Hermes Econometrics is registered with the United States Securities and Exchange Commission (SEC) as an Investment Advisor and has filed notice in the following states: CA, FL, GA, MI, NJ, OR, UT, VA. All information contained herein is for informational purposes only ad does not constitute a solicitation or offer to sell securities or investment advisory services. Such an offer can only be made in states where Hermes Econometrics is registered or where an exception from such registration is available, and no new accountwill be accepted unless and until any and all local regulations have been satisfied.
It is not our intention to state or imply in any manner that past, results and profitability is an indication of future performance.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE SUCCESS Inherent in any investment is the potential for loss as well as profit. A list of all recommendations made within the immediately preceding twelve months is available upon written request.

Hermes Econometrics was founded in 1994 to provide risk-management investment advice for mutual fund and variable annuity investments. Our goal is to provide the best service and investment strategy we can. Investors cannot make investments and hope to succeed. Today's investor needs to consider both portfolio and market risk. Hermes Econometrics' models are designed to provide reduced market risk by investing in money markets during downtrends.

The Dow theory, developed in the 1930s, was one of the first economic models applied to technical investing that established and correlated a statistical relationship between the Dow Jones Industrial Average and the Dow Jones Transportation indices. The 1970's and 1980's served as a proving ground for the existence of a relationship between interest rates and the performance of the stock market. The 1990's changed investment returns and recovery expectations.
The 21st century has realigned expectations again, especially recovery periods.
Our investment decisions are based on econometric models, which are a reliable forecasting method. Econometric models are so reliable that the Federal Reserve Board uses them to anticipate economic data and set policies accordingly.
Most Fortune 500 companies also employ these forecasting systems for corporate planning..

Once an investor contracts with Hermes Econometrics, we make the determination and provide the service: we contact the fund, annuity company or brokerage firm (the custodian) and get your account invested as determined by our econometric model.
PLEASE NOTE:
• Your investment stays where it has been (i.e. the fund, or the annuity)
• Your Financial Professional continues to work with you as she/he always has.
• You continue to receive statements and confirmations just as you have in the past.
• Hermes simply moves your money back and forth between a money market fund (when our models are negative) and whatever
   your normal account allocation is (when our models are positive).
• The only thing that changes is that you now have an additional financial professional working on your team to help protect
  assets and increase the value of your investment.

Our models are mathematical and therefore objective. We are not making any subjective decisions about the market or being persuaded by any psychological or social events (such as an anthrax scare). To the extent equity and bond markets are concerned with these events, our models will take that into consideration. We don’t have meetings, where the most persuasive or loud or charming person’s viewpoint is considered. We simply follow the statistically proven and objective Econometric Model. We are computerized, and get your authority to go to your custodian directly and prior. This means that we can move thousands of accounts in one day, without having to locate you and have you or your financial professional re-consider the sensibility of our decision. Many of our exchanges are counter-intuitive.

The following notice is furnished to clients and prospective clients in compliance with SEC Regulation S-P:
Hermes Econometrics collects nonpublic personal information about clients from the following sources:
1. Information we receive from clients on applications, contracts or other forms; and
2. Information about client account transactions with us or others.
We do not disclose any nonpublic personal information about clients to anyone, except as required or permitted by law. If a client decided to close their account or otherwise become an inactive client, we will adhere to the privacy policies and practices as described in this notice. Hermes Econometrics restricts access to client personal and account information to those employees who need to know that information to provide products or services to clients. Hermes Econometrics maintains physical, electronic and procedural safeguards to guard client nonpublic personal information.

Fall 2000

One Wall Street Truth You Can’t Trust

Timing Doesn’t Have to Be Perfect to Beat Buy and Hold

A Modern Day Fairy Tale –GRIM but True