Under the UCITS Directive, the Simplified Prospectus must include disclosure of initial charges and exit charges as well as ongoing fund charges. The European Commission has recommended that the latter are disclosed through the Total Expense Ratio (TER).
UK firms are also required to include additional charges disclosures, which in the UK consists of a table showing the effect of charges in monetary terms and a Reduction in Yield (RIY) statistic. There has been published an FSA commissioned report by CRA International. The report is entitled Benefits of Regulation: Effect of Charges Table and Reduction in Yield. The report provides a quantitative estimate of the benefits afforded by the additional elements of the disclosure for investors in UCITS regulated investment funds, compared to the situation where only the recommendation for the Simplified Prospectus is followed. It does not capture all of the possible benefits from this disclosure but rather focuses on transactional benefits from identifying the relative prices of funds.
View Benefits of Regulation: Effect of Charges Table and Reduction in Yield, (PDF 470KB), 9 July 2008