H igh Y ie l d Inv est m ent s Get Rich…………Quickly
Lance Spicer
Trident Press
Copyright Lance Spicer 1998-2004 This book is copyright. All rights reserved. Apart from any fair dealing for the purpose of private study, research, criticism or review as permitted under the Copyright Act, no part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means – electronic, mechanical, photocopying, recording or otherwise without prior written permission of the publisher.
Published by Trident Press Pty Limited PO Box 3068, Bangor NSW 2234 Australia Email:
[email protected] Web Site: www.tridentpress.com.au ISBN 0 958606 005 First Edition 1998 This Edition July 2004 Australian Produced and Manufactured Disclaimer The material in this book is of the nature of general comment only, and neither purports nor intends to give any accounting, legal, tax or investment advice. Readers should not act on the basis of any matter in this book without first considering, and if appropriate taking, professional advice with due regard to their own particular circumstances. The author and publisher expressly disclaim all and any liability to any person or organisation, whether a purchaser of this book or not, in respect of anything, and of the consequences of anything done or omitted to be done by any such person in reliance, whether whole or partial, upon the whole or any part of the contents of this book. In no way is it the intention of the author or the publisher to encourage readers to evade tax or any lawful responsibility that they may have. The author and the publisher will not accept any responsibility for any errors or omissions. Always seek professional advice from a Licensed Investment Adviser or Solicitor prior to acting upon any information in this book.
Investor’s Guide to Trident Press Publications Many people become a little confused as to what books they should purchase and read to find the information they’re after. Seeing that we now have almost 30 different publications, we thought we would make it easier, by categorising the books to enable you to pinpoint the information you need. We’ve also placed them in order of what we think you should purchase and read first, second, third etc.
The Offshore Investor
The Wealth Builder
We recommend:
We Recommend:
1. The Offshore Investment Guide 2. The Invisible World* 3. Invisible Banking* 4. The Offshore Banking CD Rom* 5. High Yield Investments 1* 6. High Yield Investments 2* 7. Future Wealth 8. Offshore Companies and Trusts* 9. Underground Knowledge 10. Underground Knowledge 3 11. Things you didn’t Know – Underground Knowledge 2 12. Invisible Cash 13. Scams and Frauds – Financial Crime Exposed! 14. Tax Haven Report series Items marked * are all included in our Complete Offshore Wealth Special which also includes the exclusive Trident Offshore Incorporation and Strategy Manual. We recommend you purchase this Special as it provides you with substantial savings.
The Conservative Investor We Recommend: 1. Investing to Win 2. Scams and Frauds – Financial Crime Exposed 3. The Australian Share Market Guide
1. 2. 3. 4. 5. 6. 7. 8.
Investing to Win The Offshore Investment Guide High Yield Investments 1 High Yield Investments 2 Future Wealth The Australian Share Market Guide Financial Crisis! Build Your Wealth Today
The Privacy Seeker We recommend: 1. The Privacy Report 2. Underground Knowledge 3. Things You Didn’t Know – Underground Knowledge 2 4. Underground Knowledge 3 5. For We are Young and Free…. Or are we? 6. Invisible Cash
Money Management and General Investment We Recommend: 1. Financial Crisis! – How to Avoid Financial Disaster 2. Investing to Win
The Stock Market Investor We recommend:
The Business Owner We Recommend: 1. Going Out on Your Own?
1. 2. 3. 4.
The Australian Share Market Guide Investing To Win Build Your Wealth Today Future Wealth
Trident Press Pty Limited Po Box 3068, Bangor NSW 2234 Australia Phone: 02 9543 0406 Fax: 02 9543 0406
www.tridentpress.com.au
Introduction to Lance Spicer Lance Spicer was born in Sydney NSW in 1960. He worked for 16 years as an accountant, financial executive and consultant to several major Australian and foreign corporations including Australian and foreign banks. In 1990, his expertise was called upon to assist in the investigation of missing assets as a result of the Qintex collapse. Before “semi-retiring” he was the financial controller of a major listed property and tourism group. In recent years, he has become a professional investor in addition to writing 28 books on various subjects such as investment, financial privacy, small business and the share market. Twelve of Lance’s books have now attained “best seller” status with books having been sold in over 90 countries around the world. Lance is a regular feature writer in magazines such as Australian Business and Money Making Opportunities, Exposure and Small Business & Home Based Income. In addition, he has spoken at several international and local seminars on issues of taxation, investment and privacy. His books have been featured on ABC Television’s LateLine program and discussed on radio in the USA and in Australia. Lance’s biography has recently been included in the Millennium Edition of Who’s Who in the World.
High Yield Investments Table of Contents Preface
1
Introduction
2
Chapter 1 – A Guide to Investment Products
5
Chapter 2 – Diversification and Caution Required 15 Chapter 3 – Viatical Settlements
17
Chapter 4 – Futures Trading
26
Chapter 5 – The Next Big Thing
35
Chapter 6 – An Australian Company getting it right
42
Chapter 7 – Another Australian Company Continues to Achieve Results
44
Chapter 8 – Offshore Investment Funds
50
Chapter 9 – Useful Fund Manager Websites
95
Chapter 10 – Tax Issues
98
Chapter 11 – Scams and Frauds
99
Chapter 12 – Establishing an Offshore Company or Trust
121
Chapter 15 – Glossary
130
High Yield Investments
Preface The information contained in this book is for information purposes only. Some of the investments mentioned are not available to residents in Australia, UK, USA or New Zealand as they may not comply with certain laws and regulations in these countries. In some cases, only investors or entities (companies or trusts) from offshore jurisdictions will be acceptable to the funds managers. Trident Press Pty Limited or Lance Spicer do not, and will not accept any commissions as a result of any investment being made from this book. Every effort has been made to comply with Australian Securities & Investment Commission Policy Statement 116 in relation to providing factual information without inducement to invest in any way whatsoever. The Information in this book has been compiled from sources believed to be reliable. The author and the publishers will not accept any responsibility for errors or omissions. All information is intended as general in nature and should be discussed with your accountant, investment adviser or solicitor before acting upon it. The information in this book should not be acted upon as investment advice and readers should always seek investment advice from a licensed adviser or securities dealer prior to any investment being made.
1
Get Rich …..Quickly
Introduction Let me ask a few questions. I know I can’t hear your answers, but I bet I can guess your answers. • Are you happy with bank interest? • Do you think investing in bank term deposits will make you rich? • Will you become wealthy working for someone else? • Do you know where rich people invest their money? • Do you want to be rich without having to lift a finger? If you are like most people you would have answered “No”, “No”, “No”, “No” and “Yes….where do I sign?” If you didn’t answer with the above answers you are probably already filthy rich or quite insane. Nobody wants to be poor but there seems to be a hell of a lot of us doing our level best to achieve just that! In my opinion the world won’t be as benevolent as it is today in 10 or 20 years. Retirees will have to provide for themselves and unless they earn an absolute fortune during their working lives or alternatively, remain frugal (and that will be a lot of fun), they will have a pretty miserable retirement. It takes a canny mind and a fair bit of information and study to make intelligent investment decisions that will pay off in the future. It also takes Opportunity. What I mean is, the opportunity to participate in investments that really will make you rich….quickly. High risk? Not necessarily! Simply “unknown” to 99.9% of us. In countries like Australia, New Zealand, United States and the UK, the government organisations simply won’t allow many of these investments to be offered publicly or even represented due to laws that are put in place supposedly to protect the investor. Piffle! A poor man doesn’t know how to make money otherwise he wouldn’t be poor, don’t ask him what to do, ask the rich man!
2
High Yield Investments As an example of the government not knowing a good investment from a bad one, they restrict investments offered by the following organisations: • Merrill Lynch • Gartmore • Invesco • Schroders • Morgan Stanley • Fleming • Barclays Not too many dills or rip-off artists in that list, but still they aren’t good enough for us so “they” say. We must be content with investment returns of 0%-25% maximum, if we’re lucky! Some of these investments have been returning outstanding growth year in year out and we never get to hear about it. In addition, there are legitimate private investments on offer that are capable of returning massive profits, as much as 50% or more per annum, but you won’t hear about them either. Many of you may of heard of investments called “trading programs” returning several hundred percent per annum. Some of you may have invested because you believed the person telling the story, or you wanted to believe, but as you probably now realise you were more than likely lied to and you haven’t seen your money since. There are a lot of people out there trying to sell you so called High Yield Programs, but unfortunately they aren’t real. I have investigated many of these investments and almost all have come up empty handed. They are either blatant rip-offs or they are run by incompetent people who have no idea on how to invest the money you have entrusted to them. I wish I could tell you they were real, but
3
Get Rich …..Quickly to give you false hope would be irresponsible to say the least. All the best. Lance Spicer Sydney, Australia, July 2004
4
High Yield Investments
Chapter 1 A Guide To Offshore Investment Products More and more investors are reading up on offshore investment as they struggle to find better returns for their hard earned cash these days. Most of them also find themselves overwhelmed by the cumbersome bureaucracy involved when they switch country or investment. They require quick and easy access to their funds, and also are interested in saving money via lower tax arrangements. Finance expert Christine Cartey works at the Guernsey-based Merrill Lynch Investment Managers. She says before considering any investment product an international investor must first assess his approach to risk. "Those who are very adverse to risk can choose investment models to suit them. But those who can accept the concept that they might lose, as well as make some money, can look at a more flexible investment product," she says. Types of investment product There are literally tens of thousands of offshore investment products offered to investors by offshore banks. This is because these banks pride themselves on being able to suit all of their customers' individual financial needs and desires and are prepared to tailor-make products as much as possible, as well as offering their own products. But for all this flexibility and the multitude of tailor-made investment products and the bank's own products, all are essentially either a variation or combination of one of three main investment types - funds, trusts and bonds. As these tend to be thrown together to make an investment product, which suits the needs of each individual 5
Get Rich …..Quickly investor, these products are to all extents and purposes as flexible as the expatriate makes them. However, each still has distinct characteristics, which tend to suit particular types of investor. The main investment products Funds A fund is either an investment company or a mutual fund (Managed Fund). For the purpose of individual investment - a mutual fund is what applies here. With an offshore mutual fund, the investor to all extents and purposes surrenders the right to manage the money invested, and instead assigns responsibility to a fund manager to manage, administer and promote the fund. Again, there are a huge variety of fund types with such weird and wonderful names ranging from an ''aggressive hedge fund' to a "blend fund", a "principal rate fund" to the highly confusing "fund of funds". However, all still tend to fall into two categories depending on the investor's attitude to risk - either '"pro-risk" or "risk-adverse". Two investment types which epitomise these extremes are equity funds and trust investments. The Equity Fund This is a mutual fund, which invests primarily in stocks, usually common stocks, which are securities that represent equity ownership in a corporation, They entitle the holder to a share of the company's financial success by receiving dividends. However, the risk is noticeable in the fact that in the event of liquidation those holding common stocks may only apply for access to the (ex)company's assets after bondholders, other debt holders, and preferred stock holders
6
High Yield Investments have taken their share first. A cash fund is simply the investment of a lump sum of cash into a fund. They clearly are the two different extremes, therefore, for investors wanting to invest, but with opposing attitudes to risk. Christine Cartey explains: "Generally speaking the risk adverse are more suited to cash funds, and those with a more flexible approach to the concept tend to find equity (stock) funds more appropriate." The Trust Investment A trust is a legal arrangement whereby an individual (the trustor) gives financial control of property to a person or institution (the trustee). An offshore trust is based in an offshore country, which does not tend to tax the company's profits. When assets are transferred into an offshore trust structure they are to all extent and purposes surrendered and placed into the hands of the manager, and not the trust settler. This means the income and capital gains generated by those assets are taxed according to the rules in the country of residence of the legal owners - the trustees, and not by the rules of the country the investor may be living in. Trusts can therefore prove a very wise option for tax planning purposes as a well organised and administered trust is likely to mean big savings on capital gains tax, inheritance tax and, above all, income tax. One problem with offshore investments is that unlike local (onshore) accounts, the investor will also have to cover the cost of opening a new bank account and making longdistance telephone calls, however the internet and email have assisted in reducing communication costs. With offshore investment, people can invest two, three, four, or even five different jurisdictions in their offshore structure - if they can afford it. Companies with substantial 7
Get Rich …..Quickly funds might invest in one country for the corporations, one for the trust, and one for the bank account. Simply by having investments held in separate areas, companies can exploit all opportunities to be as discreet as possible, and can prove difficult to track and trace. This type of investment product is therefore a good choice for the investor who lives in a high tax country and wants to save money by paying a lower tax rate. Having said that, you should always consult your tax adviser to ensure that you are abiding by the tax laws in your resident country, as some countries will tax you on your worldwide income. Although elderly investors should not have much of a problem managing this type of investment product, many factors lend it better to the younger investors, such as coping with having to make expensive long-distance phone calls maybe early in the morning to cope with the different global time-scales. Also, many elderly investors want their offshore investment to give their lives simplicity (along with attractive tax-rates). However, investors can also choose to make the most of their opportunities of reward by spreading out assets into various offshore financial centres. This type of investor will therefore win by making it very difficult for anyone to find out confidential financial information, but this will also mean he needs to familiarise himself with the often ultra complex financial and tax laws of each offshore financial centre they have invested in. This is especially difficult with trusts as many were loosely based on a piece of English legislation, which dates back 600 years. Bonds The investor’s attitude to risk applies again when considering bonds. Whilst private funds tend to be large and are more suited to longer-term investment, such as gilts or 8
High Yield Investments bonds, public funds tend to be more flexible, cheaper to buy, and allow for an indefinite period of investment. Basic investment bond This allows investment in a restricted number of the bond provider's funds. The general rule is here is that as not much has been invested, only a degree of flexibility is permitted. This is a single premium investment into a contract - an agreement provided by an assurance company, and can be 'fixed term' or 'open'. These contracts, however, are really best suited for long term, or if not, medium to long-term trading, and therefore suit the young investor who is not hoping to make a quick buck, but who is slowly considering saving for his pension. Large investment bond A 'managed portfolio bond', however, allows investment into a larger number of funds which includes 'external' funds. As a result of the special institutional rates offer to the bond provider, it can cost significantly less to invest in these external funds as opposed to making a direct investment into to the external fund manager. The best possible investment bond, however, is the 'personal portfolio’, which allows investment into almost anything - which includes all tradable securities from funds to stocks to shares in practically any country around the world. Even if you do one day become lucky enough to have such an investment arrangement, it might still prove a good idea to appoint a personal investment manager for guidance. This clearly therefore would only really suit a very welloff investor, and age is really irrelevant, although it is less likely that a young investor would already have built up
9
Get Rich …..Quickly enough assets to invest in such an expensive investment product. 'Guaranteed Income' and 'Growth Bonds' Those investors opposed to risk but still wanting to invest offshore, such as an elderly investor with some, but not vast amounts of money to invest, can make use of this form of investment. Whilst they can vary greatly, these schemes tend to relate to all, if not at least some of the following: 1. Original capital invested 2. Income 3. Capital growth The general rule to remember is that the higher the amount of guarantees, the lower the amount of return to be expected. In short - you pay a price for your security and peace of mind. Both of these bonds run for a 'fixed' term from a few to around ten years. Whilst they may seem prude and unprofitable, they are a perfect option for investors who know what they want are who are prepared to invest for the entire period. With-profits bonds But even if the above-mentioned options seem secure enough, investors can always go one step further and seek to use 'With profits' bonds. These tend to be used when the country into which the investor has placed is savings, may experience political and therefore economic volatility. To better understand the concept of these schemes, they can be viewed as somewhere between building society accounts and direct stock market investments. In short, you are still making an investment, as you would on the stock market, but you are protected from dangerous stock fluctuations on a daily basis. 10
High Yield Investments A set amount of the fund growth is paid out each year as an annual bonus, referred to as a 'loyalty' bonus. The balance is then deposited into a reserve account, so that if the fund were not to perform as well as it should - there are sufficient funds to be able to pay the bondholders their annual bonuses. All this makes for a rather safe form of offshore investment, or at least, as safe as one can be in the complicated world of offshore investment. The investment can only increase, as the capital cannot decrease in value and the bonuses distributed cannot later be reclaimed. Offshore investments are not for everyone. They generally require higher minimums, and a bit of offshore savvy...and for some of these investments, you must have a minimum level of income. These restrictions are the result of governments meddling. These governments’ good intentions have actually made it harder for investors to profit on some of the world's best investments. The Hedge Fund Another investment to consider also is the offshore hedge funds. You may already know something about hedge funds. For instance, that they aren’t open to the general public, and that to invest in one you must generally be, an "accredited investor or institution" (meaning you've got at least a million dollars in assets). What most people don't know, however, is that you can invest in international hedge funds, regardless of your income. And for a whole lot less than a million dollars. The best way to do so is through what's called an “Offshore Variable Annuity Wrapper Program”, although this is not mandatory. Hedge funds have two advantages over typical mutual or managed funds. Firstly, they can use any legal means to make money. They can be long or short (unlike typical mutual funds that don’t use shorting). They can use derivatives. They can invest in bonds, stocks, funds, currencies, commodities, and precious metals...anything that 11
Get Rich …..Quickly will make money. A hedge fund's objective is to make money, no matter what the markets are doing. Second, hedge fund managers are paid based on their performance, not, on the amount of money they are managing, as mutual fund managers usually are. Generally, the best hedge funds are those that buy and own the world's best shares...and short the world's worst shares. These funds seek conservative growth from lowvolatility hedge funds, with approximately the same risks as 1-year U.S. Treasury bonds. You can generally expect minimum yield of 12-15% per year over the medium term. Momentum Asset Master (Momentum Asset Management Ltd, 140 Brompton Road SW3 1HY London UK Ph. +44 20 7581 5841 and Fax +44 20 7581 5545) is a good example of an offshore hedge fund and it's the most consistent hedge fund since 1988 with the same volatility as 90-day U.S. T-bills. It's annualized return since 1988 is 21%. In the bear market of 2000-4, it gained over 40%. This fund is a winner even in the worst performing markets. Another is The Medallion Fund (now closed to new investors, but open in previous editions of this book) and it's been the world's most profitable hedge fund since 1995, gaining an amazing 93% in the 2000-3 bear market. This hedge fund has one of the best long-term track records in the world since 1989. In fact, the Medallion Fund gained a cumulative 2,478.6% from January 1989 to December 1999. Risks of Investing In my opinion, the biggest risk is to stick with "conventional wisdom," and not only put your current investments at risk, but also miss out on all of the great moneymaking opportunities that not only my High Yield books reveal but others that may come your way. Current conventional wisdom in the financial markets, as you probably know, is that US stocks, over the long term, will not only outperform all other investment alternatives, but
12
High Yield Investments will do so by wide margins. I have to say that I don’t necessarily disagree with this over the longer term, but you should always try to look outside the square where possible. We are constantly bombarded daily with investment theories from magazines, newspapers, websites, and television programs, it's difficult to figure out what to do. With investing, however, the one certain outcome that comes from following the mainstream is that you end up buying the same companies everyone else is buying. Unfortunately, the result of this is you end up with mediocre results. By investing the same way as everyone else, you will have the same investment performance, which as you can imagine is less than satisfactory. This is why it’s necessary to look offshore, to the 98% of investment opportunities that exist outside of our own country. Also, despite what you may have heard, it’s not illegal. You can invest anywhere you like, in anything you like. It’s your money and you can do whatever you like with it. The only obligation you have is to pay whatever tax you legally owe, that’s all!
13
Get Rich …..Quickly Free Investment Newsletter Subscription Would you like accurate and reliable information on out performing investments, offshore investing & banking, shares, property, unusual investments and tax reduction strategies that up until now, have been reserved for the rich? Australian publisher, Trident Press have kept their clients informed on all of these subjects since 1994. Trident is now regarded as one of the world’s best sources of reliable investment information and our newsletters and publications are sent to clients in over 90 countries. As an investor, we are happy to share our knowledge and experience with you FREE by sending you a copy of our Trident Newsletter so you can see for yourself what we offer our readers. Send us your email and mailing address details, and we will send you a COMPLIMENTARY TRIDENT NEWSLETTER SUBSCRIPTION in the next few days. Your details will be kept highly confidential and not sold or distributed. The books we publish are a little unusual. They are hard-hitting, pull no punches and give you the information that your Accountant or Financial Adviser is unable, or possibly unwilling to give you.
Our Website
www.tridentpress.com.au
14
High Yield Investments
Chapter 2 Diversification and Caution are Required When investing you should always use a degree of caution. Past performance is never a guarantee of future returns, although it may be some kind of indication of future potential. If the investment has provided consistent returns for several years, the chances are it will continue, but world economic changes could affect the viability of the investment you have decided to invest in. For instance, if world interest rates start to move up, you may see a reduction in the growth value of an equity fund because investors will switch some of their holdings to fixed or variable interest investments. How do you counter this problem of changing circumstances? One way is to educate yourself as regards world economics and world markets or you can simply diversify your portfolio. Diversification simply means not putting all your eggs in one basket. If you were to put all your money in one investment, and there will be a tendency by some of you to seek out the highest rate of return in this book, and drop the lot into it and cross your fingers, you may find that that investment under performs over the next few years, or worse, the value of your investment may actually reduce. The solution to the possibility of this happening is to put your money into a variety of different investments. As an example, you might put a quarter into equity investments (share funds), a quarter into bonds and warrant funds, quarter into fixed interest or foreign exchange funds and the last quarter into something a little more speculative such as some of the investments listed in this book. In this way you will avoid any one investment being able to hurt you financially. Try to avoid the compulsion to go simply for 15
Get Rich …..Quickly return and nothing else because what returns high yields now may be a “dog” in a year’s time. A way of picking a trend in certain investments is to compare all the high yield investment funds and see if you can see if they all relate to certain types of investments such as European equities. If they do, that is telling you that these equity investments are doing well at the moment and may be reaching the end of a good run. Diversification will solve the problem of poor investment performance if they have reached the end of a good few years. I have always practiced diversification in all my investing, and while I may have been able to achieve better returns, I have never taken a beating from a particular investment because it never represented more than 20% of my total invested. I recommend you do the same, never put more than 20% of your total funds available to invest into any one investment. I know when you are starting off this isn’t always practical due to the low amount of funds you may have available, but it should be your medium term goal to apply this degree (at least) of diversification. When starting off, always go for safety first and then branch out into more speculative (and risky) investments, not the other way round. I have seen too many people lose money and hope this way.
16
High Yield Investments
Chapter 3 Viatical Settlements I bet you have never heard of a Viatical Settlement. Well, it is an investment. A good friend of mine thought it sounded like some sort of ancient manuscript found in a Catholic Church. In reality, they emanate from the United States. They are a little morbid and some people may feel a little uncomfortable investing in them. A Viatical Settlement Contract purchases the life insurance policies of people that are terminally ill at a substantial discount. The unfortunate situation in the US (and we’re heading there as well) is that terminally ill people need a lot of expensive care that medical insurance simply doesn’t cover. The families of these people end up broke or just cannot afford the care. Many people in the US have life insurance policies, but these are no good to them, the patients have to die first to unlock the money. So the Viatical Settlement comes into play, it will purchase the policy at a discount off the terminally ill person, thus supplying money when they most need it, while they are alive. You can always look at it this way, you are providing a needy person with money when they most need it. When the terminally ill patient dies the company that has bought the policy gets paid out and makes a profit. This profit is the return to the investor who has provided the original venture capital to purchase the policy in the first place. Your investment is insured and guaranteed by the Viator’s insurance company. The management company (that you invest in) should only be purchasing the policies of recognised insurance companies with a high Standard and Poors rating. They buy policies where the payout is expected within 5 years. They actually allow you to nominate a time frame you would like to invest over, ie. 1 to 5 years. Obviously, the longer you invest, the higher the return. Now 17
Get Rich …..Quickly the returns are not as high as other investments in this book, but the risk is by far and away the lowest. If you think about it, the risk to your capital is virtually nil. The returns range from 12% to 25% or more per annum. Compare this to a bank deposit or real estate investments, which have comparative risks. The minimum purchase is US$5,000 to US$10,000 and offshore and foreign investors are very welcome. Your funds are allocated to a particular policy based on the life expectancy of the patient and your investment period, in this way you have an investment in an identifiable policy. Your investment may only be a part of that policy purchase but you are still noted as a part owner of the policy. A full medical analysis is performed as well as a complete audit of the policy being purchased. It’s in the best interest of the management company to ensure that no mistakes are made because they make a margin on the policy as well. This whole industry is well controlled by US government authorities. An interesting fact is, 72% of all settlements matured ahead of time, which would increase your return dramatically. For example, if you had a one year policy and it matured 7 months early (as is possible), your effective rate of return would be 29% per annum. This from an investment that is virtually risk free. A further 27% of settlements matured on time and only 1% were late. The policy purchased won’t be allowed to lapse, an account is established and the premiums are paid by the management company until the policy matures. This payment is made by the management company and is recovered by them from their share of the profit. This what the media have said about Viatical Settlements: "it is the perfect no risk investment." - US 60 Minutes program - 1995
18
High Yield Investments "Investors can reap returns of up to 25% beating most stock funds." - Newsweek Magazine - 1994 "About $300 million or nearly 4,000 life insurance policies will be sold by ill people to Viatical companies this year, nearly double last year's total. Meanwhile, with profits on investments averaging nearly 20%, it is a business that has become too attractive to ignore. Fewer than 30,000 people died last year from AIDS, while more than a half million Americans die from cancer each year. That is why cancer patients, now only 10% of those involved in Viatical settlements, are soon expected to account for most of the business." - New York Times - 1997 "The Viatical settlement industry got started only in the late 1980's, but it is maturing rapidly. More institutional money is coming into the market." - Wall Street Journal - 1996 Before you invest, ensure they are fully licensed. Investment Providers and Brokers 1. Advanced Settlements, LLC (Broker) Scott Kirby, Managing Partner 510 North Orange Blossom Trail, Suite 210 Orlando, FL 32810 Tel. (800) 561-4148 (407) 296-7373 Fax (407) 296-7377 2. Affirmative Lifestyles, Inc., dba ALIVE, Inc., The National Settlement Clearinghouse (Purchaser) Thomas W. Wallace, General Counsel 10010 San Pedro Avenue, Suite 650 San Antonio, TX 78216 Tel. (210) 341-2855
19
Get Rich …..Quickly (800) 876-2991 Fax (210) 341-0956 3. Beachwalk Financial Settlements, L.L.C. dba Beachwalk Viatical Settlement Broker (Broker) Steve Leisher, CEO Mike Alfred, President and CEO 437 South Highway 101, Suite 403 Solana Beach, CA 92075 Tel. (858) 792-9669 (800) 607-3149 Fax (858) 792-9673 4. Benefit Advocates - a Viatical Settlement Advisory Service (Broker) Nancy Cane, President 931 Tahoe Blvd., Suite 6 Incline Village, Nevada 89451-9409 Tel. (702) 833-2500 (800) 435-8891 Fax (702) 832-2525 5. Coventry Capital, Inc. (Broker) Alan H. Buerger, Chairman of the Board and CEO 7111 Valley Green Road Fort Washington, PA 19034 Tel. (215) 233-5100 Fax (215) 233-3201 6. Estate Trust, Inc. (Broker ) Michael D. Quinn, President Ronald J. Biglin, Treasurer and Exec. Vice President 7400 York Road, Suite 300 Baltimore, MD 21204-7502 Tel. (800) 456-5100 20
High Yield Investments (410) 828-1171 FAX (410) 296-2114 7. Fiedler Financial, Viatical Settlement Consulting & Brokerage (Broker) Carole Fiedler, President 1380 Lincoln Avenue, Suite #1 San Rafael, CA 94901 Tel. (415) 257-2220 (800) 905-0114 Fax (415) 257-2221 8. Richard M. Horowitz, Viatical Settlements Broker (Broker) Richard M. Horowitz, President 9301 Wilshire Blvd., Suite 206 Beverly Hills, CA 90210 Tel. (310) 278-5943 FAX (310) 278-6285 9. Individual Benefits, Inc., a Viatical Settlements Brokerage Company (Broker) Ramon A. Vicente, President Four Seasons Executive Center 7-A Terrace Way Greensboro, NC 27403 Tel. (800) 800-3264 (910) 299-5100 FAX (910) 299-9932 10. Robert L. Johnson Jr. Viatical Settlement Broker and Consultant (Broker) 4821 Escalon Avenue Los Angeles, CA 90043 Tel: (800) 211-1341 21
Get Rich …..Quickly (323) 294 1652 Fax: (323) 291-7934 11. Legacy Benefits Corporation; A Viatical Settlement Company (Purchaser) Meir Eliav, Managing Director 350 Fifth Avenue, Suite 4320 New York, NY 10118 Tel. (212) 643-1190 (800) 875-1000 Fax (212) 643-1180 12. Life Benefactors, L.P., dba, Life Benefactors, L.P., a Viatical Settlements Company (Purchaser) 3900 Fifth Avenue, Suite 260 San Diego, CA 92103 Tel. (619) 688-5920 (800) 285-5152 Fax (619) 688-1046 13. Life Settlements International, LLC (Purchaser) Robert L. Shear, Member, Manager 615 South Dupont Highway Dover, DE 19901 Tel. (302) 734-1450 Tel. 1-800-327-8222 14. National Viator Representatives, Inc.; A Viatical Settlements Broker (Broker) David S. Landay, Esq. - President (broker) 56 West 57th Street, 4th Floor New York, NY 10019 Tel. (212) 586-5600 (800) 932-0050 Fax:(212) 246-2319 22
High Yield Investments 15. Neuma, Inc., dba Neuma, Inc., a Viatical Settlement Company (Purchaser) 7366 N. Lincoln Ave., Suite 202 Lincolnwood, IL 60712 Skokie, IL 60077 (800) 457-7828 16. New Horizons, Viatical Settlements Brokers and Consultants (Broker) Edward Levy 5346 Bellaire Avenue Valley Village, CA 91607 Tel. (818) 769-3271 17. Portsmouth Settlement Company I, Inc., a Viatical Settlement Company (Purchaser) John P. Collins, President 1740 B Phoenix Pkwy Atlanta, GA 30349 Tel. (770) 997-1733 (800) 250-3230 Fax. (770) 997-1733 18. Viatical Benefactors, LLC.; A Viatical Settlement Provider (Purchaser) 100 Galleria Parkway, Suite 440 Atlanta, GA (770) 951-4760 19. Viatical Settlements Group, A Viatical Settlements Broker (Broker) James D. Aronson 29 Englewood Road Longmeadow, MA 01106 23
Get Rich …..Quickly Tel. (877) 842-8425 (413) 736-0325 FAX (413) 5732-0325 20. Viatical Settlement Professionals, Inc dba VSP, Inc. (Broker) Stephen M. Watson, President 5907 York Road Richmond, VA 23226 Tel. (888) 321-9057 Fax (804) 673-9508 21. Viaticare Capital, L.P., a Viatical Settlement Company [Funding Company for Viaticare Financial Services, L.L.C., a Viatical Settlement Company (a Purchaser)] Paul Moe Hyatt Center 1300 Nicollet Mall, Suite 4060 Minneapolis, MN 55403 Tel. (612) 333-CARE (800) 333-2249 Fax (612) 333-0056 22. Viaticare Financial Services, L.L.C., a Viatical Settlement Company (Purchaser) Paul Moe Hyatt Center 601 Carlson Parkway, Suite 900 Minneapolis, MN 55305 Tel. (612) 558-4000 (800) 333-2249 Fax (612) 548-4111 23. Wilbanks & Associates, Inc., a Viatical Settlements Broker 24
High Yield Investments (Broker) Scott Wilbanks, President 2263 15th Street San Francisco, CA 94114 Tel. (415) 621-2633 24. WM. Page & Associates, Inc., dba Page & Associates - Viatical Settlement Professionals (Purchaser) William Scott Page, President 2810 E. Oakland Park Blvd., Suite 300 Ft. Lauderdale, FL 33306 Tel. (954) 568-3658 Fax (954) 568-5970 If you ever believe you may be a victim of fraudulent activity or are not happy with your Viatical Settlements adviser, you can contact: Mike Ross Assistant Director Division of Insurance Fraud Department of Insurance 222 East Gaines St Tallahassee FL 32399-0324 USA Telephone: 0011 1 850 922 3115
25
Get Rich …..Quickly
Chapter 4 Futures Trading My approach to this chapter is two fold. The first approach is to give you some idea of how the futures trading market works so if you invest money in a Futures Trading Investment you will have an understanding of what’s going on. The second, is to give you the option of possibly launching into a trading career yourself. I know some traders, and they find the markets very lucrative and rewarding. I personally stick to share trading myself because I find the stock market easier to follow, believe it of not. The basic concept of futures trading is where you agree to buy or sell commodities or financial derivatives at a fixed price in the future. If the item you have agreed to buy at a certain price in the future, increases in value, past the value of the contract, the value of the contract increases in value and you make money. If the opposite occurs you lose money. The same applies if you agree to sell an item in the future at a certain price and the value of the goods or item reduces in value, you make money etc. These agreements are called Futures Contracts and they can be applied to anything that is traded on the world’s Futures Exchanges. These items range from commodities such as copper, gold, wheat or corn as well as financial instruments such as bonds and options. Trading futures, is a slow and sometimes difficult learning process. But don’t let me put you off, as you trade, you will gain hands on experience in relation to the factors that drive markets, the nature of price volatility, and how you yourself should react to various situations such as losing money, or making money. This knowledge, can help make you a better trader and make you richer as well. While there is no substitute for actual trading experience, the following
26
High Yield Investments trading tips will help your initial trading experience be a positive one. Once you have identified a market that you wish to trade, be it Options, Commodities, Share Price Indices (SPI) or financial derivatives or whatever, spend some time watching prices before you launch into trading. By watching prices, you will get an idea of the typical volatility of the market which gives you an indication of the cost of trading in that market. The more volatile the market, the more expensive it is to trade. Be sure to check that the initial and maintenance margin requirements will still leave you with sufficient excess margin in your trading account. (Margin requirements are higher for more volatile markets.) Also, check the contract specifications to determine the trading hours of the contract, the contract months, and the last day of trading. For instance, if a contract stops trading in one week, it may be better to enter a position into the next active contract month so as to avoid the commission of a contract roll. When you decide to enter a futures or options position, there is no shame in starting small, for example, trading just one contract. In fact, most traders, not counting the large funds, tend to trade only one or two contracts at a time. As you accumulate trading experience, you can always increase your trading activity when you feel a bit more comfortable. “Stop orders” are used to limit loss on a futures trade. It is a good idea to establish a stop price that caps the maximum loss you are willing to take on a futures position the moment you decide to initiate it, and call in your stop order to the futures order desk every day as necessary. (Stop orders are day orders and expire at the end of every day so you are going to have to place a stop loss every day.) Don't wait to set a stop later as your best judgment may falter if you start to lose money and you consequently may talk yourself into accepting a greater loss than what you 27
Get Rich …..Quickly would have initially accepted. The proper use of stop orders can protect your trading capital, which in turn, protects your peace of mind. As a beginning futures trader, you may want to consider trading in only one way: buying options for instance. If you think prices will rally (go up), buy Call options, and if you think prices will go down, buy Put options. The great advantage of limiting yourself to only buying options is that you are always protected from a risk management point of view. The most you can lose is the premium paid for the options (and the commission charges). The premium is the true cost of the option. In the past, most futures investors based their trading decisions on prices read from the business section of a major newspaper. Even though they were one day old, they were still sufficient to enable many traders to accumulate substantial wealth. With futures and options prices available on the Internet, these days, almost any investor can get a steady stream of prices throughout the trading day. While up to the minute information is a good thing, beginning traders must be careful not to over monitor the market. Being glued to the computer screen to watch prices all day can make you "jumpy", with the result that you may overreact to any price movements. I’ve seen people lose big time by jumping in and out of trades when if they had just left them alone they would have made money. The same applies to share trading. While it is not uncommon for some futures traders to turn $10,000 into $100,000 over a short time period, the reverse is just as common. The inherent risk of these instruments should always be remembered. It’s because of this, trading in futures and options is not suitable for many members of the public. You should carefully consider whether trading is appropriate for you in light of your experience, objectives, financial resources and heart condition. 28
High Yield Investments If you have decided that Futures Trading is something you would like to consider, let’s look at a few of the trading issues you will need to consider if you wish to get involved in trading. The Effect of Leveraging Initial margin is small relative to the value of a futures contract so that transactions are "leveraged" or "geared". As such, transactions in futures carry a high degree of risk. A relatively small market movement will have a proportionately larger impact on the funds you have deposited or will have to deposit: leverage can work against you as well as for you. Because of the inherent risk of futures, you should only trade with risk capital, that is, money that you can afford to lose. Because of leverage, you may sustain a total loss of initial margin funds and any additional funds deposited with the FCM to maintain the equity in your position. If the market moves adversely or margin levels are increased, you may be called upon to pay substantial additional funds on short notice to maintain your futures position. If you fail to comply with a request for additional funds within the time prescribed, your position may be liquidated by your broker at a loss and you will be liable for any resulting deficit. It is important to manage leverage. Beginning traders should develop the habit of curtailing trading as is necessary, to maintain sufficient excess margin in their account. Futures positions and account equity should be monitored daily. The Limits of Risk-Reducing Orders The placing of certain contingent orders such as stoploss or stop-limit orders which are intended to limit loss of an 29
Get Rich …..Quickly outstanding futures position to certain amounts may not be effective because market conditions may make it impossible to execute such orders. In these cases, the trader will continue to own the outstanding futures position and will be liable for any loss that continues to accrue on the position. During periods of particularly volatile price movements and in markets where price limits apply, the risk that stop-loss orders cannot be executed becomes greater. While strategies that employ combinations of positions such as “spread” and “straddle” trades are often less risky than outright “long” or “short” positions, there may be times when such strategies expose the trader to as much risk as simple long or short positions. Changing Contract Terms and Conditions You should be aware of the terms and conditions of the specific futures or options contracts which you are trading, especially the circumstances, if any, under which you may become obligated to make, or take delivery of the underlying interest in the case of a futures contract. Under certain circumstances specified in the exchange rules, the specifications of outstanding contracts may be modified by the exchange or clearing house to reflect changes in the underlying interest. The context of your exposure may, as a result, change. Typically though, changes to contract specifications are effective for up-coming futures contract months yet to be listed, and not futures contract months outstanding. Market Disruptions or Suspensions of Trading Market conditions, such as lack of liquidity, or the operation of the rules of certain markets (specifically, the suspension of trading in any contract or contract month because of price limits) may increase the risk of a loss by making it difficult or impossible to trade or liquidate your positions in the event that prices move adversely. 30
High Yield Investments In addition, during these disruptions, normal pricing relationships between the underlying interest and the futures, and the futures and the corresponding futures option may not exist. The latter situation can occur when for example, the futures contract underlying the option is subject to price limits while the option isn’t. The absence of an underlying reference price may make it difficult to judge fair value of your futures position and, consequently, equity in your account, so be very careful. The Safety of Deposited Cash and Property Protection of your money or other property you’ve deposited as collateral for trading in futures may vary in the event that something goes wrong. The extent to which you may be able to recover your money or property may be governed by specific legislation or local rules. In some jurisdictions, property which had been specifically identifiable as your own will be pro-rated in the same manner as cash for purposes of distribution in the event of a shortfall. Trading in Other Jurisdictions or Countries Foreign futures transactions involve executing and clearing trades on a foreign exchange. This is the case even if the foreign exchange is formally "linked" to a domestic exchange, whereby a trade executed on one exchange liquidates or establishes a position on the other exchange. No domestic organization regulates the activities of a foreign exchange, including the execution, delivery and clearing of transactions on such an exchange, and no domestic regulator has the authority to compel enforcement of the rules of the foreign exchange or the laws of the foreign country. In addition, such laws or regulations will vary depending on the foreign country in which the transaction occurs.
31
Get Rich …..Quickly For these reasons, customers who trade on foreign exchanges may not be afforded certain protection procedures which apply to domestic transactions, including the right to use domestic alternative dispute resolution procedures. In particular, funds received from customers to margin foreign futures transactions may not be provided the same protection as funds received to margin futures transactions on domestic exchanges. Before you trade, you should familiarize yourself with the foreign rules, which apply, to your particular transaction. Finally, you should be aware that the price of any foreign futures or options contract and, therefore, the potential profit and loss resulting, may be affected by any fluctuation in the currency exchange rate between the time the order is placed and the time the foreign futures contract is liquidated or the foreign option contract is liquidated or exercised. It is probably a better idea to stick to the domestic market until you have enough experience to tackle foreign futures market. Trading Facilities There are plenty of private client futures brokers about that can not only provide you with trading facilities but also further information than I have room for in this book. Give them a call and have them send you out some information. They also run seminars for their clients. The Sydney Futures Exchange runs some excellent training and educational programs that will assist you to understand Futures Trading. They can be contacted on (02) 9256 0578 or 9256 0555. They also have an excellent bookshop. Sydney Australian Futures& Options Brokers 1 800 354 418 ANZ Futures (02) 9322 6514 Bell Commodities (02) 9255 7200 32
High Yield Investments L Quay Futures Brokers Trend Futures Ord Minnet Jardine Fleming
(02) 9247 7377 (02) 9251 6219 (02) 9220 1555
Melbourne ANZ Futures Bell Commodities Ord Minnet Jardine Fleming
(03) 9205 1400 (03) 9656 7333 (03) 9608 4144
Brisbane Ord Minnet Jardine Fleming Bell Commodities Prudential Bache
(07) 3221 6144 (07) 3839 5166 1 800 550 550
Perth Paterson Ord Minnet Perth Commodities
(09)3239 2222 (09)3321 3901
The Risks The number one cause of financial death among beginning futures traders is trading too much with too little. In other words, using a lot of leverage - much more than they should. (Leverage reflects the value of futures contracts that you have bought or sold relative to the equity in your trading account.) Typically, these traders open a futures account with only $5,000 or less, and trade as many contracts as they can. On average, they lose their money in less than six months. Even if they have predicted the general direction of prices correctly, they just don't have enough "staying power" or excess margin in their account to cushion them from minor price reversals or corrections and they are consequently forced to exit their positions at a loss. I would suggest if you wanted to begin Futures Trading you will need at least $30,000+. To learn more: 33
Get Rich …..Quickly Contact the Sydney Futures Exchange Phone: 1 300 650 610 Website: www.sfe.com.au
New! Our Trident Offshore Banking Directory CD-Rom Lists the details of hundreds of offshore banks as well as their websites with convenient hyperlinks so you can go straight to their site. Available now from our website at www.tridentpress.com.au Only AUD$35.00
34
High Yield Investments
Chapter 5 The Next Big Thing In 1999 and 2000 it was the Internet and High Tech stocks, and then the crash came, but what will it be over the next year or so. I have tracked down the opinions of several of New York’s “gurus” to find out and have come up with a “consensus” view of 5 stocks and the number one industry prediction. Over the next few years you will be able to make your fortune...if of course you have the foresight to invest in those companies that are really going to make technology fulfill the promises made a few years ago. We have all been looking for the next big thing, but who says the last big thing won’t be next big thing again? While the old economy, from heavy industry to traditional retailers to mining companies, has fallen a little flat, settling into mediocre 2% growth rates. The new technology economy is roaring ahead at a 20% growth rate, 10-times faster! Regardless, of the “tech wreck” of last year on the markets. This is only market perception. Some companies involved in technology, are still producing accelerated growth, despite what the market thinks. Technology is still the way to go…….. as long as you pick the right companies that is! Did you know……. • Of all the computer power ever built, 90% of it has come online in just the last three years; • 400 million computers are in use today. But the real market is seven times bigger; • Only 1/3 of the world’s population has ever made a phone call. The profit potential in telecommunications is astonishing; • Internet traffic is now doubling every 120 days.
35
Get Rich …..Quickly • So you don’t have to be a genius to work out where money will be made over the next few years. So if you want your wealth to grow five or 10-times faster than most investors, you absolutely must increase your holdings of great, dominant, fast-growing technology companies. The “tech wreck” has taught us one thing if nothing else…… don’t invest in companies that don’t make money and don’t invest in companies that “burn cash” at high rates. And above all, buy quality. Buy market leaders with proven technology ability….. forget the rest! There are 4 high tech companies that will over the next few years blow all the others out of the water. According to all the experts on Wall St, these are the ones you should have…….MUST HAVE! • Applied Materials • Intel • Oracle • Microsoft You must own them is what they are saying, for the long term. These four companies have such overwhelming advantages that whoever is number 2 will not catch up with them in the next five to 10 years at least. They are all as safe as houses as far as them ever going broke. And while fortunes have already been made in these stocks, it’s not too late to make your fortune, too. The stock prices can still multiply many times over from here...because the growth rate, and growth potential, for these companies is still so huge. While there’s no question that you must own these stocks as the core holdings in your technology portfolio, you should be very particular about how and when you buy
36
High Yield Investments them. Don’t just go out and buy them all tomorrow, there’s a much smarter way to invest to slash any risk to the bone. Each stock presents its own challenges: Microsoft never seems to get really cheap...Applied Materials and Intel are subject to Wall Street’s manic-depressive attitude towards the semiconductor industry...and Oracle’s stock swings with its own product cycles. However, there is no doubting all these companies’ dominance in their particular fields. Let’s have a look at why they should be considered • APPLIED MATERIALS (AMAT) is the dominant supplier of semiconductor equipment, (the machines used to make the chips). It carries the broadest product line in the business...with an unmatched reputation for quality workmanship and unmatched customer service. No wonder they sell worldwide to virtually every chip manufacturer around the globe. Semiconductor equipment has been a cyclical industry (although that effect is starting to lessen), so pretax profits (and the stock price) has varied over the years. But the yearover-year trend for both is strongly up. On average, AMAT’s pretax profits run at 20%, after spending 10% of sales on R&D. Overall, this is a great time to own AMAT. After a long downturn triggered by the Asian crisis, the industry is in the early stages of a new, multiyear boom. However, don’t just dive in: Semiconductor stocks will still see some short-term volatility. Accumulate a little at a time, stepping up your purchases on my periodic “buy signals.” Whenever the price temporarily drops to our target buy range, I’ll immediately alert you...so you can take full advantage of every opportunity to multiply your profits.
37
Get Rich …..Quickly • INTEL (INTC) isn’t just the dominant microprocessor supplier in the world...it’s the model for every other chipmaker on how to run a business. Over the last five years, Intel has really proved its dominance. INTC has compounded revenues at an amazing 33% rate, averaging a whopping 37% pretax profits. R&D spending is running at a $2.5 billion yearly clip-six times that of its closest competitor! However, while the long-term trend for Intel stock goes nowhere but up...the stock is subject to short-term volatility. So, once again, don’t just go out and load up on Intel stock now. Accumulate your position gradually: Intel’s stock, while trending higher every year-usually fluctuates during the year with Wall Street’s predictable view of PC sales: strong September to February, weak March to August. That means you often get a chance to buy more shares cheaply during the Northern Hemisphere summer sell-off. • ORACLE SYSTEMS (ORCL) is known as a “relational database” software company. Now that sounds complex, but it’s simple really. Relational databases are the most efficient way to store data that needs to be accessed by many people...in many different ways. It’s a cutting edge technology that is reshaping the way America does business. And Oracle, with an R&D budget six times that of its chief competitor, is at the forefront of this efficiency revolution. That means huge profits as businesses around the world jockey for position in the increasingly competitive global economy. Revenues have grown about 36% annually over the last five years... pretax profits are running at 20+%...with R&D spending coming in at about 10% of sales.
38
High Yield Investments That’s a reinvestment rate that should keep Oracle in the box seat for many more years to come. • MICROSOFT (MSFT) Microsoft is the number one software producer in the world. It dominates the PC market with its Windows operating system with over 80% of the world’s PCs using the system. In recent times, it has begun to diversify into many other areas of software and hardware applications as well as a huge involvement in the Internet. We all know, that Microsoft produce Windows in it various forms, and some of you know about the Office 2000 products such as Word, Excel, Access, PowerPoint, Front Page, Outlook and Publisher. In addition, we are familiar with Internet Explorer as well as Microsoft’s many web businesses such as CarPoint.com, Expedia Travel, Hotmail, Gaming Zone, Home Advisor Real Estate, Microsoft Investor as well as others. Did you realise that all of these products are number one in their class? While the focus of real competition is coming from new operating systems such as Linux, it is unlikely that people will change from Windows because of the cheaper price of Linux. Merrill Lynch have stated that Linux is not a bad file and printer server, and even copes ok for a web network, but it is no Windows NT. Linux is not a good system for running high end applications according to Merrill Lynch analyst Steve Milunovich. While Linux users have doubled in the last year, it is still a drop in the bucket. Many believe that Linux will be the one under threat when Windows XP catches on. Linux has one thing going for it - Price, nothing else! People tend to stick with what they know, but even if they did dump Windows and go to other systems in their droves, to the tune of say 50% of all systems, Microsoft would still be increasing its profits on operating systems because the market is growing at such a phenomenal rate. I should point out at this stage that the Windows XP system is based on the Windows NT system, which has proved itself virtually bullet-proof in the business world and should knock the competition around something fierce. The thing is, Microsoft at any given time has the 39
Get Rich …..Quickly resources of cash (around US$20-$30 billion), expertise and clout to deal with competition from wherever it comes. Microsoft holds extremely strong alliances with all the major manufacturers who agree to install Windows as the default operating system on their products. The reason for this is simple, it’s what the public wants. Also, in the back of their minds must be, “What if Microsoft starts building computers of their own?” Alternatively, Microsoft is so large it could buy 2 or 3 manufacturers out. So, the PC companies fall into line because it’s in their best interest to do so. That’s business. However, Microsoft has now built the X Box gaming console and this could be the start of them starting to get more involved with hardware manufacture. Currently, Microsoft spends over US$2 billion a year on research and development, a figure that is unmatched in the industry. It is no wonder that it will be difficult to knock them out of the number one position. It will take a competitor with very deep pockets. The other problem that faces many companies that try to beat Microsoft, is Bill Gates. He may buy you out before you become a serious threat. In this way he brings the new technology into the Microsoft fold. Microsoft acquires many companies every year and many of them could develop into competition in the future if not acquired. Of course these companies do sell out willingly. It is sometimes the only way the full potential of their products will ever be realised as they need a huge injection of cash to develop and market the product. The earnings growth of Microsoft continues at over 20% with many brokers tipping this to increase to between 25% and 35%. This is quite an achievement when you consider that 2003 profit was over US$10 billion. Despite what you have heard about all their profits coming from just Windows and operating system sales, it’s nonsense. 55% of profits come from applications, games and hardware. The balance is divided up between investments, e-commerce and operating systems. 40
High Yield Investments Microsoft was founded by Bill Gates and Paul Allen in 1975. It now has nearly 400 different products and is growing. Microsoft has signed a deal with Sony to develop home based audio visual electronics platforms that will see the convergence of TVs and PCs. Also, there are other non-US companies that are firmly behind Microsoft. Companies such as Philips, Siemens, Ericsson and Peugeot Citroen all believe Microsoft has the answers to their technology needs in the future. The Industry Set To Really Boom? Biotechnology. This will be the next big boom in my opinion. When the public really discovers what can be achieved by these companies and the immense health benefits that will be coming our way over the next few years. Prices of Biotechnology companies will rocket. Companies such as Biogen, ID Biotechnology and Amgen in the USA as well as Australia’s CSL are all companies that will do extremely well in the future. Also, don’t forget pharmaceuticals, they will also be doing well in the future.
41
Get Rich …..Quickly
Chapter 6 An Australian Company getting it right For all my criticism of Australian fund managers over the years, I have finally found one that is producing good results….. but not from Australian shares, but why doesn’t that surprise me! Platinum Asset Management is an Australian based global equity fund manager that was established in February 1994 with the principals having established a creditable record over a long period of years as professional investors within the industry. Platinum Asset Management currently manages in excess of A$2.2 billion with a third of this from investors in Europe, America and New Zealand. Platinum Asset Management applies its unique stock selection methodology to the objective of achieving above average returns for its clients. The emphasis of the organisation is on managing clients' money rather than gathering funds under management. Here is a selection of their performing funds: Platinum European Fund Platinum European Fund is an equity fund, which invests in the stock markets of the UK and the European continent (including the emerging markets of Eastern Europe and Russia). The portfolio, being assembled from individual listed companies, will pay no heed to conventional benchmarks such as the MSCI. Performance: as at 30 April 2004 25% pa Compound over the last 5 years and that’s through a bear market.
42
High Yield Investments Platinum International Technology Fund Platinum International Technology Fund is an equity fund that's goal is to take advantage of the opportunities being created by the extraordinary developments in information technology and telecommunications. The portfolio will invest in companies around the world, including providers of computing, networking and telecommunications equipment, software, semi-conductors and related capital equipment providers, IT services, as well as network operators, content providers and ‘internet’ based businesses. The portfolio, being assembled from individual listed companies, will pay no heed to conventional benchmarks such as the MSCI Performance: as at 30 April 2004 42%pa over the year. Platinum International Fund Platinum International Fund is an equity fund which invests in traditional and emerging markets. The objective is to achieve good absolute returns through time, by pursuing a unique stock selection methodology. The portfolio, being assembled from individual listed companies, will pay no heed to conventional benchmarks such as the MSCI. Performance: as at 30 April 2004 22%pa over the last 5 years Platinum Asset Management Phone : 61 2 9255 7500 1300 726 700 within Australia Fax : 61 2 9254 5555 Email:
[email protected] Level 21, Goldfields House 1 Alfred Street, Sydney NSW 2000 Australia
43
Get Rich …..Quickly
Chapter 7 Another Australian Company Continues to Achieve Results …..With a Capital Guarantee! OM Strategic Investments’ (now Man Investments) funds under management have grown to more than A$2.7 billion following positive performance and strong demand for shares. Plans for 2003-4 include expanding into Asia and launching a new range of guaranteed return funds. New Hedge Funds Research Prominent research house, van Eyk Research, recently released research into 15 of the best known hedge funds available to Australian investors. The research described OM Strategic Investments as the clear market leader in structuring alternative investments in Australia and New Zealand. An extract from the van Eyk Research published in the Australian Financial Review also ranked the OM-IP 220 funds as the best performing hedge fund strategy for the 12 months to 30 September 2002. The article stated: “...van Eyk Research analyst Dragana Timotijevic said most managers had lowered forecast returns as a result of lower expected equity returns and cash rates. The 15 funds reviewed by van Eyk produced an average return of about 3 per cent the year to September 30, 2002. The best performer, OM-IP 220, produced a 20 per cent return because of its exposure to managed funds.” The Australian Financial Review - Wednesday 22 January 2003 The volatility on global stock markets last year highlighted the important role an OM-IP fund can play in diversifying a traditional portfolio of stocks, property and bonds.
44
High Yield Investments The medium term performance of the OM-IP funds is shown in the chart below. OM-IP 220 Limited is now up by 233.2% in its first 75 months, significantly outperforming Australian, US and global stock indices. The ability of each of the OM-IP funds to record positive returns last year was primarily due to spreading risk over more than 100 international markets through the AHL Diversified Program and 90 specialised international managers through the Glenwood Multi-Strategy Program. An example of some of these strategies included: • rising bond prices • rising oil prices • rising gold prices • falling stock indices • falling US dollar • falling interest rates
45
Get Rich …..Quickly The AHL Diversified Program and Glenwood MultiStrategy Program have a low correlation with traditional investments in stock, property and bond markets. These investments have a history of being able to record positive returns in both rising and falling markets. Since the launch of the first Australian OM-IP fund, OM-IP 220 Limited, there have been four significant stock market corrections, the Asian economic crisis, the South American crisis, the September 11 correction and the recent correction on global stock markets. As shown in the chart below, OM-IP 220 Limited recorded positive returns on each of these occasions.
The medium term performance of the OM-IP funds is shown by the comparative returns of OM-IP 220 Limited with
46
High Yield Investments New Zealand, Australian, global and US stock indices over the past three and five years. NZSE40G Index All Ords (Accum.) Index MSCI World Index S&P 500 Index OM-IP 220 Limited
3 years +5.9% +4.9% -44.4% -40.1% +61.7%
5 years +13.9% +35.9% -15.7% -9.3% +136.7%
Source: OM Strategic Investments Limited.
Note: Past performance is not a guide to future performance. Performance figures show total return over the 3 and 5 year periods. As shown in the chart below, the IP 220 Strategy, has had short term periods of flat, below average or negative performance since December 1990. However, the IP 220 Strategy has continued to meet its medium term performance objectives over the 12 year period. The chart also shows there has not been a deterioration in performance during the recent correction on global stock markets.
47
Get Rich …..Quickly In contrast, the three year rolling returns for the IP 220 Strategy show a number of three year returns below the 20%pa* medium term aim. However, recent performance is consistent with historic returns and bears little resemblance to the performance of global stock markets over the last three years.
The current fund open at the moment is the OM-IP150 Plus which is very similar to the OM-IP220 funds. However, on this one they have reduced their target to 15% each year, but they will also be taking a slightly safer approach too. For those interested in the OM-IP220 funds, there may be another series or release in the future and it’s best to register with Man Investments if you are interested and would like a future prospectus. Just one last thing to note is how even the rising guarantee has outstripped the performance of the All Ordinaries, let alone the fund itself as you can see on the next page. 48
High Yield Investments
In addition, your capital is guaranteed by Westpac Bank. This guarantee is raised as profits continue to accrue. You can’t get any better than that! Contact Details Man Investments Limited PO Box N672, GROSVENOR PLACE NSW 1220, AUSTRALIA Telephone: (+61 2) 8259 9999 Toll Free within Australia: 1800 222 355 Fax: (+61 2) 9252 4453 Email:
[email protected] 49
Get Rich …..Quickly
Chapter 8 Offshore Investment Funds Introduction The Offshore Investment Fund is simply an investment fund that is “Offshore” and is managed by a professional Investment Manager. The “Offshore” bit usually refers to Low Tax or Zero Tax Havens. The offshore fund is usually domiciled in a tax haven so as to save on tax or not pay any at all. These funds are very similar to many of the funds run by well-known managers here in Australia or the Mutual Funds offered in countries like the United States and Canada. They are simply pooled or collective funds with anything from a few million dollars to several billion. In all cases they are legitimate and run by professionals. One of the good things about these investments compared to other high yield investments, is the fact that due to large amount of funds, they can employ competent research staff as well as one of the most important things in investment…….. diversification. Another good aspect, for the private offshore investor, is that they can spread their money amongst a variety of offshore investment funds for even further diversification. This is possible because many funds accept relatively low entry level investments. The Offshore Investment Fund industry started with the Dutch Robeco Fund back in 1933 but took it’s biggest step in the mid 1970’s when British fund managers began setting up funds in places like the Isle Of Man, the Channel Islands, Hong Kong and Bermuda. The reason they did this was simple, tax in these places was either lower of non-existent compared to the traditional investment bases of the UK, Switzerland and the US. By establishing funds in these 50
High Yield Investments jurisdictions they could return the tax savings to the investors thus making their funds 30-40% more attractive to the investment market. These days we are offered only the domestic investment funds which struggle to produce much more than 20% pa due to the weight of tax, regulations and being far less imaginative compared to their offshore cousins. We never hear of these offshore funds because they aren’t registered here and therefore don’t have prospectuses available to Australians. In some cases, these offshore investment managers won’t even send material to Australians unless you declare that you intend to invest from a company or trust in a tax haven due to prospectus regulations. Later in the 1980’s, Luxembourg became the Offshore Investment Fund centre of the Universe when Luxembourg entered itself as a low tax haven. Luxembourg made changes to its corporate legislation to allow these funds to use Luxembourg as a low tax and low regulations base for offshore funds. Ireland has now followed the example set by Luxembourg and has thrown its hat in the Offshore Fund ring and is doing quite well from all accounts. To give you an idea where these funds are domiciled: Luxembourg 55% Isle of Man 9% Ireland 7% Channel Islands 14% Cayman Islands 5% Bermuda 4% British Virgin Islands 2% Hong Kong 2% Other 2% There are nearly 7000 funds in these jurisdictions controlling literally hundreds of billions of US dollars, and you’ve never heard of them! What do they invest in? They invest in a variety of equities and other financial instruments. As of 2003 they invested in the following: 51
Get Rich …..Quickly Equities or Shares Fixed Interest Warrants Money Markets -Trading currencies Bonds Convertibles Other
49% 11% 5% 15% 8% 2% 10%
Important Note When looking at the returns of these Investment Funds, you should keep a couple of things in mind. Firstly, the returns change daily because the return is a reflection of price. If the price goes up, the return in terms of growth, rises. If the price falls you lose money. Also, in looking at the 3 year returns you may be a little let down with the returns, but if I can remind you, since 2000 we have been in one of the great bear markets with most share markets dropping in excess of 20-30% over this time, so a positive return over this period is a badge of honour to the fund manager and a testament to his or her skill to produce an outstanding result while 95% of fund managers have experienced negative returns. The returns quoted in this book have been compiled as at June-July 2004, which means by August 2004, the returns may have changed a little, so keep this in mind. I have shown returns over 3 to 5 and sometimes 10 years to give you a better perspective of the longer term performance of the fund. You would have to agree, our local funds don’t even come close do they, although there are a few exceptions, but they are very rare and are limited to probably 3 or 4 fund managers who are all in either High Yield Investments or High Yield Investments 2. With all that out of the way, my criteria for inclusion in this book is that the fund must have a good management record and consistent positive returns.
52
High Yield Investments When contacting the fund, keep in mind some of them may require you to go through a broker unless you are investing a great deal of money. Always ask when you are enquiring that if you can’t invest directly with the amount of money you are thinking of investing, get the name of their recommended broker. It won’t cost you any more, but it may save you missing out on a great opportunity, one that you may live to regret if you ever look back at the fund you “were” going to invest in.
The Case For Offshore Funds There are many different perceptions of Offshore Investments, many of them rather bad due to some investors being stung by frauds and scams that just happened to be outside their home country, or in other words, “Offshore”. Some people perceive “Offshore” as simply some little island where tax cheats and money launderers do their “thing”, this is not the case, particularly these days. Investing offshore is simply International Investing by another name. It’s sensible to diversify your holdings and seek the best returns available worldwide rather than to simply look no further than your own shores. Another perception is that there are enormous riches to be made from avoiding tax by investing offshore, this is also a misunderstood myth, and while it may have been correct several years ago, it’s not true today. However, this does not mean that there are no tax benefits at all, there are, but they are “moderate” rather than “fantastic”. While tax benefits for the average investor are limited, the benefits to the investment itself are “not so limited”. This is due in part to the fund and the fund manager having the benefit of reduced tax on the fund (because of their jurisdiction) and on their own profits and in turn this benefit is
53
Get Rich …..Quickly quite often passed onto the investor, thus sometimes increasing the net return to you. Also, benefits are achieved by simply searching out the best markets in the world to invest in at a certain point in time. Not being restricted by investing just in one country and in one market. Less red tape also brings monetary benefit to the investor.
Equity Funds This category of offshore investment funds accounts for most that are available today and certainly represent the highest and most consistent returns as a group of investments. In the US these funds would be known as mutual funds and in Australia, managed funds. These funds are quite diverse, with some funds specialising in regions such as North America, Europe or Asia. Others concentrate on types of companies such as healthcare or mining and others place all their funds in one particular country. Some funds take a worldwide approach, investing in shares in all parts of the world. Trying to pick which fund to invest in is a difficult task. The approach I take is to firstly diversify into three regions: • Europe • North America • And last being a choice of Australasia, Asia or one of the emerging markets such as China, Czech Republic or Hungary. Secondly, select them in this order. 1. Europe - over time will continue to be a consistent and growing market as more and more countries join the European Union. 2. North America - will always be an industrial powerhouse with growing markets, domestically and internationally. 3. The others, including Australia.
54
High Yield Investments The equity funds should be the cornerstone of your offshore investment portfolio and should represent a fairly conservative diversification mix with funds offering good returns and good managers with good records.
Information Sources All the fund information presented in this book has been drawn from the following sources that are believed to be reliable. We recommend you seek the advice of a licensed financial adviser prior to making any investment. Standard and Poors Micropal, Financial Times, The International, The Offshore Financial Times, Morningstar, and Fund Manager’s Prospectuses Minimum investment levels tend to vary from fund to fund. Quite often it is based on a certain number of shares and the price of the shares change, the minimum investment also changes. Return on Investment expressed as a percentage is US Dollar, Nav-Nav (Net Asset Value), including the reinvestment of income over the time periods shown up to June 2004. The quoted returns for the following funds are correct as at June 2004. Where you see this symbol, it Still a Star! signifies that this Fund has appeared in previous editions of this book, and due to it’s continued good performance has been included again.
55
Get Rich …..Quickly Marlborough Special Situations Fund Type UK Unit Trust Management Group Marlborough Fund Managers Ltd Web Site http://www.marlboroughfunds.com E-mail
[email protected] Registered Address 21 Wood Street, Bolton, UK, BL1 1EB Telephone Numbers 0011 44 1204 399104 (Dealing) 0011 44 1204 380060 Fax Number 0011 44 1204 533045 Investment Objectives To achieve capital growth by following an actively managed and speculative policy investing in smaller companies, new issues and companies going through a difficult period but with good recovery prospects. YTD 119% for 2004. Rated 5 Stars. Initial Charge 5.00% Annual Charge 1.50% Minimum Initial £1,000 Minimum Additional £500 Fund Size £38.2m Launch 01-Jul-1995 Returns 23% pa last 3 years 101% pa last 5 years
56
Still a Star!
High Yield Investments Largest Holdings
(%)
Burford Hercules Property IG Group Marylebone Warwick Balfour Hilton Group Jardine Lloyd Thompson Group Brancote Holdings Hunting SFI Group Iceland Group Total
4.0 3.9 3.3 2.8 2.7 2.7 2.6 2.6 2.4 2.2 29.1
Boston Partners Small Cap VI II/Is
Still a Star!
Fund Type Mutual Fund Management Group Boston Partners Funds Web Site www.bostonpartnersfunds.com Registered Address 28 State St, 20th Floor, Boston MA 02109 USA Telephone Number 0011 1 302 791 2412 Fax Number 0015 1 301 791 4830 Investment Objectives This fund invests in small listed US companies undergoing significant growth in earnings. Currently returning 77% for 2004. Minimum Initial USD$100,000 Launch 1998 Returns 22% pa last 3 years 28 % pa last 5 years
Wasatch : Small Cap Value Fund Type Mutual Fund Management Group Wasatch Funds
Still a Star!
57
Get Rich …..Quickly Web Site www.advisers.com Registered Address PO Box 2172, Milwaukee WI 53201-2172, USA Telephone Numbers 0011 1 801 533 0777 Fax Number 0015 1 414 221 6937 Investment Objectives This fund invests in small listed US companies undergoing significant growth in earnings. Minimum Initial USD$2,000 Launch 1998 Returns 37% pa last 3 years 45% pa last 5 years
CGM Focus
Still a Star!
Fund Type Mutual Fund Management Group CGM Funds Web Site www.cgmfunds.com Registered Address 222 Berkeley St, Suite 1013, Boston MA 02116 USA Telephone Numbers 0011 1 617 483 5000 Fax Number 0015 1 713 807 8071 Investment Objectives This fund invests in small listed US companies undergoing significant growth in earnings. 67% return so far in 2004. Minimum Initial USD$2,500 Launch 1997 Returns 45% pa last 3 years 28% pa last 5 years
58
High Yield Investments Firebird Fund LP
Still a Star!
Fund Type Mutual Fund Management Group Firebird Management Registered Address 152 West 57th Ave, New York, NY 10019, USA Telephone Numbers 0011 1 212 698 9260 Fax Number 0015 1 212 698 9266 Investment Objectives This hedge fund invests in Eastern European markets seeking out opportunities as these economies become more westernized. Minimum Initial NA Launch 1994 Returns 60% pa last 3 years 25% pa last 5 years
Merrill Gold & General
Still a Star!
Fund Type UK Unit Trust Management Group Merrill Lynch Fund Managers Limited Web Site http://www.mlim.co.uk E-mail
[email protected] Registered Address 33 King William Street, London, UK, EC4R 9AS Telephone Numbers 0800 44 55 22 (Customer Support) 08457 405 405 (IFA Support) 0011 44 20 7743 3000 Fax Number 0011 44 20 7743 1000 Investment Objectives This is a specialist unit trust which aims to achieve long-term capital growth by investing in gold mining and precious metal-related shares.
59
Get Rich …..Quickly It tends to be volatile and is particularly suitable for diversification in a larger portfolio. 2004 YTD is 47.3% Initial Charge 5.25% Annual Charge 1.50% Minimum Initial £1,000 Minimum Additional n/a Fund Size £146.1m / $208.9m (28-Feb-02) Launch 07-Apr-1988 Pricing Method Forward and historic Pricing Times 10.00am Dealing Frequency Daily Dealing Times 8.30am-5.30pm Dividend Policy Distribution date: 15 August Ex-distribution date: 15 June Returns 41% pa last 3 years 31% pa last 5 years Largest Holdings
(%)
Regional Weightings
(%)
Sector Weightings
(%)
Newmont Harmony Gold Fields Buenaventura Lihir Gold Aurion Gold Durban Deep AngloGold Goldcorp Meridian Total
10.5 9.1 9.1 5.9 5.3 5.0 4.8 4.3 4.3 3.2 61.5
South Africa North America Australasia Latin America Cash Russia
38.0 36.0 13.0 8.0 4.0 1.0
Gold Platinum Cash Diamonds Silver
86.0 6.0 4.0 2.0 2.0
Total
100.0
Total
100.0
60
High Yield Investments Schroder US Smaller Companies
Still a Star!
Fund Type UK Unit Trust Management Group Schroder Investments Limited Web Site http://www.schroders.co.uk E-mail
[email protected] Registered Address 33 Gutter Lane, London, UK, EC2V 8AS Telephone Numbers 0800 718 788 (Dealing) 0800 718 777 (Customer Support) 0800 718 777 (IFA Support) 0011 44 20 7658 6000 Fax Number 0011 44 20 7658 6737 Investment Objectives Aims to achieve capital growth by investing in smaller companies listed on the Canadian and US stock markets. YTD 2004 is 33%. Initial Charge 5.25% Annual Charge 1.50% Minimum Initial £1,000 Minimum Additional £500 Fund Size £256.7m / $367.0m (28-Feb-02) Launch 14-Feb-1990 Pricing Method Forward Dividend Policy
Distribution dates are 30 June and 31 December. Accumulation and Income units available Returns 17% pa last 3 years 20% pa last 5 years
61
Get Rich …..Quickly Largest Holdings
(%)
Regional Weightings
(%)
Sector Weightings
(%)
Amerisource Bergen Constellation Brands A Rent-A-Center
1.7
USA
87.2
22.3
Liquid Assets
Business & Public Services 11.9 Merchandising
1.7 1.6
Switzerland
1.0
Electrical & Electronics Machinery & Engineering Financial Services
4.8
Applebees Intl Com
1.6
Hilb Rogal & Hamilton Zale O'Reilly Automotive
1.6
Insurance Electronic Comps. & Instruments Health & Personal Care Chemicals Leisure & Tourism
3.8 3.7
Amphenol Cl A
1.5
Dal-Tile Intl Federated Investors B Total
1.5 1.4
1.5 1.5
15.8
Total
100.0 Total
Rathbone Special Situations
14.6
4.8 4.3
3.7 3.7 3.6 69.2
Still a Star!
Fund Type UK Unit Trust Management Group Rathbone Unit Trust Management Limited Web Site http://www.rathboneunittrusts.com/ Registered Address 159 New Bond Street, London, UK, W1S 2UD Telephone Numbers 08459 220044 (Dealing) 0011 44 20 7399 0000 Fax Number 0011 44 20 7399 0057 Investment Objectives To provide capital growth from an investment in shares temporarily out of favour with the market in which significant recovery is expected. The return in 2004 is 63% Initial Charge 5.50% Annual Charge
62
High Yield Investments 1.50% Minimum Initial £1,000 Minimum Additional £500 Fund Size £30.1m / $43.0m (01-Feb-02) Launch 01-Oct-1989 Dividend Policy Distribution dates are 30 June (interim) and 31 December (final). Returns 21% pa last 3 years 34% pa last 5 years Largest Holdings
(%)
Ramco Energy Monsoon Brit Insurance Biotrace Ockham Holdings
3.0 2.3 2.0 2.0 2.0
CRC Paragon SOCO International Coslight Tech Int'l Huaneng Power Total
Sector Weightings
Cyclical Services Financials Overseas Resources Non-Cyclical Consumer Goods 1.9 Information Technology 1.9 Basic Industries 1.6 Cash 1.6 Cyclical Consumer Goods 1.6 General Industries 19.9 Total
FMI Focus Fund
(%) 26.4 22.6 13.3 8.9 8.8 5.0 4.6 4.4 3.0 2.4 99.3
Still a Star! Fund Type US Mutual Fund Management Group The FMI Focus Fund (the "Fund") is advised by Fiduciary Management, Inc. of Milwaukee and sub-advised by Broadview Advisors, LLC. Both firms are 100% owned by the employees. Web Site www.fiduciarymgt.com Registered Address 225 East Mason Street Milwaukee, Wisconsin 53202 Telephone Numbers
63
Get Rich …..Quickly 1 800 811 5311 Investment Objectives The Fund invests in small- to mid-cap (i.e., less than $3.0 billion of market capitalization) companies that have substantial capital appreciation potential. These companies frequently have little or no following by the major stock brokerage firms. They look for stocks of businesses that are selling at what they believe are substantial discounts to prices that accurately reflect their future earnings prospects. The Fund takes a "focused" approach to investing, meaning the Fund may from time to time invest in a limited number of securities and/or industries, and its top ten holdings may constitute 50% or more of the Funds assets. One consequence of its "focused" approach is that the Fund is classified as a non-diversified fund. YTD return is 58% for 2004. Fund Size $353.3 million Launch 16/12/96 Returns 11% pa last 3 years 20% pa last 5 years 26% pa since inception Largest Holdings
(%)
Sector Weightings
(%)
Aspen Technology, Inc Adelphia Communications Corp S&P SmallCap 600 Index Rockwell International Pride International, Inc. Republic Services, Inc Joy Global Inc. Documentum, Inc. Software Group, Inc
3.3 3.1 3.0 2.8 2.0 2.0 1.9 1.9 1.7 1.6
Energy Healthcare Telecommunications Materials Consumer Staples Consumer Discretionary Industrials Financials Other Cash Information Tech.
6.3 2.7 5.1 5.3 1.5 9.2 20.8 9.9 5.0 10.4 23.8
64
High Yield Investments TR Property Investment Trust
Still a Star!
Fund Type UK Investment Trust Management Group Henderson Global Investors Registered Address 3 Finsbury Avenue, London England, UK ECM2M 2PA Telephone Numbers 0011 44 207 410 4100 Fax Number 0015 44 207 377 5742 Investment Objectives Maximise total return by investing in property on a global basis. The YTD return is 48% for 2004. Minimum Initial NA Returns 24% pa last 3 years 31% pa last 10 years
Quadriga AG
Still a Star!
Fund Type Derivative Fund Management Group Quadriga Asset Management GmbH Website www.quadriga.at Registered Address Salzgries 15, Vienna, A-1010 Austria Telephone Numbers 0011 43 1 24700 Fax Number 0015 43 1 24700 11 Investment Objectives To achieve capital growth through the aggressive trading of financial derivatives. YTD for 2004 is 29%. Minimum Initial Euro 1000 Returns 33% pa last 3 years 45% pa last 5 years
65
Get Rich …..Quickly Profunds Ultra Small Cap Fund
Still a Star!
(Nasdaq USPIX) Fund Type US Mutual Fund Management Group Profunds Funds Website www.profunds.com Registered Address 7900 Wisconsin Ave, Suite 300, Bethesda, MD 20814 USA Telephone Numbers 0011 1 301 657 1970 Fax Number 0015 1 614 470 8734 Investment Objectives To achieve capital growth through investing a variety of US listed companies that have proven or potential growth in the short to medium term. 2004 YTD return is 58%. Minimum Initial US$15,000
Comstock Strategy C Fund (Nasdaq CPFCX)
Still a Star!
Fund Type US Mutual Fund Management Group Gabelli Comstock Funds Registered Address One Corporate Center, Rye, NY 10580 USA Telephone Numbers 0011 1 800 422 3554 Fax Number 0015 1 212 818 9672 Investment Objectives To achieve capital growth through investing a variety of medium sized US listed companies that have generally been overlooked or oversold by the market. A view to profits being achieved with a short to medium time frame. Has performed quite well during the bear market, achieving 20% return in 2004. Minimum Initial
66
High Yield Investments US$10,000 Returns 25% pa last 3 years NA% pa last 5 years
Vanguard LT Treas/Inv Fund (Nasdaq VUSTX)
Still a Star!
Fund Type US Mutual Fund Management Group Vanguard Funds Registered Address Vanguard Financial Center, PO Box 2600, Valley Forge, PA 19842, USA Telephone Numbers 0011 1 610 436 5152 Fax Number 0015 1 610 503 2349 Investment Objectives To achieve capital growth through investing a variety of high quality large cap US listed companies that have proven growth of earnings and to invest in them for the long term. A 5-10 year time horizon is envisaged. This is a very large fund with assets in excess of US$2b. Performance in the last 12 months has been very good at 15% growth in the current bear market. Minimum Initial US$2500 Returns 17% pa last 3 years 16% pa last 5 years
Fidelity Real Estate High Yield Fund Fund Type US Investment Fund Management Group Fidelity Funds Registered Address 82 Devonshire St, Mail Zone F 9A, Boston MA 02109 USA Telephone Numbers 0011 1 800 522 7297 Fax Number Na Investment Objectives
67
Still a Star!
Get Rich …..Quickly To achieve capital growth through investing real estate in the US. A highly rated fund by Standard and Poors that has achieved consistent high yields in terms of growth and income. Minimum Initial US$2500 Returns 22% pa last 3 years 19% pa last 5 years
Schroder Ventures International Fund (Now known as SVG Capital PLC)
Still a Star!
Fund Type UK Investment Trust Management Group Schroder Investment Management Ltd Registered Address 33 Gutter Lane, London, EC2V 8AS UK Telephone Numbers 0011 44 207 382 6000 Fax Number 0015 44 207 382 6965 Investment Objectives To achieve capital growth by investing in start ups and venture capital. 2004 Return was 27%pa Minimum Initial GBP 1,000 Returns 58% pa last 5 years
Fidelity Special Situations Fund
Still a Star!
Fund Type UK Investment Trust Management Group Fidelity Investment Services Ltd Registered Address Oakhill House, 130 Tonbridge, Hildenborough, England TN11 9D2 UK Telephone Numbers 0011 44 800 414 171 Fax Number 0015 44 1732 777 262
68
High Yield Investments Investment Objectives To achieve capital growth through investing in a wide variety of equities in the UK for short term profit. The return for 2004 is 30% and it’s rated 5 stars. Minimum Initial GBP 1000 Returns 20% pa last 3 years 21% pa last 5 years
AHL Diversified Plc
Still a Star!
Fund Type Swiss Investment Fund Management Group Man Investment Products Registered Address Bahnhofstrasse 15, PO Box 349, CH-8808 Pfaffikon, Switzerland Telephone Numbers 0011 41 55415 3636 Fax Number 0015 41 55 415 3637 Investment Objectives To achieve capital growth through trading a wide variety of derivatives. Minimum Initial US$1000 Returns 20% pa last 3 years 33% pa last 5 years
Radiotrust (Now known as the Media and Income Trust) Fund Type UK Investment Trust Management Group Aberdeen Asset Managers Limited Registered Address One Bow Churchyard, Cheapside, London EC4 M 9HH UK Telephone Numbers 0011 44 171 463 6000 Fax Number 0015 44 171 463 6001
69
Still a Star!
Get Rich …..Quickly Investment Objectives This trust focuses on Broadcasting and radio related investments with good returns. Will be willing to invest outside of the UK if the right opportunity comes up. Minimum Initial GBP1,500 Fund Size US $21m Launch 1989 Returns 20% pa last 3 years 17% pa last 5 years
First Ireland Investment Company
Still a Star! Fund Type UK Investment Trust Management Group AIB Govett Asset Management Limited Registered Address Shackleton House, 4 Battle Bridge Lane, London SE1 2HR UK Telephone Numbers 0011 44 171 234 0880 Fax Number 0015 44 171 378 0144 Investment Objectives This fund invests primarily in investments in Ireland. They have been producing a dividend of at least 2.0% per annum but it is the consistent capital gains that are attractive. Contact the manager for broker details if required. Ireland has been developing quite quickly in recent years and could prove to be a real winner over the long term. They have invested in companies such as : Smurfit, Allied Irish Banks, Avonmore Foods, Irish Life, Bank of Ireland etc. Minimum Initial GBP6,000 Fund Size US $123m Launch 1990 Returns 25% pa last 3 years 39% pa last 5 years
70
High Yield Investments Baring Emerging Europe Trust Fund Type Still a Star! UK Investment Trust Management Group Baring Asset Managers Ltd Registered Address 155 Bishopgate, London EC2M 3XY, United Kingdom Telephone Numbers 0011 44 207 628 6000 Fax Number 0015 44 207 214 1630 Investment Objectives The fund invests in emerging European countries. Poland 27%, Hungary 23%, Greece 16% etc. It could be a good long term investment. The companies are the “Blue Chip” investments in the emerging countries. The return for 2004 is 26%. Minimum Initial GBP1,500 Fund Size US$227 Launch 1993
Oakmark Global I Still a Star! Fund Type US Mutual Fund Management Group Oakmark Funds Registered Address Two N. LaSalle St, Chicago IL 60602-3790 Telephone Numbers 0011 1 800 625 6275 Investment Objectives The fund invests in growth stocks from all over the world. Like its siblings, this fund is as value conscious as they come. It has posted exceptional returns so far in difficult conditions considering the slump from 2000-03. Rated 5 Stars. Minimum Initial US $1,000 Fund Size US$587
71
Get Rich …..Quickly Launch 1999 Returns 25% pa last 3 years
Bridgeway Ultra Small Company Market Fund (Nasdaq BRSIX)
Still a Star!
Fund Type US Mutual Management Group Bridgeway Funds Registered Address 5615 Kirby Drive, Suite 518, Houston, TX 77005-2448 USA Telephone Numbers 0011 1 800 661 3550 Investment Objectives The fund invests in small US companies with bright futures and excellent management. Rated 5 Stars by Morningstar. Companies include Meridian Resources, Hi-Tech Pharmcal, Ask Jeeves, Ishares Russell 2000 Index and Tradestation Group. YTD return 74%. Minimum Initial US$2,000 Fund Size US$440 Launch 1997 Returns 30% pa last 3 years 27% pa last 5 years
Bridgeway Micro Cap Limited (Nasdaq BRMCX) Fund Type US Mutual Management Group Bridgeway Funds Registered Address 5615 Kirby Drive, Suite 518, Houston, TX 77005-2448 USA Telephone Numbers 0011 1 800 661 3550 Investment Objectives
72
Still a Star!
High Yield Investments Each of the company’s funds have a slightly different focus to the fund above with performance no less impressive. This fund focuses on a mixture of momentum, growth and value stocks amongst small companies. Companies include J2 Global Communications, Talk America, Usana Health Suppliers, Findwhat.com and Stratsys. Again rated 5 Stars! Minimum Initial US$2,000 Fund Size US$63 Launch 1998 Returns 12% pa last 3 years 20% pa last 5 years
Bridgeway Ultra Small Company (Nasdaq BRUSX)
Still a Star!
Fund Type US Mutual Management Group Bridgeway Funds Registered Address 5615 Kirby Drive, Suite 518, Houston, TX 77005-2448 USA Telephone Numbers 0011 1 800 661 3550 Investment Objectives The blend fund invests in Bridgeway’s specialty of smaller companies. For returns, this is the pick of them. This fund has an emphasis towards health and business services. Rated 5 stars and currently returning 47%pa Minimum Initial US$2,000 Fund Size US$87 Launch 1997 Returns 27% pa last 3 years 31% pa last 5 years
73
Get Rich …..Quickly Funds that have dropped from the 2004 edition and why….. Schroder US Opportunities Fund – Closed to new investors Wasatch Micro Cap Fund – Closed to new investors HSBC GIF Indian Equity Fund – Dropped through poor performance – This is due to sudden drop in the Indian stock market in 2004 brought on political instability. It may come back quickly though. So, if you are in this fund – HOLD. GT Healthcare – Dropped due to poor performance. In a sector that may recover quite well, however. Quantum Fund – Dropped due to poor performance. It seems, manager George Soros has temporarily lost his midas touch. We may see this fund re-appear in the future though. Hotchkis & Wiley Small Cap Value Fund – Closed to new investors
New Entries to the 2004 Edition Quadriga GCT Futures Fund US$ Fund Fund Type Luxembourg Hedge Fund Management Group Quadriga Asset Management GmbH Website www.quadriga.at Registered Address Salzgries 15, Vienna, A-1010 Austria Telephone Numbers 0011 43 1 24700 Fax Number 0015 43 1 24700 11 Investment Objectives This fund achieves Tax Free Capital Growth using an automated trading platform to generate trades. Developed using data mining that
74
High Yield Investments analyses vast amounts of information and picks out significant patterns between disparate data. It trades in 100 futures markets and around 1200 stocks. The investment decisions are taken using fundamental data. The program reacts immediately to adjust to this new market environment aiming to minimise losses and maximise profits. Rated 5 stars by S&P. Minimum Initial US$15,000 Returns 83% pa last 3 years
Next we have 3 Funds from Artemis Fund Managers. All 3 funds have shown good results over the last year or so and have out performed all their respective benchmark indices over a longer period, since their inception in fact and this is a very good thing. It is rare that a fund manager out performs benchmarks consistently. However, this is exactly what you are paying them for. In the case or Artemis, they haven’t just beat the market, they have destroyed it! They have proven themselves to be outstanding managers and should be considered. One other good thing about these funds…. You can invest online at their website I have shown in the fund details. Here they are:
Artemis UK Special Situations Fund Fund Type UK Unit Trust Management Group Artemis Fund Managers Website www.artemisonline.co.uk Registered Address Cassini House, 57 St James St, London SW1A 1LD UK
75
Get Rich …..Quickly Telephone Numbers 0011 44 20 7399 6000 Fax Number 0015 44 20 7399 6497 Investment Objectives The Fund aims to provide long-term capital growth by exploiting special situations. The Fund invests principally in UK equities and in companies which are headquartered or have a significant part of their activities in the UK which are quoted on a regulated market outside the UK. Currently they have allocated a third of their portfolio in each of small cap, large cap and medium cap companies. Companies such as Shell, Anglo Irish Bank, Cairn Energy, Vodaphone, Lloyds, Morgan Crucible. YTD performance for 2004 has been 48% Minimum Initial GBP 1,000 Returns 29.4% pa last 3 years
Artemis European Growth Fund Fund Type UK Unit Trust Management Group Artemis Fund Managers Website www.artemisonline.co.uk Registered Address Cassini House, 57 St James St, London SW1A 1LD UK Telephone Numbers 0011 44 20 7399 6000 Fax Number 0015 44 20 7399 6497 Investment Objectives The Fund aims to provide long-term capital growth through investment principally in companies in Europe (excluding the UK). Asset allocation is well spread throughout Europe with barely a country missing out. The biggest holding being in Germany, France, Switzerland and Norway. Launched in 2001, this fund has achieved nearly 25% growth during a peiod that the relevant index achieved a loss of 21%. This is an outstanding result! YTD performance for 2004 has been 24.4% Minimum Initial GBP 1,000 Returns 24.9% pa last 3 years
76
High Yield Investments Artemis UK Smaller Companies Fund Fund Type UK Unit Trust Management Group Artemis Fund Managers Website www.artemisonline.co.uk Registered Address Cassini House, 57 St James St, London SW1A 1LD UK Telephone Numbers 0011 44 20 7399 6000 Fax Number 0015 44 20 7399 6497 Investment Objectives The objective of the UK Smaller Companies Fund is to provide long term capital growth by investment in companies listed, quoted and/or traded in the UK and in companies which are headquartered or have a significant part of their activities in the UK which are quoted on a regulated market outside the UK. Investment will be made in companies which primarily comprise the bottom 10% of the UK stock market. YTD performance for 2004 has been 53.8% Minimum Initial GBP 1,000 Returns 25% pa last 3 years 56%pa last 5 years
Next, we have 5 Funds from Legg Mason Funds. The next 5 funds have the advantage of being traded on the US stock market, which means you can buy them online through your online broker. They are all higher risk funds, which is not necessarily a bad thing, it just means the volatility is higher over the short term and you should take a longer term view, which you should be doing anyway.
77
Get Rich …..Quickly As you can see from the table, below, their returns are only just starting to look outstanding, but they are all positive, good considering most fund managers (95%) went backwards at some stage in the last few years and that like Artemis are good enough to have several funds that out perform. This is another reason to consider them, they just don’t have one good fund, they have many.
Legg Mason Funds to Watch Ticker
Fund
1 3 5 7 10 Year Year Year Year Year
LMGTX Growth Trust
56.30 14.07 2.45 12.46
-
LMASX Special Investment Trust
61.72 16.72 10.96 15.89 14.19
Life of Fund (Inception) 13.13 (4/17/95) 14.15 (12/30/85)
LMSVX U.S. Small- 63.71 17.33 14.19 Capitalization Value Trust
-
-
7.45 (6/15/98)
LMOPX Opportunity Trust
67.65 12.41
-
-
9.57 (12/30/99)
LMEMX Emerging Markets Trust 2
95.21 19.56 14.77 4.62
-
6.17 (5/28/96)
-
Growth Trust (Formerly known as Legg Mason Focus Trust) (Nasdaq LMGTX) Fund Type Equity Fund Management Group Legg Mason Fund Managers Website www.leggmasonfunds.com Registered Address 100 Light Street, Baltimore, MD 21202 USA
78
High Yield Investments Telephone Numbers 0011 1 877-534-4627 Fax Number 0015 410-454-0282 Investment Objectives Uses the "theory of focus investing" to create a concentrated, lowturnover portfolio of primarily common stocks that appear to have strong growth potential. The adviser invests in a concentrated group of primarily large-cap growth companies that it believes have sound long-term economic fundamentals and are deemed to be undervalued at the time of purchase 20 of the fund's 26 holdings are in the Consumer Discretionary, Information Technology, and Telecommunication sectors where the fund maintains significant overweight positions relative to its primary benchmark, the S&P 500. The fund has significant relative underweight positions in Consumer Staples, Financials, Healthcare, and Industrials The fund has no exposure to Energy, Materials, or Utilities Because it is a concentrated portfolio, the Adviser expects the fund to be more volatile than the market The manager seeks to generate excess returns by owning securities that have been priced by the market at significant discounts to their intrinsic value by our multi-factor valuation analysis. Their analytical approach is not based on traditional, accountingbased valuation measures. We are focused on cash earnings namely, the present value of future cash flows of a company. Shareholder value is the result of cash, not accounting, earnings. In this way, we believe we differ from most value managers. Traditional valuation measures miss many mis-priced stocks because those measures do not focus on the value of a business. The manager seeks to purchase companies whose revenues and/or earnings are growing at an above-average rate selling at prices below our opinion of intrinsic business value The fund is managed by a growth manager who understands valuation YTD performance for 2004 has been 56.3% Minimum Initial GBP 1,000
79
Get Rich …..Quickly Returns See Table Above
Growth Trust (Formerly known as Legg Mason Focus Trust) (Nasdaq LMGTX) Fund Type Equity Fund Management Group Legg Mason Fund Managers Website www.leggmasonfunds.com Registered Address 100 Light Street, Baltimore, MD 21202 USA Telephone Numbers 0011 1 877-534-4627 Fax Number 0015 410-454-0282 Investment Objectives Uses the "theory of focus investing" to create a concentrated, lowturnover portfolio of primarily common stocks that appear to have strong growth potential. The Adviser invests in a concentrated group of primarily large-cap growth companies that it believes have sound long-term economic fundamentals and are deemed to be undervalued at the time of purchase 20 of the fund's 26 holdings are in the Consumer Discretionary, Information Technology, and Telecommunication sectors where the fund maintains significant overweight positions relative to its primary benchmark, the S&P 500. The fund has significant relative underweight positions in Consumer Staples, Financials, Healthcare, and Industrials The fund has no exposure to Energy, Materials, or Utilities Because it is a concentrated portfolio, the Adviser expects the fund to be more volatile than the market The manager seeks to generate excess returns by owning securities that have been priced by the market at significant discounts to their intrinsic value by our multi-factor valuation analysis. Their analytical approach is not based on traditional, accountingbased valuation measures. We are focused on cash earnings -
80
High Yield Investments namely, the present value of future cash flows of a company. Shareholder value is the result of cash, not accounting, earnings. In this way, we believe we differ from most value managers. Traditional valuation measures miss many mis-priced stocks because those measures do not focus on the value of a business. The manager seeks to purchase companies whose revenues and/or earnings are growing at an above-average rate selling at prices below our opinion of intrinsic business value The fund is managed by a growth manager who understands valuation YTD performance for 2004 has been 56.3% Minimum Initial US$ 1,000 Returns See Table Above
U.S. Small-Capitalization Value Trust (Nasdaq LMSVX) Fund Type Equity Fund Management Group Legg Mason Fund Managers Website www.leggmasonfunds.com Registered Address 100 Light Street, Baltimore, MD 21202 USA Telephone Numbers 0011 1 877-534-4627 Fax Number 0015 410-454-0282 Investment Objectives Seeks undervalued, small company stocks that are not widely recognized by the market and offer what the manager believes to be the greatest return potential The Adviser selects companies with price-to-earnings ratios in the lower quartile of small-cap stocks and targets a portfolio with 20% to 25% of assets invested in micro-cap value stocks – those with market caps under $400 million. Currently, the portfolio is very diversified with investment across 387 stocks and 12 sectors.
81
Get Rich …..Quickly 56.45% of assets are invested in the Consumer Discretionary and Financial sectors. Brandywine Asset Management (The Fund Manager working for Legg Mason) research shows and its experience confirms that securities priced low in relation to measures of current value provide superior returns over market cycles. Sometimes securities are priced low for a reason, and Brandywine, therefore, combines two investment techniques: Quantitative screening of fundamental characteristics to identify securities that are undervalued Fundamental analysis to identify securities with the ability to return to normal value YTD performance for 2004 has been 63.71% Minimum Initial US$ 1,000 Returns See Table Above
Merging Markets Trust (Nasdaq LMEMX) Fund Type Equity Fund Management Group Legg Mason Fund Managers Website www.leggmasonfunds.com Registered Address 100 Light Street, Baltimore, MD 21202 USA Telephone Numbers 0011 1 877-534-4627 Fax Number 0015 410-454-0282 Investment Objectives Invests in companies located in developing countries that the manager believes to have strong growth prospects, including countries adopting more widely recognized economic and political models. Currently, the fund is well-diversified with 147 holdings, invested in 17 countries and 20 industry groups
82
High Yield Investments 50.24% of fund assets are invested in Asia; 16.50% are invested in Latin America; and 27.50% in Europe, the Middle East, and Africa The fund’s favored industry groups are Transportation, Retailing, Auto & Components, and Banks Sector weightings are an outcome of stock selection, rather than being set as policy goal The fund’s price-to-cash flow ratio is 9.0x versus 9.1x for its benchmark, the MSCI EMF YTD performance for 2004 has been 95.21% Minimum Initial US$ 1,000 Returns See Table Above
Special Investments Trust (Nasdaq LMASX) Fund Type Equity Fund Management Group Legg Mason Fund Managers Website www.leggmasonfunds.com Registered Address 100 Light Street, Baltimore, MD 21202 USA Telephone Numbers 0011 1 877-534-4627 Fax Number 0015 410-454-0282 Investment Objectives Seeks primarily small- to mid-capitalization stocks that appear to be undervalued and secondarily stocks of companies facing special situations. They seek to generate excess returns by owning securities that have been priced by the market at significant discounts to their intrinsic value by our multi-factor valuation analysis. Their analytical approach is not based on traditional, accountingbased valuation measures. They are focused on cash earnings – namely, the present value of future cash flows of a company. Shareholder value is the result of cash, not accounting, earnings. In this way, they believe they differ from most value managers.
83
Get Rich …..Quickly Traditional valuation measures miss many mis-priced stocks because those measures do not focus on the value of a business. The Adviser’s focus is primarily on the mid-capitalization sector of the domestic equity market 52.42% of fund assets are invested in mid-capitalization; 42.04% in large-capitalization; and 3.62% in small-capitalization stocks 87.18% of net assets are invested in the Consumer Discretionary, Financials, Telecommunication Services, Information Technology, and Healthcare sectors The fund has a very significant overweight position relative to the S&P 400 in Telecommunication Services; and lesser but still significant overweight positions in Healthcare and Consumer Discretionary The fund has no exposure to Materials, Energy, or Utilities YTD performance for 2004 has been 61.72% Minimum Initial US$ 1,000 Returns See Table Above
Opportunity Trust (Nasdaq LMOPX) Fund Type Equity Fund Management Group Legg Mason Fund Managers Website www.leggmasonfunds.com Registered Address 100 Light Street, Baltimore, MD 21202 USA Telephone Numbers 0011 1 877-534-4627 Fax Number 0015 410-454-0282 Investment Objectives Has a flexible strategy and is not restrained by investment style, type of security, industry sector, location, size or market capitalization, investing primarily in U.S. common stocks.
84
High Yield Investments They seek to generate excess returns by owning securities that have been priced by the market at significant discounts to their intrinsic value by their multi-factor valuation analysis. Their analytical approach is not based on traditional, accountingbased valuation measures. They are focused on cash earnings – namely, the present value of future cash flows of a company. Shareholder value is the result of cash, not accounting, earnings. 91.74% of the fund's long net assets are invested in equities, and 3.81% are invested in corporate bonds The fund's long positions are in Telecommunication Services, Consumer Discretionary, and Industrials, which represent a significant overweight relative to its primary benchmark, the S&P 500 The fund has no exposure to Energy and Materials, and is significantly underweight in Consumer Staples, Healthcare, and Information Technology relative to its benchmark, the S&P 500 By prospectus, the fund has wide latitude to invest in a broad array of financial instruments YTD performance for 2004 has been 61.72% Minimum Initial US$ 1,000 Returns See Table Above
Brokers Generally, most of the funds mentioned that don’t sell direct to the public, will recommend a broker, but if not you can use one of these guys listed below: Atlas Securities Inc PO Box 557 Providenciales Turks & Caicos Is, BWI Phone: 0011 649 941 5835 Fax: 0015 649 941 5315 Cazenove & Co. 85
Get Rich …..Quickly 12 Tokenhouse Yard, London, EC2R 7AN UK Phone: 0011 44 20 7588 2828 Fax: 0015 44 20 7606 9205 Warburg Dillon Read 1/2 Finsbury Avenue London EC2M 2PP Phone: 0011 44 171 567 8000 Fax: 0015 44 171 568 4800 Landau Securities PO Box 316 Port Vila Vanuatu South Pacific Contact: Endre Dobozy www.landausecurities.com Phone Number: + 678 238 39 Mobile Number: + 678 438 39 Fax: + 678 27 847 Email:
[email protected] For all other brokers, ask for the details of a broker when you contact the Investment Fund. They will provide you with a contact if required.
Investing Wisely in Offshore Investment Funds We discussed diversification in an earlier chapter. Well, the subject comes up again. One of the cornerstones to any investment strategy is not to put all your eggs in the one basket. Most offshore investment advisers advise you to place two thirds of your funds in a variety of offshore investment funds, with the other third in more speculative or risky 86
High Yield Investments investments, if you want rapid growth. Obviously, the amount of diversification or “spread” you can undertake depends totally on your funds available but let’s look at two investment levels, one at $30,000 and the other at $100,000. Allowing for our two thirds / one third rule, that leaves us with $20,000 and $67,000 respectively. Conservative preferences would be: Scenario Equities Large US Companies Small US Companies UK Companies European Companies Asian / Australian Coy’s. Mining Derivative Funds
$20,000
$67,000
20% 15% 15% 20% 0% 15% 15%
15% 15% 10% 20% 10% 15% 15%
Obviously, with the smaller amount available you have to keep an eye on your entry levels. Based on the information and historical returns quoted in this book you should be able to achieve a portfolio averaging at least 20% and if we added the other third which is invested in our more speculative investments we should be able (all going well of course) increase this total rate up to around 30%-40% return without taking too many unnecessary risks. The best time to buy into these funds is obviously, when they are at their cheapest and that is during, one of the inevitable, market corrections such as the one we saw in late October 1997 when world equity markets dipped dramatically. Buying in when the markets are at their peak is never a good idea. By the same token, you are better being invested than not invested, but don’t be silly about it. Set up any banking structures and corporate structures you will need and then wait for an opportunity to get in on a “down” 87
Get Rich …..Quickly day or period. That way you receive more units or shares for your investment as the value of each share or unit will dip when the market turns down. But as many investment advisors have pointed out to me, when you get in makes very little difference to the end result because over time the markets always head up. Your fund manager’s ability will determine how much. When it comes to selling, only sell if: • Your investment objectives have changed. • The fund begins under performing over a period of say 6 months. • There are significant changes to the Fund Manager’s key staff • There are better opportunities. To realise the full potential of these investments you must be patient and that doesn’t just apply to the funds we’ve been talking about, but all investments.
Confidentiality Many of the jurisdictions that these funds reside in have laws that make it an offence to disclose the beneficiary or participant in any investment. Luxembourg, Isle of Man, Bermuda, Cayman Islands have excellent privacy laws. Ireland doesn’t stand up quite as well but the secrecy laws of the jurisdiction that you have incorporated in, should provide you with the confidentiality you require. Please check before doing anything.
How to Request Information from the Fund Managers This is tricky, if you live in Australia, New Zealand, UK or the US, these companies may not send you the information you require. The reason? Their prospectuses are not valid or registered in those countries and if they were to send them to you, they could get into hot water. But…there is a way around it. 88
High Yield Investments I suggest you contact them on the following basis: Dear Sir / Madam, Re XYZ Fund I am the Administrator for an investment company domiciled in (Tax Haven) and we wish to receive the relevant information that will allow this company to invest in your fund. Also, if required, please include the name of your preferred broker. Please send the prospectus and relevant information to our administration office: (Your name) (You home address) Many thanks for your co-operation. Yours faithfully, If they don’t agree to this, then have the information sent to a “tax haven” address such as the Isle of Man or Jersey. This can be achieved by simply contacting an agent in these jurisdictions for mail forwarding purposes as per my book The Invisible World. The chances are you will need (and it may not be a bad idea) to establish an offshore corporation or trust to be able to invest in some of these funds, as they won’t permit residents of countries like Australia, US, UK, and New Zealand invest due to government regulations and the fund’s prospectuses not being registered in these countries. If you require further information on establishing an offshore company, trust or foundation as well as bank accounts, transferring funds and tax implications, please see the order forms in the back of this book to obtain copies of The Invisible World and Invisible Banking. These books
89
Get Rich …..Quickly will show you in detail exactly how to go about it and who to contact.
How to keep tabs on your managed fund investment After the first edition of High Yield Investments I had many calls and letters asking how people can keep an eye on their fund and would I offer some suggestions, well here a couple. When you invest with a manager you will receive half yearly or possibly quarterly reports. However, if you would like to watch your fund more frequently, ask the manager if they have a recorded phone in service that will give you the latest price or possibly a website that lists daily information. The website update is fairly common now and I would be very surprised if very many fund managers didn’t have a website by now. If you haven’t accessed the internet as yet, now is the time, to be a professional investor you should have access, plus it’s a lot of fun. Try sites like: www.trustnet.com and www.morningstar.com Obtain a subscription to The International, which is also from Financial Times. They can be contacted at: Financial Times Maple House, 149 Tottenham Court Rd London W1P 9LL UK Phone: 0011 44 207 896 2000 Fax: 0015 44 207 896 2172
90
High Yield Investments Other Well Respected Fund Managers That Can Provide Information On Other High Yield Offshore Funds AIB Govett Management (Jersey) Limited AIB House, PO Box 335 Grenville St, St Helier, Jersey JE4 8WT, Channel Islands Ph: 0011 44 1534 883 277 Fax: 0015 44 1534 888 422 Allied Dunbar International Fund Managers Limited 43-51 Athol St, Douglas Isle of Man IM99 1ET, UK Ph: 0011 44 1624 661 551 Fax: 0015 44 1624 662 183 Banco Pactual 29 Andar, Rio de Janeiro, RJ 20031-170 Brazil Ph: 0011 55 21 272 1229 Fax: 0015 55 21 533 1661 This company manages a Fund called Infinity that has averaged a return of 20% per annum over the last 5 years. This return has been consistent over 3 years and last year. The volatility of the fund is low. Old Mutual International Po Box 121 Rahais, St Peter Port Guernsey, GY1 3HE UK Ph: 0011 44 1481 726 726 Fax: 0015 44 1481 728 953 OMI’s European Stockmarket Fund has returned a consistent 19% per annum over the last 10 years and 24% over the last five. It outperforms the market significantly. Worth a look. Alliance Capital Management LP 1345 Avenue of the Americas, New York 10105 USA Ph: 0011 1 212 969 1000 Fax: 0015 1 212 969 1517
91
Get Rich …..Quickly Alliance manage a Luxembourg fund called Alliance International Technology Fund. It has averaged 26% per annum for the last 10 years, 19.9% over 5 years and 18% per annum for the last 3. Obviously, a very consistent performer with a very high international rating. Deltec Securities Deltec House, Lyford Cay, Nassau Bahamas N-3229 Ph: 0011 1242 362 4549 Fax: 0015 1242 362 4623 Deltec manage the Deltec Latin American Fund, which has been a very consistent high yield performer in a rather sedate sector, Fixed Interest. The returns are obviously related to trading in the rather volatile currencies of Latin America. The fund is domiciled in the British Virgin Islands and began in 1990. A total of US$60m is invested and an average return of 14% per annum over the last 3 years and a fabulous 25% per annum over the last 5 years. It has a high international rating. May be a good speculative investment. Everest Capital Corner House, 20 Parliament St, Hamilton HM12 Bermuda Ph: 0011 1441 292 2200 Fax: 0015 1441 292 2285 The Everest Capital International Fund is a specialised hedging fund investing in equities, fixed interest and money market instruments. The return for the last 3 years has yielded 11% pa and the last 5 have earned 16%pa. Has earned the top rating from offshore investment experts. ED & F Managed Investment Products Bahnhofstrasse 15, Pfaffikon 8808, Switzerland Ph: 0011 41 55 415 3636 Fax: 0015 41 55 415 3637 This company has a range of very highly rated derivative funds domiciled in Bermuda. Of particular note is the AHL Currency Fund. It has yielded over 14 pa for the last 3 years.
92
High Yield Investments Volatility of these funds is quite high but don’t let that put you off, they are very well managed. Hasenbichler Asset Management Eschenbachgasse 11, Wien 1010, Austria Ph: 0011 43 1 587 3249 Fax: 0015 43 1 587 3344 The Hasenbichler Commodities Fund domiciled in Austria is a derivative fund with US$100m invested. It has yielded 15% per annum over the last 5 years. TSG Investment Management Bermuda Bank of Bermuda Building 6 Front St, Hamilton HMDX Bermuda Ph: 0011 1441 299 6537 Fax: 0015 1441 299 6537 The TSG group manages a variety of Currency/Derivative funds that have annual returns around 25% on their Leveraged Funds. The top performers are the Swiss Franc, British Pound and US Dollar funds. All of their funds receive the highest international rating possible. Newton Fund Managers PO Box 189 5 St Andrews Place 12, Charing Cross St St Helier Jersey JE4 8UH Channel Islands UK Phone: 0011 44 1534 285707 Fax: 0015 44 1534 285751 Newton have an excellent Fund called The Newton Continental European Equity Fund. It has yielded nearly 12% pa for the last 3 years. GAM Administration Ltd 11 Athol St, Douglas, Isle of Man IM99 1HH, UK Phone: 0011 44 1624 632632 Their US Mutual fund, Global Fund A has performed extremely well yielding over 12% pa for the last 3 years. 93
Get Rich …..Quickly Odey Asset Management 12 Upper Grosvenor St London, W1X 9PA UK Phone: 0011 44 171 208 1400 Odey have a European equity fund called The Odey European Fund which is divided into two sub-funds - one in US$ and the other in Deutschmarks. They have both yielded in the order of 21% per annum over the last 3 years.
94
High Yield Investments
Chapter 9 Useful Fund Manager Websites Company Email/Website Abbey Life Assurance Company Ltd Life Assurance Company www.abbeylife.co.uk Abbey National Group Holding Company www.abbeynational.com Abbey National Treasury Bank International Ltd www.anoffshore.com Aberdeen Asset Management plc Holding Company http://www.aberdeen-asset.com Aberdeen Fund Managers (Lux) Ltd Investment Management Company www.aberdeen-asset.com Aberdeen International Investment Management Company Management Ireland Ltd www.aberdeen-asset.com AEGON Insurance Group Holding Company www.aegon.co.uk AIB Fund Managers (CI) Ltd Investment Management Company www.aibgovett.com AIB Govett (Channel Islands) Ltd Investment Management Company www.aibgovett.com AIB Group Holding Company http//:www.aibgroup.com Allied Dunbar International Fund Investment Management Company Managers Ltd www.zurichintlife.com Aviva plc Investment Management Company www.aviva.com AXA Isle of Man Ltd Life Assurance Company http://www.sunlifeint.com Bank of Ireland Asset Management Investment Management Company (Jersey) Ltd www.biam.ie Bank of Ireland Asset Management Investment Management Company Ltd www.biam.ie Barclays Bank PLC (Guernsey) Bank www.internationalbanking.barclays.com Barclays Investment Funds Product (Luxembourg) SICAV www.bif.barclays.com Bermuda Monetary Authority Regulator http://www.bma.bm BoE Life International Ltd Life Assurance Company www.boe.co.za Canada Life Financial Corporation Holding Company http://www.canadalife.com Canada Life International Ltd Life Assurance Company www.canadalifeint.com Canadian Resident Abroad Resident Abroad Website/Magazine www.canadianresidentabroad.com CMI Insurance Company Ltd (IoM) Life Assurance Company www.clericalmedical.co.uk Financial Ombudsman Service Regulator www.financial-ombudsman.org.uk Financial Services Ombudsman Regulator Scheme www.gov.im/oft
95
Get Rich …..Quickly Franklin Templeton International Services S.A. Friends Provident International (Gsy) Friends Provident International (IoM) Generali International Ltd
Investment Management Company http://www.franklintempleton.lu Life Assurance Company www.fpinternational.com Life Assurance Company www.rlii.com or www.rsaifs.com Life Assurance Company www.generali-guernsey.com Global Asset Management Fund Investment Management Company Management Limited www.ukinfo.gam.com Hansard International Ltd Life Assurance Company www.hansard.com HBOS plc Holding Company www.halifax.co.uk Hibernian Life Ltd Life Assurance Company www.hibernian-group.ie Investec Asset Management Ltd Investment Management Company www.investecfunds.com IOM Financial Supervision Regulator Commission www.fsc.gov.im Irish Central Bank Bank http://www.centralbank.ie Irish Department of Enterprise Regulator Trade and Employment www.entemp.ie Irish Life & Permanent Plc Holding Company www.irishlifepermanent.ie Irish Life International Ltd Life Assurance Company www.irishlifeinternational.com Irish Permanent Fund Managers Investment Management Company (IOM) Ltd www.ip-intl.com Isle of Man Assurance Limited Life Assurance Company Link to the Offshore Boffin Site J.P. Morgan Fleming Asset Investment Management Company Management (Europe) S.à.r.l. www.flemings.lu Newton Fund Managers (C.I.) Ltd Investment Management Company www.newton.co.uk Nordben Life & Pension Insurance Life Assurance Company Co Ltd www.nordben.com Nordea AB Holding Company www.nordea.com Nordea Investment Funds SA Investment Management Company www.nordea.lu Nordea Life & Pensions Ltd Life Assurance Company www.nordealife.co.im PanEuroLife SA Life Assurance Company http://www.paneurolife.lu Premier Life (Bermuda) Ltd Life Assurance Company www.premier-ber.bm Premier Life (Luxembourg) S.A. Life Assurance Company www.premier-lux.com Royal & SunAlliance Life Assurance Company www.rlii.com or www.rsaifs.com Royal Bank of Canada Offshore Investment Management Company Fund Managers Ltd www.rbcprivatebanking.com Royal London Holding Company ww.royallondongroup.com Royal Skandia Life Assurance Ltd Life Assurance Company www.skandia.co.uk
96
High Yield Investments Schroder Investment Management Investment Management Company (Hong Kong) Limited www.schroders.com.hk Schroder Investment Management Investment Management Company (Luxembourg) SA http://www.schroders.lu Scottish Life International Insurance Life Assurance Company Co Ltd http://www.sli.co.im/non_uk_pages/about_slm Scottish Mutual International Plc Life Assurance Company www.smi.ie Scottish Provident International (Middle East) Ltd Scottish Provident International Life Assurance Ltd Standard Management Corporation Von Ernst Fund Management Ltd Zurich Financial Services Group
Sales Company http://www.spila.com Life Assurance Company http://www.spila.com Holding Company www.smancorp.com Bank www.bank-von-ernst.com Holding Company www.zurich.com
97
Get Rich …..Quickly
Chapter 10 Tax Issues While there isn’t room in this book to go into all the ramifications of tax and some of the legal tax strategies that can be used to defer or minimise taxation, This will depend on how you setup your offshore structure, with control and ownership issues being the main concerns, there will be a taxation agenda you will have to deal with. In Australia, income derived offshore will generally be taxable but there are ways to defer or minimise tax. To find out more about tax issues in relation to offshore structures I suggest you obtain a copy of The Invisible World or Invisible Banking. An order form is included in the back of this book.
98
High Yield Investments
Chapter 11 Scams and Frauds Any book on high yield investments would be incomplete without the so-called schemes to make you rich, which turn out to be total nonsense or illegal. Here’s a few you may have heard about, or maybe you are about to hear of them soon……beware! I suggest you also read my book, Scams and Frauds Financial Crimes Exposed. This book will reveal the names of nearly 200 schemes currently and recently operating and tell you how to avoid them and how they operate.
Bank Debenture Trading Programs or Rollover Programs These trading program scams have been around for years but the general public is just starting to see them proliferate. In recent times, these programs have emerged as “rumours” of immense investment possibilities in Australia. I call the stories “rumours” because there are very few people who have actually participated in them, and even fewer who have actually received the quoted returns. The problem being, wherever there is the possibility of large returns and high profits, a mob of frauds and con-artists emerge. Investors and Program Providers have gathered together and formed syndicates to reach the sometimes high entry levels only to find the person further up the “syndicate tree” is corrupt and the money disappears. These suspect investments, sometimes called Rollover, Forfaiting or Bank Debenture Trading Programs, have gained a degree of notoriety in recent times with investors, due to the number that have been taken to the
99
Get Rich …..Quickly cleaners particularly in the US. They often claim to provide returns of between 100% and 1,000% per annum with the capital secured by a bank guarantee. The fact is very few people receive anything and most lose a lot of money. I heard about these investments several years ago and I must say for quite some time I was convinced there was possibly something worthwhile looking into. Well, after examining over 60 of them, 100% of them have fallen into one of the following categories: • A completely fraudulent Scam of monumental proportions. • Illegal investments, whereby the promoters or managers have solicited funds from the public using the story of Bank Debenture trading as an excuse to put your money into options, futures or currency trading. The problem is they lied to the investors and there’s no security of capital at all. • The classic Ponzy Scheme where some investors are paid a return to encourage others to invest thereby increasing the funds received by the promoters. Eventually the promoters and your money disappear. Any people I have spoken to that have “invested” in these things have said one of three things: • They were ripped off - Simple as that! • They received some payments but never exceeding the amount invested. The managers then told them they have struck some problems like the “IMF / Federal Reserve has suspended trading, and the money has been locked up”. Some of the excuses are very good, but the result is the same. You never hear or see them again and you say goodbye to your money. • Their money has been used to invest in a variety of highly speculative investments for the benefit of the promoters. It had nothing to do with Bank Debentures and there are no Bank Guarantees, secured funds or anything like that.
100
High Yield Investments Your money is used to provide risk capital to allow the promoters to invest in trading options, currency derivatives etc. Sure, they receive a return as long as the “trader” is doing ok, but you could lose the lot very easily. These schemes come undone for a couple of reasons. Firstly, the Australian Securities and Investment Commission finds out about them and closes them down because they are illegal. When this occurs, it could result in losses to the investor, if the manager or promoter does a “runner” with the money. This could happen if the promoter is in a position offshore where they could disappear. Secondly, they suffer trading losses and suddenly collapse with huge losses. The promoter is offshore and you have no other choice but “to take it on the chin”. Despite what people selling these things tell you, there is very little if no security of capital. All the capital is in their name and therefore, it’s their money, not yours. Try and prove that money is yours. The paper work is quite often very flimsy and not worth the paper it’s written on. If you were involved in a scheme emanating from the US or the Caribbean would you pursue them over $10,000 or even $30.000? It would cost you that in legal fees just to get to square one. Remember you won’t be fighting this in Australian courts; you will be fighting this in the jurisdiction of the country that the promoter was operating from. Face it your money is gone for good. When I was first told about them, I said, “rubbish!” I reminded the person about the risk and return maxim. I also said that if these things existed why did this person know about it and I didn’t. I thought having been a corporate accountant for a number of years I would have heard of them. I then learned more about them from another independent source and decided to check this probable “scam of the century” out. I was surprised at how convincing
101
Get Rich …..Quickly the whole thing was. I have also been told the following stories (which may or may not be true, but probably untrue): • The five billion dollars given to the Russian government recently by US President Bill Clinton was derived from one of these investments and in this way the approval of Congress was never required as the American people didn’t actually pay a cent. • The billion dollars Ted Turner is giving to the UN is coming from his participation in trading programs. • The IMF bailout of the failing Asian economies is being funded not by the taxpayers of the participating nations, but again by the proceeds of these programs. The participating nations simply provided some of the capital required, which will be refunded in tact. • The Malaysian businessman in Melbourne, Australia who also pledged one billion dollars to the UN is also rumoured to have made his money in trading programs. • The billion dollars the Australian government has given each to Thailand and Indonesia with the full support of the Federal Opposition. Hardly a person in government had a word to say about two billion dollars coming out of our budget. Why? If a politician cheats on his travel allowance by a few thousand dollars it’s the end of the world, but if we give billions of dollars to “dodgy” economies that’s OK? I know for a fact that financial institutions trade all sorts of financial instruments and I’m sure they make money from them, probably huge profits, but as for “Barry and Beryl from Footscray” participating in the profit via a “recognised by the US Federal Reserve Trading Program”, I don’t think so. How did all this speculation start? To understand the fact from the fiction we have to travel back in history. We must understand how bank debentures and the financial system ended up the way it did
102
High Yield Investments and how trading of instruments began and how the con-men have used this history to convince you to invest with them. The term "Prime Bank Paper or Bank Debenture Trading Program" is one of many used to describe one aspect of investment banking. The term "Investment Banking" refers to transactions involving the exchange of financial instruments for profit. Such financial instruments can be Letters of Credit, Bank Guarantees, and Bank Debentures, of various wording, in large denominations. The development and trading of these Bank Instruments really began in the early 1930’s in Germany. Hitler used the good standing and credit worthiness of German banks, to make large sums of money to finance his war effort. After World War 2, much of Europe and other parts of the world lay in ruins. Factories and infrastructure such as roads, dams, power stations, railroads and government services had been destroyed. Armies were being demobbed and were being sent back to bombed out cities they had once called home. Prior to the war’s end, from 1-22 July 1944, a group of 730 of the world’s most accomplished economic, social and political minds representing 44 countries (even the Russians were there, but they went off and did their own thing) met in New Hampshire at a small town called Bretton Woods. This meeting was to become known as the Bretton Woods Convention (also known as the United Nations Monetary and Financial Conference) of 1944. The major purpose of the conference was to make financial arrangements for the expected defeat of Germany and Japan. The famous economist, John Maynard Keynes, had predicted the collapse of the financial system as it was in his book, "The Economic Consequences of the Peace", written in 1920, and he was to become the principal architect of the Post World War II reconstruction via the meeting of this group of people in New Hampshire in the USA.
103
Get Rich …..Quickly The principal issue of the Bretton Woods Convention was how to rebuild the European and Asian economies on a sufficiently solid base to foster the establishment of stable, prosperous, pro-democratic governments. In 1944/5, the majority of the world’s gold reserves, which supported the economy or asset backing of most (if not all) economies in those days, were concentrated in the treasuries of the United States, Switzerland, and Canada. They were the only major industrialised western countries to have their economies, banking systems, and treasuries intact, and most importantly, operable. Keynes and the rest of the Bretton Woods group had to devise a system to democratise trade and wealth, and redistribute currency from strong trade surplus countries back into countries with weak or negative trade surpluses. Otherwise, the majority of the world’s wealth would remain concentrated in the hands of a few nations, while the rest of the world remained in poverty. The proposal was that the United States, supported by Canada and Switzerland, would become the Banker of the world, and the U.S. dollar would replace the pound sterling as the medium of international trade. Keynes also suggested that the dollar’s value be tied to the good faith and credit of the U.S. Government, not to gold or silver as had traditionally been the support for a nations’ currency. Keynes, with the support of the United States Secretary of the Treasury, Harry Dexter White, was able to get about two-thirds of his proposals approved at the Bretton Woods meeting. The Convention accepted Keynes’ basic economic plan, but opted for a gold-backed currency as a standard of exchange. Later, under President Nixon, the gold-backed standard had to be dropped. The "official" price of gold was set at its pre WW2 level of $35.00 per ounce. One U.S. dollar would purchase 1/35 of an ounce of gold and this was obviously a little out of kilter.
104
High Yield Investments The U.S. dollar would become the standard world currency, and the value of all other currencies in the western, non-Communist world would be tied to the U.S. dollar as the medium of exchange. The US banking by-laws passed in the 1930’s prohibited US banks from using these financial instruments, so their use was therefore restricted to only European Banks. Their reason was to shift the balance of wealth from the powerful US economy to the weaker “in recovery” European economies. This is the major factor in the ascendancy of the European banking community which grew from having only a few top 100 world banks after the war to having by far the majority in the present day. Today, there are only a few U.S. banks that qualify for the top 100 list. This is the reason why you will find most of the trading of financial instruments occur in London, Antwerp, Amsterdam, Frankfurt, Vienna and Zurich, not New York. Bretton Woods was the beginning of new banking and financial system world wide. The Bretton Woods Convention produced the Marshall Plan, The Bank for Reconstruction and Development, now known as the World Bank and the International Monetary fund (IMF). It is widely held that the Bank of International Settlements (BIS) was created in Bretton Woods as a new ‘central bank’ to the central banks of each nation. This is not true. The BIS was originally established in 1930 in Basel, Switzerland to control the repayment of reparations by Germany following WW1. In fact the Bretton Woods conference had almost decided to eliminate the BIS until it was agreed to use it under the Marshall Plan. These days its role is as the agent for the European Monetary Cooperation Fund, an organisation controlled by the EU. The directors of the World Bank and Bank of International Settlements are controlled by the finance minister from each of the G10 countries; Belgium, Canada, France, Germany, Italy, Japan,
105
Get Rich …..Quickly The Netherlands, Sweden, Kingdom, and Luxembourg.
Switzerland,
The
United
The Marshall Plan was a US sponsored plan to rehabilitate the economies of Europe in order to stabilise their economies and political situation so they didn’t fall to communism. The Plan was developed by US Secretary of State George C. Marshall. Originally called the European Recovery Program it distributed US$12 billion to European economies between 1948-52. These funds were facilitated by the introduction of Bank Debentures issued by the US Federal Reserve. Harry S Truman then extended this concept to become the Four Point Program to assist all underdeveloped countries throughout the world. This is pretty much the same these days, when we look at the IMF funding of failing Asian economies, for example. However, it still suited the US Federal Reserve, the World Bank, and the IMF to have the issuance and trading of financial instruments in Europe to be in US Dollars. In the 1960’s, in response to a dollar shortage, President Kennedy allowed the European "Prime Banks" through the World Bank and Federal Reserve to develop the modern version of the bank debenture. They reasoned that the shortage was due to many investors locking away dollars in their banks or other investments, effectively taking them out of circulation. There are only two ways to end a dollar shortage. One is by printing more money, but this devalues the currency and leads to inflation, and secondly, by creating a new high return trading opportunity that encourages companies, institutions and investors to put their money back into circulation. The IMF (part of the United Nations) uses this situation to undertake re-distribution of wealth (as outlined in Bretton Woods) to the third world. A proportion of the trading profits through this IMF/Federal Reserve plan were “skimmed” off to provide funds for the third world. The IMF has recently 106
High Yield Investments announced (December 1997) that it would inject billions of US dollars into the economy of South Korea and other Asian countries. Since the financial instruments to be traded are in US dollars, the US Federal Reserve (in co-operation with the World Bank and the IMF) must approve the issuance of these instruments if they exceed $20,000,000. The profits derived this way then create jobs in a depressed area, provide funds for charities, international aid, struggling economies as I said earlier, or even fund a “justified” military action such as the peace keeping operations in Somalia or Bosnia. Of course they must meet other criteria that are imposed by the rules governing this system. By their regulation it is possible for the World Banking community to move money virtually anywhere they wish in any amounts they desire at any time. This enables them to rebuild economically, any city, county, state, or country they want. This is all done without printing new money, but by moving it. The trading profits bring the money out, and the IMF/World Bank put the money into circulation in the areas approved for funding. Enter the con-man. Once all this is explained, you run off to the Encyclopaedia Britannica to check what’s been said and you realise it’s all true. “This guy must be telling me the truth”, you say. The con-man then says he can get you into one of these trading situations because “he knows a trader licensed by the Federal Reserve”. “The returns will be enormous - 100% per month”, he will tell you. You can invest as little as $10,000! You have just fallen for it and have ended up as one of the victims of a con. There is little doubt there are trading situations between banks buying and selling financial instruments. There is little doubt that huge profits are made. Trading profits can be made in all sorts of things, options, shares etc. I know people who have made 50% in a day, but of course you also have bad days. The reality is this trading occurs at very high corporate levels and does not get down to us for a simple reason. The banks and traders don’t need our money, they already have it if it’s sitting in a bank. They utilise the money sitting in corporate 107
Get Rich …..Quickly and private deposits as part of the Fractional Banking System, but that’s another story. These sham investments are being set up by the hundreds, by unscrupulous people, ripping off investors that have had their own greed consume them. Potential investors want to believe these investments exist and that the people brokering the program are trustworthy. The truth is most of them aren’t and should not be trusted. Most of these people can be identified easily and here are a few of the ways: • Sometimes they advertise and boast huge returns sometimes advertising “self-liquidating loans” without supplying much information or contracts. • They offer no details of how the program works nor do they have any knowledge themselves. • They adopt a “trust me and give me your money” approach. • They usually have no background in finance or professional advice. • They usually don’t put their real name to anything they do. • They are often involved in pyramid money making schemes which are generally illegal and also shams. Some readers of earlier editions may ask the question, “Why has Lance Spicer changed his opinions on these more speculative trading investments?” Well, I have changed my opinion. In the first issue I had contacts that were indeed involved in trading bank instruments but trading conditions became increasingly more difficult because of the scams in the market and the ever tightening controls and margins and since then my contacts have ceased trading. In addition, I have seen so many scams it’s unbelievable and I would be irresponsible to continue encouraging people to seek these things out. There are no conspiracies, the government hasn’t paid me off or threatened me (as has been rumoured). For every one real trading situation, there are
108
High Yield Investments 100 scams, the risks to you, the reader and investor are just too high. If you think the “investment” opportunity presented to you is legitimate, why don’t you give the people below a call and ask them. They are specialists in this sort of thing and can tell you exactly what you are up against. Investment Evaluative Services Corp. 9755 Snapper Creek Dr PO Box 832647 Miami, FL 33173 USA Phone: 0011 1 305 596 0956 Fax: 0015 1 305 412 0925 A fee paid to these guys may save you a fortune. Here are a couple of news releases from the US warning people about these “investments”. NEWS RELEASE Marilyn Scanlan Bureau chief securities Bureau (208) 3328004 For Immediate Release AUGUST 18. STATE ORDERS HALT TO INTERNATIONAL INVESTMENT SCHEME Investors Warned To Avoid Secret "Debenture Trading Programs" Boise, Idaho ... The Idaho Department of Finance issued a Cease and Desist Order against several entities and one individual Ordering a halt to the offer and sale of a purported international, bank-related "debenture trading program" in Idaho. Jay Dee Harris, Acquire Venture Capital Group, Acquire Venture Fund Group and Acquire Investment Group were named in the Order. Harris operates from Orem, Utah, while the Acquire organizations claim operations in Utah and Nassau, Bahamas.
109
Get Rich …..Quickly Gavin M. Gee, Director of the Idaho Department of Finance, issued the Order on August 18, 1997. The Cease and Desist Order requires Harris and the Acquire organizations to cease offering and selling securities to Idaho residents, and to cease engaging in fraudulent activities in connection with investment offerings in Idaho. The Order also requires that Idaho investors be repaid and imposes a $10,000 fine on those named in the Order. The Order alleges that investors were provided incomplete information about the investment offering and that Harris and the Acquire organizations engaged in a fraudulent scheme by making investors agree to not contact any bank, bank officer or other organization purportedly associated with the investment, thus limiting an investor's opportunity to investigate the viability of the investment and its claimed returns. According to Gee, "Confidential, international trading schemes continue to be employed as fraudulent investment opportunities and as advance fee loan scams." Department officials indicated that international trading schemes take several forms. However, most promise investors a guaranteed return of their investment principal and access to international traders that conduct riskless arbitrage or international paper transactions that will generate huge profits. Additionally, investors are often told that they will be gaining access to a secret trading market that only very wealthy individuals, large corporations or overseas banks know about. This market is purportedly so secret that investors are told not to independently investigate the offering or risk being permanently expelled from participating in these markets. Profits promised in these schemes range from five percent return per month to hundreds of percent return per year. The Department urges any Idaho residents who have been approached to participate in these types of offerings to contact the Department at (208) 332-8004. 110
High Yield Investments Council of Better Business Bureaus, Inc. Press Release For Immediate Release Investors Warned to Avoid Secret "Debenture Trading" September 16, 1997 -- The Denver/Boulder Better Business Bureau is warning investors to be extremely cautious when considering speculative international trading investments. "Be prepared to lose your total investment," warned Ron Hamblin, BBB Operations Manager. International trading schemes are guised in various forms, but all carry a mask which promises or guarantees the investor phenomenal returns on their investments in short periods of time. In some cases, the returns are forecasted to be up to 200% in less than a year. Many claim access to international traders that conduct riskless arbitrage or international paper transactions that will generate huge profits. Investors are often informed they will be introduced to a secret trading market that only wealthy individuals, large corporations and overseas banks know about. The market is so “secret” that investors are advised not to independently investigate the offer or risk being permanently expelled from the market. Hamblin added, "If these markets are as risk free and lucrative as claimed, why hasn't the United States government invested in them? At the promised return rates, we could have retired our national debt by now." An Aurora based promoter, Financial Instruments Corporation, was recently closed after federal authorities charged the firm with operating a ponzi scheme. The firm apparently raised $10 million in investments which were purportedly financing real estate mortgages in Costa Rica and central America.
111
Get Rich …..Quickly Paris, 7 May 1998 - The International Chamber of Commerce issued a warning to investors against an alleged trading programme based on fraudulent instruments and falsely quoting its name and rules. It said the scam, which is being promoted over the Internet, has already fleeced investors of tens of millions of dollars. ICC’s London-based Commercial Crime Bureau reports that investors are being asked to put their money into a spurious "Bank Debenture Trading Programme". The sales pitch describes it as "an investment vehicle, commonly used by the very wealthy, where the principal investment is fully secured by a Bank Endorsed Guarantee." Documentation claims that the investment involves the purchase and sale of fully negotiable bank instruments that purport to be a debt obligation of the top 100 world banks in the form of 'Medium Term Notes (MTN)', 'Standby Letters of Credit' or 'Bank Guarantees'. Potential investors are told that a few people would qualify for these investment opportunities, which were 'by invitation only'. All transactions are said to be kept strictly confidential by all parties and for this reason no client references would be available. Eric Ellen, Executive Director of ICC Commercial Crime Services, said: "These instruments are falsely said to conform in all aspects with the Uniform Customs and Practice for Documentary Credits as published by the International Chamber of Commerce." Reference is made to ICC Publication 500, the current version of the documentary credit rules that came into force in 1994. Mr Ellen added: "ICC Commercial Crime Bureau warns investors against these fraudulent programmes. The 'Bank 112
High Yield Investments Debenture Trading Programme' described in the documentation does not exist and has claimed tens of millions of dollars from victims worldwide." ICC has long campaigned against scams based on phony banking instruments. In 1996, ICC Commercial Crime Bureau published its second special report Prime Bank Instrument Fraud II - the Fraud of the Century which details fraudulent techniques and lists danger signals investors should watch out for it they want to stay out of Trouble. Or further information contact ICC Commercial Crime Services tel (44-181) 591 30 00 fax (44-181) 594 282 33 E-mail
[email protected] Prime Bank Instrument Fraud II - the Fraud of the Century (Price FFr 270) available from ICC Publishing tel: 33 1 49 53 29 23/28 89 fax: +33 1 49 53 2902 e-mail
[email protected] Junk Bond Trading Programs Now there is another type of illegal trading program that has emerged, the Junk Bond trading program. This trading program offers good yields etc, but unfortunately the underlying securities are a bit of a problem as are the managers and promoters of this scheme. You may not even be told that they are trading Junk Bonds, in fact it would be in “their” interest not to tell you. A Junk Bond is a bond issued by a company that is considered to be a high credit risk. The credit rating of a high yield bond is considered speculative grade or below investment grade. This means that the chance of default with high yield bonds is higher than for other bonds. Their higher credit risk means that Junk Bond yields are higher than bonds of better credit quality. Studies have demonstrated that portfolios of high yield bonds have higher
113
Get Rich …..Quickly returns than other bond portfolios, suggesting that the higher yields more than compensate for their additional default risk. Junk bonds get their name from their characteristics. As credit ratings were developed for bonds, the credit rating agencies created a grading system to reflect the relative credit quality of bond issuers. The highest quality bonds are "AAA" and the credit scale descends to "C", and finally to the "D" or default category. Bonds considered to have an acceptable risk of default are "investment grade" and encompass "BBB" bonds and higher. Bonds "BB" and lower are called "speculative grade" and have a higher risk of default. Legislators soon began to use this demarcation to establish investment policies for financial institutions, and government regulation has adopted these standards. Since most investors were restricted to investment grade bonds, speculative grade bonds soon developed negative connotations and were not widely held in investment portfolios. Mainstream investors and investment dealers did not deal in these bonds. They soon became known as "junk" since few people would accept the risk of owning them. Before the 1980s, most junk bonds resulted from a decline in credit quality of former investment grade issuers. This was a result of a major change in business conditions, or the assumption of too much financial risk by the issuer. These issues were known as "fallen angels". The advent of modern portfolio theory meant that financial researchers soon began to observe that the "riskadjusted" returns for portfolios of junk bonds were quite high. This meant that the credit risk of these bonds was more than compensated for by their higher yields, suggesting that the actual credit losses were exceeded by the higher interest payments
114
High Yield Investments Underwriters being creative and profit-oriented, soon began to issue new bonds for issuers that were less than investment grade. This led to the Drexel-Burnham saga, where Michael Millken led a major investment charge into junk bonds in the late 1980s, which ended with a scandal and the collapse of many lower rated issuers. Despite this, the variety and number of high yield issues recovered in the 1990s and is currently thriving. Many mutual funds have been established that invest exclusively in high yield bonds, which have continued to have high risk-adjusted returns. High yield bond investment relies on credit analysis. Credit analysis is very similar to equity analysis in that it concentrates on issuer fundamentals, and a "bottom-up" process. It is concentrated on the "downside" risk of default and the individual characteristics of issuers. Portfolios of high yield bonds are diversified by industry group, and issue type. Due to the high minimum size of bond trades and the specialist credit knowledge required, most individual investors are best advised to invest through high yield mutual funds.
The Pyramid Scheme "How To Make Big Money From Your Home Computer!!!" One on-line promoter claimed recently that you could "turn $5 into $60,000 in just three to six weeks." In reality, this program was just an electronic version of the classic "pyramid" scheme in which participants attempt to make money solely by recruiting new participants into the program. This type of fraud is well-suited for the world of on-line computing where a troublemaker can easily send messages to a thousand people with the touch of a button. Unfortunately, these "investment opportunities" collapse when no new "investors" can be found.
115
Get Rich …..Quickly The Risk-Free Fraud “Exciting, Low-Risk Investment Opportunities”, Exoticsounding investments, including wireless cable projects, prime bank securities, Ostrich breeding and eel farms, have been offered on-line. One promoter attempted to get people to invest in a fictitious coconut plantation in Costa Rica, claiming the investment was “similar to a C.D. (Certificate of deposit), with a better interest rate”. Promoters misrepresent the risk by comparing their offer to something safe, like bank certificates of deposit. Sometimes, an investment product does not even exist - watch out, they're scams.
The “Pump And Dump" Scam It is common to see messages posted on the internet urging readers to buy a share quickly that is poised for rapid growth, or telling you to sell before it goes down. Often the writer claims to have “inside” information about an impending development, or will claim to use an “infallible” combination of economic and stock market data to pick shares. In reality, the promoter may be an insider who stands to gain by selling shares after the share price is pumped up by gullible investors, or a short seller who stands to gain if the price goes down. This ploy may be used with little-known, thinly-traded shares.
The Ponzi Scheme Named after Charles Ponzi, who ran such a scheme in 1919-1920, a Ponzi scheme is an investment scam in which returns are paid to earlier investors, entirely out of money paid into the scheme by newer investors. Ponzi schemes are similar to pyramid schemes, but differ in that Ponzi schemes are operated by a central
116
High Yield Investments company or person, who may or may not be making other false claims about how the money is being invested, and where the returns are coming from. In recent times we have seen what could be classified as a “classic” Ponzi scheme, the Wattle Group in Queensland. This elaborate scheme paid 50% pa to investors as well as up to 50% to the commission agents. This scheme lasted for several years before the wheels fell off. This proves that just because it has a fabulous record of returns, it doesn’t necessarily mean that the investment is genuine.
Chain Letters and Pyramid Schemes: They don't work! If you are active in mail order, you've no doubt seen tons of chain letters and pyramid programs. In case you're not familiar with them, here's an overview, so you know what to watch out for. Chain letters are those letters you get, instructing you to send, say $5, to the 4 to 6 people on the list, who will send you a report, or some product, or sometimes even nothing. Then, you add your name to the bottom of the list, moving the others up, and the top one off. You then print and mail out as many as you can, hoping others will do the same as you. The letters are liberally sprinkled with references to how much money you will make, and how many people are sure to participate. Some even go so far as to promise you $1,000,000 and more, sometimes in less than a month! Pyramid schemes are what chain letters are based on. You buy into one, then you need to recruit others below you, to move you up the line. The people you recruit, in turn, need to recruit others, and so on. Pyramids go by all kinds of names and formats. For example, “Airplanes” are a popular
117
Get Rich …..Quickly pyramid scheme. There are 8 “passengers”, 4 “stewardesses”, 2 “co-pilots”, and 1 “pilot”. When you buy in, you pay a predetermined amount, like $10, to the pilot. That makes you a passenger. When you recruit 8 more people, you become a stewardess. Your 8 people then need to recruit 8 more, to move you up, and so on. You're promised that you will get hundreds of dollars when you're the pilot. These programs all share many characteristics. First, they're illegal. Don't believe what the chain letters say, that someone “showed it to the post office, who assured him it was legal”, or “it's legal, because it’s been registered”. Pyramid games are illegal because you're paying money for nothing, it’s a shaky con game which will fall apart if recruiting drops off. With a chain letter, it's the same, but it's conducted through the mail, which also opens up mail fraud laws. Second, the mathematics used in the letters and schemes is flawed. Most chain letters will say you should expect a 5% - 10% response from your mailings. As anyone in mail order will tell you, this is absurd and unrealistic, especially in regard to chain letters. However, let's go with a 5% response on a chain letter with six levels. For the sake of argument, let's say that everyone who participates mails out 2,000 copies (though most people drop out without mailing more than a few). What you are doing in a chain letter is relying on others to do the work that will make money for you. There is no such thing as free lunch. Somewhere along the line, people will drop out and everybody loses! It doesn't matter if the chain letter/pyramid involves sending money, recipes, stamps, or any product or object of value. It's still illegal and a poor business proposition.
118
High Yield Investments Mail Order Scams After spending some time investigating, I came to the conclusion that certain types of mail order businesses were questionable, if not a verifiable scam. Example 1 Collect names for us. We pay $20 each. Guaranteed! The truth is, this company will pay you $20 for each name you collect for them. What they don’t tell you is that each person has to spend $100 or more by placing an order before you get your $20. The customer is led to believe that all they have to do is get out their phone books and start sending the company names and addresses. In return, the company will send them $20 for each name and address they send them. When they send away for the details, they discover the scam and think everybody in mail order is operating this way. The result? Mail order is labeled as a scam and an illegal business activity. Example 2 “How to get 100,000 people to send you $10 each. Send $10 to...” This is dodgy advertising, you have to put a legitimate product behind claims like this. Quite often they offer you reports that you can reprint and sell. What the beginner finds out is that they are expected to run the same ad in newspapers and tabloids. These types of ads are all just paper-passing and are classified as “Legitimate Scams”. You can't complain that your order was not filled. You can't complain the idea is not possible. You can't complain the ad promised something it didn't deliver. Likewise, do not confuse scam-sounding ads with legitimate lead-generation ads. Also, some people run ads that don't tell you what the product is, because they have an 119
Get Rich …..Quickly entire package of information they want to send you. It would be too costly to advertise the complete information in a small classified ad, so they run “Lead-Generating Ads” to bring them enquiries. This is also not illegal and is common business practice. You'll also find that real “Lead-Generating Ads” don’t ask you for a lot of money up front. They only tell you enough about the product to entice you to send in a selfaddressed stamped envelope or $5 for more information.
120
High Yield Investments
Chapter 12 Establishing an Offshore Company or Trust So I Can Invest Offshore The issue of setting up an offshore structure is a somewhat complex issue and everyone’s situation, country, nationality, tax status is different. However, I will basically give you a rough idea of what is required to get invested. As you have read, many of these investments will not deal with investors in High Tax countries like Australia, New Zealand, UK and the United States. This leaves us in the situation that we need to be “someone else”. The best way to achieve this is to establish an offshore company or trust in a “Tax Haven”, possibly the same tax haven that the fund managers thought would be suitable, but this is not necessary at all. By having an offshore “entity” you will not appear to be from a “high tax country” because if you establish the company or trust correctly, your identity and country of origin will be confidential and not disclosed to anyone. This is very important. To do this you will need an incorporation agent and a bank account, also in a tax haven. The costs for this will vary, but a correctly established entity with bank account in a good jurisdiction will cost US$3,500 (A$5,500) or more for the first year and about US$2,000 (A$3,500) for each year after that. The company should have nominee directors, registered office and bearer shares. When you consider the returns that can be achieved by investing offshore, the cost of running a company will be neither here nor there. If you would like to know more about setting up your own offshore entity you should obtain a copy of my first book, The Invisible World. It is regarded as a benchmark 121
Get Rich …..Quickly book for setting up offshore structures and bank accounts. It analyses over 40 tax havens giving you incorporation agents and banks contact details as well as costs and confidentiality and privacy strategies. We also explore the intricacies of the tax regulations and what you can do to reduce or defer taxes. There is an order form at the back of this book.
Do you need a Company or a Trust? There has been a lot written about this. Some people say you need to have a company or trust and they are …. Right! Others have said that you don’t need to have a company or trust and they are right too! The truth is, whether you need a company or trust depends on what you are trying to achieve. Let’s look at the two types of offshore investors: Type 1 – No Company or Trust Needed These investors simply want to invest offshore and diversify their portfolios. They are not interested in tax benefits, asset protection or privacy so much, just the investment returns. Their requirements are: Investment returns available only by investing offshore Currency diversification Offshore banking To achieve this, they need to have the following: An Offshore bank account A Maildrop address A broker Type 2 – Company and/or Trust Needed
122
High Yield Investments These investors are looking at the bigger picture. Not only do they want good returns, but they want to protect their money by employing asset protection strategies as well as maximizing any tax benefits that may be available to them legally. Their requirements are: Investment returns available only by investing offshore Currency diversification Offshore banking Asset Protection with the use of a Company/trust structure as explain in the chapter, Asset Protection and The Nasty World of Litigation Financial Privacy and Confidentiality Possible Tax Benefits To achieve this, they will need to have the following: An Offshore bank account A Maildrop address – Not really needed as you incorporation agent will normally include this as part of the wider service provided A broker A Company formed A Trust Formed If this is you, and you are looking at going “whole hog”, then I recommend you speak to the people listed in my book, The Invisible World.
Frequently Asked Questions These Frequently Asked Offshore Banking and Investment Questions may help you realise that there are substantial benefits in using offshore financial structures to protect your assets, provide confidentiality or provide you with fabulous, tax-minimised, investment opportunities.
123
Get Rich …..Quickly Q. What does offshore investing mean? A. Offshore, at least with respect to the financial world generally, means a jurisdiction other than where the investor lives. The foreign countries most favoured for investment purposes have laws, which give distinct advantages to the investor or business person. These laws may take the form of local no-tax or low-tax liability on all investment income regardless of the residence of the investor (Bahamas, Cayman Islands, Turks & Caicos Islands), local tax exemptions for non-residents of that jurisdiction (Channel Islands, Gibraltar, Belize, Luxembourg, Vanuatu), tax holidays for certain types of local investment (Portugal, Netherlands Antilles, Ireland, Jamaica) or favourable tax treatment through treaties and agreements with the investor's home country. Q. Do I have to travel overseas to invest offshore? A. No. Offshore investing does not mean that you have to live overseas, sell your local investments, or even visit your foreign bank accounts, corporations or other offshore facilities. Offshore investing can be done from your own home using email facilities on your home or business computer. Also, use public telephones (Use phone cards for convenience and privacy) or faxes at the local post office. Why not use the home phone or fax, I hear you ask? If you use your home phone or fax, you have just given anybody who wants to know, an idea of what you’re up to, and a permanent record and paper trail to your bank, adviser etc. For those less urgent requests, the mail is fine, and untraceable.
Q. What are the main reasons for having my wealth placed offshore? A. They are: 124
High Yield Investments 1 Asset Protection To secure against future claims such as bankruptcy, judgment creditors and other litigants, etc. 2. Estate Planning Family and Protective Trusts (possibly as an alternative to a Will) for accumulation of investment income and long-term benefits, for beneficiaries, on a favourable tax basis. 3. Confidentiality From competitors, adverse claimants and other parties from whom you wish to keep your business or personal interests private. 4. International Tax Planning Advantageous use of foreign jurisdictions and their tax rules for reduction of tax liability. Q. Is it legal for me to have offshore investments, companies, and bank accounts? A. Absolutely. Because every western nation encourages international trade and enterprise, there are usually no restrictions on residents doing business or having bank accounts in other countries. Reporting requirements on such accounts however, differ from country to country. Australian reporting requirements can be intrusive and to a large extent these heavy handed rules depend solely on the honesty of the investor in question, such is the secrecy provided by these offshore centres. Offshore investment vehicles are routinely and legally used by sophisticated and reputable high-net-worth individuals and corporations worldwide. Q. What are the Banks Like offshore?
125
Get Rich …..Quickly A. They are every bit as good as local banks. Banks such as Barclays, Lloyds and Citibank operate in most offshore financial havens. Q. Is it convenient to use offshore banks? A. Yes. These days with email, faxing and telephone facilities and the use of ATM’s, your money is just as accessible, as it is in Australia. Only withdrawals of large amounts of cash will take a little longer. Q. What about income tax on income I've earned offshore? A. Australia, New Zealand and most other high-tax countries require residents to declare their income on a worldwide basis. No matter where you earn it, tax is payable when income accrues to you, or in certain circumstances, when it accrues to an entity which you control. That is why most countries impose no restriction on where one's business interests, investments or bank accounts can be located. Q. If I have to pay taxes, what is the advantage of investing offshore? A. There are many other legitimate reasons to invest offshore which do not relate to taxes. However, there are also some little known tax loopholes that can be exploited legally. There are other important reasons to consider going offshore as well, including asset protection, estate planning, confidentiality, better investment yields and taking advantage of active business interests overseas.
Q. I want to keep my affairs confidential for reasons other than tax minimisation. Is confidentiality and privacy guaranteed? 126
High Yield Investments A. With the right choices, your privacy can be absolutely guaranteed. Except in the event of proven criminal activity, (excluding so-called "fiscal offences" such as tax evasion or other money collection disputes. Australia is one of the only countries that has criminalised tax avoidance or evasion. Tax haven jurisdictions never respond to information requests made on the basis of Australian tax evasion, but keep in mind it is your responsibility to obey our tax laws), most offshore governments uphold strict confidentiality laws for banks, corporate registries, and trust companies. These laws protect offshore investors from third parties, including both private and governmental authorities. Q. What's the minimum amount I have to place offshore to make it worth my while? A. There is no minimum amount required. However, most people will weigh the one time set-up costs (usually A$1,500 to A$10,000 and annual fees charged by the jurisdictions for things like registration fees etc.) and determine if it’s worthwhile to invest offshore. In my opinion you should be looking at an investment of at least A$10,000 or have an offshore income stream that can easily be diverted into an offshore structure. Q. Do I need a company or trust set up? A. No, not immediately anyway. Most people establish offshore trusts and companies prior to opening bank accounts so they can use the company name to provide extra secrecy. Quite often the beneficial owner or shareholder of a trust or company can be kept confidential or even unknown in the case of bearer shares or nonexistent trust beneficiaries. Obviously, the cost of these structures range from around A$1,500+ up depending on the jurisdiction you choose and the complexity of the structure you propose.
127
Get Rich …..Quickly Q. Where should I establish my offshore setup? A. There are many good havens including the Caymans, Isle of Man, Liechtenstein, Luxembourg, Gibraltar, Ireland, British Virgin Is. The list goes on. See complete list. Q. Are secrecy laws legislated and guaranteed in these places? A. In most cases, Yes. Q. Will tax havens always be available? A. Yes, since World War 2 they have proliferated and are now recognised as an essential part of international business. In fact more and more tax havens are appearing all the time. The Australian government is currently considering getting into the tax haven business with Norfolk Island. Q. Can governments like the British close them down if they wanted to? A. Yes, but they would never do so because they are all cash positive to countries like Britain and to close them down would simply ensure the money leaves and goes somewhere else. Q. With most of these offshore banks, can I get a Debit or Credit Card? A. Yes Q. Do these banks have facilities like funds management and other investments opportunities? A. Yes
128
High Yield Investments Q. What is the minimum deposit required to open an offshore account? A. Most banks require approx. US$1,000. Q. Can I invest into Australia from my offshore structure? A. Yes. If you would like to know exactly how to set yourself up offshore, The Invisible World and Invisible Banking can answer all your questions and assist you to establish a banking or corporate structure simply and at the lowest possible price. The books have been written in a simple, understandable way, without the use of complicated jargon.
Would you like more information on other High Yield Investments? I have just released the latest edition of the second volume of the “High Yield” books, High Yield Investments 2 - Investments to make you wealthy! High Yield Investments 2, continues on where the first book left off, presenting factual information on investments that have out performed and provided investors with fabulous returns.
129
Get Rich …..Quickly
Chapter 13 Glossary of terms Arbitrage - Buying securities in one country, currency or market and selling in another to take advantage of price differentials. Articles of Association - Regulations for governing the rights and duties of the members of a company among themselves. Articles deal with internal matters such as general meetings, appointment of directors, issue and transfer of shares, dividends, accounts and audits. Asset Protection Trust - A trust established offshore to protect settlor's assets against those who may attempt to make claims against them: creditors, former spouses and dependents on death. Some offshore jurisdictions provide protection from creditor claims against persons who have guaranteed bank loans. Back to Back Loan - A loan structure when "A" deposits a sum of money with a bank in country "X" on condition that a related branch, agency, edge corporation or bank located in country "Y" will lend an equivalent sum to "A" or a designee in country "Y". Bare Trusts - Also known as dry, formal, naked, passive or simple trusts. These are trusts where the trustees have no duties to perform other than to convey the trust property to the beneficiary(s) when called upon to do so. Bear - An investor who has sold a security in the hope of buying it back at a lower price. Bearer Share Certificate - A negotiable share certificate made out in the name of the bearer and not in the name of a particular person or organization. Bearer Stocks/Shares - Securities for which no register of ownership is kept by the company. Dividends are not received automatically from the company and must be claimed.
130
High Yield Investments Beneficial Owner - The actual or economic owner of an offshore company, as distinct to the registered or nominal owner. Best effort - A designation that a certain financial result is not guaranteed but that a good faith effort will be made to provide the result that is represented. BIS - Bank for International Settlements, Basel, Switzerland. The bank’s bank. Blind Trust - A trust in which the trustees are not allowed to provide any information to the beneficiaries about the administration of the assets of the trust. Blocked Funds - Term for "reserving" funds by one bank, for the benefit of another bank. Blocking of funds is an often used banking procedure to ensure that the same funds are not used twice. Often more beneficial to an investor than a bank guarantee. Blue Chip - Term for the most prestigious industrial shares. Originally an American term derived from the color of the highest value poker chip. Bond - Any interest-bearing government or corporate security that requires that the issuer will pay the holder of the bond a specified sum of money, usually at fixed intervals, and will repay the principal amount of the loan at maturity. A secured bond is backed by collateral, whereas as an unsecured bond or debenture is backed by the full faith and credit of the issuer, not by any specified collateral. Broker - An intermediary. An individual or organization, inbetween the person/organisation that controls the funds and the provider/trader. A broker often knows someone, who knows somebody else, whom may provide program trading. This chain of brokers is known in the business as a “daisy chain”. There are thousands of “want-to-be”, “hope-to-be”and “wish-they-were” brokers in the high-yield business that are giving the industry a bad name. Bull - An investor who has bought a security in the hope to make a profit from rising prices. Capitalization Issue - The process whereby money from a company's reserves, is converted into capital and then
131
Get Rich …..Quickly distributed to shareholders as new shares, in proportion to their original holdings, also known as bonus or scrip issue. Cap - An option-like contract for which the buyer pays a fee or premium, to obtain protection against a rise in a particular interest rate above a certain level. For example, an interest rate cap may cover a specified principal amount of a loan over a designated time period such as a calendar quarter. If the covered interest rate rises above the rate ceiling, the seller of the rate cap pays the purchaser an amount of money equal to the average rate differential, times the principal amount times one quarter. Clearing System - A mechanism for calculation of mutual positions within a group of participants with a view to facilitating the settlement of their mutual obligations on a net basis. Collar - The simultaneous purchase of a cap and the sale of a floor with the aim of maintaining interest rates within a defined range. The premium income from the sale of the floor reduces or offsets the cost of buying the cap. Conditional SWIFT - A funds transfer method which uses Society for Worldwide Interbank Financial Telecommunications protocols to transfer funds conditionally between banks, subject to the performance of a specified party. Commission - The fee that a broker charges clients for dealing on their behalf. Commitment Holder - A wealthy private party buying guarantees from the issuing banks, reselling them to other banks/brokers. Commitment holders are not allowed to trade or do business on their own behalf. Other designation: provider. Compound Yield - The total return on investment, consisting of the distribution (dividend, interest) and the capital gain or loss, in % of the investment amount. Consideration - The money value of a transaction (number of shares multiplied by the price), before adding commission, stamp duty, etc.
132
High Yield Investments Contract exit for non-performance - A condition in a financial agreement that enables the investor to take back his funds if the result represented is not achieved. Contract Note - The day that a transaction takes place, the broker sends the client a document detailing the transaction, including full title of the stock, price, consideration and stamp duty (if applicable). Cover - The total net profit a company has available for distribution as dividend, divided by the amount paid, gives the number of times that the dividend is covered. Credit Equivalent - Value amount representing the credit risk exposure in off-balance sheet transactions. In the case of derivatives, credit equivalent value represents the potential cost at current market prices of replacing the contract's cash flows in the case of default by the counterparty. Credit Risk - The risk that a counter party to a transaction will fail to perform according to the terms and conditions of the contract, thus causing the holder of the claim to suffer a loss. Currency Swaps - A transaction involving the exchange of cash flows and principal in one currency for those in another with an agreement to reverse the principal swap at a future date. Current Exposure Method - Term used in the Basel Capital Accord to denote a method of assessing credit risk in offbalance sheet transactions, consisting of adding the market to market replacement cost of all contracts and an amount for potential credit exposure arising from future price or volatility changes. Debenture - A certificate of indebtedness, an instrument in which a corporation or a company acknowledges indebtedness for a specified sum on which interest is due until the principal is paid back. Demand Guarantees - General term for payment undertakings arising on the presentation of a written demand (plus possible other documents specified in the guarantee), not conditional on proof of default by the principal in the underlying transaction. They ensure often that the lender will 133
Get Rich …..Quickly be paid the principal on maturity and possibly, depending on the instrument, interest when due. Example: SLC’s. Depository Trust Company (DTC) - A custodial clearing facility owned by the major banks and securities firms and monitored by various banking regulatory agencies and the Securities and Exchange Commission. Discount - When the market price of a newly issued security is lower than the issue price. If it is higher, the difference is called a premium. Discretionary Trust - The form of trust usually established offshore. The discretions are vested in the trustee who can usually decide which of the beneficiaries is to benefit, when and to what extent. Discretions are exercised under advice of, or suggestions from the settlor or protector. Dividend - The part of a company's post-tax profits distributed to shareholders, usually expressed as an amount per share. Domicile - The place of a person's permanent home and the means by which the person is connected with a certain system of law related to issues such as marriage, divorce, succession of estate and taxation. Double Exit - Use of two passports for the purpose of confusion or convenience. Draft - A signed, written order by which one party (the drawer) instructs another party (the drawee) to pay a specified sum to a third party (the payee), at sight or at a specific date. ECU - European Currency Unit. Equity - The risk-sharing part of a company's capital, usually referred to as ordinary shares. Equity Options - A class of options giving the purchaser the right but not the obligation to buy or sell an individual share, a basket of shares or an equity index at a predetermined price, on or before a fixed date. Equity Swaps - A transaction that allows an investor to exchange the rate of return (or a component thereof) on an equity investment (an individual share, a basket or index) for the rate of return on another non-equity or equity investment. 134
High Yield Investments Eurobond - A bond issued in a currency other than that of the country or market in which it is issued. Interest is paid without the deduction of tax. Exercise Price - The fixed price at which an option holder has the right to buy, in the case of a call option, or to sell, in the case of a put option, the financial instrument covered by the option. Exit Buyer - The buyer of a security arriving on the secondary (retail) market. Expatriation - The removal of ones legal residence or citizenship from one country to another in anticipation of future restrictions on capital movements or to avoid estate taxes. FED - Federal Reserve, the US Central Banking system, established in 1913, responsible for managing the US Dollar, both within and outside the US. FIBV - World Federation of Stock Exchanges. Fresh Cut - Security arriving on the secondary (retail) market. Fiduciary Account - An amount typically deposited with a Swiss Bank which will redeposit the sum with a third party bank outside Switzerland in it’s own name (to eliminate Swiss withholding tax on interest). Final Dividend - The dividend paid by a company at the end of its financial year. Flight Capital - The movement of large sums of money from one country to another to escape political or economic turmoil, aggressive taxation or to seek higher rates of interest. Floor - A contract whereby the seller agrees to pay to the purchaser, in return for the payment of a premium, the difference between current interest rates and an agreed (strike) rate times the notional amount, should interest rates fall below the agreed rate. A floor contract is effectively a string of interest rate guarantees. Flotation - The occasion on which a company's shares are offered on a market for the first time. Foreign Currency Account - An account maintained in a bank, in currency other than the currency of the country, in 135
Get Rich …..Quickly which the bank is located. Foreign currency accounts can be maintained for depositors by banks in the United States. Forfaiting - The process of purchasing at a discount registered bank paper which will mature in the future, without recourse to previous holders of the receivable. Comparable to factoring. Fully Paid - Applied to new issues when the total amount payable in relation to the new shares has been paid to the company. Futures - Securities or goods bought or sold for future delivery. There may be no intention to take them up but to rely upon price changes in order to sell at a profit before delivery. Glass-Steagall Act - A portion of the Banking Act of 1933 which prohibits banks from entering into the securities business and prohibits securities firms from accepting deposits. However, securities issued or guaranteed by a bank are not subject to the Securities Act of 1933. Therefore, bank instruments, by virtue of being issued by a bank, are not considered a form of securities. Grantor Trust - Under US tax law, income of the trust is taxed as the income of the grantor. Grossing Up - Calculation of the amount that would be required in the case of an investment subject to tax to equal the income from that investment as if it were not subject to tax. Hard Currency - The term "hard currency" is a carry-over from the days when sound currency was freely convertible into "hard" metal, i.e. gold. It is used today to describe a currency which is sufficiently sound so that it is generally accepted internationally at face value. Hedge Funds - Speculative funds managing investments for private investors (In the US, such funds are unregulated, if the number of investors does not exceed one hundred). Hot Money - (1) Large quantities of money that move quickly in international currency exchanges due to speculative activity. (2) Foreign funds temporarily transferred to a financial center and subject to withdrawal at any moment. 136
High Yield Investments ICC - International Chamber of Commerce, Paris, France. The institution that issues the rules governing the banking system. The International Chamber of Commerce has no affiliation with local Chamber of Commerce offices. Insider Dealing - A criminal offense involving the purchase or sale of shares by someone who possesses inside information about a company's performance and prospects which is not yet available to the market as a whole, and which, if available, might affect the share price. Interbank Rate of Exchange - The rate at which banks deal with each other in the market. Interest Rate Swap - A transaction in which two counter parties exchange interest payment streams of differing character based on an underlying notional principal amount. The three main types are coupon swaps (fixed rate to floating rate in the same currency), basis swaps (one floating rate index to another floating rate index in the same currency) and cross-currency interest rate swaps (fixed rate in one currency to floating rate in another). International Business Company (IBC) - A term used to define a variety of offshore corporate structures. Common to all IBC's are the dedication to business use outside the incorporating jurisdiction, rapid formation, secrecy, broad powers, low cost, low to zero taxation and minimal filing and reporting requirements. An increasing number of offshore jurisdictions are permitting the use of nominee shareholders, directors and officers. Investment Trust - A company whose sole business consists of buying, selling and holding shares. Key tested telex (KTT) - An older form of transferring funds between banks, using telex machines in addition to verification of messages through the use of key code numbers. Laundering - Laundering is the process of cleaning illicitly gained money so that it appears to others to have come from, or to be going to, a legitimate source. Letter of Intent (LOI) - A document by which the investor states that he intends to enter into a High-Yield transaction.
137
Get Rich …..Quickly Letter of Wishes/Memorandum of Wishes - A document prepared by the settlor or grantor of a trust providing guidance on how trustees should exercise their discretion. Leverage - Company debt expressed as a percentage of equity capital. High leverage means that debts are high in relation to assets. The equivalent UK term is gearing. Leveraged (indirect) programs - Programs which use leased assets (such as US Government bonds) to increase the amount of instruments purchased and resold for a profit. The benefit of leased assets is that such programs generate substantially larger profits. Limit - In relation to dealing instructions, a restriction set on an order to buy or sell, specifying the minimum selling or maximum buying price. Limited Power of Attorney - A legal document that empowers the trade manager to deal with the various parties of the transaction on behalf of the owner of the funds (the Principal). Transactions will not happen without this instrument. Listed Company - A company that has obtained permission for its shares to be admitted to the London Stock Exchange's Official List. Man of Straw - Effectively a nominee settlor or grantor who creates an offshore trust but often has no further connection with the trust once it is created. Managed Bank - An offshore bank also known as a Class "B" or Cubicle Bank. The Managed Bank is not required to maintain a physical presence in the licensing jurisdiction. Its presence in the licensing jurisdiction is passive with nominee directors and officers provided by a managing trust company with a physical presence. The Managed Bank is not permitted to transact business within the licensing jurisdiction but may maintain its books, records, etc., to assure secrecy of operations. Merchant Bank - A European form of an Investment Bank. Mini-Trust - A short (usually preprinted) form of a trust, often used as a confidentiality enhancer, to bridge the ownership and management of an International Business
138
High Yield Investments Company. The Mini-Trust is intended only to pass assets on the death of the settlor, i.e. a will substitute. MTN - Medium Term Note. A guarantee issued by a bank with a maturity between 1 and 10 years and paying interest (often 10 years with a 7 1/2% coupon). Mutual Legal Assistance Treaty - A treaty which provides for mutual legal assistance, including the exchange of information, etc., in cases where criminal offenses have been committed. Net Asset Value - The value of a company after all debts have been paid, expressed as an amount per share. Nominee Company - A company formed for the express purpose of holding securities and other assets in its name or to provide nominee directors and/or officers on behalf of clients of its parent bank or trust company. Nominee Director - A director whose function is passive in nature. The director receives a fee for lending his or her name to the organization. Nominee directors are subject to director responsibilities. Nominee Name - Name in which security is registered and held in trust on behalf of the beneficial owner. Off-balance sheet financing - The process whereby a contingent (dependent on certain events) liability is not recorded as a liability on the balance sheet but typically appears in the notes to the financial statement. Off-balance sheet financing is therefore not reflected in the balance sheet total, although possible related reserves will be. Offshore Banking - By popular usage, the establishment and operation of US or foreign banks in such offshore tax havens as the Bahamas and the Cayman Islands. Offshore Banking Unit (OBU) - A bank in an offshore financial center, not allowed to conduct business in the domestic market but only with other OBU’s or with foreign persons. Offshore Booking Centres - An offshore financial center used by international banks as a location for "shell branches" to book certain deposits and loans. Such offshore bookings are often utilized to avoid regulatory restrictions and taxes. 139
Get Rich …..Quickly Offshore Company - See International Business Company. Offshore Financial Centres - A country or jurisdiction where an intentional attempt has been made to attract foreign business by deliberate government policy such as the enactment of secrecy laws and tax incentives. Offshore Group of Banking Supervisors (OGBS) Established in October 1980 at the instigation of the Basel Committee on Banking Supervision with which the Group maintains close contact. The primary objective of OGBS is to promote the effective supervision of banks in their jurisdictions and to further international cooperation in the supervision between the Offshore Banking Supervisors and between them and Basel Committee member nations and other banking supervisors. Current OGBS members are: Aruba, Bahamas, Bahrain, Barbados, Bermuda, Cayman Islands, Cyprus, Gibraltar, Guernsey, Hong Kong, Isle of Man, Jersey, Lebanon, Malta, Mauritius, Netherlands Antilles, Panama, Singapore and Vanuatu. Offshore Limited Partnership - A partnership, the general partner of which is an offshore company. The limited partners may be onshore entities. Offshore Profit Centers - Branches of major international banks and multinational corporations located in a low tax financial center which are established for the purpose of lowering taxes. Offshore Trust - The quality that differentiates an offshore trust from an onshore trust is portability. The offshore trust can be transferred to additional jurisdictions to maintain confidentiality and to advantage desirable facets of the new jurisdictions laws. One-year zeros - An obligation of a bank due in one year and sold at a discount from face value in lieu of an interest coupon. Ordinary Shares - The most common form of shares. Holders receive dividends which vary in accordance with the profitability of the company and the recommendations of the directors. The holders of the ordinary shares are the owners of the company.
140
High Yield Investments Par - The nominal- or face value of a security. A bond selling at par is worth the same dollar amount as when issued or when redeemed at maturity. Parallel Account - A separate account established at the trading bank. Pay Order - A document which instructs a bank to pay a certain sum to a third party. Such orders are normally acknowledged by the bank which provides a guarantee that the payment will be made. PBG - Guarantees issued by prime banks. In this context the word prime is an adjective and not a noun, meaning that the bank issuing the bank guarantee is of prime status, one of the top international banks. Portfolio - A collection of securities held by an investor. Prime Bank - An older term for a well known (top-25, top100) international bank. The term should be avoided and replaced by "money center bank" or "international bank". Principal - The party that controls the funds and seeks a secure high-yield investment. Private Placement - An issue that is offered to a single or a few investors as opposed to being publicly offered. Private Trustee Company - A company incorporated in certain offshore jurisdictions, such as Bermuda, to act as a trustee for a limited class or group of trusts. Private trustee companies are not permitted to offer trustee services to the public generally. Privatisation - Conversion of a state run company into a public company, often accompanied by a sale of its shares to the general public. Proof of Funds (POF) - A document by which the principal's bank states that the principal owns the funds required for the transaction. Usually, proof of funds can also be delivered in the form of a recent bank-, security- or custody statement. Proper Law - The body of law which governs the validity and interpretation of a contract or trust deed. Protector - A person appointed by the settlor/grantor of a trust, who has limited powers to control the trustee. The protector usually has the right to change trustees. 141
Get Rich …..Quickly Provider - A wealthy private party buying guarantees from the issuing banks, reselling them through banks/brokers. Other designation: commitment holder. Purpose Trust - A trust created for an express purpose without any individually ascertained or ascertainable beneficiaries. A purpose trust is typically used in circumstances where the trust is of philanthropic nature. Resident Company - A bank, trust company or holding company permitted to deal only in local currency. Foreign currency transactions must be approved by the appropriate regulatory authority. Retail Buyer - The buyer of a security when it arrives on the secondary (retail) market. Re-domiciliation Corporations Some offshore jurisdictions allow corporations incorporated in other jurisdictions to reincorporate in their own at will. Rights Issue - An invitation to existing shareholders to acquire additional shares in the company in proportion to the number of shares they already own - usually at a preferential price. Roll Program - A broker term describing a trade program. The use of the term “roll program” should be avoided. Safekeeping receipt - A document issued by a bank which requires the bank to hold specific funds (or securities, gold, etc.) unconditionally separate from other assets and return them when requested by the depositor. In this way, the funds (or securities, gold, etc.) are not an asset of the bank nor are they, directly or indirectly, subject to any of the bank’s other obligations or debts. Seasoned - Securities owned by a participant in the secondary (retail) market. Securities - General name for shares and bonds of all types. Shares produce a variable dividend and bonds a fixed interest. Service Company - A company located in an offshore financial center to provide management, invoicing and other services for client companies located in other countries. Initially used to advantage double taxation treaties. Service Companies are now frequently used to facilitate flight capital 142
High Yield Investments outflow and are often involved in money laundering schemes. Settlement - Exchanging money or securities for securities. SLC - Stand-by Letter of Credit. A financial guarantee or performance bond issued by a bank on behalf of a customer and regulated by the ICC-500 rules. Sub-account (segregated account) - When a bank acts on behalf of an intermediary, a sub account is opened for each of the intermediaries' clients, to hold their funds in their name. The account can only be operated, and the funds can only be used, according to the terms of a written agreement (Power of Attorney) that is given to, and approved by, the bank. The deposited funds are not considered intermediary assets nor bank assets if a safekeeping receipt is issued by the bank. Tranche - A specified part of a larger transaction. Each purchase and resale of a separate block of bank instruments within the total transaction is known as a tranche. For example, a contract may be signed to buy 100 million US dollars worth of bank paper with an initial tranche (or purchase) of 25 million US dollars. Transfer - The form signed by the seller of a security authorizing the company to remove his name from the register and substitute that of the buyer. Underwriting - An arrangement by which a company is guaranteed that an issue of shares will raise a given amount of cash because the underwriters, for a commission, agree to subscribe for any of the issue not taken up by the public. Warrant - A special kind of option given by the company to holders of a particular security giving them the right to subscribe for future issues, either of the same or of some other security. White Knight - A company, which rescues another which is in financial difficulty, especially one which saves a company from an unwelcome takeover bid. Yield - The return earned on an investment taking into account the annual income and its present capital value. There are a number of different types of yield and in some cases different methods of calculating each type. 143
TRIDENT PRESS Catalogue of Investment, Privacy & Wealth Creation Titles
UNDERGROUND KNOWLEDGE Underground Knowledge
Underground Knowledge 3
This is a book that provides valuable and hard to find information - information your government would prefer you didn’t know. Forbidden information on privacy, money, freedom, technology, special places where freedom is assured, private banking and investing, “big brother” tactics and how to beat them, offshore companies and most importantly, liberty and wealth. Underground Knowledge provides you with information normally reserved for the rich and powerful. Those people in our society that can afford inordinate amounts of money to make more, and secure their privacy. The book provides the reader with practical ways to improve their lives financially and assists the reader to regain their sovereign individual rights. A very unusual and enlightening book!
Secrets of Wealth, Privacy & Offshore Investing Underground Knowledge 3 Features: • The Ultimate Strategy for Banking In Silence • How to Disappear…. And Never Be Found! I expose how the “experts” find you and how you can foil them. • How to fly just about anywhere in the world for around 15% of the regular fare with top class airlines to…I reveal how to do it, and where top get the tickets from. • A full report of the best second citizenship programs available and how you can get a second passport, legally and at the right price! • The ultimate real estate source. Where you can buy great properties around the world for under $50,000 • The best Offshore Investment Broker! This broker can assist you to invest in over 1,000 offshore funds easily. • A Comprehensive Australian Mail Drop Guide, after many readers’ requests. • Carnivore, Echelon and other snoop programs…How to ensure you don’t fall victim. • Asset Protection - The Perfect Strategy! • The 8 Golden Rules of Anonymous Banking • Investing in Portfolio Bonds – A Great Idea and not commonly known • The Best European Banking Options and Secrets • The Dangers of Caribbean Credit Cards – How to Reduce your Risk • Hide Your Assets, so nobody will find them. • The Hidden Desire of All Investors…. And it’s not what you think • Tax Secrets that are totally legal …. these will amaze you, and your accountant! • The Superannuation Lie Exposed • Get Returns on Your Investments just like the banks do • Is someone spying on you? How to find out and how to foil them • The Absolute 8 Secrets of Great Wealth….. every millionaire has used these strategies • The Latest Scams and How to avoid them and they are really convincing…. You may have already been taken and not know it. • Corporate Pirates…. How to Spot them and How to Avoid them….. Any AMP, HIH or Onetel shareholders out there? • New Anti-Terrorist Laws will give you some grief …. What you can do about them • Warren Buffett, Super Genius?.... No, just “super logical”. We examine the logic and common sense that made this man the richest investor in history and how his simple rules can be followed so easily • Plus Lots of other “Secret” Information on Privacy, Investing and Asset Protection
Features: Privacy, Security, Special Destinations, Technology, Privacy Strategies and Tricks of the Trade, Money Making Ideas, Government Surveillance and how to beat it, plus many more great ideas, concepts and methods to improve your privacy and increase your wealth. Price AUD$49.50 I enjoy reading all your books but my favourite was Underground Knowledge - MR, Queensland I finished your book (Underground Knowledge) last night and it taught me so much. I can’t thank you enough for putting this together - it is going to change my life. - JP, Brisbane
Things You Didn’t Know Underground Knowledge 2 Like Underground Knowledge, Things You Didn’t Know focuses on a wide variety of topics for the freedom lover, investor, privacy seeker, entrepreneur, Perpetual Traveller or the average person with a curious and questioning mind. For example: • Did you know there is a new ‘cyber haven’ where you can host your website without bureaucratic interference? This place is a relatively new nation. • Did you know that every phone call you make, every fax and email you send is being monitored, right here in Australia? • Do you know where you can buy ‘James Bond’ type spy equipment? • Did you know there is an Australian company currently gathering all your private personal and financial details so they can sell it to the highest bidder? Do you know how it will be used? Do you know how to foil their attempts? • Ever wondered why the rich love to bank in Switzerland and why they invest in Swiss Annuities? What are Swiss Annuities? Why you should invest in them and how and with whom? • One adviser has achieved a 4,432% return for his clients. Would you like his name? • The same adviser has averaged 51% compound return for his clients since 1986. This man is The Guru! • There is an Australian hedge fund earning 45%pa since 1989, Do you know which one? No, it’s not advertised, it’s reserved for those in the know. We tell you all about it. • Another Australian fund open to everyone earning 30%pa. • Billionaire’s secrets exposed • Do you want a million dollars? We show you how to get it for as little as $14 a week. • Would you like to live the life of a PT? Things You Didn’t Know shows you exactly how to go about it, on any budget the right way • Second Citizenships and Passports demystified • How to hide and safeguard your assets the easy way • Plus much more! Price AUD$49.50 I have really enjoyed reading your many books, they have simply been mind blowing… thank you.- RB, Rockhampton, QLD
Only AUD$49.50 plus P&H
…for we are young and free or are we? Lance Spicer reveals what we all suspected, our country and our lives are becoming more controlled and our liberties are being attacked. The Australian People are becoming increasingly manipulated by the agendas of big business, banks, international interests and politicians who regard the electorate with contempt. The author discusses many of the serious issues that must be faced by all Australians: • The Banking System and the hidden agendas • The New World Order Organisations are exposed • Loss of Privacy and what we should do about it • Citizen Initiated Referenda -Take back control • “Our British Constitution” proven invalid • The De-Industrialisation of Australia by International interests • CIA interference in our political system & spy bases pose a threat to our privacy • The Dis-Arming of Australia • Our Rights and Freedoms under siege “All concerned Australians should read this book” Price AUD$29.50 I am writing to say how much I enjoyed your book For We are Young and Free. I am very pleased I made this purchase as it was very enlightening and should be made mandatory reading for every year 12 student before leaving school. - GT, Sydney
OFFSHORE WEALTH CREATION The Offshore Investment Guide The Offshore Investment Guide is the complete offshore investing companion that leads you through all the complex issues facing investors these days. It covers in detail: • International Tax Planning and Legalities • Offshore Basics • Recent Changes to the Offshore Industry • Financial Privacy • Understanding Residency and Working Overseas and how you can benefit • Asset Protection Strategies and Solutions • Details of some of The Best Investments in The World • Offshore Banking Strategies and Methodologies • How Offshore Investing works • Due Diligence • Offshore Structures and Do you need them? • Investment Contacts • Working Scenarios for the Business Investor, Real Estate Investor, Shares Investor and those wanting to protect their Assets • Putting the whole thing together in a simple way and making it work… and Very Profitable. This book is the first complete guide of its type and leads you step by step through the whole process of this often mis-understood and lucrative area of investment. 98% of all investment opportunities lie outside of our shores and most investors have for far too long been missing out on the diversification and profits available offshore. This book addresses this issue and presents practical and easy to understand information and advice from one the world’s foremost authorities on the subject, Lance Spicer. Price AUD$59.50
The Invisible World Financial Freedom & Privacy Offshore Investment Strategies can be employed to Minimise or Defer Taxation as well as increase your Privacy & Confidentiality The Invisible World will show you how you can establish offshore companies and trusts to minimise tax and increase privacy as well as take advantage of amazing investment opportunities. Features: Over 40 Tax Havens are analysed and the book gives you full details of Banks and Incorporation Agents, Secrecy Laws, costs, advantages & disadvantages • Tax and Investment Strategies fully explained in an interesting and easy to read way • Australian Tax Laws explained with loopholes exposed • How to establish your own offshore company or trust privately and inexpensively • How to set up secret bank accounts • Privacy & Secrecy • Second Passports • How Skase beat the system • Investing Offshore - the advantages • Maildrops • Includes new havens and contacts. Price AUD$59.50 International Best Seller Books such as The Invisible World by Australian, Lance Spicer are by far and away the best in the world on this subject (offshore investment) - Amazon.com I have to congratulate (Lance Spicer) on your writing abilities and educational approach to your financial freedom and privacy series books. You have forwarded everything that I was looking for. It’s great stuff and exhilarating to see such a wealth of knowledge and experience delivered in an easy to understand format. Once again, thank you, the information in the Invisible World is priceless! - Executive, Nortel Networks
Invisible Banking This amazing book shows you how to bank and invest offshore in total privacy This amazing ‘How To’ book will provide you with the information that you always wanted to know but your accountant couldn’t tell you.This entertaining book will reveal: • How to keep your Banking Secret • Privacy & Secrecy Tips • Asset Protection Schemes • How to transfer your assets and cash around the world privately • Tax and Banking Strategies explained with working Examples • How to establish your own offshore bank • Procedures in Secret Offshore Banking and much, much more! Price AUD$59.50 Best Seller!
High Yield Investments The first book published in Australia that details over 60 of the highest yielding investments in the world and how you can invest This best selling book by Lance Spicer will change the way you invest forever. The book details over 60 of the worlds best and highest yielding investments that YOU can invest in. They are all reliable and most have exceptional track records and international reputations. The investment opportunities exist offshore as well as some right here in Australia. All investments have passed through due diligence and have been researched with full documentation received by Trident from all investment managers. Investments may include: • World famous nvestment Fund trading Currency derivatives returning 150% pa. for last 5 years • Fixed Interest in the US paying 24%pa - Secured • Investments with capital guarantees from major companies yielding 12-30% pa • Offshore Investments yielding 50-100% pa, year after year Plus many more investments, 90% of which have never been offered to Australians. All nvestment details are fully disclosed with entry levels from as little as a few thousand dollars. High Yield Investments is a must for all investors. Revised and Updated Every Year. Price AUD$59.50 Best Seller! After reading Invisible Banking, The Invisible World and High Yield Investments my husband and I are very keen to invest offshore....Keep up the good work, your books are very interesting, thought provoking and informative. Congratulations! - VT, Tasmania I have received your books, High Yield Investments and The Australian Share Market Guide a few weeks ago - I’m very impressed and thank you for the valuable information, concisely and very clearly written - RL, New Zealand
High Yield Investments 2 Investments to make you wealthy Following on from the success of the best selling High Yield Investments - Get Rich …Quickly! , Lance Spicer has come up with over 60 more exciting investments that can help you attain financial independence. High Yield Investments 2, (HYI 2) continues on where the first book left off, presenting factual information on investments that have out performed and provided investors with fabulous returns. Here are a few examples of the type of investments you will find in HYI 2: • Capital markets fund returning over 50%pa • Company trading bank instruments with potentially high returns • Technology investment fund returning 75%pa for the last 5 years • Zero risk returns of 12% through a well respected European bank • Capital guaranteed high yield investment bonds • Currency fund with a potential return of nearly 100% pa. Revised and Updated Every Year. Price AUD$59.50 Best Seller! Congratulations for a book (High Yield Investments) which provides a lot of financial signposts and sage comments on possible scams - HT, Melbourne
Offshore Companies & Trusts And How To Use Them These days more and more people are discovering the massive savings that can be made by having an offshore company and trust. Find out why the rich use them and why you probably should too. Price AUD$24.95
Invisible Cash Have you ever wondered how the “professional money movers” make cash disappear in one place and reappear in another? How money launderers and criminals transfer their cash around the world? This book reveals all their tricks. A fascinating exposé on this popular subject. AUD$24.95
Future Wealth
The Tax Haven Report Series
Have you ever thought to yourself, “Why can’t I have had shares in THAT company?” This is a book that helps that happen. A massive amount of research has gone into producing the book you always wanted, one that more or less predicts the future and informs you which industries are set to boom, which companies you should consider for the future. The book takes the consensus of opinions of economists, analysts, investors, industry experts and gives you definitive answers and solutions.
This range of 5 books provides the prospective offshore investor with concise information on a range of popular “tax havens”. They include a synopsis, taxation and legal requirements, advantages and disadvantages, cost of establishment, regulations plus much more. Invaluable information for investors. Each book is only AUD$24.95
Features: Future Economics, Globalisation, how to buy high-tech stocks, where the smart and rich have their money, the Internet, the winners and losers of the next decade, and most importantly, the 53 companies that will be the new industrial powerhouses, their real intrinsic value and how to invest in them. “If you want to make money, this is the book you need!” Price AUD$49.50 Latest Edition
The Privacy Report Strategies & Methods to beat the System! It seems everything we do, everywhere we go and everybody we speak to could be monitored by “someone” It’s a chilling thought. No longer do we have privacy, financially or personally, but this book will empower you again. Full of strategies, methods, and simple rules to not only ensure privacy, but also to beat the system “they” have tried to impose on us. A fascinating book. Price AUD$24.95
The Tax Haven Report 1 Panama–Belize–Caymans–Seychelles The Tax Haven Report 2 Channel Is–Gibraltar–Isle of Man–Nevis The Tax Haven Report 3 Liechtenstein–Luxembourg–Austria The Tax Haven Report 4 Bahamas–Turks & Caicos–BVI–Vanuatu The Tax Haven Report 5 Antilles– Delaware–Cook Is–Western Samoa–Barbados–Ireland
The Trident Offshore Banking Directory on CDROM The Trident Offshore Banking Directory gives you access to hundreds of Offshore banks. The banks are arranged in country order and provide the reader with Internet addresses with direct hyperlink access, addresses, phone numbers and brief highlights and features of many of the banks. A must for all those interested Offshore Banking and having a convenient and easy to use Banking Directory. The Trident Offshore Banking Directory comes on a CD-ROM, in PDF file format, ready to use. On CD-ROM….ONLY AUD$35 plus P&H
The Complete Offshore Wealth Special Our most popular special ever! All the information in one discounted package including: • The Trident Offshore Incorporation and Investment Strategy Manual manual is exclusive to this special and is valued at $95 - it is invaluable to investors • The Invisible World - Latest Edition • Invisible Banking - Latest Edition • High Yield Investments 2 - Latest Edition • High Yield Investments - Latest Edition • Offshore Companies and Trusts Book • The Off Shore Investment Guide This package contains everything you need to establish yourself offshore – all in one easy to understand package. Value AUD $458.00, yours for only AUD $325.00 - Save AUD
GENERAL WEALTH BUILDING The Australian Share Market Guide Is it Possible to Earn a Good Living from Investing and Trading Shares on the Stockmarket? Many people do! The Australian Share Market Guide will show you how it’s done by professional investors. The investment and trading criterion explained is similar to those used by the world’s most successful share trader, billionaire Warren Buffett. Using fundamentals to select companies and buy and sell points, this book will take much of the risk out of share market investment. Features: Value Investing - How to select undervalued shares or oversold shares - Cycles and economic factors explained - When to buy - When to Sell -What to Buy - Selection Criteria detailed - Warren Buffet’s buying criteria detailed and explained - Options - Crash Strategies - Contacts and more. Price AUD$49.50
Financial Crisis – How to avoid Financial Disaster describes exactly how people get into great financial mess and how to get out of it, and better still how to avoid it. This enlightening and fascinating book discusses in an easy to read way how people run into financial difficulties, how to get out of them and better still how to avoid them. It is a must read for anybody concerned about money, the economy and the financial security of your family. It contains great tips and strategies to follow. Financial Crisis Features: • Identifying Common Financial Problems • Money Traps • Bracing Yourself for Financial Crisis • Disaster Strikes – What To Do? • When You Can’t Pay Your Bills • The Struggle for Work and Family Balance • Budgeting & Money Management • The Art of Money Control • A Strategy for Financial Recovery •
Money Protection Strategies • Tips for the next 1,000 years • World wide Financial Crisis and How to make money from it! • Prepare for The Next Stock Market Crash • People Are Telling Me To Buy Gold, Is this Wise? • The Secret to Building Wealth • Where exactly to invest and exactly what to invest in for sure fire results that work • How to make money in a falling market • Investor’s Traps plus much more! Price AUD$39.50
Scams & Frauds Financial Crime Exposed Could you be ripped off in some “legitimate sounding” investment? Have you already been ripped off and don’t know it? This book may shock you - it may anger you - but it will give you the Truth.... If you can handle the Truth! There are literally thousands of scams operating today and the problem is identifying them - This book will show you how. The first book of its kind in the world - We name names of people still operating scams!
Scams & Frauds features: Bank debenture trading programs and other so-called High Yield Investment Programs • How they work, their history and why you will lose your money! • Sham Investment & Savings Clubs • Cold Callers and shonky brokers • Pyramid Schemes • MLM Shams • Ponzi Schemes -Gold Bullion and Mine scams • A List of the Biggest, Boldest and most well known scams around today that have ripped off thousands, they just don’t know it... Yet! • Banks that actually steal your money • Why banking in Latvia is a HUGE mistake • Why a Bank Guarantee is no Guarantee! • Nigerian Letters • Lottery and “give away” scams • Offshore Investment scams • Fake Credit Cards • Stock market bubbles and how scamsters use them to take your money • Poor advice that leaves you...poor • Affinity fraud • Self Liquidating Loans • The truth about Pure Trusts • Internet Frauds and Scams • How to avoid being taken and what to do if you have. Price AUD$39.50 High Yield Investments and The Australian Share Market Guide are excellent books as they are very practical, thank you - Ernst & Young, Accountants The books you publish are brilliant! I have read them over several times so not to miss anything - GS, Victoria
Going Out on Your Own?
Investing to Win
The Secrets to Small Business Success This book covers all aspects of small business and shows you practical ways to achieve the results that you desire. In a logical sequence of events, Going Out on Your Own? explains getting started, making sure your business will work, right through to proven ways to improve sales by writing ads that work, time management, merchandising, selling, administration and many other important aspects to business success. Going Out on Your Own? is the only book that puts together all the information you will need in one inspirational and practical book. Author and accountant Lance Spicer has taken a serious subject and made it entertaining and easy to understand. If you want to be successful in business, you need the secrets and the methods of true business success. Going Out on Your Own? contains these secrets and Price AUD$19.95 methods.
Investing to Win has now been released. This book takes an aggressive, winning approach to investment that WILL achieve results from investing. This book takes a straightforward and entertaining look at all aspects of investing. It does away with all the nonsense we hear continually from the media and focuses on ways that really make money and tells you the things that don’t. The book examines: Financial Intelligence, Share Markets, Property Investment, Superannuation, Offshore Investments, Unusual Investments, Taxation, Futures, Options, Cash Investments, Managed Funds, the Secrets of Successful Investing, Doom and Gloom, Winning Strategies, Frauds and Ripoffs & much more. This really is the complete investing guide. Price AUD$34.50 I have just purchased a few of your books. I have started to read the Invisible World, it’s a priceless book, I couldn’t put it down. I think purchasing your books is the best investment I have made. Thank you. - CL, Parramatta NSW
I have read through your book and must say I really like the practical advice that you offer in such an easy to read format (Going Out on your Own?) - Simon & Schuster, Australia
Build your Wealth Today A Wealth Building Solution We are all looking for better ways to increase our wealth but we are bombarded with differing opinions, complicated and risky schemes. It all gets too hard. However, in Build Your Wealth Today, the focus is on simple and logical strategies that anybody can employ to ensure they generate wealth at a rate above the “norm”. A great book for people who are just starting out or don’t have time for more complex solutions. Price AUD$24.95
The Author Lance Spicer Lance worked for many years as an accountant, senior financial executive and consultant to several major Australian and foreign corporations including Australian and foreign banks. Before ‘semi-retiring’, he was the financial controller of a major listed property and tourism group. In recent years, he has become a professional investor in addition to writing 27 books on various subjects such as investment, financial privacy, small business and the share market. Many of Lance’s books have now attained best seller status with books having been sold in over 90 countries around the world. Lance is a regular feature writer for several leading magazines and newspapers. He has been a key speaker at several international and local seminars on issues of taxation, investment and privacy. His books have been featured on ABC Television’s LateLine program and discussed on radio in the USA and in Australia. Lance’s biography has recently been included in Who’s Who in the World.
Visit our website. There’s plenty of free information and articles available. All our books are updated regularly so they are never out of date! All our books are written by acclaimed Australian Author & professional investor, Lance Spicer. Trade and Distributorship Enquiries Welcome
Trident Press Pty Limited (ABN 99 065 003 045)
PO Box 3068, Bangor NSW 2234 Australia Phone or Fax orders to (02) 9543 0406 E-mail:
[email protected] International Phone or Fax +612 9543 0406 Please send me the items ticked below. I have enclosed a cheque, money order for $................... or, I have provided my credit card details below. Please allow 14 days for delivery. All prices include GST of 10% All prices in Australian Dollars. All orders require $8.00 Postage and Handling to be added.- Only $8.00 per order (international add $15 per order) Underground Knowledge - Hidden Secrets Things You Didn’t Know - Underground Knowledge 2 Underground Knowledge 3 - Secrets of Wealth, Privacy & Offshore Investing ...For We are Young and Free The Offshore Investment Guide The Invisible World - Financial freedom and privacy Invisible Banking High Yield Investments - Get Rich.....Quickly High Yield Investments 2 - Investments to make you wealthy Offshore Companies & Trusts and how to use them Invisible Cash Future Wealth - The Direction of Future Fortunes The Privacy Report – Tips and Strategies The Trident Offshore Banking Directory on CDROM The Tax Haven Report 1-Panama–Belize–Caymans-Seychelles The Tax Haven Report 2-Channel Is-Gibraltar-Isle of Man-Nevis The Tax Haven Report 3-Liechtenstein-Luxembourg-Austria The Tax Haven Report 4-Bahamas-Turks & Caicos-BVI-Vanuatu The Tax Haven Report 5-Antilles-Delaware-Cook Is-Western Samoa The Australian Share Market Guide - Latest Edition Financial Crisis - How to avoid Financial Disaster Scams & Frauds - Financial Crime Exposed Investing to Win Going Out on Your Own? Build your wealth today … A Wealth Building Solution Complete Offshore Wealth Special Credit Card Details
VISA
MASTERCARD
Card No
$49.50+p&h $49.50+p&h $49.50+p&h $29.50+p&h $59.50+p&h $59.50+p&h $59.50+p&h $59.50+p&h $59.50+p&h $24.95+p&h $24.95+p&h $49.50+p&h $24.95+p&h $35.00+p&h $24.95+p&h $24.95+p&h $24.95+p&h $24.95+p&h $24.95+p&h $49.50+p&h $39.50+p&h $39.50+p&h $34.50+p&h $19.95+p&h $24.95+p&h $325.00+p&h
BANKCARD
Expiry date_____/_____
Name on card
Signature
Name
Phone No
Address
Great Information available on our website
AMEX
State
Postcode
Country
www.tridentpress.com.au
