Frequently Asked Questions

1. Why invest in managed futures?

The managed futures asset class offers the following potential benefits to investors:

Diversification of Returns: Managed futures trading programs can profit in rising or falling markets by taking long or short positions in a variety of markets – from physical commodities (agricultural products, metals, and energy) to financial futures (stock indices, currencies, and interest rates).

Non-Correlated Returns: Most managed futures programs have a low-to-negative correlation with traditional asset classes, due to the differing nature of managed futures profit opportunities.

Reduced Portfolio Risk: Academic studies suggest that even a modest allocation to managed futures can often reduce portfolio volatility by adding up-side performance potential when it is most needed. (Ibbotson and Associates, Managed Futures and Asset Allocation, 2006; p. 18)

Increased Portfolio Performance: Although past performance is not indicative of future results, during the period from January 2000 through December 2011, managed futures outperformed equities with a higher rate of return, lower standard deviation and lower maximum drawdown.

The Relative Performance of $1,000 Invested Over Time (January 2000 – March 2012)*

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS. YOU CAN LOSE MONEY IN A MANAGED FUTURES PROGRAM.

*Relative performance of $1,000 invested over time. Performance displayed represents past performance, which is no guarantee of future results. The referenced indices are shown for general market comparisons and are not meant to represent the performance of the MutualHedge Frontier Legends Fund or any other fund. The MutualHedge Frontier Legends Fund is new and has no performance history. The indices are unmanaged and are not available for direct investment. Index performance does not reflect all transaction costs, fees or expenses. The S&P 500^® Total Return Index is shown to demonstrate how the Barclay BTOP50 Index^®† compares to a broad stock market index.

^† The indices do not encompass the whole universe of CTAs (or funds). The CTAs (or funds) that comprise the indices have submitted their information voluntarily. Investors cannot directly invest in an index and unmanaged index returns do not reflect any fees, expenses or sales charges.

2. Why the emphasis on multiple CTA programs?
Each managed futures trading program has unique strengths. Programs vary in terms of the markets they trade, the inputs they rely upon (technical, fundamental, or both); the models they use (systematic, discretionary, or both), and the timeframes they encompass.

By blending the return profiles of several renowned and established managed futures trading programs, MutualHedge seeks to expand the number of profit opportunities available, thereby broadening the market conditions that are conducive to investment gains.

3. Does the Fund’s investment advisor have managed futures experience?
Equinox Fund Management is the Investment Adviser for MutualHedge. Founded in 2003, Equinox Fund Management is a commodity pool operator that specializes in the creation and distribution of innovative alternative investment products.

In 2004, Equinox Fund Management launched The Frontier Fund, a family of multi-advisor public managed futures funds available to non-accredited investors. The Frontier Fund is one of the leading retail managed futures funds, and is available through more than 50 broker dealer platforms and numerous independent investment advisers.

4. How is the program portfolio assembled?
Our portfolio management team has years of combined experience in creating alternative investment portfolios for institutional and retail investors.

There are four components to the MutualHedge portfolio methodology:

i) Research: Equinox Fund Management uses proprietary and commercial databases as well as analytical tools to identify investment programs that may be suitable for inclusion in MutualHedge. These databases and tools are supplemented with informal investment community contacts and networks.

ii) Evaluation: Equinox uses quantitative and qualitative processes to evaluate trading programs for possible inclusion in the MutualHedge portfolio. Equinox applies a variety of analytical and statistical methods in its selection process, while also relying on rigorous due diligence.

iii) Portfolio Design: Equinox analyzes the interrelationships among the selected investment programs. The contribution of each program to various hypothetical portfolios is assessed. The aim of the process is to develop a portfolio of investment programs that offers more consistent performance potential with less volatility than that of any individual investment program.

iv) Risk Management: To ensure that investment objectives are being achieved within stated risk parameters, Equinox monitors leverage, volatility, market sector exposure, losses from peak profit levels, and frequency of trading activity.

MutualHedge also holds cash, cash equivalents and fixed income securities. The Fund may also invest in a variety of derivative instruments.

The CTA programs for MutualHedge are accessed through investment in one or more trading companies. Trading companies exist as investable commodity pools and provide access to various managed futures programs. Trading companies establish separately managed accounts, thereby promoting transparency.

The aim of the process is to develop a portfolio of investment programs that offers more consistent performance potential with less volatility than that of any individual investment program.

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