Investment Futures Growth Fund - SP Trader Fund

The Investment Manager employs advanced risk management systems that are analogous to the VaR method, to ensure that the risk of all client portfolios remains within pre-determined risk bounds. It monitors positions and volatility in every market to enable the portfolio to be risk balanced at the market level.

The investment management team monitors the Investment Manager's approach to ensure it is performing in line with the results of the original research. It is responsible for the management of the feedback mechanisms with respect to monitoring volatilities, correlations, shifts in market liquidity and access costs. On a quarterly basis, changes in market slippage and portfolio matrix correlations are reviewed.

The Company's overall risk management principal is to limit the exposure to any one trade, or market sector to acceptable limits. Position size for any given trade is computed to limit the nominal risk for the trade to a specified percentage of equity. The risk percentage varies for different trading strategies, but is less than 3% in all cases. Additional risk associated with multiple positions in correlated markets is controlled by limits on the maximum number of positions within defined market groups. At the trade level risk is calculated as a percentage of assets based generally on the stop loss level. At the individual trading system level, risk is calculated as the maximum drawdown expected to occur with a 1 in 100 year frequency.

The Investment Manager's trading systems are fully systematic and although override of the systems is possible it is extremely rare. The occasions on which override have been used are well documented and disclosed, an example of which would be the running of the trading systems prior to their normal regime due to some disaster such as an earthquake.

Recent independent investment portfolio analysis has confirmed that alternative investment programs such as the SP Trader Strategic Diversified Program should form an essential part of any well-diversified portfolio. Their potential for medium-term strong capital growth, coupled with the fact that they do not behave in the same way as traditional investments, means that their inclusion in a portfolio can lead both to enhanced returns and reduced risk.

Certain common terms used can be described using the following basic definition:

Future: a contract for delivery of a standard package of a standard commodity or financial instrument at a specific date and place in the future but at a price which is agreed when the contract is taken out.

SUMMARY DESCRIPTION