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CIS 3.5 Information to be contained in the prospectus

Matters to be included in the prospectus

CIS 3.5.1R

The statements required by CIS 3.5.2 R must be included in the prospectus of an authorised fund.

CIS 3.5.2R

Contents of the prospectus

This table belongs to CIS 3.5.2 R

1

A prominent statement that this document is the prospectus or scheme particulars, of the authorised fund valid as at (and dated).

2

Description of the authorised fund

Information detailing:

(1)

the name of the authorised fund;

(2)

that the authorised fund is either an ICVC or an AUT;

(3)

the relevant category of authorised fund;

(4)

that the shareholders of an ICVC are not liable for the debts of the authorised fund;

(5)

the registered number of the ICVC;

(6)

the address of the ICVC's head office;

(7)

the effective date of the authorisation order made by the FSA;

(8)

if the duration of the authorised fund is not unlimited, when it will or may terminate;

(9)

the address of the place in the United Kingdom for service on the ICVC of notices or other documents required or authorised to be served on it;

(10)

the base currency for the authorised fund;

(11)

the maximum and minimum sizes of the ICVC's capital; and

(12)

the circumstances in which the authorised fund may be wound up under the rules in this sourcebook and a summary of the procedure for, and the rights of holders under, such a winding up.

3

Investment objectives and policy

(1)

Sufficient information to enable a holder to ascertain:

(a)

the investment objectives of the authorised fund or of each sub-fund of an umbrella scheme;

(b)

the authorised fund's investment policy for achieving those investment objectives, including the general nature of the portfolio and any intended specialisation; and

(c)

the extent (if any) to which that policy does not envisage remaining fully invested at all times.

(2)

Where, in accordance with CIS 8.3.5 R (Allocation of payments to capital or income - for ICVCs) or CIS 8.5.7 R (Allocation of payments to capital or income - for AUTs), all or any part of any payments permitted by CIS 8.2.3 R (Payments by an ICVC to an ACD) or CIS 8.5.1 R (Managers periodic charge) and any other charges or expenses of the authorised fund are is to be treated as a capital expense, a statement that this may constrain capital growth.

(3)

A description of any restrictions in the assets in which investment may be made, including restrictions in the extent to which the authorised fund may invest in any category of asset, indicating (where appropriate) where the restrictions are tighter than those imposed by CIS 5 or CIS 5A (Investment and borrowing powers), whichever is relevant to the scheme.

(4)

A list of any individual eligiblesecurities and derivatives markets through which the authorised fund may invest or deal in accordance with CIS 5.2.12 R or CIS 5A.3.3 R (Eligible markets: requirements), whichever is relevant to that scheme. Any securities or derivatives market in a EEA State which is eligible in accordance with CIS 5.2.12 R (1) or CIS 5A.3.3 R (1) (whichever is relevant to that scheme) may be included in the list or referred to in general terms.

(5)

For an authorised fund that is not a property scheme, state whether it is intended that the scheme will have an interest in any immovable property or tangible movable property.

(6)

The names of the States, local authorities or public international bodies in whose securities the authorised fund may invest more than 35% of its assets.

(7)

The policy in relation to the exercise of borrowing powers by the authorised fund and to transactions for the purpose of efficient portfolio management.

(8)

In the case of an authorised fund which may invest in other collective investment schemes, the extent to which the scheme property may be invested in the units of collective investment schemes which are managed by the authorised fund manager or by an associate of the authorised fund manager.

(9)

In the case of a property scheme:

(a)

the maximum extent to which the scheme property may be invested in:

(i)

immovables;

(ii)

property related assets;

(b)

where the directors of an ICVC or the manager of an AUT expect that the scheme property will be invested (during the period when that version of the prospectus may be in circulation) in government and public securities:

(i)

the fact that the scheme property may be so invested; and

(ii)

the maximum limit for such investment;

(c)

the countries or territories of situation of land or buildings in which the authorised fund may invest;

(d)

the policy of the authorised fund manager in relation to insurance of immovables forming part of the scheme property; and

(e)

in a prospectus available during the period of the initial offer, the consequences of failure to obtain £5 million (or the equivalent in base currency) as set out in CIS 12.3.4 R (Failure to obtain minimum subscriptions).

(10)

Where the net asset value of a UCITS scheme is likely to have high volatility owing to its portfolio composition or the portfolio management techniques used, a prominent statement to that effect.

(11)

Where a UCITS scheme invests principally in collective investment schemeunits, deposits, or derivatives or replicates an index in accordance with CIS 5.2.32 R (Schemes replicating an index) a prominent statement regarding this investment policy.

(12)

Where derivatives transactions may be used in a UCITS scheme, a prominent statement as to whether these transactions are for the purposes of hedging or meeting the investment objectives or both and the possible outcome of the use of derivatives on the risk profile of the scheme.

(13)

In the case of a UCITS scheme which invests a substantial proportion of its assets in other collective investment schemes, a statement of the maximum level of management fees that may be charged to that UCITS scheme and to the collective investment schemes in which it invests.

(14)

In the case of a UCITS scheme, a statement that the investor may obtain on request the types of information (which must be listed) referred to in CIS 3.2.2 R (3).

(15)

In the case of a UCITS scheme, information concerning the historical performance of the scheme presented in accordance with COB 3.8.11 R (specific non real time financial promotions: past performance).

(16)

In the case of a UCITS scheme, the profile of the typical investor for whom the scheme is designed.

4

Distributions

Information as to:

(1)

the date on which the authorised fund'sannual accounting period is to end in each year;

(2)

if there are interim accounting periods, what they are, and the policy in relation to interim distributions (for example, whether interim distributions will be made and, if so, the policy on smoothing of income distributions within an annual accounting period);

(3)

the date or dates in each year on or before which payment or accumulation of income is to be made or take place and, if there are holders of bearer certificates, how they are to identify themselves for the purposes of receiving payment of income;

(4)

if applicable, the policy on payment of income equalisation;

(5)

how distributable income is determined and paid; and

(6)

if applicable, that unclaimed distributions may be forfeited and a statement how such unclaimed distributions will be dealt with.

5

The characteristics of units in the authorised fund

Give information as to:

(1)

where there is more than one class of unit in issue or available for issue, the name of each such class and the rights attached to each class in so far as they vary from the rights attached to other classes;

(2)

where the instrument constituting the scheme provides for the issue of bearer certificates, that fact and, in the case of an ICVC, in what multiples bearer certificates may be issued;

(3)

how holders may exercise their voting rights and what these are;

(4)

where a mandatory redemption, cancellation or conversion of units from one class to another may be required (for instance, if an investor does not satisfy the residence condition for income to be paid or accumulated without tax being deducted), in what circumstances it may be required;

(5)

in the case of an AUT, the fact that the nature of the right represented by units is that of a beneficial interest under a trust; and

(6)

in the case of a class of limited issue shares or limited issue units, the restrictions on the issue and sale of those shares or units.

6

The authorised fund manager

The following particulars of the authorised fund manager:

(1)

its name;

(2)

the nature of its corporate form;

(3)

the country or territory of its incorporation;

(4)

the date of its incorporation;

(5)

if it is a subsidiary, the name of its ultimate holding company and the country or territory in which that holding company is incorporated;

(6)

the address of its registered office;

(7)

the address of its head office if that is different from the address of its registered office;

(8)

if neither its registered office nor its head office is in the United Kingdom, the address of its principal place of business in the United Kingdom;

(9)

if the duration of its corporate status is limited, when that status will or may cease;

(10)

the amount of its issued share capital and how much of it is paid up;

(11)

in what capacity, if any, it acts in relation to any other regulated collective investment schemes and the name of such schemes;

(12)

in the case of an ICVC, a summary of the material provisions of the contract between the ICVC and the authorised fund manager which may be relevant to shareholders including provisions (if any) relating to termination, compensation on termination and indemnity; and

(13)

in the case of an AUT, the names of the directors of the manager and, in each case, any significant business activities of the director not connected with the business of the manager.

(14)

In the case of a UCITS scheme, which functions the authorised fund manager may delegate.

7

Directors of an ICVC, other than the ACD

Other than for the ACD:

(1)

the names and positions in the ICVC of the directors;

(2)

the main business activities of each of the directors (other than those connected with the business of the ICVC) where these are significant to the ICVC's business;

(3)

the manner, amount and calculation of the remuneration of directors;

(4)

the main terms of each contract of service between the ICVC and a director in summary form; and

(5)

if the director is a body corporate in a group of which any other corporate director of the ICVC is a member, a statement of that fact.

8

The depositary

The following particulars of the depositary:

(1)

its name;

(2)

the nature of its corporate form;

(3)

the country or territory of its incorporation;

(4)

if it is a subsidiary, the name of its ultimate holding company and the country or territory in which that holding company is incorporated;

(5)

the address of its registered office;

(6)

the address of its head office if that is different from the address of its registered office;

(7)

if neither its registered office nor its head office is in the United Kingdom, the address of its principal place of business in the United Kingdom;

(8)

a description of its principal business activity; and

(9)

a summary of the material provisions of the contract between the ICVC or the manager of the AUT and the depositary which may be relevant to Unitholders, including provisions relating to the remuneration of the depositary.

9

The investment adviser

If an investment adviser is retained in connection with the business of the authorised fund:

(1)

its name;

(2)

whether or not it is authorised by the FSA;

(3)

if it is a body corporate in a group of which any director of the ICVC or the manager of the AUT is a member;

(4)

where its principal activity is not providing services to the authorised fund as an investment adviser, what the principal activity is;

(5)

a summary of the material provisions of any contract between the authorised fund manager or the ICVC and any investment adviser which may be relevant to holders and, if the investment adviser has the authority of the authorised fund manager or the ICVC to make decisions on behalf of the authorised fund manager or the ICVC, that fact and a description of the matters in relation to which it has that authority.

10

The auditor

Details of the name and address of the auditor of the authorised fund.

11

The register of holders

Details of:

(1)

the address in the United Kingdom where the register of holders is kept and can be inspected by holders and the address where the plan register can be inspected; and

(2)

in the case of an AUT, (unless the depositary is the registrar), the registrar's name and address.

12

Payments to the authorised fund manager

The payments that may be made to the authorised fund manager (whether as such or in any other capacity) out of the scheme property whether by way of remuneration for its services, or reimbursement of expenses. For each category of remuneration, specify:

(1)

the maximum and current rates or amounts of such remuneration;

(2)

how it will be calculated and accrue and when it will be paid;

(3)

if notice has been given to holders of the authorised fund manager's intention to introduce a new category of remuneration for its services or to increase any rate or amount currently charged, particulars of that introduction or increase and when it will take place;

(4)

if, in accordance with CIS 8.3.5 R (Allocation of payments to capital or to income (for ICVCs)) or CIS 8.5.7 R (Allocation of payments to capital or to income (for AUTs)), all or part of the remuneration is to be treated as a capital charge:

(a)

that fact; and

(b)

the actual or maximum amount of the charge which may be so treated; and

(5)

if notice has been given to holders of an intention to propose an increase in the maximum amount of that charge at a meeting of holders, particulars of that proposal.

13

Other payments out of the scheme property

Provide details of:

(1)

any payment to be made out of the scheme property to reimburse costs incurred by the depositary, any of the directors of an ICVC or any third party;

(2)

any remuneration (including a statement of the maximum level currently permitted) payable out of the scheme property to the depositary or any third party;

(3)

any remuneration (including a statement of the maximum level currently permitted) to which (2) does not apply, payable out of the scheme property for services provided by an affected person;

(4)

the types of any other charges and expenses that may be taken out of the scheme property; and

(5)

if, in accordance with CIS 8.3.5 R (4) (Allocation of payments to capital or income (for ICVCs)) or CIS 8.5.7 R (4) (Allocation of payments to capital or income (for AUTs)), the authorised fund manager and the depositary have agreed that all or part of any payments permitted (excluding any stated under CIS 3.5.2 R(12)(4) (Payments to the authorised fund manager)) and any other charges or expenses of the authorised fund may be treated as a capital expense:

(a)

that fact; and

(b)

the policy for the amount of the payments which may be so treated.

14

Movable and immovable property (ICVC only)

Give an estimate of any expenses likely to be incurred by the ICVC in respect of movable and immovable property in which the ICVC has an interest.

15

Amortisation (ICVC only)

As at the date of the prospectus:

(1)

the amount of any set-up costs (including any of the type described in CIS 8.3.4 R (Set-up costs) remaining to be reimbursed out of the scheme property whether to the ACD or any other person, and

(2)

the amount of any costs remaining to be amortised under CIS 8.3.4 R and the method of amortisation.

16

Sale and redemption of units

Details as to:

(1)

the dealing days and times in the dealing day on which the authorised fund manager will be available to receive requests for the sale and redemption of units;

(2)

the procedures for effecting the sale and redemption of units and the settlement of transactions;

(3)

whether certificates will be issued in respect of registered units;

(4)

the steps required to be taken by a holder in redeeming units before he can receive the proceeds;

(5)

the circumstances in which the redemption of units may be suspended;

(6)

the days and times in the day on which recalculation of the price will commence;

(7)

the amounts of the following minima (if they apply) for each class of unit in the authorised fund:

(a)

the minimum number or value of units which any one person may hold; and

(b)

the minimum number or value of units which may be the subject of any one transaction of sale or redemption;

(8)

the circumstances in which the authorised fund manager may arrange for, and the procedure for, a cancellation of units in specie;

(9)

where and at what frequency5 the most recent prices5 will be published;

55

(10)

the investment exchanges (if any) on which units in the scheme are listed or dealt; and

(11)

for a dual-priced scheme or a scheme being valued on an historic price basis, the amount which constitutes a large deal in units.

17

Valuation of scheme property

Details as to:

(1)

how frequently and at what time or times of the day the scheme property will be regularly valued for the purpose of determining the price at which units in the scheme may be purchased from or redeemed by the authorised fund manager and a description of any circumstance in which the scheme property may be specially valued;

(2)

in relation to each purpose for which the scheme property must be valued, the basis on which it will be valued; and

(3)

(in the case of an ICVC) how the price of units of each class will be determined.

18

Dilution

In the case of an ICVC or a single-priced AUT:

(1)

what is meant by: (a) dilution, (b) dilution levy or dilution adjustment (as the case may be) and (c) for the purposes of (4)(a), large deals;

(2)

a statement that it is not possible to predict accurately whether dilution would occur at any point in time;

(3)

a statement of which one of the following policies the authorised fund manager is adopting:

(a) it may require a dilution levy; or

(b) it may make a dilution adjustment; or

(c) it will not require a dilution levy or make a dilution adjustment;

together with an explanation of how this policy may affect the future growth of the authorised scheme; and

(4)

if the authorised fund manager may require a dilution levy or make a dilution adjustment:

(a) a statement of the authorised fund manager's policy in deciding when to require dilution levy, including the authorised fund manager's policy on large deals, or to make a dilution adjustment;

(b) a statement, based either on historical data or future projections, of the estimated rate or amount of any dilution levy or dilution adjustment; and

(c) a statement as to the likelihood that the authorised fund manager may require a dilution levy or make a dilution adjustment and the basis (that is, historical or projected) on which the statement is made.1

19

SDRT provision

Details as to:

(1)

what is meant by stamp duty reserve tax, SDRT provision and, for the purposes of (2), by large deal; and

(2)

the authorised fund manager's policy on imposing an SDRT provision including its policy on large deals, and the occasions, and the likely frequency of the occasions, in which an SDRT provision may be imposed and the maximum rate of it; a usual rate may also be stated.1

20

Forward and historic pricing

The authorised fund manager's normal basis of dealing (whether at a forward price, or at an historic price, or on the basis of a switch from the latter to the former in every dealing period).

21

Preliminary charge

If the authorised fund manager makes a preliminary charge:

(1)

the maximum amount of that charge, expressed either as a fixed amount or as a percentage of the issue price;

(2)

the current rate or amount of preliminary charge, if different from the maximum amount or rate; and

(3)

if notice has been given to Unitholders of the authorised fund manager's intention to introduce a preliminary charge or to increase the rate or amount currently charged, particulars of that introduction or increase and when it will take effect.

22

Redemption charge

If the authorised fund manager may make a redemption charge:

(1)

the amount of that charge or, if it is variable, the rate or method of arriving at it;

(2)

if the amount or rate or method has been changed, that details of any previous amount or rate or method may be obtained from the authorised fund manager on request;

(3)

if notice has been given of an intention to introduce a redemption charge or to propose a change in the amount or rate or method which is adverse to holders, particulars of that proposal; and

(4)

how the order in which units acquired at different times by a Unitholder is to be determined so far as necessary for the purposes of the imposition of the redemption charge.

23

General information

Details as to:

(1)

when annual and half-yearly reports will be published and, if the directors of the ICVC or the manager of the AUT have determined that the accounts contained in the report should be short form accounts, a statement that a report containing the full accounts is available on request;

(1A)

if the authorised fund manager determined that short form reports are to be prepared for the purposes of CIS 10.5.2R (2A)(2), a statement when the short report will be sent to the Unitholders.

(2)

the address at which copies of the instrument constituting the scheme, any amending instrument and the most recent annual and half-yearly reports may be inspected and from which copies may be obtained;

(3)

(in the case of dual-priced AUTs only) that the cancellationprice last notified to the trustee is available on request;

(4)

how the ICVC or the manager of an AUT will publish, for the benefit of holders of bearer certificates, notice:

(a)

of the fact that annual and half-yearly reports are available for inspection and how copies may be obtained;

(b)

when a distribution of income will become payable and how it may be collected;

(c)

of the calling of meetings;

(d)

of the winding up of the authorised fund (or the termination of a sub-fund of an umbrella scheme) or the revocation of its authorisation;

(e)

that amendments have been made to the instrument constituting the scheme;

(f)

that a significant alteration has been made to the prospectus; and

(g)

of any sub-division or consolidation of units (other than a consolidation of smaller denomination shares into larger denomination shares); and

(5)

the extent to which and the circumstances in which:

(a)

the scheme is liable to pay or suffer tax on any appreciation in the value of the scheme property or on the income derived from the scheme property; and

(b)

deductions by way of withholding tax may be made from distributions of income to holders and payments made to holders on the redemption of units.

(6)

In the case of a UCITS scheme, any possible fees or expenses not described in paragraphs 12-22, distinguishing between those to be paid by a holder and those to be paid out of scheme property.

24

Umbrella scheme

(1)

In the case of an umbrella scheme:

(a)

that a holder is entitled to exchange units in one sub-fund for units in any other sub-fund (other than limited issue units or limited issue shares);

(b)

that an exchange of units in one sub-fund for units in any other sub-fund is treated as a redemption and sale and will, for persons subject to United Kingdom taxation, be a realisation for the purposes of capital gains taxation;

(c)

that in no circumstances will a holder who exchanges units in one sub-fund for units in any other sub-fund be given a right by law to withdraw from or cancel the transaction;

(d)

what charges, if any, may be made on exchanging units in one sub-fund for units in any other sub-fund;

(e)

the policy for allocating between sub-funds any assets of, or costs, charges and expenses payable out of, the scheme property which are not attributable to any particular sub-fund;

(f)

(for ICVCs only) how the method of amortisation of any costs to be amortised under CIS 8.3.4 R (Set-up costs), or any reimbursement of set-up costs may be affected by the introduction or termination of a sub-fund;

(g)

(for ICVCs only) in respect of each sub-fund, the currency in which the scheme property allocated to it will be valued and the price of units calculated and payments made, if this currency is not the base currency of the umbrella scheme; and

(h)

if there are units for less than two sub-funds in issue, the effect of CIS 12.5.5 R (An ICVC with only one sub-fund).

(2)

In the application of these rules to an umbrella scheme, information required:

(a)

must be stated in relation to each sub-fund where the information for any sub-fund differs from that for any other;

(b)

must be stated for the umbrella scheme as a whole, but only where the information is relevant to the umbrella scheme as a whole; and

(c)

must, in the case of an ICVC, contain a statement to the effect that the sub-funds of an umbrella scheme are not "ring fenced" and in the event of an umbrella scheme being unable to meet liabilities attributable to any particular sub-fund out of the assets attributable to that sub-fund, the remaining liabilities may have to be met out of the assets attributable to other sub-funds.

25

Marketing in another EEA State

A prospectus of a UCITS scheme which is prepared for the purpose of marketingunits in a EEA State other than the United Kingdom must give details as to:

(1)

what special arrangements have been made:

(a)

for paying in that EEA State amounts distributable to holders resident in that EEA State;

(b)

for redeeming in that EEA State the units of holders resident in that EEA State;

(c)

for inspecting and obtaining copies in that EEA State of the instrument constituting the scheme and amendments to it, of the prospectus and of the annual and half-yearly reports; and

(d)

for making public the price or prices of units of each class;

(2)

how the ICVC or the manager of an AUT will publish in that EEA State notice:

(a)

that annual and half-yearly reports are available for inspection;

(b)

that a distribution has been declared;

(c)

of the calling of a meeting of holders; and

(d)

of the termination of the authorised fund or the revocation of its authorisation.

26

Additional information

Any other material information which is within the knowledge of the directors of an ICVC or the manager of an AUT, or which the directors or manager would have obtained by the making of reasonable enquiries:

(1)

which investors and their professional advisers would reasonably require, and reasonably expect to find in the prospectus, for the purpose of making an informed judgement about the merits of investing in the authorised fund and the extent and characteristics of the risks accepted by so participating;

(2)

including a statement of any risks which investment in the authorised fund may reasonably be regarded as presenting for reasonably prudent investors of moderate means; and

(3)

including, if there is any arrangement intended to result in a particular capital or income return from a holding of units in the authorised fund, or any investment objective of giving protection to the capital value of, or income return from, such a holding:

(a)

details of that arrangement or protection;

(b)

for any related guarantee, sufficient details about the guarantor and the guarantee to enable a fair assessment of the value of the guarantee;

(c)

a description of the risks that could affect achievement of that return or protection; and

(d)

details of the arrangements by which the authorised fund manager will notify holders of any action required by the holders to obtain the benefit of the guarantee, if appropriate; these arrangements must provide for notice to be given a reasonable amount of time before the action is required.234