How Do You Earn 63.5% in One Year On an Insured Mutual Fund? Simple. You Rewrite the Rules of Investing.

WOODSTOCK, Conn.--(BUSINESS WIRE)--March 22, 1999--At 9:00 a.m. on Friday, March 6, all the phone lines at Advisor's Capital Investments in Woodstock, Connecticut started ringing -- and they kept ringing continuously through the morning and into the afternoon. What was going on? The MoniResearch Newsletter had just ranked Advisor's Capital Investments number one among insured market timers who use index funds like those from Rydex. MoniResearch subscribers were calling to get the story behind Advisor's Capital incredible performance, earning 42.9% in the fourth quarter of 1998 alone and 63.5% for the whole year.

The MoniResearch Newsletter is the industry-standard source of audited market timer performance. Their work has appeared in Barron's, The Wall Street Journal and many other publications. Their investors subscribe to get unbiased results and they were clearly impressed with the results that Advisor's Capital had achieved.

But what the MoniResearch report did not reveal was the unique story behind this investment. It's the story of the development of the ULYSSES program, a new kind of investment vehicle that empowers investors to shoot for aggressive results without fear of losing any of their original investment, because the principal is insured. It is, in fact, the story of one company's quiet but persistent quest to change the game of investing.

Overcoming Emotions and Cognitive Bias 

Robert K. Mann, President of Advisor's Capital Investments, doesn't seem like the kind of advisor who would be known for super-aggressive investing. He has always been very concerned with protecting his clients. In fact, he earned national attention for shielding them through the crash of 1987.

Since that time, however, Mann has become increasingly disenchanted with traditional approaches to mutual fund investing. "One of the big problems with traditional investing methods is that the market is counter-intuitive," says Mann. "In other words, no matter which strategy investors use, they tend to make the wrong decisions because of emotions. A Morningstar study revealed that large amounts of money flow into funds at or near the peaks of the market and large amounts flow out of the funds near the lows...and this money does not return until after prices have recovered. Despite all the information and advice people get, most are blind-sided by emotions and cognitive bias. And this even includes the professionals: 9 out of 10 mutual fund managers fail to beat the S&P 500."

The Quest for a Better Way to Invest

Mann wanted to develop an investment vehicle that would have the potential of offering high performance, but would also shield investors from the emotional and cognitive biases that trip them up. Mann explained, "We reasoned that if we could convince a reputable insurance company to cover our clients' original investments, then clients wouldn't have to worry about losing their nest egg. They would be more comfortable investing aggressively and riding through the ups and downs of the market."

Mann and his cohorts began working to develop an aggressive investment vehicle that would be "reliable" enough to impress conservative insurance executives. They studied more than 90 investment strategies -- virtually every investment strategy available today, including those utilized by FasTrack user groups. They selected the strategies that consistently performed in the top 10% through up and down markets over several years. Then they developed a highly sophisticated MarketRadar(tm) software program that "reads" market data and market trends and sends out signals when it sees a turning point developing. These signals tell when to move assets into the market or out of the market, with the intent of helping investors maximize gains in both rising and declining markets. Amazingly, in computer simulations, projected over a ten-year period, the MarketRadar program predicted market turning points with 80-90% accuracy.

Finally, Mann showed his plan to the Cumberland Casualty & Surety Co., and they were very impressed. They agreed to issue a policy insuring investors in the plan against the loss of principal over a five-year continuous period. (Cumberland Casualty and Surety is backed by Durinco RE, a company with an A rating ("excellent") by A.M. Best. And Durinco RE is a subsidiary of Dow Chemical Corporation, so there is a lot of capital behind this policy.)

Fearless Investing...For Cautious Investors

With all the pieces in place, Mann dubbed his program the ULYSSES Plan because, he says, "In ancient mythology, Ulysses (another name for Odysseus) made a long, courageous journey to finally reach home safely. We're all making an investment journey, and we face many obstacles. The ULYSSES Plan can empower even cautious investors to travel more confidently and reach `home' safely despite the problems."

The uniqueness of the ULYSSES program is that it has the potential to deliver high returns with relatively low risk. No matter what happens, investors are assured not lose their original investment, including renewal advisory fees, as long as they stay in the insured plan for five consecutive years. Investors still have access to their money and can take out as much as 10% each year without voiding the policy. If necessary, they can withdraw all the money, but this will cancel the insurance.

Why hasn't someone thought of this before? Because insurance requirements are so strict that only about a dozen investment advisors nationwide have qualified. Insurance companies carefully scrutinize investment techniques and track records and require that the advisor be a Registered Investment Advisor and demonstrate consistent results over a five year period. The ULYSSES program has met both requirements.

Will the ULYSSES Plan change the game of investing? Time will tell, but one thing is for sure. From the sounds of the phones ringing at Advisors Capital offices, a lot of people are very interested in playing by these rules.

Past performance is no guarantee of future results. Hypothetical or simulated performance results have certain inherent limitations; unlike an actual performance record, simulated results do not represent actual trading. Simulated trading programs, in general, are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to our simulated results. Material market or economic conditions may enhance or impede the results of a model decision system. Past results are not indicative of future results. Future performance may not meet investment objectives and may result in losses instead of gains. Advisor's Capital Investments, Inc.'s (ACI) actual clients' results during the period described did not relate in any way to the simulated results described in the hypothetical model. ACI's desire to excel for its clients resulted in the testing and implementation of these strategies.

As with any insured program, the Guaranteed Preservation of Principal is based on the claims paying ability of the warrantor, its insurance company and the insurance company's re-insurer. All claims are presented to the advisor at the end of the five year warranty period.

Investors should carefully read the "Warranted Investment Advisory Agreement" and the "Registered Investment Advisor's Warrant" before investing. Our disclosure document, Form ADV Part II is available upon request.

The 63.5% actual performance was recorded by clients who began using our "Market Leadership Strategy" on November 18, 1997. The results were recorded from 12/31/97 to 12/31/98. The particular accounts that recorded these results had no withdrawals and followed the strategy with precision over the 12 month period. Other Advisor's Capital Investments, Inc. clients without the insurance or who did not trade exactly as the MarketRadar software indicated did not do this well.