Guotai Jinlong Bond Securities Investment Fund

Profile
Date of establishment: December 5, 2004
Type: Contract type open-end
Size: 1.12 billion
Fund trustee: Shanghai Pudong Development Bank
Accounting firm: PRICEWATERHOUSECOOPERS Zhong Tian Accounting Firm

Investment Conception
Pursue the value investment on the fundamental base, set the foot on macro-economic periodic variation to judge the value, and at the same tine, set the eye on the periodic variation and institutional variation adjustment value expectation and lay stress on the encashablity of the bond.

Fund Manager’s Comment
The accumulative net value of Jinlong Bond was surpassing the benchmark, CITIC Exclusive Bond Index, by 118 points, and Shanghai Composite National Bond Index by 267 points; the exceeding profit mainly came from the right time choice judgment.
It is expected that the macro-economy will feature a universal accelerating fall and inflation pressure alleviation. We hold a optimistic view for the 2005 national bond market, and the general investment strategy will be the mid-term national bond and short term financial bond as the primary choice and the transferable bond as the secondary, paying attention to the sectional risks. The investment hot points focus on the two blocks: the 3-7 year mid-term national bond and financial bond and the Central Bank Paper below one year.

Investment Objective
The investment objective is on the premise of low risk and high mobility of the portfolio to achieve the sustained appreciation of fund’s asset in and to pursue high current income and overall investment return.

Investment Strategy
The strategy of the fund consequently is mainly based on analysis of long-term interest rate tendency as well as combining with medium to short-term economic cycle, macroeconomic policy and yield curve analysis to actualize a positive bond investment management by means of bond replacement and yield curve allocation.

Guotai Jinlong Sector Select Securities Investment Fund

Profile
Date of establishment: December 5, 2004
Type: Contract type open-end
Size: 1 billion
Fund trustee: Shanghai Pudong Development Bank
Accounting firm: PRICEWATERHOUSECOOPERS Zhong Tian Accounting Firm

Investment Conception
Pursue the value investment on the fundamental base, focus on the profit increase of the enterprise, dynamically adjust the value expectation and lay stress on the liquidity of the asserts benefit.

Fund manager’s comment
The Fund adhere to the investment strategy of choice of industries and exploitation of the individual stocks. The Fund holds a prudent and optimistic view of the domestic A-share market. We think that the deceleration of macro-economy (including inflation and interest rise factors) and the adjustment of the RMB exchange rate (appreciation) will constitute the main line of investment, at the same time the incremental asset (IPO under offering price system), merge and acquisition, financial innovation, 3G, tax system reform, state-owned stock possession reduction piloting and others will be the important sectional investment subjects. In the view of the choice of industries, there are advantageous enterprises with endogenesis increase or industry with monopolization (resource, historic, technical and channel monopolization), which are still the proper choices.

Investment Objective
The investment objective of the fund is to appreciate its asset in value for long-term by investing on the enterprise with potential growth and industrial background following industry development trend.

Investment Strategy
By means of combining with both qualitative and quantitative analysis, the strategy is designed to effectively eliminate systematic risks in capital market in terms of asset allocation, ensure the preponderant role and its relative proportion through industry selecting. In addition, individual stock selecting is considered to explore underestimated public companies with potential development.