What is the meaning of ‘whether this approach includes or implies a reference to a benchmark’ in Article 2a(d) of the Delegated Regulation? A UCITS or AIF managed in reference to a benchmark index is

NO – active UCITS NO YES – benchmark-referenced UCITS The KID should: - State the UCITS is active - State the UCITS is managed in reference to a benchmark - Name the benchmark - Indicate the degree of freedom from the benchmark Show past performance against the benchmark The KID should: - State the UCITS is active - State the UCITS is NOT managed in reference to a benchmark Show past performance of the UCITS only The KID should: - State the fund is passive / has an index tracking objective - Name the index in the objective and investment policies Show past performance against index YES – passive UCITS • The UCITS or AIF invests in units of other UCITS or AIFs in order to achieve similar performance to a benchmark index Performance measures • Performance fees are calculated based on performance against a reference benchmark index. • The UCITS or AIF has an internal or external target to outperform a benchmark index. • Contracts between the UCITS management company or AIF manager and third parties, such as the Investment Management Agreement covering delegation of investment management, or between the UCITS management company or AIF manager and its directors and employees, state that the portfolio manager must seek to outperform a benchmark index. • The individual portfolio manager(s) receive(s) an element of performance-related remuneration based on the fund’s performance relative to a benchmark index. • The UCITS or AIF is constrained by internal or external risk indicators that refer to a benchmark index (e.g. tracking error limit, relative VaR for global exposure calculation). • Marketing communications issued by the UCITS management company or AIF manager to one or more investors or potential investors shows the performance of the fund compared with a benchmark index. For clarity, a benchmark index may refer to an individual index or composite index comprised of more than one index / a basket of indices. For additional clarity on disclosure of benchmarks, see the graphic in the previous Q&A (Q&A 1 of this section). To assist investor understanding, it is recommended that UCITS or AIFs which are not managed in reference to a benchmark index also make this clear to investors. To ensure fair, clear and not misleading communications, the information disclosed in the UCITS or AIF KID should be consistent with the UCITS or AIF’s Investment Objectives in the legal and regulatory documents of the fund.