Schroder. Offshore Cash Fund. Final Report and Accounts 31 December 2012

Transcription

1 Schroder Offshore Cash Fund Final Report and Accounts 31 December 2012

2 Contents Schroder Offshore Cash Fund Fund Information Investment objective and policy Financial highlights Fund information Ongoing charges (excluding transaction charges) Investment Adviser s Review Fund Performance Performance Unit price range Net asset value Statement of the Manager s and Trustee s Responsibilities Trustee s Report Independent Auditors Report to the unitholders of Schroder Offshore Cash Fund Portfolio Statement Significant Portfolio Movements Largest purchases Largest sales/maturities Statement of Total Return Statement of Change in Net Assets Attributable to Unitholders Balance Sheet Notes to the Accounts Accounting policies Net capital (losses)/gains Revenue Expenses Finance costs Investments Debtors Creditors Contingent liabilities Unit classes Related party transactions Financial instruments and risk profile Subsequent events General Information EU Savings directive UK reporting fund status

3 Investment objective and policy The fund aims to achieve a money market linked return with minimum risk to capital. The fund is designed to offer investors a high degree of protection and access to wholesale money markets whilst providing a high degree of liquidity. Financial highlights* Buying price % change A Units * B Units * * The comparison shown is based on prices of units calculated to more than four significant figures. The unrounded A unit buying price is (2011: ). The unrounded B unit buying price is (2011: ) Fund information Launch date 4 August 1997 (B units: 5 August 2005) Launch price 1.00 per A unit (B units: 1.477) Interim Final Accounting dates 30 June 31 December (Unaudited) (Audited) Ongoing charges (excluding transaction charges) For the year to For the year to A Units 0.24% 0.23% B Units 0.14% 0.13% 3

4 Investment Adviser s Review Investment adviser s review During the period under review the portfolio continued to invest in a conservative selection of counterparty names. At the start of the year in view of the high level of market uncertainty and our bias toward capital preservation we reduced the maturity of the portfolio by not renewing longer dated positions as they matured. During Q2 Moody s downgraded a number of major European banks. This was widely anticipated and we had pre-emptively reduced our allocation to the bonds with the lowest downgrade changes. Through H2 as money market curves flattened further we sought to increase the overall maturity of the portfolio. An allocation was retained to overnight and short dated deposits in order to manage portfolio liquidity. Looking ahead we do not anticipate the Bank of England to increase the base rate for the foreseeable future whilst monetary policy remains accommodative. The funding for lending scheme continues to perform well in the UK with further increases expected during As rates for money market securities continue to fall, we are increasing the weighted average maturity of the fund buying longer dated issues where we are able to benefit from the additional yield offered. We remain focused on high quality counterparty names as identified by our team of credit analysts. Schroder Investment Management Limited 1 February,

5 Fund Performance Performance Selling Price Price at Buying Price From Launch % Change in Buying Price to From % A units * B units * More recent prices are published in the Financial Times in the FT Managed Funds Service section under the heading, Schroder Inv Mgmt (Guernsey) Ltd (FSA Recognised). The fund is valued daily. * The comparison shown is based on prices of units calculated to more than four significant figures. Refer to page 3 for these prices. Unit price range Year to 31 December A Units B Units Highest buying price Lowest selling price Highest buying price Lowest selling price Net asset value As at 31 December Net asset value Net asset value per unit Number of units in issue 2010 A Units 212, ,088,791 B Units 35, ,760, A Units 146, ,949,573 B Units 38, ,293, A Units 155, ,717,948 B Units 26, ,485,058 Please remember that past performance is not a guide to future performance and it might not be repeated. The value of investments and the revenue from them may go down as well as up and investors may not get back the amount originally invested. Because of this, you are not certain to make a profit on your investments and you may lose money. 5

6 Statement of the Manager s and Trustee s Responsibilities The Manager is responsible for preparing accounts for each financial year which give a true and fair view of the financial position of the fund as at the end of the accounting year and of their revenue, net capital gains and expenditure for the year. In preparing these Accounts the Manager is required to: state whether applicable accounting standards have been followed subject to any material departures disclosed and explained in the accounts; select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent; and prepare the accounts on the going concern basis unless it is inappropriate to presume that the fund will continue in operation. The Manager is required to keep proper accounting records and to manage the fund in accordance with the Trust Deed, Collective Investment Schemes (Class A) Rules, 2002 and the Principal Documents. The Trustee is responsible for safeguarding the assets of the fund and must take reasonable care to ensure that the fund is managed by the Manager in compliance with the provisions of the Principal Documents and The Collective Investment Schemes (Class A) Rules, Trustee s Report In respect of the year ended 31 December 2012, we state that in our opinion, Schroder Investment Management (Guernsey) Limited (the Manager), has managed the Schroder Offshore Cash Fund (the fund): a) In accordance with the limitations imposed upon the investment and borrowing powers of the fund by the Principal Documents, by the Scheme Particulars and by The Protection of Investors (Bailiwick of Guernsey) Law, 1987; and b) In accordance with the provisions of the Principal Documents and the Collective Investment Schemes (Class A) Rules, BNP Paribas House St Julian s Avenue St. Peter Port Guernsey BNP Paribas Trust Company (Guernsey) Limited 13 March

7 Independent Auditors Report to the unitholders of Schroder Offshore Cash Fund Report on the accounts We have audited the accompanying accounts of Schroder Offshore Cash Fund ( the Fund ) which comprise the Balance Sheet as of 31 December 2012, the Statement of Total Return and the Statement of Change in Net Assets Attributable to Unitholders for the year then ended and a summary of significant accounting policies and other explanatory information. Managers responsibility for the accounts The Manager is responsible for the preparation of accounts that give a true and fair view in accordance with United Kingdom Accounting Standards and with the requirements of Guernsey law. The Manager is also responsible for such internal control as they determine is necessary to enable the preparation of accounts that are free from material misstatement, whether due to fraud or error. Auditors responsibility Our responsibility is to express an opinion on these accounts based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the accounts are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the accounts, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the accounts in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Manager, as well as evaluating the overall presentation of the accounts. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 7

8 Independent Auditors Report to the unitholders of Schroder Offshore Cash Fund (continued) Opinion In our opinion, the accounts give a true and fair view of the financial position of the Fund as of 31 December 2012, and of its financial performance for the year then ended in accordance with United Kingdom Accounting Standards and the Statement of Recommended Practice for Financial Statements of Authorised Funds issued by the Investment Management Association and have been properly prepared in accordance with the Trust Deed, The Authorised Collective Investment Schemes (Class A) Rules, 2002 and the principal documents. Report on other legal and regulatory requirements We read the other information contained in the Final Report and Accounts and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the accounts. The other information is as detailed in the Table of Contents. This report, including the opinion, has been prepared for and only for the Fund s Unitholders, as a body in accordance with The Authorised Collective Investment Schemes (Class A) Rules, 2002 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. PricewaterhouseCoopers CI LLP Chartered Accountants Guernsey, Channel Islands 13 March 2013 Notes: (a) The maintenance and integrity of the website, on which the accounts are presented, is the responsibility of Schroder Investment Management Limited; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the accounts since they were initially presented on the website. (b) Legislation in Guernsey governing the preparation and dissemination of accounts may differ from legislation in other jurisdictions. 8

9 Portfolio Statement Holding at Market value % of total net assets Fixed Deposits 22.81% ( %) ING - 0.4% 17/1/ ,250,019 11, Lloyds - 0.4% 15/1/ ,063,693 12, SEB % 11/1/2013 6,131,101 6, Societe Generale % 16/1/ ,819,713 12, , Certificates of Deposit 49.12% ( %) Abbey National % 15/4/2013 7,000,000 7, ABN Amro % 14/2/2013 8,000,000 7, BNP % 21/2/2013 8,000,000 8, Clydesdale % 27/3/2013 8,000,000 8, Credit Agricole % 7/1/2013 8,000,000 8, DNB Bank % 6/6/2013 8,000,000 7, FMS % 29/1/2013 8,000,000 7, ING Bank- 0.85% 12/2/2013 7,000,000 7, Nordea Bank % 4/1/2013 8,000,000 8, Nationwide Building Society % 25/1/2013 8,000,000 8, Rabobank Nederland % 9/5/2013 7,000,000 7, UBS % 4/2/2013 6,000,000 6, , Treasury Bills 4.32% ( %) UK Treasury Bills - 0% 4/3/2013 8,000,000 7, ,

10 Portfolio Statement (continued) Holding at Market value % of total net assets Commercial Papers 11.86% ( %) Natixis % 28/1/2013 7,000,000 6, Standard Chartered % 12/6/2013 8,000,000 7, Swedbank % 12/6/2013 7,000,000 6, , Portfolio of investments 163, Net other assets 18, Net assets attributable to unitholders 181,

11 Significant Portfolio Movements * Purchases Total cost of purchases for the year (including fixed deposits) 7,814,585,943 Cost For the year ended 31 December 2012 BNP CD % 21/8/ ,000 Erste Abwicklungsanstalt CD % 23/4/2012 8,496 UK Gilt % 7/6/2012 8,040 Nationwide Building Society CD % 25/1/2013 8,000 Nationwide Building Society CD % 25/6/2012 8,000 Credit Suisse CD % 13/6/2012 8,000 Credit Agricole CD % 9/7/2012 8,000 Credit Agricole CD % 8/5/2012 8,000 Credit Agricole CD % 5/4/2012 8,000 Credit Agricole CD % 7/1/2013 8,000 Clydesdale CD % 27/3/2013 8,000 Clydesdale CD % 17/9/2012 8,000 BNP CD % 21/2/2013 8,000 BNP CD % 21/6/2012 8,000 UK Treasury Bill TB - 0% 16/7/2012 7,999 UK Treasury Bill TB - 0% 11/6/2012 7,999 UK Treasury Bill TB - 0% 23/7/2012 7,999 UK Treasury Bill TB - 0% 3/9/2012 7,998 UK Treasury Bill TB - 0% 13/8/2012 7,998 Landes Bank CP % 6/6/2012 7,997 * Significant portfolio movements disclose the twenty largest purchases (excluding fixed deposits) during the year. 11

12 Significant Portfolio Movements (continued) * Sales/Maturities Total proceeds of sales/maturities for the year (including fixed deposits) 7,832,134,803 Proceeds For the year ended 31 December 2012 Nationwide CD % 25/6/ ,000 BNP CD % 21/8/ ,000 Erste Abwicklungsanstalt CD % 23/4/2012 8,496 UK Gilt % 7/6/2012 8,016 UK Treasury Bill TB - 0% 3/12/2012 8,000 Svenhan CP % 30/4/2012 8,000 Standard Chartered CP % 12/12/2012 8,000 RBS CD % 13/3/2012 8,000 Lloyds CD % 21/2/2012 8,000 FMS CP % 29/10/2012 8,000 DNB Nordbank CP % 6/12/2012 8,000 Credit Suisse CD % 9/3/2012 8,000 Credit Suisse CD % 13/6/2012 8,000 Credit Agricole CD % 9/7/2012 8,000 Credit Agricole CD % 8/5/2012 8,000 Credit Agricole CD % 5/4/2012 8,000 Clydesdale CD % 17/9/2012 8,000 BNP CD % 21/6/2012 8,000 UK Treasury Bill TB - 0% 16/7/2012 8,000 UK Treasury Bill TB - 0% 13/8/2012 8,000 * Significant portfolio movements disclose the twenty largest sales/maturities (excluding fixed deposits) during the year. 12

13 Statement of Total Return For the year ended 31 December Notes Income Net capital (losses)/gains 2 (1) 37 Revenue 1& ,508 Expenses 1&4 (407) (418) Net revenue for the year 568 1,090 Total return before finance costs 567 1,127 Finance costs: Equalisation Changes in net assets attributable to unitholders from investment activities 584 1,127 The results above are from continuing operations. There were no gains or losses other than those dealt with in the Statement of Total Return. Statement of Change in Net Assets Attributable to Unitholders For the year ended 31 December Opening net assets attributable to unitholders 184, ,179 Amounts receivable on issue of units 125, ,319 Amounts payable on cancellation of units (129,515) (239,276) (3,714) (64,957) Change in net assets attributable to unitholders from investment activities 584 1,127 Closing net assets attributable to unitholders 181, ,349 13

14 Balance Sheet As at 31 December Notes Assets Investment assets 1&6 163, ,755 Debtors 7 17, Cash and bank balances 238 2,963 Total other assets 18,074 3,637 Total assets 181, ,392 Liabilities Creditors 8 (61) (43) Total other liabilities (61) (43) Total liabilities (61) (43) Net assets attributable to unitholders 181, ,349 The Accounts on pages 13 to 23 were approved at a Board Meeting of Schroder Investment Management (Guernsey) Limited on 13 March 2013 and signed on its behalf by: Christopher M W Hill Richard J Corbin Directors of the Manager 14

15 Notes to the Accounts 1 Accounting policies Basis of accounting The financial statements have been prepared under the historical cost basis, as modified by the revaluation of investments, and in accordance with United Kingdom Accounting Standards, the Statement of Recommended Practice for Financial Statements of Authorised Funds issued in October 2010 ( the SORP ), the provisions of the Trust Deed dated 15 April 1997, the Collective Investment Schemes (Class A) Rules 2002 and the Principal Documents. Investments treated as financial assets designated at fair value through profit or loss Financial assets and financial liabilities classified in this category are those that have been designated by management on initial recognition. Included in this classification are Corporate Bonds and Treasury Bills. Financial assets designated as held at fair value through profit or loss are recorded in the Balance Sheet at fair value. Changes in fair value are recognised as revenue in the Statement of Total Return. Interest is earned or accrued in investment income, using the effective interest (EIR) method. Other investments and fixed deposits Other Investments including Commercial Papers, Certificates of Deposit and Fixed Deposits are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, amounts are subsequently measured at amortised cost using the EIR, less allowance for impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees and costs that are an integral part of the EIR. The amortisation is included in Revenue in the Statement of Total Return. Any losses arising from impairment are recognised in the Statement of Total Return. Accrued interest on all instruments is recognised in investment income receivable in Note 7. Expenses A and B units bear their pro-rata share of all expenses, other than management fees which are charged as detailed in Note 4. 15

16 Notes to the Accounts (continued) 1 Accounting policies (continued) Foreign exchange Functional currency is the currency of the primary economic environment in which the entity operates. This is the currency in which an entity primarily generates and uses cash. The functional and presentational currency of the fund is Sterling. Assets and liabilities in all other currencies different from the functional currency, are translated based on the exchange rates in effect at the date of the Accounts. Income and expense in all other currencies different from the functional currency are translated based on the exchange rates in effect at the date of the transaction. Foreign currency translation gains and losses are credited or charged to the Statement of Total Return. Other financial instruments For other financial instruments, including all debtors, creditors and payables, the carrying amounts as shown in the Balance Sheet approximate to fair value due to the short-term nature of these financial instruments. Cash flow statement The fund has not prepared a cash flow statement as it is an open-ended investment fund that meets the requirements for exemption under Financial Reporting Standard No. 1 (Revised). Taxation The fund is administered in Guernsey and has been granted exemption from income tax under the Income Tax (Exempt Bodies) (Guernsey) Ordinance Segmental reporting The Directors are of the opinion that the fund is engaged in a single business and geographical segment. Distributions and equalisation It is intended that no dividends will be paid and that the whole of the net revenue attributable to the fund will be accumulated within the fund as and when earned and will be reflected in the price of the units. With effect from 1 January 2012, the Directors have determined that equalisation should be applied within the fund. Equalisation is a calculation intended to ensure that an investor buying or selling units part way through a distribution period pays or receives a price for the units that reflects revenue accrued in the fund up to that date and prevents dilution of fund values. Equalisation is treated as a finance cost of the fund. 16

17 Notes to the Accounts (continued) 2 Net capital (losses)/gains Net capital (losses)/gains during the year comprise: Realised (losses)/gains on investments sold during the year (1) 37 Net capital (losses)/gains (1) 37 3 Revenue Investment income 975 1,508 4 Expenses Payable to the Manager, associates of the Manager and agents of either of them: Annual management charge Payable to the Trustee, associates of the Trustee and agents of either of them: Trustee fee Other expenses: Administration fee Transaction charges 3 2 General expenses Audit fee Total expenses a) Annual management charge: The Manager is entitled to receive a fee of 0.50% per annum of the value of the fund which has been partially waived. In respect of A Units, the Manager receives an annual fee, payable monthly in arrears, at the rate of 0.10% per annum of the value of the fund on a mid market basis. Out of its charges the Manager pays the fees of the Investment Adviser. In respect of B Units, the Manager will charge a fee which will be invoiced separately to the B Unitholders. From the launch date until 31 December 2012, this fee was 0%. 17

18 Notes to the Accounts (continued) 4 Expenses (continued) b) Trustee fee: The Trustee is entitled to a fee, payable out of the assets of the fund, at a rate of 0.025% per annum of the first 150 million, 0.02% per annum of the next 150 million and 0.005% per annum thereafter of the value of the fund or such higher amount as may be agreed between the Manager and the Trustee from time to time. c) Administration fee: The Administrator has agreed a partial waiver of fees to be paid from the assets of the fund and the amount currently charged is at the rate of 0.075% per annum of the NAV of the fund. The Administrator is entitled to receive an annual fee equal to 0.10% on the first 75 million and 0.075% per annum thereafter on the value of the fund on a mid market basis, subject to a minimum fee of 30,000 per annum. 5 Finance costs Equalisation Equalisation is revenue received on the creation of units and revenue deducted on the cancellation of units, and comprises: Add: Revenue deducted on cancellation of units Deduct: Revenue received on creation of units (354) - Total finance costs: Equalisation (17) - 6 Investments Fair value as at 1 January 180, ,376 Purchases of investments 7,814,586 5,589,107 Proceeds from sales of investments (7,832,134) (5,655,765) (Losses)/gains realised on investments sold during the year (1) 37 Fair value at end of year 163, ,755 7 Debtors Investment income receivable Investments sold receivable 17,768 - Sundry debtors - 3 Total debtors 17,

19 Notes to the Accounts (continued) 8 Creditors Accrued expenses: Manager and Agents Management fee Custodian fee Trustee and Agents Trustee fee Other creditors Total creditors Contingent liabilities There were no contingent liabilities at the balance sheet date (2011: Nil). 10 Unit classes The fund currently has two unit classes: A and B. The A units are listed on the Channel Islands Stock Exchange, the B units are offered to clients of the Manager or its affiliates. Please refer to note 4 a) for details of the annual management charge. A and B units hold equal voting rights. The net asset value of each unit class, the net asset value per unit, and the number of units in issue are given in the Net Asset Value and Comparative Tables on page Related party transactions The Manager and the Trustee actively co-operate to exercise control over the fund and are therefore related parties by virtue of their controlling influence. Amounts paid during the year or due to the Manager or the Trustee at the year end are disclosed under Expenses (Note 4) and Creditors (Note 8) in the Notes to the Accounts. Transactions relating to the creation and redemption of units which pass through, but are not for the benefit of, either related party are disclosed in the Statement of Change in Net Assets Attributable to Unitholders. Amounts due to or from the fund at the year end in relation to these transactions are disclosed under Expenses (Note 4), Debtors (Note 7) and Creditors (Note 8) in the Notes to the Accounts. Richard J. Corbin, a Director of the Manager, held 36,746 units in the fund as at 31 December 2012 (31 December 2011: 36,746). 19

20 Notes to the Accounts (continued) 12 Financial instruments and risk profile In accordance with its investment objectives and policies, the fund holds financial instruments which at any one time may comprise the following: securities held in accordance with the investment objectives and policies; cash and short-term debtors and creditors arising directly from operations; derivative transactions including investment in forward currency contracts. The financial instruments held by the fund are comprised principally of deposits with or loans to a bank, building society or local authority and in negotiable fixed and floating rate securities including certificates of deposit, short and medium term bonds, commercial paper, gilt edged securities and other money market instruments either issued by a bank or building society or which are traded on an eligible market, or which are issued or guaranteed by or on behalf of any government, local authority or international organisation listed or described for such purpose in the Collective Investment Schemes (Class A) Rules, The fund will normally make investments from which income will be received by the fund without any deduction of withholding tax. There were no derivatives traded during the year. The fund entered into an agreement with BNP Paribas Securities Services SCA ( BNP ) on 29 October 2004 to secure the provision of an overdraft facility. An eleven million euro facility has been renewed in This facility remains available to the fund as at 31 December Interest on any borrowing is charged at a rate of 1% per annum above BNP s Base Rate. The facility is provided for the purpose of short term settlement disparities and to settle redemptions pending realisation of investments. The Trustee may at the request of the Manager borrow for the account of the fund provided always that the proceeds of such borrowings shall not be utilised as part of the fund property available for investment. Moody s Investment Service Limited has given the fund a credit rating of AAA and a market risk rating of MR1+. In order to maintain a market risk rating of MR1+ the maximum weighted average maturity of instruments held within the fund will be sixty days. As at 31 December 2012 the weighted average maturity was 56 days. The specific risks arising from the fund s exposure to these instruments, and the Manager s policies for managing these risks, which have been applied throughout the year, are summarised below. Market price risk The fund s investment portfolio is exposed to market price fluctuations which are monitored by the Manager in pursuance of the investment objectives and policies. Adherence to investment guidelines and to investment and borrowing powers set out in the fund s Trust Deed and Scheme Particulars mitigates the risk of excessive exposure to any particular type of security or issuer. 20

21 Notes to the Accounts (continued) 12 Financial instruments and risk profile (continued) Foreign currency risk The fund s investment portfolio as at 31 December 2012 is wholly invested in securities denominated in Sterling, the reporting currency of the fund. Where appropriate the Manager has the power to manage exposure to currency movements by using forward currency contracts. No such instruments were held at the date of these financial statements. The fund s direct currency exposure is therefore zero at that date. The Manager s treatment of currency transactions other than in Sterling is set out in Note 1 to the financial statements under Foreign exchange. As at 31 December 2012, the fund s net currency exposure in net assets can be analysed as follows: Currency risk profile Currency Monetary exposure 000 s Non-monetary exposure Net assets Sterling , , , , , ,349 Credit risk Credit risk represents the loss that would be recognised if counterparties fail to perform as contracted. The fund s principal investment objective is to achieve a money market linked return with minimum risk to capital. Adherence to investment guidelines and to borrowing powers set out in the fund s Trust Deed and Scheme Particulars mitigates the risk of excessive exposure to any particular issuer. All investments are of investment grade credit risk. The fund only invests in A1/P1 short dated names, and a minimum long term rating of A2. The fund is rated AAA by Moody s and to maintain this, the fund is very cautious about the portfolio and the related credit risk. Interest rate risk The fund invests in fixed and floating rate securities. The revenue of the fund may be affected by changes to interest rates relevant to particular securities or as a result of the Manager being unable to secure similar returns on the expiry of contracts or sale of securities. Interest receivable on bank deposits or payable on bank overdraft positions will be affected by fluctuations in interest rates. The value of fixed interest securities may be affected by interest rate movements in the future. Interest risk is managed through strict guidelines: the fund has a maximum 60 days WAM, and only invests in assets up to 12 months to maturity as such interest rate risk is minimal. The Portfolio Statement on page 9 details the security type, issuer, interest rate and maturity date of all of the fund s investments as at 31 December

22 Notes to the Accounts (continued) 12 Financial instruments and risk profile (continued) Interest rate risk (continued) The interest rate profile of the fund s financial assets at 31 December 2012 is set out below: Currency Fixed rate financial assets Floating rate financial assets Financial assets Sterling , , ,755 3, ,718 Weighted average interest rate/yield Weighted average period for which rate/ yield fixed Total 2012 Fixed Rate Financial Assets Fixed Deposits 42, % 15 days Certificates of Deposit 90, % 59 days Treasury Bills 7, % 63 days Commercial Paper 21, % 120 days 163, % 56 days Weighted average interest rate/yield Weighted average period for which rate/ yield fixed Total 2011 Fixed Rate Financial Assets Fixed Deposits 69, % 6 days Certificates of Deposit 54, % 77 days Corporate Bonds 22, % 87 days Treasury Bills 17, % 46 days Commercial Paper 15, % 124 days 179, % 52 days Liquidity risk As at 31 December 2012, the fund had no significant financial liabilities other than short term creditors arising from investing activity. The assets held within the fund are readily realisable as cash as the fund s average holding to maturity is under 60 days. The primary source of this risk to the fund is the liability to unitholders for any cancellation of units. This risk is minimised by holding cash, readily realisable securities and access to overdraft facilities. 22

23 Notes to the Accounts (continued) 12 Financial instruments and risk profile (continued) Fair value In accordance with the fund s accounting policies the fund s investment assets are carried at fair value. The fund s investment assets are catagorised into a hierarchy consisting of the following three levels: Quoted prices (unadjusted) in active markets for identical assets (level 1). Inputs other than quoted prices included within level 1 that are observable for the asset, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2). Inputs for the asset that are not based on observable market data (that is, unobservable inputs) (level 3). The following table analyses within the fair value hierarchy the fund s investment assets (by class) measured at fair value at 31 December Total 2012 Level 1 Level 2 Level 3 Corporate Bonds Treasury Bills 7,997 7, ,997 7, Total 2011 Level 1 Level 2 Level 3 Corporate Bonds 22,777 22, Treasury Bills 17,994 17, There were no transfers between levels during the year 40,771 40, Subsequent events There were no material events subsequent to year end. 23

24 General Information Manager Schroder Investment Management (Guernsey) Limited, Trafalgar Court, Les Banques, St. Peter Port, Guernsey, Channel Islands, GY1 3QL. Administrator and Registrar Northern Trust International Fund Administration Services (Guernsey) Limited, Trafalgar Court, Les Banques, St. Peter Port, Guernsey, Channel Islands, GY1 3QL. Trustee BNP Paribas Trust Company (Guernsey) Limited, PO Box 412, BNP Paribas House, St Julian s Avenue St. Peter Port, Guernsey, Channel Islands, GY1 3WE. Independent Auditor Ernst & Young LLP (resigned 6 June 2012) Royal Chambers, St. Julian s Avenue, St. Peter Port, Guernsey, Channel Islands, GY1 4AF. PricewaterhouseCoopers CI LLP (appointed 6 June 2012) Royal Bank Place 1 Glategny Esplanade St. Peter Port, Guernsey, Channel Islands, GY1 4ND. Legal Advisers to the Manager Ogier, Ogier House, St Julian s Avenue, St. Peter Port, Guernsey, Channel Islands, GY1 1WA. Investment Adviser Schroder Investment Management Limited, 31 Gresham Street, London, EC2V 7QA. 24

25 General Information (continued) Schroder Offshore Cash Fund is an open-ended Unit Trust constituted under the laws of Guernsey by deed on 15 April The objective of the fund is to achieve a money market linked return with minimum risk to capital. The fund has been authorised by the Guernsey Financial Services Commission under the Protection of Investors (Bailiwick of Guernsey) Law, 1987 as a Class A Scheme. The fund is a recognised scheme under Section 270 of the United Kingdom Financial Services and Markets Act, 2000 and has been rated AAA and MR1+ by Moody s Investment Service Limited. The fund s A units are listed on the Channel Islands Stock Exchange. The B units are not listed. The accounting date of the fund is 31 December each year. The prices of the units in the fund are published in the Financial Times in the FT Managed Funds Service section under the heading Schroder Inv Mgmt (Guernsey) Ltd (FSA Recognised). It is the intention of the Manager to conduct the affairs of the fund so as to ensure that it will not become resident in the United Kingdom. Accordingly, and provided that the fund does not carry on a trade in the United Kingdom through a branch or agency situated therein, the fund will not be subject to United Kingdom corporation tax or income tax. EU Savings Directive Effective from 1 July 2005, the proceeds of the sale, refund, or redemption of units in the fund fell within the scope of the EU Savings Directive through the agreements that had been entered into by the States of Guernsey and each EU Member State. The Manager determined that tax not be withheld in respect of redemptions or distributions from the fund. Therefore, where the investor is considered an individual who is regarded as being resident for these purposes in an EU Member State this requires the provision of information to the tax authorities of the EU Member State where the investor is regarded as being resident. Reports are made to the States of Guernsey Income Tax Office accordingly. UK Reporting Fund Status Under The Offshore Funds (Tax) Regulations 2009, the Fund has received approval from the HMRC as a reporting fund with effect from 1 January For the Accounting period ended 31 December 2011 and future periods, details of the reportable income that a UK investor should declare as taxable income will be published on the Schroders website: funds/offshore-funds/guernsey-domiciledfunds/ guernsey-fund-income-tables within six months of the end of each accounting period. 25

26 Issued in December 2012 by Schroder Investment Management (Guernsey) Limited, Trafalgar Court, Les Banques, St Peter Port, Guernsey, GY1 3QL. Registered No: Regulated by The Guernsey Financial Services Commission, reference no: