EVERMOREFUNDSTRUST

STATEMENTOFADDITIONALINFORMATION

April30,2021

EvermoreGlobalValueFund

ShareClass TickerSymbolInvestor EVGBXInstitutional EVGIX

89SummitAvenueSummit,NewJersey07901

866-EVERMORE(866-383-7667)

ThisStatementofAdditionalInformation(“SAI”)isnotaprospectusandisonlyauthorizedfordistributionwhenprecededoraccompaniedbytheFund’scurrentprospectus(the“Prospectus”)datedApril30,2021assupplementedfromtimetotime.ThisSAIsupplementsandshouldbereadinconjunctionwiththeProspectus,acopyofwhichmaybeobtainedwithoutchargebywritingtheFundattheaddress,orbycallingtheFundat866-EVERMORE(866-383-7667).TheProspectusisincorporatedbyreferenceintothisSAI.

EVERMORE FUNDS TRUST

Evermore Global Value Fund

CONTENTS

GeneralInformation............................................................................................................................................... 1

InvestmentObjective,Policies,andRisks............................................................................................................... 1

FundamentalInvestmentPolicies/Restrictions................................................................................................... 1

InvestmentStrategiesandRisks......................................................................................................................... 2

DisclosureofPortfolioHoldings.......................................................................................................................... 34

ManagementoftheFund-BoardofTrustees....................................................................................................... 35

InvestmentAdvisoryandOtherServices................................................................................................................ 41

TheAdviser.......................................................................................................................................................... 41

PortfolioManagers............................................................................................................................................. 42

TheDistributor.................................................................................................................................................... 44

RevenueSharing..................................................................................................................................................... 45

SecuritiesLending................................................................................................................................................... 45

ProxyVotingPoliciesandProcedures.................................................................................................................... 46

ComputationofNetAssetValue............................................................................................................................ 46

PurchaseandRedemptionofShares...................................................................................................................... 47

DistributionandTaxConsiderations....................................................................................................................... 47

TaxationoftheFund:InGeneral........................................................................................................................ 47

FundDistributions............................................................................................................................................... 48

SalesandRedemptions....................................................................................................................................... 49

ForeignTaxes...................................................................................................................................................... 50

CertainInvestmentsinDebtObligations............................................................................................................ 50

TaxationofCertainFinancialInstruments,PFICsandCertainDebtInstruments............................................... 50

CertainInvestmentsinRealEstateInvestmentTrusts....................................................................................... 50

Tax-ExemptShareholders................................................................................................................................... 51

BackupWithholding............................................................................................................................................ 51

Non-U.S.Shareholders........................................................................................................................................ 51

TaxDeferredPlans.............................................................................................................................................. 52

StateandLocalTaxes.......................................................................................................................................... 52

PortfolioTransactionsandBrokerage.................................................................................................................... 52

InvestmentDecisionsandPortfolioTransactions............................................................................................... 52

BrokerageandResearchServices....................................................................................................................... 53

DescriptionoftheTrust.......................................................................................................................................... 54

Performance........................................................................................................................................................... 56

PortfolioTurnover............................................................................................................................................... 56

OtherInformationabouttheFund......................................................................................................................... 56

Custodian............................................................................................................................................................ 56

Counsel................................................................................................................................................................ 56

IndependentRegisteredPublicAccountingFirm................................................................................................ 56

Administrator...................................................................................................................................................... 56

FinancialStatements........................................................................................................................................... 57

AppendixAProxyVotingPoliciesandProcedures................................................................................................. A-1

AppendixBDescriptionofSecuritiesRatings......................................................................................................... B-1

GENERALINFORMATION

ThisSAIisinadditiontoandservestoexpandandsupplementthecurrentProspectusofEvermoreFundsTrust(the“Trust”).TheTrustisadiversified,open-endseriesmanagementinvestmentcompanyorganizedasaMassachusettsBusinessTrustonSeptember 14, 2009,which currently consists of one series, the EvermoreGlobal Value Fund (the “Fund”). A copy of theAmendedandRestatedAgreementandDeclarationofTrust,asamended(the“DeclarationofTrust”)andtheAmendmenttotheDeclaration of Trust,which is governed byMassachusetts law, is on filewith the Secretary of The Commonwealth ofMassachusetts.

TheFundcurrentlyofferstwoclassesofshares:InvestorClassandInstitutionalClass.PriortoApril30,2015theInvestorClassshareswereknownasClassAsharesandtheInstitutionalClassshareswereknownasClassIshares.

INVESTMENTOBJECTIVE,POLICIES,ANDRISKS

TheFund’sobjectiveandpolicies,exceptasotherwisestated,arenotfundamentalandmaybechangedwithoutshareholdervotes.TheFundseekscapitalappreciationbyinvestinginsecuritiesfrommarketsaroundtheworld,includingU.S.markets.TheFund’sportfoliowillconsistprimarilyofmarketableequitysecuritiesthatEvermoreGlobalAdvisors,LLC(the“Adviser”)believesareundervalued.TherecanbenoassurancethattheFundwillachieveitsobjective.

TheProspectusdiscusses the investmentobjectiveof the Fundand theprincipal investment strategies tobeemployed toachieve the objective. This section contains supplemental information concerning certain types of securities and otherinstruments inwhichtheFundmayinvest,additionalstrategiesthattheFundmayutilize,andcertainrisksassociatedwithsuch investmentsand strategies. TheFundexpects to invest inabroad rangeof securities (subject to theFund’sprincipalinvestmentstrategies).TheparticulartypesofsecuritiesandthepercentageoftheFund’sassets invested ineachtypewillvary depending on where the Adviser sees the most opportunities at the time of investment. Below under the heading“InvestmentStrategiesandRisks”isadescriptionofthedifferenttypesofsecuritiesinwhichtheFundmayinvestandcertainoftherisksrelatingtothosesecurities.

TheFundhasadoptedcertain investment restrictionsas fundamentalandnon-fundamentalpolicies.A fundamentalpolicymayonlybechanged if thechange isapprovedby (i)more than50%of theoutstandingsharesor (ii)67%ormoreof theFund’ssharespresentatashareholdermeeting ifmorethan50%of theFund’soutstandingsharesarerepresentedat themeeting inpersonorbyproxy,whichever is less.Anon-fundamentalpolicymaybechangedbytheBoardofTrustees (the“Board”)withouttheapprovalofshareholders.

FUNDAMENTALINVESTMENTPOLICIES/RESTRICTIONS

TheFund’sfundamentalinvestmentrestrictionsaresetforthbelow.TheFundmaynot:

1. Purchaseorsell(i)commodities,commoditiescontracts(exceptinconformitywithregulationsoftheCommoditiesFuturesTradingCommissionsuchthattheFundwouldnotbeconsideredacommoditypool),(ii)oilandgasinterests,or (ii) real estate. Forpurposesof this restriction, securitiesorother instrumentsbackedby commodities arenotconsideredcommoditiesorcommoditycontracts,debtorequitysecuritiesissuedbycompaniesengagedintheoil,gas,orrealestatebusinessesarenotconsideredoilorgasinterestsorrealestate,andfirstmortgageloansandotherdirectobligationssecuredbyrealestatearenotconsideredrealestate.

2. Borrowmoney,except to theextentpermittedby the InvestmentCompanyActof1940, asamended (the “1940Act”),orany rules,exemptionsor interpretations thereunder thatmaybeadopted, grantedor issuedby theU.S.SecuritiesandExchangeCommission(“SEC”).See“Borrowing”under“InvestmentStrategiesandRisks”below.

3. Act as an underwriter of securities issued by other persons, except to the extent that, in connection with thedispositionofportfoliosecurities,itmaytechnicallybedeemedtobeanunderwriterundercertainsecuritieslaws.

4. Makeloanstootherpersons.Thisrestrictiondoesnotapplyto(i)thelendingofportfoliosecurities,(ii)thepurchaseof debt securities, other debt instruments, loan participations and/or engaging in direct corporate loans inaccordancewithitsinvestmentobjectiveandpolicies,and(iii)repurchaseagreementstotheextenttheentryintoarepurchaseagreementisdeemedtobealoan.

5. Issueseniorsecurities,exceptastotheextentpermittedunderthe1940Act.See“Borrowing”under“InvestmentStrategiesandRisks”below.

6. Purchaseanysecuritieswhichwouldcause25%ormoreofthemarketvalueofitstotalassetsatthetimeofsuchpurchasetobeinvestedinthesameindustry.

7. Withrespectto75%ofitstotalassets(exclusiveofcash,cashitems,andgovernmentsecurities),investinsecuritiesofanyissuerif, immediatelyaftersuchinvestment,morethan5%ofthetotalassetsoftheFund(takenatcurrentvalue)wouldbeinvestedinthesecuritiesofsuchissuer.

1

8. Withrespectto75%ofitstotalassets,acquiremorethan10%oftheoutstandingvotingsecuritiesofanyissuer.

Asanon-fundamentalpolicy,theFundmaynot:

1. Investmorethan15%ofitsnetassetsinsecuritieswhicharenotreadilymarketable.Theseincludesecuritiessubjecttocontractualorlegalresalerestrictionsintheirprimarytradingmarket(suchasover-the-counter(“OTC”)options,includingfloors,caps,collarsandswaps,securitiesofprivatecompaniesandlonger-termrepurchaseagreements).

Otherthanthepercentage limitationsforborrowingsand illiquid investments,as longastheabovepercentagerestrictionsareadheredtoatthetimeaninvestmentismade,alaterchangeinpercentageresultinginthechangeinthevalueortotalcostoftheFund’sassetswillnotbeconsideredaviolationoftherestriction.

INVESTMENTSTRATEGIESANDRISKS

Ingeneral,thevalueofyoursharesintheFundwillincreaseasthevalueofthesecuritiesownedbytheFundincreasesandwilldecreaseasthevalueoftheFund’sinvestmentsdecrease.Inthisway,youparticipateinanychangeinthevalueofthesecuritiesownedbytheFund.InadditiontothefactorsthataffectthevalueofanyparticularsecuritythattheFundowns,thevalueoftheFund’ssharesmayalsochangewithmovementsinthestockandbondmarketsasawhole.

TheFundmayinvestinequitysecurities,includingsecuritiesconvertible,exchangeablefor,orexpectedtobeexchangedintocommon stock (includingwarrants, convertible preferred and convertible debt securities). There are no limitations on thepercentageoftheFund’sassetsthatmaybeinvestedinequitysecurities,debtsecurities,orconvertiblesecurities.TheFundmaintainstheflexibilityto invest inthesesecurities insuchproportionsastheFund’sAdviserdeemsadvisable. Inaddition,theFundalsomayinvestinrestricteddebtandequitysecurities,foreignsecurities,andotherinvestmentcompanysecurities.

Thegeneral investmentpolicyof theFund is to invest insecuritiesofcompaniesthat, intheopinionoftheAdviser,are (i)availableatpriceslessthantheirestimatedrealizablevalue(“intrinsicvalue”)and(ii)areundergoingchange,asdeterminedbytheAdviseraftercarefulanalysisandresearch,takingintoaccount,amongotherfactors,identificationandassessmentofcatalysts(e.g.,managementchanges,shareholderactivism,andoperationalandfinancialrestructurings),therelationshipofbookvaluetomarketvalueofthesecurities,cashflowpotential, long-termearnings,multiplesofearnings,anddiscussionswithcompanymanagementsandboards, shareholders,andother interestedparties.Therelationshipofasecurity’s“bookvalue tomarket value” is an analysis of the difference between the price atwhich a security is trading in themarket, ascompared to the value of that security based upon an analysis of certain information contained in a company’s financialstatements.Cashflowanalysisconsiderstheinflowandoutflowofmoneyintoandoutofacompany.TheAdviserexamineseachsecurityseparatelyanddoesnotapplythesefactorsaccordingtoanypredeterminedformula.

TheFundisnotlimitedastotheamountsthatmaybeinvestedbasedonmarketcapitalizations(sharepricetimesthenumberof common shares outstanding) of companies. The Fund may invest in any industry although it will not concentrate itsinvestmentsinanyoneindustry.

TheFundmayinvestinsecuritiesthataretradedonU.S.orforeignsecuritiesexchanges,theNationalAssociationofSecuritiesDealersAutomatedQuotationSystem(“NASDAQ”)globalmarketsystemor inanydomesticor foreignOTCmarket.U.S.orforeign securities exchanges typically represent the primary trading market for U.S. and foreign securities. A securitiesexchangebringstogetherbuyersandsellersofthesamesecurities.TheNASDAQglobalmarketsystemalsobringstogetherbuyersandsellersofthesamesecuritiesthroughanelectronicmediumwhichfacilitatesasaleandpurchaseofthesecurity.ManycompanieswhosesecuritiesaretradedontheNASDAQglobalmarketsystemaresmallerthanthecompanieswhosesecuritiesaretradedonasecuritiesexchange.TheOTCmarketreferstoallotheravenueswherebybrokersbringtogetherbuyersandsellersofsecurities.Inaddition,theFundmaypurchasesecuritiesthroughprivateplacementsorinotherprivatetransactions.

ThefollowingisadescriptionofthevarioustypesofsecuritiestheFundmaypurchase,thetechniquesitmayuse,andanyassociatedrisks.

AdjustableRateandAuctionPreferredStocks

Typically, thedividend rateonanadjustable ratepreferred stock isdeterminedprospectivelyeachquarterbyapplyinganadjustmentformulaestablishedatthetimeofissuanceofthestock.Althoughadjustmentformulasvaryamongissues,theytypically involve a fixed premium or discount relative to rates on specified debt securities issued by the U.S. Treasury.Typically,anadjustmentformulawillprovideforafixedpremiumordiscountadjustmentrelativetothehighestbaseyieldofthreespecifiedU.S.Treasurysecurities:the90-dayTreasurybill, the10-yearTreasurynoteandthe20-yearTreasurybond.ThepremiumordiscountadjustmenttobeaddedtoorsubtractedfromthishighestU.S.Treasurybaserateyieldisfixedatthe time of issue and cannot be changed without the approval of the holders of the stock. The dividend rate on otherpreferred stocks, commonly known as auction preferred stocks, is adjusted at intervals thatmay bemore frequent thanquarterly,suchasevery49days,basedonbidssubmittedbyholdersandprospectivepurchasersofsuchstocksandmaybesubject to statedmaximumandminimumdividend rates. The issuesofmost adjustable rate andauctionpreferred stocks

2

currently outstanding are perpetual, but are redeemable after a specified date at the option of the issuer. Certain issuessupportedbythecreditofahigh-ratedfinancialinstitutionprovideformandatoryredemptionpriortoexpirationofthecreditarrangement.Noredemptioncanoccur iffullcumulativedividendsarenotpaid.Althoughthedividendratesonadjustableandauctionpreferredstocksgenerallyareadjustedorresetfrequently,themarketvaluesofthesepreferredstocksstillmayfluctuate in response to changes in interest rates. Market values of adjustable preferred stocks also may substantiallyfluctuate if interest rates increase or decrease once the maximum or minimum dividend rate for a particular stock isapproached.

Asset-BackedSecurities

TheFundmayinvestinasset-backedsecurities.Thesecuritizationtechniquesusedtodevelopmortgage-relatedsecuritiesarebeingappliedtoabroadrangeoffinancialassets.Throughtheuseoftrustsandspecialpurposecorporations,varioustypesofassets, including automobile loans and leases, credit card receivables, home equity loans, equipment leases and tradereceivables, arebeing securitized in structures similar to the structuresused inmortgage securitizations. Forexample, theFund may invest in collateralized debt obligations (“CDOs”), which include collateralized bond obligations (“CBOs”),collateralized loanobligations (“CLOs”), andother similarly structured securities.CBOsandCLOsare typesofasset-backedsecurities.ACBOisatrust,whichisbackedbyadiversifiedpoolofhigh-risk,belowinvestmentgradefixed-incomesecurities.A CLO is a trust typically collateralizedby a pool of loans,whichmay include, amongothers, domestic and foreign seniorsecuredloans,seniorunsecuredloans,andsubordinatecorporateloans,includingloansthatmayberatedbelowinvestmentgradeorequivalentunratedloans.Asset-backedsecuritiesaresubjecttorisksassociatedwithchangesininterestratesandprepaymentofunderlyingobligations.Eachtypeofasset-backedsecurityalsoentailsuniquerisksdependingonthetypeofassetsinvolvedandthelegalstructureused.Insometransactions,thevalueoftheasset-backedsecurityisdependentontheperformanceofathirdpartyactingascreditenhancerorservicer.Furthermore,insometransactions(suchasthoseinvolvingthe securitizationof vehicle loansor leases) itmaybeadministrativelyburdensome toperfect the interestof the securityissuerintheunderlyingcollateralandtheunderlyingcollateralmaybecomedamagedorstolen.

Borrowing

The1940ActandtheSEC’scurrentrules,exemptionsandinterpretationsthereunder,permittheFundtoborrowuptoone-thirdofthevalueofitstotalassets(includingtheamountborrowed,butlessallliabilitiesandindebtednessnotrepresentedbyseniorsecurities)frombanks.TheFundisrequiredtomaintaincontinuousassetcoverageofatleast300%withrespecttosuchborrowingsandtoreducetheamountof itsborrowings(withinthreedaysexcludingSundaysandholidays)torestoresuchcoverage if itshoulddeclineto lessthan300%duetomarket fluctuationsorotherwise. IntheeventthattheFund isrequiredtoreduce itsborrowings, itmayhavetosellportfolioholdings,even if suchsaleof theFund’sholdingswouldbedisadvantageousfromaninvestmentstandpoint.

If the Fundmakes additional investments while borrowings are outstanding, this may be considered a form of leverage.LeveragingbymeansofborrowingmayexaggeratetheeffectofanyincreaseordecreaseinthevalueofportfoliosecuritiesontheFund’snetassetvalue(“NAV”),andmoneyborrowedwillbesubjecttointerestandothercosts(whichmayincludecommitmentfeesand/orthecostofmaintainingminimumaveragebalances),whichmayormaynotexceedtheincomeorgainsreceivedfromthesecuritiespurchasedwithborrowedfunds.

Inaddition toborrowings thatare subject to300%asset coverageandare consideredby theSEC tobepermitted“seniorsecurities,”theFundisalsopermittedunderthe1940Acttoborrowfortemporarypurposesinanamountnotexceeding5%ofthevalueofitstotalassetsatthetimewhentheloanismade.Aloanwillbepresumedtobefortemporarypurposesifitisrepaidwithin60daysandisnotextendedorrenewed.

LineofCredit. TheBoardhasapprovedalineofcredit(“LoC”)withU.S.BankN.Atobeusedfortemporaryoremergencypurposes,primarily for financingredemptionpayments,using thesecurities in theFund’sportfolioascollateral.Borrowingunder the LoC is limited to the lesserof 15%of the totalmarket valueof the Fund, 33.33%of the Fund’s unencumberedassets,or$20,000,000fortheFund.BorrowingresultsininterestexpenseandotherfeesandexpensesfortheFundthatmayimpact the Fund’s expenses, including any net expense ratios. The costs of borrowingmay reduce the Fund’s yield. TheinterestratepaidbytheFundonoutstandingborrowings,ifany,isequaltothecurrentprimerate.

Segregationofassets. ConsistentwithSEC staff guidance, financial instruments that involve theFund’sobligation tomakefuture payments to third parties will not be viewed as creating any senior security provided that the Fund covers itsobligationsasdescribedbelow.Thosefinancial instrumentscaninclude,amongothers,(i)securitiespurchasedorsoldonawhen-issued,delayeddelivery,ortobeannouncedbasis,(ii)futurescontracts,(iii)forwardcurrencycontracts,(iv)swaps,(v)writtenoptions,(vi)unfundedcommitments,(vii)securitiessoldshort,and(viii)reverserepurchaseagreements.

ConsistentwithSECstaffguidance,theFundwillconsider itsobligations involvingsucha financial instrumentas“covered”whentheFund(1)maintainsanoffsettingfinancialposition,or(2)segregatesliquidassets(constitutingcash,cashequivalentsorotherliquidportfoliosecurities)equaltotheFund’sexposuresrelatingtothefinancialinstrument,asdeterminedonadaily

3

basis. Dedicated Fund compliance policies and procedures, which the Fund’s Board has approved, govern the kinds oftransactionsthatcanbedeemedtobeoffsettingpositionsforpurposesof(1)above,andtheamountsofassetsthatneedtobesegregatedforpurposesof(2)above(AssetSegregationPolicies).

In the case of forward currency contracts, the Fund may offset the contracts for purposes of (1) above when thecounterparties,termsandamountsmatch;otherwiseanappropriateamountofassetswillbesegregatedconsistentwith(2)above.Segregatedassetsforpurposesof(2)abovearenotrequiredtobephysicallysegregatedfromotherFundassets,butaresegregatedthroughappropriatenotationonthebooksoftheFundortheFund’scustodian.

The Fund’s Asset Segregation Policies may require the Fund to sell a portfolio security or exit a transaction, including atransaction ina financial instrument,atadisadvantageous timeorprice inorder for theFund tobeable to segregate therequiredamountofassets.Ifsegregatedassetsdeclineinvalue,theFundwillneedtosegregateadditionalassetsorreduceitspositioninthefinancialinstruments.Inaddition,segregatedassetsmaynotbeavailabletosatisfyredemptionsorforotherpurposes,untiltheFund’sobligationsunderthefinancialinstrumentshavebeensatisfied.Inaddition,theFund’sabilitytousethe financial instruments identified above may under some circumstances depend on the nature of the instrument andamountofassetsthattheAssetSegregationPoliciesrequiretheFundtosegregate.

TheAssetSegregationPoliciesprovide,consistentwithcurrentSECstaffpositions,thatforfuturesandforwardcontractsthatrequireonlycashsettlement,andswapagreementsthatcallforperiodicnettingbetweentheFundanditscounterparty,thesegregatedamountisthenetamountdueunderthecontract,asdetermineddailyonamark-to-marketbasis.Forotherkindsoffutures,forwardsandswaps,theFundmustsegregatealargeramountofassetstocoveritsobligations,whichessentiallylimitstheFund’sabilitytousetheseinstruments.IftheSECstaffchangesitspositionsconcerningthesegregationofthenetamountdueundercertainforwards,futuresandswapcontracts,theabilityoftheFundtousethefinancialinstrumentscouldbenegativelyaffected.

ConvertibleSecurities

TheFundmayinvestinconvertiblesecuritieswhicharecomprisedofbothconvertibledebtandconvertiblepreferredstockandmaybeconvertedateitherastatedpriceoratastatedrate intounderlyingsharesofcommonstock.Becauseof thisfeature, convertible securitiesenablean investor tobenefit from increases in themarketpriceof theunderlying commonstock. Convertible securities tend to provide higher yields than the underlying equity securities, but generally offer loweryieldsthannon-convertiblesecuritiesofsimilarquality.Thevalueofconvertiblesecuritiesfluctuatesinrelationtochangesininterestrateslikebonds,and,inaddition,fluctuatesinrelationtotheunderlyingcommonstock.

DebtSecurities

Adebtsecuritytypicallyhasafixedpaymentschedulewhichobligatestheissuertopayinteresttothelenderandtoreturnthe lender’s money over a certain time period. A company typically meets its payment obligations associated with itsoutstanding debt securities before it declares and pays any dividends to holders of its equity securities.Whilemost debtsecurities are used as an investment to produce income to an investor as a result of the fixed payment schedule, debtsecuritiesalsomayincreaseordecreaseinvalue.Themarketvalueofdebtsecuritiesgenerallyvariesinresponsetochangesin interest rates and the financial condition of each issuer. During periods of declining interest rates, the value of debtsecurities generally increases. Conversely, during periods of rising interest rates, the value of such securities generallydeclines.ThesechangesinmarketvaluewillbereflectedintheFund’sNAV.Theseincreasesordecreasesaremoresignificantforlongerdurationdebtsecurities.

TheFundmayinvestinavarietyofdebtsecurities,includingbondsandnotesissuedbydomesticorforeigncorporationsandtheU.S.orforeigngovernmentsandtheiragenciesandinstrumentalities.Bondsandnotesdifferinthelengthoftheissuer’srepayment schedule. Bonds typically have a longer payment schedule thannotes. Typically, debt securitieswith a shorterrepaymentschedulepayinterestatalowerratethandebtsecuritieswithalongerrepaymentschedule.

ThedebtsecuritieswhichtheFundmaypurchasemayeitherbeunratedorratedinanyratingcategoryestablishedbyoneormore independent rating organizations, such as S&P Global Ratings (“S&P”) or Moody’s Investors Service (“Moody’s”).Securitiesaregivenratingsbyindependentratingorganizations,whichgradethecompanyissuingthesecuritiesbaseduponitsfinancialsoundness.TheFundmayinvestinsecuritiesthatareratedinthemediumtolowestratingcategoriesbyS&PandMoody’s.Generally,lowerratedandunrateddebtsecuritiesareriskierinvestments.DebtsecuritiesratedBBorlowerbyS&PorMoody’sareconsideredtobehighyield,highriskdebtsecurities.ThelowestratingcategoryestablishedbyMoody’sis“C”andbyS&Pis“D.”DebtsecuritieswithaDratingareindefaultastothepaymentofprincipalandinterest,whichmeansthattheissuerdoesnothavethefinancialsoundnesstomeetitsinterestpaymentsoritsrepaymentscheduletosecurityholders.These ratings represent the opinions of the rating services with respect to the issuer’s ability to pay interest and repayprincipal.Theydonotpurporttoreflecttheriskoffluctuationsinmarketvalueandarenotabsolutestandardsofquality.IftheratingonanissueheldintheFund’sportfolioischangedbytheratingserviceorthesecuritygoesintodefault,thisevent

4

willbeconsideredbytheFundinitsevaluationoftheoverallinvestmentmeritsofthatsecurity,butwillnotgenerallyresultinanautomaticsaleofthesecurity.

The Fund generallywill invest in debt securities under circumstances similar to those underwhich it will invest in equitysecurities;namely,when, intheAdviser’sopinion,suchdebtsecuritiesareavailableatprices lessthantheir intrinsicvalue.Investing in fixed-income securities under these circumstances may lead to the potential for capital appreciation.Consequently,when investing indebt securities, adebt security’s rating is given lessemphasis in theAdviser’s investmentdecision-makingprocess.TheFundmayinvestindebtsecuritiesissuedbydomesticorforeigncompanies(i)thatareinvolvedin restructurings, suchasmergers, acquisitions, consolidations, liquidations, spinoffs,or tenderorexchangeoffers, and (ii)that are, or are about to be, involved in reorganizations, financial restructurings, or bankruptcy (“DistressedCompanies”),becausesuchsecuritiesoftenareavailableat lessthantheir intrinsicvalue.Debtsecuritiesofsuchcompaniestypicallyareunrated, lowerrated, indefaultorclosetodefault.Whileposingagreaterriskthanhigherratedsecuritieswithrespecttopayment of interest and repayment of principal at the price at which the debt security was originally issued, the Fundgenerallypurchasesthesedebtsecuritiesatdiscountstotheoriginalprincipalamount.Suchdebttypicallyranksseniortotheequity securities of Distressed Companies andmay offer the potential for capital appreciation and additional investmentopportunities.

MediumandLowerRatedCorporateDebtSecurities

TheFundmayinvestinsecuritiesofDistressedCompanieswhentheintrinsicvaluesofsuchsecurities,intheopinionoftheAdviser,warrantsuchinvestment.TheFundmayinvestinsecuritiesthatareratedinthemediumtolowestratingcategoriesby S&PandMoody’s, someofwhichmaybe so-called “junkbonds.”Corporatedebt securities ratedBaa are regardedbyMoody’sasbeingneitherhighlyprotectednorpoorlysecured.InterestpaymentsandprincipalsecurityappearadequatetoMoody’sforthepresent,butcertainprotectiveelementsmaybelackingormaybecharacteristicallyunreliableoveranygreatlength of time. Such securities are regarded by Moody’s as lacking outstanding investment characteristics and havingspeculative characteristics. Corporate debt securities rated BBB are regarded by S&P as having adequate capacity to payinterest and repay principal. Such securities are regarded by S&P as normally exhibiting adequate protection parameters,although adverse economic conditions or changing circumstances aremore likely to lead to a weakened capacity to payinterest and repay principal for securities in this rating category than in higher rated categories. Companies issuing lowerratedhigher yieldingdebt securities arenot as strong financially as thosewithhigher credit ratings. These companies aremore likelytoencounterfinancialdifficultiesandaremorevulnerabletochanges intheeconomy,suchasarecessionorasustainedperiodofrisinginterestratesthatcouldpreventthemfrommakinginterestandprincipalpayments.Ifanissuerisnotpayingorstopspayinginterestand/orprincipalonitssecurities,paymentsonthesecuritiesmayneverresume.

Corporate debt securities that are rated B are regarded by Moody’s as generally lacking characteristics of a desirableinvestment.InMoody’sview,assuranceofinterestandprincipalpaymentsorofmaintenanceofothertermsofthesecurityoverany longperiodof timemaybesmall.Corporatedebt securities ratedBB,B,CCC,CC,andCare regardedbyS&Ponbalance as predominantly speculativewith respect to capacity to pay interest and repay principal in accordancewith thetermsoftheobligation.InS&P’sview,althoughsuchsecuritieslikelyhavesomequalityandprotectivecharacteristics,theseare outweighed by large uncertainties or major risk exposures to adverse conditions. BB and B are regarded by S&P asindicating the two lowest degrees of speculation andCC andCCC the twohighest degrees of speculation in this groupofratings.

SecuritiesratedDbyS&PorCbyMoody’sareindefaultandarenotcurrentlyperforming.TheFundmayinvestinunratedsecurities.TheFundwill relyon theAdviser’s judgment,analysis,andexperience inevaluatingsuchdebtsecurities. In thisevaluation, the Adviser will take into consideration, among other things, the issuer’s financial resources, its sensitivity toeconomicconditionsandtrends,itsoperatinghistory,thequalityoftheissuer’smanagementandregulatorymattersaswellasthepriceofthesecurity.TheAdviseralsomayconsider,althoughitdoesnotrelyprimarilyon,thecreditratingsofMoody’sandS&P inevaluating lowerratedcorporatedebtsecurities.Suchratingsevaluateonly thesafetyofprincipaland interestpayments,notmarketvaluerisk.Additionally,becausethecreditworthinessofanissuermaychangemorerapidlythanisabletobetimelyreflected inchanges increditratings,theAdvisermonitorsthe issuersofcorporatedebtsecuritiesheld intheFund’sportfolio.Thecreditratingassignedtoasecurity isafactorconsideredbytheAdviser inselectingasecurityfortheFund,buttheintrinsicvalueincomparisontomarketpriceandtheAdviser’sanalysisofthefundamentalvaluesunderlyingtheissueraregenerallyofgreatersignificance.Becauseofthenatureofmediumandlowerratedcorporatedebtsecurities,achievementbytheFundofitsinvestmentobjectivewheninvestinginsuchsecuritiesisdependentonthecreditanalysisoftheAdviser.IftheFundpurchasedprimarilyhigherrateddebtsecurities,suchriskswouldbesubstantiallyreduced.

ForasummaryofMoody’sandS&Pbondratings,seeAppendixBtothisSAI,“DescriptionofSecuritiesRatings,”below.

Ageneraleconomicdownturnora significant increase in interest ratescould severelydisrupt themarket formediumandlower grade corporate debt securities and adversely affect the market value of such securities. Securities in default arerelativelyunaffectedbysucheventsorbychangesinprevailinginterestrates.Inaddition,insuchcircumstances,theabilityof

5

issuers of medium and lower grade corporate debt securities to repay principal and to pay interest, to meet projectedbusinessgoalsandtoobtainadditionalfinancingmaybeadverselyaffected.SuchconsequencescouldleadtoanincreasedincidenceofdefaultforsuchsecuritiesandadverselyaffectthevalueofthecorporatedebtsecuritiesintheFund’sportfolio.Thesecondarymarketpricesofmediumand lowergradecorporatedebtsecuritiesare lesssensitivetochanges in interestrates than are higher rated debt securities, but are more sensitive to adverse economic changes or individual corporatedevelopments. Adverse publicity and investor perceptions,whether or not based on rational analysis, alsomay affect thevalue and liquidity of medium and lower grade corporate debt securities, although such factors also present investmentopportunitieswhenprices fallbelow intrinsicvalues.Yieldsondebt securities in theFund’sportfolio thatare interest ratesensitivecanbeexpectedtofluctuateovertime.Inaddition,periodsofeconomicuncertaintyandchangesininterestratescanbeexpectedtoresultinincreasedvolatilityofmarketpriceofanymediumtolowergradecorporatedebtsecuritiesintheFund’sportfolioand thuscouldhaveaneffecton theNAVof theFund ifother typesof securitiesdidnot showoffsettingchangesinvalues.Thepricesofhighyielddebtsecuritiesfluctuatemorethanhigher-qualitysecurities.Pricesareoftencloselylinkedwiththecompany’sstockpricesandtypicallyriseandfallinresponsetofactorsthataffectstockprices.Inaddition,theentire high yield securitiesmarket can experience sudden and sharp price swings due to changes in economic conditions,stockmarketactivity,largesustainedsalesbymajorinvestors,ahigh-profiledefault,orotherfactors.

Highyieldsecuritiesarealsogenerallylessliquidthanhigher-qualitybonds.Manyofthesesecuritiesdonottradefrequently,andwhentheydotradetheirpricesmaybesignificantlyhigheror lowerthanpreviouslyquotedmarketprices.Attimes, itmaybedifficulttosellthesesecuritiespromptlyatanacceptableprice,whichmaylimittheFund’sabilitytosellsecuritiesinresponse to specific economic events or to meet redemption requests. The secondary market value of corporate debtsecuritiesstructuredaszero-couponsecuritiesorpaymentinkindsecuritiesmaybemorevolatileinresponsetochangesininterestratesthandebtsecuritieswhichpayinterestperiodicallyincash.Becausesuchsecuritiesdonotpaycurrentinterest,butrather, incomeisaccreted,totheextentthattheFunddoesnothaveavailablecashtomeetdistributionrequirementswith respect to such income, it could be required to dispose of portfolio securities that it otherwise would not. Suchdispositioncouldbeatadisadvantageousprice.FailuretosatisfydistributionrequirementscouldresultintheFundfailingtoqualify as a regulated investment company under the Internal Revenue Code. Investment in such securities also involvescertainothertaxconsiderations.

TheAdviser values theFund’s investmentspursuant toguidelinesadoptedandperiodically reviewedby theBoard.To theextentthatthereisnoestablishedretailmarketforsomeofthemediumorlowergradeorunratedcorporatedebtsecuritiesinwhichtheFundmayinvest,theremaybethinornotradinginsuchsecuritiesandtheabilityoftheAdvisertoaccuratelyvaluesuchsecuritiesmaybeadverselyaffected.Further,itmaybemoredifficultfortheFundtosellsuchsecuritiesinatimelymannerandattheirstatedvaluethanwouldbethecaseforsecuritiesforwhichanestablishedretailmarketdidexist.Theeffectsofadversepublicityandinvestorperceptionsmaybemorepronouncedforsecuritiesforwhichnoestablishedretailmarketexistsascomparedwiththeeffectsonsecuritiesforwhichsuchamarketdoesexist.DuringperiodsofreducedmarketliquidityandintheabsenceofreadilyavailablemarketquotationsformediumandlowergradeandunratedcorporatedebtsecuritiesheldintheFund’sportfolio,theresponsibilityoftheAdvisertovaluetheFund’ssecuritiesbecomesmoredifficultandtheAdviser’sjudgmentmayplayagreaterroleinthevaluationoftheFund’ssecuritiesduetoareducedavailabilityofreliable objective data. To the extent that the Fund purchases illiquid corporate debt securities or securities which arerestrictedastoresale,theFundmayincuradditionalrisksandcosts.

Illiquid and restricted securitiesmay be particularly difficult to value and their dispositionmay require greater effort andexpensethanmoreliquidsecurities.Also,theFundmayincurcostsinconnectionwiththeregistrationofrestrictedsecuritiesin order to dispose of such securities, although under Rule 144A of the Securities Act of 1933 certain securities may bedeterminedtobeliquidpursuanttoproceduresadoptedbytheBoardunderapplicableguidelines.See“RestrictedandIlliquidSecurities”below.

DepositaryReceipts

The Fund may purchase American Depositary Receipts (“ADRs”), European Depositary Receipts (“EDRs”) and GlobalDepositaryReceipts(“GDRs”)(collectively,“DepositaryReceipts”).ADRsaretypicallyissuedbyaU.S.bankortrustcompanytoevidenceownershipofunderlyingsecuritiesissuedbyaforeigncorporation.EDRsandGDRsaretypicallyissuedbyforeignbanksor trust companies,although theyalsomaybe issuedbyU.S.banksor trust companies,andevidenceownershipofunderlyingsecurities issuedbyeithera foreignoraU.S.corporation.Generally,DepositaryReceipts in registered formaredesigned for use in the U.S. securities market and Depositary Receipts in bearer form are designed for use in securitiesmarketsoutsidetheU.S.

DepositaryReceiptsmaynotnecessarilybedenominated inthesamecurrencyastheunderlyingsecurities intowhichtheymaybeconverted.

DepositaryReceiptsmaybe issuedpursuanttosponsoredorunsponsoredprograms. Insponsoredprograms,an issuerhasmadearrangementstohaveitssecuritiestradedintheformofDepositaryReceipts.Inunsponsoredprograms,theissuermay

6

not be directly involved in the creation of the program.Although regulatory requirementswith respect to sponsored andunsponsoredprogramsaregenerallysimilar,insomecasesitmaybeeasiertoobtainfinancialinformationfromanissuerthathas participated in the creation of a sponsored program. Accordingly, there may be less information available regardingissuersofsecuritiesunderlyingunsponsoredprogramsandtheremaynotbeacorrelationbetweensuchinformationandthemarketvalueoftheDepositaryReceipts.DepositaryReceiptsalsoinvolvetherisksofotherinvestmentsinforeignsecurities,as discussedbelow. Forpurposesof the Fund’s investmentpolicies, the Fund’s investments inDepositaryReceiptswill bedeemedtobeinvestmentsintheunderlyingsecurities.

Depositaryreceiptsofnon-U.S. issuersmayhavecertainrisks, includingtrading fora lowerprice,having less liquidity thantheirunderlyingsecuritiesandrisksrelatingtotheissuingbankortrustcompany.Holdersofunsponsoreddepositaryreceiptshave a greater risk that receipt of corporate information and proxy disclosure will be untimely, information may beincompleteandcostsmaybehigher.

DerivativeInstruments

TheFundmayusederivativeinstrumentsforriskmanagementpurposesandaspartofitsinvestmentstrategies.Generally,derivativesarefinancialinstrumentswhosevaluedependonorarederivedfrom,thevalueofoneormoreunderlyingassets,referencerates,orindices(a“referenceinstrument”)andmayrelatetostocks,bonds,interestrates,currencies,commoditiesorrelatedindices.DerivativeinstrumentsallowtheFundtogainorreduceexposuretothevalueofareferenceinstrumentwithoutactuallyowningorsellingtheinstrument.

Derivativeinstrumentsmaybeusedfor“hedging,”whichmeansthattheymaybeusedwhentheAdviserseekstoprotecttheFund’s investmentsfromadecline invalueresultingfromchangesto interestrates,marketprices,currencyfluctuationsorothermarket factors. Derivative instrumentsmay also be used for other purposes, including to seek to increase liquidity,provide efficient portfolio management, broaden investment opportunities (including taking short or negative positions),implementataxorcashmanagementstrategy,gainexposuretoaparticularsecurityorsegmentofthemarket,modifytheeffectivedurationoftheFund’sportfolioinvestmentsand/orenhancetotalreturn.Howeverderivativeinstrumentsareused,theirsuccessfuluseisnotassuredandwilldependupon,amongotherfactors,theAdviser’sabilitytogaugerelevantmarketmovements.

TheFundmayusederivativeinstrumentsforpurposesofdirecthedging.Directhedgingmeansthatthetransactionmustbeintended to reduce a specific risk exposure of a portfolio security or its denominated currency andmust also be directlyrelatedtosuchsecurityorcurrency.TheFundmayalsousederivative instrumentsforotherpurposes,asdescribedabove.TheFund’suseofderivativeinstrumentsforpurposesotherthandirecthedgingmaybelimitedfromtimetotimebypoliciesadoptedbytheBoardortheFund’sAdviser.

BecausesomederivativeinstrumentsusedbytheFundmayobligetheFundtomakepaymentsorincuradditionalobligationsinthefuture,theSECrequiresmutualfundsto“cover”orsegregateliquidassetsequaltothepotentialexposurecreatedbysuchderivatives.Theobligationtocoverorsegregatesuchassetsisdescribedmorefullyunder“Borrowing”inthisSAI.

ExclusionofAdviserfromcommoditypooloperatordefinition.WithrespecttotheFund,theAdviserhasclaimedanexclusionfrom the definition of “commodity pool operator” (CPO) under the Commodity Exchange Act (CEA) and the rules of theCommodityFuturesTradingCommission(CFTC)and,therefore,isnotsubjecttoCFTCregistrationorregulationasaCPO.Inaddition,withrespecttotheFund,theAdviserisrelyinguponarelatedexclusionfromthedefinitionof“commoditytradingadvisor”(CTA)undertheCEAandtherulesoftheCFTC.

The terms of the CPO exclusion require the Fund, among other things, to adhere to certain limits on its investments in“commodityinterests.”Commodityinterestsincludecommodityfutures,commodityoptionsandswaps,whichinturnincludenon-deliverablecurrencyforwardcontracts,asfurtherdescribedbelow.BecausetheAdviserandtheFundintendtocomplywiththetermsoftheCPOexclusion,theFundmay,inthefuture,needtoadjustitsinvestmentstrategies,consistentwithitsinvestmentgoal,tolimititsinvestmentsinthesetypesofinstruments.TheFundisnotintendedasavehiclefortradinginthecommodityfutures,commodityoptionsorswapsmarkets.TheCFTChasneitherreviewednorapprovedtheAdviser’srelianceontheseexclusions,ortheFund,itsinvestmentstrategiesorthisSAI.

Generally,theexclusionfromCPOregulationonwhichtheAdviserreliesrequirestheFundtomeetoneofthefollowingtestsforitscommodityinterestpositions,otherthanpositionsenteredintoforbonafidehedgingpurposes(asdefinedintherulesof theCFTC):either (1) theaggregate initialmarginandpremiumsrequiredtoestablishtheFund’spositions incommodityinterestsmaynotexceed5%oftheliquidationvalueoftheFund’sportfolio(aftertakingintoaccountunrealizedprofitsandunrealizedlossesonanysuchpositions);or(2)theaggregatenetnotionalvalueoftheFund’scommodityinterestpositions,determinedatthetimethemostrecentsuchpositionwasestablished,maynotexceed100%oftheliquidationvalueoftheFund’s portfolio (after taking into account unrealized profits and unrealized losses on any such positions). In addition tomeetingoneofthesetradinglimitations,theFundmaynotbemarketedasacommoditypoolorotherwiseasavehiclefortradinginthecommodityfutures,commodityoptionsorswapsmarkets.If,inthefuture,theFundcannolongersatisfythese

7

requirements, the Adviserwouldwithdraw its notice claiming an exclusion from the definition of a CPO, and the Adviserwouldbesubject to registrationand regulationasaCPOwith respect to theFund. In that case, theAdviserand theFundwouldneedtocomplywithallapplicableCFTCdisclosure,reporting,operational,andotherregulations,whichcouldincreaseFundexpenses.

Currencyforwardcontracts.Acurrencyforwardcontractisanobligationtopurchaseorsellaspecificnon-U.S.currencyatanagreedexchangerate(price)atafuturedate.Currencyforwardsaretypicallyindividuallynegotiatedandprivatelytradedbycurrencytradersandtheircustomersintheinterbankmarket.Acrosscurrencyforwardisaforwardcontracttosellaspecificnon-U.S. currency in exchange for another non-U.S. currency andmay be used when the price of one of those non-U.S.currencies is expected to experience a substantial movement against the other non-U.S. currency. A currency forwardcontractwilltendtoreduceoreliminateexposuretothecurrencythatissold,andincreaseexposuretothecurrencythatispurchased,similartowhentheFundsellsasecuritydenominatedinonecurrencyandpurchasesasecuritydenominatedinanothercurrency.Forexample,theFundmayenterintoaforwardcontractwhenitownsasecuritythatisdenominatedinanon-U.S.currencyanddesiresto“lockin”theU.S.dollarvalueofthesecurity.Inaddition,whentheFund’sAdviserbelievesthataspecificforeigncurrencymayexperienceasubstantialmovementagainstanotherforeigncurrency,theFundmayenterinto a cross currency forward contract to buy or sell, as appropriate, an amount of the foreign currency either: (a)approximating the value of some or all of its portfolio securities denominated in such currency (this investment practicegenerally is referred to as “cross-hedging”); (b) designed to derive a level of additional income or return that the Fund’sAdviserseekstoachievefortheFund;(c)toincreaseliquidity;or(d)togainexposuretoacurrencyinamoreefficientorlessexpensiveway.TheFundmayalsoengagein“proxyhedging.”ProxyhedgingentailsenteringintoaforwardcontracttobuyorsellacurrencywhosechangesinvaluearegenerallyconsideredtoperformsimilarlytoacurrencyorcurrenciesinwhichsomeoralloftheFund’sportfoliosecuritiesareorareexpectedtobedenominated.Proxyhedgingisoftenusedwhenthecurrencyto which the Fund’s portfolio is exposed is difficult to hedge or to hedge against the U.S. dollar and therefore anothercurrencyisusedasa“proxy”forsuchcurrency.

At the maturity of a currency or cross currency forward, the Fund may either exchange the currencies specified at thematurity of a forward contract or, prior tomaturity, enter into a closing transaction involving the purchase or sale of anoffsettingcontract.Closingtransactionswithrespecttoforwardcontractsareusuallyeffectedwiththecounterpartytotheoriginalforwardcontract.TheFundmayalsoenterintoforwardcontractsthatdonotprovideforphysicalsettlementofthetwo currencies but instead are settled by a single cash payment calculated as the difference between the agreed uponexchangerateandthespotrateatsettlementbaseduponanagreeduponnotionalamount(non-deliverableforwards).

UnderdefinitionsadoptedbytheCFTCandSEC,non-deliverableforwardsareconsideredswaps,andthereforeareincludedinthe definition of “commodity interests.” Although non-deliverable forwards have historically been traded in the over-the-counter(OTC)market,asswapstheymayinthefutureberequiredtobecentrallyclearedandtradedonpublicfacilities.Formore information on central clearing and trading of cleared swaps, see “Cleared swaps,” “Risks of cleared swaps,” “Newswapsregulation”and“Developinggovernmentregulationofderivatives.”Currencyandcrosscurrencyforwardsthatqualifyasdeliverableforwardsarenotregulatedasswapsformostpurposesandarenotincludedinthedefinitionof“commodityinterests.”However,theseforwardsaresubjecttosomerequirementsapplicabletoswaps,includingreportingtoswapdatarepositories,documentationrequirements,andbusinessconductrulesapplicabletoswapdealers.

CFTCregulationofcurrencyandcrosscurrencyforwards,especiallynon-deliverableforwards,mayrestricttheFund’sabilitytousetheseinstrumentsinthemannerdescribedaboveorsubjecttheAdvisertoCFTCregistrationandregulationasaCPO.

Risksofcurrency forwardcontracts.Thesuccessfuluseof these transactionswillusuallydependontheAdviser’sability toaccuratelyforecastcurrencyexchangeratemovements.Shouldexchangeratesmoveinanunexpectedmanner,theFundmaynotachievetheanticipatedbenefitsofthetransaction,oritmayrealizelosses.Inaddition,thesetechniquescouldresultinalossifthecounterpartytothetransactiondoesnotperformaspromised,includingbecauseofthecounterparty’sbankruptcyorinsolvency.WhiletheFundusesonlycounterpartiesthatmeetitscreditqualitystandards,inunusualorextrememarketconditions,acounterparty’screditworthinessandabilitytoperformmaydeterioraterapidly,andtheavailabilityofsuitablereplacementcounterpartiesmaybecomelimited.Moreover,investorsshouldbearinmindthattheFundisnotobligatedtoactively engage in hedging or other currency transactions. For example, the Fund may not have attempted to hedge itsexposuretoaparticularforeigncurrencyatatimewhendoingsomighthaveavoidedaloss.

Currencyforwardcontractsmay limitpotentialgainfromapositivechange intherelationshipbetweentheU.S.dollarandforeigncurrencies.UnanticipatedchangesincurrencypricesmayresultinpooreroverallperformancefortheFundthanifithadnotengagedinsuchcontracts.Moreover,theremaybeanimperfectcorrelationbetweentheFund’sportfolioholdingsofsecuritiesdenominatedinaparticularcurrencyandthecurrenciesboughtorsoldintheforwardcontractsenteredintobytheFund.ThisimperfectcorrelationmaycausetheFundtosustainlossesthatwillpreventtheFundfromachievingacompletehedgeorexposetheFundtoriskofforeignexchangeloss.

8

Futures contracts. Generally, a futures contract is a standard binding agreement to buy or sell a specified quantity of anunderlyingreferenceinstrument,suchasaspecificsecurity,currencyorcommodity,ataspecifiedpriceataspecifiedlaterdate. A “sale” of a futures contractmeans the acquisition of a contractual obligation to deliver the underlying referenceinstrumentcalledforbythecontractataspecifiedpriceonaspecifieddate.A“purchase”ofafuturescontractmeanstheacquisitionofacontractualobligationtoacquiretheunderlyingreferenceinstrumentcalledforbythecontractataspecifiedpriceonaspecifieddate.ThepurchaseorsaleofafuturescontractwillallowtheFundtoincreaseordecreaseitsexposuretotheunderlyingreferenceinstrumentwithouthavingtobuytheactualinstrument.

Theunderlyingreferenceinstrumentstowhichfuturescontractsmayrelateincludenon-U.S.currencies,interestrates,stockandbond indicesanddebt securities, includingU.S.governmentdebtobligations. Inmost cases thecontractualobligationunderafuturescontractmaybeoffset,or“closedout,”beforethesettlementdatesothatthepartiesdonothavetomakeortakedelivery.Theclosingoutofacontractualobligationisusuallyaccomplishedbybuyingorselling,asthecasemaybe,anidentical, offsetting futures contract. This transaction, which is effected through a member of an exchange, cancels theobligation tomakeor takedeliveryof theunderlying instrumentorasset.Although some futures contractsby their termsrequiretheactualdeliveryoracquisitionoftheunderlyinginstrumentorasset,somerequirecashsettlement.

FuturescontractsmaybeboughtandsoldonU.S.andnon-U.S.exchanges.FuturescontractsintheU.S.havebeendesignedbyexchangesthathavebeendesignated“contractmarkets”bytheCFTCandmustbeexecutedthroughafuturescommissionmerchant (FCM),which is a brokerage firm that is amember of the relevant contractmarket. Each exchange guaranteesperformanceofthecontractsasbetweentheclearingmembersoftheexchange,therebyreducingtheriskofcounterpartydefault. Futures contracts may also be entered into on certain exempt markets, including exempt boards of trade andelectronictradingfacilities,availabletocertainmarketparticipants.Becausealltransactionsinthefuturesmarketaremade,offsetor fulfilledbyanFCMthroughaclearinghouseassociatedwith theexchangeonwhich thecontractsare traded, theFundwillincurbrokeragefeeswhenitbuysorsellsfuturescontracts.

TheFundgenerallybuysandsellsfuturescontractsonlyoncontractmarkets(includingexchangesorboardsoftrade)wherethereappearstobeanactivemarketforthefuturescontracts,butthereisnoassurancethatanactivemarketwillexistforanyparticularcontractoratanyparticulartime.Anactivemarketmakesitmorelikelythatfuturescontractswillbeliquidandbought and sold at competitivemarket prices. In addition,many of the futures contracts availablemay be relatively newinstrumentswithoutasignificanttradinghistory.Asaresult,therecanbenoassurancethatanactivemarketwilldeveloporcontinuetoexist.

WhentheFundentersintoafuturescontract,itmustdelivertoanaccountcontrolledbytheFCM(thathasbeenselectedbythe Fund), an amount referred to as “initialmargin” that currently ranges from1% to15%of the contract amount. Initialmarginrequirementsaredeterminedbytherespectiveexchangesonwhichthe futurescontractsaretradedandtheFCM.Thereafter,a“variationmargin”amountmayberequiredtobepaidbytheFundorreceivedbytheFundinaccordancewithmargincontrolssetforsuchaccounts,dependinguponchangesinthepriceoftheunderlyingreferenceinstrumentsubjecttothefuturescontract.Theaccountismarked-to-marketdailyandthevariationmarginismonitoredbytheFund’sAdviserandcustodianonadailybasis.Whenthefuturescontractisclosedout,iftheFundhasalossequaltoorgreaterthanthemarginamount,themarginamountispaidtotheFCMalongwithanylossinexcessofthemarginamount.IftheFundhasalossoflessthanthemarginamount,theexcessmarginisreturnedtotheFund.IftheFundhasagain,thefullmarginamountandtheamountofthegainispaidtotheFund.

Somefuturescontractsprovideforthedeliveryofsecuritiesthataredifferentthanthosethatarespecifiedinthecontract.Forafuturescontractfordeliveryofdebtsecurities,onthesettlementdateofthecontract,adjustmentstothecontractcanbemadetorecognizedifferencesinvaluearisingfromthedeliveryofdebtsecuritieswithadifferentinterestratefromthatoftheparticulardebtsecuritiesthatwerespecifiedinthecontract.Insomecases,securitiescalledforbyafuturescontractmaynothavebeenissuedwhenthecontractwaswritten.

Risksof futurescontracts.TheFund’suseof futurescontracts issubject totherisksassociatedwithderivative instrumentsgenerally.Inaddition,apurchaseorsaleofafuturescontractmayresultinlossestotheFundinexcessoftheamountthattheFunddeliveredas initialmargin.Becauseoftherelatively lowmargindepositsrequired, futurestrading involvesahighdegree of leverage; as a result, a relatively small price movement in a futures contract may result in immediate andsubstantialloss,orgain,totheFund.Inaddition,iftheFundhasinsufficientcashtomeetdailyvariationmarginrequirementsorcloseoutafuturesposition,itmayhavetosellsecuritiesfromitsportfolioatatimewhenitmaybedisadvantageoustodoso.AdversemarketmovementscouldcausetheFundtoexperiencesubstantiallossesonaninvestmentinafuturescontract.

ThereisariskoflossbytheFundoftheinitialandvariationmargindepositsintheeventofbankruptcyoftheFCMwithwhichtheFundhasanopenposition inafuturescontract.TheassetsoftheFundmaynotbefullyprotected intheeventofthebankruptcyoftheFCMorcentralcounterpartybecausetheFundmightbelimitedtorecoveringonlyaproratashareofallavailablefundsandmarginsegregatedonbehalfofanFCM’scustomers.IftheFCMdoesnotprovideaccuratereporting,theFundisalsosubjecttotheriskthattheFCMcouldusetheFund’sassets,whichareheldinanomnibusaccountwithassets

9

belonging to the FCM’s other customers, to satisfy its own financial obligations or the payment obligations of anothercustomertothecentralcounterparty.

TheFundmaynotbeabletoproperlyhedgeoreffectitsstrategywhenaliquidmarketisunavailableforthefuturescontracttheFundwishestoclose,whichmayattimesoccur.Inaddition,whenfuturescontractsareusedforhedging,theremaybeanimperfectcorrelationbetweenmovementsinthepricesoftheunderlyingreferenceinstrumentonwhichthefuturescontractisbasedandmovementsinthepricesoftheassetssoughttobehedged.

IftheAdviser’s investment judgmentaboutthegeneraldirectionofmarketpricesor interestorcurrencyexchangerates isincorrect,theFund’soverallperformancewillbepoorerthanifithadnotenteredintoafuturescontract.Forexample,iftheFundhaspurchasedfuturestohedgeagainstthepossibilityofan increase in interestratesthatwouldadverselyaffectthepriceof bondsheld in its portfolio and interest rates insteaddecrease, the Fundwill losepart or all of thebenefit of theincreasedvalueofthebondswhichithashedged.Thisisbecauseitslossesinitsfuturespositionswilloffsetsomeorallofitsgainsfromtheincreasedvalueofthebonds.

Thedifference(calledthe“spread”)betweenpricesinthecashmarketforthepurchaseandsaleoftheunderlyingreferenceinstrumentandthepricesinthefuturesmarketissubjecttofluctuationsanddistortionsduetodifferencesinthenatureofthose two markets. First, all participants in the futures market are subject to initial deposit and variation marginrequirements.Ratherthanmeetingadditionalvariationmarginrequirements,investorsmayclosefuturescontractsthroughoffsetting transactions that could distort the normal pricing spread between the cash and futures markets. Second, theliquidityof the futuresmarketsdependsonparticipants entering intooffsetting transactions rather thanmakingor takingdelivery of the underlying instrument. To the extent participants decide tomake or take delivery, liquidity in the futuresmarket could be reduced, resulting in pricing distortion. Third, from the point of view of speculators, themargin depositrequirements thatapply in the futuresmarketare lessonerous thansimilarmargin requirements in thesecuritiesmarket.Therefore, increasedparticipationby speculators in the futuresmarketmaycause temporarypricedistortions.Whensuchdistortionsoccur,acorrectforecastofgeneraltrendsinthepriceofanunderlyingreferenceinstrumentbytheAdvisermaystillnotnecessarilyresultinaprofitabletransaction.

Futurescontractsthataretradedonnon-U.S.exchangesmaynotbeasliquidasthosepurchasedonCFTC-designatedcontractmarkets. In addition, non-U.S. futures contractsmay be subject to varied regulatory oversight. The price of any non-U.S.futurescontractand,therefore,thepotentialprofitandlossthereon,maybeaffectedbyanychangeinthenon-U.S.exchangeratebetweenthetimeaparticularorderisplacedandthetimeitisliquidated,offsetorexercised.

TheCFTCandthevariousexchangeshaveestablishedlimitsreferredtoas“speculativepositionlimits”onthemaximumnetlongornetshortpositionthatanyperson,suchastheFund,mayholdorcontrolinaparticularfuturescontract.Tradinglimitsarealsoimposedonthemaximumnumberofcontractsthatanypersonmaytradeonaparticulartradingday.Anexchangemay order the liquidation of positions found to be in violation of these limits and it may impose other sanctions orrestrictions.Theregulationoffutures,aswellasotherderivatives,isarapidlychangingareaoflaw.Formoreinformation,see“Developinggovernmentregulationofderivatives”below.

Futuresexchangesmayalsolimittheamountoffluctuationpermittedincertainfuturescontractpricesduringasingletradingday.Thisdailylimitestablishesthemaximumamountthatthepriceofafuturescontractmayvaryeitherupordownfromthepreviousday’s settlementprice.Once thedaily limit has been reached in a futures contract subject to the limit, nomoretradesmaybemadeonthatdayatapricebeyondthatlimit.Thedailylimitgovernsonlypricemovementsduringaparticulartradingdayanddoesnot limitpotential lossesbecause the limitmayprevent the liquidationofunfavorablepositions.Forexample, futures prices have occasionally moved to the daily limit for several consecutive trading days with little or notrading, therebypreventingprompt liquidationofpositionsandsubjectingsomeholdersof futurescontracts tosubstantiallosses.

Options on futures contracts. Options on futures contracts trade on the same contractmarkets as the underlying futurescontract.WhentheFundbuysanoption,itpaysapremiumfortheright,butdoesnothavetheobligation,topurchase(call)or sell (put) a futures contract at a set price (called the exercise price). Thepurchaseof a call or put optionon a futurescontract,whereby the Fundhas the right topurchaseor sell, respectively, aparticular futures contract, is similar in somerespectstothepurchaseofacallorputoptiononanindividualsecurityorcurrency.Dependingonthepremiumpaidfortheoptioncomparedtoeitherthepriceofthefuturescontractuponwhichit isbasedorthepriceoftheunderlyingreferenceinstrument,theoptionmaybelessriskythandirectownershipofthefuturescontractortheunderlyingreferenceinstrument.Forexample,theFundcouldpurchaseacalloptiononalongfuturescontractwhenseekingtohedgeagainstanincreaseinthemarketvalueoftheunderlyingreferenceinstrument,suchasappreciationinthevalueofanon-U.S.currencyagainsttheU.S.dollar.

The seller (writer) of an option becomes contractually obligated to take the opposite futures position if the buyer of theoptionexercises its rights to the futurespositionspecified in theoption. In return for thepremiumpaidby thebuyer, theseller assumes the risk of taking a possibly adverse futures position. In addition, the seller will be required to post and

10

maintain initial and variationmarginwith the FCM.Onegoal of selling (writing) optionson futuresmaybe to receive thepremiumpaidbytheoptionbuyer.

Formoregeneralinformationaboutthemechanicsofpurchasingandwritingoptions,see“Options”below.

Risksofoptionsonfuturescontracts.TheFund’suseofoptionsonfuturescontractsissubjecttotherisksrelatedtoderivativeinstrumentsgenerally.Inaddition,theamountofrisktheFundassumeswhenitpurchasesanoptiononafuturescontractisthepremiumpaidfortheoptionplusrelatedtransactioncosts.Thepurchaseofanoptionalsoentailstheriskthatchangesinthevalueoftheunderlyingfuturescontractwillnotbefullyreflectedinthevalueoftheoptionpurchased.Theseller(writer)ofanoptiononafuturescontractissubjecttotheriskofhavingtotakeapossiblyadversefuturespositionifthepurchaseroftheoptionexercisesitsrights.Ifthesellerwererequiredtotakesuchaposition,itcouldbearsubstantial losses.Anoptionwriterhaspotentiallyunlimitedeconomicriskbecauseitspotentialloss,excepttotheextentoffsetbythepremiumreceived,isequaltotheamounttheoptionis“in-the-money”attheexpirationdate.Acalloptionisin-the-moneyifthevalueoftheunderlyingfuturescontractexceedstheexercisepriceoftheoption.Aputoptionisin-the-moneyiftheexercisepriceoftheoptionexceedsthevalueoftheunderlyingfuturescontract.

Options.Anoptionisacontractthatgivesthepurchaseroftheoption, inreturnforthepremiumpaid,therighttobuyanunderlying reference instrument, suchas a specified security, currency, index,orother instrument, from thewriterof theoption(inthecaseofacalloption),ortosellaspecifiedreferenceinstrumenttothewriteroftheoption(inthecaseofaputoption)atadesignatedpriceduringthetermoftheoption.Thepremiumpaidbythebuyerofanoptionwillreflect,amongother things, the relationship of the exercise price to the market price and the volatility of the underlying referenceinstrument,theremainingtermoftheoption,supply,demand,interestratesand/orcurrencyexchangerates.AnAmericanstyleputorcalloptionmaybeexercisedatanytimeduringtheoptionperiodwhileaEuropeanstyleputorcalloptionmaybeexercisedonlyuponexpirationorduringafixedperiodpriorthereto.PutandcalloptionsaretradedonnationalsecuritiesexchangesandintheOTCmarket.

OptionstradedonnationalsecuritiesexchangesarewithinthejurisdictionoftheSECorotherappropriatenationalsecuritiesregulator,asaresecuritiestradedonsuchexchanges.Asaresult,manyoftheprotectionsprovidedtotradersonorganizedexchangeswill be availablewith respect to such transactions. In particular, all optionpositions entered intoon anationalsecuritiesexchangeintheUnitedStatesareclearedandguaranteedbytheOptionsClearingCorporation,therebyreducingtheriskofcounterpartydefault.Furthermore,aliquidsecondarymarketinoptionstradedonanationalsecuritiesexchangemaybemorereadilyavailablethanintheOTCmarket,potentiallypermittingtheFundtoliquidateopenpositionsataprofitpriortoexerciseorexpiration,ortolimitlossesintheeventofadversemarketmovements.Thereisnoassurance,however,thathigherthananticipatedtradingactivityorotherunforeseeneventsmightnottemporarilyrenderthecapabilitiesoftheOptions Clearing Corporation inadequate, and thereby result in the exchange instituting special procedures which mayinterferewiththetimelyexecutionoftheFund’sorderstocloseoutopenoptionspositions.

Purchasingcallandputoptions.Asthebuyerofacalloption,theFundhasarighttobuytheunderlyingreferenceinstrument(e.g.,acurrencyorsecurity)attheexercisepriceatanytimeduringtheoptionperiod(forAmericanstyleoptions).TheFundmayenterintoclosingsaletransactionswithrespecttocalloptions,exercisethem,orpermitthemtoexpire.Forexample,theFundmaybuycalloptionsonunderlyingreference instrumentsthat it intendstobuywiththegoalof limitingtheriskofasubstantial increase in their market price before the purchase is effected. Unless the price of the underlying referenceinstrumentchangessufficiently,acalloptionpurchasedbytheFundmayexpirewithoutanyvaluetotheFund,inwhichcasetheFundwouldexperiencealosstotheextentofthepremiumpaidfortheoptionplusrelatedtransactioncosts.

Asthebuyerofaputoption,theFundhastherighttoselltheunderlyingreferenceinstrumentattheexercisepriceatanytimeduringtheoptionperiod(forAmericanstyleoptions).Likeacalloption,theFundmayenterintoclosingsaletransactionswith respect to put options, exercise them or permit them to expire. The Fundmay buy a put option on an underlyingreference instrument owned by the Fund (a protective put) as a hedging technique in an attempt to protect against ananticipateddeclineinthemarketvalueoftheunderlyingreferenceinstrument.SuchhedgeprotectionisprovidedonlyduringthelifeoftheputoptionwhentheFund,asthebuyeroftheputoption,isabletoselltheunderlyingreferenceinstrumentattheputexerciseprice,regardlessofanydeclineintheunderlyinginstrument’smarketprice.TheFundmayalsoseektooffsetadeclineinthevalueoftheunderlyingreferenceinstrumentthroughappreciationinthevalueoftheputoption.Aputoptionmay also bepurchasedwith the intent of protecting unrealized appreciationof an instrumentwhen theAdviser deems itdesirabletocontinuetoholdtheinstrumentbecauseoftaxorotherconsiderations.Thepremiumpaidfortheputoptionandanytransactioncostswouldreduceanyshort-termcapitalgainthatmaybeavailablefordistributionwhentheinstrumentiseventuallysold.Buyingputoptionsatatimewhenthebuyerdoesnotowntheunderlyingreferenceinstrumentallowsthebuyer tobenefit fromadecline in themarketpriceof theunderlying reference instrument,whichgenerally increases thevalueoftheputoption.

Ifaputoptionwasnotterminatedinaclosingsaletransactionwhenithasremainingvalue,andifthemarketpriceoftheunderlying reference instrument remains equal toor greater than theexercisepriceduring the lifeof theputoption, the

11

buyerwouldnotmakeanygainuponexerciseoftheoptionandwouldexperiencealosstotheextentofthepremiumpaidfortheoptionplusrelatedtransactioncosts.Inorderforthepurchaseofaputoptiontobeprofitable,themarketpriceoftheunderlying reference instrumentmust decline sufficiently below the exercise price to cover the premium and transactioncosts.

Writingcallandputoptions.Writingoptionsmaypermitthewritertogenerateadditionalincomeintheformofthepremiumreceivedforwritingtheoption.Thewriterofanoptionmayhavenocontroloverwhentheunderlyingreferenceinstrumentsmustbesold(inthecaseofacalloption)orpurchased(inthecaseofaputoption)becausethewritermaybenotifiedofexercise at any time prior to the expiration of the option (for American style options). In general, though, options areinfrequentlyexercisedpriortoexpiration.Whetherornotanoptionexpiresunexercised,thewriterretainstheamountofthepremium.Writing“covered”calloptionsmeansthatthewriterownstheunderlyingreferenceinstrumentthat issubjecttothecalloption.Calloptionsmayalsobewrittenonreferenceinstrumentsthatthewriterdoesnotown.

IftheFundwritesacoveredcalloption,anyunderlyingreferenceinstrumentsthatareheldbytheFundandaresubjecttothecalloptionwillbeearmarkedonthebooksoftheFundassegregatedtosatisfyitsobligationsundertheoption.TheFundwillbeunabletoselltheunderlyingreferenceinstrumentsthataresubjecttothewrittencalloptionuntiliteithereffectsaclosingtransaction with respect to the written call, or otherwise satisfies the conditions for release of the underlying referenceinstrumentsfromsegregation.

Asthewriterofacoveredcalloption,theFundgivesupthepotentialforcapitalappreciationabovetheexercisepriceoftheoption should the underlying reference instrument rise in value. If the value of the underlying reference instrument risesabovetheexercisepriceofthecalloption,thereferenceinstrumentwilllikelybe“calledaway,”requiringtheFundtoselltheunderlyinginstrumentattheexerciseprice.Inthatcase,theFundwillselltheunderlyingreferenceinstrumenttotheoptionbuyerforlessthanitsmarketvalue,andtheFundwillexperiencealoss(whichwillbeoffsetbythepremiumreceivedbytheFund as thewriter of such option). If a call option expires unexercised, the Fundwill realize a gain in the amount of thepremiumreceived.Ifthemarketpriceoftheunderlyingreferenceinstrumentdecreases,thecalloptionwillnotbeexercisedandtheFundwillbeabletousetheamountof thepremiumreceivedtohedgeagainst the loss invalueof theunderlyingreference instrument. The exercise price of a call optionwill be chosen based upon the expected pricemovement of theunderlying reference instrument. Theexercisepriceof a call optionmaybebelow, equal to (at-the-money), or above thecurrentvalueoftheunderlyingreferenceinstrumentatthetimetheoptioniswritten.

Asthewriterofaputoption,theFundhasariskoflossshouldtheunderlyingreferenceinstrumentdeclineinvalue.Ifthevalue of the underlying reference instrument declines below the exercise price of the put option and the put option isexercised,theFund,asthewriteroftheputoption,willberequiredtobuytheinstrumentattheexerciseprice,whichwillexceedthemarketvalueoftheunderlyingreferenceinstrumentatthattime.TheFundwillincuralosstotheextentthatthecurrentmarketvalueoftheunderlyingreferenceinstrumentis lessthantheexercisepriceoftheputoption.However,thelosswillbeoffset inpartby thepremiumreceived from thebuyerof theput. If aputoptionwrittenby theFundexpiresunexercised,theFundwillrealizeagainintheamountofthepremiumreceived.

Closingoutoptions(exchangetradedoptions).Asthewriterofanoption, iftheFundwantstoterminateitsobligation,theFundmayeffecta“closingpurchasetransaction”bybuyinganoptionofthesameseriesastheoptionpreviouslywritten.Theeffect of thepurchase is that the clearing corporationwill cancel the Fund’s position.However, awritermaynot effect aclosingpurchasetransactionafterbeingnotifiedoftheexerciseofanoption.Likewise,thebuyerofanoptionmayrecoveralloraportionofthepremiumthatitpaidbyeffectinga“closingsaletransaction”bysellinganoptionofthesameseriesastheoptionpreviouslypurchasedandreceivingapremiumonthesale.Thereisnoguaranteethateitheraclosingpurchaseoraclosing sale transactionmaybemade at a timedesired by the Fund. Closing transactions allow the Fund to terminate itspositions in written and purchased options. The Fund will realize a profit from a closing transaction if the price of thetransactionislessthanthepremiumreceivedfromwritingtheoriginaloption(inthecaseofwrittenoptions)orismorethanthepremiumpaidby theFund tobuy theoption (in thecaseofpurchasedoptions).Forexample, increases in themarketprice of a call option sold by the Fund will generally reflect increases in the market price of the underlying referenceinstrument.Asaresult,anylossresultingfromaclosingtransactiononawrittencalloptionislikelytobeoffsetinwholeorinpartbyappreciationoftheunderlyinginstrumentownedbytheFund.

Over-the-counter(OTC)options.Likeexchangetradedoptions,OTCoptionsgivetheholdertherighttobuyfromthewriter,inthecaseofOTCcalloptions,or sell to thewriter, in thecaseofOTCputoptions,anunderlying reference instrumentatastatedexerciseprice.OTCoptions,however,differfromexchangetradedoptionsincertainmaterialrespects.

OTCoptionsarearrangeddirectlywithdealersandnotwithaclearingcorporationorexchange.Consequently,thereisariskof non-performance by the dealer, including because of the dealer’s bankruptcy or insolvency.While the Fund uses onlycounterparties, such as dealers, that meet its credit quality standards, in unusual or extreme market conditions, acounterparty’screditworthinessandabilitytoperformmaydeterioraterapidly,andtheavailabilityofsuitablereplacementcounterpartiesmaybecomelimited.Becausethereisnoexchange,pricingistypicallydonebasedoninformationfrommarket

12

makersorotherdealers.OTCoptionsareavailableforagreatervarietyofunderlyingreferenceinstrumentsandinawiderrangeofexpirationdatesandexercisepricesthanexchangetradedoptions.

TherecanbenoassurancethatacontinuousliquidsecondarymarketwillexistforanyparticularOTCoptionatanyspecifictime.TheFundmaybeable to realize thevalueofanOTCoption ithaspurchasedonlybyexercising itorentering intoaclosingsaletransactionwiththedealerthat issued it.WhentheFundwritesanOTCoption, itgenerallycancloseoutthatoption prior to its expiration only by entering into a closing purchase transaction with the dealer with which the Fundoriginallywrotetheoption.

The Fund may suffer a loss if it is not able to exercise (in the case of a purchased option) or enter into a closing saletransaction on a timely basis. The Fund understands that the staff of the SEC has taken the position that purchasedOTCoptionsonsecuritiesareconsideredilliquidsecuritiesandthattheassetssegregatedtocovertheFund’sobligationunderanOTCoptiononsecuritiesithaswrittenareconsideredilliquid.Pendingachangeinthestaff’sposition,theFundwilltreatsuchOTCoptionsonsecuritiesand“covering”assetsasilliquidandsubjecttotheFund’slimitationonilliquidsecurities.

Interestratecaps.AninterestratecapisatypeofOTCoption.Thebuyerofaninterestratecappaysapremiumtothesellerinexchangeforpaymentsatsetintervalsforwhichafloatinginterestrateexceedsanagreeduponinterestrate.Thefloatinginterestratemaybetiedtoareferencerate(forexample,theLondonInterbankOfferedRate(LIBOR)),along-termswaprateorotherbenchmark.Theamountofeachpayment isdeterminedbyreferencetoaspecified“notional”amountofmoney.Interestratecapsdonotinvolvethedeliveryofsecurities,otherunderlyinginstruments,orprincipalamounts.Accordingly,barringcounterpartyrisk, theriskof loss tothepurchaserofan interestratecap is limitedtotheamountof thepremiumpaid.

Aninterestratecapcanbeusedtoincreaseordecreaseexposuretovariousinterestrates,includingtohedgeinterestraterisk.Bypurchasinganinterestratecap,thebuyerofthecapcanbenefitfromrisinginterestrateswhilelimitingitsdownsiderisk to the amount of thepremiumpaid. If the Fundbuys an interest rate cap and itsAdviser is correct at predicting thedirectionofinterestrates,theinterestratecapwill increaseinvalue.ButiftheFund’sAdviserisincorrectatpredictingthedirection,theinterestratecapwillexpireworthless.

Bywriting(selling)aninterestratecap,thesellerofthecapcanbenefitbyreceivingapremiuminexchangeforassuminganobligationtomakepaymentsatsetintervalsforwhichafloatinginterestrateexceedsanagreeduponinterestrate.Ifinterestratesriseabovetheagreeduponcap,theseller’sobligationtomakepaymentsmayresultinlossesinexcessofthepremiumreceived.

Correctlypredictingthevalueofaninterestratecaprequiresanunderstandingofthereferencedinterestrate,andtheFundbearstheriskthattheAdviserwillnotcorrectlyforecastfuturemarketevents,suchasinterestratemovements.Interestratecapsalsoinvolvetherisksassociatedwithderivativeinstrumentsgenerally,asdescribedherein,includingtherisksassociatedwithOTCoptions.

Risksofoptions.TheFund’soptionsinvestmentsinvolvecertainrisks,includinggeneralrisksrelatedtoderivativeinstruments.There can be no assurance that a liquid secondarymarket on an exchangewill exist for any particular option, or at anyparticular time, and the Fundmay have difficulty effecting closing transactions in particular options. Therefore, the Fundwouldhavetoexercisetheoptionsitpurchasedinordertorealizeanyprofit,thustakingormakingdeliveryoftheunderlyingreferenceinstrumentwhennotdesired.TheFundcouldthenincurtransactioncostsuponthesaleoftheunderlyingreferenceinstruments.Similarly,whentheFundcannoteffectaclosingtransactionwithrespecttoaputoptionitwrote,andthebuyerexercises, the Fundwouldbe required to takedelivery andwould incur transaction costs upon the sale of theunderlyingreference instruments purchased. If the Fund, as a covered call option writer, is unable to effect a closing purchasetransactioninasecondarymarket, itwillnotbeabletoselltheunderlyingreferenceinstrumentuntiltheoptionexpires, itdeliverstheunderlyinginstrumentuponexercise,oritsegregatesenoughliquidassetstopurchasetheunderlyingreferenceinstrumentatthemarked-to-marketpriceduringthetermoftheoption.Whentradingoptionsonnon-U.S.exchangesorintheOTCmarket,manyoftheprotectionsaffordedtoexchangeparticipantswillnotbeavailable.Forexample,theremaybenodaily price fluctuation limits, and adversemarketmovements could therefore continue to an unlimited extent over anindefiniteperiodoftime.

The effectiveness of an options strategy for hedging depends on the degree towhich pricemovements in the underlyingreferenceinstrumentscorrelatewithpricemovementsintherelevantportionoftheFund’sportfoliothatisbeinghedged.Inaddition,theFundbearstheriskthatthepricesofitsportfolioinvestmentswillnotmoveinthesameamountastheoptionithaspurchasedorsoldforhedgingpurposes,orthattheremaybeanegativecorrelationthatwouldresultinalossonboththe investments and the option. If theAdviser is not successful in using options inmanaging the Fund’s investments, theFund’sperformancewillbeworsethaniftheAdviserdidnotemploysuchstrategies.

Swaps.Generally,swapagreementsarecontractsbetweentheFundandanotherparty(theswapcounterparty)involvingtheexchangeofpaymentsonspecifiedtermsoverperiodsrangingfromafewdaystomultipleyears.Aswapagreementmaybe

13

negotiated bilaterally and traded OTC between the two parties (for an uncleared swap) or, in some instances, must betransactedthroughanFCMandclearedthroughaclearinghousethatservesasacentralcounterparty(foraclearedswap).Inabasic swap transaction, theFundagreeswith the swapcounterparty toexchange the returns (ordifferentials in ratesofreturn) and/or cash flows earned or realized on a particular “notional amount” or value of predetermined underlyingreference instruments. Thenotional amount is the setdollarorother value selectedby theparties touseas thebasisonwhichtocalculatetheobligationsthatthepartiestoaswapagreementhaveagreedtoexchange.Thepartiestypicallydonotactuallyexchangethenotionalamount. Insteadtheyagreetoexchangethereturnsthatwouldbeearnedorrealized ifthenotionalamountwereinvestedingiveninvestmentsoratgiveninterestrates.Examplesofreturnsthatmaybeexchangedinaswapagreementarethoseofaparticularsecurity,aparticularfixedorvariableinterestrate,aparticularnon-U.S.currency,ora“basket”ofsecuritiesrepresentingaparticularindex.Swapscanalsobebasedoncreditandotherevents.

TheFundwillgenerallyenterintoswapagreementsonanetbasis,whichmeansthatthetwopaymentstreamsthataretobemadebytheFundanditscounterpartywithrespecttoaparticularswapagreementarenettedout,withtheFundreceivingorpaying, as the casemaybe, only thenetdifference in the twopayments. The Fund’s obligations (or rights) under a swapagreementthatisenteredintoonanetbasiswillgenerallybethenetamounttobepaidorreceivedundertheagreementbasedontherelativevaluesoftheobligationsofeachpartyuponterminationoftheagreementoratsetvaluationdates.TheFundwillaccrueitsobligationsunderaswapagreementdaily(offsetbyanyamountsthecounterpartyowestheFund).Iftheswapagreementdoesnotprovideforthattypeofnetting,thefullamountoftheFund’sobligationswillbeaccruedonadailybasis.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act) and related regulatorydevelopments imposed comprehensive regulatory requirements on swaps and swap market participants. The regulatoryframeworkincludes:(1)registrationandregulationofswapdealersandmajorswapparticipants;(2)requiringcentralclearingandexecutionofstandardizedswaps;(3)imposingmarginrequirementsonswaptransactions;(4)regulatingandmonitoringswap transactions through position limits and large trader reporting requirements; and (5) imposing record keeping andcentralized and public reporting requirements, on an anonymous basis, for most swaps. The CFTC is responsible for theregulationofmostswaps.TheSEChasjurisdictionoverasmallsegmentofthemarketreferredtoas“security-basedswaps,”whichincludesswapsonsinglesecuritiesorcredits,ornarrow-basedindicesofsecuritiesorcredits.

Uncleared swaps. In an uncleared swap, the swap counterparty is typically a brokerage firm, bank or other financialinstitution.TheFundcustomarilyentersintounclearedswapsbasedonthestandardtermsandconditionsofanInternationalSwapsandDerivativesAssociation (ISDA)MasterAgreement. ISDA isavoluntary industryassociationofparticipants in theover-the-counterderivativesmarketsthathasdevelopedstandardizedcontractsusedbysuchparticipantsthathaveagreedtobeboundbysuchstandardizedcontracts.

Intheeventthatonepartytoaswaptransactiondefaultsandthetransactionisterminatedpriortoitsscheduledterminationdate,oneofthepartiesmayberequiredtomakeanearlyterminationpaymenttotheother.Anearlyterminationpaymentmay be payable by either the defaulting or non-defaulting party, depending upon which of them is “in-the-money” withrespect to theswapat the timeof its termination.Early terminationpaymentsmaybecalculated invariousways,butareintendedtoapproximatetheamountthe“in-the-money”partywouldhavetopaytoreplacetheswapasofthedateof itstermination.

Duringthetermofanunclearedswap,theFundisusuallyrequiredtopledgetotheswapcounterparty,fromtimetotime,anamount of cash and/or other assets equal to the total net amount (if any) that would be payable by the Fund to thecounterparty if the swapwere terminatedon thedate inquestion, includinganyearly terminationpayments.Periodically,changesintheamountpledgedaremadetorecognizechangesinvalueofthecontractresultingfrom,amongotherthings,interestonthenotionalvalueofthecontract,marketvaluechangesintheunderlyinginvestment,and/ordividendspaidbytheissueroftheunderlyinginstrument.Likewise,thecounterpartymayberequiredtopledgecashorotherassetstocoveritsobligationstotheFund.However,theamountpledgedmaynotalwaysbeequaltoormorethantheamountduetotheotherparty. Therefore, if a counterparty defaults in its obligations to the Fund, the amount pledged by the counterparty andavailabletotheFundmaynotbesufficienttocoveralltheamountsduetotheFundandtheFundmaysustainaloss.

Clearedswaps.Certainstandardizedswapsaresubjecttomandatorycentralclearingandexchange-trading.TheDodd-FrankActandimplementingruleswillultimatelyrequiretheclearingandexchange-tradingofmanyswaps.Mandatoryexchange-tradingandclearingwilloccuronaphased-inbasisbasedonthetypeofmarketparticipant,CFTCapprovalofcontractsforcentralclearingandpublictradingfacilitiesmakingsuchclearedswapsavailabletotrade.Todate,theCFTChasdesignatedonlycertainofthemostcommontypesofcreditdefaultindexswapsandinterestrateswapsassubjecttomandatoryclearingand certain public trading facilities have made certain of those cleared swaps available to trade, but it is expected thatadditional categories of swaps will in the future be designated as subject to mandatory clearing and trade executionrequirements.Centralclearingisintendedtoreducecounterpartycreditriskandincreaseliquidity,butcentralclearingdoesnoteliminatetheserisksandmayinvolveadditionalrisksnotinvolvedwithunclearedswaps.Formoreinformation,see“Risksofclearedswaps”below.

14

Inaclearedswap, theFund’sultimatecounterparty isacentralclearinghouserather thanabrokerage firm,bankorotherfinancial institution. The Fund may either execute a cleared swap through a swap execution facility or, in certaincircumstances where permitted, enter into a cleared swap through an executing broker. Such transactions will then besubmittedforclearingand,ifcleared,willbeheldatregulatedFCMsthataremembersoftheclearinghousethatservesasthecentralcounterparty.TransactionsexecutedonaswapexecutionfacilitymayincreasemarkettransparencyandliquiditybutmayrequiretheFundtoincurincreasedexpensestoaccessthesametypesofswapsthatithasusedinthepast.

WhentheFundentersintoaclearedswap,itmustdelivertothecentralcounterparty(viatheFCM)anamountreferredtoas“initialmargin.”Initialmarginrequirementsaredeterminedbythecentralcounterparty,butanFCMmayrequireadditionalinitialmarginabovetheamountrequiredbythecentralcounterparty.Duringthetermoftheswapagreement,a“variationmargin”amountmayalsobe required tobepaidby theFundormaybe receivedby theFund inaccordancewithmargincontrolsset forsuchaccounts,dependinguponchanges in thepriceof theunderlyingreference instrumentsubject to theswapagreement.Attheconclusionofthetermoftheswapagreement, iftheFundhasa lossequaltoorgreaterthanthemarginamount,themarginamountispaidtotheFCMalongwithanylossinexcessofthemarginamount.IftheFundhasalossoflessthanthemarginamount,theexcessmarginisreturnedtotheFund.IftheFundhasagain,thefullmarginamountandtheamountofthegainispaidtotheFund.

Creditdefaultswaps.The“buyer”ofprotectioninacreditdefaultswapagreementisobligatedtopaythe“seller”aperiodicstreamof payments over the term of the agreement in return for a payment by the “seller” that is contingent upon theoccurrence of a credit event with respect to a specific underlying reference debt obligation (whether as a single debtinstrumentoraspartofanindexofdebtinstruments).Thecontingentpaymentbythesellergenerallyisthefaceamountofthe debt obligation, in return for the buyer’s obligation tomake periodic cash payments and deliver in physical form thereferencedebtobligationoracashpaymentequaltothethen-currentmarketvalueofthatdebtobligationatthetimeofthecreditevent. Ifnocrediteventoccurs,thesellerwouldreceiveafixedrateof incomethroughoutthetermofthecontract,while thebuyerwould lose theamountof itspaymentsandrecovernothing.Thebuyer isalsosubject to therisk that thesellerwillnotsatisfyitscontingentpaymentobligation,ifandwhendue.

Purchasingprotectionthroughacreditdefaultswapmaybeusedtoattempttohedgeagainstadeclineinthevalueofdebtsecurityorsecuritiesduetoacreditevent.Thesellerofprotectionunderacreditdefaultswapreceivesperiodicpaymentsfromthebuyerbutisexposedtotheriskthatthevalueofthereferencedebtobligationdeclinesduetoacrediteventandthat itwillhave topay the faceamountof the referenceobligation to thebuyer. Sellingprotectionundera creditdefaultswapmayalsopermitthesellertogainexposurethatissimilartoowningthereferencedebtobligationdirectly.Asthesellerofprotection,theFundwouldeffectivelyaddleveragetoitsportfoliobecause,inadditiontoitstotalassets,theFundwouldbe subject to the risk that therewouldbea credit event and the Fundwouldhave tomakea substantial payment in thefuture.

Generally,acrediteventmeansbankruptcy,failuretotimelypayinterestorprincipal,obligationaccelerationordefault,orrepudiationorrestructuringofthereferencedebtobligation.Theremaybedisputesbetweenthebuyerorsellerofacreditdefaultswapagreementorwithintheswapsmarketasawholeastowhetherornotacrediteventhasoccurredorwhatthepayoutshouldbewhichcouldresultinlitigation.Insomeinstanceswherethereisadisputeinthecreditdefaultswapmarket,aregionalDeterminationsCommitteesetupbyISDAmaymakeanofficialbindingdeterminationregardingtheexistenceofcredit eventswith respect to the reference debt obligation of a credit default swap agreement or, in the case of a creditdefaultswaponanindex,withrespecttoacomponentoftheindexunderlyingthecreditdefaultswapagreement.Inthecaseofacreditdefaultswaponanindex,theexistenceofacrediteventisdeterminedaccordingtotheindexmethodology,whichmayinturnrefertodeterminationsmadebyISDA’sDeterminationsCommitteeswithrespecttoparticularcomponentsoftheindex.

ISDA’s Determination Committees are comprised principally of dealers in the OTC derivativesmarkets whichmay have aconflictinginterestinthedeterminationregardingtheexistenceofaparticularcreditevent.Inaddition,inthesovereigndebtmarket,acreditdefaultswapagreementmaynotprovidetheprotectiongenerallyanticipatedbecausethegovernmentissuerofthesovereigndebtinstrumentsmaybeabletorestructureorrenegotiatethedebtinsuchamannerastoavoidtriggeringacredit event.Moreover, (1) sovereign debt obligationsmay not incorporate common, commercially acceptable provisions,suchascollectiveactionclauses,or(2)thenegotiatedrestructuringofthesovereigndebtmaybedeemednon-mandatoryonallholders.

Asaresult,thedeterminationcommitteemightthennotbeabletodetermine,ormaybeabletoavoidhavingtodetermine,thatacrediteventunderthecreditdefaultagreementhasoccurred.Fortheseandotherreasons,thebuyerofprotectioninacreditdefaultswapagreementissubjecttotheriskthatcertainoccurrences,suchasparticularrestructuringeventsaffectingthe value of the underlying reference debt obligation, or the restructuring of sovereign debt,may not be deemed crediteventsunderthecreditdefaultswapagreement.Therefore,ifthecreditdefaultswapwaspurchasedasahedgeortotakeadvantage of an anticipated increase in the value of credit protection for the underlying reference obligation, itmay notprovideanyhedgingbenefitorotherwiseincreaseinvalueasanticipated.Similarly,thesellerofprotectioninacreditdefault

15

swapagreementissubjecttotheriskthatcertainoccurrencesmaybedeemedtobecrediteventsunderthecreditdefaultswapagreement,eveniftheseoccurrencesdonotadverselyimpactthevalueorcreditworthinessoftheunderlyingreferencedebtobligation.

Interest rate swaps. An interest rate swap is an agreement between two parties to exchange interest rate paymentobligations. Typically, one is based on an interest rate fixed tomaturitywhile the other is based on an interest rate thatchanges inaccordancewithchanges inadesignatedbenchmark (forexample, theLondon InterbankOfferedRate (LIBOR),prime rate, commercial paper rate, or otherbenchmarks). Eachparty’s paymentobligationunder an interest rate swap isdeterminedbyreferencetoaspecified“notional”amountofmoney.Therefore,interestrateswapsgenerallydonotinvolvethe delivery of securities, other underlying instruments, or principal amounts; rather they entail the exchange of cashpayments based on the application of the designated interest rates to the notional amount. Accordingly, barring swapcounterpartyorFCMdefault,theriskoflossinaninterestrateswapislimitedtothenetamountofinterestpaymentsthattheFundisobligatedtomakeorreceive(asapplicable),aswellasanyearlyterminationpaymentpayablebyortotheFunduponearlyterminationoftheswap.

Byswappingfixedinterestratepaymentsforfloatingpayments,aninterestrateswapcanbeusedtoincreaseordecreasetheFund’s exposure to various interest rates, including to hedge interest rate risk. Interest rate swaps are generally used topermitthepartyseekingafloatingrateobligationtheopportunitytoacquiresuchobligationataratelowerthanisdirectlyavailableinthecreditmarkets,whilepermittingthepartydesiringafixed-rateobligationtheopportunitytoacquiresuchafixed-rateobligation, also frequently at a rate lower than is directly available in the creditmarkets. The successof such atransactiondependsinlargepartontheavailabilityoffixed-rateobligationsatinterest(orcoupon)rateslowenoughtocoverthecosts involved.Aninterestrateswaptransaction isaffectedbychanges in interestrates,which, inturn,mayaffecttheprepaymentrateofanyunderlyingdebtobligationsuponwhichtheinterestrateswapisbased.

Totalreturnswaps.Atotalreturnswap(alsosometimesreferredtoasasyntheticequityswapor“contractfordifference”)isanagreementbetween twopartiesunderwhich theparties agree tomakepayments toeachother soas to replicate theeconomicconsequencesthatwouldapplyhadapurchaseorshortsaleoftheunderlyingreferenceinstrumenttakenplace.For example, one party agrees to pay the other party the total return earned or realized on the notional amount of anunderlyingequitysecurityandanydividendsdeclaredwithrespecttothatequitysecurity. Inreturntheotherpartymakespayments,typicallyatafloatingrate,calculatedbasedonthenotionalamount.

Optionsonswapagreements.AnoptiononaswapagreementgenerallyisanOTCoption(seethediscussionaboveonOTCoptions)thatgivesthebuyeroftheoptiontheright,butnottheobligation,inreturnforpaymentofapremiumtotheseller,toenterintoapreviouslynegotiatedswapagreement,ortoextend,terminateorotherwisemodifythetermsofanexistingswapagreement.Thewriter(seller)ofanoptiononaswapagreementreceivespremiumpaymentsfromthebuyerand, inexchange,becomesobligatedtoenterintoormodifyanunderlyingswapagreementupontheexerciseoftheoptionbythebuyer.WhentheFundpurchasesanoptiononaswapagreement,itriskslosingonlytheamountofthepremiumithaspaidshoulditdecidetolettheoptionexpireunexercised,plusanyrelatedtransactioncosts.

Therecanbenoassurancethataliquidsecondarymarketwillexistforanyparticularoptiononaswapagreement,oratanyparticular time, and the Fundmay have difficulty affecting closing transactions in particular options on swap agreements.Therefore,theFundmayhavetoexercisetheoptionsthatitpurchasesinordertorealizeanyprofitandtakedeliveryoftheunderlyingswapagreement.TheFundcouldthenincurtransactioncostsuponthesaleorclosingoutoftheunderlyingswapagreement. In the event that the option on a swap is exercised, the counterparty for such option would be the samecounterpartywithwhomtheFundenteredintotheunderlyingswap.

However,iftheFundwrites(sells)anoptiononaswapagreement,theFundisboundbythetermsoftheunderlyingswapagreement upon exercise of the option by the buyer,whichmay result in losses to the Fund in excess of the premium itreceived.Optionsonswapagreementsinvolvetherisksassociatedwithderivativeinstrumentsgenerally,asdescribedabove,aswellastheadditionalrisksassociatedwithbothoptionsandswapsgenerally.

OptionsonswapagreementsareconsideredtobeswapsforpurposesofCFTCregulation.AlthoughtheyaretradedOTC,theCFTCmay in the future designate certain options on swaps as subject tomandatory clearing. Formore information, see“Cleared swaps” and “Risks of cleared swaps.” An option on an interest rate swap (also sometimes referred to as a“swaption”) isacontractthatgivesthepurchasertheright,butnottheobligation, inreturnforpaymentofapremium,toenter into a new interest rate swap. A pay fixed option on an interest rate swap gives the buyer the right to establish apositioninaninterestrateswapwherethebuyerwillpay(andthewriterwillreceive)thefixed-ratecashflowsandreceive(andthewriterwillpay)thefloating-ratecashflows.Ingeneral,mostoptionsoninterestrateswapsare“European”exercise,whichmeansthattheycanonlybeexercisedattheendoftheoptionterm.

Depending on themovement of interest rates between the time of purchase and expiration, the value of the underlyinginterestrateswapandthereforealsothevalueoftheoptionontheinterestrateswapwillchange.

16

Risksofswapsgenerally.Theuseofswaptransactionsisahighlyspecializedactivity,whichinvolvesinvestmenttechniquesandrisksdifferentfromthoseassociatedwithordinaryportfoliosecuritiestransactions.WhethertheFundwillbesuccessfulinusingswapagreementstoachieveitsinvestmentgoaldependsontheabilityoftheAdvisercorrectlytopredictwhichtypesofinvestmentsarelikelytoproducegreaterreturns.IftheAdviser,inusingswapagreements,isincorrectinitsforecastsofmarketvalues, interestrates, inflation,currencyexchangeratesorotherapplicablefactors,the investmentperformanceoftheFundwillbelessthanitsperformancewouldhavebeenifithadnotusedtheswapagreements.

TheriskoflosstotheFundforswaptransactionsthatareenteredintoonanetbasisdependsonwhichpartyisobligatedtopaythenetamounttotheotherparty.IfthecounterpartyisobligatedtopaythenetamounttotheFund,theriskoflosstotheFundislossoftheentireamountthattheFundisentitledtoreceive.IftheFundisobligatedtopaythenetamount,theFund’sriskoflossisgenerallylimitedtothatnetamount.Iftheswapagreementinvolvestheexchangeoftheentireprincipalvalueofasecurity,theentireprincipalvalueofthatsecurityissubjecttotheriskthattheotherpartytotheswapwilldefaulton its contractual delivery obligations. In addition, the Fund’s risk of loss also includes anymargin at risk in the event ofdefault by the counterparty (in an uncleared swap) or the central counterparty or FCM (in a cleared swap), plus anytransactioncosts.

Becausebilateral swapagreementsare structuredas two-partycontractsandmayhave termsofgreater thansevendays,these swaps may be considered to be illiquid and, therefore, subject to the Fund’s limitation on investments in illiquidsecurities.Ifaswaptransactionisparticularlylargeoriftherelevantmarketisilliquid,theFundmaynotbeabletoestablishor liquidate a position at an advantageous time or price, whichmay result in significant losses. Participants in the swapmarketsarenotrequiredtomakecontinuousmarkets intheswapcontractstheytrade.Participantscouldrefusetoquotepricesforswapcontractsorquotepriceswithanunusuallywidespreadbetweenthepriceatwhichtheyarepreparedtobuyand thepriceatwhich theyareprepared to sell. Someswapagreementsentail complex termsandmay requireagreaterdegreeofsubjectivity in theirvaluation.However, theswapmarketshavegrownsubstantially in recentyears,witha largenumberoffinancialinstitutionsactingbothasprincipalsandagents,utilizingstandardizedswapdocumentation.Asaresult,theswapmarketshavebecome increasingly liquid. Inaddition,centralclearingandthe tradingofclearedswapsonpublicfacilities are intended to increase liquidity. The Fund’s Adviser, under the supervision of the Board, is responsible fordeterminingandmonitoringtheliquidityoftheFund’sswaptransactions.

RulesadoptedundertheDodd-FrankActrequirecentralizedreportingofdetailed informationaboutmanyswaps,whetherclearedor uncleared. This information is available to regulators and also, to amore limited extent andon an anonymousbasis, to thepublic.Reportingofswapdata is intendedtoresult ingreatermarket transparency.Thismaybebeneficial tofunds that use swaps in their trading strategies. However, public reporting imposes additional recordkeeping burdens onthesefunds,andthesafeguardsestablishedtoprotectanonymityarenotyettestedandmaynotprovideprotectionoffunds’identitiesasintended.

Certain IRS positions may limit the Fund’s ability to use swap agreements in a desired tax strategy. It is possible thatdevelopmentsintheswapmarketsand/orthelawsrelatingtoswapagreements,includingpotentialgovernmentregulation,couldadverselyaffecttheFund’sabilitytobenefitfromusingswapagreements,orcouldhaveadversetaxconsequences.Formoreinformationaboutpotentiallychangingregulation,see“Developinggovernmentregulationofderivatives”below.

Risks of uncleared swaps. Uncleared swaps are typically executed bilaterally with a swap dealer rather than traded onexchanges.Asaresult,swapparticipantsmaynotbeasprotectedasparticipantsonorganizedexchanges.Performanceofaswapagreementistheresponsibilityonlyoftheswapcounterpartyandnotofanyexchangeorclearinghouse.Asaresult,theFund is subject to the risk that a counterparty will be unable or will refuse to perform under such agreement, includingbecauseofthecounterparty’sbankruptcyorinsolvency.TheFundrisksthelossoftheaccruedbutunpaidamountsunderaswapagreement,whichcouldbesubstantial,intheeventofadefault,insolvencyorbankruptcybyaswapcounterparty.Insuchanevent,theFundwillhavecontractualremediespursuanttotheswapagreements,butbankruptcyandinsolvencylawscouldaffect theFund’s rightsasacreditor. If thecounterparty’screditworthinessdeclines, thevalueofaswapagreementwouldlikelydecline,potentiallyresultinginlosses.TheFund’sAdviserwillonlyapproveaswapagreementcounterpartyfortheFundiftheAdviserdeemsthecounterpartytobecreditworthyundertheFund’sCounterpartyCreditReviewStandards,adoptedand reviewedannuallyby theFund’sBoard.However, inunusualorextrememarket conditions, a counterparty’screditworthinessandabilitytoperformmaydeterioraterapidly,andtheavailabilityofsuitablereplacementcounterpartiesmaybecomelimited.

Risksofclearedswaps.Asnotedabove,underrecentfinancialreforms,certaintypesofswapsare,andotherseventuallyareexpected tobe, required tobecleared througha central counterparty,whichmayaffect counterparty riskandother risksfacedbytheFund.

Centralclearing isdesignedtoreducecounterpartycreditriskand increase liquiditycomparedtounclearedswapsbecausecentralclearinginterposesthecentralclearinghouseasthecounterpartytoeachparticipant’sswap,butitdoesnoteliminatethose risks completely. There is also a risk of loss by the Fundof the initial and variationmargindeposits in the eventof

17

bankruptcyoftheFCMwithwhichtheFundhasanopenpositioninaswapcontract.TheassetsoftheFundmaynotbefullyprotectedintheeventofthebankruptcyoftheFCMorcentralcounterpartybecausetheFundmightbelimitedtorecoveringonly a pro rata shareof all available funds andmargin segregatedonbehalf of an FCM’s customers. If the FCMdoesnotprovideaccuratereporting,theFundisalsosubjecttotheriskthattheFCMcouldusetheFund’sassets,whichareheldinanomnibusaccountwithassetsbelongingtotheFCM’sothercustomers,tosatisfyitsownfinancialobligationsorthepaymentobligationsofanothercustomertothecentralcounterparty.

Withclearedswaps,theFundmaynotbeabletoobtainasfavorabletermsasitwouldbeabletonegotiateforabilateral,unclearedswap.Inaddition,anFCMmayunilaterallyamendthetermsofitsagreementwiththeFund,whichmayincludetheimposition of position limits or additionalmargin requirementswith respect to the Fund’s investment in certain types ofswaps.CentralcounterpartiesandFCMscanrequireterminationofexistingclearedswaptransactionsupontheoccurrenceofcertain events and can also require increases in margin above the margin that is required at the initiation of the swapagreement.Additionally,dependingonanumberof factors, themargin requiredunder the rulesof theclearinghouseandFCMmaybeinexcessofthecollateralrequiredtobepostedbytheFundtosupportitsobligationsunderasimilarunclearedswap. However, regulators are expected to adopt rules imposing certain margin requirements, including minimums, onunclearedswapsinthenearfuture,whichcouldchangethiscomparison.

Finally, theFund issubjecttotheriskthat,afterentering intoaclearedswapwithanexecutingbroker,noFCMorcentralcounterparty iswillingorabletoclearthetransaction. Insuchanevent, theFundmayberequiredtobreakthetradeandmakeanearlyterminationpaymenttotheexecutingbroker.

Combined transactions. The Fund may enter into multiple derivative instruments, and any combination of derivativeinstrumentsaspartofasingleorcombinedstrategy(aCombinedTransaction)when,intheopinionoftheAdviser,itisinthebestinterestsoftheFundtodoso.ACombinedTransactionwillusuallycontainelementsofriskthatarepresentineachofitscomponenttransactions.

AlthoughCombinedTransactionsarenormallyenteredintobasedontheAdviser’sjudgmentthatthecombinedstrategieswillreduce risk or otherwise more effectively achieve the desired portfolio management goal(s), it is possible that thecombinationwillinsteadincreasesuchrisksorhinderachievementoftheportfoliomanagementobjective.

Developinggovernmentregulationofderivatives.Theregulationofclearedandunclearedswaps,aswellasotherderivatives,isarapidlychangingareaoflawandissubjecttomodificationbygovernmentandjudicialaction.Inaddition,theSEC,CFTCandtheexchangesareauthorizedtotakeextraordinaryactionsintheeventofamarketemergency,including,forexample,the implementation or reduction of speculative position limits, the implementation of higher margin requirements, theestablishmentofdailypricelimitsandthesuspensionoftrading.

It is not possible to predict fully the effects of current or future regulation. However, it is possible that developments ingovernment regulation of various types of derivative instruments, such as speculative position limits on certain types ofderivatives,orlimitsorrestrictionsonthecounterpartieswithwhichtheFundengagesinderivativetransactions,maylimitorpreventtheFundfromusingorlimittheFund’suseoftheseinstrumentseffectivelyasapartofitsinvestmentstrategy,andcouldadverselyaffecttheFund’sabilitytoachieveitsinvestmentgoal(s).TheAdviserwillcontinuetomonitordevelopmentsinthearea,particularlytotheextentregulatorychangesaffecttheFund’sabilitytoenterintodesiredswapagreements.Newrequirements,evenifnotdirectlyapplicabletotheFund,mayincreasethecostoftheFund’sinvestmentsandcostofdoingbusiness.

EquitySecurities

TheFundmayinvestinequitysecurities.Inselectingequitysecurities,theAdvisergenerallyseeksissuingcompaniesthatexhibitthefollowingcharacteristics:

• One or more catalysts (e.g., management changes, shareholder activism, and operational and financialrestructurings)todrivevaluecreation;

• A strong financial position, as determined by an analysis of balance sheet information, off-balance sheet assets,liabilitiesandcontingencies,cashflows,long-termearningsandearningsmultiples;

• A strong and experiencedmanagement team, as evidenced by operating and investing success, aswell as by anapparentabsenceofintenttoprofitattheexpenseofstockholders;

• Availabilityofcomprehensiveandmeaningfulfinancialandrelatedinformation;and

• AvailabilityofthesecurityatamarketpricewhichtheAdviserbelievesisatasubstantialdiscounttotheAdviser’sestimate of the company’s intrinsic value, and the existence of one ormore catalysts to unlock such company’sintrinsicvalue.

18

Investing in equity securities has certain risks, including the risk that the financial condition of the issuer may becomeimpairedorthatthegeneralconditionofthestockmarketmayworsen(bothofwhichmaycontributedirectlytoadecreaseinthevalueofthesecuritiesandthusinthevalueoftheFund’sshares).Equitysecuritiesareespeciallysusceptibletogeneralstockmarketmovements and to increases anddecreases in value asmarket confidence in andperceptions of the issuerschange. These perceptions are based on unpredictable factors including expectations regarding government, economic,monetaryandfiscalpolicies,inflationandinterestrates,economicexpansionorcontraction,andglobalorregionalpolitical,economic or banking crises. The value of the common stocks owned by the Fund thusmay be expected to fluctuate. Inselectingpreferredstocks,theAdviserwilluseitsselectioncriteriaforeitherequitysecuritiesordebtsecurities,dependingontheAdviser’sdeterminationastohowtheparticularissueshouldbeviewed,based,amongotherthings,uponthetermsofthe preferred stock and where it fits in the issuer’s capital structure. Preferred stocks are usually entitled to rights onliquidationwhichare senior to thoseof commonstocks. For these reasons,preferred stocksgenerallyentail less risk thancommon stocks of the same issuer. Such securities may pay cumulative dividends. Because the dividend rate is pre-established,andas thesesecuritiesaresenior tocommonstocks, theytendtohave lesspossibilityofcapitalappreciation.AlthoughtheAdviserdoesnotfocusonmarketfactorsinmakinginvestmentdecisions,theFundis,ofcourse,subjecttothevagaries of themarkets. The Fundmay invest from time to time in smaller companieswhose securities tend to bemorevolatileandlessliquidthansecuritiesoflargercompanies.

ExchangeTradedFunds(“ETFs”)

TheFundmaypurchaseETFstogainexposuretoaportionoftheU.S.oraforeignmarket.AnETFrepresentsarelativelyfixedportfoliooffinancial instrumentsdesignedtotrackaparticularmarket indexandareatypeof investmentcompanywheresharesareboughtandsoldonafinancialexchange.TherisksofowningsharesofanETFgenerallyreflecttherisksofowningtheunderlyingfinancialinstrumentstheyaredesignedtotrack.Asashareholderofanotherinvestmentcompany,theFundwould bear its pro rata portion of the other investment company’s expenses, including advisory fees, in addition to theexpensestheFundbearsdirectlyinconnectionwithitsownoperation.ThemarketpricesofETFswillfluctuateinaccordancewithbothchangesinthemarketvalueoftheirunderlyingportfoliofinancialinstrumentsandduetosupplyanddemandfortheinstrumentsontheexchangesonwhichtheyaretraded(whichmayresult intheirtradingatadiscountorpremiumtotheirNAVs).ETFinvestmentsmaynotreplicateexactlytheperformanceoftheirspecific indexbecauseoftransactioncostsandbecauseof the temporaryunavailabilityofcertaincomponent financial instrumentsof the index. Inaddition,a lackofliquidityinthetradingofanETFcouldresultinthatsecuritybeingmorevolatile.

ExchangeTradedNotes(“ETNs”)

An investment inanETN involves risks, includingpossible lossofprincipal.ETNsareunsecureddebt securities issuedbyabank that are linked to the total return of a market index. Risks of investing in ETNs also include limited portfoliodiversification,uncertainprincipalpayment,andilliquidity.Additionally,theinvestorfeewillreducetheamountofreturnonmaturityoratredemption,andasaresulttheinvestormayreceivelessthantheprincipalamountofreturnonmaturityoratredemption, even if the value of the relevant index has increased. An investment in an ETNmay not be suitable for allinvestors.

ForeignSecurities

TheFundmaypurchasesecuritiesofnon-U.S.issuerswhosevaluesarequotedandtradedinanycurrencyinadditiontotheU.S.dollar.SuchinvestmentsinvolvecertainrisksnotordinarilyassociatedwithinvestmentsinsecuritiesofU.S.issuers.Suchrisksinclude:fluctuationsinthevalueofthecurrencyinwhichthesecurityistradedorquotedascomparedtotheU.S.dollar;unpredictablepolitical,socialandeconomicdevelopments intheforeigncountrywherethesecurity is issuedorwheretheissuerofthesecurityislocated;thepossibleimpositionbyaforeigngovernmentoflimitsontheabilityoftheFundtoobtainaforeigncurrencyortoconvertaforeigncurrencyintoU.S.dollars;andtheimpositionofotherforeignlawsorrestrictions.

BecausetheFundmayinvestinsecuritiesissued,tradedorquotedincurrenciesotherthantheU.S.dollar,changesinforeigncurrencyexchangerateswillaffectthevalueofsecuritiesintheFund’sportfolio.WhendeemedadvantageoustotheFund,theAdvisermayattempt,toreducesuchrisk,knownas“currencyrisk,”byusinganinvestmenttechniquecalled“hedging,”whichattemptstoreduceoreliminatechangesinasecurity’svalueresultingfromchangingcurrencyexchangerates.Hedgingisfurtherdescribedunder“DerivativeInstruments.”Inaddition,incertaincountries,thepossibilityofexpropriationofassets,confiscatory taxation, or diplomatic developments could adversely affect investments in those countries. Expropriation ofassets refers to the possibility that a country’s lawswill prohibit the return to the U.S. of anymonies that the Fund hasinvestedinthecountry.Confiscatorytaxationreferstothepossibilitythataforeigncountrywilladoptataxlawwhichhastheeffect of requiring the Fund to pay significant amounts, if not all, of the value of the Fund’s investment to the foreigncountry’staxingauthority.Thereferencetodiplomaticdevelopmentsmeansthatbecauseofcertainactionsoccurringwithinaforeigncountry,suchassignificantcivilrightsviolationsorbecauseoftheUnitedStates’actionsduringatimeofcrisisintheparticularcountry,allcommunicationsandotherofficialgovernmentalrelationsbetweenthecountryandtheUnitedStates

19

couldbesevered.Thiscould result in theabandonmentofanyU.S. investors’, suchas theFund’s,money in theparticularcountry,withnoabilitytohavethemoneyreturnedtotheUnitedStates.

TheremaybelesspubliclyavailableinformationaboutaforeigncompanythanaboutaU.S.company.Foreignissuersmaynotbesubjecttoaccounting,auditingandfinancialreportingstandardsandrequirementscomparableto,orasuniformas,thoseof U.S. issuers. The number of securities traded, and the frequency of such trading, in non-U.S. securitiesmarkets, whilegrowinginvolume,isforthemostpart,substantiallylessthaninU.S.markets.Asaresult,securitiesofmanyforeignissuersarelessliquidandtheirpricesmorevolatilethansecuritiesofcomparableU.S.issuers.Transactioncosts,thecostsassociatedwith buying and selling securities on non-U.S. securities markets may be higher than in the U.S. There is generally lessgovernment supervision and regulation of exchanges, brokers and issuers than there is in the U.S. The Fund’s foreigninvestments may include both voting and non-voting securities, sovereign debt and participations in foreign governmentdeals.TheFundmayhavegreaterdifficulty takingappropriate legalactionwith respect to foreign investments innon-U.S.courtsthanwithrespecttodomesticissuersinU.S.courts.

EuropeancountriescanbeaffectedbythesignificantfiscalandmonetarycontrolsthattheEuropeanEconomicandMonetaryUnion(“EMU”)imposesformembership.Europe’seconomiesarediverse,itsgovernmentsaredecentralized,anditsculturesvarywidely.SeveralEuropeanUnion(“EU”)countries,includingGreece,Ireland,Italy,SpainandPortugal,havefacedbudgetissues, someofwhichmayhavenegative long-termeffects for the economies of those countries andother EU countries.Thereiscontinuedconcernaboutnational-levelsupportfortheeuroandtheaccompanyingcoordinationoffiscalandwagepolicyamongEMUmembercountries.Membercountriesarerequiredtomaintaintightcontrolover inflation,publicdebt,andbudgetdeficittoqualifyformembershipintheEMU.TheserequirementscanseverelylimittheabilityofEMUmembercountriestoimplementmonetarypolicytoaddressregionaleconomicconditions.

InJuneof2016,theUnitedKingdom(“UK”)approvedareferendumtoleavetheEU,commonlyreferredtoas“Brexit,”whichsparked depreciation in the value of the British pound and heightened risk of continued worldwide economic volatility.PursuanttoArticle50oftheTreatyofLisbon,theUKofficiallylefttheEUonJanuary31,2020andhasenteredan11-monthtransition period that lasted through December 31, 2020. There is still considerable uncertainty regarding the potentialconsequences of Brexit, including whether Brexit will have a negative impact on the UK or the EU, the broader globaleconomyorthevalueoftheBritishpoundsterlingortheEuro.ThisuncertaintymayincreaseredemptionsfromtheFundifitholds impactedsecuritiesorcausethevalueoftheFund’ssecuritiesthatareeconomicallytiedtotheUKorEUtodecline.Brexit couldadverselyaffectEUorworldwidepolitical, regulatory,economicormarket conditionsandcouldcontribute toinstabilityinglobalpoliticalinstitutions,regulatoryagenciesandfinancialmarkets.BrexitcouldalsoleadtolegaluncertaintyandpoliticallydivergentnationallawsandregulationswhileanewrelationshipbetweentheUKandtheEUisdefinedandtheUK determines which EU laws to replace or replicate. Further, the UK’s departure from the EU would potentially causevolatilitywithintheEU,whichcouldtriggerprolongedeconomicdownturnsincertainEuropeancountriesorsparkadditionalmember states to contemplate departing the EU (thereby exacerbating political instability in the region). The UK andEuropeaneconomiesandthebroaderglobaleconomycouldbesignificantlyimpactedduringthisperiodofuncertainty,whichmay result in increased volatility and illiquidity, and potentially lower economic growth inmarkets in theUK, Europe andgloballythatcouldpotentiallyhaveanadverseeffectonthevalueoftheFund’sinvestments.

Many non-governmental issuers, and even certain governments, have defaulted on, or been forced to restructure, theirdebts;manyotherissuershavefaceddifficultiesobtainingcreditorrefinancingexistingobligations;financialinstitutionshaveinmanycasesrequiredgovernmentorcentralbanksupport,haveneededtoraisecapital,and/orhavebeenimpairedintheirabilitytoextendcredit;andfinancialmarkets inEuropeandelsewherehaveexperiencedextremevolatilityanddeclines inasset valuesand liquidity. Thesedifficultiesmaycontinue,worsenor spreadwithinandwithoutEurope.Responses to thefinancialproblemsbyEuropeangovernments,centralbanksandothers, includingausteritymeasuresandreforms,maynotwork, may result in social unrest and may limit future growth and economic recovery or have other unintendedconsequences. Further defaults or restructurings by governments and others of their debt could have additional adverseeffects on economies, financial markets and asset valuations around the world. In addition, one or more countries mayabandontheeuro,thecommoncurrencyoftheEU,and/orwithdrawfromtheEU.Theimpactoftheseactions,especiallyiftheyoccurinadisorderlyfashion,isnotclearbutcouldbesignificantandfar-reaching.

Emerging markets. Investments by the Fund in companies domiciled in emerging market countries may be subject topotentiallyhigherrisksthaninvestmentsindevelopedcountries.Theserisksincludeamongothers,(i)lesseconomicstability;(ii)politicalandsocialuncertainty(forexample,regionalconflictsandriskofwar);(iii)pervasivenessofcorruptionandcrime;(iv) thesmallcurrentsizeof themarkets forsuchsecuritiesandthecurrently lowornonexistentvolumeof trading,whichresultinalackofliquidityandingreaterpricevolatility;(v)delaysinsettlingportfoliotransactions;(vi)riskoflossarisingoutof the system of share registration and custody; (vii) certain national policies that may restrict the Fund’s investmentopportunities,includingrestrictionsoninvestmentinissuersorindustriesdeemedsensitivetonationalinterests;(viii)foreigntaxation;(ix)theabsenceofdevelopedlegalstructuresgoverningprivateorforeigninvestmentorallowingforjudicialredressfor injury to private property; (x) the absence of a capital market structure or market-oriented economy; and (xi) the

20

possibility that recent favorable economic developments may be slowed or reversed by unanticipated political or socialevents.

Inaddition,manycountriesinwhichtheFundmayinvesthaveexperiencedsubstantial,andinsomeperiodsextremelyhigh,rates of inflation for many years. Inflation and rapid fluctuations in inflation rates have had and may continue to havenegativeeffectsontheeconomiesandsecuritiesmarketsofcertaincountries.Moreover,theeconomiesofsomedevelopingcountriesmaydifferfavorablyorunfavorablyfromtheU.S.economyinsuchrespectsasgrowthofgrossdomesticproduct,rateofinflation,currencydepreciation,capitalreinvestment,resourceself-sufficiency,andbalanceofpaymentsposition.

Transactioncostsassociatedwithinvestmentsinemergingmarketsecuritiesmaybehigherthantransactionscostsassociatedwithinvestmentsisdevelopedmarketsecurities.

Liquidity andTradingVolumeRisks. A fund that invests a significant percentageof its assets in foreign securitiesmaybesubjecttotheliquidityandtradingvolumerisksassociatedwithinternationalinvesting.Duetomarketconditions,includinguncertainty regarding thepriceofa security, itmaybedifficult for theFund tobuyor sell foreignportfolio securitiesatadesirabletimeorprice,whichcouldresultininvestmentlosses.Thisriskofportfolioilliquidityisheightenedwithrespecttosmall-andmid-capsecurities,generally,andforeignsmall-andmid-capsecuritiesinparticular.TheFundmayhavetolowerthe selling price, liquidate other investments, or forego another, more appealing investment opportunity as a result ofilliquidity in themarkets. TheAdviserwill fair value in good faith any securities it deems to be illiquid under consistentlyappliedproceduresestablishedbytheFund’sBoard.Marketconditionsarealwayschangingandvarybycountryandindustrysector, and investing in international markets involves unique risks. Although it is difficult to accurately assess trends intradingvolumesinforeignmarkets,becausesomeamountofactivityhasmigratedtoalternativetradingvenues,areductionin trading volumesmaypose challenges to the Fund. This is particularly so for a fund that focuseson small- andmid-capcompanies,whichusuallyhavelowertradingvolumesandtakesizeablepositionsinportfoliocompanies.Asaresultoflowertradingvolumes,itmaytakelongertobuyorsellthesecuritiesofsuchcompanies,whichcanexacerbatetheFund’sexposuretovolatilemarkets.TheFundmayalsobe limited in itsability toexecute favorable trades in foreignportfolio securities inresponsetochangesincompanypricesandfundamentals.IftheFundisforcedtosellsecuritiestomeetredemptionrequestsorothercashneeds,orinthecaseofaneventaffectingliquidityinaparticularmarketormarkets,itmaybeforcedtodisposeofthosesecuritiesunderdisadvantageouscircumstancesandataloss.AstheFundgrowsinsize,theseconsiderationstakeonincreasingsignificanceandmayadverselyimpactperformance.

Pursuant toRule 22e-4under the1940Act (the “LiquidityRule”), the Trust has implemented a liquidity riskmanagementprogramand related procedures to identify illiquid investments pursuant to the Liquidity Rule. If the limitation on illiquidsecurities is exceeded, other than by a change inmarket values, the condition will be reported to the Board and, whenrequiredbytheLiquidityRule,totheSEC.

Indebtedness,ParticipationsandTradeClaims

From time to time, the Fundmay purchase the direct indebtedness of various companies (Indebtedness), or participationinterests in Indebtedness (Participations), including IndebtednessandParticipationsofDistressedCompanies. Indebtednesscanbedistinguishedfromtraditionaldebtsecuritiesinthatdebtsecuritiesarepartofalargeissueofsecuritiestothegeneralpublicwhich is typically registeredwithasecurities registrationorganization,suchas theSEC,andwhich isheldbya largegroupofinvestors.Indebtednessmaynotbeasecurity,butrather,mayrepresentaspecificcommercialloanorportionofaloan that has been given to a company by a financial institution such as a bank or insurance company. The company istypicallyobligatedtorepaysuchcommercialloanoveraspecifiedtimeperiod.BypurchasingtheIndebtednessofcompanies,theFundineffectstepsintotheshoesofthefinancialinstitutionthatmadetheloantothecompanypriortoitsrestructuringorrefinancing.IndebtednesspurchasedbytheFundmaybeintheformofloans,notesorbonds.Iftheloanissecured,theFund will have a priority claim to the assets of the company ahead of unsecured creditors and stockholders. The Fundgenerallymakes investments in the typesofdebtdescribedabove,which typicallyhaveceasedpaying interest, toachievecapitalappreciation,ratherthantoseekincome.

TheFundalsomaypurchasetradeclaimsandothersimilardirectobligationsorclaimsagainstcompaniesinbankruptcy(tradeclaims).Tradeclaimsaregenerallypurchasedfromcreditorsofthebankruptcompanyandtypicallyrepresentmoneyduetoasupplierofgoodsorservicestothecompany.

ThelengthoftimeremaininguntilmaturityontheIndebtednessisonefactortheAdviserconsidersinpurchasingaparticularIndebtedness. Indebtedness that represents a specific indebtedness of the company to a bank is not considered to be asecurityissuedbythebanksellingit.TheFundmaypurchaseloansfromnationalandstatecharteredbanksaswellasforeignbanks.TheFundwillgenerallyinvestintheIndebtednessofacompanythathasthehighestpriorityintermsofpaymentbythecompany,althoughonoccasionlowerpriorityIndebtednessalsomaybeacquired.

Participations represent fractional interests in a company’s Indebtedness. The financial institutions that typically makeParticipations available are banks or insurance companies, governmental institutions, such as the Resolution Trust

21

Corporation,theFederalDepositInsuranceCorporationorthePensionBenefitGuarantyCorporation,orcertainorganizationssuch as the World Bank which are known as “supranational organizations.” Supranational organizations are entitiesestablished or financially supported by the national governments of one ormore countries to promote reconstruction ordevelopment. The Fund alsomay purchase Trade Claims ofDistressed Companies. Indebtedness, Participations and TradeClaimsmaybeilliquidasdescribedabove.

Thepurchaseofindebtednessorloanparticipationsofatroubledcompanyalwaysinvolvesariskastothecreditworthinessoftheissuerandthepossibilitythatprincipalinvestedmaybelost.Purchasersofparticipations,suchastheFund,mustrelyonthefinancialinstitutionissuingoractingasagentwithrespecttotheparticipationtoassertanyrightsagainsttheborrowerwithrespecttotheunderlyingindebtedness.Inaddition,theFundtakesontheriskastothecreditworthinessofanybankorother financial intermediary issuing theparticipation, aswell as that of the company issuing theunderlying indebtedness.WhentheFundpurchasesaTradeClaim,thereisnoguaranteethatthedebtorwilleverbeabletosatisfytheobligationontheTradeClaim.

InitialPublicOfferings

Securities issuedthroughaninitialpublicoffering(“IPO”)canexperienceanimmediatedropinvalueifthedemandforthesecuritiesdoesnotcontinuetosupporttheofferingprice. Informationaboutthe issuersof IPOsecurities isalsodifficulttoacquiresincetheyarenewtothemarketandmaynothavelengthyoperatinghistories.TheFundmayengageinshort-termtradinginconnectionwithitsIPOinvestments,whichcouldproducehighertradingcostsandadversetaxconsequences.Thenumberofsecurities issued inan IPO is limited,so it is likelythat IPOsecuritieswill representasmallercomponentof theFund’sportfolioastheFund’sassetsincrease(andthushaveamorelimitedeffectontheFund’sperformance).

InvestmentCompanySecurities

TheFundmayinvestfromtimetotimeinotherinvestmentcompanysecurities,subjecttoanyapplicablelawswhichrestrictsuchinvestments.Suchlawsgenerallyrestrictaregisteredinvestmentcompany’spurchaseofanotherinvestmentcompany’svotingsecuritiesto3%oftheotherinvestmentcompany’ssecurities,nomorethan5%ofaregisteredinvestmentcompany’stotalassetsinanysingleinvestmentcompany’ssecuritiesandnomorethan10%ofaregisteredinvestmentcompany’stotalassets in all investment company securities, subject to certain exceptions. Investors should recognize that the Fund’spurchasesofthesecuritiesofinvestmentcompaniesresultsinlayeringofexpenses.Thislayeringmayoccurbecauseinvestorsin any investment company, such as the Fund, indirectly bear a proportionate share of the expenses of the investmentcompany,includingoperatingcosts,andinvestmentadvisoryandadministrativefees.

TheSECrecentlyadoptedcertainregulatorychangesandtookotheractionsrelatedtotheabilityofaninvestmentcompanyto invest in the securities of another investment company. These changes include, among other things, the rescission ofcertainSECexemptiveorderspermittinginvestments inexcessofthestatutory limitsandthewithdrawalofcertainrelatedSECstaffno-actionletters,andtheadoptionofRule12d1-4underthe1940Act.Rule12d1-4,whichwaseffectiveonJanuary19, 2021, will permit the Funds to invest in other investment companies beyond the statutory limits, subject to certainconditions. The rescission of the applicable exemptive orders and the withdrawal of the applicable no-action letters iseffectiveon January19,2022. After such time, theFundwillno longerbeable to relyon theaforementionedexemptiveorders andno-action letters, andwill be subject instead to Rule 12d1-4 andother applicable rules under Section 12(d)(1)underthe1940Act.

LendingPortfolioSecurities

TheFund isauthorizedto lendsecurities itholds tobrokers,dealersandother financialorganizations.Loansof theFund’ssecuritiesmaynotexceed331/3%of theFund’s total assets. TheFund’s loansof securitieswill be collateralizedby cash,lettersofcreditorU.S.governmentsecurities thatwillbemaintainedatall times ina segregatedaccountwith theFund’scustodianinanamountatleastequaltothecurrentmarketvalueoftheloanedsecurities.Fromtimetotime,theFundmaypayapartoftheinterestearnedfromtheinvestmentcollateralreceivedforsecuritiesloanedtotheborrower.

By lending its portfolio securities, the Fund can increase its income by continuing to receive interest or dividends on theloanedsecuritiesintheformofsubstitutepayments,byinvestingthecashcollateralinshort-terminstrumentsorbyobtaininga feepaidby theborrowerwhenU.S. government securities areusedas collateral. TheFundwill adhere to the followingconditions whenever it lends its securities: (1) the Fundmust initially receive at least 102% cash collateral or equivalentsecurities from the borrower for U.S. securities and 105% cash collateral or equivalent securities from the borrower forforeign securities; (2) the borrowermust increase the collateralwhenever themarket value of the securities loaned risesabove the level of the collateral; (3) the Fundmust be able to terminate the loan at any time; (4) the Fundmust receivereasonablecompensationontheloan,aswellassubstitutepaymentsforanydividends,interestorotherdistributionsontheloanedsecurities;(5)theFundmaypayonlyreasonablelendingagentandcustodianfeesinconnectionwiththeloan;and(6)

22

theFunddoesnothavetherighttovoteonsecuritieswhiletheyarebeinglent;however,theFundmayattempttocallbacktheloanformaterialeventsandvotetheproxyiftimepermits.

If theborrowerdefaultson itsobligation to return the securities loanedbecauseof insolvencyorother reasons, theFundcouldexperiencedelaysandcostsinrecoveringthesecuritiesloanedoringainingaccesstothecollateral.Thesedelaysandcostscouldbegreater for foreignsecurities. If theFund isnotabletorecoverthesecurities loaned, theFundmaysell thecollateralandpurchaseareplacementinvestmentinthemarket.Thevalueofthecollateralcoulddecreasebelowthevalueofthereplacementsecuritybythetimethereplacementinvestmentispurchased.LoanswillbemadeonlytopartiesdeemedbytheAdviser to have the ability to performas a borrower andwhen, in theAdviser’s judgment, the incomeearnedwouldjustifytherisks.CashreceivedascollateralthroughloantransactionsmaybeinvestedinothersecuritieseligibleforpurchasebytheFund.Cashcollateralmaybeinvestedinunaffiliatedmoneymarketfunds.Theinvestmentofcashcollateralsubjectsthatinvestment,aswellasthesecuritiesloaned,tomarketappreciationordepreciation.TheFundisobligatedtoreturnthecollateraltotheborrowerattheterminationoftheloan.TheFundcouldsufferalossintheeventtheFundmustreturnthecashcollateralandtherearelossesoninvestmentsmadewithcashcollateral.

LIBORRisk

ManyfinancialinstrumentsmaybetiedtotheLondonInterbankOfferedRate,or“LIBOR,”todeterminepaymentobligations,financingterms,hedgingstrategies,orinvestmentvalue.LIBORistheofferedrateforshort-termEurodollardepositsbetweenmajorinternationalbanks.OnJuly27,2017,theheadoftheUKFinancialConductAuthorityannouncedadesiretophaseouttheuseofLIBORbytheendof2021.Regulatorsandindustryworkinggroupshavesuggestedalternativereferencerates,butglobal consensus is lacking and theprocess for amending existing contracts or instruments to transition away from LIBORremainsunclear.Therealsoremainsuncertaintyandriskregardingthewillingnessandabilityofissuerstoincludeenhancedprovisions in new and existing contracts or instruments. As such, the transition away from LIBORmay lead to increasedvolatility and illiquidity in markets that are tied to LIBOR, reduced values of LIBOR-related investments, and reducedeffectivenessofhedgingstrategies,adverselyaffectingtheFund’sperformanceorNAV.Inaddition,thealternativereferenceratemaybeanineffectivesubstituteresultinginprolongedadversemarketconditionsfortheFund.

MasterLimitedPartnerships(“MLPs”)

TheFundmayinvestinMLPstotheextentconsistentwithitsinvestmentobjectiveandstrategies.AnMLPgenerallyhastwoclassesofpartners,thegeneralpartnerandthelimitedpartners.ThegeneralpartnernormallycontrolstheMLPthroughanequity interest plus units that are subordinated to the common (publicly traded) units for an initial period and then onlyconvertingtocommonifcertainfinancialtestsaremet.AsamotivationforthegeneralpartnertosuccessfullymanagetheMLPandincreasecashflows,thetermsofmostMLPstypicallyprovidethatthegeneralpartnerreceivesalargeportionofthenetincomeasdistributionsreachhighertargetlevels.Ascashflowgrows,thegeneralpartnerreceivesgreaterinterestintheincremental income compared to the interest of limited partners. The general partner’s incentive compensation typicallyincreases to up to 50% of incremental income. Nevertheless, the aggregate amount distributed to limited partners willincreaseasMLPdistributionsreachhighertargetlevels.Giventhisincentivestructure,thegeneralpartnerhasanincentivetostreamlineoperationsandundertakeacquisitionsandgrowthprojectsinordertoincreasedistributionstoallpartners.

MLPcommonunitsrepresentanequityownershipinterestinapartnership,providinglimitedvotingrightsandentitlingtheholder to a share of the company’s success through distributions and/or capital appreciation. Unlike shareholders of acorporation, common unit holders do not elect directors annually and generally have the right to vote only on certainsignificant events, such as mergers, a sale of substantially all of the assets, removal of the general partner or materialamendments to the partnership agreement. MLPs are required by their partnership agreements to distribute a largepercentage of their current operating earnings. Common unit holders generally have first right to a minimum quarterlydistribution prior to distributions to the convertible subordinated unit holders or general partner (including incentivedistributions).Commonunitholderstypicallyhavearrearagerights if theminimumquarterlydistribution isnotmet. Intheeventofliquidation,MLPcommonunitholdershavefirstrighttothepartnership’sremainingassetsafterbondholders,otherdebtholders,andpreferredunitholdershavebeenpaidinfull.MLPcommonunitstradeonanationalsecuritiesexchangeorover-the-counter. MLP common units and other equity securities can be affected by macro-economic and other factorsaffecting the stockmarket in general, expectationsof interest rates, investor sentiment towardMLPsor aMLP’s businesssector,changesinaparticularissuer’sfinancialcondition,orunfavorableorunanticipatedpoorperformanceofaparticularissuer(inthecaseofMLPs,generallymeasuredintermsofdistributablecashflow).PricesofcommonunitsofindividualMLPsandotherequitysecuritiescanalsobeaffectedbyfundamentalsuniquetothepartnershiporcompany, includingearningspowerandcoverageratios.

Ascomparedtocommonstockholdersofacorporation,holdersofMLPunitshavemorelimitedcontrolandlimitedrightstovoteonmattersaffectingthepartnership.Inaddition,therearecertaintaxrisksassociatedwithaninvestmentinMLPunitsand conflicts of interest may exist between common unit holders and the general partner, including those arising fromincentivedistributionpayments.Achangeincurrenttaxlaw,orachangeinthebusinessofagivenMLP,couldresult inan

23

MLPbeingtreatedasacorporationforU.S.federalincometaxpurposes,whichwouldresultinsuchMLPbeingrequiredtopayU.S.federalincometaxonitstaxableincome.Thus,ifanyoftheMLPsownedbytheFundweretreatedascorporationsforU.S.federalincometaxpurposes,theafter-taxreturntotheFundwithrespecttoitsinvestmentinsuchMLPswouldbemateriallyreduced,whichcouldcauseadeclineinthevalueofthecommonstock.

TotheextentthattheFundinvestsintheequitysecuritiesofanMLP,theFundwillbealimitedpartnerormemberinsuchMLP.Accordingly,theFundwillberequiredtoincludeinitstaxableincometheFund’sallocableshareoftheincome,gains,losses,deductionsandexpensesrecognizedbyeachsuchMLP,regardlessofwhethertheMLPdistributescashtotheFund.TheFundmayhavetosellinvestmentstoprovidecashtomakerequireddistributionsifitsallocableshareofanMLP’sincomeandgains isnotoffsetbytheMLP’staxdeductions, lossesandcreditsandtheMLPdoesnotdistributesufficientcash.Theportion,ifany,ofadistributionreceivedbytheFundfromanMLPthatisoffsetbytheMLP’staxdeductions,lossesorcreditsisessentially treatedasa returnof capital.ThepercentageofanMLP’s incomeandgains that isoffsetby taxdeductions,lossesandcreditswillfluctuateovertimeforvariousreasons.AsignificantslowdowninacquisitionactivityorcapitalspendingbyMLPsheld in theFund’sportfolio could result ina reductionofdepreciationdeductions,whichmay result in increasedcurrenttaxableincomefortheFund.

RecentMarketEventsRisk

Periodsofunusuallyhighfinancialmarketvolatilityandrestrictivecreditconditions,attimeslimitedtoaparticularsectororgeographicarea,haveoccurredinthepastandmaybeexpectedtorecurinthefuture.Somecountries,includingtheUnitedStates, have adopted or have signaled protectionist trade measures, relaxation of the financial industry regulations thatfollowedthefinancialcrisis,and/orreductionstocorporatetaxes.Thescopeofthesepolicychangesisstilldeveloping,buttheequityanddebtmarketsmay react strongly toexpectationsof change,whichcould increasevolatility,particularly if aresultingpolicyrunscountertothemarket’sexpectations.Theoutcomeofsuchchangescannotbeforeseenatthepresenttime. Inaddition,geopoliticalandotherrisks, includingenvironmentalandpublichealthrisks,mayaddto instability intheworldeconomyandmarketsgenerally.Asaresultofincreasinglyinterconnectedglobaleconomiesandfinancialmarkets,thevalueandliquidityoftheFund’sinvestmentsmaybenegativelyaffectedbyeventsimpactingacountryorregion,regardlessofwhethertheFundinvestsinissuerslocatedinorwithsignificantexposuretosuchcountryorregion.

Recenteventsareimpactingthesecuritiesmarkets.ArecentoutbreakofrespiratorydiseasecausedbyanovelcoronaviruswasfirstdetectedinDecember2019andhasspreadglobally.Theoutbreakandeffortstocontainitsspreadhaveresultedinclosing borders and quarantines, restricting international and domestic travel, enhanced health screenings, cancellations,disruptedsupplychainsandcustomeractivity,responsesbybusinesses(includingchangestooperationsandreducingstaff),and have produced general concern and uncertainty. The impact of the coronavirus pandemic, and other epidemics andpandemicsthatmayariseinthefuture,couldadverselyaffectnationalandglobaleconomies,individualcompaniesandthemarketingeneralinamannerandforaperiodoftimethatcannotbeforeseenatthepresenttime.Healthcrisescausedbytherecentoutbreakmayheightenotherpre-existingpolitical,socialandeconomicrisksinacountryorregion.Governmentalauthorities and regulators throughout the world, such as the U.S. Federal Reserve, have in the past responded tomajoreconomicdisruptionswithchanges to fiscalandmonetarypolicy, includingbutnot limitedto,directcapital infusions,newmonetaryprograms,anddramaticallylowerinterestrates.Certainofthosepolicychangesarebeingimplementedinresponseto the coronavirus outbreak. Such policy changes may adversely affect the value, volatility and liquidity of dividend andinterestpayingsecurities.Incertaincases,anexchangeormarketmaycloseorissuetradinghaltsoneitherspecificsecuritiesoreventheentiremarket,whichmayresultintheFundbeing,amongotherthings,unabletobuyorsellcertainsecuritiesorfinancial instruments or to accurately price its investments. In the event of a pandemic or an outbreak, there can be noassurancethattheFundanditsserviceproviderswillbeabletomaintainnormalbusinessoperationsforanextendedperiodof timeorwillnot lose theservicesofkeypersonnelona temporaryor long-termbasisdue to illnessorother reasons.Apandemic or disease could also impair the information technology and other operational systems uponwhich the Fund’sinvestmentadviserrelies,andcouldotherwisedisrupttheabilityoftheFund’sserviceproviderstoperformessentialtasks.Althoughmultipleassetclassesmaybeaffectedbyamarketdisruptionthedurationandeffectsmaynotbethesameforalltypesofassets.TotheextenttheFundmayoverweightitsinvestmentsincertaincountries,companies,industriesormarketsectors,suchpositionwillincreasetheFund’sexposuretoriskoflossfromadversedevelopmentsaffectingthosecountries,companies, industriesor sectors. These conditions could result in the Fund’s inability to achieve its investmentobjectives,causethepostponementofreconstitutionorrebalancedatesforbenchmarkindices,adverselyaffectthepricesandliquidityof the securities andother instruments inwhich the Fund invests, negatively impacting the Fundperformance, and causelossesonyourinvestmentsintheFund.YoushouldalsoreviewtheFund’sprospectusandthisSAItounderstandtheFund’sdiscretion to implement temporary defensive measures, as well as the circumstances in which the Fund may satisfyredemptionrequestsin-kind.

MergerArbitrageSecuritiesandSecuritiesofDistressedCompanies

TheFundalsoseekstoinvestinsecuritiesofcompaniesinvolvedinamerger,acquisition,liquidation,spin-off,consolidation,etc. (“MergerArbitrageSecurities”)andthesecuritiesofcompanies(i)thatare involved inrestructurings,suchasmergers,

24

acquisitions,consolidations,liquidations,spinoffs,ortenderorexchangeoffers,and(ii)thatare,orareabouttobe,involvedin reorganizations, financial restructurings, or bankruptcy (“Distressed Companies”). The Fund may from time to timeparticipate in any such tenderor exchangeoffers inwhich such companies are involved.A tenderoffer is anofferby thecompany itselforbyanother companyorperson topurchasea company’s securitiesat ahigher (or lower)price than themarket value for such securities. An exchange offer is an offer by the company or by another company or person to theholdersof thecompany’ssecurities toexchangethosesecurities fordifferentsecurities.Althoughtherearenorestrictionslimiting the extent to which the Fund may invest in Merger Arbitrage Securities or in Distressed Companies, the Fundpresentlydoesnotanticipatecommittingmorethan50%ofitsassetstosuchinvestments.Inadditiontotypicalequityanddebt investments, the Fund’s investments in Distressed Companies may include Indebtedness, Participations and TradeClaims,asfurtherdescribedunder“Indebtedness,ParticipationsandTradeClaims.”

Mortgage-BackedSecurities

Overview.Mortgage-backedsecurities,alsoreferredtoasmortgagesecuritiesormortgage-relatedsecurities, representanownershipinterestinapoolofmortgageloans,usuallyoriginatedbymortgagebankers,commercialbanks,savingsandloanassociations,savingsbanksandcreditunionstofinancepurchasesofhomes,commercialbuildingsorotherrealestate.Theindividualmortgage loansarepackagedor “pooled” together for sale to investors. Thesemortgage loansmayhaveeitherfixedoradjustableinterestrates.Aguaranteeorotherformofcreditsupportmaybeattachedtoamortgage-backedsecurityto protect against default on obligations. As the underlying mortgage loans are paid off, investors receive principal andinterest payments, which “pass-through” when received from individual borrowers, net of any fees owed to theadministrator,guarantororotherserviceproviders.Somemortgage-backedsecuritiesmakepaymentsofbothprincipalandinterest at a range of specified intervals; others make semiannual interest payments at a predetermined rate and repayprincipalatmaturity (likea typicalbond).Mortgage-backedsecuritiesarebasedondifferent typesofmortgages, includingthoseoncommercial realestateor residentialproperties.Theprimary issuersorguarantorsofmortgage-backedsecuritieshave historically been the Government National Mortgage Association (GNMA, or “Ginnie Mae”), the Federal NationalMortgage Association (FNMA, or “FannieMae”) and the Federal Home LoanMortgage Corporation (FHLMC, or “FreddieMac”). Other issuers ofmortgage-backed securities include commercial banks and other private lenders. GinnieMae is awholly-ownedUnitedStatesgovernmentcorporationwithintheDepartmentofHousingandUrbanDevelopment.GinnieMaeguaranteestheprincipalandinterestonsecurities issuedby institutionsapprovedbyGinnieMae(suchassavingsandloaninstitutions, commercialbanksandmortgagebankers).GinnieMaealsoguarantees theprincipaland interestonsecuritiesbackedbypoolsofmortgagesinsuredbytheFederalHousingAdministration(the“FHA”),orguaranteedbytheDepartmentof Veterans Affairs (the “VA”). Ginnie Mae’s guarantees are backed by the full faith and credit of the U.S. government.Guarantees as to the timely payment of principal and interest do not extend to the value or yield of mortgage-backedsecuritiesnordotheyextendtothevalueoftheFund’sshareswhichwillfluctuatedailywithmarketconditions.FannieMaeis a government-sponsored corporation, but its common stock is owned by private stockholders. Fannie Mae purchasesconventional(i.e.,notinsuredorguaranteedbyanygovernmentagency)residentialmortgagesfromalistofapprovedseller/servicerswhichincludestateandfederallycharteredsavingsandloanassociations,mutualsavingsbanks,commercialbanksandcreditunionsandmortgagebankers.Pass-throughsecuritiesissuedbyFannieMaeareguaranteedastotimelypaymentofprincipalandinterestbyFannieMae,butarenotbackedbythefullfaithandcreditoftheU.S.government.FreddieMacwascreatedbyCongressin1970forthepurposeofincreasingtheavailabilityofmortgagecreditforresidentialhousing.Itisagovernment-sponsoredcorporation formerlyownedby the twelveFederalHomeLoanBanksbutnow its commonstock isownedentirelybyprivatestockholders.FreddieMacissuesParticipationCertificates(PCs),whicharepass-throughsecurities,eachrepresentinganundivided interest inapoolof residentialmortgages.FreddieMacguarantees thetimelypaymentofinterest and ultimate collection of principal, but PCs are not backed by the full faith and credit of the U.S. government.Althoughthemortgage-backedsecuritiesofFannieMaeandFreddieMacarenotbackedbythefull faithandcreditoftheU.S. government, the Secretary of the Treasury has the authority to support FannieMae and FreddieMac by purchasinglimitedamountsoftheirrespectiveobligations.Theyieldsonthesemortgage-backedsecuritieshavehistoricallyexceededtheyieldsonothertypesofU.S.governmentsecuritieswithcomparablematuritiesduelargelytotheirprepaymentrisk.TheU.S.government, inthepast,providedfinancialsupporttoFannieMaeandFreddieMac,buttheU.S.governmenthasno legalobligationtodoso,andnoassurancecanbegiventhattheU.S.governmentwillcontinuetodoso.OnSeptember6,2008,theFederalHousingFinanceAgency (FHFA)placedFannieMaeandFreddieMac intoconservatorship.As theconservator,FHFAsucceededtoallrights,titles,powersandprivilegesofFannieMaeandFreddieMacandofanystockholder,officerordirectorofFannieMaeandFreddieMac.FHFAselectedanewchiefexecutiveofficerandchairmanoftheboardofdirectorsforeachofFannieMaeandFreddieMac.Also,theU.S.TreasuryenteredintoaSeniorPreferredStockPurchaseAgreementimposingvariouscovenantsthatseverelylimiteachenterprise’soperations.FannieMaeandFreddieMaccontinuetooperateasgoingconcernswhileinconservatorshipandeachremainsliableforallofitsobligations,includingitsguarantyobligationsassociatedwith itsmortgage-backed securities. TheFHFAhas thepower to repudiateany contractentered intobyFannieMaeandFreddieMacpriortoFHFA’sappointmentasconservatororreceiver, includingtheguarantyobligationsofFannieMaeandFreddieMac.Accordingly, securities issuedbyFannieMaeandFreddieMacwill involvea riskofnon-paymentofprincipaland interest.UndertheFHFA’s“SingleSecurity Initiative,”FannieMaeandFreddieMachaveentered intoa joint

25

initiative to develop a common securitization platform for the issuance ofUniformMortgage-Backed Securities (“UMBS”),whichwouldgenerallyalignthecharacteristicsofFannieMaeandFreddieMacparticipationcertificates.InJune2019FannieMaeandFreddieMacbeganissuingUMBSinplaceoftheircurrentofferingsof“tobeannounced”-eligiblemortgage-backedsecurities.TheeffectoftheissuanceofUMBSonthemarketformortgage-backedsecuritiesisuncertain.

Privatemortgage-backed securities. Issuersofprivatemortgagebacked securities, suchas commercialbanks, savingsandloaninstitutions,privatemortgageinsurancecompanies,mortgagebankersandothersecondarymarketissuers,arenotU.S.government agencies andmay be both the originators of the underlyingmortgage loans aswell as the guarantors of themortgage-backed securities, or they may partner with a government entity by issuing mortgage loans guaranteed orsponsoredbytheU.S.governmentoraU.S.governmentagencyorsponsoredenterprise.Poolsofmortgageloanscreatedbyprivateissuersgenerallyofferahigherrateofinterestthangovernmentandgovernment-relatedpoolsbecausetherearenodirect or indirect government or government agency guarantees of payment. The risk of loss due to default on privatemortgagebackedsecuritiesishistoricallyhigherbecauseneithertheU.S.governmentnoranagencyorinstrumentalityhaveguaranteedthem.Timelypaymentofinterestandprincipalis,however,generallysupportedbyvariousformsofinsuranceorguarantees,includingindividualloan,title,poolandhazardinsurance.Governmententities,privateinsurancecompaniesortheprivatemortgagepoolersissuetheinsuranceandguarantees.Theinsuranceandguaranteesandthecreditworthinessoftheir issuerswillbeconsideredwhendeterminingwhetheramortgage-backedsecuritymeetstheFund’squalitystandards.The Fund may buy mortgage-backed securities without insurance or guarantees if, through an examination of the loanexperience and practices of the poolers, the investmentmanager determines that the securitiesmeet the Fund’s qualitystandards. Private mortgage-backed securities whose underlying assets are neither U.S. government securities nor U.S.government-insured mortgages, to the extent that real properties securing such assets may be located in the samegeographicalregion,mayalsobesubjecttoagreaterriskofdefaultthanothercomparablesecuritiesintheeventofadverseeconomic,politicalorbusinessdevelopmentsthatmayaffectsuchregionand,ultimately,theabilityofpropertyownerstomake payments of principal and interest on the underlying mortgages. Non-government mortgage backed securities aregenerallysubjecttogreaterpricevolatilitythanthoseissued,guaranteedorsponsoredbygovernmententitiesbecauseofthegreaterriskofdefaultinadversemarketconditions.Whereaguaranteeisprovidedbyaprivateguarantor,theFundissubjecttothecreditriskofsuchguarantor,especiallywhentheguarantordoublesastheoriginator.Mortgage-backedsecuritiesthatare issuedor guaranteedby theU.S. government, its agencies or instrumentalities, arenot subject to the Fund’s industryconcentration restrictions, set forth under “Fundamental Investment Policies,” by virtue of the exclusion from that testavailabletosecuritiesissuedorguaranteedbytheU.S.governmentoranyofitsagenciesorinstrumentalities.Inthecaseofprivately issuedmortgage-backedsecurities,theFundcategorizesthesecuritiesbytheissuer’s industryforpurposesoftheFund’sindustryconcentrationrestrictions.

Additionalrisks.Inadditiontothespecialrisksdescribedbelow,mortgage-backedsecuritiesaresubjecttomanyofthesamerisks as other types of debt securities. The market value of mortgage-backed securities, like other debt securities, willgenerallyvaryinverselywithchangesinmarketinterestrates,decliningwheninterestratesriseandrisingwheninterestratesdecline.Mortgage-backed securities differ from conventional debt securities in thatmostmortgage-backed securities arepass-throughsecurities.Thismeansthattheytypicallyprovideinvestorswithperiodicpayments(typicallymonthly)consistingof a pro rata share of both regular interest and principal payments, as well as unscheduled early prepayments, on theunderlyingmortgagepool(netofanyfeespaidtotheissuerorguarantorofsuchsecuritiesandanyapplicableloanservicingfees).Asaresult,theholderofthemortgage-backedsecurities(i.e.,theFund)receivesscheduledpaymentsofprincipalandinterestandmayreceiveunscheduledprincipalpaymentsrepresentingprepaymentsontheunderlyingmortgages.Therateofprepayments on the underlyingmortgages generally increases as interest rates decline, andwhen the Fund reinvests thepaymentsandanyunscheduledpaymentsofprincipalitreceives,itmayreceivearateofinterestthatislowerthantherateontheexistingmortgage-backedsecurities.Forthisreason,pass-throughmortgage-backedsecuritiesmayhavelesspotentialforcapitalappreciationasinterestratesdeclineandmaybelesseffectivethanothertypesofU.S.governmentorotherdebtsecuritiesasameansof“lockingin”long-terminterestrates.Ingeneral,fixedratemortgage-backedsecuritieshavegreaterexposuretothis“prepaymentrisk”thanvariableratesecurities.Anunexpectedriseininterestratescouldextendtheaveragelifeofamortgage-backedsecuritybecauseofalowerthanexpectedlevelofprepaymentsorhigherthanexpectedamountsof latepaymentsordefaults. Inaddition, to theextentmortgage-backedsecuritiesarepurchasedatapremium,mortgageforeclosures and unscheduled principal prepayments may result in some loss of the holder’s principal investment to theextentofthepremiumpaid.Ontheotherhand,ifmortgage-backedsecuritiesarepurchasedatadiscount,bothascheduledpaymentofprincipalandanunscheduledpaymentofprincipalwillincreasecurrentandtotalreturnsandwillacceleratetherecognitionofincomethat,whendistributedtoshareholders,willgenerallybetaxableasordinaryincome.Regulatoryortaxchangesmayalsoadverselyaffectthemortgage-backedsecuritiesmarketasawhole.

Guarantees.Theexistenceofaguaranteeorotherformofcreditsupportonamortgage-backedsecurityusuallyincreasesthepricethattheFundpaysorreceivesforthesecurity.Thereisalwaystheriskthattheguarantorwilldefaultonitsobligations.WhentheguarantoristheU.S.government,thereisminimalriskofguarantordefault.However,theriskremainsifthecreditsupport or guarantee is provided by a private party or a U.S. government agency or sponsored enterprise. Even if the

26

guarantormeets its obligations, there can be no assurance that the type of guarantee or credit support providedwill beeffectiveatreducinglossesordelaystoinvestors,giventhenatureofthedefault.Aguaranteeonlyassurestimelypaymentofinterest andprincipal, notaparticular rateof returnon theFund’s investmentorprotectionagainstprepaymentorotherrisks.Themarketpriceandyieldofthemortgage-backedsecurityatanygiventimearenotguaranteedandlikelytofluctuate.

Sectorfocus.TheFund’sinvestmentsinmortgage-backedsecuritiesmaycausetheFundtohavesignificant,indirectexposureto a given market sector. If the underlying mortgages are predominantly from borrowers in a given market sector, themortgage-backedsecuritiesmayrespondtomarketconditionsjustasadirectinvestmentinthatsectorwould.Asaresult,theFundmayexperiencegreaterexposuretothatspecificmarketsectorthanitwouldiftheunderlyingmortgagescamefromawidervarietyofborrowers.Greaterexposure toaparticularmarket sectormay result ingreatervolatilityof thesecurity’spriceandreturnstotheFund,aswellasgreaterpotentialforlossesintheabsenceorfailureofaguaranteetoprotectagainstwidespread defaults or late payments by the borrowers on the underlying mortgages. Similar risks may result from aninvestmentinmortgage-backedsecuritiesifrealpropertiessecuringthemortgage-backedsecuritiesarelocatedinthesamegeographical region or dependent upon the same industries or sectors. Such mortgage backed securities will experiencegreater riskofdefaultor latepayment thanother comparablebutdiversified securities in theeventofadverseeconomic,politicalorbusinessdevelopmentsbecauseofthewidespreadaffectanadverseeventwillhaveonborrowers’abilitytomakepaymentsontheunderlyingmortgages.Theunprecedenteddisruptionintheresidentialmortgage-relatedsecuritiesmarket(and, in particular, the subprime residentialmortgagemarket), the broadermortgage-related securitiesmarket and asset-backed securities market in 2008-2009 resulted in downward price pressures and increased foreclosures and defaults inresidentialandcommercialrealestate.Adeclineinorplateauingofhousingvalues(aswasexperienced,maycontinuetobeexperiencedinmanyhousingmarkets)mayexacerbatedelinquenciesandlosses.

Adjustable rate mortgage securities (ARMS). ARMS, like traditional fixed rate mortgage-backed securities, represent anownership interest inapoolofmortgage loansandare issued,guaranteedorotherwisesponsoredbygovernmentalorbyprivate entities. Unlike traditional mortgage-backed securities, the mortgage loans underlying ARMS generally carryadjustableinterestrates,andinsomecasesprincipalrepaymentrates,thatareresetperiodically.Anadjustableinterestratemaybepassed-throughorotherwiseofferedoncertainARMS.TheinterestobtainedbyowningARMS(and,asaresult,thevalueof theARMS)mayvarymonthlyasaresultof resets in interest ratesand/orprincipal repaymentratesofanyof themortgageloansthatarepartofthepoolofmortgageloanscomprisingtheARMS.InvestinginARMSmaypermittheFundtoparticipate in increases in prevailing current interest rates through periodic adjustments in the interest rate payments onmortgagesunderlyingthepoolonwhichtheARMSarebased.ARMSgenerallyhavelowerpricefluctuationsthanisthecasewith more traditional fixed income debt securities of comparable rating and maturity. The interest rates paid on ARMSgenerallyarereadjustedatintervalsofoneyearorlesstoaratethatisanincrementoversomepredeterminedinterestrateindex,althoughsomesecuritiesmayhaveresetintervalsaslongasfiveyears.Someadjustableratemortgageloanshavefixedrates for an initial period, typically three, five, seven or ten years, and adjust annually thereafter. There are three maincategories of indices: those based on LIBOR, those based onU.S. Treasury securities and those derived from a calculatedmeasuresuchasacostoffundsindex(indicatingthecostofborrowing)oramovingaverageofmortgagerates.Commonlyusedindicesincludetheone-,three-,andfive-yearconstant-maturityTreasuryrates;thethree-monthTreasurybillrate;the180-dayTreasurybillrate;ratesonlonger-termTreasurysecurities;the11thDistrictFederalHomeLoanBankCostofFunds;theNationalMedian Cost of Funds; the one-, three-, sixmonth, or one-year LIBOR; the prime rate of a specific bank; orcommercial paper rates. In a changing interest rate environment, the reset featuremay act as a buffer to reduce sharpchanges in the ARMS’ value in response to normal interest rate fluctuations. However, the time interval between eachinterestresetcausestheyieldontheARMStolagbehindchangesintheprevailingmarketinterestrate.Asinterestratesareresetontheunderlyingmortgages,theyieldsoftheARMSgraduallyre-alignthemselvestoreflectchangesinmarketratessothat their market values remain relatively stable compared to fixed-rate mortgage-backed securities. As a result, ARMSgenerallyalsohavelessriskofadeclineinvalueduringperiodsofrisinginterestratesthantraditionallongterm,fixed-ratemortgage-backed securities. However, during such periods, this reset lag may result in a lower net asset value until theinterestrateresetstomarketrates.Ifprepaymentsofprincipalaremadeontheunderlyingmortgagesduringperiodsofrisinginterest rates, theFundgenerallywillbeable to reinvest theseamounts in securitieswithahigher current rateof return.However, theFundwill notbenefit from increases in interest rates to theextent that interest ratesexceed themaximumallowable annual or lifetime reset limits (or cap rates) for a particular mortgage-backed security. See “Caps and floors.”Additionally, borrowerswith adjustable ratemortgage loans that are pooled intoARMS generally see an increase in theirmonthlymortgagepaymentswhen interest rates risewhich in turnmay increase their rateof latepaymentsanddefaults.Becauseaninvestoris“lockedin”atagiveninterestrateforthedurationoftheintervaluntiltheresetdate,whereasinterestrates continue to fluctuate, the sensitivityof anARMS’price to changes in interest rates tends to increasealongwith thelength of the interval. To the extent the Fund invests inARMS that reset infrequently, the Fundwill be subject to similarinterestraterisksaswheninvestinginfixed-ratedebtsecurities.Forexample,theFundcanexpecttoreceivealowerinterestratethantheprevailingmarketrates(orindexrates)inarisinginterestrateenvironmentbecauseofthelagbetweendailyincreases in interest rates andperiodic readjustments.Duringperiodsofdeclining interest rates, the interest rateson the

27

underlyingmortgagesmayresetdownwardwithasimilarlag,resultinginloweryieldstotheFund.Asaresult,thevalueofARMSisunlikelytoriseduringperiodsofdeclininginterestratestothesameextentasthevalueoffixed-ratesecuritiesdo.

Caps and floors. The underlying mortgages that collateralize ARMS will frequently have caps and floors that limit themaximumamountbywhichtheinterestratetotheresidentialborrowermaychangeupordown(a)perresetoradjustmentintervaland(b)overthelifeoftheloan.FluctuationsininterestratesabovetheapplicablecapsorfloorsontheARMScouldcausetheARMSto“capout”andtobehavemorelikelong-term,fixed-ratedebtsecurities.

Negative amortization. Somemortgage loans restrict periodic adjustments by limiting changes in the borrower’smonthlyprincipal and interest payments rather than limiting interest rate changes. These payment caps may result in negativeamortization,wherepaymentsare lessthantheamountofprincipaland interestowed,withexcessamountsaddedtotheoutstandingprincipalbalance,whichcanextendtheaveragelifeofthemortgage-backedsecurities.

Collateralized mortgage obligations (CMOs), real estate mortgage investment conduits (REMICs) and multi-class pass-throughs. Somemortgage-backedsecuritiesknownascollateralizedmortgageobligations (CMOs)aredivided intomultipleclasses.Eachof theclasses is allocatedadifferent shareof theprincipaland/or interestpayments received from thepoolaccordingtoadifferentpaymentscheduledependingon,amongotherfactors,theseniorityofaclassrelativetotheirclasses.Othermortgage-backedsecuritiessuchasrealestatemortgageinvestmentconduits(REMICs)arealsodividedintomultipleclasseswithdifferentrightstotheinterestand/orprincipalpaymentsreceivedonthepoolofmortgages.ACMOorREMICmaydesignatethemostjuniorofthesecuritiesitissuesasa“residual”whichwillbeentitledtoanyamountsremainingafterallclassesofshareholders(andanyfeesorexpenses)havebeenpaidinfull.Someofthedifferentrightsmayincludedifferentmaturities, interest rates, payment schedules, and allocations of interest and/or principal payments on the underlyingmortgage loans. Multi-class pass-through securities are equity interests in a trust composed of mortgage loans or othermortgage-backedsecurities.PaymentsofprincipalandinterestontheunderlyingcollateralprovidethefundstopaythedebtserviceonCMOsorREMICsortomakescheduleddistributionsonthemulti-classpass-throughsecurities.Unlessthecontextindicatesotherwise,thediscussionofCMOsbelowalsoappliestoREMICsandmulticlasspass-throughsecurities.Alltherisksapplicabletoatraditionalmortgage-backedsecurityalsoapplytotheCMOorREMICtakenasawhole,eventhoughcertainclassesoftheCMOorREMICwillbeprotectedagainstaparticularriskbysubordinatedclasses.TherisksassociatedwithaninvestmentinaparticularCMOorREMICclassvarysubstantiallydependingonthecombinationofrightsassociatedwiththatclass. An investment in the most subordinated classes of a CMO or REMIC bears a disproportionate share of the risksassociatedwithmortgage-backedsecuritiesgenerally,beitcreditrisk,prepaymentorextensionrisk,interestraterisk,incomerisk,market risk, illiquidity risk or any other risk associatedwith a debt or equity instrumentwith similar features to therelevant class. As a result, an investment in the most subordinated classes of a CMO or REMIC is often riskier than aninvestment in other types of mortgage-backed securities. CMOs are generally required to maintain more collateral thanREMICs to collateralize the CMOs being issued. Most REMICs are not subject to the same minimum collateralizationrequirements andmay be permitted to issue the full value of their assets as securities,without reserving any amount ascollateral.Asaresult,aninvestmentinthesubordinatedclassesofaREMICmayberiskierthananinvestmentinequivalentclasses of a CMO. CMOs may be issued, guaranteed or sponsored by governmental entities or by private entities.Consequently,theyinvolveriskssimilartothoseoftraditionalmortgage-backedsecuritiesthathavebeenissued,guaranteedorsponsoredbysuchgovernmentand/orprivateentities.Forexample,theFundisgenerallyexposedtoagreaterriskoflossduetodefaultwheninvestinginCMOsthathavenotbeenissued,guaranteedorsponsoredbyagovernmententity.CMOsare typically issued inmultiple classes.Eachclass,often referred toasa “tranche,” is issuedata specified coupon rateoradjustablerateandhasastatedmaturityorfinaldistributiondate.PrincipalprepaymentsoncollateralunderlyingCMOsmaycausetheCMOstoberetiredsubstantiallyearlierthantheirstatedmaturitiesorfinaldistributiondates. Interest ispaidoraccruesonmostclassesofaCMOonamonthly,quarterlyorsemiannualbasis.TheprincipalandinterestonthemortgagesunderlyingCMOsmaybeallocatedamongtheseveralclassesinmanyways.Inacommonstructure,paymentsofprincipalontheunderlyingmortgages,includinganyprincipalprepayments,areappliedtotheclassesofaseriesofaCMOintheorderoftheirrespectivestatedmaturitiesorfinaldistributiondates,sothatnopaymentofprincipalwillbemadeonanyclassuntilallotherclasseshavinganearlierstatedmaturityorfinaldistributiondatehavebeenpaidinfull.OneormoreclassesofaCMOmayhaveinterestratesthatresetperiodicallyasARMSdo.Theseadjustablerateclassesareknownas“floating-rateCMOs”and are subject to most risks associated with ARMS. Floating-rate CMOs may be backed by fixed- or adjustable-ratemortgages.Todate,fixed-ratemortgageshavebeenmorecommonlyusedforthispurpose.Floating-rateCMOsaretypicallyissuedwith lifetime“caps”onthe interestrate.Thesecaps,similartothecapsonARMS, limittheFund’spotential togainfromrisinginterestratesandincreasingthesensitivityoftheCMO’spricetointerestratechangeswhileratesremainabovethecap.Timelypaymentofinterestandprincipal(butnotthemarketvalueandyield)ofsomeofthesepoolsissupportedbyvariousformsofinsuranceorguaranteesissuedbyprivateissuers,thosewhopoolthemortgageassetsand,insomecases,byU.S.governmentagencies.CMOsinvolverisksincludingtheuncertaintyofthetimingofcashflowsthatresultsfromtherateofprepaymentsontheunderlyingmortgagesservingascollateral,andrisksresultingfromthestructureoftheparticularCMOtransactionandthepriorityoftheindividualtranches.ThepricesofsomeCMOs,dependingontheirstructureandtherateofprepayments,canbevolatile.SomeCMOsmaybelessliquidthanothertypesofmortgagebackedsecurities.Asaresult, it

28

maybedifficultor impossibletosellthesecuritiesatanadvantageouspriceortimeundercertaincircumstances.Yieldsonprivately issued CMOs have been historically higher than the yields on CMOs issued and guaranteed by U.S. governmentagenciesorinstrumentalities.TheriskoflossduetodefaultonprivatelyissuedCMOs,however,ishistoricallyhighersincetheU.S.governmenthasnotguaranteedthem.TotheextentanyprivatelyissuedCMOsinwhichtheFundinvestsareconsideredbytheSECtobeaninvestmentcompany,theFundwilllimititsinvestmentsinsuchsecuritiesinamannerconsistentwiththeprovisionsofthe1940Act.

CMOandREMICResiduals.TheresidualinaCMOorREMICstructureistheinterestinanyexcesscashflowgeneratedbythemortgagepoolthatremainsafterfirstmakingtherequiredpaymentsofprincipalandinteresttotheotherclassesoftheCMOorREMICand,second,payingtherelatedadministrativeexpensesandanymanagementfeeoftheissuer.Eachpaymentofsuchexcesscash flowtoaholderof therelatedCMOorREMICresidual represents incomeand/orareturnofcapital.TheamountofresidualcashflowresultingfromaCMOorREMICwilldependon,amongotherthings,thecharacteristicsofthemortgageassets,theinterestrateofeachclass,prevailinginterestrates,theamountofadministrativeexpensesandthepre-paymentexperienceonthemortgageassets.Inparticular,thereturnonCMOandREMICresidualsisextremelysensitivetopre-paymentsontherelatedunderlyingmortgageassets.IfaclassofaCMOorREMICbearsinterestatanadjustablerate,theCMO or REMIC residual will also be extremely sensitive to changes in the level of the index upon which interest rateadjustmentsarebased.CMOandREMICresidualsaregenerallypurchasedandsoldbyinstitutionalinvestorsthroughseveralinvestmentbankingfirmsactingasbrokersordealersandmaynothavebeenregisteredundertheSecuritiesActof1933,asamended (1933Act).CMOandREMIC residuals,whetherornot registeredunder the1933Act,maybe subject to certainrestrictions on transferability, andmay be deemed “illiquid” and subject to the Fund’s limitation on investment in illiquidsecurities.

Distressedmortgageobligationsand reversemortgages.Adirect investment inadistressedmortgageobligation involvesthepurchasebytheFundofa lender’s interest inamortgagegrantedtoaborrower,wheretheborrowerhasexperienceddifficultyinmakingitsmortgagepayments,orforwhichitappearslikelythattheborrowerwillexperiencedifficultyinmakingitsmortgagepayments.Areversemortgagegenerallyreferstoamortgageloaninwhichthelenderadvancesinalumpsumorininstallmentsasumofmoneybasedontheageoftheborrower,theinterestrateatclosing,andtheequityintherealestate.Generallynopaymentisdueonareversemortgageuntiltheborrowernolongerownsoroccupiesthehomeashisorherprincipalresidence.Asistypicalwithmortgageobligations,paymentoftheloanissecuredbytherealestateunderlyingtheloan.Bypurchasingthedistressedmortgageobligation,theFundstepsintotheshoesofthelenderfromariskpointofview.Asdistinguishedfrommortgage-backedsecurities,whichgenerallyrepresentan interest inapoolof loansbackedbyrealestate,investingindirectmortgageobligationsinvolvestheriskssimilartomakingaloanorpurchasinganassignmentofaloan.TotheextentthattheFund’sinvestmentdependsonasingleborrower,theFundwillexperiencegreatercreditriskandmoreextremegainsor losses thanwhen investing inapoolof loanswithmultipleborrowers.Other risks include theinability of a borrower tomake its loanpayments or other obligations, and if the real estate underlying thedistressedorreversemortgageloanisacquiredbyforeclosure,theFundcouldbecomepartownerofsuchrealestate,directlyorindirectlythrough themortgage-backedsecurity inwhich itholdsan interest.Asadirector indirectowner, theFundwouldbear itsshareofanycostsassociatedwithowninganddisposingoftherealestate.Thereisnoassurancethattherealestatewouldbedisposed of in a timely or profitablemanner. Investments in directmortgage obligations of distressed borrowers involvesubstantiallygreaterrisksandarehighlyspeculativeduetothefactthattheborrower’sabilitytomaketimelypaymentshasbeenidentifiedasquestionable.Borrowersthatareinbankruptcyorrestructuringmayneverpayofftheirloans,ormaypayonlyasmallfractionoftheamountowed.Thereiscurrentlynoactivemarketinreversemortgages,andtheFundaccordinglyconsidersany reversemortgages itmayhold tobe illiquidand therefore subject to theFund’s limitationon investment inilliquidsecuritiesandtherisksassociatedwithilliquidity.Therecordedvalueofreversemortgageassetsincludessignificantvolatilityassociatedwithestimations,andincomerecognitioncanvarysignificantlyfromreportingperiodtoreportingperiod.Becausereversemortgagesarearelativelynewanduncommonproduct,therecanbenoassurancesabouthowthecourtsorarbitratorsmayapplyexistinglegalprinciplestotheinterpretationandenforcementofthetermsandconditionsofreversemortgages,includingtheFund’spositionasaninvestor.

MunicipalBonds

Municipal bonds are debt obligations issued by the states, possessions, or territories of the United States (including theDistrict of Columbia) or a political subdivision, public instrumentality, agency or other governmental unit of such states,possessions,or territories (e.g., counties, cities, towns, villages,districts andauthorities). Forexample, states,possessions,territoriesandmunicipalitiesmayissuemunicipalbondstoraisefundsforvariouspublicpurposessuchasairports,housing,hospitals,masstransportation,schools,waterandsewerworks.Theymayalsoissuemunicipalbondstorefundoutstandingobligationsandtomeetgeneraloperatingexpenses.

Municipalbondsmaybegeneralobligationbondsor revenuebonds.Generalobligationbondsare securedby the issuer’spledgeof its full faith,creditandtaxingpowerforthepaymentofprincipaland interest.Revenuebondsarepayable from

29

revenuesderivedfromparticularfacilities,fromtheproceedsofaspecialexcisetaxorfromotherspecificrevenuesources.Theyarenotusuallypayablefromthegeneraltaxingpowerofamunicipality.

In addition, certain types of “private activity” bonds may be issued by public authorities to obtain funding for privatelyoperatedfacilities,suchashousingandpollutioncontrolfacilities,forindustrialfacilitiesandforwatersupply,gas,electricityandwastedisposalfacilities.Othertypesofprivateactivitybondsareusedtofinancetheconstruction,repairorimprovementof,ortoobtainequipmentfor,privatelyoperatedindustrialorcommercialfacilities.Currentfederaltaxlawsplacesubstantiallimitationsonthesizeofcertainofsuchissues. Incertaincases,theinterestonaprivateactivitybondmaynotbeexemptfromfederalincometaxorthealternativeminimumtax.

OperationalandCybersecurityRisk

The Trust, its service providers, including its Adviser, and other market participants increasingly depend on complexinformationtechnologyandcommunicationssystemstoconductbusinessfunctions.ThesesystemsaresubjecttoanumberofdifferentthreatsorrisksthatcouldadverselyaffecttheFundanditsshareholders,despitetheeffortsoftheTrustanditsserviceproviderstoadopttechnologies,processesandpracticesintendedtomitigatetheserisks.Forexample,unauthorizedthirdpartiesmayattempttoimproperlyaccess,modify,disrupttheoperationsoforpreventaccesstothesesystemsordatawithin them (a “cyber-attack”), whether systems of the Trust, its service providers, counterparties or other marketparticipants. Power or communications outages, acts of god, information technology equipmentmalfunctions, operationalerrorsand inaccuracieswithin softwareordataprocessing systemsmayalsodisruptbusinessoperationsor impact criticaldata.Marketeventsalsomayoccuratapacethatoverloadscurrentinformationtechnologyandcommunicationsystemsandprocesses of the Trust, its service providers or other market participants, impacting the ability to conduct the Fund’soperations.

Cyber-attacks,disruptionsor failures thataffectEvermoreFundsTrust’s serviceprovidersor counterpartiesmayadverselyaffecttheFundanditsshareholders,includingbycausinglossesfortheFundorimpairingFundoperations.Forexample,theFund’sortheTrust’sserviceproviders’assetsorsensitiveorconfidentialinformationmaybemisappropriated,datamaybecorrupted and operations may be disrupted (e.g., cyber-attacks or operational failures may cause the release of privateshareholderinformationorconfidentialFundinformation, interferewiththeprocessingofshareholdertransactions, impactthe ability to calculate the Fund’s NAV and impede trading). In addition, cyber-attacks, disruptions or failuresmay causereputationaldamageand subject theFundor theTrust’s serviceproviders to regulatory fines, litigationcosts,penaltiesorfinancial losses, reimbursement or other compensation costs, and/or additional compliance costs.While the Trust and itsserviceprovidersmayestablishbusinesscontinuityandotherplansandprocessestoaddressthepossibilityofcyber-attacks,disruptions or failures, there are inherent limitations in such plans and systems, including that they do not apply to thirdparties,suchasothermarketparticipants,aswellasthepossibilitythatcertainriskshavenotbeenidentifiedorthatunknownthreatsmayemergeinthefuture.TheFundandtheTrust’sserviceprovidersmayalsoincursubstantialcostsforcybersecurityriskmanagement, including insurance, inordertopreventormitigatefuturecybersecurity incidents,andtheFundand itsshareholderscouldbenegativelyimpactedasaresultofsuchcosts.Similartypesofoperationalandtechnologyrisksarealsopresent for issuers of securities or other instruments in which the Fund invests, which could result in material adverseconsequencesforsuchissuers,andmaycausetheFund’sinvestmentstolosevalue.Inaddition,cyber-attacksinvolvingtheFund’scounterpartycouldaffectsuchcounterparty’sabilitytomeetitsobligationstotheFund,whichmayresultinlossestotheFundanditsshareholders.Furthermore,asaresultofcyber-attacks,disruptionsorfailures,anexchangeormarketmaycloseorissuetradinghaltsonspecificsecuritiesortheentiremarket,whichmayresultintheFundbeing,amongotherthings,unable tobuyor sell certain securitiesorunable toaccuratelyprice its investments. TheTrust cannotdirectly control anycybersecurityplansandsystemsputinplacebyitsserviceproviders,Fundcounterparties,issuersinwhichtheFundinvests,orsecuritiesmarketsandexchanges.

RealEstateInvestmentTrusts(REITs)

TheFund’sequityinvestmentsmayincludeinvestmentsinsharesissuedbyREITs.AREITisapooledinvestmentvehiclethatpurchases primarily income-producing real estate or real estate related loans or other real estate related interests. Thepooled vehicle, typically a trust, then issues shares whose value and investment performance are dependent upon theinvestmentexperienceoftheunderlyingrealestaterelatedinvestments.

The Fund’s investments in real estate-related securities are subject to certain risks related to the real estate industry ingeneral.Theserisksinclude,amongothers:changesingeneralandlocaleconomicconditions;possibledeclinesinthevalueofreal estate; the possible lack of availability of money for loans to purchase real estate; overbuilding in particular areas;prolongedvacanciesinrentalproperties;propertytaxes;changesintaxlawsrelatingtodividendsandlawsrelatedtotheuseofrealestateincertainareas;costsresultingfromtheclean-upof,andliabilitytothirdpartiesresultingfrom,environmentalproblems;thecostsassociatedwithdamagetorealestateresultingfromfloods,earthquakesorothermaterialdisastersnotcoveredbyinsurance;andlimitationson,andvariationsin,rentsandchangesininterestrates.

30

RelativelyNewIssuers

TheFundintendstoinvestoccasionallyinthecommonstockofselectednewissuers.Investmentsinrelativelynewissuers,i.e.,thosehavingcontinuousoperatinghistoriesoflessthanthreeyears,maycarryspecialrisksandmaybemorespeculativebecause such companies are relatively unseasoned. Such companiesmay also lack sufficient resources,may be unable togenerateinternallythefundsnecessaryforgrowthandmayfindexternalfinancingtobeunavailableonfavorabletermsoreventotallyunavailable.Thosecompanieswilloftenbeinvolvedinthedevelopmentormarketingofanewproductwithnoestablishedmarket,whichcould leadtosignificant losses.Thesecuritiesofsuch issuersmayhavea limitedtradingmarketwhichmayadverselyaffecttheirdispositionandcanresult intheirbeingpricedlowerthanmightotherwisebethecase. IfotherinvestorswhoinvestinsuchissuersseektosellthesamesecuritieswhentheFundattemptstodisposeofitsholdings,theFundmayreceivelowerpricesthanmightotherwisebethecase.

RepurchaseAgreements

The Fundmay enter into repurchase agreements. The Fundmay invest amaximum of 10% of total assets in repurchaseagreements.A repurchaseagreement isa transaction inwhich thesellerofasecuritycommits itselfat the timeofsale torepurchase that security from the buyer at a mutually agreed upon time and price. The resale price is in excess of thepurchasepriceandreflectsanagreed-uponmarketinterestrateunrelatedtothecouponrateonthepurchasedsecurity.SuchtransactionsaffordtheFundtheopportunitytoearnareturnontemporarilyavailablecashatrelativelylowmarketrisk.TheAdvisermonitorsthevalueofthesecuritiesunderlyingtherepurchaseagreementatthetimethetransactionisenteredintoand at all timesduring the termof the repurchase agreement to ensure that the valueof the securities always equals orexceedstherepurchaseprice.

TheFundrequiresthatadditionalsecuritiesbedepositedifthevalueofthesecuritiespurchaseddecreasesbelowtheirresaleprice and does not bear the risk of a decline in the value of the underlying security unless the seller defaults under therepurchase obligation.While the underlying securitymaybe a bill, certificate of indebtedness, note or bond issuedby anagency, authority or instrumentality of the U.S. government, the obligation of the seller is not guaranteed by the U.S.governmentandthereisariskthatthesellermayfailtorepurchasetheunderlyingsecurity.Insuchevent,theFundwouldattempttoexerciserightswithrespecttotheunderlyingsecurity,includingpossibledispositioninthemarket.However,theFundmaybesubjecttovariousdelaysandrisksofloss,including(i)possibledeclinesinthevalueoftheunderlyingsecurityduringtheperiodwhiletheFundseekstoenforceitsrightsthereto,(ii)possiblereducedlevelsofincomeandlackofaccesstoincomeduringthisperiodand(iii)inabilitytoenforcerightsandtheexpensesinvolvedintheattemptedenforcement.

Repurchaseagreementswithmaturitiesofmorethansevendayswillbetreatedasilliquidsecurities.

RestrictedandIlliquidSecurities

PursuanttotheLiquidityRule,theFundwillnotpurchasenorotherwiseacquireanyinvestmentif,asaresult,morethan15%ofitsnetassets(takenatcurrentmarketvalue)wouldbeinvestedinsecuritiesthatareilliquid.Generallyspeaking,anilliquidsecurity is anyassetor investmentofwhich theFundcannot sell anormal tradingunit in theordinary courseofbusinesswithinsevendaysatapproximatelythevalueatwhichtheFundhasvaluedtheassetorinvestment,includingsecuritiesthatcannotbesoldpubliclydue to legalor contractual restrictions.Thesaleof illiquid securitiesoften requiresmore timeandresultsinhigherbrokeragechargesordealerdiscountsandothersellingexpensesthandoesthesaleofsecuritieseligiblefortradingonnational securitiesexchangesor in theOTCmarkets.Restricted securitiesmay sell ataprice lower thansimilarsecuritiesthatarenotsubjecttorestrictionsonresale.

Overthepastseveralyears,strong institutionalmarketshavedevelopedforvarioustypesofrestrictedsecurities, includingrepurchaseagreements,sometypesofcommercialpaper,andsomecorporatebondsandnotes(commonlyknownas“Rule144ASecurities”).SecuritiesfreelysalableamongqualifiedinstitutionalinvestorsunderspecialrulesadoptedbytheSEC,orotherwisedeterminedtobeliquid,maybetreatedasliquidiftheysatisfy liquiditystandardsestablishedbytheBoard.Thecontinuedliquidityofsuchsecuritiesisnotaswellassuredasthatofpubliclytradedsecurities,andaccordingly,theBoardofTrustees will monitor their liquidity. The Board will review pertinent factors such as trading activity, reliability of priceinformation and trading patterns of comparable securities in determiningwhether to treat any such security as liquid forpurposesoftheforegoing15%test.TotheextenttheBoardtreatssuchsecuritiesasliquid,temporaryimpairmentstotradingpatternsofsuchsecuritiesmayadverselyaffecttheFund’sliquidity.TheFundmay,fromtimetotime,participateinprivateinvestmentvehiclesand/orinequityordebtinstrumentsthatdonottradepubliclyandmaynevertradepublicly.Thesetypesofinvestmentscarryanumberofspecialrisksinadditiontothenormalrisksassociatedwithequityanddebtinvestments.Inparticular,private investmentsare likelytobe illiquid,and itmaybedifficultor impossibletosell these investmentsundermanyconditions.TheFundmayfromtimetotimeestablishoneormorewholly-ownedspecialpurposesubsidiariesinordertofacilitatetheFund’sinvestmentprogramwhichmayreducecertainofthecosts(e.g.taxconsequences)totheFund.

31

ReverseRepurchaseAgreements

TheFundmayenterinto“reverse”repurchaseagreementstoavoidsellingsecuritiesduringunfavorablemarketconditionstomeetredemptions.TheFundmayinvestamaximumof10%oftotalassetsinreverserepurchaseagreements.Pursuanttoareverse repurchase agreement, the Fund will sell portfolio securities and agree to repurchase them from the buyer at aparticular date and price.Whenever the Fund enters into a reverse repurchase agreement, it will establish a segregatedaccount inwhich itwillmaintain liquidassets inanamountat leastequal to the repurchasepricemarked tomarketdaily(includingaccruedinterest),andwillsubsequentlymonitortheaccounttoensurethatsuchequivalentvalue ismaintained.TheFundpays interestonamountsobtainedpursuant to reverse repurchaseagreements.Reverse repurchaseagreementsareconsideredtobeborrowingsbytheFund.

RiskofMinorityPositionsandControlPositions

TheFund,individuallyortogetherwithotherfundsandaccountsmanagedbytheAdviser,mayobtainacontrollingorothersubstantialpositioninapublicorprivatecompany,whichmayimposeadditionalrisks.Forexample,shouldtheFundorotherfundsandaccountsmanagedbytheAdviserobtainsuchaposition,theAdvisermayberequiredtomakefilingsconcerningitsholdingswiththeSECand itmaybecomesubjecttootherregulatoryrestrictionsthatcould limittheabilityoftheFundtodisposeoftheirholdingsatthetimesandinthemannertheFundwouldprefer.Inaddition,itispossible,althoughunlikely,that the Fund might be deemed, in such circumstances, liable for environmental damage, product defects, failure tosupervise,andothertypesofliabilityinwhichthelimitedliabilitycharacteristicofbusinessoperationsmaybeignored.

Further, the Adviser may designate directors to serve on the boards of directors of the Fund’s portfolio companies. Thedesignationofrepresentativesandothermeasurescontemplatedcouldcreateexposuretoclaimsbyaportfoliocompany,itssecurityholdersanditscreditors, includingclaimsthattheFundortheAdviser isacontrollingpersonandthus is liableforsecuritieslawsviolationsofaportfoliocompany.Thesecontrolpositionscouldalsoresultincertainliabilitiesintheeventofbankruptcy(e.g.extensiontooneyearofthe90-daybankruptcypreferenceperiod)orreorganizationofaportfoliocompany;could result in claims that thedesignateddirectors violate their fiduciaryorotherduties toaportfolio companyor fail toexerciseappropriatelevelsofcareunderapplicablecorporateorsecuritieslaws,environmentallawsorotherlegalprinciples;and could create exposure to claims that they have interfered inmanagement to the detriment of a portfolio company.Notwithstandingtheforegoing,neithertheFundnortheAdviserwillhaveunilateralcontrolofanyportfoliocompanyand,accordingly,maybeunabletocontrolthetimingoroccurrenceofanexitstrategyforanyportfoliocompany.

Inaddition,theFundmayincurlargeexpenseswhentakingcontrolpositionsandthereisnoguarantythatsuchexpensescanbe recouped. Also, there is no guaranty that the Fundwill succeed in obtaining control positions. This could result in theFund’sinvestmentsbeingfrozeninminoritypositionsandcouldincursubstantiallosses.

Rule144ASecurities

Inadditiontootherprivatelyplacedunregisteredsecurities,theFundmayinvestinunregisteredsecuritieswhichmaybesoldunderRule144Aofthe1933Act (144Asecurities).144Asecuritiesarerestricted,whichgenerallymeansthata legendhasbeenplacedonthesharecertificatesrepresentingthesecuritieswhichstatesthatthesecuritieswerenotregisteredwiththeSECwhentheywereinitiallysoldandmaynotberesoldexceptundercertaincircumstances. Inspiteofthelegend,certainsecuritiesmaybesoldtootherinstitutionalbuyersprovidedthattheconditionsofRule144Aaremet.Intheeventthatthereisanactivesecondaryinstitutionalmarketfor144Asecurities,the144Asecuritiesmaybetreatedasliquid.Aspermittedbythefederalsecuritieslaws,theBoardhasadoptedproceduresinaccordancewithRule144Awhichgovernwhenspecific144AsecuritiesheldbytheFundmaybedeemedtobeliquid.Duetochangingmarketsorotherfactors,144AsecuritiesmaybesubjecttoagreaterpossibilityofbecomingilliquidthansecuritiesthathavebeenregisteredwiththeSECforsale.

SecuritiesofCompaniesintheFinancialServicesIndustry

Certainprovisionsofthefederalsecurities lawspermit investmentcompaniestoinvest incompaniesengagedinsecurities-relatedactivities (“securities issuers”)only if certainconditionsaremet.Purchasesofsecuritiesofacompanythatderived15% or less of gross revenues during its most recent fiscal year from securities-related activities (i.e., broker, dealer,underwriter,orinvestmentadvisory)aresubjectonlytothesamepercentagelimitationsaswouldapplytoanyothersecuritytheFundmaypurchase.

TheFundalsomaypurchasesecuritiesofanissuerthatderivedmorethan15%ofitsgrossrevenuesinitsmostrecentfiscalyearfromsecurities-relatedactivities(i.e.,asecurities issuer), ifthefollowingconditionsaremet:(1) immediatelyaftertheacquisitionofanysecuritiesissuer’sequityanddebtsecurities,theacquisitioncannotcausemorethan5%oftheFund’stotalassetstobeinvestedinsecuritiesofthatsecuritiesissuer;(2)immediatelyafterapurchaseofequitysecuritiesofasecuritiesissuer, the Fund may not own more than 5% of the outstanding securities of that class of the securities issuer’s equitysecurities;and(3)immediatelyafterapurchaseofdebtsecuritiesofasecuritiesissuer,theFundmaynotownmorethan10%oftheoutstandingprincipalamountofthesecuritiesissuer’sdebtsecurities.

32

Inapplyingthegrossrevenuetest,an issuer’sgrossrevenuesfromitsownsecurities-relatedactivitiesshouldbecombinedwith its ratable share of the securities-related activities of enterprises ofwhich it owns a 20%or greater voting or equityinterest. All of the above percentage limitations, including the issuer’s gross revenue test, are applicable at the time ofpurchase. With respect to warrants, rights, and convertible securities, a determination of compliance with the abovelimitationsmustbemadeasthoughsuchwarrant,right,orconversionprivilegehadbeenexercised.

Thefollowingtransactionswouldnotbedeemedtobeanacquisitionofsecuritiesofasecurities-relatedbusiness:(i)receiptofstockdividendsonsecuritiesacquiredincompliancewiththeconditionsdescribedabove;(ii)receiptofsecuritiesarisingfromastock-for-stocksplitonsecuritiesacquiredincompliancewiththeconditionsdescribedabove;(iii)exerciseofoptions,warrants,orrightsacquiredincompliancewiththefederalsecuritieslaws;(iv)conversionofconvertiblesecuritiesacquiredincompliance with the conditions described above; and (v) the acquisition of demand features or guarantees (puts) undercertaincircumstances.

Inaddition,theFundisgenerallyprohibitedfrompurchasingorotherwiseacquiringanysecurity(notlimitedtoequityordebtindividually)issuedbyanyinsurancecompanyiftheFundandanycompanycontrolledbytheFundownintheaggregateor,asaresultofthepurchase,willownintheaggregatemorethan10%ofthetotaloutstandingvotingstockoftheinsurancecompany.Certainstateinsurancelawsimposesimilarlimitations.

ShortSales

TheFundmaymakeshortsalesofsecurities,including“shortsalesagainstthebox.”Inashortsaletransaction,theFundsellsasecurityitdoesnotowninanticipationthatthemarketpriceofthatsecuritywilldecline.TheFundexpectstomakeshortsales(i)asaformofhedgingtooffsetpotentialdeclinesinlongpositionsinsimilarsecurities,(ii)inordertomaintainportfolioflexibilityand(iii)forprofit.

When the Fundmakes a short sale, its broker borrows the security to be sold short and the broker-dealermaintains theproceedsoftheshortsalewhiletheshortpositionisopen.TheFundmustkeeptheproceedsaccountmarkedtomarketandmustpostadditionalcollateral for itsobligationtodeliversecurities toreplacethesecurities thatwereborrowedandsoldshort. The Fundmay have to pay a fee to borrow particular securities and is often obligated to pay over any paymentsreceivedonsuchborrowedsecurities.

TheFund’sobligation to replaceborrowed securitieswill be securedby collateral depositedwith thebroker-dealeror theFund’s custodian bank, usually cash, U.S. government securities or other high-grade liquid securities similar to thoseborrowed.TheFundwillalsoberequiredtosegregatesimilarcollateraltotheextent,ifany(excludinganyproceedsoftheshortsales),necessarysothatthevalueofbothcollateraldepositsintheaggregateisatalltimesequaltoatleast100%ofthecurrentmarketvalueofthesecuritysoldshort.

If the price of the security sold short increases between the time of the short sale and the time the Fund replaces theborrowedsecurity, theFundwill incura loss;conversely, if thepricedeclines, theFundwill realizeagain.Anygainwillbedecreased, and any loss increased, by the transaction costs described above. Although the Fund’s gain is limited to anydifferentialbetweenthereplacementpriceandthepriceatwhichitsoldthesecurityshort,itspotentiallossistheoreticallyunlimited.Insomecircumstances,theFundmayreceivethesecurityinconnectionwithareorganizationand,consequently,neednotbuythesecuritytobereturnedtotheborrower.

TheFundalsomayengagein“shortsalesagainstthebox.”Inashortsaleagainstthebox,atthetimeofthesale,theFundownsorhas the immediateandunconditional right toacquire the identical securityatnoadditional cost. In replacing theborrowedsecuritiesinthetransaction,theFundmayeitherbuysecuritiesintheopenmarketorusethoseinitsportfolio.

While theFund isnot limited in theamountorvalueof securities itmaysell short, theFundcurrentlydoesnot intend toengageinshortsaletransactions(otherthanshortsalesagainstthebox)if,aftergivingeffecttosuchsales,themarketvalueofallsecuritiessoldshortexceeds10%ofthevalueofitstotalassets.

Shortsalescarryrisksof loss ifthepriceofthesecuritysoldshort increasesafterthesale. Inthissituation,whentheFundreplacestheborrowedsecuritybybuyingthesecurityinthesecuritiesmarkets,theFundmaypaymoreforthesecuritythanithasreceivedfromthepurchaserintheshortsale.TheFundmay,however,profitfromachangeinthevalueofthesecuritysoldshort,ifthepricedecreases.

TemporaryDefensiveInvestments

When,inthejudgmentoftheAdviser,atemporarydefensivepostureisappropriate,theFundmayholdalloraportionofitsassets inshort-termU.S.governmentobligations,cashorcashequivalents.TheadoptionofatemporarydefensiveposturedoesnotconstituteachangeintheFund’sinvestmentobjectiveandmightimpacttheFund’sperformance.

33

Warrants

TheFundmayinvest inwarrants,whichareinstrumentsthatgivetheFundtherighttopurchasecertainsecuritiesfromanissuerataspecificprice(the“strikeprice”)foralimitedperiodoftime.Thestrikepriceofwarrantstypicallyismuchlowerthan the current market price of the underlying securities, yet they are subject to similar price fluctuations. As a result,warrants may be more volatile investments than the underlying securities and may offer greater potential for capitalappreciationaswellascapitalloss.

Warrantsdonotentitleaholdertodividendsorvotingrightswithrespecttotheunderlyingsecuritiesanddonotrepresentanyrightsintheassetsoftheissuingcompany.Also,thevalueofthewarrantdoesnotnecessarilychangewiththevalueoftheunderlyingsecuritiesandawarrantceasestohavevalueifitisnotexercisedpriortotheexpirationdate.Thesefactorscanmakewarrantsmorespeculativethanothertypesofinvestments.

Inadditiontowarrantsonsecurities,theFundmaypurchaseputwarrantsandcallwarrantswhosevaluesvarydependingonthechangeinthevalueofoneormorespecifiedsecuritiesindices(“indexwarrants”).Indexwarrantsaregenerallyissuedbybanksorotherfinancialinstitutionsandgivetheholdertheright,atanytimeduringthetermofthewarrant,toreceiveuponexerciseofthewarrantacashpaymentfromtheissuerbasedonthevalueoftheunderlyingindexatthetimeofexercise.Ingeneral,ifthevalueoftheunderlyingindexrisesabovetheexercisepriceoftheindexwarrant,theholderofacallwarrantwillbeentitledtoreceiveacashpaymentfromthe issueruponexercisebasedonthedifferencebetweenthevalueoftheindex and the exercise priceof thewarrant; if the valueof theunderlying index falls, theholder of a putwarrantwill beentitledtoreceiveacashpaymentfromtheissueruponexercisebasedonthedifferencebetweentheexercisepriceofthewarrantandthevalueofthe index.Theholderofawarrantwouldnotbeentitledtoanypaymentsfromthe issueratanytimewhen,inthecaseofacallwarrant,theexercisepriceisgreaterthanthevalueoftheunderlyingindex,or,inthecaseofaputwarrant,theexercisepriceislessthanthevalueoftheunderlyingindex.IftheFundwerenottoexerciseanindexwarrantpriortoitsexpiration,thentheFundwouldlosetheamountofthepurchasepricepaidbyitforthewarrant.

The Fundwill normally use indexwarrants in amanner similar to its useof optionson securities indices. The risks of theFund’suseof indexwarrantsaregenerally similar to those relating to itsuseof indexoptions.Unlikemost indexoptions,however,indexwarrantsareissuedinlimitedamountsandarenotobligationsofaregulatedclearingagency,butarebackedonlybythecreditofthebankorotherinstitutionwhichissuesthewarrant.Also,indexwarrantsgenerallyhavelongertermsthan index options. Indexwarrants are not likely to be as liquid as certain index options backed by a recognized clearingagency.Inaddition,thetermsofindexwarrantsmaylimittheFund’sabilitytoexercisethewarrantsatsuchtime,orinsuchquantities,astheFundwouldotherwisewishtodo.

When-IssuedSecuritiesandDelayed-DeliveryTransactions

TheFundmaypurchasesecuritiesonawhen-issuedbasis,anditmaypurchaseorsellsecuritiesfordelayed-delivery.ThesetransactionsoccurwhensecuritiesarepurchasedorsoldbytheFundwithpaymentanddeliverytakingplaceatsomefuturedate.TheFundmayenterintosuchtransactionswhen,intheAdviser’sopinion,doingsomaysecureanadvantageousyieldand/orpricetotheFundthatmightotherwisebeunavailable.TheFundhasnotestablishedanylimitonthepercentageofassetsitmaycommittosuchtransactions,buttominimizetherisksofenteringintothesetransactions,theFundwillmaintainasegregatedaccountwithitscustodianconsistingofcash,orotherhigh-gradeliquiddebtsecurities,denominatedinU.S.dollarsornon-U.S.currencies,inanamountequaltotheaggregatefairmarketvalueofitscommitmentstosuchtransactions.

DISCLOSUREOFPORTFOLIOHOLDINGS

TheBoardhasadopted,onbehalfoftheFund,policiesandproceduresrelatingtodisclosureoftheFund’sportfoliosecurities.ThesepoliciesandproceduresaredesignedtoprotecttheconfidentialityoftheFund’sportfolioholdingsinformationandtoprevent the selectivedisclosureof such information.Thesepoliciesandproceduresmaybemodifiedatany timewith theapprovaloftheBoard.

The Fund may disclose portfolio holdings information as required by applicable law or as requested by governmentalauthorities.PortfolioholdingsoftheFundwillalsobedisclosedonaquarterlybasisonformsrequiredtobefiledwiththeSECasfollows:portfolioholdingsasoftheendoftheFund’ssecondandfourthfiscalquarterswillbefiledaspartoftheannualorsemi-annualreportfiledFormN-CSR,andportfolioholdingsasoftheendoftheFund’sfirstandthirdfiscalquarterswillbefiled on on Part F of FormN-PORT. The Trust’s FormN-CSRs and FormN-PORTwill be available on the SEC’swebsite atwww.sec.gov. Monthlyportfolioholdingsdisclosuresare filedwiththeSEConFormN-PORT,withquarter-enddisclosuresbeingmadepublic60daysaftertheendofeachfiscalquarter. Inaddition,theFundwillmakeavailableallof itsportfolioholdingsonitswebsiteatwww.evermoreglobal.comorinhardcopymarketingmaterialsasofeachcalendarquarter-end,noearlierthanfifteencalendardaysaftersuchquarter’send.TheFundmayalsodiscloseitstoptenholdingsasoftheendofeachcalendarquarter-endandcalendarmonth-endwithinfifteencalendardaysoftheendofthecalendarmonthorquarter.

34

DisclosureoftheFund’sportfolioholdingsinformationthatisnotpubliclyavailable(“ConfidentialPortfolioInformation”)maybemadetotheAdviserortotheFund’scustodian,transferagent,administrator,principalunderwriter,counselandfinancialprinters.Inaddition,totheextentpermittedunderapplicablelaw,theAdvisermaydistribute(orauthorizethecustodianorprincipal underwriter to distribute) Confidential Portfolio Information to the Fund’s service providers (such as custodialservices,pricingservices,proxyvotingservices,accountingandauditingservices,counselandresearchandtradingservices)thatrequireaccesstosuchinformationinordertofulfilltheircontractualdutieswithrespecttotheFund(“FinancialServiceProviders”) and to facilitate the review of the Fund by certainmutual fund analysts and ratings agencies (such as LipperAnalyticalServices)(“RatingAgencies”);providedthatsuchdisclosureislimitedtotheinformationthattheAdviserbelievesisreasonablynecessaryinconnectionwiththeservicestobeprovided.Finally,subjecttoanon-disclosureagreement,theFundmayprovideConfidentialPortfolioInformationtoexistingorprospectiveFundshareholdersorseparateaccountinvestorsforthepurposeoffacilitatingtheirevaluationoftheFundand/orEGA;reputableinvestmentmanagementindustryconsultantsforthepurposeoffacilitatingtheirevaluationoftheFundandthepublicdisseminationoftheirviewsconcerningtheFundinamanner similar tomarketdata vendors; consultants to: (a) separateaccount clients andprospects, (b) institutional fundshareholdersandprospectiveshareholdersand(c)retirementplansforthepurposeofevaluatingthecapabilitiesofEGAinmanagingparticulartypesofinvestmentmandates;industrytradegroupssuchastheInvestmentCompanyInstituteforthepurposeofcompilingandstudyingindustry-widedataconcerningmutualfunds;andanalyticalgroupswithinbrokeragefirmsorotherintermediariesinvolvedinthedistributionofmutualfundsharesforthepurposeofperforminginitialandongoingdue diligence concerning the sale of the Fund through an intermediary’s system. Upon approval of the Fund’s Board,additionalcategoriesinvolvingalegitimatebusinesspurposemaybeaddedtothislist.

ExcepttotheextentpermittedundertheFund’sportfolioholdingsdisclosurepoliciesandprocedures,ConfidentialPortfolioInformationmaynotbedisseminatedforcompensationorotherconsideration.

BeforeanydisclosureofConfidentialPortfolioInformationtoFinancialServiceProvidersorRatingAgenciesispermitted,theAdviser’sChiefComplianceOfficer(CCO)(orpersonsdesignatedbytheAdviser’sChiefComplianceOfficer)mustdeterminethat,underthecircumstances,thedisclosureisbeingmadeforalegitimatebusinesspurpose.Furthermore,therecipientofConfidentialPortfolioInformationbyaFinancialServiceProviderorRatingAgencymustbesubjecttoawrittenconfidentialityagreement that prohibits any trading upon the Confidential Portfolio Information or the recipient must be subject toprofessional or ethical obligations not to disclose or otherwise improperly use the information, such as would apply toindependentregisteredpublicaccountingfirmsorlegalcounsel.

Exceptions to theseproceduresmayonlybemade ifanofficerof theFundor theChiefComplianceOfficerof theAdviserdetermines that the disclosure is beingmade for a legitimate business purpose andmust be reported to the Board on aquarterlybasis.

TheAdvisershallhaveprimaryresponsibilityforensuringthattheFund’sportfolioholdings informationisonlydisclosedinaccordancewiththesepolicies.Aspartofthisresponsibility,theAdviserwillmaintainsuchinternalpoliciesandproceduresasitbelievesarereasonablynecessaryforpreventingtheunauthorizeddisclosureofConfidentialPortfolioInformation.

Otherregisteredinvestmentcompaniesthatareadvisedorsub-advisedbytheAdvisermaybesubjecttodifferentportfolioholdings disclosure policies, and neither the Adviser nor the Board exercises control over such policies or disclosure. Inaddition, separate account clientsof theAdviserhave access to their portfolioholdings andarenot subject to the Fund’sportfolio holdings disclosure policies. Some of the funds that are advised or sub-advised by the Adviser and some of theseparateaccountsmanagedby theAdvisermayhave investmentobjectivesand strategies thatare substantially similaroridenticaltotheFund’s,andthereforepotentiallysubstantiallysimilar,andincertaincasesnearlyidentical,portfolioholdings,astheFund.

MANAGEMENTOFTHEFUND-BOARDOFTRUSTEES

The business and affairs of the Fund are managed under the direction of its Board. The Board approves all significantagreementsbetweentheFundandthepersonsorcompaniesthatfurnishservicestotheFund,includingagreementswithitsdistributor,Adviser,administrator,custodianandtransferagent.Theday-to-dayoperationsoftheFundaredelegatedtotheFund’sAdviserandadministrator.

Thenames,addresses,yearsofbirthandprincipaloccupationsforthepastfiveyearsoftheTrusteesandofficersoftheTrustare listedbelow,alongwiththenumberofportfolios intheFundcomplexoverseenbyandtheotherdirectorshipsheldbyeachTrustee.

35

IndependentTrustees(1)

NathanGantcher(born1940)89SummitAvenue3rdFloorSummit,NJ07901

ChairmanandTrustee

IndefiniteTermsince2011

ManagingMember,EXOPCapitalLLC,aninvestmentfirm(since2005).

1 Director,Mack-CaliRealtyCorporation(1999-2019);Director,AlbertEinsteinCollegeofMedicine(since2016);FormerDirector,CambridgeCapitalAcquisitionCorp.(2013-2015);Trustee,MontefioreMedicalCenter(since2012).

EugeneBeboutIII(born1959)89SummitAvenue3rdFloorSummit,NJ07901

Trustee IndefiniteTermsince2009

ChiefFinancialOfficerandChiefOperatingOfficer,AssuredPartnersJamisonLLC,anInsuranceAgentandBroker(since2003).

1 DirectorandAuditCommitteeMember,SummitEducationalFoundation(2012-2019);DirectorandTreasurer,SummitLacrosseClub(2009-2015);AuditCommitteeChair,SummitAreaYMCA(2011-2015).

StephenJ.Balog(born1955)89SummitAvenue3rdFloorSummit,NJ07901

Trustee IndefiniteTermsince2016

Owner,RockyMountainWestern,LLC,anonlineBolotieretailer(since2011),ChiefFinancialOfficerandPartner,GrowthPartnerLLC(since2018),adigitalmarketingagencyholdingcompany;Owner,Camrig,LLC,acameraaccessorycompany(2013-2020).

1 DirectorofCDxDiagnostics(2017toApril2020);DirectorofFizzicsGroupInc.(since2019);TheCitizensCampaign(since2005);HardingTownshipCivicAssociation(since2008);St.Joseph’sHighSchoolFoundation(since2008).

JulieKeenan(Born1962)89SummitAvenue3rdFloorSummit,NJ07901

Trustee IndefiniteTermsince2016

COO,NJPandemicReliefFund(since2021);ManagingMember,EMBEnterprises,LLC,aconsultingcompany(since2006).

1 KIPPTeamAcademy(since2019);BaldHeadIslandConservancy(since2019);TheSummitFoundation(since2000);DukeUniversity,PrattSchoolofEngineeringBoardofVisitors(since2015).

Name,YearofBirthandAddress

Position(s)Heldwiththe

Trust

TermofOffice(2)

andLengthofTimeServed

PrincipalOccupation(s)DuringPast5Years

NumberofPortfoliosintheFundComplex

OverseenbyTrustee

OtherDirectorships/TrusteeshipsHeldbyTrustee

DuringPast5years

(1)Trusteeswhoarenot“interestedpersons”oftheTrustasdefinedinthe1940Act.(2)EachTrusteeservesuntilresignationorremovalfromtheBoard.

InterestedTrustee

Name,YearofBirthandAddress

Position(s)Heldwiththe

Trust

TermofOffice(1)andLengthof

TimeServed

PrincipalOccupation(s)

DuringPast5Years

NumberofPortfoliosintheFundComplexOverseenbyTrustee

OtherDirectorships/TrusteeshipsHeldbyTrustee

DuringPast5years

EricLeGoff(2)

(born1961)89SummitAvenue3rdFloorSummit,NJ07901

ChiefExecutiveOfficerandTrustee

IndefiniteTermsince2009

President,COOandDirector,EvermoreGlobalAdvisors,LLC;(since2009)

1 FormerDirector,FXCM,Inc.(FXTradingPlatform)(2010-2017);Director,TheSummitFoundation(since2015).

_________________________(1)EachTrusteeservesuntilresignationorremovalfromtheBoard.(2)Mr.LeGoffisdeemedtobean“interestedperson”oftheTrustbyreasonofhispositionattheFund’sAdviser.

36

Officers

EricLeGoff(born1961)89SummitAvenue3rdFloorSummit,NJ07901

ChiefExecutiveOfficer

IndefiniteTermsince2009 President,COOandDirector,EvermoreGlobalAdvisors,LLC,(since2009).

DavidMarcus(born1965)89SummitAvenue3rdFloorSummit,NJ07901

President IndefiniteTermsince2009

CEO,PortfolioManagerandDirector,EvermoreGlobalAdvisors,LLC(since2009).

BartholomewC.Tesoriero(born1957)89SummitAvenue3rdFloorSummit,NJ07901

ChiefFinancialOfficer;Treasurer

IndefiniteTermsince2015

CFO,EvermoreGlobalAdvisors,LLC(since2015);ChiefOperatingOfficerofAxiomInternationalInvestorsLLC(2007-2015).

MagaliSimo(born1961)89SummitAvenue3rdFloorSummit,NJ07901

Secretary IndefiniteTermsince2009

VicePresident,InvestorServices,EvermoreGlobalAdvisors,LLC(since2010).

DouglasTyre(born1980)89SummitAvenue3rdFloorSummit,NJ07901

ChiefComplianceOfficer;Anti-MoneyLaunderingOfficer

IndefiniteTermsince2017

ComplianceDirector,CippermanComplianceServices,LLC(since2014);ChiefComplianceOfficer,EvermoreGlobalAdvisors,LLC(since2017).

Name,YearofBirthandAddress

Position(s)HeldwiththeTrust

TermofOfficeandLengthofTimeServed(1)

PrincipalOccupation(s)DuringPast5Years

(1)Thetermofofficeofeachofficerisindefinite.LengthoftimeservedrepresentstimeservedasanofficeroftheTrust,althoughvariouspositionsmayhavebeenheldduringtheperiod.

LeadershipStructureoftheBoardofTrustees

ThebusinessandaffairsoftheFundaremanagedunderthedirectionoftheBoard.TheBoardischairedbyanindependentTrustee.TheBoardmeetsatleastquarterlytoreviewtheinvestmentperformanceoftheFundandothermatters,includingpoliciesandprocedureswithrespecttocompliancewithregulatoryandotherrequirements.EachBoardmemberattendedatleast75%ofsuchmeetingsandofmeetingsofthecommitteesonwhichheorsheservedduringtheperiodsthatheserved.

Currently,80%oftheBoard’smembersarenot“interestedpersons”oftheAdviser, includingitsaffiliates,ortheFund(the“IndependentTrustees”).TheIndependentTrusteesinteractdirectlywiththeseniormanagementoftheAdviseratscheduledmeetingsandatspecialmeetings,asappropriate.TheIndependentTrusteesregularlydiscussmattersoutsideofthepresenceofmanagementandareadvisedbyexperiencedlegalcounselandseparatecounseltotheIndependentTrustees.TheBoard’slegalcounselparticipatesinBoardmeetingsandinteractswiththeAdviser.

InmakingnominationsforIndependentTrusteemembershipontheBoard,theNominatingandGovernanceCommitteemayconsider potential nominees in light of their professional experience, education, skill, and other individual qualities andattributesthatcontributetoBoardheterogeneity.

TheTrustconsideredanumberoffactorstodeterminewhetheratrusteewasqualifiedtobeontheTrust’sBoard.First,theTrustconsideredeachperson’s financialservicesandassetmanagement industryexperience;second, theTrustconsideredeachperson’sexperiencewithservingonBoardsofothercompanies;andthird,theTrustconsideredthevalueeachpersoncouldbring to theBoard.TheTrustdetermined thateachof theFund’sBoardmembersarequalified tobeon theTrust’sBoardbasedontheabovethreecriteriathatwereconsideredbytheBoard.

The Board has appointed Nathan Gantcher, an Independent Trustee, to act as Chair of the Board. The Chair’s primaryresponsibilitiesare: (i) topresideatallmeetingsof theBoard; (ii) toactas theBoard’s liaisonwithmanagementbetweenmeetingsoftheBoard;and(iii)toactastheprimarycontactforBoardcommunications.TheChairmayperformsuchotherfunctions asmaybe requestedby theBoard from time to time. Except for anyduties specifiedhereinor pursuant to theTrust’sDeclarationofTrustorBy-laws, thedesignationasChairdoesnot imposeonsuch IndependentTrusteeanyduties,obligations or liability that is greater than the duties, obligations or liability imposed on such person as amember of theBoard,generally.

37

DescriptionoftheIndependentTrustees

Eugene Bebout.Mr. Bebout is an experienced business executive with service in the accounting, finance and insuranceindustries for over 30 years. He is Chief Financial Officer and Chief Operating Officer at AssuredPartners Jamison LLC, aninsuranceagency.PriortojoiningJamison,hewasapartneratBDOSeidmanLLP,anationalpublicaccountingfirm,andalsoranhisownaccountingandtaxpractice.Mr.BeboutalsoservedasaDirectorandmemberoftheAuditCommitteefortheSummitEducationalFoundationfrom2012to2019.HehasservedastheChairmanoftheAuditCommitteefortheSummitArea YMCA and is the former Treasurer of the Summit Police Athletic League, Summit Helping Its People, and SummitLacrosseCluborganizations.Mr.BeboutiscurrentlyamemberoftheAuditCommittee(Chair),NominatingandGovernanceCommittee,ComplianceCommitteeandValuationCommitteeoftheTrust’sBoardofTrustees.

NathanGantcher.Mr. Gantcher is the independent Chairman of the Trust. He is an experienced business executivewithserviceinthefinancialindustryforover40years.HeisManagingMemberofEXOPCapitalLLC.,aninvestmentfirm.PriortostartingEXOPCapital,Mr.Gantcherwasco-ChairmanandCEOofAlpha InvestmentManagement,whichwassold toSafraNationalBankin2004.Mr.GantcherservedasViceChairmanofCIBCWorldMarketsCorporationfrom1997to2002.Priortothat,Mr.GantcherservedasPresidentandco-CEOofOppenheimer&Companyfrom1983to1997whenitwasacquiredbyCIBC.Mr.GantcherisaformerdirectorofMack-CaliRealtyCorp.,apubliclytradedrealestatecompany.HeisamemberoftheBoardsofOverseersatbothColumbiaUniversityGraduateSchoolofBusinessandAlbertEinsteinCollegeofMedicineatYeshivaUniversityandisamemberoftheBoardofTrusteesofMontefioreMedicalCenter.Mr.GantcherservedasamemberoftheBoardofTrusteesofTuftsUniversityfor20yearsandasChairmanoftheBoardfor8yearsbeforeretiringin2003.Mr.GantcherreceivedaB.A.fromTuftsUniversityandanM.B.A.fromColumbiaUniversity.Mr.GantcheriscurrentlyamemberoftheAuditCommittee,NominatingandGovernanceCommittee(Chair),ComplianceCommitteeandValuationCommitteeoftheTrust’sBoardofTrustees.

StephenJ.Balog.Mr.Baloghasover30yearsofinvestment-relatedexperience.From1983to2002,Mr.Balogwasanequityanalyst and research executive. He was recognized 5 years running by the Institutional Investor magazine’s All-AmericanresearchpollforhisworkontheelectronicsindustrywhileatPrudentialBacheandShearsonLehmanBrothers.In1990,hemovedintoresearchmanagementatLehmanBrothers.In1995,hejoinedFurmanSelzasaDirectorofResearchanddrovethe rapid buildup of the firm’s research department prior to the firm’s sale to ING Barings. After working on anentrepreneurial endeavor, Mr. Balog joined Merrill Lynch in 2000 to lead the research efforts in the global technologyindustry. After leaving Merrill Lynch, in 2002, Mr. Balog joined Cedar Creek Management, a value-oriented, long/shortinvestmentpartnershipbasedinSummit,NewJersey,whereheservedasapartnerthroughthepartnership’sclosein2009.From2010to2011,Mr.BalogwasChiefInvestmentOfficeratBeaconTrustCompany.AfterleavingBeaconTrust,Mr.Baloghas focusedonmakingprivate equity and venture capital investments.He is currentlyChief FinancialOfficer andPartner,GrowthPartnerLLC(since2018),adigitalmarketingagencyholdingcompany.Mr.BalogholdsaBSinMechanicalEngineeringfromBucknellUniversityandanMBAinFinancefromtheUniversityofPennsylvania’sWhartonSchool.

Mr.Balog is currently activeorhas servedonvariousnon-profitboards, including theNYSocietyof SecurityAnalysts, theCitizensCampaign (treasurer),CovenantHouse,KemmererLibrary,HardingTownship (president, treasurerand investmentcommitteechair),HardingTownshipCivicAssociationandSt. Joseph’sHighSchool,Metuchen(trusteeandfoundation).Onthefor-profitside,Mr.BalogwasatrusteeofLehmanBrothersEmployeePensionFundandwasontheboardofFurmanSelz,LLC. Mr. Balog is currently a member of the Audit Committee, Nominating and Governance Committee, ComplianceCommittee,andValuationCommittee(ChairsinceMay4,2016)oftheTrust’sBoardofTrustees.

Julie A. Keenan.Ms. Keenan is an independent consultant focused on strategy and changemanagement. Clients includeKaplanTestPrep;theCityofNewYork’sAdministrationforChildren’sServices;Tiller,aNewYorkbasedcause,commerceandcommunicationsfirm;andRabinowitzPartners,aconsultanttonon-profits.ShepreviouslyservedasExecutiveDirectoroftheSchumannFundforNewJersey,overseeinginvestmentstrategyforthefoundation’s$30millionendowmentandmanaginggrantsofroughly$1.5millionperyeartoorganizationsfocusingoneducation,environmentalprotection,andpublicpolicy.Prior positions include Director ofManagement Analysis at the City of New York’s Human Resources Administration andConsultant forBainandCompany, an international corporate strategy consulting firm.Ms.Keenan serveson theBoardofVisitorsofthePrattSchoolofEngineeringatDukeUniversityandisatrusteeofTheSummitFoundation,KIPP/TeamAcademyand the Bald Head Island Conservancy. Ms. Keenan is currently a member of the Audit Committee, Nominating andGovernanceCommittee,ComplianceCommittee(Chair-sinceMay4,2016)andValuationCommitteeoftheTrust’sBoardofTrustees.SheholdsaBS,cumlaude,inElectricalEngineeringfromDukeUniversityandanMBAfromStanfordUniversity.

DescriptionoftheInterestedTrustee

EricLeGoff.Mr.LeGoffisanexperiencedbusinessexecutivewithover30yearsofserviceinthefinancialindustry.Mr.LeGoffistheCo-Founder,PresidentandChiefOperatingOfficeroftheAdviserandChiefExecutiveOfficeroftheTrust.Mr.LeGoffspentelevenyearsasacomplianceofficer,researchanalystandseniorvicepresidentofoperationsatMutualSeriesFund.Mr. LeGoff is also the founder of Compliance Solutions, Inc., which created the first pre-trade portfolio compliance and

38

employeetrademonitoringsystemsforthemutualfundindustry ina jointventurewithMerrinFinancial, Inc.After leavingMutualSeriesin1997,Mr.LeGofflaunchedVIESystems,Inc.,amiddlewaresoftwarecompany,whichhesubsequentlysoldtoNewEraofNetworks,Inc.in1999.Laterin1999,heco-foundedandservedasCOOatLiquidnetHoldings,Inc.andLiquidnetInc., a registered broker/dealer. In 2001, Liquidnet launched the Liquidnet trading system,which allows large institutionalbuyersand sellers toanonymouslynegotiateand trade largeblocksofequity securities globally.After leaving Liquidnet in2007,Mr.LeGoffestablishedHawthorneAssociates,aprivateequityconsultingfirm.Mr.LeGoffcurrentlyservesasadirectoron the board of Evermore Global Advisors, LLC. He is also a director of The Summit Foundation, a 501(c)(3) non-profitorganization.Mr.LeGoffiscurrentlyamemberoftheValuationCommitteeandComplianceCommitteeoftheTrust’sBoardofTrustees.

RiskOversight

The Board oversees risk as part of its general oversight of the Fund and risk is addressed as part of various Board andCommitteeactivities.TheFundissubjecttoanumberofrisks,includinginvestment,compliance,financial,operational,andvaluation risks. Day-to-day riskmanagementwith respect to the Fund resideswith the Adviser or other service providers(dependingonthenatureof therisk).Theday-to-dayriskmanagementresponsibilities includemanagementof investmentperformanceandinvestmentrisk,valuationrisk,issuerandcounterpartycreditrisk,complianceriskandoperationalrisk.Aspart of its oversight, the Board, acting at its scheduledmeetings, or the Chair, acting between Boardmeetings, regularlyinteractswith and receives reports from senior personnel of the Adviser and other service providers, the Trust’s and theAdviser’sCCOandportfoliomanagementpersonnel.TheBoardalsoreceivesperiodicpresentationsfromseniorpersonneloftheAdviserregardingriskmanagementgenerally,aswellasperiodicpresentationsregardingspecificoperational,complianceorinvestmentareas.Mr.MarcusprovidestheBoardwithhisassessmentofportfoliorisksateachquarterlyBoardmeeting.TheBoardreceivesregularreportsfromboththeFundCCOandadministrator,detailingtheresultsoftheFund’scompliancewith its Board adopted policies and procedures, the investment policies and limitations, and applicable provisions of thefederalsecuritieslawsandInternalRevenueCode.Asneeded,theAdviserdiscussesmanagementissuesconcerningtheFundwith the Board and solicits the Board’s input onmany aspects ofmanagement, including potential risks to the Fund. TheBoard’s Audit Committee also receives reports on various aspects of risk thatmight affect the Fund and offers advice tomanagement,asappropriate.TheBoardalsomeetsinexecutivesessionwithcounseltotheFund,counseltotheIndependentTrustees,theFundCCOandrepresentativesoftheAdviser,asneeded.TheBoardalsoreceivesreportsfromcounseltotheTrust, counsel to the Independent Trustees, the Adviser and the Board regarding regulatory compliance and governancematters.TheBoardhasadoptedpoliciesandproceduresdesignedtoaddresscertainriskstotheFund.Inaddition,theAdviserand other service providers to the Fund have adopted a variety of policies, procedures and controls designed to addressparticular risks to the Fund.Different processes, procedures and controls are employedwith respect to different types ofrisks.However,itisnotpossibletoeliminatealloftherisksapplicabletotheFund.TheBoard’soversightroledoesnotmaketheBoardaguarantoroftheFund’sinvestmentsoractivities.

NotallrisksthatmayaffecttheFundcanbeidentifiednorcancontrolsbedevelopedtoeliminateormitigatetheiroccurrenceoreffects.Itmaynotbepracticalorcosteffectivetoeliminateormitigatecertainrisks,theprocessesandcontrolsemployedtoaddresscertainrisksmaybelimitedintheireffectiveness,andsomerisksaresimplybeyondthereasonablecontroloftheFund or the Adviser, its affiliates, or other service providers. Moreover, it is necessary to bear certain risks (such asinvestment-relatedrisks) toachievetheFund’s investmentgoals.Asaresultof theforegoingandother factors, theFund’sabilitytomanageriskissubjecttosubstantiallimitations.

Therecanbenoassurancethatallelementsofrisk,orevenallelementsofmaterialrisk,willbedisclosedtooridentifiedbytheBoardoritsCommittees.

BoardCommittees

The Trust has an Audit Committee, a Nominating and Governance Committee, a Compliance Committee and a ValuationCommittee.Themembersofboth theAuditCommitteeand theNominatingandGovernanceCommitteeconsistofall theIndependentTrusteesoftheFund,namelyStephenBalog,EugeneBebout,NathanGantcherandJulieKeenan.Themembersof the Compliance Committee and the Valuation Committee consist of all the Independent Trustees, and the InterestedTrustee,EricLeGoff.

In accordance with its written charter, the Audit Committee’s primary purposes are to assist the Board in fulfilling itsresponsibility for oversight of the integrity of the accounting, auditing and financial reporting practices of the Fund, thequalificationsandindependenceoftheFund’sindependentregisteredpublicaccountingfirm,andtheFund’scompliancewithlegalandregulatoryrequirements.TheAuditCommitteereviewsthescopeoftheFund’saudits,theFund’saccountingandfinancial reportingpolicies andpractices and its internal controls. TheAuditCommitteeapproves and recommends to theIndependentTrusteesof theFund for their ratification, the selection,appointment, retentionor terminationof theFund’sindependent registered public accounting firm and approves the compensation of the independent registered publicaccountingfirm.TheAuditCommitteealsoapprovesallauditandpermissiblenon-auditservicesprovidedtotheFundbythe

39

independent registered public accounting firm and all permissible non-audit services provided by the Fund’s independentregisteredpublicaccountingfirmtotheAdviserandanyaffiliatedserviceprovidersiftheengagementrelatesdirectlytotheFund’soperationsand financial reporting.During the fiscalyearendedDecember31,2020, theAuditCommitteemet fourtimes.

TheNominatingandGovernanceCommitteewillacceptnomineesrecommendedbyashareholderasitdeemsappropriate.Stockholders whowish to recommend a nominee should send recommendations to the Fund’s Secretary that include allinformationrelatingtosuchpersonthatisrequiredtobedisclosedinsolicitationsofproxiesfortheelectionofTrustees.ArecommendationmustbeaccompaniedbyawrittenconsentoftheindividualtostandforelectionifnominatedbytheBoardand to serve if elected by the shareholders. The Nominating and Governance Committee will consider nomineesrecommendedby the Fund’s shareholderswhena vacancybecomes available.During the fiscal year endedDecember 31,2019,theNominatingandGovernanceCommitteedidnotmeet.

TheComplianceCommitteewill periodically review theFund’s compliancepolicies andprocedures andadherence to suchpoliciesandprocedures.TheValuationCommitteewillperiodicallyreviewtheFund’sfairvaluepricingpoliciesandadherenceto such policies. During the fiscal year ended December 31, 2020, the Compliance Committee met four times and theValuationCommitteemetfourtimes.

BoardCompensation

TheTrustpayseachTrusteewhoisnotaninterestedperson,asdefinedbythe1940Act,oftheAdviseroranyofitsaffiliates,afeeof$10,000perannumplus$500forattendanceateachin-personmeetingoftheBoardand$250foreachtelephonicmeeting inwhich that Trusteeparticipates. Trusteesalso receivea feeof $250 for eachmeetingof any committeeof theBoardthattheyattend.Trusteesreceiveanannualfeeof$500forservingasthechairofanystandingcommitteeofTrustees.The Chairmanof the Boardwill receive an annual fee of $2,000. All Trustees are reimbursed for travel and out-of-pocketexpensesincurredtoattendsuchmeetings.TheFunddoesnotpayretirementbenefitstoitsTrusteesandofficers.OfficersandinterestedTrusteesoftheFundarenotcompensatedbytheFund.ForthefiscalyearendedDecember31,2020,theTrustpaidthefollowingfeestotheTrustees:

NameofPerson,Position

AggregateCompensationFromTrust

PensionorRetirement

BenefitsAccruedasPartofFund

Expenses

EstimatedAnnualBenefitsUponRetirement

TotalCompensationFromFundandFundComplex

PaidtoTrusteeEugeneBebout,Trustee(1)(2) $15,500 $0 $0 $15,500NathanGantcher,ChairmanandTrustee(1) $17,500 $0 $0 $17,500EricLeGoff $0 $0 $0 $0StephenJ.Balog(1) $15,500 $0 $0 $15,500JulieKeenan(1) $15,500 $0 $0 $15,500(1)Trusteeswhoarenot“interestedpersons”oftheTrustasdefinedunderthe1940Act.(2)DesignatedChairoftheAuditCommittee.

Noofficer,trusteeoremployeeoftheAdviseroranyofitsaffiliatesreceivesanycompensationfromtheFundforservingasanofficerorTrusteeoftheTrust.

AsofApril1,2021,Trusteesandofficersof theTrust, individuallyandasagroup,owned less than1%of theoutstandingsharesoftheFund.

AsofDecember31,2020,theTrusteesbeneficiallyownedthefollowingamountoftheFund’ssecurities:

NameofIndependentTrusteeDollarRangeofEquitySecuritiesin

theGlobalValueFund

AggregateDollarRangeofEquitySecuritiesinAllRegistered

InvestmentCompaniesOverseenbyTrustee

EugeneW.Bebout,III None None

NathanGantcher Over$100,000 Over$100,000

StephenJ.Balog $10,001-$50,000 $10,001-$50,000

JulieKeenan $1-$10,000 $1-$10,000

40

NameofInterestedTrusteeDollarRangeofEquitySecuritiesin

theGlobalValueFund

AggregateDollarRangeofEquitySecuritiesinAllRegistered

InvestmentCompaniesOverseenbyTrustee

EricLeGoff Over$100,000 $100,000

Aprincipalshareholderisanypersonwhoownsofrecordorbeneficially5%ormoreoftheoutstandingsharesoftheFund.Acontrolpersonisonewhoownsbeneficiallyorthroughcontrolledcompaniesmorethan25%ofthevotingsecuritiesoftheFund or acknowledges the existence of control. As of April 1, 2021, the following shareholders were considered either acontrolpersonorprincipalshareholdersoftheFund:InvestorClass

NameandAddress %ofShares TypeofOwnership

CharlesSchwab&Co.,Inc.SpecialCustodyAccountFBOCustomersAttn:MutualFunds211MainStreetSanFrancisco,CA94105-1905

42.84% Record

NationalFinancialServices,LLCFortheExclusiveBenefitofourCustomersAttn:MutualFundsDept.4thFL499WashingtonBoulevardJerseyCity,NJ07310-1995

9.72% Record

InstitutionalClass

NameandAddress %ofShares TypeofOwnership

CharlesSchwab&Co.,Inc.SpecialCustodyAccountFBOCustomersAttn:MutualFunds211MainStreetSanFrancisco,CA94105-1905

62.18% Record

NationalFinancialServices,LLCFortheExclusiveBenefitofourCustomersAttn:MutualFundsDept.4thFL499WashingtonBoulevardJerseyCity,NJ07310-1995

16.60% Record

TheNorthernTrustCompanyFBOWilmingtonTrustEvermoreGlobalValueIP.O.Box92956Chicago,IL

5.11% Record

INVESTMENTADVISORYANDOTHERSERVICES

THEADVISER

Evermore Global Advisors, LLC is the investmentmanager of the Fund. The Adviser was organized as a Delaware limitedliabilitycompanyinJune2009.Itsprimaryplaceofbusinessisat89SummitAvenue,Summit,NewJersey07901.EricLeGoffandDavidMarcuseachowngreater than25%of theAdviserand, therefore,maybedeemedtobecontrolpersonsof theAdviser.TheAdviser’sprimarybusinessistoprovideavarietyofinvestmentmanagementservicestoinvestmentvehicles.TheAdviserisresponsibleforallbusinessactivitiesandoversightoftheinvestmentdecisionsmadefortheFund.AsofMarch31,2021,theAdviserhad$552millionofassetsundermanagement.

The Adviser serves as investment manager to the Fund pursuant to an investment advisory agreement. The investmentadvisoryagreementbetweentheAdviserandtheFundprovidesthattheAdvisershallmanagetheoperationsoftheFund,subjecttopoliciesestablishedbytheBoard.Pursuanttotheinvestmentadvisoryagreement,theAdvisermanagestheFund’sinvestment portfolio, directs purchases and sales of portfolio securities and reports thereon to the Fund’s officers andTrusteesregularly.TheAdviseralsoprovidestheofficespace,facilities,equipmentandpersonnelnecessarytoperformthefollowingservicesfortheFund:coordinationandpreparationofproxystatements;supervisionofFundoperations,including

41

custodian,accountants,compliancepersonnel,andcounselandotherpartiesperformingservicesoroperationalfunctionsforthe Fund; certain administrative and clerical services, including certain accounting services, facilitation of redemptionrequests,accountadjustments,developmentofnewshareholderservicesandmaintenanceofcertainbooksandrecords;andcertain services related to the Fund’s shareholders, including assuring that investments and redemptions are completedefficiently,respondingtoshareholderinquiriesandmaintainingaflowofinformationtoshareholders.Inaddition,theAdviserpaysthecompensationoftheFund’sofficers,employeesandTrusteesaffiliatedwiththeAdviser.TheFundbearsallothercostsof itsoperations, including the compensationof its Trusteesnot affiliatedwith theAdviser and itsChiefComplianceOfficer.

Ascompensationforitsservices,theFundpaystheAdviseramonthlyfeeatanannualrateof0.99%oftheFund’saveragedailynetassets.

Under the terms of the investment advisory agreement between the Fund and the Adviser, neither the Adviser nor itsaffiliates shallbe liable for lossesordamages incurredby theFund,unless such lossesordamagesareattributable to thewillfulmisfeasance,badfaithorgrossnegligenceonthepartofeithertheAdviseroritsaffiliatesorfromrecklessdisregardbyit of its obligations and duties under the investment advisory agreement (“disabling conduct”). In addition, the Fundwillindemnify theAdviser and its affiliates andhold eachof themharmless against any losses or damagesnot resulting fromdisablingconduct.

Pursuant toanexpense limitationagreement theAdviserhas contractually agreed to limit theamountof theFund’s totalannualoperatingexpenses(excludingtaxes,interestonborrowings,acquiredfundfeesandexpenses,dividendsonsecuritiessold short, brokerage commissions, and other expenditures, which are capitalized in accordance with generally acceptedaccounting principles, and other extraordinary expenses not incurred in the ordinary course of business) to 1.60% of theFund’saveragedailynetassetsattributabletoInvestorSharesandto1.35%oftheFund’saveragedailynetassetsattributabletoInstitutionalSharesthroughApril30,2022.TheAdviserwillbepermittedtorecoup,onaclassbyclassbasis,anyfeesithaswaived or deferred or expenses is has borne pursuant to an expense limitation agreement to the extent that the Fund’sexpensesinlaterperiodsfallbelowtheannualratessetforintheexpenselimitationagreement.TheBoardofTrusteesmustapproveanyrecoupmentpaymentmadetotheAdviser.TheFundwillnotbeobligatedtopayanysuchdeferred feesandexpensesmorethanthreeyearsafterdateonwhichthefeesandexpenseswerewaivedordeferred.

TheFundpaidtheAdviserthefollowingfeesforeachofInvestorClassandInstitutionalClasssharesforthefiscalyearsendedDecember31:

FiscalYearEndedDecember31,2020 2019 2018

ManagementFeesAccruedbyAdviser $3,325,160 $5,647,699 $6,479,619ManagementFeesWaived $0 $0 $0ManagementFeesRecouped $0 $0 $0NetManagementFeesPaidtoAdviser $3,325,160 $5,647,699 $6,479,619

CODEOFETHICS

TheFundandtheAdviserhaveeachadoptedseparateCodesofEthicsunderRule17j-1ofthe1940Act.TheseCodespermit,subjecttocertainconditions,accesspersonsoftheAdvisertoinvestinsecuritiesthatmaybepurchasedorheldbytheFund.TheDistributorreliesontheprincipalunderwriter’sexceptionunderRule17j-1(c)(3),ofthe1940Act,specificallywheretheDistributorisnotaffiliatedwiththeTrustortheAdviser,andnoofficer,directororgeneralpartneroftheDistributorservesasanofficer,directororgeneralpartneroftheTrustortheAdviser.

PORTFOLIOMANAGERS

ThefollowingtablesetsforthcertainadditionalinformationwithrespecttotheportfoliomanagersoftheFund.Unlessnotedotherwise,allinformationisprovidedasofDecember31,2020.

OtherAccountsManagedbythePortfolioManagers

Thetablebelowidentifiesthenumberofaccounts(otherthantheFundwithrespecttowhich information isprovided)forwhichtheportfoliomanagershaveday-to-daymanagementresponsibilitiesandthetotalassetsinsuchaccounts,withineachof the following categories: registered investment companies, other pooled investment vehicles, and other accounts. ThisinformationisprovidedasofDecember31,2020.

42

RegisteredInvestmentCompanies

(excludingtheFund)OtherPooledInvestment

Vehicles SeparateAccounts

NameofPortfolioManager

NumberofAccounts TotalAssets

NumberofAccounts TotalAssets

NumberofAccounts TotalAssets

DavidMarcus 1 $281,320,357 6 $184,383,024 1 $82,247,354

ThomasO 1 $281,320,357 6 $184,383,024 1 $82,247,354

MatthewEpstein 1 $281,320,357 6 $184,383,024 1 $82,247,354

RegisteredInvestmentCompanies

forwhichAdviserReceivesaPerformance-BasedFee

OtherPooledInvestmentVehiclesforwhichAdviserReceivesaPerformance-

BasedFee

SeparateAccountsforwhichAdviserReceivesa

Performance-BasedFee

NameofPortfolioManager

NumberofAccounts TotalAssets

NumberofAccounts TotalAssets

NumberofAccounts TotalAssets

DavidMarcus 0 $0 0 $0 0 $0

ThomasO 0 $0 0 $0 0 $0

MatthewEpstein 0 $0 0 $0 0 $0

PortfolioManagerCompensation

Becausetheportfoliomanagersmaymanageotheraccounts, includingaccountsthatmaypayhigherfeesoraccountsthatmay pay performance-based fees, potential conflicts of interest could exist, including potential conflicts between theinvestmentstrategyoftheFundandtheinvestmentstrategyoftheotheraccountsmanagedbytheportfoliomanagersandpotentialconflictsintheallocationofinvestmentopportunitiesbetweentheFundandtheotheraccounts.

TheportfoliomanagersaremembersoftheAdviser.Theircompensationconsistsofafixedbasedsalaryandamembershipinterest inthefirm’sprofits.Theportfoliomanagersmayalsoparticipate intheAdviser’smatching401(k)retirementplan.TheymayreceivebonusesbasedontheperformanceoftheirdutiesandtheircontributiontotheAdviser.Thecompensationprogram does not disproportionately reward outperformance by higher fee/performance fee products. Receipt of profitsinterestsintheAdviser,whichprovidesemployeeswiththerighttoparticipateintheprofitsoftheAdviserwithrespecttotheirvestedprofitsinterests,isamajorincentiveforpersonstomaintainemploymentwiththeAdviser.TheAdviserbelievesthisisthebestincentivetomaintainstabilityofportfoliomanagementpersonnel.

PotentialConflictsofInterest

Potential conflicts of interestmayarisewhen the Fund’s portfoliomanagershaveday-to-daymanagement responsibilitieswithrespecttooneormoreotherfundsorotheraccounts,asisthecasefortheportfoliomanagerslistedinthetableabove.

TheAdviserandtheFundhaveadoptedcompliancepoliciesandproceduresthataredesignedtoaddressvariousconflictsofinterestthatmayarisefortheAdviserandtheindividualsthatitemploys.Forexample,theAdviserhasadoptedaside-by-sidemanagementofmutualfundsandprivateaccountspolicyandtradeallocationproceduresthataredesignedtofacilitatethefairallocationoflimitedinvestmentopportunitiesamongmultiplefundsandaccounts.Thereisnoguarantee,however,thatthepolicies andproceduresadoptedby theAdviser and theFundwill beable todetect and/orpreventevery situation inwhichanactualorpotentialconflictmayappear.

Thesepotentialconflictsinclude:

Allocation of Limited Time and Attention. A portfolio manager who is responsible for managing multiple funds and/oraccounts may devote unequal time and attention to the management of those funds and/or accounts. As a result, theportfoliomanagermaynotbeabletoformulateascompleteastrategyoridentifyequallyattractiveinvestmentopportunitiesforeachofthoseaccountsasmightbethecaseifheorsheweretodevotesubstantiallymoreattentiontothemanagementofasinglefund.Theeffectsofthispotentialconflictmaybemorepronouncedwherefundsand/oraccountsoverseenbyaparticularportfoliomanagerhavedifferentinvestmentstrategies.

AllocationofLimitedInvestmentOpportunities.Ifaportfoliomanageridentifiesalimitedinvestmentopportunitythatmaybesuitableformultiplefundsand/oraccounts,theopportunitymaybeallocatedamongtheseseveralfundsand/oraccounts,whichmaylimitafund’sand/oraccount’sabilitytotakefulladvantageoftheinvestmentopportunity.

43

Pursuit of Differing Strategies. At times, a portfolio manager may determine that an investment opportunity may beappropriateforonlysomeofthefundsand/oraccountsforwhichheorsheexercisesinvestmentresponsibility,ormaydecidethatcertainofthefundsand/oraccountsshouldtakedifferingpositionswithrespecttoaparticularsecurity.Inthesecases,theportfoliomanagermayplaceseparatetransactionsforoneormorefundsoraccountswhichmayaffectthemarketpriceofthesecurityortheexecutionofthetransaction,orboth,tothedetrimentorbenefitofoneormoreotherfundsand/oraccounts.

SelectionofBrokers/Dealers.Aportfoliomanagermaybeabletoselectorinfluencetheselectionofthebrokersanddealersthatareusedtoexecutesecuritiestransactionsforthefundsand/oraccountsthattheysupervise. Inadditiontoexecutingtrades, some brokers and dealers provide portfolio managers with brokerage and research services (as those terms aredefined in Section 28(e) of the Securities Exchange Act of 1934, as amended (the “1934 Act”)), whichmay result in thepaymentofhigherbrokeragefeesthanmighthaveotherwisebeenavailable.Theseservicesmaybemorebeneficialtocertainfundsoraccounts than toothers.Although thepaymentofbrokeragecommissions is subject to the requirement that theportfoliomanagerdetermineingoodfaiththatthecommissionsarereasonableinrelationtothevalueofthebrokerageandresearchservicesprovidedtothefund,theportfoliomanager’sdecisionastotheselectionofbrokersanddealerscouldyielddisproportionatecostsandbenefitsamongthefundsand/oraccountsthatheorshemanages.

Variation inCompensation.Aconflictof interestmayarisewhere the financialorotherbenefitsavailable to theportfoliomanagerdifferamongthefundsand/oraccountsthatheorshemanages.IfthestructureoftheAdviser’smanagementfeeand/ortheportfoliomanager’scompensationdiffersamongfundsand/oraccounts(suchaswherecertainfundsoraccountspayhighermanagement feesorperformance-basedmanagement fees), theportfoliomanagermightbemotivated tohelpcertain funds and/or accounts over others. The portfoliomanagermight bemotivated to favor funds and/or accounts inwhichheorshehasaninterestorinwhichtheAdviserand/oritsaffiliateshaveinterests.Similarly,thedesiretomaintainorraise assets under management or to enhance the portfolio manager’s performance record or to derive other rewards,financialorotherwise,couldinfluencetheportfoliomanagertolendpreferentialtreatmenttothosefundsand/oraccountsthatcouldmostsignificantlybenefittheportfoliomanager.

RelatedBusinessOpportunities.TheAdviseroritsaffiliatesmayprovidemoreservices(suchasdistributionorrecordkeeping)for some types of funds or accounts than for others. In such cases, a portfolio manager may benefit, either directly orindirectly,bydevotingdisproportionateattentiontothemanagementof fundand/oraccountsthatprovidegreateroverallreturnstotheAdviseranditsaffiliates.

PortfolioManagerSecuritiesOwnership

AsofDecember31,2020,theportfoliomanagersownedsecuritiesoftheFundintheamountsetforthinthetablebelow.

PORTFOLIOMANAGERDOLLARRANGEOFOWNERSHIPOF

SECURITIESDavidMarcus $500,001-$1,000,000ThomasO $100,001-$500,000MatthewEpstein $100,001-$500,000

THEDISTRIBUTOR

SharesoftheFundareofferedonacontinuousbasisthroughCompassDistributors,LLC,locatedatThreeCanalPlaza,Suite100, Portland, Maine 04101 (the “Distributor”), as distributor pursuant to a distribution agreement (the “DistributionAgreement”)betweentheDistributorandtheFund.PriortoJanuary1,2020,theFundwasdistributedbyQuasarDistributors,LLC(“Quasar”),which,throughMarch31,2020,wasanaffiliateofU.S.BancorpFundServices,LLCandU.S.BankN.A.

Rule12b-1Plan

AsdescribedintheProspectus,theFundhasadoptedaRule12b-1plan(the“Plan”)for its InvestorClassshares.ThePlan,among other things, permits the Investor Class shares to pay the Distributor a quarterly service fee at annual rates notexceeding0.25%of theassetsof the InvestorClass sharesas compensation for its servicesasprincipalunderwriterof thesharesofsuchclasses.PursuanttoRule12b-1underthe1940Act,thePlan(togetherwiththeDistributionAgreement)wasapprovedbytheFund’sBoardofTrustees,includingamajorityoftheTrusteeswhoarenotinterestedpersonsoftheFund(asdefinedinthe1940Act)andwhohavenodirectorindirectfinancialinterestintheoperationsofthePlanortheDistributionAgreement. The principal types of activities for which payments under the Plan may be made include payments tointermediariesforshareholderservicing,for“notransactionfee”orwrapprograms,andforretirementplanrecordkeeping.PaymentsunderthePlanalsomaybemadeforactivitiessuchasadvertising,printingandmailingtheProspectustopersonswho are not current shareholders, compensation to underwriters, compensation to broker-dealers, compensation to sales

44

personnel,andinterest,carryingorotherfinancingcharges.TheTrustbelievesthatthePlanbenefitstheTrustbyincreasingnetsalesoftheFund(orreducingnetredemptions),potentiallyallowingtheFundtobenefitfromeconomiesofscale.

ThePlanmaybeterminatedbyvoteofamajorityoftheIndependentTrustees,orbyvoteofamajorityoftheoutstandingvoting securities of the relevant class of shares of the Fund. The Planmay be amended by vote of the relevant Trustees,includingamajorityoftherelevantindependentTrustees,castinpersonatameetingcalledforthatpurpose.Anychangeinthe Plan thatwouldmaterially increase the fees payable thereunder by the relevant class of shares of the Fund requiresapprovalbyavoteof theholdersofamajorityofsuchsharesoutstanding.TheFund’sTrusteesreviewquarterlyawrittenreportofsuchcostsandthepurposesforwhichsuchcostshavebeenincurred.

ThePlanwillcontinueineffectforsuccessiveone-yearperiods,providedthateachsuchcontinuanceisspecificallyapproved(i)bythevoteofamajorityoftheIndependentTrusteesand(ii)bythevoteofamajorityoftheentireBoardcastinpersonatameetingcalledforthatpurposeorbyavoteofamajorityoftheoutstandingsecuritiesoftherelevantclass.

ThefollowingamountspaidtotheDistributorunderthePlanduringthefiscalyearendedDecember31,2020,werespenton:

Advertising/Marketing PaymentstoDealers Other TotalGlobalValueFund $0 $91,411 $0 $91,411

REVENUESHARING

The Adviser or an affiliatemay, from time to time, out of its (or their) own resources,make substantial cash payments-sometimesreferredtoas“revenuesharing”-tobrokerdealersorfinancialintermediariesforvariousreasonsinadditiontoanyRule12b-1paymentsdescribedelsewhereinthisSAI.ThesepaymentsmaysupportthedeliveryofservicestotheFundortoshareholdersintheFund,including,withoutlimitation,transactionprocessingandsub-accountingservices.TherecipientsofsuchpaymentsmayincludetheDistributor,otheraffiliatesofthemanager,andbroker-dealers,financialinstitutions,plansponsorsandadministratorsandotherfinancialintermediariesthroughwhichinvestorsmaypurchasesharesoftheFund.Insomecircumstances,suchpaymentsmaycreateanincentiveforanintermediaryor itsemployeesorassociatedpersonstorecommend or sell shares of the Fund to you, rather than shares of another mutual fund. Please contact your financialintermediaryorplanadministratororsponsorfordetailsaboutrevenuesharingpaymentsitmayreceive.

Revenue sharing paymentsmay include any portion of sub-transfer agency fees that exceed the costs of similar servicesprovided by the Fund’s transfer agent, U.S. Bancorp Fund Services, LLC (the “Transfer Agent”). Such excess sub-transferagency payments are paid by the Adviser or an affiliate out of its or their own resources. Because payments will varyaccordingtoanumberoffactors(including,forexample,numbersofshareholderaccountsserviced),thefirmsreceivingthelargestsuchexcesspaymentsfromthesepartiescanbeexpectedtochangeinorderandcompositionfromtimetotime.

SECURITIESLENDING

TheFundparticipatesinsecuritieslendingarrangementswherebyitlendscertainofitsportfoliosecuritiestobrokers,dealersand financial institutions (notwith individuals) inorder to receive additional incomeand increase the rateof returnof itsportfolio.TheBankofNewYorkMellonCorporationservesastheFund’ssecuritieslendingagentforforeignsecuritiesandU.S. BancorpAssetManagement, Inc. serves as the Fund’s securities lending agent for domestic securities. For themostrecentfiscalyearendedDecember31,2020,theFund’ssecuritieslendingactivitiesresultedinthefollowing:

Grossincomefromsecuritieslendingactivities: $ 174,417Feespaidtosecuritieslendingagentfromarevenuesplit $ (17,416)Feespaidforanycashcollateralmanagementservicethatarenotincludedintherevenuesplit $ (22,277)Rebates(paidtoborrower) $ (33,826)Aggregatefees/compensation $ (73,519)Netincomefromsecuritieslendingactivities: $ 100,898

U.S.BancorpAssetManagement, Inc.overseesthesecurities lendingprocess forboth foreignanddomesticsecurities.Theoversight includes the screening, selection and ongoing review of borrowers, monitoring the availability of securities,negotiatingrebates,dailymarkingtomarketofloans,monitoringandmaintainingcashcollaterallevels,processingsecuritiesmovementsandreinvestingcashcollateralasdirectedbytheAdviser.

45

PROXYVOTINGPOLICIESANDPROCEDURES

AlthoughindividualBoardmembersmaynotagreewithparticularpoliciesorvotesbytheAdviser,theBoardhasapproveddelegatingproxyvotingdiscretiontotheAdviserbelievingthattheAdvisershouldberesponsible forvotingbecause it isamatterrelatingtotheinvestmentdecisionmakingprocess.

AttachedasAppendixAisthesummaryoftheguidelinesandproceduresthattheAdviserwillusetodeterminehowtovoteproxies relating to portfolio securities, including the procedures that the Adviserwill usewhen a vote presents a conflictbetweentheinterestsofFundshareholders,ontheonehand,andthoseoftheAdviseroranyaffiliatedpersonoftheFundortheAdviser,ontheother.Thissummaryoftheguidelinesgivesageneral indicationastohowtheAdviserwillvoteproxiesrelatingtoportfoliosecuritiesoneachissuelisted.However,theguidelinesdonotaddressallpotentialvotingissuesortheintricaciesthatmaysurroundindividualproxyvotes.Forthatreason,theremaybeinstancesinwhichvotesmayvaryfromtheguidelinespresented.Notwithstandingtheforegoing,theAdviseralwaysendeavorstovoteproxiesrelatingtoportfoliosecuritiesinaccordancewiththeFund’sinvestmentobjectiveandtothebenefitofitsclients.InformationonhowtheFundvotedproxiesrelatingtoportfoliosecuritiesduringthemostrecentprior12-monthperiodendedJune30willbeavailablewithout charge, (1) upon request, by calling 866-EVERMORE (866-383-7667), and (2) on the SEC’s website at http://www.sec.gov.

COMPUTATIONOFNETASSETVALUE

As described in the Prospectus under the heading “How Fund Share Prices are Calculated”, the net asset value per share(“NAV”)oftheFund’ssharesofaparticularclassisdeterminedbydividingthetotalvalueoftheFund’sportfolioinvestmentsandotherassetsattributable to that class, lessany liabilities,by the totalnumberof sharesoutstandingof that class.TheProspectus furthernotes thatFundsharesarevaluedoneachday that theNewYorkStockExchange isopen (a “BusinessDay”),anddescribesthetime(the“ValuationTime”)asofwhichFundsharesarevaluedeachBusinessDay.TheTrustexpectsthattheholidaysuponwhichtheNewYorkStockExchangewillbeclosedareasfollows:NewYear’sDay,MartinLutherKing,Jr.Day,President’sDay,GoodFriday,MemorialDay,IndependenceDay,LaborDay,ThanksgivingDayandChristmasDay.

The Fund’s liabilities are allocated among its classes. The total of such liabilities allocated to a class plus that class’sdistributionand/orservicingfeesandanyotherexpensesspeciallyallocatedtothatclassarethendeductedfromtheclass’sproportionateinterestintheFund’sassets,andtheresultingamountforeachclassisdividedbythenumberofsharesofthatclassoutstandingtoproducetheclass’sNAV.Undercertaincircumstances,NAVofclassesofsharesoftheFundwithhigherserviceand/ordistributionfeesmaybelowerthanNAVoftheclassesofshareswithlowerornoserviceand/ordistributionfees as a result of the relative daily expense accruals that result from paying different service and/or distribution fees.Generally,forfundsthatpayincomedividends,thosedividendsareexpectedtodifferovertimebyapproximatelytheamountof the expense accrual differential between the fund’s classes. In accordance with regulations governing registeredinvestment companies, the Fund’s transactions in portfolio securities andpurchases and sales of Fund shares (whichbearuponthenumberofFundsharesoutstanding)aregenerallynotreflectedinNAVdeterminedfortheBusinessDayonwhichthetransactionsareeffected(thetradedate),butratheronthefollowingBusinessDay.

TheBoardhasdelegatedprimaryresponsibilityfordeterminingorcausingtobedeterminedthevalueoftheFund’sportfoliosecuritiesandotherassets(includinganyfairvaluepricing)andNAVoftheFund’ssharestoU.S.BancorpFundServices,LLC,doingbusinessasU.S.BankGlobalFundServices,initscapacityasadministrator(the“Administrator”),pursuanttovaluationpolicies and procedures approved by the Board (the “Valuation Procedures”). The Administrator has, in turn, delegatedvariousoftheseresponsibilitiestoU.S.BankGlobalFundServices,astheFund’saccountant,andotheragents.TheTrusteeshave established a Valuation Committee of the Board to which they have delegated responsibility for overseeing theimplementationoftheValuationProceduresandfairvaluedeterminationsmadeonbehalfoftheBoard.AsdescribedintheProspectus,forpurposesofcalculatingtheNAV,theFund’sinvestmentsforwhichmarketquotationsarereadilyavailablearevaluedatmarketvalue.ThefollowingsummarizesthemethodsusedbytheFundtodeterminemarketvaluesforthenotedtypesofsecuritiesorinstruments(althoughotherappropriatemarket-basedmethodsmaybeusedatanytimeorfromtimetotime):

Equitysecuritiesaregenerallyvaluedattheofficialclosingpriceorthe lastsalepriceontheexchangeorover-the-countermarket that is the primary market for such securities. If no sales or closing prices are reported during the day, equitysecuritiesaregenerallyvaluedatthemeanofthelastavailablebidandaskedquotationsontheexchangeormarketonwhichthesecurityisprimarilytraded,orusingothermarketinformationobtainedfromaquotationreportingsystem,establishedmarketmakers,orpricingservices.Fornon-exchangetradedsecuritiesthatarethinlytradedorrelativelyilliquidsecurities,theAdvisermaydeterminethe fairvalueof individualsecuritiespursuant to fairvalueproceduresapprovedbytheFund’sBoard.

Debtsecurities(exceptforshort-terminvestmentsasdescribedbelow)forwhichmarketquotationsarereadilyavailablearevaluedatthemeanbetweenthelastbidandaskedpricesreceivedfromdealersintheover-the-countermarketintheUnited

46

Statesorabroad,exceptthatwhennoaskedprice isavailable,debtsecuritiesarevaluedatthe lastbidpricealone.Short-terminvestmentshavingamaturityof60daysorlessaregenerallyvaluedatamortizedcost.

Forwardcurrencycontractsarevaluedatthecurrentcostofoffsettingsuchcontracts.Futurescontractsaregenerallyvaluedatthesettlementpricedeterminedbytheexchangeonwhichtheinstrumentisprimarilytradedor,iftherewerenotradesthatdayforaparticular instrument,atthemeanofthelastavailablebidandaskedquotationsonthemarketinwhichtheinstrumentisprimarilytraded.

Exchange-traded options are generally valued at the mean of the bid and asked quotations on the exchange at closing.Exchange-tradedoptionsmayalsobevaluedatitsNBBO(nationalbestbidandofferfromparticipantexchanges)reportedbytheOptionsPriceReportingAuthority.OTCoptionsnottradedonanexchangearevaluedatthemeanofthebidandaskedquotations.Ifthereisonlyabidoronlyanaskedpriceonsuchdate,valuationwillbeatsuchbidoraskedpriceforlongorshortoptions,respectively.

Swapagreementsaregenerallyvaluedusingabroker-dealerbidquotationoronmarket-basedpricesprovidedbyapprovedpricingsources.

PortfoliosecuritiesandotherassetsinitiallyvaluedincurrenciesotherthantheU.S.dollarareconvertedtoU.S.dollarsusingexchange rates obtained from pricing services. The value of any investment that is listed or traded on more than oneexchangeisbasedontheexchangeormarketdeterminedbytheAdvisertobetheprimarytradingvenueforthatinvestment.A quotation from the exchange or market deemed by the Adviser to be the secondary trading venue for a particularinvestmentmayberelieduponininstanceswhereaquotationisnotavailableontheprimaryexchangeormarket.

As described in the Prospectus, if market quotations are not readily available (including in cases where availablemarketquotations are deemed to be unreliable), the Fund’s investmentswill be valued as determined in good faith pursuant tovaluationprocedures,whichhavebeenapprovedbytheBoard(so-called“fairvaluepricing”).Fairvaluepricingmayrequiresubjectivedeterminationsaboutthevalueofasecurityorotherasset,andfairvaluesusedtodeterminetheFund’sNAVmaydifferfromquotedorpublishedprices,orfrompricesthatareusedbyothers,forthesameinvestments.Also,theuseoffairvaluepricingmaynotalwaysresultinadjustmentstothepricesofsecuritiesorotherassetsheldbytheFund.TheProspectusprovidesadditionalinformationregardingthecircumstancesinwhichfairvaluepricingmaybeusedandrelatedinformation.

PURCHASEANDREDEMPTIONOFSHARES

Themethodsofbuyingandsellingsharesof theFundaredescribed in theFund’sProspectus.Asstated in theProspectus,sharesoftheFundmaybepurchasedatNAVbyvariouspersonsassociatedwiththeTrust,theAdviser,certainfirmsprovidingservicestotheTrustoraffiliatesthereofforthepurposeofpromotinggoodwillwithemployeesandotherswithwhomtheTrust has business relationships, aswell as in other special circumstances. Shares are offered to other persons atNAV incircumstances where there are economies of selling efforts and sales related expenses with respect to offers to certaininvestors.

DISTRIBUTIONANDTAXCONSIDERATIONS

TAXATIONOFTHEFUND:INGENERAL

The following discussion of theU.S. federal income tax consequences of investment in the Fund is based on the InternalRevenueCodeof1986,asamended(“theCode”),U.S.Treasuryregulations,andotherapplicableauthority,asofthedateofthisSAI.Theseauthoritiesaresubjecttochangebylegislativeoradministrativeaction,possiblywithretroactiveeffect.Thefollowing discussion is only a summary of some of the important U.S. federal tax considerations generally applicable toinvestments in theFund.Theremaybeother taxconsiderationsapplicabletoparticularshareholders.Shareholdersshouldconsulttheirowntaxadvisorsregardingtheirparticularsituationandthepossibleapplicationoffederal,state,localand/orforeigntaxlaws.

TheFundqualifiedandintendstocontinuetoqualifyeachyearasaregulatedinvestmentcompanyunderSubchapterMofSubtitleA,Chapter1,oftheCode.Inordertoqualifyforthespecialtaxtreatmentaccordedregulatedinvestmentcompaniesandtheirshareholders,theFundmust,amongotherthings:

(a)deriveatleast90%ofitsgrossincomeforeachtaxableyearfrom(i)dividends,interest,paymentswithrespecttocertainsecuritiesloans,andgainsfromthesaleorotherdispositionofstock,securitiesorforeigncurrencies,orotherincome (includingbutnot limited togains fromoptions, futures,or forwardcontracts)derivedwith respect to itsbusinessof investing in suchstock, securities,or currenciesand (ii)net incomederived from interests inqualifiedpubliclytradedpartnerships;

(b)diversifyitsholdingssothat,attheendofeachquarteroftheFund’staxableyear,(i)atleast50%ofthemarketvalue of the Fund’s total assets consists of cash and cash items, U.S. government securities, securities of otherregulatedinvestmentcompanies,andothersecuritieslimitedinrespectofanyoneissuertoavaluenotgreaterthan

47

5%ofthevalueoftheFund’stotalassetsandnotmorethan10%oftheoutstandingvotingsecuritiesofsuchissuer,and(ii)notmorethan25%ofthevalueoftheFund’stotalassetsisinvested(x)inthesecurities(otherthanthoseoftheU.S.governmentorotherregulatedinvestmentcompanies)ofanyoneissueroroftwoormoreissuersthattheFundcontrolsandthatareengagedinthesame,similar,orrelatedtradesorbusinesses,or(y)inthesecuritiesofoneormorequalifiedpubliclytradedpartnerships;and

(c)distributewithrespecttoeachtaxableyearatleast90%ofthesumofitsinvestmentcompanytaxableincome(asthat term is defined in the Codewithout regard to the deduction for dividends paid—generally taxable ordinaryincomeandtheexcess,ifany,ofnetshort-termcapitalgainsovernetlong-termcapitallosses)andnettax-exemptinterestincome,ifany,forsuchyear.

Ingeneral, if theFundqualifiesasa regulated investmentcompany, theFundwillnotbesubject to federal incometaxonincome distributed in a timely manner to its shareholders in the form of dividends (including Capital Gain Dividends, asdefinedbelow).

Bycontrast, if theFundwere to fail toqualifyasa regulated investmentcompany inany taxableyear, theFundwouldbesubjecttotaxonitstaxableincomeatcorporaterates.Inaddition,alldistributionsfromearningsandprofits,includinganydistributionsofnettax-exemptincomeandnetlong-termcapitalgains,wouldbetaxabletoshareholdersasdividendincome.Someportionsofsuchdistributionsmaybeeligibleforthedividendsreceiveddeductioninthecaseofcorporateshareholdersormaybetreatedasqualifieddividendincometo individualshareholders.Finally,theFundcouldberequiredtorecognizeunrealized gains, pay substantial taxes and interest andmake substantial distributions before requalifying as a regulatedinvestmentcompany.

TheFundintendstodistributeatleastannuallytoitsshareholdersallorsubstantiallyallofitsinvestmentcompanytaxableincome(computedwithoutregardtothedividends-paiddeduction)andmaydistributeitsnetcapitalgain(theexcessofnetlong-termcapitalgainovernetshort-termcapitalloss).InvestmentcompanytaxableincomethatisretainedbytheFundwillbe subject to tax at regular corporate rates. If the Fund retains any net capital gain, it will be subject to tax at regularcorporateratesontheamountretained.However,theFundmaydesignatetheretainedcapitalgainamountasundistributedcapitalgainsinanoticetoitsshareholderswho(i)willberequiredtoincludeinincomeforfederalincometaxpurposes,aslong-termcapitalgain,theirshareofsuchundistributedamount,and(ii)willbeentitledtocredittheirproportionateshareofthetaxpaidbytheFundonsuchundistributedamountagainsttheirfederalincometaxliabilities,ifany,andtoclaimrefundsonaproperly-filedU.S.taxreturntotheextentthecreditexceedssuchliabilities.Forfederal incometaxpurposes,thetaxbasisofsharesownedbyashareholderoftheFundwillbeincreasedbyanamountequalundercurrentlawtothedifferencebetweentheamountofundistributedcapitalgains includedintheshareholder’sgross incomeandthetaxdeemedpaidbytheshareholderunderclause(ii)oftheprecedingsentence.

IftheFundfailstodistributeinacalendaryearanamountatleastequaltothesumof98%ofitsordinaryincomeforsuchyear and 98.2% of its capital gain net income for the one-year period endingOctober 31 of such year, plus any retainedamount fromtheprioryear, theFundwillbe subject toanondeductible4%excise taxon theundistributedamounts. Forthesepurposes,theFundwillbetreatedashavingdistributedanyamountonwhichithasbeensubjecttocorporateincometax in the taxable year endingwithin the calendar year. A dividend paid to shareholders in January of a year generally isdeemedtohavebeenpaidbytheFundonDecember31oftheprecedingyear,ifthedividendwasdeclaredandpayabletoshareholdersofrecordonadateinOctober,NovemberorDecemberofthatprecedingyear.TheFundintendsgenerallytomakedistributionssufficienttoavoidimpositionofthe4%excisetax,althoughtherecanbenoassurancethatitwillbeabletodoso.

FUNDDISTRIBUTIONS

Except in the case of certain shareholders eligible for preferential tax treatment, e.g., shareholders investing in the FundthroughanIRA(orothertaxqualifiedplan),shareholdersoftheFundgenerallywillbesubjecttofederalincometaxonFunddistributions. Distributions are taxable whether shareholders receive them in cash or reinvest them in additional sharesthroughadividendreinvestmentplan.

Distributions are taxable to shareholders even if they are paid from income or gains earned by the Fund before ashareholder’sinvestment(andthuswereincludedinthepricetheshareholderpaidforhisorhershares).SuchdistributionsarelikelytooccurinrespectofsharespurchasedatatimewhentheFund’sNAVreflectsgainsthatareeitherunrealized,orrealizedbutnotdistributed.SuchrealizedgainsmayberequiredtobedistributedevenwhentheFund’sNAValsoreflectsunrealizedlosses.

Distributions by the Fund of investment income generally will be taxable to shareholders as ordinary income. Taxes ondistributionsofcapitalgainsaredeterminedbyhowlongtheFundownedtheinvestmentsthatgeneratedthem,ratherthanhowlongashareholderhasownedhisorhershares.DistributionsofnetcapitalgainsfromthesaleofinvestmentsthattheFund owned for more than twelve months and that are reported to shareholders by the Fund as capital gain dividends

48

(“CapitalGainDividends”)willbetaxableaslong-termcapitalgains.Distributionsfromcapitalgainsaregenerallymadeafterapplyinganyavailablecapital losscarryovers.Fornon-corporateshareholders, long-termcapitalgain iscurrentlytaxedatamaximumrateof20%.DistributionsofgainsfromthesaleofinvestmentsthattheFundownedfortwelvemonthsorlesswillbetaxableasordinaryincome.Non-corporatetaxpayerswithincomeabovecertainthresholdsaresubjecttoa3.8%Medicaretaxonalloraportionoftheirnetinvestmentincome.Netinvestmentincomeincludesdividends,interestandcapitalgains.

AsofDecember31,2020,theFundhad,forfederalincometaxpurposes,$10,395,772inshort-termcapitallosscarryforwardsand$71,349,427inlong-termcapitallosscarryforwardsthatmaybecarriedforwardindefinitely.

DistributionsofinvestmentincomereportedtoshareholdersbytheFundasderivedfrom“qualifieddividendincome”willbetaxedinthehandsofindividualsattheratesapplicabletolong-termcapitalgains,providedthatboththeshareholderandtheFundmeetcertainholdingperiodandotherrequirements.Specifically,inorderforsomeportionofthedividendsreceivedbyaFundshareholder tobe“qualifieddividend income,” theFundmustmeetcertainholdingperiodandotherrequirementswith respect to someportionof thedividend-paying stocks in itsportfolioand the shareholdermustmeet certainholdingperiodandotherrequirementswithrespecttotheFund’sshares.Adividendwillnotbetreatedasqualifieddividendincome(ateithertheFundorshareholderlevel)(1)ifthedividendisreceivedwithrespecttoanyshareofstockheldforfewerthan61daysduringthe121-dayperiodbeginningonthedatewhichis60daysbeforethedateonwhichsuchsharebecomesex-dividendwithrespecttosuchdividend(or,inthecaseofcertainpreferredstock,91daysduringthe181-dayperiodbeginning90daysbefore suchdate), (2) to theextent that the recipient isunderanobligation (whetherpursuant toa short saleorotherwise)tomakerelatedpaymentswithrespecttopositionsinsubstantiallysimilarorrelatedproperty,(3)iftherecipientelectstohavethedividendincometreatedasinvestmentincomeforpurposesofthelimitationondeductibilityofinvestmentinterest,or(4)ifthedividendisreceivedfromaforeigncorporationthatis(a)noteligibleforthebenefitsofacomprehensiveincometaxtreatywiththeUnitedStates(withtheexceptionofdividendspaidonstockofsuchaforeigncorporationthatisreadily tradable on an established securities market in the United States) or (b) treated as a passive foreign investmentcompany.

In general, distributions of investment income reported to shareholders by the Fund as derived from qualified dividendincomewillbetreatedasqualifieddividendincomebyashareholdertaxedasanindividual,providedtheshareholdermeetsthe holding period and other requirements described abovewith respect to the Fund’s shares. If the aggregate qualifieddividendsreceivedbytheFundduringanytaxableyearare95%ormoreofitsgrossincome(excludingnetlong-termcapitalgain over net short-term capital loss), then 100% of the Fund’s dividend distributions (other than dividends reported toshareholders as Capital Gain Dividends) will be eligible to be treated as qualified dividend income. But if the aggregatequalifieddividendsreceivedbytheFundduringanytaxableyearare lessthan95%of itsgross income(excludingnet long-term capital gain over net short-term capital loss), then distributions paid by the Fund to individual shareholders will beeligibletobetreatedasqualifieddividendincomeonlytotheextentsuchdistributionsarederivedfromqualifieddividendsearnedbytheFund.

Dividends of net investment income received by corporate shareholders of the Fund will qualify for the 50% dividends-receiveddeductiongenerallyavailable tocorporations to theextentof theamountofqualifyingdividends receivedby theFund fromdomestic corporations for the taxableyear.Adividend receivedby theFundwillnotbe treatedasaqualifyingdividend(1)ifthestockonwhichthedividendispaidisconsideredtobe“debt-financed”(generally,acquiredwithborrowedfunds),(2)ifithasbeenreceivedwithrespecttoanyshareofstockthattheFundhasheldforlessthan46daysduringthe91-dayperiodbeginningonthedatewhichis45daysbeforethedateonwhichsuchsharebecomesex-dividendwithrespecttosuchdividend(lessthan91daysduringthe181-dayperiodbeginning90daysbeforesuchdateinthecaseofcertainpreferredstock) or (3) to the extent that the Fund is under an obligation (pursuant to a short sale or otherwise) tomake relatedpaymentswithrespecttopositionsinsubstantiallysimilarorrelatedproperty.Moreover,thedividendsreceiveddeductionmaybedisallowedorreduced(1)ifthecorporateshareholderfailstosatisfytheforegoingrequirementswithrespecttoitssharesoftheFundor(2)otherwisebyapplicationoftheCode.

IftheFundmakesadistributiontoashareholderinexcessoftheFund’scurrentandaccumulatedearningsandprofitsinanytaxableyear,theexcessdistributionwillbetreatedasareturnofcapitaltotheextentofsuchshareholder’staxbasisinitsshares,andthereafterascapitalgain.Areturnofcapitalisnottaxable,butitreducesashareholder’staxbasisinitsshares,thusreducinganylossorincreasinganygainonasubsequenttaxabledispositionbytheshareholderofitsshares.

SALESANDREDEMPTIONS

ThesaleorredemptionofFundsharesmaygiverisetoagainorloss,basedonthedifferencebetweentheshareholder’staxbasisintheFundsharessoldorredeemedandtheamounttheshareholderreceivedforsuchshares.Ingeneral,anygainorlossrealizeduponataxabledispositionofshareswillbetreatedaslong-termcapitalgainorlossiftheshareshavebeenheldformorethan12months.Otherwise,thegainor lossonataxabledispositionofFundshareswillbetreatedasshort-termcapitalgainorloss.However,anylossrealizeduponataxabledispositionofsharesheldforsixmonthsorlesswillbetreatedaslong-term,ratherthanshort-term,totheextentofanylong-termcapitalgaindistributionsreceived(ordeemedreceived)

49

bytheshareholderwithrespecttotheshares.AlloraportionofanylossrealizeduponataxabledispositionofFundshareswill be disallowed if other substantially identical shares of the Fund are purchased within 30 days before or after thedisposition.Insuchacase,thebasisofthenewlypurchasedshareswillbeadjustedtoreflectthedisallowedloss.

ForsharesacquiredonorafterJanuary1,2012,theFund(orrelevantbrokerorfinancialadvisor)isrequiredtocomputeandreporttotheInternalRevenueService(“IRS”)andfurnishtoFundshareholderscostbasisinformationwhensuchsharesaresoldorredeemed.TheFundhaselectedtousetheaveragecostmethod,unlessyouinstructtheFundtouseadifferentIRS-accepted cost basismethod, or choose to specifically identify your shares at the timeof each sale or redemption. If youraccountisheldbyyourbrokerorotherfinancialadvisor,theymayselectadifferentcostbasismethod.Inthesecases,pleasecontactyourbrokerorotherfinancialadvisortoobtaininformationwithrespecttotheavailablemethodsandelectionsforyouraccount.Youshouldcarefully review thecostbasis informationprovidedby theFundandmakeanyadditionalbasis,holdingperiodorotheradjustmentsthatarerequiredwhenreportingtheseamountsonyourfederalandstateincometaxreturns.FundshareholdersshouldconsultwiththeirtaxadvisorstodeterminethebestIRS-acceptedcostbasismethodfortheirtaxsituationandtoobtainmoreinformationabouthowthecostbasisreportingrequirementsapplytothem.

FOREIGNTAXES

IncomereceivedbytheFundfromsourceswithinforeigncountriesmaybesubjecttowithholdingandothertaxesimposedbysuchcountries.TaxtreatiesbetweencertaincountriesandtheU.S.mayreduceoreliminatesuchtaxes.Ifmorethan50%oftheFund’sassetsatyear-endconsistofthesecuritiesofforeigncorporations,theFundmayelecttopermitshareholderstoclaim a credit or deduction on their income tax returns for their pro rata portions of qualified taxes paid by the Fund toforeigncountriesinrespectofforeignsecuritiesthattheFundhasheldforatleasttheminimumperiodspecifiedintheCode.In such a case, shareholders will include in gross income from foreign sources their pro rata share of such taxes. Ashareholder’sabilitytoclaimaforeigntaxcreditordeductioninrespectofforeigntaxespaidbyaFundmaybesubjecttocertainlimitationsimposedbytheCode,whichmayresultintheshareholder’snotgettingafullcreditordeductionfortheamountofsuchtaxes.Shareholderswhodonot itemizedeductionsontheir federal incometaxreturnsmayclaimacredit(butnotadeduction)forsuchforeigntaxes.

CERTAININVESTMENTSINDEBTOBLIGATIONS

IftheFundpurchasesadebtobligationwithacquisitiondiscountororiginalissuediscount(“OID”),theFundmayberequiredtoincludetheacquisitiondiscountorOIDinincomeoverthetermofthedebtsecurity,eventhoughpaymentofthatamountisnotreceiveduntilalatertime,usuallywhenthedebtsecuritymatures.TheFundmaymakeoneormoreoftheelectionsapplicabletodebtobligationshavingacquisitiondiscountorOID,whichcouldaffectthecharacterandtimingofrecognitionofincomebytheFund.TheFundmayberequiredtopayoutasanincomedistributioneachyearanamountwhichisgreaterthanthetotalamountofcashinteresttheFundactuallyreceived.SuchdistributionsmaybemadefromthecashassetsoftheFundorbyliquidationofportfoliosecurities,ifnecessary.TheFundmayrealizegainsorlossesfromsuchliquidations.IntheeventtheFundrealizesnetcapitalgainsfromsuchtransactions,itsshareholdersmayreceivealargerdistributionthantheywouldintheabsenceofsuchtransactions.

Payment-in-kindsecuritieswillalsogiverisetoincomewhichisrequiredtobedistributedeventhoughtheFundholdingthesecurity receivesno interestpayment incashon thesecurityduring theyear. Inaddition, investments incertainexchangetradednotesmayaccrueinterestwhichisrequiredtobedistributedtoshareholders,eventhoughtheFundmaynotreceiveanyinterestpaymentincashonthesecurityduringtheyear.

TAXATIONOFCERTAINFINANCIALINSTRUMENTS,PFICSANDCERTAINDEBTINSTRUMENTS

Thetaxprinciplesapplicabletotransactionsincertainfinancialinstruments,suchasfuturescontractsandoptions,thatmaybeengagedinbytheFund,andinvestmentsinpassiveforeigninvestmentcompanies(“PFICs”)andcertaindebtinstruments,are complex and, in some cases, uncertain. Such transactions and investmentsmay cause the Fund to recognize taxableincomeprior to the receiptof cash, thereby requiring theFund to liquidateotherpositions,or toborrowmoney, soas tomake sufficient distributions to shareholders to avoid corporate-level tax. Moreover, some or all of the taxable incomerecognizedmaybeordinary incomeorshort-termcapitalgain, so that thedistributionsmaybe taxable toshareholdersasordinaryincome.

Inaddition,inthecaseofanysharesofaPFICinwhichtheFundinvests,theFundmaybeliableforcorporate-leveltaxonanyultimate gainor distributionson the shares if the Fund fails tomake anelection to recognize incomeannually during theperiodofitsownershipofthesharesofthePFIC.

CERTAININVESTMENTSINREALESTATEINVESTMENTTRUSTS

IftheFundinvests inequitysecuritiesofrealestateinvestmenttrusts(“REITs”),suchinvestmentsmayrequiretheFundtoaccrueanddistribute incomenotyet received. Inorder togeneratesufficientcashtomaketherequisitedistributions, theFundmayberequiredtosellsecuritiesinitsportfolio(includingwhenitisnotadvantageoustodoso)thatitotherwisewould

50

havecontinuedtohold.TheFund’sinvestmentinREITequitysecuritiesmayatothertimesresultintheFund’sreceiptofcashinexcessoftheREIT’searnings.IftheFunddistributessuchamounts,suchdistributioncouldconstituteareturnofcapitaltothe Fund’s shareholders for federal income tax purposes. Dividends received by the Fund from a REIT generally will notconstitute qualified dividend income.However, the Fundmaymake distributions to you of “section 199Adividends”withrespect to qualified dividends that it receives with respect to any investments in REITs. A section 199A dividend is anydividendorpartof suchdividendthat theFundpays to its shareholdersandreportsasasection199Adividend inwrittenstatements furnished to its shareholders. Distributions paid by the Fund that are eligible to be treated as section 199Adividendsforataxableyearmaynotexceedthe“qualifiedREITdividends”receivedbytheFundfromREITsreducedbytheFund’s allocableexpenses. Section199Adividendsmaybe taxed to individuals andothernon-corporate shareholders at areducedeffectivefederalincometaxrate,providedcertainholdingperiodrequirementsandcertainotherconditionsaremet.In addition, all or a portion of gains received from a REIT may be unrecaptured Section 1250 gain subject to tax at themaximumrateof25%.

The Fundmay invest directly or indirectly in residual interests in real estatemortgage investment conduits (“REMICs”) orequityinterestsintaxablemortgagepools(“TMPs”)orREITsthatinvestinTMPs.UnderanoticeissuedbytheIRStowhichTreasuryregulationshavenotyetbeenissued,butmayapplyretroactively,aportionoftheFund’sincome(includingincomeallocated to theFund fromaREITorotherpass-throughentity) that isattributable toa residual interest inaREMICoranequityinterestinaTMP(referredtointheCodeasan“excessinclusion”)generallywillbeallocatedtoshareholdersoftheregulatedinvestmentcompanyinproportiontothedividendsreceivedbysuchshareholders,withthesameconsequencesasif the shareholders held the related interest directly. As a result, a fund investing in such interestsmay not be a suitableinvestmentforcertaintax-exemptshareholders,asdiscussedunderTax-ExemptShareholdersbelow.

Ingeneral,excess inclusionincomeallocatedtoshareholders(i)cannotbeoffsetbynetoperatinglosses,(ii)willconstituteunrelated business taxable income (“UBTI”) to entities subject to tax on unrelated business income, thereby potentiallyrequiringsuchanentitythatisallocatedexcessinclusionincome,andotherwisemightnotberequiredtofileataxreturn,tofileataxreturnandpaytaxonsuchincome,and(iii)inthecaseofanon-U.S.shareholder,willnotqualifyforanyreductioninU.S.federalwithholdingtax.

TAX-EXEMPTSHAREHOLDERS

Undercurrentlaw,theFundgenerallyservesto“block”(thatis,preventtheattributiontoshareholdersof)UBTIfrombeingrealized by tax-exempt shareholders. Notwithstanding this “blocking” effect, a tax-exempt shareholder of the Fund couldrealizeUBTIbyvirtueofitsinvestmentintheFundifsharesintheFundconstitutedebt-financedpropertyinthehandsofthetax-exemptshareholderwithinthemeaningofCodeSection514(b).Atax-exemptshareholdermayalsorecognizeUBTIiftheFundrecognizesexcessinclusionincomederivedfromdirectorindirectinvestmentsinresidualinterestsinREMICsorequityinterestsinTMPs(asdescribedabove).

BACKUPWITHHOLDING

The Fund generally is required to withhold and remit to the U.S. Treasury a percentage of the taxable distributions andredemption proceeds paid to any individual shareholder who fails to properly furnish the Fund with a correct taxpayeridentificationnumber(“TIN”),whohasunder-reporteddividendorinterestincome,orwhofailstocertifytotheFundthatheor she is not subject to suchwithholding. The current backupwithholding tax rate is 24%. Backupwithholding is not anadditionaltax.Anyamountswithheldmaybecreditedagainsttheshareholder’sU.S.federalincometaxliability,providedtheappropriateinformationisfurnishedtotheIRS.

NON-U.S.SHAREHOLDERS

Ingeneral,dividends (other than those reported toshareholdersasCapitalGainDividends) thatarepaidby theFundtoashareholderthatisnota“UnitedStatesperson”withinthemeaningoftheCode(a“foreignperson”)aregenerallysubjecttowithholdingofU.S.federalincometaxatarateof30%(orlowerapplicabletreatyrate).However,dividendsattributabletothe Fund’s interest income from U.S. obligors and dividends attributable to net short-term capital gains of the Fund aregenerallyexemptfromthe30%withholdingtax.

In thecaseofashareholderwhoorwhich iseligible for thebenefitsofa taxtreatywiththeUnitedStates,anyeffectivelyconnectedincomeorgainwillgenerallybesubjecttoU.S.federalincometaxonanetbasisonlyifitisalsoattributabletoapermanentestablishmentmaintainedbytheshareholderintheUnitedStates.Abeneficialholderofshareswhoisaforeignpersonmay be subject to state and local tax and to the U.S. federal estate tax in addition to the federal tax on incomereferredtoabove.

Inordertoqualifyforanyexemptionsfromwithholdingdescribedaboveorforlowerwithholdingtaxratesunderincometaxtreaties,ortoestablishanexemptionfrombackupwithholding,aforeignpersonmustcomplywithspecialcertificationandfiling requirements relating to its non-U.S. status (including, in general, furnishing the applicable IRS Form W-8BEN orsubstituteform).ForeigninvestorsintheFundshouldconsulttheirtaxadvisorsinthisregard.

51

The Fundmay invest in equity securities of corporations that invest inU.S. real property. The sale of aU.S. real propertyinterest may trigger special tax consequences to foreign persons who are shareholders of the Fund under the ForeignInvestmentinRealPropertyTaxActof1980(“FIRPTA”).

ForeignpersonsaregenerallysubjecttoU.S.taxonadispositionofaU.S.realpropertyinterestasifheorshewereaUnitedStatesperson.IftheFundinvests50%ormoreofitsassetsinREITsandotherU.S.corporations50%ormoreoftheassetsofwhich are interests in U.S. real estate (“U.S. real property holding corporations” or “USRPHCs”), it will be a “qualifiedinvestmententity,”andalook-throughrulewillapplytodistributionsthatareattributabletogainfromthesaleordispositionofaU.S.realpropertyinterest.

Forforeignpersonsowningmorethan5%oftheFundatanytimeduringtheone-yearperiodendingonthedistributiondate,iftheFundisclassifiedasaqualifiedinvestmententity,distributionsattributabletogainfromasaleordispositionofaU.S.realpropertyinterest(so-called“FIRPTAgain”)inwhichtheFundinvestswillbesubjecttoU.S.withholdingtaxatarateofupto 21%. Foreign persons owning 5% or less of the Fund are subject to withholding at 30% or a lower treaty rate ondistributionsattributabletogainfromasaleordispositionofaU.S.realpropertyinterest.Certainanti-avoidancerulesmayapplyincertaininstancesandsubjectalloraportionofanyincomeorgaintotaxunderFIRPTAinthecaseofashareholderwhoisaforeignpersondisposingoftheirinterestintheFundduringthe30dayperiodprecedingtheex-dividenddateofadistribution that would be treated as a distribution from the disposition of a U.S. real property interest and acquires anidentical interestduringthe61dayperiodbeginning30dayspriortotheex-dividenddateofthedistributionanddoesnotreceiveadistributioninamannerthatsubjectstheshareholderstotaxunderFIRPTA.Theseanti-avoidancerulesalsoapplyto“substitutedividendpayments”andothersimilararrangements.

Thesaleorredemptionofshares intheFundwill result inFIRPTAgainsubject toU.S.withholdingandU.S. incometax forshareholderswhoareforeignpersonsowningmorethan5%oftheFundatanytimeduringthe5-yearperiodendingonthedateofsaleonlyif50%ormoreoftheFund’sassetsareinU.S.realpropertyinterestsatanytimeduringtheshorteroftheperiod the shareholder holds its interest in the Fund or the 5-year period ending on the date of disposition. ForeigncorporationsrecognizinggainundertheserulesmaybesubjecttotheU.S.BranchProfitsTax.

TAXDEFERREDPLANS

Specialtaxrulesapplytoinvestmentsthroughdefinedcontributionplansandothertax-qualifiedplans.Shareholdersshouldconsult their tax advisers to determine the suitability of shares of the Fund as an investment through suchplans and thepreciseeffectofsuchaninvestmentontheirparticulartaxsituation.

STATEANDLOCALTAXES

AlthoughtheFundexpectstoqualifyasaregulatedinvestmentcompanyandtoberelievedofallorsubstantiallyallfederalincometaxes,dependingupontheextentofitsactivitiesinstatesandlocalitiesinwhichitsofficesaremaintained,inwhichitsagentsorindependentcontractorsarelocated,orinwhichitisotherwisedeemedtobeconductingbusiness,theFundmaybesubjecttothetaxlawsofsuchstatesorlocalities.

INVESTMENTDECISIONSANDPORTFOLIOTRANSACTIONS

InvestmentdecisionsfortheFundaremadewithaviewtoachievingitsinvestmentobjective.Investmentdecisionsaretheproductofmanyfactorsinadditiontobasicsuitabilityfortheparticularclientinvolved(includingtheFund).Somesecuritiesconsidered for investmentby theFundmayalsobeappropriate forother clients servedby theAdviser. Thus, aparticularsecuritymaybeboughtorsoldforcertainclientseventhoughitcouldhavebeenboughtorsoldforotherclientsatthesametime.IfapurchaseorsaleofsecuritiesconsistentwiththeinvestmentpoliciesoftheFundandoneormoreoftheseclientsisconsideredatoraboutthesametime,transactionsinsuchsecuritieswillbeallocatedamongtheFundandclientsinamannerdeemed fair and reasonable by the Adviser. Particularly when investing in less liquid or illiquid securities of smallercapitalization companies, such allocation may take into account the asset size of the Fund in determining whether theallocationofaninvestmentissuitable.TheAdvisermayaggregateordersfortheFundwithsimultaneoustransactionsenteredintoonbehalfofitsotherclientssolongaspriceandtransactionexpensesareaveragedeitherfortheportfoliotransactionorforthatday.Likewise,aparticularsecuritymaybeboughtforoneormoreclientswhenoneormoreclientsaresellingthesecurity.Insomeinstances,oneclientmaysellaparticularsecuritytoanotherclient.Italsosometimeshappensthattwoormoreclientssimultaneouslypurchaseorsellthesamesecurity, inwhicheventeachday’stransactions insuchsecurityare,insofar aspossible, averagedas topriceandallocatedbetween such clients in amannerwhich in theAdviser’sopinion isequitabletoeachand inaccordancewiththeamountbeingpurchasedorsoldbyeach.Theremaybecircumstanceswhenpurchasesorsalesofportfoliosecurities foroneormoreclientswillhaveanadverseeffectonotherclients, including theFund.

52

BrokerageandResearchServices

Thereisgenerallynostatedcommissioninthecaseofsecuritiestradedonaprincipalbasisintheover-the-countermarkets,butthepricepaidbytheFundusuallyincludesanundiscloseddealercommissionormarkup.Inunderwrittenofferings,thepricepaidbytheFundincludesadisclosed,fixedcommissionordiscountretainedbytheunderwriterordealer.Transactionson U.S. stock exchanges and other agency transactions involve the payment by the Fund of negotiated brokeragecommissions. Such commissions vary amongdifferentbrokers.Also, aparticularbrokermay chargedifferent commissionsaccordingtosuchfactorsasthedifficultyandsizeofthetransaction.Transactionsinnon-U.S.securitiesgenerallyinvolvethepaymentof fixedbrokeragecommissions,whicharegenerallyhigher thanthose in theUnitedStates.Thepurchaseby theFundofparticipationsorassignmentsmaybepursuanttoprivatelynegotiatedtransactionspursuanttowhichtheFundmayberequiredtopayfeestothesellerorforegoaportionofpaymentsinrespectoftheparticipationagreement.

TheAdviserplacesordersforthepurchaseandsaleofportfoliosecurities,optionsandfuturescontractsandbuysandsellssuchsecurities,optionsandfuturesfortheFundthroughasubstantialnumberofbrokersanddealers.Insodoing,theAdviserusesitsbesteffortstoobtainfortheFundthemostfavorablepriceandexecutionavailable,excepttotheextentitmaybepermittedtopayhigherbrokeragecommissionsasdescribedbelow.Inseekingthemostfavorablepriceandexecution,theAdviser, having inmind the Fund’s best interests, considers all factors it deems relevant, including, byway of illustration,price,thesizeofthetransaction,thenatureofthemarketforthesecurity,theamountofthecommission,thetimingofthetransaction taking into accountmarket prices and trends, the reputation, experience and financial stability of the broker-dealerinvolvedandthequalityofservicerenderedbythebroker-dealerinthatorothertransactions.

TheAdviserplacesordersforthepurchaseandsaleofportfolioinvestmentsfortheFund’saccountswithbrokersordealersselectedbyitinitsdiscretion.IneffectingpurchasesandsalesofportfoliosecuritiesfortheaccountsoftheFund,theAdviserwillseekthebestpriceandexecutionoftheFund’sorders.Indoingso,theFundmaypayhighercommissionratesthanthelowestavailablewhentheAdviserbelievesitisreasonabletodosoinlightofthevalueofthebrokerageandresearchservicesprovidedbythebrokereffectingthetransaction,asdiscussedbelow.AlthoughtheFundmayuseabroker-dealerthatsellsFundsharestoeffecttransactionsfortheFund’sportfolio,theFundwillnotconsiderthesaleofFundsharesasafactorwhenselectingbroker-dealerstoexecutethosetransactions.

Ithasformanyyearsbeenacommonpracticeintheinvestmentadvisorybusinessforadvisersofinvestmentcompaniesandother institutional investors to receive research and brokerage products and services (together, “services”) from broker-dealerswhichexecuteportfoliotransactionsfortheclientsofsuchadvisers.Consistentwiththispractice,theAdviserreceivesservicesfrommanybroker-dealerswithwhichtheAdviserplacestheFund’sportfoliotransactions.Theseservices,whichinsomecasesmayalsobepurchasedforcash,mayinclude,amongotherthings,suchitemsasgeneraleconomicandsecuritymarket reviews, industryandcompanyreviews,evaluationsofsecurities, recommendationsas to thepurchaseandsaleofsecurities,andservicesrelatedtotheexecutionofsecuritiestransactions.TheadvisoryfeespaidbytheFundarenotreducedbecausetheAdviserreceivessuchserviceseventhoughthereceiptofsuchservicesrelievestheAdviserfromexpensestheymightotherwisebear.Researchandbrokerageservicesprovidedbybroker-dealerschosenbytheAdvisertoplacetheFund’sportfolio transactionsmaybeuseful to theAdviser in providing services to theAdviser’s other clients, althoughnot all ofthese services may be necessarily useful and of value to the Adviser in managing the Fund. Conversely, research andbrokerageservicesprovidedtotheAdviserbybroker-dealersinconnectionwithtradesexecutedonbehalfofotherclientsoftheAdvisermaybeusefultotheAdviserinmanagingtheFund,althoughnotalloftheseservicesmaybenecessarilyusefulandofvaluetotheAdviserinmanagingsuchotherclients.

Inrelianceonthe“safeharbor”providedbySection28(e)ofthe1934Act,theAdvisermaycausetheFundtopayabroker-dealerwhichprovides“brokerageandresearchservices”(asdefinedforpurposesofSection28(e))totheAdviseranamountof commission foreffectinga securities transaction for theFund inexcessof thecommissionwhichanotherbroker-dealerwouldhavechargedforeffectingthattransactioniftheAdviserdeterminesingoodfaiththatthecommissionisreasonableinrelation to the value of the brokerage and research services provided by the broker-dealer viewed in terms of either aparticular transaction or the Adviser’s overall responsibilities to the advisory accounts for which it exercises investmentdiscretion.

TheAdvisermayplaceordersforthepurchaseandsaleofexchange-listedportfoliosecuritieswithabroker-dealerthatisanaffiliateoftheAdviserwhere,inthejudgmentoftheAdviser,suchfirmwillbeabletoobtainapriceandexecutionatleastasfavorableasotherqualifiedbroker-dealers.PursuanttorulesoftheSEC,abroker-dealerthatisanaffiliateoftheAdvisermayreceiveandretaincompensationforeffectingportfoliotransactionsfortheFundonasecuritiesexchangeifthecommissionspaidtosuchanaffiliatedbroker-dealerbytheFundonexchangetransactionsdonotexceed“usualandcustomarybrokeragecommissions.” The rules define “usual and customary” commissions to include amounts which are “reasonable and faircompared to the commission, fee or other remuneration received or to be received by other brokers in connectionwithcomparable transactions involving similar securitiesbeingpurchasedor soldona securitiesexchangeduringa comparableperiodoftime.”

53

ThefollowingtableshowstheaggregateamountofbrokeragecommissionspaidbytheFundfortheperiodsindicated:

AsofDecember31,2020 2019 2018

EvermoreGlobalValueFund $642,563 $606,048 $1,617,911*

*TheincreaseincommissionspaidduringthefiscalyearendedDecember31,2018wasduelargelytoincreasesintheFund’ssecuritiesandportfoliohedgingtransactions.

TheAdvisermay selectbrokerdealers at leastpartiallybasedon thebrokerageand research services theyprovide to theAdviser,inaccordancewithSection28(e)ofthe1934Act.Theresearchcanbecreatedordevelopedbythatbrokerdealerorbyathirdparty.Whenaninvestmentadviserusesclientcommissionstopayforthesebrokerageandresearchservices,itiscalled “soft dollars.” TheAdvisermay take into account the research resources, aswell as the execution capabilities, of abrokerwhen selecting abroker for a securities transaction. Therefore, securities ordersmaybeplacedwith abroker thatprovidesaccesstotheirresearchanalysts,keycompanymanagement,relevantindustryandcompanyconferences,andothervalue-addedresearchservices.

The Advisermay use client commissions, or soft dollars, to pay for computer hardware or software, stock quotation andmarketdataservices(e.g.,Bloomberg),orsimilarproductsandservices.

SubjecttothecriteriaofSection28(e),theAdvisermaypayabrokeracommissionmorethanwhatanotherbrokermayhavechargedforexecutingthesametransactionbecauseofthebrokerageandresearchservicesprovidedbythebroker.WhentheAdviser uses client brokerage commissions (or markups or markdowns) to obtain research or other services, the Adviserreceives a benefit because it does not have to produce or pay for such products or services. The Adviser may have anincentivetoselectorrecommendabroker-dealerbasedonitsinterestinreceivingresearchorotherservices,ratherthanonitsclients’interestinreceivingmostfavorableexecution.TheAdvisermaycauseclientstopaycommissionshigherthanthosechargedbyotherbroker-dealerswhodonotprovideresearchorotherbrokerageservices(“execution-onlybrokers”)inreturnfor soft dollar benefits. The Adviser uses these research or other services for its clients generally. Therefore, soft dollarbenefits are not necessarily limited to those accounts that generate the benefit, nor are soft dollar benefits necessarilyallocatedtoaccountsinproportiontothesoftdollarcreditstheaccountsgenerate.Apotentialconflictofinterestisthattheallocationofthecostsandbenefitsoftheseresearchandexecutionservicesmaynotbeallocatedfairlyamongaccounts.Forexample, larger accounts tend to generate more soft dollar benefits than smaller accounts, assuming the accounts havesimilarportfolioturnoverrates.

Duringitslastfiscalyear,theAdviseracquiredresearchreports,accesstoresearchanalysts,accesstocorporatemanagementteams,andaccesstoindustryandcompanyconferencesfromanumberofthebroker-dealersweusedtoexecutesecuritiestransactions. TheAdviserbelieves it obtainedbest execution for its clientswhenexecuting securities transactions throughthesefirms.

During its last fiscal year, the Fund engaged in securities transactions with a total dollar amount of approximately$123,195,779thatresultedin$106,135insoftdollarcommissionsbeingcreditedtotheAdviser’scommissionsharingaccount(“CSA”)at itsthird-partyCSAadministrator. Duringits lastfiscalyear,theAdviserpaid$104,000fromitsCSAtobrokeragefirmsbasedontheresearchproductsandservicestheyprovidedtotheAdviser.

During its lastfiscalyear,wedirectedclienttransactionstoanumberofbroker-dealersbasedonfactors including,butnotlimitedto,(i)accesstoliquidityintherelevantsecurity,(ii)accesstocorporatemanagement,(iii)accesstoresearchanalystsandotherbroker-dealerpersonnelwhoprovidedassistanceintheresearchandanalysisoftherelevantsecurity,(iv)accesstoaconferencethatprovidedassistanceintheresearchandanalysisoftherelevantsecurity,and(v)whetherthebroker-dealergeneratedtheideafortherelevantsecurity.Webelieveweobtainedbestexecutionforourclientswhenexecutingsecuritiestransactionsthroughthesefirms.

Duringthemostrecentfiscalyear,theFunddidnotacquireanysecuritiesofitsregularbrokerdealers.

DESCRIPTIONOFTHETRUST

TheTrust’sDeclarationofTrustpermitstheTrusteestoissueanunlimitednumberoffullandfractionalsharesofeachseries.Each share of the Fund represents an equal proportionate interest in the Fundwith each other share of the Fund and isentitledtoaproportionateinterestinthedividendsanddistributionsfromtheFund.TheDeclarationofTrustfurtherpermitstheBoardtodividethesharesofeachseries intoanynumberofseparateclasses,eachhavingsuchrightsandpreferencesrelative toother classesof the sameseriesas theBoardmaydetermine.Whenyou invest in theFund, youacquire freelytransferablesharesofbeneficialinterestthatentitleyoutoreceivedividendsasdeterminedbytheBoardandtocastavotefor each share you own at shareholder meetings. The shares of the Fund do not have any preemptive rights. UponterminationoftheFund,whetherpursuanttoliquidationoftheTrustorotherwise,shareholdersofeachclassoftheFundare

54

entitled to share pro rata in the net assets attributable to that class of shares of the Fund available for distribution toshareholders.TheDeclarationofTrustalsopermitstheBoardtochargeshareholdersdirectlyforcustodial,transferagency,andservicingexpenses.

SharesoftheFundarecurrentlydividedintotwoclasses,designatedInvestorClass(formerlyClassA)andInstitutionalClass(formerlyClassI)Shares.

TheassetsreceivedbyeachclassoftheFundfortheissueorsaleof itssharesandall income,earnings,profits, lossesandproceedstherefrom,subjectonlytotherightsofcreditors,areallocatedto,andconstitutetheunderlyingassetsof,thatclassoftheFund.TheunderlyingassetsofeachclassoftheFundaresegregatedandarechargedwiththeexpenseswithrespecttothatclassoftheFundandwithashareofthegeneralexpensesoftheFundandTrust.AnygeneralexpensesoftheTrustthatarenotreadilyidentifiableasbelongingtoaparticularclassoftheFundareallocatedbyorunderthedirectionoftheTrusteesin suchmanner as the Trustees determine to be fair and equitable.While the expenses of the Trust are allocated to theseparatebooksofaccountoftheFund,certainexpensesmaybelegallychargeableagainsttheassetsofallofthefundsinaTrust.

TheDeclarationofTrustalsopermits theBoard,without shareholderapproval, to subdivide theFundor seriesor classofsharesintovarioussub-seriesorsub-classeswithsuchdividendpreferencesandotherrightsastheTrusteesmaydesignate.TheBoardmayalso,withoutshareholderapproval,establishoneormoreadditionalseriesorclassesormergetwoormoreexisting series or classeswithout shareholder approval. Shareholders’ investments in such an additional ormerged serieswouldbeevidencedbyaseparateseriesofshares(i.e.,anewFund).

TheDeclarationofTrustprovidesfortheperpetualexistenceoftheTrust.TheTrustortheFund,however,maybeterminatedat any timeby amajority vote of the Trustees of theBoard. Similarly, any classwithin the Fundmaybe terminatedby amajorityvoteoftheTrusteesoftheBoard.

ShareholdersoftheFundareentitledtoonevoteforeachfullshareheld(withfractionalvotesforeachfractionalshareheld)andmay vote (to the extent provided therein) on the electionof Trustees and the terminationof the Trust andonothermatterssubmittedtothevoteofshareholders.

AllclassesofsharesoftheFundhaveidenticalvotingrightsexceptthateachclassofshareshasexclusivevotingrightsonanymattersubmittedtoshareholdersthatrelatessolelytothatclass,andhasseparatevotingrightsonanymattersubmittedtoshareholdersinwhichtheinterestsofoneclassdifferfromtheinterestsofanyotherclass.Eachclassofshareshasexclusivevoting rightswith respect tomatterspertaining toanydistributionor servicingplanoragreementapplicable to that class.Matterssubmittedtoshareholdervotewillbeapprovedbyeachseriesseparatelyexcept(i)whenrequiredbythe1940Act,sharesshallbevotedtogetherand(ii)whenthematterdoesnotaffectallseries,thenonlyshareholdersoftheseriesaffectedshallbeentitledtovoteonthematter.ConsistentwiththecurrentpositionoftheSEC,shareholdersofallseriesandclassesvote together, irrespective of series or class, on the election of Trustees and the selection of the Trust’s independentregistered public accounting firm, but shareholders of each series vote separately on most other matters requiringshareholderapproval,suchascertainchangesininvestmentpoliciesofthatseriesortheapprovaloftheinvestmentadvisoryandanysub-advisoryagreementrelatingtothatseries,andshareholdersofeachclasswithinaseriesvoteseparatelyastotheRule12b-1plan(ifany)relatingtothatclass.

TherewillnormallybenomeetingsofshareholdersforthepurposeofelectingTrustees,exceptthat,inaccordancewiththe1940Act,(i)aTrustwillholdashareholders’meetingfortheelectionofTrusteesatsuchtimeaslessthanamajorityoftheTrusteesholdingofficehavebeenelectedbyshareholders,and(ii) ifthereisavacancyontheBoard,suchvacancymaybefilledonlybyavoteoftheshareholdersunless,afterfillingsuchvacancybyothermeans,atleasttwo-thirdsoftheTrusteesholdingofficeshallhavebeenelectedbytheshareholders.Inaddition,Trusteesmayberemovedfromofficebyavoteofatleastamajorityoftheholdersoftheoutstandingsharesorbyavoteoftheholdersofatleastamajorityoftheoutstandingsharesatameetingdulycalledforthatpurpose.

Exceptassetforthabove,theTrusteesshallcontinuetoholdofficeandmayappointsuccessorTrustees.Shareholdervotingrightsarenotcumulative.

The affirmative vote of amajority of shares of the Trust voted (assuming a quorum is present in person or by proxy) isrequiredtoamendtheDeclarationofTrustifsuchamendment(1)affectsthepowerofshareholderstovote,(2)amendsthesectionoftherelevantDeclarationofTrustgoverningamendments,(3)isoneforwhichavoteisrequiredbylaworbytheTrust’sregistrationstatementor(4)issubmittedtotheshareholdersbytheTrustees.IfoneormorenewseriesofaTrustisestablishedanddesignatedbytheTrustees,theshareholdershavingbeneficialinterestsintheFundshallnotbeentitledtovote onmatters exclusively affecting such new series, suchmatters including, without limitation, the adoption of or anychange in the investmentobjectives,policiesor restrictionsof thenewseriesandtheapprovalof the investmentadvisorycontractsofthenewseries.Similarly,theshareholdersofthenewseriesshallnotbeentitledtovoteonanysuchmattersastheyaffecttheFund.

55

ShareholderandTrusteeLiability

UnderMassachusettslaw,shareholderscould,undercertaincircumstances,beheldpersonallyliablefortheobligationsoftheTrust.However,theDeclarationofTrustdisclaimsshareholder liabilityforactsorobligationsoftheTrustandrequiresthatnoticeofsuchdisclaimerbegivenineachagreement,obligationorinstrumententeredintoorexecutedbytheTrustortheTrustees. TheDeclarationof Trust provides for indemnificationout of the Fund’s property for all loss and expenseof anyshareholderheldpersonallyliablefortheobligationsoftheFundbyreasonofowningsharesoftheFund.Thus,theriskofashareholderincurringfinanciallossonaccountofshareholderliabilityisconsideredremotesinceitislimitedtocircumstancesinwhichthedisclaimerisinoperativeandtheFunditselfwouldbeunabletomeetitsobligations.

TheDeclarationofTrustfurtherprovidesthattheBoardwillnotbeliableforerrorsofjudgmentormistakesoffactorlaw.However,nothingintheDeclarationofTrustprotectsaTrusteeagainstanyliabilitytowhichtheTrusteewouldotherwisebesubjectbyreasonofwillfulmisfeasance,badfaith,grossnegligenceorrecklessdisregardofthedutiesinvolvedintheconductofhisorheroffice.TheDeclarationofTrustoftheTrustprovidesforindemnificationbytheTrustofTrusteesandOfficersoftheTrust,exceptwithrespecttoanymatterastowhichanysuchpersondidnotactingoodfaithinthereasonablebeliefthathisorheractionwasinthebestinterestsoftheTrust.SuchpersonsmaynotbeindemnifiedagainstanyliabilitytotheTrustortheTrust’sshareholderstowhomheorshewouldotherwisebesubjectbyreasonofwillfulmisfeasance,badfaith,grossnegligenceorrecklessdisregardofthedutiesinvolvedintheconductofhisorheroffice.

PERFORMANCE

PORTFOLIOTURNOVER

The Fund’s investment policies and objective,which emphasize long-termholdings, tend to keep the number of portfoliotransactionsrelativelylow.PurchasesandsalesofportfoliosecuritiesmaybemadeasconsideredadvisablebytheAdviserinthebestinterestsoftheshareholders.TheFund’sportfolioturnoverratemayvaryfromyeartoyear,aswellaswithinayear.TheFund’sdistributionsofanynetshort-termcapitalgainsrealizedfromportfoliotransactionsaretaxabletoshareholdersasordinary income. In addition, higher portfolio turnover rates can result in corresponding increases in portfolio transactioncostsfortheFund.See“PortfolioTransactionsandBrokerage”above.

Forreportingpurposes,theFund’sportfolioturnoverrateiscalculatedbydividingthelesserofpurchasesorsalesofportfoliosecurities for the fiscalyearby themonthlyaverageof thevalueof theportfolio securitiesownedby theFundduring thefiscalyear.Indeterminingsuchportfolioturnover,allsecuritieswhosematuritiesatthetimeofacquisitionwereoneyearorlessareexcluded.A100%portfolioturnoverratewouldoccur,forexample, ifallofthesecurities intheFund’s investmentportfolio(otherthanshort-termmoneymarketsecurities)werereplacedonceduringthefiscalyear.PortfolioturnoverwillnotbealimitingfactorshouldtheAdviserdeemitadvisabletopurchaseorsellsecurities.TheportfolioturnoverfortheFundforthetwomostrecentfiscalyearsendedDecember31,2020,and2019was21%and28%,respectively.

OTHERINFORMATIONABOUTTHEFUND

CUSTODIAN

U.S.Bank,N.A. (the“Custodian”), locatedat1555NorthRivercenterDrive,Suite302,Milwaukee,WI53212, servesas thecustodianfortheFund.Assuch,theCustodianholdsinsafekeepingcertificatedsecuritiesandcashbelongingtotheFundand,in such capacity, is the registered owner of securities in book-entry form belonging to the Fund. Upon instruction, theCustodianreceivesanddeliverscashandsecuritiesoftheFundinconnectionwithFundtransactionsandcollectsalldividendsandotherdistributionsmadewith respect to Fundportfolio securities. TheCustodianalsomaintains certain accounts andrecordsoftheFundandcalculatesthetotalNAV,totalnetincomeandNAVpershareoftheFundonadailybasis.

COUNSEL

FaegreDrinkerBiddle&ReathLLPservesascounseltotheFund,andislocatedatOneLoganSquare,Suite2000,Philadelphia,PA19103-6996.

INDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRM

Ernst&YoungLLPservesastheFund’sindependentregisteredpublicaccountant.Ernst&YoungLLPprovidesauditservices,taxreturnreviewandassistanceandconsultationinconnectionwithreviewofSECfilings.Ernst&YoungLLPislocatedat5TimesSquare,NewYork,NY10036.

ADMINISTRATOR

U.S.BancorpFundServices,LLC,d/b/aU.S.BankGlobalFundServices(“GlobalFundServices”),locatedat615EastMichiganStreet,Milwaukee,WI53202,providesvariousfundadministrationandfundaccountingservices,includingthepreparationofcertain financial and tax information and income tax returns, the coordination of audits of financial statements, and

56

coordinationofvariousfilings.U.S.BancorpFundServices,LLCalsoservesasthetransferagentanddividenddisbursingagent(the“TransferAgent”)totheFund.

TheFund’sCustodian,TransferAgentandGlobalFundServicesareallaffiliatedentitiesunder thecommoncontrolofU.S.Bancorp.

TheTrustcompensatedGlobalFundServicesforsuchservicesperformedintheamountssetforthinthetablebelow.

CompensationPaidtoGlobalFundServicesfortheFiscalYearsEndedDecember31,

2020 2019 2018$260,163 $308,308 $365,250

FINANCIALSTATEMENTS

The 2020 audited financial statements, which include the financial highlights of the Fund for the fiscal years endedDecember31,2020,2019,2018,2017,and2016,assetforthintheTrust’sannualreporttoshareholders,includingthenotestheretoandthereportoftheindependentregisteredpublicaccountant,areincorporatedhereinbyreference.

57

AppendixA

PROXYVOTINGPOLICIESANDPROCEDURES

EvermoreFundsTrust(the“Trust”)andEvermoreGlobalValueFund,aseriesoftheTrust(the“Fund”)exerciseavoiceon behalf of its shareholders in matters of corporate governance through the proxy voting process. The Board ofTrustees of the Trust has delegated the authority to develop policies and procedures relating to proxy voting toEvermoreGlobalAdvisors,LLC(the“Adviser”).

TheAdviserhasadoptedasetofproxyvotingpoliciesandprocedures(the“Policies”)toensurethattheAdviservotesproxiesrelatingtoequitysecuritiesinthebestinterestofclients.

Invotingproxies,theAdviserisguidedbygeneralfiduciaryprinciplesandseekstoactprudentlyandsolelyinthebestinterestofclients.TheAdviserattemptstoconsiderall factorsthatcouldaffectthevalueofthe investmentandwillvoteproxiesinthemannerthatitbelieveswillbeconsistentwitheffortstomaximizeshareholdervalues.TheAdvisermayutilizeanexternalserviceprovidertoprovideitwithinformationand/orarecommendationwithregardtoproxyvotes.However,suchrecommendationsdonotrelievetheAdviserofitsresponsibilityfortheproxyvote.

InthecaseofaproxyissueforwhichthereisastatedpositioninthePolicies,theAdvisergenerallyvotesinaccordancewithsuchstatedposition.InthecaseofaproxyissueforwhichthereisalistoffactorssetforthinthePoliciesthattheAdviser considers in votingon such issue, theAdviser voteson a case-by-casebasis in accordancewith the generalprinciplessetforthaboveandconsideringsuchenumeratedfactors.InthecaseofaproxyissueforwhichthereisnostatedpositionorlistoffactorsthattheAdviserconsidersinvotingonsuchissue,theAdviservotesonacase-by-casebasisinaccordancewiththegeneralprinciplessetforthabove.IssuesforwhichthereisastatedpositionsetforthinthePoliciesorforwhichthereisa listoffactorssetforthinthePoliciesthattheAdviserconsiders invotingonsuchissues fall into a variety of categories, including electionof trustees, ratificationof auditors, proxy and tender offerdefenses, capital structure issues, executive and trustee compensation, mergers and corporate restructurings, andsocial andenvironmental issues.The statedpositiononan issue set forth in thePolicies canalwaysbe superseded,subject to the duty to act solely in the best interest of the beneficial owners of accounts, by the investmentmanagementprofessionalsresponsiblefortheaccountwhosesharesarebeingvoted.Issuesapplicabletoaparticularindustry may cause the Adviser to abandon a policy that would have otherwise applied to issuers generally. TheAdviser’spolicyistovoteallproxiesfromaspecificissuerinthesamewayforeachclientabsentqualifyingrestrictionsfromtheclient.

In furtherance of the Adviser’s goal to vote proxies in the best interest of clients, the Adviser follows proceduresdesigned to identify and addressmaterial conflicts thatmay arise between the Adviser’s interests and those of itsclientsbeforevotingproxiesonbehalfofsuchclients.Toseektoidentifyconflictsofinterest,theAdviserreviewsitsrelationshipwith the issuer of each security to determine if the Adviser or any of its employees has any financial,businessorpersonalrelationshipwiththeissuer.TheAdviserisalsosensitivetothefactthatasignificant,publicizedrelationshipbetweenan issuerandanon-affiliatemightappear to thepublic to influence themanner inwhich theAdviserdecidestovoteaproxywithrespecttosuchissuer.

TheAdviser’sCCOreviewsandaddressesconflictsofinterestbroughttohisorherattention.Aproxyissuethatwillbevoted in accordancewith a stated position on an issue is not brought to the attention of the CCO for a conflict ofinterestreviewbecausetheAdviser’sposition isthattotheextentaconflictof interest issueexists, it isresolvedbyvotinginaccordancewithapre-determinedpolicy.Withrespecttoaconflictof interestbroughttoitsattention,theCCOfirstdetermineswhethersuchconflictof interest ismaterial.Aconflictof interest isconsideredmaterial totheextent that it is determined that such conflict is likely to influence, or appear to influence, the Adviser’s decision-makinginvotingproxies.

IfitisdeterminedbytheCCOthataconflictofinterestisnotmaterial,theAdvisermayvoteproxiesnotwithstandingtheexistenceoftheconflict.IfitisdeterminedbytheCCOthataconflictofinterestismaterial,theCCOisresponsiblefordetermininganappropriatemethodtoresolvesuchconflictofinterestbeforetheproxyaffectedbytheconflictofinterest isvoted.Suchdetermination isbasedontheparticularfactsandcircumstances, includingthe importanceofthe proxy issue and the nature of the conflict of interest.Methods of resolving amaterial conflict of interestmayinclude,butarenotlimitedto,disclosingtheconflicttoclientsandobtainingtheirconsentbeforevoting,orsuggestingtoclientsthattheyengageanotherpartytovotetheproxyontheirbehalf.

Adviser’sProxyVotingPoliciesandPrinciples

The Adviser’s proxy voting positions have been developed based on years of experience with proxy voting andcorporategovernanceissues.TheseprincipleshavebeenreviewedbyvariousmembersoftheAdviser’sorganization,including the investment team, chief operating officer, chief financial officer, chief compliance officer, operations

A-1

personnel, andoutside legal counsel. TheBoardofDirectorsof theTrustwill approve theproxyvotingpoliciesandproceduresannually.

ThefollowingguidelinesreflectwhattheAdviserbelievestobegoodcorporategovernanceandbehavior:

Board of Directors. The election of directors and an independent board are key to good corporate governance.Directorsareexpectedtobecompetent individualsandtheyshouldbeaccountableandresponsivetoshareholders.TheAdvisersupportsanindependentboardofdirectors,andprefersthatkeycommitteessuchasaudit,nominating,and compensation committees be comprised of independent directors. The Adviser will generally vote againstmanagementeffortstoclassifyaboardandwillgenerallysupportproposalstodeclassifytheboardofdirectors.TheAdviserwillconsiderwithholdingvotesfromdirectorswhohaveattended lessthan75%ofmeetingswithoutavalidreason.WhilegenerallyinfavorofseparatingChairmanandCEOpositions,theAdviserwillreviewthisissueonacase-by-case basis taking into consideration other factors including the company’s corporate governance guidelines andperformance.TheAdviserevaluatesproposalstorestoreorprovideforcumulativevotingonacase-by-casebasisandconsiderssuchfactorsascorporategovernanceprovisionsaswellasrelativeperformance.TheAdvisergenerallywillsupportnon-bindingshareholderproposalstorequireamajorityvotestandardfortheelectionofdirectors;however,iftheseproposalsarebinding,theAdviserwillgivecarefulreviewonacase-by-casebasisofthepotentialramificationsofsuchimplementation.

RatificationofAuditors.TheAdviserwillcloselyscrutinizetheindependence,role,andperformanceofauditors.Onacase-by-case basis, the Adviser will examine proposals relating to non-audit relationships and non-audit fees. TheAdviserwillalsoconsider,onacase-by-casebasis,proposalstorotateauditors,andwillvoteagainsttheratificationofauditorswhenthereisclearandcompellingevidenceofalackofindependence,accountingirregularitiesornegligenceattributabletotheauditors.

Management&DirectorCompensation.A company’sequity-based compensationplan shouldbe in alignmentwiththeshareholders’ long-term interests.TheAdviserbelieves thatexecutivecompensationshouldbedirectly linkedtotheperformanceofthecompany.TheAdviserevaluatesplansonacase-by-casebasisbyconsideringseveralfactorstodeterminewhethertheplanisfairandreasonable.TheAdviserwillgenerallyopposeplansthathavethepotentialtobeexcessivelydilutiveandwillalmostalwaysopposeplans thatarestructured toallowthe repricingofunderwateroptions,orplansthathaveanautomaticsharereplenishment“evergreen”feature.TheAdviserwillgenerallysupportemployee stock option plans in which the purchase price is at least 85% of fairmarket value, andwhen potentialdilutionis10%orless.Severancecompensationarrangementswillbereviewedonacase-by-casebasis,althoughTheAdviserwill generally oppose “golden parachutes” that are considered excessive. TheAdviserwill normally supportproposalsthatrequirethatapercentageofdirectors’compensationbeintheformofcommonstock,asitalignstheirinterestswiththoseoftheshareholders.TheAdviserwillreviewnon-bindingsay-on-payproposalsonacase-by-casebasisandwill generally vote in favorof suchproposalsunless compensation ismisalignedwithperformanceand/orshareholders’ interests, the company has not provided reasonably clear disclosure regarding its compensationpractices,orthereareconcernswiththecompany’sremunerationpractices.

Anti-TakeoverMechanismsandRelatedIssues.TheAdvisergenerallyopposesanti-takeovermeasuressincetheytendtoreduceshareholderrights.However,aswithallproxyissues,theAdviserconductsanindependentreviewofeachanti-takeover proposal. On occasion, the Adviser may vote with management when the investment team hasconcluded that the proposals are not onerous andwould not harmAdvisory Clients’ interests as stockholders. TheAdviser generally supports proposals that require shareholder rights plans (“poison pills”) to be subject to ashareholder vote. The Adviser will closely evaluate shareholder rights’ plans on a case-by-case basis to determinewhether or not they warrant support. The Adviser will generally vote against any proposal to issue stock that hasunequalorsubordinatevotingrights.Inaddition,theAdvisergenerallyopposesanysupermajorityvotingrequirementsaswellasthepaymentof“greenmail.”TheAdviserusuallysupports“fairprice”provisionsandconfidentialvoting.

ChangestoCapitalStructure.TheAdviserrealizesthatacompany’sfinancingdecisionshaveasignificantimpactonitsshareholders, particularlywhen they involve the issuanceof additional sharesof commonorpreferred stockor theassumptionofadditionaldebt.TheAdviserwill carefully review,onacase-by-casebasis,proposalsbycompanies toincreaseauthorizedsharesandthepurposefortheincrease.TheAdviserwillgenerallynotvoteinfavorofdual-classcapital structures to increase thenumberofauthorizedshareswhere thatclassof stockwouldhavesuperiorvotingrights.TheAdviserwillgenerallyvoteinfavoroftheissuanceofpreferredstockincaseswherethecompanyspecifiesthe voting, dividend, conversion and other rights of such stock and the terms of the preferred stock issuance aredeemedreasonable.TheAdviserwillreviewproposalsseekingpreemptiverightsonacase-by-casebasis.

Mergers and Corporate Restructuring.Mergers and acquisitionswill be subject to careful reviewby theAdviser todeterminewhethertheywouldbebeneficialtoshareholders.TheAdviserwillanalyzevariouseconomicandstrategic

A-2

factorsinmakingthefinaldecisiononamergeroracquisition.Corporaterestructuringproposalsarealsosubjecttoathoroughexaminationonacase-by-casebasis.

Environmental, Social andGovernance Issues. As a fiduciary, theAdviser is primarily concernedabout the financialinterests of its advisory clients. The Adviser will generally give management discretion with regard to social,environmental and ethical issues although the Advisermay vote in favor of those issues that are believed to havesignificanteconomicbenefitsor implications.TheAdvisergenerally supports the rightof shareholders tocall specialmeetingsandactbywrittenconsent.However,theAdviserwillreviewsuchshareholderproposalsonacase-by-casebasisinanefforttoensurethatsuchproposalsdonotdisruptthecourseofbusinessorwastecompanyresourcesforthebenefitofasmallminorityofshareholders.

GlobalCorporateGovernance.TheAdvisermanagesinvestmentsincountriesworldwide.ManyofthetenetsdiscussedaboveareappliedtotheAdviser’sproxyvotingdecisionsforinternationalinvestments.However,theAdvisermustbeflexible in these worldwide markets. Principles of good corporate governance may vary by country, given theconstraintsofacountry’slawsandacceptablepracticesinthemarkets.Asaresult,itisonoccasiondifficulttoapplyaconsistentsetofgovernancepracticestoallissuers.Asexperiencedmoneymanagers,theAdviser’sanalystsareskilledin understanding the complexities of the regions in which they specialize and are trained to analyze proxy issuesgermanetotheirregions.

ProxyVotingProcedures

TheAdviserutilizes the InstitutionalShareholderServices Inc. (“ISS”)ProxyExchangevotingandresearchplatformtoaccess proxy vote recommendations, research reports, execute vote instructions, and run proxy voting reports.CustodiansoftheAdviser’sclientaccountsnotify ISSofanypendingproxiesrelatedtosuchaccounts. TheAdviser’sInvestmentTeamreviewscorporatemanagementvoterecommendations, ISSvoterecommendations,andanyotherrelevant documentation tomake a final determination on how to vote for each proposal containedwithin a givenproxy.ThefinalproxyvoteisthensubmittedviatheISSProxyExchangeplatform.AllproxyvotessubmittedontheISSProxyExchangeplatformaresavedandmayberetrievedatalaterdate.

A-3

APPENDIXB

DESCRIPTIONOFSECURITIESRATINGS

Short-TermCreditRatings

AnS&PGlobalRatingsshort-termissuecreditratingisgenerallyassignedtothoseobligationsconsideredshort-termintherelevantmarket.ThefollowingsummarizestheratingcategoriesusedbyS&PGlobalRatingsforshort-termissues:

“A-1”–Ashort-termobligationrated“A-1”isratedinthehighestcategorybyS&PGlobalRatings.Theobligor’scapacitytomeetitsfinancialcommitmentsontheobligationisstrong.Withinthiscategory,certainobligationsaredesignatedwithaplussign(+).Thisindicatesthattheobligor’scapacitytomeetitsfinancialcommitmentontheseobligationsisextremelystrong.

“A-2”–Ashort-termobligationrated“A-2”issomewhatmoresusceptibletotheadverseeffectsofchangesincircumstancesandeconomicconditionsthanobligationsinhigherratingcategories.However,theobligor’scapacitytomeetitsfinancialcommitmentsontheobligationissatisfactory.

“A-3”–Ashort-termobligationrated“A-3”exhibitsadequateprotectionparameters.However,adverseeconomicconditionsorchangingcircumstancesaremorelikelytoweakenanobligor’scapacitytomeetitsfinancialcommitmentsontheobligation.

“B”–Ashort-termobligationrated“B”isregardedasvulnerableandhassignificantspeculativecharacteristics.Theobligorcurrentlyhasthecapacitytomeetitsfinancialcommitments;however,itfacesmajorongoinguncertaintiesthatcouldleadtotheobligor’sinadequatecapacitytomeetitsfinancialcommitments.

“C”–Ashort-termobligationrated“C”iscurrentlyvulnerabletononpaymentandisdependentuponfavorablebusiness,financial,andeconomicconditionsfortheobligortomeetitsfinancialcommitmentsontheobligation.

“D”–Ashort-termobligationrated“D”isindefaultorinbreachofanimputedpromise.Fornon-hybridcapitalinstruments,the“D”ratingcategoryisusedwhenpaymentsonanobligationarenotmadeonthedatedue,unlessS&PGlobalRatingsbelievesthatsuchpaymentswillbemadewithinanystatedgraceperiod.However,anystatedgraceperiodlongerthanfivebusinessdayswillbetreatedasfivebusinessdays.The“D”ratingalsowillbeuseduponthefilingofabankruptcypetitionorthetakingofasimilaractionandwheredefaultonanobligationisavirtualcertainty,forexampleduetoautomaticstayprovisions.Aratingonanobligationisloweredto“D”ifitissubjecttoadistresseddebtrestructuring.

LocalCurrencyandForeignCurrencyRatings–S&PGlobalRatings’issuercreditratingsmakeadistinctionbetweenforeigncurrencyratingsandlocalcurrencyratings.Aforeigncurrencyratingonanissuercandifferfromthelocalcurrencyratingonitwhentheobligorhasadifferentcapacitytomeetitsobligationsdenominatedinitslocalcurrency,versusobligationsdenominatedinaforeigncurrency.

“NR”–Thisindicatesthataratinghasnotbeenassignedorisnolongerassigned.

Moody’sInvestorsService(“Moody’s”)short-termratingsareforward-lookingopinionsoftherelativecreditrisksoffinancialobligationswithanoriginalmaturityofthirteenmonthsorlessandreflectbothonthelikelihoodofadefaultorimpairmentoncontractualfinancialobligationsandtheexpectedfinanciallosssufferedintheeventofdefaultorimpairment.

Moody’semploysthefollowingdesignationstoindicatetherelativerepaymentabilityofratedissuers:

“P-1”–Issuers(orsupportinginstitutions)ratedPrime-1reflectasuperiorabilitytorepayshort-termobligations.

“P-2”–Issuers(orsupportinginstitutions)ratedPrime-2reflectastrongabilitytorepayshort-termobligations.

“P-3”–Issuers(orsupportinginstitutions)ratedPrime-3reflectanacceptableabilitytorepayshort-termobligations.

“NP”–Issuers(orsupportinginstitutions)ratedNotPrimedonotfallwithinanyofthePrimeratingcategories.

“NR”–Isassignedtoanunratedissuer.

B-1

Fitch,Inc./FitchRatingsLtd.(“Fitch”)short-termissuerorobligationratingisbasedinallcasesontheshort-termvulnerabilitytodefaultoftheratedentityandrelatestothecapacitytomeetfinancialobligationsinaccordancewiththedocumentationgoverningtherelevantobligation.Short-termdepositratingsmaybeadjustedforlossseverity.Short-termratingsareassignedtoobligationswhoseinitialmaturityisviewedas“short-term”basedonmarketconvention.1Typically,thismeansupto13monthsforcorporate,sovereign,andstructuredobligationsandupto36monthsforobligationsinU.S.publicfinancemarkets.ThefollowingsummarizestheratingcategoriesusedbyFitchforshort-termobligations:

“F1”–Securitiespossessthehighestshort-termcreditquality.Thisdesignationindicatesthestrongestintrinsiccapacityfortimelypaymentoffinancialcommitments;mayhaveanadded“+”todenoteanyexceptionallystrongcreditfeature.

“F2”–Securitiespossessgoodshort-termcreditquality.Thisdesignationindicatesgoodintrinsiccapacityfortimelypaymentoffinancialcommitments.

“F3”–Securitiespossessfairshort-termcreditquality.Thisdesignationindicatesthattheintrinsiccapacityfortimelypaymentoffinancialcommitmentsisadequate.

“B”–Securitiespossessspeculativeshort-termcreditquality.Thisdesignationindicatesminimalcapacityfortimelypaymentoffinancialcommitments,plusheightenedvulnerabilitytoneartermadversechangesinfinancialandeconomicconditions.

“C”–Securitiespossesshighshort-termdefaultrisk.Defaultisarealpossibility.

“RD”–Restricteddefault.Indicatesanentitythathasdefaultedononeormoreofitsfinancialcommitments,althoughitcontinuestomeetotherfinancialobligations.Typicallyapplicabletoentityratingsonly.

“D”–Default.Indicatesabroad-baseddefaulteventforanentity,orthedefaultofashort-termobligation.

Plus(+)orminus(-)–The“F1”ratingmaybemodifiedbytheadditionofaplus(+)orminus(-)signtoshowtherelativestatuswithinthatmajorratingcategory.

“NR”–Isassignedtoanunratedissueofaratedissuer.

TheDBRSMorningstar®RatingsLimited(“DBRSMorningstar”)short-termdebtratingscaleprovidesanopinionontheriskthatanissuerwillnotmeetitsshort-termfinancialobligationsinatimelymanner.Ratingsarebasedonquantitativeandqualitativeconsiderationsrelevanttotheissuerandtherelativerankingofclaims.TheR-1andR-2ratingcategoriesarefurtherdenotedbythesub-categories“(high)”,“(middle)”,and“(low)”.

ThefollowingsummarizestheratingsusedbyDBRSMorningstarforcommercialpaperandshort-termdebt:

“R-1(high)”-Short-termdebtrated“R-1(high)”isofthehighestcreditquality.Thecapacityforthepaymentofshort-termfinancialobligationsastheyfalldueisexceptionallyhigh.Unlikelytobeadverselyaffectedbyfutureevents.

“R-1(middle)”–Short-termdebtrated“R-1(middle)”isofsuperiorcreditquality.Thecapacityforthepaymentofshort-termfinancialobligationsastheyfalldueisveryhigh.Differsfrom“R-1(high)”byarelativelymodestdegree.Unlikelytobesignificantlyvulnerabletofutureevents.

“R-1(low)”–Short-termdebtrated“R-1(low)”isofgoodcreditquality.Thecapacityforthepaymentofshort-termfinancialobligationsastheyfalldueissubstantial.Overallstrengthisnotasfavorableashigherratingcategories.Maybevulnerabletofutureevents,butqualifyingnegativefactorsareconsideredmanageable.

“R-2(high)”–Short-termdebtrated“R-2(high)”isconsideredtobeattheupperendofadequatecreditquality.Thecapacityforthepaymentofshort-termfinancialobligationsastheyfalldueisacceptable.Maybevulnerabletofutureevents.

“R-2(middle)”–Short-termdebtrated“R-2(middle)”isconsideredtobeofadequatecreditquality.Thecapacityforthepaymentofshort-termfinancialobligationsastheyfalldueisacceptable.Maybevulnerabletofutureeventsormaybeexposedtootherfactorsthatcouldreducecreditquality.

_________________________________1Along-termratingcanalsobeusedtorateanissuewithshortmaturity.

B-2

“R-2(low)”–Short-termdebtrated“R-2(low)”isconsideredtobeatthelowerendofadequatecreditquality.Thecapacityforthepaymentofshort-termfinancialobligationsastheyfalldueisacceptable.Maybevulnerabletofutureevents.Anumberofchallengesarepresentthatcouldaffecttheissuer’sabilitytomeetsuchobligations.

“R-3”–Short-termdebtrated“R-3”isconsideredtobeatthelowestendofadequatecreditquality.Thereisacapacityforthepaymentofshort-termfinancialobligationsastheyfalldue.Maybevulnerabletofutureeventsandthecertaintyofmeetingsuchobligationscouldbeimpactedbyavarietyofdevelopments.

“R-4”–Short-termdebtrated“R-4”isconsideredtobeofspeculativecreditquality.Thecapacityforthepaymentofshort-termfinancialobligationsastheyfalldueisuncertain.

“R-5”–Short-termdebtrated“R-5”isconsideredtobeofhighlyspeculativecreditquality.Thereisahighlevelofuncertaintyastothecapacitytomeetshort-termfinancialobligationsastheyfalldue.

“D”–Short-termdebtrated“D”isassignedwhentheissuerhasfiledunderanyapplicablebankruptcy,insolvencyorwindingupstatuteorthereisafailuretosatisfyanobligationaftertheexhaustionofgraceperiods,adowngradeto“D”mayoccur.DBRSMorningstarmayalsouse“SD”(SelectiveDefault)incaseswhereonlysomesecuritiesareimpacted,suchasthecaseofa“distressedexchange”.

Long-TermCreditRatings

ThefollowingsummarizestheratingsusedbyS&PGlobalRatingsforlong-termissues:

“AAA”–Anobligationrated“AAA”hasthehighestratingassignedbyS&PGlobalRatings.Theobligor’scapacitytomeetitsfinancialcommitmentsontheobligationisextremelystrong.

“AA”–Anobligationrated“AA”differsfromthehighest-ratedobligationsonlytoasmalldegree.Theobligor’scapacitytomeetitsfinancialcommitmentsontheobligationisverystrong.

“A”–Anobligationrated“A”issomewhatmoresusceptibletotheadverseeffectsofchangesincircumstancesandeconomicconditionsthanobligationsinhigher-ratedcategories.However,theobligor’scapacitytomeetitsfinancialcommitmentsontheobligationisstillstrong.

“BBB”–Anobligationrated“BBB”exhibitsadequateprotectionparameters.However,adverseeconomicconditionsorchangingcircumstancesaremorelikelytoweakentheobligor’scapacitytomeetitsfinancialcommitmentsontheobligation.

“BB,”“B,”“CCC,”“CC”and“C”–Obligationsrated“BB,”“B,”“CCC,”“CC”and“C”areregardedashavingsignificantspeculativecharacteristics.“BB”indicatestheleastdegreeofspeculationand“C”thehighest.Whilesuchobligationswilllikelyhavesomequalityandprotectivecharacteristics,thesemaybeoutweighedbylargeuncertaintiesormajorexposuretoadverseconditions.

“BB”–Anobligationrated“BB”islessvulnerabletononpaymentthanotherspeculativeissues.However,itfacesmajorongoinguncertaintiesorexposuretoadversebusiness,financial,oreconomicconditionsthatcouldleadtotheobligor’sinadequatecapacitytomeetitsfinancialcommitmentsontheobligation.

“B”–Anobligationrated“B”ismorevulnerabletononpaymentthanobligationsrated“BB”,buttheobligorcurrentlyhasthecapacitytomeetitsfinancialcommitmentsontheobligation.Adversebusiness,financial,oreconomicconditionswilllikelyimpairtheobligor’scapacityorwillingnesstomeetitsfinancialcommitmentsontheobligation.

“CCC”–Anobligationrated“CCC”iscurrentlyvulnerabletononpaymentandisdependentuponfavorablebusiness,financial,andeconomicconditionsfortheobligortomeetitsfinancialcommitmentsontheobligation.Intheeventofadversebusiness,financial,oreconomicconditions,theobligorisnotlikelytohavethecapacitytomeetitsfinancialcommitmentsontheobligation.

“CC”–Anobligationrated“CC”iscurrentlyhighlyvulnerabletononpayment.The“CC”ratingisusedwhenadefaulthasnotyetoccurredbutS&PGlobalRatingsexpectsdefaulttobeavirtualcertainty,regardlessoftheanticipatedtimetodefault.

“C”–Anobligationrated“C”iscurrentlyhighlyvulnerabletononpayment,andtheobligationisexpectedtohavelowerrelativeseniorityorlowerultimaterecoverycomparedwithobligationsthatareratedhigher.

B-3

“D”–Anobligationrated“D”isindefaultorinbreachofanimputedpromise.Fornon-hybridcapitalinstruments,the“D”ratingcategoryisusedwhenpaymentsonanobligationarenotmadeonthedatedue,unlessS&PGlobalRatingsbelievesthatsuchpaymentswillbemadewithinfivebusinessdaysintheabsenceofastatedgraceperiodorwithintheearlierofthestatedgraceperiodor30calendardays.The“D”ratingalsowillbeuseduponthefilingofabankruptcypetitionorthetakingofsimilaractionandwheredefaultonanobligationisavirtualcertainty,forexampleduetoautomaticstayprovisions.Aratingonanobligationisloweredto“D”ifitissubjecttoadistresseddebtrestructuring

Plus(+)orminus(-)–Theratingsfrom“AA”to“CCC”maybemodifiedbytheadditionofaplus(+)orminus(-)signtoshowrelativestandingwithintheratingcategories.

“NR”–Thisindicatesthataratinghasnotbeenassigned,orisnolongerassigned.

LocalCurrencyandForeignCurrencyRatings-S&PGlobalRatings’issuercreditratingsmakeadistinctionbetweenforeigncurrencyratingsandlocalcurrencyratings.Aforeigncurrencyratingonanissuercandifferfromthelocalcurrencyratingonitwhentheobligorhasadifferentcapacitytomeetitsobligationsdenominatedinitslocalcurrency,versusobligationsdenominatedinaforeigncurrency.

Moody’slong-termratingsareforward-lookingopinionsoftherelativecreditrisksoffinancialobligationswithanoriginalmaturityofoneyearormore.Suchratingsreflectbothonthelikelihoodofdefaultorimpairmentoncontractualfinancialobligationsandtheexpectedfinanciallosssufferedintheeventofdefaultorimpairment.ThefollowingsummarizestheratingsusedbyMoody’sforlong-termdebt:

“Aaa”–Obligationsrated“Aaa”arejudgedtobeofthehighestquality,subjecttothelowestlevelofcreditrisk.

“Aa”–Obligationsrated“Aa”arejudgedtobeofhighqualityandaresubjecttoverylowcreditrisk.

“A”–Obligationsrated“A”arejudgedtobeupper-mediumgradeandaresubjecttolowcreditrisk.

“Baa”–Obligationsrated“Baa”arejudgedtobemedium-gradeandsubjecttomoderatecreditriskandassuchmaypossesscertainspeculativecharacteristics.

“Ba”–Obligationsrated“Ba”arejudgedtobespeculativeandaresubjecttosubstantialcreditrisk.

“B”–Obligationsrated“B”areconsideredspeculativeandaresubjecttohighcreditrisk.

“Caa”–Obligationsrated“Caa”arejudgedtobespeculativeofpoorstandingandaresubjecttoveryhighcreditrisk.

“Ca”–Obligationsrated“Ca”arehighlyspeculativeandarelikelyin,orverynear,default,withsomeprospectofrecoveryofprincipalandinterest.

“C”–Obligationsrated“C”arethelowestratedandaretypicallyindefault,withlittleprospectforrecoveryofprincipalorinterest.

Note:Moody’sappendsnumericalmodifiers1,2,and3toeachgenericratingclassificationfrom“Aa”through“Caa.”Themodifier1indicatesthattheobligationranksinthehigherendofitsgenericratingcategory;themodifier2indicatesamid-rangeranking;andthemodifier3indicatesarankinginthelowerendofthatgenericratingcategory.

“NR”–Isassignedtounratedobligations.

Thefollowingsummarizeslong-termratingsusedbyFitch:

“AAA”–Securitiesconsideredtobeofthehighestcreditquality.“AAA”ratingsdenotethelowestexpectationofcreditrisk.Theyareassignedonlyincasesofexceptionallystrongcapacityforpaymentoffinancialcommitments.Thiscapacityishighlyunlikelytobeadverselyaffectedbyforeseeableevents.

“AA”–Securitiesconsideredtobeofveryhighcreditquality.“AA”ratingsdenoteexpectationsofverylowcreditrisk.Theyindicateverystrongcapacityforpaymentoffinancialcommitments.Thiscapacityisnotsignificantlyvulnerabletoforeseeableevents.

B-4

“A”–Securitiesconsideredtobeofhighcreditquality.“A”ratingsdenoteexpectationsoflowcreditrisk.Thecapacityforpaymentoffinancialcommitmentsisconsideredstrong.Thiscapacitymay,nevertheless,bemorevulnerabletoadversebusinessoreconomicconditionsthanisthecaseforhigherratings.

“BBB”–Securitiesconsideredtobeofgoodcreditquality.“BBB”ratingsindicatethatexpectationsofcreditriskarecurrentlylow.Thecapacityforpaymentoffinancialcommitmentsisconsideredadequate,butadversebusinessoreconomicconditionsaremorelikelytoimpairthiscapacity.

“BB”–Securitiesconsideredtobespeculative.“BB”ratingsindicatethatthereisanelevatedvulnerabilitytocreditrisk,particularlyintheeventofadversechangesinbusinessoreconomicconditionsovertime;however,businessorfinancialalternativesmaybeavailabletoallowfinancialcommitmentstobemet.

“B”–Securitiesconsideredtobehighlyspeculative.“B”ratingsindicatethatmaterialcreditriskispresent

“CCC”–A“CCC”ratingindicatesthatsubstantialcreditriskispresent.

“CC”–A“CC”ratingindicatesveryhighlevelsofcreditrisk.

“C”–A“C”ratingindicatesexceptionallyhighlevelsofcreditrisk.

Defaultedobligationstypicallyarenotassigned“RD”or“D”ratingsbutareinsteadratedinthe“CCC”to“C”ratingcategories,dependingontheirrecoveryprospectsandotherrelevantcharacteristics.Fitchbelievesthatthisapproachbetteralignsobligationsthathavecomparableoverallexpectedlossbutvaryingvulnerabilitytodefaultandloss.

Plus(+)orminus(-)maybeappendedtoaratingtodenoterelativestatuswithinmajorratingcategories.Suchsuffixesarenotaddedtothe“AAA”obligationratingcategory,ortocorporatefinanceobligationratingsinthecategoriesbelow“CCC”.

“NR”–Isassignedtoanunratedissueofaratedissuer.

TheDBRSMorningstarlong-termratingscaleprovidesanopinionontheriskofdefault.Thatis,theriskthatanissuerwillfailtosatisfyitsfinancialobligationsinaccordancewiththetermsunderwhichanobligationhasbeenissued.Ratingsarebasedonquantitativeandqualitativeconsiderationsrelevanttotheissuer,andtherelativerankingofclaims.AllratingcategoriesotherthanAAAandDalsocontainsubcategories“(high)”and“(low)”.Theabsenceofeithera“(high)”or“(low)”designationindicatestheratingisinthemiddleofthecategory.ThefollowingsummarizestheratingsusedbyDBRSMorningstarforlong-termdebt:

“AAA”–Long-termdebtrated“AAA”isofthehighestcreditquality.Thecapacityforthepaymentoffinancialobligationsisexceptionallyhighandunlikelytobeadverselyaffectedbyfutureevents.

“AA”–Long-termdebtrated“AA”isofsuperiorcreditquality.Thecapacityforthepaymentoffinancialobligationsisconsideredhigh.Creditqualitydiffersfrom“AAA”onlytoasmalldegree.Unlikelytobesignificantlyvulnerabletofutureevents.

“A”–Long-termdebtrated“A”isofgoodcreditquality.Thecapacityforthepaymentoffinancialobligationsissubstantial,butoflessercreditqualitythan“AA.”Maybevulnerabletofutureevents,butqualifyingnegativefactorsareconsideredmanageable.

“BBB”–Long-termdebtrated“BBB”isofadequatecreditquality.Thecapacityforthepaymentoffinancialobligationsisconsideredacceptable.Maybevulnerabletofutureevents.

“BB”–Long-termdebtrated“BB”isofspeculative,non-investmentgradecreditquality.Thecapacityforthepaymentoffinancialobligationsisuncertain.Vulnerabletofutureevents.

“B”–Long-termdebtrated“B”isofhighlyspeculativecreditquality.Thereisahighlevelofuncertaintyastothecapacitytomeetfinancialobligations.

“CCC”,“CC”and“C”–Long-termdebtratedinanyofthesecategoriesisofveryhighlyspeculativecreditquality.Indangerofdefaultingonfinancialobligations.Thereislittledifferencebetweenthesethreecategories,although“CC”and“C”ratingsarenormallyappliedtoobligationsthatareseenashighlylikelytodefault,orsubordinatedtoobligationsratedinthe

B-5

“CCC”to“B”range.Obligationsinrespectofwhichdefaulthasnottechnicallytakenplacebutisconsideredinevitablemayberatedinthe“C”category.

“D”–Asecurityrated“D”isassignedwhentheissuerhasfiledunderanyapplicablebankruptcy,insolvencyorwindingupstatuteorthereisafailuretosatisfyanobligationaftertheexhaustionofgraceperiods,adowngradeto“D”mayoccur.DBRSMorningstarmayalsouse“SD”(SelectiveDefault)incaseswhereonlysomesecuritiesareimpacted,suchasthecaseofa“distressedexchange”.

MunicipalNoteRatings

AnS&PGlobalRatingsU.S.municipalnoteratingreflectsS&PGlobalRatings’opinionabouttheliquidityfactorsandmarketaccessrisksuniquetothenotes.Notesdueinthreeyearsorlesswilllikelyreceiveanoterating.Noteswithanoriginalmaturityofmorethanthreeyearswillmostlikelyreceivealong-termdebtrating.Indeterminingwhichtypeofrating,ifany,toassign,S&PGlobalRatings’analysiswillreviewthefollowingconsiderations:

• Amortizationschedule-thelargerthefinalmaturityrelativetoothermaturities,themorelikelyitwillbetreatedasanote;and

• Sourceofpayment-themoredependenttheissueisonthemarketforitsrefinancing,themorelikelyitwillbetreatedasanote.

MunicipalShort-TermNoteratingsymbolsareasfollows:

“SP-1”–Amunicipalnoterated“SP-1”exhibitsastrongcapacitytopayprincipalandinterest.Anissuedeterminedtopossessaverystrongcapacitytopaydebtserviceisgivenaplus(+)designation.

“SP-2”–Amunicipalnoterated“SP-2”exhibitsasatisfactorycapacitytopayprincipalandinterest,withsomevulnerabilitytoadversefinancialandeconomicchangesoverthetermofthenotes.

“SP-3”–Amunicipalnoterated“SP-3”exhibitsaspeculativecapacitytopayprincipalandinterest.

“D”–Thisratingisassigneduponfailuretopaythenotewhendue,completionofadistresseddebtrestructuring,orthefilingofabankruptcypetitionorthetakingofsimilaractionandwheredefaultonanobligationisavirtualcertainty,forexampleduetoautomaticstayprovisions.

Moody’susestheglobalshort-termPrimeratingscale(listedaboveunderShort-TermCreditRatings)forcommercialpaperissuedbyU.S.municipalitiesandnonprofits.Thesecommercialpaperprogramsmaybebackedbyexternallettersofcreditorliquidityfacilities,orbyanissuer’sself-liquidity.

Forothershort-termmunicipalobligations,Moody’susesoneoftwoothershort-termratingscales,theMunicipalInvestmentGrade(“MIG”)andVariableMunicipalInvestmentGrade(“VMIG”)scalesprovidedbelow.

Moody’susestheMIGscaleforU.S.municipalcashflownotes,bondanticipationnotesandcertainothershort-termobligations,whichtypicallymatureinthreeyearsorless.Undercertaincircumstances,Moody’susestheMIGscaleforbondanticipationnoteswithmaturitiesofuptofiveyears.

MIGScale

“MIG-1”–Thisdesignationdenotessuperiorcreditquality.Excellentprotectionisaffordedbyestablishedcashflows,highlyreliableliquiditysupport,ordemonstratedbroad-basedaccesstothemarketforrefinancing.

“MIG-2”–Thisdesignationdenotesstrongcreditquality.Marginsofprotectionareample,althoughnotaslargeasintheprecedinggroup.

“MIG-3”–Thisdesignationdenotesacceptablecreditquality.Liquidityandcash-flowprotectionmaybenarrow,andmarketaccessforrefinancingislikelytobelesswell-established.

“SG”–Thisdesignationdenotesspeculative-gradecreditquality.Debtinstrumentsinthiscategorymaylacksufficientmarginsofprotection.

“NR”–Isassignedtoanunratedobligation.

B-6

Inthecaseofvariableratedemandobligations(“VRDOs”),atwo-componentratingisassigned.Thecomponentsarealong-termratingandashort-termdemandobligationrating.Thelong-termratingaddressestheissuer’sabilitytomeetscheduledprincipalandinterestspayments.Theshort-termdemandobligationratingaddressestheabilityoftheissuerortheliquidityprovidertomakepaymentsassociatedwiththepurchase-price-upondemandfeature(“demandfeature”)oftheVRDO.Theshort-termdemandobligationratingusestheVMIGscale.VMIGratingswithliquiditysupportuseasaninputtheshort-termCounterpartyRiskAssessmentofthesupportprovider,orthelong-termratingoftheunderlyingobligorintheabsenceofthirdpartyliquiditysupport.TransitionsofVMIGratingsofdemandobligationswithconditionalliquiditysupportdifferfromtransitionsonthePrimescaletoreflecttheriskthatexternalliquiditysupportwillterminateiftheissuer’slong-termratingdropsbelowinvestmentgrade.

Moody’stypicallyassignstheVMIGshort-termdemandobligationratingifthefrequencyofthedemandfeatureislessthaneverythreeyears.Ifthefrequencyofthedemandfeatureislessthanthreeyearsbutthepurchasepriceispayableonlywithremarketingproceeds,theshort-termdemandobligationratingis“NR”.

“VMIG-1”–Thisdesignationdenotessuperiorcreditquality.Excellentprotectionisaffordedbythesuperiorshort-termcreditstrengthoftheliquidityproviderandstructuralandlegalprotectionsthatensurethetimelypaymentofpurchasepriceupondemand.

“VMIG-2”–Thisdesignationdenotesstrongcreditquality.Goodprotectionisaffordedbythestrongshort-termcreditstrengthoftheliquidityproviderandstructuralandlegalprotectionsthatensurethetimelypaymentofpurchasepriceupondemand.

“VMIG-3”–Thisdesignationdenotesacceptablecreditquality.Adequateprotectionisaffordedbythesatisfactoryshort-termcreditstrengthoftheliquidityproviderandstructuralandlegalprotectionsthatensurethetimelypaymentofpurchasepriceupondemand.

“SG”–Thisdesignationdenotesspeculative-gradecreditquality.Demandfeaturesratedinthiscategorymaybesupportedbyaliquidityproviderthatdoesnothaveasufficientlystrongshort-termratingormaylackthestructuraland/orlegalprotectionsnecessarytoensurethetimelypaymentofpurchasepriceupondemand.

“NR”–Isassignedtoanunratedobligation.

AboutCreditRatings

AnS&PGlobalRatingsissuecreditratingisaforward-lookingopinionaboutthecreditworthinessofanobligorwithrespecttoaspecificfinancialobligation,aspecificclassoffinancialobligations,oraspecificfinancialprogram(includingratingsonmedium-termnoteprogramsandcommercialpaperprograms).Ittakesintoconsiderationthecreditworthinessofguarantors,insurers,orotherformsofcreditenhancementontheobligationandtakesintoaccountthecurrencyinwhichtheobligationisdenominated.TheopinionreflectsS&PGlobalRatings’viewoftheobligor’scapacityandwillingnesstomeetitsfinancialcommitmentsastheycomedue,andthisopinionmayassessterms,suchascollateralsecurityandsubordination,whichcouldaffectultimatepaymentintheeventofdefault.

RatingsassignedonMoody’sgloballong-termandshort-termratingscalesareforward-lookingopinionsoftherelativecreditrisksoffinancialobligationsissuedbynon-financialcorporates,financialinstitutions,structuredfinancevehicles,projectfinancevehicles,andpublicsectorentities.

Fitch’screditratingsrelatingtoissuersareanopinionontherelativeabilityofanentitytomeetfinancialcommitments,suchasinterest,preferreddividends,repaymentofprincipal,insuranceclaimsorcounterpartyobligations.Fitchcreditratingsareusedbyinvestorsasindicationsofthelikelihoodofreceivingthemoneyowedtotheminaccordancewiththetermsonwhichtheyinvested.Fitch’screditratingscovertheglobalspectrumofcorporate,sovereignfinancial,bank,insurance,andpublicfinanceentities(includingsupranationalandsub-nationalentities)andthesecuritiesorotherobligationstheyissue,aswellasstructuredfinancesecuritiesbackedbyreceivablesorotherfinancialassets.

DBRSMorningstarprovidesindependentcreditratingsservicesforfinancialinstitutions,corporateandsovereignentitiesaswellasinrespectofstructuredfinanceproductsandinstruments.Creditratingsareforward-lookingopinionsaboutcreditriskthatreflectthecreditworthinessofanissuer,ratedentity,securityand/orobligationbasedonDBRSMorningstar’squantitativeandqualitativeanalysisinaccordancewithapplicablemethodologiesandcriteria.TheRatingCommitteeprocessfacilitatesratingdecisions,whichareacollectiveassessmentofDBRSMorningstar’sopinionratherthantheviewofanindividualanalyst.Ratingsarebasedonsufficientinformationthatincorporatesbothglobalandlocalconsiderationsandtheuseofapprovedmethodologies.Theyareindependentofanyactualorperceivedconflictsofinterest.DBRSMorningstar

B-7

creditratingsareformedanddisseminatedbasedonestablishedmethodologies,modelsandcriteria(Methodologies)thatapplytoentitiesandsecuritiesthatwerate,includingcorporatefinanceissuers,financialinstitutions,insurancecompanies,publicfinanceandsovereignentitiesaswellasStructuredFinancetransactions.DBRSMorningstarmethodologiesareperiodicallyreviewedandupdatedbytheteam.

B-8