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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number: -811-05749
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THE CHINA FUND, INC.
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(Exact name of registrant as specified in charter)
225 FRANKLIN STREET
BOSTON, MA 02110
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(Address of principal executive offices)(Zip code)
(Name and Address of Agent for Service) Copy to:
Mary Moran Zeven Leonard B. Mackey, Jr., Esq.
Secretary Clifford Chance U.S. LLP
The China Fund, Inc. 31 West 52nd Street
225 Franklin Street New York, New York 10019
Boston, MA 02110
Registrant's telephone number, including area code: (888) 246-2255
Date of fiscal year end: October 31
Date of reporting period: January 31, 2005
Item 1. Schedule of Investments
THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS
JANUARY 31, 2005 (UNAUDITED)
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NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE (a)
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COMMON STOCK AND OTHER EQUITY INTERESTS
CHINA - SHENZHEN "B" SHARES
INDUSTRIALS -- (3.4%)
China International Marine Containers (Group) Co., Ltd. ............ 3,908,395 $ 8,969,323
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TOTAL CHINA - SHENZHEN "B" SHARES -- (COST $2,735,768) .... 3.4% 8,969,323
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HONG KONG
CONSUMER DISCRETIONARY -- (4.8%)
China Travel International Investment Hong Kong, Ltd. .............. 10,000,000 3,173,097
Fu JI Food & Catering Services* .................................... 1,160,000 1,070,776
Nanjing Dahe Outdoor Media Co., Ltd.*+ ............................. 37,500,000 1,826,935
TCL International Holdings, Ltd. ................................... 32,318,000 6,670,810
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12,741,618
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CONSUMER STAPLES -- (8.0%)
Chaoda Modern Agriculture (Holdings) Ltd. .......................... 34,089,900 13,767,163
Li Ning Co. Ltd.* .................................................. 11,400,000 5,371,189
Sino Golf Holdings, Ltd. ........................................... 11,735,000 1,820,441
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20,958,793
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HEALTH CARE -- (5.0%)
China Shineway Pharmaceutical Group Ltd.* .......................... 3,576,000 1,994,320
Golden Meditech Co., Ltd. .......................................... 27,900,000 6,402,733
Hengan International Group Co. Ltd. ................................ 3,600,000 2,215,399
Natural Beauty Bio-Technology, Ltd. ................................ 32,780,000 2,437,503
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13,049,955
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INDUSTRIALS -- (5.4%)
Beiren Printing Machinery Holdings Ltd.+ ........................... 7,000,000 2,176,296
China Fire Safety Enterprise Group Holdings Ltd. ................... 50,380,000 4,069,180
Singamas Container Holdings Ltd. ................................... 3,000,000 1,826,935
TPV Technology, Ltd. ............................................... 9,968,000 6,134,193
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14,206,604
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INFORMATION TECHNOLOGY -- (2.3%)
Arcontech Corp. (a)* ............................................... 18,386,000 407,795
Solomon Systech Ltd. ............................................... 20,698,000 5,638,914
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6,046,709
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MATERIALS -- (6.8%)
Asia Aluminum Holdings Ltd. ........................................ 23,250,000 2,354,823
Asia Zirconium Ltd. ................................................ 13,196,000 1,590,297
China Rare Earth Holdings, Ltd. .................................... 15,254,000 1,877,427
Fountain Set (Holdings), Ltd. ...................................... 6,714,000 4,239,316
Ocean Grand Chemicals Holdings Ltd. ................................ 17,379,000 2,384,057
Zijin Mining Group Co., Ltd. ....................................... 12,400,000 5,444,907
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17,890,827
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TELECOMMUNICATIONS -- (5.0%)
China Netcom Group Corp. (Hong Kong) Ltd.* ......................... 4,253,000 6,106,911
Comba Telecom Systems Holdings Ltd. ................................ 16,118,000 7,077,500
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See Notes to Schedule of Investments.
THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JANUARY 31, 2005 (UNAUDITED)
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NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE (a)
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13,184,411
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UTILITIES -- (3.1%)
Xinao Gas Holdings, Ltd.* ........................................... 13,976,000 8,063,129
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TOTAL HONG KONG -- (COST $76,337,452) ........................... 40.4% 106,142,046
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HONG KONG - "H" SHARES
CONSUMER DISCRETIONARY -- (3.0%)
Weichai Power Co. Ltd. .............................................. 2,536,000 7,949,436
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ENERGY -- (1.7%)
Yanzhou Coal Mining Co. ............................................. 3,146,000 4,456,862
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INDUSTRIALS -- (7.1%)
BYD Co., Ltd ........................................................ 3,225,000 9,819,774
Guangshen Railway Co., Ltd. ......................................... 4,042,000 1,619,401
Sinotrans Limited ................................................... 12,835,000 4,196,085
Weiqiao Textile Co. Ltd. ............................................ 1,854,500 2,817,432
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18,452,692
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UTILITIES -- (6.2%)
Anhui Expressway Co., Ltd. .......................................... 13,938,000 7,817,839
Shenzhen Expressway Co., Ltd. ....................................... 21,494,000 8,473,650
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16,291,489
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TOTAL HONG KONG - "H" SHARES -- (COST $27,576,339) .............. 18.0% 47,150,479
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TOTAL HONG KONG (INCLUDING "H" SHARES) -- (COST $103,913,791) ... 58.4% 153,292,525
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TAIWAN
CONSUMER DISCRETIONARY -- (6.4%)
Merry Electronics Co., Ltd. ......................................... 3,012,016 6,830,398
Synnex Technologies International, Corp. ............................ 5,165,604 7,321,329
Taiwan FamilyMart Co., Ltd. ......................................... 1,567,231 2,542,123
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16,693,850
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FINANCIALS -- (3.4%)
Cathay Financial Holding Co., Ltd. .................................. 2,331,000 4,588,583
Fubon Financial Holdings Co., Ltd. .................................. 4,453,952 4,460,966
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9,049,549
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INDUSTRIALS -- (5.9%)
Cheng Shin Rubber Industry Co., Ltd. ................................ 3,805,974 4,627,105
Chicony Electronics Co., Ltd. ....................................... 2,404,152 2,052,048
ET Internet Technology Corp.* ....................................... 7,136,000 3,506,192
Eva Airways Corp.* .................................................. 11,300,000 5,409,764
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15,595,109
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INFORMATION TECHNOLOGY -- (6.1%)
Data Systems Consulting Co., Ltd. ................................... 4,237,987 2,549,466
Soft-World International Corp. ...................................... 933,457 1,778,713
Taiwan Green Point Enterprises Co., Ltd. ............................ 2,155,749 6,280,529
See Notes to Schedule of Investments.
THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JANUARY 31, 2005 (UNAUDITED)
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NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE (a)
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Tripod Technology Corp. ............................... 2,778,413 3,780,392
Wintek Corp. .......................................... 1,421,104 1,499,432
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15,888,532
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MATERIALS -- (1.9%)
China Metal Products Co., Ltd. ........................ 2,974,714 3,148,044
Yieh United Steel Corp. ............................... 3,500,000 1,708,661
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4,856,705
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TOTAL TAIWAN -- (COST $45,965,732) ................ 23.7% 62,083,745
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UNITED STATES - "N" SHARES
CONSUMER DISCRETIONARY -- (0.2%)
Chindex International, Inc.* .......................... 69,987 552,897
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TOTAL UNITED STATES - "N" SHARES -- (COST $686,196) 0.2% 552,897
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TOTAL COMMON STOCK AND OTHER EQUITY INTERESTS
-- (COST $153,301,487) .......................... 85.7% 224,898,490
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WARRANTS
CONSUMER DISCRETIONARY -- (0.0%)(d)
Chindex International, expiring 3/31/09*,#,(c)......... 2,160 7,361
Chindex International, expiring 5/31/09*,#,(c)......... 3,240 11,370
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TOTAL WARRANTS (COST $24,461)...................... 0.0%(d) 18,731
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DIRECT INVESTMENTS
FINANCIALS -- (1.1%)
Captive Finance, Ltd., (acquired 5/24/02) (b)*+ ....... 2,000,000 3,045,000
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INFORMATION TECHNOLOGY -- (8.5%)
CDW Holding Ltd., (acquired 1/28/05) (b)* ............. 60,000,000 18,643,499
Global e-Business Services (BVI) Ltd., (acquired
6/18/04)(b)* ........................................ 40,000 3,034,049
teco Optronics Corp., (acquired 4/26/04) (b)* ......... 1,861,710 592,715
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22,270,263
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TOTAL DIRECT INVESTMENTS -- (COST $8,411,189) ...... 9.6% 25,315,263
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TOTAL INVESTMENTS -- (Cost $161,737,137**) ....................... 95.3% 250,232,484
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OTHER ASSETS AND LIABILITIES ..................................... 4.7% 12,222,314
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NET ASSETS ....................................................... 100.0% $262,454,798
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See Notes to Schedule of Investments.
NOTES TO SCHEDULE OF INVESTMENTS
* Denotes non-income producing security
# Illiquid security. Some restrictions may apply to the resale of this
security due to limited trading volume.
(a) Portfolio securities listed on recognized United States or foreign
securities exchanges are valued at the last quoted sales price in the
principal market where they are traded. Listed securities with no such
sales price and unlisted securities are valued at the mean between the
current bid and asked prices, if any, of two brokers. Short-term
investments having maturities of sixty days or less are valued at
amortized cost (original purchase cost as adjusted for amortization of
premium or accretion of discount) which when combined with accrued
interest approximates market value. Securities for which market
quotations are readily available are valued at current market value.
Securities for which market quotations are not readily available are
valued in good faith at fair value using methods determined by the
Board of Directors. Direct Investments not traded on an exchange are
valued at fair value as determined by the Board of Directors based on
advice from the Investment Manager and Direct Investment Manager. The
Direct Investment's original cost is considered to be fair value unless
the Board of Directors, based on such advice, concludes there has been
a material change of a long-term nature and sufficient reliable
information is available to revalue these investments.
The China Fund, Inc.'s (the "Fund") investments in China companies
involve certain risks not typically associated with investments in
securities of U.S. companies or the U.S. Government, including risks
relating to (1) social, economic and political uncertainty; (2) price
volatility, lesser liquidity and smaller market capitalization of
securities markets in which securities of China companies trade; (3)
currency exchange fluctuations, currency blockage and higher rates of
inflation; (4) controls on foreign investment and limitations on
repatriation of invested capital and on the Fund's ability to exchange
local currencies for U.S. dollars; (5) governmental involvement in and
control over the economy; (6) risk of nationalization or expropriation
of assets; (7) the nature of the smaller, less seasoned and newly
organized China companies, particularly in China; and (8) the absence
of uniform accounting, auditing and financial reporting standards,
practices and disclosure requirements and less government supervision
and regulation.
(b) Direct investments are generally restricted as to resale and do not
have a readily available resale market. On the date of acquisition of
each direct investment, there were no market quotations on similar
securities, and such investments were therefore initially valued at
acquisition cost. The procedures applied by the Board of Directors in
arriving at its estimate of value of securities without readily
available market values comply with the Fund's policies for valuing
Direct Investments at original cost unless the Board of Directors,
based on advice from the Direct Investment Manager, concludes that
there has been a material change of a long-term nature and sufficient
reliable information is available to revalue these investments.
Determination of fair values involves subjective judgment and, because
of the inherent uncertainty of valuation, the Board of Directors'
estimated values may differ significantly from the values that would
have been used had a ready market for the securities existed, and the
differences could be material.
(c) Denotes a restricted security. At January 31, 2005, The China Fund,
Inc. owned the following securities which were restricted as to public
resale and not registered under the Securities Act of 1933. The Fund
has various registration rights with respect to these securities. The
securities are valued at fair value (See note (a) above).
DATE OF
DESCRIPTION ACQUISITION SHARES COST FAIR VALUE
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Chindex International,
Warrants, expiring 3/31/09 11/10/04 2,160 $ 9,633 $ 7,360
Chindex International,
Warrants, expiring 5/31/09 11/10/04 3,240 14,828 11,370
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$24,461 $ 18,731
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(d) Amount represents less than 0.1% of net assets.
+ Affiliated Issuer, as defined in the 1940 Act, includes issuers in
which the Fund held 5% or more of the outstanding securities.
** At January 31, 2005, aggregate gross unrealized appreciation for all
securities for which there was an excess of value over financial
reporting cost was $95,617,211 and aggregate gross unrealized
depreciation for all securities for which there was an excess of
financial reporting cost over value was $7,121,864 and net appreciation
for financial reporting purposes was $88,495,347. At January 31, 2005,
aggregate cost for financial reporting purposes was $161,737,137.
ITEM 2. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers
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 this Form N-Q that includes
the disclosure required by this paragraph based on their evaluation of
the 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 (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 last fiscal
quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
ITEM 3. EXHIBITS.
The certification required by Rule 30a-2 of the 1940 Act is attached as an
exhibit to this filing.
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.
THE CHINA FUND, INC.
By: /s/ Gary L. French
Gary L. French
President and Chief Executive Officer
Date: April 1, 2005
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: /s/ Gary L. French
Gary L. French
President and Chief Executive Officer
Date: April 1, 2005
By: /s/ Ann M. Carpenter
Ann M. Carpenter
Treasurer and Chief Financial Officer
Date: April 1, 2005