Supp Info GS - Public Comment v.1
5 Pages
English
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Supp Info GS - Public Comment v.1

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Downloading requires you to have access to the YouScribe library
Learn all about the services we offer
5 Pages
English

Description

INVESTMENT PERFORMANCE COUNCIL (IPC) INVITATION TO COMMENT: ®Global Investment Performance Standards (GIPS ) Guidance Statement on the Use of Supplemental Information The Association for Investment Management and Research (AIMR) seeks comment on the proposed Guidance Statement addressing the use of supplemental information set forth below. For information on the Guidance Statement process, please see http://www.aimr.org/standards/pps/process.html. Comments must be submitted in writing and be received by AIMR no later than 15 November 2002. All comments and replies will be put on the public record unless specifically requested. Comments should be addressed to: Professional Standards and Advocacy Association for Investment Management and Research P.O. Box 3668 Charlottesville, Virginia 22903 USA Re: GIPS Guidance Statement Fax: 01-434-951-5320 E-mail: standardsetting@aimr.org AIMR accepts responses by fax or e-mail, but it would be helpful if a hardcopy response is submitted as well. Effective Date This Guidance Statement will apply to all firms from the Effective Date forward. The proposed Effective Date for this Guidance Statement is 1 April 2003. This is the earliest date that the guidance can become effective given the estimated time needed for the public comment and IPC approval process. On this date, the Guidance Statement will replace all previous guidance on the subject. Executive Summary The GIPS standards encourage ...

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INVESTMENT PERFORMANCE COUNCIL (IPC)
INVITATION TO COMMENT:
Global Investment Performance Standards (GIPS
®
)
Guidance Statement on the Use of Supplemental Information
The Association for Investment Management and Research (AIMR) seeks comment on the
proposed Guidance Statement addressing the use of supplemental information set forth below.
For information on the Guidance Statement process, please see
http://www.aimr.org/standards/pps/process.html.
Comments must be submitted in writing and be received by AIMR no later than 15 November
2002. All comments and replies will be put on the public record unless specifically requested.
Comments should be addressed to:
Professional Standards and Advocacy
Association for Investment Management and Research
P.O. Box 3668
Charlottesville, Virginia 22903
USA
Re: GIPS Guidance Statement
Fax: 01-434-951-5320
E-mail:
standardsetting@aimr.org
AIMR accepts responses by fax or e-mail, but it would be helpful if a hardcopy response is
submitted as well.
Effective Date
This Guidance Statement will apply to all firms from the Effective Date forward. The proposed
Effective Date for this Guidance Statement is 1 April 2003. This is the earliest date that the
guidance can become effective given the estimated time needed for the public comment and IPC
approval process. On this date, the Guidance Statement will replace all previous guidance on the
subject.
Executive Summary
The GIPS standards encourage firms to present all relevant information to full explain their
performance. Because this supplemental information could have the potential to be misleading
in relation to the firm’s claim of compliance, this Guidance Statement was developed to address
the proper uses of supplemental information.
Comment Requested
AIMR seeks public input on the proposals set forth in this document. Issues to consider in
conjunction with this proposal include:
Do you agree with the principles established in the Guidance Statement?
Do you agree with the definition of Supplemental Information?
Do you agree with the examples of Supplemental Information provided?
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Should Supplemental Information be excluded from GIPS verification? If not, how
should Supplemental Information be verified?
Do you agree with the proposed Effective Date of this Guidance Statement? If not, when
should the guidance become effective?
If commentators suggest other proposals, AIMR requests that they explain the rationale behind
their proposal.
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Guidance Statement on the Use of Supplemental Information
GIPS Introduction 10.h: GIPS should be applied with the goal of full disclosure and fair
representation of investment performance. Meeting the objective of full and fair disclosure
is likely to require more than compliance with the minimum requirements of GIPS. If an
investment firm applies GIPS in a performance situation that is not addressed specifically
by the standards or is open to interpretation, disclosures other than those required by
GIPS may be necessary. To fully explain the performance included in a presentation, firms
are encouraged to present all relevant supplemental information.
Definition of Supplemental Information
Supplemental information is defined as any performance-related information that supplements or
enhances a GIPS-compliant presentation; that is, any additional performance-related information
beyond what the GIPS standards require or recommend. Supplemental information does not
include general information regarding the firm or the investment strategy or process.
Guiding Principles
If a firm chooses to show supplemental information, it is important to consider the following
guiding principles:
Supplemental information must satisfy the spirit and principles of the GIPS standards: i.e.,
fair representation and full disclosure.
Supplemental information must not contradict or conflict with the information provided in
the GIPS-compliant composite presentation.
Supplemental information must be clearly labeled and identified as supplemental to a
particular composite presentation.
This guidance statement does not prohibit firms from preparing and presenting information
according to specific requests from prospective clients. However, firms should provide all
prospective clients with a fully compliant presentation prior to or accompanying any
supplemental information.
Adoption Date:
Effective Date: 1 April 2003
Retroactive Application: No
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Examples of Supplemental Information
Supplemental information must relate directly to the GIPS-compliant presentation being
provided to the prospective client. Examples of information that may be presented to
supplement a fully compliant presentation include, but are not limited to:
Attribution
Sector/country weighting
Specific holdings information
Peer group comparison
Model results
Charts and graphs
Carved-out returns excluding cash
Risk analysis
Representative client type returns (like an ERISA account)
Information that is recommended in the GIPS standards and is included in a presentation is not
considered supplemental information. For example, GIPS II.5.B.1.b encourages firms to present
cumulative returns for composite and benchmarks for all periods. These are not supplemental
information and firms that choose to present cumulative returns do not have to label it as such, as
they are recommended under the GIPS standards.
The presentation and location of supplemental information in relation to ‘compliant’ data
depends on the type of supplemental information and its potential to mislead prospective clients.
There are certain situations that allow for the presentation of supplemental and compliant
information on the same page; however, firms should consider that there are also many situations
that call for the separation of supplemental and compliant information. When in doubt, firms are
encouraged to place the supplemental and compliant information on separate pages.
Supplemental Information – Verification
Supplemental information is not subject to verification under the GIPS standards. It is the
ultimate responsibility of the firm to ensure that it abides by the ethical principles and spirit of
the GIPS standards each time it presents performance results.
Application:
1. Can supplemental information be presented on the same page as the GIPS-compliant
presentation?
Yes. The supplemental information can be presented on the same page as long as it
satisfies the guiding principles of supplemental information (i.e., is not misleading, does
not contradict or conflict with the compliant information, is clearly labeled, and
references the appropriate composite presentation that it supplements).
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2. Firm A has a market brochure that describes the firm, staff, and investment process. One
of the pages contains the GIPS-compliant presentation for a specific composite. Do all
the other pages of the brochure need to be labeled as supplemental information?
No. Supplemental information is defined as performance-related information that
supplements or enhances a GIPS-compliant presentation. Supplemental information does
not include general information regarding the firm or the investment strategy or process.
3. XYZ firm created a presentation booklet that primarily highlights performance
information that is considered supplemental. The booklet shows an appropriate GIPS-
compliant presentation in the back of the book as an appendix. Is it acceptable for the
supplemental information to precede any reference to the compliant presentation?
Yes, provided the supplemental information:
is not misleading,
does not contradict or conflict with the compliant information,
is clearly labeled as supplemental, and
references the compliant presentation that it is supplemental to.
4. Are there any limits to what can be shown as supplemental information?
The definition and guiding principles of this
Guidance Statement on the Use of
Supplemental Information
are very specific about the types of information that should
and should not be shown in conjunction to a fully-compliant GIPS composite
presentation. When in doubt, firms should always turn their focus to the first guiding
principle of the
Guidance Statement
, which is also the fundamental objective of the
Standards: to ensure fair representation and full disclosure of performance results. By
continually using this principle to guide the calculation and presentation of performance,
firms are sure to satisfy the spirit and provisions of the GIPS standards.