Disclosure Documents & Selling Practices

A collective investment scheme (CIS) is bought largely on the basis of information the manager provides — an investor cannot inspect the fund the way they might inspect a physical asset. DISCLOSURE bridges this information gap so investors can make an INFORMED decision.

The disclosure philosophy is that regulators generally do NOT judge whether a fund is a 'good' or 'bad' investment; instead they require that all MATERIAL information is disclosed clearly, accurately and not misleadingly, and leave the investment decision to the investor (aided by their adviser).

Disclosure serves several protective purposes:

• •It lets investors compare funds on a like-for-like basis (objective, risks, costs, past performance).
• •It forces managers to state the fund's risks and fees up front rather than burying them.
• •It creates a documented, standardised record against which the manager can be held to account if the offer turns out to be false or misleading.

Disclosure is NECESSARY but not SUFFICIENT on its own — it works together with conduct rules (suitability, fair dealing) and knowledge gating so that a well-disclosed but unsuitable product is still not mis-sold.

The PROSPECTUS is the main, comprehensive offer document for a CIS. It must be registered/lodged with the regulator before units may be offered to the public, and units generally may not be offered without a current, valid prospectus.

A prospectus is designed to contain all information an investor and their adviser would reasonably require to make an informed assessment. Typical contents include:

• •The scheme's investment OBJECTIVE, focus and approach, and the permitted investments and any investment restrictions.
• •The RISKS of the scheme (market, credit, liquidity, currency, concentration, derivatives and other risks relevant to the strategy).