Laws of the People's Republic of China

China Securities Regulatory Commission

Circular of China Securities Regulatory Commission on Relevant Issues Concerning the Investment of Money Market Funds in Short-term Financing Bonds

All fund management companies and fund custodian banks,

With a view to further regulating the investment operation of money market funds and promoting the sound development of money market funds, and in accordance with the Securities Investment Funds Law, the Measures for the Administration of the Operation of Securities Investment Funds, the Interim Provisions on the Administration of Money Market Funds and other relevant laws and regulations, the Circular on relevant issues concerning the investment of monetary market funds in short- term financing bonds is given as follows:

1.

The credit rating of the short-term financing bonds as invested by money market funds shall not be lower than the following standards:

(1)

The short-term credit rating being Grade A-1 or the equivalent to Grade A-1 as assessed by a domestic credit rating institution;

(2)

For any short-term financing securities that have been exempted from credit rating according to the relevant provisions, the credit rating and the follow-up rating of the relevant issuers for the latest 3 years shall meet any of the following conditions:

(a)

The long-term credit rating being Grade AAA or the equivalent to Grade AAA as assessed by a domestic credit rating institution;

(b)

The credit rating as assessed by an international credit rating institution being one-level lower than the China's sovereign credit rating (e.g. where the China's sovereign credit rating is Grade A, the corresponding credit rating at one level lower is Grade BBB+).

Where an issuer has both domestic credit rating and international credit rating, the domestic credit rating shall prevail.

2.

The proportion of investment of money market funds in short-term financing bonds and the short-term enterprise bonds issued by the same company may not exceed 10% of the net value of fund assets in total. Where any fund investment fails to meet the said proportion due to the factors that go beyond the control of a fund manager, such as market fluctuation and change of fund size, the relevant fund manager shall complete the adjustment within 10 trading days.

3.

During the period when any short-term financing bonds are held by the money market funds, where the credit rating downgrades and fails to meet the relevant investment requirements, the said short-term bonds shall all be reduced within 20 trading days as of the release of the relevant rating report.

4.

The present Circular shall go into effect as of the day of promulgation.

China Securities Regulatory Commission

September 30, 2005