Offering documents

Offer document

Key Messages:

  • A fund's offering documents provide important information, such as investment objectives and restrictions, risks, fees, dealing procedures, and conditions leading to suspension or termination.
  • You should rely on a fund's offering document, rather than advertisements and other marketing materials, for all the information you need to make an informed investment decision.

Read the offering document of a fund carefully before you buy.

What will an offering document tell me?

A fund's offering document, often referred to as an explanatory memorandum or a prospectus, lists the investment objectives and restrictions, its characteristics, risk disclosure, fees, dealing procedures, conditions leading to deferral, suspension or even termination of the fund, as well as sources of further information. It should be available in both English and Chinese. An application form for subscription can only be distributed together with an offering document.


Can fees be raised as much as a fund manager likes and without prior notice?

The offering document lists charges for subscribing, redeeming and switching between funds. Normally it also indicates the current and maximum levels of fees and charges payable by the fund such as management fees, trustee / custodian fees and start-up expenses.

The offering document also states the notice period required for any fee increases. If the new fee is within the maximum stated in the constitutive document, generally one month prior notice must be given to the fund holders, otherwise, shareholders' prior approval may be required.


Why should I read financial reports?

Audited annual reports and semi-annual reports keep you informed about the fund's income and expenses and investment portfolio at the mid-point and end of the financial year. They highlight dividend distribution, unit issuance / redemption activity and a performance history including its net asset value for the past three financial years.

Bear in mind that past performance is not indicative of future performance.


Can I rely on fund advertisements and other marketing materials?

All publicly issued advertisements and marketing materials of SFC-authorised funds are required to comply with the Advertising Guidelines issued by the SFC. This applies whether the advertisements need to be authorised by the SFC or are exempted from authorisation under the Securities and Futures Ordinance.

As a general principle, the Advertising Guidelines require that the advertisements are not false, biased, misleading or deceptive. However, you must understand that these are advertisements and therefore they cannot provide you with all the information you need to make an informed and proper decision as to whether or not to invest in a fund.

To make an informed decision, you should understand the nature, the investment and the risks of the fund, as disclosed in the offering document. Make sure your investment adviser explain to you the details of this important document that contains full information of the fund during the sales process, and ask your adviser why he/she thinks the fund suits you. Remember to ask if you don't understand!