Chapter  3 Types of Funds

Section  1 General Provisions

Article 19
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.

Article 20
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.

Article 21
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.

Article 22
A fund that invests in other funds under the management of the same SITE may not collect a management fee.

Article 23
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.

Article 24
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.