Firm Policies

Document Sample
Firm Policies Powered By Docstoc
					XYZ Asset Management
GIPS Policies and Procedures

Dated:                                                                                                                  Responses

1    FIRM-WIDE DISCLOSURES
A.   For GIPS purposes, our firm is defined as follows:                               The definition must agree to the firm assets being represented to the public in
                                                                                      marketing materials and the exact wording to be included in performance
                                                                                      disclosures.
B.   Our firm's compliance statement is as follows:                                   (Example: [ For AIMR-PPS only : XYZ Investment Management Co. has
                                                                                      prepared and presented this report in compliance with the Performance
                                                                                      Presentation Standards of the Association for Investment Management and
                                                                                      Research (AIMR-PPS ® ), the U.S. and Canadian version of the Global
                                                                                      Investment Performance Standards (GIPS ® ). AIMR has not been involved in
                                                                                      the preparation or review of this report. ] [ For GIPS: XYZ Investment
                                                                                      Management Co. has prepared and presented this report in compliance with
                                                                                      the Global Investment Performance Standards (GIPS®).

2    DEFINITIONS
A.   Please note any other pertinent firm definition information, for                 (Example: XYZ Bank is a majority owner of the firm, but we are run
     internal documentation but not to be included in disclosures.                    autonomously, have PM ownership and do not include XYZ Bank in our
                                                                                      marketing materials.)
B.   What are the firm's guidelines for determining investment                        (Example: All accounts that contain investment guidelines significantly
     discretion?                                                                      restricting the management team’s ability to manage the assets according to
                                                                                      the applicable product mandate are considered "nondiscretionary" for
                                                                                      purposes of determining composite membership.)
3    REGISTRATION
A.   Inception date of the firm:
B.   Regulatory registration status:                                                  (Example: SEC registered investment adviser, state registered investment
                                                                                      adviser, not a registered investment adviser, registered broker-dealer, etc.)

C.   If a registered investment adviser, date of initial registration:
D.   Effective date of firm compliance with the GIPS standards (or prior              (Example: The firm began claiming compliance with the AIMR-PPS in 2002,
     country version of GIPS (CVGs)):                                                 which transitioned into GIPS compliance in 2006.)
E.   Has the firm name changed within the past 10 years?                              Yes/No
     1. If so, list the previous firm names and dates of transition.
     2. If so, has there been a change in the investment management
          process as a result? Explain.
4    OPERATIONS/CALCULATION METHODOLOGIES
A.   When was the attached list of composites last revised?
B.   What are the pricing sources for the various products?
                                                                 Equities:            (Example: IDC)
                                                            Fixed Income:             (Example: IDC)
                                                                  Foreign:            (Example: IDC, sourced from Reuters, taken at 4 PM London Closing)
                                                                 Options:             (Example: Prices are taken from those provided on the monthly custodial
                                                                                      statements. OR Some or all of the options are not regularly traded and
                                                                                      therefore bid-asked prices are used.)
                                                                    Other:
C.   How frequently are the securities within the products priced?
                                                                 Equities:            (Example: Monthly and when significant cash flows occur)
                                                            Fixed Income:             (Example: Monthly)
                                                                  Foreign:            (Example: Monthly)
                                                                    Other:
D.   What is the name of the portfolio accounting system?                             (Example: Axys)
E.   If different than the accounting system, what is the name of the                 (Example: Moxy)
     trading system used?
F.   What method is used for computing asset-weighted composite                       (Example: For all composites except the XYZ Equity Composite, Axys (our
     returns?                                                                         portfolio accounting system) calculates a gross asset-weighted return using
                                                                                      beginning of period values on an adjusted capital basis. The XYZ Equity
                                                                                      Composite is comprised of a Mutual Fund (XYZ Trust) that does not reside on
                                                                                      Axys, and the performance of the mutual fund is asset-weighted with the
                                                                                      separate account performance on an Excel spreadsheet using beginning of
                                                                                      period values.)
G.   Is trade-date or settlement-date valuation used?                                 (Example: Trade-date valuation is used.)
     1. Has this valuation method ever been amended throughout the
          composite history? If so, please describe.
H.   What are the firm's policies regarding the portability of portfolios             (Example: Our procedures in this area are in full compliance with SEC and
     from other firms/managers?                                                       CFA Institute requirements. None of the reported composites have portability
                                                                                      issues. Currently, we include supplemental prior firm performance in one-on-
                                                                                      one presentations of the XYZ Equity Composite.)
I.   Are management fees accounted for on a cash or accrual basis?                    (Example: Cash/accrual basis; Monthly, Quarterly, 1 st month of the quarter,
                                                                                      etc.; billed in advance/arrears)
J.   Are management fees paid outside the account booked to the                       Yes/No
     portfolio accounting system?




c761bdc7-8821-4412-9f38-3b631000385d.xls
Firm Policies                                                                Page 1 of 9                                                                  7/15/2011
XYZ Asset Management
GIPS Policies and Procedures

Dated:                                                                                                                      Responses

K.   Do you have any wrap, bundled fee relationships, or accounts                         Yes/No
     where transaction costs are grouped with other fees?
     1. Is performance shadowed for these relationships on the                            Yes/No
        portfolio accounting system?
     2. What are the firm's policies regarding the inclusion/exclusion of                 (Examples: Wrap and non-wrap accounts are not grouped together in the
        wrap/bundled fee accounts in composites?                                          same composite. Wrap accounts are grouped into separate composites. OR
                                                                                          Wrap accounts are included with non-wrap accounts in (a) composite(s).

5    PRESENTATIONS
A.   What are your firm's policies regarding the performance                              (Example: Complete GIPS compliant disclosures accompany all performance
     presentation and reporting of composite results?                                     data distributed by our firm, except for our quarterly “flash” reports, which
                                                                                          reference the availability of a full presentation in compliance with the GIPS.
                                                                                          Net returns are presented, equally prominent, in all advertising pieces and on
                                                                                          our website.)
B.   How does the marketing department receive performance data?                          (Example: Performance is received directly from the person/department
                                                                                          responsible for the firm's GIPS compliance.)
     1. How are marketing materials approved?                                             (Example: The GIPS committee and compliance department both review all
                                                                                          marketing material before it is issued.)
     2. How are performance changes reported to marketing?                                (Example: Changes are communicated immediately to relevant departments.
                                                                                          Treatment of restatement is handled accordingly per error corrections
                                                                                          documentation.)
C.   Do you have a website?                                                               Yes/No
     1. If so, the address is as follows:
     2. If you have a website, is performance shown?                                      Yes/No
     3. If yes, for which composites?
D.   What policies and procedures do you have in place regarding the                      (Example: There have been no significant changes in the organizational
     disclosure of any changes in the firm's organizational structure that                structure that would cause a significant alteration of composite results. If
     might cause a significant alteration of composite results?                           significant changes were to occur, these changes would be disclosed as
                                                                                          recommended by the AIMR-PPS, and composites would not be altered
                                                                                          historically.)
E.   Have there been or are there any upcoming changes to your firm's                     (Example: We have attached our “Procedure for Gross of Fee Calculation”
     other policies and procedures relevant to performance presentation                   for the XYZ Trust Mutual Fund. By year end, we plan to have the mutual fund
     ?                                                                                    performance tracked on Axys and eliminate the need for this manual gross-up
                                                                                          process. We are aware of no other information that is relevant to our
                                                                                          performance presentation.)
6    VERIFICATION
A.   Start date of firm-wide verification by Ashland:                                     (Example: October 1, 1989)
B.   If there are other periods verified by a previous verifier (s), state the            (Example: For the period January 1, 2000 through December 31, 2000, the
     periods that were examined?                                                          Company was verified firm-wide a by previous verifier. Performance results
                                                                                          prior to January 1, 2001 have been examined by the previous verifier.)

C.   Current verification reports to include firm-wide opinion separate                   Yes/No
     from combination firm-wide/composite performance exam
     opinions?
D.   The verification reports should be addressed to whom?                                (Example: Board of Directors, Members, Partners, Audit Committee)
                                                               Firm name:                 XYZ Asset Management
                                                            Address/Suite:
                                                     City, State Zip Code:
                                                      Transmittal sent to:
                                                                       cc:
E.   Report preference/format:
     1.        Does the firm utilize Ashland for compiling "client-use"                   Yes/No
               disclosures?
     2.        Years on Annual Disclosure (if more than 10 years of                       Make it an either/or: no more than 10/keep adding indefinitely.
               performance).
     3.        Number of accounts: "5 or fewer" or actual number.




c761bdc7-8821-4412-9f38-3b631000385d.xls
Firm Policies                                                                    Page 2 of 9                                                                7/15/2011
XYZ Asset Management
GIPS Policies and Procedures
List of Composites & Nondiscretionary / Administrative Groups


             Composite Name                                             Definition (a more detailed description that includes
                                                                        the criteria used to determine membership)

   C-1     * Composite Name
   C-2     ^ Composite Name
   C-3     * Composite Name
   C-4       Composite Name



             Closed Composites                                          Definition & Date Closed

             Composite Name



             Non-discretionary / Administrative Groups (NAGs)** Description

             Group Name



          * Composite that receives a performance examination.
          ^ Composite included in verifier report that does not receive a performance examination.
          ** NAGs should not be included in the firm List and Description of Composites (e.g. on website).




c761bdc7-8821-4412-9f38-3b631000385d.xls
LOC & NAGs                                                Page 3 of 9                                                    7/15/2011
XYZ Asset Management
                                                                                                                   Responses
          Composite Name
1    COMPOSITE DISCLOSURES
A.   Composite Description (to be included in required disclosures):             (Example: consists of fully discretionary equity portfolios.)
B.   If the composite has been redefined, state the date and reason of the
     change:
C.   If the composite name has changed, state the former name of the             (Example: Prior to January 1, 2000, the composite was named the XYZ
     composite:                                                                  Equity Composite.)
D.   Creation Date:                                                              (Example: The XYZ Equity Composite was created January 1, 2000.
E.   State the Composite Account Minimum, if any, and note the date(s) and       (Example: "The minimum account size for this composite is $500 thousand."
     prior amount(s) of any changes.                                             OR "Beginning January 1, 2000, the minimum account size for this
                                                                                 composite is $100 thousand".)
F.   Performance Examination Disclosures:
     1. Examination begins by Ashland on what date?                              (Example: January 1, 1995 --This date should reflect the date you engaged
                                                                                 Ashland to begin the performance examination and will be included in the
                                                                                 opinion.)
     2.   If there are other periods examined by previous verifiers, state the   (Example: For the period January 1, 2000 through December 31, 2000, the
          periods that were examined.                                            Company was verified firm-wide and the performance results of the
                                                                                 XYZ Equity Composite for the period January 1, 1993 to December 31, 2000
                                                                                 were examined by a previous verifier.)

G.   Fee Disclosures:
     1. Presentation disclosures are stated gross, gross and net, or net only    Example: Returns are presented gross and net of management fees and
          and include the reinvestment of all income?                            include the reinvestment of all income.
     2. If gross only results are presented, describe SEC or GIPS required       (Example: Actual returns will be reduced by investment advisory fees and
          disclosures to be included in marketing disclosures. If fees other     other expenses that may be incurred in the management of the account. The
          than trading expenses have been deducted before arriving at gross      collection of fees produces a compounding effect on the total rate of return
          performance, state the types of fees used. (If bundled fee accounts    net of management fees. As an example, the effect of investment
          are included, please leave blank and refer to section H below.)        management fees on the total value of a client’s portfolio assuming (a)
                                                                                 quarterly fee assessment, (b) $1,000,000 investment, (c) portfolio return of
                                                                                 8% a year, and (d) 1.00% annual investment advisory fee would be $10,416
                                                                                 in the first year, and cumulative effects of $59,816 over five years and
                                                                                 $143,430 over ten years. Actual investment advisory fees incurred by clients
                                                                                 may vary.)

     3.   If net results are included, describe net of fee calculation           (Example: "Net of fee performance was calculated using the highest
          methodology. Also note if fees other than management and trading       applicable annual management fee of X% applied monthly/quarterly." OR
          expenses have been deducted to arrive at net performance, including    "Net of fee performance was calculated using actual management fees.")
          any incentive fees.
     4.   State the composite fee schedule.                                      (Example: The management fee schedule is as follows: 0.50% on all assets.)

H.   SMA/Wrap/Bundled Fee Disclosures:
     1. Does the composite include bundled fee accounts?                         Yes/No
     2.  If so, should the percentages of bundled fee accounts be shown in       Yes/No
        the table of the annual disclosure presentation?
     3. If the percentage of bundled fee portfolios is not shown in the table,   (Example: As of 12/31/06 the composite was comprised of 56% bundled fee
        what are the percentatges within the composite as of each year end       accounts. OR Bundled fee accounts make up 100% of the composite for all
        beginning with 2006?                                                     periods shown. OR leave blank if showing in the table.)

     4.   For Composites with any Bundled-fee accounts: If Gross Results/Net (Example: Gross returns are shown as supplemental information and are
          Results are both shown:                                            stated gross of all fees and transaction costs; net returns are reduced by all
                                                                             fees and transaction costs incurred. Wrap fee schedules are provided by
                                                                             independent wrap sponsors and are available upon request from the
                                                                             respective wrap sponsor.)
     5.   Describe the types of fees used in any bundled fee performance.    (Example: In addition to a management fee, some accounts pay an all-
                                                                             inclusive fee based on a percentage of assets under management. Other
                                                                             than brokerage commissions, this fee includes portfolio monitoring,
                                                                             consulting services, and in some cases, custodial services.)

I.   Prior Firm Track Record Disclosures:
     1. Is a prior firm track record included in presented performance?          Yes/No
     2. Further portability disclosures deemed necessary for performance         (Example should reflect data deemed important to include in performance
          presentations:                                                         disclosures: "Performance which may accompany this report for the period
                                                                                 prior to January 1, 2000 occurred while the Portfolio Manager was
                                                                                 affiliated with a prior firm and was the only individual responsible for
                                                                                 selecting the securities to buy and sell. Such performance should not be
                                                                                 interpreted as the actual historical performance of XYZ Asset
                                                                                 Management.")
J.   Benchmark(s) Disclosures:
     1. Describe primary and/or secondary benchmarks included in                 (Example: [If you manage strictly to the benchmark: The composite is
         performance disclosure.                                                 measured against the ABC and XYZ indices.] [If you use the benchmark
                                                                                 only as a general market indicator: For comparison purposes the composite
                                                                                 is measured against the ABC and XYZ indices.] )

     2.   If blended, describe the frequency of rebalancing.                     (Example: The blended benchmark is calculated on a quarterly basis.)




c761bdc7-8821-4412-9f38-3b631000385d.xls
C-1                                                                              Page 4 of 9                                                                    7/15/2011
XYZ Asset Management
                                                                                                           Responses
         Composite Name
    3.   If there has been a change in the benchmark, please disclose the   (Example: Prior to March 31, 2004, the composite was measured against
         benchmark change, the date and reason for the change.              the S&P 500 Index, which was changed to more accurately represent the
                                                                            composite strategy.)
    4.   If no benchmark is used, please explain why.




c761bdc7-8821-4412-9f38-3b631000385d.xls
C-1                                                                         Page 5 of 9                                                             7/15/2011
XYZ Asset Management
                                                                                                                      Responses
          Composite Name
K.   Significant Cash Flow Disclosures:
     1. Are accounts that experience significant cash flows removed from            Yes/No
          the composite?
     2. If so, please describe the policy for determining significance and any      (Example: If the policy is to remove accounts when significant cash flows
          revisions to this policy (i.e. definition of significance, grace period   occur: Beginning July 1, 2002, composite policy requires the temporary
          for re-inclusion, effective dates for changes).                           removal of any portfolio incurring a client initiated significant cash inflow
                                                                                    or outflow of at least $XXX - OR - at least XX% of portfolio assets. The
                                                                                    temporary removal of such an account occurs at the beginning of the
                                                                                    {month, second month, quarter, etc.} in which the significant cash flow
                                                                                    occurs and the account re-enters the composite at the beginning of the
                                                                                    {month, second month, quarter, etc.} after the cash flow. Additional
                                                                                    information regarding the treatment of significant cash flows is available
                                                                                    upon request.)
     3.   If so, how is the removal and re-inclusion of an account due to a         (Example: A Significant Cash Flow Summary is maintained stating the
          significant cash flow documented?                                         account name, date of large cash flow, amount of flow, and description; i.e..
                                                                                    Portfolio: Livingston Family Trust, Date: 7/5/02, Amount: $45,000,000
                                                                                    representing 35% of portfolio, Type: withdrawal.)

L.   Non-Fee-Paying Account Disclosures:
     1. Are non-fee-paying accounts included in the composite?                      Yes/No
     2.   If so, should the percentages be shown in the table of the annual         Yes/No
         disclosure presentation?
     3.   If the percentages of non-fee-paying accounts are not shown in the        (Example: "Since composite inception, non-fee-paying accounts represent
         annual disclosure table, please describe their significance.               less than 2% of composite assets." OR leave blank if showing table or no
                                                                                    non-fee-paying accounts are included.)
M. Does the composite strategy include the use of leverage or derivatives?          Yes/No

     1.   If leverage is used, include a description of the use, frequency, and
          characteristics of the instruments. If No: no disclosure is necessary.

     2.  If derivatives are used, include a description of the use, frequency,
         and characteristics of the instruments. If No: no disclosure is
         necessary.
N.   Carve-out Disclosures:
     1. Does the composite include carve-outs of balanced or other multi-           Yes/No or No, segments are managed separately and are set up as separate
         asset class accounts?                                                      accounts on our portfolio accounting system.
     2. If so, please describe your cash allocation policy.                         (Example: Carve-outs are included in this composite and performance
                                                                                    reflects required total segment plus cash returns using a predetermined cash
                                                                                    allocation percentage.)
     3.   If so, should the percentages be shown in the table of the annual         Yes/No
         disclosure presentation?
     4. If percentage of assets from carve-outs is not shown in the annual          (Example: "As of December 31, 2005, 48% of composite assets are
         disclosure table, please state year-end percentages.                       comprised of carve-out segments.")
O.   Currency, Exchange Rate & Withholding Tax Disclosures:
     1. Currency used to express performance:                                       (Example: The U.S. Dollar is the currency used to express performance.)

     2.   Do the returns of this composite include the effect of currency           Yes/No
          translation back to the currency used to express performance?
     3.   If international securities are held, what is the exchange rate source
          of the composite?
     4.   Please list/describe any inconsistencies among the exchange rate          (Example: Accounts comprising 82% of the composite as of 12/31/05 use 4
          sources used among the portfolios within the composite.                   PM London Close Time. Accounts comprising 18% of the composite use end
                                                                                    of day U.S.)
     5.   If foreign securities are held in the composite, does the benchmark       Yes/No
          exchange rate source differ from the composite exchange rate
          source? If yes, disclose the difference.
     6.   If foreign securities are held in the composite, disclose relevant        (Example: Composite performance is presented net of foreign withholding
          details of the treatment of withholding tax on dividends, interest        taxes. Withholding taxes may vary according to the investor’s domicile.
          income, and capital gains.                                                Composite returns represent investors domiciled primarily in the United
                                                                                    Kingdom, The Netherlands, Sweden and Luxembourg. OR Capital gains,
                                                                                    dividends and interest received may be subject to withholding tax imposed
                                                                                    by the country of origin and such taxes may not be recoverable.)

     7.   If this is an international benchmark, and the benchmark returns are      (Example: The GHI Index is reported net of withholding taxes. Prior to
          net of foreign withholding taxes on dividends, interest income and        January 1, 2004, the GHI Index is reported gross of withholding taxes. The
          capital gains, please disclose the tax basis of the benchmark.            assumed withholding tax rate for the composite (asset-weighted) was
                                                                                    approximately 8% for a U.S. investor and 0% for the GHI Index. OR The
                                                                                    index grosses-up dividends, where this is appropriate, to reflect the position
                                                                                    of an international investor with the benefit of double taxation agreements, if
                                                                                    any. OR The ABC Index range uses withholding tax rates applicable to
                                                                                    GHI Country holding companies.)




c761bdc7-8821-4412-9f38-3b631000385d.xls
C-1                                                                                 Page 6 of 9                                                                       7/15/2011
XYZ Asset Management
                                                                                                                 Responses
          Composite Name
P.   Dispersion Disclosures:
     1. What is the method of dispersion used?                                 (Example: The annual composite dispersion is an asset-weighted standard
                                                                               deviation calculated for the accounts in the composite the entire year.)

     2.  Is dispersion shown for years that have 5 or fewer accounts in the    Yes/No
         composite for the entire year?
     3. If yes, how many accounts must be in the composite for the entire      (Example: Six or more.)
         year for a dispersion to be shown?
Q.   Other required disclosures:
     1. List of composites:                                                    The firm maintains a complete list and description of composites, which is
                                                                               available upon request.
     2.   Past Performance:                                                    Past performance is not indicative of future results .
     3.   Additional calculation methodologies:                                Additional information regarding policies for calculating and reporting
                                                                               returns is available upon request.
     4.   If there are any periods presented that are not in compliance with the
          standards, describe the period and nature.
     5.   If there are any periods where the strategy was sub-advised to
          another manager, describe the period and nature.
     6.   If there are any significant events that would help a prospective client
          interpret the performance record, describe here:
     7.   If month-end valuations are not used for portfolio returns, state the    Example: Performance calculated prior to January 1, 2001 uses quarterly
          frequency of portfolio valuation:                                        portfolio valuations.
2    COMPOSITE PRESENTATION POLICIES
A.   Inception Date of Composite Performance:
B.   Is this composite presented/marketed?                                     Yes/No
C.   How often are marketing materials updated?
D.   Is performance shown on your website?                                     Yes/No
3    POLICY FOR ACCOUNT INCLUSION/EXCLUSION
A.        New Accounts (Please explain both the timing and the quantitative or (Example: Accounts are included in the applicable composite the first full
          qualitative factors.)                                                quarter under management. For example, an account opened January 15,
                                                                               2005 will be included beginning March 31, 2005/April 1, 2005.)

B.        Terminated Accounts (Please explain both the timing and the          (Example: Terminated accounts are removed from a composite at the end of
          quantitative or qualitative factors.)                                its last full month under management. For example, an account that is
                                                                               terminated February 12, 2005 will be included through January 31,
                                                                               2005/February 1, 2005.)
C.        Changes in Mandate (Please explain both the timing and the           (Example: An account is removed from a composite at the end of its last full
          quantitative or qualitative factors.)                                month under the old mandate, and it enters the new composite after three
                                                                               months of performance in the new mandate. For example, an account that
                                                                               changes mandates on March 3, 2005 will be removed from the old
                                                                               composite on February 28, 2005/March 1, 2005 and included in the new
                                                                               composite on June 30, 2005/July 1, 2005.)

     1.   How are client-directed investment strategy changes communicated
          internally within the firm?
     2.   Are accounts also reviewed for possible changes?                     Yes/No
     3.   How would such a review be conducted?                                (Example: We have developed a few exception reports, which are run
                                                                               monthly, however it is mostly a manual review process.)
     4. How often is such a review conducted?                                  (Example: Monthly, quarterly, annually.)
D.   Would a restricted account be considered for possible inclusion in this   (Example: Yes, assuming the restriction does not materially hinder the
     composite with other non-restricted accounts?                             management of the account. For instance, an account that can not hold
                                                                               Philip Morris will be included since this stock is not held in any portfolio
                                                                               managed to this strategy.)
4    ACCOUNT MINIMUM POLICIES
A.   If the composite has a minimum account size, how do you treat accounts
     that fall below the minimum size:
     1.     Due to Market Volatility:                                          (Examples: Accounts are reviewed at the beginning of the month (quarter,
                                                                               calendar year) to ensure that all are above the composite minimum. Any
                                                                               account below the minimum is removed at that time and included back in the
                                                                               composite at the beginning of the next full month (quarter, calendar year)
                                                                               that the market value again reaches the minimum account size. OR Market
                                                                               fluctuations are reviewed monthly (quarterly, annually) and any account
                                                                               that falls below 10% of the minimum asset level, due to market volatility, for
                                                                               at least two months (quarters), will be removed from the composite and re-
                                                                               entered once it is above minimum for at least two months (quarters).)

     2.   Due to Cash Withdrawal:                                              (Examples: Accounts are reviewed at the beginning of each month (quarter,
                                                                               calendar year) to ensure that all are above the composite minimum. Any
                                                                               account below the minimum is removed at that time and included back in the
                                                                               composite at the beginning of the next full month (quarter, calendar year)
                                                                               that the market value again reaches the minimum account size. OR An
                                                                               account would be removed from the composite if a withdrawal reduced the
                                                                               account by more than 10% of the minimum asset level.)

B.   How often are accounts reviewed for minimum threshold?                    (Example: Monthly/Quarterly/Annually)


c761bdc7-8821-4412-9f38-3b631000385d.xls
C-1                                                                             Page 7 of 9                                                                     7/15/2011
XYZ Asset Management
                                                                                                                   Responses
          Composite Name
5    CALCULATION POLICIES
A.  Is Income being Accrued?
    1. Dividend Income:                                                           Yes/No
          Effective:
    2. Interest Income                                                            Yes/No
          Effective:
 B. What is the method for computing total time-weighted portfolio returns?       (Example: For the period January 1, 1993 to December 31, 1999,
                                                                                  performance was computed using the “Dietz method”, one of the
                                                                                  approximation methods, applied on a month-to-month basis. The
                                                                                  cumulative returns were calculated by linking monthly returns through
                                                                                  compounded multiplication. For the period January 1, 2000 to present,
                                                                                  performance is computed using the "Modified Dietz method", another
                                                                                  approximation method, applied on a month-to-month basis. The cumulative
                                                                                  returns were calculated by linking monthly returns through compounded
                                                                                  multiplication.)
C.   What is the method used for the timing of capital inflows/outflows?          (Example: Cash flows equal to or greater than 10% of a portfolio’s market
                                                                                  value would cause the portfolio to be re-valued and accounted for properly
                                                                                  so as not to distort performance. Prior to 2000, a mid-month assumption
                                                                                  was used for capital inflow/outflows.)
D.   Are there any accounts which pay their fee from outside the managed          Yes/No
     account?
E.   If yes to 5D, are those fees booked to the accounting system?                Yes/No
F.   Are there any accounts that pay incentive fees?                              Yes/No
     1. If so, how are incentive fees treated for performance purposes?
     2. Please describe the incentive fee structure, if applicable.
6    OTHER COMPOSITE POLICIES
A.   Are there any accounts in the composite that consistently go on margin?      Yes/No
     If so, please describe how cash flows are accounted for.
B.   Does the composite include a Mutual Fund or Funds?                           Yes/No
     1. If so, please name fund(s) and fiscal year end(s)
     2. How is performance generated for the fund(s)?                             (Example: Performance is generated in Excel OR Performance is generated
                                                                                  by a 3rd party administrator, (name administrator).)
C.   If mutual funds are not present in the composites, but are part of the       Yes/No
     holdings of accounts in the composite, and there are also "stand alone"
     mutual fund composites, do any mutual fund holdings need to be backed
     out of the accounts to avoid double counting?
D.   Is the composite made up of SMA/wrap/bundled fee accounts? If so,            Yes/No
     please see further SMAQ policies.
E.   Is after-tax performance marketed for the composite?                     Yes/No
     1. If so, what is the timing of implied taxes due on income and realized
           capital gains?
F.   Does the composite invest in securities/countries not included in the    Yes/No
     composite benchmark?
G.   Note any other items that may have a material impact on performance.
7    VERIFICATION
A.   Is there a prior track record for this composite? If so, please describe prior (Example: For the period January 1, 1993 through December 31, 1999, the
     performance period to be included in Ashland opinion.                          performance represents the equity portfolio track record established by the
                                                                                    Portfolio Manager while affiliated with a prior firm.] [If an examination of
                                                                                    prior track record has been performed, add the following disclosure: An
                                                                                    independent verification firm performed an examination of this track record;
                                                                                    an Independent Verifier’s Report is available upon request.)

     1.   Any additional information related to the prior track record that you   (Example: The results prior to January 1, 2000 are based on the
          would like documented for internal purposes:                            performance of one account with assets of $288 million as of December 31,
                                                                                  1999.)




c761bdc7-8821-4412-9f38-3b631000385d.xls
C-1                                                                               Page 8 of 9                                                                      7/15/2011
XYZ Asset Management
XYZ Error Correction Process

          Description of actions: Restatement vs.               All firms must have a policy and procedure in place to proactively report material
          Republishing                                          corrected errors not only to their existing clients but to ANY prospective client that the
                                                                firm believes relied upon the incorrect information, including consultants and verifiers.
                                                                As mentioned below, the firm’s materiality threshold should determine whether the
                                                                firm merely restates performance or if republishing is necessary. Republishing is
                                                                defined as making certain that ANY prospective client that the firm believes relied
                                                                upon the incorrect information is updated with the correct information; a disclosure
                                                                must also be provided to ensure that the prospective client fully understands the
                                                                change. Restating is defined as correcting the error but due to the lack of materiality
                                                                there is no requirement to inform prospective clients.

1         When an error is discovered what is the process       (Example: Our firm policy is to recalculate performance and determine if the error is
          for correcting the error?                             material.)
2         Materiality is defined as:                            Firms must define on an ex ante basis the size and impact of an error that would
                                                                require a restatement (i.e., adjustment to prior periods without republishing to prior
                                                                recipients) or republishing of previously presented information. The size and impact
                                                                of the error defined may vary for different asset types (e.g., equities, fixed income,
                                                                emerging markets), reporting periods (e.g., monthly, quarterly, or annual returns) and
                                                                time periods (e.g., prior to a specific date, more than 5 years ago, or in a “frozen” time
                                                                period).
        a. What is the materiality threshold for restatement?   (Example: If performance changes +/- XX bps for equity composites, we will restate
                                                                the performance in marketing materials. If performance changes +/- XX bps for fixed
                                                                income composites, we will restate the performance in marketing materials.)

        b. What is the materiality threshold for                (Example: We will republish the performance in marketing materials if any of the
           republishing?                                        following occur: If performance changes +/- XX basis points for equity or balanced
                                                                composites. If performance changes +/- XX basis points for fixed income composites.
                                                                Regardless of the number of basis points, if performance changes such that the
                                                                composite performance moves from being +0.00% to being -0.00%. Regardless of
                                                                the number of basis points, if performance changes such that the composite
                                                                performance moves from being greater than the performance of its benchmark index /
                                                                indices, to being less than the performance of its benchmark index / indices.)




c761bdc7-8821-4412-9f38-3b631000385d.xls
Error Correction                                                      Page 9 of 9                                                                      7/15/2011

				
DOCUMENT INFO