Form 497 Northern Lights Fund

Enter Wall Street with StreetInsider Premium. Claim your 1-week free trial here.


Class A Mnemonic: NAVAX
Class C Symbol: NAVCX
Class I Symbol: NAVIX

(a Northern Lights Fund Trust series)

Supplement of June 14, 2021 to the Prospectus of February 28, 2021


Please note that the sections titled “Main investment strategiesOn page 8 and on page 23 of the Fund’s prospectus are hereby deleted in their entirety and reworded as follows:

Main investment strategies:

The Fund Advisor seeks to achieve the Fund’s investment objective by allocating assets to various sectors of the global stock markets by investing primarily in:

• exchange-traded funds which each invest primarily in equity securities

• put options on the Standard & Poor’s 500 index for hedging purposes; and

• volatility exchange-traded funds, volatility exchange-traded notes, and put and call options on exchange-traded funds and volatility-linked notes for hedging purposes.

The Fund defines equity securities as comprising both (i) exchange-traded funds (“ETFs”) that invest primarily in common stocks and (ii) options on the Standard & Poor’s 500 Index.

The Fund invests without restriction as to capitalization, country (including emerging markets) or trading currency of individual equity securities held by ETFs. However, the Fund is subject to the sector limits described below. Under normal market conditions, the Fund invests at least 80% of its assets in equities, as defined above.

Global asset allocation process

The advisor determines global equity sector allocations using its proprietary quantitative relative strength research process. The advisor’s research process aims for an optimal asset allocation targeting exposure to equity ETFs in three areas: (i) US equity markets by issuer capitalization and investment style; (ii) US stock markets by industry sector and sub-sector; and (iii) foreign stock markets by region and country. The Advisor has defined minimum and maximum allocation parameters in each area in order to prevent the process from orienting the construction of the portfolio towards an excessively concentrated position.

The advisor’s proprietary research process is applied to rank investments in each of the three targeted market segments. The Issuer Capitalization and Investment Style segment groups issuers according to their relative market capitalization (eg small, medium or large) and their investment style (eg growth or value). Typically, growth refers to issuers with above average earnings or revenue growth, while value refers to issuers with above average valuation, as measured by the price / earnings ratio. The sector and sub-sector segment classifies investments in various subsets of the market that share similar characteristics. Securities in the top two quartiles of relative strength are investment candidates subject to further research.

A representative ETF is selected for inclusion in the portfolio after having been reviewed for sufficient trading liquidity and its suitability with the overall diversification needs of the portfolio. By selecting ETFs using this process, the

The advisor expects the Fund to generally hold between 5 and 15 positions. The Advisor may engage in frequent purchases and sales of securities to achieve the investment objective of the Fund.

Cover process

The Advisor applies a hedging strategy to protect the portfolio against significant market declines. The Advisor uses a protective sell hedging strategy and / or volatility linked ETFs and / or volatility linked exchange traded notes (“ETNs”) to hedge exposure to the equities of the Fund. In the case of protective puts, the Fund pays a price (called a premium) to buy a put option that gives the Fund the right to sell a security at a fixed (strike) price even though the market price may be. be inferior. The protection sell strategy is executed using exchange traded S&P 500 index put options to hedge the portfolio and reduce volatility. The protection sell strategy seeks to limit losses on the downside. Typically, the S&P 500 puts have an inverse relationship to the S&P 500 Index. In the case of volatility hedging, the Fund buys ETFs and / or ETNs that invest in linked instruments. the volatility of stock markets or futures contracts on the Chicago Board Options Exchange (“CBOE”) Volatility Index (“VIX”). In general, volatility has an inverse relationship with the S&P 500 Index. The Fund invests in volatility-related instruments to benefit from the expected negative correlation between volatility and stock market returns. In addition, the Fund may also use various option strategies which involve a combination of buying and / or writing call options on ETFs and / or Volatility Linked Exchange Traded Notes (“ETNs”). ) to hedge the Fund against volatility and reduce the cost of the hedging strategy. The Fund’s decision whether or not to use specific strategies will depend on an assessment of the options, swaps, futures, underlying funds, ETFs, ETNs or structured notes or other securities available, and on market conditions, which will dictate the extent to which the Fund focuses on its hedging strategies.


In addition, the “Put option risk” in the sections headed “Main investment risks”On pages 10 and 30 of the Fund’s prospectus are hereby deleted in their entirety and reworded as follows:

Option risk: By writing put options, the Fund assumes the risk of a decline in the value of the underlying instrument, including the possibility of a loss of up to the full strike price of each option that it writes, but without the corresponding opportunity to benefit from potential increases in the value of the underlying instrument. When the Fund writes a put option, it assumes the risk of having to buy the underlying instrument at an exercise price which may be higher than the market price of the instrument. If there is a general market downturn and the Fund is unable to close its written put options, this may result in substantial losses for the Fund. By writing a call option, the Fund may be required to deliver instruments underlying an option at a price below the market price. In the event of an uncovered call option, there is an unlimited risk of loss. When an uncovered call is made, the Fund must purchase the underlying instrument to meet its purchase obligations and the necessary instruments may not be available for purchase. When the Fund writes a covered call option, it foregoes the possibility of profiting from an increase in the price of the underlying instrument above the strike price. If a covered call option written by the Fund is exercised, the Fund will experience a gain or loss on the sale of the underlying instrument, depending on the price at which the Fund purchased the instrument and the strike price. of the option. The Fund will receive a premium on the writing of options, but the premium received may not be sufficient to compensate for losses incurred when exercising options. In the case of a covered call, the premium received may be offset by a drop in the market value of the underlying instrument during the option period. If an option that the Fund has purchased is never exercised or closed, the Fund will lose the amount of the premium it has paid and the use of those funds.


The information contained in this supplement contains new and additional information beyond that of the Prospectus, dated February 28, 2021, and the Statement of Additional Information (“SAI”), dated February 28, 2021. This supplement should be read together with the Prospectus and SAI and should be kept for future reference.

Source link

About Darnell Yu

Check Also

Bitcoin Bulls May Lose $ 365 Million When Friday’s BTC Options Expire

Bitcoins (BTC) Price action was not bullish despite an all-time high of $ 69,000 on …

Leave a Reply

Your email address will not be published. Required fields are marked *