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COLL 4.5 Reports and accounts

Application

COLL 4.5.1 R

The rules and guidance in this section apply to an authorised fund manager, a depositary and any other director of an ICVC.

Explanation

COLL 4.5.2 G

In order to provide the Unitholders with regular and relevant information about the progress of the authorised fund, the authorised fund manager must:

  1. (1)

    prepare a 15long report half-yearly and annually; and15

  2. (2)

    [deleted]15

  3. (3)

    make the long report available to Unitholders on request.

Full-scope UK AIFM of a non-UCITS retail scheme

COLL 4.5.2A G
  1. (1)

    17A full-scope UK AIFM that is the authorised fund manager of a non-UCITS retail scheme should comply with both:

    1. (a)

      FUND 3.3 (Annual report of an AIF); and

    2. (b)

      this chapter,

    regarding the preparation and publication of annual reports.

  2. (2)

    The authorised fund manager need not state the same information twice to satisfy both sets of requirements.

  3. (3)

    The authorised fund manager, when preparing the half-yearly long report, needs to comply only with this chapter.

Preparation of long reports

COLL 4.5.3 R
  1. (1)

    The authorised fund manager must for each annual accounting period and half-yearly accounting period, prepare a 15long report for a scheme.

  2. (2)

    [deleted]15

  3. (3)

    Where the first annual accounting period of a scheme is less than 12 months, a half-yearly report need not be prepared.

  4. (4)

    [deleted]1

ICVC requirements

COLL 4.5.4 G
  1. (1)

    The OEIC Regulations contain requirements for the preparation of annual and half-yearly reports and make the directors of an ICVC responsible for the preparation of annual and half-yearly reports on the ICVC.

  2. (2)

    Regulations 66 (Reports: preparation), 67 (Reports: accounts) and 68 (Reports: voluntary revision) of the OEIC Regulations also contain a number of other requirements relating to reports and accounts of an ICVC.

COLL 4.5.5 R

[deleted]15

COLL 4.5.6 G

[deleted]15

Contents of the annual long report

COLL 4.5.7 R

  1. (1)

    An annual long report on an authorised fund, other than a scheme which is an umbrella, must contain:

    1. (a)

      the

      3

      accounts for the annual accounting period which must be prepared in accordance with the requirements of the IMA SORP;

    2. (b)

      the report of the authorised fund manager in accordance with COLL 4.5.9 R (Authorised fund manager's report);

    3. (c)

      comparative information12 in accordance with COLL 4.5.10 R (Comparative information12);

      1212
    4. (d)

      the report of the depositary in accordance with COLL 4.5.11 R (Report of the depositary); and

    5. (e)

      the report of the auditor in accordance with COLL 4.5.12 R (Report of the auditor).

  2. (2)

    An annual long report on a scheme which is an umbrella must be prepared for the umbrella as a whole and2 must contain:

    1. (a)

      for each sub-fund:

      1. (i)

        the

        3

        accounts for the annual accounting period which must be prepared in accordance with the requirements of the IMA SORP;

      2. (ii)

        the report of the authorised fund manager in accordance with COLL 4.5.9 R; and

      3. (iii)

        comparative information12 in accordance with COLL 4.5.10 R;

        12
    2. (b)

      [deleted]12

      12
    3. (c)

      the report of the depositary in accordance with COLL 4.5.11 R; and

    4. (d)

      the report of the auditor in accordance with COLL 4.5.12 R.

  3. (3)

    The directors of an ICVC or the authorised fund manager9 of an AUT or ACS9 must ensure that the accounts referred to in (1)(a),2 (2)(a) and (4)(a)2 give a true and fair view of the net

    923

    revenue

    3

    and the net capital

    3

    gains

    3

    or

    3

    losses on the scheme property of the authorised fund, or, in the case of (2)(a) and (4)(a)2, the sub-fund, for the annual accounting period in question and the financial position of the authorised fund or sub-fund as at the end of that period.

  4. (4)

    The authorised fund manager of a scheme which is an umbrella may, in addition to complying with (2), prepare a further annual long report for any one or more individual sub-funds of the scheme, in which case it must contain:2

    1. (a)

      in relation to the sub-fund:2

      1. (i)

        the

        3

        accounts for the annual accounting period which must be prepared in accordance with the requirements of the IMA SORP;2

      2. (ii)

        the report of the authorised fund manager in accordance with COLL 4.5.9 R; and2

      3. (iii)

        comparative information12 in accordance with COLL 4.5.10 R;2

        12
    2. (b)

      the report of the depositary in accordance with COLL 4.5.11 R; and2

    3. (c)

      the report of the auditor in accordance with COLL 4.5.12 R.2

  5. (5)

    4An annual long report of a UCITS scheme which is a feeder UCITS must also include:

    1. (a)

      a statement on the aggregate charges of the feeder UCITS and the master UCITS; and

    2. (b)

      a description of how the annual long report of its master UCITS can be obtained.

[Note: article 63(2) of the UCITS Directive]4

  1. (6)

    An annual long report of a feeder NURS must also include:7

    1. (a)

      a statement on the aggregate charges of the feeder NURS and its qualifying master scheme; and7

    2. (b)

      a description of how the annual long report (or nearest equivalent document for a qualifying master scheme that is a recognised scheme) of its qualifying master scheme can be obtained.7

  2. (7)

    13An annual long report of a UCITS scheme must also include:

    1. (a)
      1. (i)

        the total amount of remuneration paid by the authorised fund manager to its staff for the financial year, split into fixed and variable remuneration;

      2. (ii)

        the number of beneficiaries; and

      3. (iii)

        where relevant, any amount paid directly by the UCITS scheme itself, including any performance fee;

    2. (b)

      the aggregate amount of remuneration broken down by categories of UCITS Remuneration Code staff;

    3. (c)

      a description of how the remuneration and the benefits have been calculated;

    4. (d)

      the outcome of the reviews referred to in SYSC 19E.2.7R(1) and SYSC 19E.2.8R, including any irregularities that have occurred; and

    5. (e)

      details of any material changes to the adopted remuneration policy since the previous annual long report was prepared.

    [Note: article 69(3) second paragraph of the UCITS Directive]

COLL 4.5.7A G
  1. (1)

    13The FCA recognises that the annual long report, including the remuneration related disclosures in COLL 4.5.7R(7), may be required to be made available to Unitholders before the completion of the authorised fund manager’s first annual performance period in which it has to comply with the UCITS Remuneration Code.

  2. (2)

    Under (1), the FCA expects the authorised fund manager to make best efforts to comply with COLL 4.5.7R(7) to the extent possible.

  3. (3)

    The authorised fund manager, having made best efforts to achieve compliance with COLL 4.5.7R(7), may omit to disclose information relating to remuneration where the information:

    1. (a)

      is not available to the authorised fund manager for the relevant annual accounting period; or

    2. (b)

      is available but will not provide materially relevant, reliable, comparable and clear information to Unitholders about the remuneration policy of the authorised fund manager, as it affects the particular UCITS scheme.

  4. (4)

    Where disclosure is omitted, the authorised fund manager should explain the basis for that omission.

COLL 4.5.8-A G

[deleted]18

11 14 16

Contents of the half-yearly long report

COLL 4.5.8 R

  1. (1)

    A half-yearly long report on an authorised fund, other than for a scheme which is an umbrella, must contain:

    1. (a)

      the

      3

      accounts for the half-yearly accounting period which must be prepared in accordance with the requirements of the IMA SORP; and

    2. (b)

      the report of the authorised fund manager in accordance with COLL 4.5.9 R (Authorised fund manager's report).

  2. (2)

    A half-yearly long report on a scheme which is an umbrella must be prepared for the umbrella as a whole and2 must contain:

    1. (a)

      for each sub-fund:

      1. (i)

        the 2

        3

        accounts for the half-yearly accounting period2 which must be prepared in accordance with the requirements of the IMA SORP; and

        2
      2. (ii)

        the report of the authorised fund manager in accordance with COLL 4.5.9 R; and

    2. (b)

      [deleted]12

      12
  3. (3)

    The authorised fund manager of a scheme which is an umbrella may, in addition to complying with (2), prepare a further half-yearly long report for any one or more individual sub-funds of the scheme. Such reports must contain the

    3

    accounts and the report of the authorised fund manager that would be required by (1) if the sub-fund were a separate authorised fund.2

  4. (4)

    4The half-yearly long report of a UCITS scheme which is a feeder UCITS must also include a description of how the half-yearly and annual reports of its master UCITS can be obtained.

[Note: article 63(2) second subparagraph of the UCITS Directive]

  1. (5)

    The half-yearly long report of a feeder NURS must also include a description of how the half-yearly and annual long reports (or nearest equivalent documents for a qualifying master scheme that is a recognised scheme) of its qualifying master scheme can be obtained.7

2Annual and half-yearly long reports for sub-funds of an umbrella

COLL 4.5.8A G

2The authorised fund manager may, but need not, prepare annual and half-yearly long reports for any individual sub-fund of an umbrella in accordance with COLL 4.5.7R (4) and COLL 4.5.8R (3) and make them available on request to any Unitholder investing in the relevant sub-fund. However, if the authorised fund manager does so, this does not relieve it of its duty:

  1. (1)

    to prepare annual and half-yearly long reports on the umbrella as a whole (COLL 4.5.7R (2) and COLL 4.5.8R (2)); and

  2. (2)

    to make available and publish the annual and half-yearly long reports for the umbrella as a whole (COLL 4.5.14 R).

Information to be included in annual and half-yearly reports on securities financing transactions and total return swaps

COLL 4.5.8AA G
  1. (1)

    16The Securities Financing Transactions Regulation sets out the additional information which:

    1. (a)

      an authorised fund manager of a UCITS scheme must include in the scheme’s annual and half-yearly reports; and

    2. (b)

      an authorised fund manager who is a full-scope UK AIFM of a non-UCITS retail scheme must include in the scheme’s annual report.

  2. (2)

    COLL 4.5.8ABEU and COLL 4.5.8ACEU copy out the relevant provisions of that regulation.

  3. (3)

    An authorised fund manager of a UCITS scheme or a non-UCITS retail scheme that has not used securities financing transactions or total return swaps during the relevant annual accounting period or half-yearly accounting period is not required to include the information in COLL 4.5.8ACEU in its reports.

COLL 4.5.8AB EU

16

Transparency of collective investment undertakings in periodical reports

1.

UCITS management companies, UCITS investment companies, and AIFMs shall inform investors on the use they make of SFTs and total return swaps in the following manner:

(a)

for UCITS management companies or UCITS investment companies in the half-yearly and annual reports referred to in Article 68 of Directive 2009/65/EC;

(b)

for AIFMs in the annual report referred to in Article 22 of Directive 2011/61/EU.

2.

The information on SFTs and total return swaps shall include the data provided for in Section A of the Annex.

[Note: article 13(1) and 13(2) of the Securities Financing Transactions Regulation and article 3 for relevant definitions]

COLL 4.5.8AC EU

16

Information to be provided in the UCITS half-yearly and annual reports and the AIF’s annual report

Global data:

-

The amount of securities and commodities on loan as a proportion of total lendable assets defined as excluding cash and cash equivalents;

-

The amount of assets engaged in each type of SFTs and total return swaps expressed as an absolute amount (in the collective investment undertaking’s currency) and as a proportion of the collective investment undertaking’s assets under management (AUM).

Concentration data:

-

Ten largest collateral issuers across all SFTs and total return swaps (break down of volumes of the collateral securities and commodities received per issuer’s name);

-

Top 10 counterparties of each type of SFTs and total return swaps separately (Name of counterparty and gross volume of outstanding transactions).

Aggregate transaction data for each type of SFTs and total return swaps separately to be broken down according to the below categories:

-

Type and quality of collateral;

-

Maturity tenor of the collateral broken down in the following maturity buckets: less than one day, one day to one week, one week to one month, one to three months, three months to one year, above one year, open maturity;

-

Currency of the collateral;

-

Maturity tenor of the SFTs and total return swaps broken down in the following maturity buckets: less than one day, one day to one week, one week to one month, one to three months, three months to one year, above one year, open transactions;

-

Country in which the counterparties are established;

-

Settlement and clearing (e.g., tri-party, Central Counterparty, bilateral).

Data on reuse of collateral:

-

Share of collateral received that is reused, compared to the maximum amount specified in the prospectus or in the disclosure to investors;

-

Cash collateral reinvestment returns to the collective investment undertaking.

Safekeeping of collateral received by the collective investment undertaking as part of SFTs and total return swaps:

Number and names of custodians and the amount of collateral assets safe-kept by each of the custodians

Safekeeping of collateral granted by the collective investment undertaking as part of SFTs and total return swaps:

The proportion of collateral held in segregated accounts or in pooled accounts, or in any other accounts

Data on return and cost for each type of SFTs and total return swaps

broken down between the collective investment undertaking, the manager of the collective investment undertaking and third parties (e.g. agent lender) in absolute terms and as a percentage of overall returns generated by that type of SFTs and total return swaps

[Note: section A of the annex to the Securities Financing Transactions Regulation and article 3 for relevant definitions]

Additional information that may need to be included in the annual and half-yearly long report of a UCITS scheme

COLL 4.5.8AD G

16The annual and half-yearly long reports of a UCITS scheme may be required to contain additional matters not referred to in COLL 4.5.7 R and COLL 4.5.8 R, such as those required by the ESMA Guidelines on ETFs and other UCITS issues, which can be found at

https://www.esma.europa.eu/sites/default/files/library/2015/11/2012-832en_guidelines_on_etfs_and_other_ucits_issues.pdf

Signing of annual and half-yearly reports

COLL 4.5.8B R

3The annual reports in COLL 4.5.7R (1) and (2), and the half-yearly reports in COLL 4.5.8R (1) and (2), must:

  1. (1)

    in the case of an ICVC, if there is:

    1. (a)

      more than one director, be approved by the board of directors and signed on their behalf by the ACD and at least one other director; or

    2. (b)

      no director other than the ACD, be signed by the ACD;

  2. (2)

    in the case of an AUT or ACS9, if the authorised fund manager has:

    1. (a)

      more than one director, be signed by at least two directors of the authorised fund manager; or

    2. (b)

      only one director, be signed by the director of the authorised fund manager.

Authorised fund manager's report

COLL 4.5.9 R

The matters set out in (1) to (13)2 must be included in any authorised fund manager's report, except where otherwise indicated:

2
  1. (1)

    the names and addresses of :

    1. (a)

      the authorised fund manager;

    2. (b)

      the depositary;

    3. (c)

      the registrar;

    4. (d)

      any investment adviser;

    5. (e)

      the auditor; and

    6. (f)

      for a scheme which invests in immovables, the standing independent valuer;

  2. (2)

    (for an ICVC), the names of any directors other than the ACD;

  3. (3)

    a statement of the authorised status of the scheme;

  4. (4)

    (for an ICVC) a statement that the Unitholders of the ICVC are not liable for the debts of the ICVC;

  5. (5)

    the investment objectives of the authorised fund;

  6. (6)

    the policy and strategy pursued

    3

    for achieving those objectives;

  7. (7)

    a review of the investment activities during the period to which the report relates;

  8. (7A)

    a portfolio statement prepared in accordance with the requirements of the IMA SORP;

    3
  9. (7B)

    in the case of an umbrella which has more than one sub-fund, particulars in the form of a table showing, as at the end of the period to which the report relates:12

    1. (a)

      for each sub-fund, the number of units in that sub-fund that were held by a second sub-fund of that umbrella; and

    2. (b)

      the value of each such holding;

    or, alternatively, a statement that there were no such holdings as at the end of that period;

  10. (8)

    particulars of any fundamental changes in accordance with COLL 4.3.4 R (Fundamental change requiring prior approval by meeting) made since the date of the last report;

  11. (9)

    particulars of any significant changes which have occurred in accordance with COLL 4.3.6 R (Significant change requiring pre-event notification) since the date of the last report;

  12. (9A)

    4in the case of a UCITS scheme, the figure for the synthetic risk and reward indicator disclosed in its most recent key investor information document and any changes to that figure that have taken place during the period;

  13. (10)

    any other information which would enable Unitholders to make an informed judgement on the development of the activities of the authorised fund during this period and the results of those activities as at the end of that period;

  14. (11)

    for a report on an umbrella prepared in accordance with COLL 4.5.7R (2)2 or COLL 4.5.8R (2)2 , information required by (1) to (10) must be given for each sub-fund, if it would vary from that given in respect of the umbrella as a whole;5

    225
  15. (12)

    for a UCITS scheme which invests a substantial proportion of its assets in other schemes, a statement as to the maximum proportion of management fees charged to the scheme itself and to other schemes in which that scheme invests; and2

    2
  16. (13)

    for a report on an individual sub-fund of a scheme which is an umbrella prepared in accordance with COLL 4.5.7R (4) or COLL 4.5.8R (3), a statement that the latest long report prepared for the umbrella as a whole is available on request.52

    5

Comparative information12

COLL 4.5.10 R

The comparative information12 required by COLL 4.5.7 R12 (Contents of the annual long report) and COLL 8.3.5A R (Contents of the annual report) must be shown for the last three annual accounting periods (or all of the authorised fund'sannual accounting periods, if fewer than three) and must set out:

12 12
  1. (1)

    [deleted]12

    12
  2. (1A)

    for a unit of each class in issue, a comparative table as at the end of the period to which the report relates, prepared in accordance with the requirements of the IMA SORP and showing at least:12

    1. (a)

      the performance record of a unit of that class;

    2. (b)

      an indication of the actual charges and costs borne by the class;

    3. (c)

      the net income distributed (or, for accumulation units, allocated) for the unit, taking account of any sub-division or consolidation of units that occurred during that period;

    4. (d)

      the net asset value of the unit as at the end of the period;

    5. (e)
      1. (i)

        (for a report of the directors of an ICVC) the number of units of the class in issue as at the end of the period; or

      2. (ii)

        (for a report of the authorised fund manager of an AUT or an ACS) the number of units of the class that are in existence or treated as in existence as at the end of the period; and

    6. (f)

      the highest and the lowest prices of the unit during the period;

  3. (2)

    [deleted]12

    12
  4. (2A)

    for the scheme property, its total net asset value as at the end of the period; and 12

  5. (3)

    if, in the period covered by the information:12

    12
    1. (a)

      the authorised fund has been the subject of any event (such as a scheme of arrangement) having a material effect on the size of the authorised fund, but excluding any issue or cancellation of units for cash; or

    2. (b)

      there have been changes in the investment objective and policy12 of the authorised fund;

      12
    3. (c)

      [deleted]12

      12

an indication, related in the body of the table to the relevant year in the table, of the date of the event or change in the investment objective and policy, and a brief description of its nature.12

COLL 4.5.10A G
  1. (1)

    The figure for the "return before operating charges" shown in the comparative table required by COLL 4.5.10R (1A) should include all costs and charges actually borne by the class of units it describes.

  2. (2)

    The indication of actual costs and charges borne by a class of units should cover pro-rata allocations of the operating charges borne by the scheme (e.g. annual management fee, fees and expenses payable to the depositary, auditors and FCA, costs of buying and selling units in an underlying scheme, etc.), any performance-related fee and direct transaction-related costs where known to the AFM (e.g. dealing commission on equity transactions and stamp duty). Where possible, the operating charges should be presented as a single figure in both pence per unit and as a percentage of net asset value.

Report of the depositary

COLL 4.5.11 R

  1. (1)

    The depositary must make an annual report to Unitholders which must be included in the annual report.

  2. (2)

    The annual report must contain:

    1. (a)

      a description, which may be in summary form, of the duties of the depositary under COLL 6.6.4 (General duties of the depositary) and in respect of the safekeeping of the scheme property; and

    2. (b)

      a statement whether, in any material respect:

      1. (i)

        the issue, sale, redemption and cancellation, and calculation of the price of the units and the application of the authorised fund's revenue

        33

        , have not been carried out in accordance with the rules in this sourcebook and, where applicable, the OEIC Regulations and the instrument constituting the fund;10 and

        10
      2. (ii)

        the investment and borrowing powers and restrictions applicable to the authorised fund have been exceeded.

Report of the auditor

COLL 4.5.12 R

The authorised fund manager must ensure that the report of the auditor to the Unitholders includes the following statements:3

3
  1. (1)

    whether, in the auditor's opinion, the accounts have been properly prepared in accordance with the IMA SORP, the rules in this sourcebook, and the instrument constituting the fund;10

    10
  2. (2)

    whether, in the auditor's opinion, the accounts give a true and fair view of the net revenue3and the net capital 3gains or losses on3the scheme property of the authorised fund (or, as the case may be, the scheme property attributable to the sub-fund) for the annual accounting period in question and the financial position of the authorised fund or sub-fund as at the end of that period;

    33
  3. (3)

    whether the auditor is of the opinion that proper accounting records for the authorised fund (or, as the case may be, sub-fund) have not been kept or whether the accounts are not in agreement with those records;

  4. (4)

    whether the auditor has been given all the information and explanations which, to the best of his knowledge and belief, are necessary for the purposes of his audit; and

  5. (5)

    whether the auditor is of the opinion that the information given in the report of the directors or in the report of the authorised fund manager for that period is consistent with the accounts.

COLL 4.5.13 R

[deleted]15

Publication and availability of annual and half-yearly long report

COLL 4.5.14 R

  1. (1)

    The authorised fund manager must, within four months after the end of each annual accounting period and two months after the end of each half-yearly accounting period respectively, make available and publish the long reports2 prepared in accordance with COLL 4.5.7R (1) to (3)2 (Contents of the annual long report) and COLL 4.5.8R (1) to (2)2 (Contents of the half-yearly long report).

    22
  2. (2)

    The reports referred to in (1) must:

    1. (a)

      be supplied free of charge to any person on request2;

      2
    2. (b)

      be available in English, for inspection by the public free of charge during ordinary office hours at a place specified;

    3. (c)

      for a UCITS scheme, be available for inspection by the public at a place designated by the authorised fund manager in each EEA State other than the United Kingdom in which units in the authorised fund are marketed, in English and in at least one of that other EEA State's official languages; and

    4. (d)

      be sent to the FCA and, if the UCITS scheme is managed by an EEA UCITS management company, to that company's Home State regulator on request.4

[Note: article 74 of the UCITS Directive]4

Provision of annual and half-yearly long reports for master and feeder UCITS

COLL 4.5.15 R
  1. (1)

    4The authorised fund manager of a UCITS scheme which is a feeder UCITS must:

    1. (a)

      where requested by an investor, provide copies of the annual and half-yearly long reports of its master UCITS free of charge; and

    2. (b)

      file copies of the annual and half-yearly long reports of its master UCITS with the FCA .

  2. (2)

    Except where an investor requests paper copies or the use of electronic communications is not appropriate, the annual and half-yearly long reports of its master UCITS may be provided in a durable medium other than paper or by means of a website that meets the website conditions.

[Note: articles 63(3) and 63(5) of the UCITS Directive]

Provision of annual and half-yearly long reports for qualifying master schemes of feeder NURS

COLL 4.5.16 R
  1. (1)

    7The authorised fund manager of a feeder NURS must, where requested by an investor or the FCA , provide to such person copies of the annual and half-yearly long reports (or nearest equivalent documents for a qualifying master scheme that is a recognised scheme) of its qualifying master scheme free of charge.

  2. (2)

    Except where an investor requests paper copies or the use of electronic communications is not appropriate, the annual and half-yearly long reports (or nearest equivalent documents for a qualifying master scheme that is a recognised scheme) of its qualifying master scheme may be provided in a durable medium other than paper, or by means of a website that meets the website conditions.8