Regulation No. 2007-06 on the Preparation of Financial Statements for Common Investment Funds (Update I)

Central Bank of the Republic of San Marino

Consolidated text as of 01/01/2023 – Update I

Article 1 – General Principles

1. For each common investment fund, the management company (SG) must prepare a management account and a semi-annual report. For common investment funds reserved for professional clients, as identified by Central Bank Regulation No. 2006-03 on collective investment services, the SG has the option to prepare these documents in English.

2. The management account must be prepared - with reference to December 31 or the last date of calculation of the fund's total net value, if earlier - within ninety days from the end of each annual financial year coinciding with the calendar year, or of the shorter period in which income distribution takes place. The semi-annual report must be prepared - with reference to June 30 or the last date of calculation of the fund's total net value, if earlier - within sixty days from the end of the reference period. The report is not required for funds for which the management account is prepared with at least semi-annual frequency in relation to income distribution.

3. The management account must be subject to accounting audit and certification as provided for in Article 33 of the LISF.

4. The management accounts and semi-annual reports of each common investment fund must be kept available to the public at the headquarters of the SG. The latest management account and the latest semi-annual report must also be kept available to the public at the headquarters of the depositary bank. For common investment funds reserved for professional clients, their respective management regulations may provide for forms of publicity different from those indicated in this paragraph.

5. A copy of the management account and the semi-annual report of each common investment fund must be sent to the Central Bank of the Republic of San Marino – Supervision Coordination, or transmitted electronically according to the methods communicated by the Central Bank.

Article 2 – Instructions for Completing the Management Account

1. The management account of a common investment fund is the document in which the composition of the fund's assets and liabilities at the specific reference date and the income results recorded during the reference period are represented, as well as the management performance during the reference period. The account, accompanied by the report of the accounting audit firm, consists of the following parts:
   a) balance sheet; b) income statement; c) explanatory notes.

2. For the valuation of each type of asset forming part of the fund's portfolio, the criteria established in Annex H to Central Bank Regulation No. 2006-03 on collective investment services apply.

3. Annex A contains the standard template for the preparation of the management account for funds established in open-end form. Annex B contains the standard template for the preparation of the management account for funds established in closed-end form. For asset categories in which investment is not permitted for a specific type of fund (e.g., "credits" for a UCITS III type fund), an amount equal to zero must be indicated. Amounts must be indicated in euro units.

Article 3 – Semi-Annual Report

1. The semi-annual report reports the fund's balance sheet position at the reference date. For the valuation of each type of asset forming part of the fund's portfolio, the criteria established in Annex H to Central Bank Regulation No. 2006-03 on collective investment services apply.

2. The semi-annual report is prepared according to the standard template and compilation instructions for the "Balance Sheet" section of the management account. A comparison with the data from the management account referred to the previous December 31 must be provided.

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ANNEX A – Template for the Management Account for OPEN-END FUNDS

ANNEX A

Templates for the preparation of the management account for common investment funds established in open-end form

MANAGEMENT ACCOUNT FOR OPEN-END FUND ……………………………………

AS …/…/….

Characteristics of the fund (check the relevant boxes):

• UCITS III TYPE FUND
• FUND DESTINED TO THE GENERAL PUBLIC
• FUND RESERVED FOR PROFESSIONAL CLIENTS
• ALTERNATIVE FUND

BALANCE SHEET

ASSETS

Situation at xx/xx/xxxx	Situation resulting from the previous account prepared at xx/xx/xxxx
Total Value	In percentage of assets	Total Value	In percentage of assets
A. FINANCIAL INSTRUMENTS
A.1. Quoted financial instruments
A.1.1.: Debt securities
A.1.2.: Equity securities
A.1.3.: Units in OIC
A.2. Unquoted financial instruments
A.2.1.: Debt securities
A.2.2.: Equity securities
A.2.3.: Units in OIC
A.3. Financial derivatives
A.3.1: Margins with clearing and guarantee bodies
A.3.2: Quoted financial derivatives
A.3.3: Unquoted financial derivatives
B. CREDITS (if permitted for the fund type)
C. BANK DEPOSITS
C.1: On demand
C.2: Others
D. LIQUIDITY
D.1: Available liquidity
D.2: Liquidity to be received for operations to be settled
D.3: Liquidity committed for operations to be settled
E. OTHER ASSETS
TOTAL ASSETS	100 %		100 %

LIABILITIES AND NET WORTH

Situation at xx/xx/xxxx	Situation resulting from the previous account prepared at xx/xx/xxxx
F. LOANS RECEIVED
F.1.: Reverse repos and similar operations
F.2: Others (to be specified)
G. FINANCIAL DERIVATIVES
G.1: Quoted financial derivatives
G.2: Unquoted financial derivatives
H. LIABILITIES TO PARTICIPANTS
H.1: Refunds requested and not settled
H.2: Income to be distributed
H.3: Other liabilities to participants
I. OTHER LIABILITIES
TOTAL LIABILITIES
TOTAL NET VALUE OF THE FUND
Number of shares in circulation
Unit value of shares
Refunds or income distributed per share
Share movements in the semester (1)
Number of shares issued
Number of shares redeemed

(1) In the case of subdivision into share classes, the information must be referred to each share class.

INCOME STATEMENT

Account at xx/xx/xxxx	Previous account prepared at xx/xx/xxxx
FINANCIAL INSTRUMENTS
QUOTED FINANCIAL INSTRUMENTS
INCOME FROM INVESTMENTS
Interest and other income on debt securities
Dividends and other income on equity income
Income on units in OIC
REALIZED PROFIT/LOSS
Debt securities
Equity securities
Units in OIC
GAINS/LOSSES
Debt securities
Equity securities
Units in OIC
RESULT OF HEDGING OPERATIONS ON QUOTED FINANCIAL INSTRUMENTS
Result of quoted financial instrument management
UNQUOTED FINANCIAL INSTRUMENTS
INCOME FROM INVESTMENTS
Interest and other income on debt securities
Dividends and other income on equity income
Income on units in OIC
REALIZED PROFIT/LOSS
Debt securities
Equity securities
Units in OIC
GAINS/LOSSES
Debt securities
Equity securities
Units in OIC
RESULT OF HEDGING OPERATIONS ON UNQUOTED FINANCIAL INSTRUMENTS
Result of unquoted financial instrument management

Account at xx/xx/xxxx	Previous account prepared at xx/xx/xxxx
NON-HEDGING FINANCIAL DERIVATIVES
REALIZED RESULTS
On quoted instruments
On unquoted instruments
UNREALIZED RESULTS
On quoted instruments
On unquoted instruments
Result of management in non-hedging financial derivatives
CREDITS (if permitted for the fund type)
Interest income and similar income
Increases/decreases in value
Gains/losses from realization
Result of credit management
BANK DEPOSITS
Interest income and similar income
Result of bank deposit management
OTHER ASSETS (to be specified and only if permitted for the fund type)
Income
Gains/losses from realization
Gains/losses
Result of management in other assets
FOREIGN EXCHANGE MANAGEMENT
HEDGING OPERATIONS
Realized results
Unrealized results
NON-HEDGING OPERATIONS
Realized results
Unrealized results
LIQUIDITY
Realized results
Unrealized results
Result of foreign exchange management
OTHER MANAGEMENT OPERATIONS (to be specified)
Income, profits, losses, other (to be specified)
Result of management of other operations
GROSS RESULT OF CORE MANAGEMENT

Account at xx/xx/xxxx	Previous account prepared at xx/xx/xxxx
FINANCIAL EXPENSES
Interest expenses on loans received
Other financial expenses
NET RESULT OF CORE MANAGEMENT
MANAGEMENT EXPENSES
Commissions and other fees to SG
Depositary bank commissions
Expenses for publication of documents for the public
Other management expenses
OTHER INCOMES AND EXPENSES
Interest income on liquid funds
Other incomes
Other expenses
PROFIT/LOSS FOR THE YEAR

(2) In the case of subdivision into share classes, the information must be referred to each share class.

EXPLANATORY NOTES

The explanatory notes form an integral part of the annual account. Its function is both to provide more detailed information on the accounting data contained in the balance sheet and the income section, and to provide further news to the market, even of a non-quantitative nature, on the management performance. In particular, depending on the concrete operational activity that characterized the fund during the reference period, details must be provided on the composition of the individual balance sheet and income items and the dynamics that determined the variations must be illustrated. Below is the minimum content of the explanatory notes.

1. Trend of the share value.
In this part, it is necessary at least:

1. to highlight with a linear graph the trend of the fund's share value and the benchmark, if provided for by the fund's management regulation, over the last year;
2. to report, on an annual basis, the fund's average compounded return comparing it with the benchmark, if provided for by the fund's management regulation, over the last 3 years;
3. to provide references on the trend of the share value during the financial year (with the indication of minimum and maximum values reached), commenting on the main events that influenced the share value;
4. in the case of funds subdivided into share classes, to provide references regarding the factors that determined the different value between the different share classes;
5. to provide information on relevant valuation errors of the share verified during the reference period;
6. to provide information of a qualitative and quantitative nature regarding the risks assumed and the techniques used to identify, measure, and control them. To this end, for each year, at least the value of the "Tracking Error Volatility" (TEV) must be indicated, specifying the calculation methods;
7. if the fund distributes income, to indicate the total and unit amount placed in distribution;
8. to provide information of a qualitative and quantitative nature regarding the risks assumed and the techniques used to identify, measure, and control them.

2. Assets, liabilities, and net worth of the fund. In this part, it is necessary at least:

1. to illustrate the distribution of the fund's assets according to criteria consistent with the investment policy, with reference to the geographic areas and economic sectors towards which investments are oriented;
2. for funds destined to the general public, to provide an analytical list of the financial instruments held by the fund, other than OIC, indicating at least the first twenty (in descending order of counter-value) and in any case all those that exceed two percent of the fund's assets. An analogous analytical list must also be provided with reference to short selling operations of securities, for funds that can perform them. For OIC, it is sufficient to provide information on the investment policy of the purchased funds;
3. to describe the characteristics of the financial derivatives and structured securities indicated in the account;
4. to detail the loans received, specifying the counterparties, the technical form, the duration, and the guarantees provided;
5. to illustrate the dynamics that characterized the subscription and redemption flows during the reference period.

3. Income statement.
In this part, it is necessary at least:

1. to illustrate the income results achieved with reference to the individual components highlighted in the account;
2. to subdivide management expenses into analytical items and indicate for each item the percentage paid to subjects belonging to the SG's group.

4. Other information
In this part, it is necessary at least:

1. for funds destined to the general public, to describe and motivate the possible use of the option – if recognized by the fund's management regulation – to deviate from the investment policy;
2. for funds destined to the general public, to indicate the portfolio turnover rate of the fund (so-called turnover) in the financial year, expressed by the percentage ratio between the sum of purchases and sales of financial instruments, net of subscriptions and redemptions of the fund's shares, and the average net worth of the fund in the period;
3. for funds whose management regulation allows the development of financial leverage, to indicate the maximum and average level of financial leverage that the fund has reached in the period, calculated as the ratio between the sum of long and short positions (including derivative products) and the total net value of the fund, indicating the operations carried out for hedging purposes;
4. for funds that carry out securities financing transactions (SFT) or total return swap operations, to indicate the information and data required by Section A of the Annex to Regulation (EU) 2015/2365 on the transparency of securities financing transactions and reuse.

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ANNEX B – Template for the Management Account for CLOSED-END FUNDS

ANNEX B

Templates for the preparation of the management account for common investment funds established in closed-end form

MANAGEMENT ACCOUNT FOR CLOSED-END FUND ……………………………………

AS …/…/….

Characteristics of the fund (check the relevant boxes):

• FUND DESTINED TO THE GENERAL PUBLIC
• FUND RESERVED FOR PROFESSIONAL CLIENTS
• ALTERNATIVE FUND

BALANCE SHEET

ASSETS

Situation at xx/xx/xxxx	Situation resulting from the previous account prepared at xx/xx/xxxx
Total Value	In percentage of assets	Total Value	In percentage of assets
A. FINANCIAL INSTRUMENTS
A.1. Unquoted financial instruments
A.1.1: Controlling participations
A.1.2: Non-controlling participations
A.1.3: Other equity securities
A.1.4: Debt securities
A.1.5: Units in OIC
A.2. Quoted financial instruments
A.2.1: Equity securities
A.2.2: Debt securities
A.2.3: Units in OIC
A.3. Financial derivatives
A.3.1: Margins with clearing and guarantee bodies
A.3.2: Quoted financial derivatives
A.3.3: Unquoted financial derivatives
B. REAL ESTATE AND REAL ESTATE RIGHTS
B.1: Properties leased out
B.2: Other properties
B.3: Real estate rights
C. CREDITS
D. BANK DEPOSITS
D.1: On demand
D.2: Others
E. LIQUIDITY
E.1: Available liquidity
E.2: Liquidity to be received for operations to be settled
E.3: Liquidity committed for operations to be settled
F. OTHER ASSETS (to be specified and only if permitted for the fund type)
G. OTHER ASSETS
TOTAL ASSETS	100 %		100 %

LIABILITIES AND NET WORTH

Situation at xx/xx/xxxx	Situation resulting from the previous account prepared at xx/xx/xxxx
I. LOANS RECEIVED
I.1: Mortgage loans
I.2: Reverse repos and similar operations
I.3: Others (to be specified)
L. FINANCIAL DERIVATIVES
G.1: Quoted financial derivatives
G.2: Unquoted financial derivatives
M. LIABILITIES TO PARTICIPANTS
M.1: Income to be distributed
M.2: Other liabilities to participants
N. OTHER LIABILITIES
TOTAL LIABILITIES
TOTAL NET VALUE OF THE FUND
Number of shares in circulation (1)
Unit value of shares (1)
Refunds or income distributed per share (1)

(3) In the case of subdivision into share classes, the information must be referred to each class.

INCOME STATEMENT

Account at xx/xx/xxxx	Previous account prepared at xx/xx/xxxx
FINANCIAL INSTRUMENTS
UNQUOTED FINANCIAL INSTRUMENTS
Interest, dividends and other income
Dividends and other income
Gains/losses from realization
Gains/losses
OTHER UNQUOTED FINANCIAL INSTRUMENTS
Interest, dividends and other income
Gains/losses from realization
Gains/losses
QUOTED FINANCIAL INSTRUMENTS
Interest, dividends and other income
Gains/losses from realization
Gains/losses
FINANCIAL DERIVATIVES
Hedging
Non-hedging
Result of financial instrument management
REAL ESTATE AND REAL ESTATE RIGHTS
Rental income and other income
Gains/losses from realization
Gains/losses
Expenses for real estate management
Depreciation
Result of real estate management
CREDITS
Interest income and similar income
Increases/decreases in value
Gains/losses from realization
Result of credit management

Account at xx/xx/xxxx	Previous account prepared at xx/xx/xxxx
BANK DEPOSITS
Interest income and similar income
Result of bank deposit management
OTHER ASSETS (to be specified)
Income
Gains/losses from realization
Gains/losses
Result of management of other assets
FOREIGN EXCHANGE MANAGEMENT
HEDGING OPERATIONS
Realized results
Unrealized results
NON-HEDGING OPERATIONS
Realized results
Unrealized results
LIQUIDITY
Realized results
Unrealized results
Result of foreign exchange management
OTHER MANAGEMENT OPERATIONS (to be specified)
Income, profits, losses, other (to be specified)
Result of management of other operations
GROSS RESULT OF CORE MANAGEMENT
FINANCIAL EXPENSES
Interest expenses on mortgage loans
Interest expenses on other loans
Other financial expenses
NET RESULT OF CORE MANAGEMENT
MANAGEMENT EXPENSES
Commissions and other fees for the SG
Depositary bank commissions
Independent expert expenses
Expenses for publication of documents for the public
Other management expenses
OTHER INCOMES AND EXPENSES
Interest income on liquid funds
Other incomes
Other expenses
PROFIT/LOSS FOR THE PERIOD

(4) In the case of subdivision into share classes, the information must be referred to each share class.

EXPLANATORY NOTES

The explanatory notes form an integral part of the annual account. Its function is both to provide more detailed information on the accounting data contained in the balance sheet and the income section, and to provide further news to the market, even of a non-quantitative nature, on the management performance. In particular, depending on the concrete operational activity that characterized the fund during the reference period, details must be provided on the composition of the individual balance sheet and income items and the dynamics that determined the variations must be illustrated. Below is the minimum content of the explanatory notes.

1. Trend of the share value.
In this part, it is necessary at least:

1. to highlight graphically the trend of the share value...