Structured Products in Private Wealth

Management

Moscow

16th June 2010

Risk & return Russia 2010

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Content

• Introduction to Lakeshore International – Vision, Profile, Strengths & Services

• Definition of Structured Products

• Risks and chances with Structure Products

• Different investment solutions with Structure Products

• Portfolio structures with Derivative Instruments

• Questions and Answers

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Lakeshore International – Vision

• Our vision is to be an independent premium provider of comprehensive financial services to HNW and qualified institutional clientele around the globe.

• Our belief is that a thorough understanding of client needs, combined with well balanced and comprehensive services, a consultative approach, the experience and professionalism of quality employees and transparency are essential to the success of any investment advisory business.

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Lakeshore International – Profile

• Founded 2008 as a partnership (share capital CHF 1m)

• Independent Asset Manager (Member of Swiss Association of Asset Managers)

• Substantial investor in own funds

• Comprehensive services to HNWIs & Institutions

• Globally focused with considerable inroads into Eastern Europe, Russia & Asia

• Offices: Zurich, Moscow, (China planned)

• 20+ Staff

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Lakeshore International - Strengths

• Flexible, solution driven, tailor-made approach, client focused

• Comprehensive & transparent

• Independent (partners, products etc.)

• Team has over 100 years combined experience in global financial markets

• In-depth local research with relevant industry experience

• Ongoing development of & investment in quality staff

• Global with strong regional focus

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Lakeshore International – Services

• Asset Management & Fund Management (LIBF & LISOF)

• Wealth Management (advisory, discretionary, asset allocation & portfolio construction, risk management & investment controlling)

• Family Office Services (fully understand the unique needs & aspirations of each family according to their history, tradition & values)

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Definition of Structured Products• A structured product is generally a pre-packaged investment strategy which is

based on derivatives, such as a single security, a basket of securities, options, indices, commodities, debt issuances and/or foreign currencies, and to a lesser extent, swaps.

• They have arisen out of the significant product development within the financial industry over the last number of years & have acquired a strong position within international financial markets in the last 10 years.

• Structured products remain on real value as equities, bonds, indices or commodities.

• They offer an alternative to traditional investment solutions across the various asset classes / categories – portfolio structures

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Chances with Structure Products

• The investor can access new investment themes and

markets

• The investor can secure positive returns in all market

solutions, more investment opportunities than with

traditional investments

• The investor can micro-manage investment risk

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Chances with Structured Products

• Traditionally an investor is invested in one of the previously mentioned asset classes and would typically hold a “long” view.

• Structured products allow investors to participate in a non “long” way....

• They offer to the investor an attractive way to participate in markets with different risk profiles.

• Structured products are like the grains of sand on a beach – there are endless solutions available to the investor dependant on their particular market view / investor profile.

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Risks with Structure Products

• Structure products give you certain claims against the issuer, which is why issuer quality is so important.

• Risks vary depending on the type of product used by the investor.

• Some structure products are more suited to investors with a small appetite for risk, whereas others carry more risk.

• It is important to understand the risks involved with a specific product and its underlying, and that you discuss these with your client advisor → your private banker.

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Different investment solutions with Structured

Products • Structure Products can be used in all market situations.

• Different investors have different ideas for markets.

• In Switzerland on Scoach (www.scoach.ch)

a rise of new issues of products since 2008 is shown.

• Currently more than 20„000 products are listed.

• It is a „jungle“ of products.

→ How can the investor make a selection?

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Types of Structured Products

• Leverage effect

• Participation

• Yield (example shown)

• Capital protection

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Market Shares in Switzerland

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29.85%

22.50%12.12%

9.85%

7.60% 18.08%

Market Shares

Vontobel

Zürcher Kantonalbank

Deutsche Bank

UBS

Julius Bär

Various

Source: Derivative Partners AG

Example Reverse Convertible

• Single Reverse Convertible Example by Bank

Vontobel AG

• Vontobel is one of the biggest player in the Swiss

market of Structure Products

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13 April 2007 Slide 15

Our Solution

Defender Vonti: Short Down-and-In Puts on an underlying, combined

with parallel investment in the money market

Benefit from „high“ volatilities, the coupon will be paid in any event

If the underlying reached the barrier, the underlying will be delivered at

the expiry.

Defender Vonti („worst of“ structure)

Your Investment Idea

Above-average coupon payment

Moderately positive or somewhat bearish

market expectation

Partial capital protection

13 April 2007 Slide 16

1 Year

USD, minimum Size USD 100‘000

Maximal 1.00%*

Bank Vontobel Dubai / Bank Vontobel AG, Zürich

12 %

Gazprom ADR, price USD 24.30

Maturity

Currency

Listing

Secondary Market Spread

Coupon

Issuer / Lead Manager

Underlying

Barrier 70 %

*Under normal market conditions

Indicative terms for a Defender Vontion GAZPROM ADR

Indication as of 6th April, 2010

Yes, if desired, otherwise Private Placement

13 April 2007 Slide 17

Defender Vonti („worst of“ structure)

Settlement mode:

If the underlying never reaches nor breaches the barrier between

the issue date and the final fixing date, the notional will be paid

back for each Defender Vonti independently of the underlying

price at maturity. In addition, the coupon is paid out at

maturity.

If the underlying ever reaches or breaches the barrier between

the issue date and the final fixing date, the following applies:

1. If the final fixing of the underlying is lower than the exercise

price, the notional will be paid back for each Defender Vonti.

In addition, the coupon is paid out at maturity.

2. If the final fixing of the underlying is lower than the exercise

price, the number of underlying per Defender Vonti will be

physically delivered for each Defender Vonti.

In addition, the coupon is paid out at maturity.

Portfolio structures with Derivative Instruments

The investor can structure the portfolio and all asset

classes with Derivative Instruments:

• Cash/money market

• Bonds

• Equities

• Alternative instruments (such as: Commodities /

Gold / Properties / Private Equities / Hedge Funds)

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Portfolio structures with Derivative Instruments

Cash/money market

• Money market products from different providers

• Futures and options, standard products listed on a

exchange

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Portfolio structures with Derivative Instruments

Bonds

• Structured products from different providers with

different risk profiles

• Futures and options, standard products listed on a

exchange

• Exchange Traded Notes (ETN)

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Portfolio structures with Derivative Instruments

Equities

• ETF on Global indices

• Structure products as an Discount Certificate – see

• Example and various products from different

providers

• Traded options listed on a exchange

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Portfolio structures with Derivative Instruments

Alternative instruments

• Commodities / Gold/ Properties / Private Equities /

Hedge Funds

• Tracker on various Commodities or Gold

• Exchange Traded Commodities (ETC)

• ETF on properties as an example the IShares on UK

property

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Profile

Christoph Portmann, partner, member of the Board of Directors and member of the Executive Board

Christoph Portmann has 19 years experience in advising international clientele in Wealth Management. Before joining Lakeshore International he headed up the Eastern European Private Banking team after joining Schroder & Co Bank AG, Zurich in 2005. Prior to this he was Head of Sales for Derivative & Structured Products for Bank Vontobel AG before he joined the Private Banking team in 1997. Christoph Portman is a qualified banker having graduated from the Swiss Banking School Executive Program in 2000. He is also an experienced trader in futures & options. Since 2000 he is in the foundation board of the pension fund of the city of Lucerne.

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Contact

Zurich

Lakeshore International Management Inc

Usteristr. 14, CH-8001 Zurich, Switzerland

Telephone: +41 44 215 31 11

Fax: +41 44 215 31 12

E-Mail: info@lakeshore-international.com

Moscow

LLC Lakeshore International Management

Krasnaya Presnya Str. 24

Business-Center «Tropicana», 8th floor

123022 Moscow, Russia

Telephone: +7 495 411 62 14

Fax: +7 495 253 21 08

E-Mail: info@lakeshore-international.com

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Disclaimer

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This presentation is intended solely for information purposes and is subject to change at any time without prior notice.

Any information or opinions expressed in this presentation do not constitute a solicitation, offer or recommendation to purchase or sellinvestment instruments, or to enter into any other transactions. Investment opinions and market assessments as expressed in sources in thispresentation are subject to change at any time. Lakeshore International Group is not responsible for any change of investmentconsiderations.

We recommend that you consult your investment advisor before making any investment decision based on the consultation of the LakeshoreInternational Group presentation. Lakeshore International Group shall not be liable directly or indirectly for any loss or damage suffered as aresult of the use of information published in this presentation.

The information contained herein may be restricted by applicable local regulations at your domicile. The investment products and otherservices contained in this presentation are intended only for eligible investors (e.g. “Qualified Investors”) or for existing clients of LakeshoreInternational Group. All information contained in this presentation shall be non-binding and for informational purposes only. No responsibilityis assumed for the accuracy or completeness of the information.

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