Marketing Material Guidelines and Compliance FAQ
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Question
Is performance information in offering
documents required to be updated regularly
for compliance with the up-to-date
requirement under paragraph 15 of
Advertising Guidelines?
Hypothetical figures presented to explain
the complicated mechanisms of a scheme
are required to be conservative. Are there
any guidelines to determine whether such
figures are conservative or not?
For a newly authorized scheme whose
performance is linked to that of an index, is
the presentation of (a) the historical
performance of the index, and (b) the
simulated performance of the scheme
based on the historical performance of the
index permissible?
Answer
Offering documents are required to comply with the Advertising Guidelines. Any
performance information included therein should be updated regularly to ensure it is no
more than 6 months old. Alternatively, an offering document including stale information
may be distributed together with a fact sheet that contains up to date performance
information.
Whether hypothetical figures presented are conservative or not depends on the specific
circumstances of the case. Generally, in addition to the worst-case scenario of the payout
mechanism, an advertisement issuer may disclose a scenario that offers an average payout
of less than 5% per annum and another scenario that offers an average payout of less than
9% per annum.
Historical performance of an index is not considered as scheme performance and may be
presented.
Simulated performance of the scheme based on the historical performance of an index is not
allowed (paragraph 16 of the Advertising Guidelines).
Comparison of Performance and Use of Comparative Indices
We use the Hang Seng Index as the
benchmark for our scheme. The Hang
Seng Index is a price return index whereas
our scheme only offers an accumulation
class of shares. Can we continue to use the
Hang Seng Index?
The benchmark which we consider as most
appropriate for the scheme is a price return
index which does not provide performance
figures on a total return basis. Can we use
this index?
We understand the Hang Seng Index provider presents the same index on a price return
basis as well as a total return basis. For presenting performance of an accumulation share
class, it would not be comparing "like with like" to use the Hang Seng price return index. Thus,
the manager / product issuer is required to change the comparison to the total return index
where the total return index is available.
The Commission expects that any comparison should be on a “like with like” basis. However,
where the benchmark considered by the manager / product issuer to be the most appropriate
is not calculated on the same basis as the scheme, the following would be acceptable:
If the scheme has a distribution class of shares where all income / dividends received
from the underlying holdings of the scheme are distributed, the manager / product issuer
may choose to show performance of the distribution share class so that the basis of
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