UNITED STATES
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: July 31, 2005
ITEM 1. SCHEDULE OF INVESTMENTS.
THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS
JULY 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 -- (1.9%)
China International Marine Containers (Group) Co., Ltd............ 4,754,190 $ 4,842,760
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TOTAL CHINA - SHENZHEN "B" SHARES -- (COST $1,683,886) 1.9% 4,842,760
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HONG KONG
CONSUMER DISCRETIONARY -- (3.7%)
China Travel International Investment Hong Kong, Ltd.............. 10,000,000 3,118,911
Fu JI Food & Catering Services.................................... 2,844,000 2,542,176
Nanjing Dahe Outdoor Media Co., Ltd.*+............................ 37,500,000 1,012,842
TCL Multimedia Technology Holdings Ltd............................ 15,988,000 2,961,064
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9,634,993
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CONSUMER STAPLES -- (7.4%)
Chaoda Modern Agriculture (Holdings) Ltd.......................... 34,089,900 13,372,629
Li Ning Co. Ltd................................................... 11,400,000 4,838,492
Sino Golf Holdings, Ltd........................................... 10,303,000 967,337
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19,178,458
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HEALTH CARE -- (3.4%)
China Shineway Pharmaceutical Group Ltd.*......................... 4,435,000 1,483,058
Golden Meditech Co., Ltd.......................................... 27,900,000 4,844,279
Natural Beauty Bio-Technology, Ltd................................ 32,780,000 2,445,278
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8,772,615
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INDUSTRIALS-- (6.9%)
Beiren Printing Machinery Holdings Ltd.+ ......................... 7,000,000 1,958,161
China Fire Safety Enterprise Group Holdings Ltd................... 50,380,000 4,470,936
Semiconductor Manufacturing International Co.*.................... 22,035,000 4,676,148
TPV Technology, Ltd............................................... 9,968,000 6,538,369
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17,643,614
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INFORMATION TECHNOLOGY -- (2.7%)
Arcontech Corp. (c)*.............................................. 18,386,000 236,472
Solomon Systech Ltd............................................... 20,698,000 6,588,625
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6,825,097
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MATERIALS -- (6.5%)
Asia Aluminum Holdings Ltd........................................ 23,250,000 2,631,460
Asia Zirconium Ltd................................................ 13,196,000 1,425,650
China Rare Earth Holdings, Ltd.................................... 15,254,000 1,765,702
Fountain Set (Holdings), Ltd...................................... 6,714,000 3,324,553
Ocean Grand Chemicals Holdings Ltd................................ 17,379,000 2,414,014
Zijin Mining Group Co., Ltd....................................... 24,800,000 5,262,921
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16,824,300
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TELECOMMUNICATIONS -- (4.7%)
China Netcom Group Corp. (Hong Kong) Ltd.......................... 4,253,000 6,481,939
Comba Telecom Systems Holdings Ltd................................ 16,118,000 5,700,791
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12,182,730
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See Notes to Schedule of Investments.
THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JULY 31, 2005 (UNAUDITED)
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NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE(a)
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UTILITIES-- (4.3%)
Xinao Gas Holdings, Ltd........................................... 13,976,000 11,054,758
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TOTAL HONG KONG-- (COST $75,947,949) 39.6% 102,116,565
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HONG KONG- "H" SHARES
CONSUMER DISCRETIONARY-- (2.0%)
Weichai Power Co. Ltd............................................. 2,192,000 5,286,072
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ENERGY--(2.5%)
China Shenhua Energy Co. Ltd.*.................................... 4,536,500 4,813,556
Yanzhou Coal Mining Co............................................ 1,887,600 1,529,473
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6,343,029
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INDUSTRIALS-- (5.5%)
BYD Co., Ltd...................................................... 3,225,000 6,657,267
China Oilfield Services Ltd....................................... 9,546,000 3,621,885
Sinotrans Ltd..................................................... 12,835,000 3,961,853
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14,241,005
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UTILITIES-- (7.0%)
Anhui Expressway Co., Ltd......................................... 13,938,000 9,680,225
Shenzhen Expressway Co., Ltd...................................... 21,494,000 8,293,345
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17,973,570
TOTAL HONG KONG- "H" SHARES -- (COST $30,041,747) 17.0% 43,843,676
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TOTAL HONG KONG (INCLUDING "H" SHARES)-- (COST
$105,989,696) 56.6% 145,960,241
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SINGAPORE
INDUSTRIALS-- (1.2%)
Bio-Treat Technology Ltd.......................................... 6,389,000 2,980,482
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TOTAL SINGAPORE -- (COST $2,354,033) 1.2% 2,980,482
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TAIWAN
CONSUMER DISCRETIONARY-- (6.9%)
Merry Electronics Co., Ltd........................................ 3,012,016 7,683,618
Synnex Technologies International, Corp........................... 5,165,604 7,463,949
Taiwan FamilyMart Co., Ltd........................................ 1,645,592 2,659,178
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17,806,745
FINANCIALS-- (3.5%)
Cathay Financial Holding Co., Ltd................................. 2,331,000 4,659,074
Fubon Financial Holdings Co., Ltd................................. 4,453,952 4,360,317
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9,019,391
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INDUSTRIALS-- (3.7%)
Cheng Shin Rubber Industry Co., Ltd............................... 3,805,974 4,245,447
Chicony Electronics Co., Ltd...................................... 2,697,367 2,522,169
Waffer Technology Co. Ltd......................................... 2,090,000 2,708,409
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9,476,025
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See Notes to Schedule of Investments.
THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JULY 31, 2005 (UNAUDITED)
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NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE(a)
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INFORMATION TECHNOLOGY -- (10.4%)
Data Systems Consulting Co., Ltd.................................. 4,237,987 3,803,151
Radiant Opto-Electronics Corp..................................... 1,021,000 3,331,786
Taiwan Green Point Enterprises Co., Ltd........................... 2,155,749 8,117,034
Tripod Technology Corp............................................ 3,334,095 6,716,313
Wintek Corp....................................................... 2,908,209 4,836,369
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26,804,653
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MATERIALS-- (0.5%)
Yieh United Steel Corp............................................ 3,500,000 1,419,987
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TOTAL TAIWAN-- (COST $39,102,383) 25.0% 64,526,801
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UNITED STATES - "N" SHARES
CONSUMER DISCRETIONARY -- (0.1%)
Chindex International, Inc.*...................................... 69,987 330,339
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TOTAL UNITED STATES - "N" SHARES-- (COST $686,196) 0.1% 330,339
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TOTAL COMMON STOCK AND OTHER EQUITY INTERESTS
-- (COST $149,816,194) 84.8% 218,640,623
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DEPOSITORY RECEIPTS
UNITED STATES - "N" SHARES
TELECOMMUNICATIONS --(1.4%)
China Techfaith Wireless Communication Technology Ltd.*........... 197,700 3,693,036
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TOTAL UNITED STATES - "N" SHARES-- (COST $3,245,843) 1.4% 3,693,036
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UNITED STATES
CONSUMER DISCRETIONARY -- (1.3%)
The9 Ltd.*........................................................ 146,571 3,347,682
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TOTAL UNITED STATES -- (COST $3,450,131) 1.3% 3,347,682
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TOTAL UNITED STATES -- (COST $6,695,974) 2.7% 7,040,718
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TOTAL DEPOSITORY RECEIPTS -- (COST
$6,695,974) 2.7% 7,040,718
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RIGHTS
TAIWAN
-- (0.0%)(e)
Taiwan Green Point Enterprises Co., Ltd.*......................... 2,155,749 122,770
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TOTAL TAIWAN -- (COST $0) 0.0% 122,770
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TOTAL RIGHTS -- (COST $0) 0.0%(e) 122,770
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ACCESS PRODUCTS
WARRANTS -- (2.9%)
Shanghai Airlines Co. Access Product 144A,(d)..................... 7,350,000 3,101,700
Shenergy Co. Ltd. Access Product 144A,(d)......................... 4,500,000 4,315,500
See Notes to Schedule of Investments.
THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JULY 31, 2005 (UNAUDITED)
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NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE(a)
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7,417,200
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TOTAL ACCESS PRODUCTS -- (COST $7,398,280) 2.9% 7,417,200
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DIRECT INVESTMENTS
FINANCIAL -- (1.2%)
Captive Finance, Ltd., (acquired 5/24/02) (b)*+.................. 2,000,000 3,045,000
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INFORMATION TECHNOLOGY -- (5.8%)
CDW Holding Ltd., (acquired 1/26/05)+............................ 60,000,000 11,796,484
Global e-Business Services (BVI) Ltd., (acquired 6/18/04)
(b)*........................................................... 40,000 3,043,727
teco Optronics Corp., (acquired 4/26/04)(b)*..................... 1,861,710 150,000
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14,990,211
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TOTAL DIRECT INVESTMENTS -- (COST $8,411,189) 7.0% 18,035,211
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TOTAL INVESTMENTS--(Cost $172,321,637**) 97.4% 251,256,522
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OTHER ASSETS AND LIABILITIES 2.6% 6,667,188
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NET ASSETS 100.0% $257,923,710
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See Notes to Schedule of Investments.
NOTES TO SCHEDULE OF INVESTMENTS
* Denotes non-income producing security
(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) Security valued at fair value using methods determined in good faith by or
at the direction of the Trustees (see note (a) above).
(d) Warrants issued by Citigroup Global Markets Holdings
(e) 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 July 31, 2005, aggregate gross unrealized appreciation for all
securities for which there was an excess of value over financial reporting
cost was $88,799,243 and aggregate gross unrealized depreciation for all
securities for which there was an excess of financial reporting cost over
value was $9,864,358 and net appreciation for financial reporting purposes
was $78,934,885. At July 31, 2005, aggregate cost for financial reporting
purposes was $172,321,637.
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: September 28, 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: September 28, 2005
By: /s/ William C. Cox
William C. Cox
Treasurer and Chief Financial Officer
Date: September 23, 2005