Which of the following is/are true about the Performance Presentation Standards?
I. A member who complies with the mandatory requirements of the PPS but does not follow the recommended requirements can publicly claim compliance with the PPS.
II. The PPS are designed to be primarily a performance measurement framework.
III. The Standards are not designed to enhance or detract from the presentation of historical results.
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A. B. C. D.D
The PPS are designed to be primarily a performance presentation system, not a performance measurement system. The Standards are not designed to enhance or detract from the usefulness of the information in historical results, though it does restrict the way they are to be presented. The PPS are voluntary standards and are not necessarily binding on AIMR members. Some standards are mandatory while others are recommended. To claim compliance, members must abide by the mandatory requirements, at the very least.
The correct answer is D. I and III only.
Let's break down each statement and examine its accuracy:
I. A member who complies with the mandatory requirements of the PPS but does not follow the recommended requirements can publicly claim compliance with the PPS.
This statement is true. The Performance Presentation Standards (PPS) have both mandatory and recommended requirements. If a member complies with the mandatory requirements but does not follow the recommended requirements, they can still claim compliance with the PPS. However, it's important to note that compliance with the recommended requirements is encouraged but not required.
II. The PPS are designed to be primarily a performance measurement framework.
This statement is false. The PPS are not primarily a performance measurement framework. They are a set of standards that provide guidance on how to present investment performance information to clients. The PPS cover various aspects of performance presentation, including calculation methodology, composite construction, and disclosures, among others. While performance measurement is an important component, the PPS also focus on ensuring fair representation and transparency in the presentation of performance data.
III. The Standards are not designed to enhance or detract from the presentation of historical results.
This statement is true. The PPS are not intended to enhance or detract from the presentation of historical results. Their purpose is to establish guidelines and best practices for accurately and fairly presenting investment performance information. The standards aim to ensure that the presentation is consistent, transparent, and allows for meaningful comparisons among different investment products or managers. They do not seek to manipulate or bias historical results in any way.
In summary, statement I is true, statement II is false, and statement III is true. Therefore, the correct answer is D. I and III only.