Answer: According to Article 29 of the Federal Act on investing savings part of pension no.111-?? of July 24, 2002,

pension savings are invested in securities of foreign issuers pursuant to the following requirements:

1. Investment in assets, units (shares, interest) of index funds investing in government securities of foreign states and bonds or shares of other foreign issuers is qualified by purchase of units (shares, interest) of the index funds.

In the context of the Federal Act index investment fund is passively managed mutual fund that tries to mirror the performance of a specific index.

2. The list of indices for investment of pension savings by index funds is fixed by index funds regulators being government executive agencies with prior endorsement by the Federal Securities Commission.

3. Pension savings must not be invested in indices reflecting behaviour of bonds of foreign issuers not being assigned with investment-grade credit ratings by core international rating agencies.

4. Rating agencies whose ratings are accepted for the Federal Act are fixed by regulators being government executive agencies with prior endorsement by the Federal Securities Commission.

5. Pension savings are invested in index funds assets by Management Companies after signing the agreement for investment of pension savings in securities of foreign issuers with the index fund asset manager in accordance with paragraph 1 of the article.

6. After signing the agreement, index fund asset manager must forward to the clients assets structure and market price updates in respect of pension savings invested in the assets under the agreement.

7. The essential conditions of agreements signed with index funds asset managers Manager of assets held by the index investment fund to invest pension accruals into securities of foreign issuers are determined by the government of the Russian federation.

Question: Are there any specific requirements to index investment funds or management companies?

Answer: There are the following legal requirements to investment of index fund assets in securities of foreign issuers by index fund asset manager:

1. To sign agreements for investment of pension savings into securities of foreign issuers assets manager must:

1) Have license to manage investment funds assets according to the la of the country being residence of the fund;

2) Have experience of 5 years or more as index fund investor in at least one stock index according to the pension savings investment restrictions;

3) Have experience of at least 10 years of providing asset management services to institutional investors including pension funds;

4) Meet requirements concerning capital adequacy prescribed for asset managers in the EU;

5) Meet requirements of minimum amount of assets under management stated by index funds or management companies regulators being government executive agencies with prior endorsement by the Federal Securities Commission.

2. Index fund or management company regulator being executive agency may fix the list of index funds asset managers qualifying as pension savings investors who may sign agreements for pension savings investment in securities of foreign issuers under the paragraph 1 of the relevant article with prior endorsement of the Federal Securities Commission.

3. The agreement cannot be signed unless asset manager or the investment fund are resident in countries or in territories being “tax havens” and/or countries or territories whose law contains no provisions as to disclosure of relevant information.