Important Information
Before investing, please read the Fund’s prospectus and shareholder reports to learn about its investment strategy and potential risks. Mutual Funds involve risk including possible loss of principal. An investor should consider the Fund’s investment objective, risks, charges, and expenses carefully before investing. This and other information about The Currency Strategies Fund is contained in the fund’s prospectus, which can be obtained by calling 888.898.4784 . Please read the prospectus carefully before investing. The Currency Strategies Fund is distributed by Northern Lights Distributors, LLC, Member FINRA. Sarasota Capital Strategies and Northern Lights distributors, LLC are not affiliated. Currency trading involves significant risks, including market risk, interest rate risk and country risk; because of shorting and leveraging techniques, this fund may experience increased risk and volatility; investing through the Fund in Underlying Funds involves certain additional expenses and certain tax results that would not arise if you invested directly in the Underlying Funds; and investing in foreign securities presents risk not associated with domestic investments, such as currency fluctuations, political and economic changes and market risks. NOT FDIC INSURED. MAY LOSE VALUE. NO BANK GUARANTEE.
© 2012 Sarasota Capital Strategies / The Currency Strategies Fund
1349-NLD-6/28/2011
..............................................................................................................................................
Why Currencies?
​The cornerstone of a modern investment portfolio is diversification. While diversification can neither assure a profit or protect against losses, a common goal of diversification is to reduce volatility and improve risk adjusted returns. Investors searching for a non-correlated asset class that compliments a traditional equity/fixed-income portfolio are beginning to seriously consider investing in currencies.

Recognizing that currencies are valued relative to each other is fundamental to understanding foreign exchange. For example, when entering a long position in the Euro against the US Dollar (EUR/USD), the position is long Euro and short US Dollar. This is unlike other asset classes in which an investor takes either a long or short position. It is this feature of foreign exchange that leads academics to view that currency trading is a zero-sum game. Simply, in order to generate returns in foreign exchange, currencies must be traded.

Years of academic research shows that macroeconomic factors, such as balance of payments or gross domestic product, explain less than 10% of exchange rate fluctuations. Currently, models with the most explanatory power are those that emphasize order flow in a multiple dealer, simultaneous trade market. In other words, it is the supply and demand for the currency that best explains exchange rate fluctuations. For a non-dealer, the best way to measure supply and demand is through technical analysis.

To tackle the exchange rate puzzle, The Currency Strategies Fund runs multiple, equally-weighted indicators that are diversified across time-frame and strategy. The goal is three fold:

  • Achieve low correlation to other asset classes
  • Achieve low volatility (a standard deviation of less than 1% in monthly returns)
  • Provide additional asset class exposure for diversification and/or hedging purposes. 

The fund managers work tirelessly to develop better technical trading systems to enhance returns and minimize risk.

This is an actively managed dynamic portfolio. There is no guarantee that this investment will achieve its objectives, goals, generate positive returns, or avoid losses. Correlation is a measure of the relation between two or more variables on a scale of –1 to 1. A zero correlation indicates there is no relationship between the variables with –1 and +1 representing perfect negative and perfect positive relationships, respectively. Volatility is measured using standard deviation which is a statistical measurement that shows how much variation there is from the average (mean).