Beacon Management Corp.

Meka

Meka is an aggressive, highly leveraged investment program based on technical analysis. Technical trading systems determine whether to be long or short each market. The trading systems are predominately trend-following in nature. Exposures to markets (position sizes) are based upon the relationship among the different markets and among the different trading systems. The exposure to most markets can be long or short, depending upon market conditions. The trading systems vary from short-term methods that trade almost every day to long-term methods that sometimes hold positions for over a year. These include systems based on moving averages, break outs, option replication and volatility. Under Meka, the amount of funds normally committed as margin for commodity futures contracts averages approximately 40% to 50%. However, under certain conditions the amount committed as margin may be substantially higher. The largest peak-to-valley drawdown in the Meka trading program occurred from May 1999 to October 1999 and was 46.5%. Largest peak-to-valley drawdown is the largest percentage trading loss that occurred, as measured from any month-end net asset value, without such month-end net asset value being equaled or exceeded as of any subsequent month-end by the trading program on a composite basis, expressed as a percentage of total equity. Beacon has not made changes to Meka, which, by themselves, would significantly increase or decrease the volatility of trading under the program. No assurance can be given, however, that Meka's trading results will not be more or less volatile than in the past.