ALFI UCITS IV implementation project – KID Q&A Document

A. Yes, we think that both designs are permitted but they are at the limit of what is acceptable in terms of their use ofcolour.Q. Is the following example showing multiple share classes in one KID linked to a benchmark acceptable?% European Equity60.0040.0020.000.00-20.00-40.002000 2001 2002 2003 2004 2005 2006 2007 2008 2009European Equity - Share Class A - EUR -32.10 -20.60 -15.60 -7.40 -2.10 1.10 7.60 37.50 45.50 30.50European Equity - Share Class B - EUR -30.50 -19.50 -11.50 -5.70 0.10 -1.20 6.50 35.90 46.70 29.50European Equity - Share Class C - EUR -29.50 -18.90 -15.90 -9.10 -3.60 -2.20 7.70 34.90 44.30 28.50European Equity - Benchmark -33.60 -20.60 -14.90 -10.30 -2.20 1.10 7.00 30.30 40.20 32.60A. We think that the general idea of the table is acceptable but there are some aspects of it that are not acceptable.The performance numbers should be stated to one decimal place; the font size is too small; we think that the use ofcolour is at the limit of what is acceptable: the contrast between the colours is clear when the document is printed incolour or monochrome but it becomes difficult to see when the document is copied on a standard office photocopier.When they prepare multi-share class KIDs we recommend that practitioners take note of Recital 13 of the EURegulation 583/2010, which requires that the KID should not be "too complicated or crowded". Practitioners shouldalso take note of Art 18(2) of the EU Regulation 583/2010, which says that a benchmark may not be shown duringyears in which a UCITS does not exist. In this case, for as long as one or more share classes existed, we think that thebenchmark may be shown.Q. In the example above, if one of the share classes had only 3 years' performance history, would it bepermitted to show it on the 10-year chart, leaving 7 years blank?A. No. You may simulate the missing history under the provision of Art 19, in which case you must annotate the chartaccordingly. If you choose not to simulate the performance history you should comply with Art 15(2), "UCITS withperformance of less than 5 complete calendar years shall use a presentation covering the last 5 years only" andproduce a KID with a 5-year scale or rely upon a representative share class KID.Q. Extending the example above, in the case that the share classes used different benchmarks (for example, ifthere were foreign currency hedged share classes, each measured according to a specially constructedcurrency hedged benchmark), could each share class and its benchmark be shown on the same chart?A. It is unlikely that several share classes and their separate benchmarks could be shown on a single KID without"making the document too complicated or crowded" (Recital 13 of the EU Regulation 583/2010). Practitioners wouldbe wiser to present the share classes on several KIDs or choose a representative share class if it is possible.Q. If a benchmark is changed, how should the chart of past performance be displayed for the periodpreceding the change?A. Each benchmark should be shown only in respect of the periods in which it was relevant to the UCITS.ALFI KID Q&A, Issue 1314, 11 April25 September 2012 Page 27