Newsletter-21

241 CAPITAL MARKETS LAW Asset Allocation Reports prepared as part of Portfolio Reports Asset allocation reports, which must be prepared in accordance with the format attached to the Communique, are prepared in stand- ard form like the value reports. Funds that sell their shares only to qualified investors are exempt from preparing asset allocation reports. The Communique sets forth various issues that have to be included in the asset allocation reports. Article 10 of the Communique stipulates such requirements as providing information on i) securities lending and derivatives transactions, ii) for index funds, correlation coefficient calculated with respect to last monthly and quarterly periods, for trade exchange investment funds, tracking differences and tracking errors calculated for the last annual period, and where there is a material rise in tracking differences and tracking errors, the reasons of such. Public Disclosure of Financial Reports Article 11 of the Communique sets forth the public disclosure of financial reports. Accordingly, financial tables of investment funds are disclosed to the public within 60 days following the termination of the relevant accounting or investment period, and asset allocation tables are disclosed to the public within six business days following such month. The Communique also requires the disclosure of such financial reports on the Public Disclosure Platform (“PDP”). In accordance with Article 12 of the Communique, financial reports, along with independ- ent audit reports, shall be disclosed on the PDP within six business days following the date upon which the board of directors resolved for the public disclosure of financial reports by the incorporator, after such reports have reached the incorporator with the signature of the person authorized to represent and bind the independent auditing com- pany. The asset allocation reports shall also be submitted to the PDP and disclosed to the public. In addition to the obligation to submit financial reports to the PDP, the financial reports, other than the portfolio report, shall be published on the website of the incorporator, and be easily accessible