MSI-Preferred Investment Fund, Ltd - 1. Preface

With the launch of the MSI-Preferred Investment Fund in 1994, Montaque Securities International, Ltd. ("MSI" or "Montaque Securities International") has distinguished itself as the pioneer in The Bahamas for the introduction of mutual funds as an investment vehicle in the domestic market for the broader public.

THE CONCEPT

A mutual fund is a financial structure that allows you to pool your money with other investors and have it placed in specific investments that will meet the fund's objective.

The mutual fund vehicle offers you the opportunity to invest in a portfolio of securities (such as shares, bonds, and Treasury bills) rather than your attempting to invest in them singly. The advantage of this is particularly evident in a dynamic market where frequent changes in returns or financial products would require your constant attention and understanding. By investing in a mutual fund under professional management, you have convenient access to a broad range of securities, thereby reducing your exposure to risk.

The professional investment manager uses the pool of money to select and purchase a mix of equities or money market instruments that, in the manager's assessment, will help you achieve your objectives. This collective mix of securities then forms the basis of the portfolio of the fund, the earnings of which are distributed to you and your fellow investors. Alternatively, these earnings may be reinvested in the fund in order to achieve asset growth.

In a mutual fund that is established as a corporate entity, you purchase shares in the entity, and each share represents, in effect, a proportionate share of ownership in all of the funds underlying securities. Dividends and capital appreciation achieved on these securities are distributed in proportion to the number of shares you own. Accordingly, if you invest a few hundred dollars, you will get the same investment return per dollar as someone who invests many times more.

As a mutual fund investor, you should select funds with investment objectives that most closely match your own. Accordingly, a discussion with professional investment advisors may be beneficial to you in identifying your requirements and in choosing the most appropriate financial instrument.

SECURITY

The structure of the mutual fund as a separate corporate entity is intended to provide a level of protection to you. It ensures that the funds received from you are kept separate from the assets of the sponsor or fund manager. The fund manager is obligated to utilize your funds only to make investments for your benefit in accordance with the investment strategy outlined. If the fund manager should suffer a loss or go bankrupt, it has no impact on the assets of the mutual fund held in a separate legal entity.

This process is further reinforced by the existence of an independent depository. A depository is a reputable bank or trust company which undertakes to hold the documents of title underlying the purchased securities for your protection.

DIVERSIFICATION

By combining money from individuals like yourself, the investment manager is able to invest the larger sum in a wider range of securities, thereby reducing the risk. This diversification, which may be difficult for you, as a single investor, to achieve on your own, also increases the opportunity for income and capital growth.

LIQUIDITY

You may cash in all or a portion of your shares at any time and receive the current value of your investment, which may be more or less than the original cost. There is no need to search for a buyer as the fund is always prepared to buy back ("redeem") its shares. Current per-share values ("net asset values") are calculated on a regular basis as stated in the prospectus and are based on the market value of the underlying securities. These values may change as the values of the underlying securities move up and down, and as the fund changes its portfolio by buying new securities and selling existing ones.

PROFESSIONAL MANAGEMENT

A mutual fund provides you with the benefit of the services of a professional investment manager, whose decisions on which securities to hold, when to buy and when to sell, are based on extensive ongoing research, constant attention to economic conditions and movements in the market, and continued appraisal of the various options in securities. After analyzing all available data, the fund manager makes an investment decision that best matches the fund's objectives. Such professional management has been available previously only to large institutions and wealthy individuals. A mutual fund makes this expertise accessible to everyone, and Montaque Securities International is proud to have introduced this exciting concept to the general public in The Bahamas. We, therefore, invite you to review the accompanying prospectus on the MSI-Preferred Investment Fund and to consider the merits in participating in this investment instrument designed for your future financial security.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances