To all fund management companies, securities companies and custodian banks:

In the aim of implementing the Trial Measures for the Administration of Overseas Securities Investments of Qualified Domestic Institutional Investors (hereinafter referred to as the “Trial Measures”) and properly handle  overseas securities investments of qualified domestic institutional investors (hereinafter referred to as “QDIIs”), the relevant issues on the trial measures are hereby circulated as follows.

I. Documents as specified in Article 8 of the Trial Measures are detailed as below:
(I) Documents on the assets under management at the end of latest quarter, as issued by the domestic certified public accountants;
(II) Basic information on the educational and working experience as well as the professional qualifications and titles of the personnel with previous experience in the administration of overseas investments;
(III) Major systems including risk control, compliance control and investment management;

II. Documents as specified in Article 14 of the Trial Measures are detailed as below:
(I) Business licenses and business certificates (copies) verified and issued by the national or local governments and supervisory institutions in the places where the overseas investment consultants (hereinafter referred to as the investment consultants) are located;
(II) Documents on the assets under management at the end of previous year, as issued by the overseas certified public accountants;
(III) Articles of association of the companies or partners of investment consultants;
(IV) Major systems of the investment consultants including the risk control, compliance control and investment management;
(V) Information on whether the investment consultants have received any major punishments for last five years by the regulatory institutions and whether they’re being investigated by the judicial departments and regulatory institutions;
(VI) Investment consultants’ audited financial statements for the most recent year;
(VII) Information on the domestic institutions and business activities of investment consultants and their associated parties;
In case the preceding articles are written in foreign languages, the Chinese versions or abstracts shall be available as well.

III. Documents as specified in Article 19 of the Trial Measures are detailed as below:
(I) Financial business certificates (copies);
(II) Business licenses (copies);
(III) Documents on actual capital or documents on the assets under custody at the end of the previous year as issued by the overseas certified public accountants;
(IV) Information on the staffing and asset security conditions of custody departments;
(V) Major management systems for the custody business;
(VI) Information on anything such as major punishments by the national or local regulatory institutions and similar ongoing investigations by the judicial departments and regulatory institutions for last three years;
In the event the preceding articles are written in a foreign language, the Chinese versions or abstracts shall be available as well.

IV. Fund-raising:
(I) Fund-raising application materials:
When the QDIIs apply for the fund-raising and collective schemes, they shall submit the application materials in compliance with the Law of Securities Investment Fund, the Administrative Measures for the Operation of Securities Investment Fund and the Trial Measures for the Implementation of Customer Assets Management Business of Securities Companies, and also present the following documents (one original and one transcript);
1. Letters of risk disclosure for the investors;
2. Educational materials of the investors, including but not limited to:
(1) Basic information on the fund and collective schemes;
(2) Introduction to major risks confronted by the investors which purchase the funds and collective schemes to make overseas investments;
(3) Basic information on the invested national or regional markets;
(4) Basic information on the financial products or instruments for future investments;
(5) Compilation codes and selection standards for the comparison benchmarks of fund investment performances;
The educational materials for investors shall be written in simple and understandable Chinese,  shall not have any content promoting one certain type of fund products or collective schemes and the QDIIs or their products or services. However, they may quote certain products or services as the examples and the actual quotations that will not have such effects as the promotion of companies, products or services.
3. The QDIIs shall also provide the following documents in the event they entrust the investment consultants:
(1) Basic Information Form on the Investment Consultant (Attachment 1);
(2) Draft agreements signed by the QDIIs and the investment consultants;
(3) Documents as specified by Article 2 herein;
4. The custodians shall also provide the following documents in the event they entrust the overseas custodians:
(1) Draft agreements signed by the custodians and overseas custodians;
(2) Documents as specified by Article 3 herein;
In the event the preceding articles are written in foreign languages, the Chinese versions or abstracts shall be available as well.
(II) Names of the funds and collective schemes shall conform to the following requirements:
1. Concise, clear and understandable language;
2. Consistency with the investment strategy and scope as well as the invested countries or regions of the funds and collective schemes;
(III) The comparison benchmarks of the fund investment performances and their selections shall meet the following conditions:
1. The performance comparison benchmarks shall be specified at the beginning of the performance assessment period;
2. The performance comparison benchmarks shall conform to the fund investment styles and methods.
3. The data on performance comparison benchmarks may be acquired with reasonable  frequency;
4. The components and weights of comparison benchmarks shall be explicitly defined;
5. Some knowledge about the current securities involved in the performance comparison benchmarks and the research specialty;
6. Accepts the applicability of performance comparison benchmarks and properly describing the difference between the active management and the performance comparison benchmarks;
7. Replicability of the performance comparison benchmark;
(IV) IPO of the funds and collective schemes shall comply with the following requirements:
1. RMB, USD or other major foreign currencies may be used as the currency of price in the fund-raising process;
2. The raised funds shall have a minimum sum of RMB 0.2 billion or the equivalent in another currency and the collective scheme shall have a minimum sum of RMB 0.1 billion or the equivalent in another currency;
3. Open-end funds shall have a minimum of 200 shareholders; close-end funds shall have a minimum of 1000 shareholders; collective schemes shall have a minimum of 2 holders.
4. If the financing process is conducted through par values, the QDIIs may determine the sums of par values according to the product characteristics.

V. Investment operations:
(I) The funds and collective schemes may be invested in the following financial products or instruments unless specified otherwise by the China Securities Regulatory Commission (hereinafter referred to as the CSRC).
1. Bank deposits, transferable deposit receipts, bank acceptance bills, bank bills, commercial bills, repurchase agreements, short-term government bonds and other money market instruments;
2. Government bonds, corporate bonds, convertible bond, mortgage-backed securities, asset-backed securities and  securities issued by the international financial organizations (Attachment 2) approved by the CSRC;
3. Ordinary shares, preference shares, global depository receipts, American depository receipts and real estate trust receipts listed and traded at the securities markets of the countries or regions (Attachment 3) which have signed the memorandums of understanding on mutual supervisory cooperation;
4. Public funds registered with the securities regulatory institutions of the countries or regions which have signed the memorandums of understanding on mutual supervisory cooperation;
5. Structured investment products in connection with objects like fixed incomes, equities, credits, commodity indexes and funds;
6. Forward contracts and swaps, and warrants, options, futures and other financial derivatives listed and traded at the overseas stock exchanges approved by the CSRC (Attachment 4);
The banks as referred to in the preceding item shall include the overseas branches of Chinese-funded commercial banks or the overseas banks which have reached for the latest accounting year the rating standards of credit rating institutions as approved  by the CSRC (Attachment 5);
(II) The funds and collective schemes shall have none of the following conducts unless stipulated otherwise by the CSRC.
1. Purchasing real properties;
2. Purchasing mortgaged real-estate;
3. Purchasing precious metals or receipts for precious metals;
4. Purchasing physical commodities;
5. Cash borrowing other than for temporary uses such as redemptions payable and transaction clearing; the ratio of cash borrowing shall be no more than 10% of net assets for funds and collective schemes;
6. Purchasing securities through the raised funds, but except for investments in financial derivatives;
7. Participating in short-sale transactions without the basic assets;
8. Conducting securities underwriting business;
9. Other conducts as prohibited by the CSRC.
(III) The QDIIs and investment consultants shall have none of the following conducts:
1. Treating different customers or investment portfolios unfairly;
2. Disclosing customer information to a third party unless stipulated otherwise by relevant laws and regulations;
3. Other conducts prohibited by the CSRC.
(IV) Restrictions of investment proportion:
1. Deposits held with the same bank by a single fund or collective scheme shall not exceed 20% of the net value of the fund or the  collective scheme. This restriction shall not apply to deposits in the custody accounts of funds and collective schemes.
2. The market value of securities held with the same institution (except government and international financial institutions) by a single fund and collective scheme shall not exceed 10% of the net value of fund and collective scheme. This restriction shall not apply to the index funds.
3. Where securities assets are listed and traded at the securities markets of countries or regions other than those which have signed the memorandums of understanding on mutual supervisory cooperation with the CSRC, the amount of said securities assets held by a single fund and collective scheme shall not exceed 10% of the net value of a fund or collective scheme. To be exact,  securities assets with the securities market of one country or region shall not exceed 3% of said net value.
4. The funds and collective schemes shall not be intended for purchasing securities in order to control or affect the securities issuers and their managements. All the funds and collective schemes controlled by the same QDII shall not claim more than 10% of total securities with voting rights. This restriction shall not apply to index funds.
With respect to the restriction of investment proportion in the preceding item, it is necessary to calculate the same institution’s total shares listed at the domestic and overseas stock markets and the basic securities represented by global depository receipts and American depository receipts and to assume the transfer of equity warrants available.
5. The market value of illiquid assets held by a single fund or collective scheme shall not exceed 10% of the net value of the fund or collective scheme.
Illiquid assets as referred to in the preceding item means securities with limited circulation as specified in the related laws, fund contracts and collective scheme contracts, as well as other assets as confirmed by the CSRC.
6. The market value of overseas funds held by a single fund or collective scheme shall not exceed 10% of the net value of the fund or collective scheme. This restriction shall not apply to money market funds.
7. In the event that all the funds and collective schemes controlled by the same QDII hold one overseas fund, the overseas fund shall not account for more than 20% of the total amount.
If the restrictions on investment proportion are violated by a fund or collective scheme, the proper off-load measures shall be taken within 30 working days so as to comply with said restrictions.
The investment proportions may be adjusted by the CSRC based on  development in  the securities market or in the case of specific funds and collective schemes.
(V) Funds of funds:
1. The investment proportion of each overseas fund shall be as much as 20% of net assets for funds of funds (hereinafter referred to as FOFs). If an FOF is intended for investment in an overseas umbrella fund, the umbrella fund concerned shall be deemed as one fund.
2. FOFs shall not be intended for investment in the following funds:
(1) Other FOFs;
(2) Feeder funds;
(3) Sub-funds of the umbrella fund for investment in the two funds as stated above;
3. A collective scheme for fund investment shall be implemented in regard to the aforesaid provisions.
(VI) Investment in financial derivatives:
Funds and collective schemes for  investment in financial derivatives shall be limited only to the hedging strategy and effective management of the investment portfolio, and shall not be intended as speculations or enlarged transactions. In addition, the following provisions shall be strictly abided by.
1. The entire exposure of a single fund or collective plan shall not exceed 100% of the net value of the fund or collective scheme.
2. The total, including the initial guarantee deposits paid for the investment by  a single fund or collective scheme in the futures, the premiums paid or collected during the option investment, and the initial expenses paid for investment in over-the-counter derivatives, shall not exceed 10% of the net value of a fund or a collective scheme.
3. In the event that funds and collective schemes are invested in forward contracts and swaps and other over-the-counter financial derivatives, the investments shall comply with the following requirements.
(1) All the counterparties in the transactions (except the Chinese-funded commercial banks) shall claim a credit rating no lower than that of credit rating institutions approved by the CSRC.
(2) The transaction counterparties shall evaluate the transactions at least for each working day, and the transactions of funds and collective schemes can be terminated in the form of fair value at any time.
(3) The mark-to-market exposure for any transaction counterparties shall not exceed 20% of the net value of the fund or collective scheme.
4. The QDIIs shall include in the product fund-raising applications submitted to the CSRC the risk management process, hedging portfolio and effective management strategies to be used when the funds and collective schemes become invested in the derivatives.
5. For each fund and collective scheme, the QDIIs shall submit to the CSRC the annual report on derivative positions and risk analysis within 60 working days following the end of the accounting year.
6. The funds and collective schemes shall not be directly invested in derivatives related to physical commodities.
(VII) Funds and collective schemes managed by QDIIs can participate in securities lending transactions and shall conform to the following provisions.
1. All the counterparties in the transactions (except the Chinese-funded commercial banks) shall be rated by credit rating institutions approved by the CSRC.
2. The mark-to-market system shall be adopted for adjustment so as to guarantee that the market values of collaterals shall not be lower than 102% of the market values of lent securities.
3. The debits shall pay within the trading period all the share dividends, interests and bonuses of lent securities for the funds and collective schemes. In case of the debits’ breach of the contracts, the funds and collective schemes have the right to reserve and dispose of the collaterals in line with the agreements and relevant laws to meet the compensation demands.
4. The collaterals may be the following financial instruments or types unless specified otherwise by the CSRC.
(1) Cash;
(2) Certificates of deposit;
(3) Commercial bills;
(4) Government bonds;
(5) Irrevocable letters of credit issued by Chinese-funded commercial banks or overseas financial institutions rated by the credit rating institutions approved by the CSRC (except the transaction counterparties or other associated parties);
5. Funds and collective plans have the right to terminate at any time securities lending transactions and demand within an acceptable period the return of any one or all of the lent securities according to  regular market practices.
6. QDIIs shall assume corresponding liabilities for any losses when funds and collective schemes participate in the securities lending transactions.
(VIII) Funds and collective schemes managed by QDIIs may participate in the repurchase transactions and reverse repurchase transactions according to regular market practices, as well as  comply with the following provisions.
1. All counterparties in repurchase transactions (except the Chinese-funded commercial banks) shall be rated by credit rating institutions approved by the CSRC.
2. As far as the participation in repurchase transactions is concerned, the mark-to-market system shall be adopted for adjusting the sales incomes so as to guarantee that the cash shall not be lower than 102% of the market values of sold securities.  In the event of buyer breach of contract, the funds and collective schemes have the right to reserve or dispose of the sales incomes in line with the agreements and relevant laws to meet the compensation demands.
3. Buyers shall pay within the period of repurchase transactions all the share dividends, interests and bonuses of sold securities for funds and collective schemes.
4. As far as participation in reverse repurchase transactions is concerned, the mark-to-market system shall be adopted for adjusting the purchased securities so as to guarantee that the market values of purchased securities shall not be lower than 102% of payments in cash.  In the event of seller breach of contract, funds and collective schemes have the right to reserve or dispose of the purchased securities in line with the agreements and relevant laws to meet the compensation demands.
5. QDIIs shall assume the corresponding liabilities for any losses incurred as the funds and collective schemes participate in securities repurchase and reverse repurchase transactions.
(IX) When it comes to the participation of funds and collective schemes in securities lending transactions and securities repurchase and reverse repurchase transactions, the total market value of all the lent securities to be returned or all the sold securities to be repurchased shall not exceed 50% of the total assets of funds and collective schemes.
As the proportional restraints are calculated, the total assets of funds and collective schemes shall not contain collateral and cash held by the funds and collective schemes due to their participation in the securities lending transactions and the securities repurchase and reverse repurchase transactions.
(X) If funds and collective schemes participate in the securities lending transactions and the securities repurchase and reverse repurchase transactions, QDIIs shall establish the acceptable internal control systems and operating procedures and perform the archives management according to related regulations.

VI: Calculation of costs and net values:
(I) FOFs shall have rational management expense ratios and sales expense arrangements. If investment consultants are entrusted, the expenses thus incurred shall be independently listed in the fund assets.
(II) Net asset values of funds and collective schemes shall be calculated and disclosed on a weekly basis. If funds and collective schemes are to be invested in derivatives, said net asset values shall be calculated and disclosed for each working day.
(III) The net asset values of funds and collective schemes shall be disclosed within two working days following the valuation date.
(IV)  The net asset values of funds and collective schemes shall be independently or jointly calculated and disclosed in RMB or USD and other major foreign currencies.
(V) The most recent calculation of net asset values shall indicate each purchase and sale made by the funds and collective schemes.
(VI) The valuation of securities with limited circulation shall be conducted in accordance with international accounting standards.
(VII) Derivatives valuation shall be conducted according to international accounting standards.
(VIII) QDIIs shall properly determine and explicitly state in the prospectuses and fund contracts the selection time for asset prices of open-end funds.
(IX) The specific calculation methods for the net values and subscription and redemption prices of open-end funds and collective schemes shall be stated in the contracts and prospectuses of funds and collective schemes, and the digits after the decimal points shall be determined.
(X) QDIIs shall pay redemption fees within ten working days following the acceptance of effective redemption applications from holders unless specified otherwise by the CSRC.
(XI) Fund contracts may define the proportions of fund-holding cash or government bonds, and the special types as approved by the CSRC shall not be subjected to the proportional restraints imposed according to Article 28 of the Administrative Measures for the Operation of Securities Investment Fund.
(XII) The fund contracts of open-end funds and closed-end funds shall specify the times and proportions for distribution of fund income each year. The distribution of fund income may not be restricted by Article 35 of the Administrative Measures for the Operation of Securities Investment Fund unless stipulated otherwise by the CSRC.

VII: Information disclosure:
Fund information disclosure shall strictly comply with the related regulations and the following requirements.
(I) Chinese and English versions may both be available, and the former shall prevail if there’s any discrepancy between the two versions.
(II) Net values and relevant information may be calculated and disclosed in RMB, USD and other major foreign currencies. As far as the inter-currency transfers are concerned, it is required to disclose the source of information on exchange rates and maintain consistency. Any changes and relevant causes shall be disclosed as well. The exchange rate of RMB to the main foreign currencies shall be the middle price of the RMB exchange rate as publicized by the People’s Bank of China or its authorized institutions on the last valuation date at the end of reporting period.
(III) If  investment consultants are entrusted, QDIIs shall disclose in prospectuses the information on investment consultants, including but not limited to the names, registration addresses, office addresses, legal representatives, dates of establishment, assets under management for the latest accounting year, major persons to contact and their contact telephones, faxes, e-mails, educational and working backgrounds of major personnel in charge, and their professional qualification and titles.
(IV) In the event the major leaders of QDIIs and investment consultants undergo  some changes during the period of fund operation and the QDIIs believe there may be  significant impact on the fund investments, they shall issue timely notices and describe the situation in the updated prospectuses.
(V) If overseas custodians are entrusted, the custodians shall publish in the prospectuses the information on overseas custodians, including but not limited to the names, registration addresses, office addresses, legal representatives, dates of establishment, actual capital for the latest accounting year, assets under custody and credit rating.
(VI) If the funds are invested in financial derivatives, the derivative types to be invested and their basic characteristics, the planned hedging portfolio and effective management strategies as well as the methods and frequencies involved should be described in the fund contracts and prospectuses.
(VII) If the funds are invested in overseas funds, it is required to disclose the rate arrangements between the funds and the overseas funds.
(VIII) If the funds participate in securities lending transactions or securities repurchase and reverse repurchase transactions, it is imperative to disclose the related information in the related fund contracts and prospectuses in accordance with the related regulations.
(IX) Funds shall disclose in the prospectuses the following risks of their investments in foreign markets: overseas market risk, government regulation risk, political risk, fluidity risk, exchange rate risk, derivatives risk, operating risk, accounting risk, tax risk, transaction and settlement risk, legal risk, risk of financial model, risks of securities lending/repurchase/reverse repurchase transactions, risks from shares with small market values as well as shares in emerging economies or issued by hi-tech companies, credit risk, interest rate risk, primary product risk and block trading risk. The disclosed contents shall include the definitions, features and possible results of the above risks.
(X) The funds shall disclose the guidelines, procedures and file management for proxy voting in accordance with the related regulations.
(XI) The funds shall calculate and describe the investment performances in accordance with the global investment performance standards (GIPS).
(XII) Information disclosure by collective schemes shall be executed in reference to the above regulations.

VIII. Investment consultants shall comply with the related laws, regulations and rules as they conduct relevant business in China.

IX. Sub-funds of umbrella funds shall conform to the Trial Measures and the Circular.

X. The Circular shall take effect on July 5, 2007.