Product opportunities in the Asia Pacific region

1. Product opportunities in the Asia Pacific region Examining current developments for product issuers in the region Harvey Kalman Head of EQT Corporate Fiduciary & Financial Services

2. Current Global Framework • No 4 in domestic Funds globally • Has domestic unit trusts where majority have internal non independent “Board” and uncapped capitalization required for the Board • Approx. 1.5tn in FUM • Only domestically focused • Outcome – FUM driven by superannuation system but at risk to other players who offer A$ classes in their funds ie Europe - UCITS EUROPE • No 2 in domestic Funds globally • Has domestic unitized companies with an indpt fiduciary (UCIT) and 10m euro capitalization required for the fiduciary • Approx. 5-6tn in FUM • Domestically and internationally focused especially ASIA • Able to do mutli-currency and mutli-fee classes per fund • Outcome – Europe has produced product that certain Asian countries allow direct or indirect investments CHINA • No 1 in domestic Funds globally • Has domestic Mutual Funds, unitized companies with a Board and no capitalization required for the Board • Approx. 10tn in FUM • Domestically focused but with global reach • Recent US Government changes make investments from US citizens into non US funds very difficult ie FATCA and Dodd-Frank • Outcome – US domestic funds for domestic users and will get bigger and bigger and might enter Asia USA • No X in domestic Funds globally, unsure of FUM • Has recently signaled that Chinese domestic investors will be able to invest into Hong Kong domiciled funds, who will need a “Bank” to be Trustee of that fund • FUM unsure? • Domestically focused but … • Outcome – Has a history of watching and seeing and learning and then using “politics” to get a Chinese centric solution. AUSTRALIA

3. Current Global Framework • No 1 in domestic Funds globally • Has domestic Mutual Funds, unitized companies with a Board and no capitalization required for the Board • Approx. 10tn in FUM • Domestically focused but with global reach • Recent US Government changes make investments from US citizens into non US funds very difficult ie FATCA and Dodd-Frank • Outcome – US domestic funds for domestic users and will get bigger and bigger and might enter Asia CHINA USA • No X in domestic Funds globally, unsure of FUM • Has recently signaled that Chinese domestic investors will be able to invest into Hong Kong domiciled funds, who will need a “Bank” to be Trustee of that fund • FUM unsure? • Domestically focused but … • Outcome – Has a history of watching and seeing and learning and then using “politics” to get a Chinese centric solution. • No 2 in domestic Funds globally • Has domestic unitized companies with an indpt fiduciary (UCIT) and 10m euro capitalization required for the fiduciary • Approx. 5-6tn in FUM • Domestically and internationally focused especially ASIA • Able to do mutli-currency and mutli-fee classes per fund • Outcome – Europe has produced product that certain Asian countries allow direct or indirect investments AUSTRALIA • No 4 in domestic Funds globally • Has domestic unit trusts where majority have internal non independent “Board” and uncapped capitalization required for the Board • Approx. 1.5tn in FUM • Only domestically focused • Outcome – FUM driven by superannuation system but at risk to other players who offer A$ classes in their funds ie Europe - UCITS EUROPE

4. Opportunities in Asia Issue Concern about outsourcing Tax base, Regulatory control and Jobs to Europe and potentially China or USA, so: • Need a common structure, language and framework and • Need a common Structure like a unitized company structure Possible solutions • One registered Fund with one set of accounts • Multi currency base classes with multi tax returns vs one • Tax returns lodged in multi locations, and • Multi offer documents in those location = the Asian UnitisedCollective Investments Trust or AUCIT

5. AUCIT Example • An Australian domiciled Fund global equity fund, registered in Australia with Asset managed out of Hong Kong and Sydney • Custodian and Administration of registered AUCIT in Australia with some services outsourced to China • Registries – one in each of the countries using their own currency class • Eg. A$ class registry in OZ with offer doc (principal offer doc) in OZ • $US class or $won class in Korea with wrapper offer doc in Korea leveraging off the principal offer doc and; • $NZ class in NZ again with its own offer doc wrapper • One set of Financial accounts lodged in Australia (where fund registered) • 3 tax returns associated with their own classes in OZ, Korea and NZ • If specific reporting required ie AIIR report in OZ this is done for OZ class only, or FATCA reporting again done per class = AUCIT, and jobs

6. AUCIT Pathway Pathway – initially • Governments accept the pilot • Local Oz tax laws to change to allow multiple tax returns per classes with a fund • Local ASIC rules re offer documents and capital for REs will need to be changed Pathway - ongoing • New Collective Investment Vehicle (CIV) structures created with corresponding acts in pilot counties • New CIV tax act for CIV • Harmonisation of offer rules and tax requirements across the pilot countries

7. AUCIT Outcome • Solves the common structure approach • Solves the erosion of the tax vases in the ASEAN countries • Solves the outsourcing of regulatory control as each jurisdiction will get control of its classes of investors and disclosure via the wrapper offer doc • Solves the exporting of jobs to Europe as each jurisdiction gets employment in their country associated with activity and tasks • Gives us a proper funds management operational and regulatory structure. • A Five Tick Outcome But beware: • If we do not do, others will watch, learn and then take over thus crowding us all out.