Trinity Street Funds - Reportable Income for the period ended 31 Dec 2015 Please find below the reportable income amounts relating to the following share classes of the Trinity Street Funds which are classified as "Reporting Funds" for UK tax purposes: - Global Equity A GBP Cap: LU473308400. Please note that there is no reportable income for the period.
List of available share classes and the effective management fee (as referred to in the prospectus, page 57)
The Sub-Fund may issue shares within the following classes:
Class A (USD) Class B (USD) Class D (USD) Class I (USD) Class X (USD)
Class A (EUR) Class B (EUR) Class D (EUR) Class I (EUR) Class X (EUR)
Class A (GBP) Class B (GBP) Class D (GBP) Class I (GBP) Class X (GBP)
Effective management fee:
USD A: 1.07%
USD I: 1.04%
EUR A: 1.07%
GBP A: 1.09%
Trinity Street Asset Management LLP (“Trinity Street” or the “Firm”) is a London-based investment manager that is authorised and regulated by the UK Financial Conduct Authority (“FCA”) and a registered investment adviser with the U.S. Securities and Exchange Commission (“SEC”). Trinity Street is an independently-owned investment boutique founded in 2003 and focuses solely on managing Global and International Equity portfolios.
This document describes how Trinity Street has applied the seven principles of the UK Stewardship Code (the “Code”), which is overseen and published by the Financial Reporting Council. Below we disclose the nature of our commitment to the Code and where, if at all, we do not commit to the Code we state clearly our alternative investment strategy – the Code is applied on a “comply or explain” basis.
The Code aims to enhance the quality of engagement between institutional investors and companies with the aim of improving long-term shareholder returns and encouraging enhanced corporate governance at portfolio investment companies.
Code Disclosure 2017
The following sets forth the seven principles of the Code and outlines how Trinity Street believes it fulfils each of those principles:
Principle 1: Institutional investors should publicly disclose their policy on how they will discharge their stewardship responsibilities.
At the heart of Trinity Street’s investment processes are activities that are at the core of and consistent with stewardship; with our experienced Portfolio Managers engaging with investee companies and potential investee companies on strategy, performance, risk, capital structure and corporate governance.
In particular Trinity Street considers it to be of paramount importance when assessing proxy voting responsibilities on behalf of its funds and segregated accounts to recognise the fiduciary responsibility it assumes in acting as an investment manager. Trinity Street also recognises the need to exercise its proxy voting obligations with a view to enhancing our clients' long-term investment values.
Trinity Street has a documented Proxy Voting Policy in compliance with Rule 206(4)-6 of the Investment Advisers Act of 1940.
Principle 2: Institutional investors should have a robust policy on managing conflicts of interest in relation to stewardship which should be publicly disclosed.
Trinity Street maintains a robust conflicts of interest policy to seek to identify and manage conflicts of interest that ensures our decisions are taken wholly in the interest of our clients. In compliance with both the FCA and SEC rules, Trinity Street takes a risk-based approach to identify areas of potential conflict of interest, to manage and avoid conflicts of interest in an appropriate manner, and to consider all conflicts when designing and implementing policies and procedures. A copy of Trinity Street’s Conflict of Interest Policy is available upon request from the Chief Compliance Officer.
Principle 3: Institutional investors should monitor their investee companies.
Comprehensive and continuous proprietary research and monitoring of investee companies is essential to and at the core of Trinity Street’s investment process. Trinity Street utilises various research and support tools to meet this principle.
Trinity Street may from time to time choose to become insiders. In such a case procedures are in place to restrict information and trading.
Principle 4: Institutional investors should establish clear guidelines on when and how they will escalate their stewardship.
Trinity Street takes an active approach to communicating its views to companies where it believes there are issues that will impact shareholder value. Trinity Street prefers to build effective relationships with the management and boards of these companies in private discussions. Should this approach not be successful Trinity Street would consider, in appropriate circumstances, other strategies (for example but not limited to expressing concerns through the company’s advisers, or meeting with the chairman or other board members).
Principle 5: Institutional investors should be willing to act collectively with other investors where appropriate.
Should occasion arise, Trinity Street may find it preferable to work with other shareholders of an investee company to effect change. Before entering into collaborative engagement initiatives, Trinity Street will take into account potential conflicts of interest and the regulatory implications of its actions.
Principle 6: Institutional investors should have a clear policy on voting and disclosure of voting activity.
As a registered investment adviser with the SEC, Trinity Street has a documented Proxy Voting Policy in compliance with Rule 206(4)-6 of the Investment Advisers Act of 1940. Trinity Street’s clients can request a copy of the Firm’s Proxy Voting Policy from the Chief Compliance Officer. Trinity Street does not disclose this information to non-clients.
For a number of accounts managed by Trinity Street, third party vendor electronic voting services are used (such as Broadridge Proxy Edge). Trinity Street does not carry out stock lending on the accounts it manages.
Principle 7: Institutional investors should report periodically on their stewardship and voting activities.
Due to underlying client confidentiality and investment or engagement strategy reasons, it may not always be appropriate to disclose voting actions at a detailed level.
Trinity Street’s clients can request information about proxies voted and issues raised at meetings of investee companies. Trinity Street does not disclose this information to non-clients.
For further information on Trinity Street’s application of the Code please contact our Chief Compliance Officer, Steve Hicks, at email@example.com.
This statement of compliance with the Code was last reviewed in March 2017, and will be reviewed no less frequently than annually.
1 March 2017
Trinity Street Asset Management LLP (the “Firm”) is authorised and regulated by the Financial Conduct Authority (the “FCA”). The Firm is a UK domiciled discretionary investment manager to professional clients and both regulated and unregulated collective investment schemes. The Firm is a full scope BIPRU investment firm, a full scope Alternative Investment Fund Manager ("AIFM") and is categorised as a collective portfolio management investment firm by the FCA for capital purposes. The Firm reports on a solo basis. The Firm’s Pillar 3 disclosure fulfils the Firm’s obligation to disclose to market participants’ key pieces of information on a firm’s capital, risk exposures and risk assessment processes.
We are permitted to omit required disclosures if we believe that the information is immaterial such that omission would be likely to change or influence the decision of a reader relying on that information. In addition, we may omit required disclosures where we believe that the information is regarded as proprietary or confidential. In our view, proprietary information is that which, if it were shared, would undermine our competitive position. Information is considered to be confidential where there are obligations binding us to confidentiality with our customers, suppliers and counterparties.
We have made no omissions on the grounds that it is immaterial, proprietary or confidential
The Firm's Management Board determine its business strategy and the level of risk acceptable to the Firm. In conjunction with the Risk Officer, they have designed and implemented a risk management framework that recognises the risks that the business faces and how those risks may be monitored and mitigated and assess on an ongoing basis. The Firm has in place controls and procedures necessary to manage those risks.
The Firm considers the following as key risks to its business:
Operational risk – This risk covers a range of exposures including security breaches, risk of clerical errors, a breach of the fund’s investment objectives, and the loss of key personnel. Operational risks and how they can be mitigated are assessed as part of the Internal Capital Adequacy Assessment Process (”ICAAP”).
Business Risk – This risk includes a fall in assets under management due to market movements or internal factors such as poor investment decisions and a loss of reputation, resulting in a reduction in fee income earned by the Firm and hindering its ability to finance its operations and reimburse its expenses. Business risks are assessed and mitigated as part of the ICAAP.
Market risk - The risk is the exposure to foreign exchange fluctuations due to investment management and performance fees being denominated in currencies other than sterling. The Firm operates currency bank accounts permitting it to receive/pay currency directly.
Credit risk – This risk relates to the exposure to the Funds for non-payment of management and performance fees and counterparty exposure relating to the Firm’s bank balances and any other debtors. This is monitored by the Firm’s Financial Controller.
The Firm is a Limited Liability Partnership, and its capital arrangements are established in its Partnership deed. Its capital contains only members’ capital contributions.
The Firm has a simple operational infrastructure. Its market risk is limited to foreign exchange risk on its accounts receivable in foreign currency, and credit risk from management and performance fees receivable from the funds under its management.
Pillar 1 capital is the higher of:
1. the base capital requirement of €125,000;
2. the sum of market and credit risk requirements; and
3. the Fixed Overhead Requirement
In addition, the Firm, on account of its classification as a full-scope AIFM, is subject to a parallel "own funds" requirement as follows:
The higher of:
1. the funds under management requirement, subject to a minimum of €125,000; and
2. the own funds based on fixed overheads requirement;
Plus whichever is applicable of:
a. the professional negligence capital requirement; or
b. the PII capital requirement.
Pillar 2 capital is calculated by the Firm as representing any additional capital to be maintained against any risks not adequately covered under the requirement in Pillar 1 as part of its ICAAP. When making this calculation, the Firm also takes into account the own funds requirement detailed above, in particular where the own funds exceeds Pillar 1 capital (and the extent to which the Firm is able to use capital instruments to fulfill both requirements).
It is the Firm’s experience that its Pillar 1 capital requirement normally consists of the FOR, although market and credit risks are reviewed monthly. The Firm applies a standardised approach to credit risk, applying 8% to the Firm risk-weighted exposure amounts, consisting mainly of investment management and performance fees due but not paid, and bank balances. Having performed the ICAAP, the Firm has concluded that no additional capital is required in excess of its Pillar 1 capital requirement.
As at the 30th September 2016 the Firm’s regulatory capital position was:
Tier 1 capital: £7,719,000
Total capital resources, net of deductions: £6,319,000
The Firm’s ICAAP assesses the adequacy of its internal capital to support current and future activities. This process includes an assessment of the specific risks to the Firm, the internal controls in place to mitigate those risks and an assessment of whether additional capital mitigates those risks. The Firm also considers a wind down scenario to assess the capital required to cease regulated activities.
We have not identified credit risk exposure classes or the minimum capital requirements for market risk as we believe that they are immaterial. Concerning Pillar 1, it is the Firm’s experience that the Fixed Overhead Requirement establishes its capital requirements and hence market and credit risks are considered not to be material. Furthermore, the market and credit risks component excludes such risks related to the management of alternative investment funds.
Our capital requirements are currently £845,000 (the higher of the minimum capital calculated in accordance with either ‘Pillar 1’ or ‘own funds’) which is well within the level of regulatory capital held.
We consider this amount to be sufficient regulatory capital to support the business and have not identified any areas that give rise to a requirement to hold additional risk-based capital.
The Firm’s ICAAP is formally reviewed by the Members annually, but will be revised should there be any material changes to the Firm’s business or risk profile.
Given the nature and small number of staff, remuneration is set by the Management Board. There is a formal review process of staff performance and based thereon determines each staff members overall level of remuneration and the split of that between base salary and bonus for employees and profit share for members in compliance with the FCA Rules on remuneration.
Given that the Firm has only one business area, investment management, all remuneration disclosed in our audited financial statements is from this business area.
The firm has defined “Code Staff” to be the Portfolio managers, Risk officer and Compliance officer. The aggregate level of remuneration earned by “code staff” for the financial year ended 31st March 2015 was approximately £12.4 million.
As the firm currently has no Alternative Investment Funds which is either domiciled in the European Economic Area ("EEA") or marketed in the EEA there is no requirement for a remuneration statement to form part of the annual report of any Alternative Investment Fund.
There is also a requirement for a remuneration statement to form part of the annual report of any Alternative Investment Fund ("AIF") to which the Firm acts as AIFM and which is either domiciled in the European Economic Area ("EEA") or marketed in the EEA.
The Firm is subject to the AIFMD Remuneration Code ("the Code"), has applied proportionality and, pursuant to this application and where relevant, has disapplied various provisions of the Code.