Chapter 3 Types of Funds
Section 5 Index Funds
Article 32
"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.
Article 33
The name of an index fund shall clearly indicate the index or index performance which is being tracked, simulated, or replicated.
Article 34
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.
Article 35
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.