Updated - PEP Disclosure Document

7/31/2019 Updated - PEP Disclosure Document

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CONFIDENTIAL

DISCLOSURE DOCUMENTOf

PROTEC ENERGY PARTNERS, LLC,a C o m m o d i t y T r a d i n g A d v i s o r

Registered with the Commodity Futures Trading Commissionand a Member Firm of the National Futures Association

PROTEC ENERGY PARTNERS, LLC750 Park of Commerce Boulevard, Suite 210

Boca Raton, Florida 33487561-392-3667

No person is authorized by Protec Energy Partners, LLC to give anyinformation or to make any representations not contained herein.

THE COMMODITY FUTURES TRADING COMMISSION HAS NOTPASSED UPON THE MERITS OF PARTICIPATING IN THIS TRADINGPROGRAM NOR HAS THE COMMISSION PASSED ON THE ADEQUACY

OR ACCURACY OF THIS DISCLOSURE DOCUMENT.

The date of first intended use of this Disclosure Document isMay 8, 2012

The delivery of this Disclosure Document does not imply that the information itcontains is correct subsequent to the date shown above.


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RISK DISCLOSURE STATEMENT

THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BESUBSTANTIAL. 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 AUTHORIZESOMEONE ELSE TO TRADE FOR YOU, YOU SHOULD BE AWARE OF THEFOLLOWING:

IF YOU PURCHASE A COMMODITY OPTION, YOU MAY SUSTAIN A TOTALLOSS OF THE PREMIUM AND OF ALL TRANSACTION COSTS.

IF YOU PURCHASE OR SELL A COMMODITY FUTURES CONTRACT, OR SELL A COMMODITY OPTION, OR ENGAGE IN OFF-EXCHANGE FOREIGNCURRENCY TRADING, YOU MAY SUSTAIN A TOTAL LOSS OF THE INITIALMARGIN FUNDS OR SECURITY DEPOSIT AND ANY ADDITIONAL FUNDS THATYOU DEPOSIT WITH YOUR BROKER TO ESTABLISH OR MAINTAIN YOUR POSITION. IF THE MARKET MOVES AGAINST YOUR POSITION, YOU MAY BECALLED UPON BY YOUR BROKER TO DEPOSIT A SUBSTANTIAL AMOUNT OFADDITIONAL MARGIN FUNDS, ON SHORT NOTICE, IN ORDER TO MAINTAINYOUR POSITION. IF YOU DO NOT PROVIDE THE REQUESTED FUNDS WITHINTHE 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 DIFFICULTOR 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 TRADINGADVISOR, SUCH AS A STOP-LOSS OR STOP-LIMIT ORDER, WILL NOTNECESSARILY LIMIT YOUR LOSSES TO THE INTENDED AMOUNTS, SINCEMARKET CONDITIONS MAY MAKE IT IMPOSSIBLE TO EXECUTE SUCHORDERS.

A SPREAD POSITION MAY NOT BE LESS RISKY THAN A SIMPLELONG OR SHORT POSITION.

THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE INCOMMODITY TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU. THEUSE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS GAINS.

IN SOME CASES, MANAGED COMMODITY ACCOUNTS ARE SUBJECT TOSUBSTANTIAL CHARGES FOR MANAGEMENT AND ADVISORY FEES. IT MAYBE NECESSARY FOR THOSE ACCOUNTS THAT ARE SUBJECT TO THESECHARGES TO MAKE SUBSTANTIAL TRADING PROFITS TO AVOID DEPLETIONOR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE DOCUMENTCONTAINS, BEGINNING AT PAGE 8, A COMPLETE DESCRIPTION OF EACH FEE


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TO BE CHARGED TO YOUR ACCOUNT BY THE COMMODITY TRADINGADVISOR.

THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKSASSOCIATED WITH COMMODITY TRADING, THE TRADING PROGRAM

DESCRIBED IN THIS DISCLOSURE DOCUMENT AND OTHER SIGNIFICANTASPECTS OF THE COMMODITY MARKETS. YOU SHOULD, THEREFORE,CAREFULLY STUDY THIS DISCLOSURE DOCUMENT AND COMMODITYTRADING BEFORE YOU TRADE, INCLUDING THE DESCRIPTION OF THEPRINCIPAL RISK FACTORS OF THIS INVESTMENT BEGINNING AT PAGE 13.

YOU SHOULD BE AWARE THAT THIS COMMODITY TRADING ADVISOR MAY ENGAGE IN TRADING FOREIGN FUTURES OR OPTION CONTRACTS.TRANSACTIONS ON MARKETS LOCATED OUTSIDE OF 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 REGULATORYAUTHORITIES MAY BE UNABLE TO COMPEL THE ENFORCEMENT OF THERULES OF REGULATORY AUTHORITIES OR MARKETS IN NON-UNITED STATESJURISDICTIONS WHERE YOUR TRANSACTIONS MAY BE EFFECTED. BEFOREYOU TRADE YOU SHOULD INQUIRE ABOUT ANY RULES RELEVANT TO YOUR PARTICULAR CONTEMPLATED TRANSACTIONS AND ASK THE FIRM WITHWHICH YOU INTEND TO TRADE FOR DETAILS ABOUT THE TYPES OF REDRESSAVAILABLE IN BOTH YOUR LOCAL AND OTHER RELEVANT JURISDICTIONS.

THIS COMMODITY TRADING ADVISOR IS PROHIBITED BY LAW FROMACCEPTING FUNDS IN THE TRADING ADVISORS NAME FROM A CLIENT FOR TRADING COMMODITY INTERESTS. YOU MUST PLACE ALL FUNDS FOR TRADING IN THIS TRADING PROGRAM DIRECTLY WITH A FUTURESCOMMISSION MERCHANT OR RETAIL FOREIGN EXCHANGE DEALER, ASAPPLICABLE.


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TABLE OF CONTENTSPage

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RISK DISCLOSURE STATEMENT ........................................................ ...................................... i

TABLE OF CONTENTS ........................................................ ....................................................... iii

ADVISOR AND ITS CO-MANAGERS / BACKGROUND .........................................................1

ADVISORS TRADING PROGRAM ............................................................................................3

Trends - Where Prices Are Not ...................................................... ......................................4Methodology ........................................................................................................................4Proprietary Trading ..................................................... ........................................................ .5Risk Management ................................................................................................................5Portfolios .................................................. ........................................................ ....................5Minimum Account Size .......................................................................................................6Minimum Term of Investment ....................................................... ......................................6Additions and Withdrawals ..................................................................................................6Futures Commissions Merchants ................................................... ......................................6Introducing Brokers .............................................................................................................7Referral Fees ........................................................................................................................7Conflicts of Interest ..............................................................................................................8Reports to Investors .............................................................................................................9Litigation .................................................. ........................................................ ....................9

FEES ................................................................................................................................................9

Management Fee ..................................................................................................................9Performance-Based Incentive Fee .....................................................................................10Offset Rights for Fees ................................................. .......................................................11

SUMMARY OF FUTURES AND OPTIONS MARKETS ..........................................................11

Futures Contracts ...............................................................................................................11Options Contracts ........................................................ .......................................................11Margins ..............................................................................................................................12Regulation ..........................................................................................................................12Foreign Exchanges ...................................................... .......................................................12

PRINCIPAL RISK FACTORS ............................................... .......................................................13

Speculation and Volatility ..................................................................................................13Reliance on Clearinghouses ...............................................................................................13Broker Risks.......................................................................................................................13Foreign Trading .................................................................................................................14Leverage ................................................... ........................................................ ..................14Illiquidity............................................................................................................................14Risks Associated with Electronic Trading or Order Routing Systems ..............................15Application of Speculative Position Limits .......................................................................15Stop Loss Orders May Not Limit Losses ................................................ ...........................15Tax Liability .......................................................................................................................15Exchange-Cleared Swaps ..................................................... ..............................................15

Notional Funding ........................................................ .......................................................15


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TABLE OF CONTENTSPage

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NOTIONAL ACCOUNTS - RISK DISCLOSURE STATEMENT .............................................16

Matrix for Computing Performance of Notional Accounts ...............................................18

PERFORMANCE RECORDS ......................................................................................................18

EXHIBIT A ................................................. ........................................................ ...........................25

Managed Account and Advisory Services Agreement ................................................... A-1Gramm-Leach-Bliley Consumer Privacy Notification ....................................................B-1

NFA Bylaw 1101 Due Diligence Representations ..........................................................C-1


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ADVISOR AND ITS CO-MANAGERS / BACKGROUND

Protec Energy Partners, LLC (the Advisor) is a Florida limited liability company,organized on September 9, 2009. Advisor is an affiliate of Protec Fuel Management LLC(PFM), an energy marketing and trading company founded in February 1999. PFMs

principals, Andrew Greenberg and Todd G. Garner, conceived Advisors business purpose as aninvestment manager and commodities trader, as an outgrowth of PFMs main business. PFMmarkets and trades in physical and financial energy products, including refined petroleum

products, natural gas and ethanol, serving a broad client base throughout the United States,including energy producers, refiners and wholesalers, industrial companies, transportationcompanies, jobbers, convenience store outlets, fleet operators and state, county and municipalgovernments.

PFMs business is to identify sources of specified energy-related products, and toestablish with selected sources not-to-exceed prices for clients with energy price exposure, for aspecified quantity of fuel products during a specified duration. For clients desiring direct productdelivery, PFM will also arrange for this service. To provide product and price solutions for clients, PFM monitors and analyzes fuel production, reserve and purchasing reports, at timesthroughout each business day and regularly. Its fuel procurement arrangements for clientaccounts include swaps, price collars and options, enabling PFM to respond to fluctuating energy

prices.

Advisors principals, Andrew Greenberg and Todd G. Garner, recognized that the expertisethey developed and deploy in furtherance of PFMs business could serve as the basis for an energyfutures trading strategy for an independent investment management business, separate and apart fromPFM. Their interest in establishing a separate investment management business was supported by anumber of PFM clients, who encouraged Messrs. Greenberg and Garner to assume an investmentmanagement role, considering that their independent investment goals could be furthered byemploying the same or similar pricing strategies employed by PFM.

Messrs. Greenberg and Garner formed Advisor on September 9, 2009, intending to useAdvisor as an investment advisor, using the PFM pricing analyses that were being utilized in the PFM

business. They subsequently registered Advisor as a commodity trading advisor (CTA) and acommodity pool operator (CPO) with the Commodity Futures Trading Commission (the CFTC),effective June 17, 2010 in each case. On June 17, 2010, Advisor became a member of the NationalFutures Association (the NFA). PFM is not registered as a CTA.

In March 2010, prior to Advisor becoming registered as a CTA, PFM established a particular PFM customer account for which PFM began trading on April 13, 2010, using the same analyses as

the Trading Program described in this Disclosure Document. PFM tracked performance of thataccount from and after the commencement of trading in April 2010. The performance of a secondPFM customer account was included within PFMs performance tracking beginning in November 2010. The PFM management services for the second customer included in PFMs performancetracking also used the same analyses as the Trading Program described herein, and the performanceresults deriving from PFMs management services for the two PFM accounts mentioned above are the

basis for the Performance Records accompanying this Disclosure Document (beginning at Page 18).Those two PFM accounts, referred to respectively as PFM Account #1 and PFM Account #2,


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represent PFM customer equity in a cumulative amount of almost $1.86 million as of October 31,2011. The two PFM customers in question advised Messrs. Greenberg and Garner of their intent to re-establish their PFM trading accounts as PEP-advised investment accounts, promptly after the date of the first intended use of a Confidential Disclosure Document that Advisor prepared and submitted tothe NFA and that became effective as of December 8, 2011 under NFA ID # 414405 (the Initial

Disclosure Document). This Disclosure Document updates and restates the Initial DisclosureDocument in its entirety, effective as of May 8, 2011. Advisor has submitted the Initial DisclosureDocument and this Disclosure Document to the NFA, notwithstanding the fact that Advisor providesand intends to provide advisory services only to qualified eligible persons in connection withinvestment accounts that are deemed to constitute exempt accounts pursuant to 17 C.F.R. Section4.7 (d).

Advisor had no business operations and did not operate as a CTA from its formation until thedate of the first intended use of the Initial Disclosure Document. Since its formation, Advisor has notoperated as a CPO and as of the date of the first intended use of the Disclosure Document, Advisor has no plans to operate as a CPO (but may decide to do so in the future).

Advisors mailing address and principal place of business is 750 Park of CommerceBoulevard, Suite 210, Boca Raton, Florida 33487. Its telephone number is (561) 392-3667.Advisors business is conducted at the same physical office as PFMs.

Andrew Greenberg, Todd G. Garner and Cate Wylie are the Advisors NFA-listed trading principals. A summary of composite past performance using analyses employed under the TradingProgram described below, beginning in April 2010 with the two PFM trading accounts directed byMr. Greenberg and Mr. Garner for PFM customers, and continuing since December 2011 at whichtime use of the Initial Disclosure Document began, begins on Page 19 of this Disclosure Document.Messrs. Greenberg and Garner became listed with the NFA as Advisors principals on June 17, 2010.

Since co-founding PFM in February 1999, Mr. Greenberg has been principallyresponsible for PFMs risk management and trading policy for its refined fuel clientele. In thatcapacity, his duties include the development and execution of client risk management strategies,risk analyses, and portfolio management. In addition to his engagement with PFM, Mr.Greenberg co-founded Advisor in September 2009. Since that time, Mr. Greenberg has beenresponsible for articulating Advisors business goals, and for determining the timing to processthis Disclosure Document and launch Advisors intended business after the NFAs acceptance of this Disclosure Document.

Since co-founding PFM in February 1999, Mr. Garner has been principally responsiblefor PFMs day-to-day operations. Mr. Garner directs PFMs marketing, business development

and procurement divisions for conventional and alternative fuels. He also co-heads (with Mr.Greenberg) PFMs risk management for its refined fuel clientele. In addition to his engagementwith PFM, Mr. Garner co-founded Advisor in September 2009. Mr. Garners duties include thedevelopment and execution of client risk management strategies, risk analyses, and portfoliomanagement for Advisor.

Messrs. Greenberg and Garner will be assisted in managing Advisors business by Mr.Favazza and by Ms. Cate Wylie. Mr. Favazza became chief financial officer both of Advisor and


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of PFM in June 2011, after serving for the previous 23 years as finance director for AECOM,from March 1987 until February 2010. AECOM is a publically traded company engaged inengineering, construction and risk management. After leaving AECOM and before joiningAdvisor and PFM, Mr. Favazza worked as an independent financial advisor, from March 2010until May 2011. As chief financial officer of Advisor and of PFM, Mr. Favazza is responsible for

all financial aspects of each company, including accounting functions, financial statements,audits, reporting and contract management. Mr. Favazza listing with the NFA as a principal of Advisor is pending as of May 8, 2012.

Ms. Wylie joined PFM in May 2006 and has served as its Director of Risk Analysis sincethen. Ms. Wylies additional responsibilities at PFM include managing the pricing of alternativefuels, purchasing of wholesale ethanol/gasoline and assisting in PFMs risk management

business. In addition to her engagement with PFM, Ms. Wylie will assist Messrs. Greenberg andGarner with risk management, trading policy and administrative duties for Advisor. On June 17,2010, Ms. Wylie became listed as a principal of Advisor and registered as an Associated Personof Advisor with the CFTC/NFA.

As of the date of the first intended use of this Disclosure Document, each of Messrs.Greenberg, Garner and Favazza and Ms. Wylie continue to be engaged with each of PFM andAdvisor in their respective capacities described above.

The date of first intended use of the Initial Disclosure Document was December 8, 2011.The date of first intended use of this Disclosure Document is May 8 , 2012.

ADVISORS TRADING PROGRAM

Since PFMs inception in 1999, Advisors co-managers and trading principals, Messrs.Greenberg and Garner, have dedicated their business efforts toward energy-related futures and

options trading, and have gained experience in the related financial markets. Their work on behalf of PFM included their assessment of the account performance of PFM Account #1 beginning in April2010, and of PFM Account #2 beginning in November 2010, as related above. Also, as relatedabove, PFM Account #1 and PFM Account #2 were managed by PFM using the same investmentstrategies as employed in the Trading Program summarized below. That Trading Strategy has beencontinued by Advisor from and after the date of first use of the Initial Disclosure Document. Thefollowing summary is general in nature and not exhaustive.

Advisor seeks capital appreciation in client trading accounts through speculative trading incommodity futures and options on such futures. In furtherance of this goal, Messrs. Greenberg andGarner and Ms. Wylie have studied and will study (on behalf of PFM and Advisor) energy-specific

commodity and financial markets. Advisors purpose is to understand and anticipate specific forcesaffecting price volatility, to project price floors and ceilings for natural gas, refined petroleum andethanol, and to develop sound and timely investment and hedge approaches, all to provide for growthin investment portfolios.

Advisor believes that investment portfolio allocations can benefit from a carefully managedcommodities hedge component, consistent, of course, with the principals resources and risk tolerance. Advisors trading strategy and supporting programs were developed based on its co-


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managers realization that their hedge strategies in support of the PFM business had achieved better than average gains when measured against selected investment programs.

Messrs. Greenberg and Garner developed an investment model that uses price put and calloptions in an attempt to adapt to market volatility and they formed Advisor as a vehicle for offering to selected investment customers the commodities trading strategy they developed.That trading strategy, as discussed in this Disclosure Document, is referred to for convenienceas the Trading Program. Advisor sometimes also refers to the Trading Program, including inthe presentation of the PFM Account #1, PFM Account #2 and composite performance resultsset forth beginning on page 19 as the ET1 Program. The Trading Program is proprietary toAdvisor and PFM and confidential.

Trends - Where Prices Are Not

The Trading Program is based on Mr. Greenbergs and Mr. Garners experience andknowledge of the energy-based futures markets and underlying market forces. Advisor intendsto execute the Trading Program based on three main functions: market analysis, put and call timeand price strategies, and regular calibration to control risk and opportunities in the midst of volatility.

Advisors analyses derive from its principals collective expertise and roughly 24 yearscollective experience (since inception of PFM) in energy commodities procurement, distribution,trading and risk management. Messrs. Greenberg and Garner draw on their experience with

production sources, markets, distribution logistics, and supply and demand features pertinent to theenergy sector; domestically and internationally. They monitor regularly the state of the U.S.economy as well as the global economic and political situations as may bear on energy-related issues.

Methodology

The Trading Program is guided by volatility, looking in the energy markets for priceand hedge opportunities with low-risk profiles. Advisor studies the near-past and present toanticipate the near-future, focusing as much on where the market is not (and is not likely to be),as on where the market is. Its option timing and price strategies are modeled on Advisorsassessment of where prices are likely not to go, high-side or low-side. Mindful of constantmarket fluidity, Advisor reviews and adapts price and product strategies regularly. Advisors

pricing and timing decisions with respect to energy-related futures are guided by regular monitoring of supply and demand patterns and the sources and nature of volatility.

Based on research and technical analyses, Advisor analyzes market trading ranges in theshort-term for a variety of energy-related products and futures, and seeks to price options as targetedinvestments outside of the projected trading ranges. To do this, Advisor regularly reviews andanalyzes trends and option values in various markets with the objective of creating tradingstrategies separate and apart from trend-based strategies. Advisor updates its analyses regularlyand based on its assessments, Advisor sells and buys call and put options at different exercise

prices outside the anticipated market trading range.

Advisors Trading Program is implemented through trading in futures and options on energy-related commodities on the Chicago and New York Mercantile Exchanges. Advisor will trade futures


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and options on futures, and to a limited extent may trade in exchange-cleared swaps, on the followingcommodities: crude oil, Brent crude, unleaded gasoline, heating oil, and natural gas.

Of course, risks cannot be eliminated and profits cannot be guaranteed through anyconceivable management and risk control techniques. Advisor offers experience, judgment,discipline and a seasoned price/hedge methodology that has supported PFMs business for 12 years,while regularly assessing client risk tolerance.

Advisor does not rely on pre-programmed computer-generated trading prompts. Rather,Advisor assesses prices and trends by trending and non-trending analytics, and decides on futuresand options strategies using in-house intellectual capital, experience and instincts. Applying adisciplined, business-oriented approach to the markets in which Messrs. Greenberg and Garner and Ms. Wylie work daily, and focusing specifically on sources and magnitudes of volatility, theTrading Program looks at price ceilings and floors, or more precisely trading ranges projected byits analyses, and seeks to take advantage of trades that fall outside of projected high and low

parameters. By these means, the Trading Program is intended to create favorable optionstrategies by projecting price trends and limits in volatility swings in the short-term.

Proprietary Trading

Advisor and its co-managers never have and do not presently, but may at any time in thefuture, trade for their own accounts and for the account of their affiliates, including PFM, andemployees. In the event that Advisor and/or its co-managers at any time in the future trade for their own accounts and/or for the accounts of their affiliates, including PFM, and employees,then the trading for such accounts might not follow the Trading Program and the recordsassociated with proprietary accounts maintained by Advisor or its co-managers for themselves or any such affiliates or employees, or other client accounts, will be confidential and will not beavailable for inspection by any particular client.

Risk Management

Risk management is absolutely critical to successful futures, options and exchange-cleared swaps trading in the energy markets. Risk management is an intrinsic component of theTrading Program, as Advisor concentrates on outs in pricing and positioning our futurescontracts as well as hedge strategies balanced and managed by regular calibration of buy and selloptions and exchange-cleared swaps. Of course, Advisor employs stops and exits as warranted,

but strives not to be dependent on time-critical stop-losses and exits by the very strategy of positioning our trading clients in favorable buy or sell positions, at the edges of projected markethighs and lows. When called for, specific stop-loss orders will be executed in order to quickly

exit a clients position if the market moves contrary to Advisors price and position strategy.Individual client market risk preferences are embedded within the Trading Program and portfolio-wide limits are established and re-calibrated as a stop-loss protection for the overallTrading Program. Advisor monitors this regularly and with a critical eye as to all marketsegments within our trading sphere.


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Portfolios

Advisor monitors and trades within the crude oil, Brent crude, unleaded gasoline, heatingoil, and natural gas markets. Advisor may add or remove commodity interests from the TradingProgram at any time.

Minimum Account Size

The minimum investment for managed account trading with Advisor is $200,000. Thisinvestment is most suitable for institutional investors, futures funds, and very high net worthindividuals. At this time, there is no maximum account size.

Minimum Term of Investment

Advisor manages client Accounts (as defined below) with the objective of medium-termcapital appreciation. Consequently, the Trading Program has a medium-term focus and is notsuitable to those seeking strictly short-term results. Strong short-term results are possible, but theabove-average returns Advisor seeks likely require patience and persistence. Advisor recommends therefore that a prospective client commit to a minimum term of investment of twelve months. An investment with Advisor should be considered by someone who is willingand able to make at least a $200,000 commitment during a minimum twelve month time-framewithout withdrawing funds from the Account, except for income taxes due on profits, eventhough the client may be strongly tempted to do so, particularly during down periods. The clientwill always retain full control over withdrawal of funds from his, her or its Account, subject tothe timing qualifications stated below. However, the client must be aware that withdrawal prior to the recommended minimum twelve month duration would be contrary to Advisorsrecommendation.

Additions and Withdrawals

Clients may at any time deposit additional funds in their Account or withdraw funds fromthe cash balance of the Account, subject to margin requirements of the FCM and applicablecontracts. Advisor strongly recommends that assets not be withdrawn during the suggestedminimum 12 month term of the investment other than at year-end and only to the extent neededto pay taxes on the profits, if any, earned through the Account. Clients are advised that their making additions or withdrawals not in accordance with the Advisors recommendations may begrounds for Advisors immediate termination of the Account management. Client recognizes thatthe potential profitability of the Account depends upon uninterrupted investment of capital, andthat reduction of the Account Asset Value (defined below) could materially and adversely affect

the diversification among commodities traded in the Account and the potential profitability of the Account. Client agrees to notify Advisor in writing in advance of intended withdrawals; it

being understood that Client may withdraw funds from the Account at any time in Clientsdiscretion, subject to the margin requirements of the FCM and applicable contracts,notwithstanding Advisors recommendations that invested funds be maintained in the Account,as stated above.


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Futures Commissions Merchants

Each managed account client must select a Futures Commission Merchant (FCM) tomaintain his or her trading account because, as a CTA, Advisor is not permitted to hold customer funds, securities, commodities or other property. The arrangements with an FCM are more fullydescribed in the Advisory Agreement that Advisor requires each client to execute, substantiallyin the form attached as Exhibit A (Advisory Agreement). A clients trading account soestablished with an FCM is referred to as an Account.

Currently, Advisor does not recommend any particular FCM. However, Advisor reservesthe right to approve or disapprove of a clients use of a particular FCM. Advisors approval

process is based on the execution efficiency of particular FCMs, as assessed by Advisor based onAdvisors experience with particular FCMs or its independent due diligence. Further, Advisor reserves the right to limit the amount of commissions charged by FCMs to $10.00 per round turnfor each futures and/or options contract processed for each Account. Advisor currently does notreceive compensation of any kind from any FCM and will not receive any direct or indirectfinancial benefit from the maintenance of a participating clients Account with any particular FCM. For further information, please see the Conflicts Of Interest section beginning onPage 7.

A client may terminate its Advisory Agreement and/or the Account may be closed, butonly at month-end and after not less than 5-days prior notice to Advisor. Upon termination of the Advisory Agreement and/or closing of the Account, Advisor will liquidate all of the clientsopen positions. Termination will have no effect upon liabilities and commitments made or accrued prior to such termination, nor on open positions yet to be liquidated. The management of the Account after termination of the Advisory Agreement shall be the sole responsibility of theterminating client. All commodity positions shall be valued at the settlement price determined bythe exchange on which the transaction is effected, or based the most recent appropriate quotationas supplied by the clearing broker, exchange or financial institution through which thetransaction is effected. If there are no trades on the date of the calculation due to the operation of the daily price fluctuation limits or due to a closing of the exchange on which the transaction isexecuted, the contract will be valued at the fair market value based on the last posted settlement

price.

Introducing Brokers

Advisor accepts the intercession of introducing brokers for its managed accounts.

Referral Fees

Advisor agrees to pay a referral fee to persons or firms meeting CFTC registrationrequirements that refer clients to the Trading Program. Such fees may consist of a percentage of the Management Fee and/or Incentive Fees earned by Advisor, or other arrangements to beconfirmed in writing by Advisor in advance. Advisor may offer referral fees for new referrals ona negotiated basis. Advisors (and PFMs) principals will not receive a referral fee or any feeother than the Management Fee and Incentive Fee. Thus, no conflicts of interest currently exist


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between Advisor, PFM or their principals in regards to disbursing referral fees. A further discussion of current and potential conflicts of interest can be found below.

Conflicts of Interest

Each of Advisors clients can open an Account with any FCM as long as Advisor isconsulted and provides prior approval. Advisor will not receive any direct or indirect financial

benefit from the maintenance of a participating clients Account with any particular FCM.

Advisors clients are drawn from PFMs customer base as well as from other sources,including without limitation, direct inquiries from potential clients and introductions fromintroducing brokers and FCMs. Advisor and PFM each are owned by Messrs. Greenberg andGarner, and managed by them and Mr. Favazza and Ms. Wylie. A conflict of interest may exist

between PFMs responsibilities to a customer and Advisors advice to that customer andgenerally to other clients. Similarly, the Trading Program to be used by Advisor for managedaccounts is the same as the trading system utilized by PFM. Advisor believes that it has anoperational strategy in place and sufficient resources in order to fulfill its responsibilities tomanaged account clients in a fair manner. Advisors policy is to objectively allocate tradeexecutions that afford each clients Account the same likelihood of receiving favorableexecutions over time. In furtherance of this policy, Advisor will enter all buy/sell orders at thesame price for all Accounts under its management for a given market. There may be unusual

brief periods when trading ahead conflicts could exist, however, due to lack of market liquidityor unforeseen difficulties on the part of brokers executing Advisors orders. Any suchdiscrepancies between a clients Account and other accounts managed by Advisor would be anunintentional function of trade execution, out of the Advisors control, and expected to be onlytransient in duration.

A potential conflict of interest exists regarding referral fees given that Advisor has no

formal screening process for participants introduced by CFTC registered persons or firms. Asstated in the introductory disclosure statements at the beginning of this Disclosure Document,Advisor recommends the Trading Program only to persons suitable for such type of futuresinvesting. Thus, potential clients introduced to the Trading Program by anyone other thanAdvisor or its principals should be wary and exercise independent due diligence as they think

prudent.

Further, Advisors fee structure for the Trading Program, as described in the Feessection starting on Page 8, is thought to be consistent with that of similar investment vehicles.Advisor believes that the use of an incentive fee is best for aligning the incentives of thosemanaging a fund with the investment goals of its participants. There currently exist no actual

conflicts of interests arising out of Advisers fee structure. However, a potential conflict of interest arises if Advisor risks an abnormally large amount on a given trade with the intent toincrease trading profits and thus the Incentive Fee. Alternatively, the payment of an IncentiveFee could create a potential conflict of interest if Advisor risks an abnormally small amount on agiven trade, attempting to keep asset levels high in order to maximize Management Fees andretain rights to Incentive Fees, thus reducing the profit potential of a given trade.


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Reports to Investors

Advisors clients will receive regular reports of the initiation and liquidation of positionsand monthly reports directly from the FCM. In addition, special reports may be received

periodically from Advisor.

Litigation

There have been no administrative, civil or criminal proceedings against Advisor or its principals in the past five years which require disclosure pursuant to CFTC Regulation 4.34 (k).

FEES

Advisor will be entitled to the Management Fee and Incentive Fee (as such terms aredefined below) described in this section in consideration for its investment advisory services

provided to clients. Notwithstanding the below description of such fees, however, Advisor reserves the right to make changes to the Management Fee and/or Incentive Fee charged to

existing clients and/or future clients.

Management Fee

In consideration for its investment advisory services provided to clients, Advisor willhave earned and be entitled to an annual management fee of two percent (2%) of the respectiveclients Account Asset Value (defined below) under Advisors Trading Program managementfrom time to time (Management Fee).

The Management Fee will be calculated by Advisor each month and will be payable inmonthly installments of one-twelfth (1/12) of the annualized Management Fee as calculated eachmonth. Advisor will provide clients with an invoice each month setting forth the ManagementFee then due, which invoice will include a statement of the Account Asset Value on which theManagement Fee is based. The monthly Management Fee will be payable each month within tendays after invoicing and may be offset by Advisor (or an FCM on Advisors behalf) from theclients Account. The Management Fee will be earned and paid to Advisor each month whether or not Investment Profits (defined below) have been achieved in that month or at any time.

For purposes of calculating the Management Fee, the term Account Asset Value meansthe sum of the following: (i) the total assets in a clients Account, including (A) all cash, treasury

bills, certificates of deposit and other interest-bearing financial instruments at their then-currentmarket value, plus (B) the current market value (as of the calculation date) of all open trading

positions maintained for a clients Account, plus (C) any additional dollar amounts representingfunds committed by a client to the Trading Program, which a client has stated are subject toAdvisors investment discretion in connection with the Trading Program, but which have not

been deposited into the clients Account, plus (ii) if applicable, notional funds comprising thedollar amounts which a client has stated are subject to Advisors investment discretion inconnection with the Trading Program, but which have not been deposited into the clientsAccount, less actual expenses incurred in any given month in establishing and maintaining theclients Account; provided that no reduction in the Account Asset Value will be made for

brokerage commissions and charges that would be incurred upon Account liquidation. The


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Account Asset Value will be increased or decreased from time to time by the cumulativeamounts of deposits, withdrawals, gains or losses.

Because Account Asset Values fluctuate, the Management Fee (based on the stated percentage of Account Asset Value) will vary commensurately. Also, because the ManagementFee is calculated on Account Asset Value rather than only on committed funds (which maycomprise cash and notional funds), the Management Fee imposed from time to time may exceed2% of the committed funds comprising Account Asset Value. For example, if only 50% of aclients Account Asset Value is represented by committed funds, the Management Fee for suchAccount would amount to 2% of the total Account Asset Value, but 4% of the committed funds.Since an FCM may, in its discretion, accept Accounts with a minimal amount of actual or committed funds, the Management Fee expressed as a percentage of actual or committed fundscould be higher than 2%.

Performance-Based Incentive Fee

In addition to the Management Fee, in further consideration of its investment advisoryservices provided to clients, Advisor will be entitled to an incentive fee (Incentive Fee) to becalculated and paid quarterly. The Incentive Fee will be equal to twenty percent (20%) of theInvestment Profits each calendar quarter. For purposes of calculating Incentive Fee, thefollowing terms will have the following meanings:

Investment Profits means the positive difference in the clients Account Asset Value,after deduction for FCM charges and other expenses associated with the clients Account and for Management Fees earned and/or paid to Advisor during the relevant measurement period, asmeasured (a) on the first day of each January and on the last day of each March, (b) on the firstday of each April and on the last day of each June, (c) on the first day of each July and on the lastday of each September, and (d) on the first day of each October and on the last day of each

December.

Investment Profits (if any) will be determined for each calendar quarter by comparing theAccount Asset Value balance on the start date and end date for the quarter. Within ten days of the end of each calendar quarter, Advisor will provide each client with Advisors regularly-keptreport of trading activities during the preceding quarter, and a statement of Account showing theInvestment Profit (if any) for the quarter.

If there are no Investment Profits in a given calendar quarter, no Incentive Fee will bedue for such quarter. Incentive Fees will nevertheless continue to be due and payable to Advisor subsequently, for any calendar quarter in which Investment Profits are achieved.

Investment Profits for purposes of calculating Incentive Fees are simply increases in thecumulative Account Asset Value based on investment gains, over and above the previous all-time highest balance of the Account Asset Value. If the Account Asset Value decreases during ameasurement quarter, the amount of the loss, compared to the prior all-time high, shall constitutea Carryforward Loss for the beginning of the next measurement period. No Incentive Feesduring the term shall be payable until all Carryforward Losses are offset and exceeded by futureInvestment Profits. Similarly, if a client Account experiences a loss after an Incentive Fee is


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earned, Advisor will retain the Incentive Fee previously paid, but Advisor will be entitled to nofurther Incentive Fees despite subsequent Investment Profits until such Investment Profits offsetthe earlier loss and replenish the Account Asset Value to an amount that is greater than theAccount Asset Value starting balance in respect of which the last paid Incentive Fee wascalculated.

Because Advisor permits notional funding of Accounts, and because participating clientsmay elect to fund their Account with amounts sufficient only to satisfy margin requirements,Incentive Fees may exceed those associated with fully-funded Accounts. The clients IncentiveFee will be calculated based on the total nominal value of the Account, which includes notionalfunds in addition to actual net assets. As an example, a 2% fee is equivalent to 4% of actual netassets on an Account that is 50% funded. Participating clients will be apprised of the precise

percentage of fees as a function of anticipated actual funds in the Account at the time theAccount is opened.

Offset Rights for Fees

Advisor will be irrevocably authorized to offset (or to cause FCMs to offset) from clientAccounts an amount sufficient to pay the Management Fee each month and the Incentive Fee to

be paid in each quarter for which the Incentive Fee is due. Each client will execute the PaymentAuthorization form attached to each client advisory agreement, authorizing Advisor (or FCMson Advisors behalf) to withdraw from the clients Account the Management Fee and IncentiveFee payable to Advisor. Each client also will execute any similar document or letter of instruction provided by the FCM to allow the FCM to make such offsets and payments toAdvisor.

SUMMARY OF FUTURES AND OPTIONS MARKETS

Futures Contracts

A futures contract is an agreement facilitated by an established exchange, by which theseller agrees to deliver and the buyer agrees to accept, a certain quantity of a specified type of commodity during a designated period at a specified price. Certain futures contracts are closedout by cash settlement of the profit or loss of an open position rather than by delivery.Speculative traders rarely expect to take delivery of any commodity under a futures contract.Rather, traders hope to realize profits from fluctuations in the price of futures contracts,offsetting such contracts by taking an equal and opposite position in the same contract beforedelivery is due. A margin deposit is required to initiate both long and short futures positions.Additional margin is required if unrealized losses in open positions reduce the margin on deposit

below required minimums. Unlike margin in the securities industry, which essentially constitutesa loan from a clients stockbroker, margin in futures trading acts as a deposit to give assurance toa traders futures broker of the traders ability to pay for any losses that may be incurred on thetraders positions.

Options Contracts

An option on a futures contract gives the purchaser of the option the right to take a position at a specified price (the strike or exercise price) in the underlying futures contract. A


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call option gives the purchaser the right to take a long position, and a put option confers theright to take a short position, in the underlying futures contract. The purchase price of an optionis referred to as its premium. The seller (or writer) of an option is obligated to take a futures

position at a specified price opposite to the option buyer if the option is exercised. Selling suchoptions involves risks similar to those involved in trading futures contracts, in that options are

speculative and highly leveraged. Specific market movements of the commodities or futurescontracts underlying an option cannot accurately be predicted. The purchaser of an option issubject to the risk of losing the entire purchase price of the option, plus the fees and commissionsassociated with the transaction. The writer of an option is subject to the risk of potentiallyunlimited loss in excess of the premiums received, plus the fees and commissions associatedwith the transaction.

Margins

Margin is the amount of funds that must be deposited by a trader with his or her commodity broker to secure the obligation either to make or accept delivery under a futurescontract or to make an offsetting sale or purchase. Because futures contracts are customarily

bought and sold on margins which range upward from less than two percent of the purchase priceof the contract, price fluctuations occurring in commodity futures markets may create profits andlosses that are greater than are customary in other forms of investment. The margin depositrequired of an Account will be reduced or increased daily as a consequence of fluctuations in themarket price of the open contracts held for the Account, and additional deposits may becomenecessary as a consequence of adverse market movements. Exchanges impose, and may at anytime increase, minimum margin requirements, and brokers may, in their discretion, further increase the amount of margin required from any Account.

Regulation

Futures exchanges in the United States and the trading conducted thereon are subject toregulation by the CFTC under the Commodity Exchange Act, as amended (the Act). Advisor isa CTA (commodities trading advisor) registered with and subject to regulation by the CFTC.Registration with the CFTC is not, and must not be considered as any indication of, CFTCapproval. The NFA is the self-regulatory body of the United States futures industry, of whichAdvisor is a member. The NFA has responsibility for processing the registrations of commoditytrading advisors and their associated persons, as well as most other CFTC registered persons.

Foreign Exchanges

Trading on exchanges outside the United States is not regulated by any United States

governmental agency and may involve certain risks not applicable to trading on United Statesexchanges. For example, some foreign exchanges, in contrast to United States exchanges, areprincipals markets in which performance is the responsibility only of die individual member with whom the trader has entered into a futures contract and not of an exchange or clearingcorporation. Moreover, such trading may be subject to whatever regulatory provisions areapplicable to transactions effected outside the United States, whether on foreign exchanges or otherwise. Trading on foreign exchanges involves the additional risks of expropriation,

burdensome or confiscatory taxation, moratoriums, and investment controls or political or


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diplomatic events which might adversely affect the Advisors trading activities. Trading onforeign exchanges is also subject to the risk of changes in the exchange rate between UnitedStates dollars and the currencies in which contracts on such exchanges are settled.

Although the CFTC is prohibited by statute from promulgating rules which govern in anyrespect any rule, contract term or action of any foreign commodity exchange, the CFTC has fullauthority to regulate the sale of foreign futures contracts within the United States and hasadopted regulations on this matter, effective as of February 1, 1988. These regulations mayrestrict the clients for whom or with whom the Advisor may trade or the markets which theAdvisor may trade.

The foregoing is not a complete summary of the complex and varied futures and optionsmarkets. Clients should familiarize themselves with the futures and options markets, carefullyread the Risk Disclosure Statements in the front of this Disclosure Document and the followingdescription of certain of the risks connected with futures and options trading before opening anAccount.

PRINCIPAL RISK FACTORS

Trading in futures, options and exchange-cleared swaps is subject to certain risks,including the risks set forth throughout this Disclosure Document and those specified below. Aninvestor in Advisors Trading Program will therefore be subject to risks, including the following,which potentially involve loss of investment and additional costs and damages:

Speculation and Volatility: Commodity trading is speculative and commodity interest prices are highly volatile. Price movements for commodity interests are influenced by, amongother things: changing supply and demand relationships; weather; agricultural, trade, fiscal,monetary, and exchange control programs and policies of governments; United States and

foreign political and economic events and policies; changes in national and international interestrates and rates of inflation; currency devaluations and revaluations; and emotions of themarketplace. None of these factors can be controlled by Advisor and no assurance can be giventhat Advisors advice will result in profitable trades for a participating customer or that acustomer will not incur substantial losses.

Reliance on Clearinghouses: Commodity exchanges provide centralized market facilitiesfor trading in futures contracts relating to specified commodities. Each of the commodityexchanges in the United States has an associated clearinghouse. Once trades made betweenmembers of an exchange have been confirmed, the clearinghouse becomes substituted for theclearing member acting on behalf of each buyer and each seller of contracts traded on the

exchange and in effect becomes the other party to the trade. Thereafter, each clearing member firm party to the trade looks only to the clearinghouse for performance. Clearinghouses do notdeal with customers, but only with member firms, and the guarantee of performance under open positions provided by the clearinghouse does not run to customers.

Broker Risks: Under CFTC regulations, FCMs are required to maintain customersassets in a segregated account. If a customers clearinghouse fails to do so, the customer may besubject to risk of loss of funds in the event of its bankruptcy. Even if such funds are properly


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segregated, the customer may still be subject to a risk of a loss of his funds on deposit with theFCM should another customer of the FCM or the FCM itself fail to satisfy deficiencies in suchother customers accounts. Bankruptcy law applicable to all U.S. futures brokers requires that, inthe event of the bankruptcy of such a broker, all property held by the broker, including certain

property specifically traceable to the customer, will be returned, transferred or distributed to the

brokers customers only to the extent of each customers pro-rata share of all property availablefor distribution to customers. If any futures broker retained by the customer were to become bankrupt, it is possible that the customer would be able to recover none or only a portion of itsassets held by such futures broker.

Foreign Trading: Advisor may trade commodity interests on exchanges located outsidethe United States for the customers account. Such trading does not fall within the jurisdiction of the CFTC and, in many cases, will take place without benefit of all the detailed financial, trade

practice and client protection regulations that apply to the activities of United States exchangesand their members. Possible absence of a strong clearinghouse to stand behind trades and tomake good should a party refuse or be unable to fulfill the terms of a contract may result insignificant losses. Also, not all foreign markets segregate customer funds. In some cases,intermediaries may deal on foreign markets taking the opposite side of trades made for a client,although acting as the clients agent, a practice that would be prohibited on United Statesexchanges. Furthermore, since the Advisor will calculate its fees based on gain on investedcapital in United States dollars, a client would be subject to the risk of fluctuations in theexchange rate between the local currency and dollars, as well as the possibility of exchangecontrols, in connection with any foreign trading.

Leverage: Commodity trading is highly leveraged. The low margin deposits normallyrequired in commodity interest trading (typically 2% to 20% of the value of the contract

purchase or sold) permit an extremely high degree of leverage. Accordingly, a relatively small price movement in a contract may result in immediate and substantial losses to the investor. For example, if at the time of purchase 10% of the price of a futures contract is deposited as margin,a 10% decrease in the price of the contract would, if the contract is then closed out, result in atotal loss of the margin deposit before any deductions for brokerage commissions. A decrease of more than 10% would result in a loss of more than the total margin deposit. Thus, like other leveraged investments, any trade may result in losses in excess of the amount invested. When themarket value of a particular open position changes to a point where the margin on deposit in a

participating customers Account does not satisfy the applicable maintenance marginrequirement imposed by the customers FCM, the customer, and not Advisor, will receive amargin call from the FCM. If the customer does not satisfy the margin call within a reasonabletime (which may be as brief as a few hours), the FCM will close out the customers position.

Illiquidity: Commodity trading may be illiquid. Most United States commodityexchanges limit price fluctuations in commodity interest prices during a single day by means of daily price fluctuation limits or daily limits. The daily limit, which is set by most exchangesfor all but a portion of the expiration month, imposes a floor and a ceiling on the prices at whicha trade may be executed, as measured from the last trading days close. While these limits were

put in place to lessen margin exposure, they may have certain negative consequences for acustomers trading. For example, once the price of a particular contract has increased or decreased by an amount equal to the daily limit, thereby producing a limit-up or limit-down


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market, positions in the contract can neither be taken nor liquidated unless traders are willing toeffect trades at or within the limit. Contract prices in various commodities have occasionallymoved the daily limit for several consecutive days with little or no trading. Similar occurrencescould prevent Advisor from promptly liquidating unfavorable positions and subject a

participating customer to substantial losses that could exceed the margin initially committed to

such trades.Risks Associated with Electronic Trading or Order Routing Systems: Trading through an

electronic trading or order routing system exposes clients to risks associated with system or component failure. In the event of system or component failure, Advisor may not be able to enter new orders, execute existing orders, modify or cancel orders that were previously entered or determine the status of existing orders. Possible failure may result in duplicate orders, orders

being executed that Advisor did not enter, orders being lost in the system and similar events.This could result in financial losses to the client. The program Advisor uses is similar to thoseused by other financial services firms in the industry and includes safeguards against system andcomponent failure. However, given the nature of the electronic trading or order routing systems,there is no guarantee that problems described above will not occur.

Application of Speculative Position Limits: All Accounts managed and controlled by theAdvisor are combined (that is, aggregated) for position limit purposes. Advisor believes thatestablished position limits will not adversely affect its trading for participating clients. However,there is the possibility that from time to time Advisors trading decisions may have to bemodified and positions that it holds or controls may have to be liquidated to avoid exceedingapplicable position limits. If the application of position limits were to affect Advisors tradingdecisions, Advisor would attempt to modify its recommendations in such a way as not to affectdisproportionately the performance of any one clients Account compared with that of any other Account that it managed or controlled.

Stop Loss Orders May Not Limit Losses: Stop-loss orders are not guaranteed to limitloss to the stop-loss point for various reasons, including because they are determined by Advisor,and because market conditions may make it impossible to execute such orders, and because therecan be no guarantee that the order, once executed, will be effective as the identified stop-loss

point.

Tax Liability: Clients should obtain advice from their own tax advisors and satisfythemselves as to the income tax and other tax consequences of an investment in a managedAccount, with specific reference to their own tax situation, prior to participating in a managedaccount program.

Exchange-Cleared Swaps: In addition to all of the foregoing risk factors, exchange-cleared swap transactions involve specific further risks of an exchanges, brokers or clearinghouses inability or failure to effectuate swap transactions.

Notional Funding: Advisor allows clients the use of notional funding. However, due tothe increase in risk and reward associated with notional accounts, Advisor reserves the right tolimit the amount of notional funds used in a given Account on a case-by-case basis. Pleasereview this Disclosure Document in its entirety as well as the specific risk disclosure statements


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set forth below, and the table below, for further explanation of the risks and rewards of notionalaccounts.

NOTIONAL ACCOUNTS - RISK DISCLOSURE STATEMENT

YOU SHOULD REQUEST YOUR COMMODITY TRADING ADVISOR TO ADVISE YOUOF THE AMOUNT OF CASH OR OTHER ASSETS (ACTUAL FUNDS) WHICH SHOULDBE DEPOSITED TO THE ADVISORS TRADING PROGRAM FOR YOUR ACCOUNT TOBE CONSIDERED FULLY FUNDED. THIS IS THE AMOUNT UPON WHICH THECOMMODITY TRADING ADVISOR WILL DETERMINE THE NUMBER OF CONTRACTSTRADED IN YOUR ACCOUNT AND SHOULD BE AN AMOUNT SUFFICIENT TO MAKEIT UNLIKELY THAT ANY FURTHER CASH DEPOSITS WOULD BE REQUIRED FROMYOU OVER THE COURSE OF YOUR PARTICIPATION IN THE COMMODITY TRADINGADVISORS PROGRAM.

YOU ARE REMINDED THAT THE ACCOUNT SIZE YOU HAVE AGREED TO INWRITING (THE NOMINAL ACCOUNT SIZE) IS NOT THE MAXIMUM POSSIBLELOSS THAT YOUR ACCOUNT MAY EXPERIENCE. YOU SHOULD CONSULT THEACCOUNT STATEMENTS RECEIVED FROM YOUR FUTURES COMMISSIONSMERCHANT IN ORDER TO DETERMINE THE ACTUAL ACTIVITY IN YOUR ACCOUNT, INCLUDING PROFITS, LOSSES AND CURRENT CASH EQUITY BALANCE.TO THE EXTENT THAT THE EQUITY IN YOUR ACCOUNT IS AT ANY TIME LESSTHAN THE NOMINAL ACCOUNT SIZE YOU SHOULD BE AWARE OF THEFOLLOWING:

1. ALTHOUGH YOUR GAINS AND LOSSES, FEES AND COMMISSIONSMEASURED IN DOLLARS WILL BE THE SAME, THEY WILL BE GREATER WHENEXPRESSED AS A PERCENTAGE OF ACCOUNT EQUITY.

2. YOU MAY RECEIVE MORE FREQUENT AND LARGER MARGIN CALLS.

3. THE DISCLOSURES WHICH ACCOMPANY THE PERFORMANCE TABLEMAY BE USED TO CONVERT THE RATES OF RETURN IN THE PERFORMANCETABLE TO THE CORRESPONDING RATES OF RETURN FOR PARTICULAR PARTIALFUNDING LEVELS.

4. YOU WILL INCUR GREATER RISK BECAUSE YOU MAY EXPERIENCEGREATER LOSSES, AS MEASURED BY A PERCENTAGE OF ASSETS ACTUALLYDEPOSITED IN YOUR ACCOUNT, THAN IN AN ACCOUNT FUNDED EXCLUSIVELY

WITH ACTUAL FUNDS.5. YOUR ACCOUNT WILL EXPERIENCE GREATER VOLATILITY, AS

MEASURED BY RATES OF RETURN ACHIEVED IN RELATION TO ASSETSACTUALLY DEPOSITED IN YOUR ACCOUNT, THAN AN ACCOUNT FUNDEDEXCLUSIVELY WITH ACTUAL FUNDS.


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Matrix for Computing Performance of Notional Accounts

LEVEL OF FUNDING (2)

ACTUAL RATE OF RETURN (1) 100%FUNDED

75%FUNDED

50%FUNDED

25%FUNDED

-30.00% -30.00% -40.00% -60.00% -120.00%

-20.00% -20.00% -26.67% -40.00% -80.00%

-10.00% -10.00% -13.33% -20.00% -40.00%

10.00% 10.00% 13.33% 20,00% 40.00%

20.00% 20.00% 26.67% 40.00% 80.00%

30.00% 30.00% 40.00% 60.00% 120.00%

RATES OF RETURN AT VARIOUS FUNDING LEVELS (3)

Footnotes to Matrix:(1) This column represents a hypothetical range of actual rates of return for fully funded

accounts.(2) This percentage represents the actual amount of funds deposited in an account divided by

the fully funded trading level of the account.(3) This represents the rate of return experienced by a customers account given the

respective level of funding utilized by the trading advisor. The rates of return for accounts that are not fully-funded are inversely proportional to the actual rates of return,

based on the percentage level of funding.

PERFORMANCE RECORDS

The performance tables in this Disclosure Document have not been audited byindependent public accountants. However, Advisor believes that the information contained in thetables fairly represents the results of past performance under the advised accounts referred toabove as PFM Account #1 and PFM Account #2, and as to other accounts managed by Advisor since December 2011. No representation is being made that accounts managed by the Advisor asmanaged accounts will achieve profits in the future similar to those shown in the tables set forth

below.


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PROTEC ENERGY PARTNERS, LLCET1 PROGRAM

COMPOSITE ACTUAL PERFORMANCE CAPSULEAs of March 31, 2012

Name of CTA Protec Energy Partners, LLC

Name of Trading Program: ET1 Program

Inception of Trading:(i) By CTA under Disclosure Document December 8, 2011(ii) By CTA re: PFM Account ## 1 and 2: April 13, 2010

Inception of Trading in Offered Program: April 13, 2010

# of accounts currently traded pursuantto the program 9

Total nominal assets under management $3,791,277

Total nominal assets traded pursuant tothe program: $3,791,277

Largest monthly draw-down (1): 3.76%/November 2011

Worst peak-to-valley draw-down (2): 3.76%/November 2011

Number of profitable accounts that haveopened and closed: 1

Range of returns experienced by profitableaccounts that have opened and closed: 31.29%

Number of losing accounts that haveopened and closed: 0

Range of returns experienced by losingaccounts that have opened and closed: N/A

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OFFUTURE RESULTS


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COMPOSITE ACTUAL PERFORMANCE CAPSULE (continued)As of March 31, 2012

Rate of Return

Month 2012 2011 2010January 10.40% 14.56%February 4.61% 9.02%March 5.91% 12.89%April 4.08% -1.97%May -0.47% -0.80%June -1.34% 9.06%July 1.82% 3.57%August 6.66% 6.20%September 0.53% 3.90%October 4.07% 12.04%

November -3.76% -1.84%December 3.48% 10.36%

Year-to-Date 22.31% 63.03% 40.52%

The rates of return in the Composite Actual Performance Capsule of the ET1 Program may vary materially amongmanaged accounts. See the Supplemental Table of Ranges of Rates of Return for the actual monthly range of ratesof return for the accounts. Material variations in rates of return among accounts may occur due to multiple factorsinherent in the ET1 Program. These factors include, but are not limited to, the following:

i. Option trading: Advisor trades almost exclusively options contracts. Option contracts have differentfair value characteristics than other financial instruments. As the value of an option contract iscomprised of both time value and inherent value, and option contracts are an inherently leveragedfinancial instrument, a small price move in the underlying financial instrument can make a significantchange in the rate of return of a managed account.

ii. New Account Implementation: New accounts may take several months to fully participate in the same positions as existing accounts. This is primarily due to longer-term trend-following option positions thatexisting clients hold in which new clients will not participate. New clients will start participating in thesame positions upon expiration of the existing longer term trend following option position and initiationof a new long-term trend-following option position. It may take new clients several months to havecomparable trading positions.

iii. Account Size: Smaller accounts will generally experience greater volatility in monthly rates of returndue to the increments that Advisor uses to implement positions. For example, a $200,000 and $280,000account may hold the same number of contracts. If gross trading performance for both accounts was$20,000 for the month, one account would experience a 10.00% rate of return and the other accountwould experience a 7.14% rate of return.


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COMPOSITE ACTUAL PERFORMANCE CAPSULE (continued)As of March 31, 2012

Supplemental Table of Ranges of Rates of Return

Ranges of Rates of Return

Month 2012 2011 2010

January -4.15% to 11.07% 1.57% to 26.01%February 0.05% to 6.12% 8.75% to 10.08%March 4.27% to 6.09% 7.00% to 14.41%April 2.34% to 4.50% -1.97% to -1.97%

May -0.51% to -0.33% -0.80% to -0.80%June -1.46% to -0.80% 9.06% to 9.06%July 1.21% to 1.95% 3.57% to 3.57%August 4.48% to 7.10% 6.20% to 6.20%September 0.33% to 0.57% 3.90% to 3.90%October 2.74% to 4.32% 12.04% to 12.04%

November -3.94% to -2.79% -1.84% to -1.84%December 1.19% to 3.48% 1.16% to 10.36%


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Protec Energy Partners, LLC

ET1 Program

Composite Actual Monthly Performance Table

Beginning Net Asset Value Additions Withdrawals

NetRealized

Gains(Losses)

InterestIncome

Change inUnrealized

Gains(Losses)

ManagementFees

IncentiveFees

NetPerformance

Ending Net Asset Value

Period Rateof Return

(%) VA(1) (2) (3) (4) (5) (6) (7) (8)

10030-Apr-10 - 200,000 - - - (3,948) - - (3,948) 196,052 -1.97% 98,025.861-May-10 196,052 3,948 - (3) - (1,588) - - (1,591) 198,409 -0.80% 97,246.3630-Jun-10 198,409 1,590 - - 11 21,256 - 3,146 18,121 218,120 9.06% 106,057.6231-Jul-10 218,120 - 18,122 14,637 - (5,704) - 1,787 7,146 207,144 3.57% 109,847.381-Aug-10 207,144 - 7,147 14,634 12 847 - 3,099 12,394 212,391 6.20% 116,654.770-Sep-10 212,391 - 12,394 (4) 14 9,738 - 1,950 7,798 207,795 3.90% 121,203.48

31-Oct-10 207,795 - 7,799 (4) 13 30,085 - 6,019 24,075 224,071 12.04% 135,793.140-Nov-10 224,071 - 24,075 37,136 16 (41,749) - (919) (3,678) 196,318 -1.84% 133,296.561-Dec-10 196,318 178,677 - 10,029 14 18,558 - 5,856 22,745 397,740 10.36% 147,101.54

31-Jan-11 397,740 678 19,160 27,569 - 37,817 - 10,179 55,207 434,465 14.56% 168,514.188-Feb-11 434,465 832,905 - (54,440) 35 192,877 - 24,188 114,284 1,381,654 9.02% 183,709.731-Mar-11 1,381,654 24,188 - 394,216 13 (177,915) - 35,136 181,178 1,587,020 12.89% 207,385.13

30-Apr-11 1,587,020 35,136 - 157,763 33 (78,838) - 12,827 66,131 1,688,287 4.08% 215,839.561-May-11 1,688,287 12,827 - 6,571 16 (16,219) - (1,587) (8,045) 1,693,069 -0.47% 214,818.7830-Jun-11 1,693,069 - 51,587 (151,937) 10 124,949 - (4,393) (22,585) 1,618,897 -1.34% 211,950.4231-Jul-11 1,618,897 - 4,393 48 - 35,076 - 5,703 29,421 1,643,925 1.82% 215,812.691-Aug-11 1,643,925 5,703 - - 35 131,174 - 21,321 109,888 1,759,516 6.66% 230,188.750-Sep-11 1,759,516 21,321 - 214,413 - (203,144) - 1,819 9,450 1,790,287 0.53% 231,410.23

31-Oct-11 1,790,287 1,819 - (42,952) - 129,922 - 14,112 72,858 1,864,964 4.07% 240,818.240-Nov-11 1,864,964 114,112 - 3,337 - (92,134) - (14,317) (74,480) 1,904,596 -3.76% 231,755.331-Dec-11 1,904,596 400,000 309,538 147,256 - (66,890) 353 12,913 67,100 2,062,158 3.48% 239,813.50

31-Jan-12 2,062,158 209,809 - 22,911 - 226,463 775 41,512 207,087 2,479,054 10.40% 264,743.299-Feb-12 2,479,054 30,070 - 36,252 - 102,829 833 22,622 115,626 2,624,750 4.61% 276,943.15

1-Mar-12 2,624,750 1,000,000 30,070 256,197 - (17,529) 2,645 39,426 196,597 3,791,277 5.91% 293,315.692010 40.52%2011 63.03%2012 22.31%

See accompanying Performance Table Notes Inception to date 180.20%


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ormance Table Notes

Period Rates of Return % (ROR) in the composite actual performance record were computed using the actual trading results and actual fee structure of each account contained in the composite performanced. A method of performance reporting approved by the Commodity Futures Trading Commission, which adjusts for additions a nd withdrawals to accounts by temporarily excluding certain accounts whenlating the ROR, was used in computing the composite ROR. In this method, the ROR is calculated by dividing the Net Performance by the Beginning Net Asset Value, except that accounts that traded for only

of the month or experienced material additions or withdrawals during the month, were excluded from the ROR calculation.

n Definitions

al Funds the equity in a commodity trading account over which the commodity trading advisor has trading authority and fun ds that can be transferred to that account without the clients consent to each transfer.inal Account Size the account size agreed to by the client that establishes the level of trading in the particular trading program.

onal Funds the amount by which the Nominal Account Size exceeds the Actual Funds (i.e., Nominal Account Size minus Actual Funds).

) Beginning Net Asset Value includes both Actual Funds and Notional Funds.

) Additions include additions of both Actual Funds and Notional Funds. Addition s also include the previous months accrued management fees and previous quarters accrued incentive fees for accounts

where these fees are paid outside of the trading account.) Withdrawals include withdrawals of both Actual Funds and Notional Funds.

) Management fees are accrued monthly at rates ranging from 0% to 2% annually of the net asset value of the accounts. Such fees are charged monthly at 1/12 of the annual fee rate.

) Incentive Fees are accrued monthly at rates ranging from 0% to 25% of Net Performance prior to Management Fees and Incentive Fees.

) Net Performance equals the sum of Net Realized Gains (Losses), Interest Income and Change in Unrealized Gains (Losses) less Management Fees and Incentive Fees.

) Ending Net Asset Value equals Beginning Net Asset Value plus Additions minus Withdrawals plus Net Performance.

) The Period Rate of Return % for each month is computed by dividing the Net Performance by the Beginning Net Asset Value excluding accounts that traded for only part of the month or experiencedmaterial additions or withdrawals during the month. Year-to-date rates of return for 2012 and 2011 is calculated by compounding the monthly rates of return during the year. Year-to-date rate of return for 2010 is calculated as the sum of the monthly rates of return pursuant to guidance from the Commodity Futures Trading Commission.


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EXHIBIT A


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ADVISORY AGREEMENT

PROTEC ENERGY PARTNERS, LLC750 Park of Commerce Boulevard, Suite 210

Boca Raton, Florida 33487

Telephone: 561-392-3667

Fax: 561-362-3098

REGISTERED WITH THECOMMODITY FUTURES TRADING COMMISSION

AS ACOMMODITY TRADING ADVISOR

NOTICE TO THE CUSTOMER :

PLEASE READ AND SIGN THE APPROPRIATE PAGES OF THISADVISORY AGREEMENT. THEN, RETAIN THE DISCLOSURE

DOCUMENT, BUT RETURN THE ENTIRE ADVISORY AGREEMENTINCLUDING THE SIGNATURE PAGES TO THE ADVISOR


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ADVISORY AGREEMENTPROTEC ENERGY PARTNERS, LLC

750 Park of Commerce Boulevard, Suite 210Boca Raton, Florida 33487Telephone: 561-392-3667

Fax: 561-362-3098IB Code _______ Account Number _________

THIS ADVISORY AGREEMENT (Agreement) is entered into this ________ day of _________, 2012, between Protec Energy Partners, LLC (Advisor) and the person or entity identified below (Client):

Client Name ______________________________________________ EIN/SSN__________________

Address ___________________________________________________________________________

City _____________________________________ State _______________ Zip ___________________

Occupation/Nature of Business __________________________________________________________

Phone_____________ Cell ___________Email Address_______________________________________

Address to which Account statements should be sent (if different from the address above)

c/o _________________________________________________________________________________

Address _____________________________________________________________________________

City _______________________________State _____________________ Zip ___________________

Net Worth ___________________________________

Years of Experience in the following areas: Futures _____ Futures Options _____ Stocks_____ Stock

Options ______ Bonds _______ Other [describe] ___________________________________________

Does any other person/entity:Have a financial interest in this Account? YES NOGuarantee this Account? YES NO

If you have answered YES to any of the above, please give name(s) of person(s): ______________________________________________________________________________ Is there currently pending or has there ever been any litigation, disputed accounts or other matters

between you and commodity or securities brokers, exchanges, or federal or state regulatory bodies

NO YES

(IF YES, please describe): _______________________________________________________ Have you ever been the subject of an investigation or proceeding by any futures or securities regulatory or self-regulatory body? NO YES

If yes, please provide details:______________________________________________________


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RECITALS

WHEREAS, Advisor offers to qualified eligible persons (as defined in 17 C.F.R. Section 4.7(a) (2) &(3) [see www.nfa.futures.org ]), an advisory service for the management of commodity trading accounts

pursuant to which trading decisions are guided by Advisor's proprietary trading program as described inthe Confidential Disclosure Document to which this Agreement is an exhibit (Disclosure Document).

WHEREAS, Client represents to Advisor that: (a) Client is a qualified eligible person, and has speculativecapital for the purpose of trading in commodity futures contracts of the type described in AdvisorsDisclosure Document; (b) Client possesses expertise, knowledge and sophistication in financial and

business matters, and with respect to investments of the type described in the DisclosureDocument; (c) Client is capable of evaluating the merits and economic risks of the investmentdescribed in the Disclosure Document, and is able to bear all such economic risks of suchinvestment now and in the future; (d) Client is able to tolerate adverse results relative to its Account,including the possible loss of Clients entire investment; and (e) Client has read and understandsAdvisor's Disclosure Document, including, and especially, the risk disclosure statements.

WHEREAS, Client wishes to subscribe to Advisor's trading program as described in the Disclosure

Document, under the following terms and conditions.

THEREFORE, Advisor and Client mutually agree as follows:

ESTABLISHMENT OF ACCOUNT; RELATIONSHIP WITH FCM

1. Client will promptly open, or currently has open, a commodity trading account ("Account") with _____________________________________________, a Futures Commission Merchant ("FCM").

2. The relationship between the FCM and Client is not and shall not become Advisorsresponsibility. Client has executed or agrees to execute a limited trading authorization with the FCMauthorizing Advisor to enter orders to trade futures contracts and or options on futures contracts. Advisor

has no responsibility for the execution of orders by the FCM, once such orders are entered by Advisor.Advisor is not involved with or liable for the executions of transactions. The FCM is solely responsiblefor the execution of transactions and the transmission to Client of transaction statements and periodicaccount statements. The FCM (and not Advisor) is also responsible for the custody of Client funds.

3. Client hereby confirms its request of and direction to the FCM that the FCM furnish copies of allconfirmations and periodic Account statements to the Advisor, simultaneously with their transmission tothe Client.

TRADING LEVEL AGREEMENT

4. Advisors clients who choose partially to fund a trading account must specify the nominalaccount size and the amount of notional funds to be used. Advisors Disclosure Document contains adetailed description of notional funding.

Example:

Nominal Account Size = Actual Funds + Notional Funds$200,000 = $100,000 + $100,000


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Nominal Account Size

5. The Nominal Account Size is defined as the agreed level of trading irrespective of actual fundsdeposited in the account to be managed. Nominal Account Size must be specified in increments of

$100,000. The Nominal Account Size established at the inception of Advisors management of theAccount hereunder is referred to as the Opening Nominal Account Size. As trading occurs, Accountgains (profits) or losses may occur. Trading results will be reflected in the FCM-provided Account reportsas of each month-end. If net trading gains (profits) occur as of any month-end, the Nominal Account Sizewill automatically be adjusted to reflect the net trading gains aggregating in the Account as compared tothe immediately preceding month, unless Client withdraws any or all of the accumulated gains. If nettrading losses occur as of any month-end, the Nominal Account Size will automatically be adjusted to adollar amount equal to the greater of the Opening Nominal Account Size or the Nominal Account Size asof the end of the immediately preceding month. Client requests to change the Nominal Account Size must

be submitted in writing to Advisor.

6. Client hereby directs Advisor to manage $_________________ (Nominal Account Size),

commencing on ______________________, 2012. The actual dollar amount funded to the Account by

Client as of ________________, 2012 is $______________ (Actual Funds).

Notional Funds

7. The dollar amount by which the Nominal Account Size exceeds the Actual Funds shall bedeemed Notional Funds. If Notional Funds are zero, the Account contains an amount of Actual Fundsequal to its Nominal Account Size and shall be deemed Fully-Funded.

8. The amount of Notional Funds to be committed by Client is $__________________. The amount

of Notional Funds set forth above shall remain constant (irrespective of any profits or losses) unlessAdvisor is notified otherwise in writing.

FEE STRUCTURE

9. Client will be charged the Management Fee and Incentive Fee as described in the DisclosureDocument and as confirmed below.

Management Fee

10. In consideration for its investment advisory services, Advisor will have earned and beentitled to an annual management fee of two percent (2%) of Clients Account Asset Value

(defined below) from time to time (Management Fee).

(a) The Management Fee will be calculated by Advisor each month and will be payable in monthly installments of one-twelfth (1/12) of the annualized Management Fee ascalculated each month. Advisor will provide Client with an invoice each month setting forth theManagement Fee then due, which invoice will include a statement of the Account Asset Valueon which the Management Fee is based. The monthly Management Fee will be payable eachmonth within ten days after invoicing and may be offset by Advisor (or the FCM on Advisors


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and/or relative to the affixing of signatures, and otherwise in connection with the contracting for the Account; and giving and granting unto Advisor full power and authority to do and performall and every act and thing whatsoever required or as necessary to be done as fully, to all intentsand purposes, as Client might or could do if present for and on behalf of itself and in its ownname, with full power of substitution, and hereby ratifying and confirming all that Advisor shalllawfully do or cause to be done pursuant to this limited power of attorney. This limited power of attorney is coupled with an interest and shall inure to the benefit of Advisor and the FCM andtheir respective owners, managers, employees, advisors, and the successors and assigns of all of them.

(a) Advisor shall have full authority to communicate orders directly tothe FCM and the FCM is hereby authorized to accept and execute all such orders. Client will nottrade the Account and will not authorize any person other than the Advisor to trade the Account.

(b) The limited power of attorney in favor of Advisor shall remain infull effect unless and until the Account is closed, or until revocation is received by Advisor, inwriting, from Client. Such revocation shall not affect any open position, which will be closed

promptly after receipt of the notice. Revocation or termination of this limited power of attorneyshall not abrogate or affect the terms and conditions hereof as relating to actions or transactionsinitiated prior to such revocation or termination.

(c) Client hereby agrees to defend, indemnify and hold harmlessAdvisor and the FCM, and their respective owners, officers, managers and employees, from andwith respect to any claims, losses, costs, damages, debts, and liabilities suffered or incurred as aresult of actions taken by Advisor or the FCM in good faith pursuant to this limited power of attorney, consistent with this Agreement. Neither Advisor nor FCM, nor their respective owners,officers, managers, employees or advisors, shall be liable for any acts or decisions made in goodfaith in furtherance of the purposes of this Agreement.

NON-EXCLUSIVITY; CONFIDENTIALITY

14. Advisors services are not exclusive to Client, and Advisor is and shall be free to have other clients, a

Documents

Updated - PEP Disclosure Document