FOX Event Update

Upcoming Family Office Exchange Forums

June 26 - 27, 2006
FOX University:
Family Office 101
Mid-America Club
Chicago, IL
View Agenda
Register Online

June 27-28, 2006
Exploring the
Private Trust Co.
Mid-America Club
Chicago, IL
View Agenda
Register Online

July 25 - 26, 2006
FOX Financial Executive Forum
Mid-America Club
Chicago, IL
View Agenda
Register Online

Oct. 18 - 20, 2006
FOX Fall Forum 2006
Chicago, IL
For more information contact Karen Rush

Upcoming Family Office Exchange Webinars:

June 21 - Spouses and Significant Others: Managing Roles and Relationships
Register

July 12 - Cream of the Crop: Attracting and Retaining Top Staff
Register

July 19 - Fixed Income Strategies: Debt, Emerging Markets and Other Options
Register

August 2 - Dollars and Sense: How to Talk With Children About Money
Register

August 9 - "What, Me Worry?": Scenario Planning for the Family Office
Register

August 23 - Going Paperless: The Digital Family Office
Register

September 6 - "The 3% Rule": Controlling and Managing Family Spending
Register

September 20 - Hitting the Mark: Strategic Asset Allocation, Tactical Asset Allocation, or Opportunistic Investing?
Register

October 4 - Ahead of the Curve: Strategic and Leadership Planning for 2007
Register

November 8 - Branching Out, Blending Together: Negotiating Generational Differences in the Family
Register

November 29 - Seize the Moment: Special Situations Investing
Register

December 6 - Beauty Through the Ages: Insuring, Lending, Preserving and Bequeathing Art and Collectibles
Register

Webinar Replays Newly Available on FOX Website:

Healthy, Wealthy and Wise: Investing in the Healthcare Sector
Originally broadcast
7 June 2006

Americans Abroad: Potential Pitfalls and Overlooked Opportunities
Originally broadcast
31 May 2006

Using Risk Assessment Tools to Enhance Family Strategic Planning
Originally broadcast
3 May 2006

Flight Risk: Aviation Emergency Response Planning
Originally broadcast
8 March 2006

Educating the Next Generation: Practical Lessons From Financial Families
Originally broadcast
15 February 2006

"What Have You Done for Me Lately?": Benchmarking and Year-End Reviews for the Family Office
Originally broadcast
7 December 2005

For a full listing of FOX Online Replays now available, visit the Resource Center section of the FOX website. (You will be required to log on to the FOX private website.)

Headlines

Industry Trends & Issues

Three Perspectives on Global Financial Stability And Imbalances
In the latest issue of its Global Financial Stability Report, the IMF offers an upbeat assessment on prospects for stability in international financial systems. It points to factors including strong corporate earnings and a continued increase in disposable personal incomes, which have led to substantial financial cushions in practically all major markets.

• Read "Global Financial Stability Report"
• Read summary comments by the Chairman

The European Central Bank assesses the stability of the euro area financial system, but its analysis is of general interest owing to its comments on global financial imbalances - notably growing US fiscal deficits and downward pressure on the dollar, which the ECB sees as the greatest threat to stability. Within global capital markets, it points to the increasing correlation of hedge fund investment strategies as representing a further "major risk for financial stability".

• Read "Financial Stability Review June 2006"

A paper published by the Bank For International Settlements argues that, while desirable, achieving near-term price stability might not be sufficient to avoid serious medium-term downturns. Moreover, deploying easy monetary conditions to avoid deflation can lead to a build-up of significant deviations from historical norms in indicators such as debt, savings, and asset prices - with a painful reversion a likely outcome.

• Read "Is Price Stability Enough?"

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Investment Planning

Paper Puts the Case For Emerging Markets
Despite recent market turbulence, the market capitalisation of emerging countries has doubled over the past decade. A white paper by Parametric examines the rewards and risk of emerging market equity investment, along with thoughts on capturing systematic returns from these regions through a disciplined, long-term strategy.

• Read "Emerging Markets: Portfolio Structuring to Capture Long Term Growth"

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Hedge Funds in an Investment Portfolio
A white paper written for FOX by Azimuth Trust Management scrutinizes the performance of fund of hedge funds. It finds that FoFs out-performed traditional asset classes during the periods 1994-2005, 1997-2005, and 2000-2005, while noting that in extreme bull markets, traditional asset classes can perform better than FoFs. Written from a US perspective, but with generic lessons for the private investor.

• Read "Hedge Funds in an Investment Portfolio"

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Evidence of Appetite Among Family Offices for Private Equity
Evidence from the US suggests that wealthy families have renewed their interest in private equity. A survey by Dow Jones found that funds coming from family offices accounted for 11% of funds raised by US private equity firms in 2005 - up from just 1.2% on average in the previous two years, and more than the amount committed by corporate pension funds.

• Read "Dow Jones Private Equity Analyst Finds Family Offices Investing Heavily In Private Equity Funds"

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Integrated Planning

The Benefits of Private Trust Companies
An Alert by Greenberg Traurig draws attention to the use of private trust companies (PTCs) as a flexible and creative solution to the estate planning and asset management goals of wealthy families. It focuses on clarifying the treatment of such vehicles for estate tax purposes, with insights on the proper structure and operation of a PTC.

• Read "The Private Trust Company - A Fiduciary Services and Asset Management Alternative for High Net-Worth Families"

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Review of New Hampshire's New Trust Laws
A new statute has equipped New Hampshire with an advantageous trust and company law framework. It should be of benefit for families establishing trusts, and for trust companies and other fiduciary services companies. A paper and a presentation by Trust New Hampshire First set out the issues.

• Read "Implications of New Hampshire's New Trust Laws For Families' Trust and Private Trust Company Strategies"
• Read "Summary of New Hampshire's 'Trust Modernization and Competition Act of 2006"

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Best Practice in Transferring Assets Between Generations
Two articles published by Wealth Manager examine different aspects of transferring wealth between generations:

• Lifetime giving is generally the most effective strategy for minimizing overall taxes, but some parents are deterred by loss of control. An article by Elayne Robertson Demby examines the arguments. Read "Helping the heirs before death is good for the pocketbook, but hard on the psyche"
• Only a third of family businesses are successfully transferred from parents to the next generation- and fewer still make it beyond that. What goes wrong? Ben Mattlin examines the key structuring issues. Read "When a family business travels from one generation to the next, the journey can be unexpectedly confusing"

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A Presentation on Deducting Aircraft Expenses
A presentation by Galland, Kharasch, Greenberg, Fellman & Swirsky examines the issue of deductibility of aircraft operating expenses and depreciation, with specific reference to the American Jobs Creation Act of 2004 and IRS Notice 2005-45.

• Read "Limitations on Deductibility of Aircraft Operating Expenses and Depreciation"

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Managing Risk & Liability Exposure

Responding To The Threat Of Avian Flu
The likelihood of a human H5N1 pandemic remains difficult to estimate with any degree of certainty, representing a dilemma for investors. How to respond? Research by Citigroup suggests that avian flu is a rising risk to the global economic outlook. In a detailed report, Citigroup sets out the key facts, along with potential scenarios for economies, markets, and asset classes.

• Read "Avian Flu - Science, Scenarios and Stock Ideas"

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Preparing For The Hurricane Season
The north Atlantic hurricane season started on 1 June, and lasts through November. FCI rounds up some information.

• Predictions for the 2006 season are more severe than were predictions for the devastating 2005 season. Read the Willis "May 2006 - Atlantic Basin Hurricane Forecast"
• How many people are residing in harm's way? Read "Facts for Features - 2006 Hurricane Season Begins"
• What to do if you are under a hurricane watch or warning? Read "Key Facts About Hurricane Readiness"

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International Trends

The World Cup and Economics
You may have noticed that the rest of the world is going nuts over the (soccer) World Cup Finals. Goldman Sachs has produced light-hearted report intertwining soccer and economics. Along with contributions from sporting and political luminaries, it offers an economic overview of each of the countries taking part in the Finals, and ponders the links between soccer and economic performance. There's even a probability study on who's going to win (Brazil: model probability 12.4%)!

• Read "The World Cup and Economics 2006"

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The Investment Outlook For Brazil
While the leading economic power in South America, Brazil is perhaps the least prominent of the BRIC countries in investor's minds. Deutsche Bank Private Wealth Management has produced a short paper examining its investment outlook. It recommends that Brazil occupies a place in any well-diversified emerging market portfolio.

• Read "Brazil: Land of Ipanema Beach, Samba and Imports"

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Business Owner Issues

Family Business Exemplars
The JPMorgan Private Bank Family Business Honours programme aims to recognise achievement, share experience and promote best practices among UK-based family businesses. In 2005, nineteen family firms were hounoured in three areas of best practice: family governance (winner: Ringtons Holdings Limited); social responsibility (winner: Bestway Group); and business success (winner: Walkers Shortbread Ltd.). A paper by JPMorgan Private Bank offers case studies of the 2005 winners, with a view to shedding light on "what it takes to be a great family business". Written from a UK perspective, but of generic interest to all family business owners.

• Read "2006 Family Business Honours"

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Focus On Immigration
With the issue of immigration centre stage, Immigration and Customs Enforcement conducted in April the largest nationwide worksite enforcement operation, rounding up over 1,000 aliens from one company in 26 states and 45 worksite locations. An alert by Greenberg Traurig highlights specific areas of concern for business owners.

• Read "Immigration and Customs Enforcement's Single Largest Worksite Raid"

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Strategic Philanthropy

The Secrets of Effective Communication for Foundations
How should foundations best communicate their goals with grantees? A survey conducted by The Centre For Effective Philanthropy has identified some best practices common to foundations highly rated for the quality of their communication. It finds the three keys to clear communication as: consistency of communications resource; quality of interactions; and helpfulness of grantmaking processes. Also includes a look at the communication resources most valued by grantees.

• Read "Foundation Communications" - The Grantee Perspective"

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Philanthropy and National Disasters
The Council on Foundations describes philanthropy as "problem-solving charity". It has published a moving account of four stories where philanthropy responded to national disasters. In each case, organised, strategic giving focused on long-term solutions to communities facing disaster.

• Read "We Were There: The Role of Philanthropy in National Disasters"

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Lifestyle Management

Destination Clubs Provide Global Access To Luxury
"When price is no object, luxury is". Destination clubs offer the option of luxury surroundings to wealthy clients wherever and - with some limitations - whenever they want. An article published in Wealth Manager examines how to schedule time in up-scale private homes worldwide.

• Read "The High Life"

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Technology Trends

Five Technologies You Need to Know About!
"Prediction is very difficult, especially about the future." So quotes smallbizpipeline, but it is still willing to have a go at predicting which emerging technologies will have the most impact on computing in the very near future. Their list comprises emergent technologies that few of us will have heard of, but which many of us are already starting to use.

• Read "Five Technologies You Need To Know About"

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Family Education

A Legacy of JK Galbraith: Good Writing?
The late Professor JK Galbraith was admired for the wit and fluency of his writing -- in contrast to the dry prose of many of his fellow economists. Many of his phrases - "conventional wisdom", "affluent society" and "countervailing power" - have become part of our language. In conversation with the Institute of International Studies at Berkeley, the economist described (among other topics) his approach to writing, along with observations on the pitfalls of using irony and humour. It is vital, he commends to any writer "to be aware of the music, the symphony of words, and to make written expression acceptable to the ear."

• Read JK Galbraith on the art of good writing
• Read the full conversation with JK Galbraith
• Read the in-depth obituary of JK Galbraith in the New York Times

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Family Office Exchange News

• Benchmarking Update: Reports have been distributed to participants that have completed the benchmarking tool. If you haven't signed up to participate contact your relationship manager today!
• Look for the June member survey on audit practices in family offices in your e-mail or contact Mariann Mihailidis if you have any questions.

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