Company Introduction

Guotai Junan Allianz fund Management Co.,Ltd. is the first Joint Venture fund management company that acquired the preparatory permit in China. Its local shareholder, Guotai Junan Securities is the largest security company in China that operates comprehensive securities business; its foreign shareholder, Allianz AG in Germany is one of the world’s leading financial institutions that provides diversified financial products and services. Guotai Junan Allianz has an investment team of strong international experience, and with the support from its foreign shareholder’s vast experience in the areas of corporate governance and risk management, combining the successful practice of market research and customer service of its local shareholder, the company will adopt “Stability, Profession, Excellence and Trust” operation philosophy, and endeavors to achieve the goal of becoming one of the best fund management companies in China.

Vision
Stable, Professional, Outstanding, Reliable

Mission
To become one of the most prestigious and innovative fund management companies with best performance and best customer relationship in China.

Corporate Culture
Customer Connect
Respect Everyone
Listen. Understand
Speak up. Speak out
Ethical Always
Teamwork

Shareholders

Guotai Junan Securities Company, Ltd. (GTJA)

Guotai Junan Securities Company, Ltd. (GTJA) has been in the course of perfecting the corporate governance structure, standardizing businesses, becoming practical and innovative, making important assets replacement and finishing a division since the year 2001 based on the all-round success of merger and reform. The assets quality of GTJA has been greatly improved, and all the businesses have realized rapid development. Especially, the performance of corporate finance and fixed-income securities related business has regained the first place in the securities industry; while brokerage and other businesses have also secured the foremost places. In a yearly review sponsored by Shanghai Securities Newspaper, GTJA ranked number one in the comprehensive strength among all the securities firms nationwide in 2001.

Looking forward, the securities market will speed up the implementation of the reform and open policy in the year 2002, and the depth and extent of competition will be much fiercer than ever before. Clinging to the principle of “providing the client-oriented service, linking all businesses by marketing, pushing the management mode restructure, perfecting the internal control system, strengthening the core competence and leading the management level to a new stage”, GTJA shall deepen the reform, improve corporate governance structure, implement business process reengineering (BPR), execute the management mode restructure profoundly, keep on optimizing the asset structure, adjust the business composition, improve management ability, encourage business innovation, push the corporate culture establishment, strengthen the cohesion, and accelerate the development of all businesses. We shall strive to build GTJA into a preeminent securities firm, with high-quality assets, satisfying return, complete business system, flexible incentive rewarding system, efficient management process, and a reservoir of talented members, based on which, we are marching to a financial holding company.

Instruction of Guotai Junan Securities Co., Ltd. Established on August 18, 1999 through the merger of Guotai Securities and J&A Securities and addition of new investors, Guotai Junan Securities Company, Ltd. (hereinafter abbreviated as GTJA or the Company), with a registered capital of RMB3.7 billion and near 4000 employees, has a nationwide network, consisting of 1 subsidiary, 5 district headquarters and 112 brokerage branches, covering 28 provinces, autonomous regions, municipalities directly under the Central Government and Hong Kong Special Administrative Region. By the end of 2001, net assets of the Company reached RMB4.165 billion, total assets RMB49.805 billion, and the total taxes contributed amounted to RMB1.3 billion, ranking the first place nationwide. In 2001, GTJA ranked the top in comprehensive strengths among securities firms in China, and also gained number one in total capital raised, total companies issued, B share trading amount and debt underwriting amount, etc.

GTJA is one of the largest securities firms in China with the most extensive business scope and geographic locations. The company is client-oriented, providing comprehensive securities businesses service to satisfy the needs of the clients. Its business scope includes trading and brokering of securities, acting on behalf of clients to pay the principal, interest and dividends, custodian and identification services, acting on behalf of clients to open accounts, securities businesses on its own account, securities underwriting and sponsoring, consulting in securities investment, asset management, establishing securities investment funds and funds management companies, and other businesses verified by the China Securities Regulatory Commission.

Brief Introduction to Allianz Group

The Allianz Group is a leading insurance and financial services provider, and is present in more than 70 markets around the world. With nearly 174,000 employees, Allianz offers an extensive range of products and services to more than 60 million clients, including life and health insurance, property and casualty insurance, reinsurance and risk consulting services, as well as asset management for institutional and private investors globally.

Allianz is one of the largest insurance companies worldwide in terms of gross premium income. In 2003, gross premium income in insurance business went up by 2.8 percent to 85.0 billion euros compared to the previous year. Total net income for the Group was 1.6 billion euros. The total value of assets under management was 996 billion euros as of end-2003.

In the first-half of 2004, Allianz Group reinforced its positive earnings trend in all segments. Net income was 1.3 billion euros. This represents an increase of more than 1.1 billion euros compared to the figure for the corresponding prior-year period. The combined ratio improved by 2.7 percentage points to 94.3 percent. “We are on track”, said Michael Diekmann, chairman of the Board of Management of Allianz AG, “The positive results show that our ‘3+one’ program is taking effect.”

Owing to its strong global business position in insurance and financial services and its solid capitalization, Allianz is rated as financially strong by the global rating agencies Standard & Poor’s and the US insurance rating body, A.M. Best. It ranked 11th in the 2003 Fortune Global Top 500.

Allianz - Developments and Facts

Allianz AG was founded in 1890 in Berlin, Germany. Today, its headquarters are located in Munich, the capital of Bavaria in southern Germany.

Since the early years of the 20th century, Allianz has been active in the international insurance market. It covered and compensated for the strong earthquake in San Francisco in 1906 and the sinking of the “Titanic” ocean liner. After the Second World War, Allianz recovered rapidly during the “German economic recovery” period of the 1950s, and soon became the largest insurer in Germany. It restarted its international activities at the end of the ’60s.

Since the early ’80s Allianz has conducted numerous strategic acquisitions in Europe of well-known insurance companies such as RAS of Italy, Cornhill of Great Britain, Via/Rhine of France, ELVIA of Switzerland and AGF of France. With the reunification of Germany in 1990, Allianz took over former East Germany’s National Insurance Company and also expanded into several countries of Eastern Europe. In the ’90s, the Group strengthened its position in the US market by acquiring Fireman’s Fund and Life USA Insurance.

Today, nearly 70 percent of Allianz’s gross written premiums are generated from businesses outside Germany, a clear indication of the Allianz Group’s successful efforts to be a leading international insurer.

Allianz took the strategic decision in 1998 to combine its asset management activities into a separate core business. With the subsequent acquisition of US-based asset managers PIMCO Advisors and Nicholas Applegate, Allianz cemented its position as a leading institutional investor. This reputation was further reinforced by the acquisition of Dresdner Bank in 2001, which placed the Group among the global top 5 asset managers.

As a major investor, the Allianz Group holds stakes in numerous domestically and internationally renowned companies including Siemens, Bayer, BASF, Volkswagen, Nokia, Alcatel and DaimlerChrysler.

Profile of Fund Products

De-sheng Stable Securities Investment Fund

1. Name of the fund: De-sheng Stable Securities Investment Fund
Name in short: De-sheng Stable
Trading Code: 255010
Operational Mode: Contractual Open-ended fund
Inception Date of Fund Contract: 8th August, 2003

2. Fund investment summary
Investment Target: The fund is of balance type, and the fund managers shall make full use of the successful experiences of fund management at home and abroad to throw deep light on the value driving factor of China’s economic development, adopt the active investment strategy, apply the whole-course risk management technology and seek the long-term stable investment return in order to offer the secure and reliable financial service for the fund investors.

Investment Strategy: The fund strictly follows the scientific investment management procedure. Firstly, Top down method is adopted to work out the asset allocation and industry allocation strategy of fund assets; secondly, bottom up analysis of the fundamentals shall be adopted to exploit the excellent listed companies with sound financial performance, great development potentials and special competitive status and the bonds with high expected yield. Taking advantage of our deep understanding of the global investment experiences and domestic market, the fund conducts the active strategic and tactic asset allocation and adjustment and form the optimal investment portfolio under the vested investment risk on the premise of the correct judgment of market trend.

Benchmark: Over-all performance comparison benchmark = GTJA Index*65% + SSE Treasury-Bond Index*35%.

De-sheng Small Cap Selective Securities Investment Fund

1. Name of the fund: De-sheng Small Cap Selective Securities Investment Fund
Name in short: De-sheng Small Cap
Trading Code: 257010
Operational Mode: Contractual Open-ended fund
Inception Date of Fund Contract: 12th April, 2004
Total Fund Units as at the End of Reporting Period: 8,324,975,786.82

2. Fund investment summary
Investment Target: The fund is of active growth type, it attaches importance to the investment in small caps with growth potentials in China’s A-share market. Taking full advantage of the successful fund management experiences at home and abroad, the fund manager shall adopt the active investment strategy on the principle of strict risk control and fully exploit the investment opportunity caused by the potential growth of the small caps through the multi-directional and multi-layer analysis of the fundamentals and seek the relatively high investment profit by means of timing strategy of short-term trading in order to achieve the long-term increase in investors’ assets.

Investment Strategy: The management of the fund investment shall be divided into two layers: the first layer is the security choice from bottom to top. Generally speaking, with respect to the small caps focused by the fund investment, the method from bottom to top shall be adopted to elaborately choose the individual security by applying lots of methods such as the quantitative financial engineering model, scientific and strict financial analysis, in-depth investigation and research of listed companies and special grass-root research and form the security investment portfolio on the basis of the aforementioned methods. The second layer is the risk management at the level of the portfolio of asset categories, that is, the real-time monitoring of the fund assets portfolio shall be carried out among three asset categories of stock, bond and cash, and the asset portfolio shall be adjusted according to the current macro-economic situation and security market quotations in order to achieve the aim of fund risk control. Generally speaking, the fund at every level of fund management organically combines the quantitative and qualitative researches in order to guarantee the optimality of risk return structure and the rationality of investment decision-making.
Benchmark: Over-all performance comparison benchmark = (Tianxiang small cap index * 60% + Tianxiang medium cap index 40%)60% + SSE treasury bond index *40%.

Feature of Risk Return: It is an actively managed growth equity fund, and its risk and expected return are higher than the fund of balanced type due to the focus of investment on small caps. As a result, the fund is among the type of medium and high risk in security investment fund. The fund endeavors to make the return per unit risk higher than that of performance benchmark in the long term.

Desheng Reliable Growth Securities Investment Fund

1. Name of the fund: Desheng Reliable Growth Securities Investment Fund
Name in short: Desheng Reliable Growth
Trading Code: 253010
Operational Mode: Contractual Open-ended fund
Inception Date of Fund Contract: 13th July, 2005

2. Fund investment summary
Investment Target: Share benefits from economic growth, seek for absolute return.

Investment Strategy: Investment strategies for the Fund have two tiers. First tier, to estimate risk from overall perspective combined with financial engineering model and consideration of fund investment return to allocate asset. Second tier, for equity investment, on the basis of value selection of stocks, to select those stocks with good fundamentals, high liquidity which are under valued, and manage portfolio based on sector allocation; For fixed income investment, focus will be on risk management, seeking stable return, having duration management and sector allocation depending on analysis of medium and long-term macro economic situation and interest trends, and holding appropriate level of convertible bonds to construct fixed income portfolio.

Benchmark: Reliable Growth Line. The determination of Reliable Growth Line: value at the date of inception was 0.9, with value increasing over time, slope coefficient on any day will be after-tax one year deposit interest rates in the same period divided by 365.

Feature of Risk Return: Medium-to-low risk fund product seeking long-term stable return

De-sheng Selective Equity Fund

1. Name of the fund: De-sheng Selective Equity Fund
Name in short: De-sheng Selective
Trading Code: 257020 （front end load） 257021(back end load)
Operational Mode: Contractual Open-ended fund
Inception Date of Fund Contract: 28th December, 2005

2. Fund investment summary
Investment Target: Investors who are willing to participate in the recovery of stock market and to share the return of the growth of Chinese economy.

Investment Strategy: When analyzing companies, we evaluate the profitability by ROIC and cost of capital by WACC, to establish stock pool consisting of companies that create added value to shareholders. The second step is to measure the growth potential and valuation level of the stocks in the stock pool, to build up the portfolio.

Benchmark: Shanghai and Shenzhen Stock Exchange 300 Index×85%+Shanghai Stock Exchange Government Bond Index×15%

De-sheng Advantage Equity Fund

1. Name of the fund: De-sheng Advantage Equity Fund
Name in short: De-sheng Advantage
Trading Code: 257030 (front end load) 257031(back end load)
Operational Mode: Contractual Open-ended fund.
Inception Date of Fund Contract: 24th January, 2007

2. Fund investment summary
Investment Target: The fund will be invested in domestic public stocks that have competitive advantages as well as bonds.

Investment Strategy:
1) Asset allocation strategy: This fund is an equity fund. During the operation, with full consideration of factors including macro economy, policies, money supply and demand, market fluctuations, as well as relative variations of equity risk-return, the proportion of stocks, bonds and monetary tools will be adjusted properly.

2) Sector allocation strategy: This fund is operated by the analysis and forecast of market fluctuations, industrial environment and policies, competition patterns. We also consider the growth potential, investment opportunities and carries on the fund asset distribution in stock investment to assure the positive changes in our opportunities to investments.

3) Stock investment strategy: The fund manager investigates and studies the newly established companies entering the market through the thorough comprehensive comparative analysis, excavating their competitive advantages. We only pay attention to promising companies that are superior in natural resources, Chinese culture growth, and/or have unique management patterns.

Benchmark: Shanghai and Shenzhen Stock Exchange 300 Index×70%+Shanghai Stock Exchange Government Bond Index×30%

Website: http://www.gtja-allianz.com

Copyright Fund China 2008.

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