JPMorgan Chinese Investment Trust plc...JPMorgan Chinese Investment Trust plc Annual Report & Accounts for the year ended 30th September 2016 Chinese_Cover A4 06/12/2016 17:59 Page

JPMorgan Chinese Investment Trust plcAnnual Report & Accounts for the year ended 30th September 2016

Chinese_Cover A4 06/12/2016 17:59 Page FC1

ObjectiveTo provide long term capital growth by investment in ‘GreaterChina’ companies.

Investment Policies

– To invest in companies which are quoted on the stockexchanges of China, Hong Kong and Taiwan or which derive asubstantial part of their revenues or profits from theseterritories.

– To use gearing up to a maximum level of 20% ofshareholders’ funds to increase potential returns toshareholders.

– To invest no more than 15% of gross assets in other UK listedinvestment companies (including investment trusts).

BenchmarkMSCI China Index, with net dividends reinvested, in sterlingterms. Prior to 26th January 2016, the benchmark was the MSCIGolden Dragon Index.

RiskInvestors should note that there can be significant economicand political risks inherent in investing in emerging economies.As such, the Greater China markets can exhibit more volatilitythan developed markets and this should be taken intoconsideration when evaluating the suitability of the Companyas a potential investment.

Capital Structure At 30th September 2016, the Company’s issued share capitalcomprised 77,914,965 Ordinary shares of 25p each, including3,840,030 shares held in Treasury.

Continuation VoteIn accordance with the Company’s Articles of Association, theDirectors are required to propose a resolution that theCompany continue as an investment trust at the Annual GeneralMeeting in 2018 and every fifth year thereafter.

Management Company and Company SecretaryThe Company employs JPMorgan Funds Limited (‘JPMF’ or the‘Manager’) as its Alternative Investment Fund Manager (‘AIFM’)and Company Secretary. JPMF delegates the management ofthe Company’s portfolio to JPMorgan Asset Management (UK)Limited (‘JPMAM’).

Association of Investment CompaniesThe Company is a member of the Association of InvestmentCompanies (‘AIC’).

WebsiteThe Company’s website, which can be found atwww.jpmchinese.co.uk, includes useful information on theCompany, such as daily prices, factsheets and current andhistoric half year and annual reports.

FCA regulation of ‘non-mainstream pooledinvestments’The Company currently conducts its affairs so that the sharesissued by the Company can be recommended by IndependentFinancial Advisers to ordinary retail investors in accordancewith the FCA rule in relation to non-mainstream investmentproducts and intends to continue to do so for the foreseeablefuture.

The shares are excluded from the FCA’s restrictions which applyto non-mainstream investment products because they areshares in an investment trust.

Features

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Contents

FINANCIAL RESULTS

STRATEGIC REPORT

3 Chairman’s Statement

7 Investment Managers’ Report

12 Summary of Results

13 Performance

14 Ten Year Financial Record

15 Ten Largest Investments

16 Portfolio Analyses

17 Investment Activity

18 List of Investments

20 Business Review

GOVERNANCE

26 Board of Directors

28 Directors’ Report

30 Corporate Governance Statement

36 Directors’ Remuneration Report

39 Statement of Directors’ Responsibilities

40 INDEPENDENT AUDITORS’ REPORT

FINANCIAL STATEMENTS

46 Statement of Comprehensive Income

47 Statement of Changes in Equity

48 Statement of Financial Position

49 Notes to the Financial Statements

REGULATORY DISCLOSURES

68 Alternative Investment Fund Managers Directive (‘AIFMD’)Disclosures (Unaudited)

SHAREHOLDER INFORMATION

69 Notice of Annual General Meeting

72 Glossary of Terms and Definitions

74 Where to buy J.P. Morgan Investment Trusts

75 Information about the Company

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2 JPMORGAN CHINESE INVESTMENT TRUST PLC. ANNUAL REPORT & ACCOUNTS 2016

Financial Results

TOTAL RETURNS (INCLUDES DIVIDENDS REINVESTED) TO 30TH SEPTEMBER 2016

+34.0%Benchmark total return3, 4

(2015: 0.0%)

Cumulative PerformanceFOR PERIODS ENDED 30TH SEPTEMBER 2016

1 Source: Morningstar.2 Source: J.P. Morgan.3 Source: MSCI. The Company’s benchmark is the MSCI China Index with net dividends reinvested, in sterling terms. Prior to 26th January 2016, the benchmark was the MSCI DragonIndex.

4 The MSCI Dragon Index for the year to 30th September 2016 returned 36.0%.5 The MSCI China Index for the year to 30th September 2016 returned 31.7%.

A glossary of terms and definitions is provided on page 72.

JPMorgan Chinese – return to shareholders1

JPMorgan Chinese – return on net assets2

Benchmark total return3

%

43.8 46.0 43.0

80.896.0

81.7

188.4

227.1

166.2

0

50

100

150

200

250

10 Year Performance5 Year Performance3 Year Performance

1.6pDividend

(2015: 1.8p)

+38.0%Return to shareholders1

(2015: –7.0%)

+35.2%Return on net assets2

(2015: +0.2%)

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Strategic Report

CHAIRMAN’S STATEMENT

It has been a difficult year for many investors who have been surprised by politicaldevelopments around the world. The challenge to globalisation which has been such acritical factor in the growth of Asia is being attacked as the key cause of social divide and is,therefore, coming under increasing threat. In spite of this we continue to believe that thedomestic agenda in China will provide great opportunities for investors as China becomesever more accessible thereby enabling the JP Morgan Chinese Investment Trust to positionitself actively to unearth a wide range of interesting growth companies in which to invest.

The opening of mutual market access between the Shenzhen exchange and that of HongKong, which is due to come on stream by end of the year, in a similar way to the accessbetween Shanghai and Hong Kong which has been functioning for two years, willsignificantly increase the investment opportunity set. Shenzhen Connect will enableinvestors to have exposure to many of the ‘New China’ sectors and the addition of it to theConnect programme will allow 67% of total and 68% of the free float of the ‘A’ share marketcap to become tradable in the overall programme. It will also add an aggregate total/freefloat market of USD1.9 trillion to the investable universe for global investors. MSCI has notso far included ‘A’ shares in their indices but if they did at current levels the inclusion ofChina ‘A’ shares would represent 26% of the MSCI China index. Investing in China is,therefore, becoming a fast changing and most interesting space for investors in growthcompanies.

Activity within your Company To reflect the importance to investors of the developments that are taking place in China interms of accessibility to growth companies, your Board, at its Annual General Meeting inJanuary this year, received approval to change the benchmark to the MSCI China index fromthe MSCI Golden Dragon Index. The rationale for this was explained in my Chairman’sstatement of the 21st December 2015. When the new benchmark was adopted, the Boardgave the investment management team the flexibility to invest up to 30% of the portfolio inHong Kong and Taiwanese companies which are outside the new benchmark. This wasbecause not only does the team possess longstanding knowledge and expertise for investingin Taiwan but also companies in Taiwan, particularly semi conductor companies, may beconsidered as the dividend heroes of the region with a robust culture of paying out a highpercentage of their earnings as dividends. The team was also given the ability to invest ingood opportunities identified in Hong Kong and Macau. In this way the team’s overallexperience of investing in growth companies in the China region would be utilised to the full.At the same time the Board increased the maximum exposure to China ‘A’ shares and China‘A’ share ADRs from 20% to 50%.

Another important decision taken by the Board was to provide the investment team withgreater flexibility over the use of gearing, by raising the maximum limit from 15% to 20%.The overall objective of these changes is to differentiate your Company from other Chinafocused investment vehicles while adding value through the investment process.

The investment team has responded most positively to these decisions increasing thenumber of specialist research analysts to concentrate on undervalued interesting growthcompanies quoted on the ‘A’ share markets of Shanghai and Shenzhen.

PerformancePerformance for the year to 30th September 2016 resulted in the Company achieving areturn to Ordinary shareholders of +38.0%. This includes the final dividend of 1.80 pencepaid in February 2016. The Company’s total return on net assets was +35.2%, which

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Strategic Report continued

CHAIRMAN’S STATEMENT CONTINUED

comprises the change in net asset value (‘NAV’) with dividends reinvested. This comparedfavourably with the return of 34.0%, a combination of the MSCI Golden Dragon Index up to26th January 2016 and thereafter the MSCI China Index. Over the full reporting year thereturn on the old benchmark, MSCI Golden Dragon Index, was 36.0%. The outperformancewas achieved as a result of successful stock selection and the more flexible approach tolevels of gearing.

Outlook and ApproachThere have been multiple developments in the Chinese markets this year. Some aresymptomatic of an economy still in the midst of rebalancing with many positive stepsforward. Others are the re-focus on supply side reforms to sustain growth at reasonablelevels. The correction in the market at the beginning of 2016 was triggered by anotherdevaluation of the RMB. The recovery following this setback had an impact on short termperformance as value stocks led the rally ahead of the well managed growth companies inwhich we are invested. Despite some trials and errors, the Chinese leadership will continueto be mindful of striking the right balance, as reflected in the recent residential propertytightening measures in response to price increases. Elsewhere we are encouraged byprogress in China’s capital markets, such as the RMB’s inclusion in the IMF’s ‘SpecialDrawing Rights’ (SDR) basket and the inclusion of US-listed Chinese companies, known as‘American depository receipts’ (ADRs), into MSCI indices.

As referred to above, the MSCI at their latest annual review held off including China ‘A’shares in their indices. However, inclusion would seem to be inevitable during 2017. TheShenzhen-Hong Kong Connect programme, once it is launched, should therefore lead to theCompany’s exposure to domestic companies becoming of increasing importance. In anenvironment where economic growth is expected to be driven by ‘New China’ companies,the team and its research analysts will therefore be focussing on the future winners ratherthan on the old industrial models termed ‘Old China’. They will, and are, seeking out goodideas amongst the companies that provide the most exciting often technologically driveninvestment opportunities; sectors include: the consumer space, healthcare, internet, droneand robot technology and environmental services.

To take fuller advantage of these trends the investment team is looking at the constructionof the investment portfolio slightly differently than in the past. In future it will be dividedbetween ‘Core’ investments’, the high liquidity components of any investment portfolio suchas Alibaba, Tencent, JD, Ping An Insurance and well-analysed New China growth companiesto be found quoted on the ‘A’ share markets. This approach should play to the strength ofyour Company as a closed-end investment trust which can invest and hold promising lesserknown investments without fear of enforced redemptions. ‘Core’ investments in sectors nolonger liked will be sold as has happened with regard to investments in the banking andproperty sectors. The flexibility to invest outside the benchmark of mainland China meansthat in terms of Hong Kong and Macau a few investments will continue to be held – notnecessarily core but offering value.

Taiwan continues to offer up promising technology companies. While the sector has and canbe impacted by seasonality and global demand, select investments, notably in smartphonecomponent providers that are able to gain market share through the upgrade cycle andwithstand the pricing pressure along the value chain, continue to be an important part ofthe portfolio. The Taiwanese company approach to paying good dividends thereby offeringgood returns on capital is always a good reason for investing there. The key for theinvestment team remains therefore, to focus on businesses that will benefit from changingeconomic models and the evolving capital market landscape.

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Investment TeamA further refinement from previous years is a restructuring of the responsibilities ofyour named investment team to maximise the approach that is being taken for yourCompany. Howard Wang will continue to lead the team with Emerson Yip as his deputy.Shumin Huang, as head of research, will oversee an enhanced team of analystsconcentrating on the opportunities expected to emerge from amongst ‘New China’companies listed on the ‘A’ share exchanges of Shanghai and Shenzhen. The Taiwaninvestment team remains unchanged and also is the regional home for a number of theanalysts

Board due diligence trip to Hong Kong, Taiwan and ChinaAt the end of October, the Board made a due diligence visit to Hong Kong, Taipei andBeijing. Discussions took place with department heads at JP Morgan Asset Managementcovering, amongst others, dealing, risk, compliance and Asia-wide value investing.A review of the various processes was undertaken. The Board was also given acomprehensive update on the preparations that had been made in readiness for thelaunch of Shenzhen-Hong Kong Connect and the resultant opportunities for yourCompany. The Board met the investment team handling the China region and helda series of highly useful one-on-one discussions with the various research analysts.In addition the Board met a number of Taiwanese companies, who confirmed theirrobust approach to paying dividends, as well as meeting a range of industry specialistscovering a number of the ‘New China’ sectors in which the Company is investing and itreceived updates on China’s economic direction and other macro topics of relevance.The Board came away from an intensive week with an enhanced belief in China and theChina region as an essential investment destination and confidence that the JP MorganChina team possesses the depth and preparedness for the stock picking opportunitiesahead supported by sound processes, with back and middle office strength.

Revenue and DividendsThe revenue for the year, after taxation, was £1,335,000 (2015: £1,701,000). Therevenue return per share, calculated on the average number of shares in issue, was1.79 pence (2015: 2.25 pence).

The Board is recommending a dividend of 1.60 pence (2015: 1.80 pence) per share inrespect of the financial year ended 30th September 2016 given the Company’s returnon its Revenue Account. Subject to shareholders’ approval at the Annual GeneralMeeting, this dividend will be paid on 8th February 2017 to shareholders on the registerat the close of business on 16th December 2016.

As previously stated, shareholders should note that the Company’s objective remainsthat of long term capital growth and dividends will vary from year to year accordingly.

GearingIn January 2016 the Company renewed its £30 million facility with Scotiabank for afurther 364 day period on the same terms but at a reduced margin. The facility matureson 20th January 2017 at which point the Board will consider another gearing facility.

During the year the Company’s gearing ranged from 5.7% to 12.2% geared and, at thetime of writing, was 7.6%. The current facility allows the Investment Managers theflexibility to manage the gearing tactically within a range set by the Board of 10% netcash to 20% geared.

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Share Issues and RepurchasesThe Directors have authority to issue new Ordinary shares for cash and to repurchaseshares in the market for cancellation or to hold in Treasury. The Company will reissueshares held in Treasury only at a premium to NAV.

During the year, the Company did not issue any new Ordinary shares, although it didrepurchase 930,535 shares into Treasury. However, the Board believes that its policy ofshare issuance and repurchases has helped to reduce discount volatility in the past andtherefore recommends that the authorities be kept in place. Accordingly, it is seekingapproval from shareholders to renew the share issuance and repurchase authorities atthe forthcoming Annual General Meeting.

Review of services provided by the ManagerDuring the year the Board carried out a thorough review of the investment management,secretarial and marketing services provided to the Company by the Manager. Followingthis review, the Board has concluded that the continued appointment of the Manager onthe terms agreed is in the interests of the shareholders as a whole.

The Company’s ongoing charges for the financial year, as a percentage of the averageof the daily net assets during the year, were 1.44%, which includes the increased costsassociated with the AIFMD.

Board of DirectorsIn July 2016, the Board through its Nomination and Remuneration Committee carriedout a comprehensive evaluation of the Board, its committees, the individual Directorsand the Chairman. Topics evaluated included the size and composition of the Board,Board information and processes, shareholder engagement and training andaccountability. The report confirmed the efficacy of the Board.

As part of the evaluation process, the Board has considered succession planning andhas agreed a planned phased exit for the longest-serving Director being myself, aheadof the Company’s next continuation vote.

Annual General MeetingThis year’s Annual General Meeting will be held at 60 Victoria Embankment, LondonEC4Y 0JP on Tuesday, 31st January 2017 at 11.30 a.m. In addition to the formalproceedings, there will be a presentation by a representative of the investmentmanagement team, who will also be available to respond to questions on theCompany’s portfolio and investment strategy. I look forward to seeing as many of youas possible at the meeting. If you have any detailed questions, you may wish to raisethese in advance with the Company Secretary or via the Company’s website byfollowing the ‘Ask the Chairman’ link at www.jpmchinese.co.uk. Shareholders who areunable to attend the Annual General Meeting in person are encouraged to use theirproxy votes. Shareholders who hold their shares through CREST are able to lodge theirproxy votes electronically.

William KnightChairman 8th December 2016

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INVESTMENT MANAGERS’ REPORT

Howard Wang, Fund Manager

Emerson Yip, Fund Manager

Shumin Huang , Head of Research

IntroductionAs the Chinese economy has continued to rebalance towards ‘New China’ we have used thechange in the benchmark and the investment guidelines, introduced in January 2016, toincrease the allocation to mainland listed Chinese stocks. In particular we have takenadvantage of the opening up of the onshore markets, with the introduction of the HongKong-Shanghai Connect, to increase the exposure to ‘A’ shares. Nevertheless we stillcontinue to find our best ideas across all three markets of the Greater China region; China,Hong Kong and Taiwan, regardless of where the shares are listed, to deliver returns over thelong term. Compared to a year ago, our overall weight to China has increased by 25.6% to86.2% whilst the total weight of Hong Kong and Taiwan stocks stand at a combined 13.8% ofthe portfolio. Within the China universe, our weight in ‘A’ shares has increased from 6.2% to10.9%, reflecting our view that the onshore domestic market will increasingly offer moreattractive investment opportunities going forward. In addition, we have been more active indeploying gearing, and over the year, the level of gearing has ranged between 5.7% and12.2%. We have also increased our conviction in the holdings in the portfolio and thenumber of positions in the portfolio has reduced from 63 at the start of the year to 58.

Performance commentaryOver the 12 months ended 30th September 2016, the Company delivered +35.2% comparedto the benchmark return of +34.0% (the benchmark is a combination of the MSCI GoldenDragon Index up to 26th January 2016 and thereafter the MSCI China Index). During thisperiod, stock selection was positive overall. Our stock holdings in China and Taiwan addedvalue whereas the overall exposure to ‘A’ shares detracted as the onshore quotedcompanies lagged those companies quoted in Hong Kong and Taiwan. Gearing, whichaveraged 9.4% over the period, added value in an environment of rising markets.

Over the reporting period, stock selection in technology, particularly in Taiwan, continued tobe a top contributor, while positions in select Apple supply chain companies worked well.AAC Technologies remains well-positioned for the strong upgrade cycle in acoustics. Webelieve the positive outlook for specification upgrades should continue to drive demand fordual camera lenses, benefiting Largan Precision. The overweighting in semi-conductorstocks also helped returns. Silicon Motion Technology, the fabless semiconductor company,added value and should gain from the adoption of Solid State Drive (SSD) in PCs, whileTaiwan Semiconductor Manufacturing, the chip industry bellwether, continued to executewell and its shares hit all-time highs. Regina Miracle, a textile manufacturer, performed wellas it recovered from the impact of its key customer, L Brands, changing business strategywhilst its sports products lines continued to grow. China Resources Gas, a natural gasdistributor, benefited from strong growth in both sales volume and new residentialconnection rollouts, whilst at the same time remaining well positioned for a recovery indemand and an increase in market penetration. We benefited from underweight positions inChina Mobile and Baidu Inc., which underperformed, as we continued to see better growthopportunities elsewhere.

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INVESTMENT MANAGERS’ REPORT CONTINUED

Overweights in China Taiping Insurance and Ping An Insurance detracted on the back offears about the increased risk of asset impairments. However in the long-term they shouldbe well supported by a secular tailwind in demand for insurance products. A handful ofstructural growth names also detracted from performance for stock specific reasons. SinoBiopharmaceutical fell on headline noise around plans to buy shares of China Cinda AMC andinventory de-stocking. CAR Inc also detracted on concerns over consumer demand,increasing competition given the Didi-Uber merger and weakness in its rental business, all ofwhich contributed to the stock’s derating. We exited the stock as the fundamentalsdeteriorated. Spring Airlines fell sharply, along with the broader ‘A’ share market correctionearlier in the year, over market concerns of aircraft delivery delays impacting the near termearnings; although the shares have subsequently rallied. Catcher also fell over fears that itsgrowth outlook was under pressure given a decision by Apple to change its casing materialssupplier resulting in significant pricing pressure. As a result we sold out of the holding.Additionally, JD.com corrected after failing to meet market expectations as grossmerchandise volume growth dampened and adjustments in the marketplace caused somenear-term disruptions. However, we continue to believe the company has the potential to bean efficient and profitable online retailer.

PositioningThe portfolio is broadly constructed of two categories of stocks; the core holdings and thosewhich are held for opportunistic reasons. Primarily we invest in companies that we consideras long term core holdings, which satisfy our key characteristics of being well-managed withgrowth-focused franchises as well as having structural tailwinds. These companies aretypically highly liquid, such as Tencent, Ping An or attractive New China growth companiesin the ‘A’ share markets of Shanghai and Shenzhen. These positions are typically held overa longer term investment horizon and in bigger position sizes, as we are less concernedabout the impact of shorter term macro influences. In addition, we take more tacticalpositions in opportunities that tend to be cyclical in nature with the expectation of arecovery in the valuation or due to imbalances in demand and supply. We own selectholdings here in smaller positions and usually with a shorter term investment horizon, tocapitalize on the turn in the cycle. Core holdings are currently about 90% of the InvestmentTrust, which has increased from 75% over the last 18 months.

As a result, given that we hold more of the longer term investments, there tends to be alower turnover in the individual companies held in the portfolio. Nevertheless, we may tradearound positions, buying and selling on valuation opportunities as they present themselves.In other words, if the investment thesis behind a stock is intact, we are likely to buy onweakness and trim on strength. We also make incremental trades in a holding to complywith the portfolio guidelines on single stock position limits. Such trading amounted to 92%in annualized turnover over the last 12 months. However, we believe the turnover in actualnames is more reflective of change in bottom-up conviction. Among our top 30 holdings,usually our highest conviction names, the turnover lowers to 25%, indicating an averageholding period of 4 years, compared to a year ago even given the change of the benchmarkduring this period.

Of the core holdings, we continue to be well-positioned in the New China economies, inareas including consumers, healthcare, technology and the internet and environmentalservices, which offer the most exciting investment opportunities over the next couple ofyears. Among the consumer stocks, we own a variety of names in media, tourism, autos, and

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house appliances, primarily in China but also across all the Greater China region markets.For example, we hold IMAX China, the cinematic operator, where we expect earnings to growas consumers become more willing to pay up for a ticket to have a better cinematicexperience. Brilliance China Automotive, a BMW dealer and manufacturer in China, shouldalso gain from a similar trend as consumers upgrade their purchases to more luxury carbrands. We hold a position in the travel service provider Ctrip.com, given the ADR’sunderperformance following its recent capital raising to consolidate the industry. We alsopurchased a Taiwan sportswear accessory manufacturer, Taiwan Paiho, on the back of itsunique product launches in shoe-related businesses that should surprise the market on theupside for the next 2-3 years. Another example of a core ‘A’ share holding is HangzhouRobam, a kitchen appliances company, which is explicitly tailored for the Chinese consumer,as it specialises in kitchen range hoods suitable for the high content of smoke, grease andodour found in Chinese cooking. The healthcare sector should experience a structuraltailwind as expenditure increases as a percentage of GDP combined with the agingdemographics of the population. Within this sector, we remain selective about thecompanies that we believe are positioned to be the long-term winners, such as the hospitaloperator, Phoenix Healthcare, and successful R&D drug companies, such as SinoBiopharmaceutical and, ‘A’ share listed, Jiangsu Hengrui. Technology is another fertileground for stock picking, with diverse business models, content and end consumption. Ourinvestments range from long-standing holdings in the portfolio, such as Tencent which welike for its robust internet ecosystems and Apple component suppliers, to more nichegrowth names, such as Wangsu Science and Technology, a dominant internet serviceenabler, as well as ‘A’ share companies such as Hangzhou Hikvision, a top surveillancesolutions provider. These are some examples of our investment approach, focusing on thebest stock ideas regardless of market or listing.

Of the opportunistic holdings, we focus on cyclical companies which can benefit froma valuation recovery or turn in the earnings cycle. We are selective in this space, owningquality operators in their particular sector. Attractive investments include select holdingswith exposure to the property market, including the real estate developer KWG Property andbuilding materials manufacturer BBMG. We also own CNOOC, the only energy play in theportfolio to benefit from a recovery in oil price as a pure upstream exploration andproduction company.

On the corporate governance front Taiwan continues to improve, however, China is still goingthrough a period of change and remains work in progress. Over the last year, we are stillseeing companies being directed by the government to perform national service, such as apharmaceutical company announcing plans to purchase shares of a distressed assetmanagement company. Chinese companies are also not as focused on cash flow, as theybelieve they can raise money if needed. However, we are seeing some positives such asearnings-based key performance indicators (KPIs) for managerial incentives, even thoughthere are ways to artificially set these targets so they are met. We are looking for realreforms in State Owned Enterprises to take hold, with the introduction of private ownershipsand more management incentives linked to shareholder interest. While we are realisticabout the overall standard of corporate governance practices, broadly, not measuring up tothose in the developed markets, we do consider governance to be an important pillar inlooking for quality franchises. As a result we conduct thorough due diligence of thecompanies we invest in and are selective in investing in high quality operators, as this is keyto achieving sustainability of earnings over the cycle.

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INVESTMENT MANAGERS’ REPORT CONTINUED

PERFORMANCE ATTRIBUTION FOR THE YEAR ENDED 30TH SEPTEMBER 2016

% %

Contributions to total returns

Benchmark return 34.0

Asset allocation –1.8

Stock selection 2.1

Currency effect 0.9

Gearing/cash 1.9

Investment Manager contribution 3.1

Dividends/Residual –0.7

Portfolio return 36.4

Management fee/other expenses –1.4

Structural effect — share buybacks 0.2

Return on net assets 35.2

Return to shareholders 38.0

Source: Factset, JPMAM and Morningstar. All figures are on a total return basis.

Performance attribution analyses how the Company achieved its recorded performancerelative to its benchmark.

A glossary of terms and definitions is provided on pages 72 and 73.

OutlookWe have seen multiple developments in the Chinese markets this year. While some aresymptomatic of an economy still in the midst of rebalancing, many are marked positivesteps forward. The re-focus on the supply side reforms has driven a recovery in various oldindustrial cyclicals. This presented a temporary setback to our investment performance asour preference is for well-managed growth companies which lagged the value rally,following the sharp correction at the beginning of 2016 triggered by further RMBdevaluation and the failure of the circuit breaker mechanism, another measure ofgovernment intervention that did not deliver the intended results. Despite some trials anderrors, we believe the Chinese leadership is watching the impact of their policy managementand will continue to be mindful of striking the right balance. An example of this is in therecent residential property tightening measures in response to price increases. Elsewhere,we are encouraged by the progress in China’s capital markets, such as the RMB’s inclusion inthe IMF’s Special Drawing Rights (SDR) basket and the inclusion of US-listed Chinesecompanies into MSCI indices. The potential inclusion of China ‘A’ Shares in the MSCI indices

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will result in domestic companies becoming a strategically significant part of an investor’sasset allocation decision and we believe we are significantly well placed in our investmentknowledge and experience in investing in these stocks. Additionally, the long-awaited launchof the Shenzhen-Hong Kong Connect programme on 5th December 2016 will give investorsanother way to access the onshore China markets. Having upped the exposure to domesticChinese companies to nearly 12% by the end of the financial year, we expect this to be anarea that will be of increasing importance and we will continue to add more attractive ideasover time. In an environment where economic growth will remain subdued compared toprevious periods, despite the support behind the Old China industries, we believe New Chinawill continue to foster winners.

In Hong Kong, the US interest rate outlook far remains the biggest overhang on the marketand we see mixed performance particularly from the property and retail sectors. While thedomestic Hong Kong market is less attractive and we have few investments there, Taiwancontinues to offer up promising technology companies. We continue to focus on thosebusinesses which will succeed in the changing economic environment and the evolvingcapital market landscape. We look for the best long term investments that can benefit fromchanging dynamics within their industries and have multi-year growth forecasts.

Howard WangEmerson YipShumin HuangInvestment Managers 8th December 2016

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SUMMARY OF RESULTS

2016 2015

Total returns for the year ended 30th September

Return to shareholders1 +38.0% –7.0%Return on net assets2 +35.2% +0.2%Benchmark return3 +34.0% 0.0%

Net asset value, share price and discount at 30th September % change

Shareholders’ funds (£’000) 179,795 135,932 +32.3Net asset value per share 242.7p 181.2p +33.9Share price 205.8p 150.8p +36.5Share price discount to net asset value per share 15.2% 16.8%Shares in issue (excluding shares held in Treasury) 74,074,935 75,005,470

Revenue for the year ended 30th September

Gross revenue attributable to shareholders (£’000) 3,631 4,436 –18.1Net revenue attributable to shareholders (£’000) 1,335 1,701 –21.5Revenue return per share 1.79p 2.25p –20.4Dividend per share 1.60p 1.80p

Gearing at 30th September4 8.5% 13.9%

Ongoing charges 1.44% 1.42%

1 Source: Morningstar.2 Source: J.P. Morgan.3 Source: MSCI. The benchmark is the MSCI China Index with net dividends reinvested, in sterling terms. Prior to 26th January 2016, the benchmark was the MSCI Golden DragonIndex.

4 The methodology to calculate gearing has been amended during the year therefore the comparative figure has been recalculated for comparative purposes. Please refer to theglossary of terms and definitions on page 72 for the revised calculation.


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PERFORMANCE

Ten Year PerformanceFIGURES HAVE BEEN REBASED TO 100 AT 30TH SEPTEMBER 2006

Source: Morningstar/MSCI.

JPMorgan Chinese – share price total return. JPMorgan Chinese – net asset value total return. Benchmark.

75

100

125

150

175

200

225

250

275

300

325

350

20162015201420132012201120102009200820072006

Performance Relative to BenchmarkFIGURES HAVE BEEN REBASED TO 100 AT 30TH SEPTEMBER 2006

Source: Morningstar.

JPMorgan Chinese – share price total return. JPMorgan Chinese – net asset value total return. Benchmark.

95

100

105

110

115

120

125

130

20162015201420132012201120102009200820072006

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TEN YEAR FINANCIAL RECORD

At 30th September 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Shareholders’ funds (£’m) 60.5 107.0 67.4 100.4 123.8 101.1 112.2 128.9 137.8 135.9 179.8

Net asset value per share (p) 81.8 149.9 95.4 138.2 160.1 129.8 146.4 170.7 182.4 181.2 242.7

Share price (p) 78.0 139.8 90.8 136.0 152.0 119.9 128.0 147.5 163.5 150.8 205.8

Share price discount to net asset value per share (%) 4.6 6.7 4.8 1.6 5.1 7.6 12.6 13.6 10.4 16.8 15.2

Subscription share price (p)1 — — 7.5 21.8 18.0 7.3 3.0 — — — —

Gearing (%)2 2.7 6.6 (0.4) 3.8 5.7 3.3 9.9 11.1 8.8 13.9 8.5

Year ended 30th September

Net revenue attributable to shareholders (£’000) 535 386 364 1,094 1,181 1,073 1,313 1,241 1,281 1,701 1,335

Revenue return per share (p) 0.74 0.52 0.51 1.53 1.55 1.38 1.69 1.63 1.70 2.25 1.79

Dividend per share (p) 0.70 0.50 0.50 1.50 1.50 1.30 1.60 1.60 1.60 1.80 1.60

Ongoing Charges (%)(excluding performance fee payable)3 1.55 1.34 1.59 1.50 1.41 1.40 1.41 1.46 1.40 1.42 1.44

Ongoing Charges (%)(including performance fee payable)4 1.66 2.39 2.74 2.59 2.46 1.51 1.41 2.42 1.78 1.46 1.44

Rebased to 100 at 30th September 2006

Share price total return5 100.0 180.6 117.7 177.5 200.5 159.5 172.2 200.6 224.6 209.0 288.4

Net asset value total return6 100.0 185.7 119.7 174.4 204.1 166.9 190.2 224.0 241.6 242.0 327.1

Benchmark return7 100.0 155.5 105.3 150.9 175.9 146.5 168.3 186.2 198.8 198.7 266.2

1 On 29th May 2013, the Subscription share rights lapsed.2 The methodology to calculate gearing has been amended during the year therefore the comparative figure has been recalculated for 2015 comparative purposes. Please refer tothe glossary of terms and definitions on page 72 for the revised calculation.

3 Management fee and all other operating expenses, excluding finance costs and any performance fee payable are expressed as a percentage of the average daily net assets duringthe year (2009 to 2011: the average of the month end net assets; 2008 and prior years: the average of the opening and closing net assets).

4 Management fee, all other operating expenses and any performance fee payable, but excluding finance costs are expressed as a percentage of the average daily net assets duringthe year (2009 to 2011: the average of the month end net assets; 2008 and prior years: the average of the opening and closing net assets). The performance fee was removedfrom the Company’s fee structure with effect from 30th September 2015.

5 Source: Morningstar.6 Source: J.P. Morgan7 Source: MSCI. The benchmark is the MSCI China Index with net dividends reinvested, in sterling terms. Prior to 26th January 2016, the benchmark was the MSCI Golden DragonIndex.


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15

TEN LARGEST INVESTMENTS AT 30TH SEPTEMBER

2016 2015 Country of Listing/ Valuation ValuationCompany Classification* £’000 %1 £’000 %1,5

Tencent China HK listed 17,871 9.2 11,416 7.4Alibaba3 China US listed 17,742 9.1 — —China Merchants Bank China HK listed 10,838 5.6 4,168 2.7Ping An Insurance China HK listed 10,702 5.5 5,312 3.4CNOOC2 China HK listed 6,885 3.5 941 0.6China Citic Bank2 China HK listed 6,288 3.2 1,880 1.2JD.com3 China US listed 5,633 2.9 — —China Construction Bank China HK listed 5,365 2.7 7,495 4.8AAC Technologies2 China HK listed 5,281 2.7 2,947 1.9China Telecom2 China HK listed 4,479 2.3 3,313 2.1

Total4 91,084 46.71 Based on total investments of £195.2m (2015: £154.8m).2 Not held in the ten largest investments at 30th September 2015. 3 Not held in the portfolio at 30th September 2015. 4 At 30th September 2015, the value of the ten largest investments amounted to £61.2m representing 39.6% of total investments.

5 Relevant figures have been amended in line with the current presentation adopted. Under FRS 102, liquidity funds are classified as cash equivalents.

*A glossary of terms and definitions is provided on pages 72 and 73.

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PORTFOLIO ANALYSES

Geographical 30th September 2016 30th September 2015 Portfolio1 Benchmark Portfolio1 Benchmark % % % %

China HK listed 56.5 77.4 52.5 49.8China US listed 18.0 22.3 1.3 0.3China A-shares2 10.9 — 6.2 —China B-shares 0.8 0.3 0.8 0.1

China Total 86.2 100.0 60.8 50.2

Taiwan3 8.6 — 21.5 26.8Hong Kong 5.2 — 17.7 23.0

Total 100.0 100.0 100.0 100.0

1 Based on total investments of £195.2m (2015: £154.8m).2 Includes investments in participating notes.3 2015: Includes investments in a Convertible Bond.

Sector 30th September 2016 30th September 2015 Portfolio1 Benchmark Portfolio1 Benchmark % % % %

Information Technology 32.2 33.7 27.1 22.2Financials (including property) 24.9 29.9 39.1 41.9Consumer Discretionary 16.6 8.2 7.1 5.5Industrials2 8.0 5.4 7.6 5.7Health Care 6.0 2.1 5.6 1.2Energy 3.5 6.1 3.5 4.1Utilities 3.1 2.9 3.4 5.5Telecommunication Services 2.3 8.2 4.4 7.5Consumer Staples 1.8 2.3 1.0 2.9Materials 1.6 1.2 1.2 3.5

Total 100.0 100.0 100.0 100.0

1 Based on total investments of £195.2m (2015: £154.8m).2 2015: Includes investments in a Convertible Bond.

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INVESTMENT ACTIVITY DURING THE YEAR ENDED 30TH SEPTEMBER 2016

Value at Value at 30th September 2015 Changes 30th September 2016 % of Purchases Sales in value % of £’000 portfolio4 £’000 £’000 £’000 £’000 portfolio

China HK listed1 81,221 52.5 63,540 (62,644) 28,164 110,281 56.5China US listed 2,055 1.3 30,200 (4,961) 7,880 35,174 18.0China A-shares2 9,578 6.2 26,004 (16,726) 2,321 21,177 10.9China B-shares 1,260 0.8 746 (552) 128 1,582 0.8

China Total 94,114 60.8 120,490 (84,883) 38,493 168,214 86.2

Taiwan3 33,263 21.5 11,341 (34,487) 6,719 16,836 8.6Hong Kong 27,436 17.7 5,419 (24,922) 2,174 10,107 5.2

Total Portfolio 154,813 100.0 137,250 (144,292) 47,386 195,157 100.0

1 Historically consisted of Hong Kong Red Chip, Hong Kong P Chip and Hong Kong H-Shares.2 Includes investments in participatory notes.3 2015: Includes investments in a Convertible Bond.4 Relevant figures have been amended in line with the current presentation adopted. Under FRS 102, liquidity funds are classified as cash equivalents.

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LIST OF INVESTMENTS AT 30TH SEPTEMBER 2016

ValuationCompany £’000

China HK listedTencent 17,871China Merchants Bank 10,838Ping An Insurance 10,702CNOOC 6,885China Citic Bank 6,288China Construction Bank 5,365AAC Technologies 5,281China Telecom 4,479Postal Savings Bank of China 3,628China Resources Gas 3,493China Taiping Insurance 3,076China Resources Land 3,003Nexteer Automotive 2,942Phoenix Healthcare 2,621CGN Power 2,490China Everbright International 2,319CSPC Pharmaceutical 2,283Sinopharm 2,273BOC Aviation 1,954Sino Biopharmaceutical 1,823Brilliance China Automotive 1,812IMAX China 1,785China Conch Venture 1,733KWG Property 1,343BBMG 1,056TCC International 1,025China Harmony New Energy Auto 992China Machinery Engineering 921

110,281


China US listedAlibaba 17,742JD.com 5,633Ctrip.com International 3,908Baidu 3,572Vipshop 3,159Tuniu 1,160

35,174

China A-SharesHangzhou Robam Appliances1 2,785Jiangsu Hengrui Medicine 2,653Wangsu Science & Technology1 2,554Hangzhou Hikvision Digital Technology1 2,393Han’s Laser Technology Industry1 2,089Beijing OriginWater Technology1 1,989Spring Airlines 1,932Luxshare Precision Industry1 1,390Guoxuan High-Tech1 1,222GoerTek1 1,189Kingenta Ecological Engineering1 981

21,177

China B-SharesChongqing Changan Automobile 1,582

1,582Total China 168,214

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TaiwanLargan Precision 3,713Taiwan Semiconductor Manufacturing 3,601Silicon Motion Technology 3,124President Chain Store 2,465Taiwan Paiho 2,047Himax Technologies 1,542Advanced Semiconductor Engineering 344Total Taiwan 16,836


Hong KongRegina Miracle International 3,065Hong Kong Exchanges & Clearing 2,166AIA 2,152Wynn Macau 1,552WH 1,172Total Hong Kong 10,107Total Portfolio 195,157

1 Includes investments in participatory notes.

Portfolio holdings include investments in equities and participatorynotes.


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The aim of the Strategic Report is to provide shareholders with theability to assess how the Directors have performed their duty topromote the success of the Company during the year under review.To assist shareholders with this assessment, the Strategic Reportsets out the structure and objective of the Company, its investmentpolicies and risk management, investment restrictions andguidelines, performance and key performance indicators, sharecapital, the Company’s environmental, social and ethical policy,principal risks and how the Company seeks to manage those risksand finally its long term viability.

Business of the CompanyJPMorgan Chinese Investment Trust plc is an investment trustcompany that has a premium listing on the London Stock Exchange.In seeking to achieve its objectives, the Company employs JPMorganFunds Limited (‘JPMF’ or the ‘Manager’) as its AIFM which, in turn,delegates portfolio management to JPMorgan Asset Management(UK) Limited to actively manage the Company’s assets. The Boardhas determined investment policies and related guidelines andlimits. These objectives, investment policies and related guidelinesand limits are detailed below. Its aim is to outperform the MSCIChina Index.

Objective and Strategy of the CompanyThe Company’s existing investment objective and investment policyare set out below.

The Company’s objective is to provide long term capital growthby investment in ‘Greater China’ (China, Hong Kong and Taiwan)companies. It aims to outperform the MSCI China Index total return,with net dividends reinvested, in sterling terms.

The Greater China region remains a structural growth story as theChinese economy continues to drive growth throughout the region.The Company seeks to generate long term capital growth byinvesting in the wide range of opportunities that this economicgrowth presents the investment managers.

J.P. Morgan Asset Management (‘JPMAM’) has a long establishedpresence in Greater China and the Asia Pacific region. JPMAM beganmanaging their first Asia Pacific equity portfolio mandate in 1971and have been managing money in Greater China since the 1990s.The Greater China Team is differentiated by its size and theexperience and diversity of the backgrounds of the key investmentmanagers, with their nationalities ranging from mainland Chinato Hong Kong, Taiwan, Singapore and America. The team compriseseight portfolio managers and nine dedicated research analysts and

has on average thirteen years’ within the industry. All members ofthe Greater China Team, including portfolio managers, conductresearch for Greater China equity portfolios. In addition, theportfolio managers have access to the research conducted by globalsector analysts of the broader Emerging Markets and Asia PacificEquities team. The research on domestic A-shares conducted by theanalysts in JPMAM’s joint venture in China, CIFM, is also madeavailable to the portfolio management team.

The investment managers place particular emphasis on tailoringtheir investment process to China equities. Company visits form thecornerstone of the proprietary research process which allows themanagers to take controlled, considered positions designed toenhance performance. Stock selection provides the greatest addedvalue to the funds. Underpinning stock selection is the rigorousresearch conducted by the Greater China Team. The team conductsan average of 50-100 company visits and meetings per fundmanager per year and as a result, portfolio judgments are madeusing extensive qualitative judgment in addition to financialanalysis.

Structure of the CompanyThe Company is subject to UK and European legislation andregulations including UK company law, UK Financial ReportingStandards, the UKLA Listing, Prospectus, Disclosure Guidance andTransparency Rules, Market Abuse Regulation, taxation law and theCompany’s own Articles of Association.

The Company is an investment company within the meaning ofSection 833 of the Companies Act 2006 and has been approved byHM Revenue & Customs as an investment trust (for the purposes ofSections 1158 and 1159 of the Corporation Tax Act 2010). As a resultthe Company is not liable for taxation on capital gains. TheDirectors have no reason to believe that approval will not continueto be retained. The Company is not a close company for taxationpurposes.

A review of the Company’s activities and prospects is given in theChairman’s Statement on pages 3 to 6, and in the InvestmentManagers’ Report on pages 7 to 11.

Investment Policies and Risk ManagementIn order to achieve the investment objective, the Company’sbusiness model is to invest in a diversified portfolio and to employa Manager with a strong focus on research and company visits thatenables it to identify what it believes to be the most attractivestocks in the region.

BUSINESS REVIEW

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Investment risks are managed by diversifying investment overa number of ‘Greater China’ companies. The number of investmentsin the Company will normally range between 45 and 65. Themaximum permitted exposure to Hong Kong and Taiwan listedstocks not in the index is 30% of the portfolio.

Liquidity and borrowings are managed with the aim of increasingreturns to shareholders.

The Company does not invest more than 15% of its gross assets inother UK listed closed-ended investment funds (includinginvestment trusts), nor does it invest more than 10% of its grossassets in companies that themselves may invest more than 15% oftheir gross assets in UK listed closed-ended investment funds.

Investment Restrictions and GuidelinesThe Board seeks to manage the Company’s risk by imposing variousinvestment limits and restrictions:

• At the time of purchase, the maximum permitted exposure toeach individual company is 10.0% of the Company’s total assets.

• As a result of market growth, the maximum permitted exposureto each individual company is 12.5% of the Company’s totalassets.

• The maximum permitted exposure to group or related companiesis 15% of the Company’s total assets.

• The maximum permitted exposure to small-cap stocks (a stockwith a market capitalisation of below US$500 million) is 45%(including market movement) without Board permission.

• No more than 50% of the portfolio’s value may be held in orexposed to China A-Shares and China A-Share ADRs. This includesany exposure to China A-Shares through the use of derivativeinstruments for investment purposes in the form of P-Notes.

• The Company may use derivative instruments for the purpose ofefficient portfolio management up to a value of 10%. TheCompany does not have a policy of hedging or otherwise seekingto mitigate foreign exchange risk but reserves the right to do sofrom time to time as part of the Company’s efficient portfoliomanagement.

• The Company does not normally invest in unquoted investmentsand no more than 10% of the Company’s total assets can beinvested in unquoted investments.

• The Company’s actual gearing is not to exceed 20% withoutBoard permission.

Monitoring of Compliance Compliance with the Board’s investment restrictions and guidelinesis monitored continuously by the Manager and is reported to theBoard on a monthly basis.

PerformanceIn the year to 30th September 2016, the Company produced a totalreturn to shareholders of +38.0% and a total return on net assets of+35.2%. This compares with the return on the Company’sbenchmark index of +34.0%. As at 30th September 2016, the valueof the Company’s investment portfolio was £195.2 million. TheInvestment Managers’ Report on pages 7 to 11 includes a review ofdevelopments during the year as well as information on investmentactivity within the Company’s portfolio and the factors likely toaffect the future performance of the Company.

Total Return, Revenue and Dividends The gross total return for the year amounted to £49,203,000 (2015:£3,158,000) and the net total return after deducting themanagement fee, other administrative expenses, finance costsand taxation, amounted to £46,886,000 (2015: £364,000).

The Directors recommend a final dividend of 1.6 pence(2015: 1.8 pence) per share payable on 8th February 2017 to holderson the register at the close of business on 16th December 2016. Thisdistribution will amount to £1,185,000 (2015: £1,350,000). No otherdividends were paid in respect of the year. The revenue reserveafter the payment of the dividend will amount to £1,191,000(2015: £1,041,000).

Key Performance Indicators (‘KPIs’) The Board uses a number of financial KPIs to monitor and assessthe performance of the Company. The principal KPIs are:

• Performance against the benchmark This is the most important KPI by which performance is judged.The Company’s principal objective is to achieve capital growthand outperformance relative to its benchmark. Information onthe Company’s performance is given in the Chairman’s Statementand the Investment Managers’ Report.

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BUSINESS REVIEW CONTINUED

Performance Relative to Benchmark IndexFIGURES HAVE BEEN REBASED TO 100 AT 30TH SEPTEMBER 2006


JPMorgan Chinese – Ordinary share price total return.

JPMorgan Chinese – net asset value total return.

Benchmark (represented by the bold horizontal line).

Ten Year PerformanceFIGURES HAVE BEEN REBASED TO 100 AT 30TH SEPTEMBER 2006


JPMorgan Chinese – share price total return.

JPMorgan Chinese – net asset value total return.

Benchmark.

• Performance against the Company’s peers The Board also monitors the performance relative to a broadrange of competitor funds.

• Performance attributionThe purpose of performance attribution analysis is to assess howthe Company achieved its performance relative to its benchmarkindex, i.e. to understand the impact on the Company’s relativeperformance of the various components such as asset allocationand stock selection. Details of the attribution analysis for the yearended 30th September 2016 are given in the InvestmentManagers’ Report on page 10.

• Share price (discount)/premium to net asset value (‘NAV’) per shareThe Board operates a share issuance and share repurchaseprogramme which seeks to address imbalances in the supplyof and demand for the Company’s shares within the market andthereby reduce the volatility and absolute level of thediscount/premium to NAV per share at which the Company’sshares trade. In the year to 30th September 2016, the Company’sshares traded between a discount of 12.4% and 18.2%, mainlydue to rising concerns regarding the strength of future economicgrowth.

The Board also has the ability to purchase shares into Treasuryand to re-issue them at a later date at a premium to NAV pershare. Further details of the Company’s share capital can befound below in this Strategic Report.

Discount Performance

Source: Morningstar.

JPMorgan Chinese – discount.

• Ongoing ChargesThe ongoing charges represent the Company’s management feeand all other operating expenses excluding finance costs andperformance fee payable, expressed as a percentage ofthe average daily net assets during the year. The ongoing chargesfor the year ended 30th September 2016 were 1.44% (2015:1.42%). The Board reviews each year an analysis which showsa comparison of the Company’s ongoing charges and its mainexpenses with those of its peers. The ongoing charges including theperformance fee payable for 2015 were 1.46%. The performancefee was removed with effect from 30th September 2015.

Share CapitalThe Directors have, on behalf of the Company, the authority to issuenew Ordinary shares for cash and to repurchase shares in themarket for cancellation. In addition, the Directors have authority torepurchase shares into Treasury. The Directors will re-issue sharesheld in Treasury only at a premium to net asset value per share.

75100125150175200225250275300325350

20162015201420132012201120102009200820072006

95

100

105

110

115

120

125

130

20162015201420132012201120102009200820072006

–20

–15

–10

–5

0

5

20162015201420132012201120102009200820072006

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During the year the Company repurchased 930,535 Ordinary sharesinto Treasury (2015: 525,956). The Company did not repurchase anyOrdinary shares for cancellation. In addition, no new Ordinaryshares were issued, 220,826 shares have been repurchased intoTreasury since the year end.

Resolutions to renew the authorities to issue new shares and torepurchase shares for cancellation or to be held in Treasury will beput to shareholders for approval at the Annual General Meeting.

The full text of these Resolutions is set out in the Notice of Meetingon pages 69 and 70.

Board DiversityWhen recruiting a new Director, the Board’s policy is to appointindividuals on merit. Diversity is important in bringing anappropriate range of skills and experience to the Board.

At 30th September 2016, there were three male Directorsand one female Director on the Board. The Company has noemployees and therefore there is nothing further to reportin respect of gender representation within the Company.

Employees, Social, Community and Human RightsIssuesThe Company has a management contract with JPMF. It has noemployees and all of its Directors are non-executive, the day to dayactivities being carried out by third parties. There are therefore nodisclosures to be made in respect of employees. The Board notesthe policy statements of JPMorgan Asset Management (UK) Limited(‘JPMAM’) in respect of Social, Community, Environmental andHuman Rights issues, as highlighted in italics below.

Social, Environmental and Human Rights

JPMAM believes that companies should act in a socially responsiblemanner. Although our priority at all times is the best economicinterests of our clients, we recognise that, increasingly, non-financialissues such as social and environmental factors have the potential toimpact the share price, as well as the reputation of companies.Specialists within JPMAM’s environmental, social and governance(‘ESG’) team are tasked with assessing how companies deal with andreport on social and environmental risks and issues specific to theirindustry.

JPMAM is also a signatory to the United Nations Principles ofResponsible Investment, which commits participants to six principles,with the aim of incorporating ESG criteria into their processes when

making stock selection decisions and promoting ESG disclosure. Ourdetailed approach to how we implement the principles is available onrequest.

The Manager has implemented a policy which seeks to restrictinvestments in securities issued by companies that have beenidentified by an independent third party provider as being involved inthe manufacture, production or supply of cluster munitions, depleteduranium ammunition and armour and/or anti-personnel mines.Shareholders can obtain further details on the policy by contactingthe Manager.

Greenhouse Gas EmissionsThe Company is managed by the Manager. It has no employees andall of its Directors are non-executive, the day to day activities beingcarried out by third parties. There are therefore no disclosures to bemade in respect of employees. The Company itself has no premises,consumes no electricity, gas or diesel fuel and consequently doesnot have a measurable carbon footprint. The Company’s Manager isa signatory to the Carbon Disclosure Project and JPMorgan Chase isa signatory to the Equator Principles on managing social andenvironmental risk in project finance.

The Modern Slavery Act 2015 (the ‘MSA’)The MSA requires companies to prepare a slavery and humantrafficking statement for each financial year of the organisation.As the Company has no employees and does not supply goodsand services, the MSA does not apply directly to it. The MSArequirements more appropriately relate to JPMF and JPMAM.JPMorgan’s statement on Human Rights can be found on thefollowing website: www.jpmorganchase.com/corporate/About-JPMC/ab-human-rights.htm

Principal Risks

Investors should note that there can be significant economic andpolitical risks inherent in investing in emerging economies. As such,the Greater China markets can exhibit more volatility thandeveloped markets and this should be taken into considerationwhen evaluating the suitability of the Company as a potentialinvestment.

The Directors confirm that they have carried out a robustassessment of the principal risks facing the Company, includingthose that would threaten its business model, future performance,solvency or liquidity. The risks identified have not changed over theyear under review, and the ways in which they are managed ormitigated are summarised as follows:

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BUSINESS REVIEW CONTINUED

With the assistance of the Manager, the Board has drawn up a riskmatrix, which identifies the key risks to the Company. These keyrisks fall broadly under the following categories:

• Investment Underperformance: An inappropriate investmentdecision may lead to underperformance against the Company’sbenchmark index and peer companies, resulting in the Company’sshares trading on a wider discount. The Board manages this riskby diversification of investments through its investmentrestrictions and guidelines which are monitored and reported onby the Manager. The Manager provides the Directors with timelyand accurate management information, including performancedata and attribution analyses, revenue estimates and transactionreports. The Board monitors the implementation and results ofthe investment process with the investment manager, whoattends all Board meetings, and review data which showstatistical measures of the Company’s risk profile. The investmentmanagers employ the Company’s gearing within a strategic rangeset by the Board. The Board holds an annual strategy meeting inaddition to at least four Board meetings.

• Loss of Investment Team: A sudden departure of severalmembers of the investment management team could result ina deterioration in investment performance. The Manager takessteps to reduce the likelihood of such an event by ensuringappropriate succession planning and the adoption of ateam-based approach, as well as special efforts to retain keypersonnel.

• Discount: A disproportionate widening of the discount relative tothe Company’s peers could result in a loss of value forshareholders. In order to manage the Company’s discount, whichcan be volatile, the Company operates a share repurchaseprogramme and the Board regularly discusses discount policyand has set parameters for the Manager and the Company’sbroker to follow. The Board receives regular reports and isactively involved in the discount management process.

• Market: Market risk arises from uncertainty about the futureprices of the Company’s investments. It represents the potentialloss that the Company might suffer through holding investmentsin the face of negative market movements. The Board considersasset allocation, stock selection and levels of gearing on a regularbasis and has set investment restrictions and guidelines, whichare monitored and reported on by the Manager. The Boardmonitors the implementation and results of the investmentprocess with the Investment Managers.

• Political, Economic and Governance: Changes in financial,regulatory or tax legislation, including in the European Union,may adversely affect the Company. The Manager makes

recommendations to the Board on accounting, dividend and taxpolicies and the Board seeks external advice where appropriate.In addition, the Company is subject to administrative risks, suchas the imposition of restrictions on the free movement of capital.These risks are discussed by the Board on a regular basis.

• Change of Corporate Control of the Manager: The Board holdsregular meetings with senior representatives of JPMF in order toobtain assurance that the Manager continues to demonstrate ahigh degree of commitment to its investment trusts businessthrough the provision of significant resources.

• Accounting, Legal and Regulatory: In order to qualifyas an investment trust, the Company must comply with Section1158 of the Corporation Tax Act 2010 (‘Section 1158’). Details ofthe Company’s approval are given under ‘Structure of theCompany’ on page 20. Were the Company to breach Section 1158,it may lose investment trust status and, as a consequence, gainswithin the Company’s portfolio would be subject to Capital GainsTax. The Section 1158 qualification criteria are continuallymonitored by the Manager and the results reported to the Boardeach month. The Company must also comply with the provisionsof the Companies Act 2006 and, since its shares are listed on theLondon Stock Exchange, the UKLA Listing Rules, DisclosureGuidance and Transparency Rules (‘DTRs’) and, as an InvestmentTrust, the Alternative Investment Fund Managers Directive(‘AIFMD’). A breach of the Companies Act 2006 could result in theCompany and/or the Directors being fined or the subject ofcriminal proceedings. Breach of the UKLA Listing Rules or DTRscould result in the Company’s shares being suspended fromlisting which in turn would breach Section 1158. The Board relieson the services of its Company Secretary, the Manager and itsprofessional advisers to ensure compliance with the CompaniesAct 2006, the UKLA Listing Rules, DTRs and AIFMD.

• Corporate Governance and Shareholder Relations: Details ofthe Company’s compliance with Corporate Governance bestpractice, including information on relations with shareholders,are set out in the Corporate Governance statement on pages 30to 35.

• Operational: Disruption to, or failure of, the Manager’saccounting, dealing or payments systems or the Depositary orCustodian’s records could prevent accurate reporting andmonitoring of the Company’s financial position. Details of how theBoard monitors the services provided by JPMF and its associatesand the key elements designed to provide effective internalcontrol are included with the Risk Management and InternalControl section of the Corporate Governance report on pages 34and 35.

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• Going concern: Pursuant to the Sharman Report, Boards are nowadvised to consider going concern as a potential risk, whether ornot there is an apparent issue arising in relation thereto. Goingconcern is considered rigorously on an ongoing basis and theBoard’s statement on going concern is detailed on page 33.

• Financial: The financial risks faced by the Company includemarket risk, liquidity risk and credit risk. Further details aredisclosed in note 21 on pages 61 to 66.

Long Term ViabilityTaking account of the Company’s current position, the principal risksthat it faces and their potential impact on its future developmentand prospects, the Directors have assessed the prospects of theCompany, to the extent that they are able to do so, over the nextthree years. They have made that assessment by considering thoseprincipal risks, the Company’s investment objective and strategy, theinvestment capabilities of the Manager and the current outlook forthe China region economy and its equity markets.

In determining the appropriate period of assessment the Directorshad regard to their view that, given the Company’s objective ofachieving long term capital growth, shareholders should considerthe Company as a long term investment proposition. Thus theDirectors consider three years to be an appropriate time horizon toassess the Company’s viability.

The Directors confirm that, assuming a successful continuation voteat the 2018 Annual General Meeting, they have a reasonableexpectation that the Company will be able to continue in operationand meet its liabilities as they fall due over the three year period ofassessment.

By order of the Board Lucy Dina, for and on behalf of JPMorgan Funds Limited Secretary

8th December 2016

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Governance

BOARD OF DIRECTORS

William Knight (Chairman of the Board and Nomination and Remuneration Committee)A Director since April 2004.

Last reappointed to the Board: 2016.

Current remuneration: £34,000.

Co-founder and partner of Emerisque Brands, a private equity management buy-in company forwhom he chairs three Chinese joint ventures the company has entered into (MCS Apparel (HK)Ltd, Henry Cotton’s (Greater China) Ltd and Marina Yachting (Hong Kong) Ltd. He is Chairman ofMyanmar Investments International Ltd, an AIM investment company, and of the AdvisoryBoard of Homestrings Ltd. His other board directorships include Guardian Ceylon InvestmentTrust Plc, Smith Tan Asia Phoenix Fund Ltd and GNET Group plc. He has been involved with theGreater China region for over 40 years initially at Lazard Brothers and later in variouscapacities for the Lloyds Bank group with responsibility for its merchant banking activitiesthroughout Asia based out of Hong Kong, and later as Managing Director of Lloyds Bank FundManagement. He recently became a member of the Advisory Board of Chinese Resolutions, anew company established to work with Regulators both in the UK and in China to improvecorporate governance practice amongst Chinese companies listing their shares outside China.He first visited China in 1978.

Connections with Manager: None.

Shared directorships with other Directors: None.

Shareholding in Company: 4,400 Ordinary shares.

John Misselbrook (Chairman of the Audit Committee)A Director since July 2012.



Formerly Chief Operating Officer and on the board of Baring Asset Management Ltd and itspredecessor from 2001 to 2011, the board of Baring Asset Management Japan Ltd from 2006to 2011 and the boards of Baring Fund Managers Ltd and Baring International Fund Managers(Ireland) Ltd from 2009 to 2011. He had also held senior positions in finance and operations,including Director and Chief Financial Officer at LGT Asset Management Asia, OperationsDirector at Invesco Asia and Managing Director of Investment Administration at theWM Company Limited, part of the Deutsche Bank Group. He is Non-Executive Chairman ofNorthern Trust Global Services Limited and Aviva Investors Holdings Limited, and aNon-Executive Director of Brown Shipley & Co Ltd.




Kathryn MatthewsA Director since July 2010.



Formerly Chief Investment Officer, Asia Pacific (ex Japan), for Fidelity International. Prior tothat, she held senior appointments with William M Mercer, AXA Investment Managers,Santander Global Advisers and Baring Asset Management. She is a Non-Executive Director ofa number of Boards including Rathbone Brothers Public Limited Company, Hermes FundManagement Ltd, Aperam, BT Investment Management Limited, and Montanaro UK SmallerCompanies Investment Trust plc.




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All Directors are members of the Audit and Nomination and Remuneration Committeesand are considered independent of the Manager.

Oscar WongA Director since August 2014.

Last reappointed to the Board: 2016


Currently a non-executive Director of two Growth Enterprise Market listed companies in HongKong and Ping An Insurance Group. In addition, he is Chairman and NED of China Bio-MedRegeneration Technology Limited and NED of Credit China Holdings. Prior to this he held seniorappointments at LGT Asset Management, Deputy Chief Executive of INVESCO Asia Limited,Regional Managing Director at Prudential Portfolio Managers Asia, Chief Executive ofBOCI-Prudential Asset Management Limited and ICBC (Asia) Investment Management CompanyLimited and independent non-executive Director of Hong Kong Exchanges and Clearing Limited.



Shareholding in Company: Nil.

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Governance continued

DIRECTORS’ REPORT

The Directors present their report and the audited financialstatements for the year ended 30th September 2016.

Management of the CompanyThe Manager and Company Secretary to the Company is JPMorganFunds Limited (‘JPMF’), a company authorised and regulated by theFCA. The active management of the Company’s assets is delegatedby JPMF to an affiliate JPMorgan Asset Management (UK) Limited(‘JPMAM’) with day to day investment management activityconducted in Hong Kong. The Manager is a wholly-owned subsidiaryof JPMorgan Chase Bank which, through other subsidiaries, alsoprovides marketing, banking, dealing and custodian services to theCompany.

The Manager is employed under a contract which can be terminatedon one year’s notice, without penalty. If the Company wishes toterminate the contract on shorter notice, the balance ofremuneration is payable by way of compensation.

The Board conducts a formal evaluation of the performance of, andcontractual relationship with, the Manager on an annual basis. Partof this evaluation includes a consideration of the management feesand whether the service received is value for money forshareholders. No separate management engagement committeehas been established because all Directors are considered to beindependent of the Manager and, given the nature of the Company’sbusiness, it is felt that all Directors should take part in the reviewprocess.

The Board has thoroughly reviewed the performance of theManager in the course of the year. The review covered theperformance of the Manager, its management processes,investment style, resources and risk controls and the quality ofsupport that the Company receives from the Manager including themarketing support provided. As part of this process, the Board visitsChina each year. The Board is of the opinion that the continuingappointment of the Manager is in the best interests of shareholdersas a whole. Such a review is carried out on an annual basis.

The Alternative Investment Fund Managers Directive(‘AIFMD’)JPMF is the Company’s alternative investment fund manager(‘AIFM’). It is approved as an AIFM by the FCA. For the purposes ofthe AIFMD the Company is an alternative investment fund (‘AIF’).JPMF has delegated responsibility for the day to day managementof the Company’s portfolio to JPMAM. The Company has appointedBNY Mellon Trust and Depositary (UK) Limited (‘BNY’) as itsdepositary. BNY has appointed JPMorgan Chase Bank, N.A. as the

Company’s custodian. BNY is responsible for the oversight of thecustody of the Company’s assets and for monitoring its cash flows.

The AIFMD requires certain information to be made available toinvestors in AIFs before they invest and requires that materialchanges to this information be disclosed in the annual report ofeach AIF. An Investor Disclosure Document, which sets outinformation on the Company’s investment strategy and policies,leverage, risk, liquidity, administration, management, fees, conflictsof interest and other shareholder information is available on theCompany’s website at www.jpmchinese.co.uk There have been nomaterial changes (other than those reflected in these financialstatements) to this information requiring disclosure. Anyinformation requiring immediate disclosure pursuant to the AIFMDwill be disclosed to the London Stock Exchange through a primaryinformation provider.

As an authorised AIFM, JPMF will make the requisite disclosures onremuneration levels and polices to the FCA at the appropriate time.

Management FeeThe basic annual management fee is fixed at 1% per annum of theCompany’s total assets less current liabilities, after adding backany loans. Investments in J.P. Morgan managed funds are excludedfrom the assets used for the purpose of this calculation.

With effect 30th September 2015, the performance fee wasremoved.

Prior to 1st October 2015 there was a performance related feecalculated at 15% of outperformance of the Company’s net assetvalue total return over the benchmark. The maximum total feepayable in any one year in respect of the fixed management fee andany performance fee was capped at 2% of the Company’s averagetotal assets less current liabilities. In effect, this capped thepotential performance fee paid in any one year to 1%. Anyperformance fee earned in any one year in excess of the 1% capwas carried forward until paid in full or absorbed by anyunderperformance in a subsequent year. The performance feewas calculated annually on 30th September, based on averagetotal assets less current liabilities, and paid within three monthsof that date. An estimate was accrued monthly and reflected inthe Company’s published net asset value per share.

Directors All Directors who held office during the year under review and theirdetails are included on pages 26 and 27.

Details of Directors’ beneficial shareholdings may be found in theDirectors’ Remuneration Report on page 37.

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In accordance with corporate governance best practice, WilliamKnight, John Misselbrook, Kathryn Matthews and Oscar Wong willretire at the forthcoming Annual General Meeting (‘AGM’) and, beingeligible, will offer themselves for reappointment by shareholders.The Nomination and Remuneration Committee, having consideredtheir qualifications, performance and contribution to the Board andits Committees, confirms that each Director continues to beeffective and demonstrates commitment to the role, and the Boardrecommends to shareholders that those standing for reappointmentbe reappointed.

Andrew Burns retired from the Board at the conclusion of the 2016AGM.

Director Indemnification and InsuranceAs permitted by the Company’s Articles of Association, the Directorshave the benefit of an indemnity which is a qualifying third partyindemnity, as defined by Section 234 of the Companies Act 2006.The indemnities were in place during the year and as at the date ofthis report.

An insurance policy is maintained by the Company whichindemnifies the Directors of the Company against certain liabilitiesarising in the conduct of their duties. There is no cover againstfraudulent or dishonest actions.

Disclosure of information to Auditors In the case of each of the persons who are Directors of theCompany at the time when this report was approved:

(a) so far as each of the Directors is aware, there is no relevantaudit information (as defined in the Companies Act 2006) ofwhich the Company’s Auditors are unaware, and

(b) each of the Directors has taken all the steps that he/sheought to have taken as a Director in order to make himself/herself aware of any relevant audit information and toestablish that the Company’s Auditors are aware of thatinformation.

The above confirmation is given and should be interpreted inaccordance with the provision of Section 418(2) of the CompaniesAct 2006.

Independent AuditorsPricewaterhouseCoopers LLP have expressed their willingness tocontinue in office as Auditors and a resolution proposing theirreappointment and authorising the Directors to determine theirremuneration for the ensuing year will be put to shareholders at theAnnual General Meeting.

Section 992 Companies Act 2006The following disclosures are made in accordance with Section 992Companies Act 2006.

Capital StructureThe Company’s capital structure is summarised on the inside frontcover of this report.

Voting Rights in the Company’s sharesDetails of the voting rights in the Company’s shares at the date ofthis report are given in note 16 to the Notice of Annual GeneralMeeting on page 71.

Notifiable Interests in the Company’s Voting RightsAt the year end, the following had declared a notifiable interest inthe Company’s voting rights:

Number of Shareholders voting rights %

City of London 13,358,855 18.0

Since the year-end, City of London has notified the Company that itsholding has increased to 14,379,554, representing 19.4% of theCompany’s voting rights.

The Company is also aware that as at 30th September 2016,approximately 16.6% of the Company’s total voting rights are heldby individuals through the savings products managed by JPMAMand registered in the name of Chase Nominees Limited. If thosevoting rights are not exercised by the beneficial holders, inaccordance with the terms and conditions of the savings products,under certain circumstances, JPMAM has the right to exercise thosevoting rights. That right is subject to certain limits and restrictionsand falls away at the conclusion of the relevant General Meeting.

The rules concerning the appointment and replacement ofDirectors, amendment of the Articles of Association and powersto issue or repurchase the Company’s shares are contained in theArticles of Association of the Company and the Companies Act2006.

There are no restrictions concerning the transfer of securities in theCompany; no special rights with regard to control attached tosecurities; no agreements between holders of securities regardingtheir transfer known to the Company; no agreements which theCompany is party to that affect its control following a takeover bid;and no agreements between the Company and its directorsconcerning compensation for loss of office.

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DIRECTORS’ REPORT CONTINUED

Listing Rule 9.8.4RListing Rule 9.8.4R requires the Company to include certaininformation in a single identifiable section of the Annual Report ora cross reference table indicating where the information is set out.The Directors confirm that there are no disclosures to be made inthis regard.

Annual General MeetingNOTE: THIS SECTION IS IMPORTANT AND REQUIRES YOURIMMEDIATE ATTENTION. If you are in any doubt as to the actionyou should take, you should seek your own personal financialadvice from your stockbroker, bank manager, solicitor or otherfinancial advisor authorised under the Financial Services andMarkets Act 2000.

Resolutions relating to the following items of special business willbe proposed at the forthcoming Annual General Meeting (‘AGM’):

(i) Authority to allot new Ordinary shares and to disapplystatutory pre-emption rights (resolutions 10 and 11)

The Directors will seek renewal of the authority at the AGM to issueup to 7,791,496 new Ordinary shares for cash up to an aggregatenominal amount of £1,947,874 such amount being equivalent to 10%of the present issued Ordinary share capital as at the lastpracticable date before the publication of this document. Thisauthority will expire at the conclusion of the Company’s AGM in2018 unless renewed at a prior general meeting.

It is advantageous for the Company to be able to issue new shares(or to re-issue Treasury shares) to participants purchasing sharesthrough the J.P. Morgan savings products and also to otherinvestors when the Directors consider that it is in the best interestsof shareholders to do so. As such issues are only made at pricesgreater than the net asset value (the ‘NAV’), they increase the NAVper share and spread the Company’s administrative expenses, otherthan the management fee (and any performance fee) which ischarged on the value of the Company’s assets, over a greaternumber of shares. The issue proceeds are available for investmentin line with the Company’s investment policies.

The full text of the resolutions is set out in the Notice of AnnualGeneral Meeting on page 69.

(ii) Authority to repurchase the Company’s shares(resolution 12)

The authority to repurchase up to 14.99% of the Company’s issuedOrdinary shares granted by shareholders at the 2016 AGM, willexpire at the forthcoming AGM unless renewed at this meeting.The Directors consider that the renewing of the authority is in theinterests of shareholders as a whole, as the repurchase of sharesat a discount to the underlying NAV enhances the NAV of theremaining Ordinary shares.

Resolution 12 gives the Company authority to repurchase its ownissued Ordinary shares in the market as permitted by theCompanies Act 2006 (the ‘Act’). The authority limits the number ofshares that could be purchased to a maximum of approximately14.99% of the Company’s issued Ordinary shares as at the lastpracticable date prior to the publication of this document. Theauthority also sets minimum and maximum prices and will expire on30th July 2018 unless the authority is renewed at the Company’sAGM in 2018 or any other prior general meeting.

If resolution 12 is passed at the AGM, the Board may repurchase theshares for cancellation or hold then in Treasury. The Company willonly reissue shares held in Treasury at a premium to NAV.

The full text of the resolution is set out in the Notice of AnnualGeneral Meeting on pages 69 and 70. Repurchases of Ordinaryshares will be made at the discretion of the Board and will only bemade in the market at prices below the prevailing NAV per share,thereby enhancing the NAV of the remaining shares as and whenmarket conditions are appropriate.

RecommendationThe Board considers that resolutions 10 to 12 are likely to promotethe success of the Company and are in the best interests of theCompany and its shareholders as a whole. The Directorsunanimously recommend that you vote in favour of the resolutionsas they intend to do, where voting rights are exercisable, in respectof their own beneficial holdings which amount in aggregate to18,123 Ordinary shares representing approximately 0.02% of thevoting rights of the Company.

Corporate Governance Statement

Compliance The Company is committed to high standards of CorporateGovernance. This statement, together with the Statement ofDirectors’ Responsibilities on page 39, indicates how the Companyhas applied the principles of good governance of the FinancialReporting Council 2014 UK Corporate Governance Code (the ‘UKCorporate Governance Code’) and the Association of InvestmentCompanies’ (‘AIC’) Code of Corporate Governance, (the ‘AIC Code’),which complements the UK Corporate Governance Code andprovides a framework of best practice for investment trusts.

The Board is responsible for ensuring the appropriate level ofCorporate Governance and considers that the Company hascomplied with the best practice provisions of the UK CorporateGovernance Code and of the AIC Code, insofar as they are relevantto the Company’s business, throughout the year under review.

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Role of the Board The management agreement between the Company and JPMFsets out the matters which have been delegated to the Manager.This includes management of the Company’s assets and theprovision of accounting, company secretarial, administration andsome marketing services. All other matters are reserved for theapproval of the Board. A formal schedule of matters reserved to theBoard for decision has been approved. This includes determinationand monitoring of the Company’s investment objectives and policyand its future strategic direction, gearing policy, management of thecapital structure, appointment and removal of third party serviceproviders, review of key investment and financial data and theCompany’s Corporate Governance and risk control arrangements.

At each Board meeting, Directors’ interests are considered. Theseare reviewed carefully, taking into account the circumstancessurrounding them, and, if considered appropriate, are approved.It was resolved that there were no actual or indirect interests of aDirector which conflicted with the interests of the Company whicharose during the year.

The Board has procedures in place to deal with potential conflicts ofinterest and, following the introduction of the Bribery Act 2010, hasadopted appropriate procedures designed to prevent bribery. Itconfirms that the procedures have operated effectively during theyear under review.

The Board meets at least quarterly during the year and additionalmeetings are arranged as necessary. Full and timely information isprovided to the Board to enable it to function effectively and toallow Directors to discharge their responsibilities.

There is an agreed procedure for Directors to take independentprofessional advice if necessary, and at the Company’s expense. Thisis in addition to the access that every Director has to the advice andservices of the Company Secretary, JPMF, which is responsible tothe Board for ensuring that Board procedures are followed and thatapplicable rules and regulations are complied with.

Board Composition The Board, chaired by William Knight, consists of four Non-ExecutiveDirectors as at the year end, all of whom are regarded by the Boardas independent of the Company’s Manager. Sir Andrew Burns retiredduring the financial year, following the last Annual General Meeting.The Directors have a breadth of investment knowledge, businessand financial skills and experience relevant to the Company’sbusiness and brief biographical details of each Director are set outon pages 26 and 27.

There have been no changes to the Chairman’s other significantcommitments during the year under review.

A review of Board composition and balance is included as part ofthe annual performance evaluation of the Board, details of whichmay be found below. The Senior Independent Director, KathrynMatthews, leads the evaluation of the performance of the Chairmanand is available to shareholders if they have concerns that cannotbe resolved through discussion with the Chairman.

Tenure Subject to the performance evaluation carried out each year, theBoard will agree whether it is appropriate for the Director to seekan additional term. The Board does not believe that length ofservice in itself necessarily disqualifies a Director from seekingreappointment but, when making a recommendation, the Board willtake into account the ongoing requirements of the UK CorporateGovernance Code, including the need to refresh the Board and itsCommittees. The Board has adopted corporate governance bestpractice and hence all Directors must stand for annualreappointment.

The Board has considered succession planning and has agreed aplanned phased exit for the Chairman following the Company’s AGMin 2018.

The terms and conditions of Directors’ appointments are set out informal letters of appointment, copies of which are available forinspection on request at the Company’s registered office and at theAnnual General Meeting.

Induction and TrainingOn appointment, the Manager and Company Secretary provide allDirectors with induction training. Thereafter, regular briefings areprovided on changes in law and regulatory requirements that affectthe Company and the Directors. Directors are encouraged to attendindustry and other seminars covering issues and developmentsrelevant to investment trust companies. Regular reviews of theDirectors’ training needs are carried out by the Chairman by meansof the evaluation process described below.

Meetings and Committees The Board delegates certain responsibilities and functions tocommittees. All Directors are members of the Committees.

The table details the number of Board and Committee meetingsattended by each Director. During the year there were four Boardmeetings, two Audit Committee meetings and one Nomination andRemuneration Committee meeting. The Board holds four full Boardmeetings each year and any additional ad hoc meetings as andwhen required to deal with various corporate initiatives, proceduralmatters and formal approvals. In addition, there is regular contactbetween the Directors and the Manager and Company Secretarythroughout the year.

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Nominationand

Audit RemunerationBoard Committee Committee

Meetings Meetings MeetingsDirector Attended Attended Attended

Sir Andrew Burns1 2 1 —William Knight 4 2 1Kathryn Matthews 4 2 1John Misselbrook 4 2 1Oscar Wong 4 2 11 Retired 25th January 2016.

Board Committees Nomination and Remuneration Committee The Nomination and Remuneration Committee, chaired by WilliamKnight, consists of all of the Directors and meets at least annually toensure that the Board has an appropriate balance of skills andexperience to carry out its fiduciary duties and to select andpropose suitable candidates for appointment when necessary.The appointment process takes account of the benefits of diversity,including gender.

The Board’s policy on diversity, including gender, is to take accountof the benefits of these during the appointment process.

The Committee conducts an annual performance evaluation of theBoard, its committees and individual Directors to ensure that allDirectors have devoted sufficient time and contributed adequatelyto the work of the Board and its Committees. The evaluation of theBoard considers the balance of experience, skills, independence,corporate knowledge, its diversity, including gender, and how itworks together.

Questionnaires, drawn up by the Board, with the assistance of theManager and a firm of independent consultants, are completed byeach Director. The responses are collated and then discussed bythe Committee. The evaluation of individual Directors is led by theChairman. The Senior Independent Director, Kathryn Matthews,leads the evaluation of the Chairman’s performance.

The Committee also reviews Directors’ fees and makesrecommendations to the Board as and when appropriate in relationto remuneration policy. This takes into account the level of fees paidto the directors of the Company’s peers and within the investmenttrust industry generally to ensure that high quality people areattracted and retained.

Audit Committee The Audit Committee, chaired by John Misselbrook, consists of allthe Directors and meets at least twice each year. The members ofthe Audit Committee consider that they have the requisite skills andexperience to fulfil the responsibilities of the Committee (as detailedon pages 26 and 27) and are satisfied that at least one member(John Misselbrook) of the Audit Committee has recent and relevantfinancial experience.

The Committee reviews the actions and judgements of the Managerin relation to the Half Year and Annual Report & Accounts and theCompany’s compliance with the UK Corporate Governance Code.At the request of the Board, the Audit Committee providesconfirmation to the Board as to how it has discharged itsresponsibilities so that the Board ensures that informationpresented is fair, balanced and understandable, together withdetails of how it has done so.

During its review of the Company’s financial statements for the yearended 30th September 2016, the Audit Committee considered thefollowing significant issues, including those communicated by theAuditors during their reporting:

Significant issue How the issue was addressed

Going concern The Directors have considered the Company’sinvestment objective, risk management policies,capital management policies and procedures, thenature of the portfolio and expenditure and cashflow projections. As a result, they have determinedthat the Company has adequate resources, anappropriate financial structure and suitablemanagement arrangements in place to continue inoperational existence for the foreseeable future.

Valuation, existence The valuation of investments is undertaken in and ownership of accordance with the accounting policies, disclosed investments in note 1 to the accounts on page 49. Controls are in

place to ensure that valuations are appropriate andexistence is verified through custodianreconciliations.

Recognition of The recognition of investment income is undertaken investment income in accordance with accounting policy note 1(d) to the

accounts on page 49. The Board regularly reviewssubjective elements of income such as specialdividends and agrees their accounting treatment.

Compliance with Approval for the Company as an investment trust Sections 1158 and 1159 under Sections 1158 and 1159 for financial years

commencing on or after 1st October 2012 has beenobtained and ongoing compliance with the eligibilitycriteria is monitored on a regular basis.

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The Board was made fully aware of any significant financialreporting issues and judgements made in connection with thepreparation of the financial statements.

Having taken all available information into consideration and havingdiscussed the content of the annual report and accounts with theAlternative Investment Fund Manager, Investment Managers,Company Secretary and other third party service providers, theAudit Committee has concluded that the Annual Report andAccounts for the year ended 30th September 2016, taken as awhole, are fair, balanced and understandable and provide theinformation necessary for shareholders to assess the Company’sperformance, business model and strategy, and has reported onthese findings to the Board. The Board’s conclusions in this respectare set out in the Statement of Directors’ Responsibilities onpage 39.

The Audit Committee also reviews the terms of the managementagreement and examines the effectiveness of the Company’sinternal control systems, receives information from the Manager’sCompliance department and reviews the scope and results of theexternal audit, its effectiveness and cost effectiveness, the balanceof audit and non-audit services and the independence andobjectivity of the external Auditors. In the Directors’ opinion theAuditors are considered independent. In order to safeguard theAuditors’ objectivity and independence, any significant non-auditservices are carried out through a partner other than the auditengagement partner. The Audit Committee also receivesconfirmations from the Auditors, as part of their reporting, inregard to their objectivity and independence. Representatives of theCompany’s Auditors attend the Audit Committee meeting at whichthe draft annual report and accounts are considered.

The Audit Committee also has a primary responsibility for makingrecommendations to the Board on the reappointment and removalof external auditors. PwC was appointed at the Company’s launch in1993. The audit engagement partner rotates every five years inaccordance with ethical guidelines and 2015 was the first year forthe new partner. Under the new EU audit reform, given that theCompany’s Auditors have been in place for over 20 years, theCompany must rotate their audit firm by 2020 at the latest.

Having reviewed the performance of the external Auditors andassessed their effectiveness, including assessing the quality of work,timing of communications and work with JPMF, the Committeeconsidered it appropriate to recommend their reappointment.The Board supported this recommendation which will be put toshareholders at the forthcoming Annual General Meeting. TheBoard reviews and approves the Auditors’ fees and any non-auditservices provided by the independent Auditors and assesses the

impact of any non-audit work on the ability of the Auditors toremain independent. No such work was undertaken by the Auditorsduring the year under review. Details of the Auditors’ fees aredisclosed in note 6 on page 53.

The Directors’ statement on the Company’s system of RiskManagement and Internal Control is set out on pages 34 and 35.

Terms of ReferenceThe Nomination and Remuneration Committee and the AuditCommittee have written terms of reference which define clearlytheir respective responsibilities, copies of which are available on theCompany’s website and for inspection, on request at the Company’sregistered office and at the Company’s Annual General Meeting.

Going Concern The Directors believe that, having considered the Company’sinvestment objective (see page 20), risk management policies(see pages 20 and 21), liquidity risk (see note 21 on page 65), capitalmanagement policies and procedures (see note 22 on page 66), thenature of the portfolio and expenditure and cashflow projections,the Company has adequate resources, an appropriate financialstructure and suitable management arrangements in place tocontinue in operational existence. For these reasons, the Directorsconsider that there is reasonable evidence to continue to adopt thegoing concern basis in preparing the Company’s financialstatements. They have not identified any material uncertainties tothe Company’s ability to continue to do so over a period of at least12 months from the date of approval of these financial statements.

Relations with Shareholders The Board regularly monitors the shareholder profile of theCompany. It aims to provide shareholders with a full understandingof the Company’s activities and performance and reports formally toshareholders half yearly by way of the Half Year and Annual Report& Accounts. This is supplemented by the daily publication, throughthe London Stock Exchange, of the net asset value of the Company’sOrdinary shares.

All shareholders have the opportunity, and are encouraged, toattend the Company’s Annual General Meeting at which theDirectors and representatives of the Managers are available inperson to meet with shareholders and answer their questions.In addition, a presentation is given by the Investment Managers whoreview the Company’s performance. During the year the Company’sbroker and the Manager held regular discussions with largershareholders. The Directors are made fully aware of their views.In addition, on a regular basis the Board invites the Company’sbrokers, who are independent of the manager, to present to the

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Directors and also asks them to canvass shareholder views whenappropriate. Through them, the Board not only receives anindependent and well informed report on shareholder views, butalso is able to offer shareholders meetings with the Chairman orthe Directors as and when required to address any queries. TheDirectors may be contacted through the Company Secretary whosedetails are shown on page 75 or via the ‘Ask a Question’ link on theCompany’s website. All communications from shareholders that areintended for the Board are forwarded in full directly to theChairman for his response.

The Company’s Annual Report & Accounts are published in timeto give shareholders at least 20 working days notice of the AnnualGeneral Meeting. Shareholders wishing to raise questions inadvance of the meeting are encouraged to submit questions viathe Company’s website or write to the Company Secretary at theaddress shown on page 75.

Details of the proxy voting position on each resolution will bepublished on the Company’s website shortly after the AnnualGeneral Meeting.

Risk Management and Internal Control The UK Corporate Governance Code requires the Directors, at leastannually, to review the effectiveness of the Company’s system ofrisk management and internal control and to report to shareholdersthat they have done so. This encompasses a review of all controls,which the Board has identified as including business, financial,operational, compliance and risk management.

The Directors are responsible for the Company’s system of riskmanagement and internal control which is designed to safeguardthe Company’s assets, maintain proper accounting records andensure that financial information used within the business, orpublished, is reliable. However, such a system can only be designedto manage rather than eliminate the risk of failure to achievebusiness objectives and therefore can only provide reasonable, butnot absolute, assurance against fraud, material misstatement orloss.

Since investment management, custody of assets and alladministrative services are provided to the Company by theManager and its associates, the Company’s system of riskmanagement and internal control mainly comprises monitoring theservices provided by the Manager and its associates, including theoperating controls established by them, to ensure they meet theCompany’s business objectives. There is an ongoing process foridentifying, evaluating and managing the significant risks faced by

the Company (see Principal Risks on pages 23 to 25). This processhas been in place for the year under review and up to the date ofthe approval of the Annual Report & Accounts, and it accords withthe Financial Reporting Council’s guidance. The Company does nothave an internal audit function of its own, but relies on the InternalAudit department of the Manager which reports any materialfailings or weaknesses. This arrangement is kept under review.

The key elements designed to provide effective risk managementand internal control are as follows:

Financial Reporting – Regular and comprehensive review by theBoard of key investment and financial data, including managementaccounts, revenue projections, analysis of transactions andperformance comparisons.

Management Agreement – Appointment of a manager, depositaryand custodian regulated by the FCA whose responsibilities areclearly defined in a written agreement.

Management Systems – The Manager’s system of risk managementand internal control includes organisational agreements whichclearly define the lines of responsibility, delegated authority, controlprocedures and systems. These are monitored by the Manager’sCompliance department which regularly monitors compliance withFCA rules.

Investment Strategy – Authorisation and monitoring of theCompany’s investment strategy and exposure limits by the Board.

The Board, either directly or through the Audit Committee, keepsunder review the effectiveness of the Company’s system of riskmanagement and internal control by monitoring the operation ofthe key operating controls of the Manager and its associates asfollows:

• reviews the terms of the management agreement and receivesregular reports from the Manager’s Compliance department;

• reviews reports on the risk management and internal controlsand the operations of its Depositary, BNY Mellon Trust &Depositary (UK) Limited, and its custodian, JPMorgan ChaseBank, which are themselves independently reviewed; and

• reviews every six months an independent report on the riskmanagement and internal controls and the operations of theManager.

Depositary – The Board has appointed BNY Mellon Trust &Depositary (UK) Limited as depositary, with responsibilities for safekeeping of custodial assets and oversight of the records and cashflows.

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Through the procedures set out above, the Board confirms that ithas reviewed the effectiveness of the Company’s system of riskmanagement and internal control for the year ended30th September 2016 and to the date of approval of thisAnnual Report & Accounts.

During the course of its review of the system of risk managementand internal control, the Board has not identified nor been advisedof any failings or weaknesses which it has determined to besignificant.

Corporate Governance and Voting PolicyThe Company delegates responsibility for voting to the Manager.The following is a summary of JPMorgan Asset Management (UK)Limited’s (‘JPMAM’s’) policy statements on corporate governance,voting policy and social and environmental issues, which has beenreviewed and noted by the Board. Details on social andenvironmental issues are included in the Strategic Report onpage 23.

Corporate Governance JPMAM believes that corporate governance is integral to ourinvestment process. As part of our commitment to delivering superiorinvestment performance to our clients, we expect and encourage thecompanies in which we invest to demonstrate the highest standards ofcorporate governance and best business practice. We examine theshare structure and voting structure of the companies in which weinvest, as well as the board balance, oversight functions andremuneration policy. These analyses then form the basis of our proxyvoting and engagement activity.

Proxy Voting JPMAM manages the voting rights of the shares entrusted to it as itwould manage any other asset. It is the policy of JPMAM to vote in aprudent and diligent manner, based exclusively on our reasonablejudgement of what will best serve the financial interests of our clients.So far as is practicable, we will vote at all of the meetings called bycompanies in which we are invested.

Stewardship/EngagementJPMAM recognises its wider stewardship responsibilities to its clientsas a major asset owner. To this end, we support the introduction of theFRC Stewardship Code, which sets out the responsibilities ofinstitutional shareholders in respect of investee companies. Under theCode, managers should:

• publicly disclose their policy on how they will discharge theirstewardship responsibilities to their clients;

• disclose their policy on managing conflicts of interest;

• monitor their investee companies;

• establish clear guidelines on how they escalate engagement;

• be willing to act collectively with other investors where appropriate;

• have a clear policy on proxy voting and disclose their voting record;and

• report to clients.

JPMAM endorses the Stewardship Code for its UK investments andsupports the principles as best practice elsewhere. We believe thatregular contact with the companies in which we invest is central to ourinvestment process and we also recognise the importance of being an‘active’ owner on behalf of our clients.

JPMAM’s Voting Policy and Corporate Governance Guidelines areavailable on request from the Company Secretary or can bedownloaded from JPMAM’s website:http://www.jpmorganinvestmenttrusts.co.uk/governance, whichalso sets out its approach to the seven principles of the FRCStewardship Code, its policy relating to conflicts of interest and itsdetailed voting record.

By order of the Board Lucy Dina, for and on behalf of JPMorgan Funds Limited, Secretary

8th December 2016

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DIRECTORS’ REMUNERATION REPORT

The Board presents the Directors’ Remuneration Report for the yearended 30th September 2016, which has been prepared inaccordance with the requirements of Section 421 of the CompaniesAct 2006 as amended.

The law requires the Company’s Auditors to audit certain of thedisclosures provided. Where disclosures have been audited, they areindicated as such. The Auditors’ opinion is included in its report onpages 40 to 45.

As all of the Directors are non-executive, the Board has notestablished a Remuneration Committee. Instead, the Nominationand Remuneration Committee reviews Directors’ fees on a regularbasis and makes recommendations to the Board as and whenappropriate.

Directors’ Remuneration PolicyThe Directors’ Remuneration Policy is subject to a triennial bindingvote. However, the Board has resolved that for good governancepurposes, the policy vote will be put to shareholders every year.Accordingly, a resolution to approve this policy will be put toshareholders at the 2017 Annual General Meeting. The policysubject to the vote, is set out in full below and is currently in force.

The Board’s policy for this and subsequent years is that Directors’fees should properly reflect the time spent by the Directors on theCompany’s business and should be at a level to ensure thatcandidates of a high calibre are recruited to the Board. TheChairman of the Board and the Chairman of the Audit Committeeare paid higher fees than other Directors, reflecting the greatertime commitment involved in fulfilling those roles.

The Nomination and Remuneration Committee, comprising allDirectors, reviews fees on a regular basis and makesrecommendations to the Board as and when appropriate. Reviewsare based on information provided by the Manager, and includesresearch carried out by third parties on the level of fees paid to thedirectors of the Company’s peers and within the investment trustindustry generally. The involvement of remuneration consultantshas not been deemed necessary as part of this review.

All of the Directors are non-executive. There are noperformance-related elements to their fees and the Company doesnot operate any type of incentive, share scheme, award or pensionscheme and therefore no Directors receive bonus payments orpension contributions from the Company or hold options to acquireshares in the Company. Directors are not granted exit payments andare not provided with compensation for loss of office. No otherpayments are made to Directors, other than the reimbursement ofreasonable out-of-pocket expenses incurred in attending theCompany’s business.

During the year under review, Directors’ fees were paid at a fixedrate of £30,000 per annum for the Chairman, £25,500 per annumfor the Chairman of the Audit Committee and £21,500 per annumfor each other Director. Fees were increased from 25th January2016 to £34,000 for the Chairman, £29,000 for the Audit CommitteeChairman and £23,000 for each other Director. The Board hasagreed that there will be no fee increase in 2017.

The Company’s Articles of Association stipulate that aggregate feesmust not exceed £150,000 per annum. Any increase in this themaximum aggregate amount requires both Board and shareholderapproval.

The Company has no Chief Executive Officer and no employees andtherefore there was no consultation of employees, and there is noemployee comparative data to provide, in relation to the setting ofthe remuneration policy for Directors.

The Company has not sought shareholder views on its remunerationpolicy. The Nomination and Remuneration Committee considers anycomments received from shareholders on remuneration policy onan ongoing basis and will take account of these views if appropriate.

The Directors do not have service contracts with the Company.The terms and conditions of Directors’ appointments are set out informal letters of appointment which are available for review at theCompany’s Annual General Meeting and the Company’s registeredoffice. Details of the Board’s policy on tenure are set out on page 31.

The Company’s Remuneration policy also applies to new Directors.

Directors’ Remuneration Policy ImplementationReportThe Directors’ Remuneration Policy Implementation Report whichincludes details of the Directors’ Remuneration Policy and itsimplementation, is subject to an annual advisory vote and thereforean ordinary resolution to approve this report will be put toshareholders at the forthcoming Annual General Meeting. Therehave been no changes to the policy compared with the year ended30th September 2016 and no changes are proposed for the yearending 30th September 2017.

At the Annual General Meeting held on 25th January 2016, of votescast in respect of the Remuneration Policy, 98.7% of votes castwere in favour of (or granted discretion to the Chairman who votedin favour of) the remuneration policy and 1.3% voted against.In respect of the Remuneration Report, 98.7% of votes were cast infavour and 1.3% against.

Details of the implementation of the Company’s remuneration policyare given below. No advice from remuneration consultants wasreceived during the year under review.

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Single total figure of remunerationThe single total figure of remuneration for the Board as a whole forthe year ended 30th September 2016 was £112,430. The single totalfigure of remuneration for each Director is detailed below togetherwith the prior year comparative.

There are no performance targets in place for the Directors of theCompany and there are no benefits for any of the Directors whichwill vest in the future. There are no benefits, pension, bonus, longterm incentive plans, exit payments or arrangements in place onwhich to report.

Single total figure table1

Total fees2

2016 2015

William Knight £32,703 £29,057John Misselbrook £27,865 £24,872Sir Andrew Burns3 £6,848 £21,029Irving Koo4 — £6,390Kathryn Matthews £22,507 £21,029Oscar Wong £22,507 £21,029

Total £112,430 £123,4061 Audited information.2 No taxable expenses.3 Retired 25th January 2016.4 Retired 26th January 2015.

A table showing the total remuneration for the Chairman over thefive years ended 30th September 2016 can be seen on the followingtable:

Remuneration for the Chairman over the five yearsended 30th September 2016 Year ended30th September Fees

2016 £34,0002015 £30,0002014 £27,0002013 £27,00020121 £26,0001 Appointed Chairman during financial year.

Directors’ Shareholdings1

There are no requirements pursuant to the Company’s Articles ofAssociation for the Directors to own shares in the Company. TheDirectors’ beneficial shareholdings, including any shares held byconnected persons, are detailed below.

2016 2015Number of Number of

Directors’ Name shares held shares held

William Knight 4,400 4,400Sir Andrew Burns2 4,723 4,723Kathryn Matthews 3,000 3,000John Misselbrook 6,000 6,000Oscar Wong — —

Total 18,123 18,1231 Audited information.2 Retired 25th January 2016.

As at the latest practicable date before the publication of thisdocument, there have been no changes to the Directors’shareholdings.

The Directors have no other share interests or share options in theCompany and no share schemes are available.

No amounts (2015: nil) were paid to third parties for makingavailable the services of Directors.

In accordance with the Companies Act 2006, a graph showing theCompany’s share price total return compared with its benchmark,the MSCI China Index1 with dividends reinvested, in sterling terms,over the last seven years is shown below. The Board believes thisIndex is the most representative comparator for the Company, as itincludes China securities and non-domestic China securities listed inHong Kong and Taiwan.

Seven Year Share Price and Benchmark1 Total ReturnPerformance to 30th September 2016

Source: Morningstar/Datastream/MSCI.

Share price total return.

Benchmark.

1 Prior to 26th January 2016, the benchmark was the MSCI Golden Dragon Index.

80

100

120

140

160

180

20162015201420132012201120102009

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A table showing actual expenditure by the Company onremuneration and distributions to shareholders for the year andthe prior year can be seen on the following table:

Expenditure by the Company on remuneration anddistributions to shareholders

Year ended 30th September

2016 2015

Remuneration paid to all Directors £112,430 £123,406

Distribution to shareholders— by way of dividend £1,185,000 £1,350,000— by way of share repurchases £1,673,000 £1,025,000

Total distribution to shareholders £3,006,000 £2,375,000

For and on behalf of the Board William Knight Chairman

8th December 2016

DIRECTORS’ REMUNERATION REPORT CONTINUED

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STATEMENT OF DIRECTORS’ RESPONSIBILITIES

The Directors are responsible for preparing the annual report andaccounts in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statementsfor each financial year. Under that law, the Directors have elected toprepare the financial statements in accordance with UnitedKingdom Generally Accepted Accounting Practice (United KingdomAccounting Standards, comprising Financial ReportingStandard 102, The Financial Reporting Standard Applicable in theUK and Republic of Ireland (FRS 102)) and applicable law. Undercompany law the Directors must not approve the financialstatements unless they are satisfied that, taken as a whole, theannual report and accounts are fair, balanced and understandable,provide the information necessary for shareholders to assess theCompany’s position and performance, business model and strategyand that they give a true and fair view of the state of affairs of theCompany and of the total return or loss of the Company for thatperiod. In order to provide these confirmations, and in preparingthese financial statements, the Directors are required to:

• select suitable accounting policies and then apply themconsistently;

• make judgements and estimates that are reasonable andprudent;

• state whether applicable UK Accounting Standards, comprisingFRS 102, have been followed, subject to any material departuresdisclosed and explained in the financial statements;

• notify the Company’s shareholders in writing about the use ofdisclosure exemptions, if any, in FRS 102 used in the preparationof financial statements; and

• prepare the financial statements on a going concern basis unlessit is inappropriate to presume that the Company will continue inbusiness

and the Directors confirm that they have done so.

The Directors are responsible for keeping proper accountingrecords that are sufficient to show and explain the Company’stransactions and disclose with reasonable accuracy at any time thefinancial position of the Company and to enable them to ensure thatthe financial statements comply with the Companies Act 2006. Theyare also responsible for safeguarding the assets of the Companyand hence for taking reasonable steps for the prevention anddetection of fraud and other irregularities.

The accounts are published on the www.jpmchinese.co.uk website,which is maintained by the Company’s Manager. The maintenanceand integrity of the website maintained by the Manager is, so far asit relates to the Company, the responsibility of the Manager. Thework carried out by the Auditor does not involve consideration ofthe maintenance and integrity of this website and, accordingly, theAuditor accepts no responsibility for any changes that haveoccurred to the accounts since they were initially presented on thewebsite. The accounts are prepared in accordance with UKlegislation, which may differ from legislation in other jurisdictions.

Under applicable law and regulations the Directors are alsoresponsible for preparing a Directors’ Report, Strategic Report,Statement of Corporate Governance and Directors’ RemunerationReport that comply with that law and those regulations.

Each of the Directors, whose names and functions are listed onpages 26 and 27, confirms that, to the best of their knowledge:

• the financial statements, which have been prepared inaccordance with United Kingdom Generally Accepted AccountingPractice (United Kingdom Accounting Standards) and applicablelaw, give a true and fair view of the assets, liabilities, financialposition and net return or loss of the Company; and

• the Strategic Report includes a fair review of the developmentand performance of the business and the position of theCompany, together with a description of the principal risks anduncertainties that it faces.

The Board confirms that it is satisfied that the annual report andaccounts, taken as a whole are fair, balanced and understandableand provide the information necessary for shareholders to assessthe Company’s position and performance, business model andstrategy.

The Board also confirms that it is satisfied that the Strategic Reportand Directors’ Report include a fair review of the development andperformance of the business, and the position of the Company,together with a description of the principal risks and uncertaintiesthat the Company faces.

For and on behalf of the Board William Knight, Chairman

8th December 2016

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Independent Auditors’ Report

TO THE MEMBERS OF JPMORGAN CHINESE INVESTMENT TRUST PLC

Report on the financial statements Our opinionIn our opinion, JPMorgan Chinese Investment Trust plc’s financial statements (the ‘financial statements of the Company’):

• give a true and fair view of the state of the Company’s affairs as at 30th September 2016 and of its profit for the year then ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

• have been prepared in accordance with the requirements of the Companies Act 2006.

What we have auditedThe financial statements, included within the Annual Report & Accounts (the ‘Annual Report’), comprise:

• the Statement of Financial Position as at 30th September 2016;

• the Statement of Comprehensive Income for the year then ended;

• the Statement of Changes in Equity for the year then ended; and

• the notes to the financial statements, which include a summary of significant accounting policies and other explanatory information.

Certain required disclosures have been presented elsewhere in the Annual Report, rather than in the notes to the financial statements.These are cross-referenced from the financial statements and are identified as audited.

The financial reporting framework that has been applied in the preparation of the financial statements is United Kingdom AccountingStandards, comprising FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’, and applicable law (UnitedKingdom Generally Accepted Accounting Practice).

Our audit approach

Overview

• Overall materiality: £1.8 million which represents 1% of Net assets.

• The Company is a standalone Investment Trust Company and engages JPMorgan Funds Limited(the ‘Manager’) to manage its assets.

• We conducted our audit of the financial statements using information from JPMorgan Corporate &Investment Bank (the ‘Administrator’) to whom the Manager has, with the consent of the Directors,delegated the provision of certain administrative functions.

• We tailored the scope of our audit taking into account the types of investments within the Company, theinvolvement of the third parties referred to above, the accounting processes and controls, and the industryin which the Company operates

• Income from investments.• Valuation and existence of investments.

The scope of our audit and our areas of focusWe conducted our audit in accordance with International Standards on Auditing (UK and Ireland) (‘ISAs (UK & Ireland)’).

We designed our audit by determining materiality and assessing the risks of material misstatement in the financial statements. In particular,we looked at where the Directors made subjective judgements, for example in respect of significant accounting estimates that involved

Materiality

Audit scope

Areas offocus

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making assumptions and considering future events that are inherently uncertain. As in all of our audits we also addressed the risk ofmanagement override of internal controls, including evaluating whether there was evidence of bias by the Directors that represented a riskof material misstatement due to fraud.

The risks of material misstatement that had the greatest effect on our audit, including the allocation of our resources and effort, areidentified as ‘areas of focus’ in the table below. We have also set out how we tailored our audit to address these specific areas in order toprovide an opinion on the financial statements as a whole, and any comments we make on the results of our procedures should be read inthis context. This is not a complete list of all risks identified by our audit.

Area of focus How our audit addressed the area of focus

Income from investmentsISAs (UK & Ireland) presume there is a risk of fraud in incomerecognition because of the pressure management may feel toachieve capital growth in line with the objective of the Company.

We focused on the valuation of investments with respect tounrealised income (see below) and completeness of dividendincome recognition and its presentation in the Statement ofComprehensive Income as set out in the requirements of TheAssociation of Investment Companies Statement of RecommendedPractice (the ‘AIC SORP’). Capital gains in the year amounted to£47 million. Dividend income totalled £3.5 million.

We assessed the accounting policy for income recognition forcompliance with accounting standards and the AIC SORP andperformed testing to check that income had been accounted for inaccordance with this stated accounting policy.

We found that the accounting policies implemented were inaccordance with accounting standards and the AIC SORP, and thatincome has been accounted for in accordance with the statedaccounting policy.

We tested the allocation and presentation of dividend incomebetween the income and capital return columns of the Statement ofComprehensive Income in line with the requirements set out in theAIC SORP.

The gains/losses on investments held at fair value comprise realisedand unrealised gains/losses. For unrealised gains and losses, wetested the valuation of the portfolio at the year-end (see below),together with testing the reconciliation of opening and closinginvestments. For realised gains/losses, we tested disposal proceedsby agreeing the proceeds to bank statements. No misstatementswere identified by our testing which required reporting to thosecharged with governance.

We understood and assessed the design and implementation of keycontrols surrounding income recognition.

In addition, we tested dividend receipts by agreeing the dividendrates from a sample of investments to independent third partysources and to bank statements. No misstatements were identifiedby our testing.

To test for completeness, we tested that the appropriate dividendshad been received in the year by reference to independent data ofdividends declared by a sample of investment holdings in theportfolio. Our testing did not identify any unrecorded dividends.

Valuation and existence of investmentsThe investment portfolio at the year-end principally comprisedlisted equity investments valued at £195 million.

We focused on the valuation and existence of investments becauseinvestments represent the principal element of the net asset valueas disclosed on the Statement of Financial Position in the financialstatements.

We tested the valuation of the listed equity investments by agreeingthe prices used in the valuation to independent third party sources.

No misstatements were identified by our testing which requiredreporting to those charged with governance.

We tested the existence of the investment portfolio by agreeing theholdings for investments to an independent custodian confirmationfrom JPMorgan Chase Bank, N.A. No differences were identified.

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Independent Auditors’ Report continued

How we tailored the audit scopeThe Company is a standalone Investment Trust Company and engages JPMorgan Funds Limited (the ‘Manager’) to manage its assets.

We conducted our audit of the financial statements using information from JPMorgan Corporate & Investment Bank (the ‘Administrator’) towhom the Manager has, with the consent of the Directors, delegated the provision of certain administrative functions.

We tailored the scope of our audit taking into account the types of investments within the Company, the involvement of the third partiesreferred to above, the accounting processes and controls, and the industry in which the Company operates.

We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as awhole, taking into account the geographic structure of the Company, the accounting processes and controls, and the industry in which theCompany operates.

The Company’s accounting is delegated to the Administrator who maintain their own accounting records and controls and report to theManager and the Directors. As part of our risk assessment, we assessed the control environment in place at both the Manager and theAdministrator to the extent relevant to our audit. This assessment of the operating and accounting structure in place at both organisationsinvolved obtaining and reading the relevant control reports issued by the independent auditor of the Manager and the Administrator inaccordance with generally accepted assurance standards for such work. We then identified those key controls at the Administrator on whichwe could place reliance to provide audit evidence. We also assessed the gap period of six months between the period covered by thecontrols report and the year-end of the Company. Following this assessment, we applied professional judgement to determine the extent oftesting required over each balance in the financial statements, including whether we needed to perform additional testing in respect ofthose key controls to support our substantive work. For the purposes of our audit, we determined that additional testing of controls in placeat the Administrator was not required because additional substantive testing was performed.

MaterialityThe scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These,together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our auditprocedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individuallyand on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Overall materiality £1.8 million (2015: £1.4 million).

How we determined it 1% of net assets.

We have applied this benchmark, a generally accepted auditing practice for investment trust audits, in theabsence of indicators that an alternative benchmark would be appropriate and because we believe this providesan appropriate and consistent year-on-year basis for our audit.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £90,000 (2015:£68,000) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.

Going concernUnder the Listing Rules we are required to review the Directors’ statement, set out on page 33, in relation to going concern. We have nothingto report having performed our review.

Under ISAs (UK & Ireland) we are required to report to you if we have anything material to add or to draw attention to in relation to theDirectors’ statement about whether they considered it appropriate to adopt the going concern basis in preparing the financial statements.We have nothing material to add or to draw attention to.

As noted in the Directors’ statement, the Directors have concluded that it is appropriate to adopt the going concern basis in preparing thefinancial statements. The going concern basis presumes that the Company has adequate resources to remain in operation, and that theDirectors intend it to do so, for at least one year from the date the financial statements were signed. As part of our audit we have concludedthat the Directors’ use of the going concern basis is appropriate. However, because not all future events or conditions can be predicted,these statements are not a guarantee as to the Company’s ability to continue as a going concern.

Rationale forbenchmark applied

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Other required reportingConsistency of other information

Companies Act 2006 reportingIn our opinion, the information given in the Strategic Report and the Directors’ Report for the financial year for which the financialstatements are prepared is consistent with the financial statements.

ISAs (UK & Ireland) reportingUnder ISAs (UK & Ireland) we are required to report to you if, in our opinion:

• information in the Annual Report is:

− materially inconsistent with the information in the audited financial statements; or

− apparently materially incorrect based on, or materially inconsistent with, our knowledge of theCompany acquired in the course of performing our audit; or

− otherwise misleading.

• the statement given by the Directors on page 33, in accordance with provision C.1.1 of the UK CorporateGovernance Code (the ‘Code’), that they consider the Annual Report taken as a whole to be fair,balanced and understandable and provides the information necessary for members to assess theCompany’s position and performance, business model and strategy is materially inconsistent with ourknowledge of the Company acquired in the course of performing our audit.

• the section of the Annual Report on page 32, as required by provision C.3.8 of the Code, describingthe work of the Audit Committee does not appropriately address matters communicated to us by theAudit Committee.

The Directors’ assessment of the prospects of the Company and of the principal risks that would threaten the solvency or liquidity ofthe Company Under ISAs (UK & Ireland) we are required to report to you if we have anything material to add or to draw attention to in relation to:

• the Directors’ confirmation on page 23 of the Annual Report, in accordance with provision C.2.1 of theCode, that they have carried out a robust assessment of the principal risks facing the Company,including those that would threaten its business model, future performance, solvency or liquidity.

• the disclosures in the Annual Report that describe those risks and explain how they are beingmanaged or mitigated.

• the Directors’ explanation on page 25 of the Annual Report, in accordance with provision C.2.2 of theCode, as to how they have assessed the prospects of the Company, over what period they have doneso and why they consider that period to be appropriate, and their statement as to whether they havea reasonable expectation that the Company will be able to continue in operation and meet itsliabilities as they fall due over the period of their assessment, including any related disclosuresdrawing attention to any necessary qualifications or assumptions.

Under the Listing Rules we are required to review the Directors’ statement that they have carried out a robust assessment of the principalrisks facing the Company and the Directors’ statement in relation to the longer-term viability of the Company. Our review was substantiallyless in scope than an audit and only consisted of making inquiries and considering the Directors’ process supporting their statements;checking that the statements are in alignment with the relevant provisions of the Code; and considering whether the statements are consistentwith the knowledge acquired by us in the course of performing our audit. We have nothing to report having performed our review.

We have no exceptions toreport.



We have nothing material to addor to draw attention to.



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Independent Auditors’ Report continued

Adequacy of accounting records and information and explanations receivedUnder the Companies Act 2006 we are required to report to you if, in our opinion:

• we have not received all the information and explanations we require for our audit; or

• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited byus; or

• the financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accountingrecords and returns.

We have no exceptions to report arising from this responsibility.

Directors’ remuneration

Directors’ remuneration report - Companies Act 2006 opinionIn our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the CompaniesAct 2006.

Other Companies Act 2006 reportingUnder the Companies Act 2006 we are required to report to you if, in our opinion, certain disclosures of Directors’ remuneration specifiedby law are not made. We have no exceptions to report arising from this responsibility.

Corporate governance statementUnder the Listing Rules we are required to review the part of the Corporate Governance Statement relating to ten further provisions of theCode. We have nothing to report having performed our review.

Responsibilities for the financial statements and the auditOur responsibilities and those of the DirectorsAs explained more fully in the Directors’ Responsibilities Statement set out on page 39, the Directors are responsible for the preparation ofthe financial statements and for being satisfied that they give a true and fair view.

Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and ISAs (UK & Ireland).Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 ofPart 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for anyother purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by ourprior consent in writing.

What an audit of financial statements involvesAn audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurancethat the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of:

• whether the accounting policies are appropriate to the Company’s circumstances and have been consistently applied and adequatelydisclosed;

• the reasonableness of significant accounting estimates made by the Directors; and

• the overall presentation of the financial statements.

We primarily focus our work in these areas by assessing the Directors’ judgements against available evidence, forming our own judgements,and evaluating the disclosures in the financial statements.

We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide areasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive proceduresor a combination of both.

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In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the auditedfinancial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, theknowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements orinconsistencies we consider the implications for our report.

Alex Bertolotti (Senior Statutory Auditor)for and on behalf of PricewaterhouseCoopers LLPChartered Accountants and Statutory AuditorsLondon

8th December 2016

The maintenance and integrity of the JPMorgan Chinese Investment Trust plc website is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these mattersand, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

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Financial Statements

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30TH SEPTEMBER 2016

2016 2015Revenue Capital Total Revenue Capital Total

Notes £’000 £’000 £’000 £’000 £’000 £’000

Gains/(losses) on investments held at fair value through profit or loss 3 — 47,348 47,348 — (547) (547)1

Net foreign currency losses — (1,776) (1,776) — (731) (731)1

Income from investments 4 3,548 — 3,548 4,434 — 4,434Interest receivable 4 83 — 83 2 — 2

Gross return/(loss) 3,631 45,572 49,203 4,436 (1,278) 3,158 Management fee 5 (1,660) — (1,660) (1,764) — (1,764)Performance fee 5 — — — — (59) (59)Other administrative expenses 6 (476) — (476) (467) — (467)

Net return/(loss) on ordinary activities before finance costs and taxation 1,495 45,572 47,067 2,205 (1,337) 868

Finance costs 7 (252) — (252) (211) — (211)

Net return/(loss) on ordinary activities before taxation 1,243 45,572 46,815 1,994 (1,337) 657

Taxation 8 92 (21) 71 (293) — (293)

Net return/(loss) on ordinary activities after taxation 1,335 45,551 46,886 1,701 (1,337) 364

Return/(loss) per share 10 1.79p 60.87p 62.66p 2.25p (1.77)p 0.48p


A final dividend of 1.6p (2015: 1.8p) has been proposed in respect of the year ended 30th September 2016, totalling £1,185,000 (2015:£1,350,000). Further details are given in note 9 on page 55.

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in theyear.

The ‘Total’ column of this statement is the profit and loss account of the Company and the ‘Revenue’ and ‘Capital’ columns representsupplementary information prepared under guidance issued by the Association of Investment Companies. Net return/(loss) on ordinaryactivities after taxation represents the profit/(loss) for the year and also Total Comprehensive Income.

The notes on pages 49 to 67 form an integral part of these financial statements.

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STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30TH SEPTEMBER 2016

Called up Exercised Capital share Share warrant redemption Other Capital Revenue capital premium reserve reserve reserve reserves reserve1 Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

At 30th September 2014 19,481 13,321 3 581 37,392 65,125 1,899 137,802Repurchase of shares into Treasury — — — — — (1,025) — (1,025)Net (loss)/return from ordinary

activities — — — — — (1,337) 1,701 364Dividends paid in the year — — — — — — (1,209) (1,209)

At 30th September 2015 19,481 13,321 3 581 37,392 62,763 2,391 135,932Repurchase of shares into Treasury — — — — — (1,673) — (1,673)Net return from ordinary

activities — — — — — 45,551 1,335 46,886Dividends paid in the year — — — — — — (1,350) (1,350)

At 30th September 2016 19,481 13,321 3 581 37,392 106,641 2,376 179,795

1 This reserve forms the distributable reserve of the Company and may be used to fund distribution of profits to investors via dividend payments.


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Financial Statements continued

STATEMENT OF FINANCIAL POSITION AT 30TH SEPTEMBER 2016

2016 2015 Notes £’000 £’000

Fixed assets 11Investments held at fair value through profit or loss 195,157 154,813Current assets 12Debtors 1,599 890Cash and cash equivalents1 515 4,636

2,114 5,526Current liabilities 13Creditors: amounts falling due within one year (17,476) (24,407)

Net current liabilities (15,362) (18,881)

Total assets less current liabilities 179,795 135,932

Net assets 179,795 135,932

Capital and reserves Called up share capital 15 19,481 19,481Share premium 16 13,321 13,321Exercised warrant reserve 16 3 3Capital redemption reserve 16 581 581Other reserve 16 37,392 37,392Capital reserves 16 106,641 62,763Revenue reserve 16 2,376 2,391

Total shareholders’ funds 179,795 135,932

Net asset value per share 17 242.7p 181.2p

1 This line item combines the two lines of ‘Investments in liquidity funds held at fair value through profit or loss’ and ‘Cash and short term deposits’ in the financial statements forthe year ended 30th September 2015 into one. Under FRS 102, liquidity funds are considered cash equivalents as they are held for cash management purposes.

The financial statements on pages 46 to 67 were approved and authorised for issue by the Directors on 8th December 2016 and signed ontheir behalf by:

William KnightChairman


Company registration number: 02853893.

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1. Accounting policies(a) Basis of accounting

The financial statements are prepared in accordance with the Companies Act 2006, United Kingdom Generally Accepted AccountingPractice (‘UK GAAP’), including FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ and with theStatement of Recommended Practice ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’ (the ‘SORP’)issued by the Association of Investment Companies in November 2014.

All of the Company’s operations are of a continuing nature.

The financial statements have been prepared on a going concern basis. The disclosures on going concern on page 33 of the Directors’Report form part of these financial statements.

(b) Transition to FRS 102

This set of financial statements, in accordance with the SORP includes changes arising from the adoption of FRS 102 which theCompany is required to comply with for the first time for the year ended 30th September 2016. The Company's date of transition toFRS 102 was 1st October 2014.

No significant changes have arisen from the adoption of the new standard. Where changes have arisen, they are substantially inrelation to presentation, disclosure and non-quantifiable aspects. There has been no impact to financial position or financialperformance and comparative figures which required restating were in respect of presentation only.

The Company has elected not to prepare a Statement of Cash Flows for the current year, applying the exemption from FRS 102Section 7.1A(c).

Early adoption

In March 2016, the FRC published amendments to FRS 102 concerning the fair value hierarchy disclosures. These amendments areeffective for accounting periods beginning on or after 1st January 2017. The Company has elected to adopt these amendments earlyin this set of financial statements. Full disclosure is given in note 20 on page 60.

(c) Valuation of investments

The Company has chosen to adopt Sections 11 and 12 of FRS 102 in respect of financial instruments.

The Company’s business is investing in financial assets with a view to profiting from their total return in the form of income andcapital growth. The portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordance witha documented investment strategy and information is provided internally on that basis to the Company’s Board of Directors.Accordingly, upon initial recognition the investments are designated by the Company as held at fair value through profit or loss.They are included initially at fair value which is taken to be their cost, excluding expenses incidental to purchase which are writtenoff to capital at the time of acquisition. Subsequently the investments are valued at fair value, which are quoted bid prices forinvestments traded in active markets. For investments which are not traded in active markets, unlisted and restricted investments,the Board takes into account the latest traded prices, other observable market data and asset values based on the latest managementaccounts.

All purchases and sales are accounted for on a trade date basis.

(d) Accounting for reserves

Gains and losses on sales of investments including the related foreign exchange gains and losses, and any other capital charges,are included in the Statement of Comprehensive Income and dealt with in capital reserves within ‘Gains and losses on sales ofinvestments’.

Increases and decreases in the valuation of investments held at the year end including the related foreign exchange gains andlosses, are included in the Statement of Comprehensive Income and dealt with in capital reserves within ‘Investment holding gainsand losses’.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH SEPTEMBER 2016

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

1. Accounting policies continued

(e) Income

Dividends receivable from equity shares are included in revenue on an ex-dividend basis except where, in the opinion of the Board,the dividend is capital in nature, in which case it is included in capital.

Overseas dividends are included gross of any withholding tax.

Special dividends are looked at individually to ascertain the reason behind the payment. This will determine whether they are treatedas income or capital.

Where the Company has elected to receive scrip dividends in the form of additional shares rather than in cash, the amount of the cashdividend foregone is recognised in revenue. Any excess in the value of the shares received over the amount of the cash dividend isrecognised in capital.

Stock lending income and interest receivable are taken to revenue on an accruals basis.

(f) Expenses

All expenses are accounted for on an accruals basis. Expenses are allocated wholly to the revenue with the following exceptions:

– any performance fee is allocated 100% to capital; and

– Expenses incidental to the purchase and sale of an investment are charged to capital. These expenses are commonly referred to astransaction costs and comprise brokerage commission and stamp duty. Details of transaction costs are given in note 11 onpage 56.

(g) Finance costs

Finance costs are accounted for on an accruals basis using the effective interest rate method.

Finance costs are allocated wholly to revenue.

(h) Financial instruments

Cash and cash equivalents may comprise cash including demand deposits which are readily convertible to a known amount of cashand are subject to an insignificant risk of change in value. Liquidity funds are considered cash equivalents as they are held for cashmanagement purposes as an alternative to cash, are short term, and readily convertible to a known amount of cash.

Other debtors and creditors do not carry any interest, are short term in nature and are accordingly stated at nominal value, withdebtors reduced by appropriate allowances for estimated irrecoverable amounts.

Bank loans are classified as financial liabilities measured at amortised cost. They are initially measured as proceeds net of direct issuecosts and subsequently measured at amortised cost. Interest payable on the bank loan is accounted for on an accruals basis in theStatement of Comprehensive Income.

(i) Taxation

Current tax is provided at the amounts expected to be paid or recovered.

Deferred tax is provided on all timing differences that have originated but not reversed by the balance sheet date. Deferred taxliabilities are recognised for all taxable timing differences but deferred tax assets are only recognised to the extent that it is morelikely than not that taxable profits will be available against which those timing differences can be utilised.

Deferred tax is measured at the tax rate which is expected to apply in the periods in which the timing differences are expected toreverse, based on tax rates that have been enacted or substantively enacted at the balance sheet date and is measured on anundiscounted basis.

Tax relief is allocated to expenses charged to capital on the ‘marginal basis’. On this basis, if taxable income is capable of beingentirely offset by revenue expenses, then no tax relief is transferred to capital.

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(j) Value Added Tax (‘VAT’)

Expenses are disclosed inclusive of the related irrecoverable VAT. Recoverable VAT is calculated using the partial exemption methodbased on the proportion of zero rated supplies to total supplies.

(k) Foreign currency

The Company is required to identify its functional currency, being the currency of the primary economic environment in which theCompany operates. The Board, having regard to the currency of the Company’s share capital and the predominant currency in whichits shareholders operate, has determined that sterling is the functional currency. Sterling is also the currency in which the financialstatements are presented.

Transactions denominated in foreign currencies are converted at actual exchange rates at the date of the transaction. Monetaryassets, liabilities and equity investments held at fair value, denominated in foreign currencies at the year end are translated at therates of exchange prevailing at the year end.

Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included in the Statement ofComprehensive Income as an exchange gain or loss in revenue or capital, depending on whether the gain or loss is of a revenue orcapital nature.

(l) Dividends payable

Dividends are included in the financial statements in the year in which they are approved by shareholders.

(m) Performance fee

Any performance fee falling due for payment immediately is included in ‘Creditors: amounts falling due within one year’. Amountswhich are carried forward for payment in future years but which are subject to reduction by any future underperformance areincluded in ‘Provisions for liabilities and charges’. The performance fee was terminated on 1st October 2015.

(n) Repurchases of ordinary shares for cancellation

The cost of repurchasing ordinary shares including the related stamp duty and transactions costs is charged to ‘Capital reserves’ anddealt with in the Statement of Changes in Equity. Share repurchase transactions are accounted for on a trade date basis. The nominalvalue of ordinary share capital repurchased and cancelled is transferred out of ‘Called up share capital’ and into ‘Capital redemptionreserve’.

(o) Repurchase of shares into Treasury

The cost of repurchasing shares into Treasury, including the related stamp duty and transaction costs is charged to ‘Capital reserves’and dealt with in the Statement of Changes in Equity. Share repurchase transactions are accounted for on a trade date basis. Whereshares held in Treasury are subsequently cancelled, the nominal value of those shares is transferred out of called up share capital andinto capital redemption reserve.

Should shares held in Treasury be reissued, the sales proceeds will be treated as a realised profit up to the amount of the purchaseprice of those shares and will be transferred to capital reserves. The excess of the sales proceeds over the purchase price will betransferred to share premium.

2. Significant accounting judgements, estimates and assumptionsThe preparation of the Company’s financial statements on occasion requires management to make judgements, estimates andassumptions that affect the reported amounts in the primary financial statements and the accompanying disclosures. Theseassumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets orliabilities affected in the current and future periods, depending on circumstance.

Management do not believe that any significant accounting judgements or estimates have been applied to this set of financialstatements, that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within thenext financial year.

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3. Gains/(losses) on investments held at fair value through profit or loss 2016 20151

£’000 £’000

Gains on investments held at fair value through profit or loss based on historic cost 9,103 12,218 Amounts recognised in investment holding gains and losses in the previous year in respect of investments sold during the year (3,238) (7,842)

Gains on sales of investments based on the carrying value at the previous balance sheet date 5,865 4,376 Net movement in investment holding gains and losses 41,521 (4,881)Other capital charges (38) (42)

Total capital gains/(losses) on investments held at fair value through profit or loss 47,348 (547)


4. Income 2016 2015£’000 £’000

Income from investments:Overseas dividends 3,415 4,160 Overseas interest 4 —Dividends from participatory notes 85 140 Scrip dividends 44 134

3,548 4,434

Interest receivable:Stocklending fees 76 —Interest from liquidity fund 6 2 Deposit interest 1 —

83 2

Total income 3,631 4,436

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5. Management fee and performance fee2016 2015

Revenue Capital Total Revenue Capital Total £’000 £’000 £’000 £’000 £’000 £’000

Management fee 1,660 — 1,660 1,764 — 1,764Performance fee1 — — — — 59 59

1,660 — 1,660 1,764 59 1,823

1 With effect 30 September 2015, the performance fee was removed.

Details of the management fee and performance fee are given in the Directors’ Report on page 28.

6. Other administrative expenses

2016 2015£’000 £’000

Other administration expenses 267 219Directors’ fees1 112 123Safe custody fees 43 63Depository fees2 28 37Auditors’ remuneration for audit services3 26 25

476 467

1 Full disclosure is given in the Directors’ Remuneration Report on page 37.2 Includes £1,000 (2015: £1,000) irrecoverable VAT.3 Includes £1,000 (2015: £1,000) irrecoverable VAT.

7. Finance costs

2016 2015£’000 £’000

Interest on bank loans and overdrafts 252 211

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8. Taxation (a) Analysis of tax charge in the year

2016 2015Revenue Capital Total Revenue Capital Total £’000 £’000 £’000 £’000 £’000 £’000

Overseas withholding tax (92) — (92) 293 — 293Capital gains tax — 21 21 — — —

Total tax (credit)/charge for the year (92) 21 (71) 293 — 293

(b) Factors affecting total tax charge for the year

The tax charge for the year is lower (2015: higher) than the Company’s applicable rate of corporation tax of 20.0% (2015: 20.5%) Thefactors affecting the total tax charge for the year are as follows:

2016 2015Revenue Capital Total Revenue Capital Total £’000 £’000 £’000 £’000 £’000 £’000

Net return/(loss) on ordinary activities before taxation 1,243 45,572 46,815 1,994 (1,337) 657

Net return/(loss) on ordinary activities beforetaxation multiplied by the Company’sapplicable rate of corporation tax forthe year of 20.0% (2015: 20.5%) 249 9,114 9,363 409 (274) 135

Effects of:Non taxable capital (gains)/losses — (9,114) (9,114) — 262 262Non taxable scrip dividends (9) — (9) (28) — (28)Non taxable overseas dividends (683) — (683) (853) — (853)Unrelieved expenses 443 21 464 472 12 484Overseas withholding tax (92) — (92) 293 — 293

Total tax (credit)/charge for the year (92) 21 (71) 293 — 293

(c) Deferred taxation

The Company has an unrecognised deferred tax asset of £3,194,238 (2015: £3,303,000) based on a prospective corporation tax rate of17% (2015: 20%). The UK Government announced in July 2015 that the corporation tax rate is set to be cut to 19% in 2017 and 17% in2020. These reductions in the standard rate of corporation tax were substantively enacted on 26th October 2015 and becameeffective from 18th November 2015. The deferred tax asset has arisen due to the cumulative excess of deductible expenses overtaxable income. Given the composition of the Company’s portfolio, it is not likely that this asset will be utilised in the foreseeablefuture and therefore no asset has been recognised in the financial statements.

Given the Company’s status as an investment trust company and the intention to continue meeting the conditions required to obtainapproval, the Company has not provided for deferred tax on any capital gains or losses arising on the revaluation or disposal ofinvestments.

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9. Dividends1

(a) Dividends paid and proposed

2016 2015£’000 £’000

Dividend paid2015 Final dividend paid of 1.8p (2014: 1.6p) per share 1,350 1,209

Dividend proposed2016 Final dividend proposed of 1.6p (2015: 1.8p) per share 1,185 1,350

The dividend proposed in respect of the year ended 30th September 2016 is subject to shareholder approval at the forthcomingAnnual General Meeting. In accordance with the accounting policy of the Company, this dividend will be reflected in the financialstatements for the year ending 30th September 2017.

(b) Dividend for the purposes of Section 1158 of the Corporation Tax Act 2010 (‘Section 1158’)

The requirements of Section 1158 are considered on the basis of the dividend proposed in respect of the financial year, shown below.The revenue available for distribution by way of dividend for the year is £1,335,000 (2015: £1,701,000).

2016 2015£’000 £’000

Final dividend proposed of 1.6p (2015: 1.8p) per share 1,185 1,350

1 All dividends paid and proposed in the period are funded from the revenue reserve.

The revenue reserve after payment of the final dividend will amount to £1,191,000 (2015: £1,041,000)

10. Return/(loss) per share2016 2015£’000 £’000

Revenue return 1,335 1,701Capital return/(loss) 45,551 (1,337)

Total return/(loss) 46,886 364

Weighted average number of shares in issue during the year 74,824,831 75,384,066

Revenue return per share 1.79p 2.25pCapital return/(loss) per share 60.87p (1.77)p

Total return per share 62.66p 0.48p

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11. Investments2016 2015

Overseas Overseas Investmentinvestments investments1 fund Total

£’000 £’000 £’000 £’000

Investments listed on a recognised stock exchange 195,157 154,813 — 154,813

Opening book cost 141,712 122,364 2,996 125,360 Opening investment holding gains 13,101 25,811 13 25,824

Opening valuation 154,813 148,175 3,009 151,184 Movements in the year:Purchases at cost 137,250 153,881 — 153,881 Sales - proceeds (144,292) (146,872) (2,875) (149,747)Gains/(losses) on sales of investments based on the carrying value at the previous balance sheet date 5,865 4,497 (121) 4,376

Net movement in investment holding gains and losses 41,521 (4,868) (13) (4,881)

195,157 154,813 — 154,813

Closing book cost 143,773 141,712 — 141,712 Closing investment holding gains 51,384 13,101 — 13,101

Total investments held at fair value through profit or loss 195,157 154,813 — 154,813


Transaction costs on purchases during the year amounted to £296,000 (2015: £370,000) and on sales during the year amounted to£297,000 (2015: £336,000). These costs comprise mainly brokerage commission.

During the year, prior year investment holding gains amounting to £3,238,000 have been transferred to gains and losses on sales ofinvestments as disclosed in note 16.

12. Current assets

Debtors

2016 2015£’000 £’000

Securities sold awaiting settlement 1,350 669Dividends and interest receivable 221 188Overseas tax recoverable — 12Other debtors 28 21

1,599 890

The Directors consider that the carrying amount of debtors approximates to their fair value.

Cash and cash equivalents

Cash and cash equivalents comprise bank balances, short term deposits and liquidity funds. The carrying amount of these representstheir fair value.

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13. Current liabilities2016 2015£’000 £’000

Creditors amounts falling due within one yearBank loan 16,166 24,096Securities purchased awaiting settlement 1,105 123Repurchase of the Company’s own shares awaiting settlement 105 —Other creditors and accruals 91 129Loan interest payable 9 —Performance fee payable1 — 59

17,476 24,407

1 Further details of the performance fee can be found in note 14 below.

On 27th January 2012, the Company arranged a £20 million unsecured 364 day multicurrency revolving loan facility with ScotiabankIreland Limited. This facility was renewed for a further 364 days in January 2013 and again in January 2014, January 2015 and January2016 with a maturity date of 20th January 2017. On 5th May 2015, the £20 million facility was increased to £30 million.

Under the terms of this agreement, the Company may draw down up to £30 million or its equivalent in other currency, at an interestrate of LIBOR as, offered in the market for the relevant currency and loan period, plus a margin of 0.75% plus ‘Mandatory Costs’,which are the lender’s costs of complying with certain regulatory requirements of the Bank of England and the Financial ConductAuthority. The facility is unsecured and is subject to covenants which are customary for a credit agreement of this nature.

At 30th September 2016, the Company had drawn down US$21.0 million (2015: US$36.5 million) on the multicurrency revolving loanfacility with Scotiabank at an interest rate of 1.32% (2015: 1.00%).

The Directors consider that the carrying amount of creditors falling due within one year approximates to their fair value.

14. Provisions for liabilities and charges 2016 2015£’000 £’000

Performance feeOpening balance — —Performance fee for the year — 59Amount realised during the year — (59)

Closing balance — —

The Company outperformed its benchmark in the year ended 30th September 2015 and this gave rise to a positive performance fee of£59,188. With effect from 30th September 2015, the performance fee was removed.

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15. Called up share capital 2016 2015£’000 £’000

Issued and fully paid share capital:Ordinary shares of 25p eachOpening balance of 75,005,470 (2015: 75,531,426) shares 18,754 18,885Repurchase of 930,535 (2015: 525,956) shares into Treasury (233) (131)

Sub total of 74,074,935 (2015: 75,005,470) 18,521 18,7543,840,030 (2015: 2,909,495) shares held in Treasury 960 727

Closing balance of 77,914,965 (2015: 77,914,965) including shares held in Treasury 19,481 19,481

Further details of transactions in the Company’s shares are given in the Business Review on page 23.

16. Capital and reservesCapital reserves

Gains and InvestmentsCalled up Exercised Capital losses on holding

share Share warrant redemption Other sales of gains and Revenuecapital premium reserve reserve reserve1 investments losses reserve2 Total£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Opening balance 19,481 13,321 3 581 37,392 50,590 12,173 2,391 135,932 Transfer of prior period unrealised gain on liquidity3 — — — — — 35 (35) — —

Net gains on cash and cash equivalents — — — — — 900 — — 900

Gains on sales of investments based on the carrying value at the previous balance sheet date — — — — — 5,865 — — 5,865

Net movement in investment holding gains and losses — — — — — — 41,521 — 41,521

Transfer on disposal of investments — — — — — 3,238 (3,238) — —Repurchase of shares into Treasury — — — — — (1,673) — — (1,673)Unrealised exchange loss on foreign currency loan — — — — — — (2,229) — (2,229)

Realised exchange loss on repayment of foreign currency loan — — — — — (447) — — (447)

Unrealised exchange loss on foreign currency loan now realised — — — — — (486) 486 — —

Other capital charges — — — — — (59) — — (59)Dividend paid in the year — — — — — — — (1,350) (1,350)Retained revenue for the year — — — — — — — 1,335 1,335

Closing balance 19,481 13,321 3 581 37,392 57,963 48,678 2,376 179,795

1 Created during the year ended 30th September 1999, following a cancellation of the share premium account.2 This reserve forms the distributable reserve of the Company and may be used to fund distribution of profits to investors via dividend payments.3 Transfer of opening liquidity fund unrealised loss between reserves as a result of the reclassification of liquidity holdings from Investments to cash equivalent.

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17. Net asset value per share2016 2015

Net assets (£’000) 179,795 135,932Number of shares in issue 74,074,935 75,005,470

Net asset value per share 242.7p 181.2p

18. Contingent liabilities and capital commitments At the balance sheet date there were no contingent liabilities or capital commitments (2015: same).

19. Related party transactions Details of the management contract are set out in the Directors’ Report on page 28. The management fee payable to the Manager forthe year was £1,660,000 (2015: £1,764,000) of which £nil (2015: £nil) was outstanding at the year end.

Included in administration expenses in note 6 on page 53 are safe custody fees amounting to £43,000 (2015: £63,000) payable toJPMorgan Chase Bank N.A. of which £7,000 (2015: £15,000) was outstanding at the year end.

The Manager may carry out some of its dealing transactions through group subsidiaries. These transactions are carried out at arm’slength. The commission payable to JPMorgan Securities Limited for the year was £77,000 (2015: £10,000) of which £nil (2015: £nil)was outstanding at the year end.

The Company can also hold cash in the JPMorgan US Dollar Liquidity Fund, which is managed by JPMorgan. At the year end this wasvalued at £nil (2015: £2.3 million). Interest amounting to £6,000 (2015: £2,000) was receivable during the year of which £nil (2015:£nil) was outstanding at the year end.

Handling charges on dealing transactions amounting to £38,000 (2015: £42,000) were payable to JPMorgan Chase Bank N.A. duringthe year of which £4,000 (2015: £16,000) was outstanding at the year end.

Fees amounting to £76,000 (2015: £nil) were receivable from stock lending transactions during the year. JPMorgan Investor ServicesLimited commissions in respect of such transactions amounted to £13,000 (2015: £nil).

At the year end, total cash of £515,000 (2015: £2,326,000) was held with JPMorgan Chase. A net amount of interest of £1,000 (2015:£nil) was receivable by the Company during the year from JPMorgan Chase of which £nil (2015: £nil) was outstanding at the year end.

Full details of Directors’ remuneration and shareholdings can be found on page 37 and in note 6 on page 53.

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20. Disclosures regarding financial instruments measured at fair valueThe Company’s financial instruments within the scope of FRS 102 that are held at fair value comprise its investment portfolio andderivative financial instruments.

The investments are categorised into a hierarchy consisting of the following three levels:

(1) The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurementdate

(2) Inputs other than quoted prices included within Level 1 that are observable (i.e.: developed using market data) for the asset orliability, either directly or indirectly

(3) Inputs are unobservable (i.e.: for which market data is unavailable) for the asset or liability

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair valuemeasurement of the relevant asset.

Details of the valuation techniques used by the Company are given in note 1(c) on page 49.

The following table sets out the fair value measurements using the FRS 102 hierarchy at 30th September.

2016 20151

Assets Liabilities Assets Liabilities £’000 £’000 £’000 £’000

Level 1 178,565 — 145,235 —Level 22 16,592 — 9,578 —

Total 195,157 — 154,813 —

There were no transfers between Level 1, 2 or 3 during the year (2015: same). 1 Relevant figures have been amended in line with the current presentation adopted under FRS 102, liquidity funds are classified as cash equivalents.2 Includes investments in participatory notes.

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21. Financial instruments’ exposure to risk and risk management policiesAs an investment trust, the Company invests in equities for the long term so as to secure its investment objective stated on the‘Features’ page. In pursuing this objective, the Company is exposed to a variety of financial risks that could result in a reduction in theCompany’s net assets or a reduction in the profits available for dividends.

These financial risks include market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk.The Directors’ policy for managing these risks is set out below. The Company Secretary, in close cooperation with the Board and theManager, coordinates the Company’s risk management policy.

The objectives, policies and processes for managing the risks and the methods used to measure the risks that are set out below, havenot changed from those applying in the comparative year.

The Company’s classes of financial instruments are as follows:

– investments in equity shares, convertibles, warrants, participatory notes and open ended investment companies, with exposure to‘Greater China’ companies and which are held in accordance with the Company’s investment objective;

– cash held within a liquidity fund;

– short term debtors, creditors and cash arising directly from its operations; and

– a loan facility.

(a) Market risk

The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices.This market risk comprises three elements – currency risk, interest rate risk and other price risk. Information to enable an evaluationof the nature and extent of these three elements of market risk is given in parts (i) to (iii) of this note, together with sensitivityanalyses where appropriate. The Board reviews and agrees policies for managing these risks and these policies have remainedunchanged from those applying in the comparative year. The Manager assesses the exposure to market risk when making eachinvestment decision and monitors the overall level of market risk on the whole of the investment portfolio on an ongoing basis.

(i) Currency risk

Certain of the Company's assets, liabilities and income are denominated in currencies other than sterling which is theCompany's functional currency and presentation currency. As a result, movements in exchange rates may affect the sterlingvalue of those items.

Management of currency risk

The Manager monitors the Company’s exposure to foreign currencies on a daily basis and reports to the Board, which meets onat least four occasions each year. The Manager measures the risk to the Company of this exposure by considering the effect onthe Company’s net asset value and income of a movement in rates of exchange to which the Company’s assets, liabilities,income and expenses are exposed. Income denominated in foreign currencies is converted to sterling on receipt. The Companymay use short term forward currency contracts to manage working capital requirements. It is currently not the Company'spolicy to hedge against foreign currency risk.

Foreign currency exposure

The fair value of the Company’s monetary items that have foreign currency exposure at 30th September are shown below.Where the Company’s equity investments (which are not monetary items) are priced in a foreign currency, they have beenincluded separately in the analysis so as to show the overall level of exposure.

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21. Financial instruments’ exposure to risk and risk management policies continued

(a) Market risk continued

(i) Currency risk continued

Foreign currency exposure continued

2016US Hong Kong Taiwan Chinese

Dollar Dollar Dollar Yuan Total £’000 £’000 £’000 £’000 £’000

Current assets 363 844 1,079 2 2,288Creditors (16,338) (221) (918) — (17,477)

Net current (liabilities)/assets (15,975) 623 161 2 (15,189)

Investments held at fair value through profit or loss 56,433 121,970 12,169 4,585 195,157

Total net foreign currency exposure 40,458 122,593 12,330 4,587 179,968

2015US Hong Kong Taiwan

Dollar Dollar Dollar Total £’000 £’000 £’000 £’000

Current assets 2,540 793 2,090 5,423Creditors (24,151) (68) — (24,219)

Foreign currency exposure on net monetary items (21,611) 725 2,090 (18,796)Investments held at fair value through profit or loss 15,593 107,287 31,933 154,813

Total net foreign currency exposure (6,018) 108,012 34,023 136,017

In the opinion of the Directors, the above year end amounts are broadly representative of the exposure to foreign currency riskduring the year.

Foreign currency sensitivity

The following table illustrates the sensitivity of return after taxation for the year and net assets with regard to the Company’smonetary financial assets and financial liabilities and exchange rates. The sensitivity analysis is based on the Company’smonetary currency financial instruments held at each balance sheet date and the income receivable in foreign currency andassumes a 10% (2015: 10%) appreciation or depreciation in sterling against the currencies to which the Company is exposed to,which is considered to be a reasonable illustration based on the volatility of exchange rates during the year.

2016 2015If sterling If sterling If sterling If sterling

strengthens weakens strengthens weakensby 10% by 10% by 10% by 10%£’000 £’000 £’000 £’000

Statement of Comprehensive Income – return after taxation

Revenue return (355) 355 (430) 430Capital return 1,519 (1,519) 1,880 (1,880)

Total return after taxation 1,164 (1,164) 1,450 (1,450)

Net assets 1,164 (1,164) 1,450 (1,450)

In the opinion of the Directors, the above sensitivity analysis is broadly representative of the whole year.

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(ii) Interest rate risk

Interest rate movements may affect the level of income receivable on cash deposits and the liquidity fund and the interestpayable on the Company’s variable rate cash borrowings.

Management of interest rate risk

The Company does not normally hold significant cash balances. Short term borrowings are used when required. The Companymay finance part of its activities through borrowings at levels approved and monitored by the Board. The possible effects oncash flows that could arise as a result of changes in interest rates are taken into account when the Company borrows on theloan facility. However, amounts drawn down on this facility are for short term periods and therefore exposure to interest raterisk is not significant.

Interest rate exposure

The exposure of financial assets and liabilities to floating interest rates using the year end figures, giving cash flow interest raterisk when rates are reset, is shown below.

2016 2015£’000 £’000

Exposure to floating interest ratesCash and short term deposits 515 2,326JPMorgan US Dollar Liquidity Fund — 2,310Bank loan (16,166) (24,096)

Total exposure (15,651) (19,460)

Interest receivable on cash balances, or payable on overdrafts, is at a margin below or above LIBOR respectively (2015: same).

The target interest earned on the JPMorgan US Dollar Liquidity Fund is the 7 day US Dollar London Interbank Bid Rate.

Interest rate sensitivity

The following table illustrates the sensitivity of the return after taxation for the year and net assets to a 1% (2015: 1%) increaseor decrease in interest rates in regards to the Company’s monetary financial assets and financial liabilities. This level of changeis considered to be a reasonable illustration based on observation of current market conditions. The sensitivity analysis is basedon the Company’s monetary financial instruments held at the balance sheet date with all other variables held constant.

2016 20151% Increase 1% Decrease 1% Increase 1% Decrease

in rate in rate in rate in rate £’000 £’000 £’000 £’000

Statement of Comprehensive Income – return after taxationRevenue return (157) 157 (195) 195Capital return — — — —

Total return after taxation for the year (157) 157 (195) 195

Net assets (157) 157 (195) 195

In the opinion of the Directors, this sensitivity analysis may not be representative of the Company’s future exposure to interest ratechanges due to fluctuations in the level of cash balances, cash held in the liquidity fund and amounts drawn down on the loan.

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(a) Market risk continued

(iii) Other price risk

Other price risk includes changes in market prices, other than those arising from interest rate risk or currency risk, which mayaffect the value of equity investments.

Management of other price risk

The Board meets on at least four occasions each year to consider the asset allocation of the portfolio and the risk associatedwith particular industry sectors. The investment management team has responsibility for monitoring the portfolio, which isselected in accordance with the Company’s investment objectives and seeks to ensure that individual stocks meet an acceptablerisk/reward profile.

Other price risk exposure

The Company’s total exposure to changes in market prices at 30th September comprises its holdings in equity investments asfollows:

2016 2015£’000 £’000

Equity investments held at fair value through profit or loss 195,157 154,813

The above data is broadly representative of the exposure to other price risk during the current and comparative year.

Concentration of exposure to other price risk

An analysis of the Company’s investments is given on pages 18 and 19. This shows that the investments’ value is in the ‘GreaterChina’ area. Accordingly, there is a concentration of exposure to that region. However, it should also be noted that aninvestment may not be entirely exposed to the economic conditions in its country of domicile or of listing.

Other price risk sensitivity

The following table illustrates the sensitivity of the return after taxation for the year and net assets to an increase or decreaseof 10% (2015: 10%) in the market value of equity investments. This level of change is considered to be a reasonable illustrationbased on observation of current market conditions. The sensitivity analysis is based on the Company’s equities, adjusting forchanges in the management fee but with all other variables held constant.

2016 201510% increase 10% decrease 10% increase 10% decreasein fair value in fair value in fair value in fair value

£’000 £’000 £’000 £’000

Statement of Comprehensive Income – return after taxationRevenue return (195) 195 (155) 155Capital return 19,516 (19,516) 15,481 (15,481)

Total return after taxation 19,321 (19,321) 15,326 (15,326)

Net assets 19,321 (19,321) 15,326 (15,326)

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(b) Liquidity risk

This is the risk that the Company will encounter difficulty in meeting its obligations associated with financial liabilities that are settledby delivering cash or another financial asset.

Management of the risk

Liquidity risk is not significant as the Company’s assets comprise mainly readily realisable securities, which can be sold to meetfunding requirements if necessary. Short term flexibility is achieved through the use of overdraft facilities.

The Board’s policy is for the Company to remain fully invested in normal market conditions and that short term borrowings be usedto manage short term liabilities, working capital requirements and to gear the Company as appropriate. Details of the current loanfacility are given in note 13 on page 57.

Liquidity risk exposure

Contractual maturities of the financial liabilities, based on the earliest date on which payment can be required are as follows:

2016 2015More than More than

Three three months Three three monthsmonths but not more months but not moreor less than one year Total or less than one year Total£’000 £’000 £’000 £’000 £’000 £’000

Creditors:Securities purchased awaiting settlement 1,105 — 1,105 123 — 123Repurchase of the Company’s own shares

awaiting settlement 105 — 105 — — —Bank loan – including interest 62 16,179 16,241 60 24,111 24,171Performance fee payable — — — 59 — 59Other creditors and accruals 91 — 91 129 — 129

1,363 16,179 17,542 371 24,111 24,482

The liabilities in the table above represent future contractual payments and therefore may differ from the amounts shown in theStatement of Financial Position.

(c) Credit risk

Credit risk is the risk that the failure of the counterparty to a transaction to discharge its obligations under that transaction couldresult in loss to the Company.

Management of credit risk

Portfolio dealing

The Company invests in markets that operate DVP (Delivery Versus Payment) settlement. The process of DVP mitigates the risk oflosing the principal of a trade during the settlement process. However, the Company’s holdings in Participatory Notes and Warrantsare subject to counterparty risk associated with each issuer. The Manager continuously monitors dealing activity to ensure bestexecution, a process that involves measuring various indicators including the quality of trade settlement and incidence of failedtrades. Counterparty lists are maintained and adjusted accordingly.

Cash and cash equivalents

Counterparties are subject to regular credit analysis by the Manager and deposits can only be placed with counterparties that havebeen approved by JPMAM’s Counterparty Risk Group and the Board.

JPMorgan Chase Bank N.A. and the JPMorgan US Dollar Liquidity Fund have S+P credit ratings of A–1 and AAAm respectively.

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(c) Credit risk continued

Management of credit risk continued

Exposure to JPMorgan Chase

JPMorgan Chase Bank, N.A. is the custodian of the Company’s assets. The Company’s assets are segregated from JPMorgan Chase’sown trading assets. Therefore these assets are designed to be protected from creditors in the event that JPMorgan Chase were tocease trading. The Depositary, BNY Mellon Trust and Depositary (UK) Limited, is responsible for the safekeeping of all custodial assetsof the Company and for verifying and maintaining a record of all other assets of the Company. However, no absolute guarantee canbe given on the protection of all the assets of the Company.

Credit risk exposure

The amounts shown in the Statement of Financial Position under debtors and cash and cash equivalents represent the maximumexposure to credit risk at the current and comparative year ends.

The Company engages in securities lending to generate additional income under a Stock Lending Agreement with JPMorgan Chasewhich indemnifies the Company against any counterparty default. The value of securities on loan at 30th September 2016 amountedto £15.7 million (2015: £nil). The highest value of securities on loan during the year ended 30th September 2016 amounted to£30.8 million (2015: £nil). Collateral is obtained by JPMorgan Asset Management and is called in on a daily basis to a value of 102%of the value of the securities on loan if that collateral is denominated in the same currency as the securities on loan and 105% if it isdenominated in a different currency. Collateral acceptable under the Stock Lending Agreement may comprise: cash in Euros orUS$; and, sovereign debt of members of the OECD (Organisation of Economic Corporation Development). The Company is notindemnified against the risk related to the reinvestment of cash collateral, which it mitigates by investing in highly liquid, constantvalue short-term investments.

(d) Fair values of financial assets and financial liabilities

All financial assets and liabilities are either included in the Statement of Financial Position at fair value or the carrying amount is areasonable approximation of fair value.

22. Capital management policies and proceduresThe Company’s debt and equity structure comprises the following:

2016 2015£’000 £’000

Debt:Bank loan 16,166 24,096

16,166 24,096Equity:Called up share capital 19,481 19,481Reserves 160,314 116,451

179,795 135,932

Total debt and equity 195,961 160,028

The Company’s capital management objectives are to ensure that it will continue as a going concern and to maximise capital return toits shareholders through an appropriate level of gearing.

The Company’s actual gearing is not to exceed 20% without Board permission.

JPMORGAN CHINESE INVESTMENT TRUST PLC. ANNUAL REPORT & ACCOUNTS 201666



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2016 20151

£’000 £’000

Investments held at fair value through profit or loss 195,157 154,813

Net assets 179,795 135,932

Gearing 8.5% 13.9%

1 The methodology to calculate gearing has been amended during the year therefore the comparative figure has been recalculated for comparative purposes. Please refer to theglossary of terms and definitions on page 72 for the revised calculation.

The Board, with the assistance of the Manager, monitors and reviews the broad structure of the Company’s capital on an ongoingbasis. This review includes:

– the planned level of gearing, which takes into account the Manager’s views on the market;

– the need to buy back equity shares, either for cancellation or to hold in Treasury, which takes into account the share price discountor premium; and

– the need for issues of new shares, including issues from Treasury.

23. Subsequent eventsThe Directors have evaluated the period since the year end and have not noted any subsequent events.

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Regulatory Disclosures

ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE (‘AIFMD’)DISCLOSURES (UNAUDITED)

Leverage

For the purposes of the Alternative Investment Fund Managers Directive (the ‘AIFMD’), leverage is any method which increases theCompany’s exposure, including the borrowing of cash and the use of derivatives. It is expressed as a ratio between the Company’s exposureand its net asset value and is calculated on a gross and a commitment method, in accordance with the AIFMD. Under the gross method,exposure represents the sum of the Company’s positions without taking into account any hedging and netting arrangements. Under thecommitment method, exposure is calculated after certain hedging and netting positions are offset against each other.

The Company is required to state its maximum and actual leverage levels, calculated as prescribed by the AIFMD, as at 30th September2016, which gives the following figures:

Gross CommitmentMethod Method

Leverage ExposureMaximum limit 200% 200%Actual 109% 109%

JPMF Remuneration

JPMF is the authorised manager of the Company and is part of the J.P. Morgan Chase & Co. group of companies. In this disclosure, the terms‘J.P. Morgan’ or ‘Firm’ refer to that group, and each of the entities in that group globally, unless otherwise specified.

This disclosure has been prepared in accordance with the AIFMD, the European Commission Delegated Regulation supplementing theAIFMD, the ‘Guidelines on Sound Remuneration Policies’ under the AIFMD issued by the European Securities and Markets Authority and theFinancial Conduct Authority Handbook (SYSC 19B: The AIFM Remuneration Code and FUND 3.3).

JPMF Remuneration Policy

The current remuneration policy for the EMEA Global Investment business of J.P. Morgan can be found at https://am.jpmorgan.com/gb/en/asset-management/gim/adv/legal/emea-remuneration-policy. This policy includes details of the alignment with risk management,the financial and non-financial criteria used to evaluate performance and the measures adopted to avoid or manage conflicts of interest.

JPMF Quantitative Disclosures

Disclosures in accordance with FUND 3.3.5, Article 22(2)e and 22(2)f of the AIFMD and Article 107 of the Delegated Regulation are disclosedon the Company’s website at www.jpmchinese.co.uk

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Shareholder Information

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the twenty-third Annual General Meetingof JPMorgan Chinese Investment Trust plc will be held at 60 VictoriaEmbankment, London EC4Y 0JP on Tuesday, 31st January 2017 at11.30 a.m. for the following purposes:

1. To receive the Directors’ Report, the Annual Accounts and theAuditors’ Report for the year ended 30th September 2016.

2. To approve the Company’s Remuneration Policy.

3. To approve the Directors’ Remuneration Report for the yearended 30th September 2016.

4. To approve a final dividend of 1.6p per share.

5. To reappoint William Knight as a Director of the Company.

6. To reappoint John Misselbrook as a Director of the Company.

7. To reappoint Kathryn Matthews as a Director of the Company.

8. To reappoint Oscar Wong as a Director of the Company.

9. To reappoint PricewaterhouseCoopers LLP as Auditors to theCompany and to authorise the Directors to determine theirremuneration.

Special Business To consider the following resolutions:

Authority to allot new Ordinary shares – Ordinary Resolution10. THAT the Directors of the Company be and they are hereby

generally and unconditionally authorised, (in substitution ofany authorities previously granted to the Directors), pursuantto and in accordance with Section 551 of the Companies Act2006 (the ‘Act’) to exercise all the powers of the Company toallot Ordinary shares in the Company and to grant rights tosubscribe for, or to convert any security into, Ordinary sharesin the Company (‘Rights’) up to an aggregate nominal amountof £1,947,874 representing approximately 10% of theCompany’s issued Ordinary share capital (including sharesheld in Treasury, if any) as at the date of the passing of thisresolution, provided that this authority shall expire atthe conclusion of the next Annual General Meeting of theCompany to be held in 2018 unless renewed at a generalmeeting prior to such time, save that the Company maybefore such expiry make offers or agreements which wouldor might require Ordinary shares to be allotted or Rights tobe granted after such expiry and so that the Directors of theCompany may allot Ordinary shares and grant Rights inpursuance of such offers or agreements as if the authorityconferred hereby had not expired.

Authority to disapply pre-emption rights on allotment ofrelevant securities – Special Resolution11. THAT subject to the passing of Resolution 10 set out above,

the Directors of the Company be and they are herebyempowered pursuant to Sections 570 and 573 of the Act toallot equity securities (within the meaning of Section 560 ofthe Act) for cash pursuant to the authority conferred byResolution 10 or by way of a sale of Treasury shares as ifSection 561(1) of the Act did not apply to any such allotment,provided that this power shall be limited to the allotment ofequity securities for cash up to an aggregate nominal amountof £1,947,874 representing approximately 10% of the issuedOrdinary share capital as at the date of the passing of thisresolution at a price of not less than the net asset value pershare and shall expire upon the expiry of the generalauthority conferred by Resolution 10 above, save that theCompany may before such expiry make offers or agreementswhich would or might require equity securities to be allottedafter such expiry and so that the Directors of the Companymay allot equity securities in pursuant of such offers oragreements as if the power conferred hereby had notexpired.

Authority to repurchase the Company’s shares – SpecialResolution12. THAT the Company be generally and, subject as hereinafter

appears, unconditionally authorised in accordance withSection 701 of the Act to make market purchases (within themeaning of Section 693 of the Act) of its issued Ordinaryshares on such terms and in such manner as the Directorsmay from time to time determine.

PROVIDED ALWAYS THAT

(i) the maximum number of Ordinary shares herebyauthorised to be purchased shall be 11,042,489, or ifless, that number of Ordinary shares which is equal to14.99% of the issued share capital (less shares held inTreasury, if any) as at the date of the passing of thisResolution;

(ii) the minimum price which may be paid for an Ordinaryshare shall be 25 pence;

(iii) the maximum price which may be paid for an Ordinaryshare shall be an amount equal to the highest of:(a) 105% of the average of the middle marketquotations for an Ordinary share taken from andcalculated by reference to the London Stock ExchangeDaily Official List for the five business days immediatelypreceding the day on which the Ordinary share is

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Shareholder Information continued

NOTICE OF ANNUAL GENERAL MEETING CONTINUED

purchased; or (b) the price of the last independenttrade; or (c) the highest current independent bid;

(iv) any purchase of Ordinary shares will be made in themarket for cash at prices below the prevailing net assetvalue per Ordinary share (as determined by theDirectors);

(v) the authority hereby conferred shall expire on30th July 2018 unless the authority is renewed at theCompany’s Annual General Meeting in 2018 or at anyother general meeting prior to such time; and

(vi) the Company may make a contract to purchaseOrdinary shares under the authority hereby conferredprior to the expiry of such authority which contract willor may be executed wholly or partly after the expiry ofsuch authority and may make a purchase of Ordinaryshares pursuant to any such contract.

By order of the BoardLucy Dina, for and on behalf of JPMorgan Funds Limited, Secretary

15th December 2016

Notes These notes should be read in conjunction with the notes on the reverse ofthe proxy form.

1. A member entitled to attend and vote at the Meeting may appointanother person(s) (who need not be a member of the Company) toexercise all or any of his rights to attend, speak and vote at theMeeting. A member can appoint more than one proxy in relation to theMeeting, provided that each proxy is appointed to exercise the rightsattaching to different shares held by him.

2. A proxy does not need to be a member of the Company but mustattend the Meeting to represent you. Your proxy could be theChairman, another Director of the Company or another person who hasagreed to attend to represent you. Details of how to appoint theChairman or another person(s) as your proxy or proxies using theproxy form are set out in the notes to the proxy form. If a voting box onthe proxy form is left blank, the proxy or proxies will exercise his/theirdiscretion both as to how to vote and whether he/they abstain(s) fromvoting. Your proxy must attend the Meeting for your vote to count.Appointing a proxy or proxies does not preclude you from attendingthe Meeting and voting in person.

3. Any instrument appointing a proxy, to be valid, must be lodgedin accordance with the instructions given on the proxy form, no laterthan 11.30 a.m. two business days prior to the Meeting (ie. excludingweekends and bank holidays).

4. You may change your proxy instructions by returning a new proxyappointment. The deadline for receipt of proxy appointments alsoapplies in relation to amended instructions. Any attempt to terminateor amend a proxy appointment received after the relevant deadline willbe disregarded. Where two or more valid separate appointments ofproxy are received in respect of the same share in respect of the sameMeeting, the one which is last received (regardless of its date or thedate of its signature) shall be treated as replacing and revoking theother or others as regards that share; if the Company is unable todetermine which was last received, none of them shall be treated asvalid in respect of that share.

5. To be entitled to attend and vote at the Meeting (and for the purpose ofthe determination by the Company of the number of votes they maycast), members must be entered on the Company’s register ofmembers as at 6.30 p.m. two business days prior to the Meeting (the‘specified time’). If the Meeting is adjourned to a time not more than48 hours after the specified time applicable to the original Meeting,that time will also apply for the purpose of determining the entitlementof members to attend and vote (and for the purpose of determining thenumber of votes they may cast) at the adjourned Meeting. If howeverthe Meeting is adjourned for a longer period then, to be so entitled,members must be entered on the Company’s register of members as at6.30 p.m. two business days prior to the adjourned Meeting or, if theCompany gives notice of the adjourned Meeting, at the time specifiedin that notice. Changes to entries on the register after this time shall bedisregarded in determining the rights of persons to attend or vote atthe Meeting or adjourned Meeting.

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6. Entry to the Meeting will be restricted to shareholders and their proxyor proxies, with guests admitted only by prior arrangement.

7. A corporation, which is a shareholder, may appoint an individual(s) toact as its representative(s) and to vote in person at the Meeting (seeinstructions given on the proxy form). In accordance with theprovisions of the Companies Act 2006, each such representative mayexercise (on behalf of the corporation) the same powers as thecorporation could exercise if it were an individual member of theCompany, provided that they do not do so in relation to the sameshares. It is therefore no longer necessary to nominate a designatedcorporate representative.

Representatives should bring to the Meeting evidence of theirappointment, including any authority under which it is signed.

8. Members that satisfy the thresholds in Section 527 of the CompaniesAct 2006 can require the Company to publish a statement on itswebsite setting out any matter relating to: (a) the audit of theCompany’s accounts (including the Auditors’ report and the conduct ofthe audit) that are to be laid before the AGM; or (b) any circumstancesconnected with Auditors of the Company ceasing to hold office sincethe previous AGM, which the members propose to raise at the Meeting.The Company cannot require the members requesting the publicationto pay its expenses. Any statement placed on the website must also besent to the Company’s Auditors no later than the time it makes itsstatement available on the website. The business which may be dealtwith at the AGM includes any statement that the Company has beenrequired to publish on its website pursuant to this right.

9. Pursuant to Section 319A of the Companies Act 2006, the Companymust cause to be answered at the AGM any question relating to thebusiness being dealt with at the AGM which is put by a memberattending the Meeting except in certain circumstances, including if it isundesirable in the interests of the Company or the good order of theMeeting or if it would involve the disclosure of confidential information.

10. Under Sections 338 and 338A of the 2006 Act, members meeting thethreshold requirements in those sections have the right to require theCompany: (i) to give, to members of the Company entitled to receivenotice of the Meeting, notice of a resolution which those membersintend to move (and which may properly be moved) at the Meeting;and/or (ii) to include in the business to be dealt with at the Meeting anymatter (other than a proposed resolution) which may properly beincluded in the business at the Meeting. A resolution may properly bemoved, or a matter properly included in the business unless: (a) (in thecase of a resolution only) it would, if passed, be ineffective (whether byreason of any inconsistency with any enactment or the Company’sconstitution or otherwise); (b) it is defamatory of any person; or (c) it isfrivolous or vexatious. A request made pursuant to this right may be inhard copy or electronic form, must identify the resolution of whichnotice is to be given or the matter to be included in the business, mustbe accompanied by a statement setting out the grounds for therequest, must be authenticated by the person(s) making it and must bereceived by the Company not later than the date that is six clear weeks

before the Meeting, and (in the case of a matter to be included in thebusiness only) must be accompanied by a statement setting out thegrounds for the request.

11. A copy of this notice has been sent for information only to persons whohave been nominated by a member to enjoy information rights underSection 146 of the Companies Act 2006 (a ‘Nominated Person’). Therights to appoint a proxy cannot be exercised by a Nominated Person:they can only be exercised by the member. However, a NominatedPerson may have a right under an agreement between him and themember by whom he was nominated to be appointed as a proxy for theMeeting or to have someone else so appointed. If a Nominated Persondoes not have such a right or does not wish to exercise it, he may havea right under such an agreement to give instructions to the member asto the exercise of voting rights.

12. In accordance with Section 311A of the Companies Act 2006, thecontents of this notice of meeting, details of the total number of sharesin respect of which members are entitled to exercise voting rights atthe AGM, the total voting rights members are entitled to exercise at theAGM and, if applicable, any members’ statements, members’resolutions or members’ matters of business received by the Companyafter the date of this notice will be available on the Company’s websitewww.jpmchinese.co.uk.

13. The register of interests of the Directors and connected persons in theshare capital of the Company and the Directors’ letters of appointmentare available for inspection at the Company’s registered office duringusual business hours on any weekday (Saturdays, Sundays and publicholidays excepted). It will also be available for inspection at the AnnualGeneral Meeting. No Director has any contract of service with theCompany.

14. You may not use any electronic address provided in this Notice ofMeeting to communicate with the Company for any purposes otherthan those expressly stated.

15. As an alternative to completing a hard copy Form of Proxy/VotingDirection Form, you can appoint a proxy or proxies electronically byvisiting www.sharevote.co.uk. You will need your Voting ID, Task ID andShareholder Reference Number (this is the series of numbers printedunder your name on the Form of Proxy/Voting Direction Form).Alternatively, if you have already registered with Equiniti Limited’sonline portfolio service, Shareview, you can submit your Form of Proxyat www.shareview.co.uk. Full instructions are given on both websites.

16. As at 7th December 2016 (being the latest business day prior to thepublication of this Notice), the Company’s issued share capital consistsof 73,665,707 Ordinary shares, carrying one vote each. Therefore thetotal voting rights in the Company are 73,665,707.

Electronic appointment – CREST membersCREST members who wish to appoint a proxy or proxies by utilising theCREST electronic proxy appointment service may do so for the Meeting andany adjournment(s) thereof by using the procedures described in the CRESTManual. See further instructions on the Form of Proxy.

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GLOSSARY OF TERMS AND DEFINITIONS

Return to ShareholdersTotal return to the investor, on a mid-market price to mid-marketprice basis, assuming that all dividends received were reinvested,without transaction costs, into the shares of the Company at thetime the shares were quoted ex-dividend.

Return on Net AssetsTotal return on net asset value (‘NAV’) per share, on a bid value tobid value basis, assuming that all dividends paid out by theCompany were reinvested into the shares of the Company at theNAV per share at the time the shares were quoted ex-dividend.

In accordance with industry practice, dividends payable which havebeen declared but which are unpaid at the balance sheet date arededucted from the NAV per share when calculating the total returnon net assets.

Benchmark Total ReturnTotal return on the benchmark, on a mid-market value tomid-market value basis, assuming that all dividends received werereinvested into the shares of the underlying companies at the timethe shares were quoted ex-dividend.

The benchmark is a recognised index of stocks which should not betaken as wholly representative of the Company’s investmentuniverse. The Company’s investment strategy does not track thisindex and consequently, there may be some divergence betweenthe Company’s performance and that of the benchmark.

Share Price Discount/Premium to Net Asset Value (‘NAV’)If the share price of an investment trust is lower than the NAV pershare, the shares are said to be trading at a discount. The discountis shown as a percentage of the NAV per share. The opposite of adiscount is a premium. It is more common for an investment trust’sshares to trade at a discount than at a premium.

Revenue Return per shareNet revenue return on ordinary activities after taxation, divided bythe weighted average number of shares in issue during the year.

Gearing/Net CashGearing represents the excess amount above shareholders’ funds oftotal investments expressed as a percentage of the shareholders’funds.

Ongoing Charges

The ongoing charges represents the Company’s management feeand all other operating expenses excluding interest andperformance fee payable, expressed as a percentage of the averageof the daily net assets during the year and is calculated inaccordance with guidance issued by the Association of InvestmentCompanies.

Hong Kong H-SharesCompanies incorporated in mainland China and listed in Hong Kongand other foreign stock exchanges.

Hong Kong Red ChipsCompanies incorporated outside mainland China and listed in HongKong, but with controlling shareholders (at least 30% ownership)from mainland Chinese entities.

Hong Kong P ChipsCompanies listed in Hong Kong which are incorporated in theCayman Islands, Bermuda and the British Virgin Islands, withoperations in mainland China. These companies are run by privatesector Chinese businessmen.

China A-SharesCompanies incorporated in mainland China and which are traded inthe mainland A-Share markets. The prices of A-Shares are quoted inrenminbi, and currently only mainlanders and selected foreigninstitutional investors are allowed to trade A-Shares.

The Company invests directly in China A-Shares and also gainsaccess to the A-Share market by investing into China A-Share accessproducts (participatory notes).

China B-SharesCompanies incorporated in mainland China and traded on themainland B-Share markets. The prices of B-Shares are quoted in USdollars and are available to both mainlanders and foreign investors.

Performance AttributionAnalysis of how the Company achieved its recorded performancerelative to its benchmark.

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Performance Attribution Definitions:Asset AllocationMeasures the impact of allocating assets differently from those inthe benchmark, via the portfolio’s weighting in different countries,sectors or asset types.

Stock SelectionMeasures the effect of investing in securities to a greater or lesserextent than their weighting in the benchmark, or of investing insecurities which are not included in the benchmark.

Currency EffectMeasures the impact of currency exposure differences between theCompany’s portfolio and its benchmark.

Gearing/CashMeasures the impact on returns of borrowings or cash balances onthe Company’s relative performance.

Management Fee/Other ExpensesThe payment of fees and expenses reduces the level of total assetsand therefore has a negative effect on relative performance.

Performance Fee Charge/WritebackMeasures the effect of a performance fee charge or writeback.

Dividends/ResidualRepresented by timing differences in respect of cash flows anddividends.

Fraudsters use persuasive and high-pressure tactics to lure investors into scams. They may offer to sell shares that turn out to beworthless or non-existent, or to buy shares at an inflated price in return for an upfront payment. While high profits are promised, ifyou buy or sell shares in this way you will probably lose your money.

Keep in mind that firms authorised by the FCAare unlikely to contact you out of the blue withan offer to buy or sell shares.

Do not get into a conversation, note the nameof the person and firm contacting you and thenend the call.

Check the Financial Services Register fromwww.fca.org.uk to see if the person and firmcontacting you is authorised by the FCA.

Beware of fraudsters claiming to be from anauthorised firm, copying its website or givingyou false contact details.

Use the firm’s contact details listed on theRegister if you want to call it back.

Call the FCA on 0800 111 6768 if the firm doesnot have contact details on the Register or youare told they are out of date.

Search the list of unauthorised firms to avoid atwww.fca.org.uk/scams.

Consider that if you buy or sell shares from anunauthorised firm you will not have access to theFinancial Ombudsman Service or FinancialServices Compensation Scheme.

Think about getting independent financial andprofessional advice before you hand over anymoney.

Remember: if it sounds too good to be true, itprobably is!

If you are approached by fraudsters please tell theFCA using the share fraud reporting form atwww.fca.org.uk/scams, where you can find outmore about investment scams.

You can also call the FCA Consumer Helpline on0800 111 6768.

If you have already paid money to share fraudstersyou should contact Action Fraud on 0300 123 2040.

5,000 people contact the Financial ConductAuthority about share fraud each year,with victims losing an average of £20,000

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Beware of share fraud

How to avoid share fraud

Report a scam

In association with:

Financial Conduct Authority

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WHERE TO BUY J.P. MORGAN INVESTMENT TRUSTS

You can invest in a J.P. Morgan investment trust through the following;

1. Directly from J.P. MorganInvestment AccountThe Company’s shares are available in the J.P. Morgan InvestmentAccount, which facilitates both regular monthly investments andoccasional lump sum investments in the Company’s ordinary shares.Shareholders who would like information on the Investment Accountshould call J.P. Morgan Asset Management free on 0800 20 40 20 orvisit its website at am.jpmorgan.co.uk/investor

Stocks & Shares Individual Savings Accounts (ISA)The Company’s shares are eligible investments within a J.P. MorganISA. For the 2016/17 tax year, from 6th April 2016 and ending 5th April2017, the total ISA allowance is £15,240. The shares are also availablein a J.P. Morgan Junior ISA. Details are available from J.P. Morgan AssetManagement free on 0800 20 40 20 or via its website atam.jpmorgan.co.uk/investor

2. Via a third party provider Third party providers include;

Please note this list is not exhaustive and the availability of individualtrusts may vary depending on the provider. These websites are thirdparty sites and J.P. Morgan Asset Management does not endorse orrecommend any. Please observe each site's privacy and cookie policiesas well as their platform charges structure.

3. Through a professional adviserProfessional advisers are usually able to access the products of all thecompanies in the market and can help you find an investment thatsuits your individual circumstances. An adviser will let you know thefee for their service before you go ahead. You can find an adviser atunbiased.co.uk

You may also buy investment trusts through stockbrokers, wealthmanagers and banks.

To familiarise yourself with the Financial Conduct Authority (FCA)adviser charging and commission rules, visit fca.org.uk

AJ BellAlliance Trust SavingsBarclays StockbrokersBestinvestCharles Stanley DirectHargreaves Lansdown

Interactive InvestorJames BrearleyJames HaySelftradeTD DirectThe Share Centre


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HistoryJPMorgan Chinese Investment Trust plc was launched in October 1993,as The Fleming Chinese Investment Trust plc, by a public offer of shareswhich raised £60 million before expenses. The Company changed itsname to JPMorgan Fleming Chinese Investment Trust plc in December2001 and adopted its present name on 14th December 2005.

Company NumbersCompany registration number: 02853893London Stock Exchange Sedol number: 0343501 ISIN: GB0003435012Bloomberg ticker: JMC LN

Market InformationThe Company’s net asset value (‘NAV’) is published daily, via the LondonStock Exchange. The Company’s Ordinary shares are listed on theLondon Stock Exchange and are quoted daily in the Financial Times,The Times, The Daily Telegraph, The Scotsman and on the J.P. Morganwebsite at www.jpmchinese.co.uk, where the Ordinary share price isupdated every fifteen minutes during trading hours.

Websitewww.jpmchinese.co.uk

Share TransactionsThe Company’s shares may be dealt in directly through a stockbroker orprofessional adviser acting on an investor’s behalf. They may also bepurchased and held through the J.P. Morgan Investment Account,J.P. Morgan ISA and J.P. Morgan Junior ISA. These products are allavailable on the online service at jpmorgan.co.uk/online

Manager and Company SecretaryJPMorgan Funds Limited

Company’s Registered Office60 Victoria EmbankmentLondon EC4Y 0JPTelephone number: 020 7742 4000

For company secretarial and administrative matters, please contactLucy Dina at the above address.

DepositaryBNY Mellon Trust & Depositary (UK) LimitedBNY Mellon Centre160 Queen Victoria StreetLondon EC4V 4LA

The Depositary has appointed JPMorgan Chase Bank, N.A. as theCompany’s custodian.

RegistrarsEquiniti LimitedReference 1078Aspect HouseSpencer RoadWest Sussex BN99 6DATelephone number: 0371 384 2317

Lines open 8.30 a.m. to 5.30 p.m. Monday to Friday. Calls to thehelpline will cost no more than a national rate call to a 01 or 02number. Callers from overseas should dial +44 121 415 0225.

Notifications of changes of address and enquiries regarding sharecertificates or dividend cheques should be made in writing to theRegistrar quoting reference 1078.

Registered shareholders can obtain further details on their holdings onthe internet by visiting www.shareview.co.uk

Independent AuditorsPricewaterhouseCoopers LLPChartered Accountants and Statutory Auditors7 More London RiversideLondon SE1 2RT

BrokersWinterflood Securities LimitedThe Atrium Building Cannon Bridge25 Dowgate HillLondon EC4R 2GATelephone number: 020 310 0000

Savings Product AdministratorsFor queries on the J.P. Morgan Investment Account and J.P. Morgan ISAsee contact details on the back cover of this report.

Information about the Company

FINANCIAL CALENDAR

Financial year end 30th September

Final results announced December

Half year end 31st March

Half year results announced May

Dividend on Ordinary shares paid January/February

Annual General Meeting January

A member of the AIC

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www.jpmchinese.co.uk

Telephone calls may be recorded and monitored for security and training purposes.

J.P. Morgan Helpline

Freephone 0800 20 40 20 or +44 (0) 1268 444470. Telephonelines are open Monday to Friday, 9.00am to 5.30pm.

GB A104 12/16

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Documents

JPMorgan Chinese Investment Trust plc...JPMorgan Chinese Investment Trust plc Annual Report & Accounts for the year ended 30th September 2016 Chinese_Cover A4 06/12/2016 17:59 Page