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Exhibit (A)(1)(i)
Jardine Fleming China Region Fund, Inc.
Offer to Purchase for Cash up to 2,576,691 of Its Issued
and Outstanding Shares at 95% of the Net Asset Value Per Share
THE OFFER WILL EXPIRE AT MIDNIGHT NEW YORK TIME
ON DECEMBER 18, 2000, UNLESS THE OFFER IS EXTENDED.
To the Shareholders of Jardine Fleming China Region Fund, Inc.:
Jardine Fleming China Region Fund, Inc., a non-diversified, closed-end
management investment company incorporated in Maryland (the "Fund"), is
offering to purchase up to 2,576,691 of its issued and outstanding shares of
Common Stock, par value $0.01 per share (the "Shares"). The offer is for cash
at a price equal to 95% of the net asset value ("NAV") per Share determined as
of the close of the regular trading session of the New York Stock Exchange,
the principal market in which the Shares are traded (the "NYSE"), on the date
the offer expires, and is upon the terms and subject to the conditions set
forth in this Offer to Purchase and the related Letter of Transmittal (which
together with any amendments or supplements thereto collectively constitute
the "Offer"). The Offer will expire at midnight New York Time on December 18,
2000, unless extended. The Shares are traded on the NYSE under the symbol
"JFC". The NAV as of the close of the regular trading session of the NYSE on
November 10, 2000, was $9.83 per Share. While the Offer is pending, current
NAV quotations can be obtained from MacKenzie Partners, Inc. (the "Information
Agent"), by calling (212) 929-5500 (collect) or (800) 322-2885 (toll-free)
between the hours of 8:00 a.m. and 8:00 p.m. New York Time, Monday through
Friday and 10:00 a.m. and 4:00 p.m. New York Time, Saturday (except holidays).
Tendering shareholders will not be obliged to pay brokerage fees or
commissions or, except as set forth in Instruction 7 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Fund
pursuant to the Offer. The Fund will pay all charges and expenses of the
Information Agent and EquiServe Trust Company, N.A. (the "Depositary"). The
Fund has mailed materials to record holders on or about November 20, 2000, for
the Offer.
This Offer is subject to certain conditions. See Section 3.
Important Information
Shareholders who desire to tender their Shares should either: (1) properly
complete and sign the Letter of Transmittal, including the original of any
required signature guarantee(s) and mail or deliver it together with their
Shares (in proper certificated or uncertificated form) and any other documents
required by the Letter of Transmittal; or (2) request their broker, dealer,
commercial bank, trust company or other nominee to effect the transaction on
their behalf. Shareholders who desire to tender Shares registered in the name
of a firm must contact the firm in whose name the Shares are registered to
effect a tender on their behalf. Tendering shareholders will not be obligated
to pay brokerage commissions in connection with their tender of Shares, but
they may be charged a fee by a firm processing the tender(s) on their behalf.
The Fund reserves the absolute right to reject tenders it determines not to be
in appropriate form.
If you do not wish to tender your Shares, you need not take any action.
Neither the Fund nor its Board of Directors nor Jardine Fleming
International Management Inc. ("JFIMI"), the Fund's investment adviser, makes
any recommendation to any shareholder as to whether to tender or refrain from
tendering shares. No person has been authorized to make any recommendation on
behalf of the Fund, its Board of Directors or JFIMI as to whether shareholders
should tender or refrain from tendering shares pursuant to the Offer or to
make any representation or to give any information in connection with the
Offer other than as contained in this document or in the Letter of
Transmittal. If made or given, any such recommendation, representation or
information must not be relied upon as having been
<PAGE>
authorized by the Fund, its Board of Directors or JFIMI. Shareholders are urged
to evaluate carefully all information in the Offer, consult their own
investment and tax advisers and make their own decisions whether to tender or
refrain from tendering their shares.
EquiServe Trust Company, N.A.
DEPOSITARY
via Facsimile:
(781) 575-4826
Confirm Facsimile by Telephone:
(781) 575-4816
<TABLE>
<S> <C> <C>
By First Class Mail: By Registered, Certified or Express Mail By Hand:
EquiServe Trust or Overnight Courier: Securities Transfer &
Company, N.A. Reporting
Attn: Corporate Actions EquiServe Trust Company, N.A. Services, Inc.
c/o EquiServe Trust Company,
P.O. Box 9573 Attn: Corporate Actions N.A.
Boston, MA 02205-9573 40 Campanelli Drive 100 William Street Galleria
Braintree, MA 02184 New York, NY 10038
</TABLE>
INFORMATION AGENT
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
Toll-Free (800) 322-2885
2
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SUMMARY TERM SHEET......................................................... 4
1. Price; Number of Shares.............................................. 7
2. Purpose of the Offer; Plans or Proposals of the Fund................. 7
3. Certain Conditions of the Offer...................................... 8
4. Procedures for Tendering Shares...................................... 9
a. Proper Tender of Shares............................................. 9
b. Signature Guarantees and Method of Delivery......................... 9
c. Book-Entry Delivery................................................. 10
d. Guaranteed Delivery................................................. 10
e. Determinations of Validity.......................................... 11
f. United States Federal Income Tax Withholding........................ 11
5. Withdrawal Rights.................................................... 12
6. Payment for Shares................................................... 12
7. Source and Amount of Funds........................................... 13
8. Price Range of Shares; Dividends/Distributions....................... 14
9. Selected Financial Information....................................... 14
10. Interest of Directors, Executive Officers and Certain Related
Persons................................................................. 15
11. Certain Effects of the Offer......................................... 16
12. Certain Information about the Fund................................... 16
13. Additional Information............................................... 16
14. Certain United States Federal Income Tax Consequences................ 16
15. Amendments; Extension of Tender Period; Termination.................. 18
16. Miscellaneous........................................................ 18
</TABLE>
3
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SUMMARY TERM SHEET
(Section references are to the Offer to Purchase)
This Summary Term Sheet highlights certain information concerning this
tender offer. To understand the offer fully and for a more complete discussion
of the terms and conditions of the offer, you should read carefully the entire
Offer to Purchase and the related Letter of Transmittal.
What is the tender offer?
Jardine Fleming China Region Fund, Inc. (the "Fund") is offering to
purchase up to 2,576,691 of its shares of Common Stock for cash at a price per
share equal to 95% of the per share net asset value as of the close of the
regular trading session of the NYSE on December 18, 2000 (or, if the offer is
extended, on the date to which the offer is extended) upon specified terms and
subject to conditions as set forth in the tender offer documents.
Why is the Fund making this tender offer?
On October 30, 2000, the Board of Directors of the Fund, in recognition of
the fact that the Fund's shares have traded at a discount to their net asset
value and on the recommendation of Jardine Fleming International Management
Inc. ("JFIMI"), its investment adviser, the Board determined that it was in
the best interests of the Fund and its shareholders to initiate this tender
offer. After the completion of the tender offer, the Board will continue to
monitor the price of the Fund's Shares relative to their net asset value and
will take further actions as appropriate.
When will the tender offer expire, and may the offer be extended?
The tender offer will expire at midnight New York Time on December 18,
2000, unless extended. The Fund may extend the period of time the offer will
be open by issuing a press release or making some other public announcement by
no later than the next business day after the offer otherwise would have
expired. See Section 15.
What is the Fund's net asset value per share as of a recent date, and how can
I obtain the current net asset value?
As of November 10, 2000, the net asset value per share was $9.83. See
Section 8 of the Offer to Purchase for details. While the tender offer is
pending, current net asset value quotations can be obtained from MacKenzie
Partners, Inc. by calling (212) 929-5500 (collect) or (800) 322-2885 (toll-
free) between the hours of 8:00 a.m. and 8:00 p.m. New York Time, Monday
through Friday and 10:00 a.m. and 4:00 p.m. New York Time, Saturday (except
holidays). The Fund's net asset value is calculated each Friday and is made
available the following Monday.
What will the net asset value be on the date that the price to be paid for
tendered shares is determined?
No one can accurately predict the net asset value for a future date.
How do I tender my shares?
If your shares are registered in your name, you should obtain the tender
offer materials, including the Offer to Purchase and the related Letter of
Transmittal, read them, and if you should decide to tender, complete a Letter
of Transmittal and submit any other documents required by the Letter of
Transmittal. These materials must be received by EquiServe Trust Company,
N.A., (the "Depositary"), in proper form before midnight New York Time on
December 18, 2000 (unless the tender offer is extended by the Fund in which
case the new deadline will be as stated in the public announcement of the
extension). If your shares are held by a broker, dealer, commercial bank,
trust company or other nominee (sometimes referred to as in "street name"),
you should contact the firm holding your shares to obtain the package of
information necessary to make your decision, and you can only tender your
shares by directing that firm to complete, compile and deliver the necessary
documents
4
<PAGE>
for submission to the Depositary by December 18, 2000 (or if the offer is
extended, the expiration date as extended). See Section 4.
May I withdraw my shares after I have tendered them? If I decide to withdraw
them, by when must my withdrawal be made?
Yes. You may withdraw your shares at any time prior to midnight New York
Time on December 18, 2000 (or if the offer is extended, at any time prior to
midnight New York Time on the new expiration date). Withdrawn shares may be
re-tendered by following the tender procedures before the offer expires
(including any extension period). In addition, if shares tendered have not
been accepted for payment by January 15, 2001, you may withdraw your tendered
shares at any time. See Section 5.
How do I withdraw tendered shares?
A notice to withdraw tendered shares must be timely received by the
Depositary. It must specify the name of the shareholder who tendered the
shares, the number of shares being withdrawn (which must be all of the shares
the shareholder has tendered) and, as regards share certificates which
represent tendered shares that have been delivered or otherwise identified to
the Depositary, the name of the registered owner of such shares if different
than the person who tendered the shares. See Section 5.
May I place any conditions on my tender of shares?
No.
What if more than 2,576,691 shares are tendered (and not timely withdrawn)?
The Fund will purchase duly tendered shares from tendering shareholders
pursuant to the terms and conditions of the tender offer on a pro rata basis
(disregarding fractions) in accordance with the number of shares tendered by
each shareholder (and not timely withdrawn), unless the Fund determines not to
purchase any shares.
Does the Fund have the financial resources to make payment?
Yes. Although permitted to do so, the Fund does not expect to borrow money
to finance the purchase of any tendered shares. See Section 7.
If shares I tender are accepted by the Fund, when will payment be made?
The Fund contemplates, subject to change, making payment for tendered
shares, if accepted, as soon as possible after December 21, 2000. See Section
6.
Is the Fund required to complete the tender offer and purchase all shares
tendered up to the number of shares tendered for?
Yes, unless certain conditions described in Section 3 are not satisfied.
Is there any reason shares tendered would not be accepted?
In addition to those circumstances described in Section 3 in which the Fund
is not required to accept tendered shares, the Fund has reserved the right to
reject tenders determined by it not to be in appropriate form. Among the
reasons which would cause the Fund to reject a tender would be that the tender
does not include required original signature(s) or the original of any
required signature guarantee(s).
5
<PAGE>
How will tendered shares be accepted for payment?
Properly tendered shares, up to the number tendered for, will be accepted
for payment by a determination of the Fund's Board of Directors followed by
notice of acceptance to the Depositary. The acceptance date will be on or
after the date the Offer is terminated. The Depositary will then make payment
as directed by the Fund with funds to be deposited with the Depositary by the
Fund. See Section 6.
Is my sale of shares in the tender offer a taxable transaction?
For most shareholders, yes. It is anticipated that U.S. shareholders (other
than tax-exempt persons) who sell shares in the tender offer will recognize a
gain or loss for U.S. federal income tax purposes equal to the difference
between the cash they receive for the shares sold and their adjusted basis in
the shares. The sale date for tax purposes will be the date the Fund accepts
shares for purchase. See Section 14 for details, including the nature of the
income or loss and the differing rules for U.S. and non-U.S. shareholders.
Please consult your tax adviser as well.
What action do I need to take if I decide not to tender my shares?
None.
Does the Fund's management encourage shareholders to participate in the
tender offer, and will they participate in the tender offer?
No. Neither the Fund, its Board of Directors nor the Fund's investment
adviser is making any recommendation to tender or not to tender shares in the
tender offer. No director or officer of the Fund intends to tender shares. See
Section 10.
How do I obtain additional information?
Questions, requests for assistance and requests for additional copies of
the Offer to Purchase, the Letter of Transmittal and all other tender offer
documents may be directed to MacKenzie Partners, Inc., the Information Agent
for the tender offer, by calling (212) 929-5500 (collect) or (800) 322-2885
(toll-free) between the hours of 8:00 a.m. and 8:00 p.m. New York Time, Monday
through Friday and 10:00 a.m. and 4:00 p.m. New York Time, Saturday (except
holidays). If you do not own shares directly, you should obtain this
information and the documents from your broker, dealer, commercial bank, trust
company or other nominee, as appropriate.
6
<PAGE>
1. Price; Number of Shares. Upon the terms and subject to the conditions of
the Offer, the Fund will accept for payment and purchase for cash up to
2,576,691 of its Shares that are properly tendered prior to midnight New York
Time on December 18, 2000 (and not withdrawn in accordance with Section 5).
The Fund reserves the right to amend, extend or terminate the Offer. See
Sections 3 and 15. The Fund will not be obligated to purchase Shares pursuant
to the Offer under certain circumstances. See Section 3. The later of December
18, 2000, or the latest date to which the Offer is extended, is referred to in
this document as the "Expiration Date." The purchase price of the Shares will
be 95% of their NAV per Share determined as of the Expiration Date. Under no
circumstances will the Fund pay interest on the purchase price. The NAV as of
the close of the regular trading session of the NYSE on November 10, 2000, was
$9.83 per Share. While the Offer is pending, current NAV quotations can be
obtained from the Information Agent by calling (212) 929-5500 (collect) or
(800) 322-2885 (toll-free) between the hours of 8:00 a.m. and 8:00 p.m. New
York Time, Monday through Friday and 10:00 a.m. and 4:00 pm. New York Time,
Saturday (except holidays).
The Offer is being made to all shareholders and is not conditioned upon
shareholders tendering in the aggregate any minimum number of Shares.
If more than 2,576,691 Shares are duly tendered pursuant to the Offer (and
not withdrawn as provided in Section 5), unless the Fund determines not to
purchase any Shares, the Fund will purchase Shares from tendering
shareholders, in accordance with the terms and conditions specified in the
Offer, on a pro rata basis (disregarding fractions), in accordance with the
number of Shares duly tendered by or on behalf of each shareholder (and not so
withdrawn). The Fund does not contemplate extending the Offer and increasing
the number of Shares covered thereby if more than 2,576,691 Shares are
tendered.
On November 10, 2000, there were 8,588,972 Shares issued and outstanding,
and there were 411 holders of record of Shares. Many of these holders of
record were brokers, dealers, commercial banks, trust companies and other
institutions that held Shares in nominee name on behalf of multiple beneficial
owners.
2. Purpose of the Offer; Plans or Proposals of the Fund. Each member of the
Board of Directors of the Fund (the "Board") considered and approved the Offer
on October 30, 2000, and the decision to conduct the Offer was ratified by a
unanimous vote of the Board at a meeting on November 3, 2000.
The Board has, over the years, discussed the significance of the existence
of the discount to net asset value at which the Fund's shares have traded on
the NYSE and the impact on shareholders of the discount. The Board has
discussed and considered various alternative strategies to address the
discount, including instituting share repurchases, converting to an open-end
format, or liquidating.
On May 10, 2000, the Fund announced a program to repurchase approximately
10% of the Fund's then outstanding Shares (the "Repurchase Program"). During
the Repurchase Program, May 10, 2000 until October 27, 2000 when the
Repurchase Program was suspended in contemplation of the Offer, the Fund
repurchased 512,400 Shares at prices ranging from a low of $7.000 to a high of
$8.875 per Share. The average price paid per Share was $8.062.
The Board has consistently concluded that it was in the best interests of
the Fund and its shareholders to maintain the current closed-end format,
because, in the view of the Board and of JFIMI, the closed-end format is the
most appropriate investment vehicle for participating in the equities markets
in the China region. In JFIMI's view, many attractive equity investment
opportunities in the China region have been and continue to be found in the
small-capitalization and less liquid sectors of those markets. The Board
believes that the long-term and recent performance of the Fund supports this
view.
After consideration of all alternatives available to the Fund, the Fund's
investment adviser recommended, and the Board approved, conducting a tender
offer for up to 30% of its common stock.
7
<PAGE>
The Board believes that the Offer serves the best interests of the Fund and
its shareholders. After the completion of the tender offer, the Board will
continue to monitor the price of the Fund's Shares relative to NAV and will
take further actions as appropriate. On October 30, 2000, the Board announced
that beginning in 2001 the Fund will implement a partial tender offer or
similar transaction if the Fund's shares trade at an average discount to NAV
in excess of 20% for any 13 week period. The Fund may conduct up to one tender
offer or similar transaction per year in which the specified condition is met,
to the extent permitted under U.S. law.
Except as set forth above (including in the description of the Repurchase
Program, the Fund does not have any present plans or proposals and is not
engaged in any negotiations that relate to or would result in (a) any
extraordinary transaction, such as a merger, reorganization or liquidation,
involving the Fund; (b) other than in connection with transactions in the
ordinary course of the Fund's operations and for purposes of funding the
Offer, any purchase, sale or transfer of a material amount of assets of the
Fund; (c) any material change in the Fund's present dividend policy, or
indebtedness or capitalization of the Fund; (d) any change in the composition
of the Board or management of the Fund, including, but not limited to, any
plans or proposals to change the number or the term of members of the Board,
to fill any existing vacancies on the Board or to change any material term of
the employment contract of any executive officer; (e) any other material
change in the Fund's corporate structure or business, including any plans or
proposals to make any changes in the Fund's investment policy for which a vote
would be required by Section 13 of the Investment Company Act of 1940, as
amended; (f) any class of equity securities of the Fund to be delisted from a
national securities exchange; (g) any class of equity securities of the Fund
becoming eligible for termination of registration pursuant to Section 12(g)(4)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"); (h)
the suspension of the Fund's obligation to file reports pursuant to Section
15(d) of the Exchange Act; (i) the acquisition by any person of additional
securities of the Fund, or the disposition of securities of the Fund; or (j)
any changes in the Fund's charter, bylaws or other governing instruments or
other actions that could impede the acquisition of control of the Fund.
3. Certain Conditions of the Offer. Notwithstanding any other provision of
the Offer, the Fund will not purchase shares pursuant to the Offer if (a) the
Fund would not be able to liquidate portfolio securities in an orderly manner
and consistent with the Fund's investment objective and policies in order to
purchase Shares tendered pursuant to the Offer; (b) there is any (i) material
legal action or proceeding instituted or threatened which challenges, in the
Board's judgment, the Offer or otherwise materially adversely affects the
Fund, (ii) suspension of or limitation on prices for trading securities
generally on the NYSE or any foreign exchange on which portfolio securities of
the Fund are traded, (iii) declaration of a banking moratorium by Federal,
state or relevant foreign authorities or any suspension of payment by banks in
the United States, New York State or in a foreign country which is material to
the Fund, (iv) limitation which affects the Fund or the issuers of its
portfolio securities imposed by Federal, state or relevant foreign authorities
on the extension of credit by lending institutions or on the exchange of
foreign currencies, (v) commencement of war, armed hostilities or other
international or national calamity directly or indirectly involving the United
States or any foreign country that is material to the Fund, or (vi) other
event or condition which, in the Board's judgment, would have a material
adverse effect on the Fund or its shareholders if Shares tendered pursuant to
the Offer were purchased; or (c) the Board determines that effecting the
transaction would constitute a breach of its fiduciary duty owed the Fund or
its shareholders. The Board may modify these conditions in light of
experience.
The conditions described in the paragraph above are for the benefit of the
Fund and its shareholders and are designed to protect the Fund and its
shareholders in the event of a material adverse change of circumstances from
those existing at the time of the commencement of the Offer beyond the control
of the Fund that would make proceeding with the Offer not in the best interest
of the Fund or its shareholders. As of the time of the publication and mailing
of the Offer, the Fund knows of no circumstances that would render the Offer
not in the best interest of the Fund or its shareholders. The Fund may waive
any of the stated conditions, in whole or in part, at any time and from time
to time in its reasonable judgment. The Fund's failure at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right;
the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts or
circumstances; and each such right shall be deemed an ongoing right which may
be asserted at any time and from time to time. Any determination by the Fund
concerning the events described in this Section 3 shall be final and binding.
8
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The Fund reserves the right, at any time while the Offer is pending, to
amend, extend or terminate the Offer in any respect. See Section 15.
4. Procedures for Tendering Shares.
a. Proper Tender of Shares. For Shares to be properly tendered pursuant to
the Offer, a shareholder must (i) properly complete and duly execute a Letter
of Transmittal bearing original signature(s) and the original of any required
signature guarantee(s), and any other documents required by the Letter of
Transmittal, and cause them to be delivered to the Depositary at the
Depositary's address set forth on the front cover of this Offer and (ii)
either deliver certificates for tendered Shares to the Depositary at such
address or, in the case of shareholders holding Shares in book-entry form,
cause its Shares to be delivered pursuant to the procedures for book-entry
delivery set forth below (and confirmation of receipt of such delivery to be
received by the Depositary). In the case of both (i) and (ii), delivery must
be made to the Depositary before midnight New York Time on the Expiration
Date. In lieu of the foregoing, a tendering shareholder must comply with the
guaranteed delivery procedures set forth below. Letters of Transmittal and
certificates representing tendered Shares should not be sent or delivered to
the Fund. Shareholders who desire to tender Shares registered in the name of a
broker, dealer, commercial bank, trust company or other nominee must contact
that firm to effect a tender on their behalf.
Section 14(e) of the Exchange Act and Rule 14e-4 promulgated thereunder
make it unlawful for any person, acting alone or in concert with others,
directly or indirectly, to tender Shares in a partial tender offer for such
person's own account unless at the time of tender, and at the time the Shares
are accepted for payment, the person tendering has a "net long position" equal
to or greater than the amount tendered in (a) Shares and will deliver or cause
to be delivered such Shares for the purpose of tender to the Fund within the
period specified in the Offer, or (b) an equivalent security and, upon the
acceptance of his or her tender, will acquire Shares by conversion, exchange,
or exercise of such equivalent security to the extent required by the terms of
the Offer, and will deliver or cause to be delivered the Shares so acquired
for the purpose of tender to the Fund prior to or on the Expiration Date.
Section 14(e) and Rule 14e-4 provide a similar restriction applicable to the
tender or guarantee of a tender on behalf of another person.
The acceptance of Shares by the Fund for payment will constitute a binding
agreement between the tendering shareholder and the Fund upon the terms and
subject to the conditions of the Offer, including the tendering shareholder's
representation that the shareholder has a net long position in the Shares
being tendered within the meaning of Rule 14e-4 and that its tender of such
Shares complies with Rule 14e-4.
b. Signature Guarantees and Method of Delivery. No signature guarantee is
required if (a) the Letter of Transmittal is signed by the registered
holder(s) (including, for purposes of this document, any participant in The
Depository Trust Company ("DTC") book-entry transfer facility whose name
appears on DTC's security position listing as the owner of Shares) of the
Shares tendered thereby, unless such holder(s) has completed either the box
entitled "Special Payment Instructions" or the box entitled "Special Delivery
Instructions" in the Letter of Transmittal, or (b) the Shares tendered are
tendered for the account of a firm (an "Eligible Institution") which is a
broker, dealer, commercial bank, credit union, savings association or other
entity and which is a member in good standing of a stock transfer
association's approved medallion program (such as STAMP, SEMP or MSP). In all
other cases, all signatures on the Letter of Transmittal must be guaranteed by
an Eligible Institution. See Instruction 5 of the Letter of Transmittal.
If the Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered thereby, the signature(s) must correspond with the name(s) as
written on the face of the certificate(s) for the Shares tendered without
alteration, enlargement or any change whatsoever.
If any of the Shares tendered thereby are owned of record by two or more
joint owners, all such owners must sign the Letter of Transmittal.
If any of the tendered Shares are registered in different names, it is
necessary to complete, sign and submit as many separate Letters of Transmittal
as there are different registrations.
9
<PAGE>
If the Letter of Transmittal or any certificates for Shares tendered or
stock powers relating to Shares tendered are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, such persons should
so indicate when signing, and proper evidence satisfactory to the Fund of
their authority to so act must be submitted.
If the Letter of Transmittal is signed by the registered holder(s) of the
Shares transmitted therewith, no endorsements of certificates or separate
stock powers with respect to such Shares are required unless payment is to be
made to, or certificates for Shares not purchased are to be issued in the name
of, a person other than the registered holder(s). Signatures on such
certificates or stock powers must be guaranteed by an Eligible Institution.
See Section 6.
If the Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificate(s) listed thereon, the certificate(s)
must be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name(s) of the registered holder(s) appear(s) on the
certificate(s) for the Shares involved. Signatures on such certificates or
stock powers must be guaranteed by an Eligible Institution. See Section 6.
c. Book-Entry Delivery. The Depositary has established an account with
respect to the Shares at DTC for purposes of the Offer. Any financial
institution that is a participant in the DTC system may make book-entry
delivery of tendered Shares by causing DTC to transfer such Shares into the
Depositary's account at DTC in accordance with DTC's procedures for such
transfers. However, although delivery of Shares may be effected through book-
entry transfer into the Depositary's account at DTC, a Letter of Transmittal
(or a copy or facsimile thereof) properly completed and bearing original
signature(s) and the original of any required signature guarantee(s), or an
Agent's Message (as defined below) in connection with a book-entry transfer
and any other documents required by the Letter of Transmittal, must in any
case be received by the Depositary prior to midnight New York Time on the
Expiration Date at one of its addresses set forth on page 2 of this Offer, or
the tendering shareholder must comply with the guaranteed delivery procedures
described below.
The term "Agent's Message" means a message from DTC transmitted to, and
received by, the Depositary forming a part of a timely confirmation of a book-
entry transfer of Shares (a "Book-Entry Confirmation") which states that (a)
DTC has received an express acknowledgment from the DTC participant tendering
the Shares that are the subject of the Book-Entry Confirmation, (b) the DTC
participant has received and agrees to be bound by the terms of the Letter of
Transmittal, and (c) the Fund may enforce such agreement against the DTC
participant.
Delivery of documents to DTC in accordance with DTC's procedures does not
constitute delivery to the Depositary.
d. Guaranteed Delivery. Notwithstanding the foregoing, if a shareholder
desires to tender Shares pursuant to the Offer and the certificates for the
Shares to be tendered are not immediately available, or time will not permit
the Letter of Transmittal and all documents required by the Letter of
Transmittal to reach the Depositary prior to midnight New York Time on the
Expiration Date, or a shareholder cannot complete the procedures for delivery
by book-entry transfer on a timely basis, then such shareholder's Shares may
nevertheless be tendered, provided that all of the following conditions are
satisfied:
(i) the tender is made by or through an Eligible Institution; and
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery in the form provided by the Fund is received by the Depositary
prior to midnight New York Time on the Expiration Date; and
(iii) the certificates for all such tendered Shares, in proper form for
transfer, or a Book-Entry Confirmation with respect to such Shares, as the
case may be, together with a Letter of Transmittal (or a copy or facsimile
thereof) properly completed and bearing original signature(s) and the
original of any required signature guarantee(s) (or, in the case of a book-
entry transfer, an Agent's Message) and any documents required by the
Letter of Transmittal, are received by the Depositary prior to 5:00 P.M.
New York Time on the second NYSE trading day after the date of execution of
the Notice of Guaranteed Delivery.
10
<PAGE>
The Notice of Guaranteed Delivery may be delivered by hand, transmitted by
facsimile transmission or mailed to the Depositary and must include a
guarantee by an Eligible Institution and a representation that the shareholder
owns the Shares tendered within the meaning of, and that the tender of the
Shares effected thereby complies with, Rule 14e-4 under the Exchange Act, each
in the form set forth in the Notice of Guaranteed Delivery.
The method of delivery of any documents, including share certificates, the
Letter of Transmittal and any other required documents, is at the option and
sole risk of the tendering shareholder. If documents are sent by mail,
registered mail with return receipt requested, properly insured, is
recommended. Shareholders have the responsibility to cause their Shares to be
tendered (in proper certificated or uncertificated form), the Letter of
Transmittal (or a copy or facsimile thereof) properly completed and bearing
original signature(s) and the original of any required signature guarantee(s)
and any other documents required by the Letter of Transmittal, to be timely
delivered. Timely delivery is a condition precedent to acceptance of Shares
for purchase pursuant to the Offer and to payment of the purchase amount.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of Share certificates evidencing such Shares or a
Book-Entry Confirmation of the delivery of such Shares (if available), a
Letter of Transmittal (or a copy or facsimile thereof) properly completed and
bearing original signature(s) and the original of any required signature
guarantee(s) or, in the case of a book-entry transfer, an Agent's Message and
any other documents required by the Letter of Transmittal.
e. Determinations of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of tenders will be
determined by the Fund, in its sole discretion, which determination shall be
final and binding. The Fund reserves the absolute right to reject tenders
determined not to be in appropriate form or to refuse to accept for payment,
purchase, or pay for, any Shares if, in the opinion of the Fund's counsel,
accepting, purchasing or paying for such Shares would be unlawful. The Fund
also reserves the absolute right to waive any of the conditions of the Offer
or any defect in any tender, whether generally or with respect to any
particular Share(s) or shareholder(s). The Fund's interpretations of the terms
and conditions of the Offer shall be final and binding.
Neither the Fund, its Board of Directors, JFIMI, the Depositary nor any
other person is or will be obligated to give any notice of any defect or
irregularity in any tender, and none of them will incur any liability for
failure to give any such notice.
f. United States Federal Income Tax Withholding. To prevent the imposition
of a U.S. federal backup withholding tax equal to 31% of the gross payments
made pursuant to the Offer, prior to such payments each shareholder accepting
the Offer who has not previously submitted to the Fund a correct, completed
and signed Form W-9 (for U.S. shareholders) or Form W-8BEN (or other
appropriate form) (for non-U.S. shareholders), or otherwise established an
exemption from such withholding, must submit the appropriate form to the
Depositary. See Section 14.
Under certain circumstances (see Section 14), the Depositary will withhold
a tax equal to 30% of the gross payments payable to a non-U.S. shareholder
unless the Depositary determines that a reduced rate of withholding or an
exemption from withholding is applicable. (Exemption from backup withholding
tax does not exempt a non-U.S. shareholder from the 30% withholding tax.) For
this purpose, a Non-U.S. shareholder, is, in general, a shareholder that is
not (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States, any State thereof or the District of Columbia, (iii) an estate
the income of which is subject to United States federal income taxation
regardless of the source of such income, or (iv) a trust if a court within the
United States is able to exercise primary supervision over the administration
of the trust and one or more U.S. persons have the authority to control all
substantial decisions of the trust (a "Non-U.S. shareholder"). The Depositary
will determine a shareholder's status as a Non-U.S. shareholder and the
shareholder's eligibility for a reduced rate of, or an exemption from,
withholding by reference to any outstanding certificates or statements
concerning such eligibility, unless facts and circumstances
11
<PAGE>
indicate that such reliance is not warranted. A Non-U.S. shareholder that has
not previously submitted the appropriate certificates or statements with
respect to a reduced rate of, or exemption from, withholding for which such
shareholder may be eligible should consider doing so in order to avoid over-
withholding. See Section 14.
5. Withdrawal Rights. At any time prior to midnight New York Time on the
Expiration Date, and, if the Shares have not by then been accepted for payment
by the Fund, at any time after January 15, 2001, any shareholder may withdraw
all, but not less than all, of the Shares that the shareholder has tendered.
To be effective, a written notice of withdrawal of Shares tendered must be
timely received by the Depositary at the appropriate address set forth on page
2 of this Offer. Shareholders may also send a facsimile transmission notice of
withdrawal, which must be timely received by the Depositary at (781) 575-4826
and the original notice of withdrawal must be delivered to the Depositary by
overnight courier or by hand the next day. Any notice of withdrawal must
specify the name(s) of the person having tendered the Shares to be withdrawn,
the number of Shares to be withdrawn (which may not be less than all of the
Shares tendered by the shareholder--see Sections 1 and 14) and, if one or more
certificates representing such Shares have been delivered or otherwise
identified to the Depositary, the name(s) of the registered owner(s) of such
Shares as set forth in such certificate(s) if different from the name(s) of
the person tendering the Shares. If one or more certificates have been
delivered to the Depositary, then, prior to the release of such
certificate(s), the certificate number(s) shown on the particular
certificate(s) evidencing such Shares must also be submitted and the signature
on the notice of withdrawal must be guaranteed by an Eligible Institution.
All questions as to the validity, form and eligibility (including time of
receipt) of notices of withdrawal will be determined by the Fund in its sole
discretion, which determination shall be final and binding. Shares properly
withdrawn will not thereafter be deemed to be tendered for purposes of the
Offer. Withdrawn Shares, however, may be re-tendered by following the
procedures described in Section 4 prior to midnight New York Time on the
Expiration Date. Except as otherwise provided in this Section 5, tenders of
Shares made pursuant to the Offer will be irrevocable.
Neither the Fund, its Board of Directors, JFIMI, the Depositary nor any
other person is or will be obligated to give any notice of any defect or
irregularity in any notice of withdrawal, nor shall any of them incur any
liability for failure to give any such notice.
6. Payment for Shares. For purposes of the Offer, the Fund will be deemed
to have accepted for payment and purchased Shares that are tendered (and not
withdrawn in accordance with Section 5 pursuant to the Offer) when and if it
gives oral or written notice to the Depositary of its acceptance of such
Shares for payment pursuant to the Offer. Under the Exchange Act, the Fund is
obligated to pay for or return tendered Shares promptly after the termination,
expiration or withdrawal of the Offer. Upon the terms and subject to the
conditions of the Offer, the Fund will pay for Shares properly tendered as
soon as practicable after the Expiration Date. The Fund will make payment for
Shares purchased pursuant to the Offer by depositing the aggregate purchase
price for the Shares so purchased with the Depositary, which will make payment
to shareholders promptly as directed by the Fund. Under no circumstances will
the Fund pay interest on the purchase price.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of: (a) a Letter of
Transmittal (or a copy thereof) properly completed and bearing original
signature(s) and any required signature guarantee(s), (b) such Shares (in
proper certificated or uncertificated form) and (c) any other documents
required by the Letter of Transmittal. Shareholders may be charged a fee by a
broker, dealer or other institution for processing the tender requested.
Certificates representing Shares tendered but not purchased will be returned
promptly following the termination, expiration or withdrawal of the Offer,
without further expense to the tendering shareholder. The Fund will pay any
transfer taxes payable on the transfer to it of Shares purchased pursuant to
the Offer. If, however, tendered Shares are registered in the name of any
person other than the person signing the Letter of Transmittal, the amount of
any such transfer taxes (whether imposed on the registered owner or such other
person) payable on account of the transfer to such person of such Shares will
be deducted from the purchase price unless satisfactory evidence of the
payment of such taxes, or exemption therefrom, is submitted. The Fund may not
be obligated to purchase Shares pursuant to the Offer under certain
conditions. See Section 3.
12
<PAGE>
Any tendering shareholder or other payee who has not previously submitted a
correct, completed and signed Form W-8BEN (or other appropriate form) or Form
W-9, as necessary, and who fails to complete fully and sign either a Form W-
8BEN (or other appropriate form) or Substitute Form W-9 in the Letter of
Transmittal and provide that form to the Depositary, may be subject to federal
backup withholding tax of 31% of the gross proceeds paid to such shareholder
or other payee pursuant to the Offer. See Section 14 regarding this tax as
well as possible withholding at the rate of 30% (or lower applicable treaty
rate) on the gross proceeds payable to tendering non-U.S. shareholders.
7. Source and Amount of Funds. The total cost to the Fund of purchasing
2,576,691 of its issued and outstanding Shares pursuant to the Offer would be
$24,063,717 (based on a price per Share of $9.339, 95% of the NAV as of the
close of the regular trading session of the NYSE on November 10, 2000). On
November 10, 2000, the aggregate value of the Fund's net assets was
$84,431,684.
To pay the aggregate purchase price of Shares accepted for payment pursuant
to the Offer, the Fund anticipates that funds will first be derived from any
cash on hand and then from the proceeds from the sale of portfolio securities
held by the Fund. The selection of which portfolio securities to sell, if any,
will be made by JFIMI, taking into account investment merit, relative
liquidity and applicable investment restrictions and legal requirements.
Although the Fund is authorized to borrow money to finance the purchase of
Shares, the Board believes that the Fund will have sufficient resources
through cash on hand and the disposition of assets to purchase Shares in the
Offer without utilizing such borrowing. However, the Fund reserves the right
to finance a portion of the Offer through temporary borrowing.
Because the Fund may sell portfolio securities to raise cash for the
purchase of Shares, while the Offer is pending, and possibly for a short time
thereafter, the Fund may hold a greater than normal percentage of its assets
in cash and cash equivalents. Depending on market conditions, this change in
Fund assets may decrease the Fund's net income. As of November 10, 2000, cash
and cash equivalents constituted approximately 17.7% of the Fund's total
assets.
Under some market circumstances, it may be necessary for the Fund to raise
cash by liquidating portfolio securities in a manner that could reduce the
market value of such securities and, thus, reduce both the NAV of the Shares
and the proceeds from the sale of such securities. Liquidating portfolio
securities, if necessary, may also lead to the premature disposition of
portfolio investments and additional transaction costs and may result in the
Fund recognizing gains or losses for U.S. federal income tax purposes earlier
than would be the case in the absence of such dispositions. Depending upon the
timing of such sales, any such decline in NAV may adversely affect any
tendering shareholders whose Shares are accepted for purchase by the Fund, as
well as those shareholders who do not sell Shares pursuant to the Offer.
Shareholders who retain their Shares may be subject to certain other effects
of the Offer. See Section 11.
13
<PAGE>
8. Price Range of Shares; Dividends/Distributions. The following table sets
forth, for the periods indicated, the high and low NAVs per Share and the high
and low closing sale prices per Share as reported on the NYSE Composite Tape,
and the amounts of cash dividends/distributions per Share paid during such
periods.
<TABLE>
<CAPTION>
Net Asset
Value Market Price
------------- ------------ Dividends/
High Low High Low Distributions
------ ------ ------ ----- -------------
<S> <C> <C> <C> <C> <C>
Fiscal Year (ending December 31)
1998
1st Quarter......................... $12.17 $ 8.87 $10.44 $7.75 $--
2nd Quarter......................... 11.13 7.58 9.36 5.75 --
3rd Quarter......................... 8.07 5.60 6.94 3.50 --
4th Quarter......................... 8.02 6.47 6.63 4.31 --
1999
1st Quarter......................... $ 7.79 $ 6.46 $ 5.94 $4.94 $--
2nd Quarter......................... 7.59 9.60 8.75 5.69 --
3rd Quarter......................... 10.08 8.83 8.69 6.38 --
4th Quarter......................... 11.78 8.87 8.44 6.13 0.04
2000
1st Quarter......................... $13.16 $11.21 $ 9.13 $7.88 $--
2nd Quarter......................... 12.20 9.58 8.69 6.94 --
3rd Quarter......................... 11.45 9.74 8.81 7.13 --
</TABLE>
As of the close of business on November 10, 2000, the Fund's NAV was $9.83
per Share, and the high, low and closing prices per Share on the NYSE on that
date were $7.88, $7.81 and $7.81, respectively. While the Offer is pending,
current NAV quotations can be obtained by contacting the Information Agent in
the manner indicated in Section 1.
The tendering of Shares, unless and until shares tendered are accepted for
payment and purchase, will not affect the record ownership of any such
tendered Shares for purposes of voting or entitlement to any dividends payable
by the Fund.
9. Selected Financial Information. The table below is intended to help you
understand the financial performance of the Fund. This information is derived
from financial and accounting records of the Fund.
This information has been audited, except as noted, by
PricewaterhouseCoopers LLP, the Fund's independent auditors, whose reports,
along with the Fund's financial statements, are incorporated herein by
reference and included in the Fund's Annual Reports to Shareholders. The
Annual Reports may be obtained without charge, by writing to the Information
Agent, MacKenzie Partners, Inc., 156 Fifth Avenue, New York, New York 10010,
or by calling (212) 929-5500 (collect) or (800) 322-2885 (toll-free) between
the hours of 8:00 a.m. and 8:00 p.m. New York Time, Monday through Friday and
10:00 a.m. and 4:00 p.m. New York Time, Saturday (except holidays).
14
<PAGE>
Jardine Fleming China Region Fund, Inc.
Financial Highlights
The following table includes per Share operating performance data for a
Share of common stock outstanding, total investment return, ratios to average
net assets and other supplemental data for each period indicated. This
information has been derived from information provided in the financial
statements and market price data for the Fund's Shares.
<TABLE>
<CAPTION>
Six Months
ended
June 30, For the Years Ended December 31,
----------- ------------------------------------------------
2000 1999 1998 1997 1996 1995
----------- -------- -------- -------- -------- --------
(Unaudited) (Audited) (Audited) (Audited) (Audited) (Audited)
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning
of period.................. $ 11.78 $ 7.50 $ 11.81 $ 14.31 $ 11.17 $ 12.58
======== ======== ======= ======== ======== ========
Net investment income
(loss)..................... -- 0.03 0.02 (0.01) 0.03 0.07
Net realized and unrealized
gain (loss) on investments
and foreign currency-
related transactions....... (1.25) 4.29 (4.33) (2.45) 3.13 (1.39)
-------- -------- ------- -------- -------- --------
Total from investment
operations................. (1.25) 4.32 (4.31) (2.46) 3.16 (1.32)
======== ======== ======= ======== ======== ========
Dividends from net
investment income.......... -- (0.04) -- (0.04) (0.02) (0.09)
======== ======== ======= ======== ======== ========
Capital share repurchases... 0.01 -- -- -- -- --
======== ======== ======= ======== ======== ========
Net asset value, end of
period..................... $ 10.54 $ 11.78 $ 7.50 $ 11.81 $ 14.31 $ 11.17
======== ======== ======= ======== ======== ========
Market value, end of
period..................... $ 7.81 $ 8.44 $ 5.50 $ 9.75 $ 11.38 $ 10.00
======== ======== ======= ======== ======== ========
Total investment return
based on:
Net asset value, % (a)..... (10.5) 57.6 (36.5) (17.2) 28.3 (10.5)
Market price, % (a)........ (7.4) 54.2 (43.6) (13.9) 13.9 (10.3)
======== ======== ======= ======== ======== ========
Ratios/Supplemental Data:
Net assets, end of period
(000 omitted).............. $ 95,644 $107,251 $68,289 $107,495 $130,224 $101,647
Ratio of expenses to average
net assets................. 1.73(b) 2.28 2.49 1.68 2.18 2.22
Ratio of net investment
income (loss) to average
net assets................. 0.03(b) 0.37 0.24 (0.05) 0.26 0.60
Portfolio turnover rate, %.. 101.6(b) 90.8 111.9 102.60 44.40 44.90
</TABLE>
--------
(a) Total investment return is calculated assuming a purchase of common stock
on the opening of the first day and a sale on the closing of the last day
of each period reported. Dividends and distributions, if any, are assumed
for purposes of this calculation, to be reinvested at prices obtained
under the Fund's dividend reinvestment plan. Total investment return does
not reflect sales charges or brokerage commissions. Generally, total
investment return based on net asset value will be higher than total
investment return based on market price in periods where there is an
increase in the discount or a decrease in the premium of the market price
to the net asset value from the beginning to the end of such periods.
Conversely, total investment return based on net asset value will be lower
than total investment return based on market value in periods where there
is a decrease in the discount or an increase in the premium of the market
value to the net asset value from the beginning to the end of such
periods.
(b) Annualized
10. Interest of Directors, Executive Officers and Certain Related
Persons. Information, as of particular dates, concerning the Fund's directors
and executive officers, their remuneration, any material interest of such
persons in transactions with the Fund and other matters is required to be
disclosed in proxy statements distributed to the Fund's shareholders and filed
with the U.S. Securities and Exchange Commission (the "SEC"). Neither the Fund
nor, to the best of the Fund's knowledge, any of the Fund's directors or
executive officers, or associates of any of the foregoing, has effected any
transaction in Shares, except for dividend reinvestment and the Current
Repurchase Program (described in Section 2), during the past 40 business days.
Except as set forth in this Offer, neither the Fund, nor, to the best of the
Fund's knowledge, any of the Fund's officers or directors, is a party to any
contract, arrangement, understanding or relationship with any other person
relating, directly or indirectly to the Offer with respect to any securities
of the Fund, including, but not limited to, any contract,
15
<PAGE>
arrangement, understanding or relationship concerning the transfer or the
voting of any such securities, joint ventures, loan or option arrangements,
puts or calls, guaranties of loans, guaranties against loss or the giving or
withholding of proxies, consents or authorizations. Based upon information
provided or available to the Fund, no director, officer or affiliate of the
Fund intends to tender Shares pursuant to the Offer. The Offer does not,
however, restrict the purchase of Shares pursuant to the Offer from any such
person.
11. Certain Effects of the Offer. The purchase of Shares pursuant to the
Offer will increase the proportionate interest in the Fund of Stockholders who
do not tender Shares. All shareholders remaining after the Offer will be
subject to any increased risks associated with the reduction in the number of
outstanding shares and the reduction in the Fund's assets resulting from
payment for the tendered Shares, such as any greater volatility due to
decreased portfolio diversification and proportionately higher expenses. Under
certain circumstances, the need to raise cash in connection with the purchase
of Shares pursuant to the Offer may have an adverse effect on the Fund's NAV,
or its income per Share. See Section 7. All Shares purchased by the Fund
pursuant to the Offer will be retired and thereafter will be authorized and
unissued shares.
12. Certain Information about the Fund. The Fund's principal executive
offices are located at 100 East Pratt Street, Baltimore, Maryland 21202
(telephone number (800) 638-8540). The Fund is a closed-end, non-diversified,
management investment company organized as a Maryland corporation. The Shares
were first issued to the public on July 16, 1992. As a closed-end investment
company the Fund differs from an open-end investment company in that it does
not redeem its Shares at the election of a shareholder and does not
continuously offer its Shares for sale to the public. The Fund's investment
objective is long-term capital appreciation through investments primarily in
China Region equity securities. The Fund has been managed since its inception
by JFIMI.
JFIMI is a registered investment adviser under the Investment Advisers Act
of 1940, as amended, whose address is P.O. Box 3151, Road Town, Tortola,
British Virgin Islands. JFIMI currently manages four registered investment
companies, with combined assets of approximately $296 million. On August 1,
2000, Robert Fleming Holdings, Ltd., the parent company of JFIMI, was acquired
by The Chase Manhattan Corporation. As a result of this acquisition, JFIMI
became part of a global asset management group which will operate under the
name Chase Fleming Asset Management and has approximately $331 billion under
management.
13. Additional Information. An Issuer Tender Offer Statement on Schedule TO
(the "Schedule TO") including the exhibits thereto, filed with the SEC,
provides certain additional information relating to the Offer, and may be
inspected and copied at the prescribed rates at the SEC's public reference
facilities at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, 7
World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center,
500 W. Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of the
Schedule TO and the exhibits may also be obtained by mail at the prescribed
rates from the Public Reference Branch of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549, or by accessing the SEC's website at www.sec.gov.
14. Certain United States Federal Income Tax Consequences. The following
discussion is a general summary of the U.S. federal income tax consequences of
a sale of Shares pursuant to the Offer based on current U.S. federal income
tax law, including applicable Treasury regulations and Internal Revenue
Service rulings. This summary deals only with holders that hold Shares as
capital assets, and does not address tax considerations applicable to
investors that may be subject to special tax rules, such as banks, tax-exempt
entities, insurance companies, dealers in securities or currencies, traders in
securities electing to mark to market, persons that hold Shares as a position
in a "straddle" or conversion transaction, or as part of a "synthetic
security" or other integrated financial transaction or persons that have
"functional currency" other than the U.S. dollar. Each shareholder should
consult the shareholder's tax adviser for a full understanding of the tax
consequences of such a sale, including potential state, local and foreign
taxation by jurisdictions of which the shareholder is a citizen, resident or
domiciliary.
16
<PAGE>
U.S. shareholders. It is anticipated that shareholders (other than tax-
exempt persons) who are citizens and/or residents of the United States,
corporations, partnerships or other entities created or organized in or under
the laws of the United States or any State thereof or the District of
Columbia, estates the income of which is subject to U.S. federal income
taxation regardless of the source of such income, and trusts if a court within
the United States is able to exercise primary supervision over the
administration of the trust and one or more U.S. persons have the authority to
control all substantial decisions of the trust ("U.S. shareholders"), and who
sell Shares pursuant to the Offer will recognize gain or loss for U.S. federal
income tax purposes equal to the difference between the amount of cash they
receive pursuant to the Offer and their adjusted tax basis in the Shares sold.
The sale date for tax purposes will be the date the Fund accepts Shares for
purchase. This gain or loss will be capital gain or loss and will be treated
as either long-term or short-term if the Shares have been held at that time
for more than one year or one year or less, respectively. Any such long-term
capital gain realized by a non-corporate U.S. shareholder will be taxed at a
maximum rate of 20%. This U.S. federal income tax treatment, however, is based
on the expectation that not all shareholders will tender their Shares pursuant
to the Offer and that the continuing ownership interest in the Fund of
tendering shareholders will be sufficiently reduced to qualify the sale as a
sale rather than a distribution for U.S. federal income tax purposes. It is
therefore possible that the cash received for the Shares purchased would be
taxable as a distribution by the Fund, rather than as a gain from the sale of
the Shares, in the case of a shareholder selling less than all of the Shares
it owns. In that event, the cash received by a U.S. shareholder will be
taxable as a dividend (i.e., as ordinary income) to the extent of the U.S.
shareholder's allocable share of the Fund's current or accumulated earnings
and profits, with the excess of the cash received over the portion so taxable
constituting a non-taxable return of capital to the extent of the U.S.
shareholder's tax basis in the Shares sold and with any remaining excess of
such cash being treated as either long-term or short-term capital gain from
the sale of the Shares depending on how long they were held by the U.S.
shareholder. If cash received by a U.S. shareholder is taxable as a dividend,
the shareholder's tax basis in the purchased Shares will be considered
transferred to the remaining Shares held by the shareholder.
Under the "wash sale" rules under the U.S. Internal Revenue Code, loss
recognized on Shares sold pursuant to the Offer will ordinarily be disallowed
to the extent the U.S. shareholder acquires Shares within 30 days before or
after the date the Shares are purchased pursuant to the Offer and, in that
event, the basis and holding period of the Shares acquired will be adjusted to
reflect the disallowed loss.
The Depositary may be required to withhold 31% of the gross proceeds paid
to a U.S. shareholder or other payee pursuant to the Offer unless either: (a)
the U.S. shareholder has completed and submitted to the Depositary an IRS Form
W-9 (or Substitute Form W-9), providing the U.S. shareholder's employer
identification number or social security number as applicable, and certifying
under penalties of perjury that: (i) such number is correct; (ii) either (A)
the U.S. shareholder is exempt from backup withholding, (B) the U.S.
shareholder has not been notified by the Internal Revenue Service that the
U.S. shareholder is subject to backup withholding as a result of an under-
reporting of interest or dividends, or (C) the Internal Revenue Service has
notified the U.S. shareholder that the U.S. shareholder is no longer subject
to backup withholding; or (b) an exception applies under applicable law. A
Substitute Form W-9 is included as part of the Letter of Transmittal for U.S.
shareholders.
Non-U.S. shareholders. The U.S. federal income taxation of a Non-U.S.
shareholder on a sale of Shares pursuant to the Offer depends on whether this
transaction is "effectively connected" with a trade or business carried on in
the United States by the Non-U.S. shareholder as well as the tax
characterization of the transaction as either a sale of the Shares or a
distribution by the Fund, as discussed above for U.S. shareholders. If the
sale of Shares pursuant to the Offer is not so effectively connected and if,
as anticipated for U.S. shareholders, it gives rise to gain or loss, any gain
realized by a Non-U.S. shareholder upon the tender of Shares pursuant to the
Offer will not be subject to U.S. federal income tax or to any U.S. tax
withholding, provided, however, that such a gain will be subject to U.S.
federal income tax at the rate of 30% (or such lower rate as may be applicable
under a tax treaty) if the Non-U.S. shareholder is a non-resident alien
individual who is physically present in the United States for more than 182
days during the taxable year of the sale and certain other conditions are met.
If,
17
<PAGE>
however, U.S. shareholders are deemed to receive a distribution from the Fund
with respect to Shares they tender, the cash received by a tendering Non-U.S.
shareholder will also be treated for U.S. tax purposes as a distribution by
the Fund, with the cash then being characterized in the same manner as
described above for U.S. shareholders. In such an event, the portion of the
distribution treated as a dividend to the Non-U.S. shareholder would be
subject to a U.S. withholding tax at the rate of 30% (or such lower rate as
may be applicable under a tax treaty) if the dividend does not constitute
effectively connected income. If the amount realized on the tender of Shares
by a Non-U.S. shareholder is effectively connected income, regardless of
whether the tender is characterized as a sale or as giving rise to a
distribution from the Fund for U.S. federal income tax purposes, the
transaction will be treated and taxed in the same manner as if the Shares
involved were tendered by a U.S. shareholder.
Non-U.S. shareholders should provide the Depositary with a completed Form
W-8BEN (or other appropriate form) in order to avoid 31% backup withholding on
the cash they receive from the Fund regardless of how they are taxed with
respect to their tender of the Shares involved. Form W-8BEN is available upon
request from the Depositary.
15. Amendments; Extension of Tender Period; Termination. The Fund reserves
the right, at any time while the Offer is pending, to amend or extend the
Offer in any respect. The Fund also reserves the right, at any time while the
Offer is pending, to terminate the Offer in the event of a material adverse
change of circumstances from those existing at the time of the announcement of
the Offer beyond the control of the Fund that would make proceeding with the
Offer not in the best interest of the Fund or its shareholders. Without
limiting the manner in which the Fund may choose to make a public announcement
of such an amendment, extension or termination, the Fund shall have no
obligation to publish, advertise or otherwise communicate any such public
announcement, except as provided by applicable law (including Rule 14e-1(d)
promulgated under the Exchange Act) and by the requirements of the NYSE
(including the listing agreement with respect to the Shares).
Except to the extent required by applicable law (including Rule 13e-4(f)(1)
promulgated under the Exchange Act), the Fund will have no obligation to
extend the Offer. In the event that the Fund is obligated to, or elects to,
extend the Offer, the purchase price for each Share purchased pursuant to the
Offer will be equal to 95% of the per Share NAV determined as of the close of
the regular trading session of the NYSE on the Expiration Date. No Shares will
be accepted for payment until on or after the new Expiration Date.
16. Miscellaneous. The Offer is not being made to, nor will the Fund accept
tenders from, or on behalf of, owners of Shares in any jurisdiction in which
the making of the Offer or its acceptance would not comply with the securities
or "blue sky" laws of that jurisdiction. The Fund is not aware of any
jurisdiction in which the making of the Offer or the acceptance of tenders of,
purchase of, or payment for, Shares in accordance with the Offer would not be
in compliance with the laws of such jurisdiction. The Fund, however, reserves
the right to exclude shareholders in any jurisdiction in which it is asserted
that the Offer cannot lawfully be made or tendered Shares cannot lawfully be
accepted, purchased or paid for. So long as the Fund makes a good-faith effort
to comply with any state law deemed applicable to the Offer, the Fund believes
that the exclusion of holders residing in any such jurisdiction is permitted
under Rule 13e-4(f)(9) promulgated under the Exchange Act. In any jurisdiction
where the securities, "blue sky" or other laws require the Offer to be made by
a licensed broker or dealer, the Offer shall be deemed to be made on the
Fund's behalf by one or more brokers or dealers licensed under the laws of
such jurisdiction.
November 20, 2000 Jardine Fleming China Region Fund, Inc.
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