Investors The GIPS standards are intended for the institutional marketplace (they do not attempt to incorporate all of the local disclosure laws that retail investors require). Therefore fund trustees, fund members and defined benefit plan sponsors should directly benefit from the adoption of GIPS by their investment managers Investment managers The standards help to promote fair and equitable presentation of investment performance information to potential and existing clients. This helps achieve a level playing field between investment managers, including equity, fixed income, hedge fund, private equity and property investment management firms. Intermediaries and regulators

Consultants and regulators also directly benefit from investment management firms adopting the standards through consistency in the calculation and presentation of performance results (including the frequency of valuation, treatment of large cash flows and handling of accruals); full disclosure of important details on performance data presented (such as fees, composite construction criteria and dispersion of returns); and the establishment of a bestpractice standard for performance calculation and presentation on a globally recognised basis.

Of course to achieve the best practice level of a GIPS standard, investment management firms will need to reconsider and sometimes strengthen their internal processes and controls; and this in turn results in improved risk management. The GIPS standards currently require (among other things) that investment management firms: • clearly define and identify the entity (or group) that is providing the investment management services (“the firm”); • that all portfolios managed by the firm be allocated to a “composite” and that each composite contains only likemanaged accounts and is clearly defined; • investment returns are only to be calculated using a time-

weighted methodology to remove the impact of cash flows on returns; • annual returns must be reported for each year separately; • clearly state whether fees are included in the calculation of investment performance; • provide details of the investment benchmark and the return on the benchmark; • provide a suitable measure of risk for the investment. The GIPS Executive Committee has approved additions to the GIPS standards with effect from 1 January 2010 and these require investment management firms to value portfolios on the date of all large external cash flows to or from a portfolio; value all portfolios as of the calendar month-end or last business day of the month; calculate all composite returns by asset weighting the individual portfolio returns on a monthly basis; and excluding carveout returns for single asset class composite return calculations.