Context Insurance Linked Income Fund

Context Insurance Linked Income Fund

Overview

ILSAX | ILSCX | ILSIX

The Context Insurance Linked Income Fund seeks total return by investing in an actively managed portfolio of insurance-linked securities (“ILS,” primarily catastrophe [“cat”] bonds) and other income-oriented insurance-related investments. The Fund’s investment objective is total return by investing in (re)insurance risk premiums through income-producing catastrophe bonds and other insurance-related investments.

Why Cat Bond Strategies Are Attractive Non-Traditional Fixed Income Products:

  • The most liquid instrument in the insurance-linked securities (“ILS”) asset class.
  • Provide exposure to pure (re)insurance event risk, a sector dominated by institutions and hedge funds.
  • Principal loss is tied to insurance event risk–not the same as drivers of risk in stocks, corporate bonds, and other traditional capital market securities.
    • Therefore, cat bond returns can be minimally correlated to stock and bond returns.
  • Floating rate design pays a fixed risk premium rate above a reference rate and may protect against rising interest rates.
    • Typical risk premium rates of 3-8% depending on risk type.
  • Tends to have short term average maturity of approximately 3 years.

Sub Advisor brings unique expertise to the Fund’s Management

  • Over 50 years of combined (re)insurance and asset management experience.
  • Actively managed, fundamental analysis-based portfolio.
  • Experience trading through multiple insurance market stress periods:
    • Sep 2001 terror attacks, 2004 tsunami, 2004/05/12 hurricane seasons, 2008 credit crisis & hurricanes, 2011 events (Japan earthquake, US tornadoes, Thailand floods).
  • In-depth knowledge of catastrophe models.
  • Extensive trading relationships with (re)insurers, brokers and investment banks.

Investment Strategy

The Fund pursues its investment objective by investing primarily in income producing insurance-related investments such as catastrophe bonds and insurance sector debt and preferred stock.

Catastrophe bonds provide exposure to insurance event risk premiums whose returns have historically shown low correlation to traditional equity and debt market returns.

Insurance sector debt and preferred equity provide additional exposure to the insurance industry capital structure and may provide returns comparable to catastrophe bonds.

Fund Documents

Fact Sheet
Prospectus
Summary Prospectus
SAI
XBRL

Context Insurance Linked Income Fund Distributions

TickerRecord DatePayable DateMonthly Distribution AmountReinvest Price
ILSIX4/26/20194/29/20190.023110.24
ILSIX3/28/20193/29/20190.039610.03
ILSIX2/26/20192/27/20190.03499.99
TickerRecord DatePayable DateMonthly Distribution AmountReinvest Price
ILSAX4/26/20194/29/20190.020910.24
ILSAX3/28/20193/29/20190.036810.04
ILSAX2/26/20192/27/20190.03229.99
TickerRecord DatePayable DateMonthly Distribution AmountReinvest Price
ILSCX4/26/20194/29/20190.011010.23
ILSCX3/28/20193/29/20190.031010.03
ILSCX2/26/20192/27/20190.02669.99

4500-NLD-4/8/2019

Past performance is not a guarantee of future results.

Investors should carefully consider the investment objectives, risks, charges and expenses of the Rational Funds. This and other important information about the Fund is contained in the prospectus, which can be obtained by calling (800) 253-0412 or at www.RationalMF.com. The prospectus should be read carefully before investing. The Rational Funds are distributed by Northern Lights Distributors, LLC member FINRA/SIPC. Rational Advisors, Inc. and Cicero Capital Partners, LLC are not affiliated with Northern Lights Distributors, LLC.

Important Risk Information

An investment in the Fund involves a high degree of risk. The insurance-related securities in which the Fund invests are typically considered “high yield” and many insurance-related debt securities may be rated less than investment grade or unrated. It is possible that investing in the Fund may result in a loss of some or all of the amount invested. Before making an investment or allocation decision, investors should (i) consider the suitability of this investment with respect to an investor’s or a client’s investment objectives and individual situation and (ii) consider factors such as an investor’s or a client’s net worth, income, age, and risk tolerance. Investment should be avoided where an investor or client has a short-term investing horizon and/or cannot bear the loss of some or all of the investment. The insurance-related securities in which the Fund invests will be subject to credit risk. Credit risk may be substantial for the Fund. The Fund may invest in derivatives with a limited number of counterparties, and events affecting the creditworthiness of any of those counterparties may have a pronounced effect on the Fund, its value and the valuation of individual securities. The use of derivatives involves risks that are in addition to, and potentially greater than, the risks of investing directly in securities and other more traditional assets. When the Fund invests in fixed income securities, the value of your investment in the Fund will fluctuate with changes in interest rates. Typically, a rise in interest rates causes a decline in the value of fixed income securities owned by the Fund. A significant percentage of the insurance-related securities in which the Fund invests are expected to be variable rate, or floating-rate, event-linked bonds. Floating-rate instruments and similar investments may be illiquid or less liquid than other investments. The principal risk of an investment in an event-linked bond or swap is that a trigger event(s) (e.g., (i) natural events, such as a hurricane, tornado or earthquake; or (ii) man-made events, such as large aviation disasters, building explosions or cyberattacks) will occur and the Fund will lose all or a significant portion of the principal it has invested in the security and the right to additional interest payments with respect to the security. The Fund may invest in countries with newly organized or less developed securities markets. There are typically greater risks involved in investing in emerging markets securities. There are risks associated with an options hedging strategy. Generally, options may not be an effective hedge because they may have imperfect correlation to the value of the Fund’s portfolio securities. There can be no assurance that the Fund’s hedging strategy will reduce risk or that hedging transactions will be either available or cost effective.

8610-NLD-12/31/2018

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