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Some stocks have appreciated 400% in 1999 Где Деньге Сейчас - Апрель 2000 $10.000.000.000,00
MANAGEMENT OF RUSSIAN SOCIAL SECURITY SYSTEM - INSURANCE COMPANY INVESTMENT FUNDS - PENSION FUNDS
Dr. Pyotr Johannevich van de Waal-Palms
SEATTLE, WASHINGTON STATE, UNITED STATES OF AMERICA
The new economic direction of "Privatization" of Russian Industry has left hospitals, and pension funds the task of caring for themselves and finding "rentabelnost", the ability to pay their own way, to survive as a commercial entity. The new owners of Russia are able by means of "laws" to transfer GDP to their personal out-of-country bank accounts and have ceased to provide in "budgets" for anything more than "below poverty level" population survival to the extent that life expectancy has fallen by almost 10 years and population is declining at the rate of almost 1% annually.
In other post-war economies currency regulations have legitimately been used to deter "flight capital" in order that available capital might be employed in economic reconstruction. In Russia a corrupt "nomenklatura" (elite Communist party members) have perverted these concepts by using them to loot Russia and restrict the flight of capital to members of the "nomenklatura".
At the same time printing presses have been used to print money to produce the inflation that saw the ruble drop from 10R= $1 to 24,000R = $1.00 within the past decade thereby wiping out the entire national savings of the Russian and population. Russia's nomenklatura" have used economic policy and "laws" to create "reverse income redistribution from the general population to less than 1 million nomenklatura and their henchmen. "privatization" a corruption of the concept of transferring the communally owned property of the population of the former USSR into individual private hands, was used to transfer the country int the private hands of the Communist Party elected officials of the ruling class, disenfranchising 99% of the citizens of the new Russian Federation that replaced the USSR. For reasons as yet undisclosed Western nations supported this biggest daylight robbery of the 20th century by calling the disctator-thieves democrats and the theft 'a market economy" of private ownership.
Because of this unique "Company Store" approach to 'running" Russia, it is impossible to protect insurance reserves, pension funds, and social security principal from serious loss caused by planned devaluation of the currency and inflation, much less provide a real return on invested capital. This requires a policy and strategy that would insulate and protect ("Hedges") against domestic political and "exchange" risks.
Prudent trustee administration dictates that wage funds which are applied to health insurance and pensions must be invested outside the jurisdiction of the Nomenklatura in the same manner that maintenance of a domestic currency requires the establishment of an out-of country "Currency Board". Both have yet to evolve...but they will. When the Russian people regain control of their country, an important source of capital will be the $500+ billion on deposit in Western bank accounts that has been looted from Russia by the "nomenklatura.
An important part of the task facing the Russian population is the creation of off-shore money management for:
* Managing Health Insurance Premiums
* Managing Money of social funds of industries and government
* Managing money of pension plans of workers
* Investing Foundation capital of Russian Banks
* Managing Wage Funds of Industries
* Managing government budget funds for investment in Russian industry (agriculture, coal mining, farming etc)
In 1973 a small group of American consultants set out on a mission: To find for their clients the finest professional money managers, previously reserved for just the privileged few very rich. Twenty years later this commitment has become firmly established in "Palms & Company, Inc. Investment Bankers Consulting Group"
As Palms & Company, Inc. begins its sixth decade of existence, it is developing the business of the "Consulting Group" which is the leader and largest of its kind in money management, and which is the authority on professional investment management.
1997 marks the 25th anniversary of the Consulting Group and follows very successful years. In 1992 the Consulting Group established relationships with more than 40.000 new clients whose capital was all together $9.000.000.000,00. The Consulting Group now has total client relationships of 140.000.
Gains were made in each of the four major client segments.- $6.000.000.000,00 dollars in personal private investor accounts, $700.000.000,00 dollars in retirement plans and $2.000.000.000,00 dollars in joint-stock company accounts.. 65% of new clients were for management of pensions which received lower tax privileges. Assets have grown in every year but one- in 1988, after the October 1987 market crash - and now the assets total more than $50.000.000.000,00 dollars.
1992 was a difficult year. The U.S. Economy remained slow growing and interest rates fell to a very low level.. The stock market didn't begin to go higher until the last three months of the year. The hard currencies of all countries were attacked by high interest rates and the beginning of the European Currency Unit as a new currency. The Stock Market of Japan performed very poorly.
During this confusing year for investors of the world, the consulting group continued to grow. This shows that investors recognize the importance to have professional experts manage their money. The message the consulting group received from its clients is that when conditions are very difficult, its becomes even more critical to have expert managers of their money.
In 1992 the consulting group continued to improve. Most important were two new personal investment advice services. Since this program began in October 1991, 30,000 new clients have deposited with the consulting group more than $1.000.000.000,00 dollars to manage for them.
Because of the new necessity to manage pension programs for the workers of Russia, the consulting group made the principles of the personal investment advice services strategy larger and began new special services in 1992. Because of the unusual way of communicating with its clients, the Consulting Group is the first pension management joint stock company in the pension industry which is permitted by the United States Government (Department of Labor) to provide investment advice directly to our clients.
In 1992 clients of the consulting group were asked if they were satisfied with our investment management. 97% said they were satisfied. The survey also informs us that clients like to be informed about all consulting group activities. So the consulting group agreed to send a newspaper every 90 days- "On Course" that reports to our clients what is happening in the capital markets and discussions questions about investment.
The consulting group will continue to improve the research capabilities of the analysts who perform the evaluation of investment managers. From the 8000 Investment managers the consulting group personally visit 400 each year to keep informed of their performance. The consulting group's responsibility is to identify the investment managers that can perform the best to reach the financial goals of our clients and also to guarantee that these managers continue to follow the clients instructions about the way that they wish their money to be invested. In 1992 the consulting group removed three investment managers. In 1992 the consulting group added four new investment managers.
In Moscow, local personal service is provided by our local representative We intend to strengthen our position as leader in Russia in 1997. We look forward with great enthusiasm to assisting Russian companies to solving difficult questions about their health programs and pension programs and management of their money. We work always to reach the goals of our clients for concrete results.
NEW CLIENTS OF CONSULTING GROUP
1987 - 2300 1989 - 9400 1992 - 40000
total consulting group client assets have increased an average of 35% annually in the past 10 years
CLIENT ASSETS (MONEY) (in dollars)
1974 - $ 13.000.000,00 1977 - $ 120.000.000,00 1980 - $ 800.000.000,00 1983 - $ 3.800.000.000.00 1986 - $13.700.000.000,00 1989 - $26.000.000.000,00 1990 - $52.000.000.000,00
The mission of the Consulting Group is to provide private personal investment management service to every client.
These clients are in three major types: private citizens, pensions of workers, and organizations.
In 1992 private citizens gave the Consulting Group more than $6.000.000.000,00 dollars to manage for them. Private citizens understand that managing money is like managing a business. Both require time, experience, knowledge, access to information than a private citizen does not have. The Consulting Group helps and protects citizens.
Uncertain conditions in inflation and currency exchange require special solutions and strategy. What was a comfortable knowledge of an acceptable pension a few years ago has no become too little for the new conditions. Correcting these mistakes makes necessary great attention to investment choices and decisions.
Cost of Education:
The cost of an education has become suddenly very high. It grows even faster than inflation. Providing your children with a future and education in the best schools of the world makes necessary experts to plan your strategy.
Workers with Pension:
Many older people cannot live from the pensions they now receive. If their children want to see them safe then a plan must be made that will give them the same life, even if inflation goes higher.
The Consulting Group can provide storage of valuable papers. We can provide trustee services that satisfy the fiduciary demands made by the U.S. Government for protection of pension money from any dangers of disappearance.
In 1992 the Consulting Group received more than $700.000.000,00 dollars to place under Investment Managers to manage. By the end of 1992 about $1.720.000.000,00 of pension money was being managed.
GOVERNMENT MINISTRIES AND OBLASTS AND OKRUGS
RUSSIAN FEDERATION AND 89 ADMINISTRATION REGIONS
The management of government money and government agency money is determined by precise norms. The procedure is normally to invite bids for contracts to manage money. Our services can help governments and organize the steps for these normative actions.
HUMANITARIAN AND ECONOMIC GRANTS
We understand the special norms that are required to handle international grants of money for economic assistance, pollution and environment protection, health services, studies of nuclear plants, etc.
The expenses are frequently unpredictable and receiving of money very stable. This present a challenge for managing the money properly. We know our clients want to earn the best possible profit so that the money will be sufficient to complete their spending policies.
JOINTLY TRUSTEED FUNDS
Cooperation is required to manage money jointly between our firm and Oblasts and Okrugs or Ministries. Our trustees and labor union trustees are interested to accomplish their responsibilities. Our clients have discovered that the services we give them provide a strong safety for safely managing money and protecting it from devaluation, inflation, currency exchange risks and investment losses.
YOUR FINANCIAL CONSULTANT
The most important thing we give our clients is our Financial Consultants. A FC gives the client a direct communication link to the work of investment. He is a friend and an ally and advisor. The client get professional advice, expert experience and good decisions from the FC about the management of money under international conditions.
To keep the education of FC's at high norms they receive continuing training directed by 16 deputy General Directors. It is the work of the Deputy General Directors to teach new methods to FC's. In 1992 the Consulting Group paid $1.500.000,00 dollars for training of their FC's. During five years FC's as a group, completed more than 80.000 hours of class and seminar instruction
The Consulting group has a special group of Association of Professional Investment Consultants (APIC).
THE INVESTMENT PROCESS
Every investor has different ideas, goals and opinions. So we create a special strategy for each client. We listen to what the investor wants. What does he want to accomplish and how much risk does he wish to take. We listen to what the client says should be the results and when they should happen. The important questions are: When will the investor need to receive cash and how much. Will the investor accept short periods when the investment will become lower in order to reach a higher result in a longer period of time? When the important questions are answered the FC will help the client to take actions that will reach his purposes. The second step is the decide which investment manager is able to follow the strategy of the investor. The manager must invest the money in the type of investments that the client likes and which can provide the results that the client expects, within the time that the client wishes the results to be produced.
The final step is to monitor the investment managers. The Consulting Group and FC's conduct frequent investigations of the actions of investment managers to be certain that the manager is following the client's instructions and that results are as expected. The FC's gives attention only the the investor's interests. If the conditions of the client change the complete work can begin again to make changes that the client wants.
JUDGING THE INVESTMENT MANAGERS
Each time the FC recommends an investment manager to the client he receives the expert advice of more than 50 analysts who are responsible for judging the investment managers. There are 18,000 investment managers registered with the Securities Ministry of the U.S. (SEC). It is not simple to select the best one for the client.
Every year the judging group of the Consulting Group visit 350 investment managers in Europe and the United States. The analyst (judging person) study whether the investment manager's strategy can make the client's money greater and that the manager is following the strategy the client selected. This process tests the investment manager every year. The results of the judging are given in writing to a committee of 12 financial experts which is called the Consulting group Evaluation Committee. The committee then decides if the performance is acceptable. During the past five years the Consulting Group has terminated seven managers and added 23 new ones. The Consulting Group maintains a computer data base of more than 800 investment managers which now each manage more than $800 million. This is about a total of $640.000.000.000,00 dollars.
The Consulting Group has offices in 29 cities. Some cities have more than one center. The Consulting Group employs a staff of 174 people to provide technical information to clients. The Consulting group trading desk carry out 16.000 transactions every day. In 1992, 456 million shares of stock and bonds for a value of $7.000.000.000,00 were exchanged (traded) by the traders for the clients.
FC's also receive special advice from 16 Consulting Service Deputy General Directors in 16 different cities. 31 Technical specialists perform research for the FC's to answer the questions of clients. The technical analysts are experts for finding information about world markets and the results, information about investment managers and strategy for managing money.
COMMUNICATIONS WITH CLIENTS
The Consulting Group believes it is very important for Russian investors to be very well informed by us about their money and how it is managed and about political, economic and monetary events in the World. We accomplish this by providing the client complete information about results every 90 days. Second, we offer them research information to keep them informed of other variants that are possible and of important new events in Russia and the rest of the world.
WALL STREET JOURNAL
The Wall Street Journal is the most important financial newspaper in America and is also distributed in Asia and Europe. The Consulting Group, in concert with the Wall Street Journal conducts quarterly judging of investment managers. Such reports are printed in the newspaper which is read by millions of readers.
RESULTS IN 1996
Dear Dr. van de Waal Palms
With the holiday now a pleasant memory and the better part of 1997 still ahead, it seems only appropriate to recognize that many relationships which helped to make 1996 such a resounding success at XXXXXXXX. We are very fortunate to be associated with such a prestigious group of partners, managers and other professionals. Despite our firm's rapid growth, we remain committed to maintaining and expanding these relationships and we continue to pursue growth oriented investments on a global basis.
During this past year, our direct investments totaled a record $725 million in over 60 venture capital, management buy-out, re-capitalization, growth equity and mezzanine transactions. We are especially proud of the quality and diversity of the attached listing of investments completed during 1009. It highlights the broad array of industries and geographies in which we committed capital. We now manage over $4.0 billion of capital with a particular focus on the following sectors; health-care, specialty retail, media, telecommunications, financial services, automotive, consumer products, food and energy. We have recently begun to target the technology, Internet and real estate sectors as well.
We had the opportunity to realize significant capital gains of $555 million the past year. In total, 15 of our portfolio companies successfully completed public offerings during 1996 and capital gains were realized on approximately 45 investments.
Our worldwide activity also continues to expand. Approximately $90 million was invested outside the United States in 15 transactions by 18 professionals dedicated to investing in Europe, Asia and South America. Our closely integrated global investment team has provided us with a significant advantage in the marketplace.
We are pleased to announce new commitments which further evidence our strategy in new markets:
* We originated, advised and co-led a $750 million private equity transaction with XXXXXX, a Chilean financed services company and a four-member International investment group, to jointly invest in financial services companies throughout Latin America. The group already has acquired two Latin America.
* We have formed an affiliation with XXXXXX fund, one of Israel's premier venture capital funds. We committed $25 million dollars to invest with XXXXXX on a side-by-side basis. The industry focus of this partnership will be on technology-oriented venture capital investments. The fund will be managed by XXXXXXXX and XXXXXXXXXX and XXXXXXXXXX, and was sponsored by XXXXXXXXXXXXX, a prominent Israeli investment group.
As always we welcome the opportunity to work with you on transactions which you think will be mutually beneficial. Again, all of the professionals appreciate our many relationships and we look forward to enhancing them during 1997 and beyond.
Please do not hesitate to contacts any of the colleagues
Sincerely Managing Partner _________________________________________________________________________
We invite interested parties in Russia, who have responsibility for management of capital to dicuss with us policies and strategies for the management of pension, social security and insurance reserves
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