LEGAL
INFORMATION

INTERMEDIATION FEES

Intermediation fees report for the financial year 2019

This report has been published in compliance with article 314-82 of the General Regulations of l'Autorité des Marchés Financiers.

In the context of investment management mandates or managed UCIs, Lazard Frères Gestion outsources order execution to services providers. As the intermediation fees incurred by these services represented over €500,000, Lazard Frères Gestion is obliged to report on the conditions under which investment decision support and order execution services were used. Lazard Frères Gestion must also specify the breakdown between 1° intermediation fees relating to order reception and transmission services and order reception services, and 2° intermediation fees relating to investment decision support and order execution services.

Investment decision support and order execution services (IDSS)

For 2019, Lazard Frères Gestion used investment services providers with which a commission sharing agreement had been signed.

The objective of our policy targeting the best possible selection and control of IDSS providers is, when possible, to collaborate with the best services providers for each speciality (regional analysis, sector analysis, analysis by market cap, arbitrage, etc.).

With this in mind, we may use analysis provided by sell-side executing broker research departments, as well as analysis available from independent research bureaus.

The quality of services from IDSS providers shall be controlled and assessed by the committee which also analyses and controls broker execution services.

IDSS provider monitoring and any potential reallocation of resources between services providers is undertaken using the methodology described below.

Intermediation fees breakdown

Intermediation fees relate to transactions in equities, assimilated instruments and forward market instruments traded in the context of investment management mandates and managed UCIs. Lazard Frères Gestion is authorised to receive and transmit orders. Intermediation fees are therefore paid to remunerate services providers for investment decision support and order execution services. Global remuneration is split 62.5% for investment decision support and 37.5% for order execution.

Investment decision support and order execution service fees repaid to third-party services providers in the context of commission sharing agreements represented 4.55% of total intermediation fees paid in 2019.

Prevention of conflicts of interest

This report also covers measures implemented to prevent and resolve potential conflicts of interest in our choice of services providers.

Lazard Frères Gestion reviews its services provider selection bi-annually at Broker Committee meetings which are attended by the CIO, fund managers, dealers, compliance and the head of the middle-office. Selection draws on a transparent review process based chiefly on :

  - quality and availability of research,
  - quality of order execution and prices,
  - administrative processing,
  - commercial relationship (enabling meeting issuers).

Furthermore, Lazard Frères Gestion does not receive any soft commissions or intermediation fee retrocessions from its services providers.

For the financial year 2017, no conflicts of interests were detected within Lazard Frères Gestion.

Variable management fees: calculation modalities

In accordance with the European Securities and Markets Authority’s (ESMA) “guidelines on performance fees in UCITS and certain types of AIFs” (ESMA34-39) and with the recommendation 2021-01 from the AMF, Lazard Frères Gestion will modify its documents concerning the calculation modalities of variable management fees for its relevant UCIs. The objective of the ESMA’s guidelines is to promote increased convergence and normalization in the area of performance fees.

Reminder about the principle of performance fees:

If, on the crystallization date of the fund, the performance of the UCI (reinvested net dividends and excluding variable management fees) is superior to that of the benchmark index, performance fees are paid, even in the case of a negative performance of the fund.

New calculation modalities:

For each relevant UCI, the variable management fees will henceforth be calculated taking into account performance realized over the past five years of the fund’s existence, or since its creation if the UCI was launched less than five years ago. The periods of underperformance are thus deducted from the periods of outperformance in the calculation of variable fees.

To illustrate the way this mechanism functions, the ESMA published an example that Lazard Frères Gestion uses here for information purposes. The below chart shows the years of outperformance and of underperformance of a UCI with respect to its benchmark index (blue line). Only the years marked by a green dot are characterized by the payment of performance fees.

  Net performance vs. the benchmark index Underperformance to be compensated in the following year Payment of performance fees
Year 1 5% 0% Yes
Year 2 0% 0% No
Year 3 -5% -5% No
Year 4 3% -2% No
Year 5 2% 0% No
Year 6 5% 0% Yes
Year 7 5% 0% Yes
Year 8 -10% -10% No
Year 9 2% -8% No
Year 10 2% -6% No
Year 11 2% -4% No
Year 12 0% 0%* No
Year 13 2% 0% Yes
Year 14 -6% -6% No
Year 15 2% -4% No
Year 16 2% -2% No
Year 17 -4% -6% No
Year 18 0% -4%** No
Year 19 5% 0% Yes
  Year 1
Net performance vs. the benchmark index 5%
Underperformance to be compensated in the following year 0%
Payment of performance fees Yes
  Year 2
Net performance vs. the benchmark index 0%
Underperformance to be compensated in the following year 0%
Payment of performance fees No
  Year 3
Net performance vs. the benchmark index -5%
Underperformance to be compensated in the following year -5%
Payment of performance fees No
  Year 4
Net performance vs. the benchmark index 3%
Underperformance to be compensated in the following year -2%
Payment of performance fees No
  Year 5
Net performance vs. the benchmark index 2%
Underperformance to be compensated in the following year 0%
Payment of performance fees No
  Year 6
Net performance vs. the benchmark index 5%
Underperformance to be compensated in the following year 0%
Payment of performance fees Yes
  Year 7
Net performance vs. the benchmark index 5%
Underperformance to be compensated in the following year 0%
Payment of performance fees Yes
  Year 8
Net performance vs. the benchmark index -10%
Underperformance to be compensated in the following year -10%
Payment of performance fees No
  Year 9
Net performance vs. the benchmark index 2%
Underperformance to be compensated in the following year -8%
Payment of performance fees No
  Year 10
Net performance vs. the benchmark index 2%
Underperformance to be compensated in the following year -6%
Payment of performance fees No
  Year 11
Net performance vs. the benchmark index 2%
Underperformance to be compensated in the following year -4%
Payment of performance fees No
  Year 12
Net performance vs. the benchmark index 0%
Underperformance to be compensated in the following year 0%*
Payment of performance fees No
  Year 13
Net performance vs. the benchmark index 2%
Underperformance to be compensated in the following year 0%
Payment of performance fees Yes
  Year 14
Net performance vs. the benchmark index -6%
Underperformance to be compensated in the following year -6%
Payment of performance fees No
  Year 15
Net performance vs. the benchmark index 2%
Underperformance to be compensated in the following year -4%
Payment of performance fees No
  Year 16
Net performance vs. the benchmark index 2%
Underperformance to be compensated in the following year -2%
Payment of performance fees No
  Year 17
Net performance vs. the benchmark index -4%
Underperformance to be compensated in the following year -6%
Payment of performance fees No
  Year 18
Net performance vs. the benchmark index 0%
Underperformance to be compensated in the following year -4%**
Payment of performance fees No
  Year 19
Net performance vs. the benchmark index 5%
Underperformance to be compensated in the following year 0%
Payment of performance fees Yes

* The underperformance of Y12 to be taken forward to the following year (Y13) is 0% (and not -4%) in light of the fact that the residual underperformance coming from Y8 that was not yet compensated (-4%) is no longer relevant as the 5-year period has elapsed (the underperformance of Y8 is compensated until Y12).

** The underperformance of Y18 to be taken forward to the following year (Y19) is 4% (and not -6%) in light of the fact that the residual underperformance coming from Y14 that was not yet compensated (-2%) is no longer relevant as the 5-year period has elapsed (the underperformance of Y14 is compensated until Y18).

ORDER EXECUTION AND INTERMEDIARY SELECTION POLICY

DOWNLOAD THE ORDER EXECUTION AND INTERMEDIARY SELECTION POLICY.

DOWNLOAD THE ANNUAL REPORT ON THE EXECUTION OF ORDER.

APPLICATION OF THE DODD-FRANK ACT BY LAZARD FRERES GESTION

Lazard Frères Gestion SAS does not provide investment services, directly or indirectly, to any clients or investors qualified as “US persons” (as defined by Rule 902 of Regulation S under the 1933 United States Securities Act). Furthermore, Lazard Frères Gestion SAS shall not accept potential clients or investors who :

(i) acquire financial instruments on behalf of, or in the name of, a US person or
(ii) through an intermediary providing investment services on behalf of, or in the name of, a US person

CLAIMS PROCEDURE

LFG informs its clients that it is implementing a claims procedure. To ensure that claims are processed efficiently, they must be addressed in written to the Secrétariat Général at Lazard Frères Gestion, 25 rue de Courcelles, 75008 Paris.

Upon reception of a claim, Lazard Frères Gestion commits to process the claim within ten working days after reception of the claim. Barring a response within the aforementioned ten working days, Lazard Frères Gestion will commit to respond within a delay of two months as of reception of the claim, unless unexpected, justified circumstances arise. If the client deems that the claim is unsatisfactorily processed by Lazard Frères Gestion, then the former can request mediation with the Autorité de Marché Financier Ombudsman at the following address: Autorité des Marchés Financiers, Service Médiation – 17 Place de la Bourse, 75082 PARIS-CEDEX 02, or simply fill in an electronic form on the AMF’s internet site on http://www.amf-france.org (AMF Mediator section). This site also contains a mediation charter drafted by the AMF’s Ombudsman.

Information from Lazard Frères Banque

Lazard Frères Banque informs its clients that its banking mobility guide is available from its Services desk at 121, boulevard Haussmann, Paris 75008.

Voting policy

DOWNLOAD LAST EXERCISE REPORT OF THE VOTING RIGHTS.

Website intellectual property rights

This website and the information included within the site, such as brands, logos, charts and photography are protected by intellectual property laws. The data included may not be reproduced or transmitted to third parties, or used for commercial or non-commercial purposes, without prior written authorisation from Lazard Frères Gestion. Specific pages and/or sections of the site may be copied or printed out for your own personal use, provided that you do not delete the references to copyright or intellectual property rights.

The Lazard Frères Gestion name and associated logo are trademarks registered by the Lazard Group. Copying, deleting, reusing or modifying the name and associated logo shall be considered as a breach of copyright.

Confidence in the digital economy

Lazard Frères Gestion SAS is an authorised fund management company registered with l'Autorité des Marchés Financiers, the French market regulator, under number GP 04 000068.

  - Address/registered office: 25, rue de Courcelles 75008 Paris
  - RCS number: PARIS B 352 213 599
  - Capital: €14,487,500 
  - Intra-community VAT number: FR21352213599
  - Person responsible for publication: François-Marc Durand
  - Website host: Lazard Frères Gestion
 - Reference made to the simplified declaration of the CNIL, the French data protection authority, regarding data concerning clients: no client information is collated through the websites

Technical integrity and defects

The security and the integrity of communications via the internet cannot be guaranteed. Lazard Frères Gestion therefore declines all responsibility in the event of technical defects, particularly regarding difficulty of access to the website or the unavailability of the website.

FATCA, a new regulatory measure for non-US financial institutions

FATCA objectives and legal framework

The Foreign Account Tax Compliance Act (FATCA) is a US law which was ratified on 18 March 2010 with the objective of preventing US tax evasion. Under FATCA, an annual declaration of accounts held outside of the US by US taxpayers must be made to the US Internal Revenue Service (IRS).

US tax legislation obliges US taxpayers, wherever their country of residence, to make their own declaration.

The regulations concern “US Persons”, i.e. US nationals or US residents. Under the regulations, financial institutions are required to report on the identity of US nationals or US residents and their account balances, financial revenues and, in the future, products from the sale of securities.

The first annual IRS declaration was drafted for the year 2015 regarding 2014. This declaration shall also concern the accounts of corporations and trusts held by US taxpayers.

In France, the FATCA law has been transposed through the Inter-Governmental Agreement (IGA) signed on 14 November 2013 and submitted to parliament for ratification. The agreement aims to render the reporting of banking and tax information obligatory between France and the US.

The FATCA law concerning Lazard

From 1 July 2014, Lazard Frères Banque and Lazard Frères Gestion must comply with the FATCA law under their status as Participating Financial Institutions granted by the IRS.

In this context, Lazard Frères Banque and Lazard Frères Gestion apply identification obligations under the FATCA law.

Upon opening an account, Lazard collects information from individual and corporate clients to enable the identification of US Persons and request clients to confirm their status.

Information regarding existing Lazard clients is also analysed in order to identify elements which may determine a US Person status. Clients concerned shall be contacted in order to verify their status as defined by the FATCA law.

Clients may contact their usual correspondents for any further information.

Solvency II

In accordance with AMF Position 2004-07, Lazard Frères Gestion SAS informs holders of units and/or shareholders of its managed UCIs that it may have to report the composition of the UCI portfolios to certain professional investors requiring this information, in order to calculate regulatory requirements, under EC Directive 2009/138/ (known as Solvency II).

Remuneration policy

The fixed and variable remunerations paid by the management company to its staff, in proportion to the investment made in the management of Undertakings for Collective Investment, excluding management under mandate, can be obtained on request by mail from the legal department of the UCI of Lazard Frères Gestion.

The total amount of variable compensation is set by the Lazard Group based on various criteria, including the financial performance of the Lazard Group over the past year, taking results into account.

General Management decides on the total amount of the remuneration divided between fixed and variable remuneration, in compliance with the absolute separation between the fixed and variable components of the remuneration.

The total amount of variable compensation is determined taking all risks into account.

The amount of variable compensation is then individualized and determined in part on the basis of the performance of each Identified Person.

General Management supervises the determination of the individual amount of compensation, which is based in particular on an individual assessment sheet, which is used as a basis for the annual performance review.

The criteria for the annual individual performance review make it possible to measure the suitability of Identified person for the position they occupy, to take their skills into account, and to assess their reliability and autonomy.

This evaluation takes into account the achievement of objectives for the past year and allows future objectives to be set accordingly.

The compensation policy promotes rigorous and effective risk management in terms of sustainable development. Thus, the performance review of the identified person takes into account not only financial risks but also sustainability risks.

The compensation policy is reviewed every year and is fully compliant with the compensation policies and procedures put in place by Lazard Frères Gestion.
Every year, the committee responsible for monitoring the compliance of the compensation policy of Lazard Frères Gestion issues an opinion as to the proper application of the compensation policy and its compliance with applicable regulations. This committee includes two members who are independent of the management company.

Privacy Statement LFG

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