So I spent whole day doing some 10 item sets plus all EOCs, reading this, and have summarized

the whole
framework in a page. By far the most dreaded topic has now become something to look forward to in the exam.

1. PROVISIONS

1. Fundamentals of Compliance
o Apply on a firm wide basis
o Must be an investment firm, a subsidiary or a distinct business unit
o If it markets as part of a group then it is not a distinct unit
o If combination of compliant with non-compliant, latter must become compliant within one year
2. Input Data
o Use fair value, trade date accounting (not settlement date) and accrual accounting
o If period < 1/1/2001 report quarterly, otherwise monthly
o If period > 1/1/2010 report monthly and after any large cash flows
3. Calculation Methodology
o Use TWR and link geometrically
o For daily cash flows use Modified Dietz method
o Calculate returns net of direct trading expenses
o Custodian fees are not direct trading expenses
o Use actual trading expenses, not estimated
o Material changes must be disclosed
4. Composite Construction
o All actual, fee paying, discretionary portfolios in at least one composite
o Do not include non-discretionary accounts
o Define composite (similar to IPS) and make available upon request
o Include terminated portfolios up the date of latest full measurement period
o Historical performance of portfolio must remain in the original composite (no switching).
o Include returns from cash and equivalents in total return calculations.
o Must have separate accounts or sub accounts for carve outs (carve outs must have their own
cash)
5. Disclosure
o Use precise wording of compliance claim
o Disclose use of sub-advisors and the period used
o Disclose composite date and description but not too broadly.
o If using custom benchmark disclose components, weights and rebalancing
o Disclose periods of non-compliance prior to 2000
o Disclose number of portfolios in a composite, unless number is < 5
6. Presentation and Reporting
o Disclose a measure of internal dispersion (std.dev, hi-low, interquartile etc) of annual returns.
o Must present at least 5 years or since inception, and then continue until 10 years.
7. Real Estate
o At fair value, otherwise seek third party valuation
o Calculate income return and capital return separately
o If period < 1/1/2012 external valuation at least every 36 months
o If period > 1/1/2012 external valuations at least annually, unless stipulated otherwise
o Present cumulative committed capital, since inception paid-in capital and distributions.
o Also present ratios such as TVPI, DPI and RVPI
8. Private Equity
o Separate composites by strategy as well as vintage.
 o The same as Real Estate more or less

9. Wrap Fee/Separately Managed Account (SMA) Portfolios

o Include performance record in appropriate composites
o Disclose for each period that the composite does not contain actual wrap fee

2. VALUATION PRINCIPLES
o Follow this hierarchy of valuation:
1. Objective, observable quoted market prices for active markets
2. Quoted prices for identical or similar investments for inactive markets
3. Any observable market based inputs
4. Subjective unobservable inputs
3. ADVERTISING GUIDELINES
o Always include firm description
o One-on-one presentations and individual client reports are not advertisements
o You can just state that you are GIPS compliant without any further disclosure
o If chose to also disclose performance then state composite and benchmark descriptions, fees (net
or gross), currency used etc.
o Present 1-3-5 year annualized composite returns plus period to date composite returns
4. VERIFICATION
o Provides credibility, but not accuracy
o Must be a single report for firm, not separate for specific composite