Active Advantage Fund

Risk Definitions

Key principal investment risks include, but are not limited to:

• Management Risk: The Adviser’s reliance on its proprietary trend-following model and asset judgments may be incorrect, potentially failing to achieve desired results.
• High-Yield Bond Risk: High-yield or “junk” bonds are speculative, lower-quality securities with a higher risk of default. If they default or undergo reorganization, they may become worthless and are illiquid.
• Fixed-Income Securities Risk: Fixed-income securities face interest rate risk, credit risk, liquidity risk, prepayment risk, extension risk, and duration risk. These factors can cause volatility and impact performance.
• Equity Securities Risk: Equity securities can experience sudden, unpredictable drops or prolonged declines in value. This may result from general market factors or specific issues affecting industries, sectors, geographic markets, or individual companies.
• Loans Risk: The market for loans, including bank loans and loan participations, may be illiquid, making them difficult to sell. These investments expose investors to credit risk from both the financial institution and the borrower, with bank loans often settling on a delayed basis, potentially delaying sale proceeds.
• Market Risk: Investment market risks, influenced by economic growth, market conditions, interest rates, and political events, affect asset values. Unexpected events like war, terrorism, financial disruptions, natural disasters, pandemics, and recessions can significantly impact investments and market liquidity, causing investor fear and economic instability.
• Underlying Funds Risk: Investments in underlying funds can lead to duplicated fees and expenses. Each fund has specific risks based on its strategy, and its manager may not always succeed. ETF shares might trade at prices different from their net asset value and incur additional trading costs, potentially affecting performance. Market demand can impact the ability to liquidate holdings optimally.
• Derivatives Risk: Derivatives involve leverage, leading to potential gains or losses greater than the initial investment, with value fluctuations that may not perfectly correlate with the market. Futures contracts carry risks like imperfect correlation, lack of liquidity, and unanticipated market movements. Credit default swaps are difficult to value and highly susceptible to liquidity and credit risk. Options are speculative and can result in the loss of the premium paid if the underlying asset’s price does not move favorably.
• Non-Diversification Risk: Non-diversified investments may allocate more than 5% of total assets to one or more issuers, including non-diversified underlying funds. This can make performance more sensitive to single economic, business, political, or regulatory events compared to diversified investments.
• Turnover Risk: Higher portfolio turnover can lead to increased transactional and brokerage costs. Turnover rates may significantly exceed 100% annually.
• US Government Securities Risk: Investments in obligations issued by US government agencies or instrumentalities may not be backed by the US government. If the issuer defaults and the government chooses not to provide financial support, recovery of the investment may not be possible.
• Models and Data Risk: Investment exposure relies heavily on proprietary quantitative models and third-party data. Incorrect or incomplete models and data can lead to suboptimal investment decisions. Predictive models carry inherent risks, such as incorrect forecasts and unexpected results in low-probability scenarios, potentially causing losses.

For a complete list of potential investment risks associated with this Fund, please refer to its Prospectus.