Asset management insights Selected publications from Ernst & Young global asset management

Issue 12, July 2009

Contents Introduction ................................................................................... 2 Recent releases .............................................................................. 3 Other selected publications ............................................................. 8 Global asset management center ................................................... 10

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Asset Management Insights

Introduction Welcome to this issue of ‘Asset management insights’, collecting together global publications from Ernst & Young. We have included the recent global publications most relevant to asset management professionals. We hope you find them useful.

Publications are available to download from our website at www.ey.com/assetmanagement. We’re also pleased to introduce a new facility called Industry 360 Online. This is increasingly becoming the primary source of our global asset management content, making locating and downloading publications easier than ever before. Industry 360 Online is available on our website now.

If you have any questions regarding these publications, or require more information, please get in touch with the Global Asset Management Center using the contact details located at the back of this document.

Ratan Engineer

Global Asset Management Leader

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Asset Management Insights

Recent releases

Americas asset management news – August 2009 Published quarterly by Ernst & Young US

Risk management, reporting and reform are some of the timely topics in the Spring issue of Asset Management News.

In this issue:

► Hedge fund risk management processes

► IFRS adoption in Canada

► The ICI’s Working Group recommendations for money market reform

Hot off the press! As soon as this is available it will be published at www.ey.com/assetmanagement.

Revenue recognition project Preliminary IFRS views

Published by Ernst & Young UK, July 2009

On 19 December 2008, the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) (collectively, the Boards) issued a Discussion Paper entitled Preliminary Views on Revenue Recognition in Contracts with Customers (the Discussion Paper) relating to their ongoing joint revenue recognition project. The Discussion Paper sought comments on the Boards’ preliminary views on a single-asset and liability-based revenue recognition model that they believe will improve financial reporting under both IFRS and US GAAP. The Discussion Paper addresses the effect of the proposed model on current revenue recognition practices.

An asset management specific appendix is also available for this publication.

Download these publications at www.ey.com/assetmanagement.

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Asset Management Insights

Supplement to IFRS outlook, issue 51 New proposals from the IASB to account for financial instruments

Published by Ernst & Young’s International Financial Reporting Group, July 2009

This issue of Supplement to IFRS Outlook reviews the first phase of the comprehensive project to replace IAS 39 Financial Instrument: Recognition and Measurement which has reached a key milestone - the publication of the Exposure Draft (ED) on Financial Instruments: Classification and Measurement. In this supplement, we summarise the key proposals set out in the ED and their likely impact on businesses. The proposals to have only two measurement categories (fair value and amortised cost) are in line with the IASB's aim of reducing the complexity in accounting for financial instruments however, the detailed proposals have other consequences that may make it unattractive to entities.

Download this publication at www.ey.com/assetmanagement.

Supplement to IFRS outlook, issue 50 IFRIC decisions on rights issues, debt to equity swaps and impairment of equity investments

Published by Ernst & Young’s International Financial Reporting Group, July 2009

This issue of Supplement to IFRS Outlook reviews the IFRIC decisions reached at the 20 July 2009 meeting about accounting for financial instruments - namely accounting for rights issues denominated in a foreign currency, the meaning of 'significant or prolonged' in the context of impairment of available for sale equity securities, and accounting for debt to equity swaps. This supplement summarises the key decisions and highlights potential implications for entities. In summary, the IFRIC will request the Board to amend IAS 32 with regard to rights issues denominated in foreign currency; it also confirmed its tentative decision regarding what is deemed the inappropriate interpretation of the meaning of 'significant or prolonged', and it is expected to issue a draft interpretation clarifying that equity instruments issued in a debt to equity swap should be measured at the fair value of the liability settled or the fair value of the equity instruments issued, whichever is more reliably determinable.

Download this publication at www.ey.com/assetmanagement.

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Asset Management Insights

IFRS outlook, July 2009 Insights on International GAAP

Published monthly by Ernst & Young UK

IFRS outlook continues to bring you insights into recent IFRS developments and emerging issues on a monthly basis.

In this issue of IFRS outlook:

► With the Monitoring Board of the International Accounting Standards Committee Foundation now in place, Hans Hoogervorst explains his role as chairman and offers his thoughts on the current economic crisis.

► Private equity funds — accounting for investments. With a new consolidation standard on the horizon, private equity funds should be aware of the potential impact on their businesses.

► Borrowing costs and the role of foreign currency exchange gains or losses. Learn about the effect foreign currency borrowings may have on your entity and the alternative treatments available.

► Financial reporting developments.

► Resources - recent publications on the impact of the proposed revenue recognition model and the amendments to IFRS 2 Share-based payment.

Download this publication at www.ey.com/assetmanagement.

Mutual funds weather the storm Article by Matt Forstenhausler and Ravi Singh

Published by Ernst & Young US, July 2009

While most asset managers have survived the global financial crisis, they still face many uncertainties. Internal cost pressures, changes in products, heightened investor demands and tighter regulatory scrutiny lead the list of challenges. Ernst & Young recently brought together industry leaders and Ernst & Young professionals at seminars in New York and Boston to share their views on some of the most important trends emerging in the industry. In this article, we present the observations and perspectives shared by the conference participants.

Download this publication at www.ey.com/assetmanagement.

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Asset Management Insights

Asset management survey snapshot Opportunities in Adversity

Published by Ernst & Young US, July 2009

The asset management industry is facing unprecedented challenges in the wake of the deep and prolonged global financial crisis and the accompanying credit crunch. Investment losses, widespread redemptions and damage to the industry’s reputation have combined with the looming threat of significant regulatory changes to pressure almost all industry participants. Asset management firms are now challenged to reassess their risk management strategies and to manage costs in new and innovative ways.

With the Economist Intelligence Unit, senior executives from major firms were interviewed around the world in June 2009 to gain insight on how they are managing their businesses during this period of uncertainty.

This report highlights findings specifically from the asset management respondents.

Download this publication at www.ey.com/assetmanagement.

Divesting in difficult times Opportunities in Adversity

Article by Susan Prior. Published by Ernst & Young US, June 2009

In this turbulent economic environment, the asset management industry — traditionally viewed as a source of stable, dependable earnings and cash flows — is subject to significant troubles. With earnings slammed by both falling asset values and growing demands for withdrawals and redemptions, asset managers are coming under increasing pressure to rationalize or retool their investment product offerings, maintain liquidity and implement rapid, sustainable cost reductions. Furthermore, they must also devote more attention to risk management while strengthening their investment management talent and improving their overall performance.

Download this publication at www.ey.com/assetmanagement.

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Asset Management Insights

UK risk management survey for asset management Published by Ernst & Young UK, June 2009

Ernst & Young’s risk management for asset management 2009 survey offers a revealing insight into the unique set of challenges currently confronting the industry’s risk practitioners. In comparing the views of 23 CROs from some of the largest asset managers in the UK, the survey provides indications about the future development of risk management in the industry. It also suggests areas where improvements must be made to effectively meet the new challenges faced by asset management firms.

Download this publication at www.ey.com/assetmanagement.

Viewpoint: Cost management in a more regulated asset management industry Published by Ernst & Young UK, June 2009

This paper reviews some of the current cost reduction activity in the asset management industry, some familiar and some not seen so often in the past. It also considers the most recent indicator for the future of regulation of the industry, issued by the European Commission, and looks at the impact that this, and other regulation in the pipeline, is likely to have on the cost base of an asset manager.

Download this publication at www.ey.com/assetmanagement.

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Asset Management Insights

Other selected publications

Achieving remarkable returns: Consider an investment in treasury management Article by Elliott Carpenter and Alan Fish.

Published by Ernst & Young US, April 2009

What's the return on treasury? A large alternative investment manager obtained a partial answer while examining its cash management practices, including overnight investing. A few simple changes to its operating practices are now saving the company millions of dollars annually. And no, it isn't the installation of a whole new battery of processes, personnel or technology. Rather, it's the addition of a single, newly hired professional cash manager followed by an analysis and refinement of prior practices and procedures.

Download this publication at www.ey.com/assetmanagement.

Supplement to Good Investment Fund Limited

Published by Ernst & Young UK, April 2009

On 5 March 2009 the International Accounting Standards Board (IASB or the Board) issued amendments to IFRS 7 Financial Instruments: Disclosures - Improving Disclosures about Financial Instruments. The amendments are intended to enhance disclosures about fair value measurement and liquidity risk. These are particularly relevant given the current economic turmoil. This publication provides illustrative examples of the additional disclosure requirements as a result of these amendments as related to investment funds.

Download this publication at www.ey.com/assetmanagement.

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Asset Management Insights

Good Investment Fund Limited

Published by Ernst & Young UK, December 2008

These publications contain the financial statements of two open-ended investment companies domiciled and incorporated as limited liability companies in Euroland and listed on the Euroland Stock Exchange. The financial statements are prepared for the year ending 31 December 2008, based on International Financial Reporting Standards in issue at 30 October 2008 and are cross-referenced to the source literature and include explanatory notes.

Two sets of financial statements are available, firstly representing funds whose puttable shares are classified as financial liabilities and secondly as equity.

Download this publication at www.ey.com/funds for Equities or Liabilities.

The 2009 Ernst & Young business risk report Asset Management

Published annually by Ernst & Young in conjunction with Oxford Analytica

The crisis experienced in the financial markets during 2008 has had a dramatic impact on asset management. Understanding and mitigating market risks is placing great pressure on managers as they seek to deliver value for investors.

We have been talking with Ernst & Young’s global industry analysts, together with leaders in the industry to identify the leading business risks and have then rated the severity of the risk management challenge posed by each. The top 10 risks most likely to affect asset management companies during 2009 and shape the industry are discussed in this report. An understanding of how to respond to these challenges is essential for asset management companies to manage risk effectively, improve performance and increase value for investors.

Download this publication at www.ey.com/assetmanagement.

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Asset Management Insights

Investment Funds in Luxembourg A technical guide, September 2008

Published by Ernst & Young Luxembourg

Luxembourg has become one of the leading centres for investment funds - particularly as a domicile and an administration centre. The first fund was established in 1959. By December 31 2007 there were 2,868 investment funds with € 2 trillion in assets.

Ernst & Young Luxembourg's technical guide entitled Investment Funds in Luxembourg provides an introduction to Luxembourg as a centre for investment funds, the types of funds available and a summary of the regulations applicable to the formation and operation of funds. It also covers the regulations applicable to management companies based in Luxembourg.

Download this publication at www.ey.com/assetmanagement.

Investment funds in Malta - a technical guide Published by Ernst & Young Malta, February 2009

On behalf of the Asset Management team in Malta, we're pleased to present you with the first edition of Investment Funds in Malta – A technical guide.

Through this publication, we aim to provide you and your clients with a clear and concise overview of the funds industry in Malta, the applicable legal and regulatory framework, as well as that of formation and other ongoing obligations.

Download this publication at www.ey.com/assetmanagement.

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Asset Management Insights

UK investment funds 2008 Published annually by Ernst & Young UK, January 2009

An overview of the investment funds industry in the UK, including the regulatory, legal and tax regimes applicable to asset management firms and to the operation of investment vehicles in the UK. It concentrates on the open-ended fund sector, but covers other fund types as well.

The UK is one of the largest centres in the world for asset management and the largest in Europe. As of December 2007, assets managed by the members of the Investment Management Association (IMA), the UK’s largest investment management trade body, totalled £3.4 trillion: twice the size of all the world’s sovereign wealth funds combined and two and a half times the estimated assets of hedge funds worldwide.

Download this publication at www.ey.com/assetmanagement.

Investment funds in Ireland Published by Ernst & Young Ireland, October 2008

Since the implementation of the EU UCITS Directive in 1989, a number of innovative legislative initiatives, together with the introduction of a tax exemption for Irish domiciled funds in April 2000 and the opening up of Irish funds to Irish resident investors, have resulted in spectacular growth in Irish domiciled funds in recent years, with over €805 billion in fund assets domiciled in Ireland at the end of 2007.

This annual publication provides a general overview of the investment funds industry in Ireland, including the legal, regulatory and tax regime applicable to the formation and operation of funds in Ireland in 2008.

Download this publication at www.ey.com/assetmanagement.

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Asset Management Insights

Global asset management center Ratan Engineer Global Asset Management Leader reengineer@uk.ey.com +44 (0)20 7951 2322

Crispin Rolt Global Markets Director crispin.rolt@dk.ey.com +45 35 87 25 35

Richard Le Tissier Sector IFRS contact rletissier@uk.ey.com +44 (0)1481 717 468

Leigh Pennington Global Marketing & Operations Manager lpennington@uk.ey.com +44 (0)20 7951 2373

Kerry Hubbard EMEIA Marketing Manager khubbard@uk.ey.com +44 (0)20 7951 4831

Brendan Dodds Global Knowledge Coordinator bdodds@uk.ey.com +44 (0)20 795 10293

Joanne Coquard Business Unit Coordinator jcoquard@uk.ey.com +44 (0)20 7951 1921

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Asset Management Insights

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About Ernst & Young’s Global Asset Management Center

The asset management industry is evolving at a deceptively fast pace. Asset managers and service providers face challenges every single day whether it’s managing business growth, mitigating risk, providing transparency or embracing regulatory scrutiny. Ernst & Young’s Global Asset Management Center brings together a worldwide team of professionals to help you achieve your potential — a team with deep technical experience in providing assurance, tax, transaction and advisory services. The Center works to anticipate market trends, identify the implications and develop points of view on relevant industry issues. Ultimately it enables us to help you meet your goals and compete more effectively. It’s how Ernst & Young makes a difference.

© EYGM 2009 Limited.

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This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither EYGM Limited nor any other member of the global Ernst & Young organisation can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor.

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