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Disclaimer The English version is for reference only, and the Chinese version shall prevail in case of inconsistency. ChinaAMC shall not be liable for any loss caused as a result of the direct or indirect use, reproduction and retransmission of the information contained in the English version.
PROSPECTUS ABF CHINA BOND INDEX FUND
CHINA ASSET MANAGEMENT CO., LTD.
as Fund Manager and BANK OF COMMUNICATIONS CO., LTD.
as Fund Custodian
THIS ENGLISH VERSION OF THIS PROSPECTUS IS FOR REFERENCE ONLY.
THE CHINESE VERSION SHALL PREVAIL IN CASE OF INCONSISTENCY.
IMPORTANT INFORMATION
ABF China Bond Index Fund (“the Fund”) has been approved by the China Securities Regulatory Commission (“CSRC”) on March 14th 2011 in its approval document Zheng Jian Xu Ke [2011] No. 392. The Fund Manager hereby warrants that the contents of this Prospectus are true, accurate and complete. This Prospectus has been approved by the CSRC; nevertheless, in giving such approval, the CSRC implies no judgment in substance or guarantee for the value and income of the Fund, nor does it imply that the investment in the Fund is risk-free. This Fund is intended to invest in the securities markets. The NAV of the Fund will fluctuate due to factors such as fluctuations in the relevant securities markets. The investors are entitled to the income of the Fund as well as undertake corresponding investment risks according to their unit holdings in the Fund respectively. The risks relating to this Fund include the following: systematic risks arising from political, economic, social and other influences on the prices of securities; non-systematic risks of individual securities; liquidity risk arising from Mass Redemption by Fund Unit Holders; risks pertaining to the Fund. The Fund is a bond fund, with risks higher than a money market fund but lower than a hybrid fund or a stock fund, which is a low-risk and low-income fund. Before investing in this Fund, investors are advised to read through the Prospectus and the Fund Contract to obtain a good knowledge of the Fund’s characteristics regarding risks and returns and product features before investing, consider personal risk-bearing capacity thoroughly, estimate the market rationally, and make an investment decision cautiously.
The Fund’s past performance does not necessarily indicate how the Fund will perform in the future.
The Fund Manager shall manage the Fund Assets with good faith and due diligence, but does not guarantee any profits or minimum returns on the Fund. The Fund Manager shall abide by the Fund Contract and operate the Fund for the best interests of the Fund Unit Holders. In managing the Fund Assets, the Fund Manager shall fulfill its duties consciously and fulfill its obligations with honesty, good faith, prudence and efficiency.
ABF China Bond Index Fund Prospectus
TABLE OF CONTENTS
1. PREFACE ...... 1 2. DEFINITIONS ...... 2 3. FUND MANAGER...... 6 4. FUND CUSTODIAN ...... 14 5. RELEVANT SERVICE AGENCIES ...... 19 6. OFFERING OF FUND ...... 46 7. ENFORCEMENT OF FUND CONTRACT ...... 51 8. SUBSCRIPTION, REDEMPTION AND EXCHANGE OF FUND UNITS ...... 52 9. OTHER SERVICES INCLUDING CUSTODY TRANSFER AND NON-TRADING TRANSFER OF FUND ...... 61 10. FUND INVESTMENT ...... 62 11. FUND ASSETS ...... 68 12. VALUATION OF FUND ASSETS ...... 69 13. FUND INCOME AND DISTRIBUTION ...... 72 14. EXPENSES AND TAXES ...... 73 15. ACCOUNTING AND AUDITING ...... 76 16. INFORMATION DISCLOSURE...... 76 17. RISK DISCLOSURE ...... 80 18. MODIFICATION AND TERMINATION OF FUND CONTRACT AND LIQUIDATION OF FUND ASSETS ...... 84 19. SUMMARY OF THE FUND CONTRACT ...... 86 20. SUMMARY OF THE FUND CUSTODY AGREEMENT ...... 86 21. SERVICES TO FUND UNIT HOLDERS ...... 86 22. ADDITIONAL INFORMATION DISCLOSURE ...... 89 23. PROSPECTUS PLACEMENT AND REFERENCE ...... 90 24. DOCUMENTS AVAILABLE FOR INSPECTION ...... 90 ANNEX 1: SUMMARY OF THE FUND CONTRACT ...... 92 ANNEX 2: SUMMARY OF THE CUSTODY AGREEMENT ...... 109 APPENDIX: DEFINITIONS TO FACILITATE FOREIGN INVESTORS’ UNDERSTANDINGS ...... 121
ABF China Bond Index Fund Prospectus
1. PREFACE
The ABF China Bond Index Fund Prospectus (hereinafter referred to as the “Prospectus”), is drafted pursuant to the Law of the People’s Republic of China on Securities Investment Fund (hereinafter referred to as the “Law on Fund”), the Administrative Rules on Sales of Securities Investment Fund (hereinafter referred to as the “Rules on Sales”), the Administrative Rules on Operations of Securities Investment Fund (hereinafter referred to as the “Rules on Operations”), the Administrative Rules on Information Disclosure of Securities Investment Fund (hereinafter referred to as the “Rules on Information Disclosure”), other relevant regulations, and the ABF China Bond Index Fund Contract (hereinafter referred to as the “Fund Contract”).
The Fund Manager hereby warrants that there is no false or misleading statement or material omission in this Prospectus, and it shall be fully responsible for the truthfulness, accuracy, and completeness of the information contained herein. The Fund shall be offered based on the information in this Prospectus. The Fund Manager does not entrust or authorize any person to provide any information that is not disclosed in this Prospectus or to make any explanation or clarification of this Prospectus.
This Prospectus is drafted pursuant to the Fund Contract and approved by the CSRC. The Fund Contract is the legal document stipulating the rights and obligations of the Parties to Fund Contract, which shall prevail over any other documents and statements that are relevant to the Fund with regard to the rights and obligations of the parties. Investors become Fund Unit Holders and a Party to Fund Contract from the date when they acquire the Fund Units pursuant to the Fund Contract. Their holding of the Fund Units indicates their acknowledgement and acceptance of the Fund Contract, and they shall enjoy rights and bear obligations pursuant to the Law on Fund, the Fund Contract and other applicable regulations. Investors should carefully review the Fund Contract to have a knowledge of the rights and obligations of the Fund Unit Holders.
1 ABF China Bond Index Fund Prospectus
2. DEFINITIONS
Unless otherwise specified herein, the following terms or abbreviations in this Prospectus shall have the meanings given below: Fund or the Fund ABF China Bond Index Fund; Fund Contract or the Fund ABF China Bond Index Fund Contract and any effective Contract amendments or supplements thereof; Custody Agreement ABF China Bond Index Fund Custody Agreement and any effective amendments or supplements thereof; Prospectus ABF China Bond Index Fund Prospectus and its periodic updates made by the Fund Manager; Offering Announcement Offering Announcement of Fund Units of ABF China Bond Index Fund; CSRC China Securities Regulatory Commission; CBRC China Banking Regulatory Commission; Law on Fund The Law of the People’s Republic of China on Securities Investment Fund, adopted at the 5th session of the Standing Committee of the 10th National People’s Congress of the People’s Republic of China on October 28th, 2003, which went into effect as of June 1st, 2004, as may be amended from time to time; Rules on Operations The Administrative Rules on Operations of Securities Investment Fund promulgated on June 29th, 2004 by the CSRC, which went into effect as of July 1st, 2004, as may be amended from time to time; Rules on Sales The Administrative Rules on Sales of Securities Investment Fund promulgated on June 25th, 2004 by the CSRC, which went into effect as of July 1st, 2004, as may be amended from time to time; Rules on Information The Administrative Rules on Information Disclosure of Securities Disclosure Investment Fund promulgated on June 8th 2004 by the CSRC, which went into effect as of July 1st 2004, as they may be amended from time to time; Securities Law The Securities Law of the People's Republic of China, adopted at the 6th session of the Standing Committee of the 9th National People’s Congress of the People’s Republic of China on December 29th, 1998, as may be amended from time to time;
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Party to Fund Contract, The Fund Manager, the Fund Custodian and the Fund Unit Holders, Parties to Fund Contract who are bound by the Fund Contract and enjoy the rights and bear the obligations under the Fund Contract; Fund Manager China Asset Management Co., Ltd. (ChinaAMC); Fund Custodian Bank of Communications Co., Ltd.; Fund Unit Holder(s) An investor who acquires and holds the Fund Units according to the applicable laws and regulations or the Fund Contract; Registration and Clearing The registration, deposit, transfer, clearing and settlement of the Services Fund Units, including management of the Investors’ fund accounts, registration, settlement and clearing of the Fund Units, confirmation of sale of Fund Units, confirmation of sale of fund, distribution of dividends on behalf of the Fund, creation and maintenance of the register of the Fund Unit Holders; Registration and Clearing The institution that provides the Registration and Clearing Service Institution for the Fund. The Registration and Clearing Institution for the Fund is ChinaAMC or the institution that is entrusted by ChinaAMC to provide Registration and Clearing Service; Investor(s) Individual investors, institutional investors, Qualified Foreign Institutional Investors and other investors as approved by laws and regulations or the CSRC to purchase securities investment funds; Individual Investor(s) A natural person who can invest in securities investment funds according to the applicable laws and regulations of the People’s Republic of China; Institutional Investor(s) An enterprise legal person, public affairs legal person, social group or other organizations that are lawfully registered or approved by competent government departments and exist in the People’s Republic of China and can invest in securities investment funds according to the applicable laws and regulations; Qualified Foreign A foreign institutional investor that meets the requirements of the Institutional Investor(s) or Administrative Rules on Investment in Securities in China by QFII Qualified Foreign Institutional Investors and other relevant laws and regulations and is approved by the CSRC to invest in the Chinese securities market and allotted an investment quota by the State Administration of Foreign Exchange (SAFE); Important Connected The issuers of securities who are under the control of the controlling
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Parties shareholder(s) of the Fund Manager or the Fund Custodian; Fund Offering Period The period commencing from the date of offering of the Fund Units, which shall not exceed three months; Effective Date of Fund The date on which the Fund Contract meets the legal requirements Contract for funds filing and the Fund Manager obtains a written confirmation of its filing with the CSRC from the CSRC; Duration of Fund The indefinite period from the Effective Date of Fund Contract to the date when the Fund Contract is terminated; Initial Subscription An Investor’s application to purchase certain Fund Units pursuant to the Fund Contract during the Fund Offering Period; Subscription An Investor’s application to purchase certain Fund Units during the Duration of Fund after the Effective Date of Fund Contract, pursuant to the Fund Contract; Redeem, Redemption A Fund Unit Holder’s application to sell certain Fund Units to the Fund Manager during the Duration of Fund after the Effective Date of Fund Contract pursuant to the Fund Contract; Exchange A Fund Unit Holder’s application to exchange his units of certain fund (including the Fund) into units of another fund (including the Fund) managed by the Fund Manager and registered and cleared by the same registration and clearing institution, pursuant to the terms and conditions set forth in the Fund Contract and the requirements of the Fund Manager; Sales Institutions The Direct Sales Institution and the Sales Agencies; Direct Sales Institution China Asset Management Co., Ltd.; Sales Agency, Sales An institution that is authorized by the Fund Manager to sell the Agencies Fund as an agent and is qualified by the CSRC to sell funds; Sales Outlets The direct sales centers of the Fund Manager and the sales outlets of the Sales Agencies; Fund Account An account at the Registration and Clearing Institution opened for an Investor, for the purpose of recording the balance and changes of the Fund Units that are held by such Fund Unit Holder and maintained by the Registration and Clearing Institution; Trading Account An account at a Sales Institution opened for an Investor, for the purpose of recording the changes and balance of the Investor’s Fund Units of the open-ended Fund traded through the Sales Institution;
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Continuous Sales and The charge payable out of the Fund Assets to support the sales and Service Charge marketing of the Fund as well as the provision of certain services to the Fund Unit Holders; Unit Class(s) Different classes of the Fund Units that differ in charges for Initial Subscription and Subscription and Continuous Sales and Service Charge, as well as trading code. The NAV per unit and the accumulated NAV per unit of each class are calculated and disclosed separately; Benchmark Index The iBoxx® ABF China Index provided and published by the Markit Indices Limited and its updates, if any, or any other bond market index as replacement as needed; Constituent Bonds The bonds that are included into the Benchmark Index; Yua n RMB Yua n; Business Day A day on which both the Shanghai Stock Exchange (“SSE”) and the Shenzhen Stock Exchange (“SZSE”) are open for trading; Open Day A Business Day on which the Fund is open for Initial Subscription, Subscription, Redemption and other operations; Day T An Open Day on which a Sales Institution accepts an Investor’s valid application for Initial Subscription, Subscription, Redemption or other operations at prescribed open hours; Day T+n The nth Business Day after Day T (excluding Day T), where “n” is a natural number; Fund Income Income from interest of bonds, capital gains, interest of bank deposits and other lawful incomes accruing from investment of the Fund and savings of costs and expenses of the management of the Fund Assets; Total Asset Value of the The total value of all the securities and notes, principal and interest Fund of the bank deposits, accrued interest of bonds, receivables from Subscription, deposited margins and other investment proceeds owned by the Fund; NAV of the Fund The Total Asset Value of the Fund less the liabilities of the Fund; NAV per unit The net asset value per unit of each class of the Fund Units, calculated by dividing the net asset value of each class of the Fund Units on the calculation day by the total number of outstanding units of each class of the Fund Units on the same day; Valuation of the Fund Estimate of the value of the assets and liabilities of the Fund to
5 ABF China Bond Index Fund Prospectus
Assets determine the NAV of the Fund and the NAV pe r unit; Designated Media The newspapers and internet websites designated by the CSRC for information disclosure; laws and regulations The laws, administrative regulations, judicial interpretations, local rules and regulations, departmental rules and other regulatory documents of the People’s Republic of China, as amended and supplemented from time to time; Business Rules The Business Rules on Open-ended Funds of China Asset Management Co., Ltd. to standardize the registration and clearing of the open-ended securities investment funds under the management of the Fund Manager, which shall be followed by the Fund Manager and Fund Investors; Force Majeure Events and factors that cannot be foreseen, overcome or avoided, including but not limited to flood, earthquake and other natural disasters, wars, epidemic diseases, chaos, fires, government forfeiture, confiscation, change of laws, power failure interruptions or other emergencies, and unusual suspension or discontinuation of trading on securities exchanges.
3. FUND MANAGER
3.1 Summary of Fund Manager Name: China Asset Management Co., Ltd. Domicile: Section A, Tianzhu Airport Industrial Zone, Shunyi District, Beijing Office Address: 3/F Tower B, Tongtai Building, No. 33 Finance Street, Xicheng District, Beijing Date of Incorporation: April 9th, 1998 Legal Representative: Fan Yonghong Contact Person: Cui Yanwei Service Telephone: 400-818-6666 Fax: (8610) 63136700 The registered capital of China Asset Management Co., Ltd, is 238 million Yuan and its ownership structure is as follows: Shareholder Shareholding Percentage CITIC Securities Co., Ltd. 100% Total 100%
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3.2 Officers 3.2.1 Information relating to the Directors, Supervisors, Managers and other Senior Management Personnel of the Fund Manager Mr. Wang Dongming, Chairman of the Board, Senior Economist. Mr. Wang has a master’s degree. Mr. Wang is Chairman of CITIC Securities Co. Ltd., Director and Assistant General Manager of CITIC Group, Director of CITIC Holdings Ltd., Director of CITIC International Financial Holdings Ltd., Director of CITIC Capital Markets Holding Ltd. and Director of CITIC Securities International Co., Ltd. Mr. Wang was Vice General Manager, General Manager and Director of CITIC Securities Co. Ltd., Vice General Manager of Beijing Huayuan Economy Development Company, Associate Department Manager of Security Company of Scotia Bank, Vice General Manager of Sales Department of China Securities Co., Ltd. and Vice President of China Southern Securities Ltd. Mr. Fan Yonghong, Director, General Manager, Ph.D. Mr. Fan was Assistant President of China Securities Co., Ltd., Business Director of North China Securities Co., Ltd., General Manager of Beijing Dongsi Office of China Securities Co., Ltd., and officer of the headquarter of China Construction Bank. Mr. Wang Lianzhou, Independent Director, retired. Mr. Wang has a bachelor’s degree. Mr. Wang is one of the leading organizers and participants of the drafting of China’s three major civil and commercial laws: the Securities Law, the Trust Law and the Law on Fund. Mr. Wang worked in the Finance & Economic Committee of the National People’s Congress and the Banknote Printing & Minting Administration of the People’s Bank of China. Mr. Long Tao, Independent Director. Mr. Long has a master’s degree. Mr. Long is Chairman of the Board of Haiwen Investment Consulting Co., Ltd., and Associate Professor of the Accounting Department of China Central University of Finance and Economics. Mr. Long worked in KPMG New York responsible for auditing and financial analysis. Mr. Tu Jian, Independent Director. Mr. Tu has a bachelor’s degree. Mr. Tu is Party Secretary General of Chairman of the Pacific Security Co. Ltd. Mr. Tu served the Asset Supervision and Management Committee under China Council for the Promotion of International Trade as Director of its Asset Management Center. Mr. Teng Tianming, Executive Associate General Manager. Mr. Teng has a master’s degree. Mr. Teng was Assistant General Manager and General Manager of the Institution Financial Management Department of China Asset Management Co. Ltd. Mr. Wang Yawei, Associate General Manager. Mr. Wang has a master’s degree. Mr. Wang is Portfolio Manager of ChinaAMC Large Cap Select Fund, Portfolio Manager of ChinaAMC
7 ABF China Bond Index Fund Prospectus
Strategy Select Fund. Mr. Zhang Houqi, Associate General Manager, Ph.D. Mr. Zhang was Assistant General Manager of the company. Ms. Fang Ruizhi, Inspector General. Ms. Fang has a master’s degree. Ms. Fang worked in the China Finance Press. Mr. Zhou Weiming, Supervisor. Mr. Zhou has a master’s degree. Mr. Zhou is Senior Researcher, Manager of the Market Research Department and Deputy General Manager of the Research and Development Center of Southwest Securities Co., Ltd. Mr. Zhou was a researcher of the Research and Development Department and Manager of Shanghai Branch of Jiangsu United Trust and Investment Co., Ltd. Mr. Zhang Mingxi, Supervisor. Mr. Zhang has a bachelor’s degree. Mr. Zhang is a non-practicing member of the Chinese Institute of CPA. Mr. Zhang was Executive General Manager and CFO of the Investment Banking Department of the Beijing Securities Co. Ltd., Standing Vice General Manager of the M&A Department, Deputy General Manager of the Planning &Finance Department and Deputy General Manager of the Investment Banking Department of China Securities Co. Ltd. and auditor of China Auditing Firm. Ms. Qu Ying, Supervisor. Ms. Qu has a master’s degree. Ms. Qu is a non-practicing member of the Chinese Institute of CPA. Ms. Qu is Assistant Director of the Auditing Department of China Asset Management Co., Ltd. Ms. Qu worked in Ernst & Young Hua Ming Accounting Firm and Taikang Life Insurance Co., Ltd. 3.2.2 Portfolio Manager of the Fund Mr. Dong Yuanxing has a PH.D in Finance, Leonard N. Stern School of Business of New York University. He joined China Asset Management Co., Ltd. in 2009. Prior to that, he was a bond dealer of Barclays Capital (New York). 3.2.3 Members of the Fixed-Income Investment Decision-Making Committee Mr. Yang Aibin, General Director of the Fixed Income Investment Department, China Asset Management Co., Ltd. Mr. Zhang Houqi, Associate General Manager, China Asset Management Co. Ltd. Mr. Han Huiyong, Associate Director of the Fixed Income Investment Department, Portfolio Manager of ChinaAMC Bond Fund, Portfolio Manager of ChinaAMC Hope Bond Fund, China Asset Management Co., Ltd. Mr. Tang Jun, Associate General Manager of the Fixed Income Investment Department, China Asset Management Co., Ltd., Investment Manager. Mr. Liu Ludan, Associate General Manager of the Fixed Income Investment Department, China Asset Management Co., Ltd., Investment Manager.
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3.2.4 The Persons listed above are not close relatives to each other.
3.3 Duties and Responsibilities of the Fund Manager 3.3.1 To offer funds pursuant to the relevant laws and regulations. To handle or authorize other agencies recognized by the securities regulatory commission under the State Council to handle the sales, Subscription, Redemption and registration of the Fund Units; 3.3.2 To u ndertake the filing procedure for the Fund; 3.3.3 To manage and keep separately accounts of the assets of the various funds under its management, and to make securities investment; 3.3.4 To make a plan for the distribution of the Fund Income in accordance with the Fund Contract and to promptly distribute income to the Fund Unit Holders; 3.3.5 To c arry out accounting and prepare financial and accounting reports for the Fund; 3.3.6 To p repare interim and annual reports of the Fund; 3.3.7 To calculate and announce the NAV of the Fund, and determine the Subscription and Redemption prices of Fund Units; 3.3.8 To d isclose the information relating to the management of the fund’s property; 3.3.9 To c onvene Fund Unit Holders’ meetings; 3.3.10 To maintain records, accounting books, statements and other relevant data regarding the management of the Fund’s property; 3.3.11 To exercise the right to institute legal actions or other legal proceedings on behalf of the Fund Unit Holders in the name of the Fund Manager; and 3.3.12 To observe all other duties and responsibilities as required by the securities regulatory commission under the State Council.
3.4 Warrants of Fund Manager 3.4.1 The Fund Manager shall have the full authority to manage the investment of the Fund, pursuant to the Fund Contract and in line with the investment objective, strategies and restrictions stated in this Prospectus. 3.4.2 The Fund Manager shall not commit any activities violating the Securities Law of the People’s Republic of China, and shall establish developed internal control policies and take effective measures to prevent breaches of the Securities Law of the People’s Republic of China. 3.4.3 The Fund Manager shall not commit any activities violating the Law on Fund, and shall establish developed internal control policies and take effective measures to ensure that Fund’s property will not be used in the following investments and activities:
9 ABF China Bond Index Fund Prospectus
(1) To be provided as loans or guarantee to third parties; (2) To be invested with unlimited liabilities; (3) To be used to Subscription or sell units of other funds, except as otherwise stipulated by the State Council; (4) To be contributed as capital of the Fund Manager or the Fund Custodian, or to be used to purchase or sell the stocks or bonds issued by the Fund Manager or the Fund Custodian; (5) To be used to purchase or sell securities issued by or underwritten within the underwriting period by controlling shareholders of the Fund Manager or the Fund Custodian or by companies which have conflict of interest with the Fund Manager or the Fund Custodian; (6) To be used for insider trading, manipulation of securities price, or other securities dealing misconducts; and (7) Other activities prohibited by the securities regulatory commission under the State Council pursuant to the relevant laws and administrative regulations. 3.4.4 The Fund Manager shall enhance staff management, strengthen professional integrity, urge staff to observe the relevant laws, regulations and industry norms, and urge staff to conform to the principles of good faith and due diligence, without committing the following: (1) Mixing the Fund Manager’s own assets or third party’s assets with the Fund Assets in investment in securities; (2) Treating different managed funds’ assets unequally; (3) Utilizing the Fund’s property to obtain benefits for a third party other than the Fund Unit Holders; (4) Illegal promise of income or assumption of losses of the Fund Unit Holders; or (5) Other activities prohibited by the securities regulatory commission under the State Council pursuant to the relevant laws and administrative regulations. 3.4.5 The Portfolio Manager warrants that he shall (1) Seek, with prudence, to maximize the benefits for the Fund Unit Holders pursuant to relevant laws and regulations and the Fund Contract. (2) Not make improper benefits for himself, parties that he acts for or represents, his employer or any other third party by taking advantage of his position. (3) Not disclose any confidential information regarding securities or funds known during incumbency, or any unannounced information including portfolios of Fund investment or Fund investment plans.
3.5 Internal Control System of the Fund Manager
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The Fund Manager has developed an integrated internal control system in accordance with the principles of completeness, effectiveness, independence, check and balance, firewalls, and cost-benefit. This internal control system is comprised of a series of business management policies and corresponding business operations and control procedures, which cover control environment, risk assessment, operation control, information communication, internal auditing, etc. 3.5.1 Control Environment Good control environment includes desirable corporate governance, effective supervision and regulation, proper organization structure and a strong control culture. (1) The company has built up a desirable corporate governance structure, and was the first in the industry to introduce the roles of independent directors. It has three independent directors at present. Under the Board of Directors are the nomination committee, the remuneration committee, and the audit committee, among which the audit committee is responsible for the evaluation and improvement of the company’s internal control system. The management team of the company has set up committees such as the Investment Decision-Making Committee and the Risk Management Committee. (2) The company’s departments have clearly defined duties and authorities and they may cooperate with each other and at the same time perform check and balance between departments so as to form a proper organization structure. (3) The company persists in prudent management and standardized operations, encourages the development of employees’ professional ethics, enacts and promulgates the Guidance of Professional Moral Integrity Practices, and carries out continuous education for such purpose. 3.5.2 Risk Assessment All levels and business departments of the company, after identifying their objectives respectively, will analyze the adverse factors (the risks) that affect the achievement of the objectives. In regards to uncontrollable risks, the purpose of risk assessment is to decide whether or not to take the risk or to reduce relevant business. In respect of controllable risks, the purpose of risk assessment is to analyze how to develop mechanisms to control the risk level. Risk assessment also includes re-assessment of the risks arising from daily activities and improvement of the corresponding systems, as well as developing risk assessment and risk control system for new business. 3.5.3 Operation Control The company has developed strict control systems over investment, accounting, technical systems, human resources and other major functions. In respect of business management, the company has developed scientific, logical and standardized business operating process
11 ABF China Bond Index Fund Prospectus and requires complete record keeping as well as examination and double-checking of the records. The company has defined and reasonable responsibilities for different functions and conflicting duties and positions are separated so as to provide check and balance. (1) Investment Control Systems (a) Separation of investment decision-making from implementation. The investment Decision-Making Committee is responsible for developing investment principles and determining the asset allocation. For the investment of bond funds, the Investment Decision-Making Committee shall be in charge of making policies regarding the duration and composition of the fund portfolios. The portfolio manager shall, within the scope decided by the Investment Decision-Making Committee, establish and implement the investment strategies, make a specific choice of securities, and develop and adjust the portfolios and give investment orders, which will then be implemented by dealers in the dealing management department. (b) Control of investment decision-making power. If the investment in a single security exceeds certain ratio, the portfolio manager shall report in written form to the General Director of Investment or Investment Decision-Making Committee (depending on the investment ratio) to obtain its approval before execution. (c) Warning control. The dealing management department will give a prior warning on problematic dealing orders and before the investment ratios of assets in the portfolios reach the limits set by the laws and regulations or the Fund Manager. When discovering such orders, the dealing management department will, in a timely manner, warn the Investment Director and the supervisory and auditing departments. The portfolio manager shall then report to the Investment Director and the supervisory and auditing departments, which shall then determine whether there are any violations and whether or not to continue the deal. The investment ratio prior warning system functions by setting prior warning ratio limits for different investments in the dealing system. The system will give a warning automatically whenever an investment ratio reaches a certain level close to the limit, and the dealing management department will report the situation to the portfolio manager immediately. (d) Restriction control. The company will formulate a list of restrictions related to securities investment pursuant to the laws and regulations and misconducts prohibited by the company, including restricted securities and restricted activities. The portfolio manager shall comply with such restrictions when constructing portfolios; the dealing management department shall monitor them. The dealing system can automatically give notices and impose restrictions when preset requirements are triggered.
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(e) Consistency control. Cross checking shall be carried out to ensure the consistency between investment dealing orders made by the portfolio manager, dealing orders input into the trading system by the dealers as well as the Fund’s accounting of concluded deals. (f) Multi-layers of monitoring and feedback. The dealing management department will carry out the monitoring at the first level (including the aforementioned warning control and restrictions control) on investment activities. The dealing management department itself is monitored by three bodies including the Investment Director, the Portfolio Manager and the auditing department. The Investment Director monitors the proper implementation of dealing orders and the effective implementation of the monitoring functions of the dealing management department, while the Portfolio Manager monitors the proper implementation of the dealing orders. The auditing department will monitor problematic deals. (2) Accounting Control Systems The company has (a) Established accounting policies and the corresponding operation and control rules to ensure that the accounting will follow these rules; (b) Established an internal cross-check system in the accounting function and a cross-checking system with the custodian of the Fund, pursuant to the principle of check and balance; (c) Developed a cash position management system in order to prevent overdraft in cash position management of the Fund’s accounting; (d) Developed complete archive and record keeping and financial accounting transition systems. (3) Technical System Control Systems The company has developed comprehensive systems for the secure functioning of the hardware, data transmission and network security management, maintenance of software and hardware, data backup, management of operation of information technicians, crisis management and in other aspects, to ensure the secure and stable running of technical systems. (4) Human Resources Management Systems The company has established scientific personnel management systems including recruitment and dismissal, training and education, evaluation and remuneration, to ensure the effective management of human resources. (5) Supervisory Systems
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The company has established an independent legal and supervision department to take charge of the legal affairs and supervisory work of the company. Supervisory policies include investigation procedures and disciplines on misconducts, as well as supervision of employees’ conducts. (6) Anti-money Laundering Systems The company has established an anti-money laundering group to handle the anti-money laundering work, and assigned the special personnel to combat money laundering and financing of terrorism. Besides, all the departments concerned have assigned the anti-money laundering post and staff. Having improved the anti-money laundering systems, the company has also formulated the Internal Control System on Anti-money Laundering and other business operation procedures to guarantee the lawful and effective performance of anti-money laundering obligations. 3.5.4 Information and Communication The company has established internal office automation (OA) information systems and business reporting systems. Through effective communication platforms, the company can ensure that employees and managers at all levels receive the information related to their responsibilities, and that information can be sent to and handled by the appropriate person. All the functions of the company are covered by its OA systems, and different persons are given different authorizations depending upon their roles within the company and their levels of seniority. 3.5.5 Internal Auditing The company has set up an auditing department independent of other functions. The internal auditors shall regularly check and evaluate the appropriateness, completeness and effectiveness of the company’s internal control systems, and shall supervise the implementation of various internal control rules and provide corresponding advice for improvement. 3.5.6 The Fund Manager’s Representations on Internal Control (1) The company is aware that establishing, implementing and maintaining internal control are the responsibilities of the Board of Directors and the management team of the company. (2) The above disclosure regarding internal control is true and accurate. (3) The company undertakes to develop and refine its internal control systems pursuant to the changes of the market environment and the developments of the company.
4. FUND CUSTODIAN
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4.1 Summary of Fund Custodian Legal Chinese Name: 交通银行股份有限公司 Legal English Name: BANK OF COMMUNICATIONS CO., LTD (abbreviated as “BOCOM”) Legal Representative: Hu Huaibang Domicile: No. 188, Yincheng Middle Road, Pudong New District, Shanghai Office Address: No. 188, Yincheng Middle Road, Pudong New District, Shanghai Post Code: 200336 Date of Registration: March 30th, 1987 Registered Capital: 56.259 billion Yuan Funds Custody Qualification Approval Document: CSRC Zheng Jian Ji Zi [1998] No. 25 Contact Person: Zhang Yongdong Telephone: (8621) 32169999 Founded in 1908, Bank of Communications (BOCOM) is one of four oldest banks in China and one of the banks that issued bank notes in the modern history of China. In June 2005, BOCOM was listed in Hong Kong and in May 2007, BOCOM was listed on the Shanghai Stock Exchange. BOCOM is the only commercial bank global partner of the 2010 Shanghai Expo. Among the top 1000 global banks for the year 2009 released by the British magazine Bankers, BOCOM ranked No.49 by Tier 1 Capital, and ranked No.56 by total assets. As of the end of 2010, BOCOM's total assets exceeded 3.95 trillion Yuan, and the net profits of that year reached 39.042 billion Yua n. BOCOM has an Asset Custody Department. It has employees with long experience in funds, securities, and banking business, who are qualified to engage in funds business and have qualifications in economics, accounting, engineering, law or other middle to high level professional titles. With high-level education and diverse specialties, such employees have extensive professional expertise and high level professionalism. They are honest, diligent, active and creative.
4.2 Senior Officers Mr. Niu Ximing, President of BOCOM, Senior Economist. Mr. Niu has a master’s degree in economics, Harbin Institute of Technology. Mr. Niu has been Vice Chairman and President of BOCOM since December 2009. Mr. Wang Bin, Vice President of BOCOM in charge of assets custody, senior economist. Mr. Wang received a doctor’s degree in economics from Nankai University. Mr. Wang was Vice President of the Beijing Branch of BOCOM, President of the Tianjin Branch of BOCOM, and President of the Beijing Branch of BOCOM. Mr. Wang is Vice President and member of the Chinese Communist Party (CCP) committee of BOCOM and Secretary of CCP of the Beijing branch of BOCOM since January 2006.
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Ms. Gu Nasha, General Manager of Asset Custody Department of BOCOM, Economist. Ms. Gu received college education. Ms. Gu was a senior clerk of the Department of Research and Development, Deputy Director of the Agency Business Section of the Trust Department, Deputy Director of the Planning Section of the Securities Investment Funds Custody Department, Director of the Internal Control Inspection Section of the Securities Investment Funds Custody Department of BOCOM. She served as Assistant Manager of the Investment Funds Custody Department of BOCOM since January 2001, as Deputy General Manager of the Assets Custody Department since May 2002, and as General Manager of the Assets Custody Department since December 2007.
4.3 Operations of Funds Custody Business
By the end of March 2011, BOCOM had served as the custodian of 52 securities investment funds, including Bosera Cash Income Fund, Bosera Emerging Growth Stocks Fund, Great Wall Jiufu
Stocks Fund (LOF), Fuguo Hanxing Close-Ended Fund, Fuguo Tianyi Value Stocks Fund,
Everbright Pramerica Middle- to Small-Cap Stock Fund, Guotai Jinying Growth Stocks Fund,
Haifutong Select Hybrid Fund, Huaan Anshun Close-Ended Fund, Huaan Baoli Allocation Hybrid
Fund, Huaan Strategy Select Stocks Fund, Huaan Innovation Stocks Fund, ChinaAMC Bluechip
Hybrid Fund (LOF), ChinaAMC Bond Fund, HSBC Jintrust Lifecycle 2016 Fund, HSBC Jintrust
Longteng Stocks Fund, HSBC Jintrust Dynamic Strategy Hybrid Fund, HSBC Jintrust Stable
Growth Bond Fund, HSBC Jintrust Large-cap Stock Fund, HSBC Jintrust Low-carbon Pioneer
Stock Fund, HSBC Jintrust Consumption Dividend Stock Fund, Jianxin Advantage Power
Close-Ended Fund, Gold Eagle Dividend Value Hybrid Fund, Gold Eagle Middle- to Small-Cap
Select Hybrid, JP Morgan Money Market Fund, Agricultural Bank Perpetual Growth Bond Fund,
Agricultural Bank Industry Growth Stocks Fund, Agricultural Bank Balanced Double Income
Hybrid Fund, Penghua Puhui Close-Ended Fund, Penghua Putian Income Hybrid Fund, Penghua
Putian Bond Fund, Penghua China 50 Hybrid Fund, Penghua Credit Income Growth Bond Fund,
Rongtong Industry Prosperity Hybrid Fund, Manulife Teda Growth Stocks, Manulife Teda Risks
Budget Hybrid Fund, Manulife Teda Stable Stocks Fund, Manulife Teda Lifecycle Stocks Fund,
Tianye Innovation Pioneer Stocks Fund, Tianye Core Growth Stocks Fund (LOF), Wanjia Utilities
Industry Stocks Fund (LOF), E Funds Kehui Flexible Allocation Hybrid Fund, E Funds Kerui
Close-Ended Fund, E Funds SSE 50 Index Fund, E Funds Kexun Stocks Fund, Galaxy Yinfu
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Money Market Fund, Yinhua Money Market Fund and Zhonghai Excellence Growth Hybrid,
AEGON-Industrial Stable Growth Bond Fund, Huafu CSI 100 Index, IBC/CCS Double Income
Bond Fund and Chang Xin Quantitative Pioneer Stock Fund. In addition, BOCOM also acts as custodian for the National Social Security Fund, insurance assets, corporate annuity, QFII, QDII, trust scheme, collective investment schemes of securities companies, ABS, industry funds and special account management. The total assets under its custody value nearly 700 billion Yuan.
4.4 Internal Control Systems of Fund Custodian 4.4.1 Objectives of Internal Control To ensure strict compliance with the state laws and regulations, industry regulations and the relevant internal management rules, to strengthen internal control to safeguard the integrity of the business systems and regulations of the asset custody department and the execution of the systems, to effectively supervise and manage various business risks, to maintain the steady operation of business and to safeguard the legal rights and interest of the fund holders, through analyzing, evaluating and monitoring all kinds of risks. 4.4.2 Principles of Internal Control (1) Principle of Entirety. Internal control covers all functions, sections and employees as well as all operational aspects (including decision-making, implementation, supervision and feedback), and involves self-supervision of all the functional departments and divisions and the risk control by the internal control department. Comprehensive multi-facet risk management and supervision system is established. (2) Principle of Independence. The Assets Custody Department of BOCOM is independently in charge of the custody of the Fund Assets and ensures the Fund Assets are separated from the assets of BOCOM. The Fund Custodian shall establish separate accounts, implement independent accounting management and keep separate books for different funds. (3) Principle of Check and Balance. Proper authorization and check and balance principles are implemented in order to ensure that the powers and responsibilities of the different departments/divisions and positions are clear and cross-checked and controlled as a result of structural planning. Effective check and balance measures are taken to eliminate loopholes in internal control. (4) Principle of Efficiency: Scientific and logical internal control decision-making mechanism, implementation mechanism and supervision mechanism are formed at the three levels of positions, divisions and internal control department. Effective internal control
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procedures are established by means of effective control procedures and measures so as to ensure the effective implementation of internal control management. (5) Principle of Effectiveness: Internal control shall correspond to the size of the fund under custody, business scope and the risk control requirement of the business operation, and the cost of the business operations shall be minimized to achieve the best internal control at reasonable control costs. 4.4.3 Mechanisms and Measures of Internal Control BOCOM has established a series of cohesive and efficient management rules on funds custody in accordance with the Law on Fund and the Commercial Bank Law of the People’s Republic of China to ensure the standards, safety and efficiency of funds custody business, which include the following rules and regulations of the Funds Custody Department of BOCOM: The Provisional Management Rules on Custody Business, The Internal Control Rules of the Funds Custody Department, The Management Rules on Project Development of the Funds Custody Department, The Fund Information Disclosure Rules of the Funds Custody Department, The Confidentiality Rules of the Funds Custody Department, The Code of Conduct for Employee in Funds Custody Business, The Management Rules on the Materials of Funds Custody Business, The Supervision Rule of the Funds Custody Department, etc. The BOCOM will continue to develop the above regulations according to market changes and the development of the funds business so as to reasonably separate business operations, establish a completely independent technology system, regularize the business management, set up firewalls for core business areas, and have personnel exclusively in charge of information disclosure. BOCOM undertakes internal risk control dynamically through prior disclosure, ongoing control and audit afterwards in all respects of funds custody business. The bank has appointed an internationally recognized accounting firm to assess its internal control systems in order to safeguard the efficient performance of internal control management. 4.4.4 Miscellaneous BOCOM and its senior managers in charge of its funds custody department have not committed any significant violation of the relevant laws and regulations nor is it subject to any penalty from the People’s Band of China, CSRC, CBRC or other relevant institutions in the past one year. The senior managers in charge of the funds custody department do not hold any post at any fund management companies.
4.5 Methods and Procedures for Supervising the Fund Manager’s Operation of the Fund by the Fund Custodian
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Pursuant to the Law on Fund, the Rules on Operations, and other relevant securities laws and regulations, the Fund Custodian shall supervise and verify that the investment targets of the Fund, the Fund Assets portfolio ratio, the verification of the Fund Assets, the calculation of the NAV of the Fund, the accrual and payment of the remuneration to the Fund Manager and the Fund Custodian, the receipt of subscription money, and the payment of money for redemption and the distribution of the Fund Income comply with the laws and regulations and relevant rules. The Fund Custodian shall promptly inform the Fund Manager of any violations of the Fund Manager of the Law on Fund, the Rules on Operations, other relevant securities laws and regulations or the Fund Contract. The Fund Manager shall timely verify and correct the alleged violations. The Fund Custodian has the right to re-check the alleged violations so as to supervise and urge the Fund Manager’s correction. If the Fund Manager fails to correct its violations in time, the Fund Custodian shall report to the CSRC. The Fund Custodian shall report to the CSRC any significant violation of the relevant laws and regulations, and notify the Fund Manager to correct the violation within certain period.
5. RELEVANT SERVICE AGENCIES
5.1 Sales Institutions 5.1.1 Direct Sales Institution: China Asset Management Co., Ltd. Domicile: Section A, Tianzhu Airport Industrial Zone, Shunyi District, Beijing Office Address: 3/F Tower B, Tongtai Building, No. 33 Finance Street, Xicheng District, Beijing Legal Representative: Fan Yonghong Customer Service Telephone No.: 400-818-6666 Fax: (8610) 63136700 Contact Person: Wu Zhijun Website: www.ChinaAMC.com 5.1.2 Sales Agencies (1) Bank of Communications Co., Ltd Domicile: No. 188, Yincheng Middle Street, Pudong New District, Shanghai Office Address: No. 188 Yincheng Middle Road, Pudong New District, Shanghai Legal Representative: Hu Huaibang Telephone: (8621)58781234 Fax: (8621) 58408842 Contact Person: Cao Rong
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Website: www.bankcomm.com Customer Service Telephone No.: 95559 (2) Industrial and Commercial Bank of China Limited Domicile: No.55 Fuxingmennei Street, Xicheng District, Beijing Office Address: No.55 Fuxingmennei Street, Xicheng District, Beijing Legal Representative: Jiang Jianqing Customer Service Telephone No.: 95588 Fax.: (8610)66107914 Contact Person: Tian Geng Website: www.icbc.com.cn (3) Agricultural Bank of China Limited Domicile: No.69, Jianguomen Nei Street, Dongcheng District, Beijing Office Address: No.69, Jianguomen Nei Street, Dongcheng District, Beijing Legal Representative: Xiang Junbo Customer Service Telephone No.: 95599 Fax.: (8610)85109219 Contact Person: Teng Tao Website: www.abchina.com (4) Bank of China Limited Domicile: No. 1 Fuxingmennei Street, Xicheng District, Beijing Office Address: No. 1 Fuxingmennei Street, Xicheng District, Beijing Legal Representative: Xiao Gang Telephone: (8610)66596688 Fax.: (8610)66593777 Contact Person: Customer Service Center Website: www.boc.cn Customer Service Telephone No.: 95566 (5) China Construction Bank Corporation Domicile: No. 25, Finance Street, Xicheng District, Beijing Office Address: Building 1, No. 1 Naoshikou Street, Xicheng District, Beijing Legal Representative: Guo Shuqing Customer Service Telephone No.: 95533 Fax.: (8610)66275654 Contact Person: Wang Lin Website: www.ccb.com
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(6) Shanghai Pudong Development Bank Co., Ltd. Domicile: No. 500 Pudong Nan Road, Pudong New Area, Shanghai Office Address: No. 12, Zhongshan Dong Yi Road,Shanghai Legal Representative: Ji Xiaohui Telephone: (8621)61618888 Fax.: (8621)63602431 Contact Person: Xu Wei, Tang Jiahui Website: www.spdb.com.cn Customer Service Telephone No.: 95528 (7) Shenzhen Development Bank Co., Ltd. Domicile: SDB Tower, No.5047, Shennandong Rd., Shenzhen, Guangdong Office Address: SDB Tower, No.5047, Shennandong Rd., Shenzhen, Guangdong Legal Representative: Xiao Suining Telephone: (86755)82088888 Fax.: (86755)25841098 Contact Person: Zhang Qing Website: www.sdb.com.cn Customer Service Telephone No.: 95501 (8) China Minsheng Banking Co., Ltd. Domicile: No. 2 Fuxingmennei Street, Xicheng District, Beijing Office Address: 11/F, West Building 3, Jiaoyu Street, Xidan, Xicheng District, Beijing Legal Representative: Dong Wenbiao Customer Service Telephone No.: 95568 Fax.: (8610)57092611 Contact Person: Dong Yunwei Website: www.cmbc.com.cn (9) Postal Savings Bank of China Co., Ltd. Domicile: No. 131 West Xuanwumen Street, Xicheng District, Beijing Office Address: No. 3 Jinrong Street, Xicheng District, Beijing Legal Representative: Liu Andong Telephone: (8610)68858095 Fax.: (8610)68858116 Contact Person: Chen Chunlin Website: www.psbc.com Customer Service Telephone No.: 95580
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(10) Bank of Beijing Co., Ltd. Domicile: 1/F, A17, Jinrong Street, Xicheng District, Beijing Office Address: C17, Jinrong Street, Xicheng District, Beijing Legal Representative: Yan Bingzhu Customer Service Telephone No.: 95526 Fax.: (8610)66226045 Contact Person: Wang Xi Website: www.bankofbeijing.com.cn (11) Hua Xia Bank Co., Ltd. Domicile: Hua Xia Bank Plaza, No. 22 Jianguomennei Street, Dongcheng District, Beijing Office Address: Hua Xia Bank Plaza, No. 22 Jianguomennei Street, Dongcheng District, Beijing Legal Representative: Wu Jian Telephone: (8610)85238670 Fax.: (8610)85238680 Contact Person: Li Hui Website: www.hxb.com.cn Customer Service Telephone No.: 95577 (12) Bank of Shanghai Co., Ltd. Domicile: No. 168 Yincheng Middle Road, Pudong New District, Shanghai Office Address: No. 168 Yincheng Middle Road, Pudong New District, Shanghai Legal Representative: Chen Xin Telephone: (8621)68475888 Fax.: (8621)68476111 Contact Person: Zhang Ping Website: www.bankofshanghai.com Customer Service Telephone No.: (8621)962888 (13) Bank of Ningbo Co., Ltd. Domicile: No. 294 East Zhongshan Road, Jiangdong District, Ningbo Office Address: No. 294 East Zhongshan Road, Jiangdong District, Ningbo Legal Representative: Lu Huayu Customer Service Telephone No.: 96528 Fax.: (8621)63586215 Contact Person: Hu Jixun Website: www.nbcb.com.cn
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(14) Shanghai Rural Commercial Bank Co., Ltd. Domicile: No.981 Pudong Avenue, Shanghai Office Address: 15/F, Zhongrong Jasper Tower, No.8 Middle Yincheng Road, Pudong New District, Shanghai Legal Representative: Hu Pingxi Customer Service Telephone No.: (8621)962999 Fax.: (8621)50105124 Contact Person: Wu Haiping Website: www.shrcb.com (15) Bank of Qingdao Co., Ltd. Domicile: Huapu Plaza. No. 68 Hongkong Middle Road, Southern District, Qingdao Office Address: Huapu Plaza. No. 68 Hongkong Middle Road, Southern District, Qingdao Legal Representative: Zhang Guanghong Customer Service Telephone No.: 96588(Qingdao), 400-669-6588(Nationwide) Fax.: (86532)85709839 Contact Person: Teng Ke Website: www.qdccb.com (16) Huishang Bank Co., Ltd. Domicile: Tower A, Tianhui Building, No.79 Anqing Road, Hefei Office Address: Tower A, Tianhui Building, No.79 Anqing Road, Hefei Legal Representative: Wang Xiaoxin Telephone: (86551)2667819 Fax.: (86551)2667684 Contact Person: Wang Yi Website: www.hsbank.com.cn Customer Service Telephone No.: 400-889-6588(outside Anhui), 96588(Anhui) (17) Bank of Dongguan Co., Ltd. Domicile: No. 193 East Yunhe No.1 Road, Dongguan Office Address: No. 193 East Yunhe No.1 Road, Dongguan Legal Representative: Liao Yulin Telephone: 13316603168 Fax.: 0769-22117730 Contact Person: Hu Yu Website: www.dongguanbank.cn Customer Service Telephone No.: (86769)96228
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(18) Bank of Hangzhou Co., Ltd. Domicile: Plaza of Bank of Hangzhou, No.46 Qingchun Road, Hangzhou Office Address: Plaza of Bank of Hangzhou, No.46 Qingchun Road, Hangzhou Legal Representative: Wu Taipu Telephone: (86571)85108195 Fax.: (86571)85106576 Contact Person: Chen Zhenfeng Website: www.hzbank.com.cn Customer Service Telephone No.: 400-888-8508 (19) Bank of Nanjing Co., Ltd. Domicile: No. 50 Huaihai Road, Baixia District, Nanjing Office Address: No. 50 Huaihai Road, Baixia District, Nanjing Legal Representative: Lin Fu Telephone: (8625)84544021 Fax.: (8625)84544129 Contact Person: Weng Jun Website: www.njcb.com.cn Customer Service Telephone No.: 400-889-6400 (20) Linshang Bank Co., Ltd. Domicile: No. 336 Yimeng Road, Linyi, Shandong Office Address: No. 336 Yimeng Road, Linyi, Shandong Legal Representative: Wang Jiayu Telephone: (86539)8304657 Fax.: (86539)8051127 Contact Person: Kou Tingzhu Website: www.lsbchina.com Customer Service Telephone No.: 400-699-6588 (21) Bank of Wenzhou Co., Ltd. Domicile: Building 1, Huahai Square, Station Avenue, Wenzhou Office Address: Building 1, Huahai Square, Station Avenue, Wenzhou Legal Representative: Xia Ruizhou Telephone: (86577)88990082 Fax.: (86577)88995217 Contact Person: Lin Bo Website: www.wzbank.cn
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Customer Service Telephone No.: 96699(Zhejiang and Shanghai), (86577)96699(other regions) (22) Hankou Bank Co., Ltd. Domicile: Wuhan Merchants Bank Building, No.933 Jianshe Avenue, Jianghan District, Wuhan Office Address: Wuhan Merchants Bank Building, No.933 Jianshe Avenue, Jianghan District, Wuhan Legal Representative: Chen Xinmin Telephone: (8627)82656224 Fax.: (8627)82656236 Contact Person: Luo Yun Website: www.hkbchina.com Customer Service Telephone No.: (8627)96558(local), 400-609-6558 (23) Bank of Luoyang Co., Ltd. Domicile: Intersection of Kaiyuan Avenue and Tongji Street, Luoyang New Area, Luoyang Office Address: Intersection of Kaiyuan Avenue and Tongji Street, Luoyang New Area, Luoyang Legal Representative: Wang Jianfu Telephone: (86379)65921977 Fax.: (86379)65920155 Contact Person: Hu Yanli Website: www.bankofluoyang.com.cn Customer Service Telephone No.: (86379)96699 (24) Urumqi City Commercial Bank Co., Ltd. Domicile: No. 8, North Xinhua Road, Urumqi, Xinjiang Autonomous Region Office Address: No. 8, North Xinhua Road, Urumqi, Xinjiang Autonomous Region Legal Representative: Nong Huichen Telephone: (86991)8824667 Fax.: (86991)8824667 Contact Person: He Jia Website: www.uccb.com.cn Customer Service Telephone No.: (86991)96518 (25) TX Investment Consulting Co., Ltd. Domicile: Room 701, Block B, Focus Place, No. 19 Jinrong Street, Xicheng District, Beijing
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Office Address: 4/F, Block B, Xinsheng Building, No. 5 Jinrong Street, Xicheng District, Beijing Legal Representative: Lin Yixiang Telephone: (8610)66045446 Fax.: (8610)66045500 Contact Person: Pan Hong Website: www.txsec.com Customer Service Telephone No.: (8610)66045678 (26) Guotai Junan Securities Co., Ltd. Domicile: No. 618 Shangcheng Road, Pudong New Area, Shanghai Office Address: No. 168 Middle Yincheng Road, Pudong New Area, Shanghai Legal Representative: Zhu Youyi Telephone: (8621)38676666 Fax.: (8621)38670666 Contact Person: Han Xingyu Website: www.gtja.com Customer Service Telephone No.: (8621)962588, 400-888-8666 (27) China Securities Co., Ltd. Domicile: Building 4, No. 66 Anli Road, Chaoyang District, Beijing Office Address: No. 188 Chaonei Street, Dongcheng District, Beijing Legal Representative: Zhang Youjun Customer Service Telephone No.: 400-888-8108 Fax.: (8610)65182261 Contact Person: Quan Tang Website: www.csc108.com (28) Guosen Securities Co., Ltd. Domicile: 16-26/F, Guoxin Zhengquan Mansion, No. 1012 Middle Hongling Road, Luohu District, Shenzhen Office Address: 9/F, International Trust Building, No. 1010 Middle Hongling Road, Luohu District, Shenzhen Legal Representative: He Ru Telephone: (86755)82130833 Fax.: (86755)82133302 Contact Person: Qi Xiaoyan Website: www.guosen.com.cn
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Customer Service Telephone No.: 95536 (29) China Merchants Securities Co., Ltd. Domicile: 38-45/F, Block A, Jiangsu Building, Yitian Road, Futian District, Shenzhen Office Address: 40/F, Block A, Jiangsu Building, Yitian Road, Futian District, Shenzhen Legal Representative: Gong Shaolin Telephone: (86755)82943666 Fax.: (86755)82943636 Contact Person: Huang Jian Website: www.newone.com.cn Customer Service Telephone No.: 400-888-8111, 95565 (30) Guangfa Securities Co., Ltd. Domicile: 43/F, Daduhui Square, No. 183 North Tianhe Road, Guangzhou, Guangdong Office Address: 18-19/F,36/F,38/F&41-42/F, Daduhui Square, No. 183 North Tianhe Road, Guangzhou, Guangdong Legal Representative: Wang Zhiwei Telephone: (8620)87555888 Fax.: (8620)87555417 Contact Person: Huang Lan Website: www.gf.com.cn Customer Service Telephone No.: 95575 or the telephone number of each business outlets (31) CITIC Securities Co., Ltd. Domicile: Level A, China Merchants Bank Tower, No. 7088 Shennan Road, Shenzhen Office Address: Capital Mansion, No. 6 South Xinyuan Road, Chaoyang District, Beijing Legal Representative: Wang Dongming Telephone: (8610)84588266 Fax.: (8610)84865560 Contact Person: Chen Zhong Website: www.cs.ecitic.com Customer Service Telephone No.: 95558 (32) China Galaxy Securities Co., Ltd. Domicile: Block C, International Enterprise Mansion, No. 35 Jinrong Street, Xicheng District, Beijing Office Address: Block C, International Enterprise Mansion, No. 35 Jinrong Street, Xicheng District, Beijing Legal Representative: Gu Weiguo
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Telephone: (8610)66568430 Fax.: (8610)66568536 Contact Person: Tian Wei Website: www.chinastock.com.cn Customer Service Telephone No.: 400-888-8888 (33) Haitong Securities Co., Ltd. Domicile: No. 98 Middle Huaihai Road, Shanghai Office Address: 10/F, No. 689 Guangdong Road, Huangpu District, Shanghai Legal Representative: Wang Kaiguo Telephone: (8621)23219000 Fax.: (8621)63410456 Contact Person: Jin Yun, Li Xiaoming Website: www.htsec.com Customer Service Telephone No.: (8621)962503, 400-888-8001 or the telephone number of each business outlets (34) United Securities Co., Ltd. Domicile: 5/F (01A, 02, 03, 04), 17A,18A, 24A, 25A, 26A, Hongkong Zhonglv Plaza, Central Square, Cerentral area, Futian District, Shenzhen Office Address: 5/F, 17/F, 18/F, 24/F, 25/F, 26/F, Hongkong Zhonglv Plaza, Central Square, Cerentral area, Futian District, Shenzhen Legal Representative: Ma Zhaoming Telephone: (86755)82493561 Fax.: (86755)82492962 Contact Person: Sheng Zongling Website: www.lhzq.com Customer Service Telephone No.: 95513 (35) Shenyin & Wanguo Securities Co., Ltd. Domicile: No. 171 Changshu Road, Shanghai Office Address: No. 171 Changshu Road, Shanghai Legal Representative: Ding Guorong Telephone: (8621)54033888 Fax.: (8621)54030294 Contact Person: Li Qingyi Website: www.sw2000.com.cn Customer Service Telephone No.: (8621)962505
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(36) Industrial Securities Co., Ltd. Domicile: No. 268 Hudong Road, Fuzhou, Fujian Office Address: 21/F, Building 1, Wudaokou Square, No. 1199, Minsheng Road, Pudong District, Shanghai Legal Representative: Lan Rong Telephone: (8621)38565785 Fax.: (8621)38565955 Contact Person: Xie Gaode Website: www.xyzq.com.cn Customer Service Telephone No.: (8621)68419393-1098 (37) Changjiang Securities Co., Ltd. Domicile: Changjiang Security Building, No. T8 Xinhua Road, Jianghan District, Wuhan Office Address: Changjiang Security Building, No. T8Xinhua Road, Jianghan District, Wuhan Legal Representative: Hu Yunzhao Telephone: (8627)65799999 Fax.: (8627)85481100 Contact Person: Li Liang Website: www.95579.com Customer Service Telephone No.: 95579, 400-888-8999 (38) Essence Securities Co., Ltd. Domicile: A02-28/F&35/F, Anlian Mansion, No. 4018 Jintian Road, Futian District, Shenzhen Office Address: A02-28/F&35/F, Anlian Mansion, No. 4018 Jintian Road, Futian District, Shenzhen Legal Representative: Niu Guanxing Telephone: (86755)82558305 Fax.: (86755)82558355 Contact Person: Chen Jianhong Website: www.essence.com.cn Customer Service Telephone No.: 400-800-1001 (39) Southwest Securities Company Ltd. Domicile: 22-25/F, Block A, Hejing International Building, No. 2 Linjiang Branch Road, Yuzhong District, Chongqing
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Office Address: 22-25/F, Block A, Hejing International Building, No. 2 Linjiang Branch Road, Yuzhong District, Chongqing Legal Representative: Wang Zhulin Customer Service Telephone No.: (8623)63786397 Fax.: (8623)63786312 Contact Person: Yang Zhuoying Website: www.swsc.com.cn (40) CITIC-Kington Securities Co., Ltd. Domicile: Block A, Wankaitingyuan Business Building, No. 11 South Zhonghe Road, Hangzhou, Zhejiang Office Address: Block A, Wankaitingyuan Business Building, No. 11 South Zhonghe Road, Hangzhou, Zhejiang Legal Representative: Liu Jun Telephone: (86571)85783715 Fax.: (86571)85783771 Contact Person: Wang Qin Website: www.bigsun.com.cn Customer Service Telephone No.: (86571)96598 (41) Xiangcai Securities Co., Ltd. Domicile: 12/F, Zhongshan International Tower, No. 63 Middle Huangxin Road, Changsha, Hunan Office Address: 12/F, Zhongshan International Tower, No. 63 Middle Huangxin Road, Changsha, Hunan Legal Representative: Lin Junbo Telephone: (8621)68634518-8631 Fax.: (8621)68865680 Contact Person: Li Mengshi Website: www.xcsc.com Customer Service Telephone No.: 400-888-1551 (42) Wanlian Securities Co., Ltd. Domicile: 36-37/F, Guangdong Telecom Plaza, No.18 2nd Zhongshan Road, Guangzhou Office Address: 36-37/F, Guangdong Telecom Plaza, No.18 2nd Zhongshan Road, Guangzhou Legal Representative: Li Fangjin Telephone: (8620)37865070
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Fax.: (8620)37865008 Contact Person: Luo Chuangbin Website: www.wlzq.com.cn Customer Service Telephone No.: 400-8888-133 (43) Guoyuan Securities Co., Ltd. Domicile: No. 179 Shouchun Road, Hefei, Anhui Office Address: No. 179 Shouchun Road, Hefei, Anhui Legal Representative: Feng Liangzhi Telephone: (86551)2207938 Fax.: (86551)2634400-1171 Contact Person: Zhu Liping Website: www.gyzq.com.cn Customer Service Telephone No.: 400-888-8777 (nation wide), 96888 (Anhui) (44) Bohai Securities Co., Ltd. Domicile: Room101, Office Building, No.42 The Second Avenue, Economic-Technological Development Area, Tianjin Office Address: No. 8 Binshui Road, Nankai District, Tianjin Legal Representative: Zhang Zhijun Telephone: (8622)28451861 Fax.: (8622)28451892 Contact Person: Wang Zhaoquan Website: www.bhzq.com Customer Service Telephone No.: 400-651-5988 (45) Huatai Securities Co., Ltd. Domicile: Huatai Securities Mansion, No. 90 East Zhongshan Road, Nanjing, Jiangsu Office Address: Huatai Securities Mansion, No. 90 East Zhongshan Road, Nanjing, Jiangsu Legal Representative: Wu Wanshan Telephone: (8625)84457777-893 Fax.: (8625)84579879 Contact Person: Cheng Gaofeng Website: www.htsc.com.cn Customer Service Telephone No.: 400-888-8168,(8625)84579897 (46) Shanxi Securities Co., Ltd. Domicile: East Tower, World Trade Mansion, No. 69 Fuxi Street, Taiyuan, Shanxi Office Address: East Tower, World Trade Mansion, No. 69 Fuxi Street, Taiyuan, Shanxi
31 ABF China Bond Index Fund Prospectus
Legal Representative: Hou Wei Telephone: (86351)8686703 Fax.: (86351)8686619 Contact Person: Zhang Zhiguo Website: www.i618.com.cn Customer Service Telephone No.: 400-666-1618 (47) CITIC Wantong Securities Co., Ltd. Domicile: Room1507-1510, 15/F, Aucma Building, No. 29 Miaoling Road, Laoshan District, Qingdao Office Address: No. 28 West Donghai Road, Qingdao Legal Representative: Shi Jiemin Telephone: (86532)85022026 Fax.: (86532)85022026 Contact Person: Ding Shaoyan Website: www.zxwt.com.cn Customer Service Telephone No.: (86532)96577 (48) Soochow Securities Co., Ltd. Domicile: No. 181 Cuiyuan Road, Suzhou Industry Park, Suzhou, Jiangsu Office Address: 18-21/F, SIPCTD Building, No. 181 Cuiyuan Road, Suzhou Industry Park, Suzhou, Jiangsu Legal Representative: Wu Yongmin Telephone: (86512)65581136 Fax.: (86512)65588021 Contact Person: Fang Xiaodan Website: www.dwzq.com.cn Customer Service Telephone No.: (86512)33396288 (49) Cinda Securities Co., Ltd. Domicile: 10/F, Zhongshang Tower, No.5 East Sanlihe Road, Xicheng District, Beijing Office Address: 10/F, Zhongshang Tower, No.5 East Sanlihe Road, Xicheng District, Beijing Legal Representative: Zhang Zhigang Telephone: (8610)88656100 Fax.: (8610)88656290 Contact Person: Tang Jing Website: www.cindasc.com
32 ABF China Bond Index Fund Prospectus
Customer Service Telephone No.: 400-800-8899 (50) Orient Securities Co., Ltd. Domicile: 22-29/F, Building 2, No. 318 South Zhongshan Road, Shanghai Office Address: 22-29/F, Building 2, No. 318 South Zhongshan Road, Shanghai Legal Representative: Wang Yimin Telephone: (8621)63325888 Fax.: (8621)63326173 Contact Person: Wu Yu Website: www.dfzq.com.cn Customer Service Telephone No.: 95503 (51) Founder Securities Co., Ltd. Domicile: 22-24/F, Overseas Chinese Tower, No. 2 Middle Furong Road, Changsha, Hunan Office Address: 22-24/F, Overseas Chinese Tower, No. 2 Middle Furong Road, Changsha, Hunan Legal Representative: Lei Jie Telephone: 13857135668 Fax.: (86571)87782011 Contact Person: Xing Tieying Website: www.foundersc.com Customer Service Telephone No.: 95571 (52) Greatwall Securities Co., Ltd. Domicile: 14/F&16-17/F, Shenzhen Special Area Daily Building, No. 6008 Shennan Road, Futian District, Shenzhen Office Address: 14/F&16-17/F, Shenzhen Special Area Daily Building, No. 6008 Shennan Road, Futian District, Shenzhen Legal Representative: Huang Yaohua Telephone: (86755)83516289 Fax.: (86755)83515567 Contact Person: Kuang Ting Website: www.cgws.com Customer Service Telephone No.: (86755)33680000, 400-666-6888 (53) Everbright Securities Co., Ltd. Domicile: No. 1508, XinZha Road, Jing'an District, ShangHai Office Address: No. 1508, XinZha Road, Jing'an District, ShangHai Legal Representative: Xu Haoming
33 ABF China Bond Index Fund Prospectus
Telephone: (8621)22169089 Fax.: (8621)22169134 Contact Person: Li Fangfang Website: www.ebscn.com Customer Service Telephone No.: 10108998, 400-888-8788 (54) Guangzhou Securities Co., Ltd. Domicile: 5/F, Main Building, Dongshan Plaza, 69 Middle Xianlie Road, Guangzhou Office Address: 6/F, Main Building, Dongshan Plaza, 69 Middle Xianlie Road, Guangzhou Legal Representative: Wu Zhiming Telephone: (8620)87322668 Fax.: (8620)87325036 Contact Person: Fan Gangzheng Website: www.gzs.com.cn Customer Service Telephone No.: (8620)961303 (55) Northeast Securities Co., Ltd. Domicile: No. 1138 Ziyou Road, Changchun, Jilin Office Address: No. 1138 Ziyou Road, Changchun, Jilin Legal Representative: Jiao Zhengzhong Telephone: (86431)85096709 Fax.: (86431)85096795 Contact Person: Pan Kai Website: www.nesc.cn Customer Service Telephone No.: (86431)96688, (86431)85096733 (56) Nanjing Securities Co., Ltd. Domicile: No. 8 Dazhongting, Gulou District, Nanjing Office Address: No. 8 Dazhongting, Gulou District, Nanjing Legal Representative: Zhang Huadong Customer Service Telephone No.: (8625)83364032 Fax.: (8625)83364032 Contact Person: Shi Jian Website: www.njzq.com.cn (57) Shanghai Securities Co., Ltd. Domicile: No. 336, Middle Xizang Road, Shanghai Office Address: No. 336, Middle Xizang Road, Shanghai Legal Representative: Jiang Yuanzhen
34 ABF China Bond Index Fund Prospectus
Telephone: (8621)51539888 Fax.: (8621)65217206 Contact Person: Xie Xiufeng Website: www.962518.com Customer Service Telephone No.: (8621)962518 (58) New Times Securities Co., Ltd. Domicile: 15/F, Yuetan Mansion, Xicheng District, Beijing Office Address: 15/F, Yuetan Mansion, Xicheng District, Beijing Legal Representative: Ma Jinsheng Customer Service Telephone No.: (8610)68084591 Fax.: (8610)68084986 Contact Person: Dai Di Website: www.xsdzq.cn (59) Datong Securities Co., Ltd. Domicile: No. 13 Dabei Road, Datong, Shanxi Office Address: No. 8 Qingnian Road, Taiyuan, Shanxi Legal Representative: Dong Xiang Customer Service Telephone No.: (86351)4167056 Fax.: (86351)4192803 Contact Person: Su Ni Website: www.dtsbc.com.cn (60) Guolian Securities Co., Ltd. Domicile: No. 168 East Xianqian Road, Wuxi, Jiangsu Office Address: 6-8/F, Guolian Mansion, No. 168 East Xianqian Road, Wuxi, Jiangsu Legal Representative: Lei Jianhui Telephone: (86510)82831662 Fax.: (86510)82830162 Contact Person: Xu Xin Website: www.glsc.com.cn Customer Service Telephone No.: 400-888-5288 (61) Zheshang Securities Co., Ltd. Domicile: A6-7/F, Huanglong Century Plaza, No. 1 Hangda Road, Hangzhou, Zhejiang Office Address: A6-7/F, Huanglong Century Plaza, No. 1 Hangda Road, Hangzhou, Zhejiang Legal Representative: Wu Chenggen
35 ABF China Bond Index Fund Prospectus
Telephone: (86571)87901053 Fax.: (86571)87901913 Contact Person: Xie Xianghui Website: www.stocke.com.cn Customer Service Telephone No.: 967777 (62) Ping An Securities Company Ltd. Domicile: 8/F, Great China International Trading Plaza, Jintian Road., Futian District, Shenzhen Office Address: 8/F, Great China International Trading Plaza, Jintian Road., Futian District, Shenzhen Legal Representative: Yang Yuxiang Telephone: (86755)22626172 Fax.: (86755)82400862 Contact Person: Zhou Lu Website: www.pingan.com Customer Service Telephone No.: 400-881-6168 (63) Hua An Securities Co., Ltd. Domicile: No. 357 Middle Changjiang Road, Hefei, Anhui Office Address: Tower A, Run'an Plaza, No. 166 Funan Road, Hefei, Anhui Legal Representative: Li Gong Telephone: (86551)5161821 Fax.: (86551)5161672 Contact Person: Gan Lin Website: www.hazq.com Customer Service Telephone No.: (86551)96518, 400-809-6518 (64) Sealand Securities Co., Ltd. Domicile: No. 46 Binhu Road, Nanning, Guangxi Office Address: No. 46 Binhu Road, Nanning, Guangxi Legal Representative: Zhang Yafeng Telephone: (86771)5539262 Fax.: (86771)5539033 Contact Person: Tan Qingfang Website: www.ghzq.com.cn Customer Service Telephone No.: 400-888-8100(Nationwide), 96100(Guangxi) (65) Fortune Securities Co., Ltd.
36 ABF China Bond Index Fund Prospectus
Domicile: 26/F, Shuntian Fortune Center, No. 80, 2nd Block of Middle Furong Road, Changsha, Hunan Office Address: 26-28/F, Shuntian Fortune Center, No. 80, 2nd Block of Middle Furong Road, Changsha, Hunan Legal Representative: Zhou Hui Customer Service Telephone No.: (86731)4403319 Fax.: (86731)4403349 Contact Person: Guo Lei Website: www.cfzq.com (66) Dongguan Securities Co., Ltd. Domicile: 30/F, Jinyuan Center, No. 1 South Keyuan Road, Guancheng District, Dongguan, Guangdong Office Address: 30/F, Jinyuan Center, No. 1 South Keyuan Road, Guancheng District, Dongguan, Guangdong Legal Representative: You Jinhui Telephone: (86769)22119426, (86769)22119351 Fax.: (86769)22119423 Contact Person: Zhang Jianping, Luo Shaohui Website: www.dgzq.com.cn Customer Service Telephone No.: (86769)961130 (67) Central China Securities Co., Ltd. Domicile: 11/F, Glory International trading Building, No. 15 Jingsan Road, Zhengzhou, Henan Office Address: 11/F, Glory International trading Building, No. 15 Jingsan Road, Zhengzhou, Henan Legal Representative: Shi Baoshang Telephone: (86371)65585670 Fax.: (86371)65585665 Contact Person: Cheng Yueyan, Geng Ming Website: www.ccnew.com Customer Service Telephone No.: 967218, 400-813-9666 (68) Guodu Securities Co., Ltd. Domicile: 9-10/F, Guohua Investment Plaza, No. 3 South Dongzhimen Street, Dongcheng District, Beijing
37 ABF China Bond Index Fund Prospectus
Office Address: 9-10/F, Guohua Investment Plaza, No. 3 South Dongzhimen Street, Dongcheng District, Beijing Legal Representative: Chang Zhe Telephone: (8610)84183389 Fax.: (8610)84183311-3389 Contact Person: Huang Jing Website: www.guodu.com Customer Service Telephone No.: 400-818-8118 (69) Donghai Securities Co., Ltd. Domicile: 18-19/F, Investment Square, No. 23 West Yanlin Road, Changzhou, Jiangsu Office Address: 18-19/F, Investment Square, No. 23 West Yanlin Road, Changzhou, Jiangsu Legal Representative: Zhu Kemin Telephone: (86519)88157761 Fax.: (86519)88157761 Contact Person: Li Tao Website: www.longone.com.cn Customer Service Telephone No.: (8621)52574550, (86519)88166222, (86379)64902266, 400-888-8588 (70) Golden Sun Securities Co., Ltd. Domicile: No. 15 Yongshu Road, Nanchang, Jiangxi Office Address: 10-13/F, Xinda Mansion, No. 15 Yongshu Road, Nanchang, Jiangxi Legal Representative: Guan Rongsheng Customer Service Telephone No.: (86791)6285337 Fax.: (86791)6288690 Contact Person: Xu Meiyun Website: www.gsstock.com (71) Hongyuan Securities Co., Ltd. Domicile: No. 233 Wenyi Road, Urumqi, Xinjiang Autonomous Region Office Address: No. 19, Taiping Bridge Avenue, Xicheng, Beijing Legal Representative: Feng Rong Telephone: (8610)88085201 Fax.: (8610)88085195 Contact Person: Li Wei Website: www.hysec.com
38 ABF China Bond Index Fund Prospectus
Customer Service Telephone No.: 400-800-0562 (72) Qilu Securities Co., Ltd. Domicile: No. 128 Jingshi Road, Jinan, Shandong Office Address: No. 128 Jingshi Road, Jinan, Shandong Legal Representative: Li Wei Telephone: (86531)81283906 Fax.: (86531)81283900 Contact Person: Wu Yang Website: www.qlzq.com.cn Customer Service Telephone No.: 95538 (73) First Capital Securities Co., Ltd. Domicile: 25/F, Tower B, Zhongmin Time Plaza, No. 12 Sungang Road, Luohu District, Shenzhen Office Address: 25/F, Tower B, Zhongmin Time Plaza, No. 12 Sungang Road, Luohu District, Shenzhen Legal Representative: Liu Xuemin Telephone: (86755)25832494 Fax.: (86755)25831718 Contact Person: Wang Lizhou Website: www.fcsc.cn Customer Service Telephone No.: (86755)25832523 (74) Goldstate Securities Co., Ltd. Domicile: 4/F, Security Tower, No. 36 Nanbao Road, Haikou, Hainan Office Address: 17/F, Times Financial Center, No. 4001 Shennan Avenue, Shenzhen Legal Representative: Lu Tao Telephone: (86755)83025666 Fax.: (86755)83025625 Contact Person: Jin Chun Website: www.jyzq.cn Customer Service Telephone No.: 400-888-8228 (75) Avic Securities Co., Ltd. Domicile: No. 291 North Fuhe Road, Nanchang, Jiangxi Office Address: No. 291 North Fuhe Road, Nanchang, Jiangxi Legal Representative: Du Hang Telephone: (86791)6768763
39 ABF China Bond Index Fund Prospectus
Fax.: (86791)6789414 Contact Person: Yu Yana Website: www.avicsec.com Customer Service Telephone No.: 400-886-6567 (76) Chinalion Securities Co., Ltd. Domicile: Room 202-203, 2/F, No. 96 Xiawan and Huaping Road, Gongbei, Zhuhai Office Address: 6/F, Huarong Building, No. 178 Mintian Road, Futian District, Shenzhen Legal Representative: Duan Wenqing Telephone: (86755)82707853 Fax.: (86755)82707850 Contact Person: Luo Yang Website: www.chinalions.com Customer Service Telephone No.: The customer service telephone number of each business outlets (77) Tebon Securities Co., Ltd. Domicile: 9/F, South Tower, No.510 Caoyang Road, Putuo District, Shanghai Office Address: 26/F, Urban Construction Tower, No. 500 Fushan Road, Pudong New Area, Shanghai Legal Representative: Fang Jiachun Telephone: (8621)68761616 Fax.: (8621)68767981 Contact Person: Luo Fang Website: www.tebon.com.cn Customer Service Telephone No.: 400-888-8128 (78) Western Securities Co., Ltd. Domicile: 16-17/F, Xintuo Building, No. 232 Dongxin Street, Xi'an, Shaanxi Office Address: 16-17/F, Xintuo Building, No. 232 Dongxin Street, Xi'an, Shaanxi Legal Representative: Liu Jianwu Telephone: (8629)87406488 Fax.: (8629)87406387 Contact Person: Feng Ping Website: www.westsecu.com.cn Customer Service Telephone No.: (8629)95582 (79) Guangfa Huafu Securities Co., Ltd. Domicile: 7-8/F, New Skyland Plaza, No. 157 Wusi Road, Fuzhou, Fujian
40 ABF China Bond Index Fund Prospectus
Office Address: 7-8/F&10/F, New Skyland Plaza, No. 157 Wusi Road, Fuzhou, Fujian Legal Representative: Huang Jinlin Telephone: (86591)87383623 Fax.: (86591)87383610 Contact Person: Zhang Teng Website: www.gfhfzq.com.cn Customer Service Telephone No.: (86591)96326 (80) China Dragon Securities Co., Ltd. Domicile: No. 308 Jingning Road, Chengguan District, Lanzhou, Gansu Office Address: No. 308 Jingning Road, Chengguan District, Lanzhou, Gansu Legal Representative: Li Xiaoan Telephone: (86931)4890100 Contact Person: Li Xintian Website: www.hlzqgs.com Customer Service Telephone No.: (86931)4890619, 4890618, 4890100 (81) China International Capital Co., Ltd. Domicile: 27/F&28/F, Block 2, China World Trade Centre, No. 1 Jianguomenwai Street, Beijing Office Address: 27/F&28/F, Block 2, China World Trade Centre, No. 1 Jianguomenwai Street, Beijing Legal Representative: Li Jiange Telephone: (8610)65051166 Fax.: (8610)65058065 Contact Person: Luo Chunrong Website: www.cicc.com.cn Customer Service Telephone No.: (8610)65051166 (82) Caitong Securities Brokerage Co., Ltd. Domicile: Jinqian Tower, No. 111 Jiefang Road, Hangzhou, Zhejiang Office Address: Jinqian Tower, No. 111 Jiefang Road, Hangzhou, Zhejiang Legal Representative: Shen Jining Telephone: (86571)87925129 Fax.: (86571)87828042 Contact Person: Qiao Jun Website: www.ctsec.com Customer Service Telephone No.: (86571)96336
41 ABF China Bond Index Fund Prospectus
(83) China Fortune Securities Co., Ltd. Domicile: 2512/2513, 25/F, Shenye Building, No. 5047 Shennan Road East Road, Luohu District, Shenzhen Office Address: A01, 28/F, Anlian Building, No.4018 Jintian Road, Futian District, Shenzhen, Legal Representative: Wang Wenxue Telephone: (8621)64339000-826,(8621)64374864 Fax.: (8621)64374864 Contact Person: Yang Xiaojiang Website: www.cfsc.com.cn Customer Service Telephone No.: (8621)32109999, (8629)68918888 (84) UBS Securities Co., Ltd. Domicile: 12/F&15/F, Winland International Finance Centre, No.7 Finance Street, Xicheng District, Beijing Office Address: 12/F&15/F, Winland International Finance Centre, No.7 Finance Street, Xicheng District, Beijing Legal Representative: Liu Hong Telephone: (8610)58328752,(8610)58328725 Fax.: (8610)58328748 Contact Person: Xie Yafan Website: www.ubssecurities.com Customer Service Telephone No.: 400-887-8827 (85) China Jianyin Investment Securities Co., Ltd. Domicile: 48-50/F, Shenzhen International Chamber of Commerce Tower, intersection of Yitian Road and Fuhua 3 Road, Futian District, Shenzhen Office Address: 18-20/F, Tower A, Rongchao Commerce Center, intersection of Yitian Road and Fuzhong Road, Futian District, Shenzhen Legal Representative: Yang Xiaoyang Telephone: (86755)82026521 Fax.: (86755)82026539 Contact Person: Liu Quan Website: www.cjis.cn Customer Service Telephone No.: 400-600-8008 (86) Zhongshan Securities Co., Ltd. Domicile: 29/F, No. 6009, New World Center, Yitian Road, Futian District, Shenzhen
42 ABF China Bond Index Fund Prospectus
Office Address: 29/F, No. 6009, New World Center, Yitian Road, Futian District, Shenzhen Legal Representative: Wu Yongliang Telephone: (86755)82570586 Fax.: (86755)82960582 Contact Person: Li Zhen Website: www.zszq.com Customer Service Telephone No.: 400-102-2011 (87) Tongxin Securities Co., Ltd. Domicile: No.101 Middle Beijing Road, Lasa, Tibet Office Address: No. 24 Dongfangqiye Garden, 118 Nong of Yonghe Road, Zhabei District, Shanghai Legal Representative: Jia Shaojun Telephone: (8621)36533016 Fax.: (8621)36533017 Contact Person: Wang Weiguang Website: www.xzsec.com Customer Service Telephone No.: 400-881-1177 (88) Rising Securities Co., Ltd. Domicile: No.18 South Xilin Road, Xincheng District, Hohhot, Inner Mongolia) Office Address: No.18 South Xilin Road, Xincheng District, Hohhot, Inner Mongolia) Legal Representative: Kong Youjie Telephone: (8610)88086830 Fax.: (8610)66412537 Contact Person: Chen Weishan Website: www.rxzq.com.cn Customer Service Telephone No.: (8610)88086830 (89) Jianghai Securities Co., Ltd. Domicile: No. 56, Ganshui Road, Xiangfang District, Harbin, Heilongjiang Office Address: No. 56, Ganshui Road, Xiangfang District, Harbin, Heilongjiang Legal Representative: Sun Mingyang Telephone: (86451)82336863 Fax.: (86451)82287211 Contact Person: Xu Shiwang Website: www.jhzq.com.cn Customer Service Telephone No.: 400-666-2288
43 ABF China Bond Index Fund Prospectus
(90) Xiamen Securities Co., Ltd. Domicile: 17/F, Lianfu Building, No. 2 West Lianxian Road, Xiamen Office Address: 17/F, Lianfu Building, No. 2 West Lianxian Road, Xiamen Legal Representative: Fu Yihui Telephone: (86592)5161642 Fax.: (86592)5161140 Contact Person: Lu Jinwen Website: www.xmzq.cn Customer Service Telephone No.: (86592)5163588 (91) Aijian Securities Co., Ltd. Domicile: 23/F, No. 758, West Nanjing Road, Shanghai Office Address: 20-25/F, No. 758, West Nanjing Road, Shanghai Legal Representative: Zhang Jianhua Telephone: (8621)32229888 Fax.: (8621)62878783 Contact Person: Chen Min Website: www.ajzq.com Customer Service Telephone No.: (8621)63340678 (92) Huarong Securities Co., Ltd. Domicile: No.26 North Yuetan Street, Xicheng District, Beijing Office Address: No.26 North Yuetan Street, Xicheng District, Beijing Legal Representative: Ding Zhisuo Telephone: (8610)58568007 Fax.: (8610)58568062 Contact Person: Liang Yu Website: www.hrsec.com.cn Customer Service Telephone No.: (8610)58568118 (93) Tianfeng Securities Co., Ltd. Domicile: 4/F, Hi-Tech Tower, No.2 Guandongyuan Road, Donghu New Technology Development Zone, Wuhan, Hubei Office Address: 4/F, Hi-Tech Tower, No.2 Guandongyuan Road, Donghu New Technology Development Zone, Wuhan, Hubei Legal Representative: Yu Lei Telephone: (8627)87618882 Fax.: (8627)87618863
44 ABF China Bond Index Fund Prospectus
Contact Person: Zhai Jing Website: www.tfzq.com Customer Service Telephone No.: (8628)86711410, (8627)87618882 The Fund Manager may add or remove other Sales Agencies as the case may be and shall make separate announcements of such changes. The Sales Agencies may add or remove the cities of sales and the outlets as the case may be and shall make separate announcements of such changes.
5.2 Registration and Clearing Institution Name: China Asset Management Co., Ltd. Domicile: Section A, Tianzhu Airport Industrial Zone, Shunyi District, Beijing Office Address: 3/F Tower B, Tongtai Building, No. 33 Finance Street, Xicheng District, Beijing Legal Representative: Ling Xinyuan Customer Service Telephone: 400-818-6666 Fax: (8610) 63136700 Contact Person: Zhang Jinfeng
5.3 Legal Advisor Name: Beijing Deheng Law Offices Domicile: F/12, Tower B, Focus Plaza, No. 19 Finance Street, Xicheng District, Beijing Office Address: F/12, Tower B, Focus Plaza, No. 19 Finance Street, Xicheng District, Beijing Person in Charge: Wang Li Telephone: (8610) 52682888 Fax: (8610) 52682999 Contact Person: Li Xiaoming Handling Attorneys at Law: Xu Jianjun and Li Xiaoming
5.4 Accounting Firm The company hires Deloitte Touche Tohmatsu Certified Public Accountants Ltd. as the authorized verification firm. Name: Deloitte Touche Tohmatsu Certified Public Accountants Ltd. Domicile: 30/F Bund Center, 222 Yan An Road East, Shanghai Office Address: 8/F Office Tower W2, The Towers, Oriental Plaza, 1 East Chang An Avenue, Beijing Legal Representative: Xie Yingfeng
45 ABF China Bond Index Fund Prospectus
Telephone: (8610) 85207788 Fax: (8610) 85181218 Contact Person: Wu Rong Handling Certified Public Accountants: Guo Xinhua, Wu Rong
6. OFFERING OF FUND
6.1 History of the Fund The Fund is transformed from the separate account of ABF2 China Sub-fund. ABF2 China Sub-fund is recognized by the CSRC’s Letter on the Relevant Issues of ABF2 China Sub-fund (Zhen Jian Ban Han [2005] No. 68), and served by China Asset Management Co., Ltd. as the Fund Manager to undertake the investment management of China sub-fund in the form of securities investments entrusted by specific clients. The holder of the fund is the Executives’ Meeting of East Asia and Pacific Central Banks (“EMEAP”). The fund mainly adopts the representative stratified sampling replication method and tracks the iBoxx® ABF China Index. Approved by the regulatory authority, ABF2 China Sub-fund transforms from a separate account to an open-ended fund for public offering. The investment scope and the investment strategies of the Fund is the same as that of the separate account. In order to save the cost of portfolio construction of the Fund, EMEAP will purchase the Fund Units for investment with the assets (including bonds and cash) of its separate account.
6.2 Basis of Offering of Fund The Fund Manager shall offer the Fund pursuant to the Law on Fund, Rules on Operations, Rules on Sales, the Fund Contract and other relevant regulations. The application for offering the Fund has been approved by the CSRC Zheng Jian Xu Ke [2011] No. 392 on March 14th, 2011.
6.3 Type of Fund and Duration 6.3.1 Type of the Fund: Bond fund. 6.3.2 Operation Mode of the Fund: Open-ended contractual Fund. 6.3.3 Duration of Fund: Indefinite.
6.4 Fund Offering Methods The Fund is publicly offered to the Investors through the Sales Outlets of the Sales Institutions (including the direct sales centers of the Fund Manager and the sales outlets of Sales Agencies. A list of the Sales Institutions will be disclosed in the Offering Announcement).
46 ABF China Bond Index Fund Prospectus
6.5 Fund Offering Period The Fund Offering Period, commencing from the start date of the offering of the Fund Units, shall not exceed three months. The Fund shall be offered from April 26th 2011 to May 23rd 2011. If the Fund has not met the requirements for Fund filing pursuant to 7.1 of this Prospectus in this period, the offering of the Fund may continue within the Fund Offering Period, until the Fund filing requirements are met. Within the Fund Offering Period, the Fund Manager may, extend or shorten the period of offering according to the sales results of the Fund Units, and give due announcement of any such extension or shortening of the period of offering in a timely manner.
6.6 Investors of the Fund Individual Investors and Institutional Investors in mainland China as well as QFIIs, and other Investors entitled to buy securities investment funds according to laws and regulations or with the approval of the CSRC.
6.7 Locations of Offering of the Fund Investors shall buy the Fund Units from the premises of the Fund Manager or the Sales Agencies designated for such purpose, or by other means provided by the Fund Manager and the Sales Agency Institutions. A list of the Sales Institutions will be provided in the Offering Announcement. For detailed information of the geographic coverage and contacts of the Sales Outlets of the Fund Manager and the Sales Agencies, please refer to the Offering Announcement and the announcements of local Sales Institutions. The Fund Manager may add other Sales Agencies as the case may be and also make separate announcements of appointments of new Sales Agencies.
6.8 Classification of Fund Units There are several classes of Fund Units according to the different charges for Initial Subscription and Subscription and Continuous Sales and Service Charge. Unit Class A requires Investors to pay the front-end Initial Subscription/Subscription fee when applying for Initial Subscription/Subscription, and no Continuous Sales and Service Charge is required; while Class C requires no front-end or back-end Initial Subscription/Subscription fee but requires the payment of the Continuous Sales and Service Charge at a rate of 0.4% per annum. Each class has its own trading code. The NAV per unit and the accumulated NAV pe r unit of each class are calculated and
47 ABF China Bond Index Fund Prospectus disclosed separately. According to the sales result of the Fund Units, the Fund Manager may, as long as the benefits of Fund Unit Holders are not damaged, add new Unit Class, adjust the fee rate of existing Unit Classes, suspend sales of existing Unit Classes, or apply for the listing of the Fund Units on the securities exchanges. Prior to any of these adjustments, the Fund Manager shall make timely disclosure and report to the CSRC for filing.
6.9 Arrangement of Initial Subscription 6.9.1 Period for Initial Subscription: From April 26th 2011 to May 23rd 2011. The specific time for handling Initial Subscription shall be determined by the Sales Institutions. 6.9.2 Procedure: In the case of an Initial Subscription, an Investor should apply to open a Fund Account with China Asset Management Co., Ltd. and a Trading Account with a Sales Institution. One Investor can open and use only one Fund Account. Investors who have opened Fund Accounts with China Asset Management Co., Ltd are exempt from application for such accounts. 6.9.3 Principles: The Initial Subscription shall be made with capital amount. An Investor should make full payment for the Initial Subscription as required by the Sales Institutions. An Investor may subscribe in one or more applications, but the minimum amount of each Initial Subscription shall be 1,000 Yuan. Once accepted, applications for Initial Subscription shall not be revoked. 6.9.4 Confirmation of applications: The acceptance of Initial Subscription applications by Sales Outlets does not mean that such applications are successful but only that such Sales Outlets have received the Initial Subscription applications. The validity of applications shall be determined by the confirmation of the Registration and Clearing Institution. Investors shall seek the final confirmation of acceptance of their Initial Subscription applications and the subscribed Fund Units through the Sales Outlets after the Fund Contract becomes effective. Investors may refer to Offering Announcement for the documents to be submitted and formalities to be handled by Investors decided by the Fund Manager and Sales Agencies for the purpose of opening the accounts and making Initial Subscriptions.
6.10 Initial Subscription Fee 6.10.1 When the Investors buy Class A Fund Units, they shall pay the front-end Initial Subscription fees. The fee rates decrease for higher amounts of Initial Subscription. The details are indicated as follows: Initial Subscription Amounts(including Initial Subscription Fee) Rate of Front-end Initial
48 ABF China Bond Index Fund Prospectus
Subscription Fee Less than 1 million Yua n 0.6% From 1 million Yuan (including 1 million Yua n) to 5 million Yua n 0.4% From 5 million Yuan (including 5 million Yua n) to 10 million Yua n 0.2% More than 10 million Yuan (including 10 million Yua n) 1,000 Yuan/Application When the Investors buy Class C Fund Units, the front-end Initial Subscription fee is 0. 6.10.2 The Investors shall pay Initial Subscription fee and the Initial Subscription fee shall not be considered part of the Fund Assets. The Initial Subscription fees are intended to cover the expenses incurred in the marketing, sales, registration and settlement during the Fund Offering Period. 6.10.3 If an Investor makes more than one Initial Subscription, Initial Subscription fees will be calculated for each Initial Subscription using the corresponding fee rate.
6.11 Treatment of Accrued Interest on Proceeds from the Offering After the Fund Contract comes into effect, the interest accrued on the payment for Initial Subscription made paid by the Investors during the Fund Offering Period will be converted into Fund Units of the same class as the Unit Class the Investors choose for the Initial Subscription. Such Fund Units will be transferred into the ownership of the Fund Unit Holders. The specific amount of interest to be converted shall be that shown in the records of the Registration and Clearing Institution, and no Initial Subscription fees shall be charged for the conversion of the interest.
6.12 Calculation of Units Subscription in Initial Subscription Class A and Class C Fund Units both have an initial face value of 1.00 Yuan. 6.12.1 For Investors applying to subscribe Class A Fund Units, the subscribed units are calculated as follows: (1) Appropriate Initial Subscription fee rate applied, the subscribed units are calculated as follows: Net Initial Subscription Amount = Initial Subscription Amount /(1 + Applicable Front-end Initial Subscription Fee Rate) Front-end Initial Subscription Fee = Initial Subscription Amount – Net Initial Subscription Amount Subscribed Units = (Net Initial Subscription Amount + Interests on Initial Subscription)/1.00 Yuan (2) If the Initial Subscription fee is a fixed amount, the subscribed units are calculated as
49 ABF China Bond Index Fund Prospectus
follows: Front-end Initial Subscription Fee = Applicable Fixed Amount Net Initial Subscription Amount = Initial Subscription Amount – Front-end Initial Subscription Fee Subscribed Units = (Net Initial Subscription Amount + Interest on Initial Subscription) /1.00 Yuan 6.12.2 For Investors applying to subscribe Class C Fund Units, the subscribed units are calculated as follows: Subscribed Units = (Initial Subscription Amount + Interest on Initial Subscription) /1.00 Yuan 6.12.3 Numbers of the Fund Units of the Initial Subscription shall be rounded to the nearest cent. Any losses resulting from such rounding shall be born by the Fund Assets, and any surplus resulting from such rounding shall become part of the Fund Assets. Case 1: An Investor makes an investment of 1,000 Yuan to subscribe Class A Fund Units. Assuming that the investment of 1,000 Yuan yields interest of 0.46 Yuan during the Fund Offering Period, the subscribed units of the Initial Subscription shall be calculated as follows: Net Initial Subscription Amount = 1,000/(1+0.6%)= 994.04 Yua n Front-end Initial Subscription Fee = 1,000-994.04 =5.96 Yuan Subscribed Units =(994.04+0.46)/1.00=994.50 Units Therefore, through an investment of 1,000 Yuan for Class A Fund Units, the Investor can obtain 994.50 Class A Fund Units, taking into account the interest earned on the Initial Subscription during the Fund Offering Period. Case 2: An Investor makes an investment of 1,000 Yuan to subscribe Class C Fund Units. Assuming that the investment of 1,000 Yuan yields interest of 0.46 Yuan during the Fund Offering Period, the subscribed units are calculated as follows: Subscribed Units =(1,000+0.46)/1.00=1,000.46 Units Therefore, through an investment of 1,000 Yuan for Class C Fund Units, the Investor can obtain 1,000.46 Class C Fund Units, taking into account the interest earned on the Initial Subscription during the Fund Offering Period.
6.13 Initial Subscription of EMEAP EMEAP made an initial investment in the Fund. Such investment has been operated in separate accounts, since June 2005. The current value of the assets in EMEAP’s portfolio amounts to 2.1 billion Yuan. In order to save the investment costs, the initial investment of EMEAP shall, in the
50 ABF China Bond Index Fund Prospectus form of bonds in kind and small amount of cash, make Initial Subscription for Class A Fund Units from the Fund Manager directly. The Initial Subscription will be as of the last day of the Fund Offering Period. The bonds to be used to pay for the Initial Subscription shall be evaluated and converted according to the valuation method set forth in the Fund Contract. EMEAP is a group of central banks and monetary authorities comprising Reserve Bank of Australia, People’s Bank of China, Monetary Authority of Hong Kong, Bank Indonesia, Bank of Japan, Bank of Korea, Bank Negara Malaysia, Reserve Bank of New Zealand, Bangko Sentral ng Pilipinas, Monetary Authority of Singapore and Bank of Thailand. As Fund Unit Holders, the central banks and financial authorities comprising EMEAP have the same rights as the other Fund Unit Holders and may redeem or exchange their Fund Units after the opening of the Fund without prior disclosure.
6.14 Proceeds and Expenses during the Fund Offering Period Before the end of the Fund Offering Period, the proceeds and the bonds received during the Fund Offering Period shall be deposited in special accounts and shall not be withdrawn by any person. The expenses relating to information disclosure, accounting and legal and other expenses incurred during the Fund Offering Period shall not be deducted from the Fund Assets.
7. ENFORCEMENT OF FUND CONTRACT
7.1 Requirements for Fund Filing At the expiration of the Fund Offering Period, if the following conditions are fulfilled, the Fund Manager shall undertake the proceeds verification and filing procedure pursuant to the relevant laws and regulations: 7.1.1 The number of the offered Fund Units is no less than 200 million, which amount, including the initial investment of EMEAP, is no less than 200 million Yuan. 7.1.2 There are no less than 200 Fund Unit Holders.
7.2 Proceeds Verification and Filing of Fund At the expiration of the Fund Offering Period, if the Fund fulfills the above requirements, the Fund Manager shall, within ten days after the expiration date of the Fund Offering Period, appoint an authorized verification firm to verify the proceeds, and shall submit the verification report to the CSRC for Fund filing within ten days after the date of receiving such verification report from the verification firm.
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7.3 Enforcement of Fund Contract The Fund Contract comes into effect and the filing procedure of the Fund is completed on the date of the CSRC’s written confirmation. The Fund Manager shall give an announcement on the next day following the receipt of the confirmation document from the CSRC.
7.4 Failure of Fund Offering If the Fund does not fulfill the above requirements as stipulated in Paragraph 7.1 at the expiration of the Fund Offering Period, or any Force Majeure event during the Fund Offering Period makes the Fund Contract unable to come into effect, the offering of the Fund fails and the Fund Contract shall not have any effect. If the offering of the Fund fails, the Fund Manager shall bear all the liabilities and expenses arising from the offering of the Fund with the Fund Manager’s own assets, and shall return the investments to the Investors, together with the interest calculated at the interest rate of current deposits, within 30 days following the expiration of the Fund Offering Period.
7.5 Number of Fund Unit Holders and Size of Assets after the Fund Contract Comes into Effect After the Fund Contract becomes effective, if the number of the Fund Unit Holders falls below 200 and/or the NAV of the Fund falls below 50 million Yuan, the Fund Manager shall timely notify the CSRC. If such situation continues for 20 consecutive Business Days, the Fund Manager shall notify the CSRC to explain the reason for the above situation and provide solutions. The Fund Manager shall act accordingly if otherwise required by applicable laws and regulations or other rules of the regulatory authority.
8. SUBSCRIPTION, REDEMPTION AND EXCHANGE OF FUND UNITS
8.1 Locations for Subscription and Redemption The Sales Institutions of the Fund include the Fund Manager and the Sales Agencies appointed by the Fund Manager. The Investors should apply for Subscription or Redemption of Fund Units at the premises of the Sales Institutions or by other means provided by the Sales Institutions. Depending on the situation, the Fund Manager can increase or decrease the number of Sales Agencies and will make appropriate announcement following such change. Sales Institutions may increase and decrease the number of the cities or the Sales Outlets where applications for Subscription or Redemption of Fund Units may be made, and will make appropriate announcement following such change.
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8.2 Open Day and Open Hours for Subscription and Redemption 8.2.1 Open Day and Open Hours An Open Day for the Investors to handle Subscription and Redemption of the Fund is the ordinary trading day of both SSE and SZSE, unless the Fund Manager suspends Subscription and/or Redemption with prior notice pursuant to the relevant regulations and the Fund Contract. The open hours of the Open Day for handling the relevant business shall be determined and published by the Sales Institutions. If there are any new securities exchanges established or existing exchanges change their trading time, or other special situations happen, the Fund Manager shall adjust the Open Day and open hours accordingly and make prior announcement. The Fund Manager shall not handle Subscription, Redemption and other businesses on the date or at the time other than that stipulated in the Fund Contract. If the Investors submit the application for Subscription, Redemption of Fund Units on the date or at the time other than that stipulated in the Fund Contract, the prices for Subscription and Redemption of Fund Units shall be the prices on the next Open Day for Subscription and Redemption of Fund Units. 8.2.2 Start time for Subscription and Redemption The Fund will be open for Subscription and Redemption within a period of not more than three months following the Effective Date of the Fund Contract. The Fund Manager shall make an announcement on at least one of the Designated Media at least one Business Day before the commencement of Subscription and Redemption.
8.3 Principles of Subscription and Redemption 8.3.1 Principle of “unknown price”, which means that the prices for Subscription and Redemption will be calculated on the basis of the NAV pe r unit calculated after the trading hours on the application day. 8.3.2 Principle of “Subscription by amount and Redemption by unit”, which means the applications for Subscription are based on the amount that is invested, while the applications for Redemption are made by unit. 8.3.3 The Fund has several classes, which apply different Subscription fees and Continuous Sales and Service Charge. Investors can independently choose the class of Fund Units for Subscription. 8.3.4 When Investors apply for Subscription and Redemption, the documents to be submitted, and the formalities, time, the operating rules and other matters shall be specified by the Sales
53 ABF China Bond Index Fund Prospectus
Institutions according to the Fund Contract and the Prospectus. 8.3.5 Any applications for Subscription or Redemption may be cancelled before the end of the open hours of the Open Day, and cannot be cancelled after the end of the open hours. 8.3.6 The Fund Manager can change any of the above principles without damage to the interest of the Fund Unit Holders. Nevertheless any change shall be announced on at least one Designated Media at least two days prior to the implementation of such new principles.
8.4 Restrictions on Amount of Subscription and Redemption 8.4.1 The minimum Subscription amount per application is 1,000 Yuan (including the Subscription fee). 8.4.2 The minimum Redemption amount per application is 100 Fund Units. If the Fund Unit Holder’s holding of Fund Units with the Sales Institution (Sales Outlets) is less than 100 Fund Units after the Redemption, then the Fund Unit Holder must redeem all his Fund Units in the same application. 8.4.3 The Fund Manager may, based on the market conditions, as allowed by the relevant laws and regulations, adjust the restrictions on Subscription amount and units to be Redeemed, and shall announce the adjustments on at least one Designated Media at least two days prior to the adjustment.
8.5 Procedure of Subscription and Redemption 8.5.1 Application for Subscription and Redemption The Fund Investors shall, according to the procedure as required by the Sales Institutions, apply for Subscription or Redemption during the open hours on the Open Days. When filing an application for Subscription, the Investor shall make full payment for the Subscription by the means required by the Sales Institutions. When an Investor applies for Redemption, his account balance with the Sales Institutions (Sales Outlets) should be no less than the number of Fund Units intended to be redeemed. Any applications for Subscription or Redemption that does not fulfill these requirements will be invalid. 8.5.2 Confirmation and notification of application for Subscription and Redemption If an Investor’s application for Subscription is successful on Day T, the Registration and Clearing Institution shall make the registration to increase the Investor’s holding on Day T+1, and the Investor will have the right to Redeem such Fund Units from Day T+2. If an Investor’s application for Redemption is successful on Day T, the Registration and Clearing Institution shall make the registration to decrease the Investor’ holding on Day T+1. For the applications accepted during the open hours on Day T, under normal circumstances,
54 ABF China Bond Index Fund Prospectus
Investors may query and print the confirmation results after Day T+2 (including the same day) through ChinaAMC’s website, customer service telephone or at the Sales Outlets where the Investors have applied for the Subscription or Redemption of Fund Units. To the extent permitted by the related laws and regulations, the Fund Manager shall have the right to adjust and announce the time for aforesaid registration and settlement. 8.5.3 Payment for Subscription and Redemption Full payment shall be made for Subscription. The Subscription will fail in case the Subscription price is not paid in full into the specified account within the specified period. The amount of payment made in the failed Subscription shall be returned to the relevant Investor account. In the case of Redemption, the Fund Manager shall instruct the Fund Custodian to pay for the Redeemed Fund Units by Day T+7 (including the same day) according to the related regulations if the Investor’s application for Redemption on Day T is successful. In the case of a Mass Redemption, the payments shall be made as required by the Fund Contract, the Prospectus and the relevant laws and regulations.
8.6 Fees of Subscription and Redemption 8.6.1 For Class A Fund Units, Investors shall pay the front-end Subscription fees. The fee rates decrease for higher amounts of Subscription. The details are indicated as follows: Rate of Front-end Subscription Amount(including Subscription Fee) Subscription Fee Less than 1 million Yua n 0.8% From 1 million Yuan (including 1 million Yua n) to 5 million Yua n 0.6% From 5 million Yua n (including 5 million Yua n) to 10 million Yua n 0.4% More than 10 million Yuan (including 10 million Yua n) 1,000 Yuan/Application The Subscription fees shall be paid by the Investors and are intended to cover the expenses incurred in the marketing, sales, registration and settlement. 8.6.2 No Subscription fees apply to Class C Fund Units. 8.6.3 Redemption fees apply to both Class A and Class C Fund Units. Fund Unit Holders should bear the Redemption fees which should be paid at the time of Redemption. The rate of the Redemption fee is 0.3%, if the holding of the Fund Units is for less than 90 days; the Redemption fee is 0, if the holding of the Fund Units is for more than 90 days (including 90 days). No less than 25% of the total Redemption fees shall be paid into the Fund Assets, and the rest will be used to pay for the registration and clearing expenses, sales handling charges and so on.
55 ABF China Bond Index Fund Prospectus
8.6.4 The Fund Manager may adjust the Subscription fee rates, Redemption fee rates or charging methods to the extent permitted by laws and regulations and the Fund Contract. If the fee rates or charging methods are to be adjusted, the Fund Manager shall publicly announce such adjustment on at least one Designated Media at least one Business Day prior to the implementation of the new fee rates or charging methods. 8.6.5 If approved by the CSRC and in compliance with the relevant laws and regulations and the Fund Contract, the Fund Manager may take some measures such as lowering the Subscription and Redemption fees or increasing the Redemption fee, during a specific period or for the Investors that match specific conditions. The Fund Manager must announce these changes on at least one Designated Media at least one Business Day prior to the implementation of such changes. 8.7 Calculation of Subscription Units and Redemption Amounts 8.7.1 Calculation of Subscription Units (1) For an Investor applying to subscribe Class A Fund Units, the subscribed units are calculated as follows: (a) Appropriate Subscription fee rate applied, the subscribed units are calculated as follows: Net Subscription Amount = Subscription Amount/(1+ Applicable Front-end Subscription Fee Rate) Front-end Subscription Fee = Subscription Amount – Net Subscription Amount Subscribed Units = Net Subscription Amount / NAV pe r Unit of Class A on Day T (b) If the Subscription fee is a fixed amount, the subscribed units are calculated as follows: Front-end Subscription Fee = Applicable Fixed Amount Net Subscription amount = Subscription Amount – Front-end Subscription Fee Subscribed Units = Net Subscription Amount / NAV pe r Unit of Class A on Day T (2) For an Investor applying to Subscription Class C Fund Units, the subscribed units are calculated as follows: Subscribed Units = Subscription Amount / NAV pe r Unit of Class C on Day T (3) The Subscribed units shall be rounded to the nearest cent. Any losses resulting from such rounding shall be born by the Fund Assets, and any surplus resulting from such rounding shall become part of the Fund Assets. Case 3: Assuming that the NAV per unit of Class A Fund Units is 1.230 Yuan on Day T, and that three Subscription applications for Class A Fund Units are in the amounts of 1,000 Yuan, 1 million Yuan, and 5 million Yuan respectively. The Subscription fees and Subscribed Fund Units for the three Subscriptions respectively are calculated as follows:
Subscription Subscription Subscription
56 ABF China Bond Index Fund Prospectus
1 2 3
Subscription amount (Yuan, a) 1,000 1,000,000 5,000,000
Applicable Subscription Fee Rate(b) 0.8% 0.6% 0.4%
Net Subscription Amount[c=a/(1+b)] 992.06 994,035.79 4,980,079.68
Front-end Subscription Fee(d=a-c) 7.94 5,964.21 19,920.32
NAV per Unit for the Unit Class (e) 1.230 1.230 1.230
Subscribed Units(f=c/e) 806.55 808,159.18 4,048,845.27
If a Subscription application for Class A is in the amount of 10 million Yuan, The Subscription fees and Subscribed Fund Units for this Subscriptions is calculated as follows:
Subscription 4
Subscription amount (Yuan, a) 10,000,000
Front-end Subscription Fee(b) 1,000
Net Subscription Amount(c=a-b) 9,999,000
NAV per Unit for the Unit Class (d) 1.230
Subscribed Units(f=c/d) 8,129,268.29
Case 4: Assuming that the NAV per unit of Class C Fund Units is 1.200 Yuan on Day T, and a Subscription is in the amount of 0.1 million Yuan. The Subscribed Fund Units for this Subscription is calculated as follows: Subscribed Units＝100,000/1.200=83,333.33 Units 8.7.2 Calculation of the Redemption amount (1) For an Investor applying to Redeem Class A Fund Units, the Redeemed amount is calculated as follows: Redeemed Amount = Redeemed Units × NAV per Unit of Class A on Day T Redemption Fee = Redeemed Amount × Applicable Redemption Fee Rate Net Redeemed Amount = Redeemed Amount – Redemption Fee (2) For an Investor applying to Redeem Class C Fund Units, the Redeemed amount is calculated as follows: Redeemed Amount = Redeemed Units × NAV per Unit of Class C on Day T Redemption Fee = Redeemed Amount × Applicable Redemption Fee Rate Net Redeemed Amount = Redeemed Amount – Redemption Fee Case 5: Assuming that an Investor Redeems 10,000 Class A Fund Units on Day T, which are held for 20 days, and the NAV per unit of Class A on Day T is 1.250 Yuan. The Redeemed amount is calculated as follows: Redeemed Amount = 10,000 × 1.250 = 12,500.00 Yua n Redemption Fee = 12,500×0.3％＝37.50 Yua n
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Net Redeemed Amount = 12,500-37.5＝12,462.50 Yua n Case 6: Assuming that an investor Redeems 10,000 Class C Fund Units on Day T, which are held for 95 days, and the NAV per unit of Class C on Day T is 1.225 Yuan. The Redeemed amount is calculated as follows: Redeemed Amount = 10,000 × 1.225 = 12,250.00 Yua n 8.7.3 The NAV per unit on Day T shall be calculated after the end of the trading hours, and published on Day T+1. For each Unit Class, the NAV per unit shall be independently calculated and shall be the net asset value of each class divided by the outstanding units of each class on the calculation day. The NAV per unit shall be rounded to nearest thousandth. In emergency, the calculation and publication may be delayed, and such delay shall be reported to the CSRC for record.
8.8 Rejection or Suspension of Subscription In any of the following situations, the Fund Manager may reject or suspend accepting applications for Subscription: 8.8.1 Force Majeure leading to the Fund’s failure to accept applications for Subscription; 8.8.2 Temporary suspension of trading of the securities exchanges preventing the Fund Manager from calculating the NAV of the Fund for the day; 8.8.3 Valuation of the Fund Assets is suspended according to Article 16.6 of the Fund Contract; 8.8.4 Because of the distribution of the Fund Income, or upcoming listing or dividend distribution of certain portfolio securities held by the Fund, the Fund Manager consider that the acceptance of Subscription within the short term may influence or harm the interests of the Fund Unit Holders; 8.8.5 The size of the Fund Assets is too large for successful implementation of the investment strategy and may have adverse effects on the Fund performance and even harm the interests of the Fund Unit Holders; 8.8.6 Excessively frequent Subscription and Redemption of individual Investors which are likely to cause an increase in the trading expense and cost of selling the Fund Assets, or to prevent the Fund Manager from successfully implementing the investment strategy. The continued acceptance of Subscription of such Investor may harm the interests of other Fund Unit Holders; 8.8.7 The Fund Manager believes that the acceptance of one or some Subscription applications may affect or harm the interests of other Fund Unit Holders; or 8.8.8 Other situations as stipulated by the relevant laws and regulations or as defined by the CSRC.
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Once the Fund Manager decides to reject certain applications for Subscription, the amounts of Subscription paid to the Fund Manager shall be returned to the relevant Investor’s accounts. Once the Fund Manager decides to suspend all or some of the applications for Subscription, it will be necessary to submit to the CSRC for record and make timely announcement. Once the relevant circumstances causing suspension of Subscription are removed, the Fund Manager shall resume the Subscription service without delay and make timely announcements.
8.9 Suspension of Redemption or Deferral of Redemption Payment In case of the occurrence of any of the following situations, the Fund Manager may suspend accepting applications for Redemption or defer Redemption payment: 8.9.1 Force Majeure leading to the Fund’s failure to make Redemption payment; 8.9.2 Temporary suspension of trading of the securities exchanges preventing the Fund Manager from calculating the NAV of the Fund for the day; 8.9.3 Valuation of the Fund Assets is suspended according to Article 16.6 of the Fund Contract; 8.9.4 Mass Redemption (as defined in Clause 6.9.1 in the Fund Contract) for two or more consecutive Open Days; or 8.9.5 Other situations as stipulated by the relevant laws and regulations or as defined by the CSRC. In case of the occurrence of any of the above situations, the Fund Manager shall submit to the CSRC for record on the same day and make timely announcement. For the Redemption applications that have been accepted, the Fund shall make full payment when it has the ability. If full payment cannot be made for all the accepted applications for Redemption for the time being, the Fund Manager shall make pro rata payments according to the ratio between the amount of each accepted Redemption applications and the total amount of the accepted Redemption applications on the day. The remaining portion of the Redemption applications shall be processed at a later time, and the Redeemed amount shall be calculated based on the NAV per unit of the subsequent Open Day. Nevertheless, processing the Redemption applications may not be delayed for more than 20 Business Days of the normal payment schedule. Fund Unit Holders may choose to withdraw the portion of the Redemption applications that is not processed on the day of application. Once the relevant circumstances causing the suspension of Redemption are removed, the Fund Manager shall resume the Redemption activity without delay and make timely announcement.
8.10 Determination and Treatment of Mass Redemption 8.10.1 Determination of Mass Redemption
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Within a single Open Day, if the sum of the net applications for Redemption of the Fund Units (i.e. the total amount of Redemption applications minus the total amount of Subscription applications) and net applications for Exchange from the Fund Units (i.e. the total amount of applications for exchange-out minus the total amount of applications for exchange-in) is more than 10% of the total Fund Units of the preceding day, there is a Mass Redemption. 8.10.2 Treatment of Mass Redemption In the case of a Mass Redemption, the Fund Manager may decide, based on the status of the portfolio of the Fund, to accept all the Redemption applications or to defer part of the Redemption applications. (1) To accept all the Redemption: If the Fund Manager is able to pay for all the Redemption applications, then the regular Redemption procedure shall be followed. (2) To delay part of the Redemptions: When the Fund Manager believes there are difficulties with payment for all the Redemption applications and/or the payment for all the Redemption may trigger drastic fluctuations in the NAV of the Fund, the Fund Manager may defer the payment for part of the Redemption applications, provided that the total number of the Redeemed Fund Units on that day is not less than 10% of that of the preceding day. The Fund Manager shall make pro rata payments for the Redemption applications based on the ratio between the amount of each Redemption application and the total amount of the Redemption applications on that day. Unless the Investor chooses to withdraw the portion that is not accepted on the same day, the unaccepted portion of the applications shall be deferred to the next Open Day for Redemption. The deferred portion of any Redemption application does not enjoy any priority for Redemption, and the amount of Redemption shall be calculated based on the NAV per unit of the next Open Day. The same applies to any further deferral of Redemption applications until all the applications are satisfied. In the case of a Mass Redemption and partial deferral, the Fund Manager shall immediately report to the CSRC for record, and make an announcement stating the suggested solutions on at least one Designated Media within two days. If there is a Mass Redemption for two or more consecutive Open Days, the Fund Manager may suspend the acceptance of Redemption applications if necessary. Payment for accepted Redemption applications may be deferred for no more than 20 Business Days and the Fund Manager shall make an announcement on at least one Designated Media.
8.11 Suspension Period of Subscription and Redemption and Announcement for Re-Opening
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When the suspension of Subscription or Redemption comes to an end and the Fund is to be re-opened for Subscription or Redemption, the Fund Manager shall make an announcement on at least one Designated Media. 8.11.1 If the suspension lasts for one day, the Fund Manager shall announce the re-opening of Subscription or Redemption and the latest NAV per unit on at least one Designated Media on the re-open day. 8.11.2 If the suspension lasts for more than one day but less than two weeks, the Fund Manager shall announce the re-opening of Subscription or Redemption at least one Business Day in advance and the latest NAV per unit on the day of the re-opening on at least one Designated Media, when the suspension concludes and the Subscription or Redemption is re-opened. 8.11.3 If the suspension lasts for more than two weeks, the Fund Manager shall announce the suspension at least once every two weeks during the suspension period. If the suspension lasts for more than two months, it may adjust the frequency for such announcement. When the suspension concludes and the Fund Subscription or Redemption is re-opened, the Fund Manager shall announce the re-opening of Subscription or Redemption at least two days in advance and the latest NAV per unit on the day of re-opening on at least one Designated Media.
8.12 Exchange of Fund The Fund Manager may consult with the Sales Institutions to provide services of Fund Exchange for Fund Unit Holders, i.e. the Fund Unit Holders may apply to a Sales Institution with Fund Exchange business which sells both the funds to be exchanged. The Exchange from the Fund Units into units of other funds shall be deemed as Redemption and shall comply with all the relevant Redemption requirements and payment of Redemption fees is applicable. The Exchange from the units of other funds into the Fund Units shall be deemed as Subscription and shall comply with all the relevant Subscription requirements. The Fund Manager or the Sales Institutions may charge for the Exchange. The specific rules on Fund Exchange will be formulated and independently published by the Fund Manager.
9. OTHER SERVICES INCLUDING CUSTODY TRANSFER AND NON-TRADING TRANSFER OF FUND
9.1 The Registration and Clearing Institution accepts applications for non-trading transfer including inheritance, donation and judicial enforcement. Inheritance refers to the situation where a Fund Unit Holder is deceased and his Fund Units are inherited by the legal heir. Donation refers
61 ABF China Bond Index Fund Prospectus to the situation where a Fund Unit Holder donates his legally held Fund Units to any charity funds or other charity groups. Judicial enforcement refers to the situation where a judicial body compulsorily transfers the Fund Units of a Fund Unit Holder to another natural person, legal person or organization according to a valid judicial document. Any application for non-trading transfer under any of the foregoing circumstances shall be processed within two months following the acceptance of the application, and subject to charges in accordance with the relevant rules of the Registration and Clearing Institution. The Registration and Clearing Institution may handle other applications for non-trading transfer in compliance with its rules or authorize the Sales Institutions to process the applications as its agent.
9.2 If a Fund Unit Holder changes to another Sales Institution (Sales Outlet) for Fund Subscription and Redemption, he shall transfer the custody of his Fund Units if the Subscription or Redemption service is limited to a single Sales Institution (Sales Outlet). The Fund Unit Holder applying for custody transfer shall apply to the original Sales Institution (Sales Outlet) for custody transfer-out and, within 20 Business Days, apply to the new Sales Institution (Sales Outlet) for custody transfer-in. If the application for custody transfer is effective, the Fund Units shall be transferred into the designated Sales Institution (Sales Outlet) following the transfer-in formalities. The Fund Unit Holder shall pay service charges as required by the Sales Institutions (Sales Outlets).
9.3 The Registration and Clearing Institution only accepts the freezing and de-freezing of Fund Accounts or Fund Units as required by competent authorities in compliance with applicable law. Once a Fund Account is, or relevant Fund Units are, frozen, whether the interest and rights accruing on the frozen account or units should be frozen shall be determined according to the relevant regulations.
9.4 The Registration and Clearing Institution may, based on the related laws and regulations, provide the service of pledging of Fund Units or other Fund services, and develop and implement the corresponding business rules.
10. FUND INVESTMENT
10.1 Investment Objectives The Fund’s investment objective is to achieve a total return possibly close to the Benchmark Index before deduction of all fees and expenses.
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10.2 Investment Scope The Fund shall principally invest in the Constituent Bonds of the Benchmark Index. In order to achieve the investment objectives better, the Fund may also invest in non-Constituent Bonds and other financial instruments permitted by the laws and the regulations and the CSRC, but these financial instruments shall be limited to RMB-denominated bonds, money market instruments, cash and cash equivalents. The Fund shall not invest in equities.
10.3 Investment Strategies The Fund is passively managed, and mainly adopts the representative stratified sampling replication method. The representative stratified sampling replication method is to invest in some of the Constituent Bonds being representative of the Benchmark Index, or some selected non-Constituent Bonds as substitutes so as to make the general characteristics of the Fund bond portfolio (such as the duration, maturity distribution and the yield to maturity, etc.) tracking the Benchmark Index. In addition, the Fund will actively participate in the low-risk and risk-controllable investments like repurchase of bonds so as to compensate for the Fund’s expenses and increase the returns on the Fund. 10.3.1 Bond indexing investment (1) Strategy of building investment portfolio There are three steps in the process of building the Fund’s investment portfolio: identification of liquidity of Constituent Bonds of the Benchmark Index, determination of the target portfolio and gradual re-balancing. (a) Identify the liquidity of Constituent Bonds: Select the Constituent Bonds as the optional bonds for the portfolio with good liquidity based on quantitative and qualitative data such as the daily average trading volume, the frequency of quotation, the bid-ask spread and whether any Constituent Bonds are cross-market bonds or not. (b) Determine the target portfolio: Use the representative stratified sampling method to determine the weightings of the alternative bonds to achieve similarity between the general characteristic of the Fund’s portfolio and the Benchmark Index. (c) Gradual re-balancing: Adjust and perfect the actual portfolio to build the position gradually based on the actual liquidity of the market and the investment opportunities. In general, the bond assets shall constitute not less than 90% of the Net Asset Value of the Fund. The Fund shall reach this investment ratio within six months after the Effective Date of the Fund Contract. Thereafter, the Fund Manager shall re-balance the Fund’s portfolio within ten Business Days if the Fund does not meet this investment ratio due to factors such as the re-balancing of the Benchmark Index and cash flow from the Fund Unit Subscription
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and/or Redemption. (2) Monthly portfolio management (a) Re-balance the bonds and their weights in the Fund’s investment portfolio based on the monthly rebalancing of the Benchmark Index to retain the similarity between the general characteristic of the Fund’s portfolio and to track the re-balanced Benchmark Index. (b) Check the cash position in the Fund’s portfolio and prepare for disbursement of cash according to the payment requirements, such as the Fund Income distribution and the Fund fees, etc. (c) Analyze the Fund’s portfolio operations and tracking errors, analyze the difference between the recent return of the Fund’s portfolio and the total return of the Benchmark Index, and determine the reason(s) for the difference in monthly strategy meetings of the Fund Manager’s Research Team. (d) The Fund Manager’s Investment Decision-Making Committee supervises and makes decisions on the operation of the Fund. The portfolio manager of the Fund carries out the next phase of the work pursuant to the decisions made by the Investment Decision-Making Committee. (3) Tracking error target In normal market situations, the Fund Manager shall make efforts to limit the amount of the annualized tracking error between the pre-expense total return of the Fund and the total return of the Benchmark Index not exceeding 50 basis points (one basis point is equal to 0.0001). If the tracking error is beyond the above limit due to the adjustment of the formulation rules of the Benchmark Index or other reasons, the Fund Manager shall undertake appropriate measures to prevent further increase in the tracking error. 10.3.2 Investment in derivatives In the future, if investment in financial derivatives is allowed in the laws and regulations and approved by the supervisory authorities, after the approval of Fund Unit Holders’ Meetings the Fund may participate in relevant derivatives investments. The objective for the Fund to invest in derivatives is to enable the Fund’s portfolio to track more closely the relevant important features of the Benchmark Index or to replicate such features, so as to better achieve the investment objective of the Fund. The Fund may mainly invest in financial derivatives that are related to interest rates, the Benchmark Index, Constituent Bonds or any other non-Constituent Bonds in the Fund’s portfolio, such as forwards, swaps, options, futures. The absolute sum of the financial derivatives’ exposure of the Fund shall not exceed 10% of the Fund Assets, and the investment in derivatives should be for hedging
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purposes only, with no speculation. 10.3.3 In the future, if the relevant laws and regulations or the CSRC permits the Fund to invest in other instruments, the Fund Manager shall, after going through the proper procedure in accordance with relevant laws and regulations, integrate these instruments into the investment scope of the Fund and update and enrich the Fund’s investment strategy.
10.4 Investment Management System The Fund Manager adopts the Chief Investment Officer responsibility system under the leadership of the Investment Decision-Making Committee. The Investment Decision-Making Committee is the supreme decision-making body which will decide on matters relating to any significant re-balancing proposal with respect to the Benchmark Index, and to any significant re-balancing of portfolios and significant single investments. The Chief Investment Officer takes the full responsibility for the investment, research and trading operation, and reports to the Investment Decision-Making Committee. The portfolio manager is responsible for the daily investment operation of the Fund within the scope of management. The dealing management department is responsible for the centralized execution of all the trading activities.
10.5 Investment Management Procedure The investment management process of the Fund is an organic combination of research, investment decision-making, portfolio building, trading execution, investment performance evaluation and portfolio maintenance. Strict investment management process ensures the appropriate execution of investment concepts and the avoidance of significant risks. 10.5.1 Research: Combining with external research sources, the Research Team of the Fund Manager performs analyses on index tracking, liquidity, tracking error and its reasons, and prepares research reports as the primary basis of making fund investment decisions. 10.5.2 Investment decision: The Investment Decision-Making Committee, based on the research reports provided by the Research Team, holds meetings for investment decision-making regularly or when encountering some significant events, and makes decisions on the relevant matters. The portfolio manager, based on the decisions made by the Investment Decision-Making Committee, makes decisions on daily Fund investment management. 10.5.3 Portfolio building: Based on the Benchmark Index and combined with research reports, the portfolio manager mainly uses the representative stratified sampling replication method principally to construct the Fund’s portfolio. Provided that the general characteristics of the Fund’s portfolio and the Benchmark Index are similar, the portfolio manager will adopt appropriate methods to reduce the dealing cost and control the investment risks.
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10.5.4 Trading execution: The dealing management department of the Fund Manager is responsible for practical trading execution, and also for the real-time supervision function. 10.5.5 Risk and performance assessment: The Fund Manager will conduct investment risk and performance assessment on the Fund both regularly and on an ad hoc basis. Risk assessment helps the Investment Decision-Making Committee and the portfolio manager keep abreast of the portfolio’s risk level and consistency with the established investment strategy. Performance assessment helps to confirm whether or not the Fund’s portfolio fulfils its investment objectives, the sources of the portfolio’s tracking error and whether or not the Fund’s investment strategy is successful. Hence the portfolio manager may review investment strategies and make re-balancing changes to the Fund’s investment portfolio. 10.5.6 Portfolio monitoring and adjustment: The portfolio manager will track changes in the Benchmark Index, combine the liquidity of the Constituent Bonds, the cash flow of Subscription and Redemption and the results of portfolio risk and investment performance assessment to monitor and adjust the Fund’s portfolio, so that the portfolio is continuously optimized. The Fund Manager has the right to make changes to the above investment process according to market changes and actual demand, provided that the Fund Unit Holders’ interests are protected, and the changes are announced in the Prospectus and its updates.
10.6 Performance Measurement Benchmark The performance measurement benchmark of the Fund is the Benchmark Index. The Benchmark Index of the Fund is the iBoxx ®1ABF China Index compiled and published by the Markit Indices Limited. The Constituent Bonds of the iBoxx® ABF China Index include the RMB bonds issued by the government and other entities which are guaranteed by the government, such as treasury bonds, central bank notes, policy financial agency bonds and local government bonds etc. For changes of the Benchmark Index, which will lead to changes in the investment scope or strategy of the Fund (including but not limited to change in Index Provider), Fund Unit Holders’ Meetings shall be convened to approve the changes. Resolution of the Fund Unit Holders’ Meeting will become valid after being approved or recorded by the CSRC.
10.7 Characteristics of Risk and Return The Fund belongs to the category of bond fund, the risk and return of which are lower than an equity fund and a hybrid fund and are higher than that of a money market fund. The Fund principally invests in government bonds so its risk and return are lower than that of a bond fund
1 iBoxx is the registered trademark of Markit Indices Limited.
66 ABF China Bond Index Fund Prospectus which investment scope includes stocks, convertible bonds and corporate bonds.
10.8 Prohibited Activities The following are prohibited: 10.8.1 Provide loans or guarantee to others; 10.8.2 Engage in investment involving unlimited liabilities to the Fund; 10.8.3 Purchase or sell units of other funds, except as otherwise stipulated by the State Council; 10.8.4 Make capital contributions to the Fund Manager or the Fund Custodian, or purchase or sell the stocks or bonds issued by the Fund Manager or the Fund Custodian; 10.8.5 Buy or sell securities issued by or underwritten within the underwriting period by controlling shareholders of the Fund Manager or the Fund Custodian or by Important Connected Parties of the Fund Manager or the Fund Custodian; 10.8.6 Commit insider trading, manipulation of the securities price, or other inappropriate securities trading activities; or 10.8.7 Other activities prohibited by the CSRC pursuant to the relevant laws and administrative regulations. If the relevant laws and regulations or the supervisory authorities modify the prohibited activities provisions, the Fund Contract can be modified accordingly, and such modification is not subject to the review by the Fund Unit Holders’ Meeting.
10.9 Investment Restrictions 10.9.1 The Fund shall not invest in bonds not issued by the issuers of the Constituent Bonds; 10.9.2 The Fund shall not invest in Non-Constituent Bonds with an aggregate value exceeding 30% of the NAV of the Fund; 10.9.3 The Fund shall not hold cash and government bonds with maturity of not more than one year with an aggregate value less than 5% of the NAV of the Fund; 10.9.4 The Fund shall not engage in short sales; and 10.9.5 The Fund shall not make other investments forbidden by the Fund Contract, the relevant laws and regulations, or the CSRC. The Fund Manager shall make the Fund portfolio comply with the Fund Contract within six months after the Effective Date of the Fund Contract. If the Fund’s investment does not comply with any of the above provisions due to factors not attributable to the Fund Manager such as securities market fluctuation and the change of the Fund’s scale, the Fund Manager shall make the necessary adjustment within ten Business Days so that the Fund will comply with all the above provisions.
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In case that division of the Fund Units, large-scale dividends distribution or other concentrated and continuous events result in an increase of the NAV of the Fund by over one billion Yuan within ten Business Days, which causes the Fund’s securities investment ratio to be lower than the terms of the Fund Contract, the Fund Manager, after consulting with the Fund Custodian to have a mutual agreement and submitting a written report to the CSRC, may extend the adjustment period from ten Business Days to three months, or as otherwise required by the relevant laws and regulations as amended.
10.10 Short-Term Borrowing of Cash and Securities Lending The Fund can participate in short-term borrowing of cash and securities lending as permitted by the relevant laws and regulations or the supervisory authority. The Fund Manager shall obtain prior approval from the Fund Unit Holders’ Meeting before starting to carry out these businesses. The relevant risk management plans shall be approved by the Fund Unit Holders’ Meeting as well. The Fund's investment in repurchase of bonds is not subject to this clause.
11. FUND ASSETS
11.1 Total Asset Value of Fund The Total Asset Value of the Fund includes the total value of all securities, the principal and interest of the bank deposits, the receivables arising from the Subscriptions of Fund Units and other assets possessed by the Fund.
11.2 NAV of the Fund The NAV of the Fund is calculated by deducting liabilities from the Total Asset Value of the Fund.
11.3 Fund Asset Account The Fund shall open the Fund cash accounts and securities accounts in compliance with related regulations. The above accounts shall be separated from the respective self-owned asset accounts of the Fund Manager and the Fund Custodian, as well as other fund asset accounts. If there are any modifications of the relevant laws and regulations, the Fund Manager and the Fund Custodian may execute according to the new regulations.
11.4 Keeping and Disposal of Fund Assets 11.4.1 The Fund Assets are separated from the respective assets of the Fund Manager and the Fund Custodian, and are under the custody of the Fund Custodian.
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11.4.2 All assets and revenue received from the Fund’s investments and/or operations belong to the Fund Assets. 11.4.3 In the event that the Fund Manager or the Fund Custodian is under liquidation proceeding because of lawful dissolution, closed or declared bankruptcy, the Fund Assets must be separated from the liquidation assets. 11.4.4 Credits of the Fund Assets must not be offset against the debts of the Fund Manager or the Fund Custodian. Credits and debts of different funds’ assets must not be offset against each other. Debts not borne by the Fund shall not be enforced against the Fund Assets. 11.4.5 The Fund Assets shall not be disposed of, unless otherwise provided in the Law on Fund or relevant laws and regulations and the Fund Contract.
12. VALUATION OF FUND ASSETS
12.1 Valuation Date After the Effective Date of the Fund Contract, Fund Assets shall be valuated on every Open Day or on non-Open Days when the NAV of the Fund shall be disclosed as required by the laws and regulations.
12.2 Valuation Methods 12.2.1 The bonds which are listed on the securities exchanges and traded at net prices shall be valuated at the closing prices on the valuation day. In case there is no trading on the valuation day and no major changes happen to the market after the last trading day, the closing prices on the last trading day shall be adopted; if major changes happen to the market after the last trading day, the changes shall be considered together with the current market prices of similar bonds in the market to adjust the closing prices on the last trading day to determine their fair value. If sufficient evidence indicates that the closing prices on the last trading day cannot reflect their fair value, it is necessary to adjust the closing prices on the last trading day to determine the fair value for valuation. 12.2.2 The bonds which are listed on the securities exchanges and traded at gross prices shall be valuated at the net prices calculated by deducting the accrued interest from the closing gross price of the bonds on the valuation day. In case there is no trading on the valuation day and no major changes happen to the market after the last trading day, the closing prices (net prices) on the last trading day shall be adopted; if major changes happen to the market after the last trading day, the changes shall be considered together with the current market prices (net prices) of similar bonds in the market to adjust the closing prices (net prices) on the last
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trading day to determine their fair value. If sufficient evidence indicates that the closing prices (net prices) on the last trading day cannot reflect their fair value, it is necessary to adjust the closing prices (net prices) on the last trading day to determine their fair value for valuation. 12.2.3 The bonds that are initially offered and not listed shall be valuated at a fair value determined using valuation methods. In case a bond’s fair value cannot be determined using valuation methods, it shall be evaluated at cost. 12.2.4 The bonds that are traded on the inter-bank market shall be valuated at their fair value. 12.2.5 In any case, any valuation methods stated in the above paragraphs 12.2.1 to 12.2.4 used by the Fund Manager shall be considered as appropriate valuation methods. However, if the Fund Manager considers that none of the valuation methods stated in above paragraphs 12.2.1 to 12.2.4 reflects the fair value of a particular asset of the Fund, the Fund Manager may, pursuant to the specific circumstances and after consultation with the Fund Custodian, determine the value at a price which better reflects the fair value of the asset. 12.2.6 Other assets shall be valuated by other methods provided by the relevant laws and regulations or the principles by any supervisory authority. 12.2.7 Notwithstanding the above, if at any time any relevant laws or regulations or the supervisory authority require otherwise, valuation of the Fund shall conducted accordingly.
12.3 Assets to Be Valuated Assets that are required to be valuated include but not limit to bonds, bank deposits including the principal and the interest, accounts receivables and other investments.
12.4 Valuation Procedures and Confirmation of NAV of the Fund The Fund Manager conducts daily valuation of the Fund. After finishing the valuation, the Fund Manager shall send the valuation result to the Fund Custodian. The Fund Custodian shall then verify the valuation according to the valuation methods, time and procedures specified in the Fund Contract. If the valuation is correct, the Fund Custodian shall return the verification result to the Fund Manager. The Fund Manager shall then make a public announcement of the result.
12.5 Valuation Mistakes 12.5.1 The NAV per unit shall be calculated and rounded to 0.001 Yuan. The calculation shall follow the relevant laws and regulations or the principles provided by the supervisory authority. 12.5.2 The Fund Manager and the Fund Custodian shall take necessary, appropriate and
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reasonable measures to ensure the accuracy and timeliness of valuation of the Fund Assets. When there are mistakes in the calculation of the NAV per unit, the Fund Manager shall make immediate correction, and take reasonable measures to prevent further losses. If any calculation mistake amounts to 0.25% of the NAV per unit or more, the Fund Manager shall report to the CSRC. If any calculation mistake amounts to 0.5% of the NAV per unit or more, the Fund Manager shall make an announcement and report to the CSRC for filing. 12.5.3 The Fund Manager shall assume the liability for any losses of the Investors resulting from the error in calculation of the NAV per unit, which are limited to the direct losses of the Fund Unit Holders only. The Fund Manager shall have the right to claim for indemnity against the party who is responsible for the error in calculation after paying the damages to the relevant Investors. The Fund Manager reserves the right to claim for reinstatement of any unjust enrichment for and on behalf of the Fund. 12.5.4 If the relevant laws and regulations provide otherwise regarding the above circumstances, such relevant laws and regulations shall be complied with.
12.6 Circumstances of Suspension of Valuation 12.6.1 The exchanges on which the Fund’s investments are traded are closed because of public holidays or other reasons; 12.6.2 The Fund Manager or the Fund Custodian cannot accurately valuate the value of the Fund Assets because of Force Majeure or other circumstances; 12.6.3 Major changes occur to the valuation of certain type of investment that accounts for a substantial portion of the Fund Assets, and the Fund Manager has decided to defer the valuation to protect the interest of the Fund Unit Holders; 12.6.4 The Fund Manager is unable to sell or valuate the Fund Assets due to an emergency in the Fund Manager’s opinion; and 12.6.5 Other circumstances stipulated by the CSRC and the Fund Contract.
12.7 Treatment of Special Circumstances 12.7.1 Where the Fund is valuated in accordance with Paragraph 12.2.5 above, the valuation error shall not be regarded as a valuation mistake in respect of the Fund. 12.7.2 If the Fund Manager and the Fund Custodian have taken necessary, appropriate and reasonable measures to check but still did not discover the mistakes because of the mistakes in the data transmitted by the exchanges and/or the registration and clearing companies or events of Force Majeure, the Fund Manager and Fund Custodian may be exempted from the liability for the mistakes in the valuation of Fund Assets. However, the Fund Manager and
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the Fund Custodian should actively take the necessary measures to eliminate the impact of such mistakes.
13. FUND INCOME AND DISTRIBUTION
13.1 Sources of Fund Income 13.1.1 Fund Income includes interest income of bonds and bank deposits, capital gains, and other lawful income from the Fund’s investments. 13.1.2 Savings of costs or expenses of the management of the Fund Assets shall be included as its income.
13.2 Distributable Profits of the Fund Distributable profits of the Fund is the lower of the undistributed profits and the realized income in the undistributed profits as of the Fund Income distribution base day (as of which the distributable profit is taken for calculation).
13.3 Principles of Income Distribution 13.3.1 Because the fees are different, income distribution for each Unit Class may be different. The Fund Manager may develop plans on income distribution for different Unit Classes respectively, and each Fund Unit in the same Unit Class shall have the same rights for distribution of Fund Income. 13.3.2 After the income distribution, the NAV per unit shall not be lower than its face value, i.e., the NAV per unit on the income distribution base day less the amount of the distributed income per unit shall not be lower than the face value. 13.3.3 Provided that the above conditions for income distribution are fulfilled, the Fund Income can be distributed. The Fund Income shall not be distributed more than four times annually. Each distribution shall not be less than 20% of the then distributable profits, and the dividend distribution day shall not be later than 15 Business Days following the Fund Income distribution base day (as of which the distributable profit is taken for calculation). The Fund Income may not be distributed within three months from the Effective Date of the Fund Contract. 13.3.4 The Fund Unit Holders may choose to receive cash dividends or reinvest the dividends in the Fund. The Fund Unit Holders may choose different dividend methods for Class A and Class C respectively. In the case of dividend reinvestment, the dividends of the Units within the same Class shall be converted into equivalent Fund Units based on the NAV per unit
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within the same Class on the day of the dividend reinvestment specified in the Fund Income distribution announcement. In case that a Fund Unit Holder does not make a choice in advance, the default method of distribution is cash dividends. 13.3.5 Notwithstanding the above, if at any time any relevant laws or regulations or the supervisory authority imposes different requirements with regard to the distribution of the Fund Income, such provisions shall be observed.
13.4 Determination and Publication of Distribution Plan of Fund Income The Fund Income distribution plans shall be proposed by the Fund Manager, reviewed by the Fund Custodian, then reported to the CSRC for filing and published by the Fund Manager. The Fund Income distribution plans shall include information on the amount of the distributable profits as of the Fund Income distribution base day, the beneficiaries to such distribution, distribution time, distribution amount and proportion, and distribution method. Because different Unit Classes correspond to different distributable income, the Fund Manager may formulate different distribution plans of Fund Income for different Unit Classes.
13.5 Expenses Arising from Fund Income Distribution 13.5.1 There is no charge for reinvestment of distributed dividends. In the case of cash dividends, an amount or a portion of the cash dividends may be deducted as the handling charges for registration and clearing. If handling charges are collected, the deduction rate and method shall be described in the Prospectus or the announcements of the Fund Manager. 13.5.2 The Fund Unit Holders shall pay the bank charges including charges for money transfers for the distribution of the Fund Income. If the cash dividends received by certain Fund Unit Holders are not enough to pay the aforesaid charges, the Registration and Clearing Institution may convert the above cash dividends into equivalent Fund Units based on the NAV of the Fund Units within the same Class on the dividend reinvestment day (specified in the Fund Income distribution announcement).
14. EXPENSES AND TAXES
14.1 Operating Expenses 14.1.1 Types of expenses of the Fund During the Fund’s operation, fees payable from the Fund Assets include: (1) Management fee payable to the Fund Manager; (2) Custody fee payable to the Fund Custodian;
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(3) Continuous Sales and Service Charges; (4) Expenses arising from securities trading or settlement (including but not limited to handling charge, stamp duty, the monitoring fee for stock trading, transfer fee, service fee, brokerage commission and other fees of similar nature); (5) Expenses of convening and holding Fund Unit Holders’ Meetings; (6) Accounting fees, legal fees and information disclosure expenses incurred after the Fund Contract comes into effect; (7) Expense of money remittance; and (8) Other fees which may be charged against the Fund Assets as permitted by the laws and regulations and the supervisory authority. 14.1.2 Rate, accrual, and payment of the expenses (1) Management fees payable to the Fund Manager Generally, the management fee shall be accrued at the rate of 0.28% per annum of the NAV of the Fund of the preceding day. The calculation method is shown below: H＝E×0.28%÷Number of days in the current year H is the management fee accrued every day E is the NAV of the Fund on the preceding day The management fee is accrued daily and payable monthly. The Fund Manager will send the payment order for the Fund management fee to the Fund Custodian, and the Fund Custodian will check and make a lump-sum payment to the Fund Manager from the Fund Assets within the first 5 Business Days of the following month. The Fund management fee includes the iBoxx® index license fee payable to the Markit Indices Limited by the Fund Manager. The index license fee shall be a proportion of the NAV of the Fund and the maximum license fee rate is 0.023% per annum. The license fee rate changes according to the size of the Fund, the change of the exchange rate of RMB and changes of other factors. In addition, the Fund Manager shall pay on behalf of the Markit Indices Limited the exchange fee, bank charges and the tax payable by the Markit Indices Limited in China. (2) Custody fee payable to the Fund Custodian Generally, the custody fee shall be accrued at the rate of 0.15% per annum of the NAV of the Fund of the preceding day. The calculation method is shown below: H＝E×0.15%÷Number of days in the current year H is the custody fee accrued every day E is the NAV of the Fund on the preceding day The Fund’s custody fee is accrued daily and payable monthly. The Fund Manager will send
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the payment order for the Fund custody fee to the Fund Custodian, and the Fund Custodian will check and make a lump-sum payment to itself from the Fund Assets within the first 5 Business Days of the following month. (3) Continuous Sales and Service Charge The Continuous Sales and Service Charge is intended to cover the various expenses involved in marketing and sales of this Fund as well as the services to Fund Unit Holders. The Fund Units of different Unit Classes are subject to different rates of Continuous Sales and Service Charge. Class A is exempt from any Continuous Sales and Service Charge and Class C is subject to Continuous Sales and Service Charge at a rate of 0.4% per annum. The Continuous Sales and Service Charge of various Unit Classes is calculated as follows: H=E×R÷Number of days in the current year H is the accrued daily Continuous Sales and Service Charge for the Unit Class E is the NAV of the Class on the preceding day R is the Continuous Sales and Service Charge rate applicable for the Unit Class The Continuous Sales and Service Charge is accrued daily and payable monthly. The Fund Manager shall instruct the Fund Custodian to transfer and pay the relevant Continuous Sales and Service Charge, and the latter shall, after reviewing, make a payment from the Fund Assets within the first 5 Business Days of the following month, and the Registration and Clearing Institution shall make respective payments to all the Fund’s Sales Institutions concerned. (4) The Fund Manager and the Fund Custodian may discuss and reduce the Fund management fee and Fund custody fee according to the circumstances, and do not need to convene a Fund Unit Holders’ Meeting. However, a proposal to increase the above fees must be approved at the Fund Unit Holders’ Meeting. (5) The Fund Custodian shall pay for the actual fees stated in Items (4) to (8) of Paragraph 14.1.1 pursuant to the relevant regulations and the Fund Contract. 14.1.3 Items that are not expenses of the Fund The expenses or losses of the Fund Assets arising from the failure of the Fund Manager or the Fund Custodian to perform or fully perform their obligations and the expenses for matters not related to the Fund’s operations shall not be payable by the Fund.
14.2 Sales Load The rates, calculation, payment and use of the Initial Subscription fees of this Fund are detailed in Section 6.10 Initial Subscription Fee and 6.12 Calculation of Initial Subscription Units under Section 6, Offering of the Fund.
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The rates, calculation, payment and use of the Subscription fees and Redemption fees of this Fund are detailed in Section 8.6 Fees of Subscription and Redemption and 8.7 Calculation of Subscribed Units and Redemption Amounts under Section 8 Subscription, Redemption and Conversion of Fund Units.
14.3 Taxes Every taxpayer involved in the Fund’s operations shall pay tax pursuant to the laws and regulations.
15. ACCOUNTING AND AUDITING
15.1 Accounting Policy of the Fund 15.1.1 The fiscal year of the Fund commences on January 1st and ends on December 31st . 15.1.2 The Fund adopts RMB as its recording currency and Yuan as bookkeeping unit. 15.1.3 The accounting system of the Fund shall comply with the relevant accounting rules of the State. 15.1.4 The Fund shall keep its own books and accounting independently. 15.1.5 The party responsible for the accounting of the Fund is the Fund Manager. 15.1.6 The Fund Manager shall keep complete accounting books and records for daily accounting and prepare the Fund’s financial statements pursuant to the relevant regulations. The Fund Custodian will verify regularly the accounting and the statements with the Fund Manager.
15.2 Fund Auditing 15.2.1 The Fund Manager shall engage an accounting firm, which is independent from the Fund Manager and the Fund Custodian, and its Certified Public Accountants qualified for auditing securities business to audit the annual financial statements and other matters of the Fund. 15.2.2 The accounting firm shall seek the consent of the Fund Manager and the Fund Custodian to replace the Certified Public Accountants for the Fund. 15.2.3 If in the opinion of the Fund Manager (or the Fund Custodian) it is necessary to replace the accounting firm, it shall seek the consent of the Fund Custodian (or the Fund Manager) and file with the CSRC before the replacement. The Fund Manager shall announce the replacement of the accounting firm within two days following the replacement.
16. INFORMATION DISCLOSURE
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Information disclosure of the Fund shall be processed pursuant to the Law on Fund, Rules on Operations, Rules on Information Disclosure and its detailed implementation rules, the Fund Contract and other relevant regulations and made on at least one of the Designated Media designated by the CSRC (including newspapers and websites).
16.1 Fund Contract, Custody Agreement, Prospectus and Announcement of Fund Unit Offering After the approval of Fund offering application from the CSRC, the Fund Manager shall publish the Prospectus and a summary of the Fund Contract on the designated newspapers and websites three days prior to the commencement of the offering of the Fund Units. The Fund Manager and the Fund Custodian shall publish the Fund Contract and the Custody Agreement on their websites respectively. The Fund Manager shall prepare an announcement regarding the offering of the Fund Units and publish it on the designated newspapers and websites on the day of publishing the Prospectus. After the Fund Contract becomes effective, the Fund Manager shall update the Prospectus and publish it on its websites and the updated summary of the Prospectus on the designated newspapers within the first 45 days of every six months.
16.2 Announcement of the Enforcement of the Fund Contract The Fund Manager shall make an announcement of the enforcement of the Fund Contract on the designated newspapers and websites on the following day after the Fund Contract comes into effect.
16.3 Announcement of the Commencement of Subscription and Redemption The Fund Manager shall announce the commencement of Subscription and Redemption of Fund Units on designated newspapers and websites at least one Business Day before the date of commencement.
16.4 Announcement of NAV of the Fund and NAV per Unit After the Fund Contract becomes effective, and before the commencement of the Subscription or Redemption of the Fund Units, the Fund Manager shall publish at least once a week the NAV of the Fund and the NAV per unit. After the Fund Unit Subscription and Redemption begins, the Fund Manager shall disclose the NAV per unit and the accumulated NAV per unit of each Open Day through the websites of the Fund Manager, the Sales Agencies and other media on the day following that Open Day.
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The Fund Manager shall announce the NAV of the Fund and the NAV per unit on the last Business Day of each fiscal year and half year. The Fund Manager shall announce the NAV of the Fund, the NAV per unit and the accumulated NAV per unit on the designated newspapers and websites on the following day.
16.5 Periodic Reports Periodic reports of the Fund include the quarterly reports, semi-annual reports and annual reports, all of which are prepared by the Fund Manager pursuant to the relevant regulations, and checked by the Fund Custodian. 16.5.1 Quarterly reports: Quarterly reports of the Fund shall be completed within 15 Business Days after the end of every quarter, and published on the designated newspapers and websites. 16.5.2 Semi-annual reports: Semi-annual reports of the Fund shall be completed within 60 days after the end of the first six months of a fiscal year. The full text of the report shall be published on the websites and the summary of the report shall be published on the designated newspapers. 16.5.3 Annual reports: Annual reports of the Fund, after audited by the Fund’s certified public accountants, shall be completed within 90 days after the end of a fiscal year. The full text of the report shall be published on the websites and the summary of the report shall be published on the designated newspapers. 16.5.4 If the Fund Contract has taken effect for less than two months, it is not necessary to prepare the quarterly reports, semi-annual reports, or annual reports. 16.5.5 Notwithstanding the above, if at any time any relevant laws or regulations or the CSRC have different requirements with respect to the periodic reports of the Fund, such requirements shall be observed.
16.6 Extraordinary Reports and Announcement During the Fund’s operation, if any of the following events occurs which may significantly influence the interests of the Fund Unit Holders or the price of the Fund Units, the relevant party which has the obligation of information disclosure shall prepare and publish an extraordinary report within two days and file with the CSRC and the representative branch of the CSRC in the region in which the headquarters of the Fund Manager is located. (1) Convention of the Fund Unit Holders’ Meetings or adoption of resolutions; (2) Termination of the Fund Contract; (3) Alteration of Fund’s operation mode;
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(4) Replacement of the Fund Manager or the Fund Custodian; (5) Change of legal name or address of the Fund Manager or the Fund Custodian; (6) Any change in the Fund Manager’s shareholders or the proportions of their holdings; (7) Extension of the Fund Offering Period; (8) Replacement of the Chairman of the Board, General Manager, other senior management members or the Portfolio Manager of the Fund Manager or the replacement of the person in charge of the Funds Custody Department of the Fund Custodian; (9) Replacement of more than 50% of the Directors of the Fund Manager in a single year; (10) Replacement of more than 30% of the main personnel of the Fund Manager or the Funds Custody Department of the Fund Custodian in a single year; (11) Litigation or arbitration related to the Fund Manager, the Fund Assets or the Fund’s custody; (12) The Fund Manager or the Fund Custodian is under investigation by the regulatory authorities; (13) The Fund Manager or any of its Directors, General Manager, other senior management members, or the Portfolio Manager of the Fund receives a severe administrative penalty, or the Fund Custodian or the person in charge of its Funds Custody Department receives a severe administrative penalty; (14) Significant connected transactions; (15) Distribution of the Fund Income; (16) Alteration of the accrual standard, methods, and rate of the fees including the management fee and the custody fee; (17) Valuation mistakes in respect of the NAV per unit no less than 0.5% of the NAV per unit; (18) The Fund replaces the accounting firm responsible for auditing the Fund; (19) Change, addition, or removal of Sales Agencies; (20) Replacement of the Registration and Clearing Institution; (21) Commencement of the Subscription and Redemption of the Fund; (22) Any change in the rate and payment method of the fees for the Subscription and Redemption of the Fund Units and the Continuous Sales and Service Charge; (23) The Fund defers Redemption payment because of Mass Redemption; (24) The Fund suspends Redemption because of continuous Mass Redemptions; (25) The Fund suspends Subscription and Redemption of the Fund temporarily; (26) Resumption of Subscription and Redemption of the Fund; (27) Change of the Benchmark Index; (28) Introduction of new business or services;
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(29) Other events as prescribed by the CSRC;
16.7 Placement and Reference of Information Disclosure Documents Documents such as the Fund Contract, the Custody Agreement, the Prospectus, the Offering Announcement, the announcement of the enforcement of the Fund Contract, the periodic reports and the extraordinary announcements shall be kept in the offices or business places of the Fund Manager and the Fund Custodian, and shall be available for inspection free of charge by Investors. After paying a handling charge, Investors may obtain a duplicate or a copy of the above documents in reasonable time. The Fund Manager and Fund Custodian shall ensure the consistency between the documents and the announcements. These documents are also available to the Investors on the Fund Manager’s website. The information disclosure announcements can also be found on the Designated Media.
17. RISK DISCLOSURE Securities investment fund (hereinafter referred to as “fund”) is a long-term investment tool, the major functions of which are diversification of investment and reducing the individual risks of investing in single securities. Fund differs from bank deposits, bonds and other financial instruments which can provide fixed returns. Fund investors may not only enjoy the returns from their holdings in the funds but also bear the potential losses arising from the investment in the funds. A fund is exposed to various risks in the course of investment operations, including not only market risks, but also management risks, technical risks, conformity risks and other risks of the fund itself. Mass redemption is a risk specific to the open-ended funds, that is, when the sum of the net applications for redemption of the fund units and net applications for exchange from the fund units on a single Trading Day exceeds 10% of the total fund units, the investors may not be able to redeem all their fund units timely. There are different kinds of funds, including stock funds, hybrid funds, bond funds and money market funds. Investors, investing in different kinds of funds, may expect different returns and as well take different levels of risks. Generally speaking, the higher the expectation of returns from a fund, the greater risk an investor takes. Investors shall have full understandings of the differences between periodic plan in a fund and fixed deposits by installment. Periodic Plan is a simple and easy investment method that guides an investor to make long-term investment and equalize investment cost. However, periodic plan method can not avoid risks inherent in funds investment nor can it guarantee an investor’s profits from the investment, so it is not an alternative financial management method equivalent to
80 ABF China Bond Index Fund Prospectus savings. Investors shall carefully read the Fund Contract, the Prospectus and other legal documents of this Fund to understand the features of the risks and the returns of the Fund. Investors should make their own judgments on whether the Fund is adapted to their own risk bearing ability according to their investment purpose, investment period, investment experience, assets conditions and other respects. Investors shall Subscription and Redeem the fund through the Fund Manager or a Sales Agency. For the list of the Sales Agencies, please refer to the Fund Prospectus and the related announcements. That the Fund is offered at 1.00 Yua n per unit for Initial Subscription within the Fund Offering Period does not change the risks-and-returns features of the Fund. After Investors make their Initial Subscription at 1.00 Yua n per unit, Investor may face the risk of the NAV per unit falling below 1.00 Yua n.
17.1 Principal Risks of Investing in the Fund 17.1.1 Investment Portfolio Risk (1) Interest Risk: The value of the fixed income securities portfolio possessed by the Fund drops if the interest rate increases. The Fund tracks the Benchmark Index and will not involve active management. When the bond market falls, the Fund will not seek a defensive strategy and accordingly the value of the Fund Assets may be adversely affected. (2) Income Risk: The reinvestment income and interest income of the Fund reduce if interest rate decline and the dividend distributed by the Fund may also reduce. (3) Market Risk: The NAV per unit may be affected by fluctuation in the securities markets. Investors may suffer short-term or long-term loss due to fluctuations in the bond markets. (4) Asset Class Risk: The Fund mainly invests in RMB denominated treasury bonds, central bank notes and financial agency bonds. The returns on such bonds may be higher or lower than the average returns in the market. 17.1.2 Tracking Error Risk The following factors may cause the returns of the investment portfolio of the Fund to deviate from that of the Benchmark Index: (1) The Fund adopts the representative stratified sampling replication method and there may be a difference between the Fund’s investment portfolio and the composition of the Benchmark Index. In the process of sampling replication, and taking into account of liquidity, the Fund may mainly focus its investment on cross-market bonds. (2) There are investment costs and various fees and expenses as well as taxes incurred by
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the Fund, which are not taken into account when the Benchmark Index is compiled and calculated. (3) The interest on the bonds shall be treated as reinvestment income when the Benchmark Index is compiled but the Fund may not achieve the same yield when making reinvestment. (4) The difference in the composition of the Fund’s investment portfolio and the Benchmark Index may temporarily increase when the Fund Manager rebalances the Fund in response to a change in the Constituent Bonds of the Benchmark Index. Consequent trading costs may be incurred. (5) The Fund’s portfolio may have a cash drag or the Fund Manager may experience difficulty in buying or selling bonds due to insufficient liquidity on the bond market or restrictions on the minimum dealing board lots for bonds trading in the Inter-bank market when the Fund Manager seeks to invest cash received on the Subscription for Fund Units or to provide cash to be paid for the Redemption of Fund Units. (6) Tracking error could arise from other circumstances, such as difference between the valuation of the Fund Units and the pricing of the Constituent Bonds of the Benchmark Index, or an error in the compilation of the Benchmark Index by the Benchmark Index provider. 17.1.3 Liquidity Risk If the market is not sufficiently liquid, the Fund Managers may be unable to adjust the Fund investment portfolio in a rapid and cost-efficient manner, which have some adverse effects on the Fund Income. Considering the specific demands posed by open-ended funds, the Fund must keep a certain proportion of its assets in cash to meet Redemption demands. In terms of cash position management, there may be the risk of a cash shortage or decrease in earnings of the Fund due to excessive cash. 17.1.4 Risk of Benchmark Index Alteration Though very unlikely, according to the Fund Contract, the Benchmark Index may be changed. Investment strategies based on the original Benchmark Index will change and the Fund’s investment portfolio will consequently be rebalanced. The characteristics of returns and risks of the Fund will be consistent with the new Benchmark Index and Investors shall bear the risks and costs incurred in this rebalancing. 17.1.5 Operating or Technical Risk In the operation process of each business steps by connected parties, any operation failures or violations of operation rules due to defective internal control or misconducts may cause risks including unauthorized operation violations, frauds of accounting department,
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transaction errors and IT system failures. During various transactions or back-office operations of open-ended funds, any failures or errors of any relevant technical system may adversely affect regular transactions or the Investors’ interests. This kind of technical risk may arise from the Fund management companies, the Registration and Clearing Institution, the Sales Institutions, the stock exchanges, and the securities Registration and Clearing Institution. 17.1.6 Other risks Any event of Force Majeure, such as wars and natural disasters, would be likely to seriously affect the operation of the securities markets and might lead to the loss of the Fund Assets. Any crisis in financial markets, industry competition, and breach of contract by the Sales Agencies may occur out of the Fund Manager’s control and may be detrimental to the interest of the Fund or the Fund Unit Holders.
17.2 Statement (1) The Fund is not guaranteed by any level of government, agency or department. Investors invest in the Fund out of their free will, and shall take the investment risks personally. (2) Other than direct sale of the Fund by the Fund Manager, the Fund may also be sold by Sales Agencies. However, the Fund Assets are not deposits or liabilities of these Sales Agencies, nor guaranteed or endorsed by them, therefore, the Sales Agencies cannot guarantee its returns or the safety of the principal. (3) Members of EMEAP will invest in the Fund. The Fund is not promoted, offered, introduced, issued or guaranteed by any of the central banks or monetary authorities of EMEAP. As Fund Unit Holders, the central banks and monetary authorities of EMEAP have the same rights as other Fund Unit Holders, i.e., the rights to Redeem or exchange their Fund Units after the opening of Subscription or Redemption of the Fund without prior disclosure. (4) iBoxx® is a registered trademark of Markit Indices Limited (Markit) and has been licensed for use by the Fund Manager. Markit does not approve, endorse or recommend the Fund Manager or the Fund. Investments of the Fund are made on the basis of an iBoxx® ABF China Index provided by Markit, which is derived from a source considered reliable, but Markit and its employees, suppliers, subcontractors and agents (together Markit Associates) do not guarantee the veracity, completeness or accuracy of the Fund or other information furnished in connection with it. No statement, warranty or condition (no matter explicit or implicit, statutory or otherwise) as to the status, satisfaction of quality, performance, or fitness for purpose are
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given or assumed by Markit or any of the Markit associates in respect of the Fund or any data provided in connection with it or the use by any person or entity of the Fund or that data and all those statements, warranties and conditions are excluded save to the extent that such exclusion is prohibited by law.
18. MODIFICATION AND TERMINATION OF FUND CONTRACT AND LIQUIDATION OF FUND ASSETS
18.1 Modification of the Fund Contract Amendment of the Fund Contract shall be authorized by a Fund Unit Holders’ Meeting with approval of the CSRC or filing with the CSRC, and the amendment will become effective on the day of approval or issuance of non-objection letter by the CSRC. However, if an event provided in Clause 9.1.2 of the Fund Contract occurs, it is not necessary to hold a Fund Unit Holders’ Meeting. Amendment of the Fund Contract may be made without a resolution of the Fund Unit Holders’ Meeting so long as the consent of the Fund Manager and the Fund Custodian is obtained, an announcement is made and the amendment is reported to the CSRC for filing.
18.2 Termination of the Fund Contract Under any of the following circumstances, the Fund Contract shall be terminated: 18.2.1 The Fund Unit Holders’ Meeting votes for the Fund to be terminated. 18.2.2 If the duties of the Fund Manager or the Fund Custodian terminates, and no other new Fund Manager or Fund Custodian is appointed to undertake the rights and obligations of the former Fund Manager or Fund Custodian within six months of such termination. 18.2.3 Other circumstances as prescribed by the relevant laws and regulations or the CSRC. In any of the above circumstances of termination, the Fund Manager shall make an announcement promptly and shall organize a liquidation group to undertake the liquidation of the Fund Assets pursuant to the relevant laws and regulations and the requirements of the Fund Contract. The Fund Contract terminates on the day of the approval and announcement of the liquidation results by the CSRC.
18.3 Liquidation of the Fund Assets If the Fund Contract is terminated, the Fund Assets shall be liquidated in accordance with the relevant laws and regulations and the Fund Contract. 18.3.1 Liquidation group of the Fund Assets Before the liquidation group takes over the Fund Assets, the Fund Manager and Fund
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Custodian shall continue to perform their responsibilities of safeguarding the Fund Assets pursuant to the Fund Contract and the Custody Agreement. (1) The liquidation group shall consist of the Fund Manager, the Fund Custodian, certified public accountants qualified for auditing securities business, lawyers, and persons appointed by the CSRC. The liquidation group may hire necessary staff. (2) The liquidation group shall be responsible for safekeeping, liquidating, assessing, and realizing and distributing the Fund Assets. The liquidation group may take necessary civil actions according to the relevant laws. 18.3.2 Steps of liquidation (1) In the event of termination of the Fund Contract, the liquidation group takes over the Fund Assets; (2) The liquidation group determines the liquidation term according to the conditions of the Fund Assets; (3) The liquidation group checks and confirms the Fund Assets; (4) The liquidation group assesses and realizes the Fund Assets; (5) The liquidation group prepares a liquidation report; (6) After audit by an independent accounting firm and issuance of legal opinion by a law firm, the liquidation group reports the liquidation results to the CSRC for filing; (7) The liquidation group makes an announcement regarding liquidation of the Fund Assets; and (8) The liquidation group distributes the remaining Fund Assets to the Fund Unit Holders. 18.3.3 Liquidation expenses Liquidation expenses mean all reasonable fees and expenses incurred during the Fund liquidation process, which shall be paid out of the Fund Assets by the liquidation group with priority. 18.3.4 Distribution of remaining Fund Assets after the liquidation The Fund Assets shall be distributed in an order as below: (1) Payment of liquidation expenses; (2) Payment of taxes in arrears; (3) Discharge of the Fund’s debts; and (4) Distribution to the Fund Unit Holders in the proportion of their holdings in the Fund. The Fund Assets shall not be distributed to the Fund Unit Holders before the payments set forth in Items (1)-(3) above are made. 18.3.5 Fund liquidation announcement Any significant event in the liquidation process shall be announced timely. The resulting
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report of the liquidation made by the liquidation group audited by an accounting firm together with written legal opinion from a law firm shall be sent to the CSRC for filing and be announced within two Business Days. 18.3.6 Keeping of the statements and documents of the liquidation The Fund Custodian shall retain all statements and documents relating to the liquidation of the Fund Assets for at least 15 years.
19. SUMMARY OF THE FUND CONTRACT
For the summary of the Fund Contract, please see Annex 1.
20. SUMMARY OF THE FUND CUSTODY AGREEMENT
For the summary of the Fund Custody Agreement, please see Annex 2.
21. SERVICES TO FUND UNIT HOLDERS
The services to the Fund Unit Holders are mainly provided by the Fund Manager and Sales Agencies. The Fund Manager warrants to provide a wide range of services to the Fund Unit Holders. The Fund Manager will increase or change the services according to the needs of Fund Unit Holders, and the changes in the market. Major services are as follows:
21.1 Sending Documents 21.1.1 Statements of Account of Fund transactions The Fund Manager will regularly or irregularly send the statements of account in writing or in electronic form to the Fund Unit Holders who have transactions during the accounting period or hold the Fund Units as of the end of accounting period. However, the statements of accounts may not be sent successfully in whatever form once the Fund Unit Holders haven’t specified or updated their personal information (including name, address, etc.), or have decided not to receive the statements of accounts. 21.1.2 Other relevant information This refers to the Fund information sent from time to time along with the statements of account, including but not limited to materials related to new fund products or new services, review of the open-ended fund operations, and questions and answers from the Fund Manager’s customer service department.
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21.2 Reinvestment of Dividends When the Fund distributes the Fund Income, the Fund Unit Holders may choose to reinvest the dividends received from the Fund, and the Registration and Clearing Institution will automatically convert the dividends into Fund Units according to the NAV per unit on the day of the dividend reinvestment specified in the Fund Income distribution announcement. Dividend reinvestment is free of Subscription fees.
21.3 Periodic Plan The Fund may provide the Investors with periodic plans for subscription for Fund Units through the Sales Institutions. Investors can subscribe Fund Units in the manner of regular and fixed-amount subscription through the same Sales Institutions. Periodic plan is free from the minimum amount restriction on the Subscription amount. The detailed open hours and regulations will be announced on the Designated Media and website of the Fund Manger.
21.4 Fund Exchange The Fund Unit Holders may exchange the Fund Units through the Sales Institutions with fund Exchange business which also sell the funds to be exchanged. The Exchange should be subject to the rules of Subscription and Redemption of the Fund when exchanged. The Investors exchanging the Fund Units may receive a certain preferential fee rate. The detailed operation time and rules will be announced in the Designated Media and our company’s website.
21.5 Online Transactions Those individual Investors who hold saving cards of China Construction Bank, Jinsui debit cards of the Agricultural Bank of China, debit card of Industrial and Commercial Bank of China, saving card of China Merchants Bank, Pacific debit card of Bank of Communications, debit cards of Industrial Bank, debit card of Minsheng Bank, Dongfang Card/Savings Account Passbook of Shanghai Pudong Development Bank, debit cards of Guangdong Development Bank (Licaitong cards), or have opened accounts at TianTian Yin or at the Investment and Money Management Center of ChinaAMC may log on to the Fund Manager’s website (www.ChinaAMC.com) for opening Fund Accounts, Fund Initial Subscription, Subscription, Redemption, Fund Unit Exchanges, personal information alteration, changing the type of dividend distribution, and submitting information queries, etc. once such investors have reached an agreement on online transactions with the Fund Manager. As for the business rules applicable to the online transactions of the Fund Units, please visit the Fund Manager’s website. To learn more about the business operation procedures, please refer to the Fund Manager’s relevant statements.
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21.6 Email Services For the Investors who register their email addresses when opening the accounts with ChinaAMC, and subscribe email service through our website can automatically receive the email service. The Investors who do not register relevant information can acquire this email service after altering their personal information.
21.7 Call Center 21.7.1 Automatic Voice Service An interactive voice response service is provided for seven days a week, 24 hours a day. Fund Unit Holders may receive the latest notification information, the NAV per unit and the balances of the Fund Account by calling. 21.7.2 Customer Representatives A person-to-person service is provided for seven days a week. Monday to Friday: 8:30 am.－9:00 pm. Saturday to Sunday: 8:30 am.－5:00 pm. (except public holidays) Customer Service No.: 400-818-6666 Fax: (8610)63136700 21.8 Online Services The Investors may access the following services through ChinaAMC’s website. 21.8.1 Enquiry Service The Investors may visit the “Fund Account Enquiry” section of the website to check the relevant information about their Fund Accounts, update personal information and subscribe for customized services. 21.8.2 Online Customer Service The Investors may visit the “Online Customer Service” section of the website to consult or leave a message. The person-to-person service time is from 8:30 am. to 5:00 pm. (except public holidays). 21.8.3 Information Service The Investors can learn about the relevant information of the Fund and the Fund Manager, including the Fund documents, news of the Fund Manager and hot issues through the website. Company’s Website: www.ChinaAMC.com Email: [email protected]
21.9 Customer Complaints and Suggestions Investors may complain or make suggestions through the call center IVR, call center
88 ABF China Bond Index Fund Prospectus person-to-person service, online customer service, letter, email, or fax in respect of the services provided by the Fund Manager and Sales Institutions. Investors may call the customer service hotline of the Sales Agencies directly to complain about their services.
22. ADDITIONAL INFORMATION DISCLOSURE
22.1 Criteria and Procedures of Selecting the Securities Dealing Institutions for the Fund’s Exclusive Trading Seat The Fund Manager selects the securities dealing institutions and their trading seats exclusively for buying/selling the securities in which the Fund invests. The selected securities dealing institutions should: (1) Have strong qualifications and good reputation; (2) Have good financial status and advisable business, and do not receive any punishment imposed by relevant administrative institutions for serious violation of regulations in the last one year; (3) Have standard and strict internal management, with comprehensive internal control system, and have the ability to satisfy the highly confidential operation requirements of the Fund; (4) Have efficient and safe communication systems, with trading facilities qualified for the securities trading of the Fund, and be able to provide an all-round information service for the Fund, have strong research team, with a permanent research organization and skillful researchers, have ability to provide information service for the Fund in a timely manner, regularly and comprehensively, and be able to provide special research reports according to the specific requirements of the Fund. The Fund Manager examines the securities dealing institutions pursuant to the above criteria and then makes the selection. The Fund Manager will sign a written agreement with the securities dealing institutions selected.
22.2 Seat Rental Period and Changes The seat rental period is tentatively half a year. After the rental period expires, the Fund Manager will make an integrated assessment based on the research reports and information provided by the selected securities dealing institutions. The assessment may include: (1) Quality and quantity of research reports provided; (2) Whether the research reports are adopted by the Fund; (3) The direct and indirect benefits for the Fund resulting from the adoption of reports;
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(4) The Fund’s losses avoided or mitigated resulting from the adoption of reports; (5) The quality of the research papers, the subjects of which are assigned by the Fund Manager, provided by the securities dealing institutions; (6) Quality of the database provided by the securities dealing institutions; and (7) Other assessable quantitative criteria. The securities dealing institutions will be ranked according to the results of the above assessment. The Fund Manager not only ranks the securities dealing institutions, whose seats are rented by the Fund, but also considers and accepts research reports and information services from other securities dealing institutions to prepare for reallocation of trading seats in half a year. If the research reports or other information services provided by the securities dealing institutions do not satisfy the Fund’s requirements, the Fund Manager has the right to cancel the rental of the trading seat before expiration of the rental term.
22.3 Seats Operation The Fund Manager, by taking into account the quality of the research reports and information service provided by all the securities dealing institutions, may distribute the securities trading volume of the Fund among the seats.
22.4 Miscellaneous Pursuant to the relevant regulations, the Fund Manager shall disclose the relevant information of the securities dealing institutions selected, the trading volume of the Fund through each particular securities dealing institution, and the commission paid to each such securities dealing institution in the semi-annual reports and annual reports, and report to the CSRC.
23. PROSPECTUS PLACEMENT AND REFERENCE
The Fund Prospectus is kept in the offices or business locations of the Fund Manager, the Fund Custodian and the Sales Agencies and copies may be reviewed free of charge by the Investors. After paying a handling fee, they may obtain a duplicate or a copy of the Prospectus in reasonable time. The Fund Manager and Fund Custodian shall make sure that the content of these documents are the same as those that have been published.
24. DOCUMENTS AVAILABLE FOR INSPECTION
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24.1 The List of Documents Available for Inspection 24.1.1 Approval documents of the CSRC for the offering of the ABF CHINA BOND INDEX FUND; 24.1.2 ABF China Bond Index Fund Contract; 24.1.3 ABF China Bond Index Fund Custody Agreement; 24.1.4 Legal Opinion; 24.1.5 Qualification Approval of the Fund Manager’s professional qualifications and business license; and 24.1.6 Approval of the Fund Custodian’s professional qualification and business license.
24.2 Placement of the Documents The documents are kept in the offices or business locations of the Fund Manager and the Fund Custodian and are available for inspection.
24.3 Reference of the Documents The Investors may inspect the documents for free during the business hours. After paying a handling charge, the Investors may obtain a duplicate or a copy of the documents in reasonable time.
China Asset Management Co., Ltd. April 19th 2011
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ANNEX 1: SUMMARY OF THE FUND CONTRACT
1. PARTIES TO CONTRACT AND THEIR RIGHTS AND OBLIGATIONS
1. 1 Fund Manager 1.1.1 Summary Name: China Asset Management Co., Ltd. Domicile: Section A, Tianzhu Airport Industrial Zone, Shunyi District, Beijing Office Address: 3/F Tower B, Tongtai Building, No. 33 Finance Street, Xicheng District, Beijing Legal Representative: Fan Yonghong Date of Incorporation: April 9th, 1998 Approval Authority and Approval Document: CSRC Zheng Jian Ji Jin Zi [1998] No. 16 Form of Organization: Limited Liability Company Registered Capital: 238 million Yuan Duration: 100 years 1.1.2 Rights of Fund Manager (1) To offer the fund and file the fund in accordance with the law; (2) To operate the Fund Assets; (3) To receive management remuneration; (4) To assume the rights arising from Fund’s investment in securities in accordance with the relevant regulations; (5) To formulate and adjust fund operation rules including Initial Subscription, Subscription, Redemption, custody transfer, Exchange, non-trading transfer, freeze of Fund Account and distribution of Fund Income in compliance with the relevant laws and regulations; (6) To decide the fee structure and method of fee payment in compliance with the laws and the Fund Contract; (7) In accordance to the laws and the Fund Contract, the Fund Manager offers Fund Units, collects Initial Subscription fee, Subscription fee, Redemption fee and other fees stipulated by laws and regulations; (8) In accordance with the Fund Contract and the relevant regulations, the Fund Manager supervises the Fund Custodian. The Fund Manager shall promptly report to the CSRC and CBRC any matter which in its opinion is a breach of the Fund Contract or the relevant laws and regulations by the Fund Custodian, which might cause material losses to the Fund Assets and/or to other involved parties, and take necessary measures to protect the interests
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of the Fund and the other involved parties; (9) In the event of replacement of the Fund Custodian, the Fund Manager shall nominate a new custodian; (10) To choose and replace the Sales Agencies and to supervise and check their activities in accordance with the relevant Sales Agency agreements and the relevant laws and regulations; (11) To act as the Registration and Clearing Institution or to choose and replace the Registration and Clearing Institution to complete the Registration and Clearing Service, and to undertake necessary supervision and inspection of the Registration and Clearing Institution according to the Fund Contract; (12) To reject or temporarily suspend Subscription and Redemption applications as provided in the Fund Contract; (13) To make short-term borrowing of cash or securities lending on behalf and in the name of the Fund in accordance with the relevant laws and regulations; (14) To prepare the plan for distribution of the Fund Income in accordance with the laws and the Fund Contract; (15) To convene the Fund Unit Holders’ Meetings in accordance with the relevant laws and regulations and the Fund Contract; (16) To act for the benefits of the Fund Unit Holders in the name of the Fund Manager in legal proceedings and any other legal conducts; (17) To choose or change lawyers, auditors, securities dealing institutions, or other external service providers for the Fund and decide the relevant fee rates for the services; and (18) All other rights stipulated by the relevant laws and regulations, the Fund Contract and the securities regulatory authority under the State Council. 1.1.3 Fund Manager’s duties and obligations (1) To offer the Fund pursuant to the relevant laws and regulations; to handle or authorize other agencies which are recognized by the securities regulatory authority under the State Council to handle sales, Subscription, Redemption and registration of Fund Units; (2) To undertake the filing of the Fund; (3) From the Effective Date of the Fund Contract, to manage and use the Fund Assets in good faith and with due diligence; (4) To employ adequate qualified professionals to conduct analysis and make decisions regarding the Fund’s investment, and to manage and operate the Fund Assets in a professional manner; (5) To develop adequate internal risk control, supervision and auditing, financial control and
93 ABF China Bond Index Fund Prospectus personnel control in order to ensure the separation of the Fund Assets and the assets of the Fund Manager. To separately manage and keep books of the assets of the various funds and entrusted assets managed by the Fund Manager; to carry out securities investment; (6) Neither to seek illegal benefits for itself or any third party, nor to authorize any third party to operate the Fund Assets unless otherwise provided by the Law on Fund, the Fund Contract and other relevant regulations; (7) To be supervised by the Fund Custodian according to law; (8) To calculate and announce the NAV per unit, and determine the Subscription and Redemption prices per unit in accordance with the law; (9) To adopt appropriate and reasonable measures to ensure that the calculation method for the Initial Subscription, Subscription, Redemption and liquidation prices per share comply with the provisions of the Fund Contract and other legal documents; (10) To accept Subscription and Redemption applications pursuant to relevant rules, and to make timely and sufficient payment for Redemption; (11) To carry out accounting and prepare financial and accounting reports for the Fund; (12) To prepare interim and annual reports for the Fund; (13) To perform the obligations of information disclosure and reporting in strict accordance with the Law on Fund, the Fund Contract and other relevant regulations; (14) To keep business secrets of the Fund and not to disclose any Fund investment plans, investment intentions and so forth; to keep confidential and not disclose to others any information of the Fund before the same is made available to the public, save for disclosures required by the Law on Fund, the Fund Contract and other relevant rules; (15) To determine income distribution plan of the Fund in accordance with the Fund Contract and to promptly distribute the Fund Income to the Fund Unit Holders; (16) To convene or assist the Fund Custodian and Fund Unit Holders with convening Fund Unit Holders’ Meetings in accordance with the Law on Fund, the Fund Contract and other relevant regulations; (17) To keep records, accounting books, statements of Fund Assets management activities and other relevant data; (18) To exercise the right to file litigation actions or to implement other legal proceedings on behalf of the Fund Unit Holders in the name of the Fund Manager; (19) To organize and participate in the liquidation group of the Fund Assets, and to participate in the keeping, clearing, assessment, realization and distribution of the Fund Assets; (20) In the case of its breach of the Law on Fund or the Fund Contract, to take the liability
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for any and all losses to the Fund Assets and damage to the lawful interests of the Fund Unit Holders arising from such breach, which shall not be relieved as a result of its withdrawal of service; (21) To claim against the Fund Custodian for the losses of the Fund Assets and damage to the Fund Unit Holders arising from the Fund Custodian’s breach of the Law on Fund or the Fund Contract; and (22) To observe all other duties and responsibilities stipulated by the relevant law, regulations, Fund Contract and the securities regulatory authority under the State Council.
1.2 Fund Custodian 1.2.1 Summary Name: Bank of Communications Co. Ltd. Domicile: No.188, Yincheng Middle Road, Pudong New District, Shanghai Legal Representative: Hu Huaibang Date of Incorporation: March 30th, 1987 Funds Custody Qualification Approval Document: CSRC Zheng Jian Ji Zi [1998] No. 25 Form of Organization: Stock limited company Registered Capital: 56.259 billion Yuan Duration: Infinite 1.2.2 Fund Custodian’s rights (1) To receive the custody fees; (2) To supervise the investment operation of the Fund Manager; (3) From the Effective Date of the Fund Contract, to hold and keep in safe custody the Fund Assets in accordance with all applicable laws and regulations; (4) In the event of replacement of the Fund Manager, to nominate a new Fund Manager; (5) To convene the Fund Unit Holders’ Meetings in accordance with the relevant laws and regulations; and (6) To exercise all other rights stipulated by the relevant laws, regulations, Fund Contract and the securities regulatory authority under the State Council. 1.2.3 Fund Custodian’s duties and obligations (1) The Fund Custodian shall be honest and diligent and keep and hold in custody the Fund Assets safely; (2) The Fund Custodian shall establish a special custody department and have qualified business site and adequate and professional personnel for the custody of the Fund Assets; (3) The Fund Custodian shall establish and improve the internal control system, supervisory
95 ABF China Bond Index Fund Prospectus and auditing system, financial and personnel management system, to ensure the safety of the Fund Assets, to ensure the independence of the Fund Assets under its custody, the Fund Custodian’s own assets and the assets of other funds under its custody; to maintain separate accounts, conduct separate accounting and keep separate books for different funds and entrusted assets, and to ensure the independence among different funds and entrusted assets in terms of registration, account setup, fund transfer and account recording; (4) Except as otherwise provided by the Law on Fund, the Fund Contract and other relevant regulations, the Fund Custodian shall not seek to profit from the Fund Assets for itself and/or any other third party. The Fund Custodian shall not authorize a third party for the custody of the Fund Assets; (5) The Fund Custodian shall safely keep all the important agreements and the documents signed by the Fund Manager on behalf of the Fund in accordance with the related rules; (6) The Fund Custodian shall open separate money accounts and securities accounts for the Fund Assets; (7) The Fund Custodian shall keep business secrets of the Fund and not disclose to others any information of the Fund before the same is made available to the public, save for disclosures required by the Law on Fund, the Fund Contract and other relevant regulations; (8) The Fund Custodian shall offer its opinion on the financial and accounting reports of the Fund, the interim and annual reports of the Fund to state whether the operation of the Fund Manager in important respects is strictly in compliance with the Fund Contract or not. If there exists any non-performance of the Fund Contract of the Fund Manager, the Fund Custodian shall state whether the Fund Custodian has undertaken appropriate measures or not; (9) The Fund Custodian shall create and keep the register of the Fund Unit Holders in accordance with the related laws and regulations; (10) In accordance with the related rules, the Fund Custodian shall safely keep all the records, account books, report forms and other materials relating to the custody activity, and the account books, report forms and records in respect of the Fund Assets shall be kept for at least 15 years; (11)The Fund Custodian shall undertake the settlement and delivery of the Fund Assets and/or the Fund Units as ordered by the Fund Manager in accordance with the Fund Contract; (12) The Fund Custodian shall make information disclosure relating to the custody of the Fund Assets; (13) The Fund Custodian shall review and verify the NAV of the Fund, the NAV per unit,
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the accumulated NAV per unit, the Subscription prices and the Redemption prices per unit calculated by the Fund Manager; (14) The Fund Custodian shall supervise the investment operation of the Fund Manager in accordance with the relevant laws and regulations; (15) The Fund Custodian shall prepare the relevant account books for the Fund and check with the Fund Manager in accordance with the related laws and regulations; (16) The Fund Custodian shall distribute the Fund Income and pay the Fund Unit Holders for the Redemption and Exchange from the Fund pursuant to the instructions of the Fund Manager and/or the related regulations; (17) The Fund Custodian shall convene or assist the Fund Unit Holders with convening the Fund Unit Holders’ Meetings in accordance with the relevant regulations; (18) The Fund Custodian shall be liable for any and all losses or damage to the Fund Assets arising from its breach of the Law on Fund or the Fund Contract. Such liability shall not be relieved as a result of its withdrawal of service; (19) In the event of any losses of the Fund Assets arising from the breach of the Law on Fund or the Fund Contract by the Fund Manager, the Fund Custodian shall claim for compensation against the Fund Manager for the Fund; (20) The Fund Custodian shall participate in the Fund liquidation group, and participate in the keeping, clearing, valuation, realization and distribution of the Fund Assets; and (21) To observe all other obligations stipulated by the relevant laws and regulations, the Fund Contract and the rules of the securities regulatory authority under the State Council.
1.3 Fund Unit Holder Investors become Fund Unit Holders and a Contract Party of the Fund Contract commencing on the date when they receive the Fund Units under the Fund Contract. The Investors’ holding of the Fund Units shows their acknowledgement and acceptance of the Fund Contract and it is not necessary for a Fund Unit Holder to sign on the Fund Contract to become a Fund Contract Party. Each Fund Unit carries equal legal rights. 1.3.1 The rights of Fund Unit Holders are as follows: (1) The Fund Unit Holders have the right to receive distributions of the Fund Income; (2) The Fund Unit Holders shall be entitled to participate in the distribution of the remaining assets after the Fund liquidation; (3) The Fund Unit Holders have the right to redeem their Fund Units in accordance with the relevant laws and regulations and the Fund Contract; (4) The Fund Unit Holders have the right to request to convene the Fund Unit Holders’
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Meetings in accordance with the relevant regulations (Details refer to Chapter 9 of the Contract); (5) The Fund Unit Holders have the right to attend or appoint a proxy to attend a Fund Unit Holders’ Meeting to exercise their voting rights on matters under discussion by the Fund Unit Holders’ Meeting; (6) The Fund Unit Holders have the right to review and copy the disclosed information of the Fund; (7) The Fund Unit Holders have the right to supervise the investment operation of the Fund Manager; (8) The Fund Unit Holders have the right to acquire from the Fund Manager and the Fund Custodian the reports on any matter or action pertaining to their management or administration of the Fund, including without limitation, in respect of the policies for Subscription and Redemption of the Fund, and the influences on the operation of the Fund caused by the changes of the applicable laws and regulations; (9) The Fund Unit Holders may file a lawsuit against the violation of their lawful interests by the Fund Manager, the Fund Custodian, the Registration and Clearing Institution, the Sales Institutions and so on; and (10) All other rights stipulated by the relevant laws and regulations, the Fund Contract and the relevant rules of the securities regulatory authority under the State Council. 1.3.2 Obligations of Fund Unit Holders (1) The Fund Unit Holders shall comply with the laws and regulations, the Fund Contract, business rules and other relevant rules; (2) The Fund Unit Holders shall pay the Initial Subscription fee, Subscription fee and other applicable fees; (3) The Fund Unit Holders shall share the losses from the investment of the Fund and the termination of the Fund Contract, within the amount of their Fund Unit holdings; (4) The Fund Unit Holders shall not involve themselves in any activities that may cause damage to the Fund and/or the lawful interests of other Fund Unit Holders. For the avoidance of doubt, the exercise of any of the Fund Unit Holders’ rights pursuant to Section 1.3.1 shall not be deemed to cause any damage to the Fund and/or the lawful interests of other Fund Unit Holders; (5) To implement valid resolutions adopted by the Fund Unit Holders’ Meetings; (6) To return any undue profits received during transactions of fund from the Fund Manager, the Fund Custodian, the agent of the Fund Manager or other Fund Unit Holders; and (7) Other obligations stipulated by the relevant laws and regulations, the Fund Contract and
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the rules of the securities regulatory authority under the State Council.
2. FUND UNIT HOLDERS’ MEETINGS
2.1 Circumstances for Convening Fund Unit Holders’ Meetings 2.1.1 The Fund Unit Holders’ Meeting shall be convened in any of the following situations:
(1) To change the type of the Fund; (2) To change the investment objective, investment scope and investment strategy of the Fund; (3) To change the procedure of Fund Unit Holders’ Meeting; (4) To terminate the Fund Contract; (5) To change the operation mode of the Fund; (6) To raise the remuneration of the Fund Manager and/or the Fund Custodian; (7) To replace the Fund Manager and/or the Fund Custodian, except as specified by the Fund Contract; and (8) Other circumstances required by the relevant laws and regulations, the Fund Contract and the CSRC. 2.1.2 In any of the following situations, it is not required to convene a Fund Unit Holders’ Meeting: (1) To lower the management fee or custody fee of the Fund or other fees borne by the Fund Assets; (2) To change the classification of the Fund Units or adjust the rate of Subscription fees, Redemption fees and Continuous Sales and Service Charges of different classes of the Fund Units, as well as the methods to calculate the rates in compliance with the relevant laws and regulations and the Fund Contract; (3) To modify the rules of Initial Subscription, Subscription, Redemption, Exchange, non-trading transfer and custody transfer by the Fund Manager, the Sales Agencies, the Registration and Clearing Institution according to laws and regulations, with the permission of the CSRC; (4) Any change to the Fund Manager or Custodian, including change of unit holders, merger/demerger, change of operation scope, company form or name which involve no material changes to the management or custody businesses of the Fund and have no material negative effect on Fund Unit Holders’ interests in the Fund, where it is not required to convene the Fund Unit Holders’ Meeting; (5) To add new services or business such as telephone trading service with approval of the
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CSRC; (6) To modify the Fund Contract because of changes made in the relevant laws and regulations; (7) Any change to the Fund Contract that does not affect the rights and obligations of the Fund Contract Parties; (8) Any modification to the Fund Contract without any disadvantage in substance to the interests of the Fund Unit Holders; and (9) Other circumstances except where the convention of the Fund Unit Holder’s Meeting is required in accordance with laws and regulations or the Fund Contract.
2.2 Convener and the Convening Procedure (1) In general situation, the Fund Manager shall act as the convener of a Fund Unit Holders’ Meeting. (2) If the Fund Manager does not convene the meeting according to the relevant rules or cannot convene a Fund Unit Holders’ Meeting, the Fund Custodian shall convene the Fund Unit Holders’ Meeting. The Fund Custodian shall request in writing the Fund Manager to convene the Fund Unit Holders’ Meeting if it considers it necessary. The Fund Manager shall decide whether to convene the Fund Unit Holders’ Meeting or not and give written notice to the Fund Custodian within ten days after receipt of the written request. If the Fund Manager decides to convene the Fund Unit Holders’ Meeting, the Fund Unit Holders’ Meeting shall be held within 60 days after the written notice. If the Fund Manager decides not to convene the Fund Unit Holders’ Meeting and the Fund Custodian still regards it as necessary, the Fund Custodian shall convene the Fund Unit Holders’ Meeting. (3) If Fund Unit Holders holding 10% or more Fund Units in aggregate consider it necessary to convene a Fund Unit Holders’ Meeting, they shall submit a written request to the Fund Manager to convene a Fund Unit Holders’ Meeting. The Fund Manager shall decide whether to convene the Fund Unit Holders’ Meeting or not and give written notice to the representative(s) of the requesting Fund Unit Holders and the Fund Custodian within ten days after receipt of the written request. If the Fund Manager decides to convene the Fund Unit Holders’ Meeting, it shall convene the Fund Unit Holders’ Meeting within 60 days after the written notice. If the Fund Manager decides not to convene the Fund Unit Holders’ meeting and the Fund Unit Holders representing 10% or more Fund Units in aggregate still regard it necessary to convene the Fund Unit Holders’ Meeting, they shall submit a written request to convene the Fund Unit Holders’ Meeting to the Fund Custodian. The Fund Custodian shall decide whether to convene the Fund Unit Holders’ Meeting or not and give
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written notice to the representative(s) of the requesting Fund Unit Holders and the Fund Manager within ten days after receipt of the written request. If the Fund Custodian decides to convene the Fund Unit Holders’ Meeting, it shall convene the Fund Unit Holders’ Meeting within 60 days after the written notice. If both the Fund Manager and the Fund Custodian decide not to convene the Fund Unit Holders’ Meeting, the Fund Unit Holders have the right to convene the Fund Unit Holders’ Meeting. In this situation, the Fund Unit Holders shall report to the CSRC for filing not less than 30 days prior to the scheduled meeting date.
2.3 Time and Method and Contents of Notice to Convene Fund Unit Holders’ Meetings 2.3.1 The time and method of notice The convener shall issue a public notice regarding the convening of the Fund Unit Holders’ Meeting not less than 30 days prior to the scheduled meeting date on at least one Designated Media. 2.3.2 The contents of the notice The notice to convene Fund Unit Holders’ Meetings shall at least specify the following: (1) The date, time, venue and form of the meeting; (2) The matters for discussion, procedure and voting method of the meeting; (3) The date of registration of the rights and interests of the Fund Unit Holders who have the right to attend the Fund Unit Holders’ Meeting; (4) When and where the written notice of power of attorney to appoint a proxy to exercise the power to vote shall be served; (5) The name and the telephone number of the standing contact person; and (6) Other information that the convener needs to specify. If a Fund Unit Holders’ Meeting is convened by communication and the attendees are required to cast their votes, the convener shall determine the means of communication and the method of voting in writing, and specify in the notice the means of communication, the appointed notary public and its contact method and person, and the method of delivery and receipt of written votes at the Fund Unit Holders’ Meeting. If the convener is the Fund Manager, it shall notify the Fund Custodian, in a written format, to supervise the counting of the written votes at the specified meeting venue. If the convener is the Fund Custodian, it shall notify the Fund Manager, in a written format, to supervise the counting of the written votes at the specified meeting venue. If the convener is the Fund Unit Holders, they shall notify the Fund Manager and Fund Custodian, in a written form, to supervise the counting of the written votes at the specified meeting venue.
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2.4 How to Attend Fund Unit Holders’ Meeting The convener may convene the Fund Unit Holders’ Meeting by personal attendance or by communication. 2.4.1 Meeting by personal attendance: The Fund Unit Holder or his proxy with a power of attorney to vote attends the meeting, and the authorized representatives of the Fund Manager and the Fund Custodian shall attend the Fund Unit Holders’ Meeting. If personal attendance is adopted, the Fund Unit Holders’ Meeting may commence its agenda only when both of the following requirements are met: (1) The certificates of holdings of Fund Units of the attending Fund Unit Holders, the certificates of holdings of Fund Units of Fund Unit Holders who attend by proxy and the written powers of attorney of the proxies meet all the requirements of the relevant laws and regulations, the Fund Contract and the meeting notice; and (2) As verified, the certificates of holdings of Fund Units as of the date of registration of unit holdings represent 50% or more Fund Units registered on the date of registration of unit holdings. If either of the above requirements is not met, the convener of the meeting can defer the meeting to a later date and announce the date and venue for reconvening such meeting. The date of registration of unit holdings for such reconvention shall be the same date. 2.4.2 Meeting by communication: Voting shall be made in written form in the meetings by communication. If all the following conditions are met, the meeting by communication shall be regarded as effective: (1) After announcing the meeting notice in accordance with the Fund Contract, the convener makes reminding announcement repeatedly; and (2) The convener notifies the Fund Custodian and / or the Fund Manager (respectively or collectively called the “supervisors”) to supervise the counting of the written votes at a specified place in accordance with the Fund Contract; (3) Under the supervision of a notary public, the convener collects the written votes from the Fund Unit Holders by means stated in the meeting notice; (4) The Fund Units held by the Fund Unit Holders submitting written votes in aggregate account for 50% or more of the total number of Fund Units outstanding on the date of registration of unit holdings; and (5) For the Fund Unit Holders directly issuing written votes or the proxies appointed by the Fund Unit Holders to issue written votes, the certificates of holdings of Fund Units, the
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certificates of holdings of Fund Units of Fund Unit Holders who attend by proxy and the written powers of attorney of the proxies meet all the requirements of the relevant laws and regulations, the Fund Contract and the meeting notice. If the voting process is handled by means of written communication, the written votes which comply with the relevant laws and regulations and the meeting notice shall be deemed as valid votes. Any vote with vague expression or internal contradiction of comments on the face of the vote shall be deemed as abstention; however, these votes shall be calculated into the total number of valid votes by Fund Unit Holders. If any of the conditions for holding a meeting by communication is not satisfied, the convener may independently determine and announce a new voting time, and the date of registration of unit holdings shall be the same date.
2.5 Agenda and Procedure 2.5.1 Agenda Any major matters that affect the interests of Fund Unit Holders, including the events stipulated by Clause 2.1, may be put on the agenda. If the convener of the Fund Unit Holders’ Meeting has issued the meeting notice, timely announcements shall be made prior to such Fund Unit Holders’ Meeting if the original agenda is revised. Voting cannot be made in a Fund Unit Holders’ Meeting for an agenda item that was not announced by the convener. 2.5.2 Discussion procedure (1) Meeting by personal attendance At a meeting by personal attendance, the conveners shall designate a person to be the meeting director. The meeting director shall then appoint voting supervisors according to the procedure specified in Clause 2.6 below, and announce the proposals listed in the agenda. Following full discussion on a proposal, the Fund Unit Holders shall cast their votes and adopt resolutions. (2) Meeting by communication For a meeting by communication, the convener shall announce the agenda at least 30 days in advance. All the valid votes shall be counted on the second day after the announced voting deadline under the supervision of a notary public and the supervisor, and the voting results shall be the meeting resolutions. If the supervisor receives the notice but refuses to supervise with personal attendance, it does not affect the effect of the resolutions made at the Fund Unit Holders’ meeting.
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2.6 Requirements, Voting and Procedure of Resolution 2.6.1 Requirements for making a resolution Resolutions of Fund Unit Holders’ Meetings include general resolutions and special resolutions. (1) A general resolution shall be approved to be effective by the Fund Unit Holders and the proxies attending the meeting with more than 50% of the voting rights. Except for the events defined in paragraph (2) below which must be approved with a special resolution, all other matters shall be approved with a general resolution. (2) A special resolution must be approved to be effective by the Fund Unit Holders and the proxies attending the meeting with two thirds or more of the voting rights. Significant events including replacing the Fund Manager or Fund Custodian (except as specified by the Fund Contract), changing Fund operation mode, and terminating the Fund Contract shall be approved with special resolution. 2.6.2 Voting method The Fund Unit Holders’ Meeting adopts registered voting. Each Fund Unit represents one vote, and a Fund Unit Holder may appoint a proxy to attend a Fund Unit Holders’ Meeting on his behalf to exercise his voting right. 2.6.3 Voting procedure Each proposal or each topic in the same proposal on the agenda of a Fund Unit Holders’ Meeting shall be discussed and voted on separately. The votes counting procedure is as follow: (1) Meeting by personal attendance If the meeting is convened by the Fund Manager or Fund Custodian, the director of the meeting shall announce, after the commencement of the meeting, to elect two representatives of the Fund Unit Holders among the attending Fund Unit Holders and proxies together with one representative appointed by the convener to act as the voting supervisors. If the meeting is convened by Fund Unit Holders, the director of the meeting shall announce, after the commencement of the meeting, to elect two representatives of the Fund Unit Holders among the attending Fund Unit Holders and proxies to act as the voting supervisors together with one representative authorized by the Fund Manager. If the authorized representative of the Fund Manager does not attend, one representative authorized by the Fund Custodian shall act as the voting supervisors together with the two representatives of the Fund Unit Holders. If the authorized representative of the Fund Manager and the Fund Custodian does not attend, the director of the meeting shall elect
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three representatives of Fund Unit Holders to act as the voting supervisors, which doesn’t affect the effectiveness of voting. The voting supervisors shall count the votes immediately, after the Fund Unit Holders cast their votes, and then the director of the meeting shall announce the vote counting result. If the director of the meeting doubts the submitted voting result, the votes may be recounted. If the director of the meeting does not recount the votes, and the Fund Unit Holders attending the meeting or the proxies of the Fund Unit Holders dissent with the voting result, they shall have the right to request immediate recounting after the announcement of the voting result, and the director of the meeting shall immediately recount and announce the recounting result. The votes can be recounted only once. (2) Meeting by communication The votes of meetings by communications shall be counted by two voting supervisors authorized by the convener under the supervision of an authorized representative of the supervisor and a notary public shall notarize the vote counting process. If the supervisor receives the notice but refuses to supervise with personal attendance, the convener himself may authorize three supervisors to count the votes, and a notary public shall notarize the vote counting process, which doesn’t affect the effectiveness of voting.
2.7 Effect and Announcement of Resolutions of the Fund Unit Holders’ Meeting The convener shall report the matters approved by the Fund Unit Holders’ Meeting to the CSRC for approval or filing within five days after approval of the relevant resolution. Resolutions approved by the Fund Unit Holders’ Meetings shall become effective on the day the CSRC approves or issues non-objection opinion in accordance with the law. Resolutions of Fund Unit Holders’ Meetings shall be announced on at least one Designated Media within two Business Days after they become effective. Valid resolutions of Fund Unit Holders’ Meetings are binding on all the Fund Unit Holders, the Fund Manager and Fund Custodian. The Fund Manager, the Fund Custodian and the Fund Unit Holders shall implement valid resolutions of the Fund Unit Holders’ Meetings.
2.8 Relevant laws and regulations or rules of the supervisory authority which provide otherwise shall prevail.
3. TERMINATION OF FUND CONTRACT AND LIQUIDATION OF FUND ASSETS
3.1 Termination of the Fund Contract Under any of the following circumstances, the Fund Contract shall be terminated:
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3.1.1 The Fund Unit Holders’ Meeting votes for the Fund to be terminated. 3.1.2 If the duties of the Fund Manager or the Fund Custodian terminates, and no other new Fund Manager or Fund Custodian is appointed to undertake the rights and obligations of the former Fund Manager or Fund Custodian within six months of such termination. 3.1.3 Other circumstances as prescribed by the relevant laws and regulations or the CSRC. In any of the above circumstances of termination, the Fund Manager shall make an announcement promptly and shall organize a liquidation group to undertake the liquidation of the Fund Assets pursuant to the relevant laws and regulations and the requirements of the Fund Contract. The Fund Contract terminates on the day of the approval and announcement of the liquidation results by the CSRC.
3.2 Liquidation of the Fund Assets If the Fund Contract is terminated, the Fund Assets shall be liquidated in accordance with the relevant laws and regulations and the Fund Contract. 3.2.1 Liquidation group of the Fund Assets Before the liquidation group takes over the Fund Assets, the Fund Manager and Fund Custodian shall continue to perform their responsibilities of safeguarding the Fund Assets pursuant to the Fund Contract and the Custody Agreement. (1) The liquidation group shall consist of the Fund Manager, the Fund Custodian, certified public accountants qualified for auditing securities business, lawyers, and persons appointed by the CSRC. The liquidation group may hire necessary staff. (2) The liquidation group shall be responsible for safekeeping, liquidating, assessing, and realizing and distributing the Fund Assets. The liquidation group may take necessary civil actions according to the relevant laws. 3.2.2 Steps of liquidation (1) In the event of termination of the Fund Contract, the liquidation group takes over the Fund Assets; (2) The liquidation group determines the liquidation term according to the conditions of the Fund Assets; (3) The liquidation group checks and confirms the Fund Assets; (4) The liquidation group assesses and realizes the Fund Assets; (5) The liquidation group prepares a liquidation report; (6) After audit by an independent accounting firm and issuance of legal opinion by a law firm, the liquidation group reports the liquidation results to the CSRC for filing; (7) The liquidation group makes an announcement regarding liquidation of the Fund Assets;
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and (8) The liquidation group distributes the remaining Fund Assets to the Fund Unit Holders. 3.2.3 Liquidation expenses Liquidation expenses mean all reasonable fees and expenses incurred during the Fund liquidation process, which shall be paid out of the Fund Assets by the liquidation group with priority. 3.2.4 Distribution of remaining Fund Assets after the liquidation The Fund Assets shall be distributed in an order as below: (1) Payment of liquidation expenses; (2) Payment of taxes in arrears; (3) Discharge of the Fund’s debts; and (4) Distribution to the Fund Unit Holders in the proportion of their holdings in the Fund. The Fund Assets shall not be distributed to the Fund Unit Holders before the payments set forth in Items (1)-(3) above are made. 3.2.5 Fund liquidation announcement Any significant event in the liquidation process shall be announced timely. The resulting report of the liquidation made by the liquidation group audited by an accounting firm together with written legal opinion from a law firm shall be sent to the CSRC for filing and be announced within two Business Days. 3.2.6 Keeping of the statements and documents of the liquidation The Fund Custodian shall retain all statements and documents relating to the liquidation of the Fund Assets for at least 15 years.
4. DISPUTE SETTLEMENT
The Fund Contract is governed by the laws of the People’s Republic of China. Any dispute arising out of, in connection with or relating to the Fund Contract between the Contract Parties may be settled through negotiation or mediation. If the negotiation or mediation fails, any Party to the Fund Contract may submit to the China International Economic and Trade Arbitration Commission for arbitration pursuant to the then effective rules of the China International Economic and Trade Arbitration Commission in Shanghai. The arbitration award is final and legally binding on all the Parties to the Fund Contract. Except for the part with regard to the disputed matters, the Parties to the Fund Contract shall continue to perform this Fund Contract.
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5. FUND CONTRACT PLACEMENT AND REFERENCE
The Fund Contract is kept in the locations of the Fund Manager and Fund Custodian. Investors may review the Fund Contract by visiting the websites of the Fund Manager and the Fund Custodian. After paying a handling charge, Investors may obtain a duplicate or a copy of the Fund Contract. The Chinese version of the original Fund Contract shall prevail.
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ANNEX 2: SUMMARY OF THE CUSTODY AGREEMENT
1. PARTIES TO CUSTODY AGREEMENT
1.1 The Fund Manager Name: China Asset Management Co., Ltd. Domicile: Section A, Tianzhu Airport Industrial Zone, Shunyi District, Beijing Office Address: 3/F Tower B, Tongtai Building, No. 33 Finance Street, Xicheng District, Beijing Post Code: 100033 Legal Representative: Fan Yonghong Date of Incorporation: April 9th, 1998 Approval Authority and Approval Document: CSRC Zheng Jian Ji Jin Zi [1998] No. 16 Registered Capital: 238 million Yuan Form of Organization: Limited Liability Company Duration: 100 years
1.2 The Fund Custodian Name: Bank of Communications Co. Ltd. (abbreviated as “BOCOM”) Domicile: No.188, Yincheng Middle Road, Pudong New District, Shanghai Office Address: No. 188, Yincheng Middle Road, Pudong New District, Shanghai Post Code: 200336 Legal Representative: Hu Huaibang Date of Incorporation: March 30th, 1987 Funds Custody Qualification Approval Document: CSRC Zheng Jian Ji Zi [1998] No. 25 Registered Capital: 56.259 billion Yuan Form of Organization: Stock limited company Duration: Infinite
2. SUPERVISION AND VERIFICATION OF THE FUND MANAGER’S OPERATION BY THE FUND CUSTODIAN
2.1 The Fund Custodian shall supervise the investment scope and targets in accordance with the related laws and regulations as well as the related provisions of the Fund Contract. According to the Fund Contract, the Fund shall principally invest in the Constituent Bonds of the Benchmark Index. In order to achieve the investment objectives better, the Fund may also invest in non-Constituent Bonds and other financial instruments permitted by the laws and the
109 ABF China Bond Index Fund Prospectus regulations and the CSRC, but these financial instruments shall be limited to RMB-denominated bonds, money market instruments, cash and cash equivalents. The Fund shall not invest in equities. The Fund Custodian shall supervise the compliance of actual fund investment with the related provisions of the Fund Contract and verify any doubtful matters through relevant technical systems.
2.2 The Fund Custodian shall supervise the fund investment and financing ratio in accordance with the related laws and regulations as well as the related provisions of the Fund Contract. According to the Fund Contract, when using the Fund Assets for bonds investment, the Fund Manger shall not do the following: 2.2.1 Invest in bonds not issued by the issuers of the Constituent Bonds; 2.2.2 Invest in Non-Constituent Bonds with an aggregate value exceeding 30% of the NAV of the Fund; 2.2.3 Hold cash and government bonds with maturity of not more than one year with an aggregate value less than 5% of the NAV of the Fund; 2.2.4 Engage in short sales; 2.2.5 Breach the investment scope and investment strategies stipulated in the Fund Contract; and 2.2.6 Other circumstances forbidden by the CSRC. The Fund Manager shall make the Fund portfolio comply with the Fund Contract within six months after the Effective Date of the Fund Contract. If the Fund’s investment does not comply with any of the provisions in the Fund Contract due to factors not attributable to the Fund Manager such as securities market fluctuation and the change of the Fund’s scale, the Fund Manager shall make the necessary adjustment within ten Business Days. In case that division of the Fund Units, large-scale dividends distribution or other concentrated and continuous events result in an increase of the NAV of the Fund by over one billion Yuan within ten Business Days, which causes the Fund’s securities investment ratio to be lower than the terms of the Fund Contract, the Fund Manager, after consulting with the Fund Custodian to have a mutual agreement and submitting a written report to the CSRC, may extend the adjustment period from ten Business Days to three months, or as otherwise required by the relevant laws and regulations as amended. The Fund Custodian shall supervise the Fund’s portfolio restriction and adjustment period according to such provisions as described above.
2.3 The Fund Custodian shall supervise the prohibited activities of the Fund investments in accordance with the related laws and regulations as well as the related provisions of the Fund
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Contract. The Fund Assets shall not be used in the following investments or activities: 2.3.1 Provide loans or guarantee to others; 2.3.2 Engage in investment involving unlimited liabilities to the Fund; 2.3.3 Purchase or sell units of other funds, except as otherwise stipulated by the State Council; 2.3.4 Make capital contributions to the Fund Manager or the Fund Custodian, or purchase or sell the stocks or bonds issued by the Fund Manager or the Fund Custodian; 2.3.5 Buy or sell securities issued by or underwritten within the underwriting period by controlling shareholders of the Fund Manager or the Fund Custodian, or by Connected Parties of the Fund Manager or the Fund Custodian; 2.3.6 Commit insider trading, manipulation of the securities price, or other inappropriate securities trading activities; or 2.3.7 Other activities prohibited by the CSRC pursuant to the relevant laws and administrative regulations. If the relevant laws and regulations or the supervisory authorities modify the prohibited activities provisions, the Fund Contract can be modified accordingly, and such modification is not subject to the review by the Fund Unit Holders’ Meeting. According to the related laws and regulations on the connected transactions that aren’t allowed for the Fund, the Fund Manager and the Fund Custodian shall, within two Business Days after the Fund Contract becomes effective, provide the list of its controlling shareholders and Connected Parties to each other. In case there’s any change in the said list, either of them shall update the list and inform the other party without delay.
2.4 The Fund Custodian shall supervise the Fund Manager’s operation at the interbank bond market in accordance with the related laws and regulations as well as the related provisions of the Fund Contract. 2.4.1 The Fund Custodian shall supervise the possible counterparty risk during the Fund Manager’s operation at the interbank bond market in accordance with the related laws and regulations as well as the related provisions of the Fund Contract. The Fund Manager shall provide the Fund Custodian with the list of counterparties at the interbank market according to the related laws and regulations as well as the industrial standards, and shall update on a regular or irregular basis the list of the counterparties of bonds in kind and repurchase at the interbank market. The Fund Custodian shall, in receipt of the said list, confirm via telephone or in writing. The new list shall, once confirmed by the Fund Custodian, come into effect. Those unsettled transactions with such counterparties as removed from the new list shall be handled according to this Custody Agreement as long
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as such transactions have taken place prior to the validity of the new list. 2.4.2 The Fund Manager shall control the counterparties’ credit risk during its transactions at the interbank bond market and shall claim for indemnity against the counterparties whose credit risk is responsible for its losses.
2.5 The Fund Custodian shall supervise the Fund Manager’s choice of bank of deposit in accordance with the related laws and regulations as well as the related provisions of the Fund Contract. Where the Fund is invested in the bank deposits, the Fund Manager shall define the list of all the qualified banks of deposit according to the related laws and regulations as well as the related provisions of the Fund Contract and provide the said list to the Fund Custodian in a timely manner. The Fund Custodian shall supervise the counterparties’ compliance with the related regulations on the Fund’s investment in bank deposits. The Fund’s investment in bank deposits shall act upon the following provisions: 2.5.1 The Fund Manager and the Fund Custodian shall create a regular reconciliation mechanism with the bank of deposit to ensure the authenticity and accuracy of accounts and settlement for the Fund’s bank deposit business. 2.5.2 The Fund Manager and the Fund Custodian shall sign an independent written agreement on the Fund’s bank deposit business in line with the related regulations to specify their respective rights, duties and responsibilities in terms of signing relevant agreements, opening and managing accounts, communicating and executing investment orders, transferring funds, checking accounts, making payments at maturity, maintaining documents, and issuing, transmitting and maintaining the certificate of deposit, and to guarantee the safety of Fund Assets and protect the legitimate rights and benefits of Fund Unit Holders. 2.5.3 The Fund Custodian shall tighten its supervision and verification of the Fund’s bank deposit business, and strictly examine and double-check such documents as agreement, account, investment order and certificate of deposit so as to perform its duty as a custodian. 2.5.4 The Fund Manager and the Fund Custodian shall handle the Fund’s deposit business in strict accordance with such laws and regulations as the Law on Fund and the Rules on Operations, as well as China’s relevant regulations on account management, interest rate management and payment and settlement.
2.6 The Fund Custodian shall supervise other investment activities of the Fund in accordance with the related laws and regulations as well as the related provisions of the Fund Contract.
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2.7 The Fund Custodian shall supervise and verify the NAV calculation of the Fund and Fund Units, availability of receivables, confirmation of Fund expense and income, distribution of Fund Income, information disclosure, and publication of performance data in the Fund’s promotion materials in accordance with the related laws and regulations as well as the related provisions of the Fund Contract.
2.8 Once the Fund Manager is found to have violated the Law on Fund, the Fund Contract, this Custody Agreement and other related regulations, the Fund Custodian shall require the Fund Manager in writing to make corrections within the specified period, and remind the Fund Manager to make verification in receipt of the notice and confirm with the Fund Custodian via telephone or in writing. The Fund Custodian shall, within the specified period, have the right to review the matters as set forth in the notice and urge the Fund Manager to make corrections. In case the Fund Manager fails to correct its offenses within the said period, the Fund Custodian shall report to the China Securities Regulatory Commission (hereinafter referred to as the CSRC). Where the Fund Manager is found to have any serious offenses, the Fund Custodian shall report to the CSRC right away and require the Fund Manager to make corrections within the specified period.
2.9 The Fund Manager shall assist the Fund Custodian to handle inspection and verification work. The Fund Manager shall, in receipt of the written notice from the Fund Custodian, make responses and corrections within the specified period, and even present explanations or evidences to remove the Fund Custodian’s doubts. If the Fund Custodian submits the fund supervision report to the CSRC according to the related laws, the Fund Manager shall offer the necessary data materials and systems. The Fund Custodian shall refuse to execute the Fund Manager’s orders as long as such orders are found to have infringed upon the related laws, administrative regulations and other rules, or the related provisions of the Fund Contract, and shall inform the Fund Manager of its unlawful conducts and submit a report to the CSRC in a timely manner. Once The Fund Manager’s orders have become effective according to the transaction process but are found to have violated the related laws, administrative regulations and other rules, or the related provisions of the Fund Contract, the Fund Custodian shall inform the Fund Manager of its unlawful conducts and submit a report to the CSRC without delay.
3. SUPERVISION AND VERIFICATION OF THE FUND CUSTODIAN’S OPERATION BY THE FUND MANAGER
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The Fund Manager shall, according to the Law on Fund and the related regulations, the Fund Contract and this Custody Agreement, verify the Fund Custodian’s performance of its duties, including but not limited to the safety custody of Fund Assets, the timely opening of capital account, securities account and bond custody account of Fund Assets, the accurate reviewing of the Fund Manager’s NAV calculation of the Fund and Fund Units, the treatment of settlement according to the Fund Manager’s orders, the timely feedbacks in case of problems, the information disclosure and supervision over the Fund’s investment conducts in line with the related laws and regulations as well as the related provisions of the Fund Contract, and the confidentiality of non-public information. The Fund Manager shall verify the Fund Custodian’s custody of Fund Assets, and the Fund Custodian shall assist the Fund Manager in its verification conducts, including but not limited to providing the related materials to help the Fund Manager verify the integrity and authenticity of Fund Assets under the custody and making responses and corrections within the specified period. Once the Fund Custodian is found to keep same book for different funds, intend Fund Assets for other purpose than approved, neglect or postpone the execution of the Fund Manager’s funds transfer orders for no acceptable reason, disclose the investment information and have other conducts in violation of the Law on Fund, the Fund Contract, this Custody Agreement and other related regulations, the Fund Manager shall require the Fund Custodian in writing to make corrections within the specified period, and remind the Fund Custodian to make verification in receipt of the notice and confirm with the Fund Manager in writing. The Fund Manager shall, within the specified period, have the right to review the matters as set forth in the notice and urge the Fund Custodian to make corrections. In case the Fund Custodian fails to correct its offenses within the said period, the Fund Manager shall report to the CSRC. If the Fund Manager submits the fund supervision report to the CSRC according to the related laws, the Fund Custodian shall offer the necessary data materials and systems. Where the Fund Custodian is found to have any serious offenses, the Fund Manager shall report to the CSRC right away and require the Fund Custodian to make corrections within the specified period.
4. CUSTODY OF FUND ASSETS
4.1 Principles for the Custody of Fund Assets 4.1.1 The Fund Custodian shall guarantee the safe and intact custody of Fund Assets. 4.1.2 Fund Assets shall be separated from the assets of the Fund Manager and the Fund Custodian. 4.1.3 The Fund Custodian shall open capital account, securities account and bond custody account of Fund Assets according to the related regulations.
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4.1.4 The Fund Custodian shall establish separate accounts for different Fund Assets to ensure the integrity and independence of Fund Assets. 4.1.5 The Fund Custodian shall not utilize, dispose of and allocate any part of Fund Assets unless approved by the Fund Manager. 4.1.6 The Fund Custodian shall not entrust any third party to be responsible for the custody of Fund Assets unless approved by the Law on Fund, the Rules on Operations, the Fund Contract and other related laws and regulations. As regards the assets receivable due to the fund investment and subscription, the Fund Manager shall determine the date when the receivables reach the account with the party concerned, and then inform the Fund Custodian of such a date. In case the Fund Custodian fails to receive the Fund Assets on the said date, the Fund Manager shall be notified to demand the payment. The Fund Manager shall claim for indemnity against the party who is responsible for the fund loss thus incurred. As regards the Fund Assets generated by fund investment and kept or possessed by the other institution than the Fund Custodian, the Fund Custodian is merely responsible for maintain the written evidence for asset ownership as well as the related records. The Fund Manager shall claim for indemnity against the institution that is responsible for the fund loss as incurred by the latter’s bankruptcy, omission, fraud, willful misconducts and other offenses. The Fund Custodian shall be exempt from any liabilities thus incurred.
4.2 Verification of Fund Assets When the Fund Offering Period expires or the Fund Manager declares such Period is terminated, the Fund Manager shall, after the total Fund Units, Fund Amount and number of Fund Unit Holders comply with the Law on Fund, the Rules on Operations and the related rules, engage an accounting firm with the professional qualification for securities business to conduct the capital verification and issue the capital verification report which is signed by at least two China’s certified public accountants involved in the verification process. Once verification is completed, the Fund Manager shall transfer all the capitals and securities respectively to the Fund’s deposit account and securities account opened by the Fund Custodian. The Fund Custodian shall issue the written evidences in receipt of the said capital or securities.
4.3 Opening and Management of the Deposit Account 4.3.1 The Fund Custodian shall be responsible for opening and managing the Fund’s deposit account. 4.3.2 The Fund Custodian shall open in its own sales outlet the Fund’s deposit account in the
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name of the Fund. The Fund Custodian shall make, keep and use the Fund’s seal card. All the monetary receipts and payments of the Fund, including but not limited to investment, payment of redemption fees and Fund Income, and collection of subscription fees, shall be handled through the said deposit account. 4.3.3 The Fund’s deposit account is opened and used for no other purpose than satisfying the Fund’s business demand. Neither the Fund Custodian nor the Fund Manager shall open any other deposit accounts in the name of the Fund, or handle through the Fund’s deposit account any business that isn’t related to the Fund. 4.3.4 The Fund Custodian may make payments through the corporate online banking service for the Fund’s deposit account, and handle the fund settlement and transfer business for the Fund Assets under custody through the BOCOM’s online banking service (abbreviated as “BOCOM E-banking). 4.3.5 The Fund’s deposit account shall be managed in accordance with the Law of the People’s Republic of China on Negotiable Instruments, the Measures for the Administration of RMB Bank Account Settlement, the Interim Provisions for Cash Management, the Administrative Rules of the People’s Bank of China on Interest Rate, the Notice on the Management of Cash Payment in Large Denomination, the Measures for the Settlement of Payment as well as other related regulations. 4.3.6 The Fund Custodian shall keep the Fund’s deposit account under strict control and check the account balance without delay.
4.4 Opening and Management of the Securities and Capital Settlement Accounts 4.4.1 The Fund Custodian shall open with China Securities Depository and Clearing Company Limited (abbreviated as CSDCC) the Fund’s securities account with a joint name of the Fund Custodian and the Fund. 4.4.2 The Fund’s securities account is opened and used for no other purpose than satisfying the Fund’s business demand. Neither the Fund Custodian nor the Fund Manager shall lend or transfer any securities accounts unless approved by the other party, or handle through the Fund’s securities account any business that isn’t related to the Fund. 4.4.3 The Fund Manager shall buy and sell the securities on the Fund’s securities and capital settlement accounts within the specified amount. Where the Fund is allowed following the Effective Date of this Custody Agreement to have other investment operations according to the CSRC and other regulatory institutions, the Fund Custodian shall refer to and comply with the related provisions for opening and using the related accounts. 4.4.4 The Fund Custodian shall open, in its own name, the settlement provision account with the
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CSDCC to handle the fund settlement business with the stock exchanges for all the assets under its custody, including the Fund. The settlement provisions shall be collected according to the CSDCC’s relevant regulations. 4.4.5 The Fund Custodian shall open, in the name of Fund, the secondary settlement provision account with the Fund Custodian to handle the settlement of securities trading capitals.
4.5 Opening and Management of the Bond Custody Accounts 4.5.1 Once the Fund Contract has become effective, the Fund Manager shall, in the Fund’s name, apply for and obtain the trading qualification in the national interbank lending and borrowing market and handle the transactions on behalf of the Fund. The Fund Custodian shall, in the Fund’s name, open the bond custody account of interbank bond market with the China Central Depository & Clearing Co., Ltd., and handle the Fund’s bond and capital liquidation. Having completed the formalities as described above, the Fund Custodian shall submit a report to the People’s Bank of China (abbreviated as PBOC) for filing. 4.5.2 The Fund Manager and the Fund Custodian shall co-sign the master agreement for bond buy-backs in the national interbank bond market on behalf of the Fund, and the Fund Custodian shall keep the original of the said agreement while the Fund Manager shall keep the copy of the said Agreement.
4.6 Maintenance of Instruments like the Fund’s Physical Securities and Bank Deposit Certificates The Fund Custodian shall keep the Fund’s physical securities at the vault of the Fund Custodian bank and ensure the separate maintenance of such physical securities from other physical securities, or keep such physical securities in the CSDCC’s proxy vault. The Fund Custodian shall hold the deposit receipt, and handle the purchase and transfer of physical securities in the way the Fund Manager instructs. The Fund Custodian may not be responsible for the custody of the assets under the actual control of other institutions. The Fund Custodian shall keep the instruments like bank deposit certificates.
4.7 Maintenance of Major Contracts on Fund Assets The Fund Custodian and the Fund Manager shall separately keep the originals of major contracts concerning the Fund, which are signed by the Fund Manager on behalf of the Fund, unless restricted otherwise by the related business processes. The Fund Manager shall keep at least two originals for each of such major contracts unless stipulated otherwise by this Custody Agreement, so that the Fund Manager and the Fund Custodian can secure at least one original. The Fund
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Manager shall send one of two originals to the Fund Custodian without delay. The maintenance period of the contract shall comply with the related national regulations. In case two or more originals are unavailable, the Fund Manager shall offer the Fund Custodian the fax version of the contract which carries the authorized business seal. The original contract shall not be transferred unless agreed upon by two parties or approved by the contract.
5. CALCULATION AND REVIEW OF THE NAV OF THE FUND
The NAV of the Fund means the total asset value of the Fund less the liabilities of the Fund. The NAV per unit means the value after the net assets vale of the Fund Assets is divided by the total number of the Fund Units on the calculation day. There are several classes of Fund Units according to the different charges for Initial Subscription and Subscription and Continuous Sales and Service Charge. Each class has its own trading code. The NAV per unit of each class are calculated and disclosed separately. The net asset value per unit of each class of the Fund Units, calculated by dividing the net asset value of each class of the Fund Units on the calculation day by the total number of outstanding units of each class of the Fund Units on the same day. The Fund Manager shall estimate the value of the Fund Assets on each valuation day. The valuation principle shall not challenge the Fund Contract, the Guideline for the Accounting Business of Securities Investment Fund and other related laws and regulations. The Fund Manager shall calculate and the Fund Custodian shall review the NAV of Fund Assets and Fund Units which is involved in the Fund’s information disclosure. The Fund Manager shall calculate the NAV of Fund Units on each valuation day, and send in the form of encrypted fax to the Fund Custodian the calculation result that carries the official seal. Having reviewed and applied the official seal to the said result, the Fund Custodian shall inform the Fund Manager of the review result in the form of encrypted fax. The Fund Manager shall be responsible for publishing the NAV of Fund Units. Two parties may check the valuation results in the form of electronic reconciliation.
6. REGISTER MAINTENANCE OF THE FUND UNIT HOLDERS
The Fund Manager can entrust the Fund’s Registration and Clearing Institution to record and maintain the Register of the Fund Units Holders. The contents of such Register shall include but not be limited to the Fund Unit Holders’ names and number of Fund Units in holding. The Register of the Fund Units Holders include the Register of the Fund Units Holders at the end of the Fund Offering Period, on the Registration Day of the Fund Equity, on the Right Registration
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Day of Fund Unit Holders’ Meeting and on the last trading day of each year. The Fund’s Registration and Clearing Institution shall prepare and maintain the said Registers and be responsible for their authenticity, integrity and accuracy. The Fund Manager shall provide on a regular or irregular basis the Register of the Fund Units Holders in response to the Fund Custodian’s demand.
6.1 The Fund Manager shall provide the Fund Custodian with the Register of the Fund Units Holders as prepared by the Fund’s Registration and Clearing Institution within ten Business Days following the end of the Effective Date and the Expiry Date of the Fund Contract.
6.2 The Fund Manager shall provide the Fund Custodian with the Register of the Fund Units Holders as prepared by the Fund’s Registration and Clearing Institution within five Business Days following the end of the Right Registration Day of Fund Unit Holders’ Meeting.
6.3 The Fund Manager shall provide the Fund Custodian with the Register of the Fund Units Holders as prepared by the Fund’s Registration and Clearing Institution within ten Business Days following the end of the last trading day of each year.
6.4 Besides, where there’s the business demand, the Fund Manager shall provide the Fund Custodian with the Register of the Fund Units Holders as prepared by the Fund’s Registration and Clearing Institution after the two parties reach a consensus following their consultation.
The Fund Custodian shall properly maintain the electronic version of the said Register and generate the Disc-based copy on a regular basis. The Fund Custodian shall be held responsible for any improper maintenance during a storage period of 15 years. The Fund Custodian shall not intend the said Register under its storage for any other purposes than the Fund’s custody business, and shall perform the duty of confidentiality.
7. SETTLEMENT OF DISPUTES
The parties to this Custody Agreement agree to settle through the friendly consultation or mediation any disputes arising from or related to this Custody Agreement. Where the said parties refuse to settle through consultation or mediation or their attempts to settle through consultation or mediation fail, either of the parties has the right to submit the disputes to the China International Economic and Trade Arbitration Commission (CIETAC) Shanghai Commission for arbitration in accordance with the valid arbitration rules. The arbitration will take place in Shanghai and the
119 ABF China Bond Index Fund Prospectus arbitration award is final and binding upon the parties concerned. During the settlement of disputes, the parties concerned shall perform their respective responsibility as the Fund Manager and the Fund Custodian, fulfill their respective duty as set forth in the Fund Contract and this Custody Agreement faithfully, diligently and responsibly, and maintains the lawful rights and benefits of the Fund Units Holders. This Custody Agreement shall be governed by the laws of the People’s Republic of China.
8. MODIFICATION AND TERMINATION OF THE FUND CUSTODY AGREEMENT AND LIQUIDATION OF THE FUND ASSETS
8.1 Modification of the Fund Custody Agreement The parties to this Custody Agreement may modify the Agreement through consultation. The new Agreement shall be consistent with the provisions of the Fund Contract. The Fund Custody Agreement shall not be modified unless submitted to and verified by the CSRC.
8.2 Situations for the Termination of the Fund Custody Agreement 8.2.1 Termination of the Fund Contract; 8.2.2 The Fund Custodian is dissolved, revoked, declared bankrupt, and disqualified as the Fund Custodian according to the related laws, or has the custody business of Fund Assets taken over by other The Fund Custodian for other reasons; 8.2.3 The Fund Manager is dissolved, revoked, declared bankrupt, and disqualified as the Fund Manager according to the related laws, or has the management business of Fund Assets taken over by other Fund Manager for other reasons; 8.2.4 Other things that cause the termination of the Fund Custody Agreement according the Law on Fund, the Rules on Sales, the Rules on Operations and other related laws and regulations.
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APPENDIX: DEFINITIONS TO FACILITATE FOREIGN INVESTORS’ UNDERSTANDINGS Accumulated NAV per The accumulated NAV per unit of each class is the sum of the NAV unit per unit and the accumulated dividend per unit of this class on the same day; Back-end Subscription A sales charge the investor may pay when Fund Units are redeemed; Fee Benchmark Index The iBoxx® ABF China Index provided and published by the Markit Indices Limited and its updates, if any, or any other bond market index as replacement as needed; Business Day A day on which both the Shanghai Stock Exchange (“SSE”) and the Shenzhen Stock Exchange (“SZSE”) are open for trading; Business Rules The Business Rules on Open-ended Funds of China Asset Management Co., Ltd. to standardize the registration and settlement of open-ended securities investment funds under the administration of the Fund Manager, which shall be followed by the Fund Manager and Fund Investors; CBRC China Banking Regulatory Commission; Constituent Bonds The bonds that are included into the Benchmark Index; Continuous Sales and The charge payable out of the Fund Assets to support the sales and Service Charge marketing of the Fund, as well as the provision of certain services to the Fund Unit Holders; Exchange A Fund Unit Holder’s application to exchange his units of certain fund (including the Fund) into units of another fund (including the Fund) managed by the Fund Manager and registered and cleared by the same registration and clearing institution, pursuant to the terms and conditions set forth in the Fund Contract and the requirements of the Fund Manager; CSRC China Securities Regulatory Commission; Custody Agreement ABF China Bond Index Fund Custody Agreement and any effective revisions or supplements thereof; Day T An Open Day on which a Sales Institution accepts an Investor’s valid application for Initial Subscription, Subscription, Redemption or other operations at prescribed open hours;
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Day T+n The nth Business Day after Day T (excluding Day T), where “n” is a natural number; Day/week/month Calendar day/week/month; Designated Media The newspapers and internet websites designated by the CSRC for information disclosure; Direct Sales China Asset Management Co., Ltd; Effective Date of the The date on which the Fund Contract meets the legal requirements Fund Contract for funds filing and the Fund Manager obtains a written confirmation of its filing with the CSRC from the CSRC; Force Majeure Events and factors that cannot be foreseen, overcome or avoided, including but not limited to flood, earthquake and other natural disasters, wars, epidemic diseases, chaos, fires, government forfeiture, confiscation, change of laws, power failure interruptions or other emergencies, unusual suspension or discontinuation of trading on securities exchanges; Front-end Subscription A sales charge one may pay to subscribe the Fund Units; Fee Fund Account An account at the Registration and Clearing Institution opened for an Investor, for the purpose of recording the balance and changes of the Fund Units that are held by such Fund Unit Holder and maintained by the Registration and Clearing Institution; Unit Class(s) Different classes of the Fund Units that differ in charges for Initial Subscription and Subscription and Continuous Sales and Service Charge, as well as trading code. The NAV pe r unit and the accumulated NAV pe r unit of each class are calculated and disclosed separately; Fund Contract ABF China Bond Index Fund Contract and any effective amendments or supplements thereof; Party to Fund Contract, The Fund Manager, the Fund Custodian and the Fund Unit Holders, Parties to Fund Contract who are bound by the Fund Contract and enjoy the rights and bear the obligations under the Fund Contract; Fund Custodian Bank of Communications Co., Ltd; Duration of Fund The indefinite period from the Effective Date of Fund Contract to the date when the Fund Contract is terminated; Fund Income Income from interest of bonds, capital gains, interest of bank deposits
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and other lawful incomes accruing from investment of the Fund and savings of costs and expenses of the management of the Fund Assets; Fund Manager China Asset Management Co., Ltd. (ChinaAMC); Fund or the Fund ABF China Bond Index Fund; Fund Offering Period The period commencing from the date of offering of the Fund Units, which shall not exceed three months; Fund Unit Holder(s) An investor who acquires and holds the Fund Units according to the applicable laws and regulations or the Fund Contract; Important Connected The issuers of securities who are under the control of the controlling Parties shareholder(s) of the Fund Manager or the Fund Custodian; Initial Subscription An Investor’s application to purchase certain Fund Units pursuant to the Fund Contract during the Fund Offering Period; Investor(s) Individual investors, institutional investors, Qualified Foreign Institutional Investors and other investors as approved by laws and regulations or the CSRC to purchase securities investment funds; Individual Investor(s) A natural person who can invest in securities investment funds according to the applicable laws and regulations of the People’s Republic of China; Institutional Investor(s) An enterprise legal person, public affairs legal person, social group or other organizations that are lawfully registered or approved by competent government departments and exist in the People’s Republic of China and can invest in securities investment funds according to the applicable laws and regulations; Law on Fund The Law of the People’s Republic of China on Securities Investment Fund, adopted at the 5th session of the Standing Committee of the 10th National People’s Congress of the People’s Republic of China on October 28th, 2003, which went into effect as of June 1st, 2004, as may be amended from time to time; laws and regulations The laws, administrative regulations, judicial interpretations, local rules and regulations, departmental rules and other regulatory documents of the People’s Republic of China, as amended and supplemented from time to time; Mass Redemption Within a single Open Day, if the sum of the net applications for Redemption of the Fund Units (i.e. the total amount of Redemption applications minus the total amount of Subscription applications) and
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net applications for Exchange of the Fund Units (i.e. the total amount of applications for exchange-out minus the total amount of applications for exchange-in) are more than 10% of the total Fund Units of the preceding day, there is a Mass Redemption; NAV per unit The net asset value per unit of each class of the Fund Units, calculated by dividing the net asset value of each class of the Fund Units on the calculation day by the total number of outstanding units of each class of the Fund Units on the same day; NAV of the Fund The Total Asset Value of the Fund less the liabilities of the Fund; Non-Constituent Bonds Comparable bonds that are not included into the Benchmark Index but are issued by the same issuers of the Constituent Bonds; Offering Announcement Offering Announcement of Fund Units of ABF China Bond Index Fund; Open Day A Business Day on which the Fund is open for Initial Subscription, Subscription, Redemption and other operations; periodic plan Subscription for the Fund Units in the manner of regular and fixed-amount subscribe. Such a plan would generally set a specific initial time period when only Subscriptions, and no Redemptions, are allowed; Prospectus ABF China Bond Index Fund Prospectus and its periodic updates made by the Fund Manager; Qualified Foreign A foreign institutional investor that meets the requirements of the Institutional Investor(s) or Administrative Rules on Investment in Securities in China by QFII Qualified Foreign Institutional Investors and other relevant laws and regulations and is approved by the CSRC to invest in the Chinese securities market and allotted an investment quota by the State Administration of Foreign Exchange (SAFE); Redeem, Redemption A Fund Unit Holder’s application to sell certain Fund Units to the Fund Manager during the Duration of Fund after the Effective Date of Fund Contract pursuant to the Fund Contract; Registration and Clearing The institution that provides the Registration and Clearing Service Institution for the Fund. The Registration and Clearing Institution for the Fund is ChinaAMC or the institution that is entrusted by ChinaAMC to provide Registration and Clearing Service; Registration and Clearing The registration, deposit, transfer, clearing and settlement of Fund
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Services Units, including management of the Investors’ fund accounts, registration, settlement and clearing of Fund Units, confirmation of sale of Fund Units, confirmation of sale of fund, distribution of dividend on behalf of the Fund, creation and maintenance of the register of the Fund Unit Holders; Rules on Information The Administrative Rules on Information Disclosure of Securities Disclosure Investment Fund promulgated on June 8th 2004 by the CSRC, which went into effect as of July 1st 2004, as they may be amended from time to time; Rules on Operations The Administrative Rules on Operations of Securities Investment Fund promulgated on June 29th, 2004 by the CSRC, which went into effect as of July 1st, 2004, as may be amended from time to time; Rules on Sales The Administrative Rules on Sales of Securities Investment Fund promulgated on June 25th, 2004 by the CSRC, and which went into effect as of July 1st, 2004, as may be amended from time to time; Sales Agency, Sales An institution that is authorized by the Fund Manager to sell the Agencies Fund as an agent and is qualified by the CSRC to sell funds; Sales Institutions The Direct Sales Institution and the Sales Agencies; Sales Outlets The direct sales centers of the Fund Manager and the sales outlets of the Sales Agencies; Seat Membership on an exchange, which is a requirement for trading on that exchange; Securities Law The Securities Law of the People's Republic of China, adopted at the 6th session of the Standing Committee of the 9th National People’s Congress of the People’s Republic of China on December 29th, 1998, as may be amended from time to time; Subscription An Investor’s application to purchase certain Fund Units during the Duration of Fund after the Effective Date of Fund Contract, pursuant to the Fund Contract; Temporary Suspension In case of the occurrence of any of the following extraordinary circumstances which disable part or all of the trading activities, the exchanges will have the discretion to impose a technical suspension or temporary closure of the market: (1) Force Majeure; (2) unexpected events; (3) technical failure; or (4) other extraordinary circumstances as recognized by the exchanges.
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The Representative The Representative Stratified Sampling Replication Method is to Stratified Sampling invest in some of the Constituent Bonds, or chooses the Replication Method non-Constituent Bonds as substitutes. The objectives of this method is to make the portfolio a representative of the Benchmark Index as a whole to make the general characteristics of the Fund portfolio (such as the duration, maturity distribution and the yield to maturity, etc.) similar to the Benchmark Index; Total Asset Value of the The total value of all the securities and notes, principal and interest Fund of the bank deposits, accrued interest of bonds, receivables from Subscription, deposited margins and other investment proceeds owned by the Fund; Trading Account An account at a Sales Institution opened for an Investor, for the purpose of recording the changes and balance of the Investor’s Fund Units of the open-ended Fund traded through the Sales Institution; Valuation of the Fund Estimate of the value of the assets and liabilities of the Fund to Assets determine the NAV of the Fund and the NAV per unit; Yua n RMB Yuan, the currency of the People’s Republic of China.
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