ALFI UCITS IV implementation project – KID Q&A Document

Q. Should an underlying fund's performance fee (if it has been paid) be included in the performance feestatement of the holding fund's KID?A. No. There is nothing in the EU Regulation 583/2010 or the CESR guidelines on this matter but we consider theperformance fee statement, as required under Art 10(2)(c) of EU Regulation 583/2010 and as described in CESR/09-949, to apply to the performance fee that is charged directly to the UCITS by its manager and to exclude performancefees charged by underlying managers.Annex IIIPresentation of the past performance informationNo questions have been asked.Additional QuestionsQ. The EC Regulation contains no binding references to the CESR recommendations on the methodologiesfor the SRRI and ongoing charges. How should a practitioner implement these aspects of the KID?A. The reference to the SRRI methodology is made in Recital 6 of the EC Regulation and the reference to the ongoingcharges methodology is made in Recital 8. Whilst these are not binding references, they amount to an instruction topractitioners to use the CESR methodologies. The new European Securities and Markets Authority might confirm thestatus of these guidelines in the future.Q. Must the KID be published for all share classes including institutional share classes or must it bepublished only for retail share classes?A. We think that it must be published for all share classes, including institutional share classes and there is nothing inthe Directive or the EU Regulation 583/2010 that differentiates between institutional and retail investors and productsin this way. CESR/09-949 acknowledges the question but does not resolve it: "The question of whether a share classdesigned for institutional investors is being promoted "to the public" is not one which this Advice can answerdefinitively. If such a class is being promoted to the public, a KID must be available to be provided to investors, even ifpotential institutional investors opt not to receive the document."Q. When a UCITS is distributed in countries other than Member States of the European Union, e.g.Switzerland, Hong Kong, Singapore, will it be acceptable to translate the KID without further modification orwill modifications or perhaps an entirely local document be required? Should the simplified prospectus bemaintained for these countries?A. We are uncertain about Swiss policy on whether the KID will be accepted as a substitute for the simplifiedprospectus. It seems likely that in most non-EU jurisdictions Luxembourg funds will have to produce point of salesmaterial that is compliant with local rules and that the KID will not be accepted as a substitute. Examples include theKey Facts Statement in Hong Kong and the Product Highlight Sheet in Singapore. The Monetary Authority ofSingapore will permit the distribution of the KID in Singapore (source: Deloitte Luxembourg) but the Product HighlightSheet remains the mandatory point of sale document. Some of ALFI's members have received encouragingresponses that other non-EU regulators will permit the KID to replace the simplified prospectus in their jurisdiction.Q. Is there more detailed information about these foreign requirements?A. For the Hong Kong Key Facts Statement refer to:http://www.sfc.hk/sfc/html/EN/intermediaries/products/pkfStatements/pkfStatements.htmlFor the Singapore Product Highlight Sheet refer to MAS Circular No. CMD 01/2010.Q. Is it required or permitted to show the minimum subscription and shareholding amounts on the KID?A. The EU Regulation 583/2010 does not prescribe this information for the KID and nor is it permitted (Art 3(1): "noother information or statements shall be included").Q. Must an updated KID be published in the official gazette? Does Luxembourg have any specific rules in thisregard?A. No.ALFI KID Q&A, Issue 1314, 11 April25 September 2012 Page 38