HONG KONG authorised funds: This refers to funds that are authorised by the Securities and Futures Commission (SFC) in Hong Kong under the Code on Unit Trusts and Mutual Funds. Authorisation aims to ensure investors have sufficient information to make an investment decision. To get authorisation, a fund must meet these requirements: Appropriate safeguards, with an independent trustee to look after the interests of investors; Background of persons managing the investment is checked; Presence of a Hong Kong representative; Clear and full disclosure in English and Chinese; Accurate and fair advertising.
Only authorised funds can be marketed and offered for sale to the public. Minimum investment: In general, it is US$1,000 to $2,000. However, for schemes investing in Hong Kong dollar-denominated money market instruments, the minimum prescribed by the SFC Code is HK$50,000.
Subscription charges: Initial service charge paid by investors at time of purchase. Annual management fee: The remuneration of the managers. It is quoted as an annual percentage of the fund value, but it will be allocated from the fund daily and will not constitute an out-of-pocket expense for investors.
Discount for switching: A discount given to investors who switch from one unit trust to another within the same fund management group.
Dealing time: All are in Hong Kong time, Monday to Friday, unless stated otherwise. Days for redemption: The number of days it takes for an investor to get back the money after selling. Under the SFC Code, the maximum time before pay-back after a redemption request has been lodged is one calendar month. Monthly savings plan: This refers to schemes that allow small regular fixed-sum investments into unit trusts, usually below HK$5,000. The advantage is dollar-cost averaging: it averages the purchase cost to investors as one can buy more units when the price is lower and fewer when it is higher.
Methods by which funds are quoted: Forward pricing means that when investors place their sale and buy orders, fund houses will price the orders at the next valuation day. For instance, if an investor buys on Tuesday, he will only know the price he deals in on Wednesday. This is used to ensure that dealing is done at a fair market price. Prices are quoted in two ways: Bid/Offer price: An investor will buy at the offer price (higher price) and sell at the bid price (lower price). The offer price is basically the cost of the units, plus subscription charges. Single price or net asset value (NAV): An investor will sell at the NAV and buy at the NAV plus subscription charges.