Slide n° 1 23 June 2008 Brussels The European Fund Classification Peter De Proft, EFAMA Bernard Delbecque, EFAMA Cora Gibbons, Allianz Global Investors 23 June 2008 The European Fund Classification Peter De Proft, EFAMA Bernard Delbecque, EFAMA Cora Gibbons, Allianz Global Investors 23 June 2008

Slide n° 2 23 June 2008 Brussels Part I Background Part I Background

Slide n° 3 23 June 2008 Brussels Three main motivations Current classification sectors too broad  Wrong star ranking and questionable awards Product development outpaced development of fund categorization  Differing views on fund classification between fund providers and data vendors Cross-border fund sales on the rise in Europe  Need for a pan-European approach to sector / peer group classification Creation of the European Fund Categorization Forum in 2002

Slide n° 4 23 June 2008 Brussels Product creation in Europe Fund launches in % of number of funds Source: Lipper Hindsight

Slide n° 5 23 June 2008 Brussels Terms of reference of the EFCF Composition: Cross-border fund managers and data vendors only Purpose: To adopt a pan-European investment fund classification to enable investors and fund companies to truly compare like with like. Strategy: To Review fund categories with a view to proposing clear new categories Win-win “business model”  Pooling of expertise from the business  Mutual understanding of difficulties involved  Collaborative approach to resolving challenges  Data vendors’ support to bring the EFCF work to a wide audience

Slide n° 6 23 June 2008 Brussels A step-by-step process July 2003: EFAMA joins the EFCF June 2004: EFCF adopts Version 1 of fixed-income funds classification June 2005: EFCF becomes an EFAMA Working Group Summer 2005: EFCF hires « Classification Administrator » April 2007: Adoption of EFC beta version, covering equity, bond, money market and mixed funds Fall/Winter 2007: Testing of EFC version by Classification Administrator and EFCF members Spring 2008: Finalization of the EFC

Slide n° 7 23 June 2008 Brussels EFCF current membership Fund Managers Allianz Global Investors BlackRock Investment Management BNP Paribas Investment Partners Credit Suisse Asset Management DWS Fidelity International Franklin Templeton Goldman Sachs HSBC Asset Management Limited ING Investment Management Invesco JPMorgan Asset Management KBC Asset Management Mellon Global Investments Morgan Stanley Investment Management Pioneer Investments Robeco Schroders UBS Global Asset Management Union Asset Management Data Vendors Bloomberg Feri Rating Research AG Lipper Morningstar Trade Associations Assogestioni BVI EFAMA EFCF Classification Administrator FundConnect & CCLux EFCF Chairman Robert Higginbotham, President – Europe for Fidelity International

Slide n° 8 23 June 2008 Brussels EFCF current membership (1) International funds only include funds that source at least 80% of their assets from more than one market. Source: Lipper Feri

Slide n° 9 23 June 2008 Brussels Part II The European Fund Classification Part II The European Fund Classification

Slide n° June 2008 Brussels Three key principles Transparency: high thresholds define fund categories to ensure transparency for investors and fund management companies and enable like with like comparison of funds Investor protection: well delimitated fund categories, subjected to robust criteria, and effective monitoring based on the portfolio holding of the funds, will help investors buying funds knowing their inherent qualities Independence: compliance with the classification criteria will be monitored by a neutral Classification Administrator

Slide n° June 2008 Brussels The benefits Benefits to investors  They will know what they buy when they invest in EFC compliant funds  Comparison of funds from different countries will be easier Benefits to fund providers  Sector/peer group classification will be more transparent  More consistent marketing of funds on a cross-border basis will be possible Benefits to data vendors  They will get the classification results free-of-charge  They will be able to spend less resources on classification issues, more on fund comparison

Slide n° June 2008 Brussels EFC general structure Four Main Categories Equity (85% exposure to shares) Mixed (Mix of asset type) Bond (90% exposure to fixed income securities) Money Market (Weighted average modified duration of less than 1 year)

Slide n° June 2008 Brussels EFC main fund categories’ shares in UCITS market Source: EFAMA Quarterly Statistical Release June 2008, N°33

Slide n° June 2008 Brussels EFC classification criteria Description

Slide n° June 2008 Brussels EFC classification criteria Illustration for bond funds Classification Criteria Currency exposure Emerging market exposure Credit quality Interest Rate exposure Structural characteristics Unconstrained

Slide n° June 2008 Brussels Other fund categories covered Absolute return Total return Convertibles Open-ended & closed ended real estate funds REITS Guaranteed Capital protected Lifecycle/Target maturity ABS Commodities

Slide n° June 2008 Brussels Part III First Classification Results Part III First Classification Results

Slide n° June 2008 Brussels Main fund categories Number of Funds Classified Equity funds 904 Mixed 110 Bond 350 Money Market 72

Slide n° June 2008 Brussels EFC classified equity funds

Slide n° June 2008 Brussels EFC classified bond funds

Slide n° June 2008 Brussels EFC classified money market funds

Slide n° June 2008 Brussels EFC classified mixed funds

Slide n° June 2008 Brussels Part IV Concluding Remarks Part IV Concluding Remarks

Slide n° June 2008 Brussels Converging towards a pan-European fund classification is an ambitious goal … National associations cannot give orders; they can try to convince their members of the importance of a pan-European standard Local market characteristics and national regulation may impose limits to convergence

Slide n° June 2008 Brussels … but success is a realistic possibility Finding a consensus on a pan-European classification was possible within the EFCF Flexible implementation at national level will facilitate dissemination  Not all categories should necessarily be adopted in national versions of the EFC  Funds not yet classified by the EFC could be included in local versions of the EFC  Cohabitation of the EFC with local classification should be possible, at least initially The completion of the European Single Market for investment funds heightens the need for a pan-European approach to fund classification

Slide n° June 2008 Brussels For more information about the EFC, please visit EFAMA website. Thank you for your attention. For more information about the EFC, please visit EFAMA website. Thank you for your attention.