MI is an active trader. Consequently, the trading activities of participating customers' accounts may be quite active and the turnover rate of participating customers' portfolios can be rather substantial, involving correspondingly high transaction costs. It is anticipated that participating customers may generate a commission-to-equity ratio of up to 4% at an anticipated round-turn rate of approximately $20 including exchange fees.

DESCRIPTION OF ORDERS AND ORDER PLACEMENT

MI determines the timing and method by which orders are placed and places all United States exchange orders either through an experienced trading desk at the FCM or directly with the trading floor. MI also selects the types of orders placed. Order placement varies in accordance with the type of market encountered and the type of order that can be used on the exchange on which a particular commodity interest is traded.

To assure that orders are filled at prices which do not favor any account over any other, MI uses a nondiscriminatory allocation system wherein the lowest fill is always allocated to the lowest account number, and the remaining fills are ordered numerically among the accounts. MI's system assigns the account numbers and each new account is assigned the next available number. This allocation system applies to both buy and sell orders. With respect to orders that are only partially filled, MI allocates on a percentage basis among all of the accounts. If unusual market conditions occur, however, MI may determine not to use the allocation system.

FORM OF MARGINS DEPOSITS

A customer participating in the Managed Account Program must deposit trading funds directly in a commodity trading account with its FCM. MI will use its best efforts to direct the investment of a portion of the customer's funds in United States Treasury bills or to assist the customer in making arrangements so that the FCM pays interest on all or a portion of the customer's funds at a rate which is at or near the prevailing Treasury bill rate. No assurance is given, however, that the FCM will pay interest on customer accounts.

If Treasury bills are purchased for a participating customer's account, such Treasury bills are utilized as initial margin for commodity interest transactions, although FCMs generally credit a customer's margin obligation with only 90% of the face value thereof. All interest income earned on such Treasury bills is credited to the participating customer's account and MI will receive an incentive fee on such interest income. Because Treasury bills may not be used as maintenance margin for commodity interest transactions, a small portion of a participating customer's funds on deposit with the FCM normally is maintained in the form of cash.