Dynamic Allocation

A Better Way to do Commodity Index Exposure? A Commodity Index Fund is designed to track the performance of a group of commodities, representing an unleveraged, long-only investment in commodity futures that is broadly diversified across the spectrum of commodities. The best index fund managers are focused on only two things for their funds — tracking the index as closely as possible and keeping expenses as low as possible. Lake II is introducing two actively managed, Dynamically Allocated Programs which use an investment approach that builds upon the basic principles of exiting losing positions and adding to winning positions, enabling opportunity for better performance. Lake II managers use computer-aided, time-based analysis of present tense valuation, to select a broadly diversified group of commodities that one side, buyers or sellers, have a dominant control of and allow the Dynamic Allocation Process to provide a higher total return than that of the benchmark index. The portfolio managers use a proprietary program to construct optimal portfolio holdings utilizing these analyses. The portfolio managers will generally attempt to overweight commodities with positive characteristics identified in the evaluation process and exit commodities with negative characteristics. What you are left with is a fund that seeks to provide a higher total return than that of the benchmark index while managing benchmark relative risks. In general, the systematic trading program employed by Lake II Trading relies on technical market generated analysis and is not based on anticipated supply and demand, economic forecasting, the study of political policy or any predictive models.

The Commodity Programs

The Lake II Dynamic strategy offers a Long Commodity Program and a Long/Short Commodity Program. The Programs seeks profit opportunity in a diversified portfolio of twenty commodity futures contracts. The Programs trade in a variety of different futures markets including, grains, metals, softs, energies, and meats. The Long Commodity Program seeks to capture opportunity with a long-only bias. The Long/Short Program, however, is more active as it seeks profit opportunity in both directions. The Advisor may add markets without prior notice to clients.

The Following Markets Are Currently Traded:

Crude Oil RBOB Unleaded Gas Heating Oil Natural Gas Soybeans Soy Meal Soy Oil Wheat Corn Gold

Silver Copper Platinum Live Cattle Lean Hogs Pork Bellies Coffee Sugar Cocoa Lumber