Western XX FMC Business Plan(2004-2007)

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Western XX FMCBusiness Plan(2004-2007)

to be further discussed

(Confidential)

2

ContentContent

1 、 Profile of Western XX Asset Management Co.,Ltd.

2 、 Organizational Structure

3 、 Business Development Strategies

4 、 Roadmap

5 、 Assumptions and Forecast

6 、 Sales Breakdown in 2005

3

1 、 Profile of Western XX Asset Management Co.,Ltd.

4

Registered Capital and Share Structure

Registered Capital:

RMB 100 million

Registered Place:

Pudong District, Shanghai, China

Proposed Share Structure:

Western Securities Co., Ltd. RMB 40 million

Other foreign sponsor RMB 33 million

Shaanxi Investment Group Co.,Ltd. RMB 27 million

5

Business Scope

Fund management and investment advisory business in China as permitted by the applicable law. (incl. promotion, sale,issuance and management of investment funds)

Other asset management business permitted by the applicable law.

6

Vision, Philosophy and Strategy

Vision

One of the leaders in the great China wealth management

Philoshophy

Investors‘ benefits are everything

Strategy

Brand, Service and Product all in one

7

Business Goal

Grow the JV into one of the top 5 FMCs in China, in the following three categories:

• Profitability

• Fund Performance

• Total AUM

• Professionalism

8

2 、 Organizational Structure

9

FMC‘s Organization Chart (at the beginning)

CEO(1)

CMO(1) CIO(1) CEO/COO(1)

Sales& Customer

Service(5)

Marketing&Product

development (3)

Head of Compliance(1)

R&D(5)

Fund Manager

(2)

BODChairman(1)

Trader(2)

FundAccount

-ing&TA(3)

IT(2)

Admin&HR(2)

Auditing&Compliance

(2)

32 persons in the 1st year(proposed)

10

FMC‘s Organizational Chart (in 3 years )

Customer Service

Dept.

CMO CIO COO

Fund Manage-ment Dept.

Fund dealing

Dept.

R&DDept.

CEO

TA IT

Dept.

HR&Admin. Dept.

FundSales Dept.

Marketing Dept.

Strategy research

Finance engineer

-ing

Industry&

Company research

Centraldealing room

Call center

FundAccount-

ing

Market-ing &

Productdevelop-mentDirect

saleAgency sale OA

Systemmaintain

-ence

Complianceoffice

Auditing&Supervis

-ing

Info.disclosure

Head of Compliance

11

Structure of Governance

Board of directors

Qualification examination and

compensationcommittee

CEO

The shareholders’ meeting

Board of supervisors

The compliance committee

Head of Compliance

12

Structure of Business Operation

CEO

Investment decision committee

Risk control committee

Fund appraisal group

CMO CIO COO

Head of Compliance

13

3 、 Business Development Strategies

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Adding long-term value

DistributionChannels

Clients base

Local market acknowledgement

22 branches, strategic cooperation with ICBC, CCB etc.

700 ， 000 individual clients, main institutional clients exceed 400

Excellent performance record, good reputation ,

Strong government support, Opportunities from

the development of western China Professionalism

International experience

Productdevelopment

International standard in FM. & research

Organizational Know How;International management team

Fund product innovation& importation

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Outsourcing

Value-added

business

Market Segmentation

Product Design

Promotion/Fund Distribution

Research and Development

Fund Transaction/ Investment Management

Risk Control/ Performance evaluation

Non value- added

businessCompliance

HR/ Administration

IT Maintenance

Customer Service

TA/ Fund accounting

Internal Audit

Outsourcing to the reliable third-party

16

Market Segmentation

Market analysis • Market volume 182 billion units in 2003

• Growth rate Aver. annual growth rate 50%

• New opportunities QFII,National Security Funds asset allocation

• Deregulation in fund issuance procedure

Customer segmentation

• Institutional v.s. Individual clients 40%v.s.60%(estimate)

• Internal sales package A.M. clients transfer into funds holders

• …

17

Customer Needs Anlysis

Return Safety Liquidation

GovernmentOrganization

Low High Medium

Insurance Company

High Medium Low

State-owned Enterprise

Low High Medium

Private-owned Enterprise

Medium High High

Wealthy Investor High Medium Low

Ordinary Investor Low High Low

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Identifying the needs of domestic customers

•Institutional clients : Fixed income,low risk,cash flow management •Individuals clients : Growth,Small and middle cap,active management

Fee Structure varies according to client base

•Institutional clients: Low subscription and redemption fee•Individuals clients: Varies according to the period of holding

Deciding on distribution channels, depending on target groups

•Institutional clients : Direct sales/custodian bank recommendation•Individuals clients : Agency sales via banks, securities houses etc.

Customer Segmentation

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Product Strategy

• Present fund products Equity,bond,balance,hybrid,index,

money market,guaranty etc.

• Competition products Deposit, fund biding insurance, asset

management, trust, underground fund

etc.

• Development plan Meet the needs of main clients group

• Product frame Based on capital market environment

• Image/Brand

• …

20

Guaranty Fund

Money Market Fund

Bond Fund

Balance FundHigh Risk

Low

Equity Fund

Low

R

eturn

Hig

h

Product Frame

Fund Type

21

Distrubution

Distribution methods

• Direct sales to main institutional clients

• Agency sales through agency banks, securities

firms, China Unionpay etc.

• E-business through website and call center

• …

Distribution channels

• Present channels banks, securities firms,internet etc.

• Channels selection 3-4 commercial banks,10 sec. firms

• Incentive scheme front-load fee kickbacks

• Binding promotion flight tickets,insurance,credit card,lottery etc.

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Investment Management

Investment Strategies• Active / Passive

• Benchmark

• Error tracking

• Performance evaluation/Risk management

• Reporting system

Research• Top to down /Bottom up

• Investment strategies

• Listed companies research

• Modeling

• Stock-based loan

• …

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Operational management

IT framework

• TA (Self-establishment / The third-party supporting)

• Software and hardware selection

• Customer service system

• Company web

• OA

Human resources & General Administration

• The number of staff

• Core employees

• Job description

• Training

• Corporate finance and administration

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Compliance

Auditing and supervising

• Fund and company assets auditing

• Behavior supervising

• Risk evaluation

• Firewall

• Emergency event handling scheme

• …

Public relationship

• Relationship with CSRC, the exchanges and securities association

• Legal affairs, information disclosure, international business

• …

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4 、 Roadmap

26

Initial Process in Seting up JVFMC

• Sign the Joint Venture agreement and the article

• Set up joint preparatory team

• Prepare application documents required by CSRC

• Obtain the approval of establishment

• Recruitment and training

• Install the equipment and software of JVFMC’s operation

• Fund product development and key clients contact

• Setup of contracts with custodian bank and distributors

• Promotion

• Fund issuance

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Short-/Medium-/Long Term Target Setting

PeriodThe Number of Fund ,Total

AUM(in billion unit)

The Number of

Staff,Location of Branches

Short-term(1-2 year)

Num of funds: 1-2 Series funds the first year: 6-8 billion the second year: 9-15biliion

32-45Beijing,Shanghai、Guangzhou 、 Shenzhen,Xi’an

Medium-term(5 year, top 10)

Num of funds: 7-8 funds Mutual funds: 30-50 billion Pension funds: 25 billion Mandates: 25 billion

60-85Major cities in China mainland & Hongkong

Long-term(8-10 year, top 5)

Mutual funds： 80-100billionPension funds & mandates： 60billionInternational business： 10billionOther asset management business: 10billion

100-120 Taiwan 、 Singapore and other Asian countries

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5 、 Assumption and Forecast

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Macroeconomy

• GDP growth rate

7%-8% annually

• Inflation rate

Under 1%

7. 80% 7. 10%8. 00% 7. 30% 7. 80%

9. 10%

0%

2%

4%

6%

8%

10%

1998 1999 2000 2001 2002 2003

Chi nes GDP Growth Rate

0

2, 000

4, 000

6, 000

8, 000

10, 000

12, 000

1998 1999 2000 2001 2002 2003

Chi nese Resi dent Savi ng ( i n RMBbn yuan) (Chi nese Resi dent Savi ng ( i n RMBbn yuan) )线性

• Resident Savings

20% growth annually

- 5%

0%

5%

10%

15%

20%

1995 1996 1997 1998 1999 2000 2001 2002 2003

Chi nese CPI 2 (Chi nese CPI )天移动平均

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Shareholder Concept

2003 2004 2005 2006 2007

67%

33%M

ain

tain 3

3%

Call O

pti

on

to 4

9%

Or

• Share transfer

• Capital Expansion

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Earning Distribution Concept

JV-FMC

Share Capital& Resource

Share Capital& Resource

Dividends& Service fee

Dividends& Service fee

Dividends destribution bases on share stuctureService fee based on the shareholders‘ contribution to JVFMC under SLASLA and the payment method are to be discussed under the real legal enviroment

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Market Share

• Optimistic Scenario 60% 5%

• Realistic Scenario 45% 3.5%

• Pessimistic Scenario 30% 2%

Total Mutual Fund The num. Of FMCs The num. Of Funds

182 billion units 47 112

Scenario Growth Rate Market Share

(in 3 years)

(By the end of 2003)

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Fee rate Structure

0.25%

ManagementFee

CustodyFee

Subscription Fee(IPO)

Subscription Fee

(after IPO)

Redemption Fee

Equity &HybridFund

Bond Fund

Index Fund

MoneytaryMarket Fund

1-1.5% 1% 1% <=3% 0-1%

0.6-0.75% 0.2% 1% <= 1.5% 0-1%

1% 0.2% 1% <= 1.5% 0-1%

0.33% 0.1% * NA NA

* 0.25% sales service fee charged

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Setup Cost

• Space 1000 M2 (Constructional area)

• Rent US$0.70/M2 / D (Aver, standard)

• Decoration 850 yuan /M2 0.85 million (Aver, standard)

• Computer Center 1 million

• Furniture/PCs 32 0.80 million

• Automobile 3 1.2 million

• IT costs 11 million

(TA,OA,hardware,software etc.)

• Depreciation method straight line

• 2004.3-2005.3 12 months

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SETUP 2004.3-2005.3 in RMB yuan Note

Preriod Milestone Item Unit RMB/unit Total Sum

Pre-pararing Before LOI Expenses paid by each party

Preparetory Team(6 months) After LOI

Space 100m2 US$0.7/m2/d aver. Level in Pudong area

Rent 6 months 17,500/month 105,000

Consulting 800,000 R&D,IT,Marketing,HR topics

Payroll 7 persons 10,000/m/p 420,000

Overhead 50,000/m 300,000 staitionary,communication,transport

Travelling and meeting 1,200,000 Overseas and domestic

Training 3 times 100,000/t 300,000 in Frankfurt&Shanghai

Other business activity 500,000 Public relationship

Subtotal 3,625,000

Establishing(6 months) After approval Expenses paid by both parties

Space

Rent 6 months RMB175000/month 1,050,000

Payroll 15 persons 10,000/m/p 900,000

Overhead 75,000/m 450,000

Travelling and meeting 1,800,000

Recruting &Training 600,000

Other business activity 750,000

Subtotal 5,550,000

IT equipment 12,100,000 11 million in equipment,10%installment

Computer&Furniture 32persons 25000/p 800,000 including conference equipments

Decoration m2 1,850,000 including computer center

Automobile 3 400,000/u 1,200,000

Subtotal 15,950,000

Total establishing expense 25,125,000

Depreciation Method Type Years Total Sum Annual Sum

Straight line Initial expense 5 9,175,000 1,835,000

IT ,furniture,Decoration 3 14,750,000 2,950,000

Automobile 5 1,200,000 240,000

25,125,000 5,025,000

constructional 1000m2 , actural 700m2

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Staff Cost

• 7 employees in establishing period aver. RMB10,000 yuan/m per

Operational period

• Number of employee 32,45,55 in 2003-2007

• Base salary according to the position

• Bonus 30%-120% of base salary

aver. 40% in BP

• No compensation for foreign staff by JVFMC

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Position Num. RMB/u Total Num. RMB/u Total Num. RMB/u TotalCHAIRMAN 1 800 800 1 800 800 1 800 800CEO 1 700 700 1 700 700 1 700 700CIO 1 600 600 1 600 600 1 600 600CMO 1 500 500 1 500 500 1 500 500COO 1 450 450 1 450 450 1 450 450HEAD COMPLIANCE 1 250 250 1 250 250 1 250 250

6 3300 6 3300 6 3300

FUND MANAGER 2 500 1000 4 500 2000 4 500 2000HEAD SALES 1 300 300 3 300 900 4 300 1200HEAD RESEARCH 1 280 280 1 280 280 2 280 560HEAD DEALING 1 260 260 2 260 520 2 260 520HEAD IT 1 260 260 1 260 260 1 260 260

6 2100 11 3960 13 4540

RESEARCH ANALYST 2 180 360 4 180 720 6 180 1080SALES&Markting 2 180 360 4 180 720 6 180 1080HEAD HR ADMIN 1 180 360 1 180 180 1 180 180HEAD FINANCE/ACCOUNTING 1 180 180 1 180 180 1 180 180

6 1260 10 1800 14 2520Other OPERATION STAFFSales 5 100 500 8 100 800 10 100 1000Rearch 2 100 200 2 100 200 3 100 300Finance/Accounting 3 80 240 4 80 320 4 80 320IT 2 80 160 2 80 160 2 80 160Admin 2 50 100 2 50 100 3 50 150

14 1200 18 1580 22 1930

TOTAL STAFF COST 32 7860 45 10640 55 12290

TOTAL EXPENSE 43, 506 55,086 65, 416See costbreakdown worksheet

% OF TOTAL STAFF COST 18% 19% 19%OVER TOTAL EXPENSE

BONUS 30%-120% OF BASE SALARY ACCORDING TO Annual Performance

JV STAFF BASE SALARY BUDGET (IN RMB1,000yuan)

2005 2006 2007

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Operational Cost(2005-2007)

• Rent 2.1 million /y

• IT maintenance 1.1 million/y, 10% of IT costs

• Traveling and meeting 3.2-6.2 million

• Marketing and Promotion 11-21.5 million

• Research and development 2.1-3 million

• Compliance 1.05-1.25 million

• Consulting 5.175 million /y

• Administration 0.6-0.84 million

• Sales tax 5%

• Income tax 15%

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2005 2006 2007 NOTEItem Month RMB/unit

Depreciation 5,025,000 5,025,000 5,025,000

Operating expenseRent 12 175,000/month 2,100,000 2,100,000 2,100,000Payroll 12 7,860,000 10,640,000 12,290,000 See JV STAFF BASE PAY WORKSHEETBonus 3,144,000 4,256,000 4,916,000 Aver. 40% PAYROLLOverhead 12 3000/m/p 1,152,000 1,620,000 1,980,000 32,45,55 persons in 2005,2006,2007

Travelling&meeting 3,200,000 4,800,000 6,240,000

IT service/ maintainence 1,100,000 1,100,000 1,100,000 10% OF IT INSTALLMENTSubtotal 18,556,000 24,516,000 28,626,000

Marketing expenseAdvertisement 4,500,000 5,500,000 6,500,000 1 million increasing annuallyDistribution Channels 50,000/u 3,000,000 5,000,000 7,500,000 60-150 in 3 yearsMaterials 50/u 500,000 1,000,000 1,500,000 10,000-30,000 in 3 yearsBinding promotion 500,000/u 2,000,000 3,000,000 4,000,000 Flight ticket,credit card,insurance,lottery etc.Other promotion activity 200,000/u/y 1,000,000 1,500,000 2,000,000

Subtotal 11,000,000 16,000,000 21,500,000Rearch expense

Software service 300,000 300,000 300,000Rearch report 800,000 1,000,000 1,200,000Product development 1,000,000 1,200,000 1,500,000

Subtotal 2,100,000 2,500,000 3,000,000Legal affairs

Auditing expense 700,000 700,000 700,000Information disclosure 350,000 450,000 550,000

Subtotal 1,050,000 1,150,000 1,250,000Consulting Consulting 5,175,000 5,175,000 5,175,000 under SLA. , to be further discussed

Subtotal 5,175,000 5,175,000 5,175,000Admininstration Recruiting&Training 12 10,000/m 120,000 120,000 120,000

Public relationship 12 10,000/m 120,000 120,000 120,000Administrative expense 12 360,000 480,000 600,000

Subtotal 600,000 720,000 840,00043,506,000 55,086,000 65,416,000

Tax Sales tax rate 5% of revenueIncome tax rate 15% of income

In Million Euros 1 Euro=￥10.35 4.20 5.32 6.32

Total expense

BUSINESS STARTING PERIOD (in RMB YUAN)

40

Revenue,Profit and Cashflow Forecast

Optimistic Scenario

Year

Note

Number of Funds 1 Umbrella Fund Total

Equity(<=80% ) Hybrid(50% :50% ) Monetary Market Bond Fund

Fee Rate 1.50% 1.00% 0.33% 0.75%

Front-load Fee Rate 50% kick back 1.00% 1.00% 0.25% 1.00%

Net AUMs(in Million Units) 2,000 2,000 4,000 0 8,000

Revenue(in Million RMB Yuan) 40.00 30.00 18.20 0.00 88.20

in Million Euro 1 Euro= ￥10.35 3.86 2.90 1.76 8.52

Year

Number of Funds 2 2,400 2,400 4,800 9,600

New Launch 1 Guaranty Fund 5,000 5,000

Net AUMs 7,400 2,400 4,800 14,600

Revenue 111.00 24.00 15.84 150.84

in Million Euro 10.72 2.32 1.53 14.57

Year

Number of Funds 4 7,880 2,880 5,760 16,520

New Launch 1 Bond, 1 Equity fund 3,000 4,000 7,000

Net AUMs 10,880 2,880 5,760 4,000 23,520

Revenue 153.20 28.80 19.01 50.00 251.01

in Million Euro 14.80 2.78 1.84 4.83 24.25

2004 2005 2006 2007

Revenue 0.000 88.200 150.840 251.008

Cost 25.125 43.506 55.086 65.416

- Sale tax 0.000 4.410 7.542 12.550 5%

Income 0 40.284 88.212 173.042

- Income tax 0 6.043 13.232 25.956 15%

Net profit 0 34.241 74.980 147.085

in Million Euro 3.308 7.244 14.211

Cumulated profit (25.13) 9.116 84.097 231.182

in Million Euro (2.43) 0.88 8.13 22.34

Total

Cash Flow to Union (in Million Euro) 0.00 1.59 2.89 5.19 9.67

Cost/Income ratio n.a. 49.33% 36.52% 26.06%

Net yield margin n.a. 1.10% 1.03% 1.07%

Expense margin n.a. 0.54% 0.38% 0.28%

Profit margin n.a. 0.56% 0.66% 0.79%

2005

2006

2007

Fund Type

41

Realistic Scenario

Year

Note



Fee Rate 1.50% 1.00% 0.33% 0.75%

Front-load Fee Rate 50% kick off 1.00% 1.00% 0.25% 1.00%



in Million Euro 1 Euro= ￥10.35 2.90 2.17 1.54 6.61

Year

Number of Funds 2 1,800 1,800 4,200 7,800

New Launch 1 guaranty Fund 4,000 4,000

Net AUMs 5,800 1,800 4,200 11,800

Revenue 87.00 18.00 13.86 118.86

in Million Euro 8.41 1.74 1.34 11.48

Year

Number of Funds 4 6,160 2,160 5,040 13,360

New Launch 1 Bond ,1 Equity fund 2,400 3,200 5,600

Net AUMs 8,560 2,160 5,040 3,200 18,960

Revenue 120.40 21.60 16.63 40.00 198.63

in Million Euro 11.63 2.09 1.61 3.86 19.19

2004 2005 2006 2007

Revenue 0.000 68.425 118.860 198.632

Cost 25.125 43.506 55.086 65.416

- Sale tax 0.000 3.421 5.943 9.932

Income 0 21.498 57.831 123.284

- Income tax 0 3.225 8.675 18.493

Net profit 0.000 18.273 49.156 104.792

in Million Euro 0.000 1.766 4.749 10.125

Cumulated profit (25.13) (6.852) 42.304 147.096

in Million Euro (2.43) (0.66) 4.09 14.21

Total





Profit margin n.a. 0.38% 0.54% 0.70%

2005

2006

2007

Fund Type

42

Pessimistic ScenarioYear

Note



Fee Rate 1.50% 1.00% 0.33% 0.75%

Front-load Fee Rate 50% kick off 1.00% 1.00% 0.25% 1.00%



in Million Euro 1 Euro= ￥10.35 2.71 1.45 1.06 0.00 5.21

Year

Number of Funds 2 1,680 1,200 2,880 5,760

New Launch 1 Guaranty Fund 3,000 3,000

Net AUMs 4,680 1,200 2,880 8,760

Revenue 70.20 12.00 9.50 91.70

in Million Euro 6.78 1.16 0.92 8.86

Year

Number of Funds 4 5,016 1,440 3,456 9,912

New Launch 1 Bond,1 equity Fund 1,800 2,400 4,200

Net AUMs 6,816 1,440 3,456 2,400 14,112

Revenue 96.24 14.40 11.40 30.00 152.04

in Million Euro 9.30 1.39 1.10 2.90 14.69

2004 2005 2006 2007

Revenue 0.000 53.920 91.704 152.045

Cost 25.125 43.506 55.086 65.416

- Sale tax 0.000 2.696 4.585 7.602

Income 0 7.718 32.033 79.027

- Income tax 0 0.000 4.805 11.854

Net profit 0 7.718 27.228 67.173

in Million Euro 0 0.746 2.631 6.490

Cumulated profit (25.13) (17.407) 9.821 76.993

in Million Euro (2.43) (1.68) 0.95 7.44

Total





Profit margin n.a. 0.22% 0.42% 0.61%

2005

2006

2007

Fund Type

43

6 、 Sales Breakdown in 2005

44

Asset allocation of Chinese insurance

Company

Direct Sales

1999 2000 2001 2002 2003

Bank Deposits 926 1235.4 1930.6 3026.2 4549.6

Bonds 678.5 956 795.8 1107.8 1409.9

Funds 14.8 133.5 209 307.8 463.3

Other Assets 984.8 1049 1655.9 2052.3 1958.7

Total Assets 2604.1 3373.9 4591.3 6494.1 8378.5

ASSUME that funds invested by insurance companies increase by 50 percent annually and 1 percent market share taken by JVFMC; around RMB0.7bn units will be sold to insurance companies

Unit: RMB 100 million yuan

45

Potentials from Other Financial Institutions ex

Banks• Total assets of finance companies are RMB346bn, net assets are RMB32.2bn b

y the end of Jun. 2002

Major finance companies in China :

China Electric Power Finance Co., China Petroleum Finance Co., China Petrifaction Finance Co., HuaNeng Finance Co., Zhongwu Finance Co. etc.

• Trust & Securities Co. owns RMB250bn assets by the end of 2002

Including: Western Trust&Investment Co., JinSin Trust Co., Ping An of China Trust Co., Ai Jian Trust Co., Shangdong Trust Co. ect.

ASSUME that 10% of total assets of these institutions are allocated into mutual funds and 1% market share taken by JVFMC; more than RMB0.55bn funds will be sold to these companies

46

NaCSSeF/Houese Reserve/Listed Companies

• Total assets of National Council for Social Security Fund (NaCSSeF) are around RMB124.1bn by the end of 2003 which of 40 percent is permitted to flow into securities market

• Total assets of National House Reserve are 346.7bn by the end of 2003, and 1.5% of total sum managed by Shaanxi Provincial House Reserve

• According to the bulletins of China Securities Journal, trust assets of listed companies managed by securities companies exceed RMB 3bn in 2003

ASSUME that around RMB20bn assets of NaCSSeF allocated into mutual funds and 1 percent market share taken by JVFMC; 0.2bn units funds will be sold to NaCSSeF

ASSUME 5% share of Shaanxi Provincial House Reserve taken by JVFMC, that is 0.25bn units

47

State-owned Enterpirise Groups (Strategic partners)

• Shaanxi Provincial Investment Group

State-owned investment holding company with a registered capital of RMB3bn; to manage the governmental enterprises, real estate and financial assets more than RMB15bn by the end of 2002

• HanNan Airlines Group

Listed company invested by American Aviation Ltd., and total assets exceeding around RMB20bn; more than sixty thousand employees

• Shaanxi Provincial Electric Power Co.

Fully held by National Electric Power Co., Ltd; total Assets exceeding RMB 24bn and by the end of 2002; sustained long-term growth and abundant cash

• China HuaNeng Group, China LuNeng Group, Jiangsu Electric Power Co., Guizhou Electric Power Co., Zhejiang Electric Power Co., China International Traveling Group, Zhong Hai Group … …

48

Non-profit Organization (Good relationship )

• Universities and affiliated companies

Xi’an Jiaotong University, Northwestern University, Northwestern Polytechnical University, Xi’an Fanyi University, Chang’an University, Tongji University, Shanhai Financial University, Fudan University, Xijing University, Ouya University, Zhejiang University Tianjin University, Nankai University, Nanjing University etc.

• Hospitals and affiliated institutions

Xi Jing Hospital, Xi’an Dianzi Hospital, Xi’an Wujing Hospital, Eastern Hospital, Huaxi University etc.

• Charity funds association

Yanlin Agriculture Development Funds, Yanlin Industry Development funds, Shaanxi Architecture Industry Fund etc.

49

Internal Sales Package

ASSUME

• 100,000 units purchased by each top-level manager

• 50,000 units purchased by each middle-level manager

• 10,000 units purchased by each ordinary employee

• Product package should be well designed for individual investor, and the return should be superior to the market benchmark

• Employee can purchase JVFMC’s funds at discount front-end fee rate

Top-level

Manager

Middle-level Manager

Ordinary

Employee

Total

Shaanxi Provincial

Investment Group

77 365 5489 5931

Shaanxi Provincial

Electri Power Co.

502 3200 36524 40226

Shaanxi High-tech Industry Investment

204 530 4287 5021

Western Securities 9 55 633 697

Total 792 4150 46933 51875

50

Top-level

Manager

Middle-level Manager

Ordinary Employee

Total

Shaanxi Provincial

Investment Group

7.7 18.25 54.89 80.84

Shaanxi Provincial

Electri Power Co.

50.2 160 365.24 575.44

Shaanxi High-tech Industry Investment

20.4 26.5 42.87 89.77

Western Securities 0.9 2.75 6.33 9.98

Total 79.2 207.5 469.33 756.03

Unit: RMB Million yuan

Internal Sales Estimation

51

Retail Sales

Fund Assets under Custody in Chinese Commercial Banks

Open-end Funds Closed-end Funds Total Num.of Branch

ICBC 278.83 206 484.83 17,000

China Agricultural Bank 114.21 230 344.21 4,200

China Construction Bank 125.52 175 300.52 12,000

Bank of China 202.11 60 262.11 7,064

Bank of Communication 152.10 146 298.10

China Everbright Bank 16.45 16.45

China Merchants Bank 40.87 40.87

Shanghai Pudong

Development Bank 25.72 25.72

Unit: RMB 100 million

Total 955.81 817 1772.81 40,264

52

Comprehensive Cooperation Contracts

• Western Securities signed the comprehensive cooperation contracts with ICBC and CCB in 2001; the contracts will be signed once again after 2004 and become effect continually

• Following banks have been discussing comprehensive cooperation contract with Western Securities:

Nationwide Banks: Bank of Communication, HUA XIA Bank, Shanghai Bank, Shanghai Pudong Development Bank

Local Commercial Banks: Xi’an Commercial Bank, Baoji Commercial Bank, Xianyang Commercial Bank, Nanjing Commercial Bank, Tianjin Commercial Bank, Guiyang Commercial Bank, Ji Nan Commercial Bank, Yin Chuan Commercial Bank

53

Distribution Channels

ASSUME

• ICBC,CAB,CCB,COB as JVFMC agency banks,10 securities firms,100branches as agency;

• Aver. 80,000 units distributed by each branch,total 3.2 billion units distributed through commercial banks;

• Aver. 3,000,000 units distributed by each branch of agency securities firms,total 0.3 billion units distributed through securities firms ;

• 5 Direct sales centers in Beijing,Shanghai,Shenzhen,Xi’an,Fuzhou, 0.1billion distributed each center,total 0.5 billion;

• 0.2 billion units distributed through Call-center,website and other sub-contractors.

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Sales Forecast in 2005

Pessimistic % Realistic % Optimistic %

Internal Sales Package 2. 2 4. 58% 3 4. 62% 3. 7 4. 63%State-owned enterprise group 2. 2 4. 58% 3 4. 62% 3. 7 4. 63%Insurance companies 5. 2 10. 83% 7 10. 77% 8. 6 10. 75%Other financial institutions 4 8. 33% 5. 5 8. 46% 6. 8 8. 50%NaCSSeF/Listed companies 1. 5 3. 13% 2 3. 08% 2. 5 3. 13%Housing reserve 1. 9 3. 96% 2. 5 3. 85% 3 3. 75%Non-profit organization 1. 5 3. 13% 2 3. 08% 2. 5 3. 13%Other companies 0. 7 1. 46% 1 1. 54% 1. 2 1. 50%

Subtotal 19. 2 40. 00% 26 40. 00% 32 40. 00%Custody bank 10. 9 22. 71% 15. 4 23. 69% 18. 7 23. 38%Agency bank 10. 4 21. 67% 14. 2 21. 85% 17. 6 22. 00%Securities house 2. 5 5. 21% 3. 2 4. 92% 4. 1 5. 13%Other distributors 5 10. 42% 6. 2 9. 54% 7. 6 9. 50%

Subtotal 28. 8 60. 00% 39 60. 00% 48 60. 00%Total 48 100. 00% 65 100. 00% 80 100%

Unit: in 100 million RMB yuan

Direct Sales

Retail Sales

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Package Scheme/Saving up Plan

• Package scheme (for different investors)

80% equity fund, 20% money market fund;

50% equity fund, 50% money market fund

30% equity fund, 30% hybrid fund,40% money market fund

20% hybrid fund, 80% money market fund

• Saving-up plan

80% initial purchase + 20% saving-up

Western XX FMC Business Plan(2004-2007)

Documents

Transcript of Western XX FMC Business Plan(2004-2007)