UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-06686
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JF China Region Fund, Inc.
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(Exact name of registrant as specified in charter)
JPMorgan Worldwide Securities Services
73 Tremont Street, 11th Floor
Boston, MA 02108
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(Address of principal executive offices) (Zip code)
CSC
Suite 3100
1133 Avenue of the Americas
New York, NY 10036
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(Name and address of agent for service)
registrant's telephone number, including area code: (617) 557-8000
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Date of fiscal year end: December 31, 2006
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Date of reporting period: December 31, 2006
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
[GRAPHIC OMITTED] JF CHINA REGION FUND, INC.
Annual Report
December 31, 2006
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JF 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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Top Ten Holdings 4
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Investment Portfolio 6
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Statement of Assets and Liabilities 12
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Statement of Operations 13
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Statement of Changes in Net Assets 14
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Financial Highlights 15
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Notes to Financial Statements 16
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Report of Independent Registered Public Accounting Firm 21
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Results of the Annual Stockholders Meeting 22
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Other Information 22
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Approval of Investment Advisory Contract 24
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Fund Management 25
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Dividend Reinvestment and Cash Purchase Plan 27
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Directors and Administration 30
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JF CHINA REGION FUND, INC.
OBJECTIVES
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JF 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 ("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. Hong Kong enterprises have made
substantial investments in China, particularly where labor and land prices are
lower than in Hong Kong. Similarly, many Chinese companies have Hong Kong based
subsidiaries with securities listed on the Hong Kong Stock Exchange. More
recently, 'A' shares which are listed in China have become available for
acquisition by Western institutional investors including your Fund. Many Taiwan
enterprises also have operations in China.
The economies of China, Hong Kong, Taiwan and Macau have become increasingly
linked over recent years, and the Fund invests to take advantage of the many
opportunities that result from this linkage among the markets of China Region.
MANAGEMENT
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JF International Management Inc. ("JFIMI") is the investment management
company appointed to advise and manage the Fund's portfolio. JFIMI is part of
JPMorgan Chase & Co. ("JPMC"), one of the world's premier financial services
institutions. In asset management, JPMC operates globally under the name of
JPMorgan Asset Management ("JPMAM"), although in Asia it uses the sub-brand JF
Asset Management. Funds under management for the global asset management
business of JPMAM were US$1.013 billion as of December 31, 2006.
The day-to-day management of the Fund's portfolio is handled by JPMAM's
Greater China investment team based in Hong Kong. The head of this team is
Howard Wang who joined JPMAM in 2005. Previously, Mr. Wang spent eight years
with Goldman Sachs, where in 2004, he was appointed Managing Director, Equities
and General Manager of the Taipei branch office.
MARKET INFORMATION
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THE FUND IS LISTED ON THE NEW YORK STOCK EXCHANGE (SYMBOL JFC). THE SHARE PRICE
IS PUBLISHED IN
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o The Wall Street Journal (daily online at www.WSJ.com/Free)
THE NET ASSET VALUE IS PUBLISHED IN
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o The Wall Street Journal under "Closed-End Funds" (every Saturday)
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JF CHINA REGION FUND, INC.
HIGHLIGHTS
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DECEMBER 31, 2006 DECEMBER 31, 2005
US$ US$
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Net Assets $104.6 MILLION $73.5 million
Net Asset Value Per Share $22.82 $16.04
MARKET DATA
Share Price on the
New York Stock Exchange $22.80 $13.71
Discount to Net Asset Value (0.1%) (14.5%)
TOTAL RETURN FOR THE YEAR ENDED DECEMBER 31, 2006
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NET ASSET VALUE +42.97%
SHARE PRICE +67.12%
JFC BENCHMARK INDEX* +39.50%
MSCI HONG KONG INDEX (TOTAL) +30.35%
BNP PRIME PEREGRINE CHINA INDEX +82.78%
TAIWAN WEIGHTED INDEX +20.42%
NET ASSET VALUE AND SHARE PRICE VS. BENCHMARK INDEX
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS:
Net Asset Value Share Price JFC Benchmark Index
7/16/92 $100.00 $100.00 $100.00
7/27/92 99.78 98.33 89.81
8/28/92 100.43 94.20 91.11
9/30/92 100.94 80.00 79.15
10/30/92 108.60 92.53 90.31
11/30/92 111.05 96.67 91.95
12/31/92 109.29 93.02 90.21
1/29/93 110.16 96.37 87.65
2/26/93 117.49 98.85 97.55
3/31/93 120.54 108.90 94.28
4/30/93 125.48 118.95 97.84
5/28/93 129.84 122.30 92.05
6/30/93 122.35 120.09 83.13
7/30/93 120.67 116.73 77.96
8/27/93 124.75 129.29 82.27
9/30/93 128.39 126.81 84.74
10/29/93 147.17 150.32 102.63
11/26/93 156.34 166.71 113.90
12/31/93 188.96 187.39 128.98
1/28/94 175.52 183.65 111.34
2/25/94 158.91 148.41 103.16
3/31/94 136.56 136.08 91.08
4/29/94 132.14 134.18 87.30
5/27/94 136.06 148.41 90.89
6/30/94 123.99 123.29 82.84
7/29/94 130.78 126.47 87.48
8/26/94 130.78 135.83 92.18
9/30/94 132.98 129.56 94.14
10/28/94 132.34 126.47 89.14
11/23/94 124.35 110.76 80.63
12/31/94 115.72 94.29 72.23
1/27/95 101.37 90.10 62.02
2/24/95 108.27 98.48 66.92
3/31/95 109.37 94.29 67.13
4/30/95 105.33 90.10 63.43
5/26/95 113.68 107.01 70.35
6/30/95 111.93 92.33 69.32
7/28/95 116.08 95.51 73.64
8/31/95 108.89 88.13 69.66
9/30/95 112.85 94.42 68.82
10/31/95 110.46 89.22 67.02
11/30/95 104.65 85.02 64.06
12/31/95 103.54 84.52 63.34
1/31/96 112.35 107.76 72.64
2/29/96 113.37 95.08 73.99
3/31/96 110.12 95.08 70.65
4/30/96 111.70 96.18 68.52
5/31/96 112.25 94.07 71.64
6/30/96 111.98 87.73 71.47
7/31/96 110.21 81.39 71.69
8/30/96 110.68 84.52 73.69
9/30/96 112.16 85.62 74.73
10/31/96 113.18 83.51 77.45
11/29/96 125.79 90.86 89.15
12/31/96 132.84 95.25 97.43
1/31/97 135.63 99.49 99.27
2/28/97 138.13 99.49 100.73
3/27/97 133.96 99.49 99.65
4/30/97 148.44 106.94 106.53
5/31/97 159.48 115.41 111.06
6/30/97 170.35 124.89 114.45
7/31/97 178.89 130.22 117.43
8/31/97 187.33 126.50 121.24
9/30/97 167.65 124.38 116.19
10/31/97 124.12 87.29 88.50
11/28/97 107.96 84.67 82.92
12/31/97 110.00 82.89 83.73
1/30/98 85.88 79.75 70.48
2/28/98 114.29 88.25 86.61
3/31/98 107.58 80.77 83.66
4/30/98 98.27 74.90 76.62
5/29/98 83.74 60.57 69.04
6/30/98 72.75 54.24 63.53
7/31/98 57.28 44.10 56.17
8/31/98 51.32 29.76 50.16
9/30/98 60.82 40.91 56.88
10/30/98 70.51 50.48 65.12
11/30/98 72.47 53.14 64.68
12/31/98 69.86 46.76 61.44
1/29/99 63.27 45.70 55.92
2/26/99 63.43 44.63 56.22
3/31/99 69.67 47.82 62.49
4/30/99 82.25 62.17 74.33
5/31/99 76.94 57.39 69.97
6/30/99 90.35 74.39 80.74
7/30/99 84.95 60.57 75.80
8/31/99 88.77 61.11 78.44
9/30/99 84.11 56.86 73.92
10/29/99 87.65 59.51 75.69
11/30/99 99.29 68.01 82.85
12/31/99 110.11 72.07 90.38
1/31/00 108.99 69.94 90.33
2/29/00 113.38 73.68 91.87
3/31/00 118.43 75.28 96.89
4/28/00 100.86 64.07 87.24
5/31/00 94.69 62.46 82.27
6/30/00 98.52 66.73 85.48
7/31/00 102.07 69.94 89.73
8/31/00 103.94 71.54 88.73
9/29/00 95.34 66.73 79.73
10/31/00 87.40 64.07 72.78
11/30/00 83.00 61.93 68.48
12/31/00 87.30 60.33 71.12
1/31/01 95.81 71.33 78.24
2/28/01 91.42 67.57 76.15
3/30/01 84.59 60.73 69.80
4/30/01 86.09 63.89 69.03
5/31/01 87.12 66.46 67.29
6/29/01 84.69 66.20 65.30
7/31/01 78.98 60.22 61.21
8/31/01 73.10 54.24 57.47
9/28/01 66.37 50.83 48.34
10/31/01 71.51 51.34 51.10
11/30/01 76.18 55.95 57.64
12/31/01 76.09 56.12 63.41
1/31/02 75.34 55.52 63.09
2/28/02 75.53 57.92 60.84
3/28/02 81.23 63.64 65.43
4/30/02 80.95 64.92 66.68
5/31/02 81.88 65.18 64.55
6/28/02 76.65 58.94 60.36
7/31/02 73.94 54.24 57.39
8/30/02 70.29 53.39 54.89
9/30/02 65.71 49.71 49.30
10/31/02 68.42 52.96 52.07
11/29/02 70.48 55.78 54.34
12/31/02 69.82 55.52 50.92
1/31/03 77.58 62.36 53.73
2/28/03 77.30 66.63 50.72
3/31/03 73.94 64.41 48.90
4/30/03 73.75 63.21 48.38
5/30/03 82.63 65.43 53.24
6/30/03 86.93 73.46 55.68
7/31/03 96.93 80.30 60.86
8/29/03 104.13 88.58 66.88
9/30/03 106.37 86.87 68.73
10/31/03 120.30 116.09 73.75
11/28/03 119.37 114.63 72.11
12/31/03 130.21 154.44 75.70
1/30/04 134.88 129.50 80.89
2/27/04 143.95 141.97 84.25
3/31/04 135.35 123.01 79.74
4/30/04 115.81 91.40 73.82
5/31/04 118.43 104.47 74.32
6/30/04 115.63 97.12 73.49
7/30/04 115.63 90.80 72.08
8/31/04 117.59 102.68 76.05
9/30/04 121.80 100.88 78.02
10/31/04 121.33 99.17 77.35
11/30/04 128.81 111.05 83.91
12/31/04 131.42 109.34 86.50
1/31/05 129.37 110.19 83.66
2/28/05 137.22 114.38 88.07
3/31/05 132.08 105.92 83.87
4/30/05 132.92 104.90 84.85
5/31/05 133.76 106.01 86.42
6/30/05 137.31 110.45 89.42
7/29/05 144.23 116.68 93.15
8/31/05 141.14 117.11 90.42
9/30/05 146.75 117.37 92.93
10/31/05 135.63 108.65 86.00
11/30/05 145.44 114.98 91.53
12/31/05 150.49 117.62 95.39
1/31/06 162.31 139.24 101.51
2/28/06 162.50 135.38 102.13
3/31/06 167.66 135.04 103.48
4/30/06 177.04 153.31 111.13
5/31/06 168.51 143.71 104.50
6/30/06 164.19 136.33 104.46
7/31/06 164.36 137.34 103.96
8/31/06 169.16 139.32 107.27
9/29/06 174.53 143.80 110.54
10/31/06 181.87 151.81 113.79
11/30/06 199.66 163.60 124.27
12/29/06 215.15 196.61 133.06
* JFC Benchmark: MSCI Golden Dragon Index (Total)
Prior to March 2001, 25% Taiwan Weighted Index, 20% BNP Paribas China
Index, 50% MSCI Hong Kong, 5% HSBC;
Prior to March 1999, 60% Hong Kong All Ordinaries, 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: JPMorgan Asset Management
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JF CHINA REGION FUND, INC.
CHAIRMAN'S STATEMENT
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Dear Fellow Stockholder,
I am delighted to be able to report to you another year of above benchmark
performance for the Fund. Over the year under review, the net asset value rose
by 43.0% compared to an increase of 39.5% in the Fund's benchmark, the MSCI
Golden Dragon Index (Total) -- an outperformance of +3.5 percentage points. The
Fund's share price rose by 67.1% reflecting a significant narrowing of the
discount to net asset value from -14.5% to just -0.1% at the year end.
The management of the Fund is handled by JPMorgan Asset Management's Greater
China investment team in Hong Kong. During the year, Emerson Yip took over the
management of the portfolio with Howard Wang remaining as head of the team. Your
Board is delighted by the recent changes in the investment style of the
management team and we are of the view that they have made a substantial
contribution to the recent performance gains.
In addition to the appointment of Michael James as the Fund's Treasurer
that I reported in the Semi-Annual Report, the Directors have taken the decision
to change the Fund's administrators with effect from January 1, 2007. From that
date, JPMorgan Worldwide Securities Services will act as the administrators,
taking over from PFPC who have fulfilled the role since 2001.
The exuberance of the China rally has been a pleasant surprise but both
economic fundamentals and liquidity conditions remain conducive for us to
continue our long term positive view on China, despite the risks of a sustained
correction, rising wage pressures and inflation. The medium term outlook for
Hong Kong is dependent on economic conditions and corporate earnings
expectations, both of which remain positive. We believe that there is scope for
a domestic recovery in Taiwan and are positive on the earnings growth potential
of technology companies. Overall, we continue in the belief that, despite the
ever present risks, continued economic growth in the China region will result in
positive returns for investors.
Respectfully submitted,
The Rt. Hon. The Earl of Cromer
Chairman
February 27, 2007
For more information refer to the website www.jfchinaregion.com
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JF CHINA REGION FUND, INC.
TOP TEN HOLDINGS
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AT DECEMBER 31, 2006
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% of Net
Assets
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TAIWAN SEMICONDUCTOR MANUFACTURING CO., LTD. 6.2
Taiwan Semiconductor Manufacturing Company, Limited manufactures
and markets integrated circuits. The Company provides the following
services: wafer manufacturing, wafer probing, assembly and testing,
mask production, and design services. The Company's integrated
circuits are used in computer, communication, consumer electronics,
automotive, and industrial equipment industries.
CHINA MOBILE, LTD. 5.9
China Mobile, Limited provides cellular telecommunications
services in the People's Republic of China.
HON HAI PRECISION INDUSTRY CO., LTD. 4.2
Hon Hai Precision Industry Company, Limited manufactures and
markets personal computer ('PC') connectors and cable assemblies used
in desktop PCs and PC servers.
CHEUNG KONG HOLDINGS, LTD. 3.7
Cheung Kong Holdings, Limited, through its subsidiaries, develops
and invests in real estate. The Company also provides real estate
agency and management services, operates hotels and invests in
securities.
CHINA LIFE INSURANCE CO., LTD. 3.2
China Life Insurance Company, Limited offers a wide range of
life, accident and health insurance products and services.
CHINA CONSTRUCTION BANK 3.1
China Construction Bank provides a complete range of banking
services and other financial services to individual and corporate
customers. The Bank's services include retail banking, international
settlement, project finance and credit card services.
PETROCHINA CO., LTD. 3.0
PetroChina Company, Limited explores, develops and produces crude
oil and natural gas. The Company also refines, transports, and
distributes crude oil and petroleum products, produces and sells
chemicals and markets and sells natural gas.
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JF CHINA REGION FUND, INC.
TOP TEN HOLDINGS (CONTINUED)
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AT DECEMBER 31, 2006
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% of Net
Assets
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CHINA PETROLEUM AND CHEMICAL CORP. (SINOPEC) 2.7
China Petroleum and Chemical Corporation explores for and
produces crude oil and natural gas in China. The Company also owns
refineries that make petroleum and petrochemical products such as
gasoline, diesel, jet fuel, kerosene, ethylene, synthetic fibers,
synthetic rubber, synthetic resins, and chemical fertilizers. In
addition, the Company trades petrochemical products.
SUN HUNG KAI PROPERTIES, LTD. 2.6
Sun Hung Kai Properties, Limited develops and invests in
properties. The Company also operates hotels and manages properties,
car parking and transportation infrastructure. In addition, the
Company operates logistics business, construction, financial services,
telecommunication internet infrastructure and enabling services.
CATHAY FINANCIAL HOLDING CO., LTD 2.4
Cathay Financial Holding Company, Limited is a holding company.
Through its subsidiaries, the Company provides traditional life,
health care and accident insurances, as well as banking, security
underwriting, and brokerage services.
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TOTAL TOP TEN HOLDINGS 37.0
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JF CHINA REGION FUND, INC.
INVESTMENT PORTFOLIO
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AT DECEMBER 31, 2006
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Market
Holdings Value
Description (in shares) (in US$)
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COMMON STOCKS (UNLESS OTHERWISE NOTED)
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CHINA (24.0%)
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COMMERCIAL BANKS (7.1%)
Bank of Communications Co., Ltd. 'H' 1,793,000 2,176,337
China Construction Bank 'H' 5,099,000 3,245,370
* China Merchants Bank Co., Ltd. 'H' 148,000 313,612
* Industrial and Commercial Bank of China 'H' 2,749,000 1,707,245
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7,442,564
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INSURANCE (5.1%)
China Life Insurance Co., Ltd. 'H' 972,000 3,318,216
Ping An Insurance Group Co. 'H' 360,500 1,995,503
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5,313,719
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METALS & MINING (2.4%)
Angang Steel Co., Ltd. 'H' 922,000 1,351,480
* Hunan Non-Ferrous Metals Corp., Ltd. 'H' 1,250,000 723,263
Zijin Mining Group Co., Ltd. 'H' 608,000 424,500
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2,499,243
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OIL & GAS (5.7%)
China Petroleum and Chemical Corp. (Sinopec) 'H' 3,020,000 2,795,847
PetroChina Co., Ltd. 'H' 2,234,000 3,165,474
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5,961,321
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REAL ESTATE (0.2%)
* Shimao Property Holdings, Ltd. 118,500 222,152
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SOFTWARE (0.6%)
Tencent Holdings, Ltd., 'H' 180,000 641,101
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TELECOMMUNICATIONS (1.6%)
China Telecom Corp., Ltd. 'H' 1,844,000 1,010,053
* Foxconn International Holdings, Ltd. 191,000 625,022
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1,635,075
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JF CHINA REGION FUND, INC.
INVESTMENT PORTFOLIO (CONTINUED)
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AT DECEMBER 31, 2006
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Market
Holdings Value
Description (in shares) (in US$)
--------------------------------------------------------------------------------
TRANSPORTATION INFRASTRUCTURE (1.3%)
* Dongfeng Motors Group Corp., Ltd. 'H' 1,522,000 737,785
Guangshen Railway Co., Ltd. 'H' 972,000 662,394
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1,400,179
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TOTAL CHINA 25,115,354
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HONG KONG (41.5%)
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AIRLINES (1.1%)
Air China, Ltd., 'H' 2,108,000 1,141,108
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ATHLETIC FOOTWEAR (0.3%)
Yue Yuen Industrial Holdings, Ltd. 85,500 271,542
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BUILDING MATERIALS (1.3%)
* China Communications Construction Co., Ltd. 'H' 489,000 483,514
China National Building Material Co., Ltd. 'H' 1,312,000 850,234
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1,333,748
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COMMERCIAL BANKS (3.4%)
BOC Hong Kong Holdings, Ltd. 827,500 2,245,042
Dah Sing Financial Holdings, Ltd. 78,400 710,184
Standard Chartered, Plc 21,225 627,150
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3,582,376
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DISTRIBUTION/WHOLESALE (2.2%)
Esprit Holdings, Ltd. 209,000 2,333,942
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DIVERSIFIED FINANCIAL SERVICES (1.5%)
Hong Kong Exchanges & Clearing, Ltd. 142,000 1,561,092
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[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
INVESTMENT PORTFOLIO (CONTINUED)
--------------------------------------------------------------------------------
AT DECEMBER 31, 2006
--------------------------------------------------------------------------------
Market
Holdings Value
Description (in shares) (in US$)
--------------------------------------------------------------------------------
DIVERSIFIED OPERATIONS (3.2%)
China Resources Enterprise, Ltd. 312,000 896,615
Hutchison Whampoa, Ltd. 51,000 518,377
Jardine Matheson Holdings, Ltd. 43,200 924,480
Swire Pacific, Ltd., Class A 99,000 1,063,545
--------------------------------------------------------------------------------
3,403,017
--------------------------------------------------------------------------------
ELECTRIC UTILITIES (1.2%)
China Resources Power Holdings 628,000 947,986
* Zhuzhou CSR Times Electric Co., Ltd. 194,000 268,403
--------------------------------------------------------------------------------
1,216,389
--------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.3%)
* AAC Acoustic Technology Holdings, Inc. 380,000 360,590
--------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE (1.2%)
Shangri-La Asia, Ltd. 496,000 1,278,704
--------------------------------------------------------------------------------
INVESTMENT COMPANIES (1.6%)
Li & Fung, Ltd. 546,600 1,700,822
--------------------------------------------------------------------------------
MARINE (1.0%)
Pacific Basin Shipping, Ltd. 1,588,000 1,000,508
--------------------------------------------------------------------------------
METALS & MINING (1.0%)
China Shenhua Energy Co., Ltd. 'H' 419,500 1,009,745
--------------------------------------------------------------------------------
MISCELLANEOUS (0.0%)
* Health Asia MediCentres Beijing++ 1,000,000 0
--------------------------------------------------------------------------------
OIL & GAS (1.1%)
CNOOC, Ltd. 1,010,000 959,709
CNPC Hong Kong, Ltd. 400,000 221,158
--------------------------------------------------------------------------------
1,180,867
--------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS (0.5%)
Nine Dragons Paper Holdings, Ltd. 301,000 518,615
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[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
INVESTMENT PORTFOLIO (CONTINUED)
--------------------------------------------------------------------------------
AT DECEMBER 31, 2006
--------------------------------------------------------------------------------
Market
Holdings Value
Description (in shares) (in US$)
--------------------------------------------------------------------------------
REAL ESTATE (10.8%)
Cheung Kong Holdings, Ltd. 316,000 3,890,450
China Overseas Land & Investment 1,044,000 1,401,441
Guangzhou R&F Properties Co., Ltd. 'H' 574,800 1,241,652
Hang Lung Properties, Ltd. 191,000 478,897
Kerry Properties, Ltd. 106,500 497,769
New World Development Co., Ltd. 223,000 449,025
Shun Tak Holdings, Ltd. 422,000 645,704
Sun Hung Kai Properties, Ltd. 236,000 2,711,318
--------------------------------------------------------------------------------
11,316,256
--------------------------------------------------------------------------------
RETAIL (2.8%)
Golden Eagle Retail Group, Ltd. 1,204,000 1,069,741
Lifestyle International Holdings, Ltd. 273,500 703,333
Parkson Retail Group, Ltd. 234,500 1,160,854
--------------------------------------------------------------------------------
2,933,928
--------------------------------------------------------------------------------
TELECOMMUNICATIONS (0.2%)
* China Communications Services 'H' 308,000 175,836
--------------------------------------------------------------------------------
TRANSPORTATION INFRASTRUCTURE (0.9%)
Cosco Pacific, Ltd. 404,000 948,541
--------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (5.9%)
China Mobile, Ltd. 717,000 6,195,300
--------------------------------------------------------------------------------
TOTAL HONG KONG 43,462,926
--------------------------------------------------------------------------------
TAIWAN (34.1%)
--------------------------------------------------------------------------------
AUTOMOBILES (0.5%)
Hotai Motor Co., Ltd. 242,000 553,291
--------------------------------------------------------------------------------
BUILDING MATERIALS (0.6%)
Asia Cement Corp. 632,000 601,258
--------------------------------------------------------------------------------
CHEMICALS (0.9%)
Formosa Chemical & Fibre Corp. 536,000 896,486
--------------------------------------------------------------------------------
-- 9 --
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
INVESTMENT PORTFOLIO (CONTINUED)
--------------------------------------------------------------------------------
AT DECEMBER 31, 2006
--------------------------------------------------------------------------------
Market
Holdings Value
Description (in shares) (in US$)
--------------------------------------------------------------------------------
COMMERCIAL BANKS (1.9%)
* Chang Hwa Commercial Bank 2,798,000 1,953,491
--------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS (1.8%)
Foxconn Technology Co., Ltd. 81,000 970,707
High Tech Computer Corp. 48,000 950,131
--------------------------------------------------------------------------------
1,920,838
--------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (4.0%)
Cathay Financial Holding Co., Ltd. 1,087,895 2,470,592
Chinatrust Financial Holding Co. 2,062,000 1,724,398
--------------------------------------------------------------------------------
4,194,990
--------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (11.0%)
Asustek Computer, Inc. 580,500 1,589,093
AU Optronics Corp. 805,905 1,122,464
Delta Electronics, Inc. 512,000 1,649,839
Hon Hai Precision Industry Co., Ltd. 611,784 4,365,192
MediaTek, Inc. 181,080 1,872,762
Tripod Technology Corp. 143,990 517,012
TXC Corp. 270,000 431,702
--------------------------------------------------------------------------------
11,548,064
--------------------------------------------------------------------------------
METALS & MINING (1.3%)
Catcher Technology Co., Ltd. 82,658 807,935
China Steel Corp. 495,000 525,610
--------------------------------------------------------------------------------
1,333,545
--------------------------------------------------------------------------------
REAL ESTATE (1.0%)
Chong Hong Construction Co. 189,187 512,085
Huaku Construction Corp. 260,000 560,933
--------------------------------------------------------------------------------
1,073,018
--------------------------------------------------------------------------------
-- 10 --
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
INVESTMENT PORTFOLIO (CONTINUED)
--------------------------------------------------------------------------------
AT DECEMBER 31, 2006
--------------------------------------------------------------------------------
Market
Holdings Value
Description (in shares) (in US$)
--------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (10.6%)
* Advanced Semiconductor Engineering, Inc. 956,000 1,085,530
Novatek Microelectronics Corp., Ltd. 118,044 534,341
* Novatek Microelectronics Corp., Ltd.
Warrants 29 March 2007 125,229 559,085
* ProMOS Technologies, Inc. 409,000 178,235
* ProMOS Technologies, Inc.
Warrants 04 March 2007 1,214,000 530,032
Richtek Technology Corp. 68,000 545,711
Siliconware Precision Industries 769,000 1,208,311
Taiwan Semiconductor Manufacturing Co., Ltd. 3,112,787 6,448,155
--------------------------------------------------------------------------------
11,089,400
--------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (0.5%)
Far EasTone Telecommunications Co., Ltd. 420,000 476,262
--------------------------------------------------------------------------------
TOTAL TAIWAN 35,640,643
--------------------------------------------------------------------------------
TOTAL INVESTMENTS IN COMMON STOCK
(99.6% of Net Assets) (Cost $77,740,977) 104,218,923
================================================================================
Other assets in excess of liabilities (0.4% of Net Assets) 404,983
================================================================================
NET ASSETS (100.0%) 104,623,906
================================================================================
As of December 31, 2006, aggregate cost for
Federal income tax purposes was $78,170,564. The
aggregate unrealized gain for all securities is
as follows:
Excess of market value over cost 26,795,529
Excess of cost over market value (747,170)
--------------------------------------------------------------------------------
Net unrealized gain 26,048,359
================================================================================
H Chinese security traded on Hong Kong Stock Exchange.
* Non-income producing.
++ At fair value as determined under the supervision of the Board of
Directors.
See accompanying notes to financial statements.
-- 11 --
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
AT DECEMBER 31, 2006
--------------------------------------------------------------------------------
(in US$)
--------------------------------------------------------------------------------
ASSETS
-----------------------------------------------------------------------------------------------------
Investments at value (cost $77,740,977) 104,218,923
Cash (including foreign currencies with a cost of $312 and value of $312) 865,327
Dividends receivable 13,732
Prepaid expenses 38,532
-----------------------------------------------------------------------------------------------------
TOTAL ASSETS 105,136,514
-----------------------------------------------------------------------------------------------------
LIABILITIES
-----------------------------------------------------------------------------------------------------
Due to Investment Adviser 233,375
Accrued expenses payable 279,233
-----------------------------------------------------------------------------------------------------
Total Liabilities 512,608
-----------------------------------------------------------------------------------------------------
NET ASSETS 104,623,906
=====================================================================================================
NET ASSETS CONSIST OF:
Common stock, $0.01 par value
(100,000,000 shares authorized;
4,585,160 shares issued and outstanding) 45,852
Paid-in capital 83,945,330
Undistributed net investment income 324,053
Accumulated realized loss on investments
and foreign currency transactions (6,169,292)
Accumulated net unrealized appreciation on investments,
foreign currency holdings, and other assets and
liabilities denominated in foreign currencies 26,477,963
-----------------------------------------------------------------------------------------------------
NET ASSETS 104,623,906
=====================================================================================================
NET ASSET VALUE PER SHARE ($104,623,906 / 4,585,160) 22.82
=====================================================================================================
See accompanying notes to financial statements.
-- 12 --
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 2006
--------------------------------------------------------------------------------
(in US$)
-----------------------------------------------------------------------------------------------------
INVESTMENT INCOME
-----------------------------------------------------------------------------------------------------
Dividends (net of foreign withholding tax of $137,564) 1,925,247
Interest (net of foreign withholding tax of $207) 19,015
-----------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 1,944,262
-----------------------------------------------------------------------------------------------------
EXPENSES
-----------------------------------------------------------------------------------------------------
Investment advisory fees 842,035
Directors' fees and expenses 167,703
Custodian fees 166,738
Administration and accounting fees 138,000
Legal fees 78,680
Shareholder report and expenses 46,456
Insurance 44,675
Audit fees 37,150
NYSE listing fee 25,000
Shareholder service fees 16,239
Other expenses 76,946
-----------------------------------------------------------------------------------------------------
TOTAL EXPENSES 1,639,622
-----------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 304,640
=====================================================================================================
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS, FOREIGN CURRENCY
HOLDINGS AND OTHER ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES
-----------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS)
Investments 12,991,089
Foreign currency transactions (6,725)
NET CHANGE IN UNREALIZED DEPRECIATION
Investments and foreign currency holdings and
other assets and liabilities denominated
in foreign currencies 18,195,428
-----------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS,
FOREIGN CURRENCY HOLDINGS AND OTHER ASSETS
AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES 31,179,792
-----------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 31,484,432
=====================================================================================================
See accompanying notes to financial statements.
-- 13 --
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
Year Ended Year Ended
December 31, 2006 December 31, 2005
(in US$) (in US$)
-----------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment income 304,640 607,149
Net realized gain on investment transactions 12,991,089 6,571,071
Net realized loss on foreign currency transactions (6,725) (179,850)
Net change in unrealized appreciation on
investments, foreign currency holdings and other
assets and liabilities denominated in foreign
currencies 18,195,428 2,347,419
-----------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 31,484,432 9,345,789
====================================================================================================
DISTRIBUTIONS TO STOCKHOLDERS
Net investment income ($0.09 and $0.06 per share,
respectively) (419,175) (275,111)
-----------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 31,065,257 9,070,678
Net Assets:
Beginning of year 73,558,649 64,487,971
-----------------------------------------------------------------------------------------------------
End of year (including undistributed net investment
income of $304,598 and $419,133, respectively) 104,623,906 73,558,649
====================================================================================================
See accompanying notes to financial statements.
-- 14 --
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
For the For the For the For the For the
Year Ended Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31, December 31,
2006 2005 2004 2003 2002
(in US$) (in US$) (in US$) (in US$) (in US$)
--------------------------------------------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR:
--------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of year 16.04 14.06 13.93 7.47 8.14
====================================================================================================================
Net investment income
(loss) 0.07 0.13 0.04 (0.02) (0.04)
Net realized and
unrealized gain (loss)
on investment and
foreign currency-
related transactions 6.80 1.91 0.09 6.48 (0.66)
--------------------------------------------------------------------------------------------------------------------
Total from investment
operations 6.87 2.04 0.13 6.46 (0.70)
====================================================================================================================
Dividends from net
investment income (0.09) (0.06) -- -- --
====================================================================================================================
Dilutive Effect of Capital
shares repurchased -- -- -- --* 0.03
====================================================================================================================
NET ASSET VALUE, END OF
YEAR 22.82 16.04 14.06 13.93 7.47
====================================================================================================================
Market value, end of
year 22.80 13.71 12.80 18.08 6.50
====================================================================================================================
TOTAL INVESTMENT RETURN
Per share market value 67.1% 7.6% (29.2%) 178.2% (1.1%)
Per share net asset
value 43.0% 14.5% 0.9% 86.5% (8.2%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year 104,623,906 73,558,649 64,487,971 63,882,635 34,248,715
Ratios of total expenses
to average net assets 1.95% 2.08% 2.22% 2.54% 2.62%
Ratios of net investment
income (loss) to
average net assets 0.36% 0.90% 0.31% (0.19%) (0.44%)
Portfolio turnover rate 192.4% 121.8% 168.6% 162.5% 245.0%
Number of shares
outstanding at end of
year (in thousands) 4,585 4,585 4,585 4,585 4,587
*Less than $0.01 per share.
See accompanying notes to financial statements.
-- 15 --
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
DECEMBER 31, 2006
--------------------------------------------------------------------------------
1. ORGANIZATION AND CAPITAL
JF 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 ("GAAP"), are consistently followed by the Fund in the
preparation of its financial statements.
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net
assets from operations during the reported period. 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. 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 United States ("U.S.") dollar
equivalents at the exchange rate in effect on the valuation date.
II) FOREIGN CURRENCY TRANSLATION
The books and records of the Fund are maintained in U.S. 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,
-- 16 --
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
realized and unrealized foreign currency gains (losses) are
included in the reported net realized and unrealized gains
(losses) on investments.
Unrealized currency gains (losses) resulting 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.
III) DISTRIBUTION OF INCOME AND GAINS
The Fund intends to distribute to stockholders, 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 GAAP.
IV) OTHER
Security transactions are accounted for on trade date. 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.
3. INVESTMENT TRANSACTIONS
The investment objective, policies, program, and risk factors of the
Fund are described fully in the Fund's Prospectus.
During the year ended December 31, 2006, the Fund made purchases of
$161,054,496 and sales of $161,441,031 of investment securities other
than short-term investments. There were no purchases or sales of U.S.
government securities.
4. RELATED PARTY, OTHER SERVICE PROVIDER TRANSACTIONS AND DIRECTORS
I) JF International Management Inc. (the "Adviser"), an indirect
wholly-owned subsidiary of JPMorgan Chase & Co., provides
investment advisory services to the Fund under the terms of an
investment advisory agreement. The Adviser is paid a fee, computed
weekly and payable monthly, at the annual rate of 1.00% of the
Fund's weekly net assets.
II) During the year ended December 31, 2006, the Fund did not pay any
brokerage commissions to JPMorgan Chase Group companies or
affiliated brokers/dealers.
III) OTHER SERVICE PROVIDERS
During the year, PFPC Inc. (the "Administrator") provided
administrative and accounting services to the Fund under an
Administrative and Accounting Services Agreement. The
-- 17 --
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
Administrator received 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. Effective January 1, 2007,
JPMorgan Worldwide Securities Services will take over as the
Administrator.
IV) DIRECTORS
The Fund pays each of its Directors who is not a director, officer
or employee of the Adviser, Administrator or any affiliate thereof
an annual fee of $16,000 and the Chairman $19,000 plus $1,400
attendance fee for each Board and committee meeting attended. In
addition, the Fund reimburses all directors for travel and
out-of-pocket expenses incurred in connection with Board of
Directors meetings. Under normal circumstances, in order to
minimise expenses, the Board expects to hold two meetings a year
by telephone.
5. CAPITAL SHARE TRANSACTIONS
On September 7, 2006, the Board of Directors renewed an authority for
the Fund to purchase shares of its common stock from Fund stockholders,
as described below. When shares trade at a discount to net asset value,
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 458,516 shares (10% of
its issued and outstanding shares) in the open market through
September 5, 2007. Repurchases can be made only when the Fund's
shares are trading at less than net asset value and at such times
and amounts as it is believed to be in the best interest of the
Fund's stockholders.
During the year ended December 31, 2006 and the year ended
December 31, 2005, the Fund did not repurchase any shares under
the share repurchase program.
6. RISKS AND UNCERTAINTIES
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
In the normal course of business, the Fund may enter into
contracts that provide general indemnifications. The maximum
exposure under these arrangements is dependent on future claims
that may be made against the Fund and, therefore, cannot be
estimated; however, based on experience, the risk of any loss from
such claims is considered remote.
-- 18 --
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
7. TAX STATUS
I) 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
under subchapter M of the Internal Revenue Code and distribute
substantially all of its taxable income.
The tax character of distributions paid for the year ended
December 31, 2006 was $419,175 ordinary income.
At December 31, 2006, the components of net assets (excluding
paid-in capital) on a tax basis were as follows:
Tax basis Ordinary Income ............................................ $ 324,053
------------
Tax basis capital loss carryforward ................. $(5,739,705)
Plus/Less:cumulative timing differences --
wash sales ........................................ (429,587)
-----------
Accumulated capital loss ............................................. (6,169,292)
------------
Book unrealized foreign exchange gain ................................ 0
------------
Book unrealized appreciation on foreign currencies ................... 0
------------
Tax unrealized appreciation ......................... $26,048,376
Plus/Less:cumulative timing differences --
wash sales ........................................ 429,587
-----------
Unrealized appreciation .............................................. 26,477,963
------------
Net assets (excluding paid-in capital) ............................... $ 20,632,724
============
The difference between book and tax basis unrealized appreciation
is primarily attributable to wash sales. The cumulative timing
difference for the capital loss carryover is due to wash sales.
Net Asset Value .................................. $104,623,906
Paid-in Capital .................................. (83,991,182)
------------
Net assets (excluding paid-in capital) ........... $ 20,632,724
============
As of December 31, 2006, the Fund had capital loss carryforwards
for federal income tax purposes of $5,739,705, of which $2,129,532
expires in 2008, $3,610,173 expires in 2009. The Fund intends to
retain gains realized in future periods that may be offset by
available capital loss carryforward.
-- 19 --
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
--------------------------------------------------------------------------------
During the year ended December 31, 2006, the Fund reclassified
$6,725 to undistributed net investment income from accumulated
realized loss on investments as a result of permanent book and tax
differences relating to realized foreign currency losses. The Fund
also reclassified $26,180 from undistributed net investment income
to paid-in capital as a result of nondeductible expenses
associated with the deficiency dividend. Net assets were not
affected by the reclassifications.
8. RECENT ACCOUNTING PRONOUNCEMENTS
In July 2006, the Financial Accounting Standards Board issued
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an
Interpretation of FASB Statement No. 109" (the "Interpretation"). The
Interpretation establishes for all entities, including pass-through
entities such as the Fund, a minimum threshold for financial statement
recognition of the benefit of positions taken in filing tax returns
(including whether an entity is taxable in a particular jurisdiction),
and requires certain expanded tax disclosures. The Interpretation is
effective for fiscal years beginning after December 15, 2006, and is to
be applied to all open years as of the date of effectiveness. The Fund
will not be required to adopt FIN 48 until June 29, 2007 (the last
business day of the semi-annual reporting period) and the impact of FIN
48 will then be reflected in the Fund's semi-annual financial statements
contained in their Form N-CSR filing. Management has recently begun to
evaluate the tax application of the Interpretation to the Fund, and is
not in a position at this time to estimate the significance of its
impact, if any, on the Fund's financial statements.
In September 2006, the FASB issued STATEMENT ON FINANCIAL ACCOUNTING
STANDARDS ("SFAS") No. 157, "FAIR VALUE MEASUREMENTS." This standard
establishes a single authoritative definition of fair value, sets out a
framework for measuring fair value and requires additional disclosures
about fair value measurements. SFAS No. 157 applies to fair value
measurements already required or permitted by existing standards. SFAS
No. 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007 and interim periods within those
fiscal years. The changes to current generally accepted accounting
principles from the application of this Statement relate to the
definition of fair value, the methods used to measure fair value, and
the expanded disclosures about fair value measurements. As of December
31, 2006, the Fund does not believe the adoption of SFAS No. 157 will
impact the amounts reported in the financial statements, however,
additional disclosures may be required about the inputs used to develop
the measurements and the effect of certain of the measurements reported
on the Statement of Changes in Net Assets for a fiscal period.
-- 20 --
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------
To the Board of Directors and Shareholders of
JF China Region Fund, Inc.:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of JF China Region Fund, Inc. (the
"Fund") at December 31, 2006, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the five years in the period
then ended, in conformity with accounting principles generally accepted in the
United States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 2006 by correspondence with the custodian and brokers, provide a
reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 26, 2007
-- 21 --
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
RESULTS OF THE ANNUAL STOCKHOLDERS MEETING (UNAUDITED)
--------------------------------------------------------------------------------
The Fund held its annual stockholders meeting on May 11, 2006. At this meeting,
stockholders elected the following nominees to the Fund's Board of Directors.
I) ELECTION OF DIRECTORS
NOMINEE VOTES FOR VOTES WITHHELD NON-VOTING SHARES TOTAL VOTING SHARES
------- --------- -------------- ----------------- -------------------
The Rt. Hon.
The Earl of Cromer 3,482,739 164,641 937,780 4,585,160
Alexander Reid Hamilton 3,483,898 163,482 937,780 4,585,160
OTHER INFORMATION
--------------------------------------------------------------------------------
QUALIFIED DIVIDEND INCOME
We are providing this information as required by the Internal Revenue Code. The
amounts shown may differ from those elsewhere in this report because of
differences between tax and financial reporting requirements. For taxable
non-corporate shareholders, 100% of the Fund's ordinary income distributions
paid during the year ended December 31, 2006, represent qualified dividend
income subject to the 15% rate category.
TREASURER AND CHIEF FINANCIAL OFFICER
Michael J. James replaced A. Douglas Eu as Fund Treasurer and Chief Financial
Officer effective August 10, 2006.
DEFICIENCY DIVIDEND
On July 26, 2006, the Board of Directors of the Fund declared a deficiency
dividend of $0.05822 per share to shareholders of record as of August 1, 2006
and ordered the payment of a related compliance fee of approximately $50,000 to
the Internal Revenue Service to satisfy a spillback dividend election taken by
the Fund for the tax year ended December 31, 2004 and maintain the Fund's status
as a regulated investment company under subchapter M of the Internal Revenue
Code. The Fund filed the forms necessary to claim the deficiency dividend as a
dividend paid deduction with the IRS on August 8, 2006. The related compliance
fee was paid to the IRS on August 21, 2006. Approximately 53% of the total costs
in relation to this matter has been recovered from service providers.
INFORMATION ABOUT PORTFOLIO HOLDINGS
The Fund files its complete schedule of portfolio holdings with the U.S.
Securities and Exchange Commission (the "Commission") for the first and third
quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q are available on
the Commission's website at http://www.sec.gov and may be reviewed and copied at
the Commission's Public Reference Room in Washington, DC. Information on the
operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
-- 22 --
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
OTHER INFORMATION
--------------------------------------------------------------------------------
PROXY VOTING POLICIES AND PROCEDURES AND PROXY VOTING RECORD
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request, by calling 202-942-8008, and on the Commission's website at
http://www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30 is available
without charge, upon request, by calling 202-942-8088, and on the Commission's
website at http://www.sec.gov.
CERTIFICATIONS
Simon J. Crinage, as the Fund's President, has certified to the New York Stock
Exchange that, as of June 9, 2006, he was not aware of any violation by the Fund
of applicable NYSE corporate governance listing standards. The Fund's reports to
the Commission on Forms N-CSR and N-CSRS contain certifications by the Fund's
principal executive officer and principal financial officer that relate to the
Fund's disclosure in such reports and that are required by Rule 30a-2(a) under
the 1940 Act.
-- 23 --
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
APPROVAL OF INVESTMENT ADVISORY CONTRACT
--------------------------------------------------------------------------------
On November 28, 2006, the Fund's Board of Directors (the "Board") considered and
approved the renewal of the Investment Advisory Contract (the "Agreement")
between the Fund and JFIMI for an additional term of twelve months. At this
meeting, the Board reviewed extensive materials prepared by JFIMI and discussed
these materials with representatives of JPMAM. The Directors considered the
recommendation of the Management Engagement Committee (the "Committee") that the
Agreement be renewed, noting that the Committee had discussed, in executive
session with independent counsel, the nature, extent and quality of the advisory
services provided to the Fund by JFIMI, the level of advisory fees, the costs of
the services provided and the profits realized by JFIMI, the Fund's expense
ratio, its relative and absolute performance, any economies of scale with
respect to the management of the Fund, any ancillary benefits received by JFIMI
and its affiliates as a result of their relationship with the Fund, and various
other matters included in the materials provided by JFIMI. In approving the
renewal of the Agreement, the Committee, and the Board, concluded that:
o The annual investment advisory fee rate paid by the Fund to JFIMI for
investment advisory services was reasonable relative to the Fund's peer group
and relative to other non-U.S. funds managed by JFIMI.
o The Committee and the Board were satisfied with the nature, quality and extent
of services provided by JFIMI. In reaching this conclusion, the Committee and
the Board reviewed, among other things, JFIMI's investment experience in the
China region markets, the background and experience of JFIMI's senior
management, including the firm's new head of the Greater China team. The
Committee and the Board also received information regarding JFIMI's compliance
with applicable laws and SEC and other regulatory inquiries or audits of the
Fund and JFIMI.
o The Fund's performance, particularly in the one-year period, was improving as
compared to the Fund's peer group and the Fund's benchmark, the MSCI Golden
Dragon Index. (The Board and the Committee reviewed the Fund's performance in
comparison to the peer group and the benchmark for the 1 year, 3 year, 5 year
and since inception periods.) The Board and Committee concluded that, during
the most recent fiscal year, JFIMI had made improvements with respect to the
investment processes used in managing the Fund.
o The Fund's expense ratio remained at an acceptable level, and that JFIMI had
been successful in negotiating reductions of certain of the Fund's operating
expenses.
o Any potential economies of scale were being shared between the Fund and JFIMI
in an appropriate manner.
o In light of the costs of providing advisory services to the Fund, the profits
and ancillary benefits that JFIMI received, with respect to providing
investment advisory services to the Fund, were reasonable. The Board and the
Committee noted that beginning in May 2005, the Fund discontinued using
JFIMI's affiliates to affect Fund securities trades, unless in exceptional
circumstances, effectively eliminating brokerage commissions as an ancillary
benefit for JFIMI.
-- 24 --
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
FUND MANAGEMENT
--------------------------------------------------------------------------------
Information pertaining to the Directors and officers of the Fund is set forth
below.
------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS IN OTHER
OFFICE AND FUND COMPLEX TRUSTEESHIPS/
NAME, (DOB), ADDRESS AND LENGTH OF TIME PRINCIPAL OCCUPATION(S) OVERSEEN BY DIRECTORSHIPS
POSITION(S) WITH FUND SERVED(1) DURING PAST 5 YEARS DIRECTOR(2) HELD BY DIRECTOR
------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT DIRECTORS
------------------------------------------------------------------------------------------------------------------------------------
The Rt. Hon. The Earl of Cromer Since 1994 Chairman of the Board of the 1 Director of Schroder Asia
(June 3, 1946) Fund; Chief Executive Officer Pacific Fund Limited,
Finsbury Dials of Cromer Associates Limited Business Link Somerset
20 Finsbury Street (family business). Limited, Pacific Basin
London, EC2Y 9AQ Shipping Limited,
United Kingdom Cambridge Asia
Chairman and Director, Class I Investments Limited,
Pedder Street Asia
Absolute Return Fund
Limited, Chairman of
Japan High Yield Property
Fund Limited and Western
Provident Association;
former Director of
Inchcape Pacific Limited
and Korea Asia Fund
Limited.
------------------------------------------------------------------------------------------------------------------------------------
Alexander Reid Hamilton Since 1994 Director of Citic Pacific 1 See Principal Occupation
(October 4, 1941) Limited (infrastructure), China
P.O. Box 12343 Cosco Holdings Company Limited
General Post Office (container shipping), Esprit
Hong Kong Holdings Limited (clothing
Director, Class I retail), Shangri-La Asia
Limited (hotels) and Octopus
Cards Limited (financial
services).
------------------------------------------------------------------------------------------------------------------------------------
Julian M. I. Reid Since 1998 Chief Executive Officer of 3a 1 Director and Chairman of
(August 7, 1944) Asset Management Limited; The Korea Fund, Inc.,
Finsbury Dials, Director and Chairman of Director and Chairman of
20 Finsbury Street Morgan's Walk Properties Prosperity Voskhod Fund,
London, EC2Y 9AQ Limited. and Director of 3a Global
United Kingdom Growth Fund Limited.
Director, Class III
------------------------------------------------------------------------------------------------------------------------------------
(1)Number I, II or III below a director's name indicates whether he serves in Class I, II, or III of the Board of Directors. Class I
directors will be elected as of the 2007 Annual Meeting. Class II directors will serve until the 2008 Annual Meeting with the
position then becoming one for subsequent three-year terms. Class III directors will serve until the 2008 Annual Meeting with the
position then becoming one for subsequent three-year terms.
(2)The Fund is the only fund in the Fund Complex.
-- 25 --
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
FUND MANAGEMENT (CONTINUED)
--------------------------------------------------------------------------------
Information pertaining to the Directors and officers of the Fund is set forth
below.
------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS IN OTHER
OFFICE AND FUND COMPLEX TRUSTEESHIPS/
NAME, (DOB), ADDRESS AND LENGTH OF TIME PRINCIPAL OCCUPATION(S) OVERSEEN BY DIRECTORSHIPS
POSITION(S) WITH FUND SERVED(1) DURING PAST 5 YEARS DIRECTOR(2) HELD BY DIRECTOR
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS WHO ARE NOT DIRECTORS
------------------------------------------------------------------------------------------------------------------------------------
Michael J. James Since 2006 Treasurer of the Fund; Vice N/A N/A
(May 11, 1967) President, JPMorgan Asset
Finsbury Dials, Management since September
20 Finsbury Street 2000. Prior to that, Director
London, EC2Y 9AQ of JPMorgan Asset Management
United Kingdom (UK) Limited.
Treasurer
------------------------------------------------------------------------------------------------------------------------------------
Simon J. Crinage Since 2003 President of the Fund; Vice N/A N/A
(May 10, 1965) President, JPMorgan Asset
Finsbury Dials, Management since September
20 Finsbury Street 2000. Prior to that, Director
London, EC2Y 9AQ of JPMorgan Asset Management
United Kingdom (UK) Limited.
President
------------------------------------------------------------------------------------------------------------------------------------
Hilary A.Lowe Since 2005 Secretary of the Fund; N/A N/A
(November 15, 1971) Associate JPMorgan Asset
Finsbury Dials, Management since February 2002.
20 Finsbury Street
London, EC2Y 9AQ
United Kingdom
Secretary
------------------------------------------------------------------------------------------------------------------------------------
(!)Number I, II or III below a director's name indicates whether he serves in Class I, II, or III of the Board of Directors. Class I
directors will be elected as of the 2007 Annual Meeting. Class II directors will serve until the 2008 Annual Meeting with the
position then becoming one for subsequent three-year terms. Class III directors will serve until the 2008 Annual Meeting with the
position then becoming one for subsequent three-year terms.
(2)The Fund is the only fund in the Fund Complex.
-- 26 --
[GRAPHIC OMITTED]
JF 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 THE PLAN AGENT:
Computershare Trust Company, N.A.
P. O. Box 43010
Providence, RI 02940-3010 USA
Telephone No.: 800-426-5523 (toll-free)
www.computershare.com
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.
-- 27 --
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(This Page Intentionally Left Blank)
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
DIRECTORS AND ADMINISTRATION
--------------------------------------------------------------------------------
OFFICERS AND DIRECTORS THE RT. HON. THE EARL OF CROMER - DIRECTOR AND
CHAIRMAN OF THE BOARD
Alexander R. Hamilton - Director
Julian M. I. Reid - Director
Simon J. Crinage - President
Michael J. James - Treasurer*
Hilary A. Lowe - Secretary
INVESTMENT ADVISER JF INTERNATIONAL MANAGEMENT INC.
P.O. Box 3151
Road Town, Tortola
British Virgin Islands
ADMINISTRATOR TO DECEMBER 31, 2006 FROM JANUARY 1, 2007
PFPC INC. JPMORGAN WORLDWIDE SECURITIES SERVICES
301 Bellevue Parkway 73 Tremont Street, 11th Floor
Wilmington, Delaware 19809 Boston, Massachusetts 02108
U.S.A. U.S.A.
CUSTODIAN TO DECEMBER 31, 2006 FROM JANUARY 1, 2007
CITIBANK N.A. JPMORGAN WORLDWIDE SECURITIES SERVICES
NEW YORK: 73 Tremont Street, 11th Floor
111 Wall Street, 16th Floor Boston, Massachusetts 02108
New York, New York 10005 U.S.A.
U.S.A.
HONG KONG:
Citibank Tower
Citibank Plaza
3 Garden Road
Hong Kong
INDEPENDENT REGISTERED PRICEWATERHOUSECOOPERS LLP
PUBLIC ACCOUNTING FIRM Two Commerce Square
2001 Market Street
Philadelphia, Pennsylvania 19103
U.S.A.
LEGAL COUNSEL CLEARY GOTTLIEB STEEN & HAMILTON LLP
NEW YORK:
1 Liberty Plaza
New York, New York 10006
U.S.A.
HONG KONG:
Bank of China Tower
1 Garden Road
Hong Kong
REGISTRAR, TRANSFER AGENT, COMPUTERSHARE TRUST COMPANY, N.A.
AND DIVIDEND PAYING AGENT P. O. BOX 43010
Providence, Rhode Island 02940-3010
U.S.A.
* MICHAEL J. JAMES REPLACED A. DOUGLAS EU AS FUND TREASURER AND CHIEF FINANCIAL
OFFICER EFFECTIVE AUGUST 10, 2006.
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.
WWW.JFCHINAREGION.COM
-- 30 --
This report, including the financial statements herein, is sent to the
stockholders 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.
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report,
has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party.
(b) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are
employed by the registrant or a third party, and that relates to any
element of the code of ethics description.
(c) The registrant has not, during the period covered by this report,
granted any waivers, including an implicit waiver, from a provision of
the code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party, that relates to one or more of the items set forth
in paragraph (b) of this item's instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Registrant's Board of Directors has determined that it does not have an "audit
committee financial expert" serving on its audit committee. While Registrant
believes that each of the members of its audit committee has sufficient
knowledge of accounting principles and financial statements to serve on the
audit committee, none has the requisite experience to qualify as an "audit
committee financial expert" as such term is defined by the Securities and
Exchange Commission.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The registrant incorporates by reference the information disclosed under the
caption "Independent Registered Public Accounting Firm" from its definitive
proxy statement that will be filed with the Commission no later than 120 days
after the end of the fiscal year covered by this report.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately designated audit committee consisting of all the
independent directors of the registrant. The members of the audit committee are:
The Rt. Hon. The Earl of Cromer, Alexander Reid Hamilton and Julian I.M. Reid.
ITEM 6. SCHEDULE OF INVESTMENTS.
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The Proxy Voting Policies are set forth below.
NOVEMBER 2005 EDITION
JF ASSET MANAGEMENT
VOTING POLICY
& CORPORATE GOVERNANCE
GUIDELINES
TABLE OF CONTENTS
I PRINCIPLES 3
II POLICY AND PROCEDURES 4
III VOTING GUIDELINES 6
REPORTS & ACCOUNTS 6
DIVIDENDS 6
AUDITORS 6
BOARDS 6
DIRECTORS 7
NON-EXECUTIVE DIRECTORS 8
ISSUE OF CAPITAL 8
MERGERS/ACQUISITIONS 9
VOTING RIGHTS 9
SHARE OPTIONS/L-TIPS 10
OTHERS 10
IV ACTIVISM 12
V SUSTAINABILITY 13
I. PRINCIPLES
JF ASSET MANAGEMENT ("JFAM") is committed to delivering superior investment
performance to its clients worldwide. We believe that one of the drivers of
investment performance is an assessment of the corporate governance
principles and practices of the companies in which we invest our clients'
assets and we expect those companies to demonstrate high standards of
governance in the management of their business.
We have set out below the principles which provide the framework for our
corporate governance activity. Although the policies and guidelines set out
in this document apply to Hong Kong and therefore principally concern
accounts managed from the Hong Kong office, our colleagues in London, New
York and Tokyo have similar standards, consistent with law and best
practice in these different locations.
1. FIDUCIARY PRIORITY. Our clients appoint us to manage their assets in
order to maximise the likelihood of meeting or exceeding their
investment objectives at acceptable risk levels. Every decision to
buy, hold or sell any security will be consistent with that overriding
objective.
2. EVALUATION. Our clients expect us, as their delegates, to monitor the
governance of companies in which we have invested their assets.
3. ENGAGEMENT. We encourage excellence in the management of companies
through the considered application of our corporate governance
policies and guidelines. We welcome consultation by companies with
their leading shareholders on corporate governance issues.
4. PROXY VOTING. Company management is accountable to the shareholders,
our clients. It is our responsibility to ensure this is recognised
through the considered use of our clients' votes.
5. LITIGATION AND JOINT WORKING PARTIES. JFAM will align itself with
other shareholders, for example, by joining class action suits or
working parties as local practice dictates, where we are convinced
that this is in the best interests of our clients.
6. DISCLOSURE. JFAM's corporate governance guidelines and policies are
available to clients and companies alike. We believe that they conform
to best practice and we are prepared to discuss them openly with other
interested parties.
7. ONGOING COMMITMENT. JFAM is committed to reviewing its corporate
governance principles, policies and guidelines to ensure that they
fully reflect our interpretation of best market practice.
JF ASSET MANAGEMENT
HONG KONG PROXY COMMITTEE
II. POLICY AND PROCEDURES
JF Asset Management ("JFAM") manages the voting rights of the shares
entrusted to it as it would manage any other asset. It is the policy of
JFAM to vote in a prudent and diligent manner, based exclusively on our
reasonable judgement of what will best serve the financial interests of the
beneficial owners of the security.
1. PROXY COMMITTEE
The Hong Kong Proxy Committee has been established to oversee the proxy
voting process in the Asia ex Japan region on an ongoing basis. It is
composed of the Proxy Administrator and senior officers from the
Investment, Compliance and Risk Management Departments. The main functions
of the Proxy Committee are to review the Proxy Voting Guidelines
("Guidelines") to ensure they are aligned with best practice; to determine
the independence of any third-party vendor which it has delegated proxy
voting responsibilities and to conclude that there are no conflicts of
interest that would prevent such vendor from providing such proxy voting
services prior to delegating proxy responsibilities; and to provide advice
and recommendations on general proxy voting matters as well as on specific
voting issues as they occur. The Proxy Committee may delegate certain of
its responsibilities to subgroups composed of Proxy Committee members. It
meets quarterly, or more frequently as circumstances dictate and its
minutes are circulated to senior management including the Asia Risk
Committee to whom it reports.
2. VOTING
As these Guidelines represent what we consider to be in the best financial
interests of our clients, we would normally expect clients to allow us to
use them as a template for voting. However, we recognise that in certain
circumstances further analysis may be required.
In view our overriding fiduciary duty to act in the best interest of our
clients, the Guidelines are an indication only of JFAM's voting policy. The
portfolio manager has discretion to override the policy should individual
circumstances dictate.
Our Guidelines are primarily targeted at companies listed on main stock
exchanges. It is sometimes difficult for smaller companies to apply the
same corporate governance standards and we would look at any issues for
such companies on a case-by-case basis. We would, however, encourage them
to apply the highest possible standards of governance.
For markets in Asia ex Japan, we will generally abstain from voting at AGMs
on the grounds that the matters normally considered at such meetings are of
a routine and non-contentious nature. To ensure we fulfil our fiduciary
obligation to always act in our clients best interests, we will review each
AGM notice to check whether there are any non-routine matters such as
company reorganisations/ restructurings, takeover/ merger and senior
management compensation plans included therein. If any such matters are
identified then we will consider each one individually so that our clients'
best interests are served. The major routine matters in AGM are as follows:
1. Accept Financial Statement and Statutory Reports
2. Approve Dividend
3. Election and re-election of directors
4. Fix remuneration of directors
5. Appoint auditors and fix remunerations
6. Approve issuance of Equity or Equity-Linked Securities without
pre-emptive rights
7. Approve repurchase of shares (up to 20% of issued capital)
8. Authorise reissuance of repurchased shares
Also, certain markets require that shares are blocked from trading in order
to be tendered for voting purposes. In these instances, it may be in our
clients' best interests to abstain from voting in order to preserve the
ability to trade. For these countries, a decision will be taken on a
case-by-case basis by the research analyst in conjunction with the
portfolio manager in order to determine how our clients' best interests are
served.
To assist JFAM investment professionals with public companies' proxy voting
proposals, we have retained the services of an independent proxy voting
service, Institutional Shareholder Services Inc. (ISS). ISS is assigned
responsibility for various functions, which may include one or more of the
following: coordinating with client custodians to ensure that all proxy
materials are processed in a timely fashion; providing JFAM with a
comprehensive analysis of each proxy proposal and providing JFAM with
recommendations on how to vote each proxy proposal based on the Guidelines
or, where no Guideline exists or where the Guidelines require a
case-by-case analysis, on ISS' analysis; and executing the voting of the
proxies in accordance with Guidelines and its recommendation, except when a
recommendation is overridden by JFAM, as described below.
Situations can sometimes arise where more than one JFAM client invests in
the same company or in which a single client may invest in the same company
but in multiple accounts. In those situations, two or more clients, or one
client with different accounts, may be invested in strategies having
different investment objectives, investment styles, or portfolio managers.
As a result, JFAM may cast different votes on behalf of different clients
or on behalf of the same client with different accounts.
In the event a JFAM investment professional makes a recommendation in
connection with an override, the investment professional must provide the
appropriate Proxy Administrator with a written certification
("Certification") which shall contain an analysis supporting his or her
recommendation and a certification that he or she (A) received no
communication in regard to the proxy that would violate either the JPMorgan
Chase ("JPMC") Safeguard Policy or written policy on information barriers,
or received any communication in connection with the proxy solicitation or
otherwise that would suggest the existence of an actual or potential
conflict between JFAM's interests and that of its clients and (B) was not
aware of any personal or other relationship that could present an actual or
potential conflict of interest with the clients' interests.
3. ENGAGEMENT
We regard regular, systematic and direct contact with senior company
management, both executive and non-executive, as crucially important. We
consider that these dialogues have been useful and plan to expand this
approach.
4. CONFLICTS OF INTEREST
In order to maintain the integrity and independence of JFAM's proxy-voting
decisions, JPMorgan Chase (including JPMAM) has established formal barriers
designed to restrict the flow of information between JPMC's securities,
lending, investment banking and other divisions to JPMAM investment
professionals.
Where a potential material conflict of interest has been identified, the
Proxy Administrator, in consultation with the Proxy Committee, evaluates
the potential conflict and determines whether an actual conflict exists. In
the event that this is the case, they make a recommendation on how to vote
the proxy. A record of such decisions is available to clients on request.
Finally, it should be pointed out that this document is intended as an
overview only. Specific issues should always be directed to your account
administrator or portfolio manager.
III. VOTING GUIDELINES
1. REPORTS & ACCOUNTS
1A. ANNUAL REPORT
Reports and accounts should be both detailed and transparent, and should be
submitted to shareholders for approval. They should meet accepted reporting
standards, and company accounts should employ Generally Accepted Accounting
Practices (GAAP). Reports should meet with the spirit as well as the letter
of reporting standards, including the most recent recommendations of the
International Accounting Standards Board (IASB).
The annual report should include a statement of compliance with relevant
codes of best practice, in markets where they exist.
Legal disclosure varies from market to market. If, in our opinion, a
company's standards of disclosure (whilst meeting minimum legal
requirements) are insufficient in any particular area, we will inform
company management of our concerns. Depending on the circumstances, we will
either abstain or vote against the resolution concerned. Similar
consideration would relate to the use of inappropriate accounting methods.
2. DIVIDENDS
Proposals for the payment of dividends should be presented to shareholders
for approval, and should be fully disclosed in advance of the meeting. We
will vote against dividend proposals if we feel that payment of the
proposed dividend would prejudice the solvency or future prospects of the
company.
3. AUDITORS
3A. AUDITOR INDEPENDENCE
Auditors must provide an independent and objective check on the way in
which the financial statements have been prepared and presented. JFAM will
vote against the appointment or re-appointment of auditors who are not
perceived as being independent.
3B. AUDITOR REMUNERATION
Companies should be encouraged to distinguish clearly between audit and
non-audit fees. Audit fees should never be excessive.
4. BOARDS
4A. CHAIRMAN & CEO
JFAM believes that it is best practice for the roles of Chairman and Chief
Executive Officer to be separate.
4B. BOARD STRUCTURE
JFAM is in favour of unitary boards of the type found in Hong Kong, as
opposed to tiered board structures.
4C. BOARD SIZE
Boards with more than 20 directors are considered to be excessively large.
4D. BOARD INDEPENDENCE
JFAM believes that a strong independent element to a board is essential to
the effective running of a company. The calibre and number of non-executive
directors on a board should be such that their views will carry significant
weight in the board's decisions.
We believe that as a minimum, all boards should have at least three
non-executive directors, unless the company is of such a size that
sustaining such a number would be an excessive burden.
JFAM will use its voting powers to encourage appropriate levels of board
independence, taking into account local market practice.
4E. BOARD COMMITTEES
Where appropriate, boards should delegate key oversight functions to
independent committees. The Chairman and members of any Committee should be
clearly identified in the annual report.
5. DIRECTORS
5A. EXECUTIVE DIRECTOR'S REMUNERATION
Executive remuneration is and will remain a contentious issue, particularly
the overall quantum of remuneration.
JFAM will generally vote against shareholder proposals to restrict
arbitrarily the compensation of executives or other employees.
5B. DIRECTOR'S LIABILITY
In certain markets, this proposal asks shareholders to give blanket
discharge from responsibility for all decisions made during the previous
financial year. Depending on the market, this resolution may or may not be
legally binding, and may not release the board from its legal
responsibility.
JFAM will usually vote against discharging the board from responsibility in
cases of pending litigation, or if there is evidence of wrongdoing for
which the board must be held accountable.
5C. DIRECTORS OVER 70
JFAM considers that a similar standard of care should be applied to the
selection of a director over 70 as would be applied to that of any other
director, although we would expect to see such a director offer him or
herself for re-election each year.
5D. DIRECTORS' CONTRACT
Generally, we encourage contracts of one year or less and vote accordingly.
6. NON-EXECUTIVE DIRECTORS
6A. ROLE OF NON-EXECUTIVE DIRECTORS
As stated earlier in these guidelines, JFAM believes that a strong
independent element to a board is important to the effective running of a
company.
In determining our vote, we will always consider independence issues on a
case-by-case basis, taking into account any exceptional individual
circumstances, together with local markets' differing attitudes to director
independence.
In order to help assess their contribution to the company, the time spent
by each non-executive director should be disclosed to shareholders, as well
as their attendance at board and committee meetings.
Audit and Remuneration Committees should be composed exclusively of
independent directors.
6B. DIRECTOR INDEPENDENCE
We consider that a director will generally be deemed to be independent if
he or she has no significant financial, familial or other ties with the
company which might pose a conflict, and has not been employed in an
executive capacity by the company for at least the previous ten years.
6C. MULTIPLE DIRECTORSHIPS
In order to be able to devote sufficient time to his or her duties, we
would not normally expect a non-executive to hold more than five
significant directorships at any one time. For executives, only one
additional non-executive post would normally be considered appropriate
without further explanation.
6D. NON-EXECUTIVE DIRECTOR REMUNERATION
Non-executive directors should be paid but should not be awarded options.
6E. BONUSES FOR RETIRING DIRECTORS AND INTERNAL STATUTORY AUDITORS
JFAM will generally vote Against proposals for retirement bonuses which
will be paid to retirees including one or more directors or statutory
auditors designated by companies as an outsider.
7. ISSUE OF CAPITAL
7A. ISSUE OF EQUITY
In most countries, company law requires that shareholder approval be
obtained in order to increase the authorised share capital of the company.
Proposals for equity issues will also specify whether pre-emptive rights
are to be retained or suppressed or partially suppressed for the issue. As
a general rule, JFAM believes that any new issue of equity should first be
offered to existing shareholders on a pre-emptive basis.
JFAM will vote in favour of increases in capital which enhance a company's
long-term prospects.
7B. ISSUE OF DEBT
Reasons for increased bank borrowing powers are many and varied, including
allowing normal growth of the company, the financing of acquisitions, and
allowing increased financial leverage. Management may also attempt to
borrow as part of a takeover defence.
JFAM will vote in favour of proposals which will enhance a company's
long-term prospects. We will vote against an increase in bank borrowing
powers which would result in the company reaching an unacceptable level of
financial leverage, where such borrowing is expressly intended as part of a
takeover defence, or where there is a material reduction in shareholder
value.
7C. SHARE REPURCHASE PROGRAMMES
Boards may instigate share repurchase or stock buy-back programs for a
number of reasons. JFAM will vote in favour of such programmes where the
repurchase would be in the best interests of shareholders, and where the
company is not thought to be able to use the cash in a more useful way.
We will vote against such programmes when shareholders' interests could be
better served by deployment of the cash for alternative uses, or where the
repurchase is a defensive manoeuvre or an attempt to entrench management.
8. MERGERS / ACQUISITIONS
Mergers and acquisitions are always reviewed on a case-by-case basis by the
investment analyst in conjunction with portfolio managers and, in
exceptional circumstances, the Proxy Committee. Individual circumstances
will always apply. However, as a general rule, JFAM will favour mergers and
acquisitions where the proposed acquisition price represents fair value,
where shareholders cannot realise greater value through other means, and
where all shareholders receive fair and equal treatment under the
merger/acquisition terms.
9. VOTING RIGHTS
JFAM believes in the fundamental principle of "one share, one vote".
Accordingly, we will vote to phase out dual voting rights or classes of
share with restricted voting rights, and will oppose attempts to introduce
new ones. We are opposed to mechanisms that skew voting rights, such as
cumulative voting; directors should represent all shareholders equally, and
voting rights should accrue in accordance with the shareholder's equity
capital commitment to the company.
10. SHARE OPTIONS / LONG-TERM INCENTIVE PLANS (L-TIPS)
10A. SHARE OPTIONS
Best practice requires that share options be fully expensed, so that
shareholders can assess their true cost to the company. The assumptions and
methodology behind the expensing calculation should also be explained to
shareholders.
We will generally vote against the cancellation and re-issue, re-pricing,
of underwater options.
10B. LONG-TERM INCENTIVE PLANS (L-TIPS)
A Long-Term Incentive Plan ("L-TIP") can be defined as any arrangement,
other than deferred bonuses and retirement benefit plans, which require one
or more conditions in respect of service and/or performance to be satisfied
over more than one financial year.
JFAM normally will vote in favour of schemes with keen incentives and
challenging performance criteria, which are fully disclosed to shareholders
in advance, and vote against payments which are excessive or performance
criteria which are undemanding.
11. OTHERS
11A. CHARITABLE ISSUES
Charitable donations are generally acceptable, provided they are within
reasonable limits and fully disclosed to shareholders.
11B. POLITICAL ISSUES
JFAM does not normally support the use of shareholder funds for political
donations, and would require the fullest explanation as to why this would
be beneficial to shareholders.
11C. POISON PILLS
Poison pills, or shareholder rights plans, are designed to give
shareholders of a target company the right to purchase shares of the
acquiring company, the target company, or both at a substantial discount
from market value. These rights are exercisable once a pre-defined
"triggering event" occurs, generally a hostile takeover offer or an
outsider's acquisition of a certain percentage of stock. Corporations may
or may not be able to adopt poison pills without shareholder approval,
depending on the market.
In reaching its voting position, the Committee has reviewed and continues
to review current takeover events. However, it has concluded that there is
no clear evidence that poison pills deter takeover offers or defeat
takeover attempts and are, in fact, sometimes used as tools to entrench
management.
JFAM will generally vote against anti-takeover devices and support
proposals aimed at revoking existing plans. Where anti-takeover devices
exist, they should be fully disclosed to shareholders and shareholders
should be given the opportunity to review them periodically.
11D. COMPOSITE RESOLUTIONS
Agenda items at shareholder meetings should be presented in such a way that
they can be voted upon clearly, distinctly and unambiguously. We normally
oppose deliberately vague, composite or "bundled" resolutions, depending on
the context.
11E. AMENDMENTS TO COMPANY ARTICLES
i. Limitation on Directors' Liability - review on a case by case basis
ii. Changes in business activities/ Expansion of business line - generally
vote For
iii. Relaxation of Quorum Requirement - generally vote Against
iv. Shares Repurchase at discretion of the Board of Directors - review on
a case by case basis
v. Changes of shareholders record date at discretion of the Board of
Directors - generally vote Against
IV. ACTIVISM
ACTIVISM POLICY
1. DISCHARGE OF RESPONSIBILITIES
a) Our primary responsibility is to protect our clients' interests and,
as active managers, we therefore absolutely reserve the right to
dispose of an investment where a company fails to meet our
expectations.
b) Our investment managers and analysts have explicit responsibilities
for monitoring the companies in the universe of stocks from which
clients' portfolios are constructed. Whilst we attach considerable
importance to meetings with management (and several hundred take place
in Asia ex Japan each year), we also emphasise the benefits of
fundamental research into companies in our investment processes.
Industry research, balance sheet analysis and company news flow all
have a role to varying degrees in our company monitoring.
c) Our approach to dealing with conflicts of interest is described fully
in our Corporate Governance Policies and Procedures. We seek to
minimise conflicts by controlling information flows between different
parts of JPMorgan Chase. Where a material conflict does arise we
require investors who make the voting decision to certify that they
have acted solely in the clients' best interests.
2. MONITOR PERFORMANCE
Monitoring of company performance is a key part of our investment
processes. We maintain a record of all private meetings held with
companies. We regard these meetings as confidential and will not comment on
them outside JFAM.
3. EVALUATING AND REPORTING
We are convinced that a strong governance culture leads ultimately to a
better business and a better stock market rating. As investors we
scrutinise companies' governance policies as a part of our investment
research and take comfort from good governance.
V. SUSTAINABILITY
Where JFAM engages with companies on broader social, environmental and
sustainability issues, we have adopted a positive engagement approach.
Thus, specific assets or types of assets are not excluded on purely social,
environmental or ethical criteria (unless specifically requested by
clients). Rather, analysts take such issues into account as part of the
mainstream analytical process. Where appropriate, JFAM will also engage
with company management on specific issues at company one-to-one meetings.
This engagement activity can then be reported to clients as required.
Where social or environmental issues are the subject of a proxy vote, JFAM
will consider the issue on a case-by-case basis, keeping in mind at all
times the best financial interests of our clients.
It is anticipated that our sustainability program will continue to expand
both in terms of scope and market coverage as client demand and
availability of suitable resources dictate.
* * * * * * * * *
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
JF CHINA REGION FUND, INC.
INFORMATION AS OF DECEMBER 31, 2006
JF China Region Fund, Inc. ("Fund")
JF International Management Inc. ("Adviser")
(a)(1) Identify portfolio manager(s) of the Adviser to be named in the Fund
prospectus
Howard H. Wang joined JPMorgan Asset Management ('JPMAM') in Hong Kong in July
2005. Prior to his appointment, Mr. Wang spent eight years with Goldman Sachs,
where in 2004, he was appointed Managing Director, Equities and General Manager
of the Taipei branch office.
Emerson Yip joined JPMAM in Hong Kong in May 2006. Prior to his appointment, Mr.
Yip was a director of Newbridge Capital where, since 1998, he held various
positions of responsibility within the company.
The day-to-day management of the Fund's portfolio is handled by JPMAM's Greater
China investment team based in Hong Kong. The head of this team is Howard Wang
and Emerson Yip is the day-to-day portfolio manager.
------------------------------------------------------------------------------------------------------------------------------------
(a)(2)(ii) For each person identified in
(a)(1), provide number of other accounts (a)(2)(iii) For each of the categories in
managed by the person within each column (a)(2)(ii), provide number of accounts
category below and the total assets in and the total assets in the accounts with
the accounts managed within each respect to which the advisory fee is based
category below on the performance of the account
------------------------------------------------------------------------------------------------------------------------------------
Registered Registered
Investment Other Pooled Investment Other Pooled
Companies Investment Vehicles Other Accounts Companies Investment Vehicles Other Accounts
------------------------------------------------------------------------------------------------------------------------------------
Number Number Number Number Number
of Total of Total Number of Total of Total of Total of Total
Accounts Assets Accounts Assets Accounts Assets Accounts Assets Accounts Assets Accounts Assets
------------------------------------------------------------------------------------------------------------------------------------
Howard Yang 1 $105 6 $1,395 0 $0 0 $0 1 28 mil 0 $0
mil mil
------------------------------------------------------------------------------------------------------------------------------------
Emerson Yip 1 $105 5 $981.25 4 $323mil 0 $0 0 $0 0 $0
mil mil
------------------------------------------------------------------------------------------------------------------------------------
(a)(2)(iv) Description of any Potential Material Conflicts of Interest that may
arise in connection with the portfolio manager's management of the Fund and
other accounts.
The chart above shows the number, type and market value as of 12/31/06 of the
accounts other than the Fund that are managed by each of the Fund's portfolio
managers. The potential for conflicts of interest exists when a portfolio
manager manages other accounts with similar or different investment objectives
and strategies as the Fund ("Other Accounts"). Potential conflicts may include,
for example, conflicts between investment strategies and conflicts in the
allocation of investment opportunities.
Responsibility for managing the client portfolios of the Adviser and the
Adviser's participating affiliates is organized according to the mandates of
each account. The Fund's portfolio managers manage other accounts with similar
objectives, approach and philosophy to the Fund. The portfolio holdings,
relative position sizes and industry and sector exposures tend to be similar
across these similar portfolios, which minimizes the potential for conflicts of
interest. For Howard Wang, these similar portfolios include one registered
investment company and five of the six other pooled investment vehicles as
described under (a)(2)(ii) above that invest in the Greater China/ China/Asia
markets and only take long positions in securities. On the other hand, the other
pooled investment vehicle described under (a)(2)(iii) also invests in the
Greater China markets but may take long and short positions in securities as
part of its investment strategy. When the portfolio manager engages for this
other pooled investment vehicle in short sales of securities which the Fund has
purchased, the portfolio manager could be seen as harming the performance of the
Fund for the benefit of the accounts engaging in short sales if the short sales
cause the market value of those securities to fall. For Emerson Yip, the similar
portfolios include one registered investment company, five other pooled
investment vehicles as described under (a)(2)(ii) above that invest in Greater
China/Hong Kong markets and only take long positions in securities, and four
other accounts as described under (a)(2)(ii) above that invest in HK/China
markets.
The Adviser and the Adviser's participating affiliates receive more compensation
with respect to certain Other Accounts than that received with respect to the
Fund and receive compensation based in part on the performance of one of the
Other Accounts as described under (a)(2)(iii). This may create a potential
conflict of interest for the Adviser or the Fund's portfolio managers by
providing an incentive to favor these Other Accounts when, for example, placing
securities transactions. The conflicts of interest may arise with both the
aggregation and allocation of securities transactions and allocation of limited
investment opportunities. Allocations of aggregated trades, particularly trade
orders that were only partially completed due to limited availability, and
allocation of investment opportunities generally, could raise a potential
conflict of interest, as the Adviser or the portfolio manager may have an
incentive to allocate securities that are expected to increase in value to
favored accounts. Initial public offerings, in particular, are frequently of
very limited availability. The portfolio manager may be perceived as causing
accounts he manages to participate in an offering to increase the Adviser's
overall allocation of securities in that offering. A potential conflict of
interest also may be perceived to arise if transactions in one account closely
follow related transactions in a different account, such as when a purchase
increases the value of securities previously purchased by another account, or
when a sale in one account lowers the sale price received in a sale by a second
account.
The Adviser has policies and procedures designed to manage these conflicts
described above such as allocation of investment opportunities to achieve fair
and equitable allocation of investment opportunities among its clients over
time. For example:
Orders for the same equity security are aggregated on a continual basis
throughout each trading day consistent with the Adviser's duty of best execution
for its clients. If aggregated trades are fully executed, accounts participating
in the trade will be allocated their pro rata share on an average price basis.
Partially completed orders generally will be allocated among the participating
accounts on a pro-rata average price basis, subject to certain limited
exceptions. For example, accounts that would receive a DE MINIMIS allocation
relative to their size may be excluded from the allocation. Another exception
may occur when thin markets or price volatility require that an aggregated order
be completed in multiple executions over several days. If partial completion of
the order would result in an uneconomic allocation to an account due to fixed
transaction or custody costs, the dealer may have the discretion to complete and
exclude the small orders.
Purchases of money market instruments and fixed income securities cannot always
be allocated pro-rata across the accounts with the same investment strategy and
objective. However, the Adviser attempts to mitigate any potential unfairness by
basing non-pro rata allocations upon an objective predetermined criteria for the
selection of investments and a disciplined process for allocating securities
with similar duration, credit quality and liquidity in the good faith judgment
of the Adviser so that fair and equitable allocation will occur over time.
(a)(3) Portfolio Manager Compensation
The Fund's portfolio managers participate in a competitive compensation program
that is designed to attract and retain outstanding people and closely link their
performance to client investment objectives. The total compensation program
includes a base salary fixed from year to year and a variable performance bonus
consisting of cash incentives and restricted stock and, in some cases, mandatory
deferred compensation. These elements reflect individual performance and the
performance of the Adviser's business as a whole.
Each portfolio manager's performance is formally evaluated annually based on a
variety of factors including the aggregate size and blended performance of the
portfolios that he manages. Individual contribution relative to client goals
carries the highest impact. The compensation is primarily driven by meeting or
exceeding clients' risk and return objectives, relative performance to
competitors or competitive indices and compliance with firm policies and
regulatory requirements. In evaluating the portfolio manager's performance with
respect to the mutual funds (including the Fund) he manages, the funds' pre-tax
performance is compared to the appropriate market peer group and to each fund's
benchmark index listed in the fund's prospectus over one, three and five year
periods (or such shorter time as the portfolio manager has managed the fund).
Investment performance is generally more heavily weighted to the long-term.
Stock awards are granted as the annual performance bonus and comprise from 0% to
35% of each portfolio manager's total award. As the level of incentive
compensation increases, the percentage of compensation awarded in restricted
stock also increases.
(a)(4) Ownership of Securities
---------------------------------------------------------------------------------------------------------
Portfolio Manager None $1- $10,001- $50,001- $100,001- $500,001 - over
$10,000 $50,000 $100,000 $500,000 $1,000,000 $1,000,000
---------------------------------------------------------------------------------------------------------
Howard H Wang X
---------------------------------------------------------------------------------------------------------
Emerson Yip X
---------------------------------------------------------------------------------------------------------
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors since this report
was last filed.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of December 31,
2006, based on their evaluation of these controls and procedures
required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and
Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of
1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the registrant's second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) The code of ethics that is the subject of disclosure required by
Item 2 is incorporated by reference from EX-99.CODE ETH to the Fund's
N-CSR, filed with the Commission on March 10, 2006.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) JF China Region Fund, Inc.
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By (Signature and Title)* /s/ Simon Crinage
-------------------------------------------------------
Simon Crinage, President
(principal executive officer)
Date March 6, 2007
----------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Simon Crinage
-------------------------------------------------------
Simon Crinage, President
(principal executive officer)
Date March 6, 2007
----------------------------------------------------------------------------
By (Signature and Title)* /s/ Michael J. James
-------------------------------------------------------
Michael J. James, Treasurer
(principal financial officer)
Date March 6, 2007
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.