Commission Delegated Regulation (EU) 2021/2268 of 6 September 2021 amending the regulatory technical standards laid down in Commission Delegated Regulation (EU) 2017/653 as regards the underpinning methodology and presentation of performance scenarios, the presentation of costs and the methodology for the calculation of summary cost indicators, the presentation and content of information on past performance and the presentation of costs by packaged retail and insurance-based investment products (PRIIPs) offering a range of options for investment and alignment of the transitional arrangement for PRIIP manufacturers offering units of funds referred to in Article 32 of Regulation (EU) No 1286/2014 of the European Parliament and of the Council as underlying investment options with the prolonged transitional arrangement laid down in that Article (Text with EEA relevance)

Delegated Regulation (EU) 2017/653 is amended as follows:

1. Article 1 is amended as follows:

   1. in the first paragraph, the following points (f) to (i) are added:

      1. where applicable, in cases where the PRIIP manufacturer forms part of a group of companies for legal, administrative or marketing purposes, the name of that group;

      2. where the PRIIP takes the form of an undertaking for collective investment in transferable securities (UCITS) or an alternative investment fund (AIF), the identification of the UCITS or AIF including the share class or investment compartment thereof, stated prominently;

      3. authorisation details, where applicable;

      4. where the PRIIP takes the form of a UCITS or AIF and in cases where a UCITS is managed by a management company as defined in Article 2(1), point (b), of Directive 2009/65/EC or where it is an investment company as referred to in Article 27 of that Directive (collectively “UCITS management company”) which is exercising in respect of that UCITS rights under Article 16 of that Directive, or in cases where an AIF is managed by an alternative investment fund manager (AIFM) which is exercising in respect of that AIF rights under Articles 31, 32 and 33 of Directive 2011/61/EU of the European Parliament and of the Council^(*), an additional statement in respect of that fact shall be included.

   2. the following paragraph is added:

      ‘For the purposes of the first paragraph, point (g), in the case of an investment compartment or share class, the name of the UCITS or AIF shall follow the compartment or share class name. Where a code number identifying the UCITS or AIF, investment compartment or share class exists, it shall form part of the identification of the UCITS or AIF.’;

2. Article 2 is amended as follows:

   1. the following paragraphs 2a, 2b and 2c are inserted:

      ‘2a.

      Where the PRIIP takes the form of a UCITS or an AIF, the information in the section entitled “What is this product?” of the key information document shall cover those essential features of a UCITS or AIF about which a retail investor shall be informed, even where those features do not form part of the description of objectives and investment policy in the prospectus of a UCITS as referred to in Article 68 of Directive 2009/65/EC or the description of the investment strategy and objectives of the AIF referred to in Article 23(1), point (a), of Directive 2011/61/EU, including:

      1. the main categories of eligible financial instruments that are the object of investment;

      2. the possibility that the retail investor may redeem units of UCITS or AIF on demand, qualifying that statement with an indication as to the frequency of dealing in units, or where applicable a statement that there is no possibility to redeem units on demand;

      3. whether the UCITS or AIF has a particular target in relation to any industrial, geographic or other market sectors or specific classes of assets;

      4. whether the UCITS or AIF allows for discretionary choices in regards to the particular investments that are to be made, and whether this approach includes or implies a reference to a benchmark and if so, which one;

      5. whether dividend income is distributed or reinvested.

      For the purposes of the first subparagraph, point (d), where a reference to a benchmark is implied, the degree of freedom available in relation to that benchmark shall be indicated, and where the UCITS or AIF has an index tracking objective, this shall be stated.

      2b.

      The information referred to in paragraph 2a shall include the following, where relevant:

      1. where the UCITS or AIF invests in debt securities, an indication of whether those debt securities are issued by corporate bodies, governments or other entities, and, where applicable, any minimum rating requirements;

      2. where the UCITS or AIF is a structured investment fund, an explanation in simple terms of all elements necessary for a correct understanding of the pay-off and the factors that are expected to determine performance, including references, where necessary, to the details on the algorithm and its workings which appear in the prospectus of the UCITS or the description of the investment strategy and objectives of the AIF;

      3. where the choice of assets is guided by specific criteria, an explanation of those criteria, such as “growth”, “value” or “high dividends”;

      4. where specific asset management techniques are used, which may include hedging, arbitrage or leverage, an explanation in simple terms of the factors that are expected to determine the performance of the UCITS or AIF.

      2c.

      The information referred to in paragraphs 2a and 2b shall distinguish between the broad categories of investments as specified in paragraph 2a, points (a) and (c), and paragraph 2b, point (a), and the approach to those investments to be adopted by a UCITS management company or an AIFM as specified in paragraph 2a, point (d) and paragraph 2b, points (b), (c) and (d).

      The section entitled “What is this product?” of the key information document may contain other elements than those listed in paragraphs 2a and 2b, including the description of the UCITS or AIF’s investment strategy, where those elements are necessary to adequately describe the objectives and investment policy of the UCITS or AIF.’;

   2. the following paragraphs 6 and 7 are added:

      ‘6.

      Where the PRIIP takes the form of a UCITS or an AIF, the identification and explanation of risks referred to in Annexes II and III to this Regulation shall be consistent with the internal process for identifying, measuring, managing and monitoring risk adopted by the UCITS’ management company in accordance with Directive 2009/65/EC or by AIFMs in accordance with Directive 2011/61/EU. Where a management company manages more than one UCITS or where an AIFM manages more than one AIF, the risks shall be identified and explained in a consistent manner.

      7.

      Where the PRIIP takes the form of a UCITS or an AIF, the section entitled “What is this product?” of the key information document shall contain the following information for every Member State in which the UCITS or AIF is marketed:

      1. the name of the depositary;

      2. where and how to obtain further information about the UCITS or AIF, copies of the UCITS’ prospectus or copies of the description of the investment strategy and objectives of the AIF, the latest annual report and any subsequent half-yearly report of the UCITS as referred to in Article 68(1), points (b) and (c), of Directive 2009/65/EC, or the latest annual report of the AIF as referred to in Article 22 of Directive 2011/61/EU, stating in which language or languages those documents are available, and that they may be obtained free of charge;

      3. where and how to obtain other practical information, including where to find the latest prices of units.’;

3. Article 5 is amended as follows:

   1. in paragraph 2, the following subparagraph is added:

      ‘A prominent warning shall be added, where applicable, regarding the additional costs that may be charged by persons advising on, or selling, the PRIIP.’;

   2. paragraph 3 is replaced by the following:

      ‘3.

      In the “Composition of costs” table in the section titled “What are the costs?” of the key information document, PRIIP manufacturers shall specify summary indicators of the following types of costs:

      1. any one-off costs, such as entry and exit costs;

      2. any recurring costs, separating portfolio transaction costs and other recurring costs;

      3. any incidental costs, such as performance fees or carried interest.’;

   3. paragraph 4 is replaced by the following:

      ‘4.

      PRIIP manufacturers shall describe each of the different costs included in the “Composition of costs” table in the section titled “What are the costs?” of the key information document, in accordance with Annex VII, and shall specify where and how those costs may differ from the actual costs the retail investor may incur, and where and how such costs may depend on whether the retail investor does or does not exercise certain options.’;

4. in Article 8, the following paragraph 3 is added:

   ‘3.

   For UCITS as defined in point 1(a) of Annex VIII, AIFs as defined in point 1(b) of that Annex, or unit-linked insurance-based investment products as defined in point 1(c) of that Annex, the section titled “Other relevant information” of the key information document shall include:

   1. a link to the website, or a reference to a document, where the information about past performance published by the PRIIP manufacturer in accordance with Annex VIII is made available;

   2. the number of years for which past performance data is presented.

   For PRIIPs referred to in Annex II, Part 1, point 5, that are open-ended funds, or other PRIIPs open to subscription, previous performance scenario calculations shall be published on a monthly basis and the section titled “Other relevant information” shall state where those calculations can be found.’;

5. the title of Chapter II is replaced by the following:

6. in Article 10, points (a) and (b) are replaced by the following:

   1. a key information document for each underlying investment option within the PRIIP, in accordance with Chapter I, including information about the PRIIP as a whole, with each key information document reflecting the case that the retail investor invests in one investment option only;

   2. a generic key information document describing the PRIIP in accordance with Chapter I, unless otherwise specified in Articles 11 to 14, including a description of where the specific information on each underlying investment option can be found.’;

7. in Article 11, point (c) is deleted;

8. Article 12 is amended as follows:

   1. in paragraph 1, point (d) is deleted;

   2. paragraph 2 is deleted;

9. Articles 13 and 14 are replaced by the following:

   In the section titled “What are the costs?”, by way of derogation from Article 5(1), point (b), PRIIP manufacturers shall specify the following:

   1. where the costs of the PRIIP other than the costs for the underlying investment option cannot be provided in a single figure, including where those costs vary depending on the underlying investment option selected:

      1. the range of costs for the PRIIP in the “Costs over time” and “Composition of costs” tables set out in Annex VII;

      2. a statement indicating that the costs to the retail investor vary on the basis of the underlying investment options;

   2. where the costs of the PRIIP other than the costs for the underlying investment options can be provided in a single figure:

      1. those costs shown separately from the range of costs for the underlying investment options offered by the PRIIP in the “Costs over time” and “Composition of costs” tables set out in Annex VII;

      2. a statement indicating that the total costs to the retail investor consist of a combination of the costs for the underlying investment options chosen and other costs of the PRIIP and vary on the basis of the underlying investment options.

   The specific information on each underlying investment option, referred to in Article 10, point (b), shall be provided in a specific information document supplementing the generic key information document. PRIIP manufacturers shall include for each underlying investment option all of the following:

   1. a comprehension alert, where relevant;

   2. the investment objectives, the means for achieving them, and the intended target market as referred to in Article 2(2) and (3);

   3. a summary risk indicator and narrative, and performance scenarios, as referred to in Article 3;

   4. a presentation of the costs, in accordance with Article 5, including a statement on whether or not those costs include all of the costs of the PRIIP in the case that the retail investor invests in that specific investment option only;

   5. for underlying investment options that are UCITS as defined in point 1(a) of Annex VIII, AIFs as defined in point 1(b) of that Annex, or unit-linked insurance-based investment products as defined in point 1(c) of that Annex, information about past performance as required by Article 8(3).

   The information referred to in points (a) to (e) of this paragraph shall follow the structure of the relevant parts of the template laid down in Annex I.’;

10. the following Chapter IIa is inserted:

    1.

    Where a UCITS or AIF consists of two or more investment compartments, a separate key information document shall be produced for each individual compartment.

    2.

    Each key information document referred to in paragraph 1 shall contain, in the section entitled “What is this product?”, the following information:

    1. a statement that the key information document describes a compartment of a UCITS or AIF, and, where applicable, that the prospectus of the UCITS or the description of the investment strategy and objectives of the AIF and periodic reports are prepared for the entire UCITS or AIF named at the beginning of the key information document;

    2. whether or not the assets and liabilities of each compartment are segregated by law and how this might affect the investor;

    3. whether or not the retail investor has the right to exchange his investment in units in one compartment for units in another compartment, and if so, where to obtain information about how to exercise that right.

    3.

    Where the UCITS management company or the AIFM sets a charge for the retail investor to exchange his investment in accordance with paragraph 2, point (c), and that charge differs from the standard charge for buying or selling units, that charge shall be stated separately in the section entitled “What are the costs?” of the key information document.

    1.

    Where a UCITS or AIF consists of more than one class of units or shares, the key information document shall be prepared for each class of units or shares.

    2.

    The key information document pertinent to two or more classes of the same UCITS or AIF may be combined into a single key information document, provided that the resulting document fully complies with all requirements on length, language and presentation of the key information document.

    3.

    The UCITS management company or AIFM may select a class to represent one or more other classes of the UCITS or AIF, provided the choice is fair, clear and not misleading to potential retail investors in those other classes. In such cases, the section entitled “What are the risks and what could I get in return?” of the key information document shall contain the explanation of material risk applicable to any of the other classes being represented. A key information document based on the representative class may be provided to retail investors in the other classes.

    4.

    Different classes shall not be combined into a composite representative class as referred to in paragraph 3.

    5.

    The UCITS management company or AIFM shall keep a record of which other classes are represented by the representative class referred to in paragraph 3 and the grounds justifying that choice.

    6.

    Where applicable, the section entitled “What is this product?” of the key information document shall be supplemented by an indication of which class has been selected as representative, using the term by which it is designated in the UCITS’ prospectus or in the description of the investment strategy and objectives of the AIF.

    7.

    That section shall also indicate where retail investors can obtain information about the other classes of the UCITS or AIF that are marketed in their own Member State.

    1.

    Where the UCITS invests a substantial proportion of its assets in other UCITS or other collective investment undertakings as referred to in Article 50(1), point (e), of Directive 2009/65/EC, the description of the objectives and investment policy of that UCITS in the key information document shall include a brief explanation of how the other collective undertakings are to be selected on an ongoing basis. Where a UCITS is a fund of hedge funds the key information document shall include information about the purchase of non-EU AIFs that are not under supervision.

    2.

    Where the AIF invests a substantial proportion of its assets in other UCITS or AIFs, paragraphs 1 and 2 shall apply mutatis mutandis.

    1.

    For feeder UCITS, as defined in Article 58 of Directive 2009/65/EC, the key information document shall contain, in the section entitled “What is this product?” the following information specific to the feeder UCITS:

    1. a statement that the master UCITS’ prospectus, key information document, and periodic reports and accounts are available to retail investors of the feeder UCITS upon request, how they may be obtained, and in which language(s);

    2. whether the items listed in point (a) of this paragraph are available in paper copies only or in other durable media, and whether any fee is payable for items not subject to free delivery in accordance with Article 63(5) of Directive 2009/65/EC;

    3. where the master UCITS is established in a different Member State to the feeder UCITS, and where this may affect the feeder UCITS’s tax treatment, a statement to this effect;

    4. information about the proportion of the feeder UCITS’ assets which is invested in the master UCITS;

    5. a description of the master UCITS’ objectives and investment policy, supplemented, as appropriate, by either of the following:

       1. an indication that the feeder UCITS’ investment returns will be very similar to those of the master UCITS; or

       2. an explanation of how and why the investment returns of the feeder and master UCITS may differ.

    2.

    Where the risk and reward profile of the feeder UCITS differs in any material respect from that of the master UCITS, that fact and the reason for it shall be explained in the section entitled “What are the risks and what could I get in return?” of the key information document.

    3.

    Any liquidity risk and the relationship between purchase and redemption arrangements for the master and feeder UCITS shall be explained in the section entitled “What are the risks and what could I get in return?” of the key information document.

    Structured investment funds are UCITS or AIFs which provide retail investors, at certain predetermined dates, with algorithm-based payoffs that are linked to the performance, or to the realisation of price changes or other conditions, of financial assets, indices or reference portfolios or UCITS or AIFs with similar features.’;

11. in Article 15, paragraph 2, the following point (d) is added:

    1. where the performance scenarios are based on appropriate benchmarks or proxies, the consistency of the benchmark or proxy with the objectives of the PRIIP.’;

12. the following Chapter IVa is inserted:

    Without prejudice to Article 6 of Regulation (EU) No 1286/2014, cross-references to other sources of information, including the prospectus and annual or half-yearly reports, may be included in the key information document, provided that all information fundamental for the retail investors’ understanding of the essential elements of the investment is included in the key information document.

    Cross-references shall be permitted to the website of the PRIIP or the PRIIP manufacturer, including a part of any such website containing the prospectus and the periodic reports.

    Cross-references referred to in the first subparagraph shall direct the retail investor to the specific section of the relevant source of information. Several different cross-references may be used within the key information document but they shall be kept to a minimum.’;

13. in Article 18, the third paragraph is replaced by the following: ‘Article 14(2) shall apply until 30 June 2022.’;

14. Annex I is replaced by the text in Annex I to this Regulation;

15. Annex II is amended in accordance with Annex II to this Regulation;

16. Annex III is amended in accordance with Annex III to this Regulation;

17. Annex IV is replaced by the text in Annex IV to this Regulation;

18. Annex V is replaced by the text in Annex V to this Regulation;

19. Annex VI is amended in accordance with Annex VI to this Regulation;

20. Annex VII is replaced by the text in Annex VII to this Regulation;

21. the text set out in Annex VIII of this Regulation is added as Annex VIII.

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

It shall apply from 1 January 2023. However, Article 1, point 13 shall apply from 1 January 2022.