This bill establishes requirements for an investment company related to its (1) use of market indices, and (2) investment in Chinese securities.
The bill requires an investment company to disclose information related to the company's use of a market index. (A market index is calculated based on a set of investments for the purpose of tracking the changes in the market represented by the investments. For example, the S&P 500 Index is generally used as an indicator of the U.S. stock market. Investment companies may use these indices for developing index funds, among other uses.) Specifically, an investment company must disclose whether it intends to track the returns of, or benchmark against, a specific market index and if so, disclose certain interactions between the company and the index provider.
Additionally, the bill requires an authorizing vote by the board of directors of the investment company in the event of certain deviations from investment policy relating to an index, including a deviation involving securities issued by a company headquartered or incorporated in China or listed on a Chinese exchange.
Finally, an investment company must annually disclose to stockholders specific information regarding securities owned by the company and issued by a company headquartered or incorporated in China or listed on a Chinese exchange.
