The Friends First Insight Currency Fund is a single premium policy investment in currency trades, managed by Alder Capital using the Alder Global 20 Currency Program.

This type of investment has hitherto only been Cost effective for Corporate bodies or individuals with very large sums to invest. However, through the Alder Global 20 Currency Program, Friends First is now in a position to offer a product that allows more investors to participate in this market.

Friends First believes that the Insight Currency Fund has the potential to outperform equity markets. The Alder Global 20 Currency program* illustrated below shows outperformance over the Standards and Poors 500 total return index over the illustrated term of 5 and 10 years to Dec 2000.

Using the program, the growth rate over the five years to Dec 2000 would have been 25.1% per annum (16.8% for the S&P soo). The growth rate over 10 years to Dec 2000 would have been 22.7% per annum (15.1% for the S&P 500).

*These figures are based on the simulated performance of the Alder Global 20 Currency Program. which is a systematic mathematical trading program created by Alder Capital. The performance illustrated is net of fees, realistic transaction costs, actual market rates have been used, average interest income of 5% per annum has been assumed and no allowance made for taxation. Simulated performance is no guarantee of future performance.
**The Alder Global 20 Program may under perform or Out perform the 5&P 500 index in the future.

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Exclusive Access

By pooling individual investors together in a fund, the cost efficiency necessary to participate in these markets can be achieved. Usually only those with extremely high levels of capital at their disposal can participate efficiently in the currency markets.

The sophisticated investor can now invest any amount from €50,000 upwards in this fund and have their money managed by an expert currency fund manager.

The Opportunity for Exceptional Returns

The Friends First Insight Currency Fund only uses major currencies with high liquidity. The currencies used in the fund are US Dollars, Japanese Yen, Swiss Francs and Euros.

Currency markets are affected by a broad range of influences. Some of these are difficult to predict and lead to inefficiencies in the market. The Friends First Insight Currency Fund seeks to take advantage of these opportunities.

These market inefficiencies include:

• Trade driven transactions.
• Central banks trading currencies to smooth out exchange rate fluctuations.
• Trading companies hedging out unwanted exposures.

Capital tends to flow out of weak economies and into strong economies. These flows give rise to opportunities to invest using a range of currency strategies. Over the medium to long term the Alder Global 20 Currency Program seeks to capitalise on these currency exchange rate movements.

For example between january 1999 and December 2000 the Euro moved from 1.1831 to 0.9419 cents against the US Dollar*. During this period a simple strategy to sell Euros against the US Dollar would have yielded a return of 25.5% (allowing for bid/offer spread) over this period.

Comparison of the Alder Global 20 Currency Program with the ITR Currency Index** for currency fund managers from January 1991 to December 2000.

*Euro/ Dollar exchange closing rate On 4th january 1999 was 1.1831 and .9419 on 29th December 2000.
** The ITR (International Traders Research Inc) currency index is based on the most accurate and comprehensive database for commodity trading advisors.
Source: Alder Capital

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Friends First and Alder Capital

The Friends First Insight Currency Fund is managed by Alder Capital, using the Alder Global 20 Currency Program.

Alder Capital

Alder Capital is a specialist currency fund management company, established in 2000 by Mark Caslin and Brian McCarthy which manages a range of currency products for corporate clients in Ireland.

Mark and Brian at Alder have many years experience in managing currency funds.

In 1998, prior to establishing Alder; a Currency Program researched and developed by Mark Caslin and with the trades executed by Brian McCarthy was the best performing currency program in the world over the three years from july 1995 to june 1998 with returns of 29.8% per annum net of fees*. Mark is the author of a number of articles on currency risk management and is a frequent conference speaker on the subject of currency forecasting.

The Alder Global 20 Currency Program is a fully systematic, mathematically driven trading process.

Friends First believes that a unique and disciplined approach to risk management is what sets Alder apart from other fund managers.

* Source: Managed Account Reporting (MAR) 1/7/1998

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Diversity

A key attribute of this fund is that it is not dependent on interest rate stability or a favourable stock market environment. In fact, the inherent volatility caused by economic uncertainty can present this fund with profit opportunities.

Mixing currencies with other asset classes like equities or bonds means you can achieve a better risk adjusted return because of diversification.

Unique features of Currencies as an Investment

• Investing in the Friends First Insight Currency Fund provides an opportunity to make profit in rising or falling currency markets.
• Investing in the Friends First Insight Currency Fund provides real asset diversification from traditional asset classes like bonds and equities.
• Currency Funds are the largest financial market and your investment in the Friends First Insight Currency Fund allows you to participate in this market.
• Investing in the Friends First Insight Currency Fund provides global diversification without having to invest capital abroad.

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Risk Control

The experienced investor recognises that the key investment focus is on risk adjusted returns.

The Friends First Insight Currency Fund is a specialist investment fund. It is not suitable for the risk averse investor. As is shown in our table above, simulated performance is no guarantee of future performance and the value of the investment can go down as well as up. Investors may not get back the full amount originally invested.

Alder through its Global 20 Currency Program employs stringent risk control techniques throughout all aspects of the process covering:

• Maintaining a diversified portfolio
• Gearing limitations
• Strict and disciplined systematic trading style
• Trading only in liquid currencies

Specifically

• Alder measures the potential risk of all trades before they are executed.
• Alder targets a fixed level of risk - a risk target of 20% standard deviation per annum * applies to the Alder Global 20 Currency Program.
• A risk level is targeted each day using the Alder risk forecasting system.

* The equivalent measure for the S&P 500 index is 16.8% over the last year, 17.6% over the last three years and 16.0% over the last 5 years to December 2000.
Standard deviation is a statistical measure of volatility.

This shows the Alder Global 20 Program, exhibits higher volatility than the S&P 500 equity index. However the Alder Global 20 risk adjusted returns exceed those achieved by the S&P 500. The table demonstrates the effect of utilising a diversification strategy to enhance the risk return ratio. This is possible because of the high degree of independence of these two asset classes.

* 10 year total returns, risk here is measured as standard deviation. The Sharpe Ratio, a well defined market measure, relates to the risk return profile of the fund. A high figure means that more return is being generated for each unit of risk.
Source: Alder Capital

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Fund Details

Bid/Offer Spread
There is no bid/offer spread on this contract.

Investment Charge
To cover the cost of setting up the contract, an initial charge of 2.5% of the investment will be applied.

Fund Management Charge
To cover the cost of actively managing the Friends First Insight Currency Fund, an annual management charge applies. This charge is currently 2% p.a. of the value of the fund, and is built into the unit prices we quote.

Performance Fee
A charge is also taken when the fund performance exceeds a threshold of 7% per annum before the management charge. This fee is 20% of the amount by which the annualised fund growth exceeds this threshold, and is built into the unit prices we quote. This charge is deducted on a monthly basis.

Unit Pricing
Unit prices are calculated monthly. The unit price quoted includes the Fund Management charge and the Performance Fee.

All unit transactions are effected on the next unit pricing date immediately following the date on which the transaction request is received by Friends First.

Taxation
Friends First Insight Currency Fund is an insurance policy and incurs no tax on income or capital gains within the fund.

You only pay tax when you encash your units. This exit tax is currently charged on the growth element of any encashment at the standard rate of tax +3%.

Your Next Move

Having read this article, if you have any queries about any item please contact us for details.