AIMR PROPOSES GLOBAL STANDARDS FOR INVESTMENT PERFORMANCE MEASUREMENT AND REPORTING

In recognition of the rapid globalization and growth of the financial industry, and a heightened need for consistent, globally accepted standards on investment performance, the Association for Investment Management and Research (AIMR) recently issued a proposal to standardize global investment performance measurement and reporting.

The Global Investment Performance Standards (GIPS) provide investment managers around the world with a single set of performance reporting guidelines that enhance their ability to penetrate foreign markets. GIPS will also make investment decisions easier for investors by providing them with the ability to readily compare results.

According to Lee Price, chair of the GIPS Committee, the standards would make investment decisions and comparisons easier for investors by increasing the ease in comparing results across a variety of countries. GIPS also provide fund managers with a single set of performance reporting guidelines, potential for greater penetration of foreign markets, and a fairer competitive position.

Performance presentation standards consistent with the major principles of GIPS have already been adopted by investment organizations in several nations, including Australia, Canada, Denmark, Germany, Netherlands, New Zealand, Switzerland, Thailand, the United Kingdom, and the United States.

Though GIPS will be subject to voluntary compliance, the AIMR committee feels the standards will provide investment managers with an extra tool for their marketing efforts by establishing a GIPS-compliant firm as superior to a competitor that does not adhere to the standards.

Compliance with the guidelines will allow investment firms to certify on their presentations that they are prepared and presented according to GIPS. As with other AIMR standards, CPAs will have increased opportunities for attestation services by reviewing clients' statements for compliance with the new standards.

Requirements of the proposed standards include--

* records of performance history for a minimum of five years, or since inception,

* time-weighted calculation of performance including amortization of income,

* presentation of composite performance rather than for "representative" portfolios,

* standardization of input data,

* compliance with local or country-specific laws in case of conflicts with GIPS, and

* evolution over time of the standards to address additional aspects of investment performance.

The AIMR committee that developed the standards is comprised of members from financial societies and regulatory agencies from numerous countries. The proposed draft is available for public comment until December 31, 1998. Finalized guidelines will be published early in 1999. Written public comment and requests for copies of the GIPS document should be directed to AIMR by fax at (804) 980-9755 or by e-mail at info@aimr.org. More information also is available on the association's website at www.aimr.org. *