Rotation Out of Tech

We believe there is no catalyst to move the market higher until mid-July when earnings come out. We believe it’s going to be a long hot summer. There are some geo-political risks that could upset the apple cart, but this could also be an opportunity for the funds.

Illinois: low interest rates have caused extreme underfunding in defined benefit and other pension liabilities and I think Chicago will probably be the first victim of that.
- We see an attempt at restructuring by end of year. Similar to Detroit in 2013
We believe Venezuela probably will default. Credit rating currently at CCC headed for single D is probably a foregone conclusion.
Tech stocks: We see a rotation out of tech and into basic industries this summer.
Potential for Inverted Chinese yield curve
- Difference between the short end and the long end is currently 30 or 40 basis points (0.30%-0.40%.) Possible inversion from the three to fives and the seven to tens.
- China may go into recession.
South China Seas: General Mattis got on TV a week or two ago regarding this region. We mentioned a few months ago that the South China Seas could become a real issue.
Interest Rates: we believe the risk is a flatter yield curve here in the US.
We have continued to keep the credit quality of holdings high as we believe the risk reward in the high yield space isn’t there.
We remain bearish on the car market but we think that sector should begin to come out of the fog late this year or early next year.

Disclousre

Past performance is not a guide to future performance. Portfolio holdings and allocations may change at any time. Views and opinions discussed in the Portfolio Manager Highlights are those of the fund managers and could change after the date published. The information in this article does not qualify as an investment recommendation. Investors should consider the investment objective, risks, charges and expenses of the Fund carefully before investing. The Prospectus contains this and other important information about the Fund. For a current Prospectus, call 800-269-8810 or go to Please read carefully before investing.

In this update Leader Capital provides its thoughts on the current economy as well as analysis of specific market sectors and securities – and their strategy for the funds going forward. The securities and sectors mentioned are ones of interest to the portfolio managers in carrying out their investment strategy for the funds and although the funds may not invest directly in the securities or sectors discussed, their resulting performance may impact that of the funds – or influence actions taken by the portfolio managers. These discussions do not imply a recommendation to purchase any specific investment or investment in a specific market segment.
As of 06/17/2017 none of the securities referenced are currently held by the funds. Portfolio holdings and allocations may change at any time.
10-Year Breakeven Rate: Subtracting the real yield of the inflation linked maturity curve from the yield of the 10-year Treasury maturity. The result is the implied inflation rate for the term of the stated maturity.
Consumer Prices Index: Consumer prices (CPI) are a measure of prices paid by consumers for a market basket of consumer goods and services. The yearly (or monthly) growth rates represent the inflation rate.
Risks: Investments in debt securities typically decrease in value when interest rates rise. The risk is actually greater for longer term debt securities. Investment in lower-rated and nonrated securities presents a greater risk of loss of principle and interest than higher-rated securities. Investments exposed to credit risk where lower-rated securities have a higher risk of defaulting on obligations. Investments in foreign securities involve greater volatility and political, economic and currency risks. They may also have different accounting methods. Investments in asset-backed and mortgage-backed securities include additional risks that investors should be aware of such as credit risk, prepayment risk, possible illiquidity and default, as well as increased susceptibility to adverse economic developments.
The Funds are distributed by Foreside Distribution Services, LP.