Half Yearly Report

RNS Number : 4868S

JPMorgan Chinese Inv Tst PLC

19 May 2009

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN CHINESE INVESTMENT TRUST PLC

UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS ENDED

31ST MARCH 2009

Chairman's Statement

Performance

During this period of global economic uncertainty, it is pleasing to report that the Company achieved a positive net asset value ('NAV') return of +8.2% in the six months ended 31st March 2009. This compares favourably with the return of +6.5% from the Company's benchmark, the MSCI Golden Dragon Index in sterling terms, and represents an outperformance of +1.7%. Over the same period, the Company's share price return was lower at +2.0%, reflecting a widening of the discount from 4.8% to 9.9%.

The Investment Managers' Report below gives a more detailed review of the Company's performance.

Subscription Shares

On 16th April 2008, the Company issued subscription shares as a bonus issue to the ordinary shareholders on the basis of one subscription share for every five ordinary shares held. Each subscription share confers the rights (but not the obligation) to subscribe for one ordinary share, at pre-determined prices, on 15th May each year from 2009 to 2013, whereupon the rights under the subscription shares will lapse. On 15th May 2009 applications for the first conversion opportunity were received to convert 79,460 subscription shares into ordinary shares. Further details of the subscription shares, including the bonus cost for the calculation of taxation, can be found on the Company's website at www.jpmchinese.co.uk

Share Issues and Share Buybacks

At a General Meeting held on 14th April 2008, shareholders gave the Board authority to issue up to approximately 50 million new ordinary shares in the Company. In addition, at the Annual General Meeting held on 16th December 2008, the authority to repurchase up to 14.99% of the Company's issued ordinary and subscription share capital was renewed. Repurchases will only be made in the market at prices below the prevailing NAV. At the time of writing, no shares have been repurchased under this authority.

During the six months to 31st March 2009, the Company issued 450,000 shares out of Treasury at a weighted average premium of 3.6%. The Company will only re-issue shares held in Treasury at a premium to NAV.

Outlook

There is a common belief in China that whatever happens at the start of the New Year is a sign of things to come. It is therefore encouraging to report that this Chinese New Year (26th January 2009) coincided with a marked improvement in the Greater China markets. Whilst one hopes that such a belief holds true, it is too early to tell if the recent good performance is sustainable in the near term, but the Board is confident that the Greater China markets continue to offer excellent growth opportunities and is encouraged by the stimulus policy announcements made by the Chinese government. With ample government reserves and low levels of corporate and consumer borrowing, the Chinese domestic economy is well positioned to withstand the global economic downturn. Whilst volatility is likely to continue over the coming months, the longer term growth prospects of the Greater China markets look attractive.

Nigel Melville

Chairman

19th May 2009

Investment Managers' Report

During the six months ended 31st March 2009, the Company achieved a total return on net assets of +8.2% in sterling terms, outperforming the benchmark return of +6.5% by +1.7%. The outperformance can be attributed to the portfolio's overweight position in Chinese equities and stock selection within the Chinese and Taiwanese markets. The biggest detractor from performance was stock selection in Hong Kong equities; however, this negative effect was reduced substantially by the portfolio's favourable underweight position in Hong Kong equities during the period.

China

Market Performance

Regardless of large stimulus packages announced by the Chinese government and falling interest rates, Chinese equities faced a challenging last quarter in 2008 due to rising concerns about much slower than expected global growth. The announced 4 trillion renminbi ('RMB') fiscal stimulus package was designed to support GDP growth, with a focus on infrastructure, social welfare and rural reform, as well as credit easing. In the last quarter of 2008 the MSCI China Index fell 11%*, whilst the domestic A-Share markets declined even further, with the CSI 300 Index down 19%.

Chinese equities edged up modestly in the first quarter of 2009, despite worries about the global financial system. The market was somewhat lifted by optimism triggered by falling interest rates and expectations of the large-scale stimulus packages showing first signs of traction. The domestic A-Share markets outperformed strongly, supported by ample liquidity and improved domestic confidence. First signs of the stimulus package working became evident as total RMB loans reached RMB 2.7 trillion (against an annual loan target of RMB 6 trillion for 2009).

Market Outlook

Despite its reliance on global trade flows, China's economy is very well positioned in a global context, with ample government reserves and low levels of corporate and consumer borrowing. We believe that the Chinese economy will continue to stand out as one with growth. There are still divided views over China's second quarter economic performance in 2009, which would suggest high volatility in the next few months. Despite this, the government's pro-active stimulus policies should help support investor interest.

Hong Kong

Market Performance

In the last quarter of 2008, Hong Kong shares underperformed the China shares with the MSCI Hong Kong Index losing almost 19%. This underperformance was primarily due to Hong Kong's greater sensitivity to external conditions. Property stocks did outperform as a result of attractive valuations, temporary physical pricing stability and rising transaction volumes. In contrast, banks were sold off substantially due to fears over a systemic breakdown as well as a rise in non-performing loans on the back of further decreases in global demand.

In the first quarter of 2009, the MSCI Hong Kong Index fell 1%, only marginally underperforming the general Asia Pacific ex Japan Region Index. Corporate results were on average slightly behind expectations as, in the financial sector especially, companies aggressively wrote down their valuations of underperforming assets in order to improve conditions for a stronger reporting year in 2009. For property companies, most earnings were adversely affected by booking delays while writedowns, due to property revaluations, were largely within expectations.

Market Outlook

Global policy uncertainty remains an overhang on the Hong Kong stock market as it is largely exposed to global money flows. However, the stimulus package from China should soon translate into economic benefits flowing across the border. The resilience of retail rents from Hong Kong property companies and the recovery in transaction volumes has been reflected by the recent strength of share prices. However, a sustained upturn seems unlikely given a lack of new development opportunities and continued pressures on margins.

Taiwan

Market Performance

In the last quarter of 2008, Taiwan saw a sharp synchronised sell-down alongside global markets with the MSCI Taiwan Index falling 24%. The concerns over both the global and domestic economies were overwhelming and redemption selling pressures dampened sentiment. As part of its effort to support domestic growth, the Taiwan government announced several stimulus measures such as special budgets for infrastructure projects and shopping vouchers for consumers worth around 1% of GDP. The trend for Taiwanese equities, however, reversed in the first quarter of 2009, as it was the best performing Asian market despite the still uncertain economic backdrop, with most of the outperformance coming from the technology and construction sectors. The rally was mainly driven by retail investors and was backed by an improved revenue outlook and company restocking after overly aggressive order cuts in late 2008.

Market Outlook

In spite of the poor global outlook, the uncertainty for end demand from OECD countries and relatively rich valuations, there is strong liquidity in Taiwan. An upcoming signing of a Memorandum of Understanding ('MOU') with China in June 2009, could provide the ammunition for continued strength in the Taiwanese market for the early part of the second quarter in 2009. The thawing relations between China and Taiwan have been further evidenced by China Mobile's recent announcement of a planned investment in Far EasTone, a Taiwan telecommunications service provider. The announcement led to a surge in Taiwanese share prices as investors began to speculate whether this signalled the start of further cross-strait investments. By midway through the second quarter of 2009 markets may weaken as worries about the sustainability of restocking remain and investors tend to sell ahead of news on the MOU. Within technology, there could be some rotation out of upstream (exploration/production) and into downstream (distributional/sales/marketing) technology stocks where valuations are generally more attractive. Financials, which have underperformed in the first quarter of 2009, could see rotational interest ahead of the signing of the MOU. More concrete steps in cross-straits talks are likely to trigger interest in China concept stocks, properties, tourism and transportation stocks.

*Returns from this point are stated in local currency.

Howard Wang

Emerson Yip

Kevin Chan

Shumin Huang

Investment Managers

19th May 2009

For further information please contact:

Christopher Legg

JPMorgan Asset Management (UK) Limited

020 7742 6000

Interim Management Report

The Company is required to make the following disclosures in its half year report.

Principal Risks and Uncertainties

The principal risks and uncertainties faced by the Company fall into six broad categories: market; investment and strategy; accounting, legal and regulatory; corporate governance and shareholder relations; operational; and financial. Information on each of these areas is given in the Business Review within the Annual Report and Accounts for the year ended 30th September 2008.

During the market turmoil in the latter part of 2008, JPMAM reacted with heightened management scrutiny of counterparty risk. In addition, reviews were initiated of exposures, policies, procedures and legal arrangements applicable to the major sources of counterparty exposure.

Related Parties Transactions

During the first six months of the current financial year, no transactions with related parties have taken place which have materially affected the financial position or the performance of the Company during the period.

Directors' Responsibilities

The Board of Directors confirms that, to the best of its knowledge:

(i) the condensed set of financial statements contained within the half yearly financial report has been prepared in accordance with the Accounting Standards Board’s Statement ‘Half-Yearly Financial Reports’; and

(ii) the interim management report includes a fair review of the information required by 4.2.7R and 4.2.8R of the UK Listing Authority Disclosure and Transparency Rules.

Nigel Melville

Chairman

For further information, please contact:

Christopher Legg

For and on behalf of

JPMorgan Asset Management (UK) Limited, Secretary

020 7742 6000

Please note that up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can be found at www.jpmchinese.co.uk

Income Statement

For the six months ended 31st March 2009

	(Unaudited)					(Unaudited)				(Audited)
	Six months ended					Six months ended				Year ended
	31st March 2009					31st March 2008				30th September 2008
		Revenue	Capital	Total	Revenue		Capital	Total	Revenue		Capital	Total
		£'000	£'000	£'000	£'000		£'000	£'000	£'000		£'000	£'000
Gains/(losses) from investments
held at fair value through
profit or loss		-	4,995	4,995	-		(21,469)	(21,469)	-		(39,414)	(39,414)
Net foreign currency
gains		-	364	364	-		166	166	-		103	103
Income from investments		499	-	499	235		-	235	2,306		-	2,306
Other interest receivable
and similar income		26	-	26	44		-	44	30		-	30
Gross return/(loss)		525	5,359	5,884	279		(21,303)	(21,024)	2,336		(39,311)	(36,975)
Management fee		(324)	-	(324)	(510)		-	(510)	(933)		-	(933)
VAT recoverable (note 3)		3	16	19	-		-	-	-		-	-
Performance fee (charge)/writeback		-	(135)	(135)	-		1,010	1,010	-		627	627
Other administrative expenses		(209)	-	(209)	(218)		-	(218)	(705)		-	(705)
Net (loss)/return on ordinary
activities before finance
costs and taxation		(5)	5,240	5,235	(449)		(20,293)	(20,742)	698		(38,684)	(37,986)
Finance costs		(15)	-	(15)	(95)		-	(95)	(150)		-	(150)
Net (loss)/return on ordinary
activities before taxation		(20)	5,240	5,220	(544)		(20,293)	(20,837)	548		(38,684)	(38,136)
Taxation		(39)	-	(39)	(5)		-	(5)	(184)		-	(184)
Net (loss)/return on ordinary
activities after taxation		(59)	5,240	5,181	(549)		(20,293)	(20,842)	364		(38,684)	(38,320)
(Loss)/return per share
(note 5)		(0.1)p	7.4p	7.3p	(0.8)p		(28.6)p	(29.4)p	0.5p		(54.6)p	(54.1)p

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

The 'Total' column of this statement is the profit and loss account of the Company and the 'Revenue' and 'Capital' columns represent supplementary information prepared under guidance issued by the Association of Investment Companies. The Total column represents all the information that is required to be disclosed in a Statement of Total Recognised Gains and Losses ('STRGL'). For this reason a STRGL has not been presented.

Reconciliation of Movements in Shareholders' Funds

Six months ended 31st March 2009 (unaudited)

	Called up		Exercised	Capital
	share	Share	warrant	redemption	Other	Capital	Revenue
	capital	premium	reserve	reserve	reserve	reserves	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30th September 2008	19,007	8,571	3	581	32,507	5,963	803	67,435
Sale of shares from Treasury	-	268	-	-	113	-	-	381
Net return/(loss) on
ordinary activities	-	-	-	-	-	5,240	(59)	5,181
Dividends appropriated
in the period	-	-	-	-	-	-	(355)	(355)
At 31st March 2009	19,007	8,839	3	581	32,620	11,203	389	72,642
Six months ended 31st March 2008 (unaudited)
	Called up		Exercised	Capital
	share	Share	warrant	redemption	Other	Capital	Revenue
	capital	premium	reserve	reserve	reserve	reserves	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30th September 2007	18,866	8,712	3	581	33,364	44,647	796	106,969
Repurchase of shares
into Treasury	-	-	-	-	(857)	-	-	(857)
Net loss on ordinary
activities	-	-	-	-	-	(20,293)	(549)	(20,842)
Dividends appropriated
in the period	-	-	-	-	-	-	(357)	(357)
At 31st March 2008	18,866	8,712	3	581	32,507	24,354	(110)	84,913
Year ended 30th September 2008 (Audited)
	Called up		Exercised	Capital
	share	Share	warrant	redemption	Other	Capital	Revenue
	capital	premium	reserve	reserve	reserve	reserves	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30th September 2007	18,866	8,712	3	581	33,364	44,647	796	106,969
Bonus issue of subscripton
shares	141	(141)	-	-	-	-	-	-
Repurchase of shares
into Treasury	-	-	-	-	(857)	-	-	(857)
Net (loss)/return on ordinary
activities	-	-	-	-	-	(38,684)	364	(38,320)
Dividends appropriated
in the year	-	-	-	-	-	-	(357)	(357)
At 30th September 2008	19,007	8,571	3	581	32,507	5,963	803	67,435

Balance Sheet

at 31st March 2009

	(Unaudited)	(Unaudited)	(Audited)
	31st March 2009	31st March 2008	30th September 2008
	£'000	£'000	£'000
Fixed assets
Investments at fair value through profit or loss:
China	40,001	39,799	30,067
Taiwan	19,505	23,849	19,448
Hong Kong	13,101	22,646	17,664
Singapore	950	-	-
Total investments at fair value	73,557	86,294	67,179
Current assets
Debtors	520	2,321	685
Cash and short term deposits	1,161	3,885	3,478
	1,681	6,206	4,163
Creditors: amounts falling due within one year	(1,067)	(4,936)	(1,870)
Net current assets	614	1,270	2,293
Total assets less current liabilities	74,171	87,564	69,472
Provisions for liabilities and charges
Performance fee	(1,529)	(2,651)	(2,037)
Total net assets	72,642	84,913	67,435
Capital and reserves
Called up share capital	19,007	18,866	19,007
Share premium	8,839	8,712	8,571
Exercised warrant reserve	3	3	3
Capital redemption reserve	581	581	581
Other reserve	32,620	32,507	32,507
Capital reserves	11,203	24,354	5,963
Revenue reserve	389	(110)	803
Shareholders' funds	72,642	84,913	67,435
Net asset value per share (note 6)	102.1p	120.1p	95.4p

Cash Flow Statement

For the six months ended 31st March 2009

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	31st March 2009	31st March 2008	30th September 2008
	£'000	£'000	£'000
Net cash outflow from operating
activities (note 7)	(1,064)	(1,234)	(386)
Net cash outflow from returns on investments
and servicing of finance	(15)	(100)	(159)
Taxation paid	-	-	-
Net cash (outflow)/inflow from capital
expenditure and financial investment	(1,628)	6,848	7,979
Dividends paid	(355)	(357)	(357)
Net cash inflow/(outflow) from financing	381	(2,221)	(4,633)
(Decrease) /increase in cash for the period	(2,681)	2,936	2,444
Reconciliation of net cash flow to movement in net funds
Net cash movement	(2,681)	2,936	2,444
Loans repaid in the period	-	-	3,776
Exchange rate movements	364	162	103
Movement in net debt/funds in the period	(2,317)	3,098	6,323
Net funds/(debt) at the beginning of the period	3,478	787	(2,845)
Net funds at the end of the period	1,161	3,885	3,478
Represented by:
Cash and short term deposits	1,161	3,885	3,478

Notes to the Accounts

for the six months ended 31st March 2009

1. Financial statements

The information contained within the Financial Statements in this announcement has not been audited or reviewed by the Company’s
auditors.

                The figures and financial information for the year ended 30th September 2008 are extracted from the latest  published accounts
                of the Company and do not constitute statutory accounts for that year. Those accounts have been delivered to the Registrar of
                Companies and included the report of the auditors which was unqualified and did not contain a statement under either section 498(2)
                or 498(3) of the Companies Act 2006.

2. Accounting policies

The accounts have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (‘UK GAAP’) and with
the Statement of Recommended Practice ‘Financial Statements of Investment Trust Companies’ issued in January 2009.

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

The accounting policies applied to these half year accounts are consistent with those applied in the accounts for the year ended 30th
September 2008.

3. VAT recoverable

                No VAT has been charged on management fees since November 2007 when HM Revenue & Customs announced acceptance that
                VAT was not chargeable on investment trust management fees. The Company has since recovered VAT amounting to £19,000 and
                interest of £3,000 in respect of VAT paid in the past.

4. Dividends paid

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	31st March 2009	31st March 2008	30th September 2008
	£'000	£'000	£'000
Final dividend in respect of the year ended
30th September 2008 of 0.5p (2007: 0.5p)1	353	357	357

1No interim dividend has been declared in respect of the six months ended 31st March 2009 (2008: nil).

5. (Loss)/return per share

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	31st March 2009	31st March 2008	30th September 2008
	£'000	£'000	£'000
(Loss)/return per share is based on the following:
Revenue (loss)/return	(59)	(549)	364
Capital return/(loss)	5,240	(20,293)	(38,684)
Total return/(loss)	5,181	(20,842)	(38,320)
Weighted average number of shares in issue	71,021,463	70,899,963	70,791,482
Revenue (loss)/return per share	(0.1)p	(0.8)p	0.5p
Capital return/(loss) per share	7.4p	(28.6)p	(54.6)p
Total return/(loss) per share	7.3p	(29.4)p	(54.1)p

6. Net asset value per share

Net asset value per share is calculated by dividing shareholders' funds by the number of ordinary shares in issue at 31st March 2009 of 71,133,001 (31st March 2008: 70,683,001 and 30th September 2008: 70,683,001), excluding shares held in Treasury.

7. Reconciliation of net return/(loss) on ordinary activities before finance costs and taxation to net cash outflow from
operating activities

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	31st March 2009	31st March 2008	30th September 2008
	£'000	£'000	£'000
Net return/(loss) on ordinary activities before finance
costs and taxation	5,235	(20,742)	(37,986)
Add back capital (return)/loss before finance costs
and taxation	(5,240)	20,293	38,684
Scrip dividends received as income	(66)	(31)	(87)
Decrease in accrued income	34	134	76
Decrease/(increase) in other debtors	36	17	(22)
(Decrease)/increase in accrued expenses	(44)	(28)	5
Overseas taxation	(38)	(5)	(184)
VAT recoverable included in capital	16	-	-
Performance fee paid	(997)	(872)	(872)
Net cash outflow from operating activities	(1,064)	(1,234)	(386)