ALFI UCITS IV implementation project – KID Q&A Document

Chapter 3, Content of Sections of the Key Investor Information DocumentSection 5, Practical Information and Cross-ReferencesArt 20Q. May the name, address and telephone number of the Management Company/self-managed SICAV beincluded in the Practical Information section? May the contact details of the relevant representative agents inthe countries where the UCITS is marketed also be included in that section?A. Yes, we think that Art 20(1)(b) and (c) of the EU Regulation 583/2010 permits this: "The 'Practical Information'section of the [KID] shall contain the following information relevant to investors in every Member State in which theUCITS is marketed … (b) where and how to obtain further information …" If the practitioner has the space to includethe details of every marketing agent then we think that those details are also permitted but for widely distributed fundsthe number of agents would make it impracticable and it would be sensible to describe a single point of contact.Q. May the KID be produced in several local editions, showing only the contact details of the representativeagents in a particular locality?A. No. Art 78(6) of the UCITS Directive says that a KID "shall be used without alterations or supplements, excepttranslation, in all Member States where the UCITS is notified to market its units." (See also Art 159(6) of theLuxembourg Law of 17 December 2010.)Art 20(1)(b)Q. When providing information about where and how to obtain further information such as the prospectus, isit permissible to add a sentence such as, "only the full prospectus contains all the information about the fundand investors must read it"?A. No. The EU Regulation 583/2010 also says in Recital 10 that the KID "should contain all information necessary forthe investor to understand the essential elements of the UCITS." (ALFI's emphasis.) The disclaimer in the questionabove appears to deny the principle that the KID alone should be sufficient.Art 20(1)(e)Q. In the event that a practitioner changes a fund's benchmark and publishes an updated KID, would it be atrisk if it was unable to publish the updated prospectus until some time later and the KID was therefore"inconsistent with the relevant parts of the prospectus"?A. This question assumes that the benchmark is described in the prospectus. It is only a risk under Art 20(1)(e) of EURegulation 583/2010 to the extent that the benchmark is named in the prospectus and the KID is inconsistent with it.(If the benchmark forms part of the investment objective and strategy in the prospectus or is the basis for aperformance fee, the KID must be changed promptly after the home state regulator has approved the change to theprospectus and (Art 23(2) of EU Regulation 583/2010) the new KID "shall be made available before the change comesinto effect".)Chapter 3, Content of Sections of the Key Investor Information DocumentSection 6, Review and Revision of the Key Investor Information DocumentArt 23Q. In the event of a material change to a fund (e.g., change to investment objective) or a change to the KID(e.g., change to the risk narrative), should the revised KID be sent to existing shareholders?A. There is no obligation to send the revised KID to existing shareholders and practitioners may decide whether or notto do so. Generally, we think that they will not. Material changes to a fund (e.g., investment objective, managementfee, dealing frequency) must in any event be notified to investors in writing prior to the change taking effect and wethink that the current practice of giving notice by letter will be sufficient. We do not consider a change to the risknarrative of the KID to be a notifiable change because it is only a narrative and it does not form part of the UCITS'investment and borrowing powers.ALFI KID Q&A, Issue 1314, 11 April25 September 2012 Page 29