Mullaney Investment Management, LLC was formed as a limited liability company in the State of Florida in April 2005.  The Advisor is registered with the Commodity Futures Trading Commission (the “CFTC”) as a commodity trading advisor (a “CTA”) (effective April 26, 2005) and as a commodity pool operator (a “CPO”) (effective October 31, 2005), and is a member of the National Futures Association (the “NFA”) (effective June 1, 2005) in such capacities.

The Advisor’s primary business is to provide commodity trading advice to client accounts using the Advisor’s proprietary futures and options trading programs (“Trading Programs”) with an investment objective of capital appreciation.  The Advisor studies financial markets with the goal of developing strategic investment approaches to add better than average growth to investment portfolios.  The Advisor primarily engages in selling options on the S&P 500* Index futures contract and trading the S&P 500 Index futures contract.  The Advisor may buy, sell or otherwise trade in futures contracts, options on futures contracts, and related instruments (collectively, “futures contracts”).

Trading Program Description
The Advisor trades primarily options on the S&P 500 Index futures contract, and the S&P 500 Index futures contract.

Premium Program.  The Advisor uses an approach intended to profit in rising, declining and sideways markets by utilizing delta neutral and directional strategies by selling far out-of-the-money puts and calls while taking advantage of time decay.  The range of the S&P 500 Index futures contract is forecast and options on the futures contract are sold outside of this range, typically outside support and/or resistance levels.  More than two dozen risk control strategies are used, including analysis of margin, delta, rolling options, and hedging with the underlying S&P 500 Index futures contract.  Positions are monitored and adjusted depending on market conditions.  The Trading Programs are designed for a long term investment horizon and are not appropriate for an investor who will withdraw funds within three years.

The Advisor primarily sells (“writes”) out-of-the-money options (puts and calls) on S&P 500 Index futures contracts (put options with strike prices below the price of the S&P 500 Index futures contract and calls with strike prices above the S&P 500 Index futures contract).  The Advisor may sell a different number of puts versus calls and at different prices, depending on market conditions and the pricing of the options.  The Advisor may buy or sell the S&P 500 Index futures contract to profit in rising and declining markets or to balance out option positions.  The Advisor may also purchase options. The Advisor may trade options on the E-mini S&P 500 Index futures contract, including buying and selling the underlying E-mini S&P 500 Index futures contract,

The Advisor determines the likely market trading range in the short and long-term, and call and put options are sold at strike prices above and below the anticipated market trading range within those time frames.  Depending upon the situation, the Advisor may use any of a number of trading tactics, such as taking long or short positions in the S&P 500 Index futures contract, or using a variety of spreading techniques.  Positions are generally held until they expire, have yielded a reasonable profit, or it is determined that it is best to offset (buy back) the options.  The cycle is repeated continuously, market conditions permitting.  The goal is to achieve a profitable outcome regardless of the direction and price movement of the underlying S&P 500 Index futures contract so that profitable situations can be realized in bear markets, bull markets or when markets are moving within a range.  The option strike prices can be adjusted as options expire or are closed out, providing the opportunity to adjust the range.

 Moderate Program.  The Moderate Program is similar to the Premium Program except it is designed to have less volatility and risk than the Premium Program.

S&P 500 Credit Spread Program. The S&P 500 Credit Spread Program differs from the Premium and Moderate Programs in that the Advisor will also purchase options creating hedged, credit spread positions. For example, a put is sold at one strike price and another put is purchased at a lower strike price as a hedge creating a credit spread. Likewise, a call is sold at one strike price and another call is purchased at a higher strike price as a hedge also creating a credit spread. Advisor may enter into various types of spreads including, for example, calendar spreads and ratio spreads. This program is intended to have less volatility and risk than the other two programs.

The minimum investment for all three Programs is $50,000. Advisor reserves the right to raise or lower the minimum investment at any time. The Advisor does not accept notional funds, so that all funds allocated to the Advisor’s management, regardless of which Trading Program is selected, must be deposited with the client’s FCM in full and in cash.

If the Chicago Mercantile Exchange or the client’s FCM increases margin requirements (because of market volatility or otherwise), the percentage as assets committed to margin and option premiums may increase to levels beyond the stated averages.  Client funds not used for trading may be invested in Treasury bills or notes, money market instruments or other cash equivalents, or held as cash.

The Advisor may add markets or instruments to its Trading Programs.  For instance, the Advisor may buy and sell the CBOE Volatility Index® futures contract (the “VIX”) and options on the VIX.  The VIX is an implied volatility index that is designed to measure the volatility in the S&P 500 Index.  At a client’s request, the Advisor may tailor a Trading Program with the goal of meeting the specific return objectives and risk profiles of a particular client.

As the Trading Programs of the Advisor are proprietary and confidential, the description above of the Advisor’s Trading Programs is necessarily of a general nature and is not intended to be exhaustive.  The Advisor reserves the right to alter its Trading Programs without prior approval by, or notice to, clients.