The delivery of this Disclosure Document at any time does not imply that the information herein is accurate or complete as of any date subsequent to that stated above.
 
 
 
 

THE RISK OF LOSS IN TRADING COMMODITIES CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. IN CONSIDERING WHETHER TO TRADE OR TO AUTHORIZE SOMEONE 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 MAY SUSTAIN A TOTAL LOSS OF THE INITIAL MARGIN FUNDS AND ANY ADDITIONAL FUNDS THAT YOU DEPOSIT WITH YOUR BROKER TO ESTABLISH OR MAINTAIN YOUR POSITION. IF THE MARKET MOVES AGAINST YOUR POSITION, YOU MAY BE CALLED UPON BY YOUR BROKER TO DEPOSIT A SUBSTANTIAL AMOUNT OF ADDITIONAL MARGIN FUNDS, ON SHORT NOTICE, IN ORDER TO MAINTAIN YOUR POSITION. IF YOU DO NOT PROVIDE THE REQUESTED FUNDS WITHIN THE PRESCRIBED TIME, YOUR POSITION MAY BE LIQUIDATED AT A LOSS, AND YOU WILL BE LIABLE FOR ANY RESULTING DEFICIT IN YOUR ACCOUNT.

UNDER CERTAIN MARKET CONDITIONS, YOU MAY FIND IT DIFFICULT OR IMPOSSIBLE TO LIQUIDATE 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 THE INTENDED AMOUNTS, SINCE MARKET CONDITIONS MAY MAKE IT IMPOSSIBLE TO EXECUTE SUCH 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 CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS GAINS.

IN SOME CASES, MANAGED COMMODITY ACCOUNTS ARE SUBJECT TO SUBSTANTIAL CHARGES FOR MANAGEMENT AND ADVISORY FEES. IT MAY BE NECESSARY FOR THOSE ACCOUNTS THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE DOCUMENT CONTAINS, AT PAGES 13 AND 14, A COMPLETE DESCRIPTION OF EACH FEE TO BE CHARGED TO YOUR ACCOUNT BY THE COMMODITY TRADING ADVISOR.

THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER SIGNIFICANT ASPECTS OF THE COMMODITY MARKETS. YOU SHOULD THEREFORE CAREFULLY STUDY THIS DISCLOSURE DOCUMENT AND COMMODITY TRADING BEFORE YOU TRADE, Including the description of the principal risk factors of this investment, at pages 9 to 12.

you should also be aware that this commodity trading advisor may engage in trading foreign futures or options contracts. transactions on markets located outside the united states, including markets formally linked to a united states market may be subject to regulations which offer different or diminished protection. further, united states regulatory authorities may be unable to compel the enforcement of the rules of regulatory authorities or markets in non-united states jurisdictions where your transactions may be effected. before you trade you should inquire about and ask the firm with which you intend to trade for details about the types of redress available in both your local and other relevant jurisdictions.

THIS COMMODITY TRADING ADVISOR IS PROHIBITED BY LAW FROM ACCEPTING FUNDS IN THE TRADING ADVISOR'S NAME FROM A CLIENT FOR TRADING COMMODITY INTERESTS. YOU MUST PLACE ALL FUNDS FOR TRADING IN THIS TRADING PROGRAM DIRECTLY WITH A FUTURES COMMISSION MERCHANT.

Risk Disclosure Statement

 Introduction

 The Advisor

The Trading Programs

 Past Performance

Risk Factors

Conflicts of Interest

Fees of the Advisor

Brokerage Arrangements

Opening an Account

Additional Information

Advisory Agreement

Notional Account
 
 

Dr. John F. Clayburg (the "Advisor") engages in the management of commodity trading accounts for qualified investors. This Disclosure Document describes the trading management services offered by the Advisor and the risks associated therewith.
 
 

The Advisor's main office is located at 29568 Highway 141, Coon Rapids, Iowa 50058-7178. His telephone number is (712) 684-5239.
 
 

The Advisor's objective in providing trading management services is to effect appreciation of the assets of his clients through the speculative trading of commodity interests, which include, without limiting the foregoing, commodity futures contracts and related options thereon. This Disclosure Document describes the trading management services offered by the Advisor and the risks associated therewith. The Advisor intends to begin using this Disclosure Document on or after May 31, 1998.
 
 

Trading in commodities is not intended as a replacement for investing in traditional asset classes, but rather as a possible enhancement to a traditional portfolio. There has historically been a degree of non-correlation between the returns realized on certain commodity interest trading and those on stocks and bonds. This non-correlation suggests that commodity trading can, in certain circumstances, be a valuable complement to a traditional portfolio.
 
 

Commodity trading involves substantial risks due in part to the highly speculative nature of such trading. As a result, an investment in a commodity trading account is only suitable for those investors who have adequate means to provide for their current needs and personal contingencies and who can bear the economic risk of losing their entire investment. Furthermore, investors must also possess an appropriate level of financial sophistication and experience.

The Advisor graduated from Iowa State University in 1971 with a degree in Doctor of Veterinary Medicine. Since that time he has had a general practice of large animal medicine in the Coon Rapids, Iowa area and has operated his family farm. For several years he studied the commodity markets and attempted to adapt computer technology to market activity. In August 1995 the Advisor began marketing computer trading programs which generate trading signals to buy or sell certain commodities. He became registered under the Commodity Exchange Act as a commodity trading advisor in April 1995. The Advisor has used the name "JFC Trading" but no longer does business under this name. The Advisor is also a member of the National Futures Association.
 
 

The Advisor may trade, or will continue to trade, commodity interests for his own personal accounts. Clients of the Advisor will not be permitted to inspect the records of any such trading by the Advisor. See "Conflicts of Interest--Proprietary Trading of the Advisor."
 
 

The Advisor will trade the assets of a client in accordance with one of his multiple trading programs. The Advisor's objective in providing trading management services is to effect appreciation of the client's assets through the speculative trading of commodity interests.
 
 

Currently the Advisor offers the following trading programs to his managed account clients: (i) the Cyclone Program, (ii) the QSP Program, (iii) the RC2 Program and (iv) the Cosmos Program. The following provides general information regarding each program.
 
 

Each program is technical in nature and was developed to take advantage of a specific condition or set of conditions that may appear in a market. Technical trading methods evolve from the theory that a study of the markets themselves will provide a means of anticipating future prices. Price analysis, which focuses on the nature of recent advances or declines and market reaction to price moves, is the primary technical tool employed by the Advisor. Each program may examine a different aspect of market behavior while seeking to initiate the best course of action from a trading perspective.
 
 

The trading programs will generally not incorporate fundamental factors which affect price, such as political or economic events. Fundamental information is based on the premise that by studying supply and demand of a given commodity, one can predict the future price level of that commodity.
 
 

The trading strategy to be followed by the Advisor does not assure successful trading. Investment decisions made in accordance with each program will be based on an assessment of available facts. However, because of the large quantity of facts at hand, the number of available facts that may be overlooked and the variables that may shift, any investment decision must, in the final analysis, be based on the judgment of the Advisor.
 
 

The Cyclone Program is a day trading system which trades only the stock index futures. It operates by calculating proprietary support and resistance areas each night for use in the next day's trade. Being self-adaptive in nature, the entry and exit signals will be unique for each trading day.
 
 

The QSP Program is a trading program which derives its entry and exit signals from a variety of data inputs. Although its primary use is in the stock market indices this same trading technique also applies to other markets.
 
 

The RC2 Program trades short term swings in the market defined by a unique combination of overbought/oversold oscillators combined with a proprietary momentum indicator. The program utilizes multiple time frames to accurately define entry and exit points. Although this program primarily trades the financial sector, the technique may be used in other markets.
 
 

The Cosmos Program will trade a diversified portfolio of the major markets. This program will attempt to capture longer term trends in the markets traded. Trading methods, including short term reversal identification and longer term trend following techniques, will be used in a portfolio that could include up to 30 different markets.
 
 

Each program is an active and aggressive trading method. Such trading can be expected to have rapid drawdowns and volatile performance; it also has the potential of incurring substantial trading profits. In the event the Advisor experiences losing trades, however, the client's equity will erode more
 
 

quickly than that of an account which does not use such an aggressive trading strategy.
 
 

In addition, the Advisor's trading is expected to generate a much higher volume of trades, and therefore a higher aggregate amount of brokerage commissions, than some other trading methods may generate. Brokerage commissions will constitute an ongoing expense for an account which must be recouped before profits can be generated.
 
 

Effective risk management is a crucial aspect of each trading program. The current account size, expectation, volatility of market traded and the nature of other positions taken are all factors in determining the amount of equity committed to each trade.
 
 

The decision by the Advisor not to trade certain markets or not to make certain trades may result at times in missing price moves and hence profits of great magnitude, which other trading managers who are willing to trade these commodities may be able to capture. The Advisor's approach is dependent in part on the existence of certain technical indicators. There have been periods in the past when there were no such market indicators, and those periods may recur.
 
 
 
 

Within certain programs, the Advisor may trade a diversified portfolio of commodity interests--including, but not limited to, agriculturals, metals, energies, currencies and financials. Diversification may be limited, however, during the start-up period and will vary depending upon the size of the client account. The Advisor also reserves the right to refine his trading programs, including, but not limited to, adding or deleting commodities from the portfolio without prior approval by, or notice to, the client.
 
 

The trading programs utilized by the Advisor are proprietary and confidential. The foregoing descriptions are of necessity general and are not intended to be exhaustive. Consequently, clients of the Advisor will not be able to determine the full details of those programs, or whether those programs are being followed. There can be no assurance that any trading strategy of the Advisor will produce profitable results or will not result in losses.
 
 

The following table reflects the actual trading results of all client accounts directed by the Advisor for the period shown.
 
 

Table A presents the past performance record of the Cyclone Program. Investors should note that the Advisor has not used the QSP Program, the RC2 Program and the Cosmos Program to trade client accounts; therefore, these programs do not have any applicable performance history for clients to review.
 
 

The results set forth in the following table are not indicative of the results which may be achieved by a client's account. Past results are not necessarily indicative of future results. No representation is being made that a client's account will or is likely to achieve profits or incur losses similar to those shown. In addition, because the Advisor has modified and will continue to modify his trading programs, the results shown in the table do not necessarily reflect the program which will be used by the Advisor on behalf of a client's account. The markets in which the performance record was compiled have been and are changing; a trading program or approach successful in a particular set of market conditions might not be successful in other market conditions existing now or in the future. No representation is or could be made that the results set forth above are representative of the Advisor's current trading methods.
 
 

The following is a composite performance table. Accordingly, investors in the specific accounts included in the composite figures may have more or less favorable results than the table indicates. Furthermore, results among accounts will vary depending on such factors as the size of the accounts, commission rates and advisory fees charged the accounts, the date the accounts started trading and the order in which trades for the various accounts were entered. The size of an account may affect the relative size of positions taken, the degree of diversification and the particular commodities traded.

General Information Regarding the Advisor

Date the Advisor Began Trading Customer Accounts: February 1997

Assets Under Management of the Advisor (Excluding Notional Funds): $0

Assets Under Management of the Advisor (Including Notional Funds): $0
 
 

General Information Regarding the Advisor's Cyclone Program

Date the Advisor Commenced Trading the Program: February 1997

Number of Open Accounts: 0

Number of Closed Accounts with Positive Net Performance: 0

Number of Closed Accounts with Negative Net Performance: 3

Assets Traded Pursuant to the Program (Excluding Notional Funds): $0

Assets Traded Pursuant to the Program (Including Notional Funds): $0

Worst Monthly Percentage Draw-Down: -18.1% in July 1997**

Worst Peak-to-Valley Percentage Draw-Down: -22.57% from March 1997 through July 1997**
 
 

* Monthly Rate of Return is calculated by dividing the sum of the net performance for the fully-funded accounts by the sum of the monthly beginning net asset value of the fully-funded accounts plus time-weighted additions and time-weighted withdrawals. Annual Rate of Return is calculated by multiplying, on a compound basis, each of the Monthly Rates of Return for the year. For periods of less than one year, the results are year-to-date.
 
 

** "Draw-down" means losses experienced by an account traded in accordance with the program over the specified period.
 
 

Certain of the accounts included in the table were fully funded and certain of the accounts were notionally funded. Trading leverage consists of two different components, cash and notional funds. Cash is the actual dollars given to the Advisor for use within an account. Notional funds are the increase in dollars, above cash, which the Advisor is instructed by a client to consider itself to be managing. A fully funded account uses no notional funds; a notionally funded account uses a mix of cash and notional funds.
 
 

The Advisor computed the rates of return included in the above table pursuant to the "fully funded subset" method, i.e., the rates of return are based on the composite performance of the fully funded accounts. To qualify for use of the fully funded subset method, certain computations must be made in order to arrive at the fully funded subset and the accounts for which performance is so reported must meet certain tests which are designed to provide assurance that the fully funded subset and the resultant rates of return are representative of the trading program. The Advisor has performed these computations for each period shown.
 
 

The following matrix allows the conversion of the fully funded rates of return in the performance table to the effective rates of return that would have been experienced by a notionally funded account. The figures in the following matrix show varying rates of return that may be achieved by a client with a given profit or loss at different levels of funding.

This matrix allows one to convert the range of monthly rates of return on fully-funded accounts (vertical axis) to corresponding rates of return for different funding levels (horizontal axis). For example, a rate of return of -20.0% for a fully funded account would signify a rate of return of -80.0% for an account that is funded at the 25% level, i.e., 25% in actual funds and 75% in notional funds. Likewise, a rate of return of 20% for a fully funded account would signify a rate of return of 40% for an account that is funded at the 50% level, i.e., 50% in actual funds and 50% in notional funds.
 
 

The following table only includes rates of return. Upon request, the Advisor will make available to a prospective or existing client a performance table which presents in a multi-column format, among other things, monthly beginning net asset value, additions, withdrawals, net performance and ending net asset value, as well as monthly rates of return.
 
 

See "Risk Factors--Past Results No Assurance of Future Performance."
 
 

Commodity interest trading is a high risk investment which should be made only after consultation with independent qualified sources of investment and tax advice. Among the risks involved are the following:
 
 

A principal risk in commodity interest trading is the traditional volatility (or rapid fluctuation) in the market prices of commodities. The volatility of commodity trading may cause a client's account to lose all or a substantial amount of its assets in a short period of time. Prices of commodity interests are affected by a wide variety of complex and hard to predict factors, such as political and economic events, weather and climate conditions and the prevailing psychological characteristics of the marketplace.
 
 

Commodity futures contracts are traded on margins which typically range from about 2% to 20% of the value of the contract. Low margin provides a large amount of leverage, i.e., commodity futures contracts for a large number of units (bushels, pounds, etc.) of a commodity, having a value substantially greater than the margin, may be traded for a relatively small amount of money. Hence a relatively small change in the market price of a commodity can produce a corresponding large profit or loss. If the Advisor invested a substantial portion of the assets of a client's account in such a situation, a substantial change, up or down, in the value of the account would result. For example, if at the time of purchase 5% of the price of a futures contract is deposited as margin, a 5% decrease in the price of the futures contract would, if the contract were then closed out, result in a total loss of the margin deposit. Brokerage commissions and other expenses also would be incurred and would have to be paid despite the loss. Thus, like other leveraged investments, any trade may result in losses in excess of the amount invested.
 
 

It is not always possible to execute a buy or sell order at the desired price, or to close out an open position due to market conditions and/or price fluctuations. As an example of this latter risk, it should be noted that when the market price of a commodity futures contract reaches its daily price fluctuation limit no trades or only a limited number of trades can be executed. Daily price fluctuation limits are established by the exchanges and approved by the Commodity Futures Trading Commission ("CFTC"). The holder of a commodity futures contract may therefore be locked into an adverse price movement for several days or more and lose considerably more than the initial margin paid to establish a position. In certain commodities, the daily price fluctuation limits may apply throughout the life of the contract, and hence the holder of a futures contract who cannot liquidate his position by the end of trading on the last trading day may be required to make or take delivery of the commodity. Another instance of difficult or impossible execution occurs in thinly traded markets or markets which lack sufficient trading liquidity. As a result, no assurance can be given that the Advisor's orders will be executed at or near the desired price.
 
 

In a managed account, as opposed to a limited liability investment such as a commodity pool, a client's liability for losses in the account is a direct personal liability of the client. A client's potential loss is by no means limited to the amount of assets which he commits to the account. For example, in a market in which the Advisor is unable to liquidate positions, clients could lose well in excess of the maximum they had thought they were risking in their futures trading.
 
 

The Advisor may concentrate his trading in certain types of commodity interests. Consequently, a client may not maintain a variety of diverse positions. Concentration of trading in certain types of commodity interests may subject the account's performance to relatively greater volatility than if the account was more diversified.

Trading leverage consists of two different components, cash and notional funds. Cash is the actual dollars given to the Advisor for use within the trading account. Notional funds are the increase in dollars, above cash, which the Advisor is instructed by a client to consider itself to be managing when deciding the size of futures positions he should initiate on behalf of the client. Using notional funds to increase the leverage at which the Advisor will trade can be expected to increase the rapidity of drawdowns and the volatility of the performance of the Advisor by increasing trading losses; however, the use of notional funds has the potential of increasing trading profits. There can be no assurance as to the effect which such leverage adjustments may have on the performance of the Advisor or of a client's account. If a client uses notional funds for additional leverage, the equity in the account of the client will erode much more quickly than if it does not use notional funds, in the event the account experiences losing trades.
 
 

A managed account client of the Advisor may request him to advise the client of the amount of cash or other assets which should be deposited in his account to be considered "fully funded." This is the amount upon which the Advisor will determine the number of contracts traded in the account and should be an amount sufficient to make it unlikely that any further cash deposits would be required from the client over the course of his participation in the Advisor's managed account program.
 
 

A managed account client of the Advisor should consult the account statements received from his futures commission merchant in order to determine the actual activity in the account, including profits, losses and current cash equity balance. If a client uses notional funds for additional leverage, the client should be aware of the following: (i) although the gains and losses, brokerage fees and commissions measured in dollars will be the same, they will be greater when expressed as a percentage of account equity, (ii) the client may receive more frequent and larger margin calls and (iii) the disclosures which accompany the performance table in this Disclosure Document may be used to convert the rates of return in the performance table to the corresponding rates of return for particular funding levels. The account size that a client may have agreed to in writing is not the maximum possible loss that the account may experience.
 
 

In particular, the client understands that the management fee paid to the Advisor will be calculated based partly on the notional funds in his account. As a result, the use of notional funds will increase the amount of management fees that the Advisor will receive from the client for trading the same amount of cash or actual funds. For example, the Advisor may receive a 2% management fee. If an account is fully funded the Advisor will receive a management fee of 2% based on the actual funds in the account. If the account, however, is funded at only 50%, i.e., one half actual funds and one half notional funds, the 2% management fee, expressed as a percentage of actual funds, would be 4%. Similarly, while the per trade commission rate charged to the client will not change, the use of notional funds will increase the aggregate amount of brokerage commissions paid by the client since the number of trades initiated by the advisor will increase.
 
 

The Advisor bases his decisions on "technical" factors, such as past price fluctuations of the group or type of commodity. See "The Trading Programs."
 
 

Technical analysis is based on the theory that the study of the markets themselves provides a means of anticipating price movements. Consequently, such analysis does not focus on the forces directly affecting the markets. The technical factors that can be evaluated by a trader are limited in that they must be quantifiable in order to be processed by the trader. Technical trading programs may also be unsuccessful both because the market models employed are not in fact reliable indicators of future price trends and because the markets are from time to time dominated by fundamental factors. Any factor which may lessen major price trends (such as governmental controls affecting the markets) may reduce the prospect for future trading profitability. Any factor which would make it difficult to execute trades, such as reduced liquidity or extreme market developments resulting in limit moves, could also be detrimental to profits.
 
 

In short, no assurance can be given that the Advisor's trading techniques and strategies will be profitable. The best trading strategy will not be profitable if there are no fundamental or technical indicators of the kind it seeks to follow.
 
 

The services of Dr. Clayburg are essential to the business of the Advisor. If his services were no longer available, or if he was unable to provide his services, the continued ability of the Advisor to operate would be subject to substantial uncertainty and could be terminated. In addition, he devotes to the affairs of the Advisor, and will devote to the trading affairs of any particular account, only such time as he, in his sole discretion, deems necessary.
 
 

The Advisor believes that the development of a commodity trading strategy is a continual process. As a result of further analysis and research into the performance of the Advisor's trading programs, changes may be made from time to time in the specific manner in which the programs evaluate price movements in various commodities. As a result of such modifications, the trading program that may be used by the Advisor in the future will differ from that used by the Advisor in the past and might differ from that presently being used. In addition, the Advisor may abandon his trading program altogether if the Advisor perceives unique market conditions. Consequently, the actual trading programs applied by the Advisor may differ substantially from that described to an investor herein and investors will not be informed with respect to such changes.
 
 

The Advisor may trade any futures or options contracts that are traded now, or may be traded in the future, on exchanges located in the United States and abroad. In particular, the number of commodity markets available for trading has increased substantially during recent years (a process which is expected to continue), and the commodity markets in which an account trades can be expected to change significantly in the future, perhaps with adverse consequences to an investor.
 
 

The Advisor may engage in the trading of contracts on foreign exchanges. Investors should note that foreign exchanges are not
regulated by the Commodity Futures Trading Commission or any other government agency of the United States and, thus, such trading may involve risks not applicable to trading on United States exchanges. In addition, contracts traded on foreign exchanges are typically denominated in the local currency, which introduces an additional price variable not applicable to contracts traded on domestic exchanges. Therefore, unless an account hedges itself against fluctuations in exchange rates between the U.S. dollar and the currencies in which trading is done on such foreign exchanges, any profits which an account might realize in such trading could be eliminated by adverse changes in exchange rates or an account could incur losses as a result of any such changes. Some foreign exchanges, in contrast to exchanges in the United States, are "principals' markets" similar to the forward markets, in which responsibility for performance is only that of the individual member with whom a trader has entered into a transaction, and not of an exchange or exchange clearing house. Because some foreign exchanges generally lack a clearing house program such as that utilized by exchanges in the United States, market disruptions may be more likely to occur on foreign exchanges.
 
 

The Advisor may trade a client account in the over-the-counter foreign exchange and financial instrument markets. These markets do not have the safeguard mechanisms of a clearing organization which, in effect, guarantee every exchange-traded instrument. In contrast to exchange-traded futures contracts, over-the-counter instruments rely on the dealer or counterparty being contracted with to fulfill its contract. Failure by a counterparty to fulfill its contractual obligations could expose the client to unanticipated losses.
 
 

An account managed by the Advisor will encounter a start-up period during which it will incur certain risks relating to the initial investment of its assets. An account may commence trading operations at an unpropitious time, such as shortly before a period during which markets have few or no price trends. Moreover, the level of diversification may be lower during the start-up period than in later periods characterized by the commitment of a greater percentage of assets to trading in certain commodity interests. No assurance can be given that the approach which the Advisor chooses to adopt as a means of moving toward full portfolio commitment will be successful or will not result in substantial losses which might have been avoided by other means of initiating such trading in commodity interests.
 
 

THE FOREGOING LIST OF RISK FACTORS DOES NOT PURPORT TO BE A COMPLETE EXPLANATION OF THE RISKS INVOLVED in commodity trading. POTENTIAL INVESTORS SHOULD READ THE ENTIRE disclosure document and consult with their own financial and tax advisors BEFORE DECIDING TO INVEST.
 
 

An investment in an account managed by the Advisor involves risks due in part to certain inherent or potential conflicts of interests. Among such conflicts are the following:
 
 

The Advisor may trade, or will continue to trade, for his own proprietary accounts; such trading may be extensive. There is a conflict of interest between his interest in trading client accounts in order to maximize trading profits for clients and his interest in trading the proprietary accounts in order to maximize trading profits for such accounts. A potential conflict of interest may occur when the Advisor as a result of a neutral allocation program, testing a new trading program, trading proprietary accounts more aggressively or any other actions that would not constitute a violation of fiduciary duties, take positions in the proprietary accounts which are opposite, or ahead of, the positions taken for a client.
 
 

Investors Performance Group, Inc. will act as the introducing broker for all client accounts of the Advisor and LFG, L.L.C. may serve as the commodity broker for such accounts. The Advisor may receive services or products provided by these brokers, a practice known as receiving "soft dollars." Such services or products may be used to provide appropriate assistance to the Advisor in making investment decisions for his clients, which may include research reports or analysis about particular commodities, publications, database software

and services, quotation equipment and other products or services that may enhance the Advisor's investment decision making. As a result, the Advisor has a conflict of interest because he may receive certain benefits from a brokerage firm and the transaction compensation charged by the broker might not be the lowest available.
 
 

The Advisor may advise other commodity trading accounts, including commodity pools. These accounts may be traded according to the same trading programs described herein. Positions held by all client accounts, as well as the proprietary accounts of the Advisor, will be aggregated for the purpose of applying the speculative position limits. If these limits were approached or reached by trading directed by the Advisor for his proprietary accounts or other client accounts, an account might be unable to enter or hold certain positions. Such other accounts managed by the Advisor could also compete with an account for the execution of the same trades. Because of the price volatility, variations in liquidity from time to time, and differences in order execution, it is impossible for the Advisor to obtain identical trade executions for all his clients. In addition, certain clients of the Advisor may pay fees to the Advisor which are higher than that which the Advisor will receive from other clients. As a result, the Advisor will have a conflict of interest between his interest in treating all client accounts alike and his interest in favouring certain clients over others because such clients may pay more in fees to the Advisor. In rendering trading advice to a

client, the Advisor will not knowingly or deliberately favor any other account over the account of a client. No assurance, however, is given that the performance of all accounts managed by the Advisor will be identical or even similar.
 
 

The Advisor may receive an incentive fee based on Net Trading Profits. In order to generate Net Trading Profits, the Advisor may adopt a more aggressive trading strategy than might be chosen by the Advisor if he were to be compensated in a different manner.
 
 

The Advisor will receive the following fees for his services: (i) an incentive fee which is based on the trading performance of a client's account and (ii) a management fee which is based on the amount of assets in the account that the Advisor is managing.
 
 

Fees will be billed by the Advisor, with the billing sent directly to the client's commodity broker to be paid out of the client's
account. A client is required to execute a Fee Payment Authorization directing the client's commodity broker to deduct the fees from the client's account upon presentation to the broker by the Advisor of a certificate setting forth the amount of the incentive and management fees payable to the Advisor.
 
 

At the discretion of the Advisor, certain of his clients may be charged fees that vary from those described above. Incentive fees will range from 15% to 25% of Net Trading Profits and management fees will range from 0% to 4% of Net Asset Value per year. The Advisor may share up to 50% of its management and incentive fees with Investors Performance Group, Inc., the client's introducing broker. See "Conflicts of Interest--Management of Other Accounts by the Advisor" and "Brokerage Arrangements."

The Advisor may receive a monthly incentive fee equal to 20% of an account's Net Trading Profits for the calender month. The incentive fee for each month is payable exclusively on cumulative Net Trading Profits. All incentive fees payable to the Advisor will be retained by the Advisor and will not be repaid to the account. It should be noted that since the incentive fee on Net Trading Profits is calculated and paid monthly, an account may have paid incentive fees for months when it traded profitably even though at some subsequent time in the same year the account may have a net loss overall. See "Conflicts of Interest--Incentive Fee."
 
 

Net Trading Profits is equal to the excess, if any, of the Net Asset Value at the end of the month over the Net Asset Value at the end of the highest previous month or the Net Asset Value at the date trading commences, whichever is higher, and as further adjusted to eliminate the effect on the Net Asset Value resulting from new capital contributions or capital withdrawals, if any, made during the period, whether the assets are held separately or in a margin account. Losses attributable to capital withdrawals shall not be carried forward. Net Trading Profits shall include interest or other income not directly related to trading activity.
 
 

The Advisor may receive a monthly management fee of 1/4 of 1% (3% annually) of an accounts Net Asset Value as of the close of business on the last trading day of each month. Any management fee charged will be paid whether or not trading has been profitable. Net Asset Value shall mean an account's total assets less total liabilities. Net Asset Value will include the sum of all cash and any unrealized profit or loss on securities and open commodity positions plus notional funds, if any. All securities and open commodity positions shall be valued at their then market value which means, with respect to open commodity positions, the settlement price determined by the exchanges on which such positions are maintained and, with respect to United States Treasury Bills, their cost plus accrued interest. If there are no trades on the date of the calculation due to the operation of the daily price fluctuation limits or due to closing of the exchange on which positions are maintained, the contract will be valued at the settlement price as determined by the exchange on the first subsequent day on which the position could be liquidated.
 
 

Investors Performance Group, Inc. ("IPG") will act as the introducing broker for all client accounts of the Advisor and LFG, L.L.C. ("LFG") may serve as the commodity broker or futures commission merchant for such accounts. Brokerage fees and other expenses charged by LFG and IPG may vary significantly and are negotiated between the client and his brokers. See "Conflicts of Interest--The Advisor May Receive Soft Dollars."
 
 

Since the identities of the purchaser and seller in a commodity transaction are not disclosed until after the trade, IPG and LFG may introduce or effect transactions for the account of a client in which the other parties to the transactions are officers, directors, employees, principals, associated persons or customers of the IPG or LFG, respectively, trading for their own accounts. Such persons might also compete with a client in bidding on purchases or sales of commodity contracts and might take positions similar to or opposite those taken by a client. IPG might be deemed to have a conflict of interest concerning the sequence in which such orders will be introduced to LFG and LFG might be deemed to have a conflict of interest concerning the sequence in which the orders will be transmitted to the trading floors of exchanges.
 
 

LFG, L.L.C. ("LFG") may serve as the futures commission merchant for client accounts of the Advisor. In such capacity, LFG will hold the assets of the clients, execute the transactions in commodity interests and provide other brokerage-related services for the accounts of clients. As is the case with other brokerage firms in the commodities business handling numerous customer accounts, LFG and its affiliates are occasionally involved in civil litigation and administrative proceedings. These matters, either individually or in the aggregate, are generally not material to the financial condition or continued operation of LFG, although some legal actions may seek significant damages.
 
 

Investors Performance Group, Inc. ("IPG") will act as the introducing broker for all client accounts of the Advisor. IPG is registered under the Commodity Exchange Act, as amended, as a commodity pool operator and an introducing broker. It is also a member of the NFA. IPG is a corporation formed under the laws of Illinois in 1987. IPG became registered as an introducing broker in 1987 and as a pool operator in May, 1991. Its office is located at 30 S. Wacker Drive, Suite 2700, Chicago, Illinois 60606. Its telephone number is (800) 453-4474.
 
 

IPG is a guaranteed introducing broker of LFG. Generally, a registered introducing broker must maintain a certain level of net capital pursuant to the regulations of the CFTC. The CFTC regulations provide, however, that the minimum net capital requirements do not apply to an introducing broker which elects to enter into a guarantee agreement with a futures commission merchant registered under the Commodity Exchange Act. IPG has entered into a guarantee agreement with LFG which, among other things, relieves IPG from having to maintain any net capital pursuant to the CFTC regulations.
 
 

Each client must read, sign and return to the Advisor the Advisor's Commodity Advisory Agreement and the Fee Payment Authorization. The client may also sign and return to the Advisor the Arbitration Agreement, although the client is not required to sign such agreement in order to retain the services of the Advisor. The client must complete the standard package of customer account agreements of its commodity broker.

The minimum initial investment for an account managed by the Advisor is recommended to be at least $100,000, although the Advisor may, in certain circumstances, agree to manage a smaller amount. The Advisor strongly recommends that his clients view a managed futures trading program as a long term investment and, accordingly, should not withdraw capital for at least one year.
 
 

Additional information about the Advisor is available from him upon request. Inquiries should be directed to John F. Clayburg at 29568 Highway 141, Coon Rapids, Iowa 50058-7178. His telephone number is (712) 684-5239. Clients should also consult with their personal tax or financial advisors to obtain an
understanding of the impact of trading commodity interests on their tax and financial situations.
 
 

THIS AGREEMENT is made between Dr. John F. Clayburg, registered under the Commodity Exchange Act, as amended, as a commodity trading advisor (hereinafter the "Advisor"), and the undersigned (hereinafter the "Client").
 
 

1. Client's Account. The Client will open a commodity trading account (the "Account") with the futures commission merchant identified below (the "Broker"). The initial deposit, all subsequent deposits to and withdrawals from the Account, and all transactions effected in the Account shall be subject to this Agreement. The Client represents that he/she has significant additional resources beyond any funds that are now or may in the future be deposited in the Account and that all funds in the Account represent only risk capital to the Client.
 
 

2. Client Representations. The Client represents and warrants that he/she is of legal age to be bound by this Agreement and is legally competent, and that no other person has, or will have as a result of any action of the Client, any interest in or right to the Account, except as disclosed to the Advisor. The Client further represents and warrants that he/she is financially able to accept the risks of trading commodity interests.
 
 

3. Authorization of the Advisor to Enter Orders for the Account. The Client hereby gives and grants to the Advisor, as his/her agent and attorney in fact, full power and authority in his/her name, place and stead to buy, sell (including short sales), spread or otherwise trade in commodity interests, which includes commodity futures contracts, commodity options, forward contracts, and any other items which are presently, or may hereafter become, the subject of commodity trading, on margin or otherwise, on exchanges or in markets located in the United States or abroad through the Broker. The Advisor shall have discretionary authority to make all trading decisions for the Account, without prior consultation with the Client and without prior notice to or approval from the Client with respect to such trading decisions. All such trades shall be for the account of and the risk of the Client. The Client will not enter any orders in the Account and will not authorize or permit any other person to do so.
 
 

4. Receipt of and Sole Reliance on Disclosure Document. The Client acknowledges that he/she has received the Advisor's Disclosure Document. The Client has read and understands the contents of the Disclosure Document, including, without limiting the foregoing, the Risk Disclosure Statement contained therein. The Client understands that no person has been authorized by the Advisor to make statements in addition to, or inconsistent with, those contained in such Disclosure Document. The Client represents that he/she is entering this Agreement in reliance solely on the basis of information contained in such Disclosure Document. The Client agrees to execute any and all other documents required by the Advisor, the Broker or the regulatory authorities as may be necessary to open and maintain the Account.
 
 

5. Acknowledgement of Risks Associated with Commodity Trading and Lack of Guarantee by the Advisor. The Client is aware of the speculative nature and the high risks associated with commodity trading, which include the risk that the Client may incur trading losses in an amount which is greater than the capital contributed to the Account. The Client acknowledges that no "safe" trading system has ever been devised, and that no one can guarantee profits or freedom from loss in commodity trading. The Advisor cannot and does not imply or guarantee that the Client will make a profit and it is agreed that the Advisor will not be held responsible for trading losses in the Account. The Advisor makes no representation or warranty that the advice provided by him will result in any profit for the Client, that the Client will not incur losses or that such losses will be limited. The Client is aware of the possibility that the Account may lose an amount in excess of his/her investment and that the Client will be liable for any resulting deficit in the Account. The Advisor cannot give any assurance to the Client as to the extent of any such potential loss.
 
 

6. Additions to and Withdrawals from the Account. The Client may deposit additional funds in the Account at any time, but may only withdraw from the cash balance of the Account to the extent consistent with margin requirements of the Broker and applicable contract markets. The Client agrees to notify the Advisor in writing in advance of such withdrawals. The Client recognizes that the potential profitability of the Account depends upon uninterrupted investment of capital, and that reduction of the Account's net asset value could materially and adversely affect the diversification among commodities traded in the Account and the potential profitability of the Account.
 
 

7. Fees. (a) The Client agrees to pay the Advisor (i) a monthly management fee based on the Account's Net Asset Value as of the close of business on the last trading day of each month and (ii) a monthly incentive fee based on the Account's Net Trading Profits as of the close of business on the last trading day of each calendar month, as specified below.
 
 

(b) Net Asset Value shall mean the Account's total assets less total liabilities. Net Asset Value will include the sum of all cash and any unrealized profit or loss on securities and open commodity positions plus notional funds, if any. All securities and open commodity positions shall be valued at their then market value which means, with respect to open commodity positions, the settlement price determined by the exchanges on which such positions are maintained and, with respect to United States Treasury Bills, their cost plus accrued interest. If there are no trades on the date of the calculation due to the operation of the daily price fluctuation limits or due to closing of the exchange on which positions are maintained, the contract will be valued at the settlement price as determined by the exchange on the first subsequent day on which the position could be liquidated.
 
 

(c) Net Trading Profits is equal to the excess, if any, of the Net Asset Value at the end of the month over the Net Asset Value at the end of the highest previous month or the Net Asset Value at the date trading commences, whichever is higher, and as further adjusted to eliminate the effect on the Net Asset Value resulting from new capital contributions or capital withdrawals, if any, made during the period, whether the assets are held separately or in a margin account. Losses attributable to capital withdrawals shall not be carried forward. Net Trading Profits shall include interest or other income not directly related to trading activity.
 
 

(d) The monthly management fee is due and payable on the last business day of each calendar month and the monthly incentive fee is due and payable on the last business day of each calendar month. Fees will be billed by the Advisor, with the billing sent directly to the Broker to be paid out of the Account. The Client agrees to execute a Fee Payment Authorization directing the Broker to deduct such fees directly from the Account upon receipt by the Broker of a certificate from the Advisor stating the amount of such fees.
 
 

8. Responsibilities of the Broker. The Client recognizes that the Advisor will transmit orders on his/her behalf to the Broker and/or the introducing broker, if any, but will not directly execute such orders. The Advisor shall not be responsible for any acts, omissions or errors of the Broker or the introducing broker in executing or introducing such orders. The Broker will furnish the Client with confirmations of all transactions effected in the Account, monthly statements showing information concerning trading activities in the Account, and other account statements customarily furnished by the Broker to its customers. The furnishing of such reports shall be the sole responsibility of the Broker, and the Client recognizes that the Advisor is not required to furnish such reports to the Client. The Client authorizes the Broker to forward to the Advisor copies of all confirmations, statements or reports sent by the Broker to the Client. The Client understands that the Broker, rather than the Advisor, will have full custody of the Client's funds and commodity market positions and that the Client will be required to pay brokerage commissions to the Broker with respect to all transactions effected in the Account.
 
 

9. Term. This Agreement shall automatically terminate upon written notice to the Advisor of the death, legal disability, or bankruptcy of the Client. Either party may terminate this Agreement by giving the other written notice that the party elects to terminate the Agreement. Termination shall be effective on the date such written notice is deemed given pursuant to section 19 of this Agreement. Unless otherwise specified, in writing, by the Client upon the termination of this Agreement as provided herein, the Advisor will direct the Broker to close out all open positions in the Account by entering market orders at the opening of the next business day. No such termination shall affect any liability of either party hereunder arising prior to the closing-out of the Account, including, without limitation, the Client's liability for fees as provided in Section 7 hereof. The Client shall be liable for all costs, expenses and losses incurred in liquidating open positions upon termination.
 
 

10. Management of Other Accounts by the Advisor. The Client acknowledges that the Advisor currently advises and manages other commodity accounts and intends to do so in the future. The Client further acknowledges that the positions taken by the Advisor on behalf of his managed account clients may be different from or contrary to the positions recommended to be taken in a publication of the Advisor or otherwise taken by the other clients of the Advisor, including the users of the software programs marketed by the Advisor. The Client also acknowledges that the Advisor's trading methods are proprietary and agrees not to disclose any of the Advisor's trading recommendations to any third party without the Advisor's prior written consent.
 
 

11. Assignment. This Agreement shall not be assignable by the Client or the Advisor and shall be binding upon the parties hereto, their heirs, respective legal representatives, successors and assigns and no other person shall have any right or obligation under it.
 
 

12. Indemnification. The Client agrees that the Advisor and its employees shall not be liable to the Client except by reason of intentional misconduct or gross negligence, or for not having acted in the reasonable belief that their actions were in, or were not opposed to, the best interests of the Client. The Client agrees to indemnify the Advisor and its employees for all liabilities, losses or expenses incurred in the performance of services contemplated by this Agreement (including reasonable attorneys fees), provided, that there have been no final judicial determination that such liability was the result of gross negligence or intentional misconduct, and, provided further, that the conduct which was the basis for such liability was done in a reasonable belief that it was in, or not opposed to, the best interests of the Client. If the Advisor or its employees are made parties to any claim, dispute or litigation or otherwise incur any liabilities, losses or expenses in connection with the Client's obligations or activities unrelated to the Account or the services to be rendered by Advisor under this Agreement, the Client shall indemnify and reimburse the Advisor and such other person(s), as the case may be, for all liabilities, losses and expenses incurred, including reasonable attorneys fees. The right of the Advisor to indemnification shall survive the termination of this Agreement for any reason.
 
 

13. Amendment; Waiver. This Agreement may not be amended except by a written instrument signed by the parties hereto. Neither this Agreement nor any provisions hereof shall be waived, discharged or terminated except by an instrument in writing signed by the party against whom any such waiver, discharge or termination is sought.
 
 

14. Counterparts. This Agreement may be executed through separate signature pages or in any number of counterparts, and each of such counterparts shall, for all purposes, constitute one agreement binding on all parties, notwithstanding that all parties are not signatories to the same counterpart.
 
 

15. Entire Agreement. This Agreement contains the entire agreement of the parties with respect to the subject matter hereof and there are no representations, warranties, covenants or other agreements except as stated or referred to herein.
 
 

16. Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.
 
 

17. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Iowa as applied to residents of that state executing contracts wholly to be performed in that state.
 
 

18. Choice of Jurisdiction. The parties agree that any action or proceeding arising, directly, indirectly, or otherwise, in connection with, out of, or from this Agreement, any breach hereof, or any transaction covered hereby shall be resolved, whether by arbitration or otherwise, within the State of Iowa. Accordingly, the parties consent and submit to the jurisdiction of the United States Federal and state courts located within the State of Iowa. The parties further agree that any such relief whatsoever in connection with this Agreement shall be commenced by such party exclusively in the United States Federal or state courts, or before an arbitral body, located within the State of Iowa.
 
 

19. Notices. Any notices required to be given hereunder shall be in writing and sent by certified or registered mail, return receipt requested, to the Advisor at 29568 Highway 141, Coon Rapids, Iowa 50058-7178, and to the Client at the address set forth below. Either party may change his/her address by giving notice in writing to the other party stating his/her new address. Commencing on the tenth day after the giving of such notice, such newly designated address shall be the party's address for the purpose of all notices or communications required or permitted to be given pursuant to this Agreement. Notices to the Client from the Advisor shall be deemed given as of the close of business on the second business day after mailing. Notices to the Advisor from the Client shall be deemed given as of the close of business on the day such notices are actually received by the Advisor.
 
 

20. Paragraph Headings. Paragraph headings in no way define, extend, or describe the scope of this Agreement or the effect of any of its provisions.
 
 
 
 
 
 

1. Name:

2. Primary Residence Address:

3. Primary Residence Telephone Number: ( )

4. Date of Birth:

5. Principal Occupation or Business:

6. Business Address:

7. Business Telephone Number: ( )

8. Name and Address of the Broker for the Account:

9. Amount of initial deposit:

10. Have you received and read the Advisor's Disclosure Document dated ?

  Yes No 11. Do you feel that you have an adequate understanding of the high risks associated with trading commodity interests, which include the speculative nature of such trading and the risk that you may incur trading losses in an amount which is greater than the capital contributed to your account?   Yes No 12. Have you been given anything written or verbal that is contrary to what is in the Disclosure Document of the Advisor?   Yes No If Yes, please explain:

13. Have all questions which you may have had concerning a managed commodity trading account been

answered to your full satisfaction?

  Yes No 14. Please state your estimated annual income:

15. Please state your approximate net worth:

16. Have you ever traded futures contracts either for your own account or in a managed account program

or pool?

  Yes No If Yes, please explain:

17. Have you ever had a securities brokerage account or invested in a mutual fund?

  Yes No If Yes, please explain:
 
 

18. I agree to pay the Advisor (i) a monthy management fee of % of the Account's Net

Asset Value as of the close of business on the last trading day of each month and (ii) a monthly incentive fee equal to % of the Account's Net Trading Profits.

year set forth below.
 
 

Client(s): Accepted by Dr. John F. Clayburg:

Signature of Client Date Signature of John F. Clayburg Date

Signature of Client Date

From: Client Name(s):

Account Number:
 
 

To: Brokerage Firm Name:
 
 

Subject to the provisions of the Commodity Advisory Agreement of Dr. John F. Clayburg (the "Advisor"), which the undersigned has executed, you are hereby authorized to deduct and remit directly to the Advisor such fees as the Advisor requests.
 
 

The Advisor will inform you of the exact amounts due on the agreed upon payment dates. The undersigned acknowledges and agrees that the Advisor is solely responsible for the computation of fees and authorizes you to rely conclusively on remittance instructions submitted by the Advisor with respect to the amount and payment of fees.
 
 

This authorization will continue in effect until you have received written notice terminating it from the undersigned. Such notice will be mailed to the Advisor. Any notices required to be given hereunder shall be in writing and sent by certified or registered mail, return receipt requested.
 
 

THIS AGREEMENT is made between Dr. John F. Clayburg, registered under the Commodity Exchange Act, as amended, as a commodity trading advisor (hereinafter the "Trading Advisor"), and the undersigned (hereinafter "Client"). In consideration of the performance of advisory services by the Advisor for and on behalf of the Client, the Client hereby agrees to the following:
 
 

1. Any dispute or controversy between the Advisor and the Client shall, except as provided below, be resolved by arbitration in accordance with the rules of a qualified forum.
 
 

2. THREE FORUMS EXIST FOR THE RESOLUTION OF COMMODITY DISPUTES: CIVIL COURT LITIGATION, REPARATIONS AT THE COMMODITY FUTURES TRADING COMMISSION (CFTC) AND ARBITRATION CONDUCTED BY A SELF-REGULATORY OR OTHER PRIVATE ORGANIZATION.
 
 

THE CFTC RECOGNIZES THAT THE OPPORTUNITY TO SETTLE DISPUTES BY ARBITRATION MAY IN SOME CASES PROVIDE MANY BENEFITS TO CUSTOMERS, INCLUDING THE ABILITY TO OBTAIN AN EXPEDITIOUS AND FINAL RESOLUTION OF DISPUTES WITHOUT INCURRING SUBSTANTIAL COSTS. THE CFTC REQUIRES, HOWEVER, THAT EACH CUSTOMER INDIVIDUALLY EXAMINE THE RELATIVE MERITS OF ARBITRATION AND THAT YOUR CONSENT TO THIS ARBITRATION AGREEMENT BE VOLUNTARY.
 
 

BY SIGNING THIS AGREEMENT, YOU: (1) MAY BE WAIVING YOUR RIGHT TO SUE IN A COURT OF LAW; AND (2) ARE AGREEING TO BE BOUND BY ARBITRATION OF ANY CLAIMS OR COUNTERCLAIMS WHICH YOU OR THE ADVISOR MAY SUBMIT TO ARBITRATION UNDER THIS AGREEMENT. YOU ARE NOT, HOWEVER, WAIVING YOUR RIGHT TO ELECT INSTEAD TO PETITION THE CFTC TO INSTITUTE REPARATIONS PROCEEDINGS UNDER SECTION 14 OF THE COMMODITY EXCHANGE ACT WITH RESPECT TO ANY DISPUTE WHICH MAY BE ARBITRATED PURSUANT TO THIS AGREEMENT. IN THE EVENT A DISPUTE ARISES, YOU WILL BE NOTIFIED IF THE ADVISOR INTENDS TO SUBMIT THE DISPUTE TO ARBITRATION. IF YOU BELIEVE A VIOLATION OF THE COMMODITY EXCHANGE ACT IS INVOLVED AND IF YOU PREFER TO REQUEST A SECTION 14 "REPARATIONS" PROCEEDING BEFORE THE CFTC,YOU WILL HAVE 45 DAYS FROM THE DATE OF SUCH NOTICE IN WHICH TO MAKE THAT ELECTION.
 
 

YOU NEED NOT SIGN THIS AGREEMENT TO OPEN AN ACCOUNT WITH THE ADVISOR. SEE 17 CFR 180.1-180.5.
 
 

3. At such time as the Client may notify the Advisor that he/she intends to submit a claim to arbitration, or at such time as the Advisor notifies the Client of his intent to submit a claim to arbitration, the Client will have the opportunity to elect a qualified arbitration forum for conducting the proceeding. Within ten business days after the Client notifies the Advisor of his intent to submit a claim to arbitration, or the Advisor so notifies the Client, the Advisor will provide the Client with a list of certain qualified forums for such arbitration pursuant to the requirements of the regulations of the Commodity Futures Trading Commission. The Client shall, within 45 days after receipt of such list, notify the Advisor of the forum selected. The Client's failure to provide such notice shall give the Advisor the right to select a forum from the list.
 
 

4. If a dispute or controversy is submitted to arbitration, the Client will have the right to have the dispute or controversy heard by a mixed panel of arbitrators. If the dispute or controversy is heard by a contract market, a mixed panel will be composed of a majority of arbitrators who are not associated with any contract market, the members of any contract market, or the employees of members of any contract market. If the dispute or controversy is heard by a registered futures association, a mixed panel will be composed of a majority of arbitrators who are not associated with the registered futures association, its members, or the employees of its members. If the Client chooses to have a dispute or controversy heard by a mixed panel, the Advisor will pay any incremental fees which may be assessed by the arbitration forum for providing a mixed panel, except that the Client will be required to pay such fees if the arbitrators in the proceeding decide that the Client acted in bad faith in initiating or conducting the proceeding.
 
 

5. If, by reason of any applicable statute, regulation, exchange rule or otherwise, other than the Client's right to commence reparations proceedings under Section 14 of the Commodity Exchange Act, the Client's advance agreement to submit a dispute or controversy to arbitration is not enforceable by the Advisor, then the Client shall not enforce the Advisor's advance agreement to submit to arbitration.
 
 

6. Any award rendered in such arbitration shall be final and binding on and enforceable against the Client in accordance with the laws of the State of Iowa.
 
 

7. The Client agrees that if he/she seeks reparations under Section 14 of the Commodity Exchange Act and the Commodity Futures Trading Commission declines to institute reparation proceedings, the claim or grievance will be subject to this Arbitration Agreement. Any claim or grievance that is not subject to the reparations procedure (i.e. does not constitute a violation of the Commodity Exchange Act or the rules thereunder) must be submitted to arbitration pursuant to this Arbitration Agreement.
 
 

8. This Arbitration Agreement shall survive the termination of the Commodity Advisory Agreement by and between the parties hereto and may not be altered, modified or terminated without the signed written consent of all parties hereto.
 
 

9. The Client acknowledges that he understands, agrees with and consents to this Arbitration Agreement.
 
 

IN WITNESS WHEREOF, the parties hereby execute this Agreement as of the day, month and year set forth below.

Accepted by

Client(s): Dr. John F. Clayburg:

Signature of Client Date Signature of John F. Clayburg Date

Signature of Client Date
 
 

Pursuant to the Commodity Advisory Agreement by and between Dr. John F. Clayburg (the "Advisor") and the undersigned (the "Client"), the Client has agreed to open a commodity trading account (the "Account") to be traded by the Advisor.
 
 

The Client understands that trading leverage consists of two different components, cash and notional funds. Cash is the actual dollars given to the Advisor for use within the Account. Notional funds are the increase in dollars, above cash, which the Advisor is instructed by the Client to consider itself to be managing in the Account. The Account will be opened with an initial deposit of $ . The Client hereby instructs the Advisor to trade the Account as though it had been fully funded with $ . The difference between the initial deposit and the fully funded account size shall represent "notional funds." The trading activity of the Account will be based upon the cash or other assets in the Account and the notional funds.
 
 

The Client has read and understands the following statement relating to the Account and the use of notional funds:
 
 

The Client also understands that the management fee paid to the Advisor will be calculated based partly on the notional funds in the Account. As a result, the use of notional funds will increase the amount of management fees that the advisor will receive from the Client for trading the same amount of cash or actual funds, as shown in the following matrix:
 
 

For example, the Advisor may receive a 2% management fee. If the Account is fully funded the Advisor will receive a management fee of 2% based on the actual funds in the Account. If the Account, however, is funded at only 50%, i.e., one half actual funds and one half notional funds, the 2% management fee, expressed as a percentage of actual funds, would be 4%. Similarly, while the per trade commission rate charged to the Client will not change, the use of notional funds will increase the aggregate amount of brokerage commissions paid by the Client since the number of trades initiated by the Advisor will increase.
 
 

Client(s): Accepted by Dr. John F. Clayburg:

Signature of Client Date Signature of John F. Clayburg Date

Signature of Client Date