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In view of the Sub-Fund’s investment policy, the dividends distributed and capital gains realised by shareholders on the disposal of the Sub-Fund’s shares are to be considered, in the Company’s opinion, as falling in the scope of the Directive.

I. OBJECTIVE AND INVESTMENT POLICY

Objective

The management objective is to outperform the Euro-Aggregate Treasury – 3-5 Years index over a 3 to 5-year investment period. Investment policy

The Sub-Fund will invest at least two third of its total assets in bonds, issued or guaranteed by an OECD member State, in euros. A maximum of 25% of the Sub-Fund’s total assets may be invested in convertible bonds.

The Sub-Fund will invest on an ancillary basis, in negotiable debt instruments in euros, with fixed, variable or revisable rates, or indexed bonds. The Sub-Fund may not invest more that one third of its total assets in monetary papers.

The Sub-Fund may also invest on an ancillary basis, i.e. to the extent of not more than one third of its total assets, in bonds issued or guaranteed by an OECD member State in currencies other than the euro.

These holdings could be hedged for exchange risks against the euro.

The average maturity of the assets in this Sub-Fund will not exceed 5 years and the residual maturity of each asset 10 years.

II. SUB-FUND’S RISK PROFILE

The investments of the Sub-Fund are subject to normal market fluctuation and other risks inherent in investing in securities and there can be no assurance that capital appreciation or distribution payments would occur. The value of investments and income from them, and therefore the value of the Shares of the Sub-Fund, can and do go down as well as up and an investor may not get back the amount he invests.

The investor must be aware of that the Sub – Fund can be subject to the credit risks.

III. PROFILE OF THE TYPICAL INVESTOR

The Sub-Fund is suitable for conservative or less experienced investors including those who are not interested in or informed about capital market topics, but who see investment fund as a convenient “saving” product. It is also suitable for or more experienced investors wishing to attain defined investment objectives within medium to long term. Experience of capital market products is not required. The investors must be able to accept moderate temporary losses, thus, this Sub-Fund is suitable to the investors who can afford to set aside the capital for at least 2 years.

IV. CLASSES OF SHARES AVAILABLE AND CURRENCIES

For this Sub-Fund, Shares of Class A and Class D are available to investors.

Class of shares

Euro Government Bonds Mid Term Class A Euro Government Bonds Mid Term Class D

Currency EUR EUR

ISIN code LU 0112657076 LU 0112658983

The Company’s Board of Directors may decide to temporarily close subscriptions to Shares in Class A and Class D as well as those subscriptions arising from the conversion of Shares of another Class or another Sub-Fund.

V. VALUATION CURRENCY

The Net Asset Value will be calculated and subscriptions and redemptions will be made in the currency of the Class concerned. In the financial reports, the net value of each Class of Shares and the Sub-Fund's consolidated financial statements shall be expressed in €.

VI. SUBSCRIPTION FEE

The shares will be issued at a price corresponding to the net asset value per share plus a sales charge of a maximum of 4.5% of the net asset value per share as follows: a maximum of 4% will be paid to approved distributors and 0.5% maximum will be paid to the investment manager of the Sub-Fund.

VII. REDEMPTION FEE None

VIII. CONVERSION FEE

A conversion fee of a maximum of 0.5% of the net asset value of the Sub-Fund redeemed paid to the approved distributors will be charged.

IX. MANAGEMENT AND ADMINISTRATION FEE

The administration and management fee is set at 0.6 % per annum for Class A and 0.9 % per annum for Class D, payable quarterly and calculated on the average net asset value of the Sub-Fund for the quarter in question.

X. PORTFOLIO TURNOVER RATE

The portfolio turnover rate as at 30 June 2007 amounts to -331%

XI. TOTAL EXPENSE RATIO

The Total Expense Ratio as of 30 June 2007, including all costs to be borne by the Sub-Fund with the exception of transaction costs included in the cost of the securities, is, for the class A, 1.25% of the average net assets of the Sub-Fund. The class D is not available to investors.

XII. INVESTMENT MANAGER

The Company has appointed RFS GESTION 47, rue du Faubourg Saint-Honoré F- 75008 Paris, as Investment Manager of the Sub-Fund.

XIII. VALUATION DAY

Each bank working day in Luxembourg.

XIII. SUBSCRIPTION

The deadline for the receipt of subscription requests is no later than 12.30 p.m. (Luxembourg time) one banking day prior to the applicable Valuation Day.

The amount subscribed is payable in €, and must reach the Company within the three Luxembourg banking days of the Valuation Day applicable to the said subscriptions.

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XIV. REDEMPTION

The deadline for the receipt of redemption requests is no later than 12.30 p.m. (Luxembourg time) one banking day prior to the Valuation Day.

Payment of the proceeds of redeemed shares will be made within the three (3) bank working days following the Valuation Day.

Payment will be made in the Sub-Fund currency or in any other currency, in accordance with instructions indicated in the request for redemption, in which case exchange fees will be borne by the shareholder.

XV. SUBSCRIPTION TAX (TAXE D’ABONNEMENT)

The Company is subject in Luxembourg to a tax of 0.05% per annum of its net asset value. This tax is payable quarterly on the basis of the net assets of the Company calculated at the end of the relevant quarter. However, this tax is not due for the part of the Company’s net assets invested in other undertakings for collective investment in Luxembourg.

EDMOND DE ROTHSCHILD FUND – EURO GOVERNMENT BONDS LONG TERM*