Unaudited Semi-Annual Report 31 December 2017

Transcription

1 Unaudited Semi-Annual Report 31 December 2017

2 Semi-annual report for the period ended 31 December 2017 Contents Page Statement of Financial Position 1 Statement of Comprehensive Income 2 Statement of Changes in Net Assets Attributable to Holders of Redeemable Units 3 Statement of Cash Flows 4 Notes to the Financial Statements 5 6 Investment Portfolio 7 Statement of Movements in Portfolio Holdings 8 This report does not constitute an offer of any units in the fund forming the subject matter of this document (the "Fund"). Subscriptions are only valid if made on the basis of the current explanatory memorandum (or equivalent), supplemented by the most recent financial report.

3 Semi-annual report for the period ended 31 December 2017 Statement of Financial Position As at 31 December 2017 (Unaudited) Assets Cash at banks 595, ,053 Amounts due from brokers 302, ,154 Amounts receivable on allotment 3,867,484 4,996,350 Investments 511,984, ,315,090 Interest receivable - 38 Total assets 516,750, ,876, Liabilities Amounts payable on redemption 497,306 92,048 Other accounts payable 523, ,795 Liabilities (excluding net assets attributable to holders of redeemable units) 1,020, , Net assets attributable to holders of redeemable units [Note 3] 515,729, ,294,842 The notes on pages 5 to 6 form part of these financial statements

4 Semi-annual report for the period ended 31 December 2017 Statement of Comprehensive Income For the period ended 31 December 2017 (Unaudited) to to Income Net gains on investments [Note 4] 92,976,152 19,297,060 Interest on deposits 1, Net foreign currency exchange losses (182) (259) Other income 11,908-92,989,050 19,296, Expenses Management fee 2,352,385 1,879,012 Administration fee 424, ,493 Auditor's fee 30,947 49,363 Safe custody and bank charges 3,284 1,156 Printing and publication expenses 816 4,465 Transaction costs Legal and professional expenses - 7,740 Trustee's fee Other operating expenses 3,555 41,553 2,815,864 2,307, Increase in net assets attributable to holders of redeemable units and total comprehensive income 90,173,186 16,989,342 The notes on pages 5 to 6 form part of these financial statements

5 Semi-annual report for the period ended 31 December 2017 Statement of Changes in Net Assets Attributable to Holders of Redeemable Units For the period ended 31 December 2017 (Unaudited) to to Net assets attributable to holders of redeemable units at the beginning of the period 438,294, ,731, Allotment of redeemable units 54,245,302 40,328,529 Redemption of redeemable units (66,983,814) (47,372,100) Net redemption (12,738,512) (7,043,571) ,556, ,687,522 Increase in net assets attributable to holders of redeemable units and total comprehensive income 90,173,186 16,989,342 Net assets attributable to holders of redeemable units at the end of the period 515,729, ,676,864 The notes on pages 5 to 6 form part of these financial statements

6 Semi-annual report for the period ended 31 December 2017 Statement of Cash Flows For the period ended 31 December 2017 (Unaudited) to to Operating activities Purchase of investments (11,920,394) (9,944,931) Proceeds from disposal of investments 26,251,765 17,093,465 Interest received 1, Trustee's fee paid - (968) Transaction costs paid (921) (820) Administration fee paid (418,408) (319,423) Management fee paid (2,311,708) (1,863,411) Others (39,719) (150,568) Net cash inflow from operating activities 11,561,825 4,813, Financing activities Receipts on allotment of redeemable units 55,374,168 41,867,677 Payments on redemption of redeemable units (66,578,556) (47,008,045) Net cash outflow from financing activities (11,204,388) (5,140,368) Increase/(decrease) in cash and cash equivalents 357,437 (326,997) Cash and cash equivalents at the beginning of the period 238,053 1,413,273 Exchange gains/(losses) on cash and cash equivalents 231 (148) Cash and cash equivalents at the end of the period 595,721 1,086,128 Analysis of balances of cash and cash equivalents: Cash at banks 595,721 1,086,128 The notes on pages 5 to 6 form part of these financial statements

7 Semi-annual report for the period ended 31 December 2017 Notes to the Financial Statements 1 The Fund JPMorgan Provident Greater China Fund (the "Fund") was established under a Trust Deed dated 12 July 2007, as amended (the "Trust Deed") and is governed by the laws of Hong Kong. The Fund is authorized by the Securities and Futures Commission of Hong Kong. With effect from 28 April 2017, the Fund changed domicile from the Cayman Islands to Hong Kong. Cititrust Limited replaced Royal Bank of Canada Trust Company (Cayman) Limited as Trustee and Citicorp Trustee (Singapore) Limited replaced Royal Bank of Canada Trust Company (Cayman) Limited as Registrar for the Fund. The Fund is a feeder fund investing solely in the units of JPMorgan SAR Greater China Fund (the "Master Fund"), a collective investment scheme managed by JF Asset Management Limited, a Connected Person of the Manager. The primary investment objective of the Fund is to maximize its long-term capital appreciation in Hong Kong dollar terms. The investment objective of the Master Fund is to provide investors with long-term capital growth in Hong Kong dollar terms through a portfolio consisting primarily of securities of companies based or operating principally in the People's Republic of China, Hong Kong, Macau or Taiwan ("Greater China Region") and the majority of these companies will be listed on a stock exchange in Hong Kong or Taiwan. The Fund offers two classes of units, administration units and investment units. All unitholders' rights with regard to the convening, voting or otherwise acting at any meeting of unitholders are the same. 2 Summary of significant accounting policies (a) Accounting policies of interim financial statements The accounting policies and methods of computation used in the preparation of these unaudited condensed interim financial statements are consistent with those used in the annual financial statements for the. (b) Investments Classification The Fund classifies its investments as financial assets or financial liabilities at fair value through profit or loss. These financial assets or financial liabilities are held-for-trading as they are acquired or incurred principally for the purpose of selling or repurchasing in the near term or short-term profit taking. Recognition, derecognition and measurement Purchases and sales of investments are accounted for on the trade date basis. Investments are initially recognized at fair value and are subsequently re-measured at fair value. Realized and unrealized gains and losses on investments are recognized in the Statement of Comprehensive Income. Investments are derecognized when the rights to receive cash flows from the investments have expired or the Fund has transferred substantially all risks and rewards of ownership. Fair value estimation Investments in collective investment schemes are stated at fair value based on the net asset value per unit of the respective funds as determined by the administrators of the relevant funds. (c) Foreign currency translation Functional and presentation currency The Fund has adopted Hong Kong dollar as its functional and presentation currency. Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of assets and liabilities denominated in foreign currencies at period/year end exchange rates are recognized in the Statement of Comprehensive Income. Foreign exchange gains and losses relating to cash and cash equivalents are presented in the Statement of Comprehensive Income within "Net foreign currency exchange gains/losses". Foreign exchange gains and losses relating to the financial assets and liabilities - 5 -

8 Semi-annual report for the period ended 31 December 2017 carried at fair value through profit or loss are presented in the Statement of Comprehensive Income within "Net gains/losses on investments and derivatives". (d) Proceeds and payments on allotment and redemption of units The net asset value per unit is computed for each dealing day. The price at which units are allotted or redeemed is calculated by reference to the net asset value per unit as at the close of business on the relevant dealing day in accordance with the provisions of the Trust Deed which may be different from the accounting policies stated in the financial statements. Units of the Fund are redeemable at the option of the holders of redeemable units and are classified as a financial liability in the Statement of Financial Position which represents the net assets attributable to holders of redeemable units (or "net asset value" or "net assets" or "NAV") and is carried at the redemption amount that would be payable at the Statement of Financial Position date if the holders of redeemable units exercised the right to redeem units of the Fund. 3 Number of units in issue and net assets attributable to holders of redeemable units (per unit) Number of units in issue Units Units Administration Units 947, , Investment Units 2,153, ,202, Net assets attributable to holders of redeemable units Administration Units 150,839, ,997,819 Investment Units 364,889, ,297, ,729, ,294,842 Net assets attributable to holders of redeemable units (per unit) Administration Units Investment Units Net gains on investments to to Change in unrealized gains in value of investments 83,329,581 15,681,770 Realized gains on sale of investments 9,646,571 3,615,290 92,976,152 19,297,060 5 Soft dollar arrangements/commission sharing arrangements During the period, the Investment Manager and its Connected Persons did not enter into any soft dollar arrangements/commission sharing arrangements in connection with directing transactions of the Fund through a broker or dealer (31 December 2016: nil). 6 Distribution No distribution was made during the period (31 December 2016: nil)

9 Semi-annual report for the period ended 31 December 2017 Investment Portfolio As at 31 December 2017 (Unaudited) Place of establishment Holding Fair value % of net assets Listed/Quoted Investment (99.3%) Collective Investment Scheme (99.3%) Greater China (99.3%) JPM SAR Greater China Fund 'B'* Hong Kong 2,975, ,984, Total Listed/Quoted Investment 511,984, Other net assets 3,744, Net assets attributable to holders of redeemable units at 31 December ,729, Total investments, at cost 291,725,745 * Issued and managed by a Connected Person of the Manager - 7 -

10 Semi-annual report for the period ended 31 December 2017 Statement of Movements in Portfolio Holdings For the period ended 31 December 2017 (Unaudited) % holdings of net assets Listed/Quoted Investment Collective Investment Scheme Greater China Total Listed/Quoted Investment Other net assets Net assets attributable to holders of redeemable units

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12 Audited Annual Report 30 June 2017

13 Contents Page Statement of Responsibilities of the Manager and the Trustee 1 Report of the Trustee to the Unitholders 2 Independent Auditor s Report to the Unitholders 3-4 Statement of Financial Position 5 Statement of Comprehensive Income 6 Statement of Changes in Net Assets Attributable to Holders of Redeemable Units 7 Statement of Cash Flows 8 Notes to the Financial Statements 9 20 Investment Portfolio Unaudited 21 Statement of Movements in Portfolio Holdings - Unaudited 22 Supplementary Information Investment Portfolio of JPMorgan SAR Greater China Fund (Unaudited) Performance Record - Unaudited 25 Management and Administration 26 This report does not constitute an offer of any units in the fund forming the subject matter of this document (the "Fund"). Subscriptions are only valid if made on the basis of the current explanatory memorandum (or equivalent), supplemented by the most recent financial report.

14 Statement of Responsibilities of the Manager and the Trustee Manager's Responsibilities The Manager of the Fund is required by the Code on Unit Trusts and Mutual Funds established by the Securities and Futures Commission of Hong Kong and the Trust Deed to prepare financial statements for each annual accounting period which give a true and fair view of the financial position of the Fund at the end of that period and of the transactions for the period then ended. In preparing these financial statements, the Manager is required to: - select suitable accounting policies and then apply them consistently; - make judgments and estimates that are prudent and reasonable; and - prepare the financial statements on the basis that the Fund will continue in operation unless it is inappropriate to presume this. The Manager is also required to manage the Fund in accordance with the Trust Deed and take reasonable steps for the prevention and detection of fraud and other irregularities. Trustee's Responsibilities The Trustee of the Fund is required to: - ensure that the Fund is managed by the Manager in accordance with the Trust Deed and that the investment and borrowing powers are complied with; - satisfy itself that sufficient accounting and other records have been maintained; - safeguard the property of the Fund and rights attaching thereto; and - report to the unitholders for each annual accounting period on the conduct of the Manager in the management of the Fund

15 Report of the Trustee to the Unitholders We hereby confirm that, in our opinion, the Manager of the Fund has, in all material respects, managed the Fund in accordance with the provisions of the Trust Deed dated 12 July 2007, as amended, for the. For and on behalf of Cititrust Limited, Trustee - 2 -

16 Independent Auditor's Report To the Unitholders of JPMorgan Provident Greater China Fund (the "Fund") Report on the Audit of the Financial Statements Opinion What we have audited The financial statements of JPMorgan Provident Greater China Fund set out on pages 5 to 20, which comprise: the Statement of Financial Position as at 30 June 2017; the Statement of Comprehensive Income for the year then ended; the Statement of Changes in Net Assets Attributable to Holders of Redeemable Units for the year then ended; the Statement of Cash Flows for the year then ended; and the notes to the financial statements, which include a summary of significant accounting policies. Our opinion In our opinion, the financial statements give a true and fair view of the financial position of the Fund as at 30 June 2017, and of its financial transactions and cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards ("HKFRSs") issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA"). Basis for Opinion We conducted our audit in accordance with Hong Kong Standards on Auditing ("HKSAs") issued by the HKICPA. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Fund in accordance with the HKICPA's Code of Ethics for Professional Accountants (the "Code"), and we have fulfilled our other ethical responsibilities in accordance with the Code. Other Information The Trustee and the Manager (the "Management") of the Fund are responsible for the other information. The other information comprises all of the information included in the annual report other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Management for the Financial Statements The Management of the Fund is responsible for the preparation of the financial statements that give a true and fair view in accordance with HKFRSs issued by the HKICPA, and for such internal control as the Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Management of the Fund is responsible for assessing the Fund's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Management either intends to liquidate the Fund or to cease operations, or have no realistic alternative but to do so. In addition, the Management of the Fund is required to ensure that the financial statements have been properly prepared in accordance with the relevant disclosure provisions of the Trust Deed dated 12 July 2007, as amended ("Trust Deed") and Appendix E of the Code on Unit Trusts and Mutual Funds issued by the Hong Kong Securities and Futures Commission (the "SFC Code")

17 Independent Auditor's Report (continued) To the Unitholders of JPMorgan Provident Greater China Fund (the "Fund") Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. We report our opinion solely to you, as a body, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. In addition, we are required to assess whether the financial statements of the Fund have been properly prepared, in all material respects, in accordance with the relevant disclosure provisions of the Trust Deed and the SFC Code. As part of an audit in accordance with HKSAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Management. Conclude on the appropriateness of the Management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Fund's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Fund to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with the Management regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Report on Matters under the Relevant Disclosure Provisions of the Trust Deed and the SFC Code In our opinion, the financial statements have been properly prepared, in all material respects, in accordance with the relevant disclosure provisions of the Trust Deed and the SFC Code. PricewaterhouseCoopers Certified Public Accountants Hong Kong, 20 October

18 Statement of Financial Position As at 30 June Assets Cash at banks 238,053 1,413,273 Amounts due from brokers 327,154 - Amounts receivable on allotment 4,996,350 5,224,855 Investments [Note 4(I)(a)] 433,315, ,563,361 Interest receivable 38 2 Total assets 438,876, ,201, Liabilities Amounts payable on redemption 92,048 40,120 Other accounts payable 489, ,278 Liabilities (excluding net assets attributable to holders of redeemable units) 581, , Net assets attributable to holders of redeemable units [Note 3] 438,294, ,731,093 Approved by the Manager on 20 October 2017 Signed By: For and on behalf of JPMorgan Funds (Asia) Limited, Manager The notes on pages 9 to 20 form part of these financial statements

19 Statement of Comprehensive Income For the Income Net gains/(losses) on investments [Note 5] 99,763,397 (74,299,031) Net foreign currency exchange gains 1, Interest on deposits ,764,780 (74,298,896) Expenses Management fee [Note 7(f)] 3,912,542 3,533,890 Administration fee [Note 7(g)] 685, ,729 Auditor's fee 62,064 98,457 Legal and professional expenses 20,293 19,267 Printing and publication expenses 4,812 6,629 Safe custody and bank charges 2,328 1,261 Trustee's fee [Note 8] 1,815 3,219 Transaction costs 1, Other operating expenses 49,752 47,724 4,740,729 4,316, Increase/(decrease) in net assets attributable to holders of redeemable units and total comprehensive income 95,024,051 (78,615,717) The notes on pages 9 to 20 form part of these financial statements

20 Statement of Changes in Net Assets Attributable to Holders of Redeemable Units For the Net assets attributable to holders of redeemable units at the beginning of the year 350,731, ,325, Allotment of redeemable units [Note 3] 83,269,465 94,489,157 Redemption of redeemable units [Note 3] (90,729,767) (96,467,717) Net redemption (7,460,302) (1,978,560) ,270, ,346,810 Increase/(decrease) in net assets attributable to holders of redeemable units and total comprehensive income 95,024,051 (78,615,717) Net assets attributable to holders of redeemable units at the end of the year 438,294, ,731,093 The notes on pages 9 to 20 form part of these financial statements

21 Statement of Cash Flows For the Operating activities Purchase of investments (19,541,976) (24,908,631) Proceeds from disposal of investments 30,226,490 31,201,507 Interest received Transaction costs paid (1,287) (885) Trustee's fee paid (2,285) (3,686) Administration fee paid (670,119) (621,547) Management fee paid (3,839,225) (3,632,146) Others (168,316) (171,006) Net cash inflow from operating activities 6,003,396 1,863, Financing activities Receipts on allotment of redeemable units 83,497,970 95,523,571 Payments on redemption of redeemable units (90,677,839) (98,522,671) Net cash outflow from financing activities (7,179,869) (2,999,100) Decrease in cash and cash equivalents (1,176,473) (1,135,443) Cash and cash equivalents at the beginning of the year 1,413,273 2,548,664 Exchange gains on cash and cash equivalents 1, Cash and cash equivalents at the end of the year 238,053 1,413,273 Analysis of balances of cash and cash equivalents: Cash at banks 238,053 1,413,273 The notes on pages 9 to 20 form part of these financial statements

22 Notes to the Financial Statements 1 The Fund JPMorgan Provident Greater China Fund (the "Fund") was established under a Trust Deed dated 12 July 2007, as amended (the "Trust Deed") and is governed by the laws of Hong Kong. The Fund is authorized by the Securities and Futures Commission of Hong Kong ("SFC"). With effect from 28 April 2017, the Fund changed domicile from the Cayman Islands to Hong Kong. Cititrust Limited replaced Royal Bank of Canada Trust Company (Cayman) Limited as Trustee and Citicorp Trustee (Singapore) Limited replaced Royal Bank of Canada Trust Company (Cayman) Limited as Registrar for the Fund. The Fund is a feeder fund investing solely in the units of JPMorgan SAR Greater China Fund (the "Master Fund"), a collective investment scheme managed by JF Asset Management Limited, a Connected Person of the Manager. The primary investment objective of the Fund is to maximize its long-term capital appreciation in Hong Kong dollar terms. The investment objective of the Master Fund is to provide investors with long-term capital growth in Hong Kong dollar terms through a portfolio consisting primarily of securities of companies based or operating principally in the People's Republic of China, Hong Kong, Macau or Taiwan ("Greater China Region") and the majority of these companies will be listed on a stock exchange in Hong Kong or Taiwan. The Fund offers two classes of units, administration units and investment units. All unitholders' rights with regard to the convening, voting or otherwise acting at any meeting of unitholders are the same. 2 Summary of significant accounting policies The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. (a) Basis of preparation of financial statements The financial statements of the Fund have been prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRSs"). The financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities (including derivative financial instruments) held at fair value through profit or loss. The preparation of financial statements in conformity with HKFRSs requires the use of certain critical accounting estimates. It also requires the Manager and the Trustee (the "Management") to exercise their judgment in the process of applying the Fund's accounting policies. Standards and amendments to existing standards effective from 1 July 2016 There are no standards or amendments to existing standards that are effective for the first time for the financial year beginning 1 July 2016 that have had a material impact on the Fund. New standards, amendments and interpretations effective after 1 July 2016 that have not been early adopted by the Fund HKFRS 9, "Financial instruments", addresses the classification, measurement and recognition of financial assets and financial liabilities. It replaces the guidance in Hong Kong Accounting Standard ("HKAS") 39, "Financial instruments: recognition and measurement", that relates to the classification and measurement of financial instruments. HKFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortized cost, fair value through other comprehensive income and fair value through profit or loss. The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in other comprehensive income not recycling. There is now a new expected credit losses model that replaces the incurred loss impairment model used in HKAS 39. For financial liabilities, there were no changes to classification and measurement, except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. The standard is effective for accounting periods beginning on or after 1 January Early adoption is permitted. The Management is currently assessing the impact on the Fund's financial statements. There are no other standards, interpretations or amendments to existing standards that are effective for the financial year after 1 July 2016 that would be expected to have a material impact on the Fund

23 (b) Investments Classification The Fund classifies its investments as financial assets or financial liabilities at fair value through profit or loss. These financial assets or financial liabilities are held-for-trading as they are acquired or incurred principally for the purpose of selling or repurchasing in the near term or short-term profit taking. Recognition, derecognition and measurement Purchases and sales of investments are accounted for on the trade date basis. Investments are initially recognized at fair value and are subsequently re-measured at fair value. Realized and unrealized gains and losses on investments are recognized in the Statement of Comprehensive Income. Investments are derecognized when the rights to receive cash flows from the investments have expired or the Fund has transferred substantially all risks and rewards of ownership. Fair value estimation Investments in collective investment schemes are stated at fair value based on the net asset value per unit of the respective funds as determined by the administrators of the relevant funds. Transfers between levels of the fair value hierarchy Transfers between levels of the fair value hierarchy are deemed to have occurred at the beginning of the reporting period. (c) Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the Statement of Financial Position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously. (d) Income and expense Interest income on cash at banks and short-term deposits is accounted for in the Statement of Comprehensive Income on an effective interest basis. Expenses are accounted for in the Statement of Comprehensive Income on an accrual basis. (e) Foreign currency translation Functional and presentation currency The Fund has adopted Hong Kong dollar as its functional and presentation currency. Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of assets and liabilities denominated in foreign currencies at year end exchange rates are recognized in the Statement of Comprehensive Income. Foreign exchange gains and losses relating to cash and cash equivalents are presented in the Statement of Comprehensive Income within "Net foreign currency exchange gains/losses". Foreign exchange gains and losses relating to the financial assets and liabilities carried at fair value through profit or loss are presented in the Statement of Comprehensive Income within "Net gains/losses on investments". (f) Cash and cash equivalents For the purpose of the Statement of Cash Flows, cash and cash equivalents comprise cash at banks and bank deposits with maturity of three months or less from the date of placing the deposits, net of certain short-term bank loans which the Fund usually undertakes as overnight bank borrowings

24 (g) Amounts due from/to brokers Amounts due from/to brokers represent receivables for investments sold and payables for investments purchased that have been contracted for but not yet settled by the end of the year. (h) Proceeds and payments on allotment and redemption of units The net asset value per unit is computed for each dealing day. The price at which units are allotted or redeemed is calculated by reference to the net asset value per unit as at the close of business on the relevant dealing day in accordance with the provisions of the Trust Deed which may be different from the accounting policies stated in the financial statements. Units of the Fund are redeemable at the option of the holders of redeemable units and are classified as a financial liability in the Statement of Financial Position which represents the net assets attributable to holders of redeemable units (or "net asset value" or "net assets" or "NAV") and is carried at the redemption amount that would be payable at the Statement of Financial Position date if the holders of redeemable units exercised the right to redeem units of the Fund. 3 Number of units in issue and net assets attributable to holders of redeemable units (per unit) Number of units in issue: Investment Administration Investment Administration Units Units Units Units At the beginning of the year 2,281, , ,313, , Total allotments 400, , , , Total redemptions (480, ) (260, ) (589, ) (287, ) At the end of the year 2,202, , ,281, , Net assets attributable to holders of redeemable units 307,297, ,997, ,878, ,853,084 Net assets attributable to holders of redeemable units (per unit) Holders of investment units are only entitled to investment management services from the Manager. Holders of administration units are also entitled to other administrative services provided by the Manager upon payment of the administration fee, which is deducted from the share of net assets of the respective units. 4 Financial risk management (I) Financial risk factors The Fund solely invests in a collective investment scheme JPMorgan SAR Greater China Fund which is managed by the Fund's Investment Manager. The Master Fund invests in the equity markets of Greater China Region. The Fund's activities therefore expose it to the same financial risks to which the Master Fund is exposed to, i.e. market risk (including market price risk, interest rate risk and currency risk), credit risk and liquidity risk. The Fund's holding in the Master fund, as a percentage of the Master fund's total net asset value, will vary from time to time dependent on the volume of allotments and redemptions at the Master Fund level. It is possible that the Fund may, at any point in time, hold a majority of the Master fund's total units in issue. As at 30 June 2017, the Fund owned 26% (2016: 23.11%) of the Master Fund's net assets attributable to the holders of redeemable units

25 (a) (i) Market risk Market price risk The Master Fund's investments are subject to the market price risk inherent in all investments i.e. the value of holdings may fall as well as rise. The Fund's market risk is managed through (i) deliberate stocks selection, and (ii) diversification of the investment portfolio in accordance with specific investment restrictions and guidelines. The manager of the Master Fund monitors the market price sensitivity primarily through the Beta of the Master Fund on a regular basis. Beta measures the statistical relationship between the return of the Master Fund and the relevant benchmark index chosen by the manager of the Master Fund. As at 30 June, the fair value of investments of the Master Fund and its estimated market sensitivity were as follows: Listed/Quoted Investments Fair value of investments % of net assets Fair value of investments % of net assets Assets Equities - Hong Kong 1,233,140, ,138,160, Taiwan 397,487, ,745, China ,203, Total Listed/Quoted Investments 1,630,627, ,457,109, Net asset value Relevant benchmark index for the Fund (Note*) Beta (Note**) % of reasonable possible change of the relevant benchmark index (Note***) Estimated impact on net asset value (Note****) As at 30 June ,666,784,611 MSCI Golden Dragon ex Foreign Listing (NDR) ,783,950 MSCI Golden Dragon ex Foreign Listing (NDR) [Before 1 December 2015, As at 30 June ,491,184,433 MSCI Golden Dragon (NDR)] (240,975,404) If the relevant benchmark index return was to move in the opposite direction, this would result in an opposite movement in the net asset value of the Fund by the same amount, assuming all other variables that may impact the net asset value of the Master Fund are held constant. Note: * Relevant benchmark index for the Master Fund represents the relevant market index used by the manager of the Master Fund in monitoring the market price risk of the Master Fund. ** Beta measures the statistical relationship between the return of the Fund and the respective benchmark index over the maximum of past 36 months, or the number of months since portfolio inception. For funds launched within a period of less than 12 months, weekly returns of the Fund are used for calculating the Beta. *** % of reasonable possible change is based on the actual historical change in the benchmark index in the past 12 months and does not include remote or "worst case" scenarios or "stress tests" nor represent the manager of Master Fund's forecast of the Master Fund's future returns. For funds launched within a period of less than 12 months, actual historical change in the benchmark index since the commencement of operations will be used to calculate the % of reasonable possible change. **** Estimated impact on net asset value of the Master Fund is calculated by applying the relevant Beta against the net asset value of the Master Fund multiplied by the % of reasonable possible change of the relevant benchmark index, assuming all other variables that may impact the net asset value of the Master Fund are held constant

26 (ii) Interest rate risk Interest rate risk is the risk that the value of a financial instrument or future cash flow will fluctuate due to changes in market interest rates. The Fund The Fund is a feeder fund investing substantially all of its assets in the Master Fund and thus its investment is not directly exposed to interest rate risk. The Fund's bank deposits are exposed to interest rate risk which is considered to be minimal as these interest bearing assets are short-term in nature, changes in their fair values in the event of a change in interest rate will not be material. The Master Fund The table below summarizes the Master Fund's financial assets and liabilities as at 30 June which expose it to the risk associated with the effects of fluctuations in the prevailing levels of market interest rates, categorized by remaining maturity dates Less than 1 month 2016 Less than 1 month Cash at banks 33,749,428 15,436,760 Total interest sensitivity gap 33,749,428 15,436,760 Any cash and cash equivalents are placed/borrowed at short-term market interest rates and the manager of the Master Fund considers that the Master Fund is not subject to significant amount of risk due to the stable and low fluctuation in the prevailing levels of market interest rates. (iii) Currency risk The Fund The Fund invests substantially all of its assets in the Master Fund in Hong Kong dollar denomination. HKFRS 7 considers the foreign exchange exposure relating to non-monetary assets and liabilities to be a component of market price risk not currency risk. The Investment Manager monitors the exposure on all foreign currency denominated assets and liabilities including both monetary and nonmonetary assets and liabilities. The Fund's other assets and liabilities are mainly denominated in United States dollar and Hong Kong dollar and are therefore not exposed to significant currency risk as the Hong Kong dollar is currently pegged to United States dollar. The Master Fund The Master Fund holds assets and liabilities denominated in a number of currencies. HKFRS 7 considers the foreign exchange exposure relating to non-monetary assets and liabilities to be a component of market price risk not currency risk. However, the manager of the Master Fund monitors the exposure to currency risk on all foreign currency denominated assets and liabilities including both monetary and non-monetary assets and liabilities. The table below summarizes the Master Fund's exposure to currency risk as at 30 June together with the percentage of reasonable possible change in foreign currencies and the estimated impact on net asset value of the Master Fund. Net currency exposures (Note*) equivalent % of reasonable possible change against (Note**) Estimated impact on net asset value 2017 Taiwan Dollar 402,384, ,959,735 United States Dollar 80, ,464,282 26,960,

27 Net currency exposures (Note*) equivalent % of reasonable possible change against (Note**) Estimated impact on net asset value 2016 Chinese Yuan 1,405, (92,741) Taiwan Dollar 310,932, (13,370,113) United States Dollar 21,310, , ,648,678 (13,441,543) If the foreign currency fluctuations were to move in the opposite direction, this would result in an opposite movement in the net asset value of the Master Fund by the same amount, assuming all other variables that may impact the net asset value of the Master Fund are held constant. Note: * Net currency exposures on assets and liabilities include both monetary and non-monetary assets and liabilities. ** % of reasonable possible change is based on the actual historical change in the respective currencies against the functional currency of the Master Fund in the past 12 months and does not include remote or "worst case" scenarios or "stress tests" nor represent the manager of the Master Fund's forecast of the Master Fund's future returns. (b) Credit risk Credit risk is the risk that a counterparty will not be able to pay amounts in full when due. The Fund As at 30 June, the Fund's maximum exposure to credit risk before any credit enhancements was as follows: Cash at banks 238,053 1,413,273 Amounts due from brokers 327,154 - Amounts receivable on allotment 4,996,350 5,224,855 Interest receivable ,561,595 6,638,130 The table below summarizes the credit rating of the banks/custodians which the Fund has placed the financial assets as at 30 June Exposure to counterparties Exposure to counterparties Bank balances S&P(AA)/Moody's(Aa)/FITCH(AA) 238,053 1,413,273 Investment balances with custodian S&P(AA)/Moody's(Aa)/FITCH(AA) 433,315, ,563,

28 The Master Fund As at 30 June, the Master Fund's maximum exposure to credit risk before any credit enhancements was as follows: Cash at banks 33,749,428 15,436,760 Amounts due from brokers 2,345,848 4,257,256 Amounts receivable on allotment 1,280, ,609 Dividend and other accounts receivable 9,503,141 15,687,538 46,878,702 35,653,163 All transactions in listed/quoted investments are settled on a delivery versus payment basis using approved brokers. The risk of default is considered minimal, as delivery of investments sold is only made when the Master Fund's custodian bank has received payment. For a purchase, payment is made once the investments have been received by the Master Fund's custodian bank. The trade will fail if either party fails to meet the obligation. The table below summarizes the credit rating of the banks which the Master Fund has placed the financial assets as at 30 June Exposure to counterparties Exposure to counterparties Bank balances under the safekeeping of the custodian S&P(AA)/Moody's(Aa)/FITCH(AA) 33,749,428 15,436,760 Investment balances with custodian S&P(AA)/Moody's(Aa)/FITCH(AA) 1,630,627,327 1,457,109,380 (c) Liquidity risk The Fund is exposed to daily redemption of units. As at 30 June 2017 and 2016, the Fund invests solely in collective investment scheme JPMorgan SAR Greater China Fund which allows daily redemption. The Manager may also limit the total number of units redeemed on any dealing day to 10% or more of the units in issue on any dealing day. The table below summarizes the Fund's and the Master Fund's financial liabilities into relevant maturity groupings based on the remaining period as at 30 June to the contractual maturity date. The amounts in the table are the contractual undiscounted cash flows. The Fund Less than 1 month Less than 1 month Amounts payable on redemption 92,048 40,120 Other accounts payable 489, ,278 Net assets attributable to holders of redeemable units 438,294, ,731,093 Total financial liabilities 438,876, ,201,

29 The Master Fund Less than 1 month Less than 1 month Amounts due to brokers 5,841, ,247 Amounts payable on redemption 4,181, ,848 Other accounts payable 699, ,015 Net assets attributable to holders of redeemable units (Note*) 1,666,784,611 1,491,184,433 Total financial liabilities 1,677,506,029 1,492,762,543 Note: * The manager of the Master Fund may limit the total number of units redeemed on any dealing day to 10% or more of the current units in issue of any one class on any dealing day. The Investment Manager manages the Fund's liquidity risk by investing in investments that the Investment Manager expects to liquidate normally within 1 month and making short-term bank borrowing to meet the total financial liabilities. (II) Capital risk management The capital of the Fund is represented by the net assets attributable to holders of redeemable units which is subject to allotments and redemptions of redeemable units. The Fund's objective for capital management is to provide returns and long-term capital growth for unitholders. In order to maintain the capital structure, the Management performs the following: - Monitor allotment and redemption activities relative to the liquid assets. - To protect the interest of unitholders and in exceptional circumstances, the Manager may also limit the total number of units redeemed on any dealing day to 10% or more of the units in issue on any dealing day. - Monitor fund investment guidelines and restrictions, in accordance with the constitutional documents, to maintain sufficient liquidity through diversification. (III) Fair value estimation As at 30 June 2017 and 2016, the Management considers that the carrying values of assets and liabilities were reasonable approximations of their fair value. HKFRS 13 requires the Fund to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels: - Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1). - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2). - Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3)

30 The table below summarizes the Fund's investments (by class) within the fair value hierarchy measured at fair value as at 30 June: Listed/Quoted Investments Level 1 Level 2 Level 3 Total 2017 Assets Collective Investment Scheme 433,315, ,315,090 Total financial assets at fair value through profit and loss 433,315, ,315,090 Listed/Quoted Investments Level 1 Level 2 Level 3 Total 2016 Assets Collective Investment Scheme 344,563, ,563,361 Total financial assets at fair value through profit and loss 344,563, ,563,361 Investments, whose values are based on quoted market prices in active markets, and therefore classified within level 1, include active listed equities. The Fund does not adjust the quoted price for these instruments. Financial instruments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer/broker quotations or alternative pricing sources supported by observable inputs are classified within level 2. Investments classified within level 3 have significant unobservable inputs, as they trade infrequently. There were no transfers between levels for the years ended 30 June 2017 and The table below summarizes the Fund's assets and liabilities (by class) within the fair value hierarchy not measured at fair value at 30 June but for which fair value is disclosed. Level 1 Level 2 Level 3 Total 2017 Assets Cash at banks 238, ,053 Amounts due from brokers - 327, ,154 Amounts receivable on allotment - 4,996,350-4,996,350 Interest receivable Total assets 238,053 5,323,542-5,561,595 Liabilities Amounts payable on redemption - 92,048-92,048 Other accounts payable - 489, ,795 Net assets attributable to holders of redeemable units 438,294, ,294,842 Total liabilities 438,294, , ,876,