In the long history of the asset management industry, there are no permanent benchmarks—only continuous evolution.

Looking back at the century-long development of the U.S. mutual fund industry, its true boom did not arrive until the 1990s. At that time, pension reforms in the United States brought a steady inflow of long-term capital into mutual funds, while the rise of the internet increased the level of professionalism required in equity investing. Together, these forces drove a sustained shift of household wealth toward mutual funds. Between 1989 and 1999, the proportion of U.S. households owning mutual funds rose from 25% to 47.4%, while institutional investors became increasingly prominent in the U.S. equity market. Against this backdrop, the mutual fund industry gradually shifted its focus from building the personal brands of “star” fund managers to developing more sustainable platform-based brands. This transformation also provides valuable lessons for the development of China’s mutual fund industry.

Benefiting from China’s rapid economic growth, the domestic mutual fund industry has achieved remarkable expansion and is now standing at a new historical juncture. The accelerating transformation of the Chinese economy, deepening capital market reforms and increasingly diversified client needs are driving the industry away from scale-driven competition and toward value creation. At this critical stage of high-quality development, GF Fund Management has anchored itself in long-termism and pursued systematic evolution across four dimensions—strategy, investment and research, products and client services—providing its answer for the new era: to build a first-class asset management institution that is professional, platform-driven and multi-strategy, and to create sustainable and high-quality investment outcomes for clients.

(I) Evolution in Strategic Direction:

Anchoring Development in Long-Term Value Creation

In May 2025, the Action Plan for Promoting the High-Quality Development of the Mutual fund Industry was officially released. Widely regarded as a “compass” for the industry’s future development, the plan explicitly called for strengthening the core investment and research capabilities of mutual fund managers and materially improving investors’ sense of investment gains, directly addressing some of the industry’s most pressing challenges. Meanwhile, amid increasingly uncertain capital markets, investors are placing greater emphasis on “visible returns, tangible services and expertise they can understand.” Under the dual impetus of regulatory guidance and evolving client expectations, exploring paths of self-reform and continuous evolution has become a key priority for every responsible asset manager.

As one of the industry’s leading institutions, GF Fund Management has taken the initiative to integrate the key principles of these reforms into its long-term development strategy. In its latest strategic plan, the Company has explicitly incorporated “creating high-quality investment outcomes” into its strategic positioning and objectives. It has identified the development of a client-centric business model and the upgrading of platform-based investment and research capabilities as key areas for capability enhancement, supported by a combination of organizational optimization, enhanced rules and policies, and continuous upgrades to systems and platforms. Together, these initiatives provide a solid strategic foundation for high-quality development.

Looking at the evolution of asset management industries in China and abroad, “putting clients at the center” has long been a widely shared aspiration. The real challenge, however, lies in translating that aspiration into concrete practices and ultimately into a core competitive advantage. GF Fund Management’s approach goes beyond elevating its management philosophy. It seeks to systematically redefine client investment outcomes from a mere “end-result metric” into a set of “process metrics”—from product development and portfolio management to organizational structures and incentive mechanisms, and from talent development to platform building. Every link in the chain is assessed against a core criterion: whether it improves investors’ sense of investment gains. The ultimate objective is to create a mutually reinforcing cycle between “creating value for clients” and “achieving sustainable corporate development.”

In GF Fund Management’s strategic framework, “sustainable and high-quality investment outcomes” do not mean pursuing bursts of short-term performance. Rather, they are built upon the ability to generate stable Alpha, thereby supporting sustainable long-term performance. This objective is assessed across three dimensions: stable Alpha generation, strong long-term performance and a high proportion of quality products.

To translate this strategic mission into action, the Company has established a clear system of North Star metrics, including a range of quantitative indicators relating to client investment outcomes. This turns an abstract mission into specific objectives that can be measured, monitored and assessed. Along the entire client value chain, these North Star objectives are further translated into core performance indicators for investment and research, product development, sales, client services and other functions, supported by optimized assessment, incentive and accountability mechanisms. While maintaining a long-term evaluation framework, the Company continues to refine the methodologies used to assess investment outcomes, increasing the weighting of indicators related to investors’ actual gains and further reinforcing its long-term orientation and focus on investor returns.

(II) Evolution of the Investment and Research Platform:

From Individual Expertise to Platform-Based Capabilities

From the perspective of modern corporate management, any enduring enterprise, when viewed retrospectively, must have aligned the right strategic direction with an appropriate talent system. Yet its success can never be reduced to a static match between the two. Instead, it depends on creating a dynamic symbiosis among strategy, talent and organizational capabilities. Strategy is never a fixed blueprint carved in stone, but rather a map that must be continuously recalibrated along the journey. Likewise, the value of outstanding talent lies not merely in meeting immediate business needs, but also in helping the organization push beyond existing boundaries of knowledge, continuously upgrade its capability map and develop an agile, forward-looking and anti-fragile growth model. This enables an organization to retain its capacity for evolution amid an increasingly complex and rapidly changing environment.

For the asset management industry, the underlying logic of investing, research and portfolio management is ultimately an expression of both individual and organizational cognition. The source of value creation lies fundamentally in deep and differentiated intellectual capabilities. Exceptional insight and consistent performance are inseparable from respect for professional expertise, and even more importantly, from the ability to value, develop and cultivate talent systematically.

GF Fund Management’s original intention in building its investment and research talent system has always been straightforward and unwavering: to identify people who are genuinely passionate about investing and willing to devote themselves to the profession, and to provide them with a visible and achievable path for long-term development so that their professional commitment can take root and flourish.

This philosophy has ultimately been embedded in a closed-loop development system that places equal emphasis on rigorous selection and the transmission of expertise. At GF Fund Management, investment assistants who emerge from the Company’s structured selection process undergo a dedicated training period of up to two years. Rather than being pushed prematurely into portfolio management roles, they are given the time to build solid fundamentals. The Company’s “Fund Manager Academy” serves not only as a professional training ground integrating high-quality internal and external learning materials with simulated portfolio management systems, but also as a mentorship workshop embodying a strong culture of knowledge sharing and coaching. Leading fund managers serve as mentors and investment and research team leaders, passing on expertise and helping younger professionals make the transition from research to portfolio management. In this way, investment methodologies, culture and philosophy are transmitted from one generation to the next through the platform. Emerging investment professionals are able to grow steadily within this robust ecosystem, creating a high-density and highly professional investment and research talent base.

To date, GF Fund Management has more than 200 investment and research professionals. Its equity investment platform encompasses multiple teams specializing in value and low-volatility strategies, growth, balanced strategies, prudent investment, overseas markets, segregated mandates, discretionary-plus-quantitative strategies and quantitative investment. Its investment managers have more than ten years of industry experience on average. Operating on a unified platform, these professionals are able to leverage their respective strengths while evolving collaboratively, ensuring both diversity in investment capabilities and stability in organizational capabilities.

Individual professional insights can be transformed into collective organizational intelligence, while organizational resources and platforms can in turn enhance individual capabilities. Together, they create a mutually reinforcing ecosystem. In recent years, in response to rapidly changing investment environments, GF Fund Management has developed multiple discretionary quantitative and quantitative multi-strategy teams. Taking the quantitative multi-strategy team as an example, its mature investment methodologies and underlying strategies are openly shared across the internal investment platform, providing other investment teams with efficient Beta allocation tools and enabling a transition from individual expertise to platform-based capabilities.

The benefits of this collaboration extend beyond the different styles and strategies within active equity investing. They also cross the traditional boundary between equities and fixed income, and facilitate deeper integration between active management and passive investment.

For example, in its index investment business, the active equity investment team has established a regular communication mechanism with the index investment and index operations teams. Through scheduled research meetings and ad hoc exchanges, sector insights and industry knowledge generated by active research are incorporated into index product design and the identification of potential product opportunities, allowing research capabilities to create value for a second time.

The emergence of every distinctive investment team and the implementation of every collaborative initiative serve as tangible evidence of the value of this system.

This mature talent and organizational ecosystem has ultimately produced three clear pathways for enhancing excess returns, making value creation more predictable and replicable. First, diversified investment styles broaden the sources of Alpha and improve the stability of excess returns. Second, forward-looking identification of structural opportunities strengthens the ability to capture Alpha. Third, the integration of discretionary and quantitative approaches combines efficient Beta exposure with greater stability in Alpha generation.

Across both domestic and international asset management industries, the shift from “reliance on star fund managers” toward “systematic platform empowerment” has become a common direction of transformation. Yet relatively few institutions have truly achieved both a deep pool of high-quality talent and efficient organizational collaboration. The key challenge is that platform-based empowerment requires substantial accumulated resources, a powerful support platform, continuous innovation in organizational mechanisms and unwavering long-term investment—all of which test an institution’s strategic conviction and execution capabilities. Drawing on years of continuous investment in resource accumulation, platform development and institutional innovation, GF Fund Management is steadily building a modern investment and research system capable of continuously driving organizational evolution and preparing the institution for the future.

(III) Evolution of Product Capabilities:

Building a Closed-Loop Quality Management System Amid Supply-Side Upgrading

Investment products are the primary vehicles through which investment and research capabilities are delivered to clients. As the traditional extensive growth model—relying on distribution advantages and pursuing scale expansion—gradually loses momentum, product capabilities are replacing traffic-driven thinking as a core competitive moat enabling asset managers to navigate market cycles. An institution’s ability to deliver predictable risk-return characteristics and build a solid bridge between professional expertise and client needs will directly determine its resilience and growth potential in the next phase of industry consolidation.

The key to building strong product capabilities lies in two concepts: “controllable quality” and “supply-side upgrading.” This requires asset managers to move beyond the traditional one-way approach to product development and upgrade product capabilities from isolated product design into a two-way value transmission system supported by active management capabilities and deeply connected to client needs. On the one hand, institutions must establish product quality through scientific and highly disciplined full-lifecycle management. On the other, they must continually innovate on the supply side to respond to diversified client needs, ensuring that professional value reaches the underlying substance of those needs. GF Fund Management’s practices provide a representative example of this evolution.

Achieving “controllable quality” requires a refined management framework covering the entire product lifecycle, from initial creation to ongoing management.

Taking a newly launched active equity product at GF Fund Management as an example, before the product is created, the Company first determines its precise positioning based on an assessment of both client-side demand and investment opportunities. Key parameters—including risk-return characteristics, performance benchmark, investment strategy and intended client needs—are clearly defined. Once the product enters its operational stage, in addition to professional management by the fund manager, a dedicated team conducts in-depth assessments of the strategy logic, market environment and risk factors and establishes a disciplined framework for managing deviations. This preserves sufficient flexibility for fund managers to implement their strategies while strictly controlling the risk that portfolio behavior deviates from the risk-return profile represented by the benchmark, thereby supporting performance stability. At the subsequent evaluation stage, guided by the objective of delivering stable long-term performance, the Company focuses on excess-return performance and attribution, clearly defines quality-control responsibilities among relevant investment and research personnel, and regularly conducts portfolio reviews and detailed performance assessments. These analyses provide data-driven support for strategy iteration and product optimization.

Turning to “supply-side upgrading,” effective product supply is never about simply increasing the number of products. It is about responding precisely to industrial trends and genuine client needs based on a deep understanding of both.

In recent years, GF Fund Management has continued to broaden and upgrade its product offering around investment value and client needs. This includes industry and thematic products designed to capture opportunities associated with new quality productive forces; innovation in discretionary-plus-quantitative strategies through the “GF Smart Selection Equity” series; and a comprehensive range of index-based allocation tools covering broad-market indices, sector and thematic indices, strategy indices and bond indices. The Company has also developed flagship overseas product lines to capture opportunities across diverse markets and explored innovative approaches to alternative assets and multi-asset solutions, continuously expanding investors’ allocation boundaries. Today, the Company has established a multi-asset, multi-market and multi-strategy product system capable of providing clients with all-weather investment tools suited to different economic cycles and market environments.

The long-term philosophy underpinning this evolution in product capabilities remains clear: quality control is the foundation, while relevant and effective product supply is at the core; both ultimately serve the principle of putting clients at the center. Only by embedding quality control into the organizational DNA and aligning product supply with genuine client needs can an asset manager sustain its competitiveness through changing market cycles. GF Fund Management has been steadily advancing along this long-term path through continued practice.

(IV) Evolution of Client Services:

A New Paradigm Toward Becoming a Comprehensive Solutions Provider

As an important participant in inclusive finance, the development of the mutual fund industry resembles countless streams converging into an ocean. At its core, the industry has always been guided by the principle of placing investors’ interests first. Within the integrated client value chain spanning “investment and research–products–services,” client services represent a crucial link connecting the institution with investors and are an essential means of delivering on the mission of “creating sustainable and high-quality investment outcomes for clients.”

At the heart of GF Fund Management’s client service transformation is the adoption of a “solutions mindset.” Through the dual drivers of professionalism and customization, the Company is making a fundamental shift from “selling products” to “creating value.” From the perspective of professionalism, investment and research capabilities must reach all the way through to the end-client experience. Rather than merely offering individual products, the Company aims to help clients allocate to suitable products at appropriate times based on market assessments, using professional expertise to improve their overall investment outcomes. From the perspective of customization, client needs serve as the starting point, with the Company integrating capabilities across its organization to deliver holistic solutions. Through supply-side portfolio construction and account-level allocation advice, clients are better positioned to navigate rotations in market styles, supporting the Company’s transformation into a comprehensive investment solutions provider.

Exploring a more advisory-oriented operating model is an important part of this service transformation. Building on its high-quality asset management products, GF Fund Management has strengthened its capabilities in identifying client needs, matching appropriate solutions and guiding investment behavior, helping investors address a broad range of challenges including asset allocation, fund selection and market timing, and thereby completing the investment-outcome service loop. The Company continues to promote systematic investment strategies such as regular investment plans, encouraging investors to build positions at relatively attractive market levels and cultivate long-term holding habits, thereby reducing the impact of behavioral biases on portfolio returns. At the same time, it has developed a comprehensive investment toolkit featuring clearly defined styles and a broad range of product categories, combining detailed product analysis with client profiling to match individualized investment needs.

The upgrading of the service system also requires the dual support of institutional mechanisms and technological empowerment. The Company has comprehensively implemented its “Client Satisfaction Panorama Programme,” conducting end-to-end and in-depth assessments across six core business areas and 23 key service dimensions. Through its Client Experience Centre, GF Fund Management has redesigned critical service scenarios and established a standardized and robust service framework. Building on this foundation, it has developed a closed-loop “Voice of the Customer (VoC)” management mechanism covering the collection of client feedback, analysis and assessment, needs tracking and the rollout of corresponding solutions, enabling client needs and service offerings to be dynamically and precisely aligned.

Digital tools have brought fresh momentum to the service upgrade, allowing professional services to combine efficiency with a more human touch. “AiFa,” a conversational intelligent wealth management assistant pioneered by GF Fund Management within the fund industry, was developed around the philosophy of “always by your side and deeply understanding your needs.” Available 24/7, it provides personalized market interpretations, fund analysis and portfolio diagnostics. By creating a human-AI collaborative service model, AiFa overcomes the time and capacity constraints of traditional human services and brings together service efficiency and personalized engagement. Meanwhile, the “GF Fund Kapok” mini-program provides a full-cycle matrix of content and investment tools. Features such as the “Regular Investment Compass” and “Index Temperature Gauge” assist investment decision-making, while daily, weekly and monthly market insights covering A-shares, fixed income, overseas markets and other asset classes provide precise professional support for the Company’s advisory-oriented service model.

From more than 7,000 “Heart Bridge Journey” offline investor engagement events conducted over seventeen years to digitally empowered online advisory services, GF Fund Management has never stopped evolving its client service capabilities. As of the end of 2025, the Company had served more than 189 million investors in aggregate and generated more than RMB300.3 billion in investment gains for fund holders, demonstrating in practice the long-term value of putting clients at the center.

Ultimately, the fundamental competitiveness of an asset management institution must return to the essence of “creating value for investors.” At this critical stage in the high-quality development of China’s mutual fund industry, GF Fund Management has anchored its direction through strategic evolution, strengthened its foundations through the evolution of its investment and research system, achieved stable value delivery through enhanced product capabilities, and conveyed value and care through the evolution of client services. Together, these efforts align institutional value creation with investors’ sense of investment gains and chart a path of systematic advancement driven by long-termism.