2005 Annual Report Julius Baer Holding Ltd. - GAM Holding AG

Notes
Changes in fair value recognized in profit and loss during the period that were estimated using valuation techniques
Total results from trading operations came to CHF 148.9 million for the financial year ended 31 December 2005. This figure represents
the net result from various products traded across different business activities, including the effect of foreign currency translation,
and including both realized and unrealized income. Unrealized income is determined from changes in fair value, using quoted
prices in active markets when available, and is otherwise estimated using valuation techniques.
Included in the unrealized portion of the results from trading operations are net losses from changes in fair values of CHF 92.6 million
on financial instruments whose fair value was estimated using valuation techniques. These valuation techniques included models
such as those described above, which range from relatively simple models based on observable market factors, to more complex
models based on assumptions or estimates reflecting market conditions.
The results from trading operations are frequently generated through transactions involving several financial instruments, or subject
to hedging or other risk management techniques. This may result in different portions of the transactions being valued using
different methods.
Consequently, the changes in fair value recognized in profit or loss during the reporting period that were estimated using valuation
techniques represent only a portion of the results from trading operations. In many cases, these amounts were offset by other
financial instruments or transactions that were realized or valued using quoted market prices or rates. The amount of such income
for 2005, including the effect of foreign currency translation on unrealized transactions, was a gain of CHF 241.5 million. Changes
in fair value estimated using valuation techniques are also recognized in profit and loss in situations of unrealized impairments on
available-for-sale financial investments.
122 JULIUS BAER GROUP