Summary

-INVESTMENT MANAGER General Quay Capital Management Limited (formerly Druid Futures Limited) is an Irish corporation, formed in February 1999. Quay Capital Management Limited ('Quay' or 'the Investment Manager') received its authorisation as an investment intermediary from the Central Bank of Ireland in June 2000. Quay is a member of the National Futures Association ('NFA') and has been registered as a Commodity Trading Advisor ('CTA') with the Commodity Futures Trading Commission ('CFTC') since January 2001. Quay is engaged in the business of managing trading in financial instruments for clients. The directors and principals of the company are Mr Paul Phelan and Mr Padraig O'Sullivan. Quay's books and records are maintained at its office in Dublin. PRINCIPALS Paul Phelan (38) is a former Director of Marketing and Business Development with IIU Asset Strategies (previously known as Gandon Fund Management). He joined Gandon in July 1988 as a trader, and dealt in fixed income and currency markets for over five years before he became head of investment management and business development. Mr. Phelan was instrumental in developing the alternative asset management business and in addition to managing the trading and business development functions he was also responsible for managing a number of successful joint ventures and acquisitions for the firm. Having spent over 12 years with IIU Mr. Phelan left the company and joined Quay in December 2000. Padraig O'Sullivan (37) is also a former Director of Gandon Fund Management having joined the company in July 1988. Having spent 5 years trading currency, equity and fixed income markets Mr. O'Sullivan became chief investment officer in charge of systematic trading for the firm and was responsible for the trading record of the IIU Breakout Program. Mr. O'Sullivan departed from the firm in December 1997 to become a Fixed Income Fund Manager for Hibernian Investment Managers. He left Hibernian in December 1998 in order to develop his own company, Druid Futures Ltd (now Quay Capital Management Limited). The models currently employed by Quay are the result of Mr. O'Sullivan 13 years experience trading and financial modelling. The Quay Druid Futures Program The Managers The principals of Quay Capital Management Limited are Padraig O'Sullivan and Paul Phelan, who are also the managers of the program known as the Quay Druid Futures Program. Trading Methodology The Quay Druid Futures Program is a systematic trading model seeking to achieve consistent rates of return with low drawdowns and efficient use of capital. This efficient use of capital means an average margin to equity ratio of less than 5%. The program also seeks low correlation to traditional investments such as stocks and bonds and to established trend following methodologies. The strategy is also highly disciplined in that each position has a pre-determined exit point and risk is strictly quantified and controlled around these levels. The concept underlying the trading strategy is that certain momentum exists in markets moving away from trading ranges that have existed for a certain time period and with particular volatility levels. The measurement of these so-called momentum indicators is subject to complex scrutiny in the research process to ensure false signals are avoided. Once a trade signal has been generated position sizes are adjusted to allow for the current and historical volatility of the market. A consistent and pre-set portion of equity is then allocated to each trade by the imposition of initial and trailing stop loss levels. Each position is then managed on a real time basis and is monitored as a function of both price and time. It is part of the philosophy of the program that the momentum indicators have a limited return expectancy in terms of duration and capturing this duration leads to strong returns with low volatility. Once a trade is exited either in profit or loss it is not re-entered until a completely new signal is generated. The program only traded CFTC approved markets and where the liquidity of the contract is deemed sufficient to enable easy position entry and exit for the program. The current portfolio trades the following markets: Interest rate futures in US Bonds, UK Gilts, Euro Bonds, and Australian Bonds, and Currencies futures in Euro, US Dollar, Yen, Australian Dollar, Canadian Dollar, Swedish Krona and New Zealand Dollar. Risk Management and Account Size A central element of Quay's trading strategy is the application of various risk management measures that in general seek to limit a client's risk exposure from any one position or instrument. Although the Advisor endeavours to follow such measures, no guarantee is given that they will necessarily be followed at all times; that the Advisor will be successful in limiting the risk exposure of an account to the extent sought; or that the measures will in fact achieve the objective of controlling risk. The Advisor estimates that approximately 3% to 7% of the assets in the account will be committed to margin at any one time, although the percentage may vary, depending upon such factors as market conditions, current margin requirements and changes in account equity, or in the Advisor's discretion. The minimum size necessary to commence trading an account with Quay is $500,000.