If you want to laugh, look what happens if spam filters read a hedge fund newsletter....Yesterday was a specially tough day with hundreds of Citibank subscribers not receiving this newsletter. This really hits me because my promise is to deliver – unless I told you in advance that the newsletter will not be published on a certain day. So, I am not sure should I laugh or cry…but definitely you are free to laugh and amuse yourself with some of the weird interpretations of spam filters reading hedge funds newsletters (note: these are all original messages):

“1.2 OFFSHORE_SCAM BODY: Off Shore Scams * 2.0 NA_DOLLARS BODY: Talks about a million North American dollars * 0.7 RISK_FREE BODY: Risk free. Suuurreeee....* 0.0 LINES_OF_YELLING BODY: A WHOLE LINE OF YELLING DETECTED *”

See what I mean? That “whole line of yelling” made me laugh so hard that I decided I have to share this… In order to prevent to be identified as another offsh. scam in an article below I use this abbreviation. Another spam filter did not complain about the “yelling”, but reported the successful identification of the following words: “The phrase 'big' was found at the location(s): . ; The phrase 'bust' was found at the location(s): . ; The phrase 'discount' was found at the location(s): . ; The phrase 'hot' was found at the location(s): . ; The phrase 'prices' was found at the location(s):”

Remember you can always access the archive here: www.opalesque.com/forward.html in case you think you are missing your Alternative Market Briefing.

One last thing: in case you receive the TEXT formated newsletter (i.e. if you see no colors in this newsletter, only text), please hit the link: "View HTML Version" for best viewing! Due to the holiday the next newsletter will be out Tuesday. Have a great, looong weekend!

• US Financial services industry is facing a labor shortage of 10 million by 2010
• CSFB/ Tremont Investable Hedge Fund Index will exceed the US$2 billion
• Van launches investable hedge fund index
• Fed warns of hedge funds risks
• Innovations in finance always 1 step ahead of regulators
• Risky State Investments: Not Ready for Primetime (JP)
• NASD sets up mutual fund clean machine (JP)
• Credit rating industry adopts quantitative approach
• Citigroup Wealth Manager Says Beware of Long Bonds
• Top banks report a surge in the use of credit options
• Options Boom Brings Its Own Opportunity
• Top banks report a surge in the use of credit options
• Soft dollars decline under specter of new regulation
• Canada: Montrusco Bolton and Focus Investment announce Third Annual Alternative Investments Conference
• Man rated `hold`, double digit growth expected
• Towry Law to shut down international operations
• AP1 clarifies – starts 2005 to look at hedge funds, not earlier
• Is the European Commission taking control of the Offsh. and Banking Industry?
• Wall Street`s Bullish Outlook for M&A Deals in China is Premature
• Yam on Asia`s Ability to Cope with the Continuing Challenges of Globalization
• A Bubble in Bulk: Shipping costs raise 200%
• China to launch Nasdaq-like board
• Foreign buyers seek refuge in Japan`s bonds, new hedge fund trade?

• 11th Annual Hedge Fund Forum New York City - Save up to $500
• NEW! : 2nd Annual Global Absolute Return Congress (‘Global ARC’) Boston
• Alternative Investment Roundup: three concurrent conferences on Hedge Funds, Private Equity & Real Estate
• 7th Annual Portfolio Management Conference Frankfurt/Germany
• Asset Allocation Summit London - 10% discount for subscribers
• Institutional Investor invites for second annual Hedge Fund Awards Dinner in NY on June 24, 2004
• Advertise in this newsletter
• Contact

What was behind your original concept for PerTrac?
I’d like to tell you that PerTrac was the result of a brilliantly conceived plan to build and deliver a revolutionary new analytical platform to the investment management industry. But actually, the whole thing is a fluke of circumstances that could never be repeated and we did not initially intend to be in the software business.

Continue reading the full story on this market leader in performance analysis software who started out never wanting to sell anything at all...

To the Technologically Speaking Archive

Hedge Funds: Quantitative Insights
François-Serge Lhabitant
Hardcover
384 pages

Fresh off the press (published May 18th): “Quantitative Insights” from the bestselling author of “Hedge Funds: Myths and Limits”.

This primer on the analysis of hedge funds offers investors a more quantitative understanding of this topic, providing a complete guide to portfolio techniques, asset allocation, performance measurement and product selection in the alternative investment world.

• Hedge funds are the fastest growing sector of the financial industry, and yet the least understood, by market professionals.
• Examines and popularises the results of several quantitative studies that have so far been confirmed within academic circles.
• Written by a highly regarded and impartial financial practitioner and academic, this will provide an excellent follow-on to Hedge Funds: Myths & Limits (Wiley 2002).

To the Recommended Reading Archive

From Investmentnews.com: By 2010, an “age wave” will have hit the U.S. work force, and firms in the financial services industry will be fighting to find — and hang on to — skilled employees such as financial advisers and brokers, according to recruiters and consultants. Full article: Source

CSFB is pleased to announce that products linked to the CSFB/Tremont Investable Hedge Fund Index will exceed the US$2 billion mark on June 1 in total assets through the sale of index-linked products. Investment vehicles tracking the CSFB/Tremont Investable Hedge Fund Index are now available throughout Europe and Asia, and are distributed by CSFB. The CSFB/Tremont Investable Hedge Fund Index was launched with 60 funds across 10 style-based sectors and is designed to give investors broad exposure to hedge funds as an asset class through index-linked products. Performance for the index and the ten style-based sector indices is calculated monthly. Source: company press release, no online Source

Portfolio-international.com reports Van Global Hedge Fund Advisors (Van) has launched an investable hedge fund index, the Van Tracker Fund (VTF), that will track the performance of the Van Offshore Hedge Fund Index excluding funds of funds. The Index began with a value of 1,000 in January 1988 and has climbed to a value of 9,269.86 in March 2004. Over a 16-year and three month history, the Index has generated a net compound annualised return of 14.7 per cent, with a reduced risk profile. Source

The US financial system is strong, but the growth of the hedge fund industry in recent years poses potential risks to the system, New York Federal Reserve President Timothy Geithner said on Thursday. "U.S. hedge funds cam play a beneficial role ... But they also present risks to the financial system," Geithner told the Economic Club of New York. Full article: Source

CBS.MarketWatch.com - Banking supervisors are engaged in a never-ending "arms race" with the increasingly complex financial system they are supposed to regulate, New York Federal Reserve Bank President Timothy Geithner said Thursday. While the Fed and other bank supervisors generally have jurisdiction over banks, the financial system has found ways to diversify its risks beyond the regulated sectors and into a murky region ruled by unsupervised hedge funds. Source

The WashingtonTimes .com reports that U.S. states are amending open-records laws to keep risky, often lucrative venture-capital investments secret. Pension funds and colleges would normally be required to disclose investment information, but venture-capital funds, trying to keep their holdings and performance secret, have successfully lobbied states to keep that information out of the public eye. The media and watchdog groups say such changes make it harder to hold government officials responsible for their spending of public money. Source

According to the Investors’ Daily.(CBS.MW) the NASD named 20 people to its mutual fund task force, which will seek to bring clarity to fund fees and distribution arrangements. The task force, which will meet June 23, will focus on fund portfolio transaction costs, including direct brokerage deals, disclosure and soft dollars. The task force will report to the Securities and Exchange Commission on these issues in the next several months, the NASD said Thursday. Source

According to the FT, investors are turning in greater numbers to new technologies and services that monitor market movements to judge credit risk, posing a challenge to the rating agencies' traditional qualitative methods of analysis. The new-style quantitative analysis relies on "measurable" factors to assess a company's financial condition, including movements in bond prices, equity prices and interest rates. Investors can use this information to calculate the impact of price changes on a company's creditworthiness and estimate the likelihood it might default on its debt. Full article: Source

Reuters reports investors keen to protect their capital should beware of long bonds, stick to the short end and seek out specialized products designed to ensure against losses, a leading U.S. wealth manager said on Thursday. Clark Winter, chief global investment strategist for Citigroup Private Bank, said tighter monetary policy was likely to hit long-term government paper harder than expected. Source

The FT reports the use of credit options has exploded this year, according to JP Morgan, one of the leading banks involved in this type of derivative. In the first five months of 2004 the bank has seen nine times as much volume as in the same period last year. Source

Whether you love 'em or hate 'em, options are an integral and growing part of the investment industry. According to data from the Options Clearing Corp., through which all options transactions are matched, cleared and guaranteed, 2003 was a record year for options trading, as volume hit 797 million contracts, a 2.2% increase over the prior record set in 2001. Source

On Wednesday, May 26, a Full Membership at the Chicago Board of Trade sold for $885,000, surpassing the exchange's all-time high seat sale of $857,500 in May 1997. Source

U.S. investment managers and mutual funds cut back on their use of soft dollars last year in anticipation of regulatory intervention, and many institutions are planning further reductions in the months to come. A new report by Greenwich Associates reveals that a general decline in equity commissions and uncertainty about the legal future of soft dollars combined to drive down U.S. soft-dollar volumes by 18% last year to $1.24 billion or 11% of overall equity commissions. The specter of regulatory intervention has also caused institutions in the United States to begin contemplating how they will value, access, and pay for third-party equity research and services in the event of new restrictions or an outright ban on soft dollars.

“The declines in soft-dollar usage reflect the expectation that in the current environment, soft dollars are unlikely to escape regulatory action,” says Greenwich Associates consultant John Colon. “As that perception takes hold, we expect to see even deeper cuts in the future, either in the form of across-the-board reductions in soft-dollar usage, or in a paring back of the types of research and services purchased with soft dollars.” While a portion of this reductions in soft-dollar volumes can be attributed to the 11% overall decline in U.S. equity commissions, Greenwich Associates research suggests that institutions are planning deeper cuts in the coming 12 months. The consultants at Greenwich see these cuts as an attempt by investment managers and mutual funds to stay ahead of regulatory action that many regard as increasingly likely.

Greenwich Associates recommendations
A ban or strict limitations on soft dollars would have an impact far beyond the current debate over trading costs and best execution rules, however. About one-half of U.S. institutions interviewed by Greenwich Associates say they are “opposed to” or “strongly opposed to” paying hard dollars for access to research and research services. Source: company press release. Company website: Source

Montrusco Bolton Investments Inc. of Montreal, and Focus Investment Group of Bermuda, today announced the Third Annual Alternative Investments Conference that will be held on June 3-4, in Bromont, Quebec. The private conference is aimed at institutional investors in Canada, and provides attendees with an intimate view of the Montrusco Bolton / Focus Investment Group partnership.
Speakers at the conference will address such issues as portfolio construction, manager research, risk management, hedge fund outlooks for 2004 and global investing trends. Specifically managers will describe in detail their investment strategies and provide a portfolio review and investment outlook for their area of specialization. For further information, please contact: Frank Belvedere (514) 282-2910. No online Source

Analyst Keith Baird of Dryden Financial maintains his "hold" rating on Man Group. In a research note published yesterday, the analyst mentions that Man has been benefiting from the robust investment trends in hedge funds during the bear phase of the equity markets. The company is expected to report double-digit growth in the near future. Source

From the FT: Towry Law, the financial advisory group owned by HHG, is to shut down its international operations following two years of market turbulence and a scandal over two Hong Kong hedge funds. Towry Law is believed to be under investigation by the Securities and Futures Commission, the Hong Kong regulator, over two failed hedge funds it marketed to investors. Source

From IPE.com AP1 says recent press statements about it moving into hedge funds are “misleading” and that it will not start reviewing hedge funds until 2005 for possible investment. The 139 billion-crown (15.2 billion-euro) fund said in a statement: “Första AP-fonden is currently in the building-up phase for alternative investments. Statements in the press recently about Första AP-fonden moving into hedge funds already in 2004 are misleading.” It added: “At this stage, Första AP-fonden prioritizes building up the private equity portfolio. The fund will not start reviewing hedge funds until 2005 for possible investments some time during that year.” Source

From Simon Denton, Managing Director of The Sovereign’s Group UK subsidiary & was recently elected as Chairman of The Offsh. Institute, UK Chapter. See my Editorial Note above for more comments.
The EU Savings Tax Directive, will clearly have an impact on business generation, the retention of existing business and how the same business will be serviced by banking institutions, trust companies and professional firms. It has been my view for some considerable time that clients that wish to take advantage of offsh. domiciles and the banks that offer private banking services to shelter personal funds from reporting requirements and taxation in the country of where the person is resident is possibly non-compliant, illegal and very often a poorly thought out strategy that will never stand the test of time and will not provide family and possible business partners with legitimate asset protection, tax deferment and planning. Full article: Source

Merger and acquisition activity in China is heating up and it looks like Wall Street is too enthusiastic for its own good. It is true that early this month Anheuser-Busch announced plans to buy a 29% stake in SABMiller and two days later SAB offered shareholders a total of $553 million for the 75.6% of Harbin's Hong Kong listed shares it doesn't yet own.
Harbin Brewery is at the center of a tug-of-war between the world's largest beer makers in the first hostile takeover attempt of a Hong Kong-listed Chinese company. This marks the first time a foreign company has launched a hostile takeover bid for a mainland company. If the takeover is successful, analysts are expecting that this may pave the way for more mergers and acquisitions in China. However, don’t bet on China becoming the newest takeover target for the top investment banks….Full article: Source

The following is a statement by Mr Joseph Yam, Chief Executive of the Hong Kong Monetary Authority and Alternate Governor on the Board of Directors of the Asian Development Bank, at the 37th Asian Development Bank Annual Meeting, Jeju Island, Korea. Source

In February Cargill charterd a cargo ship called Thrasyvoulos for five months at a rate of $41,000 a day. A year ago the commodities giant would have paid $13,000 a day for a comparable 68,000-ton bulk vessel. It now costs exporters like Cargill $75 to ship a ton of soybeans across the Pacific, $50 more than a year ago. Blame China--or praise it if you're in the shipping business and raking it in. Source

New exchange expected to have 10 stocks listed in early June. China is set to create a board on the Shenzhen stock exchange tomorrow grouping small and mid-sized firms, a move that analysts said was a step towards a Nasdaq-style board that would help entrepreneurs raise cash. Source

According to the FT, foreign investment in Japanese bonds hit a record high last week as non-Japanese buyers seized on debt as a haven from Tokyo stocks and a way to profit from the strength of the yen. The huge inflows puzzled observers because yields on Japanese government bonds (JGBs) are among the lowest in the world. And with deflation easing, the value of debt bought today is likely to fall as interest rates rise. "It sounds like it's a hedge fund type of trade being set up,"…More: Source

From the team that brought you GAIM USA, the only must-attend event of the summer on key regulatory and investment issues in the heart of New York City. **Register and Save up to $500**

• Special track specifically for investors looking to make an early allocation to hedge funds - plus the opportunity to meet leading institutional investors including - Verizon Investment Management, Stanford Management Company & the Ford Foundation
• Opportunity to meet face to face with several leading consultants advising on major alternative investment mandates
• A mid year update on regulatory issues - registration, inspections, cap intro conflicts of interest, AML update, short selling rules and more.
• Expert advice on how to prepare for and manage an SEC inspection - unmissable information given the additional resources the SEC will be dedicating to inspecting hedge funds.
• Outlook for alpha roundtables - face to face time with leading managers to discover their perspectives on alpha opportunities in each of the major hedge fund strategies.

For more information, visit: www.iirhedge.com or contact Marc Weitzman at the Institute for International Research p: 212.661.3500 ext.3092

Pension/Endowment speakers include:

• from North America: ABP Investments • Alberta Revenue • CDP Capital • City of Philadelphia Public Employees • Emory University Endowment • George Washington University Endowment • MIT Endowment & Retirement Plan • New Hampshire Retirement System • Texas Teachers Retirement System • The Atlantic Philanthropies • University of California Endowment • University of Texas Endowment • Verizon Investment Management • Virginia Retirement System • World Bank Pension Plan
• from Europe: AP7 Pension Fund • Danish Lawyers & Economist Pension Plan • KLM Airlines Pension Plan • Pension Fennia • Skandia Liv
• from Asia and Australasia: Commonwealth/Public Superannuation Scheme • Mitsubishi Corporation Pension Fund • New Zealand Superannuation Fund • Retail Employees Superannuation Trust • Victorian Funds Management Corporation

For registration go to www.global-arc.net or contact David Stewart at david@global-arc.net

The Alternative Investment Roundup is three concurrent conferences at the same location covering the most important alternative asset classes-Private Equity, Hedge Funds, & Institutional Real Estate. The programs share networking events, offering you unmatched opportunities to meet a wide array of alternative investment professionals and investors. Over 750 decision makers attended last year's event.

10% discount for Alternative Market Briefing Readers for the Alternative Investment Roundup. Register by May 17, 2004 for additional Early Bird Discount. For more information, please visit www.srinstitute.com/air or contact Chris Petersen at CPetersen@srinstitute.com

The Conference for Institutional Investors

Key speakers: Prof. Harry Kat, City University, London
Prof. Ken Froot, Harvard University, U.S.A.

Topics include:

• What are the risk and return sources of Hedge Funds?
• „Absolute Return“: What are the opportunities for insitutional investors?
• Institutional investor behavior in the equity markets
• Best execution and transaction cost analysis for European bonds
• Demographic changes and its impact on future returns of stocks and bonds

At this critical juncture for the development of the world's equity and bond markets, this conference will be examining strategic and tactical asset allocation, current strategy and alternative investing. Our conference in October 2003 attracted over 300 participants to the Inter-Continental Hotel.

"THE BIG EVENT FOR THE BIG PICTURE"

The theory and practice of asset allocation is undergoing dramatic change. The dominant position of equities in pension schemes is under question and investment consultants are putting forward new ideas regarding the structure of asset allocation benchmarks. Multi-asset mandates are coming back into fashion. Asset allocators are grappling with uncertain economic and market conditions, and the correlation between equity and bond markets has reversed. Alternative Investments are seeing record new money flows. The Asset Allocation Summit features speakers at the very heart of these key developments. For anyone involved in asset allocation, this could be the most significant investment conference of 2004.

OVER 300 DELEGATES IN 2003

ASSET ALLOCATION SUMMIT 2004 features presentations on:

• Current investment strategy
• Dynamic asset allocation strategies
• Liability driven benchmarks and risk budgeting
• Tactical asset allocation
• Using style analysis
• Investing in hedge funds
• Investing in private equity
• Gold, commodities and other alternatives
• Portable alpha strategies
• Currency overlay strategies
• Derivative overlays and structured products
• Implementation tools and strategies

This gala – held in conjunction with Institutional Investor’s Spring Hedge Fund Investment Roundtable, June 23-24, 2004 – will bring together the hedge fund industry to recognize and applaud the achievements of their peers. The awards dinner will include key industry players – hedge fund managers, funds of funds, endowments, foundations, and corporate and public pension funds.

Nominees for the awards are selected by the editorial team of Alternative Investment News. Subscribers, readers and other industry members are encouraged to visit our website to offer their input and comments on the nominations. Winners will be selected by the editorial team of Alternative Investment News. Winners will be announced at the event.

2004 Alternative Investment News’ Editorial Advisory Board:
Leroy Cody, American Express Alternative Investments
Joel Katzman, J P Morgan Alternative Asset Management
Richard Lindsey, Bear Stearns Securities Corp
Nick von Speyr, Optima Fund Management
Kent Clark, Goldman Sachs Hedge Fund Strategies
Joe Pescatore, UBS
Martin Phipps, Gartmore Investments

Award Categories: Hedge Fund Leader of the Year, Fund of Funds Leader of the Year, Institutional Manager of the Year, Emerging Manager of the Year, Institutional Investor of the Year

To find out who is nominated and to register for the event contact: Nazneen Kanga nkanga@iinews.com

Opalesque Ltd.
8 Samou Street
St. Omologites
Nicosia 1640
Cyprus

+49-89-512668-68
info@opalesque.com
www.opalesque.com

This newsletter is edited by Matthias Knab (MK) for Opalesque Ltd. For more information about me and Opalesque Ltd. please use this link.

Jeff Posner (JP), a Chicago based PR specialist and free lance writer focussing on the financial industry, is a contributing editor of this newsletter. He can be reached at Geoffp7@juno.com.

Did you know? Opalesque is giving you free access to the newsletter archive - use this link.

Disclaimer: The information contained in this newsletter does not constitute an offer or solicitation to sell any security or fund to or by anyone in any jurisdictions, nor should it be regarded as a contractual document. Under no circumstances should the information provided on this newsletter be considered as investment advice, or as a sufficient basis on which to make investment decisions. The information contained herein has been gathered by Opalesque Ltd. from sources deemed reliable as of the date of publication, but no warranty of accuracy or completeness is given. Opalesque Ltd. is not responsible for and provides no guarantee with respect to any of the information provided herein or through the use of any hypertext link. Past results are no indication of future performance. All information in this newsletter is for educational and informational purposes and does not constitute investment, legal, tax or accounting advice.