The Bandon Directional Interest Rate Strategy invests on a monthly basis (one trade per month) in U.S. Treasury based mutual funds. The theory behind the investment model is as follows: Interest rates follow macroeconomic and valuation principles Bond prices can be forecast with reasonable predictability on a monthly basis Significant returns can be generated by adjusting bond market exposure on a monthly basis. The Program uses a consistent disciplined approach employing a multi-factor model to project appropriate monthly fixed income exposure. The monthly cycle of this model is designed to coincide with government economic statistics and data. The overall model methodology applies forecasting tools used by the Federal Reserve Bank and is based on research covering 40 years of history. It utilizes publicly available data and factors that are precisely measurable and devoid of subjective or speculative inputs. The model produces a signal which forecasts whether Treasury interest rates will rise or fall over the next month along with a forecast of the likelihood or strength of this prediction (strong, modest, or unclear). Each trade is placed with a 4% stop-loss trigger. Should the 4% stop-loss level be reached or exceeded on any day during the month, all funds are moved to the ProFunds Money Market Fund. (Note: since trades are made once per day, the loss could potentially exceed the 4% trigger.) Funds will remain in money market until the next model signal is generated, which occurs the first Friday of every month. Past performance is no guarantee of future returns.
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