Long/Short Equity Commentary

Mutual Funds involve risk including possible loss of principal. The Fund will invest a percentage of its assets in derivatives, commodities, futures and options contracts. Currencies are subject to interest rate, exchange rate, economic and political risks. The use of such derivatives and the resulting high portfolio turn-over, may expose the Fund to additional risks that it would not be subject to, if it invested directly in the securities and commodities underlying those derivatives. Commodity prices may be influenced by unfavorable weather, animal and plant disease, geologic and environmental factors as well as changes in government regulation. The Fund may experience losses that exceed those experienced by funds that do not use futures contract, options and commodities.

Changes in interest rates and the liquidity of certain investments could affect the Fund’s overall performance. The Fund is non-diversified and as a result, changes in the value of a single security may have significant effect on the Fund’s value.
Other risks include credit risks and investments in fixed income securities, structured notes, asset-back securities, and foreign investments. The Fund may utilize a wholly-owned subsidiary, not registered under the 1940 Act and therefore not subject to all of the investor protections of the Act. Although only 25% of the Fund’s assets may be invested in the Subsidiary, that portion may be highly leveraged.

Furthermore, the use of short positions and leveraging can magnify the potential for gain or loss and amplify the effects of market volatility on the Fund’s share price. The Fund is subject to regulatory change and tax risks. Changes to current regulation or taxation rules could increase costs associated with an investment in the Fund.

Mutual Funds involve risk including possible loss of principal. There is a risk that issuers and counterparties will not make payment on securities and other investments held by the Fund, resulting in loss. The Fund’s use of derivatives (including futures, forward contracts and swap agreements) involves risks different from and possibly greater than those associated with investing directly in securities including leverage risk, counterparty default risk, tracking risk and liquidity. The price of equity security fluctuates based on changes in a company’s financial condition and overall market and economic conditions. Investments in ETF’s may involve extra expenses and may not perform as expected and may not replicate the performance of the underlying index.

Fixed income securities could lose value due to interest rate changes. ADR’s are subject to fluctuations in foreign currencies, political and economic instability, differences in financial reporting, security regulation, trading and taxation issues. The successful used of forward and futures contracts draws on the Adviser’s skill and experience in predicting market movement. Risks include imperfect correlation, illiquid secondary markets, unanticipated market movements, counterparty default, and potentially selling securities when disadvantageous to do so. The success of the Fund’s hedging strategy is subject to the Adviser’s ability to correctly assess market performance and correlation of the instruments used in the hedging strategy and the investments in the portfolio.

The Fund may trade more, incurring higher brokerage fees and tax liability to shareholders. The Fund has a limited history of operation and an investment entails a high degree of risk. Large Cap companies may be unable to respond quickly to new competitive challenges such as changes in consumer tastes. Small Cap and Mid-Cap companies may be volatile and vulnerable to adverse business or economic events. The Fund is ‘non-diversified’ and changes in the value of a single security may have a significant effect on the Fund’s value. The Fund may have investments that appreciate or decrease significantly over short periods. The value of REIT securities may be adversely affected by changes in the value of the underlying property the REIT holds. Short positions may be considered speculative and losses are potentially unlimited.