Content Options

View Options

Status: You are viewing the version of the handbook as on 2005-06-30.

COB 10.7 Periodic statements for an unregulated collective investment scheme

COB 10.7.1G

COB 10.7 applies in the case of an operator of an unregulated collective investment scheme. COB 10.7 modifies the general section on periodic statements (that is, COB 8.2) to take into account the operation of an unregulated collective investment scheme. In this way, an operator should send to a participant of the scheme, on a timely basis, a regular statement providing a valuation of the portfolio of the scheme and other details.

The requirement to prepare and issue periodic statements

COB 10.7.2R

An operator of an unregulated collective investment scheme must, subject to COB 10.7.5 R, provide to participants in the scheme, promptly and at suitable intervals, a written statement which contains adequate information on the value and composition of the portfolio of the scheme at the beginning and end of the period of the statement.

Promptness, suitable intervals and adequate information

COB 10.7.3E
  1. (1)

    An operator should act in accordance with the provisions in the right hand column of COB 10.7.7 E to fulfil the requirement of COB 10.7.2 R indicated in the left hand column against these provisions.

  2. (2)

    Compliance with (1) may be relied on as tending to establish compliance with COB 10.7.2 R.

  3. (3)

    Contravention of (1) may be relied on as tending to establish contravention of COB 10.7.2 R.

COB 10.7.4G

Regarding the electronic provision of a periodic statement, see COB 1.8.

Exceptions from the requirement to provide a periodic statement

COB 10.7.5R
  1. (1)

    An operator of an unregulated collective investment scheme need not provide a periodic statement:

    1. (a)
      1. (i)

        to a participant in the scheme who is a private customer ordinarily resident outside the United Kingdom; or

      2. (ii)

        to a participant in the scheme who is an intermediate customer;

    if the participant has so requested or the operator has taken reasonable steps to establish that the participant does not wish to receive it; or

    1. (b)

      if it would duplicate a statement to be provided by someone else.2

  2. (2)

    For a firm acting as an outgoing ECA provider, the exemption in (1)(a)(i) applies only to a participant in the scheme who is a private customer ordinarily resident outside the EEA.21

Record keeping requirements

COB 10.7.6R

An operator of an unregulated collective investment scheme must make a copy of any periodic statement it has provided in accordance with COB 10.7.2 R to participants in the scheme. The record must be retained for a minimum period of three years.

COB 10.7.7E

Periodic statements

This table belongs to COB 10.7.3 E

Periodic statements

Promptness

(1)

(a)

A periodic statement should be provided within 25 business days after the end of the period to which the statement relates.

(b)

In the case of:

(i)

a scheme the portfolio of which is comprised exclusively of investment in equity that is not traded or listed on an exchange; or

(ii)

a scheme which is a property enterprise trust; or

(iii)

a scheme the portfolio of which is comprised exclusively of investment in equity that is not traded or listed on an exchange and assets which are land and buildings;

the operator should provide a periodic statement within 50 business days after the end of the period to which the statement relates.

Suitable intervals

(2)

A periodic statement should be provided at least:

(a)

six-monthly; or

(b)

once in any other period, not exceeding 12 months, which has been mutually agreed between the operator and the participant in the scheme.

Adequate information

(3)

(a)

A periodic statement should contain:

(i)

(A)

the information set out in COB 10.7.9 E; and

(B)

where the portfolio of the scheme includes uncovered open positions in contingent liability investments, the additional information in COB 10.7.10 E; or

(ii)

such information as a participant who is a private customer ordinarily resident outside the United Kingdom, or an intermediate customer, has on his own initiative agreed with the operator as adequate.2

(b)

For a firm acting as an outgoing ECA provider, (3)(a)(ii) should be read as though the words 'United Kingdom' were replaced by 'EEA'.2

COB 10.7.8G

Examples of uncovered open positions include:

  1. (1)

    selling a call option on an investment not held in the portfolio;

  2. (2)

    unsettled sales of call options on currency in amounts greater than the portfolio's holding of that currency in cash or in readily realisable investments denominated in that currency; and

  3. (3)

    transactions having the effect of selling an index to an amount greater than the portfolio's holdings of investments included in that index.

COB 10.7.9E

General contents of a periodic statement

This table belongs to COB 10.7.7 E

General contents of a periodic statement

1

Contents and value

(a)

As at the beginning of the account period, the total value of the portfolio of the scheme, being either:

(i)

the value of the assets comprised in the portfolio on the date as at which the statement provided for the immediately preceding period of account is made up; or

(ii)

in the case of the first periodic statement, the value of the assets comprised in the portfolio on the date on which the operator assumed responsibility for the management of the portfolio.

(b)

As at the end of the account period:

(i)

the number, description and value of each investment held on behalf of the scheme;

(ii)

the amount of cash held on behalf of the scheme; and

(iii)

the total value of the portfolio of the scheme.

2

Basis of valuation

A statement of the basis on which the value of each investment has been calculated and, if applicable, a statement that the basis for valuing a particular investment has changed since the previous periodic statement. Where any investments are shown in a currency other than the usual one used for valuation of the portfolio of the scheme, the relevant currency exchange rates must be shown.

3

Details of any assets loaned or charged

(a)

A summary of those investments (if any) which were, at the closing date, loaned to any third party and those investments (if any) that were at that date charged to secure borrowings made on behalf of the portfolio of the scheme; and

(b)

the aggregate of any interest payments made and income received during the account period in respect of loans or borrowings made during the period.

4

Transactions and changes in composition

Except in the case of a portfolio which aims to track the performance of an external index:

(a)

a statement that summarises the transactions entered into for the portfolio of the scheme during the period; and

(b)

the aggregate of money and a summary of all investments transferred into and out of the portfolio of the scheme during the period; and

(c)

the aggregate of any interest payments, dividends and other benefits received by the operator for the portfolio of the scheme during that period.

5

Charges and remuneration

If not previously advised in writing, a statement for the account period:

(a)

of the aggregate charges of the operator and its associates; and

(b)

of any remuneration received by the operator or its associates or both from a third party in respect of the transactions entered into, or any other services provided, for the portfolio of the scheme.

6

Movement in value of portfolio

A statement of the difference between the value of the portfolio at the closing date and its value at the starting date of the account period, having regard at least, during the account period, to the following:

(a)

the aggregate of assets received from participants of the scheme and added to the portfolio of the scheme;

(b)

the aggregate of the value of assets transferred, or of amounts paid, to the scheme;

(c)

the aggregate income received on behalf of the scheme in respect of the portfolio; and

(d)

the aggregate of realised and unrealised profits or gains and losses attributable to the assets comprised in the portfolio of the scheme.

Notes:

For the purposes of Item 1, where the scheme is a property enterprise trust, it will be sufficient for the periodic statement to disclose the number of properties held in successive valuation bands where this is appropriate to the size and composition of the scheme, rather than the value of each asset in the portfolio. The valuation bands of over £10m, £5-£10m, £2.5-£5m, £1-£2.5m and under £1m would be appropriate, unless an operator could show that different bands were justifiable in the circumstances.

The statement to be provided under Item 6 is not intended to be an indicator of the performance of the portfolio of the scheme.

An operator may wish to distinguish capital and income, and thereby provide more information than referred to in this table. If the statement includes some measure of performance, the basis of measurement should be stated.

COB 10.7.10E

Contents of a periodic statement in respect of contingent liability investments

This table belongs to COB 10.7.7 E

Contents of a periodic statement in respect of contingent liability investments

1

Changes in value

The aggregate of money transferred into and out of the portfolio of the scheme during the account period.

2

Open positions

In relation to each open position in the portfolio of the scheme at the end of the account period, the unrealised profit or loss to the portfolio of the scheme (before deducting or adding any commission which would be payable on closing out).

3

Closed positions

In relation to each transaction effected during the account period to close out a position of the scheme, the resulting profit or loss to the portfolio of the scheme after deducting or adding any commission.

(Instead of the specific detail required by Items 2 or 3, the statement may show the net profit or loss in respect of the overall position of the scheme in each contract)

4

Aggregate of contents

The aggregate of each of the following in, or relating to, the portfolio of the scheme at the close of business on the valuation date:

(a)

cash;

(b)

collateral value;

(c)

management fees; and

(d)

commissions attributable to transactions during the period or a statement that this information has been separately disclosed in writing on earlier statements or confirmations to the participant.

5

Option account valuations

In respect of each open option comprising the portfolio of the scheme on the valuation date:

(a)

the share, future, index or other investment or asset involved;

(b)

(unless the valuation statement follows the statement for the period in which the option was opened) the trade price and date for the opening transaction;

(c)

the market price of the contract; and

(d)

the exercise price of the contract.

Options account valuations may show an average trade price and market price in respect of an option series where a number of contracts within the same series have been purchased on behalf of the scheme.