4.1 The concerns discussed above in connection with CIS offering documents are also present in the context of CIS advertisements, including CIS sales material. The goal of regulatory authorities should be to seek to ensure that CIS advertising (which the Principles define as "any activity or notice electronically communicated or otherwise which publicly calls or draws attention to a CIS") portrays the investment in a balanced manner, emphasizing the potential risks of an investment as well as the potential return from the investment. It is also considered fundamental that regulatory authorities have the power to enforce withdrawal of advertising or take appropriate action against non­compliance.

4.2 Member countries of WP 5 take a variety of approaches to the regulation of CIS advertising. Principle 10.3 recognizes that it is essential that in all jurisdictions, CIS advertisements "must not contain information which is false or misleading or which is presented in a manner which is deceptive". In the context of risk disclosure, it may be deemed to be a deceptive or misleading practice for an advertisement to refer to the possible benefits of a CIS investment without also providing a discussion of the risks of the investment.

4.3 In some jurisdictions, certain selling documents are permitted to be disseminated to investors, provided that they do not contain false or misleading statements and that the prospectus accompanies or precedes the communication, thereby ensuring that investors do not receive sales documents unless they also have received the prospectus containing information concerning risk.

4.4 Alternatively, in other jurisdictions, certain selling documents are only permitted to be published or disseminated if they refer to the importance of a prospectus and its availability, and that units will only be issued on the basis of an application form which is attached to the prospectus.

Options for Improvement

4.5 To ensure that CIS advertisements do not contain misleading information, regulatory authorities may:

4.5.1 Require that advertisements intended for distribution to investors be reviewed for compliance with applicable regulations, either prior to the use of the advertisement or during the course of compliance examinations.

4.5.2 Not wish to play a role in approving CIS advertising, but rather emphasize that the burden is upon the CIS (and its advisers) to issue an advertisement which is not false or misleading, contains no material information not contained in the prospectus and refers appropriately to the availability of the prospectus for all material information relating to the offer.

4.6 In some jurisdictions regulatory authorities may require certain advertisements to contain "risk warnings" to potential investors, where for example:  the investment can fluctuate in value; or the investment is described as being likely to yield a high income or as being suitable for an investor particularly seeking income from the investment.

4.7 Certain sales material that is intended for distribution only to brokers and dealers and that is not passed on to investors ("dealers­use­only material") may not be required to be filed with regulatory authorities. Dealer­use­only material should be clearly and prominently labeled to indicate that it has not been approved for distribution to the public and may not be copied by or used with the public. Such material should not contain false, misleading or deceptive information.