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Announcement on Open-end Fund Conversion Business of Huaxia Fund Management Co., Ltd.

In order to meet the financial needs of investors, Huaxia Fund Management Co., Ltd. (hereinafter referred to as "the Company") officially launched the fund conversion business of open-end funds on March 25th, 2004. Fund conversion refers to converting part or all of the shares of an open-end fund held by our company into the shares of another open-end fund managed by our company.

I. Scope of applicable funds

The fund conversion business is applicable to Huaxia Growth Securities Investment Fund (hereinafter referred to as "Huaxia Growth", with pre-charge code: 0000 1 and post-charge code: 000002) and Huaxia Bond Investment Fund (hereinafter referred to as "Huaxia Bond", with pre-charge code: 00 1) which have been issued and managed by the Company. Post-charging code: 00 1002), Huaxia Return Securities Investment Fund (hereinafter referred to as "Huaxia Return", pre-charging code: 00200 1, post-charging code: 002002) and Huaxia Cash Increase Securities Investment Fund (hereinafter referred to as "Huaxia Cash Increase", fund code: 003003). The open-end funds issued by the company in the future will determine whether they are suitable for fund conversion business according to the specific circumstances.

Second, the scope of applicable investors

The fund conversion business is applicable to all individual investors and institutional investors who hold the above funds.

Three. Calculation of related expenses and conversion share

1. No fund conversion fee is charged.

2. The redemption fee due for the normal redemption of the transferred-out fund will be charged when the fund is transferred out. If this part of the fund adopts the back-end subscription mode, the back-end subscription fee will be charged at the expiration of normal redemption.

3. Discount the subscription rate when transferring to the fund. The rules are as follows: (the fund shares purchased by the front-end charging mode are referred to as "front-end charging transfer", and the fund shares purchased by the back-end charging mode are referred to as "back-end charging transfer"; Select front-end charging mode (referred to as "front-end charging transfer") and back-end charging mode (referred to as "back-end charging transfer").

(1) The conversion between China's cash increase and China's growth, China's bonds and China's returns.

① Transfer the other three funds to China to increase profits in cash.

No charge.

② Transfer cash from Huaxia to increase profits, and transfer the front-end expenses to the other three funds.

Rate = subscription rate transferred to the fund -0.25%* holding days of Huaxia Cash Increase Fund /365, and the minimum value is 0.

③ Transfer Huaxia's cash to increase profits, and transfer the back-end expenses to the other three funds.

When calculating the holding period of the transferred fund, the holding period is calculated from the time when Huaxia Cash Increase Fund is bought (if it is bought during the issuance period, it is calculated from the time when the fund is established).

(2) The transformation among Huaxia Growth, Huaxia Bond and Huaxia Return.

① Front-end expenses are transferred out and front-end expenses are transferred in.

If the highest subscription rate of the transferred-out fund is higher than that of the transferred-in fund, the difference will be used as the priority subscription rate when transferring out, otherwise the subscription rate will be 0.

② Back-end expenses are transferred out and front-end expenses are transferred in. Expense rules are the same as front-end expense transfer-out and front-end expense transfer-in.

③ The front-end expenses are transferred out and the back-end expenses are transferred in.

The back-end subscription rate sets different rate levels according to the holding period. The longer the holding time, the lower the rate until it is zero. At the time of conversion, the transferred-out fund is regarded as holding a certain number of years, and the back-end subscription rate is 0, which is regarded as the holding period of the transferred-in fund.

④ Back-end expenses are transferred out and back-end expenses are transferred in. Expense rules are the same as front-end expense transfer-out and back-end expense transfer-in.

Fourth, for example.

Assuming that the transfer-in amount after collecting the receivable fees when transferring funds is 65,438+00,000 yuan, the net value of Huaxia growth unit on that day is 65,438+0.15 yuan, the net value of Huaxia bond unit is 65,438+0.02 yuan, and the net value of Huaxia return unit is 65,438+0.1.

1. Whether the front-end charges are transferred out of Huaxia Growth or the back-end charges are transferred out, the front-end charges are transferred into Huaxia Bond.

Transfer subscription fee =0

Transfer-out fund share =10000/1.02 = 9803.92.

2. Whether the front-end charges are transferred out of Huaxia bonds or the back-end charges are transferred out, the front-end charges are transferred to Huaxia Growth.

Transfer subscription fee =10000 * (1.8%-1.0%) = 80 yuan.

Transferred fund share = (10000-80)/1.15 = 8626.09.

3. Whether the front-end charges are transferred out of Huaxia bonds or the back-end charges are transferred out, the back-end charges are transferred into Huaxia returns.

Transfer-out fund share =10000/1.10 = 9090.438+0.

The current holding period of the transferred-out fund is 5 years. When it is redeemed in the future, the back-end subscription fee will be calculated according to the actual holding period of Huaxia Return plus 5 years.

4. Transfer Huaxia cash to increase profits, and transfer front-end charges to Huaxia bonds.

Transfer subscription fee =10000 * (1.0%-0.25% * 0.5) = 87.5 yuan.

Transfer-out fund share = (10000-87.5)/1.02 = 9718.14.

5. Turn out Huaxia cash to increase profits, and the back-end charges will be converted into Huaxia returns.

Transfer-out fund share =10000/1.1= 9090.9438+0.

The current holding period of the transferred-out fund is 0.5 years. In the future redemption, the back-end subscription fee will be calculated according to the actual holding period of this part of China return plus 0.5 years.

Verb (abbreviation for verb) business rules

1. Investors can only handle fund conversion business in institutions that sell both transferred-out funds and transferred-in funds.

2. Fund conversion is based on shares.

3. The conversion of the Fund adopts the unknown price method, that is, the conversion price of the Fund is calculated based on the net value of the unit transferred to the Fund on the day when the application for conversion is accepted.

4. After the investor applies for fund conversion on T day, it can be confirmed on T+ 1 day.

5. The single transfer-out application of the fund holder is limited by the redemption share of the transferred-out fund (at present, each redemption application of the open-end fund of the Company shall not be less than 65,438+0,000 fund shares, and if the fund holder keeps less than 65,438+0,000 fund shares in the sales organization (outlet) during or after redemption, the single transfer-in application shall be treated as the total redemption).

6. When a fund (total redemption-total subscription+total transfer) exceeds 10% of the total fund share on the previous open day, it is a huge redemption. In case of huge redemption, the fund transfer-out and fund redemption have the same priority, and the fund manager can decide to transfer all or part of the fund according to the fund asset portfolio, and the fund transfer-out and fund redemption are confirmed in the same proportion; In the case of partial confirmation of the transfer-out application, the unconfirmed transfer-out application can be postponed or the fund conversion can be cancelled according to the investor's prior selection and the relevant regulations of the agency.

7. When an investor handles the fund conversion business, the transferred-out fund must be in a redeemable state, and the transferred-in fund must be in a subscription or subscription state.

Pause of fund conversion of intransitive verbs and its handling

In any of the following circumstances, the fund manager may suspend the fund conversion business:

1. The Fund cannot operate normally due to force majeure.

2. The stock exchange is abnormally closed during trading hours, which makes it impossible for the fund manager to calculate the net asset value of the fund on that day.

3. Due to market fluctuation or other reasons, the fund manager considers it necessary to suspend the acceptance of the application for fund share transfer.

4. Other special circumstances stipulated by laws, regulations and rules or specified in the fund contract and prospectus and approved by the China Securities Regulatory Commission.

One of the above situations occurs? The fund manager shall immediately file with the China Securities Regulatory Commission and publish a suspension announcement in at least one media designated by the China Securities Regulatory Commission within the prescribed time limit. When reopening the Fund for conversion, the fund manager shall publish an announcement on reopening the Fund for conversion in at least one media designated by the China Securities Regulatory Commission at least 3 working days in advance.

Seven, important tips

1. At present, the sales organizations that can accept the application for fund conversion business include the company's direct outlets and some consignment agencies, including China Construction Bank, Huaxia Securities Co., Ltd., Guotai Junan Securities Co., Ltd., Guangfa Securities Co., Ltd. and Industrial Securities Co., Ltd.

2. After the establishment of the Fund, it will accept the conversion business related to the cash capital increase of Huaxia. The conversion rules of newly issued funds will be announced in time.

3. Due to the different systems and business arrangements of various institutions, the time for launching this service may be different. Investors should refer to the specific regulations of various institutions.

4. The company has the right to adjust the above conversion procedures and related restrictions according to market conditions, but it shall make an announcement on at least one information disclosure media designated by China Securities Regulatory Commission at the latest 3 working days before the adjustment takes effect.

5. For other information, please log on to our website (www.ChinaAMC.com) or call our customer service number (0 10-88092666). You can also call China Construction Bank (95533), Huaxia Securities (400-8888- 108), Guotai Junan (02 1-962588, 800-820-6888) and Guangfa Securities (020-87558).

6. The right to interpret the conversion business of the Fund belongs to the Company.

It is hereby announced

Huaxia fund management co., ltd

March 2004 18