Trendwatch Asset Management

Suite 2/1-2, 3 Minster Court, London, EC3R 7DD, United Kingdom

T: + 44 (0)20 7398 5269 F: +44 (0) 207 398 5101

An investor in TrendWatch Asset Management (TAM) could be materially and adversely affected by any of the risks described below. In such cases, investors may lose part or all of their investment. Additional risks and uncertainties not presently known to the directors, or that the directors currently deem immaterial, may also have an adverse effect on TAM.

The directors consider the following risks to be the most material for potential investors in TAM, but the risks listed do not necessarily comprise all those associated with an investment in TAM and are not set out in any particular order of priority:

For individuals based in the UK, gains from spread betting are currently free from UK capital gains tax and income tax. Although the directors are not aware of any government moves to modify this, taxation laws are subject to change and UK tax exemption might be withdrawn in the future.

The advice we have received is that TAM will not be viewed by HM Customs & Revenue as constituting ‘the carrying on of trade’, and therefore gains should not become subject to tax for that reason. However, taxation laws and / or HM Customs and Revenue’s view on this may alter over time.

TAM is a geared investment, which means that we are effectively able to invest a larger amount on your behalf than your initial investment with us. This implies that losses (as well as gains) can be substantially greater than with a conventional ungeared investment of the same size.

The performance of investments recommended by TrendWatch in the past should not be regarded as an indication of the performance of investments to be made by TAM. NO PROJECTION IS IMPLIED OR SHOULD BE INFERRED from any figures quoted in TAM’s brochure or similar material, since market conditions in the future will bear no relationship to the past, and the investments made by the investment managers in the future will be unrelated to those recommended in the past.

The TAM investment concept depends upon its relationship with its chosen spread betting broker, WorldSpreads Ltd. In the event of the insolvency of WorldSpreads or a breakdown of the relationship, there is no guarantee that TAM will be able to forge a similar relationship with another spread betting broker.

TAM’s existence depends upon the continuing authorisation by the Financial Services Authority (FSA). This in turn depends upon TAM continuing to satisfy the rules and requirements set out in the FSA Handbook (e.g. the capital adequacy requirement) as well as other legislation and EU Directives. There can be no guarantee that FSA authorisation will not be withdrawn in the future, either as a result of TAM’s inability to satisfy the FSA’s requirements or as a result of changed legislation or EU directives.

Many of the spread bets placed by TAM will be on small to medium-sized companies. These generally carry a higher risk profile than larger companies as their securities may be less freely marketable and may, therefore, be difficult to realise.

Trades placed by TAM are likely to be large because the bets on each individual TAM investors’ account will be aggregated. Consequently, there is no guarantee that sufficient investment opportunities will be identified or that TAM’s investment objective will be met.

Any loss realised on a TAM investment will not be an allowable loss for UK capital gains tax purposes.

The valuation of a TAM investors’ account depends on stock market conditions. Consequently, the value of that account will go down as well as up and investors may not receive back the full amount that they invested.

The performance of TAM is dependent upon the skill and experience of the investment managers, and their continued capacity to carry out their analysis.

The investment funds deposited by a TAM investor will be invested in the market over time. It will be some time before funds are fully invested. Only then are TAM investors likely to experience maximum returns (though they will then also be at maximum risk). For this reason, and the fact that investments can fall in value as well as rise, an investment in TAM should be regarded as a medium to long-term rather than a short-term investment.

In many respects, TAM is a new and innovative investment concept. Because of this, despite the Directors having made every effort to anticipate and plan for all likely eventualities, it is possible that there may be unforeseen technical or other factors that may result in the scheme being less successful than the Directors anticipated.

Risk Warning : TAM managed accounts invest predominantly in spread bets. Spread betting involves a level of risk to your capital and you may get back less than you have invested. Spread bets are leveraged products; this allows larger positions than would otherwise be possible with the same amount of capital. As a result of leverage, it is not uncommon for the profits or losses on a spread bet to exceed the initial capital deposited. TAM will, however, be placing ‘guaranteed stop loss’ orders against all open trades, to prevent losses in excess of your investment on your TAM managed account.