UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-06686
---------
JF China Region Fund, Inc.
--------------------------------------------------
(Exact name of registrant as specified in charter)
301 Bellevue Parkway
Wilmington, DE 19809
--------------------------------------------------
(Address of principal executive offices) (Zip code)
Cleary, Gottlieb, Steen & Hamilton
1 Liberty Plaza
New York, NY 10006
--------------------------------------------------
(Name and address of agent for service)
registrant's telephone number, including area code: 800-441-9800
------------
Date of fiscal year end: December 31
-----------
Date of reporting period: June 30, 2006
-------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
[LOGO] JF CHINA REGION FUND, INC.
--------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
JUNE 30, 2006
[GRAPHIC OMITTED]
THIS REPORT, INCLUDING THE FINANCIAL STATEMENTS HEREIN, IS SENT TO THE
STOCKHOLDERS OF THE FUND FOR THEIR INFORMATION. IT IS NOT A PROSPECTUS, CIRCULAR
OR REPRESENTATION INTENDED FOR USE IN THE PURCHASE OR SALE OF SHARES OF THE FUND
OR OF ANY SECURITIES MENTIONED IN THIS REPORT.
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
CONTENTS
--------------------------------------------------------------------------------
PAGE
--------------------------------------------------------------------------------
Objectives 1
--------------------------------------------------------------------------------
Management 1
--------------------------------------------------------------------------------
Market Information 1
--------------------------------------------------------------------------------
Highlights 2
--------------------------------------------------------------------------------
Chairman's Statement 3
--------------------------------------------------------------------------------
Top Ten Holdings 4
--------------------------------------------------------------------------------
Investment Portfolio 6
--------------------------------------------------------------------------------
Statement of Assets and Liabilities 12
--------------------------------------------------------------------------------
Statement of Operations 13
--------------------------------------------------------------------------------
Statement of Changes in Net Assets 14
--------------------------------------------------------------------------------
Financial Highlights 15
--------------------------------------------------------------------------------
Notes to Financial Statements 16
--------------------------------------------------------------------------------
Results of the Annual Stockholders Meeting 21
--------------------------------------------------------------------------------
Other Information 21
--------------------------------------------------------------------------------
Dividend Reinvestment and Cash Purchase Plan 22
--------------------------------------------------------------------------------
Directors and Administration 26
--------------------------------------------------------------------------------
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
OBJECTIVES
--------------------------------------------------------------------------------
JF China Region Fund, Inc. (the "Fund") seeks to achieve long-term capital
appreciation through investments primarily in equity securities of companies
with substantial assets in, or revenues derived from, the People's Republic of
China ("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 in the PRC are expected to be predominantly through 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
labor and land prices are lower than in Hong Kong. Hong Kong is also the largest
trading partner of the PRC. Furthermore, many PRC companies and their Hong
Kong-incorporated subsidiaries have listed their securities on the Stock
Exchange of Hong Kong.
The economies of the PRC, Hong Kong, Taiwan and Macau have become
increasingly linked over the past 10 years, especially since Hong Kong and Macau
reverted to Chinese sovereignty in 1997 and 1999, respectively. Investments made
by the Fund will seek to take advantage of opportunities resulting from this
linkage among the China Region markets.
MANAGEMENT
--------------------------------------------------------------------------------
JF International Management Inc. ("JFIMI") is the investment management
company appointed to advise and manage the Fund's portfolio. JFIMI is part of
J.P. Morgan Chase & Co. ("JPMC"), one of the world's premier financial services
institutions. In asset management, JPMC operates globally under the name of
JPMorgan Asset Management ("JPMAM"), although in Asia it uses the sub-brand JF
Asset Management. Funds under management for the global asset management
business of JPMAM were US$898.2 billion as of June 30, 2006.
The day-to-day management of the Fund's portfolio is handled by JPMAM's
Greater China investment team based in Hong Kong. The head of this team is
Howard Wang who joined JPMAM in 2005. Previously, Mr. Wang spent eight years
with Goldman Sachs, where in 2004, he was appointed Managing Director, Equities
and General Manager of the Taipei branch office.
MARKET INFORMATION
--------------------------------------------------------------------------------
THE FUND IS LISTED ON THE NEW YORK STOCK EXCHANGE (SYMBOL JFC). THE SHARE PRICE
IS PUBLISHED IN
--------------------------------------------------------------------------------
o The Wall Street Journal (daily online at www.WSJ.com/Free)
THE NET ASSET VALUE IS PUBLISHED IN
--------------------------------------------------------------------------------
o The Wall Street Journal under "Closed-End Funds" (every Saturday)
1
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
HIGHLIGHTS
--------------------------------------------------------------------------------
FOR THE SIX MONTHS
ENDED For the Year
JUNE 30, 2006 Ended
US$ December 31, 2005
(UNAUDITED) US$
--------------------------------------------------------------------------------
Net Assets $80.2 MILLION $73.6 million
Net Asset Value Per Share $17.50 $16.04
MARKET DATA
Share Price on the
New York Stock Exchange $15.89 $13.71
Discount to Net Asset Value 9.2% 14.5%
TOTAL RETURN FOR THE PERIOD ENDED JUNE 30, 2006
--------------------------------------------------------------------------------
Net Asset Value 9.1%
Share Price 15.9%
JFC Benchmark Index* 9.5%
MSCI Hong Kong Index (Total) 7.0%
BNP Prime Peregrine China Index 25.3%
Taiwan Weighted Index 3.9%
NET ASSET VALUE AND SHARE PRICE VS. BENCHMARK INDEX
Net Asset Value Share Price JFC Benchmark Index*
--------------- ----------- --------------------
7/16/1992 $100.00 $100.00 $100.00
7/27/1992 99.78 98.33 89.81
8/28/1992 100.43 94.20 91.11
9/30/1992 100.94 80.00 79.15
10/30/1992 108.60 92.53 90.31
11/30/1992 111.05 96.67 91.95
12/31/1992 109.29 93.02 90.21
1/29/1993 110.16 96.37 87.65
2/26/1993 117.49 98.85 97.55
3/31/1993 120.54 108.90 94.28
4/30/1993 125.48 118.95 97.84
5/28/1993 129.84 122.30 92.05
6/30/1993 122.35 120.09 83.13
7/30/1993 120.67 116.73 77.96
8/27/1993 124.75 129.29 82.27
9/30/1993 128.39 126.81 84.74
10/29/1993 147.17 150.32 102.63
11/26/1993 156.34 166.71 113.90
12/31/1993 188.96 187.39 128.98
1/28/1994 175.52 183.65 111.34
2/25/1994 158.91 148.41 103.16
3/31/1994 136.56 136.08 91.08
4/29/1994 132.14 134.18 87.30
5/27/1994 136.06 148.41 90.89
6/30/1994 123.99 123.29 82.84
7/29/1994 130.78 126.47 87.48
8/26/1994 130.78 135.83 92.18
9/30/1994 132.98 129.56 94.14
10/28/1994 132.34 126.47 89.14
11/23/1994 124.35 110.76 80.63
12/31/1994 115.72 94.29 72.23
1/27/1995 101.37 90.10 62.02
2/24/1995 108.27 98.48 66.92
3/31/1995 109.37 94.29 67.13
4/30/1995 105.33 90.10 63.43
5/26/1995 113.68 107.01 70.35
6/30/1995 111.93 92.33 69.32
7/28/1995 116.08 95.51 73.64
8/31/1995 108.89 88.13 69.66
9/30/1995 112.85 94.42 68.82
10/31/1995 110.46 89.22 67.02
11/30/1995 104.65 85.02 64.06
12/31/1995 103.54 84.52 63.34
1/31/1996 112.35 107.76 72.64
2/29/1996 113.37 95.08 73.99
3/31/1996 110.12 95.08 70.65
4/30/1996 111.70 96.18 68.52
5/31/1996 112.25 94.07 71.64
6/30/1996 111.98 87.73 71.47
7/31/1996 110.21 81.39 71.69
8/30/1996 110.68 84.52 73.69
9/30/1996 112.16 85.62 74.73
10/31/1996 113.18 83.51 77.45
11/29/1996 125.79 90.86 89.15
12/31/1996 132.84 95.25 97.43
1/31/1997 135.63 99.49 99.27
2/28/1997 138.13 99.49 100.73
3/27/1997 133.96 99.49 99.65
4/30/1997 148.44 106.94 106.53
5/31/1997 159.48 115.41 111.06
6/30/1997 170.35 124.89 114.45
7/31/1997 178.89 130.22 117.43
8/31/1997 187.33 126.50 121.24
9/30/1997 167.65 124.38 116.19
10/31/1997 124.12 87.29 88.50
11/28/1997 107.96 84.67 82.92
12/31/1997 110.00 82.89 83.73
1/30/1998 85.88 79.75 70.48
2/28/1998 114.29 88.25 86.61
3/31/1998 107.58 80.77 83.66
4/30/1998 98.27 74.90 76.62
5/29/1998 83.74 60.57 69.04
6/30/1998 72.75 54.24 63.53
7/31/1998 57.28 44.10 56.17
8/31/1998 51.32 29.76 50.16
9/30/1998 60.82 40.91 56.88
10/30/1998 70.51 50.48 65.12
11/30/1998 72.47 53.14 64.68
12/31/1998 69.86 46.76 61.44
1/29/1999 63.27 45.70 55.92
2/26/1999 63.43 44.63 56.22
3/31/1999 69.67 47.82 62.49
4/30/1999 82.25 62.17 74.33
5/31/1999 76.94 57.39 69.97
6/30/1999 90.35 74.39 80.74
7/30/1999 84.95 60.57 75.80
8/31/1999 88.77 61.11 78.44
9/30/1999 84.11 56.86 73.92
10/29/1999 87.65 59.51 75.69
11/30/1999 99.29 68.01 82.85
12/31/1999 110.11 72.07 90.38
1/31/2000 108.99 69.94 90.33
2/29/2000 113.38 73.68 91.87
3/31/2000 118.43 75.28 96.89
4/28/2000 100.86 64.07 87.24
5/31/2000 94.69 62.46 82.27
6/30/2000 98.52 66.73 85.48
7/31/2000 102.07 69.94 89.73
8/31/2000 103.94 71.54 88.73
9/29/2000 95.34 66.73 79.73
10/31/2000 87.40 64.07 72.78
11/30/2000 83.00 61.93 68.48
12/31/2000 87.30 60.33 71.12
1/31/2001 95.81 71.33 78.24
2/28/2001 91.42 67.57 76.15
3/30/2001 84.59 60.73 69.80
4/30/2001 86.09 63.89 69.03
5/31/2001 87.12 66.46 67.29
6/29/2001 84.69 66.20 65.30
7/31/2001 78.98 60.22 61.21
8/31/2001 73.10 54.24 57.47
9/28/2001 66.37 50.83 48.34
10/31/2001 71.51 51.34 51.10
11/30/2001 76.18 55.95 57.64
12/31/2001 76.09 56.12 63.41
1/31/2002 75.34 55.52 63.09
2/28/2002 75.53 57.92 60.84
3/28/2002 81.23 63.64 65.43
4/30/2002 80.95 64.92 66.68
5/31/2002 81.88 65.18 64.55
6/28/2002 76.65 58.94 60.36
7/31/2002 73.94 54.24 57.39
8/30/2002 70.29 53.39 54.89
9/30/2002 65.71 49.71 49.30
10/31/2002 68.42 52.96 52.07
11/29/2002 70.48 55.78 54.34
12/31/2002 69.82 55.52 50.92
1/31/2003 77.58 62.36 53.73
2/28/2003 77.30 66.63 50.72
3/31/2003 73.94 64.41 48.90
4/30/2003 73.75 63.21 48.38
5/30/2003 82.63 65.43 53.24
6/30/2003 86.93 73.46 55.68
7/31/2003 96.93 80.30 60.86
8/29/2003 104.13 88.58 66.88
9/30/2003 106.37 86.87 68.73
10/31/2003 120.30 116.09 73.75
11/28/2003 119.37 114.63 72.11
12/31/2003 130.21 154.44 75.70
1/30/2004 134.88 129.50 80.89
2/27/2004 143.95 141.97 84.25
3/31/2004 135.35 123.01 79.74
4/30/2004 115.81 91.40 73.82
5/31/2004 118.43 104.47 74.32
6/30/2004 115.63 97.12 73.49
7/30/2004 115.63 90.80 72.08
8/31/2004 117.59 102.68 76.05
9/30/2004 121.80 100.88 78.02
10/31/2004 121.33 99.17 77.35
11/30/2004 128.81 111.05 83.91
12/31/2004 131.42 109.34 86.50
1/31/2005 129.37 110.19 83.66
2/28/2005 137.22 114.38 88.07
3/31/2005 132.08 105.92 83.87
4/30/2005 132.92 104.90 84.85
5/31/2005 133.76 106.01 86.42
6/30/2005 137.31 110.45 89.42
7/29/2005 144.23 116.68 93.15
8/31/2005 141.14 117.11 90.42
9/30/2005 146.75 117.37 92.93
10/31/2005 135.63 108.65 86.00
11/30/2005 145.44 114.98 91.53
12/31/2005 150.49 117.62 95.39
1/31/2006 162.31 139.24 101.51
2/28/2006 162.50 135.38 102.13
3/31/2006 167.66 135.04 103.48
4/30/2006 177.04 153.31 111.13
5/31/2006 168.51 143.71 104.50
6/30/2006 164.19 136.33 104.46
* JFC Benchmark: MSCI Golden Dragon Index (Total)
Prior to March 2001, 25% Taiwan Weighted Index, 20% BNP Paribas China
Index, 50% MSCI Hong Kong, 5% HSBC;
Prior to March 1999, 60% Hong Kong All Ordinaries, 30% Credit Lyonnais
Securities Asia All China B Index, 10% Taiwan Weighted Index;
Prior to January 1997, Peregrine Greater China Index
** Commencement of operations
Source JPMorgan Asset Management
- 2 -
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
CHAIRMAN'S STATEMENT
--------------------------------------------------------------------------------
Dear Fellow Stockholder,
The six month period to June 30, 2006 was a volatile period for our
investments in the Greater China Region. Nevertheless, I am pleased to report
that the Fund's net asset value gained 9.1% over the period. The share price
gained 15.9%, which not only reflected the increase in the net asset value but
the narrowing of the discount from 14.5% as at December 31, 2005 to 9.2% as at
June 30, 2006. Your Board continues to monitor the level of the discount closely
and is pleased that it narrowed over the reporting period. Generally, the Fund
has performed broadly in line with its benchmark, the MSCI Golden Dragon Index
(Total), which returned 9.5%.
On August 10, 2006, Michael J. James replaced A. Douglas Eu as Treasurer
to the Fund following Mr. Eu's decision to pursue career opportunities outside
of the J.P. Morgan Chase & Co. family of funds. On behalf of the Board I would
like to thank Mr. Eu for his contribution to the Fund over the past 9 years and
wish him well in his new endeavours. Michael James brings with him a wealth of
experience as he is currently the Chief Operating Officer of JPMorgan Asset
Management's closed-end fund division. He is also a qualified Chartered
Accountant and holds an MBA from London University. On behalf of the Board I
would like to extend a warm welcome to Michael.
Respectfully submitted,
/s/ Cromer
The Rt. Hon. The Earl of Cromer
Chairman
August 17, 2006
For more information refer to the website www.jfchinaregion.com
- 3 -
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
TOP TEN HOLDINGS
--------------------------------------------------------------------------------
AT JUNE 30, 2006 (UNAUDITED)
------------------------------------------------------------------------------------------------------
% OF NET
ASSETS
------------------------------------------------------------------------------------------------------
TAIWAN SEMICONDUCTOR MANUFACTURING CO., LTD. 6.0
Taiwan Semiconductor Manufacturing Company Limited manufactures and
markets integrated circuits. The Company provides the following services: wafer
manufacturing, wafer probing, assembly and testing, mask production, and design
services. The Company's integrated circuits are used in computer, communication,
consumer electronics, automotive and industrial equipment industries.
CHINA MOBILE (HONG KONG), LTD. 5.2
China Mobile (Hong Kong) Limited provides cellular telecommunication
services in the People's Republic of China.
HON HAI PRECISION INDUSTRY CO., LTD. 3.9
Hon Hai Precision Industry Company, Limited manufactures and markets
personal computer ('PC') connectors and cable assemblies used in desktop PCs and
PC servers.
CHEUNG KONG HOLDINGS, LTD. 3.5
Cheung Kong Holdings Limited develops and invests in real estate. The
Company also provides real estate agency and management services, operates
hotels and invests in securities.
CATHAY FINANCIAL HOLDING CO., LTD. 2.8
Cathay Financial Holding Company, Limited is a holding company. Through
its subsidiaries, the Company provides traditional life, health care and
accident insurances, as well as banking, security underwriting and brokerage
services.
CHINA LIFE INSURANCE CO. LTD. 'H' 2.7
China Life Insurance Company, Limited offers a wide range of life,
accident and health insurance products and services.
PETROCHINA COMPANY LIMITED 'H' 2.6
PetroChina Company Limited explores, develops and produces crude oil and
natural gas. The Company also refines, transports and distributes crude oil and
petroleum products, produces and sells chemicals, and markets and sells natural
gas.
- 4 -
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
TOP TEN HOLDINGS (CONTINUED)
--------------------------------------------------------------------------------
AT JUNE 30, 2006 (UNAUDITED)
------------------------------------------------------------------------------------------------------
% OF NET
ASSETS
------------------------------------------------------------------------------------------------------
SUN HUNG KAI PROPERTIES, LTD. 2.5
Sun Hung Kai Properties Limited develops and invests in properties. The
Company also operates hotels, manages properties, car parking and transportation
infrastructure. In addition, the Company operates logistics business,
construction, financial services, telecommunication Internet infrastructure and
enabling services.
CHINA PETROLEUM AND CHEMICAL CORP. (SINOPEC) 'H' 2.5
China Petroleum and Chemical Corporation explores for and produces crude
oil and natural gas in China. The Company also owns refineries that make
petroleum and petrochemical products such as gasoline, diesel, jet fuel,
kerosene, ethylene, synthetic fibers, synthetic rubber, synthetic resins and
chemical fertilizers. In addition, the Company trades petrochemical products.
CHINA CONSTRUCTION BANK 'H' 2.1
China Construction Bank provides a complete range of banking services and
other financial services to individual and corporate customers. The bank's
services include retail banking, international settlement, project finance and
credit card services.
------------------------------------------------------------------------------------------------------
TOTAL TOP TEN HOLDINGS 33.8
- 5 -
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
INVESTMENT PORTFOLIO
--------------------------------------------------------------------------------
AT JUNE 30, 2006 (UNAUDITED)
-------------------------------------------------------------------------------------------------------
MARKET
HOLDINGS VALUE
DESCRIPTION (IN SHARES) (IN US$)
------------------------------------------------------------------------------------------------------
COMMON STOCKS (UNLESS OTHERWISE NOTED)
------------------------------------------------------------------------------------------------------
CHINA (15.8%)
------------------------------------------------------------------------------------------------------
COMMERCIAL BANKS (3.7%)
Bank of Communications Co. 'H' 2,010,000 1,306,875
* China Construction Bank 'H' 3,682,000 1,682,902
------------------------------------------------------------------------------------------------------
2,989,777
------------------------------------------------------------------------------------------------------
INSURANCE (2.7%)
China Life Insurance Co., Ltd. 'H' 1,353,000 2,133,932
------------------------------------------------------------------------------------------------------
METALS & MINING (2.3%)
Angang New Steel Co., Ltd. 'H' 1,370,000 1,296,447
Zijin Mining Group Co., Ltd. 'H' 1,088,000 542,809
------------------------------------------------------------------------------------------------------
1,839,256
------------------------------------------------------------------------------------------------------
OIL & GAS (5.1%)
China Petroleum and Chemical Corp. (Sinopec) 'H' 3,518,000 2,015,592
PetroChina Company Limited 'H' 1,934,000 2,066,718
------------------------------------------------------------------------------------------------------
4,082,310
------------------------------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS (0.7%)
Shandong Chenming Paper Holdings, Ltd., 'B' 1,102,612 572,103
------------------------------------------------------------------------------------------------------
TRANSPORTATION INFRASTRUCTURE (1.3%)
* Dongfeng Motors Group Corp., Ltd. 'H' 2,266,000 1,057,583
------------------------------------------------------------------------------------------------------
TOTAL CHINA 12,674,961
------------------------------------------------------------------------------------------------------
HONG KONG (48.9%)
------------------------------------------------------------------------------------------------------
AIRLINES (1.2%)
* Air China, Ltd. 'H' 2,302,000 963,242
------------------------------------------------------------------------------------------------------
BUILDING MATERIALS (0.7%)
* China National Building Material Co., Ltd. 'H' 1,782,000 590,788
------------------------------------------------------------------------------------------------------
- 6 -
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
INVESTMENT PORTFOLIO (CONTINUED)
--------------------------------------------------------------------------------
AT JUNE 30, 2006 (UNAUDITED)
------------------------------------------------------------------------------------------------------
MARKET
HOLDINGS VALUE
DESCRIPTION (IN SHARES) (IN US$)
------------------------------------------------------------------------------------------------------
CHEMICALS (0.9%)
Sinochem Hong Kong Holdings, Ltd. 1,876,000 736,681
------------------------------------------------------------------------------------------------------
COMMERCIAL BANKS (3.9%)
BOC Hong Kong (Holdings), Ltd. 527,500 1,032,316
Dah Sing Financial Group 141,200 1,034,412
Standard Chartered, Plc. 44,325 1,090,006
------------------------------------------------------------------------------------------------------
3,156,734
------------------------------------------------------------------------------------------------------
DISTRIBUTION/WHOLESALE (2.6%)
Esprit Holdings, Ltd. 162,500 1,326,445
Li & Fung, Ltd. 388,600 785,505
------------------------------------------------------------------------------------------------------
2,111,950
------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (2.3%)
Hong Kong Exchanges & Clearing, Ltd. 90,000 578,795
Shin Kong Financial Holding 1,167,246 1,295,526
------------------------------------------------------------------------------------------------------
1,874,321
------------------------------------------------------------------------------------------------------
DIVERSIFIED OPERATIONS (6.7%)
China Merchants Holdings International Co., Ltd. 250,000 761,233
China Resources Enterprise, Ltd. 260,000 530,578
Guangdong Investment, Ltd. 1,088,000 416,737
Hutchison Whampoa, Ltd. 84,000 766,783
Jardine Strategic Holdings, Ltd. 101,500 1,096,200
Melco International Development, Ltd. 83,000 208,382
Swire Pacific, Ltd., Class A 150,500 1,553,055
------------------------------------------------------------------------------------------------------
5,332,968
------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES (1.1%)
China Resources Power Holdings 1,040,000 870,349
------------------------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE (1.7%)
Cafe de Coral Holdings, Ltd. 342,000 486,558
Shangri-La Asia, Ltd. 438,000 843,067
------------------------------------------------------------------------------------------------------
1,329,625
------------------------------------------------------------------------------------------------------
- 7 -
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
INVESTMENT PORTFOLIO (CONTINUED)
--------------------------------------------------------------------------------
AT JUNE 30, 2006 (UNAUDITED)
------------------------------------------------------------------------------------------------------
MARKET
HOLDINGS VALUE
DESCRIPTION (IN SHARES) (IN US$)
------------------------------------------------------------------------------------------------------
MACHINERY (1.0%)
Techtronic Industries Co., Ltd. 582,500 787,466
------------------------------------------------------------------------------------------------------
MARINE (1.2%)
Pacific Basin Shipping, Ltd. 2,022,000 917,671
------------------------------------------------------------------------------------------------------
METALS & MINING (1.7%)
China Shenhua Energy Co. Ltd. 'H' 723,500 1,336,710
------------------------------------------------------------------------------------------------------
MISCELLANEOUS (0.0%)
* Health Asia MediCentres Beijing++ 1,000,000 0
------------------------------------------------------------------------------------------------------
MULTILINE RETAIL (1.4%)
Lifestyle International Holdings, Ltd. 628,000 1,148,140
------------------------------------------------------------------------------------------------------
OIL & GAS (2.4%)
CNPC Hong Kong, Ltd. 2,370,000 1,334,975
Xinao Gas Holdings, Ltd. 582,000 554,500
------------------------------------------------------------------------------------------------------
1,889,475
------------------------------------------------------------------------------------------------------
REAL ESTATE (9.4%)
Cheung Kong Holdings, Ltd. 257,000 2,784,415
Guangzhou R&F Prop Co., Ltd. 'H' 203,400 942,758
Henderson Land Development Co. Ltd. 76,000 394,824
Hysan Development Co., Ltd. 256,419 723,004
New World Development Co., Ltd. 382,000 629,535
Sun Hung Kai Properties, Ltd. 199,000 2,029,200
Wheelock and Co., Ltd. 25,000 42,005
------------------------------------------------------------------------------------------------------
7,545,741
------------------------------------------------------------------------------------------------------
REITS - DIVERSIFIED (0.9%)
* Champion Real Estate Investment Trust 1,524,000 755,427
------------------------------------------------------------------------------------------------------
RETAIL (1.8%)
* Golden Eagle Retail Group, Ltd. 1,690,000 881,228
Parkson Retail Group, Ltd. 209,000 594,683
------------------------------------------------------------------------------------------------------
1,475,911
------------------------------------------------------------------------------------------------------
- 8 -
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
INVESTMENT PORTFOLIO (CONTINUED)
--------------------------------------------------------------------------------
AT JUNE 30, 2006 (UNAUDITED)
------------------------------------------------------------------------------------------------------
MARKET
HOLDINGS VALUE
DESCRIPTION (IN SHARES) (IN US$)
------------------------------------------------------------------------------------------------------
TRANSPORTATION INFRASTRUCTURE (1.4%)
Cosco Pacific, Ltd. 500,000 1,107,249
------------------------------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (6.6%)
China Mobile (Hong Kong), Ltd. 725,500 4,147,316
China Unicom, Ltd. 1,238,000 1,107,776
------------------------------------------------------------------------------------------------------
5,255,092
------------------------------------------------------------------------------------------------------
TOTAL HONG KONG 39,185,540
------------------------------------------------------------------------------------------------------
TAIWAN (32.0%)
------------------------------------------------------------------------------------------------------
CIRCUIT BOARDS (1.0%)
Nan Ya Printed Circuit Board Corp. 104,000 804,645
------------------------------------------------------------------------------------------------------
COMMERCIAL BANKS (1.6%)
Chang Hwa Commercial Bank 1,840,000 1,304,259
------------------------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS (2.1%)
High Tech Computer 30,000 824,659
* Innolux Display Corp. 621,000 888,047
------------------------------------------------------------------------------------------------------
1,712,706
------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (1.6%)
First Financial Holding Co., Ltd. 1,632,000 1,234,951
Shin Kong Financial Holding Co., Ltd. 758 833
------------------------------------------------------------------------------------------------------
1,235,784
------------------------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (8.3%)
AU Optronics Corp Warrants 19 Oct 2006 (UBS AG) 576,819 823,467
* AU Optronics Corp. 232,820 328,625
Delta Electronics, Inc. 151,000 429,070
Hon Hai Precision Industry Co., Ltd. 503,487 3,110,152
Silitech Technology Corp. 176,000 932,267
Tripod Technology Corp. 309,000 1,049,819
------------------------------------------------------------------------------------------------------
6,673,400
------------------------------------------------------------------------------------------------------
- 9 -
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
INVESTMENT PORTFOLIO (CONTINUED)
--------------------------------------------------------------------------------
AT JUNE 30, 2006 (UNAUDITED)
------------------------------------------------------------------------------------------------------
MARKET
HOLDINGS VALUE
DESCRIPTION (IN SHARES OR PAR) (IN US$)
------------------------------------------------------------------------------------------------------
INSURANCE (2.8%)
Cathay Financial Holding Co., Ltd. 1,011,000 2,210,792
------------------------------------------------------------------------------------------------------
METALS & MINING (1.6%)
Catcher Technology Co., Ltd. 121,000 1,281,867
------------------------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (13.0%)
Advanced Semiconductor Engineering, Inc. 1,591,000 1,572,474
MediaTek, Inc. 142,800 1,323,162
Novatek Microelectronics Corp., Ltd. 336,000 1,629,305
ProMOS Technologies, Inc. 3,183,000 1,155,149
* Taiwan Semiconductor Manufacturing Co., Ltd. 2,648,786 4,777,747
------------------------------------------------------------------------------------------------------
10,457,837
------------------------------------------------------------------------------------------------------
TOTAL TAIWAN 25,681,290
------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN COMMON STOCK
(96.7% of Net Assets) (Cost $73,253,991) 77,541,791
======================================================================================================
SHORT TERM INVESTMENTS
------------------------------------------------------------------------------------------------------
UNITED STATES (1.6%)
------------------------------------------------------------------------------------------------------
Citibank Time Deposit, 5.02%, 07/03/2006 1,303,668 1,303,668
------------------------------------------------------------------------------------------------------
TOTAL UNITED STATES 1,303,668
------------------------------------------------------------------------------------------------------
TOTAL SHORT TERM INVESTMENTS
(1.6% of Net Assets) (Cost $1,303,668) 1,303,668
======================================================================================================
- 10 -
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
INVESTMENT PORTFOLIO (CONTINUED)
--------------------------------------------------------------------------------
AT JUNE 30, 2006 (UNAUDITED)
------------------------------------------------------------------------------------------------------
MARKET
VALUE
DESCRIPTION (IN US$)
------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(98.3% of Net Assets) (Cost $74,557,659) 78,845,459
======================================================================================================
Other assets in excess of liabilities (1.7% of Net Assets) 1,387,289
======================================================================================================
NET ASSETS (100.0%) 80,232,748
======================================================================================================
As of June 30, 2006, aggregate cost for Federal income tax purposes was $75,291,136.
The aggregate unrealized gain for all securities is as follows:
Excess of market value over cost 6,200,370
Excess of cost over market value (2,646,047)
------------------------------------------------------------------------------------------------------
Net unrealized gain 3,554,323
======================================================================================================
B Chinese security traded on Shenzhen Stock Exchange or Shanghai Stock
Exchange.
H Chinese security traded on Hong Kong Stock Exchange.
* Non-income producing.
++ At fair value as determined under the supervision of the Board of
Directors.
See accompanying notes to financial statements.
- 11 -
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
AT JUNE 30, 2006 (UNAUDITED)
-----------------------------------------------------------------------------------------------------
(IN US$)
-----------------------------------------------------------------------------------------------------
ASSETS
-----------------------------------------------------------------------------------------------------
Investments at value (cost $74,557,659) 78,845,459
Cash (including foreign currencies with a cost of $2,634,422 and value of $2,659,012) 2,738,698
Receivable for securities sold 554,197
Dividends receivable 360,055
Interest receivable 181
Prepaid expenses 24,974
-----------------------------------------------------------------------------------------------------
TOTAL ASSETS 82,523,564
-----------------------------------------------------------------------------------------------------
LIABILITIES
-----------------------------------------------------------------------------------------------------
Payable for securities purchased 1,796,935
Due to Investment Adviser 138,076
Accrued expenses payable 355,805
-----------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 2,290,816
-----------------------------------------------------------------------------------------------------
NET ASSETS 80,232,748
=====================================================================================================
NET ASSETS CONSIST OF:
Common stock, $0.01 par value
(100,000,000 shares authorized;
4,585,160 shares issued and outstanding) 45,852
Paid-in capital 83,971,510
Undistributed net investment income 648,681
Accumulated realized loss on investments
and foreign currency transactions (8,746,340)
Accumulated net unrealized appreciation on investments,
and foreign currency holdings, and other assets
and liabilities denominated in foreign currencies 4,313,045
-----------------------------------------------------------------------------------------------------
NET ASSETS 80,232,748
=====================================================================================================
NET ASSET VALUE PER SHARE ($80,232,748 / 4,585,160) 17.50
=====================================================================================================
See accompanying notes to financial statements.
- 12 -
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED JUNE 30, 2006 (UNAUDITED)
-----------------------------------------------------------------------------------------------------
(IN US$)
-----------------------------------------------------------------------------------------------------
INVESTMENT INCOME
------------------------------------------------------------------------------------------------------
Dividends (net of foreign withholding tax of $40,082) 1,052,701
Interest (net of foreign withholding tax of $129) 11,633
-----------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 1,064,334
-----------------------------------------------------------------------------------------------------
EXPENSES
-----------------------------------------------------------------------------------------------------
Investment advisory fees 403,050
Custodian fees 116,778
Directors' fees and expenses 90,657
Administration and accounting fees 68,432
Legal fees 39,781
Shareholder service fees 23,120
Shareholder report and expenses 21,012
Insurance 18,581
Audit fees 16,747
NYSE listing fee 12,945
Other expenses 23,683
-----------------------------------------------------------------------------------------------------
TOTAL EXPENSES 834,786
-----------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 229,548
=====================================================================================================
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS, FOREIGN CURRENCY
HOLDINGS AND OTHER ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES
-----------------------------------------------------------------------------------------------------
NET REALIZED GAIN
Investments 10,412,544
Foreign currency transactions 1,497
NET CHANGE IN UNREALIZED DEPRECIATION
Investments and foreign currency holdings and
other assets and liabilities denominated
in foreign currencies (3,969,490)
-----------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS,
FOREIGN CURRENCY HOLDINGS AND OTHER ASSETS
AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES 6,444,551
-----------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 6,674,099
=====================================================================================================
See accompanying notes to financial statements.
- 13 -
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
FOR THE
SIX MONTHS ENDED
JUNE 30, 2006 YEAR ENDED
(IN US$) DECEMBER 31, 2005
(UNAUDITED) (IN US$)
---------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment income 229,548 607,149
Net realized gain on investment transactions 10,412,544 6,571,071
Net realized gain (loss) on foreign currency transactions 1,497 (179,850)
Net change in unrealized appreciation (depreciation) on
investments, foreign currency holdings and other assets
and liabilities denominated in foreign currencies (3,969,490) 2,347,419
---------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 6,674,099 9,345,789
===============================================================================================================
DISTRIBUTIONS TO STOCKHOLDERS
Net investment income ($0.00 and $0.06 per share,
respectively) -- (275,111)
===============================================================================================================
TOTAL INCREASE IN NET ASSETS 6,674,099 9,070,678
Net Assets:
Beginning of period 73,558,649 64,487,971
---------------------------------------------------------------------------------------------------------------
End of period (including undistributed net investment income
of $648,681 and $419,133, respectively) 80,232,748 73,558,649
===============================================================================================================
See accompanying notes to financial statements.
- 14 -
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
FOR THE
SIX MONTHS
ENDED FOR THE FOR THE FOR THE FOR THE FOR THE
JUNE 30, YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
2006 DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
(IN US$) 2005 2004 2003 2002 2001
(UNAUDITED) (IN US$) (IN US$) (IN US$) (IN US$) (IN US$)
------------------------------------------------------------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period 16.04 14.06 13.93 7.47 8.14 9.34
====================================================================================================================================
Net investment income
(loss) 0.05 0.13 0.04 (0.02) (0.04) (0.11)
Net realized and
unrealized gain (loss)
on investment and
foreign currency-
related transactions 1.41 1.91 0.09 6.48 (0.66) (1.31)
------------------------------------------------------------------------------------------------------------------------------------
Total from investment
operations 1.46 2.04 0.13 6.46 (0.70) (1.42)
====================================================================================================================================
Dividends from net
investment income -- (0.06) -- -- -- --
====================================================================================================================================
Dilutive Effect of Capital
shares repurchased -- -- -- --* 0.03 0.22
====================================================================================================================================
NET ASSET VALUE, END OF
PERIOD 17.50 16.04 14.06 13.93 7.47 8.14
====================================================================================================================================
Market value, end of
period 15.89 13.71 12.80 18.08 6.50 6.57
====================================================================================================================================
TOTAL INVESTMENT RETURN
Per share market value 15.9% 7.6% (29.2%) 178.2% (1.1%) (6.9%)
Per share net asset
value 9.1% 14.5% 0.9% 86.5% (8.2%) (12.8%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period 80,232,748 73,558,649 64,487,971 63,882,635 34,248,715 38,169,881
Ratios of total expenses
to average net assets 2.08% + 2.08% 2.22% 2.54% 2.62% 3.51%
Ratios of net investment
income (loss) to
average net assets 0.57% + 0.90% 0.31% (0.19%) (0.44%) (1.25%)
Portfolio turnover rate 142.8% 121.8% 168.6% 162.5% 245.0% 212.1%
Number of shares
outstanding at end of
period (in thousands) 4,585 4,585 4,585 4,585 4,587 4,689
* Less than $0.01 per share.
+ Annualized.
See accompanying notes to financial statements.
- 15 -
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
JUNE 30, 2006
--------------------------------------------------------------------------------
1. ORGANIZATION AND CAPITAL
JF China Region Fund, Inc. (the "Fund") was incorporated in the State of
Maryland on May 22, 1992, and is registered as a non-diversified,
closed-end management investment company under the Investment Company Act
of 1940. The Fund commenced operations on July 16, 1992.
2. SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies, which are in conformity
with accounting principles generally accepted in the United States of
America ("GAAP") and are consistently followed by the Fund in the
preparation of its financial statements.
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of increases and decreases in net assets from operations during
the reported period. Actual results could differ from these estimates.
I) SECURITY VALUATION
All securities for which market quotations are readily available are
valued at the last sales price prior to the time of determination
or, if no sales price is available at that time, at the mean between
the last current bid and asked prices. Securities that are traded
over-the-counter are valued, if bid and asked quotations are
available, at the mean between the current bid and asked prices. All
other securities and assets are valued at fair value as determined
in good faith by the Board of Directors. In valuing the Fund's
assets, quotations of foreign securities in a foreign currency are
translated to United States ("U.S.") dollar equivalents at the
exchange rate in effect on the valuation date.
II) FOREIGN CURRENCY TRANSLATION
The books and records of the Fund are maintained in U.S. dollars.
Foreign currency amounts are translated into U.S. dollars at the
mid-market price of such currencies against U.S. dollars as follows:
o investments, other assets, and liabilities at the
prevailing rates of exchange on the valuation date;
o investment transactions and investment income at the
prevailing rates of exchange on the dates of such
transactions.
Although the net assets of the Fund are presented at the foreign
exchange rates and market values at the close of the period, the
Fund does not isolate that portion of the results of operations
arising as a result of changes in the foreign exchange rates from
the fluctuations arising from changes in the market prices of the
securities held at period-end. Similarly, the Fund does not isolate
the effect of changes in foreign exchange rates from the
fluctuations arising from changes in the market prices of securities
sold during the period. Accordingly,
- 16 -
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
realized and unrealized foreign currency gains (losses) are included
in the reported net realized and unrealized gains (losses) on
investments.
Unrealized currency gains (losses) resulting from valuing foreign
currency denominated assets and liabilities at period-end exchange
rates are reflected as a component of accumulated net unrealized
gain (loss) on investments, foreign currency holdings, and other
assets and liabilities denominated in foreign currencies.
III) DISTRIBUTION OF INCOME AND GAINS
The Fund intends to distribute to stockholders, at least annually,
substantially all of its net investment income and expects to
distribute annually any net long-term capital gains in excess of net
short-term capital losses. An additional distribution may be made to
the extent necessary to avoid the payment of a 4% federal excise
tax. Income and capital gain distributions are determined in
accordance with federal income tax regulations and may differ from
those determined in accordance with GAAP.
IV) OTHER
Security transactions are accounted for on trade date. Realized
gains and losses on the sale of investment securities are determined
on the identified cost basis. Interest income is recognized on the
accrual basis. Dividend income and distributions to shareholders are
recorded on the ex-dividend date.
3. INVESTMENT TRANSACTIONS
The investment objective, policies, program, and risk factors of the Fund
are described fully in the Fund's Prospectus.
During the six months ended June 30, 2006, the Fund made purchases of
$112,461,673 and sales of $114,756,648 of investment securities other than
short-term investments. There were no purchases or sales of U.S.
government securities.
4. RELATED PARTY, OTHER SERVICE PROVIDER TRANSACTIONS AND DIRECTORS
I) JF International Management Inc. (the "Adviser"), an indirect
wholly-owned subsidiary of J.P. Morgan Chase & Co., provides
investment advisory services to the Fund under the terms of an
investment advisory agreement. The Adviser is paid a fee, computed
weekly and payable monthly, at the annual rate of 1.00% of the
Fund's weekly net assets.
II) During the six months ended June 30, 2006, the Fund did not pay any
brokerage commissions to J.P. Morgan Chase Group companies or
affiliated brokers/dealers.
- 17 -
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
III) OTHER SERVICE PROVIDERS
PFPC Inc. (the "Administrator") provides administrative and
accounting services to the Fund under an Administrative and
Accounting Services Agreement. The Administrator receives a fee,
payable monthly, at an annual rate of 0.135% of the first $100
million, 0.095% of the next $50 million, 0.08% of the next $50
million and 0.065% of the excess over $200 million of the Fund's
average weekly net assets, subject to a minimum annual fee of
$138,000, plus reimbursement for certain out-of-pocket expenses.
IV) DIRECTORS
The Fund pays each of its Directors who is not a director, officer
or employee of the Adviser, Administrator or any affiliate thereof
an annual fee of $16,000 and the Chairman $19,000 plus $1,400
attendance fee for each Board and committee meeting attended. In
addition, the Fund reimburses all directors for travel and
out-of-pocket expenses incurred in connection with Board of
Directors meetings.
5. CAPITAL SHARE TRANSACTIONS
On September 8, 2005 the Board of Directors renewed an authority for the
Fund to purchase shares of its common stock from Fund stockholders, as
described below. When shares trade at a discount to net asset value, any
purchase of shares by the Fund has the effect of increasing the net asset
value per share of the Fund's remaining shares outstanding. All shares
purchased by the Fund are thereafter considered authorized and unissued.
I) SHARE REPURCHASE PROGRAM
The Fund is authorized to repurchase up to 458,516 shares (10% of
its issued and outstanding shares) in the open market through
September 7, 2006. Repurchases can be made only when the Fund's
shares are trading at less than net asset value and at such times
and amounts as it is believed to be in the best interest of the
Fund's stockholders.
During the six months ended June 30, 2006 and the year ended
December 31, 2005, the Fund did not repurchase any shares under the
share repurchase program.
6. RISKS AND UNCERTAINTIES
I) FOREIGN TRANSACTIONS
Foreign security and currency transactions may involve certain
considerations and risks not typically associated with those of U.S.
dollar denominated transactions as a result of, among other factors,
the level of governmental supervision and regulation of foreign
securities markets and the possibility of political or economic
instability.
II) OTHER
In the normal course of business, the Fund may enter into contracts
that provide general indemnifications. The maximum exposure under
these arrangements is dependent on future claims that may be made
against the Fund and, therefore, cannot be estimated; however, based
on experience, the risk of any loss from such claims is considered
remote.
- 18 -
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
7. TAX STATUS
I) U.S. FEDERAL INCOME TAXES
No provision for federal income taxes is required since the Fund
intends to continue to qualify as a regulated investment company
under subchapter M of the Internal Revenue Code and distribute
substantially all of its taxable income.
At December 31, 2005, the components of net assets (excluding
paid-in capital) on a tax basis were as follows:
Tax basis Ordinary Income .............................. $ 419,133
------------
Tax basis capital loss carryforward .................... $(19,066,798)
Plus/Less: cumulative timing differences --
wash sales ........................................... (93,583)
------------
Accumulated capital loss ................................................ (19,160,381)
------------
Book unrealized foreign exchange gain ................................... 6
------------
Book unrealized appreciation on foreign currencies ...................... 6,855
------------
Tax unrealized appreciation ............................ $ 8,182,091
Plus/Less: cumulative timing differences --
wash sales ........................................... 93,583
------------
Unrealized appreciation ................................................. 8,275,674
------------
Net assets (excluding paid-in capital) .................................. $(10,458,713)
============
The difference between book and tax basis unrealized appreciation is
primarily attributable to wash sales. The cumulative timing
difference for the capital loss carryover is due to wash sales.
Net Asset Value ......................................................... $ 73,558,649
Paid-in Capital ......................................................... (84,017,362)
------------
Net assets (excluding paid-in capital) .................................. $(10,458,713)
============
As of December 31, 2005, the Fund had capital loss carryforwards for
federal income tax purposes of $19,066,798, of which $11,676,567
expires in 2006, $3,780,058 expires in 2008 and $3,610,173 expires
in 2009. The Fund intends to retain gains realized in future periods
that may be offset by available capital loss carryforward.
During the year ended December 31, 2005, the Fund reclassified
$179,850 and $12,170,495 from undistributed net investment income
and paid in capital, respectively, to accumulated realized loss on
investments as a result of permanent book and tax differences
relating to realized foreign currency losses and carryforward loss
expirations. Net assets were not affected by the reclassifications.
- 19 -
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONCLUDED)
--------------------------------------------------------------------------------
8. RECENT ACCOUNTING PRONOUNCEMENTS
In July 2006, the Financial Accounting Standards Board issued
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes -
an Interpretation of FASB Statement No. 109" (the "Interpretation").
The Interpretation establishes for all entities, including
pass-through entities such as the Fund, a minimum threshold for
financial statement recognition of the benefit of positions taken in
filing tax returns (including whether an entity is taxable in a
particular jurisdiction), and requires certain expanded tax
disclosures. The Interpretation is effective for fiscal years
beginning after December 15, 2006, and is to be applied to all open
years as of the date of effectiveness. Management has recently begun
to evaluate the tax application of the Interpretation to the Fund,
and is not in a position at this time to estimate the significance
of its impact, if any, on the Fund's financial statements.
- 20 -
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
RESULTS OF THE ANNUAL STOCKHOLDERS MEETING (UNAUDITED)
--------------------------------------------------------------------------------
The Fund held its annual stockholders meeting on May 11, 2006. At this meeting,
stockholders elected the following nominees to the Fund's Board of Directors.
I) ELECTION OF DIRECTORS
NOMINEE VOTES FOR VOTES WITHHELD NON-VOTING SHARES TOTAL VOTING SHARES
------- --------- -------------- ----------------- -------------------
The Rt. Hon.
The Earl of Cromer 3,482,739 164,641 937,780 4,585,160
Alexander Reid Hamilton 3,483,898 163,482 937,780 4,585,160
OTHER INFORMATION
--------------------------------------------------------------------------------
TREASURER AND CHIEF FINANCIAL OFFICER
Michael J. James replaced A. Douglas Eu as Fund Treasurer and Chief Financial
Officer effective August 10, 2006.
DEFICIENCY DIVIDEND
On July 26, 2006, the Board of Directors of the Fund declared a deficiency
dividend of $0.05822 per share to shareholders of record as of August 1, 2006
and ordered the payment of a related compliance fee of approximately $50,000 to
the Internal Revenue Service to satisfy a spillback dividend election taken by
the Fund for the tax year ended December 31, 2004 and maintain the Fund's status
as a regulated investment company under subchapter M of the Internal Revenue
Code. The Fund filed the forms necessary to claim the deficiency dividend as a
dividend paid deduction with the IRS on August 8, 2006. The related compliance
fee was paid to the IRS on August 21, 2006.
INFORMATION ABOUT PORTFOLIO HOLDINGS
The Fund files its complete schedule of portfolio holdings with the U.S.
Securities and Exchange Commission (the "Commission") for the first and third
quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q are available on
the Commission's website at http://www.sec.gov and may be reviewed and copied at
the Commission's Public Reference Room in Washington, DC. Information on the
operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
PROXY VOTING POLICIES AND PROCEDURES AND PROXY VOTING RECORD
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request, by calling 202-942-8008, and on the Commission's website at
http://www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30 is available
without charge, upon request, by calling 202-942-8088, and on the Commission's
website at http://www.sec.gov.
CERTIFICATIONS
Simon J. Crinage, as the Fund's President, has certified to the New York Stock
Exchange that, as of June 9, 2006, he was not aware of any violation by the Fund
of applicable NYSE corporate governance listing standards. The Fund's reports to
the Commission on Forms N-CSR and N-CSRS contain certifications by the Fund's
principal executive officer and principal financial officer that relate to the
Fund's disclosure in such reports and that are required by Rule 30a-2(a) under
the 1940 Act.
- 21 -
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
--------------------------------------------------------------------------------
THE FUND OPERATES AN OPTIONAL DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN (THE
"PLAN") WHEREBY:
a) shareholders may elect to receive dividend and capital gain
distributions in the form of additional shares of the Fund (the
Share Distribution Plan).
b) shareholders may make optional payments (any amount between $100 and
$3,000) which will be used to purchase additional shares in the open
market (the Share Purchase Plan).
FOR A COPY OF THE PLAN BROCHURE, AS WELL AS A DIVIDEND REINVESTMENT
AUTHORIZATION CARD, PLEASE CONTACT THE PLAN AGENT:
Computershare Trust Company, N.A.
P. O. Box 43010
Providence, RI 02940-3010
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.
- 22 -
(This Page Intentionally Left Blank)
(This Page Intentionally Left Blank)
(This Page Intentionally Left Blank)
[GRAPHIC OMITTED]
JF CHINA REGION FUND, INC.
DIRECTORS AND ADMINISTRATION
--------------------------------------------------------------------------------
OFFICERS AND DIRECTORS THE RT. HON. THE EARL OF CROMER - DIRECTOR AND
CHAIRMAN OF THE BOARD
Alexander R. Hamilton - Director
Julian M. I. Reid - Director
Simon J. Crinage - President
Michael J. James - Treasurer*
Hilary A. Lowe - Secretary
INVESTMENT ADVISER JF INTERNATIONAL MANAGEMENT INC.
P.O. Box 3151
Road Town, Tortola
British Virgin Islands
ADMINISTRATOR PFPC INC.
301 Bellevue Parkway
Wilmington, Delaware 19809
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 REGISTERED PRICEWATERHOUSECOOPERS LLP
PUBLIC ACCOUNTING FIRM Two Commerce Square
2001 MARKET STREET
Philadelphia, Pennsylvania 19103
U.S.A.
LEGAL COUNSEL CLEARY GOTTLIEB STEEN & HAMILTON LLP
NEW YORK:
1 Liberty Plaza
New York, New York 10006
U.S.A.
HONG KONG:
Bank of China Tower
1 Garden Road
Hong Kong
REGISTRAR, TRANSFER AGENT, AND COMPUTERSHARE TRUST COMPANY, N.A.
DIVIDEND PAYING AGENT P. O. Box 43010
Providence, RI 02940-3010
U.S.A.
* MICHAEL J. JAMES REPLACED A. DOUGLAS EU AS FUND TREASURER AND CHIEF FINANCIAL
OFFICER EFFECTIVE AUGUST 10, 2006.
NOTICE IS HEREBY GIVEN IN ACCORDANCE WITH SECTION 23(C) OF THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED, THAT FROM TIME TO TIME THE FUND MAY PURCHASE
SHARES OF ITS COMMON STOCK IN THE OPEN MARKET.
WWW.JFCHINAREGION.COM
- 26 -
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
There has been no change, as of the date of this filing, in any of the portfolio
managers identified in response to paragraph (a)(1) of this Item in the
registrant's most recently filed annual report on Form N-CSR.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR
240.14a-101), or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these
controls and procedures required by Rule 30a-3(b) under the 1940 Act
(17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the
Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the registrant's second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) JF China Region Fund, Inc.
--------------------------------------------------------------------
By (Signature and Title) /s/ Simon Crinage
------------------------------------------------------
Simon Crinage, President
(principal executive officer)
Date August 30, 2006
----------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title) /s/ Simon Crinage
--------------------------------------------------------
Simon Crinage, President
(principal executive officer)
Date August 30, 2006
----------------------------------------------------------------------------
By (Signature and Title) /s/ Michael J. James
--------------------------------------------------------
Michael J. James, Treasurer
(principal financial officer)
Date August 30, 2006
----------------------------------------------------------------------------