Regulatory Frequently AskedQuestions78

The line graph must show the performance of a £10,000 investment, or an equivalent amount in another currency that is divisible by 1,000. It must include at least one data point per month, with the last day of each month included in the time series. The x-axis must be expressed in calendar years (or parts thereof), and the y-axis must be linear, showing values as whole-number amounts.

The manufacturer must retain a copy of the product summary for each consumer composite investment once it has been prepared, as well as after any subsequent reviews, amendments, or updates. Each version of the product summary must be kept for a minimum period of three years.

Under the CCI, manufacturers are required to provide standardised underlying product information in a machine-readable format to support distributors’ disclosures, unless the firm is the sole distributor of its own products, in which case a machine-readable file is not required.

Where performance fees or carried interest apply, the product summary must include at least one illustrative example showing how much the performance fee and/or carried interest could amount to, based on a hypothetical £10,000 investment and reasonable assumptions about the performance of the CCI. A CCI is also considered subject to a performance fee or carried interest where it invests in one or more investments to which such fees apply.

Where there is less than three months of past performance data, the manufacture may choose not to include a performance graph. In such cases, the product summary must clearly explain that there is insufficient information to produce the graph.

Where a consumer composite investment is a fund that invests in one or more funds managed by the same person, the product summary must disclose any actual or potential benefits to that person arising from the investment in the investee funds.

Where the past performance data covers less than one year, the product summary must include a warning stating that the performance shown relates to a short period and may not be representative of the consumer composite investment’s performance over the longer term (DISC 5.3.3).

Although the FCA generally discourages cross-referencing, an exception applies for costs and charges. Where relevant, the product summary must include a cross-reference to the parts of the consumer composite investment’s prospectus where more detailed information on costs and charges can be found, including information on performance fees and how they are calculated.

Where the issuer has taken reasonable steps to ensure that communications are addressed exclusively to professional investors, the issuer is not required to produce a Product Summary Document.

Costs and charges must be presented both as a percentage and as a cash amount, rounded to the nearest pound, and shown only where the amount is not zero. The presentation must include one-off entry costs, one-off exit costs, ongoing costs, and, where applicable, the ongoing costs of any investee closed-ended investment funds. Transaction costs must be expressed as a percentage of the assumed investment amount.

Both new and existing products will have the option to follow the outgoing regime or switch to the incoming CCI rules during the transition period.

The product summary must be provided to distributors free of charge and must be made accessible on the manufacturer’s website, alongside a non-machine-readable version. In addition, the manufacturer must publish clear instructions explaining how the machine-readable file should be used.