Annual Report 2004

Dear members,

At our General Assembly in spring last year, I stated that breathing life into our young association was the main task of the Board ofLAIP for the months to come. After setting up the structure and going through the approval process with CFA Institute to become alocal Society, our Board had to focus now on the goals set forth in LAIP's mission statement. While going through the activity reportsin this annual report, I hope that you will reach the conclusion that, as a Board, we were able to live up to this promise. LAIP is nowa dynamic association with a quickly growing member base, offering value added content to its members and to the investmentpublic and actively contributing to shape the future of the financial centre of Luxembourg.

I wanted to use this opportunity to thank all our Board members for their support and commitment towards our cause. I wantedto thank specifically Mario Eichenberger, Vice President and CFA Courses Chair, and Ed Werner, Vice President and GIPS chair, fortheir contribution since the launch of our association. Both are currently relocating to Switzerland to pursue new professionalopportunities and will leave the Board. I believe that with the two new board members we propose to the AGM their successionis ensured and the work they started with the preparatory courses and the performance standards can be continued.

With more than 100 members, LAIP has reached a reasonable size for a local CFA Society. While this number appears low comparedto the more than 20,000 investment professionals working in Luxembourg, it starts to compare favourably to our neighbouringGerman and French Societies. More importantly, we have reached a critical mass that enables us to become more active and vocalin the finance centre.

Last year we started to capitalize more systematically on the fact that LAIP belongs to CFA Institute. Here the positive impactcould be felt on four different levels.

The first is the access to first grade content LAIP receives by belonging to the organization being considered as one of thethought leaders in our profession. For example, LAIP invited the expert from CFA Institute on the GIPS standards to Luxembourgnot only to make a presentation to local investment professionals, but also to present the standards to the regulator. CFAInstitute also helped LAIP to draft a comment on circular 2000-15 that will hopefully initiate further discussion with the CSSF andhelp investment professionals address potential conflicts of interest.

A second area where CFA Institute supports our local Society is the organization of events. As local Society we have the possibilityto invite renowned speakers to Luxembourg and organize conferences for our members and the investment public. The hedge fundconference, the presentation on behavioural finance at our Charter Awards Ceremony and, lately, the Annual Forecast conferenceare examples for this collaboration.

The third important field are the financial and administrative resources that are made available by CFA Institute to LAIP. Without thissupport, it would be difficult for LAIP to function in the way it does today. CFA Institute assisted our local society, for example, in theset-up of our website, the billing of membership dues and media contacts.

The last but for me the most important point is the credibility our local Society gets by belonging to the largest network of investmentprofessionals worldwide. From numerous meetings our Board members had over the past months with outside parties, being it theregulator, industry lobbying groups, government authorities or journalists, we got the feeling that LAIP is seen as a neutral andindependent partner able to bring added value to the discussion.

I am particularly pleased to report that our local efforts to promote the CFA program and to support CFA candidates finally started topay off. After a lot of preparation and a first failed attempt to set up a preparatory course in 2004, LAIP was finally able to hold its firstcourses this year. The 2nd part of the course was attended by around 10 participants, which is an impressive result for the first yearthe course was held. As our program offer gets better known amongst candidates and we intensify our efforts to promote the CFAprogram and the course amongst employers, I believe that we now have a solid starting point for developing this activity further.

Our Board members remain convinced that we should continue to increase our membership base in order to strengthen our organization.From the number of new candidates enrolling into the CFA program here in Luxembourg and from the attendance to our Charter AwardCeremony, we see a continuing natural inflow of new members. As Board, we propose to the AGM to go one step further. In fact, wepropose this year to adapt the bylaws in order to expand the definition of affiliate membership. By this change, we want to attract highlyrecognized senior investment professionals into our association and make LAIP more representative of the investment profession here inLuxembourg. It may be worthwhile noting that the new definition of affiliate membership is the same as the one used by CFA Institute andthat affiliate members do not have voting rights in our association. The Board also proposes to change the name of LAIP to "LuxembourgCFA Society". We hope that this change facilitates the task of explaining our organization and activities to the outside public by creating animmediate recognition effect with a view to CFA Institute and the CFA program.

As a conclusion, I remain extremely confident that there are more exciting years ahead for our association. In discussions with ourBoard members, I gather that there are still more interesting ideas for new projects around than resources available to executethem. In my opinion, this is definitely a positive challenge to face but also means that we will need further contribution from ourmembers to move ahead.

1 . Introduct ion by the Presidentof the Society Léon Kirch

President

2.1 Professional Development EventsDuring the past year, LAIP organized events targeted at fulfilling different member preferences and needs. A GIPS seminar washeld with a senior GIPS expert from CFA Institute, Charlottesville, to give a small group of practitioners valuable insights into thisspecific field. Our Hedge Fund Conference last October was aimed at a broader audience to address the ever popular issue ofrisk taking within hedge funds with a panel of experts on the subject. In November, we celebrated the award of 33 new charterswith our members and the successful candidates with a gala dinner at Cercle Munster. The keynote speech at the Charter AwardCeremony was given by Jean Brunel on the topic of "Behavioral Finance". Also in November, we gave our members access to aninteresting presentation by emerging markets guru Marc Faber on "Why Asia will overtake the developed world in 10 years". InFebruary, the Annual Forecast Conference, featuring the chief economists from UBS and JPMorgan and a senior expert from OPECwas organized with the help of EIB and provided our members with a roadmap for investing in the year to come. The topic of thekeynote speech by R.David Ranson was "Using Markets to Forecast Markets".

2.2 AdvocacyLAIP regularly responds to new local regulations, relating to standards of practice that affect the investment profession, the practiceof investment analysis and management, and the efficiency and integrity of financial markets. In light of this, LAIP has commentedon the local Circular CSSF 2000/15 aiming at establishing precise rules of conduct for the business practices in the Luxembourgfinancial sector. LAIP provided the local authorities with a list of points to increase the compatibility between CSSF Circular and theCFA Institute Code and Standards.

2.3 Public AwarenessThe broadest public awareness effort last year was the advertisement run to welcome the new CFA charterholders on the occasionof the charter awards ceremony. Like in 2003, LAIP had again different appearances in the local press last year in order to explainthe association and its activities better to the public. The main events LAIP organized, like for example the GIPS conference, thehedge fund conference, the Annual Forecast Conference and the Charter Awards Ceremony, were also covered by the local media.LAIP published articles in CFA Advantage and the magazine of the UK CFA Society.

2.4 CFA candidatesFor the 2004/2005 CFA program study year, the Society organized its first ever review course for level I candidates in cooperationwith Financial Training Company, London and IFBL, Luxembourg. The course has been very well received by the participants. Onceagain, last year, the review course had to be cancelled for lack of participants, which we attribute to the lack of local employersupport. Only for the strong support of two major international institutions in Luxembourg, EIB and Nordea Bank, the coursecould take off. In the future, the Society will need more such institutional sponsors to make the review courses a true local successand be able to extend the offer to level II and III candidates.

2.5 Technology2004 saw the introduction of a new society website version, platformed by CFA Institute. The new version provides significant functionalimprovements on the previous one, allowing us to provide more details on upcoming events, and also to display pictures from eventsand other interesting uploads for our website visitors. Our website was also used, for the first time in 2004, as a tool to distributeconference and event invitations to our members/candidates. On-line registration is also now possible via an e-mail send option. Dueto the increase in content on the website, and an increase in number of visits, LAIP acknowledges that the society's website is nowthe primary communication channel between the organization, its members, candidates and the public in general. Through 2005, theTechnology Chair will continue to focus on improving website content, including regular maintenance and update, and continue toprovide feedback to CFA Institute in recommending functionality upgrades for future versions. The Chair is constantly looking forvolunteers from within our membership, and amongst candidates, to help us achieve these objectives.

2.6 Fund RaisingOur association has three main sources of funding: membership dues, financial support from CFA Institute and sponsorship.Sponsorship has become more important as the number of activities has increased. The main part of the events held over theyear were sponsored by a number of corporations that were directly targeted during the organization of the respective event.

2.7 CFA Institute LiaisonLAIP was represented at the annual meeting and regional meetings from CFA Institute. Our local Society was in contact with CFAInstitute on a regular basis for the organization of events, its advocacy work and administrative issues. On several occasions,CFA Institute asked our local Society’s feedback on relevant issues that are currently discussed within the organization. LAIP alsogot the opportunity to present its activities and needs during a visit from a senior staff member of the London regional office ofCFA Institute.

2.8 Strategic PlanningStrategic Planning remains an on-going process in our association. At the end of last year, we conducted an in-depth strategicreview that was presented to our Board and constitutes the basis for our activity in 2005. The aim of this effort was to analysethe strengths and weaknesses of LAIP. Three critical areas were identified: strengthen the association, reinforce advocacy workand provide more educational content for members, CFA candidates and the investment public.

2. Act iv i ty Repor ts

Income statment for year ending December 31, 2004

INCOME (in EUR) 2004 2003

Membership dues 3'635,53 3'682,49Donation 4'000,00Events income 613,80

Total income 3'635,53 8'296,29

EXPENDITURE (in EUR) 2004 2003

Events & presentations 625,88 174,50(including sponsor contributions)Public awareness 328,28 35,96(including CFA Institute contributions)Administrative expenses (58,58) 4,90(including CFA Institute contributions)Constitution cost 48,00

Total expenditure 895,58 263,36

Surplus / (Deficit) 2'739,95 8'032,93

Balance sheet at December 31, 2004

ASSETS (in EUR) 2004 2003

Post account in EUR 10'772,88 6'032,93Debtors 2'000,00

Total assets 10'772,88 8'032,93

LIABILITIES & EQUITY (in EUR) 2004 2003

Expenses to pay 0,0 0,0Equity at beginning of year 8'032,93 0,0Surplus of the year 2'739,95 8'032,93Equity at the end of year 10'772,88 8'032,93

Total liabilities & equity 10'772,88 8'032,93

All numbers are cash based without accruals.

3. Society F inancials

Each individual listed as a regular member of LAIP is being sent the document on hand, which includes a meeting agenda as wellas the Proxy, which are also posted on LAIP´s website.The enclosed Proxy is solicited on behalf of the LAIP Board of Directors. For the Proxy to be voted it must be received by June 24th, 2005.Each eligible member is encouraged to vote by the enclosed Proxy even if the member is also planning to attend the Annual Meeting in person.Required Quorum: For business to be transacted at the Annual Meeting of LAIP Members, 2/3 (66%) of LAIP regular Membersmust be represented in person or by proxy at the Meeting.

4.1 Approval of the minutes of the 2003 Annual meetingThe minutes of the 2003 AGM will be made available on the Society's website and on site before the Meeting.

://: Motion to be approved

4.2 Annual reportThe Annual report consists of section 2 and 3 of this document.

4.3 Exoneration of the Board

://: Motion to grant exoneration to the current members of the Board

4.4 Election of the Board of Directors

Election of Officers. The following paragraphs describe the professional background of the Board members. According to the by-laws,they shall serve for a term of 3 years. The terms are staggered so that one-third (1/3) of the directors are renewed or reelected eachyear. The nominees for this year's election are:- Birthe Bruhn-Léon, new- Antonio Grieco, new- Philippe Bernard, running for renewal of his mandate as treasurer

PresidentLéon Kirch, CFA, was born in Luxembourg in 1972. He studied at the Ecole de Commerce Solvay and the Université Libre deBruxelles, graduating with a Masters degree in Sciences Management in 1996. Following a five-year stint in the AssetManagement Department of Banque de Luxembourg, where his main functions included managing in-house equity investmentfunds and buy-side equity analysis, he joined Nordea S.A. Luxembourg at the beginning of 2002 as a fund manager. He chairsalso the following chairs: Strategic Planning, CFA Institute Liaison, Public Awareness, Fund Raising.

Vice PresidentKnut Reinertz, CFA, was born in Luxembourg in 1963 and grew up in Belgium, Luxembourg and Finland. He graduated in 1987 fromthe University of Trier in Germany with majors in Finance and Banking. After working for BGL in Luxembourg in the institutionalportfolio management department until 1990, he spent some years in Finland and Canada. In 1993 he rejoined BGL, this time inHong Kong where his last position held was Chief Representative and General Manager. Knut became a CFA in 1996. He recentlymoved back to Luxembourg and is presently working in BGL's private banking division. He is Society VP and committee chair:Volunteer.

SecretaryMiro Zivkovic, Candidate Level III, was born in Derventa, in 1966. He studied economics at the University of Sarajevo from 1986 to1989 when he moved to Germany to continue his studies at the University of Stuttgart (BWL). He graduated as a Bankbetriebswirtat Bankakademie Frankfurt in 2001. In 1996 he moved to Luxembourg and worked for different local banks before he joined theDexia BIL in 2000. Firstly he was in charge of Product Development for Institutional Clients on the investment fund side. In February2004, he moved to the Market Risk Department and after one year took over the responsibility of the Modelling & Methodologyteam. He is currently serving as Secretary and is in charge of Career development and Job Placement chairs.

TreasurerPhilippe Bernard, CFA, is director and member of the Management Committee at Credit Suisse (Luxembourg) S.A., where he overseesthe Investment Services department in charge of asset management, financial consulting for HNWI and treasury activities. Mr Bernardjoined Credit Suisse in Luxembourg in 1995 as head of portfolio management and chair of the investment committee and has since thencovered different positions within the bank. He previously gathered experience at UBS in different locations. For ten years, he wasportfolio-manager at UBS Asset Management in charge of investment funds and pension funds. Mr Bernard is also a foundingmember of the Swiss Society of Investment Professionals. He has graded CFA exams for several years. In addition to holding a CFAcharter, Mr Bernard is "Eidgenössisch Diplomierter Bankfachmann".

4. AGM Agenda and Proxy Statement

Birthe Bruhn-Léon, Born in Bremen, Germany, in 1966, she graduated in Economics ("Diplom-Volkswirtin") at the University ofPassau. She joined Deutsche Bank (DB) in May 1992, where she served a total of 11 years in different functions in the corporate andstructured finance areas and investment banking in Madrid and Frankfurt. During her last five years at DB, she was a senior trans-action manager in syndicated loans, which involved the origination, structuring and distribution of large Euromarket financings (cor-porate, structured and acquisition-related) for corporate and institutional customers, with a focus on the Southern European mar-kets. In August 1993, Birthe joined the European Investment Bank (EIB) in Luxembourg as a senior credit officer. She gained the CFAcharter in 2004 and has since then been active in LAIP.

Antonio Grieco, CFA since 2003, holds a University degree from both the University of Parma (Italy) and ESAHL Business School(Brussels). He started his career in the financial sector in 1999 as a high tech equity analyst for CONSEUR S.A., a non-profit organizationset up by several European Associations of consumers. Two years later, Antonio joined Dexia Bil's dealing room as an equity analyst andsales officer to Institutional Customers. Antonio is currently a Client Advisor within Dexia's Private Banking Department in charge for theMediterranean Market. Apart from advising private banking customers, Antonio is also member of the Global and Local Asset AllocationCommittees, which decide the asset allocation policies for the discretionary managed accounts.

Vincent A. Hannecart, CFA (1999), MSc. Economics (1992) started his career as a Client Liaison Officer for a major industrialappliances company in Belgium. In 1994 he joined State Street Bank Luxembourg in the Fund Accounting department administeringa wide variety of clients. In 1997 Vincent joined the Dexia-BIL Group in Luxembourg as a Portfolio Manager Private Clients where heassumed responsibility of the Dutch Equity market for the bank's Investment Committee. After completion of his CFA charter as wellas a training in derivatives and hedging techniques, he joined PricewaterhouseCoopers Luxembourg as a consultant, currentlyheading the Financial Risk Management Group. Vincent is now back at Dexia-BIL Group. As a practitioner, he also serves as a teacherin Finance courses for the Institut de Formation Bancaire Luxembourgeoise (IFBL). He is chair of the Advocacy committee.

Olivier Kalpers, CFA, graduated in Electrical Engineering at the University of Liege and Business Administration at the Rheinisch-Westfaelische Technische Hochschule in Aachen. He has been working in Luxembourg for 10 years in several areas such as AssetManagement and Risk Management. Now he is working for Reuters and is heading a team of Product Specialists for RiskManagement and Asset Management solutions. He is chair of the committees: Membership and University Liaison.

Frank Lee, CFA, CA (SA) Born in the UK but growing up in Johannesburg, South Africa, Frank came to Luxembourg in 1995. He studiedat the University of the Witwatersrand (Johannesburg) where he obtained his Bachelor of Commerce and Bachelor of Accountancy,before joining the accounting and audit firm Deloitte & Touche. In 1993, he passed the final qualifying examination of the PublicAccountants and Auditors Board and shortly thereafter became a member of the South African Institute of Chartered Accountants.After 6 years with Deloitte & Touche (both in South Africa and here in Luxembourg), he joined Swedish banking group SvenskaHandelsbanken, Luxembourg branch as a manager in corporate banking department and head of their Nordic desk. He also servedfor a brief period on their credit committee and, after 4 years with the bank, joined the European Investment Bank (EIB) in November2002. He is currently a lending officer with the EIB, specializing in public and private project financing in their Balkans and Turkeydivision. He received his CFA charter in September 2002. He is heading the Technology chair.

Arndt Nicolaus, CFA, is a national of Germany who has been working in Luxembourg's financial industry for over a decade. After studyingfinance in Germany and in the US he received a Bachelor of Commerce Degree in Business Administration (Diplom-Kaufmann) from theUniversity of Trier in 1993. He was awarded the CFA charter in 1998 and has been actively involved in CFA Institute since by serving on theCandidate Curriculum Committee Working Body, as a Standard Setter for the Level I exam and as an exam grader for Level II. Arndt isemployed as a Senior Portfolio Manager with Credit Suisse (Luxembourg) SA and is in charge of global equity investments. He is a Directorof Luxembourg CFA Society and holds the following chairs: Program, Continuing Education and Scholarship.

://: Motion for the 3 proposed members to be elected

4.5 Amendments of the BylawsThere are several changes to our society Bylaws proposed this year. A complete version of the Bylaws with all proposed changesis available on the Society’s website.

4.5.1 Amendments subsequent to CFA institute changesThe CFA Institute has requested several changes to be made to our Bylaws to reflect changes in the CFA Institute Bylaws madein May (name change from AIMR to CFA Institute, membership requirements).

://: Motion for amendment to be approved

4.5.2 Name changeAfter careful consideration and discussion, the Board proposes to the LAIP to follow the CFA Institute's lead and change its nameto Luxembourg CFA Society. Given the short history of LAIP, this is not a change to be made lightly, but we think the followingadvantages justify the rebranding:

· We will participate in and reinforce the unified branding strategy of the CFA Institute worldwide. After all, the CFA Charter is atthe core of our Mission; reflecting this in our name creates both a clearer link to the CFA program as well as CFA Institute andthe other local Societies, many of them have already opted for a similar name and logo change. However, through theLuxembourg identifier in the name, the own local profile of the Society is being kept.

· Communication with third parties is simplified; the new name is perceived as providing better and easier recognition andvisibility than “Luxembourg Association of Investment Professionals”.

· The CFA Institute covers the costs of our rebranding up to USD 8,000.

://: Motion for amendments to be approved

4.5.3 New Membership CategoryWe propose to introduce a new category of Members in Article 3.3 Affiliate Member.

Affiliate Membership Requirements: To qualify for Affiliate membership, an applicant must meet both of the following criteria listed below.

A) agree to adhere to and sign the Member's Agreement and Professional Conduct Statement. B) fulfill such other requirements as the Society may impose consistent with the requirements established by CFA Institute.

Once an applicant is approved for Affiliate membership by a society, the applicant will automatically become an Affiliate memberwith CFA Institute and receive the same benefits as Regular members, but do not have voting rights.

://: Motion for amendments to be approved

4.5.4 Membership dues in EURThe CFA Institute is preparing to be able to handle multiple currencies. The added language in Article 8.2 "… dues for membersof the Society in USD or in EUR" enables us to set membership dues in Euro instead of USD, thereby removing the currency riskfrom our most reliable source of revenue. The value of the dues will remain the same.

://: Motion for amendments to be approved

4.6 Other business

4.7 Questions and comments from Members

4.8 Special welcome to LAIP Member 100

4.9 Adjournment

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