june 7 2010 bayside pacific advisors llc disclosure document

8/6/2019 June 7 2010 Bayside Pacific Advisors LLC Disclosure Document

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COMMODITY TRADING ADVISORDISCLOSURE DOCUMENT

BAYSIDE PACIFIC ADVISORS, LLC

250 NEWPORT CENTER DRIVE, SUITE M-101NEWPORT BEACH, CA 92660

(949)[email protected]

www.baysidepacific.com

GLOBAL MANAGED FUTURES PROGRAM

MINIMUM INVESTMENT OF $250,000

GLOBAL MANAGED FUTURES AGGRESSIVEMINIMUM INVESMENT OF $75,000

THE COMMODITY FUTURES TRADING COMMISSION HAS NOTPASSED UPON THE MERITS OF PARTICIPATING IN THIS TRADINGPROGRAM NOR HAS THE COMMISSION PASSED ON THEADEQUACY OR ACCURACY OF THIS DISCLOSURE DOCUMENT.

No person or entity is authorized to give any information or make any representation notcontained in this Disclosure Document in connection with the matters described herein, and, ifgiven or made, such information or representation must not be relied upon as having beenauthorized by Bayside Pacific Advisors, LLC.

The effective date of this Disclosure Document is June 7, 2010.This Disclosure Document is considered outdated after March 7, 2011.

This Disclosure Document should be read carefully and in its entirety by all prospective clients.

PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADINGCOMMISSION IN CONNECTION WITH ACCOUNTS OF QUALIFIED ELIGIBLE PERSONS,THIS BROCHURE OR ACCOUNT DOCUMENT IS NOT REQUIRED TO BE, AND HAS NOTBEEN, FILED WITH THE COMMISSION. THE COMMODITY FUTURES TRADINGCOMMISSION DOES NOT PASS UPON THE MERITS OF PARTICIPATING IN A TRADINGPROGRAM OR UPON THE ADEQUACY OR ACCURACY OF COMMODITY TRADINGADVISOR DISCLOSURE. CONSEQUENTLY, THE COMMODITY FUTURES TRADINGCOMMISSION HAS NOT REVIEWED OR APPROVED THIS TRADING PROGRAM OR THISBROCHURE OR ACCOUNT DOCUMENT.


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RISK DISCLOSURE STATEMENT

THE RISK OF LOSS IN TRADING COMMODITIES CAN BE SUBSTANTIAL. YOU SHOULDTHEREFORE CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHTOF YOUR FINANCIAL CONDITION. IN CONSIDERING WHETHER TO TRADE OR TO AUTHORIZESOMEONE ELSE TO TRADE FOR YOU, YOU SHOULD BE AWARE OF THE FOLLOWING:

IF YOU PURCHASE A COMMODITY OPTION, YOU MAY SUSTAIN A TOTAL LOSS OF THE PREMIUM

AND OF ALL TRANSACTION COSTS.

IF YOU PURCHASE OR SELL A COMMODITY FUTURE OR SELL A COMMODITY OPTION, YOU MAYSUSTAIN A TOTAL LOSS OF THE INITIAL MARGIN FUNDS AND ANY ADDITIONAL FUNDS THATYOU DEPOSIT WITH YOUR BROKER TO ESTABLISH OR MAINTAIN YOUR POSITION. IF THEMARKET MOVES AGAINST YOUR POSITION, YOU MAY BE CALLED UPON BY YOUR BROKER TODEPOSIT A SUBSTANTIAL AMOUNT OF ADDITIONAL MARGIN FUNDS, ON SHORT NOTICE, INORDER TO MAINTAIN YOUR POSITION. IF YOU DO NOT PROVIDE THE REQUESTED FUNDSWITHIN THE PRESCRIBED TIME, YOUR POSITION MAY BE LIQUIDATED AT A LOSS, AND YOUWILL BE LIABLE FOR ANY RESULTING DEFICIT IN YOUR ACCOUNT.

UNDER CERTAIN MARKET CONDITIONS, YOU MAY FIND IT DIFFICULT OR IMPOSSIBLE TOLIQUIDATE A POSITION. THIS CAN OCCUR, FOR EXAMPLE, WHEN THE MARKET MAKES A"LIMIT MOVE."

THE PLACEMENT OF CONTINGENT ORDERS BY YOU OR YOUR TRADING ADVISOR, SUCH AS A"STOP-LOSS" OR "STOP LIMIT" ORDER, WILL NOT NECESSARILY LIMIT YOUR LOSSES TO THEINTENDED AMOUNTS, SINCE MARKET CONDITIONS MAY MAKE IT IMPOSSIBLE TO EXECUTESUCH 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 COMMODITY TRADING CANWORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO LARGELOSSES AS WELL AS GAINS.

IN SOME CASES, MANAGED COMMODITY ACCOUNTS ARE SUBJECT TO SUBSTANTIAL CHARGESFOR MANAGEMENT AND ADVISORY FEES. IT MAY BE NECESSARY FOR THOSE ACCOUNTS THAT

ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS TO AVOIDDEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE DOCUMENT CONTAINS,BEGINNING AT PAGE 11, A COMPLETE DESCRIPTION OF EACH FEE TO BE CHARGED TO YOURACCOUNT BY THE COMMODITY TRADING ADVISOR.

THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER SIGNIFICANT ASPECTSOF THE COMMODITY MARKETS. YOU SHOULD, THEREFORE, CAREFULLY STUDY THISDISCLOSURE DOCUMENT AND COMMODITY TRADING BEFORE YOU TRADE, INCLUDING THEDESCRIPTION OF THE PRINCIPAL RISK FACTORS OF THIS INVESTMENT, BEGINNING AT PAGE 5.

YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY TRADING ADVISOR MAY ENGAGE INTRADING FOREIGN FUTURES OR OPTIONS CONTRACTS. TRANSACTIONS ON MARKETSLOCATED OUTSIDE THE UNITED STATES, INCLUDING MARKETS FORMALLY LINKED TO AUNITED STATES MARKET MAY BE SUBJECT TO REGULATIONS WHICH OFFER DIFFERENT ORDIMINISHED PROTECTION. FURTHER, UNITED STATES REGULATORY AUTHORITIES MAY BE

UNABLE TO COMPEL THE ENFORCEMENT OF THE RULES OF REGULATORY AUTHORITIES ORMARKETS IN NON-UNITED STATES JURISDICTIONS WHERE YOUR TRANSACTIONS MAY BEEFFECTED. BEFORE YOU TRADE YOU SHOULD INQUIRE ABOUT ANY RULES RELEVANT TOYOUR PARTICULAR CONTEMPLATED TRANSACTIONS AND ASK THE FIRM WITH WHICH YOUINTEND TO TRADE FOR DETAILS ABOUT THE TYPES OF REDRESS AVAILABLE IN BOTH YOURLOCAL AND OTHER RELEVANT JURISDICTIONS.

THIS COMMODITY TRADING ADVISOR IS PROHIBITED BY LAW FROM ACCEPTING FUNDS IN THETRADING ADVISOR'S NAME FROM A CLIENT FOR TRADING COMMODITY INTERESTS. YOUMUST PLACE ALL FUNDS FOR TRADING IN THIS TRADING PROGRAM DIRECTLY WITH AFUTURES COMMISSION MERCHANT.


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TABLE OF CONTENTS

RISK DISCLOSURE STATEMENT ................................................................................................................................................ iABOUT THE ADVISOR ................................................................................................................................................................. 1ABOUT THE ADVISORS PRINCIPAL ........................................................................................................................................ 1TRADING PROGRAMS .................................................................................................................................................................. 2NOTIONAL FUNDING ................................................................................................................................................................... 4

Special Performance Disclosure For Notionally Funded Accounts ................................................. 4Notional Funding Performance Matrix .............................................................................................5

PRINCIPAL RISK FACTORS ......................................................................................................................................................... 5BROKERAGE ARRANGEMENTS................................................................................................................................................. 9ADDITIONS/WITHDRAWALS TO EXISTING ACCOUNTS; ESTABLISHING ACCOUNTS IN A NEW PROGRAM ........ 11ADVISORS FEES ......................................................................................................................................................................... 11CONFLICTS OF INTEREST ......................................................................................................................................................... 13LITIGATION.................................................................................................................................................................................. 14OPENING AN ACCOUNT ............................................................................................................................................................ 19PRIVACY POLICY........................................................................................................................................................................ 19DISCLOSURE FOR SELF-DIRECTED IRA ACCOUNTS .......................................................................................................... 20TAX ASPECTS .............................................................................................................................................................................. 20PAST TRADING PERFORMANCE .............................................................................................................................................. 21ACKNOWLEDGMENT OF RECEIPT OF BAYSIDE PACIFIC ADVISORS, LLC DISCLOSURE DOCUMENT................. A-1LIMITED POWER OF ATTORNEY ........................................................................................................................................... B-1CONFIDENTIAL INVESTOR INFORMATION ........................................................................................................................ C-1AUTHORIZATION TO PAY FEES ............................................................................................................................................ D-1INITIAL TRADING LEVEL AGREEMENT .............................................................................................................................. E-1ADVISORY AGREEMENT ......................................................................................................................................................... F-1QUALIFIED ELIGIBLE PERSON QUESTIONNAIRE ............................................................................................................. G-1


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ABOUT THE ADVISOR

Bayside Pacific Advisors, LLC (the Advisor") was organized in the State of California in May 2008. OnJune 20, 2008, the Advisor became registered as a commodity trading advisor (CTA) with theCommodity Futures Trading Commission (CFTC) and became a Member of the National FuturesAssociation (NFA). Effective July 9, 2008, the Advisor filed for 4.7 relief under CFTC regulations.

The Advisors primary business is to provide capital appreciation to institutional and retail client accountsby managing their accounts pursuant to the Advisors Global Managed Futures or Global ManagedFutures Aggressive proprietary trading programs. Although the risk of loss exists in futures trading, theAdvisor studies the futures markets with the goal of developing strategic investment approaches to addpositive performance to investment portfolios.

Mr. Richard A. Seapy is the Managing Member, principal, and sole associated person of the Advisor andtherefore, is responsible for making all trading decisions on behalf of Client accounts. A biographicaldescription of Mr. Seapy is presented below under "About the Principal".

The Advisor's main business address is 250 Newport Center Drive, Suite M-101, Newport Beach, CA92660. The Advisor's books and records are maintained at this location. The Advisor's telephone number

is (949) 729-9291 and the e-mail address is [email protected] of the date of this disclosure document, the Advisor was rendering advisory services to four clientaccounts. To view the past trading results of Mr. Seapy and the Advisor, please refer to PASTTRADING PERFORMANCE beginning at page 21.

The Advisor does not trade commodity futures for its own account. In the event the Advisor trades itsown account in the future, Clients would not be permitted to inspect the trading records or written policiesrelated to such trading. Furthermore, Clients will not be permitted to review other clients records.

The Advisor manages accounts for trading in futures and options on futures interest contracts on asystematic basis, however, the Advisor reserves the right to exercise partial or full discretion over thetrading system. The Advisors trading methodologies are speculative in nature. Potential Clients, afterreading the Disclosure Document, should determine whether a trading account managed by the Advisor is

consistent with their financial and investment objectives.

ABOUT THE ADVISORS PRINCIPAL

Richard A. Seapy

Richard A. Seapy, age 41, is the Advisors sole managing member, principal, and associated person. Mr.Seapy became a principal and associated person of the Advisor on June 20, 2008. Mr. Seapy isresponsible for the day-to-day supervision of the Advisor and makes all trading decisions for Clientaccounts.

From November 2000 through January 2004, Mr. Seapy worked for Integrated Capital Markets, LLC(formerly Farallon Capital Group, LLC) located in San Francisco. Mr. Seapy co-founded Integrated

Capital Markets, LLC in November 2000 which was a Member of the Pacific Exchange, registered as acommodity pool operator, and was a Member of NFA. Integrated Capital Markets, LLC ran a tradingdesk in both San Francisco and Los Angeles. As a market maker and proprietary trading firm, IntegratedCapital Markets, LLC made markets in listed securities and options as well as operating an arbitrage desk.As managing member, Mr. Seapy was primarily responsible for operations and trading. This includedsupervising the trading desk as well as overseeing all accounting, bookkeeping, technology andcompliance. While at Integrated Capital Markets, LLC, Mr. Seapy was registered as an associated personand listed as a principal from February 2002 through May 2004.


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include: Soybeans, Soybean Meal, Soybean Oil, Milk (Class III), Wheat, Kansas City Wheat, SpringWheat, Milling Wheat, Rice, Oats, Corn, Maize Corn, Sunflower Seeds, Nikkei 225 mini, Hang Seng,S+P 500 mini, Nasdaq mini, Cattle Feeder, Live Cattle, Lean Hogs, Copper, Palladium, Platinum, Gold,Silver, London Metal Exchange (LME) Aluminum forwards, LME Lead forwards, LME Zinc forwards,Cocoa, Arabica Coffee, Coffee, Cotton #2, Lumber, Orange Juice, Sugar, Crude Oil e-miNY, Natural Gase-miNY, Reformulated Unleaded Gas, Palm Oil, Heating Oil, Carbon Emissions, Australian Dollar,

British Pound, Canadian Dollar, Euro Futures, Japanese Yen, Mexican Peso, Euro/Yen, German Bunds,Eurodollar 3 month, Fed Funds, Japanese Bonds, United States Bonds, Australian Bonds. The Advisorexplores new markets and may decide to add or delete contracts from this list. The Advisor will notgenerally notify the Client each time a new contract is added or deleted unless such changes are materialto the overall program.

The markets that are targeted to be traded include and could potentially include futures contracts, optionson futures contracts as well as forward contracts. Such trading will take place on United States andforeign exchanges. The trading program will not engage in direct foreign exchange (FOREX)transactions or security futures contracts, however, a Clients account will be settled in many differentcurrencies depending on the exchange and contract traded.

The Advisor may invest in or Clients may request the purchase of United States Treasury Bills or otherinterest earning investments such as a cash management product using idle cash in the account.

Global Managed Futures Aggressive Program Methodology

The second program being offered to manage client accounts is the Global Managed FuturesAggressive Program.

Global Managed Futures Aggressive is similar in nature to the Advisors Global Managed Futuresprogram. The major difference between the two programs is that the Global Managed Futures AggressiveProgram requires a lower minimum account size of $75,000 compared to $250,000 required under theGlobal Managed Futures Program. In addition, the Global Managed Futures Aggressive Program trades

fewer markets and generally assumes a slightly larger amount of initial risk when positions are consideredand initiated. Otherwise, the methodology and timing of entries is very similar. For this reason, the twoprograms will perform somewhat similarly over longer periods. However, in no way can it be expectedthat the two strategies will have similar results on a short term, or month to month basis.

On average, the trading program will use 20% to 30% of a customers deposit to meet initial marginrequirements. However, this can and will vary based upon current market conditions, changes inexchange and brokerage margin requirements, the number of markets and the types of markets currentlyin the portfolio. This percentage estimate could vary significantly and will largely depend on factors thatare critical to the Advisors management of the account.

Markets Traded in Global Managed Futures Aggressive Program

The Global Managed Futures Aggressive Program currently monitors or has positions in approximately32 global markets. These include mini-Corn, mini-Soybeans, Sunflower Seeds, Canola, Rough Rice,Oats, Maize Corn, Red Beans, Milk (Class III), mini-Hang Seng, mini-Nikkei 225, Gold, Silver, Cocoa,Arabica Coffee, Orange Juice, Sugar, miNY-Crude, miNY-Natural Gas, Palm Oil, Rubber, Swiss Bonds,Canadian Bonds, Euro German Bobl, Euro German Schatz, Euro Dollar, Fed Funds, Sterling, USTreasuries (2 Year). The Advisor will review the list of contracts from time to time and may decide toadd or delete contracts from this list. The Advisor will not notify the Client each time a change is madeunless the change is material to the overall program.


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The markets that are currently traded or may potentially be traded include futures contracts, options onfutures contracts as well as forward contracts. Such trading will take place on United States and otherforeign exchanges. The trading program will not engage in direct foreign exchange (FOREX)transactions; however a Clients account will be settled in many different currencies depending on theexchange, market, and exchange set specifications for that particular market.

The Advisor may invest in or Clients may request the purchase of United States Treasury Bills or otherinterest earning investments such as a cash management product using idle cash in the account.

Other Considerations for Trading these Programs

A Client may choose either program or may invest in both programs. The Advisor does stress that whileboth programs follow similar methodologies and risk controls and are expected to perform similarly overlonger periods of time, there should be no expectations that these two strategies will have similar resultson a short term basis. Both programs are not trading the same markets dues to the differences in the sizeof the accounts and therefore, for this reason alone, results in the program can and will vary.

The Advisor employs proprietary risk management techniques designed to control risk in a client'saccount. In order to control risk, the trading programs determine and limit how much equity should becommitted to each position, the risk taken is a small fraction of the total equity value. By broadlydiversifying across a wide array of markets, the trading programs diminish the importance of any oneposition in the portfolio even further. Since the Global Managed Futures Aggressive Program has a lowerminimum account size and trades few markets, the diversification may not be as great as that in theGlobal Managed Futures program, thus resulting in a more aggressive nature in the program.

The Advisor believes that there is always room for improvement and as a result the methods that may beused in the future might differ from those presently being used. Because the Advisor's methods areproprietary and confidential, managed account clients will not be informed with respect to such changesin the Advisors investment methods.

There can be no assurance that any trading system will produce profitable results or will not result inlosses.

NOTIONAL FUNDING

The Advisor permits accounts to be traded based upon notional funds. Notional Funds are funds notactually held in the account, but which have been promised by a client, generally in writing, to thetrading activity of the account. The total amount of notional funds and actual funds in a clients accountare considered the Nominal Account size which the Advisor will base its trading decisions.

Should notional funds be employed, Clients should be aware that trading with notional funding increases

leverage, which has the effect of magnifying gains or losses, when calculated as a percentage of the actualcash in an account. Realized gains and losses in an account are always applied to the cash balance in theaccount, not to notional equity. The amount of notional equity in an account can only be increased orreduced upon written instructions from the client.

Special Performance Disclosure For Notionally Funded Accounts

All clients should request the Advisor to advise them of the amount of actual cash deposited in the marginaccount that should be deposited to the Advisor's trading program(s) for the account to be considered


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"Fully-Funded". This is the amount upon which the Advisor will determine the number of contractstraded in their account and should be an amount sufficient to make it unlikely that any further cashdeposits would be required from them over the course of their participation in the Advisor's program(s).You are reminded that the account size you have agreed to in writing (the "nominal" account size) is notthe maximum possible loss that your account may experience. You should review the account statementsreceived from your FCM 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 thenominal account size you should be aware of the following:

1. Although your gains and losses, fees and commissions measured in dollars will be thesame, they will be greater when expressed as a percentage of the actual account equityshown in the account.

2. You may receive more frequent and larger margin calls.3. The disclosures which accompany the performance table may be used to convert

the rates-of-return (RORs) in the performance table to the corresponding RORs forparticular partial funding levels.

Notional Funding Performance Matrix

The following matrix is intended to enable a prospective client to convert any indicated Fully-FundedRate of Return to an equivalent Rate of Return at the various funding levels of the Advisors Program(s).

RATE OF RETURN(1)

RATES OF RETURN BASED ON VARIOUS FUNDING LEVELS(3)

50.00% (High) 50.00% 100.00% 166.67% 500.00%

10.00% 10.00% 20.00% 33.33% 100.00%

0.00% 0.00% 0.00% 0.00% 0.00%

-10.00% -10.00% -20.00% -33.33% -100.00%

-50.00% (Low) -50.00% -100.00% -167.77% -500.00%

100.00% 50.00% 30.00% 10.00%

LEVEL OF FUNDING (2)

Notes: (1) Represents a range in rates of return.

(2) Represents four levels of funding.

(3) Represents rate of return on actual assets in the account for different levels of funding.

PRINCIPAL RISK FACTORS

In addition to the risks inherent in trading commodity interests, other risk factors exist, including thosedescribed below, in connection with a client participating in the Advisor's managed account program(s).Prospective clients should consider all of the risk factors described below and elsewhere in this

Disclosure Document before participating in the Advisor's program(s):

A Participating Client's Futures Commission Merchant May Fail: Under the Advisors tradingProgram(s), client funds will be held by a futures commission merchant (FCM) that is located in theUnited States. As such, rules and regulations of foreign jurisdictions would not apply. Under CFTCRegulations, the FCM is required to maintain client funds in a segregated account. If the FCM fails to doso, the client may be subject to a risk of loss of funds on deposit in the event of bankruptcy. In addition,under certain circumstances, such as the inability of another customers account to satisfy a margin call,the client may be subject to a risk of loss of its funds on deposit with the FCM, even if such funds are


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properly segregated. In the case of any such bankruptcy or customer loss, the client might recover, evenin respect of property specifically traceable to the client, only on a pro-rata share of all property availableto all of the FCMs customers. It is possible that a client may not be able to recover any of his funds.

Commodity Futures Trading is Speculative and Volatile: Commodity prices are highly volatile.Historically, prices for commodity futures and options contracts were highly volatile at times (i.e. prices

either increase or decrease rapidly based upon various occurrences). Price movements of financial futuresand options contracts are influenced by, among other things, government, fiscal and monetary Programand policies, national and international political and economic events, and changes in interest rates. Noneof these factors can be controlled by the Advisor and no assurance can be given that the Advisor's advicewill result in profitable trades for a participating client or that a client will not incur substantial losses.

Commodity Futures Trading is Highly Leveraged: The low margin deposits normally required incommodity futures and options trading permit an extremely high degree of leverage. The higher theleverage the higher the risk. The Advisor employs a subjective approach to determine the clientsleverage based upon the size of the account and current market conditions. A relatively small pricemovement in a commodity futures contract may result in immediate loss, in excess of the amountinvested, or profit to the investor. Under the Advisors Program(s), the average amount of funds investedfor margin purposes at one time will generally be between 20% and 30%, however, the percentage may

be higher or lower based upon the current market conditions.

Commodity Futures Trading May Be Illiquid: Most United States commodity exchanges limitfluctuations in commodity futures contract prices during a single day by regulations referred to as "dailyprice fluctuation limits" or "daily limits." The Advisor conducts trading on the New York Board ofTrade, the New York Mercantile Exchange, the Chicago Board of Trade, and the Chicago MercantileExchange, and trades on other exchanges both domestically and internationally. In the past, futures pricesmay have reached the daily price limit for any or all of the commodity futures traded by the Advisor.During a single trading day, no trades may be executed at prices beyond the daily limit. Once the price ofa futures contract for a particular commodity has increased or decreased to the limit point, positions in thecommodity can be neither taken nor liquidated unless traders are willing to effect trades at or within thelimit. Commodity futures prices have occasionally moved the daily limit for several consecutive days

with little or no trading. Similar occurrences could prevent the client from promptly liquidatingunfavorable positions and subject the client to substantial losses, which could exceed the margin initiallycommitted to such trades. Under very unusual circumstances, the client may be required to accept ormake delivery of the underlying commodity if the position could not be liquidated prior to its expirationdate. The Advisor anticipates trading on foreign futures markets. Clients should be aware that foreignmarkets may or may not impose such daily price limits. Furthermore, market participation oninternational exchanges is generally less than participation on domestic exchanges. Therefore, theinternational exchanges may not provide the necessary liquidity to initiate or liquidate positions generatedat prices specified by the Advisor.

Trading on Foreign Exchanges and Currency Exchange Rate Fluctuations: The Advisor does tradecommodity futures contracts on exchanges located outside the U.S. where the protections provided byCFTC regulations do not apply. Some foreign commodity exchanges, in contrast to domestic exchanges,are "principal markets" in which performance with respect to a commodity contract is the responsibilityonly of the individual member with whom the trader has entered into the contract and not of the exchangeor its clearing house, if any. In the case of trading by the Advisor on foreign exchanges, the Advisor'sclients may be subject to the risk of the inability of or the refusal by its counterparts to perform withrespect to their commodity futures contracts with the Advisor. The Advisor may also not have the sameaccess to certain trades, as do various other participants in foreign markets. Furthermore, because theassets in a client's account will be determined in U.S. Dollars with respect to trading on Foreign Markets,


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a client will be subject to the risk of fluctuation in the exchange rate between the local currency and theU.S. Dollar.

Limited Trading History for Trading Program(s): The Advisor has limited experience managingClient accounts. Also, the Advisor has a limited operating history in its capacity as a registeredcommodity trading advisor. The Advisors principal, however, has experience in the futures industry and

has been trading an account for an exempt commodity pool and therefore, the Advisor does not foreseematerial concerns that may encountered by offering the trading program(s).

Speculative Nature of Commodity Trading: Commodity futures contracts, unlike many securities, donot pay any dividends or interest. Profits can be made in commodity trading only by selling a contract ata higher price than that at which it was bought or by buying a contract at a lower price than at which itwas sold.

Speculative Position Limits: The CFTC and the commodity exchanges have established limits on themaximum net long or net shorts futures positions which any person or group of persons acting togethermay hold or control. Any commodity accounts owned or managed by the Advisor or its principals,including the Advisors account, must be combined for position limit purposes. The Advisor believes thatthe current limits will not adversely affect its trading. However, it is possible that the Advisors trading

decisions may have to be modified and positions held by Clients may have to be liquidated in order toavoid exceeding such limits.

Charges to a Clients Account: A Client is obligated to pay brokerage commissions, exchange and NFAfees, and management fees regardless of whether the Client realizes profits. The Advisors Incentive Feeis based, in part, upon unrealized appreciation in open commodity positions. Such unrealized appreciationmay never be realized by a Client. Incentive fees previously paid against such unrealized appreciationwould not be refunded.

Give Up Brokers: The Advisor may use multiple FCMs or floor brokerage operations to executecustomers trades. As such, filled trades will be given up to the Clients FCM for clearing purposes.Clients must understand that there can be no guarantee as to any order being filled at the expected orpredicted price level. The reasons for that are multiple: lack of market liquidity, limit moves, optionmarkets might be closed during overnight trading; unpredictable acts of terrorism might cause obstacles intransporting or executing the order. The Advisor will choose the Give Up Brokers of its choice. Clientswill bear the costs associated with give-up transactions, which are usually $1 up to $2 per round trade.

Changes in Trading Approach: No assurance is given that the Advisor's performance will result insuccessful trading for clients under all or any conditions. The Advisor may alter its trading methods,commodity options and/or futures traded, or money management principles, without prior approval by, ornotice to clients, if the Advisor determines that such change in policy is in the best interest of clients.However, the Advisor will make every reasonable attempt to communicate such changes either in anaddendum to this Disclosure Document or under separate cover.

Futures Trading is Non-Correlated to other Asset Classes: Generally, assets invested in futures

accounts have been non-correlated to the performance of other investment asset classes such as bonds andcommodities. As a result of this non-correlation, a futures account managed by the Advisor should not beexpected to automatically profit during unfavorable periods or vice-versa. The futures markets arefundamentally different from other markets, therefore, making any comparison inherently limited.

Performance Among Accounts May Vary During the Start of Trading: Client accounts may incurcertain risks relating to the initial investment of its assets. As a result of market conditions, the Advisormay need substantial time (e.g., days, weeks, or possibly months) before a Clients account is fullyinvested pursuant to the Advisors trading program(s). Under the Advisors trading program(s), new


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accounts are entered into positions as new trading signals occur or when limited risk opportunities allowalignment of positions with those existing in older accounts. Notwithstanding any delay in becomingfully invested, a Client's account may commence trading at a less favorable time, such as after profitablemoves in a number of markets. Specifically, in the event a Client's account begins trading after a periodof profitability experienced by the Advisor, the new Client account may experience a losing period,perhaps of a considerable length, during the early months of trading.

Notionally Funded Accounts: The Advisor permits the use of Notional Funds in a client's account.Notional Funds are funds not actually held in the account, but which have been promised by a client,generally in writing, to the trading activity of the account. The total amount of notional funds and actualfunds in a clients account are considered the Nominal Account size which the Advisor will base itstrading decisions. Therefore, Notional funding allows a client to trade the account at a level higher thanthe cash actually held in the account. Notional equity creates additional leverage in an account relative tothe cash in such account. This additional leverage results in a proportionally greater risk of loss (andopportunity for gain). While the possibility of losing all the cash in an account is present in all accounts,accounts that contain notional equity have a proportionately greater risk of loss. For example, in anaccount which is funded with only 50% cash (and, therefore, has 50% notional equity), a loss of 10% ofthe clients account total value (based on both cash and notional equity) will equal a loss of 20% of the

actual cash in the account. Additionally, a client who funds his account with notional equity may receivemore frequent and larger margin calls. Clients should note that additions or profits made to or in anaccount would increase the nominal trading level. Similarly, withdrawals or losses made from or in anaccount would decrease the nominal trading level.

If a Client promises Notional Funds to a trading program when the account is established andsubsequently pursuant to a written agreement, the Client's monthly management fee will be calculated on"Assets under Management" as defined in this Disclosure Document. As a result, a Clients managementfee as a percent of actual funds will be higher. The management fee as a percent of actual funds may bedetermined by dividing the management fee computed on assets under management by the actual funds inthe account. For example, assume an investment in the Global Managed Futures program requiring aminimum investment of $250,000. Using an annual management fee rate of 2%, an account which is

funded with $125,000 in actual funds and 50% with notional funds (e.g., $125,000), for total assets undermanagement of $250,000, the Client will be charged a management fee of $5,000 on an annual basis($250,000 X 2%). As a result, the management fee as a percent of actual funds is 4% ($5,000/$125,000).

Electronic Order Entry: The Advisor may place trades via electronic order platforms for its tradingprogram(s). In such instances, trading through an electronic trading or order routing system exposesClients to risks associated with system or component failure. System or component failure may result inloss of orders or order priority. The risk exists that a trade may not be placed, a trade may be placed at alater time than originally desired, or a trade may not be able to be cancelled. These occurrences, whichare beyond the Advisors control, could result in losses to a clients account. Some contracts offered onan electronic trading system may be traded electronically and through open outcry during the sametrading hours. Exchanges offering an electronic trading or order routing system and listing the contractmay have adopted rules to limit their liability, the liability of futures brokers and software andcommunication system vendors and the amount that may be collected for system failures and delays.These limitations of liability provisions vary among the exchanges.

Positions held Overnight: The Advisor anticipates holding positions overnight. Due to the nature of thesystem that looks for varying price low and high thresholds, it is extremely unlikely that positions will beentered and exited on the same day, although the Advisor cannot rule this out. For this reason, investorsshould anticipate overnight margin requirements on open positions.


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Intraday Trading: The Advisors Program(s) are not considered to be a day trading programs. Aprospective customer, however, should be aware that an increase in trading activity results in an increasein total commissions to an account which could subsequently reduce overall performance considerably.

Stop Orders: The Advisor may use"Stop Loss" or "Stop Limit" orders. A prospective customer shouldbe aware that placing such orders will not necessarily limit your losses to the intended amounts since

market conditions may make it impossible to execute such orders.

Services of the Advisors Principal: The Advisor is dependent on the investment services of Mr. Seapy,the Advisors sole trader. If the services of Mr. Seapy were not available, or were interrupted, thecontinued ability of the Advisor to render services to clients might be subject to uncertainty, and suchservices of the Advisor could be terminated completely.

Confidentiality of Client Records: The Advisor may enter into a contract with external complianceconsulting firms to compile performance data, prepare Disclosure Documents and perform on-siteinspections for the Advisor. Although the Advisor retains all Client records under strict confidentiality,the Advisor may provide Client records (i.e., daily and month end commodity statements generated by theClients FCM, Client account files, and fee arrangements) to the external consultants for purposes of

compiling performance data in accordance with CFTC and NFA Requirements. In addition, the Advisormay request the Clients FCM to furnish these records to the external service providers in order tomaintain compliance with the rules and regulations with respect to performance reporting requirements.At times, the Advisor may be required by law to furnish complete Client records to regulators, legalcounsel, courts of competent jurisdiction, or other entities. The Advisor will obtain reasonable assurancefrom the external consultants that all Client information will be regarded with the utmost ofconfidentiality. In addition, Client records will remain confidential to other Clients. No Client will bepermitted to review other Clients records.

Uncertainty Concerning Future Regulatory Changes: In addition to possible changes in the regulationof the commodity futures markets, other regulatory changes could have a material and adverse effect onthe prospects for profitability. The commodity futures markets are subject to ongoing and substantial

regulatory changes, and it is impossible to predict what statutory, administrative or exchange-imposedrestrictions may become applicable in the future. Particularly in light of the general turmoil that hasengulfed the financial markets over the past two years, Congress, the Treasury Department, the SEC andthe CFTC, among others, have or are considering measures, including but not limited to, bans and limitson speculative trading that could limit or negate the ability of the Advisor to trade profitably.

BROKERAGE ARRANGEMENTS

To hold money and trade for the account of another, a person must be registered with the CFTC as aclearing or non-clearing Futures Commission Merchant (FCM) and must be a Member of NFA.Accordingly, clients will be required to have, or to open an account with, an FCM prior to commencingactivities with the Advisor. Clients are free to choose a Futures Commission Merchant (FCM) of their

choice. However, the Advisor reserves the right to reject the clients chosen FCM if the costs beingcharged are substantially higher than the competition or if there is any substantial reason to expect lessthan acceptable standards of execution, book keeping, or service. Each Client will negotiate acommission structure with the FCM of his choice. In addition to commissions, Clients will be chargedexchange, clearing, brokerage, and NFA fees. The Advisor does not expect to share in any commissionscharged to Client accounts.

In the event the Client does not have an FCM, the Advisor may recommend MF Global, Inc. since theAdvisor has been trading an account at MF Global, Inc. and from an administrative and trading


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standpoint, it would be more efficient to maintain as many accounts at one or a few FCMs.

MF Global Inc. (MFG) is registered under the Commodity Exchange Act, as amended, as a futurescommission merchant and a commodity pool operator, and is a member of the National FuturesAssociation in such capacities. In addition, MFG is registered with the Financial Industry RegulatoryAuthority as a broker-dealer. MFG was formerly known as Man Financial Inc. (MFI) until the change

of name to MFG was effected on July 19, 2007. MFG is a member of all major U.S. futures exchangesand most major U.S. securities exchanges. MFGs main office is located at 717 Fifth Avenue, 9th Floor,New York, New York 10022-8101. MFGs telephone number at such location is (212) 589-6200.

The FCM will also charge NFA and exchange fees on the commodity interest transactions. These chargeswill be reflected on daily confirmations and purchases/sales statements sent to the client. A participatingclient is directly responsible for the payment to the FCM of all margins, brokerage commissions and fees,option premiums and other transaction costs incurred in connection with transactions effected for suchclient's account. Additional charges per round turn trade may result if give up trades are executed. Giveup trades are trades that are executed on the floor of the exchange by someone other than the FCMcarrying the client's account. As of the date of this disclosure the document, the Advisor has not enteredinto any give up agreements. In the event a give up agreement is entered into, the Advisor does not

expect the roundturn cost for execution to exceed $2. A client will be required to pay brokeragecommissions regardless of the accounts profitability.

Clients are free to choose an introducing broker of their choice. The Advisor reserves the right to rejectthe clients chosen IB if the costs being charged are substantially higher than the competition or if there isany substantial reason to expect less than acceptable standards of service.

Currently, the Advisor has developed a business relationship with one introducing broker, WisdomFinancial, Inc. and may be developing additional relationships with other introducing brokers in thefuture. Wisdom Financial Inc. is registered with the CFTC as an introducing broker and is NFA Member.Wisdom will be executing orders for the Advisor.

Clients should note that some of the Advisors clients may pay more favorable commissions than otherclients. These differences may be due to the size of the account, the FCM used by the Client, or the othercircumstances allowing for such favorable rates. The Advisor is under no obligation to negotiate lowerrates for Clients.

The Clients FCM acts only as clearing broker for Client accounts and as such, is paid commissions forexecuting and clearing trades on behalf of Client Accounts. The FCM chosen by the client has not andwill not pass upon the adequacy or accuracy of this Disclosure Document. Additionally, the FCM willnot act in any supervisory capacity with respect to the Advisor nor will they participate in themanagement of the Advisor. Therefore, prospective Clients should not rely on the FCM in decidingwhether or not to participate in the Trading Program(s) of the Advisor.

In addition to the execution of the Advisors account documentation, each Client will also be required to

execute the various FCM account forms for new customers such as a power-of-attorney, risk disclosuredocument, authorization to do cross trade transactions, and the FCM customer agreement.

A portion of the assets of each Clients account(s) may, at the discretion of the Advisor, be invested ininterest-bearing obligations, such as United States Treasury bills. Any such obligations will be posted asmargin in the futures account to the extent allowed by various exchanges rather than maintained in cash,thus enabling the Client to earn interest on funds being used for trading as well as funds being held inreserve.


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ADDITIONS/WITHDRAWALS TO EXISTING ACCOUNTS; ESTABLISHING ACCOUNTS INA NEW PROGRAM

Additional funds may be added to Clients existing account at any time, although the Advisor suggests

any increases or decreases in nominal trading levels be made effective as of the first of the month.Withdrawals may be made at any time upon written notice to the Advisor. However, the Advisor will notpermit withdrawals which would reduce the assets under management in a Clients account below suchaccounts minimum account size (i.e., $250,000 for the Global Managed Futures Program and $75,000for the Global Managed Futures Aggressive Program) other than a withdrawal in termination of suchaccount or transfer to an account utilizing one of the Advisors other programs, if available, or with theprior written consent of the Advisor. Clients wishing to establish an account trading pursuant to anotherTrading Program offered by the advisor must sign a new Advisory Agreement.

For accounts that are fully funded and have no notional funds in their accounts, these Clients should notethat any actual cash additions to the account as well as any profits made in the account will increase theNominal Account Size (which is the trading level used by the Trading Manager to determine which tradesto execute). Actual cash withdrawals made from the account as well as any losses incurred in the account

will reduce the Nominal Account Size (which is the trading level used by the Trading Manger todetermine which trades to execute).Nominal Account Size equals actual cash and cash equivalents plusnotional funds.

For accounts that have initially funded their accounts with notional funds, these Clients should note thatany actual cash additions or cash withdrawals will not affect the trading level (nominal level) unless theClient informs the Advisor in writing that the trading level is being increased for actual additions ordecreased for actual withdrawals. Profits and losses in the account will automatically increase or decreasethe nominal trading level. THE ADVISOR WILL NOT ACCEPT ANY VERBAL INCREASES ORDECREASES IN TRADING LEVELS.

The Advisor requests that any withdrawals made from a Client account be made with advanced notice,generally 10 days before the anticipated withdrawal. This will allow the Advisor to liquidate the necessary

positions to raise the necessary cash if needed and to do so with minimal about of possible trading losses. Ifthe Client does not provide advance notice, the Clients account could suffer substantial losses.

ADVISORS FEES

Specific fees will be discussed with each client before an advisory agreement is entered into. If a clientterminates the Advisors power of attorney at any time prior to the last trading day of the month, then anyincentive fee due will be calculated as of the last day the Advisor maintained discretionary authority. TheAdvisor will not charge an upfront fee upon the opening of client accounts.

Management Fee

The Advisor charges a management fee of 1/12 of 2% of "Assets under Management" at the end of eachmonth. "Assets under Management" is defined as the accounts ending equity as of month end computed onan accrual basis of accounting. Ending equity includes the sum of cash and cash equivalents,notional/committed funds (in cases where the Client has contributed Notional Funds at the time the accounthas opened or anytime thereafter pursuant to written instructions provided to the Advisor), current marketvalue of securities, plus the unrealized profit/loss on open positions, plus accrued interest income earned onsecurities (securities deposited by the Client for margin purposes and securities purchased by the Advisor forthe Client) and interest paid equity in the Clients account (Not all FCMs pay interest on equity on theClients value), minus accrued commissions on open positions, minus other accrued expenses (e.g., priormonths management and incentive fees not yet paid).


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In the event a Client promises Notional Funds to a trading program pursuant to written instructions, aClient's monthly management fee will be calculated on the Assets Under Management (as defined above) atthe end of each month. Therefore, if notional funds are contributed by the Client, a Clients management feeas a percent of actual funds will be higher. For example, under the Global Managed Futures Program, if aClient deposits $125,000 into the trading account and elects to have the account initially traded at a $250,000level, the accounts beginning equity for management fee purposes will be $250,000. If the account

appreciates by $5,000 based on realized and unrealized profits, the actual funds in the account are at$130,000; the account size for management fee purposes is $255,000 and the trading level is $255,000 (i.e.,the notional assets remain at $125,000). In the event the account had a $5,000 loss based on realized andunrealized losses, the actual funds in the account are at $120,000; the account size for management feepurposes is $120,000 and the trading level is at $245,000 (i.e., the notional assets remain at $125,000). Themanagement fee as a percent of actual funds may be determined by dividing the management fee computedon assets under management by the actual funds in the account. When the account is first opened, themanagement fee is based the first months ending equity and shall be pro-rated.

Management fees are charged regardless of the profitability in the Clients account. Any withdrawals oradditions made during the month shall be added back or subtracted on a pro-rated basis in order to calculatethe management fee. If the Advisors power of attorney has been terminated prior to the end of the month,the management fee will be computed on a pro-rated basis on the ending value of the account as of the datethe power of attorney was terminated. The date the account was terminated shall be included as a day undermanagement.

Incentive Fee

The Client will pay the Advisor a quarterly incentive fee of 20% based on New Net Trading Profits. TheIncentive fee is computed after the management fee is accrued. Although the incentive fee is chargedquarterly, it is computed monthly. For purposes of calculating the Advisor's incentive fees during a period,New Net Trading Profits shall mean the cumulative profits (over and above the aggregate of previous periodprofits as of the end of any period) during the period (after deduction for brokerage fees paid but beforededucting the Advisor's incentive fee payable). New Net Trading Profits shall include: (i) the net of profitsand losses (i.e. less commissions, clearing and exchange fees, and NFA fees) resulting from all trades

closed out during the period; (ii) the change in unrealized profit or loss on open trades as of the close ofthe Period; (iii) accrued interest income on securities and free credit balances, minus (i) the change inaccrued commissions on open trades as of the close of the Period, (ii) accrued management fees for theperiod; and (iii) other expenses incurred during the period. Interest expense, if any, will be considered aspart of the incentive fee.

All open futures positions in a clients account are calculated at their fair market value at the end of eachbusiness day and at the end of the month. The market value of an open position is determined by thesettlement price as determined by the exchange on which the transaction is completed, or the most recentappropriate quotation provided by the FCM as supplied by the exchange. If any payment is made to theAdvisor with respect to New Net Trading Profits experienced by the account, and the account thereafterincurs a net loss for any subsequent period, the Advisor will retain the amount previously paid withrespect to such New Net Trading Profits regardless of whether any New Net Trading Profits were/are

earned.

Losses shall be carried forward from the preceding Periods and not carried back. If Trading Profits for aperiod are negative (thus a Trading Loss), it shall constitute a "Carryforward Loss" for the beginning of thenext period. If a client withdraws funds from the account at a time when the account has a CarryforwardLoss, the Trading Loss that must be recovered before there will be New Net Trading Profits will be reduced.The amount of the reduction will be determined by dividing the value of the account immediately after suchwithdrawal by the value of the account immediately before such withdrawal and multiplying that fraction bythe amount of the unrecovered Trading Loss at the time of the withdrawal. If Trading Losses occur in more


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than one calendar month in the account without an intervening payment of an incentive fee, and the value ofthe account is reduced in more than one calendar month because of withdrawals, then the Trading Loss ineach such calendar month shall be reduced in accordance with the above formula, and only the reducedamount of Trading Loss will be carried forward to offset future Trading Profits.

The Advisor expects to share a portion of its management and/or incentive fees with third parties in

accordance with regulatory standards. The percentage of the sharing is not known at this time but it is notexpected to exceed 20% of the Advisors fees. The Advisor does not expect to share in any commissionscharged to Client accounts.

CONFLICTS OF INTEREST

Prospective clients should be aware that these, and other, potential conflicts of interests are frequentlyinherent in the position occupied by a CTA. The Advisor, however, is obligated to treat each client withfairness, considering the client's best interests. All efforts will be made to assure fair and equitabletreatment of all accounts. Clients should be aware that normal marketplace factors may cause the resultsof various accounts to differ.

The Advisor and or the Advisors principal may trade commodity futures and options on commodity

futures for their own accounts. The trades in these accounts may compete with a Client's account for thesame or similar positions in the commodity markets. The Advisor expects to manage the commodityaccounts of various clients. All of these accounts plus the accounts of the Advisor and the Advisorsprincipal will be combined for purposes of speculative position limits (restrictions imposed by U.S.commodity exchanges and the CFTC on the size of the commodity positions that a person may hold orcontrol), so that the number of commodity positions that the Advisor establishes for any one client maybe restricted by the number of positions held for these other accounts. Also, these other accounts mightcompete with a client's account for the same or similar positions in the commodity markets. To the extentthat position limits restrict the total number of positions that the Advisor may establish for any one clientand those of other accounts, the Advisor will allocate commodity transaction orders equitably between theclient's account and such other accounts on a pro-rata basis, if possible. If pro rata allocation is notpossible, then the Advisor will rotate the accounts that receive fills. The Advisor and/or the Advisors

principal may receive a fill price and the client may not.

The Advisors principal, Richard Seapy, has an investment in Bayside Trading Partners, LLC which is acommodity pool operating pursuant to an exemption allowed under CFTC Regulation 4.12(a)(2). TheAdvisor does provide advisory services to Bayside Trading Advisors, LLC and is expected to do sofollowing both programs offered by the Advisor. The Advisor and its principal may have investments inother accounts, which could create an incentive to favor those accounts over any one client's account.Although no such favoritism is intended or expected to occur, there can be no assurance that theperformance of these accounts will be similar to those of a Client's account.

The Advisor and/or its principal may, at times, test new trading concepts and techniques in their ownaccounts. As such, trading in these accounts may be more aggressive than client accounts, and trading inthese accounts may involve trades, which are opposite to clients trades.

The Advisor will generally place orders in a fashion generally known as "block orders". With this type oftrading method, the Advisor will combine the order for one client along with the orders of other clients,and place the entire order simultaneously as one trade. In addition, the Advisor's principals account willusually be blocked with the clients accounts. In this manner of trading, the Advisor attempts to tradeclient accounts in parallel, making trades for accounts and apportioning the number of each commodityinterest ratably among the accounts based on the equity in each account. In the event of a partial fill,allocations will be made on a pro-rata basis. Each client would receive, if possible, a portion of theblocked order. If pro rata allocation is not possible, then the Advisor will apportion the allocation on


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contracts to Client accounts by not giving all Clients the intended number of contracts. In the event apartial fill occurs and the Advisor and/or the Advisors principal has an account, the Advisorand/or its principal will not receive a position until all Clients have received a position.

In the event a block order results in a split fill (i.e. more than one price), the Advisor attempts to have thetrade apportioned according to the average price system


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MF Global Inc. (MFG or MF Global) is registered under the Commodity Exchange Act, as amended,as a futures commission merchant and a commodity pool operator, and is a member of the NationalFutures Association (NFA) in such capacities. In addition, MFG is registered with Securities andExchange Commission as a broker-dealer and is a member of the Financial Industry Regulatory AuthorityInc. (FINRA). MFG was formerly known as Man Financial Inc. (MFI) until the change of name toMFG was effected on July 19, 2007. MFG is a member of all major U.S. futures exchanges and most

major U.S. securities exchanges. MFGs main office is located at 717 Fifth Avenue, 9th Floor, NewYork, New York 10022-8101. MFGs telephone number at such location is (212) 589-6200.

At any given time, MFG is involved in numerous legal actions and administrative proceedings, which inthe aggregate, are not, as of the date of this Disclosure Document, expected to have a material effect uponits condition, financial or otherwise, or to the services it will render to the Advisor (Trading Advisor).There have been no administrative, civil or criminal proceedings pending, on appeal or concluded againstMFG or its principals within the five years preceding the date of this Disclosure Document that MFGwould deem material for purposes of Part 4 of the Regulations of the Commodity Futures TradingCommission (the CFTC), except as follows:

In May 2006, MFI was sued by the Receiver for Philadelphia Alternate Asset Fund (PAAF) and

associated entities for common law negligence, common law fraud, violations of the CommodityExchange Act and RICO violations (the Litigation). In December 2007, without admitting any liabilityof any party to the Litigation to any other party to the Litigation, the Litigation was settled with MFIagreeing to pay $69 million, plus $6 million of legal expenses, to the Receiver, in exchange for releasesfrom all applicable parties and the dismissal of the Litigation with prejudice. In a related action, MFIsettled a CFTC administrative proceeding (In the Matter of MF Global, f/k/a Man Financial Inc., andThomas Gilmartin) brought by the CFTC against MFI and one of its employees for failure to superviseand recordkeeping violations. Without admitting or denying the allegations, MFI agreed to pay a civilmonetary penalty of $2 million and accept a cease and desist order.

On February 20, 2007, MFI settled a CFTC administrative proceeding (In the Matter of Steven M. Campand Man Financial Inc., CFTC Docket No. 07-04) in which MFI was alleged to have failed to supervise

one of its former associated persons (AP) who was charged with fraudulently soliciting customers toopen accounts at MFI. The CFTC alleged that the former AP misrepresented the profitability of a web-based trading system and of a purported trading system to be traded by a commodity trading advisor.Without admitting or denying the allegation, MFI agreed to pay restitution to customers amounting to$196,900.44 and a civil monetary penalty of $120,000. MFI also agreed to a cease and desist order and tostrengthen its supervisory system for overseeing sales solicitations by employees in connection withaccounts to be traded under letters of direction in favor of third party system providers.

On March 6, 2008, and thereafter, 5 virtually identical proposed class action securities suits were filedagainst MFGs parent, MF Global Ltd. (MF Global), certain of its officers and directors, and ManGroup plc. These suits have now been consolidated into a single action. The complaints seek to holddefendants liable under 11, 12 and 15 of the Securities Act of 1933 by alleging that the registration

statement and prospectus issued in connection with MF Globals initial public offering in July 2007 werematerially false and misleading to the extent that representations were made regarding MF Globals riskmanagement policies, procedures and systems. The allegations are based upon MF Globals disclosure of$141.5 million in trading losses incurred in a single day by an AP in his personal trading account(Trading Incident), which losses MFG was responsible to pay as an exchange clearing member. Theconsolidated cases have been dismissed on a motion to dismiss by defendants. Plaintiffs have appealed.

On December 17, 2009, MFG settled a CFTC administrative proceeding in connection with the TradingIncident and three other matters without admitting or denying any allegations and accepting a charge of


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failing to supervise (In the Matter of MF Global Inc. CFTC Docket No. 10-03). The three additionalmatters that were settled involved allegations that MF Global failed to implement procedures to ensureproper transmissions of price information for certain options that were sent to a customer, specifically thatthe price indications reflected a consensus taken on [a particular] time and date and were derived fromdifferent sources in the market place; failed to diligently supervise the proper and accurate preparation oftrading cards and failed to maintain appropriate written authorization to conduct trades for a certain

customer. Under the Commissions order, MFG agreed to pay an aggregate civil monetary penalty of $10million (which it had previously accrued) and agreed to a cease and desist order. In addition, MFGagreed to specific undertakings related to its supervisory practices and procedures and MFG agreed that itwould engage an independent outside firm to review and assess the implementation of the undertakingsand certain recommendations that MFG previously accepted. At the same time, MFG, without admittingor denying the allegations made by the CME, settled a CME disciplinary action relating to the TradingIncident by paying a fine of $495,000.

On August 28, 2009, Bank of Montreal (BMO) instituted suit against MFG and its former broker,Joseph Saab (Saab) (as well as a firm named Optionable, Inc. and five of its principals or employees),in the United States District Court for the Southern District of New York. In its complaint, BMO assertsvarious claims against all defendants for their alleged misrepresentation of price quotes to BMOs Market

Risk Department (MRD) as independent quotes when defendants knew, or should have known, thatDavid Lee (Lee), BMOs trader, created the quotes which, in circular fashion, were passed on to BMOthrough MFGs broker, thereby enabling Lee substantially to overvalue his book at BMO. BMO furtheralleges that MFG and Saab knew that Lee was fraudulently misrepresenting prices in his options naturalgas book and aided and abetted his ability to do so by MFGs actions in sending price indications to theBMO MRD, and substantially assisted Lees breach of his fiduciary duties to BMO as its employee. TheComplaint seeks to hold all defendants jointly and severally liable and, although it does not specify anexact damage claim, it claims CAD 680.0 million (approximately $635.9 million) as a pre-tax loss forBMO in its natural gas trading, claims that it would not have paid brokerage commissions to MFG (andOptionable), would not have continued Lee and his supervisor as employees at substantial salaries andbonuses, and would not have incurred substantial legal costs and expenses to deal with the Leemispricing. MFG has made a motion to dismiss, which is pending.

In or about October 2003, MFI uncovered an apparent fraudulent scheme conducted by third partiesunrelated to MFI that may have victimized a number of its clients. CCPM, a German Introducing Broker,introduced to MFI all the clients that may have been victimized. An agent of CCPM, Michael Woertche(and his asssociates), apparently engaged in a Ponzi scheme in which allegedly unauthorized transfersfrom and trading in accounts maintained at MFI were utilized to siphon money out of these accounts, onsome occasions shortly after they were established. MFI was involved in two arbitration proceedingsrelating to these CCPM introduced accounts. The first arbitration involved claims made by two claimantsbefore a NFA panel. The second arbitration involves claims made by four claimants before a FINRApanel. The claims in both arbitrations are based on allegations that MFI and an employee assisted CCPMin engaging in, or recklessly or negligently failed to prevent, unauthorized transfers from, and trading in,accounts maintained by MFI. Damages sought in the NFA arbitration proceeding were approximately

$1,700,000 in compensatory damages, unspecified punitive damages and attorneys fees in addition to therescission of certain deposit agreements. The NFA arbitration was settled for $200,000 as to one claimantand a net of $240,000 as to the second claimant during fiscal 2008. Damages sought in the FINRAproceeding were approximately $6,000,000 in compensatory damages and $12,000,000 in punitivedamages. During the year ended March 31, 2009, the FINRA arbitration was settled for an aggregate of$800,000.

MFI was named as a co-defendant in an action filed in Florida State Court by Eagletech CommunicationsInc. (Eagletech) and three of its alleged shareholders against 21 defendants, including banks, broker-


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dealers and clearing brokers, as well as 100 John Doe defendants or their nominee entities. Thecomplaint alleges that the defendants engaged in a criminal conspiracy designed to manipulate thepublicly traded share price of Eagletech stock. Plaintiffs seek unspecified compensatory and specialdamages, alleging that Man Group PLC d/b/a Man Financial Inc participated in the conspiracy byacting as a clearing broker for a broker-dealer that traded in Eagletech stock. The complaint asserts claimsunder RICO, the Florida Securities and Investor Protection Act, the Florida Civil Remedies for Criminal

Practices Act and a related negligence claim. On May 9, 2007, defendants filed a notice removing theState Court action to the United States District Court for the Southern District of Florida pursuant to 28U.S.C. 1441(a). On October 2, 2007, Plaintiffs filed a first amended complaint in the Federal Courtaction asserting additional claims against MFG under Florida common law, including civil conspiracy,conversion and trespass to chattels. On February 26, 2008, the financial institution defendants, includingMF Global Inc., filed a motion to dismiss seeking dismissal of all claims asserted in the amendedcomplaint on the ground that the claims are barred by the Private Securities Litigation Reform Act(PSLRA) and preempted by the federal securities laws. On June 27, 2008, the Court partially grantedthe motion, holding that the federal RICO claims are barred by the PSLRA and dismissing the RICOclaims with prejudice. The Court declined to exercise supplemental jurisdiction over the state law claimsand remanded those claims to the Florida State Court. On July 25, 2008, plaintiffs filed a notice of appealof the Courts June 27, 2008 decision to the United States Court of Appeals for the Eleventh Circuit but

subsequently withdrew its appeal.

In December 2007, MFG, along with four other futures commission merchants (FCMs), were named asdefendants in an action filed in the United States District Court in Corpus Christi, Texas by 47 individualswho were investors in a commodity pool (RAM I LLC) operated by Renaissance Asset ManagementLLC. The complaint alleges that MFG and the other defendants violated the Commodity Exchange Actand alleges claims of negligence, common law fraud, violation of a Texas statute relating to securitiesfraud and breach of fiduciary duty for allegedly failing to conduct due diligence on the commodity pooloperator and commodity trading advisor, having accepted executed trades directed by the commoditytrading advisor, which was engaged in a fraudulent scheme with respect to the commodity pool, andhaving permitted the improper allocation of trades among accounts. The plaintiffs claim damages of $32.0million, plus exemplary damages, from all defendants. All of the FCM defendants moved to dismiss the

complaint for failure to state a claim upon which relief may be granted. Following an initial pre-trialconference, the court granted plaintiffs leave to file an amended complaint. On May 9, 2008, plaintiffsfiled an amended complaint in which plaintiffs abandoned all claims except a claim alleging that the FCMdefendants aided and abetted violations of the Commodity Exchange Act. Plaintiffs now seek $17.0million in claimed damages plus exemplary damages from all defendants. MFG filed a motion to dismissthe amended complaint which was granted by the court and appealed by the plaintiffs.

The Liquidation Trustee (Trustee) for Sentinel Management Group, Inc. (Sentinel) sued MFG in June2009 on the theory that MFGs withdrawal of $50.2 million within 90 days of the filing of Sentinelsbankruptcy petition on August 17, 2007 is a voidable preference under Section 547 of the BankruptcyCode and, therefore, recoverable by the Trustee, along with interest and costs.

In May 2009, investors in a venture set up by Nicholas Cosmo (Cosmo) sued Bank of America andMFG, among others, in the United States District Court for the Eastern District of New York, allegingthat MFG, among others, aided and abetted Cosmo and related entities in a Ponzi scheme in whichinvestors lost $400 million. MFG has made a motion to dismiss which is currently pending before thecourt.

In the late spring of 2009, MFG was sued in Oklahoma State Court by customers who were substantialinvestors with Mark Trimble (Trimble) and/or Phidippides Capital Management (Phidippides).Trimble and Phidippides may have been engaged in a Ponzi scheme. Plaintiffs allege that MFG


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materially aided and abetted Trimbles and Phidippides violations of the anti-fraud provisions of theOklahoma securities laws and they are seeking damages in excess of $10,000 each. MFG made amotion to dismiss which was granted by the court. Plaintiffs have appealed.

MFG and an affiliate, MF Global Market Services LLC (Market Services), are currently involved inlitigation with a former customer of Market Services, Morgan Fuel & Heating Co., Inc. (Morgan Fuel)

and its principals, Anthony Bottini, Jr., Brian Bottini and Mark Bottini (the Bottinis). The litigationsarise out of trading losses incurred by Morgan Fuel in over-the-counter derivative swap transactions,which were unconditionally guaranteed by the Bottinis.

On October 6, 2008, Market Services commenced an arbitration against the Bottinis to recover $8.3million, which is the amount of the debt owed to Market Services by Morgan Fuel after the liquidation ofthe swap transactions. MF Global Market Services LLC v. Anthony Bottini, Jr., Brian Bottini and MarkBottini, FINRA No. 08-03673. Each of the Bottinis executed a guaranty in favor of Market Servicespersonally and unconditionally guaranteeing payment of the obligations of Morgan Fuel upon writtendemand by Market Services. Market Services asserted a claim of breach of contract based upon theBottinis failure to honor the guarantees.

On October 21, 2008, Morgan Fuel commenced a separate arbitration proceeding before FINRA againstMFG and Market Services. Morgan Fuel claims that MFG and Market Services caused Morgan Fuel toincur approximately $14.2 million in trading losses. Morgan Fuel v. MFG and Market Services, FINRANo. 08-03879. Morgan Fuel seeks recovery of $5.9 million in margin payments that it allegedly made toMarket Services and a declaration that it has no responsibility to pay Market Services for the remaining$8.3 million in trading losses because Market Services should not have allowed Morgan Fuel to enterinto, or maintain, the swap transactions.

The Bottinis also asserted a third-party claim against Morgan Fuel, which in turn asserted a fourth-partyclaim against MFG, Market Services and Steven Bellino (an MFG employee) in the arbitrationproceeding commenced by Market Services.

On December 12, 2008, MFG settled three CME Group disciplinary actions involving allegations that ona number of occasions in 2006 and 2007, MFG employees engaged in impermissible pre-executioncommunications in connection with trades executed on the e-cbot electronic trading platform, withheldcustomer orders that were executable in the market for the purpose of soliciting, and brokering contra-orders and crossed orders on the e-cbot trading platform without allowing for the minimum requiredexposure period between the entry of the orders. MFG was also charged with failing to properly superviseits employees in connection with these trades. Without admitting or denying any wrongdoing, MFGconsented to an order of a CME Business Conduct Committee Panel which found that MFG violatedlegacy CBOT Rule 504.00 and Regulations 480.10 and 9B.13 and 9B.13(c) and ordered MFG to pay a$400,000 fine, cease and desist from similar conduct and, in consultation with CME Market regulationStaff, enhance its training practices and supervisory procedures regarding electronic trading practices.

MFG acts only as clearing broker for the futures accounts to be traded pursuant to this Disclosuredocument and as such is paid commissions for executing and clearing trades. The cases and settlementsreferenced above will not materially affect MFG or its ability to perform as a clearing broker. MFG hasnot passed upon the adequacy or accuracy of this Disclosure Document and will not act in anysupervisory capacity with respect to the Advisor nor participate in the management of the Advisor.Therefore, prospective investors should not rely on MFG in deciding whether or not to participate in thetrading program of the Advisor.


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OPENING AN ACCOUNT

ONLY PERSONS OR ENTITIES THAT MEET THE DEFINITION OF A QUALIFIEDELIGIBLE PERSON (QEP) WILL BE PERMITTED TO PARTICIAPATE IN THEADVISORS TRADING PROGRAM.

To determine if a prospective Client is a QEP, the Advisor will follow the criteria outlined under CFTCRegulation 4.7. Specifically, certain Clients must meet a Portfolio Requirement to qualify as a QEP andcertain Clients do not need to meet a Portfolio Requirement to be deemed a QEP. Please refer to the endof this Disclosure Document for the form relating to QEP status.

The FCM will provide each Client with account documentation necessary to establish the Clients accountat the FCM.

Clients should be able to invest funds in the Advisors Program for a period of at least one year. As withany investment, profits as well as losses in commodity trading can and will occur. The Program istherefore only for those clients who are able to both appreciate and bear the financial risks described inthis disclosure document.

The Advisors Global Managed Futures Program requires a minimum investment of $250,000 and theAdvisors Global Managed Futures Aggressive Program requires a minimum investment of $75,000.Generally, there is no maximum amount of funds the Advisor can manage for its clients pursuant to theProgram.

BEFORE SIGNING ANY AGREEMENTS WITH THE ADVISOR, YOU SHOULD CAREFULLYREAD THIS ENTIRE DOCUMENT AND DISCUSS WITH THE ADVISOR THE VARIOUSRISKS WITH TRADING COMMODITY FUTURES AND COMMODITY OPTIONS.

1. Each client must sign and date the acknowledgment of receipt of the Advisors DisclosureDocument before any trading activity may commence in the clients account;

2. Each client must sign and date a Limited Power of Attorney which grants discretionary tradingauthority to the Advisor;

3. Each client must sign and date the Advisor's Advisory Agreement;4. Each client must complete the Confidential Investor Information Form;5. Each client should complete the authorization to pay fees form provided which will permit the

FCM to remit fees directly to the Advisor; and

6. Each client must sign and date the Trading Level Agreement.7. Each client must sign and date the Qualified Eligible Person Questionnaire.

These documents may not be modified, except in writing, by all relevant parties.

PRIVACY POLICY

The confidentiality of client information is of the utmost importance to the Advisor.

The Advisor collects nonpublic personal information about its clients from information provided by theclients on account applications and forms and through transactions that occur in the clients tradingaccounts.

The Advisor does not disclose any nonpublic personal information about its clients to anyone, except as


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permitted or required by law. At times, the Advisor may be required to furnish complete client records toregulators, legal counsel, courts of competent jurisdiction, or other entities as required by law. Inaddition, the Advisor may be required to furnish tax information to the Internal Revenue Service.

The Advisor enters into agreements with external compliance/accounting firms to compile performancedata for the Advisors Trading Program. The performance calculations are required to be compiled in

accordance with CFTC Regulations and NFA Rules. The Advisor would provide clients records (e.g.,month end commodity statements generated by the FCM) to the external compliance firm for purposes ofcompiling the performance data or will advise the FCM to provide the external compliance firm with thenecessary information or access privileges to on-line statements for a Client account. The Advisor hasobtained reasonable assurance that the external compliance firm will not share the clients informationwith third parties. However, a client may instruct the Advisor, in writing, to not provide its month endstatements to the external compliance firm.

The Advisor will not sell clients personal information to anyone and no client will be permitted to reviewother clients records.

The Advisor maintains physical, electronic, and procedural safeguards to protect clients nonpublicpersonal information.

DISCLOSURE FOR SELF-DIRECTED IRA ACCOUNTS

For self-directed individual retirement accounts, the portion of the account committed to margin generallywill not exceed 50% of the beginning equity of the account for any given period. Further, the Advisorwill cease all trading for the account(s) if the account(s) experience a drawdown in excess of 50% of theaccounts current trading level. The drawdown will be reviewed at the end of each trading day and willnot generally be monitored on an intra-day basis. In the event the account is approaching the 50%drawdown benchmark, the Client will be provided with the option to either terminate the account andliquidate all positions and remaining balances, with such liquidation occurring as soon as administrativelypossible by the Advisor, or continue trading upon written instructions from the Client. Due to the volatilenature of the futures markets, the advisor is unable to guarantee that any drawdown in the account can be

limited to 50% of the accounts current trading level.

TAX ASPECTS

Certain miscellaneous itemized deductions, including investment expenses such as incentive fees, aregenerally limited in their deductibility to the extent they exceed 2% of the adjusted gross income of anindividual, trust, or estate. In addition, certain itemized deductions of an individual (and certainentities) are reduced should a taxpayers adjusted gross income exceed a certain dollar amount in the taxyear. EACH PARTICIPATING CUSTOMER THEREFORE MAY PAY TAX ON MORE THAN NETPROFITS GENERATED BY THE ADVISORS MANAGED ACCOUNT PROGRAM. Eachparticipating Client should satisfy himself as to the income tax and other tax consequences of aninvestment in any of the Advisors trading programs with specific reference to his own tax situation by

obtaining advice from his or her own tax counsel before participating in the Advisors trading programs.

The laws relating to the taxation of commodities are too complex to be dealt with in this DisclosureDocument. Prospective investors should consult with their own tax advisor.


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PAST TRADING PERFORMANCE

The information in the following Capsules has not been audited. However, they have been prepared byan outside firm, and, in the opinion of the Advisor, are accurate and fairly stated in all material respects.

Since past performance is not necessarily indicative of future results, the results set forth herein may notbe indicative of the results that may be achieved by the Advisor in the future. No representation is beingmade that any account will or is likely to achieve profits or incur losses similar to those shown.

The performance presented in Capsule I is that of the Advisors Global Managed Futures Program. Theperformance presented in Capsule II is that of the Advisors Global Managed Futures AggressiveProgram.

Clients should understand that in a presentation of past performance data, different accounts, even thoughthey are traded according to the same set of rules, can have varying investment results. The reasons forthis include (1) the period du w[(hich, they)-7.3( areac )]TJ2185739 0 TD[(tivetandwh(en they)-7.3(begcan tr

e differentar


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PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

PERFORMANCE CAPSULE I

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD (3)

2010 -0.63% -5.23% 3.73% -1.72% 1.55% -2.50%

2009 -2.62% 2.69% -13.60% 0.09% -3.21% -4.84% 0.28% 4.16% 6.73% -14.83% 16.38% -10.97% -21.65%

2008 32.14% 36.89% -7.23% -9.33% -2.10% 22.91% -26.67% -3.65% 1.61% 30.29% 9.94% 7.01% 101.46%

2007 0.28% 2.42% 5.95% -5.78% 9.33% 12.09%

Trader: Bayside Pacific Advisors, LLCTrading Program: Global Managed Futures ProgramInception of Trading: August 2007Funds began trading in Program: August 2007

Total Number of Accounts under Management: 3Total Nominal Assets under Management: $1,211,377Total Nominal Assets in this Capsule: $1,094,551Accounts opened and closed with positive performance: 0Accounts opened and closed with negative performance: 1 (Range: -0.12%)Worst Monthly Drawdown (1): -26.67% Jul. 2008Worst Peak to Valley Drawdown (2): -29.35% Jun. 2008 to Aug. 2008

(1) Draw-Down is defined as losses experienced by a composite over a specified period.(2) Worst Peak-to-Valley Draw-Down is defined as the greatest cumulative percentagedecline in month end net

asset value due to losses sustained by a trading program during any period in which the initial month-end netasset value is not equaled or exceeded by a subsequent month-end net asset value.

(3) Year to Date represents the compounded rate of return for each year or portion of the year presented. It is

computed by applying successively the respective Monthly Rates of Return beginning with the first month ofthat year. The calculation assumes a continuous investment throughout the period.(4) For the period of August 2007 through June 2008, the performance presented was that one account, that being

the account of the one commodity pool operated by the Advisor pursuant to a CFTC exemption. CommencingJuly 2008, the Advisor began managing outside client accounts. As of the date of the Disclosure Document, theexempt commodity pool operated by the Advisor represented approximately 33% of the assets undermanagement.


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PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

PERFORMANCE CAPSULE II

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD (3)

2010 5.36% 1.18% 7.65% 0.51% -0.96% 14.23%

2009 -1.05% 4.93% -4.90% 11.04% -6.03% 3.02%

Trader: Bayside Pacific Advisors, LLCTrading Program: Global Managed Futures Aggressive ProgramInception of Trading: August 2007Funds began trading in Program: August 2009Total Number of Accounts under Management: 1Total Nominal Assets under Management: $1,211,377Total Nominal Assets in this Capsule: $116,826Accounts opened and closed with positive performance: 0

Accounts opened and closed with negative performance: 0Worst Monthly Drawdown (1): -6.03% Dec.