adkins diversified capital, llc ddoc v 46

DISCLOSURE DOCUMENT OF

ADKINS DIVERSIFIED CAPITAL, LLC A COMMODITY TRADING ADVISOR

__________________________________________________________________

Adkins Diversified Capital, LLC

4129 Spruce Hills Drive Cedar Falls, IA 50613

319-553-2183 _________________________________________________________________

ADC DIVERSIFIED OPTIONS PROGRAM

$30,000 MINIMUM INVESTMENT

THE DATE OF THIS DISCLOSURE DOCUMENT IS APRIL 3, 2012 THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF PARTICIPATING IN THIS TRADING PROGRAM NOR HAS THE COMMISSION PASSED ON THE ADEQUACY OR ACCURACY OF THIS DISCLOSURE DOCUMENT

The delivery of this Disclosure Document at any time does not imply that the information contained herein is correct as of any time subsequent to the date of this Disclosure Document. No person is authorized by Adkins Diversified Capital, LLC. to give any information or to make representations not contained herein.

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RISK DISCLOSURE STATEMENT THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. IN CONSIDERING WHETHER TO TRADE OR TO AUTHORIZE SOMEONE ELSE TO TRADE FOR YOU, YOU SHOULD BE AWARE OF THE FOLLOWING: IF YOU PURCHASE A COMMODITY OPTION YOU MAY SUSTAIN A TOTAL LOSS OF THE PREMIUM AND OF ALL TRANSACTION COSTS. IF YOU PURCHASE OR SELL A COMMODITY FUTURES CONTRACT OR SELL A COMMODITY OPTION OR ENGAGE IN OFF-EXCHANGE FOREIGN CURRENCY TRADING YOU MAY SUSTAIN A TOTAL LOSS OF THE INITIAL MARGIN FUNDS OR SECURITY DEPOSIT AND ANY ADDITIONAL FUNDS THAT YOU DEPOSIT WITH YOUR BROKER TO ESTABLISH OR MAINTAIN YOUR POSITION. IF THE MARKET MOVES AGAINST YOUR POSITION, YOU MAY BE CALLED UPON BY YOUR BROKER TO DEPOSIT A SUBSTANTIAL AMOUNT OF ADDITIONAL MARGIN FUNDS, ON SHORT NOTICE, IN ORDER TO MAINTAIN YOUR POSITION. IF YOU DO NOT PROVIDE THE REQUESTED FUNDS WITHIN THE PRESCRIBED TIME, YOUR POSITION MAY BE LIQUIDATED AT A LOSS, AND YOU WILL BE LIABLE FOR ANY RESULTING DEFICIT IN YOUR ACCOUNT. UNDER CERTAIN MARKET CONDITIONS, YOU MAY FIND IT DIFFICULT OR IMPOSSIBLE TO LIQUIDATE A POSITION. THIS CAN OCCUR, FOR EXAMPLE, WHEN THE MARKET MAKES A “LIMIT MOVE.” THE PLACEMENT OF CONTINGENT ORDERS BY YOU OR YOUR TRADING ADVISOR, SUCH AS A “STOP-LOSS” OR “STOP-LIMIT” ORDER, WILL NOT NECESSARILY LIMIT YOUR LOSSES TO THE INTENDED AMOUNTS, SINCE MARKET CONDITIONS MAY MAKE IT IMPOSSIBLE TO EXECUTE SUCH ORDERS. A “SPREAD” POSITION MAY NOT BE LESS RISKY THAN A SIMPLE “LONG” OR “SHORT” POSITION. THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN COMMODITY INTEREST TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS GAINS. IN SOME CASES, MANAGED COMMODITY ACCOUNTS ARE SUBJECT TO SUBSTANTIAL CHARGES FOR MANAGEMENT AND ADVISORY FEES. IT MAY BE NECESSARY FOR THOSE ACCOUNTS THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE DOCUMENT CONTAINS, AT PAGE 10, A COMPLETE DESCRIPTION OF EACH FEE TO BE CHARGED TO YOUR ACCOUNT BY THE COMMODITY TRADING ADVISOR. THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER SIGNIFICANT ASPECTS OF THE COMMODITY INTEREST MARKETS. YOU SHOULD THEREFORE CAREFULLY STUDY THIS DISCLOSURE DOCUMENT AND COMMODITY INTEREST TRADING BEFORE YOU TRADE, INCLUDING THE DESCRIPTION OF THE PRINCIPAL RISK FACTORS OF THIS INVESTMENT AT PAGE 7. YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY TRADING ADVISOR MAY ENGAGE IN TRADING FOREIGN FUTURES OR OPTIONS CONTRACTS. TRANSACTIONS ON MARKETS LOCATED OUTSIDE THE UNITED STATES, INCLUDING MARKETS FORMALLY LINKED TO A UNITED STATES MARKET MAY BE SUBJECT TO REGULATIONS WHICH OFFER DIFFERENT OR DIMINISHED PROTECTION. FURTHER, UNITED STATES REGULATORY AUTHORITIES MAY BE UNABLE TO COMPEL THE ENFORCEMENT OF THE RULES OF REGULATORY AUTHORITIES OR MARKETS IN NON-UNITED STATES JURISDICTIONS WHERE YOUR TRANSACTIONS MAY BE EFFECTED. BEFORE YOU TRADE YOU SHOULD INQUIRE ABOUT ANY RULES RELEVANT TO

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YOUR PARTICULAR CONTEMPLATED TRANSACTIONS AND ASK THE FIRM WITH WHICH YOU INTEND TO TRADE FOR DETAILS ABOUT THE TYPES OF REDRESS AVAILABLE IN BOTH YOUR LOCAL AND OTHER RELEVANT JURISDICTIONS. THIS COMMODITY TRADING ADVISOR IS PROHIBITED BY LAW FROM ACCEPTING FUNDS IN THE TRADING ADVISOR’S NAME FROM A CLIENT FOR TRADING COMMODITY INTERESTS. YOU MUST PLACE ALL FUNDS FOR TRADING IN THIS TRADING PROGRAM DIRECTLY WITH A FUTURES COMMISSION MERCHANT OR RETAIL FOREIGN EXCHANGE DEALER, AS APPLICABLE.

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TABLE OF CONTENTS

INTRODUCTION ............................................................................................................................... 1 PRINCIPAL OF THE ADVISOR ....................................................................................................... 1 PRIOR PERFORMANCE ................................................................................................................... 2 ABOUT THE TRADING METHODOLOGY .................................................................................... 6 NOTIONAL FUNDS ........................................................................................................................... 6 PRINCIPAL RISK FACTORS ............................................................................................................ 7 FEES .................................................................................................................................................. 10 CLEARING BROKER, ACCOUNT STATEMENTS AND COMMISSIONS ............................... 11 ACTUAL AND POTENTIAL CONFLICTS OF INTEREST .......................................................... 12 PRIVACY POLICY........................................................................................................................... 13 GENERAL INFORMATION ............................................................................................................ 13 INSTRUCTIONS FOR OPENING AN ACCOUNT ........................................................................ 14

EXHIBITS:

Client Acknowledgement and Client Information Questionnaire ........................................... Ex. A Managed Account Agreement................................................................................................. Ex. B

Addendum to Managed Account Agreement - Special Disclosure for Notionally Funded Accounts .................................................................................. Ex. C Arbitration Agreement ............................................................................................................ Ex. D Authorization to Pay Fees ...................................................................................................... Ex. E Proprietary Performance Record ............................................................................................ Ex. F

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INTRODUCTION Adkins Diversified Capital, LLC (the “Advisor”), is a limited liability corporation organized under the laws of Iowa in March of 2011. The Advisor was not engaged in business from March 2011 until its registration as a commodity trading advisor on August 2, 2011. The Advisor has been registered as a commodity trading advisor with the Commodity Futures Trading Commission (“CFTC”) and a member of the National Futures Association (“NFA”) since August 2, 2011. The business office of the Advisor is 4129 Spruce Hills Drive, Cedar Falls, Iowa, 50613, and its telephone number is 319-553-2183. The Advisor intends to use this Disclosure Document commencing April 3, 2012. The Advisor’s past performance is shown at page 2. There have never been any material administrative, civil or criminal actions (whether pending, on appeal, or concluded) against the Advisor or its principal.

PRINCIPAL OF THE ADVISOR Scott J. Adkins is the sole principal and manager of Adkins Diversified Capital, LLC and an associated person (“AP”) of the Advisor. Scott is also a Senior Wealth Manager and Branch Office Manager with the Wealth Management Division of Peregrine Financial Group, Inc. (“PFG” or “PFGBEST”), a Registered Futures Commission Merchant and member of the NFA, whose main office location is located in Chicago, IL. He became approved as a Principal of the Advisor on June 2, 2011 and as an Associated Person of the Advisor on August 2, 2011. Scott joined the PFG team in May 2001 as a Customer Relations Manager (“CRM”). This position gave Scott the knowledge of PFGBEST products as well as the tools needed to advance in the futures industry. In 2002 and 2003 he transitioned from CRM to a full service broker, becoming an associated person in August 2002 and a branch office manager in July 2003 of Wasendorf & Son Company (“Wasendorf”), which was a Guaranteed Introducing Broker for PFG. In January 2003 he was registered as an AP of PFG and a branch office manager in July 2003. Scott ceased being an AP and branch manager for Wasendorf in October 2007 when Wasendorf ceased operating as an introducing broker for PFG. During his tenure as a broker Scott built a book of business, working with retail clients from around the world and advising them on the day-to-day activities of the markets. Joining the Wealth Management Team as a Senior Wealth Manager, Scott has brought his knowledge of the markets and risk management skills to bear, working with clients on asset allocation and over-all market strategies as well as advising clients on Broker Assisted Strategies. Scott was instrumental in developing the broker-assisted option selling strategy DIEM (Diversified Investments in Efficient Markets). He is one of the two primary traders for the DIEM strategy. DIEM is designed to help the investor diversify a small portion of their risk capital into more than the traditional assets. DIEM holds and adjusts diversified positions of short options allowing time decay and implied volatility to potentially work in the client’s favor. DIEM investors are in the business of selling option premium to speculators looking to pick the next directional move.

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PRIOR PERFORMANCE

Below are capsule performance summaries for accounts traded by Scott J. Adkins, as an Associated Person of PFG, and the Advisor.

THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.

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SCOTT J. ADKINS CUSTOMER CAPSULE PERFORMANCE SUMMARY No. 1

ADC DIVERSIFIED OPTIONS PROGRAM Period 3/1/2009 to 03/31/2012

PRO-FORMA UNTIL ADVISOR COMMENCED OPERATION

Inception of trading by Scott J. Adkins (March 2009) and CTA (January 2012) Mar ’09; Jan ‘12

Inception of trading pursuant to the program

Mar ‘09

# of accounts traded pursuant to the program

14

Total actual assets under management by Scott Adkins and CTA $532,530

Total actual assets under this program

$525,528

Total nominal assets under this program $565,528

Total nominal assets under management by Scott Adkins and CTA

$572,530

Largest Monthly draw-down -7.30%: May ‘11

Worst Peak to valley draw-down -7.30%: Apr ‘11-May ’11

#of profitable accounts that have opened & closed since Mar 09 and their ranges N/A

#of losing accounts that have opened & closed since Mar 09 and their ranges 1 (-4.81%)

Monthly Rates of Return

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Y-T-D

% % % % % % % % % % % % %

2012 0.45% 0.80% 1.13% 2.39%

2011 2.34% -1.61% 2.78% 3.23% -7.30% 1.57% 1.32% -0.82% 3.97% 1.34% 2.92% 0.33% 9.97%

2010 2.84% 4.72% 2.22% 4.58% -4.80% 3.73% 2.78% 0.92% 7.22% 2.22% 5.00% 4.22% 41.43%

2009 NT NT 0.20% 1.54% -2.84% 14.31% 4.85% 4.13% 0.14% 6.23% 5.71% 4.51% 44.97%

Notes: 1 “Drawdown” means losses experienced by the composite over a specific period. 2 Rate of Return is calculated by dividing the Net Performance by the Adjusted Beginning Net Asset Value

(Beginning Net Asset Value plus time weighted additions and withdrawals) multiplied by 100. 3 Worst Peak to Valley drawdown is the greatest cumulative percentage decline in month-end net asset

value of the composite due to losses during a period in which the initial month-end net asset value is not equaled or exceeded by a subsequent month-end net asset value.

4 The performance summary was adjusted to reflect a 30% monthly incentive fee until the Advisor commenced operation. All accounts in the performance summary were charged in excess of $15.00 per round turn transaction plus applicable NFA and exchange fees plus floor brokerage, if applicable.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS

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SCOTT J. ADKINS CUSTOMER CAPSULE PERFORMANCE SUMMARY

ADC DIVERSIFIED OPTIONS PROGRAM Period 6/11/2011 to 03/31/2012

Small Account Program Pro-Forma

Inception of trading by Scott J. Adkins (Mar ’09) and CTA (Jan. ’12) Mar 09; Jan 12

Inception of trading of Client funds pursuant to the program

June 11

# of accounts traded pursuant to the program

1

Total actual assets under management by Scott Adkins and CTA $532,530


$7,002

Total nominal assets under this program $7,002

Total nominal assets under management by Scott Adkins and CTA $572,530

Largest Monthly draw-down -17.14%: Jan. ‘12

Worst Peak to valley draw-down -20.07%: Nov ‘11-Feb ’12

#of profitable accounts that have opened & closed since June ‘11 and their ranges N/A

#of losing accounts that have opened & closed since June ‘11 and their ranges N/A



% % % % % % % % % % % % %

2012 -17.14 -1.65 2.21% -16.71

2011 0.13 4.14 1.53 2.84 0.50 0.49 -1.92 7.85

Notes: 1 Drawdown means losses experienced by the composite over a specified period. 2 Rate of Return is calculated by dividing the Net Performance by the Adjusted Beginning Net Asset Value

(Beginning Net Asset Value plus time weighted additions and withdrawals) multiplied by 100. 3 Worst Peak-to-Valley draw-down is the greatest cumulative percentage decline in month-end net asset


4 The performance summary was adjusted to reflect a 30% monthly incentive fee. The account in the performance summary was charged in excess of $15.00 per round turn transaction plus applicable NFA and exchange fees plus floor brokerage, if applicable.

5 Because of the size of this account, all trades indicated by the program could not be made.


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SCOTT J. ADKINS CUSTOMER CAPSULE PERFORMANCE SUMMARY No. 2

Period 8/1/2009 to 12/31/2011 Accounts #20707 and #75615

Program Closed

Inception of trading by Scott J. Adkins Mar ‘09

Inception of trading pursuant to clients’ powers of attorney

Aug ‘09

Number of accounts traded pursuant to the program(4)

0

Total actual assets under management by Scott Adkins

$532,530


0

Total nominal assets under this program

0

Total nominal assets under management by Scott Adkins $572,530 Largest monthly draw-down -101.45%: Sept 2011 Worst Peak to valley draw-down -169%: Aug ‘09 – Oct ‘11 # of profitable accounts that have opened & closed since Aug 09 and their ranges Not applicable # of losing accounts that have opened & closed since Aug 09 and their ranges 2 (-51.72% to -101.36%)



% % % % % % % % % % % % %

2009 -3.43 -25.03 2.76 1.05 8.57 -18.38

2010 3.84 3.77 -33.73 -17.17 NT NT NT NT NT NT NT NT -40.84

2011 NT NT -13.94 4.31 3.36 -0.45 3.58 -2.95 -101.45 -2.09 0.10 3.47 -101.36

2012 NT NT 0.00

Notes: 1 “Drawdown” means losses experienced by the composite over a specified period. 2 Rate of Return is calculated by dividing the Net Performance by the Adjusted Beginning Net Asset Value

(Beginning Net Asset Value plus time weighted additions and withdrawals) multiplied by 100. 3 Worst Peak to Valley drawdown is the greatest cumulative percentage decline in month-end net asset

value of the composite due to losses during a period in which the initial month-end net asset value is not equaled or exceeded by a subsequent month-end net asset value. It is calculated above by adding the monthly rates of return from August 2009 through October 2011.

4 Mr. Adkins traded these accounts pursuant to powers of attorney but the trading strategies were supplied by the clients. In September 2011, the account lost $292,015, resulting in a debit balance at 10-31-2011 of $3,169.24. The account was short options in October, November, and December 2011. Although no further trades were made in the account, the loss increased in October 2011 and decreased in November and December 2011, when the options expired worthless.


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THE TRADING ADVISOR HAS ALSO DIRECTED ONE PROPRIETARY ACCOUNT.

SEE EXHIBIT F.

ABOUT THE TRADING METHODOLOGY

Trading Program The ADC Diversified Options Program is a premium collecting options selling program. It seeks profits primarily from the passage of time by selling both calls and puts, options on futures contracts including but not limited to financial index futures, interest rate futures, agricultural futures, metals futures, energy futures and soft futures (coffee, sugar and cocoa). The program sells strangle spreads in an attempt to collect premium for clients in the anticipation that options will expire worthless. A strangle is generally defined as the purchase or sale of a call option and put option at different strike prices. The ADC Option Program will usually simultaneously sell an out of the money put option and sell an out of the money call option in the same commodity future and same month. The program also attempts to be relatively delta neutral in its positions. Delta is the proportion of change in the option premium relative to the price movement in the underlying futures price. By delta neutral the Advisor means the delta of the call option and the delta of the put option are within 5% one direction or the other direction. The program tries to maintain a non directional bias. Positions are attempted to be kept small relative to the account size (what the Advisor terms “de-leveraged”), and relatively diversified across market sectors. The ADC Diversified Options Program also attempts to take into consideration correlations between markets in an attempt to avoid long term proven correlations. The attempted result should be a relative diversification of trades. New trade selection and risk-management follow-up are dictated by using filters and guidelines that have been developed to attempt to enhance money management techniques. The Adkins Diversified Capital Options Program is proactive in regards to taking new trades and making adjustments to current trades. New order entry is responsive to short-term changes in Implied Volatility. Implied Volatility is extracted from the option premium by calculating the value of a theoretical option pricing model to determine what the “market option” of volatility will be. Risk-management is opportunistic about changes in price, and net delta of the position and is within specific guidelines. Also, existing positions will be added frequently, attempting to remain somewhat delta neutral. The ADC Diversified Options Program will exit positions when profit targets are achieved. The risks in this program can be unlimited. However, the Advisor will employ risk management techniques that will attempt to reduce of the size of potential losses. If the combined net delta of the call option and put option exceed a set amount and the Advisor determines the position is either too bullish or bearish, the Advisor will make adjustments to the position ( buying or selling additional options) in order to bring the net delta back within reasonable limits.

NOTIONAL FUNDS Please Note: The following has been provided solely for the purpose of helping prospective clients to fully understand the information contained in this Disclosure Document. It is not meant as a recommendation by Adkins Diversified Capital, LLC to clients to fund accounts with notional equity. Clients should consult their financial advisors to determine whether or not the use of notional equity is suitable for them. Clients may direct the Advisor to employ notional funds when trading a client’s account. Notional funds in a client’s account are funds not actually held in the account, but the amount of notional funds will be traded as if actually in a client’s account. Notional equity creates additional leverage in an account

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relative to the cash in such account. This additional leverage results in proportionately greater risk of loss (and opportunity for gain). While the possibility of losing all of the cash in an account is present in all accounts, accounts that contain notional equity have a proportionately greater risk of loss. For example, for an account that is funded with only fifty percent (50%) cash and, therefore, has fifty percent (50%) notional equity, a ten percent (10%) loss of the account’s total value (based on both cash and notional equity) will equal a loss of twenty percent (20%) of the cash in the account. Additionally, an account employing notional equity may receive more frequent and larger margin calls. To better understand notional funding, the reader is referred to the notional funds matrix found below. The matrix on this page allows a reader to take the actual rate of return for a given portfolio at various funding levels and determine the adjusted rate of return at those levels.

Actual Rate of Return(1)

Level of Funding(2)

100%

75% 50% 25%

-30.00% -30.00% -40.00% -60.00% -120.00%

-20.00% -20.00% -26.67% -40.00% -80.00%

-10.00% -10.00% -13.33% -20.00% -40.00%

10.00% 10.00% 13.33% 20.00% 40.00%

20.00% 20.00% 26.67% 40.00% 80.00%

30.00% 30.00% 40.00% 60.00% 120.00%

40.00% 40.00% 53.33% 80.00% 160.00%

50.00% 50.00% 66.67% 100.00% 200.00%

60.00% 60.00% 80.00% 120.00% 240.00% Rates of Return at Various Funding Levels(3)

(1) This column represents the range of actual rates of return for fully funded accounts. (2) This represents the percentage of actual funds divided by the fully funded trading level. (3) These columns represent the rate of return experienced by a customer at various levels of

funding traded by the Advisor. The rates of return for accounts that are not fully funded are inversely proportional to the actual rates of return based on the percentage level of funding.

Those parties interested in employing the use of notional funds must complete Exhibit C, the “Addendum to Managed Account Agreement – Special Disclosure for Notionally Funded Accounts.”

PRINCIPAL RISK FACTORS Trading futures contracts and options thereon involves a HIGH DEGREE OF RISK. Before investing, a prospective client should consult his/her financial advisor(s) to inform themselves fully on futures trading and to determine if futures are suitable for their investment needs. Futures trading involves many risks. The client should review this section and the entire Disclosure Document and become familiar with some of the more significant risks. 1. Trading Is Speculative and Volatile. Commodity interest prices are highly volatile. Price

movements for commodity interests are influenced by, among other things: changing supply and

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demand relationships; weather; agricultural, trade, fiscal, monetary, and exchange control programs and policies of governments; United States and foreign political and economic events and policies; changes in national and international interest rates and rates of inflation; currency devaluations and revaluations; and emotions of the marketplace. None of these factors can be controlled by the Advisor and no assurance can be given that the Advisor’s advice will result in profitable trades for a participating client or that a client will not incur substantial losses.

2. Trading Is Highly Leveraged. The leverage in futures trading comes from the minimal amount of

margin necessary to purchase a futures contract. Normally, the amount of margin funds necessary to be deposited with a futures broker in order to enter into a futures contract position is between three percent (3%) and ten percent (10%) of the total value of the contract but can be more or less. A relatively small movement in the price of a contract can produce a loss that is equal to or substantially greater than the margin deposit.

3. Potential Illiquidity of Contract. Futures positions cannot always be liquidated at the desired price.

Such limitation can occur when the market is “thinly traded” (i.e., a relatively small volume of buy and sell orders). Some futures contracts are also subject to daily price fluctuation limits. These limits are exchange -imposed restrictions on the maximum price fluctuation that may occur in a futures contract on any one trading day. For example, if the price of a futures contract rises to its daily limit, no trades may take place that day above the limit price. Prices of some futures contracts have moved to daily limit for several consecutive days with little or no trading, and such situations could recur. In these instances, the Advisor may be unable to liquidate certain unprofitable positions for some time, thereby increasing the loss to a client’s account from the trade.

4. Options on Futures Contracts and Physical Commodities. Options on futures contracts and

physical commodities have been approved by the CFTC for trading on U.S. and certain non-U.S. futures exchanges. Each such option is a right, purchased for a certain price, to either buy or sell a futures contract or physical commodity during a certain period of time for a pre-established price. Although successful options trading probably requires many of the same skills required for successful futures or forward contract trading, the risks involved may be somewhat different. For example, if the Advisor, on behalf of a participating customer, buys an option (either to sell or buy a futures contract or commodity), the customer will be required to pay a "premium" representing the market value of the option. Unless the price of the futures contract or commodity underlying the option changes and it becomes profitable to exercise or offset the option before it expires, the Client may lose the entire amount of the premium. Conversely, if the Advisor, on behalf of a Client, sells an option (either to sell or buy a futures contract or commodity), the Client will be credited with the premium but will have to deposit margin with the customer's FCM due to the customer's contingent liability to deliver or accept the futures contract or commodity underlying the option in the event the option is exercised. Traders who sell options are subject to the entire loss which occurs in the underlying futures contract or commodity (less any premium received). The ability to trade in or exercise options may be restricted in the event that trading in the underlying futures contract or commodity becomes restricted. THERE IS AN UNLIMITED RISK OF LOSS IN SELLING OPTIONS. BECAUSE THE ADVISOR WILL ENGAGE IN AN OPTIONS SELLING PROGRAM, PROSPECTIVE CLIENTS SHOULD CAREFULLY CONSIDER THE RISKS IN THIS OPTIONS SELLING PROGRAM. Options trading on U.S. futures exchanges is subject to regulation by both the CFTC and such exchanges.

5. Speculative Position Limits. The CFTC has established limits (“speculative position limits”) on the

maximum net long or net short positions that any person may hold or control in certain futures contracts. Futures exchanges also have established such limits. All accounts controlled by the Advisor must be combined for speculative position limit purposes. If positions in those accounts

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were to approach the level of speculative position limits such limits could cause a modification of the Advisor’s trading decisions for a client’s account, or force liquidation of certain futures positions.

6. Proprietary Trading Methodology. Because specific elements of the Advisor’s trading methods are

proprietary to it, a client will not be able to determine the full details of the methods or whether the methods are being followed. For more information regarding the Advisor’s Program, please see “About The Trading Methodology.”

7. Risk of Failure of Futures Commission Merchant. Under CFTC regulations, futures commission

merchants (referred to herein in the singular as a “FCM” and in the plural as “FCMs”) are required to maintain a client’s assets in a segregated account. If the FCM used by a client fails to do so, the client may be subject to a risk of loss of his funds on deposit with his FCM in the event of its bankruptcy. In addition, under certain circumstances, such as the inability of another client of the FCM or the FCM itself to satisfy substantial deficiencies in such other client’s account, a client may be subject to a risk of loss of his funds on deposit with his FCM, even if such funds are properly segregated. In the case of any such bankruptcy or client loss, a client might recover, even with respect to property specifically traceable to the client, only a pro-rata share of all property available for distribution to all of the FCM’s clients.

8. Devotion of Time to Advisory Affairs. The Advisor shall devote such time to managing clients’

accounts as it deems necessary to effectively manage such accounts. The Advisor and its principal may engage in other business activities and shall not be required to refrain from any other activity or disgorge any profits from any such activity.

9. Electronic Order Entry. The Advisor may place trades via electronic order platforms for the Program. In such instances, trading through an electronic trading or order routing system exposes you to risks associated with system or component failure. The risk exists that a trade may not be placed, a trade may be placed at a later time than originally desired, or a trade may not be able to be cancelled. These occurrences, which are beyond the Advisor’s control, could result in losses to a client’s account.

10. Tax Liability. Clients should satisfy themselves as to the income tax and other tax consequences of

an investment in a managed account program with specific reference to their own tax situation by obtaining advice from their own tax counsel before participating in a managed account program.

11. Dependence on Key Personnel. The Advisor’s success is dependent exclusively on the skill and

investment acumen of Mr. Adkins, the Advisor’s Principal. If Mr. Adkins should die, become incompetent or disabled (i.e., unable, by reason of disease, illness or injury, to perform his functions with respect to the Advisor), or otherwise cease to be involved in the affairs of the Advisor, the Advisor’s ability to select attractive investments and manage Clients’ account would be severely impaired.

12. Trading Disruptions. Following the terrorist attacks of September 11, 2001, the United States

financial markets were closed for several days. In addition, once they were reopened, these markets experienced extreme volatility and a lack of liquidity. There can be no assurance that world events will not cause severe market disruptions in the future. If such market disruptions were to occur again, Clients’ performance could be adversely affected due to the fact that Clients’ assets will be invested in these markets. For instance, the Advisor’s ability to liquidate a position in order to limit losses could be hindered.

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. The foregoing risk factors do not purport to be a complete explanation of all of the risks involved while investing in the Program. Prospective clients should read this Disclosure Document in its entirety before determining whether to invest in the Program.

FEES As compensation for its services, the Advisor charges a monthly incentive fee. The Advisor reserves the right to reduce or waive the incentive fee for any one client account without notification to other client accounts of such a reduction or waiver. The Advisor shall be entitled to receive a monthly incentive fee of thirty percent (30%) of Net New Profits. “New Net Profits” are calculated as of the last trading day of the month and are the sum of: (i) the net of profits and losses resulting from all trades closed out during the month, plus (ii) the net of any profits or losses on open trades as of the close of the month, minus: (i) the net of any profits or losses carried forward on open trades from the preceding month, and (ii) cumulative net realized losses “Carryforward Loss,” if any, carried forward from the preceding month. New Net Profits are calculated after reduction for any accrued brokerage commissions and fees. The amount of interest income, if any, earned during the month is excluded for purposes of calculating New Net Profits. In the event that a partial withdrawal occurs when there is a Carryforward Loss, the amount of the Carryforward Loss will be reduced for future periods by the ratio obtained by dividing the amount of the withdrawal by the Net Asset Value prior to such withdrawal. “Net Asset Value” is defined as total assets of the account, including all cash and cash equivalents, market value of all open commodity positions, and accrued interest, less all liabilities of the account, including any accrued brokerage commissions and fees, plus notional funds, if any (See Addendum To Advisory Agreement/Special Disclosure For Notionally-Funded Accounts). Incentive fees are billed by the Advisor directly to the carrying FCM (PFGBEST) to be paid out of a client’s account, unless the Advisor and client have otherwise made a different arrangement. Upon presentation of the bill to the FCM, the FCM and the Advisor are authorized by the client to deduct the fees directly from the client’s account. Either the Advisor or the investor may terminate the agreement by delivering a written notification of such termination to the other party. Clients must sign a Fee Payment Authorization directing the futures commission merchant (PFGBEST) carrying this account to pay such Incentive Fees directly to the Advisor from the account as they become payable, upon the presentation of an invoice by the Advisor. At Client’s request the Advisor will furnish a copy of the invoice to the Client. PFGBEST, the FCM, will charge the client $15.00 per round turn transaction (sale and purchase of an option or future) plus applicable NFA and exchange fees and floor brokerage if a floor broker is used to execute an order. Neither the Advisor nor Scott Adkins will share in the commissions paid to PFGBEST. In order to provide for more efficient execution of orders for the account, the Advisor may place orders for execution through one broker, which will later be “given up” by the executing broker to the FCM. When signing the managed account agreement attached hereto, the client agrees to pay all “give up” fees. The Advisor estimates these fees will range from $0.50 to $3.00 per contract side (buy or sell).

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CLEARING BROKER, ACCOUNT STATEMENTS, AND COMMISSIONS

All of a client’s funds are deposited with an FCM and, at times, invested in US Treasury Bills or other money market investments. The US Treasury Bills or other money market investments provide income for clients and serve as an interest-bearing source of initial and maintenance margin for the purchase or sale of futures contracts. Clients must use Peregrine Financial Group, Inc. (“PFGBEST”) as their FCM. PFGBEST is an Iowa corporation with its principal address at 311 W. Monroe Street, Suite 1300, Chicago Illinois 60606. PFGBEST is registered with the Commodities Futures Trading Commission ("CFTC") as a futures commission merchant ("FCM") and is a member of the National Futures Association ("NFA"). The clients can select an introducing broker of the clients’ choice. PFGBEST will maintain the Customer's account on a "fully disclosed" basis. The positions and funds of the Customer held by PFGBEST will be commingled with those of other customers, but segregated or separated from those of the Broker, pursuant to the CFTC's rules. PFGBEST clears its customers' transactions on an omnibus basis. PFGBEST will be responsible for the transaction and order execution of futures, options and off-exchange foreign currency contracts, as well as certain administrative duties, such as record keeping, transmittal of confirmation and statements to the Customer, and calculating the equity balances and margin requirements for the Customer's account. PFGBEST is not connected in any way with this trading program, other than in its capacity as an FCM for the Customer's account. The opening and maintenance of the Customer's accounts with PFGBEST does not constitute an endorsement or recommendation of this trading program by PFGBEST. PFGBEST will hold the assets of each client’s account and trades will be executed through PFG. Each client will receive confirmations and monthly account statements from its FCM reflecting all transactions entered into on its behalf by the Advisor. These records should be reviewed immediately upon receipt in order to monitor the status of the accounts managed by the Advisor, and should be retained for future reference. MATERIAL PROCEEDINGS: On February 8, 2012, the NFA accepted an offer of settlement submitted by PFG, Russell R. Wasendorf, Jr., Susan O’Meara and Nolan Schiff in which, without admitting or denying the allegations, PFG agreed to pay a fine of $700,000. In addition, PFG, without admitting or denying the necessity of such, agreed to retain an independent consultant to review PFG’s existing procedures for supervising its GIBs. The independent consultant will make specific recommendations which PFG will implement with regard to the supervision of trading in broker assisted retail customer accounts. PFG agreed to not enter into any new guarantee agreements with IBs for a period of two years from February 8, 2012, without petitioning the NFA for relief. Further, PFG agreed to designate a full-time AML officer for PFG. On February 1, 2012, PFG was sued by the Receiver for the Estates of Trevor Cook, Patrick Kiley, Jason Beckman, UBS Diversified Growth, LLC, Market Shot, LLC, Oxford Global Advisors, LLC, Oxford Global Partners, LLC, Oxford Global FX, LLC and Oxford Growth FX, LP. The suit alleges that fraudulent transfers were made through PFG by the estates. PFG denies the allegations and is vigorously defending the suit.

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Other than the aforementioned matters, there have been no other material administrative, civil, or criminal proceedings against PFG or any of its principals within the preceding five years of the date of this Disclosure Document that would be material to a client's decision to open and maintain a commodities account with PFG. The Advisor, solely in reliance upon representations of the management of PFGBEST, believes that any pending litigation in which PFGBEST may be involved will not have a material effect upon PFGBEST's condition, financial or otherwise, and that such actions are not material to the Customer's decision to have his account carried by PFGBEST. PFGBEST vigorously defends, as a matter of policy, civil litigation, reparations and arbitration proceedings brought against it and, in all such proceedings currently pending, the management of PFGBEST has represented to the Advisor that PFGBEST has factually and legally sound defenses.

ACTUAL AND POTENTIAL CONFLICTS OF INTEREST 1. Right and Intent to Manage Other Clients. The Advisor reserves the right to advise and manage,

respectively, other clients. Thus, a conflict of interest may arise because:

- The Advisor is allocating its time and orders among different client accounts.

- These various other accounts may be deemed to be competing for the same or similar positions in the market. When advising more than one account, price volatility and variations in liquidity from time to time as well as differences in order execution may make it impossible for the Advisor to obtain identical trade executions for all accounts.

- Further, the Advisor and its principal may also determine from time to time that some

investment opportunities are appropriate for certain clients (of the Advisor or an affiliate thereof) and not others, due to differing objectives, time horizons, liquidity needs or availability, or other general market conditions.

- The Advisor may “block” order entry of client accounts with other customer accounts guided

by the Advisor. To make block order allocations as fair as possible, the Advisor may take such actions as it deems appropriate to allocate orders equitably among the accounts involved. Currently, when client trade orders are entered at varying price levels , the Advisor uses the average price and quantity method of order allocation. Under such a method, the Advisor will instruct an (the) FCM to calculate the average price for each block order and allocate the actual fill prices among the accounts included in the order to approximate, as closely as possible, the average fill price.

2. Non-customer and Proprietary Accounts. The Advisor and its principal(s) reserve the right to

trade for their own account (“non-customer and proprietary accounts”). Non-customer and proprietary accounts include, but are not limited to, accounts that are fifty or more percent (50%+) beneficially owned or controlled by the Advisor, a principal thereof or any affiliate or family members of the Advisor or its principal. These non-customer and proprietary trades may be executed and cleared through any IB or FCM also utilized by a client account. A potential conflict of interest with respect to the client account may exist if non-customer and proprietary trades are executed in similar positions, at the same time, and in the same market. In such an event, the Advisor will avoid as much conflict as possible by allocating a worse fill order for the non-customer and proprietary account(s). Due to their confidential nature, the records of the Advisor and the Advisor’s clients are not generally available for inspection, except as provided in the following sentence. If the Advisor or

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its principal(s) have a proprietary account, the trading records of the proprietary account will be available for inspection by clients.

3. Incentive Fee. The monthly incentive fee payable to the Advisor is based on a percentage of Net

New Profits (as defined). This arrangement may create an incentive for the Advisor to make trades that are riskier or more speculative than would be the case if the Advisor were compensated solely on an asset based management fee.

4. Indirect Compensation Arrangements. The Principal of the Advisor is an associated person and branch manager of PFG. The Advisor may receive some form of indirect compensation or consideration from PFG as a result of the maintenance of any client accounts with PFG. PFG may provide the Advisor with quotation services, marketing services, market research and analysis, and other such services, which services may be based in part on the number of transactions that the Advisor’s clients execute through the PFG. No such arrangements currently exist. PFG provides the Principal of the Advisor with office space, telephone services and regular compensation. This may create a conflict of interest between the Advisor’s interest in continuing to receive these services and its duty to manage customer trading without concern for trading frequency. This may also create a conflict of interest between the Advisor’s duty to recommend different FCMs and the Advisor’s interest in having a client maintain his account at PFG.

5. Payment to Third Parties. The Advisor may, at its discretion, pay certain parties (who are

appropriately registered under the Commodity Exchange Act) portions of the fees that the Advisor earns as compensation for the introduction of Clients’ accounts. Such parties must be registered with the CFTC as an IB or as an FCM. The IB or FCM may remit some or all of its compensation to certain of its employees who are registered as associated persons.

PRIVACY POLICY The Advisor, as a member of the financial services industry, has been and continues to be subject to laws and regulations regarding the collection and exchange of nonpublic personal information about the client. Clients that choose to invest in the Program will provide the Advisor with certain personal information about the clients. Advisor pledges its commitment to maintain the confidentiality of this information, and to not disclose this information to any nonaffiliated, third parties other than regulatory agencies and other legal authorities as required by law. Further, the Advisor agrees to protect the investor’s information by restricting access to such nonpublic personal information to those employees with a legitimate need for the information. If a client decides to terminate this Agreement, the Advisor agrees to adhere to the privacy policies and practices as set forth above. In the event Advisor amends its privacy policy, the Advisor agrees to provide clients with appropriate notice when such privacy policy changes.

GENERAL INFORMATION The minimum initial account requires a deposit of $30,000. The Advisor may, in its discretion, waive or change this minimum investment requirement for any one client and without notice to other clients. Transactions effected for accounts managed by the Advisor may be subject to tax and accounting considerations. While the Advisor has general familiarity with these matters, the Advisor itself does not render professional tax counsel. Clients are advised to retain a professional tax advisor for the purposes of carefully assessing such matters with respect to the client’s particular tax planning objectives and accounting standards.

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It should also be noted that the Advisor makes no expressed or implied assurance of profit or guaranty against loss in connection with its management of client accounts. Prospective clients are advised to review carefully this Disclosure Document, including the Risk Disclosure Statements on page “ii” of this document, to consider the potential risk/reward factors and to clarify any questions prior to opening an account. In addition to the execution of Exhibit B, the Managed Account Agreement, each client may also be required to execute the various new account forms, powers-of-attorney, risk disclosure documents, authorization to do give-ups, notional equity agreements (where applicable) and customer agreements of the FCM or IB for the client’s account.

INSTRUCTIONS FOR OPENING AN ACCOUNT

1. Complete and sign Exhibit A - Client Acknowledgment and Client Information Questionnaire. 2. Complete, date, and sign Exhibit B - Adkins Diversified Capital, LLC’s “Managed Account

Agreement.” 3. For those parties interested in employing the use of notional funds, complete and sign the “Addendum

to Managed Account Agreement – Special Disclosure for Notionally Funded Accounts.” 4. For the parties seeking to settle any dispute via arbitration, complete, date, and sign Exhibit D –

Adkins Diversified Capital, LLC’s “Arbitration Agreement.” 5. Complete, date and sign Exhibit E – the “Authorization to Pay Fees.” 6. Complete, date and sign the account application from your FCM (and IB, if applicable), including

appropriate power-of-attorney form. 7. Issue a check payable to the futures commission merchant where your account will be carried. Return

the items referenced above in 1, 2, and 5, along with 3 and 4 (if 3 and 4 are applicable) to: Adkins Diversified Capital, LLC 4129 Spruce Hills Drive Cedar Falls, Iowa 50613.

8. Keep the Disclosure Document and a copy of the exhibits for your records.

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EXHIBIT A

CLIENT ACKNOWLEDGMENT This is to acknowledge that I have read and understand the Disclosure Document for Adkins Diversified Capital, LLC dated April 3, 2012 and agree to all of the terms and conditions thereof, and have carefully considered the matters outlined and referred to therein in determining whether to open a commodity trading account managed by the Advisor. ______________________ First Client Signature ______________________ First Client’s Name & Title

______________________ Second Client Signature ______________________ Second Client’s Name & Title

_________________________ Name of Entity By _______________________ __________________________ Print Name __________________________ Title

CLIENT INFORMATION QUESTIONNAIRE Under National Futures Association Rules and Commodities Futures Trading Commission Regulations, Adkins Diversified Capital, LLC is required to obtain specified information about individually managed account clients. Please assist us by providing the information requested below. If you, the client, choose to keep certain items confidential, please mark those items, sign and date the form. For joint accounts, please provide combined information.

CLIENT INFORMATION QUESTIONNAIRE

(FOR INDIVIDUALS AND JOINT ACCOUNTS) Under National Futures Association rules and Commodity Futures Trading Commission regulations, Adkins Diversified Capital, LLC is required to obtain specified information about individually managed account clients. Please assist us by providing the information requested below. If you choose to keep certain items confidential, please mark those items, sign and date the form. For joint accounts, please provide combined information. I. ACCOUNT INFORMATION (PLEASE PRINT OR TYPE) Client Name: Date of Birth: Home Telephone Number: Home Address: City/State: Zip Code: E-mail Address: Principal Occupation or Business/Years Employed:

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Business Telephone Number: Estimated Annual Income: ___ under $30,000 ___ $30,000-$100,000 ___ over $100,000 Estimated Net Worth: ___ under $100,000 ___ $100,000-$250,000 ___ over $250,000 Previous Investment Experience: Yes No Years Stocks/Bonds _______ _______ _______ Mutual Funds _______ _______ _______ Options _______ _______ _______ Commodity Futures _______ _______ _______ Limited Partnerships _______ _______ _______

Client certifies and represents that all information furnished above is accurate. First Client's Signature Second Client's Signature

First Client's Name and Title Second Client's Name and Title Date Date

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Adkins Diversified Capital, LLC 4129 Spruce Hills Drive Cedar Falls, IA 50613

319-553-2183

CLIENT INFORMATION QUESTIONNAIRE

(FOR CORPORATE AND OTHER ENTITY ACCOUNTS ONLY)

I. ACCOUNT INFORMATION (PLEASE PRINT OR TYPE) Name: Address: City/State: Zip Code: Telephone Number: Principal contact person and title: E-mail Address: Year of Formation: State or Country of Formation: Principal Business: Client certifies and represents and that all information furnished above is accurate. NAME OF ENTITY: ____________________________________ By Print Name Title Date

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EXHIBIT B

ADKINS DIVERSIFIED CAPITAL, LLC MANAGED ACCOUNT AGREEMENT

THIS MANAGED ACCOUNT AGREEMENT (the “Agreement”) is made by and between Adkins Diversified Capital, LLC (the “Advisor”) and ___________________________________ (the “Client”). WHEREAS, Client hereby acknowledges to Advisor that client has received, read and understood and carefully considered the risks outlined in the Disclosure Document for the Advisor’s ADC Diversified Options Program (the “Program”), dated April 3, 2012, of Advisor and that no person is authorized by Advisor to make statements in addition to, or inconsistent with, those contained in such Disclosure Document, WHEREAS, Client desires to retain Advisor as Client’s commodity trading advisor pursuant to the terms and conditions set forth in this Agreement, and Advisor desires to service Client pursuant to such terms and conditions. NOW THEREFORE, in consideration of the premises set forth above, the parties hereto do hereby agree as follows: 1. CLIENT’S ACCOUNT. Client shall open an investment account (the “Account”) with Peregrine Financial Group, Inc (“PFGBEST”) (the “Broker,” “Futures Commission Merchant,” or “FCM”), with an initial deposit of $__________. The initial deposit, all subsequent deposits to and withdrawals from the Account and all transactions effected in the Account shall be subject to this Agreement. If Client owns more than one Account, which is managed by Advisor, each such Account shall be subject to this Agreement. 2. REPRESENTATION OF ADVISOR. Advisor represents and Client acknowledges that Advisor is currently registered with the Commodities Futures Trading Commission as a commodity trading advisor and is a Member of the National Futures Association. 3. REPRESENTATIONS OF CLIENT. Client hereby represents to Advisor that Client has capital available and desires to invest such capital in speculative investments in futures contracts, over-the-counter foreign currency contracts, and other similar financial instruments and options on such instruments (“Investments”). Client acknowledges receipt of Advisor’s Disclosure Document dated April 3, 2012.

Client, if an individual, hereby represents to Advisor that Client is of full legal age in the jurisdiction in which Client resides and is legally competent to execute and deliver this Agreement and to purchase, sell, trade and own Investments as contemplated by this Agreement. Client, if a corporation, partnership, limited liability company, trust or other entity or association, hereby represents to Advisor that Client has full power and authority to execute and deliver this Agreement and to purchase, sell, trade and own Investments as contemplated by this Agreement and the individual executing and delivering this Agreement for and on behalf of Client is of full legal age in the jurisdiction in which such individual resides and is legally competent and has full power and authority to do so on behalf of Client and its officer(s) stockholder(s), partner(s), manager(s), member(s) or beneficiaries, if any. Client hereby represents to Advisor that Client is fully familiar with the speculative nature of trading in Investments and its high degree of risk that makes such trading suitable only for a person who can sustain substantial losses that may be far in excess of such person’s funds on deposit in such person’s Account.

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Client hereby represents to Advisor that Client is willing and able, financially and otherwise, to assume the risks of trading in Investments and has financial ability to bear losses in excess of the amount deposited pursuant to Section 1 of this Agreement.

4. AUTHORIZATION TO THE ADVISOR TO ENTER ORDERS FOR THE ACCOUNT. Client appoints Advisor as his sole attorney-in-fact with respect to the Account to buy, sell or otherwise trade in Investments through the Broker pursuant to the Advisor’s trading system. Client hereby gives and grants to Advisor full power and authority to act for Client and on Client’s behalf to do every act and thing whatsoever requisite, necessary or appropriate to be done in connection with this power of attorney as fully and in the same manner and with the same force and effect as Client might do or could do if personally present, and Client hereby ratifies and confirms any and all transactions heretofore made by Advisor for the Account and agrees that the rights and obligations of Client in respect thereof shall be governed by the terms of this Agreement. Advisor shall have discretionary authority to make all trading decisions for the Account, without prior consultation with Client and without prior notice to Client with respect to such trading decisions. By this Agreement, Client authorizes the Broker to permit Advisor to enter orders for his account. Client acknowledges that in order to provide for more efficient execution of orders for the Account, the Advisor may place orders for execution through one broker, which will later be “given up” by the executing broker to the Broker. Client agrees to pay all “give up” fees. 5. ACKNOWLEDGMENT OF RISKS ASSOCIATED WITH COMMODITIES FUTURES AND OPTIONS INVESTMENT TRADING, LACK OF GUARANTEE BY THE ADVISOR AND CONFLICTS OF INTEREST. Client is aware of the speculative nature in trading Investments (which includes the risk that Client may incur trading losses in excess of capital contributed to the Account). Client also acknowledges that no “safe” trading system has ever been devised, and that no one can guarantee profits or freedom from loss in such trading. The Advisor, therefore, cannot and does not imply or guarantee that Client will make a profit and it is expressly agreed that Advisor will not be liable to Client or any other party for any act or omission in the course of or in connection with the rendering of its services hereunder, except for acts or omissions by Advisor or its employees, affiliates or agents which constitute gross negligence, willful misconduct or fraud. Client shall indemnify Advisor, its principals and employees for all liability incurred in the performance of the services required by this Agreement, provided that there has been no judicial determination that such liability was the result of gross negligence, willful misconduct or fraud on the part of Advisor and provided further that any conduct of Advisor which was the basis for such liability was done with the good faith belief of Advisor that it was in the best interest of Client.

6. ADDITIONS TO AND WITHDRAWALS FROM THE ACCOUNT. Client may add to or withdraw from the cash balance of the Account upon prior written notice to Advisor to the extent consistent with margin requirements of the Broker and applicable contract markets, provided that Client may not withdraw funds from the Account (unless he intends to terminate this Agreement) if to do so would cause the balance in the Account to fall below a level such that Advisor believes that the Account should no longer be traded. Client recognizes that the potential profitability of the Account depends upon long term, uninterrupted investment of capital and that reduction of equity could materially and adversely affect the potential profitability of the Account. This notification requirement does not restrict a client’s ability to access funds at the FCM. Client further recognizes that Advisor has complete discretion to terminate this Agreement pursuant to Section 9 below.

7. Fees. The Advisor charges clients a monthly Incentive Fee equal to 30% of the account's New Net Profits payable as of the end of each calendar month payable as of the end of each month. The terms “Net Asset Value” and “New Net Profits” are defined below. The Advisor reserves the right to negotiate different fees at any time.

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A. “Net Asset Value” is defined as total assets of the account, including all cash and cash equivalents, market value of all open commodity positions, and accrued interest, less all liabilities of the account, including any accrued brokerage commissions and fees, plus notional funds, if any (See Addendum To Advisory Agreement/Special Disclosure For Notionally-Funded Accounts). B. “New Net Profits” are calculated as of the last trading day of the month and are the sum of: (i) the net of profits and losses resulting from all trades closed out during the quarter, plus (ii) the net of any profits or losses on open trades as of the close of the month, minus: (i) the net of any profits or losses carried forward on open trades from the preceding month, and (ii) cumulative net realized losses “Carryforward Loss,” if any, carried forward from the preceding month . New Net Profits are calculated after reduction for any accrued brokerage commissions and fees. The amount of interest income earned, if any, during the month is excluded for purposes of calculating New Net Profits. In the event that a partial withdrawal occurs when there is a Carryforward Loss, the amount of the Carryforward Loss will be reduced for future periods by the ratio obtained by dividing the amount of the withdrawal by the Net Asset Value prior to such withdrawal. INCENTIVE FEE. The Incentive Fee is 30% of the New Net Profits in an account monthly. Incentive Fees, once paid, will not be refunded in the event of subsequent losses. However, no Incentive Fees are payable until future net profits for the succeeding month exceed Carryforward Loss. The Incentive Fee is payable as of the last business day of the month to which the fee applies. If an account is opened during a month, the Incentive Fee, if any, is payable in full at the end of the month without proration. New Net Profits and Net Asset Value are adjusted by proration for any additions to and withdrawals from an account during a period. Clients must sign a Fee Payment Authorization directing the futures commission merchant ("PFGBEST") carrying this account to pay such Incentive Fees directly to the Advisor from the account as they become payable, upon the presentation of an invoice by the Advisor. At Client’s request the Advisor will furnish a copy of the invoice. 8. RESPONSIBILITIES OF THE BROKER. Client recognizes that Advisor will transmit orders on his behalf to the Broker. Advisor’s responsibilities with respect to any of Client’s transactions shall be fulfilled at the time that a complete order has been transmitted to the FCM. Advisor shall not be responsible for any acts, omissions or errors of the FCM in executing such orders. The FCM will furnish Client with confirmations of all transactions executed in the Account, monthly statements showing information concerning trading activities in the Account and other account statements customarily furnished by the FCM to customers of guaranteed introducing brokers. Client authorizes the FCM to forward to Advisor copies of any confirmations, statements or reports sent by FCM to Client. Client understands that FCM, rather than Advisor, will have full custody of Client’s funds and investment positions. 9. TERMS AND CONDITIONS FOR TERMINATION. This Agreement shall terminate upon written notice by any party hereunder to the other party. Notice shall be deemed given on the close of business on the day such notice is actually received by Advisor or Client. This Agreement shall also automatically terminate upon written notice to Advisor of the death, legal disability, dissolution, or bankruptcy of Client. Termination shall be effective on the date such written notice is deemed given pursuant to Section 15 of this Agreement. If either party terminates this Agreement, the incentive fee shall be calculated (and, if due, paid) as if the termination date of the Account were the end of the calendar quarter. When either party terminates this Agreement, Client shall be liable for all costs, expenses and losses incurred in liquidating open positions upon termination. 10. MANAGEMENT OF OTHER ACCOUNTS BY THE ADVISOR, TRADING BY THE ADVISOR FOR ITS OWN ACCOUNT(S). The services rendered hereunder are not exclusive and Client acknowledges that

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Advisor may manage other client accounts and intends to do so in the future. Client acknowledges that Advisor reserves the right to charge management and incentive fees different from those described above for other accounts that it manages. Advisor and its principal(s) may trade Investments for their own account(s). 11. ASSIGNMENT. This Agreement shall not be assignable by Client without the written consent of Advisor or by Advisor without notice to Client and shall be binding upon the parties hereto, their heirs, respective legal representatives and successors and assigns. 12. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Iowa. If any provision is found unenforceable, then this Agreement shall be enforced and construed as if that invalid provision did not appear. 13. SECTION HEADINGS. The section headings in this Agreement are for convenience of reference only and shall not be deemed to interpret or modify the provisions of the Agreement. 14. ENTIRE AGREEMENT. This Agreement contains the entire understanding between Advisor and Client with respect to commodity advisory matters, is intended to be the complete and exclusive expression of the agreement between Advisor and Client, it supersedes any other agreements or understandings of the parties with respect to commodity advisory matters, and may only be amended by mutual written consent. 15. NOTICES. Any notices required to be given shall be in writing and sent by certified or registered mail, return receipt requested, to Adkins Diversified Capital, LLC, 4129 Spruce Hills Drive, Cedar Falls, Iowa 50613, and to Client at the address set forth below his signature to this Agreement. Either party may change his address by giving notice in writing to the other party stating his new address. Commencing on the tenth (10th) day after the giving of such notice, such newly designated address shall be the party’s address for the purpose of all notices or communications required or permitted to be given pursuant to this Agreement. Notices to Advisor from Client shall be deemed given as of the close of business on the day such notices are actually received by Advisor. 16. CONFIDENTIALITY. Client understands that the trading method employed by Advisor is proprietary and that the advice provided hereunder by Advisor is for the exclusive use of Client. Client agrees not to disclose any of Advisor’s trading recommendations, advice or analysis to any third party without Advisor’s prior written consent. Client agrees to treat all such communication related to the Account as confidential. 17. PATRIOT ACT. Client understands that Advisor may implement an anti-money laundering program as required under the “Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot) Act of 2001.” Therefore, Client agrees to provide any information deemed necessary by the Advisor in its sole discretion to comply with its anti-money laundering program and related responsibilities from time to time. Further, Client represents and covenants that neither Client, nor any person controlling, controlled by, or under common control with Client, nor any person having a beneficial interest in Client, is a Prohibited Investor (as defined in the USA Patriot Act), and that Client is not investing on behalf of or for the benefit of any Prohibited Investor. Further, Client agrees to promptly notify the Advisor of any change in information affecting this representation and covenant, and, in the event Client breaches its representations and covenants found under this Section 17, Advisor may be obligated to freeze Client’s investment by prohibiting additional investments, or refusing to invest the Clients assets pursuant to this Agreement. In such an event, Client shall have no claim against the Advisor for any form of damages as a result of any of the aforementioned actions provided for in this Section. 18. JURISDICTION. The parties agree that any action or proceeding arising, directly, indirectly or otherwise in connection with, out of, related to, or from this Agreement, any breach hereof, or any transaction covered hereby shall be resolved, whether by arbitration or otherwise, within the State of Illinois, County of Cook. Accordingly, the parties consent and submit to the jurisdiction of the federal and state

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courts located within such state and county and further agree that any action or proceeding brought by either party to enforce any fight, assert any claim or obtain any relief whatsoever in connection with this Agreement shall be commenced by such party exclusively in the federal or state courts, or if appropriate, before an arbitral body, located within such state. 19. JOINT UNDERTAKING. If more than one person is signing this Agreement as Client, each undertaking herein shall be a joint and several undertaking of all such persons, and the foregoing grant of power of attorney and authority to Advisor shall be a joint and several grant by all such persons. Action of any one Client pursuant to this Agreement shall bind all such Clients. An Account in joint names creates a joint tenancy with right of survivorship and not a tenancy in common. 20. COUNTERPARTS. This Agreement may be executed in counterparts, each of which shall be considered an original and all of which counterparts of each agreement shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have caused this Managed Account Agreement to be duly executed as of the _____ day of ______________ 20__, with an effective date as of the _____ day of ______________ 20__.

____________________________ First [individual] Client’s Signature ____________________________ First Client’s Name and Title ____________________________ ____________________________ ____________________________ First Client’s Address & Telephone

_______________________________ Name of Entity By_____________________________ _______________________________ Print Name _______________________________ Title

____________________________ Second [individual] Client’s Signature ____________________________ Second Client’s Name and Title ____________________________ ____________________________ ____________________________ Second Client’s Address & Telephone

Adkins Diversified Capital, LLC By: _________________________

Scott J. Adkins, President

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EXHIBIT C

ADDENDUM TO MANAGED ACCOUNT AGREEMENT SPECIAL DISCLOSURE FOR NOTIONALLY-FUNDED ACCOUNTS

You should request your commodity trading advisor to advise you of the amount of cash or

other assets (actual funds) which should be deposited to the advisor’s trading program for your account to be considered “Fully-Funded.” This is the amount upon which the commodity trading advisor will determine the number of contracts traded in your account and should be an amount sufficient to make it unlikely that any further cash deposits would be required from you over the course of your participation in the commodity trading advisor’s program.

You are reminded that the account size you have agreed to in writing (the “nominal” account size) is not the maximum possible loss that your account may experience.

You should consult the account statements received from your futures commission merchant in order to determine the actual activity in your account, including profits, losses and current cash equity balance. To the extent that the equity in your account is at any time less than the nominal account size you should be aware of the following:

1. Although your gains and losses, fees and commissions measured in dollars will be the same, they will be greater when expressed as a percentage of account equity.

2. You may receive more frequent and larger margin calls.

3. The disclosures which accompany the matrix table at page 6 may be used to convert the

rates-of-return (“RORs”) in the performance tables to the corresponding RORs for particular partial funding levels.

* * * I have read and understood the above statement relating to my partially funded account. I understand that my account will be traded pursuant to the ADC Diversified Options Program (the “Program”) offered by Adkins Diversified Capital, LLC (the “Advisor”). My account will be opened with a $______________ deposit by me into a trading account held by my futures commission merchant. My account will be traded as though it had been fully funded with $_______________ and, therefore, will be funded only as to ____% of its nominal account size. The difference between my deposit and the nominal account size shall represent “notional funds.” I also understand that my account will generally be traded with a margin-to-equity ratio that may average ____% of the account if fully funded (equal to a ____% margin-to-equity ratio because of my partial funding). Notional funds in a client’s account are funds not actually held in the account, but have been committed by a client to the trading activity of the account. Notional funding creates additional leverage in an account relative to the cash in such account. This additional leverage results in a proportionally greater risk of loss (and opportunity for gain). While the possibility of losing all the cash in an account is present in all accounts, accounts that contain notional equity have a proportionately greater risk of loss. For example, in an account which is funded with only 50% cash (and therefore has 50% notional funds), a loss of 10% of the account’s nominal value (based on both cash and notional funds) will equal a loss of 20% of the cash in the account.

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The following table further demonstrates the impact of notional funding. The table shows a range of possible actual rates of return for a given portfolio in bold print, followed by adjusted rates of return corresponding to various funding levels.

Level of Funding

Rates of Return

100% -30.00% -20.00% -10.00% 0.00% 10.00% 20.00% 30.00% 80% -37.50% -25.00% -12.50% 0.00% 12.50% 25.00% 37.50% 60% -50.00% -33.30% -16.70% 0.00% 16.70% 33.30% 50.00% 40% -75.00% -50.00% -25.00% 0.00% 25.00% 50.00% 75.00%

Any additions to my account after the initial deposit shall be treated as an addition to the actual funds in the account and shall be subtracted from the notional funds. Any withdrawals from my account shall be treated as a withdrawal of actual funds and shall be added to the notional funds. Any realized profits or losses in my account shall be treated as an addition to or withdrawal from actual funds in the account. I understand that, because my account is not fully funded, profits and losses will be larger as a percentage of actual account size and margin calls, if any, will be greater, when compared to accounts that are fully funded. IN WITNESS WHEREOF, the parties have caused this Addendum to Managed Account Agreement – Special Disclosure for Notionally-Funded Accounts to be duly executed as of the _____ day of ______________ 20__, with an effective date as of the _____ day of ______________ 20__.


_______________________________ Name of Entity By_____________________________ _______________________________ Print Name _______________________________ Title


Adkins Diversified Capital, LLC By: _________________________ Scott J. Adkins, President

D-1

EXHIBIT D

ADKINS DIVERSIFIED CAPITAL, LLC ARBITRATION AGREEMENT

Any controversy or claim asserted by the undersigned customer against Adkins Diversified Capital, LLC (“the Advisor”) and/or its principals, arising out of or relating to the Commodity Advisory Agreement between the undersigned customer(s) and Adkins Diversified Capital, LLC, or the undersigned customer’s futures account, shall be settled by arbitration upon either 1) the contract market on which the disputed transaction was executed or could have been executed, 2) the National Futures Association or 3) the American Arbitration Association. Any award rendered hereon by the arbitrators shall be final and binding on each and all or the parties thereto and their personal representatives and judgment may be entered in any court having jurisdiction thereof. Notification of your intent to arbitrate must be sent by Certified Mail to Adkins Diversified Capital, LLC (“Advisor”) at 4129 Spruce Hills Drive, Cedar Falls, Iowa 50613. At such time as you may notify the Advisor that you intend to submit a claim to arbitration, or at such time as the Advisor notifies you of intent to submit a claim to arbitration, you will have the opportunity to elect a qualified forum for conducting the proceedings from a list the Advisor will provide to you within 10 days of receipt of such notice. If you fail to make a selection within 45 days of receipt of such list, the Advisor then has the right to make a selection from the list. The Advisor acknowledges that it may be required to pay any incremental fees, which may be assessed by a qualified forum for provision of a mixed panel. THREE FORUMS EXIST FOR THE RESOLUTION OF COMMODITY DISPUTES: CIVIL COURT LITIGATION, REPARATIONS AT THE COMMODITY FUTURES TRADING COMMISSION (CFTC) AND ARBITRATION CONDUCTED BY A SELF-REGULATORY OR OTHER PRIVATE ORGANIZATION. THE CFTC RECOGNIZES THAT THE OPPORTUNITY TO SETTLE DISPUTES BY ARBITRATION MAY IN SOME CASES PROVIDE MANY BENEFITS TO CUSTOMERS, INCLUDING THE ABILITY TO OBTAIN AN EXPEDITIOUS AND FINAL RESOLUTION OF DISPUTES WITHOUT INCURRING SUBSTANTIAL COSTS. THE CFTC REQUIRES, HOWEVER, THAT EACH CUSTOMER INDIVIDUALLY EXAMINE THE RELATIVE MERITS OF ARBITRATION AND THAT YOUR CONSENT TO THIS ARBITRATION AGREEMENT BE VOLUNTARY. BY SIGNING THIS AGREEMENT, YOU: (1) MAY BE WAIVING YOUR RIGHT TO SUE IN A COURT OF LAW; AND (2) ARE AGREEING TO BE BOUND BY ARBITRATION OF ANY CLAIMS OR COUNTERCLAIMS WHICH YOU OR THE ADVISOR MAY SUBMIT TO ARBITRATION UNDER THIS AGREEMENT. YOU ARE NOT, HOWEVER, WAIVING YOUR RIGHT TO ELECT INSTEAD TO PETITION THE CFTC TO INSTITUTE REPARATIONS PROCEEDINGS UNDER SECTION 14 OF THE COMMODITY EXCHANGE ACT WITH RESPECT TO ANY DISPUTE WHICH MAY BE ARBITRATED PURSUANT TO THIS AGREEMENT. IN THE EVENT A DISPUTE ARISES, YOU WILL BE NOTIFIED IF THE ADVISOR INTENDS TO SUBMIT THE DISPUTE TO ARBITRATION. IF YOU BELIEVE A VIOLATION OF THE COMMODITY EXCHANGE ACT IS INVOLVED AND IF YOU PREFER TO REQUEST A SECTION 14 "REPARATIONS" PROCEEDING BEFORE THE CFTC, YOU WILL HAVE 45 DAYS FROM THE DATE OF SUCH NOTICE IN WHICH TO MAKE THAT ELECTION.

D-2

YOU NEED NOT SIGN THIS AGREEMENT TO OPEN AN ACCOUNT WITH THE ADVISOR. SEE 17 CFR 166.5. ________________________ Date


________________________________ Name of Entity By______________________________ ________________________________ Print Name ________________________________ Title


Accepted by Adkins Diversified Capital, LLC By: _________________________ Scott J. Adkins, President

E-1

EXHIBIT E

ADKINS DIVERSIFIED CAPITAL, LLC 4129 Spruce Hills Drive Cedar Falls, Iowa 50613

AUTHORIZATION TO PAY FEES

TO: Peregrine Financial Group, Inc. 311 W. Monroe Street Suite 1300 Chicago, IL 60606

To Whom It May Concern:

The undersigned client(s) ("Client") hereby authorizes the FCM named above to deduct from Client's commodity trading account with the FCM and remit directly to Adkins Diversified Capital, LLC within five business days following the FCM's receipt of the Advisor's bill, such management fees and/or incentive fees as shall become due and owing to the Advisor under the terms and conditions of the Customer Advisory Agreement between the Advisor and the Client. Client acknowledges Client's ongoing responsibility to review regularly all customer account records and statements from the FCM and from the Advisor since such records will be conclusive and binding on Client unless a prompt written and/or verbal objection from Client is received by the FCM or the Advisor, as the case may be.

______________________ First Client Signature ______________________ First Client’s Name & Title Date: __________________

______________________ Second Client Signature ______________________ Second Client’s Name & Title Date: __________________

_________________________ Name of Entity By _______________________ __________________________ Print Name __________________________ Title Date: _____________________

F-1

EXHIBIT F

SCOTT J. ADKINS

PROPRIETARY CAPSULE PERFORMANCE SUMMARY

Period 12/1/2009 to 3/31/2012 Account # 75917 – Nominal Account Size $50,000; Trading Level $50,000

Inception of trading by Scott J. Adkins Dec 09

Inception of trading pursuant to the program:

Dec 09

Number of accounts traded pursuant to the program

1

Total actual proprietary assets traded under management by Scott J. Adkins $ 22,870 Total actual assets under this program $ 22,870 Total nominal assets under this program $ 62,870 Total nominal proprietary assets under management by Scott J. Adkins $ 62,870

Largest monthly draw-down -3.45%: May 11

Worst peak to valley draw-down -3.99%: Apr 11 – Jun 11

# of profitable accounts that have opened & closed since Dec 09 and their ranges N/A

# of losing accounts that have opened & closed since Dec 09 and their ranges N/A



% % % % % % % % % % % % %

2012 0.57 0.13 0.30 1.01

2011 1.66 -0.49 0.52 1.12 -3.45 -0.56 0.42 1.00 1.57 0.56 0.93 0.03 3.26 2010 -0.09 1.79 1.99 2.45 2.15 2.05 0.92 0.15 2.28 0.58 1.47 2.15 19.39 2009 0.97 0.97

Notes: 1 “Drawdown” means losses experienced by the composite over a specified period. 2 Rate of Return is calculated by dividing the Net Performance by the Adjusted Beginning Net Asset Value

(Beginning Net Asset Value plus time weighted additions and withdrawals) multiplied by 100. 3 Worst Peak-to-Valley draw-down is the greatest cumulative percentage decline in month-end net asset


4 The performance summary was adjusted to reflect a 30% monthly quarterly incentive fee. 5 The account was traded as having $50,000.00 in funds, and all performance results were calculated using

the $50,000.00 trading level.


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