Goldman's_Jackpot

Michael Maender Jeff Seeburger Personal Finance 5 May, 2011 “Goldman’s Jackpot” Greetings and congratulations on your recent windfall, Mr. Goldman. We are pleased that you have chosen us to ensure your retirement is financially fit. The following pages are simply a guide based on the information you revealed to us in an earlier interview. Plus, as per your request, the entire investment package is comprised solely of mutual funds. Let’s begin by reviewing your personal profile, which will allow us to outline your asset allocation. This allocation is based upon your current status at 33 years of age and in the 25% tax bracket, supporting two young children and a stay-at-home mom. We also discovered that you desire to be not only debt free by the time you retire in twenty five years, but also desire to have your net worth equal 2 million in assets. Again, we believe that when you combine your risk willingess and your family’s health and life expectancy history, along with our direction, that you will meet your financial retirement objectives. The remainder of this guide is an asset allocation strategy. Simply put, it is wealth distribution. Even simpler, where you are choosing to put your money based on your financial needs at the time of retirement combined with, in this case, the ability to cope with risk. Allowing us to care for your money, has already eliminated the biggest risk of all, which is not taking one at all. Again, we thank you for the opportunity to grow your wealth. Let’s begin by examining your allocation in a pie chart starting with the largest portion, then working toward the smallest. As you can see the dominant piece, or 30 percent, is represented with international or global funds. We chose to divide that 30 percent three ways; placing 50 percent into the Matthews China Investor fund, 25 percent into the Columbia European Equity fund and another 25 percent into the DWS Latin American Equity fund. Now, the reason we chose this particular fund for you is because it pairs well with your need to possess a fund that is completely global with an Asian bent. The fund’s ability to produce long-term capital appreciation is another reason we were drawn to it. The Matthews Asia Growth fund seeks to accomplish its objective by investing 80 percent of its assets back into Asian markets. For example, it chooses to use countries like China, Hong Kong, India and Malaysia. Moreover, if we peer into the top ten holdings of this particular fund, you’ll see that they are following through on their strategy by choosing companies within those regions. The CSR Corporation possesses the largest percentage of assets with 2.87 percent. Based in Shanghai, China, CSR mainly engages in the following: research and development , sales and manufacturing of locomotives, passenger cars, freight cars and mass transit vehicles. Next, CNOOC, Ltd., located in Hong Kong, is China’s leading producer of offshore crude oil and natural gas, as well as one of the world’s largest independent producers of oil and gas exploration. Lianhua Supermarket Holdings Company, also based in Shanghai, got its start in 1991. Since then, it has grown into one of that nation’s largest supermarket retailers. Ping An Insurance Group, claiming 2.54 percent of this funds assets is in Shekeo, Shenzen, China. Since its inception there in 1988, it has become on of that nations biggest integrated financial services conglomerates, with insurance, banking, and investments at its foundation. Rounding out the top five is BOC Hong Kong Holdings. The Bank of Hong Kong just celebrated its 20th birthday, and now boasts of its 270 plus locations. Now, let’s have a look at how this fund has performed. Charts and graphs inserted here. The second fund that we are recommending in the international category is the Columbia European Equity Fund. This particular mutual fund’s strategy is to invest in European companies that offer growth potential. The main reason for selecting this fund was to keep your money in the global market however, this time, in Europe. The Rio Tinto Group, making up 3.63 percent of this fund’s assets is an international mining company based in the United Kingdom with ties to Australia. The majority of their work is done in open pits, underground mines, mills and refineries. Next, the BG Group, short for British Gas, is a major player in the global energy market. After 25 solid years in the business, they have a dominant percentage of their holdings in the United Kingdom. Holding just over three percent of the assets is Vodafone Group. They are the world’s leading telecommunications company with a large presence in Europe, the Middle East, Africa, and Asia Pacific. They are the seventh most recognizable name in communications today. The fourth largest holder in this fund is Fresenius Medical Care Corporation. They have been the countries leading producer of dialysis services and products. Over half of their productivity comes from Germany. Completing the top five is HSBC Holdings. HSBC is headquartered in London and one of the world’s largest banking mortgage institutions. Financials dominate the sector weightings here at 22.03 percent of the assets. Consumer Discretionary is next at 16.33 percent. This is followed by Industrials. Weighing in at number four, and then five, are energy and materials, both above 10 percent. Now let’s take a look at the other large piece of the pie, the large cap value. The large cap is also garnering 30 percent of our investment. With this particular portion, we have chosen the ALPS/WMC Value Intersection Fund. We like this fund because it truly embodies the Spirit of America, what with financials, healthcare and energy at its core. Plus it is backed by an approximately forty year boasting of nearly fifty million in assets. This fund invests about 99 percent in the United States, primarily in the common stocks of companies in which the funds sub-advisor believes are undervalued in the marketplace. However, the fund still places emphasis on large capitalization companies. Companies like; Chevron, Wells Fargo, JP Morgan Chase, AT&T, Pfizer, Bank of America, General Electric, Goldman Sachs and Marathon Oil, just to name a few. According to your risk assessment, 25 percent of the pie requires an investment in large cap growth companies. Moreover, in relation to your specific needs, the American Century Growth Investment fund is beneficial. As the name of the fund indicates, the holding companies here are based in the United States. The main reason this particular investment is considered a growth fund is because of the emphasis placed on information technology. The managers of this fund seek individual companies they believe will allow them the largest increase in value over time. Again, these folks focus putting their stock in the company and not the market. Nearly, one-third of this fund falls into that sector. Consumer discretionary, or a sector of the economy that consists of businesses that sell non-essential goods and services, owns 15 percent of this fund. This would be the opposite of consumer staples. Automobile and component companies, consumer service companies, media companies and retailers are some of the businesses that fill out the consumer discretionary sector. Obviously, this portion of the fund does well during an economic boom. Industrials, healthcare and energy combine to posses a little over thirty-four percent of the remaining fifty-five percent of this fund. To allow you an even greater understanding of this fund, I would like to take a minute and list some of the major players. Apple is number one at 4.6 percent, followed closely by Exxon-Mobile Corporation at 4.38 percent. Google, Oracle, Qualcomm and Microsoft, and EMC Corporation are all top ten holders, allowing IT that 30 plus percent sector weighting. Schlumberger, Coca-Cola, and United Parcel Service round out the top ten. The final piece of the pie belongs to our small-mid cap companies. These companies boast of annual revenues between two and ten billion. The asset allocation model asks that you put 15 percent or some thousand dollars here. Since we found two funds that make sense for you in the small-mid cap range, you’ll actually be investing half of that amount into each fund. The main reason for suggesting the Wells Fargo Advantage Small Cap Value Investment fund is because we wanted to fuse foreign with small in order to maximize the growth potential. This is one of the larger small blend funds with $2034.82 million in assets. Energy holds the majority of the sector weight here with over 28 percent, leaving financials, materials, industrials, information technology and health care comprising nearly sixty of the remaining seventy percent. Although you may recognize the company who the fund is named after, the holding companies are not exactly household names. Having said that, I believe it is important that we overview these companies. In the top spot, at just over eleven percent, is the Wfa Cash Investment Management fund. Next, at 6.5 percent, is the InterOil Corporation. InterOil Corporation is a developing oil and gas company in Papua New Guinea possessing ownership of nearly four million acres of petroleum-licensed property. Holding more than 5.5 percent of the assets in this fund is Rangold Resources, Ltd. ADR. The companies operations are based in west and central Africa. Rangold Resources deals mostly in gold mining and exploration controlling eighty percent of the Loulo mine in Somilo, West Africa. Chimera Investment Corporation is next with 3.29 percent of this fund’s assets. Chimera is an American specialized finance company that invests in residential mortgage-backed securities, residential mortgage loans and real-estate-related securities. They enjoy providing risk adjusted, long-term returns to their investors through dividends and capital appreciation. Holding just under 2.5 percent in this fund is McMoRan Exploration Company. They are an independent public company engaged in the development and exploration of natural gas as well as oil in offshore in the Gulf of Mexico and onshore in the Gulf Coast. At nearly seventeen years of age, they posses the most acreage in that region and are using it for deep digs trying to tap into natural gas well below the earth’s surface. Possessing nearly the exact amount of assets for this fund is Range Resources Corporation. Currently, they have a number of low-cost, low-risk targets which creates an opportunity for growth at nearly eight to ten times their current net worth. RRC is a U.S. based company who specializes in natural gas exploration. Their first quarter earnings were released last week marking the nineteenth consecutive quarter of double-digit growth. Chicago Bridge & Iron Company currently holds 2.29 percent of this fund. Founded in 1889 in Chicago, this once local bridge building company has gone global and provides its customers with engineering, procurement, construction. Most recently, RRC also provides comprehensive solutions in regards to energy and natural resources. Our second small-mid cap and final fund offering is the Paradigm Value fund. This fund is true to its name in that it follows a systematic arrangement in regards to whom and how it invests. For starters, it only deals with small capital companies, 2.5 billion or less, they must attractive valuations and are usually sold after they have realized such profits. The aforementioned reasons are exactly why we chose this fund. Plus, we believe it promotes balance throughout the portfolio. The percentage of assets is equally distributed within seven of the ten sectors, and the top ten holdings each claim roughly two percent of the funds assets. As in the previous fund, most of the holding companies are not so easily recognized. We thought it may be important to give a brief description of these small to mid-cap companies. Beginning with Endo Pharmaceutical Holdings. Endo is a U.S. based specialty pharmaceutical company with a focus on value-branded products and generics. Next, the QLogic Corporation is a global leader and an innovator in high performance networking. Performance The information provides some indication of the risks of investing in the Fund by showing changes in the Fund's performance from year to year and by showing how the Fund's average annual returns for 1 year, 5 years, and since inception compare with those of a broad measure of market performance. The Fund's past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. Updated performance information is available on the Fund's website at www.paradigm-funds.com or by calling 1-877-59-FUNDS. The bar chart shows calendar year total returns for the Fund for each full year since its inception. [pic] Best Quarter (June 30, 2003) +30.99%       Worst Quarter (December 31, 2008) -27.15% |  | |  |  | |  |  | |  |  | | | | | | | | | | Since   | | |AVERAGE ANNUAL TOTAL RETURN  | |  |  | |  |  | |Inception|  | |FOR THE PERIODS ENDED 12/31/10  | | 1 Year |  | |5 Years|  | |(1/1/2003|) | |  | |VALUE FUND  | |  |  | |  |  | |  |  | | Return Before Taxes  | |29.08 |% | |7.03 |% | |17.23 |% | | Return After Taxes on Distributions  | |29.00 |% | |6.74 |% | |16.35 |% | | Return After Taxes on Distributions and Sale of Fund Shares  | |18.90 |% | |5.81 |% | |14.60 |% | | Russell 2000 Value Index (does not reflect deductions for fees, expenses or taxes)  | |24.50 |% | |3.52 |% | |10.49 |% | Source: Paradigm Funds Advisor, LLC Works Cited