Laws of the People's Republic of China

the China Securities Regulatory Commission, the People's Bank of China

Notice of the China Securities Regulatory Commission and the People's Bank of China about Promulgating the Interim Provisions on the Management of Monetary Market Funds

Zheng Jian Fa [2004] No. 78

The regulatory bureaus of the China Securities Regulatory Commission in all the provinces, autonomous regions, municipalities directly under the Central Government, and the cities specifically designated in the state plan, all the branches, business management departments, central sub-branches of provincial capital cities, and central sub-branches of Shenzhen, Dalian, Qingdao, Ningbo and Xiamen of the People's Bank of China:

For the purpose of regulating the operations of monetary market funds and protecting the lawful rights and interests of the fund investors, China Securities Regulatory Commission and People's Bank of China formulated the Interim Provisions on the Management of Monetary Market Funds. They are hereby promulgated and take into effect as of the date of promulgation.

China Securities Regulatory Commission

People's Bank of China

August 16, 2004

Interim Provisions on the Management of Monetary Market Funds

Article 1

For the purpose of promoting the development of securities investment funds (hereinafter refers to SIF), regulating the raising and operation of monetary market funds and other relevant activities, and protecting the lawful rights and interests of the investors and other relevant parties, the present Provisions are formulated in light of the Securities Investment Funds Law, the Measures Governing the Operations of the Securities Investment Funds, the Provisions Governing the Fund Management Companies' Entry into the Inter-bank Market and other related provisions.

Article 2

The term of "monetary market funds" as referred to in the present Provisions means the funds merely invested into the monetary market instruments.

Any fund, whose name contains "money", "cash", "flowing", "ready money", "short-term bond" or other similar words, shall meet the relevant requirements of the present Provisions.

Article 3

Monetary market fund shall be invested into the financial instruments as follow:

(1)

Cash;

(2)

Fixed-term bank deposits and lump sum deposit slips within one year (including one year);

(3)

Bonds with a residual maturity not more than 397 days (including 397 days);

(4)

Repurchases of bonds with a residual maturity within one year (including one year);

(5)

Central bank bills within one year (including one year); and

(6)

Other monetary market instruments with good liquidity as acknowledged by the China Securities Regulatory Commission (CSRC) and the People's Bank of China (PBC).

Article 4

Any monetary market fund may not be invested in the following financial instruments:

(1)

Stocks;

(2)

Convertible bonds;

(3)

Bonds with a residual maturity more than 397 days;

(4)

Enterprise bonds with a credit rating below AAA; or

(5)

Other financial instruments prohibited by the CSRC and the PBC.

Article 5

The investment combination of monetary market fund shall comply with the following provisions:

(1)

The investments ratio of the short-term enterprise bond issued by the same company shall be within 10% of the net value of the assets of the fund;

(2)

The ratio of the deposits in the same commercial bank with the fund custodian qualifications shall be within 30 % of the net value of the assets of the fund; that in the same commercial bank without the fund custodian qualifications shall be within 5 % of the net value of the assets of the fund;

(3)

The ratio of the balance of the repurchase of bonds from the national inter-bank bond market shall not exceed 40 % of the net value of the assets of the fund; and

(4)

Other ratio limits provided by the CSRC and the PBC.

Article 6

The average residual maturity of the investment combination of monetary market fund shall not exceed 180 days.

Article 7

Excluding the circumstances as listed below, the residual maturity of a bond in the investment combination of a monetary market fund means the residual days from the computation date to the maturity date of the bond:

(1)

With regard to a bond with changeable interest rate or floating interest rate on the basis of the market interest rates, if the interest adjustment frequency is not more than one year, the residual maturity is equal to the remaining period from the computation date to the next interest adjustment date;

(2)

The residual maturity of a repurchase agreement is equal to the remaining period from the computation date to the date for dealing of the basic bonds as stipulated in the said agreement; and

(3)

Other circumstances otherwise as provided for by the CBRC.

Article 8

The monetary market fund shall disclose the average residual maturity of the investment combination of SIF in the part of investment combination of its annual report, semi-annual report and quarterly report.

Article 9

With regard to a monetary market fund for which price-offering is made every day on the basis of par value, in the fund contract, the way of distribution of yields may be stipulated as re-investment of bonuses, and the distribution of yields shall be conducted each day.

Article 10

As to monetary market fund for which no purchase or redemption fee is charged, not more than 0.25 % of the fund may be drawn from the assets thereof as exclusive provision for serving the sellers and holders of this fund. The annual report of the fund shall make special explanation about the expenses under this provision.

Article 11

A fund management company shall state it clearly in its prospectuses and publicity materials, that an investor's purchasing monetary market fund isn't equivalent to depositing money into a bank or financial institution that accepts deposits, and that it can't promise that the fund will make profits, nor does it promise the minimum yields thereof.

Article 12

A monetary market fund shall adopt stable and proper accounting and estimation approaches so as to ensure that the net value of the assets of the fund can fairly reflect the value of the fund. The accounting approach shall be stipulated in the fund contract, and its prospective consequences to the fluctuation of the net value of the fund shall be disclosed in the prospectuses.

In case the fund estimation approach as mentioned in the preceding paragraph can't fairly reflect the value of the fund under a special circumstance, the monetary market fund may adopt other estimation approaches. Such special circumstances and the estimation approaches thereof shall be stipulated in the fund contract.

The occurrence of the circumstance as mentioned in the preceding paragraph shall be disclosed through the financial accounting statement in the annual report or semi-annual report of the monetary market fund.

Article 13

The activities such as raising, purchase, redemption, investment, information disclosure and publicity of a monetary market fund shall not only abide by the present Provisions, but also comply with the Securities Investment Fund Law, the Measures Governing the Operation of Securities Investment Funds, the Measures Governing the Sale of Securities Investment Funds, the Measures Governing the Information Disclosure of Securities Investment Funds, the Provisions Governing the Fund Management Companies' Entry into the Inter-bank Market and other pertinent provisions.

Article 14

When conducting the activities of the dealings and settlements in the national inter-bank market, monetary market fund shall abide by the provisions governing the national inter-bank market of the People's Bank of China and shall be subject to the supervision and dynamic inspection of the People's Bank of China.

Article 15

The right to interpret the present Provisions shall reside in the China Securities Regulatory Commission and the People's Bank of China.

Article 16

The present Provisions shall be implemented as of the date of promulgation.