Massachusetts Water Resources Authority (“MWRA”) Employees’ Retirement System
IMPORTANT PERFORMANCE DISCLOSURES
You are urged to compare the information contained in this report to the account statements of your
Administrator, which are the official books and records.
The information contained in this report is provided for informational purposes only and is not intended as an
offer or solicitation of an offer for the purchase or sale of any security and should not be relied upon by you in
evaluating the merits of investing in any securities.
Select Equity Group, L.P. ("SEG" or "Manager") is a US-based investment management firm registered as an
investment adviser with the Securities and Exchange Commission. Unless otherwise indicated, the
performance and other data referred to in this letter/report represents the returns of Baxter Street Fund, L.P.,
which closely tracks Baxter Street Offshore Fund, Ltd. and Baxter Street Fund II, L.P., since their inceptions
(collectively, the "Fund" or "Funds"). While the three Funds are managed in parallel, performance may differ
among the entities due to the timing of fund flows and other factors. Each of the Funds is an unregistered
pooled investment vehicle over which SEG maintains discretionary authority. Separate performance schedules
are available for Baxter Street Offshore Fund, Ltd. and Baxter Street Fund II, L.P.
The performance data herein represents past performance, which is not indicative of future results.
Performance is expressed in US dollars. Unless otherwise stated, performance results for the Fund reflect the
performance earned by a Fund investor who had invested at the beginning of each year under a model fee
structure of the highest fee structure in place for the respective fiscal years. From inception through
September 2013, the Fund's performance is presented net of an annualized base management fee of 1.25% of
net asset value charged monthly in arrears. From October 2013 onward, the performance is presented net of
an annualized management fee of 1.50%. Separately managed accounts may be subject to different fee
structures set forth in their investment management agreements.
Please note the returns presented in the attached for the Fund are inclusive of both the restricted and
non-restricted interest/share classes. Performance between the restricted and non-restricted classes may
differ due to allocations of new issues. Additional information regarding the allocation of specific IPOs, and
their effect on the restricted and non-restricted interest/share class performance, is available upon request.
Fund performance is calculated monthly using the net asset value appreciation (net of all fees and expenses
including a model fee structure described above) as a percentage of beginning-of-month net asset value
(appropriately adjusted for any capital activity). Purchases and sales of securities are recorded on a trade
date basis. Realized gains and losses from security transactions are generally determined using the specific
identification method. Unrealized gains and losses from investment transactions are recognized as income.
Dividend income is recorded on the ex-dividend date and interest income is recorded on an accrual basis. The
Fund's annual returns are calculated by linking the monthly performance through compounded multiplication.
Exposure to certain derivative instruments may not always be reflected in the data presented in this report
(e.g., certain named securities may be owned via swap). The Fund's cumulative rate of return is calculated by
linking the Fund's annual rates of return. Fund average annualized rates of return are equivalent to the annual
rate of return which, if earned in each year of the indicated multi-year period, would produce the actual
cumulative rate of return over the time period. Computations assume reinvestment of all dividends, interest
and capital gains. Geographic exposure is determined by using the MSCI Global Investable Market Indices
("GIMI") Methodology for country classification. Sector exposure is derived from FactSet which uses GICS
industry classification. Manager reserves the right to use a different or internal methodology for
classification if a security is not classified by MSCI/GICS or if it does not agree with the assigned
classification. Securities may currently be held in the portfolio where the manager used internal
classification. Much of the data and other information contained in this letter/report is unaudited and is
collected, in whole or in part, from a source believed by SEG to be reliable. SEG cannot guarantee the accuracy
of the data/information and therefore shall not be held liable for inaccuracies. Assets are as of month end.
The average exposure is calculated using daily exposures and such average exposures and the resulting
internal return calculations are approximations. The cash position, if shown, is from our accounting system
which assumes full payment of equity swaps. The actual cash held in the portfolio may differ significantly
from this report.
Any discussions regarding potential future events and their impact on any Fund are based solely on historic
information and SEG's estimates and/or opinions, are provided for illustrative purposes only, and are subject
to further limitations as specified elsewhere in this material. No guarantee can be made of the occurrence of
such events or the actual impact such events would have on any Fund's future performance.
This document may be issued in the United Kingdom by Select Equity Group, L.P. to, and/or directed at, only
persons to or at whom it may lawfully be issued or directed under the Financial Services and Markets Act
2000 (Financial Promotion) Order 2005, including persons who are authorized under the Financial Services
SELECT EQUITY GROUP, L.P.
380 Lafayette Street
New York, New York 10003
212.601.9675
[email protected]
and Markets Act 2000 ("FSMA"), certain persons having professional experience in matters relating to
investments, high net worth companies, high net worth unincorporated associations or partnerships, trustees
of high value trusts or persons who qualify as certified sophisticated investors. Interests in the Fund are only
available to such persons in the United Kingdom and this document must not be relied or acted upon by any
other persons in the United Kingdom. In order to qualify as a certified sophisticated investor a person must:
(a) have a certificate in writing or other legible form signed by an authorized person to the effect that he is
sufficiently knowledgeable to understand the risks associated with a particular type of investment; and (b)
have signed, within the last 12 months, a statement in a prescribed form declaring, amongst other things,
that he qualifies as a sophisticated investor in relation to such investments. This document is exempt from
the general restriction in Section 21 of FSMA on the communication of invitations or inducements to engage
in investment activity on the grounds that it is being issued to and/or directed at only the types of person
referred to above. The content of this document has not been approved by an authorized person and such
approval is, save where this document is directed at or issued to the types of person referred to above,
required by Section 21 of FSMA. An investment in the Fund may expose an investor to a significant risk of
losing all of the amount invested. The Fund is a Limited Partnership (while offshore funds are Limited
Companies) and any person who acquires interests in the Fund will not thereby be exposed to any significant
risk of incurring additional liability. Any person who is in any doubt about investing in the Fund should consult
an authorized person specializing in advising on such investments.
At various points in this letter/report, the returns of the Fund may be compared to the MSCI ACWI (AII
Country World Index) ex USA or the S&P 500. The MSCI ACWI ex USA Investable Market Index (IMI) captures
large, mid and small cap representation across 22 of 23 Developed Markets (DM) countries (excluding the
United States) and 21 Emerging Markets (EM) countries (lists available upon request). The S&P 500, which is
a market capitalization-weighted index, contains the 500 most widely held companies chosen with respect to
market size, liquidity and industry. The volatility of this index may be materially different from that of the
Fund. Neither S&P nor its third party information providers shall be liable with respect to the data and
information contained in this report or the context from which it is drawn. "S&P," "S&P 500" and "S&P 400"
are registered trademarks of Standard & Poor's. Neither MSCI nor any other party involved in or related to
compiling, computing or creating the MSCI data makes any express or implied warranties or representations
with respect to such data (or the results to be obtained by the use thereof), and all such parties hereby
expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a
particular purpose with respect to any of such data. Without limiting any of the foregoing, in no event shall
MSCI, any of its affiliates or any third party involved in or related to compiling, computing or creating the
data have any liability for any direct, indirect, special, punitive, consequential or any other damages (including
lost profits) even if notified of the possibility of such damages. No further distribution or dissemination of
the MSCI/S&P data is permitted without MSCI's/S&P's express written consent.
Any investor who subscribes, or proposes to subscribe, for an investment in an unregistered pooled
investment fund must be able to bear the risks involved and must meet an unregistered pooled investment
fund's suitability requirements. Some or all alternative investment programs may not be suitable for certain
investors. No assurance can be given that an unregistered pooled investment fund's investment objectives
will be achieved. Such investments are typically speculative and involve a substantial degree of risk. An
investor must realize that he or she could lose all or a substantial amount of his or her investment in an
unregistered pooled investment fund. The investment manager has total trading authority over the
unregistered pooled investment fund, and the fund is dependent upon the services of the investment
manager. The use of a single adviser could mean lack of diversification and, consequently, higher risk.
Unregistered pooled investment funds are generally highly illiquid. There is no secondary market for an
investor's interest in an unregistered pooled investment fund and none should be expected to develop. There
are restrictions on transferring interests in an unregistered pooled investment fund. The instruments in
which an unregistered pooled investment fund invests may involve complex tax structures and there may be
delays in distributing important tax information. Certain of the trades executed for an unregistered pooled
investment fund may take place on foreign markets, which inherently involves a greater degree of risk. For a
complete list of the risk factors and conflicts of interest with respect to an unregistered pooled investment
fund in which you propose to invest or currently invest, please refer to the unregistered pooled investment
fund's offering memorandum.
THE INFORMATION CONTAINED IN THIS REPORT IS CONFIDENTIAL AND IS INTENDED ONLY FOR THE
PERSON TO WHOM IT HAS BEEN SENT. UNDER NO CIRCUMSTANCES MAY A COPY OF THIS REPORT BE
SHOWN, COPIED OR TRANSMITTED OR OTHERWISE GIVEN TO ANY PERSON OTHER THAN THE
ORIGINALLY INTENDED RECIPIENT.
A COPY OF PART 2 OF SEG'S FORM ADV IS AVAILABLE UPON REQUESTView entire presentation