October 15th 2008:Lately we have noted media reports concerning Stable Investment Corporation’s investment in the Primary Fund (“the Fund”) managed by the Reserve. Stable Investment Corporation is wholly owned by China Investment Corporation (CIC). We would like to clarify：
i. Currently CIC is a creditor, not a shareholder, of the Fund. Although CIC had invested in the Fund, it filed a redemption order before the Fund announced the suspension of redemption; in addition the Fund has confirmed in writing that CIC’s investment will be redeemed at par. On legal advice, CIC is confident of its position with regard to the full recovery of its money.
ii. CIC is not subject to a 3% loss on principal. CIC filed its redemption order before the Fund’s suspension deadline. According to the Fund’s announcement, only those investors that hadn’t filed redemption requests by the time of suspension may lose 3% of their principal.
iii. Since the suspension, CIC has followed closely the Fund’s progress in fulfilling its obligations. We have communicated with relevant parties in the United States, emphasizing the Fund’s promise of full repayment and CIC’s legal rights, and have urged relevant parties to facilitate the soonest payment possible.
iv. The Fund has announced that it will make an initial distribution to creditors soon. The first distribution will account for approximately 35% of the total amount due. The distribution plan is being formulated under guidance from the U.S. Securities and Exchange Commission (SEC).
v. CIC has communicated with the SEC through our legal counsel, highlighting the Fund’s promise of full repayment to CIC and CIC’s legal rights. We reiterated our points to the SEC with regards to the full recovery of CIC’s investment.