JARDINE FLEMING CHINA REGION FUND, INC.
OFFER TO PURCHASE FOR CASH UP TO 1,172,856 OF ITS ISSUED
AND OUTSTANDING SHARES AT 95% OF NET ASSET VALUE PER SHARE
- --------------------------------------------------------------------------------
THE OFFER WILL EXPIRE AT MIDNIGHT NEW YORK TIME
ON JULY 9, 2001, 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 1,172,856 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 JULY 9, 2001, 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 June 1, 2001, was
$9.33 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 relating to the Offer to record
holders on or about June 11, 2001.
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.
NONE OF THE FUND, ITS BOARD OF DIRECTORS AND JF 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 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
BY FIRST CLASS MAIL: BY REGISTERED, CERTIFIED OR EXPRESS MAIL BY HAND:
EQUISERVE TRUST COMPANY, N.A. OR OVERNIGHT COURIER: Securities Transfer & Reporting
Attn: Corporate Actions EquiServe Trust Company, N.A. Services, Inc.
P.O. Box 43025 Attn: Corporate Actions c/o EquiServe Trust Company, N.A.
Providence, RI 02940-3025 40 Campanelli Drive 100 William Street Galleria
Braintree, MA 02184 New York, NY 10038
INFORMATION AGENT
(LOGO)
MACKENZIE
PARTNERS, INC.
[GRAPHIC OMITTED]
156 FIFTH AVENUE
NEW YORK, NEW YORK 10010
(212) 929-5500 (CALL COLLECT)
OR
TOLL-FREE (800) 322-2885
ii
TABLE OF CONTENTS
PAGE
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SUMMARY TERM SHEET ..................................................................... 1
1. Price; Number of Shares .................................................... 4
2. Purpose of the Offer; Plans or Proposals of the Fund ....................... 4
3. Certain Conditions of the Offer ............................................ 5
4. Procedures for Tendering Shares ............................................ 6
a. Proper Tender of Shares ................................................. 6
b. Signature Guarantees and Method of Delivery ............................. 6
c. Book-Entry Delivery ..................................................... 7
d. Guaranteed Delivery ..................................................... 7
e. Determinations of Validity .............................................. 8
f. United States Federal Income Tax Withholding ............................ 8
5. Withdrawal Rights .......................................................... 9
6. Payment for Shares ......................................................... 9
7. Source and Amount of Funds ................................................. 10
8. Price Range of Shares; Dividends/Distributions ............................. 11
9. Selected Financial Information ............................................. 11
10. Interest of Directors, Executive Officers and Certain Related Persons ...... 12
11. Certain Effects of the Offer ............................................... 13
12. Certain Information about the Fund ......................................... 13
13. Additional Information ..................................................... 13
14. Certain United States Federal Income Tax Consequences ...................... 13
15. Amendments; Extension of Tender Period; Termination ........................ 15
16. Miscellaneous .............................................................. 15
iii
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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 1,172,856 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 July 9, 2001 (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 24 and 30, 2000, in recognition that the Fund's shares have
traded at a discount to their net asset value and on the recommendation of JF
International Management Inc. ("JFIMI"), the Fund's investment adviser, the Fund
stated its intention to conduct a tender offer, up to one in each calendar year,
beginning in 2001 if the Fund's shares traded at an average discount to net
asset value in excess of 20% for any 13 week period. On April 10, 2001, the
Board of Directors of the Fund (the "Board") announced that the average discount
to net asset value for the Fund's shares exceeded 20% during the first 13 weeks
of 2001 and that the Fund intended to conduct the 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 July 9, 2001,
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 June 1, 2001, the net asset value per share was $9.33. See Section 8
of the Offer to Purchase for details. While the tender offer is pending, the
most recent net asset value quotation 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 July 9, 2001
(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 tender your shares only by directing that firm to
complete, compile and deliver the necessary documents for submission to the
Depositary by July 9, 2001 (or if the offer is extended, the expiration date as
extended). See Section 4.
1
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 July 9, 2001 (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 August 6, 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 from
the person who tendered the shares. See Section 5.
MAY I PLACE ANY CONDITIONS ON MY TENDER OF SHARES?
No.
WHAT IF MORE THAN 1,172,856 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 July 12, 2001. 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, except for certain conditions described in Section 3.
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).
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.
2
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 advisor 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 direct your requests
for assistance, information and documents to your broker, dealer, commercial
bank, trust company or other nominee, as appropriate.
3
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
1,172,856 of its Shares that are properly tendered prior to midnight New York
Time on July 9, 2001 (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 July 9, 2001, and 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 June 1, 2001 was $9.33 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 p.m. 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 1,172,856 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 1,172,856 Shares are tendered.
On June 1, 2001, there were 5,864,280 Shares issued and outstanding, and
there were 377 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. The Board of
Directors of the Fund (the "Board") considered and approved the timing and terms
of the Offer at a meeting held on May 9, 2001.
Despite the existence of a persistent discount to net asset value at which
the Fund's shares have traded on the NYSE, the Board has consistently concluded
that, given the Fund's size, it is in the best interests of the Fund and its
shareholders to maintain the current closed-end format. The closed-end format
permits the Fund to participate in the small capitalization and less liquid
sectors of the market, sectors that have historically been important in the
China region. 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 the Fund. Last year the Board
initiated a share repurchase program and conducted a tender offer to address the
discount. Following completion of the Offer, the Board will continue to monitor
the discount issue and actively consider all available mechanisms for addressing
the problem.
On October 24 and 30, 2000, the Board stated its intention to conduct an
annual tender offer if the average discount to NAV exceeded 20% for any 13 week
period. The Board's policy is consistent with the Board's commitment to enhance
shareholder value. The policy was adopted pursuant to the recommendations of
JFIMI, the Fund's investment adviser, after due consideration of all
alternatives available to the Fund.
On April 10, 2001, the Board announced that the average discount to NAV for
the Fund's Shares had exceeded 20% during the first thirteen weeks of 2001 and
that the Board intended to conduct a tender offer. The Board announced the terms
and timing of the Offer on May 24, 2001. The Board continues to believe that the
Offer serves the best interests of the Fund and its shareholders. After the
completion of the Offer, the Board will continue to monitor the price of the
Fund's Shares relative to NAV and will take further actions as appropriate.
Except as set forth above, 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
4
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) such
transaction, if consummated, would impair the Fund's status as a regulated
investment company under the Code (which would make the Fund a taxable entity,
causing the Fund's income to be taxed at the corporate level in addition to the
taxation of shareholders who receive dividends from the Fund); (b) 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; (c) 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 (d) 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 judgement. 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.
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.
5
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 6 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 to 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.
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
6
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 Instruction 6 of
the Letter of Transmittal.
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 Instruction 6 of the
Letter of Transmittal.
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 ii 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.
7
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.
None of the Fund, its Board of Directors, JFIMI, the Depositary and 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 on 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 indicate that such reliance is not warranted. A Non-U.S.
shareholder that has not previously submitted the appropriate
8
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 August 6, 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
ii 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 Section 1) 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.
None of the Fund, its Board of Directors, JFIMI, the Depositary and 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.
9
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 on 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
1,172,856 of its issued and outstanding Shares pursuant to the Offer would be
$10,396,196 (based on a price per Share of $8.864, 95% of the NAV as of the
close of the regular trading session of the NYSE on June 1, 2001). On June 1,
2001, the aggregate value of the Fund's net assets was $54,725,707.
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 June 1, 2001, cash and cash
equivalents constituted approximately 2.7% 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.
10
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.
NET ASSET VALUE MARKET PRICE
------------------ ----------------- DIVIDENDS/
HIGH LOW HIGH LOW DISTRIBUTIONS
------ ------ ------ ----- -------------
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 --
4th Quarter ......................... 10.20 8.88 8.06 6.75 --
2001
1st Quarter ......................... $10.27 $ 8.96 $ 8.41 $6.72 $--
As of the close of business on June 1, 2001, the Fund's NAV was $9.33 per
Share, and the high, low and closing prices per Share on the NYSE on that date
were $7.75, $7.75 and $7.75, 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).
11
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.
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------------------------
2000 1999 1998 1997 1996
--------- -------- --------- -------- ---------
(AUDITED) (AUDITED) (AUDITED) (AUDITED) (AUDITED)
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ................. $ 11.78 $ 7.50 $ 11.81 $ 14.31 $ 11.17
======= ======== ======= ======== ========
Net investment income (loss) ......................... (0.06) 0.03 0.02 (0.01) 0.03
Net realized and unrealized gain (loss) on
investments and foreign currency-related
transactions ...................................... (2.73) 4.29 (4.33) (2.45) 3.13
------- -------- ------- -------- --------
Total from investment operations ..................... (2.79) 4.32 (4.31) (2.46) 3.16
======= ======== ======= ======== ========
Dividends from net investment income ................. -- (0.04) -- (0.04) (0.02)
======= ======== ======= ======== ========
Capital share repurchases ............................ 0.35 -- -- -- --
======= ======== ======= ======== ========
Net asset value, end of period ....................... $ 9.34 $ 11.78 $ 7.50 $ 11.81 $ 14.31
======= ======== ======= ======== ========
Market value, end of period .......................... $ 7.06 $ 8.44 $ 5.50 $ 9.75 $ 11.38
======= ======== ======= ======== ========
TOTAL INVESTMENT RETURN BASED ON:
Net asset value, %(a) ............................. 20.7 57.6 (36.5) (17.2) 28.3
Market price, %(a) ................................ 16.3 54.2 (43.6) (13.9) 13.9
======= ======== ======= ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) .............. $56,150 $107,251 $68,289 $107,495 $130,224
Ratio of expenses to average net assets .............. 2.02 2.28 2.49 1.68 2.18
Ratio of net investment income (loss) to
average net assets ................................ (0.36) 0.37 0.24 (0.05) 0.26
Portfolio turnover rate, % ........................... 94.8 90.8 111.9 102.6 44.4
- ----------
(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.
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, 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
12
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, arrangement, understanding or relationship
concerning the transfer or the voting of any such securities, joint ventures,
loan or option arrangements, puts or calls, guarantees of loans, guarantees
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 shareholders 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, 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 400 Bellevue Parkway, Wilmington, DE 19809 (telephone
number (302) 791-4764). 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 five registered investment companies,
with combined assets of approximately $482 million. On August 1, 2000, Robert
Fleming Holdings, Ltd., the parent company of JFIMI, was acquired by The Chase
Manhattan Corporation. On December 31, 2000, The Chase Manhattan Corporation
merged with J.P. Morgan & Co. Incorporated. As a result of this merger, JFIMI
became part of a global asset management group which will operate under the name
JPMorgan Fleming Asset Management and has approximately $608 billion under
management as of March 31, 2001.
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.
13
U.S. SHAREHOLDERS. It is anticipated that shareholders (other than
tax-exempt persons) who are citizens and/or residents of the U.S., 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 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 a portion 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 U.S. 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, 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
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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 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, extend or terminate
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.
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