A SITE that offers a fund shall invest in securities in accordance with the type and characteristics of the fund. SITE investment in domestic securities shall be restricted in scope and type to the following:
1.Listed securities.
2.Securities traded on the over-the-counter market, as publicly announced by the FSC ("OTC securities").
3.Securities having received FSC approval for underwriting or effective registration.
4.Government bonds or publicly offered and issued corporate bonds and financial bonds.
5.Certificates of beneficial interest issued by a SITE.
6.Bonds of international financial organizations approved by the FSC.
7.Other investments approved by the FSC.
The types and the scope of funds offered domestically by a SITE for investment in foreign securities shall be prescribed by the FSC.

When a SITE utilizes a fund for trading in securities-related products, the scope of trading shall conform with the following provisions:
1.Authorized trading that futures commission merchants ("FCM") are allowed to handle per FSC announcement in accordance with Article 5 of the Futures Trading Act, and trading in securities-related futures contracts, option contracts, and futures option contracts.
2.FSC approved off-exchange trading in futures, options or other financial products which are currency-derived, securities-derived, interest-rate derived, or index-derived.
When a SITE utilizes a fund to trade securities-related products, it may be exempt from the restrictions of subparagraph 1 of the preceding paragraph when such trading is necessary to match the fund's investment strategy and when the FSC has granted special approval.
The method of calculating the ratios and risk exposures for the types of trading listed in the 2 preceding paragraphs and related regulatory measures shall be announced by the FSC.
When a SITE has received FSC approval for concurrent operation of a futures trust enterprise, it may apply to the FSC for exemption from the restriction of the preceding paragraph regarding trading ratios when utilizing a fund of the enterprise, other than an exchange-traded fund as specified in Article 37-1, for trading in securities-related products. Risk exposure, however, may not exceed 100 percent of the net asset value of the given fund.
A SITE that utilizes a fund for trading in securities-related products shall draft measures for accounting, risk monitoring, and management for those types of trades as part of its internal control system, and submit the measures to the board of directors for passage.

A SITE offering a trust fund shall utilize the fund's assets in accordance with these Regulations and the provisions of the trust agreement, and except where otherwise provided by these Regulations or the FSC, shall comply with the following provisions:
1. The SITE may not invest in non-listed or non-OTC-listed stocks or privately-placed securities.
2. The SITE may not make loans or provide security, provided that a SITE that meets the requirements of Article 10-1 is not subject to this restriction.
3. The SITE may not engage in securities margin transactions.
4. The SITE may not engage in trading of securities or securities-related products between the various other funds, collective trust funds, discretionary accounts, or accounts for trading of securities with self-owned funds under the common management of the SITE, provided that this shall not apply in the case of cross-trades unintentionally occurring on a centralized securities exchange market or on Over-the-Counter Markets.
5. The SITE may not invest in its own securities or in securities issued by any company that is an interested company relative to the SITE.
6. The SITE may not use a fund to purchase the certificates of beneficial interest of that same fund, provided that this restriction shall not apply in the case of beneficiaries' requests for redemption of certificates of beneficial interest, or when certificates of beneficial interest are redeemed because of the discontinuance of all or some part of the fund.
7. The SITE may not invest in structured interest rate products, with the exception of floating rate notes. However, this restriction shall not apply when structured interest rate products are a fund's principal investment vehicle and are so designated by the fund's name.
8. The total amount invested by any fund in the stocks, corporate bonds, or financial bonds of any single listed or OTC-listed company may not exceed ten percent of the net asset value of the fund.
9. The total amount invested by any fund in the shares of any single listed or OTC-listed company may not exceed ten percent of the total issued and outstanding shares of that company; the total amount invested by all funds under the common management of a SITE in the shares of any one listed or OTC-listed company may also not exceed ten percent of the total issued and outstanding shares of that company.
10. The total amount invested by any fund in an underwriting of shares of any single listed or OTC-listed company may not exceed 3 percent of the total underwriting shares; the total amount invested by all funds under the common management of a SITE in any single underwriting may not exceed 10 percent of the total underwriting shares.
11. The total amount invested by a fund in the certificates of beneficial interest of other funds may not exceed 20 percent of the first fund's total asset value, provided that this restriction shall not apply in the case of a fund of funds or exchange-traded funds under Article 37, paragraph 4.
12. With the exception of exchange-traded funds under Article 37, paragraph 4, the total number of beneficial units of any single fund that may be invested in by any fund may not exceed 10 percent of the beneficial units already issued by the fund being invested in; the total number of beneficial units of any single fund that may be invested in by all funds under the common management of a SITE may not exceed 20 percent of the issued beneficial units of the fund being invested in.
13. The total amount invested by a fund in the unsecured corporate bonds of any single company may not exceed ten percent of the unsecured corporate bonds issued by that company.
14. The securities held by a fund may not be loaned to another person, provided that this restriction shall not apply given compliance with Article 14 and Article 14-1.
15. Proxy forms for shareholders' meetings of an issuing company whose shares are purchased by a fund may not be sold or transferred.
16. No fund may authorize stock trades by any single securities firm that exceed 30 percent of the total monetary value of the fund's stock trades in the given fiscal year. This provision shall not apply, however, to funds that have been established for less than one full fiscal year.
17. The total amount any fund may invest in short-term bills and securities issued, guaranteed, or endorsed by any single company may not exceed ten percent of the fund's total asset value. However, this restriction does not apply to investments in beneficial certificates of funds.
18. The total amount invested by a fund in the international financial institution bonds issued by any single international financial institution with FSC approval to issue such bonds within Taiwan may not exceed ten percent of the fund's net asset value, and may not exceed ten percent of the international financial institution bonds issued within Taiwan by the given international financial institution.
19. The SITE may not engage in any improper trading activity and thereby affect the net asset value of a fund under its management.
20. The SITE may not engage in any other act prohibited by the FSC.
The term "various funds" in subparagraph 4 of the preceding paragraph and the term "all funds under the common management of a SITE" in subparagraphs 9, 10, and 12 include securities investment trust funds and futures trust funds publicly or privately offered by a SITE.
The ceiling on the ratio of a SITE's use of a fund for investment in an underwritten stock shall be calculated by combining the amount of that investment with the shares of listed and OTC-listed companies of a similar type held to arrive at the total number of shares or total monetary amount; the amount of investment in depositary receipts shall be combined with the shares held in the issuing company of the depositary receipts, and the ceiling on the ratio of investment in that company similarly based on the combined figures for either monetary values or numbers of shares.
"Corporate bonds" as referred to in paragraph 1, subparagraphs 8 and 13 shall include common corporate bonds, convertible corporate bonds, exchangeable corporate bonds, and corporate bonds with warrants.

A SITE that utilizes a fund for payment of redemption prices or for settlement of securities may instruct the fund's custodian institution to arrange a short-term loan with a financial institution, in the name of the fund's exclusive account, in accordance with the provisions below; the use of such a loan shall be disclosed in the securities investment trust agreement and the public prospectus:
1.The provider of the loan must be a domestic or foreign bank duly authorized to engage in lending business.
2.The term of a loan taken out in order to pay redemption prices may not exceed 30 business days; the term of a loan taken out for settlement of securities may not exceed 14 business days.
3.Payment of interest and fees related to the loan will be made using fund assets.
4.The total amount of the loan may not exceed 10 percent of the net asset value of the fund.
5.When the provider of the loan is the fund's custodian institution or is an interested party with respect to the SITE, the terms of the loan transaction may not be less favorable than those offered by any other financial institution.
The provisions of Article 11 apply mutatis mutandis with respect to the definition of "interested party" in subparagraph 5 above.
When taking out a loan will require the fund to establish rights over fund assets, or when the provider of the loan is the fund's custodian institution, the SITE must disclose those facts in the securities investment trust agreement and the prospectus.
The liability for repayment of the loan that is borne by the fund and the fund custodian institution of paragraph 1 is limited to the amount of the fund's assets. The amount of liability borne by a beneficiary is limited to the beneficiary's respective amount of investment in the fund's beneficial certificates.
A template contract for borrowing by funds shall be adopted by the SITCA in consultation with the Trust Association. The template shall be submitted to the FSC for recordation upon its adoption and at the time of any amendment. The content of the template shall include the parties of the loan, loan amount, loan duration, method of repayment, and parties liable for payment of damages.
When a SITE uses fund assets for borrowing purposes, measures for control and management of the SITE's borrowing shall be incorporated into its internal control system. The measures shall be submitted to the board of directors for approval.
The control and management measures of the preceding paragraph shall include, at a minimum, assessment of the loan efficacy, loan providers, and loan transaction terms and conditions, and management of the loan amounts and their repayment.
Assessments of borrowing by the fund and loan-related operations shall be documented in a written record, which shall be retained for a period of not less than 5 years.

The term "an interested company relative to the SITE" in paragraph 1, subparagraph 5 of Article 10 refers to any one of the following circumstances:
1.A company having the relationship with the SITE forth in Chapter 6-1 of the Company Act.
2.A SITE director or supervisor, or a shareholder with total shareholdings of five percent or more.
3.Any of the above persons, or a manager of the SITE, when they are the same person as the given company's director, supervisor, manager, or shareholder with a ten percent or greater shareholding, or have a spousal relationship with such person.
The term "combined shareholdings" as used in subparagraph 2 of the preceding paragraph refers to the total shareholdings of the enterprise in the SITE, plus the shareholdings in the same SITE of the enterprise's director, supervisor, or manager, as well as those of an enterprise directly or indirectly controlled by the first enterprise.
The provisions of paragraph 1 apply mutatis mutandis to the representative or designated representative of a juristic person director or supervisor who executes the duties of the juristic person.

The total monetary amount that a fund offered overseas by a SITE may invest in any single domestic listed or OTC-listed stock, corporate bond, or financial bond may not exceed 20 percent of the total asset value of the fund, without regard to the restrictions of Article 10, paragraph 1, subparagraph 8. All other restrictions on investment shall be observed in accordance with the laws and regulations governing funds in the place where the fund is offered.

The scope and types of all investments in overseas securities by a SITE fund offered overseas shall be subject to the laws and regulations of the place where the fund is offered.

Lending of domestic securities by a SITE-managed fund shall be handled in accordance with the applicable rules of the Taiwan Securities Exchange Corporation (TWSE) and the GreTai Securities Market (GTSM), and shall conform with the following conditions:
1.A fund may not loan any single domestic security in an amount exceeding 50 percent of the total of that security held by the fund, provided that this shall not apply where the trust agreement of a privately offered fund provides otherwise.
2.The lending period for securities loans shall extend for at most six months from the date of the lending transaction.
3.When a loan of securities takes the form of a negotiated securities lending transaction, the types of collateral provided by the borrower shall be limited to cash, government bonds, and exchange listed or OTC listed securities that are eligible subjects of margin trades or short sales, provided that when the borrower's collateral is in the form of said bonds or securities, the SITE may provide such a securities loan only after reporting its risk monitoring and control measures for collateral management to the FSC for approval.
The provisions of subparagraph 3 of the preceding paragraph regarding collateral shall be applied with reference to TWSE and GTSM regulations applicable to fixed-price trading and auction trading.
A SITE that loans domestic securities held by one of its managed funds shall draft measures for the monitoring and management of risk in domestic securities lending as a part of its internal control system and submit those measures to the board of directors for passage.

A SITE-managed fund may itself engage in lending of the foreign securities it holds or may engage an overseas agent for such lending. It must meet the following requirements and must observe the relevant regulations of the competent authority of the respective home country or region:
1.The quantity of any single foreign security loaned by any single fund may not exceed 50 percent of the quantity or total dollar amount of the given security that is held by the fund.
2.The duration of the loan period for the loaned securities may not exceed 6 months from the date on which the loan transaction takes place.
3.The types of collateral provided by the borrower of the securities are restricted to cash and government bonds issued by a country with a sovereign credit rating of a specific level or higher from a credit rating agency approved or recognized by the FSC.
4.The respective collateral maintenance ratios may not be lower than 100 percent and 105 percent.
The "foreign agent" of the preceding paragraph must meet the following conditions:
1.Have been established for 3 or more years.
2.Be a financial institution whose assets or net worth for the preceding year were listed in the top 500 globally, or a bank with assets of US$500 billion or more under custody.
3.Have a credit rating of a specific level or higher issued by a credit rating agency approved or recognized by the FSC.
When a SITE utilizes a fund to lend the foreign securities it holds, measures for risk control and management in such securities lending by the SITE shall be incorporated into its internal control system and shall be submitted to the board of directors for approval.
When the borrower of the securities is an interested company with respect to the SITE or when government bonds are provided as collateral for the borrowing, the lending transaction may only take place after the SITE's risk control and management measures for interested party transactions and collateral management have been submitted to and approved by the FSC.
The provisions of Article 11 apply mutatis mutandis with respect to the definition of "interested company" under the preceding paragraph.

A SITE that offers a fund for investment in beneficial securities or asset-backed securities issued in accordance with the Financial Asset Securitization Act shall observe the following conditions:
1.With the exception of those securities approved as short-term bills by the FSC, the fund shall be restricted to investment in beneficial securities or asset-backed securities which have obtained FSC approval or effective registration.
2.The total amount invested by a fund in beneficial securities or asset-backed securities issued by any single trustee institution or special-purpose company may not exceed ten percent of the total value of the given issue (or tranche, where the issue is tranched); the invested amount may also not exceed ten percent of the total asset value of the fund.
3.The total monetary amount invested by a fund in the stocks, corporate bonds, or financial bonds issued by any single originator and the beneficial securities or asset-backed securities issued by any single originator through entrusting financial assets to a trustee organization or assigning financial assets to a special-purpose company may not exceed ten percent of the total asset value of the fund.
4.The beneficial securities or asset-backed securities in which the fund invests shall have a credit rating at or above a prescribed level from an FSC-approved or recognized credit-rating institution.
When a SITE is an interested company as referred to in Article 10, paragraph 1 with respect to any originator, trustee institution or special-purpose company connected with beneficial securities or asset-backed securities, the SITE may not utilize fund assets for investment in those beneficial securities or asset-backed securities.

A SITE offering a fund for investment in real estate investment trust fund certificates of beneficial interest or real estate asset trust fund certificates of beneficial interest offered publicly pursuant to the Real Estate Securitization Act shall observe the following conditions:
1.The fund shall be restricted to investment in closed-end real estate investment trust fund certificates of beneficial interest or real estate asset trust fund certificates of beneficial interest approved by the FSC.
2.The total investment by any such fund in real estate investment trust beneficiary units issued by any single trustee institution may not exceed ten percent of the beneficiary units already issued.
3.The total investment by any such fund in real estate asset trust beneficial securities issued by any single trustee institution may not exceed ten percent of the total value of the given issue (or tranche, where the issue is tranched).
4.The total investment by any such fund in the real estate asset trust beneficial securities and real estate investment trust beneficial securities issued by any single trustee institution may not exceed ten percent of the fund's total asset value.
5.The total monetary amount invested by a fund in the real estate asset trust beneficial securities issued by any single principal through entrusting real estate assets to a trustee organization, the beneficial securities or asset-backed securities issued by that principal through entrusting financial assets to a trustee organization or a special-purpose company, and the stocks, corporate bonds, or financial bonds issued by that principal may not exceed 10 percent of the net asset value of the fund.
6.The real estate investment trust beneficial securities or real estate asset trust beneficial securities in which such a fund invests shall have a credit rating at or above a prescribed level issued by an FSC-approved or recognized credit-rating institution.
When a SITE is an interested company as referred to in Article 10, paragraph 1 with respect to the trustee institution of a real estate investment trust beneficial security, or with respect to the principal or trustee institution of a real estate assets trust beneficial security, the SITE may not invest fund assets in those real estate investment trust beneficial securities or real estate assets trust beneficial securities.

A SITE offering a fund for investment in domestic subordinated corporate bonds or subordinated financial bonds shall observe the following conditions:
1. Fund investment shall be restricted to listed or OTC-listed subordinated corporate bonds or subordinated financial bonds.
2. The total investment by any such fund in subordinated corporate bonds or subordinated financial bonds issued by any single company may not exceed ten percent of the total value of the given issue (or tranche, where the issue is tranched).

When a SITE offers a fund, the fund shall hold the following types of assets at FSC-prescribed ratios:
1.Cash.
2.Bank deposits.
3.Short-term bills purchased from bills finance companies.
4.Other methods of maintaining fund assets in accordance with FSC regulations.
The banks or short-term bills referred to in subparagraphs 2 and 3 shall have a credit rating at or above a prescribed level issued by an FSC-approved or recognized credit-rating institution.
For domestically offered funds, the amounts held in the manners described in paragraph 1, subparagraphs 2-4 may not exceed ratios prescribed by regulations.