Investors should view the information contained in the key investor document (Kid) for the £1.3bn Finsbury Growth and Income trust with caution, according to its chairman, Anthony Townsend.
As FTAdviser has previously reported, investment trusts are required to produce a key information document which must disclose the transaction costs, ascribe a risk weighting to the trust and produce a projection of future returns.
There has been heavy criticism in the industry about how each of those is calculated and communicated.
Simon Fraser, chairman of both the F&C investment trust and the Merchants investment trust, described the strictures of the Kid document as having the potential to lead to a mis-selling scandal.
In the half-year report to the Finsbury Growth and Income trust, Mr Townsend branded the content of the key investor document "highly prescriptive, both in terms of the assumptions underlying projected future returns under prescribed scenarios and the limited scope to provide further explanation of the content".
"Shareholders should note that the procedures for calculating the risks, costs and potential returns are prescribed by law and that expected performance returns cannot be guaranteed," he said.
"The directors believe that prospective investors in the trust should only use the Kid in conjunction with other documentation.”
The performance projections link past performance with future return.
Previously in his own criticism of the Kid rules, Mr Fraser has said throughout his career he has been told by regulators that past performance is not a guide to future returns, but he feels the current regulations do imply that past performance is a guide to future returns.
The FCA initially said the key investor document requirements under the Packaged Retail Insurance and Investment Products (Priips) rules are European rules that are directly applicable to the UK. The regulator later clarified this to say investment trust providers could provide extra documentation to clarify the performance projections in the Kid information.
The same requirements will apply to open-ended funds by 2020.
The Finsbury Growth and Income trust has returned 88 per cent over the past five years to 21 May, compared with 46 per cent for the average trust in the AIC UK Equity Income sector in the same time period.
Mr Townsend has a personal investment in the Finsbury Growth and Income trust of about 31.4m, while the fund manager Nick Train, has a personal investment of about £9m, according to data from Canaccord Genuity.