Mr. Masters is a director of the Trading Advisor and a director and shareholder of GA Holdings. He is registered with the NFA as a Principal, an Associated Person and an NFA associate member of the Trading Advisor and is approved as a Principal Person of the Trading Advisor by the JFSC. From February 1994 to February 1999 Mr. Masters was employed by Morgan Guaranty Trust Company (“MGT”) in New York. His last position there was head of the global energy trading business. In this capacity he directed trading strategies and was responsible for risk management for a group of some 30 individuals. Mr. Masters’ business mandate spanned all actively traded energy bases including physical markets, forward transactions, swaps, options and exotic derivative products. Mr. Masters was also responsible for directing research into methods of profiting systematically from the price, political and fundamental information available in the energy markets. From July 1987 to January 1994, Mr. Masters was employed by the Phibro Energy Division of Salomon, Inc. (“Phibro”). Latterly, his responsibilities at Phibro included several trading and risk management functions. He was involved in the establishment of the UK natural gas and electricity markets, transacting some of the first electricity forward agreements and some newly structured options-related physical natural gas deals. Prior to this, Mr. Masters held a senior trading position in the Zug, Switzerland, office of Phibro, where Mr. Masters ran a speculative forward, physical and futures book focused on the Atlantic Basin region, including Brent, WTI, Dubai and several other physical grades. He also was an original and subsequently very active participant in the Contract for Difference (“CFD”) market in Europe, trading based on price relationships between physical crude and corresponding futures. Mr. Masters’ first employment, from September 1985 to June 1987, was with Shell International Trading Company in London, UK, one of the largest physical oil trading companies in the world. During this period he had experience as a physical oil trader in the European and Mediterranean region, an energy risk manager and a coordinator of a portfolio of physical North Sea crude oils. Mr. Masters earned a Bachelor of Science (Honours) in Physics from Exeter University, UK in 1984, and followed that with a Masters in Management Science and Operational Research from Imperial College, London, UK in 1985.
The objective of the Trading Advisor's Commodity Investment Program (the “Program") is to seek profits from commodity interest transactions while taking reasonable steps to protect capital relative to the rates of return sought. The investment objective of the Program is long-term appreciation of assets, and that investment horizon is consistent with the long-term, cyclical nature of the underlying commodities which frequently experience volatility during the course of their price cycles. No assurance can be given that this objective will be met and an investment in the offered program should only be considered by investors that can assume the significant risks associated with commodity interest trading, including the loss of their entire investment. The Trading Advisor attempts to accomplish this objective by following the trading methods set forth below.
Trade selection will be made at the discretion of the portfolio manager. Commodity fundamental as well as macro-economic factors will be considered and combined with quantitative analysis of prices and market conditions. Trades will be executed with holding periods ranging from one day to a month or more.
The Trading Advisor and its Principals believe that money management discipline is a vital element of any trading program. This discipline is comprised of the following major components:
The Trading Advisor trades primarily US exchange-traded commodity futures and options on futures contracts, and may trade on any United States and non-United States exchange that has been designated as a “contract market” by the CFTC and on certain other non-United States exchanges. “Commodity interests” include, but are not limited to, contracts on and for physical commodities, currencies, money market instruments and items which are now, or may hereafter be, the subject of trading futures contracts, swaps, and other commodity related contracts. The Trading Advisor may also trade the cash and forward markets, including the interbank market and exchange of futures for physicals (“EFPs”) for its client accounts.
The trading strategy is designed to gain exposure to opportunities in the majority of actively traded market groups, while simultaneously limiting, to the extent possible, the exposure in any one particular group. The intent of this policy is to increase, on a discretionary basis, opportunities for gain, decrease risk and provide more consistent returns. Especially in view of the above, there may be times, due to market and other conditions, when trading is not well diversified; in fact, on occasion, there may be a heavy concentration of a given commodity (such as Brent crude) or a commodity complex (such as Energies) which could result in a greater return or risk to the account.
The Trading Advisor trades on United States and non-United States exchanges and markets. Because the particular investments that are made by the Trading Advisor depend upon the trading opportunities at the time, it is not possible to estimate what portion of a Client’s investments will be in such different markets in the future.
The trading advisor estimates that for the un-levered version of the program, which targets 15%-25% annualized volatility, approximately 10%-30% of a client accounts’ net asset value on both an intraday and overnight basis will be committed to margin at any one time. However, the trading advisor makes no assurance that actual margin usage will not be substantially higher or lower than this figure depending on market conditions, current margin requirements and changes in account equity.
The Trading Advisor does not intend to alter its primary reliance on a combination of outside source data in conjunction with internally developed proprietary trading systems that evaluate technical and fundamental indicators deemed relevant by the Trading Advisor to evaluate trading opportunities. However, the Trading Advisor reserves the right to make minor adjustments to its risk management and other trading policies.