Annual Report 2010 1 P a g e
1 Introduction to the Annual Report Léon Kirch President Dear members, Dear candidates, 2010 has been another eventful year for the Luxembourg CFA Society. With 2010 marking the 8th anniversary of the Luxembourg CFA Society, I can safely state that the Board has been more active than ever during this past year. That s why I wanted to use this opportunity to thank all of my fellow Board members for their contribution in 2010. These volunteers spend each year a considerable amount of time and energy outside of their busy professional and personal lives. Without their passion and dedication for the cause of the local CFA Society, there would be no activity to report. I d also like to acknowledge the professional support we receive from the Europe, Middle East & Africa (EMEA) office of the CFA Institute in London. Special thanks to Emily Dunbar, Director for Society Relations EMEA at the CFA Institute, and Philippa Williams, Society Relations Representative EMEA at the CFA Institute, for their active contribution to our Society. As a non-profit organization, we have one disadvantage compared to a for-profit organization when we report. The straightforward financial indicators we are so accustomed to use as investment professionals when we evaluate the success of a business are simply not applicable. Nevertheless there are a couple of indicators that come to my mind when I evaluate our success as a local Society. Most of these factors have been highlighted in the strategic review we made in 2009 and presented at the AGM last year. 1) Reinforcing membership During 2010, membership has increased by 2% to 154 members. While a substantial membership for a small financial centre like Luxembourg, this remains a tiny membership inside an organization like CFA Institute now comprising more than 100,000 members in 130 countries. We believe it is very important that we continue to expand our membership for 2 reasons. First, we want to maintain our voice and good status inside the global network of the CFA Institute. Second, a solid membership increases our leverage in the local market when we approach decision makers or want to express our views. It also needs to be noted that the main part of our membership is still made up of regular members. We conclude that the introduction of affiliate membership has not made a big difference in our overall numbers, but we remain confident that this category offers opportunities. Several local Societies, like for example the Swiss one, actively introduce new classes of membership and simplify the membership application procedures in order to attract new members. While some fluctuation is to be expected we need to make sure that these members are not leaving the Society unnoticed or for the wrong reasons. We will support CFA candidates in the application process when needed. Candidates are indeed one of our main sources of future members. 2) Providing educational content to members and candidates This is the most visible part of the activity. I counted no less than 18 events for members and candidates in 2010! The range of subjects covered was broad, from the European debt crisis, to Global Investment Performance Standards, to socially responsible investing. In general, events were well attended supporting our view that the subjects that our Event Committee selected added value to our membership and to candidates. During the year, we also reinforced our university outreach. 3) Supporting candidates in their study efforts We maintained in 2010 a full service offer to candidates including preparatory courses, mock exams and information sessions. 4) Providing networking opportunities to our members Over the past years and especially since the financial crisis hit, members and candidates have asked for more opportunities to network and liaise amongst investment professionals. In 2010, we organized several such events. Moreover, we acted as an intermediary vis-avis our membership for employment opportunities in the local financial community. 5) Establishing Luxembourg CFA Society as a credible and visible discussion partner in the local financial industry 2 P a g e
During 2010, we organized a Travelling Conference in close collaboration with the EMEA office of the CFA Institute and Luxembourg For Finance, a local industry lobby, which enabled us to increase the visibility of the Luxembourg CFA Society. When you review the annual accounts of the Luxembourg CFA Society, you will observe that the financial situation of your association is healthy. In the 2009 annual report, we stated that As a Board, we collectively feel that Luxembourg Society has reached a size now we need to rethink our practices in order to continue to be able to provide the increased level of services and support you, as our Members, can reasonably expect from us.. In that framework, we have started a pilot project with the French Society and the EMEA office of the CFA Institute in London to share a Society Administrator, Valerie de Kergorlay. Her work will become visible in 2011. I also wanted to emphasise once again that the Luxembourg CFA Society thrives on contributions from volunteers. We are still looking for volunteers, be it for the different working groups or at the Board level. All help is welcome! Lastly, I want to thank all of our sponsors for their continuous support. On behalf of the Board of the Luxembourg CFA Society, Léon Kirch President Charter award ceremony 2010 3 P a g e
2 Activity report While we believe in sound and transparent finances, the real raison d être for the Luxembourg CFA Society is to provide intangible services for our membership. We offer our members continuing education, networking opportunities and points of contact in the local banking and financial sectors. We help our CFA candidates to prepare successfully for their exams. We get together to celebrate our new CFA charterholders. We liaise with the CFA Institute, in order to tap into the rich resources available there, such as upgrade our website, provide speakers, society leadership development and organisational support. A majority of these events would not be possible without the support of our sponsors. is our main sponsor for continuing education events and has been generous in providing a venue for our events and catering. Kneip hosts our GIPS working group meetings. Luxembourg For Finance has covered a substantial part of the cost for the Travelling Conference; they have moderated it; and always been prepared to give practical advice when needed. In 2009 the Board set the goal of one event per month. We are proud to say that this goal was exceeded substantially, and also that most events attracted an audience of between 30 and 50 members, networking events typically even more than that. The table below gives an overview of the events since January 2010: Date and Time Event Speaker(s) Type of Event Location 1 02/02/2010 The Luxembourg Financial Centre: the pursuit of excellence through ethics and integrity Charles Cronin, CFA Institute and others lecture and panel debate in cooperation with LiGFi Banque de Luxembourg auditorium 2 10/02/2010 12:00 Sustainable and Responsible Investing: generating long term performance Gaetan Herincks, Dexia Asset Management lecture 3 16/02/2010 18:00 CFA Exam Coaching Event exam preparation Cercle Munster 4 04/05/2010 General Assembly of the Luxembourg CFA Society AGM 2009 Sofitel Kirchberg 5 04/05/2010 Strategy for the Luxembourg CFA Society Emily Dunbar, Director for Society Relations EMEA, CFA Institute presentation Sofitel Kirchberg 6 11/05/2010 12:00 A Richness of Embarrassments: Capital Markets after a tumultuous decade Kevin Gardiner, Barclays Wealth lecture, 1.5 CE credits 7 15/05/2010 09:00 Mock exam for June 2010 CFA Exam exam preparation 8 16/05/2010 09:00 Final Review for June 2010 CFA Exam exam preparation 9 26/05/2010 Financial System Overview in China - risks and opportunities after the crisis Cong Zhang, CFA, Landing Wisdom & Company lecture, Sofitel Kirchberg 10 09/06/2010 Post-Exam Happy Hour networking opportunity Vinoteca 11 10/06/2010 17:00 The State of Financial Market Integrity Jim Allen, Matt Orsagh, Rhodri Preece, CFA Institute, Standards & Financial Market Integrity Division web-seminar, CE credits CFA Institute website 12 17/06/2010 11:00 Carry trades, momentum trading and forward premium anomaly M. Richard Baillie, Michigan State University, lecture provided by Luxembourg School of Finance Luxembourg School of Finance 4 P a g e
13 05/07/2010 12:15 GIPS Today (Global Investment Performance Standards) Beth Kaiser, CFA, CIPM, Director of Global Investment Performance Standards lecture, 1 CE/SER credit 14 22/09/2010 Luxembourg CFA Society "Back 2 work" drink networking opportunity Cafetin de Buenos Aires 15 14/10/2010 12:10 Systematic Biases in Analyst Estimates and Their Impact on Equity Valuation (Tim Gaumer, CFA - StarMine) Tim Gaumer, CFA, StarMine lecture in cooperation with 16 10/11/2010 Extreme Risks in Financial Markets and the New EU Financial Regulatory Framework Prof. Dr. Lucjan T. Orlowski, professor of economics and international finance in the Department of Economics and Finance, Sacred Heart University lecture in cooperation with Sacred Heart University, 1 CE credit 17 15/11/2010 15:30 Luxembourg CFA Society Travelling Conference Toby Nangle, Constantine N. Ponticos, Jerome Booth 3 lectures, 3 CE credits Abbaye de Neumünster 18 01/12/2010 Charter Award Ceremony new charterholder welcome Sofitel Grand Ducal 19 27/01/2011 12:00 Investing in Africa the attractiveness of frontier markets Zin Bekkali, Silk Invest lecture, 0.5 CE credits 20 02/02/2011 Investment Management after the Crisis Sergio Focardi lecture, 1 CE credit 21 09/03/2011 12:00 Ethics event: the New Standard of Practice Handbook Robert M. Luck Director - Society Advocacy Engagement, CFA Institute lecture, 1 CE/SER credit 22 10/03/2011 18:00 CFA Exam Coaching Event exam preparation Cercle Munster A continuously updated calendar of upcoming events can be found on our webpage: www.membersocieties.org/luxembourg. In the second half of 2010 we started to upgrade our public webpage, a process that is still ongoing. The contents have been streamlined, a tab for GIPS has been added, and current events are now given more space. In an effort to make our internal operations more efficient, we created a password-protected Board area where we store our documents and data. Special thanks belong to Katie VanSciver, Society Technology Representative at the CFA Institute, who made sure that we use the latest software and design. 5 P a g e
3 Society Financials Our association has three main sources of funding: Membership fees, Financial support from the CFA Institute Sponsorship Sponsorship has become more important as the number of activities has increased. Most of the larger events held during the year were sponsored by corporations that were directly targeted during the organization of the respective event. These financial statements are primarily cash based, with some accruals considered specifically provided for. The annual accounts for the years ended December 31 st, 2009 and December 31 st, 2010 were audited independently by Allan Saustrup Jensen and Yves Bodson. Both statutory auditors issued unqualified auditor s letters, added at the end of the report. Income Statement for the year ending December 31, 2010 INCOME (in EUR) 2010 2009 Membership fees 6,180 5,530 CFA Institute 9,135 8,927 Interest income 142 99 Miscellaneous - - Total income 15,457 14,556 EXPENDITURE (in EUR) 2010 2009 Events & presentations 11,305 13,944 Equipment purchase 0 599 Administrative expenses 794 565 Legal cost - - Exchange (gain)/loss* (64) 353 Exceptional item cost re 2008 events - 1,541 Total expenditure 12,035 17,002 Surplus / (Deficit) 3,422 (2,446) Balance Sheet at December 31, 2010 ASSETS (in EUR) 2010 2009 Cash accounts 27,679 27,397 Total assets 27,679 27,397 LIABILITIES & EQUITY (in EUR) 2010 2009 Short term creditor 33 3,173 Equity at beginning of year 24,224 26,671 Surplus of the year 3,422 (2,447) Equity at the end of year 27,646 24,224 Total liabilities & equity 27,679 27,397 *) Expenditure: Exchange (gain)/loss represents the effect of the strengthening/weakening exchange rate on USD cash and income during the respective year. 6 P a g e
4 Luxembourg Society statistics 4.1 Trends 4.1.1 Member trends 7 P a g e
4.1.2 Candidate trends 8 P a g e
4.2 Member demographics 9 P a g e
4.1 Candidate demographics 10 P a g e
5 AGM Agenda and Proxy Statement Each individual listed as a regular member of Luxembourg CFA Society is being sent the document on hand, which includes a meeting agenda, as well as a Proxy Statement and the Proxy Voting Form, documents which are also posted on Luxembourg CFA Society s website. The Proxy is solicited on behalf of the Luxembourg CFA Society Board of Directors. For the Proxy to be voted it must be received by April 3rd, 2011. Each eligible member is encouraged to vote by Proxy even if the member is also planning to attend the Annual Meeting in person. 5.1 Approval of the minutes of the 2009 Annual meeting The minutes of the 2009 AGM will be made available on the Society s website and on site before the Meeting. ://: Motion to be approved 5.2 Annual report The Annual report consists of sections 2 and 3 of this document. 5.3 Exoneration of the Board ://: Motion to grant exoneration to the current members of the Board 5.4 Election of the Board of Directors Election of Officers. According to the by-laws, all Directors including the President, Vice Presidents, Treasurer and the Secretary are elected for three years; the terms are staggered so that one-third (1/3) of the Directors will be renewed or re-elected each year. While the Board comprised of 12 officers previously, the 2011 Board will be composed of 10 individuals. The paragraphs following the table of Board members describe their professional background. The nominees for this year s election are: Position Name On the board since Current term expiring*) New term expiring*) President Léon Kirch 2002 (founding member) 2012 not up for election Vice President and Treasurer Knut Reinertz 2002 (founding member) 2012 not up for election Vice President Philippe Bernard 2002 (founding member) 2011 2014 Secretary Elke Valila 2010 2011 2014 Director Yohann Adolphe 2006 2013 not up for election Director Matteo Candolfini 2009 2013 not up for election Director Marc Fohr 2007 2013 not up for election Director Antonio Grieco 2005 2013 not up for election Director Arndt Nicolaus 2002 (founding member) 2012 not up for election Director Carolyn Linnevers 2010 2011 2014 *) The table refers to the calendar year, i.e. a term expiring in CY 2012 runs until the Annual General Meeting scheduled to be held in the spring of 2012. President Léon Kirch, CFA, was born in Luxembourg in 1972. He studied at the Ecole de Commerce Solvay and the Université Libre de Bruxelles, graduating with a Masters degree in Sciences Management in 1996. Following a five-year stint in the Asset Management Department of Banque de Luxembourg, where his main functions included managing in-house equity investment funds and buy-side equity analysis, he joined Nordea S.A. Luxembourg at the beginning of 2002 as co-fund manager of Nordea European Value Fund, an award winning investment fund with assets in excess of 1 billion EUR. At the beginning of 2008, he left Nordea to set up European Value Partners, an investment boutique focussing on investing in European equities. European Value Partners sub-advises the Nordea European Value Fund and manages the European Value Partners FCP-SIF Polaris Equity fund. He also chairs the following: Strategic Planning, CFA Institute Liaison, Public Awareness, Fund Raising. 11 P a g e
Vice President and Treasurer Knut Reinertz, CFA, was born in Luxembourg in 1963 and grew up in Belgium, Luxembourg and Finland. He graduated in 1987 from the University of Trier in Germany with majors in Finance and Banking. After working for BGL in Luxembourg in the institutional portfolio management department until 1990, he spent some years in Finland and Canada. In 1993 he rejoined BGL, this time in Hong Kong where his last position held was Chief Representative and General Manager. Knut became a CFA Charterholder in 1996. In 2002 he moved back to Luxembourg, heading the department in charge of New Markets in Fortis private banking division. At the end of 2007, he started Edison Capital Partners s.a., a Luxembourg-based Private Office, advising a handful of UHNWI. Knut is Society Vice President and Treasurer. He chairs the volunteer committee. Vice President Philippe Bernard, CFA, is Manager of Credit Suisse AG Luxembourg Branch and member of Senior Management at Credit Suisse (Luxembourg) S.A., where he oversees asset management, financial consulting and treasury activities. Mr Bernard joined Credit Suisse in Luxembourg in 1995 as head of portfolio management and chair of the investment committee. He previously gathered experience at UBS in different locations. Mr Bernard is also a founding member of the Swiss CFA Society. He has graded CFA exams for several years and was representing Europe at the Private Wealth Advisory Committee. In addition to holding a CFA charter, Mr Bernard is Eidgenössisch Diplomierter Bankfachmann. He holds the chair for Advocacy. Secretary Elke Valila, CFA, was born in Austria in 1969. She holds a Master s degree in International Economic and Business Sciences (Mag. rer. soc. oec.) from the University of Innsbruck, Austria, and received her CFA charter in 2001. Prior to the current family break, Elke worked in Private Real Estate Finance (Bausparkasse Wüstenrot, Salzburg, Austria), Corporate Banking (Rabobank Deutschland, Frankfurt/Main, Germany), Capital Markets (Rabobank Deutschland, Frankfurt/Main, Germany; World Bank, Washington, DC) and Private Banking (Nordea Bank SA, Luxembourg). She has served as Society Secretary for the Luxembourg CFA Society since 2010. Directors Yohann Adolphe, CFA, FRM, MBA, Ingénieur Génie Chimique, is currently working as Group Treasurer within IKANO Group (conglomerate held by the Kamprad family Ingvard Kamprad founded IKEA). He is heading the Corporate Finance department and the Internal Bank (of which he is the Managing Director). Before joining the head office of IKANO in 2005, Yohann was a manager within the Corporate Finance department at Deloitte, Luxembourg, where he worked since 1999. He holds the Membership Chair. Matteo Candolfini, CFA, was born in Cesena, Italy, in 1980. He studied at the University of Bologna and graduated in Computer Science in 2003. After briefly working as an IT Business Consultant, he moved to Luxembourg and joined Eurizon Capital (formerly known as Sanpaolo Asset Management S.A.), where he worked in quantitative analysis and portfolio management. In August 2007, Matteo joined ING Private Capital Management, first as Portfolio Manager of two asset allocation funds for private banking clients and then as hedge fund analyst. In August 2010 he moved to Ikano Fund Management where he is currently working as Risk Manager. He holds the Technology Chair and Career Development Chair. Marc Fohr, CFA, was born in Luxembourg in 1973. He studied at the University of the Saarland, Saarbrücken, and graduated in 1998 with a Major in Business Administration. After being European Equity Portfolio Manager for 6 years at Salomon Brothers/Citigroup Asset Management, Frankfurt/Main, Marc joined Allianz Global Investors, Frankfurt/Main, in 2004 where he was responsible for managing institutional and mutual funds with global equity exposure. Since 2006, he has been working for Sanpaolo Asset Management (renamed as Eurizon Capital), Luxembourg, as Senior Portfolio Manager for retail funds with European equities. Marc became CFA charterholder in 2002 and is a Board Member of the Luxembourg CFA Society since 2007. He chairs the following: University Liaison. Antonio Grieco, CFA since 2003, holds a University degree from both the University of Parma (Italy) and EHSAL Business School (Brussels). He started his career in the financial sector in 1999 as an equity analyst in the high tech sector for CONSEUR S.A., a nonprofit organization set up by several European Associations of consumers. Two years later, Antonio joined Dexia Bil's dealing room as an equity analyst and sales manager to Institutional Customers. In 2001 Antonio moved to Dexia's Private Banking Department where he was in charge of the Mediterranean Market. Apart from advising private banking customers, Antonio was also member of the Global and Local Asset Allocation Committees, which set the asset allocation policies for the discretionary managed accounts. In September 2006 Antonio joined Fidelity International S.A. where he worked in the Pan European Communication Department and focused, among other things, on fund analysis, fund positioning and research and product strategy. Since June 2008 Antonio is the Senior Institutional Sales Manager at Dexia Asset Management looking after the distribution of Dexia fund in Luxembourg. He holds the CFA Courses Chair. Arndt Nicolaus, CFA, was born in Montabaur (Germany) in 1967. He studied finance in Germany and in the US and received a Bachelor of Commerce Degree in Business Administration (Diplom-Kaufmann) from the University of Trier in 1993. After starting his career at Fidelity Investments (Luxembourg) S.A., Arndt was employed as a Senior Portfolio Manager with Credit Suisse (Luxembourg) SA for 10 years. In 2005, he joined LRI Invest S.A. as a Senior Fund Manager overseeing all equity products; since 2010 he serves as Senior Compliance Officer. He was awarded the CFA charter in 1998 and has been actively involved in CFA Institute since by serving on the Candidate Curriculum Committee Working Body, as a Standard Setter for the Level I&II exam and as an exam grader for Level II&III. He is a Director of Luxembourg CFA Society and holds the following chairs: Program and Continuing Education. Carolyn Linnevers, was born in the United States and holds dual American and Dutch nationalities. She graduated from the University of Connecticut in 1986 with a BA cum laude in Latin American Studies with a concentration in economics. She has been a long standing member of the CFA Institute (formerly AIMR) dating back to the early days of her career in New York. She worked in the asset management business in New York as an assistant portfolio manager for non-us equity investment funds for NSM Lepercq and as an asset management specialist and relationship manager for ABN AMRO Securities from 1987 to 1991. She then moved on the Coutts & 12 P a g e
Co (Jersey) Ltd where she headed the private client portfolio management department and was a member of the Coutts offshore global asset allocation committee. During a brief period in the Netherlands she passed the Level 1 CFA exam and was an investment adviser for Smith Barney in Amsterdam. After coming to Luxembourg in 1995, she was a volunteer board member and President of the American Women s Club and founded an investment club. Since 2001, Carolyn has worked for Clearstream Banking in Luxembourg as Vice President, Product Management and Design. She is a regular participant in the CFA Institute continuing education program. She was elected to the Luxembourg CFA Society Board in 2010 and presently serves as the GIPS chairperson. 5.5 Presentation: Business Modelling How to Excel In Your Business Nicolas Bolland, CFA, and Emmanuel de Villeneuve Esclapon, both of Ernst & Young, will give a presentation on Business Modelling How to Excel in Your Business" followed by a Q&A session. 5.6 Adjournment 5.7 Cocktail 13 P a g e
6 Auditor s letters 6.1 Allan Saustrup Jensen, CFA, CAIA 14 P a g e
6.2 Yves Bodson, CFA 15 P a g e