Donoghue Forlines Momentum

Objective And Strategy

Objective
Capital growth and income.

Strategy
The investment adviser seeks to achieve the Portfolio's investment objectives by investing Portfolio assets in the securities held by the W.E. Donoghue Power Momentum Index (the "Power Momentum Index", or "Index"). The adviser follows an Index replication process and, consequently, the Portfolio is expected to hold all the securities in the Index according to their Index weights. If the Portfolio holds an investment in common stock of a company that is removed from the S&P 500 Index, that position will be sold, consistent with the Index's creation protocol. The adviser has entered a licensing agreement with the Standard & Poors 500 (S&P 500) stock market index and the S-Network Sharpe Ratio Large Cap Index ("SHRPX") for and in connection with its proprietary Power Momentum Index Portfolio with respect to the SHRPX Index of 50 stocks (five from each of the ten industry sectors (as modified) which comprise the S&P 500 Index), as determined by the highest risk adjusted returns for the previous calendar quarter. The "W.E. Donoghue Power Momentum Index" has been licensed for use by W.E. Donoghue & Co., LLC. W.E. Donoghue & Co., LLC's Power Momentum Index is not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P, their respective affiliates, and neither S&P Dow Jones Indices LLC, Dow Jones, S&P, nor their respective affiliates make any representation regarding the advisability of investing in such product(s).

Principal Risks

* Certain portfolios are subject to active trading risk. (Some may derive a significant portion of their assets from investors who take part in certain strategic and tactical asset allocation programs). The frequent exchange of shares of the portfolio may cause the portfolio to experience high turnover. High portfolio turnover may result in the portfolio having to pay higher transaction costs and may negatively impact the portfolio manager's ability to achieve the investment objective of the portfolio.

* This portfolio invests its assets in underlying funds, thus the risks associated with investing in the portfolio are closely related to the risks associated with the securities and other investments held by the underlying funds. The ability of this portfolio to achieve its investment objective will depend on the ability of the underlying funds to achieve their investment objectives.

* This Fund may invest in publicly issued equity securities, including common stocks. Investments in common stocks are subject to market risks that may cause their prices to fluctuate over time.

* Securities in which the Portfolio invests will not be able to replicate exactly the performance of the Power Momentum Index because the total return generated by the securities will be reduced by transaction costs incurred in adjusting the actual balance of the securities. In addition, the Portfolio will incur expenses not incurred by Power Momentum Index.

* The Index's defensive positioning may not effectively hedge the Portfolio's downside risk. Hedging strategies may not perform as anticipated.