Letter from Financial Commodity Investments. Make sure to read and follow instructions! Bob, Just a note to let you know that we are now starting to get orders in. That was quick! Here at the home front, we are working diligently to make sure your investment with us, is very beneficial for you, your clients, and all parties involved. Just a few points that I would like to bring to your attention they will be worth mentioning in your sales conference call this afternoon. This will help us a lot in implementing success for all parties involved.
Make sure that the Vision IB's, use the updated DOoes that have been prepared exclusively for Vision. We have received some orders that relate to our old non Vision appropriate DDoes. The DDoes to use th for Vision accounts is dated May 8 , 2007. Have the 18 only use the Fel -- Vision DDocs; have them cross out and manually update the 20/0 to 1% management fee. We will initial and comply with the reduced management fee as an added marketing and value added benefit to these Vision clients. Make sure that the IB's complete all appropriate pages to be completed and signed with DDocs and Power of Attorney forms. We are also asking for email address of all retail customers. We are doing this, in case we do have a draw down In the future. We want to keep the client informed, and be sure to let them know how hard we are working for them, when events don't go our way. Also, please be sure to have the IB's send us their email address so that we can keep them informed. Equally important, make sure that all application documents are written in a neat and legible format. Some of the documents are very hard to read because of poor handwriting. The last thing we want to do, is to get the information entered in an incorrect format. Once a contract is received and in a complete format, it will go into our contract backlog file. We enter this information into our system, sign the contract, and look to have all paperwork signed and faxed back to the 18 within 24 hours. Then the 18 is to inform us, once the client has an account number and the account is funded. Be sure to email us, with the account number and the effective date that the account was funded. We are batch processing these contracts. All contracts that are complete and funded with an account number, will go live for trading starting on the next Monday of the week. Hence, if we get a contract number by any day prior to Friday of the week, that account will participate will all new trades effective starting the following Monday. Thanks for your help. Craig 8. Kendall
Craig B. Kendall, CPA Kendall & Company, CPA's Financial Investments, Inc. (FII) www.'financialiLcom Financial Commodity Investments (Fel) www.financialcii.com 462 Herndon Parkway Suite 205 Herndon, Va 20170 703 435-2777
Financial Commodity Investments (FCI) Option Selling Strategy
FCI utilizes a market neutral trading strategy that does not attem pt to forecast market direction. FCI utilizes options on futur es to initiate market neutral positions by simultaneously writin g (selling) a TM call and put options, followed by appropriate adjustments based on movement of the underly ing futures contract. Profits are derived when the price of the options that have been written (sold) declines such that the options can be purchased for amounts less than the price at which those options were initially sold . Profits also are realized when options expire worthless, providing full profit on the option premium sold (after commission and other fees). FCI's primary trading philosophy is for profits to be made when the value of options are reduced as a function of time , rather than a function of market direction.
: :;~ Management Fee: Incentive Fee: Min. Acct. Size: Annual RTs/$M il:
Systematic : N/A Discretionary : 100% Margin/Equity : 40% Index: Int. Rates: Currencies:
Year Return Percentile Max. Drawdown Stoev W(L) Months Equity ($MiI)
AROR: TROR: BstRU : WinMn : AvW in:
47.53 % 200.98 % 200.98 % 25 5.58 %
Metals : Energ ies: Softs :
15% N/A N/A
15% 25% 15%
Grains : 25% Meats : 5% Forex: N/A
26.3 % 87
-1.0 % 3.5% 5(1) $0.2
7.6 % 7(5) $0.3
8.7% N/A -0.2 % 2.9 % 3(1) $14 .1
Stdev: 19.24 % Smdev : 16.10 % WOO: -16.26 % LosMn: 9 AvLos : -2.49 %
ShrpM: Str1 : ITR: RRR: W/L : AvW/L:
2.00% 20.00 % 50,000 USD 5,000
2.95 N/A 2.75 11.26 2.78 2.24
Month 07YTD ~r-07 ar-07 Feb-07 Jan-07 06YTD Dec-06 Nov-06 Oct-06 Sep-06 Aug-06 Jul-06 Jun-06 May-06
ar-06 Feb-06 Jan-06 05YTD Dec-OS Nov-OS Oct-OS Sep-05 Aug-OS Jul-05 Jun-05 May-OS ~r-05 ar-05 Feb-OS Jan-OS 04 YTD Dec-04 Nov-04 Oct-04 Sep-04 Aug-04 Jul-04
Alpha: 43.90 % Beta: 0.56 Ritr: 0.23 Rsp: -0.02 Rtb: -0.21
Compi led by Internat ional Traders Research, Inc . www.ManagedFutures.com
Annual ROR 8.72
7.10 -0.18 0.39 1.30
$1 0 s
10,066 8,123 6,936
58.52 7 .28 1.72 - 1.66 - 1.81 14.00 0 .50 3.70 9.40 3.20 4.20 3.10 4.40
4,322 2,952 2,066 1,750 1,782 1,411 1,173 1,087
5.00 6.60 4.50 20.30 14.00 -5.30 -2.00 - 1.60 -8.30 0.60 2.90 -0.60 26.34 1.80 5.70 2.00 9.80 -1.00 5.90
Program Inception : Jul-04
Option Selling Strategy
PrincipaJ(s): Craig Kendall, CPA
Contact: Gaurav Gupta
VAMI Chan e
Reeov. Mon ths
-16.26 % -3.44 % -1.00 % -0.60 % -0.18 %
4 2 1 1 1
Mar-OS Aug-06 Jul-0 4 Dec-04 Feb-07
Jul-0 5 Oct-06 Aug-0 4 Jan-OS Mar-07
2 2 1 1 1
1 3 6 12 18 24
20.3% 43.3% 67.5% 111.7 % 157.6 %
-8.3 % -11.6 % -13.3 % 2.8 % 70.1 % 107.9 %
U nderwater Curve
3.4 % 10.6 % 22.5% 53.8 % 97.2 % 125.0 %
7.1 % 7.3 % 18.6% 48.9% 92.9 % 152.5 %
12 18 24
48.9 % 55.0 % 58.9 %
3.85 4.77 3.63
3.7 % 3.3 % 4.7 %
58.70 96.44 36.19
ROR Di stributi o n
nnpiled by International Traders Research, Inc. www.Mana~dFut ures. eom
Financial Commodity Investments (Option Selling Strat.) April 2007
Advisor Barclay CTA Index _, _
___A ."",N _NUAL RETURNS 2003 2004 2005 N/A 26.34% 38.22% 8.69% 3.30% 1.71% $ N/A $ 0.25 $ 0.34
ACCO UNT~I"N """-'F""O""'RMA TION
Mgmt. Fee: 2.00% MIE Ratio: Incentive Fee: 20.00% Options: Min. Acc: $ 50K Discretion: Rtlyr/$Million: 5000 Interbank:
40.00 80% 100 N/A
2006 58.52% 3.54% S 4.32
2007 YTD 8.72% -0.69% $ 14.13
REW ~/RiS~K RATIO S 3-Years Cumulative Sharpe Ratio: 2.27 2.27 Sterling Ratio: N/A N/A Barclay Ratio: 3.35 3.35 Efficiency Index: 2.47 2.47
__ Start Date : July 2004 Total Return Since Inception: 200.98% Compounded Average Annual ROR: 47.53 % Average Monthly ROR: 3.44% Std. Deviation of Monthly ROR: 5.55% Winning Months: 25 Average Gain: 5.58% Losing Months: 9 Average Loss: -2.49%
RELATIVEVOLA TILITY Loss of25% or more: Loss of 50% or more: Loss of75% or more:
CORRELATIONS Barclay CTA Index: 0.23 S&P 500 US Treasury Bonds : -0.2 1 EAFE World Bonds: -0.01
0.03% 0% 0%
PORTFOLlO COMPOSITION. ..............
0% Energy: 25% Equities:
0% Grains: 25% Interest Rates:
0% Meats: 5% Base Metals:
0% Precio us Metals : 15% Softs:
15% Stock Indices: 15% SSF :
0% VIX: 0% Other :
-0.0 1 0.25
DRA WDOWN REPORT Length Recovery S tart D atEd e n Da te (Mos.) (Mos.) Mar 05 Jul05 l6.2~% 1 4 2 . Oct 06 Au~06 2 3.44% 1 Jul04 Aug 04 1.00% 1 I : 1 Dec 04 Jan 05 0.60%! 1 1 i 1 Feb 07 Mar 07
THE BAR CLAY INSTITUTIONAL REPORT PAST PERFORM ANCE IS NOT INDICATIVE OF FUTURE RESULTS. THE RISK OF LOSS INHERE NT IN AN OPTION S WRITING PROGRAM IS SUBSTANTIAL. AN INV ESTOR COULD POTENTIA LLY LOSE MORE THA N THE INITIAL INVESM ENT. INVESTORS MUST READ THE CURRENT DISCLOSURE DOCUMENT BEFORE THEY INVEST. A COMPLETE DISCUSSION OF FEES AND CHARGES ARE REPORTED IN THE CTA's DISCLOS URE DOCUMENT. SPECIFICALLY, ONE SHOULD RECOGNIZE THAT AN INTRODUCING BROKER MAY CHAR GE A FRONT-END START UP FEE OF UP TO 6% OF THE INITIAL CONTRIB UTION. PLEASE NOTE THAT TIllS CHARG E IS NOT REFLECTED IN THE PERFORMANCE OF THE COMMODITY TRADING ADVIS OR AND COUL D HAVE A SIGNIFICANT IMPACT ON THE CUS10~RS ABILITY TO ACHI EVE SIMILAR RETURNS.
Financial Commodity I~vestme~ts (Option Selling Strat.) V A M i" '~~ BA R C LAY vs S&P 50~O~ -- ~'-'-""'II
3500 1 -
2500 - " 2000
Dec 05 ED S &. P 500
IlEI Barclay CTA Index
RETl!RI §}?g R PRECEDING I2-MO. PERIODS
III .. t
I ill li
~1J:i IMffi Fmil) ~ rs ~f)i lb,rt FmW ~~ _ r~'~ . ~ ~ _ .M:f~ ~f)i_ ~'.[~ . ~o/ . DISTRIBUTION OF MO T HLY RETU RNS iI
PERFORMANCE HISTORY DATE Jun 04 Ju/04 Aug 04 Sep 04 Oct 04 Nov 04 Dec 04 Jan 05 Feb 05 Mar 05 Apr OS May 05 Jun 05 Jul05 Aug 05 Sep 05 Oct 05 Nov 05 Dec OS Jan 06 Feb 06 Mar 06 Apr 06 May 06 Jun 06 Jul06 Aug 06 Sep 06 Oct 06 Nov 06 Dec 06 Jan 07 Feb 07 Mar 07 Apr 07
VAMI 1000 1059 1048 1151 1174 1241 1263 1256 1292 . 1300
1192 1173 1150 1089 1241 1493 1560 1663 1746 1823 1880 1959 2021 2211 229 3 2305 2627 2580 2537 2581 2768 2804 2815 2810 3010
ROR 5.90 - 1.00 9.80 2.00 5.70 1.80 -0.60 2.90 0.60 -8.JO -1.6 0 -2.00 -5.30 ]4 .00 20 .30 4.5 0 6.60 5.00 4.4 0 3.10 4.2 0 3.20 9.40 3.70 0.50 14.00
-1.81 -1.66 1.72 7.28 1.30 0.39 -0.18
:: ~ 15 G
THE BAReLA Y INSTITUTIONAL REPORT 'l.STPERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. THE RISK OF LOSS INHERENT IN AN OPTI ONS WRlTING PROGRAM , SUBSTANTIAL. AN INVESTOR COULD POT ENTIALLY LOSE MORE THAN THE INITIAL INVESMENT. INVESTORS MUST REA D THE URRENT DIS CLOSURE DOCUMENT BEFORE THEY INV EST. COMPLETE DISCUSSION OF FEES AND CHARGES ARE REPORTED IN THE CTA's DISCLOSURE DOC UMENT. SPECIFICALLY, ONE mULD RECO GNIZE THAT AN INTROD UCING BROKER MAY CHARGE A FRONT-END START UP FEE OF UP TO 6% OF THE INITIAL JNTRIBUTION. PLEASE NOTE THAT THIS CHARGE IS NOT REFLECTED IN THE PERFOR,.\1ANCE OF THE COMMODITY TRADING WISORAND COULD HAVE A SIGNIFICANT IMPACT ON THE C US 'P~ RS ABILITY TO ACHIEVE SIMILA R RETURNS .
Financial Commodity Investments (Option Sellin g Strat.) Apr il 2007
FCI OPTI ON SELLING STRATEGY utilizes a market neutral trading strate gy that does not attempt to forecast market direction. FCI utilize s options on futures to initiate market neutral positions by simultaneously writ ing out of the money call and put options, followed by appropriate adjustments based on movement of the underl ying futures contract. Profits are derived when the price of the options that have been written declines such that the options can be purchased for amounts less than the price at which those options were initially sold. Profits also are realized when options expire worthless, providing full profit on the option premium sold (after commission and other fees). FCI 's primary trading philosophy is for profits to be made when the value of options are reduced as a function of time , rather than a function of market direction.
KEY PRINCIPALS - RIO CRAIG B. KEN DALL is the owner and manager of Kendall & Company, CPA, and Financial Investment, Inc. Mr. Kendall, is a CPA licensed in the state of Virginia. Mr. Kendall operates, Kendall & Company, a local CPA firm , tailoring its services to entrepreneurial business needing comprehensive CPA and Chief Financial Officer, "CFO Services for Hire". Mr. Kendall has operated the CPA business since 1995. In 1997, Mr. Kendall, founded FII, an investment firm registered with the NFA as a CPO (Com modity Pool Operator), which participates and advises clients in the acquisition of or investment in securities or other instruments, including private offerings. FII also docs business as Financial Investment, LP, a hedge fund that trades a portion of it assets pursu ant to FCI' s options sellin g strategy . FILP uses unique imp lied vo latility va luatio n models to capitalize with the strategy of selling short term dated, far out of the money options and der ivatives on equ ities and commodity contracts. Prior to 1995 , Mr. Kenda ll, served as the Controller and Ch ief Financial Officer (CFO ) o f a closely held electronic man ufacturer firm . Mr. Ken dall grad uated from Washingto n & Lee Univers ity in 1978. He received his CPA license from Mary land in 1981, and from Virgi nia in 1991. Mr. Kendall received his Series 6, 63, 65 and 3 Securi ties Licenses in 2001 and currently maintains his license as a Registered Investment Advisor. His business experience includes ove r twe nty years in the finance, accou nting and investment banking industry. Mr . Kendall is so lely responsible for all money management, trade execution, and risk management of all transactions executed on behalf of Financial Commodities Inc. (FCI).
THE BAReLAY INSTITUTIONAL REPORT PAST PERFOR..V1ANCE IS NOT INDICATIVE OF FUTURE RESULTS. THE RISK O F LOSS INHERENT IN AN OPTIONS WRITING PRO GRAM IS SUBSTANTIAL. AN INVESTOR COULD POTENT IALLY LOSE MORE THAN THE INmAL INVESMENT. INVESTORS NfUST READ TH E CURRENT DISCLOSURE DOCUMENT BEFORE THEY INVEST. A COM PLETE DISCUSSION OF FEES AN D CHARGES ARE RE PORTED IN THE CTA's DISCLO SURE DOCUMENT. SPEC IFICALLY, ONE SHOU LD RECOGNIZE THAT AN INTRODUCING BROKE R MAY CHA RGE A FRONT-EN D START UP FEE OF UP TO 6% OF THE INIT IAL CONTRIBUTION. PLEASE NOTE THAT THIS CHARGE IS NO T REFLECTE D IN THE PERF OR..'vIA NCE OF THE COM MO DITY TRADING ADVISOR AND COULD HAVE A SIGNIFICANT IMPACT ON THE CUS!:pj'~RS ABILITY TO ACHIEVE SIMILAR RETURNS.
Mature CTAs Compounded Annual ROR Rankings Current Month For Tr aders Reporting Resu lts as of Mon day, May 14, 2007 May not be reprint ed w ithout per m issio n Mature eTAs Represent Progra ms that commenced tr ading prior t o 1- 2004
5 6 7
10 11 12
13 14 15 16 17
18 19 20 21
22 23 24 25 26 27
Pug liese Capita l Managem ent. LLC FX Program Fina ncial Com modity I nvest m en ts (FCn Opti on Seiling St ra tegy ( Proprietary Perform ance) ACE I nvestments Strat egists, LLC St ock I n de x Pr em ium Collect ion - Regula r p ight on Capita l U~ Swis s Futures Tradi ng Pro gram r1..o nar ch C;gp/ta l Management FX f'l ult i-S t ra tegy Program Da Vinc i I nv est Ltd. Da Vinci Ar bit rage Capricorn Advi sory Mgt. Ltd Capric orn fxl'-1T Growt h MIGFX Reta il Growth .Badger Investment Gro up I ndex Program EMC Capita l Managemen t. Inc. ENC Classic Program lli:k k ~a p ita l ManagementJJ.c. Global Divers ifie d Fut ures 3X UM Partne rs Ltd Delt a Neutral Opt ion Wr iting Clar ke Capita l Mgt , Inc. Global Basic Program Capr icorn AdVisory Mgt, Ltd Capricorn fx ST Aggressiv e Briarwood Cap ita l Management Dive rsified 2X Pr ogra m Zen ith Resources I ndex Option Eckhar dt Trading Com pan y Highe r Lev er aged Pr ogr am KMJ Capital LLC K ~1 J Currency Pro gram Mullan ey I nvest m ent Mgt, LLC Prem ium Program ( Propriet ar y T r adin g) MI GFX I nst itu t iona l Pr ogra m BAM Asset Management, LLC Progr am i Alt is Partners (Jersey) Lim it ed Globa l Futu res Pro gram Saxon Investment Cor poration Aggressiv e Div ers ified Program Quan t it ative Investment Mgt LLC Quantitative Globa l Pro gram Keck Capita l Management, LLC Keck Program Zephyr Asset Mgt 1\1 oder at e Program Hath ersag eCapita l Managem ent LLC Long Ter m Curren cy Ta ct ical I nv est ment Mgt Corp Institutiona l Futures Progr am
4 7. 56%
Apr -0 7
4 0. 9 7 %
- 2 3 . 8 3 '~o
500 ,0 00
3 9 .82%
1, 000 ,00 0
. 0 .00 %
5 . 10
Apr -0 7
-45 .1 6%
14 6 .24
- 23.86 %
Apr -0 7
- 23.0 4%
Apr - 07
- 13 .22%
4 3 .23
-1 6. 21%
-3. 1. 2%
- 4 0. 39%
7 5 .90
- 13 .28%
-8 .7 2%
- 41.0 7'\10
- 24 .67%
500 , 000
Apr -0 7
- 65 .86%
5, 000, 000
Apr - 07
- 28 .65%
Apr - 07
Apr - 07
- 15 .4 3%
Apr - 07
- 30. 7 5%
29 .4 1
Apr - 07
THI S MATERIAL MENTIONS SERVI CES WHICH RANK THE PERFORMANCE OF COMMODITY TRADI NG ADVISORS. PLEASE NOTE THAT THE RANKI NGS APPLY ONLY TO THOSE CTAs WHO SUBMIT THEIR TRADING RESULTS. THE RANKINGS I N NO WAY PURPORT TO BE REPRESENTATI VE OF THE ENTIRE UN IVERSE OF COMMODITY TRADING ADVI SORS. THE MATERI AL I N NO WAY IMPUE5 THAT THt:5 E RES ULfS ARE OFFICIA LLY SANCTIONED RES ULTS OF THE COMMODITY INDUSTRY. PAST PERFORMANCE IS NOT I NDICATIVE OF FUTURE RESULTS. THERE IS A RISK OF LOSS IN FUTURES TRADING. A COMPLETE DISCUSSION OF FEES AND CHARGES ARE REPORTED IN THE CTA's DISCLOSURE DOCUMENT. SPECI FICALLY, ONE SHOULD RECOGN IZE THAT AN INTRODUCING BROKER MAY CHARGE A FRONT-END STARTUP FEE OF UP TO 6% OF THE INTIAL CONTRIBUTION. PLEASE NOTE THAT THIS CHARGE IS NOT REFLECTED IN THE PERFORMANCE OF THE COMMODITYTRADING ADVI SOR AND COU LD HAVE SIGNIFICANT IMPACT ON THE CUSTOMERS ABI LITY TO ACHIEVE SIMILAR RETURNS.
1 / J1
29 30 31
32 33 34 35 36
s 9 0
Clarke Capital Mgt. Inc. Global 1\1agnuin Program Hawksbill Capital l"1anagement Global Diversified Program Kinkogf Capital Management, lLC S&P Proqra m (Proprietary Trading) AIS Futures Management LlC i\'lA/\P (3X - 6X) Proora.n VEC Capital, Inc.
Ccmm od~ty Alternatives Red Oak Advisors, Inc. Fundamental Program Eckhardt Trading Company Standard Program Transtrend B.V. Transtrend OTP - Enhanced Risk (U5D) Calaveras Trading & Investments, LLC. Leveraged Standard Program (2x) Beacon Management CQIQ f'1eka Program Abraham Trading CQ!JJ.P-any oiversl fi ed Proq ra In Capital Fund Management Discus !'1anaged Futures Program FX Concepts Trading Advisor, Inc Global CUrrency Program Dunn Capital Management World Monetarv Assets Program C View Limited 3XL Program Bell Fundamental Futures LLC Standard Program Ansbacher Investment Mgt, Inc. General Program Clarke Capital Mgt[ Inc. fvlillennium Program Paskewitz Asset Management Contrarian 3X S&P Prg Fail River Capital LLC Global Strategies Higher Leverage Program Mulvaney Capital Management J'o1anaged Futures Program Strategic Ag Trading Grain Program Wallwood Consultants. Ltd Forex Managed Accounts Appleton Capital Management 2SQjo Risk Program MondialeAsset Management Ltd ~'londiale Leveraged Trading Program RangeWise Inc. RangeW'lse
Beacon Management Corp Enhanced Financial Program .chesa~ke Capital Corporation Diversified
Sunrise Capital Manaaement, Inc. Expanded Diversified Program Saxon Investment Corporation Diversified Program Scully Capital Management. LLC l'>1istrai Program
Smith Point Investment, Ltd Aggn~s.sive
Briarwood Caoital Managemeht Inc.
Apr- 0 7
17.41 u/ o
17.44% 16.94 tlj o
-5 . .16%
14. 99 ufu
16 r!( r;
12. 76 tl/o
MATERIAL MENTIONS SERVICES WHICH RANK THE PERFORMANCE OF COMMODITY TRADING ADVISORS. PL EASE NOTE THAT THE RANKINGS APPLY NLY TO THOSE CTAs WHO SUBMIT THEIR TRADING RESULTS, THE RANKINGS IN NO WAY PURPORT TO BE REPRESENTATIVE OF THE ENTIRE UN IVERSE OF OMMODITY TRADING ADVISORS. THE MATERIAL IN NO WAY IMPLIES THAT THESE RESULTS ARE OFFICIALLY 5ANCTIONED RESULTS OF THE COMMODITY iDUSTRY.
PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. THERE IS A RISK OF LOSS IN FUTURES TRADING.
COMPLETE DISCUSSION OF FEES AND CHARGES ARE REPORTED IN THE CTA's DISCLOSURE DOCUMENT. SPECIFICALLY, ONE SHOULD RECOGNIZE THAT 'oJ INTRODUCING BROKER MAY CHARGE A FRONT-END START UP FEE OF UP TO 6% OF THE INTIAL CONTRIBUTION. PLEASE NOTE THAT THIS CHARGE IS JT REFLECTED IN THE PERFORMANCE OF THE COMMODITY TRADING ADVISOR AND COULD HAVE SIGNIFICANT IMPACT ON THE CUSTOMERS ABILITY TO :HIEVE SIMILAR RETURNS.
Latest Autumn Gold Mature eTA Rankings Broker Use Only Attached is the latest Autumn Gold, Mature CTAs Compounded Annual ROR Rankings, as of May 14, 2007. We dissected the disclosure document of the #1 ranked trader, Pugliese Capital Management. Their track record is in the unregulated FX markets based on Pugliese's proprietary account trading only $542,000. He just started trading customer funds in 02/06 and only made 8~80/o in 2006. So far in 2007 Pugliese is about even. Performance with customer funds is what counts!
In reality, focusing on eTAs that traded customer funds, FCI, Ace and Dighton are respectively ranked #1, #2, and #3, with all CTAs compounded returns ranging between 420/0 to 47%. Even with their recent drawdowns Ace and Dighton still have highly attractive compounded returns! Past performance is not necessarily indicative of future results. The risk of substantial loss exists in futures trading. Ace, FCI and Dighton make a Dynamically Diversified Portfolio! Each possesses its own unique trading approach) and places trades on the client's behalf completely independent of one another. Each CTA applies its own proprietary trading systems and techniques in managing its clients' accounts. Not only is the performance of each CTA non-correlated with the performance of equities (stocks), but each other's performance as welL This is what diversification is all about and the epitome of Modern Portfolio Theory!
Each CTA has the potential to perform well regardless of whether the stock market rises, moves sideways or falls, or, for that matter, whether the economy is robust or in recession. Unlike stocks, the CTAs have the potential to perform well under virtually any economic scenario. When it comes to exceptional performance and generally prudent money
management we believe knowledgeable investors will be hard pressed to find a better grouping of CTAs than Ace, FCI and Dighton! Now with Dighton and Ace experiencing their worst ever drawdowns and both
starting to recover from their lows, this may be a particularly opportune time to open accounts with all 3 traders for suitable investors.
Individually, each of the traders make an excellent standalone investment. When combined, 'they could potentia.lly make a strong trading force for qualified investors-one that provides diversification for an investment portfolio that would be extremely difficult to duplicate, especially for an investment of only $225,000! Instead of selling one CTA, consider selling a Dvnamicallv Diversified Portfolio of all three CTAs. For clients not in the position to invest with all three CTAs they can select the one or two CTAs they like best! By offering a selection of eTAs your chances of an investor selecting one or two of the three are much better than just offering one....particularly with Autumn Gold's top 3 ranked traders, all of which have averaged compounded returns in excess of 40% per year. Be advised that past performance is not indicative of future results. There is a substantial risk of loss in futures trading no matter who is managing money. Futures trading is not suitable for all investors.
Interesting Sales Approach A broker recently related to me he has had excellent success with opening new accounts with Ace and other CTAs in a drawdown. After providing the proper risk disclosure, he suggests clients potentially lock in profits at what very well maybe near or at the top in the stock market, and come in at what very well may be near or at the bottom with Ace Investment Strategists!
Broker Use only! Not for Public use
Update on Ace's Trading Strategy Ace's trader, Yu-Dee Chang went back to analyze all his trades. He found the ones that were written closest to expiration were the most profitable, where the ones written furthest away from expiration were what attributed to most of his losses. With that in mind, he wants to be close to expiration as possible! He will primarily write options that expire that same month, waiting for higher volatility days to collect better premiums. When writing options, particularly those that have more than 3 weeks to expire he will try to get a strike price that is well below strong support if he is writing puts and well above resistance if he is writing calls. This way if he does have to roll or exit the price witI have a greater probability of being far enough away from his strike price as not to suffer a big loss. For example, let's say there is strong support for the S&P at 1450. He might write puts at 1410, well below support. This way if the market breaks strong support at 1450, his expiration date is still far enough away from the market where if he does roll down or exit the losses will be minimized compared to exiting close to his strike price of 141 or Most options Ace will write will be of short expiration (within 21 days, or even much shorter than that). Only approximately, ,10 0/0 to 30 % of the options written will be 30 to 45 days out. In this way Yu-Dee believes he can capitalize on the volatility, instead of being victimized by it. With the increased volatility and corresponding increase in option premiums he can collect enough option premium without going out more than a month, risking the uncertainty that lies that far in advance. He will primarily write options that expire that same month, waiting for higher volatility days to collect better premiums.
The above strategy was the strategy Ace primarily followed back in 2001 to 2003 when the markets were volatile with richly priced option premiums, even in expiring months! 2001 to 2003 were Ace's best performing years, with corresponding returns of 1010/0, 72%, and 660/0. Past performance is not necessarily indicative of future results. The risk of substantial loss exists in options writing. Ace began employing the above described strategy during the past week and is now up an estimated 30/0 to 4% in his SIPC program for the month of May. YTD we estimate Ace is down 18% t019%. What was very impressive and caught the eye of many ISs and their clients about Ace's trading last week, was that the Dow was down over 100 points on Thursday and up over 100 points on Friday. Normally that type of volatility was exactly what caused many of Ace's losses, but the way Ace positioned his accounts, with over 700/0 of his positions close to expiration in the expiring month, Ace actually made money on those two days! Is this the end of Ace's drawdown? Is Yu-Dee back to his winning ways? . We believe this is an excellent time for those who have been waiting for Ace's drawdown to end, to take the calculated risk that this is the end or very near the end of Ace's drawdown to open an account, and for existing clients to add money! reasoning is, Yu-Dee has 20 years experience trading the markets, and since he started managing accounts in 2001 has recovered from every drawdown to make new highs in equity. Every top performing trader, at one point in their career experiences
drawdowns that are out of character and larger than the historical norm. With 20/20 hindsight, these drawdown periods proved to be the best time to get started with the eTA. All one has to do is look at the most recent edition of Autumn Gold's top 100 Mature eTAs Compounded Annual ROR Rankings to see that every top ranked eTA experienced drawdowns, most more than 20%, and most with no where near the long term returns of Ace! All of these "hot" traders didn't look too hot when they were in a drawdown.....no one does! But investing with them during their drawdown would have proved to be the best time! Past performance is not necessarily indicative of future results. The risk of substantial loss exist in futures trading. Even with Ace's drawdown Barclay's ranks Ace # 7 in the first Quarter of 2007 edition. Top 30 eTA Programs for the Past 5 Years. Even with Ace's drawdown Barclays March 2007 Institutional Report, shows Ace with a 694% total return since inception and a 450/0 con1pounded average annual return. Even with Ace's drawdown, Autumn Gold ranks Ace #3 out of their top 100 traders in their May 14, 2007. Mature CTAs Compounded Annual ROR Rankings. And let's not forget, in Ace's best performing years the markets experienced the increased volatility we are now experiencing and that volatility probably will continue in an aging bull market, at its historic highs, with deteriorating tu ndamentals. Due to Ace's drawdown, Ace may not have one of the best short term track records today, but still has one of the best long term records even with their drawdown! For most savvy investors performance over time counts a lot more than short term performance! Good performance over time is how the "magic" of compounded returns takes effect. It's the potential opportunity to achieve highly attractive compounded returns that motivates investors to take the substantial risk of 105s in futures trading! Drawdowns have historically been the best time to open an account and add money with Ace. Ace up to date has 1000/0 of the time recovered from all drawdowns to make new highs in equity. We continue to view Ace's drawdown as an isolated event out of sync with their overall track record. We believe May will prove the end of Ace's drawdown and the beginning of their recovery period to make new highs in equity! Clients starting now have around a 200;0 advantage than eXisting clients. If Ace makes up the drawdown new clients starting now will be up 20 % , while existinq accounts starting before the drawdown will be even, making back what Ace was down. Whether it be with Ace or any other trader, this is how savvy investors tend to make the most amount of money: by investing with a trader with a good long term track record near or at the end of a drawdown! Bear in mind there can be no assurances that this is the end of Ace's . drawdown, that only time will tell. Past performance is not necessarily indicative of future results. The risk of substantial loss exist in futures trading. We recommend calling existing Ace accounts who are in the financial position to add more money to their accounts and for new accounts to start now! Broker Use only. Not for Public Use
Broker Use Only: Not for distribution to the public. The risk of loss in futures trading can be substantial no matter who is managing money. Past performance is not necessarily indicative of future results. An investor could potentially lose more than the initial investment.
New Fully Diversified Recommended eTA: Financial Commodity Investments (Fel) FCI's new disclosure document is approved and attached. FCI is one of the most marketable CTAs today with ascending vearlv performance producing a compounded annual average return of 450/0 since 2004! Ending April 2007, FCI's track record has 940/0 of all its executed futures options profitable, with 750/0 winning months. (25 winning out of 33 months) FCI's trading team can be described as a "brain trust", comprised of a CP .A. and two finance MBAs. With their razor sharp intelligence, they synergistically work together, selecting trades with the highest profit potential, least risk and highest mathematical probability of success. It appears FCI is succeeding in selecting trades with the highest profit potential, least risk and highest mathematical probability of success by winning 25 out of 33 months with 940/0 of the futures options executed profitable, producing a compounded annual average return of 47 % ! Past performance is not necessarilv indicative of future results. The risk of substantial loss exists in writing futures options. With a low account minimum, diversifying across the entire liquid commodity spectrum focusing in Energy and Grains, producing respective ascending yearly returns of 260/0 in 2004 (Only 6 months), 380/0 in 2005 and 580/0 in 2006, and up already 8.60/0 in 2007, FCI is one of the easiest sales a broker ever had for suitable investors. As you will learn, the credentials of the eTA, combined with their investment strategy, prudent money management, profound diversification, and highly attractive returns practically sells itself! Past performance is not necessarily indicative of future results. The risk of SUbstantial loss exists in futures and options trading. Fel has observed an investor may successfully predict the long term direction of the
market but may be stopped out by short term market movements, only to then watch the market move in his favor. In order to help avoid such short term qyrations, and to attempt to capitalize on the fact that 800/0 to 900/0 of option buyers lose money, Fel sells
way out of the money options which have very small odds of going in the money, The risk of substantia! loss exists in writing options. They trade liquid commodity markets, with a focus on Energy and Grains.
FeI may, but doesn't trade the S&P 500 and will NOT trade any natural gas options! A typical portfolio breakdown is as follows: Ene rgy-30 0/0 Grains and Oilseeds-25% Metals-20% Softs-20% Meats-50/o
Fel believes writing options on commodities has distinct advantages over trading futures. A short option on commodities carries the same risk as a futures contract with one distinct exception: the option on a futures contact will generally move slower than a futures contract, giving the trader more time and latitude to exit should the market move against the option. Additionally a futures contact has to move in the direction of the initiated trade to be profitable, where as an option writer can be profitable if a market moves with or against the direction of the initiated trade, and even if the market doesn't move at all: as long as the market doesn't move beyond the options strike price at expiration. Fel's primary trading philosophy is for profits to be made when the value of options they write are reduced as a function of time, rather than a function of the market. Fel's unique proprietary trading program is based on extremely disciplined and diligent trade selection paying strict attention to each trades statistical probability of success, risk and profit potential. Only those trades deemed having a high probability of success are initiated. Trading decisions are based on FCl's interpretation of technical and fundamental analysis using proprietary parameters scrutinizing trends, seasonality, implied volatility, historical pricing, charting, major support and resistance and other variables.
Money Management FCI believes capital preservation is a pre requisite to capital appreciation. They have developed strict risk management rules attempting to maximize profits and minimize losses. Position exposure and the potential percentage loss that the portfolio may incur in unfavorable market moves are continuously monitored. Volatility models are used to
deterrnine position size adjustments to maintain the programs maximum exposure limits. Position exposure limits are the total equity risked in anyone market, and is
generally between 0.5% and 1.5% of total equity. An increase of the volatility model may necessitate a position size reduct ion in any particular market. To help eliminate emotional decisio ns, besides using stop losses when a positio n gets to their risk threshold , FCI has a contingency plan for practically anything the market will do. They strategize befo re a trade is initiated a plan of action as to where and why they will get out of a trade if things go wrong. On rare occasions when a market moves against their position Fel will buy or sell a futures contact as a hedge . Diversification among a minimum of 4-6 commodities helps prevent being over exposed in any single market. This diversification tends to not only reduce portfolio volatility but also provides incremental profit opportunities.
Performa nce Results FCl's strict money management and highly thought out, selective trade selection is
demonstrated in their updated performance record.
PERFORMANCE RECORD Monthly Returns
---- - _. Feb Ja n ........._._- -
-- ~ - _
- -- - _.
200 2.90 5 0.60% %
200 3.10 4.40% 6 %
8.30 % 1.60% 2.00% 5.3 0% 3.2 0% 9.40% 3.70% 0.50%
---_....--- --. YTD
9.80% 2.00 %
26 .34 %
58 .48 %
PAST PERFORMANCE IS NOT NECESSARI LY INDICATIV E OF FUTURE PERFORMANCE
For detailed information on FCl's performance record see page 8 in their filed disclosure document. The above performance record shows: 75% winning months: 94% of actual contracts traded were profitable. Note the worst drawdown of 16% occurred from April through July of 2005. Even with the 16% drawdown in 2005, Fel finished the
year producing a 380/0 return. Since July of 2005 Fels worst drawdown has been under 40/0. Past performance is not necessarily indicative of future results. The risk of substantial loss exists in futures and options trading Note: The performance record was compiled up until August of 2006 from a portion of a hedge fund, Financial Investments, L.P" Fel's president Craig Kendall is trading. The trades are real time and come from exactly the same program used by the CTA. This is explained in the disclosure document on page 6 under, Option Selling Strategy for Vision Financial Markets-Performance Capsule:
The petformance data presented on the following pages reflects the performance of the Option Selling Strategy for Vision Financial Markets to date. Specifically, the performance represents the track record for the Option SeIling Strategy for Vision Financial markets as employed by FII for an account of FILP from, 2004 until August of 2006, and by Fel for the several managed accounts from August 2006 to date. Additionally, the disclosure document shows 144 accounts with $14,125,575 under management, and no accounts closing with a loss.
According to the i\ilarch 2007 edition of Barclay Institutional Report Fel has the following performance statistics:
Compounded Average Annual Return: 45.610/0 Total Return since Inception 181.020/0 25 winning months out of 33 months Best 24 month period 150.590/0 Worst 24 month period 107.920/0 Sharpe Ratio 2.150/0 VAMI: Since July 2004 each 1000 has over doubled growing to $2810 ending 03/07
Account Specifications Minimum size account: any CTA Management fee
eTA Incentive Fee Monthly Accounting Fee
$50,000 (Sorry no exceptions. Fel will not accept account starting with less than $50,000.)
2% prorated and taken monthly. Vision ISs get special rate of only 10/0.
200/0 of new profits taken monthly. $25 monthly
Note: Fel is a very active trader, averaging 17 round turn trades per month per $50,000.
$20 round turn plus $5 in fees.
Optional, up to 6%. IB retains 90% .
IB payout: $10 per round turn. Estimated earnings: Approximately 4% on equity, NOT including Sales Charge. Note: 4% on equity is approximately what IBs earn with Dighton Capital USA. , which is the upper end of payouts in the managed futures industry! (This doesn't include where IBs earn 90% of up to a 6% sales charge) We could easily find CTAs that would 'all ow us to charge a higher commission where IBs could earn over double the amount, but with no where near the track record, credentials, trading expertise and not being able to provide good profit potential to investors ... not to mention a lack of marketability! It doesn't matter how much a payout is if the product is difficult to market and generates little interest from investors! For every single account you'll raise from most other CTAs, you'd probably be able to raise 3 for FCI! The most important thing to a business man is what his bottom line net profit is! With FCl's track record and affordable account minimum IBs can easily raise multi-millions of dollars for FCI, thereby making Fer one of their most profitable products while producing some of the best "bottom line" profits for brokers ! Most importantly, we believe FCI will provide investors an excellent potential to enjoy highly attractive returns through prudent money management! '
Fel's Trader Craig B, Kendall , is the trader fo r FC I. He is the owner and manager of Kendall & Company, Financial Investment, Inc . and Financial Investment, LP. Craig is a CPA licensed in the state of Virginia . In 1997, Craig founded Financial Investments, Inc. an investment firm participating in the acquisition of equities, private placement memorandums (PMM) , and has participated in other investments securities His business experience includes over twenty yea rs in the finance , accounting and investment banking industry. He is extremely bright with a highly detailed analytical mind which perfectly compliments the two finance MBAs who are an essential part of Craig's CT A: Gaurav P. Gupta earned a Masters of Science in Finance from the prestigious Georg e Washi ngton Unive rsity (GW U), graduating near the top of his class . W hile in GWU , he was the Vice Presi de nt of Tradin g & Finance Investment Club . Dean A. Dan iel has 19 yea rs experience in mergers & acq uisitions, val uation and corporate finance. His knowledge of valu ation, macro econom ics a nd busin ess fundamentals comp lem ent and strengthen the stat istical models used by Fe !. Dean stud ied business and engineering whi le earning a Bachelor's of Science degree at the
US Air Force Academy. He later received a MBA in finance at the Smith School of Business, University of Maryland.
Craig works as a synergistic team with Gaurav and Dean in carefully scrutinizing and
selecting trades that have the highest profit potential least risk, and highest
mathamatical probability of being successful. They utilize sophisticated proprietary
option pricing models and a combination of fundamental and technical analysis in
If you have any questions for Craig, he may be reached at 703-4352777. The best time to reach him is around 1 to 3 P.M. Eastern Time. It would be a good idea to call Craig to introduce your self, ask questions and get a better feel for his CTA dedication and professionalism! Craig also writes a CTA newsletter on Fel that he would like to send to all interested 18s. His e-mail address is ckendall@financialciLcom E-mail him your name, 18's name and your phone number. Additionally, if you call Craig and he is not available make sure to E-Mail your name and phone # and he will return your call! New Accounts Here are several suggestions on generating new Fel accounts: 1. Fel has the exceptional track record and credentials that many highly selective, finicky investors, who refused to invest with other eTAs, will want to invest with FCI. Make a point of getting back to every prospect who said no to a managed account and present Fel! 2. Present Fel to all existing accounts that are in the fi nancial position to open another account. 3. Focus on new money for FCI, not transferring money from existing
Conclusion With an ascending track record of extremely impressive returns that
have increased each year since 2004, producing an average compound return of 47% per year through prudent money
manageme nt, Fel is a hig h ly marketable produ ct t o inve stors. Add t o t hat t he fact t hat FCI foc uses in two of t he hottest markets , Energy and Grains, w hile hav i ng an affo rdable acco un t m inim um of only $50,00 0 and y ou have t he in g red ients to raise m ulti-millio ns of dolla rs! FCI w ill also attract a lot of bus iness for other CTAs w ith investo rs w ho seek a divers ified CTA portf olio ! We st ro ng ly advise ma king FCl an int egral part of yo ur busin ess ! Note: Like Zenith, we expect Fel to reac h a t radi ng limit of around 100 m ill ion dollars and no longer accept new acco unts. We advise ISs t o raise money for Fel w hile they are st ill accept ing new accounts! Very Important Note: FCI has received numerous calls from Vision ISs informing them that they now have and intend to raise substantial additional amounts of equity for FCI. With virtually not even doing any marketing FCI has attracted around 11 million dollars since the beginning of the year. FCI's president Craig Kendal is very thankful and appreciative of the enthusiastic support Vision ISs are giving his CTA! Craig, rightfully so, is concerned about growing too fast. He estimates FCI will be able to handle $75 to $100 million dollars. However, Craig doesn't want to jeopardize the performance of his program by taking on too much money too fast. He is one of the only CTAs whose performance has increased as the equity under management grew. To help insure the integrity of his program, Craig has instituted the following stipulations on new accounts: • For the month of May there will be no limit on the amount of new accounts accepted. • From June going forward, until further notice FCI will accept on a first come first serve basis a maximum of $2.5 million per month in new equity. • If during any given month more that $2.5 million dollars is raised the accounts that get closed out will be the first to be accepted the following month. However, priority will be given to larger size accounts. For example, if there is over $2.5 million on the waiting list for the next month the larger accounts will be
accepted first and the smaller size accounts will be put in on the waiting list for the following month.
â€˘ Please be sure all paperwork is in a NEAT, and complete format. Incomplete paperwork will not be accepted.
Craig believes the above stipulations will be in the best interest of
clients and brokers alike. From our 30 years experience with CTAs,
Craig has already raised the minimum account for everyone except
Vision ISs to $100,000. Be advised that the Vision $50,000 minimum
for FCI is a courtesy to Vision ISs that Craig reserves the right to raise
at his discretion.
Craig thanks Vision IBs in advance for their understanding!