10:08     SHANGHAI GROWTH<00770> - Announcement (2)                           

    However, even with the additional costs to be incurred, the additional    
    work to be carried out by the Custodian would not include direct          
    communications with local PRC enterprises to which the Unlisted           
    Portfolio relates in order for the Custodian to perform the required      
    fair valuation of the unlisted investments. The Company would still       
    be required to arrange for or carry out its own direct communications     
    with local PRC enterprises to which the Unlisted Portfolio relates,       
    as it was not contemplated by the parties when entering into the          
    Custodian Agreement that the Custodian would need to communicate          
    directly with local PRC enterprises to which the Unlisted Portfolio       
    relates.                                                                  
                                                                              
    Further, the Custodian was unable to establish direct communication       
    channels with these PRC counterparts, and accordingly, it was unable      
    to communicate directly with local PRC enterprises to which the           
    Unlisted Portfolio relates. Without such communications, the              
    Custodian was unable to perform market valuation or maintain              
    communications on the distribution of dividends in relation to the        
    Unlisted Portfolio. Instead, with the implementation of the new           
    accounting standard, the Investment Manager, which is required under      
    the Investment Management and Administration Agreement to perform         
    valuation of the unlisted investment of the Company and maintain          
    regular communication with the management of PRC invested entities,       
    has had to fulfill such functions in relation to the Unlisted             
    Portfolio.                                                                
                                                                              
    In view of the additional costs required, the Company decided to          
    appoint international auditing firms, which are separate to its           
    auditors for its annual audits, to perform annual auditing reviews        
    and the required fair valuation on the Unlisted Portfolio, with the       
    assistance of the Investment Manager to communicate with the relevant     
    PRC enterprises to carry out the annual and semi-annual valuations,       
    and in relation to the distribution of dividends in relation to the       
    Unlisted Portfolio, the Company decided that the Investment Manager       
    would continue to maintain communications with the PRC enterprises        
    on the distribution of dividends in relation to the Unlisted Portfolio    
    and that the Custodian will rely on the notifications from the            
    Investment Manager for the receipt of such dividends remitted from        
    the PRC enterprises.                                                      
                                                                              
    Apart from voiding the additional costs required by the Custodian         
    for the additional work, the self-custody of the underlying assets        
    of the Unlisted Portfolio by the Company since October 2002, also         
    results in cost savings for the Company. Prior to October 1, 2002,        
    pursuant to the Custodian Agreement, the Custodian charges the Company    
    custodian fees, which include a maximum administration and                
    safekeeping fee of 0.15% per annum of the aggregate value of all          
    securities, listed and unlisted, and cash which are for the time being    
    held by the Custodian on behalf of the Company, provided in the case      
    of listed securities, such maximum can increase to 0.35%. For the         
    reason that the Custodian had been unable to communicate directly         
    with local PRC enterprises to which the Unlisted Portfolio relates        
    to perform market valuation or maintain communications on the             
    distribution of dividends in relation to the Unlisted Portfolio and       
    in order to save costs for the Company, the Board decided and the         
    parties to the Custodian Agreement agreed that with effect from           
    October 1, 2002, the custodian arrangement with the Custodian be          
    revised to exclude the Unlisted Portfolio so that the Company will        
    not incur any administration and safekeeping fee for the Unlisted         
    Portfolio and that the administration and safekeeping fee for the         
    Custodian in relation to the other assets and monies remaining within     
    the Custodian's custody would be generally revised downwards.