Operators of collective investment schemes

Part

COB Conduct of Business

Chapter

Operators of collective investment schemes

Printed on: 07/11/2024

Rulebook at: 01/01/2006

COB 10

Operators of collective investment schemes

COB 10.1

Application

01/12/2004

COB 10.1.1

(1) COB 10 applies to a firm which is an operator of a collective investment scheme in accordance with COB 10.1.2 R.
(2) The right hand column of the table in COB 10.1.2 R specifies the sections in COB 10 which apply to the operator specified in the left hand column of the table.

01/12/2001

COB 10.1.2

Application

This table belongs to COB 10.1.1 R

Application

Type of firm

Section

Operator of a regulated collective investment scheme in so far as the firm is undertaking scheme management activity.

COB 10.1, COB 10.2 and COB 10.3

Operator of an unregulated collective investment scheme in so far as the firm is undertaking scheme management activity.

COB 10.1, COB 10.2, COB 10.3, COB 10.4 and COB 10.5

Operator of an unregulated collective investment scheme.

COB 10.1, COB 10.6 and COB 10.7

01/12/2001

COB 10.1.3

The term operator includes an authorised corporate director of an ICVC.

01/12/2001

COB 10.1.4

Operators are also required to comply with the other relevant provisions of the Handbook. For example:

(1) The Principles for Business (PRIN);
(2) Senior Management Arrangements, Systems and Controls (SYSC);
(3) an operator that communicates or approves a financial promotion relating to a scheme is also required to comply with COB 3;
(4) an operator that holds clients' money otherwise than as trustee of an unregulated collective investment scheme is also required to comply with CASS 4;
(5) an operator that is also the trustee of an unregulated collective investment scheme is also required to comply with COB 11 in relation to its activity as a trustee firm;
(6) an operator of an authorised unit trust scheme is also required to comply with the Collective Investment Schemes sourcebook (CIS);
(7) an operator of an ICVC is also required to comply with the Collective Investment Schemes sourcebook (CIS); and
(8) an operator is also required to comply with the Money Laundering sourcebook (ML).

01/12/2001

Purpose

COB 10.1.5

The purpose of this chapter is:

(1) to take into account the existence of other legislation and rules that may apply to operators (for example, the Collective Investment Schemes sourcebook); to adopt or disapply rules from other chapters in COB; in this way, conflicts between rules and duplication of rules are avoided;
(2) to make a number of general modifications to the operation of the applied rules in COB in the operator context; in general, the ordinary definition of a customer is modified to mean the scheme; however, in certain circumstances, such as an obligation to provide certain kinds of information about the scheme and its investments, the ordinary definition of a customer is modified to mean a participant in the scheme; and
(3) to apply a number of rules that have been specifically designed to apply to operators when undertaking scheme management activity.

01/12/2001

COB 10.2

Application of general COB rules

01/12/2004

Application or modification of general COB rules for operators

COB 10.2.1

An operator when it is undertaking scheme management activity:

(1) must comply with the rules specified in COB 10.2.5 R as modified by COB 10.2.3 R and in COB 10.2.5 R; and
(2) need not comply with any other rule in COB.

20/09/2001

COB 10.2.2

[deleted]

(1) [deleted]
(2) [deleted]

01/09/2003

General modifications

COB 10.2.3

The rules specified in COB 10.2.5 R apply to an operator when it is undertaking scheme management activity (unless otherwise expressly provided in this chapter) with the following modifications:

(1) subject to (3), references to customer are to be construed as references to any scheme in respect of which the operator is acting or intends to act, and with or for the benefit of which the relevant activity is to be carried on;
(2) In the case of an unregulated collective investment scheme, references to terms of business or a client agreement are to be construed as references to the scheme documents of an unregulated collective investment scheme required by COB 10.6.2 R; and
(3) in the case of an unregulated collective investment scheme, when an operator is required by the rules in COB to provide information to, or obtain consent from, a customer, the operator must ensure that the information is provided to, or consent obtained from, a participant or a potential participant in the scheme as the case may be.

01/12/2001

COB 10.2.4

Terms including the word customer such as customer order and current customer order are to be construed in accordance with COB 10.2.3 R.

01/12/2001

COB 10.2.5

Application of conduct of business rules

This table belongs to COB 10.2.1 R

Application of conduct of business rules

Chapter, Section or Rule

Description

Modifications

Application and general provisions

2.1

Clear, fair and not misleading communication

2.2

Inducements and soft commission

In the case of a regulated collective investment scheme, COB 2.2.8 R (5) and COB 2.2.16 R to COB 2.2.19R do not apply.

2.3

Reliance on others

2.4

Chinese Walls

5.3

Suitability

COB 10.4 applies instead of COB 5.3.

7.1

Conflict of interest and material interest

7.2

Churning and switching

7.4

Customer order priority

7.5

Best execution

In the case of a regulated collective investment scheme, COB 7.5 applies as if the scheme was a private customer. In the case of an unregulated collective investment scheme, COB 10.5.3 R applies instead of COB 7.5.4 R in the circumstances set out in COB 10.5.3 R.

7.6

Timely execution

7.7

Aggregation and allocation

COB 10.3.3 E applies instead of COB 7.7.6 E. COB 10.3.5 R applies instead of COB 7.7.14 R.

7.12

Customer order and execution records

7.18

Use of dealing commission

Operators of collective investment schemes

01/01/2006

COB 10.3

Modification of the allocation rule

01/12/2004

COB 10.3.1

COB 10.3 applies to an operator only when undertaking scheme management activity.

01/12/2001

COB 10.3.2

COB 10.3.3 E replaces COB 7.7.6 E. COB 10.3.3 E modifies the general rule on the timing of allocation (that is, COB 7.7.5 R) to take into account the kind of scheme in which no participant is a private customer.

20/09/2001

COB 10.3.3

(1) To allocate promptly, an operator which has aggregated an order under COB 7.7.4 R should complete the allocation of the designated investments concerned within one business day of the transaction, subject to (2), (3) and (4).
(2) The period in (1) is within five business days if:

(a) the scheme is one in which no participant is a private customer; or
(b) the scheme is an unregulated collective investment scheme and no current participant in the scheme was a private customer on joining the scheme as a participant.

(3) For the purposes of COB 10.3.3 E, all transactions in a series of transactions all of which are executed within one business day, may be treated as having been executed at the time of the last transaction, so long as a record of the time that each individual transaction was executed is made, such as by means of a time stamp.
(4) If transactions in a series of transactions occur over more than one business day, then the requirement in COB 7.7.5 R (and (1) or (2) as appropriate) will apply separately in relation to each business day in which any transaction is executed.
(5) Compliance with (1) may be relied on as tending to establish compliance with COB 7.7.5 R.
(6) Contravention of (1) may be relied on as tending to establish contravention of COB 7.7.5 R.

01/12/2001

COB 10.3.4

COB 10.3.5 R replaces COB 7.7.14 R. COB 10.3.5 R modifies the general rule on the record keeping of aggregated transactions (that is, COB 7.7.14 R) to take into account the fact that an operator may act on a proportional basis or otherwise and may also act for all schemes under its management or for some of the schemes under its management.

01/12/2001

COB 10.3.5

(1) An operator must, on executing an aggregated transaction on behalf of a number of schemes under its management, make a record of:

(a) the identity of the schemes concerned; and
(b) whether the transaction was executed proportionally for these schemes under its management generally or that a stated proportion was executed for some schemes under its management.

(2) If an operator aggregates a number of customer orders on behalf of a number of schemes under its management, the operator must make a record of the intended basis of allocation as soon as is practicable.
(3) If an operator aggregates an order for one or more schemes under its management and itself, the operator must make a record of the intended basis of allocation before the transaction is executed.

01/12/2001

COB 10.4

Suitability of the portfolio of an unregulated collective investment scheme

01/12/2004

COB 10.4.1

COB 10.4 applies to an operator of an unregulated collective investment scheme only when undertaking scheme management activity.

01/12/2001

COB 10.4.2

COB 10.4 adapts COB 5.3 (Suitability) for an operator of an unregulated collective investment scheme. It requires the operator to ensure that its management of the portfolio of the scheme is suitable taking into account its investment management objectives. The Collective Investment Schemes sourcebook deals separately with the basis upon which an operator of a regulated collective investment scheme manages its portfolio.

01/12/2001

COB 10.4.3

An operator of an unregulated collective investment scheme when it is undertaking scheme management activity must take reasonable steps to ensure that:

(1) each transaction undertaken with or for an unregulated collective investment scheme under its management; and
(2) the portfolio for an unregulated collective investment scheme under its management;

is suitable for the scheme.

01/12/2001

COB 10.4.4

For the purposes of COB 10.4.3 R, an operator of an unregulated collective investment scheme should have regard to the stated investment objectives of the scheme.

01/12/2001

COB 10.5

Modification of the best execution rule

01/12/2004

COB 10.5.1

COB 10.5 applies to an operator of an unregulated collective investment scheme only when undertaking scheme management activity.

01/12/2001

COB 10.5.2

COB 10.5.3 R modifies the effect of COB 7.5.4 R. COB 10.5.3 R modifies the general rule (that is, COB 7.5.4 R) on the exceptions to the best execution rule (that is, COB 7.5.3 R) to take into account the existence of unregulated collective investment schemes in which no participant is a private customer.

01/12/2001

COB 10.5.3

COB 7.5.3 R does not apply:

(1) in any of the circumstances specified in COB 7.5.4 R; or
(2) in relation to an unregulated collective investment scheme whose scheme documents include a statement that best execution does not apply in relation to the scheme and in which:

(a) no participant is a private customer; or
(b) no current participant in the scheme was a private customer on joining the scheme as a participant.

01/12/2001

COB 10.6

Scheme documents for an unregulated collective investment scheme

01/12/2004

COB 10.6.1

Except in relation to a distance contract with a retail customer for the sale or purchase as principal of units in a scheme (for which see COB 4.2.5 R and COB 4 Annex 1.1 R), COB 10.6.2 R fulfils the purpose of the terms of business (including the client agreement) requirements (see COB 4.2) in the context of an unregulated collective investment scheme by application of content requirements in scheme documents. In this way, the scheme documents record the basis on which the operator provides investment management services to a participant in the scheme. The Collective Investment Schemes sourcebook deals separately with the basis upon which an operator of a regulated collective investment scheme provides investment management services to a participant of the scheme.

01/12/2001

Provision of scheme documents to private customers

COB 10.6.2

An operator of an unregulated collective investment scheme must not accept a private customer as a participant in the scheme unless it has taken reasonable steps to offer and, if requested, provide to the potential participant scheme documents which adequately describe how the operation of the scheme is governed.

01/12/2001

Format and content of scheme documents

COB 10.6.3

An operator's scheme documents may consist of any number of documents provided that it is clear that collectively they constitute the scheme documents and provided the use of several documents in no way diminishes the significance of any of the statements which are required to be given to the potential participant.

01/12/2001

COB 10.6.4

COB 10.6.4 G is intended to ensure that the scheme documents of an unregulated collective investment scheme (if they exist) make it clear that if a participant is reclassified as a private customer, this reclassification will not affect certain scheme management activities of the operator of the scheme. In particular, despite such a reclassification, the operator will not be required to comply with COB 7.5.3 R (that is, the best execution rule) and the requirement in COB 10.3.3 E (1) to complete the allocation of an aggregated transaction order within one business day of the transaction. It should be noted that COB 10.6.5 R does not require that scheme documents must be produced for an unregulated collective investment scheme.

01/12/2001

COB 10.6.5

Where the scheme is an unregulated collective investment scheme where no current participant in the scheme was a private customer on joining the scheme as a participant, the scheme documents must include a statement that:

(1) explains that if a participant is reclassified as a private customer subsequent to joining the scheme as a participant, then the operator may continue to treat all participants in the scheme as though they were not private customers; and
(2) explains that, in respect of an order aggregated under COB 7.7.4 R, the operator may allocate the designated investments concerned within five business days of the transaction;
(3) explains that if a participant is reclassified as a private customer subsequent to joining the scheme as a participant, then COB 10.5.3 R will continue to apply to that scheme; and
(4) explains that, in the event of a reclassification described in (3), the operator will not be required to provide best execution under COB 7.5.3 R in relation to the scheme.

01/12/2001

COB 10.6.6

It should be noted that the operator will still have to comply with other COB provisions as a result of the reclassification of a participant as a private customer: for example, the requirement under COB 10.7.2 R to provide periodic statements to participants who are private customers in an unregulated collective investment scheme.

01/12/2001

Adequate Information

COB 10.6.7

(1) In order to provide adequate information in scheme documents under COB 10.6.2 R, an operator should include in the scheme documents required by COB 10.6.2 R a provision about each of the items of relevant information set out in COB 10.6.8 E.
(2) Compliance with (1) may be relied on as tending to establish compliance with COB 10.6.2 R.
(3) Contravention of (1) may be relied on as tending to establish contravention of COB 10.6.2 R.

01/12/2001

COB 10.6.8

Content of scheme documents

This table belongs to COB 10.6.7 E

Content of scheme documents

The scheme documents should include provision about:

(1)

Regulator

The firm statutory status in accordance with GEN 4 Annex 1 (Statutory status disclosure);

(2)

Services

the nature of the services that the operator will provide in relation to the scheme;

(3)

Payments for services

details of any payment for services payable by the scheme or from the property of the scheme or participants in the scheme to the operator, including where appropriate:

(a)

the basis of calculation;

(b)

how it is to be paid and collected;

(c)

how frequently it is to be paid; and

(d)

whether or not any other payment is receivable by the operator (or to its knowledge by any of its associates) in connection with any transactions effected by the operator with or for the scheme, in addition to or in lieu of any fees;

(4)

Commencement

when and how the operator is appointed;

(5)

Accounting

the arrangements for accounting to the scheme or participants in the scheme for any transaction effected;

(6)

Termination method

how the appointment of the operator may be terminated;

(7)

Complaints procedure

how to complain to the operator and a statement that the participants in the scheme may subsequently complain direct to the Financial Ombudsman Service;

(8)

Compensation

whether or not compensation may be available from the compensation scheme should the operator be unable to meet its liabilities, and information about any other applicable compensation scheme; and, for each applicable scheme, the extent and level of cover and how further information can be obtained (see the example in COB 5.5.11 G (Example of compensation information for a UK domestic investment firm operating from the United Kingdom);

(9)

Investment objectives

the investment objectives for the portfolio of the scheme;

(10)

Restrictions

(a)

any restrictions on:

(i)

the types of investments or property which may be included in the portfolio of the scheme; and

(ii)

markets on which investments or property may be acquired for the portfolio of the scheme;

(iii)

the amount or value of any one investment or asset, or on the proportion of the portfolio of the scheme which any one investment or asset or any particular kind of investment or asset may constitute; or

(b)

that there are no such restrictions;

(11)

Holding of scheme assets

(a)

if it is the case, that the operator will:

(i)

hold money on behalf of the scheme or be the custodian of investments or other property of the scheme; or

(ii)

arrange for some other person to act in either capacity and, if so, whether that person is an associate of the operator identifying that person and describing the nature of any association; and

(b)

in either case:

(i)

how any money is to be deposited;

(ii)

the arrangements for recording and separately identifying registrable investments of the scheme and, where the registered holder is the operator's own nominee, that the operator will be responsible for the acts and omissions of that person;

(iii)

the extent to which the operator accepts liability for any loss of the investment of the scheme;

(iv)

the extent to which the operator or any other person mentioned in (11)(a)(ii), may hold a lien or security interest over investments of the scheme;

(v)

where investments of the scheme will be registered collectively in the same name, a statement that the entitlements of the scheme may not be identifiable by separate certificates or other physical documents of title, and that, should the operator default, any shortfall in investments of the scheme registered in that name may be shared proportionately among all schemes and any other customers of the operator whose investments are so registered;

(vi)

whether or not investments or other property of the scheme can be lent to, or deposited by way of collateral with, a third party and whether or not money can be borrowed on the behalf of the scheme against the security of those investments or property and, if so, the terms upon which they may be lent or deposited;

(vii)

the arrangements for accounting to the scheme for investments of the scheme; for income received (including any interest on money and any income earned by lending investments or other property) of the scheme; and for rights conferred in respect of investments or other property of the scheme;

(viii)

the arrangements for determining the exercise of any voting rights conferred by investments of the scheme; and

(ix)

where investments of the scheme may be held by an eligible custodian outside the United Kingdom, a general statement that different settlement, legal and regulatory requirements, and different practices relating to the segregation of those investments, may apply;

(12)

Clients' money outside the United Kingdom

if it is the case, that the operator may hold the money of the scheme in a client bank account outside the United Kingdom;

(13)

Exchange rates

if a liability of the scheme in one currency is to be matched by an asset in a different currency, or if the services to be provided to the operator for the scheme may relate to an investment denominated in a currency other than the currency in which the investments of the scheme are valued, a warning that a movement of exchange rates may have a separate effect, unfavourable or favourable, on the gain or loss otherwise made on the investments of the scheme;

(14)

Stabilised investments

if it is the case, that the operator is to have the right under the scheme documents to effect transactions in investments the prices of which may be the subject of stabilisation;

(15)

Conflict of interest and material interest

if it is the case, that the operator is to have the right under the agreement or instrument constituting the scheme to effect transactions on behalf of the scheme in which the operator has directly or indirectly a material interest (except for an interest arising solely from the participation of the operator as agent for the scheme), or a relationship of any description with another party which may involve a conflict with the operator's duty to the scheme, together with a disclosure of the nature of the interest or relationship;

(16)

Use of soft commission agreements

if the operator is to be authorised under the agreement or instrument constituting the scheme to effect transactions with or through the agency of another person with whom the operator has a soft commission agreement, the prior disclosure required by COB 2.2.16 R;
Use of dealing commission
if the operator receives goods or services in addition to the execution of its customer orders in accordance with COB 7.18 (Use of dealing commission), the prior disclosure required by COB 7.18.12 R (Prior and periodic disclosure).

(17)

Acting as principal

if it is the case, that the operator may act as principal in a transaction with the scheme;

(18)

Stock lending

if it is the case, that the operator may undertake stock lending activity with or for the scheme specifying the type of assets of the scheme to be lent, the type and value of relevant collateral from the borrower and the method and amount of payment due to the scheme in respect of the lending;

(19)

Transactions involving contingent liability investments

(a)

if it is the case, that the agreement or instrument constituting the scheme allows the operator to effect transactions involving contingent liability investments for the account of the portfolio of the scheme;

(b)

if applicable, whether there are any limits on the amount to be committed by way of margin and, if so, what those limits are; and

(c)

if applicable, that the operator has the authority to effect transactions involving contingent liability investments otherwise than under the rules of a recognised investment exchange or designated investment exchange and in a contract traded thereon;

(20)

Periodic statements

(a)

the frequency of any periodic statement (this should not be less than once every 12 months under COB 10.7.3 E) except where a periodic statement is not required by COB 10.7.5 R (Exceptions from the requirement to provide a periodic statement); and

(b)

whether those statements will include some measure of performance, and, if so, what the basis of that measurement will be;

(21)

Valuation

the bases on which assets comprised in the portfolio of the scheme are to be valued;

(22)

Borrowings

if it is the case, that the operator may supplement the funds in the portfolio of the scheme and, if it may do so:

(a)

the circumstances in which the operator may do so;

(b)

whether there are any limits on the extent to which the operator may do so and, if so, what those limits are; and

(c)

any circumstances in which such limits may be exceeded;

(23)

Underwriting commitments

if it is the case, that the operator may for the account of the portfolio of the scheme underwrite or sub-underwrite any issue or offer for sale of securities, and:

(a)

whether there are any restrictions on the categories of securities which may be underwritten and, if so, what these restrictions are; and

(b)

whether there are any financial limits on the extent of the underwriting and, if so, what these limits are;

(24)

Investments in other collective investment schemes

whether or not the portfolio may contain units in a collective investment scheme either operated or advised by the operator or by an associate of the operator or in a collective investment scheme which is not a regulated collective investment scheme;

(25)

Investments in securities underwritten by the operator

whether or not the portfolio may contain securities of which any issue or offer for sale was underwritten, managed or arranged by the operator or by an associate of the operator during the preceding 12 months.

01/01/2006

COB 10.7

Periodic statements for an unregulated collective investment scheme

01/12/2004

COB 10.7.1

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.

01/12/2001

The requirement to prepare and issue periodic statements

COB 10.7.2

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.

01/12/2001

Promptness, suitable intervals and adequate information

COB 10.7.3

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

01/12/2001

COB 10.7.4

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

01/12/2001

Exceptions from the requirement to provide a periodic statement

COB 10.7.5

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

(i) to a participant in the scheme who is a private customer ordinarily resident outside the United Kingdom; or
(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
(b) if it would duplicate a statement to be provided by someone else.

(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.

21/08/2002

Record keeping requirements

COB 10.7.6

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.

01/12/2001

COB 10.7.7

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.

(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'.

21/08/2002

COB 10.7.8

Examples of uncovered open positions include:

(1) selling a call option on an investment not held in the portfolio;
(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) transactions having the effect of selling an index to an amount greater than the portfolio's holdings of investments included in that index.

01/12/2001

COB 10.7.9

General contents of a periodic statement

This table belongs to COB 10.7.7 E

General contents of a periodic statement

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.

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.

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.

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.

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.

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.

01/12/2001

COB 10.7.10

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

Changes in value

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

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).

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)

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.

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.

01/12/2001