AMP Capital China Growth Fund ARSN 122 303 744 SYDNEY … · AMP Capital China Growth Fund ARSN 122 303 744 ... First Annual Report ... in Indonesia before joining Colonial

AMP Capital China Growth Fund ARSN 122 303 744 Level 12, 50 Bridge Street SYDNEY NSW 2000 www.ampcapital.com.au/china

To: Manager Company Announcements Australian Securities Exchange 20 Bridge Street SYDNEY NSW 2000

Date: 27 March 2008

ASX Code: AGF

Announcement Number: 12/08

Subject: AMP Capital China Growth Fund - First Annual Report

AMP Capital Investors Limited, the responsible entity for the AMP Capital China Growth Fund, is pleased to release the Annual Report for the AMP Capital China Growth Fund for the period from 3 November 2006 (date of registration) to 31 December 2007.

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AMP CapitalChina Growth FundGENERAL PURPOSE FINANCIAL REPORT For the period from 3 November 2006 (date of registration) to 31 December 2007

ARSN 122 303 744

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p:03 Chairman’s report

p:04 The Board

p:06 Corporate governance

p:10 Directors report

p:12 Auditor’s independence declaration

p:13 Income statement

p:14 Balance sheet

p:15 Statement of changes in net assets attributable to unitholders

p:16 Cash fl ow statement

p:17 Notes to the fi nancial statements

p:30 Directors’ declaration

p:31 Independent auditor’s report

p:33 Investor information

BackCover

Corporate directory

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AMP Capital Investors Limited ABN 59 001 777 591AFSL 232497

50 Bridge Street, Sydney NSW 2000PO Box R227, Royal Exchange Sydney NSW 1225

T: 02 9257 5000

Issue date: March 2008For

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Dear Investor,

I am pleased to present the first annual report for the AMP Capital China Growth Fund (‘the Fund’) for the period from 3 November 2006 to 31 December 2007.

This initial 14 month period has marked an exciting time for the Fund, with several significant milestones achieved.

The Fund successfully raised $280 million through an initial public offering in December 2006. As of 4 January 2007 sufficient funds were remitted to China to secure the full amount of the US$200 million Qualified Foreign Institutional Investor (QFII) quota granted to AMP Capital Investors Limited (“AMP Capital Investors”). By 10 January 2007, more than 90 per cent of the funds managed had been invested into Chinese equities.

The Fund’s investment objectives are to achieve long-term capital growth with a focus on investing in the China A shares and to outperform the S&P/CITIC 300 Total Return Index (expressed in Australian dollars). The Fund’s initial $280 million grew to $562 million by 31 December 2007, solely through strong investment performance. Overall, the Fund performed well in the first three quarters with moderate returns in the fourth quarter.

During the period the China A share market grew from A$1.4 trillion to A$4.9 trillion and is now more than six times larger than the China H share market in Hong Kong. The China A share market continues to represent a broader selection of securities across a greater diversification of sectors than the China H share market.

AMP Capital Investors remains the only Australian company to be granted a QFII Licence to invest in China’s largest share market, providing a rare opportunity for Australian investors. In 2007 AMP Capital Investors continued its commitment to expanding its presence in China, by establishing an on-the-ground research capability in Beijing.

On behalf of the board of AMP Capital Investors Limited, I thank you for your support of the AMP Capital China Growth Fund.

Jack RitchChairmanAMP Capital Investors LimitedResponsible entity of the AMP Capital China Growth Fund

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The AMP Capital Investors Limited Board (the Board) is responsible for the long-term growth and profitability of AMP Capital Investors Limited, and currently consists of six directors, three of whom are independent.

AMP Capital Investors Limited’s Directors are:

Jack H. Ritch (Chairman)

J. Brian Clark

Craig W. Dunn

Stephen J.P. Dunne

Dr Stephen A. Grenville

Donald R. Luke

Dr Nora L. Scheinkestel.

The fees and expenses of the independent directors are paid by us in our own right and will not be reimbursed out of the Fund. Any fees and expenses associated with the Board carrying out the functions which would otherwise be carried out by a compliance committee, including any fees paid to, or insurance premiums in respect of, external directors appointed to satisfy the requirements of Chapter 5C of the Corporations Act, will be paid by us and will not be reimbursed out of the Fund.

Jack H. Ritch BEc, Dip T&CP, FAII, FAPI

Non-executive Chairman

Jack was appointed Non-executive Chairman of AMP Capital Investors Limited, in April 2004. Prior to this, Jack held the role of Managing Director and Chairman of the company from 1999 to 2004. From 1987 to 1999, Jack held the position of Director, Property, during which time he was responsible for managing AMP’s $9 billion property portfolio. Jack has held a variety of other positions within the AMP Group since he joined AMP in 1958.

Jack was Non-executive Chairman of the Principal Healthcare Group in February 2007. He is a director of Australia Pacific Airports Corporation Limited (owner of Melbourne and Launceston airports), and Galileo Japan Funds Management Limited. His other activities include Chairman of the Powerhouse Foundation and Chairman of the Advisory Council of the Centre for Real Estate Research, University of New South Wales.

J. Brian Clark DSc Non-executive Director

Brian was appointed to the AMP Limited Board on 1 January 2008. He was appointed to the AMP Capital Investors Limited Board and its Audit Committee on 8 February 2008.

Brian spent ten years in a variety of senior executive roles at Vodafone internationally, most recently in a United Kingdom-based role as group human resources director. He was also chief executive officer of Vodafone’s Australian business as well as CEO of the Asia

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Pacific region, based in Tokyo. He was a member of the company’s global executive committee throughout his tenure with the company. Before joining Vodafone, Brian spent three years as CEO of Telkom SA Ltd, the state-owned telephone company in South Africa, where he oversaw the partial privatisation of the company and a total reengineering of its operations.

Brian has degrees in physics and mathematics and a PhD, all from the University of Pretoria, and has completed the Advanced Management Program at the Harvard Business School. Brian was a director of National Australia Bank Limited from 2001 to 2004, and of various Vodafone Group PLC subsidiary and separately listed boards. Brian has been a director of Boral Limited since May 2007 and a member of the Advisory Board of Merrill Lynch in Australia since November 2007.

Craig W. Dunn BCom, ACA

Managing Director and Chief Executive Officer, AMP Limited

Craig was appointed Managing Director and Chief Executive Officer of AMP Limited on 1 January 2008. He was appointed to the AMP Capital Investors Limited Board on 1 January 2008, having previously acted as an Alternate Director to Andrew Mohl. He has been a Director of AMP Life Limited since April 2002.

Prior to becoming CEO, Craig was Managing Director, AMP Financial Services from 2002 to 2007. He joined AMP in January 2000, and has held a number of senior roles, including Managing Director of AMP Banking, and Director, Office of the CEO. Before joining AMP, Craig was CEO of a Malaysia-based insurance company, a joint venture of Colonial Limited. He worked for KPMG throughout Europe and in Indonesia before joining Colonial. Craig is currently an Advisory Board Member with the Government’s Financial Literacy Foundation and a former chairman of the Investment and Financial Services Association (IFSA).

Stephen J. P. Dunne CFA, BBus (Mgt & Mktg), MBA, ASIA

Managing Director, AMP Capital Investors

Stephen was appointed to his current position in April 2004. Stephen joined the funds management arm of AMP in 1994 as Head of Product Development. Stephen’s previous role in the business was as Director of Client Services and Marketing, Asia Pacific. His previous experience incorporates eight years at National Mutual Funds Management in various managerial roles, including Manager, Investment Products and Research.

Stephen is a Chartered Financial Analyst, holds a Masters of Business from Monash University and is an Associate of the Securities Institute of Australia.

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Dr Stephen A. Grenville AO, PhD

Non-executive Director

Stephen has a PhD in Economics and 20 years experience at the Reserve Bank, where he was Deputy Governor and Chair of the Audit Committee. His experience covers the full range of central bank activities, including high-level management of both the international and domestic money market departments. He also worked at the Organisation for Economic Co-operation and Development in Paris, with the International Monetary Fund in Jakarta, and with the Department of Foreign Affairs. Since leaving the Reserve Bank at the end of 2001, Stephen has worked as an economic consultant for the World Bank, the IMF Independent Evaluation Office and AusAID.

Stephen was appointed to the AMP Capital Investors Limited Board as a Non-Executive Director in February 2004.

Donald R. Luke BSc, BA (Econ) Non-executive Director

Donald was appointed as a Non-Executive Director of AMP Capital Investors in July 2007. He is a member of the company’s Audit Committee.

Donald was Chief Executive Officer of the Queensland-based superannuation fund SunSuper for ten years until May 2007. He began his career in financial services with AMP in the early 1970s as a Graduate Recruit, working across a broad range of areas including actuarial, superannuation management and life insurance administration. He is currently the Executive Director of the Community Services Commission for the Anglican Church in South East Queensland. He is also a Director of Splash Aquatics Pty Ltd and the Bible Society.

Dr Nora L. Scheinkestel LLB (Hons), PhD, FAICD

Non-executive Director

Nora was appointed to the AMP Limited Board in September 2003. She is chairman of the Nomination Committee and a member of the Audit Committee. She has been a Director of AMP Capital Investors Limited since February 2004 and chairs its Audit Committee.

Nora was formerly a senior banking executive in international and project financing. She held positions with CRA Limited, Macquarie Bank, Chase AMP and Deutsche Bank where, as head of the Project Finance Unit, she was responsible for the development and financing of major projects in Australasia and South East Asia. Nora’s current consulting practice assists government, corporate and institutional clients in areas such as corporate governance and project and structured finance. Nora is an experienced company director having served as chairman and non-executive director of companies in a wide range of industry sectors and in the public, government and private spheres. Previous directorships include North Limited, IOOF Funds Management, Medical Benefits Fund of Australia Limited and chairman and director of various energy and water utilities, in addition to those listed below.

Nora is also an Associate Professor at the Melbourne Business School at Melbourne University. In 2003, she was awarded a centenary medal for services to Australian society in business leadership. Nora has been a director of PaperlinX since 2000 and of Orica Limited since August 2006. Nora was a director of Newcrest Mining (2000 to 2007), Mayne Group Limited (2005) and of Mayne Pharma Limited (2005 to 2007).

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Framework

The Corporations Act, the ASX Listing Rules, the Fund’s Constitution, the Fund’s Compliance Plan and the general law regulate the workings of the Fund and the essential practices, responsibilities and duties of AMP Capital Investors and its officers.

AMP Capital Investors must exercise its functions diligently and in the best interests of investors. AMP Capital Investors and its officers manage the assets of the Fund and are responsible for all investment decisions with absolute discretion as to the exercise of AMP Capital Investors’ powers in accordance with the Fund’s Constitution and the Corporations Act. AMP Capital Investors also undertakes the administrative functions of the Fund including preparing the Fund’s financial statements, preparation of notices and reports to members and monitoring of registry services.

As a wholly-owned subsidiary of AMP Limited, AMP Capital Investors and its management and officers are subject to the AMP Group’s corporate governance practices and policies. For more information on the AMP Group’s corporate governance practices, visit the corporate governance section of its website, www.ampgroup.com.

ASX corporate governance standards

Listed entities are required to disclose in their annual reports the extent of their compliance with the Corporate Governance Principles and Best Practice Recommendations (the Standards), released by the ASX Corporate Governance Council and to explain why they have not adopted a Standard, if they consider it inappropriate in their particular circumstances.

The Standards encompass matters such as board composition, committees and compliance procedures and are designed to maximise corporate performance and accountability in the interests of investors and the broader economy. The corporate governance statement outlining the corporate governance regime that applies to funds managed by AMP Capital Investors, including the AMP Capital China Growth Fund, and information about AMP Capital Investors’ compliance with the Standards is set out below.

Principle 1 – Lay solid foundations for management and oversight

The AMP Capital Investors Board (the Board) is responsible to investors in the Fund for the overall governance and performance of the Fund and is also responsible for:

overseeing AMP Capital Investors and its various businesses, including the management of the Fund, approval of AMP Capital Investors’ strategy and management’s performance

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objectives, consistent with those of the AMP Group

ensuring effective corporate governance

input into, and approval of, the AMP Capital Investors’ risk management and internal compliance systems, internal controls and codes of conduct and ongoing compliance monitoring

regulatory and legal compliance

monitoring management performance

approving financial and other reporting, and

the AMP Capital Investors’ committee structures and operations.

The Board meets regularly and additionally as required to carry out its functions. When conducting AMP Capital Investors Board business, Directors have a duty to question, request information, raise issues of concern and fully canvass all aspects of relevant issues. Directors are required to monitor and disclose any actual or potential conflicts of interest which may arise and any related party transactions.

The Managing Director of AMP Capital Investors (the equivalent of a Chief Executive Officer for AMP Capital Investors) is responsible for the overall management and performance of AMP Capital Investors. This includes managing its business and operations in accordance with the strategy, plans and policies approved by the Board and consistent with those of the AMP Group.

The responsibilities of the Board and management have been formalised in a Corporate Governance Charter. In addition, in relation to matters specific to the operation of the Fund, these are largely set out in the Fund’s Constitution and the Compliance Plan.

Each non-executive director, the AMP Capital Investors Managing Director and the AMP Capital Investors Chief Financial Officer have received a letter of appointment, specific to AMP Capital Investors, which sets out the key terms and conditions of their appointment.

Principle 2 – Structure the Board to add value

Details of the composition of the Board and profiles of the Directors are set out in this section. Each of Jack Ritch, Nora Scheinkestel, Stephen Grenville, Don Luke and Brian Clark has been appointed for a term of three years. None of the other Directors has been appointed for a fixed term.

The Chairman of the Board, Jack Ritch, was employed in an executive capacity as Managing Director by AMP Capital Investors until April 2004 and is therefore not ‘independent’ under the guidelines set out in the ASX recommendations. He was appointed as Chairman and non-executive director in April 2004 for a term of three years.

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Nora Scheinkestel and Brian Clark are also non-executive directors of AMP Limited, the ultimate parent entity of AMP Capital Investors.

Craig Dunn is Managing Director and Chief Executive Officer of AMP Limited, the ultimate parent entity of AMP Capital Investors.

The Board is satisfied that the business interests or other relationships described above do not materially interfere with the independent judgement and ability of any of these directors to act in the best interests of AMP Capital Investors or holders of Units.

AMP Capital Investors has a majority of non-executive directors on its Board and, though not all meet the definition of independence in the ASX recommendations, the Board is satisfied as to the independence of its non-executive directors. Further, AMP Capital Investors is a wholly owned subsidiary of AMP Limited, which is an ASX listed public company, and its Board’s performance in relation to the Fund and otherwise is reviewed periodically both by the Board itself and by the Nomination Committee of AMP Limited.

Each Director is required to provide AMP Capital Investors with details of their directorships of other entities.

The size of the Board is determined with reference to the AMP Capital Investors Constitution, which states that there will be a minimum of three and a maximum of twelve directors.

The Board does not have a Nomination Committee. The AMP Limited Nomination Committee must approve all non-executive appointments to the AMP Capital Investors Board. The terms of reference of the AMP Limited Nomination Committee are available on the corporate governance section of the AMP Group website, www.ampgroup.com.

Nominations of new directors are considered having regard to the Board’s current composition and the need for independence. Nominated directors are assessed against a range of criteria, including experience, professional skills, personal qualities and their capacity to commit to the Board’s activities.

AMP Capital Investors Directors are entitled to obtain independent professional advice at the expense of AMP Capital Investors.

Principle 3 – Promote ethical and responsible decision making

AMP Capital Investors’ directors, officers and employees are subject to the AMP Limited Employee Code of Conduct (Code), which sets out the expected standards of personal and corporate behaviour. It requires employees to report suspected violations of the Code to an appropriate manager. No action is to be taken

against any employee who reports a suspected violation in good faith. The Code reinforces an already strong ethical culture for the benefit of all stakeholders. The Code is available online at www.ampgroup.com.

All AMP Group directors and employees, including those of AMP Capital Investors, are subject to the AMP Limited Trading Policy. This policy aims to ensure that they do not use any information for personal advantage or to the detriment of the AMP Group or its clients. They must also comply with relevant ‘insider trading’ legislation, principally in relation to securities issued by the AMP Group. Trading in Units in the Fund is covered by this policy. The AMP Limited’s Trading Policy is available online at www.ampgroup.com.

Additionally, Australian based employees of AMP Capital Investors (including those involved in the management and operations of the Fund) are subject to the AMP Capital Investors Personal Trading Policy. This policy adopts the AMP Limited Trading Policy and includes provisions specific to AMP Capital Investors’ business. It is designed to place paramount importance on the interests of clients and investors.

Principle 4 – Safeguard integrity in financial reporting

The Board has approved terms of reference setting out the roles and responsibilities of the AMP Capital Audit Committee, which are based on the AMP Limited Audit Committee’s terms of reference. The AMP Limited Audit Committee’s terms of reference are available online at www.ampgroup.com.

The functions of the AMP Capital Audit Committee include:

recommending the AMP Capital Investors entity and registered managed investment scheme financial statements to the Board for approval

reviewing the AMP Capital Investors group yearly and half-yearly financial statements

reporting to the Board on the Committee’s considerations of non-financial matters, including risk and compliance, audit and tax matters, and

receiving reports from the AMP Group internal auditor and from the external auditor.

The AMP Capital Audit Committee is supported by the Management Accounts Committee. The Board has adopted terms of reference for the Management Accounts Committee. The objective of these terms of reference is to provide the Board and the AMP Capital Audit Committee with assurance of the objectivity, reliability, integrity and legal compliance of the relevant financial reporting processes.

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The Management Accounts Committee will report to the AMP Capital Audit Committee on the financial reports of the Fund. The AMP Capital Audit Committee will then recommend to the Board the adoption of the financial reports of the Fund as representing a true and fair view of its financial position and operational results and in accordance with relevant accounting standards.

As a subsidiary of AMP Limited, AMP Capital Investors’ activities are also monitored by the AMP Limited Audit Committee. AMP Capital Investors is required to report at least quarterly to this committee.

The AMP Capital Audit Committee is constituted by external, non-executive members and currently comprises:

Nora Scheinkestel (Chairman)

Don Luke

Brian Clark

Stephen Grenville, and

Richard Grellman (also Chairman of the AMP Limited Audit Committee).

The Management Accounts Committee includes an AMP Limited executive, and currently comprises:

Paul Leaming (Chairman of the Committee and Chief Financial Officer, AMP Limited)

Gerald Naughton (Head of AMP Funds Team, AMP Capital Investors), and

Henry Capra (Chief Financial Officer, AMP Capital Investors).

The Board appoints the external auditors of the Fund and maintains the direct relationship with them.

Principle 5 – Make timely and balanced disclosure

The Board’s policy is to ensure that announcements are made in a timely manner, are factual and are expressed in a clear and objective manner allowing investors to assess the impact of the information when making investment decisions, and do not omit material information.

The Board has adopted policies and procedures in relation to compliance with the ASX Listing Rules having regard to the recommendations in the Standards. As a wholly-owned subsidiary of AMP Limited, AMP Capital Investors is also subject to the AMP Limited Market Disclosure Policy, which is available online at www.ampgroup.com.

Principle 6 – Respect the rights of investors

The cornerstone of AMP Capital Investors’ external communications policy is the delivery of timely and relevant information to investors and the investment community generally. AMP Capital Investors seeks to effectively manage its clients’ assets to enhance returns to investors. AMP Capital Investors believes that this approach

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will be positive for its business and therefore benefit AMP Limited’s shareholders. AMP Capital Investors manages assets on behalf of a number of clients and in a range of investment vehicles. The potential exists for AMP Capital Investors to be in a position where it might have a conflict of interest when dealing with various clients that invest in these different vehicles.

Principle 7 – Recognise and manage risk

The Board is responsible for ensuring appropriate measures are in place to manage risk in relation to all its operations and business including the Fund, in line with AMP Limited’s overall risk strategy and the Fund’s Compliance Plan. AMP Capital Investors has a risk policy in place, which enables the identification of risks, development of appropriate responses, and the monitoring of risks and controls. Risk and compliance information is reported regularly to the AMP Capital Audit Committee and Board.

Principle 8 – Encourage enhanced performance

The Chairman of the Board facilitates discussions of the performance of the Board, and the Board continues to seek opportunities for improvement. All non-executive director appointments and reappointments to the Board are approved by the AMP Limited Nomination Committee following a review by, and on the recommendation of, the AMP Limited Chief Executive Officer. AMP Capital Investors executive directors who are AMP Group employees are subject to performance review twice yearly as part of the AMP Group’s overall employee performance evaluation process.

Non-executive directors receive a range of relevant materials on appointment and are encouraged to access senior managers to request any information relevant to their decision-making. Management maintains regular contact with all members of the Board to ensure directors are kept abreast of developments. As part of the annual programme, non-executive directors participate in regular briefings on aspects of the business as well as updates on strategic initiatives. Non-executive directors are invited to meet with the AMP Limited board each year to gain a further understanding of group wide issues.

Principle 9 – Remunerate fairly and responsibly

The Fund is not responsible for the remuneration of AMP Capital Investors’ directors, officers or employees. Executive directors on the Board are remunerated by the AMP Group in accordance with its remuneration policies and procedures. Non-executive directors’ fees are set by the AMP Limited Nomination Committee, are payable by AMP Capital Investors in its personal capacity and are not payable by the Fund.

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Nora Scheinkestel’s and Brian Clark’s fees for acting as non-executive directors of AMP Capital Investors are payable in addition to the fees they are entitled to receive as non-executive directors of AMP Limited.

Neither AMP Capital Investors’ non-executive directors nor any AMP Group employee is entitled to receive any securities of the Fund or options over such securities as part of their remuneration.

The remuneration policies of AMP Capital Investors are approved by the AMP Limited Remuneration Committee, and administered by the AMP Capital Investors Remuneration Committee which reports both to the AMP Limited Remuneration Committee and the AMP Capital Investors Board.

Principle 10 – Recognise the legitimate interests of stakeholders

AMP Capital Investors is committed to fulfilling its responsibilities to stakeholders. As mentioned under Principle 6, AMP Capital Investors has adopted a Conflicts of Interest Charter to ensure that AMP Capital Investors can meet its responsibilities to clients in an efficient and responsible manner.

AMP Capital Investors takes its responsibilities as an investment manager seriously as an agent of shareholders in companies and as a steward of its clients’ assets. In order to exercise these responsibilities and to assist its clients in achieving the returns on their investments that they expect, AMP Capital Investors seeks high standards of transparency, corporate governance and social responsibility from the companies in which its funds invest.

Environmental, social and community relationships will be taken into account in making investment decisions where a company’s activity is found to fall short of appropriate standards, potentially jeopardising share price performance.

The AMP Limited Code of Conduct referred to under Principle 3 covers matters relevant to AMP Capital Investors and the Fund’s compliance with their obligations to stakeholders. This Code is available online at www.ampgroup.com.

Compliance plan

As required by the Corporations Act, we have prepared and lodged a Compliance Plan for the Fund with the Australian Securities and Investments Commission (ASIC). The Compliance Plan sets out the measures that we must apply to ensure compliance with the Corporations Act and the Fund’s Constitution.

As more than 50% of AMP Capital Investors’ directors are external, the Corporations Act does not require, and we do not currently propose, to appoint a separate Compliance Committee. In the absence of a Compliance Committee, it is the Board’s responsibility to ensure the adequacy of, and AMP Capital Investors’ compliance with, the Compliance Plan. The AMP Capital Audit Committee assists the Board by monitoring the extent to which AMP Capital Investors complies with the Compliance Plan and reporting its findings to the Board.

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The Directors of AMP Capital Investors Limited (ABN 59 001 777 591), the Responsible Entity of the AMP Capital China Growth Fund (‘the Fund’), present their report together with the financial report of the Fund and its Controlled Entity (‘Consolidated Entity’) for the period ended 31 December 2007.

Directors

The Directors of the Responsible Entity who, unless otherwise stated, have been in office at all times during and since the end of the period, and the period for which they are a director are:

Jack H. Ritch (Chairman)

Stephen J. P. Dunne

J. Brian Clark –Appointed on 8 February 2008

David C. Clarke –Resigned 23 March 2007

Craig W. Dunn –Resigned as Alternate Director for Andrew M. Mohl 31 December 2007Appointed as Director 1 January 2008

Stephen A. Grenville

Donald R. Luke –Appointed on 26 July 2007

Andrew M. Mohl –Resigned 31 December 2007

Nora L. Scheinkestel

Fund information

The Fund is an Australian registered scheme. AMP Capital Investors Limited, the Responsible Entity of the Fund, is incorporated and domiciled in Australia.

The registered office of the Responsible Entity is located at Level 24, 33 Alfred St, Sydney Cove, Sydney, NSW 2000.

Principal activity

The principal activity of the Fund during the period was the investment in China A shares, which are shares in companies listed on China’s Shanghai or Shenzhen stock exchanges. The funds are invested by the wholly-owned subsidiary, a company incorporated in Mauritius.

Distributions

Under the provisions of the Fund Constitution, the Fund has recognised a distribution of $37,919,857 during the period ended 31 December 2007. The distribution will be paid by 28 March 2008.

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Review and results of operations

The performance of the Fund, as represented by the result of its operations, was as follows:

Consolidated for the period 3 Nov 2006

to 31 Dec 2007$’000

Total investment income from ordinary activities

63,035

Changes in net assets attributable to unitholders

15,176

Significant changes in state of affairs

The Fund was registered on 3 November 2006, listed on the Australian Stock Exchange (ASX) on 18 December 2006 and the official quotation of securities occurred on 22 December 2006. As of 4 January 2007 sufficient funds had been remitted to China to secure the full amount of the USD$200 million Qualified Foreign Institutional Investor (QFII) quota granted to AMP Capital Investors Limited and from 10 January 2007, over 90 per cent of the funds managed under the QFII licence had been invested into Chinese equities.

Significant events after the balance date

Since 31 December 2007, there have been no matters or circumstances not otherwise dealt with in the Financial Report by the Responsible Entity that have significantly or may significantly affect the Fund, its operations, results of operations or state of affairs in future years.

Likely developments and expected results

Currently, there are no significant developments expected in respect of the Fund. The performance of the Fund in the future will be subject to movements in the underlying investment markets over time.

Environmental regulation and performance

The operations of the Fund are not subject to any particular or significant environmental regulations under a Commonwealth, State or Territory law.

Relevant information

Following is a list of relevant information required under the Corporations Act 2001:

Fees paid to the Responsible Entity – Refer to Note 14 to the Financial Statements

Units held by the Responsible Entity in the Fund – Refer to Note 14 to the Financial Statements

Interests in the Fund issued during the period – Refer to Note 9 to the Financial Statements

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Withdrawals from the Fund during the period – Refer to Note 9 to the Financial Statements

The value of Fund assets and basis of valuation – Refer to Balance Sheet and Note 1 respectively

The number of interests in the Fund as at 31 December 2007 – Refer to Note 9 to the Financial Statements

These notes have been prepared in accordance with ASIC Class Order 98/2395.

Indemnification and insurance of Directors, Officers and Auditors

Under its Constitution, AMP Capital Investors Limited will indemnify all directors, secretaries and executive officers of the company for certain liabilities for which they may be held personally liable. The Constitution provides for AMP Capital Investors Limited to pay an amount where:

a) the liability does not arise out of conduct involving lack of good faith; or

b) the liability is for reasonable legal costs and reasonable expenses incurred by the director or officer in defending proceedings in which judgement is given in their favour or in which they are acquitted.

Directors and officers of AMP Capital Investors Limited are covered by insurance policies of AMP Limited, as AMP Capital Investors Limited is a subsidiary of the AMP Group.

No indemnity is given by any member of the AMP Group to present or former employees (other than directors and officers) against liability incurred in their capacity as an employee unless the giving of the indemnity has been approved by the Board of AMP Limited. During or since the period ending 31 December 2007, no indemnities have been provided (other than directors and officers).

Directors and officers of AMP Capital Investors Limited are not indemnified out of the assets of the Scheme.

During or since the end of the period, AMP Group has paid or agreed to pay premiums in respect of a contract insuring all the Directors, secretaries and executive officers against certain liabilities as permitted by the Corporations Act. The insurance policy prohibits disclosure of the nature of the liability, the amount of the premium and the limit of liability.

The auditor of the AMP Capital China Growth Fund is in no way indemnified out of the assets of the AMP Capital China Growth Fund.

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Directors’ interests

Stephen J.P. Dunne has significant influence over an entity which has an interest in the Fund, details of which are disclosed in Note 14(b) of the financial statements.

Rounding of amounts

The Fund is a registered scheme of a kind referred to in Class Order 98/0100 issued by the Australian Securities & Investments Commission relating to the ‘rounding off’ of amounts in the directors’ report and financial report. Amounts in the directors’ report and financial report have been rounded to the nearest thousand dollars in accordance with that Class Order, unless otherwise indicated.

Auditors’ Independence Declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 4.

Signed in accordance with a resolution of the Directors of AMP Capital Investors Limited.

Director Director

Dated this 29th day of February 2008, Sydney

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FOR THE PERIOD 3 NOVEMBER 2006 TO 31 DECEMBER 2007

Consolidated Parent entity

Note

For the period 3 Nov 2006

to 31 Dec 2007 ($’000)


to 31 Dec 2007 ($’000)

INVESTMENT INCOME

Changes in fair value of investments held for trading 7,343 7,343

Realised gains on available for sale investments 52,116 –

Dividend income 3,841 146

Interest income 524 8,888

Foreign exchange gains/(losses) (789) (10,842)

Total investment income 63,035 5,535

EXPENSES

Management fees 14(c) 7,859 258

Administration expenses 100 14

Trading fees 191 –

Other expenses 876 553

Total operating expenses 9,026 825

Net profit attributable to unitholders before financing costs and tax expenses 54,009 4,710

Tax expense 913 –

Net profit attributable to unitholders after tax expenses and before financing costs 53,096 4,710

FINANCING COSTS

Distribution to unitholders 37,920 37,920

Change in net assets attributable to unitholders 15,176 (33,210)

EARNINGS PER UNIT (EPU)

EPU based on the weighted average number of ordinary units (calculated since formation)

– Basic earnings per unit 10 0.212

– Diluted earnings per unit 10 0.212

EPU based on the weighted average number of ordinary units (calculated since IPO)

– Basic earnings per unit 10 0.190

– Diluted earnings per unit 10 0.190

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AS AT 31 DECEMBER 2007


Note31 Dec 2007

($’000)31 Dec 2007

($’000)

ASSETS

Cash assets 15(a) 13,131 452

Receivables 3 7 2,196

Investments

– Held for trading 4(a) 14,382 14,382

– Available for sale 4(b) 582,239 –

Loan to subsidiary 14(d) – 96,758

Investment in subsidiary 5 – 159,797

Total assets 609,759 273,585

LIABILITIES

Payables 6 2,489 75

Distribution payable 7 37,920 37,920

Current tax 8 69 –

Deferred tax 8 7,547 –

Total liabilities excluding net assets attributable to unitholders 48,025 37,995

Net assets attributable to unitholders 9 561,734 235,590

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to 31 Dec 2007 ($’000)


to 31 Dec 2007 ($’000)

NET ASSETS ATTRIBUTABLE TO UNITHOLDERS

Opening balance – –

Revaluation of investments 306,005 –

Foreign currency translation reserve (28,247) –

Net income recognised directly in net assets attributable to unitholders 277,758 –

Net profit attributable to unitholders after tax expenses and before financing costs 53,096 4,710

Total income and expenses for the period 330,854 4,710

Units issued during the period 280,000 280,000

Costs of issue of units (11,200) (11,200)

Distribution to unitholders (37,920) (37,920)

230,880 230,880

Closing balance 561,734 235,590

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Note


to 31 Dec 2007 ($’000)


to 31 Dec 2007 ($’000)

CASH FLOWS FROM OPERATING ACTIVITIES

Bank interest received 521 405

Dividends received 3,841 146

Premium paid (330) (330)

Payments to suppliers (498) (234)

Management fees (5,418) (5,418)

Payments for purchases of financial instruments held for trading (20,074) (20,074)

Proceeds from sales of financial instruments held for trading 11,912 11,912

Net cash inflow from operating activities 15(b) (10,046) (13,593)

CASH FLOWS FROM INVESTING ACTIVITIES

Payments for acquisition of subsidiary – (159,797)

Payments for purchases of financial instruments available for sale (531,540) –

Proceeds from sales of financial instruments available for sale 286,214 –

Net cash inflow from investing activities (245,326) (159,797)

CASH FLOWS FROM FINANCING ACTIVITIES

Interest paid (359) (7)

Proceeds from issue of units 280,000 280,000

Costs of issue of units (11,200) (11,200)

Loan to subsidiary – (94,951)

Net cash inflow from financing activities 268,441 173,842

Net (decrease) / increase in cash assets held 13,069 452

Foreign exchange gain/(loss) 62 –

Cash assets at the beginning of the period – –

Cash assets at the end of the period 13,131 452

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The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all periods presented, unless otherwise stated in the following text.

The Fund was established on 3 November 2006 and the first reporting period runs from this date to 31 December 2007.

(a) Basis of Preparation

This general purpose financial report has been prepared in accordance with the Fund Constitution and the requirements of the Corporations Act 2001, which includes Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board and Australian Accounting Interpretations. Australian Accounting Standards include the Australian equivalents to International Financial Reporting Standards (AIFRS).

The financial report should be read in conjunction with any public announcement in respect of the Fund during the reporting period.

The financial report has been prepared on the basis of fair value measurement of assets and liabilities, except where otherwise stated.

The Balance Sheet presents assets and liabilities in decreasing order of liquidity and does not distinguish between current and non current items.

All of the Fund’s assets and liabilities are held for the purpose of being traded or are expected to be realised within one year, except for investments classified as available for sale which are expected to be held for periods longer than one year. Certain assets and liabilities may not be settled within 12 months, in particular trading securities and unitholder liabilities. Given the nature of the Fund, a reasonable estimate cannot be made of the amount of the balances, if any, that are unlikely to be settled within 12 months.

For the purpose of preparing the financial report, the 14 month period has been treated as a discrete reporting period.

(b) Statement of Compliance

The financial report complies with Australian Accounting Standards, which include AIFRS. The financial report also complies with International Financial Reporting Standards (IFRS).

Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2007 reporting

periods. The directors’ assessment of the impact of the new standards (to the extent relevant to the Fund) and interpretations is set out below:

AASB 7 “Financial Instruments: Disclosures”, AASB 101 “Presentation of Financial Statements” and AASB 2005-10 “Amendments to Australian Accounting Standards” [AASB 101, AASB 114, AASB 117, AASB 133, AASB 139, AASB 1, AASB 4, AASB1023 & AASB 1038]. AASB 7, AASB 101 and AASB 2005-10 are applicable to annual reporting periods beginning on or after 1 January 2007.

AASB 8 “Operating Segments”, AASB 2007 3 “Amendments to Australian Accounting Standards arising from AASB 8” [AASB 5, AASB 6, AASB 102, AASB 107, AASB 119, AASB 127, AASB 134, AASB 136, AASB 1023 & AASB 1038], AASB 2007 8 “Amendments to Australian Accounting Standards arising from AASB 101” and AASB 101 “Presentation of Financial Statements (Revised)” (effective for annual reporting periods beginning on or after 1 January 2009).

AASB 2007 4 “Amendments to Australian Accounting Standards arising from ED 151 and Other Amendments” [AASB 1, 2, 3, 4, 5, 6, 7, 102, 107, 108, 110, 112, 114, 116, 117, 118, 119, 120, 121, 127, 128, 129, 130, 131, 132, 133, 134, 136, 137, 138, 139, 141, 1023 & 1038], AASB 2007 7 “Amendments to Accounting Standards [AASB 1, AASB 2, AASB 4, AASB 5, AASB 107 & AASB 128] and Erratum: Proportionate Consolidation (effective for annual periods beginning on or after 1 July 2007), AASB 2007-9 “Amendments to Australian Accounting Standards arising from the Review of AAS’s 27, 29 and 31 [AASB 3, AASB 5, AASB 8, AASB 101, AASB 114, AASB 116, AASB 127 & AASB 137].

The Fund has not adopted these standards early. Application of these standards will not affect any of the amounts recognised in the financial statements, but will impact the type of information disclosed.

(c) Investments

The Fund’s investments are classified as financial instruments and are initially recognised at cost, being the fair value of the consideration given and including transaction costs, for available for sale assets.

Financial instruments held for trading, after initial recognition, are subsequently measured at fair value through the Income statement. Financial instruments held for trading are H Shares listed on the Hong Kong Stock Exchange.


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial instruments available for sale, after initial recognition, are subsequently measured at fair value with gains or losses being recognised as a separate component of net assets attributable to unitholders until the investment is realised, at which time the cumulative gain or loss previously reported in net assets attributable to unitholders is recognised in the income statement. Financial instruments available for sale are A Shares listed on the Shanghai and Shenzhen security markets.

The investment in the subsidiary is recorded at cost.

Listed equity securities

The fair value of a listed equity security is determined by reference to the “bid” price of the security, as quoted on its primary exchange on the day of valuation.

(d) Use of estimates

The Fund may make estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial period. Estimates are continually evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

(e) Investment income

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Fund and the income can be reliably measured. The following specific recognition criteria must also be met before income is recognised:

Dividend income

Dividends are recognised as income on the date the share is quoted ex-dividend.

Interest income

Interest income is recognised for all debt instruments using the effective interest rate method. This is the rate that discounts estimated future cash receipts through the expected life of the financial instrument, or a shorter period where appropriate, to the net carrying value of the amount of the financial instrument.

Changes in the fair value of investments

Changes in the fair value of investments are recognised as income and are determined as the difference between the fair value at period end or consideration received if sold during the period,

and the fair value as at the prior period end or cost if the investment was acquired during the period.

(f) Expenses

All expenses are recognised in the Income Statement on an accruals basis.

Performance fee

A performance fee of 20% of outperformance above the benchmark is payable quarterly in arrears on the final day of each quarter as a cash payment or by way of an issue of Units in the Fund to the Responsible Entity. These are accounted for on an accruals basis.

(g) Derecognition of financial instruments

Financial instruments are derecognised when the rights to receive cash flows from the financial assets have expired or been transferred and substantially all the risks and rewards of ownership have been transferred.

(h) Loan to related parties

The term of the loan with the parent company is for 10 years and is repayable on demand. Interest is payable at 9% per annum. Interest and Management fees payable by the subsidiary to the parent are capitalised into the loan on a quarterly basis.

(i) Cash and cash equivalents

For the purposes of the Cash Flow Statement, cash and cash equivalents include deposits held at call with a bank or financial institution with an original maturity date of three months or less. Cash and cash equivalents also include highly liquid investments which are readily convertible to cash on hand at the Responsible Entity’s option and which the Responsible Entity uses in its day to day management of the Fund’s cash requirements.

( j) Receivables

Receivables include amounts where settlement has not yet occurred, and include outstanding settlements on the sale of investments. Receivables are recognised and carried at their original amounts. Amounts are generally received within 30 days of being recorded as receivables. Amounts receivable that are outstanding at the balance date that are denominated in foreign currencies have been converted to local currency using the rates of exchange prevailing at the end of the period.

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(k) Payables

Payables are recognised for amounts to be paid in the future for goods and services received, whether or not billed to the Fund, and include outstanding settlements on the purchase of investments. Amounts are generally paid within 30 days of being recorded as payables. Amounts payable that are outstanding at the balance date that are denominated in foreign currencies have been converted to local currency using the rates of exchange prevailing at the end of the period.

(l) Income Tax

Under current legislation, the Fund is not subject to income tax in Australia since, under the terms of the Fund Constitution, the unitholders are presently entitled to the taxable income of the Fund. However, the consolidated entity is subject to withholding tax in China at 10% on interest, 5% on dividends and 10% on capital gains on ‘land rich’ investments under National PEOPLE’s Congress law. The subsidiary entity is subject to income tax at 3% in Mauritius on taxable income.

The current tax liability for the period is measured at the amount expected to be paid to the taxation authorities based on the current period’s taxable income. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be capitalised.

The deferred tax liabilities are recognised at the tax rates expected to apply to the year when the liabilities are settled, based on tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.

Deferred tax assets and tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.

(m) Distributable income

In accordance with the Fund Constitution, the Fund fully distributes its distributable income to unitholders each tax year. Distributions are payable at the end of each year. Such distributions are determined by reference to the taxable income of the Fund. Distributions are recognised in the Income Statement as finance costs attributable to unitholders.

Distributable income includes capital gains arising from the disposal of assets.

Distributable income does not include unrealised gains and losses on the net value of investments, accrued income not yet assessable and expenses provided for or accrued but not yet deductible, tax free or deferred income and realised capital losses which are retained to offset future realised capital gains.

(n) Foreign currency translation

(i) Functional and presentation currency

Items included in the Fund’s financial statements are measured using the currency of the primary economic environment in which it operates (the ‘functional currency’). For the subsidiary of the Fund this is the US dollar, which reflects the currency of the economy in which the subsidiary operates for capital and is regulated. The Fund’s presentation and functional currency is the Australian dollar.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translations at the year-end exchange rates of monetary assets and liabilities denominated in foreign currencies on the Balance Sheet are recognised in the Income Statement.

(o) Unit prices

Unit prices are determined in accordance with the Fund Constitution and are quoted on the Australian Securities Exchange (ASX).



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(p) Terms and conditions on units

Each unit issued confers upon the unitholder an equal interest in the Fund, and is of equal value. A unit does not confer any interest in any particular asset or investment of the Fund. Unitholders have various rights under the Constitution and the Corporations Act 2001, including the right to:

receive income distributions;

attend and vote at meetings of unitholders; and

participate in the termination and winding up of the Fund.

The rights, obligations and restrictions attached to each unit are identical in all respects.

(q) Goods and Services Tax

Responsible Entity fees and other expenses incurred by the Fund are recognised net of the amount of goods and services tax (GST) recoverable from the taxation authority as a reduced input tax credit (RITC). Payables and accruals are stated with the amount of GST included. The net amount of GST recoverable/payable from/to the Australian Taxation Office (ATO) is included as a receivable or payable in the Balance Sheet. Cash flows are included in the Cash Flow Statement on a gross basis. The GST components of cash flows arising from investing and financing activities which is recoverable from, or payable to, the ATO are classified as operating cash flows.

•

•

•

(r) Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of the Fund (‘parent entity’) as at reporting date and the results of all subsidiaries for the period. The Fund and its subsidiary are referred to in the Financial Report as the Consolidated Entity.

Subsidiaries are all those entities (including special purpose entities) over which the Fund has the power to govern the financial and operating policies so as to obtain benefits from their activities.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the parent entity. Subsidiaries are fully consolidated from the date on which control is transferred.

All transactions (including gains and losses) and balances between the parent entity and subsidiaries are eliminated. Accordingly policies of subsidiaries are consistent with the policies adopted by the consolidated entity.

(s) Rounding

The Fund is a registered scheme of a kind referred to in Class Order 98/0100 issued by the Australian Securities & Investments Commission relating to the ‘rounding off’ of amounts in the directors’ report and financial report. Amounts in the directors’ report and financial report have been rounded to the nearest thousand dollars in accordance with that Class Order, unless otherwise indicated.N

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2. AUDITOR’S REMUNERATION


2007 ($) 2007 ($)

Amounts paid or payable to Ernst & Young, the auditor of the Fund, for:

– Audit and review of the financial statements of the Fund 43,078 35,000

– Other services 10,000 10,000

Total 53,078 45,000

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3. RECEIVABLES


2007 ($’000) 2007 ($’000)

Interest receivable – 2,192

Other receivables 7 4

Total 7 2,196

4. INVESTMENTS

(a) Held for trading


2007 ($’000) 2007 ($’000)

H Shares – listed equities on Hong Kong Stock Exchange 14,382 14,382

Total 14,382 14,382

(b) Available for sale


2007 ($’000) 2007 ($’000)

A Shares – listed equities on Shanghai and Shenzhen security markets 582,239 –

Total 582,239 –

5. INVESTMENT IN SUBSIDIARY


2007 ($’000) 2007 ($’000)

Investment in subsidiary – 159,797

AMP Capital China Growth Fund has 100% ownership of AMP Capital China Growth Fund Limited, a company domiciled and incorporated in Mauritius.

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6. PAYABLES


2007 ($’000) 2007 ($’000)

Management fees payable to the Responsible Entity 2,441 75

Other payables 48 –

Total 2,489 75

7. DISTRIBUTION PAYABLE


2007 ($’000) 2007 ($’000)

Distribution payable 37,920 37,920

Total 37,920 37,920

8. INCOME TAX

(a) Income tax expense

Consolidated

2007 ($’000)

The major components of income tax expense are:

INCOME STATEMENT

Current income tax

– Current income tax charge 69

Deferred income tax

– Relating to the origination and reversal of temporary differences 844

Income tax expense as reported in the income statement 913

(b) Amounts charged directly or indirectly to net assets attributable to unitholders

Consolidated

2007 ($’000)

Deferred income tax related to items charged directly to net assets attributable to unitholders

Unrealised gain on available for sale investments 6,703

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8. INCOME TAX (Continued)

(c) Numerical reconciliation between aggregate tax expense recognised in the income statement and tax expense calculated per the statutory income tax rate

Consolidated

2007 ($’000)

A reconciliation between tax expense and the product of accounting profit before income tax multiplied by the Group’s applicable income tax rate is as follows:

Accounting profit before income tax 54,009

At the statutory income tax rate of 30% 16,203

Tax rate adjustment on realised CGT on land rich companies in PRC (1,301)

Tax rate adjustment on tax on interest in PRC 10% (24)

Tax rate adjustment on dividend income in PRC 5% (924)

Tax rate adjustment on profit on disposal of non-land rich companies in PRC (13,121)

Foreign tax adjustment – Mauritius expenses 2,215

Adjustment for Australian income not taxable (2,369)

Adjustment for Australian expenses not tax deductible 247

Foreign exchange adjustment (14)

(15,290)

913

Provision for tax on interest and dividends in PRC 197

Provision for realised capital gains in PRC 647

Mauritius company taxation 69

913

The parent entity is not subject to tax in Australia, since under the terms of the Fund Constitution, the unitholders are presently entitled to the taxable income of the Fund.

(d) Recognised deferred tax assets and liabilities

Balance sheet Consolidated

Income statement Consolidated

2007 ($’000) 2007 ($’000)

DEFERRED TAX LIABILITIES

Unrealised gain on investments available for sale in PRC 6,703 –

Interest and dividends in PRC 197 197

Realised capital gains in PRC 647 647

Total deferred tax liabilities 7,547 844

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9. NET ASSETS ATTRIBUTABLE TO UNITHOLDERS

(a) Reconciliation of units


2007 2007

(Units ’000) ($’000) (Units ’000) ($’000)

Equity issued on 22 December 2006 280,000 280,000 280,000 280,000

The movement in net assets attributable to unitholders in the Fund during the period is as set out below:

Units on issue Consolidated Parent entity

2007 ($’000) 2007 ($’000)


Applications 280,000 280,000

Revaluation of investments 306,005 –

Foreign currency translation reserve (28,247) –

Cost of issue of units (11,200) (11,200)


Closing balance 561,734 235,590

(b) Investment revaluation reserve


2007 ($’000) 2007 ($’000)


Net transfer to revaluation reserve 364,824 –

Transfers to income statement (52,116) –

Deferred tax (6,703) –

Closing balance 306,005 –

(c) Foreign exchange reserve


2007 ($’000) 2007 ($’000)


Foreign currency translation (28,247) –

Closing balance (28,247) –

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10. ASSET BACKING AND EARNINGS PER UNIT

Consolidated

2007

Net tangible asset backing per unit $2.01

Earnings used in calculation of earnings per unit $53,095,512

Weighted average number of units on issue for earnings per unit (calculated since formation) 250,212,766

Weighted average number of units un issue for earnings per unit (calculated since IPO) 280,000,000

11. SEGMENT INFORMATION

The AMP Capital China Growth Fund operates solely in the business of investing and is controlled from and is domiciled in Australia. Investments in the People’s Republic of China are facilitated through the holding of a wholly owned company in Mauritius.

12. COMMITMENTS AND CONTINGENCIES

As at 31 December 2007, the Fund had no commitments or contingencies.

13. EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE

Since 31 December 2007 there have been no matters or circumstances not otherwise dealt with in the Financial Report that have significantly affected or may significantly affect the Fund.

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NOTE 14. RELATED PARTY TRANSACTIONS

(a) General information

The Responsible Entity of the Fund is AMP Capital Investors Limited, a wholly owned subsidiary of AMP Limited. The ultimate parent entity is AMP Capital China Growth Fund.

(b) Investments

Related party investors in the Fund

Details of related party investors in the Fund, including the Responsible Entity, entities in the same wholly owned group as the Responsible Entity, and other Funds managed by the Responsible Entity, are set out below:

2007 Number of units held

Interest held (%)

Number of units acquired

during the period

Number of units sold during the

period

Distributions paid or payable during period

($)

AMP Life Limited 90,347,880 32.27 106,082,880 15,735,000 12,648,703

Entity over which S. J. P. Dunne has significant influence 50,000 0.02 50,000 – 7,000

(c) Transactions with the Responsible Entity

All transactions between the Fund and related parties have been at market value on normal commercial terms and conditions. This includes purchases and sales of investments as well as applications and redemptions of units.

In accordance with the Fund Constitution, the Responsible Entity is entitled to receive fees for the provision of services to the Fund and to be reimbursed for certain expenditure incurred in the administration of the Fund.


2007 ($) 2007 ($)

Responsible Entity fees expensed during the year 7,859,234 257,533

Responsible Entity fees expensed during the year are calculated as 1.65% on the Fund assets as at the last day of each month and are payable quarterly in arrears.

During the year the Responsible Entity has incurred certain expenses of $5,693,692 on behalf of the Fund. It is the Responsible Entity’s intention not to seek reimbursement of these expenses from the Fund.

(d) Loan to related parties

During the period the parent entity lent an amount of USD75 million to its subsidiary. The term of the loan is for 10 years and is repayable on demand. Interest is payable at 9% per annum. Management fees payable by the subsidiary to the Responsible Entity are paid by the parent. Upon payment they are capitalised into the loan. The total amount outstanding at 31 December 2007 is A$96,758,076.

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NOTE 14. RELATED PARTY TRANSACTIONS (Continued)

(e) Key management personnel

AASB 124 “Related Party Disclosures” defines key management personnel (KMP) as including all non-executive directors, executive directors and any other persons having authority or responsibility for planning, directing and controlling the activities of the entity. The Fund has no direct employees, however, the non-executive directors and the executive directors of the Responsible Entity have been deemed to be directors of the Fund. These individuals and the Responsible Entity comprise the KMP of the Fund.

The names of each person holding the position of Director of the Responsible Entity at any time during the period and until the date of this report are as follows:

Name Position

Jack H. Ritch Chairman and Non-executive Director

Stephen J. P. Dunne Executive Director

J. Brian Clark Non-executive Director Appointed 8 February 2008

David C. Clarke Non-executive Director Resigned 23 March 2007

Craig W. Dunn Managing Director and CEO of AMP Limited Resigned as Alternate Director for Andrew M. Mohl 31 December 2007 and appointed 1 January 2008

Stephen A. Grenville Non-executive Director

Donald R. Luke Non-executive Director Appointed 26 July 2007

Andrew M. Mohl Executive Director Resigned 31 December 2007

Nora L. Scheinkestel Non-executive Director

Remuneration paid to the Responsible Entity is detailed in note 14(c) above. No director of the Responsible Entity was paid any remuneration by the Fund during the period and their compensation paid by the Responsible Entity or related entities of the Responsible Entity is not related to services they render to the Fund.

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15. CASH AND CASH EQUIVALENTS

(a) Reconciliation of cash and cash equivalents

Cash and cash equivalents at the end of the period as shown in the cash flow statement is reconciled to the related items in the balance sheet as follows:


2007 ($’000) 2007 ($’000)

Domestic 262 262

Foreign

– United States Dollar 22 1

– Hong Kong Dollar 189 189

– Chinese Yuan Renminbi 12,658 –

12,869 190

Total 13,131 452

(b) Reconciliation of change in net assets attributable to unitholders to net cash inflow/(outflow) from operating activities

Consolidated entity Parent entity

2007 ($’000) 2007 ($’000)


Proceeds from sales of financial instruments held for trading 11,912 11,912

Payments for purchases of financial instruments held for trading (20,074) (20,074)

Foreign exchange (gain)/losses 725 10,842

Interest expense paid 359 6

Changes in the fair value of investments (59,459) (7,343)

Interest income capitalised – (6,290)

Management fees capitalised – (5,235)

Changes in assets and liabilities:

– (Increase)/decrease in receivables (7) (2,196)

– Increase/(decrease) in payables/provisions 41,322 37,995

Net cash and cash equivalents inflow from operating activities (10,046) (13,593)

16. AUTHORISATION OF FINANCIAL REPORT

The financial report of the AMP Capital China Growth Fund for the period ended 31 December 2007 was authorised for issue in accordance with a resolution of the directors of AMP Capital Investors

Limited on the 29 February 2008.

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17. FINANCIAL INSTRUMENTS NOTE

The Fund’s principal financial instruments consist of investments in overseas listed securities. The main purpose of these financial assets is to generate a return of the investment made by the unitholders.

The Fund’s financial assets included in the balance sheet are carried at their fair value.

Where it assists the Fund in meeting its investment objectives, and is consistent with the Fund’s investment strategy, AMP Capital Investors, the Responsible Entity, will actively manage the capital of the Fund. This may include :

a buy back of Units

management of the distribution reinvestment plan, and

the issue of Units through Unit purchase plans, bonus or rights issues to investors.

(a) Credit risk exposure

Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted. Concentrations of credit risk are minimised primarily by the investment manager/custodian carrying out all market transactions through recognised and creditworthy brokers and the monitoring of receivable balances. The Fund’s business activities do not necessitate the requirement for collateral as a means of mitigating the risk of financial loss from defaults.

Market prices of listed financial instruments generally incorporate credit assessments into valuations and risk of loss is implicitly provided for in the carrying value of such assets in the financial statements as they are marked to market at balance date. The total credit risk for on-balance sheet items including securities is therefore limited to the amount carried in the balance sheet.

(b) Liquidity and cash flow risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations associated with financial liabilities. Cash flow risk is the risk that future cash flows associated with financial instruments will fluctuate in amount.

The risk is controlled through the Fund’s investment in financial instruments, which under normal market conditions are readily convertible to cash. In addition, the Fund maintains sufficient cash and cash equivalents to meet normal operating requirements.

The Fund’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans and bank overdrafts.

(c) Market risk

The Fund is exposed to market risks influencing investment valuations.

Market risk is minimised through ensuring that all investment activities are undertaken in accordance with established mandate limits and investment strategies.

(d) Foreign exchange risk

The fund is exposed to foreign exchange risk as a result of investments in financial investments denominated in foreign currencies.

(e) Interest rate risk

Interest rate risk is the risk that a financial instrument’s value will fluctuate as a result of changes in market interest rates. The Fund’s exposure to interest rate risk is on cash and cash equivalents only. The weighted average effective interest rate on cash and cash equivalents is 5.6% at 31 December 2007.

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In accordance with a resolution of the Directors of AMP Capital Investors Limited, we state that:

In the opinion of the Directors of the Responsible Entity, at the date of this Declaration:

a) The financial statements and notes of the Fund and consolidated entity are in accordance with the requirements of the Fund Constitution and the Corporations Act 2001, and:

(i) are properly drawn up so as to present a true and fair view of the financial position of the Fund and consolidated entity as at 31 December 2007 and of their performance for the period ended on that date: and

(ii) comply with Accounting Standards, the Corporations Regulations 2001 and mandatory professional reporting requirements.

b) There are reasonable grounds to believe that the Fund and the consolidated entity will be able to pay their debts as and when they become due and payable.

c) This declaration has been made after receiving the declarations required to be made to the directors in accordance with section 295A of the Corporations Act 2001 for the financial period ending 31 December 2007.

Signed in accordance with a resolution of the Directors of AMP Capital Investors Limited:

Director Director

Dated this 29th day of February 2008, Sydney

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AS AT 29 FEBRUARY 2008

The following information presented on pages 33-36 is current as at 29 February 2008.

Number of unitholders and voting rights

There were 280,000,000 ordinary units on issue held by 8,372 unitholders. On a show of hands at any unitholder meeting, every member present in person or represented by a proxy or representative shall have one vote and on a poll every member who is present in person or represented by a proxy or representative shall have one vote for every dollar of the value of the total interests they have in the Fund.

Distribution of units

Investor ranges Number of holders

Total units % issued capital

1 – 1,000 477 358,852 0.13

1,001 – 5,000 2,886 9,568,532 3.42

5,001 – 10,000 1,993 17,189,941 6.14

10,001 – 100,000 2,883 84,222,469 30.08

100,001 and over 133 168,660,206 60.23

Total 8,372 280,000,000 100.00

There are 47 investors holding less than a marketable parcel of ordinary units in the Fund.

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Twenty largest investors

Rank Investor Number of units

% issued capital

1 AMP Life Limited 95,521,880 34.11

2 Pageant Limited 14,000,000 5.00

3 Cogent Nominees Pty Limited 10,000,000 3.57

4 UBS Wealth Management Australia Nominees Pty Ltd 7,921,329 2.83

5 RBC Dexia Investor Services Australia Nominees Pty Limited 3,844,227 1.37

6 Capital Nominees Ltd 1,500,000 0.54

7 Mr Peter Hanbury Masfen & Mrs Joanna Alison Masfen 1,500,000 0.54

8 Mr Peter Hanbury Masfen & Mrs Joanna Alison Masfen 1,500,000 0.54

9 Vigor Door Corporation Pty Ltd 1,418,558 0.51

10 Ms Feng-Chu Lin 1,356,700 0.48

11 Custodial Services Limited 1,003,424 0.36

12 Serioso Pty Limited 1,000,000 0.36

13 Investment Custodial Services Limited 983,865 0.35

14 Australian Executor Trustees Limited 873,840 0.31

15 Kevson Pty Ltd 740,000 0.26

16 Deadline Group Pty Ltd 700,540 0.25

17 CS Fourth Nominees Pty Ltd 618,383 0.22

18 Belike Nominees Pty Limited 531,975 0.19

19 Brazil Farming Pty Ltd 530,000 0.19

20 MLQ Nominees Pty Limited 514,278 0.18

Total 146,058,999 52.16

Substantial holders

The substantial holder of units in AMP Capital China Growth Fund was AMP Limited with 42.68%.

Restricted securities

There are no restricted securities on issue.

Buy-back

There is no current on-market buy-back.

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Management Agreement

AMP Capital Investors has been appointed investment manager by the Fund’s wholly owned subsidiary AMP Capital China Growth Fund (‘Subsidiary Company’) under the Investment Management Agreement dated 9 November 2006 to invest and manage the investment portfolio for an initial term of 10 years.

Services

AMP Capital Investors performs investment management services including reviewing the investment portfolio, arranging for the acquisition and disposal of assets within the portfolio (within certain investment parameters) and preparing reports on the investment portfolio.

AMP Capital Investors also procures the appointment of a custodian for the assets and agrees to provide certain information in relation to that custody arrangement.

Indemnities

AMP Capital Investors is indemnified against any losses or liabilities it reasonably incurs in acting under the agreement except to the extent that any loss, liability, cost, charge or expense is caused by the negligence, fraud or dishonesty of AMP Capital Investors or its officers or agents. This obligation continues after the termination of the agreement and the Subsidiary Company is not otherwise liable to AMP Capital Investors for any loss or liability.

AMP Capital Investors indemnifies the Subsidiary Company against any losses or liabilities reasonably incurred arising out of, or in connection with, any negligence, fraud or dishonesty of AMP Capital Investors or its officers or agents.

This obligation continues after the termination of the agreement and AMP Capital Investors is not otherwise liable to the Subsidiary Company for any loss or liability.

Fees

The Subsidiary Company pays AMP Capital Investors base and performance fees for the provision of the investment management services under the agreement.

The base fee of 1.652% per annum is calculated on the Fund’s assets as at the last day of each month and is payable quarterly in arrears on the final day of each quarter. Ongoing expenses associated with operating the Fund and the Subsidiary Company will be paid or reimbursed from the Fund and the Subsidiary Company when incurred. These expenses include custody, accounting, auditing, administration, registry, ASX and ASIC fees.

The performance fee of 20% of outperformance above the benchmark (if any) is payable quarterly in arrears on the final day of each quarter.

Termination

The agreement may be terminated by AMP Capital Investors giving 60 business days notice in writing to the Subsidiary Company.

The Subsidiary Company may terminate the agreement immediately if a receiver (or similar person) is appointed with respect to the assets and undertakings of AMP Capital Investors, AMP Capital Investors goes into liquidation, AMP Capital Investors ceases to carry on its normal business, AMP Capital Investors breaches any material provision of the agreement and fails to correct it within certain timeframes, AMP Capital Investors’ QFII Licence is not renewed, or the performance is more than 20% less than the benchmark return in any two consecutive years.

This agreement will continue for a further 10 year term if the investors in the Fund pass an ordinary resolution to approve such an extension. The investors in the Fund may resolve to terminate the agreement.

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Investment Portfolio

CHINA

Angang Steel Co Ltd Kweichow Moutai Co Ltd

Anhui Conch Cement Co Ltd Luzhou Laojiao Co Ltd

Baoshan Iron & Steel Co Ltd Offshore Oil Engineering Co Ltd

Changsha Zoomlion Heavy Industry Science and Technology Development Co Ltd

Poly Real Estate Group Co Ltd

China Animal Husbandry Industry Co Qinghai Salt Lake Potash Co

China COSCO Holdings Co Ltd Sany Heavy Industry Co Ltd

China CYTS Tours Holding Co Ltd Shandong Expressway Co Ltd

China Merchants Bank Co Ltd Shandong Gold Mining Co Ltd

China Minsheng Banking Corp Ltd Shandong Haihua Co Ltd

China Petroleum & Chemical Corp Shanghai International Airport Co Ltd

China Shenhua Energy Co Ltd Shanghai Pudong Development Bank

China Shipping Development Co Ltd Shanghai Zhangjiang High-Tech Park Development Co Ltd

China United Telecommunications Corp Ltd Shanghai Zhenhua Port Machinery Co

China Vanke Co Ltd Shanxi Guoyang New Energy Co Ltd

China Yangtze Power Co Ltd Shanxi Lanhua Sci-Tech Venture Co Ltd

Citic Securities Co Ltd/China Shanxi Lu’an Environmental Energy Development Co Ltd

Daqin Railway Co Ltd Shenzhen Agricultural Products Co Ltd

Dongfang Electric Corp Ltd Shenzhen Development Bank Co

GD Midea Electric Appliances Co Ltd Shenzhen Yantian Port Holding Co Ltd

Gemdale Corp Shenzhen Zhongjin Lingnan Nonfemet Co Ltd

Gree Electric Appliances Inc Suning Appliance Co Ltd

Guangxi Liugong Machinery Tangshan Iron & Steel Co

Guangzhou Baiyun International Airport Co Ltd TBEA Co Ltd

Heilongjiang Agriculture Co Tianjin Port Co Ltd

Henan Shen Huo Coal Industry & Electricity Power Co Ltd

Weichai Power Co Ltd

Henan Zhongfu Industry Co Ltd Yantai Wanhua Polyurethanes Co Ltd

Hubei Yihua Chemical IND Zhejiang Xinan Chemical Industrial Group Co Ltd

Industrial & Commercial Bank of China ZTE Corp

Jiangxi Ganyue Expressway Co Ltd

HONG KONG

Anhui Conch Cement Co Ltd China Petroleum & Chemical Corp

MAURITIUS

AMP Capital China Growth Fund Limited

Brokerage costs and investment transactions

During the period the Fund paid approximately $1,220,000 in brokerage costs relating to 496 transactions.

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CORPORATE DIRECTORY

AMP Capital China Growth Fund

ABN 59 597 237 72550 Bridge Street, Sydney NSW 2000T: 02 9257 5000

Responsible Entity and Investment Manager

AMP Capital Investors Limited ABN 59 001 777 591www.ampcapital.com.au

Secretary of the Responsible Entity

Philip Grindley

Registry

Computershare Investor Services Pty LimitedLevel 2, 60 Carrington Street, Sydney NSW 2000

Auditors

Ernst & Young680 George Street, Sydney NSW 2000

NS3

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Documents

AMP Capital China Growth Fund ARSN 122 303 744 SYDNEY … · AMP Capital China Growth Fund ARSN 122 303 744 ... First Annual Report ... in Indonesia before joining Colonial