As of 30 September 2010, based on estimated and unaudited data, the French pension fund FRR’s annualised performance, net of expenses, since it commenced investment operations (June 2004) is +2.9%. The Fund’s performance since the beginning of 2010 is +2,7%.In the last three months, the FRR’s investments have benefitted from decreasing fear over the public finances of the Euro zone following the establishment of the European financial stability fund and the reassuring publication of European banks’ stress tests. The anxieties over growth in the US have also levelled off, which led to a clear upturn in the equity markets by the end of this quarter. As at 30 September last, the FRR’s assets totalled 35.7 Bn euros (31.9 Bn euros as at 30 September 2009 and 33.3 Bn euros as at 31 December 2009 respectively). Again at the end of September last, the global structure of the FRR’s assets is as follows : - performance assets represent 40.6% (of which 33.3% equities, 3.8% commodities and 3.5% real estate); - Fixed income and money market investments accounted for 59.4%.

p { margin-bottom: 0.08in; } The Spanish minister of Economy and Finance has already signed or is about to sign tax agreements with 20 offshore territories which will then be withdrawn from the offshore tax haven blacklist established by Spain in 1991, which then included 48 countries, Cinco Días reports. Such information exchange and/or double taxation agreements have been signed with Trinidad and Tobago, Barbados, Luxembourg, Andorra and Panama. In the short term, similar conventions are expected to be signed with the Bahamas, Bermuda, Cyprus, Gibraltar, Guernsey, Jersey, Hong Kong, the Cayman Islands, the Isle of Man, Jordan, Oman, San Marino and Singapore.

p { margin-bottom: 0.08in; } The Hong Kong-based hedge fund Richland Capital Management has recruited Elena Lau as chief operating officer (COO), Asian Investor reports. Lau previously worked at Bank of America Merrill Lynch as vice president.

The Swedish asset management company HQ Fonder Sverige AB has changed its name to Carnegie Fonder AB. The individual funds will also shortly change name. On September 3, 2010 the Nordic investment bank Carnegie group signed an agreement to acquire all shares in HQ Fonder Sverige AB. The acquisition was completed on September 22. Carnegie has assets under management in excess of SEK 110 billion.

p { margin-bottom: 0.08in; } Assets under management at Polar Capital have topped USD3bn in the six months to 30 September, at a total of USD3.05bn, compared with USD2.53bn as of the end of March 2010. Net inflows in the period under review totalled USD283m, while the acquisition of HIM Capital contributed USD249m to the increase in inflows.

Polar Capital Holdings has announced the formation of the Global Convertibles team with the hiring of David Keetley, Steve McCormick and Kendrick Li. It isanticipated that the team will launch the Polar Capital ALVA Global Convertibles hedge fund on the 1st November 2010. The fund intends to invest in liquid, global convertiblesecurities. The team joins from Vicis Capital based in New York and London. At its peak Vicis Capital managed USD5.8bn with USD3.3bn of Long Market Value committed to convertibles.

p { margin-bottom: 0.08in; } Arnaud Gandon was recruited in August as CIO of the asset management division of Heptagon Capital, Hedge Week reports. Gandon spend 12 years at Union Bancaire Privée (UBP) in London, most recently as head of global equity. The group has also recruited Natalia Greslikova as director of institutional sales for Benelux, Germany, Austria and Switzerland. She was most recently managing director of sales at Gottex Fund Management, in charge of European clients.

p { margin-bottom: 0.08in; } The German asset management firm Morgan Stanley Real Estate Investment GmbH has announced that as of 14 October, the net asset value of the open-ended real estate fund P2 Value has been lowered 77 cents to EUR27.34, due to the fact that the value of the portfolio has been revised downward by about EUR24m, to EUR852m at an annual revision of the valuation of properties in the portfolio. The adjustment is tied to a depreciation in the residential properties Spacia Ahinjuku and Chester House in Tokyo, and the Pia Reiju property in Osaka. The market values of the three properties have been revised downward by 6%, 10% and 15%, respectively. In addition, management firms has reduced the value on its books of the Spacia Shinjuku, Jade Hakata, Minds Hakataekihigashi, and Chester Houuse Kudanshita properties to zero. Morgan Stanley Real Estate Investment says that it does not expect any further routine depreciations until the end of October. The P2 Value fund is thus expected to be able to reopen as planned, with total assets of EUR820m to EUR870m.

p { margin-bottom: 0.08in; } AXA Real Estate has added to its teams dedicated to open-ended real estate funds. Ian Gordine has been appointed as manager of the AXA Immoselect fund, while Achim Gräfen, who had previously managed the fund, will concentrate on directing AXA Investment Managers Deutschland GmbH, a position he has occupied since 2009. Bernd Hemmersbach has been promoted to Head of Distribution – Real Estate.

Hermes, the UK fund manager, has sent Klaus Wucherer, Infineon’s chairman, a letter pressing him publicly to present a succession plan in the next two weeks. In the letter, obtained by the Financial Times, Hans Hirt, head of corporate governance, wrote that he was “worried” about the speculation over the succession process.

p { margin-bottom: 0.08in; } The Wall Street Journal reports that RiverNorth Capital is planning to launch a strategic income fund, the RiverNorth/DoubleLine Strategic Income Fund, at the end of December. The fund will be managed by Patrick Galley, CIO of RiverNorth, and Stephen O’Neill, a portfolio manager at RiverNorth, and Jeffrey Gundlach, the former TCW star manager who has gone independent to found DoubleLine Capital (Usd5.5bn in assets), of which he is CEO and CIO. The new product will be an open-ended fund; Gundlach’s contribution will be based on a core bond strategy and an opportunistic strategy which may use derivatives. According to its SEC filing, the fund may make use of short-term trading, and will have a short-term portfolio turnover rate of over 100%.

p { margin-bottom: 0.08in; } On 18 October, Universal-Investment launches the European equities fund European Equity Selection R, on behalf of the asset management affiliate of Hamburg’s Berenberg private bank. The product will invest at least 51% of its assets in shares in firms of all cap sizes with their headquarters in the EMU. The management team, which selects equities which are fundamentally undervalued, is also authorised to invest in ETFs and to retain cash. Characteristics Name: Berenberg European Equity Selection R ISIN code: DE000A1C2XN2 Front-end fee: 5% Management commission: 1%

p { margin-bottom: 0.08in; } Since 14 October, Lyxor Asset Mangaement (Société Générale) has been offering four French-registered ETF products providing inverse replication of sub-indices of the Stoxx Europe 600 on the XTF segment of the Xetra electronic trading platform from Deutsche Börse. The products are the Lyxor ETF STOXX Europe 600 Automobiles & Parts Daily Short, Lyxor ETF STOXX Europe 600 Banks Daily Short, Lyxor ETF STOXX Europe 600 Basic Resources Daily Short and Lyxor ETF STOXX Europe 600 Oil & Gas Daily Short.

p { margin-bottom: 0.08in; } There has been an unprecedented price war raging in the past few weeks between providers of ETF savings plans. After Comdirect and DAB Bank, Cortal Consors, the third largest major online broker, is now working on a new fee model, which is expected to result in a major price drop, according to a spokesperson cited by Handelsblatt. The war was triggered a few weeks ago by DAB Bank, which offers 66 ETFs from db x-trackers with “zero fees.” The client is charged only the spread between buy and sell and the annual account management commission. Maxblue, the online broker from Deutsche Bank, is also offering plans based on db-x-trackers, its sister company, with no front-end fees. A competing price cut at SBroker, the platform for the German savings banks, has not been ruled out.

Corporate pension plans had almost 70% of their money in stocks by the mid-2000s, writes the Wall Street Journal. By this July, they had cut their stock exposure to 45%, according to the Center for Retirement Research at Boston College. Some of the cutbacks at pension funds are the result of losses during the financial crisis.

p { margin-bottom: 0.08in; } Hedge funds have posted an increase of 3.58% in September, according to the Barclay Hedge Fund index. Over nine months, the funds show gains of 5.23%. An examination of the sub-indices reveals that 17 of the 18 indices finished the month with total gains ranging from 1.22% for the Pacific Rim Equities Index to 8.40% for convertibles arbitrage. The only losing strategy was equity short bias, which lost 6.45% for the month, and 6.48% over nine months,

p { margin-bottom: 0.08in; } Giorgio Giovannini has been promoted to global business development director at Henderson Bluerating reports. He will, however, retain his position as country manager for Italy. In his new position, he will be in charge of guiding and strengthening the development of the UK asset management firm in new key markets, including Latin America. He will report to Greg Jones, director of continental European wholesale.

p { margin-bottom: 0.08in; } Marna Whittington, COO of Allianz Global Investors (AGI), announced on 15 Octber that AGI has created the Allianz Global Investors Center for Behavioural Finance, where professor Shlomo Benartzi (Anderson School of Management, UCLA) will be chief behavioural economist. The new structure will operate in three central areas: Behavioural research and training: the center will make training and pedagogical material available to IFAs, investors and decision-makers at retirement funds; Investment and risk management: the centre will apply the results of behavioural studies to improve the risk management and investment process; Products and solutions for preparations for old age and for the retirement phase: the centre will act as an interface between behavioural research and ageing and retirement planning needs.

p { margin-bottom: 0.08in; } In third quarter, the index of investment advisor morale (BSI) calculated by TNS Infratest on behalf of Robeco Deutschland fell by 0.3 points compared with April-June, to 99.8. The index is calculated on the basis of responses from 350 advisors at commercial banks, savings banks and co-operative banks. Only 27%, compared with 35%, of specialists surveyed consider the current situation satisfactory in terms of sales of open-ended funds. However, the proportion of optimists for the next six months totals 37%, compared with 35%.

p { margin-bottom: 0.08in; } Assets under administration at Hargreaves Lansdown rose 14% in third quarter, ending at the end of September, to GBP19.9bn, from GBP17.5bn at the end of June.

p { margin-bottom: 0.08in; } Prince Kyril of Saxe-Coburg, who was previously head of sales at GLG for the Iberian peninsula, will now be head of sales for newcits hedge funds from Man Group, the management firm which acquired GLG Partners, Funds People reports. The second son of the former king Simeon of Bulgaria succeeds Frank Pauls in this position.

p { margin-bottom: 0.08in; } Investment Week reports that the Scottish management firm Martin Currie is planning to launch a Latin American fund and a global equities revenue fund on 1 November. The former fund will be managed by a team recruited from Scottish Widows (SWIP), an din particular by Jeff Casson, who will manage a highly concentrated product of 35-55 equities, of which 60% will be invested in Brazilian equities. The latter product, the Global Equity Income Fund, will be an adaptation of the UK Equity Income Fund. It will be managed by Alan Porter with a bias in favour of businesses in a phase of rapid growth in Asia, Latin America and Europe. The portfolio of 40-60 positions will aim to outperform the MSCI World index.

After Brevan Howard, CQS, one of London’s biggest hedge funds, is to announce plans to float a new fund on the London stock exchange, says the Financial Times. Money raised through the listing will be invested in CQS’s existing Diversified Fund.

p { margin-bottom: 0.08in; } In the past 12 months, equities ETFs have grown strongly on the Indian market, Asian Investor reports. In the next 18 months, the market is set to post more strong growth. Currently, the ETF market is dominated by China, with a market share of 40%, followed by Hong Kong (33%), Japan (12%) and India (0.2%). ETFs dedicated to Asia traded in other countries now represent a total of USD3.4bn.

p { margin-bottom: 0.08in; } The Italian asset management firm Azimut, which is listed on the Milan stock exchange, will make a bond issue of EUR200m for a duration of 5 years, with a set coupon of 2.5% per year. The deal was approved on 14 October by the board of directors, and must now be approved by the market supervisory authorities. “The bond issue is a response to the current, particularly difficult period on the market, which is characterised by high aversion to risk on the part of clients, and will allow investment in part of the assets in financial instruments which restore invested capital at maturity, along with a safe and fixed return, neutralising variations in taxes,” a statement says. In the first nine months of the year, Azimut has posted net subscriptions of EUR461.8m. Its assets as of the end of September totalled EUR14.3bn, up 2.9% compared with the end of December 2009, and 6.7% compared with September 2009.

p { margin-bottom: 0.08in; } The announcement of an agreement over the planned AIFM directive was put off last Thursday due to a lack of consensus between Parliament, the Commission and the European presidency, in another chapter to the saga, Agefi reports. Jean-Paul Gauzès, reporter to the European Parliament on the directive, is not concealing some aberrations in the redaction of the directive. The Parliament has made a large number of amendments, in total 1,690, and has thus been required to rewrite the draft. “The text is changing virtually every day,” and remains difficult to keep track of, even for lawyers, the newspaper reports. The Parliament has also blamed reversals of positions of member states, not least “France, which rallied a week and a half ago behind the idea of a European passport.” But despite the change in the French position, the question of a license for foreign funds remains at the centre of the disagreement. The UK would like to see national supervisors remain responsible for issuing licenses, while France is pushing for ESMA, the future European market supervisor, to hold the keys to the system. “The Belgian presidency will have to choose between them, putting one country out, which could be a bad sign for the future,” the reporter opines. A vote on the text is now planned for November, Agefi reports.

p { margin-bottom: 0.08in; } On 14 October, Van Eck Global launched the Market Vectors China ETF (acronym PEK on NYSE Arca), the first ETF on the US market to offer exposure to Chinese A equities listed in Shenzhen and Shanghai. It provides synthetic replication, for the moment, of the shares of the CSI 300 index. Management commission is 0.72%. Van Eck says that there are already 29 other ETFs (all of them synthetic replication products) based on Chinese A shares in Asia, 24 of them in Hong Kong, three in Singapore and Taiwan, and two in Tokyo.

An analysis of the period 1999 to 2008 in quarterly 13Ffilings withthe SEC, stating the valuation of hedge funds’ positions on equities, reveals that about 7% of all statements of positions were falsified, meaning that hedge funds used other valuations than the market. The findings come in a working document from the Centre for Financial Research (CFR) at the University of Cologne, available at http://www.cfr-cologne.de/download/workingpaper/cfr-10-15.pdf.According to the authors of the study, Gjergji Cici (Mason School of Business), Alexander Kempf and Alexander Puetz (both of CFR- University ofCologne), the deviations show that hedge funds knowingly manipulate their valuation, as these variations are not random and serve the interest of managers.The authors show, firstly, that false valuations aim to make returns look better by reducing volatility and boosting the Sharpe ratio.Secondly, the divergences with reality are highest for funds which have the least risk to be controlled.Thirdly, the largest deviations are for hedge funds which are the most aggressive in the use of publicity materials which state their returns.Lastly, the study shows that suspicious performance profiles appear particularly for funds which most amply or most frequently falsify their equities positions.

In 2008, two quantitative management specialists founded FinanceCom Asset Management in Paris, with the help of the Moroccan private group FinanceCom. Now, Jean-Philippe Scholler, president, and Jean-Marc Divoux, CEO, are at the head of a 6-member team, and are planning to enlarge their product range and client base.

p { margin-bottom: 0.08in; } A new foreign asset management firm has recently made its first appearance in France, under the name E.I. Sturdza Strategic Management Ltd. Behind this slightly mysterious name hides an asset management unit of Banque Baring Brothers Sturdza SA, the former Swiss arm of the Baring bank, which is now wholly owned by its founder, the Prince Eric I. Sturdza and his partners. Founded in 1999, E.I. Sturdza Strategic Management Ltd. initially developed a range of funds for private clients of the Swiss bank. Relying on its expertise in outsourced management, it built its range on offerings from experienced managers who took the opportunity to go independent. For example, in 2008, E.I Sturda Strategic Management Ltd. teamed up with Lilian Co., the former star manager from Baring Asset Management Asia Ltd, who founded the firm LBN Advisors Ltd, in Hong Kong. Together they launced the Strategic China Panda Fund. “This type of partnership, bringing together operational quality and management talent, has allowed E.I. Sturdza Strategic Management Ltd. to attract well-known managers such as Frédérique Dubrion, former manager of the Gold and Energy funds from SGAM; Yutaka Uda, former director of Japanese investments for Baring Asset Management, Willem Vinke, former manager of Europe funds at Jo Hambro, and more recently, Michel Danechi, ex-head of trading emerging markets at Lehman Brothers,” explains Patrick Kopitz, one of the partners at Banque Baring Brothers Sturdza SA. “Before investing in a geographical region or an asset class, we first look to invest with talented managers,” he says. Though in principle E.I. Sturdza Strategic Management Ltd. demands exclusive rights to sales activity for the firm in which they sign an agreement, they do not buy a stake in capital. 10 funds have been released on this original model, covering asset classes and regions such as Japan, China, Europe, and natural resources. The first funds were based in Guernsey, but since 2008, E.I. Sturdza Strategic Managemetn Ltd. has been compliant with UCITS III. It will now launch two new UCITS III funds in October 2010, one focused on emerging Eastern Europe (including Turkey) with Danechi, who joined Armajaro Asset Management LLP in March 2009 as managing partners, and one fund focused on Europe, in partnership with Willem Vinke, CEO and CIO of Lofoten Asset Management Ltd. In total, E.I. Sturdza Strategic Management Ltd. has a relatively exhaustive range of products, which represents CHF1.5bn in assets. In 2009, E.I. Sturdza Strategic Management Ltd., registered its Strategic China Panda Fund with the Autorité des marchés financiers (AMF) in France. Other products will follow soon.