Under paragraph 8.3(b)(ii) of the Code of Conduct, licensed and registered persons are expected to disclose the maximum percentage of trailer fees receivable for a particular fund as per the distribution agreement with the product issuer. Where trailer fees receivable are calculated pursuant to the distribution agreement as a specified percentage of management fees, licensed or registered persons are generally expected to disclose the maximum percentage of trailer fees receivable in the following manner:
|
Name of fund |
Trailer fees receivable from product issuer |
|---|---|
|
Fund A |
We will receive from [the product issuer’s name] up to 60% of Fund A’s annual management fees as ongoing commission every year throughout the term of your investment. |
Where the trailer fees receivable are calculated based on formulations other than a specified percentage of management fees (eg, x% of assets under management (“AUM”) / net asset value (“NAV”)) pursuant to the distribution agreement, licensed and registered persons may disclose the maximum percentage based on the formulation as specified in the distribution agreement. However, licensed and registered persons should also make additional disclosure to make it clear to investors that such trailer fees receivable are being paid by the fund manager out of the management fees of the fund (if it is the case). For example, if the trailer fees receivable are calculated based on x% of AUM / NAV pursuant to the distribution agreement, licensed or registered persons are generally expected to disclose the maximum percentage of trailer fees receivable in the following manner:
|
Name of fund |
Trailer fees receivable from product issuer |
|---|---|
|
Fund A |
We will receive from [the product issuer’s name] up to 0.6% of your investment in Fund A as ongoing commission every year throughout the term of your investment. This is paid out of[the product issuer’s name]’s management fees receivable from Fund A. |