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ADDENDUM to

Explanatory Memorandum April 2010 for Guotai Junan Investment Funds

(the “Fund”) Guotai Junan Greater China Growth Fund

(the “Sub-Fund”)

Important - If you are in any doubt about the contents of this Addendum, you should seek independent professional financial advice.

This Addendum forms an integral part of the Explanatory Memorandum for the Unit Trust and may not be distributed separately. All terms used in this Addendum have the same meaning as in the Explanatory Memorandum.

The Manager accepts full responsibility for the accuracy of the information contained in this Addendum and Explanatory Memorandum and confirms, having made all reasonable enquiries, which to the best of its knowledge and belief, there are no other facts the omission of which would make any statement misleading.

EXPLANATORY MEMORANDUM 1. The following paragraph appearing at the bottom of page 1 of the Explanatory

Memorandum has been amended as follows: INVESTORS SHOULD NOTE THAT THE GUOTAI JUNAN GREATER CHINA GROWTH FUND IS AUTHORISED BY THE SECURITIES AND FUTURES COMMISSION UNDER THE CODE ON UNIT TRUSTS AND MUTUAL FUNDS AND SUCH AUTHORISATION DOES NOT IMPLY THAT INVESTMENT IN THE FUND IS RECOMMENDED BY THE SECURITIES AND FUTURES COMMISSION. SUCH AUTHORISATION IS NOT A RECOMMENDATION OR ENDORSEMENT OF THE FUND NOR DOES IT GUARANTEE THE COMMERCIAL MERITS OF THE FUND OR ITS PERFORMANCE. IT DOES NOT MEAN THE FUND IS SUITABLE FOR ALL INVESTORS NOR IS IT AN ENDORSEMENT OF ITS SUITABILITY FOR ANY PARTICULAR INVESTOR OR CLASS OF INVESTORS.

2. IMPORTANT INFORMATION FOR INVESTORS

a) The Enhanced Disclosure Box appearing on page 3 of this section is removed

entirely. b) The fifth paragraph on page 3 of this section will be amended as follows:

The Funds and its Sub-Fund have been authorised by the SFC. In granting

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such authorisation, the SFC takes no responsibility for the financial soundness of the Fund or the Sub-Funds or the accuracy of any of the statements made or opinions expressed in this Explanatory Memorandum and sSuch authorisation does not imply that investment in the Fund is recommended or endorsed by the SFC nor does the SFC guarantee the commercial merits of the Fund or its performance. Further, the authorisation does not mean that the Fund is suitable for all investors nor is it an endorsement of its suitability for any particular investor or class of investors.

c) The following information has been added immediately after the third

paragraph on page 4 of this section:

Please contact the Manager with the following contact details should you have any enquiries or complaints in relation to the Fund or its Sub-Funds:

Guotai Junan Assets (Asia) Limited

27/F., Low Block

Grand Millennium Plaza

181 Queen’s Road Central

Hong Kong

For enquiries: E-mail: anna.sung@gtjas.com.hk / kathy.yuen@gtjas.com.hk

Telephone number: (852) 2509 7714 / (852) 2509 7746

For complaints:

E-mail: chris.shum@gtjas.com.hk

Telephone number: (852) 2509 7515

The Manager will aim to respond by telephone or in writing within 7 Business Days of receiving the enquiry or complaint.

3. DIRECTORY OF PARTIES The name of the auditors has been updated as follows:

Ernst & Young Ltd. 62 Forum Lane Camana Bay P.O. Box 510 Grand Cayman Cayman Islands British West Indies

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4. MANAGER AND TRUSTEE The entire section in relation to the Manager appearing on pages 8 and 9 has been amended to the following: Manager

The Manager of the Fund is Guotai Junan Assets (Asia) Limited.

The Manager was incorporated in Hong Kong under the Companies Ordinance, Chapter 32 of the Laws of Hong Kong, with limited liability in August 1995. It is principally engaged in fund management and advisory investment services for corporations, institutions and individual investors. The Manager’s experienced investment management team come from renowned international asset management companies. The team has extensive international investment experiences and, has achieved outstanding investment performance; and is well versed in many kinds of investment products and services.

The Manager is a wholly-owned subsidiary of Guotai Junan Financial International Holdings Limited (“GTJAI”) which is listed on the Stock Exchange of Hong Kong Limited. was established in June 1995. The major shareholder of GTJAI is The parent company of the Manager is an overseas wholly-owned subsidiary of Guotai Junan Securities Company Limited (“Guotai”), an investment bank in the People’s Republic of China (“PRC”). The Manager acts as the asset management arm of GTJAI. its parent company and is responsible for managing the foreign assets business of its parent company and Guotai outside of the PRC.

In accordance with section 116 of the SFO, the Manager is licensed to conduct types 1, 4 and 9 regulated activities, as defined in Schedule 5 of the SFO. Such regulated activities include dealing in securities, advising on in securities and asset management.

Details of the Directors of the Manager are as follows:–

YIM Fung

Dr. Yim Fung holds a doctorate degree in Economics from the Graduate School of the Chinese Academy of Social Sciences and a Bachelor’s degree in Environmental Engineering from Tsinghua University. He has over 15 years’ experience in the securities industry. He was the deputy general manager of J&A Securities (Hong Kong) Limited., a subsidiary investment company owned by J&A Securities Co. Ltd. Dr. Yim is licensed as a responsible officer with the SFC to conduct Type 1 (dealing in securities) and Type 4 (advising on securities) regulated activities on behalf of Guotai Junan Securities (Hong Kong) Limited. Dr. Yim also acts as a responsible officer of the Manager and is licensed to conduct Type 4 (advising on securities) and Type 9 (assets management) regulated activities. He is the Chief Executive Officer of Guotai Junan Financial Holdings Limited.

Dr. Yim Fung holds a doctorate degree in Economics from the Graduate School of the Chinese Academy of Social Sciences and a Bachelor’s degree in

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Environmental Engineering from Tsinghua University. He has over 19 years’ experience in the securities industry. He was the deputy general manager of J&A Securities (Hong Kong) Limited, a subsidiary investment company owned by J&A Securities Co. Ltd. Dr. Yim is licensed as a responsible officer with the SFC to conduct Type 1 (dealing in securities) and Type 4 (advising on securities) regulated activities on behalf of Guotai Junan Securities (Hong Kong) Limited. Dr. Yim also acts as a responsible officer of the Manager and is licensed to conduct Type 1 (dealing in securities), Type 4 (advising on securities) and Type 9 (asset management) regulated activities. He is the Vice Chairman, Executive Director and Chief Executive Officer of GTJAI.

Cheung Lai Yan, Charles

Mr. Cheung Lai Yan, Charles holds a Bachelor’s (Honour) degree in Science from The University of Hong Kong and a Master’s (Honour) degree in Business Administration from Cardiff University. He has over 18 years of experience in the financial services industry, in particular with exceeding 10 years’ exposure in fund management. Since his graduation in 1985, Mr. Cheung has worked in Standard Chartered Bank and Kim Eng Securities (Hong Kong) Ltd. During the period between 1990 and 1995, he was the director of the People’s Leveraged Fund and was responsible for managing the fund. Mr. Cheung joined the Guotai Junan group in 1996 and has been appointed as the Managing Director since 2001. He has being responsible for firm-wide management and involved in all aspects of the investment process and managing all funds. Mr. Cheung has been appointed as the core member of all different Investment Committees for various products including private and authorized public funds. He is registered as a Responsible Officer in respect of Type 4 (Advising on Securities) and Type 9 (Assets Management) regulated activities with the Securities and Futures Commission of Hong Kong.

YUAN Junping

Mr. Yuan Junping holds a Bachelor’s degree and a Master’s Degree in Electricity Power Automation from Huazhong University of Science and Technologies. He has over 18 years experience in the securities industry in the PRC. From 1993 to 2000, Mr. Yuan was the Director and Executive Director of the Corporate Finance Department of Guotai in the PRC, the parent company of both Guotai Junan Assets (Asia) Limited. He was the Research Manager, Senior Fund Manager, and Portfolio Manager for “An Dan Investment Plan” of Guotai between 2000 and 2005. Mr. Yuan joined Guotai Junan Assets (Asia) Limited in 2005 as Deputy General Manager and Chief Fund Manager of China Real Watch, one of the Japan domiciled funds under the management of Guotai Junan Assets (Asia) Limited. He is also the Chief Fund Manager of China Discovery Fund managed by Guotai Junan Assets (Asia) Limited. In January 2008, Mr. Yuan was appointed as one of the directors of Guotai Junan Fund Management Limited and the Chief Investment Officer of Guotai Junan Assets (Asia) Limited. From 1st January 2010 onward, Mr. Yuan has acted as the chief fund manager of Guotai Junan Investment Funds –

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Guotai Junan Greater China Growth Fund. Mr. Yuan was also appointed as the Managing Director of Guotai Junan Assets (Asia) Limited on 14th February 2011. He is licensed as a responsible officer with the SFC to conduct Type 1 (dealing in securities), Type 4 (advising on securities), and Type 9 (asset management) regulated activities on behalf of Guotai Junan Assets (Asia) Limited.

Details of the Investment Team of the Manager are as follows:

YUAN Junping

Mr. Yuan Junping holds a Bachelor’s degree and a Master’s Degree in Electricity Power Automation from Huazhong University of Science and Technologies. He has over 16 years experience in the equities industry in the PRC. From 1993 to 2000, Mr. Yuan was the Executive Director of the Corporate Finance Department of Guotai Junan Securities Company Ltd, the parent company of both Guotai Junan Assets (Asia) Limited and Guotai Junan Fund Management Limited, in the PRC. He was the Research Manager, Senior Fund Manager, and Portfolio Manager for “An Dan Investment Plan” of Guotai Junan Securities Company Limited between 2000 and 2005.

Mr. Yuan joined Guotai Junan Assets (Asia) Limited in 2005 as Deputy General Manager of the company and Chief Fund Manager of China Real Watch and China Discovery Fund which are Japan domicile funds under the management of Guotai Junan Assets (Asia) Limited. Since January 2008, Mr. Yuan has also been appointed as one of the directors of Guotai Junan Fund Management Limited. Currently, Mr. Yuan is the Chief Investment Officer of Guotai Junan Assets (Asia) Limited. Mr. Yuan is licensed as a representative in respect of Type 4 (advising on securities) and Type 9 (asset management) regulated activities with the SFC.

MOK Wai Man, Derek

Mr. Mok Wai Man, Derek holds a Bachelor’s degree in Accounting from the University of Monash in Australia and a Master’s degree in Investment Management, concentration in Financial Engineering, from the Hong Kong University of Science and Technology. Mr. Mok has over 8 years of experience in investment management in Asia and global markets. Prior to joining Guotai Junan Assets (Asia) Ltd, Mr. Mok was an investment manager for BEA Union Investment Limited, a joint venture between Bank of East Asia in Hong Kong and Union Asset Management Holding AG, and was responsible for managing equity investments for portfolios from insurance company, university and pension funds. Between 2005 and 2007, Mr. Mok was a Portfolio Manager with the Hong Kong Monetary Authority, responsible for managing the global equity portfolio exposure for the Exchange Fund. Mr. Mok had been with Nexus Investment Management Limited, a subsidiary of Sun Hung Kai Properties Limited, and VC Asset Management Limited, a local-based fund management firm, where he was primarily responsible for formulating and implement investment strategies, stock selection, and managing some private funds and a private absolute return fund on a team basis.

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Mr. Mok is a Chartered Financial Analyst (CFA), Member of CPA (Australia), Member of the Hong Kong Institute of Certified Public Accountants and a certified FRM (Financial Risk Manager) holder. He is also a Member of the Hong Kong Securities Institute. Mr. Mok is licensed as a representative in respect of Type 4 (advising on securities) and Type 9 (asset management) regulated activities with the SFC.

TONG Leung Kwing, Andrew

Mr. Tong Leung Kwing, Andrew holds a Bachelor’s degree of Science in Economics and Master’s degree of Science in Economics from the Hong Kong University of Sciences and Technologies. Mr. Tong has over 8 years of experience in capital markets and investment management in the China market. Prior to joining the company, from 2006 to 2010, Mr. Tong was the investment manager at Hang Seng Investment Management (“HSVM”), a wholly-owned subsidiary of Hang Seng Bank and was principally responsible for managing several portfolios, including SFC authorized retail funds and QDII funds, with assets under management of approximately US$300m in the Greater China Region. Before joining HSVM, he was an equity analyst for Kingsway Financial Group, ICEA Asia Securities and Dao Heng Securities from 2002 to 2006. He was specialized in conducting research in respect of the property, retail and industrial sectors in Hong Kong and the China market.

Mr. Tong joined Guotai Junan Assets (Asia) Limited as a Fund Manager in June 2010 and was tasked with primary responsibility for managing investments, assisting in formulating investment policy and strategy, and assisting with the management of daily operations and the business development of the company. Mr. Tong is licensed as a representative in respect of Type 4 (advising on securities) and Type 9 (asset management) regulated activities with the SFC.

MING Liang Ms. Ming Liang holds a Master of Science degree in Financial Economics from the Norwegian School of Management and a Bachelor (Honor) degree in Accounting from the Shanghai University of Finance and Economics. Ms. Ming has more than 6 years of experience in the China financial market. Before joining Guotai Junan Assets (Asia) Limited, Ms. Ming Liang worked as a Business Analyst in Citibank (China) Limited’s Global Transaction Service (GTS) Department from 2005 to 2007, where she was mainly responsible for GTS’ financial and industry analysis. Ms. Ming Liang joined Guotai Junan Assets (Asia) Limited in 2007 as an investment analyst. She is currently an assistant portfolio manager. Ms. Ming Liang has acted as the assistant portfolio manager for the Guotai Junan Investment Funds - Guotai Junan Greater China Growth

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Fund since January 2010. She has also acted as the co-manager of the China Environmental Related Mother Fund, a Japan-based equity fund, since March 2011.

Ms. Ming Liang is a CFA Charterholder and a licensed representative for Type 9 (assets management) and Type 4 (advising on securities) regulated activities with the SFC.

MAN Chi Ho

Mr. Man Chi Ho, holds a Bachelor of Arts (Hon) Degree in Computing from The Hong Kong Polytechnic University. Mr. Man joined Guotai Junan Assets (Asia) Limited in 2010 and is responsible for equity analysis and research. Prior to joining the Company, he worked for The Hong Kong Monetary Authority and Hang Seng Investment Management Limited, a wholly-owned subsidiary of Hang Seng Bank. During his service with Hang Seng Investment Management Limited from 2008 to 2010, Mr. Man was responsible for managing index tracking and quantitative investment products, including a number of SFC authorized retail unit trusts, pension funds, Mandatory Provident Fund Schemes’ sub-funds and Exchange Traded Funds. Assets under his lead management reached 2.5 billion Hong Kong dollars, including in respect of the Hang Seng Index Fund, the Hang Seng China Index Fund, the Hang Seng MidCap Index Fund and the Hang Seng SmallCap Index Fund. Mr. Man is licensed as a representative in respect of Type 9 (asset management) regulated activities with the SFC.

5. EXPENSES AND CHARGES The first sentence of the fourth paragraph of this section on page 18 has been

amended as follows:

The costs of establishment of the Fund and the initial Sub-Fund Guotai Junan Greater China Growth Fund will bewere approximately HK$1,300,000. and will beThese costs were charged to the accounts of Guotai Junan Greater China Growth Fund.

6. TAXATION

The first sentence of the fourth paragraph of this section on page 19 has been amended as follows: If the Fund seeks deauthorisation with the SFC, the Fund wouldwill be subject to Hong Kong profits tax (currently at the rate of 167.5%) only if (a) it were to carry on a trade, profession or business in Hong Kong; and (b) profits from that trade, profession or business were to arise in or be derived from Hong Kong.

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7. REPORTS AND ACCOUNTS

The first five paragraphs of this section on page 20 have been amended as follows: The Fund’s financial year end is on 31st December in each year. English Aaudited accounts in Hong Kong Dollars will be sent to Unitholders as soon as possible, and in any event within four months, after the end of the financial year.

The Manager also sends English unaudited semi-annual reports to Unitholders within two months after 30th June in each year. Such reports contain a statement of the Net Asset Value of the Sub-Fund and of the investments comprising its portfolio. Once issued, the accounts will be available for inspection at the Manager’s office free of charge during normal working hours.

The Fund’s first audited accounts will bewere made up to the period endingended 31st December 2008.

The Manager may elect to deliver or make available all such accounts, reports and other communications with Unitholders via electronic mail or an internet site established by or on its behalf, if Unitholders consent to electronic delivery of such information, as provided in the Aapplication Fform of the Sub-Fund.

The accounts of the Fund will beare drawn up in accordance with HKFRS and the Manager has determined to amortise the establishment costs over a period of 12 months or such other period as the Manager may in its discretion consider appropriate. The Manager believes that such treatment is more equitable to the initial investors of the Sub-Fund than expensing the entire amount as they are this is incurred.

APPENDIX A

8. INVESTMENT OBJECTIVE AND STRATEGY The first paragraph under the section headed “QFII” this section on page 27 has been amended as follows: Under prevailing regulations in the PRC, foreign investors can only invest only in the “A” share market (or Chinese Depository Receipts) as Qualified Foreign Institutional Investors (“QFII”)through institutions that have obtained Qualified Foreign Institutional Investor status (“QFII”) in the PRC. As of the date of this Explanatory Memorandum, the Sub-Fund and the Manager arehas not obtained QFIIs status in the PRC. In addition, the Sub-Fund has not invested and will not invest in A Shares until the Manager is able to invest in A shares in accordance with applicable regulations in the PRC. The Manager intends to invest in A Shares via existing QFII quota holders pending the grant of its QFII status. The Manager aims to adjust the portion of A Share investment in accordance with the available QFII investment quota it secures overtime. The Manager will give prior notice to Unitholders when the Manager is able to invest in A Shares in accordance with applicable regulations in the PRC.

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9. RISK FACTORS

a) The entire sub-section under the sub-heading “QFII Risk” has been

amended as follows:

Under prevailing regulations in the PRC, foreign investors can only invest in A Shares as QFIIs. As at the date of this Explanatory Memorandum, the Manager has not obtained QFII status in the PRC. Consequently, Tthere can be no assurance that the Sub-Fund and the Manager will be able to obtain a sufficient QFII investment quota from existing QFII holders to adequately allocate assets in the Sub-Fund for investment in A Shares under prevailing regulations in the PRC, pending grant of the Manager’s QFII status.

Further, the Manager will rely on the existing arrangements entered into between QFII holders and their local custodian (“PRC Custodian”) with respect to the custody of the Sub-Fund’s assets in A Shares, and their broker (“PRC Broker”) in relation to the execution of transactions in A Shares on behalf of the Sub-Fund, in the PRC markets. The Sub-Fund may, therefore, incur losses due to the acts or omissions of the PRC Broker or the PRC Custodian in the execution or settlement of any transaction, or in the transfer of any funds or securities.

The current QFII regulations impose strict restrictions (including in relation to investment guidelines, minimum holding periods and restrictions with respect to the repatriation of capital and profits out of the PRC) on A-share investment.

In particular, transaction sizes for QFIIs are large and there are lock-up restrictions on the repatriation of capital invested by a QFII in the PRC.

QFII restrictions on investment cover the entire quota granted to a QFII holder and do not relate solely to investments made by the Sub-Fund. Accordingly, investors should be aware that violations of the QFII regulations on investment arising out of activities related to portions of the investment quota allocated to another client of the QFII holder could result in the revocation of, or other regulatory action in respect of, the investment quota of the QFII, including any portion utilised by the Sub-Fund.

Investors should note that direct investments in A-Shares through QFIIs are subject to compliance with the following investment restrictions currently imposed under the QFII regulations in the PRC, as amended from time to time, which are applied to each QFII and which will affect the ability of the Sub-Fund to invest in A-Shares:

(a) shares held by each QFII in one listed company should not exceed 10% of the total outstanding shares of the company;

(b) total shares held by the QFIIs in one listed company should not

exceed 20% of the total outstanding shares of the company; and

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(c) the investments should comply with the requirements set out in

the Guidance Catalogue on Industries for Foreign Investment.

The Sub-Fund may incur significant loss due to limited investment capabilities, or may not be able to fully implement or pursue its investment objective or strategy, due to QFII investment restrictions, the illiquidity of the A Share market, and/ or any delay or disruption in the execution or settlement of trades.

b) The first sentence under the sub-heading “Investment in Publicly Traded

Securities” has been amended as follows:

Some of the markets in which the Sub-Fund may invest are emerging markets, and as a consequence tend to be substantially smaller, less liquid, less regulated and more volatile than major securities markets, such as those in more developed economiecs.

22 June 2011

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中華

基金說明書

國泰君安GUOTAI JUNAN (HONG KONG)

香港

EXPLANATORY MEMORANDUM

國泰君安GUOTAI JUNAN (HONG KONG)

香港

Expertise in investmentFocused on China

GUOTAI JUNAN INVESTMENT FUNDS –GUOTAI JUNAN GREATER CHINA GROWTH FUND

國 泰 君安投資基金─國泰君安大中華增長基金

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Guotai JunanInvestment Funds

Guotai Junan Greater ChinaGrowth Fund

EXPLANATORY MEMORANDUM

August 2007(Updated in April 2010 incorporating

amendments made in June 2009 and April 2010)

* INVESTORS SHOULD NOTE THAT THE GUOTAI JUNAN GREATER CHINA GROWTH FUND ISAUTHORISED BY THE SECURITIES AND FUTURES COMMISSION UNDER THE CODE ON UNITTRUSTS AND MUTUAL FUNDS AND SUCH AUTHORISATION DOES NOT IMPLY THATINVESTMENT IN THE FUND IS RECOMMENDED BY THE SECURITIES AND FUTURESCOMMISSION.

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Heading Page

IMPORTANT INFORMATION FOR INVESTORS 2

DIRECTORY OF PARTIES 5

DEFINITIONS 6

INTRODUCTION 7

MANAGER AND TRUSTEE 7

INVESTMENT OBJECTIVE AND STRATEGY 10

INVESTMENT AND BORROWING RESTRICTIONS 10

RESTRICTIONS ON UNITHOLDERS 12

OFFERING 13

PURCHASE OF UNITS 13

REDEMPTION OF UNITS 14

PAYMENT OF REDEMPTION PROCEEDS 14

CONVERSION BETWEEN SUB-FUNDS 15

VALUATION 16

DISTRIBUTION POLICY 18

EXPENSES AND CHARGES 18

RISK FACTORS 19

TAXATION 20

REPORTS AND ACCOUNTS 21

PUBLICATION OF PRICES 21

VOTING RIGHTS 21

TRANSFER OF UNITS 22

TRUST DEED 22

REMOVAL AND RETIREMENT OF THE TRUSTEE AND THE MANAGER 22

MODIFICATION OF TRUST DEED 23

TERMINATION OF THE FUND OR ANY SUB-FUND 23

DOCUMENTS AVAILABLE FOR INSPECTION 24

REGULATION IN THE CAYMAN ISLANDS 24

ANTI-MONEY LAUNDERING REGULATIONS 24

CONFLICTS OF INTEREST 25

PERSONAL DATA 25

APPENDIX A 25

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(a) The Fund may invest in listed companies that derive a significant portion of their revenues from goodsproduced or sold, investments made or services performed in the Greater China region, which includesthe People’s Republic of China, the Hong Kong & Macau Special Administrative Regions and Taiwan.

(b) The Fund may invest in the Greater China securities markets, which are emerging markets. As such,the Fund may involve a higher degree of risk and are usually more sensitive to price movements.

(c) The value of the Fund can be volatile and could go down substantially within a short period of time.

(d) The investment decision is yours. You should not invest unless the intermediary who sells this Fund toyou has advised you that this Fund is suitable for you and has explained why, including how investing in itwould be consistent with your investment objectives.

Important –If you are in any doubt about the contents of this Explanatory Memorandum, you shouldseek independent financial and/or legal advice. Investment in the Fund involves risks. Please refer tothe Risk Factors Section for further details.

This Explanatory Memorandum comprises information relating to Guotai Junan Investment Funds, an umbrellaunit trust established under the laws of the Cayman Islands by a trust deed dated on or about August 2007between Guotai Junan Assets (Asia) Limited as manager and HSBC Trustee (Cayman) Limited as trustee andas amended from time to time.

The Manager accepts responsibility for the information contained in this Explanatory Memorandum as beingaccurate at the date of publication. However, neither the delivery of this Explanatory Memorandum nor theoffer or issue of Units shall under any circumstances constitute a representation that the information containedin this Explanatory Memorandum is correct as of any time subsequent to such date. This ExplanatoryMemorandum may from time to time be updated. Prospective applicants for Units should ask the Manager ifany supplements to this Explanatory Memorandum or any later Explanatory Memorandum has been issued.

Any information given or representations made by any dealer, salesman or other person and (in either case)not contained in this Explanatory Memorandum should be regarded as unauthorised and accordingly must notbe relied upon.

The Funds and its Sub-Fund have been authorised by the SFC. In granting such authorisation, the SFC takesno responsibility for the financial soundness of the Fund or the Sub-Funds or the accuracy of any of thestatements made or opinions expressed in this Explanatory Memorandum and such authorisation does notimply that investment in the Fund is recommended by the SFC.

No action has been taken to permit an offering of Units or the distribution of this Explanatory Memorandum inany jurisdiction other than Hong Kong where action would be required for such purposes. Accordingly, thisExplanatory Memorandum may not be used for the purpose of an offer or solicitation in any jurisdiction or inany circumstances in which such offer or solicitation is not authorised.

In particular:–

(a) the Units have not been registered under the United States Securities Act of 1933 (as amended) and,except in a transaction which does not violate such Act, may not be directly or indirectly offered or sold inthe United States of America, or any of its territories or possessions or areas subject to its jurisdiction, orfor the benefit of a US Person (as defined in Regulation S under such Act);

(b) the Fund has not been and will not be registered under the United States Investment Company Act of1940 (as amended); and

(c) no offer or invitation to subscribe for Units may be made to the public in the Cayman Islands.

Potential applicants for Units should inform themselves as to (a) the possible tax consequences, (b) the legal

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requirements and (c) any foreign exchange restrictions or exchange control requirements which they mightencounter under the laws of the countries of their incorporation, citizenship, residence or domicile and whichmight be relevant to the subscription, holding or disposal of Units.

This document is based on the laws and practices currently in force in the Cayman Islands and is subject tochanges therein.

The directors of the Manager have taken all reasonable care to ensure that the facts stated in this ExplanatoryMemorandum are true and accurate in all material respects as at the date of publication and there are no othermaterial facts the omission of which would make misleading any statement in this Explanatory Memorandumwhether of fact or opinion.

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ManagerGuotai Junan Assets (Asia) Limited

27/F., Low BlockGrand Millennium Plaza181 Queen’s Road Central

Hong Kong

Directors of the ManagerYim Fung

Cheung Lai Yan, Charles

Trustee and RegistrarHSBC Trustee (Cayman) Limited

P.O. Box 484HSBC House

68 West Bay RoadGrand Cayman, KY1-1106

Cayman Islands

Service Provider to Trustee and RegistrarHSBC Institutional Trust Services (Asia) Limited

1 Queen’s Road CentralHong Kong

AuditorsErnst & Young62 Forum LaneCamana BayP.O. Box 510

Grand CaymanCayman Islands

British West Indies

Lead Legal Advisers to the ManagerSidley Austin

39th FloorTwo International Finance Centre

8 Finance StreetCentral, Hong Kong

Cayman Islands Legal Advisers to the ManagerConyers Dill & Pearman

Cricket SquareHutchins DriveP.O. Box 2681

Grand Cayman KY1-1111Cayman Islands

August 2007

April 2010

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The defined terms used in this Explanatory Memorandum have the following meanings:–

“Business Day” a day (other than a Saturday) on which banks in Hong Kong are open fornormal banking business or such other day or days as the Manager andthe Trustee may agree from time to time, either generally or in relation toa particular Sub-Fund, provided that where as a result of a number 8typhoon signal, black rainstorm warning or other similar event, the periodduring which banks in Hong Kong are open on anyday is reduced, such day shall not be a Business Day unless theManager and the Trustee determine otherwise

“Class” Each sub-fund may issue different class of Units, which may havedifferent fee structures

“Code” the SFC’s Code on Unit Trusts and Mutual Funds, as amended from time to time

“Commencement Date” the date and time at which the Initial Offer Period commences asoutlined in the Appendix relating to the Sub-Fund

“Connected Person” in relation to the Manager means:

(a) any person or fund beneficially owning, directly or indirectly, 20% ormore of the ordinary share capital of the Manager or being able toexercise, directly or indirectly, 20% or more of the total voting rightsin the Manager; or

(b) any person or fund controlled by a person as described in (a); or(c) any fund in which the Manager owns directly or indirectly 20% or

more of the ordinary share capital or in which the Manager is ableto exercise, directly or indirectly 20% or more of the total votingrights of such fund; or

(d) any director or officer of the Manager or of any of its connectedpersons as defined in (a), (b) or (c) above

“Dealing Day” such days as are described in the Appendix for the Sub-Fund

“Extraordinary Resolution” means a resolution proposed at one or more meetings of Unitholdersconvened and held in accordance with the provisions of Appendix K ofthe Trust Deed and passed at such meeting by a majority consisting of75% or more of the total number of votes cast for and against suchresolution

“Fund” Guotai Junan Investment Funds, a Cayman Islands exempted trustformed under the Trust Laws by the Trust Deed

“HK Dollar”or“HK$” means the currency of the Hong Kong Special Administrative Region ofthe People’s Republic of China

“HKFRS” means the Hong Kong Financial Reporting Standards

“Initial Offer Period” the initial period during which the Units of the relevant Sub-Fund arebeing offered to investors as described in the relevant Appendix relatingto the relevant Sub-Fund

“Issue Price” in respect of the Sub-Fund the price per Unit as disclosed in the relevantAppendix relating to the relevant Sub-Fund

“Manager” Guotai Junan Assets (Asia) Limited

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“Market” means any stock exchange, any over-the-counter market, any futuresexchange and any organised securities market which is open to theinternational public and on which securities are regularly traded, being ineach case an exchange or market in any part of the world and includes,in relation to any particular securities, any responsible association in anypart of the world which so deals in the securities as to be expectedgenerally to provide in the opinion of the Manager a satisfactory marketfor such securities and is approved by the Trustee and in such a casethe relevant securities shall be deemed to be the subject of an effectivepermission to deal on the Market deemed to be constituted by suchassociation

“Minimum Holding” means the minimum amount invested in the Fund as outlined in therelevant Appendix for the Sub-Fund

“Net Asset Value” the net asset value of the Fund or a Sub-Fund or a class of Units or aUnit, as the context may require, calculated in accordance with theprovisions of the Trust Deed as summarised below under the sectionheaded“Valuation”

“Ordinary Resolution” means a resolution passed at one or more meetings of Unitholdersconvened and held in accordance with the provisions of Appendix K ofthe Trust Deed and passed at such meeting by a simple majority or moreof the total number of votes cast for and against such resolution

“Registrar” HSBC Trustee (Cayman) Limited

“Service Provider to Trustee and Registrar”

such person as may from time to time be appointed by the Trustee

“SFC” the Securities and Futures Commission of Hong Kong

“SFO” the Securities and Futures Ordinance, Chapter 571 of the Laws of HongKong

“Sub-Fund” a separate pool of assets of the Fund allocated to a sub-fund, which isinvested and administered separately from other assets of the Fund

“Trust Deed” the trust deed establishing the Fund entered into by the Manager and theTrustee dated on or about August 2007 and as amended from time totime

“Trustee” HSBC Trustee (Cayman) Limited in its capacity as trustee of the Fund

“Trusts Law” the Trusts Laws (2001 Revision) of the Cayman Islands as consolidated,amended, supplemented, restated and revised from time to time

“Unit” means a Unit in a Sub-Fund

“Unitholder” means a person registered as a holder of a Unit

“Valuation Day” means such days as are described in the relevant Appendix for therelevant Sub-Fund

“Valuation Point” means close of business in the last relevant market to close on eachValuation Day or such other Business Day or Business Days as theManager may determine from time to time with the approval of theTrustee

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Guotai Junan Investment Funds is an umbrella unit trust established in the Cayman Islands under the TrustsLaw by the Trust Deed. The assets and liabilities of the Fund will be apportioned and attributed in the books ofthe Fund to the relevant Sub-Fund. The Manager may create further Sub-Funds in future. Each Sub-Fund mayhave different objectives, and may issue different classes of Units, which may have different fee structures.This Explanatory Memorandum together with Appendix A relate to the initial Sub-Fund, Guotai Junan GreaterChina Growth Fund.

Manager

The Manager of the Fund is Guotai Junan Assets (Asia) Limited.

The Manager was incorporated in Hong Kong under the Companies Ordinance, Chapter 32 of the Laws ofHong Kong, with limited liability in August 1995. It is principally engaged in fund management and advisoryinvestment services for corporations, institutions and individual investors. The Manager’s experienced investment management team come from renowned international asset management companies. The teamhas extensive international investment experiences and outstanding investment performance; and is wellversed in many kinds of investment products and services.

The Manager is a wholly-owned subsidiary of Guotai Junan Financial Holdings Limited which was establishedin June 1995. The parent company of the Manager is an overseas wholly-owned subsidiary of Guotai JunanSecurities Company Limited (“Guotai”), an investment bank in the People’s Republic of China (“PRC”).

The Manager acts as the asset management arm of its parent company and is responsible for managing theforeign assets business of its parent company and Guotai outside of the PRC.

In accordance with section 116 of the SFO, the Manager is licensed to conduct types 4 and 9 regulatedactivities as defined in Schedule 5 of the SFO. Such regulated activities include advising in securities andasset management.

Details of the Directors of the Manager are as follows:–

YIM Fung

Dr. Yim Fung holds a doctorate degree in Economics from the Graduate School of the Chinese Academy ofSocial Sciences and a Bachelor’s degree in Environmental Engineering from Tsinghua University. He has over 15 years’ experience in the securities industry. He was the deputy general manager of J&A Securities (HongKong) Limited., a subsidiary investment company owned by J&A Securities Co. Ltd. Dr. Yim is licensed as aresponsible officer with the SFC to conduct Type 1 (dealing in securities) and Type 4 (advising on securities)regulated activities on behalf of Guotai Junan Securities (Hong Kong) Limited. Dr. Yim also acts as aresponsible officer of the Manager and is licensed to conduct Type 4 (advising on securities) and Type 9(assets management) regulated activities. He is the Chief Executive Officer of Guotai Junan FinancialHoldings Limited.

CHEUNG Lai Yan, Charles

Mr. Cheung Lai Yan, Charles holds a Bachelor’s (Honour) degree in Science from The University of HongKong and a Master’s (Honour) degree in Business Administration from Cardiff University. He has over 18 years of experience in the financial services industry, in particular with exceeding 10 years’ exposure in fund management. Since his graduation in 1985, Mr. Cheung has worked in Standard Chartered Bank and Kim EngSecurities (Hong Kong) Ltd. During the period between 1990 and 1995, he was the director of the People’s Leveraged Fund and was responsible for managing the fund. Mr. Cheung joined the Guotai Junan group in1996 and has been appointed as the Managing Director since 2001. He has being responsible for firm-widemanagement and involved in all aspects of the investment process and managing all funds. Mr. Cheung hasbeen appointed as the core member of all different Investment Committees for various products includingprivate and authorized public funds. He is registered as a Responsible Officer in respect of Type 4 (Advisingon Securities) and Type 9 (Assets Management) regulated activities with the Securities and FuturesCommission of Hong Kong.

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Details of the Investment Team of the Manager are as follows:

YUAN Junping

Mr. Yuan Junping holds a Bachelor’s degree and a Master’s Degree in Electricity Power Automation from Huazhong University of Science and Technologies. He has over 16 years experience in the equities industry inthe PRC. From 1993 to 2000, Mr. Yuan was the Executive Director of the Corporate Finance Department ofGuotai Junan Securities Company Ltd, the parent company of both Guotai Junan Assets (Asia) Limited andGuotai Junan Fund Management Limited, in the PRC. He was the Research Manager, Senior Fund Manager,and Portfolio Manager for “An Dan Investment Plan” of Guotai Junan Securities Company Limited between 2000 and 2005.

Mr. Yuan joined Guotai Junan Assets (Asia) Limited in 2005 as Deputy General Manager of the company andChief Fund Manager of China Real Watch and China Discovery Fund which are Japan domicile funds under themanagement of Guotai Junan Assets (Asia) Limited. Since January 2008, Mr. Yuan has also been appointed asone of the directors of Guotai Junan Fund Management Limited. Currently, Mr. Yuan is the Chief InvestmentOfficer of Guotai Junan Assets (Asia) Limited. Mr. Yuan is licensed as a representative in respect of Type 4(advising on securities) and Type 9 (asset management) regulated activities with the SFC.

TANG Tak Wai, Davina

Ms. Tang Tak Wai, Davina holds a Bachelor’s degree in Science in Actuarial Science and Economics from the University of Toronto in Canada. Ms. Tang has over 10 years of experience in capital markets and investmentmanagement in Asia. Prior to joining the Manager, Ms. Tang was the investment manager at China EverbrightAssets Management Ltd. (“China Everbright”) and was principally responsible for managing the equityinvestment in the Greater China region. Before joining China Everbright, she was the investment manager ofMirae Asset Global Investment Management Ltd. (“Mirae”), and was responsible for managing Mirae’s Chinafund with assets under management of approximately US$400m. Between 2002 and 2003, Ms. Tang workedfor Access Investment Management (HK) Ltd. (“Access”), a boutique fund house owned by Bank of East Asia and G K Goh, as an investment manager. She was the investment manager for the Access PIF Funds (theMPF funds with both equity and bond investments), which are authorised by the SFC. Ms. Tang was aninvestment manager for Hang Seng Investment Management Limited, a wholly-owned subsidiary of the HangSeng Bank where she was responsible for the management of a variety of Hong Kong/China equity funds andpension funds for third party clients under the SFC authorised ORSO scheme Hang Seng Pooled ProvidentPlan prior to joining Access in 2002.

Ms Tang joined the Manager as an Assistant Director and Senior Fund Manager in December 2006 and wastasked with primary responsibilities to manage investments, to assist in formulating investment policy andstrategy, and to assist with the management of daily operations and business development of the Manager.Ms Tang is licensed as a representative in respect of Type 4 (advising on securities) and Type 9 (assetmanagement) regulated activities with the SFC.

MOK Wai Man, Derek

Mr. Mok Wai Man, Derek holds a Bachelor’sdegree in Accounting from the University of Monash in Australiaand a Master’s degree in Investment Management, concentration in Financial Engineering, from the Hong Kong University of Science and Technology. Mr. Mok has over 8 years of experience in investmentmanagement in Asia and global markets. Prior to joining Guotai Junan Assets (Asia) Ltd, Mr. Mok was aninvestment manager for BEA Union Investment Limited, a joint venture between Bank of East Asia in HongKong and Union Asset Management Holding AG, and was responsible for managing equity investments forportfolios from insurance company, university and pension funds. Between 2005 and 2007, Mr. Mok was aPortfolio Manager with the Hong Kong Monetary Authority, responsible for managing the global equity portfolioexposure for the Exchange Fund. Mr. Mok had been with Nexus Investment Management Limited, asubsidiary of Sun Hung Kai Properties Limited, and VC Asset Management Limited, a local-based fund

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management firm, where he was primarily responsible for formulating and implement investment strategies,stock selection, and managing some private funds and a private absolute return fund on a team basis.

Mr. Mok is a Chartered Financial Analyst (CFA), Member of CPA (Australia), Member of the Hong KongInstitute of Certified Public Accountants and a certified FRM (Financial Risk Manager) holder. He is also aMember of the Hong Kong Securities Institute. Mr. Mok is licensed as a representative in respect of Type 4(advising on securities) and Type 9 (asset management) regulated activities with the SFC.

Trustee and Registrar

HSBC Trustee (Cayman) Limited, a company incorporated in the Cayman Islands, will be appointed as trusteeand registrar to the Fund.

Under the Trust Deed, the Trustee is responsible for the safe-keeping of the assets and administration of theFund.

Service Provider to Trustee and Registrar

HSBC Trustee (Cayman) Limited will appoint HSBC Institutional Trust Services (Asia) Limited as its serviceprovider in relation to its duties to provide administrative services and safe-keeping of the assets of the Fund.Notwithstanding such appointment, the register of Unitholders will be maintained by the Registrar in theCayman Islands, and HSBC Institutional Trust Services (Asia) Limited as service provider is subject to theoverall direction and control of HSBC Trustee (Cayman) Limited.

HSBC Institutional Trust Services (Asia) Limited is incorporated in Hong Kong on 27 September 1974. It is anindirect wholly-owned subsidiary of The Hongkong and Shanghai Banking Corporation Limited and its ultimateholding company is HSBC Holdings Plc.

As members of the HSBC Group, HSBC Institutional Trust Services (Asia) Limited and HSBC Trustee(Cayman) Limited are part of one of the world’s leading international banking and financial serviceorganisations. The HSBC Group has major commercial and investment banking businesses in the Asia Pacificregion, Europe, the Americas, the Middle East and Africa.

Neither the Trustee nor the Service Provider to Trustee and Registrar will participate in transactions andactivities, or make any payments denominated in HK Dollars, which, if carried out by a US person, would besubject to sanctions by The Office of Foreign Assets Control (“OFAC”) of the US Department of the Treasury.HSBC Group has adopted a policy of compliance with the sanctions issued by OFAC.

Neither HSBC Trustee (Cayman) Limited nor HSBC Institutional Trust Services (Asia) Limited is involveddirectly or indirectly with the business affairs, organisation or sponsorship of the Fund. In addition, HSBCTrustee (Cayman) Limited and HSBC Institutional Trust Services (Asia) Limited are not responsible for thepreparation of this Explanatory Memorandum and therefore accept no responsibility for any informationcontained in this Explanatory Memorandum.

The investment objective of each Sub-Fund is set out in the relevant Appendix which is or will be attached tothis Explanatory Memorandum. The investment objective of the Guotai Junan Greater China Growth Fund, theprincipal risks, as well as other important details are set forth in Appendix A hereof.

The Trust Deed sets out restrictions and prohibitions on the acquisition of certain investments by the Managerfor the Fund. Unless otherwise disclosed in the relevant Appendix for the relevant Sub-Fund and agreed bythe SFC, the Fund and the Sub-Fund(s) is subject to the following principal investment restrictions:–

(a) not more than 10% of the Net Asset Value of the Sub-Fund may consist of securities (other thangovernment and other public securities) or units (in the case of a unit trust) issued by a single issuer;

(b) a Sub-Fund may not hold more than 10% of any ordinary shares or units issued by any singleissuer;

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(c) not more than 15% of the Net Asset Value of the Sub-Fund may consist of securities of anycompany not listed or quoted on a stock exchange, over-the-counter market or other organisedsecurities market;

(d) not more than 15% of the Net Asset Value of the Sub-Fund may consist of warrants and options,other than warrants and options held for hedging purposes;

(e) not more than 10% of the Net Asset Value of the Sub-Fund may consist of shares or units in otherunauthorised open ended unit trusts or mutual funds (“managed funds”), provided that no investment may be made in a managed fund managed by the Manager or any of its connectedpersons if any such investment would result in an increase in the overall total of the preliminarycharge, manager’s fee or other costs and charges borne by the Unitholders of the Sub-Fund.

(f) not more than 20% of the Net Asset Value of the Sub-Fund may consist of physical commodities(including gold, silver, platinum or other bullion) and commodity based investments (other thanshares in companies engaged in producing, processing or trading in commodities);

(g) the net aggregate value of the contract prices, whether payable to or by the Sub-Fund (other thanfutures contracts entered into for hedging purposes), together with the aggregate value ofinvestments falling within paragraph (f) above held by the Sub-Fund, may not exceed 20% of theNet Asset Value of the Sub-Fund;

(h) not more than 30% of the Net Asset Value of the Sub-Fund may consist of government and otherpublic securities or units (in the case of a unit trust) of a single issue; and

(i) subject to paragraph (h) above, the Sub-Fund may be fully invested in government and other publicsecurities issued by a single issuer but only if that it holds government and other public securities ofat least six different issues.

The Manager shall not on behalf of the Sub-Fund:–

(i) invest in a security of any class in any company or body if directors and officers of the Managerindividually own more than 1/2% of the total nominal amount of all the issued securities of that classor collectively own more than 5% of those securities;

(ii) invest in any type of real estate (including buildings) or interests in real estate (including options orrights but excluding interests in real estate companies and interests in real estate investment trusts(REITs) that are listed on a stock exchange);

(iii) make short sales if as a consequence the liability of the Sub-Fund to deliver securities would exceed10% of the Net Asset Value of the Sub-Fund (and for this purpose securities sold short must beactively traded on a market where short selling is permitted);

(iv) write uncovered options and/or enter into any securities lending transaction;

(v) write a call option if the aggregate of the exercise prices of all such call options written on behalf ofthe Sub-Fund would exceed 25% of the Net Asset Value of that Sub-Fund;

(vi) make a loan out of the Sub-Fund without the prior written consent of the Trustee except to the extentthat the acquisition of an investment or the making of a deposit might constitute a loan;

(vii) assume, guarantee, endorse or otherwise become directly or contingently liable for or in connectionwith any obligation or indebtedness of any person in respect of borrowed money without the priorwritten consent of the Trustee;

(viii) enter into any obligation on behalf of the Sub-Fund or acquire any asset for the account of theSub-Fund which involves the assumption of any liability by the Trustee which is unlimited;

(ix) enter into any underwriting or sub-underwriting contracts without the prior consent of the Trusteeand unless the Manager provides in writing that all commissions and fees payable and investments

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acquired pursuant to such contracts form part of the Sub-Fund’s assets; or

(x) apply any part of the Sub-Fund in the acquisition of any investments which are for the time being nilpaid or partly paid in respect of which a call is due to be made unless such call could be met in fullout of cash or near cash forming part of the Sub-Fund which has not been appropriated and setaside for any other purposes and shall not be entitled without the consent of the Trustee to applyany part of the Sub-Fund in the acquisition of any other investment which is in the opinion of theTrustee likely to involve the Trustee in any liability (contingent or otherwise).

The Manager on behalf of the Fund and/or the Sub-Fund has no current intentions to invest in other collectiveinvestment schemes managed by the Manager and/or its connected persons. In the event that the Fundinvests in other collective investment schemes managed by the Manager or its connected person, theUnitholders or the Fund will not bear any increase in the Management Fee or any cost and charges payable tothe Manager or any of its connected person.

Unless otherwise disclosed in the relevant part of the Appendix, the Manager may borrow up to 25% of thelatest available Net Asset Value of each Sub-Fund to acquire investments. The assets of the Sub-Fund maybe charged or pledged as security for any such borrowings. In addition, the assets of the Sub-Fund may becharged to secure guarantees given in favour of Unitholders in such Sub-Fund.

If any of the investment and borrowing restrictions are breached, the Manager shall as a priority objective takeall steps necessary within a reasonable period of time to remedy the situation, having due regard to theinterests of Unitholders. The Manager is not required to sell investments if any of the investment restrictionsare exceeded as a result of changes in the value of the Sub-Fund’s investments, reconstructions or amalgamations, payments out of the assets of the Sub-Fund or redemptions of Units but for so long as suchlimits are exceeded the Manager will not acquire any further investments subject to the relevant restriction andwill take all reasonable steps to restore the position so that the limits are no longer exceeded.

The investor declares that he or she is not a “United States Person” or Canadian resident. A “United States Person” has the meaning ascribed to it in Regulation S of the United States Securities Act of 1933. A “United States Person” includes any person resident in the United States. An investor must inform the Manager immediately on becoming a “United States Person” or a Canadian resident, in which circumstances the investor may be required to redeem his or her Units in the Fund.

The Manager has power to impose such restrictions as it deems necessary for the purpose of ensuring that noUnits of the Fund are acquired or held directly or beneficially by:–

(i) any person under the age of 18; or

(ii) any person in breach of the law or requirements of any country or governmental authority; or

(iii) any person or persons in circumstances (whether directly or indirectly affecting such person orpersons and whether taken alone or in conjunction with any other person or persons, connected ornot, or any other circumstances appearing to the Manager to be relevant) which, in the opinion ofthe Manager, might result in the Trustee, the Manager or the Fund breaching any law or requirementof any country or governmental authority or suffering any other pecuniary disadvantage, includingincurring any liability to taxation, which the Trustee, the Manager or the Fund might not otherwisehave incurred or suffered (a “non-qualified person”).

If it comes to the notice of the Manager that any Units are held by any such non-qualified person, the Managermay give notice to such person requiring the redemption or transfer of any Units held in accordance with theprovisions of the Trust Deed. A person who becomes aware that he is holding or owning Units in breach of anysuch restrictions is required to deliver, either to the Service Provider to Trustee and Registrar or the Manageror its authorised agents, a written request for the redemption of such Units or to transfer the same to a personwho is not a non-qualified person. In such circumstances, neither the Manager, the Trustee, nor any otherperson is requested to compensate the investor or any other person for any loss which may arise inconnection with the redemption of Units.

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Units of the Sub-Fund will be offered for the first time at the Issue Price during the Initial Offer Period set forthin the relevant Appendix relating to the relevant Sub-Fund. Units of a Sub-Fund may or may not be issuedfollowing the close of the relevant Initial Offer Period as described in the relevant Appendix. Investments canonly be made after Units are issued to Unitholders subsequent to the close of the relevant Initial Offer Period.

Application Procedure

Unless otherwise disclosed in the relevant Appendix relating to the relevant Sub-Fund, to purchase Units aninvestor should complete the application form enclosed with this Explanatory Memorandum and return theoriginal form to the Service Provider to Trustee and Registrar by hand or by mail.

Investors should be reminded that if they choose to send application forms by fax or by mail, they bear theirown risk of the forms not being received by the Service Provider to Trustee and Registrar. Investors shouldtherefore for their own benefit confirm with the Service Provider to Trustee and Registrar safe receipt of anapplication form. None of the Manager, the Trustee, Service Provider to Trustee and Registrar and/or therespective agents are responsible to a Unitholder for any loss resulting from non-receipt or duplicate receipt ofany application form sent by facsimile or by mail.

Subject to the conditions outlined in the section headed “Subscription of Units” in the relevant Appendix, applications will generally be accepted only if cleared funds have been received on or prior to the relevantapplication submission cut-off times in relation to which Units are to be issued, as set out in the sectionheaded “Subscription Details” in the Appendix, or at the discretion of the Manager. Investors should confirmthe relevant application submission cut-off times with their distributors.

The Manager reserves the right to defer the processing of any application until receipt of cleared monies andreduce the subscription amount by any financial charges.

Each applicant whose application is accepted will be sent a contract note confirming details of the purchase ofUnits but no certificates will be issued. A Unitholder must examine contract notes and statements issued bythe Fund. A register of Unitholders shall be kept by the Trustee. If a Unitholder does not notify the Trustee ofany errors within 30 days of issue of the statement or contract note, the Unitholder will be deemed to havewaived any right to raise any objections in relation to them.

The Manager, at its discretion, is entitled to impose a subscription fee on the total value of the Unitssubscribed for by the investor or Unitholder. The subscription fee, if any, is described in the relevant Appendixin respect of the relevant Sub-Fund. The Manager may retain the benefit of such charge or may re-allow orpay all or part of the subscription fee (and any other fees received) to recognised intermediaries or such otherpersons as the Manager may at its absolute discretion determine. The Manager may from time to time vary thelevel of subscription fee to be imposed up to the maximum level as outlined in the relevant Appendix. TheManager may also differentiate between applicants as to the amount of the subscription fee.

Payment of Subscription Amount

The Subscription Price on any Dealing Day is the price per Unit ascertained by dividing the Net Asset Value ofthe Sub-Fund as at the Valuation Point in respect of the Dealing Day on which the application form is receivedby the Service Provider to Trustee and Registrar by the number of Units then in issue, rounded up to thenearest 2 decimal places or in such manner and to such other number of decimal places as may from time totime be determined by the Manager after consulting the Trustee (“Subscription Price”). Any roundingadjustment as a result of determining the Subscription Price will be retained for the benefit of the relevantSub-Fund.Subscription monies should normally be paid in HK$. Arrangements can be made for applicants to pay forUnits in most other major currencies and in such cases, the cost of currency conversion will be borne by theapplicant.

The Subscription Price will be calculated in the base currency of the Sub-Fund and quoted by the Manager inthat base currency and in any other currency or currencies at the Manager’s discretion (with prior notice to the Trustee) by converting the Subscription Price to its equivalent in such other currency or currencies at the same

14

rate as the Manager adopts in calculating the Net Asset Value as at the Valuation Point.

The Manager may at its discretion impose a subscription fee in respect of Units being subscribed. Thesubscription fee, if any, is described in the relevant part of the Appendix. The Manager may on any day in itssole and absolute discretion differentiate between Unitholders as to the amount of the subscription fee to beimposed (within the permitted limit).

All payments should be made by telegraphic transfer or cheque. Cheques should be crossed “a/c payee only,not negotiable” and made payable to “HSBC Institutional Trust Services (Asia) Limited –SubscriptionAccount”, and sent with the completed application form and relevant documents required by the Trustee. Payment by cheque should be made in HK Dollars and is likely to cause delay in receipt of cleared funds as itnormally takes 3 Business Days to clear. Units will not be issued until the cheque is cleared and the completedapplication form, together with all relevant documents required by the Trustee, are received by the ServiceProvider to Trustee and Registrar. The Applicant will bear the costs of transfer of subscription monies to theSub-Fund. No third party payment or cash payment will be accepted.

Details of payments by telegraphic transfer are set out in the application form enclosed.

No money should be paid to any intermediary in Hong Kong who is not licensed or registered to carryon Type 1 (dealing in securities) regulated activity under Part V of the SFO. For the avoidance of doubt,HSBC Institutional Trust Services (Asia) Limited is exempted from the requirement to be licensed orregistered to carry on Type 1 (dealing in securities) regulated activity under Part V of the SFO.

Redemption Procedure

Unitholders may redeem their Units on any Dealing Day by submitting a redemption request to the ServiceProvider to Trustee and Registrar or to an authorised distributor before the relevant redemption requestsubmission cut-off time for the Sub-Fund, as set out in the section headed “Redemption of Units” in the relevant Appendix. Investors should confirm the relevant redemption request submission cut-off time with theirdistributors.

A redemption request must be given in writing or by facsimile and must specify:

the name of the Sub-Fund;

the number of Units to be redeemed;

the name(s) of the Unitholder(s); and

give payment instructions for the redemption proceeds.

Unless otherwise agreed by the Trustee, the original of any redemption request given by facsimile should beforwarded to the Service Provider to Trustee and Registrar. None of the Manager, the Trustee or the ServiceProvider to Trustee and Registrar shall be responsible to a Unitholder for any loss resulting from non-receipt orduplicate receipt of any redemption request sent by facsimile.

A Unitholder shall not be entitled to redeem part only of his holding of Units in relation to a Sub-Fund if hisholding would be reduced to less than the Minimum Holding for the Sub-Fund. Unitholders will be deemed toredeem all Units in the Sub-Fund if the request to redeem a holding of Units in the Sub-Fund would cause thatholding in the Sub-Fund to fall below the Minimum Holding.

Redemptions will be effected on a “First In, First Out” basis, i.e. the first Unit to be redeemed will be the Unit which was first subscribed. The Manager considers that the treatment of redemptions on a“First In, First Out” basis is fair and equitable to Unitholders as the Trustee will be bound to effect redemptions of Units in accordance with the order of subscription.

The Redemption Price on any Dealing Day shall be the price per Unit ascertained by dividing the Net Asset

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Value of the Sub-Fund as at the Valuation Point in respect of the Dealing Day on which the redemptionrequest is received by the Service Provider to Trustee and Registrar by the number of Units in respect of suchSub-Fund then in issue rounded down to the nearest 2 decimal places or in such manner and to such othernumber of decimal places as the Manager may determine from time to time after consulting the Trustee (the“Redemption Price”). Any rounding adjustment as a result of determining the Redemption Price will be retained for the benefit of the relevant Sub-Fund.

The Redemption Price will be calculated in the base currency of the Sub-Fund and quoted by the Manager inthe base currency and in any other currency or currencies at the Manager’s discretion (with prior notice to the Trustee) by converting the Redemption Price to its equivalent in such other currency or currencies at the samerate as the Manager adopts in calculating the Net Asset Value as at the Valuation Point.

The Manager may at its discretion impose a redemption fee in respect of Units being redeemed. Theredemption fee, if any, is described in the relevant Appendix. The Manager may on any day in its sole andabsolute discretion differentiate between Unitholders as to the amount of the redemption fee to be imposed(within the permitted limit).

The amount due to a Unitholder on the redemption of a Unit pursuant to the paragraphs above is theRedemption Price, less any redemption fee, any reasonable fiscal and sales charges imposed by theremittance banks in accordance with their prevailing standard rates and any rounding adjustment. The fiscaland sales charges (if any), as well as the rounding adjustments in relation to the redemption of any Units willbe retained as part of the Sub-Fund. The redemption fee will be retained by the Sub-Fund.

Redemption proceeds will not be paid to any redeeming Unitholder until (a) unless otherwise agreed by theTrustee, the written original of the redemption request duly signed by the Unitholder has been received by theService Provider to Trustee and Registrar and (b) where redemption proceeds are to be paid by telegraphictransfer, the signature of the Unitholder (or each joint Unitholder) has been verified to the satisfaction of theTrustee. No third party payment will be made.

Subject as mentioned above and so long as relevant account details have been provided and a properlydocumented redemption request has been accepted by the Service Provider to Trustee and Registrar,redemption proceeds will be paid in the base currency of the Sub-Fund by telegraphic transfer, normally within7 Business Days after the relevant Dealing Day and in any event within one calendar month of the relevantDealing Day or (if later) receipt of a properly documented redemption request. If relevant account details arenot provided, redemption proceeds will be paid to the redeeming Unitholder (or to the first-named of jointUnitholders) at the Unitholder’s risk by cheque in the base currency of the Sub-Fund.

Redemption proceeds can be paid in a currency other than the base currency of the Sub-Fund at the requestand expense of the Unitholder. In such circumstances, the Trustee will use such currency exchange rates as itmay from time to time determine.

Restrictions on Redemption

The Manager may suspend the redemption of Units or delay the payment of redemption proceeds during anyperiods in which the determination of the Net Asset Value of the Sub-Fund is suspended (for details see“Suspension of Calculation of Net Asset Value” below).

With a view to protecting the interests of Unitholders, the Manager is entitled, with the approval of the Trustee,to limit the number of Units of any Sub-Fund redeemed on any Dealing Day to 10% of the total number ofUnits of the relevant Sub-Fund in issue. In this event, the limitation will apply pro rata so that all Unitholderswishing to redeem Units of the same Sub-Fund on that Dealing Day will redeem the same proportion of suchUnits, and Units not redeemed (but which would otherwise have been redeemed) will be carried forward forredemption, subject to the same limitation, and will have priority on the next Dealing Day. If requests forredemption are carried forward, the Trustee will inform the Unitholders concerned.

Subject to the consent of the Manager, Unitholders have the right (subject to any suspension in thedetermination of the Net Asset Value of any relevant Sub-Fund) to convert all or part of their Units of any classrelating to a Sub-Fund into Units of the same class relating to another Sub-Fund by giving notice in writing or

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by facsimile to the Manager.

Conversion notice received by the Manager prior to 4:00 p.m. (Hong Kong time) on a Dealing Day will be dealtwith on that Dealing Day. Conversion Notice received after such time or on a day which is not a Dealing Daywill be carried forward and dealt with on the next Dealing Day. Where a Conversion Notice is made byfacsimile, neither the Manager the Trustee nor the Service Provider to Trustee and Registrar are responsibleto any Unitholder for any loss resulting from the non-receipt of such Conversion Notice.

The price at which the whole or any part of a holding of Units of a class relating to a Sub-Fund (the “CurrentClass”) will be converted on any Dealing Day into Units of the same class relating to another Sub-Fund (the“New Class”) will be determined by reference to the Redemption Price of the Current Class and Subscription Price of the New Class on the relevant Dealing Day. Unless otherwise specified in the “Expenses andCharges” below, no subscription fee or redemption fee will be levied.

The Manager is entitled to levy a conversion fee expressed as a percentage of the issue price per Unit of theNew Class to be issued. The conversion fee will be deducted from the amount re-invested into the New Classof Units. The amount of conversion fee is set out in the section “Expenses and Charges” below, unless otherwise specified in the Appendix of the original Sub-Fund.

No conversion will be allowed during any period when the determination of the net asset value of any relevantSub-Fund is suspended (for further details, see “Suspension of Calculation of Net Asset Value”). Unitholders should also note that the requirements on:

minimum subscription;

minimum holding; and

minimum redemption amount

as set out in the Appendix of the original Sub-Fund, are also applicable in the case of conversion.

General

The Manager has an absolute discretion to accept or reject in whole or in part any application for Units. If anapplication is rejected, subscription monies will be returned without interest by cheque through the post at therisk of the applicant.

Fractions of Units may be issued rounded down to 2 decimal places. Subscription monies representing smallerfractions of a Unit will be retained by the Sub-Fund.

All holdings will be registered and certificates will not be issued. Evidence of title will be the entry on theregister of Unitholders. No bearer units will be issued. A maximum of 4 persons may be registered as jointUnitholders. Unitholders should therefore be aware of the importance of ensuring that the Registrar is informedof any change to the registered details.

The value of the net assets of each Sub-Fund, the Subscription Price and Redemption Price will bedetermined as at each Valuation Point in accordance with the Trust Deed. The Trust Deed provides (inter alia)that:–

(a) except in the case of any interest in a collective investment scheme to which paragraph (b) appliesand subject as provided in paragraphs (c) and (f) below, all calculations based on the value ofsecurities quoted, listed, traded or dealt in on any securities market shall be made by reference tothe last traded price on the principal stock exchange as at the close of business in such place or ifthe last traded prices on the market are not available, the value of the securities shall be certified bysuch person, firm or institution dealing in or making a market in such securities as may be appointedfor such purpose by the Trustee or, if the Manager so requires, by the Trustee after consultation withthe Manager. In determining such prices the Manager and the Trustee are entitled to use and relyon electronic price feeds from such source or sources as they may determine from time to time;

(b) subject as provided in paragraphs (c) and (f) below, the value of each interest in any collective

17

investment scheme will be the latest available net asset value per Unit in such collective investmentscheme whether or not published or (if the same is not available) the last available bid price for suchUnit or share or other interest;

(c) the value of any investment which is not listed or ordinarily dealt in on a market shall be the initialvalue thereof equal to the amount expended out of the relevant Sub-Fund in the acquisition of suchinvestment (including in each case the amount of stamp duties, commissions and other acquisitionexpenses) provided that the Manager may with the approval of the Trustee and shall at the requestof the Trustee cause a revaluation to be made by a professional person approved by the Trustee asqualified to value such investment;

(d) cash, deposits and similar investments shall be valued at their face value (together with accruedinterest) unless, in the opinion of the Trustee following consultation with the Manager, anyadjustment should be made to reflect the value thereof;

(e) notwithstanding the foregoing, the Manager may with the consent of the Trustee adjust the value ofany investment or permit some other method of valuation to be used if, having regard to relevantcircumstances, the Manager considers that such adjustment or use of such other method is requiredto reflect the fair value of the investment provided always that the accounting standards under therelevant jurisdiction are being complied with; and

(f) the value of any investment (whether of a security or cash) otherwise than in the base currency ofthe relevant Sub-Fund will be converted into such base currency at the rate (whether official orotherwise) which the Manager believes appropriate in the circumstances, having regard to anypremium or discount which may be relevant and to costs of exchange.

Potential investors should note that under HKFRS the value of investments quoted, listed, traded or dealt in onany stock exchange, commodities exchange, futures exchange or over-the-counter market shall be made byreference to the closing bid or offer price. Given that the Fund has chosen to value such investments byreference to the last traded price, this valuation basis deviates from HKFRS. To the extent the valuation basisadopted by the Fund deviates from HKFRS, the Fund’s annual accounts will include a reconciliation note to reconcile values arrived at by applying the Fund’s valuation rules.

The Net Asset Value shall be calculated by determining the value of the assets attributable to the Fund,including accrued income, and deducting all its liabilities. The resultant sum is divided by the total number ofUnits in issue at that time to give the Net Asset Value per Unit and adjusting the resultant sum to the nearest 2decimal places.

Suspension of Calculation of Net Asset Value

The Manager may, after giving notice to the Trustee, declare a suspension of the determination of the NetAsset Value of a Sub-Fund for the whole or any part of any period during which:

(a) any period when any Market on which a substantial part of the securities or other property for thetime being comprised in the relevant Sub-Fund (being the Sub-Fund to which that class of Unitsrelates) is quoted, listed or dealt in is closed otherwise than for ordinary holidays;

(b) any period when dealings on any such Market are restricted or suspended;

(c) during the existence of any state of affairs as a result of which disposal of any of the securities orother property for the time being comprised in the relevant Sub-Fund cannot, in the opinion of theManager, be effected normally or without seriously prejudicing the interests of Unitholders;

(d) during any breakdown in the means of communications normally employed in determining the NetAsset Value of the relevant Sub-Fund or when for any other reason the value of any securities orother property for the time being comprised in the relevant Sub-Fund cannot be promptly andaccurately ascertained;

(e) any period when the redemption of securities or other property for the time being comprised in therelevant Sub-Fund or the transfer of funds involved in such realisation cannot, in the opinion of theManager, be effected at normal prices or normal rates of exchange;

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(f) any period when the payment or receipt of the proceeds of the realisation of any of the securities orother property comprised in the relevant Sub-Fund is the subject of delay due to exceptionalcircumstances.

Such suspension will take effect immediately upon the Manager’s declaration and thereafter there will be no determination of the Net Asset Value of the Sub-Fund until the Manager declares the suspension at an end,except that the suspension will terminate in any event on the day following the first Business Day on which (i)the condition giving rise to the suspension has ceased to exist and (ii) no other condition under whichsuspension is authorised exists.

Whenever the Manager declares such a suspension it shall, as soon as practicable after any such declarationand at least once a month during the period of such suspension, publish a notice in one Hong Kong Englishnewspaper and one Hong Kong Chinese newspaper, including but not limited to, the South China MorningPost and Hong Kong Economic Times.

No Units in the Sub-Fund may be issued, redeemed or converted during a period of suspension.

Please refer to the relevant Appendix in respect of the distribution policy of the relevant Sub-Fund.

The current fees of the Sub-Fund are set out in the relevant Appendix. Unless otherwise disclosed in therelevant Appendix, the types of fees and maximum level of fees are set out below:

Types of Fees* Level of Fees per Annummanagement fee Up to 3%trustee fee 0.14%^subscription fee 5%redemption fee 3%conversion fee 3%

^ Percentage of trustee fee excludes transaction fee, out-of-pocket expenses and sub-custodian fees and will be subject to a minimum annualfee as agreed between the relevant Sub-Fund and the Trustee.

* All fees are expressed as a percentage of the Net Asset Value of the Sub-Fund as at the relevant Valuation Point, with the exception of thebasis for calculation of the subscription fee and unless otherwise stated in the relevant Appendix of the relevant Sub-Fund. The subscriptionfees payable will be calculated based on the total value of Units subscribed for by the investor or Unitholder.

In the event that the Fund invests in other collective investment schemes managed by the Manager or itsconnected person, the Unitholders or the Fund will not bear any increase in the Management Fee or any costand charges payable to the Manager or any of its connected person.

The Manager will give 3 months’ prior notice to Unitholders should there be any increase of the fees from thecurrent level up to the aforesaid maximum level.

The Sub-Fund will bear the costs set out in the Trust Deed which are directly attributable to it. Where suchcosts are not directly attributable to the Sub-Fund, the Sub-Fund will bear such costs in proportion to itsrespective Net Asset Value or in such other manner as the Manager shall consider appropriate. Such costsinclude but are not limited to the costs incurred in the establishment, management and administration of theFund and the Sub-Fund, the costs of investing and realising the investments of the Sub-Fund, the fees andexpenses of custodians of the assets of the Fund, the fees and expenses of the auditors, valuation costs, legalfees, the costs incurred in connection with any listing or regulatory approval, the costs of holding meetings ofUnitholders and the costs incurred in preparing and printing any explanatory memorandum and any auditedaccounts or interim reports which are sent to the Unitholders.

The costs of establishment of the Fund and the initial Sub-Fund Guotai Junan Greater China Growth Fund willbe approximately HK$1,300,000 and will be charged to the accounts of Guotai Junan Greater China Growth

19

Fund. It is the intention of the Manager to amortise the establishment expenses of the Fund and the Sub-Fundover a 12 month period. If the Fund and/or the initial Sub-Fund will be terminated prior to the end of the firstfinancial year, any unamortised establishment costs will be expensed at the point of termination of the initialSub-Fund and will have been fully recognised in the income statement for the Sub-Fund. If the initial Sub-Fundis terminated after the end of the first financial year, the establishment costs will have been fully written off inthe initial financial year and there will be no unamortised establishment expenses. The Manager believes thatsuch treatment is more equitable to the initial investors of the Sub-Fund than expensing the entire amount asincurred.

If further Sub-Funds are launched, the establishment costs will be allocated to the respective Sub-Funds,except for those costs which the Manager decides to pay out of its own resources.

The first accounting period of the Sub-Fund is from the close of the Initial Offer Period to 31 December 2008.Subsequent accounting periods of the Fund are from 1 January of each year to 31 December of the nextfollowing year.

In addition to the above, Unitholders may be required to pay any requisite governmental tax, stamp duty,registration fee, custody and nominee charges as may be required in the purchase or sale of the Units underthe Fund.

Transactions with Connected Persons

Cash forming part of the property of the Fund may be placed on deposit with the Trustee, or with anyconnected persons of the Trustee (being an institution licensed to accept deposits) so long as the institutionpays interest thereon at a rate that is no lower than that which applies, in accordance with normal bankingpractice and the commercial rate for deposits of the size of the deposit in question negotiated at arm’s length.

Unless otherwise provided in the Trust Deed, any transactions between the Fund and the Manager, directorsof the Manager or any of their connected persons as principal may only be made with the prior written consentof the Trustee.

All transactions carried out by or on behalf of the Fund must be at arm’s length and executed on the best available terms.

The Manager and/or any of its connected persons reserves the right to effect transactions by or through theagency of another person with whom the Manager and/or any of its connected persons has an arrangementunder which that party will from time to time provide to or procure for the Manager and/or any of its connectedpersons goods, services or other benefits (such as research and advisory services, computer hardwareassociated with specialised software or research services and performance measures) the nature of which issuch that their provision can reasonably be expected to benefit the Fund as a whole and may contribute to animprovement in the performance of the Fund or of the Manager and/or any of its connected persons inproviding services to the Fund and for which no direct payment is made but instead the Manager and/or any ofits connected persons undertakes to place business with that party. For the avoidance of doubt, such goodsand services do not include travel, accommodation, entertainment, general administrative goods or services,general office equipment or premises, membership fees, employee salaries or direct money payments.

Transactions with brokers or dealers connected to the Manager or directors of the Manager or any of theirconnected persons may not in aggregate account for more than 50% of the Fund’s transactions in value in any one financial year of the Fund. Brokerage rates will not be in excess of customary institutional full-servicebrokerage rates.

All connected party transactions will be disclosed in the Fund’s annual report.

Allocation of Assets and Liabilities between Sub-Funds

As the Fund is established as an open-ended investment company with an umbrella structure under CaymanIslands law, the assets and liabilities of the Fund will be apportioned and attributed in the books of the Fund tothe relevant Class relating to a Sub-Fund. However, the Fund is a single legal entity which may operate orhave assets held on its behalf or be subject to claims in circumstances where assets of one Sub-Fund may be

20

exposed to the liabilities of another Sub-Fund. In particular, in the event of the insolvency of a Sub-Fund, theliabilities of the insolvent Sub-Fund will attach to the Fund as a whole. Accordingly, each Sub-Fund maybecome subject to the liabilities of other Sub-Funds and to the general creditors of the Fund.

Other risk factors specific to a Sub-Fund are set out in the relevant Appendix.

This summary of certain tax considerations is considered to be a correct interpretation of existing laws andregulations in force on the date of this Explanatory Memorandum. No assurance can be given that changes inexisting laws or regulations or their interpretation will not occur after the date of this ExplanatoryMemorandum.

Each prospective Unitholder should inform himself of, and where appropriate take advice on, the taxesapplicable to the acquisition, holding and redemption of Units by him under the laws of the places of hiscitizenship, residence and domicile.Hong Kong

The Fund will be exempted from profits tax in Hong Kong once authorised by the SFC.

If the Fund seeks deauthorisation with the SFC, the Fund would be subject to Hong Kong profits tax (currentlyat the rate of 17.5%) only if (a) it were to carry on a trade, profession or business in Hong Kong and (b) profitsfrom that trade, profession or business were to arise in or be derived from Hong Kong. Hong Kong profits taxwill not be payable in respect of trading profits from the sale of shares and other securities transacted outsideHong Kong, interest arising or derived from outside Hong Kong and profits in the nature of capital gains ratherthan trading profits. The Manager intends to conduct the affairs of the Fund so as to ensure, so far ascommercially practicable, that the Fund will not be liable for profits tax in Hong Kong, but no assurance can begiven that profits from the disposal of certain Fund assets in Hong Kong will not give rise to a liability for profitstax in Hong Kong.

Dividends which the Fund may pay on its Units will not be taxable in Hong Kong (whether by way ofwithholding or otherwise) under current legislation and practice.

Hong Kong does not tax capital gains arising from the sale or other disposal by any Unitholder of Units.However, in the case of certain Unitholders (principally, dealers in securities, financial institutions andinsurance companies carrying on business in Hong Kong), such gains may be considered to be part of theUnitholder’s normal business profits and in such circumstances will be subject to Hong Kong profits tax (which is currently charged at the rate of 17.5% in the case of corporations, and 16% in the case of individuals) if thegains in question arise in or are derived from Hong Kong.

On the basis that the register of Unitholders of the Fund will be maintained outside Hong Kong, no Hong Kongstamp duty will be payable in respect of transactions in the Units.

Hong Kong estate duty will not arise in respect of holding of Units.

Cayman Islands

The Trustee has obtained an undertaking from the Governor-in-Council of the Cayman Islands that, inaccordance with Section 81 of the Trusts Law, for a period of 50 years from the date of establishment of theFund, no laws of the Cayman Islands thereafter enacted imposing any tax or duty to be levied on income or oncapital assets, gains or appreciations or any tax in the nature of estate duty or inheritance tax shall apply toany property comprised in or any income arising under the Fund or to the Trustee or Unitholders in respect ofany such property or income.

Under current Cayman Islands law no tax will be charged in the Cayman Islands on profits or gains of theFund and distributions in respect of the Fund will be payable to the relevant Unitholders without deduction oftax. No stamp duty is levied in the Cayman Islands on the transfer or redemption of Units in the Fund. There is,at the date of this Explanatory Memorandum, no exchange control in the Cayman Islands. As an exemptedtrust, the Fund is required to pay an annual fee currently at the rate of approximately US$610 to the Registrarof Trusts. Such fees will be borne by the Fund.

The foregoing is a summary of some of the important tax rules and considerations affecting the

21

Unitholders, the Fund, and the Fund’s proposed operations and does not purport to be a complete analysis of all relevant tax rules and considerations, nor does it purport to be a comprehensivecoverage of all potential tax risks inherent in purchasing or holding Units in the Fund. Prospectiveinvestors in the Fund are urged to consult their own tax advisers on the tax consequences to them ofacquiring, holding, realising, transferring or redeeming Units in the Fund under the relevant laws ofthe jurisdictions to which they are subject, including any exchange control requirements. Theseconsequences, including the availability of, and the value of, tax relief to Unitholders will vary with thelaw and practice of the Unitholders’ country of citizenship, residence, domicile or incorporation and their personal circumstances.

The Fund’s financial year end is on 31stDecember in each year. Audited accounts in Hong Kong Dollars willbe sent to Unitholders as soon as possible, and in any event within four months, after the end of the financialyear.

The Manager also sends unaudited semi-annual reports to Unitholders within two months after 30th June ineach year. Such reports contain a statement of the Net Asset Value of the Sub-Fund and of the investmentscomprising its portfolio. Once issued, the accounts will be available for inspection at the Manager’s office free of charge during normal working hours.

The Fund’s first audited accounts will be made up to the period ending 31st December 2008.

The Manager may elect to deliver or make available all such accounts, reports and other communications withUnitholders via electronic mail or an internet site established by or on its behalf, if Unitholders consent toelectronic delivery of such information, as provided in the Application Form of the Sub-Fund.

The accounts of the Fund will be drawn up in accordance with HKFRS and the Manager has determined toamortise the establishment costs over a period of 12 months or such other period as the Manager may in itsdiscretion consider appropriate. The Manager believes that such treatment is more equitable to the initialinvestors of the Sub-Fund than expensing the entire amount as they are incurred.

To the extent that the valuation basis adopted by the Fund deviates from HKFRS, the Fund’s annual accounts will include a reconciliation note to reconcile values arrived at by applying the Fund’s valuation rules.

The Net Asset Value per Unit of the Sub-Fund will be published daily in Hong Kong in the South ChinaMorning Post and in the Hong Kong Economic Times and/or any other newspapers which the Manager mayfrom time to time determine and notify the Unitholders. The prices will be expressed exclusive of any initialcharge or redemption charge which may be payable on subscription or redemption.

Meetings of Unitholders may be convened by the Manager or the Trustee, and the Unitholders of 10% or morein value of the Units in issue may require a meeting to be convened. Unitholders will be given not less than 21days’ notice of any meeting. If a situation gives rise to potential conflict of interest between different classes of Unitholders, class meetings shall be held in accordance with the provisions of the Trust Deed.

The quorum for all meetings is Unitholders present in person or by proxy representing 10% of the Units for thetime being in issue except for the purpose of passing an Extraordinary Resolution. The quorum for passing anExtraordinary Resolution is Unitholders present in person or by proxy representing 25% or more of the Units inissue. If a quorum is not present within half an hour from the appointed meeting time, the meeting will beadjourned for not less than 15 days. In the case of an adjourned meeting of which separate notice will be given,such Unitholders as are present in person or by proxy will form a quorum. Every individual Unitholder presentin person, by proxy or by representative has one vote for every Unit of which he is the holder. In the case ofjoint Unitholders the senior of those who tenders a vote (in person or by proxy) will be accepted and seniorityis determined by the order in which the names appear on the register of Unitholders.

An Extraordinary General Meeting should be called for the following purposes:

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(i) to modify, alter or add to the Trust Deed;

(ii) to terminate the Fund in accordance with the Trust Deed;

(iii) to increase the maximum fees paid to the Manager and/or Trustee; or

(iv) to impose other types of fees.

The Trustee, the Manager and their connected persons are prohibited from voting their beneficially ownedUnits at, or counted in the quorum for, a meeting at which they have a material interest in the business to becontracted by the Fund and/or Sub-Fund.

Subject as provided below, Units may be transferred by an instrument in writing in common form signed by (or,in the case of a body corporate, signed on behalf of or sealed by) the transferor and the transferee. Thetransferor will be deemed to remain the holder of the Units transferred until the name of the transferee isentered in the register of Unitholders in respect of such Units.

The Fund was established under the Trusts Law by a Trust Deed dated on or about August 2007 madebetween Guotai Junan Assets (Asia) Limited as Manager and HSBC Trustee (Cayman) Limited as Trusteeand as amended from time to time.

The Trust Deed contains provisions for the indemnification of the parties, their exculpation from liability incertain circumstances and circumstances as to the removal and retirement of the Trustee and Manager maybe effected is set out below. Unitholders and intending applicants are advised to consult the terms of the TrustDeed. In the event of any conflict between any of the provisions of this Explanatory Memorandum and theTrust Deed, the provisions of the Trust Deed will prevail.

Copies of the Trust Deed (together with any undertakings given to the SFC) as for the time being in force maybe obtained from the Manager at a cost of HK$300 each and may be inspected during normal working hoursat the offices of the Manager and the Trustee free of charge.

The Trustee

Subject to the prior approval of the SFC:

1. the Trustee may retire voluntarily if a new trustee has been appointed by the Manager and adequatearrangements have been made for the new trustee to assume the responsibility foradministration of theFund and for the Trustee’s interest in the Fund to be transferred to the new trustee; and

2. the Manager may remove the Trustee by giving not less than 3 months’ prior notice in writing to the Trustee and appoint any other qualified company to act as the trustee of the Fund.

The Manager

Subject to the prior approval of the SFC, the Manager may be subject to removal by the Trustee if:

1. the Manager commences liquidation or has gone into receivership; or

2. for good and sufficient reason, the Trustee states in writing to the Manager that a change of theManager is desirable in the interest of the Unitholders provided that not less than 6 months’ prior written notice is given to the Manager; or

3. the Unitholders representing at least 50% in value of the Units outstanding (excluding those held ordeemed to be held by the Manager) deliver to the Trustee a written request to dismiss the Manager andthe Trustee provides not less than 6 months’ prior written notice to the Manager.

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If the SFC withdraws the authorisation of the Manager to act as investment manager of the Fund, theManager’s appointment under the Fund will terminate as at the date on which the SFC’s withdrawal becomes effective.

Apart from the above, the Manager may also retire voluntarily in favour of some other qualified companyapproved by the Trustee.

Subject to the prior approval of the SFC, the Trustee and the Manager may agree to modify the Trust Deed bysupplemental deed provided that in the opinion of the Trustee such modification:

(i) is not materially prejudicial to the interests of Unitholders, does not operate to release to anymaterial extent the Trustee, the Manager or any other person from any responsibility to theUnitholders and (with the exception of the costs of preparing and executing the relevantsupplemental deed) does not increase the costs and charges payable out of the assets of the Fund;or

(ii) is necessary or desirable in order to comply with any fiscal, statutory or official requirement; or

(iii) is made to correct a manifest error.

In all other cases modifications require the sanction of any Extraordinary Resolution of the Unitholders affected.

The Fund will continue for a period of 100 years from the date of the Trust Deed or until it is terminated in oneof the ways set out below.

The Trustee may terminate the Fund in the following events (provided that the Trustee certifies that in itsopinion, the proposed termination is in the interest of Unitholders), namely if:

(a) within 30 days of the Manager leaving office and no new manager is appointed; or

(b) if in the opinion of the Trustee, the Manager is incapable of performing or fails to perform its dutiessatisfactorily; or

(c) if the Manager goes into liquidation; or

(d) if the Trustee desires to retire and the Manager fails to find a new trustee qualified to act as trusteein the place of the retiring Trustee within 3 months from the date of retirement of the Trustee.

The Trustee may also terminate the Fund if any law is passed which renders it illegal, or in the opinion of theTrustee, impracticable or inadvisable to continue the Fund.

The Manager may terminate the Fund or any Sub-Fund:

(a) if, in relation to any Sub-Fund, the average net asset value of the Units outstanding in respect ofsuch Sub-Fund is less than HK$39,000,000 over 12 consecutive calendar months, and Unitholdersof such Sub-Fund pass an Extraordinary Resolution approving the termination of the Sub-Fund insuch circumstances; or

(b) if any law is passed which renders it illegal or, in the opinion of the Manager, impracticable orinadvisable, in consultation with the SFC to continue the Fund or such Sub-Fund; or

(c) if the Fund and/or any Sub-Fund (as the case may be) ceases to be authorised or otherwiseofficially approved by the SFC.

Three months’ notice of any termination will be given to Unitholders. Such notice will be submitted to the SFCfor prior approval and will contain the reasons for the termination, alternatives available to Unitholders and the

24

expected costs involved.

Further, at any time the Unitholders of any Sub-Fund may authorise termination of such Sub-Fund byExtraordinary Resolution.

Copies of the Trust Deed and the latest annual and semi-annual reports (if any) are available for inspectionfree of charge at any time during normal business hours on any day (excluding Saturdays, Sundays and publicholidays) at the offices of the Manager at 27/F., Low Block, Grand Millennium Plaza, 181 Queen’s Road Central, Hong Kong. Copies of the Trust Deed can be purchased from the Manager on payment of areasonable fee.

The Fund has applied for registration pursuant to section 4(1)(b) of the Mutual Funds Law (2003 Revision) ofthe Cayman Islands (as amended and revised from time to time) (the “Mutual Funds Law”) and will fall within the definition of a “regulated mutual fund”. The obligations of the Fund under the Mutual Funds Law are to filecertain prescribed details (and any changes thereto) together with its audited accounts on an annual basis withthe Monetary Authority in the Cayman Islands (the “Authority”) and pay a prescribed registration and recurring annual fee of approximately US$3,048.78.

As a regulated mutual fund, the Fund is subject to the supervision of the Authority which may at any timeinstruct the Fund to have their accounts audited and submitted to the Authority within such time as theAuthority specifies. In addition, the Authority may ask the Trustee to provide it with such information or suchexplanation in respect of the Fund as the Authority may reasonably require to enable it to carry out its dutyunder the Mutual Funds Law.

The Trustee may give the Authority access to or provide at any reasonable time all records relating to theFund and the Authority may copy or take an extract of any record to which it is given access. Failure to complywith these requests by the Authority may result in substantial fines on the part of the Trustee and may result inthe Authority applying to a court to have the Fund wound up.

The Authority may take certain actions if it is satisfied that a regulated mutual fund is or is likely to becomeunable to meet its obligations as they fall due, is carrying on or is attempting to carry on its business or iswinding up its business voluntarily in a manner that is prejudicial to its investors or creditors, the direction andmanagement of the regulated mutual fund has not been conducted in a fit and proper manner or a personholding the position as a manager of the regulated mutual fund is not a fit and proper person to hold theposition. The powers of the Authority include, inter alia, the power to require the substitution of the Trustee orthe Manager, to appoint a person to advise the Fund on the proper conduct of its affairs or to appoint a personto assume control of the affairs of the Fund. There are other remedies available to the Authority, including theability to apply to a court for approval of other actions.

As part of the Trustee and the Manager’s responsibility for the prevention of money laundering, the Trustee and/or the Manager (including its affiliates, subsidiaries or associates) require a detailed verification of aninvestor’s identity and the source of payment of application monies. Depending on the circumstances of each application, a detailed verification might not be required where:–

(a) the applicant makes payment from an account held in the applicant’s name at a financial institutionthat is regulated in and either based or incorporated in, or formed under the laws of, a countryspecified in Schedule 3 of the Money Laundering Regulations (2006 Revision) of the CaymanIslands (the “Money Laundering Regulations”); or

(b) the application is made through an intermediary that is regulated by a recognised regulatoryauthority and is based or incorporated in or formed under the laws of a country listed in Schedule 3of the Money Laundering Regulations. In this situation the Fund may rely on a written assurancefrom the intermediary that the requisite identification procedures in respect of the applicant have

25

been carried out.

However, the above exceptions will only apply if the applicant or intermediary is operating in a countryrecognised as having sufficient anti-money laundering legislation and provided that any redemption proceedsor other distributions by the Fund are paid back to the applicant and not to third parties.

The Trustee and the Manager reserve the right to request any information necessary to verify the identity of anapplicant and the source of payment. In the event of delay or failure by the applicant to produce anyinformation required for verification purposes, the Trustee and/or the Manager may refuse to accept theapplication and the subscription monies relating thereto.

If any person who is resident in the Cayman Islands (including the Fund and the Trustee) has a suspicion thata payment to the Fund (by way of subscription or otherwise) contains the proceeds of criminal conduct, theperson is required to report such suspicion pursuant to the Proceeds of Criminal Conduct Law (2005 Revision)of the Cayman Islands and such report shall not be treated as a breach of any restriction upon the disclosureof information imposed by any enactment or otherwise.

The Manager and the Trustee may from time to time act as trustee, administrator, registrar, manager,custodian, investment manager or investment adviser, representative or otherwise as may be required fromtime to time in relation to, or be otherwise involved in or with, other funds and clients which have similarinvestment objectives to those of any Sub-Fund. It is, therefore, possible that any of them may, in the courseof business, have potential conflicts of interest with the Fund. Each will, at all times, have regard in such eventto its obligations to the Fund and will endeavour to ensure that such conflicts are resolved fairly. In any event,the Manager shall ensure that all investment opportunities will be fairly allocated.

Personal data provided by the Unitholder on the application form, and details of transactions or dealingsbetween Unitholder and the Fund will be used, stored, disclosed and transferred (in and outside Hong Kong)to such persons as the Fund considers necessary for any purpose in connection with the services the Fundmay provide to a Unitholder and/or in connection with matching and for whatever purpose with other personaldata concerning a Unitholder.

A Unitholder has the right to request access to and correction of any personal data.

Save as provided below, the defined terms used in the Explanatory Memorandum have the same meaning inthis Appendix A. In addition in this Appendix A, the following expressions have the following meanings:–

“Accounting Period” a 12-month period ending on 31 December of each calendar year, unless theManager determines otherwise with the approval of the Trustee

“Base Currency” Hong Kong Dollar or HK$

“Class A Units” Units with a minimum subscription amount of HK$10,000 and a minimumsubsequent holding of HK$10,000

“Closing Day” the last Business Day of the Initial Offer Period

“Dealing Day” each Business Day

“Dealing Deadline” 4:00 p.m. (Hong Kong time) on the relevant Dealing Day

“Greater China” includes the PRC, the Special Administrative Regions of Hong Kong, Macau and

26

Taiwan

“Initial Offer Period” from 9:00 a.m. (Hong Kong time) on 8 October 2007 until 4:00 p. m. (Hong Kongtime) on 16 November 2007 (or such other date as determined by the Manager).Subject to the prior approval of the SFC, the Manager may at its discretion extendthe Initial Offer Period

“Issue Price” HK$100 per Unit net of subscription fee

“Minimum Aggregate Subscription”

receipt by the Service Provider to Trustee and Registrar of valid application forUnits amounting to HK$39,000,000 in aggregate (or such lower figure as theManager may determine by the Closing Day)

“PRC” the People’s Republic of China

“SFC” the Securities and Futures Commission of Hong Kong

“Sub-Fund” Guotai Junan Greater China Growth Fund

“Unit” a unit in the Sub-Fund

“Valuation Day” each Dealing Day

This Appendix contained in this Explanatory Memorandum relates solely to Guotai Junan Greater ChinaGrowth Fund.

The offering of Units in the Guotai Junan Greater China Growth Fund is conditional upon achieving aggregateminimum subscriptions of HK$39,000,000 for the Sub-Fund at the close of the Initial Offer Period.

In the event that the above condition is not satisfied, or if the Manager is of the opinion that it is not in theinterests of investors or commercially viable to proceed, the Manager may determine in its sole and absolutediscretion either to close the Initial Offer Period at an earlier date or not to issue any Units in the Sub-Fund.The subscription monies paid by the applicants will be returned without interest by cheque through the post orby telegraphic transfer at the risk and expense of the applicants.

Investment Objective

The Guotai Junan Greater China Growth Fund seeks to provide investors with medium to long term capitalappreciation over time.

Investment Strategy

The Manager intends to make investments primarily through a portfolio consisting of listed securities ofcompanies that derive or are expected to derive a significant portion of their revenues from goods produced orsold, investments made or services performed in Greater China, which includes the People’s Republic of China (PRC), the Special Administrative Regions of Hong Kong and Macau and Taiwan. The Managerbelieves that the value of these companies would increase through benefiting from the economic growth of theGreater China region.

The Sub-Fund will be managed based on a value-oriented investment strategy, which means that the Managerwill invest in assets which are considered to be undervalued, compared to their intrinsic value.

Investment Portfolio

The investment portfolio of the Sub-Fund may include shares listed in the PRC, Hong Kong, Macau, Taiwan orelsewhere (please refer to table below) of companies whose majority of their assets are situated in, or themajority of their incomes are derived from operation, investment made or services performed in Greater China.

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In addition, the Sub-Fund may invest in the above investment companies through Global Depository Receipts,American Depository Receipts, Chinese Depository Receipts, equity linked notes or other derivativeinstruments for exposures or for hedging purposes only, subject to the investment restrictions set out in thisExplanatory Memorandum.

Listed Shares Nature Fund’s percentage allocation

A Shares quoted in Renminbi listed on the Shanghai Securities Exchange and

Shenzhen Stock Exchange

0%–35%

B Shares quoted in United States Dollars and Hong Kong Dollars listed on the Shanghai Securities Exchange and

Shenzhen Stock Exchange

0%–20%

H Shares & RedChips

quoted in Hong Kong Dollars listed on the Hong Kong Stock Exchange

0%–90%

HK Shares quoted in Hong Kong Dollars listed on the Hong Kong Stock Exchange

0%–50%

Taiwan Shares& Other ChinaRelated Stocks

quoted in Taiwan Dollars listed on the Taiwan Stock Exchange quoted in non Hong Kong Dollars listed on other Exchanges

0%–50%

* The Manager has absolute discretion to vary the percentage allocation of assets in the Sub-Fund to be invested into different types of listed

shares.

QFII

Under prevailing regulations in the PRC, foreign investors can invest only in the “A” share market (or Chinese Depository Receipts) through institutions that have obtained Qualified Foreign Institutional Investor status(“QFII”) in the PRC. As of the date of this Explanatory Memorandum, the Sub-Fund and the Manager are notQFIIs in the PRC. The Manager intends to invest in A Shares via existing QFII quota holders pending the grantof its QFII status. The Manager aims to adjust the portion of A Share investment in accordance with theavailable QFII investment quota it secures overtime.

Please refer to the risk factor section for details of the risks involved in an investment by means of QFII in thePRC.

Geographical Concentration

The Sub-Fund will focus primarily on investment into the Greater China region and at least 70% of theSub-Fund’s non-cash assets will be invested into Greater China-related financial instruments and companies.However, this will not preclude the Sub-Fund from investing in other markets where opportunities can beidentified.

Subject to the investment restrictions set out in the Explanatory Memorandum, the Manager may apply anyinvestment strategy (including hedging, leveraging, and other strategies) it deems appropriate under theprevailing economic and market conditions in order to achieve the investment objective and strategy of theSub-Fund.

In addition, the Manager may hold cash, deposits, short-term papers such as treasury bills, certificates ofdeposit, bankers’ acceptances, short-term commercial papers and other fixed income instruments for theaccount of the Sub-Fund. In times of extreme volatility of the markets or during severe adverse marketconditions, the Manager may hold a substantial portion of the Sub-Fund’s assets in cash or cash equivalents, or invest in short-term money market instruments to preserve the value of the assets in the investmentportfolio of the Sub-Fund.

The value of Units may fall as well as rise, given that the Sub-Fund invests in a basket of underlying securities.

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Subscription Fee

The Manager may charge Unitholders a subscription fee of up to 5% of the total value of the Units subscribedfor by the investor or Unitholder. Subject to the maximum level of 5%, the Manager may change the level ofsubscription fee from time to time.

The current Subscription Fee is 5% of the total value of the Class A Units subscribed for by the investor orUnitholder.

The Manager may share its fees with any persons who distribute Units or otherwise procure subscriptions tothe Sub-Fund.

Redemption Fee

The Manager may charge redeeming Unitholders a redemption fee of up to 3% of the Net Asset Valuecalculated as at the most recent Valuation Day upon receipt of the redemption request. Subject to themaximum level of 3%, the Manager may change the level of redemption fee from time to time.

The following redemption fee will be imposed on the Units for which investors successfully subscribed on orafter 1 April 2010 (the “Effective Date”):

Holding period since the Effective Date Redemption Fee

Less than 6 months 1.00%

6 months or exceeding 6 months but less than 12 months 0.75%

12 months or exceeding 12 months but less than 18 months 0.50%

18 months or exceeding 18 months but less than 24 months 0.25%

24 months or exceeding 24 months waived

Conversion Fee

The Manager may charge a Unitholder wishing to convert its Units into a new class a conversion fee of up to3% of the issue price per Unit of the new Class. Subject to the maximum level of 3%, the Manager maychange the level of conversion fee from time to time.

Currently, the aggregate redemption and subscription fees payable by a Unitholder with respect to convertingUnits from this Sub-Fund to another Sub-Fund to be established by the Fund in the future will not exceed 3%of the Issue Price per Unit of a new Class in the new sub-fund.

Management Fee

The Manager will be paid a management fee by the Fund equal to 1.5% per annum of the Net Asset Valuecalculated on a daily basis and accrued on each Valuation Day and payable monthly in arrears in relation toClass A Units.

Trustee Fee

The Trustee is entitled to receive from the Sub-Fund, an annual fee at a sliding scale with a maximum rate of0.14% per annum of the Net Asset Value of the Fund as at the relevant Valuation Point subject to a minimumannual fee of HK$412,000, in relation to the Sub-Fund. This fee will be calculated and accrued on eachValuation Day and be paid monthly in arrears. The Trustee fee described above represent the current andmaximum fee rates applicable to the Sub-Fund and does not include the fees payable for the services of anysub-custodians appointed by the Trustee. The Service Provider to the Trustee and Registrar will receive a feefor its services and such fees will be payable by the Trustee.

In addition, the Trustee will receive a one time establishment fee of HK$31,200 in respect of the Sub-Fund,payable upon the close of the Initial Offer Period. The Trustee is also entitled to receive transaction,processing and valuation fees and be paid or reimbursed with other applicable fees as agreed with theManager.

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Registrar Fee

The Trustee will receive a fee for services in its capacity as Registrar which will be fixed at HK$39,000 perannum initially. Such fee may vary depending on the number of Unitholders in the Sub-Fund and will becalculated and paid quarterly in arrears to the Trustee. There is no maximum amount applicable to theRegistrar Fees.

Further, the Trustee may appoint sub-custodians to safe-keep the assets of the Sub-Fund. All sub-custodianfees will be charged to the relevant Sub-Fund and are calculated and paid monthly in arrears, in addition, to,any fees and expenses payable to the Trustee. The sub-custodian is entitled to recover all out-of-pocketexpenses, including telephone, photocopying and courier fees incurred in the performance of its duties inconnection with the relevant Sub-Fund.

The Trustee Fee and Registrar Fee may be varied by agreement in writing between the Fund and the Trustee.The Manager will give Unitholders at least three months prior notice with respect to any proposal to increasethe Trustee Fee beyond the maximum level as set out in the Trust Deed.

The Trust Deed provides that sanction of Unitholders by means of Extraordinary Resolution is required shouldthere be any increase of (i) the management fee from the current level up to the maximum level stated in theTrust Deed and/or (ii) the trustee fee up to the maximum level stated in the Trust Deed. Investors should notethat at present there is no intention to increase these fees.

The first Net Asset Value will be calculated on the first Valuation Day after the Closing Day.

The offering is conditional upon the Minimum Aggregate Subscription being achieved prior to the expiration ofthe Initial Offer Period.

The Manager reserves the right not to issue Units in the Sub-Fund and to return the subscription moniesreceived (without interest and at the risk of investors) to the applicant by cheque through the post or bytelegraphic transfer no later than 14 Business Days after the close of the Initial Offer Period if the aggregateamount raised at the close of the Initial Offer Period for the Sub-Fund is less than HK$39,000,000, or if theManager is of the opinion that it is not in the interests of investors or commercially viable to proceed, and insuch event the Sub-Fund shall be deemed not to have commenced.

In the event that any of the above conditions are not satisfied, no Units will be issued. All subscription monieswill be returned to applicants (without interest and at the risk of investors) and the Manager will apply forrevocation of the authorisation of the Fund by the SFC. Please note, however, that notwithstanding theaforesaid, the Manager reserves the right to elect, at its discretion, to instruct the Trustee to proceed with theissue of Units in the Fund despite the fact that the Minimum Aggregate Subscription has not been achieved.

In the event that the Manager determines not to proceed with the issue of Units in the Sub-Fund, applicantswill be notified of the Manager’s determination within 7 Business Days of the Closing Day by courier mail. Thenotice to investors will also be published in the South China Morning Post and the Hong Kong EconomicTimes and/or any other newspapers which the Manager may determine from time to time.

The Minimum Subscription Amount for Units from prospective investors must be for a minimum of HK$10,000.

Initial Offer Period means from 9:00 a.m. (Hong Kong time) on 8 October 2007 until 4:00p.m. (Hong Kong time) on 16 November 2007, subject to the priorapproval of the SFC, the Manager may at its discretion extend the InitialOffer Period after the original Closing Day to no more than 3 monthsfrom the Closing Day.

Issue Price HK$100 per Unit net of subscription fee

Minimum Subscription Amount Class A Units: HK$10,000

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Minimum Holding Amount Class A Units: HK$10,000

Subject as otherwise provided, Units in the Sub-Fund will be issued on the Business Day immediatelyfollowing the relevant Dealing Day in respect of applications, together with cleared application monies receivedby the Service Provider to Trustee and Registrar prior to 4:00p.m. (Hong Kong time) on the relevant DealingDay. Investors should confirm the relevant cut-off times with their distributor.

For details regarding the procedure for the subscriptions, see the main part of the Explanatory Memorandumunder “Purchase of Units”.

The Manager has the exclusive right to offer and issue Units and has complete discretion to accept or rejectany subscription for Units. Applications for subscription of Units may be made on each Business Day duringthe Initial Offer Period and thereafter at any time on each Dealing Day.

Subscriptions of Units during the Initial Offer Period

Written applications for subscription of Units during the Initial Offer Period must be forwarded to, and receivedby, the Service Provider to Trustee and Registrar (via distributors) by no later than 4:00 p.m. (Hong Kong time)on the Closing Day. Cleared funds in respect of the subscription monies must be received by the ServiceProvider to Trustee and Registrar by 4:00 p.m. (Hong Kong time) on the Closing Day.

Each Unit may be subscribed at the Issue Price during the Initial Offer Period.

Subscriptions of Units subsequent to the Initial Offer Period

Written applications for subscription of Units after the Initial Offer Period must be forwarded to, and receivedby, the Service Provider to Trustee and Registrar (via distributors) by no later than the Dealing Deadline.Applications received after this deadline will be processed for subscription on the next Dealing Day.

The Subscription Price on any Dealing Day is the price per Unit ascertained by dividing the Net Asset Value ofthe Sub-Fund as at the Valuation Point in respect of the Dealing Day on which the application form is receivedby the Service Provider to Trustee and Registrar by the number of Units then in issue rounded up to thenearest 2 decimal places or in such manner and to such other number of decimal places as the Manager mayfrom time to time be determine after consulting the Trustee.

The subscription amount payable for the number of Unit subscribed by a subscriber, in respect of any DealingDay subsequent to the Initial Offer Period, is due and payable no later than the Dealing Deadline.

Minimum Subscription

The minimum subscription per investor that must be subscribed for in relation to Class A Units is HK$10,000.

The Manager has absolute discretion to determine the number of applications for Units that will be acceptedand whether or not to accept applications from any subscriber for less than the Minimum Subscription.

The Service Provider to Trustee and Registrar will send contract note confirming to each subscriber no laterthan 2 Business Days after the availability of the price per Unit, as is applicable, and as to whether thesubscriber’s application for Unit has been successful, either in whole or in part.

Confirmation of Subscription

If the relevant application form and/or subscription monies is/are not received by the times stated above, theapplication will be held over to the next Dealing Day and Units will be issued at the relevant Subscription Priceon that Dealing Day.

The Manager reserves the right to reject any application in whole or in part at its absolute discretion, in whichevent the amount paid on application or the balance thereof (as the case may be) will be returned (withoutinterest) as soon as practicable in HK$ at the risk and cost of the applicant.

Applications for Units will not be dealt with and Units will not be issued until receipt of confirmation that anapplicant’s funds have been cleared in the full amount of the applicable subscription amount. Shares are deemed to be issued on the Closing Day or the relevant Dealing Day.

In order to be dealt with on a particular Dealing Day, an application form and cleared monies must be received

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by the Service Provider to Trustee and Registrar (via distributors) before the Dealing Deadline. Investorsshould confirm the relevant cut-off times with their distributor. Application forms and cleared monies receivedafter such time will be deemed to have been received on the next Business Day and will be dealt withaccordingly, unless specifically approved by the Manager.

The procedures regarding the redemption of Units are described in the main part of this ExplanatoryMemorandum under “Redemption of Units”.

In order to be dealt with on a particular Dealing Day, a redemption request must be received by the ServiceProvider to Trustee and Registrar before the Dealing Deadline. Investors should confirm the relevant cut-offtimes with their distributor. Redemption requests received after such time will be deemed to have beenreceived on the next Business Day and will be dealt with accordingly. Unless the Manager in any particularcase or generally otherwise agrees, a Unitholder shall not be entitled to redeem Units in amounts of less thanHK$10,000 in the case of Class A Units.

The Redemption Price on any Dealing Day is the price per Unit ascertained by dividing the Net Asset Value ofthe Sub-Fund as at the Valuation Point in respect of the Dealing Day on which the redemption request isreceived by Service Provider to Trustee and Registrar by the number of Units in respect of such Sub-Fundthen in issue, rounded down to the nearest 2 decimal places or in such manner and to such other number ofdecimal places as the Manager may determine from time to time after consulting the Trustee.

Unitholders may redeem their Units on any Dealing Day, in whole or in part provided that the Manager mayrefuse a request for a partial redemption which would result in the Unitholder’s falling below Minimum Holding in relation to Class A Units, and in such a situation, the Manager may require the Unitholder to redeem hisholdings in full. The Service Provider to Trustee and Registrar will send a contract note to each redeemingUnitholder no later than 2 Business Days after the availability of the price per Unit.

Redemption proceeds will normally be paid in the base currency of the Sub-Fund (unless the Unitholderrequests another currency, in which case, the Unitholder will bear any exchange costs) within a period ofmaximum 7 Business Days from the day a properly documented original request for redemption of Units isaccepted by the Service Provider to Trustee and Registrar and the Manager has not exercised any of itspowers described in the section headed “Suspension of Calculation of Net Asset Value”. In any event, redemption proceeds will be paid no later than one calendar month from the relevant Dealing Day. Anyredemption money unclaimed after six years from the date of payment shall become part of the assets of theSub-Fund.

All bank charges and costs incurred in the payment of the redemption proceeds to the Unitholder will be borneby the relevant Unitholder and deducted from the redemption proceeds. Any risks arising from delay inclearance of funds by banks will be borne by the relevant Unitholder.

No payments shall be made to a person other than the registered Unitholders.

Income of the Sub-Fund, in such amounts as the Manager may at its discretion determine in respect of eachAccounting Period, after deducting the relevant expenses, will be distributed to Unitholders. The Manager mayalso distribute the proceeds of sales of rights and other capital receipts accruing from the Sub-Fund’s investments. It is the current intention of the Manager that income earned by the Sub-Fund will be reinvestedin the respective Sub-Fund and reflected in the value of Units of the respective Sub-Fund.

Investors should note that any distributions made from the capital of the Sub-Fund may have theeffect of reducing the investor’s original investment in the Sub-Fund.

Investors should note that the declaration and/or paying of dividends (whether out of capital orotherwise) may have the effect of lowering the net asset value of the Sub-Fund.

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Investment in the Fund involves risks. Please refer to the following risk factors in relation to the investments inthe Sub-Fund.

The Sub-Fund may be affected by the following risks, among others:

Principal Risk Factor(s): Investors should note that investments in the Sub-Fund are exposed to the financialand market risks that accompany investments in equities and these have been set out in greater detail below.While equities may offer the potential for greater long-term growth than most debt securities, equities generallyhave higher volatility.

PRC Market Risk: Investing in the securities markets in the PRC is subject to the risks of investing inemerging markets generally and the risks specific to the China market in particular.

Investors should be aware that for more than 50 years, the Chinese government has adopted a plannedeconomic system. Since 1978, the Chinese government has implemented economic reform measures whichemphasise decentralisation and the utilisation of market forces in the development of the Chinese economy.Such reforms have resulted in significant economic growth and social progress.

Many of the economic reforms in the PRC are unprecedented or experimental and are subject to adjustmentand modification, and such adjustment and modification may not always have a positive effect on foreigninvestment in joint stock limited companies in the PRC or in A-, B–and H–shares.

In view of the small yet slowly increasing number of A-, B–and H–share issues currently available, the choiceof investments available to the Manager will be severely limited as compared with the choice available in othermarkets. There is a low level of liquidity in the A–and B–share markets in the PRC, which are relatively smallin terms of both combined total market value and the number of A–and B–shares which are available forinvestment. Investors are warned that this could lead to severe price volatility.

The national regulatory and legal framework for capital markets and joint stock companies in the PRC is notwell developed when compared with those of developed countries.

Companies in the PRC are required to follow the Chinese accounting standards and practice which, to acertain extent, follow international accounting standards. However, there may be significant differencesbetween financial statements prepared by accountants following the Chinese accounting standards andpractice and those prepared in accordance with international accounting standards.

Both the Shanghai and Shenzhen securities markets are in the process of development and change. This maylead to trading volatility, difficulty in the settlement and recording of transactions and difficulty in interpretingand applying the relevant regulations.

Under the prevailing tax policy in the PRC, there are certain tax incentives available to foreign investment.There can be no assurance, however, that the aforesaid tax incentives will not be abolished in the future.

Investments in the PRC will be sensitive to any significant change in political, social or economic policy in thePRC. Such sensitivity may, for the reasons specified above, adversely affect the capital growth and thus theperformance of these investments.The PRC government’s control of currency conversion and future movements in exchange rates may adversely affect the operations and financial results of the companies invested in by the Sub-Fund.

QFII Risk: There can no assurance that the Sub-Fund and the Manager will be able to obtain a sufficient QFIIinvestment quota from existing QFII holders to adequately allocate assets in the Sub-Fund for investment in AShares, pending grant of the Manager’s QFII status.

Further, the Manager will rely on the existing arrangements entered into between QFII holders and their localcustodian (“PRC Custodian”) with respect to the custody of the Sub-Fund’s assets in A Shares, and their broker (“PRC Broker”) in relation to the execution of transactions in A Shares on behalf of the Sub-Fund, in thePRC markets. The Sub-Fund may, therefore, incur losses due to the acts or omissions of the PRC Broker orthe PRC Custodian in the execution or settlement of any transaction, or in the transfer of any funds orsecurities.

The current QFII regulations impose strict restrictions (including in relation to investment guidelines, minimumholding periods and restrictions with respect to the repatriation of capital and profits out of the PRC) onA-share investment.

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In particular, transaction sizes for QFIIs are large and there are lock-up restrictions on the repatriation ofcapital invested by a QFII in the PRC.

QFII restrictions on investment cover the entire quota granted to a QFII holder and do not relate solely toinvestments made by the Sub-Fund. Accordingly, investors should be aware that violations of the QFIIregulations on investment arising out of activities related to portions of the investment quota allocated toanother client of the QFII holder could result in the revocation of, or other regulatory action in respect of, theinvestment quota of the QFII, including any portion utilised by the Sub-Fund.

Investors should note that direct investments in A-Shares through QFIIs are subject to compliance with thefollowing investment restrictions currently imposed under the QFII regulations in the PRC, as amended fromtime to time, which are applied to each QFII and which will affect the ability of the Sub-Fund to invest inA-Shares:

(a) shares held by each QFII in one listed company should not exceed 10% of the total outstandingshares of the company;

(b) total shares held by the QFIIs in one listed company should not exceed 20% of the total outstandingshares of the company; and

(c) the investments should comply with the requirements set out in the Guidance Catalogue onIndustries for Foreign Investment.

The Sub-Fund may incur significant loss due to limited investment capabilities, or may not be able to fullyimplement or pursue its investment objective or strategy, due to QFII investment restrictions, the illiquidity ofthe A Share market, and/ or any delay or disruption in the execution or settlement of trades.

Investment in Publicly Traded Securities

Some of the markets in which the Sub-Fund may invest are emerging markets, and as a consequence tend tobe substantially smaller, less liquid, less regulated and more volatile than major securities markets, such asthose in more developed economics. The limited liquidity of securities in some emerging countries could alsoaffect the Fund’s ability to acquire or dispose of securities at the price and at the time it wishes to do so.

Risk relating to Distributions

Investors should be aware that the Manager may make distributions from both the capital or the income of theSub-Fund. If the Manager determines to make a distribution from the capital of the Sub-Fund investors shouldbe aware that any distributions made from the capital of the Sub-Fund may have the effect of reducing theinvestor’s original investment in the Sub-Fund and that the net asset value of the Sub-Fund may decrease.

Investors should also understand that any declaration of a distribution may not indicate whether the Sub-Fundhas made profit whether of a capital or income nature.Political and/or Regulatory Risks

The value of the Sub-Fund’s investments may be affected by uncertainties such as international political developments, changes in government policies, changes in taxation, restrictions on foreign investment andcurrency repatriation, currency fluctuations and other developments in the laws and regulations of countries inwhich investment may be made. Furthermore, the legal infrastructure and accounting, auditing and reportingstandards in certain countries in which investment may be made may not provide the same degree of investorprotection or information to investors as would generally apply in major securities markets. Foreign ownershiprestrictions in some markets may mean that corporate actions entitlements in relation to any collectiveinvestment schemes or other investments the Fund is invested into may not always be secured or may berestricted.

Portfolio Management Risk

The Manager may engage in various portfolio strategies on behalf of the Sub-Fund by the use of futures andoptions for efficient portfolio management purposes only. Due to the nature of futures, cash to meet initial andfuture margin deposits may be held by a broker with whom the Fund has an open position. On execution of theoption the Sub-Fund may pay a premium to a counterparty. In the event of bankruptcy of the counterparty theoption premium may be lost in addition to any unrealised gains where the contract is “in the money”.

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Foreign Exchange/Currency Risk

The Sub-Fund may invest its assets in securities denominated in a wide range of currencies, some of whichmay not be freely convertible. The Net Asset Value of the investments of the Sub-Fund as expressed in HKDwill fluctuate in accordance with the changes in the foreign exchange rate between the HKD and thecurrencies in which the Sub-Fund’s investments are denominated. The Sub-Fund may therefore be exposed toa foreign exchange/currency risk.

It may not be possible or practicable to hedge against the consequent foreign exchange/currency riskexposure.

Premium Risk

Where the Sub-Fund acquires or values securities in the over-the-counter market there is no guarantee thatthe Sub-Fund will be able to realise such securities at a premium due to the nature of the over-the-countermarket. Subject to the interests of investors and/or the Sub-Fund, the Manager shall make reasonable effortsto reduce the Sub-Fund’s exposure to such premium risk.

Counterparty and Settlement Considerations

The Sub-Fund will be exposed to credit risk on the counterparties with which it trades particularly in relation tooptions, futures, contracts and other derivative financial instruments that are not traded on a recognisedmarket. Such instruments are not afforded the same protections as may apply to participants trading futures oroptions on organised exchanges, such as the performance guarantee of an exchange clearing house. TheSub-Fund will be subject to the possibility of the insolvency, bankruptcy or default of a counterparty with whichthe Sub-Fund trades, which could result in substantial losses to the Sub-Fund.

The Sub-Fund will also be exposed to a credit risk on parties with whom it trades securities, and may also bearthe risk of settlement default, in particular in relation to debt securities such as bonds, notes and similar debtobligations or instruments. Investors should also note that settlement mechanisms in emerging markets aregenerally less developed and reliable than those in more developed countries and that this therefore increasesthe risk of settlement default, which could result in substantial losses for the Sub-Fund in respect toinvestments in emerging markets. Investors should also note that the securities of companies domiciled inemerging markets are less liquid and more volatile than more developed stock markets and this may result influctuations in the price of the Units.Emerging Markets Risk

The Sub-Fund may invest in equity securities of companies in emerging markets. Such securities may involvea high degree of risk and may be considered speculative. Risks include (i) greater risk of expropriation,confiscatory taxation, nationalisation, and social, political and economic stability; (ii) the small current size ofthe markets for securities of emerging markets issuers and the currently low or non-existent volume of trading,resulting in lack of liquidity and in price volatility,(iii) certain national policies which may restrict the Sub-Fund’s investment opportunities including restrictions on investing in issuers or industries deemed sensitive to relevant national interests and repatriation of capital;and (iv) the absence of developed legal structures governing private or foreign investment.

Price volatility

The value of the Sub-Fund changes as the prices of its investments go up and down. Equity securities facemarket, issuer and other risks, and their values may go up or down, sometimes rapidly and unpredictably.Market risk is the risk that securities may decline in value due to factors affecting securities market generally orparticular industries. Issuer risk is the risk that the value of a security may decline for reasons relating to theissuer, such as changes in the financial condition of the issuer. While equities may offer the potential forgreater long-term growth than most debt securities, they generally have higher volatility.

Market trend

From time to time, the stock market may not favour the securities in which the Sub-Fund invests. Rather, themarket could favour stocks in industries to which the Sub-Fund is not exposed, or may not favour equities atall.

Jurisdiction Concentration

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If the Sub-Fund concentrates its assets in securities related to a particular jurisdiction, the Sub-Fund may besubject to greater market fluctuation than a fund which has securities representing a broader range ofinvestment alternatives.

Restriction on Auditors’ liability

The engagement letter, to be entered into between the Fund and the auditor of the Fund, Ernst & Young,Cayman Islands, contains provisions limiting the liability of the auditor to three times the fees paid to theauditor for the services or work product giving rise to the liability except to the extent finally determined to haveresulted from the wilful or intentional neglect or misconduct, or fraudulent behaviour of the auditor. Otherrelease and indemnity provisions are also contained in the engagement letter relating to consequential loss,third party claims and fraudulent acts or omissions, misrepresentations or wilful default on the part of the Fund,its Manager, employees or agents.

The above should not be considered to be an exhaustive list of the risks which potential investorsshould consider before investing into the Sub-Fund. Potential Investors should be aware that aninvestment in the Sub-Fund may be exposed to other risks from time to time and should consult theirfinancial adviser, banker, accountant or lawyer.