​Management of Mutual Fund

15. Procedures in a case of defaults of debt instrument issuers

15.1 Recording the value of a debt​ instrument  or claim as zero “0" (set-aside)

1) In the case that the mutual fund company records the​ value of a debt instrument as “0", or that the issuers of the debt instruments may be unable to pay the debt, all unitholders in the register of the funds on the day of such recording are entitled to the net income from assets received as repayment of debts;

​​2) The debt instrument or claim shall not be included when calculating  the fund's NAV.

15.2 Procedure for handling assets as debt repayment

​1) Set-aside: the mutual fund management company shall dispose of the assets at the earliest opportunity, except that the unitholders accept the assets as debt repayment instead of cash.

​​2) Inclusion in the fund:  The funds may continue to hold the assets provided that the assets can be invested in or held by the mutual fund; otherwise the assets shall be disposed of at the earliest opportunity.

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15.3 Calculation of the NAV

​​​​1) Set-aside : the mutual fund management company shall exclude assets/proceeds from the debt repayment when calculating the NAV.

​2) Inclusion in the fund: the mutual fund management company shall include the assets received as debt repayment when calculating the NAV.

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