Harbor Financial, LLC

(Voltage Balanced)

Fund Investment Objectives

Harbor Financial seeks to achieve capital appreciation by trading options and option spreads on stock index futures traded on the Chicago Mercantile Exchange. An options spread consists of the simultaneous sale and purchase of options of different exercise prices and/or expiration months. By trading options and options spreads, the Advisor seeks to profit in three ways: (1) Premium collection - this technique yields profits as sold options' value declines over time. Profit is captured when sold options are repurchased at a reduced value, or when they expire worthless, allowing retention of the original sales proceeds; (2) Volatility Trading - market prices of options are dependent on observed and anticipated volatility of the underlying stock indexes. According to his trading system the advisor may enter options positions designed to profit from either an increase or a decrease in stock index volatility; and (3) Trend following - under certain conditions, the Advisor may enter options spreads which will profit from an established price trend. Central to the success of this strategy is the Advisor's ability to predict the range of market movement over time frames ranging from thirty (30) to ninety (90) days. However, in general, the strategy does not depend on a prediction of equity market direction, and is designed to produce returns which are not correlated with equity market returns. The Advisor uses an extensive historical database of stock index price movement to assist him in determining high probability exercise prices at which to sell option spreads. In addition, seasonal and technical analyses are employed to further optimize trade entries. Technical analysis includes the study of price, volume, momentum and other measures, as well as recurring price patterns and measures of investor sentiment. The Advisor regularly evaluates market volatility and other technical behavior and adapts the strategy's entry, adjustment, and position sizing criteria to current market conditions. The Advisor places a strong focus on risk management intended to provide consistency of returns and to mitigate the extent of the losses that may occur. Although the Advisor's strategy is narrowly focused, trades are entered into on a continuous basis across different exercise prices and expiration months for diversification purposes. Once trades are entered, the Advisor employs strict risk management procedures that are triggered by total portfolio exposure rather than individual position value. Supported by sophisticated options analysis software and many years of options trading experience, the Advisor determines the correct portfolio adjustment, when necessary.