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According to the requirements of the Notice on Issues Related to Fund Investment Warrants in the Share trading Reform (Zheng Jian Ji Jin Zi [2005] No. 138) (hereinafter referred to as the "Notice") issued by the China Securities Regulatory Commission (CSRC), it has been decided through study that the fund investment warrants managed by our company will be executed in strict accordance with the requirements of the relevant measures of the CSRC and the Exchange for the management of warrants.
1、 Proportion limit of fund investment warrants
Our company will strictly comply with the requirements of the Notice on the proportion of investment warrants to:
1. The total amount of warrants purchased by a fund on any trading day shall not exceed 0.5% of the net asset value of the fund on the previous trading day.
2. The market value of all warrants held by a fund shall not exceed 3% of the net asset value of the fund.
3. The same warrant held by all funds managed by the same fund manager shall not exceed 10% of the warrant.
2、 Investment strategy
On the premise of doing a good job in the research, valuation and risk assessment of warrants, our company's strategies for investing in warrants are:
1. It mainly focuses on passive investment, and obtains long-term income by holding the warrants paid by high-quality companies or their major shareholders in the share reform.
2. As the warrant market is still in its early stage and the price fluctuates violently, in order to avoid the greater impact of warrant price fluctuations on the net value of funds, try to avoid warrant speculation.
3. After the warrant market is fully developed and the transaction is active, we will use the research and valuation of the company's professional researchers to make active investment, and achieve the goal of reducing risk and improving portfolio management efficiency through the reasonable allocation of warrants and stocks.
3、 Information disclosure method
Disclose relevant information of investment warrants in designated newspapers according to the requirements of the Notice. It shall be publicly disclosed in the semi annual report of the Fund, the accounting report of the annual report and the prospectus (update) of the open-ended fund.
4、 Risk control measures
Our investment warrants will be executed in strict accordance with the company's risk control system and relevant requirements in the Notice. It includes:
1. Under the leadership of the Investment Decision making Committee, the system of warrant investment shall be formulated.
2. Financial engineers and researchers should do a good job in the research, valuation and risk analysis of warrants.
3. The fund manager shall decide the investment plan of specific warrant varieties according to the market transactions of warrants and strictly abide by the investment authorization system.
5、 Risk warning
Although warrant investment adopts the principle of prudence, it still has the following risks:
1. Price risk. Due to the high leverage of warrants, the price of warrants may fluctuate violently. Warrant price and subject matter negotiable securities Price and volatility, interest rate level, residual duration of warrants and other factors are highly correlated; At the same time, the price of warrants may be affected by the degree of trading activity of warrants.
2. Liquidity risk. Warrants may not be able to buy or sell a large number of warrants at the same price level, and there is a certain liquidity risk.
3. Timeliness risk. After the expiration of the duration, the warrants will not have any value and there is a risk of timeliness.
4. Credit risk. It refers to the risk of the issuer's failure to perform when the warrant holder exercises the right
South Fund Management Co., Ltd
August 26, 2005
Sina statement: The content of this article is purely the author's personal view, only for investors' reference, and does not constitute investment advice. Investors operate accordingly at their own risk.
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