Forex Risk Statement

The risk of loss in trading foreign exchange can be substantial. You should therefore carefully consider whether such trading is suitable in light of your financial condition. You may sustain a total loss of funds and any additional funds that you deposit with your broker to maintain a position in the foreign exchange market. Actual past performance is no guarantee of future results. Simulated performance results also have certain limitations unlike actual performance records, simulated results do not represent composite trading. Also, since trades have not actually been executed for this composite, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity, simulated trading results, in general are also subject to the fact they are designed with the benefit of hindsight. No representation can or is being made that any trading system will, or is likely, to achieve profits or losses similar to those shown in this simulated performance record.

The performance records have been calculated in a manner we believe to be reasonable and is based on the respective leverage factors intended to be used. Prospective investors must recognize that any simulation of a hypothetical record, even when based on actual trading systems, with qualified trade execution, has inherent limitations. We believe that the records as presented should be of interest to investors in determining whether to participate, such rates of return should by no means be taken as an indication of how the system will perform or would have performed, even given the same trades. Any performance record compiled from individual performance records of any trading methodologies has certain hypothetical and artificial characteristics and must be evaluated accordingly.

HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.

The risk of loss in trading the foreign exchange markets can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. In considering whether to trade or authorize someone else to trade for you, you should be aware of the following:

If you purchase or sell a foreign exchange option you may sustain a total loss of the initial margin funds and additional funds that you deposit with your broker to establish or maintain your position. If the market moves against your position, you could be called upon by your broker to deposit additional margin funds, on short notice, in order to maintain your position. If you do not provide the additional required funds within the prescribed time, your position may be liquidated at a loss, and you would be liable for any resulting deficit in you account.

Under certain market conditions, you may find it difficult or impossible to liquidate a position. This can occur, for example when a currency is deregulated or fixed trading bands are widened. Potential currencies include, but are not limited to the Thai Baht, South Korean Won, Malaysian Ringitt, Brazilian Real, Hong Kong Dollar.

The placement of contingent orders by you or your trading advisor, such as a “stop-loss” or “stop-limit” orders, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders.

A “spread” position may not be less risky than a simple “long” or “short” position.

The high degree of leverage that is often obtainable in foreign exchange trading can work against you as well as for you. The use of leverage can lead to large losses as well as gains.

In some cases, managed accounts are subject to substantial charges for management and advisory fees. It may be necessary for those accounts that are subject to these charges to make substantial trading profits to avoid depletion or exhaustion of their assets.

Currency trading is speculative and volatile
Currency prices are highly volatile. Price movements for currencies are influenced by, among other things: changing supply-demand relationships; trade, fiscal, monetary, exchange control programs and policies of governments; United States and foreign political and economic events and policies; changes in national and international interest rates and inflation; currency devaluation; and sentiment of the market place. None of these factors can be controlled by any individual advisor and no assurance can be given that an advisor’s advice will result in profitable trades for a partic0pating customer or that a customer will not incur losses from such events.

Currency trading can be highly leveraged
The low margin deposits normally required in currency trading (typically between 3%-20% of the value of the contract purchased or sold) permit an extremely high degree leverage. Accordingly, a relatively small price movement in a contract may result in immediate and substantial losses to the investor. Like other leveraged investments, in certain markets, any trade may result in losses in excess of the amount invested.

Currency trading presents unique risks
The interbank market consists of a direct dealing market, in which a participant trades directly with a participating bank or dealer, and a brokers’ market. The brokers’ market differs from the direct dealing market in that the banks or financial institutions serve as intermediaries rather than principals to the transaction. In the brokers’ market, brokers may add a commission to the prices they communicate to their customers, or they may incorporate a fee into the quotation of price.

Trading in the interbank markets differs from trading in futures or futures options in a number of ways that may create additional risks. For example, there are no limitations on daily price moves in most currency markets. In addition, the principals who deal in interbank markets are not required to continue to make markets. There have been periods during which certain participants in interbank markets have refused to quote prices for interbank trades or have quoted prices with unusually wide spreads between the price at which transactions occur.

Frequency of trading; degree of leverage used
It is impossible to predict the precise frequency with which positions will be entered and liquidated. Foreign exchange trading , due to the finite duration of contracts, the high degree of leverage that is attainable in trading those contracts, and the volatility of foreign exchange prices and markets, among other things, typically involves a much higher frequency of trading and turnover of positions than may be found in other types of investments. There is nothing in the trading methodology which necessarily precludes a high frequency of trading for accounts managed.

Execution of orders
In entering orders for clients’ accounts, the advisor does not intend to limit itself to any particular kind of order. At times it may enter market orders intended to obtain the prevailing market price in a particular market. The advisor may, however, at times use limit orders and other kinds of qualified orders if, in its judgment, that appears appropriate in the given market circumstances. In addition, when liquidating a position, the advisor may effect a reversal order, i.e., the current position is liquidated and an opposite one established for the market in question, if signaled by the program.

The effect of dealing spreads and terms
Each client could be subjected to various kinds of transactional costs, even if the account ultimately is not profitable. The advisor bases compensation on profitability, hence it is important to domicile the account managed by the advisor with a competitive dealing center. Since dealing spreads vary from dealing center to dealing center. The advisor reserves the right for final approval of the dealing center chosen by the client. The advisor may refuse or suspend order entry with certain dealing centers if it is determined the dealing center in question refuses to make competitive markets.

Failure of a client’s dealing center
Under regulation, dealing centers are required to maintain a clients assets in a segregated account. If a client’s dealing center fails to do so, the client may be subject to a risk of loss of his funds on deposit with the dealing center in the event of its bankruptcy. In addition, under certain circumstances, such as the inability of another client of the dealing center or the dealing center itself to satisfy substantial deficiencies in such other client’s account, a client may be subject to a risk of loss of his funds on deposit with his dealing center, even if such funds are properly segregated. In the case of any such bankruptcy or client loss, a client might recover, even in respect of property specifically traceable to the client, only a pro rata share of all property available for distribution to all of the dealing center’s clients. With this information in mind the advisor reserves the right for final approval of the dealing center chosen by the client.

Potential conflicts of interest
The advisor trades for its own proprietary accounts, it is possible that orders of the advisor could compete for execution with the orders of other customers, even if said orders are placed with differing dealing centers around the world. There is therefore, a potential that orders executed by a particular dealing center chosen by the client, could receive better or worse price fills than orders executed for and by the advisor for its own proprietary accounts.

The advisor when acting as an introducing foreign exchange broker for its customers, could receive a portion of the commission charged by the dealing center for the execution of client trades. The advisors receipt of a portion of such commissions could create a potential conflict of interest for it by creating an incentive to execute trades in such client accounts on a more frequent basis than would be appropriate in the unbiased application of a particular trading program and in the best interest of clients. It is the advisor’s intention to manage all accounts within each particular program with the same principles, techniques and market evaluations applicable to the particular program and not have more frequent transactions in those accounts for which the advisor acts as an introducing foreign exchange broker.

Independent introducing foreign exchange brokers and dealing centers who are unaffiliated with the advisor, but introduce clients to advisor, may receive compensation, either directly from the client or through the advisor in the form of a shared portion of the advisory incentive fee charged. Such introducing foreign exchange brokers also may share a portion of the dealing spread charged by the client’s dealing center. Such brokers may charge their own management, administrative or other fees in connection with introducing the client. These forms of compensation to the broker create a potential conflict of interest for the broker by creating a financial incentive potentially for them to recommend an advisor.

This brief statement cannot disclose all the risks and other significant aspects of the foreign exchange markets. You should therefore carefully study all documents and foreign exchange trading before you trade, including the description of the principle risk factors of the investment.

NOTIONAL FUNDS

Note: The following information is provided solely for the purpose of helping prospective clients to fully understand the information contained in this Disclosure Document. It is not meant as a recommendation to clients to fund accounts with notional equity. Clients should consult their financial advisers to determine if the use of notional equity funding is suitable for them.

Special Disclosure for Notionally Funded Accounts
You should request your Trading Advisor to advise you of the amount of cash or other assets (actual funds) which should be deposited to the advisors trading program for your account to be considered “Fully Funded”. This is the amount upon which the Trading Advisor will determine the position size traded for your account and should be an amount sufficient to make it unlikely that any further cash deposits would be required from you over the course of participation in the Trading Advisor’s program. You are reminded that the account size you have agreed to in writing (the “nominal” account size) is not the maximum possible loss that your account may experience. You should consult the account statement received from your dealing center in order to determine the actual activity in your account, including profits, losses and current cash equity balance. To the extent that the equity in your account is at any time less than the nominal account size, you should be aware of the following: 1) although your gains and losses, fees and commission measured in dollars will be the same, they will be greater when expressed as a percentage of account equity; 2) the disclosures which accompany the performance tables may be used to convert the rate-of-return (“ROR”) performance table to the corresponding RORs for particular funding levels.

Definitions.
Actual Funds: The amount of margin-qualifying assets on deposit in an account, generally cash and marketable securities. “Actual Funds” can include certain additional funds which are held in other accounts identified by the customer, provided certain conditions evidencing accessibility and control are met. These conditions include (but are not limited to) provisions whereby the additional funds are specifically designated by written agreement to be specifically designated and committed to the exclusive trading of the client’s account under the direction of the Trading Advisor.

Nominal or Notional Account Size: The dollar amount that the Trading Advisor and its customers have agreed to in writing which will determine the level of trading in an account regardless of the amount of Actual Funds in the account. Accounts in which the Nominal or Notional Account Size exceeds the amount of Actual Funds are as “Notionally-Funded Accounts”. The terms “Nominal Account Size” and “Notional Account Size” are used interchangeably.

Notional Funds: The amount by which the Nominal Account Size exceeds the amount of Actual Funds which are on deposit in an account. Fully Funded Account: An account in which the amount of Actual Funds is equal to its Nominal Account Size. In executing the Advisory Agreement with the Advisor, each client must designate the size of the account to be managed by the Advisor and specify the trading program the client desires the Advisor to utilize on the client’s behalf. The designation establishes the Nominal Account Size and initial mix of Actual Funds and Notional Funds, if such are to be included.

Notional funds in a client’s account are funds not actually held in the account, but which have been “promised” by the client through separate agreement with his dealing center to be available for trading activity in the account. Because notional funding involves the extension of credit by the client’s dealing center, any such trading must be agreed to by that entity. Notional funding allows a client to trade the account at a level higher than the cash actually held in the account. Notional equity creates additional leverage in an account relative to the actual cash in such account. Clients considering the use of notional equity should be certain that they understand fully the consequences of increasing the degree of leverage used to trade their accounts. This additional leverage results in a proportionally greater risk of loss (and corresponding opportunity for gain). While the possibility of losing all the cash in an account is present in all accounts, accounts which contain notional equity have a proportionately greater risk of loss since all cash transaction activities can be applied only to the cash portion of the account total value. For example, an account which is funded with only 50% cash (and therefore 50% notional), a loss of 10% of the account value (based on both cash and notional equity) will equal a loss of 20% of the cash value in the account because of the two to one leverage factor (50% cash, 50% notional).

The account portfolio size designated by you will determine the size of contracts traded for your account. The client should be aware that the notional portion of an account will be reduced only upon prior written notification by the client.

Upon request, we will provide custom portfolio account analysis, using your intended level of leverage and risk factors. To request a custom analysis free of charge call your account representative on your country’s toll-free number and it will be processed immediately.

RATES OF RETURN BASED ON VARIOUS FUNDING LEVELS (3)

Actual (1)
Rate of Return			Level Of	Funding (2)
	100%	80%	60%	50%	40%	30%	20%
45.00%	45.00%	56.30%	75.00%	90.00%	12.5% 1	50.00%	225.00%
40.00%	40.00%	50.00%	66.70%	80.00%	100.00%	133.30%	200.00%
30.00%	30.00%	37.50%	50.00%	60.00%	75.00%	100.00%	150.00%
20.00%	20.00%	25.00%	33.30%	40.00%	50.00%	66.70%	100.00%
10.00%	10.00%	12.50%	16.70%	20.00%	25.00%	33.30%	50.00%
5.00%	5.00%	6.30%	8.30%	10.00%	12.50%	16.70%	25.00%
-5.00%	-5.00%	-6.30%	-8.30%	-10.00%	-12.50%	-16.70%	-25.00%
-10.00%	-10.00%	-12.50%	-16.70%	-20.00%	-25.00%	-33.30%	-50.00%
-20.00%	-20.00%	-25.00%	-33.30%	-40.00%	-50.00%	-66.70%	-100.00%
-30.00%	-30.00%	-37.50%	-50.00%	-60.00%	-75.00%	-100.00%	-150.00%

Comparative Matrix
The matrix on page 26 provides a general guide for prospective investor to convert any indicated fully-funded rate of return in the capsule performance summaries in this Disclosure Document to an equivalent rate of return at various funding levels. For example, if the monthly rate of return reflected is 10%, a fully funded account would realize a similar 10% rate of return. An account funded at 50% would realize a 20% rate of return. Similarly, if a fully funded account realizes a 10% loss, an account funded at 50% would realize a 20% loss. When reviewing the performance records in this Disclosure Document, a client who intends to fund his account notionally should read these tables in conjunction with the intended leverage to be implemented.

(1)This column represents the range of rates of return for a fully funded account that are included in the accompanying capsule performance summary.

(2)These columns represent the rates of return experienced at various levels of funding.

(3)This represents the percentage derived by dividing actual funds by the fully funded trading level. Funding levels selected should include the most common funding percentage selected and the lowest level funding allowed.

Note: The rates of return presented by the matrix reflect only the impact of an accounts funding level. An individual account’s rate of return is influenced by numerous other factors set forth specifically in this disclosure.

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