JARDINE FLEMING
CHINA REGION FUND, INC.
Semiannual Report
June 30, 1997
This report, including the financial statements herein, is sent
to the shareholders of the Fund for their information. It is not
a prospectus, circular or representation intended for use in the
purchase or sale of shares of the Fund or of any securities
mentioned in this report.
RPRTJFCR 6/30/97
JARDINE FLEMING
CHINA REGION FUND, INC.
Contents
Page
Objectives 1
Management 1
Market Information 1
Highlights 2
Investment Review 3
Major Holdings 5
Investment Portfolio 7
Statement of Assets and Liabilities 13
Statement of Operations 14
Statements of Changes in Net Assets 15
Financial Highlights 16
Notes to Financial Statements 17
Dividend Reinvestment and Cash Purchase Plan 20
Directors and Administration 21
JARDINE FLEMING
CHINA REGION FUND, INC.
Objectives
Jardine Fleming China Region Fund, Inc. ("the Fund") seeks
to achieve long-term capital appreciation through investments
primarily in equity securities of companies with substantial
assets in, or revenues derived from, the People's Republic of
China (PRC or China), Hong Kong, Taiwan, and Macau-collectively,
the China Region.
The Fund provides investors with an opportunity to
participate in the growing economies of the China Region,
especially that of the PRC, although investments are expected to
be predominantly in securities listed on the Hong Kong Stock
Exchange. Hong Kong enterprises have made substantial
investments in the PRC, in Guangdong Province in particular,
where abundant cheap labor and land are available. Hong Kong is
also the largest trading partner of the PRC.
The economies of the PRC, Hong Kong, Taiwan, and Macau have
become increasingly linked over the past 10 years and are
expected to become further integrated. Investments made by the
Fund will seek to take advantage of opportunities resulting from
this linkage among the China Region countries.
Management
Jardine Fleming International Management, Inc. (JFIM) is the
investment management company appointed to advise on and manage
the Fund's portfolio. JFIM is part of the Jardine Fleming group,
which has a team of investment managers in the Asia Pacific
region managing funds in excess of US$22 billion for both
institutional and private clients.
A. Douglas Eu is the portfolio manager of the Fund. Mr. Eu
has been involved in analyzing China Region companies since 1987
and, since 1991, has been portfolio manager of a number of the
Jardine Fleming group's funds which invest in China Region
companies. He is the Chief Operations Officer of JFIM and has
been involved in the day-to-day management of the Fund's
portfolio since its inception.
Market Information
The Fund is listed on the New York Stock Exchange (symbol JFC).
The share price is published in
o The Wall Street Journal (daily)
o The Asian Wall Street Journal (daily)
o Reuters (page JFIC)
The net asset value is published in
o The Wall Street Journal under "Closed-End Funds" (every
Monday)
o The Asian Wall Street Journal under "Closed-End Funds"
(every Monday)
o South China Morning Post in Hong Kong (first Thursday of
every month)
o Reuters (page JFIC)
JARDINE FLEMING
CHINA REGION FUND, INC.
Highlights
June 30, 1997 December 31, 1996
US$ US$
Net Assets 167.0 million 130.2 million
Net Asset Value Per Share 18.35 14.31
Market Data
Share Price on the
New York Stock Exchange 14.75 11.38
Discount to Net Asset Value -19.6% -20.5%
Total Return for the Six Months Ended June 30, 1997
Net Asset Value 28.2%
Share Price 29.6%
Hong Kong All Ordinaries Index 16.2%
Credit Lyonnais Securities Asia
All China B Index 8.3%
Peregrine Greater China Index 19.9%
Net Asset Value and Share Price vs. Target Index
% July 16, 1992 = 100
Net Asset Peregrine
Value Share Price Greater China
7/16/92* 100 100 100
99.78 98.33 89.81
100.43 94.2 91.11
100.94 80 79.15
108.6 92.53 90.31
111.05 96.67 91.95
12/92 109.29 93.02 90.21
110.16 96.37 87.65
117.49 98.85 97.55
120.54 108.9 94.28
125.48 118.95 97.84
129.84 122.3 92.05
6/93 122.35 120.09 83.13
120.67 116.73 77.96
124.75 129.29 82.27
128.39 126.81 84.74
147.17 150.32 102.63
156.34 166.71 113.9
12/93 188.96 187.39 128.98
175.52 183.65 111.34
158.91 148.41 103.16
136.56 136.08 91.08
132.14 134.18 87.3
136.06 148.41 90.89
6/94 123.99 123.29 82.84
130.78 126.47 87.48
130.78 135.83 92.18
132.98 129.56 94.14
132.34 126.47 89.14
124.35 110.76 80.63
12/94 115.72 94.29 72.23
101.37 90.1 62.02
108.27 98.48 66.92
109.37 94.29 67.13
105.33 90.1 63.43
113.68 107.01 70.35
6/95 111.93 92.33 69.32
116.08 95.51 73.64
108.89 88.13 69.66
112.85 94.42 68.82
110.46 89.22 67.02
104.65 85.02 64.06
12/95 103.54 84.52 63.34
112.35 107.76 72.64
113.37 95.08 73.99
110.12 95.08 70.65
111.7 96.18 68.52
112.25 94.07 71.64
6/96 111.98 87.73 71.47
110.21 81.39 71.69
110.68 84.52 73.69
112.16 85.62 74.73
113.18 83.51 77.45
125.79 90.86 89.15
12/96 132.84 95.25 97.43
135.63 99.49 97.2
138.13 99.49 101.37
133.96 99.49 99.39
148.44 106.94 107.3
159.48 115.41 115.05
6/97 170.35 124.89 116.86
*Commencement of operations.
Source: Jardine Fleming/Peregrine
Investment Review
Dear Fellow Shareholders:
We are pleased to report that the encouraging conditions in
China's economy and its stock markets, highlighted in our 1996
year-end report to you, continued through the first six months
of 1997, the period covered by this report.
Over this period, your fund's net asset value has increased
28.2%, which compares favorably with increases of 16.2% for the
Hong Kong All Ordinaries Index, and 21.6% and 0.7%,
respectively, for the B-share indices of Shanghai and Shenzhen.
(B-shares are the portion of capital of People's Republic of
China (PRC) incorporated entities that may be held by
non-Chinese investors and so are available to your fund.) An
additional area of great market interest and price strength over
the period lay in the Red Chips, which are Hong Kong-listed,
PRC-controlled companies.
China's macroeconomic numbers through May 1997 continued to
paint a consistent picture of a slightly slowing economy that
has successfully solved its inflation problem. Inflation, as
measured by the consumer price index, registered a 4% rate for
the year to date, which, when compared with the 24% level of
1994, demonstrates the effectiveness of the past austerity
measures in cooling the economy.
China's real GDP continues to expand at a high rate, with
market forecasts of approximately 10% growth for 1997 after the
9.7% achieved in 1996.
The most significant event at the macro level has been the
dramatic improvement in China's trade picture. Exports have been
strong since the turnaround in late 1996 and, in the period
covered by this report, increased 26.2% year-on-year compared
with a 0.15% decline in imports. Both factors contributed to a
trade surplus of some US$17.8 billion, year-to-date, which is
providing a useful, additional source of liquidity.
The broader money supply, as measured by M2, has continued
to decline from the 37.3% annualized growth evident in 1993 and
presently runs at a real rate of some 15%, thanks to the
government's prudent credit policy. Meanwhile the narrower money
supply gauges, M1 and M0, have signaled small but nevertheless
encouraging increases since the middle of 1996.
Interest rates have eased since early in 1996, with the
12-month working capital loan rate declining from 12% to the
present 10.5%, while the 12-month deposit rate has declined over
the same period from 11.25% to 7.75%. We would expect this
encouraging interest rate scenario to continue through 1997,
particularly given the rise in real interest rates that is
primarily due to falling inflation. China's currency, the
renminbi, has remained very stable since the unification of the
official and swap rates in 1994. The high level of foreign
investment and the trade surplus are likely to sustain the
status quo for the currency in the period ahead.
In short, we believe signs remain encouraging for continued
strong economic growth in China over the medium term in an
environment of credit relaxation.
On the political front, China's patriarch, Deng Xiao-ping,
passed away in early 1997, thereby continuing the shift in
China's leadership from the old guard toward the second
generation. President Jiang Zemin is expected to consolidate his
position later in the year at the upcoming Fifteenth Party
Congress. We are optimistic that China's economic reforms will
continue.
The other major political development at the end of the
period was the handover of Hong Kong to China on July 1. The
very smooth change of sovereignty makes us optimistic that Hong
Kong's high degree of autonomy and separate system can be
maintained and Hong Kong's success will continue now that it is
part of China.
Turning to the stock markets, there has been great activity
in China's A shares - shares available only to Mainland
investors. With the recent rise in liquidity, for the various
reasons mentioned, China's markets so far in 1997 have been a
major beneficiary. The Shanghai and Shenzhen A-share indices
have risen 25% and 47%, respectively, despite recent price
corrections of approximately 18% from the period highs. At these
levels, the relative valuations of the A-shares, some 50 times
for Shanghai and 60 times for Shenzhen, might be cause for
concern - perhaps more so among the Chinese authorities. Indeed
recent clampdowns by the authorities and a change of leadership
at the China Securities Regulatory Commission have done
something to dampen the level of speculation.
The Hong Kong market, trading on a prospective 1997 multiple
of under 15 times, will be looking to Tung Chee Hwa's October
"state-of-the-nation" address, in which the Chief Executive of
the Special Administrative Region is expected to focus on the
availability and price of housing. A significant increase in the
availability of land for real estate development may be proposed
to curb presently rapidly rising prices. Given the importance of
property to the Hong Kong stock market, we might expect a
trading range for the index in the short term.
Within the Hong Kong market, the valuations of Red Chips
carry premiums that anticipate continuing asset injections from
mainland entities. While your fund maintains substantial Red
Chip exposure, its holdings in this sector were reduced in cases
where valuations were deemed excessive.
In the Shanghai market our largest holding, Huangshan
Tourism Development, is in the B-share sector and has been a
particular beneficiary of recent price appreciation. Huangshan
controls one of China's most famous tourist areas, collecting
entrance fees and operating several hotels as well as cable
cars. Visitor numbers, which are presently low, should rise
significantly over the coming years as the improved
infrastructure permits easier access from the Shanghai area and
other parts of the country.
Earnings growth in B-shares has been stronger than expected
so far in 1997, and we continue to be optimistic about their
long-term prospects. While B-shares have lagged the Hong
Kong-listed Red Chips due to lower levels of liquidity and more
questionable fundamentals, the shares are not expensive, and we
would expect the improvement in China's economy to underpin
continuing good earnings growth for them. We maintain fairly
full weightings in this sector.
We look forward to continuing to search for promising
investments in the China region markets on your behalf, and
thank you for your support.
Respectfully submitted,
Martin Barrow
President
August 8, 1997
JARDINE FLEMING
CHINA REGION FUND, INC.
Major Holdings
At June 30, 1997
% of Net
Assets
Huangshan Tourism Development 'B' 7.4
The monopoly operator of the Huangshan (Yellow Mountain)
area, one of China's premier scenic tourist sites. Because of
poor airline and road infrastructure, the area is frequented
more by local tourists than international visitors. Huangshan
collects an entrance fee from visitors and also operates most of
the major hotels and cable car rides in the area.
Cheung Kong Holdings 6.5
One of Hong Kong's premier property companies with
significant property developments in Hong Kong and in the PRC.
Cheung Kong has been discussing numerous property and
infrastructure projects in China.
China Resources Enterprise 6.0
The investment arm of the Ministry of Foreign Trade and
Economic Cooperation in Hong Kong. Their operations include
infrastructure projects, food distribution, property
development, brewery production, and warehouses in Hong Kong and
the PRC.
Hutchison Whampoa 5.2
One of Hong Kong's leading conglomerates, controlling 60%
and 50% of the container ports in Hong Kong and Shanghai,
respectively. Hutchison should benefit from increased PRC
exports.
China Everbright - IHD Pacific Ltd. 4.6
The flagship company of China Everbright Group in Hong Kong.
Following the recent restructuring, the company will focus on
financial service businesses in Hong Kong and China.
Cosco Pacific 4.5
The Hong Kong-listed subsidiary of China's large state-owned
shipping line. It engages in container leasing, primarily for
its parent, and also port operations in Hong Kong and China.
New World Development 4.2
Mainly engaged in property development and investment,
infrastructure projects, and hotel operations in Hong Kong and
the PRC. The infrastructure and property projects in the PRC
include five toll roads and bridges, three power plants, and
home ownership projects in Wuhan.
Shanghai Industrial Holdings 3.1
The window company for the Shanghai government in Hong Kong.
It is a diversified holding company with interests in
cigarettes, infrastructure, auto parts, and cosmetics.
China Merchants Holdings International (formerly China Merchants
Hai Hong Holdings) 3.0
A Hong Kong-listed conglomerate controlled by China's
Ministry of Communications. It is primarily engaged in
infrastructure, shipping, paints, and container manufacturing.
Beijing Enterprises Holdings 2.8
The primary commercial vehicle for the Beijing Municipal
Government to access international markets for capital,
technology, and management expertise. The company engages in a
diversified range of businesses including infrastructure,
consumer products, hotel and tourism services, and property
investment in Hong Kong and Beijing.
Total Major Holdings 47.3
Investment Portfolio
At June 30, 1997 (unaudited)
Holdings Market
(in shares Value
Description or par) (in US$)
Common Stocks (unless otherwise noted)
CHINA (26.8%)
Shanghai Equities (USD) (20.8%)
Autos & Transportation Equipment (2.3%)
* China Yuchai International 250,000 781,250
Ek Chor China Motorcycle 50,900 273,587
* Shanghai Diesel Engine 'B' 8,400,000 2,856,000
3,910,837
Building Material (0.5%)
Huaxin Cement 'B' 4,300,000 791,200
Chemicals (1.6%)
Shanghai Tyre and Rubber 'B' 5,543,680 2,716,403
Commercial & Industrial (0.0%)
* Phoenix Company 'B' 285,000 41,610
Electronics & Components (1.5%)
*! Shanghai Refrigerator
Compressor 'B' 5,070,000 2,433,600
Hotels & Tourism (10.5%)
*! Huangshan Tourism
Development 'B' 13,543,000 12,432,474
Shanghai Dazhong Taxi 'B' 5,200,000 4,617,600
* Shanghai Jin Jiang Tower 'B' 1,426,499 450,774
17,500,848
Pharmaceuticals (0.1%)
* Tianjin Zhong Xin
Pharmaceutical 'B' 140,000 95,200
Textiles (2.3%)
Inner Mongolia Erdos Cashmere
Products 'B' 1,652,700 1,388,268
Shanghai Worldbest 'B' 3,950,000 2,512,200
3,900,468
Utilities (2.0%)
Heilongjian Electric Power 'B' 4,074,900 3,259,920
Total Shanghai Equities 34,650,086
Shenzhen Equities (HKD) (6.0%)
Autos & Transportation
Equipment (0.5%)
Shenzhen North Jianshe
Motorcycle 'B' 2,395,000 797,581
Chemicals (0.0%)
* Hubei Sanonda 'B' 146,700 83,127
Commercial & Industrial (2.7%)
China Southern Glass 'B' 2,000,000 1,045,526
* Shenzhen China Bicycles 'B' 3,691,600 1,453,330
* Wuxi Little Swan 'B' 1,150,000 1,929,705
4,428,561
Energy (1.0%)
Shenzhen Chiwan Petroleum
Supply Base 'B' 4,236,300 1,634,961
Steel (0.8%)
* Bengang Steel Plates 'B' 4,579,000 1,406,686
Transportation Services (1.0%)
China Merchant Shekou Port
Service 'B' 3,138,960 1,721,965
Total Shenzhen Equities 10,072,881
TOTAL CHINA 44,722,967
HONG KONG (71.7%)
Autos & Transportation
Equipment (2.8%)
* First Tractor 'H' 3,454,000 2,273,747
Qingling Motors 'H' 3,500,000 1,807,081
Qingling Motors, CB,
3.50%, 1/22/02 (USD) 549,000 550,922
4,631,750
Banking & Financial Services (5.3%)
HSBC Holdings 120,000 3,608,999
Ka Wah Bank 2,445,000 3,171,718
Min Xin Holdings 3,002,000 2,131,194
8,911,911
Building & Construction (1.9%)
* New World Infrastructure 750,000 2,120,093
* Zhejiang Expressway 'H' 4,439,000 1,077,191
3,197,284
Chemicals (4.3%)
China Merchants Holdings
International 1,600,000 4,977,218
Ngai Hing Hong 1,800,000 362,449
Zhenhai Refining and
Chemical 'H' 5,000,000 1,807,081
7,146,748
Commercial & Industrial (2.1%)
Guangzhou Investment 5,760,000 3,178,398
* H shares Basket Warrants,
12/5/97 (Merril Lynch
International)Exercise of
the warrants at a price of
HK $1.16 per warrant entitles
the holder to receive a
basket of five RMB traded
securities. In lieu of
transfer of securities, the
issuer may elect to make
a cash payment. 11,400,000 313,425
3,491,823
Conglomerates (14.0%)
* Beijing Enterprises Holdings 740,000 4,661,237
China Resources Enterprise 1,176,000 5,768,203
* China Resources Enterprise,
Warrants, 12/10/97 (ING
Baring) 10,000,000 3,097,853
* China Resources Enterprise,
Warrants, 3/20/98 (Salomon
Brothers) 3,600,000 1,138,461
Hutchison Whampoa 1,000,000 8,648,174
23,313,928
Consumer Manufacturing (4.4%)
Guangdong Kelon Electrical
Holdings 'H' 2,172,000 2,074,632
Shanghai Industrial Holdings 838,000 5,213,636
7,288,268
Energy (1.1%)
* CNPC 8,550,000 1,898,210
Media (2.3%)
Television Broadcasts 850,000 3,818,104
Metals (0.5%)
* Jiangxi Copper 'H' 3,444,000 944,652
Packaging (4.8%)
* Concordia Paper Holdings ADR (USD) 150,000 506,250
Cosco Pacific 3,250,000 7,530,043
8,036,293
Pharmaceuticals (1.4%)
* Sa Sa International Holdings 7,334,000 2,390,297
Property & Real Estate (13.2%)
Cheung Kong Holdings 1,100,000 10,861,849
New World Development 1,175,000 7,006,957
Seapower Resources
International 15,000,000 2,013,605
Top Glory International
Holdings 10,000,000 2,091,051
21,973,462
Retail (6.5%)
* China Everbright - IHD
Pacific Ltd. 2,598,000 7,763,182
Giordano Holdings 2,230,000 1,525,564
Lamex Holdings 5,568,000 1,509,274
10,798,020
Steel (1.7%)
Maanshan Iron and Steel 'H' 13,236,000 2,767,715
Transportation Services (4.8%)
Guangshen Railway 'H' 6,500,000 2,852,607
* Shanghai Haixing Shipping 'H' 7,895,000 4,407,455
* Shenzhen Expressway 'H' 2,736,000 750,455
8,010,517
Utilities (0.6%)
* Beijing Datang Power
Generation 'H' 938,000 432,841
* Harbin Power Equipment 'H' 3,000,000 662,166
1,095,007
TOTAL HONG KONG 119,713,989
KOREA (1.2%)
Electricals (1.2%)
* Samsung Electro-Mechanics,
Warrants to Purchase
Preferred, 9/8/97 (USD) 750 29,072
Samsung Electronics 24,399 1,937,083
1,966,155
TOTAL KOREA 1,966,155
TIME DEPOSITS (1.3%)
Citibank, N.A., 5.6875%, 7/3/97
(HKD) 17,700,000 2,284,667
TOTAL TIME DEPOSITS 2,284,667
TOTAL INVESTMENTS
(101.0% of Net Assets)
(Cost $125,210,965) 168,687,778
___________
Other assets less liabilities (1,703,649)
___________
NET ASSETS 166,984,129
___________
Aggregate cost is the same for
Federal income tax purposes.
The aggregate unrealized gain for
all securities is as follows:
Excess of market value over cost 58,560,557
Excess of cost over market value (15,083,744)
Net unrealized gain 43,476,813
___________
HKD Hong Kong dollar
RMB Chinese renminbi
USD U.S. dollar
CB Convertible Bond
* Non-income producing
! Affiliated company
See accompanying notes to financial statements.
Statement of Assets and Liabilities
At June 30, 1997 (unaudited)
(in US$)
Assets
Investments at value (Note 2)
Affiliated companies (Cost $4,780,285) 14,866,074
Other companies (Cost $120,430,680) 153,821,704
Total investments in securities 168,687,778
Cash and foreign currencies 58,333
Receivable for securities sold 123,691
Dividends receivable 361,880
Interest receivable 11,572
Prepaid insurance premium 55,159
Restricted cash (Note 6) 305,266
Unamortized organization costs (Note 1) 145
Total Assets 169,603,824
Liabilities
Payable for securities purchased 1,750,267
Accrued expenses payable 713,449
Due to investment adviser (Note 5) 155,979
Total Liabilities 2,619,695
Net Assets 166,984,129
___________
Net assets consist of:
Common stock, $0.01 par value
(100,000,000 shares authorized;
9,101,372 shares issued and
outstanding) 91,014
Paid-in capital 136,511,652
Accumulated undistributed net
investment income 139,347
Accumulated realized gain (loss) on
investments and foreign currency
transactions, net of distributions (13,234,612)
Accumulated net unrealized gain (loss)
on investments,foreign currency
holdings, and other assets
and liabilities denominated in
foreign currencies 43,476,728
Net Assets 166,984,129
___________
Net Asset Value Per Share
($166,984,129/9,101,372) 18.35
See accompanying notes to financial statements.
Statement of Operations
Six Months Ended June 30, 1997 (unaudited)
(in US$)
Investment Income (Note 2)
Dividends (net of foreign taxes of
$14,820) 1,366,862
Interest 94,573
___________
Total Investment Income 1,461,435
Expenses
Investment advisory fee (Note 5) 849,341
Administration and accounting fees (Note 5) 141,299
Custodian fees 102,897
Directors' fees and expenses 89,146
Reports and notices to shareholders 59,507
Proxy expenses 37,192
Legal fees 29,753
Audit fees 17,852
Amortization of organizational costs (Note 1) 17,577
Insurance 13,228
Listing fees 12,397
Miscellaneous expenses 25,766
Total Expenses 1,395,955
Net Investment Income 65,480
Realized and Unrealized Gain (Loss)
on Investments, Foreign Currency
Holdings and Other Assets and Liabilities
Denominated in Foreign Currencies:
Net realized gain (loss) on (Note 2)
Investments 13,244,614
Foreign currency transactions (82,292)
Net change in unrealized gain (loss)
on (Note 2)
Investments 23,532,243
Foreign currency holdings and
other assets and liabilities
denominated in foreign currencies (11)
Net realized and unrealized gain on
investments, foreign currency holdings
and other assets and liabilities
denominated in foreign currencies 36,694,554
Net Increase in Net Assets Resulting
From Operations 36,760,034
___________
See accompanying notes to financial statements.
Statements of Changes in Net Assets
(Unaudited)
Six Months Ended Year Ended
June 30, 1997 December 31, 1996
(in US$) (in US$)
Increase (Decrease) in
Net Assets
Operations
Net investment
income 65,480 292,404
Net realized gain
(loss) on
investments 13,244,614 (9,424,969)
Net realized loss on
foreign currency
transactions (82,292) (19,180)
Net change in unrealized
gain (loss) on
investments,
foreign
currency holdings
and other assets
and liabilities
denominated
in foreign
currencies 23,532,232 37,910,742
Net increase (decrease)
in net assets resulting
from operations 36,760,034 28,758,997
Dividends to Shareholders:
From net investment income - (182,014)
Total Increase (Decrease) in
Net Assets 36,760,034 28,576,983
Net Assets:
Beginning of period 130,224,095 101,647,112
End of period 166,984,129 130,224,095
____________ ____________
See accompanying notes to financial statements.
<TABLE>
JARDINE FLEMING
CHINA REGION FUND, INC.
Financial Highlights (Unaudited)
<CAPTION>
For the
Period
For the July 16,
Six Months For the For the For the For the 1992*
Ended Year Ended Year Ended Year Ended Year Ended through
June 30, December 31, December 31, December 31, December 31,December 31,
1997 1996 1995 1994 1993 1992
(In US$) (In US$) (In US$) (In US$) (In US$) (In US$)
____________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Per share operating
performance
____________________________________________________________________________________
Net asset value,
beginning of
period 14.31 11.17 12.58 22.58 15.05 13.95**
Offering costs
charged
to paid-in
capital - - - (0.06) - (0.11)
14.31 11.17 12.58 22.52 15.05 13.84
Net investment
income 0.01 0.03 0.07 0.05 0.10 0.07
Net realized
and unreal-
ized gain
(loss) on
investment
and foreign
currency-related
transactions 4.03 3.13 (1.39) (8.51) 10.50 1.21
Total from
investment
operations 4.04 3.16 (1.32) (8.46) 10.60 1.28
Less distributions
Dividends from
net investment
income - (0.02) (0.09) (0.03) (0.11) (0.07)
Distributions
from capital
gains - - - (1.45) (1.62) -
Total
distributions - (0.02) (0.09) (1.48) (1.73) (0.07)
Net asset value,
end of
period 18.35 14.31 11.17 12.58 23.92 15.05
Dilutive effect
of fully
subscribed
rights offering
(Note 4) - - - - (1.34)*** -
Net asset value,
end of period,
giving effect
to fully
subscribed
rights
offering - - - - 22.58*** -
Market value,
end of
period 14.75 11.38 10.00 11.25 26.00 13.88
Total Investment Return
Per share
market
value 29.7% 13.9% (10.3%) (52.5%)# 99.3% (7.0%)
Per share
net asset
value 28.2% 28.3% (10.5%) (38.9%)# 72.9% 9.3%
RATIOS/SUPPLEMENTAL DATA
Net assets,
end of
period 166,984,129 130,224,095 101,647,112 114,523,459 162,848,785 102,422,708
Ratio of
expenses
to
average
net assets 2.01%! 2.18% 2.22% 2.01% 2.17% 2.23%!Ratio
of net
investment
income
to average
net assets 0.09%! 0.26% 0.60% 0.35% 0.59% 1.16%!
Portfolio
turnover
rate 37.31% 44.40% 44.90% 71.20% 99.22% 1.56%
Average
commission
rate paid $0.0026 $0.0015 $ - $ - $ - $ -
Number of
shares
outstanding
at end of
period (in
thousands) 9,101 9,101 9,101 9,101 6,807 6,807
* Commencement of operations
** Initial public offering of $13.95 per share net of underwriting discount.
*** Reflects the effect of fully subscribed rights offering completed January 5,
1994. The fund received net proceeds of approximately $42 million in exchange for
2,269,109 shares of common stock.
! Annualized.
# Adjusted to exclude the dilutive effect of the rights offering completed January
5, 1994.
See accompanying notes to financial statements.
Notes to Financial Statements
June 30, 1997 (unaudited)
1. Organization and Capital
Jardine Fleming China Region Fund Inc. (the "Fund") was
incorporated in the State of Maryland on May 22, 1992, and
is registered as a non-diversified, closed-end management
investment company under the Investment Company Act of 1940.
The Fund commenced operations on July 16, 1992.
In connection with its initial organization and offering of
shares, the Fund incurred $177,227 and $772,698 of
organization and offering costs, respectively. The
organization costs are being amortized over a 60 month
period from the date the Fund commenced operations. The
offering costs have been charged to capital.
2. Significant Accounting Policies
The following significant accounting policies, which are in
conformity with generally accepted accounting principles of
the United States of America for investment companies, are
consistently followed by the Fund in the preparation of its
financial statements.
The preparation of financial statements in accordance with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual
results could differ from these estimates.
i) Security Valuation
All securities for which market quotations are readily
available are valued at the last sales price prior to
the time of determination, or, if no sales price is
available at that time, at the mean between the last
current bid and asked prices. Securities that are
traded over-the-counter are valued, if bid and asked
quotations are available, at the mean between the
current bid and asked prices. Investments in short-term
debt securities having a maturity of 60 days or less
are valued at amortized cost. All other securities and
assets are valued at fair value as determined in good
faith by the Board of Directors. In valuing the Fund's
assets, quotations of foreign securities in a foreign
currency are translated to U.S. dollar equivalents at
the exchange rate in effect on the valuation date.
ii) U.S. Federal Income Taxes
No provision for federal income taxes is required since
the Fund intends to continue to qualify as a regulated
investment company and distribute all of its taxable
income. The Fund has unused realized capital loss
carryforwards for federal income tax purposes of
$25,678,377, of which $2,287,086 expire in 2002,
$10,477,747 in 2003, and $12,913,544 in 2004. The Fund
intends to retain gains realized in future periods that
may be offset by available capital loss carryforwards.
iii) Affiliated Companies
Investments in companies 5% or more of whose
outstanding voting securities are held by the Fund are
defined as "Affiliated Companies" in Section 2(a)(3) of
the Investment Company Act of 1940.
iv) Foreign Currency Translation
The books and records of the Fund are maintained in
United States dollars. Foreign currency amounts are
translated into U.S. dollars at the mid-market price of
such currencies against U.S. dollars as follows:
o investments, other assets and liabilities at the
prevailing rates of exchange on the valuation
date;
o investment transactions and investment income at
the prevailing rates of exchange on the dates of
such transactions
Although the net assets of the Fund are presented at
the foreign exchange rates and market values at the
close of the period, the Fund does not isolate that
portion of the results of operations arising as a
result of changes in the foreign exchange rates from
the fluctuations arising from changes in the market
prices of the securities held at period end. Similarly,
the Fund does not isolate the effect of changes in
foreign exchange rates from the fluctuations arising
from changes in the market prices of securities sold
during the period. Accordingly, realized and unrealized
foreign currency gains (losses) are included in the
reported net realized and unrealized gains (losses) on
investment transactions balances.
Net currency gains (losses) from valuing foreign
currency denominated assets and liabilities at period
end exchange rates are reflected as a component of
unrealized gain (loss) on investments, foreign currency
holdings and other assets and liabilities denominated
in foreign currencies.
v) Distribution of Income and Gains
The Fund intends to distribute to shareholders, at
least annually, substantially all of its net investment
income and expects to distribute annually any net
long-term capital gains in excess of net short-term
capital losses. An additional distribution may be made
to the extent necessary to avoid the payment of a 4%
Federal excise tax.
Income and capital gain distributions are determined in
accordance with federal income tax regulations and may
differ from those determined in accordance with
generally accepted accounting principles.
vi) Other
Security transactions are accounted for on the date the
securities are purchased or sold. Realized gains and
losses on the sale of investment securities are
determined on the identified cost basis. Interest
income is recognized on the accrual basis. Dividend
income and distributions to shareholders are recorded
on the ex-dividend date. Portfolio turnover rate is
calculated by dividing the lesser of purchases and
sales of investment securities having maturities
greater than one year at the time of acquisition by the
average monthly market value of those investment
securities.
3. Investment Transactions
Consistent with its investment objective, the Fund engages
in the following transactions practices. The investment
objective, policies, program, and risk factors of the Fund
are described more fully in the Fund's Prospectus.
i) Foreign Transactions
Foreign security and currency transactions may involve
certain considerations and risks not typically
associated with those of U.S. dollar denominated
transactions as a result of, among other factors, the
level of governmental supervision and regulation of
foreign securities markets and the possibility of
political or economic instability.
ii) Other
During the six months ended June 30, 1997, the Fund
made purchases of $56,342,367 and sales of $52,053,869
of investment securities other than short-term
investments. There were no purchases or sales of U.S.
Government securities.
4. Rights Offering
As of the close of business on December 8, 1993, the Fund
issued to shareholders rights entitling the holders thereof
to subscribe for an aggregate of 2,269,109 shares at a rate
of one share of common stock for each three rights held. The
subscription price per share was $19.50.
The offer expired on January 5, 1994. At the expiration date
the offer was fully subscribed and 2,269,109 shares were
subsequently issued. Net proceeds (after sales loads and
other expenses) received by the Fund aggregated
approximately $42,000,000. The net asset value per share at
December 31, 1993, assuming that the 2,269,109 shares had
been issued as of that date, was $22.58.
5. Related Party Transactions
i) Jardine Fleming International Management Inc. ( the
"Adviser"), provides investment advisory services to
the Fund under the terms of an investment advisory
agreement. Under the investment advisory agreement, the
Adviser is paid a fee, computed weekly and payable
monthly, at the annual rate of 1.50% of the first $50
million, 1.25% of the next $25 million and 1.00% of the
excess over $75 million of the Fund's weekly net
assets. The Adviser is an affiliate of the Fund.
ii) T. Rowe Price Services, Inc. (the "Administrator")
provides administrative services to the Fund under an
Administrative Services Agreement. The Administrator
receives a fee, payable monthly, at an annual rate of
0.10% of the first $250 million, 0.075% of the next
$250 million and 0.05% of the excess over $500 million
of the Fund's average weekly net assets subject to a
minimum annual fee of $200,000, plus reimbursement for
certain out-of-pocket expenses. The Administrator also
receives an annual fee of $85,000 for fund accounting
services pursuant to an Accounting Services Agreement.
At June 30, 1997, $47,310 was payable to the
Administrator.
iii) During the six months ended June 30, 1997, the Fund
paid $38,996 in brokerage commissions to Jardine
Fleming Broking Ltd. and Jardine Fleming Securities
Ltd., affiliated brokers/dealers.
6. Restricted Cash
As part of the arrangements for insuring the Fund, a letter
of credit amounting to $305,266 was issued by Citibank N.A.
in favor of the insurers. In return, the Fund pledged
deposits amounting to $305,266 to Citibank N.A. as security
for the letter of credit.
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:
1) State Street Bank & Trust Company
(the Plan Agent):
P. O. Box 8200
Boston, Massachusetts 02266-8200
Telephone No: 800-426-5523 (toll free)
or
2) T. Rowe Price Services, Inc.
Telephone No: 800-638-8540 (toll free)
The following should be noted with respect to the Plan:
If you participate in the Share Distribution Plan, whenever the
Board of Directors of the Fund declares an income dividend or
net capital gain distribution, you will automatically receive
your distribution in newly issued shares (cash will be paid in
lieu of fractional shares) if the market price of the shares on
the date of the distribution is at or above the net asset value
of the shares. The number of shares to be issued to you by the
Fund will be determined by dividing the amount of the cash
distribution to which you are entitled (net of any applicable
withholding taxes) by the greater of the net asset value (NAV)
per share on such date or 95% of the market price of a share on
such date. If the market price of the shares on such a
distribution date is below the NAV, the Plan Agent will, as
agent for the participants, buy shares on the open market, on
the New York Stock Exchange or elsewhere, for the participant's
account on, or after, the payment date. There is no service
charge for purchases under this Plan.
For U.S. federal income tax purposes, shareholders receiving
newly issued shares pursuant to the Share Distribution Plan will
be treated as receiving income or capital gains in an amount
equal to the fair market value (determined as of the
distribution date) of the shares received and will have a cost
basis equal to such fair market value. Shareholders receiving a
distribution in the form of shares purchased in the open market
pursuant to the Plan will be treated as receiving a distribution
of the cash distribution that such shareholder would have
received had the shareholder not elected to have such
distribution reinvested and will have a cost basis in such
shares equal to the amount of the distribution.
There will be no brokerage charge to participants for shares
issued directly by the Fund under the Plan. Each participant
will pay a pro rata share of brokerage commissions incurred with
respect to the Plan Agent's open market purchases of shares in
connection with the Plan. The Fund will pay the fees of the Plan
Agent for handling the Plan.
You may terminate your account under the Share Distribution Plan
by notifying the Plan Agent in writing. The Plan may be
terminated by the Plan Agent or the Fund with notice to you at
least 30 days prior to any record date for the payment of any
distribution by the Fund. Upon any termination, the Plan Agent
will deliver a certificate or certificates for the full shares
held for you under the Plan and a cash adjustment for any
fractional shares.
You also have the option of instructing the Plan Agent to make
semiannual cash purchases of shares in the open market. There is
a service charge of $1.25 for each purchase under this Share
Purchase Plan.
Directors and Administration
Officers and Directors
Martin G. Barrow - Director and President
A.B. Colayco - Director
The Rt. Hon. The Earl of Cromer - Director
Alexander R. Hamilton - Director
Alastair A. Macintosh - Secretary (appointed July 17, 1997)
Yook-man Ng - Director
Emmett J. Rice - Director
William J. Tootill - Secretary (resigned July 17, 1997)
Mark B. E. White - Director and Treasurer
Investment Adviser
Jardine Fleming International Management, Inc.
P.O. Box 3151
Road Town, Tortola
British Virgin Islands
Administrator
T. Rowe Price Services, Inc.
100 East Pratt Street
Baltimore, Maryland 21202
U.S.A.
Custodian
Citibank N.A.
New York:
111 Wall Street, 16th Floor
New York, New York 10005
U.S.A.
Hong Kong:
Citibank Tower
Citibank Plaza
3 Garden Road
Hong Kong
Independent Accountants
Price Waterhouse LLP
1306 Concourse Drive
Suite 100
Linthicum, Maryland 21090
U.S.A.
Legal Counsel
Cleary, Gottlieb, Steen & Hamilton
New York:
1 Liberty Plaza, 43rd Floor
New York, New York 10006
U.S.A.
Hong Kong:
56th Floor, Bank of China Tower
1 Garden Road
Hong Kong
Registrar, Transfer Agent, and
Dividend Paying Agent
State Street Bank & Trust Company
P. O. Box 8200
Boston, Massachusetts 02266-8200
U.S.A.
</TABLE>
