Schroder Offshore Cash Fund Interim Report and Accounts 30 June 2017
Contents Schroder Offshore Cash Fund Fund Information 1 3 Investment objective and policy 3 Alternative Investment Fund Managers Directive (AIFMD) 3 Financial highlights 3 Fund information Ongoing charges (excluding transaction charges).. 3 3 Investment Adviser's Review 4 Comparative Tables 5 Change in net assets per unit 5 Performance 5 Other information 5 Prices 5 Portfolio Statement 1 6 Statement of Total Return (unaudited)... 7 Statement of Change in Net Assets Attributable to Unitholders (unaudited) 7 Balance Sheet (unaudited)... 8 Statement of Cash Flows (unaudited)... 9 Notes to the Accounts 10 General Information 12 Alternative Investment Fund Managers Directive (AIFMD) 13 Alternative Investment Fund Managers (AIFM) Remuneration Disclosures for Schroder Unit Trusts (SUTL) as at 31 December 2016..... 13 EU Savings Directive 14 UK Reporting Fund Status 14 Foreign Account Tax Compliance (FATCA) 14 1 Collectively these comprise the Authorised Fund Manager s report.
Fund Information Investment objective and policy Alternative Investment Fund Managers Directive (AIFMD) Schroder Offshore Cash Fund (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. The AIFMD, as implemented in the UK by the Alternative Investment Fund Managers (AIFMs) Regulations 2013, establishes an EU wide harmonised framework for monitoring and supervising risks posed by AIFMs and the alternative investment funds (AIFs) they manage. The Fund is an AIF and Schroder Unit Trusts Limited was authorised by the Financial Conduct Authority to act as an AIFM on 2 July 2014. The FCA requires certain information to be disclosed to unitholders. It is intended that any such information will in future be provided in the report and accounts, unless such information is required to be disclosed without delay, in which case it will be made via the Schroders website at: http://www.schroders.com/en/uk/private-investor/fund-centre/changes-to-funds/ Financial highlights* Buying price 30.06.17 31.12.16 % change A Units 1.806 1.806 +0.02* B Units 1.827 1.826 +0.07* * The comparison shown is based on prices of units calculated to more than four significant figures. The unrounded A unit buying price is 1.80612036 (31.12.2016: 1.80580040). The unrounded B unit buying price is 1.82714913 (31.12.2015: 1.82591489). 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 For the six months For the six months (excluding transaction to 30.06.17 to 30.06.16 charges) A Units 0.24% 0.24% B Units 0.13% 0.14% 3
Investment Adviser's Review Investment adviser's review Investment adviser to provide Schroder Investment Management Limited 23 August 2017 4
Comparative Tables (unaudited) A Units B Units 30.06.17 31.12.16 31.12.15 30.06.17 31.12.16 31.12.15 For the period to per unit per unit per unit per unit per unit per unit Change in net assets per unit Opening net asset value per unit 1.806 1.802 1.797 1.826 1.820 1.813 Return before operating charges 0.002 0.010 0.009 0.002 0.010 0.010 Operating charges (0.001) (0.006) (0.004) - (0.004) (0.003) Return after operating charges* 0.001 0.004 0.005 0.002 0.006 0.007 Closing net asset value per unit 1.806 1.806 1.802 1.827 1.826 1.820 Performance Return after charges** +0.02% +0.22% +0.29% +0.07% +0.32% +0.39% Other information Closing net asset value ('000) 55,405 116,131 218,167 239,108 93,370 60,364 Closing number of units 30,676,070 64,310,299 121,083,780 130,863,334 51,135,994 33,166,153 Operating charges 0.24% 0.23% 0.22% 0.13% 0.13% 0.12% Prices Highest unit price 1.806 1.806 1.802 1.827 1.826 1.820 Lowest unit price 1.806 1.802 1.797 1.826 1.820 1.813 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. * There are no direct transaction costs related to the purchase and sale of investments. ** Return after charges is based on prices of units calculated to ten significant figures. 5
Portfolio Statement Market % of Holding at value total net 30.06.17 000's assets Fixed Deposits 23.34% (31.12.16-29.30%) Rabobank - 0.15% 05/07/17 24,972,527 24,972 8.48 ING - 0.15% 04/07/17 21,670,753 21,670 7.36 Natixis - 0.20% 10/07/17 20,570,307 20,570 6.98 Societe Generale - 0.00% 05/07/17 1,518,906 1,519 0.52 68,731 23.34 Certificates of Deposit 22.75% (31.12.16-23.86%) Lloyds - 0.39% 04/12/17 11,500,000 11,500 3.90 Nationwide - 0.24% 05/07/17 11,500,000 11,500 3.90 SEB - 0.17% 08/08/17 12,000,000 12,000 4.07 Svenska - 0.22% 20/09/17 5,000,000 5,000 1.70 Svenska - 0.24% 27/07/17 7,000,000 7,000 2.38 Swedbank - 0.29% 13/07/17 10,000,000 9,999 3.40 UBS - 0.41% 17/10/17 10,000,000 10,000 3.40 66,999 22.75 Treasury Bills 4.41% (31.12.16-4.29%) UK Treasury Bill - 0.00% 03/07/17 9,000,000 9,000 3.05 UK Treasury Bill - 0.00% 10/07/17 2,000,000 2,000 0.68 UK Treasury Bill - 0.00% 10/07/17 2,000,000 2,000 0.68 13,000 4.41 Commercial Papers 43.17% (31.12.16-34.58%) ABN AMRO - 0.44% 26/07/17 10,000,000 9,997 3.39 BFCM - 0.445% 02/11/17 9,000,000 8,986 3.05 Danske - 0.50 % 01/08/17 8,000,000 7,997 2.72 DNB - 0.24% 04/01/18 8,000,000 7,990 2.71 DZB - 0.33% 25/08/17 10,000,000 9,995 3.39 ERSTE - 0.25% 31/08/17 12,000,000 11,995 4.07 FMS - 0.20% 14/08/17 10,000,000 9,998 3.39 National Bank of Abu Dhabi - 0.21% 03/07/17 14,200,000 14,200 4.83 Nordea Bank - 0.30% 08/12/17 10,000,000 9,987 3.39 OP Corporate Bank - 0.40% 26/09/17 5,000,000 4,995 1.70 OP Corporate Bank - 0.22% 27/07/17 9,000,000 8,999 3.06 QNB - 0.57% 10/07/17 10,000,000 9,998 3.39 Tordom - 0.18% 06/12/17 12,000,000 11,991 4.08 127,128 43.17 Portfolio of investments 275,858 93.67 Net current assets 18,655 6.33 Net assets attributable to unitholders 294,513 100.00 6
Statement of Total Return (unaudited) For the six months ended 30 June 2017 30.06.17 30.06.16 000's 000's 000's 000's Income Revenue 345 701 Expenses (201) (280) Interest payable and similar charges 29 (92) Total return 173 329 Change in net assets attributable to unitholders from investment activities 173 329 The results above are from continuing operations. The Fund has no recognised gains or losses other than those included in the Statement of Total Return and Statement of Change in Net Assets Attributable to Unitholders. Statement of Change in Net Assets Attributable to Unitholders (unaudited) For the six months ended 30 June 2017 30.06.17 30.06.16 000's 000's 000's 000's Opening net assets attributable to unitholders 209,501* 278,531 Amounts receivable on issue of units 249,409 126,795 Amounts payable on cancellation of units (164,570) (199,113) 84,839 (72,318) Change in net assets attributable to unitholders from investment activities 173 329 Closing net assets attributable to unitholders 294,513 206,542 *The opening net assets attributable to unit holders for the current period do not equal the closing net assets attributable to unitholders for the comparative period as they are not consecutive periods. 7
Balance Sheet (unaudited) As at 30 June 2017 30.06.17 31.12.16 000's 000's Assets Investments 275,858 192,811 Current assets Debtors 33 47 Cash and bank balances 18,668 16,697 Total assets 294,559 209,555 Liabilities Other creditors (46) (54) Net assets attributable to unitholders 294,513 209,501 The Accounts on pages 7 to 11 were approved at a Board Meeting of Schroder Investment Management (Guernsey) Limited on 23 August 2017 and signed on its behalf by: Director Director Directors of the Manager 8
Statement of Cash Flows (unaudited) For the six months ended 30 June 2017 30.06.17 30.06.16 000's 000's Cash flows from operating activities Total return for the period 173 329 Decrease in debtors 14 26,536 Decrease in creditors (8) (12) Net cash inflow from operating activities 179 26,853 Cash flows from investing activities Purchases of investments (5,277,483) (202,504) Proceeds from sales of investments 5,194,436 227,148 Net cash (outflow)/inflow from investing activities (83,047) 24,644 Cash flows from financing activities Amounts received on issue of units 249,409 126,795 Amounts paid on cancellation of units (164,570) (199,113) Net cash inflow/(outflow) from financing activities 84,839 (72,318) Increase/(decrease) in cash and bank balances 1,971 (20,821) Cash and cash equivalents at the start of the period 16,697 21,339 Cash and cash equivalents at the end of the period 18,668 518 9
Notes to the Accounts 1 Financial Statements 2 Accounting policies The information contained withn the accounts in this half-year report has not been audited or reviewed by the Funds' auditors. Basis of Preparation The accounts are prepared in accordance with Financial Reporting Standard 102, the "Financial Reporting Standards applicable in the United Kingdom and the Republic of Ireland" ("FRS 102") and with the Statement of Recommended Practice "Financial Statements of UK Authorised Funds" ("the SORP") issued by the Investment Association in May 2014 and which superseded the SORP issued in October 2010, the provisions of the Trust Deed dated 15 April 1997, the Authorised Collective Investment Schemes (Class B) Rules, 2013 and the Principal Document. All of the Fund's operations are of a continuing nature. The accounting policies in these accounts are consistent with those applied in the accounts for the year ended 31 December 2016. The Fund operates pursuant to the Authorised Collective Investment Schemes (Class B) Rules 2013. Investments treated as financial assets designated as held at fair value through profit or loss Financial assets and financial liabilities classified in this category are those that have been so designated by management on initial recognition. Included in this classification are 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 treated as movements of capital and classified as net capital gains/(losses) in the Statement of Total Return. Interest is earned or accrued in investment income, using the effective interest (EIR) method. Valuation of investments Treasury Bills are designated as "measured at fair value through profit or loss" and are recorded in the Balance Sheet at fair value. Accordingly, upon initial recognition, Treasury Bills are included at fair value which is taken to be their cost. Subsequently they are carried at fair value, which are quoted bid prices in active markets. Fixed Deposits, Certificates of Deposit and Commercial Papers are valued at amortised cost. Fixed deposits, Certificates of Deposit and Commercial Papers are valued at amortised cost. Revenue Interest on investments is recognised in revenue, using the effective interest method. Expenses A and B units bear their pro-rata share of all expenses, other than management fees which are charged as detailed below: 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 and the Alternative Investment Fund Manager. 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 30 June 2016, this fee was 0%. b) Depositary and 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. The Depositary charges a fee of 25,000 per annum in respect of the services it provides to the Fund. 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 10
Notes to the Accounts 2 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 expenses in 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 All other financial instruments, including cash, receivables and payables are shown in the Balance Sheet at amortised cost. There is no significant difference between the carrying value and fair value of these instruments. Taxation The Fund is administered in Guernsey and has been granted exemption from income tax under the Income Tax (Exempt Bodies) (Guernsey) Ordinance 1989. Segmental reporting The Directors of the Manager are of the opinion that the Fund is engaged in a single business and geographical segment. Distributions and Equalisation Although dividends are permitted by the Trust Deed, it is intended that no dividends will be paid and that the whole of the net income of 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. 11
General Information Manager Schroder Investment Management (Guernsey) Limited, Regency Court, Glategny Esplanade, St Peter Port, Guernsey, GY1 3UF. Investment Adviser Schroder Investment Management Limited, 31 Gresham Street, London, EC2V 7QA. Administrator and Registrar Northern Trust International Fund Administration Services (Guernsey) Limited, PO Box 255, Trafalgar Court, Les Banques, St Peter Port, Guernsey, Channel Islands, GY1 3QL. Depositary and Trustee BNP Paribas Securities Services SCA, Guernsey Branch, PO Box 412, BNP Paribas House, St Julian's Avenue, St Peter Port, Guernsey, Channel Islands, GY1 3WE. Independent Auditors PricewaterhouseCoopers CI LLP, 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. Alternative Investment Fund Manager Schroder Unit Trusts Limited 31 Gresham Street, London, EC2V 7QA. 12
General Information (continued) Schroder Offshore Cash Fund is an open-ended Unit Trust constituted under the laws of Guernsey by deed on 15 April 1997. The objective of the Fund is to achieve a money market linked return with minimum risk to capital. The Fund was authorised by the Guernsey Financial Services Commission under the Protection of Investors (Bailiwick of Guernsey) Law, 1987 as a Class A Scheme. With effect from 28 January 2016, the Fund converted from a Class A Scheme to a Class B Scheme. As a result, the Fund will operate pursuant to the Authorised Collective Investment Schemes (Class B) Rules, 2013. +-1000 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 International Stock Exchange (previously the Channel Islands Securities Exchange). The B units are not listed. The accounting date of the Fund is 31 December each year. The prices of the A units in the Fund are published on the Financial Times website: https://markets.ft.com/data/funds/tearsheet/summary?s=gb0000440429:gbp 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. Alternative Investment Fund Managers Directive (AIFMD) The AIFMD, as implemented in the UK by the Alternative Investment Fund Managers (AIFMs) Regulations 2013, establishes an EU wide harmonised framework for monitoring and supervising risks posed by AIFMs and the alternative investment funds (AIFs) they manage. The Fund is an AIF and Schroder Unit Trusts Limited was authorised by the Financial Conduct Authority to act as an AIFM on 2 July 2014. The FCA requires certain information to be disclosed to unitholders. It is intended that any such information will in future be provided in the report and accounts, unless such information is required to be disclosed without delay, in which case it will be made via the Schroders website at: http://www.schroders.com/en/uk/private-investor/fund-centre/changes-to-funds/ Alternative Investment Fund Managers (AIFM) Remuneration Disclosures for Schroder Unit Trusts Limited (SUTL) as at 31 December 2016 The following disclosures are required under the Alternative Investment Fund Managers Directive (AIFMD). These disclosures should be read in conjunction with the Schroders Remuneration Report on pages 68 to 96 of the 2016 Annual Report & Accounts (available on the Group s website www.schroders.com/ir), which provides more information on the activities of our Remuneration Committee and our remuneration principles and policies. Details of the AIFM Remuneration Code can be found at www.fca.org.uk, in the Senior Management Arrangements, Systems and Controls Sourcebook (SYSC 19B). 13
General Information (continued) Alternative Investment Fund Managers (AIFM) Remuneration Disclosures for Schroder Unit Trusts Limited (SUTL) as at 31 December 2016 (continued) The Remuneration Committee of Schroders plc has established an AIFM Remuneration Policy to ensure the requirements of the AIFM Remuneration Code are met proportionately for all AIFM Remuneration Code Staff. You can get details of the latest remuneration policy at http://www.schroders.com/annualreport2016/governance/remunerationreport/directors-remuneration-policy-summary.html. The total amount of remuneration paid by SUTL to its staff is nil as SUTL has no employees. AIFM Remuneration Code Staff of SUTL are employed and paid by other Schroders group companies. Employees who serve as Directors of SUTL receive no additional fees in respect of their role on the Board of SUTL. SUTL manages a total of 42,989 million assets under management, 16,753 million of which are in Alternative Investment Funds (AIFs). SUTL s Code Staff are individuals in roles which can materially affect the risk of SUTL or any AIF it manages. These individuals are employed by and provide services to other companies in, and clients of, the Schroders Group. As a result, only a portion of remuneration for those individuals is included in the aggregate remuneration figures that follow, based on an objective apportionment to reflect the balance of each role. The aggregate total remuneration paid to the 140 AIFM Remuneration Code Staff of SUTL is 11,548,623, of which 3,891,982 is paid to Senior Management and 7,656,641 is paid to other AIFM Remuneration Code Staff. 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 would 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 2010. For the Accounting period ended 31 December 2011 and subsequent periods, details of the reportable income that a UK investor should declare as taxable income will be published on the Schroders website: http://www.schroders.com/en/uk/pensions/fundcentre/funds-overview/guernsey-fund-income-tables/ within six months of the end of each accounting period. Foreign Account Tax Compliance (FATCA) Schroders is a FATCA compliant organisation. Please find the FATCA classification of this entity and its Global Intermediary Identification Number ("GIIN") below. FATCA entity classification: FFI Sponsoring entity: Schroder Investment Management (Guernsey) Limited Sponsoring entity GIIN: W07K11.00000.SP.831 14