Asset Management Services A successful joint venture between traditions, technology and professionalism 1
Who we are 2 Space for the date
Our Values It is a duty of everyone in our company to bring to life these principles Attention to the client Our client s success is our success. A constant dialogue with our clients through the whole investment advisory process will assure a full understanding of clients needs and it will assure that we will focalize attention and resources towards the achievement of such goals. Ambition, energy and fun Our activity is enthusiastic and full of possibilities of professional growth. Only with high ambitions and unconditioned will to work at the highest standards, however without forgiving fun, it will be possible to fully exploit these opportunities. Innovation and education Our professionalism and competence are built on experience, innovation and continuous education. The creativity that characterizes our services is very recognized: we always try to identify the best solutions for our clientele by promoting the results of such a process in the whole company. 3
Our Partner Relationships It is a duty of everyone in our company to bring to life these principles Partnership with our Clients The relationships between our staff and our clients are always built on the principle of the «power of partnership», a concept that internally means respect, personal participation and reciprocal support. We encourage idea exchanges and require a team work. Partnership with banks and product providers The relationships between our staff and the banks and the product providers are always built on the principle of the «power of partnership», a concept that internally means participation, respect, personal participation and reciprocal support. We encourage idea exchanges and require a team work. 4
Our Ethical Standards It is a duty of everyone in our company to bring to life these principles Integrity Our company and all our employees adopt a strict code of conduct and ethics. Our integrity is the key factor in preserving our most important asset: our reputation. Privacy Our company deeply respects the privacy requirements of our clientele and as a consequence we treat every information with the maximum discretion. Diversity Our points of strength are enhanced by adopting a philosophy of diversity of cultures, experiences and knowledge. 5
CAMPONOVO ASSET MANAGEMENT SA Board of Directors Dott. Oliver Camponovo, CFA, CIIA BoD President Mr. Camponovo is the CEO of Camponovo Asset Management SA since 2003. In 1999 Mr. Camponovo started its career at UBS AG Investment Banking division. From 1999 to 2003, Mr. Camponovo covered various positions as Associate Director in the Investment Banking Division and in the Asset Management Division, where he was responsible for equity research, risk management and institutional asset management. Dott. Cristina Cardoni - Member Dott. Cardoni holds a master in business administration from University Bocconi (Milan Italy). Dott Cardoni started her career in an accounting and auditing firm in Milan in 2003. Since 2004 Madame Cardoni has been responsible for the corporate services for Gestfinanz SA. Since June 2006 is responsible for the corporate services in Camponovo Asset Management SA. Giovanni Piffaretti - Member Mr. Piffaretti owns and manages since 1975 a commercial and real estate fiduciary in Chiasso. In June 2006 Mr. Piffaretti has been nominated member of the BoD of Camponovo Asset Management SA. 6
Product Provider CAMPONOVO ASSET MANAGEMENT SA screens the best product provider in function of financial engineering techniques, historical track record and costs in the interest of its clientele. 7
Corporate Governance Overview Typology Governance Instrument Statutary Statutes Camponovo Asset Management SA (of the 31.03.2006) Legal Membership Agreement on the Swiss banks code of conduct with regard to the exercise of due diligence Swiss Federal Act on Stock Exchanges and Securities Trading Stock Exchanges and Securities Trading ordinance Code of Conduct for Securities Dealers Statutes of the Organismo di Autodisciplina dei Fiduciari del Cantone Ticino (of the 31.03.2003) Regulament of the Organismo di Autodisciplina dei Fiduciari del Cantone Ticino (of the 06.08.2004) Voluntary Corporate Governance Guidelines (of the 24.11.2006) Code of Conduct (of the 13.07.2007) Asset Management Services Due Diligence Directive (of the 13.07.2007) Corporate Services Due Diligence Directive (of the 26.06.2006) 8
The Discretionary Asset Management Mandate 9 Space for the date
Asset Management Mandate Why is it necessary? The changes that have affected the financial markets over the last years have made asset management even more hard, sophisticated and complex. Now more than ever, to take sound investment decisions knowledge and modern technologies are a must. In the last 15 years experience know how and experience have been mature to the sole advantage of our clientele. This will allow you to dedicate more time to the things you are interested in, knowing that your assets will be managed by trustworthy and expert professionals. 10
Asset Management Mandate What does this operatively mean? 1. CAMPONOVO ASSET MANAGEMENT SA will manage the assets in your account; 2. Together we will analyze your risk profile and we will determine a specific investment strategy to achieve your personal specific goals and requirements; 3. CAMPONOVO ASSET MANAGEMENT SA will invest your assets according to your specific investment profile, the financial market situation and the investment strategy; 4. In the Switzerland the asset management industry is strongly disciplined and the asset management mandate clearly states rights and duties. In particular the asset management mandate only allows us to invest your assets according to the investment profile but does not allow us to freely dispose of your assets: money transfers, pledge agreements and bank guarantees can only be taken by you. 5. You will always be able to exit/quit the mandate. 11
Asset Management Mandate Your individuality our challenge With a personal discussion with your consultant you will be able to define investment objectives and investment horizon. CAMPONOVO ASSET MANAGEMENT SA strongly believes that a deep understanding of your overall financial and personal situation will allow us to better serve you; by doing this we will always consider not only risk propensity but also present and future financial needs. Once the analysis of your situation has been terminated we will together define your investment profile in your reference currency. You will be able to choose amongst five investment profiles, which differentiate in terms of risk and investment horizon: 12 Fixed income; Yield; Balanced; Growth; Equity.
Asset Management Mandate Your individuality our challenge These investment profiles have been developed in light of our long private banking experience and allow us to optimize your wealth management. Everyone of the five investment profiles ponderate in a different vary the following investment classes: liquidity, bonds, equity and alternative investments. To allow adapting for market changes for each investment class we have determined minimum and maximum quotas; thanks to this margin we can fast react to market changes and take profit of price changes. The flexibility of this system allow us to invest your capital in function of your return expectations guaranteeing hereby in every moment full attention to your risk propensity. 13
Asset Management Mandate Five investment profiles 14
Asset Management Process 15 Space for the date
Phases of the Asset Management Process 1. Determination of risk tolerance and return expectations 4. Verification Our consultant will determine with you your needs, expectations and investment objectives and will propose an investment solution appropriate to your risk profile 2. Investment Proposal and Solutions 3. Acceptance and Implementation 16
Phases of the Asset Management Process 1. Determination of risk tolerance and return expectations The fundamental variables for every client are: Total wealth Propensity to save Propensity to risk Financial culture Therefore the analysis of the above variables is key in: determining desires and necessities of the client, defining return objectives and defining risk limits. 17
Phases of the Asset Management Process 2. Investment proposal and solutions After having determined investment objectives (risk and return) we will determine investment strategy EUR - Frontiers Expected Return 9.00% 8.00% 7.00% 6.00% 5.00% 4.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% Annual Volatility (Risk) SAA TAA TAAx 18
Phases of the Asset Management Process 2. Investment proposal and solutions (detailed example) That will subdivided in asset classes, countries, and currencies. Today: 03.ago.05 Base Currency: EUR Last Strategy update 20.ott.03 Equity quote: 50 Index Weights as of: 01.gen.02 Extra: Yes Durations as of 23.ott.03 Taxation No Model Strategy Change: 18.dic.02 1 A s s e t A l l o c a t i o n New Active Normal Min Max Strategy Strategy New Active vs Downside New Active vs New Market Active vs Currency CASH & EQUIVALENTS 0.00% 0.00% 0.00% Normal Min Max Strategy Normal Protection Normal Min Max Strategy Normal Normal Strategy Normal Min Max Strategy Exposure Normal Hedge Domestic MM & Cash 0.00% 0.00% 0.00% SWITZERLAND 0.79% 2.50% 1.71% 0.02% 0.00% -0.02% 0.81% 36.50% 2.50% 35.69% -34.00% Foreign MM & Cash 0.00% 0.00% 0.00% N. AMERICA 14.96% 8.50% -6.46% 0.82% 4.50% 3.68% 25.28% 25.00% 37.50% -0.28% 12.50% EU 23.94% 14.00% -9.94% 39.58% 26.50% -13.08% 70.26% 24.50% 48.50% -45.76% 24.00% FIXED INCOME 50.00% 43.50% -6.50% NORDIC 0.41% 0.00% -0.41% 0.06% 2.50% 2.44% 0.46% 0.50% 2.50% 0.04% 2.00% DOMESTIC FIXED INCOME 46.18% 32.50% -13.68% EUROPE X CHF 24.73% 16.50% -8.23% 39.59% 26.50% -13.09% 71.08% 61.00% 51.00% -10.08% -10.00% EUR - BONDS 39.43% 24.50% -14.93% ASIA 2.39% 10.50% 8.11% 0.82% 0.00% -0.82% 3.21% 14.00% 10.50% 10.79% -3.50% EUR- TIPS 0.00% 0.00% 0.00% AUD/NZD 0.41% 0.00% -0.41% 0.01% 1.00% 0.99% 0.43% 0.00% 1.00% -0.43% 1.00% EUR- High Yield & Inv. Grade 6.75% 8.00% 1.25% EUR- Convertibles 0.00% 0.00% 0.00% FOREIGN FIXED INCOME 3.82% 11.00% 7.18% USD 14.40% 6.00% -8.40% si 0.74% 4.00% 3.26% 4.49 2.96 24.64% 19.50% 34.50% -5.14% 15.00% FOREIGN BONDS 1.82% 7.50% 5.68% CAD 0.56% 2.50% 1.94% no 0.08% 0.50% 0.42% 6.47 3.01 0.64% 5.50% 3.00% 4.86% -2.50% EMMA Bonds 0.80% 3.50% 2.70% ATS 0.08% 0.00% -0.08% no 1.29% 0.00% -1.29% 4.98 2.80 0.00% 0.00% 0.00% Foreign High Yield & Inv. Grade 1.20% 0.00% -1.20% BEF 0.61% 0.00% -0.61% no 2.96% 0.00% -2.96% 4.98 2.80 0.00% 0.00% 0.00% Foreign TIPS 0.00% 0.00% 0.00% FIM 1.27% 0.00% -1.27% no 0.59% 0.00% -0.59% 4.98 2.80 0.00% 0.00% 0.00% Foreign Convertibles 0.00% 0.00% 0.00% FRF 5.99% 0.00% -5.99% no 8.35% 0.00% -8.35% 4.98 2.80 0.00% 0.00% 0.00% DEM 4.60% 0.00% -4.60% no 8.85% 0.00% -8.85% 4.98 2.80 0.00% 0.00% 0.00% REAL ASSETS 47.97% 46.50% -1.47% IEP 0.45% 0.00% -0.45% no 0.23% 0.00% -0.23% 4.98 2.78 0.00% 0.00% 0.00% TOTAL EQUITY 44.50% 38.50% -6.00% ITL 2.35% 0.00% -2.35% no 9.10% 0.00% -9.10% 4.98 2.80 0.00% 0.00% 0.00% DOMESTIC REAL ASSETS 21.27% 9.50% -11.77% NLG 3.27% 0.00% -3.27% no 2.41% 0.00% -2.41% 4.98 2.80 0.00% 0.00% 0.00% EUR- EQUITY 21.27% 9.50% -11.77% PTE 0.26% 0.00% -0.26% no 0.64% 0.00% -0.64% 4.98 2.80 0.00% 0.00% 0.00% EUR- Growth Equity 0.00% 0.00% 0.00% ESP 1.78% 0.00% -1.78% no 3.66% 0.00% -3.66% 4.98 2.80 0.00% 0.00% 0.00% EUR- Value Equity 0.00% 0.00% 0.00% EUR 0.00% 9.50% 9.50% no 0.00% 22.00% 22.00% 4.98 2.80 66.98% 15.50% 39.50% -51.48% 24.00% EUR- Real Estate 0.00% 0.00% 0.00% CHF 0.79% 2.50% 1.71% si 0.02% 0.00% -0.02% 4.89 2.80 0.81% 36.50% 2.50% 35.69% -34.00% FOREIGN REAL ASSETS 23.60% 29.00% 5.40% DKK 0.09% 0.00% -0.09% si 0.03% 0.00% -0.03% 4.32 2.39 0.12% 0.00% 0.00% -0.12% 0.00% FOREIGN EQUITY 21.23% 26.00% 4.77% GRD 0.20% 0.00% -0.20% no 1.29% 0.00% -1.29% 4.98 2.40 0.00% 0.00% 0.00% EMMA Equity 2.00% 3.00% 1.00% NOK 0.05% 0.00% -0.05% no 0.00% 0.00% 0.00% 3.83 0.00 0.05% 0.00% 0.00% -0.05% 0.00% Foreign Growth Equity 0.00% 0.00% 0.00% SEK 0.26% 0.00% -0.26% no 0.03% 2.50% 2.47% 4.11 2.25 0.29% 0.50% 2.50% 0.21% 2.00% Foreign Value Equity 0.00% 0.00% 0.00% GBP 2.67% 4.50% 1.83% si 0.15% 2.00% 1.85% 7.69 3.79 2.82% 8.50% 6.50% 5.68% -2.00% Foreign Real Estate 0.37% 0.00% -0.37% JPY 2.08% 5.50% 3.42% no 0.82% 0.00% -0.82% 5.26 2.73 2.90% 7.50% 5.50% 4.60% -2.00% OTHER REAL ASSETS 3.10% 8.00% 4.90% HKD 0.21% 5.00% 4.79% no 0.00% 0.00% 0.00% 3.49 3.00 0.21% 6.50% 5.00% 6.29% -1.50% Private Equity 3.10% 8.00% 4.90% MYR 0.00% 0.00% 0.00% no 0.00% 0.00% 0.00% 3.49 3.00 0.00% 0.00% 0.00% 0.00% 0.00% SGD 0.10% 0.00% -0.10% no 0.00% 0.00% 0.00% 3.49 0.00 0.10% 0.00% 0.00% -0.10% 0.00% AUD 0.40% 0.00% -0.40% no 0.01% 1.00% 0.99% 3.49 2.32 0.41% 0.00% 1.00% -0.41% 1.00% OTHERS 2.03% 10.00% 7.97% NZD 0.01% 0.00% -0.01% no 0.00% 0.00% 0.00% 3.49 3.00 0.01% 0.00% 0.00% -0.01% 0.00% Hedge Funds 2.03% 10.00% 7.97% EMA 2.00% 3.00% 1.00% no 0.80% 3.50% 2.70% 5.57 10.00 0.00% 0.00% 0.00% TOTAL 100.00% 100.00% 0.00% E q u i t y M a r k e t A l l o c a t i o n C u r r e n c y A l l o c a t i o n B o n d s Total 44.50% 38.50% -6.00% 42.05% 0.00% 0.00% 35.50% -6.55% 100.00% 100.00% 100.00% 0.00% 0.00% Duration C u r r e n c y TOTAL Cash & Fixed Income 50.00% 43.50% -6.50% TOTAL Equity 44.50% 38.50% -6.00% TOTAL Non-Traditional Assets 13.45% 26.00% 12.55% FOREIGN CURRENCY 33.02% 60.50% 27.48% Notes: 19
Phases of the Asset Management Process 2. Investment proposal and solutions (detailed example) That will attentively analyzed to understand risk and return factor contributions. Contribution to Risk of Portfolio EUR-50 Contributions to risk and contributions to return Equities Bond Currencies Non traditional Alternatives 6.3% 1.1% 0.9% 0.0% 0.0% Contribution to Risk Diversification effect Non trad. & alternativ es Others Currencies Bond Contrib to risk Contrib to exc return Others 0.0% Equities Total Risk 8.3% - 1.00% 2.00% 3. 00% 4.00% 5. 00% 6. 00% 7.00% 0% 5% 10% 15% 20
Phases of the Asset Management Process 2. Investment proposal and solutions (detailed analysis) And this will allow us to quantitatively simulate the evolution of your wealth over time. Median Wealth and 95% Confidence Intervals over 20 years 800 700 600 500 400 300 200 100 0 0 2 4 6 8 10 12 14 16 18 20 20 EUR-60 Median EUR-50 lower Bound EUR- 50 upper Bound EUR- 50 Median EUR-60 lower Bound EUR- 60 upper Bound EUR- 60 Years 21
Phases of the Asset Management Process 2. Investment proposal and solutions Definition and importance of asset allocation Asset Allocation is the process through which an investment strategy is defined and total wealth is divided amongst asset classes, i.e. groups of investments with homogenous market risk (this means that every asset class reacts differently to market changes or macroeconomic changes). Some investor undervaluate the importance of asset allocation. Various academic and professional studies demonstrate that asset allocation is by far the most important factor in determining the success of the investment process. 22
Phases of the Asset Management Process 2. Investment proposal and solutions - Definition and importance of asset allocation It is fundamental to note that the asset allocation determines 92% of portfolio volatility in the long-medium term. 6% Security Selection 2% Market Timing 92% Asset Allocation 23 Source: Brinson, Singer, Beebouwer (1990) It is therefore vital to reflect the client s expectations in the right asset allocation and therefore considering asset allocation in the investment process.
Phases of the Asset Management Process 3. Acceptance and implementation After having determined the investment profile and only after the client has signed the asset management mandate CAMPONOVO ASSET MANAGEMENT SA will implement the investment strategy on the market. We will particularly pay attention to Investment selection Market Timing and Transaction cost minimization. 24
Phases of the Asset Management Process 3. Acceptance and implementation Success in every market situation In phase of equity market growth as between the 50 s and the 60 s and as in the 80 s and 90 s a buy and hold strategy has been the most attractive one. In other phases, in particular when markets were consolidating, as in the 70 s or at the beginning of the new millennium, an active portfolio management strategy has been more successful. This is the main reason why investment strategy flexibility is needed in adapting the investment strategy. This means for us taking active choices in the management of client s wealth, and according to our expectations adapt to different market conditions. 25
Phases of the Asset Management Process 3. Acceptance and implementation For your portfolio only the best qualitative standards Based on your investment profile, our portfolio managers will invest your wealth in various asset classes. In the securities selection phase we particularly take care of choosing securities according to quality criteria based on sector/country and credit risk analysis. The worldwide presence of CAMPONOVO ASSET MANAGEMENT SA and its partners is a fundamental requisite. Of course constant monitoring of return and risk at the highest qualitative standards is a regular part of our investment process. 26
Pricing 27 Space for the date
Asset Management Fees Quarterly Fees Investment management fees are charged at the end of each calendar quarter and are based on assets under management at the close of the quarter. Our fee schedule is as follows: Total Assets Min. Quarterly Fee CHF 500,000 to CHF 2,000,000 0.25% of assets (1.0%/yr) Next CHF 1,500,000 0.20% of assets (0.8%/yr) Next CHF 1,500,000 0.15% of assets (0.6%/yr) Over CHF 5,000,000 0.125% of assets (0.5%/yr) Minimum Investment Our minimum initial investment is CHF 500'000. You may invest this amount in one or more of Camponovo Asset Management SA s investment programs. Implementation Fees No other implementation fee will be charged. Performance Fees No performance fees fee will be charged since we believe that performance fees can bias the asset manager towards higher market exposure. This forfeit does not include banking services, such as custody account fees, current account fees, fiduciary expenses and any other fee not here listed. 28
Your Advantages summarizes Experience and professionalism Service quality and competitive pricing High value added & tailormade solutions Complete product range CAMPONOVO ASSET MANAGEMENT SA is active since 15 years in providing top quality asset management services Over the last 15 years we have constantly outperformed our peers whereby guaranteeing inferior average banking fees to our clients. Your individuality is our challenge. Starting from your specific requirements and expectations we design tailor made solutions to better fit all your needs. By analyzing our product range regularly and by continuously monitoring our partners we are able to deliver a complete high quality product range and are able to satisfy all client s requests. 29
30 Via S. Balestra 6, 6830 Chiasso-Switzerland Tel. +41 91 683 63 43, Fax +41 91 683 69 15, oliver.camponovo@camponovoam.com www.camponovoam.com