Braddock Multi-Strategy Income Fund

Class A Shares (BDKAX )

Class C Shares (BDKCX)

Institutional Class Shares (BDKNX)

PROSPECTUS

December 31, 2015

The Securities and Exchange Commission (“SEC”) has not approved or disapproved these securities or passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense.

Braddock Multi-Strategy Income Fund

A series of Investment Managers Series Trust (the “Trust”)

Table of Contents

SUMMARY SECTION	3
MORE ABOUT THE FUND’S INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND RISKS	12
MANAGEMENT OF THE FUND	19
DISTRIBUTION AND SHAREHOLDER SERVICE PLAN	21
PURCHASE OF SHARES	22
FEDERAL INCOME TAX CONSEQUENCES	38
FINANCIAL HIGHLIGHTS	40
APPENDIX A – DESCRIPTION OF SECURITIES RATINGS	41
FOR MORE INFORMATION	47

This Prospectus sets forth basic information about the Fund that you should know before investing. It should be read and retained for future reference.

The date of this Prospectus is December 31, 2015.

SUMMARY SECTION

Investment Objective

The investment objective of the Braddock Multi-Strategy Income Fund (the “Fund”) is to seek total return with an emphasis on providing current income.

Fees and Expenses of the Fund

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in A Shares of the Fund. More information about these fees and other discounts is available from your financial professional and in the section titled “Reduced Sales Charges – A Shares” on page 35 of this Prospectus.

Shareholder Fees (fees paid directly from your investment)		Class A Shares		Class C Shares		Institutional Class Shares
Maximum sales charge (load) imposed on purchases (as a percentage of offering price)		5.75%⁽¹⁾		None		None
Maximum deferred sales charge (load) (as a percentage of the lesser of the value redeemed or the amount invested)		1.00%⁽²⁾		1.00%⁽²⁾		None
Wire fee		$20		$20		$20
Overnight check delivery fee for weekday		$25		$25		$25
Retirement account fees (annual maintenance fee)		$15		$15		$15

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management fees		1.25%		1.25%		1.25%
Distribution and service (Rule 12b-1) fees		0.25%		1.00%		None
Other expenses		0.59%		0.59%		0.59%
Shareholder service fee	0.15%		0.15%		0.15%
All Other Expenses ⁽³⁾	0.44%		0.44%		0.44%
Acquired fund fees and expenses ⁽³⁾		0.01%		0.01%		0.01%
Total annual fund operating expenses		2.10%		2.85%		1.85%
Fees waiver and/or expenses reimbursements ⁽⁴⁾		(0.34%)		(0.34%)		(0.34%)
Total annual fund operating expenses after fee waiver and/or expense reimbursements ⁽⁴⁾		1.76%		2.51%		1.51%

¹	No initial sales charge is applied to purchases of $1 million or more.

A contingent deferred sales charge (“CDSC”) of 1.00% will be charged on certain Class A Share purchases of $1 million or more that are redeemed in whole or in part within 12 months of the date of purchase. A CDSC of 1.00% will be charged on Class C Share purchases that are redeemed in whole or in part within 12 months of purchase.

³	“Other expenses” and “acquired fund fees and expenses” have been estimated for the current fiscal year.

⁴

The Fund’s advisor has contractually agreed to waive its fees and/or pay for operating expenses of the Fund to ensure that total annual fund operating expenses (excluding, as applicable, taxes, leverage interest, brokerage commissions, acquired fund fees and expenses (as determined in accordance with Form N-1A), expenses incurred in connection with any merger or reorganization and extraordinary expenses such as litigation expenses) do not exceed 1.75%, 2.50% and 1.50% of the average daily net assets of the A Shares, C Shares and Institutional Shares, respectively. This agreement is in effect until April 30, 2017, and may be terminated before that date only by the Trust’s Board of Trustees. The Fund’s advisor is permitted to seek reimbursement from the Fund for a period ending three full fiscal years after the date of the waiver or payment.

Example

This example is intended to help you compare the costs of investing in the Fund with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

	One Year	Three Years
A Shares	$744	$1,164
C Shares	$357	$851
Institutional Shares	$154	$549

You would pay the following expenses if you did not redeem your shares:

	One Year	Three Years
C Shares	$254	$851

Portfolio Turnover

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. The Fund is newly created and, as a result, does not yet have a portfolio turnover rate.

Principal Investment Strategies

Under normal market conditions, the Fund will pursue its investment strategy by investing primarily in asset-backed debt securities. Asset-backed debt securities represent interests in “pools” of mortgages or other assets, including securities backed by assets such as residential and commercial real estate, corporate debt, credit card and business receivables, student loans, personal and consumer loans and automobile loans. The Fund’s allocation of its assets among various asset classes within the asset-backed debt securities market will depend on the views of Braddock Financial LLC (the “Sub-advisor”), the Fund’s sub-advisor, as to the best value currently available in the market place. In selecting investments, the Sub-advisor will consider, among other things, maturity, yield and ratings information and opportunities for price appreciation and interest income.

Although the Fund’s allocation may be among various assets classes in the asset-backed debt securities market, the Fund’s investments are expected to focus on mortgage-related securities. Mortgage-related securities are backed by or provide exposure to mortgages, including private and government mortgage-backed securities. In particular, the Fund intends to focus its investment on residential mortgage backed securities (“RMBS”). Residential mortgage loans, a type of RMBS collateral, are generally classified into three categories based on the risk profile of the borrower and the property: (i) Prime, (ii) Alternative-A (“Alt-A”), and (iii) Subprime. Prime residential mortgage loans are extended to borrowers who, in the opinion of the lender, represent a relatively low risk profile through a strong credit history. Subprime loans are made to borrowers who the lender believes display poor credit histories and other characteristics that correlate with a higher default risk. Alt-A loans are made to borrowers whose risk profile falls between Prime and Subprime. When selecting RMBS investments for the Fund, the Sub-advisor intends to focus on RMBS that are collateralized by pools of Prime or Alt-A mortgages and that are seasoned (i.e., have a history of timely payments). Mortgage loans may be either “agency” (i.e. government) or “non-agency” (i.e., private). Agency loans have balances that fall within the limits set by the Federal Housing Finance Agency (“FHFA”) and qualify as collateral for securities that are issued by the Government National Mortgage Association (“Ginnie Mae”), the Federal National Mortgage Association (“Fannie Mae”) or the Federal Home Loan Mortgage Corporation (“Freddie Mac”). Non-agency loans have balances that may or may not fall within the limits set by FHFA and do not qualify as collateral for securities that are issued by Ginnie Mae, Fannie Mae or Freddie Mac, and are made by private companies rather than government sponsored enterprises (sometimes referred to as “private label paper”). Additional RMBS products include trusts backed by non-performing or re-performing mortgage loans and loans secured by single family rental properties. Re-performing residential mortgage loans, a type of RMBS collateral, are seasoned loans where the borrower was delinquent in payment and later resumed making payments on the mortgage. The borrower’s mortgage payment terms may or may not have been adjusted during their delinquency. Non-performing and re-performing mortgage loans derive their value from the sale of the underlying residential property and potentially from modified mortgage payments.

The Fund may also invest up to 15% of its net assets in illiquid securities, which may include certain collateralized loan obligations (“CLOs”). A CLO is a type of asset-backed debt security typically collateralized predominately by pools of domestic and foreign senior secured corporate loans, including loans that may be rated below investment grade. Unsecured and subordinate securities may be included, but are typically limited to 5% to 15% of the pool. A CLO is an obligation of a trust. The trust creates a series of cash flow bonds, called tranches, which vary in risk and yield. The riskier portion is the residual, or “equity,” tranche, which bears some or all of the risk of default by the loans in the trust. Typically, CLOs are privately offered and sold, and thus are not registered under the securities laws. As a result, the Fund may in certain circumstances characterize its investments in CLOs as illiquid.

In addition, the Fund may enter into repurchase agreements and reverse repurchase agreements. The Fund may enter into reverse repurchase agreements, which are considered to be borrowings, to seek to enhance returns. The Fund may borrow to the maximum extent permitted by applicable law, which generally means that the Fund may borrow up to one-third of its total assets.

In selecting securities for investment, the Sub-advisor favors investments that it believes are undervalued and will produce consistent returns in most interest rate environments. The Sub-advisor selects those securities for investment that it believes offer the best risk/return opportunity based on its analyses of a variety of factors including collateral quality, duration, structure, excess interest, credit support, potential for greater upside and less downside capture, liquidity, and market conditions. The Sub-advisor attempts to diversify the Fund’s investments geographically (i.e. by the location of the underlying mortgage properties) and, with respect to asset backed debt securities, among the loan servicing institutions. While there are no restrictions on the maturity of individual securities, the securities in the Fund's portfolio are expected to have an average duration of less than five years. The Fund does not limit its investments to a particular credit quality but expects to invest primarily in securities rated non-investment grade (also referred to as “junk bonds”) by a nationally recognized statistical rating organization (“NRSRO”), or not rated. A NRSRO is a credit rating agency that rates the creditworthiness of a company or a financial product, such as a debt security or money market instrument.

The Sub-advisor employs a multi-level approach to asset selection and portfolio management. This method applies a set of analytical techniques and criteria, including evaluating each security on an individual basis and as a component of the Fund’s overall portfolio. The investment approach is comprised of 1) market analysis, 2) credit selection and 3) risk management. Market analysis concentrates on macro aspects of the RMBS and asset backed security sectors such as interest rates, liquidity, volatility, and other market metrics. Credit selection concentrates on the underlying loan level attributes of the target investments and how changes in loan level performance may affect each security’s cash flows, credit risk, and credit ratings. Risk management is a surveillance program utilizing scenario tests and time horizon analysis at both the portfolio and individual security level.

From time to time, the Sub-advisor may tactically utilize the following securities or instruments for hedging purposes, to attempt to enhance the portfolio’s return or to mitigate against certain risks, principally credit and interest rate risk: U.S. Treasury securities; investment companies, including exchange-traded funds (“ETFs”), that invest in fixed income securities; interest rate, total return, credit default, and synthetic swaps; interest rate and bond futures; and credit spread and interest rate options.

Principal Risks of Investing

Risk is inherent in all investing. A summary description of certain principal risks of investing in the Fund is set forth below. Before you decide whether to invest in the Fund, carefully consider these risk factors associated with investing in the Fund, which may cause investors to lose money. There can be no assurance that the Fund will achieve its investment objective.

Management and Strategy Risk: The value of your investment depends on the judgment of the Sub-advisor about the quality, relative yield, value or market trends affecting a particular security, issuer, sector or region, which may prove to be incorrect. Investment strategies employed by the Sub-advisor in selecting investments for the Fund may not result in an increase in the value of your investment or in overall performance equal to that of other investments.

·	Market Risk: An investment in the Fund is subject to investment risk, including the possible loss of the entire principal amount that you invest.

Collateralized Loan Obligations Risk: The risks of an investment in a CLO largely depend on the type of underlying collateral securities and the tranche in which the Fund invests. While CLOs are subject to the typical risks associated with debt instruments (i.e., interest rate risk and credit risk), the Fund is also subject to asset manager, legal and regulatory, limited recourse, liquidity, redemption, and reinvestment risks as a result of the structure of CLOs in which the Fund may invest. A CLO’s performance is linked to the expertise of the CLO manager and its ability to manage the CLO portfolio. Changes in the regulation of CLOs may adversely affect the value of the CLO investments held by the Fund and the ability of the Fund to execute its investment strategy. CLO debt is payable solely from the proceeds of the CLO’s underlying assets and, therefore, if the income from the underlying loans is insufficient to make payments on the CLO debt, no other assets will be available for payment. The CLO manager may not find suitable assets in which to invest and the CLO manager’s opportunities to invest may be limited. CLO debt securities may be subject to redemption and the timing of redemptions may adversely affect the returns on CLO debt. The redemption periods and terms will depend upon the CLO. Optional redemptions, if decided upon, may be directed by a majority of the holders of the subordinated notes. A redemption may also occur at the written direction of the CLO manager to the issuer and the trustee of the CLO. For example, certain tranches of CLO debt may be redeemed if the CLO manager is unable to identify assets suitable for investment during the period when it has the ability to reinvest the principal proceeds from the sale of assets, scheduled redemptions and prepayment in additional assets. Additionally, holders of subordinated CLO debt may cause the redemption of senior CLO debt.

Sector Focus Risk: Sector focus risk results from maintaining exposure to the performance of the asset-backed debt securities, including mortgage-related securities, in which the Fund invests. The focus of the Fund’s portfolio on a specific sector, such as in mortgage-related securities, may present more risks than if the portfolio were broadly diversified over numerous sectors. At times the performance of the Fund’s investments may lag the performance of other sectors or the broader market as a whole. Such underperformance may continue for extended periods of time.

Real Estate Market Risk: The real estate sector may suffer and property values may fall due to increasing vacancies or declining rents resulting from unanticipated economic, legal, employment, cultural or technological developments, fluctuations in rent schedules and operating expenses, unfavorable changes in applicable taxes, governmental regulations, zoning, building, environmental and other laws and interest rates, operating or development expenses, unexpected increases in the cost of energy and environmental factors and lack of available financing. The value of real estate company securities also may decline because of the failure of borrowers to pay their loans and poor property management.

Credit Risk: If an obligor (such as the issuer itself or a party offering credit enhancement) for a security held by the Fund fails to pay amounts due when required by the terms of the security, otherwise defaults, is perceived to be less creditworthy, becomes insolvent or files for bankruptcy, a security’s credit rating is downgraded or the credit quality or value of any underlying assets declines, the value of the Fund’s investment could decline. If the Fund enters into financial contracts (such as certain derivatives, repurchase agreements, reverse repurchase agreements, and when-issued, delayed delivery and forward commitment transactions), the Fund will be subject to the credit risk presented by the counterparties.

Interest Rate Risk: Interest rate risk is the possibility that your investment may go down in value when interest rates rise, because when interest rates rise, the prices of bonds and fixed rate loans fall. For example, the price of a security with a five-year duration would be expected to drop by approximately 5% in response to a 1% increase in interest rates. Generally, the longer the maturity of a bond or fixed rate loan, the more sensitive it is to this risk. Falling interest rates also create the potential for a decline in the Fund’s income. These risks are greater during periods of rising inflation.

Derivatives Risk: The Fund may use derivative instruments, which derive their value from the value of an underlying security, currency, or index. Derivative instruments involve risks different from direct investments in the underlying assets, including: imperfect correlation between the value of the derivative instrument and the underlying assets; risks of default by the other party to the derivative instrument; risks that the transactions may result in losses of all or in excess of any gain in the portfolio positions; risks that the transactions may result in income that is not exempt from federal income tax; and risks that the transactions may not be liquid.

Options Risk: Purchasing and writing options are highly specialized activities and entail greater than ordinary investment risks. The Fund may not fully benefit from or may lose money on an option if changes in its value do not correspond as anticipated to changes in the value of the underlying securities. If the Fund is not able to sell an option held in its portfolio, it would have to exercise the option to realize any profit and would incur transaction costs upon the purchase or sale of the underlying securities. Ownership of options involved the payment of premiums, which may adversely affect the Fund’s performance. To the extent that the Fund invests in over-the-counter options, the Fund may be exposed to counterparty risk.

Swaps Risk: The Fund may enter into interest rate, total return, credit default, and synthetic swap agreements, or “swaps.” Swaps can involve greater risks than direct investment in securities, because swaps may be leveraged, are subject to the risk of that the counterparty may default on the obligation, and may be difficult to value. Swaps may also be considered illiquid.

High Yield (“Junk”) Bond Risk: High yield bonds are debt securities rated below investment grade (often called “junk bonds”). Junk bonds are speculative, involve greater risks of default, downgrade, or price declines and are more volatile and tend to be less liquid than investment-grade securities. Companies issuing high yield bonds are less financially strong, are more likely to encounter financial difficulties, and are more vulnerable to adverse market events and negative sentiments than companies with higher credit ratings.

Repurchase Agreement Risk: Repurchase agreements may be viewed as loans made by the Fund which are collateralized by the securities subject to repurchase. The Fund’s investment in repurchase agreements may be subject to market and credit risk with respect to the collateral securing the repurchase agreements. If the Fund's counterparty should default on its obligations and the Fund is delayed or prevented from recovering the collateral, or if the value of the collateral is insufficient, the Fund may realize a loss.

Exchange Traded Funds ("ETFs") Risk: Investing in an ETF will provide the Fund with exposure to the securities comprising the index on which the ETF is based and will expose the Fund to risks similar to those of investing directly in those securities. Shares of ETFs typically trade on securities exchanges and may at times trade at a premium or discount to their net asset values. In addition, an ETF may not replicate exactly the performance of the benchmark index it seeks to track for a number of reasons, including transaction costs incurred by the ETF, the temporary unavailability of certain index securities in the secondary market or discrepancies between the ETF and the index with respect to the weighting of securities or the number of securities held. Investing in ETFs, which are investment companies, may involve duplication of advisory fees and certain other expenses. The Fund will pay brokerage commissions in connection with the purchase and sale of shares of ETFs.

Liquidity Risk: The Fund may not be able to sell some or all of the investments that it holds due to a lack of demand in the marketplace or other factors such as market turmoil, or if the Fund is forced to sell an illiquid asset to meet redemption requests or other cash needs it may only be able to sell those investments at a loss. Illiquid assets may also be difficult to value.

Valuation Risk: The sales price the Fund could receive for any particular portfolio investment may differ from the Fund’s valuation of the investment, particularly for securities that trade in thin or volatile markets or that are valued by the Fund using a fair value methodology. Investors who purchase or redeem Fund shares on days when the Fund is holding fair-valued securities may receive fewer or more shares or lower or higher redemption proceeds than they would have received if the Fund had not fair-valued the security or had used a different valuation methodology.

Leverage Risk: The Fund may be leveraged as a result of borrowing or other investment techniques. Leverage creates exposure to gains and losses in a greater amount than the dollar amount made in an investment. Leverage can magnify the effects of changes in the value of the Fund’s investments and make the Fund more volatile. Relatively small market movements may result in large changes in the value of a leveraged investment. The potential loss on such leveraged investments may be substantial relative to the initial investment therein.

Non-Diversification Risk: The Fund is classified as “non-diversified”, which means the Fund may invest a larger percentage of its assets in the securities of a smaller number of issuers than a diversified fund. Investment in securities of a limited number of issuers exposes the Fund to greater market risk and potential losses than if its assets were diversified among the securities of a greater number of issuers.

Performance

The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund’s performance from year to year. The bar chart shows changes in the performance of the Fund’s Institutional Class Shares from calendar year to calendar year. The table shows the average annual total returns for each class of the Fund over time and compares these returns to the returns of the Barclays Aggregate Bond Index and the Bank of America Merrill Lynch U.S. Cash Pay U.S. High Yield Index, each a broad-based measure of market performance that has characteristics relevant to the Fund’s investment strategies. Updated performance information is available at the Fund’s website, www.libertystreetfunds.com. The Fund’s past performance, before and after taxes, is not necessarily an indication of how the Fund will perform in the future.

The Fund commenced investment operations on December 31, 2015, after the conversion of a limited partnership account, Braddock Structured Opportunities Fund Series A, L.P., which commenced operations on July 31, 2009, (the "Predecessor Account"), into shares of the Fund. Information in the bar chart and the performance table below prior to December 31, 2015 are for the Predecessor Account. The Fund’s objectives, policies, guidelines and restrictions are, in all material respects, equivalent to those of the Predecessor Account. The Predecessor Account was not registered under the Investment Company Act of 1940, as amended (the “1940 Act”) and therefore was not subject to certain restrictions imposed by the 1940 Act on registered investment companies and by the Internal Revenue Code of 1986 on regulated investment companies. If the Predecessor Account had been registered under the 1940 Act, the Predecessor Account's performance may have been adversely affected. Braddock Financial LLC (formerly, "Braddock Financial Corporation") was the investment adviser to the Predecessor Account.

Calendar-Year Total Return (before taxes) – Institutional Class Shares

For each calendar year at NAV

Institutional Class Shares
Highest Calendar Quarter Return at NAV	9.65%	Quarter Ended 9/30/2012
Lowest Calendar Quarter Return at NAV	(0.34)%	Quarter Ended 12/31/2011

Average Annual Total Returns (for the Periods Ended December 31, 2014)

	1 Year	3 Years	5 Years	Since Inception	Inception Date/From
Institutional Class — Return Before Taxes	5.42%	13.47%	13.27%	13.00%	7/31/2009
Institutional Class — Return After Taxes on Distributions*	5.42%	13.47%	13.27%	13.00%	7/31/2009
Institutional Class — Return After Taxes on Distributions and Sale of Fund Shares*	3.07%	10.56%	10.65%	10.48%	7/31/2009
Class A Shares — Return Before Taxes	5.16%	13.19%	12.98%	12.72%	7/31/2009
Class C Shares — Return Before Taxes	4.37%	12.34%	12.14%	11.88%	7/31/2009
Barclays Aggregate Bond Index (reflects no deduction for fees, expenses or taxes)	5.97%	2.66%	4.45%	4.54%	7/31/2009
Bank of America Merrill Lynch U.S. Cash Pay U.S. High Yield Index (reflects no deduction for fees, expenses or taxes)	2.45%	8.29%	8.87%	10.85%	7/31/2009

* After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After–tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns are shown for Institutional Class shares and after-tax returns for classes other than Institutional Class shares will vary from returns shown for Institutional Class shares.

Investment Advisors and the Sub-advisor

Liberty Street Advisors, Inc. is the Fund’s investment advisor (the “Advisor”). Braddock Financial LLC is the Fund’s Sub-advisor (“Braddock” or the “Sub-advisor”).

Portfolio Managers

Garrett Tripp, CFA and Toby Giordano, CFA are the portfolio managers of the Fund, and are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio.

Purchase and Sale of Fund Shares

To purchase shares of the Fund, you must invest at least the minimum amount.

Minimum Investments	To Open Your Account	To Add to Your Account
A Shares and C Shares*
Standard Accounts	$2,500	$100
Traditional and Roth IRA Accounts	$2,500	$100
Accounts with Systematic Investment Plans	$2,500	$100
Qualified Retirement Plans	$2,500	$100
Institutional Shares
All Accounts	$1,000,000	$100,000

Fund shares are redeemable on any business day the New York Stock Exchange (the “NYSE”) is open for business by written request or by telephone.

* The maximum investment amount for the C Share is $999,999.

Tax Information

The Fund’s distributions are generally taxable, and will ordinarily be taxed as ordinary income, qualified dividend income or capital gains, unless you are investing through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Shareholders investing through such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.

Payments to Broker-Dealers and Other Financial Intermediaries

If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies (including the Advisor) may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary to recommend the Fund over another investment. Ask your financial adviser or visit your financial intermediary’s website for more information.

MORE ABOUT THE FUND’S INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND RISKS

Investment Objective

The investment objective of the Braddock Multi-Strategy Income Fund (the “Fund”) is to seek total return with an emphasis on providing current income.

The Fund’s investment objective is not fundamental and may be changed by the Board of Trustees of the Fund without shareholder approval, upon at least 60 days’ prior written notice to shareholders.

Principal Investment Strategies

Under normal market conditions, the Fund will pursue its investment strategy by investing primarily in asset-backed debt securities. Asset-backed debt securities represent interests in “pools” of mortgages or other assets, including securities backed by assets such as residential and commercial real estate, corporate debt, credit card and business receivables, student loans, personal and consumer loans and automobile loans. The Fund’s allocation of its assets among various asset classes within the asset-backed debt-securities market will depend on the views of Braddock Financial LLC (the “Sub-advisor”), the Fund’s sub-advisor, as to the best value currently available in the market place. In selecting investments, the Sub-advisor will consider, among other things, maturity, yield and ratings information and opportunities for price appreciation and interest income.

Although the Fund’s allocation may be among various assets classes in the asset-backed debt securities market, the Fund’s investments are expected to focus on mortgage-related securities. Mortgage-related securities are backed by or provide exposure to mortgages, including private, government, commercial and residential mortgage-backed securities. In particular, the Fund intends to focus its investment on residential mortgage backed securities (“RMBS”). Residential mortgage loans, a type of RMBS collateral, are generally classified into three categories based on the risk profile of the borrower and the property: (i) Prime, (ii) Alternative-A (“Alt-A”), and (iii) Subprime. Prime residential mortgage loans are extended to borrowers who, in the opinion of the lender, represent a relatively low risk profile through a strong credit history. Subprime loans are made to borrowers who the lender believes display poor credit histories and other characteristics that correlate with a higher default risk. Alt-A loans are made to borrowers whose risk profile falls between Prime and Subprime. When selecting RMBS investments for the Fund, the Sub-advisor intends to focus on RMBS that are collateralized by pools of Prime or Alt-A mortgages and that are seasoned (i.e., have a history of timely payments). Mortgage loans may be either “agency” (i.e. government) or “non-agency”(i.e. private). Agency loans have balances that fall within the limits set by the Federal Housing Finance Agency (“FHFA”) and qualify as collateral for securities that are issued by the Government National Mortgage Association (“Ginnie Mae”), the Federal National Mortgage Association (“Fannie Mae”) or the Federal Home Loan Mortgage Corporation (“Freddie Mac”). Non-agency loans have balances that may or may not fall within the limits set by FHFA and do not qualify as collateral for securities that are issued by Ginnie Mae, Fannie Mae or Freddie Mac, and are made by private companies rather than government sponsored enterprises (sometimes referred to as “private label paper”). Additional RMBS products include trusts backed by non-performing or re-performing mortgage loans and loans secured by single family rental properties. Re-performing residential mortgage loans, a type of RMBS collateral, are seasoned loans where the borrower was delinquent in payment and later resumed making payments on the mortgage. The borrower’s mortgage payment terms may or may not have been adjusted during their delinquency. Non-performing and re-performing mortgage loans derive their value from the sale of the underlying residential property and potentially from modified mortgage payments.

The Fund may also invest up to 15% of its net assets in illiquid securities, which may include certain collateralized loan obligations (“CLOs”). A CLO is a type of asset-backed debt security typically collateralized predominately by a pool of domestic and foreign senior secured loans, including loans that may be rated below investment grade. Unsecured and subordinate securities may be included, but are typically limited to 5% to 15% of the pool. A CLO is an obligation of a trust. The trust creates a series of cash flow bonds, called tranches, which vary in risk and yield. The riskier portion is the residual, or “equity,” tranche, which bears some or all of the risk of default by the loans in the trust. Typically, CLOs are privately offered and sold, and thus are not registered under the securities laws. As a result, the Fund may in certain circumstances characterize its investments in CLOs as illiquid. In assessing liquidity, the Fund will consider various factors including whether the CLO may be purchased and sold in Rule 144A transactions and whether an active dealer market exists.

In addition, to seek to enhance the portfolio’s return, the Fund may enter into repurchase agreements and reverse repurchase agreements. A repurchase agreement is a transaction in which the Fund purchases securities or other obligations from a bank or securities dealer and simultaneously commits to resell them to a counterparty at an agreed-upon date or upon demand and at a price reflecting a market rate of interest unrelated to the coupon rate or maturity of the purchased obligations. A reverse repurchase agreement is the sale by the Fund of a debt obligation to a party for a specified price, with the simultaneous agreement by the Fund to repurchase that debt obligation from that party on a future date at an agreed upon price. Similar to borrowing, reverse repurchase agreements provide the Fund with cash for investment purposes. The Fund may borrow to the maximum extent permitted by applicable law, which generally means that the Fund may borrow up to one-third of its total assets.

In selecting securities for investment, the Sub-advisor favors investments that it believes are undervalued and will produce consistent returns in most interest rate environments. The Sub-advisor intends to apply a disciplined set of analytical techniques and criteria, including evaluating each security on an individual basis and as a complement of the overall portfolio. The Sub-advisor selects those securities for investment that it believes offer the best risk/return opportunity based on its analyses of a variety of factors including collateral quality, duration, structure, excess interest, credit support, potential for greater upside and less downside capture, liquidity, and market conditions. The Sub-advisor attempts to diversify the Fund’s investments geographically (i.e. by the location of the underlying mortgage properties) and, with respect to asset-backed debt securities, among the loan servicing institutions. While there are no restrictions on the maturity of individual securities, the securities in the Fund's portfolio are expected to have an average duration of less than five years. The Fund does not limit its investments to a particular credit quality but expects to invest primarily in securities rated non-investment grade (also referred to as “junk bonds”) by a nationally recognized statistical rating organization (“NRSRO”), or not rated. A NRSRO is a credit rating agency that rates the creditworthiness of a company or a financial product, such as a debt security or a money market instrument.

The Sub-advisor employs a multi-level approach to asset selection and portfolio management. This method applies a set of analytical techniques and criteria, including evaluating each security on an individual basis and as a component of the Fund’s overall portfolio. The investment approach is comprised of 1) market analysis 2) credit selection and 3) risk management. Market analysis concentrates on macro aspects of the RMBS and asset backed security sectors such as interest rates, liquidity, volatility, and other market metrics. Credit selection concentrates on the underlying loan level attributes of the target investments and how changes in loan level performance may affect each security’s cash flows, credit risk, and credit ratings. Risk management is a surveillance program utilizing scenario tests and time horizon analysis at both the portfolio and individual security level.

From time to time, the Sub-advisor may tactically utilize the following securities or instruments for hedging purposes, to attempt to enhance the portfolio’s return or to mitigate against certain risks, principally credit and interest rate risk: U.S. Treasury securities; investment companies, including exchange-traded funds (“ETFs”) that invest in fixed income securities; interest rate, total return, credit default, and synthetic swaps; interest rate and bond futures; and credit spread and interest rate options.

The Sub-advisor generally sells the Fund’s investments if the Sub-advisor determines that the characteristics that resulted in the original purchase decision have changed materially, the investment is no longer earning a return commensurate with its risk, the Sub-advisor identifies other investments with more attractive valuations and return characteristics, or the Fund requires cash to meet redemption requests.

Cash and Temporary Defensive Positions. The Fund generally holds a portion of its assets in cash or high quality, short-term debt obligations and money market instruments for reserves to cover redemptions and unanticipated expenses. In addition, when the risk/reward profile for portfolio securities appears unfavorable, or when the Sub-advisor believes price valuations are not attractive, the Sub-advisor may, but is not required to, allow the Fund’s cash position to increase rather than purchase securities that fail to meet its investment criteria. In addition, at times the Sub-advisor may, but is not required to, respond to adverse market, economic, political or other considerations by causing the Fund’s cash position to increase, and may invest up to 100% of the Fund’s assets in high quality, short-term debt securities or other defensive investments for temporary defensive purposes. During temporary defensive periods, the Fund may not be able to achieve its investment objective and, instead, may focus on preserving its assets or mitigating risks. To the extent the Fund uses a money market fund for investment of cash, there will be some duplication of expenses because the Fund would bear its pro rata portion of such money market fund’s advisory fees and operational expenses.

Principal Risks of Investing

Market Risk: The market price of a security or instrument may decline, sometimes rapidly or unpredictably, due to general market conditions that are not specifically related to a particular company, such as real or perceived adverse economic or political conditions throughout the world, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of a security or instrument also may decline because of factors that affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry.

Mortgage-Backed and Asset-Backed Debt Securities Risk: Mortgage-backed securities are subject to “prepayment risk” (the risk that borrowers will repay a loan more quickly in periods of falling interest rates) and “extension risk” (the risk that borrowers will repay a loan more slowly in periods of rising interest rates). The Fund may invest in mortgage-backed securities issued by the U.S. Government or by non-governmental issuers. To the extent that the Fund invests in mortgage-backed securities offered by non-governmental issuers, such as commercial banks, savings and loan institutions, private mortgage insurance companies, mortgage bankers and other secondary market issuers, the Fund may be subject to additional risks. Timely payment of interest and principal of non-governmental issuers are supported by various forms of private insurance or guarantees, including individual loan, title, pool and hazard insurance purchased by the issuer. There can be no assurance that the private insurers can meet their obligations under the policies. If the Fund invests in mortgage-backed or asset-backed debt securities that are subordinated to other interests in the same pool, the Fund may only receive payments after the pool’s obligations to other investors have been satisfied. An unexpectedly high rate of defaults on the assets held by a pool may limit substantially the pool’s ability to make payments of principal or interest to the Fund, reducing the values of those securities or in some cases rendering them worthless. The risk of such defaults is generally higher in the case of mortgage pools that include so-called “subprime” mortgages. The Fund’s investments in other asset-backed debt securities are subject to risks similar to those associated with mortgage-backed securities, as well as additional risks associated with the nature of the assets and the servicing of those assets.

Asset Manager Risk: The CLO’s performance is linked to the expertise of the CLO manager and its ability to manage the CLO portfolio. The experience of a CLO manager plays an important role in the rating and risk assessment of CLO debt securities. One of the primary risks to investors of a CLO is the potential change in CLO manager, over which the Fund may have no control.

Legal and Regulatory Risk: The Fund may be adversely affected by new (or revised) laws or regulations that may be imposed by government regulators or self-regulatory organizations that supervise the financial markets. These agencies are empowered to promulgate a variety of rules pursuant to financial reform legislation in the United States. The Fund may also be adversely affected by changes in the enforcement or interpretation of existing statutes and rules. Changes in the regulation of CLOs may adversely affect the value of the investments held by the Fund and the ability of the Fund to execute its investment strategy.

Limited Recourse Risk. CLO debt securities are limited recourse obligations of their issuers. CLO debt is payable solely from the proceeds of its underlying assets. Consequently, CLO investors must rely solely on distributions from the underlying assets for payments on the CLO debt they hold. No party or entity other than the issuer will be obligated to make payments on CLO debt. CLO debt is not guaranteed by the issuer or any other party or entity involved in the organization and management of a CLO. If income from the underlying loans is insufficient to make payments on the CLO debt, no other assets will be available for payment.

Redemption Risk: CLO debt securities may be subject to redemption. For example, certain tranches of CLO debt may be redeemed if the CLO manager is unable to identify assets suitable for investment during the period when it has the ability to reinvest the principal proceeds from the sale of assets, scheduled redemptions and prepayments in additional assets (the “Reinvestment Period”). Additionally, holders of subordinated CLO debt may cause the redemption of senior CLO debt. In the event of an early redemption, holders of the CLO debt being redeemed will be repaid earlier than the stated maturity of the debt. The timing of redemptions may adversely affect the returns on CLO debt.

Reinvestment Risk: The CLO manager may not find suitable assets in which to invest during the Reinvestment Period or to replace assets that the manager has determined are no longer suitable for investment (for example, if a security has been downgraded by a rating agency). Additionally, the reinvestment period is a pre-determined finite period of time; however, there is a risk that the reinvestment period may terminate early if, for example, the CLO defaults on payments on the securities which it issues or if the CLO manager determines that it can no longer reinvest in underlying assets. Early termination of the Reinvestment Period could adversely affect a CLO investment.

Liquidity Risk: The CLO debt securities in which the Fund invests are restricted securities (securities with limited transferability under the securities laws). CLOs are not registered under the Securities Act of 1933, as amended, and are subject to restrictions on resale. They are eligible for sale only to certain qualified institutional buyers and are not sold on a trading market or exchange. Because such securities are available to few buyers, they may be both difficult to sell and to value. Because of the limited market, the Fund may find it difficult to sell the securities when it finds it advisable to do so and, to the extent such securities are sold in private negotiations, they may be sold for less than the price for which they were purchased or less than their fair market value.

Real Estate Market Risk: The Fund will not invest in real estate directly, but only in securities issued by real estate companies. However, because of its policy of concentration in the securities of companies in the real estate industry, the Fund is also subject to the risks associated with the direct ownership of real estate. These risks include: declines in the value of real estate; risks related to general and local economic conditions; possible lack of availability of mortgage funds; overbuilding; extended vacancies of properties; increased competition; increases in property taxes and operating expenses; changes in zoning laws; losses due to costs resulting from the clean-up of environmental problems; liability to third parties for damages resulting from environmental problems; casualty or condemnation losses; limitations on rents; changes in neighborhood values and the appeal of properties to tenants; and changes in interest rates; falling home prices; failure of borrowers to repay their loans; early payment or restructuring of mortgage loans; slower mortgage origination; and rising construction costs. Thus, the value of the Fund’s shares may change at different rates compared to the value of shares of a mutual fund with investments in a mix of different industries.

Interest Rate Risk: Prices of fixed income securities tend to move inversely with changes in interest rates. Generally, fixed income securities decrease in value if interest rates rise and increase in value if interest rates fall, with longer-term securities being more sensitive than shorter-term securities. For example, the approximate percentage change in the price of a security with a five-year duration would be expected to drop by approximately 5% in response to a 1% increase in interest rates. Duration is a weighted measure of the length of time required to receive the present value of future payments, both interest and principal, from a fixed income security. Generally, the longer the maturity and duration of a bond or fixed rate loan, the more sensitive it is to this risk. Falling interest rates also create the potential for a decline in the Fund’s income. These risks are greater during periods of rising inflation.

Futures Risk: Use of futures contracts by the Fund may cause the value of the Fund's shares to be more volatile. Futures contracts expose the Fund to leverage and tracking risks because a small investment in futures contracts may produce large losses and futures contracts may not accurately track the underlying securities. The Fund’s use of U.S. Treasury futures contracts to hedge against interest rates depends on the judgment of the Sub-advisor, and there is no guarantee that the process used by the Sub-advisor will be correct.

Options Risk: If an option purchased by the Fund expires without being sold or exercised, the Fund would lose the premium it paid for the option. The risk involved in writing a covered call option is the lack of liquidity for the option. If the Fund is not able to close out the option transaction, the Fund would not be able to sell the underlying security until the option expires or is exercised. The risk involved in writing an uncovered call option is that there could be an increase in the market value of the underlying security caused by declining interest rates or other factors. If this occurs, the option could be exercised and the underlying security would then be sold by the Fund at a lower price than its current market value. The risk involved in writing a put option is that the market value of the underlying security could decrease as a result of rising interest rates or other factors. If this occurs, the option could be exercised and the underlying security would then be sold to the Fund at a higher price than its prevailing market value. Purchasing and writing put and call options are highly specialized activities and entail greater than ordinary investment risks. To the extent that the Fund invests in over-the-counter options, the Fund may be exposed to credit risk with regard to parties with which it trades and may also bear the risk of settlement default. These risks may differ materially from those entailed in exchange-traded transactions, which generally are backed by clearing organization guarantees, daily marking-to-market and settlement, and segregation and minimum capital requirements applicable to intermediaries. Transactions entered directly between two counterparties generally do not benefit from such protections and expose the parties to the risk of counterparty default.

Swaps Risk: The Fund may enter into interest rate, total return, credit default, and synthetic swap agreements, or “swaps.” Depending on how they are used, swap transactions may increase or decrease the overall volatility of the Fund’s portfolio. The most significant factor in the performance of a swap transaction is the change in the specific interest rate, currency, individual equity values or other factors that determine the amounts of payments due to and from the Fund. Swaps can involve greater risks than direct investment in securities, because swaps may be leveraged, are subject to the risk of that the counterparty may default on the obligation, and may be difficult to value. Swaps may also be considered illiquid.

Fixed Income Securities Risk: The prices of fixed income securities respond to economic developments, particularly interest rate changes, as well as to changes in an issuer’s credit rating or market perceptions about the creditworthiness of an issuer. Prices of fixed income securities tend to move inversely with changes in interest rates. Generally fixed income securities decrease in value if interest rates rise and increase in value if interest rates fall, with lower rated securities more volatile than higher rated securities. The longer the effective maturity and duration of the Fund’s portfolio, the more the Fund’s share price is likely to react to changes in interest rates. (Duration is a weighted measure of the length of time required to receive the present value of future payments, both interest and principal, from a fixed income security.) Some fixed income securities give the issuer the option to call, or redeem, the securities before their maturity dates. If an issuer calls its security during a time of declining interest rates, the Fund might have to reinvest the proceeds in an investment offering a lower yield, and therefore might not benefit from any increase in value of the security as a result of declining interest rates. During periods of market illiquidity or rising interest rates, prices of callable issues are subject to increased price fluctuation. In addition, the Fund may be subject to extension risk, which occurs during a rising interest rate environment because certain obligations may be paid off by an issuer more slowly than anticipated, causing the value of those securities held by the Fund to fall.

High Yield (“Junk”) Bond Risk: High yield bonds (often called “junk bonds”) are speculative, involve greater risks of default or downgrade and are more volatile and tend to be less liquid than investment-grade securities. High yield bonds involve a greater risk of price declines than investment-grade securities due to actual or perceived changes in an issuer’s creditworthiness. Companies issuing high yield fixed-income securities are less financially strong, are more likely to encounter financial difficulties, and are more vulnerable to adverse market events and negative sentiments than companies with higher credit ratings. These factors could affect such companies’ abilities to make interest and principal payments and ultimately could cause such companies to stop making interest and/or principal payments. In such cases, payments on the securities may never resume, which would result in the securities owned by the Fund becoming worthless. The market prices of junk bonds are generally less sensitive to interest rate changes than higher rated investments, but more sensitive to adverse economic or political changes or individual developments specific to the issuer.

Repurchase Agreements Risk: The Fund may enter into repurchase agreements, which are transactions in which the Fund purchases securities or other obligations from a bank or securities dealer and simultaneously commits to resell them to a counterparty at an agreed-upon date or upon demand and at a price reflecting a market rate of interest unrelated to the coupon rate or maturity of the purchased obligations. The Fund’s investment in repurchase agreements may be subject to market and credit risk with respect to the collateral securing the repurchase agreements. If the market value of the underlying obligations of a repurchase agreement declines, the counterparty must provide additional collateral so that at all times the value of the collateral is greater than the repurchase price of the underlying obligations. Nonetheless, should a counterparty become insolvent or otherwise default, there could be a delay before the Fund is able to liquidate the collateral, which would subject the collateral and the Fund to market risk during that period. If the Fund's counterparty should default on its obligations and the Fund is delayed or prevented from recovering the collateral, or if the value of the collateral is insufficient, the Fund may realize a loss.

Reverse Repurchase Agreements Risk: A reverse repurchase agreement is the sale by the Fund of a debt obligation to a party for a specified price, with the simultaneous agreement by the Fund to repurchase that debt obligation from that party on a future date at an agreed upon price. Similar to borrowing, reverse repurchase agreements provide the Fund with cash for investment purposes, which creates leverage and subjects the Fund to the risks of leverage. Reverse repurchase agreements also involve the risk that the other party may fail to return the securities in a timely manner or at all. The Fund could lose money if it is unable to recover the securities and the value of collateral held by the Fund, including the value of the investments made with cash collateral, is less than the value of securities. Reverse repurchase agreements also create Fund expenses and require that the Fund have sufficient cash available to purchase the debt obligations when required. Reverse repurchase agreements also involve the risk that the market value of the debt obligation that is the subject of the reverse repurchase agreement could decline significantly below the price at which the Fund is obligated to repurchase the security.

Exchange-Traded Funds (“ETF”) Risk: Investing in an ETF will provide the Fund with exposure to the securities comprising the index on which the ETF is based and will expose the Fund to risks similar to those of investing directly in those securities. Shares of ETFs typically trade on securities exchanges and may at times trade at a premium or discount to their net asset values. In addition, an ETF may not replicate exactly the performance of the benchmark index it seeks to track for a number of reasons, including transaction costs incurred by the ETF, the temporary unavailability of certain index securities in the secondary market or discrepancies between the ETF and the index with respect to the weighting of securities or the number of securities held. Investing in ETFs, which are investment companies, may involve duplication of advisory fees and certain other expenses. The Fund will pay brokerage commissions in connection with the purchase and sale of shares of ETFs.

Liquidity Risk: Due to a lack of demand in the marketplace or other factors, the Fund may not be able to sell some or all of the investments that it holds, or may only be able to sell those investments at less than desired prices. Liquidity risk arises, for example, from small average trading volumes, trading restrictions, or temporary suspensions of trading. Liquidity risk may also refer to the risk that the Fund will not be able to pay redemption proceeds within the allowable time period because of unusual market conditions, an unusually high volume of redemption requests, or other reasons. To meet redemption requests, the Fund may be forced to sell securities at an unfavorable time and/or under unfavorable conditions. In addition, when the market for certain investments is illiquid, the Fund may be unable to achieve its desired level of exposure to a certain sector.

Valuation Risk: Many factors may influence the price at which the Fund could sell any particular portfolio investment. The sales price may well differ—higher or lower—from the Fund’s last valuation, and such differences could be significant, particularly for illiquid securities and securities that trade in relatively thin markets and/or markets that experience extreme volatility. If market conditions make it difficult to value some investments, the Fund may value these investments using more subjective methods, such as fair value methodologies. Investors who purchase or redeem Fund shares on days when the Fund is holding fair-valued securities may receive fewer or more shares, or lower or higher redemption proceeds, than they would have received if the Fund had not fair-valued the securities or had used a different valuation methodology. The value of foreign securities, certain fixed income securities, and currencies may be materially affected by events after the close of the market on which they are valued but before the Fund determines its net asset value.

Non-Diversification Risk. The Fund is classified as “non-diversified”, which means the Fund may invest a larger percentage of its assets in the securities of a smaller number of issuers than a diversified fund. Investment in securities of a limited number of issuers exposes the Fund to greater market risk and potential losses than if its assets were diversified among the securities of a greater number of issuers. However, the Fund will comply with certain diversification requirements imposed by the Internal Revenue Code.

For further information about the risks of investing in the Fund, please see the Fund’s Statement of Additional Information (“SAI”).

Portfolio Holdings Information

A description of the Fund’s policies and procedures with respect to the disclosure of the Fund’s portfolio securities is available in the Fund’s Statement of Additional Information (“SAI”). Currently, disclosure of the Fund’s holdings is required to be made quarterly within 60 days of the end of each fiscal quarter, in the Fund’s Annual Report and Semi-Annual Report to Fund shareholders, and in its quarterly holdings report on Form N-Q.

MANAGEMENT OF THE FUND

The Advisor and Sub-advisor

Liberty Street Advisors, Inc., a New York corporation which maintains its principal office at 100 Wall Street, Floor 20, New York, NY 10005, acts as the investment advisor to the Fund pursuant to an investment advisory agreement (the “Advisory Agreement”). The Adviser is an investment adviser registered with the SEC. As the Fund’s investment advisor, Liberty Street provides investment advisory services to the Fund, including: (i) designing the Fund’s initial investment policies and developing evolutionary changes to such policies as appropriate for presentation to the Board; (ii) providing overall supervision for the general investment management operations of the Fund; (iii) monitoring and supervising the activities of the Sub-advisor, and (iv) providing related administrative services. As of September 30, 2015, the Advisor had approximately $2.6 billion in assets under management.

Pursuant to the Advisory Agreement, the Fund pays the Advisor an annual advisory fee of 1.25% of the Fund’s average daily net assets for the services and facilities it provides, payable on a monthly basis. By way of agreement, the Advisor pays a portion of its advisory fee to the Sub-advisor. The Fund’s SAI provides additional information about the fees paid to the Advisor and the Sub-advisor.

Braddock Financial LLC (“Braddock”), located at 1200 17^th Street, Suite 880, Denver, CO 80202, serves as the Fund’s Sub-advisor pursuant to an investment Sub-advisory agreement (the “Sub-advisory Agreement”). Braddock is registered as an investment advisor with the SEC, and is responsible for the day-to-day management of the Fund’s portfolio, selection of the Fund’s portfolio investments and supervision of its portfolio transactions subject to the general oversight of the Board and the Advisor. As of September 30, 2015, Braddock had approximately $69.1 million in assets under management.

A discussion regarding the basis for the Board’s approval of the Advisory Agreement and Sub-advisory Agreement will be available in the Fund’s Semi-Annual Report to shareholders dated as of June 30, 2016.

Portfolio Managers

Garrett Tripp, CFA and Toby Giordano, CFA are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio. Mr. Tripp serves as the Senior Vice President and Senior Portfolio Manager of Braddock. Mr. Giordano serves as the Vice President and Portfolio Manager of Braddock.

The SAI provides additional information about each portfolio manager’s method of compensation, other accounts managed by the portfolio managers and the portfolio managers’ ownership of Fund securities.

Fund Expenses

The Advisor has contractually agreed to waive its fees and/or pay for operating expenses of the Fund to ensure that the total annual fund operating expenses (excluding any front-end or contingent deferred loads, taxes, leverage interest, brokerage commissions, acquired fund fees and expenses (as determined in accordance with Form N-1A), expenses incurred in connection with any merger or reorganization, and extraordinary expenses such as litigation expenses) do not exceed 1.75%, 2.50% and 1.50% of the average daily net assets of the Class A Shares, Class C Shares and Institutional Class Shares, respectively. This agreement is in effect until April 30, 2017, and it may be terminated before that date only by the Trust’s Board of Trustees.

Any reduction in advisory fees or payment of the Fund’s expenses made by the Advisor in a fiscal year may be reimbursed by the Fund for a period ending three full fiscal years after the date of the waiver or payment. This reimbursement may be requested from the Fund if the aggregate amount of operating expenses for a fiscal year, as accrued each month, does not exceed the lesser of (a) the limitation on Fund expenses in effect at the time of the relevant reduction in advisory fees or payment of the Fund’s expenses, or (b) the limitation on Fund expenses at the time of the request. Any such reimbursement is contingent upon the Board’s subsequent review and ratification of the reimbursed amounts and no reimbursement may cause the total operating expenses paid by the Fund in a fiscal year to exceed the applicable limitation on Fund expenses. The Fund must pay current ordinary operating expenses before the Advisor is entitled to any reimbursement of fees and/or Fund expenses.

DISTRIBUTION AND SHAREHOLDER SERVICE PLAN

Distribution and Service (Rule 12b-1) Fees (For Class A and Class C Shares)

The Trust has adopted a plan on behalf of the Fund pursuant to Rule 12b-1 of the 1940 Act (the “12b-1 Plan”), which allows the Fund to pay distribution fees for the sale and distribution of its Class A Shares and Class C Shares and/or shareholder liaison service fees in connection with the provision of personal services to shareholders of Class A Shares and Class C Shares and the maintenance of shareholder accounts.

Foreside Fund Services, LLC, the Fund’s principal underwriter (the “Distributor”), acts as the Fund’s distributor in connection with the offering of the Fund’s shares. The Distributor may enter into arrangements with banks, broker-dealers and other financial institutions through which investors may purchase or redeem shares.

The Distributor is not affiliated with the Advisor, Sub-advisor, or their affiliates.

For Class A Shares, the maximum annual fee payable to the Distributor for such distribution and/or shareholder liaison services is 0.25% of the average daily net assets of such shares. For Class C shares, the maximum annual fees payable to the Distributor for distribution services and shareholder liaison services are 0.75% and 0.25%, respectively, of the average daily net assets of such shares. Since these fees are paid out of the Fund’s assets attributable to the Fund’s Class A Shares and Class C Shares, respectively, these fees will increase the cost of your investment and, over time, may cost you more than paying other types of sales charges. The net income attributable to Class A Shares and Class C Shares will be reduced by the amount of distribution and service fees and other expenses of the Fund associated with that respective class of shares. The Distributor may pay any or all amounts received under the Rule 12b-1 Plan to other persons for any distribution or administrative services provided by such persons to the Fund. Payments under the 12b-1 Plan are not tied exclusively to expenses actually incurred by the Distributor or others and the payments may exceed or be less than the amount of expenses actually incurred.

To promote the sale of the Fund’s Class C Shares and to pay for certain shareholder liaison services, the Distributor may pay broker-dealers up to 1.00% of the amount invested by their clients in the Class C Shares of the Fund at the time the Shares are purchased (which includes prepayment of the first year's 0.25% shareholder liaison service fee). These up-front payments to broker-dealers are financed by the Advisor. However, the Distributor receives and can pay reimbursement to the Advisor all of the 12b-1 fees with respect to such shares. During the first 12 months, the Advisor may retain the full 1.00% 12b-1 fee to recoup the up-front payment advanced at the time of purchase. After the Distributor has reimbursed the Advisor for the amounts that the Advisor has financed, the broker-dealers will receive from the Distributor the ongoing 12b-1 fees associated with their clients’ investments.

Institutional Class shares are not subject to any distribution fees under the Plan.

To assist investors in comparing classes of shares, the table under the Prospectus heading “Fees and Expenses of the Fund” provides a summary of expenses and an example of the sales charges and expenses of the Fund applicable to each class of shares offered in this Prospectus.

Shareholder Servicing Fee

The Fund may pay a fee at an annual rate of up to 0.15% of its average daily net assets to shareholder servicing agents. Shareholder servicing agents provide non-distribution administrative and support services to their customers, which may include establishing and maintaining accounts and records relating to shareholders, processing dividend and distribution payments from the Fund on behalf of shareholders, forwarding communications from the Fund, providing sub-accounting with respect to Fund shares, and other similar services.

Additional Payments to Broker-Dealers and Other Financial Intermediaries

The Advisor or the Sub-advisor may pay service fees to intermediaries such as banks, broker-dealers, financial advisors or other financial institutions, some of which may be affiliates, for sub-administration, sub-transfer agency and other shareholder services associated with shareholders whose shares are held of record in omnibus accounts, other group accounts or accounts traded through registered securities clearing agents.

The Advisor or the Sub-advisor, out of its own resources, and without additional cost to the Fund or its shareholders, may provide additional cash payments to broker-dealers or intermediaries that sell shares of the Fund. These additional cash payments are generally made to intermediaries that provide shareholder servicing, marketing support and/or access to sales meetings, sales representatives and management representatives of the intermediary. The Advisor or the Sub-advisor may provide cash payments for inclusion of the Fund on a sales list, including a preferred or select sales list, or in other sales programs, or may pay an expense reimbursement in cases where the intermediary provides shareholder services to the Fund’s shareholders. The Advisor or the Sub-advisor may also pay cash compensation in the form of finder’s fees that vary depending on the dollar amount of the shares sold. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the Fund over another investment. Ask your financial advisor or visit your financial intermediary’s website for more information.

PURCHASE OF SHARES

General

This Prospectus offers three classes of shares of the Fund, designated as Class A Shares, Class C Shares and Institutional Class Shares.

Class A Shares generally incur sales loads at the time of purchase and annual distribution/service fees.

Class C Shares may incur sales loads at the time of redemption and are subject to higher ongoing distribution fees and service fees.

Institutional Class Shares incur no sales loads or distribution/service fees.

By offering multiple classes of shares, the Fund permits each investor to choose the class of shares that is most beneficial given the type of investor, the amount to be invested and the length of time the investor expects to hold the shares. As described more fully below, each class of shares offers a distinct structure of sales loads, distribution fees and service fees and other features that are designed to address the needs of a variety of investors.

Each class of shares generally has the same rights, except for the differing sales loads, distribution fees, service fees, any related expenses associated with each class of shares, and the exclusive voting rights by each class with respect to any distribution plan or service plan for such class of shares.

To the extent allowed by applicable law, the Fund reserves the right to discontinue offering shares at any time or to cease operating entirely.

Pricing Fund Shares

The offering price of each class of the Fund's shares is the NAV (plus sales charges, as applicable). The differences among the classes' NAVs reflect the daily expense accruals of the distribution fees applicable to Class A Shares and Class C Shares.

The Fund’s NAVs are calculated as of 4:00 p.m. Eastern Time, the normal close of regular trading on the New York Stock Exchange (“NYSE”), on each day the NYSE is open for trading. If, for example, the NYSE closes at 1:00 p.m. New York time, the Fund’s NAV would still be determined as of 4:00 p.m. New York time. In this example, portfolio securities traded on the NYSE would be valued at their closing prices unless the Trust’s Valuation Committee determines that a “fair value” adjustment is appropriate due to subsequent events. NAV for each class is determined by dividing the value of the Fund's portfolio securities, cash and other assets (including accrued interest) allocable to such class, less all liabilities (including accrued expenses) allocable to such class, by the total number of outstanding shares of such class.

The Fund values equity securities at the last reported sale price on the principal exchange or in the principal over-the-counter (OTC) market in which such securities are trading, as of the close of regular trading on the NYSE on the day the securities are being valued or, if there are no sales, at the mean of the most recent bid and asked prices. Equity securities that are traded on NASDAQ are valued at the NASDAQ Official Closing Price produced by NASDAQ each business day. Debt securities are valued at the mean between the last available bid and asked prices for such securities or, if such prices are not available, at fair value considering prices for securities of comparable maturity, quality, and type. The Fund values exchange-traded options at the last sales price, or, if no last sales price is available, at the last bid price.

The Fund values securities for which market quotations are not readily available, including restricted securities, by methods approved by the Board of Trustees and that the Board believes accurately reflect fair value. Securities will be valued at fair value when market quotations are not readily available or are deemed unreliable, such as when a security's value or a meaningful portion of the Fund's portfolio is believed to have been materially affected by a significant event. Such events may include a natural disaster, an economic event like a bankruptcy filing, a trading halt in a security, an unscheduled early market close or a substantial fluctuation in domestic and foreign markets that has occurred between the close of the exchange on which the security principally trades and the close of the NYSE. In such a case, the Fund’s value for a security could be different from the last quoted market price. In addition, due to the subjective and variable nature of fair market value pricing, it is possible that the value determined for a particular asset may be materially different from the value realized upon such asset's sale.

Trading in securities on many foreign securities exchanges and over-the-counter markets is normally completed before the close of business on each U.S. business day. In addition, securities trading in a particular country or countries may not take place on all U.S. business days or may take place on days which are not U.S. business days. Changes in valuations on certain securities may occur at times or on days on which the Fund’s NAVs are not calculated and on which the Fund does not affect sales and redemptions of its shares.

The price at which a purchase or redemption is effected is based on the next calculation of NAV after the order is placed, as described above. Such calculation does not take place contemporaneously with the determination of the prices of certain foreign portfolio securities used in such calculation.

NYSE Holiday Schedule. The NYSE is open every weekday, Monday through Friday, except when the following holidays are celebrated: New Year’s Day, Martin Luther King, Jr. Day (the third Monday in January), President’s Day (the third Monday in February), Good Friday, Memorial Day (the last Monday in May), Independence Day, Labor Day (the first Monday in September), Thanksgiving Day (the fourth Thursday in November) and Christmas Day. Exchange holiday schedules are subject to change without notice. The NYSE may close early on the day before each of these holidays and the day after Thanksgiving Day.

Transactions through Third Parties. Certain financial institutions may be appointed as agents for or authorized by the Fund to accept on its behalf purchase and redemption requests that are received in good order. Subject to Fund approval, certain of these companies may be authorized to designate other entities to accept purchase and redemption orders on behalf of the Fund. A purchase or redemption order placed with a financial institution or its authorized agent is treated as if such orders were placed directly with the Fund, and will be deemed to have been received by the Fund when the financial institution or its authorized agent receives such order. If you invest through a broker or other financial institution, the policies of and fees (other than sales charges) charged by that institution may be different than those of the Fund. These financial institutions may charge transaction fees and may set different minimum investments or limitations on buying or selling shares. These institutions may also provide you with certain shareholder services such as periodic account statements and trade confirmations summarizing your investment activity. Consult a representative of your financial institution for more information.

The Fund may enter into arrangements with financial institutions through which investors may purchase or redeem Fund shares. The Advisor or the Sub-advisor may, at its own expense, compensate the financial institutions in connection with the sale or expected sale of Fund shares and it may sponsor various educational activities held by the financial institutions. Certain financial institutions may provide administrative services (such as sub-transfer agency, record-keeping or shareholder communications services) to investors purchasing shares of the Fund through such companies. The Advisor or the Sub-advisor may pay fees to these financial institutions for their services. The Advisor or the Sub-advisor may also compensate a financial institution for providing certain marketing support services, including finder’s fees, third party marketing services, business planning assistance, advertising, educating personnel of the financial institution about the Fund and shareholder financial planning needs, providing placement on the financial institution’s list of offered funds, counseling on the preparation of sales material and presentations and access to sales meetings, and arranging access to sales representatives and management representatives of the financial institution. Such payments may create an incentive for the financial institutions to recommend that you purchase Fund shares.

Anti-Money Laundering Program. Customer identification and verification are part of the Trust’s overall obligation to deter money laundering under Federal law. The Trust has adopted an Anti-Money Laundering Program designed to prevent the Fund from being used for money laundering or the financing of terrorist activities. In this regard, the Fund reserves the right, to the extent permitted by law, to: (i) refuse, cancel or rescind any purchase or exchange order; (ii) freeze any account and/or suspend account services; or (iii) involuntarily close your account in cases of threatening conduct or suspected fraudulent or illegal activity. These actions will be taken when, in the sole discretion of Trust management, they are deemed to be in the best interest of the Fund or in cases when the Fund is requested or compelled to do so by governmental or law enforcement authority. If an order is rescinded or your account is liquidated due to perceived threatening conduct or suspected fraudulent or illegal activity, you will not be able to recoup any sales charges assessed. If your account is closed at the request of governmental or law enforcement authority, you may not receive proceeds of the redemption if the Fund is required to withhold such proceeds.

How To Buy Shares

How to Make Payments. Unless purchased through a third-party financial institution, all investments must be made by check, ACH, or wire. All checks must be payable in U.S. Dollars and drawn on U.S. financial institutions. The Fund does not accept purchases made by cash.

Checks. For all accounts, the check must be made payable on its face to “Liberty Street Funds.”

Regular Mail:	Overnight Delivery:
Liberty Street Funds	Liberty Street Funds
P.O. Box 2175	235 West Galena Street
Milwaukee, WI 53201-2175	Milwaukee, WI 53212

To prevent check fraud, the Fund will not accept Treasury checks, credit card checks, traveler's checks, starter checks, money orders, bank drafts, third party check or cashier’s checks for the purchase of shares. The Fund is unable to accept post-dated checks, post-dated on-line bill pay checks, or any conditional order or payment.

The Fund does not consider the U.S. Postal Service or other independent delivery services to be its agents.

ACH. ACH refers to the “Automated Clearing House” system maintained by the Federal Reserve Bank, which allows banks to process checks, transfer funds and perform other tasks. Your financial institution may charge you a fee for this service.

Wires. Instruct your financial institution with whom you have an account to make a Federal Funds wire payment to us. Your financial institution may charge you a fee for this service. Please contact UMB Fund Services, Inc. (the “Transfer Agent”) at (800) 207-7108 for wire instructions.

The Fund reserves the right to refuse, change, discontinue, or temporarily suspend account services, including purchase or telephone redemption privileges (if redemption by telephone is not available, you may send your redemption order to the Fund via regular or overnight delivery), for any reason, particularly when requests could adversely affect the Fund or its operations.

The Transfer Agent will charge a fee against a shareholder's account, in addition to any loss sustained by the Fund, for any payment that is returned. It is the policy of the Fund not to accept applications under certain circumstances or in amounts considered disadvantageous to shareholders. The Fund reserves the right to reject any application.

Checks sent via overnight delivery are also subject to a $25 charge (additional charge for Saturday delivery). There is also a $15.00 annual maintenance fee charged on retirement accounts or upon full redemption.

A Medallion signature guarantee must be obtained in those instances that require that a signature is guaranteed.

Minimum Investments. The Fund accepts investments in the following minimum amounts:

	Minimum Initial Investment		Minimum Additional Investment
Class A Shares and Class C Shares*
Direct Regular Accounts	$	2,500	$	100
Traditional and Roth IRA Accounts	$	2,500	$	100
Accounts with Automatic Investment Plans	$	2,500	$	100
Qualified Retirement Plans	$	2,500	$	100
Institutional Class Shares
All Accounts	$	1,000,000	$	100,000

* The maximum investment amount for the C Share is $999,999.

No initial or subsequent investment minimum is required for accounts maintained by financial institutions for the benefit of their clients who purchase shares through investment programs such as employee benefit plans like 401(k) retirement plans. In addition, for financial institutions, including registered investment advisors, making investments for a group of clients, the initial or subsequent investment minimum can be met through an aggregated purchase order for more than one client. The minimum for the Institutional Class Shares may be waived for purchases pursuant to asset allocation programs, wrap fee programs, and other investment programs offered by financial institutions, including registered investment advisors, in which investment decisions are made on a discretionary basis by investment professionals. No initial or subsequent investment minimum is required for Trustees or officers of the Trust, directors, officers and employees of the Advisor, the Sub-advisor or the Distributor or any of their affiliates, or the spouse, life-partner, parent, child, sibling or other close family member of any such person, any trust or individual retirement account or self-employed retirement plan for the benefit of any such person, or the estate of any such person. The Fund reserves the right to waive minimum investment amounts, if deemed appropriate by the Trust's officers.

Account Requirements

Type of Account		Requirement
Individual, Sole Proprietorship and Joint Accounts Individual accounts and sole proprietorship accounts are owned by one person. Joint accounts have two or more owners (tenants).		• Instructions must be signed by all persons required to sign exactly as their names appear on the account. • Provide a power of attorney or similar document for each person that is authorized to open or transact business for the account if not a named account owner.
Gifts or Transfers to a Minor (UGMA, UTMA) These custodial accounts provide a way to give money to a child and obtain tax benefits.		• Depending on state laws, you can set up a custodial account under the UGMA or the UTMA. • The custodian must sign instructions in a manner indicating custodial capacity.
Business Entities		• Provide certified articles of incorporation, a government-issued business license or certificate, partnership agreement or similar document evidencing the identity and existence of the business entity. • Submit a secretary’s (or similar) certificate listing the person(s) authorized to open or transact business for the account.
Trusts (including corporate pension plans)		• The trust must be established before an account can be opened. • Provide the first and signature pages from the trust document identifying the trustees. • Provide a power of attorney or similar document for each person that is authorized to open or transact business in the account if not a trustee of the trust.

Account Application and Customer Identity Verification. To help the government fight the funding of terrorism and money laundering activities, Federal law requires financial institutions to, among other measures, obtain, verify, and record information that identifies each person who opens an account.

When you open an account, the Fund will ask for your name, address, date of birth, social security number, and other information or documents that will allow us to identify you. For certain types of accounts, additional information may be required. If you do not supply the required information, the Fund will attempt to contact you or, if applicable, your financial advisor. If the Fund cannot obtain the required information within a timeframe established in our sole discretion, your application will be rejected.

When your application is in proper form and includes all required information, your application will normally be accepted and your order will be processed at the NAV next calculated after receipt of your application in proper form. If your application is accepted, the Fund will then attempt to verify your identity using the information you have supplied and other information about you that is available from third parties, including information available in public and private databases such as consumer reports from credit reporting agencies.

The Fund will try to verify your identity within a timeframe established in its sole discretion. If the Fund cannot do so, the Fund reserves the right to close your account at the NAV next calculated after the Fund decides to close your account and to remit proceeds to you via check, but only if your original check clears the bank.

If your account is closed, you may be subject to a gain or loss on Fund shares and will be subject to any related taxes and will not be able to recoup any sales charges assessed.

The Fund may reject your application under the Trust’s Anti-Money Laundering Program. Under this program, your money may not be returned to you if your account is closed at the request of governmental or law enforcement authorities.

Limitations on Frequent Purchases and Redemptions. The Board has adopted policies and procedures with respect to frequent purchases and redemptions of Fund shares by Fund shareholders. It is the Fund’s policy to discourage short-term trading. Frequent trading in the Fund such as trades seeking short-term profits from market momentum and other timing strategies may interfere with the management of the Fund’s portfolio and result in increased administrative and brokerage costs and a potential dilution in the value of Fund shares. As money is moved in and out, the Fund may incur expenses buying and selling portfolio securities and these expenses are borne by Fund shareholders. The Fund does not permit market timing and does not accommodate frequent purchases or redemptions. In addition, the Fund may take action, which may include using its best efforts to restrict a shareholder’s trading privileges in the Fund, if that shareholder has engaged in four or more “round trips” in the Fund within a one-year period.

The Fund focuses on identifying frequent redemption transactions which may be harmful to the Fund or its shareholders. These transactions are analyzed for offsetting purchases within a pre-determined period of time. If frequent trading trends are detected, an appropriate course of action is taken. The Fund reserves the right to cancel, restrict, or reject without any prior notice, any purchase order, including transactions representing excessive trading, transactions that may be disruptive to the management of the Fund’s portfolio, and purchase orders not accompanied by payment.

Because the Fund receives purchase and sale orders through financial intermediaries that use omnibus or retirement accounts, the Fund cannot always detect frequent purchases and redemptions. As a consequence, the Fund’s ability to monitor and discourage abusive trading practices in such accounts may be limited.

The Fund’s investment in foreign securities may make the Fund more susceptible to the risk of market timing activities because of price differentials that may be reflected in the NAVs of the Fund’s shares. The Fund generally prices its foreign securities using their closing prices from the foreign markets in which they trade, typically prior to the Fund’s calculation of its NAVs. These prices may be affected by events that occur after the close of a foreign market but before the Fund prices its shares. Although the Fund may price foreign securities using fair valuation in such instances and may undertake other measures to discourage frequent purchases and redemptions, investors may engage in frequent short-term trading to take advantage of any arbitrage opportunities in the pricing of the Fund’s shares. There is no assurance that fair valuation of securities can reduce or eliminate market timing.

The Fund’s investment in securities of smaller companies may make the Fund more susceptible to market timing as shareholders may try to capitalize on the market volatilities of such securities and the effect of the volatilities on the value of Fund shares.

Policy on Prohibition of Foreign Shareholders. The Fund requires that all shareholders must be a U.S. citizen residing in the United States or a U.S. Territory or a resident alien residing in the United States or a U.S. Territory, and they must also have a valid U.S. Taxpayer Identification Number to open an account with the Fund.

Investment Procedures

To contact the Fund, please call (800) 207-7108.

How to Open an Account		How to Add to Your Account
Through a Financial Advisor Contact your advisor using the method that is most convenient for you.		Through a Financial Advisor • Contact your advisor using the method that is most convenient for you.
By Check • Call or write us for an account application, or visit www.libertystreetfunds.com. • Complete the application (and other required documents). • Mail us your application (and other required documents) and a check. Regular Mail: Liberty Street Funds P.O. Box 2175 Milwaukee, WI 53201-2175 Overnight Delivery: Liberty Street Funds 235 West Galena Street Milwaukee, WI 53212 The Fund does not consider the U.S. Postal Service or other independent delivery services to be its agents.		By Check • Fill out an investment slip from a confirmation or write us a letter. • Write your account number on your check. • Mail us the slip (or your letter) and the check.
By Wire • Call or write us for an account application or visit www.libertystreetfunds.com. • Complete the application (and other required documents). • Call us to fax the completed application (and other required documents) and we will assign you an account number. • Mail us your original application (and other required documents). • Instruct your financial institution to wire your money to us.		By Wire • Call to notify us of your incoming wire. • Instruct your financial institution to wire your money to us.
		By ACH Payment (For Systematic Investments) • Complete the systematic investment section of the application. • Attach a voided check to your application. • Mail us the completed application and voided check. • We will electronically debit the purchase amount from the financial institution account identified on your account application.

Automatic Investment Plan. If you intend to use the Automatic Investment Plan (“AIP”), you may open your account with the initial minimum investment amount. Once an account has been opened, you may make additional investments in the Fund at regular intervals through the AIP. If elected on your account application, funds can be automatically transferred from your checking or savings account on the 5th, 10th, 15th, 20th or 25th of each month. In order to participate in the AIP, each additional subscription must be at least $100 for Class A and Class C Shares, at least $100,000 for Institutional Class shares, and your financial institution must be a member of the Automated Clearing House (“ACH”) network. The first AIP purchase will be made 15 days after the Transfer Agent receives your request in good order. The Transfer Agent will charge a $25 fee for any ACH payment that is rejected by your bank. Your AIP will be terminated if two successive mailings we send to you are returned by the U.S. Postal Service as undeliverable. You may terminate your participation in the AIP at any time by notifying the Transfer Agent at 1-(800) 207-7108 at least five days prior to the date of the next AIP transfer. The Fund may modify or terminate the AIP at any time without notice.

Canceled or Failed Payments. The Fund accepts checks and ACH transfers at full value subject to collection. If the Fund does not receive your payment for shares or you pay with a check or ACH transfer that does not clear, your purchase will be canceled. You will be responsible for any losses or expenses incurred by the Fund or the Transfer Agent, and the Fund may redeem shares you own in the account (or another identically registered account that you maintain with the Transfer Agent) as reimbursement. A $25 fee will be imposed for any returned checks/ACH transactions. The Fund and its agents have the right to reject or cancel any purchase due to nonpayment.

Selling Shares

You may redeem shares of the Fund at a price equal to the NAV next determined after the Transfer Agent and/or authorized agent receives your redemption request in good order. Generally, your redemption request cannot be processed on days the NYSE is closed. All requests received in good order by the Transfer Agent and/or authorized agent before the close of the regular trading session of the NYSE (generally, 4:00 p.m. Eastern Time) will usually be sent to the bank you indicate or mailed or wired, as applicable, on the following business day to the address, or pursuant to the wiring instructions, on record. Except as specified below, the Fund will process your redemption request and send your proceeds within seven calendar days after the Fund receives your redemption request.

If you purchase shares using a check and request a redemption before the check has cleared, the Fund may postpone payment of your redemption proceeds up to 15 calendar days while the Fund waits for the check to clear. Furthermore, there are certain times when you may be unable to sell Fund shares or receive proceeds. Specifically, the Fund may suspend the right to redeem shares or postpone the date of payment upon redemption for more than seven calendar days: (1) for any period during which the NYSE is closed (other than customary weekend or holiday closings) or trading on the NYSE is restricted; (2) for any period during which an emergency exists affecting the sale of the Fund’s securities or making such sale or the fair determination of the value of the Fund’s net assets not reasonably practicable; or (3) for such other periods as the SEC may permit for the protection of the Fund’s shareholders.

How to Sell Shares from Your Account
Through a Financial Advisor • Contact your advisor by the method that is most convenient for you.
By Mail • Prepare a written request including: • Your name(s) and signature(s) of all account owners • Your account number • The Fund name and class • The dollar amount or number of shares you want to sell • How and where to send the redemption proceeds • Obtain a Medallion signature guarantee (if required). • Obtain other documentation (if required). • Mail us your request and documentation.
Regular Mail: Liberty Street Funds P.O. Box 2175 Milwaukee, WI 53201-2175	Overnight Delivery: Liberty Street Funds 235 West Galena Street Milwaukee, WI 53212

The Fund does not consider the U.S. Postal Service or other independent delivery services to be its agents.

By Wire or ACH

• Wire or ACH redemptions are only available if your redemption is for $5,000 (except for systematic withdrawals) or more and you did not decline wire or ACH redemption privileges on your account application.

• Call us with your request (unless you declined telephone redemption privileges on your account application) (See “By Telephone”). or

• Mail us your request (See “By Mail”).

By Telephone

• Call us with your request (unless you declined telephone redemption privileges on your account application).

• Provide the following information:

• Your account number

• Exact name(s) in which the account is registered

• Additional form of identification

• Redemption proceeds will be:

• Mailed to you or

• Electronically credited to your account at the financial institution identified on your account application.

Systematically

• Complete the systematic withdrawal section of the application.

• Attach a voided check to your application.

• Mail us your completed application signed by all account owners.

• Redemption proceeds will be:

• Mailed to you or

• Electronically credited to your account at the financial institution identified on your account application

Wire or ACH Redemption Privileges. You may redeem your shares by wire or ACH unless you declined wire or ACH redemption privileges on your account application. The minimum amount that may be redeemed by wire is $5,000, except for systematic withdrawals.

Telephone Redemption Privileges. You may redeem your shares by telephone unless you declined telephone redemption privileges on your account application. You may be responsible for any unauthorized telephone order as long as the transfer agent takes reasonable measures to verify that the order is genuine. Telephone redemption orders may be difficult to complete during periods of significant economic or market activity. If you are not able to reach the Fund by telephone, you may send your redemption order to the Fund via regular or overnight delivery.

Systematic Withdrawal Plan. You may request that a predetermined dollar amount be sent to you on a monthly or quarterly basis. Your account must maintain a value of at least $10,000 for you to be eligible to participate in the Systematic Withdrawal Plan (“SWP”). The minimum withdrawal amount is $50. If you elect to receive redemptions through the SWP, the Fund will send a check to your address of record, or will send the payment via electronic funds transfer through the ACH network, directly to your bank account on record. You may request an application for the SWP by calling the Transfer Agent toll-free at 1-(800) 207-7108. The Fund may modify or terminate the SWP at any time. You may terminate your participation in the SWP by calling the Transfer Agent at least five business days before the next withdrawal.

Medallion Signature Guarantee Requirements. To protect you and the Fund against fraud, signatures on certain requests must have a “Medallion signature guarantee.” A Medallion signature guarantee verifies the authenticity of your signature. You can obtain a Medallion signature guarantee from most banking institutions or securities brokers, but not from a notary public. The transfer agent will need written instructions signed by all registered shareholders, with a Medallion signature guarantee for each shareholder, for any of the following (the following situations apply if you are requesting the transaction directly through the Fund):

·	Written requests to redeem $100,000 or more;

·	Changes to a shareholder’s record name;

Redemptions from an account for which the address or account registration has changed within the last 30 days;

Sending redemption and distribution proceeds to any person, address or financial institution account not on record;

Sending redemption and distribution proceeds to an account with a different registration (name or ownership) from your account; or

Adding or changing ACH or wire instructions, telephone redemption options or any other election in connection with your account.

The Transfer Agent reserves the right to require a Medallion signature guarantee on all redemptions.

Cost Basis Information. Federal tax law requires that regulated investment companies, such as the Fund report their shareholders' cost basis, gain/loss, and holding period to the IRS on the shareholders’ Consolidated Form 1099s when “covered” shares of the regulated investment companies are sold. Covered shares are any shares acquired (including pursuant to a dividend reinvestment plan) on or after January 1, 2012.

The Fund has chosen “first-in, first-out” (FIFO) as its standing (default) tax lot identification method for all shareholders, which means this is the method the Fund will use to determine which specific shares are deemed to be sold when there are multiple purchases on different dates at differing net asset values, and the entire position is not sold at one time. The Fund’s standing tax lot identification method is the method it will use to report the sale of covered shares on your Consolidated Form 1099 if you do not select a specific tax lot identification method. Redemptions are taxable and you may realize a gain or a loss upon redemption of your shares. Certain shareholders may be subject to backup withholding.

Subject to certain limitations, you may choose a method other than the Fund’s standing method at the time of your purchase or upon the sale of covered shares. For all methods except Specific Lot Identification, the Fund redeems noncovered shares first until they are depleted and then applies your elected method to your covered shares. Please refer to the appropriate Treasury regulations or consult your tax advisor with regard to your personal circumstances.

Exchange Privileges

You may exchange shares of the Fund for shares of other funds managed by the Advisor, which are offered in separate prospectuses The amount of the exchange must be equal to or greater than the required minimum initial investment (see “Minimum Investment” table). You may realize either a gain or loss on those shares and will be responsible for paying the appropriate taxes. If you exchange shares through a broker, the broker may charge you a transaction fee. If you are not using a broker, you may exchange shares by sending a written request to the Fund or by telephone. Be sure that your written request includes the dollar amount or number of shares to be exchanged, the name(s) on the account, the account number(s), and signed by all shareholders on the account. In order to limit expenses, each fund reserves the right to limit the total number of exchanges you can make in any year. If a CDSC applies to your redemption of Fund shares, it will be waived for the transaction to exchange shares of the Fund for shares of another fund managed by the Advisor; however, the CDSC and the remaining time period for which the CDSC applies will carry to the other fund.

Small Accounts. If the value of your account falls below $1,000 (excluding Qualified Retirement Accounts) with respect to Institutional Shares or $500 (excluding Qualified Retirement Accounts or accounts with systematic investment plans) with respect to A Shares and C Shares, the Fund may ask you to increase your balance. If, after 60 days, the account value is still below $1,000 (excluding Qualified Retirement Accounts or accounts with systematic investment plans) for Institutional Shares or $500 (excluding Qualified Retirement Accounts) for A Shares and C Shares, the Fund may close your account and send you the proceeds. The Fund will not close your account if it falls below these amounts solely as a result of a reduction in your account’s market value. There are no minimum balance requirements for Qualified Retirement Accounts.

In-Kind Purchases and Redemptions. The Fund reserves the right to accept payment for shares in the form of securities that are permissible investments for the Fund. However, under unusual conditions that make the payment of cash unwise (and for the protection of the Fund’s remaining shareholders), the Fund may pay all or part of a shareholder’s redemption proceeds in liquid securities with a market value equal to the redemption price (known as redemption-in-kind). If the Fund redeems your shares in kind, you will bear any market risks associated with investment in these securities, and you will be responsible for the costs (including brokerage charges) of converting the securities to cash. In-kind purchases and redemptions are taxable events and may result in the recognition of gain or loss for federal income tax purposes. See the SAI for further information about the terms of these purchases and redemptions.

Conversion of Shares. A share conversion is a transaction in which shares of one class of the Fund are exchanged for shares of another class of the Fund. Share conversions can occur between each share class of the Fund. Generally, share conversions occur when a shareholder becomes eligible for another share class of the Fund or no longer meets the eligibility criteria of the share class owned by the shareholder (and another class exists for which the shareholder would be eligible). Please note that a share conversion is generally a non-taxable event, but you should consult with your personal tax advisor on your particular circumstances.

A request for a share conversion will not be processed until it is received in “good order” (as defined above) by the Fund or your financial intermediary. To receive the NAV of the new class calculated that day, conversion requests must be received in good order by the Fund or your financial intermediary before 4:00 p.m., Eastern Time or the financial intermediary’s earlier applicable deadline. Please note that, because the NAV of each class of the Fund will generally vary from the NAVs of the other classes due to differences in expenses, you will receive a number of shares of the new class that is different from the number of shares that you held of the old class, but the total value of your holdings will remain the same.

The Fund’s frequent trading policies will not be applicable to share conversions. If you hold your shares through a financial intermediary, please contact the financial intermediary for more information on share conversions. Please note that certain financial intermediaries may not permit all types of share conversions. The Fund reserves the right to terminate, suspend or modify the share conversion privilege for any shareholder or group of shareholders.

The Fund reserves the right to automatically convert shareholders from one class to another if they either no longer qualify as eligible for their existing class or if they become eligible for another class. Such mandatory conversions may be as a result of a change in value of an account due to market movements, exchanges or redemptions. The Fund will notify affected shareholders in writing prior to any mandatory conversion.

Additional Investments. Additional subscriptions in the Fund generally may be made by investing at least the minimum amount shown in the table on page 22. Exceptions may be made at the Fund’s discretion. You may purchase additional shares of the Fund by sending a check together with the investment stub from your most recent account statement to the Fund at the applicable address listed in the table below. Please ensure that you include your account number on the check. If you do not have the investment stub from your account statement, list your name, address and account number on a separate sheet of paper and include it with your check. You may also make additional investments in the Fund by wire transfer of funds or through an approved financial intermediary.

Dividend Reinvestment. You may reinvest dividends and capital gains distributions in shares of the Fund. Such shares are acquired at NAV (without a sales charge) on the applicable payable date of the dividend or capital gain distribution. Unless you instruct otherwise, dividends and distributions on Fund shares are automatically reinvested in shares of the same class of the Fund paying the dividend or distribution. This instruction may be made by writing to the Transfer Agent or by telephone by calling (800) 207-7108. You may, on the account application form or prior to any declaration, instruct that dividends and/or capital gain distributions be paid in cash or be reinvested in the Fund at the next determined NAV. If you elect to receive dividends and/or capital gain distributions in cash and the U.S. Postal Service cannot deliver the check, or if a check remains outstanding for six months or more, the Fund reserves the right to reinvest the distribution check in your account at the Fund’s current NAV and to reinvest all subsequent distributions.

Lost Accounts. The Transfer Agent may consider your account “lost” if correspondence to your address of record is returned as undeliverable on two consecutive occasions, unless the transfer agent determines your new address. When an account is “lost”, all distributions on the account will be reinvested in additional Fund shares. In addition, the amount of any outstanding checks (unpaid for six months or more) or checks that have been returned to the Transfer Agent may be reinvested at the then-current NAV and the checks will be canceled. However, checks will not be reinvested into accounts with a zero balance, but may be held in an account for a period of time until the Transfer Agent locates you.

Please note that the value of your account may be transferred to the appropriate state if no activity occurs in the account within the time period specified by the state law.

Payment of Redemption Proceeds. You may redeem shares of the Fund at a price equal to the NAV next determined after the Transfer Agent and/or authorized agent receives your redemption request in good order. Generally your redemption request cannot be processed on days the NYSE is closed. All requests received in good order by the Transfer Agent and/or authorized agent before the close of the regular trading session of the NYSE (generally 4:00 p.m. Eastern Time) will usually be sent to the bank you indicate or wired on the following business day using the wire instructions on record. Except as specified below, the Fund will process your redemption request and send your proceeds within seven calendar days after the Fund receives your redemption request.

If you purchase shares using a check and request a redemption before the check has cleared, the Fund may postpone payment of your redemption proceeds up to 15 calendar days while the Fund waits for the check to clear. Furthermore, the Fund may suspend the right to redeem shares or postpone the date of payment upon redemption for more than seven calendar days: (1) for any period during which the NYSE is closed (other than customary weekend or holiday closings) or trading on the NYSE is restricted; (2) for any period during which an emergency exists affecting the sale of the Fund’s securities or making such sale or the fair determination of the value of the Fund’s net assets not reasonably practicable; or (3) for such other periods as the SEC may permit for the protection of the Fund’s shareholders.

Other Redemption Information

Shareholders who hold shares through an IRA or other retirement plan must indicate on their redemption request whether to withhold federal income tax. Redemption requests failing to indicate an election not to have taxes withheld generally will be subject to a 10% federal income tax withholding. In addition, if you are a resident of certain states, state income tax also applies to non-Roth IRA distributions when federal withholding applies. Please consult with your tax professional.

Choosing a Share Class

The Fund offers three classes of shares, each of which is designed for specific investors. Sales charges and fees may vary considerably between the Fund’s classes. You should carefully consider the differences in the fee and sales charge structures. Please review the Fee Table and Sales Charge Schedules before investing in the Fund. You may also want to consult with a financial advisor in order to help you determine which class is most appropriate for you. The following is a summary of the differences between Class A Shares, Class C Shares, and Institutional Class Shares of the Fund:

Class A Shares	Class C Shares	Institutional Class Shares
• Designed for retail investors	• Designed for retail investors (available for purchase only through an approved broker-dealer or financial intermediary)	• Designed for institutions (financial institutions, corporations, trusts, estates and religious and charitable organizations) investing for proprietary programs and firm discretionary accounts, corporate benefit plans, clients of the Advisor, trustees or officers of the Trust, directors, officers, employees of the Advisor, the Distributor or any of their affiliates or the spouse, life-partner, parent, child, sibling or other close family member
• Initial sales charge of 5.75% or less • No initial sales charge applied to purchases of $1 million or more	• No initial sales charge Maximum investment amount $999,999.	• No initial or deferred sales charge
• Deferred sales charge of 1.00% on purchases of $1 million or more on all fund shares liquidated in whole or in part within 12 months of purchase • Rule 12b-1 distribution or shareholder liaison service fee equal to 0.25% of the class’ average daily net assets · Shareholder service fee of up to 0.15% of the class’ average daily net assets	• Deferred sales charge of 1.00% on purchases of fund shares liquidated in whole or in part within 12 months of purchase • Rule 12b-1 distribution fee equal to 0.75/0.25% breakdown of the class’ average daily net assets for distribution and shareholder liaison service fee, respectively • Higher expense ratio than A Shares due to higher Rule 12b-1 distribution/shareholder liaison service fee · Shareholder service fee of up to 0.15% of the class’ average daily net assets	• No Rule 12b-1 distribution/service fee • Lower expense ratio than A Shares and C Shares because no Rule 12b-1 distribution fees or shareholder liaison service fees · Shareholder service fee of up to 0.15% of the class’ average daily net assets

Information on sales charges can be also found on the Fund’s website www.libertystreetfunds.com, or please call (800) 207-7108, or consult with your financial advisor.

Sales Charge Schedule—Class A Shares. Class A shares of the Fund are sold at the offering price, which is NAV plus an initial maximum sales charge that varies with the amounts you invest as shown in the following chart. This means that part of your investment in the Fund will be used to pay the sales charge.

	Sales Charge (Load) as % of:
Amount of Purchase	Public Offering Price	Net Asset Value⁽¹⁾	Broker/Dealer Reallowance %
Less than $50,000	5.75%	6.10%	5.75%
At least $50,000 but less than $100,000	4.70%	4.99%	4.70%
At least $100,000 but less than $250,000	3.50%	3.63%	3.50%
At least $250,000 but less than $500,000	2.50%	2.56%	2.50%
At least $500,000 but less than $1,000,000	2.00%	2.04%	2.00%
$1,000,000 and greater⁽²⁾	None	0.00%	None

⁽¹⁾	Rounded to the nearest one-hundredth percent. Because of rounding of the calculation in determining sales charges, the charges may be more or less than those shown in the table.
⁽²⁾	No initial sales charge applies on purchases of $1 million or more. A CDSC of up to 1.00% of the offering price will be charged on purchases of $1 million or more that are redeemed in whole or in part within twelve months of purchase.

The offering price for Class A Shares includes the relevant sales charge. The commission received by the Distributor is the sales charge less the reallowance paid to certain financial institutions purchasing shares. Normally, reallowances are paid as indicated in the previous tables. Commissions received by the Distributor are not retained for compensation, but instead are retained to pay future distribution expenses.

The Advisor may pay a sales commission of up to 1.00% of the offering price of Class A shares to brokers that initiate and are responsible for purchases of $1 million or more according to the chart below. This does not apply to accounts for which an institution provides advisory or fiduciary services pursuant to an account management fee.

Sales Commission as % of Public Offering Price:
Aggregate Amount of Purchase⁽¹⁾		Sales Commission
$1,000,000 but less than $5,000,000	1.00%
$5,000,000 but less than $10,000,000	0.75%	of the amount over $5,000,000 plus $50,000
$10,000,000 but less than $15,000,000	0.50%	of the amount over $10,000,000 plus $87,500
$15,000,000 and greater	0.25%	of the amount over $15,000,000 plus $112,500

⁽¹⁾	Sales commissions will be calculated at the rate indicated in the table above based on the aggregate, not incremental, purchase amount.

Reduced Sales Charges—Class A Shares. You may qualify for a reduced initial sales charge on purchases of Class A Shares under rights of accumulation (“ROA”) or a letter of intent (“LOI”). The Class A Shares of other mutual funds managed by the Advisor may be included when considering eligibility for reduced sales charges under ROA or a LOI. The transaction processing procedures maintained by certain financial institutions through which you can purchase Fund shares may restrict the universe of accounts considered for purposes of calculating a reduced sales charge under ROA or LOI. For example, the processing procedures of a financial institution may limit accounts to those that share the same tax identification number or mailing address and that are maintained only with that financial institution. The Fund permits financial institutions to calculate ROA and LOI based on the financial institution’s transaction processing procedures. Please contact your financial institution before investing to determine the process used to identify accounts for ROA and LOI purposes.

If the financial institution does not have transaction processing procedures for ROA, to determine the applicable reduced sales charge under ROA, the Fund or its agent will combine the value of your current purchase with the collective value of Class A Shares of the Fund (as of the Fund’s prior business day) and if applicable any other eligible fund managed by the Advisor that were purchased previously for accounts (a) (i) in your name, (ii) in the name of your spouse, (iii) in the name of you and your spouse, or (iv) in the name of your minor child under the age of 21, and (b) sharing the same mailing address (“Accounts”).

To be entitled to a reduced sales charge based on shares already owned, you must ask for the reduction at the time of purchase. You must also provide the Fund with your account number(s) and, if applicable, the account numbers for your spouse, children (provide the children’s ages), or other household members and, if requested by your financial institution, the following additional information regarding these Accounts:

·	Information or records regarding Class A Shares held in all accounts in your name at the transfer agent;

·	Information or records regarding Class A Shares held in all accounts in your name at a financial intermediary; and

·	Information or records regarding Class A Shares for accounts at the transfer agent or another financial intermediary.

The Fund may amend or terminate this right of accumulation at any time.

You may also enter into an LOI, which expresses your intent to invest $50,000 or more in the Fund’s Class A Shares in accounts within a future period of 13 months. The Class A Shares of other mutual funds managed by the Advisor may be eligible to be included for purposes of calculating a reduced sales charge under a LOI. Each purchase under an LOI will be made at the public offering price applicable at the time of the purchase to a single transaction of the dollar amount indicated in the LOI. If you do not purchase the minimum investment referenced in the LOI, you must pay the Fund an amount equal to the difference between the dollar value of the sales charges paid under the LOI and the dollar value of the sales charges due on the aggregate purchases of the Class A Shares as if such purchases were executed in a single transaction. If incurred, these charges may be deducted directly from your account. Accounts subject to the LOI must be specifically identified in the LOI.

Elimination of Initial Sales Charges—Class A Shares. Certain persons may also be eligible to purchase or redeem Class A Shares without a sales charge. No sales charge is assessed on the reinvestment of Class A Shares’ distributions. No sales charge is assessed on purchases made for investment purposes by:

·	Investors with no associated broker/dealer who purchase shares directly through the Transfer Agent;

·	Investors purchasing shares through a financial institution that has an agreement with the Fund or the Distributor to waive sales charges or offer Class A shares through a no load network or platform;

·	A qualified retirement plan under Section 401(a) of the Internal Revenue Code (“the Code”) or a plan operating consistent with Section 403(b) of the Code;

·	Any bank, trust company, savings institution, registered investment advisor, financial planner or financial institution on behalf of an account for which it provides advisory or fiduciary services pursuant to an account management fee;

Trustees and officers of the Trust, directors, officers and full-time employees of the Advisor, the Sub-advisor, the Distributor, any of their affiliates or any organization which has a selling agreement with the Fund or the Distributor, with respect to the Fund; the spouse, life partner, parent, child, sibling or other close family members of any such person; any trust or individual retirement account or retirement plan for the benefit of any such person; or the estate of any such person;

·	Shares purchased due to an exchange from another eligible fund managed by the Advisor; provided such purchase occurs within 90 days from redemption of the other eligible fund;

·	Any shares purchased as a result of reinvesting dividends or distributions; or

·	Any person purchasing $1 million or more in Class A Shares.

The Fund requires appropriate documentation of an investor’s eligibility to purchase or redeem Class A Shares without a sales charge. Any shares of the Fund so purchased may not be resold except to the Fund.

Contingent Deferred Sales Charge Schedule—Class A Shares and Class C Shares. A CDSC of 1.00% of the purchase or sales price, whichever is less, is assessed on redemptions of Class A Shares that were part of a purchase of $1 million or more and that are liquidated in whole or in part within 12 months of purchase for the Fund. A CDSC of 1.00% of the purchase or sales price, whichever is less, is assessed on redemptions of Class C Shares that are liquidated in whole or in part within 12 months of purchase for the Fund. The maximum investment amount for C Shares is $999,999. The transaction processing procedures maintained by certain financial institutions through which you can purchase Fund shares may impose lower maximum investment amounts for the Fund’s Class C Shares.

To satisfy a redemption request, the Fund will first liquidate shares that are not subject to a CDSC such as shares acquired with reinvested dividends and capital gains. The Fund will then liquidate shares in the order that they were first purchased until the redemption request is satisfied. Investors who think they may be eligible for a waiver of the CDSC should inform their financial advisor. An investor or financial intermediary must notify the Fund’s Transfer Agent prior to the redemption request to ensure receipt of the waiver.

Waivers of CDSC. A CDSC will not be assessed on the following redemptions of Class A Shares or Class C Shares:

·	Redemptions following death or permanent disability (as defined by the Code) of an individual investor:

·	Required minimum distributions from a tax-deferred retirement plan or an individual retirement account (IRA) as required under the Code;

·	Redemption from accounts for which the broker-dealer of record has entered into a special agreement with the Fund permitting such waiver;

·	Redemptions to return excess contributions made to a retirement plan;

·	Redemptions by any bank, trust company, savings institution, registered investment advisor, financial planner or financial institution on behalf of an account for which it provides advisory or fiduciary services pursuant to an account management fee; or

Redemptions by trustees and officers of the Trust, directors, officers and full-time employees of the Advisor, the Sub-advisor, the Distributor, any of their affiliates or any organization with which the Distributor has entered into a dealer agreement, the spouse, life partner, parent, child, sibling or other close family members of any such person; any trust or individual retirement account or self-employed retirement plan for the benefit of any such person; or the estate of any such person.

·	Exchanges into another eligible fund managed by the Advisor; however, the waiver of the CDSC shall only apply to the exchange transaction. The CDSC will still apply to the subsequent purchase of the other fund.

Retirement Accounts

You may invest in Fund shares through IRA accounts, including traditional and Roth IRAs. The Fund may also be appropriate for other retirement plans. Before investing in any IRA or other retirement plan, you should consult your tax advisor. Whenever making an investment in an IRA, be sure to indicate the year in which the contribution is made.

Availability of Information

In order to reduce the amount of mail you receive and to help reduce expenses, we generally send a single copy of any shareholder report and Prospectus to each household. If you do not want the mailing of these documents to be combined with those of other members of your household, please contact your authorized dealer or the Transfer Agent.

OTHER INFORMATION

Distributions

The Fund will make dividend distributions of net investment income, if any, monthly and net capital gains distributions, if any, at least annually, typically in December. The Fund may make an additional payment of dividends or distributions if it deems it desirable at any other time during the year.

If you buy shares of the Fund just before it makes a distribution (on or before the record date), you will receive some of the purchase price back in the form of a taxable distribution.

All dividends and distributions of the Fund will be reinvested in additional Fund shares, unless you choose one of the following options: (1) to receive net investment income dividends in cash, while reinvesting capital gain distributions in additional Fund shares; or (2) to receive all dividends and distributions in cash. If you wish to change your distribution option, please write to the Transfer Agent before the payment date of the distribution.

If you elect to receive distributions in cash and the U.S. Postal Service cannot deliver your check, or if your distribution check has not been cashed for six months, the Fund reserves the right to reinvest the distribution check in your account at the Fund’s then current NAVs and to reinvest all subsequent distributions. Shares become entitled to receive distributions on the day after the shares are issued.

FEDERAL INCOME TAX CONSEQUENCES

The following discussion is very general and does not address investors subject to special rules, such as investors who hold Fund shares through an IRA, 401(k) plan or other tax-deferred account. The SAI contains further information about taxes. Because each shareholder’s circumstances are different and special tax rules may apply, you should consult your tax advisor about your investment in the Fund.

You will generally have to pay federal income taxes, as well as any state or local taxes, on distributions received from the Fund, whether paid in cash or reinvested in additional shares. If you sell Fund shares, it is generally considered a taxable event. If you exchange shares of the Fund for shares of another fund, the exchange will be treated as a sale of the Fund’s shares and any gain on the transaction may be subject to federal income tax.

Distributions of net investment income, other than “qualified dividend income,” and distributions of net short-term capital gains, are taxable for federal income tax purposes at ordinary income tax rates. Distributions from the Fund’s net capital gain (i.e., the excess of net long-term capital gain over net short-term capital loss) are taxable for federal income tax purposes as long-term capital gain, regardless of how long you have held Fund shares.

Dividends paid by the Fund (but none of the Fund’s capital gain distributions) may qualify in part for the dividends-received deduction available to corporate shareholders, provided certain holding period and other requirements are satisfied. Distributions of investment income that the Fund reports as “qualified dividend income” may be eligible to be taxed to non-corporate shareholders at the reduced rates applicable to long-term capital gain if derived from the Fund’s qualified dividend income and if certain other requirements are satisfied. “Qualified dividend income” generally is income derived from dividends paid by U.S. corporations or certain foreign corporations that are either incorporated in a U.S. possession or eligible for tax benefits under certain U.S. income tax treaties. In addition, dividends that the Fund receives in respect of stock of certain foreign corporations may be qualified dividend income if that stock is readily tradable on an established U.S. securities market.

You may want to avoid buying shares of the Fund just before it declares a distribution (on or before the record date), because such a distribution will be taxable to you even though it may effectively be a return of a portion of your investment.

Although distributions are generally taxable when received, dividends declared in October, November or December to shareholders of record as of a date in such month and paid during the following January are treated as if received on December 31 of the calendar year when the dividends were declared. Information on the federal income tax status of dividends and distributions is provided annually.

Dividends and distributions from the Fund and net gain from redemptions of Fund shares will generally be taken into account in determining a shareholder’s “net investment income” for purposes of the Medicare contribution tax applicable to certain individuals, estates and trusts.

If you do not provide the Fund with your correct taxpayer identification number and any required certifications, you will be subject to backup withholding on your redemption proceeds, dividends and other distributions. The backup withholding rate is currently 28%.

Dividends and certain other payments made by the Fund to a non-U.S. shareholder are subject to such withholding of federal income tax at the rate of 30% (or such lower rate as may be determined in accordance with any applicable treaty). Dividends that are reported by the Fund as “interest-related dividends” or “short-term capital gain dividends” are generally exempt from such withholding for taxable years of the Fund beginning before January 1, 2015. In general, the Fund may report interest-related dividends to the extent of its net income derived from U.S.-source interest and the Fund may report short-term capital gain dividends to the extent its net short-term capital gain for the taxable year exceeds its net long-term capital loss. Backup withholding will not be applied to payments that have been subject to the 30% withholding tax described in this paragraph.

Unless certain non-U.S. entities that hold shares comply with IRS requirements that will generally require them to report information regarding U.S. persons investing in, or holding accounts with, such entities, a 30% withholding tax may apply to distributions payable to such entities after June 30, 2014 (or, in certain cases, after later dates) and redemption proceeds and certain capital gain dividends payable to such entities after December 31, 2016. A non-U.S. shareholder may be exempt from the withholding described in this paragraph under an applicable intergovernmental agreement between the U.S. and a foreign government, provided that the shareholder and the applicable foreign government comply with the terms of the agreement.

Some of the Fund’s investment income may be subject to foreign income taxes that are withheld at the country of origin. Tax treaties between certain countries and the United States may reduce or eliminate such taxes, but there can be no assurance that the Fund will qualify for treaty benefits.

This discussion of distributions and taxes is not intended or written to be used as tax advice. Because everyone’s tax situation is different, we encourage you to consult with appropriate tax and accounting professionals about federal, state, local, or foreign tax consequences before considering an investment in the Fund.

FINANCIAL HIGHLIGHTS

Because the Fund has not commenced operations as of the date of this Prospectus, no financial information is available.

APPENDIX A – DESCRIPTION OF SECURITIES RATINGS

Corporate Bonds (Including Convertible Bonds)

Moody’s

Aaa

Bonds that are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as “gilt edged.” Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.

Bonds that are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high-grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present, which make the long-term risk, appear somewhat larger than the Aaa securities.

A	Bonds that are rated A possess many favorable investment attributes and are to be considered as upper-medium-grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future.

Baa

Bonds that are rated Baa are considered as medium-grade obligations (i.e., they are neither highly protected nor poorly secured). Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.

Bonds that are rated Ba are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate, and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class.

B	Bonds that are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.

Caa

Bonds that are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest. Ca Bonds, which are rated Ca, represent obligations that are speculative in a high degree. Such issues are often in default or have other marked shortcomings.

C	Bonds that are rated C are the lowest rated class of bonds, and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

Note

Moody’s applies numerical modifiers 1, 2, and 3 in each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category.

S&P

AAA	An obligation rated AAA has the highest rating assigned by Standard & Poor’s. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong.

AA	An obligation rated AA differs from the highest-rated obligations only in small degree. The obligor’s capacity to meet its financial commitment on the obligation is very strong.

A	An obligation rated A is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor’s capacity to meet its financial commitment on the obligation is still strong.

BBB	An obligation rated BBB exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.

Note

Obligations rated BB, B, CCC, CC, and C are regarded as having significant speculative characteristics. BB indicates the least degree of speculation and C the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions.

An obligation rated BB is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial or economic conditions, which could lead to the obligor’s inadequate capacity to meet its financial commitment on the obligation.

An obligation rated B is more vulnerable to nonpayment than obligations rated BB, but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor’s capacity or willingness to meet its financial commitment on the obligation.

CCC

An obligation rated CCC is currently vulnerable to nonpayment, and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation.

CC	An obligation rated CC is currently highly vulnerable to nonpayment.

C	The C rating may be used to cover a situation where a bankruptcy petition has been filed or similar action has been taken, but payments on this obligation are being continued.

An obligation rated D is in payment default. The D rating category is used when payments on an obligation are not made on the date due even if the applicable grace period has not expired, unless Standard & Poor’s believes that such payments will be made during such grace period. The D rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized.

Note

Plus (+) or minus (-). The ratings from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories. The “r” symbol is attached to the ratings of instruments with significant noncredit risks. It highlights risks to principal or volatility of expected returns, which are not addressed in the credit rating. Examples include: obligations linked or indexed to equities, currencies, or commodities; obligations exposed to severe prepayment risk-such as interest-only or principal-only mortgage securities; and obligations with unusually risky interest terms, such as inverse floaters.

Preferred Stock

Moody’s

Aaa	An issue that is rated “Aaa” is considered to be a top-quality preferred stock. This rating indicates good asset protection and the least risk of dividend impairment within the universe of preferred stocks.

Aa	An issue that is rated “Aa” is considered a high-grade preferred stock. This rating indicates that there is a reasonable assurance the earnings and asset protection will remain relatively well maintained in the foreseeable future.

A	An issue that is rated “A” is considered to be an upper-medium grade preferred stock. While risks are judged to be somewhat greater than in the “Aaa” and “Aa” classification, earnings and asset protection are, nevertheless, expected to be maintained at adequate levels.

Baa	An issue that is rated “Baa” is considered to be a medium-grade preferred stock, neither highly protected nor poorly secured. Earnings and asset protection appear adequate at present but may be questionable over any great length of time.

Ba	An issue that is rated “Ba” is considered to have speculative elements and its future cannot be considered well assured. Earnings and asset protection may be very moderate and not well safeguarded during adverse periods. Uncertainty of position characterizes preferred stocks in this class.

B	An issue that is rated “B” generally lacks the characteristics of a desirable investment. Assurance of dividend payments and maintenance of other terms of the issue over any long period of time may be small.

Caa	An issue that is rated “Caa” is likely to be in arrears on dividend payments. This rating designation does not purport to indicate the future status of payments.

Ca	An issue that is rated “Ca” is speculative in a high degree and is likely to be in arrears on dividends with little likelihood of eventual payments.

C	This is the lowest rated class of preferred or preference stock. Issues so rated can thus be regarded as having extremely poor prospects of ever attaining any real investment standing.

Note

Moody’s applies numerical modifiers 1, 2, and 3 in each rating classification: the modifier 1 indicates that the security ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking and the modifier 3 indicates that the issue ranks in the lower end of its generic rating category.

S&P

AAA	This is the highest rating that may be assigned by Standard & Poor’s to a preferred stock issue and indicates an extremely strong capacity to pay the preferred stock obligations.

AA	A preferred stock issue rated AA also qualifies as a high-quality, fixed-income security. The capacity to pay preferred stock obligations is very strong, although not as overwhelming as for issues rated AAA.

A	An issue rated A is backed by a sound capacity to pay the preferred stock obligations, although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions.

BBB

An issue rated BBB is regarded as backed by an adequate capacity to pay the preferred stock obligations. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to make payments for a preferred stock in this category than for issues in the A category.

BBB,

CCC

Preferred stock rated BB, B, and CCC is regarded, on balance, as predominantly speculative with respect to the issuer’s capacity to pay preferred stock obligations. BB indicates the lowest degree of speculation and CCC the highest. While such issues will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions.

CC	The rating CC is reserved for a preferred stock issue that is in arrears on dividends or sinking fund payments, but that is currently paying.

C	A preferred stock rated C is a nonpaying issue.

D	A preferred stock rated D is a nonpaying issue with the issuer in default on debt instruments.

N.R.	This indicates that no rating has been requested, that there is insufficient information on which to base a rating, or that Standard & Poor’s does not rate a particular type of obligation as a matter of policy.

Note	Plus (+) or minus (-). To provide more detailed indications of preferred stock quality, ratings from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.

Short Term Ratings

Moody’s

Moody’s employs the following three designations, all judged to be investment grade, to indicate the relative repayment ability of rated issuers:

Prime-1

Issuers rated Prime-1 (or supporting institutions) have a superior ability for repayment of senior short-term debt obligations. Prime-1 repayment ability will often be evidenced by many of the following characteristics:

Leading market positions in well-established industries.

High rates of return on funds employed.

Conservative capitalization structure with moderate reliance on debt and ample asset protection.

Broad margins in earnings coverage of fixed financial charges and high internal cash generation.

Well-established access to a range of financial markets and assured sources of alternate liquidity.

Prime-2

Issuers rated Prime-2 (or supporting institutions) have a strong ability for repayment of senior short-term debt obligations. This will normally be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and coverage ratios, while sound, may be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained.

Prime-3

Issuers rated Prime-3 (or supporting institutions) have an acceptable ability for repayment of senior short-term obligations. The effect of industry characteristics and market compositions may be more pronounced. Variability in earnings and profitability may result in changes in the level of debt protection measurements and may require relatively high financial leverage. Adequate alternate liquidity is maintained.

Not Prime

Issuers rated Not Prime do not fall within any of the Prime rating categories.

S&P

A-1

A short-term obligation rated A-1 is rated in the highest category by Standard & Poor’s. The obligor’s capacity to meet its financial commitment on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor’s capacity to meet its financial commitment on these obligations is extremely strong.

A-2	A short-term obligation rated A-2 is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor’s capacity to meet its financial commitment on the obligation is satisfactory.

A-3	A short-term obligation rated A-3 exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.

A short-term obligation rated B is regarded as having significant speculative characteristics. The obligor currently has the capacity to meet its financial commitment on the obligation; however, it faces major ongoing uncertainties, which could lead to the obligor’s inadequate capacity to meet its financial commitment on the obligation

C	A short-term obligation rated C is currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation.

A short-term obligation rated D is in payment default. The D rating category is used when payments on an obligation are not made on the date due even if the applicable grace period has not expired, unless Standard & Poor’s believes that such payments will be made during such grace period. The D rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized.

Investment Advisor

Liberty Street Advisors, Inc.

100 Wall Street, Floor 20

New York, New York 10005

Sub-advisor

Braddock Financial LLC

1200 17^th Street, Suite 880

Denver, Colorado 80202

Fund Co-Administrator, Transfer Agent and Fund Accountant

UMB Fund Services, Inc.

235 West Galena Street

Milwaukee, Wisconsin 53212

Fund Co-Administrator

Mutual Fund Administration, LLC

2220 E. Route 66, Suite 226

Glendora, California 91740

Custodian

UMB Bank, N.A.

928 Grand Boulevard, 5^h Floor

Kansas City, Missouri 64106

Independent Registered Public Accounting Firm

Tait, Weller & Baker LLP

1818 Market Street, Suite 2400

Philadelphia, Pennsylvania 19103

Independent Counsel

Morgan, Lewis & Bockius LLP

300 S. Grand Avenue, 22^nd Floor

Los Angeles, California 90071

Distributor

Foreside Fund Services, LLC

Three Canal Plaza, Suite 100

Portland, Maine 04101

www.foreside.com

Braddock Multi-Strategy Income Fund

A series of Investment Managers Series Trust

FOR MORE INFORMATION

Statement of Additional Information (SAI)

The SAI provides additional details about the investments and techniques of the Fund and certain other additional information. A current SAI is on file with the SEC and is incorporated into this Prospectus by reference. This means that the SAI is legally considered a part of this Prospectus even though it is not physically within this Prospectus.

Shareholder Reports

Additional information about the Fund’s investments is available in the Fund’s annual and semi-annual reports to shareholders. In the Fund’s annual report, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund’s performance during its last fiscal year.

The Fund’s SAI and annual and semi-annual reports are available free of charge on the Fund’s website at http://www.libertystreetfunds.com. You can obtain a free copy of the Fund’s SAI or annual and semi-annual reports, request other information, or inquire about the Fund by contacting a broker that sells shares of the Fund or by calling the Fund (toll-free) at (800) 207-7108 or by writing to:

Liberty Street Funds

P.O. Box 2175

Milwaukee, Wisconsin 53201

You may review and copy information including the Fund's Shareholder Reports and SAI at the Public Reference Room of the SEC in Washington, DC. You can obtain information on the operation of the Public Reference Room by calling (202) 551-8090. Reports and other information about the Fund are also available:

·	Free of charge from the SEC’s EDGAR database on the SEC’s Internet website at http://www.sec.gov;

·	For a duplication fee, by writing to the Public Reference Room of the SEC, Washington, DC 20549-1520; or

·	For a duplication fee, by electronic request at the following e-mail address: publicinfo@sec.gov.

(Investment Company Act file number 811- 21719.)

Statement of Additional Information

December 31, 2015

Braddock Multi-Strategy Income Fund

a series of Investment Managers Series Trust

Class A Shares (Ticker Symbol: BDKAX), Class C Shares (Ticker Symbol: BDKCX)

Institutional Class Shares (Ticker Symbol: BDKNX)

This Statement of Additional Information (“SAI”) is not a prospectus, and it should be read in conjunction with the Prospectus dated December 31, 2015, as may be amended from time to time, of the Braddock Multi-Strategy Income Fund (the “Fund”), a series of Investment Managers Series Trust (the “Trust”). Liberty Street Advisors, Inc. (the “Advisor”) is the investment advisor to the Fund. Braddock Financial LLC (the “Sub-Advisor”) is the sub-advisor to the Fund. A copy of the Fund’s Prospectus may be obtained by contacting the Fund at the address or telephone number specified below.

Braddock Multi-Strategy Income Fund

P.O. Box 2175

Milwaukee, Wisconsin 53201

1-(800) 207-7108

TABLE OF CONTENTS

THE TRUST AND THE FUND	B-2
INVESTMENT STRATEGIES, POLICIES AND RISKS	B-2
MANAGEMENT OF THE FUND	B-36
PORTFOLIO TRANSACTIONS AND BROKERAGE	B-48
PORTFOLIO TURNOVER	B-49
PROXY VOTING POLICY	B-50
ANTI-MONEY LAUNDERING PROGRAM	B-50
PORTFOLIO HOLDINGS INFORMATION	B-51
DETERMINATION OF NET ASSET VALUE	B-52
PURCHASE AND REDEMPTION OF FUND SHARES	B-53
FEDERAL INCOME TAX MATTERS	B-54
DIVIDENDS AND DISTRIBUTIONS	B-60
GENERAL INFORMATION	B-61
FINANCIAL STATEMENTS	B-63
APPENDIX A: PROXY VOTING POLICY	B-64
APPENDIX B: FINANCIAL STATEMENTS OF BRADDOCK STRUCTURED OPPORTUNITIES FUND, LP (THE PREDECESSOR FUND)	B-66

THE TRUST AND THE FUND

The Trust is an open-end management investment company organized as a Delaware statutory trust under the laws of the State of Delaware on February 15, 2005. The Trust currently consists of several other series of shares of beneficial interest. This SAI relates only to the Fund and not to the other series of the Trust.

The Trust is registered with the Securities and Exchange Commission (“SEC”) as an open-end management investment company. Such a registration does not involve supervision of the management or policies of the Fund. The Prospectus of the Fund and this SAI omit certain of the information contained in the Registration Statement filed with the SEC. Copies of such information may be obtained from the SEC upon payment of the prescribed fee.

The Fund is a non-diversified fund, which means it is not subject to the diversification requirements under the Investment Company Act of 1940, as amended (the “1940 Act”). Under the 1940 Act, a diversified fund may not, with respect to 75% of its total assets, invest more than 5% of its total assets in the securities of one issuer (and in not more than 10% of the outstanding voting securities of an issuer), excluding cash, Government securities, and securities of other investment companies. Although the Fund is not required to comply with the above requirement, the Fund intends to diversify its assets to the extent necessary to qualify for tax treatment as a regulated investment company under the Internal Revenue Code of 1986, as amended (the “Code”).

The Fund currently offers three classes of shares: Class A, Class C and Institutional Class. Other classes may be established from time to time in accordance with the provisions of the Trust’s Agreement and Declaration of Trust (the “Declaration of Trust”). Each class of shares of the Fund generally is identical in all respects except that each class of shares is subject to its own distribution expenses and minimum investments. Each class of shares also has exclusive voting rights with respect to its distribution fees.

INVESTMENT STRATEGIES, POLICIES AND RISKS

The discussion below supplements information contained in the Fund’s Prospectus pertaining to the investment policies of the Fund.

Market Conditions

The equity and debt capital markets in the United States and internationally experienced unprecedented volatility from 2008 through 2012. These conditions caused a significant decline in the value and liquidity of many securities and other instruments. It is impossible to predict whether such conditions will recur. Because such situations may be widespread, it may be difficult to identify both risks and opportunities using past models of the interplay of market forces, or to predict the duration of such events.

Principal Investment Strategies, Policies and Risks

Asset-Backed Debt Securities

Asset-backed debt securities represent interests in “pools” of mortgages or other assets, including securities backed by assets such as residential and commercial real estate, corporate debt, credit card and business receivables, student loans, personal and consumer loans and automobile loans.

The Fund may invest in mortgage-related securities that are backed by or provide exposure to mortgages, including private, government, commercial and residential mortgage-backed securities. The Fund may invest in mortgage-backed securities and derivative mortgage-backed securities, and may also invest in “principal only” and “interest only” components. Mortgage-backed securities are securities that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property. As with other debt securities, mortgage-backed securities are subject to credit risk and interest rate risk. However, the yield and maturity characteristics of mortgage-backed securities differ from traditional debt securities. A major difference is that the principal amount of the obligations may normally be prepaid at any time because the underlying assets (i.e., loans) generally may be prepaid at any time. The relationship between prepayments and interest rates may give some mortgage-backed securities less potential for growth in value than conventional fixed-income securities with comparable maturities. In addition, in periods of falling interest rates, the rate of prepayments tends to increase. During such periods, the reinvestment of prepayment proceeds by the Fund will generally be at lower rates than the rates that were carried by the obligations that have been prepaid. If interest rates rise, borrowers may prepay mortgages more slowly than originally expected. This may further reduce the market value of mortgage-backed securities and lengthen their durations. Because of these and other reasons, a mortgage-backed security’s total return, maturity and duration may be difficult to predict precisely.

B-2

Mortgage loans may be either “agency” (i.e. government) or “non-agency” (i.e., private). Agency loans have balances that fall within the limits set by the Federal Housing Finance Agency (“FHFA”) and qualify as collateral for securities that are issued by the Government National Mortgage Association (“Ginnie Mae”), the Federal National Mortgage Association (“Fannie Mae”) or the Federal Home Loan Mortgage Corporation (“Freddie Mac”). Non-agency loans have balances that may or may not fall within the limits set by FHFA and do not qualify as collateral for securities that are issued by Ginnie Mae, Fannie Mae or Freddie Mac, and are made by private companies rather than government sponsored enterprises (sometimes referred to as “private label paper”). Additional RMBS products include trusts backed by non-performing or re-performing mortgage loans and loans secured by single family rental properties. Non-performing and re-performing mortgage loans derive their value from the sale of the underlying residential property and potentially from modified mortgage payments to the previously delinquent borrower.

Mortgage-backed securities come in different classes that have different risks. Junior classes of mortgage-backed securities are designed to protect the senior class investors against losses on the underlying mortgage loans by taking the first loss if there are liquidations among the underlying loans. Junior classes generally receive principal and interest payments only after all required payments have been made to more senior classes. If the Fund invests in junior classes of mortgage-related securities, it may not be able to recover all of its investment in the securities it purchases. In addition, if the underlying mortgage portfolio has been overvalued, or if mortgage values subsequently decline, the Fund may suffer significant losses. Investments in mortgage-backed securities involve the risks of interruptions in the payment of interest and principal (delinquency) and the potential for loss of principal if the property underlying the security is sold as a result of foreclosure on the mortgage (default). These risks include the risks associated with direct ownership of real estate, such as the effects of general and local economic conditions on real estate values, the conditions of specific industry segments, the ability of tenants to make lease payments and the ability of a property to attract and retain tenants, which in turn may be affected by local market conditions such as oversupply of space or a reduction of available space, the ability of the owner to provide adequate maintenance and insurance, energy costs, government regulations with respect to environmental, zoning, rent control and other matters, and real estate and other taxes. If the underlying borrowers cannot pay their mortgage loans, they may default and the lenders may foreclose on the property.

The ability of borrowers to repay mortgage loans underlying mortgage-backed securities will typically depend upon the future availability of financing and the stability of real estate values. For mortgage loans not guaranteed by a government agency or other party, the only remedy of the lender in the event of a default is to foreclose upon the property. If borrowers are not able or willing to pay the principal balance on the loans, there is a good chance that payments on the related mortgage-related securities will not be made. Certain borrowers on underlying mortgages may become subject to bankruptcy proceedings, in which case the value of the mortgage-backed securities may decline.

B-3

The residential real estate market in the United States experienced unprecedented upheaval from approximately 2007 to 2011. Among other things, the value of residential real estate during that time decreased significantly. This decrease in value was more pronounced in some regions of the country but, overall, prices dropped substantially. Those significant decreases affected the value of both prime and subprime mortgage-backed securities, as payments of principal and interest on residential mortgages varied due to foreclosures, job losses, and other factors. As a result of those conditions, mortgage-backed securities lost value during that time period, including the “senior” classes of those securities. There can be no assurance that the residential real estate market or home prices will not undergo similar upheaval in the future. Should the residential real estate market in the United States experience similar upheaval as from approximately 2007 to 2011, there may be no assurance that mortgage-backed securities will make payments of principal and interest at the times or in the amounts scheduled.

The Fund may invest in other asset-backed debt securities that, through the use of trusts and special purpose vehicles, are securitized with various types of assets, such as automobile receivables, credit card receivables and home-equity loans in pass- through structures similar to the mortgage-related securities described above. In general, the collateral supporting asset-backed debt securities is of shorter maturity than the collateral supporting mortgage loans and is less likely to experience substantial prepayments. However, asset-backed debt securities are not backed by any governmental agency.

Collateralized Debt Obligations. Collateralized Debt Obligations (“CDOs”) include Collateralized Bond Obligations (“CBOs”), Collateralized Loan Obligations (“CLOs”) and other similarly structured securities. CBOs and CLOs are types of asset backed securities. A CBO is a trust which is backed by a diversified pool of high risk, below investment grade fixed income securities. A CLO is a trust typically collateralized by a pool of loans, which may include, among others, domestic and foreign senior secured loans, senior unsecured loans, and subordinate corporate loans, including loans that may be rated below investment grade or equivalent unrated loans. The risks of an investment in a CDO depend largely on the type of the collateral securities and the class of the CDO in which a Fund invests. CDOs carry additional risks including, but not limited to, (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments, (ii) the collateral may decline in value or default, (iii) a Fund may invest in CDOs that are subordinate to other classes, and (iv) the complex structure of the security may not be fully understood at the time of investment and may produce disputes with the issuer or unexpected investment results.

Collateralized Loan Obligations. CLOs are a type of CDO. A CLO is a trust typically collateralized by a pool of loans, which may include, among others, domestic and foreign senior secured loans, senior unsecured loans, and subordinate corporate loans, including loans that may be rated below investment grade or equivalent unrated loans. The loans generate cash flow that is allocated among one or more classes of securities (“tranches”) that vary in risk and yield. The most senior tranche has the best credit quality and the lowest yield compared to the other tranches. The equity tranche has the highest potential yield but also has the greatest risk, as it bears the bulk of defaults from the underlying loans and helps to protect the more senior tranches from risk of these defaults. However, despite the protection from the equity and other more junior tranches, more senior tranches can experience substantial losses due to actual defaults and decreased market value due to collateral default and disappearance of protecting tranches, market anticipation of defaults, as well as aversion to CLO securities as a class.

Normally, CLOs are privately offered and sold and are not registered under state or federal securities laws. Therefore, investments in CLOs may be characterized by the Fund as illiquid securities; however, an active dealer market may exist for CLOs allowing a CLO to qualify for transactions pursuant to Rule 144A under the Securities Act. CLOs normally charge management fees and administrative expenses, which are in addition to those of the Fund.

B-4

The riskiness of investing in CLOs depends largely on the quality and type of the collateral loans and the tranche of the CLO in which the Fund invests. In addition to the normal risks associated with fixed-income securities (such as interest rate risk and credit risk) and the risks associated with investing in CDOs, CLOs carry additional risks including that interest on certain tranches of a CLO may be paid in-kind (meaning that unpaid interest is effectively added to principal), which involves continued exposure to default risk with respect to such payments. Certain CLOs may receive credit enhancement in the form of a senior-subordinate structure, over-collateralization or bond insurance, but such enhancement may not always be present and may fail to protect the Fund against the risk of loss due to defaults on the collateral. Certain CLOs may not hold loans directly, but rather, use derivatives such as swaps to create “synthetic” exposure to the collateral pool of loans. Such CLOs entail the risks of derivative instruments.

Debt Securities

Debt securities are used by issuers to borrow money. Generally, issuers pay investors periodic interest and repay the amount borrowed either periodically during the life of the security and/or at maturity. Some debt securities, such as zero coupon bonds, do not pay current interest, but are purchased at a discount from their face values and accrue interest at the applicable coupon rate over a specified time period. Some debt securities pay a periodic coupon that is not fixed; instead payments “float” relative to a reference rate, such as LIBOR. The “floating rate” debt may pay interest at levels above or below the previous interest payment. The market prices of debt securities fluctuate depending on such factors as interest rates, credit quality and maturity. In general, market prices of debt securities decline when interest rates rise and increase when interest rates fall.

Certain additional risk factors related to debt securities are discussed below:

Sensitivity to interest rate and economic changes. Debt securities may be sensitive to economic changes, political and corporate developments, and interest rate changes. In addition, during an economic downturn or periods of rising interest rates, issuers that are highly leveraged may experience increased financial stress that could adversely affect their ability to meet projected business goals, obtain additional financing, and service their principal and interest payment obligations. Furthermore, periods of economic change and uncertainty can be expected to result in increased volatility of market prices and yields of certain debt securities. For example, prices of these securities can be affected by financial contracts held by the issuer or third parties (such as derivatives) related to the security or other assets or indices.

Payment expectations. Debt securities may contain redemption or call provisions. If an issuer exercises these provisions in a lower interest rate environment, the Fund would have to replace the security with a lower yielding security, resulting in decreased income to investors. If the issuer of a debt security defaults on its obligations to pay interest or principal or is the subject of bankruptcy proceedings, the Fund may incur losses or expenses in seeking recovery of amounts owed to it.

Liquidity and valuation. There may be limited trading in the secondary market for particular debt securities, which may adversely affect the Fund’s ability to accurately value or sell such debt securities. Adverse publicity and investor perceptions, whether or not based on fundamental analysis, may decrease the value and/or liquidity of debt securities. The Advisor attempts to reduce the risks described above through diversification of the Fund’s portfolio, credit analysis of each issuer, and by monitoring broad economic trends as well as corporate and legislative developments, but there can be no assurance that it will be successful in doing so. Credit ratings of debt securities provided by rating agencies indicate a measure of the safety of principal and interest payments, not market value risk. The rating of an issuer is a rating agency’s view of past and future potential developments related to the issuer and may not necessarily reflect actual outcomes. There can be a lag between corporate developments and the time a rating is assigned and updated.

B-5

Changing Fixed Income Market Conditions. Following the financial crisis that began in 2007, the Board of Governors of the Federal Reserve System (the “Federal Reserve”) has attempted to stabilize the U.S. economy and support the U.S. economic recovery by keeping the federal funds rate at or near zero percent. In addition, the Federal Reserve has purchased large quantities of securities issued or guaranteed by the U.S. government, its agencies or instrumentalities on the open market (“Quantitative Easing”). As the Federal Reserve “tapers” or reduces Quantitative Easing, and when the Federal Reserve raises the federal funds rate, there is a risk that interest rates across the U.S. financial system will rise. These policy changes may expose fixed-income and related markets to heightened volatility and may reduce liquidity for certain Fund investments, which could cause the value of the Fund’s investments and share price to decline. Because the Fund invests in derivatives tied to fixed income markets it may be more substantially exposed to these risks than a fund that does not invest in derivatives. To the extent the Fund experiences high redemptions because of these policy changes, the Fund may experience increased portfolio turnover, which will increase the costs that the Fund incurs and may lower the Fund’s performance. The liquidity levels of the Fund’s portfolio may also be affected. In addition, decreases since 2007 in fixed income dealer market-making capacity may persist in the future, potentially leading to decreased liquidity and increased volatility in the fixed income markets.

Bond rating agencies may assign modifiers (such as +/–) to ratings categories to signify the relative position of a credit within the rating category. Investment policies that are based on ratings categories should be read to include any security within that category, without considering the modifier. Please refer to Appendix A to the Prospectus for more information about credit ratings.

Lower-Rated Debt Securities

The Fund may invest in lower-rated fixed-income securities (commonly known as “junk bonds”). The Fund does not limit its investments to a particular credit quality but expects to invest primarily in securities rated non-investment grade by a nationally recognized statistical rating organization (“NRSRO”), or not rated. A NRSRO is a credit rating agency that issues credit ratings which the U.S. Securities and Exchange Commission permits other financial organizations to use for certain regulatory purposes. Lower rated debt securities, those rated Ba or below by Moody’s Investors Service, Inc. (“Moody’s) and/or BB or below by Standard & Poor’s Ratings Group (“S&P”) or unrated but determined by the Sub-Advisor to be of comparable quality, are described by the rating agencies as speculative and involve greater risk of default or price changes than higher rated debt securities due to changes in the issuer’s creditworthiness or the fact that the issuer may already be in default. The market prices of these securities may fluctuate more than higher quality securities and may decline significantly in periods of general economic difficulty. It may be more difficult to sell or to determine the value of lower rated debt securities.

B-6

The lower ratings reflect a greater possibility that adverse changes in the financial condition of the issuer or in general economic conditions, or both, or an unanticipated rise in interest rates, may impair the ability of the issuer to make payments of interest and principal. The inability (or perceived inability) of issuers to make timely payment of interest and principal would likely make the values of securities held by the Fund more volatile and could limit the Fund’s ability to sell its securities at prices approximating the values the Fund had placed on such securities. In the absence of a liquid trading market for securities held by it, the Fund at times may be unable to establish the fair value of such securities. Securities ratings are based largely on the issuer’s historical financial condition and the rating agencies’ analysis at the time of rating. Consequently, the rating assigned to any particular security is not necessarily a reflection of the issuer’s current financial condition, which may be better or worse than the rating would indicate. In addition, the rating assigned to a security by Moody’s or S&P (or by any other nationally recognized securities rating agency) does not reflect an assessment of the volatility of the security’s market value or the liquidity of an investment in the security.

Like those of other fixed-income securities, the values of lower-rated securities fluctuate in response to changes in interest rates. A decrease in interest rates will generally result in an increase in the value of the Fund’s fixed-income assets. Conversely, during periods of rising interest rates, the value of the Fund’s fixed-income assets will generally decline. The values of lower-rated securities may often be affected to a greater extent by changes in general economic conditions and business conditions affecting the issuers of such securities and their industries. Negative publicity or investor perceptions may also adversely affect the values of lower-rated securities. Changes by nationally recognized securities rating agencies in their ratings of any fixed-income security and changes in the ability of an issuer to make payments of interest and principal may also affect the value of these investments. Changes in the value of portfolio securities generally will not affect income derived from these securities, but will affect the Fund’s net asset value. The Fund will not necessarily dispose of a security when its rating is reduced below its rating at the time of purchase. However, the Sub-Advisor will monitor the investment to determine whether its retention will assist in meeting the Fund’s investment objective. Issuers of lower-rated securities are often highly leveraged, so that their ability to service their debt obligations during an economic downturn or during sustained periods of rising interest rates may be impaired. Such issuers may not have more traditional methods of financing available to them and may be unable to repay outstanding obligations at maturity by refinancing.

The risk of loss due to default in payment of interest or repayment of principal by such issuers is significantly greater because such securities frequently are unsecured and subordinated to the prior payment of senior indebtedness. It is possible that, under adverse market or economic conditions or in the event of adverse changes in the financial condition of the issuer, the Fund could find it more difficult to sell these securities when the Sub-Advisor believes it advisable to do so or may be able to sell the securities only at prices lower than if they were more widely held. Under these circumstances, it may also be more difficult to determine the fair value of such securities for purposes of computing the Fund’s net asset value. In order to enforce its rights in the event of a default, the Fund may be required to participate in various legal proceedings or take possession of and manage assets securing the issuer’s obligations on such securities. This could increase the Fund’s operating expenses and adversely affect the Fund’s net asset value. The ability of a holder of a tax-exempt security to enforce the terms of that security in a bankruptcy proceeding may be more limited than would be the case with respect to securities of private issuers. In addition, the Fund’s intention to qualify as a “regulated investment company” under the U.S. Internal Revenue Code of 1986, as amended (the “Code”) may limit the extent to which the Fund may exercise its rights by taking possession of such assets. To the extent the Fund invests in securities in the lower rating categories, the achievement of the Fund’s investment objective is more dependent on the investment analysis of the Sub-Advisor than would be the case if the Fund were investing in securities in the higher rating categories.

B-7

Over-the-Counter Transactions – Fixed Income Securities

Over-the-Counter (“OTC”) transactions differ from exchange-traded transactions in several respects. OTC transactions are transacted directly with dealers and not with a clearing corporation. Without the availability of a clearing corporation, OTC transaction pricing is normally done by reference to information from market makers, which information is carefully monitored by the Advisor and verified in appropriate cases. As OTC transactions are transacted directly with dealers, there is a risk of nonperformance by the dealer as a result of the insolvency of such dealer or otherwise. The Fund intends to enter into OTC transactions only with dealers which agree to, and which are expected to be capable of, entering into closing transactions with the Fund. There is also no assurance that the Fund will be able to liquidate an OTC transaction at any time prior to expiration.

Repurchase Agreements

The Fund may enter into repurchase agreements with respect to its portfolio securities. Pursuant to such agreements, the Fund acquires securities from financial institutions such as banks and broker-dealers deemed to be creditworthy by the Sub-Advisor, subject to the seller’s agreement to repurchase and the Fund’s agreement to resell such securities at a mutually agreed upon date and price. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates (which may be more or less than the rate on the underlying portfolio security). Securities subject to repurchase agreements will be held by the custodian or in the Federal Reserve/Treasury Book-Entry System or an equivalent foreign system. The seller under a repurchase agreement will be required to maintain the value of the underlying securities at not less than 102% of the repurchase price under the agreement. If the seller defaults on its repurchase obligation, the Fund will suffer a loss to the extent that the proceeds from a sale of the underlying securities are less than the repurchase price under the agreement. Bankruptcy or insolvency of such a defaulting seller may cause the Fund’s rights with respect to such securities to be delayed or limited. Repurchase agreements are considered to be loans under the 1940 Act.

Reverse Repurchase Agreements

The Fund may enter into “reverse” repurchase agreements to seek to enhance the portfolio’s return. Pursuant to a reverse repurchase agreement, the Fund will sell portfolio securities and agree to repurchase them from the buyer at a particular date and price. Whenever the Fund enters into a reverse repurchase agreement, it will establish a segregated account in which it will maintain liquid assets in an amount at least equal to the repurchase price marked to market daily (including accrued interest), and will subsequently monitor the account to ensure that such equivalent value is maintained. The Fund pays interest on amounts obtained pursuant to reverse repurchase agreements. Reverse repurchase agreements are considered to be borrowings by the Fund. Similar to borrowing, reverse repurchase agreements provide the Fund with cash for investment purposes, which creates leverage and subjects the Fund to the risks of leverage. Reverse repurchase agreements also involve the risk that the other party may fail to return the securities in a timely manner or at all. The Fund could lose money if it is unable to recover the securities and the value of collateral held by the Fund, including the value of the investments made with cash collateral, is less than the value of securities. Reverse repurchase agreements also create Fund expenses and require that the Fund have sufficient cash available to purchase the debt obligations when required. Reverse repurchase agreements also involve the risk that the market value of the debt obligation that is the subject of the reverse repurchase agreement could decline significantly below the price at which the Fund is obligated to repurchase the security.

B-8

Derivatives

The Fund may utilize a variety of derivatives contracts, such as futures, options, swaps and forward contracts, both for investment purposes and for hedging purposes. Hedging involves special risks including the possible default by the other party to the transaction, illiquidity and, to the extent the Sub-Advisor’s assessment of certain market movements is incorrect, the risk that the use of hedging could result in losses greater than if hedging had not been used. Nonetheless, with respect to certain investment positions, the Fund may not be sufficiently hedged against market fluctuations, in which case an investment position could result in a loss greater than if the Sub-Advisor had been sufficiently hedged with respect to such position.

The Sub-Advisor will not, in general, attempt to hedge all market or other risks inherent in the Fund’s positions, and may hedge certain risks, if at all, only partially. Specifically, the Sub-Advisor may choose not, or may determine that it is economically unattractive, to hedge certain risks, either in respect of particular positions or in respect of the Fund’s overall portfolio. Moreover, it should be noted that the Fund’s portfolio always will be exposed to unidentified systematic risk factors and to certain risks that cannot be completely hedged, such as credit risk (relating both to particular securities and to counterparties). The Fund’s portfolio composition may result in various directional market risks remaining unhedged, although the Sub-Advisor may rely on diversification to control such risks to the extent that the Sub-Advisor believes it is desirable to do so.

Recent legislation calls for new regulation of the derivatives markets. The extent and impact of the regulation is not yet fully known and may not be for some time. Any new regulations could adversely affect the value, availability and performance of certain derivative instruments, may make them more costly, and may limit or restrict their use by the Funds.

Certain additional risk factors related to derivatives are discussed below:

Derivatives Risk. Under recently adopted rules by the CFTC, transactions in some types of interest rate swaps and index credit default swaps on North American and European indices will be required to be cleared. In a cleared derivatives transaction, the Fund’s counterparty is a clearing house (such as CME Clearing, ICE Clearing or LCH.Clearnet), rather than a bank or broker. Since the Fund is not a member of clearing houses and only members of a clearing house can participate directly in the clearing house, the Fund will hold cleared derivatives through accounts at clearing members, who are futures commission merchants that are members of the clearing houses and who have the appropriate regulatory approvals to engage in swap transactions. The Fund will make and receive payments owed under cleared derivatives transactions (including margin payments) through accounts at clearing members. Clearing members guarantee performance of their clients’ obligations to the clearing house. In contrast to bilateral derivatives transactions, following a period of advance notice to the Fund, clearing members generally can require termination of existing cleared derivatives transactions at any time and increases in margin above the margin that it required at the beginning of a transaction. Clearing houses also have broad rights to increase margin requirements for existing transactions and to terminate transactions. Any such increase or termination could interfere with the ability of the Fund to pursue its investment strategy. Also, the Fund is subject to execution risk if it enters into a derivatives transaction that is required to be cleared (or that the Sub-Advisor expects to be cleared), and no clearing member is willing or able to clear the transaction on the Fund’s behalf. While the documentation in place between the Fund and clearing members generally provides that the clearing members will accept for clearing all transactions submitted for clearing that are within credit limits specified by the clearing members in advance, the Fund could be subject to this execution risk if the Fund submits for clearing transactions that exceed such credit limits, if the clearing house does not accept the transactions for clearing, or if the clearing members do not comply with their agreement to clear such transactions. In that case, the transaction might have to be terminated, and the Fund could lose some or all of the benefit of any increase in the value of the transaction after the time of the transaction. In addition, new regulations could, among other things, restrict the Fund’s ability to engage in, or increase the cost to the Fund of, derivatives transactions, for example, by making some types of derivatives no longer available to the Fund or increasing margin or capital requirements. If the Fund is not able to enter into a particular derivatives transaction, the Fund’s investment performance and risk profile could be adversely affected as a result.

B-9

Counterparty Risk. Counterparty risk with respect to OTC derivatives may be affected by new regulations promulgated by the CFTC and SEC affecting the derivatives market. As described under “Derivatives Risk” above, some derivatives transactions will be required to be cleared, and a party to a cleared derivatives transaction is subject to the credit risk of the clearing house and the clearing member through which it holds its cleared position, rather than the credit risk of its original counterparty to the derivative transaction. Clearing members are required to segregate all funds received from customers with respect to cleared derivatives transactions from the clearing member’s proprietary assets. However, all funds and other property received by a clearing broker from its customers are generally held by the clearing broker on a commingled basis in an omnibus account, which may also invest those funds in certain instruments permitted under the applicable regulations. The assets of the Fund might not be fully protected in the event of the bankruptcy of the Fund’s clearing member because the Fund would be limited to recovering only a pro rata share of all available funds segregated on behalf of the clearing broker’s customers for a relevant account class. Also, the clearing member transfers to the clearing house the amount of margin required by the clearing house for cleared derivatives transactions, which amounts are generally held in an omnibus account at the clearing house for all customers of the clearing member. For commodities futures positions, the clearing house may use all of the collateral held in the clearing member’s omnibus account to meet a loss in that account, without regard to which customer in fact supplied that collateral. Accordingly, in addition to bearing the credit risk of its clearing member, each customer to a futures transaction also bears “fellow customer” risk from other customers of the clearing member. However, with respect to cleared swaps positions, recent regulations promulgated by the CFTC require that the clearing member notify the clearing house of the amount of initial margin provided by the clearing member to the clearing house that is attributable to each customer. Because margin in respect of cleared swaps must be earmarked for specific clearing member customers, the clearing house may not use the collateral of one customer to cover the obligations of another customer. However, if the clearing member does not provide accurate reporting, the Fund is subject to the risk that a clearing house will use the Fund’s assets held in an omnibus account at the clearing house to satisfy payment obligations of a defaulting customer of the clearing member to the clearing house. In addition, a clearing member may generally choose to provide to the clearing house the net amount of variation margin required for cleared swaps for all of the clearing member’s customers in the aggregate, rather than the gross amount of each customer. The Fund is therefore subject to the risk that a clearing house will not make variation margin payments owed to the Fund if another customer of the clearing member has suffered a loss and is in default.

Options on Securities and Securities Indices

A call option would entitle the Fund, in return for the premium paid, to purchase specified securities at a specified price during the option period. A put option would entitle the Fund, in return for the premium paid, to sell specified securities during the option period. The Fund may invest in both European-style or American-style options. A European-style option is only exercisable immediately prior to its expiration. American-style options are exercisable at any time prior to the expiration date of the option.

B-10

Writing Call Options. The Fund may write covered call options. A call option is “covered” if the Fund owns the security underlying the call or has an absolute right to acquire the security without additional cash consideration or, if additional cash consideration is required, cash or cash equivalents in such amounts as held in a segregated account by the Fund’s custodian. The writer of a call option receives a premium and gives the purchaser the right to buy the security underlying the option at the exercise price. The writer has the obligation upon exercise of the option to deliver the underlying security against payment of the exercise price during the option period. If the writer of an exchange-traded option wishes to terminate his obligation, he may effect a “closing purchase transaction.” This is accomplished by buying an option of the same series as the option previously written. A writer may not effect a closing purchase transaction after it has been notified of the exercise of an option.

Effecting a closing transaction in a written call option will permit the Fund to write another call option on the underlying security with either a different exercise price, expiration date or both. Also, effecting a closing transaction will permit the cash or proceeds from the concurrent sale of any securities subject to the option to be used for other investments of the Fund. If the Fund desires to sell a particular security from its portfolio on which it has written a call option, it will effect a closing transaction prior to or concurrent with the sale of the security.

The Fund will realize a gain from a closing transaction if the cost of the closing transaction is less than the premium received from writing the option or if the proceeds from the closing transaction are more than the premium paid to purchase the option. The Fund will realize a loss from a closing transaction if the cost of the closing transaction is more than the premium received from writing the option or if the proceeds from the closing transaction are less than the premium paid to purchase the option. However, because increases in the market price of a call option will generally reflect increases in the market price of the underlying security, any loss to the Fund resulting from the repurchase of a call option is likely to be offset in whole or in part by appreciation of the underlying security owned by the Fund.

In addition to covered call options, the Fund may write uncovered (or “naked”) call options on securities, including ETFs, and indices; however, SEC rules require that the Fund segregates assets on its books and records with a value equal to the value of the securities or the index that the holder of the option is entitled to call. Segregated securities cannot be sold while the option strategy is outstanding, unless they are replaced with other suitable assets. As a result, there is a possibility that segregation of a large percentage of the Fund’s assets could impede portfolio management or the Fund’s ability to meet redemption requests or other current obligations.

Writing Covered Index Call Options. The Fund may sell index call options. The Fund may also execute a closing purchase transaction with respect to the option it has sold and then sell another option with either a different exercise price and/or expiration date. The Fund’s objective in entering into such closing transactions is to increase option premium income, to limit losses or to protect anticipated gains in the underlying stocks. The cost of a closing transaction, while reducing the premium income realized from the sale of the option, should be offset, at least in part, by the appreciation in the value of the underlying index, and by the opportunity to realize additional premium income from selling a new option.

When the Fund sells an index call option, it does not deliver the underlying stocks or cash to the broker through whom the transaction is effected. In the case of an exchange-traded option, the Fund establishes an escrow account. The Fund’s custodian (or a securities depository acting for the custodian) acts as the Fund’s escrow agent. The escrow agent enters into documents known as escrow receipts with respect to the stocks included in the Fund (or escrow receipts with respect to other acceptable securities). The escrow agent releases the stocks from the escrow account when the call option expires or the Fund enters into a closing purchase transaction. Until such release, the underlying stocks cannot be sold by the Fund. The Fund may enter into similar collateral arrangements with the counterparty when it sells over-the-counter index call options.

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When the Fund sells an index call option, it is also required to “cover” the option pursuant to requirements enunciated by the staff of the SEC. The staff has indicated that a mutual fund may “cover” an index call option by (1) owning and holding for the term of the option a portfolio of stocks substantially replicating the movement of the index underlying the call option; (2) purchasing an American-style call option on the same index with an exercise price not greater than the exercise price of the written option; or (3) establishing and maintaining for the term of the option a segregated account consisting of cash, U.S. Government securities or other high-grade debt securities, equal in value to the aggregate contract price of the call option (the current index value times the specific multiple). The Fund generally “covers” the index options it has sold by owning and holding stocks substantially replicating the movement of the applicable index. As an alternative method of “covering” the option, the Fund may purchase an appropriate offsetting option.

The purchaser of an index call option sold by the Fund may exercise the option at a price fixed as of the closing level of the index on exercise date. Unless the Fund has liquid assets sufficient to satisfy the exercise of the index call option, the Fund would be required to liquidate portfolio securities to satisfy the exercise. The market value of such securities may decline between the time the option is exercised and the time the Fund is able to sell the securities. If the Fund fails to anticipate an exercise, it may have to borrow from a bank (in amounts not exceeding 5% of the Fund’s total assets) pending settlement of the sale of the portfolio securities and thereby incur interest charges. If trading is interrupted on the index, the Fund would not be able to close out its option positions.

Risks of Transactions in Options. There are several risks associated with transactions in options on securities and indices. Options may be more volatile than the underlying securities and, therefore, on a percentage basis, an investment in options may be subject to greater fluctuation in value than an investment in the underlying securities themselves. There are also significant differences between the securities and options markets that could result in an imperfect correlation between these markets, causing a given transaction not to achieve its objective. In addition, a liquid secondary market for particular options may be absent for reasons which include the following: there may be insufficient trading interest in certain options; restrictions may be imposed by an exchange on opening transactions or closing transactions or both; trading halts, suspensions or other restrictions may be imposed with respect to particular classes or series of options of underlying securities; unusual or unforeseen circumstances may interrupt normal operations on an exchange; the facilities of an exchange or clearing corporation may not be adequate to handle current trading volume at all times; or one or more exchanges could, for economic or other reasons, decide or be compelled at some future date to discontinue the trading of options (or a particular class or series of options), in which event the secondary market on that exchange (or in that class or series of options) would cease to exist, although outstanding options that had been issued by a clearing corporation as a result of trades on that exchange would continue to be exercisable in accordance with their terms.

A decision as to whether, when and how to use options involves the exercise of skill and judgment, and even a well-conceived transaction may be unsuccessful to some degree because of market behavior or unexpected events. The extent to which the Fund may enter into options transactions may be limited by the requirements of the Code, for qualification of the Fund as a regulated investment company.

Over-the-Counter Options. The Fund may engage in transactions involving over-the-counter options as well as exchange-traded options. Certain additional risks are specific to over-the-counter options. The Fund may engage a clearing corporation to exercise exchange-traded options, but if the Fund purchased an over-the-counter option, it must then rely on the dealer from which it purchased the option if the option is exercised. Failure by the dealer to do so would result in the loss of the premium paid by the Fund as well as loss of the expected benefit of the transaction.

B-12

Exchange-traded options generally have a continuous liquid market while over-the-counter options may not. Consequently, the Fund may generally be able to realize the value of an over-the-counter option it has purchased only by exercising or reselling the option to the dealer who issued it. Similarly, when the Fund writes an over-the-counter option, the Fund may generally be able to close out the option prior to its expiration only by entering into a closing purchase transaction with the dealer to whom the Fund originally wrote the option. While the Fund will seek to enter into over-the-counter options only with dealers who will agree to and are expected to be capable of entering into closing transactions with the Fund, there can be no assurance that the Fund will at any time be able to liquidate an over-the-counter option at a favorable price at any time prior to expiration. Unless the Fund, as a covered over-the-counter call option writer, is able to effect a closing purchase transaction, it will not be able to liquidate securities (or other assets) used as cover until the option expires or is exercised. In the event of insolvency of the other party, the Fund may be unable to liquidate an over-the-counter option. With respect to options written by the Fund, the inability to enter into a closing transaction may result in material losses to the Fund. For example, since the Fund must maintain a secured position with respect to any call option on a security it writes, the Fund may not sell the assets which it has segregated to secure the position while it is obligated under the option. This requirement may impair the Fund’s ability to sell portfolio securities at a time when such sale might be advantageous.

The SEC has taken the position that purchased over-the-counter options are illiquid securities. The Fund may treat the cover used for written over-the-counter options as liquid if the dealer agrees that the Fund may repurchase the over-the-counter option it has written for a maximum price to be calculated by a predetermined formula. In such cases, the over-the-counter option would be considered illiquid only to the extent the maximum purchase price under the formula exceeds the intrinsic value of the option. Accordingly, the Fund will treat over-the-counter options as subject to the Fund’s limitation on illiquid securities. If the SEC changes its position on the liquidity of over-the-counter options, the Fund will change the treatment of such instruments accordingly.

Stock Index Options. The Fund may invest in options on indices, including broad-based security indices. Puts and calls on indices are similar to puts and calls on other investments except that all settlements are in cash and gain or loss depends on changes in the index in question rather than on price movements in individual securities. When a fund writes a call on an index, it receives a premium and agrees that, prior to the expiration date, the purchaser of the call, upon exercise of the call, will receive from the fund an amount of cash if the closing level of the index upon which the call is based is greater than the exercise price of the call. The amount of cash is equal to the difference between the closing price of the index and the exercise price of the call times a specified multiple (“multiplier”), which determines the total dollar value for each point of such difference. When a fund buys a call on an index, it pays a premium and has the same rights as to such call as are indicated above. When a fund buys a put on an index, it pays a premium and has the right, prior to the expiration date, to require the seller of the put, upon the fund’s exercise of the put, to deliver to the fund an amount of cash if the closing level of the index upon which the put is based is less than the exercise price of the put, which amount of cash is determined by the multiplier, as described above for calls. When a fund writes a put on an index, it receives a premium and the purchaser of the put has the right, prior to the expiration date, to require the fund to deliver to it an amount of cash equal to the difference between the closing level of the index and exercise price times the multiplier if the closing level is less than the exercise price.

The risks of investment in options on indices may be greater than options on securities. Because index options are settled in cash, if a fund writes a call on an index it cannot provide in advance for its potential settlement obligations by acquiring and holding the underlying index. A fund can offset some of the risk of writing a call index option by holding a diversified portfolio of securities or instruments similar to those on which the underlying index is based. However, a fund cannot, as a practical matter, acquire and hold a portfolio containing exactly the same securities or instruments as underlie the index and, as a result, bears a risk that the value of the securities or instruments held will vary from the value of the index.

B-13

Even if the Fund could assemble a portfolio that exactly reproduced the composition of the underlying index, it still would not be fully covered from a risk standpoint because of the “timing risk” inherent in writing index options. When an index option is exercised, the amount of cash that the holder is entitled to receive is determined by the difference between the exercise price and the closing index level on the date when the option is exercised. As with other kinds of options, a fund as the call writer will not learn of the assignment until the next business day at the earliest. The time lag between exercise and notice of assignment poses no risk for the writer of a covered call on a specific underlying security or instrument, such as common stock, because there the writer’s obligation is to deliver the underlying security or instrument, not to pay its value as of a fixed time in the past. So long as the writer already owns the underlying security or instrument, it can satisfy its settlement obligations by simply delivering it, and the risk that its value may have declined since the exercise date is borne by the exercising holder. In contrast, even if the writer of an index call holds investments that exactly match the composition of the underlying index, it will not be able to satisfy its assignment obligations by delivering those investments against payment of the exercise price. Instead, it will be required to pay cash in an amount based on the closing index value on the exercise date. By the time it learns that it has been assigned, the index may have declined, with a corresponding decline in the value of its portfolio. This “timing risk” is an inherent limitation on the ability of index call writers to cover their risk exposure by holding security or instrument positions.

If the Fund has purchased an index option and exercises it before the closing index value for that day is available, it runs the risk that the level of the underlying index may subsequently change. If such a change causes the exercised option to fall out-of-the-money, the Fund will be required to pay the difference between the closing index value and the exercise price of the option (times the applicable multiplier) to the assigned writer.

Futures and Options on Futures

The Fund may use interest rate, foreign currency, index and other futures contracts. The Fund may use options on futures contracts. A futures contract provides for the future sale by one party and purchase by another party of a specified quantity of the security or other financial instrument at a specified price and time. A futures contract on an index is an agreement pursuant to which two parties agree to take or make delivery of an amount of cash equal to the difference between the value of the index at the close of the last trading day of the contract and the price at which the index contract originally was written. Although the value of an index might be a function of the value of certain specified securities, physical delivery of these securities is not always made. A public market exists in futures contracts covering a number of indexes, as well as financial instruments, including, without limitation: U.S. Treasury bonds; U.S. Treasury notes; GNMA Certificates; three-month U.S. Treasury bills; 90-day commercial paper; bank certificates of deposit; Eurodollar certificates of deposit; the Australian Dollar; the Canadian Dollar; the British Pound; the Japanese Yen; the Swiss Franc; the Mexican Peso; and certain multinational currencies, such as the Euro. It is expected that other futures contracts will be developed and traded in the future.

The Fund may purchase and write (sell) call and put futures options. Futures options possess many of the same characteristics as options on securities and indexes (discussed above). A futures option gives the holder the right, in return for the premium paid, to assume a long position (call) or short position (put) in a futures contract at a specified exercise price upon expiration of, or at any time during the period of, the option. Upon exercise of a call option, the holder acquires a long position in the futures contract and the writer is assigned the opposite short position. In the case of a put option, the opposite is true. When a purchase or sale of a futures contract is made by the Fund, the Fund is required to deposit with its futures commission merchant a specified amount of liquid assets (“initial margin”). The margin required for a futures contract is set by the exchange on which the contract is traded and may be modified during the term of the contract. The initial margin is in the nature of a performance bond or good faith deposit on the futures contract that is returned to the Fund upon termination of the contract, assuming all contractual obligations have been satisfied. The Fund may earn taxable interest income on its initial margin deposits.

B-14

Futures and options on futures are regulated by the Commodity Futures Trading Commission (“CFTC”). The Fund invests in futures, options on futures and other instruments subject to regulation by the CFTC in reliance upon and in accordance with CFTC Regulation 4.5. Under Regulation 4.5, if the Fund uses futures, options on futures, or swaps other than for bona fide hedging purposes (as defined by the CFTC), the aggregate initial margin and premiums on these positions (after taking into account unrealized profits and unrealized losses on any such positions and excluding the amount by which options that are “in-the-money” at the time of purchase of a new position are “in-the-money”) may not exceed 5% of the Fund’s net asset value, or alternatively, the aggregate net notional value of those positions at the time may not exceed 100% of the Fund’s net asset value (after taking into account unrealized profits and unrealized losses on any such positions). The Trust, on behalf of the Fund, has filed a notice of eligibility for exclusion from the definition of the term “commodity pool operator” in accordance with Regulation 4.5. Therefore, as of the date of this SAI, neither the Trust nor the Fund is deemed to be a “commodity pool” or “commodity pool operator” under the Commodity Exchange Act (“CEA”), and they are not subject to registration or regulation as such under the CEA. In addition, as of the date of this SAI, the Advisor and Sub-Advisor are not deemed to be “commodity pool operators” or “commodity trading advisers” with respect to the advisory services they provide to the Fund. In the future, if the Fund’s use of futures, options on futures, or swaps requires the Advisor and Sub-Advisor to register as a commodity pool operator with respect to the Fund with the CFTC, the Advisor and Sub-Advisor will do so at that time.

A futures contract held by the Fund is valued daily at the official settlement price of the exchange on which it is traded. Each day the Fund pays or receives cash, called “variation margin”, equal to the daily change in value of the futures contract. This process is known as “marking to market”. Variation margin does not represent a borrowing or loan by the Fund but is instead a settlement between the Fund and the broker of the amount one would owe the other if the futures contract expired. In computing daily net asset value, the Fund will mark to market its open futures positions. The Fund also is required to deposit and to maintain margin with respect to put and call options on futures contracts written by it. Such margin deposits will vary depending on the nature of the underlying futures contract (and the related initial margin requirements), the current market value of the option and other futures positions held by the Fund. Although some futures contracts call for making or taking delivery of the underlying securities, generally these obligations are closed out prior to delivery by offsetting purchases or sales of matching futures contracts (involving the same exchange, underlying security or index and delivery month). If an offsetting purchase price is less than the original sale price, the Fund realizes a capital gain, or if it is more, the Fund realizes a capital loss. Conversely, if an offsetting sale price is more than the original purchase price, the Fund realizes a capital gain, or if it is less, the Fund realizes a capital loss. The transaction costs also must be included in these calculations.

The Fund may write covered straddles consisting of a call and a put written on the same underlying futures contract. A straddle will be covered when sufficient assets are deposited to meet the Fund’s immediate obligations. The Fund may use the same liquid assets to cover both the call and put options if the exercise price of the call and put are the same, or if the exercise price of the call is higher than that of the put. In such cases, the Fund also will segregate liquid assets equivalent to the amount, if any, by which the put is “in the money.”

B-15

U.S. Treasury Futures Contracts Hedge Risk

The Sub-Advisor, where deemed appropriate will seek to hedge against interest rate risk by shorting U.S. Treasury futures contracts. To the extent the Fund holds such short positions, should market conditions cause U.S. Treasury prices to rise, the Fund’s portfolio could experience a loss; and should U.S. Treasury prices rise at the same time municipal bond and/or closed-end municipal bond fund prices fall, these losses may be greater than if the hedging strategy not been in place. The hedging strategy depends on market conditions and the judgment of the Sub-Advisor, and there is no guarantee that the hedging strategy will be successful in mitigating interest rate risk or preventing losses to the Fund’s portfolio.

Stock Index Futures

The Fund may invest in stock index futures only as a substitute for a comparable market position in the underlying securities. A stock index future obligates the seller to deliver (and the purchaser to accept), effectively, an amount of cash equal to a specific dollar amount times the difference between the value of a specific stock index at the close of the last trading day of the contract and the price at which the agreement is made. No physical delivery of the underlying stocks in the index is made. With respect to stock indices that are permitted investments, the Fund intends to purchase and sell futures contracts on the stock index for which it can obtain the best price with consideration also given to liquidity.

Swap Transactions

The Fund may enter into interest rate, currency and index swaps and the purchase or sale of related caps, floors and collars. The Fund may enter into these transactions to preserve a return or spread on a particular investment or portion of its portfolio, to protect against currency fluctuations or to protect against any increase in the price of securities it anticipates purchasing at a later date. Swaps may be used in conjunction with other instruments to offset interest rate, currency or other underlying risks. For example, interest rate swaps may be offset with “caps,” “floors” or “collars”. A “cap” is essentially a call option which places a limit on the amount of floating rate interest that must be paid on a certain principal amount. A “floor” is essentially a put option which places a limit on the minimum amount that would be paid on a certain principal amount. A “collar” is essentially a combination of a long cap and a short floor where the limits are set at different levels.

The Fund will usually enter into swaps on a net basis; that is, the two payment streams will be netted out in a cash settlement on the payment date or dates specified in the instrument, with the Fund receiving or paying, as the case may be, only the net amount of the two payments. To the extent obligations created thereby may be deemed to constitute senior securities, the Fund will maintain required collateral in a segregated account consisting of U.S. Government securities or cash or cash equivalents.

Total Return Swaps. The Fund may enter into total return swap contracts for investment purposes. Total return swaps are contracts in which one party agrees to make periodic payments based on the change in market value of the underlying assets, which may include a specified security, basket of securities or security indexes during the specified period, in return for periodic payments based on a fixed or variable interest rate of the total return from other underlying assets. Total return swaps may be used to obtain exposure to a security or market without owning or taking physical custody of such security or market, including in cases in which there may be disadvantages associated with direct ownership of a particular security. In a typical total return equity swap, payments made by the Fund or the counterparty are based on the total return of a particular reference asset or assets (such as an equity security, a combination of such securities, or an index). That is, one party agrees to pay another party the return on a stock, basket of stocks, or stock index in return for a specified interest rate. By entering into an equity index swap, for example, the index receiver can gain exposure to stocks making up the index of securities without actually purchasing those stocks. Total return swaps involve not only the risk associated with the investment in the underlying securities, but also the risk of the counterparty not fulfilling its obligations under the agreement.

B-16

Credit Default Swaps. The Fund may enter into credit default swap transactions for investment purposes. A credit default swap may have as reference obligations one or more securities that are not currently held by the Fund. The Fund may be either the buyer or seller in the transaction. Credit default swaps may also be structured based on the debt of a basket of issuers, rather than a single issuer, and may be customized with respect to the default event that triggers purchase or other factors. As a seller, the Fund would generally receive an upfront payment or a fixed rate of income throughout the term of the swap, which typically is between six months and three years, provided that there is no credit event. If a credit event occurs, generally the seller must pay the buyer the full face amount of deliverable obligations of the reference obligations that may have little or no value. The notional value of the credit default swap will be used to segregate liquid assets for selling protection on credit default swaps. If the Fund were a buyer and no credit event occurs, the Fund would recover nothing if the swap is held through its termination date. However, if a credit event occurs, the buyer may elect to receive the full notional value of the swap in exchange for an equal face amount of deliverable obligations of the reference obligation that may have little or no value. When the Fund buys credit default swaps it will segregate an amount at least equal to the amount of any accrued premium payment obligations including amounts for early terminations. The use of swap transactions by a fund entails certain risks, which may be different from, or possibly greater than, the risks associated with investing directly in the securities and other investments that are the referenced asset for the swap transaction. Swaps are highly specialized instruments that require investment techniques, risk analyses, and tax planning different from those associated with stocks, bonds, and other traditional investments. The use of a swap requires an understanding not only of the referenced asset, reference rate, or index, but also of the swap itself, without the benefit of observing the performance of the swap under all the possible market conditions. Because some swap agreements have a leverage component, adverse changes in the value or level of the underlying asset, reference rate, or index can result in a loss substantially greater than the amount invested in the swap itself. Certain swaps have the potential for unlimited loss, regardless of the size of the initial investment.

The Fund may also purchase credit default swap contracts in order to hedge against the risk of default of the debt of a particular issuer or basket of issuers, in which case the Fund would function as the counterparty referenced in the preceding paragraph. This would involve the risk that the investment may expire worthless and would only generate income in the event of an actual default by the issuer(s) of the underlying obligation(s) (or, as applicable, a credit downgrade or other indication of financial instability). It would also involve the risk that the seller may fail to satisfy its payment obligations to the Fund in the event of a default. The purchase of credit default swaps involves costs, which will reduce the Fund’s return.

Currency Swaps. The Fund may enter into currency swap transactions for investment purposes. Currency swaps are similar to interest rate swaps, except that they involve multiple currencies. The Fund may enter into a currency swap when it has exposure to one currency and desires exposure to a different currency. Typically the interest rates that determine the currency swap payments are fixed, although occasionally one or both parties may pay a floating rate of interest. Unlike an interest rate swap, however, the principal amounts are exchanged at the beginning of the contract and returned at the end of the contract. In addition to paying and receiving amounts at the beginning and termination of the agreements, both sides will also have to pay in full periodically based upon the currency they have borrowed. Change in foreign exchange rates and changes in interest rates, as described above, may negatively affect currency swaps.

Interest Rate Swaps. The Fund may enter into an interest rate swap in an effort to protect against declines in the value of fixed income securities held by the Fund. In such an instance, the Fund may agree to pay a fixed rate (multiplied by a notional amount) while a counterparty agrees to pay a floating rate (multiplied by the same notional amount). If interest rates rise, resulting in a diminution in the value of the fund’s portfolio, the fund would receive payments under the swap that would offset, in whole or in part, such diminution in value.

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Options on Swaps. An option on a swap agreement, or a “swaption,” is a contract that gives a counterparty the right (but not the obligation) to enter into a new swap agreement or to shorten, extend, cancel or otherwise modify an existing swap agreement, at some designated future time on specified terms. In return, the purchaser pays a “premium” to the seller of the contract. The seller of the contract receives the premium and bears the risk of unfavorable changes on the underlying swap. The Fund may write (sell) and purchase put and call swaptions. The Fund may also enter into swaptions on either an asset-based or liability-based basis, depending on whether the Fund is hedging its assets or its liabilities. The Fund may write (sell) and purchase put and call swaptions to the same extent it may make use of standard options on securities or other instruments. The Fund may enter into these transactions primarily to preserve a return or spread on a particular investment or portion of its holdings, as a duration management technique, to protect against an increase in the price of securities the fund anticipates purchasing at a later date, or for any other purposes, such as for speculation to increase returns. Swaptions are generally subject to the same risks involved in the Fund’s use of options.

Depending on the terms of the particular option agreement, the Fund will generally incur a greater degree of risk when it writes a swaption than it will incur when it purchases a swaption. When the Fund purchases a swaption, it risks losing only the amount of the premium it has paid should it decide to let the option expire unexercised. However, when the Fund writes a swaption, upon exercise of the option the Fund will become obligated according to the terms of the underlying agreement.

Over-the-Counter Derivatives Transactions

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) which was signed into law on July 21, 2010, established a new statutory framework that comprehensively regulated the over-the-counter (“OTC”) derivatives markets for the first time. Key Dodd-Frank Act provisions relating to OTC derivatives require rulemaking by the SEC and the CFTC, not all of which has been proposed or finalized as at the date of this SAI. Prior to the Dodd-Frank Act, the OTC derivatives markets were traditionally traded on a bilateral basis (so-called “bilateral OTC transactions”). Now certain OTC derivatives contracts are required to be centrally cleared and traded on exchanges or electronic trading platforms called swap execution facilities (“SEFs”).

Bilateral OTC transactions differ from exchange-traded or cleared derivatives transactions in several respects. Bilateral OTC transactions are transacted directly with dealers and not with a clearing corporation. Without the availability of a clearing corporation, bilateral OTC transaction pricing is normally done by reference to information from market makers, which information is carefully monitored by the Sub-Advisor and verified in appropriate cases. As bilateral OTC transactions are entered into directly with a dealer, there is a risk of nonperformance by the dealer as a result of its insolvency or otherwise. Under recently-adopted CFTC regulations, counterparties of registered swap dealers and major swap participants have the right to elect segregation of initial margin in respect of uncleared swaps. If a counterparty makes such an election, any initial margin that is posted to the swap dealer or major swap participant must be segregated in individual customer accounts held at an independent third party custodian. In addition, the collateral may only be invested in certain categories of instruments identified in the CFTC’s regulations. Agreements covering these segregation arrangements must generally provide for consent by both the counterparty and the swap dealer or major swap participant to withdraw margin from the segregated account. Given these limitations on the use of uncleared swaps collateral, there is some likelihood that the electing counterparty will experience an increase in the costs associated with trading swaps with the relevant swap dealer or major swap participant. Certain other protections apply to a counterparty to uncleared swaps under the CFTC’s regulations even if the counterparty does not elect segregation of its initial margin. These regulations are newly adopted, and it remains unclear whether they will be effective in protecting initial margin in the manner intended in the event of significant market stress or the insolvency of a swap dealer or major swap participant.

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Furthermore, a bilateral OTC transaction may only be terminated voluntarily by entering into a closing transaction with the dealer with which the Fund originally dealt. Any such cancellation may require the Fund to pay a premium to that dealer. In those cases in which the Fund has entered into a covered transaction and cannot voluntarily terminate the transaction, the Fund will not be able to sell the underlying security until the transaction expires or is exercised or different cover is substituted. The Fund will seek to enter into OTC transactions only with dealers which agree to, and which are expected to be capable of, entering into closing transactions with the Fund. There is also no assurance that the Fund will be able to liquidate an OTC transaction at any time prior to expiration.

The requirement to execute certain OTC derivatives contracts on SEFs may offer certain advantages over traditional bilateral OTC trading, such as ease of execution, price transparency, increased liquidity and/or favorable pricing. However, SEF trading may make it more difficult and costly for the Fund to enter into highly tailored or customized transactions and may result in additional costs and risks. Market participants such as the Fund that execute derivatives contracts through a SEF, whether directly or through a broker intermediary, are required to submit to the jurisdiction of the SEF and comply with SEF and CFTC rules and regulations which impose, among other things disclosure and recordkeeping obligations. In addition, the Fund will generally incur SEF or broker intermediary fees when it trades on a SEF. The Fund may also be required to indemnify the SEF or broker intermediary for any losses or costs that may result from the Fund’s transactions on the SEF.

investment company Securities

The Fund may invest in shares of other investment companies (each, an “Underlying Fund”), including open-end funds, closed-end funds, unit investment trusts (“UITs”) and exchange-traded funds (“ETFs”), to the extent permitted by applicable law and subject to certain restrictions set forth in this SAI.

Under Sections 12(d)(1)(A) and 12(d)(1)(B) of the 1940 Act, the Fund and any companies controlled by the Fund may hold securities of an Underlying Fund in amounts which (i) do not exceed 3% of the total outstanding voting stock of such Underlying Fund, (ii) do not exceed 5% of the value of the Fund’s total assets and (iii) when added to all other Underlying Fund securities held by the Fund, do not exceed 10% of the value of the Fund’s total assets. The Fund may exceed these limits when permitted by SEC order or other applicable law or regulatory guidance, such as is the case with many ETFs. These SEC orders typically do not permit the Fund to exceed these limits when investing in an ETF that itself invests in other registered open-end funds or registered UITs

Generally, under Sections 12(d)(1)(F) and 12(d)(1)(G) of the 1940 Act and SEC rules adopted pursuant to the 1940 Act, the Fund may acquire the securities of affiliated and unaffiliated Underlying Funds subject to the following guidelines and restrictions:

· The Fund may own an unlimited amount of the securities of any registered open-end fund or registered UIT that is affiliated with the Fund, so long as any such Underlying Fund has a policy that prohibits it from acquiring any securities of registered open-end funds or registered UITS in reliance on certain sections of the 1940 Act, and subject to certain limitations on excessive sales loads or distribution-related fees.

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· The Fund and its “affiliated persons” may own up to 3% of the outstanding stock of any fund, subject to the following restrictions:

the Fund and each Underlying Fund, in the aggregate, may not charge a sales load greater than the limits established by the Financial Industry Regulatory Authority (“FINRA”) applicable to funds of funds;

ii.

each Underlying Fund is not obligated to redeem more than 1% of its total outstanding securities during any period less than 30 days; and

iii.

the Fund is obligated to exercise proxy voting rights in shares of an Underlying Fund either by (i) seeking instructions from its shareholders with regard to the voting of all proxies with respect to the Underlying Fund and to vote only in accordance with such instructions, or (ii) voting the shares of the Underlying Fund held by the Fund in the same proportion as the vote of all other shareholders of the Underlying Fund.

Acquired funds typically incur fees that are separate from those fees incurred directly by the Fund. The Fund’s purchase of such investment company securities results in the layering of expenses as Fund shareholders would indirectly bear a proportionate share of the operating expenses of such investment companies, including advisory fees, in addition to paying Fund expenses. In addition, the securities of other investment companies may also be leveraged and will therefore be subject to certain leverage risks. The net asset value and market value of leveraged securities will be more volatile and the yield to shareholders will tend to fluctuate more than the yield generated by unleveraged securities. Investment companies may have investment policies that differ from those of the Fund.

Under certain circumstances an open-end investment company in which the Fund invests may determine to make payment of a redemption by the Fund wholly or in part by a distribution in kind of securities from its portfolio, instead of in cash. As a result, the Fund may hold such securities until the Sub-Advisor determines it is appropriate to dispose of them. Such disposition will impose additional costs on the Fund.

Investment decisions by the investment advisors to the registered investment companies in which the Fund invests are made independently of the Fund. At any particular time, one Underlying Fund may be purchasing shares of an issuer whose shares are being sold by another Underlying Fund. As a result, under these circumstances the Fund indirectly would incur certain transactional costs without accomplishing any investment purpose.

Exchange-Traded Funds (“ETFs”)

ETFs are pooled investment vehicles that generally seek to track the performance of specific indices. ETFs may be organized as open-end funds or as unit investment trusts. Their shares are listed on stock exchanges and can be traded throughout the day at market-determined prices.

An ETF generally issues index-based investments in aggregations of 50,000 shares known as “Creation Units” in exchange for a “Portfolio Deposit” consisting of (a) a portfolio of securities substantially similar to the component securities (“Index Securities”) of the applicable index (the “Index”), (b) a cash payment equal to a pro rata portion of the dividends accrued on the ETF’s portfolio securities since the last dividend payment by the ETF, net of expenses and liabilities, and (c) a cash payment or credit (“Balancing Amount”) designed to equalize the net asset value of the Index and the net asset value of a Portfolio Deposit.

Shares of ETFs are not individually redeemable, except upon termination of the ETF. To redeem shares of an ETF, an investor must accumulate enough shares of the ETF to reconstitute a Creation Unit. The liquidity of small holdings of ETF shares, therefore, will depend upon the existence of a secondary market for such shares. Upon redemption of a Creation Unit, the portfolio will receive Index Securities and cash identical to the Portfolio Deposit required of an investor wishing to purchase a Creation Unit that day.

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The price of ETF shares is based upon (but not necessarily identical to) the value of the securities held by the ETF. Accordingly, the level of risk involved in the purchase or sale of ETF shares is similar to the risk involved in the purchase or sale of traditional common stock, with the exception that the pricing mechanism for ETF shares is based on a basket of stocks. Disruptions in the markets for the securities underlying ETF shares purchased or sold by the Fund could result in losses on such shares. There is no assurance that the requirements of the national securities exchanges necessary to maintain the listing of shares of any ETF will continue to be met.

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Government Obligations

The Fund may invest in U.S. Government obligations. Such obligations include Treasury bills, certificates of indebtedness, notes and bonds. U.S. Government obligations include securities issued or guaranteed as to principal and interest by the U.S. Government, its agencies or instrumentalities. Treasury bills, the most frequently issued marketable government securities, have a maturity of up to one year and are issued on a discount basis. U.S. Government obligations include securities issued or guaranteed by government-sponsored enterprises.

Payment of principal and interest on U.S. Government obligations may be backed by the full faith and credit of the United States or may be backed solely by the issuing or guaranteeing agency or instrumentality itself. In the latter case, the investor must look principally to the agency or instrumentality issuing or guaranteeing the obligation for ultimate repayment, which agency or instrumentality may be privately owned. There can be no assurance that the U.S. Government would provide financial support to its agencies or instrumentalities, including government-sponsored enterprises, where it is not obligated to do so. In addition, U.S. Government obligations are subject to fluctuations in market value due to fluctuations in market interest rates. As a general matter, the value of debt instruments, including U.S. Government obligations, declines when market interest rates increase and rises when market interest rates decrease. Certain types of U.S. Government obligations are subject to fluctuations in yield or value due to their structure or contract terms.

Borrowing

Borrowing creates an opportunity for increased return, but, at the same time, creates special risks. Furthermore, if the Fund were to engage in borrowing, an increase in interest rates could reduce the value of the Fund’s shares by increasing the Fund’s interest expense. Subject to the limitations described under “Investment Limitations” below, the Fund may be permitted to borrow for temporary purposes and/or for investment purposes. Such a practice will result in leveraging of the Fund’s assets and may cause the Fund to liquidate portfolio positions when it would not be advantageous to do so. This borrowing may be secured or unsecured. Provisions of the 1940 Act require the Fund to maintain continuous asset coverage (that is, total assets including borrowings, less liabilities exclusive of borrowings) of 300% of the amount borrowed, with an exception for borrowings not in excess of 5% of the Fund’s total assets made for temporary administrative purposes. Any borrowings for temporary administrative purposes in excess of 5% of the Fund’s total assets will count against this asset coverage requirement. If the 300% asset coverage should decline as a result of market fluctuations or other reasons, the Fund may be required to sell some of its portfolio holdings within three days to reduce the debt and restore the 300% asset coverage, even though it may be disadvantageous from an investment standpoint if the Fund sells securities at that time. Borrowing will tend to exaggerate the effect on net asset value of any increase or decrease in the market value of the Fund’s portfolio. Money borrowed will be subject to interest charges which may or may not be recovered by appreciation of the securities purchased, if any. The Fund also may be required to maintain minimum average balances in connection with such borrowings or to pay a commitment or other fee to maintain a line of credit; either of these requirements would increase the cost of borrowing over the stated interest rate.

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Other Investment Strategies, Policies and Risks

Closed-End Funds

The Fund may invest in shares of closed-end funds. Investments in closed-end funds are subject to various risks, including reliance on management’s ability to meet the closed-end fund’s investment objective and to manage the closed-end fund portfolio; fluctuation in the net asset value of closed-end fund shares compared to the changes in the value of the underlying securities that the closed-end fund owns; and bearing a pro rata share of the management fees and expenses of each underlying closed-end fund resulting in Fund’s shareholders being subject to higher expenses than if he or she invested directly in the closed-end fund(s). The closed-end funds in which the Fund may invest may be leveraged. As a result, the Fund may be exposed indirectly to leverage through investment in a closed-end fund. An investment in securities of a closed-end fund that uses leverage may expose the Fund to higher volatility in the market value of such securities and the possibility that the Fund’s long-term returns on such securities (and, indirectly, the long-term returns of the shares) will be diminished.

Short Sales

A short sale is a transaction in which the Fund sells a security it does not own in anticipation that the market price of that security will decline. If the price of the security sold short increases between the time of the short sale and the time the Fund replaces the borrowed security, the Fund will incur a loss; conversely, if the price declines, the Fund will realize a capital gain. Any gain will be decreased, and any loss will be increased, by the transaction costs incurred by the Fund, including the costs associated with providing collateral to the broker-dealer (usually cash and liquid securities) and the maintenance of collateral with its custodian. The Fund also may be required to pay a premium to borrow a security, which would increase the cost of the security sold short. Although the Fund’s gain is limited to the price at which it sold the security short, its potential loss is theoretically unlimited.

The broker-dealer will retain the net proceeds of the short sale to the extent necessary to meet margin requirements until the short position is closed out.

When the Sub-Advisor believes that the price of a particular security held by the Fund may decline, it may make “short sales against the box” to hedge the unrealized gain on such security. Selling short against the box involves selling a security which the Fund owns for delivery at a specified date in the future. The Fund will incur transaction costs to open, maintain and close short sales against the box.

To the extent the Fund sells securities short (except in the case of short sales “against the box”), it is required to segregate an amount of cash or liquid securities on its records equal to the market price of the securities sold short. The segregated assets are marked to market daily in an attempt to ensure that the amount deposited in the segregated account is at least equal to the market value of the securities sold short. Segregated securities cannot be sold while the position they are covering is outstanding, unless they are replaced with similar securities. As a result, there is the possibility that segregation of a large percentage of the Fund’s assets could affect its portfolio management.

Exchange Traded Notes (“ETNs”)

An investment in an ETN involves risks, including possible loss of principal. ETNs are unsecured debt securities issued by a bank that are linked to the total return of a market index. Risks of investing in ETNs also include limited portfolio diversification, uncertain principal payment, and illiquidity. Additionally, the investor fee will reduce the amount of return on maturity or at redemption, and as a result the investor may receive less than the principal amount at maturity or upon redemption, even if the value of the relevant index has increased. An investment in an ETN may not be suitable for all investors.

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Real Estate Investment Trusts (“REITs”)

REITs are pooled investment vehicles that invest primarily in income producing real estate or real estate related loans or interests. REITs are generally classified as equity REITs, mortgage REITs, or a combination of equity and mortgage REITs. Equity REITs invest the majority of their assets directly in real property and derive income primarily from the collection of rents. Equity REITs can also realize capital gains by selling properties that have appreciated in value. Mortgage REITs invest the majority of their assets in real estate mortgages and derive income from the collection of principal and interest payments. Similar to investment companies such as the Fund, REITs are not taxed on income distributed to shareholders provided they comply with several requirements of the Code. The Fund will indirectly bear its proportionate share of expenses incurred by REITs in which the Fund invests in addition to the expenses incurred directly by the Fund.

Investing in REITs involves certain unique risks in addition to those risks associated with investing in the real estate industry in general. Equity REITs may be affected by changes in the value of the underlying property owned by the REITs, while mortgage REITs may be affected by the quality of any credit extended. REITs are dependent upon management skills, are not diversified, and are subject to heavy cash flow dependency, default by borrowers and self-liquidation.

Investing in REITs involves risks similar to those associated with investing in small capitalization companies. REITs may have limited financial resources, may trade less frequently and in a limited volume and may be subject to more abrupt or erratic price movements than larger company securities. Historically, small capitalization stocks, such as REITs, have had more price volatility than larger capitalization stocks.

REITs are subject to the possibilities of failing to qualify for the favorable federal income tax treatment generally available to them under the Code and failing to maintain their exemptions from registration under the 1940 Act. REITs (especially mortgage REITs) also are subject to interest rate risks. When interest rates decline, the value of a REIT’s investment in fixed-rate obligations can be expected to rise. Conversely, when interest rates rise, the value of a REIT’s investment in fixed-rate obligations can be expected to decline. In contrast, as interest rates on adjustable rate mortgage loans are reset periodically, yields on a REIT’s investments in such loans will gradually align themselves to reflect changes in market interest rates, causing the value of such investments to fluctuate less dramatically in response to interest rate fluctuations than would investments in fixed-rate obligations.

DEBT SECURITIES

Sovereign Debt Obligations

The Fund may invest in sovereign debt obligations, which are securities issued or guaranteed by foreign governments governmental agencies or instrumentalities and political subdivisions, including debt of developing countries. Sovereign debt may be in the form of conventional securities or other types of debt instruments such as loans or loan participations. Sovereign debt of developing countries may involve a high degree of risk, and may be in default or present the risk of default. Governmental entities responsible for repayment of the debt may be unable or unwilling to repay principal and pay interest when due, and may require renegotiation or rescheduling of debt payments. In addition, prospects for repayment of principal and payment of interest may depend on political as well as economic factors. Although some sovereign debt, such as Brady Bonds, is collateralized by U.S. Government securities, repayment of principal and payment of interest is not guaranteed by the U.S. Government. There is no bankruptcy proceeding by which sovereign debt on which governmental entities have defaulted may be collected in whole or in part.

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Zero Coupon, Step Coupon, and Pay-In-Kind Securities

Within the parameters of its specific investment policies, the Fund may invest in zero coupon, pay-in-kind, and step coupon securities. Zero coupon bonds are securities that make no fixed interest payments but instead are issued and traded at a discount from their face value. They do not entitle the holder to any periodic payment of interest prior to maturity. Step coupon bonds trade at a discount from their face value and pay coupon interest. The coupon rate is low for an initial period and then increases to a higher coupon rate thereafter. The discount from the face amount or par value depends on the time remaining until cash payments begin, prevailing interest rates, liquidity of the security, and the perceived credit quality of the issuer. Pay-in-kind bonds normally give the issuer an option to pay cash at a coupon payment date or give the holder of the security a similar bond with the same coupon rate and a face value equal to the amount of the coupon payment that would have been made.

Generally, the market prices of zero coupon, step coupon, and pay-in-kind securities are more volatile than the prices of securities that pay interest periodically and in cash and are likely to respond to changes in interest rates to a greater degree than other types of debt securities having similar maturities and credit quality.

Floating Rate, Inverse Floating Rate and Index Obligations

The Fund may invest in debt securities with interest payments or maturity values that are not fixed, but float in conjunction with (or inversely to) an underlying index or price. These securities may be backed by sovereign or corporate issuers, or by collateral such as mortgages. The indices and prices upon which such securities can be based include interest rates, currency rates and commodities prices. Floating rate securities pay interest according to a coupon which is reset periodically. The reset mechanism may be formula based, or reflect the passing through of floating interest payments on an underlying collateral pool. Inverse floating rate securities are similar to floating rate securities except that their coupon payments vary inversely with an underlying index by use of a formula. Inverse floating rate securities tend to exhibit greater price volatility than other floating rate securities. Interest rate risk and price volatility on inverse floating rate obligations can be high, especially if leverage is used in the formula. Index securities pay a fixed rate of interest, but have a maturity value that varies by formula, so that when the obligation matures a gain or loss may be realized. The risk of index obligations depends on the volatility of the underlying index, the coupon payment and the maturity of the obligation.

Equity Securities

Common Stock

Common stock represents an equity (ownership) interest in a company, and usually possesses voting rights and earns dividends. Dividends on common stock are not fixed but are declared at the discretion of the issuer. Common stock generally represents the riskiest investment in a company. In addition, common stock generally has the greatest appreciation and depreciation potential because increases and decreases in earnings are usually reflected in a company’s stock price.

The fundamental risk of investing in common stock is that the value of the stock might decrease. Stock values fluctuate in response to the activities of an individual company or in response to general market and/or economic conditions. While common stocks have historically provided greater long-term returns than preferred stocks, fixed-income and money market investments, common stocks have also experienced significantly more volatility than the returns from those other investments.

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Preferred Stock

Preferred stock is a class of stock having a preference over common stock as to the payment of dividends and the recovery of investment in the event a company is liquidated, although preferred stock is usually subordinate to the debt securities of the issuer. Preferred stock typically does not possess voting rights and its market value may change based on changes in interest rates. If interest rates rise, the fixed dividend on preferred stocks may be less attractive, causing the price of preferred stocks to decline. Preferred stock may have mandatory sinking fund provisions, as well as call/redemption provisions prior to maturity, a negative feature when interest rates decline. In addition, the Fund may receive stocks or warrants as result of an exchange or tender of fixed income securities.

The Fund’s investment in preferred stocks is subject to the credit risk related to the financial condition of the issuers of those securities. Credit ratings attempt to evaluate the safety of principal and dividend or interest payments and do not evaluate the risks of fluctuations in market value.

Small-Cap and Mid-Cap Stocks

The Fund may invest in stock of companies with market capitalizations that are small compared to other publicly traded companies. Investments in larger companies present certain advantages in that such companies generally have greater financial resources, more extensive research and development, manufacturing, marketing and service capabilities, and more stability and greater depth of management and personnel. Investments in smaller, less seasoned companies may present greater opportunities for growth but also may involve greater risks than customarily are associated with more established companies. The securities of smaller companies may be subject to more abrupt or erratic market movements than larger, more established companies. These companies may have limited product lines, markets or financial resources, or they may be dependent upon a limited management group. Their securities may be traded in the over-the-counter market or on a regional exchange, or may otherwise have limited liquidity. As a result of owning large positions in this type of security, the Fund is subject to the additional risk of possibly having to sell portfolio securities at disadvantageous times and prices if redemptions require the Fund to liquidate its securities positions. In addition, it may be prudent for the Fund, as its asset size grows, to limit the number of relatively small positions it holds in securities having limited liquidity in order to minimize its exposure to such risks, to minimize transaction costs, and to maximize the benefits of research. As a consequence, as the Fund’s asset size increases, the Fund may reduce its exposure to illiquid small capitalization securities, which could adversely affect performance.

The Fund may also invest in stocks of companies with medium market capitalizations (i.e., mid-cap companies). Such investments share some of the risk characteristics of investments in stocks of companies with small market capitalizations described above, although mid cap companies tend to have longer operating histories, broader product lines and greater financial resources and their stocks tend to be more liquid and less volatile than those of smaller capitalization issuers.

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Warrants and Rights

The Fund may invest in warrants or rights (including those acquired in units or attached to other securities) that entitle the holder to buy equity securities at a specific price for a specific period of time but will do so only if such equity securities are deemed appropriate by the Sub-Advisor. Warrants do not have voting rights, do not earn dividends, and do not entitle the holder to any rights with respect to the assets of the corporation that has issued them. They do not represent ownership of the underlying companies but only the right to purchase shares of those companies at a specified price on or before a specified exercise date. Warrants tend to be more volatile than the underlying stock, and if at a warrant’s expiration date the stock is trading at a price below the price set in the warrant, the warrant will expire worthless. Conversely, if at the expiration date the stock is trading at a price higher than the price set in the warrant, the Fund can acquire the stock at a price below its market value. The prices of warrants do not necessarily parallel the prices of the underlying securities. An investment in warrants or rights may be considered speculative.

Convertible Securities

A convertible security is a preferred stock, warrant or other security that may be converted or exchanged for a prescribed amount of common stock or other security of the same or a different issuer or into cash within a particular period of time at a specified price or formula. A convertible security generally entitles the holder to receive the dividend or interest until the convertible security matures or is redeemed, converted or exchanged. Before conversion, convertible securities generally have characteristics similar to both fixed income and equity securities. Although to a lesser extent than with fixed income securities generally, the market value of convertible securities tends to decline as interest rates increase and, conversely, tends to increase as interest rates decline. In addition, because of the conversion feature, the market value of convertible securities tends to vary with fluctuations in the market value of the underlying common stocks and, therefore, also will react to variations in the general market for equity securities. A significant feature of convertible securities is that as the market price of the underlying common stock declines, convertible securities tend to trade increasingly on a yield basis, and so they may not experience market value declines to the same extent as the underlying common stock. When the market price of the underlying common stock increases, the prices of the convertible securities tend to rise as a reflection of the value of the underlying common stock. While no securities investments are without risk, investments in convertible securities generally entail less risk than investments in common stock of the same issuer.

Foreign Investments

Foreign Securities

Investments in the securities of foreign issuers and other non-U.S. investments may involve risks in addition to those normally associated with investments in the securities of U.S. issuers or other U.S. investments. All foreign investments are subject to risks of foreign political and economic instability, adverse movements in foreign exchange rates, and the imposition or tightening of exchange controls and limitations on the repatriation of foreign capital. Other risks stem from potential changes in governmental attitude or policy toward private investment, which in turn raises the risk of nationalization, increased taxation or confiscation of foreign investors’ assets.

The financial problems in global economies over the past several years, including the European sovereign debt crisis, may continue to cause high volatility in global financial markets. In addition, global economies are increasingly interconnected, which increases the possibilities that conditions in one country or region might adversely impact a different country or region. The severity or duration of these conditions may also be affected if one or more countries leave the Euro currency or by other policy changes made by governments or quasi-governmental organizations.

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Additional non-U.S. taxes and expenses may also adversely affect the Fund’s performance, including foreign withholding taxes on foreign securities’ dividends. Brokerage commissions and other transaction costs on foreign securities exchanges are generally higher than in the United States. Foreign companies may be subject to different accounting, auditing and financial reporting standards. To the extent foreign securities held by the Fund are not registered with the SEC or with any other U.S. regulator, the issuers thereof will not be subject to the reporting requirements of the SEC or any other U.S. regulator. Accordingly, less information may be available about foreign companies and other investments than is generally available on issuers of comparable securities and other investments in the United States. Foreign securities and other investments may also trade less frequently and with lower volume and may exhibit greater price volatility than U.S. securities and other investments.

Changes in foreign exchange rates will affect the value in U.S. Dollars of all foreign currency-denominated securities and other investments held by the Fund. Exchange rates are influenced generally by the forces of supply and demand in the foreign currency markets and by numerous other political and economic events occurring outside the United States, many of which may be difficult, if not impossible, to predict.

Income from foreign securities and other investments will be received and realized in foreign currencies, and the Fund is required to compute and distribute income in U.S. Dollars. Accordingly, a decline in the value of a particular foreign currency against the U.S. Dollar occurring after the Fund’s income has been earned and computed in U.S. Dollars may require the Fund to liquidate portfolio securities or other investments to acquire sufficient U.S. Dollars to make a distribution. Similarly, if the exchange rate declines between the time the Fund incurs expenses in U.S. Dollars and the time such expenses are paid, the Fund may be required to liquidate additional portfolio securities or other investments to purchase the U.S. Dollars required to meet such expenses.

The Fund may purchase foreign bank obligations. In addition to the risks described above that are generally applicable to foreign investments, the investments that the Fund makes in obligations of foreign banks, branches or subsidiaries may involve further risks, including differences between foreign banks and U.S. banks in applicable accounting, auditing and financial reporting standards, and the possible establishment of exchange controls or other foreign government laws or restrictions applicable to the payment of certificates of deposit or time deposits that may affect adversely the payment of principal and interest on the securities and other investments held by the Fund.

Emerging Markets

The Fund may invest in companies organized or doing substantial business in emerging market countries or developing countries as defined by the World Bank, International Financial Corporation or the Morgan Stanley Capital International (MSCI) emerging market indices or other comparable indices. Developing countries may impose restrictions on the Fund’s ability to repatriate investment income or capital. Even where there is no outright restriction on repatriation of investment income or capital, the mechanics of repatriation may affect certain aspects of the operations of the Fund.

Some of the currencies in emerging markets have experienced devaluations relative to the U.S. Dollar, and major adjustments have been made periodically in certain of such currencies. Certain developing countries face serious exchange constraints.

Governments of some developing countries exercise substantial influence over many aspects of the private sector. In some countries, the government owns or controls many companies. Therefore, government actions in the future could have a significant effect on economic conditions in developing countries, which could affect the private sector companies in which the Fund invests.

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Foreign Currency Transactions

The Fund may conduct foreign currency exchange transactions either on a spot, i.e., cash, basis at the prevailing rate in the foreign exchange market or by entering into a forward foreign currency contract. A forward foreign currency contract (“forward contract”) involves an obligation to purchase or sell a specific amount of a specific currency at a future date, which may be any fixed number of days (usually less than one year) from the date of the contract agreed upon by the parties, at a price set at the time of the contract. Forward contracts are considered to be derivatives. The Fund enters into forward contracts in order to “lock in” the exchange rate between the currency it will deliver and the currency it will receive for the duration of the contract. In addition, the Fund may enter into forward contracts to hedge against risks arising from securities the Fund owns or anticipates purchasing or the U.S. Dollar value of interest and dividends paid on those securities. The Fund will not have more than 10% of its total assets committed to forward contracts, or maintain a net exposure to forward contracts that would obligate the Fund to deliver an amount of foreign currency in excess of the value of the Fund’s investment securities or other assets denominated in that currency.

If the Fund delivers the foreign currency at or before the settlement of a forward contract, it may be required to obtain the currency by selling some of the Fund’s assets that are denominated in that specific currency. The Fund may close out a forward contract obligating it to purchase a foreign currency by selling an offsetting contract, in which case it will realize a gain or a loss.

Foreign currency transactions involve certain costs and risks. The Fund incurs foreign exchange expenses in converting assets from one currency to another. Forward contracts involve a risk of loss if the Sub-Advisor is inaccurate in predicting currency movements. The projection of short-term currency market movements is extremely difficult, and the successful execution of a short-term hedging strategy is highly uncertain. The precise matching of forward contract amounts and the value of the securities involved is generally not possible. Accordingly, it may be necessary for the Fund to purchase additional foreign currency if the market value of the security is less than the amount of the foreign currency the Fund is obligated to deliver under the forward contract and the decision is made to sell the security and deliver the foreign currency. The use of forward contracts as a hedging technique does not eliminate the fluctuation in the prices of the underlying securities the Fund owns or intends to acquire, but it fixes a rate of exchange in advance. Although forward contracts can reduce the risk of loss if the values of the hedged currencies decline, these instruments also limit the potential gain that might result from an increase in the value of the hedged currencies.

There is no systematic reporting of last sale information for foreign currencies, and there is no regulatory requirement that quotations available through dealers or other market sources be firm or revised on a timely basis. Quotation information available is generally representative of very large transactions in the interbank market. The interbank market in foreign currencies is a global around-the-clock market. Since foreign currency transactions occurring in the interbank market involve substantially larger amounts than those that may be involved in the use of foreign currency options, the Fund may be disadvantaged by having to deal in an odd lot market (generally consisting of transactions of less than $1 million) for the underlying foreign currencies at prices that are less favorable than for round lots. The Fund may take positions in options on foreign currencies in order to hedge against the risk of foreign exchange fluctuation on foreign securities the Fund holds in its portfolio or which it intends to purchase.

Depository Receipts

American Depository Receipts (“ADRs”) are negotiable receipts issued by a U.S. bank or trust company that evidence ownership of securities in a foreign company which have been deposited with such bank or trust company’s office or agent in a foreign country. European Depository Receipts (“EDRs”) are negotiable certificates held in the bank of one country representing a specific number of shares of a stock traded on an exchange of another country. Global Depository Receipts (“GDRs”) are negotiable certificates held in the bank of one country representing a specific number of shares of a stock traded on an exchange of another country. Canadian Depository Receipts (“CDRs”) are negotiable receipts issued by a Canadian bank or trust company that evidence ownership of securities in a foreign company which have been deposited with such bank or trust company’s office or agent in a foreign country.

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Investing in ADRs, EDRs, GDRs, and CDRs presents risks that may not be equal to the risk inherent in holding the equivalent shares of the same companies that are traded in the local markets even though the Fund will purchase, sell and be paid dividends on ADRs, in U.S. Dollars. These risks include fluctuations in currency exchange rates, which are affected by international balances of payments and other economic and financial conditions; government intervention; speculation; and other factors. With respect to certain foreign countries, there is the possibility of expropriation or nationalization of assets, confiscatory taxation, political and social upheaval, and economic instability. The Fund may be required to pay foreign withholding or other taxes on certain ADRs, EDRs, GDRs, or CDRs that it owns, but investors may or may not be able to deduct their pro-rata share of such taxes in computing their taxable income, or take such shares as a credit against their U.S. federal income tax. See “Federal Income Tax Matters.” ADRs, EDRs, GDRs, and CDRs may be sponsored by the foreign issuer or may be unsponsored. Unsponsored ADRs, EDRs, GDRs, and CDRs are organized independently and without the cooperation of the foreign issuer of the underlying securities. Unsponsored ADRs, EDRs, GDRs, and CDRs are offered by companies which are not prepared to meet either the reporting or accounting standards of the United States. While readily exchangeable with stock in local markets, unsponsored ADRs, EDRs, GDRs, and CDRs may be less liquid than sponsored ADRs, EDRs, GDRs, and CDRs. Additionally, there generally is less publicly available information with respect to unsponsored ADRs, EDRs, GDRs, and CDRs.

Structured Investments

A structured investment is a security having a return tied to an underlying index or other security or asset class. Structured investments generally are individually negotiated agreements and may be traded over-the-counter. Structured investments are organized and operated to restructure the investment characteristics of the underlying security. This restructuring involves the deposit with or purchase by an entity, such as a corporation or trust, on specified instruments (such as commercial bank loans) and the issuance by that entity or one or more classes of securities (“structured securities”) backed by, or representing interests in, the underlying instruments. The cash flow on the underlying instruments may be apportioned among the newly issued structured securities to create securities with different investment characteristics, such as varying maturities, payment priorities and interest rate provisions, and the extent of such payments made with respect to structured securities is dependent on the extent of the cash flow on the underlying instruments. Because structured securities typically involve no credit enhancement, their credit risk generally will be equivalent to that of the underlying instruments. Investments in structured securities are generally of a class of structured securities that is either subordinated or unsubordinated to the right of payment of another class. Subordinated structured securities typically have higher yields and present greater risks than unsubordinated structured securities. Structured securities are typically sold in private placement transactions, and there currently is no active trading market for structured securities. Investments in government and government-related and restructured debt instruments are subject to special risks, including the inability or unwillingness to repay principal and interest, requests to reschedule or restructure outstanding debt and requests to extend additional loan amounts. Certain issuers of structured investments may be deemed to be “investment companies” as defined in the 1940 Act. As a result, the Fund’s investment in these structured investments may be limited by the restrictions contained in the 1940 Act. Structured investments are typically sold in private placement transactions, and there currently is no active trading market for Structured Investments.

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When-Issued or Delayed-Delivery Securities

The Fund may purchase securities on a when-issued or delayed delivery basis. For example, delivery of and payment for these securities can take place a month or more after the date of the purchase commitment. The purchase price and the interest rate payable, if any, on the securities are fixed on the purchase commitment date or at the time the settlement date is fixed. The value of such securities is subject to market fluctuations and, in the case of fixed income securities, no interest accrues to the Fund until settlement takes place. When purchasing a security on a when-issued or delayed-delivery basis, the Fund assumes the rights and risks of ownership of the security, including the risk of price and yield fluctuations. Accordingly, at the time the Fund makes the commitment to purchase securities on a when-issued or delayed delivery basis, it will record the transaction, reflect the value each day of such securities in determining its net asset value and, if applicable, calculate the maturity for the purposes of average maturity from that date. At the time of its acquisition, a when-issued security may be valued at less than the purchase price. The Fund will make commitments for such when-issued transactions only when it has the intention of actually acquiring the securities. To facilitate such acquisitions, the Fund will maintain with its custodian a segregated account with liquid assets, consisting of cash, United States Government securities or other appropriate securities, in an amount at least equal to such commitments. On delivery dates for such transactions, the Fund will meet its obligations from maturities or sales of the securities held in the segregated account and/or from cash flow. If, however, the Fund chooses to dispose of the right to acquire a when-issued security prior to its acquisition, it could, as with the disposition of any other portfolio obligation, incur a taxable capital gain or loss due to market fluctuation. Also, the Fund may be disadvantaged if the other party to the transaction defaults.

COMMODITIES AND COMMODITY CONTRACTS

The Fund may purchase and sell futures contracts and options; may enter into foreign exchange contracts; and may enter into swap agreements and other financial transactions not requiring the delivery of physical commodities. The Fund may also invest in instruments related to commodities, including structured notes, securities of commodities finance and operating companies. The Fund’s exposure to the commodities markets may subject the Fund to greater volatility than investments in traditional securities. The value of commodity-linked instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, and other risks affecting a particular industry or commodity. The Fund will only invest in commodities transactions or commodity-linked instruments that the Sub-Advisor believes can be readily liquidated.

TEMPORARY INVESTMENTS

The Fund may take temporary defensive measures that are inconsistent with the Fund’s normal fundamental or non-fundamental investment policies and strategies in response to adverse market, economic, political, or other conditions as determined by the Sub-Advisor. Such measures could include, but are not limited to, investments in (1) highly liquid short-term fixed income securities issued by or on behalf of municipal or corporate issuers, obligations of the U.S. Government and its agencies, commercial paper, and bank certificates of deposit; (2) repurchase agreements involving any such securities; and (3) other money market instruments. The Fund also may invest in shares of money market mutual funds to the extent permitted under applicable law. Money market mutual funds are investment companies, and the investments in those companies by the Fund are in some cases subject to certain fundamental investment restrictions. As a shareholder in a mutual fund, the Fund will bear its ratable share of its expenses, including management fees, and will remain subject to payment of the fees to the Advisor, with respect to assets so invested. The Fund may not achieve its investment objectives during temporary defensive periods.

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SHORT-TERM INVESTMENTS

The Fund may invest in any of the following securities and instruments:

Bank Certificates of Deposit, Bankers’ Acceptances and Time Deposits. The Fund may acquire certificates of deposit, bankers’ acceptances and time deposits in U.S. Dollar or foreign currencies. Certificates of deposit are negotiable certificates issued against monies deposited in a commercial bank for a definite period of time and earning a specified return. Bankers’ acceptances are negotiable drafts or bills of exchange, normally drawn by an importer or exporter to pay for specific merchandise, which are “accepted” by a bank, meaning in effect that the bank unconditionally agrees to pay the face value of the instrument on maturity. These short-term instruments which the Fund may acquire must, at the time of purchase, have capital, surplus and undivided profits in excess of $100 million (including assets of both domestic and foreign branches), based on latest published reports, or less than $100 million if the principal amount of such bank obligations are fully insured by the U.S. Government. If the Fund holds instruments of foreign banks or financial institutions, it may be subject to additional investment risks that are different in some respects from those incurred if the Fund invests only in debt obligations of U.S. domestic issuers. See “Foreign Securities” above. Such risks include future political and economic developments, the possible imposition of withholding taxes by the particular country in which the issuer is located, the possible confiscation or nationalization of foreign deposits, the possible establishment of exchange controls, or the adoption of other foreign governmental restrictions which may adversely affect the payment of principal and interest on these securities.

Domestic banks and foreign banks are subject to different governmental regulations with respect to the amount and types of loans that may be made and interest rates that may be charged. In addition, the profitability of the banking industry depends largely upon the availability and cost of funds and the interest income generated from lending operations. General economic conditions and the quality of loan portfolios affect the banking industry.

As a result of federal and state laws and regulations, domestic banks are required to maintain specified levels of reserves, limited in the amount that they can loan to a single borrower, and are subject to regulations designed to promote financial soundness. However, such laws and regulations may not necessarily apply to foreign banks, thereby affecting the risk involved in bank obligations that the Fund may acquire.

In addition to purchasing certificates of deposit and bankers’ acceptances, to the extent permitted under its investment strategies and policies stated above and in the Prospectus, the Fund may invest in interest-bearing time deposits or other interest-bearing deposits in commercial or savings banks. Time deposits are non-negotiable deposits maintained at a banking institution for a specified period of time at a specified interest rate.

Savings Association Obligations. The Fund may invest in certificates of deposit (interest-bearing time deposits) issued by savings banks or savings and loan associations that have capital, surplus and undivided profits in excess of $100 million, based on latest published reports, or less than $100 million if the principal amount of such obligations is fully insured by the U.S. Government.

Commercial Paper, Short-Term Notes and Other Corporate Obligations. The Fund may invest a portion of its assets in commercial paper and short-term notes. Commercial paper consists of unsecured promissory notes issued by corporations. Issues of commercial paper and short-term notes will normally have maturities of less than nine months and fixed rates of return, although such instruments may have maturities of up to one year.

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The Fund’s investment in commercial paper and short-term notes will consist of issues rated at the time of purchase “A-2” or higher by S&P, “Prime-1” or “Prime-2” by Moody’s, or similarly rated by another nationally recognized statistical rating organization or, if unrated, will be determined by the Sub-Advisor to be of comparable quality. These rating symbols are described in Appendix A to the Prospectus.

Corporate debt obligations are subject to the risk of an issuer’s inability to meet principal and interest payments on the obligations, i.e., credit risk. The Sub-Advisor may actively expose the Fund to credit risk. However, there can be no guarantee that the Sub-Advisor will be successful in making the right selections and thus fully mitigate the impact of credit risk changes on the Fund.

Illiquid and Restricted Securities

The Fund may invest up to 15% of its net assets in illiquid securities, including (i) securities for which there is no readily available market; (ii) securities in which the disposition would be subject to legal restrictions (so called “restricted securities”); and (iii) repurchase agreements having more than seven days to maturity. However, the Fund will not acquire illiquid securities if, as a result, such securities would comprise more than 15% of the value of the Fund’s net assets. The Trust’s Board of Trustees (the “Board”) or its delegate has the ultimate authority to determine, to the extent permissible under the federal securities laws, which securities are liquid or illiquid for purposes of this 15% limitation. The Board has delegated to the Sub-Advisor the day-to-day determination of the illiquidity of any security held by the Fund, although it has retained oversight and ultimate responsibility for such determinations. Although no definitive liquidity criteria are used, the Board has directed the Sub-Advisor to consider to such factors as (a) frequency of trading and availability of quotations; (b) the number of dealers willing to purchase or sell the security and the availability of buyers; (c) the willingness of dealers to be market makers in the security; and (d) the nature of trading activity including (i) the time needed to dispose of a position or part of a position and (ii) offer and solicitation methods. A considerable period of time may elapse between the Fund’s decision to sell such securities and the time when the Fund is able to sell them, during which time the value of the securities could decline. Illiquid securities will usually be priced at fair value as determined in good faith by the Board or its delegate. If, through the appreciation of illiquid securities or the depreciation of liquid securities, more than 15% of the value of the Fund’s net assets is invested in illiquid securities, including restricted securities which are not readily marketable, the Fund will take such steps as are deemed advisable, if any, to protect liquidity.

Restricted securities may be sold only in privately negotiated transactions or in a public offering with respect to which a registration statement is in effect under the Securities Act of 1933, as amended (the “Securities Act”). Where registration is required, the Fund may be obligated to pay all or part of the registration expenses and a considerable period may elapse between the time of the decision to sell and the time the Fund may be permitted to sell a security under an effective registration statement. If, during such a period, adverse market conditions were to develop, the Fund might obtain a less favorable price than that which prevailed when it decided to sell. Restricted securities issued pursuant to Rule 144A under the Securities Act that have a readily available market usually are not deemed illiquid for purposes of this limitation by the Fund. However, investing in Rule 144A securities could result in increasing the level of the Fund’s illiquidity if qualified institutional buyers become, for a time, uninterested in purchasing these securities.

Lending Portfolio Securities

Consistent with applicable regulatory requirements and the Fund’s investment restrictions, the Fund may lend portfolio securities to securities broker-dealers or financial institutions, provided that such loans are callable at any time by the Fund (subject to notice provisions described below), and are at all times secured by cash or cash equivalents, which are maintained in a segregated account pursuant to applicable regulations and that are at least equal to the market value, determined daily, of the loaned securities. The advantage of such loans is that the Fund continues to receive the income on the loaned securities while at the same time earns interest on the cash amounts deposited as collateral, which will be invested in short-term obligations. The Fund will not lend portfolio securities if such loans are not permitted by the laws or regulations of any state in which its shares are qualified for sale. The Fund’s loans of portfolio securities will be collateralized in accordance with applicable regulatory requirements and no loan will cause the value of all loaned securities to exceed 33 1/3% of the value of the Fund’s total assets.

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A loan may generally be terminated by the borrower on one business day’s notice, or by the Fund on five business days’ notice. If the borrower fails to deliver the loaned securities within five days after receipt of notice or fails to maintain the requisite amount of collateral, the Fund could use the collateral to replace the securities while holding the borrower liable for any excess of replacement cost over collateral. As with any extensions of credit, there are risks of delay in recovery and in some cases even loss of rights in the collateral should the borrower of the securities fail financially. However, these loans of portfolio securities will only be made to firms deemed by the Fund’s management to be creditworthy and when the income that can be earned from such loans justifies the attendant risks. Upon termination of the loan, the borrower is required to return the securities to the Fund. Any gain or loss in the market price during the loan period would inure to the Fund. The risks associated with loans of portfolio securities are substantially similar to those associated with repurchase agreements. Thus, if the counterparty to the loan petitions for bankruptcy or becomes subject to the United States Bankruptcy Code, the law regarding the rights of the Fund is unsettled. As a result, under extreme circumstances, there may be a restriction on the Fund’s ability to sell the collateral, and the Fund would suffer a loss. When voting or consent rights that accompany loaned securities pass to the borrower, the Fund will follow the policy of calling the loaned securities, to be delivered within one day after notice, to permit the exercise of such rights if the matters involved would have a material effect on the Fund’s investment in such loaned securities. The Fund will pay reasonable finder’s, administrative and custodial fees in connection with a loan of its securities.

Developments in the China Region

After nearly 30 years of unprecedented growth, the People’s Republic of China now faces a slowing economy. The real estate market, which many observers believed to be inflated, has begun to decline. Local governments, which had borrowed heavily to bolster growth, face high debt burdens and limited revenue sources. As a result, demand for Chinese exports by the U.S. and countries in Europe, and demands for Chinese imports from such countries, may weaken due to the effects of more limited economic growth. Additionally, Chinese actions to lay claim to disputed islands have caused relations with China's regional trading partners to suffer, and could cause further disruption to regional and international trade. In the long run, China's ability to develop and sustain a credible legal, regulatory, monetary, and socioeconomic system could influence the course of outside investment.

Europe—Recent Events

A number of countries in Europe have experienced severe economic and financial difficulties. Many non-governmental issuers, and even certain governments, have defaulted on, or been forced to restructure, their debts; many other issuers have faced difficulties obtaining credit or refinancing existing obligations; financial institutions have in many cases required government or central bank support, have needed to raise capital, and/or have been impaired in their ability to extend credit; and financial markets in Europe and elsewhere have experienced extreme volatility and declines in asset values and liquidity. These difficulties may continue, worsen or spread within and without Europe. Responses to the financial problems by European governments, central banks and others, including austerity measures and reforms, may not work, may result in social unrest and may limit future growth and economic recovery or have other unintended consequences. Further defaults or restructurings by governments and others of their debt could have additional adverse effects on economies, financial markets and asset valuations around the world. In addition, one or more countries may abandon the Euro, the common currency of the European Union, and/or withdraw from the European Union. The impact of these actions, especially if they occur in a disorderly fashion, is not clear but could be significant and far-reaching. Whether or not the Fund invests in securities of issuers located in Europe or with significant exposure to European issuers or countries, these events could negatively affect the value and liquidity of the Fund’s investments due to the interconnected nature of the global economy and capital markets. The Fund may also be susceptible to these events to the extent that the Fund invests in municipal obligations with credit support by non-U.S. financial institutions.

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Cyber Security Risk

Investment companies, such as the Fund, and its service providers may be subject to operational and information security risks resulting from cyber attacks. Cyber attacks include, among other behaviors, stealing or corrupting data maintained online or digitally, denial of service attacks on websites, the unauthorized release of confidential information or various other forms of cyber security breaches. Cyber attacks affecting the Fund, the Advisor or Sub-Advisor, the Fund’s custodian or transfer agent, or intermediaries or other third-party service providers may adversely impact the Fund. For instance, cyber attacks may interfere with the processing of shareholder transactions, impact the Fund’s ability to calculate its net asset value, cause the release of private shareholder information or confidential company information, impede trading, subject the Fund to regulatory fines or financial losses, and cause reputational damage. The Fund may also incur additional costs for cyber security risk management purposes. Similar types of cyber security risks are also present for issuers of securities in which the Fund invests, which could result in material adverse consequences for such issuers, and may cause the Fund’s investment in such portfolio companies to lose value.

Investment Restrictions

The Fund has adopted the following restrictions as fundamental policies, which may not be changed without the favorable “vote of the holders of a majority of the outstanding voting securities” of the Fund, as defined in the 1940 Act. Under the 1940 Act, the “vote of the holders of a majority of the outstanding voting securities” of the Fund means the vote of the holders of the lesser of (i) 67% of the shares of the Fund represented at a meeting at which the holders of more than 50% of its outstanding shares are represented or (ii) more than 50% of the outstanding shares of the Fund. The Fund’s investment objective is a non-fundamental policy and may be changed without shareholder approval.

The Fund may not:

Issue senior securities, borrow money or pledge its assets, except that (i) the Fund may borrow from banks in amounts not exceeding one-third of its net assets (including the amount borrowed); and (ii) this restriction shall not prohibit the Fund from engaging in or writing options transactions or short sales or investing in or writing financial futures, swaps, when-issued or delayed delivery securities, or reverse repurchase agreements.

2.	Act as underwriter, except to the extent the Fund may be deemed to be an underwriter in connection with the sale of securities in its investment portfolio;

Invest 25% or more of its total assets, calculated at the time of purchase and taken at market value, in any one industry, except (i) the Fund will invest at least 25% of its total assets in mortgage-related securities which are securities that are backed by or provide exposure to mortgages, including private and government mortgage-backed securities and (ii) the Fund may invest 25% or more of its total assets in securities issued by the U.S. Government, its agencies or instrumentalities.

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4.	Purchase or sell real estate or interests in real estate or real estate limited partnerships (although the Fund may purchase and sell securities which are secured by real estate and securities of companies which invest or deal in real estate, such as real estate investment trusts (REITs);

5.	Make loans of money, except (a) for purchases of debt securities consistent with the investment policies of the Fund, (b) by engaging in repurchase agreements or, (c) through the loan of portfolio securities in an amount up to 33 1/3% of the Fund’s net assets; or

Purchase or sell commodities, except that the Fund may purchase and sell futures contracts and options; may enter into foreign exchange contracts; may enter into swap agreements and other financial transactions not requiring the delivery of physical commodities in compliance with applicable commodities laws.

The Fund observes the following restriction as a matter of operating but not fundamental policy, pursuant to positions taken by federal regulatory authorities:

The Fund may not invest, in the aggregate, more than 15% of its net assets in securities with legal or contractual restrictions on resale, securities that are not readily marketable and repurchase agreements with more than seven days to maturity. In addition, the Fund will not invest more than 15% of its total net assets in collateralized loan obligations.

Except with respect to borrowing, if a percentage or rating restriction on investment or use of assets set forth herein or in the Prospectus is adhered to at the time a transaction is effected, later changes in percentage resulting from any cause other than actions by the Fund will not be considered a violation.

MANAGEMENT OF THE FUND

Trustees and Officers

The overall management of the business and affairs of the Trust is vested with its Board of Trustees. The Board approves all significant agreements between the Trust and persons or companies furnishing services to it, including the agreements with the Advisor, Sub-Advisor, co-administrators, distributor, custodian and transfer agent. The day-to-day operations of the Trust are delegated to its officers, except that the Sub-Advisor is responsible for making day-to-day investment decisions in accordance with the Fund’s investment objectives, strategies, and policies, all of which are subject to general supervision by the Board.

The Trustees and officers of the Trust, their years of birth and positions with the Trust, term of office with the Trust and length of time served, their business addresses and principal occupations during the past five years and other directorships held during the past five years are listed in the table below. Unless noted otherwise, each person has held the position listed for a minimum of five years. Charles H. Miller, Ashley Toomey Rabun and William H. Young are all of the Trustees who are not “interested persons” of the Trust, as that term is defined in the 1940 Act (collectively, the “Independent Trustees”).

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Name, Address, Year of Birth and Position(s) held with Trust	Term of Office^c and Length of Time Served	Principal Occupation During the Past Five Years and Other Affiliations	Number of Portfolios in the Fund Complex Overseen by Trustee	Other Directorships Held by Trustee During the Past Five Years
“Independent” Trustees:
Charles H. Miller^a (born 1947) Trustee	Since November 2007	Retired (2013 – present). Executive Vice President, Client Management and Development, Access Data, a Broadridge company, a provider of technology and services to asset management firms (1997-2012).	79	None.
Ashley Toomey Rabun^a (born 1952) Trustee and Chairperson of the Board	Since November 2007	President and Founder, InvestorReach, Inc. a financial services consulting firm (1996-present).	79	Select Sector SPDR Trust, a registered investment company (includes 11 portfolios).
William H. Young^a (born 1950) Trustee	Since November 2007	Retired (2014 - present). Independent financial services consultant (1996-2014). Interim CEO, Unified Fund Services Inc. (now Huntington Fund Services), a mutual fund service provider (2003 - 2006). Senior Vice President, Oppenheimer Management Company (1983 - 1996). Board Member Emeritus, NICSA, an investment management trade association (2012 - present).	79	None.
Interested Trustees:
John P. Zader^a‡ (born 1961) Trustee	Since November 2007	Retired (June 2014 - present). CEO, UMB Fund Services, Inc., a mutual fund and hedge fund service provider, and the transfer agent, fund accountant, and co-administrator for the Fund, (2006 – June 2014). President, Investment Managers Series Trust (December 2007 - June 2014).	79	Investment Managers Series Trust II, a registered investment company (includes 13 portfolios).
Eric M. Banhazl^b† (born 1957) Trustee and Vice President	Since January 2008 as Trustee and December 2007 as Vice President	President, Mutual Fund Administration, LLC, co-administrator for the Fund (2006 – present).	79	Investment Managers Series Trust II, a registered investment company (includes 13 portfolios).
Officers of the Trust:
Maureen Quill ^a (born 1963) President	Since June 2014	Chief Operating Officer (June 2014 - present) and Executive Vice President, UMB Fund Services, Inc. (January 2007 – June 2014). Vice President, Investment Managers Series Trust (December 2013 - June 2014).	N/A	N/A
Terrance P. Gallagher, CPA, JD ^a (born 1958) Vice President	Since December 2007	Executive Vice President, UMB Fund Services, Inc. (2007 – present). Director of Compliance, Unified Fund Services Inc. (2004 – 2007).	N/A	N/A

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Name, Address, Year of Birth and Position(s) held with Trust	Term of Office^c and Length of Time Served	Principal Occupation During the Past Five Years and Other Affiliations	Number of Portfolios in the Fund Complex Overseen by Trustee	Other Directorships Held by Trustee During the Past Five Years
Rita Dam^b (born 1966) Treasurer and Assistant Secretary	Since December 2007	Vice President, Mutual Fund Administration, LLC (2006 – present).	N/A	N/A
Joy Ausili^b (born 1966) Secretary and Assistant Treasurer	Since December 2007	Vice President, Mutual Fund Administration, LLC (2006 – present).	N/A	N/A
Martin Dziura^b (born 1959) Chief Compliance Officer	Since June 2014	Principal, Dziura Compliance Consulting, LLC (October 2014 - present). Managing Director, Cipperman Compliance Services (2010 – September 2014). Chief Compliance Officer, Hanlon Investment Management (2009-2010). Vice President − Compliance, Morgan Stanley Investment Management (2000 − 2009).	N/A	N/A

a	Address for certain Trustees and certain officers: 235 W. Galena Street, Milwaukee, Wisconsin 53212.

b	Address for Mr. Banhazl, Ms. Ausili and Ms. Dam: 2220 E. Route 66, Suite 226, Glendora, California 91740.

Address for Mr. Dziura: 39 Stratford Square, Boyerstown, PA 19512.

c	Trustees and officers serve until their successors have been duly elected.

†	Mr. Banhazl is an “interested person” of the Trust by virtue of his position as an officer of the Trust.

‡	Mr. Zader is being treated as an “interested person” of the Trust until July 1, 2016, by reason of his former position with UMB Fund Services, Inc.

Compensation

Each Independent Trustee and Mr. Zader receives from the Trust a quarterly retainer of $26,000, $4,000 for each special in-person meeting attended and $1,000 for each telephonic meeting attended at which Board action is taken. In addition, Ms. Rabun receives an additional annual retainer of $25,000 for serving as Chairperson of the Board; each of Mr. Young and Mr. Miller receives an additional annual retainer of $10,000 for serving as Audit Committee Chair and Valuation Committee Chair, respectively; and Mr. Miller, who serves as Chair of the Nominating and Governance Committee (the “Nominating Committee”), receives a fee of $1,000 for each meeting of that Committee. The Trust has no pension or retirement plan. No other entity affiliated with the Trust pays any compensation to the Trustees.

Name of Person/Position	Aggregate Compensation From the Fund ($)¹	Pension or Retirement Benefits Accrued as Part of Fund’s Expenses ($)	Estimated Annual Benefits Upon Retirement ($)	Total Compensation from Trust (79 Funds) Paid to Trustees ($)¹
Independent Trustees:
Charles H. Miller, Trustee and Nominating Committee and Valuation Committee Chair	$1,500	None	None	$114,000

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Name of Person/Position	Aggregate Compensation From the Fund ($)¹	Pension or Retirement Benefits Accrued as Part of Fund’s Expenses ($)	Estimated Annual Benefits Upon Retirement ($)	Total Compensation from Trust (79 Funds) Paid to Trustees ($)¹
Ashley Toomey Rabun, Trustee and Chairperson	$1,500	None	None	$129,000
William H. Young, Trustee and Audit Committee Chair	$1,500	None	None	$114,000
Interested Trustee:
John Zader, Trustee	$1,500	None	None	$104,000

¹	Estimated annual compensation for the current fiscal year.

Mr. Banhazl is not compensated for his service as Trustee because of his affiliation with the Trust. Officers of the Trust are not compensated by the Fund for their services.

Additional Information Concerning the Board and the Trustees

The current Trustees were selected in November 2007 (January 2008 for Mr. Banhazl) with a view towards establishing a Board that would have the broad experience needed to oversee a registered investment company comprised of multiple series employing a variety of different investment strategies. As a group, the Board has extensive experience in many different aspects of the financial services and asset management industries.

The Trustees were selected to join the Board based upon the following factors, among others: character and integrity; willingness to serve and willingness and ability to commit the time necessary to perform the duties of a Trustee; as to each Trustee other than Messrs. Banhazl and Zader, satisfying the criteria for not being classified as an “interested person” of the Trust as defined in the 1940 Act; and, as to Messrs. Banhazl and Zader, their current and former positions with the Trust’s co-administrators. In addition, the Trustees have the following specific experience, qualifications, attributes and/or skills relevant to the operations of the Trust:

Ms. Rabun has substantial senior executive experience in mutual fund marketing and distribution and serving in senior executive and board positions with mutual funds, including multiple series trusts similar to the Trust.

Mr. Miller has significant senior executive experience with respect to marketing and distribution of mutual funds, including multiple series trusts similar to the Trust.

Mr. Young has broad senior executive experience with respect to the operations and management of mutual funds and administrative service providers, including multiple series trusts similar to the Trust.

Mr. Banhazl has significant experience serving in senior executive and board positions for mutual funds and with respect to the organization and operation of mutual funds and multiple series trusts similar to the Trust.

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Mr. Zader has substantial experience serving in senior executive positions at mutual fund administrative service providers.

In its periodic self-assessment of the effectiveness of the Board, the Board considers the complementary individual skills and experience of the individual Trustees primarily in the broader context of the Board’s overall composition so that the Board, as a body, possesses the appropriate (and appropriately diverse) skills and experience to oversee the business of the Fund. The summaries set forth above as to the qualifications, attributes and skills of the Trustees are required by the registration form adopted by the SEC, do not constitute holding out the Board or any Trustee as having any special expertise or experience, and do not impose any greater responsibility or liability on any such person or on the Board as a whole than would otherwise be the case.

The Board of Trustees has three standing committees: the Audit Committee, the Nominating Committee, and the Valuation Committee.

The function of the Audit Committee, with respect to each series of the Trust, is to review the scope and results of the series’ annual audit and any matters bearing on the audit or the series’ financial statements and to assist the Board’s oversight of the integrity of the series’ pricing and financial reporting. The Audit Committee is comprised of all of the Independent Trustees and is chaired by Mr. Young. It does not include any Interested Trustees. The Audit Committee is expected to meet at least twice a year with respect to each series of the Trust.

The Audit Committee also serves as the Qualified Legal Compliance Committee (“QLCC”) for the Trust for the purpose of compliance with Rules 205.2(k) and 205.3(c) of the Code of Federal Regulations regarding alternative reporting procedures for attorneys retained or employed by an issuer who appear and practice before the SEC on behalf of the issuer.

The Nominating Committee is responsible for reviewing matters pertaining to composition, committees, and operations of the Board and meets from time to time as needed. The Nominating Committee will consider nominees properly recommended by the Trust’s shareholders. Shareholders who wish to recommend a nominee should send nominations that include, among other things, biographical data and the qualifications of the proposed nominee to the Trust’s Secretary. The Independent Trustees comprise the Nominating Committee, and the Committee is chaired by Mr. Miller.

The function of the Valuation Committee is to value securities held by any series of the Trust for which current and reliable market quotations are not readily available. Such securities are valued at their respective fair values as determined in good faith by the Valuation Committee and the actions of the Valuation Committee are subsequently reviewed by the Board. The Valuation Committee is comprised of all the Trustees and is chaired by Mr. Miller, but action may be taken by any one of the Trustees. The Valuation Committee meets as needed.

Independent Trustees comprise 60% of the Board and Ashley Toomey Rabun, an Independent Trustee, serves as Chairperson of the Board. The Chairperson serves as a key point person for dealings between the Trust’s management and the other Independent Trustees. As noted above, through the committees of the Board the Independent Trustees consider and address important matters involving each series of the Trust, including those presenting conflicts or potential conflicts of interest. The Independent Trustees also regularly meet outside the presence of management and are advised by independent legal counsel. The Board has determined that its organization and leadership structure are appropriate in light of its fiduciary and oversight obligations, the special obligations of the Independent Trustees, and the relationship between the Interested Trustees and the Trust’s co-administrators. The Board also believes that its structure facilitates the orderly and efficient flow of information to the Independent Trustees from management.

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Consistent with its responsibility for oversight of the Fund in the interests of shareholders, the Board among other things oversees risk management of the Fund’s investment programs and business affairs directly and through the Audit Committee. The Board has emphasized to the Advisor and the Sub-Advisor the importance of maintaining vigorous risk management programs and procedures.

The Fund faces a number of risks, such as investment risk, valuation risk, reputational risk, risk of operational failure or lack of business continuity, and legal, compliance and regulatory risk. Risk management seeks to identify and address risks, i.e., events or circumstances that could have material adverse effects on the business, operations, shareholder services, investment performance or reputation of the Fund. Under the overall supervision of the Board, the Advisor, the Sub-Advisor and other service providers to the Fund employ a variety of processes, procedures and controls to identify various of those possible events or circumstances, to lessen the probability of their occurrence and/or to mitigate the effects of such events or circumstances if they do occur. Different processes, procedures and controls are employed with respect to different types of risks. Various personnel, including the Trust’s CCO, the Advisor’s management, the Sub-Advisor’s management and other service providers (such as the Fund’s independent registered public accounting firm) make periodic reports to the Board or to the Audit Committee with respect to various aspects of risk management. The Board recognizes that not all risks that may affect the Fund can be identified, that it may not be practical or cost-effective to eliminate or mitigate certain risks, that it may be necessary to bear certain risks (such as investment-related risks) to achieve the Fund’s investment objective, and that the processes, procedures and controls employed to address certain risks may be limited in their effectiveness. Moreover, reports received by the Trustees as to risk management matters are typically summaries of the relevant information. As a result of the foregoing and other factors, the Board’s risk management oversight is subject to substantial limitations.

Fund Shares Beneficially Owned by Trustees

Certain information regarding ownership by the Trustees of the Fund and other series of the Trust, as of

December 31, 2014, is set forth in the following table.

Name of Trustee	Dollar Range of Equity Securities in the Fund ($)	Aggregate Dollar Range of Equity Securities in all Registered Investment Companies Overseen by Trustee in Family of Investment Companies ($)
Independent Trustees
Charles H. Miller	None	$1-$10,000
Ashley Toomey Rabun	None	$1-$10,000
William H. Young	None	None
Interested Trustees:
John P. Zader	None	None
Eric M. Banhazl	None	$50,001-$100,000

Control Persons, Principal Shareholders, and Management Ownership

A principal shareholder is any person who owns of record or beneficially 5% or more of the outstanding shares of any class of the Fund. A control person is one who owns beneficially or of record more than 25% of the voting securities of the Fund or acknowledge s the existence of control. Shareholders with a controlling interest could affect the outcome of voting or the direction of management of the Fund.

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As of the date of this SAI, the Fund is under the control of HRC Portfolio Solutions, LLC, a control affiliate of Liberty Street Advisors, Inc., which had voting authority with respect to 100% of the outstanding shares in the Fund on such date. However, once the Fund commences investment operations and its shares are sold to the public, this control will be diluted.

As of the date of this SAI, none of the Trustees and officers of the Trust owned any shares of the Fund. Furthermore, neither the Independent Trustees, nor members of their immediate families, own securities beneficially or of record in the Advisor, Sub-Advisor, the Fund’s distributor, Foreside Fund Services, LLC (the “Distributor”), or any of their respective affiliates.

The Advisor

The Advisor, Liberty Street Advisors, Inc., serves as investment advisor to the Fund pursuant to an Investment Advisory Agreement with the Trust (the “Advisory Agreement”). The Advisor is a corporation organized in New York. The Advisor is privately owned with the controlling interests held by Raymond A. Hill, III, Timothy Reick, Victor J. Fontana and Scott Daniels.

Pursuant to the terms of the Advisory Agreement, the Advisor provides the Fund with investment advice, makes recommendations with respect to the selection and continued employment of the Sub-Advisor to manage the Fund’s assets, supervises the investment program of the Fund and the composition of its investment portfolio, performs diligence on and monitors the Sub-Advisor, reviews investment performance and adherence to compliance procedures, and oversees the investments made by the Sub-Advisor. The Advisor also continuously monitors the Sub-Advisor’s compliance with the Fund’s investment objective, policies and restrictions. Subject to such policies as the Board of Trustees may determine, the Advisor is ultimately responsible for investment decisions for the Fund.

The Advisory Agreement will remain in effect for an initial two-year period. After the initial two-year period, the Advisory Agreement will continue in effect from year to year only if such continuance is specifically approved at least annually by the Board or by vote of a majority of the Fund’s outstanding voting securities and by a majority of the Trustees who are not parties to the Advisory Agreement or interested persons of any such party, at a meeting called for the purpose of voting on the Advisory Agreement. The Advisory Agreement is terminable without penalty by the Trust on behalf of the Fund, upon giving the Advisor 60 days’ notice when authorized either by a majority vote of the Fund’s shareholders or by a vote of a majority of the Board, or by the Advisor on 60 days’ written notice, and will automatically terminate in the event of its “assignment” (as defined in the 1940 Act). The Advisory Agreement provides that the Advisor shall not be liable for any error of judgment or for any loss suffered by the Trust in connection with the Advisory Agreement, except for a loss resulting from a breach of fiduciary duty, or for a loss resulting from willful misfeasance, bad faith or gross negligence in the performance of its duties, or from reckless disregard by the Advisor of its duties under the Advisory Agreement.

In consideration of the services to be provided by the Advisor pursuant to the Advisory Agreement, the Advisor is entitled to receive from the Fund an investment advisory fee computed daily and paid monthly based on an annual rate equal to a percentage of the Fund’s average daily net assets specified in the Prospectus.

The Sub-Advisor

Braddock Financial LLC serves as the sub-advisor for the Fund pursuant to a sub-advisory agreement with the Advisor (the “Sub-Advisory Agreement”). Subject to the oversight of the Board and the Advisor, the Sub-Advisor makes decisions regarding the investment and reinvestment of the Fund’s assets. The Sub-Advisor is 100% employee-owned, with Harvey Allon owning 62.5% and the remaining 37.5% interest shared amongst Tom Plisko, Garrett Tripp, Toby Giordano, Greg Seals, Ken Glickstein, Matt Talkington and David Allon.

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The Advisor compensates the Sub-Advisor out of the investment advisory fees the Advisor receives from the Fund. The Sub-Advisor makes investment decisions for the assets it has been allocated to manage, subject to the overall supervision of the Advisor.

The Sub-Advisory Agreement will remain in effect for an initial two-year period. After the initial two-year period, the Sub-Advisory Agreement will continue in effect from year to year only as long as such continuance is specifically approved at least annually by (i) the Board of Trustees of the Trust or by the vote of a majority of the outstanding voting shares of the Fund, and (ii) by the vote of a majority of the Trustees of the Trust who are not parties to the Sub-Advisory Agreement or interested persons of the Advisor or the Sub-Advisor or the Trust. The Sub-Advisory Agreement may be terminated at any time without the payment of any penalty by the Board of Trustees of the Trust or by the vote of a majority of the outstanding voting shares of the Fund, or by the Sub-Advisor or the Advisor upon 60 days’ written notice to the other party. Additionally, the Sub-Advisory Agreement automatically terminates in the event of its assignment. The Sub-Advisory Agreement provides that the Sub-Advisor shall not be liable for any error of judgment or for any loss suffered by the Trust in connection with the Sub-Advisory Agreement, except for a loss resulting from a breach of fiduciary duty, or for a loss resulting from willful misfeasance, bad faith or gross negligence in the performance of its duties, or from reckless disregard by the Sub-Advisor of its duties under the Sub-Advisory Agreement.

Fund Expenses

For services rendered by the Advisor under the Advisory Agreement, the Fund pays the Advisor a fee, payable monthly, in an annual amount equal to 1.25% of the Fund's average daily net assets. The Sub-Advisor's fee, payable monthly and calculated as a percentage of the Fund's average daily net assets, is paid by the Advisor and not the Fund.

The Fund is responsible for its own operating expenses (all of which will be borne directly or indirectly by the Fund’s shareholders), including among others, legal fees and expenses of counsel to the Fund and the Fund’s independent trustees; insurance (including trustees’ and officers’ errors and omissions insurance); auditing and accounting expenses; taxes and governmental fees; listing fees; dues and expenses incurred in connection with membership in investment company organizations; fees and expenses of the Fund’s custodians, administrators, transfer agents, registrars and other service providers; expenses for portfolio pricing services by a pricing agent, if any; expenses in connection with the issuance and offering of shares; expenses relating to investor and public relations; expenses of registering or qualifying securities of the Fund for public sale; brokerage commissions and other costs of acquiring or disposing of any portfolio holding of the Fund; expenses of preparation and distribution of reports, notices and dividends to shareholders; expenses of the dividend reinvestment plan; compensation and expenses of trustees; any litigation expenses; and costs of shareholders’ and other meetings.

The Advisor has contractually agreed to waive its fees and/or pay for operating expenses of the Fund to ensure that the total annual fund operating expenses (excluding, as applicable, taxes, leverage interest, brokerage commission, dividend and interest expenses on short sales, acquired fund fees and expenses (as determined in accordance with Form N-1A), expenses incurred in connection with any merger or reorganization, or extraordinary expenses such as litigation expenses) do not exceed 1.75%, 2.50% and 1.50% of the average daily net assets of the Class A Shares, Class C Shares, and Institutional Class Shares of the Fund, respectively. This agreement is effective until April 30, 2017, and may be terminated before that date only by the Board of Trustees.

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Any reduction in advisory fees or payment of the Fund’s expenses made by the Advisor in a fiscal year may be reimbursed by the Fund for a period ending three full fiscal years after the date of reduction or payment if the Advisor so requests. This reimbursement may be requested from the Fund if the aggregate amount of operating expenses for such fiscal year, as accrued each month, does not exceed the lesser of (a) the limitation on Fund expenses in effect at the time of the relevant reduction in advisory fees or payment of the Fund’s expenses, or (b) the limitation on Fund expenses at the time of the request. The reimbursement amount may not exceed the total amount of fees waived and/or Fund expenses paid by the Advisor and will not include any amounts previously reimbursed to the Advisor by the Fund. Any such reimbursement is contingent upon the Board’s subsequent review and ratification of the reimbursed amounts. The Fund must pay current ordinary operating expenses before the Advisor is entitled to any reimbursement of fees and/or Fund expenses.

Portfolio Manager

Other Accounts Managed by the Portfolio Manager. As of the date of this SAI, information on other accounts managed by the Fund’s portfolio managers is as follows.

Garrett Tripp

			With Advisory Fee based on performance
Type of Accounts	Number of Accounts	Total Assets ($)	Number of Accounts	Total Assets ($)
Registered Investment Companies	0	$0	0	0
Other Pooled Investments	1	$53.8 million	1	$53.8 million
Other Accounts	1	$9.2 million	0	$0

Toby R. Giordano

			With Advisory Fee based on performance
Type of Accounts	Number of Accounts	Total Assets ($)	Number of Accounts	Total Assets ($)
Registered Investment Companies	0	$0	0	0
Other Pooled Investments	1	$53.8 million	1	$53.8 million
Other Accounts	1	$9.2 million	0	$0

Material Conflicts of Interest. Actual or apparent conflicts of interest may arise when a portfolio manager has day-to-day management responsibilities with respect to more than one fund or other account. Where conflicts of interest arise between the Fund and other accounts managed by the portfolio manager, the Sub-Advisor will proceed in a manner that ensures that the Fund will not be treated less favorably. There may be instances in which similar portfolio transactions may be executed for the same security for numerous accounts managed by the portfolio manager. In such instances, securities will be allocated in accordance with the Sub-Advisor’s trade allocation policy. Though the Sub-Advisor has such procedures in place to address conflicts of interest, there is no guarantee that the Sub-Advisor’s procedures will detect each and every situation in which a conflict arises.

Compensation. The portfolio managers are compensated by the Sub-Advisor. Messrs. Tripp and Giordano receive compensation from the Sub-Advisor in the form of a salary and discretionary bonus, which is assessed on the firm's overall profitability and allocated based on each individual's contribution to work performance, firm growth and profitability. Messrs. Tripp and Giordano, as partial owners of the Sub-Advisor, will participate in any distribution of the Sub-Advisor's profits.

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Ownership of the Fund by the Portfolio Manager. As of the date of this SAI, no shares of the Fund were owned by the Portfolio Managers.

Service Providers

Pursuant to a Co-Administration Agreement (the “Co-Administration Agreement”), UMB Fund Services, Inc. (“UMBFS”), 235 W. Galena Street, Milwaukee, Wisconsin 53212, and Mutual Fund Administration, LLC (“MFAC”), 2220 E. Route 66, Suite 226, Glendora, California 91740 (collectively the “Co-Administrators”), act as co-administrators for the Fund. The Co-Administrators provide certain administrative services to the Fund, including, among other responsibilities, coordinating the negotiation of contracts and fees with, and the monitoring of performance and billing of, the Fund’s independent contractors and agents; preparing for signature by an officer of the Trust of all documents required to be filed for compliance with applicable laws and regulations including those of the securities laws of various states; arranging for the computation of performance data, including net asset value and yield; arranging for the maintenance of books and records of the Fund; and providing, at their own expense, office facilities, equipment and personnel necessary to carry out their duties. In this capacity, the Co-Administrators do not have any responsibility or authority for the management of the Fund, the determination of investment policy, or for any matter pertaining to the distribution of Fund shares. The Co-Administration Agreement provides that neither Co-Administrator shall be liable for any error of judgment or mistake of law or for any loss suffered by the Trust or its series, except for losses resulting from a Co-Administrator’s willful misfeasance, bad faith or negligence in the performance of its duties or from reckless disregard by it of its obligations and duties under the Agreement.

As compensation for their services, the Fund pays the Co-Administrators an administration fee payable monthly at the annual rate set forth below as a percentage of the Fund’s average daily net assets:

Net Assets	Rate
First $50 million	0.10%
Thereafter	0.05%

Because the Fund is a newly formed fund and has yet to commence operations, the Fund has not paid any fees to the Co-Administrators as of the date of this SAI.

UMBFS also acts as the Trust’s fund accountant, transfer agent and dividend disbursing agent pursuant to separate agreements.

UMB Bank, n.a. (the “Custodian”), an affiliate of UMBFS, is the custodian of the assets of the Fund pursuant to a custody agreement between the Custodian and the Trust, whereby the Custodian provides services for fees on a transactional basis plus out‑of‑pocket expenses. The Custodian’s address is 928 Grand Boulevard, Kansas City, Missouri 64106. The Custodian does not participate in decisions pertaining to the purchase and sale of securities by the Fund.

Tait, Weller & Baker LLP, 1818 Market Street, Suite 2400, Philadelphia, Pennsylvania 19103, is the independent registered public accounting firm for the Fund. Its services include auditing the Fund’s financial statements and the performance of related tax services.

Morgan, Lewis & Bockius LLP (“Morgan Lewis”), 300 South Grand Avenue, 22^nd Floor, Los Angeles, California 90071, serves as counsel to the Trust and provides counsel on legal matters relating to the Fund. Morgan Lewis also serves as independent legal counsel to the Independent Trustees.

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Distribution Agreement

Foreside Fund Services, LLC is the distributor (also known as the principal underwriter) of the shares of the Fund and is located at Three Canal Plaza, Suite 100, Portland, Maine 04101. The Distributor is a registered broker-dealer and is a member of the Financial Industry Regulatory Authority (“FINRA”). The Distributor is not affiliated with the Trust, the Advisor, the Sub-Advisor or any other service provider for the Fund.

Under a Distribution Agreement with the Trust dated September 30, 2014 (the “Distribution Agreement”), the Distributor acts as the agent of the Trust in connection with the continuous offering of shares of the Fund. The Distributor continually distributes shares of the Fund on a best efforts basis. The Distributor has no obligation to sell any specific quantity of Fund shares. The Distributor and its officers have no role in determining the investment policies or which securities are to be purchased or sold by the Trust.

The Distributor may enter into agreements with selected broker-dealers, banks or other financial intermediaries for distribution of shares of the Fund. With respect to certain financial intermediaries and related fund “supermarket” platform arrangements, the Fund and/or the Advisor, rather than the Distributor, typically enter into such agreements. These financial intermediaries may charge a fee for their services and may receive shareholder service or other fees from parties other than the Distributor. These financial intermediaries may otherwise act as processing agents and are responsible for promptly transmitting purchase, redemption and other requests to the Fund.

Investors who purchase shares through financial intermediaries will be subject to the procedures of those intermediaries through which they purchase shares, which may include charges, investment minimums, cutoff times and other restrictions in addition to, or different from, those listed herein. Information concerning any charges or services will be provided to customers by the financial intermediary through which they purchase shares. Investors purchasing shares of the Fund through financial intermediaries should acquaint themselves with their financial intermediary’s procedures and should read the Prospectus in conjunction with any materials and information provided by their financial intermediary. The financial intermediary, and not its customers, will be the shareholder of record, although customers may have the right to vote shares depending upon their arrangement with the financial intermediary. The Distributor does not receive compensation from the Fund for its distribution services except the distribution/service fees with respect to the shares of those classes for which a Rule 12b-1 distribution plan is effective. The Advisor pays the Distributor a fee for certain distribution-related services.

The Distribution Agreement has an initial term of up to two years and will continue in effect only if such continuance is specifically approved at least annually by the Board or by vote of a majority of the Fund’s outstanding voting securities in accordance with the 1940 Act. The Distribution Agreement is terminable without penalty by the Trust on behalf of the Fund on no less than 60 days’ written notice when authorized either by a vote of a majority of the outstanding voting securities of the Fund or by vote of a majority of the members of the Board who are not “interested persons” (as defined in the 1940 Act) of the Trust and have no direct or indirect financial interest in the operation of the Distribution Agreement, or by the Distributor, and will automatically terminate in the event of its “assignment” (as defined in the 1940 Act). The Distribution Agreement provides that the Distributor shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Trust in connection with the performance of the Distributor’s obligations and duties under the Distribution Agreement, except a loss resulting from the Distributor’s willful misfeasance, bad faith or gross negligence in the performance of such duties and obligations, or by reason of its reckless disregard thereof.

The Distributor does not retain sales charges for the sale of Fund’s Class A Shares. Pursuant to the Distribution Agreement, should any amounts be retained by the Distributor, such amounts would not be held for profit at the Distributor, but instead would be used solely for distribution related expenditures.

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Rule 12b-1 Plan

The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act (the “12b-1 Plan”) that provides for Fund assets to be used for the payment for distribution services for Class A and Class C shares. The 12b-1 Plan provides alternative methods for paying sales charges and may help the Fund grow or maintain asset levels to provide operational efficiencies and economies of scale. The 12b-1 Plan also provides for the payment of service fees in connection with the provision of post-sales shareholders liaison services to holders of Class A and Class C shares as defined in FINRA regulations, including personal services such as responding to customer inquiries, and services related to the maintenance of shareholder accounts. Because 12b-1 fees are paid out of Fund assets attributable to Class A and Class C shares on an ongoing basis, they will, over time, increase the cost of an investment and may cost more than other types of sales charges. The 12b-1 Plan is a compensation plan, which means that the Distributor is compensated regardless of its expenses, as opposed to a reimbursement plan which reimburses only for expenses incurred. The Distributor does not retain any 12b-1 fees for profit. All 12b-1 fees are held in a retention account by the Distributor to pay for and/or reimburse the Advisor for distribution related expenditures.

The 12b-1 Plan provides that the distribution fees paid by Class A or Class C Shares of the Fund may be used to pay for any expenses primarily intended to result in the sale of shares of such Class, including: (a) costs of payments, including incentive compensation, made to agents for and consultants to the Distributor or the Trust, including pension administration firms that provide distribution services and broker-dealers that engage in the distribution of the shares of the Fund or Class; (b) payments made to, and expenses of, persons who provide support services in connection with the distribution of shares of such Class of the Fund; (c) payments made pursuant to any dealer agreements between the Distributor and certain broker-dealers, financial institutions and other service providers with respect to such Class of the Fund; (d) costs relating to the formulation and implementation of marketing and promotional activities; (e) costs of printing and distributing prospectuses, statements of additional information and reports of the Fund to prospective shareholders of such Class of the Fund; (f) costs involved in preparing, printing and distributing sales literature pertaining to such Class of the Fund; (g) costs involved in obtaining such information, analyses and reports with respect to marketing and promotional activities that the Trust may deem advisable with respect to such Class of the Fund, and (h) reimbursement to the Advisor for expenses advanced on behalf of the Fund or Class with respect to such activities.

The 12b-1 Plan may not be amended to materially increase the amount to be paid by the Fund’s Class A and Class C shares for distribution services without the vote of a majority of the outstanding voting securities of such shares. The 12b-1 Plan shall continue in effect indefinitely with respect to a Class, provided that such continuance is approved at least annually by a vote of a majority of the Trustees, including the Independent Trustees, cast in person at a meeting called for such purpose or by vote of at least a majority of the outstanding voting securities of such Class. The 12b-1 Plan may be terminated with respect to a Class at any time without penalty by vote of a majority of the Independent Trustees or by vote of the majority of the outstanding voting securities of such Class.

If the 12b-1 Plan is terminated for the Fund’s Class A and Class C shares in accordance with its terms, the obligation of the Fund to make payments pursuant to the 12b-1 Plan will cease and the Fund will not be required to make any payments past the termination date. Thus, there is no legal obligation for the Fund to pay any expenses incurred by the Distributor other than fees already payable under the 12b-1 Plan, if the 12b-1 Plan is terminated in accordance with its terms for any reason.

Shareholder Service Plan

The Board has adopted, on behalf of the Fund, a Shareholder Service Plan (the “Service Plan”) under which the Advisor will provide, or arrange for others (such as banks, trust companies, broker-dealers and other financial intermediaries (each, a “Service Organization”)) to provide, certain specified non-distribution shareholder servicing functions for Fund shares owned by its respective customers, including but not limited to (a) establishing and maintaining accounts and records relating to customers who invest in the Fund; (b) aggregating and processing orders involving Fund shares; (c) processing dividend and other distribution payments from the Fund on behalf of customers; (d) preparing tax reports or forms on behalf of customers; (e) forwarding communications from the Fund; (f) providing sub-accounting with respect to Fund shares; (g) providing customers with a service that invests the assets of their accounts in Fund shares pursuant to specific or pre-authorized instructions; and (h) providing such other similar services as the Advisor may reasonably request to the extent it or a Service Organization is permitted to do so under applicable statutes, rules or regulations. The Fund will pay the Advisor or Service Organizations, as applicable, at an annual rate of up to 0.15% of the Fund’s average daily net assets, payable monthly.

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Marketing and Support Payments

The Advisor or the Sub-advisor, out of its own resources and without additional cost to the Fund or its shareholders, may provide cash payments to certain financial intermediaries who sell shares of the Fund. These payments are in addition to other fees described in the Fund’s Prospectus and this SAI, and are generally provided for shareholder services or marketing support. Payments for marketing support are typically for inclusion of the Fund on sales lists, including electronic sales platforms. Investors may wish to take these payments into account when considering and evaluating recommendations to purchase shares of the Fund.

Dealer Reallowances

The Fund’s Class A shares are subject to a sales charge that includes a dealer reallowance, which varies depending on how much the shareholder invests. The Distributor pays the appropriate dealer reallowance to dealers who have entered into an agreement with the Distributor to sell shares of the Fund. The Distributor does not retain sales charges for the sale of the Fund’s Class A Shares. If the Distributor did retain sales charges, the Advisor’s affiliated broker-dealer, HRC Fund Associates, LLC (“HRC”) may receive sales charges from the Distributor for activities relating to the marketing of Fund shares pursuant to a wholesaling agreement with the Fund’s Distributor. In addition, HRC markets the Fund shares pursuant to a marketing agreement with the Advisor. The Advisor pays HRC out of its own resources and without additional cost to the Fund or its shareholders. Under both the wholesaling agreement and the marketing agreement, HRC markets the Fund to financial intermediaries, which in turn may recommend the Fund for purchase to their clients. HRC may also market the Fund to institutional investors. More detailed information on the sales charge and its application is contained in the Prospectus.

PORTFOLIO TRANSACTIONS AND BROKERAGE

The Sub-Advisor determines which securities are to be purchased and sold by the Fund and which broker-dealers are eligible to execute the Fund’s portfolio transactions. The purchases and sales of securities in the over-the-counter market will generally be executed by using a broker for the transaction.

Purchases of portfolio securities for the Fund also may be made directly from issuers or from underwriters. Where possible, purchase and sale transactions will be effected through dealers (including banks) that specialize in the types of securities which the Fund will be holding unless better executions are available elsewhere. Dealers and underwriters usually act as principals for their own accounts. Purchases from underwriters will include a concession paid by the issuer to the underwriter and purchases from dealers will include the spread between the bid and the asked price. If the execution and price offered by more than one dealer or underwriter are comparable, the order may be allocated to a dealer or underwriter that has provided research or other services as discussed below.

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In placing portfolio transactions, the Sub-Advisor will use its reasonable efforts to choose broker-dealers capable of providing the services necessary to obtain the most favorable price and execution available. The full range and quality of services available will be considered in making these determinations, such as the size of the order, the difficulty of execution, the operational facilities of the broker-dealer involved, the risk in positioning the block of securities, and other factors. In those instances where it is reasonably determined that more than one broker-dealer can offer the services needed to obtain the most favorable price and execution available, consideration may be given to those broker-dealers which furnish or supply research and statistical information to the Sub-Advisor that they may lawfully and appropriately use in their investment advisory capacities, as well as provide other services in addition to execution services. The Sub-Advisor considers such information, which is in addition to and not in lieu of the services required to be performed by it under its Sub-Advisory Agreement with respect to the Fund, to be useful in varying degrees, but of indeterminable value.

While it is the Fund’s general policy to seek to obtain the most favorable price and execution available in selecting a broker-dealer to execute portfolio transactions for the Fund, weight is also given to the ability of a broker-dealer to furnish brokerage and research services as defined in Section 28(e) of the Securities Exchange Act of 1934, as amended, to the Fund or to the Sub-Advisor, even if the specific services are not directly useful to the Fund and may be useful to the Sub-Advisor in advising other clients. In negotiating commissions with a broker or evaluating the spread to be paid to a dealer, the Fund may therefore pay a higher commission or spread than would be the case if no weight were given to the furnishing of these supplemental services, provided that the amount of such commission or spread has been determined in good faith by the Sub-Advisor to be reasonable in relation to the value of the brokerage and/or research services provided by such broker-dealer. The standard of reasonableness is to be measured in light of the Sub-Advisor’s overall responsibilities to the Fund.

Investment decisions for the Fund are made independently from those of other client accounts that may be managed or advised by the Sub-Advisor. Nevertheless, it is possible that at times, identical securities will be acceptable for both the Fund and one or more of such client accounts. In such event, the position of the Fund and such client accounts in the same issuer may vary and the holding period may likewise vary. However, to the extent any of these client accounts seek to acquire the same security as the Fund at the same time, the Fund may not be able to acquire as large a position in such security as it desires, or it may have to pay a higher price or obtain a lower yield for such security. Similarly, the Fund may not be able to obtain as high a price for, or as large an execution of, an order to sell any particular security at the same time as the Sub-Advisor’s other client accounts.

The Fund does not effect securities transactions through brokers in accordance with any formula, nor does it effect securities transactions through brokers in recognition of the brokers’ sale of Fund shares. However, broker-dealers who execute brokerage transactions may effect purchase of shares of the Fund for their customers. The brokers may also supply the Fund with research, statistical and other services.

PORTFOLIO TURNOVER

Although the Fund generally will not invest for short-term trading purposes, portfolio securities may be sold without regard to the length of time they have been held when, in the opinion of the Sub-Advisor, investment considerations warrant such action. Portfolio turnover rate is calculated by dividing (1) the lesser of purchases or sales of portfolio securities for the fiscal year by (2) the monthly average of the value of portfolio securities owned during the fiscal year. A 100% turnover rate would occur if all the securities in the Fund’s portfolio, with the exception of securities whose maturities at the time of acquisition were one year or less, were sold and either repurchased or replaced within one year. A high rate of portfolio turnover (100% or more) generally leads to higher transaction costs and may result in a greater number of taxable transactions. To the extent net short-term capital gains are realized, any distributions resulting from such gains will generally be taxed at ordinary income tax rates for federal income tax purposes.

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The Fund is newly-created and, as a result, does not yet have a portfolio turnover rate.

PROXY VOTING POLICY

The Board has adopted Proxy Voting Policies and Procedures (“Trust Policies”) on behalf of the Trust, which delegates the responsibility for voting the Fund’s proxies to the Sub-Advisor, subject to the Board’s continuing oversight. The Trust Policies require that the Sub-Advisor vote proxies received in a manner consistent with the best interests of the Fund. The Trust Policies also require the Sub-Advisor to present to the Board, at least annually, the Sub-Advisor’s Proxy Voting Policies and Procedures (“Sub-Advisor’s Proxy Policies”) and a record of each proxy voted by the Sub-Advisor on behalf of the Fund, including a report on the resolution of all proxies identified by the Sub-Advisor as involving a conflict of interest. See Appendix A for the Trust Policies and Sub-Advisor’s Proxy Policies. These policies are intended to serve as a guideline and to further the economic value of each security held by the Fund. The Trust’s CCO will review the Trust Policies and the Sub-Advisor Policies on a regular basis. Each proxy will be considered individually, taking into account the relevant circumstances at the time of each vote.

If a proxy proposal raises a material conflict between the Sub-Advisor’s interests and the Fund’s interests, the Sub-Advisor will resolve the conflict by following the policy guidelines or the recommendation of an independent third party.

The Fund is required to annually file Form N-PX, which lists the Fund’s complete proxy voting record for the 12-month period ending June 30 each year. Once filed, the Fund’s proxy voting record will be available without charge, upon request, by calling toll-free 1-(800) 207-7108 and on the SEC’s web site at www.sec.gov.

ANTI-MONEY LAUNDERING PROGRAM

The Trust has established an Anti-Money Laundering Compliance Program (the “Program”) as required by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA PATRIOT Act”). In order to ensure compliance with this law, the Program provides for the development and implementation of internal practices, procedures and controls, designation of anti-money laundering compliance officers, an ongoing training program and an independent audit function to determine the effectiveness of the Program.

Procedures to implement the Program include, but are not limited to, determining that the Distributor and the Fund’s transfer agent have established proper anti-money laundering procedures, reporting suspicious and/or fraudulent activity, checking shareholder names against designated government lists, including Office of Foreign Assets Control (“OFAC”), and a complete and thorough review of all new opening account applications. The Trust will not transact business with any person or entity whose identity cannot be adequately verified under the provisions of the USA PATRIOT Act.

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PORTFOLIO HOLDINGS INFORMATION

The Trust has adopted policies and procedures regarding disclosure of portfolio holdings information (the “Disclosure Policy”). The Board of Trustees determined that the adoption of the Disclosure Policy, including the disclosure permitted therein, was in the best interests of the Trust. The Disclosure Policy applies to the Fund, Advisor, Sub-Advisor, and other internal parties involved in the administration, operation or custody of the Fund, including, but not limited to UMBFS, MFAC, the Board of Trustees, counsel to the Trust and Independent Trustees, Morgan Lewis, and the Fund’s independent registered public accounting firm, Tait, Weller & Baker LLP (collectively, the “Service Providers”). Pursuant to the Disclosure Policy, non-public information concerning the Fund’s portfolio holdings may be disclosed to its Service Providers only if such disclosure is consistent with the antifraud provisions of the federal securities laws and the fiduciary duties owed by the Fund, the Advisor and the Sub-Advisor to the Fund’s shareholders. The Fund and its Service Providers may not receive compensation or any other consideration (which includes any agreement to maintain assets in the Fund or in other investment companies or accounts managed by the Sub-Advisor or any affiliated person of the Sub-Advisor) in connection with the disclosure of portfolio holdings information of the Fund. The Fund’s Disclosure Policy is implemented and overseen by the CCO of the Trust, subject to the oversight of the Board of Trustees. Periodic reports regarding these procedures will be provided to the Trust’s Board.

Portfolio holdings information will be deemed public when it has been (1) posted to the Fund’s public website (www.libertystreetfunds.com) or (2) disclosed in periodic regulatory filings on the SEC’s website (www.sec.gov). Management of the Fund may make information regarding the Fund’s portfolio holdings available on the Fund’s public website no earlier than five days after the date of such information (e.g., information as of January 31 may be made available no earlier than February 5).

Non-Public Portfolio Holdings Information Policy. All portfolio holdings information that has not been disseminated in a manner making it available to investors generally as described above is considered non-public portfolio holdings information for the purposes of the Disclosure Policy. Pursuant to the Disclosure Policy, the Fund or its Service Providers may disclose non-public portfolio holdings information to certain third parties who fall within pre-authorized categories on a daily basis, with no lag time unless otherwise specified below. These third parties include: (i) the Fund’s Service Providers and others who need access to such information in the performance of their contractual or other duties and responsibilities to the Fund (e.g., custodians, accountants, the Advisor, the Sub-Advisor, administrators, attorneys, officers and Trustees) and who are subject to duties of confidentiality imposed by law or contract, (ii) brokers who execute trades for the Fund, (iii) evaluation service providers (as described below) and (iv) shareholders receiving in-kind redemptions (as described below).

Evaluation Service Providers. These third parties include mutual fund evaluation services, such as Morningstar, Inc. and Lipper, Inc., if the Fund has a legitimate business purpose for disclosing the information, provided that the third party expressly agrees to maintain the non-public portfolio holdings information in confidence and not to trade portfolio securities based on the non-public portfolio holdings information. Subject to the terms and conditions of any agreement between the Fund or its authorized service providers and the third party, if these conditions for disclosure are satisfied, there shall be no restriction on the frequency with which the Fund’s non-public portfolio holdings information is released, and no lag period shall apply. In addition, persons who owe a duty of trust or confidence to the Fund or its Service Providers (such as legal counsel) may receive non-public portfolio holdings information without entering into a non-disclosure agreement.

Shareholder In-Kind Distributions. The Fund may, in certain circumstances, pay redemption proceeds to a shareholder by an in-kind distribution of portfolio securities (instead of cash). In such circumstances, pursuant to the Disclosure Policy, Fund shareholders may receive a complete listing of the portfolio holdings of the Fund up to seven (7) calendar days prior to making the redemption request provided that they represent orally or in writing that they agree to maintain the confidentiality of the portfolio holdings information and not to trade portfolio securities based on the non-public holdings information.

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Other Entities. Pursuant to the Disclosure Policy, the Fund, the Advisor or the Sub-Advisor may disclose non-public portfolio holdings information to a third party who does not fall within the pre-approved categories, and who are not executing broker-dealers; however, prior to the receipt of any non-public portfolio holdings information by such third party, the recipient must have entered into a non-disclosure agreement and the disclosure arrangement must have been approved by the CCO of the Trust. The CCO will report to the Board of Trustees on a quarterly basis regarding any recipients of non-public portfolio holdings information approved pursuant to this paragraph. There are no other ongoing arrangements as of the date of this SAI.

Current Arrangements Regarding Disclosure of Portfolio Holdings. As of the date of this SAI, the Trust or the Fund has ongoing business arrangements with the following entities which involve making portfolio holdings information available to such entities as an incidental part of the services they provide to the Trust: (i) the Advisor, the Sub-Advisor, MFAC and UMBFS (the Trust's co-administrators), and the Custodian, pursuant to investment management, administration and custody agreements, respectively, under which the Trust’s portfolio holdings information is provided daily on a real-time basis (i.e. with no time lag); (ii) Tait, Weller & Baker LLP (independent registered public accounting firm), Morgan Lewis (attorneys) and other professionals engaged by the Trust to whom the Trust provides portfolio holdings information on a regular basis with varying lag times after the date of the information, and (iii) Morningstar, Inc., Lipper Inc., Thomson Financial, Vickers Stock Research Corporation, and Bloomberg L.P., to which the Fund’s portfolio holdings information is provided quarterly after the end of the previous fiscal quarter, with a 60-day time lag and no earlier than the date such information is filed on the SEC’s EDGAR system on Form N-Q (for the first and third fiscal quarters) or the Annual or Semi-Annual Report is mailed to shareholders (for the second and fourth fiscal quarters), as applicable.

DETERMINATION OF NET ASSET VALUE

The net asset values per share (“NAVs”) of the Fund’s shares will fluctuate and are determined as of the close of regular trading on the New York Stock Exchange (the “NYSE”) (generally 4:00 p.m. Eastern Time) each business day. The NAVs may be calculated earlier if trading on the NYSE is restricted or if permitted by the SEC. The NYSE annually announces the days on which it will not be open for trading. The most recent announcement indicates that the NYSE will not be open for the following holidays: New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. However, the NYSE may close on days not included in that announcement.

The NAV of each class is computed by dividing (a) the difference between the value of the Fund’s securities, cash and other assets and the amount of the Fund’s expenses and liabilities attributable to the class by (b) the number of shares outstanding in that class (assets – liabilities / # of shares = NAV). Each NAV takes into account all of the expenses and fees of that class of the Fund, including management fees and administration fees, which are accrued daily.

Net Assets	=	NAV
Shares Outstanding

Generally, the Fund’s investments are valued at market value or, in the absence of a market value, at fair value as determined in good faith by the Sub-Advisor and the Trust’s Valuation Committee pursuant to procedures approved by or under the direction of the Board. Pursuant to those procedures, the Board considers, among other things: 1) the last sale price on the securities exchange, if any, on which a security is primarily traded; 2) the mean between the bid and ask prices; 3) price quotations from an approved pricing service, and 4) other factors as necessary to determine a fair value under certain circumstances.

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The Fund’s securities which are traded on securities exchanges are valued at the last sale price on the exchange on which such securities are traded, as of the close of business on the day the securities are being valued or, lacking any reported sales, at the mean between the last available bid and ask prices.

Securities that are traded on more than one exchange are valued on the exchange determined by the Sub-Advisor to be the primary market. Securities primarily traded in the National Association of Securities Dealers Automated Quotation (“NASDAQ”), National Market System for which market quotations are readily available shall be valued using the NASDAQ Official Closing Price (“NOCP”). If the NOCP is not available, such securities shall be valued at the last sale price on the day of valuation, or if there has not been any sale on such day, at the mean between the bid and ask prices. Over-the-counter (“OTC”) securities which are not traded in the NASDAQ National Market System shall be valued at the most recent trade price.

Stocks that are “thinly traded” or events occurring when a foreign market is closed but the NYSE is open (for example, the value of a security held by the Fund has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded) may create a situation where a market quote would not be readily available. When a market quote is not readily available, the security’s value is based on “fair value” as determined by procedures adopted by the Board. The Board will periodically review the reliability of the Fund’s fair value methodology. The Fund may hold portfolio securities, such as those traded on foreign securities exchanges that trade on weekends or other days when the Fund’s shares are not priced. Therefore, the value of the Fund’s shares may change on days when shareholders will not be able to purchase or redeem shares.

Short-term debt obligations with remaining maturities in excess of 60 days are valued at current market prices, as discussed above. Short-term securities with 60 days or less remaining to maturity are, unless conditions indicate otherwise, amortized to maturity based on their cost to the Fund if acquired within 60 days of maturity or, if already held by the Fund on the 60th day, based on the value determined on the 61st day, unless the Valuation Committee determines that the amortized cost does not reflect fair value.

All other assets of the Fund are valued in such manner as the Board in good faith deems appropriate to reflect as their fair value.

PURCHASE AND REDEMPTION OF FUND SHARES

Detailed information on the purchase and redemption of shares is included in the Fund’s Prospectus. Shares of the Fund are sold at the next offering price calculated after receipt of an order for purchase. In order to purchase shares of the Fund, you must invest the initial minimum investment for the relevant class of shares. However, the Fund reserves the right, in its sole discretion, to waive the minimum initial investment amount for certain investors, or to waive or reduce the minimum initial investment for 401(k) plans or other tax-deferred retirement plans. You may purchase shares on any day that the NYSE is open for business by placing orders with the Fund.

The Fund reserves the right to refuse any purchase requests, particularly those that would not be in the best interests of the Fund or its shareholders and could adversely affect the Fund or its operations. This includes those from any individual or group who, in the Fund’s view, is likely to engage in or has a history of excessive trading (usually defined as more than four round-trip transactions out of the Fund within a calendar year). Furthermore, the Fund may suspend the right to redeem its shares or postpone the date of payment upon redemption for more than seven calendar days (i) for any period during which the NYSE is closed (other than customary weekend or holiday closings) or trading on the NYSE is restricted; (ii) for any period during which an emergency exists affecting the sale of the Fund’s securities or making such sale or the fair determination of the value of the Fund’s net assets not reasonably practicable; or (iii) for such other periods as the SEC may permit for the protection of the Fund’s shareholders. In addition, if shares are purchased using a check and a redemption is requested before the check has cleared, the Fund may postpone payment of the redemption proceeds up to 15 days while the Fund waits for the check to clear.

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Redemptions In Kind. The Trust has filed an election under SEC Rule 18f-1 committing to pay in cash all redemptions by a shareholder of record up to amounts specified by the rule (the lesser of (i) $250,000 or (ii) 1% of the Fund’s assets). The Fund has reserved the right to pay the redemption price of its shares in excess of the amounts specified by the rule, either totally or partially, by an in-kind distribution of portfolio securities (instead of cash). The securities so distributed would be valued at the same amounts as those assigned to them in calculating the NAV for the Fund shares being redeemed. If a shareholder receives an in-kind distribution, the shareholder could incur brokerage or other charges in converting the securities to cash.

The Fund does not intend to hold any significant percentage of its portfolio in illiquid securities, although the Fund, like virtually all mutual funds, may from time to time hold a small percentage of securities that are illiquid. In the unlikely event the Fund were to elect to make an in-kind redemption, the Fund expects that it would follow the normal protocol of making such distribution by way of a pro rata distribution based on its entire portfolio. If the Fund held illiquid securities, such distribution may contain a pro rata portion of such illiquid securities or the Fund may determine, based on a materiality assessment, not to include illiquid securities in the in-kind redemption. The Fund does not anticipate that it would ever selectively distribute a greater than pro rata portion of any illiquid securities to satisfy a redemption request. If such securities are included in the distribution, shareholders may not be able to liquidate such securities and may be required to hold such securities indefinitely. Shareholders’ ability to liquidate such securities distributed in-kind may be restricted by resale limitations or substantial restrictions on transfer imposed by the issuers of the securities or by law. Shareholders may only be able to liquidate such securities distributed in-kind at a substantial discount from their value, and there may be higher brokerage costs associated with any subsequent disposition of these securities by the recipient.

FEDERAL INCOME TAX MATTERS

The following is a summary of certain material U.S. federal (and, where noted, state and local) income tax considerations affecting the Fund and its shareholders. The discussion is very general. Current and prospective shareholders are therefore urged to consult their own tax advisers with respect to the specific federal, state, local and foreign tax consequences of investing in the Fund. The summary is based on the laws in effect on the date of this SAI and existing judicial and administrative interpretations thereof, all of which are subject to change, possibly with retroactive effect.

The Fund is treated as a separate entity from other series of the Trust for federal income tax purposes. The Fund has elected (or intends to elect) to be, and intends to qualify each year for treatment as, a “regulated investment company” under Subchapter M of the Code by complying with all applicable requirements of the Code, including, among other things, requirements as to the sources of the Fund’s income, diversification of the Fund’s assets and timing of Fund distributions. To so qualify, a Fund must, among other things: (a) derive at least 90% of its gross income in each taxable year from dividends, interest, payments with respect to certain securities loans, and gains from the sale or other disposition of stock or securities or foreign currencies, or other income (including, but not limited to, gains from options, futures or forward contracts) derived with respect to its business of investing in such stock, securities or currencies, and net income derived from interests in “qualified publicly traded partnerships” (i.e., partnerships that are traded on an established securities market or tradable on a secondary market, other than partnerships that derive 90% of their income from interest, dividends, capital gains, and other traditionally permitted mutual fund income(the “Income Requirement”); and (b) diversify its holdings so that, at the end of each quarter of the Fund’s taxable year, (i) at least 50% of the market value of the Fund’s assets is represented by cash, securities of other regulated investment companies, U.S. Government securities and other securities, with such other securities limited, in respect of any one issuer, to an amount not greater than 5% of the Fund’s assets and not greater than 10% of the outstanding voting securities of such issuer and (ii) not more than 25% of the value of its assets is invested in the securities (other than U.S. Government securities or securities of other regulated investment companies) of any one issuer, in the securities (other than the securities of other regulated investment companies) of any two or more issuers that the Fund controls and that are determined to be engaged in the same or similar trades or businesses or related trades or businesses, or in the securities of one or more “qualified publicly traded partnerships,” and (c) distribute an amount equal to the sum of at least 90% of its investment company taxable income (computed without regard to the dividends-paid deduction) and 90% of its net tax-exempt income, if any, for the tax year (including, for purposes of satisfying this distribution requirement, certain distributions made by the Fund after the close of its taxable year that are treated as made during such taxable year).

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As a regulated investment company, the Fund will not be subject to U.S. federal income tax on the portion of its taxable investment income and capital gains that it distributes to its shareholders provided that it satisfies a minimum distribution requirement. In order to also avoid liability for a non-deductible federal excise tax, the Fund must distribute (or be deemed to have distributed) by December 31 of each calendar year at least the sum of (i) 98% of its ordinary income for such year, (ii) 98.2% of the excess of its realized capital gains over its realized capital losses for the 12-month period generally ending on October 31 during such year and (iii) any amounts from the prior calendar year that were not distributed and on which the Fund paid no federal income tax. The Fund will be subject to income tax at regular corporate tax rates on any taxable income or gains that it does not distribute to its shareholders. The Fund's policy is to distribute to its shareholders all investment company taxable income (determined without regard to the deduction for dividends paid) and any net capital gain (the excess of net long-term capital gain over net short-term capital loss) for each fiscal year in a manner that complies with the distribution requirements of the Code, so that the Fund will not be subject to any federal income or excise taxes.

If, for any taxable year, the Fund were to fail to qualify as a regulated investment company or were to fail to meet certain minimum distribution requirements under the Code, it would be taxed in the same manner as an ordinary corporation and distributions to its shareholders would not be deductible by the Fund in computing its taxable income. In addition, in the event of a failure to qualify, the Fund’s distributions, to the extent derived from the Fund’s current or accumulated earnings and profits, including any distributions of net capital gain (the excess of net long-term capital gain over net short-term capital loss), would be taxable to shareholders as ordinary dividend income for federal income tax purposes. However, such dividends would be eligible, subject to any generally applicable limitations, (i) to be treated as qualified dividend income in the case of shareholders taxed as individuals and (ii) for the dividends received deduction in the case of corporate shareholders. Moreover, if the Fund were to fail to qualify as a regulated investment company in any year, it would be required to pay out its earnings and profits accumulated in that year in order to qualify again as a regulated investment company. Under certain circumstances, the Fund may be able to cure a failure to qualify as a regulated investment company, but in order to do so the Fund might incur significant Fund-level taxes and might be forced to dispose of certain assets. If the Fund failed to qualify as a regulated investment company for a period greater than two taxable years, the Fund would generally be required to recognize any net built-in gains with respect to certain of its assets upon a disposition of such assets within ten years of qualifying as a regulated investment company in a subsequent year.

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Shareholders generally will be subject to federal income taxes on distributions made by the Fund whether paid in cash or additional shares. Distributions of net investment income (including interest, dividend income and net short-term capital gain in excess of any net long-term capital loss, less certain expenses), other than qualified dividend income, will be taxable to shareholders as ordinary income. Distributions of qualified dividend income generally will be taxed to non-corporate shareholders at the federal income tax rates applicable to net capital gain, provided the Fund reports the amount distributed as qualified dividend income.

In general, dividends may be reported by the Fund as qualified dividend income if they are attributable to qualified dividend income received by the Fund. Qualified dividend income generally means dividend income received from the Fund’s investments in common and preferred stock of U.S. companies and stock of certain qualified foreign corporations, provided that certain holding period and other requirements are met by both the Fund and its shareholders. If 95% or more of the Fund’s gross income (calculated without taking into account net capital gain derived from sales or other dispositions of stock or securities) consists of qualified dividend income, the Fund may report all distributions of such income as qualified dividend income.

A foreign corporation is treated as a qualified foreign corporation for this purpose if it is incorporated in a possession of the United States or it is eligible for the benefits of certain income tax treaties with the United States and meets certain additional requirements. Certain foreign corporations that are not otherwise qualified foreign corporations will be treated as qualified foreign corporations with respect to dividends paid by them if the stock with respect to which the dividends are paid is readily tradable on an established securities market in the United States. Passive foreign investment companies are not qualified foreign corporations for this purpose. Dividends received by the Fund from REITs generally do not qualify for treatment as qualified dividend income.

Dividends paid by the Fund may qualify in part for the dividends-received deduction available to corporate shareholders, provided the Fund reports the amount distributed as a qualifying dividend and certain holding period and other requirements under the Code are satisfied. The reported amount, however, cannot exceed the aggregate amount of qualifying dividends received by the Fund for its taxable year. Eligibility for qualified dividend income treatment and the dividends-received deduction may be reduced or eliminated if, among other things, (i) the shareholder is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property or (ii) certain holding period requirements are not satisfied at both the Fund and shareholder levels. In addition, qualified dividend income treatment is not available if a shareholder elects to have the dividend income treated as investment income for purposes of the limitation on deductibility of investment interest.

Distributions of net capital gain, if any, that the Fund reports as capital gain dividends will be taxable to non-corporate shareholders as long-term capital gain without regard to how long a shareholder has held shares of the Fund. The Fund may retain certain amounts of capital gains and designate them as undistributed net capital gain in a notice to its shareholders, who (i) will be required to include in income for U.S. federal income tax purposes, as long-term capital gain, their proportionate shares of the undistributed amounts so designated, (ii) will be entitled to credit their proportionate shares of the income tax paid by the fund on those undistributed amounts against their federal income tax liabilities and to claim refunds to the extent such credits exceed their liabilities and (iii) will be entitled to increase their federal income tax basis in their shares by an amount equal to the excess of the amounts of undistributed net capital gain included in their respective income over their respective income tax credits.

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Distributions in excess of earnings and profits will, as to each shareholder, be treated as a tax-free return of capital to the extent of the shareholder’s basis in his or her Fund shares. A distribution treated as a return of capital will reduce the shareholder’s basis in his or her shares, which will result in an increase in the amount of gain (or a decrease in the amount of loss) that will be recognized by the shareholder for tax purposes on a later sale of such shares. After the shareholder’s basis is reduced to zero, any distributions in excess of earnings and profits will be treated as a capital gain, assuming the shareholder holds his or her shares as capital assets.

A 3.8% Medicare contribution tax generally applies to all or a portion of the net investment income of a shareholder who is an individual and not a nonresident alien for federal income tax purposes and who has adjusted gross income (subject to certain adjustments) that exceeds a threshold amount ($250,000 if married filing jointly or if considered a “surviving spouse” for federal income tax purposes, $125,000 if married filing separately, and $200,000 in other cases). This 3.8% tax also applies to all or a portion of the undistributed net investment income of certain shareholders that are estates and trusts. For these purposes, interest, dividends and certain capital gains (among other categories of income) are generally taken into account in computing a shareholder’s net investment income.

Distributions are generally taxable when received. However, distributions declared in October, November or December to shareholders of record on a date in such a month and paid the following January are taxable for federal income tax purposes as if received on December 31 of the calendar year in which declared. Distributions are includable in alternative minimum taxable income in computing a shareholder's liability for the federal alternative minimum tax. In addition, certain distributions made after the close of a taxable year of the Fund may be “spilled back” and treated for certain purposes as paid by the Fund during such taxable year. In such case, shareholders generally will be treated as having received such dividends in the taxable year in which the distributions were actually made. For purposes of calculating the amount of a regulated investment company’s undistributed income and gain subject to the 4% excise tax described above, such “spilled back” dividends are treated as paid by the regulated investment company when they are actually paid.

A redemption of Fund shares may result in recognition of a taxable gain or loss. The gain or loss will generally be treated as a long-term capital gain or loss if the shares are held for more than one year, and as a short-term capital gain or loss if the shares are held for one year or less. Any loss realized upon redemption or exchange of shares held for six months or less will be treated as a long‑term capital loss to the extent of any amounts treated as distributions of long‑term capital gains during such six‑month period. Any loss realized upon a redemption may be disallowed under certain wash sale rules to the extent shares of the Fund or substantially identical stock or securities are purchased (through reinvestment of distributions or otherwise) within 30 days before or after the redemption.

If a shareholder recognizes a loss with respect to the Fund’s shares of $2 million or more for an individual shareholder or $10 million or more for a corporate shareholder (or certain greater amounts over a combination of years), the shareholder must file with the IRS a disclosure statement on IRS Form 8886. Direct shareholders of portfolio securities are in many cases exempted from this reporting requirement, but under current guidance, shareholders of a regulated investment company are not exempted. The fact that a loss is so reportable does not affect the legal determination of whether the taxpayer’s treatment of the loss is proper.

The Fund's transactions in options and other similar transactions, such as futures, may be subject to special provisions of the Code that, among other things, affect the character of any income realized by the Fund from such investments, accelerate recognition of income to the Fund, defer Fund losses, affect the holding period of the Fund's securities, affect whether distributions will be eligible for the dividends-received deduction or be treated as qualified dividend income and affect the determination of whether capital gain and loss is characterized as long-term or short-term capital gain or loss. These rules could therefore affect the character, amount and timing of distributions to shareholders. These provisions may also require the Fund to "mark-to-market" certain types of the positions in its portfolio (i.e., treat them as if they were closed out), which may cause the Fund to recognize income without receiving cash with which to make distributions in amounts necessary to satisfy the distribution requirements for avoiding U.S. federal income and excise taxes. The Fund will monitor these transactions and will make the appropriate entries in its books and records, and if the Fund deems it advisable, will make appropriate elections if available in order to mitigate the effect of these rules, prevent disqualification of the Fund as a regulated investment company and minimize the imposition of U.S. federal income and excise taxes.

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The Fund's transactions in broad based equity index futures contracts, exchange-traded options on such indices and certain other futures contracts are generally considered "Section 1256 contracts" for federal income tax purposes. Any unrealized gains or losses on such Section 1256 contracts are treated as though they were realized at the end of each taxable year. The resulting gain or loss is treated as 60% long-term capital gain or loss and 40% short-term capital gain or loss. Gain or loss recognized on actual sales of Section 1256 contracts is treated in the same manner. As noted above, distributions of net short-term capital gain are taxable to shareholders as ordinary income while distributions of net long-term capital gain are taxable to shareholders as long-term capital gain, regardless of how long the shareholder has held shares of the Fund.

The Fund's entry into a short sale transaction, an option or certain other contracts, such as futures, could be treated as the constructive sale of an appreciated financial position, causing the Fund to realize gain, but not loss, on the position.

If the Fund invests in certain pay-in-kind securities, zero coupon securities, deferred interest securities or, in general, any other securities with original issue discount (or with market discount if the Fund elects to include market discount in income currently), the Fund must accrue income on such investments for each taxable year, which generally will be prior to the receipt of the corresponding cash payments. However, the Fund must distribute, at least annually, all or substantially all of its investment company taxable income (determined without regard to the deduction for dividends paid), including such accrued income to shareholders to avoid federal income and excise taxes. Therefore, the Fund may have to sell portfolio securities (potentially under disadvantageous circumstances) to generate cash, or may have to undertake leverage by borrowing cash, to satisfy these distribution requirements. Dispositions of portfolio securities may result in additional gains and additional distribution requirements.

If the Fund invests in a market discount bond, it will be required to treat any gain recognized on the disposition of such market discount bond as ordinary income (instead of capital gain) to the extent of the accrued market discount, unless the Fund elects to include the market discount in income as it accrues as discussed above. A market discount bond is a security acquired in the secondary market at a price below its redemption value (or its adjusted issue price if it is also an original issue discount bond).

The Fund may be subject to withholding and other taxes imposed by foreign countries, including taxes on interest, dividends and capital gains with respect to its investments in those countries, which would, if imposed, reduce the yield on or return from those investments. Tax treaties between certain countries and the United States may reduce or eliminate such taxes in some cases. So long as the Fund qualifies for treatment as a regulated investment company and incurs “qualified foreign taxes,” if more than 50% of its net assets at the close of its taxable year consist of stock or securities of foreign corporations, the Fund may elect to "pass through" to its shareholders the amount of such foreign taxes paid. If this election is made, information with respect to the amount of the foreign income taxes that are allocated to the Fund's shareholders will be provided to them and any shareholder subject to tax on dividends will be required (i) to include in ordinary gross income (in addition to the amount of the taxable dividends actually received) his/her proportionate share of the foreign taxes paid that are attributable to such dividends; and (ii) either to deduct his/her proportionate share of such foreign taxes in computing his/her taxable income or to claim that amount as a foreign tax credit (subject to applicable limitations) against U.S. income taxes.

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Shareholders who do not itemize deductions for U.S. federal income tax purposes will not be able to deduct their pro rata portion of qualified foreign taxes paid by the Fund, although such shareholders will be required to include their shares of such taxes in gross income if the Fund makes the election described above. Qualified foreign taxes generally include taxes that would be treated as income taxes under U.S. tax regulations but do not include most other taxes, such as stamp taxes, securities transaction taxes, and similar taxes. No deduction for such taxes will be permitted to individuals in computing their alternative minimum tax liability.

If the Fund makes the election to pass through qualified foreign taxes and a shareholder chooses to take a credit for the foreign taxes deemed paid by such shareholder, the amount of the credit that may be claimed in any year may not exceed the same proportion of the U.S. tax against which such credit is taken that the shareholder’s taxable income from foreign sources (but not in excess of the shareholder’s entire taxable income) bears to his entire taxable income. For this purpose, long-term and short-term capital gains the Fund realizes and distributes to shareholders will generally not be treated as income from foreign sources in their hands, nor will distributions of certain foreign currency gains subject to Section 988 of the Code or of any other income realized by the Fund that is deemed, under the Code, to be U.S.-source income in the hands of the Fund. This foreign tax credit limitation may also be applied separately to certain specific categories of foreign-source income and the related foreign taxes. As a result of these rules, which may have different effects depending upon each shareholder’s particular tax situation, certain shareholders may not be able to claim a credit for the full amount of their proportionate share of the foreign taxes paid by the Fund. Shareholders who are not liable for U.S. federal income taxes, including tax-exempt shareholders, will ordinarily not benefit from this election. If the Fund does make the election, it will provide required tax information to shareholders. The Fund generally may deduct any foreign taxes that are not passed through to its shareholders in computing its income available for distribution to shareholders to satisfy applicable tax distribution requirements.

Foreign exchange gains or losses realized by the Fund in connection with certain transactions involving foreign currency-denominated debt securities, certain options and futures contracts relating to foreign currency, foreign currency forward contracts, foreign currencies, or payables or receivables denominated in a foreign currency are subject to Section 988 of the Code, which generally causes such gains or losses to be treated as ordinary gain or loss and may affect the amount, timing and character of distributions to shareholders.

The Fund is required to withhold (as “backup withholding”) a portion of reportable payments, including dividends, capital gain distributions and the proceeds of redemptions and exchanges or repurchases of Fund shares, paid to shareholders who have not complied with certain IRS regulations. The backup withholding rate is 28%. In order to avoid this withholding requirement, shareholders, other than certain exempt entities, must certify on IRS Forms W-9 or on certain other documents, that the Social Security Numbers or other Taxpayer Identification Numbers they provide are their correct numbers and that they are not currently subject to backup withholding, or that they are exempt from backup withholding. The Fund may nevertheless be required to backup withhold if it receives notice from the IRS or a broker that a number provided is incorrect or that backup withholding is applicable as a result of previous underreporting of interest or dividend income.

Ordinary dividends and certain other payments made by the Fund to non-U.S. shareholders are generally subject to withholding tax at a 30% rate (or a lower rate as may be determined in accordance with any applicable treaty). In order to obtain a reduced rate of withholding, a non-U.S. shareholder will be required to provide an IRS Form W-8BEN or similar form certifying its entitlement to benefits under a treaty. The withholding tax does not apply to regular dividends paid to a non-U.S. shareholder who provides an IRS Form W-8ECI, certifying that the dividends are effectively connected with the non-U.S. shareholder’s conduct of a trade or business within the United States. Instead, the effectively connected dividends will be subject to regular U.S. income tax as if the non-U.S. shareholder were a U.S. shareholder. A non-U.S. corporation receiving effectively connected dividends may also be subject to additional “branch profits tax” imposed at a rate of 30% (or a lower treaty rate).

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The 30% withholding tax described in the preceding paragraph generally will not apply to distributions of net capital gain or to redemption proceeds. For Fund taxable years beginning before January 1, 2015, this 30% withholding tax will also not apply to dividends that the Fund reports as (a) interest-related dividends, to the extent such dividends are derived from the Fund’s “qualified net interest income,” or (b) short-term capital gain dividends, to the extent such dividends are derived from the Fund’s “qualified short-term gain.” “Qualified net interest income” is the Fund’s net income derived from U.S.-source interest and original issue discount, subject to certain exceptions and limitations. “Qualified short-term gain” generally means the excess of the net short-term capital gain of the Fund for the taxable year over its net long-term capital loss, if any. In order to qualify for an exemption from withholding, a non-U.S. shareholder will need to comply with applicable certification requirements relating to its non-U.S. status (including, in general, furnishing an IRS Form W-8BEN or other applicable form). Backup withholding will not be applied to payments that are subject to this 30% withholding tax.

Unless certain non-U.S. entities that hold Fund shares comply with IRS requirements that will generally require them to report information regarding U.S. persons investing in, or holding accounts with, such entities, a 30% withholding tax may apply to the Fund’s distributions payable to such entities after June 30, 2014 (or, in certain cases, after later dates) and redemptions and certain capital gain dividends payable to such entities after December 31, 2016. A non-U.S. shareholder may be exempt from the withholding described in this paragraph under an applicable intergovernmental agreement between the U.S. and a foreign government, provided that the shareholder and the applicable foreign government comply with the terms of such agreement.

This discussion and the related discussion in the Prospectus have been prepared by management of the Fund, and counsel to the Trust has expressed no opinion in respect thereof.

Shareholders and prospective shareholders of the Fund should consult their own tax advisors concerning the effect of owning shares of the Fund in light of their particular tax situations.

DIVIDENDS AND DISTRIBUTIONS

The Fund will receive income in the form of dividends and interest earned on its investments in securities. This income, less the expenses incurred in its operations, is the Fund’s net investment income, substantially all of which will be declared as dividends to the Fund’s shareholders.

The amount of income dividend payments by the Fund is dependent upon the amount of net investment income received by the Fund from its portfolio holdings, is not guaranteed and is subject to the discretion of the Board. The Fund does not pay “interest” or guarantee any fixed rate of return on an investment in its shares.

The Fund also may derive capital gains or losses in connection with sales or other dispositions of its portfolio securities. Any net gain the Fund may realize from transactions involving investments held for less than the period required for long-term capital gain or loss recognition or otherwise producing short‑term capital gains and losses (taking into account any available carryover of capital losses), although a distribution from capital gains, will be distributed to shareholders with and as a part of the income dividends paid by the Fund and will be taxable to shareholders as ordinary income for federal income tax purposes. If during any year the Fund realizes a net gain on transactions involving investments held for more than the period required for long‑term capital gain or loss recognition or otherwise producing long‑term capital gains and losses, the Fund will have a net long‑term capital gain. After deduction of the amount of any net short‑term capital loss, the balance (to the extent not offset by any capital losses available to be carried over) generally will be distributed and treated as long‑term capital gains in the hands of the shareholders regardless of the length of time the Fund’s shares may have been held by the shareholders. For more information concerning applicable capital gains tax rates, see your tax advisor.

B-60

Any dividend or distribution paid by the Fund reduces the Fund’s NAVs on the date paid by the amount of the dividend or distribution per share. Accordingly, a dividend or distribution paid shortly after a purchase of shares by a shareholder will generally be taxable, even if it effectively represents a partial return of the shareholder’s capital.

Dividends and other distributions will be made in the form of additional shares of the Fund unless the shareholder has otherwise indicated. Investors have the right to change their elections with respect to the reinvestment of dividends and distributions by notifying the transfer agent in writing, but any such change will be effective only as to dividends and other distributions for which the record date is seven or more business days after the transfer agent has received the written request.

The Fund’s investments in partnerships, if any, including in qualified publicly traded partnerships, may result in that Fund being subject to state, local or foreign income, franchise or withholding tax liabilities.

GENERAL INFORMATION

Investment Managers Series Trust is an open-end management investment company organized as a Delaware statutory trust under the laws of the State of Delaware on February 15, 2005. The Trust has a number of outstanding series of shares of beneficial interest, each of which represents interests in a separate portfolio of securities.

The Trust’s Declaration of Trust permits the Trustees to create additional series of shares, to issue an unlimited number of full and fractional shares of beneficial interest of each series, including the Fund, and to divide or combine the shares of any series into a greater or lesser number of shares without thereby changing the proportionate beneficial interest in the series. The assets belonging to a series is charged with the liabilities in respect of that series and all expenses, costs, charges and reserves attributable to that series only. Therefore, any creditor of any series may look only to the assets belonging to that series to satisfy the creditor’s debt. Any general liabilities, expenses, costs, charges or reserves of the Trust which are not readily identifiable as pertaining to any particular series are allocated and charged by the Trustees to and among the existing series in the sole discretion of the Trustees. Each share of the Fund represents an interest in the Fund proportionately equal to the interest of each other share. Upon the Fund’s liquidation, all shareholders would share pro rata in the net assets of the Fund available for distribution to shareholders.

The Trust may offer more than one class of shares of any series. Each share of a series or class represents an equal proportionate interest in that series or class with each other share of that series or class. With respect to the Fund, the Trust currently offers the following classes of shares: Class A Shares, Class C Shares, and Institutional Class Shares. The Trust has reserved the right to create and issue additional series or classes. Each share of a series or class represents an equal proportionate interest in that series or class with each other share of that series or class.

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The shares of each series or class participate equally in the earnings, dividends and assets of the particular series or class. Expenses of the Trust, which are not attributable to a specific series or class, are allocated among all the series in a manner believed by management of the Trust to be fair and equitable. Shares issued do not have pre‑emptive or conversion rights. Shares when issued are fully paid and non‑assessable, except as set forth below. Shareholders are entitled to one vote for each share held. Shares of each series or class generally vote together, except when required under federal securities laws to vote separately on matters that only affect a particular series or class, such as the approval of distribution plans for a particular class.

The Trust is not required to hold annual meetings of shareholders but will hold special meetings of shareholders of a series or class when, in the judgment of the Board, it is necessary or desirable to submit matters for a shareholder vote. Shareholders have, under certain circumstances, the right to communicate with other shareholders in connection with requesting a meeting of shareholders for the purpose of removing one or more trustees. Shareholders also have, in certain circumstances, the right to remove one or more trustees without a meeting. No material amendment may be made to the Trust’s Declaration of Trust without the affirmative vote of the holders of a majority of the outstanding shares of each portfolio affected by the amendment.

The Trust’s Declaration of Trust provides that, at any meeting of shareholders of the Trust or of any series or class, a shareholder servicing agent may vote any shares as to which such shareholder servicing agent is the agent of record for shareholders who are not represented in person or by proxy at the meeting, proportionately in accordance with the votes cast by holders of all shares of that portfolio otherwise represented at the meeting in person or by proxy as to which such shareholder servicing agent is the agent of record. Any shares so voted by a shareholder servicing agent will be deemed represented at the meeting for purposes of quorum requirements. Any series or class may be terminated (i) upon the merger or consolidation with, or the sale or disposition of all or substantially all of its assets to, another entity, if approved by the vote of the holders of two‑thirds of its outstanding shares, except that if the Board recommends such merger, consolidation or sale or disposition of assets, the approval by vote of the holders of a majority of the series’ or class’ outstanding shares will be sufficient, or (ii) by the vote of the holders of a majority of its outstanding shares, or (iii) by the Board by written notice to the series’ or class’ shareholders. Unless each series and class is so terminated, the Trust will continue indefinitely.

Shareholders may send communications to the Board. Shareholders should send communications intended for the Board by addressing the communications to the Board, in care of the Secretary of the Trust and sending the communication to 2220 E. Route 66, Suite 226, Glendora, California 91740. A shareholder communication must (i) be in writing and be signed by the shareholder, (ii) provide contact information for the shareholder, (iii) identify the Fund to which it relates, and (iv) identify the class and number of shares held by the shareholder. The Secretary of the Trust may, in good faith, determine that a shareholder communication should not be provided to the Board because it does not reasonably relate to the Trust or its operations, management, activities, policies, service providers, Board, officers, shareholders or other matters relating to an investment in the Fund or is otherwise immaterial in nature. Other shareholder communications received by the Funds not directly addressed and sent to the Board will be reviewed and generally responded to by management, and will be forwarded to the Board only at management's discretion based on the matters contained therein.

The Declaration of Trust provides that no Trustee or officer of the Trust shall be subject to any personal liability in connection with the assets or affairs of the Trust or any of its series except for losses in connection with his or her willful misfeasance, bad faith, gross negligence or reckless disregard of his or her duties. The Trust has also entered into an indemnification agreement with each Trustee which provides that the Trust shall advance expenses and indemnify and hold harmless the Trustee in certain circumstances against any expenses incurred by the Trustee in any proceeding arising out of or in connection with the Trustee's service to the Trust, to the maximum extent permitted by the Delaware Statutory Trust Act, the Securities Act and the 1940 Act, and which provides for certain procedures in connection with such advancement of expenses and indemnification.

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The Trust’s Declaration of Trust also provides that the Trust shall maintain appropriate insurance (for example, fidelity bonding and errors and omissions insurance) for the protection of the Trust, its shareholders, trustees, officers, employees and agents covering possible tort and other liabilities.

The Declaration of Trust does not require the issuance of stock certificates. If stock certificates are issued, they must be returned by the registered owners prior to the transfer or redemption of shares represented by such certificates.

Rule 18f-2 under the 1940 Act provides that as to any investment company which has two or more series outstanding and as to any matter required to be submitted to shareholder vote, such matter is not deemed to have been effectively acted upon unless approved by the holders of a “majority” (as defined in the rule) of the voting securities of each series affected by the matter. Such separate voting requirements do not apply to the election of Trustees or the ratification of the selection of accountants. The Rule contains special provisions for cases in which an advisory contract is approved by one or more, but not all, series. A change in investment policy may go into effect as to one or more series whose holders so approve the change even though the required vote is not obtained as to the holders of other affected series.

The Trust, the Advisor and the Sub-Advisor have adopted Codes of Ethics under Rule 17j‑1 of the 1940 Act. These codes of ethics permit, subject to certain conditions, personnel of those entities to invest in securities that may be purchased or held by the Fund.

FINANCIAL STATEMENTS

As the Fund has recently commenced operations, there are no financial statements available at this time. Shareholders of the Fund will be informed of the Fund’s progress through periodic reports when those reports become available. Financial statements certified by the independent registered public accounting firm will be submitted to shareholders at least annually. However, financial statements certified by the independent registered public accounting firm for the Braddock Structured Opportunities Fund, LP, a Cayman Islands exempted limited partnership which commenced operations on July 31, 2009 (the "Predecessor Fund") for the last two fiscal years as well as unaudited financial statements for the period ended September 30, 2015 are included in Appendix B of this SAI. The Predecessor Fund intends to reorganize into the Fund after it commences operations. The Fund’s objectives, policies, guidelines and restrictions are, in all material respects, substantially the same as those of the Predecessor Fund. The Predecessor Fund was not registered under the 1940 Act and, therefore, was not subject to certain restrictions imposed by the 1940 Act on registered investment companies and by the Internal Revenue Code of 1986, as amended, on regulated investment companies, such as the Fund.

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APPENDIX A

PROXY VOTING POLICY

INVESTMENT MANAGERS SERIES TRUST

PROXY VOTING POLICIES AND PROCEDURES

Investment Managers Series Trust (the “Trust”) is registered as an open-end investment company under the Investment Company Act of 1940, as amended (“1940 Act”). The Trust offers multiple series (each a “Fund” and, collectively, the “Funds”). Consistent with its fiduciary duties and pursuant to Rule 30b1-4 under the 1940 Act (the “Proxy Rule”), the Board of Trustees of the Trust (the “Board”) has adopted this proxy voting policy on behalf of the Trust (the “Policy”) to reflect its commitment to ensure that proxies are voted in a manner consistent with the best interests of the Funds’ shareholders.

Delegation of Proxy Voting Authority to Fund Advisors

The Board believes that the investment advisor of each Fund (each an “Advisor” and, collectively, the “Advisors”), as the entity that selects the individual securities that comprise its Fund’s portfolio, is the most knowledgeable and best-suited to make decisions on how to vote proxies of portfolio companies held by that Fund. The Trust shall therefore defer to, and rely on, the Advisor of each Fund to make decisions on how to cast proxy votes on behalf of such Fund.

The Trust hereby designates the Advisor of each Fund as the entity responsible for exercising proxy voting authority with regard to securities held in the Fund’s investment portfolio. Consistent with its duties under this Policy, each Advisor shall monitor and review corporate transactions of corporations in which the Fund has invested, obtain all information sufficient to allow an informed vote on all proxy solicitations, ensure that all proxy votes are cast in a timely fashion, and maintain all records required to be maintained by the Fund under the Proxy Rule and the 1940 Act. Each Advisor shall perform these duties in accordance with the Advisor’s proxy voting policy, a copy of which shall be presented to this Board for its review. Each Advisor shall promptly provide to the Board updates to its proxy voting policy as they are adopted and implemented.

Availability of Proxy Voting Policy and Records Available to Fund Shareholders

If a Fund or an Advisor has a web site, a copy of the Advisor’s proxy voting policy and this Policy may be posted on such website. A copy of such policies and of each Fund’s proxy voting record shall also be made available, without charge, upon request of any shareholder of the Fund, by calling the applicable Fund’s toll-free telephone number as printed in the Fund’s prospectus. The Trust’s administrator shall reply to any Fund shareholder request within three business days of receipt of the request, by first-class mail or other means designed to ensure equally prompt delivery.

Each Advisor shall provide a complete voting record, as required by the Proxy Rule, for each series of the Trust for which it acts as advisor, to the Trust’s co-administrator within 15 days following the end of each calendar quarter. The Trust’s co-administrator, MFAC will file a report based on such record on Form N-PX on an annual basis with the Securities and Exchange Commission no later than August 31^st of each year.

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SUB-ADVISOR'S PROXY POLICIES AND GUIDELINES

The Sub-Advisor (the “Firm”) follows this proxy voting policy (the “Policy”) to ensure that proxies the Firm votes, on behalf of each investment account (“Client”) for which the Firm serves as the investment advisor, are voted to further the best interest of that Client. The Policy establishes a mechanism to address any conflicts of interests between the Firm and the Client.

Determination of Vote

The Firm determines how to vote after studying the proxy materials and any other materials that may be necessary or beneficial to voting. The Firm votes in a manner that the Firm believes reasonably furthers the best interests of the Client and is consistent with the Client’s investment philosophy as set forth in the relevant investment management documents.

The major proxy-related issues generally fall within five categories: corporate governance, takeover defenses, compensation plans, capital structure, and social responsibility. The Firm will cast votes for these matters on a case-by-case basis. The Firm will generally vote in favor of matters which follow an agreeable corporate strategic direction, support an ownership structure that enhances shareholder value without diluting management’s accountability to shareholders and/or present compensation plans that are commensurate with enhanced manager performance and market practices.

Resolution of any Conflicts of Interest

If a proxy vote creates a material conflict between the interests of the Firm and a Client, the Firm will resolve the conflict before voting the proxies. The Firm will either disclose the conflict to the Client and obtain a consent or take other steps designed to ensure that a decision to vote the proxy was based on the Firm’s determination of the Client’s best interest and was not the product of the conflict.

Records

The Firm maintains records of (i) all proxy statements and materials the Firm receives on behalf of Clients; (ii) all proxy votes that are made on behalf of the Clients; (iii) all documents that were material to a proxy vote; (iv) all written requests from Clients regarding voting history; and (v) all responses (written and oral) to Clients’ requests. Such records are available to the Clients (and owners of a Client that is an investment vehicle) upon request.

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APPENDIX B

AUDITED AND UNAUDITED FINANCIAL STATEMENTS OF BRADDOCK STRUCTURED

OPPORTUNITIES FUND, LP (THE PREDECESSOR FUND)

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BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, L.P.

STATEMENT OF FINANCIAL CONDITION

(UNAUDITED)

September 30, 2015 (Unaudited)

Assets

Investment in Braddock Structured Opportunities Fund, L.P., at fair value	$	56,905,726
Cash		1,363

	$	56,907,089

Liabilities and partners' capital

Liabilities
Capital withdrawals payable		33,589

Total liabilities		33,589

Partners' capital		56,873,500

	$	56,907,089

B-67

BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, L.P.

STATEMENT OF OPERATIONS

(UNAUDITED)

For the Nine Months Ended September 30, 2015 (Unaudited)

Net investment income (loss) allocated
from Braddock Structured Opportunities Fund, L.P.
Interest income	$	3,821,590
Management fee		(349,336	)
Professional fees and other		(127,273	)
Decision support fee		(118,323	)
Administrative fee		(50,146	)
Interest and dividend expenses		(397,392	)

Total net investment income allocated from
Braddock Structured Opportunities Fund, L.P.		2,779,120

Fund expenses
Professional fees and other		1,091

Net investment income		2,778,029

Realized and unrealized gain on investments allocated
from Braddock Structured Opportunities Fund, L.P.
Net realized gain on securities		2,055,921
Net change in unrealized appreciation or depreciation on securities		(1,788,797	)
Net gain on investments allocated
from Braddock Structured Opportunities Fund, L.P.		267,124

Net income before performance allocation to the General Partner
of Braddock Structured Opportunities Fund, L.P.		3,045,153

Performance allocation to the General Partner
of Braddock Structured Opportunities Fund, L.P.		(304,040	)

Net income	$	2,741,113

B-68

BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, L.P.

STATEMENT OF CHANGES IN PARTNERS' CAPITAL

(UNAUDITED)

As of September 30, 2015 (Unaudited)

	General		Limited
	Partner		Partners			Total

Partners' capital, beginning of year	$	173,630	$	54,224,813		$	54,398,443

Capital contributions		13,677		2,072,174			2,085,851

Capital withdrawals		-		(2,351,907	)		(2,351,907	)

Allocation of net income		10,887		2,730,226			2,741,113

Partners' capital, end of year	$	198,194	$	56,675,306		$	56,873,500

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BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, L.P.

STATEMENT OF CASH FLOWS

(UNAUDITED)

Period Ended September 30, 2015 (Unaudited)

Cash flows from operating activities
Net income	$	2,741,113
Adjustments to reconcile net income to net cash used in operating activities:
Net income allocated from Braddock Structured Opportunities Fund, L.P.		(2,742,204	)
Changes in operating assets and liabilities:
Contributions to Braddock Structured Opportunities Fund, L.P.		(1,538,247	)
Withdrawals from Braddock Structured Opportunities Fund, L.P.		3,005,937

Net cash used in operating activities		1,466,599


Cash flows from financing activities
Capital contributions, net of change in advance capital contribution		1,935,851
Capital withdrawals, net of change in capital withdrawals payable		(3,551,779	)

Net cash provided by financing activities		(1,615,928	)

Net change in cash		(149,329	)

Cash, beginning of period		150,692

Cash, end of period	$	1,363

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BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

STATEMENT OF FINANCIAL CONDITION

(UNAUDITED)

September 30, 2015 (Unaudited)

Assets

Investments in securities, at fair value (cost $76,868,639)	$	80,186,274
Cash and cash equivalents		399,985
Due from broker		2,047,397
Interest receivable		349,804
Other assets		1,415

	$	82,984,875

Liabilities and partners' capital

Liabilities
Payable for securities sold under agreements to repurchase		25,659,000
Accrued expenses		115,009
Dividend and interest payable		14,777

Total liabilities		25,788,786

Partners' capital		57,196,089

	$	82,984,875

B-71

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

STATEMENT OF OPERATIONS

(UNAUDITED)

For the Nine Months Ended September 30, 2015 (Unaudited)

Investment income
Interest	$	3,821,590

Expenses
Management fee		349,336
Professional fees and other		127,274
Decision support fees		118,323
Administrative fee		50,146
Interest and dividends		397,391

Total expenses		1,042,470

Net investment income		2,779,120

Net gain on investments
Net realized gain on securities		2,055,921
Net change in unrealized appreciation or depreciation on securities		(1,788,797	)

Net gain on investments		267,124

Net income	$	3,046,244

B-72

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

STATEMENT OF CHANGES IN PARTNERS' CAPITAL

(UNAUDITED)

As of September 30, 2015 (Unaudited)

	General			Limited
	Partner			Partners			Total

Partners' capital, beginning of year	$	349,409		$	54,412,248		$	54,761,657

Capital contributions					1,538,247			1,538,247

Capital withdrawals		(349,409	)		(1,800,650	)		(2,150,059	)

Allocation of net income
Pro rata allocation					3,046,244			3,046,244
Accrued Performance allocation to General Partner		290,363			(290,363	)		-

		290,363			2,755,881			3,046,244

Partners' capital, end of year	$	290,363		$	56,905,726		$	57,196,089

B-73

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

STATEMENT OF CASH FLOWS

(UNAUDITED)

Period Ended September 30, 2015 (Unaudited)

Cash flows from operating activities
Net income	$	3,046,244
Adjustments to reconcile net income to net cash used in operating activities:
Net realized gain on securities		(2,055,921	)
Net change in unrealized appreciation or depreciation on securities		1,788,797
Amortization of discounts on debt securities		(1,145,926	)
Purchases of investments in securities		(35,454,369	)
Proceeds from investments in securities		51,014,262
Payments to cover securities sold short		(168,465	)
Changes in operating assets and liabilities:
Proceeds from principal paydowns		5,041,575
Due from broker		(1,642,952	)
Accrued expenses		(3,238	)
Dividend and interest payable		(19,418	)
Interest receivable		40,493
Other assets		21,785
Payable for securities sold under agreements to repurchase		(19,332,620	)
Due to broker		(1,707,000	)

Net cash used in operating activities		(576,753	)

Cash flows from financing activities
Capital contributions		1,538,247
Capital withdrawals, net of change in capital withdrawals payable		(3,355,346	)

Net cash provided by financing activities		(1,817,099	)

Net change in cash and cash equivalents		(2,393,852	)

Cash and cash equivalents, beginning of year		2,793,837

Cash and cash equivalents, end of year	$	399,985

B-74

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

(UNAUDITED)

CONDENSED SCHEDULE OF INVESTMENTS

September 30, 2015 (Unaudited)

	Original Face Value	Coupon		Maturity Date	Percentage of Partners' Capital		Fair Value

Investments in securities, at fair value

Collateralized Loan Obligations
United States
Collateralized Loan Obligations
ALM Loan Funding Series 2015-16X Class D	1,000,000	5.61	%*	07/15/2027	1.5	%	$	882,500
Birchwood Park CLO Ltd Series 2014-1X Class E1	1,000,000	5.39	%*	07/15/2026	1.5			879,500
Eaton Vance CDO Ltd Series 2014-1X Class D**	1,000,000	3.93	%*	07/15/2026	1.6			900,000
GoldenTree Loan Opportunities Series 2007-3A Class D	1,000,000	3.50	%*	05/01/2022	1.7			970,000
GoldenTree Loan Opportunities Series 2014-8A Class F	2,000,000	5.64	%*	04/19/2026	2.8			1,620,000
Halcyon Loan Advisors Funding Series 2012-1A Class D	1,500,000	5.82	%*	08/15/2023	2.3			1,335,000
Halcyon Loan Advisors Funding Series 2013-2A Class D**	1,900,000	4.10	%*	08/01/2025	2.9			1,672,000
LCM Ltd Partnership Series 13A Class D**	2,700,000	4.09	%*	01/19/2023	4.6			2,639,250
Octagon Investment Partners XV Series 2013-1A Class D**	750,000	3.84	%*	01/19/2025	1.3			718,125
Octagon Investment Partners XV Series 2013-1A Class E	1,250,000	5.04	%*	01/19/2025	2.0			1,123,125
Symphony CLO Ltd Series 2013-11A Class D**	2,000,000	4.29	%*	01/17/2025	3.5			1,990,000
Venture CDO Ltd Series 2014-19X Class E	1,500,000	5.59	%*	01/15/2027	2.2			1,263,750
West CLO Ltd Series 2014-2X Class E	2,000,000	6.33	%*	01/16/2027	2.6			1,500,000
Wind River CLO Ltd Series 2014-3X Class E	1,500,000	5.90	%*	01/22/2027	2.2			1,282,500
Zais CLO 2 Ltd Series 2014-2X Class C**	1,500,000	4.05	%*	07/25/2026	2.4			1,372,350

Total Collateralized Loan Obligations (cost $21,394,756)								20,148,100

*	Coupon rates shown on floating rate securities represent the rate as of September 30, 2015.

**	Pledged as collateral on repurchase agreements

B-75

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

CONDENSED SCHEDULE OF INVESTMENTS (CONTINUED)

(UNAUDITED)

September 30, 2015 (Unaudited)

	Original Face Value	Coupon		Maturity Date	Percentage of Partners' Capital		Fair Value

Investments in securities, at fair value (continued)

Commercial Mortgage Backed Securities
United States
Alt-A and Subprime
Bayview Commercial Asset Trust Series 2005-1A Class M1	11,720,000	0.63	%*	04/25/2035	2.9	%	$	1,678,936
Bayview Commercial Asset Trust Series 2005-3A Class A2**	5,000,000	0.60	%*	11/25/2035	1.7			998,978
Bayview Commercial Asset Trust Series 2005-3A Class M2	1,480,485	0.69	%*	11/25/2035	0.5			286,755
Bayview Commercial Asset Trust Series 2005-3A Class M3	3,471,576	0.71	%*	11/25/2035	1.2			673,062
Bayview Commercial Asset Trust Series 2005-3A Class M4	1,652,309	0.80	%*	11/25/2035	0.6			321,745
Bayview Commercial Asset Trust Series 2006-1A Class M1	1,350,648	0.58	%*	04/25/2036	0.5			297,183
Bayview Commercial Asset Trust Series 2006-1A Class M2	1,426,139	0.60	%*	04/25/2036	0.5			310,373
Bayview Commercial Asset Trust Series 2006-1A Class M3	1,224,680	0.62	%*	04/25/2036	0.5			263,463

Total Commercial Mortgage Backed Securities (cost $4,420,807)								4,830,495

Other Asset Backed Securities
United States
Other
CAN Capital Funding LLC Series 2014-1X Class B**	3,000,000	4.26	%	04/15/2020	5.2			2,946,600
First Matrix RMOF Trust	750,000	-		10/01/2029	-			1,875
LSTAR Securities Investment Trust Series 2015-8X Class A2	1,000,000	3.69	%	08/01/2020	1.7			970,000
Onemain Financial Issuance Trust Series 2015-2A Class D	1,000,000	5.64	%	07/18/2025	1.7			993,310

Total Other Asset Backed Securities (cost $4,887,005)								4,911,785

*	Coupon rates shown on floating rate securities represent the rate as of September 30, 2015.

**	Pledged as collateral on repurchase agreements

B-76

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

CONDENSED SCHEDULE OF INVESTMENTS (CONTINUED)

(UNAUDITED)

September 30, 2015 (Unaudited)

	Original Face Value	Coupon		Maturity Date	Percentage of Partners' Capital		Fair Value

Investments in securities, at fair value (continued)

Residential Mortgage Backed Securities
United States
Alt-A and Subprime
Ameriquest Mortgage Securities Series 2003-12 Class M1	400,000	1.32	%*	01/25/2034	0.1	%	$	54,788
Asset Backed Securities Corp Home Equity Loan Trust Series 2004-HE1 Class M2**	16,650,000	2.67	%*	01/15/2034	2.2			1,256,555
Countrywide Asset-Backed Certificate Series 2002-BC3 Class M1**	18,000,000	1.10	%*	05/25/2032	2.0			1,118,808
Credit Suisse First Boston Mortgage Securities Series 2005-AGE1 Class M3**	2,877,000	0.85	%*	02/25/2032	4.5			2,595,652
Equifirst Mortgage Loan Trust Series 2005-1 Class M2**	1,945,000	0.87	%*	04/25/2035	3.3			1,891,513
GSRPM Mortgage Loan Trust Series 2004-1 Class B1	3,900,000	2.70	%*	09/25/2042	6.7			3,822,000
Impac CMB Trust Series 2004-4 Class 2M2	2,500,000	2.45	%*	09/25/2034	0.5			310,004
New York Mortgage Trust Series 2005-1 Class M1**	18,854,000	0.95	%*	04/25/2035	1.7			955,445
Soundview Home Equity Loan Trust Series 2001-2 Class AF	13,225,000	6.50	%	03/25/2030	1.0			570,382

Total Alt-A and Subprime (cost $9,836,908)								12,575,147

Credit Risk Transfer
Bellemede RE LT Series 2015-1A Class B1	500,000	6.49	%*	07/25/2025	0.9			505,650
Structured Agency Credit Risk Series 2014-DN3 Class M3**	2,000,000	4.19	%*	08/25/2024	3.4			1,954,200
Structured Agency Credit Risk Series 2015-DN1 Class M3	1,000,000	4.34	%*	01/25/2025	1.7			998,920
Structured Agency Credit Risk Series 2015-DNA1 Class B	500,000	9.39	%*	10/25/2027	1.0			580,894
Structured Agency Credit Risk Series 2015-DNA2 Class B	500,000	7.74	%*	12/25/2027	0.9			501,953
Structured Agency Credit Risk Series 2015-HQ1 Class M3	1,000,000	3.99	%*	03/25/2025	1.7			979,943

*	Coupon rates shown on floating rate securities represent the rate as of September 30, 2015.

**	Pledged as collateral on repurchase agreements

B-77

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

CONDENSED SCHEDULE OF INVESTMENTS (CONTINUED)

(UNAUDITED)

September 30, 2015 (Unaudited)

	Original Face Value	Coupon		Maturity Date	Percentage of Partners' Capital		Fair Value

Investments in securities, at fair value (continued)

Residential Mortgage Backed Securities (continued)
United States (continued)
Credit Risk Transfer (continued)
Structured Agency Credit Risk Series 2015-HQA1 Class B	500,000	8.99	%*	03/25/2028	0.9	%	$	500,000

Total Credit Risk Transfer (cost $6,063,125)								6,021,560

Interest Only
Countrywide Alternative Loan Trust Series 2005-62 Class 1X1	42,000,000	2.14	%*	12/25/2035	2.1			1,206,624
Countrywide Home Loans Series 2005-24 Class A40	681,818	5.50	%	11/25/2035	0.1			56,429
Countrywide Home Loans Series 2005-3 Class 1X	242,953,000	2.13	%*	04/25/2035	3.9			2,224,342

Total Interest Only (cost $3,486,468)								3,487,395

Other
Mt. Spx Credit-Linked Notes Series 2004-A Class Certificate	3,375,000	30.71	%*	11/15/2026	0.6			337,490
Mt. Spx Credit-Linked Notes Series 2004-A Class E	3,375,000	4.96	%*	11/15/2026	0.6			316,586
Mt. Spx Credit-Linked Notes Series 2004-A Class F	1,688,000	10.71	%*	11/15/2026	0.3			163,497
Nationstar HECM Loan Trust Series 2015-1X Class M**	1,000,000	7.02	%	05/25/2018	1.8			1,008,129
Vericrest Opportunity Loan Transferee Series 2015-NP4X Class A2**	1,500,000	4.25	%	02/25/2055	2.6			1,481,329
Vericrest Opportunity Loan Transferee Series 2015-NP5X Class A2**	1,000,000	4.25	%	03/25/2055	1.7			987,840

Total Other (cost $3,916,483)								4,294,871

*	Coupon rates shown on floating rate securities represent the rate as of September 30, 2015.

**	Pledged as collateral on repurchase agreements

B-78

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

CONDENSED SCHEDULE OF INVESTMENTS (CONTINUED)

(UNAUDITED)

September 30, 2015 (Unaudited)

	Original Face Value	Coupon		Maturity Date	Percentage of Partners' Capital		Fair Value

Investments in securities, at fair value (continued)

Residential Mortgage Backed Securities (continued)
United States (continued)
Prime
ABN AMRO Mortgage Corporate Series 2013-12 Class B2	351,000	5.68	%	12/25/2033	0.3	%	$	186,163
Banc of America Alternative Loan Series 2004-7 Class 15B1	2,420,000	5.36	%	08/25/2019	0.7			416,474
Banc of America Alternative Loan Series 2004-9 Class 30B1	906,000	5.75	%	10/25/2034	0.5			261,765
Banc of America Mortgage Securities Series 2003-10 Class XB1	1,235,000	5.44	%	01/25/2034	0.7			378,063
Banc of America Mortgage Securities Series 2003-8 Class 2B3	368,000	4.75	%	11/25/2018	0.1			52,079
Banc of America Mortgage Securities Series 2003-C Class B1	1,821,000	3.01	%*	04/25/2033	0.2			114,376
Banc of America Mortgage Securities Series 2003-D Class B2	4,328,000	2.76	%*	05/25/2033	0.7			403,983
Banc of America Mortgage Securities Series 2003-I Class B2	900,000	2.89	%*	10/25/2033	0.5			258,522
Bear Stearns Adjustable Rate Mortgage Series 2004-10 Class 2B2	4,653,000	2.95	%*	01/25/2035	1.8			1,011,967
Bear Stearns Asset Backed Securities Trust Series 2003-AC6 Class BB	4,000,000	5.45	%*	11/25/2033	0.9			528,633
Chase Mortgage Finance Corporation Series 2002-S4 Class B2	611,000	6.25	%	03/25/2032	0.2			93,088
Citigroup Mortgage Loan Trust Series 2004-HYB2 Class B2	3,366,000	2.65	%*	03/25/2034	1.0			573,059
Countrywide Home Loans Series 2002-32 Class B3	1,657,300	5.81	%	01/25/2033	0.3			143,089
Countrywide Home Loans Series 2003-58 Class B1	637,000	2.58	%*	02/19/2034	0.4			201,747
Countrywide Home Loans Series 2004-7 Class 1B1	2,000,000	2.56	%*	06/25/2034	2.0			1,159,175
Credit Suisse First Boston Mortgage Securities Series 2002-22 Class 2B1	332,000	6.14	%	06/25/2032	0.2			122,005
GSR Mortgage Loan Trust Series 2004-7 Class B1	4,219,000	2.42	%*	06/25/2034	4.1			2,339,779
Homebanc Mortgage Trust Series 2004-1 Class 1M1	9,551,000	1.1	%*	08/25/2029	0.8			444,410
MLCC Mortgage Investors Inc Series 2004-B Class B3	1,250,000	2.6	%*	05/25/2029	0.3			194,022

*	Coupon rates shown on floating rate securities represent the rate as of September 30, 2015.

**	Pledged as collateral on repurchase agreements

B-79

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

CONDENSED SCHEDULE OF INVESTMENTS (CONTINUED)

(UNAUDITED)

September 30, 2015 (Unaudited)

	Original Face Value	Coupon		Maturity Date	Percentage of Partners' Capital		Fair Value

Investments in securities, at fair value (continued)

Residential Mortgage Backed Securities (continued)
United States (continued)
Prime (continued)
Prime Mortgage Trust Series 2003-1 Class B2	1,911,000	5.50	%	06/25/2033	0.6	%	$	332,976
Prime Mortgage Trust Series 2005-2 Class 2B1	1,200,000	4.95	%	10/25/2032	1.1			655,285
Provident Funding Mortgage Loan Trust Series 2004-1 Class B2	1,000,000	2.54	%*	04/25/2034	0.3			148,085
Residential Accredit Loans, Inc Series 2002-QS7 Class B1	1,907,600	6.75	%	06/25/2032	0.9			521,745
Residential Accredit Loans, Inc Series 2002-QS7 Class M2	3,495,800	6.75	%	06/25/2032	1.9			1,083,741
Residential Accredit Loans, Inc Series 2002-QS7 Class M3	3,099,800	6.75	%	06/25/2032	1.7			954,800
RESIX Financial Ltd Series 2004-A Class B8	875,000	5.39	%*	02/10/2036	0.1			40,568
Sequoia Mortgage Trust Series 2005-4 Class 2B1	114,711	2.67	%*	04/20/2035	0.1			47,925
Structured Adjustable Rate Mortgage Loan Trust Series 2004-1 Class B2I	3,000,000	1.60	%*	02/25/2034	0.1			44,841
Structured Asset Securities Corporation Series 2002-5A Class B2	3,286,000	2.34	%*	04/25/2032	0.3			159,450
Structured Asset Securities Corporation Series 2003-17A Class B2I	831,000	2.04	%*	05/25/2033	-			3,530
Structured Asset Securities Corporation Series 2003-22A Class B2	1,500,000	2.41	%*	06/25/2033	0.4			225,707
Structured Asset Securities Corporation Series 2003-26A Class B1I	3,333,500	1.69	%*	09/25/2033	0.3			153,949
Structured Asset Securities Corporation Series 2003-26A Class B2I	750,000	2.12	%*	09/25/2033	-			5,445
Structured Asset Securities Corporation Series 2003-2A Class B1I	1,000,000	1.10	%*	02/25/2033	-			3,531
Structured Asset Securities Corporation Series 2003-34A Class B2I	500,000	2.04	%*	11/25/2033	-			6,189
Structured Asset Securities Corporation Series 2003-6A Class B1	510,000	2.51	%*	03/25/2033	0.1			39,586
Thornburg Mortgage Securities Series 2003-2 Class M1**	10,608,900	1.32	%*	04/25/2043	1.1			628,597
WAMU Mortgage Pass-Through Certificate Series 2002-S8 Class 2B2	1,380,000	5.25	%	01/25/2018	0.1			50,073

*	Coupon rates shown on floating rate securities represent the rate as of September 30, 2015.

**	Pledged as collateral on repurchase agreements

B-80

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

CONDENSED SCHEDULE OF INVESTMENTS (CONTINUED)

(UNAUDITED)

September 30, 2015 (Unaudited)

	Original Face Value	Coupon		Maturity Date	Percentage of Partners' Capital		Fair Value

Investments in securities, at fair value (continued)

Residential Mortgage Backed Securities (continued)
United States (continued)
Prime (continued)
WAMU Mortgage Pass-Through Certificate Series 2002-S8 Class 2B4	690,000	5.25	%	01/25/2018	-	%	$	25,979
WAMU Mortgage Pass-Through Certificate Series 2003-AR6 Class B3	3,700,000	2.55	%*	06/25/2033	0.6			367,043
Washington Mutual MSC Mortgage Pass-Through Certificate Series 2002-AR3 Class B2	8,457,400	2.2	%*	12/25/2032	0.7			413,936
Wells Fargo Mortgage Backed Securities Series 2003-J Class B2	2,896,000	2.66	%*	10/25/2033	0.5			294,583
Wells Fargo Mortgage Backed Securities Series 2003-K Class B2	4,065,000	2.55	%*	11/25/2033	0.8			457,221
Wells Fargo Mortgage Backed Securities Series 2003-O Class B2	3,166,000	2.5	%*	01/25/2034	0.3			194,322
Wells Fargo Mortgage Backed Securities Series 2004-D Class B3	748,000	2.61	%*	05/25/2034	0.1			65,139
Wells Fargo Mortgage Backed Securities Series 2004-J Class B2	3,198,000	2.74	%*	07/25/2034	1.3			730,689
Wells Fargo Mortgage Backed Securities Series 2004-L Class B2	2,058,000	2.75	%*	07/25/2034	0.4			237,572

Total Prime (cost $15,591,245)								16,774,906

Single Family Residence
American Residential Properties Trust Series 2014-SFR1 Class E	1,000,000	4.13	%*	9/17/2031	1.7			984,901
Firstkey Lending Trust Series 2015-SF1X Class E	1,500,000	4.96	%	03/09/2047	2.6			1,466,789
Invitation Homes Trust Series 2015-SF2X Class E**	1,750,000	3.36	%*	6/17/2032	3.0			1,690,325
Invitation Homes Trust Series 2015-SF3X Class F	1,000,000	4.96	%*	8/17/2032	1.7			1,000,000
Progress Residential Trust Series 2014-SFR1 Class E**	2,000,000	4.36	%*	10/17/2031	3.5			2,000,000

Total Single Family Residence (cost $7,271,842)								7,142,015


Total Residential Mortgage Backed Securities (cost $46,166,999)								50,295,894

Total investments in securities, at fair value (cost $76,868,639)								80,186,274

*	Coupon rates shown on floating rate securities represent the rate as of September 30, 2015.

**	Pledged as collateral on repurchase agreements

B-81

BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, LP

FINANCIAL STATEMENTS

AND

INDEPENDENT AUDITORS' REPORT

DECEMBER 31, 2014

(INCLUDING THE FINANCIAL STATEMENTS AND

INDEPENDENT AUDITORS' REPORT OF

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.)

BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, LP

MASTER INDEX

	Section
Braddock Structured Opportunities Fund Series A, LP Financial Statements and Independent Auditors' Report As of December 31, 2014 and for the year then ended	I
Braddock Structured Opportunites Fund, L.P. Financial Statements and Independent Auditors' Report As of December 31, 2014 and for the year then ended	II

BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, LP

FINANCIAL STATEMENTS

AND

INDEPENDENT AUDITORS' REPORT

DECEMBER 31, 2014

BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, LP

CONTENTS

Independent Auditors' Report	1-2
Financial Statements
Statement of Financial Condition	3
Statement of Operations	4
Statement of Changes in Partners' Capital	5
Statement of Cash Flows	6
Notes to Financial Statements	7-10

Independent Auditors' Report

The Partners

Braddock Structured Opportunities Fund Series A, LP:

We have audited the accompanying financial statements of Braddock Structured Opportunities Fund Series A, LP, which comprise the statement of financial condition, as of December 31, 2014, and the related statement of operations, changes in partners' capital, and cash flows for the year then ended, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Braddock Structured Opportunities Fund Series A, LP as of December 31, 2014, and the results of its operations and its cash flows for the year then ended, in accordance with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Denver, Colorado
April 29, 2015

BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, LP

STATEMENT OF FINANCIAL CONDITION

December 31, 2014

Assets

Investment in Braddock Structured Opportunities Fund, L.P., at fair value	$	54,412,248
Cash		150,692
Withdrawals receivable from Braddock Structured Opportunities Fund, L.P.		1,218,964
	$	55,781,904
Liabilities and partners' capital

Liabilities
Advance capital contribution	$	150,000
Capital withdrawals payable		1,233,461
Total liabilities		1,383,461
Partners' capital		54,398,443
	$	55,781,904

See accompanying notes to financial statements.

BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, LP

STATEMENT OF OPERATIONS

Year Ended December 31, 2014

Net investment income (loss) allocated from Braddock Structured Opportunities Fund, L.P.
Interest income	$	3,762,854
Management fee		(425,904	)
Professional fees and other		(172,230	)
Decision support fee		(136,055	)
Administrative fee		(59,443	)
Interest and dividend expenses		(289,258	)

Total net investment income allocated from Braddock Structured Opportunities Fund, L.P.		2,679,964

Fund expenses
Professional fees and other		2,464

Net investment income		2,677,500

Realized and unrealized gain on investments allocated from Braddock Structured Opportunities Fund, L.P.
Net realized gain on securities		6,152,895
Net change in unrealized appreciation or depreciation on securities		(5,066,748	)
Net gain on investments allocated from Braddock Structured Opportunities Fund, L.P.		1,086,147

Net income before performance allocation to the General Partner of Braddock Structured Opportunities Fund, L.P.		3,763,647

Performance allocation to the General Partner of Braddock Structured Opportunities Fund, L.P.		(355,524	)

Net income	$	3,408,123

See accompanying notes to financial statements.

BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, LP

STATEMENT OF CHANGES IN PARTNERS' CAPITAL

Year Ended December 31, 2014


	General Partner		Limited Partners			Total

Partners' capital, beginning of year	$	15,021	$	21,929,897		$	21,944,918

Capital contributions		145,528		35,216,516			35,362,044

Capital withdrawals		-		(6,316,642	)		(6,316,642	)

Allocation of net income		13,081		3,395,042			3,408,123

Partners' capital, end of year	$	173,630	$	54,224,813		$	54,398,443

See accompanying notes to financial statements.

BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, LP

STATEMENT OF CASH FLOWS

Year Ended December 31, 2014

Cash flows from operating activities
Net income	$	3,408,123
Adjustments to reconcile net income to net cash used in operating activities:
Net income allocated from Braddock Structured Opportunities Fund, L.P.		(3,410,587	)
Changes in operating assets and liabilities:
Contributions to Braddock Structured Opportunities Fund, L.P.		(9,213,211	)
Withdrawals from Braddock Structured Opportunities Fund, L.P.		4,273,191

Net cash used in operating activities		(4,942,484	)

Cash flows from financing activities
Capital contributions, net of change in advance capital contribution		10,175,535
Capital withdrawals, net of change in capital withdrawals payable		(5,083,181	)

Net cash provided by financing activities		5,092,354

Net change in cash		149,870

Cash, beginning of year		822

Cash, end of year	$	150,692

Supplemental disclosure of noncash operating and financing activities
Contribution of securities, at fair value (cost basis of $22,694,459)	$	32,033,719

See accompanying notes to financial statements.

BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, LP

NOTES TO FINANCIAL STATEMENTS

1.	Nature of operations and summary of significant accounting policies

Nature of Operations

Braddock Structured Opportunities Fund Series A, LP (the "Fund"), a Delaware investment limited partnership, commenced operations on September 1, 2012. The Fund was organized for the purpose of seeking capital appreciation and holding period income through disciplined investing in Residential Mortgage Backed Securities ("RMBS"), and other structured finance securities that may include securities classified as distress-priced and newly issued, in RMBS, Asset Backed Securities ("ABS"), Collateralized Debt Obligations ("CDO"), Collateral Loan Obligations ("CLO"), and Commercial Mortgage Backed Securities ("CMBS"). The Fund is managed by Braddock Structured Opportunities Fund GP, LLC (the "General Partner") and Braddock Financial Corporation (the "Investment Manager").

Effective January 1, 2014, the General Partner of Braddock Structured Opportunities Fund Series A, L.P. and the General Partner of Mortgage Opportunity Fund VIII L.P., along with a required percentage of limited partners from each Fund, agreed to merge Mortgage Opportunity Fund VIII, L.P. into Braddock Structured Opportunities Fund Series A, L.P. The purpose of the merger was to combine the two funds managed by the Investment Manager that shared the same general investment objective, held similar assets, and had a significant percentage of investors in common. The General Partners believed that by combining these two funds into one larger fund, certain benefits would be achieved such as reducing the aggregate fixed expenses such as administrative, custodial, and other operating costs. For financial reporting purposes, the assets were recorded at fair value and the cost basis of the investments from both funds was carried forward to align ongoing reporting of the realized and unrealized gains and losses.

As a result of the approved merger, Braddock Structured Opportunities Fund Series A, L.P. was the surviving entity after the merger was effective on January 1, 2014.

The Fund invests substantially all of its assets through a master-feeder structure in Braddock Structured Opportunities Fund, L.P. (the "Master Fund"), an investment company that has the same investment objectives as the Fund. The financial statements of the Master Fund, including the condensed schedule of investments, are included elsewhere in this report and should be read with the Fund's financial statements. The Fund owns 99.4% of the Master Fund at December 31, 2014.

Basis of Presentation

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The Master Fund is an investment company and follows the accounting and reporting guidance in Financial Accounting Standards Board ("FASB") Account Standards Codification Topic 946.

These financial statements were approved by management and available for issuance on April 29, 2015. Subsequent events have been evaluated through this date.

Valuation of Investment in Braddock Structured Opportunities Fund, L.P.

The Fund records its investment in the Master Fund at fair value. Valuation of investments held by the Master Fund, including, but not limited to the valuation techniques used and categorization within the fair value hierarchy of investments, are discussed in the notes to the Master Fund financial statements included elsewhere in this report.

BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, LP

NOTES TO FINANCIAL STATEMENTS

1.	Nature of operations and summary of significant accounting policies (continued)

Investment Income and Expenses

The Fund records its proportionate share of the Master Fund's income, expenses, and realized and unrealized gains and losses. The management fee and performance allocation are charged at the Master Fund level and allocated to the Feeder Fund.

Income Taxes

The Fund does not record a provision for U.S. federal, state, or local income taxes because the partners report their share of the Fund's income or loss on their income tax returns. The Fund files an income tax return in the U.S. Federal jurisdiction, and may file income tax returns in various U.S. states and foreign jurisdictions. Generally, the Fund is subject to income tax examinations by major taxing authorities since inception.

The Fund is required to determine whether its tax positions are more likely than not to be sustained upon examination by the applicable taxing authority, based on the technical merits of the position. The tax benefit recognized is measured as the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant taxing authorities. Based on its analysis, the Fund has determined that it has not incurred any liability for unrecognized tax benefits as of December 31, 2014. The Fund does not expect that its assessment regarding unrecognized tax benefits will materially change over the next twelve months. However, the Fund's conclusions may be subject to review and adjustment at a later date based on factors including, but not limited to, questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions, compliance with U.S. federal, U.S. state and foreign tax laws, and changes in the administrative practices and precedents of the relevant taxing authorities.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Fund's management to make estimates and assumptions that affect the amounts disclosed in the financial statements. Actual results could differ from those estimates.

2.	Concentration of credit risk

In the normal course of business, the Fund maintains its cash balances in financial institutions, JPMorgan Chase Bank, N.A., which at times may exceed federally insured limits. The Fund is subject to credit risk to the extent any financial institution with which it conducts business is unable to fulfill contractual obligations on its behalf. Management monitors the financial condition of such financial institutions and does not anticipate any losses from these counterparties.

3.	Partners' capital

In accordance with the limited partnership agreement (the "Agreement"), profits and losses of the Fund are allocated to partners according to their respective interests in the Fund. Subject to certain limitations, generally 20% of the net profits allocated to the limited partners are reallocated to the General Partner of the Master Fund. To the extent the reallocation is allocated at the Master Fund level, no reallocation will be made at the Fund level.

BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, LP

NOTES TO FINANCIAL STATEMENTS

3.	Partners' capital (continued)

Limited partners have redemption rights which contain certain restrictions with respect to rights of withdrawal from the Fund as specified in the Agreement. Limited partners may withdraw all or a portion of their interest on 90 day's prior notice as of the close of business on the first day of each month provided that the portion of the interest being withdrawn is attributable to capital contributed to the Fund at least 12 complete consecutive months prior to the relevant withdrawal date. Limited partners withdrawing capital prior to the expiration of their agreed upon twelve month lock-up are subject to an early withdrawal fee of 3% of the gross withdrawal proceeds.

4.	Related party transactions

The Master Fund pays the General Partner of the Master Fund a management fee, calculated and payable monthly in arrears, equal to 0.125% (1.5% per annum) of the Fund's net asset value determined as of the end of each calendar month. Certain limited partners have special management fee arrangements, performance arrangements, or redemption rights as provided for in the Agreement. To the extent the management fee is charged at the Master Fund level, no fee will be charged at the Fund level.

Certain limited partners are affiliated with the General Partner. The aggregate value of the affiliated limited partners' share of partners' capital at December 31, 2014 is approximately $21,348,000.

5.	Administrative fee

ALPS, a DST Company (the "Administrator") serves as the Fund's administrator and performs certain administrative and clerical services on behalf of the Fund.

6.	Financial highlights

Financial highlights for the year ended December 31, 2014 are as follows:


Total return
Total return before reallocation to General Partner of Braddock Structured Opportunities Fund, L.P.	7.5	%
Reallocation to General Partner of Braddock Structured Opportunities Fund, L.P.	(0.7	)
Total return after reallocation to General Partner of Braddock Structured Opportunities Fund, L.P.	6.8	%

Ratio to average limited partners' capital
Expenses	2.1	%
Reallocation to General Partner of Braddock Structured Opportunities Fund, L.P.	0.7
Expenses and reallocation to General Partner of Braddock Structured Opportunities Fund, L.P.	2.8	%

Net investment income	5.1	%

BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, LP

NOTES TO FINANCIAL STATEMENTS

6.	Financial highlights (continued)

Financial highlights are calculated for the limited partner class taken as a whole. An individual limited partner's return and ratios may vary based on participation in different performance and/or management fee arrangements, and the timing of capital transactions.

7.	Subsequent events

The Fund accepted additional capital contributions of $1,308,375 (of which $150,000 is included in advance capital contributions) and had additional capital withdrawals of $689,908 during the period from January 1, 2015 through April 29, 2015.

SECTION II

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

FINANCIAL STATEMENTS

AND

INDEPENDENT AUDITORS' REPORT

DECEMBER 31, 2014

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

CONTENTS

Independent Auditors' Report	1-2
Financial Statements
Statement of Financial Condition	3
Statement of Operations	4
Statement of Changes in Partners' Capital	5
Statement of Cash Flows	6
Condensed Schedule of Investments	7-14
Notes to Financial Statements	15-24

Independent Auditors' Report

The Partners

Braddock Structured Opportunities Fund, L.P.:

We have audited the accompanying financial statements of Braddock Structured Opportunities Fund, L.P., which comprise the statement of financial condition, including the condensed schedule of investments, as of December 31, 2014, and the related statements of operations, changes in partners' capital, and cash flows for the year then ended, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Braddock Structured Opportunities Fund, L.P. as of December 31, 2014, and the results of its operations and its cash flows for the year then ended, in accordance with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Denver, Colorado
April 29, 2015, except as to Note 12, which is as of December 30, 2015

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

STATEMENT OF FINANCIAL CONDITION

December 31, 2014


Assets

Investments in securities, at fair value (cost $94,287,379)	$	99,389,797
Cash and cash equivalents		2,793,837
Due from broker		404,445
Interest receivable		390,297
Other assets		23,200
	$	103,001,576

Liabilities and partners' capital

Liabilities
Securities sold short, at fair value (proceeds $173,812)	$	169,884
Payable for securities sold under agreements to repurchase		44,991,620
Capital withdrawal payable		1,218,964
Due to broker		1,707,000
Accrued expenses		118,256
Dividend and interest payable		34,195

Total liabilities		48,239,919

Partners' capital		54,761,657
	$	103,001,576


See accompanying notes to financial statements.	3

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

STATEMENT OF OPERATIONS

Year Ended December 31, 2014


Investment income
Interest	$	3,762,854
Expenses
Management fee		425,904
Professional fees and other		172,230
Decision support fees		136,055
Administrative fee		59,443
Interest and dividends		289,258
Total expenses		1,082,890

Net investment income		2,679,964

Net gain on investments
Net realized gain on securities		6,152,895
Net change in unrealized appreciation or depreciation on securities		(5,066,748	)
Net gain on investments		1,086,147
Net income	$	3,766,111


See accompanying notes to financial statements.	4

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

STATEMENT OF CHANGES IN PARTNERS' CAPITAL

Year Ended December 31, 2014


	General Partner			Limited Partners			Total

Partners' capital, beginning of year	$	139,413		$	21,944,096		$	22,083,509

Capital contributions		-			34,549,720			34,549,720

Capital withdrawals		(145,528	)		(5,492,155	)		(5,637,683	)

Allocation of net income
Pro rata allocation		-			3,766,111			3,766,111
Performance allocation to General Partner		355,524			(355,524	)		-
		355,524			3,410,587			3,766,111

Partners' capital, end of year	$	349,409		$	54,412,248		$	54,761,657


See accompanying notes to financial statements.	5

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

STATEMENT OF CASH FLOWS

Year Ended December 31, 2014


Cash flows from operating activities
Net income	$	3,766,111
Adjustments to reconcile net income to net cash used in operating activities:
Net realized gain on securities		(6,152,895	)
Net change in unrealized appreciation or depreciation on securities		5,066,748
Accretion/Amortization of discount/premium on debt securities		(1,380,498	)
Purchases of investments in securities		(72,685,127	)
Proceeds from investments in securities		24,352,388
Proceeds from securities sold short		59,979
Payments to cover securities sold short		(277,598	)
Changes in operating assets and liabilities:
Proceeds from principal paydowns		4,464,679
Net payable to Mortgage Opportunity Fund VIII, LP related to merger (see note 1)		(6,778,142	)
Due from broker		144,108
Accrued expenses		52,864
Dividend and interest payable		32,519
Interest receivable		(225,743	)
Other assets		4,995
Payable for securities sold under agreements to repurchase		44,991,620
Due to broker		1,707,000
Net cash used in operating activities		(2,856,992	)

Cash flows from financing activities
Capital contributions		9,213,211
Capital withdrawals, net of change in capital withdrawals payable		(4,418,719	)
Net cash provided by financing activities		4,794,492

Net change in cash and cash equivalents		1,937,500

Cash and cash equivalents, beginning of year		856,337

Cash and cash equivalents, end of year	$	2,793,837
Supplemental disclosure of noncash financing activities
Contribution of securities, at fair value (cost basis of $22,694,459)	$	32,033,719


See accompanying notes to financial statements.	6

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

CONDENSED SCHEDULE OF INVESTMENTS

December 31, 2014

	Original Face Value		Coupon			Maturity Date	Percentage of Partners' Capital			Fair Value

Investments in securities, at fair value

Collateralized Loan Obligations
United States
Collateralized Loan Obligations
Birchwood Park CLO Ltd Series 2014-1X Class D1 `		1,500,000		3.68	%*	07/15/2026		2.5	%	$	1,398,165
Birchwood Park CLO Ltd Series 2014-1X Class E1		1,000,000		3.68	%*	07/15/2026		1.6			902,230
Carlyle Global Market Strategies Series 2013-4A Class E		1,000,000		4.73	%*	10/15/2025		1.6			888,160
Cent CLO LP Series 2013-19A Class D		1,000,000		5.18	%*	10/29/2025		1.6			894,900
Eaton Vance CLO 2014-1 Ltd Series 2014-1 Class D**		1,000,000		3.88	%*	07/15/2026		1.7			942,020
Goldentree Loan Opportunities Series 2007-3A Class D		1,000,000		3.45	%*	05/01/2022		1.7			965,170
ING Investment Management Class Series 2013-1A Class C**		2,000,000		3.75	%*	04/15/2024		3.4			1,875,580
Goldentree Loan Opportunities Series 2014-8A Class F		4,000,000		5.61	%*	04/19/2026		6.1			3,400,400
Halcyon Loan Advisors Funding Series 2012-1A Class D		1,500,000		5.76	%*	08/15/2023		2.6			1,426,395
Halcyon Loan Advisors Funding Series 2012-2A Class A**		5,000,000		1.68	%*	12/20/2024		8.9			4,980,500
Halcyon Loan Advisors Funding Series 2013-2A Class D		1,900,000		4.05	%*	08/01/2025		3.2			1,806,900
LCM Ltd Partnership Series 13A Class D**		2,700,000		4.06	%*	01/19/2023		4.7			2,625,664
Octagon Investment Partners XV Series 2013-1A Class D**		750,000		3.81	%*	01/19/2025		1.3			714,465
Octagon Investment Partners XV Series 2013-1A Class E		250,000		5.01	%*	01/19/2025		0.4			226,158
Octagon Investment Partners XVII Series 2013-1A Class E		2,000,000		4.73	%	10/25/2025		3.1			1,720,000
Symphony Class Ltd Series 2013-11A Class D**		2,000,000		4.26	%*	01/17/2025		3.5			1,975,460
West CLO Ltd Series 2013-1A Class A1A**		8,000,000		1.66	%*	11/07/2025		14.2			7,920,000
West CLO Ltd Series 2014-2X Class E		2,000,000		6.29	%*	01/16/2027		3.1			1,707,000
Zais CLO 2 Ltd Series 2014-2X Class C**		1,500,000		3.98	%*	07/25/2026		2.5			1,410,563

Total Collateralized Loan Obligations (cost $38,439,969)								69.0			37,779,730

*	Coupon rates shown on floating rate securities represent the rate as of December 31, 2014.

**	Pledged as collateral on repurchase agreements

See accompanying notes to financial statements.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

CONDENSED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2014

	Original Face Value		Coupon			Maturity Date	Percentage of Partners' Capital			Fair Value

Investments in securities, at fair value (continued)

Commercial Mortgage Backed Securities
United States
Alt-A and Subprime
Bayview Commercial Asset Trust Series 2005-1A Class M1**		11,720,000		0.59	%*	04/25/2035		3.6	%	$	2,031,246
Bayview Commercial Asset Trust Series 2005-3A Class A2		5,000,000		0.56	%*	11/25/2035		2.1			1,154,540
Bayview Commercial Asset Trust Series 2005-3A Class M2		1,480,485		0.65	%*	11/25/2035		0.5			301,360
Bayview Commercial Asset Trust Series 2005-3A Class M3		3,471,576		0.67	%*	11/25/2035		1.2			688,991
Bayview Commercial Asset Trust Series 2005-3A Class M4		1,652,309		0.76	%*	11/25/2035		0.6			317,417
Bayview Commercial Asset Trust Series 2005-4A Class A2		5,110,000		0.55	%*	01/25/2036		2.2			1,251,203
Bayview Commercial Asset Trust Series 2006-1A Class M1		1,350,648		0.54	%*	04/25/2036		0.6			332,681
Bayview Commercial Asset Trust Series 2006-1A Class M2		1,426,139		0.56	%*	04/25/2036		0.6			335,404
Bayview Commercial Asset Trust Series 2006-1A Class M3		1,224,680		0.58	%*	04/25/2036		0.5			279,847

Total Commercial Mortgage Backed Securities (cost $6,092,243)								12.2			6,692,689

Other Asset Backed Securities
United States
Other
CAN Capital Funding LLC Series 2014-1X Class B**		3,000,000		4.26	%*	04/15/2020		5.2			2,889,900
First Matrix RMOF Trust		632,000		-		10/01/2029		-			1,580

Total Other Asset Backed Securities (cost $2,913,014)								5.3			2,891,480

*	Coupon rates shown on floating rate securities represent the rate as of December 31, 2014.

**	Pledged as collateral on repurchase agreements

See accompanying notes to financial statements.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

CONDENSED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2014

	Original Face Value		Coupon			Maturity Date	Percentage of Partners' Capital			Fair Value

Investments in securities, at fair value (continued)

Residential Mortgage Backed Securities
United States
Alt-A and Subprime
Ace Securities Corporation Series 2004-IN1 Class A1**		82,946,500		0.8	%*	05/25/2034		6.7	%	$	3,752,034
Ameriquest Mortgage Securities Series 2003-12 Class M1		400,000		1.28	%*	01/25/2034		0.1			62,238
Argent Securities Inc. Series 2003-W5 Class M2		5,058,000		2.93	%*	10/25/2033		1.1			588,456
Asset Backed Sec Corp Home Equity Loan Tr Series 2004-HE1 Class M2		16,650,000		2.63	%*	01/15/2034		2.4			1,334,052
Countrywide Asset-Backed Certificate Series 2002-BC3 Class M13**		18,000,000		1.06	%*	05/25/2032		1.9			1,084,683
Credit Suisse First Boston Mortgage Sec Series 2005-AGE1 Class M3**		2,877,000		0.8	%*	02/25/2032		4.5			2,517,445
Countrywide ABS Inc. Series 2004-3 Class M-1		1,302,000		0.91	%*	06/25/2034		2.1			1,154,174
Equifirst Mortgage Loan Trust Series 2005-1 Class M2**		1,945,000		0.61	%*	04/25/2035		3.3			1,838,025
GSRPM Mortgage Loan Trust Series 2004-1 Class B1		3,255,500		2.66	%*	09/25/2042		5.5			3,064,050
Impac CMB Trust Series 2004-4 Class 2M2		2,500,000		2.41	%*	09/25/2034		0.6			355,368
Morgan Stanley Capital Inc. Series 2004-NC6 Class M1**		1,618,500		1.06	%*	07/25/2034		2.1			1,173,322
Option One Mortgage Loan Trust Series 2004-3 Class M2		1,621,000		1.01	%*	11/25/2034		1.0			566,960
Saxon Asset Securities Trust Series 2005-1 Class M1**		3,699,500		0.85	%*	05/25/2035		5.1			2,852,794

Total Alt-A and Subprime (cost $16,260,275)								37.1			20,343,601

Credit Risk Transfer
Structured Agency Credit Risk Series 2014-DN1 Class M3		3,000,000		4.66	%*	2/25/2024		5.3			2,970,000
Structured Agency Credit Risk Series 2014-DN2 Class M3**		4,000,000		3.77	%*	4/25/2024		6.6			3,680,000

*	Coupon rates shown on floating rate securities represent the rate as of December 31, 2014.

**	Pledged as collateral on repurchase agreements

See accompanying notes to financial statements.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

CONDENSED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2014

	Original Face Value		Coupon			Maturity Date	Percentage of Partners' Capital			Fair Value

Investments in securities, at fair value (continued)

Residential Mortgage Backed Securities (continued)
United States (continued)
Credit Risk Transfer (continued)
Structured Agency Credit Risk Series 2014-DN3 Class M3**		5,000,000		4.17	%*	8/25/2024		8.5	%	$	4,750,000

Total Credit Risk Transfer (cost $12,307,344)								20.8			11,400,000

Interest Only
Countrywide Alternative Loan Trust Series 2005-62 Class 1X1		42,000,000		2.19	%*	12/25/2035		2.7			1,485,845
Countrywide Home Loans Series 2005-24 Class A40		681,818		5.50	%	11/25/2035		0.1			68,424
Countrywide Home Loans Series 2005-3 Class 1X		222,953,000		2.09	%*	04/25/2035		4.3			2,380,417
Residential Accredited Loans Series 2004-QS6 Class AV		131,909,500		.25	%*	05/25/2019		0.1			40,996

Total Interest Only (cost $3,933,902)								7.3			3,975,682

Other
Mt. Spx Credit-Linked Notes Series 2004-A Class E		2,845,000		4.91	%*	11/15/2026		0.6			323,385
Mt. Spx Credit-Linked Notes Series 2004-A Class Certificate		2,845,000		30.66	%*	11/15/2026		0.6			341,669
Mt. Spx Credit-Linked Notes Series 2004-A Class F		1,423,000		10.66	%*	11/15/2026		0.3			165,537

Total Other (cost $446,344)								1.5			830,591

*	Coupon rates shown on floating rate securities represent the rate as of December 31, 2014.

**	Pledged as collateral on repurchase agreements

See accompanying notes to financial statements.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

CONDENSED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2014


	Original Face Value		Coupon			Maturity Date	Percentage of Partners' Capital			Fair Value

Investments in securities, at fair value (continued)

Residential Mortgage Backed Securities (continued)
United States (continued)
Prime
ABN Amro Mortgage Corporate Series 2003-12 Class B2		351,000		5.68	%	12/25/2033		0.3	%	$	181,347
Banc of America Mortgage Securities Inc Series 2004-7 Class 15B1		2,420,000		5.36	%	08/25/2019		0.8			448,186
Banc of America Alternative Loan Series 2004-9 Class 30B1		356,000		5.75	%	10/25/2034		0.2			103,971
Banc of America Mortgage Securities Series 2003-10 Class XB1		1,235,000		5.42	%	01/25/2034		0.7			404,287
Banc of America Mortgage Securities Series 2003-8 Class 2B3		368,000		4.75	%	11/25/2018		0.1			74,594
Banc of America Mortgage Securities Series 2003-C Class B1		1,821,000		2.99	%*	04/25/2033		0.2			125,985
Banc of America Mortgage Securities Series 2003-I Class B2		900,000		2.69	%*	10/25/2033		0.4			240,210
Bear Stearns Adjustable Rate Mortgage Series 2004-10 Class 2B2		4,653,000		2.98	%*	01/25/2035		1.7			968,478
Chase Mortgage Finance Corporation Series 2002-S4 Class B2		611,000		6.25	%	03/25/2032		0.2			102,538
Chase Mortgage Finance Corporation Series 2004-S3 Class B2		1,138,000		5.70	%	03/25/2034		0.4			217,664
Citigroup Mortgage Loan Trust Series 2004-HYB2 Class B2		3,366,000		2.63	%*	03/25/2034		1.1			635,193
Countrywide Home Loans Series 2002-32 Class B3		1,657,300		5.73	%	01/25/2033		0.4			212,261
Countrywide Home Loans Series 2003-1 Class B1		1,500,000		5.75	%	03/25/2033		0.5			295,434
Countrywide Home Loans Series 2003-58 Class B1		637,000		2.52	%*	02/19/2034		0.4			199,822
Countrywide Home Loans Series 2004-7 Class 1B1		2,000,000		2.46	%*	06/25/2034		1.9			1,084,695
GS Mortgage Securities Corporation Series 2004-7 Class B1		2,160,000		2.28	%*	06/25/2034		2.3			1,263,149
Homebanc Mortgage Trust Series 2004-1 Class 1M1		9,551,000		1.06	%*	08/25/2029		0.9			511,492
Prime Mortgage Trust Series 2005-2 Class 2B1		1,200,000		5.00	%	10/25/2032		1.1			637,610
Resix Financial Ltd Series 2004-A Class B8		875,000		5.35	%*	02/10/2036		0.2			83,787

*	Coupon rates shown on floating rate securities represent the rate as of December 31, 2014.

**	Pledged as collateral on repurchase agreements

See accompanying notes to financial statements.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

CONDENSED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2014


	Original Face Value		Coupon			Maturity Date	Percentage of Partners' Capital			Fair Value

Investments in securities, at fair value (continued)

Residential Mortgage Backed Securities (continued)
United States (continued)
Prime (continued)
Sequoia Mortgage Trust Series 2005-4 Class 2B1		114,711		2.64	%*	04/20/2035		0.1	%	$	50,862
Structured Adjustable Rate Mortgage Series 2004-1 Class B2I		3,000,000		1.56	%*	02/25/2034		0.1			75,105
Structured Asset Securities Corporation Series 2002-5A Class B2		3,286,000		2.29	%*	04/25/2032		0.2			132,352
Structured Asset Securities Corporation Series 2003-17A Class B2I		831,000		2.01	%*	05/25/2033		0.1			40,600
Structured Asset Securities Corporation Series 2003-22A Class B2		1,500,000		2.41	%*	06/25/2033		0.4			223,147
Structured Asset Securities Corporation Series 2003-26A Class B1I		3,333,500		1.66	%*	09/25/2033		0.3			174,388
Structured Asset Securities Corporation Series 2003-26A Class B2I		750,000		2.09	%*	09/25/2033		0.0			10,157
Structured Asset Securities Corporation Series 2003-2A Class B1I		1,000,000		1.1	%*	02/25/2033		-			662
Structured Asset Securities Corporation Series 2003-34A Class B2I		500,000		2.01	%*	11/25/2033		0.0			5,409
Structured Asset Securities Corporation Series 2003-6A Class B1		510,000		2.47	%*	03/25/2033		0.1			40,730
Thornburg Mortgage Securities Series 2003-2 Class M1**		10,608,900		1.28	%*	04/25/2043		2.0			1,138,057
Wamu Mortgage Pass-Through Certificate Series 2002-S8 Class 2B2		1,380,000		5.25	%	01/25/2018		0.1			69,898
Wamu Mortgage Pass-Through Certificate Series 2002-S8 Class 2B4		690,000		5.25	%	01/25/2018		0.1			35,040
Wamu Mortgage Pass-Through Certificate Series 2003-AR6 Class B3		3,700,000		2.44	%*	06/25/2033		0.8			433,953
Wells Fargo Mortgage Backed Securities Series 2003-K Class B2		1,497,500		2.49	%*	11/25/2033		0.4			195,842
Wells Fargo Mortgage Backed Securities Series 2003-O Class B2		3,166,000		2.49	%*	01/25/2034		0.6			311,408
Wells Fargo Mortgage Backed Securities Series 2004-D Class B3		748,000		2.49	%*	05/25/2034		0.1			75,434
Wells Fargo Mortgage Backed Securities Series 2004-J Class B2		3,198,000		2.62	%*	07/25/2034		1.8			996,035
Wells Fargo Mortgage Backed Securities Series 2004-L Class B2		2,058,000		2.63	%*	07/25/2034		0.5			289,479

*	Coupon rates shown on floating rate securities represent the rate as of December 31, 2014.

**	Pledged as collateral on repurchase agreements

See accompanying notes to financial statements.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

CONDENSED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2014


	Original Face Value		Coupon			Maturity Date	Percentage of Partners' Capital			Fair Value

Investments in securities, at fair value (continued)

Residential Mortgage Backed Securities (continued)
United States (continued)
Prime (continued)
Wells Fargo Mortgage Backed Securities Series 2006-1 Class B1		4,010,000		5.00	%	03/25/2021		2.4	%	$	1,363,638
Wells Fargo Mortgage Backed Securities Series 2003-J Class B2		420,000		2.55	%*	10/25/2033		0.1			38,630

Total Prime (cost $11,916,263)								24.6			13,491,529

Single Family Residence
American Residential Properties Series 2014-SFR1 Class E		1,000,000		4.09	%*	9/17/2031		1.8			994,500
Colony American Homes Series 2014-1A Class D		1,000,000		2.4	%*	5/17/2031		1.7			975,600

Total Single Family Residence (cost $1,946,875)								3.6			1,970,100


Total Residential Mortgage Backed Securities (cost $46,811,003)								95.0			52,011,503

Exchange traded funds
United States
Other (cost $31,150)								0			14,395

Total investments in securities, at fair value (cost $94,287,379)								181.5	%	$	99,389,797

*	Coupon rates shown on floating rate securities represent the rate as of December 31, 2014.

**	Pledged as collateral on repurchase agreements

See accompanying notes to financial statements.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

CONDENSED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2014


	Percentage of Partners' Capital			Fair Value

Securities sold short, at fair value

Exchange traded funds
United States
Other (proceeds $173,812)		0.3	%	$	169,884

See accompanying notes to financial statements.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

NOTES TO FINANCIAL STATEMENTS

Nature of operations and summary of significant accounting policies

Nature of Operations

Braddock Structured Opportunities Fund, L.P. (the "Master Fund") is an investment partnership which was formed under the laws of the Cayman Islands and commenced operations on September 1, 2012. The Master Fund was organized for the purpose of seeking capital appreciation and holding period income through disciplined investing in Residential Mortgage Backed Securities ("RMBS"), and other structured finance securities that may include securities classified as distress-priced and newly issued, in RMBS, Asset Backed Securities ("ABS"), Collateralized Debt Obligations ("CDO"), Collateral Loan Obligations ("CLO"), and Commercial Mortgage Backed Securities ("CMBS"). The Master Fund has one limited partner: Braddock Structured Opportunities Fund Series A, LP (the "Feeder Fund"), a United States of America investment limited partnership. The Feeder Fund invests substantially all of its assets in the Master Fund. The Master Fund is managed by Braddock Structured Opportunities Fund GP, LLC (the "General Partner") and Braddock Financial Corporation (the "Investment Manager").

As a result of the approved merger, Braddock Structured Opportunities Fund Series A, L.P. was the surviving entity after the merger was effective on January 1, 2014.

Basis of Presentation

These financial statements were approved by management and available for issuance on April 29, 2015. Subsequent events have been evaluated through this date.

Cash Equivalents

Cash equivalents include short-term highly liquid investments, such as money market funds, that are readily convertible to known amounts of cash and have original maturities of three months or less.

Fair Value - Definition and Hierarchy

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

NOTES TO FINANCIAL STATEMENTS

1.	Nature of operations and summary of significant accounting policies (continued)

Fair Value - Definition and Hierarchy (continued)

In determining fair value, the Master Fund uses various valuation techniques. A fair value hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs are to be used when available. Valuation techniques that are consistent with the market or income approach are used to measure fair value. The fair value hierarchy is categorized into three levels based on the inputs as follows:

Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Master Fund has the ability to access.

Level 2 - Valuation based on inputs, other than quoted prices included in Level 1, that are observable either directly or indirectly.

Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

Fair value is a market-based measure, based on assumptions of prices and inputs considered from the perspective of a market participant that are current as of the measurement date, rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Master Fund's own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date.

The availability of valuation techniques and observable inputs can vary from investment to investment and are affected by a wide variety of factors, including the type of investment, whether the investment is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the investments existed. Accordingly, the degree of judgment exercised by the Master Fund in determining fair value is greatest for investments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement.

Fair Value - Valuation Techniques, Inputs and Processes

Investments in Securities - MBS

The majority of the Master Fund's investments in MBS are not exchange traded. All of the securities in the Master Fund's portfolio are valued at fair value in accordance with the Master Fund's valuation policy. As part of this policy, independent valuation marks are sent directly to the Master Fund's Administrator (as defined in Note 7) at each month end either from an independent pricing service or from a dealer. Management utilizes a variety of cash flow modeling techniques combined with management's knowledge of the current trading environment to determine the fair value for each of the securities in the portfolio. In accordance with the Master Fund's valuation policy, management prices each security in the portfolio at a price that is at or within a range of the independent valuation marks that are sent directly to the Administrator.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

NOTES TO FINANCIAL STATEMENTS

1.	Nature of operations and summary of significant accounting policies (continued)

Fair Value - Valuation Techniques, Inputs and Processes (continued)

Investments in Securities – MBS (continued)

Management consistently applies its modeling techniques and communications with broker-dealers who are knowledgeable in these securities to value the positions in the portfolio to fair value. Management and the Master Fund's Administrator obtain independent marks for each security from an independent pricing service or directly from a dealer to assist in valuing the portfolio assets at the end of each month. Valuations can be obtained through multiple pricing services and dealers.

Management utilizes internal financial models with observable inputs to assess the investment value of every bond in the portfolio and to assess the valuation obtained by an independent source. Independent marks are obtained from alternative independent sources if a pricing service is unable to provide valuation on any security.

The Master Fund values investments in securities for which there is no ready market at fair value as determined by the Master Fund's management. Historically, there have been periods of time when the types of similar securities owned by the Master Fund have experienced price volatility as a result of the increased credit risk and the reduced liquidity of these investments in the marketplace. That volatility and reduced liquidity can result in difficulties in measuring the fair value of subprime mortgage-related assets, other MBS and ABS, as well as other assets affected by the illiquidity in the market.

A portion of the Master Fund's securities may be deemed to be illiquid. Illiquid securities are generally those that cannot be sold or disposed of in the ordinary course of business at approximately the prices at which they are valued. This may result in illiquid securities being disposed of at a price significantly lower or higher than the recorded value since the market price of illiquid securities generally is more volatile than that of more liquid securities. This illiquidity of securities may result in the Master Fund incurring greater losses on the sale of some securities than under more stable market conditions. Such losses can adversely impact the Master Fund's net asset value.

There can be no assurance that the Master Fund could purchase or sell a security at the price used to calculate the Master Fund's net asset value. Changes in the estimated fair value of securities may be less frequent and of greater magnitude than changes in the price of securities valued at their last sale price, by an independent pricing service, or based on market quotations. Those estimated values do not necessarily represent the amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined. Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the securities existed.

The Master Fund invests a portion of its portfolio in below investment grade debt securities, including MBS and ABS. Below investment grade debt securities involve a higher degree of credit risk than investment grade debt securities. In the event of unanticipated delinquencies or defaults, the Master Fund could experience a reduction in its income, a decline in the market value of the securities so affected and a decline in its net asset value.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

NOTES TO FINANCIAL STATEMENTS

1.	Nature of operations and summary of significant accounting policies (continued)

Fair Value - Valuation Techniques, Inputs and Processes (continued)

Investments in Securities – MBS (continued)

In light of the complexity of fair value judgments, to assist in determining the fair value of certain of the Master Fund's securities, significant estimates are currently being used to value some of the assets of the Master Fund. The fair value of securities may be difficult to determine and thus judgment plays a greater role in this valuation process. The degree of judgment involved in determining the fair value of the securities is dependent upon the availability of quoted market prices or observable market parameters. When observable market prices and parameters do not exist, judgment is necessary to estimate fair value and such inputs reflect management's own assumptions about the assumptions a market participant would use in pricing the assets. The valuation process takes into consideration factors such as interest rate changes, movements in credit spreads, default rate assumptions, prepayment assumptions, type and quality of collateral, loss severity assumptions, and market dislocation. Imprecision in estimating fair value can impact the amount of unrealized appreciation or depreciation recorded for a particular security and differences in the assumptions used could result in a different determination of fair value, and those differences could be material.

The following table summarizes the valuation techniques and significant unobservable inputs used for the Master Fund's investments that are categorized within Level 3 of the fair value hierarchy as of December 31, 2014:


	Fair Value at December 31, 2014		Valuation Technique	Unobservable Inputs	Range of Inputs (Weighted Average)
Assets (at fair value)
Investments in securities
Residential Mortgage Backed
Securities
Other	$	830,591	Discounted cashflow model	Prepayment rates		21%-55% (37	%)
				Default rates		0%-10% (0.13	%)
				Loss Severity		25	%

Risks Relating to MBS

Credit Risk

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Master Fund. The amount of credit exposure is represented by the carrying amounts of the assets in the statement of financial condition. Substantially all financial instruments that are not financed in the repurchase market are held in custody by various brokers. The Master Fund is subject to credit risk to the extent that any broker may be unable to fulfill its obligations to return the Master Fund's securities. The Master Fund does not anticipate any losses as a result of this concentration.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

NOTES TO FINANCIAL STATEMENTS

1.	Nature of operations and summary of significant accounting policies (continued)

Risks Relating to MBS (continued)

Credit Risk (continued)

Investments in subordinated MBS involve greater credit risk of default than the senior classes of the issue or series. Many of the default-related risks of whole loan mortgages will be magnified in subordinated securities. Default risks may be further pronounced in the case of MBS by, or evidencing an interest in, a relatively small or less diverse pool of underlying mortgage loans. Certain subordinated securities absorb all losses from default before any other class of securities is at risk, particularly if such securities have been issued with little or no credit enhancement or equity. In addition, principal payments on subordinated securities may be subject to a "lock-out" period in which some or all of the principal payments are directed to the related senior securities. This lock-out period may be for a set period of time and/or may be determined based on pool performance criteria such as losses and delinquencies. Such securities therefore possess some of the attributes typically associated with equity investments.

Interest Rate Risk

A portion of the Master Fund's financial assets and liabilities is interest bearing and as a result the Master Fund is subject to a risk arising from fluctuations in the prevailing levels of market interest rates. Any excess cash of the Master Fund are invested in instruments earning short-term market interest rates.

Liquidity Risk

An insufficient secondary market may prevent the liquidation of an asset or limit the funds that can be generated from selling an asset. A portion of the Master Fund's financial assets are highly illiquid and have high liquidity risk.

Prepayment Risk

The frequency at which prepayments occur on loans underlying MBS will be affected by a variety of factors including the prevailing level of interest as well as economic, demographic, tax, social, legal and other factors. Generally, mortgage obligors tend to prepay their mortgages when prevailing mortgage rates fall below the interest rates on their mortgage loans.

Generally, MBS purchased at a premium are adversely affected by faster than anticipated prepayments and MBS purchased at a discount are adversely affected by slower than anticipated prepayments. The adverse effects of prepayments may impact the Master Fund in two ways. First, particular investments may experience outright losses, as in the case of an interest-only security in an environment of faster actual or anticipated prepayments.

Second, particular investments may underperform relative to the financial instruments that the General Partner may have constructed to reduce specific financial risks for these investments, resulting in a loss to the Master Fund. In particular, prepayments (at par) may limit the potential upside of many MBS to their principal or par amounts, whereas their corresponding hedges often have the potential for unlimited loss.

Index Risk

The Master Fund may also invest in variable-rate MBS, including adjustable-rate mortgage securities ("ARMs"), which are backed by mortgages with variable rates, the rate of interest payable under which varies with a designated rate or index. The value of these investments is closely tied to the absolute levels of such rates or indices, or the market's perception of anticipated changes in those rates or indices. This introduces additional risk factors related to the movements in specific indices or interest rates which may be difficult or impossible to hedge, and which also interact in a complex fashion with prepayment risks.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

NOTES TO FINANCIAL STATEMENTS

1.	Nature of operations and summary of significant accounting policies (continued)

Risks Relating to MBS (continued)

Basis Risk

In a rising interest rate environment, to the extent that interest rates on mortgage loans underlying the related MBS adjust more slowly than the interest rates on such MBS, there will be less cash flow to make payments on such MBS, which could reduce earning or result in losses on such MBS.

Investment Transactions and Related Investment Income

Investment transactions are accounted for on a trade-date basis. Interest income is recognized on the accrual basis. Discount or premium on debt instruments are accreted or amortized in proportion to principal payment received.

Income Taxes

The Master Fund does not record a provision for U.S. federal, state, or local income taxes because the partners report their share of the Master Fund's income or loss on their income tax returns. The Master Fund files an income tax return in the U.S. federal jurisdiction, and may file income tax returns in various U.S. states. Generally, the Master Fund is subject to income tax examinations by major taxing authorities since inception.

The Master Fund is required to determine whether its tax positions are more likely than not to be sustained upon examination by the applicable taxing authority, based on the technical merits of the position. The tax benefit recognized is measured as the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant taxing authorities. Based on its analysis, the Master Fund has determined that it has not incurred any liability for unrecognized tax benefits as of December 31, 2014. The Master Fund does not expect that its assessment regarding unrecognized tax benefits will materially change over the next twelve months. However, the Master Fund's conclusions may be subject to review and adjustment at a later date based on factors including, but not limited to, questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions, compliance with U.S. federal, U.S. state and foreign tax laws, and changes in the administrative practices and precedents of the relevant taxing authorities.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Master Fund's management to make estimates and assumptions that affect the amounts disclosed in the financial statements. Actual results could differ from those estimates.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

NOTES TO FINANCIAL STATEMENTS

2.	Fair value measurements

The Master Fund's assets and liabilities recorded at fair value have been categorized based upon a fair value hierarchy as described in the Master Fund's significant accounting policies in Note 1. The following table presents information about the Master Fund's assets measured at fair value as of December 31, 2014:

	Level 1		Level 2		Level 3		Total
Assets (at fair value)

Investments in securities

Collateralized Loan Obligations	$	-	$	37,779,730	$	-	$	37,779,730
Commercial Mortgage Backed Securities
Alt-A and Subprime		-		6,692,689		-		6,692,689
Other Asset Backed Securities
Other		-		2,889,900		1,580		2,891,480
Residential Mortgage Backed Securities
Alt-A and Subprime		-		20,343,601		-		20,343,601
Credit Risk Transfer		-		11,400,000		-		11,400,000
Interest Only		-		3,975,682		-		3,975,682
Other		-		-		830,591		830,591
Prime		-		13,491,529		-		13,491,529
Single Family Residence		-		1,970,100		-		1,970,100
Exchange traded funds		14,395		-		-		14,395

Total investments in securities		14,395		98,543,231		832,171		99,389,797

Cash equivalents		2,793,837		-		-		2,793,837
	$	2,808,232	$	98,543,231	$	832,171	$	102,183,634

The following table presents information about the Master Fund's liabilities measured at fair value as of December 31, 2014:

	Level 1		Level 2		Level 3		Total
Liabilities (at fair value)

Securities sold short
Exchange traded funds	$	169,884	$	-	$	-	$	169,884

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

NOTES TO FINANCIAL STATEMENTS

2.	Fair value measurements (continued)

The following table presents additional information about Level 3 assets measured at fair value. Both observable and unobservable inputs may be used to determine the fair value of positions that the Master Fund has classified within the Level 3 category. As a result, the unrealized gains and losses for assets within the Level 3 category may include changes in fair value that were attributable to both observable and unobservable inputs.

Changes in Level 3 assets measured at fair value for the year ended December 31, 2014 were as follows:

	LEVEL 3
	Beginning Balance January 1, 2014		Realized & Unrealized Gains (Losses) ^(a)			Securities Acquired (Note 1)		Sales		Principal Paydowns			Transfers Into Level 3		Transfers (Out) of Level 3			Ending Balance December 31, 2014		Change in Unrealized Gains (Losses) for Investments still held at December 31, 2014 ^(b)
Assets (at fair value)

Investments in securities
Asset-backed securities	$	16,943,474	$	(41,420	)	$	1,003,329	$	-	$	(129,738	)	$	-	$	(16,943,474	)	$	832,171	$	(41,420	)

(a)

Realized and unrealized gains and losses are all included in net gain (loss) on investments in the statement of operations.

(b)

The change in unrealized gains (losses) for the year ended December 31, 2014 for investments still held at December 31, 2014 are reflected in net change in unrealized appreciation or depreciation on securities in the statement of operations.

All Transfers are recognized by the Fund at the beginning of each reporting period. Transfers between Levels 2 and 3 generally relate to whether significant unobservable inputs are used for the fair value measurements. See Note 1 for additional information related to the fair value hierarchy and valuation techniques and inputs.

3.	Investments in securities, at fair value

The Master Fund's investment objective is to achieve capital appreciation and holding period income through disciplined investing in MBS that may include securities classified as distress-priced securities in the RMBS and ABS markets. The Master Fund primarily invests in collateralized mortgage obligations ("CMOs"), which are multi-class bonds backed by a pool of mortgage-backed pass-through securities or mortgage loans. CMO classes have a wide variety of payment characteristics and preferences, including interest only, principal only, and can be structured to weigh those components differently. In addition, the interest rates can be fixed or floating, the inverse of a given rate, or indices. Each security will have varying preference for payment within a given cash flow stream and can be a planned amortization class, targeted amortization class, companion class, or residual tranche. Maturity date is not the same as expected life of the security or weighted average life, each of which differs significantly from the maturity date.

4.	Concentration of credit risk

In the normal course of business, the Master Fund maintains its cash balances at Wells Fargo Bank, N.A., which at times may exceed federally insured limits. The Master Fund is subject to credit risk to the extent any financial institution with which it conducts business is unable to fulfill contractual obligations on its behalf. Management monitors the financial condition of such financial institutions and does not anticipate any losses from these counterparties.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

NOTES TO FINANCIAL STATEMENTS

5.	Due from/to broker

Due from/to brokers includes cash balances held with brokers and payables from unsettled trades. Amounts due from broker may be restricted to the extent that they serve as deposits for certain marketable securities.

In the normal course of business, certain of the Master Fund's securities transactions, money balances and security positions are transacted with the Master Fund's broker, Interactive Brokers. The Master Fund is subject to credit risk to the extent any broker with which it conducts business is unable to fulfill contractual obligations on its behalf. The Master Fund's management monitors the financial condition of such brokers and does not anticipate any losses from these counterparties.

6.	Repurchase agreements

A repurchase agreement is the sale of a security by the Master Fund to a counterparty at a specified price with an agreement by the Master Fund to repurchase the same security from the counterparty at a fixed rate or determinable price at a future date. A repurchase agreement allows the Master Fund to transfer possession of a security to the counterparty, as collateral, in exchange for cash from the counterparty. Each repurchase agreement is recorded at the contracted repurchase amount. The Master Fund agrees to repay the cash plus interest in exchange for the return of the same security. The party taking possession of the security receives interest at an agreed upon rate. The repurchase date is mutually agreed to by the Master Fund and the counterparty.

At December 31, 2014, reverse repurchase agreements had interest rates of 1.16% through 2.01% and maturity dates of January 5, 2015 through February 25, 2015.

7.	Partners' capital

In accordance with the limited partnership agreement (the "Agreement"), profits and losses of the Master Fund are allocated to the General Partner and Feeder Fund according to their respective interests in the Master Fund. Subject to certain limitations, generally 20% of the net profits allocated to the limited partners of the Feeder Fund are reallocated to the General Partner.

8.	Related party transactions

The Master Fund pays the Investment Manager a management fee, calculated and payable monthly in arrears, equal to 0.125% (1.5% per annum) of the Feeder Fund's limited partners' capital balances as determined as of the end of each month. Certain limited partners have special management fee or performance allocation arrangements as provided for in the Agreement.

The Investment Manager of the Master Fund is also the Investment Manager of the Feeder Fund.

9.	Administrative fee

ALPS, a DST Company (the "Administrator") serves as the Master Fund's administrator and performs certain administrative and clerical services on behalf of the Master Fund.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

NOTES TO FINANCIAL STATEMENTS

10.	Financial highlights

Financial highlights for the year ended December 31, 2014 are as follows:

Total return
Total return before reallocation to General Partner	7.6	%
Reallocation to General Partner	(0.7	)
Total return after reallocation to General Partner	6.9	%

Ratio to average limited partners' capital
Expenses (including dividends and interest)	2.1	%
Reallocation to General Partner	0.7
Expenses and reallocation to General Partner	2.8	%

Net investment income	5.1	%

Financial highlights are calculated for the limited partner class taken as a whole. An individual investor's return and ratios may vary based on the timing of capital transactions. The net investment income ratio does not reflect the effects of the reallocation to the General Partner.

11.	Subsequent events

The Master Fund accepted additional capital contributions of approximately $1,308,375 and had additional capital withdrawals of $689,908, during the period from January 1, 2015 through April 29, 2015.

12.	Correction to statement of cash flows

The statement of cash flows for the year ended December 31, 2014 has been amended to correct a clerical error that was included in the original version of the statement. The amount included on the original version for accretion/amortization of discount/premium on debt securities was $0 and was corrected to be ($1,380,498) on the amended version. The amount included on the original version for capital withdrawals was ($4,273,191) and was corrected to be ($4,418,719) on the amended version. The corrections resulted in a change to ending cash and cash equivalents on the statement of cash flows in the amount of ($1,526,026) for a revised ending cash and cash equivalents of $2,793,837. The errors only effected the statement of cash flows and did not impact any other statement or disclosures in the financial statements.

BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, LP

FINANCIAL STATEMENTS

AND

INDEPENDENT AUDITORS' REPORT

DECEMBER 31, 2013

(INCLUDING THE FINANCIAL STATEMENTS AND

INDEPENDENT AUDITORS' REPORT OF

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.)

BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, LP

MASTER INDEX

	Section
Braddock Structured Opportunities Fund Series A, LP Financial Statements and Independent Auditors' Report As of December 31, 2013 and for the year then ended	I
Braddock Structured Opportunites Fund, L.P. Financial Statements and Independent Auditors' Report As of December 31, 2013 and for the year then ended	II

BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, LP

FINANCIAL STATEMENTS

AND

INDEPENDENT AUDITORS' REPORT

DECEMBER 31, 2013

BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, LP

CONTENTS

Independent Auditors' Report	1
Financial Statements
Statement of Financial Condition	2
Statement of Operations	3
Statement of Changes in Partners' Capital	4
Statement of Cash Flows	5
Notes to Financial Statements	6-9

INDEPENDENT AUDITORS' REPORT

To Braddock Structured Opportunities Fund Series A, LP

We have audited the accompanying financial statements of Braddock Structured Opportunities Fund Series A, LP (the "Fund"), which comprise the statement of financial condition as of December 31, 2013, and the related statements of operations, changes in partners' capital, and cash flows for the year then ended, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Fund's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Braddock Structured Opportunities Fund Series A, LP as of December 31, 2013, and the results of its operations, changes in its partners' capital, and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

/s/ Rothstein Kass

Denver, Colorado
April 23, 2014	1

BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, LP

STATEMENT OF FINANCIAL CONDITION

December 31, 2013


Assets

Investment in Braddock Structured Opportunities Fund, L.P., at fair value	$	21,944,096
Cash		822
	$	21,944,918

Partners' capital	$	21,944,918

See accompanying notes to financial statements.

BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, LP

STATEMENT OF OPERATIONS

Year Ended December 31, 2013


Net investment income (loss) allocated from Braddock Structured Opportunities Fund, L.P.
Discount amortization income	$	485,323
Interest income		457,595
Management fee		(125,436	)
Professional fees and other		(86,443	)
Decision support fee		(53,988	)
Administrative fee		(42,000	)
Interest and dividend expenses		(10,013	)

Total net investment income allocated from Braddock Structured Opportunities Fund, L.P.		625,038

Fund expenses
Professional fees and other		2,981

Net investment income		622,057

Realized and unrealized gain on investments allocated from Braddock Structured Opportunities Fund, L.P.
Net realized gain on securities		47,204
Net change in unrealized appreciation or depreciation on securities		760,506
Net gain on investments allocated from Braddock Structured Opportunities Fund, L.P.		807,710

Net income before performance allocation to the General Partner of Braddock Structured Opportunities Fund, L.P.		1,429,767

Performance allocation to the General Partner of Braddock Structured Opportunities Fund, L.P.		(142,612	)

Net income	$	1,287,155

See accompanying notes to financial statements.

BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, LP

STATEMENT OF CHANGES IN PARTNERS' CAPITAL

Year Ended December 31, 2013


	General		Limited
	Partner		Partners			Total

Partners' capital, beginning of year	$	-	$	5,914,028		$	5,914,028

Capital contributions		13,687		14,794,548			14,808,235

Capital withdrawals		-		(64,500	)		(64,500	)

Allocation of net income		1,334		1,285,821			1,287,155

Partners' capital, end of year	$	15,021	$	21,929,897		$	21,944,918

See accompanying notes to financial statements.

BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, LP

STATEMENT OF CASH FLOWS

Year Ended December 31, 2013


Cash flows from operating activities
Net income	$	1,287,155
Adjustments to reconcile net income to net cash used in operating activities:
Net income allocated from Braddock Structured Opportunities Fund, L.P.		(1,290,136	)
Changes in operating assets and liabilities:
Contributions to Braddock Structured Opportunities Fund, L.P.		(14,792,498	)
Performance allocation to Braddock Structured Opportunities Fund, L.P.		(13,687	)
Withdrawals from Braddock Structured Opportunities Fund, L.P.		65,500

Net cash used in operating activities		(14,743,666	)

Cash flows from financing activities
Capital contributions		14,808,235
Capital withdrawals		(64,500	)

Net cash provided by financing activities		14,743,735

Net change in cash		69

Cash, beginning of year		753

Cash, end of year	$	822

See accompanying notes to financial statements.

BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, LP

NOTES TO FINANCIAL STATEMENTS

1.	Nature of operations and summary of significant accounting policies

Nature of Operations

Effective January 1, 2014, the General Partner of the Fund and Mortgage Opportunity Fund VIII GP, LLC who serves as the general partner for Mortgage Opportunity Fund VIII, L.P. along with a required percentage of limited partners from each Fund, agreed to merge the Fund with Mortgage Opportunity Fund VIII, L.P. As a result of the approved merger, Braddock Structured Opportunities Fund, L.P. is the surviving entity and Mortgage Opportunity Fund VIII, L.P. was extinguished after the merger was effective on January 1, 2014.

Basis of Presentation

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") as detailed in the Financial Accounting Standards Board's Accounting Standards Codification.

These financial statements were approved by management and available for issuance on April 23, 2014. Subsequent events have been evaluated through this date.

Valuation of Investment in Braddock Structured Opportunities Fund, L.P.

Investment Income and Expenses

Income Taxes

The Fund does not record a provision for U.S. federal, state, or local income taxes because the partners report their share of the Fund's income or loss on their income tax returns. The Fund files an income tax return in the U.S. federal jurisdiction, and may file income tax returns in various U.S. states and foreign jurisdictions. Generally, the Fund is subject to income tax examinations by major taxing authorities since inception.

BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, LP

NOTES TO FINANCIAL STATEMENTS

1.	Nature of operations and summary of significant accounting policies (continued)

Income Taxes (continued)

The Fund is required to determine whether its tax positions are more likely than not to be sustained upon examination by the applicable taxing authority, based on the technical merits of the position. The tax benefit recognized is measured as the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant taxing authorities. Based on its analysis, the Fund has determined that it has not incurred any liability for unrecognized tax benefits as of December 31, 2013. The Fund does not expect that its assessment regarding unrecognized tax benefits will materially change over the next twelve months. However, the Fund's conclusions may be subject to review and adjustment at a later date based on factors including, but not limited to, questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions, compliance with U.S. federal, U.S. state and foreign tax laws, and changes in the administrative practices and precedents of the relevant taxing authorities.

Use of Estimates

2.	Concentration of credit risk

3.	Partners' capital

In accordance with the limited partnership agreement (the "Agreement"), profits and losses of the Fund are allocated to partners according to their respective interests in the Fund. Subject to certain limitations, generally 20% of the net profits allocated to the limited partners is reallocated to the General Partner of the Master Fund. To the extent the reallocation is allocated at the Master Fund level, no reallocation will be made at the Fund level.

Limited partners have redemption rights which contain certain restrictions with respect to rights of withdrawal from the Fund as specified in the Agreement. Limited partners withdrawing capital prior to the expiration of their agreed upon twelve month lock-up are subject to an early withdrawal fee of 3% of the gross withdrawal proceeds. Refer to the Agreement for more information.

BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, LP

NOTES TO FINANCIAL STATEMENTS

4.	Related party transactions

Certain limited partners are affiliated with the General Partner. The aggregate value of the affiliated limited partners' share of partners' capital at December 31, 2013 is approximately $8,515,000.

5.	Administrative fee

ALPS, a DST Company (the "Administrator") serves as the Fund's administrator and performs certain administrative and clerical services on behalf of the Fund.

6.	Financial highlights

Financial highlights for the year ended December 31, 2013 are as follows:

Total return
Total return before reallocation to General Partner of Braddock Structured Opportunities Fund, L.P.	10.1	%
Reallocation to General Partner of Braddock Structured Opportunities Fund, L.P.	(1.1	)
Total return after reallocation to General Partner of Braddock Structured Opportunities Fund, L.P.	9.0	%

Ratio to average limited partners' capital
Expenses	2.1	%
Reallocation to General Partner of Braddock Structured Opportunities Fund, L.P.	1.0
Expenses and reallocation to General Partner of Braddock Structured Opportunities Fund, L.P.	3.1	%

Net investment income	3.2	%

BRADDOCK STRUCTURED OPPORTUNITIES FUND SERIES A, LP

NOTES TO FINANCIAL STATEMENTS

7.	Subsequent events

Excluding the capital activity connected to the merger of the Mortgage Opportunity Fund VIII, L.P. and the Fund, the Fund accepted additional capital contributions of $3,752,758 and had additional capital withdrawals of $150,400 during the period from January 1, 2014 through April 23, 2014.

In November of 2013, Braddock Structured Opportunities Fund GP, LLC, who serves as the General Partner of the the Master Fund and of the Fund, along with Mortgage Opportunity Fund VIII GP, LLC, who serves as the general partner for Mortgage Opportunity Fund VIII, L.P., proposed a merger of these two Funds effective January 1, 2014. The Funds generally share the same investment objective and hold similar assets, and have a high percentage of common ownership among their limited partners. The General Partners believe that the merger may offer benefits of operating one larger fund structure that would allow the combined Fund access to a broader set of investment opportunities and would reduce aggregate fixed expenses such as administrative and custodial costs. Under the proposed merger, Mortgage Opportunity Fund VIII, L.P. would merge into the Fund and the Fund will be the surviving entity.

The merger was approved by both General Partners and by the required percentage of limited partners in the Fund and in Mortgage Opportunity Fund VIII, L.P. As a result, effective January 1, 2014 the General Partners and consenting limited partners from Mortgage Opportunity Fund VIII, L.P. converted their interests in the amount of $26,369,266 into membership interests of the Fund. Each limited partner's initial capital account balance in the Fund was equal to each limited partner's capital account balance in Mortgage Opportunity Fund VIII, LP immediately preceding the merger. Mortgage Opportunity Fund VIII, L.P. paid or transferred a portion of its assets to members that did not consent to the merge, and all remaining assets were transferred into the Fund at fair value, the same values that were recorded on the books of Mortgage Opportunity Fund VIII, L.P. immediately prior to the effective date of the merger.

After the merger was completed on January 1, 2014, the Fund had $48,563,197 in net assets.

SECTION II

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS' REPORT

DECEMBER 31, 2013

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

CONTENTS

Independent Auditors' Report	1
Financial Statements
Statement of Financial Condition	2
Statement of Operations	3
Statement of Changes in Partners' Capital	4
Statement of Cash Flows	5
Condensed Schedule of Investments	6-9
Notes to Financial Statements	10-20

INDEPENDENT AUDITORS' REPORT

To Braddock Structured Opportunities Fund, L.P.

We have audited the accompanying financial statements of Braddock Structured Opportunities Fund, L.P. (the "Master Fund"), which comprise the statement of financial condition, including the condensed schedule of investments, as of December 31, 2013, and the related statements of operations, changes in partners' capital, and cash flows for the year then ended, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

Auditors' Responsibility

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Master Fund's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Master Fund's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Braddock Structured Opportunities Fund, L.P. as of December 31, 2013, and the results of its operations, changes in its partners' capital, and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

/s/ Rothstein Kass

Denver, Colorado

April 23, 2014

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

STATEMENT OF FINANCIAL CONDITION

December 31, 2013


Assets

Investments in securities, at fair value (cost $20,161,102)	$	20,999,829
Cash and cash equivalents		856,338
Due from broker		548,553
Interest receivable		83,622
Other assets		28,195
	$	22,516,537
Liabilities and partners' capital

Liabilities
Securities sold short, at fair value (proceeds $361,067)	$	365,960
Accrued expenses		65,392
Dividend and interest payable		1,676

Total liabilities		433,028

Partners' capital		22,083,509
	$	22,516,537

See accompanying notes to financial statements.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

STATEMENT OF OPERATIONS

Year Ended December 31, 2013


Investment income
Discount amortization income	$	485,323
Interest		457,595
Total investment income		942,918

Expenses
Management fee		125,436
Professional fees and other		86,443
Decision support fees		53,988
Administrative fee		42,000
Interest and dividends		10,013
Total expenses		317,880

Net investment income		625,038

Net gain on investments
Net realized gain on securities		47,204
Net change in unrealized appreciation or depreciation on securities		760,506
Net gain on investments		807,710
Net income	$	1,432,748

See accompanying notes to financial statements.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

STATEMENT OF CHANGES IN PARTNERS' CAPITAL

Year Ended December 31, 2013


	General			Limited
	Partner			Partners			Total

Partners' capital, beginning of year	$	10,488		$	5,913,275		$	5,923,763

Capital contributions		-			14,792,498			14,792,498

Capital withdrawals		-			(65,500	)		(65,500	)

Transfers of capital		(13,687	)		13,687			-

Allocation of net income
Pro rata allocation		-			1,432,748			1,432,748
Performance allocation to General Partner		142,612			(142,612	)		-
		142,612			1,290,136			1,432,748

Partners' capital, end of year	$	139,413		$	21,944,096		$	22,083,509

See accompanying notes to financial statements.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

STATEMENT OF CASH FLOWS

Year Ended December 31, 2013


Cash flows from operating activities
Net income	$	1,432,748
Adjustments to reconcile net income to net cash used in operating activities:
Net realized gain on securities		(47,204	)
Net change in unrealized appreciation or depreciation on securities		(760,506	)
Amortization of discounts on debt securities		(485,323	)
Changes in operating assets and liabilities:
Purchases of investments in securities		(19,056,333	)
Proceeds from investments in securities		2,986,439
Proceeds from principal paydowns		2,113,212
Due from broker		(548,553	)
Interest receivable		(59,354	)
Other assets		4,417
Proceeds from securities shold short		482,208
Payment to cover securities sold short		(116,820	)
Accrued expenses		38,931
Dividend and interest payable		1,676
Net cash used in operating activities		(14,014,462	)

Net cash provided by financing activities
Capital contributions		14,792,498
Capital withdrawals		(65,500	)
Net cash provided by financing activities		14,726,998

Net change in cash and cash equivalents		712,536

Cash and cash equivalents, beginning of year		143,802

Cash and cash equivalents, end of year	$	856,338

See accompanying notes to financial statements.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

CONDENSED SCHEDULE OF INVESTMENTS

December 31, 2013


	Original Face Value	Coupon Range	Maturity Date Range	Percentage of Partners' Capital			Fair Value

Investments in securities, at fair value

Residential Mortgage Backed Securities
United States
Alt-A and Subprime

AA+	175,000	3.86%	01/25/2033		0.0	%	$	10,008

A+	50,000	1.14%*	10/25/2034		0.2			46,641

BBB+	730,000	1.29%**-2.67%	01/25/2034-09/25/2042		2.2			486,619

BBB-	88,000	0.92%*	06/25/2034		0.4			79,420

BB+	5,666,000	0.70%*-5.87%	12/25/2032-06/25/2034		2.6			582,231

B+	2,145,000	2.72%*	01/25/2034		1.2			260,733

B-	1,500,000	1.32%*	06/25/2034		0.9			188,473

Total Alt-A and Subprime (cost $1,582,977)					7.5			1,654,125

Prime

BB+	114,711	2.63%*	04/20/2035		0.3			60,226

CCC

GSR 04-7 B1	1,370,000	2.97%*	06/25/2034		3.6			791,025

Other	10,751,000	1.07%**-5.25%	01/25/2018-03/25/2033		3.0			665,389

*	Coupon rates shown on floating rate securities represent the rate as of December 31, 2013.

**	Indicates some fix and some floating rate securities included.

See accompanying notes to financial statements.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

CONDENSED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2013


	Original Face Value	Coupon Range	Maturity Date Range	Percentage of Partners' Capital			Fair Value

Investments in securities, at fair value (continued)

Residential Mortgage Backed Securities (continued)
United States (continued)
Prime (continued)

CC

WFMBS 04-J B2	3,198,000	2.62%*	07/25/2034		4.0	%	$	887,567

Other	968,000	2.93%**-4.75%	11/25/2018-04/25/2034		1.2			264,672

NR

STACR 13-DN1 M2	2,000,000	7.32%*	07/25/2023		10.7			2,353,200

CWHL 03-26 B1	3,325,000	5.34%	08/25/2033		4.7			1,048,727

BOAA 04-7 15B1	2,420,000	5.35%	08/25/2019		3.0			663,600

Other	7,904,818	2.44%**-5.74%	02/25/2033-11/25/2035		6.0			1,324,990

Total Prime (cost $7,546,828)					36.5			8,059,396

Rental (cost $1,000,000)
NR

IHSFR 13-SFR1 F	1,000,000	3.81%*	12/17/2030		4.5			1,000,000

Total Residential Mortgage Backed Securities (cost $10,129,805)					48.5			10,713,521

Commercial Mortgage Backed Securities
United States
Alt-A and Subprime
AA+	2,000,000	0.49%*	11/25/2035		2.3			506,528

*	Coupon rates shown on floating rate securities represent the rate as of December 31, 2013.

**	Indicates some fix and some floating rate securities included.

See accompanying notes to financial statements.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

CONDENSED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2013


	Original Face Value	Coupon Range	Maturity Date Range	Percentage of Partners' Capital			Fair Value

Investments in securities, at fair value (continued)
Commercial Mortgage Backed Securities (continued)
United States (continued)
Alt-A and Subprime (continued)
BBB	2,831,133	0.55%*-0.66%	11/25/2035-04/25/2036		3.0	%	$	665,558
BBB-

BAYC 05-4A A2	5,110,000	0.56%*	01/25/2036		6.3			1,389,091

BAYC 05-3A M3	3,471,576	0.68%*	11/25/2035		3.2			707,482

Other	1,426,139	0.56%*	04/25/2036		1.6			351,819

BB+	1,224,680	0.59%*	04/25/2036		1.3			292,712

BB	1,652,309	0.77%*	11/25/2035		1.4			303,788

Total Commercial Mortgage Backed Securities (cost $3,966,460)					19.1			4,216,978

Collateralized Loan Obligation
United States
Alt-A
BBB	1,250,000	3.79%*-4.99%	11/15/2023-01/19/2025		5.5			1,221,250

BB+

GOLD3 07-3A D	1,000,000	3.44%*	05/01/2022		4.2			931,250

BB

HLA 12-1A D	1,500,000	5.74%*	08/15/2023		6.5			1,428,750

CECLO 13-19A D	1,000,000	5.19%*	10/29/2025		4.2			920,000

*	Coupon rates shown on floating rate securities represent the rate as of December 31, 2013.

See accompanying notes to financial statements.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

CONDENSED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2013


	Original Face Value	Coupon Range	Maturity Date Range	Percentage of Partners' Capital			Fair Value

Investments in securities, at fair value (continued)

Collateralized Loan Obligation (continued)
United States (continued)
Alt-A (continued)

CGMS 13-4A E	1,000,000	4.74%*	10/15/2025		4.0	%	$	890,900

Other	750,000	4.72%*-4.99%	01/19/2025-10/25/2025		3.1			677,180
Total Collateralized Loan Obligation (cost $6,064,837)					27.5			6,069,330

Total investments in securities, at fair value (cost $20,161,102)					95.1	%	$	20,999,829

Securities sold short, at fair value

Exchange traded funds
United States
Other (proceeds $361,067)					1.7	%	$	365,960

*	Coupon rates shown on floating rate securities represent the rate as of December 31, 2013.

See accompanying notes to financial statements.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

NOTES TO FINANCIAL STATEMENTS

1.	Nature of operations and summary of significant accounting policies

Nature of Operations

Effective January 1, 2014, the General Partner of the Fund and Mortgage Opportunity Fund VIII GP, LLC, who serves as the general partner for Mortgage Opportunity Fund VIII, L.P., along with a required percentage of limited partners from each Fund, agreed to merge the Fund with Mortgage Opportunity Fund VIII, L.P. As a result of the approved merger, Braddock Structured Opportunities Fund, L.P. is the surviving entity and Mortgage Opportunity Fund VIII, L.P. was extinguished after the merger was effective on January 1, 2014.

Basis of Presentation

The financial statements are expressed in United States dollars and have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") as detailed in the Financial Accounting Standards Board's Accounting Standards Codification.

These financial statements were approved by management and available for issuance on April 23, 2014. Subsequent events have been evaluated through this date.

Cash Equivalents

Cash equivalents include short-term highly liquid investments, such as money market funds, that are readily convertible to known amounts of cash and have original maturities of three months or less.

Fair Value - Definition and Hierarchy

Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Master Fund has the ability to access.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

NOTES TO FINANCIAL STATEMENTS

1.	Nature of operations and summary of significant accounting policies (continued)

Fair Value - Definition and Hierarchy (continued)

	Level 2 - Valuation based on inputs, other than quoted prices included in Level 1, that are observable either directly or indirectly.

	Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

Fair Value - Valuation Techniques, Inputs and Processes

Investments in Securities – MBS

The majority of the Master Fund's investments in MBS are not exchange traded and market quotations may not readily be available. All of the securities in the Master Fund's portfolio are valued at fair value in accordance with the Master Fund's valuation policy. As part of this policy, independent valuation marks are sent directly to the Master Fund's Administrator (as defined in Note 7) at each month end either from an independent pricing service or from a dealer. Management utilizes a variety of cash flow modeling techniques combined with management's knowledge of the current trading environment to determine the fair value for each of the securities in the portfolio. In accordance with the Master Fund's valuation policy, management prices each security in the portfolio at a price that is at or below the independent valuation marks that are sent directly to the Administrator.

Management consistently applies its modeling techniques and communications with broker-dealers who are knowledgeable in these securities to value the positions in the portfolio to fair value. However, management's estimate of fair value and the resulting reported rates of return may be materially higher or lower than the values that would have been realized if the Master Fund was to liquidate the portfolio positions on a given date. Management and the Master Fund's Administrator obtain independent marks for each security from an independent pricing service or directly from a dealer to assist in valuing the portfolio assets at the end of each month. Valuations can be obtained through multiple pricing services and dealers. The primary service utilized is MountainView Pricing Service ("MountainView IPS"). MountainView IPS uses a combination of modeling techniques, communication with securities dealers, and valuation data from their other clients in the MBS sector to evaluate and provide an opinion on the valuation of the portfolio. Management utilizes internal financial models to assess the investment value of every bond in the portfolio and to assess the valuation obtained from MountainView IPS. Independent marks are obtained from alternative independent sources if MountainView IPS is unable to provide valuation on any security. At December 31, 2013, the Master Fund's investments consisted of 3% A rated or higher, 54% rated BBB+, BBB, BBB-, BB+, BB, B+, or B-, 12% rated CCC or CC and 30% unrated MBS.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

NOTES TO FINANCIAL STATEMENTS

1.	Nature of operations and summary of significant accounting policies (continued)

Fair Value - Valuation Techniques, Inputs and Processes (continued)

Investments in Securities – MBS (continued)

A portion of the Master Fund's securities may be deemed to be illiquid. Illiquid securities are generally those that cannot be sold or disposed of in the ordinary course of business at approximately the prices at which they are valued. This may result in illiquid securities being disposed of at a price significantly lower than the recorded value since the market price of illiquid securities generally is more volatile than that of more liquid securities. This illiquidity of securities may result in the Master Fund incurring greater losses on the sale of some securities than under more stable market conditions. Such losses can adversely impact the Master Fund's net asset value.

In light of the complexity of fair value judgments, to assist in determining the fair value of certain of the Master Fund's securities, significant estimates are currently being used to value a portion of the assets of the Master Fund. The fair value of securities may be difficult to determine and thus judgment plays a greater role in this valuation process. The degree of judgment involved in determining the fair value of the securities is dependent upon the availability of quoted market prices or observable market parameters. When observable market prices and parameters do not exist, judgment is necessary to estimate fair value and such inputs reflect management's own assumptions about the assumptions a market participant would use in pricing the assets. The valuation process takes into consideration factors such as interest rate changes, movements in credit spreads, default rate assumptions, prepayment assumptions, type and quality of collateral, loss severity assumptions, and market dislocation. Imprecision in estimating fair value can impact the amount of unrealized appreciation or depreciation recorded for a particular security and differences in the assumptions used could result in a different determination of fair value, and those differences could be material.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

NOTES TO FINANCIAL STATEMENTS

1.	Nature of operations and summary of significant accounting policies (continued)

Fair Value - Valuation Techniques, Inputs and Processes (continued)

Investments in Securities – MBS (continued)

The following table summarizes the valuation techniques and significant unobservable inputs used for the Fund's investments that are categorized within Level 3 of the fair value hierarchy as of December 31, 2013:


	Fair Value at December 31, 2013		Valuation Technique	Unobservable Inputs	Range of Inputs (Weighted Average)
Assets (at fair value)
Investments in securities
Residential Mortgage Backed Securities
Alt-A and Subprime	$	950,970	Discounted cashflow model	Prepayment rates	3.0% - 10.0% (4.7%)
				Default rates	1.7% - 11.4% (4.3%)
				Loss severity	75.0% - 80.0% (77.4%)

Prime	$	5,706,196	Discounted cashflow model	Prepayment rates	0.0% - 20.0% (14.2%)
				Default rates	0.0% - 9.05% (2.1%)
				Loss severity	0.0% - 100.0% (70.7%)

Commercial Mortgage Backed	$	4,216,978	Discounted cashflow model	Prepayment rates	5.0% - 6.0% (5.4%)
Securities				Default rates	6.5% - 18% (13.0%)
				Loss severity	75.0% - 85.0% (80.7%)

Collateralized Loan Obligation	$	6,069,330	Discounted cashflow model	Prepayment rates	20.0% (20.0%)
				Default rates	2.0% (2.0%)
				Loss severity	30.0% (30.0%)

Risks Relating to MBS

Credit Risk

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

NOTES TO FINANCIAL STATEMENTS

1.	Nature of operations and summary of significant accounting policies (continued)

Risks Relating to MBS (continued)

Credit Risk (continued)

Interest Rate Risk

Liquidity Risk

Prepayment Risk

Index Risk

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

NOTES TO FINANCIAL STATEMENTS

1.	Nature of operations and summary of significant accounting policies (continued)

Risks Relating to MBS (continued)

Basis Risk

Investment Transactions and Related Investment Income

Income Taxes

The Master Fund is required to determine whether its tax positions are more likely than not to be sustained upon examination by the applicable taxing authority, based on the technical merits of the position. The tax benefit recognized is measured as the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant taxing authorities. Based on its analysis, the Master Fund has determined that it has not incurred any liability for unrecognized tax benefits as of December 31, 2013. The Master Fund does not expect that its assessment regarding unrecognized tax benefits will materially change over the next twelve months. However, the Master Fund's conclusions may be subject to review and adjustment at a later date based on factors including, but not limited to, questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions, compliance with U.S. federal, U.S. state and foreign tax laws, and changes in the administrative practices and precedents of the relevant taxing authorities.

Use of Estimates

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

NOTES TO FINANCIAL STATEMENTS

2.	Fair value measurements


	Level 1		Level 2		Level 3		Total
Assets (at fair value)

Investments in securities
Residential Mortgage
Backed Securities
Alt-A and Subprime
AA+	$	-	$	10,008	$	-	$	10,008
A+		-		46,641		-		46,641
BBB+		-		486,619		-		486,619
BBB-		-		79,420		-		79,420
BB+		-		80,467		501,764		582,231
B+		-		-		260,733		260,733
B-		-		-		188,473		188,473
Prime
BB+		-		-		60,226		60,226
CCC		-		-		1,456,414		1,456,414
CC		-		-		1,152,239		1,152,239
NR		-		2,353,200		3,037,317		5,390,517
Rental		-		1,000,000		-		1,000,000
Commercial Mortgage Backed Securities		-		-		4,216,978		4,216,978
Collateralized Loan Obligation		-		-		6,069,330		6,069,330

Total investments in securities		-		4,056,355		16,943,474		20,999,829

Cash equivalents		271,896		-		-		271,896
	$	271,896	$	4,056,355	$	16,943,474	$	21,271,725

The following table presents information about the Master Fund's liabilities measured at fair value as of December 31, 2013:


	Level 1		Level 2		Level 3		Total
Liabilities (at fair value)

Securities sold short
Exchange traded funds	$	365,960	$	-	$	-	$	365,960

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

NOTES TO FINANCIAL STATEMENTS

2.	Fair value measurements (continued)

Changes in Level 3 assets measured at fair value for the year ended December 31, 2013 were as follows:

	LEVEL 3
	Beginning Balance January 1, 2013		Realized & Unrealized Gains (Losses) ^(a)		Purchases		Sales			Principal Paydowns			Transfers Into Level 3		Transfers (Out) of Level 3			Ending Balance December 31, 2013		Change in Unrealized Gains (Losses) for Investments still held at December 31, 2013 ^(b)
Assets (at fair value)
Investments in securities
Asset-backed securities	$	5,749,572	$	449,633	$	14,116,960	$	(1,779,763	)	$	(1,512,461	)	$	-	$	(80,467	)	$	16,943,474	$	445,216

(a)	Realized and unrealized gains and losses are all included in net gain (loss) on investments in the statement of operations.

(b)	The change in unrealized gains (losses) for the year ended December 31, 2013 for investments still held at December 31, 2013 are reflected in net change in unrealized appreciation or depreciation on securities in the statement of operations.

3.	Investments in securities, at fair value

4.	Concentration of credit risk

In the normal course of business, the Master Fund maintains its cash balances at JPMorgan Chase Bank, N.A. and Wells Fargo Bank, N.A., which at times may exceed federally insured limits. The Master Fund is subject to credit risk to the extent any financial institution with which it conducts business is unable to fulfill contractual obligations on its behalf. Management monitors the financial condition of such financial institutions and does not anticipate any losses from these counterparties.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

NOTES TO FINANCIAL STATEMENTS

5.	Due from broker

Amounts due from broker may be restricted to the extent that they serve as deposits for certain marketable securities.

In the normal course of business, certain of the Fund's securities transactions, money balances and security positions are transacted with the Fund's broker, Interactive Brokers. The Fund is subject to credit risk to the extent any broker with which it conducts business is unable to fulfill contractual obligations on its behalf. The Fund's management monitors the financial condition of such brokers and does not anticipate any losses from these counterparties.

6.	Partners' capital

7.	Related party transactions

The Investment Manager of the Master Fund is also the Investment Manager of the Feeder Fund.

8.	Administrative fee

ALPS, a DST Company (the "Administrator") serves as the Master Fund's administrator and performs certain administrative and clerical services on behalf of the Master Fund.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

NOTES TO FINANCIAL STATEMENTS

9.	Financial highlights

Financial highlights for the year ended December 31, 2013 are as follows:


Total return
Total return before reallocation to General Partner	10.2	%
Reallocation to General Partner	(1.1	)
Total return after reallocation to General Partner	9.1	%

Ratio to average limited partners' capital
Expenses (including dividends and interest)	2.1	%
Reallocation to General Partner	1.0
Expenses and reallocation to General Partner	3.1	%

Net investment income	4.2	%

10.	Subsequent events

Excluding the capital activity connected to the merger of the Mortgage Opportunity Fund VIII, L.P. and Braddock Structured Opportunities Fund Series A, LP, the Master Fund accepted additional capital contributions of approximately $3,727,801 and had additional capital withdrawals of $150,400 during the period from January 1, 2014 through April 23, 2014.

In November of 2013, Braddock Structured Opportunities Fund GP, LLC, who serves as the General Partner of the Master Fund and of Braddock Structured Opportunities Fund Series A, LP, along with Mortgage Opportunity Fund VIII GP, LLC, who serves as the general partner for Mortgage Opportunity Fund VIII, L.P., proposed a merger of these two funds effective January 1, 2014. The funds generally share the same investment objective and hold similar assets, and have a high percentage of common ownership among their limited partners. The General Partners believe that the merger may offer benefits of operating one larger fund structure that would allow the combined fund access to a broader set of investment opportunities and would reduce aggregate fixed expenses such as administrative and custodial costs. Under the proposed merger, Mortgage Opportunity Fund VIII, L.P. would merge into Braddock Structured Opportunities Fund Series A, LP and Braddock Structured Opportunities Fund Series A, LP will be the surviving entity.

BRADDOCK STRUCTURED OPPORTUNITIES FUND, L.P.

NOTES TO FINANCIAL STATEMENTS

10.	Subsequent events (continued)

The merger was approved by both General Partners and by the required percentage of limited partners in Braddock Structured Opportunities Fund Series A, LP and in Mortgage Opportunity Fund VIII, L.P. As a result, effective January 1, 2014 the General Partners and consenting limited partners from Mortgage Opportunity Fund VIII, L.P. converted their interests in the amount of $26,369,266 into membership interests of Braddock Structured Opportunities Fund Series A, LP. Each limited partner's initial capital account balance in Braddock Structured Opportunities Fund Series A, LP was equal to each limited partner's capital account balance in Mortgage Opportunity Fund VIII, L.P. immediately preceding the merger. Mortgage Opportunity Fund VIII, L.P. paid or transferred a portion of its assets to members that did not consent to the merge, and all remaining assets were transferred into Braddock Structured Opportunities Fund Series A, LP at fair value, the same values that were recorded on the books of Mortgage Opportunity Fund VIII, L.P. immediately prior to the effective date of the merger.

After the merger was completed on January 1, 2014, the Fund had $48,562,375 in net assets.

MORTGAGE OPPORTUNITY FUND VIII, L.P.

(In Liquidation)

FINANCIAL STATEMENTS

AND

INDEPENDENT AUDITORS' REPORT

DECEMBER 31, 2013

MORTGAGE OPPORTUNITY FUND VIII, L.P.

(In Liquidation)

CONTENTS

Independent Auditors' Report	1
Financial Statements
Statement of Financial Condition	2
Statement of Operations	3
Statement of Changes in Partners' Capital	4
Statement of Cash Flows	5
Condensed Schedule of Investments	6-8
Notes to Financial Statements	9-19

INDEPENDENT AUDITORS' REPORT

To Mortgage Opportunity Fund VIII, L.P. (In Liquidation)

We have audited the accompanying financial statements of Mortgage Opportunity Fund VIII, L.P. (In Liquidation) (the "Fund"), which comprise the statement of financial condition, including the condensed schedule of investments, as of December 31, 2013, and the related statements of operations, changes in partners' capital and cash flows for the year then ended, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

Auditors' Responsibility

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Fund's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Mortgage Opportunity Fund VIII, L.P. (In Liquidation) as of December 31, 2013, and the results of its operations, changes in its partners' capital and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

/s/ Rothstein Kass
Denver, Colarado
April 25, 2014

MORTGAGE OPPORTUNITY FUND VIII, L.P.

(In Liquidation)

STATEMENT OF FINANCIAL CONDITION

December 31, 2013


Assets

Investments in securities, at fair value (cost $26,922,564)	$	38,001,769
Cash and cash equivalents		1,094,939
Principal and interest receivable		80,932
	$	39,177,640

Liabilities and partners' capital

Liabilities
Capital distributions payable	$	36,390,687
Due to General Partner		2,682,758
Accrued expenses		70,285
Management fee payable		33,910
Total liabilities		39,177,640
Partners' capital		-
	$	39,177,640

See accompanying notes to financial statements.

MORTGAGE OPPORTUNITY FUND VIII, L.P.

(In Liquidation)

STATEMENT OF OPERATIONS

Year Ended December 31, 2013


Investment income
Interest	$	1,095,944
Discount amortization		1,155,795
Total investment income		2,251,739

Expenses
Management fee		418,625
Decision support fees		120,923
Professional fees and other		57,837
Administrative fee		53,686
Total expenses		651,071

Net investment income		1,600,668

Realized and unrealized gain on investments
Net realized gain on securities		1,976,997
Net change in unrealized appreciation or depreciation on securities		2,436,767
Net gain on investments		4,413,764

Net income	$	6,014,432

See accompanying notes to financial statements.

MORTGAGE OPPORTUNITY FUND VIII, L.P.

(In Liquidation)

STATEMENT OF CHANGES IN PARTNERS' CAPITAL

Year Ended December 31, 2013


	General Partner			Limited Partners			Total

Partners' capital, beginning of year	$	5,926		$	42,602,415		$	42,608,341

Capital distributions^(a)		(2,772,873	)		(45,849,900	)		(48,622,773	)

Allocation of net income
Pro rata allocation		-			6,014,432			6,014,432
Reallocation to General Partner		2,766,947			(2,766,947	)		-
		2,766,947			3,247,485			6,014,432

Partners' capital, end of year	$	-		$	-		$	-

^(a)	See Note 9 to the financial statements.

See accompanying notes to financial statements.

MORTGAGE OPPORTUNITY FUND VIII, L.P.

(In Liquidation)

STATEMENT OF CASH FLOWS

Year Ended December 31, 2013

Cash flows from operating activities
Net income	$	6,014,432
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized gain on securities		(1,976,997	)
Net change in unrealized appreciation or depreciation on securities		(2,436,767	)
Amortization of discounts on debt securities		(1,155,795	)
Changes in operating assets and liabilities:
Proceeds from investments in securities		6,015,357
Proceeds from principal paydowns		3,294,456
Principal and interest receivable ⁽¹⁾		22,679
Accrued expenses		10,993
Management fee payable		(3,074	)
Net cash provided by operating activities		9,785,284

Net cash used in financing activities
Capital distributions, net of change in capital distributions payable and due to General Partner		(9,554,453	)

Net change in cash and cash equivalents		230,831

Cash and cash equivalents, beginning of year		864,108

Cash and cash equivalents, end of year	$	1,094,939

⁽¹⁾	Cash flows from principal and interest receivable is prior to the effect of discount amortization.

See accompanying notes to financial statements.

MORTGAGE OPPORTUNITY FUND VIII, L.P.

(In Liquidation)

CONDENSED SCHEDULE OF INVESTMENTS

December 31, 2013

	Original Face Value	Coupon Range			Maturity Date Range	Percentage of Final Distribution⁽¹⁾			Fair Value

Investments in securities, at fair value

Mortgage-Backed Securities
United States
Alt-A and Subprime
AAA

SAIL 04-8 A8	9,120,000		1.17	%*	09/25/2034		3.2	%	$	1,248,817

Other	21,153,000		0.81	%*	05/25/2034		2.4			933,756

AA+	2,895,000		3.86%-5.58	%	01/25/2033		1.2			466,397

A+

CSFB 05-AGE1 M3	3,413,000		0.82	%*	02/25/2032		7.3			2,871,287

EMLT 05-1 M2	2,307,500		0.62	%*	04/25/2035		5.3			2,076,750

AMSI 04-R9 M2	1,225,000		1.14	%*	10/25/2034		3.0			1,163,750

A

RAMP 05-RS5 M1	2,884,500		0.61	%*	05/25/2035		7.0			2,733,064

BBB+

GSRPM 04-1 B1	3,269,000		2.67	%*	09/25/2042		7.3			2,860,375

ARSI 03-W3 M2	3,846,000		2.87	%*	09/25/2033		5.5			2,145,951

SAST 05-1 M1	2,327,000		0.86	%*	05/25/2035		5.0			1,955,478

Other	3,033,500		0.58%*-1.22	%*	10/25/2033-11/25/2035		4.0			1,575,950

*	Coupon rates shown on floating rate securities represent the rate as of December 31, 2013.

⁽¹⁾	Percentage of final distribution represents the respective percentages of the capital distributions payable and due to General Partner balance as of December 31, 2013 as noted on the Statement of Financial Condition.

See accompanying notes to financial statements.

MORTGAGE OPPORTUNITY FUND VIII, L.P.

(In Liquidation)

CONDENSED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2013

	Original Face Value	Coupon Range			Maturity Date Range	Percentage of Final Distribution⁽¹⁾			Fair Value

Investments in securities, at fair value (continued)

Mortgage-Backed Securities (continued)
United States (continued)
Alt-A and Subprime (continued)

BBB

MSAC 04-NC6 M1	1,920,000		1.07	%*	07/25/2034		3.8	%	$	1,484,386

BBB-

CWL 04-3 M1	1,440,000		0.92	%*	06/25/2034		3.3			1,299,600

BB+

BSABS 04-HE11 M2	2,884,500		1.74	%*	12/25/2034		6.8			2,668,163

ABSHE 04-HE1 M2	19,751,513		2.64	%*	01/15/2034		4.2			1,642,223

BSABS 03-1 M1	5,344,320		1.82	%*	11/25/2042		3.7			1,431,822

MSAC 05-HE1 M2	1,918,000		0.64	%*	12/25/2034		3.2			1,252,860

Other	1,923,000		1.02	%*	11/25/2034		2.8			1,075,163

B-	6,000,000		2.94	%*	10/25/2033		2.0			773,387

CCC

ACCR 05-3M1	3,584,500		0.62	%*	09/25/2035		8.4			3,270,856

Total Alt-A and Subprime (cost $24,921,126)							89.4			34,930,035

*	Coupon rates shown on floating rate securities represent the rate as of December 31, 2013.

⁽¹⁾	Percentage of final distribution represents the respective percentages of the capital distributions payable and due to General Partner balance as of December 31, 2013 as noted on the Statement of Financial Condition.

See accompanying notes to financial statements.

MORTGAGE OPPORTUNITY FUND VIII, L.P.

(In Liquidation)

CONDENSED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2013

	Original Face Value	Coupon Range			Maturity Date Range	Percentage of Final Distribution⁽¹⁾			Fair Value

Investments in securities, at fair value (continued)

Mortgage-Backed Securities (continued)
United States (continued)
Prime Arm

CCC	2,646,500		2.50%-2.77	%	11/25/2033-08/25/2034		1.0	%	$	392,929

NR

WFMBS 06-1 B1	4,756,800		5.00	%	03/25/2021		3.6			1,408,927

Total Prime Arm (cost $1,222,412)							4.6			1,801,856

Synthetic (cost $683,394)

NR	8,438,000		4.99%*-30.74	%*	11/15/2026		3.1			1,188,354

Other (cost $95,632)

NR	157,231,318		0.0%**-0.25	%	05/25/2019-10/01/2029		0.2			81,524

Total investments in securities, at fair value (cost $26,922,564)							97.3	%	$	38,001,769

*	Coupon rates shown on floating rate securities represent the rate as of December 31, 2013.

**	Indicates some fix and some floating rate securities included.

⁽¹⁾	Percentage of final distribution represents the respective percentages of the capital distributions payable and due to General Partner balance as of December 31, 2013 as noted on the Statement of Financial Condition.

See accompanying notes to financial statements.

MORTGAGE OPPORTUNITY FUND VIII, L.P.

(In Liquidation)

NOTES TO FINANCIAL STATEMENTS

1.	Nature of operations and summary of significant accounting policies

Nature of Operations

Mortgage Opportunity Fund VIII, L.P. (In Liquidation) (the "Fund"), a Delaware limited partnership, commenced operations on August 1, 2009. The Fund was organized for the purpose of achieving capital appreciation and holding period income through investing in mortgage-backed securities ("MBS") that may include securities in the residential MBS (prime/Jumbo A, Alt-A) and asset-backed security ("ABS") (sub-prime/home equity) markets. The Fund is managed by Mortgage Opportunity Fund VIII GP, LLC (the "General Partner"), a Delaware limited liability company, and Braddock Financial Corporation (the "Investment Manager"), a Delaware corporation. Refer to the Fund's offering memorandum for more information.

The limited partnership agreement (the "Agreement") provides that the Fund is scheduled to continue until the close of business on December 31, 2014, unless sooner terminated or extended through terms specified in the Agreement.

Effective January 1, 2014, the General Partner of the Fund and Braddock Structured Opportunities Fund GP, LLC who serves as the general partner for Braddock Structured Opportunities Fund, L.P. and Braddock Structured Opportunity Fund Series A, LP, along with a required percentage of limited partners, agreed to merge the Fund with Braddock Structured Opportunities Fund Series A, LP. As a result of the approved merger, Braddock Structured Opportunities Fund Series A, LP will be the surviving entity and the Fund will be extinguished after the merger is completed on January 1, 2014.

Plan of Liquidation

In accordance with the Agreement, management has formalized a plan of liquidation to liquidate the Fund in an orderly manner, and as a result, changed its basis of accounting from the going concern basis to the liquidation basis whereby assets and liabilities are stated at their estimated settlement amounts and all costs of liquidation have been recognized. The adoption of the liquidation basis of accounting did not have a material effect on the carrying values of assets and liabilities as of December 31, 2013. See Note 9 for further information.

Basis of Presentation

These financial statements were approved by management and available for issuance on April 25, 2014. Subsequent events have been evaluated through this date.

Cash Equivalents

Cash equivalents include short-term highly liquid investments, such as money market funds, that are readily convertible to known amounts of cash and have original maturities of three months or less.

Fair Value - Definition and Hierarchy

MORTGAGE OPPORTUNITY FUND VIII, L.P.

(In Liquidation)

NOTES TO FINANCIAL STATEMENTS

1.	Nature of operations and summary of significant accounting policies (continued)

Fair Value - Definition and Hierarchy (continued)

In determining fair value, the Fund uses various valuation approaches. A fair value hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs are to be used when available. The fair value hierarchy is categorized into three levels based on the inputs as follows:

Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access.

Level 2 - Valuation based on inputs, other than quoted prices included in Level 1, that are observable either directly or indirectly.

Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

Fair value is a market-based measure, based on assumptions of prices and inputs considered from the perspective of a market participant that are current as of the measurement date, rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Fund's own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date.

The availability of valuation techniques and observable inputs can vary from investment to investment and are affected by a wide variety of factors, including the type of investment, whether the investment is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the investments existed. Accordingly, the degree of judgment exercised by the Fund in determining fair value is greatest for investments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement.

Fair Value – Valuation Techniques, Inputs and Processes

Investments in Securities – MBS

The majority of the Fund's investments in MBS are not exchange traded and market quotations may not readily be available. All of the securities in the Fund's portfolio are valued at fair value in accordance with the Fund's valuation policy. As part of this policy, independent valuation marks are sent directly to the Fund's Administrator (as defined in Note 7) at each month end either from an independent pricing service or from a dealer. Management utilizes a variety of cash flow modeling techniques combined with management's knowledge of the current trading environment to determine the fair value for each of the securities in the portfolio. In accordance with the Fund's valuation policy, management prices each security in the portfolio at a price that is at or below the independent valuation marks that are sent directly to the Administrator.

MORTGAGE OPPORTUNITY FUND VIII, L.P.

(In Liquidation)

NOTES TO FINANCIAL STATEMENTS

1.	Nature of operations and summary of significant accounting policies (continued)

Fair Value – Valuation Techniques, Inputs and Processes (continued)

Investments in Securities – MBS (continued)

Management consistently applies its modeling techniques and communications with broker-dealers who are knowledgeable in these securities to value the positions in the portfolio to fair value. However, management's estimate of fair value and the resulting reported rates of return may be materially higher or lower than the values that would have been realized if the Fund was to liquidate the portfolio positions on a given date. Management and the Fund's Administrator obtain independent marks for each security from an independent pricing service or directly from a dealer to assist in valuing the portfolio assets at the end of each month. Valuations can be obtained through multiple pricing services and dealers. The primary service utilized is MountainView Pricing Service ("MountainView IPS"). MountainView IPS uses a combination of modeling techniques, communication with securities dealers, and valuation data from their other clients in the MBS sector to evaluate and provide an opinion on the valuation of the portfolio. Management utilizes internal financial models to assess the investment value of every bond in the portfolio and to assess the valuation obtained from MountainView IPS. Independent marks are obtained from alternative independent sources if MountainView IPS is unable to provide valuation on any security. At December 31, 2013, the Fund's investments consisted of 30% A rated or higher, 53% rated BBB+ through B-, 10% rated CCC and 7% unrated MBS.

The Fund values investments in securities for which there is no ready market at fair value as determined by the Fund's management. Many of the Fund's securities have experienced price volatility as a result of the increased credit risk and the reduced liquidity of these investments in the marketplace. That volatility and reduced liquidity have resulted in difficulties in measuring the fair value of subprime mortgage-related assets, other MBS and ABS, as well as other assets affected by the illiquidity in the market.

A portion of the Fund's securities may be deemed to be illiquid. Illiquid securities are generally those that cannot be sold or disposed of in the ordinary course of business at approximately the prices at which they are valued. This may result in illiquid securities being disposed of at a price significantly lower than recorded value since the market price of illiquid securities generally is more volatile than that of more liquid securities. This illiquidity of securities may result in the Fund incurring greater losses on the sale of some securities than under more stable market conditions. Such losses can adversely impact the Fund's net asset value.

There can be no assurance that the Fund could purchase or sell a security at the price used to calculate the Fund's net asset value. Changes in the estimated fair value of securities may be less frequent and of greater magnitude than changes in the price of securities valued at their last sale price, by an independent pricing service, or based on market quotations. Those estimated values do not necessarily represent the amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined. Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the securities existed.

The Fund invests a portion of its portfolio in below investment grade debt securities, including MBS and ABS. Below investment grade debt securities involve a higher degree of credit risk than investment grade debt securities. In the event of unanticipated delinquencies or defaults, the Fund would experience a reduction in its income, a decline in the market value of the securities so affected and a decline in its net asset value.

MORTGAGE OPPORTUNITY FUND VIII, L.P.

(In Liquidation)

NOTES TO FINANCIAL STATEMENTS

1.	Nature of operations and summary of significant accounting policies (continued)

Fair Value – Valuation Techniques, Inputs and Processes (continued)

Investments in Securities – MBS (continued)

In light of the complexity of fair value judgments, to assist in determining the fair value of certain of the Fund's securities, significant estimates are currently being used to value a portion of the assets of the Fund. The fair value of securities may be difficult to determine and thus judgment plays a greater role in this valuation process. The degree of judgment involved in determining the fair value of the securities is dependent upon the availability of quoted market prices or observable market parameters. When observable market prices and parameters do not exist, judgment is necessary to estimate fair value and such inputs reflect management's own assumptions about the assumptions a market participant would use in pricing the assets. The valuation process takes into consideration factors such as interest rate changes, movements in credit spreads, default rate assumptions, prepayment assumptions, type and quality of collateral, security seasoning, and market dislocation. Imprecision in estimating fair value can impact the amount of unrealized appreciation or depreciation recorded for a particular security and differences in the assumptions used could result in a different determination of fair value, and those differences could be material.


	Fair Value at December 31, 2013		Valuation Technique	Unobservable Inputs	Range of Inputs (Weighted Average)
Assets (at fair value)
Investments in securities
Mortgage-Backed Securities
Alt A and Subprime	$	2,860,375	Discounted cashflow model	Prepayment rates		0.0	%
				Default rates		2.5	%
				Loss severity		85.0	%

Prime Arm	$	1,801,856	Discounted cashflow model	Prepayment rates	8.0% - 15.0% (14.4		%)
				Default rates		0.1%- 9.4% (8.3	%)
				Loss severity	10.0%- 45.0% (13.6		%)

Synthetic	$	1,188,354	Discounted cashflow model	Prepayment rates		21.0	%
				Default rates		0.5	%
				Loss severity		25.0	%

Other	$	1,875	Current cashflow	Probability of continued
				cashflow		50.0	%

	$	79,649	Discounted cashflow model	Prepayment rates		16.0	%
				Default rates		0.0	%
				Loss severity		80.0	%

Risks Relating to MBS

Credit Risk

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Fund. The amount of credit exposure is represented by the carrying amounts of the assets in the statement of financial condition. Substantially all financial instruments that are not financed in the repurchase market are held in custody by various brokers. The Fund is subject to credit risk to the extent that any broker may be unable to fulfill its obligations to return the Fund's securities. The Fund does not anticipate any losses as a result of this concentration.

MORTGAGE OPPORTUNITY FUND VIII, L.P.

(In Liquidation)

NOTES TO FINANCIAL STATEMENTS

1.	Nature of operations and summary of significant accounting policies (continued)

Risks Relating to MBS (continued)

Credit Risk (continued)

In addition, principal payments on subordinated securities may be subject to a "lock-out" period in which some or all of the principal payments are directed to the related senior securities. This lock-out period may be for a set period of time and/or may be determined based on pool performance criteria such as losses and delinquencies. Such securities therefore possess some of the attributes typically associated with equity investments.

Interest Rate Risk

A portion of the Fund's financial assets is interest bearing and as a result the Fund is subject to a risk arising from fluctuations in the prevailing levels of market interest rates. Any excess cash of the Fund is invested in instruments earning short-term market interest rates.

Liquidity Risk

An insufficient secondary market may prevent the liquidation of an asset or limit the funds that can be generated from selling an asset. A portion of the Fund's financial assets are highly illiquid and have high liquidity risk.

Prepayment Risk

Generally, MBS purchased at a premium are adversely affected by faster than anticipated prepayments and MBS purchased at a discount are adversely affected by slower than anticipated prepayments. The adverse effects of prepayments may impact the Fund in two ways. First, particular investments may experience outright losses, as in the case of an interest-only security in an environment of faster actual or anticipated prepayments.

Second, particular investments may underperform relative to the financial instruments that the General Partner may have constructed to reduce specific financial risks for these investments, resulting in a loss to the Fund. In particular, prepayments (at par) may limit the potential upside of many MBS to their principal or par amounts, whereas their corresponding hedges often have the potential for unlimited loss.

Index Risk

The Fund may also invest in variable-rate MBS, including adjustable-rate mortgage securities ("ARMs"), which are backed by mortgages with variable rates, the rate of interest payable under which varies with a designated rate or index. The value of these investments is closely tied to the absolute levels of such rates or indices, or the market's perception of anticipated changes in those rates or indices. This introduces additional risk factors related to the movements in specific indices or interest rates which may be difficult or impossible to hedge, and which also interact in a complex fashion with prepayment risks.

MORTGAGE OPPORTUNITY FUND VIII, L.P.

(In Liquidation)

NOTES TO FINANCIAL STATEMENTS

1.	Nature of operations and summary of significant accounting policies (continued)

Risks Relating to MBS (continued)

Basis Risk

Investment Transactions and Related Investment Income

Income Taxes

The Fund does not record a provision for U.S. federal, state, or local income taxes because the partners report their share of the Fund's income or loss on their income tax returns. The Fund files an income tax return in the U.S. federal jurisdiction, and may file income tax returns in various U.S. states. Generally, the Fund is subject to income tax examinations by major taxing authorities during the three year period prior to the period covered by these financial statements.

The Fund is required to determine whether its tax positions are more likely than not to be sustained upon examination by the applicable taxing authority, based on the technical merits of the position. The tax benefit recognized is measured as the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant taxing authorities. Based on its analysis, the Fund has determined that it has not incurred any liability for unrecognized tax benefits as of December 31, 2013. The Fund does not expect that its assessment regarding unrecognized tax benefits will materially change over the next twelve months. However, the Fund's conclusions may be subject to review and adjustment at a later date based on factors including, but not limited to, questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions, compliance with U.S. federal, U.S. state and foreign tax laws, and changes in the administrative practices and precedents of the relevant taxing authorities.

Use of Estimates

MORTGAGE OPPORTUNITY FUND VIII, L.P.

(In Liquidation)

NOTES TO FINANCIAL STATEMENTS

2.	Fair value measurements

The Fund's assets recorded at fair value have been categorized based upon a fair value hierarchy as described in the Fund's significant accounting policies in Note 1. The following table presents information about the Fund's assets measured at fair value as of December 31, 2013:


	Level 1		Level 2		Level 3		Total

Assets (at fair value)

Investments in securities
Alt-A and Subprime
AAA	$	-	$	2,182,573	$	-	$	2,182,573
AA+		-		466,397		-		466,397
A+		-		6,111,787		-		6,111,787
A		-		2,733,064		-		2,733,064
BBB+		-		5,677,385		2,860,375		8,537,760
BBB		-		1,484,381		-		1,484,381
BBB-		-		1,299,600		-		1,299,600
BB+		-		8,070,230		-		8,070,230
B-		-		773,387		-		773,387
CCC		-		3,270,856		-		3,270,856
Synthetic		-		-		1,188,354		1,188,354
Prime ARM		-		-		1,801,856		1,801,856
Other		-		-		81,524		81,524
Total investments in securities		-		32,069,660		5,932,109		38,001,769
Cash equivalents		1,061,248		-		-		1,061,248

	$	1,061,248	$	32,069,660	$	5,932,109	$	39,063,017

The following table presents additional information about Level 3 assets measured at fair value. Both observable and unobservable inputs may be used to determine the fair value of positions that the Fund has classified within the Level 3 category. As a result, the unrealized gains and losses for assets within the Level 3 category may include changes in fair value that were attributable to both observable and unobservable inputs.

Changes in Level 3 assets measured at fair value for the year ended December 31, 2013 were as follows:


	LEVEL 3
	Beginning Balance January 1, 2013		Realized & Unrealized Gains (Losses)^(a)		Sales			Principal Paydowns			Transfers (out) of Level 3			Ending Balance December 31, 2013		Change in Unrealized Gains (Losses) for Investments still held at December 31, 2013^(b)

Assets (at fair value)

Total investments in securities
Mortgage-backed securities	$	41,739,273	$	4,413,764	$	(6,015,357	)	$	(2,135,911	)	$	(32,069,660	)	$	5,932,109	$	837,998

(a)	Realized and unrealized gains (losses) are included in net gain on investments in the statement of operations.

(b)	The change in unrealized gains (losses) for investments still held at December 31, 2013 is reflected in the net change in unrealized appreciation or depreciation on securities in the statement of operations.

MORTGAGE OPPORTUNITY FUND VIII, L.P.

(In Liquidation)

NOTES TO FINANCIAL STATEMENTS

2.	Fair value measurements (continued)

The securities that transferred from Level 3 to Level 2 are maturing; as the securities mature the pricing inputs become more predictable. With more predictable pricing inputs, there is less variance in the valuations among market participants resulting in a more liquid market for the securities. All transfers between levels are effective as of December 31, 2013.

3.	Investments in securities, at fair value

The Fund's investment objective is to achieve capital appreciation and holding period income through disciplined investing in MBS that may include securities classified as distress-priced securities in the RMBS and ABS markets. The Fund primarily invests in collateralized mortgage obligations ("CMOs"), which are multi-class bonds backed by a pool of mortgage-backed pass-through securities or mortgage loans. CMO classes have a wide variety of payment characteristics and preferences, including interest only, principal only, and zero coupon, and can be structured to weigh those components differently. In addition, the interest rates can be fixed or floating, the inverse of a given rate, or indices. Each security will have varying preference for payment within a given cash flow stream and can be a planned amortization class, targeted amortization class, companion class, or residual tranche. Maturity date is not the same as expected life of the security or weighted average life, each of which differs significantly from the maturity date.

4.	Concentration of credit risk

In the normal course of business, the Fund maintains its cash balances at JPMorgan Chase Bank, N.A. and Wells Fargo Bank, N.A., which at times may exceed federally insured limits. The Fund is subject to credit risk to the extent any financial institution with which it conducts business is unable to fulfill contractual obligations on its behalf. Management monitors the financial condition of such financial institutions and does not anticipate any losses from these counterparties.

5.	Related party transactions

The Fund pays the Investment Manager a management fee, calculated and payable monthly in arrears, equal to 0.125% (1.5% per annum) of the Fund's net asset value determined as of the end of each calendar month.

Certain limited partners are affiliated with the Investment Manager. The aggregate value of the affiliated limited partners' share of partners' capital at December 31, 2013 is approximately $10,787,000 prior to the final distribution.

Certain limited partners have special management fee arrangements, performance arrangements, or redemption rights as provided for in the Agreement.

Due from General Partner represents the amount payable corresponding to the cumulative effect of the carried interest being paid upon liquidation.

MORTGAGE OPPORTUNITY FUND VIII, L.P.

(In Liquidation)

NOTES TO FINANCIAL STATEMENTS

6.	Partners' capital

Allocation of Partners' Net Profits and Losses

As of the close of each accounting period, the net profit or net loss will be allocated pro rata among the capital accounts of the limited partners in proportion to their percentage interests as of the commencement of the period.

Partners' Distributions

In accordance with the Agreement, the amount of cash available for distribution shall be distributed to the limited partners in the following order and priority:


	1)	first, 100% pro-rata to each limited partner until such limited partner receives proceeds equal to the total contributions by such limited partner to the Fund; and
	2)	thereafter, 80% pro-rata to the limited partner, and 20% to the General Partner.

Limited partners have redemption rights which contain certain restrictions with respect to rights of withdrawal from the Fund as specified in the Agreement.

Capital distributions payable represents an amount due to limited partners based on distributions effective through December 31, 2013. Of the total amount distributed at December 31, 2013, $4,918,612 of this amount represents capital distributions payable to limited partners at year end that did not consent to the Fund merger. Of the total amount distributed at December 31, 2013, $31,472,075 represents account balances withdrawn from the Fund by limited partners that elected to transfer their interest into another Fund managed by the Investment Manager in connection with the Fund merger.

7.	Administrative fee

ALPS, a DST Company (the "Administrator") serves as the Fund's administrator and performs certain administrative and clerical services on behalf of the Fund.

8.	Financial highlights

Financial highlights for the year ended December 31, 2013 are as follows:

Internal rate of return, since inception:
Beginning of year	16.2	%
End of year	16.3	%

Ratio to average limited partners' capital:
Expenses	1.6	%
Reallocation to General Partner	7.0
Expenses and reallocation to General Partner	8.6	%

Net investment income	4.0	%

MORTGAGE OPPORTUNITY FUND VIII, L.P.

(In Liquidation)

NOTES TO FINANCIAL STATEMENTS

8.	Financial highlights (continued)

The Internal Rate of Return ("IRR") of the limited partners since inception of the Fund is net of all management fees and was computed based on the actual dates of capital contributions and distributions, and the ending aggregate net assets at the end of the year (residual value) of the limited partners' capital.

Financial highlights are calculated for the limited partner class taken as a whole. An individual limited partner's return and ratios may vary based on different management fee and performance arrangements, and the timing of capital transactions. The net investment income ratio does not reflect the effects of the reallocation to the General Partner.

9.	Subsequent events

In November of 2013, Braddock Structured Opportunities Fund GP, LLC, who serves as the General Partner of Braddock Structured Opportunities Fund, L.P. and Braddock Structured Opportunities Fund Series A, LP, along with Mortgage Opportunity Fund VIII GP, LLC, who serves as the General Partner for the Fund, proposed a merger of these two Funds effective January 1, 2014. The Funds generally share the same investment objective and hold similar assets, and have a high percentage of common ownership among their limited partners. The General Partners believe that the merger may offer benefits of operating one larger fund structure that would allow the combined Fund access to a broader set of investment opportunities and would reduce aggregate fixed expenses such as administrative and custodial costs. Under the proposed merger, Mortgage Opportunity Fund VIII, L.P. would merge into Braddock Structured Opportunities Fund Series A, LP and Braddock Structured Opportunities Fund Series A, LP will be the surviving entity.

In connection with the merger effective January 1, 2014, the Fund transferred limited partnership interests totaling $25,336,509 into Braddock Structured Opportunities Fund Series A, LP. Effective January 1, 2014, the General Partner transferred $1,032,757 of its carried interest receivable amount due from the Fund into Braddock Structured Opportunities Fund Series A, LP in exchange for a limited partnership interest. The partners that consented to the merger received a limited partner interest in Braddock Structured Opportunities Fund Series A, LP on January 1, 2014 with a balance equal to each such limited partner's capital account balance in the Fund immediately preceding the merger.

The Fund transferred $6,135,565 in limited partnership interests and a proportionate share of each asset owned by the Fund effective January 1, 2014 into a newly formed investment partnership whose limited partners consisted of seven limited partner's of the Fund that did not consent to the merger and who did not desire to sell their indirect ownership in the Fund's underlying assets. A percentage of each asset equal to the combined ownership percentage of these partners immediately preceding the merger were transferred into the newly formed entity. The amount of assets and limited partnership interests transferred into the investment partnership was equal to the combined capital balance for these seven limited partners immediately preceding the merger. The beneficial owners of this separately managed investment partnership are not related to the Investment Manager. The Investment Manager entered into an agreement to manage this newly formed partnership.

MORTGAGE OPPORTUNITY FUND VIII, L.P.

(In Liquidation)

NOTES TO FINANCIAL STATEMENTS

9.	Subsequent events (continued)

Subsequent to December 31, 2013, the Fund distributed $4,918,612 to the limited partners of the Fund that did not consent to the merger.

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933	[ ]
PRE-EFFECTIVE AMENDMENT NO.	[ ]
POST-EFFECTIVE AMENDMENT NO. 719	[X]
AND/OR

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940	[ ]
AMENDMENT NO. 732	[X]

Name	Address	Position with Underwriter	Position with Registrant
Mark A. Fairbanks	Three Canal Plaza, Suite 100, Portland, Maine 04101	President	None
Richard J. Berthy	Three Canal Plaza, Suite 100, Portland, Maine 04101	Vice President, Treasurer and Manager	None
Jennifer E. Hoopes	Three Canal Plaza, Suite 100, Portland, Maine 04101	Secretary	None
Nanette K. Chern	Three Canal Plaza, Suite 100, Portland, Maine 04101	Vice President and Chief Compliance Officer	None
Paula R. Watson	Three Canal Plaza, Suite 100, Portland, Maine 04101	Assistant Secretary	None

Records Relating to:	Are located at:
Registrant’s Transfer Agent, Fund Accountant and Co-Administrator	UMB Fund Services, Inc. 235 W. Galena Street Milwaukee, Wisconsin 53212
Registrant’s Co-Administrator	Mutual Fund Administration, LLC 2220 E. Route 66, Suite 226 Glendora, California 91740
Registrant’s Custodian	UMB Bank, n.a. 928 Grand Boulevard Kansas City, Missouri, 64141
Registrant’s Investment Adviser	Liberty Street Advisors, Inc. 100 Wall Street, 20^th Floor New York, New York 10005
Fund’s Distributor	Foreside Fund Services, LLC Three Canal Plaza, Suite 100 Portland, Maine 04101

Records Relating to:	Are located at:
Fund’s Sub-Advisor	Braddock Financial Corporation 1200 17^th Street, Suite 880 Denver, CO 80202

	INVESTMENT MANAGERS SERIES TRUST

	By:	/s/ Maureen Quill
		Maureen Quill, President

Signature		Title

†
Ashley Toomey Rabun		Trustee
†
William H. Young		Trustee
†
Charles H. Miller		Trustee
†
John P. Zader		Trustee

†
Eric M. Banhazl /s/ Maureen Quill		Trustee and Vice President
Maureen Quill /s/ Rita Dam		President
Rita Dam		Treasurer and Principal Financial and Accounting Officer

†By	/s/ Rita Dam

Exhibit	Exhibit No.
Consent of Independent Registered Public Accounting Firm-Tait, Weller & Baker LLP	EX99.28(j)(1)
Consent of Independent Registered Public Accounting Firm-KPMG LLP	EX99.28(j)(2)
Consent of Independent Registered Public Accounting Firm-Rothstein Kass	EX99.28(j)(3)