TRADING STRATEGY NDX Capital Management utilizes a combination of technical and fundamental analysis in its trading methodology. The Advisor trades both futures and options on US exchanges, primarily in the livestock and grain sectors. However, the Advisor may trade any future contracts that fit its profit objectives and risk parameters. Much of the NDX Capital Management system is dedicated to position and spread trading in the livestock sector. Entry and exit signals are a product of technical analysis that includes both traditional charting techniques and a proprietary computer program. The robustness of a trade, characterized by confirmation of multiple technical indicators, determines the position size and verifies the entry point. Fundamentals, including seasonal influences, news events, and supply and demand, are variables considered in trade implementation. They also weigh on profit objective and trade duration. Fundamental factors are considered more in some markets than others, given their influence relative to the trade's timeframe parameters. NDX Capital Management offers two trading programs. Both programs focus trading in the livestock sector, and both typically utilize spreads. The technical parameters of the individual programs are defined somewhat differently, however. A variety of components - such as price, volatility, time, and open interest - are factored in technical analysis. The weightings, or importance, given to the various components affects the overall system, often to a large extent. It is this technical variance that establishes the two separate programs. The Abednego Program adheres to strict trade evaluation criteria from a technical aspect. The technical features of the Shadrach Program, however, allow elasticity, which ultimately results in a more aggressive trading approach. On occasion, the programs may trigger opposing positions. The programs are traded independent of one another. The Advisor's principal is Phillip D. Herbert. Mr. Herbert is the Chief Executive Officer of NDX Capital Management. His experience makes him ideally suited to the role he will assume as a principal of the Advisor. He has worked for 12 years as a full-time trader, deriving the majority of his income from his trading activities. While training others to become day traders, he learned to successfully identify personal characteristics associated with successful traders, as well as how to match those characteristics appropriately to systems and markets to create a winning trading strategy. He used this knowledge to assemble and supervise a staff of eight traders for his personal accounts. As a successful trader himself, he knows how to appeal to traders, to maintain their motivation, and to keep them focused and working within the boundaries of their chosen strategies. He began his career in the financial services industry as a stockbroker with Paine Webber Group Inc., where he was the top retail broker for two consecutive years while employed there from 1987 to 1991. From 1991 to 1993, he was employed as a retail broker for Pru-Bache Securities. In 1993, he left Pru-Bache Securities to open the Minneapolis branch of All-Tech Investments, Inc., a stock brokerage firm specializing in day trading using the Small Order Execution System on the NASDAQ exchange. By 1996, the firm provided training, order execution and clearing services for approximately 300 equity traders. In 1996, he left All-Tech and became a full-time trader at NDX Trading Inc., a broker dealer, where he continues to trade actively. NDX Trading provides services to day traders at its offices and through remote Internet connections. He received his Bachelor of Arts degree from the University of St. Thomas in 1986.