The CurrencyShares Chinese Renminbi Trust is not an investment company registered under the Investment Company Act of 1940 or a commodity pool for purposes of the Commodity Exchange Act. Before making an investment decision, you should carefully consider the risk factors and other information included in the prospectus.

Chinese Renminbi has been the official currency of China since 1949. The People’s Bank of China has been functioning as the central bank of China since 1983. After keeping its currency pegged to the USD, in July 2005 China revalued its currency by 2.1% against the USD and moved to an exchange rate system that references a basket of currencies said by the Chinese government to include currencies of China’s major trading partners such as the USD, Euro, Japanese Yen and Singapore Dollar. In 2008, during the global financial crisis, China pegged the Chinese Renminbi to the USD again. Amid international pressure to allow the currency to float freely, subject to market forces, China announced a return to the basket-based approach in July 2010. The mix of currencies contained in the “basket” is controlled by the Chinese government, and the exact allocations are unknown to the public.

As part of China’s plans to make Chinese Renminbi a more flexible currency for settling cross-border trade, with the ultimate aim of creating a freely floating (unpegged) currency, China has implemented two versions of its currency: the onshore version (CNY) and the offshore version (CNH). The reason for using two versions is to facilitate a controlled roll-out of Chinese Renminbi as an international currency for trade, investment and reserve, without exposing the Chinese economy to possible shocks. The advent of CNH began in 2003 when the People’s Bank of China and the Hong Kong Monetary Authority agreed that Hong Kong banks could conduct personal business in Chinese Renminbi on a trial basis and The Bank of China (Hong Kong) was designated as the Chinese Renminbi clearing bank. The roll-out progressed slowly until the summer of 2010, when a flurry of government initiatives led to, among other things, expansion of the CNY trade settlement scheme to include businesses from 20 provinces in mainland China, creation of CNH investment products, and increased opportunity for movement of CNH onto the mainland.

The Chinese Renminbi deposited into and held by the Trust, and accordingly represented by CurrencyShares, are the CNH version of the currency.

Source: CIA World Fact Book – August 31, 2011