Q&A - Alfi

Q. When performance has been simulated, shall the prominent disclosure indicating that the performance was
simulated be printed on top of the performance chart?
A. Yes. CESR/10-949 says at Page 37, Box 14, Para 3, "in all cases, following MiFID standards, there shall be
prominent disclosure in the performance bar chart itself that this performance has been simulated" and the EU
Regulation 583/2010 says at Art 19(2) that "in all cases where performance has been simulated […] there shall be
prominent disclosure on the bar chart …".
Q. If a share class has a history of dormancy (i.e., it is launched and subsequently liquidated and then
launched again under the same ISIN, perhaps several times), how should its past performance chart be
displayed?
A. We see two possibilities:
(1) Show actual past performance for each complete calendar year that exists and show no performance for each 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 past performance
under Art 19 of the EU Regulation 583/2010 to complete the missing history, with an explanatory note on the chart.
Chapter 3, Content of Sections of the Key Investor Information Document
Section 5, Practical Information and Cross-References
Art 20
Q. May the name, address and telephone number of the Management Company/self-managed SICAV be
included in the Practical Information section? May the contact details of the relevant representative agents in
the 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 the
UCITS is marketed … (b) where and how to obtain further information …" If the practitioner has the space to include
the details of every marketing agent then we think that those details are also permitted but for widely distributed funds
the 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 representative
agents in a particular locality?
A. No. Art 78(6) of the UCITS Directive says that a KID "shall be used without alterations or supplements, except
translation, in all Member States where the UCITS is notified to market its units." (See also Art 159(6) of the
Luxembourg 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, is
it permissible to add a sentence such as, "only the full prospectus contains all the information about the fund
and investors must read it"?
A. No. The EU Regulation 583/2010 also says in Recital 10 that the KID "should contain all information necessary for
the investor to understand the essential elements of the UCITS." (ALFI's emphasis.) The disclaimer in the question
above 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 at
risk 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 EU
Regulation 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 a
performance fee, the KID must be changed promptly after the home state regulator has approved the change to the
ALFI KID Q&A, Issue 1112, 19 December 201116 February 2012 Page 28