CIR 14.4.8

A Fund Manager of an Exchange Traded Fund (ETF) must include in its Prospectus details relating to:

(a) the type of ETF and its characteristics;
(b) the risks associated with the type of ETF;
(c) the investment methodology and strategies the ETF proposes to adopt to track the referenced index or benchmark;
(d) a clear description of the relevant indices or other benchmark the ETF is designed to track, timely information about the underlying components (including their liquidity) of the relevant index or the benchmark and, if the Price Information Provider is a Related Party, that fact;
(e) clear signposts to guide investors to relevant websites or sources of information provided by Price Information Providers, as specified in CIR A9.1.2(2)(b)(i);
(f) information about whether iNAV is made available by the relevant exchange, and if so, how this information can be accessed by investors;
(g) information on how the referenced index or benchmark will be tracked and the risks for investors in terms of exposure they have to the underlying index and any counterparty risk;
(h) a description of the key elements which may affect the ETF's ability to track fully the relevant index or benchmark, including, but not limited to, transaction costs, illiquid segments, and dividend re-investment;
(i) in the case of a synthetic ETF using Derivatives to replicate the performance of an index or other benchmark:
(i) whether the ETF uses a funded or unfunded model to replicate the performance of the specified index or benchmark;
(ii) if not already disclosed, information relating to the counterparties to the Derivatives transactions, and where collateral is used, details relating to such collateral; and
(iii) a description of the risks associated with counterparty default and use of any collateral, the impact of those risks on the ETF's performance and investor returns, and how such risks are to be mitigated;
(j) to the extent an ETF is required to have a diversified portfolio, how the ETF proposes to achieve diversification of investments through its investment strategy;
(k) if available, information about the past performance of the ETF, measured through its realised tracking difference and annual tracking error information, on the anticipated level of tracking error during normal market conditions, and how this will be effectively minimised; and
(l) information about the ETF's Authorised Participant and if it is also a market maker in the ETF Units in the relevant exchange, that fact.
Derived from DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18]