China's first open-ended index fund based on a Dow Jones index is to be released later this year, Dow Jones sources said Monday.

Leading index provider Dow Jones Indexes announced Monday it had licensed China's Yinhua Fund Management Co. Ltd. to use its Dow Jones China 88 index as the basis for the enhanced index fund, Yinhua-Dow Jones China 88 Select Equity Fund.

The index fund has been approved by China Securities Regulatory Commission (CSRC) and will hit the market on July 4 in China. China Construction Bank and other institutions will act as fund trustees.

Dow Jones now releases four indexes in China, namely, Dow Jones China 88 index, Dow Jones China Total Market index, Dow Jones Shanghai index and Dow Jones Shenzhen index. The Dow Jones China 88 index comprises the 88 largest and the most liquid stocks in the Dow Jones China Total Market Index and includes stocks from both Shanghai and Shenzhen stock exchanges.

The two primary criteria used in the component selection process are market capitalization and trading liquidity, said Dow Jones.

Yinhua Fund Management Co. Ltd. was founded in 2001 under the approval of CSRC with a registered capital amounting to 100 million yuan (12.1 million US dollars).