FOREIGN EXCHANGE RISK DISCLOSURE STATEMENT

The risk of loss in trading the foreign exchange markets can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. In considering whether to trade or authorize someone else to trade for you, you should be aware of the following:

If you purchase or sell a foreign exchange option you may sustain a total loss of the initial margin funds and additional funds that you deposit with your broker to establish or maintain your position. If the market moves against your position, you could be called upon by your broker to deposit additional margin funds, on short notice, in order to maintain your position. If you do not provide the additional required funds within the prescribed time, your position may be liquidated at a loss, and you would be liable for any resulting deficit in you account.

Under certain market conditions, you may find it difficult or impossible to liquidate a position. This can occur, for example when a currency is deregulated or fixed trading bands are widened. Potential currencies include, but are not limited to the Thai Baht, South Korean Won, Malaysian Ringitt, Brazilian Real, Hong Kong Dollar.

The placement of contingent orders by you or your trading advisor, such as a "stop-loss" or "stop-limit" orders, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders.

A "spread" position may not be less risky than a simple "long" or "short" position.

The high degree of leverage that is often obtainable in foreign exchange trading can work against you as well as for you. The use of leverage can lead to large losses as well as gains.

In some cases, managed accounts are subject to substantial charges for management and advisory fees. It may be necessary for those accounts that are subject to these charges to make substantial trading profits to avoid depletion or exhaustion of their assets.

Currency trading is speculative and volatile
Currency prices are highly volatile. Price movements for currencies are influenced by, among other things: changing supply-demand relationships; trade, fiscal, monetary, exchange control programs and policies of governments; United States and foreign political and economic events and policies; changes in national and international interest rates and inflation; currency devaluation; and sentiment of the market place. None of these factors can be controlled by any individual advisor and no assurance can be given that an advisor’s advice will result in profitable trades for a participating customer or that a customer will not incur losses from such events.

Currency trading can be highly leveraged
The low margin deposits normally required in currency trading (typically between 3%-20% of the value of the contract purchased or sold) permit an extremely high degree leverage. Accordingly, a relatively small price movement in a contract may result in immediate and substantial losses to the investor. Like other leveraged investments, in certain markets, any trade may result in losses in excess of the amount invested.

Currency trading presents unique risks
The interbank market consists of a direct dealing market, in which a participant trades directly with a participating bank or dealer, and a brokers’ market. The brokers’ market differs from the direct dealing market in that the banks or financial institutions serve as intermediaries rather than principals to the transaction. In the brokers’ market, brokers may add a commission to the prices they communicate to their customers, or they may incorporate a fee into the quotation of price.

Trading in the interbank markets differs from trading in futures or futures options in a number of ways that may create additional risks. For example, there are no limitations on daily price moves in most currency markets. In addition, the principals who deal in interbank markets are not required to continue to make markets. There have been periods during which certain participants in interbank markets have refused to quote prices for interbank trades or have quoted prices with unusually wide spreads between the price at which transactions occur.

Failure of a client’s dealing center
Under regulation, dealing centers are required to maintain a clients assets in a segregated account. If a client’s dealing center fails to do so, the client may be subject to a risk of loss of his funds on deposit with the dealing center in the event of its bankruptcy. In addition, under certain circumstances, such as the inability of another client of the dealing center or the dealing center itself to satisfy substantial deficiencies in such other client’s account, a client may be subject to a risk of loss of his funds on deposit with his dealing center, even if such funds are properly segregated.

When acting as an introducing foreign exchange broker for its customers, The Introducing Foreign Exchange Broker could receive a portion of the commission charged by the dealing center for the execution of client trades. The receipt of a portion of such commissions could create a potential conflict of interest for it by creating an incentive to execute trades in such client accounts on a more frequent basis than would be appropriate.

Independent introducing foreign exchange brokers and dealing centers who are unaffiliated with but introduce clients to be advised by may receive compensation, either directly from the client or through the advisor in the form of a shared portion of the advisory incentive fee charged. Such introducing foreign exchange brokers also may share a portion of the dealing spread charged by the client’s dealing center. Such brokers may charge their own management, administrative or other fees in connection with introducing the client. These forms of compensation to the broker create a potential conflict of interest for the broker by creating a financial incentive potentially for them to recommend an advisor.

This brief statement cannot disclose all the risks and other significant aspects of the foreign exchange markets. You should therefore carefully study all documents and foreign exchange trading before you trade, including the description of the principle risk factors of the investment.