Overview of the Firm Trinity Street Asset Management LLP (“Trinity Street”, the “firm”, “we”, “our” or “us”) is an
investment adviser registered with the SEC under the Investment Advisers Act of 1940, as
amended (the “Advisers Act”). Trinity Street was founded as Bruce Nelson Capital in 2003 and
registered with the SEC as an investment adviser on March 22, 2010. Trinity Street is based in
London, United Kingdom, where it has been authorised and regulated by the U.K. Financial
Conduct Authority (or its predecessor regulator, the Financial Services Authority) since 2003.
Trinity Street is a limited liability partnership which was established in 2002 under UK law. The
controlling partner is Bruce Nelson Cayman Ltd. Richard Bruce together with his wife Claire
Bruce own the majority of the shares of Bruce Nelson Cayman Ltd., and Edward Bell together
with his wife Catherine Bell also own shares of Bruce Nelson Cayman Ltd. Richard Bruce and
Edward Bell serve on Trinity Street’s management board and are responsible for the strategic
decisions with respect to Trinity Street.
Trinity Street’s strategic objective seeks to deliver consistent excess returns over the long term
to a mainly institutional client base that is equally long-term in its thinking and strategic
positioning. Trinity Street’s client portfolios will ordinarily be invested in global exchange-listed
equity securities.
Our advisory business can primarily be described as follows:
1. Our philosophy: We focus our research on companies experiencing periods of rapid change because we believe this is where disruptions to normal market pricing
mechanisms are most likely to be found. We seek to identify pricing anomalies over the
long term. We believe the key advantage to investing in these types of companies is that
“change” is a constant in business and markets and is ever-present, although where
change takes place is constantly moving. We believe that “Under-Recognised Change”
arises irrespective of whether value, growth or other trends are generally impacting
markets and can therefore be seen as a consistent source of alpha.
2. Specialisation: We engage in global and EAFE equity investing by managing portfolios generally consisting of 30 to 40 stocks. Unlike many other fund managers who may seek
to balance the risk of their global equity strategy underperforming by launching
alternative strategies, our firm-wide strategy relies on global equity investing.
3. Our people: Each of our portfolio managers has considerable experience in global investing within highly regarded financial institutions. Trinity Street is the product of
deep and intensive thought about why large institutions tend to underperform and what
can be done about it. One of the most important aspects of this is creating an
environment in which a team of experienced people can work together to seek to create
a coherent, alpha-generating equity portfolio from a large equity universe.
Investment Services Trinity Street provides investment management services on a discretionary basis to its clients,
including private investment funds and separately managed accounts set up for investment by
institutional investors, such as employee benefit plans, endowment funds, foundations and
religious organizations as well as individual investors. In performing investment advisory
services for its clients, Trinity Street acts as a fiduciary and has a duty to act in the best interests
of the client.
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The funds are not tailored to the needs of any particular private fund investor. Investments are
made in accordance with the stated investment objectives, strategies, restrictions and
guidelines found in the relevant fund’s confidential private offering memorandum. For the
separately managed account clients, Trinity Street makes investments in accordance with
mutually agreed upon written investment guidelines. Trinity Street has established procedures
and controls to help ensure compliance with each client’s investment guidelines and any client-
imposed restrictions.
Trinity Street reserves the right to reject any account not consistent with its investment
philosophy.
Assets under Management As of May 31, 2019, Trinity Street managed approximately $ 3,901,133,971.80 in regulatory
assets under management on a discretionary basis.
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Client Billing Practices Trinity Street typically charges each client a management fee. We negotiate these fees with
clients, and not all clients pay the fee listed in the schedules below. Our standard fee for
investment management services varies based on the investment strategy being employed, a
particular client’s profile, or as otherwise negotiated with the client or its intermediaries. These
differences depend on various factors such as, among other things, the type of client, the client’s
asset levels, the existence of an intermediary relationship, a pre-existing relationship, the
amount of servicing required for the client’s account, and the inception date of an account,
among other things. Management fees are generally payable quarterly in arrears and are
computed based on the market value of the underlying fund investor’s capital account or the
client’s investment portfolio at the end of the billing period. Fees are pro-rated on a daily basis
for a portion of any quarterly fee period. Management fees are generally charged in accordance
with the following fee schedule:
GLOBAL Strategy Fees have two components: A base fee plus a performance component. The base fee schedule
for managed account clients investing in the Global Strategy is as follows:
Amount Fixed fee (bps)
The first USD 50 Million 70
The next USD 50 Million and above 50
Plus a performance component: 20% of the excess relative performance against the benchmark.
There is a high water mark relative to the benchmark.
For the Trinity Street Commingled Global Equity Fund LP – investors are subject to an annual
management fee equal to 1%, Plus: 20% of the excess relative performance against the
benchmark. There is a high water mark relative to the benchmark.
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EAFE Strategy Managed account clients investing in the EAFE Strategy may elect one of the following fee
schedules:
Schedule 1
Amount Fixed fee (bps)
The first USD 50 Million 70
The next USD 50 Million and above 50
Plus a performance component: 20% of the excess relative performance against the benchmark.
There is a high water mark relative to the benchmark.
OR Schedule 2
Amount
Fixed fee (bps)
Total amount less than $50 million
90 on total amount
Total amount greater than $50 million
and up to $100 million
80 on total amount
Total amount greater than $100
million
80 on 1st $100 million,
70 on the balance
For the Trinity Street Commingled EAFE Equity Fund. LP, investors are subject to the fee table in
Schedule 2 above.
Separately Managed Accounts Trinity Street receives a specified management fee from each separately managed account
pursuant to the investment management agreement. Separately managed account fees are
invoiced. Trinity Street reserves the right to negotiate fees. Some clients pay more or less than
others depending on certain factors, including but not limited to, the type and size of the
account.
Commingled Funds Trinity Street receives management fees from the funds as set out in the relevant fund’s
confidential private offering memorandum. Trinity Street reserves the right to negotiate fees.
Some funds and/or fund investors pay more or less than others depending on certain factors,
including but not limited to, the type and size of the investment. The fees that are charged are
specified in the investment management agreement between Trinity Street and each fund.
European Funds Trinity Street is the investment advisor to a fund that was incorporated in Luxembourg as an
open-ended investment company qualifying as a UCITS (Undertaking for Collective Investment
in Transferable Securities). The fund merged with an Irish ICAV on 5 October 2018. This fund is
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not available to US investors. The fund’s fee and expense schedule is found in the fund’s
prospectus.
Sub-advisory Arrangements Trinity Street has been engaged by HGK Asset Management Inc (CRD# 104870) to manage a
number of separately managed accounts and to act as investment manager for a fund sponsored
by HGK Asset Management Inc. As compensation for serving as sub-adviser or investment
manager to these separately managed accounts and fund, Trinity Street receives a portion of the
management fees and performance fees received by HGK Asset Management Inc.
Termination of Accounts; Withdrawals If a new client account is established during a quarter or a client makes an addition to its
account during a quarter, the management fee will be prorated. If a client’s investment
management agreement is terminated or a withdrawal is made from a client account during a
quarter, the management fee payable to Trinity Street will be calculated based on the value of
the assets on the termination date or withdrawal date and prorated for the number of days
during the quarter in which the investment management arrangement was in effect or such
amount was in the account. Similarly, management fees for the funds will be prorated for any
period that is less than a quarter.
Performance Fees or Allocations In addition to management fees, for a number of accounts Trinity Street charges a performance-
based fee or allocation. When calculating net profits, performance-based fees or allocations are
based on benchmark relative returns and are subject to a high water mark.
Other Fees and Expenses Clients may pay other expenses in addition to the fees paid to Trinity Street. For example, clients
may pay costs such as brokerage commissions, transaction fees, custodial fees, transfer taxes,
wire transfer fees and electronic fund fees, and other fees and taxes charged to security
transactions which are unrelated to the fees collected by Trinity Street. In addition, the funds
bear fund legal, compliance, audit and third-party accounting expenses, fees of the fund
administrator, fees and expenses related to various filings (or portions thereof) made in
connection with managing the funds’ portfolios, organizational expenses, research fees and
expenses, bank service fees and other expenses reasonably related to the purchase, sale or
transmittal of assets of the funds.
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Performance-Based Fees As noted in Item 5, for certain accounts, Trinity Street receives performance-based fees for its
investment management services. Such performance-based compensation may create an
incentive for Trinity Street to make investments that are riskier or more speculative than would
be the case in the absence of such performance-based compensation arrangements. In addition,
Trinity Street’s investment personnel are typically compensated on a basis that includes a
performance-based component. Trinity Street and its investment personnel, including
investment personnel that share in performance-based compensation, manage both client
accounts that are charged both management fees and performance-based compensation and
accounts that are charged only management fees. In addition, certain client accounts may be
subject to higher management fees or more favourable performance-based compensation
arrangements than other accounts. When Trinity Street and its investment personnel manage
more than one client account, a potential exists for one client account to be favoured over
another client account.
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Side-By-Side Management Trinity Street has adopted policies and procedures to seek to mitigate possible inherent
conflicts associated with managing accounts for multiple clients. Trinity Street has adopted
trading and allocation policies designed to seek to ensure that its side-by-side management of
accounts with different types of fees is consistent with its fiduciary responsibilities to its clients,
and that no client account is systematically favoured over another. These policies require
Trinity Street to consider each client’s investment objectives and profile and make allocations
based on suitability. Where Trinity Street deems an investment opportunity suitable for more
than one client, Trinity Street’s policy is to allocate the opportunity equitably in order to seek to
ensure that clients have equal access to the same quality and quantity of investment
opportunities, but in determining such allocations, Trinity Street considers a variety of factors
and principles, as further described in Item 12. Accounts are regularly reviewed by the
compliance department to ensure these policies are closely followed and that buy and sell
opportunities are allocated fairly among client accounts.
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The clients of Trinity Street are the funds and the separately managed accounts.
Trinity Street also acts as a sub-adviser to HGK Asset Management Inc for its Global and
International (EAFE) Equity mandates.
Investors in the funds include institutional investors meeting the terms of the exceptions and
exemptions under which the funds operate. Any required minimum investment in any fund is
set forth in the fund’s offering memorandum.
Minimum account size is generally $25 million for opening any separately managed account,
although Trinity Street reserves the right in its sole discretion to accept client accounts with
fewer initial assets.
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The main methods of analysis are based on the following:
Trinity Street’s proprietary research library consists of a significant number of company
spreadsheets. These are company specific research models dating back to 1991 across
many different markets. The objective of using a standardised template is to enable us to
quantify the extent to which our view differs from the market and to ensure that we look
at each stock in the same way. The portfolio managers see this as a crucial investment
discipline because it forces them to compare each global stock idea along the same
parameters.
The portfolio managers’ company visiting programme. The portfolio managers have
logged contacts with hundreds of companies per annum, including the suppliers, clients
and competitors of companies that they are researching. These company meetings are
used to refine models on companies and also generate further potential investment
ideas.
The in-depth analysis of possible Under-Recognized Change opportunities: Here, the
firm undertakes extremely in-depth analysis of possible investment opportunities,
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including divisional level modelling if appropriate, often carried out with direct inputs
from the company (garnered in company visits and phone calls). The exact content of
the model is flexible and depends on the type of company being analysed, but the
outputs are usually much the same and include proprietary forecasts of revenues, cash
flows, earnings, etc., to a degree of detail that enables them to compare their view with
the consensus view prevailing in the market, on which the company’s stock price is
based.
While the portfolio managers have a significant amount of experience in global investing, it is
important to note that no level of experience can guarantee a correct valuation of a company.
Equally, unexpected events may occur internally or externally to change a company’s value in a
way that may be positive or negative to the company’s stock price. This means that the price of
investments and the income from them may fall as well as rise and investors may not get back
the full amount invested. These methods of analysis are based on Trinity Street’s main
investment strategy, which focuses entirely on bottom-up fundamental research of companies
rapidly changing fundamentals. Trinity Street operates with the view that equity markets are
usually efficient and provide an adequate mechanism for valuing companies and taking into
account all of the company-specific data and external influences on such valuations. However,
this pricing mechanism can be interrupted when a company is undergoing rapid and
fundamental change. On occasions, the market can be slow to interpret the impact and
consequences of such change, sometimes leading to major mis-pricings. Consequently, the firm
focuses on rapidly-changing companies, to discern whether the consequences of the change
taking place are “under-recognised” by brokers’ forecasts and/or the market valuation of the
company meaning that the company may be undervalued. All of the stocks in our portfolios have
a clearly identified Under-Recognised Change factor. It takes place irrespective of whether
value, growth or other trends are generally impacting markets. Therefore, we believe that
Under-Recognised Change can serve as a consistent source of alpha in many market
environments.
Risk of Loss Trinity Street cannot give any guarantee that it will achieve client investment objectives or that a
client will receive a return on its investment. It should be noted that investing in securities
involves a risk of loss as well as gain, which clients should be prepared to bear. Past
performance is not a guide to the future and prices of investments may rise as well as fall.
Investors may lose the full amount invested.
Investing in Trinity Street’s products face the following investment risks:
Equity Market Risk: Overall stock market risks may adversely affect the value of the
investments in equity strategies. Factors such as global economic growth and market
conditions, interest rates and political events affect the equity markets.
Company Risk: Individual stocks may decline in value. Additionally, an adverse event,
such as an unfavourable earnings report, may depress the value of a particular
company’s stock.
Management Risk: Our judgements about the attractiveness, value and potential
appreciation of a particular asset class or individual security may be incorrect and there
is no guarantee that individual securities will perform as anticipated. The value of an
individual security can be more volatile than the market as a whole.
Counterparty Risk: Counterparty risk is the risk that the other party or parties to an
agreement or a participant to a transaction, such as a broker or a custodian, might
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default on a contract or fail to perform by failing to pay amounts due or failing to fulfil
the obligations of the contract or transaction.
Economic and Market Events Risk: Global economies and financial markets are
becoming increasingly interconnected and conditions and events in one country, region
or financial market may adversely affect the value of a security of an issuer located in
another country, region or financial market.
Government Intervention and Regulation of Financial Markets: Changes in government
regulation may adversely affect the value of a security.
Emerging Markets: There are greater risks associated with investments in securities of
issuers located in less developed countries than investments in securities of issuers
located in developed markets. Political risk for many developing countries is a
significant factor. During certain social and political circumstances, governments may
be involved in policies of expropriation, confiscatory taxation, nationalization,
intervention in the securities market and trade settlement, and imposition of foreign
investment restrictions and exchange controls. In comparison to more developed
markets, trading volumes in emerging markets may be lower, which can result in a lack
of liquidity and greater price volatility.
In addition, there are risks associated with Trinity Street’s advisory business:
Cybersecurity Risk: The information and technology systems of Trinity Street and of key
service providers to Trinity Street and its clients may be vulnerable to potential damage
or interruption from computer viruses, network failures, computer and
telecommunication failures, infiltration by unauthorized persons and security breaches,
usage errors by their respective professionals, power outages and catastrophic events
such as fires, tornadoes, floods, hurricanes and earthquakes. Although Trinity Street has
implemented various measures designed to seek to manage risks relating to these types
of events, if these systems are compromised, become inoperable for extended periods of
time or cease to function properly, it may be necessary for Trinity Street to make a
significant investment to fix or replace them and to seek to remedy the effect of these
issues. The failure of these systems and/or of disaster recovery plans for any reason
could cause significant interruptions in the operations of Trinity Street or its client
accounts and result in a failure to maintain the security, confidentiality or privacy of
sensitive data, including personal information.
Risk Management Failures: Although Trinity Street attempts to identify, monitor and
manage significant risks, these efforts do not take all risks into account and there can be
no assurance that these efforts will be effective. Moreover, many risk management
techniques, including those employed by Trinity Street, are based on historical market
behaviour, but future market behaviour may be entirely different and, accordingly, the
risk management techniques employed on behalf of clients may be incomplete or
altogether ineffective. Similarly, Trinity Street may be ineffective in implementing or
applying risk management techniques. Any inadequacy or failure in risk management
efforts could result in material losses to clients.
Systems and Operational Risk: Trinity Street relies on certain financial, accounting, data
processing and other operational systems and services that are employed by Trinity
Street and/or by third-party service providers, including the third-party administrator,
market counterparties and others. Many of these systems and services require manual
input and are susceptible to error. These programs or systems may be subject to certain
defects, failures or interruptions. For example, Trinity Street and its clients could be
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exposed to errors made in the confirmation or settlement of transactions, from
transactions not being properly booked, evaluated or accounted for or related to other
similar disruptions in the clients’ operations. In addition, despite certain measures
established by Trinity Street and third-party service providers to safeguard information
in these systems, Trinity Street, clients and their third-party service providers are
subject to risks associated with a breach in cybersecurity which may result in damage
and disruption to hardware and software systems, loss or corruption of data and/or
misappropriation of confidential information. Any such errors and/or disruptions may
lead to financial losses, the disruption of the client trading activities, liability under
applicable law, regulatory intervention or reputational damage.
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By hard copy letter dated 19 June 2017, the financial services regulator in South Korea, the
Korean Financial Services Commission (‘FSC”), notified Trinity Street it intended to fine Trinity
Street 7,500,000 Korean Won (approximately $6,500). A summary of the matter is below.
In February 2016, Trinity Street placed two sell orders in a Korean security for a client which
unintentionally resulted in short positions being taken; which breached Korean short selling
restrictions. In 2014, the custodian for the client effected a restructuring for the client setting up
a new Investment Registration Certificate (“IRC”) account which Trinity Street was advised to
use going forward. Trinity Street was not aware that holdings prior to the restructuring were
still held on an old IRC account (having been advised that the intention was to transfer the
legacy account to the new IRC number). Holdings information did not differentiate between the
two IRC accounts. As soon as the short positions were identified, buy trades were effected to
remedy the position, this being the only available solution at the time. Having reviewed the
matter in detail, Trinity Street is satisfied that there were no systematic issues. This is the first
regulatory sanction to which Trinity Street has been subject and the fine has been paid. Trinity
Street and its management consider the sanction regrettable and remain committed to the
approach that it has held since inception, to seek to comply at all times and in all respects with
the regulatory regimes to which is it subject.
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As described in Item 5, Trinity Street acts as sub-advisor and provides investment management
services with respect to clients of HGK Asset Management Inc. HGK Asset Management Inc
holds shares of Bruce Nelson Cayman Limited, which is the controlling partner of Trinity Street.
Certain grants of special rights may also be made for investors in the funds through separate
side letter agreements. Although certain investors may invest in the funds with different
material terms, Trinity Street will only offer such terms if it believes other investors will not be
materially disadvantaged.
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Transactions and Personal Trading Code of Ethics Trinity Street has adopted a Code of Ethics (the “Code”) that complies with SEC Rule 204A-1
under the Advisers Act. Trinity Street will provide a copy of the Code to any client or
prospective client upon request.
The Code sets forth standards of business conduct for the firm and its employees, access
persons and other individuals involved in the day-to-day business of Trinity Street (collectively,
the “Members of Staff”). The Code is based on the principle that the firm has a fiduciary duty to
act in the best interests of Trinity Street’s clients.
The Code sets forth record keeping requirements and the responsibilities of Trinity Street’s
Chief Compliance Officer (the “CCO”) with respect to the review of personal securities
transactions, personal holdings and trading reports and monitoring compliance with the Code.
Members of Staff must comply with federal securities laws, certify that they have read and
understand the Code and are encouraged to report any violations of the Code to the CCO.
The Code requires all Members of Staff to acknowledge that they have read and understand the
Code and reaffirm such acknowledgment at least annually.
Personal Securities Members of Staff are required to submit to the CCO an initial report and annual reports listing
the reportable securities in their personal accounts and quarterly reports showing all
transactions in reportable securities in their personal accounts, subject to certain exceptions.
All personal transactions involving reportable securities (including private placements and
initial public offerings), other than those specifically exempted by the Code, are required to be
preapproved by the CCO, or his delegate, who will generally deny permission to execute the
transaction unless the CCO is satisfied that there is no conflict of interest with the interests of
clients in the case concerned. Among other things, the Code exempts from the preapproval
requirement transactions involving certain securities that the CCO has determined are not
suitable investments for Trinity Street’s clients.
Trinity Street, in the course of its investment management and other activities, may come into
possession of confidential or material non-public information about issuers, including issuers in
which Trinity Street or its related persons have invested or seek to invest on behalf of clients.
Members of Staff are prohibited from trading either in their personal accounts or client
accounts on the basis of material non-public information.
Gifts and Business Entertainment The Code includes policies and procedures regarding the giving and receiving of gifts and
business entertainment between the firm’s employees and certain third parties (e.g., vendors,
broker-dealers, consultants, etc.) to help mitigate the potential for conflicts of interest
surrounding these practices. In general, Trinity Street limits the amount of gifts and business
entertainment that may be provided by its staff to these parties, and requires the preapproval of
the CCO with respect to any gift, inducement or entertainment offered or received that is valued
above such limits. In addition, even gifts of nominal value must be approved in writing by the
CCO if they involve persons associated with pension plan sponsors, including state, municipal
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and other governmental plans. All Members of Staff are required to report to the CCO any gifts,
inducements or entertainment offered or received.
Outside Business Activities The Code requires Members of Staff to obtain the CCO’s written approval before taking up any
paid or unpaid external charitable, political or business activities. Generally, Members of Staff
may not serve as an executive officer or director or trustee of any business entity with which
Trinity Street conducts business or in whose securities Trinity Street may invest without pre-
approval in writing from the CCO. Members of Staff are required to disclose to Trinity Street in
writing all benefits, including monetary compensation, which they receive for such outside
business activities.
Political Contributions The Code prohibits its Members of Staff from making any political contributions, from any
fundraising or engaging in any political activity in the U.S., the UK or any other jurisdiction.
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Trading The firm’s trading policies and procedures prohibit unfair trading practices and seek to avoid
any conflicts of interests or resolve conflicts in the client’s favour. We follow written policies
and procedures for trade documentation, reporting of trade order status, resolution of trade
errors, trade allocation and trade aggregation. All Trinity Street employees must follow these
policies and procedures which are tested by the CCO to assess their effectiveness.
Brokerage Discretion and Selection Trinity Street generally assumes responsibility for selecting brokers and dealers for the
execution of securities transactions recommended on behalf of its funds or separately managed
accounts. The firm is not affiliated with any broker-dealers and does not execute securities
transactions as a principal. Accordingly, the firm selects unaffiliated third-party broker-dealers
to execute all client transactions as permitted by applicable law. The firm maintains a list of
active/approved trading partners (i.e., counterparties) with whom the firm may transact.
Areas considered in the selection of brokers include the following (as appropriate in the
particular case being considered):
Regulatory status;
Financial status;
Ability to maintain the confidentiality of trading intentions;
Accuracy and timeliness and certainty of execution, settlement, clearance and error /
dispute resolution processes;
Liquidity of the securities traded;
Block trading and block positioning capabilities;
Ability to place trades in difficult market environments;
Expertise as it relates to specific securities;
Market intelligence;
On-going individual assessment of whether best execution achieved with a specific
broker – e.g. retrospective trade review against comparable market trades;
Efficient execution and competence in supporting the trade execution process
Depth of client base;
Access to primary market issuance;
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Understanding of Trinity Street’s investment process;
Ability to manage conflicts of interest;
Business reputation;
Ongoing reliability; and
Overall costs of a trade including commissions, mark-ups, markdowns or spreads.
The firm ordinarily reviews its active broker list on a periodic basis and assesses each broker on
a combination of factors including those listed above. Any brokerage services furnished by
brokers through which the firm effects securities transactions may be used by the firm in
advising other clients and funds and not necessarily the same investment portfolio.
Research and Soft Dollars
Research services may include information or analysis relating to companies, sectors, countries
and other services that may assist the firm in its investment decision. As a UK investment
manager impacted by “MiFID II” regulations, Trinity Street has set up a research payment
account and the research budget is agreed upon with the client, and trade execution is priced
separately with the broker (research providers may also be brokers but the arrangements for
research are separate from broking activities). These arrangements have unbundled the cost of
research and executions services required by the UK Financial Conduct Authority and will be
consistent with Section 28(e) of the Securities Exchange Act of 1934 (including the SIFMA AMG
No-Action Letter dated October 26, 2017) which permits the use of "soft dollars" in certain
circumstances. The availability and quality of research provided are assessed by the firm
periodically. Services that assist Trinity Street solely in its performance of non-research related
functions will be paid by the firm.
Best Execution Trinity Street, as a fiduciary to its advisory clients, endeavors to seek best execution for client
transactions, seeking to obtain not necessarily the lowest commission cost but the best overall
qualitative execution. When determining best execution on a particular trade, Trinity Street’s
considerations include:
Quality of execution
The nature and character of the relevant markets on which the transactions will be
executed
The broker's execution experience, integrity and credit-worthiness
Operational efficiency
Block Trading of Client Orders Trinity Street will only aggregate client orders (i.e., engage in block trading) when it is unlikely
that the aggregation of orders will work to the disadvantage of any client whose order is
aggregated. By aggregating orders, clients may be able to benefit from a better trade price,
lower transaction costs or overall better transaction terms achieved through larger, bulk
transactions.
When aggregating client orders, management’s considerations include but are not limited to the
following:
No advisory account is favoured over any other account. Clients participating in an
aggregated order shall receive an average share price with other transaction costs
shared on a pro-rata basis;
The firm will not aggregate transactions unless block trading is consistent with the
firm’s duty to seek best execution and the terms of the firm’s investment management
agreement with each client for which trades are being aggregated;
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Before placing a blocked trade, the portfolio manager will specify the participating
client accounts and the intended allocation among those clients;
If the aggregated order is filled in its entirety, it will be allocated among clients in
accordance with the terms of the order; if the order is partially filled, it will be allocated
on a pro-rata basis (subject to rounding) within the same terms of the order; provided,
however, that if the partial execution results in a particular client’s allocation being de
minimis in nature, that client may be excluded from the investment opportunity; and
The firm’s books and records will separately reflect the orders for each client account
that are aggregated, as well as the securities bought and sold for and held by that
account.
Trade Allocation Aggregated trades will be allocated on a basis believed to be fair and equitable; no participating
client will receive preferential treatment over any other. Trinity Street will strive to ensure that
no participating client will be systematically disadvantaged by the aggregation, placement or
allocation of trades.
When allocating trades Trinity Street will take into consideration each client’s investment
objectives and profile and will make allocations based on suitability. Where the firm deems an
investment opportunity suitable for more than one client, Trinity Street will allocate such
investment opportunity equitably in order to ensure that clients have equal access to the same
quality and quantity of investment opportunities, but in determining such allocations will
consider a variety of factors and principles, including, but not limited to the following:
Legal and regulatory restrictions affecting the participation rates for any clients;
Each client’s own investment horizon and restrictions;
Liquidity preference or availability;
Other investment opportunities that may be available to a client;
Desired portfolio diversification;
Target return;
Risk and/or volatility tolerance of the client;
Size of the investment and minimum investment sizes – for example, where allocation of
an investment opportunity would be insufficient to make up a meaningful portion of a
client’s portfolio, such client may be excluded from the investment opportunity due to
the de minimis nature of the allocation; and
The need to rebalance positions held by any client in an investment due to capital
inflows or outflows.
Error Correction Trades From time to time, trading errors may occur. If it appears that a trade error has occurred, the
Head of Operations, together with the CCO, will investigate the circumstances surrounding the
error and will determine an appropriate resolution in accordance with Trinity Street’s policy.
Trinity Street will correct trade errors as soon as practicable and will be responsible for its own
trade errors (but not the trade errors of other persons, including third-party brokers and
custodians, unless expressly agreed). If a trade error (other than a trade misallocation) is
discovered on the trade date or thereafter, the trade will be broken, if possible. Generally,
where Trinity Street has determined that it bears responsibility for a trade error, it will seek to
make the client whole. Trinity Street will bear the costs associated with correcting the trade
error and will generally reimburse the client for any losses suffered and, in the event that the
client made a financial gain as a result of any trade error, the client will be entitled to retain such
gain. Notwithstanding the foregoing, if, after a thorough investigation and evaluation of the
circumstances surrounding a trade error, the CCO concludes that exceptional circumstances
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have caused the error, the CCO has discretion to resolve the error in a manner other than as
described above.
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Account Reviews Account reviews are performed daily by a portfolio manager or a designee. Reviews are
triggered by various factors including portfolio model changes, changes in client investment
objectives, account deposits and withdrawals, volatile markets or notification from the
operations team that the price target for individual securities has been reached. Among other
things, reviewers evaluate the composition of the portfolios relative to the benchmark and
review numerous risk statistics on both an ex-post and ex-ante basis. Trinity Street also
compiles an internal daily information package which includes a matrix of holdings and values
per account across strategies and Factset attribution analysis to conduct holdings based and
returns based analysis at the security level.
Trinity Street also performs reconciliations of its records of the securities and cash within its
client’s accounts against the records of the custodians who actually hold the securities and cash.
These reconciliations are performed by Trinity Street’s operations personnel. At a minimum,
positions and cash are reconciled on a monthly basis. To the extent any discrepancies are
identified through the performance of these reconciliations, our operations personnel will work
with both our internal team and the custodian to resolve any such discrepancies. The
statements and records of the custodian are the official books and records for the account.
Client Reporting Trinity Street will normally provide clients with reports not less frequently than quarterly.
Client reports include a portfolio appraisal, reconciliation against custodian, and performance
returns. Additional or different information will be provided to clients as agreed by Trinity
Street and the client. We urge clients to carefully review these reports and compare them to the
statements that they receive from the fund administrator or their custodian. The information in
our reports may vary from custodial statements based on accounting procedures, reporting
dates or valuation methodologies of certain securities.
In addition to reports tailored to clients, Trinity Street issues a variety of general circulation
materials for clients and consultants about its investments and investment processes.
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Relationships with Consultants Many of our clients and prospective clients retain investment consultants to advise them on the
selection and review of investment managers. Trinity Street may have certain accounts that
were introduced to Trinity Street through consultants. These consultants or their affiliates may,
in the ordinary course of their investment consulting business, recommend Trinity Street’s
investment advisory services, or otherwise place Trinity Street into searches or other selection
processes for a particular client.
Trinity Street has extensive dealings with investment consultants, both in the consultants’ role
as adviser for their clients and through independent business relationships. Specifically, we
provide consultants with information on portfolios we manage for our mutual clients, pursuant
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to our clients’ directions. Trinity Street also provides information on our investment styles to
consultants, who use that information in connection with searches they conduct for their clients.
Compensation for Client Referrals If a client is referred to us by a solicitor, we will pay a referral fee to the extent permitted under
applicable SEC rules. The referral fee is paid entirely from our investment advisory fee; the
client does not pay an added fee. The solicitor is required to inform the client about his
relationship with Trinity Street at the time of solicitation and deliver to the client a copy of this
Form ADV and a written disclosure explaining the terms of the arrangement.
Trinity Street’s only active arrangement is with Centenium Advisors. While no longer a solicitor
for the firm, Centenium Advisors continues to receive finder’s fees for existing introductions.
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Trinity Street is subject to SEC Rule 206(4)-2 under the Advisers Act and is deemed to have
custody over certain fund assets as a result of its related persons serving as the general partners
of limited partnerships. The firm complies with the custody rule by maintaining all assets
physically at third-party qualified custodians and by requiring any US fund to be subject to an
annual audit by an independent auditing firm and meeting the other conditions of the pooled
vehicle annual audit provision.
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At the outset of the advisory relationship, Trinity Street requires clients to execute and deliver
limited powers of attorney authorizing the firm to act on behalf of the client, in such form as
may be required by various brokerage firms, banks, etc. Trinity Street obtains discretionary
investment authority from the client through the execution of an investment management
agreement at the outset of the advisory relationship which sets forth the scope of Trinity
Street’s discretion. Trinity Street exercises investment management discretion in a manner
consistent with the stated investment objectives for the particular client account and in
accordance with any investment guidelines as may be set forth and provided to Trinity Street in
writing.
Class Action Suits and Other Legal Actions Trinity Street is not obligated to, and typically does not, take any legal action with regard to
class action suits relating to securities purchased by Trinity Street for its clients. Trinity Street
provides instructions to custodians and brokers regarding tender offers and rights offerings for
securities in client accounts. However, Trinity Street does not provide legal advice to clients
and, accordingly, does not determine whether a client should join, opt out of or otherwise
submit a claim with respect to any legal proceedings, including bankruptcies or class actions,
involving securities held or previously held by the client. Trinity Street generally does not have
authority to submit claims or elections on behalf of clients in legal proceedings. Should a
separately managed account client, however, wish to retain legal counsel and/or take action
regarding any class action suit proceeding, Trinity Street will attempt to provide the client or
the client’s legal counsel with information that may be needed upon the client’s reasonable
request.
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Trinity Street considers it to be of paramount importance when assessing proxy voting
responsibilities on behalf of its clients to recognize the fiduciary responsibility it assumes in
acting as investment adviser. The firm also recognizes the need to exercise its proxy voting
obligations with a view towards seeking to enhance its clients' long term investment values. To
help achieve its objectives, it is Trinity Street’s policy, subject to the considerations described
below, to use its best efforts to vote proxies arising on all shares held on behalf of its clients.
Trinity Street has a commitment to evaluate and vote proxy issues in the best interests of its
clients. The firm will generally vote proxy proposals, amendments, consents or resolutions
relating to client securities, including interests in private investment funds, if any (collectively,
"proxies"), in accordance with the following guidelines:
Trinity Street will generally support a current management initiative if TSAM’s view of
the issuer’s management is favorable;
Trinity Street will generally vote to change the management structure of an issuer if it
would increase shareholder value;
Trinity Street will generally vote against management if there is a clear conflict between
the issuer’s management and shareholder interest;
In some cases, even if Trinity Street supports an issuer’s management, there may be
some corporate governance issues that the firm believes should be subject to
shareholder approval; and
Trinity Street may abstain from voting proxies when it is determined that the cost of
voting the proxy exceeds the expected benefit to our clients.
Generally, all proxies are evaluated and voted on a case-by-case basis, considering each of the
relevant factors set forth above. Trinity Street, in all cases, will vote for any proposals that we
believe will be most advantageous to our clients.
There may be times in which conflicts may arise between the interest of the client and the
interest of the firm. The firm will strive to address such conflicts in the best interests of the
client. If a perceived material conflict of interest arises in connection with a proxy vote, Trinity
Street may resolve such perceived material conflict of interest as follows:
Trinity Street may delegate the voting decision for such proxy proposal to an
independent third party;
Trinity Street may delegate the voting decision to an independent committee of
partners, members, directors or other representatives of the client, as applicable;
Trinity Street may inform the investors or account of the conflict of interest and obtain
consent to (majority consent, in the case of a fund) vote the proxy as recommended by
the firm; or
Trinity Street may obtain approval of the decision from the CCO.
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If an independent third party or a committee is utilised in making a decision to vote on a proxy,
the firm will submit the proxy to such third party or committee for a decision. The firm will
execute the proxy in accordance with such third party or committee's decision and update
Trinity Street’s proxy recordkeeping.
Trinity Street and its Members of Staff generally do not invest in the same securities that Trinity
Street recommends to clients and therefore does not anticipate a situation where there would
be a conflict between maximizing long-term investment returns for clients and the interests of
the firm or its Members of Staff. If such a situation should arise, the senior management will
independently review and evaluate the proxy proposal.
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Open Brochure from SEC website