About Bison Bond II

The Bison Bond II program focuses on providing investors with an alternative to the "normal" Wall Street method of bond management. Using only the highest quality bonds, this program avoids credit risk but does have considerable market risk in order to hopefully obtain upper percentile returns. Austrian economic fundamentals are used to forecast interest rates, and these forecasts are then used to determine the securities. A technical model with a possible fundamental override is used to help make purchase/sale decisions. The Bison Bond II program uses government bond no-load mutual funds and/or exchange traded funds. CPAI may elect to either short 100% or long 100% these funds. Going short does add another degree of risk to the program.

The Bison Bond II program may utilize zero-coupon government bonds since they are more volatile than bonds making regular interest payments. This volatility – although involving market risk – is essential in achieving higher capital gains.

As noted above, the Bison Bond II program may utilize no-load mutual funds and/or exchange traded funds. At the investor’s request, the Bison Bond II program can be applied to annuities that have compatible fund options, primarily those annuities offered by Nationwide and American Skandia. These work well with our investment style. Please keep in mind that all annuities have costs, which should be investigated to your satisfaction. Central Plains Advisors, Inc. does not participate in any compensation from these funds or any other funds. The investment results will differ with annuities.

Why Use Bison Bond II

The Bison Bond II program builds on the Austrian economic fundamentals of investing with government bonds and further adds to the investor’s potential to achieve capital gains by short selling the bond market if interest rates are forecasted to rise. This program allows the investor to make money whether interest rates rise or fall.

Risks Associated with this Investment

The Bison Bond II program’s fixed income investments will change in value in response to interest rate changes and other factors. In addition, the value of securities with longer maturities will fluctuate more in response to interest rate changes.

This program also takes advantage of funds that short sell the government bond market. Short sales are transactions in which the fund sells a security it does not own. If the security the fund sold short goes down in price between the time the fund sells the security and closes its short position, the fund will realize a gain on the transaction. Conversely, if the security goes up in price during the period, the fund will realize a loss on the transaction. The risk of such price increases is the principal risk of engaging in short sales.

At any given time your shares may be worth more or less than the price you paid for them. In other words, it is possible to lose money by investing in the funds.