N-Q 1 d481216dnq.htm THE CHINA FUND, INC. The China Fund, Inc.

 

 

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

 

 

THE CHINA FUND, INC.

(Exact name of registrant as specified in charter)

 

 

c/o STATE STREET BANK AND TRUST COMPANY

2 AVENUE DE LAFAYETTE

P.O. BOX 5049

BOSTON, MA 02206-5049

(Address of principal executive offices)(Zip code)

 

 

 

(Name and Address of Agent for Service)   Copy to:

Tracie A. Coop

Secretary

The China Fund, Inc.

4 Copley Place, 5th Floor

Boston, MA 02116

  

Leonard B. Mackey, Jr., Esq.

Clifford Chance U.S. LLP

31 West 52nd Street

New York, New York 10019

 

 

Registrant’s telephone number, including area code: (888) 246-2255

Date of fiscal year end: October 31

Date of reporting period: January 31, 2013

 

 

 

Item 1. Schedule of Investments.

THE CHINA FUND, INC.

SCHEDULE OF INVESTMENTS

January 31, 2013 (Unaudited)

 

 

 

 

Name of Issuer and Title of Issue

    Shares     Value (Note A)  

COMMON STOCK AND OTHER EQUITY INTERESTS

     

CHINA — “A” SHARES

     

IT Services — (5.4%)

     

HAND Enterprise Solutions Co., Ltd. #

      6,369,715      $ 20,290,740   
    

 

 

  

TOTAL CHINA — “A” SHARES — (Cost $1,793,493)

      5.4 %      20,290,740   
  

 

 

    

 

 

  

HONG KONG

     

Commercial Services & Supplies — (4.2%)

     

China Everbright International, Ltd. †(2)

      26,730,000        14,819,270   

Fook Woo Group Holdings, Ltd. *#(1)(2)

      25,314,000        1,119,475   
    

 

 

  
       15,938,745   
    

 

 

  

Communications Equipment — (1.1%)

     

Comba Telecom Systems Holdings, Ltd. (2)

      10,958,500        3,970,241   
    

 

 

  

Diversified Financial Services — (1.5%)

     

Hong Kong Exchanges and Clearing, Ltd. (2)

      306,500        5,820,933   
    

 

 

  

Electronic Equipment & Instruments — (3.1%)

     

Digital China Holdings, Ltd. †(2)

      7,256,000        11,731,518   
    

 

 

  

Gas Utilities — (2.8%)

     

Enn Energy Holdings, Ltd. (2)

      2,204,000        10,613,573   
    

 

 

  

Health Care Equipment & Supplies — (1.2%)

     

Golden Meditech Holdings, Ltd. #

      35,040,000        4,382,231   
    

 

 

  

Hotels, Restaurants & Leisure — (0.0%)

     

FU JI Food and Catering Services Holdings Ltd. *^#(1)

      5,462,000        —     
    

 

 

  

Industrial Conglomerates — (1.3%)

     

Hutchison Whampoa, Ltd.

      453,000        5,063,802   
    

 

 

  

Internet Software & Services — (2.4%)

     

Tencent Holdings, Ltd.

      262,100        9,171,413   
    

 

 

  

Metals & Mining — (1.0%)

     

Tiangong International Co., Ltd. †

      12,616,000        3,887,577   
    

 

 

  

Oil, Gas & Consumable Fuels — (4.0%)

     

CNOOC, Ltd.

      4,228,000        8,743,770   

See notes to schedule of investments.

 

1

THE CHINA FUND, INC.

SCHEDULE OF INVESTMENTS (continued)

January 31, 2013 (Unaudited)

 

 

 

 

Name of Issuer and Title of Issue

    Shares     Value (Note A)  

COMMON STOCK AND OTHER EQUITY INTERESTS (continued)

     

HONG KONG (continued)

     

Oil, Gas & Consumable Fuels (continued)

     

Kunlun Energy Co., Ltd.

      3,122,000      $ 6,496,745   
    

 

 

  
       15,240,515   
    

 

 

  

Personal Products — (1.3%)

     

Natural Beauty Bio-Technology, Ltd. #

      47,710,000        4,859,548   
    

 

 

  

Pharmaceuticals — (2.7%)

     

China Medical System Holdings, Ltd.

      11,669,300        10,020,247   
    

 

 

  

Real Estate Management & Development — (8.6%)

     

China Resources Land, Ltd. (2)

      3,436,000        10,432,862   

Sun Hung Kai Properties, Ltd. (2)

      1,331,000        21,828,534   
    

 

 

  
       32,261,396   
    

 

 

  

Semiconductors & Semiconductor Equipment — (1.1%)

     

ASM Pacific Technology, Ltd. (2)

      323,600        4,084,610   
    

 

 

  

Specialty Retail — (1.1%)

     

Zhongsheng Group Holdings, Ltd. (2)

      2,662,000        3,981,305   
    

 

 

  

Transportation Infrastructure — (2.2%)

     

Shenzhen International Holdings, Ltd. (2)

      60,947,500        8,093,801   
    

 

 

  

Wireless Telecommunication Services — (3.5%)

     

China Mobile, Ltd.

      1,191,000        13,098,459   
    

 

 

  

TOTAL HONG KONG — (Cost $138,373,914)

      43.1 %      162,219,914   
  

 

 

    

 

 

  

HONG KONG — “H” SHARES

     

Automobiles — (2.1%)

     

Qingling Motors Co., Ltd. #

      28,960,000        7,990,459   
    

 

 

  

Commercial Banks — (7.8%)

     

Bank of China, Ltd.

      13,762,000        6,795,787   

Industrial & Commercial Bank of China (2)

      29,829,000        22,460,061   
    

 

 

  
       29,255,848   
    

 

 

  

Health Care Providers & Services — (1.0%)

     

Sinopharm Group Co., Ltd. (2)

      1,212,000        3,719,109   
    

 

 

  

See notes to schedule of investments.

 

2

THE CHINA FUND, INC.

SCHEDULE OF INVESTMENTS (continued)

January 31, 2013 (Unaudited)

 

 

 

 

Name of Issuer and Title of Issue

    Shares     Value (Note A)  

COMMON STOCK AND OTHER EQUITY INTERESTS (continued)

     

HONG KONG — “H” SHARES (continued)

     

Machinery — (2.2%)

     

CSR Corp., Ltd. (2)

      9,930,000      $ 8,181,059   
    

 

 

  

Oil, Gas & Consumable Fuels — (1.0%)

     

China Coal Energy Co., Ltd. (2)

      3,405,000        3,801,845   
    

 

 

  

TOTAL HONG KONG — “H” SHARES — (Cost $50,294,317)

      14.1 %      52,948,320   
  

 

 

    

 

 

  

TOTAL HONG KONG (INCLUDING “H” SHARES) — (Cost $188,668,231)

      57.2 %      215,168,234   
  

 

 

    

 

 

  

TAIWAN

     

Computers & Peripherals — (1.4%)

     

Advantech Co., Ltd.

      1,284,000        5,370,565   
    

 

 

  

Electronic Equipment & Instruments — (3.2%)

     

Delta Electronics, Inc.

      1,615,000        5,852,539   

WT Microelectronics Co., Ltd. #

      4,819,530        6,137,346   
    

 

 

  
       11,989,885   
    

 

 

  

Food Products — (1.7%)

     

Uni-President Enterprises Corp.

      3,667,508        6,434,116   
    

 

 

  
     Face Amount        

Insurance — (1.7%)

     

Taiwan Life Insurance Co., Ltd., 4.0%, 12/28/14 #@ (1)

    $ 200,000,000        6,477,849   
    

 

 

  
     Shares        

Machinery — (2.0%)

     

Hiwin Technologies Corp. (2)

      942,750        7,567,160   
    

 

 

  

Multiline Retail — (2.3%)

     

Taiwan FamilyMart Co., Ltd. #

      1,942,652        8,783,433   
    

 

 

  

Real Estate Management & Development — (2.6%)

     

Ruentex Development Co., Ltd.

      4,416,301        9,722,099   
    

 

 

  

Semiconductors & Semiconductor Equipment — (7.2%)

     

MediaTek Inc.

      559,000        6,115,083   

See notes to schedule of investments.

 

3

THE CHINA FUND, INC.

SCHEDULE OF INVESTMENTS (continued)

January 31, 2013 (Unaudited)

 

 

 

 

Name of Issuer and Title of Issue

    Shares     Value (Note A)  

COMMON STOCK AND OTHER EQUITY INTERESTS (continued)

     

TAIWAN (continued)

     

Semiconductors & Semiconductor Equipment (continued)

     

Taiwan Semiconductor Manufacturing Co., Ltd.

      6,084,000      $ 20,914,297   
    

 

 

  
       27,029,380   
    

 

 

  

TOTAL TAIWAN — (Cost $58,734,458)

      22.1 %      83,374,487   
  

 

 

    

 

 

  

TOTAL COMMON STOCK AND OTHER EQUITY INTERESTS — (Cost $249,196,182)

      84.7 %      318,833,461   
  

 

 

    

 

 

  

EQUITY-LINKED SECURITIES

     

Beverages — (1.5%)

     

Kweichow Moutai Co., Ltd. Access Product (expiration 10/26/15) 144A,*(3)

      204,751        5,833,253   
    

 

 

  

Household Durables — (2.3%)

     

Gree Electric Appliances, Inc. Access Product (expiration 01/17/14) 144A,*(4)

      1,838,546        8,569,463   
    

 

 

  

Insurance — (3.3%)

     

Ping An Insurance (Group) Company of China, Ltd. Access Product (expiration 01/17/14) 144A,*(4)

      209,900        1,611,822   

Ping An Insurance (Group) Company of China, Ltd. Access Product (expiration 04/01/13) 144A,*(3)

      1,418,047        10,889,183   
    

 

 

  
       12,501,005   
    

 

 

  

Machinery — (1.0%)

     

Zhengzhou Yutong Bus Co., Ltd. Access Product (expiration 01/20/15) 144A,*(4)

      825,469        3,616,380   
    

 

 

  

TOTAL EQUITY-LINKED SECURITIES — (Cost $27,995,035)

      8.1 %      30,520,101   
  

 

 

    

 

 

  

DIRECT INVESTMENTS(5)

     

Food Products — (0.0%)

     

Zong Su Foods (acquired 09/21/10) *^#(1)(6)

      2,677        —     
    

 

 

  

See notes to schedule of investments.

 

4

THE CHINA FUND, INC.

SCHEDULE OF INVESTMENTS (continued)

January 31, 2013 (Unaudited)

 

 

 

 

Name of Issuer and Title of Issue

    Face Amount     Value (Note A)  

DIRECT INVESTMENTS (continued)

     

Health Care Providers & Services — (2.9%)

     

Golden Meditech Holdings, Ltd. 15.0%, 05/16/13 (acquired 08/27/10) #(1)(6)

    HKD 58,222,500      $ 5,554,164   

Golden Meditech Holdings, Ltd. 15.0%, 11/16/13 (acquired 08/27/10) #(1)(6)

    HKD 58,222,500        5,554,164   
    

 

 

  

TOTAL DIRECT INVESTMENTS — (Cost $26,114,452)

      2.9 %      11,108,328   
  

 

 

    

 

 

  
     Shares        

COLLATERAL FOR SECURITIES ON LOAN

     

State Street Navigator Securities Lending Prime Portfolio

      35,983,626        35,983,626   
    

 

 

  

TOTAL COLLATERAL FOR SECURITIES ON LOAN — (Cost $35,983,626)

      9.6 %      35,983,626   
  

 

 

    

 

 

  
     Face Amount        

SHORT TERM INVESTMENTS

     

Repurchase Agreement with State Street Bank and Trust, 0.01%, 02/01/13 (7)

    $ 4,085,000        4,085,000   
    

 

 

  

TOTAL SHORT TERM INVESTMENTS — (Cost $4,085,000)

      1.1 %      4,085,000   
  

 

 

    

 

 

  

TOTAL INVESTMENTS** — (Cost $343,374,295)

      106.4 %      400,530,516   
  

 

 

    

 

 

  

OTHER ASSETS AND LIABILITIES

      (6.4 )%      (23,976,486 ) 
  

 

 

    

 

 

  

NET ASSETS

      100.0 %    $ 376,554,030   
  

 

 

    

 

 

  

Notes to Schedule of Investments

 

* Denotes non-income producing security.
^ Security is deemed worthless.
# Illiquid security.
† Affiliated issuer (see Note B).
@ The bond contains a feature or option to be converted into common stock.
(1) Security valued at fair value using methods determined in good faith by or at the direction of the Board of Directors.
(2) A portion or all of the security was held on loan. As of January 31, 2013, the market value of the securities loaned was $56,589,834.
(3) Equity linked securities issued by Credit Lyonnais (CLSA).
(4) Equity linked securities issued by Citigroup Global Markets Holdings.

See notes to schedule of investments.

 

5

THE CHINA FUND, INC.

SCHEDULE OF INVESTMENTS (continued)

January 31, 2013 (Unaudited)

 

 

 

 

(5) Direct investments are generally restricted as to resale and do not have a readily available resale market. On the date of acquisition of the direct investments, there were no market quotations on similar securities, and the investments were therefore initially valued in good faith by the Board of Directors at fair market value. The securities continue to be valued in good faith by the Board of Directors at fair market value as of January 31, 2013.
(6) The securities contain a put option which allows the Fund to sell the investments for a value at least equal to the purchase price under certain circumstances.
(7) Repurchase agreement, dated 01/31/13, due 02/01/13 with repurchase proceeds of $4,085,000 is collateralized by US Treasury Bond, 4.5% due 02/15/36 with a market value of $4,167,930.

144A Securities restricted for resale to Qualified Institutional Buyers in the United States or to non-US persons. At January 31, 2013, these restricted securities amounted to $30,520,101, which represented 8.11% of total net assets.

 

** At January 31, 2013, aggregate cost for federal tax purposes was $343,374,295. Gross unrealized appreciation of investments was $93,938,796 which gross unrealized depreciation of investments was $36,782,575, resulting in net unrealized appreciation of investments of $57,156,221.

See notes to schedule of investments.

 

6

NOTE A – Portfolio securities listed on recognized United States or foreign security 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, from 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 not readily available are valued at fair value in good faith by or at the direction of the Board of Directors considering relevant factors, data and information including, if relevant, the market value of freely tradable securities of the same class in the principal market on which such securities are normally traded. Direct Investments are valued at fair value as determined by or at the direction of the Board of Directors based on financial and other information supplied by the Direct Investment Manager regarding each Direct Investment. Forward currency contracts are valued at the current cost of offsetting the contract. Equity linked securities are valued at fair value primarily based on the value(s) of the underlying security (or securities), which normally follows the same methodology as the valuation of securities listed on recognized exchanges.

The Fund’s investments in Chinese 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 Chinese 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 Chinese 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.

Fair Value Measurement

The Fund utilizes various methods to measure the fair value of most of its investments on a recurring basis. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are as follows:

 

•  

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access.

 

•  

Level 2 – Observable inputs other than quoted prices included in level 1 that are observable for the asset or liability either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, process for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates, and similar data.

 

•  

Level 3 – Unobservable inputs for the asset or liability to the extent that relevant observable inputs are not available, representing the Fund’s own assumptions about the assumptions that a market participant would use in valuing the asset or liability, and that would be based on the best information available.

The availability of observable inputs used to measure fair value can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining the fair value is greatest for instruments categorized in level 3.

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in is determined based on the lowest level input that is significant to the measurement in its entirety.

 

7

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the measurement in its entirety.

The following is a summary of the inputs used as of January 31, 2013 in valuing the Fund’s investments carried at value:

 

ASSETS VALUATION INPUT

Description

    Level 1      Level 2      Level 3     Total  

COMMON STOCK AND OTHER EQUITY INTERESTS

           

Automobiles

    $ 7,990,459       $ —         $ —        $ 7,990,459   

Commercial Banks

      29,255,848         —           —          29,255,848   

Commercial Services & Supplies

      14,819,270         —           1,119,475        15,938,745   

Communications Equipment

      3,970,241         —           —          3,970,241   

Computers & Peripherals

      5,370,565         —           —          5,370,565   

Diversified Financial Services

      5,820,933         —           —          5,820,933   

Electronic Equipment & Instruments

      23,721,403         —           —          23,721,403   

Food Products

      6,434,116         —           —          6,434,116   

Gas Utilities

      10,613,573         —           —          10,613,573   

Health Care Equipment & Supplies

      4,382,231         —           —          4,382,231   

Health Care Providers & Services

      3,719,109         —           —          3,719,109   

Hotels, Restaurants & Leisure

      —           —           —   ^      —     

IT Services

      20,290,740         —           —          20,290,740   

Industrial Conglomerates

      5,063,802         —           —          5,063,802   

Insurance

      —           6,477,849         —          6,477,849   

Internet Software & Services

      9,171,413         —           —          9,171,413   

Machinery

      15,748,219         —           —          15,748,219   

Metals & Mining

      3,887,577         —           —          3,887,577   

Multiline Retail

      8,783,433         —           —          8,783,433   

Oil, Gas & Consumable Fuels

      19,042,360         —           —          19,042,360   

Personal Products

      4,859,548         —           —          4,859,548   

Pharmaceuticals

      10,020,247         —           —          10,020,247   

Real Estate Management & Development

      41,983,495         —           —          41,983,495   

Semiconductors & Semiconductor Equipment

      31,113,990         —           —          31,113,990   

Specialty Retail

      3,981,305         —           —          3,981,305   

Transportation Infrastructure

      8,093,801         —           —          8,093,801   

Wireless Telecommunication Services

      13,098,459         —           —          13,098,459   
  

 

 

     

 

 

     

 

 

    

 

 

  

TOTAL COMMON STOCK AND OTHER EQUITY INTERESTS

      311,236,137         6,477,849         1,119,475        318,833,461   
  

 

 

     

 

 

     

 

 

    

 

 

  

EQUITY-LINKED SECURITIES

           

Beverages

      —           5,833,253         —          5,833,253   

Household Durables

      —           8,569,463         —          8,569,463   

Insurance

      —           12,501,005         —          12,501,005   

Machinery

      —           3,616,380         —          3,616,380   
  

 

 

     

 

 

     

 

 

    

 

 

  

TOTAL EQUITY-LINKED SECURITIES

      —           30,520,101         —          30,520,101   
  

 

 

     

 

 

     

 

 

    

 

 

  

DIRECT INVESTMENTS

           

Food Products

      —           —           —   ^      —     

Health Care Providers & Services

      —           —           11,108,328        11,108,328   
  

 

 

     

 

 

     

 

 

    

 

 

  

TOTAL DIRECT INVESTMENTS

      —           —           11,108,328        11,108,328   
  

 

 

     

 

 

     

 

 

    

 

 

  

COLLATERAL FOR SECURITIES ON LOAN

      35,983,626         —           —          35,983,626   

SHORT TERM INVESTMENTS UNITED STATES

      —           4,085,000         —          4,085,000   
  

 

 

     

 

 

     

 

 

    

 

 

  

TOTAL INVESTMENTS

    $ 347,219,763       $ 41,082,950       $ 12,227,803      $ 400,530,516   
  

 

 

     

 

 

     

 

 

    

 

 

  

 

^ Security is deemed worthless.

See notes to schedule of investments.

 

8

The Fund’s policy is to disclose transfers between levels based on valuations at the end of the reporting period. As of January 31, 2013, there were no transfers between Levels.

The following is a reconciliation of the fair valuations using significant unobservable inputs (Level 3) for the fund during the three months ended January 31, 2013:

 

Investments in Securities

   Balance as
of
October 31,
2012		     Purchases     Sales     Realized
Gain/(Loss)		     Change in
Unrealized
Appreciation
(Depreciation)		     Transfers
in to
Level 3		     Transfers
out of
Level 3		     Balance as
of
January 31,
2013		     Change in
Unrealized
Appreciation
(Depreciation)
on
Investments
Held at
January 31,
2013		  

COMMON STOCK AND OTHER EQUITY INTERESTS

                  

Commercial Services & Supplies

   $ 2,237,417      $ —        $ —        $ —        $ (1,117,942 )    $ —        $ —        $ 1,119,475      $ (1,117,942 ) 

Food Products

     —          —          (1,027,971 )      (8,259,965 )      9,287,936        —          —          —          —     
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
    2,237,417        —          (1,027,971 )      (8,259,965 )      8,169,994        —          —          1,119,475        (1,117,942 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

DIRECT INVESTMENTS

                  

Health Care Providers & Services

     25,868,089        16,671,627        (31,693,299 )      11,166,654        (10,904,743 )      —          —        $ 11,108,328        (10,904,743 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  $ 28,105,506      $ 16,671,627      $ (32,721,270 )    $ 2,906,689      $ (2,734,749 )    $ —        $ —        $ 12,227,803      $ (12,022,685 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

The following table presents additional information about valuation techniques and inputs used for investments that are measured at fair value and categorized within Level 3 for the fund during the three months ended January 31, 2013:

 

Asset Category

    Fair Value at
January 31,
2013		      Valuation
Technique(s)		    Unobservable
Input		    Range     Impact to
Valuation
from an
Increase
in Input

Common Stock

              

Commercial Services & Supplies

    $ 1,119,475       Discount to
last trade		    Discount
rate		      25 %    Decrease
in value
  

 

 

             

Direct Investments

              

Health Care Providers & Services

    $ 11,108,328       Manager
valuation		    Discount
rate		      50 %    Decrease
in value
  

 

 

             
   $ 12,227,803              
  

 

 

             

Direct Investments: The Fund may invest up to 25% of the net proceeds from its offering of its outstanding common stock in direct investments; however, the Board of Directors of the Fund has suspended additional investments in direct investments. Direct investments are generally restricted and do not have a readily available resale market. Because of the absence of any public trading market for these investments, the Fund may take longer to liquidate this position than would be the case for publicly traded securities. Although this security may be resold in privately negotiated transactions, the price on these sales could be less than those originally paid by the Fund. Issuers whose securities are not publicly traded may not be subject to public disclosure and other investor protections requirements applicable to publicly traded securities. The values of these securities held at January 31, 2013 were $11,108,328 or 2.9% of the Fund’s net assets. The table below details the acquisition date, cost, and values of the Fund’s direct investments as determined by the Board of Directors of the Fund. The Fund does not have the right to demand that such securities be registered.

 

Security

    Acquisition
Date		      Cost      Value  

Golden Meditech Holdings, Ltd.

      08/27/2010       $ 11,114,418       $ 11,108,328   

Zong Su Foods

      09/21/2010         15,000,034         —     
     

 

 

     

 

 

  
      $ 26,114,452       $ 11,108,328   
     

 

 

     

 

 

  

NOTE B – INVESTMENTS IN NON-CONTROLLED AFFILIATES*:

 

Name of Issuer

    Balance of
Shares/Par
Held
October 31,
2012		      Gross
Purchases
and
Additions		      Gross Sales
and
Reductions		      Balance of
Shares/Par
Held
January 31,
2013		      Value
January 31,
2013		      Income
From
Non-
Controlled
Affiliates		      Gain / (Loss)
Realized on
Sale of Shares
as of
January 31,
2013		  

CDW Holding, Ltd.

      28,454,000         —           28,454,000         —         $ —         $ —         $ 1,569,757   

China Bright

      14,665,617         —           14,665,617         —           —           —           11,166,654   

China Everbright International, Ltd.

      26,730,000         —           —           26,730,000         14,819,270         —           —     

Digital China Holdings, Ltd.

      9,603,000         —           2,347,000         7,256,000         11,731,518         —           (615,162 ) 

Tiangong International Co., Ltd.

      —           12,616,000         —           12,616,000         3,887,577         —           —     
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
     79,452,617         12,616,000         45,466,617         46,602,000       $ 30,438,365       $ —         $ 12,121,249   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

* Affiliated issuers, as defined in the 1940 Act as amended, include issuers in which the Fund held 5% or more of the outstanding voting securities.

 

9

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(a) of the 1940 Act (17 CFR 270.30a-2(a)) 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/ Adam Phua

  Adam Phua
  President of The China Fund, Inc.
Date:   March 19, 2013

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/ Adam Phua

  Adam Phua
  President of The China Fund, Inc.
Date:   March 19, 2013
By:  

/s/ Laura F. Dell

  Laura F. Dell
  Treasurer of The China Fund, Inc.
Date:  

March 19, 2013