COLL 15.5 Annual report and investor relations

1This section applies to:

1. (1)

   the authorised fund manager of an AUT, ACS or an ICVC; and

2. (2)

   an ICVC,

   which is a long-term asset fund.

1. (1)

   1The authorised fund manager must prepare a report in respect of each annual accounting period, half-yearly accounting period and quarterly reporting period.

2. (2)

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

3. (3)

   The authorised fund manager must:

   1. (a)

      publish the annual report not more than four months after the end of each relevant annual accounting period;

   2. (b)

      publish the half-yearly report not more than two months after the end of each relevant half-yearly accounting period; and

   3. (c)

      publish the quarterly report not more than 20 business days after the end of each relevant quarterly reporting period,

      and in each case provide a copy free of charge on request to any unitholder.

4. (4)

   The authorised fund manager must provide free of charge, on the request of any person eligible to invest in the scheme, a copy of the latest:

   1. (a)

      annual report and (if more recent) half-yearly report; and

   2. (b)

      quarterly report,

      before the conclusion of any sale to such a person.

5. (5)

   The authorised fund manager must provide a copy of each annual, half-yearly and quarterly report to the FCA.

6. (6)

   For a scheme which is an umbrella, any annual report provided under (3) or (4) may be a report prepared under COLL 15.5.3R(3), but the authorised fund manager must nevertheless provide free of charge the report prepared under COLL 15.5.3R(2) if a unitholder or any other person eligible to invest in the scheme requests it.

1. (1)

   1An annual report, other than for a scheme which is an umbrella, must contain:

   1. (a)

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

   2. (b)

      the report of the authorised fund manager in accordance with COLL 15.5.6R (Authorised fund manager’s report);

   3. (c)

      comparative information in accordance with COLL 4.5.10R (1A) and (2A) (Comparative information);

   4. (d)

      the report of the depositary in accordance with COLL 15.5.7R (Report of the depositary); and

   5. (e)

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

2. (2)

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

   1. (a)

      for each sub-fund:

      1. (i)

         the accounts required by (1)(a);

      2. (ii)

         the report of the authorised fund manager in accordance with COLL 15.5.6R; and

      3. (iii)

         comparative information in accordance with COLL 4.5.10R(1A) and (2A)

   2. (b)

      the report of the depositary in accordance with COLL 15.5.7R; and

   3. (c)

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

3. (3)

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

   1. (a)

      for the sub-fund:

      1. (i)

         the accounts required by (1)(a);

      2. (ii)

         the report of the authorised fund manager in accordance with COLL 15.5.6R; and

      3. (iii)

         comparative information in accordance with COLL 4.5.10R(1A) and (2A);

   2. (b)

      the report of the depositary in accordance with COLL 15.5.7R; and

   3. (c)

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

4. (4)

   The directors of an ICVC or the authorised fund manager of an AUT or ACS must ensure that the accounts referred to in (1)(a), (2)(a) and (3)(a) give a true and fair view of the net revenue and the net capital gains or losses on the scheme property of the authorised fund or sub-fund for the relevant annual accounting period, and of the financial position of the authorised fund or sub-fund as at the end of that period.

5. (5)

   An annual report of a long-term asset fund must also contain a statement setting out a description of the assessment of value required by COLL 15.7.17R including:

   1. (a)

      a separate discussion and conclusion for the matters covered in each paragraph of COLL 6.6.21R, and for each other matter that formed part of the assessment, covering the considerations taken into account in the assessment, a summary of its findings and the steps undertaken as part of or as a consequence of the assessment;

   2. (b)

      an explanation for any case in which benefits from economies of scale that were identified in the assessment have not been passed on to unitholders;

   3. (c)

      an explanation for any case in which unitholders hold units in a class for which the payments out of scheme property in relation to that class as set out in the prospectus (in this rule, “charges”) are higher than those applying to other classes of the same scheme with substantially similar rights;

   4. (d)

      the conclusion of the authorised fund manager’s assessment of whether the charges are justified in the context of the overall value delivered to the unitholders in the scheme; and

   5. (e)

      if the assessment has identified that the charges are not justified in the context of the overall value delivered to the unitholders, a clear explanation of what action has been or will be taken to address the situation.

6. (6)

   An annual report of a long-term asset fund must also contain a statement setting out a description of the assessment required by COLL 15.7.20R (Assessment of investment valuations, due diligence, conflicts of interest and liquidity management), including:

   1. (a)

      a separate discussion and conclusion for each of the matters specified in COLL 15.7.21R (Table: minimum considerations – assessment of investment valuations, due diligence, conflicts of interest and liquidity management) and for each other matter that formed part of the assessment;

   2. (b)

      a summary of the assessment’s findings and the steps undertaken as part of or as a consequence of the assessment; and

   3. (c)

      the conclusion of the authorised fund manager’s assessment of how it managed the LTAF in the best interests of the scheme, its investors and the integrity of the market.

1. (1)

   1A half-yearly report on an authorised fund or sub-fund must contain:

   1. (a)

      the 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 15.5.6R.

2. (2)

   For a scheme which is an umbrella, the authorised fund manager may choose whether the half-yearly report is prepared for the umbrella as a whole, or for each individual sub-fund, or both.

1The report of the authorised fund manager must include:

1. (1)

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

2. (2)

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

3. (3)

   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:

   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;

4. (4)

   particulars of any fundamental or significant change to the authorised fund made since the date of the last report;

5. (5)

   in relation to each scheme or sub-fund which is a long-term asset fund:

   1. (a)

      the amount of any remuneration, charge, payment or expense paid out of the scheme property during the period to which the report relates;

   2. (b)

      the person to whom that amount was paid;

   3. (c)

      what that remuneration, charge, payment or expense was for; and

   4. (d)

      how the remuneration, charge, payment or expense was calculated; and

6. (6)

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

1. (1)

   1The depositary must make an annual report to unitholders which must be included in the annual report.

2. (2)

   The depositary’s report must contain:

   1. (a)

      a description, which may be in summary form, of the duties of the depositary under COLL 15.7.6R and COLL 15.7.7R (Duties of the depositary) and in respect of the safekeeping of the scheme property;

   2. (b)

      in relation to its oversight and monitoring obligations:

      1. (i)

         a description of the reasonable steps the depositary has taken to ensure that the LTAF has been managed in accordance with each of the matters specified in COLL 15.7.6R(2)(e) (Duties of the depositary); and

      2. (ii)

         where an external valuer has not been appointed, a statement setting out the depositary’s determination of the matters in COLL 15.2.6R(2)(a) (Appointment of external valuer or authorised fund manager with knowledge, skills and experience of valuing long-term assets); and

   3. (c)

      a statement as to 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, 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; and

      2. (ii)

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

1The annual reports in COLL 15.5.3R(1) and (2) and the half-yearly reports in COLL 15.5.5R(1) 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 ACS, 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.

1. (1)

   1A quarterly report must contain details of any transactions executed by, or for or on behalf of, the long-term asset fund in the relevant quarterly reporting period which have resulted in assets being held in the LTAF’s scheme property, including:

   1. (a)

      the date of each transaction;

   2. (b)

      details of the asset and type of asset which was the subject of the transaction; and

   3. (c)

      an explanation of how the transaction is consistent with the LTAF’s investment objectives, investment policy and investment strategy.

2. (2)

   A quarterly reporting period for a long-term asset fund must be determined in accordance with (a) to (c).

   1. (a)

      Each quarterly reporting period must be three months long.

   2. (b)

      There must be four consecutive quarterly reporting periods in each annual accounting period.

   3. (c)

      The first quarterly reporting period in each annual accounting period must begin when the annual accounting period begins.

1. (1)

   1Any proposed change which would be reasonably considered to be a fundamental change to the scheme requires the prior sanction of an extraordinary resolution of the unitholders.

2. (2)

   Any proposed change to the scheme which is not within (1) but which would be reasonably considered to be significant, requires the giving of reasonable notice to unitholders to become effective.

3. (3)

   Alterations affecting only a particular sub-fund or class of units may be approved in accordance with (1) or (2) for the particular sub-fund or class of units, with the consent of, or, as the case may be, notice to, the relevant unitholders.

4. (4)

   This rule and COLL 15.5.12R (Meetings) will apply (unless the context requires otherwise) to alterations concerning unitholders of a particular sub-fund or class of units rather than the scheme or sub-fund as a whole.

1. (1)

   1Details of the procedures for the convening and conducting of meetings and resolutions must be set out in the instrument constituting the fund and be reasonable and fair as between all relevant parties.

2. (2)

   The authorised fund manager must record and keep minutes for six years of all proceedings to which COLL 15.5.10R (Alterations to the scheme and notices to unitholders) and this rule are relevant.

3. (3)

   The provisions in COLL 4.4.12R (Notices to unitholders), COLL 4.4.13R (Other notices) and COLL 4.4.14G (References to writing and electronic documents) apply in relation to long-term asset funds.