JARDINE FLEMING
CHINA REGION FUND, INC.
Annual Report
December 31, 1996
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
____________________________________________________________
Report of Independent Accountants 21
____________________________________________________________
Dividend Reinvestment and Cash Purchase Plan 22
____________________________________________________________
Directors and Administration 23
_________________________________________________________________
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 be further integrated as Hong Kong and Macau revert
to the sovereignty of the PRC. 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$19 billion for both
institutional and private clients.
A. Douglas Eu is the portfolio manager of the Fund. Mr. Eu
has been involved in analyzing China Region companies since 1987
and, since 1991, has been portfolio manager of a number of the
Jardine Fleming group's funds which invest in China Region
companies. He is the Chief Operations Officer of JFIM and has
been involved in the day-to-day management of the Fund's
portfolio since its inception.
Market Information
_________________________________________________________________
The Fund is listed on the New York Stock Exchange (symbol JFC).
The share price is published in
_________________________________________________________________
o The Wall Street Journal (daily)
o The Asian Wall Street Journal (daily)
o Reuters (page JFIC)
The net asset value is published in
_________________________________________________________________
o The Wall Street Journal under "Publicly Traded Funds" (every
Monday)
o The Asian Wall Street Journal under "Publicly Traded Funds"
(every Monday)
o South China Morning Post in Hong Kong (first Thursday of
every month)
o Reuters (page JFIC)
JARDINE FLEMING
CHINA REGION FUND, INC.
Highlights
_________________________________________________________________
December 31, 1996 December 31, 1995
US$ US$
_________________________________________________________________
Net Assets $130.2 million $101.6 million
Net Asset Value Per Share $14.31 $11.17
Interim Dividend Per Share - $0.02
Final Dividend Per Share $0.02 $0.07
Market Data
Share Price on the
New York Stock Exchange $11.38 $10.00
Discount to Net Asset Value -20.5% -10.5%
Total Return for the Year Ended December 31, 1996
________________________________________________________________
Net Asset Value 28.3%
Share Price 13.9%
Hong Kong All Ordinaries Index 37.0%
Credit Lyonnais Securities Asia
All China B Index 73.7%
Peregrine Greater China Index 53.8%
Chart 1 - Net Asset Value and Share Price vs. Target Index
*Commencement of operations.
JARDINE FLEMING
CHINA REGION FUND, INC.
Investment Review
Dear Fellow Shareholders:
Nineteen ninety-six was a rewarding year for the markets of
the Greater China region. After a relatively slow first half,
market activity increased significantly in the second half,
providing strong gains for the full year.
Thus, 1996 finally delivered the long-promised recovery for
the China markets. While the main beneficiaries were the stocks
viewed as "purer" plays on the reflation of China's economy, all
of the major China region markets gained. Your Fund's performance
reflects this more pleasant environment with the net asset value
(NAV) gaining 28.3% over the year.
Cumulative Returns of the China Region Markets
________________________________________________________________
Periods Ended 12/31/96 1 Year 3 Years Since Inception
(7/16/92)
________________________________________________________________
Hong Kong All Ordinaries Index 37.0% 7.6% 96.0%
Credit Lyonnais Securities All
China B Index 73.7 - 18.1 - 34.5
Peregrine Greater China Index 53.8 - 24.5 - 2.6
Jardine Fleming China Region
Fund (Based on NAV) 28.3 - 33.6 32.8
________________________________________________________________
China's economy continued to improve in line with our
expectations as set out in previous reports. GDP growth showed
healthy signs of moderation in line with the Central Government's
policy target and, at 9.7%, was slower than 1995 GDP growth of
10.5%. But, more important, the absolute level of growth remained
attractive and at a relatively buoyant level in global terms.
The retail price index (RPI), the Government's target
inflation indicator, also continued to slow. For the year, the
RPI of 6% was well below the Government's target level of 8% to
10% and demonstrated the success of its three-and-a-half-year
austerity program.
Other economic indicators also reinforced this picture of a
moderating economy. Industrial production numbers were steady
over the course of the year, averaging about 13.8%. Trade was
also weaker, although this was a reflection of global trends as
much as a result of China's own economy. The improvement in
export growth during the fourth quarter (up 12.3% in the quarter
alone versus a 1.4% overall increase for the full year) may be
even more positive, perhaps reflecting the beginning of a
cyclical improvement in trade following a dull year for the
region as a whole. Against this improving picture for exports,
imports remained under control, enabling China to amass a trade
surplus of US$12.2 billion.
Within this positive framework, the Government took some
measures to ease the austerity campaign. While this indicated no
major change from the current policy of gradual easing, anecdotal
evidence from companies suggests greater optimism for 1997 and
beyond. This, coupled with the two official cuts in interest
rates, the first in May and the second in September, underpins
our continued optimism for China's macroeconomic picture.
Your Fund's increase in weightings, as highlighted in last
year's report, proved opportune, though some individual holdings
disappointed. Overall, the appreciation achieved for the year was
satisfactory, and we look for further gains in the coming year.
It should be noted that given the imminent return of Hong Kong to
Chinese sovereignty, scheduled for June 30, 1997, your Board of
Directors has moderated its earlier policy of excluding Hong Kong
companies that did not stringently meet our test as a "China
Region Company." The new policy will allow your fund manager to
select appropriate investments from the broader Hong Kong market.
Among the recent additions to the portfolio are HSBC
Holdings and Swire Pacific. Previously, HSBC Holdings was outside
our investment universe since its business focused on Hong Kong,
the United Kingdom (through subsidiary Midland Bank), and the
United States (through subsidiary Marine Midland Bank). Further,
China's banking laws limited the domestic banking market to
purely domestic banks. The wisdom of this broader mandate was
justified by the recent announcement that HSBC was one of four
banks granted a license to conduct Renminbi banking business in
China. While the initial contribution to profits will be small,
we feel this highlights a significant profit opportunity that
should grow substantially in the coming years.
Similarly for Swire Pacific, the imminent handover and the
company's own focus have increased business opportunities for
this old line, Hong Kong-listed conglomerate. Future business
growth is squarely focused on China: its China-targeted
businesses include the operation of a regional airline, Dragonair
(through its listed airline subsidiary, Cathay Pacific), which
operates a large number of China regional flights. More recently,
Swire Pacific has signed an agreement to act as sole bottler and
distributor for U.S.-based Coca-Cola in several provinces. Like
HSBC, while initial profit contributions will be minimal, the
long-term prospects are likely to be very good.
Within your Fund's holdings of China B-shares, our most
notable acquisition was a stake in the recently listed Huangshan
Tourism Development in Shanghai. Huangshan is the monopoly
operator of the Huangshan scenic area in Central China, one of
China's most famous tourist areas. Huangshan's monopoly allows it
to collect fees from visitors to the area and also to operate the
local cable cars. The area is very popular among domestic Chinese
tourists, and improved roads to Shanghai should substantially
increase access and shorten travel time in the near future. The
company, which also operates the majority of hotels in the area,
generates attractive profits with fewer credit risks than are
present in most Chinese industrial companies. In addition, it
represents an excellent play on the rising level of domestic
consumption and affluence among Chinese consumers.
Among H-shares, we used the listing of Guangshen Railway to
increase our weighting in this sector. Guangshen operates the
rail line between Shenzhen and Guangzhou (Canton), which carries
both passenger and freight cars. Its solid position as one of the
prime infrastructure plays should result in future earnings
growth as trade in southern China improves in the coming year.
Your Fund's weightings in Korea were substantially reduced
early in the year except for certain core positions. Given the
attractive outlook for the core China region markets over the
coming year, we do not envisage any higher exposure to Korea in
the near term. Last year's forecast of an improvement in Taiwan
proved correct, and we shall monitor opportunities in the market
in the coming year.
Long-term investors in China have experienced both the
euphoria of the earlier enthusiasm as well as the pain of the
reversal that resulted from the 1993 austerity program. Having
largely suffered over the past three years, we expect the gains
of late 1996 for the China region markets to mark the beginning
of an improving period for stock markets. We are concerned that
overheated equity markets in China could concentrate the gains
and lead to higher volatility. Recent actions by the Central
Government have been positive in that policymakers seem to
realize the damage this could have on the longer-term development
of China region markets. On balance, we remain positive on the
prospects for equity markets over the coming months and expect
further rewards for long-term investors in the China region
markets.
Respectfully submitted,
Martin Barrow
President
February 9, 1997
JARDINE FLEMING
CHINA REGION FUND, INC.
Major Holdings
_____________________________________________________________
At December 31, 1996
_____________________________________________________________
% of Net
Assets
_____________________________________________________________
Hutchison Whampoa 9.7
One of Hong Kong's leading conglomerates. It controls 60% and
50% of the container ports in Hong Kong and Shanghai,
respectively. Hutchison should benefit from increased PRC
exports.
Cheung Kong Holdings 8.2
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.
New World Development 7.4
Engaged mainly in property development and investment,
infrastructure projects, and hotel operations in Hong Kong and
China. The infrastructure and property projects in China include
five toll roads and bridges, three power plants, and home
ownership projects in Wuhan.
Huangshan Tourism Development 'B' 5.2
The monopoly operator of the Huangshan (Yellow Mountain)
Tourist 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.
Swire Pacific ('A' and 'B') 4.9
A diversified conglomerate. Swire's controlling stake in
Cathay Pacific and Cathay's minority stake in Dragonair (the
leading private airline into the PRC) give it a strong position
in the PRC airline industry. Swire's bottling subsidiary has
excellent long-term growth prospects as the monopoly bottler for
Coca-Cola in seven provinces with a total population of 372
million.
Qingling Motors 'H' 3.6
A light truck manufacturer in China with Isuzu technology. The
company used to rely heavily on imports of parts from Japan and
therefore was subjected to the fluctuations in the currency. It
sped up the localization process in 1995 with the commissioning
of an engine manufacturing factory.
Shanghai Diesel Engine Company 'B' 3.1
A manufacturer of medium-sized diesel engines for use in
construction, power generation, and boats. It also produces
larger engines for agricultural purposes in a joint venture with
Caterpillar.
HSBC Holdings 2.9
The largest bank in Hong Kong and one of the largest in the
world. Earnings growth over the next couple of years will
continue to be driven by its Asian, primarily Hong Kong-based,
businesses, but a stable global earnings base lends comfort to
investors.
Guangshen Railway 2.7
The owner and operator of a three track, 147 km railway line
between Guangzhou (Canton) and Shenzhen. Guangshen operates both
passenger and freight services and is one of the key transport
links within the PRC.
Television Broadcasts (TVB) 2.6
Focuses on essential broadcasting in Hong Kong. However, the
ability of viewers in Southern China to pick up TVB's signal has
given advertisers a new medium to develop brand names in the PRC.
JARDINE FLEMING
CHINA REGION FUND, INC.
Investment Portfolio
_______________________________________________________________
At December 31, 1996
Holdings Market
(in shares Value
Description or par) (in US$)
_______________________________________________________________
Common Stocks (unless otherwise noted)
_______________________________________________________________
CHINA (23.9%)
_______________________________________________________________
Shanghai Equities (USD) (15.9%)
_______________________________________________________________
Autos & Transportation Equipment (4.3%)
China Yuchai International 250,000 1,187,500
Ek Chor China Motorcycle 50,900 369,025
!*Shanghai Diesel Engine 'B' 8,400,000 3,981,600
5,538,125
Building Materials (0.9%)
Huaxin Cement 'B' 4,300,000 1,204,000
Chemicals (1.8%)
* Shanghai Tyre and Rubber 5,543,680 2,350,520
Commercial & Industrial (0.1%)
* Shanghai Phoenix Bicycle 'B' 440,000 79,200
Electronics & Components (1.6%)
! Shanghai Refrigerator Compressor 'B' 3,900,000 2,121,600
Hotels & Tourism (7.2%)
!*Huangshan Tourism Development 'B' 15,303,000 6,733,318
Shanghai Dazhong Taxi 'B' 2,600,000 2,147,600
* Shanghai Jin Jiang Tower 'B' 1,662,499 505,400
9,386,318
Total Shanghai Equities 20,679,763
_______________________________________________________________
Shenzhen Equities (HKD) (8.0%)
_______________________________________________________________
Autos & Transportation Equipment (0.9%)
Shenzhen North Jianshe
Motorcycle 'B' 2,395,000 1,192,159
Commercial & Industrial (3.6%)
China Southern Glass 'B' 2,641,470 1,639,286
* Shenzhen China Bicycles 'B' 3,691,600 1,603,695
* Wuxi Little Swan 'B' 1,500,000 1,512,703
4,755,684
Energy (1.9%)
Chiwan Petroleum Supply Base 'B' 4,236,300 2,464,717
Transportation Services (1.6%)
China Merchant Shekou Port
Service 'B' 3,138,960 2,090,070
Total Shenzhen Equities 10,502,630
_______________________________________________________________
TOTAL CHINA 31,182,393
_______________________________________________________________
HONG KONG (67.6%)
_______________________________________________________________
Autos & Transportation Equipment (3.6%)
Qingling Motors 'H' 8,500,000 4,698,106
Banking & Financial Services (2.9%)
HSBC Holdings 174,800 3,740,306
Building & Construction (1.7%)
* New World Infrastructure 750,000 2,191,480
Chemicals (1.8%)
Ngai Hing Hong 1,800,000 488,719
Zhenhai Refining and Chemical 'H' 5,000,000 1,842,394
2,331,113
Commercial & Industrial (2.0%)
Guangzhou Investment 3,600,000 1,722,154
* 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. 11,400,000 928,567
2,650,721
Conglomerates (16.1%)
China Resources Enterprise 388,000 872,868
* China Resources Enterprise
Warrants, 12/10/97 (ING Baring) 10,000,000 853,320
* China Resources Enterprise
Warrants, 3/20/98 (Salomon Brothers)
(When/if issued security) 3,600,000 167,933
Hutchison Whampoa 1,600,000 12,567,072
Swire Pacific Ltd. 'A' 120,000 1,144,224
Swire Pacific Ltd. 'B' 3,500,000 5,294,460
20,899,877
Consumer Products (0.4%)
Climax International 4,000,000 517,163
Electricals (0.0%)
* Chengdu Telecommunications Cable 'H' 398,000 61,235
Food & Beverages (1.2%)
Dairy Farms International (USD) 2,000,000 1,610,000
Media (3.7%)
Pico Far East Holdings 5,000,000 1,454,522
Television Broadcasts 850,000 3,395,824
4,850,346
Packaging (2.4%)
* Concordia Paper Holdings ADR (USD) 150,000 637,500
Cosco Pacific Ltd. 2,100,000 2,443,597
3,081,097
Pharmaceuticals (0.1%)
* Shandong Xinhua Pharmaceuticals 'H' 529,000 157,308
Property & Real Estate (21.0%)
Cheung Kong Holdings 1,200,000 10,666,494
China Overseas Land and Investment 3,500,000 1,776,133
Guangdong Investment 1,620,000 1,560,411
Henderson Capital, CB, VR, 5.00%,
3/28/97 (USD) 1,200,000 1,050,000
Henderson China Holdings 550,000 1,251,535
New World Development 1,425,000 9,626,511
* Seapower Resources 15,000,000 1,454,522
27,385,606
Retail (3.0%)
* China Everbright - IHD Pacific Ltd. 490,000 171,052
Goldlion Holdings 1,850,000 1,518,844
Lamex Holdings 6,064,000 2,195,255
3,885,151
Steel (2.2%)
Maanshan Iron and Steel 'H' 13,236,000 2,840,747
Telecommunications (0.2%)
* CM Telecom (USD) 784,000 207,760
Transportation Services (4.9%)
* Anhui Expressway 'H' 5,990,000 1,684,433
* Guangshen Railway 'H' 8,000,000 3,464,995
Shanghai Haixin Shipping 'H' 10,555,000 1,228,198
6,377,626
Utilities (0.4%)
Harbin Power Equipment 'H' 3,000,000 488,719
TOTAL HONG KONG 87,974,361
KOREA (4.7%)
_______________________________________________________________
Electricals (1.4%)
* Samsung Electro-Mechanics Warrants, 9/8/97 (USD) 750
450,000
Samsung Electronics 24,001 1,421,598
1,871,598
Insurance (1.4%)
Samsung Fire and Marine Insurance 5,000 1,834,319
Steel (1.9%)
Pohang Iron and Steel 56,000 2,418,935
Transportation Services (0.0%)
* Hanjin Transportation 2,877 47,666
TOTAL KOREA 6,172,518
_______________________________________________________________
TIME DEPOSITS (4.3%)
_______________________________________________________________
Citibank, N.A., 5.375%,
1/2/97 (HKD) 43,000,000 5,559,506
TOTAL TIME DEPOSITS 5,559,506
_______________________________________________________________
TOTAL INVESTMENTS
(100.5% of Net Assets) (Cost $110,944,208) 130,888,778
_______________________________________________________________
_______________________________________________________________
Other assets less liabilities (664,683)
_______________________________________________________________
_______________________________________________________________
NET ASSETS 130,224,095
_______________________________________________________________
_______________________________________________________________
Aggregate cost is the same for Federal income tax purposes.
The aggregate unrealized gain for all securities is as follows:
Excess of market value over cost 32,865,034
Excess of cost over market value (12,920,464)
Net unrealized gain 19,944,570
_______________________________________________________________
_______________________________________________________________
(HKD) Hong Kong dollar
(RMB) Chinese renminbi
(USD) U.S. dollar
CB Convertible Bond
VR Variable Rate
* Non-income producing
! Affiliated company
See accompanying notes to financial statements.
JARDINE FLEMING
CHINA REGION FUND, INC.
Statement of Assets and Liabilities
At December 31, 1996
_______________________________________________________________
(in US$)
_______________________________________________________________
Assets
_______________________________________________________________
Investments at value (Note 2)
Affiliated companies (Cost $9,225,860) $12,836,518
Other companies (Cost $101,718,349) 118,052,260
_______________________________________________________________
Total investments in securities 130,888,778
Cash and foreign currencies 167,786
Receivable for securities sold 13,391
Dividends receivable 161,284
Interest receivable 7,286
Deposits in respect of insurance policy 68,388
Restricted cash (Note 6) 305,266
Unamortized organization costs (Note 1) 17,722
_______________________________________________________________
Total Assets 131,629,901
Liabilities
_______________________________________________________________
Payable for securities purchased 344,784
Distributions payable (Note 2) 182,027
Accrued expenses payable 627,293
Due to investment adviser (Note 5) 251,702
_______________________________________________________________
Total Liabilities 1,405,806
Net Assets 130,224,095
_______________________________________________________________
_______________________________________________________________
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 net investment income, net of
distributions 73,867
Accumulated realized gain (loss) on investments
and foreign currency transactions, net of
distributions (26,396,934)
Accumulated net unrealized gain (loss) on
investments, foreign currency holdings,
and other assets and liabilities denominated
in foreign currencies 19,944,496
_______________________________________________________________
Net Assets 130,224,095
_______________________________________________________________
_______________________________________________________________
Net Asset Value Per Share
($130,224,095/9,101,372) 14.31
_______________________________________________________________
See accompanying notes to financial statements.
JARDINE FLEMING
CHINA REGION FUND, INC.
Statement of Operations
Year Ended December 31, 1996
_______________________________________________________________
(in US$)
_______________________________________________________________
Investment Income (Note 2)
_______________________________________________________________
Dividends (net of foreign taxes of $15,526) 2,182,759
Interest 531,940
_______________________________________________________________
Total Investment Income 2,714,699
Expenses
_______________________________________________________________
Investment advisory fee (Note 5) 1,425,100
Administration and accounting fees (Note 5) 310,030
Custodian fees 207,500
Reports and notices to shareholders 120,000
Directors' fee and expenses 79,874
Proxy expenses 75,000
Legal fees 60,000
Audit fees 36,000
Amortization of organizational costs (Note 1) 35,445
Insurance 29,276
Listing fees 25,000
Miscellaneous expenses 19,070
_______________________________________________________________
Total Expenses 2,422,295
_______________________________________________________________
Net Investment Income 292,404
_______________________________________________________________
Realized and Unrealized Gain (Loss) on Investments, Foreign
Currency
Holdings and Other Assets and Liabilities Denominated in Foreign
Currencies:
_______________________________________________________________
Net realized loss on (Note 2)
Investment transactions (9,424,969)
Foreign currency transactions (19,180)
Net change in unrealized gain (loss) on (Note 2)
Investments 37,910,852
Foreign currency holdings and other assets
and liabilities denominated in foreign
currencies (110)
_______________________________________________________________
Net realized and unrealized gain on investments,
foreign currency holdings and other assets
and liabilities denominated in foreign
currencies 28,466,593
_______________________________________________________________
Net Increase in Net Assets Resulting From
Operations 28,758,997
_______________________________________________________________
_______________________________________________________________
See accompanying notes to financial statements.
JARDINE FLEMING
CHINA REGION FUND, INC.
Statements of Changes in Net Assets
_______________________________________________________________
_______________________________________________________________
Year Ended Year Ended
December 31, 1996 December 31, 1995
(in US$) (in US$)
_______________________________________________________________
_______________________________________________________________
Increase (Decrease) in Net Assets
_______________________________________________________________
Operations
Net investment income 292,404 653,349
Net realized loss on investment
transactions (9,424,969) (8,640,290)
Net realized loss on foreign
currency transactions (19,180) (32,040)
Net change in unrealized gain
(loss) on investments,
foreign currency holdings
and other assets and
liabilities denominated
in foreign currencies 37,910,742 (4,053,722)
_______________________________________________________________
Net increase (decrease) in net
assets resulting from
operations 28,758,997 (12,072,703)
_______________________________________________________________
Dividends to Shareholders:
_______________________________________________________________
From net investment income (182,014) (803,644)
_______________________________________________________________
Total Increase (Decrease) in
Net Assets 28,576,983 (12,876,347)
Net Assets:
Beginning of period 101,647,112 114,523,459
_______________________________________________________________
End of period 130,224,095 101,647,112
_______________________________________________________________
_______________________________________________________________
See accompanying notes to financial statements.
JARDINE FLEMING
CHINA REGION FUND, INC.
Financial Highlights
_________________________________________________________________
For the
For the For the For the For the Period
Year Year Year Year July 16, 1992*
Ended Ended Ended Ended through
December December December December December
31, 31, 31, 31, 31,
1996 1995 1994 1993 1992
(in US$) (in US$) (in US$) (in US$) (in US$)
_________________________________________________________________
Per share operating performance
_________________________________________________________________
Net asset value,
beginning of
period 11.17 12.58 22.58 15.05 13.95**
Offering costs
charged to
paid-in capital - - (0.06) - (0.11)
_________________________________________________________________
11.17 12.58 22.52 15.05 13.84
_________________________________________________________________
Net investment
income 0.03 0.07 0.05 0.10 0.07
Net realized and
unrealized gain
(loss) on
investment and
foreign
currency-
related
transactions 3.13 (1.39) (8.51) 10.50 1.21
_________________________________________________________________
Total from
investment
operations 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 14.31 11.17 12.58 23.92 15.05
_________________________________________________________________
_________________________________________________________________
Dilutive effect
of fully
subscribed
rights
offering - - - (1.34)*** -
_________________________________________________________________
Net asset
value, end of
period, giving
effect to fully
subscribed
rights offering - - - 22.58*** -
_________________________________________________________________
_________________________________________________________________
Market value,
end of period 11.38 10.00 11.25 26.00 13.88
_________________________________________________________________
_________________________________________________________________
Total Investment
Return
Per share
market
value 13.9% (10.3%) (52.5%)# 99.3% (7.0%)
Per share
net asset
value 28.3% (10.5%) (38.9%)# 72.9% 9.3%
RATIOS/SUPPLEMENTAL DATA
Net assets,
end of
period 130,224,095 101,647,112 114,523,459 162,848,785 102,422,708
Ratio of expenses to
average
net assets 2.18% 2.22% 2.01% 2.17% 2.23%+
Ratio of net
investment
income
to average
net assets 0.26% 0.60% 0.35% 0.59% 1.16%+
Portfolio
turnover
rate 44.40% 44.90% 71.20% 99.22% 1.56%
Average
commission
rate paid $0.0015 $ - $ - $ - $ -
Number of shares
outstanding
at end of
period
(in
thousands) 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.
JARDINE FLEMING
CHINA REGION FUND, INC.
Notes to Financial Statements
December 31, 1996
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.
In order for the fund's capital accounts and
distributions to shareholders to reflect the tax
character of certain transactions, the following
reclassifications were made during the year ended
December 31, 1996. The results of operations and net
assets were not affected by the reclassifications.
Undistributed netinvestment income $ (36,523)
Undistributed net realized gain 74,916
Paid-in-capital (38,393)
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 year ended December 31, 1996, the Fund
made purchases of $56,451,294 and sales of
$45,179,819 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 December 31, 1996, $47,598
was payable to the Administrator.
iii) During the year ended December 31, 1996, the Fund
paid $83,777 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.
JARDINE FLEMING
CHINA REGION FUND, INC.
Report of Independent Accountants
To The Board of Directors and Shareholders of Jardine Fleming
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 Jardine Fleming China Region Fund, Inc.
("the Fund") at December 31, 1996, and results of its operations,
the changes in its net assets and the financial highlights for
each of the fiscal periods presented, in conformity with
generally accepted accounting principles. 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 generally
accepted auditing standards which 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, 1996,
by correspondence with the custodian and brokers and, where
appropriate, the application of alternative auditing procedures
for unsettled security transactions, provide a reasonable basis
for the opinion expressed above.
PRICE WATERHOUSE LLP
Baltimore, Maryland
January 20, 1997
JARDINE FLEMING
CHINA REGION FUND, INC.
Dividend Reinvestment and Cash Purchase Plan
The Fund operates an optional Dividend Reinvestment and Cash
Purchase Plan (the "Plan") whereby:
a) shareholders may elect to receive dividend and
capital gain distributions in the form of additional
shares of the Fund (the Share Distribution Plan).
b) shareholders may make optional payments (any amount
between $100 and $3,000) which will be used to
purchase additional shares in the open market (the
Share Purchase Plan).
For a copy of the Plan brochure, as well as a dividend
reinvestment authorization card, please contact:
1) State Street Bank & Trust Company (the Plan Agent):
P. O. Box 8200
Boston, Massachusetts 02266-8200
U.S.A.
Telephone No: 800-426-5523 (toll free)
or
2) T. Rowe Price Services, Inc.
Telephone No: 800-638-8540 (toll free)
JARDINE FLEMING
CHINA REGION FUND, INC.
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
Emmett J. Rice - Director
Mark B. E. White - Director and
Treasurer
William J. Tootill - Secretary
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
7 Saint Paul Street
Suite 1700
Baltimore, Maryland 21202
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.
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 12/31/96
<PAGE>
Chart 1 - Net Asset Value and Share Price vs. Target Index - A
line chart showing the net asset value and share price vs. target
index between 7/92 and 12/96.
