julian M.I. Reid, Director $18,250 None None $18,250
--------------------------------------------------------------------------------------------------------------------
A. Douglas Eu, Treasurer and Director $0 None None $0
--------------------------------------------------------------------------------------------------------------------
Simon J. Crinage, President and Director $0 None None $0
--------------------------------------------------------------------------------------------------------------------
Total $58,755 None None $58,755
--------------------------------------------------------------------------------------------------------------------
5
The Directors' compensation from the Fund consists solely of Directors' and
attendance fees. Each Director is paid an annual fee of $13,750 and the Chairman
is paid an annual fee of $17,750, plus $750 per meeting attended. Mr. Eu and Mr.
Crinage do not receive such fees because of their affiliation with the
Investment Adviser.
None of the executive officers of the Fund received any compensation from the
Fund for the year ended December 31, 2003.
THE BOARD OF DIRECTORS, INCLUDING ALL THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" EACH OF THE NOMINEES AS DIRECTORS.
6
PROPOSAL NO. 2
AMENDMENT TO FUND'S
INVESTMENT POLICIES
At the Fund's Board of Directors meeting on February 19, 2004, the directors
agreed to approve, subject to the approval by the Fund's stockholders, a change
in the Fund's fundamental investment policies to permit the Fund to borrow money
up to 20% of the Fund's net assets (not including the amount borrowed) for
investment purposes. The Board has directed that the proposal be submitted to
stockholders for approval or disapproval.
The Fund's current fundamental policy with respect to borrowing is as follows:
"Under its fundamental investment restrictions, the Fund may not: Issue
senior securities, borrow or pledge its assets, except that the Fund may
borrow from a bank for the purpose of obtaining amounts necessary to make
distributions for qualification as a registered investment company or to
avoid imposition of an excise tax under United States tax laws, and except
that the Fund may borrow money in an amount not to exceed 15% (calculated
at the lower of cost or current market value) of its total assets (not
including the amount borrowed (a) for temporary or emergency purposes, (b)
for such short-term credits as may be necessary for the clearance or
settlement of transactions and (c) for repurchases of its Common Stock. The
Fund may also pledge its assets to secure such borrowings. Notwithstanding
the above, initial and variation margin in respect of futures contracts and
options thereon and any collateral arrangement in respect of options on
securities or indexes will not be prohibited by this paragraph 3 or any
other investment restrictions."
As amended, the Fund's fundamental policy on borrowing would be as follows:
"Under its fundamental investment restrictions, the Fund may not: Issue
senior securities, borrow or pledge its assets, except that the Fund may
(i) borrow from a bank for the purpose of obtaining amounts necessary to
make distributions for qualification as a registered investment company to
avoid imposition of an excise tax under United States tax law; and (ii)
borrow money (including through reverse repurchase agreements) up to the
maximum amount permitted under the Investment Company Act of 1940 (a) for
temporary or emergency purposes, (b) for such short-term credits as may be
necessary for the clearance or settlement of transactions, (c) for
repurchases of its Common Stock and (d) for investment purposes, provided
that amounts borrowed under this clause (d) shall not exceed 20% on the net
assets of the Fund. The Fund may also pledge its assets to secure such
borrowings. Notwithstanding the above, initial and variation margin in
respect of futures contracts and options thereon and any collateral
arrangement in respect of options on securities or indexes will not be
prohibited by this paragraph 3 or any other investment restrictions."
An increase in the amount of money borrowed by the Fund for the purposes listed
in item (i) and items (ii)(a)-(c) of the proposed policy may cause the Fund to
incur greater costs and expose the Fund to greater risks than the Fund currently
faces under its existing investment policies.
The Board has noted that, because the Investment Adviser is not currently
permitted to borrow funds for the purpose of investing in securities, the
Investment Adviser has been restricted to using funds from the liquidation of
existing holdings for the purpose of making additional investments. This has
constrained the Investment Adviser from taking advantage of opportunities to add
value to the Fund, particularly in a rising market. The Board believes that the
proposed change in the Fund's borrowing policy would give the Investment Adviser
the flexibility to take advantage of such opportunities when it believes that
the return from the additional investment would exceed the cost of borrowing.
However, purchasing securities with borrowed funds will cause the Fund's losses
to increase if there is a decline in the value of the securities purchased with
the proceeds of the loan, or if the return on securities purchased with borrowed
funds is less than the borrowing costs of those funds. These new risks would
result from the Fund's increased exposure in the underlying securities purchased
with borrowed funds and the borrowing costs incurred.
7
To the extent the income or capital appreciation derived from securities
purchased with funds received from leverage exceeds the cost of leverage, the
Fund's return to Stockholders will be greater than if leverage had not been
used. Conversely, if the income or capital appreciation from the securities
purchased with such funds is not sufficient to cover the cost of leverage or if
the Fund incurs capital losses, the return of the Fund to Stockholders will be
less than if leverage had not been used. The Investment Adviser may determine to
maintain the Fund's leveraged position if it expects that the long-term benefits
to Stockholders of maintaining the leveraged position will outweigh the current
reduced return. Capital raised through borrowing will be subject to interest
costs that may or may not exceed the income and appreciation on the assets
purchased. The Fund also may be required to maintain minimum average balances in
connection with borrowings or to pay a commitment or other fee to maintain a
line of credit; either of these requirements would increase the cost of
borrowing over the stated interest rate. Under the 1940 Act, the Fund is not
permitted to incur indebtedness unless immediately after such borrowing the Fund
has an asset coverage of at least 300% of the aggregate outstanding principal
balance of indebtedness (that is, such indebtedness may not exceed 331/3% of the
value of the Fund's total assets). Additionally, under the 1940 Act, the Fund
may not declare any dividend or other distribution upon any class of its shares,
or purchase any such shares, unless the aggregate indebtedness of the Fund has,
at the time of the declaration of any such dividend or distribution or at the
time of any such purchase, an asset coverage of at least 300% after deducting
the amount of such dividend, distribution, or purchase price, as the case may
be.
The prohibitions on the payment of dividends or distributions described above
might impair the Fund's ability to maintain its qualification as a regulated
investment company for federal income tax purposes. There can be no assurance,
however, that the Fund will be able to distribute its income as required to
maintain its qualification as a regulated investment company under the Internal
Revenue Code of 1986, as amended.
Approval of the proposed amendment to the fundamental investment policy requires
the affirmative vote of the holders of a majority of the Fund's outstanding
voting shares. Under the Investment Company Act of 1940 this means the lesser
of: (i) 67% or more of the Fund's outstanding voting shares, if more than 50% of
such shares are present at the Meeting in person or by proxy, or (ii) more than
50% of the Fund's outstanding voting shares. If the proposed amendment is
approved, the change in the Fund's fundamental investment policies will become
effective immediately.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE PROPOSAL
TO CHANGE THE FUND'S FUNDAMENTAL INVESTMENT POLICIES.
8
ADDITIONAL INFORMATION
AUDIT COMMITTEE REPORT
Notwithstanding anything to the contrary set forth in any of the Fund's previous
or future filings under the Securities Act of 1933 or the Securities Exchange
Act of 1934 that might incorporate future filings made by the Fund under those
statutes, the following report shall not be deemed to be incorporated by
reference into any prior filings or future filings made by the Fund under those
statutes.
(1) MEMBERSHIP AND ROLE OF THE AUDIT COMMITTEE
The Audit Committee consists of Mr. Alexander R. Hamilton, Mr. Julian M.I. Reid
and The Rt. Hon. The Earl of Cromer. Each of the members of the Audit Committee
is independent as defined under the rules of the New York Stock Exchange. The
Audit Committee operates under a written charter adopted by the Board of
Directors, which was most recently approved by the Board on September 3, 2003.
The primary purpose of the Audit Committee is to assist the Board in monitoring
the integrity of the financial statements of the Fund, the compliance by the
Fund with legal and regulatory requirements, and the independence and
performance of the Fund's external accountants.
(2) REVIEW OF THE FUND'S AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED
DECEMBER 31, 2003
The Audit Committee has conducted specific oversight activities with respect to
the Fund's audited financial statements for the year ended December 31, 2003.
The Audit Committee has also reviewed and discussed them with the Investment
Adviser. The Audit Committee has discussed with PricewaterhouseCoopers, LLP
("PwC"), the Fund's independent accountants, the matters required to be
discussed by Statement on Auditing Standards No. 61 (Communication with Audit
Committees).
At its meeting on February 19, 2004, the Audit Committee also received the
written disclosures and the letter from PwC required by Independence Standards
Board Standard No. 1 (Independence Discussion with Audit Committees) and the
Audit Committee discussed the independence of PwC with that firm.
Based on the Audit Committee's review and discussions noted above, the Audit
Committee recommended to the Board that the audited financial statements for the
year ended December 31, 2003 be included in the Fund's annual report to
shareholders required by Section 30(e) of the 1940 Act, and filed with the SEC
as required by Rule 30d(1) under the 1940 Act.
Audit Committee
Alexander R. Hamilton, Chairman
The Rt. Hon. The Earl of Cromer
Julian M.I. Reid
9
INDEPENDENT ACCOUNTANTS
PwC, located at 2001 Market Street, Philadelphia, Pennsylvania 19103 has been
selected as the independent accountants by the Board of Directors, including all
the Independent Directors, to audit the accounts of the Fund for and during
2004. This firm served as independent accountants of the Fund for 2003. The
Board does not know of any direct or indirect financial interest of PwC in the
Fund.
A representative of PwC will be present at the Meeting, will have the
opportunity to make a statement if he desires to do so, and will be available to
answer questions.
Set forth in the table below are audit fees and non-audit related fees billed to
the Fund by PwC for professional services received during and for the Fund's
fiscal years ended December 31, 2002 and 2003, respectively. No fees were billed
by PwC to the Funds' Investment Adviser or its affiliates.
FISCAL YEAR ENDED
DECEMBER 31 AUDIT FEES AUDIT-RELATED FEES* TAX FEES ALL OTHER FEES
------------------------------------------------------------------------------------------------------------
2002 $33,750 $3,250 -- --
------------------------------------------------------------------------------------------------------------
2003 $35,000 -- -- --
------------------------------------------------------------------------------------------------------------
* "Audit-Related Fees" are those fees billed to the Fund by PWC in connection with services reasonably
related to the performance of the audit of the Fund's financial statements.
The Fund's Audit Committee Charter requires that the Audit Committee pre-approve
all audit and non-audit services to be provided by the auditors to the Fund, and
all non-audit services to be provided by the auditors to the Fund's Investment
Adviser and any service providers controlling, controlled by or under common
control with the Fund's Investment Adviser that provide on-going services to the
Fund, if the engagement relates directly to the operations and financial
reporting of the Fund, or to establish detailed pre-approval policies and
procedures for such services in accordance with applicable laws. All of the
audit, audit-related and tax services described above for which PwC billed the
Fund for the fiscal years ended December 31, 2002 and December 31, 2003 were
pre-approved by the Audit Committee.
For the Fund's fiscal year ended December 31, 2003, PwC did not provide any
non-audit services to the Fund's Investment Adviser or to any affiliates thereof
that provide services to the Fund.
THE INVESTMENT ADVISER
The Fund's Investment Adviser is JF International Management, Inc., which was
incorporated in the British Virgin Islands in 1992 and is registered as an
investment adviser under the Investment Advisers Act. The Investment Adviser's
principal address is 21st Floor, Chater House, 8 Connaught Road Central, Hong
Kong.
THE ADMINISTRATOR
The Fund's Administrator is PFPC Inc., whose address is 301 Bellevue Parkway,
Wilmington, DE 19809.
DEADLINE FOR STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 2005 Annual Meeting of the
Stockholders of the Fund must be received by December 9, 2004, to be included in
the Proxy Statement. A Stockholder seeking to have a proposal considered at the
2005 Annual Meeting where the proposal is not received by December 9, 2004,
should notify the Fund no later than January 31, 2005. If notice is not received
by January 31, 2005, then the persons appointed as proxies may vote on the
proposal as they see fit notwithstanding that stockholders have not been advised
of the proposal in the Proxy Statement. Any proposal submitted by stockholders
must comply in all respects with the following: (1) the rules and regulations of
the SEC; (2) the provisions of the Fund's Amended Articles of Incorporation and
Bylaws; and (3) Maryland law. The Fund expects the 2005 Annual Meeting will be
held in May of 2005.
10
OTHER MATTERS
The Board of Directors of the Fund knows of no other matters to be presented for
action at the Meeting other than those mentioned above; however, if any other
matters properly come before the Meeting, it is intended that the persons named
in the accompanying proxy will vote on such other matters in accordance with
their judgment of the best interests of the Fund.
All proxies received will be voted in favor of all of the proposals unless
otherwise directed therein.
11
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EXHIBIT A
---------
JF CHINA REGION FUND, INC.
NOMINATING COMMITTEE CHARTER
1. NOMINATING COMMITTEE
It was resolved that a Committee of the Board of JF China Region Fund,
Inc. (the 'Board') to be known as the Nominating Committee (the
'Committee') be hereby constituted. The Committee shall be governed as
follows:
2. MEMBERSHIP
2.1. The Committee shall be appointed by the Board amongst the
Independent (as such term is defined by the NYSE Listing
Standards) Directors of the Company and shall comprise a
chairman and at least 2 other directors.
2.2. The Board shall appoint the chairman of the Committee, who
could be the Chairman of the Board. In the absence of the
chairman of the Committee and/or an appointed deputy, the
remaining members present shall elect one of their number to
chair the meeting.
2.3. If a regular member is unable to act due to absence, illness
or any other cause, the chairman of the Committee may appoint
another Indpendent Director of the Company to serve as an
alternate member.
2.4. Care should be taken to minimise the risk of any conflict of
interest.
3. SECRETARY
3.1. The Company Secretary or his nominee shall act as the
secretary of the Committee but shall not be a member.
4. QUORUM
4.1. The quorum necessary for the transaction of business shall be
two. A duly convened meeting of the Committee at which a
quorum is present shall be competent to exercise all or any of
the authorities, powers and discretions vested in or
exercisable by the Committee.
5. FREQUENCY OF MEETINGS
5.1. The Committee shall meet as frequently as the chairman of the
Committee deems necessary. Directors being considered will not
be present at the meeting.
6. NOTICE OF MEETINGS
6.1. Meetings of the Committee shall be convened by the secretary
of the Committee at the request of the chairman of the
Committee.
6.2. Unless otherwise agreed, notice of each meeting confirming the
venue, time and date, together with an agenda of items to be
discussed, shall be forwarded to each member of the Committee
no fewer than 10 working days prior to the date of the
meeting.
7. MINUTES OF MEETINGS
7.1. The secretary shall minute the proceedings and resolutions of
all Committee meetings, which shall be circulated to all
members of the Board.
8. ANNUAL GENERAL MEETING
8.1. The chairman of the Committee shall attend the Annual Meeting
and be prepared to respond to any shareholder questions on the
Committee's activities.
A-1
9. DUTIES
9.1. The Committee shall:
9.1.1. be responsible for identifying, from a variety of sources
including the possible use of search consultants, and
nominating for the approval of the Board, candidates to fill
vacancies for Independent Directors as and when they arise;
9.1.2. satisfy itself with regard to succession planning, that
appropriate processes and plans are in place with regard to
appointments of Independent Directors;
9.1.3. ensure on appointment that a candidate for Independent
Director has sufficient time to undertake the role and, if
applicable, review his commitments and training; and
9.1.4. make recommendations to the Board as regards the
re-appointment of any Independent Director at the conclusion
of his or her specified term of office.
10. DIRECTORS' FEES
10.1. To consider directors' fees as and when required, for a
recommendation to be put to the Board.
10.2. This can be done with reference, for example, to research
conducted on competitor funds as well as any available
independent research.
11. AUTHORITY
11.1. The Committee is authorised by the Board to investigate any
activity within its terms of reference and to seek any
information it requires.
11.2. The Committee is authorised by the Board to obtain, at the
Company's expense, outside legal or other professional advice
on any matters within its terms of reference. However, prior
to doing this the Committee should consult with the Chairman
of the Board to agreed fee levels.
A-2
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JFCRM-PS-04
JF CHINA REGION FUND, INC.
Dear Stockholder,
Please take note of the important information enclosed with this Proxy Ballot.
There are two issues related to the management and operation of your Fund that
require your immediate attention and approval. They are discussed in detail in
the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the box on this proxy card to indicate how your shares will be
voted. Then sign and date the card, detach it and return your proxy vote in the
enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders, May 13,
2004.
Thank you in advance for your prompt consideration of this matter.
Sincerely,
JF China Region Fund, Inc.
[3545 - JF CHINA REGION FUND, INC.] [FILE NAME: ZJFR32.ELX]
[VERSION - (4)] [03/31/04] [orig. 03/11/04]
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL ZJFR32
JF CHINA REGION FUND, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED STOCKHOLDER of JF China Region Fund, Inc. (the "Fund") hereby
appoints Jo Anne Bennick and Jack P. Huntington, and each of them, the lawful
attorneys and proxies of the undersigned with full power of substitution to
vote, as designated below, all shares of Common Stock of the Fund which the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be held
on Thursday, May 13, 2004, at 10:00 a.m., at One Liberty Plaza, 39th Floor
Conference Center, New York, New York 10006, and at any and all adjournments
thereof with respect to the matters set forth below and described in the Notice
of Annual Meeting and Proxy Statement dated April 6, 2004, receipt of which is
hereby acknowledged, and any other matters arising before such Annual Meeting or
any adjournment thereof.
Properly executed proxies will be voted (or the vote on such matters will be
withheld on specific matters) in accordance with instructions appearing on the
proxy. In the absence of specific instructions, proxies will be voted FOR the
election of the nominees as directors, FOR the proposal to amend the Fund's
investment policies and in the best discretion of the proxyholders as to any
other matters. Please refer to the Proxy Statement for a discussion of the
proposals.
--------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Please sign exactly as name(s) appear(s) hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
--------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
__________________________________ ____________________________________
__________________________________ ____________________________________
__________________________________ ____________________________________
JF CHINA REGION FUND, INC.
C/O EQUISERVE TRUST COMPANY, N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
[3545 - JF CHINA REGION FUND, INC.] [FILE NAME: ZJFR31.ELX]
[VERSION - (3)] [03/31/04] [ORIG. 03/11/04]
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL ZJFR31
3545
[ X ] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
--------------------------
JF CHINA REGION FUND, INC.
--------------------------
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH
NOMINEE AS DIRECTOR AND "FOR" PROPOSAL 2.
FOR AGAINST ABSTAIN
1. Election of Directors. 2. To consider and act upon a proposal [ ] [ ] [ ]
NOMINEES: (01) A. Douglas Eu and (02) Simon J. Crinage to approve a change in the Fund's
fundamental policies to permit the
FOR [ ] [ ] WITHHELD Fund to borrow up to 20% of the
BOTH FROM BOTH Fund's net assets (not including the
NOMINEES NOMINEES amount borrowed) for investment
purposes.
[ ] ___________________________________________
For both nominee(s) except as written above
Mark box at right if an address change [ ]
or comment has been noted on the
reverse side of this card.
Please be sure to sign and date this Proxy.
Signature: _______________________ Date: __________ Signature: _______________________ Date: __________