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The Swan Defined Risk Emerging Markets Fund

Applying the DRS to Emerging Markets

The Swan Defined Risk Emerging Markets Fund seeks to address common investor concerns such as seeking capital appreciation while seeking protection of that capital when investing in emerging markets. The DRS allows investors to seek participation in the growth opportunities while also seeking some protection from major losses that can be experienced in emerging markets.

Investing for growth, Seeking protection of capital.

The market is unpredictable, making it difficult to plan long-term outcomes. That’s why we believe reducing downside risk can help smooth out returns over market cycles and significantly impact wealth creation over the long term.

With this in mind, we developed our Defined Risk Strategy in 1997 as a way to offer our clients a distinctive, innovative tool that seeks consistent long-term returns while protecting portfolios from large market declines.



Class A: SDFAX | Class C: SDFCX | Class I: SDFIX

Based on our Defined Risk Strategy, the Swan Defined Risk Emerging Markets Fund is an absolute return type, risk-managed approach to asset allocation designed for growth investors and based on Emerging Markets equity. See the disclosures below for more information.

The goal: to achieve consistent long-term returns while minimizing the downside risk of Emerging Markets equity.

Key elements of the Fund’s strategy include:
> Always invested using low-cost ETFs
> Designed to seek consistent long-term returns
> Aims to protect client assets during major market downturns
> Always hedged, all the time, using put options

Defined Risk Strategy


Other Defined Risk Funds

Invest in Equities
• Buy ETFs that track Emerging Markets equity indexes

• Invested at all times

Hedge the Equities
• Buy puts on Emerging Markets indexes

• At – or near-the-money

• Long-term – generally one to two years, initially

Trade Options Strategies

• Seek to buy and/or sell shorter-term options

• Typically, non-directional, market-neutral initially

Monitor & Adjust

• Daily monitoring

• Rebalance as required

• Re-hedge annually, or as needed



Q2 2019 Swan Defined Risk Emerging Markets Fund Performance




Performance shown is historical and does not guarantee future results. Current performance may be lower or higher. Because share price, principal value, and return will vary, you may have a gain or loss when you sell fund shares. Performance assumes the reinvestment of dividends and capital gains. There is no assurance the fund will pay dividends or capital gains in the future. “Without sales charge” performance does not reflect the current maximum sales charge. Had the sales charge been included, the Fund’s returns would have been lower. Class I shares have no sales charge and may be purchased by specified classes of investors. The MSCI (Morgan Stanley Capital International) Emerging Markets Index is designed to measure equity market performance in global emerging markets. You cannot invest directly in an index or average. For performance information current to the most recent month end, please call (877) 896-2590. Maximum sales charge for Class A Shares is 5.50%. The fund’s investment adviser has contractually agreed to reduce its fees and/or absorb expenses of the fund, at least until December 14, 2019. The Fund’s total annual fund operating expenses after fee waiver are 2.28% for Class A, 3.03% for Class C , and 2.03% for Class I shares, respectively. * Without these waivers, the Fund’s total annual operating expenses would be 2.30% for Class A, 3.05% for Class C, and 2.05% for Class I. Please review the fund’s prospectus for more information regarding the fund’s fees and expenses. These fee waivers and expense reimbursements are subject to possible recoupment from the Fund within the three years after the fiscal year end during which the fees have been waived or reimbursed, if such recoupment can be achieved within the foregoing expense limits. These agreements may be terminated only by the Fund’s Board of Trustees, on 60 days’ written notice to the Fund’s adviser.

Randy Swan

Randy Swan

Portfolio Manager

Rob Swan

Rob Swan

Portfolio Manager

Randy Swan started Swan Global Investments in 1997, looking to supply investment management services that were not available to most investors. Early in his financial career, Randy saw that options provided an opportunity to minimize investment risk.
Randy and co-portfolio manager Rob Swan have been managing the Funds since inception.

Swan Capital Management Logo

Swan Capital Management

1099 Main Avenue, Suite 206
Durango, Co 81301
Tel: 970.382.8901

Gemini Fund Services, LLC

PO Box 541150
Omaha, Ne 68154

Direct Contacts

For general questions or support

Toll Free
P:  866-617-7926
E: Email Client Services

For advisors or institutions with questions

Sean McCaffrey
P: 970-382-8901, ext. 105
E: Email Sean

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ETFs are subject to investment advisory and other expenses, which will be indirectly paid by the Fund. As a result, the cost of investing in the Fund will be higher than the cost of investing directly in ETFs and may be higher than other mutual funds that invest directly in stocks. ETFs are subject to specific risks, depending on the nature of the Fund.
Investors cannot directly invest in an index and unmanaged index returns do not reflect any fees, expenses or sales charges. Swan may invest in index ETFs as an underlying asset within each mutual fund, such as:
SPY: The SPDR® S&P 500® ETF Trust seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P 500® Index.
EEM: The iShares MSCI Emerging Markets ETF seeks to track the investment results of an index composed of large- and mid-capitalization emerging market equities.
IWM: The iShares Russell 2000 ETF seeks to track the investment results of an index composed of small-capitalization U.S. equities.
EAFE: The iShares MSCI EAFE ETF seeks to track the investment results of an index composed of large- and mid-capitalization developed market equities, excluding the U.S. and Canada.
The use of leverage, such as that embedded in options, could magnify the Fund’s gains or losses. Written option positions expose the Fund to potential losses many times the option premium received.
The adviser’s dependence on its Defined Risk Strategy process and judgments about the attractiveness, value and potential appreciation of particular ETFs and options in which the Fund invests or sells may prove to be incorrect and may not produce the desired results.
Purchased put options may expire worthless and may have imperfect correlation to the value of the Fund’s sector ETFs. Written call and put options may limit the Fund’s participation in equity market gains and may amplify losses in market declines. The Fund’s losses are potentially large in a written put or call transaction. If un-hedged, written calls expose the Fund to potentially unlimited losses.
Investments in underlying funds that own small and mid-capitalization companies may be more vulnerable than larger, more established organizations. Investments in foreign securities could subject the Fund to greater risks including, currency fluctuation, economic conditions, and different governmental and accounting standards. In addition to the risks generally associated with investing in securities of foreign companies, 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.
Investors should carefully consider the investment objective, risks, charges and expenses of the Swan Defined Risk Funds. Mutual funds involve risk, including possible loss of principal. There is no guarantee the Fund will meet its objective. This and other information is contained in the prospectus and should be read carefully before investing. For a prospectus please call Swan Defined Risk Funds at (877) 896-2590. The Funds are distributed by Northern Lights Distributors, LLC, member FINRA / SIPC. Northern Lights Distributors, LLC is not affiliated with Swan Capital Management, LLC, Swan Global Management, LLC, or Swan Global Investments, LLC. Swan Capital Management, LLC, Swan Global Management, LLC, and Swan Global Investments, LLC are affiliated entities. 6002-NLD-1/6/2016