HNSN Hansen Medical, Inc. (MM)

Principal Investment Risks.

 

Management Risk.   The Adviser’s judgments about the attractiveness, value and potential appreciation of a particular asset class or individual security (“underlying fund”) in which the Portfolio invests may prove to be incorrect and there is no guarantee that underlying funds will perform as anticipated. The value of an underlying fund can be more volatile than the market as a whole, and the Adviser’s intrinsic value-oriented approach may fail to produce the intended results.

 

Equity Risk.   Overall stock market risks may affect the value of the Portfolio.  Factors such as domestic economic growth and market conditions, interest rate levels and political events affect the securities markets. When the value of an underlying fund decreases, the Portfolio’s value decreases.

 

Market Capitalization Risk. Investment companies may be categorized as having a small, medium, or large capitalization market value. The underlying funds in which the Portfolio invests, as well as the Portfolio itself may invest in small and mid-capitalization companies, which generally have higher potential risks than large capitalization companies. Small and mid-capitalization companies may be more volatile than, and fluctuate independently of, broad stock market indices such as the S&P 500 â Composite Index.

 

Investment Company and ETF Risk.   Investments by the Portfolio in other investment companies, including ETFs, will expose investors to the risk that the underlying fund manager may change objectives which may or may not parallel the investment direction of the Portfolio. The Portfolios’ Management has no control over the managers or investments of underlying funds. In addition, the price movement of an ETF may not correlate to the underlying index and may result in a loss.  Further, investments in other investment companies subject the investor to fees and expenses charged by such other investment companies, including ETFs, referred to as Acquired Fund Fees and Expenses as shown in the Annual Fund Operating Expenses table.

 

Foreign Investing Risk.   The Portfolio may utilize global macro investment strategies by investing in investment companies that invest primarily in foreign securities.  Foreign investments may be riskier than U.S. investments because of factors such as unstable international political and economic conditions, currency fluctuations, foreign controls on investment and currency exchange, withholding taxes, a lack of adequate company information, less liquid and more volatile markets, a lack of government regulation, and legal systems or market practices that permit inequitable treatment of minority and/or non-domestic investors. If an underlying fund invests primarily in a particular country or region, it may be adversely affected by the above factors or events particular to that country or region.

 

 

Emerging Market Securities Risk. The Portfolio may invest in investment companies that invest in foreign securities issued by companies located in developing or emerging countries. Investing in emerging market securities imposes risks different from, or greater than, risks of investing in foreign developed countries. These risks include: smaller market capitalization of securities markets, which may suffer periods of relative illiquidity; significant price volatility; restrictions on foreign investment; and possible repatriation of investment income and capital.

 

Currency Risk. The Portfolio may invest in foreign securities or take a thematic approach that forecasts a change in the valuation of the U.S. Dollar and as a result would expose the Portfolio to currency risk which is also commonly referred to as exchange rate risk.  Exchange rate risk arises when there is a change in the price of one currency in relation to another.  For example, if the Japanese Yen appreciates relative to the U.S. Dollar, an investment denominated in the Yen will be impacted by both the return of the underlying investment as well as the Yen’s appreciation versus the U.S. Dollar.

Principal Investment Risks.

 

Management Risk.   The Adviser’s judgments about the attractiveness, value and potential appreciation of a particular asset class or individual security in which the Portfolio invests may prove to be incorrect and there is no guarantee that underlying funds will perform as anticipated. The value of an underlying funds can be more volatile than the market as a whole, and the Adviser’s intrinsic value-oriented approach may fail to produce the intended results.

 

Equity Risk.   Overall stock market risks may affect the value of the Portfolio.  Factors such as domestic economic growth and market conditions, interest rate levels and political events affect the securities markets. When the value of an underlying fund decreases, the Portfolio’s value decreases.

 

Market Capitalization Risk. Investment companies may be categorized as having a small, middle, or large capitalization market value. The underlying funds in which the Portfolio invests, as well as the Portfolio itself, may invest in small and mid-capitalization companies, which generally have higher potential risks than large capitalization companies. Small and mid-capitalization companies may be more volatile than, and fluctuate independently of, broad stock market indices such as the S&P 500 ® Composite Index.

 

Investment Company and ETF Risk.   Investments by the Portfolio in other investment companies, including ETFs, will expose investors to the risk that the underlying fund manager may change objectives which may or may not parallel the investment direction of the Portfolio.  The Portfolios’ Management has no control over the managers or investments of underlying funds.  In addition, the price movement of an ETF may not correlate to the underlying index and may result in a loss. Further, investments in other investment companies subject the investor to fees and expenses charged by such other investment

 

 

companies, including ETFs, referred to as Acquired Fund Fees and Expenses as shown in the Annual Fund Operating Expenses table.

Emerging Market Securities Risk. The Portfolio may invest in investment companies that invest in foreign securities issued by companies located in developing or emerging countries. Investing in emerging market securities imposes risks different from, or greater than, risks of investing in foreign developed countries. These risks include: smaller market capitalization of securities markets, which may suffer periods of relative illiquidity; significant price volatility; restrictions on foreign investment; and possible repatriation of investment income and capital.

 

Currency Risk. The Portfolio may invest in foreign securities or take a thematic approach that forecasts a change in the valuation of the U.S. Dollar and as a result would expose the Portfolio to currency risk which is also commonly referred to as exchange rate risk.  Exchange rate risk arises when there is a change in the price of one currency in relation to another.  For example, if the Japanese Yen appreciates relative to the U.S. Dollar, an investment denominated in the Yen will be impacted by both the return of the underlying investment as well as the Yen’s appreciation versus the U.S. Dollar.

 

Fixed Income Risk. The Portfolio invests in investment companies that invest in fixed income securities such as debt securities. Debt securities will increase or decrease in value based on changes in interest rates, among other factors. The Portfolio will also be subject to credit risk if investing in distressed securities, such as high-yield or lower-rated securities. Certain debt securities may be subject to maturity risk. More information about these risks is provided below:

 

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Interest Rate Risk. Fixed income securities, such as debt securities, may not make regular interest payments, but instead may be sold at a discount to the principal amount that is paid at maturity.  Some securities pay interest at fixed rates of return, while others pay interest at variable rates. Interest may be paid at different intervals. If interest rates increase, the value of the Portfolio’s fixed income securities generally declines. On the other hand, if interest rates fall, the value of the fixed income securities generally increases.

 

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Credit / High-Yield Risk.   The Portfolio is subject to credit risk.  The Portfolio may lose money if the issuer of a fixed income security or distressed security cannot meet its financial obligations or goes bankrupt.  Distressed securities, such as high-yield, lower-rated debt securities (i.e. “junk bonds”) are considered to be more speculative than higher quality fixed income securities.  Distressed securities are more susceptible to credit risk than investment-grade securities, which may be especially true during periods of economic uncertainty or during economic downturns.

 

 

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Maturity Risk.   Generally, the longer the time until maturity, the more sensitive the price of a fixed income security is to changes in interest rates. Further, the net asset value ("NAV") of a fund that holds debt securities with a longer average maturity may fluctuate more than the NAV of a fund that holds debt securities with a shorter average maturity.

 

Convertible Securities Risk.   The Portfolio may invest in investment companies that invest in convertible securities.  Convertible securities include debt obligations and preferred stock of the company issuing the security, which may be exchanged for a pre-determined price (the conversion price) into the common stock of the issuer. The market values of convertible securities and other debt securities tend to fall when prevailing interest rates rise. The values of convertible securities also tend to change whenever the market value of the underlying common or preferred stock fluctuates.

Principal Investment Risks.

 

Management Risk.   The Adviser’s judgments about the attractiveness, value and potential appreciation of particular asset class or individual security in which the Portfolio invests may prove to be incorrect and there is no guarantee that underlying funds will perform as anticipated. The value of an underlying fund can be more volatile than the market as a whole, and the Adviser’s intrinsic value-oriented approach may fail to produce the intended results.

 

Equity Risk.   Overall stock market risks may affect the value of the Portfolio.  Factors such as domestic economic growth and market conditions, interest rate levels and political events affect the securities markets. When the value of an underlying fund decreases, the Portfolio’s value decreases.

 

Market Capitalization Risk.   Investment companies may be categorized as having a small, medium, or large capitalization market value. The underlying funds in which the Portfolio invests, as well as the Portfolio itself, may invest in small and mid-capitalization companies, which generally have higher potential risks than large capitalization companies. Small and mid-capitalization companies may be more volatile than, and fluctuate independently of, broad stock market indices such as the S&P 500 ® Composite Index.

 

Investment Company and ETF Risk.   Investments by the Portfolio in other investment companies, including ETFs, will expose investors to the risk that the underlying fund manager may change objectives which may or may not parallel the investment direction of the Portfolio. The Portfolios’ Management has no control over the managers or investments of underlying funds. In addition, the price movement of an ETF may not correlate to the underlying index and may result in a loss. Further, investments in other

 

 

investment companies subject the investor to fees and expenses charged by such other investment companies, including ETFs, referred to as Acquired Fund Fees and Expenses as shown in the Annual Fund Operating Expenses table.

 

Foreign Investing Risk. The Portfolio may utilize global macro investment strategies by investing in investment companies that invest primarily in foreign securities.  Foreign investments may be riskier than U.S. investments because of factors such as unstable international political and economic conditions, currency fluctuations, foreign controls on investment and currency exchange, withholding taxes, a lack of adequate company information, less liquid and more volatile markets, a lack of government regulation, and legal systems or market practices that permit inequitable treatment of minority and/or non-domestic investors. The Portfolio will primarily invest in international mutual funds that invest predominantly in foreign securities.  The foreign securities in which an underlying fund may invest can include securities from emerging markets and securities located within a particular country or region. If an underlying fund invests primarily in a particular country or region, it may be adversely affected by the above factors or events particular to that country or region.

 

Emerging Market Securities Risk. The Portfolio may invest in investment companies that invest primarily in foreign securities issued by companies located in developing or emerging countries. Investing in emerging market securities imposes risks different from, or greater than, risks of investing in foreign developed countries. These risks include: smaller market capitalization of securities markets, which may suffer periods of relative illiquidity; significant price volatility; restrictions on foreign investment; and possible repatriation of investment income and capital.

 

Currency Risk. The Portfolio may invest in foreign securities or take a thematic approach that forecasts a change in the valuation of the U.S. Dollar and as a result would expose the Portfolio to currency risk which is also commonly referred to as exchange rate risk.  Exchange rate risk arises when there is a change in the price of one currency in relation to another.  For example, if the Japanese Yen appreciates relative to the U.S. Dollar, an investment denominated in the Yen will be impacted by both the return of the underlying investment as well as the Yen’s appreciation versus the U.S. Dollar.

Principal Investment Risks.   

 

Management Risk.   The Adviser’s judgments about the attractiveness, value and potential appreciation of particular asset class or individual security in which the Portfolio invests may prove to be incorrect and there is no guarantee that underlying funds will perform as anticipated. The value of an underlying fund can be more volatile than the market as a whole, and the Adviser’s intrinsic value-oriented approach may fail to produce the intended results.

 

Investment Company, Closed-End Fund and ETF Risk.   Investments by the Portfolio in other investment companies, including ETFs, will expose investors to the risk that the underlying fund manager may change objectives which may or may not parallel the investment direction of the Portfolio. The Portfolios’ Management has no control over the managers or investments of underlying funds. In addition, the price movement of an ETF may not correlate to the underlying index and may result in a loss. Closed-end funds may trade infrequently, with small volume, and at a discount to NAV, which may affect the Portfolio’s ability to sell shares of the fund at a reasonable price. Further, investments in other investment companies subject the investor to fees and expenses charged by such other investment companies, including ETFs, called Acquired Fund fees and expenses as shown in the Annual Fund Operating Expenses table.

 

Foreign Investing Risk.   The Portfolio may utilize global macro investment strategies by investing in investment companies that invest primarily in foreign securities.  Foreign investments may be riskier than U.S. investments because of factors such as unstable international political and economic conditions, currency fluctuations, foreign controls on investment, withholding taxes, a lack of adequate company information, less liquid and more volatile markets, a lack of government regulation, and legal systems or market practices that permit inequitable treatment of minority and/or non-domestic investors.  If an underlying fund invests primarily in a particular country or region, it may be adversely affected by the above factors or events particular to that country or region.

 

Emerging Market Securities Risk. The Portfolio may invest in investment companies that invest in foreign securities issued by companies located in developing or emerging countries. Investing in emerging

 

 

market securities imposes risks different from, or greater than, risks of investing in foreign developed countries. These risks include: smaller market capitalization of securities markets, which may suffer periods of relative illiquidity; significant price volatility; restrictions on foreign investment; and possible repatriation of investment income and capital.

 

Currency Risk. The Portfolio may invest in foreign securities or take a thematic approach that forecasts a change in the valuation of the U.S. Dollar and as a result would expose the Portfolio to currency risk which is also commonly referred to as exchange rate risk.  Exchange rate risk arises when there is a change in the price of one currency in relation to another. For example, if the Japanese Yen appreciates relative to the U.S. Dollar, an investment denominated in the Yen will be impacted by both the return of the underlying investment as well as the Yen’s appreciation versus the U.S. Dollar.

 

Long/Short Selling Risk.   The Portfolio may invest in underlying funds that take long and short positions in different securities, and may invest in such underlying funds as a part of its principal investment strategy.  There are risks involved with selling securities short.  The underlying fund may not always be able to borrow the security or close out a short position at an acceptable price, and may have to sell long positions at disadvantageous times to cover short positions.  The underlying fund will incur a loss as a result of the short sale if the price of the security increases between the date of the short sale and the date on which the fund replaces the borrowed security.  The underlying fund may be required to pay a premium, dividend or interest.

 

Convertible Securities Risk.   The Portfolio may invest in investment companies that invest in convertible securities.  Convertible securities include debt obligations and preferred stock of the company issuing the security, which may be exchanged for a pre-determined price (the conversion price) into the common stock of the issuer. The market values of convertible securities and other debt securities tend to fall when prevailing interest rates rise. The values of convertible securities also tend to change whenever the market value of the underlying common or preferred stock fluctuates.

 

Merger Arbitrage Risk.   The Alternative Strategies Portfolio may invest in underlying funds that use a merger arbitrage investment strategy.  The principal risk involved with merger arbitrage investments is the possibility that proposed reorganizations may be renegotiated or terminated, which could result in a loss.

 

Natural Resources Risk.   The Portfolio may invest in investment companies that invest primarily in the natural resources sector, and may invest in such underlying funds as a part of its principal investment strategy.  The values of natural resources are affected by numerous factors including events occurring in nature and international politics.  For example, events in nature, such as earthquakes or fires in prime resource areas, and political events, such as coups or military confrontations, can affect the overall supply of a natural resource and thereby affect the value of companies involved in that natural resource.

 

Fixed Income Risk. The Portfolio invests in investment companies that invest in fixed income securities. These securities will increase or decrease in value based on changes in interest rates; will be subject to credit risk if investing in distressed securities, such as high-yield or lower-rated securities. Certain debt securities may be subject to maturity risk. Fixed income securities subject the Portfolio to additional risks as noted below:

 

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Interest Rate Risk. Fixed income securities, such as debt securities, may not make regular interest payments, but instead are sold at a discount to the principal amount that is paid at maturity.  Some securities pay interest at fixed rates of return, while others pay interest at variable rates. Interest may be paid at different intervals. If interest rates increase, the value of the Portfolio’s fixed income securities generally declines. On the other hand, if interest rates fall, the value of the fixed income securities generally increases.

 

 

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Maturity Risk.   Generally, the longer the time until maturity, the more sensitive the price of a fixed income security is to interest rate changes. Further, the net asset value ("NAV") of a fund that holds debt securities with a longer average maturity may fluctuate more than the NAV of a fund that holds debt securities with a shorter average maturity.

 

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Credit / High-Yield Risk.   The Portfolio is subject to credit risk.  The Portfolio may lose money if the issuer of a fixed income security or distressed security cannot meet its financial obligations or goes bankrupt.  Distressed securities, such as high-yield, lower-rated debt securities (i.e. “junk bonds”) are considered to be more speculative than higher quality fixed income securities.  Distressed securities are more susceptible to credit risk than investment-grade securities, which may be especially true during periods of economic uncertainty or during economic downturns.

 

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Distressed Companies Risk: The Portfolio may invest in investment companies concentrated in distressed companies.   Distressed companies are those that are, or are about to be, involved in reorganizations, financial restructurings, or bankruptcy. The risk associated with investing in distressed companies is that a merger or other restructuring, or a tender or exchange offer, that was proposed or pending at the time the Fund invested in the distressed company may not be executed with the terms or within the time frame anticipated, resulting in losses to the Fund. Debt obligations of distressed companies typically are unrated, lower-rated, in default, or close to default. Also, securities of distressed companies are generally more likely to become worthless than the securities of more financially stable companies.

 

Futures and Options Risk. The Portfolio may invest in investment companies invested in managed futures and options. An underlying fund may use derivatives such as options on stock or bond indices, financial and currency futures contracts and related options, and currency options.  There is no guarantee such strategies will work. An underlying fund’s use of derivates may magnify losses on those investments, as well as risk to that fund that it would not have been subject to if it invested directly in securities, commodities or currencies underlying those derivatives. In addition, exposure to commodity markets may subject the fund to greater volatility than investments in traditional securities.

 

Real Estate Risk.   REITs, although not direct investments in real estate, are subject to the risks associated with investing in real estate. The value of these securities will rise and fall in response to many factors including economic conditions, the demand for rental property and changes in interest rates.  The Portfolio is currently authorized to invest up to 5% of its total assets directly in REITs.

Additional Information on Principal Risks of Investing in the Portfolios

 

The main risks associated with investing in the Portfolios are described below and in the Portfolio Summaries at the beginning of this Prospectus.

 

Investment Companies.   The Portfolios are funds of funds which invest primarily in the shares of registered open-end and closed-end investment companies, including exchange-traded investment companies, which are commonly referred to as “ETFs.”  Thus, each Portfolio is affected by the performance of those companies.  Investing in investment companies does not eliminate investment risk.

 

Closed-end investment companies and ETFs trade on securities exchanges, and the market price for which such securities trade may not correspond exactly with the net asset value of the investment company. In addition, closed-end investment companies may trade infrequently, with small volume and at a discount to the net asset value, which may affect the Portfolio’s ability to sell shares of the fund at a reasonable price.  Further, ETFs which hold stocks included in a particular index and will not be able to perfectly replicate the performance of the indices they track because the total return generated by the securities will be reduced by transaction costs incurred in adjusting the actual balance of the securities.

 

You should recognize that you may invest directly in mutual funds.  By investing in mutual funds indirectly through the Portfolios, you will bear both your proportionate share of the expenses of the Portfolios (including operating costs and investment advisory and administrative fees) and similar expenses of the underlying funds.  In addition, you will bear your proportionate share of expenses related to the distribution of a Portfolio’s shares and you also may indirectly bear expenses paid by an underlying fund for the distribution of its shares.

 

Allocation Risk.   In managing each Portfolio, the Adviser has the authority to select and allocate assets among underlying funds.  A Portfolio is subject to the risk that the Adviser’s decisions regarding asset classes and selection of underlying funds will not anticipate market trends successfully.

 

Market Capitalization.   Companies may be categorized as having a small, middle, or large capitalization market value.  The potential risks are generally higher with small and mid- capitalization companies and lower with large capitalization companies.  Therefore, investors should expect underlying funds which invest primarily in small-capitalization and mid-capitalization stocks, to be more volatile than, and to fluctuate independently of, broad stock market indices such as the S&P 500 ® Composite Index.

 

Concentration.   Each Portfolio may invest in investment companies that concentrate in a particular industry (i.e., real estate) or industry sector (i.e., natural resources).  Investments within a single industry or sector would be affected by developments within that industry or sector.  Further, an underlying fund that concentrates its investments in a particular industry or sector is subject to greater risk than a fund that invests in a broader range of industries or sectors.  Also, the value of the shares of such an underlying fund may be subject to greater market fluctuation than an investment in a more diversified fund.

 

Diversification.   Some of the underlying funds in which the Portfolios may invest are classified as non-diversified funds for purposes of the Investment Company Act of 1940, as amended.  This means that the underlying fund may invest a larger portion of its assets in a small number of securities.  This may cause the performance of the underlying fund’s larger security positions to have a greater impact on the fund’s net asset value per share, which could lead to increased volatility.

 

Foreign Investing.   The Portfolios may utilize global macro investment strategies by investing in investment companies that are concentrated primarily in foreign securities.  Foreign investments may be riskier than domestic investments because of factors such as unstable international political and economic conditions, currency fluctuations, foreign controls on investment and currency exchange, withholding

 

 

taxes, a lack of adequate company information, less liquid and more volatile markets, a lack of government regulation, and legal systems or market practices that permit inequitable treatment of minority and/or non-domestic investors.  Investments in emerging markets may involve even greater risks such as immature economic structures and lesser-developed and more thinly traded securities markets.  If an underlying fund invests primarily in a particular country or region, it may be adversely affected by the above factors or events particular to that country or region.

 

Natural Resources.   The Portfolios may invest in investment companies that are concentrated primarily in the natural resources sector, and the Alternative Strategies Portfolio may invest in such underlying funds as a part of its principal investment strategy.  The values of natural resources are affected by numerous factors including events occurring in nature and international politics.  For example, events in nature such as earthquakes or fires in prime resource areas, and political events, such as coups or military confrontations, can affect the overall supply of a natural resource and thereby the value of companies involved in such natural resource.

 

REITs.   The Portfolios may invest in investment companies that concentrate in REITs.  In addition, the Alternative Strategies Portfolio is currently authorized to invest up to 5% of its total assets directly in REITs.  REITs are subject to the cyclical nature of the real estate industry, including declines in the value of real estate, risks related to general and local economic conditions, overbuilding and increased competition, increases in property taxes and operating expenses, and variations on rental income.

 

Long/Short Selling Risk.   Each Portfolio may invest in underlying funds that sell securities long or short, and the Alternative Strategies Portfolio may invest in such underlying funds as a part of its principal investment strategy.  There are risks involved with selling securities long or short.  The underlying fund may not always be able to borrow the security or close out a short position at an acceptable price, and may have to sell long positions at disadvantageous times to cover its short positions.  The underlying fund will incur a loss as a result of the short sale if the price of the security increases between the date of the short sale and the date on which the fund replaces the borrowed security.  The underlying fund may be required to pay a premium, dividend or interest.

 

Merger Arbitrage.   The Portfolios may invest in investment companies that engage in arbitrage techniques such as merger arbitrage, and the Alternative Strategies Portfolio may invest in such underlying funds as a part of its principal investment strategy.  Merger arbitrage involves investing in securities of companies that are, or are expected to be, involved in publicly announced mergers, takeovers or other corporate reorganizations.  Merger arbitrage is a highly specialized investment approach generally designed to profit from the successful completion of proposed mergers, takeovers, tender offers, leveraged buyouts, spin-offs, liquidations and other types of corporate reorganizations.  Although a variety of strategies may be employed depending upon the nature of the reorganization, the most common merger arbitrage activity involves purchasing the shares of a proposed acquisition target at a discount to their expected value upon the completion of the acquisition.

 

Fixed Income Investing.

 

Credit Risk .   The Portfolios are each subject to credit risk.  The Portfolios may lose money if the issuer of a fixed income security cannot meet its financial obligations or goes bankrupt.  Each Portfolio, except for the Capital Portfolio, may invest in companies that invest primarily in distressed securities, such as high-yield, lower-rated debt securities.  High-yield, lower rated debt securities (i.e., “junk bonds”) are considered to be more speculative than higher quality fixed income securities.  Junk bonds are more susceptible to credit risk than investment-grade securities, which may be especially true during periods of economic uncertainty or during economic downturns.

 

 

Interest Rate Risk .   Each Portfolio is subject to interest rate risk.  The value of a Portfolio’s investments in fixed income securities is affected by interest rate movement.  The value of fixed income securities tend to fall when interest rates rise and to rise when interest rates fall.  Generally, the longer the time until maturity, the more sensitive the price of a fixed income security is to interest rate changes.

 

Convertible Securities .   The Portfolios may invest in underlying funds that invest in convertible securities.  Securities that can be converted into common stock, such as certain debt securities and preferred stock, are subject to the usual risks associated with fixed income investments, such as interest rate risk and credit risk.  In addition, because they react to changes in the value of the equity securities into which they will convert, convertible securities are also subject to stock market risk.  The Alternative Strategies Portfolio may invest in underlying funds that invest in convertible arbitrage securities. This strategy involves the purchase of convertible securities and the subsequent shorting of the corresponding stock.  Conversion will offset the short position.  The transaction may be profitable if the convertible security is priced incorrectly relative to the stock.

 

Options, Futures and Options on Futures.   An underlying fund may use derivatives such as options on stock or bond indices, financial and currency futures contracts and related options, and currency options.  There is no guarantee such strategies will work.  If a fund’s investment manager is not successful in employing such instruments in managing a fund’s investments, the fund’s performance will be worse than if it did not employ such strategies. An underlying fund’s use of derivates may magnify losses on those investments, as well as risk to that fund. There may be an imperfect correlation between the changes in market value of derivatives and the underlying asset upon which they are based. Purchased options may expire worthless. Derivative counterparties may default. There may not always be a liquid secondary market for derivative contracts. Trading restrictions or limitations may be imposed by an exchange, and government regulations may restrict trading in futures contracts and options .   In addition, exposure to commodity markets may subject the fund to greater volatility than investments in traditional securities.

 

Leveraging.   An underlying fund may borrow money to increase its holdings of portfolio securities.  Since a fund must maintain asset coverage of 300%, an underlying fund that leverages could be required to sell investments at an inopportune time to satisfy this requirement.  Leveraging also can exaggerate the effect of any increase or decrease in the value of portfolio securities held by that fund.  The amounts borrowed are subject to interest costs and fees that may affect the gains achieved on the investment of such borrowed funds.

 

Portfolio Holdings Disclosure

 

A description of the Trust’s policies and procedures with respect to the disclosure of each Portfolio’s securities holdings is available: (i) in the Statement of Additional Information; (ii) on the Trust’s Web site at http://www.newcenturyportfolios.com located in the “Prospectus and Reports” tab; and (iii) by calling us toll-free at (888) 639-0102.

 

WHO MANAGES THE PORTFOLIOS