Barbados Network Consultation - Pathway to Trade Investment Presented by: Marlon E. Yarde CEO/General Manager

Contents – Financial Instruments – Short-term Investment Vehicles Savings Accounts Money Market Accounts Term Deposits Treasury Bills – Financial Instruments – Long-term Investment Vehicles Mutual Funds Bonds Shares (Equity) – Financial Instruments – Classification Risk vs, Return Time Horizon – BSE International Securities Market Investing in Barbados

Financial Instruments – Short-term Investment Vehicles Savings Accounts - Money kept in a bank or savings and loan association for safekeeping. Money Market Accounts - An account where all of the underlying securities are short term, low risk high quality investments under a year. Term Deposits - A deposit held at a financial institution that has a fixed term. These are generally short-term with maturities ranging anywhere from a month to a few years. Treasury Bills - Short-term obligations of a Government issued for periods of one year or less. In Barbados the process is managed by the Treasury.

Financial Instruments – Long-term Investment Vehicles Mutual Funds* Bonds* Stocks/Shares* Property Ownership Insurance Pension Plans

Financial Instruments – Mutual Funds A mutual fund is an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. There are several mutual funds registered in Barbados. The BSE currently reports the net asset value of the following: – Republic Capital Growth Fund – Republic Income Fund – Republic Property Fund – CLICO Balance Fund – Fortress Caribbean Growth Fund – Fortress High Interest – Accumulation – Fortress High Interest Fund – Distribution – Royal Fidelity Select Balanced Fund – Royal Fidelity Strategic Growth Fund – Royal Fidelity Premium Income Fund – Sagicor Global Balanced Fund – Sagicor Select Growth Fund – Sagicor Preferred Income Fund

Financial Instruments – Fixed Income Securities Fixed Income Securities (FIS) are a form of loan or IOU. The holder of the FIS is the lender (creditor), the issuer of the FIS is the borrower (debtor), and the coupon is the interest. FIS provide the borrower with external funds to finance long-term investments, or, in the case of Government FIS, to finance current expenditure. Fixed Income Securities in Barbados – Savings Bonds Issued on a discounted basis to individuals, societies and charities Individuals must be 18 years or older but can be held in trust for a minor, a resident of Barbados or a Barbadian national Five year security (encouraged to maximize ROI) Issued denominations - $50, $100, $500, $1,000, $5,000 Min. nominal value - $50; Max. nominal value - $50,000 Interest earned free of income tax Interest earned after the first 6 months with yield increasing at 6- month intervals thereafter Savings Bonds are transferable only at death Savings bonds can be purchased at any commercial bank (authorized Savings Bond agent)

Financial Instruments – Fixed Income Securities Fixed Income Securities in Barbados – Treasury Notes and Debentures Issued at face value to individuals 18 years or older, non-residents of Barbados and institutional investors Issued in denominations of $1,000; minimum investment size - $1,000 Treasury note maturity periods range from 1 to 10 years Debentures have a maturity period in excess of 10 years Interest is paid semi-annually and determined by Government; payment dates are always listed in the instruments prospectus document. Instruments are subject to a withholding tax rate of 12.5% Treasury Notes and Debentures are transferable and tradable, i.e. they can be sold prior to maturity on the board of the BSE. – Total face value traded for $43,370,000 – Total face value traded as at June 30 th, $4,675,000

Financial Instruments – Equity/Shares A share is a unit of ownership interest in a corporation or financial asset. – Owning shares in a business does not mean that the shareholder has direct control over the business’ day-to-day operations, it does, however, entitle the possessor to an equal distribution in any profits, if any are declared in the form of dividends. – Share prices are generally expected to go up over time and give you a ‘capital gain’ on your money when you sell. However, prices can fall in value as well. Dividends: Payments made by a corporation to its shareholders. The amount you'll receive is based on the number of shares you own. Capital Gains: The difference between an asset’s purchase price and selling price, when the selling price is greater. There are two types of shares: – Common Shares – Preferred Shares

Two (2) Equity Markets – Regular Market (22 listed securities) – Junior Market (4 listed securities) Financial Instruments – Equity/Shares

Financial Instruments – The Risk- Return Relationship

Financial Instruments – Time Horizon Long-Term7.0 – 12.0%+*Shares 3 months – 6 months3.38 – 3.40%Treasury Bills 10+ years6.625 – 7.750%Debentures Long-Term4.31 – 7.75% +*Mutual Funds 1 – 10 years4.25 – 6.25%Treasury Notes 12 months – 3 years3.50 – 4.25%Term Deposit 1 day onward2.6%Call Deposit Time Period Rate of Return Investment Type * The Rate of Return will vary from company to company and from fund to fund

BSE International Securities Market (ISM) - Highlights What is the BSE ISM? – A market for the listing and trading of securities of issuers incorporated in Barbados that would otherwise be listed and traded on other exchanges around the world. Core Products – Equities (trading companies) – Mineral Exploration Companies – Corporate Debt – Investment Funds (open-ended & closed-ended) – Special Categories of Securities Investors – International Investors – Offshore Banks and IBCs – Qualified Investors in Barbados (to be defined but seen as high net-worth individuals within current Exchange Controls regulations)

BSE ISM - Highlights Membership – Trading Participants – Clearing Participants – Sponsors (or listing agents) Benefits to Barbados & International Business Community – Missing pillar in Barbados’ int’l financial centre – Raises the possibility of attracting new types of int’l business to Barbados – Encourages positive use of the numerous double taxation treaties – Enables new types of business to be undertaken (listing sponsors) – Catalyst for changing dated legislation and removing obstacles to company registration – Creation of new jobs and opportunities with specialized skills – Creates a ‘One Stop Shop’ for the int’l business community – Additional tool to the Invest Barbados toolkit for selling the Barbados Brand – Assists in future DTA negotiations and trade agreements – Enhances the current int’l financial services infrastructure with new and updated legislative framework

Benefits to the BSE – It expands the range of instruments listed on the BSE – It brings to membership a new group of participants from the int’l business community both from within Barbados and externally – It creates new trading opportunities for existing members – It raises the profile of the BSE both locally and internationally – It strengthens the position of the BSE in the Caribbean and moves the BSE from being a purely domestic exchange to an international one – By launching ISM, it makes it more likely to attract participants from Trinidad and Jamaica; 1 st mover advantage is key! – Looking at future profits prospects, it will strengthen the value of the shares of the demutualised BSE. BSE ISM - Highlights

Contact Information Marlon Yarde – CEO/General Manager Telephone: (246) /2 Fax: (246) Website:

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