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Mutual Fund Series Trust
0001355064
2012-11-01
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<b><font style="font-size:12.0pt; font-family:Times New Roman">Investment Objective:</font></b><font style="font-size:12.0pt; font-family:Times New Roman"> </font>
<font style="font-size:10.0pt; font-family:Times New Roman">The Fund seeks to provide a high level of current income with capital appreciation as a secondary objective. </font>
<b><font style="font-size:12.0pt; font-family:Times New Roman">Fees and Expenses of the Fund:</font></b><font style="font-size:12.0pt; font-family:Times New Roman"> </font>
<p>This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.  You may qualify for sales charge discounts on purchases of Class A shares if you and your family invest, or agree to invest in the future, at least $50,000 in the Fund.  More information about these and other discounts is available from your financial professional and in section entitled How to Buy Shares on page 73 of the Fund's Prospectus.</p>
<p><b>Shareholder Fees</b></p> <p><b>(fees paid directly from your investment)</b></p>
<p><b>Annual Fund Operating Expenses</b></p> <p><b>(expenses that you pay each year as a percentage of the value of your investment)</b></p>
<b><font style="font-size:12.0pt; font-family:Times New Roman">Example:</font></b>
<p>This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.  The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods.  The Example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same.  Although your actual costs may be higher or lower, based on these assumptions your costs would be:</p>
<u><font style="font-size:12.0pt; font-family:Times New Roman">Portfolio Turnover:</font></u>
<p>The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio).  A higher portfolio turnover may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account.  These costs, which are not reflected in annual fund operating expenses or in the Example, affect the Fund's performance. The portfolio turnover rate of the Fund for the fiscal year ended June 30, 2012 was 33%.</p>
<p>Principal Investment Strategies: </p>
<p style="margin-top:0in; margin-right:0in; margin-bottom:12.0pt; margin-left:0in; text-align:justify; text-indent:.5in"><font lang="X-NONE">The Fund invests in a non-diversified group of low-quality, high yield corporate bonds, convertible securities and asset-backed securities.  The Fund may invest without limitation in non-investment grade corporate bonds rated Baa or lower by Moody’s or BBB or lower by S&P (also known as “junk” bonds).  The Fund may also invest in corporate issues that have defaulted.  Because of their low credit quality, these securities typically pay higher interest rates to compensate investors for the substantial credit risk they assume.  While there are no restrictions on maturity, the bonds in the Fund’s portfolio will generally have an average maturity of less than ten years.  The Fund seeks capital appreciation from selling securities above the purchase price.  Bonds may appreciate in value through an improvement in credit quality among other reasons. </font></p> <p style="margin-top:0in; margin-right:0in; margin-bottom:12.0pt; margin-left:0in; text-align:justify; text-indent:.5in"><font lang="X-NONE">To select the securities in which to invest, SMH Capital Advisors, Inc., the Fund’s sub-advisor (“Sub-Advisor”), conducts fundamental credit research on each issuer.  Securities may be sold when the Sub-Advisor believes that they no longer represent relatively attractive investment opportunities.</font></p> <p style="margin-top:0in; margin-right:0in; margin-bottom:6.0pt; margin-left:0in; text-align:justify; text-indent:.5in"><font lang="X-NONE">The Fund invests primarily in, and will choose its investments from, the following types of securities:</font></p> <p style="margin-top:0in; margin-right:0in; margin-bottom:0in; margin-left:.5in; margin-bottom:.0001pt; text-align:justify; text-indent:-.25in; tab-stops:.5in"><font style="font-family:Symbol">·    </font><b>Corporate debt.</b> Debt obligations (usually called bonds) are loans by an investor to a corporation. They usually have a set interest rate and term.</p> <p style="margin-top:0in; margin-right:0in; margin-bottom:6.0pt; margin-left:0in; text-align:justify; text-indent:.5in"><font lang="X-NONE"> </font></p> <p style="margin-top:0in; margin-right:0in; margin-bottom:0in; margin-left:.5in; margin-bottom:.0001pt; text-align:justify; text-indent:-.25in; tab-stops:.5in"><font style="font-family:Symbol">·    </font><b>Preferred stocks.</b> Preferred stock is corporate stock that pays set dividends to its holders. Preferred stock has a superior claim on the issuer’s income and assets relative to common stock but a lower claim on assets than corporate bondholders.</p> <p style="margin-top:0in; margin-right:0in; margin-bottom:6.0pt; margin-left:0in; text-align:justify; text-indent:.5in"><font lang="X-NONE"> </font></p> <p style="margin-top:0in; margin-right:0in; margin-bottom:0in; margin-left:.5in; margin-bottom:.0001pt; text-align:justify; text-indent:-.25in; tab-stops:.5in"><font style="font-family:Symbol">·    </font><b>Convertible securities.</b> Bonds or preferred stocks which are convertible into, or exchangeable for, common stocks.</p> <p style="margin-top:0in; margin-right:0in; margin-bottom:0in; margin-left:.5in; margin-bottom:.0001pt; text-align:justify; text-indent:-.25in; tab-stops:.5in"><font style="font-family:Symbol">·    </font><b>Asset-backed securities.</b> Asset-backed securities are securities issued by trusts and special purpose entities that are backed by pools of assets, such as automobile and credit-card receivables and home equity loans, which pass through the payments on the underlying obligations to the security holders (less servicing fees paid to the originator or fees for any credit enhancement). Typically, the originator of the underlying loans transfers it to a specially created trust, which repackages it as securities with a minimum denomination and a specific term. The securities are then privately placed or publicly offered. Examples include certificates for automobile receivables and so-called plastic bonds, backed by credit card receivables. The Fund does not intend to invest in sub-prime mortgage backed securities.</p> <p style="margin-top:0in; margin-right:0in; margin-bottom:6.0pt; margin-left:0in; text-align:justify; text-indent:.5in"><font lang="X-NONE"> </font></p> <p style="margin-top:0in; margin-right:0in; margin-bottom:6.0pt; margin-left:.5in; text-align:justify; text-indent:-.25in"><font style="font-family:Symbol">·    </font><b>Collateralized Mortgage Obligations (CMOs).</b> CMOs are a specific type of asset backed securities that are collateralized by mortgages or mortgage pass-through securities. When CMOs are created, the rights to receive principal and interest payments on the underlying mortgages are divided up to create short, intermediate and long-term CMO bonds. These rights are delegated and divided among the various maturity structures of the CMOs based on assumptions made by the creators concerning the timing of cash flows on the underlying mortgages, including expected prepayment rates. The Fund does not intend to invest in sub-prime mortgage backed securities.</p> <p style="margin-top:0in; margin-right:0in; margin-bottom:12.0pt; margin-left:0in; text-align:justify"> </p> <p style="margin-top:0in; margin-right:0in; margin-bottom:.25in; margin-left:0in; text-align:justify; text-indent:.5in"><font lang="X-NONE">The Fund is classified as “non-diversified” for purposes of the Investment Company Act of 1940 (the “1940 Act”), which means that it is not limited by the 1940 Act with regard to the portion of its assets that may be invested in the securities of a single issuer.</font></p> <p style="margin-top:0in; margin-right:0in; margin-bottom:.25in; margin-left:0in; text-align:justify; text-indent:.5in"><font lang="X-NONE">The Fund and Catalyst Capital Advisors LLC, the Fund’s investment advisor</font>, <font lang="X-NONE">intend</font>s <font lang="X-NONE">to request that the Securities and Exchange Commission grant an order that allows the advisor to hire a sub-advisor or sub-advisors without shareholder approval (the “Order”).  </font>If the Order is granted, <font lang="X-NONE">the Adviser </font>will have <font lang="X-NONE">ultimate responsibility (subject to oversight by the Board</font><font lang="X-NONE"> </font>of Trustees of the Trust<font lang="X-NONE">) to oversee the Subadvisers and recommend their hiring, termination and replacement.</font><font lang="X-NONE">  Until that Order is granted, shareholder approval is required if the advisor hires a sub-advisor or sub-advisors.  However, there is no guarantee that such an Order will be issued.</font></p>
<p><b>Principal Risks of Investing in the Fund:</b></p>
<p>As with any mutual fund, there is no guarantee that the Fund will achieve its goal. The Fund's net asset value and returns will vary and you could lose money on your investment in the Fund.</p> <p> </p> <p><b><font style="color:black" lang="X-NONE">Asset-Backed Security Risk.</font></b><font style="color:black" lang="X-NONE">  When the Fund invests in asset-backed securities, including mortgage backed securities and CMOs, the Fund is subject to the risk that, if the issuer fails to pay interest or repay principal, the assets backing these securities may not be     sufficient to support payments on the securities.  </font></p> <p><b><font style="color:black" lang="X-NONE">Convertible Securities Risk.</font></b><font style="color:black" lang="X-NONE"> </font><font style="color:black" lang="X-NONE">Convertible securities are hybrid securities that have characteristics of both fixed income and equity securities and are subject to risks associated with both fixed income and equity securities.</font></p> <p><b><font style="color:black" lang="X-NONE">Credit Risk.</font></b><font style="color:black" lang="X-NONE"> Credit risk is the risk that an issuer of a security will fail to pay principal and interest in a timely manner, reducing the Fund’s total return. The Fund may invest in high-yield, high-risk securities, commonly called “junk bonds”, that are not investment grade and are generally considered speculative because they present a greater risk of loss, including default, than higher quality debt securities. Credit risk may be substantial for the Fund. </font></p> <p><b><font style="color:black" lang="X-NONE">Income Risk.</font></b><font style="color:black" lang="X-NONE"> Income risk is the risk that the income from the Fund’s portfolio will decline because of falling market interest rates. This can result when the Fund invests the proceeds from new share sales, or from matured or called bonds, at market interest rates that are below the portfolio’s current earnings rate.</font></p> <p><b><font style="color:black" lang="X-NONE">Interest Rate Risk.</font></b><font style="color:black" lang="X-NONE"> Interest rate risk is the risk that bond prices overall, including the prices of securities held by the Fund, will decline over short or even long periods of time due to rising interest rates. Bonds with longer maturities tend to be more sensitive to interest rates than bonds with shorter maturities.</font></p> <p><b><font style="color:black" lang="X-NONE">Junk Bond Risk.</font></b><font style="color:black" lang="X-NONE">  Lower-quality bonds, known as “high yield” or “junk” bonds, present greater risk than bonds of higher quality, including an increased risk of default.  An economic downturn or period of rising interest rates could adversely affect the market for these bonds and reduce the Fund’s ability to sell its bonds.  The lack of a liquid market for these bonds could decrease the Fund’s share price.</font></p> <p><font style="color:black" lang="X-NONE"> </font></p> <p><b><font style="color:black" lang="X-NONE">Lower Quality Debt.</font></b><font style="color:black" lang="X-NONE"> Lower-quality debt securities and certain types of other securities involve greater risk of default or price changes due to changes in the credit quality of the issuer. </font></p> <p><b><font style="color:black" lang="X-NONE">Management Risk.</font></b><font style="color:black" lang="X-NONE">  The portfolio manager’s judgments about the attractiveness, value and potential appreciation of particular securities in which the Fund invests may prove to be incorrect and there is no guarantee that the portfolio manager’s judgment will produce the desired results.  </font></p> <p><b><font style="color:black" lang="X-NONE">Market Risk.</font></b><font style="color:black" lang="X-NONE">  Overall stock or bond 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.</font></p> <p><b><font style="color:black" lang="X-NONE">Non-diversification Risk.</font></b><font style="color:black" lang="X-NONE"> Because a relatively high percentage of a non-diversified Fund’s assets may be invested in the securities of a limited number of companies that could be in the same or related economic sectors, the Fund’s portfolio may be more susceptible to any single economic, technological or regulatory occurrence than the portfolio of a diversified fund.</font></p> <p><b><font style="color:black" lang="X-NONE">Prepayment Risk.</font></b><font style="color:black" lang="X-NONE">  During periods of declining interest rates, prepayment of loans underlying mortgage-backed and asset-backed securities usually accelerates.  Prepayment may shorten the effective maturities of these securities and the Fund may have to reinvest at a lower interest rate. </font></p> <p><b><font style="color:black" lang="X-NONE">Security Risk.  </font></b><font style="color:black" lang="X-NONE">The value of the Fund may decrease in response to the activities and financial prospects of an individual security in the Fund’s portfolio.  There can be no guarantee the securities held by the Fund will appreciate in value.</font></p> <p><b><font style="color:black" lang="X-NONE">U.S. Agency Securities Risk.</font></b><font style="color:black" lang="X-NONE"> The Fund may invest in U.S. government or agency obligations. Securities issued or guaranteed by federal agencies and U.S. government sponsored entities may or may not be backed by the full faith and credit of the U.S. government.</font></p>
<p><b>Performance:</b></p>
<p style="text-align:justify; tab-stops:45.8pt 91.6pt 137.4pt 183.2pt 229.0pt 274.8pt 320.6pt 366.4pt 412.2pt 458.0pt 503.8pt 549.6pt 595.4pt 641.2pt 687.0pt 732.8pt"><font style="color:black">The bar chart and accompanying table shown below provide an indication of the risks of investing in the High Income Fund by showing the total return of its Class A shares for each full calendar year, and by showing how its average annual returns compare over time with those of a broad measure of market performance.  How the Fund has performed in the past (before and after taxes) is not necessarily an indication of how it will perform in the future. </font>Updated performance information is available at no cost by calling 1-866-447-4228.<font style="color:black"></font></p>
<p style="tab-stops:45.8pt 91.6pt 137.4pt 183.2pt 229.0pt 274.8pt 320.6pt 366.4pt 412.2pt 458.0pt 503.8pt 549.6pt 595.4pt 641.2pt 687.0pt 732.8pt"><b><font style="color:black">Annual Total Returns</font></b></p>
<p>Figures do not reflect sales charges.  If they did, returns would be lower. </p> <p> </p> <p>During the period shown in the bar chart, the highest return for a quarter was 27.23% (quarter ended June 30, 2009), and the lowest return for a quarter was (7.72)% (quarter ended September 30, 2011). The Fund’s Class A year-to-date return for the period ended September 30, 2012 was 6.88%.</p>
<p><b>Average Annual Total Returns</b></p> <p><b>(for the periods ended</b></p> <b><font style="font-size:12.0pt; font-family:Times New Roman">December 31, 2011)</font></b>
<p><font style="font-size:10.0pt">After-tax returns are calculated using the highest historical individual federal marginal income tax rate and do not reflect the impact of state and local taxes.  Actual after-tax returns depend on a shareholder’s tax situation and may differ from those shown.  After-tax returns are not relevant for shareholders who hold Fund shares in tax-deferred accounts or to shares held by non-taxable entities. After-tax returns are only shown for Class A shares. After-tax returns for Class C shares will vary.</font></p>
.33
<font style="font-size:12.0pt; font-family:Times New Roman">The Fund's net asset value and returns will vary and you could lose money on your investment in the Fund.</font>
<font style="font-size:12.0pt; font-family:Times New Roman; color:black">How the Fund has performed in the past (before and after taxes) is not necessarily an indication of how it will perform in the future.</font>
<font style="font-size:12.0pt; font-family:Times New Roman">866-447-4228</font>
.2723
<font style="font-size:12.0pt; font-family:Times New Roman">highest return for a quarter </font>
2009-06-30
<font style="font-size:12.0pt; font-family:Times New Roman">lowest return for a quarter </font>
-.0772
2011-09-30
<font style="font-size:12.0pt; font-family:Times New Roman">After-tax returns are calculated using the highest historical individual federal marginal income tax rate and do not reflect the impact of state and local taxes.</font>
<font style="font-size:12.0pt; font-family:Times New Roman">After-tax returns are not relevant for shareholders who hold Fund shares in tax-deferred accounts</font>
<b><font style="font-size:12.0pt; font-family:Times New Roman">Investment Objective</font></b>
<font style="font-size:10.0pt; font-family:Times New Roman">The TRI Fund seeks to provide total return, which consists of current income and capital appreciation.</font><font style="font-size:12.0pt; font-family:Times New Roman"> </font>
<b><font style="font-size:12.0pt; font-family:Times New Roman">Fees and Expenses of the Fund</font></b>
<p>This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.  You may qualify for sales charge discounts on purchases of Class A shares if you and your family invest, or agree to invest in the future, at least $50,000 in the Fund.  More information about these and other discounts is available from your financial professional and in the section entitled How to Buy Shares on page 73 of the Fund’s Prospectus.</p>
<p><b>Shareholder Fees</b></p> <b><font style="font-size:12.0pt; font-family:Times New Roman">(fees paid directly from your investment)</font></b>
<p><b>Annual Fund Operating Expenses</b></p> <p><b>(expenses that you pay each year as a percentage of the value of your investment)</b></p>
<b><u><font style="font-size:12.0pt; font-family:Times New Roman">Example:</font></u></b>
<p><font style="font-size:10.0pt">This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.  The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods.  The Example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses remain the same.  Although your actual costs may be higher or lower, based on these assumptions your costs would be:</font></p>
<b><u><font style="font-size:12.0pt; font-family:Times New Roman">Portfolio Turnover:</font></u></b>
<p><font style="font-size:10.0pt">The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio).  A higher portfolio turnover may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account.  These costs, which are not reflected in annual fund operating expenses or in the Example, affect the Fund’s performance. The portfolio turnover rate of the Fund for the fiscal year ended June 30, 2012 was 39%.</font></p>
<b><font style="font-size:12.0pt; font-family:Times New Roman">Principal investment Strategies:</font></b>
<p style="margin-top:0in; margin-right:0in; margin-bottom:12.0pt; margin-left:0in; text-align:justify; text-indent:.5in"><font lang="X-NONE">Normally, the TRI Fund invests primarily in a broad range of income-producing securities. These include equity securities, such as dividend-paying common stocks and REITs and debt securities, such as interest-paying bonds and convertible bonds. The Fund may also invest in preferred stock, master limited partnerships, bank notes and write covered calls on equities. The composition of the Fund’s investments in equity, debt and cash or money market instruments may vary substantially depending on various factors, including market conditions.</font></p> <p style="margin-top:0in; margin-right:0in; margin-bottom:12.0pt; margin-left:0in; text-align:justify; text-indent:.5in"><font lang="X-NONE">Generally, at least 30% of the Fund’s assets will be invested in equity securities. Subject to the provisions of the Investment Company Act of 1940 (the “1940 Act”) and any applicable exemptive orders, the Fund may invest in other investment companies (“acquired funds”), including Business Development Companies (“BDCs”) and other closed-end funds, and exchange-traded funds (“ETFs”). The Fund may invest in companies of any market capitalization but generally focuses on stocks with capitalization between $1 billion and $10 billion.</font></p> <p style="margin-top:0in; margin-right:0in; margin-bottom:12.0pt; margin-left:0in; text-align:justify; text-indent:.5in"><font lang="X-NONE">The Fund may invest up to 20% of its assets in equity securities of issuers domiciled outside the United States, including without limitation sponsored American Depositary Receipts (“ADRs”). The Fund may also invest up to 20% of its assets in debt securities of non-U.S. issuers.</font></p> <p style="margin-top:0in; margin-right:0in; margin-bottom:12.0pt; margin-left:0in; text-align:justify; text-indent:.5in"><font lang="X-NONE">In addition, the Fund may invest without limitation in lower quality, higher yielding debt securities (rated Ba or lower by Moody’s Investors Service or BB or lower by Standard & Poor’s Corporation or unrated but determined by the Sub-Advisor to be of equivalent quality) also known as “junk bonds”. While there are no restrictions on maturity, the bonds in the Fund’s portfolio will generally have an average maturity of less than ten years.</font></p> <p style="margin-top:0in; margin-right:0in; margin-bottom:12.0pt; margin-left:0in; text-align:justify; text-indent:.5in"><font lang="X-NONE">The Fund’s sub-advisor, SMH Capital Advisors, Inc. (“SMHCA” or the “Sub-Advisor”) seeks to invest in attractively valued securities that, in its opinion, represent above-average long-term investment opportunities. The Sub-Advisor seeks investments with yields above the market average and generally focuses on value-oriented securities – those with low price to sales, price to book and price to earnings ratios relative to their growth rates. Securities may be sold when the Sub-Advisor believes that they no longer represent relatively attractive investment opportunities.</font></p> <p style="margin-top:0in; margin-right:0in; margin-bottom:12.0pt; margin-left:0in; text-align:justify; text-indent:.5in"><font lang="X-NONE">The Fund is classified as “non-diversified” for purposes of the Investment Company Act of 1940 (the “1940 Act”), which means that it is not limited by the 1940 Act with regard to the portion of its assets that may be invested in the securities of a single issuer.</font></p> <p style="margin-top:0in; margin-right:0in; margin-bottom:.25in; margin-left:0in; text-align:justify; text-indent:.5in"><font lang="X-NONE">The Fund and Catalyst Capital Advisors LLC, the Fund’s investment advisor</font>, <font lang="X-NONE">intend</font>s <font lang="X-NONE">to request that the Securities and Exchange Commission grant an order that allows the advisor to hire a sub-advisor or sub-advisors without shareholder approval (the “Order”).  </font>If the Order is granted, <font lang="X-NONE">the Adviser </font>will have <font lang="X-NONE">ultimate responsibility (subject to oversight by the Board</font><font lang="X-NONE"> </font>of Trustees of the Trust<font lang="X-NONE">) to oversee the Subadvisers and recommend their hiring, termination and replacement.</font><font lang="X-NONE">  Until that Order is granted, shareholder approval is required if the advisor hires a sub-advisor or sub-advisors.  However, there is no guarantee that such an Order will be issued.</font></p>
<b><font style="font-size:12.0pt; font-family:Times New Roman">Principal Risks of Investing in the Fund:</font></b>
<p>As with any mutual fund, there is no guarantee that the Fund will achieve its goal. The Fund’s net asset value and returns will vary and you could lose money on your investment in the Fund.</p> <p> </p> <p><b>Acquired Fund Risk.</b> Because the Fund may invest in other investment companies, the value of your investment will fluctuate in response to the performance of the acquired funds. Investing in acquired funds involves certain additional expenses and certain tax results that would not arise if you invested directly in the securities of the acquired funds.  </p> <p> </p> <p><b>Convertible Securities Risk.</b> Convertible securities are hybrid securities that have characteristics of both fixed income and equity securities and are subject to risks associated with both fixed income and equity securities.</p> <p> </p> <p><b>Credit Risk.</b> Credit risk is the risk that an issuer of a security will fail to pay principal and interest in a timely manner, reducing the Fund’s total return. The Fund may invest in high-yield, high-risk securities, commonly called “junk bonds”, that are not investment grade and are generally considered speculative because they present a greater risk of loss, including default, than higher quality debt securities. Credit risk may be substantial for the Fund. </p> <p> </p> <p><b>Foreign Securities Risk.</b>  Since the Fund’s investments may include ADRs and foreign securities, the Fund is subject to risks beyond those associated with investing in domestic securities. Foreign companies are generally not subject to the same regulatory requirements of U.S. companies thereby resulting in less publicly available information about these companies.  In addition, foreign accounting, auditing and financial reporting standards generally differ from those applicable to U.S. companies.  </p> <p> </p> <p><b>Income Risk.</b> Income risk is the risk that the income from the Fund’s portfolio will decline because of falling market interest rates. This can result when the Fund invests the proceeds from new share sales, or from matured or called bonds, at market interest rates that are below the portfolio’s current earnings rate.</p> <p> </p> <p><b>Interest Rate Risk. </b>Interest rate risk is the risk that bond prices overall, including the prices of securities held by the Fund, will decline over short or even long periods of time due to rising interest rates. Bonds with longer maturities tend to be more sensitive to interest rates than bonds with shorter maturities.</p> <p> </p> <p> </p> <p><b>Junk Bond Risk.</b>  Lower-quality bonds, known as “high yield” or “junk” bonds, present greater risk than bonds of higher quality, including an increased risk of default.  An economic downturn or period of rising interest rates could adversely affect the market for these bonds and reduce the Fund’s ability to sell its bonds.  The lack of a liquid market for these bonds could decrease the Fund’s share price.</p> <p> </p> <p><b>Lower Quality Debt.</b> Lower-quality debt securities and certain types of other securities involve greater risk of default or price changes due to changes in the credit quality of the issuer. </p> <p> </p> <p><b>Management Risk.</b>  The portfolio manager’s judgments about the attractiveness, value and potential appreciation of particular securities in which the Fund invests may prove to be incorrect and there is no guarantee that the portfolio manager’s judgment will produce the desired results.  </p> <p> </p> <p><b>Market Risk.</b>  Overall stock or bond 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.</p> <p> </p> <p><b>Non-diversification Risk.</b> Because a relatively high percentage of a non-diversified Fund’s assets may be invested in the securities of a limited number of companies that could be in the same or related economic sectors, the Fund’s portfolio may be more susceptible to any single economic, technological or regulatory occurrence than the portfolio of a diversified fund.</p> <p> </p> <p><b>Options Risk.</b>  There are risks associated with the sale and purchase of call and put options.  As the seller (writer) of a covered call option, the Fund assumes the risk of a decline in the market price of the underlying security below the purchase price of the underlying security less the premium received, and gives up the opportunity for gain on the underlying security above the exercise option price.  As the buyer of a put or call option, the Fund risks losing the entire premium invested in the option if the Fund does not exercise the option.  As a seller (writer) of a put option, the Fund will lose money if the value of the security falls below the strike price.</p> <p> </p> <p><b>Real Estate Risk.</b>  The Fund is subject to the risks of the real estate market as a whole, such as taxation, regulations and economic and political factors that negatively impact the real estate market and the direct ownership of real estate.  These may include decreases in real estate values, overbuilding, rising operating costs, interest rates and property taxes. In addition, some real estate related investments are not fully diversified and are subject to the risks associated with financing a limited number of projects.  REITs are heavily dependent upon the management team and are subject to heavy cash flow dependency, defaults by borrowers and self-liquidation.</p> <p> </p> <p><b>Security Risk.</b>  The value of the Fund may decrease in response to the activities and financial prospects of an individual security in the Fund’s portfolio.  There can be no guarantee the securities held by the Fund will appreciate in value.</p> <p> </p> <p><b>Smaller Capitalization Stock Risk.</b>  To the extent the Fund invests in the stocks of smaller-sized companies, the Fund may be subject to additional risks, including the risk that earnings and prospects of these companies are more volatile than larger companies.  </p>
<p><b>Performance:</b></p>
<p style="text-align:justify; tab-stops:45.8pt 91.6pt 137.4pt 183.2pt 229.0pt 274.8pt 320.6pt 366.4pt 412.2pt 458.0pt 503.8pt 549.6pt 595.4pt 641.2pt 687.0pt 732.8pt"><font style="font-size:10.0pt; color:black">The bar chart and accompanying table shown below provide an indication of the risks of investing in the Total Return Income Fund by showing the total return of its Class A shares for each full calendar year, and by showing how its average annual returns compare over time with those of a broad measure of market performance.  The average annual total returns are also compared over time to the Merrill Lynch US Cash Pay High Yield Return Index because the Fund’s portfolio generally includes a significant number of high yield bonds.  How the Fund has performed in the past (before and after taxes) is not necessarily an indication of how it will perform in the future. </font><font style="font-size:10.0pt">Updated performance information is available at no cost by calling 1-</font></p> <p style="text-align:justify; tab-stops:45.8pt 91.6pt 137.4pt 183.2pt 229.0pt 274.8pt 320.6pt 366.4pt 412.2pt 458.0pt 503.8pt 549.6pt 595.4pt 641.2pt 687.0pt 732.8pt"><font style="font-size:10.0pt">866-447-4228.<font style="color:black"></font></font></p>
<b><font style="font-size:12.0pt; font-family:Times New Roman; color:black">Annual Total Returns</font></b>
<p><font style="font-size:10.0pt">Figures do not reflect sales charges.  If they did, returns would be lower.</font></p> <p><font style="font-size:10.0pt"> </font></p> <p><font style="font-size:10.0pt">During the period shown in the bar chart, the highest return for a quarter was 29.75% (quarter ended June 30, 2009), and the lowest return for a quarter was (15.03%) (quarter ended September 30, 2011). The Fund’s Class A year-to-date return for the period ended September 30, 2012 was 6.75%.</font></p>
<p>Average Annual Total Returns</p> <p>(for the periods ended December 31, 2011)</p>
<p>After-tax returns are calculated using the highest historical individual federal marginal income tax rate and do not reflect the impact of state and local taxes.  Actual after-tax returns depend on a shareholder’s tax situation and may differ from those shown.  After-tax returns are not relevant for shareholders who hold Fund shares in tax-deferred accounts or to shares held by non-taxable entities. After-tax returns are only shown for Class A shares. After-tax returns for Class C shares will vary.</p>
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<font style="font-size:12.0pt; font-family:Times New Roman">The Fund’s net asset value and returns will vary and you could lose money on your investment in the Fund.</font>
<font style="font-size:12.0pt; font-family:Times New Roman; color:black">How the Fund has performed in the past (before and after taxes) is not necessarily an indication of how it will perform in the future.</font>
<font style="font-size:12.0pt; font-family:Times New Roman">866-447-4228</font>
<font style="font-size:12.0pt; font-family:Times New Roman">highest return for a quarter </font>
.2975
2009-06-30
<font style="font-size:12.0pt; font-family:Times New Roman">lowest return for a quarter </font>
-.1503
2011-09-30
<font style="font-size:12.0pt; font-family:Times New Roman">After-tax returns are calculated using the highest historical individual federal marginal income tax rate and do not reflect the impact of state and local taxes.</font>
<font style="font-size:12.0pt; font-family:Times New Roman">After-tax returns are not relevant for shareholders who hold Fund shares in tax-deferred accounts</font>
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The Advisor has contractually agreed to waive fees and/or reimburse expenses of the Fund through October 31, 2013. This agreement may be terminated by the Fund's Board of Trustees on 60 days' written notice to the advisor.
Fund Inception Date 5/21/2008
Acquired Fund Fees and Expenses are the indirect costs of investing in other investment companies. The operating expenses in this fee table will not correlate to the expense ratio in the Fund's financial highlights because the financial statements include only the direct operating expenses incurred by the Fund, not the indirect costs of investing in other investment companies.