What must an AIFM report to investors and to CySEC?

For every EU AIF under its management, and every AIF it markets in the EU, an annual report covering each financial year is produced no later than six months after that year ends, available to investors on request and to CySEC and, where relevant, the fund's home supervisor. If the fund already publishes an annual financial report under EU transparency rules, only the extra items go to investors on request, separately or added to that report, which must then be out within four months.

The report contains at least a balance sheet or a statement of assets and liabilities, an income and expenditure account, a report on activities, material changes in the information investors receive before investing, total pay for the year split into fixed and variable with the number of beneficiaries and any carried interest, and aggregate pay broken down between senior management and staff whose actions materially affect the fund's risk profile. Pay figures are required in aggregate, by category, not per person. Accounts follow the home state's (or third country's) standards and the fund rules, and are audited, with the audit report reproduced in full. Separately, the AIF Law requires every Cypriot AIF to file with CySEC an audited IFRS annual report within six months and an unaudited half-yearly report within two months; CySEC's circular C768 of 2 April 2026 restated the annual-report duties.

Before anyone invests, and after any material change, the AIFM makes sixteen items available as the fund rules provide. They cover the strategy, objectives, asset types, techniques, risks, restrictions and leverage rules, including the maximum; how strategy can change; the legal effects of investing; the identity and duties of the AIFM, depositary, auditor and other providers; cover for professional liability; delegation and resulting conflicts; valuation methods, including for hard-to-value assets; liquidity management and redemption rights in normal and stressed conditions; all fees and their maximum amounts; fair and any preferential treatment; the latest annual report and NAV; the issue and sale procedure; past performance; the prime broker; and how and when periodic information will be disclosed. The exam material lists fifteen items and omits the last, which the law has required since 2013.

Investors also learn before investing of any contractual discharge of the depositary's liability, and of any change to that liability without delay. Where a prospectus is required, only what it lacks is added. Periodically, the AIFM discloses the share of assets under special arrangements because they are illiquid, any new liquidity arrangements, and the fund's current risk profile and the systems used to manage it; for leveraged funds it manages or markets in the EU, also any change in maximum leverage or reuse rights and the total leverage used.

CySEC receives regular reports on the main instruments traded for the funds, the markets where the AIFM is a member or trades actively, and each fund's principal exposures and concentrations; and, for each EU AIF managed and AIF marketed in the EU, the illiquid share, new liquidity arrangements, the risk profile and the systems for managing market, counterparty, liquidity, operational and other risks, the main asset categories and stress-test results. Frequency is half-yearly for managers above the thresholds with up to €1 billion under management, quarterly above €1 billion and for any fund above €500 million, and yearly for unleveraged funds that buy control of unlisted companies. On request CySEC also gets the annual reports and a detailed list of all funds managed at each quarter-end.

Leverage is substantial when exposure under the commitment method exceeds three times net asset value. The AIFM then reports overall leverage, how much of it comes from borrowed cash or securities and how much from derivatives, how far assets have been reused, and the five biggest lenders of cash or securities with the amount from each. A non-EU AIFM whose Member State of reference is Cyprus reports this only for the EU AIFs under its management and the non-EU AIFs it markets in the Union; the exam material frames this as a Cyprus branch of a non-EU manager, but since 2013 the test has been the Member State of reference. CySEC may ask for more to monitor systemic risk and informs ESMA.