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13 October 2006

News release

Securities Commission prohibits ads for Hanover's Protected Investments Global Growth Fund

The Securities Commission has prohibited some advertisements for a new unit trust offered by Hanover Funds Management Limited because they are likely to mislead or confuse investors about the potential returns.

The prohibited advertisements for Hanover Protected Investments Global Growth Fund units are those which say the investment

• has a 10% potential return; or
• has a 50% potential return without clearly stating that the possible returns on the investment at maturity are 50% or zero.

The investment is structured so that at the end of five years investors will receive their capital back. The return is to be either 50% of the amount invested, or nothing.

"The way the returns on these securities are structured is unusual," Chairman Jane Diplock says. "Therefore they should be described clearly and precisely to avoid being misleading or confusing. The prohibited advertisements are not sufficiently clear and precise."

Hanover has cooperated with the Commission and agreed to write to all investors who subscribed to the fund to make sure they correctly understand the returns under the fund. They will be offered their money back.

The Commission considered the advertisements were misleading or confusing because:

• Investors may think that the 10% figure means that they would receive a return of 10% each year. This is not the case. There is no annual return for this investment.
• Investors are likely to believe from the advertisements that the return is potentially greater than is actually the case. Even if they receive the 50% return at the end of five years, this equates to less than a 10% annualised return on the investment. They may receive zero return.

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Contact: Poly Banerjee 04 471 7666