ClaraVista Capital Management : Quadrant

Summary

-Trading Approach ClaraVista will trade client accounts pursuant to the trading methodology that is Quadrant (the "Program"). The Program is classified as systematic and technical. Systematic traders rely primarily on trading programs or models that generate trading signals. The systems utilized to generate trading signals are changed from time to time (although generally infrequently), but the trading instructions generated by the systems being used are followed without significant additional analysis or interpretation. Technical analysis is based on the theory that the study of the commodities markets themselves will provide a means of anticipating the external factors that affect the supply and demand of any particular commodity in order to predict future prices. Technical analysis focuses on the analysis of price histories, movements and patterns on the theory that a detailed analysis of market data is the most effective means of attempting to predict the future course of prices. ClaraVista's trading approach is built on elements of trend-following and diversification. The portfolio emphasizes diversification by trading: metals, agricultural products, foreign exchange, stock index futures, energy products, and financial instruments. ClaraVista trades on both U.S. and non-U.S. exchanges which include, but are not limited to, the Chicago Board of Trade, Chicago Mercantile Exchange, New York Mercantile Exchange, New York Board of Trade, London Metals Exchange, London International Financial Futures and Options Exchange, and Eurex. ClaraVista may also trade foreign currencies, for spot and forward delivery, in the interbank market. A strict money management discipline is in place, the design of which is intended to maximize return while diminishing volatility. ClaraVista's program is broadly diversified and is designed to balance risk among various market sectors and various instruments in each sector. Prior to opening an account, ClaraVista will determine with each client the maximum limit positions for the client's account. Capital in excess of the margin required for positions held by the client's account may be invested in U.S. Treasury Bills, with interest accruing to the benefit of the client's account. ClaraVista believes that the ongoing utilization of a systematic trading strategy a mostly static process, in that the methods employed by it are not expected to change significantly over time. However, as a result of further analysis and research into the performance of ClaraVista's trading strategy, changes may be made from time to time in the sole discretion of the Advisor. Clients will be notified of changes, additions or deletions to the Quadrant deemed to be material by ClaraVista's principal. The trading strategies utilized by ClaraVista for an account may differ from those used with respect to other accounts managed by ClaraVista or its own accounts. Trading decisions may require the exercise of judgment by ClaraVista. ClaraVista intends to generally employ a margin-to-equity ratio of approximately 15%, but such ratio may be higher or lower at certain times. ClaraVista expects to pay approximately 2% of the account's net assets on commissions annually and anticipates placing approximately 1,000 roundturns per million per year, but the actual number may be lower or higher at certain times. Trading ideas and methods are confidential and cannot be fully explained in detail. The trading method utilized by ClaraVista is proprietary and confidential. The foregoing description is of necessity general and is not intended to be exhaustive. Consequently, investors will not be able to determine the full details of this method, or whether this method is being followed. There can be no assurance that any trading strategy of ClaraVista will produce profitable results or will not result in losses.