The name of a fund may not contravene the basic scope and objectives of the fund, nor cause others to mistakenly believe that either profits or the security of investment capital can be guaranteed.
If an expiration date is stipulated for a fund, the name of the fund shall indicate the duration or the expiration year.

A SITE using a fund to trade in securities shall apply the relevant provisions of these Regulations in accordance with the trust agreement provisions regarding regions, markets, and types and scope of securities investment.
If an expiration date is stipulated for a fund, and for purposes of meeting the investment strategy needs, the securities investment trust agreement may specify that the restrictions of Articles 25, 26, and 29 and Article 30, paragraph 1 do not apply during a certain period of time before the expiration date of the fund.
If a SITE meets the conditions specified by the FSC, when the SITE applies to offer a fund, it may, for the purposes of meeting investment strategy needs, and upon applying to the FSC and receiving its approval, specify in the securities investment trust agreement restrictions relating to the types, scopes, and ratios of domestic and foreign securities in which the fund will invest, and be exempted from the restrictions set out in Article 8, Article 10, paragraph 1, Articles 15 to 17, Article 27, and Article 30, paragraph 1.

A SITE may offer or privately place funds denominated in foreign currencies except where otherwise provided by the FSC; subscriptions, redemptions, and fee payment for such funds shall be denominated in a currency designated by the SITE. Following its designation, the SITE may not arbitrarily change the designated currency.

A fund that invests in other funds under the management of the same SITE may not collect a management fee.

The types of funds are as follows:
1.Equity funds.
2.Bond funds.
3.Balanced funds and multi-asset funds.
4.Index funds.
5.Exchange-traded funds (ETFs).
6.Funds of funds.
7.Principal guaranteed funds.
8.Money market funds.
9.Other funds issued with FSC approval.

A SITE may offer and issue asset-allocation type umbrella funds, and shall observe the following conditions:
1.Sub-funds may not exceed three in number, and shall be applied for and offered simultaneously. Should any individual sub-fund fail to meet the establishment requirements, the umbrella fund may not be established.
2.Sub-funds may, depending on the type of asset allocation desired, select one type of fund for allocation and segregation or select a combination of types.
3.Separate trust agreements shall be entered into for each separate sub-fund, which shall state the following matters:
A.The umbrella fund will not be established when any individual sub-fund fails to meet establishment requirements.
B.No mechanism for automatic conversions between sub-funds shall be allowed, and conversion between different funds may be carried out only pursuant to investor application, with conversion fees to be set by the SITE.

"Equity fund" refers to a fund in which total investment in stocks accounts for no less than 70 percent of the total asset value of the fund.

When the name of an equity fund indicates investment in a particular investment vehicle, region, or market, then investment in the vehicle, region, or market so indicated shall account for no less than 60 percent of the total asset value of the fund.

Except where law and regulation provide otherwise, bond funds may not invest in the following investment instruments:
1. Stocks.
2. Equity-type securities, provided that convertible corporate bonds, corporate bonds with warrants, exchangeable corporate bonds, and bonds with loss-absorption features issued by a financial institution are not subject to this restriction.
3. Structured interest rate products. However, this restriction shall not apply to floating rate notes.
The total amount of investment in convertible corporate bonds, corporate bonds with warrants, exchangeable corporate bonds, and bonds with loss-absorption features that are eligible capital instruments as defined by the competent authority, by a SITE utilizing a bond fund, may not exceed 10 percent of the net asset value of the fund.
When the convertible corporate bonds, corporate bonds with warrants, or exchangeable corporate bonds held by a bond fund meet conditions such that there is any bond conversion, exercise of warrants, or exchange for stock, the fund shall make adjustments within one year to achieve conformance with requirements.
Any financial institution-issued bonds with loss-absorption features in which a SITE utilizes a bond fund to invest shall have a credit rating at or above a prescribed level from an FSC-approved or recognized credit-rating agency. For any investment in such bonds, the SITE furthermore shall draft as a part of its internal control system the dispositive measures to be taken when the invested bonds are converted into common shares, and shall submit those measures to its board of directors for passage.

The credit rating of an issue of unsecured corporate bonds or financial bonds from any company in which a SITE invests fund assets shall be explicitly stated in the trust agreement.

A bond fund's asset portfolio shall have a weighted average duration of no less than one year, provided that this restriction shall not apply to funds established for less than three months, or in the month prior to the trust agreement's termination date, or to a fund that invests primarily in floating rate notes.

"Balanced fund" refers to a fund invested in stocks, bonds, and other fixed-income securities in an amount equal to 70 percent or more of the net asset value of the fund, and in which stock investments account for not more than 90 percent and not less than 10 percent of the fund's net asset value.
The FSC may adjust the investment ratios of the preceding paragraph based on conditions in domestic and foreign securities markets and the development of securities investment trust enterprises.

The word "balanced" shall appear as part of the name of any balanced fund.

"Multi-asset fund" refers to a fund invested in stocks, bonds (including other fixed-income securities), beneficial certificates of funds, beneficial interest securities of real estate investment trust funds, or other types of assets that have been approved by the FSC for investments, and among which the total amount of the fund’s investment in any of the above-mentioned types of assets may not exceed 70 percent of the net asset value of the fund.
To meet investment strategy needs, the total amount invested by a securities investment trust enterprise utilizing a multi-asset fund to invest in beneficial certificates of other funds need not be restricted by the main provision of Article 10, paragraph 1, subparagraph 11.
The FSC may adjust the investment ratio set out in paragraph 1 based on conditions in domestic and foreign securities markets and in the development of securities investment trust enterprises.

The word "multi-asset" shall appear as part of the name of any multi-asset fund.

"Index fund" refers to a fund in which all or a major portion of fund assets are invested in index component securities in order to track, simulate, or replicate the performance of the index.
The subject index of the preceding paragraph shall meet the following conditions:
1.The index shall have been produced by a party with professional ability and experience in producing indexes.
2.The index shall be representative of its defined market.
3.The index's component securities shall be liquid and a broad sampling.
4.Index data shall be sufficiently disclosed and easily accessible.
5.There may be no violation of other laws or regulations in connection with the index.

The name of an index fund shall clearly indicate the index or index performance which is being tracked, simulated, or replicated.

In addition to compliance with Article 2, paragraph 1 herein, the trust agreement of an index fund shall also set forth the following:
1.The name of the subject index.
2.Essential content of the index licensing agreement: the parties to the agreement and their rights and obligations; use of the index name by license; index licensing fees; matters relating to termination of the agreement; other important content.
3.Methods for notification and announcement of material events in connection with the subject index, when those events have a material bearing on investor rights and interests.
4.Fund shareholding information and the intervals at which it will be released.

To achieve conformity with an index's composition, a SITE utlizing index fund assets may invest in securities without regard for the restrictions of Article 10, paragraph 1, subparagraph 5, subparagraph 8, or the main provision of subparagraph 17, provided that if the total amount of investment in any one of the securities exceeds 10 percent of the net asset value of the fund, its investment does not exceed the weighting given the individual component security within the index.
When a SITE utilizes an index fund's assets, if an adjustment of the index's composition or the index replication strategy measures so require, and if the conditions of the FSC are met, the SITE need not be subject to the proviso of the preceding paragraph.

(deleted)

"Exchange-traded fund (ETF)" refers to a fund which tracks, simulates, or replicates the performance of an index and is traded on a securities exchange market, with subscription and redemption of ETF units carried out through physical delivery or by the method prescribed in the trust agreement.
The component securities of the subject index of the preceding paragraph include stocks, bonds, and other securities approved by the FSC.
The subject index of paragraph 1 shall meet the conditions given in Article 32, paragraph 2.
An ETF may be linked to a single offshore ETF that complies with the requirements of Article 26 of the Regulations Governing Offshore Funds.
If any event in Article 12, paragraph 6 of the Regulations Governing Offshore Funds occurs with respect to a single offshore ETF that is linked to by an ETF as described in the preceding paragraph, the SITE shall, after receiving notice of a meeting of beneficial owners issued by the offshore fund entity or any other relevant notice, report to the FSC for approval, and make a public announcement within 3 days from the date of occurrence of the event.

A SITE offering an ETF that tracks, simulates, or replicates a multiple of the performance of an index ("leveraged ETF") or a multiple of the inverse performance of an index ("inverse ETF") shall comply with the following provisions in addition to these Regulations and the securities investment trust contract:
1.The name of a leveraged or inverse ETF shall clearly indicate the multiple of the daily performance or inverse performance of the underlying index that is being tracked, simulated, or replicated
2.To meet investment strategy needs, the total amount invested by a leveraged or inverse ETF in beneficial certificates of other funds need not be restricted by the main provision of Article 10, paragraph 1, subparagraph 11, provided that the amount may not exceed 30 percent of the total net asset value of the leveraged or inverse ETF.

In addition to compliance with Article 2, paragraph 1 herein, the trust agreement for an ETF offered by a SITE shall additionally set forth essential matters relating to its trading on a securities exchange market, the method of subscription and redemption, the index licensing agreement, and the participant agreement, provided that the essential matters relating to the index licensing agreement may be omitted in the case of an ETF that complies with Article 37, paragraph 4.
A SITE offering an ETF need not set forth the total face value, total number of beneficiary units, or whether there will be additional future issues.

Given compliance with the following provisions, a SITE investing an ETF may borrow domestic securities and provide fund assets as collateral without regard for the restrictions of Article 10, paragraph 1, subparagraph 2 herein:
1.Only when the purpose of borrowing securities, as set forth in the ETF trust agreement, is to meet an insufficiency in the fund shareholdings needed for physical delivery in redemptions.
2.The total value of securities borrowed by an ETF may not exceed ten percent of the net asset value of the fund.
A SITE borrowing domestic securities against fund assets shall do so in accordance with the applicable TWSE and GTSM regulations.

When an ETF under SITE management borrows securities, the SITE shall draft measures governing risk monitoring and management in securities borrowing as a part of its internal control system and submit those measures to the board of directors for passage.

The provisions of Articles 33-35 shall apply mutatis mutandis to ETFs.

"Fund of funds" refers to a fund that invests in the certificates of beneficial interest, fund shares, or investment units issued or managed by a SITE, a futures trust enterprise, or a foreign fund management institution, and that may not invest in another fund of funds.

A fund of funds shall invest in no less than five sub-funds. Each sub-fund shall have an investment ceiling of 30 percent of the fund of funds' net asset value.

A principal-guaranteed fund shall be distinguished as either a capital-guaranteed fund or a capital-protected fund based on whether the fund is backed by the guarantee of an institution. A capital-guaranteed fund is one in which, through a guarantee provided by a guarantee institution during the duration of the fund, a beneficiary will receive a prescribed ratio of guaranteed principal at the maturity of the fund. A capital-protected fund is one in which, through the operation of the fund's given investment instruments, a beneficiary will receive a prescribed ratio of protected principal at the fund's maturity.
A capital-protected fund is one that has no guarantor institution to provide a mechanism for guarantee.
The ratio of principal guaranteed by a guaranteed-principal fund shall not be less than 90 percent of investment principal.
In order to increase the investment efficiency of a principal-guaranteed fund, a SITE may, while observing applicable regulatory provisions, use interest or non-guaranteed principal to trade in securities-related products on either domestic or foreign centralized securities markets or OTC markets.

A capital-guaranteed fund shall be guaranteed by a guarantee institution with a credit rating at or above a prescribed level from an FSC-approved or recognized credit-rating institution.
The public prospectus and the marketing materials for a capital-protected fund may not use the terms "guaranteed," "safe," "risk-free," or other similar terms, and in addition, shall explicitly state that the fund provides no mechanism by which it may be guaranteed by a guarantor institution.

When maintenance of principal so requires, a principal-guaranteed fund may be placed on time deposit at a financial institution with a credit rating at or above a prescribed level issued by an FSC-approved or recognized credit-rating institution, with no ceiling on its deposit ratio.

"Money-market fund" refers to a fund in which the total amount of utilization for bank deposits, short-term bills, and repurchase transactions accounts for no less than 70 percent of the total asset value of the fund.
"Repurchase transactions" as referred to in the preceding paragraph includes short-term bills and securities.

In addition to the provisions of Article 10, a SITE shall observe the following conditions in investing a money-market fund:
1.Fund investment shall be through bank deposits, short-term bills, securities, and repurchase transactions at financial institutions with a credit rating at or above a prescribed level issued by an FSC-approved or recognized credit-rating institution.
2.The fund's total amount of investment in the short-term bills or securities issued, guaranteed, or endorsed by any one company other than a financial institution may not exceed ten percent of the fund's net asset value.
3.The total amount of the fund's deposits at any one financial institution or investments in short-term bills or securities issued, guaranteed, or endorsed by that institution may not exceed ten percent of the fund's net asset value.
4.With the exception of government bonds, the total amount of the fund's investment in securities with a long-term credit rating at or below a prescribed level from an FSC-approved or recognized credit-rating institution may not exceed ten percent of the fund's net asset value.
5.The fund may not invest in the short-term bills of the SITE under which it is managed or in short-term bills issued by a company with an interest in the SITE.
6.The fund may not invest in stocks or other types of equity securities.
Where a company or a financial institution referred in subparagraphs 2 and 3 of the preceding paragraph meets the requirements set out by the FSC, the percentage restriction on a money market fund's investment or deposit in the company or financial institution may be raised to 20 percent of the fund's net asset value. However, the amount of the money-market fund's investment in short-term bills issued by any one company or financial institution may not exceed 10 percent of the issuer's net worth as stated in its most recent CPA-audited and attested financial report.

The weighted-average duration of a money-market fund may not exceed 180 days, and shall be calculated in terms of the repurchase transaction period when the investment vehicle is a repurchase transaction.
Money-market fund investment shall be limited to investment vehicles with a remaining maturity of not more than one year, provided that this restriction shall not apply to repurchase transactions.

When a fund invests primarily in structured interest rate products pursuant to the Article 10, paragraph 1, subparagraph 7 proviso, the term "structured interest rate product" or other similar terminology shall appear in the name of the fund.
When a fund invests primarily in convertible corporate bonds, corporate bonds with warrants, or other types of equity securities, the name of the fund shall include terminology clearly indicating the primary investment vehicle.
The funds referred to in the preceding two paragraphs may not be named bond funds, and may not pay a redemption price to a beneficiary on the date of a requested beneficiary certificate redemption or the following business day.