We thank you for the opportunity to respond to the proposed changes within GIPS 2010.

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1 June 30, 2009 GIPS Executive Committee CFA Institute Centre for Financial Market Integrity 560 Ray C. Hunt Drive P.O. Box 3668 Charlottesville, VA Dear GIPS Executive Committee, We thank you for the opportunity to respond to the proposed changes within GIPS At ACA Beacon Verification, we currently provide GIPS verification services to approximately 200 investment management firms. Our client base is extremely diverse as it relates to size, location, target market, investment strategies, investment vehicles, etc. In forming our opinions within this comment letter, we first think about the GIPS from the standpoint of prospective investors and place the highest emphasis on benefits the GIPS can and do bring to them. Secondly, we very much consider feasibility and meaningfulness from the standpoint of investment management firms. A final and less weighty consideration for us is the practicality of the GIPS from the standpoint of verification, even though this is our business. We recognize and appreciate all of the work that has been put into this next version of the GIPS. We are as excited as ever when it comes to the increased acceptance of the GIPS. The current regulatory environment on a global basis, as well as the increasing sophistication in all areas of investment management, bodes very well for the GIPS in our view. As always, we encourage the GIPS EC to contact us with any questions, and we continue to offer the time, experience and expertise of our verification professionals to discuss our views of best practice as it relates to claiming GIPS compliance. Sincerely, ACA Compliance Group Beacon Verification Services Division

2 GIPS 2010 Comments ACA Compliance Group - Beacon Verification Services Division 0. Fundamentals of Compliance 1. In 0.A.2, we appreciate the inclusion of the definition of prospective client. However, a very typical question is do we still need to show a GIPS compliant presentation to a prospect every 12 months if that prospect showed interest 3 years ago but has not since then? While we are not necessarily advocating for a definitive time limit, we do believe this type of question should be addressed, perhaps in the definition of prospective client in the Glossary or via a Q&A. 2. In the context of 0.A.3, and while we will address the following in Section 8 as well, we believe UMA relationships in the wrap arena should be discussed as they relate to inclusion/exclusion in total firm assets. While we believe current guidance points to these assets as being advisory only and thus excluded from composites and firm assets, we believe the market is rapidly moving more towards UMA structures. Therefore, we believe there needs to be provisions or guidance that could allow managers that solely manage UMA assets to claim compliance. 3. In 0.A.7, we agree with including the firm s verification status in the compliance claim and prefer this over mandatory verification. 4. We agree with the 24 month period. This gives firms time to have verifications updated with a cushion and also prevents misrepresentation of stating a verification that is stale. However, we encourage an additional recommended Standard by which it is recommended that firms are verified annually at a minimum. We believe some firms that wait until month 23, for example, for a subsequent verification will create an unnecessary strain on investment management firms and their verifiers. Perhaps more importantly, firms might be forced to drop the claim of verification temporarily, which obviously would not be desirable for firms claiming compliance and being verified. 5. While we agree with the proposed disclosure language related to verification, we believe it should be stated that if the firm would like to name its verifier, it can do so in this single paragraph. 6. We believe there will be firms that had verifications performed over two years ago that might not want to claim a period as being verified for one reason or another. For example, a firm might have been verified for the period Perhaps they do not want to explain why they were verified at one point and decided to no longer be verified. It could be due to cost or because they do not place much reliance on the verification due to the verification provider providing a service not in line with what was sold. As a result, we believe firms 1

3 that want to drop a claim of verification that is not current should be able to opt for the last compliance claim presented (i.e. never verified). 7. We believe it should be recommended in section 0.B that firms get verified annually at a minimum so they do not flirt with the 24 month requirement. 8. We agree with the enhanced language in 0.A.8 and 0.A For 0.A.11, please see comment #1 above for questions concerning the definition of prospective client. In short, we believe compliant firms need some guidance on when a prospect is no longer a prospect so that they are no longer required to send the compliant presentation every 12 months. Perhaps the firm can define when a prospect is no longer a prospect in its GIPS Policies and Procedures. 10. In relation to 0.A.11, we would like to see some guidance on whether a firm can present information that is Supplemental to the firm as opposed to a compliant presentation in cases where there is not an applicable composite. This topic was heavily debated at the EC meeting prior to the 2008 GIPS conference. We believe the Standards as written today do not allow for this; however, we are aware of differing interpretations and solid arguments on both side of this issue. 11. In 0.A.12, we believe a common question needs to be addressed perhaps by a Q&A. If a firm has hundreds of one account composites, for example, we believe the GIPS should allow this firm to disclose on its list and description of composites that a list of one account composites is available upon request. Otherwise a document that already is underutilized becomes extremely impractical and burdensome to maintain. It might also be considered whether firms must have descriptions for one account composites. For example, if a firm manages institutional accounts that fit a model and private client accounts that are highly customized, how much value is added by listing each customized portfolio when the firm believes they are discretionary and must be in a composite? E.g. A one account composite with an asset allocation target of 25% equity/75% fixed income with call options written on all equities above a market cap of $10 billion and a target fixed income duration of 7 years. 12. We believe some discussion of 0.A.14 added to the GIPS Handbook would be useful to most firms. Perhaps it could be discussed both in the context of one firm where some divisions/locations claim compliance and others do not as well as where different entities might jointly market. 13. We believe 0.A.16 is an issue that needs to be re-evaluated. We are aware of current thinking in some areas of the industry that this is already a requirement via 4.A.9; however, we do not totally agree with this. This can perhaps best be seen through an example in the United States. A SEC no-action letter to ICI states that if only gross of fee returns are shown, the firm must include a chart or narrative explaining the effects of compounding fees on a portfolio. If a firm does not 2

4 include this disclosure, it is our opinion that the optimal way to view this is that the firm is out of compliance with SEC requirements but not GIPS. To say the firm is not GIPS compliant because they did not include a regulatory disclosure seems inappropriate to us. This becomes an issue for verification firms as well. One way of viewing this requirement is that verification firms should not only know the GIPS backwards and forwards but also all local law. We incorporate local law into many of our verification procedures; however, we do question whether this should be a requirement for verification procedures. We are not stating we think local law considerations should not be subject verification - similar to Supplemental Information - but we simply believe it is a substantive item that needs thorough vetting. See also note #60 for further thoughts. 14. We do not believe 0.B.2 should be included even though we understand and appreciate the attempt for increased full disclosure to current clients. It is our understanding that there will be a task force set up to gauge the need for the GIPS to expand to client level reporting. We believe this proposed recommendation should be assessed further by this committee as opposed to adding it to this version of the GIPS. At the risk of sounding skeptical, we believe the majority of times this would not be done to account holders underperforming the composite unless it was due to restrictions/constraints placed on the manager. There are plenty of managers whose composites might have dispersion caused by factors other than client restrictions. Ultimately, this recommendation could be used to wield marketing/client retention power on a very selective basis. 15. We agree with 0.B.4 being a recommendation and agree with the new language and deletion of the old. 1. Input Data 16. In 1.A.2, we agree with the change from market value to fair value. However, we believe there is no need to discuss IASB and FASB issues. While the shift can and should be considered in the context of accounting practice changes, we do not believe these references add value. While we support the move to fair value, there are some downsides that we see. One, there is some fear that a move to fair value might open the door to aggressive, subjective pricing policies when there might be more objective methods of deriving a price. Two, many firms are already upset about additional costs of obtaining liquid fixed income prices when portfolios are to be revalued due to large cash flows (as an example). If this is an issue, one can easily conclude a move to fair value will increase costs even more as it relates to monthly and intra-month valuations for hard to value securities of any kind. 17. We believe the concept in 1.A.3.b has historically been flawed in terms of addressing the revaluation of portfolios in the composite and not the composite itself if the aggregate method is being used. Revaluing portfolios will increase the accuracy of dispersion measure; however, it will possibly have no effect on the 3

5 composite return if an aggregate method is being used for the composite return calculation. Therefore, a composite calculation using a traditional asset weighting approach (using beginning of month market values and returns for the month for all portfolios) can lead to a materially different return than the composite if it is calculated on an aggregate level with no revaluations being triggered. We understand and appreciate the 2 methods will lead to different returns in general but the issue is exacerbated when individual accounts are revalued but composites are not when treated as a single portfolio. As an example, it should be known that revaluing individual portfolios when cash flows greater than 10% occur does not affect the composite return if an aggregate method is used and it also has a large cash flow policy of 10% for revaluation that is not triggered. If the Standards want to speak in terms of revaluing portfolios as opposed to composites, it seems as though the most accurate measure would be to use beginning of period values plus weighted cash flows and the portfolio returns that have been revalued intramonth. More accurate, of course, would be to revalue the composite any time an individual account s threshold has been broken if in fact the aggregate method is being used for the composite. This is quickly moving towards setting a very low threshold for composite revaluation when using the aggregate method, but the point has been made. 18. We agree with 1.A.3. and understand that the requirement to revalue at the date of all Large Cash Flows as of 1/1/2010 has been in effect since But, we question whether this should be reevaluated for certain asset classes, namely fixed income securities. At a deeper level, fixed income securities that are thinly traded. Much like real estate is not required to be revalued as often as public equities, we question if a line should be drawn for fixed income as well. We realize this is a slippery slope and perhaps one that should be avoided, but we believe it is worth examining possibilities. At a minimum, we believe there should be a Q&A regarding whether firms can use the most recent price. For example, if a firm receives weekly pricing for fixed income, can it use the most recent price? We know it is common practice to use the most recent price for private equity funds if a fund of funds is calculating a TWRR and does not have access to monthly valuations. On a final note, we strongly believe what constitutes Large should be addressed in the form of a Q&A. For example, we do not believe it is in the spirit of the GIPS to set a threshold of 200% of beginning of period assets in attempts to all but eliminate chances of having to revalue. It appears as though the loophole that will be used is significant cash flow policies, but this seems to be counterproductive in the context of the GIPS recommending temporary new accounts for significant cash flows as opposed to removing accounts from composites. 19. We believe 1.A.3.c. needs clarification or the following language added to it adhering to the requirements in Appendix D. The concern here is that firms might try to set valuation policies that work around the requirements set forth in a and b of this section. It should be apparent this would be prohibited, but we 4

6 anticipate that questions will be asked. If section c is placed here solely for real estate and private equity, we do not see the need for it. 20. We agree with all recommendations in 1.B. 2. Calculation Methodology 21. We believe 2.A.1 should remain unchanged, as we believe in general the Glossary is underutilized. 22. We believe the language in 2.A.7.a and 2.A.7.b. can and should be optimized (e.g. When calculating gross of fees returns, returns must be reduced by the portion of the bundled fee that includes the direct trading expenses. If the portion of the bundled fee that includes the direct trading expenses cannot be identified, returns must be reduced by the entire bundled fee. Firms must not ) 23. As discussed in point 34, we believe there should be more discussion regarding composites with performance fees and how they should be presented. 3. Composite Construction 23. In 3.A.1., we do not agree with the change mandating that non-fee-paying portfolios must be included in composites. We do not see this as an area of abuse at the moment and firms typically do a very good and honest job of including non-fee-paying portfolios if they believe they meet the strategy and excluding others that might be maintenance accounts managed at the request of a client with larger portfolios. The accounts could be discretionary but serve no purpose being in composites or monitored for composite inclusion. We also believe that most non-fee-paying portfolios ultimately have different risk profiles from feepaying portfolios no matter how indiscriminately they are treated. If we saw firms trying to game the non-fee-paying allowance, we would opine differently, but we do not see issues with the current writing of this Standard and believe the current disclosure requirements when non-fee-paying accounts are included are adequate. We believe one area the Standards can and probably should address is ensuring seed accounts go into composites when the strategy is first formed as opposed to when it is officially launched in the marketplace. We are aware of firms keeping this type of account out of composites until it is made available to outside investors because it technically is a non-fee-paying account even though the intent is to have it in a composite at a later time. While this might not be a violation of the Standards if the firm discloses historically that the account was 100% non-fee-paying before its release, we do not believe it is totally aligned with the spirit of fair representation and full disclosure. If we were prospective investors, we might want to know that the firm is busy incubating 8 strategies while managing the one for which we have an account so that we can make an informed decision as to the firm s level of focus. As such, we believe more language should be added to the already proposed language on proprietary 5

7 accounts. Perhaps all proprietary, non-fee-paying accounts should go into at least one composite but not all non-fee-paying accounts. 24. Related to 3.A.1. and 3.A.2, we believe a Q&A should be developed prohibiting firms from defining discretion as any account that does not fit a current strategy/composite. We do not believe this is permissible and have seen firms that use this definition in part or in whole. This type of definition appears to exist in small cases and ones due to lack of guidance as opposed to gaming the Standards. 25. Although the old 3.A.6. never received much attention, we believe it should remain in the Standards. We believe this Standard might become more applicable as firms move to more sub accounting for asset classes. If this proves to be true, it will be more important to ensure firms do not classify preferred stock as fixed income in some cases and equity in other cases, for example. Perhaps this Standard needs to be revised to make it clearer and perhaps address it at the portfolio level in addition to the composite level. 26. We believe there needs to be more and better clarification on requirements related to carve-outs. The current Standards are contradictory in areas. For example, 5.A.5 states that periods after 1/1/2011 will not require carve-out disclosure; however, 3.A.6, implies it is still a carve-out even if it is managed with its own cash. If it is still a carve-out, why would it not need to be disclosed after 1/1/2011? If a segment is managed with its own cash balance, should the term carve-out continue to exist? We believe these issues are created for the most part by the fact that carve-outs have never been defined at a very detailed level. In our opinion, a carve-out should not only meet the current definition but it should be a segment of a portfolio managed to a broader client directed mandate. For example, if the client mandates a balanced account, then the equity and fixed segments should be classified as carve-outs even if they are managed with their own cash allocations. The same would be true of the European Equity portion of a portfolio with a Global Equity mandate. Many in the industry look to the custody level or other operational level to assess whether it is a carve-out this is an operational proxy as opposed to a pure investment management proxy. There are other angles to view carve-outs and what exactly makes a segment a carveout that further cloud the picture. In the end, we believe concrete decisions and guidance need to be included. We believe either the term carve-out continues to exist and percentages are disclosed in perpetuity or the term should disappear after 1/1/2011 or preferably 1/1/2010 with a special re-draft of the current Guidance Statement. An additional item that should be addressed is does subportfolio accounting meet the intentions of the Standards if cash is transferred amongst portfolios on a frequent basis such that it truly does not represent a single asset client? Please feel free to call us for more discussion. 27. We believe the proposed 3.A.9 would be better placed in Section 0 of the Standards. We agree with the principles behind this Standard; however, we 6

8 recommend it be clarified that firms can show the composite presentation if it is requested by a prospective client that currently does not have assets meeting the composite minimum. Perhaps an additional Q&A could address the age old question of then what performance do we show the prospect? Another option would add the word willingly so that a firm that acts in good faith is not in violation of the Standards if the prospect did not appropriately convey investable assets. 28. We agree with the addition of 3.A.10. However, as an aside and addressing exante, we believe there will need to be clarification that a firm coming into compliance in 2012 (for example) can and should be allowed to remove portfolios due to significant cash flows for the entire 5 year track for which they build composites (going back to 2008 in this example). Of course the June 2002 effective date of the guidance statement should never change. 4. Disclosure 29. We do not believe certain disclosures should be allowed to be removed after a defined period of time. We believe all the requirements are meaningful. We also caution opening the can of worms that go with placing different time requirements on different disclosures. However, if certain disclosures will not be permanently required, we feel it would be necessary to have a Q&A where these requirements are outlined. Otherwise, the skeptic in us feels that there is the potential for firms to take an aggressive interpretation of what they can remove from their disclosures. Most will agree that there is significant difference between deleting a change to a composite name 20 years ago, and a change in the composite benchmark one year ago. In addition, perhaps notice could be made that the GIPS do not require additional disclosure over and above Sections 4 and 5. Firms feeling that the disclosure requirements are too onerous might be happy to know many common disclosures are not required by the GIPS or regulatory authorities (e.g. the Modified Dietz method is used; portfolios are revalued monthly, etc.) 30. We agree with the proposed changes to 4.A We very much agree with the change in 4.A.7 to material. 32. We feel strongly that 4.A.10 should not be altered. We believe the reasons for non-compliance can be very important. For example, a firm that did not include closed accounts prior to 1/1/2000 could have a survivorship bias while a firm using annual valuations with very small cash flows might be a less significant issue. In short, not all non-compliant records are created equal in our minds. 33. We welcome the revised 4.A.16. 7

9 34. As a point of discussion related to 4.A.16, we question why returns of performance based fee accounts must not be net of the performance based fees similar to the private equity guidelines. For example, if a hedge fund charges 2 and 20 is it fair representation to show this gross only or net of only the 2% management fee? 35. For 4.A.20, we agree with the revised language but believe including risks should be omitted. We believe the other disclosure Standards sufficiently address vehicles used and the investment strategy so that risks can be properly evaluated from a qualitative standpoint. We believe adding this language to 4.A.20 likely would result in too many questions and more importantly, vague and nonmeaningful language regarding risk (e.g. portfolios are subject to loss of principal ) A.27 is another welcome move of a Significant Cash Flow item to the core of the Standards in addition to having it in the Guidance Statement. 37. We agree with 4.A.28 being added. 38. For 4.A.29, we understand the debate on standard deviation as a risk measure but believe this is a painless way for the Standards to move into and explore risk. However, we believe the Standard can be worded more clearly. The term minimum of monthly periods is unnecessarily confusing. We read this as one must have a minimum of 36 data points when this calculation is performed. However, the ambiguous language might have some firms annualizing 3 calendar year returns and others finding the monthly standard deviation and annualizing the 36 month standard deviation. Without an example, one can quickly realize these numbers might be vastly different for the same return stream. As a result of this, and in attempts to keep this as simplistic as possible in the beginning, we believe there should be a required formula so that periodicity is the same across firms whether it is monthly, quarterly or annually. We would vote for annual but do not feel adamant about this. Periodicity could be more clearly defined in the Glossary as well. 39. We believe the new 4.B.3 should be a requirement as opposed to a recommendation. 5. Presentation and Reporting 40. We appreciate and agree with the addition of 5.A.1.b. 41. In 5.A.4, we agree with removing the old c and the revised language in the new one. 42. Please see note 26 related to 5.A.5. 8

10 43. We appreciate the term Link being defined in the glossary and would encourage Q&A s to bring the differences between mathematical and presentational more to life. 44. We agree with the proposed 5.A.8 because as mentioned in a previous section, we believe in most cases the risk profile of proprietary assets is inherently different than that of an unaffiliated client regardless of how indiscriminately the accounts are treated. More importantly, we believe this Standard should be decided upon by the investing public and its consultants and sponsors. Adoption should be fully aligned with responses from this side of the industry. Putting ourselves in the shoes of those who perform manager due diligence, we would want to know this information. However, we would like to add one caveat here. We feel that additional consideration is needed regarding how this requirement would affect pooled vehicles. Many fund managers with whom we work invest internal assets into their own funds. Our interpretation is that currently these firms are not required to disclose the percent of their internal assets in the fund, because the fund itself is the sole discretionary, fee paying account, and the current requirement is only that the percent of non-fee portfolios in composites be disclosed. By requiring the percent of any PROPRIETARY ASSETS to be disclosed, one could only infer that this would include internal assets of a firm in one of its own pooled vehicles. We simply want to ensure this potential requirement has been well thought out from this perspective. One can see the crux of our opinions lies in the potential for a new client s assets to be invested differently than that of a proprietary account. We recognize the challenge, but if it is a vehicle that makes it possible for investments to differ, then it should be disclosed. If it is in a commingled fund with one share class, for example, then it should not have to be disclosed. 45. For the recommendations in 5.B.2, we would recommend only addressing annualized returns and not cumulative. We do not feel strongly here, but we recommend discussion since most firms present annualized, and we believe some firms have ignored the recommendations in 5.B. in the past to a degree because they have been numerous. We believe the other ways this section is being trimmed will be helpful. 46. We agree with 5.B.3 because combined with other disclosures related to risk, we believe the need for a written description in the composite description is not needed. 47. We completely agree with 5.B.6 and believe it should be a requirement. We believe that the annual requirement is one of the major reasons most GIPS compliant firms focus on performance displays other than the GIPS compliant presentation. Too many times this important piece is treated as an appendix or a 9

11 page in the performance section of a pitch book that is not the focal point of the discussion on performance. We believe if the presentation were updated quarterly, it would gain acceptance as a more widely used performance presentation. This would have numerous benefits. Needless to say, we believe this should be a recommendation if not a requirement. 6. Real Estate 48. For 6.A.2, we believe that regular third party valuation is important. However, it is also costly and adds to the overall cost to the investor. We do lean toward a required independent appraisal every 12 months, but believe that serious thought and consideration be paid to the feasibility and cost that such a change would require. Should a move from 36 months to 24 months not be considered if there is opposition to 12 months? If there will be a change from an independent valuation from 36 months to 12 months, we believe it might eliminate some confusion among firms if the effective date was 01/01/11 instead of 01/01/12. We feel that firms will have an easier time understanding all of the changes if the vast majority of the changes are effective on the same date A.4 is a welcome change/addition. 50. We agree with requirement 6.A.6. It makes far more sense, in our opinion, for a closed-end fund to report an SI-IRR than a TWRR. In fact, for closed-end funds, we strongly believe that only the SI-IRR be required to be shown. We also agree with all additional presentation requirements of closed end funds contained in 6.A.17 6.A For 6.A.8.b and 6.A.8.c., does this mean each firm has to define material differences on an ex-ante basis? If so, it would be helpful to have further guidance as to the definition of material. Ultimately, we agree with these additions. 52. It might seem obvious but we would recommend perhaps adding including land and its natural resources (e.g. timber) or something similar to the definition of real estate in the Glossary. 7. Private Equity 53. For 7.B.2, remove the word beginning from the recommendation. 54. In general, we believe that an IRR or SI-IRR should be allowed instead of a time weighted rate of return in the presentations for composites which are structured identically to private equity composites, but whose underlying investments are not actually private equity. 10

12 55. We feel that an important addition to this section would be clear guidance reflecting the idea that a time weighted rate of return be used to calculate fund of private equity funds returns. As a result, valuation frequency of underlying funds should be addressed. We believe this is very important. There might be some cases where an IRR is applicable but in most cases we believe a TWRR is more applicable. 8. Wrap/SMA 56. We do agree that 8.A,6 should be a requirement. Though the sponsor is an existing client, the presentation from the firm to the sponsor is created for the generation of additional business, and we see a sponsor-specific composite presentation as the most accurate reflection of what an end client would achieve. 57. As previously discussed in point number 2, we strongly believe that further guidance needs to be given concerning the treatment of UMA relationships. As we see more and more of these type of relationships, we find it increasingly difficult to understand how it is a fair representation for these assets not to be included in total firm assets. While we are not advocating that these assets be placed in composites, a prospective client should realize if a firm advises $500 million in UMAs. If these types of assets were to be included in total firm assets, we feel that it would be an important requirement that firms present the % of firm assets comprised of UMAs or other similar types of advisory relationships. Section III - Verification 58. Regarding requirement 7, we also believe that if any material errors are discovered in the period verified by the prior firm, these errors must be addressed by the investment firm and corrected before the new verifier can issue its report. 59. While we do appreciate the effort not to limit the scope of a verifier s Knowledge of Firm Policies due diligence, by removing the enumerated policies in B.1.d, we believe that a lot of firms look to these specific policies as a good starting point for policies which they need to include in their Policies document. For this reason, we would lean toward retaining these policies or moving them to a Q&A. 60. We do agree that specific verification procedures should be included for GIPS provisions 0.A.16 and 0.A We feel that it might be helpful to include a recommendation that verifications be completed at least annually. This will ensure that firms do not get the impression that being verified every 24 months is optimal. 62. We believe further clarification is needed regarding whether a composite could receive a Performance Examination for periods prior to the creation of the firm (i.e. a ported track record). Are there, in fact, unique instances where a 11

13 Performance Examination can be performed without a firm-wide verification for the same period? Miscellaneous 63. We believe the reference to base currency in the Composite Definition Guidance Statement needs to be changed or addressed in a Q&A. We read the fact that firms cannot use base currency to define composites as a firm cannot put an equity portfolio denominated in Yen in the same composite as a fixed income portfolio in Yen simply because they are both in Yen. However, firms often believe that they cannot separate portfolios into separate composites based on different base currencies. For example, an unhedged European Aggregate Fixed Income portfolio denominated in USD probably should not be in a composite with an unhedged European Aggregate Fixed Income portfolio denominated in Yen. This is because there will always be a component of the total return attributable to currency fluctuations/return. If the portfolios do not have a currency hedge, the return streams will at times be very different. We believe this section of the Guidance Statements needs clarification. 64. Supplemental Information We believe that the Guidance Statement on Supplemental Information should be updated. The examples in the Guidance are contradictory to the definition of Supplemental Information. For example, if portfolio level holding weights are considered Additional and Additional Information is by definition not Supplemental, why is portfolio level country weightings an example for Supplemental Information? In addition, we believe there needs to be further guidance regarding situations where Supplemental Information is presented as an advertisement or other scenarios where Supplemental Information might be presented without an accompanying fully compliant GIPS presentation. 63. Portability A. We believe further guidance is necessary regarding what constitutes sufficient records to meet the portability Standards. Must the firm have the level of records required by the Record Keeping Guidance Statement for periods after 10/31/07? Does this date need to be referenced when assessing portability? B. If a Firm A acquires Firm B in 2009 and Firm A has been verified back to 2000, in order continue to claim it has been verified back to 2000, must Firm B essentially be verified back to 2000? 64. Verification We feel guidance is needed concerning whether or not a verification can be performed on a firm, for time periods prior to its existence (i.e. if a firm is created 12

14 in 2009; however, its performance due to portability goes back to 2003, can a firmwide verification cover the period from 2003 to 2009). 13