11.10.2011

The split-up of the Dexia financial group poses questions on the status of the custodian bank RBC Dexia Investor Services ("RBC Dexia") and on the current positions of Swisscanto funds in Dexia companies. Swisscanto releases the following statement:

1. RBC Dexia as deposit bank

RBC Dexia acts as depository agency (custodian bank) of the Swisscanto funds under Luxembourg Law The function of the custodian bank is among other things the safe custody of all securities in the fund. These are managed as special assets and would not be directly affected even in the case of a credit default by RBC Dexia. Taking our current assessments into account we deem a credit default by RBC Dexia to be unlikely.

RBC Dexia is a 50% subsidiary of the Dexia BIL bank in Luxembourg which has received its own very good Aa3 rating by Moody's. The other 50% are in the possession of the Royal Bank of Canada ("RBC") which is well rated by Moody'. All business operations are running as normal. The counterparty risks arising from the liquidity and the foreign exchange transactions of the funds are subject to strict limits. In addition, the custodian bank cannot take up any loans for the account of the fund.

2. Current Swisscanto positions in Dexia companies

Swisscanto holds positions in various portfolios of the French branch of the Dexia Group. The majority of the current positions in the Swisscanto investment products are bonds of the Dexia Municipal Agency, which presumably shall be taken over by state-owned French institutions. These bonds are secured bonds with an AAA-rating from all three rating agencies. Based on our analysis these bonds are not in danger. The worst case scenario is that their rating could be downgraded on their own account or in the course of a downgrading of France. In addition, larger price fluctuations are to be expected with these bonds until the situation is finally resolved. Swisscanto holds no share of more than 3% in any of its investment products with this borrower.
 
Furthermore, there are positions at Dexia Crédit Local, which is also very likely to be placed under government control. These are bonds of higher priority with a present rating of A3 (Moody's), A- (Standard and Poor's) and A+ (Fitch) The majority of these bonds are due in the first quarter of 2012. These redemptions are not jeopardised from our point of view. A downgrading of the rating is possible for these bonds as well, and price fluctuations are high in the current market environment. Swisscanto holds no share of more than 3% in any of its investment products with this borrower.

We are following up the developments in connection with the Dexia Group very carefully and continue to focus our investment decisions and activities on the interests of our clients and sales partners.