Report and Accounts

Part

CIS Collective Investment Schemes

Chapter

Report and Accounts

Printed on: 07/11/2024

Rulebook at: 01/07/2005

CIS 10

Report and Accounts

CIS 10.1

Introduction

01/12/2004

Application

CIS 10.1.1

This section applies to authorised fund managers, depositaries, directors of an ICVC and auditors.

01/12/2004

Application : guidance

CIS 10.1.2

The persons to whom each rule and guidance in this chapter applies are stated either at the beginning of the rule or guidance or at the beginning of the section that contains the rule or guidance.

01/12/2004

Purpose

CIS 10.1.3

In line with Principle 7 (Communication with clients), this chapter requires directors of ICVCs and managers of AUTs to prepare annual and half-yearly reports to holders and prospective holders, containing up-to-date and good quality information on the progress of the authorised fund's investments, their costs, expenses and other related financial information.

01/12/2004

Contents of this chapter

CIS 10.1.4

(1) This chapter covers the contents of reports on authorised funds, including the annual reports of the depositary and of the auditor, and builds upon the requirements in CIS 9 (Income), which provides how the annual accounting periods and half-yearly accounting periods are to be determined.

(2) This chapter requires the accounts contained in the annual and half-yearly reports to comply with the IMA SORP.

(3) Finally, this chapter permits, in specified circumstances, the accounts contained in an annual or half-yearly report to be in a short form. However, this does not discharge the directors of an ICVC or the manager from preparing reports with full accounts.

01/02/2004

CIS 10.2

Preparation of annual and half-yearly reports

01/12/2004

Preparation by the manager of an AUT of annual and half-yearly reports

CIS 10.2.1

(1) This rule (CIS 10.2.1 R) applies to a manager of an AUT.

(2) The manager must, in relation to each annual accounting period and half-yearly accounting period, prepare a report in respect of the period concerned.

(3) Where an AUT's first annual accounting period is a period of less than 12 months, a half-yearly report need not be prepared for any part of that period.

01/12/2004

Preparation by the directors of an ICVC of annual and half-yearly reports

CIS 10.2.2

(1) This guidance (CIS 10.2.2 G) applies to the directors of an ICVC.

(2) Requirements for the preparation of annual and half-yearly reports are contained in the OEIC regulations. Those regulations make the directors of an ICVC responsible for the preparation of annual and half-yearly reports on the ICVC (see regulation 66 (Reports: preparation)). A half-yearly report need not be prepared where an ICVC's first annual accounting period is less than 12 months.

(3) The OEIC regulations (regulation 66 Reports: preparation), regulation 67 (Reports: accounts) and regulation 68 (Reports: voluntary revision) also contain a number of other requirements relating to reports and accounts of an ICVC. These include, for example, requirements that:

(a) the directors must lay copies of the annual report before the ICVC in general meeting; and

(b) every annual report is to contain accounts of the ICVC and a report by the auditor to the ICVC's shareholders.

01/12/2004

CIS 10.3

Contents of annual and half-yearly reports

01/12/2004

Application

CIS 10.3.1

This section (CIS 10.3) applies to the directors of an ICVC (for a report on an ICVC) and to the manager (for a report on an AUT), except CIS 10.3.7 R (Duty of the ACD), which applies only to the ACD.

01/12/2004

Explanation

CIS 10.3.2

This section sets out the contents of each annual and half-yearly report. It sets the scene for CIS 10.4 (Information to be included in annual and half-yearly reports). That section outlines some more detailed information, which must be included in reports on authorised funds. In particular, it distinguishes between requirements to be included in reports on umbrella schemes and reports on other types of authorised funds.

01/11/2002

Annual reports

CIS 10.3.3

(1) An annual report on an authorised fund other than an umbrella scheme must contain:

(a) full accounts for the annual accounting period which must, subject to the rules in this chapter, include all the matters required to be included in them by the IMA SORP. Accordingly, references to those accounts (and to short form accounts mentioned in CIS 10.3.6 R) are not to be construed to relate only to the balance sheet and the statement of total return;

(b) the information required to comply with CIS 10.4.2 R and CIS 10.4.5 R (Comparative table);

(c) (for an annual report on an ICVC) the report of the depositary referred to in CIS 10.4.6 R (Report of the depositary of an ICVC) or (for an annual report on an AUT) the report of the trustee referred to in CIS 10.4.7 R (Report of the trustee of an AUT); and

(d) the report of the auditor referred to in CIS 10.4.8 R (Report of the auditor).

(2) An annual report on an umbrella scheme must contain:

(a) reports relating to each of its sub-funds which must, so far as practicable, contain the accounts and the information that would be required by (1)(a) and (1)(b) if each sub-fund were a separate authorised fund;

(b) an aggregation of the accounts required by (a); and

(i) the information referred to in (1)(b);

(ii) (for an annual report on an ICVC) the report of the depositary referred to in CIS 10.4.6 R (Report of the depositary of an ICVC) or (for an annual report on an AUT) the report of the trustee referred to in CIS 10.4.7 R (Report of the trustee of an AUT); and

(iii) the report of the auditor referred to in CIS 10.4.8 R (Report of the auditor).

(3) An annual report relating to a sub-fund which is not part of a report under (2) must contain:

(a) so far as practicable, the accounts and the information that would be required by (1)(a) and (1)(b) if the sub-fund were a separate authorised fund;

(b) the copy report relating to the umbrella scheme referred to in (2)(c)(ii); and

(4) The directors of an ICVC or the manager of an AUT must ensure that the accounts referred to in (1)(a), (2)(a) and (3)(a) give a true and fair view of the net income and the net gains or losses on the scheme property of the authorised fund or, in the case of (2)(a) and (3)(a), 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.

01/02/2004

Half-yearly reports

CIS 10.3.4

(1) A half yearly report on an authorised fund, other than an umbrella scheme must contain:

(a) full accounts for the half-yearly accounting period which must, subject to the rules in this chapter, consist of the matters required by the IMA SORP; and

(b) the information required to comply with CIS 10.4.2 R;

(2) A half yearly report on an umbrella scheme must contain:

(a) reports relating to each of its sub-funds which must, so far as practicable, contain the accounts and information that would be required by (1) if each sub-fund were a separate authorised fund; and

(b) an aggregation of the accounts required by (a) and, except as contained in a report relating to a sub-fund in accordance with (a), the information required to comply with CIS 10.4.2 R.

(3) A half-yearly report relating to a sub-fund which is not part of a report under (2) must contain so far as practicable the accounts and information that would be required by (1) if the sub-fund were a separate authorised fund.

01/02/2004

Signing of reports

CIS 10.3.5

(1) Each report on an ICVC (other than a report prepared under CIS 10.3.3 R (2)(a) and CIS 10.3.4 R (2)(a)) must be signed by the ACD, or, if there is more than one director of the ICVC, must, following approval of the report by the board of directors, be signed on behalf of the board of directors of the ICVC by the ACD and at least one other director.

(2) Each report on an AUT (other than a report prepared in accordance with CIS 10.3.3 R (2)(a) or CIS 10.3.4 R (2)(a)) must be signed by two directors of the manager or, if the manager has only one director, by that director.

01/12/2004

Short form accounts in reports

CIS 10.3.6

(1) If the directors of an ICVC or the manager of an AUT so determine, the accounts contained in a report sent or supplied to each holder in accordance with CIS 10.5.2 R (2)and (3) may be short form accounts except to the extent that, in respect of any particular accounting period, a holder (or for joint holders, the first named) has requested that a report containing the full accounts of the authorised fund or umbrella scheme be sent or supplied to him.

(2) An annual report that contains short form accounts in accordance with (1) must contain:

(a) the statement and any report required under CIS 10.4.4 R (Report of the directors or report of the manager: short form accounts); and

(b) the auditor's statement required under CIS 10.4.9 R instead of the report of the auditor referred to in CIS 10.4.8 R, unless the latter is qualified, in which case the annual report must contain both.

(3) Short-form accounts must comply with the relevant requirements of the IMA SORP.

(4) Accounts to be included in a report to be published or offered in accordance with CIS 10.5.2 R (Publication of reports), CIS 10.5.3 R (Reports to be offered to purchasers of units) or CIS 10.5.4 R (Publication of availability of reports and prospectus) may only be short form accounts to the extent permitted by (1), (2) and (3).

01/02/2004

Duty of the ACD

CIS 10.3.7

The ACD must ensure that each annual and half-yearly report (including any accounts to be contained in it) complies with CIS 10.3.3 R (Annual reports), CIS 10.3.4 R (Half yearly reports), CIS 10.3.5 R (Signing of reports) and (where applicable) with CIS 10.3.6 R (Short form accounts in reports).

01/12/2004

CIS 10.4

Information to be included in annual and half-yearly reports

01/12/2004

Application

CIS 10.4.1

This section (CIS 10.4) applies to the directors of an ICVC (for a report on an ICVC) or to the manager (for report on an AUT), except:

(1) CIS 10.4.6 R (Report of the depositary of an ICVC) which applies only to the depositary of an ICVC;

(2) CIS 10.4.7 R (Report of the trustee of an AUT) which applies only to the trustee of an AUT; and

(3) CIS 10.4.8 R (Report of the auditor) and CIS 10.4.9 R (Auditor's statement relating to short form accounts) which apply to the auditors of the authorised fund, appointed in accordance with paragraph (4) of Schedule 5 of the OEIC regulations (for an ICVC) or appointed under CIS 7.8.5 R (for an AUT).

01/12/2004

Report of the directors of an ICVC or report of the manager of an AUT

CIS 10.4.2

The matters set out in (1) - (16) must be included in each report of the directors (for a report on an ICVC) and in each report of the manager (for a report on an AUT), except where otherwise indicated:

(1) the names and addresses of :

(a) the authorised fund manager;

(b) the depositary;

(d) any investment adviser;

(e) the auditor; and

(f) for a property scheme, the standing independent valuer;

(2) (for a report of the directors), the names of any directors other than the ACD;

(3) a statement that :

(a) (for a report of the manager) the AUT is an authorised unit trust scheme under section 243 of the Act (Authorisation orders); or

(b) (for a report of the directors) the ICVC is an investment company with variable capital under regulation 12 (Authorisation) of the OEIC regulations;

(4) (for a report of the directors) a statement that the shareholders of the ICVC are not liable for the debts of the ICVC;

(5) a statement as to which of the types of authorised fund in CIS 2.1.4 R (Constitution) the authorised fund belongs;

(6) the investment objectives of the authorised fund;

(7) the ICVC's (for a report of the directors) or manager's (for a report of the manager) policy for achieving those objectives;

(8) a review of the ICVC's (for a report of the directors) or manager's (for a report of the manager) investment activities during the period to which the report relates;

(9) where the directors of an ICVC or the manager of an 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;

(10) particulars of any significant change in the prospectus made since the date of the last report;

(11) particulars of any significant change in the instrument constituting the scheme made since the date of the last report;

(12) a statement of any sub-division or consolidation of units which has been effected during the period to which the report relates (but, for an ICVC, other than any as between smaller and larger denomination shares effected under CIS 2.5.2 G (Characteristics of larger and smaller denomination shares));

(13) any other significant information which would enable holders 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) for a report of the directors included in a report on an umbrella scheme (prepared in accordance with CIS 10.3.3 R (2) or CIS 10.3.4 R (2)), a statement to the effect that, as a sub-fund is not a legal entity, if the assets attributable to any sub-fund were insufficient to meet the liabilities attributable to it, the shortfall might have to be met out of the assets attributable to one or more other sub-funds of the ICVC; and

(15) for a report on a sub-fund, prepared in accordance with CIS 10.3.3 R (3) or CIS 10.3.4 R (3), which is not part of a report on the umbrella scheme of which the sub-fund is part:

(a) a statement whether the auditor's report on the annual accounts of the umbrella scheme for the period in question was unqualified or qualified and, if it was qualified, that report in full together with any further material needed to understand the qualification;

(b) a statement that a report relating to the umbrella scheme as a whole is available from the authorised fund manager on request; and

(c) a statement equivalent to that required by (14) making it clear that the shortfall, or part of it, might have to be met out of the sub-fund to which the report relates.

(16) In the case of a UCITS scheme which invests a substantial proportion of its assets in other collective investment schemes, a statement as to the maximum proportion of management fees charged to the scheme itself and to other collective investment schemes in which that scheme invests.

01/11/2002

Report of the directors or report of the manager: umbrella schemes

CIS 10.4.3

For a report on an umbrella scheme prepared in accordance with CIS 10.3.3 R (2) or CIS 10.3.4 R (2):

(1) the information required by CIS 10.4.2 R (1) to CIS 10.4.2 R (13) must be given in respect of each sub-fund if it would vary from that given in respect of the umbrella scheme as a whole; and

(2) CIS 10.4.2 R (5) applies as if it required a statement in respect of each sub-fund that it has investment powers equivalent to those of an authorised fund of a stated type under CIS 2.1.4 R (Constitution).

01/11/2002

Report of the directors or report of the manager: short form accounts

CIS 10.4.4

A report of the directors of an ICVC or a report of the manager of an AUT containing short form accounts for any annual accounting period must:

(1) state whether the report of the auditor on the full accounts was unqualified or qualified and, if it was qualified, contain a copy of that report in full together with any further material needed to understand the qualification; and

(2) state whether the report of the auditor contained a statement under (3), (4) or (5) of CIS 10.4.8 R and, if so, set out the statement or statements in full.

01/12/2004

Comparative table

CIS 10.4.5

Each report of the directors of an ICVC or each report of the manager of an AUT must contain a comparative table which must set out:

(1) a performance record over the last five calendar years, or if the authorised fund has not been in existence during the whole of that period, over the whole period in which it has been in existence, showing:

(a) the highest and the lowest price (or, for dual-priced AUTs, the highest sale price and lowest redemption price) of a unit of each class in issue during each of those years; and
(b) the net income distributed (or, for accumulation units, allocated) for a unit of each class in issue during each of those years, taking account of any sub-division or consolidation of units that occurred during that period;

(2) as at the end of each of the last three annual accounting periods (or all of the authorised fund's annual accounting periods, if less than three):

(a) the total net asset value of the scheme property at the end of each of those years;
(b) the net asset value per unit of each class; and
(c)

(i) (for a report of the directors) the number of units of each class in issue; or
(ii) (for a report of the manager) the number of units of each class in existence or treated as in existence;

(3) if, in the period covered by the table:

(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
(b) there have been changes in the investment objectives of the authorised fund;

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 objectives and a brief description of its nature; and
(4) for an umbrella scheme, the information required by (1) to (3) for each sub-fund of the umbrella scheme, instead of the information for the umbrella scheme as a whole.

01/12/2004

Report of the depositary of an ICVC

CIS 10.4.6

(1) The depositary must make an annual report to shareholders which must be delivered to the directors in good time to enable its inclusion in the annual report.

(2) That report must contain:

(a) a description, which may be in summary form, of the duties of the depositary under CIS 7.4.1 R (General duties of the depositary) and in respect of the safekeeping of the scheme property;

(b) a statement whether, in any material respect,:

(i) the issue, sale, redemption and cancellation, and calculation of the price of the ICVC's shares and the application of the ICVC's income, have not been carried out in accordance with the rules in this sourcebook and, where applicable, the OEIC regulations and the instrument of incorporation of the ICVC;

(ii) the investment and borrowing powers and restrictions applicable to the ICVC have been exceeded.

01/12/2004

Report of the trustee of an AUT

CIS 10.4.7

(1) The trustee must enquire into the conduct of the manager in the management of the AUT in each annual accounting period and must report on that conduct to the unitholders. That report must be delivered to the manager in good time to enable its inclusion in the annual report.

(2) The report of the trustee must state whether in the trustee's opinion the manager has managed the AUT in that period:

(a) in accordance with the investment and borrowing powers and restrictions applicable to the AUT; and

(b) otherwise in accordance with the provisions of the trust deed and the rules in this sourcebook.

(3) If the manager has not done so, the trustee's report must describe any material failures and the steps which the trustee has taken as a result of those failures.

01/12/2004

Report of the auditor

CIS 10.4.8

The report of the auditor to the holders on the accounts of the authorised fund, or on the aggregated accounts of the umbrella scheme (or for a report prepared for the purposes of CIS 10.3.3 R (3), on the accounts of the sub-fund) must state:

(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 scheme;

(2) whether, in the auditor's opinion the accounts give a true and fair view of the net income and the net gains or losses on the 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;

(3) if 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 that the accounts are not in agreement with those records, that fact;

(4) if the auditor has not been given all the information and explanations which, to the best of his knowledge and belief, are necessary for the purposes of his audit, that fact; and

(5) if the auditor is of the opinion that the information given in the report of the directors or in the report of the manager for that period is inconsistent with the accounts, that fact.

01/02/2004

Auditor's statement relating to short form accounts

CIS 10.4.9

In relation to short form accounts for any annual accounting period, the auditor must state whether, in the auditor's opinion, the short-form accounts are:

(1) consistent with the full accounts;

(2) prepared in accordance with:

(a) the IMA SORP so far as it relates to short-form accounts; and

(b) the rules in this sourcebook and the instrument constituting the scheme.

01/12/2004

CIS 10.5

Publication and availability of annual and half-yearly reports

01/12/2004

Application

CIS 10.5.1

(1) CIS 10.5.2 R (1), (2), (4) - (6) and CIS 10.5.3 R - CIS 10.5.4 R apply to an authorised fund manager; and

(2) CIS 10.5.2 R (3) applies to the directors of an ICVC (for an ICVC) or to the manager (for an AUT).

01/12/2004

Publication of reports

CIS 10.5.2

(1) The authorised fund manager must, within four months after the end of each annual accounting period and within two months after the end of each half-yearly accounting period respectively, publish the annual report and half-yearly report in accordance with (2) and (4).

(2)

(a) The authorised fund manager must, subject to (2A) and (3) provide free of charge:

(i) a copy of each annual report and each half-yearly report to each holder (or to the first named of joint holders) entered in or entitled to be entered in the register at the close of business on the last day of the relevant accounting period or half-yearly accounting period; and

(ii) a copy of the report to each holder of bearer units at his request.

(b) A report relating to an umbrella scheme to be provided under (a)(i) or (ii) need not contain an aggregation of the accounts relating to each sub-fund, but such information must be sent, free of charge, to any holder who requests it.

(2)A

(a) Notwithstanding (2), the authorised fund manager may comply with COLL 4.5.13 (Provision of short report) instead of (2), provided that any short report prepared by the authorised fund manager for this purpose;

(i) meets the requirements of COLL 4.5.3 (1) and (2) (Preparation of long and short reports); and

(ii) contains the information required by COLL 4.5.5 (Contents of a short report).

(b) In preparing a short report for the purposes of (1), the authorised fund manager should construe references to a long report in COLL 4.5.5 (1)(f) and (5) and in COLL 4.5.13 (3) as the annual report referred to in CIS 10.3.3 R (Annual reports) or, as the case may be, the half-yearly report in CIS 10.3.4 R (Half-yearly reports).

(3) For an umbrella scheme, if the directors of the ICVC or manager so determine for any accounting period, the reports provided to holders in accordance with (2) may be the reports complying with CIS 10.3.3 R (3) or CIS 10.3.4 R (3) (as the case may be) relating to the respective sub-fund to which their unitholdings relate. However, if requested to do so by any holder in respect of any particular accounting period, the authorised fund manager must provide to that holder (or, for joint holders, the first named), a report complying with CIS 10.3.3 R (2) or CIS 10.3.4 R (2) (as the case may be).

(4) The authorised fund manager must make available the most recent annual report (and, if more recent, the most recent half-yearly report) on the authorised fund in English prepared under CIS 10.3.3 R (Annual reports) and CIS 10.3.4 R (Half-yearly reports) for inspection by the public free of charge during ordinary office hours at a place specified for the purpose in the most recently published prospectus.

(5) The authorised fund manager must also make the reports referred to in (4) available for the same purpose at a place designated by it in each EEA State other than the United Kingdom in which it markets units in the authorised fund, in English and in at least one of that other EEA State's official languages.

(6) The authorised fund manager must provide a copy of each annual report and half-yearly report, any report sent or supplied in accordance with (3) and any report containing short form accounts on publication to the FSA.

01/04/2004

CIS 10.5.2A

COLL 4.5.6 G which provides guidance on sufficient and significant information which should be contained in short reports, applies in relation to short reports prepared for the purposes of CIS 10.5.2 R(2A). References in that guidance to a fundamental change should be regarded as a change requiring unitholder approval by meeting during the period. Similarly, references to a significant change should be regarded as a change in respect of which prior written notice of the change should be given to unitholders by the authorised fund manager.

01/04/2004

Reports to be made available

CIS 10.5.3

A copy of the most recent annual report of the authorised fund and (if more recent) the most recent half-yearly report on the authorised fund must be sent to any person, free of charge, on request.

13/02/2004

Publication of availability of reports and prospectus

CIS 10.5.4

(1) The authorised fund manager must, with every publication of prices in a UK newspaper under CIS 4.4.8 R (Publications of prices) or CIS 15.4.14 R (Publications of prices), publish a statement that a copy of the most recent annual report or half-yearly report and prospectus is available free of charge to anyone who requests the ICVC or the authorised fund manager for it.

(2) It will be sufficient compliance with (1) if one of the pages in which the authorised fund manager publishes prices in the newspaper carries the statement there required in relation to all, or any relevant category of, the collective investment schemes referred to in those pages.

01/12/2004