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					 Dunn & Hargitt
 INTERNATIONAL GROUP
 Investment Groups
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                                       THE FUTURES MARKETS ARE NOW CONSIDERED
                                            A SEPARATE CLASS OF INVESTMENTS


       The best-known International Investment Markets are the EQUITY MARKETS. These markets are
       the primary source of capital to corporations throughout the world. An investor seeks not only to
       earn dividends (a share of profit) from the company in which he holds stock, but he also seeks to gain
       from an increase in the market value of that stock. Most investment Portfolios will invest in the
       Equity Markets.

       The second best known International Investment Markets are the DEBT MARKETS. It is within
       these market places that the governments and corporations of the world borrow money. When an
       investor buys bonds or other debt instruments, he is actually making a loan. In exchange for this loan
       he earns interest on his investment. Most of the International Portfolios have made investments in
       the Debt Markets.

       The third and unfortunately the least well known of the International markets are the COMMODITY,
       CURRENCY, PRECIOUS METALS AND FINANCIAL FUTURES MARKETS. It is within these
       markets that the future flow of goods is facilitated. In addition, these markets reflect investors’
       current attitudes of the future value of goods, Commodities, Currencies and also the future value of
       Debt and Equity investments.

       Commodity Futures have a particular appeal because they are not related to the sudden fluctuations
       in the Bond and Stock markets.

       When you invest in a commodity such as Sugar Futures, the only relevant variable is the price of
       Sugar.

       Since the price of Sugar is determined by ultimate supply and demand, it is possible to devise
       technical trading systems based on price fluctuations. For this reason the Commodity Futures
       Markets have become a new frontier for investors seeking capital growth and protection against
       inflation.

       There are two categories of Commodity markets:

       “Spot” markets and “Futures” markets.

       The “Spot” markets allow farmers to sell their products directly to food processors, for immediate
       delivery. The seller must already have the commodity physically in his possession and ready for
       shipment to the buyers warehouse. Because the buyer must pay instantly and in full for the
       commodities and also accept immediate delivery of rather large quantities of Grains, Meats, Soft
       Commodities or other raw goods, very few investors exploit these markets.

Administrative Offices: Dunn & Hargitt Research S.A.- The Dunn & Hargitt Building - Avenue Legrand, 41 Box 1 - B-1050 Brussels - Belgium
                          Telephone: (32-2) 640.32.80 - Telefax: (32-2) 648.46.28 - E-mail : dunnhargitt@skynet.be
                                                  Société Anonyme T.V.A. 415.723.588 - R.C.B 395.840

                           Traders and investors should understand that futures are speculative investments with a high degree of risk
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The “Futures” Markets are quite another thing. A farmer or a producer sells all or part of his future
production at a fixed price, for delivery during some specified month in the future. In effect the
producer makes a contract with an unknown buyer who guarantees purchase of a given quality and
quantity of a certain commodity, which will eventually be delivered according to agreed upon terms.

The producer may decide to “sell forward” when prices are high and his profit is thereby secured.
The buyer and the seller may in effect cancel the purchase or the delivery by entering into another
Futures contract offsetting the original agreement. The buyers who need Commodities can also
protect their risk of increases in prices by “buying forward”.

The variations can be almost endless.       No other category of investments is as flexible as the
Commodity Futures Markets.

A major difference between the trading in the Stock Market and the trading in the Commodity
Futures Markets is that each investor can take his “paper profit” immediately, without having to sell
his holdings. His broker will actually write a check for the amount of paper profit in the client’s
portfolio, this amount being based on the closing market values of the Commodity Futures Contracts.

However, there are margin requirements, which must be deposited with the Commodity Exchange
Clearing House and represent “earnest money” that guarantees the fulfilment of the Futures Contract.

The Commodity Markets thus enable investors to trade large quantities of commodities with
relatively small sums of money, which means that profits in relation to capital invested can be
surprisingly high.

It is the very nature of commodities, which make them such a stimulating investment medium. The
structure of these markets has created an infinite source of opportunity for making money on major
upward and downward price movements.

There are three principal markets: London, New York and Chicago, which are of course, open at
different times of the day. Market attitudes and prices can vary, giving the potential for dealing
across the world in a “dealing day”.

The first Data Bank on the Chicago Board of Trade and the Chicago Mercantile Commodity Futures
Markets was compiled and developed by the well-known Portfolio Management Group, The Dunn &
Hargitt International Group. Three Professors from Purdue University in Lafayette, Indiana first
founded the Dunn & Hargitt International Group in 1965.

Dennis Dunn, an Agricultural Economist and Edwin Hargitt, a Computer Scientist joined forces with
Professor Bruhen, the Head of the school of Aeronautical engineering at Purdue to create the first
Commodity Futures Data Banks and to test various trading strategies for making money in the
Commodity Futures Markets.

Most successful traders in the Commodity Futures Markets have extensive knowledge of the market
place and have several years of experience of trading in a diversified portfolio of Commodities,
Currencies, Precious Metals and Financial Futures. The traders tend to use historical data banks to
test their trading ideas and their portfolio management strategies before trading in the Futures
Markets.

The successful traders fall primarily into two categories:

The first of these is the “Fundamental” Trader. For the Fundamental Trader, expert understanding
and the analysis of supply and demand are the basis for their trading decisions. This would include
seasonal price fluctuations, the level of rainfall, the general economic outlook, and Government fiscal
and monetary policies, etc.
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Their goal is to predict long-term prices based on the analysis of detailed data and then enter into the
Futures market places accordingly.

The second category of traders is the “Technical” Trader. For the Technical Trader, expert
understanding and the analysis of historical price movements form the basis for their trading policies.
Almost all Technical Traders have developed algorithms and proprietary computer systems that
monitor and analyse price trends and which seek to enter the Futures markets at some point to take
advantage of these trends.

Technical Traders take positions in the market much more rapidly than Fundamental Traders and the
Technical Trader may exit the market almost immediately after entering it should prices rise or fall to
predetermined levels.

Commodity Futures markets operate on margins only. This means that, as an investor, only a
minimum amount of capital is required to deal in very large amounts of money. However, this means
that in difficult and volatile market conditions, a highly technical approach is required to ensure that
the amounts invested are not endangered by too much risk. At the same time, the successful
investments can produce very large profits in relation to the capital invested.

International investors find that the “Futures” markets offer a greater scope, since buying a “Futures
Contract” does not necessarily mean that you have to take physical delivery of the Commodity in
question.

The Commodity Futures markets have become part of the Investment Portfolios of Pension Funds,
High Net Worth Investors and even some of the University Endowment Funds.

For instance, in a publication from one of the major investment banks in the United States, they
showed that the Harvard Endowment Management Company Policy Portfolio had 13% of their
Portfolio invested in the Commodity Futures Markets.

The decision to deal in the “Futures” markets opens up the widest possible range of investment
opportunities. Not only can you deal in the base metals, but you can also deal in such varied
Commodity Futures as Grains, Meats, Currencies, US Treasury Notes, Soft Commodities and even
Stock Indices.

This wide diversity of investment gives enormous scope for making large profits.

However, Commodity trading can be a complex business. Therefore, this is one of the investment
classes where a professional trading approach is absolutely necessary in order to make money.

The solution to the problem of trading in the Futures markets is to utilise the services of a
professional trader through investments in a “managed futures account” by Commodity Trading
Advisors “CTAs”. These Commodity Trading Advisors are registered with the National Futures
Association in the United States and they are regulated and audited by the Commodity Futures
Trading Commission. The total volume of money that is being managed in the Futures markets is
more than US$ 120 billion.

Most Commodity Trading Advisors make their living by taking a percentage of the profits that they
can earn for their clients by successfully investing in the Futures markets and in addition they usually
charge a small annual fixed fee for their services and to cover the fixed expenses.
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There are several types of investments in the Futures Markets, such as mutual funds, investment
pools and also capital protected investments which invest in diversified portfolios selected amongst
more than 100 different Futures Markets.

The Futures Markets are one of the most important classes of investments and should be included in
all of the growth oriented International Investment Portfolios.

However, Traders and Investors should understand that Futures are speculative investments with a
high degree of risk.

To obtain more information on the Futures Markets an investor can contact some of the major
Commodity Futures Brokerage firms or some of the well known large Commodity Trading Advisors
who manage money in the Commodity Futures Markets.




David Lee Hargitt

The Dunn & Hargitt International Group
The Dunn & Hargitt Building
41 Avenue Legrand, Bte 1
B-1050 Brussels
Belgium

Tel:   00 32 2 640 3280
Fax:   0032 2 648 4628
Email: dunnhargitt@skynet.be

				
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