Marketing Material Guidelines and Compliance FAQ
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Question
index (e.g. Hang Seng Index). We would like to
show the fund's NAV performance versus the
performance of the index for reference. Is this
permissible?
Our scheme offers both accumulation and
distribution share classes. We would like to
show the performance of both classes against a
benchmark index. Do we need to show the
benchmark performance on both the total return
basis and the price return basis?
Changes to a Scheme
What events constitute changes having a
significant impact on scheme performance
and hence require explanatory notes to be
disclosed together with the performance
information? What information should be
included in the explanatory notes?
For how long are the explanatory notes
regarding scheme changes required to be
maintained in the advertisements? Is
disclosure still required for changes that
occurred 10 years ago?
Answer
As to whether it is permissible to compare scheme performance with that of the price
return index depends on the calculation basis of the scheme performance and the nature
of the underlying investments. For example, some guaranteed funds aim to achieve the
objective by investing in options or in structured notes which do not distribute any
income/dividends. In such cases, the scheme's performance compared to a price return
index is generally considered acceptable.
Where the performance of both share classes are shown, at least the performance of the total
return index should be shown. The performance of the price return index may be shown in
addition.
Events that may require explanatory notes to accompany scheme performance include, but
not limited to, the following:
significant change of investment objective and policies
change of comparative indices
scheme mergers where the pre-merger performance of the absorbed scheme is
presented
Explanatory notes should be specifically tailored for the circumstances of the change so as to
ensure that the presentation of performance information prior to the change is not misleading.
For example, for a change of comparative indices, a clear description of the old and the new
indices used and the effective date of change should be disclosed. In any event,
advertisement issuers should use their professional judgement to determine the disclosure
appropriate for their specific circumstances.
There is no minimum or maximum time limit for disclosure of explanatory notes regarding
scheme changes. Such notes should be disclosed for so long as they remain relevant
(i.e. where performance information prior to the change is disclosed).
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