July 11, 2007
Financial Services Agency
Government of Japan

Administrative action on
Pictet Asset Management Japan Ltd.

1. The Securities and Exchange Surveillance Commission (SESC) conducted an inspection on Pictet Asset Management Japan Ltd. (hereinafter referred as the''Company''), and found the following violations of the Law Concerning Invest Trusts and Investment Corporations (hereinafter referred to as ''LITIC''),the Law for Regulating Securities Investment Advisory Business (hereinafter referred to as ''LRSIAB''). The SESC recommended on June 29, 2007, to the Commissioner of the Financial Services Agency (FSA) to take disciplinary action on the Company.

• Arbitrary allocation of shares of initial public offered stock (Allocation constitutes breach of loyalty duty.)

With regard to allocation of acquired shares of IPO stock (the ''Shares'') to (i) assets of investment trust fund and to (ii) assets placed under discretionary investment management agreements (hereinafter collectively referred as the ''Assets''), the Company determined as a rule in December 2001 that the Shares must be allocated in proportion to value of assets, if fund managers of respective assets plan to incorporate the Shares into portfolio they operate. This rule was aimed for fair allocation of the Shares.

However, the head of investment section who was responsible for allocation of the Shares gradually became disrespectful of the rule and in the end, (a) arbitrarily selected specific Assets of small value and intensively allocated the Shares, since such allocation contributes to the performance of the funds and (b) arbitrarily selected comparatively low performed Assets and intensively allocated the Shares for a certain period of time to improve its performance. This negligence of the rule resulted in repetitions of unfair and arbitrary allocation of the Shares

Acts of the Company which are relevant to investment funds constitute breach of Article 14, Par. 1 of the LITIC. Acts which are relevant to assets placed under discretionary investment management agreements constitute breach of Article 30-3 of the LRSIAB. Acts conducted before April 30, 2006 constitutes breach of Article 30-2 of the LRSIAB.

2. Administrative action on the Company

On the basis of these violations above, the FSA today issued following administrative actions to the Company:

• Business Suspension Order

To prohibit the signing of new asset management contracts based on Article 42 Par.1, Item 1 (A) of LITIC

To prohibit the signing of new discretionary investment agreements based on Article 39 Par.1, Item 2 of LRSIAB

Period: From July 18 (wed) to August 17 (Fri) 2007 (one month)

• Business Improvement Order (Article 40 Par. 1 of LITIC and Article 37 of LRSIAB)

1. The Company is to clarify its management stance regarding regulatory compliance, to ensure that it has a robust system of compliance and internal controls, and to review its business methods to ensure the achievement of the foregoing, in order to ensure that its business as an asset management company, is conducted in a fit and proper manner.
2. In Particular, when allocating acquired shares (including IPO stocks) to portfolios, implement adequate controls to prevent recurrence, including the establishment of procedures to ensure that allocations are carried out fairly and in accordance with the laws, regulations and internal rules.
3. To clarify the responsibilities of all staff, including those of management, based on the results of the inspection.
4. To submit a business improvement plan regarding the above three items by August 10, 2007 and implement the plan immediately thereafter.