ALFI UCITS IV implementation project – KID Q&A Document

A. Yes, we think that both designs are permitted.Q. What is your understanding of performance publication requirements for constant NAV (money market)funds? Would it be the annualised yield for the past 10 years?A. Neither the EU Regulation 583/2010 nor CESR/09-949 specifically mentions constant NAV funds but we think that acorrect interpretation in this case would be to show past performance as the fund's annual yield.Q. May past performance data be sourced from a data vendor (e.g., Morningstar) with a footnote to declare thesource?A. The management company or the self-managed UCITS may delegate the calculation of past performance but itremains responsible for valuation and for the production of the KID. For that reason and because Art 3(1) of the EURegulation 583/2010 says, "No other information or statements shall be included", we think that a source attributionstatement will not be permitted.Q. For various reasons it is likely that the performance figures for the same period will be different on the KIDand the fact sheet. Will that cause problems?A. If the past performance figures on the fact sheet represent the same period as the past performance figures on theKID (for example, calendar year performance shown in discrete annual intervals) then the practitioner should considerusing the same methodology to prepare them, so that they agree. If the past performance figures represent differentperiods (for example, trailing annual performance on the fact sheet and calendar year performance on the KID) thenthey will very probably differ but we do not think that is likely to cause problems.Q. If a fund uses swing pricing, which price should be used in the calculation of past performance (and theSRRI): the original price or the swung price?A. Calculations should be on the basis of the published NAV (i.e., if the NAV on a particular day was swung, theswung price should be used).Q. In the event that one fund merges with another, may the absorbing fund's past performance be shownwithout modification or footnote?A. Yes. The absorbing fund must retain its performance history (EU Regulation, Art 19(4)) and the practitioner is notobliged to declare the merger on the past performance chart. CESR/09-949 provides more insight into this question atpage 38: "CESR considered whether a disclosure to investors such as 'On [date] the fund [X] absorbed fund [Y]',would be effective. This information does not seem likely to help investors to make a better-informed decision. It is notessential for investors, when deciding whether or not to invest in the existing fund, to know that it has previouslyabsorbed other funds. CESR recommends that the information should nevertheless be available through othersources (prospectus or website)."Q. If a share class has a history of dormancy (i.e., it is launched and subsequently liquidated and thenlaunched again under the same ISIN, perhaps several times), how should its past performance chart bedisplayed?A. We see two possibilities:(1) Show actual past performance for each complete calendar year that exists and show no performance foreach year where there is no complete calendar year of performance, with an explanatory note on the chart.(2) Show actual past performance for each complete calendar year that exists and use simulated pastperformance under Art 19 of the EU Regulation 583/2010 to complete the missing history, with an explanatorynote on the chart.ALFI KID Q&A, Issue 1314, 11 April25 September 2012 Page 23