Fund China

Company Introduction

Lombarda China Fund Management Co., Ltd. (hereinafter referred to as Lombarda China), registered in Shenzhen with a registered capital of RMB 120 million, was formally established on July 19th, 2006. Italy-based Banca Lombarda e Piemontese S.p.A. holds 49% stake, Guodu Securities Co., Ltd. holds 47%, and Pingdingshan Coal (Group) Co., Ltd. holds 4%.

Company Philosophy

Goals
Lombarda China, integrating the best of the East and the West investment cultures, aims to be a top-notch indigenous Chinese fund management company with a global view.

Position
Lombarda China strives to be a “boutique-like” investment management company and a niche-player. At “Lombarda China Investment Boutique”, our experienced professionals will listen to your investment needs; recommend to you individualized fund products; provide realistic investment objectives and custom-made investment solutions. Customers will enjoy privileged investment services at Lombarda China.

Commitment
We care for the fund holders’ interest - it is the starting point as well as objective of all the staff of Lombarda China.

Vision
We encourage professionalism, diligence and innovation. We will provide employees with a career stage on which they can grow. We will try to build a multi-win cooperative network with shareholders and a trustable business partner with customers. We will work persistently to earn the respect and recognition of the market and the industry.

Shareholders

BLP, the foreign shareholder, is a large Italian banking group comprising listed bank whose history dates back over one hundred years. The Italian Bank, enjoys an A rating by Moody’s and S&P, reflecting its top profitability records, outstanding risk management capability and a bad loans ratio well below 1.0%. BLP group manages a large family of mutual funds covering the full range of investment alternatives from most traditional to most advanced products. Many of its funds are rated 5-star or 4-star by Morning Star.

Guodu Securities, with a stable track record and strong asset quality, is the main Chinese shareholder, whose net capital rate is about 91.4%, among the highest in the industry. As one of the few innovative securities companies among the one hundred plus securities companies in China, Guodu Securities with its full range of securities business qualifications will provide strong support to the fund JV in various business areas. China Credit Trust (formerly China Coal Trust), a shareholders of Guodu Securities, is one of the leading companies in China’s trust industry. In 2005, China Credit Trust attained the certificate of “legal person trusteeship” in pension fund management, which is granted to only 5 financial institutions in China.

The other Chinese shareholder, Pingdingshan Coal (Group) is a super large coal enterprise, which ranks No.8 in terms of comprehensive capability and No.5 in terms of net-income and profit in China’s coal industry in 2005 .

Lombarda China’s shareholders have a strong commitment to participating into the development of the Chinese capital markets and they are building the company focusing on professional tailored investment solutions and high quality of human resources. About this, interestingly LCF has built a team that relies chiefly on strong domestic expertise, but also includes professionals with extensive experience in overseas markets in the belief that international exposure will be of growing importance to meet investors’ diversification needs and to seize new investment opportunities.

Organizational Structure

Research & Investment

Our investment brand will be built around 4 main pillars:

Bottom-up proprietary research

Fundamental in-house research will form the cornerstone of our investment approach.

Initial stock screening based on fundamental data will seek to remove poor quality companies from the investment universe and design adequate stock pool. Equity analysts will then spend a lot of effort on “grass roots” research outside of the office to achieve a comprehensive knowledge of industry dynamics, competitive forces and company positioning and to gain an understanding of a company’s real potential. Dedicated company meetings and in-depth company interviews focused on business strategy and management motivation will help us to identify superior companies with the potential to deliver consistent returns for shareholders. By giving careful consideration to valuation, stock recommendations by research analysts will include a “target price” to avoid over-paying and limit downside risk.

Portfolio of “best ideas”
Our goal in investing is to focus on adding value and generate extra-returns regardless the benchmark performance. With this in mind, the fund manager will draw extensively on the research team’s work and construct a portfolio of “best ideas”, while paying little attention to index weightings of single stocks. Portfolios will rather emphasize the strong convictions of our investment team and hold stocks that offer the potential of significant capital gains over an extended period of time. Short-term volatility in stocks prices, while carefully monitored, will not impact portfolio composition.

Active risk management
We view risk management as an integral part of our investment approach, being able to add-value throughout the whole process. Our primary objective is to ensure that an optimal trade-off between risks and returns is achieved within the portfolios and that un-rewarded sources of risks are minimized. The risk management process of Lombarda China FMC will target primarily the measurement and control of active risks as opposed to passive benchmark-related risks.

Intellectual capital and high quality of resources
In Lombarda China FMC we think that providing a first class intellectual capital for our investment team is the best way to achieve our goal. We seek to employ people whose excellent understanding of markets and sectors is complemented by the ability to apply that knowledge to gain an edge over the competition in identifying non-mainstream investment opportunities. Open-minded environment, constructive discussion, dedication to team-work and team stability will support our capability to add value to client portfolios.

Marketing & Services

Fund Product

LC New Trends Equity
Fund Name: LC New Trends Equity
Fund Code: 166001
Fund Type: Listed-Open Fund
Face Value: RMB 1 per unit
Manager: Lombarda China Fund Management Co., Ltd
Custodian Bank: Industrial Bank
Target Investors: Retail investors, institutional investors, qualified foreign institutional investors, and others who are permitted to invest by Chinese laws and regulations.

Fund Manager

Mr. Ian Midgley, CIO and fund manager of Lombarda China New Trends Equity Fund

British, CFA. Master degree of economics in London School of Economics and Political Science,15 years working experience of investment management in Chinese and international securities market . His career highlights include research assistant in UBS Investment Management Company, fund manager in Friends Provident Fund Management Company, Investment Strategist in Schroder Investment Management Company, fund manager in Huaan Fund Management Company and Chief Representative in HSBC Investment Management Company Shanghai Office.

Investment Objective
Through investing in the companies which may achieve benefits from Chinese economic development and new trends of capital market, within a given risk tolerance, the fund pursues long-term and stable capital gains surpassing the benchmark.

Investment Scope
Financial instruments with excellent liquidity, including equities and bonds legally issued and listed domestically as well as other financial instruments which are allowed to be invested by funds approved by China’s Securities Regulatory Commission. Equities investment scopes include all A-shares with good liquidity which are legally issued domestically. The bond investment scopes include government bonds, PBOC bills, financial bonds, corporate bonds, convertible bonds and other financial instruments. The fund manager can include other instruments into the investment scope after fulfilling appropriate procedures under the approval of laws and rules or supervisory organizations.

The general principle of asset allocation of the fund are, 60%-95% to stocks, 0-35% to bonds and at least 5% to cash and the government bonds maturing within one year.

Investment strategies
The investment style of the fund is characterized with the active stock selection tactics, emphasizing exploring the enterprise value based on the future trends. At the level of asset allocation and sector allocation, the fund will not conduct positive asset allocation adjustment under normal market conditions and tend to hold sectors which comply with the new trends of economic development and market reform. At the level of stock selection, the fund will choose suitable and valuable stocks of listed companies to construct asset portfolio integrating the “best wisdom” through objective quantitative analysis, subjective qualitative analysis, securities valuation and other procedures.

Benchmark
80%×FTSE A600 Index +20%×FTSE Bond Index

Risk-Return Profile
The investment target, scope and strategy of the fund decide that fund is a kind of equity fund investment with moderate risks and pursuing long-term and stable capital appreciation. In the principle of strictly controlling risks, the fund will proactively grasp the medium- and long-term trends in Chinese economic development and reform of capital market, and endeavor to identify and select investment opportunities from individual stocks as well as sectors.

Website: http://www.lcfunds.com

Copyright Fund China 2008.

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