Under normal circumstances, the Fund invests primarily in a combination of futures contracts on long-term U.S. Treasuries and the S&P 500 or NASDAQ (“Index Futures”), and investments, in money market funds, U.S. Treasury securities, and short-term bonds (“Fixed Income Investments”). The Fund, however, may invest in exchange-traded funds (“ETFs”) and open-end mutual funds that provide exposure to broad-based U.S. equity securities indices (collectively, with Index Futures, “Portfolio Instruments”) rather than in Index Futures. Investments by the Fund in mutual funds or ETFs would be determined at the discretion of the Adviser based on several factors, including: market volatility, liquidity of trading vehicles, and trade execution costs. The percentage of the Fund’s net assets invested in futures contracts may fluctuate over time but under normal circumstances is generally expected to represent less than 10% of the Fund’s net assets based on mark-to-market values. However, the Fund’s notional exposure from derivative instruments may at times equal 100% of the Fund’s net assets. Under normal circumstances, the balance of the Fund’s net assets generally will be invested in Fixed Income Investments in an effort to generate income for the Fund.

In managing the Fund, the Adviser utilizes a tactical, systematic strategy that relies on a proprietary algorithmic model developed by the Adviser that incorporates trend analysis (the “Model”). Trend analysis refers to the concept that the market price of a particular equity securities index (“Index Market Exposure”) will often exhibit autocorrelation. That is, when the index establishes a direction, either up or down, it will tend to maintain that direction for a certain length of time, depending on market conditions. For example, if the price of a given Index Market Exposure was to increase steadily over several weeks, the Model may signal this to be a buying opportunity for that Index Market Exposure, based on the belief that the price for the Index Market Exposure is likely to continue rising. The Model also incorporates additional quantitative trading indicators that include mean-reversion, relative strength, momentum, moving averages, breakouts, and overbought/oversold conditions. Trend analysis is the primary indicator of a buying opportunity for the Fund, while the additional quantitative trading indicators confirm the existence of a buying opportunity. The additional quantitative trading indicators may be applied at the discretion of Adviser based on its assessment of the prevailing market environment.

The Model generates daily signals (“buy” or “no buy”) for a particular Index Market Exposure indicating whether or not, taking into account the existence of a market trending upward or downward on average, a trading opportunity has been identified. The Fund generally exits positions when the Model indicates that the prevailing trend for an Index Market Exposure is likely to reverse, or the volatility of the Index is elevated. When the Model’s signals prompt the Fund to divest, in whole or in part, from Portfolio Instruments, the Fund will look to other signals, such as mean-reversion, to determine if alternate equity investments are warranted. If no such equity signals trigger, the Fund will evaluate the Treasury bond market to determine if trends exist in that market. If so, the Fund may take long, or inverse positions in Treasury bond instruments. If the Treasury market is not deemed appropriate for investment, the Fund will invest in money market funds, ultra-short term bond funds or comparable investments (collectively, “Defensive Investments”) in an effort to preserve capital. The Fund typically invests in Defensive Investments, sometimes for extended periods of time, until the Model indicates “buy” signals in the equity markets.

Trades involving Portfolio Instruments may, at times, be short-term in nature depending on prevailing market conditions, which may involve active and frequent trading and high portfolio turnover. However, certain trades could span longer periods of time, depending on market conditions. At times, the Tactical Fund’s investments may be indirectly focused on one or more sectors or areas of the economy.