Credit Suisse Solutions (Lux)
Megatrends
Credit Suisse Asset Management
August 2010
The Fund in a nutshell
 The identification of Megatrends: a very concise
and effective way of looking at the world
MEGATRENDS
 Demographics – analyzing the long-term developments of the
Transparency
human population
 Multipolar World – taking into account that a greater share of
the global population will enjoy higher development
 Sustainability – realizing that this cannot happen without an
eye on limited resources
 The CS Solutions (Lux) Megatrends fund
 One investment solution based on identified Megatrends,
Flexibility
One bank solution
creating a portfolio for each
 Transparently implemented through Equities and Long-Only
Funds
 Actively managed, incorporating Credit Suisse’s renowned
research expertise and investment experience
 By managers with robust track records and years of
experience managing such portfolios
Asset Management
2010
Slide 2
What is a Megatrend?
Looking at the history of human civilisation, distinct forces that have spurred future developments in, and
the
evolution of, mankind can be identified. These forces were natural challenges, technological
breakthroughs
or geopolitical changes that initiated lasting trends in society on a large scale – so-called megatrends.
A Megatrend represents
 a major and lasting alteration of society
 progressive change lasting several decades or centuries
 a source that can often be rooted in a major technological breakthrough, a geopolitical rebalancing, or
an environmental shift such as change in climate
We identified three major Megatrends that are currently shaping global society. Each of these
Megatrends
entails several distinct themes that have their own implications for investors.
These Megatrends are Multipolar World, Demographics and Sustainability.
Asset Management
2010
Slide 3
Megatrends – Three themes and their components
Above average growth perspectives
Moving to a multipolar world –
as global wealth is rapidly
spreading
from the developed to the
emerging world and as a result of
accelerating globalisation, more
emerging market countries
are increasingly participating in
the global economy.
The demographic challenge –
rapid population growth in
emerging markets and increasing
ageing, mainly in developed
markets, represent the starting
point in the cycle of Megatrends.
The need for sustainability –
rising demand and depleting
resources are leading to
imbalances,
one solution to restore the balance
between supply and demand
is the sustainable generation of
resources as well as more efficient
use of existing resources.
Asset Management
2010
Slide 4
Credit Suisse Solutions (Lux) Megatrends
Composition of the fund
Sourcing
Construction
Benchmark
 MEGATRENDS according to Credit Suisse Private Banking Research definition
 CS Private Banking Equity Research, Product Buffet for Funds and Certificates
 Embedded within PB/Asset Management Investment Process







Use of Private Banking Research MEGATREND individual stock recommendations
Use thematic funds, ETF and index Trackers with clear evidence to MEGATRENDS
Around 20 Stocks well diversified per MEGATREND
Total of around 60 Stocks plus min. 1 Thematic product per MEGATREND
HOLT valuation
BarraOne optimization and benchmarking
Allowance for other asset class exposure if in line with MEGATRENDS
 100% MSCI AC World
–
–
–
Demographics 100% MSCI World
Sustainability 100% MSCI World
Multipolar World 100% MSCI Emerging Market
 Tracking error range: 3.0 – 12
*Source: MACS.
Asset Management
2010
Slide 5
Credit Suisse Solutions (Lux) Megatrends – Strategic allocation
Megatrends
CS Megatrend Coordination Forum

Megatrends
Multipolar
World
Selection
 MSCI Emerging Markets
 CS Private Banking


Research
CS HOLT Scorecard
Optimization
Optimization
 BarraOne
 One Fund
 Multi Factor
 3 Themes
Model
Megatrends
 MSCI World
 CS Private Banking
Research
 CS HOLT Scorecard
 Optimization
Sustainability
 Individual Selection
 CS Private Banking
Research
Demographics
Implementation
 Thematic
CS Solutions
(Lux) Megatrends
Funds
Selection
 TOP 30
PB Research
 MSCI World
 Best in Class
 CS Private Banking


Research
CS HOLT Scorecard
Optimization
*Source: MACS.
Asset Management
2010
Slide 6
Tactical Asset Allocation
Bottom-up
CIO Investment Views
Research view on stock level
Absolute views based on HOLT model
Megatrend Allocation
Thematic relevance
MEGATRENDS
Translation Tactical Allocation CIO
Investment Views into Megatrends
Optimization (BarraOne)
Calculation of the optimized portfolio under
consideration of risk, investment views and
themes specific factors
Selection Equities
Selection thematic funds and ETF
Risk optimization
Reporting
Implementation
Investment views, performance,
implementation
selection screening, timing, liquidity, optimization,
trading
Performance Measurement
Return relative views, confidence in
views
Investment views, asset allocation, implementation
Credit Suisse Solutions (Lux) Megatrends Tactical allocation
Source: Credit Suisse AG
Asset Management
2010
Slide 7
Tactical overlay on demographic investments - Urbanisation
Estimated cummulative global infrastructure requirement allocations 2010 to 2030
trillion)
Est. cumulative global (US$71
infrastructure
requirement
allocations 2010 to 2030 (USD 71trn)
electricity (transmission &
distribution)
8%
Advanced G-20 Countries: government debt (in
percent of GDP
rail
2%
roads
11%
water
37%
telecommunciation
17%
energy infrastructure
25%
Source: OECD Global Infrastructures to 2030 White Paper
Source: January 2009 World Economic Outlook (WEO) projections
"Urbanization" conclusions: +
 Urbanization dramatically raises infrastructure spending needs from water to energy to transportation
 The UN projects that roughly one billion people will move to the cities in Asia alone over the next 20 years
 Large deficits, growing structural deficits, and globally rising government debt to GDP levels point to more "brownfield"
OECD infrastructure privatization, investment choice, transparency, and to constructive asset pricing/ROI
developments
 Look for "forced infrastructure privatizations by governments" news flow (P.E. funds) as well as EM infrastructure
Source:
CS CIO-Office
spending trends as concerns infrastructure stock (ABB, Siemens, Komatsu, United Technologies, Holcim,
etc.)
purchases
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2010
Slide 8
Orascom: Growth in demand from infrastructure and agriculture
12
12000
10
world pop. in billions
10000
8
8000
6
6000
4
4000
2000
0
1960
1970
1980
1990
2000
2010
2020
2030
2040
2050
bn
6
GDP per capita in USD
14000
5
Urban
4
3
Rural
2
2
1
0
0
1950
1960
1970
1980
1990
2000
2010
2020
2030
World population in billions (right hand side)
GDP per capita in constant 2000 US dollars (left hand side)
 Orascom Construction (OCI) is a construction firm active in emerging markets, building large industrial infrastructure


projects in the MENA region and beyond.
OCI also produces nitrogen-based fertilizer products (urea and ammonia) and ranks among the top 10 global fertilizer
firms in terms of production capacity.
With a growing global population, increasing income per capita, and rising urbanisation, the demand for food and
infrastructure is likely to remain robust – especially in emerging markets.
Source: CS Private Banking Research
Asset Management
2010
Slide 9
CS Solutions (Lux) Megatrends– Model Portfolio
Indicative only
Multipolar World
Emerging
Consumer
Emerging Markets
Demographics
Metro
Nestlé SA – Reg
McDonalds Corp
2.1%
2.1%
1.2%
Altria Group
0.9%
SAB Miller Plc
2.1%
Fomento Economico Mex.
0.7%
Swatch Group
2.1%
Siam Commercial Bank L
1.2%
United Overseas Bank Ltd
1.6%
Belle International Holdings
1.4%
Boc Hong Kong Holdings
1.4%
Vale Sa – SP Pref ADR
1.9%
Emerging Producer Gazprom OAO-SPON ADR
Anadarko Petroleum Corp
Siemens
Keppel Corp
General Electric Co
Cisco Systems Inc.
Schneider Electric SA
Orascom Construction–GDR
Holcim Ltd – Reg
1.9%
2.4%
1.9%
1.8%
0.9%
1.0%
1.6%
Astellas Pharma Inc
Resmed Inc.
Baxter International
Merck & Co. Inc.
Stryker
Medtronic Inc.
Novo Nordisk A/S-b
Hikma Pharmaceuticals PLC
0.8%
0.9%
1.0%
2.1%
0.9%
0.8%
1.0%
1.1%
Community
Environment
Innovation
1.7%
Conoco Phillips
1.7%
Encana Corp
2.1%
Apache Corp
1.5%
HSBC Holdings Plc
3.1%
Hang Seng Bank Ltd
1.2%
SATS Ltd
1.3%
Emerging Markets
HSBC GIF –INDIAN Equity
3.1%
Invesco Asia Infrastruct-A-A
2.7%
CS Sicav Lx-Eq MidEsNAfB
3.4%
Total
21st century
lifestyle
0.6%
Logistics
Frontier Markets
Urbanization
Sustainability
Education
Agriculture
United Tractors TBK PT
Archer-Daniels-Midland Co
FIAT SPA
INCITEC PIVOT Ltd
1.3%
1.5%
1.7%
1.0%
1.0%
Funds
21st cent lifestyle
41.1%
New Oriental Education -SP
Agriculture
Total
Invesco GLB Health Care-A
DWS Invest Global
Agribusiness
2.0%
2.6%
31.2%
ING Groep NV
SAP AG
City Developments Ltd
1.5%
1.1%
1.3%
Honda Motor Co Ltd
1.5%
Panasonic Corp
1.0%
Nike Inc. CL B
1.8%
Walt Disney Co
1.4%
Companie de Saint-Gobain
1.5%
Konl. Philips Electronics
1.7%
Iberdrola
1.4%
Vestas Wind Systems
0.6%
Geberit AG –Reg
1.3%
Toshiba
1.1%
BASF
1.2%
Fanuc Ltd
0.5%
Johnson Matthey Plc
0.8%
First Solar Inc.
1.4%
Agilent Technologies Inc
1.9%
Samsung Electronics Co Ltd
1.4%
Apple Inc.
1.0%
JB SAM Smart Materials FdB
2.3%
Funds
Innovation
Total
27.7%
Asset Management
2010
Slide 10
CS Solutions (Lux) Megatrends – Asset Allocation
Sectors
Thematic
Financials
11.3%
Materials
Energy
Countries
Regions
Demographics
31.2%
Switzerland
7.1%
9.0%
Urbanization
11.5%
France
2.4%
7.6%
21st Century Lifestyle
10.6%
Netherlands
3.2%
Consumer Discretionary
12.7%
Education
1.3%
Italy
1.0%
Industrials
16.4%
Agriculture
7.8%
United Kingdom
7.1%
Information Technology
12.1%
Sustainability
27.7%
Germany
6.4%
1.6%
Telecommunication Services
Health Care
0.0%
Community
9.6%
Denmark
10.5%
Environment
6.5%
Spain
9.6%
Innovation
11.6%
United States
Utilities
1.5%
Multipolar World
41.1%
Canada
2.1%
9.3%
Emerging Consumer
15.4%
Japan
4.8%
Australia
1.0%
100.00%
Emerging Markets
9.1%
Emerging Producer
25.5%
11.9%
Singapore
6.7%
Frontier Markets
3.4%
Hong Kong
4.0%
Logistics
1.3%
China
1.3%
100%
Thailand
1.2%
India
3.1%
Indonesia
1.5%
Korea
1.4%
Asia Funds
2.7%
Brazil
1.9%
Russia
0.6%
Mexico
0.7%
Egypt
1.0%
Frontier Markets Funds
3.4%
Key figures
Total Risk for direct investments
20.98
Active Risk of direct investments
3.78
Global Funds
30.2%
N-Amerika
27.6%
1.5%
Consumer Staples
Thematic Regional Funds
Europe
6.8%
Japan
4.8%
Pac ex Jap
11.6%
Emerging Markets
19.0%
Other incl. cash
100%
6.8%
100%
Indicative only
*Source: MACS.
Asset Management
2010
Slide 11
Credit Suisse Solutions (Lux) MEGATRENDS backtest (in USD)
Backtest calculation based on indices
(monthly rebalancing)
Backtest calculation based on indices
(monthly rebalancing)
1.4
Sustainability
1.2
Innovation
NASDAQ 100 Stock Ind.
1.2%
0.8
Alternative Energy
Global Alternative Energy
16.9%
0.6
Social Awareness
CS Social Awareness
16.7%
1
34.8%
0.4
0.2
Demographics
0
21st century lifestyle CS Healthy Living I.
-0.2
-0.4
2004
2005
2006
2007
MSCI AC World Index Daily Gross USD
As per 26.02.2010
Return p.a.
Risk p.a.
Tracking error
2008
2009
Backtest Megatrends
Backtest
Benchmark
8.4%
2.9%
17.6%
18.1%
15.2%
Agriculture
CS Agriculture Index
4.6%
Urbanization
MSCI Daily TR World
13.2%
Emerging
MSCI Emerging M. Daily
27.2%
Frontier
MSCI (Frontier M.) Daily
5.0%
33.0%
Emerging Markets
7.1%
Historical performance indications and financial market scenarios are no guarantee for current or future performance..
32.2%
100.0%
*Source: Bloomberg.
Asset Management
2010
Slide 12
CS Solutions (Lux) Megatrends – Key Facts
Key Facts
Fund manager:
Markus Mächler
Location:
Zurich
Fund domicile:
Luxembourg
Fund currency:
Issue price:
USD
100 USD for B Share
Minimum investment:
USD 100
Inception date:
30. September 2010
Management fee in % p.a.:
Benchmark:
1.92% for B Share (70/30)
0.90% for I Shares (60/40)
MSCI AC World
Unit classes:
B,D,F,I,P,R,S
ISIN
B, USD: LU0522191245
R, EUR: LU0522192136
R, CHF: LU0522192300
S, EUR: LU0522192482
S, CHF: LU0522192565
Maximum exposure per stock
Maximum of free float per stock
Minimum equity exposure
Minimum Tracking error
Maximum Tracking error
Target Information ratio*
Maximum collective investment
Maximum counterparty risk
No leverage
No hedging within portfolio
5%
10%
60%
3%
12%
0.5
40%
10%
*Information ratio = Excess return/Tracking error
Registration in: Luxembourg; Switzerland; Austria; Czech
Republic; Finland; France; Germany; Hungary, Italy,
Neutral position per Megatrend = 100% equity / #Megatrends
Netherlands, Spain; Sweden; UK (pending); Lichtenstein; Maximum spread per Megatrend = +/-10% (subject to be
Norway; Singapore (QI only); Hong Kong (QI only).
confirmed by MEGATREND Coordination Forum)
Source: Credit Suisse
Asset Management
2010
Slide 13
Share class overview:
 Currency: USD
B-shares
Base currency - for Benchmark oriented investors willing
to carry all currency risks!
 Currency: CHF
R-shares
For Swiss domiciled equity oriented private investors.
Hedged for USD against CHF currency fluctuation.
 Currency: EUR
R-shares
I-shares
For EURO domiciled equity oriented private investors.
Hedged for USD against EURO currency fluctuation.
 Currency USD
For institutional investors with more than USD 5 Mio
investments. Reduced fee
Asset Management
2010
Slide 14
Credit Suisse Solutions (Lux) MEGATRENDS
Conclusion
 Fund investing in global equities & theme funds (active & ETFs)
 Focusing on Credit Suisse Megatrends
– Demographics
– Multipolar World
– Sustainability
 Active Stock Picking based on
– CS Research
– Holt
– BarraOne Optimization
 Benchmark: MSCI AC World
 Share Classes in USD / CHF (hedged) / EUR (hedged)
 Launch: Subscription period from
Start investing:
August 16, 2010
September 30, 2010
Asset Management
2010
Slide 15
Important Information Regarding Hypothetical, Back-Tested or
Simulated Performance
The hypothetical back-tested performance shown is for illustrative purposes and does not represent actual performance of any client
account.
CREDIT SUISSE AG does not represent that the hypothetical returns would be similar to actual performance had the firm actually managed
accounts in this manner.
Hypothetical, back tested or simulated performances have many inherent limitations only some of which are described as follows: (i) It
is designed with the benefit of hindsight, based on historical data, and does not reflect the impact that certain economic and market factors might
have had on the decision-making process. No hypothetical, back-tested or simulated performance can completely account for the impact of
financial risk in actual performance. Therefore, it will invariably show positive rates of return. (ii) It does not reflect actual client asset trading and
cannot accurately account for the ability to withstand losses. (iii) The information is based, in part, on hypothetical assumptions made for modelling
purposes that may not be realized in the actual management of accounts. No representation or warranty is made as to the reasonableness of the
assumptions made or that all assumptions used in achieving the returns have been stated or fully considered. Assumption changes may have a
material impact on the model return presented. This material is not representative of any particular client’s experience. Investors should not
assume that they will have an investment experience similar to the hypothetical, back-tested or simulated performance shown. There
are frequently material differences between hypothetical, back-tested or simulated performance results and actual results subsequently achieved
by any investment strategy.
Unlike an actual performance record based on trading actual client portfolios, hypothetical, back-tested or simulated results are achieved by
means of the retroactive application of a back-tested model itself designed with the benefit of hindsight. Hypothetical, back-tested or simulated
performance may not reflect the impact that material economic or market factors might have on an adviser’s decision making process if the
adviser were actually managing a client’s portfolio. The back-testing of performance differs from actual account performance because the
investment strategy may be adjusted at any time, for any reason and can continue to be changed until desired or better performance results are
achieved. The back-tested performance includes hypothetical results that do not reflect the deduction of advisory fees, brokerage or other
commissions, and any other expenses that a client would have paid or actually paid. No representation is made that any account will or is
likely to achieve profits or losses similar to those shown. Alternative modelling techniques or assumptions might produce significantly
different results and prove to be more appropriate. Past hypothetical, back-test or simulated results are neither indicators nor guarantees for future
returns. In fact, there are frequently sharp differences between hypothetical, back-tested and simulated performance results and the
actual results subsequently achieved. As an investor, you accept and agree to use such information only for the purpose of discussion with
CREDIT SUISSE AG your preliminary interest in investing in the strategy described herein.
Asset Management
2010
Slide 16
Disclaimer
This document was produced by Credit Suisse AG and/or its affiliates (hereafter "CS") with the greatest of care and to the best of its knowledge and
belief. However, CS provides no guarantee with regard to its content and completeness and does not accept any liability for losses which might
arise from making use of this information. The opinions expressed in this document are those of CS at the time of writing and are subject to change
at any time without notice. If nothing is indicated to the contrary, all figures are not audited. This document is provided for information purposes only
and is for the exclusive use of the recipient. It does not constitute an offer or a recommendation to buy or sell financial instruments or banking
services and does not release the recipient from exercising his/her own judgment. The recipient is in particular recommended to check that the
information provided is in line with his/her own circumstances with regard to any legal, regulatory, tax or other consequences, if necessary with the
help of a professional advisor. This document may not be reproduced either in part or in full without the written permission of CS. It is expressly not
intended for persons who, due to their nationality or place of residence, are not permitted access to such information under local law. Neither this
document nor any copy thereof may be sent, taken into or distributed in the United States or to any U. S. person. Every investment involves risk,
especially with regard to fluctuations in value and return. Investments in foreign currencies involve the additional risk that the foreign currency might
lose value against the investor’s reference currency. Historical performance indications and financial market scenarios are no guarantee for current
or future performance. Performance indications do not consider commissions levied at subscription and/or redemption. Furthermore, no guarantee
can be given that the performance of the benchmark will be reached or outperformed. The collective investment scheme mentioned in this
publication was issued in Luxembourg as a UCITS pursuant to Part I of the Luxembourg law of December 20, 2002, on undertakings for collective
investment. The representative in Switzerland is Credit Suisse Asset Management Funds AG, Zurich. The paying agent in Switzerland is Credit
Suisse AG, Zurich. Subscriptions are only valid on the basis of the current sales prospectus, the simplified prospectus, the bylaws and/or
contractual terms and conditions and the most recent annual report (or semi-annual report, if more recent). The prospectus, simplified prospectus,
bylaws and/or the contractual terms and conditions and the annual and semi-annual reports are available free of charge from Credit Suisse Asset
Management Funds Service (Luxembourg) S.A., Luxembourg, from Credit Suisse Asset Management Funds AG, Zurich, or from any Credit Suisse
AG bank in Switzerland.
© 2010 Copyright by Credit Suisse AG
Asset Management
2010
Slide 17