Forex Risk Statement
The risk of loss in trading foreign exchange can be rather significant. For that reason you should carefully consider whether such trading is suitable in light of your financial condition. You may sustain a total loss of funds and any extra funds that you deposit with your broker to maintain a position in the foreign exchange market. Concrete past performance is no guarantee of future results. Simulated performance results also have certain limitations not like actual performance records; simulated results do not represent composite trading. Besides, in view of the fact that trades have not really 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 performance can or is being made, that any trading system will, or is liable; to achieve profits or losses similar to those shown in this simulated performance record.

The performance records have been calculated in a manner we think to be logical and is based on the respective leverage factors intended to be used. Potential 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 think that the records as presented should be of interest to investors in determining whether to take part, 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 methods has certain hypothetical and artificial characteristics and must be evaluated accordingly.

The risk of loss in trading the foreign exchange markets can be significant. Therefore, you should cautiously 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 conscious of the following:

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

You may find it difficult or impossible to liquidate a position under certain market conditions. This can happen, for instance, when a currency is deregulated or fixed trading bands are widened. Potential currencies include, but are not limited to the Malaysian Ringitt, Thai Baht, South Korean Won, 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, won’t inevitably limit your losses to the intended amounts, as market conditions may make it impossible to execute such orders.

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

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

In a number of cases, managed accounts are subject to substantial charges for management and advisory fees. It may be required 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 volatile and speculative
Currency prices are very volatile. Price movements for currencies are inclined by, among other things: changing supply-demand relationships; trade, monetary, fiscal, exchange control programs and policies of governments; United States and foreign political and economic events and policies; currency devaluation; changes in national and international interest rates and inflation; and sentiment of the market place. Any individual advisor can control no one of these aspects and no assurance can be given that an advisor’s recommendation will result in profitable trades for a participating customer or that a customer will not sustain losses from such events.

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

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

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

Frequency of trading; degree of leverage used
It is not possible to forecast the precise frequency with which positions will be entered and liquidated. Foreign exchange trading, owing to the predetermined 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, usually 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 automatically excludes a high frequency of trading for controlled accounts.

Execution of orders
In entering orders for clients’ accounts, the advisor is not determined to limit itself to any particular kind of order. Sometimes it may go into 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 conditions. When liquidating a position, the advisor may, as well, affect a reversal order, that is, the current position is liquidated and an opposite one established for the market being discussed, if signalled by the program.

The effect of dealing spreads and terms
Each client could be subjected to different kinds of transactional costs, even though the account ultimately is not profitable. The advisor stands return on profitability, hence it is important to domicile the account managed by the advisor with a competitive dealing centre. Since dealing spreads differ from dealing centre to dealing centre. The advisor reserves the right for final approval of the dealing centre that has been chosen by the client. The advisor may refuse or delay order entry with certain dealing centres if it is determined the dealing centre in question declines to make competitive markets.

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

Potential conflicts of interest
The advisor trades for its own proprietary accounts. It is possible that orders of the advisor compete for execution with the orders of other customers, although said orders are placed with differing dealing centres around the world. Therefore, there is a potential that orders executed by a particular dealing centre 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, while acting as an introducing foreign exchange broker for its customers, could receive a portion of the commission charged by the dealing centre 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 producing 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 target to manage all accounts within each particular program with the same principles, techniques and market evaluations applicable to the particular program and have no more frequent transactions in those accounts for which the advisor acts as an introducing foreign exchange broker.

Independent introducing foreign exchange brokers and dealing centres that 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 may share a portion of the dealing spread charged by the client’s dealing centre, too. These brokers may charge their own management, administrative or other fees in association with introducing the client. These forms of compensation to the broker generate a potential conflict of interest for the broker by creating a financial incentive potentially for them to recommend an advisor.

This short report cannot disclose all the risks and other important aspects of the foreign exchange markets. Therefore, you should cautiously learn all the documents on foreign exchange trading before you trade, counting the description of the principle risk factors of the investment.

NOTIONAL FUNDS
Note: The next information is provided for the purpose of helping prospective clients to understand fully the information in this Disclosure Document only. It is not meant as a suggestion to clients to fund accounts with notional equity. Clients ought to consult their financial advisers to resolve if the use of notional equity funding is acceptable for them.

Special Disclosure for Notionally Funded Accounts
You ought to request your Trading Advisor to advise you of the amount of cash and other assets (actual funds) that should be deposited to the advisors trading program for your account to be considered “Fully Funded”. That is the amount upon which the Trading Advisor determines the position size traded for your account and should be an amount enough to make it unlikely that any further cash deposits would be required from you in the course of participation in the Trading Advisor’s program. You must remember that the “nominal” account size (the account size you have agreed to in writing) is not the maximum potential loss that your account may experience. You should see the account statement received from your dealing centre in order to determine the actual activity in your account, as well as profits, losses and current cash equity balance. To the level that the equity in your account is at any time less than the nominal account size, you should be aware of the next aspects: 1) even if 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 that accompany the performance tables may be used to convert the rate-of-return (“ROR”) performance table to the equivalent RORs for particular funding levels.

Definitions.
Actual Funds: The amount of margin-qualifying assets on deposit in an account, usually cash and marketable securities. “Actual Funds” can contain definite additional funds that are held in other accounts identified by the customer, provided certain conditions confirming accessibility and control are met. These conditions include provisions whereby the additional funds are particularly designated by written agreement to be principally designated and committed to the exclusive trading of the client’s account under the direction of the Trading Advisor.

ominal or Notional Account Size: The dollar amount that the Trading Advisor and its customers have agreed to in writing which will establish the level of trading in an account not considering the amount of Actual Funds in the account. Accounts, the Nominal or Notional Account Size of which, goes over the amount of Actual Funds are as “Notionally-Funded Accounts”. The terms “Notional Account Size” and “Nominal Account Size» are used interchangeably.

Notional Funds: The amount by which the Nominal Account Size goes over the amount of Actual Funds, which are on deposit in an account. Fully Funded Account: An account in which the amount of Actual Funds equals to its Nominal Account Size. In carrying out 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 requires 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 held in the account in fact, but which have been “promised” by the client through separate agreement with his dealing centre to be available for trading activity in the account. Since notional funding involves the extension of credit by the client’s dealing centre, any such trading must be agreed to by that entity. Notional funding permits 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 comparative to the actual cash in such account. Clients considering the use of notional equity should be confident of their full understanding of the consequences of increasing the degree of leverage used to trade their accounts. This additional leverage results in a proportionally larger risk of loss (and equivalent opportunity for gain). Whereas the possibility of losing all the cash in an account is present in all accounts, accounts that include 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 instance, 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 you designate, will determine the size of contracts traded for your account. The client ought to 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 planned rank of leverage and risk factors. To request a custom analysis free of charge you should 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)

Comparative Matrix
This matrix 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 a corresponding rate of return at different funding levels. For instance, if the monthly rate of return reflected were 10%, a fully funded account would realize a similar 10% rate of return. Thus, an account funded at 50% would realize a 20% rate of return. Accordingly, if a fully funded account realizes a 10% loss, an account funded at 50% would realize a 20% loss. Once reviewing the performance records in this Disclosure Document, a client who is determined to fund his account notionally should read these tables in conjunction with the intended leverage to be executed.

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

(2)These columns correspond to the rates of return experienced at different levels of funding.

(3)This represents the percentage derived by dividing actual funds by the fully funded trading level. The funding levels selected should contain the most common funding percentage selected and the lowest level funding permitted.
Note: The rates of return presented by the matrix reflect only the influence of an accounts funding level. An individual account’s rate of return is impacted by various other factors presented specifically in this disclosure.