TNAG-1773-FCO40-2525-Hong-Kong-Exchange-Fund-Hong-Kong-Futures-Exchange-Limited--1988 — Page 130

CONFIDENTIAL

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EXCHANGE FUND INVESTMENT POLICY

Appendix I

At a meeting of the Exchange Fund Advisory Committee held

on 6 November 1987, members approved the following investment policy:

Objectives

1.

The main objectives are as follows:

(a)

to maintain sufficient liquidity to

(b)

(c)

provide adequate cash for the

redemption of certificates of

indebtedness and debt certificates and

to provide funds for regulating the

exchange value of the Hong Kong dollar;

to obtain the maximum investment

return available and to provide

concomitant investment safety;

to safeguard the Hong Kong dollar value of the Fund's foreign currency

assets.

Distribution

2.

of assets

As a general guideline, the currency spread of assets not denominated in Hong Kong dollars

should be:

U.S. dollars

Gold

40 65%

2-1/2%

Other currencies

balance

CONFIDENTIAL