MEDIUM TERM NOTES

All participating banks have AA or AAA ratings. They issue bank bonds, called MTN (Medium Term Notes). They usually have a 10-year term and a 5 to 7 ½ percent coupon.

Beyond this well-known information, each MTN document is covered by a US treasury document deposited by the FED into the issuing bank. MTN are in strong demand because they combine safety and return.

The banks transfer their sales revenues, profits and commissions to the US treasury via the FED. The exported MTNs are offset by US treasury securities and therefore the MTN are not included in the annual reports of the issuing banks.

These securities are traded under discounted cuts due to various factors such as discounting, market return, issuer quality and above all purchasing power and slice rhythm. They have a CUSIP and a registration number so they can be fully processed and monitored.

The instruments that are used in this trading program are fully traded bank instruments. These are not subjected to any liability, claim or restriction.

The instruments are debt securities in the form of medium-term bank bonds with a maturity of 10 years or in the form of discounted one-year letters of credit.

These banking instruments fully fits to the standard rules of ICC 400 (revision of 1983), the latest edition (revision of 1995) and the latest published ICC 500 (revision of 1983) and International Chamber of Commerce (ICC) loans in Paris / France.

It should be emphasized that the re-sale contract already exists before the purchase of the bonds. The Buyer's account will contain value that is equal or greater than the current value of the fund or bank bills.

PRIVATE PLACEMENT trading safety is based on the fact that the transactions are performed as arbitrage transactions. This means that the instruments will be bought and resold immediately with pre-defined prices. A number of buyers and sellers are contracted, including exit-buyers comprising mostly large financial institutions, insurance companies, or exceptionally wealthy individuals. The issued instruments are never sold directly to the exit-buyer, but to a chain of clients. For obvious reasons, the involved banks cannot directly participate in these transactions, but are still profiting from it indirectly by loaning money with interest to the trader or client as a line of credit. This is their leverage. Furthermore, the banks profit from the commissions involved in each transaction.

The client's principal does not have to be used for the transactions, as it is only reserved as a compensating balance ("mirrored") against this credit line. This credit line is then used to back up the arbitrage transactions. Since the trading is done as arbitrage, the money (“credit line”) can not be used, but it has to be available to back up each and every transactions.

Such programs never fail because they don't begin before all actors have been contracted, and each actor knows exactly what role to play and how they will profit from the transactions.

Arbitrage transactions with discounted bank instruments are done in a similar way. The involved traders never actually spend the money, but have to be in control of it. The client's principal is reserved directly for this, or indirectly in order for the trader to leverage a line of credit.