8.1 Offering Documentation

The CIS Principles already require a regulatory regime to impose a disclosure requirement to ensure that there is full, accurate and timely disclosure to investors, providing all the information necessary for investors to make informed investment decisions. Investors' interests can be protected by ensuring that product literature, including prospectuses and other promotional material which is made available to investors is fair and not misleading.

A regulatory body may review relevant product documentation at the time a CIS is seeking authorization. This may include the prospectus and any marketing material to be used at the CIS's launch. Additionally, marketing material may be subject to supervision on an on going basis, either during periodic inspections of operators or by reviewing advertisements in the public domain, typically in newspapers and magazines. A regulatory body could also require that advertising materials are filed with it for review and comment.

It is important that investors' attention is drawn to any relevant risks with the use of appropriate regulatory warnings and that a CIS does not purport to offer benefits or promises to investors which cannot be fulfilled⁶. Supervision of an operator's product literature will help to ensure that investors understand -and receive- what they are entitled to, both at the point of sale and on an ongoing basis.

8.2 Financial Statements

Review of financial data, including a CIS's annual and semi-annual reports which have been prepared by an operator, may also help to confirm whether the fund has been managed in accordance with a jurisdiction's regulations and whether risks and other salient factors have been adequately disclosed to investors.

8.3 Continuing Disclosure of Material Information

A regulatory regime may also monitor the continuous disclosure of material information about a CIS. This could include, for example, merger and restructuring arrangements, and material changes to a CIS's constitutive documents.

Footnotes:

6 Disclosure of risks to investors is the subject of a separate paper which has been produced by WP 5, that was approved by the Technical Committee in Montreal, September 1996.