Available in mutual fund and SMA structure, the KCM Macro Trends Fund is an outgrowth of our model portfolios. The Fund can invest globally in all asset classes, long or short, but its focus is equities. This flexible mandate gives it the ability to respond in both bull and bear markets. Research shows that investors have achieved better long-term portfolio performance when they invest among a wide variety of asset classes, industries, company sizes, and equity types (growth vs. value). By seeking an opportunistic fund with the flexibility to invest without style box restrictions, investors can achieve several investing objectives: portfolio diversification, opportunity for growth, and the potential for downside protection.
August 4, 2008
Martin L. Kerns, II
KCMTX ranks in the Top 1% of Multi-Alternative funds by Morningstar, Inc. out of 137 funds, based on total return for the five-year period and in the Top 2% and 3% out of 393 funds and 231 funds for the one-year and three-year periods, respectively, ending 2/28/2017.
Past performance is no guarantee of future results. Current performance may be lower or higher than the performance quoted. Rankings are just one form of performance measurement.
For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of the funds in each category received 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its three-, five- and ten- year (if applicable) Morningstar Rating metrics.
KCM was rated against the following number of U.S. domiciled Multi-Alternative funds over the following periods ending 2.28.17: 238 funds in the last three years and 142 funds in the last five years. With respect to these Multi-Alternative funds, KCMTX received a Morningstar Rating of 5 stars for the three-year and 5 stars for the five-year periods.
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Investors should carefully consider the investment objectives, risks, charges and expenses of the KCM Macro Trends Fund before investing. Call 800.945.2125 for a prospectus containing this and other important information.
The Fund’s primary investment objective is long-term growth of capital. As a secondary, but equally important goal, the fund seeks to manage volatility and market risk. Making money during good times is important, but it is equally important to protect your assets during bad times. It is a mathematical fact that it is harder to make up losses than to make money. Therefore, the Fund’s primary goal during tenuous markets is capital preservation.
The KCM Macro Trends Fund employs an equity-focused, opportunistic, investment strategy. Managers use technical and fundamentally designed quantitative models to asses the risk environment for equities and to select individual stocks. When “risk is on”, the Fund will be fully invested in a diversified portfolio of stocks. When “risk is off”, the Fund will hedge using inverse index EFTS, options, non-correlated assets and cash to create a market neutral or net short position. The Fund can be leveraged up to accentuate market moves or hedged in an effort to control risk and manage volatility. During defensive periods, the Fund may hold up to 100% cash
Any successful investment that produces income or profits will eventually be taxed. In general, the more successful the investment, the more income and profits will be created to be taxed. Our objective is obviously to increase profits so taxes are inevitable. From a tax standpoint, we try to have as much of that profit as possible be taxed in the categories with the lowest tax rates – that being long-term capital gains and qualified dividends. The investment process we follow is designed to help minimize taxes.
The Fund’s tax-adjusted return of 7.33% ranks in the top 1% of Morningstar’s Multi-Alternative category for the five-year period ending January 1, 2017.
The KCM Macro Trends Fund is an equity-focused, opportunistic, investment strategy. The Fund’s flexible mandate gives it the ability to invest globally in a wide variety of asset classes, company sizes, industries and equity types (no style box restrictions), long or short. It can also employ leverage to accentuate market moves and hedge in an effort to control risk and manage volatility. Quantitative, top-down hedging and bottoms-up stock picking tools are used to remove emotion and behavior biases from investment decisions.
The performance data quoted here represents past performance and is not a guarantee of future results. Performance current to the most recent month-end may be lower or higher and can be obtained by calling 800.945.2125. The investment return and principal value of an investment will fluctuate so that investor’s shares, when redeemed, may be worth more or less than their original cost. The Fund’s total annual operating expense ratio is 1.71%. The indices shown are for illustrative purposes only. Unmanaged index returns do not reflect any fees, expenses or sales charges. You cannot invest directly in an index. Past performance is no guarantee of future results. The HFRX Equity Hedge Index (“HFRX”) is reflected as a benchmark for equity hedge strategies. Source: Hedge Fund Research, Inc. The Morningstar Multi-AlternativeTM category includes funds that have a majority of their assets exposed to alternative strategies, including long/short strategies, and can include both funds with static allocations to alternative strategies and funds tactically allocating among alternative strategies and asset classes. Source: Morningstar, Inc.
Mutual Funds involve risk including possible loss of principal. Investors should carefully consider the investment objectives, risks, charges and expenses of the KCM Macro Trends Fund before investing. The Fund may invest in small, less well-known companies, which may be subject to more erratic market movements than large-cap stocks; foreign securities, which are subject to currency fluctuations and political uncertainty; and derivative securities, which may carry market, credit and liquidity risks. The Fund may also engage in short selling activities, which are more risky than “long” positions because the potential loss on a short sell is unlimited. The Fund may use leveraging and/or hedging techniques that could fail if changes in the value of the derivative do not correlate with the securities being hedged. These risks may result in greater share price volatility. Definitions. Short: Any sale that is completed by the delivery of a security borrowed by the seller. Short sellers assume they will be able to buy the stock at a lower amount that the price at which they sold short. Long: The buying of a security such as a stock, commodity or currency with the expectation that the asset will rise in value.
Investors should carefully consider the investment objectives, risks, charges and expenses of the KCM Macro Trends Fund. No-Load mutual funds are sold without a sales charge, however other fees and expenses do apply to an investment in the fund. This and other important information about the Fund is contained in the prospectus, which can be obtained at www.kcmtx.com or by calling 877-275-5599. The prospectus should be read carefully before investing. The KCM Macro Trends Fund is distributed by Northern Lights Distributors, LLC. Member FINRA/SIPC. Kerns Capital Management and Northern Lights Distributors, LLC are not affiliated. — 3195-NLD-3/7/2017