District Capital Management

SELECT

Program Description: The Advisor applies a disciplined technical strategy to trading commodity interests, including physical commodities, foreign currencies, and financial securities, based on multiple, independent and parallel, trend-following systems blended with a discretionary overlay. Each trading system is designed and validated to extract a different market behavior on different time horizons for a particular market. Not all markets are traded the same. In addition, fundamental and economic analyses of varying degree are utilized depending upon the market. Within the parameters of multiple frequencies, the trading methodology combines systematic, disciplined trading criteria, which are unique to each market, with well-defined risk management procedures to attain Client profitability. Embedded in the trading strategy is the Advisor's conservative philosophy on asset management to minimize risk exposure and preserve capital appreciation. These goals are paramount in priority. The objective of the trading strategy is to identify and capture major price movement in a given market. Mathematical models, charting, and statistical analyses of historical price behavior, among other factors, such as volume indicators, seasonality, and profitability ratios, provide the criteria for the Advisor's trading methodology. Furthermore, the study of the cash markets alongside the futures markets for each commodity or financial asset adds to the foundation of the methodology. This unique dual focus allows the Advisor to identify or to authenticate the development of a trend that may exist because of an economic imbalance of either supply or demand or because of market inefficiencies. For each commodity sector (such as foreign currencies, grains, or interest rates), different trading methodologies are employed which extract and analyze each group's unique components. Similar procedures may be applied to sub-groups of particular markets as well. Within each trading system's framework, multiple time windows and filters are used to address prevailing market characteristics, including price volatility. Therefore, the Advisor approaches almost every futures and/or cash market with unique formulas; typically each market encompasses its own type of commercial traders who utilize the market for hedging their costs of doing business according to their specific time horizons. In addition, each market may differ in seasonality factors, political factors, and supply/demand conditions. Such fundamental input plays a critical role in creating a successful trading system. For both trading programs currently offered, the Advisor endeavors to maximize risk-adjusted rates of return under both favorable and adverse market conditions. Once a trend is determined in a particular market, the trading system attempts to capture a majority of the price movement over a long-term duration while withstanding daily price fluctuations. The system strives to be consistent and identifies different market inefficiencies. Based on the conditions as dictated by each market in conjunction with a pre-determined leverage policy, the system invests heavily or lightly, quickly or slowly, or not at all. Seldom are its entry and exit points at the most favorable price in the particular market trend. In addition, a maximum price movement is not defined; rather, a price movement may exceed the expectation of the marketplace. Positions held are either net long or net short as the Advisor takes positions in rising (Bull) and falling (Bear) markets without bias. The trading system is not designed for outright spread trading or pyramiding. However, the Advisor may add to existing positions or scale down existing positions when the trading model indicates such action. Furthermore, the Advisor will give a position sufficient time to mature and become profitable within prescribed risk parameters. On average, losses are liquidated relatively quickly, while profitable positions are held for extended periods of time. In the past, some positions have been held for more than one year. The Advisor may use its discretion to prevail over the trading system if it deems that the execution of a particular trade would be difficult or would expose the Clients' accounts to an extreme amount of risk. Thus, there may be an infrequent occasion in which the Advisor will override the system to decrease risk exposure. Such modification may affect performance positively or negatively. The Advisor is under no obligation to notify Clients of this type of deviation from its trading system since it is an integral part of the overall trading methodology. Other subjective decisions to be made by the Advisor include the determination of leverage, the commencement of trading for an account, which markets are traded, the contract months traded, the degree of margin utilization, and the most effective trade execution procedure. All trades which the Advisor initiates with a Client's FCM or with an executing floor broker will be done without any prior consultation with the Client; the trades will be in such amounts and at such prices as the Advisor, in its sole discretion, may determine. It is anticipated that the Advisor will commit to margin between 5 to 35 percent of assets managed but may exceed this range. The Advisor must also subjectively determine when to liquidate a position in a contract month that is about to expire and initiate a position in a more distant contract month. Apart from the above subjective decisions, the trading methodology in general is largely systematic and quantitative. It is proprietary in nature and has been primarily developed by Cathryn Namath and/or by her deceased father, Mr. Kenneth Hanger. The Advisor's overall basic trading philosophy is to capture major market trends while keeping the methodology fairly simple and within strict risk parameters in order to enhance the accuracy, consistency, and profitability of trading. The trading systems in general are dynamic and agile in that they can adapt to changing economic environments within each market or across multiple interrelated markets. The implementation of a disciplined technical strategy, which is time-tested and robust over 25 years of real-time trading, combined with responsible, controlled risk management procedures, provides the Advisor with a distinct competitive advantage.