ALFI UCITS IV implementation project â€“ KID Q&A Document

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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
Q. If the shares of a UCITS are held in the portfolio of another fund which is notified in one or more hostMember States, must the UCITS produce a KID in the official languages of those host Member States andmust the UCITS make a notification to the authorities of those host Member States?A. No. The inclusion of a UCITS in the portfolio of another fund which is notified in a host Member State does notoblige the UCITS to produce a KID in that host Member State's official language nor does it oblige the UCITS to makenotification to that host Member State's authority. A UCITS need only produce the KID in the official languages of ahost Member State if it is or intends to become a fund that is notified to the authority in that host Member State.Q. In the case of a non-European promoter who promotes European-domiciled UCITS which presently haveonly non-European investors, whose umbrella fund prospectus includes funds that have been launched andfunds that have not yet been launched, which KIDs must be produced and by when?A. The domicile of the fund is the determining factor here, not the domicile of the promoter and the investors. In thecase of funds that have been launched or that will be launched before 30 June 2012, KIDs must be produced in theofficial language of the home Member State and be filed with the authority of that Member State (and any relevant hostMember State) no later than 30 June 2012. In the case of funds that will not be launched before 30 June 2012, theproduction of the KID and filing with the home Member State authority may not be immediately required. However, theKID should be filed with the home Member State authority and any relevant host Member State authorities in goodtime before the launch date. For more on KIDs for products that have not yet been launched, see also ALFI's Q&A onArts 26 and 27 of the EU Regulation 583/2010. For more on the use of the KID in non-European markets, see alsoPart 4 of this Q&A: "Using KID in distribution networks."ALFI KID Q&A, Issue 1314, 11 April25 September 2012 Page 39
Page 4: IndexPart 1 EU Regulation 583/2010
Page 9 and 10: "Management Company:", which would
Page 11 and 12: Q. Will it be compulsory to use a g
Page 13 and 14: Art 7(1)(b)Q. Information on the in
Page 15 and 16: Chapter 3, Content of Sections of t
Page 17 and 18: Currently published SRRI value: 5Is
Page 19 and 20: decide what is materially relevant
Page 21 and 22: Q. If switch charges are applied in
Page 23 and 24: A. Yes, we think that both designs
Page 25 and 26: Art 16Q. Past performance "shall be
Page 27 and 28: A. Yes, we think that both designs
Page 29 and 30: Chapter 3, Content of Sections of t
Page 31 and 32: Chapter 4, Particular UCITS Structu
Page 33 and 34: Q. The EU Regulation 583/2010 reque
Page 35 and 36: annual update process. The practiti
Page 37: Art 38(2)(b)Q. Can deemed consent b
Page 41 and 42: Q. Is the management company oblige
Page 43 and 44: Q. It may be hard to tell apart abs
Page 45 and 46: Q. Who should be in charge of the S
Page 47 and 48: Part 3CESR/10-674CESR's guidelines
Page 49 and 50: Page 5, Para 6(b)Q. Does this parag
Page 51 and 52: Q. Should average net assets be cal
Page 53 and 54: Part 4Using KID in distribution net
Page 55 and 56: The following diagrams (which are n
Page 57 and 58: Q. Art 80 of the UCITS IV Directive
Page 59 and 60: the subscription in the future, dem

ALFI UCITS IV implementation project â€“ KID Q&A Document

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