JARDINE FLEMING
CHINA REGION FUND, INC.
--------------------------------------------------------------------------------
Semiannual Report
June 30, 2000
This report, including the financial statements herein, is sent to the
shareholders of the Fund for their information. It is not a prospectus, circular
or representation intended for use in the purchase or sale of shares of the Fund
or of any securities mentioned in this report.
JFCRM-SR-00 F01-051 6/30/00
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 11
Statement of Operations 12
Statements of Changes in Net Assets 13
Financial Highlights 14
Notes to Financial Statements 15
Dividend Reinvestment and Cash Purchase Plan 18
Directors and Administration 19
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 Stock
Exchange of Hong Kong. Hong Kong enterprises have made substantial investments
in the PRC, in Guangdong Province in particular, where abundant cheap labor and
land are available. Hong Kong is also the largest trading partner of the PRC.
The economies of the PRC, Hong Kong, Taiwan, and Macau have become
increasingly linked over the past 10 years and are expected to become further
integrated now that Hong Kong and Macau have reverted to Chinese sovereignty.
Investments made by the Fund will seek to take advantage of opportunities
resulting from this linkage among the China Region markets.
Management
--------------------------------------------------------------------------------
Jardine Fleming International Management, Inc. ("JFIM") is the investment
management company appointed to advise and manage the Fund's portfolio. JFIM is
an investment management and advisory company owned by Robert Fleming Holdings
Ltd. ("Flemings"). Earlier this year, Flemings agreed to merge with The Chase
Manhattan Corporation ("Chase"), a global financial services firm headquartered
in New York with offices in more than 45 countries. On August 1, 2000, the
transaction was completed. It is not expected that this change will make any
difference to the management of your Fund's assets.
Steve Luk is the portfolio manager of the Fund. Mr. Luk joined Jardine
Fleming in 1990 and has been a portfolio manager specializing in Hong Kong and
China since 1993. He has been an Assistant Director since 1995.
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 JFC)
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 JFC)
JARDINE FLEMING
CHINA REGION FUND, INC.
Highlights
--------------------------------------------------------------------------------
June 30, 2000 December 31, 1999
US$ US$
Net Assets $95.6 million $107.3 million
Net Asset Value Per Share $10.54 $11.78
Market Data
Share Price on the
New York Stock Exchange $7.81 $8.44
Discount to Net Asset Value -25.9% -28.4%
Total Return for the Six Months Ended June 30, 2000
--------------------------------------------------------------------------------
Net Asset Value -10.5%
Share Price -7.4%
JFC Benchmark Index* -5.6%
MSCI Hong Kong Index -14.2%
BNP Prime Peregrine China Index 10.8%
Taiwan Weighted Index -0.4%
Net Asset Value and Share Price vs. Target Index
July 16, 1992 = 100
Net Asset JFC Benchmark
Value Share Price Index*
7/16/92** 100.00 100.00 100.00
9/92 100.90 80.00 79.10
12/92 109.30 93.00 90.20
3/93 120.50 108.90 94.30
6/93 122.30 120.10 83.10
9/93 128.40 126.80 84.70
12/93 189.00 187.40 129.00
3/94 136.60 136.10 91.10
6/94 124.00 123.30 82.80
9/94 133.00 129.80 94.10
12/94 115.70 94.30 72.20
3/95 109.40 94.30 67.10
6/95 111.90 92.30 69.30
9/95 112.90 94.40 68.80
12/95 103.50 84.50 63.30
3/96 110.10 95.10 70.70
6/96 112.00 87.70 71.50
9/96 112.20 85.60 74.70
12/96 132.80 95.30 97.40
3/97 134.00 99.50 99.70
6/97 170.30 124.90 114.40
9/97 167.70 124.40 116.20
12/97 110.00 82.90 83.70
3/98 107.60 80.80 83.70
6/98 72.70 54.20 63.50
9/98 60.80 40.90 56.90
12/98 69.90 46.80 61.40
3/99 69.70 47.80 62.50
6/99 90.40 74.40 80.70
9/99 84.11 56.86 75.59
12/99 110.11 72.07 90.23
3/00 118.43 75.28 96.66
6/00 98.52 66.73 85.22
* This benchmark is composed of the MSCI Hong Kong Index, 50%; BNP Prime
Peregrine China Index, 20%; Taiwan Weighted Index, 25%; HSBC Holdings
Limited, 5%. When calculating benchmark performance, the monthly
rebalancing method is used. The Board of Directors established the JFC
Benchmark Index in 1997, and the current composition dates from January
1999. Previously, the benchmark was composed of the Hong Kong All
Ordinaries Index, 60%; Credit Lyonnais Securities Asia All China B Index,
30%; and the Taiwan Weighted Index, 10%.
** Commencement of operations
Source: Jardine Fleming
JARDINE FLEMING
CHINA REGION FUND, INC.
Investment Review
Dear Fellow Shareholders:
For the first six months of 2000, most global equity markets experienced
corrections. The Hang Seng Index fell 5% after hitting a record high of 18,301
in March, and the Taiwan Weighted Index also retreated significantly after
exceeding 10,000 twice, falling 0.4% for the whole period.
The Fund's performance reflected this difficult environment, with the net
asset value falling -10.5% for the first six months of 2000, and the share price
declining -7.4%.
The Hong Kong stock market was extremely volatile. During the first
quarter, the rally in U.S. technology stocks trading on Nasdaq sparked sharp
increases in Hong Kong's telecom, media, and technology (TMT) stocks. However,
the subsequent sharp correction in the U.S. stock market, especially Nasdaq
stocks, curtailed momentum in the TMT sector in Hong Kong, and many of these
stocks fell sharply as fundamental factors could not justify their high
valuations. Uncertainties about the extent of the U.S. interest rate hikes also
affected sentiment regarding banks and property stocks in Hong Kong. Toward the
end of the second quarter, the Hong Kong market recovered some lost ground, as
there was a growing belief that the interest rate cycle in the U.S. may have
peaked. This is good for the economy as well as the equities market in Hong
Kong.
The Chinese economy continued to surprise the market on the upside. Export
growth as well as the recovery of domestic consumption contributed to
better-than-expected economic growth for the first half of this year. The
success of China's WTO negotiations with the European Union and the United
States also helped Chinese shares. Given the improved market sentiment as well
as a conscious policy by the central government to privatize some of the
state-owned enterprises, a few Chinese companies are coming to the market to
raise capital. Initial public offerings (IPOs) of Petro China and China Unicom
were very well received and together raised U.S. $8 billion. More Chinese
companies are expected to come to the market to raise funds in the second half
of this year.
The election of the DPP candidate Chen Shui-bian as president of Taiwan has
not resulted in further disturbance in the cross-straits relationship between
Taiwan and China. Since his inauguration, President Chen has adopted a
conciliatory and flexible approach toward China. Despite all the political
rhetoric from Beijing before the election, the reaction from that quarter so far
has been rather muted. We believe both sides are keen to start a dialogue, and
there is a chance that this could happen this year.
Separately, the Taiwan stock market is still dominated by the electronics
companies that have done well due to strong global demand for telecommunications
and personal computing equipment. These world-class manufacturers are taking
advantage of the global trend of outsourcing from the U.S. and Japanese brand
name companies to cost-efficient Taiwan manufacturers.
Outlook
With the interest rate cycle in the U.S. apparently peaking, the outlook
for an interest rate-sensitive market like Hong Kong has improved. The Hong Kong
economy is benefiting from strong external demand and is expected to grow at
around 10% for 2000. The property market is starting to see some renewed
interest, especially the primary market in the residential sector, although
prices are still weak. The office property sector has already shown signs of
recovery, with rents rising more than 30% compared with a year ago. Loan growth
is still sluggish, but we expect some pickup in loan demand in the second half.
The completion of the debt restructuring of Guangdong Enterprise Group will
boost the confidence of banks toward Chinese enterprises, and we may see some
growth in this sector. Property loans should recover with the expected
turnaround in property prices.
The continual improvement in the economic outlook for China is also
encouraging. Recent statistics show that the Chinese economy grew above 8% in
the first half of 2000, and this momentum is expected to continue into the
second half. Stronger-than-expected exports and domestic consumption have
propelled the recovery. Export growth is expected to slow later this year but
should be offset by continued recovery in domestic consumption and the easing of
deflationary pressures. The accession of China into WTO will bring more foreign
direct investment into China in the future. This will provide not only foreign
capital and technology but will also speed up reform of the state enterprises
that must compete with foreign companies or go out of business. We expect more
IPOs of Chinese companies, which would give us more choices in picking quality
companies for the portfolio.
Persistent strength in global demand for telecommunication and personal
computing equipment will provide support to share prices of Taiwan electronics
companies. We continue to prefer upstream players in the foundry and DRAM
sectors.
Overall, the improved interest rate outlook and the economic recovery of
China will provide an interesting investment environment for the Greater China
region.
Respectfully submitted,
The Rt. Hon. The Earl of Cromer
Chairman
July 28, 2000
JARDINE FLEMING
CHINA REGION FUND, INC.
Major Holdings
--------------------------------------------------------------------------------
At June 30, 2000
--------------------------------------------------------------------------------
% of Net
Assets
--------------------------------------------------------------------------------
Hutchison Whampoa 11.0
One of Hong Kong's leading conglomerates, controlling 60% and 50%
of the container ports in Hong Kong and Shanghai, respectively.
Hutchison should benefit from an increase in PRC exports.
HSBC Holdings 6.1
Hong Kong's first home-grown international bank with a network of
over 3,400 offices in more than 70 countries. Despite its
prominent overseas presence, HSBC has been active in pursuing
expansion opportunities in the restricted banking sector in
China. It is one of the first four banks to be granted a license
to conduct renminbi business in the PRC.
Cable & Wireless HKT 6.0
The dominant fixed line and cellular network operator in Hong
Kong. It has the best chance of gaining a lucrative position in
China via relationships with its existing shareholder, the
Ministry of Post and Telecommunications, particularly when China
liberalizes its telecommunications market.
Cheung Kong Holdings 5.9
One of Hong Kong's premier property companies with significant
property developments in Hong Kong and the PRC. Cheung Kong has
been discussing numerous property and infrastructure projects in
China.
China Mobile (Hong Kong) 5.8
Owns and operates cellular network businesses with a combined 93%
market share in six provinces in China. With limited competition
on the horizon, the company is expected to grow from 12 million
subscribers in 1999 to 16 million in 2000. It is the only listed
PRC telecommunications stock in Hong Kong included in the Hang
Seng Index.
Taiwan Semiconductor Manufacturing 5.5
The world's first and largest dedicated integrated circuit
foundry. The company currently operates two 6-inch-wafer fabs and
three 8-inch-wafer fabs and owns two-thirds of WaferTech, an
8-inch-wafer fab in Washington. TSM benefits from the increase in
outsourcing by major IC companies around the world.
Hang Seng Bank 5.4
The largest local bank in Hong Kong. Hang Seng Bank is well known
for its conservative and prudent management. Apart from
capitalizing on HSBC's network in China, Hang Seng Bank has
pursued its own expansion in China in recent years with branches
and representative offices in major cities.
Sun Hung Kai Properties 4.0
Hong Kong's premier and largest property company with an
investment properties portfolio of over 15 million square feet
and a property development landbank in excess of 30 million
square feet. Although primarily focused in Hong Kong, SHK
Properties has been gradually expanding its property exposure to
three strategic locations in China - Beijing, Shanghai, and
Guangzhou.
CLP Holdings 3.0
The franchisee for electricity generation and transmission for
the Kowloon and New Territories area. CLP was one of the first
Hong Kong companies to pursue investment opportunities in China.
Its first such investment was 1979, and it is one of the largest
shareholders of a power project in Shandong - one of the largest
projects in China. In 1997, CLP established a strategic
relationship with CITIC Pacific, which is ultimately owned by the
State Council.
Legend Holdings 3.0
The largest manufacturer and distributor of personal computers in
China, with its own brand name. Legend has approximately a 25%
share of the personal computer market in China. It is
diversifying into e-commerce and ISP services.
--------------=-----------------------------------------------------------------
Total Major Holdings 55.7
JARDINE FLEMING
CHINA REGION FUND, INC.
Investment Portfolio
--------------------------------------------------------------------------------
At June 30, 2000 (unaudited)
--------------------------------------------------------------------------------
Holdings Market
(in shares Value
Description or par) (in US$)
--------------------------------------------------------------------------------
Common Stocks (unless otherwise noted)
--------------------------------------------------------------------------------
HONG KONG (65.0%)
--------------------------------------------------------------------------------
Banking (7.4%)
Bank of East Asia 570,594 1,332,155
Dao Heng Bank Group 129,500 573,119
Hang Seng Bank 542,200 5,146,918
7,052,192
Broadcasting & Publishing (1.3%)
Television Broadcasts 183,000 1,220,704
Business & Public Services (0.7%)
* SINA.com (USD) 26,737 685,136
Chemicals (0.8%)
* Far Eastern Polychem Industries 3,690,000 776,294
Data Processing & Reproduction (3.0%)
Legend Holdings 2,956,000 2,862,908
Electrical & Electronics (2.9%)
Johnson Electric Holdings 289,500 2,738,840
Multi-Industry (15.3%)
Citic Pacific 380,000 1,988,840
Hutchison Whampoa 839,600 10,554,910
Swire Pacific 363,500 2,126,304
14,670,054
Real Estate (11.7%)
Cheung Kong Holdings 511,000 5,653,743
China Resources Enterprise 734,000 880,367
Sun Hung Kai Properties 531,000 3,814,508
Wharf Holdings 481,000 860,747
11,209,365
Telecommunications (14.0%)
Cable & Wireless 2,625,141 5,775,276
* China Mobile (Hong Kong) 630,000 5,556,090
* China Unicom 958,000 2,033,853
13,365,219
Transportation - Airlines (2.2%)
Cathay Pacific Airways 1,135,000 2,103,874
Transportation - Shipping (1.0%)
Cosco Pacific 1,238,000 976,679
Utilities - Electrical & Gas (4.7%)
CLP Holdings 621,000 2,891,707
Hong Kong & China Gas 1,402,570 1,574,304
4,466,011
TOTAL HONG KONG 62,127,276
--------------------------------------------------------------------------------
TAIWAN (26.5%)
--------------------------------------------------------------------------------
Building Materials & Components (1.3%)
Taiwan Cement 1,541,000 1,223,772
Business & Public Services (1.5%)
Stark Technology 72,000 960,781
Systex 135,520 476,360
1,437,141
Chemicals (0.7%)
* Grand Pacific Petrochemical 831,000 695,092
Data Processing & Reproduction (1.7%)
Acer 258,000 482,832
Asustek Computer 133,171 1,100,909
1,583,741
Electrical & Electronics (9.2%)
Hon Hai Precision Industry 122,000 1,103,857
Mosel Vitelic 393,000 984,898
Taiwan Semiconductor Manufacturing 1,102,796 5,240,300
Winbond Electronics 321,900 932,436
* Zyxel Communications 165,000 542,392
8,803,883
Electronic Components, Instruments (7.3%)
Ambit Microsystems 160,000 1,588,283
Compeq Manufacturing 120,000 738,161
Powerchip Semiconductor 624,400 1,259,977
Pro Mos Technologies 207,000 838,780
United Micro Electronics 561,840 1,563,460
* Via Technologies 39,000 602,929
* Walsin Technology 75,000 412,531
7,004,121
Industrial Components (0.7%)
* Pacific Electric Wire & Cable 816,000 653,331
Merchandising (0.8%)
President Chain Store 213,780 800,153
Textiles & Apparel (1.1%)
Far Eastern Textile 875,300 1,088,249
Utilities - Electrical & Gas (1.1%)
Phoenixtec Power 578,786 1,054,907
Wholesale & International Trade (1.1%)
Synnex Technology International 190,000 1,020,342
TOTAL TAIWAN 25,364,732
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UNITED KINGDOM (HKD) (6.1%)
--------------------------------------------------------------------------------
Banking (6.1%)
HSBC Holdings 512,541 5,851,600
TOTAL UNITED KINGDOM 5,851,600
--------------------------------------------------------------------------------
UNITED STATES (1.9%)
--------------------------------------------------------------------------------
Short-Term Investments (1.9%)
Citibank Time Deposit, 6.60%, 7/3/00 1,835,000 1,835,000
TOTAL UNITED STATES 1,835,000
--------------------------------------------------------------------------------
TOTAL INVESTMENTS
(99.5% of Net Assets) (Cost $76,644,788) 95,178,608
================================================================================
Other assets less liabilities 465,842
================================================================================
NET ASSETS 95,644,450
================================================================================
Aggregate cost is substantially the same as for Federal income tax purposes.
The aggregate unrealized gain for all securities is as follows:
Excess of market value over cost 23,251,455
Excess of cost over market value (4,717,635)
Net unrealized gain 18,533,820
================================================================================
* Non-income producing
HKD Hong Kong dollar
USD U.S. dollar
See accompanying notes to financial statements.
JARDINE FLEMING
CHINA REGION FUND, INC.
Statement of Assets and Liabilities
--------------------------------------------------------------------------------
At June 30, 2000 (unaudited)
--------------------------------------------------------------------------------
(in US$)
Assets
Investments at value (Note 2) (cost $76,644,788) 95,178,608
Receivable for securities sold 280,843
Cash and foreign currencies 240,727
Dividends and interest receivable 232,639
--------------------------------------------------------------------------------
Total Assets 95,932,817
Liabilities
--------------------------------------------------------------------------------
Accrued expenses payable 231,897
Payable for fund shares repurchased 49,531
Payable for securities purchased 6,939
--------------------------------------------------------------------------------
Total Liabilities 288,367
Net Assets 95,644,450
================================================================================
Net assets consist of:
Common stock, $0.01 par value
(100,000,000 shares authorized;
9,074,772 shares issued and outstanding) 90,748
Paid-in capital 135,770,690
Accumulated net investment income
- net of distributions 13,350
Accumulated realized gain (loss) on investments
and foreign currency transactions
- net of distributions (58,764,607)
Accumulated net unrealized gain (loss) on investments,
foreign currency holdings, and other assets
and liabilities denominated in foreign currencies 18,534,269
Net Assets 95,644,450
================================================================================
Net Asset Value Per Share
($95,644,450 (divided by) 9,074,772) 10.54
================================================================================
See accompanying notes to financial statements.
JARDINE FLEMING
CHINA REGION FUND, INC.
Statement of Operations
--------------------------------------------------------------------------------
Six Months Ended June 30, 2000 (unaudited)
--------------------------------------------------------------------------------
(in US$)
Investment Income (Loss) (Note 2)
--------------------------------------------------------------------------------
Dividends 871,262
Interest 44,200
--------------------------------------------------------------------------------
Total Investment Income 915,462
--------------------------------------------------------------------------------
Expenses
--------------------------------------------------------------------------------
Investment advisory fees (Note 4) 618,816
Administration and accounting fees (Note 4) 142,042
Directors' fees and expenses 51,882
Custodian fees 49,596
Audit and legal fees 16,990
Registration fees 11,500
Other expenses 11,286
--------------------------------------------------------------------------------
Total Expenses 902,112
--------------------------------------------------------------------------------
Net Investment Income (Loss) 13,350
--------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments, Foreign Currency
Holdings and Other Assets and Liabilities Denominated in Foreign Currencies
--------------------------------------------------------------------------------
Net realized gain (loss) (Note 2)
Investments 7,746,114
Foreign currency transactions (87,718)
Net change in unrealized gain (loss) (Note 2)
Investments (19,067,211)
Foreign currency holdings and other
assets and liabilities
denominated in foreign currencies (1,072)
--------------------------------------------------------------------------------
Net realized and unrealized gain on investments,
foreign currency holdings and other assets and
liabilities denominated in foreign currencies (11,409,887)
--------------------------------------------------------------------------------
Net Decrease in Net Assets
Resulting From Operations (11,396,537)
================================================================================
See accompanying notes to financial statements.
JARDINE FLEMING
CHINA REGION FUND, INC.
Statements of Changes in Net Assets
--------------------------------------------------------------------------------
(unaudited)
--------------------------------------------------------------------------------
Six Months Ended Year Ended
June 30, 2000 December 31, 1999
(in US$) (in US$)
--------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
Operations
Net investment income 13,350 293,506
Net realized gain (loss)
on investments 7,746,114 (8,303,697)
Net realized gain (loss) on
foreign currency transactions (87,718) (6,739)
Net change in unrealized
gain (loss) on investments,
foreign currency holdings
and other assets and
liabilities denominated in
foreign currencies (19,068,283) 47,337,583
--------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations (11,396,537) 39,320,653
--------------------------------------------------------------------------------
Dividends to Shareholders
From net investment income (Note 2) - (364,035)
Capital Shares Repurchased (Note 5) * (209,967) -
Capital Contributions
from Adviser (Note 4) - 5,400
Total Increase
Decrease) in Net Assets (11,606,504) 38,962,018
Net Assets:
Beginning of period 107,250,954 68,288,936
--------------------------------------------------------------------------------
End of period 95,644,450 107,250,954
================================================================================
*Shares Repurchased
Number of shares (26,600) -
Weighted average discount from
net asset value per share 27.07% -
See accompanying notes to financial statements.
<TABLE>
JARDINE FLEMING
CHINA REGION FUND, INC.
Financial Highlights (unaudited)
---------------------------------------------------------------------------------------------------
<CAPTION>
For the For the For the For the For the
Six Months Year Year Year Year
Ended Ended Ended Ended Ended
June 30, December 31, December 31, December 31, December 31,
2000 1999 1998 1997 1996
(In US$) (In US$) (In US$) (In US$) (In US$)
---------------------------------------------------------------------------------------------------
For a share outstanding throughout each period:
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period 11.78 7.50 11.81 14.31 11.17
---------------------------------------------------------------------------------------------------
Net investment
income (loss) - 0.03 0.02 (0.01) 0.03
Net realized and
unrealized gain
(loss) on investments
and foreign currency-
related transactions (1.25) 4.29 (4.33) (2.45) 3.13
---------------------------------------------------------------------------------------------------
Total from
investment operations (1.25) 4.32 (4.31) (2.46) 3.16
---------------------------------------------------------------------------------------------------
Dividends from net
investment income - (0.04) - (0.04) (0.02)
---------------------------------------------------------------------------------------------------
Capital share
repurchases (Note 5) 0.01 - - - -
---------------------------------------------------------------------------------------------------
Net asset value,
end of period 10.54 11.78 7.50 11.81 14.31
---------------------------------------------------------------------------------------------------
Market value,
end of period 7.81 8.44 5.50 9.75 11.38
---------------------------------------------------------------------------------------------------
Total Investment Return
Per share
market value (7.4%) 54.2% (43.6%) (13.9%) 13.9%
Per share net
asset value (10.5%) 57.6% (36.5%) (17.2%) 28.3%
RATIOS/SUPPLEMENTAL DATA
Net assets,
end of period 95,644,450 107,250,954 68,288,936 107,494,855 130,224,095
Ratio of total
expenses to
average net assets 1.73%! 2.28% 2.49% 1.68% 2.18%
Ratio of net
investment income
(loss) to average
net assets 0.03%! 0.37% 0.24% (0.05%) 0.26%
Portfolio
turnover rate 101.6%! 90.8% 111.9% 102.60% 44.40%
Number of shares
outstanding
at end of period
(in thousands) 9,075 9,101 9,101 9,101 9,101
<FN>
! Annualized
See accompanying notes to financial statements.
</FN>
</TABLE>
JARDINE FLEMING
CHINA REGION FUND, INC.
Notes to Financial Statements
--------------------------------------------------------------------------------
June 30, 2000 (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.
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 capital loss
carryforwards for federal income tax purposes of $66,355,578 of which
$7,825,208 expires in 2004, $46,853,803 in 2006, and $11,676,567 in
2007.
iii) Foreign Currency Translation
The books and records of the Fund are maintained in United States
dollars. Foreign currency amounts are translated into U.S. dollars at
the mid-market price of such currencies against U.S. dollars as
follows:
o investments, other assets, and liabilities at the prevailing
rates of exchange on the valuation date;
o investment transactions and investment income at the prevailing
rates of exchange on the dates of such transactions.
Although the net assets of the Fund are presented at the foreign
exchange rates and market values at the close of the period, the Fund
does not isolate that portion of the results of operations arising as
a result of changes in the foreign exchange rates from the
fluctuations arising from changes in the market prices of the
securities held at period-end. Similarly, the Fund does not isolate
the effect of changes in foreign exchange rates from the fluctuations
arising from changes in the market prices of securities sold during
the period. Accordingly, realized and unrealized foreign currency
gains (losses) are included in the reported net realized and
unrealized gains (losses) on investments.
Unrealized currency gains (losses) from valuing foreign currency
denominated assets and liabilities at period-end exchange rates are
reflected as a component of accumulated net unrealized gain (loss) on
investments, foreign currency holdings, and other assets and
liabilities denominated in foreign currencies.
iv) Distribution of Income and Gains
The Fund intends to distribute to shareholders, at least annually,
substantially all of its net investment income and expects to
distribute annually any net long-term capital gains in excess of net
short-term capital losses. An additional distribution may be made to
the extent necessary to avoid the payment of a 4% Federal excise tax.
Income and capital gain distributions are determined in accordance
with federal income tax regulations and may differ from those
determined in accordance with generally accepted accounting
principles.
v) Other
Security transactions are accounted for on the date the securities are
purchased or sold. Realized gains and losses on the sale of investment
securities are determined on the identified cost basis. Interest
income is recognized on the accrual basis. Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
Portfolio turnover rate is calculated by dividing the lesser of
purchases and sales of investment securities having maturities greater
than one year at the time of acquisition by the average monthly market
value of those investment securities.
3. Investment Transactions
Consistent with its investment objective, the Fund engages in the following
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, 2000, the Fund made purchases of
$51,339,642 and sales of $53,091,923 of investment securities other
than short-term investments. There were no purchases or sales of U.S.
government securities.
4. 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 1.25% of the first $75 million and
1.00% of the excess over $75 million of the Fund's weekly net assets.
At June 30, 2000, $95,000 was payable to the Adviser.
ii) T. Rowe Price Associates, 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, 2000, $47,498 was payable to the Administrator.
iii) During the six months ended June 30, 2000, the Fund paid $42,299 in
brokerage commissions to Jardine Fleming Broking Ltd. and Jardine
Fleming Securities Ltd., affiliated brokers/dealers.
iv) In conjunction with the redemption of a portion of its initial shares,
the Adviser made a capital contribution of $5,400 to the Fund during
the year ended December 31, 1999.
5. Share Repurchase Program
The Fund's Board of Directors has authorized the fund to repurchase up to
10% of its issued shares in the open market through March 5, 2001.
Repurchases will be made only when the Fund's shares are trading at less
than net asset value and at such times and amounts as are believed to be in
the best interest of the Fund's shareholders. Any repurchase of shares has
the effect of increasing the net asset value per share of the Fund's
remaining shares outstanding. Through June 30, 2000, the Fund had
repurchased a total of 26,600 shares.
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 or 2) T. Rowe Price Services, Inc.
(the Plan Agent): Telephone No: 800-638-8540
P. O. Box 8200 (toll-free)
Boston, Massachusetts 02266-8200
Telephone No: 800-426-5523 (toll-free)
The following should be noted with respect to the Plan:
If you participate in the Share Distribution Plan, whenever the Board of
Directors of the Fund declares an income dividend or net capital gain
distribution, you will automatically receive your distribution in newly issued
shares (cash will be paid in lieu of fractional shares) if the market price of
the shares on the date of the distribution is at or above the net asset value of
the shares. The number of shares to be issued to you by the Fund will be
determined by dividing the amount of the cash distribution to which you are
entitled (net of any applicable withholding taxes) by the greater of the net
asset value (NAV) per share on such date or 95% of the market price of a share
on such date. If the market price of the shares on such a distribution date is
below the NAV, the Plan Agent will, as agent for the participants, buy shares on
the open market, on the New York Stock Exchange or elsewhere, for the
participant's account on, or after, the payment date. There is no service charge
for purchases under this Plan.
For U.S. federal income tax purposes, shareholders receiving newly issued shares
pursuant to the Share Distribution Plan will be treated as receiving income or
capital gains in an amount equal to the fair market value (determined as of the
distribution date) of the shares received and will have a cost basis equal to
such fair market value. Shareholders receiving a distribution in the form of
shares purchased in the open market pursuant to the Plan will be treated as
receiving a distribution of the cash distribution that such shareholder would
have received had the shareholder not elected to have such distribution
reinvested and will have a cost basis in such shares equal to the amount of the
distribution.
There will be no brokerage charge to participants for shares issued directly by
the Fund under the Plan. Each participant will pay a pro rata share of brokerage
commissions incurred with respect to the Plan Agent's open market purchases of
shares in connection with the Plan. The Fund will pay the fees of the Plan Agent
for handling the Plan.
You may terminate your account under the Share Distribution Plan by notifying
the Plan Agent in writing. The Plan may be terminated by the Plan Agent or the
Fund with notice to you at least 30 days prior to any record date for the
payment of any distribution by the Fund. Upon any termination, the Plan Agent
will deliver a certificate or certificates for the full shares held for you
under the Plan and a cash adjustment for any fractional shares.
You also have the option of instructing the Plan Agent to make semiannual cash
purchases of shares in the open market. There is a service charge of $1.25 for
each purchase under this Share Purchase Plan.
JARDINE FLEMING
CHINA REGION FUND, INC.
Directors and Administration
--------------------------------------------------------------------------------
Officers and Directors The Rt. Hon. The Earl of Cromer - Director
and Chairman of the Board
A. Douglas Eu - Director, President, and Treasurer
Alexander R. Hamilton - Director
Ng Yook Man - Director
Julian M. I. Reid - Director
Anthony John Morgan - Secretary
Henry H. Hopkins - Assistant 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 PricewaterhouseCoopers LLP
250 West Pratt Street
Baltimore, Maryland 21201 U.S.A.
Legal Counsel Cleary, Gottlieb, Steen & Hamilton
New York:
1 Liberty Plaza, 43rd Floor
New York, New York 10006
U.S.A.
Hong Kong:
39th Floor, Bank of China Tower
1 Garden Road
Hong Kong
Registrar, Transfer Agent, State Street Bank & Trust Company
and Dividend Paying Agent P. O. Box 8200
Boston, Massachusetts 02266-8200
U.S.A.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that from time to time the Fund may purchase
shares of its common stock in the open market.
