2. Significant
Accounting Policies (continued):
(e) Expenses:
Pursuant to the
Amended and Restated Advisory Agreement (Advisory Agreement) between the
investment adviser and the trust, the investment
adviser will pay the operating expenses of each fund, excluding taxes, any
brokerage expenses, and extraordinary or non-routine expenses.
Taxes, any brokerage expenses and extraordinary or non-routine expenses that are
specific to a fund are charged directly to
the fund. The Advisory Agreement excludes paying acquired fund fees and
expenses, which are indirect expenses incurred by a fund
through its investments in underlying funds.
(f) Distributions
to Shareholders:
The funds make
distributions from net investment income, if any, monthly and from net realized
capital gains, if any, once a year. To receive a
distribution, you must be a registered shareholder on the record date.
Distributions are paid to shareholders on the payable
date.
(g) Accounting
Estimates:
The accounting
policies described in this report conform to GAAP. Notwithstanding this,
shareholders should understand that in order to follow these
principles, fund management has to make estimates and assumptions that affect
the information reported in the financial
statements. It’s possible that once the results are known, they may turn out to
be different from these estimates and these differences may
be material.
(h) Federal
Income Taxes:
The funds intend to
meet federal income and excise tax requirements for regulated investment
companies under subchapter M of the Internal Revenue
Code, as amended. Accordingly, the funds distribute substantially all of their
net investment income and net realized capital
gains, if any, to their respective shareholders each year. As long as a fund
meets the tax requirements, it is not required to pay
federal income tax.
(i) Indemnification:
Under the funds’
organizational documents, the officers and trustees are indemnified against
certain liabilities arising out of the performance of their
duties to the funds. In addition, in the normal course of business the funds
enter into contracts with their vendors and others
that provide general indemnifications. The funds’ maximum exposure under these
arrangements is unknown as this would involve
future claims that may be made against the funds. However, based on experience,
the funds expect the risk of loss attributable to
these arrangements to be remote.
(j) Regulatory
Update:
Effective January 24,
2023, the SEC adopted rule and form amendments to require mutual funds and ETFs
to transmit concise and visually engaging
streamlined annual and semiannual reports to shareholders that highlight key
information deemed important for retail investors to
assess and monitor their fund investments. Other information, including
financial statements, will no longer appear in a
streamlined shareholder report but must be available online, delivered free of
charge upon request, and filed on a semiannual basis on
Form N-CSR. The rule and form amendments have a compliance date of July 24,
2024. At this time, management is
evaluating the impact of these rule and form amendment changes on the content of
the current shareholder report and the newly created
annual and semiannual streamlined shareholder reports.
3. Risk
Factors:
Investing in the
funds may involve certain risks, as discussed in the funds’ prospectus,
including, but not limited to, those described below. Any of these
risks could cause an investor to lose money.
Market
Risk.
Financial markets rise and fall in response to a variety of factors, sometimes
rapidly and unpredictably. Markets may be impacted by
economic, political, regulatory and other conditions, including economic
sanctions and other government actions. In addition, the
occurrence of global events, such as war, terrorism, environmental disasters,
natural disasters and epidemics, may also negatively
affect the financial markets. As with any investment whose performance is tied
to these markets, the value of an investment in a fund
will fluctuate, which means that an investor could lose money over short or long
periods.
