Jinxin Securities Investment Fund

Profile
Transaction code: 500011
Date of establishment: October 21, 1999
Expiration date: As of October 20, 2014
Size: 3 billion
Type: Contract type closed-end
Fund trustee: China Construction Bank
Accounting firm: PRICEWATERHOUSECOOPERS Zhong Tian Accounting Firm

Investment conception
We adhere to the investment philosophy of value-based development, pay unceasing attention to and invest in the companies in growing industries with high standing in their respective industry, favorable prospect, sound financial situation and perfect corporate governing structure. Meanwhile, this Fund will also pay close attention to the M&A value of these companies.

Fund Manager’s comment
In 2005,this Fund increased its shares of those companies with continuously and stable upgraded performance, monopolization in resources and brand effect, and reduced its shares of those companies impacted by the interest rate, exchange rate and oil price. We believe that the 11th Five Year Programming appreciation of RMB, advance in price of commodities, TMT, financial innovation and M&A will be the most important themes of investment in 2006.With respect to the strategy of industrial configuration, we think the structural change in the economic growth and the exchange rate of RMB will become the important factors for choosing industries in 2006.In detailed, we believe that those industries including TMT, commerce, non-ferrous metal, real estate plus finance, mechanical equipment(including new energy source and energy-saving product0and medical retail will have a good prospect, and we will pay close attention to the strategic M&A value of companies with periodical performance, especially with monopolization in resources, such as companies in petrochemical and electrolytic aluminum industries.

Investment objective
The investment objective of the fund is to achieve stable investment returns in long term by mainly investing on H-shares that have potential growth, in pursuit of risk decentralization and risk evasion on investment.

Investment Strategy
The portfolio is mainly composed by bond investment in parts, and equity investment, which consist of state owned enterprise share with stable growth the one hand and with dramatic growth on the other hand.

Criteria of judgment for the stock with stable growth in unit volume is based on growth potential from the enterprise’s main business and its prominent position in the market. Consequently, the company’s profit is sustainable in long terms thanks to the increase in its main business and the characteristic such as products, technology and marketing channels can be defined as the competitive advantages. For the stock with rapid growth, the Criteria is concerned on rapid growth potential resulting by substantive changes of the enterprise. Investment on state owned enterprise shares with rapid growth then emphasize particularly on assets reorganization.