BTS Funds © 2014
Investors should carefully consider the investment objectives, risks, charges, and expenses of BTS Funds. This and other important information is contained within the individual Fund’s prospectus and should be read carefully before investing. The Fund prospectus can be obtained by calling 1-877-287-9820 (1-877-BTS-9820). BTS Funds are distributed by Northern Lights Distributors, LLC. Mutual Funds involve risk including possible loss of principal. BTS Asset Management, Inc. is not affiliated with Northern Lights Distributors, LLC.
There is no guarantee that any investment strategy will achieve its objectives, generate profits or avoid losses.
The Funds invest in fixed income securities, derivatives on fixed income securities or other investment companies (“Underlying Funds”) that invest in fixed income securities. The value of the Funds will fluctuate with changes in interest rates. Defaults by fixed income issuers in which the Funds invest will also harm performance. There is a risk that issuers and counterparties will not make payments on securities and other investments held by the Funds, resulting in losses to the Funds. In addition, the credit quality of fixed income securities held by the Funds may be lowered if an issuer's financial condition changes. The credit risk, liquidity risk, and potential for default is heightened for lower-quality debt securities, also known as "high-yield" or "junk" bonds. The Funds may invest in obligations issued by agencies and instrumentalities of the U.S. Government. The U.S. Government may choose not to provide financial support to U.S. Government sponsored agencies or instrumentalities if it is not legally obligated to do so, in which case, if the issuer defaulted, the Funds might not be able to recover its investment.
The Funds may seek to execute an investment strategy to enhance returns or hedge against market declines by purchasing or entering into derivative contracts such as futures, options on futures, structured notes, swaps or purchasing securities whose prices are expected to move inversely to prices of the Funds’ portfolio of securities. The Funds’ use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. Even a small investment in derivatives may give rise to leverage risk, and can have a significant impact on the Funds’ performance. The Funds may use credit default swaps (“CDS”) which involves investment techniques and risks different from those associated with ordinary portfolio security transactions, such as potentially heightened counterparty, concentration and exposure risks.
The Funds’ performance may depend on issues other than the performance of a particular company or
U.S. market sector. The values of foreign investments may be affected by changes in exchange control regulations, application of foreign tax laws (including withholding tax) changes in governmental administration or economic or monetary policy (in this country or abroad) or changed circumstances in dealings between nations. The value of foreign securities is also affected by the value of the local currency relative to the U.S. dollar. In addition to the risks generally associated with investing in foreign securities, countries with emerging markets also may have relatively unstable governments, social and legal systems that do not protect shareholders, economies based on only a few industries, and securities markets that trade a small number of issues.
The Funds may use leverage which may exaggerate changes in a Fund’s share price and the return on their investments. Accordingly, the value of the Funds’ investments may be more volatile and all other risks, including the risk of loss of an investment, could be compounded or magnified. The use of inverse mutual funds will prevent the Funds from participating in market-wide or sector-wide gains and may not prove to be an effective hedge.
The Funds may engage in short selling activities and take short positions in derivatives, which are significantly different from the investment activities commonly associated with conservative fixed income funds. Positions in shorted securities and short positions are speculative and more risky than “long” positions (purchases) because the cost of the replacement security is unknown. Therefore, the potential loss on an uncovered short sale or short position is potentially unlimited.
Underlying Funds are subject to investment advisory and other expenses, which will be indirectly paid by the Funds. As a result, your cost of investing in the Funds will be higher than the cost of investing directly in the Underlying Funds and may be higher than other mutual funds that invest directly in stocks and bonds.