“GLOBAL INVESTMENT PERFORMANCE STANDARDS – LEVEL III WORKBOOK” (STU...

2. “Global Investment Performance Standards – Level III Workbook” (Study Session 17)

b) describe the relationship between the GIPS standards and country version of GIPS

(CVG) and Translation of GIPS (TG);

d) describe the ways a firm may define itself for the purpose of complying with the

GIPS standards;

e) describe the minimum historical performance record requirement and the proper

treatment of a non-compliant performance record;

f) identify the proper use of the GIPS compliant statement;

g) discuss the requirements and recommendations of the GIPS standard with respect to

the input data, including supporting information portfolio evaluation and accounting

methods;

h) discuss the requirements and recommendations of the GIPS standard with respect to

calculation methodology including return calculations, composite return calculations,

composite weighting, cash returns, expenses and minimum asset levels;

i) discuss the requirements and recommendations of the GIPS standards with respect to

composite construction including inclusion of all portfolios, composite definitions,

terminated portfolios, switching portfolios, carve-out single asset classes, and

simulated or model portfolios;

j) discuss the requirements and recommendations of the GIPS standards with respect to

disclosures including the definition of firm, firm assets, list of composites, valuation

methodology, asset level requirements, currency used, the use of leverage or

derivatives, management and other fees, accounting methods, benchmark discussions,

non-fee paying portfolios, conformation to local laws or regulation, compliance

periods and cash allocation methods;

k) discuss the requirements and recommendations of the GIPS standards with respect to

presentation and reporting, including time frame of performance records, annual

returns, composite and firm assets, dispersion measures, compliance statement,

creation date, non-compliant performance linking, annualization, portability of

records, carve out asset classes, and benchmarks;

m) evaluate a sample performance presentation and determine whether the presentation

complies with GIPS standards;

n) recommend changes to a sample performance presentation that would bring the

presentation into compliance with the GIPS standards;

o) create a performance presentation that complies with the GIPS standards.

Guideline Answer:

Part A

Give two of the five requirements set forth by the GIPS standards for linking the

performance data of Morehouse and Smyth to create a surviving composite that is

compliant with the GIPS standards