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Investment Objective
The investment objective of the Marathon Value Portfolio (the
“Fund”) is to provide shareholders with long-term capital
appreciation in a well-diversified portfolio. The Fund will
measure its performance against the S&P’s 500
Index®. It will benchmark both relative performance and
volatility against that measure.
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Principal Strategies
The Fund primarily will provide the investor broad exposure to
what the Fund’s advisor, Spectrum Advisory Services, Inc.,
believes are the best opportunities or values in common stocks
of U.S. companies. These opportunities or values typically will
be stocks of companies that, in the advisor’s opinion, do not
reflect the intrinsic value of the companies.
The advisor intends that the Fund will invest primarily in
common stocks of U.S. companies that have potential “value” in
the advisor’s judgment. The advisor believes that determining
value involves an effort to understand a company’s assets and
business strengths and to compare those to the current price of
the company’s stock. It is worth noting that in today’s economy,
assets are often intangible. A value investor does not place
great emphasis on precise projections of future earnings or on
the current momentum of the company’s business. The advisor will
not exclude great companies that sell at reasonable prices
relative to their value. The advisor intends for the Fund to
provide investors with exposure to a wide number of industries.
In valuing a company, the advisor takes a long-term approach,
with an emphasis on management strength and the fundamental
profitability of the company’s business. To assess management
strength, the advisor looks for characteristics such as a
long-term record of success or positive opinions from industry
observers. The advisor seeks companies whose businesses possess,
in the advisor’s opinion, inherent strength based on factors
such as superior production or distribution processes, unique
products or quality franchises. The Fund may also purchase a
company’s stock if the advisor’s assessment of the private
market value of the company (i.e., the price at which
knowledgeable buyers and sellers would exchange a comparable
business) exceeds, by a material amount, the price of the
security. The advisor’s assessment of private market value is
based on reported similar transactions, information in industry
publications or from individuals within the industry, or other
sources of information.
The Fund may invest in short-term and long-term debt securities,
preferred stocks, convertible debt securities and convertible
preferred stocks. The Fund may invest in lower-rated debt
securities of a company if the advisor believes that the
company’s junk bonds offer more potential for participating in
the company’s long-term prospects than could be achieved by
investing in the company’s other available securities. The Fund
also may invest up to 10% of its assets in junk bonds rated at
the time of purchase BB/Ba or lower by S&P or Moody’s or,
unrated, but determined to be of comparable quality by the
advisor. The Fund also may invest up to 10% of its assets in
equity securities of foreign issuers, including American
Depositary Receipts (“ADRs”). ADRs are certificates held in
trust by a U.S. bank or trust company evidencing ownership of
shares of foreign-based issuers, and are an alternative to
purchasing foreign securities in their national market and
currency.
The Fund intends to remain substantially invested in value
securities. If, however, the advisor believes that sufficient
investment opportunities that meet the Fund's investment
criteria are not available, the Fund may invest up to 20% of its
total assets in money market funds, investment grade short-term
money market instruments including U.S. Government and agency
securities, commercial paper, certificates of deposit,
repurchase agreements and other cash equivalents. The Fund will
incur duplicate management and other fees when investing in
money market funds. By keeping cash on hand, the Fund may be
able to meet shareholder redemptions without selling stocks and
realizing gains and losses. However, the Fund may not achieve
its investment objective when holding a substantial cash
position.
The advisor believes its price-driven, value-oriented approach
will provide investors with the opportunity for growth, while
providing some protection against permanent impairment of
capital. The advisor seeks to reduce risk by buying stocks the
advisor believes are reasonably priced relative to the company’s
earnings and sales, by diversifying broadly and by avoiding
current market favorites. The advisor’s decision to purchase a
stock is made without regard to the market capitalization of the
company or its weighting in any market index. The Fund may
invest in companies of all sizes, which includes large, mid-cap,
and small-cap securities.
The Fund may sell a security when the advisor believes the price
is no longer undervalued relative to the company’s earnings and
sales, the company’s prospects have deteriorated, there has been
a change in management, or better investment opportunities are
available.
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Principal Risks of Investing in the Fund
- Value Risk. A company may be undervalued due to market or economic
conditions, temporary earnings declines, unfavorable
developments affecting the company and other factors, or
because it is associated with a market sector that generally
is out of favor with investors. Undervalued stocks tend to
be inexpensive relative to their earnings or assets compared
to other types of stock. However, these stocks can continue
to be inexpensive for long periods of time and may not
realize their full economic value.
- Management Risk. The advisor’s value-oriented approach may fail to produce
the intended results. If the advisor’s perception of a
company’s worth is not realized in the expected time frame,
the Fund’s overall performance may suffer.
- Small-Cap and Mid-Cap Risk.
Stocks of small-capitalization and mid-capitalization
companies are more risky than stocks of larger companies.
Many of these companies are young and have a limited track
record. Their securities may trade less frequently and in
more limited volume than those of more mature companies. As
a result, small-and mid-cap stocks may be significantly more
volatile than larger-cap stocks. Small-cap and mid-cap
companies also may lack the managerial, financial or other
resources necessary to implement their business plans or
succeed in the face of competition. The prospects for a
company or its industry may deteriorate because of a variety
of factors, including disappointing operating results or
changes in the competitive environment. It may be difficult
to sell a small-cap or mid-cap stock, and this lack of
market liquidity can adversely affect the Fund’s ability to
realize the market price of a stock, especially during
periods of rapid market decline.
- Foreign Risk.
Foreign securities may experience more rapid and extreme
changes in value than securities of U.S. companies because
the securities markets of many foreign countries are
relatively smaller than those in the U.S. Foreign issuers
are not subject to the same degree of regulation as U.S.
issuers. Also, nationalization, expropriation or
confiscatory taxation or political changes could adversely
affect the Fund’s investments in a foreign country. There is
a risk that fluctuations in the exchange rates between the
U.S. dollar and foreign currencies may negatively affect the
value of the Fund’s investments in foreign securities.
- Interest Rate Risk.
Changes in interest rates will affect the value of the
Fund’s investments in debt securities. Increases in interest
rates may cause the value of the Fund’s investments to
decline and this decrease in value may not be offset by
higher interest income from new investments. Interest rate
risk is greater for investments in junk bonds.
- Credit Risk.
Changes in the financial strength of an issuer may affect
the issuer’s ability to repay principal and to make timely
interest payments. The degree of risk for a particular
security may be reflected in its credit rating. Junk bonds
are subject to greater credit and market risk than higher
rated securities.
- Company Risk. The
value of the Fund may decrease in response to the activities
and financial prospects of an individual company in the
Fund’s portfolio. The value of an individual company can be
more volatile than the market as a whole.
- Market Risk.
Overall stock market risks may also affect the value of the
Fund. Factors such as domestic economic growth and market
conditions, interest rate levels and political events affect
the securities markets and could cause the Fund’s share
price to fall.
- An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
- The Fund is not a complete investment program. As with any mutual fund investment, the
Fund’s returns will vary and you could lose money.
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Is the Fund Right for You?
The Fund may be suitable for:
- Long-term investors seeking a fund with a value investment strategy
- Investors who can tolerate the risks associated with common stock investments
- Investors willing to accept the greater market price fluctuations of smaller companies
You should carefully consider the investment
objectives, potential risks, management fees, and
charges and expenses of the Fund before investing.
The Fund's Prospectus
contains this and other information about the Fund, and should be read
carefully before investing. You may obtain a current
copy of the Fund's Prospectus by calling
1-800-788-6086.
The Fund's past performance does not guarantee
future results. The investment return and principal
value of an investment in the Fund will fluctuate so
that an investor's shares, when redeemed, may be
worth more or less than their original cost. Current
performance of the Fund may be lower or higher than
the performance quoted. Performance data current to
the most recent month end may be obtained by calling
1-800-788-6086.
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