Summary

In general terms, IPATS may be described as a technical, medium to long-term, trend following, reversal program. Trading decisions are derived from proprietary computer programs, which utilize historical price patterns over dynamically varying time horizons to anticipate changes in price trends. Position sizes are based on account size, each future’s current volatility and a designed overall portfolio risk level. All decisions necessary to implement the IPATS strategy are derived from proprietary computer programs designed by CFS. These programs seek to identify the major trends and turning points for each future and to determine the changes required to maintain a balanced and diversified risk posture for each managed portfolio. From time to time, however, market conditions may be such that, in the opinion of CFS’s management, execution of trades recommended by their computer programs would be difficult or involve an undue amount of risk. In these unusual instances, which CFS estimates will affect less than 2% of the trading decisions, the computer recommendations may be modified by CFS. In addition, the market may occasionally present unique trading opportunities, which are not derived from CFS’s computer programs. CFS may enter such trades using its risk control methodology.