Investment Approach

An unconstrained corporate bond portfolio. The portfolio combines higher yielding fixed income corporate securities with a small amount of U.S. Treasury and alternative income securities. The portfolio is comprised primarily (80% plus) of higher yielding corporate bonds in both the investment grade category and the higher-rated non-investment grade corporate bonds. Bonds with ratings of BBB and BB as rated by Standard & Poor's will be the primary source of investment selections.

Portfolio management and issue selection encompasses both fundamental and technical analysis and employs internal and external intelligence in the execution of the approach. Research is also focused on broader macroeconomic risks, including credit and interest rate risks.

Investment Objective

The fund seeks high current income, competitive total return, as well as protection from turbulent financial markets. By combining security selection and risk management, PVG believes it can generate annual distributable income of 4% to 6% as well as capital appreciation over time.

The US Corporate Flexible Bond Strategy is suitable for income oriented investors, who also seek appreciation, but are uncomfortable with substantial bond market risks.

Risk Management

PVG reduces undiversifiable market volatility and risk by hedging portfolios with inverse market index securities, stop losses and cash positions. Hedging tactics are utilized to reduce overall volatility of the portfolio, and may also result in minimizing losses that may occur in an unfavorable cyclical or secular market.

Individual bond risk is also managed by PVG. While PVG extensively researches all issues included in the US Corporate Flexible Bond Strategy, changing fundamental and market conditions, periodically requires the sale and replacement of portfolio securities. Others are sold if they rise to excessive valuations.

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