Formulaire 497 Fonds Northern Lights ☎ garantie entreprise

Quels éléments jouent sur le tarif d’une foi pro ?
Plusieurs critères vont avoir un impact sur le coût d’une conviction professionnelle, parmi quoi le risque possible que vous représentez pour l’assureur. Ainsi vont être pris en compte dans le tarif :

la taille de l’entreprise et sa forme juridique. Ainsi, une entreprise unipersonnelle ainsi qu’à un auto-entrepreneur bénéficieront d’un tarif réduit, risques à couvrir sont moindres.
le chiffre d’affaires de l’entreprise. En effet, un chiffre d’affaires important représente un risque supplémentaire que la compagnie d’assurance va répercuter sur ses prix
le secteur d’activité de l’entreprise. Une entreprise travaillant a l’intérieur du secteur des coups de main est d’ailleurs exposée à des risques moins essentiels qu’une société du domaine du bâtiment ou bien de la chimie
le nombre de garanties et leur étendue. Plus elles seront grandes et couvrantes et plus le tarif sera important.
Combien paiera un auto-entrepreneur pour son persuasion professionnelle ?
Le coût de l’assurance prostituée pour un auto-entrepreneur varie en fonction du chiffre d’affaires, du secteur d’activité. Mais attention ! Selon les métiers, certaines garanties sont obligatoires tel que le de la garantie décennale bâtiment pour professionnels du BTP.

Ainsi un auto-entrepreneur pourra souscrire les garanties suivantes (montant minimal) :

responsabilité civile : 100 euros en an
protection juridique : 100 euros selon an
complémentaire santé : 200 euros en an
conviction perte d’exploitation : 300 euros par an
multirisque professionnel : 400 euros dans an
garantie décennale bâtiment : 600 euros chez an

Quid du taxe de l’assurance pour quelques exercice ?
Voici quelques fourchettes de tarifs pour des fermeté professionnelles rares :

Pour une société individuelle, le chiffre d’affaires moyen, le secteur d’activité et le nombre de garanties souscrites auront un impact sur le tarif de l’assurance professionnelle. Ainsi prix peuvent aller de 100 à 1000 euros par an
Pour une sûreté profession libérale, en plus de l’activité exercée et garanties choisies, le taux le montant le pourcentage de collaborateurs et l’occupation d’un local professionnel pourront aussi jouer sur les cotisations. Les prix moyens vont de 90 à 500 euros annuels
Pour une audace agricole, la taille de l’exploitation sera également prise en compte. Le coût moyen d’une audace couvrant aussi bien l’exploitation que le matériel s’élève à environ 2000 euros pendant an


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Fondation Patriots

Classe Un partage TRFAX
Classe C partage TRFCX
Classe Moi partage TRFTX

LE PROSPECTUS

28 JANVIER 2020

Conseillé par:

(Logo004.gif)

Ascendant Advisors, LLC
Emplacement de quatre chênes

1330, avenue Post Oak, bureau 1550

Houston, Texas 77056

www.patriotfund.com 1-855-5ASCEND
(1-855-527-2363)

Ce prospectus est important
des informations sur le Fonds que vous devez connaître avant d'investir. Lisez-le attentivement et conservez-le pour référence future.

Ces titres n'existaient pas
approuvé ou non approuvé par la Securities and Exchange Commission, ni par la Securities and Exchange Commission
l'exactitude ou la suffisance de ce prospectus. Toute déclaration contraire est une infraction pénale.

À partir de 2021. 1er janvier
des copies papier des rapports des actionnaires du Fonds, comme le permettent les règlements adoptés par la Securities and Exchange Commission
comme celui-ci, ne sera plus envoyé à moins que vous ne demandiez spécifiquement des copies papier. Au lieu de cela, les rapports
sera disponible sur le site Internet de la Fondation au www.patriotfund.com et vous serez averti par mail chaque fois qu'un rapport est soumis
affiché et fourni avec un lien annexe pour accéder au rapport.

Si vous avez déjà élu
l'accès électronique aux rapports des actionnaires ne sera pas affecté par ce changement et vous n'aurez pas besoin de prendre de mesures. Vous pouvez
décidera à tout moment de recevoir les rapports aux actionnaires et autres communications du Fonds en contactant ses financiers
intermédiaire (comme un courtier ou une banque) ou, si vous êtes un investisseur direct, suivez les instructions fournies avec le document
Documents de fonds qui vous ont été envoyés. Vous pouvez également choisir de recevoir gratuitement tous les futurs rapports papier.

TABLE DES MATIERES

SOMMAIRE DU FONDS: FONDS PATRIOT 1
INFORMATIONS SUPPLÉMENTAIRES SUR
PRINCIPALES STRATÉGIES ET RISQUES D'INVESTISSEMENT
4
But de l'investissement 4
Stratégies d'investissement de base 4
Risque d'investissement principal 4
Investissement temporaire 4
Divulgation des actions du portefeuille 5
Cyber ​​sécurité 5
GOUVERNANCE 5
Conseiller en investissement 5
Gestionnaire de portefeuille 6e
COMMENT PARTAGER LES PRIX 7e
COMMENT ACHETER DES ACTIONS 8e
COMMENT METTRE À JOUR LES ACTIONS 12e
ACHATS ET PAIEMENTS COMMUNS D'ACTIONS DE FONDS 14e
STATUT FISCAL, DIVIDENDES ET DISTRIBUTION 15e
RÉPARTITION DES ACTIONS 16e
Distributeur 16e
Frais de distribution 16e
Rémunération supplémentaire des intermédiaires financiers 16e
Ménage 16e
CADRE FINANCIER 17e
AVIS DE CONFIDENTIALITÉ 20e

SOMMAIRE DU FONDS: FONDS PATRIOT

Objectif d'investissement: Le fonds vise à lever des capitaux.

Frais et dépenses du fonds: Ce tableau
décrit les frais et dépenses que vous pouvez payer lors de l'achat et de la détention d'actions du Fonds. Vous pourriez être admissible à des rabais sur les ventes
lors de l'achat d'actions de catégorie A si vous et votre famille investissez ou acceptez d'investir au moins 25 000 $ à l'avenir. En savoir plus
des informations sur ces remises et sur d’autres remises peuvent être obtenues auprès de votre Comment acheter des actions |
À la page 8 du prospectus du Fonds.

Honoraires des actionnaires
(taxes payées directement sur votre investissement)
Classe A Classe C Classe I
Taxe de vente d'achat maximale (charge)
(en pourcentage de l'enchère)
5,75% Aucun Aucun
Taxe de vente différée maximale (charge)
(en% du prix d'achat d'origine)
1,00% Aucun Aucun
Frais de vente maximum estimés (charge)
sur dividendes réinvestis et autres distributions
Aucun Aucun Aucun
Frais de rachat
(en% du montant du rachat s'il est détenu pendant moins de 30 jours)
Aucun Aucun Aucun
Coûts de fonctionnement annuels du Fonds
(le coût que vous payez chaque année
pourcentage de votre valeur)
Frais de gestion 1,40% 1,40% 1,40%
Frais de distribution et de service (12b-1) 0,25% 1,00% 0,00%
Autres dépenses 0,63% 0,64% 0,65%
Total des frais d'exploitation annuels du Fonds 2,28% 3,04 pour cent 2,05%

Exemple: Cet exemple est pour
pour aider à comparer le coût d'investissement dans le Fonds avec celui d'autres fonds communs de placement.

L'exemple suppose que vous investissez 10 000 $
racheter les actions à la fin de ces périodes. L'exemple suppose également
que votre investissement rapporte 5% par an et que les frais d'exploitation du fonds restent les mêmes. Bien que votre vrai
les coûts peuvent être supérieurs ou inférieurs selon les hypothèses suivantes:

Classe 1 an 3 ans 5 ans 10 ans
Un 793 $ 1 246 $ 1 725 $ 3 040 $
C 307 $ 939 $ 1 596 $ 3 355 $
Moi 208 $ US 643 $ 1 103 $ 2379 $

Rotation du portefeuille: Le fonds paie l'opération
les dépenses, telles que les commissions, sur l'achat et la vente de titres (ou le «retournement» de votre portefeuille). Rotation du portefeuille plus élevée
peut indiquer des coûts de transaction plus élevés et peut entraîner des frais plus élevés lorsque les actions du Fonds sont dans un compte imposable. Ces coûts,
qui ne sont pas reflétés dans le coût de fonctionnement ou l'échantillon annuel du fonds, affectent la performance du fonds. Trop
dernier exercice clos en 2019. Au 30 septembre 2006, le taux de rotation des titres en portefeuille du Fonds était de 48%.

Stratégies d'investissement clés: Le Fonds investit principalement dans des actions ordinaires incluses dans l'indice Standard and Poor's 500, à l'exception de celles qui ne prennent pas en charge les actions de conseillers,
Ascendant Advisors, LLC («Conseiller») Patriot Investment Screen. Le patriotisme du conseiller
L'écran d'investissement élimine les actions ordinaires émises par les entreprises ciblant les pays qui soutiennent le terrorisme, y compris ces pays
"Défini par le Département d'État américain comme une" nation terroriste ". Plusieurs pays sont actuellement répertoriés
sous la direction des autorités suivantes: Iran, Soudan et Syrie. Les entreprises sont inspectées tous les trimestres pour éliminer les émetteurs liés au terrorisme
avant d'entreprendre d'autres enquêtes spécifiques à l'entreprise.

De l'univers de l'entreprise patriotique, commun
l'inventaire, le processus de sélection des conseillers est principalement basé sur un processus quantitatif ascendant utilisant un large spectre
éléments de données techniques et de base créés au cours de 40 ans de recherche brevetée. Ces éléments de données incluent des outils de base
y compris: évaluation des actions basée sur le rapport cours / bénéfice, effet de levier du bilan et bénéfice relatif de l'industrie. Basé sur
cette analyse classe les entreprises et les industries en fonction des perspectives d'évolution des prix relatifs dans le temps.
Le conseiller évalue également les actions ordinaires les plus attractives sur la base de considérations qualitatives telles que l'expérience de l'entreprise
gestion, élire des titres. D'autres méthodes d'analyse incluent l'utilisation d'impulsions de prix et de bénéfices pour déterminer la direction des tendances
et le pouvoir. Advisor utilise également l'analyse du cycle du marché comme outil pour guider l'allocation et la mise en page du portefeuille.

Le conseiller vendra le titre en cas de court terme
l'écran patriotique du conseiller et peut vendre les actions en fonction de ses performances, de nouvelles recherches ou lorsqu'il y a un investissement majeur
la thèse s'est aggravée.

Principaux risques d'investissement: Comme avec
Pour tous les fonds communs de placement, il existe un risque que vous perdiez de l'argent en investissant dans un fonds. Le fonds n'est pas destiné
être un programme d'investissement complet. La valeur liquidative (VNI) et la performance du fonds peuvent être affectées par de nombreux facteurs.

· Risque boursier. Bourses
peut être volatile. En d'autres termes, les cours des actions ordinaires peuvent baisser rapidement en raison de changements affectant
l’entreprise ou l’industrie, ou l’évolution des conditions économiques, politiques ou du marché.
· Risque spécifique de l'émetteur. Valeur
Des actions ordinaires spécifiques peuvent être plus volatiles que le marché dans son ensemble et peuvent se comporter différemment que le marché dans son ensemble.
· Risque de gestion. Conseiller
les décisions concernant l'attractivité et la valorisation potentielle des actions ordinaires peuvent sembler inexactes et entraîner des investissements
pertes pour le Fonds.
· Risque lié à la stratégie. Parce qu'un conseiller
examine les émetteurs liés aux pays terroristes, ce qui réduira les investissements potentiels du Fonds et du Fonds
La fondation peut ne pas fonctionner aussi bien qu'illimité.

Performances: Graphique à barres et performances
Le tableau ci-dessous montre la volatilité du rendement du Fonds, ce qui illustre légèrement le risque d'investir dans le Fonds.
un graphique à barres illustrant le rendement des actions de catégorie I du Fonds chaque année civile depuis la création du Fonds. Retours
Les actions de classe A et de classe C en circulation seront différentes du rendement des actions de classe I. Le tableau des performances est comparé
Changements dans la valeur du fonds au fil du temps pour des changements d'indices boursiers à grande échelle. Tu devrais savoir que
La performance passée (avant et après impôts) du Fonds peut être une contribution inutile à la performance future du Fonds. Mise à jour
des informations sur le rendement seront disponibles gratuitement sur www.patriotfund.com ou en appelant au 1-855-527-2363.

Rendements annuels totaux de catégorie I au cours d'une année civile
Terminé le 31 décembre

Meilleur trimestre: 1St. Trimestre 2019 12,63%
Pire trimestre: 4des milliers Trimestre 2018 (13,48)%

Tableau des performances

Rendement annuel moyen

(Pour les périodes closes le 31 décembre 2019)

Un
Année
Cinq
Année
À partir de
Accueil
2018-03-01
Actions de classe I
Remboursements avant impôt 23,81% 9,10% 11,55%
Retour sur paiement des frais de distribution 19,75% 7,49% 10,29 pour cent
Retour sur paiement des frais de distribution
et vente d'actions du Fonds
16,96% 7,06% 9,30%
Actions de catégorie A
Remboursements avant impôt 23,52% 8,81% 11,25%
Actions de classe C
Remboursements avant impôt 22,62% 8,02% 10,46%
Index du Standard & Poor's 500
(ne représente pas les taxes, les dépenses ou les déductions fiscales)
31,49% 11,70% 13,87%

Après les déclarations de revenus ont été calculées en utilisant
historiquement les taux d'imposition marginaux fédéraux individuels les plus élevés et ne reflète pas l'influence des impôts nationaux et locaux. Le vrai
après déclaration fiscale dépend de la situation fiscale de l'investisseur et peut différer des déclarations fiscales déposées
ne s'applique pas aux investisseurs qui détiennent des actions du Fonds par le biais d'accords d'impôt différé tels que les régimes 401 (k) ou la retraite individuelle
comptes. Après la déclaration de revenus, les actions de classe A et de classe C non présentées seront différentes des actions de classe I.

S&P 500® L'index est
indice pondéré de capitalisation boursière non gérée des 500 plus grandes sociétés américaines capitalisées. L'indice renvoie la prémisse
réinvestir les dividendes. Contrairement à un fonds commun de placement, l'indice ne reflète aucun frais de négociation ou de gestion. Les investisseurs ne peuvent pas
investir directement dans l'indice.

Conseiller en investissement: Conseillers émergents,
LLC.

Conseiller en placement Gestionnaire de portefeuille: James
Conseiller du président Lee depuis 2014. A été gestionnaire de portefeuille pour le Fonds.

Achat et vente d'actions du Fonds: Vous
peut acheter et racheter des Actions du Fonds chaque jour où la Bourse de New York est ouverte aux négociations sur demande écrite,
par téléphone ou par des intermédiaires financiers agréés par le Fonds. Placement minimal initial et subséquent dans les catégories A ou A
Les actions C sont de 1 000 $ et 100 $. L'investissement minimal initial et subséquent dans les actions de catégorie I est de 1 000 000 $ et 25 000 $.

Honoraires
Renseignements:
Distributions de dividendes et de gains en capital que vous recevez du Fonds, que vous distribuiez ou non vos distributions à
des actions supplémentaires du Fonds ou les recevoir en espèces sous réserve de votre impôt ordinaire sur le revenu ou les gains en capital, sauf si
investir dans un plan d'impôt différé comme un IRA ou un plan 401 (k). Cependant, ces distributions de dividendes et de gains en capital
peuvent être imposés lorsqu'ils devraient se retirer des régimes d'impôt différé.

Paiements aux intermédiaires et autres finances
Intermédiaires:
Si vous achetez un fonds par l’intermédiaire d’un courtier ou d’un autre intermédiaire financier (comme une banque), le fonds
et les sociétés affiliées peuvent payer l'intermédiaire pour la vente des actions du Fonds et des services connexes. Ces paiements peuvent être créés
conflit d'intérêts pour influencer le courtier ou un autre courtier et votre vendeur à recommander le fonds à un autre
investissement. Pour plus d'informations, contactez le vendeur ou visitez le site Internet de l'intermédiaire financier.

INFORMATIONS SUPPLÉMENTAIRES SUR LES STRATÉGIES D'INVESTISSEMENT CLÉS
ET RISQUES ASSOCIÉS

OBJECTIF D'INVESTISSEMENT

La Fondation But de l'investissement
Fondation Patriots Le fonds vise à lever des capitaux.

L'objectif d'investissement du Fonds n'est pas le principal
politique et peut être modifié par le conseil des fiduciaires du Fonds (le «conseil») sans le consentement des actionnaires après l'âge de 60 ans
avis aux actionnaires.

STRATÉGIES D'INVESTISSEMENT CLÉS

Fondation Patriot:

Le conseiller cherche à rembourser l'investissement
Au sein d'un groupe de pairs de la Fondation ou au-dessus, en évitant l'impact des entreprises opérant dans des pays qui soutiennent le terrorisme tel que défini
Département d'État américain, combinant des techniques patriotiques et traditionnelles de filtrage de sécurité. La loi américaine exige un secrétaire
avant le 30 avril de chaque année. Donnera au Congrès un rapport complet sur le terrorisme dans ces pays
et les groupes qui répondent aux critères énoncés dans la législation pertinente. Ce rapport annuel au Congrès est correct Rapports nationaux sur
Terrorisme
. Le Secrétaire d'État identifie les pays qui ont à plusieurs reprises apporté leur soutien à des actes de terrorisme international
sont désignés en vertu de trois lois: l'article 6 j) de la Loi sur l'administration des exportations, l'article 40 de la Loi sur le contrôle des exportations d'armes,
et l'article 620A de la loi sur l'aide étrangère. En résumé, il existe quatre catégories principales de sanctions liées à la désignation
ces autorités incluent des restrictions sur l'aide étrangère des États-Unis; assurance-défense à l'exportation et à la vente; un certain contrôle
exportations d'articles à double usage; et diverses contraintes financières et autres. Nomination au nom des autorités susmentionnées
d'autres lois sont également en place pour punir les individus et les pays engagés dans certains échanges commerciaux avec les États. Actuellement là
il y a plusieurs États désignés sous les autorités suivantes: Cuba, Iran, Soudan et Syrie. Le conseiller ordonne également à Terror
Service de sélection des peuples pour aider à identifier les entreprises ayant des liens avec les États terroristes et fournir des mises à jour en temps opportun
que celle publiée par le Département d'État américain.

PRINCIPAL RISQUE D'INVESTISSEMENT

Risque boursier. Les marchés boursiers peuvent
être volatile. En d'autres termes, les cours des actions peuvent baisser rapidement en réponse à des changements affectant un particulier
l’entreprise ou l’industrie, ou l’évolution des conditions économiques, politiques ou du marché. La valeur des investissements du Fonds peut baisser
si les marchés boursiers obtiennent de mauvais résultats. Il existe également un risque que les investissements du Fonds soient inférieurs aux titres
marchés en général ou dans certains segments des marchés des valeurs mobilières.

Risque spécifique de l'émetteur. Prix
un titre spécifique peut être plus volatil que le marché dans son ensemble et peut fonctionner différemment de la valeur de marché
tout. Les prix des titres des petits émetteurs peuvent être plus volatils que ceux des grands émetteurs. Le coût de certains types
les titres peuvent être plus volatils en raison d'une sensibilité accrue à un émetteur négatif, aux changements politiques, réglementaires, de marché ou économiques.

Risque de gestion. Conseiller
les décisions concernant l'attractivité et l'évaluation potentielle des titres peuvent s'avérer inexactes et ne peuvent pas être utilisées
résultats souhaités. De plus, la confiance du conseiller dans les décisions de stratégie d’investissement pour un potentiel de croissance spécifique
la valeur relative de l'entreprise ou de certains titres peut s'avérer incorrecte ou incompatible avec le marché commun
une estimation de ces caractéristiques, ce qui peut entraîner des rendements inférieurs aux prévisions. Le style de placement d’un conseiller peut être
fonds de risque. Le bénéfice d'une société de portefeuille peut ne pas augmenter autant que le consultant le prévoit
sera. Même si les bénéfices de la société de portefeuille augmentent comme prévu par le conseiller, il peut ne pas y avoir d'augmentation correspondante
valeur des actions de la société en portefeuille. De plus, le conseiller a fixé une évaluation raisonnable du portefeuille
peut être incorrect. Ainsi, le Fonds peut payer plus que sa valeur pour les titres en portefeuille.

Risque lié à la stratégie. Parce que les écrans Advisor
outre les émetteurs liés aux pays terroristes, cela réduira le nombre d'investissements potentiels du Fonds et du Fonds
ne fonctionne pas aussi bien que des fonds illimités. Parce que le conseiller prend en compte les principes de l'investissement patriotique, il peut choisir de vendre soit
de ne pas acheter des placements qui répondent par ailleurs à l'objectif de placement du Fonds et qui pourraient le nuire
la performance financière relative du Fonds.

Investissements temporaires: Répondre à
en raison de conditions de marché, économiques, politiques ou autres défavorables, le Fonds peut investir 100% de son actif total sans limiter sa qualité,
titres de créance à court terme et instruments du marché monétaire. Ces titres de créance à court terme et instruments du marché monétaire comprennent:
parts de fonds du marché monétaire, papier commercial, certificats de dépôt, consentements bancaires, titres du gouvernement américain
et repo. Tant que le Fonds est dans une position défensive, le Fonds ne suit pas nécessairement ses investissements sous-jacents
stratégies et peut

n'atteint pas votre objectif d'investissement. Aussi,
tant que le fonds investit dans des fonds communs de placement du marché monétaire pour couvrir des positions de trésorerie, les coûts se reproduiront légèrement
parce que le Fonds paie une part proportionnelle des frais de conseil et de fonctionnement de ces fonds du marché monétaire. La Fondation peut
et doit, à tout moment, investir une partie importante de ses actifs dans des instruments permettant de maintenir la liquidité ou d'attendre des choix d'investissement
conformément à ses politiques.

DIVULGATION DE L'INSTALLATION DE PORTEFEUILLE: La description
la politique du Fonds concernant la publication d'informations sur les parts du portefeuille se trouve dans l'avis du Fonds
informations supplémentaires.

CYBER SÉCURITÉ: Systèmes informatiques,
les réseaux et les installations utilisés par la Fondation et ses fournisseurs de services pour les opérations commerciales normales sont nombreux
Sécurité pour prévenir les virus informatiques, les pannes de réseau, les dommages ou les interruptions des ordinateurs et des télécommunications
défaillances, intrusions par des personnes non autorisées et violations de la sécurité. Malgré les différentes fondations et
leurs fournisseurs de services, systèmes, réseaux ou appareils peuvent être compromis. Le Fonds et ses actionnaires peuvent être négatifs
affecté par une violation de la cybersécurité.

Les violations de la cybersécurité peuvent être illégales
accès aux systèmes, réseaux ou installations; infecter des virus informatiques ou tout autre code logiciel malveillant; et les attaques se ferment
désactiver, désactiver, ralentir ou autrement perturber les opérations, les processus commerciaux ou l'accès ou la fonctionnalité du site. Atteintes à la cybersécurité
peut perturber et affecter les activités commerciales du Fonds, ce qui peut entraîner une perte financière; interférence
la capacité du Fonds à calculer sa valeur liquidative; obstacles au commerce; invalidité d'une fondation, d'un conseiller et d'autres services
les prestataires désireux de faire des affaires; violations de la vie privée applicable et d'autres lois; amendes réglementaires, amendes, atteinte à la réputation,
remboursement ou autres frais de remboursement ou frais de conformité supplémentaires; ainsi que la divulgation accidentelle d'informations confidentielles.

Des effets indésirables similaires peuvent résulter de
les atteintes à la cybersécurité touchant les émetteurs des titres dans lesquels le Fonds investit; les contreparties avec lesquelles le Fonds traite
transactions; les organismes gouvernementaux et autres organismes de réglementation; bourses et autres opérateurs des marchés financiers, banques, courtiers, négociants,
les compagnies d'assurance et autres institutions financières (y compris les intermédiaires financiers et les prestataires de services du Fonds)
actionnaires); et d'autres parties. En outre, ces entités peuvent encourir des coûts importants pour éviter toute cybersécurité
violations futures.

GOUVERNANCE

CONSEILLER EN INVESTISSEMENT: Conseillers émergents,
LLC, située à Four Oaks Place, 1330 Post Oak Blvd., Suite 1550, Houston, TX 77056, sert de conseiller à la Fondation.
Le conseiller a été initialement formé en 1970. Et depuis sa création, il a toujours agi à titre de conseiller en placement inscrit.
2009 Le conseiller a été acquis par sa direction actuelle et un groupe d'investisseurs, qui a été transformé en société à responsabilité limitée
et s'est renommé Ascendant Advisors, LLC. Le conseiller appartient en totalité à Ascendant Advisors Group, LLC, une société à responsabilité limitée du Delaware
entreprise. À partir de 2019 30 septembre Le conseiller avait 139 millions de dollars. USD d'actifs sous gestion.

Le conseiller fournit des actions et des titres à revenu fixe
Conseils en placement aux particuliers, régimes de retraite, sociétés et autres fonds communs de placement.

Dépend de la supervision du Fonds
Le Conseil de fondation et le Conseiller en investissement fourniront à la Fondation un programme glissant
La gestion et la supervision des actifs du Fonds, y compris le développement du portefeuille du Fonds; et
Fournit des conseils et des orientations sur l'investissement, la politique d'investissement et l'achat et la vente de titres.
Le conseiller est également responsable de la sélection des courtiers intermédiaires par l'intermédiaire desquels le Fonds mène des opérations de portefeuille.
à la politique de médiation établie par le Conseil. Le conseiller est éligible en vertu de la convention de conseil
mensuellement, une commission de conseil annuelle égale à 1,40% de l'actif net quotidien moyen du Patriot Fund. Pour l'exercice
a expiré en 2019. Au 30 septembre 2010, le conseiller recevait des honoraires de conseil annuels correspondant à 1,40% de l'actif net quotidien moyen du Patriot
La Fondation.

Le conseiller en fonds a accepté
réduire ses commissions et / ou absorber les frais du Fonds jusqu'en 2021 au moins; 31 janvier pour garantir que l'ensemble des activités annuelles du Fonds
Frais après impôt et frais de courtage pour le retour du fonds, à l'exclusion de toute provision définitive ou conditionnelle
commissions, frais et charges des fonds, coûts d'emprunt (tels que les intérêts et les dividendes sur les ventes à découvert),
Frais et dépenses liés aux investissements dans d'autres instruments de placement collectif ou dérivés (y compris
les frais et coûts d'option et de swap), les frais et dépenses extraordinaires tels que les frais de contentieux (qui peuvent inclure des dommages)
La rémunération contractuelle des dirigeants et fiduciaires du Fonds, des prestataires de services du Fonds (à l'exclusion du conseiller) ne dépassera pas
ce sont les valeurs d'actifs moyennes quotidiennes de chaque classe d'actions, en tenant compte des recouvrements
Fondation et cours pour l'année à venir, à partir de trois ans (dans les trois ans après la levée ou le remboursement de l'impôt)
à condition que ce recouvrement puisse être réalisé dans les limites de dépenses suivantes:

La Fondation Classe A Classe C Classe I
Fondation Patriots 2,40% 3,15% 2,15%

Les accords d'exemption et de remboursement peuvent
réduire les coûts du Fonds et accroître sa performance. Le présent Accord ne peut être résilié que par le Conseil du Fonds,
avec un préavis écrit de 60 jours au conseiller. Discussion sur le cadre consultatif renouvelé du Conseil
L'accord sera disponible dans le rapport aux actionnaires semestriel du Fonds pour la période se terminant en 2020. 31 mars

GUIDE DE PORTEFEUILLE

James H. Lee

James H. Lee est principalement responsable de
la gestion quotidienne du Fonds. James. H. Lee est devenu gestionnaire de portefeuille du Fonds en 2014. Il a servi de conseiller
Le comité d'investissement depuis la création du fonds en 2012 Mars James H. Lee a été président des Rising Advisers
Group, LLC depuis 2009 Et a siégé au comité d'investissement depuis sa création. Il est membre du comité d'investissement,
Fondateur et ancien président de Momentum Securities, LLC (1999-2003); était en 2001. Entrepreneur E&Y. Ancien président
Conseil d'administration, Texas Teachers Retirement System 2006-2009. et ancien fiduciaire, Texas Growth Fund (2008-2009)
et 1990. Au début, il a travaillé pour The First Boston Corporation M&A Group. M. Lee a fréquenté l'Université du Texas à Austin
(MBA), Université du Texas à Austin (BBA, Finance) et London Business School (Executive Hedge Fund Program).

Le gestionnaire de portefeuille est soutenu par un conseiller
Comité d'investissement et autres cadres supérieurs. Les détails de ces autres employés sont fournis ci-dessous.

J. Philip Ferguson est président exécutif
conseiller du comité d'investissement. M. Ferguson est un ancien responsable des questions d'investissement chez Invesco / AIM, où il a dirigé
avec plus de 100 milliards de dollars en actions et en actifs à revenu fixe et 90 professionnels de l'investissement. Il est actuellement député
Président de la University of Texas Investment Management Company (UTIMCO). Il est diplômé de la faculté de droit de l'Université du Texas
(JD), Texas Christian University (BBA) et London City College (droit international et droit comparé).

Katherine Ensor, PhD, consultante, Quantitative
Recherche. Mme Esnor est actuellement présidente, fondatrice et directrice du département de statistique de l'Université Rice
En informatique en finance et économie (CoFES) de l'Université Rice. Elle est diplômée de la Texas A&M University (PhD
Statistics) et Arkansas State University (BSE Mathematics).

Cullen Rogers, analyste de portefeuille principal et
Membre du comité d'investissement, avant affiliation avec les conseillers émergents, p. Rogers travaille comme analyste principal chez Salient.
Partners, L.P. Il traite avec des conseillers ascendants depuis environ 7 ans. M. Rogers est titulaire d'un baccalauréat de l'Université
du Texas.

James Walker est membre du comité d'investissement
et depuis 1990. est un commerçant d'Ascendant Advisors, LLC. Il a obtenu son MBA de la Southern Methodist University (MBA) et
a également fréquenté l'Université Rice (BA, physique).

Paul Wigdor est directeur exécutif d'Ascendant
Les fonds. Ancien président de Superfund USA, PDG de Pershing LLC et directeur associé de Bear,
Stearns & Co. Il a également participé au programme SEC Honors avec la Securities and Exchange Commission des États-Unis. M. Wigdor est diplômé
Université Brandeis (BA) et faculté de droit de l'Université Fordham (JD).

COMMENT PARTAGER LES PRIX

VNI et cours acheteur (VNI plus tout
les taxes de vente sur chaque catégorie de fonds) sont déterminées à la fermeture de la Bourse de New York (NYSE) (généralement
16 h 00 Heure de l'Est) Chaque jour, le NYSE est ouvert aux affaires. La valeur liquidative du Fonds est calculée en déterminant la valeur de chaque catégorie
base, la valeur marchande totale des actifs du Fonds moins ses passifs divisée par le nombre total d'actions en circulation
((Actif-Passif) / Nombre d'actions = VNI). Les week-ends et le jour de l'an à New York sont terminés, Martin Luther King Jr.
Jour, jour des présidents, vendredi saint, jour commémoratif, jour de l'indépendance, fête du Travail, action de grâces et Noël. GAV
les frais et commissions du Fonds, y compris la gestion, l'administration et la distribution, seront pris en considération pour chaque catégorie
les frais (le cas échéant) accumulés chaque jour. La détermination de la valeur liquidative pour une classe d'actions à un jour donné est applicable à toutes les applications
d'acquérir des Actions ainsi que toute demande de rachat d'Actions reçue par le Fonds (ou un intermédiaire autorisé)
ou son représentant autorisé) avant la clôture du NYSE Trading à cette date.

Habituellement une fondation
les titres sont évalués quotidiennement à la dernière cotation à la bourse principale de chaque titre. Titres négociés ou négociés
une ou plusieurs bourses (nationales ou étrangères) pour lesquelles les cotations du marché sont facilement disponibles et non disponibles
soumis à des limites de revente, évaluées à la dernière cotation sur la bourse principale, en moyenne entre
offre actuelle et demander un prix sur ces échanges. Titres négociés principalement à la National Association of Securities Dealers
La tarification automatisée (NASDAQ) doit être un système de marché national avec un accès facile aux prix du marché
être évalué en utilisant le cours de clôture officiel du NASDAQ. Les titres qui ne sont pas négociés en bourse (ou
nationaux ou étrangers) qui sont généralement disponibles au comptoir
le prix de vente ou, s'il n'est pas vendu, la moyenne entre l'offre actuelle et le prix demandé dans un tel OTC. Dettes
Les titres non négociés en bourse peuvent être évalués aux prix indiqués par le ou les agents de prix en fonction du courtier ou du courtier fourni
évaluation ou tarification matricielle – une méthode d'évaluation des titres basée sur la valeur d'autres titres ayant des caractéristiques similaires,
telles que la notation, le taux d'intérêt et l'échéance.

S'il n'y a pas de prix du marché
les titres facilement disponibles seront évalués à la juste valeur, déterminée par des procédures de «juste valeur»
approuvé par le Conseil. Si les prix du marché ne sont pas facilement disponibles, les titres seront évalués à leur juste valeur
est déterminé de bonne foi par le conseiller conformément aux procédures approuvées par le conseil et évalué trimestriellement par les conseils.
apie naudojamo tikrosios vertės metodo patikimumą. Tikrosios vertės kainodara apima subjektyvius sprendimus ir gali būti, kad
vertybinio popieriaus tikroji vertė gali iš esmės skirtis nuo vertės, kuri galėtų būti realizuota pardavus tą vertybinį popierių.
Tikrosios vertės kainos gali skirtis nuo rinkos kainų, kai jos tampa prieinamos arba kai kaina tampa prieinama. Valdyba turi
šių procedūrų vykdymą pavedė tikrosios vertės komitetui, sudarytam iš vieno ar daugiau atstovų iš kiekvienos i)
Patikėk, ii) administratoriumi ir iii) patarėju. Komitetas taip pat gali pasitelkti trečiųjų šalių konsultantus, tokius kaip audito įmonė ar finansininkai
vertybinių popierių emitento pareigūnas pagal poreikį padeda nustatyti konkretaus vertybinio popieriaus tikrąją vertę. Valdyba peržiūri ir
patvirtina šio proceso vykdymą ir gautas tikrosios vertės kainas bent kartą per ketvirtį, kad užtikrintų proceso patikimumą
rezultatai.

Fondas gali naudotis nepriklausomomis kainų nustatymo paslaugomis
padėti apskaičiuoti Fondo vertybinių popierių vertę. Be to, užsienio vertybinių popierių rinkos kainos nėra nustatomos
tuo pačiu dienos laiku kaip ir Fondo GAV. Kadangi Fondas gali investuoti į vertybinius popierius, kurių vertybiniai popieriai daugiausia įtraukti į užsienio
biržos, ir šios biržos gali prekiauti savaitgaliais ar kitomis dienomis, kai Fondas nekainuoja jų akcijų, kai kurių
Fondo portfelio vertybiniai popieriai gali keistis tomis dienomis, kai galbūt negalėsite nusipirkti ar parduoti Fondo akcijų. Kompiuterijoje
Fondo grynųjų aktyvų vertę, patarėjas vertina Fondo turimus užsienio vertybinius popierius ne vėliau kaip uždarymo kainą biržoje, kurioje
jais prekiaujama prieš pat NYSE uždarymą. Užsienio vertybinių popierių, išreikštų užsienio valiuta, kainos yra perskaičiuojamos
į JAV dolerius pagal dabartinius kursus. Jei įvyksta įvykių, turinčių esminės įtakos vertybinių popierių vertei Fondo portfelyje
prieš tai, kai Fondas įvertins jų akcijas, vertybinis popierius bus įvertintas tikrąja verte. Pavyzdžiui, jei prekiaujama vertybinių popierių portfeliu
is halted and does not resume before the Fund calculates their NAVs, the Adviser may need to price the security using the Fund’s
fair value pricing guidelines. Without a fair value price, short-term traders could take advantage of the arbitrage opportunity
and dilute the NAVs of long-term investors. Fair valuation of a Fund’s portfolio securities can serve to reduce arbitrage
opportunities available to short-term traders, but there is no assurance that fair value pricing policies will prevent dilution
of the Fund’s NAVs by short-term traders. The determination of fair value involves subjective judgments. As a result, using
fair value to price a security may result in a price materially different from the prices used by other mutual funds to determine
net asset value, or from the price that may be realized upon the actual sale of the security.

With respect to any portion of a Fund’s
assets, if any, that are invested in one or more open-end management investment companies registered under the Investment Company
Act of 1940, as amended (the “1940 Act”), the Fund’s NAV is calculated based upon the NAVs of those open-end
management investment companies, and the prospectuses for these companies explain the circumstances under which those companies
will use fair value pricing and the effects of using fair value pricing.

HOW TO PURCHASE SHARES

Share Classes

This Prospectus describes three classes of shares
offered by the Fund: Class A, Class C and Class I. The Fund offers these classes of shares so that you can choose the class that
best suits your investment needs. Refer to the information below so that you can choose the class that best suits your investment
needs. The main differences between the share classes are ongoing fees, minimum investment amounts, and sales charges. The minimum
initial investment for Class A and Class C is $1,000. The minimum initial investment amount for Class I shares is $1,000,000. Class
A shares pay sales charges up to 5.75%, and Class C and Class I shares do not pay such fees. Class A shares pay an annual fee of
up to 0.25% for distribution expenses pursuant to a plan under Rule 12b-1, Class C shares pay an annual fee of up to 1.00% for
distribution expenses pursuant to a plan under Rule 12b-1, and Class I shares do not pay such fees. For information on ongoing
distribution fees, see Distribution Fees on page 16 of this Prospectus. Each class of shares in the Fund represents an interest
in the same portfolio of investments within the Fund. There is no investment minimum on reinvested distributions and the Fund may
change investment minimums at any time. The Fund reserves the right to waive sales charges, as described below, and investment
minimums. All share classes may not be available for purchase in all states. Shares of the Fund may be exchanged for shares of
another class of the same Fund, provided the investor qualifies for the new share class. Such share class exchanges within the
same Fund are non-taxable.

Class A Shares

Class A shares are offered at their public offering
price, which is NAV plus the applicable sales charge and are subject to 12b-1 distribution fees of up to 0.25% of the average daily
net assets of Class A shares. The minimum initial investment in Class A shares of the Fund is $1,000 for all accounts. The minimum
subsequent investment in Class A shares of the Fund is $100 for all accounts. The sales charge varies, depending on how much you
invest. There are no sales charges on reinvested distributions. The following sales charges, which may be waived in the Fund’s
or the Adviser’s discretion as described below, apply to your purchases of Class A shares of the Fund:

Amount Invested Sales Charge as a %
of Offering Price(1)
Sales Charge as a %
of Amount Invested
Dealer
Reallowance(2)
Under $25,000 5.75% 6.10% 5.00%
$25,000 to $49,999 5.00% 5.26% 4.25%
$50,000 to $99,999 4.75% 4.99% 4.00%
$100,000 to $249,999 3.75% 3.83% 3.25%
$250,000 to $499,999 2.50% 2.56% 2.00%
$500,000 to $999,999 2.00% 2.04% 1.75%
$1,000,000 and above 0.00% 0.00% See below
(1) Offering price includes
the front-end sales load. The sales charge you pay may differ slightly from the amount set forth above because of rounding that
occurs in the calculations used to determine your sales charge.
(2) Represent a amount
of the sales charge retained by the selling broker-dealer.

A selling broker may receive commissions from
the Adviser on purchases of Class A shares over $1 million calculated as follows: 1.00% on purchases between $1 million and $3
million, 0.50% on amounts over $3 million but less than $5 million, 0.25% on amounts over $5 million. The commission rate is determined
based on the purchase amount combined with the current market value of existing investments in Class A shares.

As shown, investors that purchase $1,000,000
or more of the Fund’s Class A shares will not pay any initial sales charge on the purchase. However, purchases of $1,000,000
or more of Class A shares may be subject to a contingent deferred sales charge (“CDSC”) on shares redeemed during the
first 18 months after their purchase in the amount of the commissions paid on the shares redeemed.

How to Reduce Your Sales Charge

You may be eligible to purchase Class A shares
at a reduced sales charge. To qualify for these reductions, you must notify the Fund’s distributor, Northern Lights Distributors,
LLC (the “distributor”), in writing and supply your account number at the time of purchase. You may combine your purchase
with those of your “immediate family” (your spouse and your children under the age of 21) for purposes of determining
eligibility. If applicable, you will need to provide the account numbers of your spouse and your minor children as well as the
ages of your minor children.

Rights of Accumulation: To qualify for
the lower sales charge rates that apply to larger purchases of Class A shares, you may combine your new purchases of Class A shares
with Class A shares of the Fund that you already own. The applicable initial sales charge for the new purchase is based on the
total of your current purchase and the current value of all other Class A shares that you own. The reduced sales charge will apply
only to current purchases and must be requested in writing when you buy your shares.

Shares of the Fund held as follows cannot
be combined with your current purchase for purposes of reduced sales charges:

· shares held indirectly through financial
intermediaries other than your current purchase broker-dealer
(for example, a different broker-dealer, a bank, a separate insurance company account or an investment advisor);
· shares held through an administrator or
trustee/custodian of an Employer Sponsored Retirement Plan
(for example, a 401(k) plan) other than employer-sponsored IRAs; et
· shares held directly in an account of the
Fund on which the broker-dealer (financial advisor) of record is different than your current purchase broker-dealer.

Letter of Intent: Under a Letter of Intent
(“LOI”), you commit to purchase a specified dollar amount of Class A shares of the Fund, with a minimum of $25,000,
during a 13-month period. At your written request, Class A shares purchases made during the previous 90 days may be included. The
amount you agree to purchase determines the initial sales charge you pay. If the full-face amount of the LOI is not invested by
the end of the 13-month period, your account will be adjusted to the higher initial sales charge level for the amount actually
invested. You are not legally bound by the terms of your LOI to purchase the amount of your shares stated in the LOI. The LOI does,
however, authorizes the Fund to hold in escrow 5% of the total amount you intend to purchase. If you do not complete the total
intended purchase at the end of the 13 month period, the Fund’s transfer agent will redeem the necessary portion of the escrowed
shares to make up the difference between the reduced rate sales charge (based on the amount you intended to purchase) and the sales
charge that would normally apply (based on the actual amount you purchased).

Repurchase of Class A Shares: If you
have redeemed Class A shares of the Fund within the past 120 days, you may repurchase an equivalent amount of Class A shares of
the Fund at NAV, without the normal front-end sales charge. In effect, this allows you to reacquire shares that you may have had
to redeem, without repaying the front-end sales charge. You may exercise this privilege only once and must notify the Fund that
you intend to do so in writing. The Fund must receive your purchase order within 120 days of your redemption. Note that if you
reacquire shares through separate installments (e.g., through monthly or quarterly repurchases), the sales charge waiver will only
apply to those portions of your repurchase order received within 120 days of your redemption.

Sales Charge Waivers

The sales charge on purchases of Class A shares
is waived for certain types of investors, including:

· Current and retired trustees and officers
of the Fund sponsored by the Adviser or any of its subsidiaries, their families (e.g., spouse, children, mother or father)
and any purchases referred through the Adviser.
· Employees of the Adviser and their families,
or any full-time employee or registered representative of the distributor or of broker-dealers having dealer agreements with the
distributor (a “Selling Broker”) and their immediate families (or any trust, pension, profit sharing or other benefit
plan for the benefit of such persons).
· Any full-time employee of a bank, savings
and loan, credit union or other financial institution that utilizes a Selling Broker to clear purchases of the Fund’s shares
and their immediate families.
· Participants in certain “wrap-fee”
or asset allocation programs or other fee-based arrangements sponsored by broker-dealers and other financial institutions that
have entered into agreements with the distributor.
· Clients of financial intermediaries that
have entered into arrangements with the distributor providing for the shares to be used in particular investment products made
available to such clients and for which such registered investment advisors may charge a separate fee.
· Institutional investors (which may include
bank trust departments and registered investment advisors).
· Any accounts established on behalf of registered
investment advisors or their clients by broker-dealers that charge a transaction fee and that have entered into agreements with
the distributor.
· Separate accounts used to fund certain
unregistered variable annuity contracts or Section 403(b) or 401(a) or (k) accounts.

· Employer-sponsored retirement or benefit
plans with total plan assets in excess of $5 million where the plan’s investments in the Fund are part of an omnibus account.
A minimum initial investment of $1 million in the Fund is required. The distributor in its sole discretion may waive these minimum
dollar requirements.

The Fund does not waive sales charges for the
reinvestment of proceeds from the sale of shares of a different fund where those shares were subject to a front-end sales charge
(sometimes called an “NAV transfer”). Whether a sales charge waiver is available for your retirement plan or charitable
account depends upon the policies and procedures of your intermediary. Please consult your financial adviser for further information.

Class C Shares

Class C shares of the Fund are offered at their
NAV without an initial sales charge. This means that 100% of your initial investment is placed into shares of the Fund. Class C
shares pay up to 1.00% on an annualized basis of the average daily net assets as reimbursement or compensation for service and
distribution-related activities with respect to the Fund and/or shareholder services. Over time, fees paid under this distribution
and service plan will increase the cost of a Class C shareholder’s investment and may cost more than other types of sales
charges. The minimum initial investment in the Class C shares is $1,000 and the minimum subsequent investment is $100.

Class I Shares

Class I shares of the Fund are sold at NAV without
an initial or deferred sales charge and are not subject to 12b-1 distribution fees, but have a higher minimum initial investment
than Class A and Class C shares. This means that 100% of your initial investment is placed into shares of the Patriot Fund. Class
I shares require a minimum initial investment of $1,000,000 and the minimum subsequent investment is $25,000.

Factors to Consider When Choosing a Share
Class:
When deciding which class of shares of the which Fund to purchase, you should consider your investment goals, present
and future amounts you may invest in the Patriot Fund, and the length of time you intend to hold your shares. To help you make
a determination as to which class of shares to buy, please refer back to the examples of the Fund’s expenses over time in Fees and Expenses of the Fund section for the Fund in this Prospectus. You also may wish to consult with your financial
Adviser for advice with regard to which share class would be most appropriate for you.

Purchasing Shares: You may purchase shares of
the Fund by sending a completed application form to the following address:

via Regular Mail: or Overnight Mail:

Patriot Fund

c/o Gemini Fund Services, LLC

P.O. Box 541150

Omaha, Nebraska 68154

Patriot Fund

c/o Gemini Fund Services, LLC

4221 North 203rd Street, Suite 100

Elkhorn, Nebraska 68022-3474

The USA PATRIOT Act requires financial institutions,
including the Fund, to adopt certain policies and programs to prevent money-laundering activities, including procedures to verify
the identity of customers opening new accounts. As requested on the Application, you should supply your full name, date of birth,
social security number and permanent street address. Mailing addresses containing a P.O. Box will not be accepted. This information
will assist the Fund in verifying your identity. Until such verification is made, the Fund may temporarily limit additional share
purchases. In addition, the Fund may limit additional share purchases or close an account if it is unable to verify a shareholder’s
identity. As required by law, the Fund may employ various procedures, such as comparing the information to fraud databases or requesting
additional information or documentation from you, to ensure that the information supplied by you is correct.

Purchase through Brokers: You may invest
in the Fund through brokers or agents who have entered into selling agreements with the Fund’s distributor. The brokers and
agents are authorized to receive purchase and redemption orders on behalf of the Fund. The Fund will be deemed to have received
a purchase or redemption order when an authorized broker or its designee receives the order. The broker or agent may set their
own initial and subsequent investment minimums. You may be charged a fee if you use a broker or agent to buy or redeem shares of
the Fund. Finally, various servicing agents use procedures and impose restrictions that may be in addition to, or different from
those applicable to investors purchasing shares directly from the Fund. You should carefully read the program materials provided
to you by your servicing agent. Such brokers are authorized to designate other financial intermediaries to receive purchase and
redemption orders on the Fund’s behalf.

Purchase by Wire: If you wish to wire
money to make an investment in the Fund, please call the Fund at
1-855-527-2363 for wiring instructions and to notify the Fund that a wire transfer is coming. Any commercial bank can transfer
same-day funds via wire. The Fund will normally accept wired funds for investment on the day received if they are received by the
Fund’s designated bank before the close of regular trading on the NYSE. Your bank may charge you a fee for wiring same-day
funds.

Automatic Investment Plan: You may participate
in either of the Fund’s Automatic Investment Plans, an investment plan that automatically moves money from your bank account
and invests it in the Fund through the use of electronic funds transfers or automatic bank drafts. You may elect to make subsequent
investments by transfers of a minimum of $100 on specified days of each month into your established Fund account. Please contact
the Fund at 1-855-527-2363 for more information about the Fund’s Automatic Investment Plans.

The Fund, however, reserves the right, in their
sole discretion, to reject any application to purchase shares. Applications will not be accepted unless they are accompanied by
a check drawn on a U.S. bank, thrift institutions, or credit union in U.S. funds for the full amount of the shares to be purchased.
After you open an account, you may purchase additional shares by sending a check together with written instructions stating the
name(s) on the account and the account number, to the above address. Make all checks payable to the Fund in which you wish to purchase
shares, e.g. “Patriot Fund”. The Fund will not accept payment in cash, including cashier’s checks or money
orders. Also, the Fund will not accept third party checks, U.S. Treasury checks, credit card checks or starter checks for the purchase
of shares. Redemptions of Shares of the Fund purchased by check may be subject to a hold
period until the check has been cleared by the issuing bank. To avoid such holding periods, Shares may be purchased through a broker
or by wire, as described in this section.

Note: Gemini Fund Services, LLC, the
Fund’s Transfer Agent, will charge a $25 fee against a shareholder’s account, in addition to any loss sustained by
the Fund, for any check returned to the transfer agent for insufficient funds.

When Order is Processed: All requests
received in good order by the Fund’s transfer agent or the appropriate financial intermediary before the close of
the NYSE (normally 4:00 PM Eastern Time) will be processed on that same day. All requests received in good order by the Fund before
4:00 p.m. (Eastern Time) will be processed on that same day. Requests received after 4:00 p.m. will be processed on the next business
jour.

Good Order: When making a purchase request, make sure
        your request is in good order. “Good order” means your purchase request includes:

·
the name of the Fund and share class,

·
the dollar amount of shares to be purchased,

·
a completed purchase application or investment stub, and

·
a check payable to the “Patriot Fund”.

Retirement Plans: You may purchase shares
of the Fund for your individual retirement plans. Please call the Fund at
1-855-527-2363 for the most current listing and appropriate disclosure documentation on how to open a retirement account.

HOW TO REDEEM SHARES

Redeeming Shares: The Fund typically
expect that it will take up to 7 days following the receipt of your redemption request to pay out redemption proceeds by check
or electronic transfer. The Fund typically expect to pay redemptions from cash, cash equivalents, proceeds from the sale of Fund
shares, any lines of credit, and the from the sale of portfolio securities. These redemption payment methods will be used in regular
and stressed market conditions. You may redeem all or any portion of the shares credited to your account by submitting a written
request for redemption to:

via Regular Mail: or Overnight Mail:
Patriot Fund
c/o Gemini Fund Services, LLC
P.O. Box 541150
Omaha, Nebraska 68154
Patriot Fund
c/o Gemini Fund Services, LLC
4221 North 203rd Street, Suite 100
Elkhorn, Nebraska 68022-34

Redemptions by Telephone: The telephone
redemption privilege is automatically available to all new accounts except retirement accounts. If you do not want the telephone
redemption privilege, you must indicate this in the appropriate area on your account application or you must write to the Fund
and instruct them to remove this privilege from your account.

The proceeds will be sent by mail to the address
designated on your account or wired directly to your existing account in a bank or brokerage firm in the U.S. as designated on
your application. To redeem by telephone, call 1-855-527-2363. The redemption proceeds normally will be sent by mail or by wire
within three business days after receipt of your telephone instructions. IRA accounts are not redeemable by telephone.

The Fund reserves the right to suspend the telephone
redemption privileges with respect to your account if the name(s) or the address on the account has been changed within the previous
30 days. Neither the Fund, the Transfer Agent, nor their respective affiliates will be liable for complying with telephone instructions
they reasonably believe to be genuine or for any loss, damage, cost or expenses in acting on such telephone instructions and you
will be required to bear the risk of any such loss. The Fund or the Transfer Agent, or both, will employ reasonable procedures
to determine that telephone instructions are genuine. If the Fund and/or the Transfer Agent do not employ these procedures, they
may be liable to you for losses due to unauthorized or fraudulent instructions. These procedures may include, among others, requiring
forms of personal identification prior to acting upon telephone instructions, providing written confirmation of the transactions
and/or tape recording telephone instructions.

Redemptions through Broker: If shares
of the Fund are held by a broker-dealer, financial institution or other servicing agent, you must contact that servicing agent
to redeem shares of the Fund. The servicing agent may charge a fee for this service.

Redemptions by Wire: You may request
that your redemption proceeds be wired directly to your bank account. The Fund’s Transfer Agent imposes a $15 fee for each
wire redemption and deducts the fee directly from your account. Your bank may also impose a fee for the incoming wire.

Redemptions in Kind: The Fund reserves
the right to honor requests for redemption or repurchase orders made by a shareholder during any 90-day period by making payment
in whole or in part in portfolio securities (“redemption in kind”) if the amount of such a request is large enough
to affect operations (if the request is greater than the lesser of $250,000 or 1% of the Fund’s net assets at the beginning
of the 90-day period). The securities will be chosen by the Fund and valued using the same procedures as used in calculating the
Fund’s NAV. A shareholder may incur transaction expenses in converting these securities to cash. Additionally, such securities
are subject to changes in value due to market risk. To the extend feasible, the Fund expects a pro-rata distribution of its securities.

Automatic Withdrawal Plan: If your individual
account, IRA or other qualified plan account has a current account value of at least $50,000, you may participate in the Fund’s
Automatic Withdrawal Plan, an investment plan that automatically moves money to your bank account from the Fund through the use
of electronic funds transfers. You may elect to make subsequent withdrawals by transfers of a minimum of $500 on specified days
of each month into your established bank account. Please contact the Fund at 1-855-527-2363 for more information about the Fund’s
Automatic Withdrawal Plans.

When Redemptions are Sent: Once the Fund
receive your redemption request in “good order” as described below, it will issue a check based on the next determined
NAV following your redemption request. The redemption proceeds normally will be sent by mail or by wire within seven business days
after receipt of a request in “good order.” If you purchase shares using a check and soon after request a redemption,
your redemption proceeds, which are payable at the next determined NAV following the receipt
your redemption request in “good order”, as described below,
will not be sent until the check used for your
purchase has cleared your bank.

Good Order: Your redemption request will
be processed if it is in “good order.” To be in good order, the following conditions must be satisfied:

· the request should be in writing, unless
redeeming by telephone, indicating the number of shares or dollar amount to be redeemed;
· the request must identify your account
number;
· the request should be signed by you and
any other person listed on the account, exactly as the shares are registered; et
· if you request that the redemption proceeds
be sent to a person, bank or an address other than that of record or paid to someone other than the record owner(s), or if the
address was changed within the last 30 days, or if the proceeds of a requested redemption exceed $50,000, the signature(s) on the
request must be medallion signature guaranteed by an eligible signature guarantor.

When You Need Medallion Signature Guarantees:
If you wish to change the bank or brokerage account that you have designated on your account, you may do so at any time by
writing to the Fund with your signature guaranteed. A medallion signature guarantee assures that a signature is genuine and protects
you from unauthorized account transfers. You will need your signature guaranteed if:

· you request a redemption to be made payable
to a person not on record with the Fund,
· you request that a redemption be mailed
to an address other than that on record with the Fund,
· the proceeds of a requested redemption
exceed $50,000,
· any redemption is transmitted by federal
wire transfer to a bank other than the bank of record, or
· your address was changed within 30 days
of your redemption request.

Signatures may be guaranteed by any eligible
guarantor institution (including banks, brokers and dealers, credit unions, national securities exchanges, registered securities
associations, clearing agencies and savings associations). Further documentation will be required to change the designated account
if shares are held by a corporation, fiduciary or other organization. A notary public cannot guarantee signatures.

Retirement Plans: If you own an IRA or
other retirement plan, you must indicate on your redemption request whether the Fund should withhold federal income tax. Unless
you elect in your redemption request that you do not want to have federal tax withheld, the redemption will be subject to withholding.

Low Balances: If at any time your account
balance in the Fund falls below the following amounts per share class:

Class Un C I
Minimum $1,000 $1,000 $1,000,000

The Fund may notify you that, unless the account
is brought up to at least the per-class minimum within 60 days of the notice, your account could be closed. After the notice period,
the Fund may redeem all of your shares and close your account by sending you a check to the address of record. Your account will
not be closed if the account balance drops below the per-class minimum due to a decline in NAV.

FREQUENT PURCHASES AND REDEMPTIONS OF FUND SHARES

The Fund discourages and do not accommodate
market timing. Frequent trading into and out of the Fund can harm all Fund shareholders by disrupting the Fund’s investment
strategies, increasing Fund expenses, decreasing tax efficiency and diluting the value of shares held by long-term shareholders.
The Fund is designed for long-term investors and not intended for market timing or other disruptive trading activities. Accordingly,
the Fund’s Board has approved policies that seek to curb these disruptive activities while recognizing that shareholders
may have a legitimate need to adjust their Fund investments as their financial needs or circumstances change.

The Fund currently uses several methods to reduce
the risk of market timing and commits a staff to review, on a continuing basis, recent trading activity in order to identify trading
activity that may be contrary to the Fund’s “Market Timing Trading Policy.” These methods include:

· rejecting or limiting specific purchase requests,
· rejecting purchase requests from certain investors, and
· charging a redemption fee.

Though these methods involve judgments that
are inherently subjective and involve some selectivity in their application, the Fund seeks to make judgments and applications
that are consistent with the interests of the Fund’s shareholders.

Based on the frequency of redemptions in your
account, the Adviser or Transfer Agent may in its sole discretion determine that your trading activity is detrimental to the Fund
as described in the Fund’s Market Timing Trading Policy and elect to reject or limit the amount, number, frequency or method
for requesting future purchases or exchanges into the Fund.

The Fund reserves the right to reject or restrict
purchase requests for any reason, particularly when the shareholder’s trading activity suggests that the shareholder may
be engaged in market timing or other disruptive trading activities. Neither the Fund nor the Adviser will be liable for any losses
resulting from rejected purchase orders. The Adviser may also bar an investor who has violated these policies (and the investor’s
financial advisor) from opening new accounts with the Fund.

Although the Fund attempts to limit disruptive
trading activities, some investors use a variety of strategies to hide their identities and their trading practices. There can
be no guarantee that the Fund will be able to identify or limit these activities. Omnibus account arrangements are common forms
of holding shares of the Fund. While the Fund will encourage financial intermediaries to apply the Fund’s Market Timing Trading
Policy to their customers who invest indirectly in the Fund, the Fund is limited in their ability to monitor the trading activity
or enforce the Fund’s Market Timing Trading Policy with respect to customers of financial intermediaries. For example, should
it occur, the Fund may not be able to detect market timing that may be facilitated by financial intermediaries or made difficult
to identify in the omnibus accounts used by those intermediaries for aggregated purchases, exchanges and redemptions on behalf
of all their customers. More specifically, unless the financial intermediaries have the ability to apply the Fund’s Market
Timing Trading Policy to their customers through such methods as implementing short-term trading limitations or restrictions and
monitoring trading activity for what might be market timing, the Fund may not be able to determine whether trading by customers
of financial intermediaries is contrary to the Fund’s Market Timing Trading Policy. Brokers maintaining omnibus accounts
with the Fund have agreed to provide shareholder transaction information to the extent known to the broker to the Fund upon request.
If the Fund or the Transfer Agent or shareholder servicing agent suspects there is market timing activity in the account, the Fund
will seek full cooperation from the service provider maintaining the account to identify the underlying participant. At the request
of the Adviser, the service providers may take immediate action to stop any further short-term trading by such participants.

TAX STATUS, DIVIDENDS AND DISTRIBUTIONS

Any sale or exchange of the Fund’s shares
may generate tax liability (unless you are a tax-exempt investor or your investment is in a qualified retirement account). When
you redeem your shares, you may realize a taxable gain or loss. This is measured by the difference between the proceeds of the
sale and the tax basis for the shares you sold. (To aid in computing your tax basis, you generally should retain your account statements
for the period that you hold shares in the Fund.)

The Fund intends to distribute substantially
all of its net investment income at least annually and net capital gains annually. Both distributions will be reinvested in shares
of the Fund unless you elect to receive cash. Dividends from net investment income (including any excess of net short-term capital
gain over net long-term capital loss) are taxable to investors as ordinary income, while distributions of net capital gain (the
excess of net long-term capital gain over net short-term capital loss) are generally taxable as long-term capital gain, regardless
of your holding period for the shares. Any dividends or capital gain distributions you receive from the Fund will normally be taxable
to you when made, regardless of whether you reinvest dividends or capital gain distributions or receive them in cash. Certain dividends
or distributions declared in October, November or December will be taxed to shareholders as if received in December if they are
paid during the following January. Each year the Fund will inform you of the amount and type of your distributions. IRAs and other
qualified retirement plans are exempt from federal income taxation until retirement proceeds are paid out to the participant.

Your redemptions, including exchanges, may result
in a capital gain or loss for federal tax purposes. A capital gain or loss on your investment is the difference between the cost
of your shares, including any sales charges, and the amount you receive when you sell them.

On the account application, you will be asked
to certify that your social security number or taxpayer identification number is correct and that you are not subject to backup
withholding for failing to report income to the IRS. If you are subject to backup withholding or you did not certify your taxpayer
identification number, the IRS requires the Fund to withhold a percentage of any dividend, redemption or exchange proceeds. The
Fund reserves the right to reject any application that do not include a certified social security or taxpayer identification number.
If you do not have a social security number, you should indicate on the purchase form that your application to obtain a number
is pending. The Fund is required to withhold taxes if a number is not delivered to the Fund within seven days.

This summary is not intended to be and should
not be construed to be legal or tax advice. You should consult your own tax advisors to determine the tax consequences of owning
the Fund’s shares.

DISTRIBUTION OF SHARES

DISTRIBUTOR: Northern Lights Distributors,
LLC, 4221 North 203rd Street, Suite 100, Elkhorn, NE  68022, is the distributor for the shares of the Fund. Northern
Lights Distributors, LLC is a registered broker-dealer and member of the Financial Industry Regulatory Authority, Inc. (“FINRA”).
Shares of the Fund are offered on a continuous basis.

DISTRIBUTION FEES: The Trust, with respect
to the Fund, has adopted the Trust’s Master Distribution and Shareholder Servicing Plans (the “Plans”), for the
Fund’s Class A and Class C shares pursuant to Rule 12b-1 of the 1940 Act which allows the Fund to pay the Fund’s distributor
an annual fee for distribution and shareholder servicing expenses as indicated in the following table of the Fund’s average
daily net assets attributable to the respective class of shares:

Class Un C
12b-1 Fee 0.25% 1.00%

The Fund’s distributor and other entities
are paid pursuant to the Plans for distribution and shareholder servicing provided and the expenses borne by the distributor and
others in the distribution of Fund shares, including the payment of commissions for sales of the shares and incentive compensation
to and expenses of dealers and others who engage in or support distribution of shares or who service shareholder accounts, including
overhead and telephone expenses; printing and distribution of prospectuses and reports used in connection with the offering of
the Fund’s shares to other than current shareholders; and preparation, printing and distribution of sales literature and
advertising materials. In addition, the distributor or other entities may utilize fees paid pursuant to the Plans to compensate
dealers or other entities for their opportunity costs in advancing such amounts, which compensation would be in the form of a carrying
charge on any un-reimbursed expenses.

ADDITIONAL COMPENSATION TO FINANCIAL INTERMEDIARIES:
The Fund’s distributor, its affiliates, and the Fund’s Adviser may each, at its own expense and out of its own
assets including their legitimate profits from Fund-related activities, provide additional cash payments to financial intermediaries
who sell shares of the Fund. Financial intermediaries include brokers, financial planners, banks, insurance companies, retirement
or 401(k) plan administrators and others. These payments may be in addition to the Rule 12b-1 fees and any sales charges that are
disclosed elsewhere in this Prospectus. These payments are generally made to financial intermediaries that provide shareholder
or administrative services, or marketing support. Marketing support may include access to sales meetings, sales representatives
and financial intermediary management representatives, inclusion of the Fund on a sales list, including a preferred or select sales
list, or other sales programs. These payments also may be made as an expense reimbursement in cases where the financial intermediary
provides shareholder services to the Fund’s shareholders. The distributor may, from time to time, provide promotional incentives
to certain investment firms. Such incentives may, at the distributor’s discretion, be limited to investment firms who allow
their individual selling representatives to participate in such additional compensation.

HOUSEHOLDING: To reduce expenses, the
Fund mails only one copy of the Prospectus and each annual and semi-annual report to those addresses shared by two or more accounts.
If you wish to receive individual copies of these documents, please call the Fund at 1-855-527-2363 on days the Fund is open for
business or contact your financial institution. The Fund will begin sending you individual copies thirty days after receiving your
request.

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to
help you understand the Fund’s financial performance for the period of the Fund’s operations. Certain information reflects
financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned
(or lost) on an investment in the Fund (assuming reinvestment if all dividends and distributions). This information for the Fund
have been derived from the financial statements audited by BBD, LLP, whose report, along with the Fund’s financial statements,
are included in the Fund’s September 30, 2019 annual report, which is available upon request.

Patriot Fund

Per Share Data and Ratios for a Share of Beneficial
Interest Outstanding Throughout Each Year

Year Ended Year Ended Year Ended Year Ended Year Ended
Class A Shares September 30,
2019
September 30,
L'année 2018
September 30,
2017
September 30,
2016
September 30,
2015
Net Asset Value, Beginning of Year Dollars 18.91 Dollars 17.13 Dollars 14.97 Dollars 13.99 Dollars 14.37
Activity from investment operations:
Net investment loss (1) (0.04 ) (0.11 ) (0.07 ) (0.05 ) (0,03 )
Net realized and unrealized gain/(loss) on investments (0.15 ) 2.28 2.58 1.43 0.47
Total from investment operations (0.19 ) 2.17 2.51 1.38 0.44
Less distributions from:
Net realized gains (1.75 ) (0.39 ) (0.35 ) (0.40 ) (0.82 )
Paid-in-capital from redemption fees (1) 0.00 (4) 0.00 (4)
Net Asset Value, End of Year Dollars 16.97 Dollars 18.91 Dollars 17.13 Dollars 14.97 Dollars 13.99
Total Return (2) 0.22 % 12.83 % (7) 17.02 % (7) 9.94 % 3.22 %
Net Assets, At End of Year (000s) Dollars 1,398 Dollars 5,213 Dollars 8,777 Dollars 10,875 Dollars 6,132
Ratio of gross expenses to average net assets (3) 2.28 % 2.20 % (6) 2.25 % (6) 2.43 % 2.61 %
Ratio of net expenses to average net assets 2.28 % 2.33 % (5) 2.40 % (5) 2.40 % 2.40 %
Ratio of net investment loss to average net assets (0.25 )% (0.62 )% (0.43 )% (0.33 )% (0.23 )%
Portfolio Turnover Rate 48 % 45 % 41 % 49 % 22e %

(1) Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the year.
(2) Total returns shown are historical in nature and assume changes in share price, reinvestment of dividends and distributions, if any, and exclude the effect of applicable sales charges and redemption fees.  Had the adviser not waived a portion of its fees, total returns would have been lower.
(3) Represents the ratio of expenses to average net assets absent fee waivers and/or expense reimbursements by the Adviser.
(4) Amount represents less than $0.01 per share.
(5) Represents the ratio of expenses to average net assets after Adviser recapture of waived/reimbursements fees from prior periods.
(6) Represents ratio of expenses to average net assets before Adviser recapture of waived/reimbursed fees from prior periods.
(7) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and consequently, the net asset value for financial reporting purposes and the returns based upon these net asset values may differ from the net asset values and returns for shareholder processing.

Patriot Fund

Per Share Data and Ratios for a Share of Beneficial
Interest Outstanding Throughout Each Year

Year Ended Year Ended Year Ended Year Ended Year Ended
September 30, September 30, September 30, September 30, September 30,
Class C Shares 2019 L'année 2018 2017 2016 2015
Net Asset Value, Beginning of Year Dollars 17.99 Dollars 16.42 Dollars 14.47 Dollars 13.63 Dollars 14.13
Activity from investment operations:
Net investment loss (1) (0.16 ) (0.22 ) (0.20 ) (0.15 ) (0.18 )
Net realized and unrealized gain/(loss) on investments (0.16 ) 2.18 2.50 1.39 0.50
Total from investment operations (0.32 ) 1.96 2.30 1.24 0.32
Less distributions from:
Net realized gains (1.75 ) (0.39 ) (0.35 ) (0.40 ) (0.82 )
Paid-in-capital from redemption fees (1) 0.00 (4) 0.00 (4)
Net Asset Value, End of Year Dollars 15.92 Dollars 17.99 Dollars 16.42 Dollars 14.47 Dollars 13.63
Total Return (2) (0.56 )% 12.09 % (7) 16.13 % (7) 9.15 % 2.39 %
Net Assets, At End of Year (000s) Dollars 342 Dollars 550 Dollars 559 Dollars 467 Dollars 373
Ratio of gross expenses to average net assets (3) 3.04 % 2.95 % (6) 3.00 % (6) 3.18 % 3.36 %
Ratio of net expenses to average net assets 3.04 % 3.08 % (5) 3.15 % (5) 3.15 % 3.15 %
Ratio of net investment loss to average net assets (1.01 )% (1.25 )% (1.25 )% (1.06 )% (0.64 )%
Portfolio Turnover Rate 48 % 45 % 41 % 49 % 22e %

(1) Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the year.
(2) Total returns shown are historical in nature and assume changes in share price, reinvestment of dividends and distributions, if any, and exclude the effect of applicable sales charges and redemption fees.  Had the adviser not waived a portion of its fees, total returns would have been lower.
(3) Represents the ratio of expenses to average net assets absent fee waivers and/or expense reimbursements by the Adviser.
(4) Amount represents less than $0.01 per share.
(5) Represents the ratio of expenses to average net assets after Adviser recapture of waived/reimbursements fees from prior periods.
(6) Represents ratio of expenses to average net assets before Adviser recapture of waived/reimbursed fees from prior periods.
(7) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and consequently, the net asset value for financial reporting purposes and the returns based upon these net asset values may differ from the net asset values and returns for shareholder processing.

Patriot Fund

Per Share Data and Ratios for a Share of Beneficial
Interest Outstanding Throughout Each Year

Year Ended Year Ended Year Ended Year Ended Year Ended
Class I Shares September 30,
2019
September 30,
L'année 2018
September 30,
2017
September 30,
2016
September 30,
2015
Net Asset Value, Beginning of Year Dollars 19.28 Dollars 17.41 Dollars 15.17 Dollars 14.13 Dollars 14.47
Activity from investment operations:
Net investment income/(loss) (1) (0.00 ) (4) (0.05 ) (0.04 ) (0,01 ) (0.05 )
Net realized and unrealized gain/(loss)
on investments
(0.15 ) 2.31 2.63 1.45 0.53
Total from investment operations (0.15 ) 2.26 2.59 1.44 0.48
Less distributions from:
Net realized gains (1.75 ) (0.39 ) (0.35 ) (0.40 ) (0.82 )
Paid-in-capital from redemption fees (1) 0.00 (4) 0.00 (4) 0.00 (4)
Net Asset Value, End of Year Dollars 17.38 Dollars 19.28 Dollars 17.41 Dollars 15.17 Dollars 14.13
Total Return (2) 0.44 % 13.14 % 17.32 % 10.27 % 3.48 %
Net Assets, At End of Year (000s) Dollars 22,722 Dollars 27,610 Dollars 25,935 Dollars 19,803 Dollars 15,269
Ratio of gross expenses to average net assets (3) 2.05 % 1.95 % (6) 2.00 % (6) 2.18 % 2.38 %
Ratio of net expenses to average net assets 2.05 % 2.08 % (5) 2.15 % (5) 2.15 % 2.15 %
Ratio of net investment loss to average net assets (0.02 )% (0.29 )% (0.22 )% (0.06 )% (0.35 )%
Portfolio Turnover Rate 48 % 45 % 41 % 49 % 22e %

(1) Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the year.
(2) Total returns shown are historical in nature and assume changes in share price, reinvestment of dividends and distributions, if any, and exclude the effect of applicable sales charges and redemption fees. Had the adviser not waived a portion of its fees, total returns would have been lower.
(3) Represents the ratio of expenses to average net assets absent fee waivers and/or expense reimbursements by the Adviser.
(4) Amount represents less than $0.01 per share.
(5) Represents the ratio of expenses to average net assets after Adviser recapture of waived/reimbursements fees from prior periods.
(6) Represents ratio of expenses to average net assets before Adviser recapture of waived/reimbursed fees from prior periods.

PRIVACY NOTICE

Revised February 2014

FACTS WHAT DOES NORTHERN LIGHTS FUND TRUST DO WITH YOUR PERSONAL INFORMATION?

Pourquoi? Financial companies choose how they share your personal information.  Federal law gives consumers the right to limit some, but not all sharing.  Federal law also requires us to tell you how we collect, share, and protect your personal information.  Please read this notice carefully to understand what we do.

What?

The types of personal information we collect and share depends
        on the product or service that you have with us. This information can include:

  • Social Security number and wire transfer instructions
  • account transactions and transaction history

·
investment experience and purchase history

When you are no longer our customer, we continue to share
        your information as described in this notice.

How? All financial companies need to share customers’ personal information to run their everyday business.  In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons Northern Lights Fund Trust chooses to share; and whether you can limit this sharing.

Reasons we can share your personal information: Does Northern Lights Fund Trust share information? Can you limit this sharing?
For our everyday business purposes – such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus. YES NO
For our marketing purposes – to offer our products and services to you. NO We don’t share
For joint marketing with other financial companies. NO We don’t share
For our affiliates’ everyday business purposes – information about your transactions and records. NO We don’t share
For our affiliates’ everyday business purposes – information about your credit worthiness. NO We don’t share
For nonaffiliates to market to you NO We don’t share

QUESTIONS? Call 1-402-493-4603

What we do:
How does Northern Lights Fund Trust protect my personal information?

To protect your personal information from unauthorized
        access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files
        and buildings.

Our service providers are held accountable
        for adhering to strict policies and procedures to prevent any misuse of your nonpublic personal information.

How does Northern Lights Fund Trust collect my personal information?

We collect your personal information,
        for example, when you

·
open an account or deposit money

·
direct us to buy securities or direct us to sell your securities

·
seek advice about your investments

We also collect your personal information
        from others, such as credit bureaus, affiliates, or other companies.

Why can’t I limit all sharing?

Federal law gives you the right to
        limit only:

·
sharing for affiliates’ everyday business purposes – information about your creditworthiness.

·
affiliates from using your information to market to you.

·
sharing for nonaffiliates to market to you.

State laws and individual companies may give you additional rights
        to limit sharing.

Definitions
Affiliates

Companies related by common ownership or control. They can
        be financial and nonfinancial companies.

·
Northern Lights Fund Trust does not share with its affiliates.

Nonaffiliates

Companies not related by common ownership or control. They
        can be financial and nonfinancial companies.

·
Northern Lights Fund Trust does not share with nonaffiliates so they can market to you.

Joint marketing

A formal agreement between nonaffiliated financial companies
        that together market financial products or services to you.

·
Northern Lights Fund Trust doesn’t jointly market.

Patriot Fund

Adviser Ascendant Advisors, LLC
Four Oaks Place
1330 Post Oaks Blvd., Suite 1550
Houston, TX  77056
Distributor

Northern Lights Distributors, LLC
4221 North 203rd Street, Suite 100,

Elkhorn, NE 68022

Independent
Registered Public
Accounting Firm
BBD, LLP
1835 Market Street, 3rd Floor
Philadelphia, PA  19103
Legal
Counsel
Thompson Hine LLP
41 South High Street, Suite 1700
Columbus, OH  43215
Custodian MUFG Union Bank,
National Association
400 California Street, Suite 1700
San Francisco, CA  94104
Transfer
Agent

Gemini Fund Services, LLC
4221 North 203rd Street, Suite 100

Elkhorn, Nebraska 68022-3474

Additional information about the Fund is included
in the Fund’s Statement of Additional Information dated January 28, 2020 (the “SAI”). The SAI is incorporated
into this Prospectus by reference (i.e., legally made a part of this Prospectus). The SAI provides more details about the Fund’s
policies and management. 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 their last fiscal year.

To obtain a free copy of the SAI, the Annual
and Semi-Annual Reports to Shareholders, or other information about the Fund, or to make shareholder inquiries about the Fund,
please call 1-855-527-2363 or visit www.patriotfund.com. You may also write to:

Patriot Fund
c/o Gemini Fund Services, LLC
P.O. Box 541150

Omaha, Nebraska 68154

or over night

4221 North 203rd Street, Suite 100

Elkhorn, Nebraska 68022-3474

Reports and other information about the Fund are available on the EDGAR Database on the SEC’s Internet site at http://www.sec.gov.
Copies of the information may be obtained, after paying a duplicating fee, by electronic request at the following E-mail address:
publicinfo@sec.gov, or by writing the Public Reference Section, Securities and Exchange Commission, Washington, D.C. 20549-1520.

Investment Company Act File # 811-21720

Patriot Fund

Class Un shares TRFAX
Class C shares TRFCX
Class I shares TRFTX

A Series of Northern Lights
Fund Trust


STATEMENT OF ADDITIONAL INFORMATION

January 28, 2020


This Statement of Additional Information ("SAI")
is not a prospectus and should be read in conjunction with the Prospectus of the Patriot Fund dated January 28, 2020. You can obtain
copies of the Fund’s Prospectus, annual or semi-annual report without charge by contacting the Fund’s transfer agent,
Gemini Fund Services, LLC, at 4221 North 203rd Street, Suite 100, Elkhorn Nebraska 68022-3474 or by calling toll-free 1-855-527-2363.
You may also obtain a Prospectus by visiting www.patriotfund.com.

TABLE OF CONTENTS

THE FUND 1
TYPES OF INVESTMENTS 2
INVESTMENT RESTRICTIONS 35
POLICIES AND PROCEDURES FOR DISCLOSURE OF PORTFOLIO HOLDINGS 37
MANAGEMENT 39
CONTROL PERSONS AND PRINCIPAL HOLDERS 46
INVESTMENT ADVISER 47
DISTRIBUTION OF SHARES 51
PORTFOLIO MANAGER 55
ALLOCATION OF PORTFOLIO BROKERAGE 56
PORTFOLIO TURNOVER 58
OTHER SERVICE PROVIDERS 58
DESCRIPTION OF SHARES 61
ANTI-MONEY LAUNDERING PROGRAM 62
PURCHASE, REDEMPTION AND PRICING OF SHARES 62
TAX STATUS 68
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 75
LEGAL COUNSEL 75
FINANCIAL STATEMENTS 75
APPENDIX – ADVISER'S PROXY VOTING POLICIES AND PROCEDURES A-1

THE FUND


The Patriot Fund (the "Fund")
is a series of Northern Lights Fund Trust, a Delaware statutory trust organized on January 19, 2005 (the "Trust"). The
Trust is registered as an open-end management investment company. The Trust is governed by its Board of Trustees (the "Board"
or "Trustees").

The Fund may issue an unlimited
number of shares of beneficial interest. All shares of the Fund have equal rights and privileges. Each share of the Fund is entitled
to one vote on all matters as to which shares are entitled to vote. In addition, each share of the Fund is entitled to participate
equally with other shares on a class-specific basis (i) in dividends and distributions declared by the Fund and (ii) on liquidation,
to its proportionate share of the assets remaining after satisfaction of outstanding liabilities. Shares of the Fund are fully
paid, non-assessable and fully transferable when issued and have no pre-emptive, conversion or exchange rights. Fractional shares
have proportionately the same rights, including voting rights, as are provided for a full share.

The Patriot Fund is a diversified
series of the Trust. Ascendant Advisors, LLC (the "Adviser") is the Fund’s investment adviser. The Fund’s
investment objective, restrictions and policies are more fully described here and in the Prospectus. The Board may start other
series and offer shares of a new mutual funds under the Trust at any time.

The Fund offers three classes
of shares: Class A, Class C, and Class I shares. Each share class represents an interest in the same assets of the Fund, has the
same rights and is identical in all material respects except that (i) each class of shares may be subject to different (or no)
sales loads, (ii) each class of shares may bear different (or no) distribution fees; (iii) each class of shares may have different
shareholder features, such as minimum investment amounts; (iv) certain other class-specific expenses will be borne solely by the
class to which such expenses are attributable, including transfer agent fees attributable to a specific class of shares, printing
and postage expenses related to preparing and distributing materials to current shareholders of a specific class, registration
fees paid by a specific class of shares, the expenses of administrative personnel and services required to support the shareholders
of a specific class, litigation or other legal expenses relating to a class of shares, Trustees' fees or expenses paid as a result
of issues relating to a specific class of shares and accounting fees and expenses relating to a specific class of shares and (v)
each class has exclusive voting rights with respect to matters relating to its own distribution arrangements. The Board may classify
and reclassify the shares of the Fund into additional classes of shares at a future date.

Under the Trust's Agreement
and Declaration of Trust, each Trustee will continue in office until the termination of the Trust or his/her earlier death, incapacity,
resignation or removal. Shareholders can remove a Trustee to the extent provided by the Investment Company Act of 1940, as amended
(the "1940 Act") and the rules and

regulations promulgated thereunder. Vacancies
may be filled by a majority of the remaining Trustees, except insofar as the 1940 Act may require the election by shareholders.
As a result, normally no annual or regular meetings of shareholders will be held unless matters arise requiring a vote of shareholders
under the Agreement and Declaration of Trust or the 1940 Act.

TYPES OF INVESTMENTS


The investment objective
of the Fund and a description of the Fund’s principal investment strategies are set forth under "Fund Summary"
in the Prospectus. The Fund’s investment objectives are not "fundamental" and may be changed without the approval
of a majority of its outstanding voting securities; however, shareholders will be given at least 60 days’ notice of such
a change. To the extent that a type of investment is not discusses in the section of the Fund’s prospectus titled”
Principal Investment Strategies,” such type of investment is not used by the Fund in executing its principal investment strategies.

The following information
describes securities in which the Fund may invest and their related risks.

Equity Securities

Equity securities include
common stock and securities convertible into common stocks, such as convertible bonds, warrants, rights and options. The value
of equity securities varies in response to many factors, including the activities and financial condition of individual companies,
the business market in which individual companies compete and general market and economic conditions. Equity securities fluctuate
in value, often based on factors unrelated to the value of the issuer of the securities, and such fluctuations can be significant.

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 the risk 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. Historically, common stocks have provided
greater long-term returns and have entailed greater short-term risks than fixed-income securities and money market investments.
The market value of all securities, including common stocks, is based upon the market's

perception of value and not necessarily the
book value of an issuer or other objective measures of a company's worth.

Convertible Securities

The Fund may invest in convertible
securities and non-investment grade convertible securities. Convertible securities include fixed income securities that may be
exchanged or converted into a predetermined number of shares of the issuer's underlying common stock at the option of the holder
during a specified period. Convertible securities may take the form of convertible preferred stock, convertible bonds or debentures,
units consisting of "usable" bonds and warrants or a combination of the features of several of these securities. Convertible
securities are senior to common stocks in an issuer's capital structure, but are usually subordinated to similar non-convertible
securities. While providing a fixed-income stream (generally higher in yield than the income derivable from common stock but lower
than that afforded by a similar nonconvertible security), a convertible security also gives an investor the opportunity, through
its conversion feature, to participate in the capital appreciation of the issuing company depending upon a market price advance
in the convertible security's underlying common stock.

Income Trusts

The Fund may invest
in income trusts which are investment trusts that hold assets that are income producing. The income is passed on to the "unitholders."
Each income trust has an operating risk based on its underlying business. The term may also be
used to designate a legal entity, capital structure and ownership vehicle for certain assets or businesses. Shares or "trust
units" are traded on securities exchanges just like stocks. Income is passed on to the investors, called unitholders, through
monthly or quarterly distributions. Historically, distributions have typically been higher than dividends on common stocks.
The
unitholders are the beneficiaries of a trust, and their units represent their right to participate in the income and capital of
the trust. Income trusts generally invest funds in assets that provide a return to the trust and its beneficiaries based on the
cash flows of an underlying business. This return is often achieved through the acquisition by the trust of equity and debt instruments,
royalty interests or real properties. The trust can receive interest, royalty or lease payments from an operating entity carrying
on a business, as well as dividends and a return of capital.

Each income trust
has an operating risk based on its underlying business; and, typically, the higher the yield, the higher the risk. They also have
additional risk factors, including, but not limited to, poorer access to debt markets.  Similar to a dividend paying stock,
income trusts do not guarantee minimum distributions or even return of capital.  If the business starts to lose money, the
trust can reduce or even eliminate distributions; this is usually accompanied by sharp losses in a unit's market value.  Since
the yield is one of the main attractions of income trusts, there is the risk that trust units will decline in value if interest
rates offering in competing markets, such as in the cash/treasury market, increase. Interest rate risk is also present within the
trusts themselves because

they hold very long term capital assets
(e.g. pipelines, power plants, etc.), and much of the excess distributable income is derived from a maturity (or duration) mismatch
between the life of the asset, and the life of the financing associated with it.  In an increasing interest rate environment,
not only does the attractiveness of trust distributions decrease, but quite possibly, the distributions may themselves decrease,
leading to a double whammy of both declining yield and substantial loss of unitholder value. Because most income is passed on to
unitholders, rather than reinvested in the business, in some cases, a trust can become a wasting asset unless more equity is issued. 
Because many income trusts pay out more than their net income, the unitholder equity (capital) may decline over time. To the extent
that the value of the trust is driven by the deferral or reduction of tax, any change in government tax regulations to remove the
benefit will reduce the value of the trusts. Generally, income trusts also carry the same risks as dividend paying stocks that
are traded on stock markets.

Publicly Traded Partnerships

The Fund may invest in publicly
traded partnerships ("PTPs"). PTPs are limited partnerships the interests in which (known as "units") are traded
on public exchanges, just like corporate stock. PTPs are limited partnerships that provide an investor with a direct interest in
a group of assets (generally, oil and gas properties). Publicly traded partnership units typically trade publicly, like stock,
and thus may provide the investor more liquidity than ordinary limited partnerships. Publicly traded partnerships are also called
master limited partnerships and public limited partnerships. A limited partnership has one or more general partners (they may be
individuals, corporations, partnerships or another entity) which manage the partnership, and limited partners, which provide capital
to the partnership but have no role in its management. When an investor buys units in a PTP, he or she becomes a limited partner.
PTPs are formed in several ways. A non-traded partnership may decide to go public. Several non-traded partnerships may "roll
up" into a single PTP. A corporation may spin off a group of assets or part of its business into a PTP of which it is the
general partner, either to realize what it believes to be the asset's full value or as an alternative to issuing debt. Un
corporation may fully convert to a PTP, although since 1986 the tax consequences have made this an unappealing; or, a newly formed
company may operate as a PTP from its inception.

There are different types
of risks to investing in PTPs including regulatory risks and interest rate risks. Currently most partnerships enjoy pass through
taxation of their income to partners, which avoids double taxation of earnings. If the government were to change PTP business tax
structure, unitholders would not be able to enjoy the relatively high yields in the sector for long. In addition, PTP's which charge
government-regulated fees for transportation of oil and gas products through their pipelines are subject to unfavorable changes
in government-approved rates and fees, which would affect a PTPs revenue stream negatively. PTPs also carry some interest rate
risks. During increases in interest rates, PTPs may not produce decent returns to shareholders.

Real Estate Investment Trusts

The Fund may invest in securities
of real estate investment trusts ("REITs"). REITs are publicly traded corporations or trusts that specialize in acquiring,
holding and

managing residential, commercial or industrial
real estate. A REIT is not taxed at the entity level on income distributed to its shareholders or unitholders if it distributes
to shareholders or unitholders at least 95% of its taxable income for each taxable year and complies with regulatory requirements
relating to its organization, ownership, assets and income.

REITs generally can be classified
as "Equity REITs,” "Mortgage REITs" and "Hybrid REITs." An Equity REIT invests the majority of its
assets directly in real property and derives its income primarily from rents and from capital gains on real estate appreciation,
which are realized through property sales. A Mortgage REIT invests the majority of its assets in real estate mortgage loans and
services its income primarily from interest payments. A Hybrid REIT combines the characteristics of an Equity REIT and a Mortgage
REIT. Although the Fund can invest in all three kinds of REITs, its emphasis is expected to be on investments in Equity REITs.

Investments in the real
estate industry involve particular risks. The real estate industry has been subject to substantial fluctuations and declines on
a local, regional and national basis in the past and may continue to be in the future. Real property values and income from real
property continue to be in the future. Real property values and income from real property may decline due to general and local
economic conditions, overbuilding and increased competition, increases in property taxes and operating expenses, changes in zoning
laws, casualty or condemnation losses, regulatory limitations on rents, changes in neighborhoods and in demographics, increases
in market interest rates, or other factors. Factors such as these may adversely affect companies that own and operate real estate
directly, companies that lend to such companies, and companies that service the real estate industry.

Investments in REITs also
involve risks. Equity REITs will be affected by changes in the values of and income from the properties they own, while Mortgage
REITs may be affected by the credit quality of the mortgage loans they hold. In addition, REITs are dependent on specialized management
skills and on their ability to generate cash flow for operating purposes and to make distributions to shareholders or unitholders
REITs may have limited diversification and are subject to risks associated with obtaining financing for real property, as well
as to the risk of self-liquidation. REITs also can be adversely affected by their failure to qualify for tax-free pass-through
treatment of their income under the Internal Revenue Code of 1986, as amended, or their failure to maintain an exemption from registration
under the 1940 Act. By investing in REITs indirectly through the Fund, a shareholder bears not only a proportionate share of the
expenses of the Fund, but also may indirectly bear similar expenses of some of the REITs in which it invests.

Warrants

The Fund may invest in warrants.
Warrants are options to purchase common stock at a specific price (usually at a premium above the market value of the optioned
common stock at issuance) valid for a specific period of time. Warrants may have a life

ranging from less than one year to twenty years,
or longer. Warrants have expiration dates after which they are worthless. In addition, a warrant is worthless if the market price
of the common stock does not exceed the warrant's exercise price during the life of the warrant. Warrants have no voting rights,
pay no dividends, and have no rights with respect to the assets of the corporation issuing them. The percentage increase or decrease
in the market price of the warrant may tend to be greater than the percentage increase or decrease in the market price of the optioned
common stock.

Fixed Income/ Debt/ Bond Securities

Yields on fixed income securities,
which the Fund defines to include preferred stock, are dependent on a variety of factors, including the general conditions of the
money market and other fixed income securities markets, the size of a particular offering, the maturity of the obligation and the
rating of the issue. An investment in the Fund will be subjected to risk even if all fixed income securities in the Fund’s
portfolios are paid in full at maturity. All fixed income securities, including U.S. Government securities, can change in value
when there is a change in interest rates or the issuer's actual or perceived creditworthiness or ability to meet its obligations.

There is normally an inverse
relationship between the market value of securities sensitive to prevailing interest rates and actual changes in interest rates.
In other words, an increase in interest rates produces a decrease in market value. The longer the remaining maturity (and duration)
of a security, the greater will be the effect of interest rate changes on the market value of that security. Changes in the ability
of an issuer to make payments of interest and principal and in the markets' perception of an issuer's creditworthiness will also
affect the market value of the debt securities of that issuer. Obligations of issuers of fixed income securities (including municipal
securities) are subject to the provisions of bankruptcy, insolvency, and other laws affecting the rights and remedies of creditors,
such as the Federal Bankruptcy Reform Act of 1978. In addition, the obligations of municipal issuers may become subject to laws
enacted in the future by Congress, state legislatures, or referenda extending the time for payment of principal and/or interest,
or imposing other constraints upon enforcement of such obligations or upon the ability of municipalities to levy taxes. Changes
in the ability of an issuer to make payments of interest and principal and in the market's perception of an issuer's creditworthiness
will also affect the market value of the debt securities of that issuer. The possibility exists, therefore, that, the ability of
any issuer to pay, when due, the principal of and interest on its debt securities may become impaired.

The corporate debt securities
in which the Fund may invest include corporate bonds and notes and short-term investments such as commercial paper and variable
rate demand notes. Commercial paper (short-term promissory notes) is issued by companies to finance their or their affiliate's
current obligations and is frequently unsecured. Variable and floating rate demand notes are unsecured obligations typically redeemable
upon not more than 30 days' notice. These obligations include master demand notes that permit investment of fluctuating amounts
at varying rates of interest pursuant to a direct arrangement with the issuer of the instrument. The issuer of these

obligations often has the right, after a
given period, to prepay the outstanding principal amount of the obligations upon a specified number of days' notice. These obligations
generally are not traded, nor generally is there an established secondary market for these obligations. To the extent a demand
note does not have a 7-day or shorter demand feature and there is no readily available market for the obligation, it is treated
as an illiquid security.

The Fund may invest in debt
securities, including non-investment grade debt securities. The following describes some of the risks associated with fixed income
debt securities:

Interest Rate Risk.
Debt securities have varying levels of sensitivity to changes in interest rates. In general, the price of a debt security can fall
when interest rates rise and can rise when interest rates fall. Securities with longer maturities and mortgage securities can be
more sensitive to interest rate changes although they usually offer higher yields to compensate investors for the greater risks.
The longer the maturity of the security, the greater the impact a change in interest rates could have on the security's price.
In addition, short-term and long-term interest rates do not necessarily move in the same amount or the same direction. Short-term
securities tend to react to changes in short-term interest rates and long-term securities tend to react to changes in long-term
interest rates.

Credit Risk. Fixed
income securities have speculative characteristics and changes in economic conditions or other circumstances are more likely to
lead to a weakened capacity of those issuers to make principal or interest payments, as compared to issuers of more highly rated
securities.

Extension Risk.
The Fund is subject to the risk that an issuer will exercise its right to pay principal on an obligation held by the Fund (such
as mortgage-backed securities) later than expected. This may happen when there is a rise in interest rates. These events may lengthen
the duration (i.e. interest rate sensitivity) and potentially reduce the value of these securities.

Prepayment Risk.
Certain types of debt securities, such as mortgage-backed securities, have yield and maturity characteristics corresponding to
underlying assets. Unlike traditional debt securities, which may pay a fixed rate of interest until maturity when the entire principal
amount comes due, payments on certain mortgage-backed securities may include both interest and a partial payment of principal.
Besides the scheduled repayment of principal, payments of principal may result from the voluntary prepayment, refinancing, or foreclosure
of the underlying mortgage loans.

Securities subject to prepayment
are less effective than other types of securities as a means of "locking in" attractive long-term interest rates. One
reason is the need to reinvest prepayments of principal; another is the possibility of significant unscheduled prepayments resulting
from declines in interest rates. These prepayments would have to be reinvested at lower rates. As a result, these securities may
have less potential for

capital appreciation during periods of declining
interest rates than other securities of comparable maturities, although they may have a similar risk of decline in market value
during periods of rising interest rates. Prepayments may also significantly shorten the effective maturities of these securities,
especially during periods of declining interest rates. Conversely, during periods of rising interest rates, a reduction in prepayments
may increase the effective maturities of these securities, subjecting them to a greater risk of decline in market value in response
to rising interest rates than traditional debt securities, and, therefore, potentially increasing the volatility of the Fund.

At times, some of the mortgage-backed
securities in which the Fund may invest will have higher than market interest rates and therefore will be purchased at a premium
above their par value. Prepayments may cause losses in securities purchased at a premium, as unscheduled prepayments, which are
made at par, will cause the Fund to experience a loss equal to any unamortized premium.

Certificates of Deposit
and Bankers' Acceptances

The Fund may invest in certificates
of deposit and bankers' acceptances, which are considered to be short-term money market instruments.

Certificates of deposit
are receipts issued by a depository institution in exchange for the deposit of funds. The issuer agrees to pay the amount deposited
plus interest to the bearer of the receipt on the date specified on the certificate. The certificate usually can be traded in the
secondary market prior to maturity. Bankers' acceptances typically arise from short-term credit arrangements designed to enable
businesses to obtain funds to finance commercial transactions. Generally, an acceptance is a time draft drawn on a bank by an exporter
or an importer to obtain a stated amount of funds to pay for specific merchandise. The draft is then "accepted" by a
bank that, in effect, unconditionally guarantees to pay the face value of the instrument on its maturity date. The acceptance may
then be held by the accepting bank as an earning asset or it may be sold in the secondary market at the going rate of discount
for a specific maturity. Although maturities for acceptances can be as long as 270 days, most acceptances have maturities of six
months or less.

Commercial Paper

The Fund may purchase commercial
paper. Commercial paper consists of short-term (usually from 1 to 270 days) unsecured promissory notes issued by corporations in
order to finance their current operations. It may be secured by letters of credit, a surety bond or other forms of collateral.
Commercial paper is usually repaid at maturity by the issuer from the proceeds of the issuance of new commercial paper. As a result,
investment in commercial paper is subject to the risk the issuer cannot issue enough new commercial paper to satisfy its outstanding
commercial paper, also known as rollover risk. Commercial paper may become illiquid or may suffer from reduced liquidity in certain
circumstances. Like all fixed income securities, commercial paper prices are susceptible to fluctuations in interest rates. If
interest rates rise, commercial

paper prices will decline. The short-term nature
of a commercial paper investment makes it less susceptible to interest rate risk than many other fixed income securities because
interest rate risk typically increases as maturity lengths increase. Commercial paper tends to yield smaller returns than longer-term
corporate debt because securities with shorter maturities typically have lower effective yields than those with longer maturities.
As with all fixed income securities, there is a chance that the issuer will default on its commercial paper obligation.

Time Deposits and Variable Rate Notes

The Fund may invest in fixed
time deposits, whether or not subject to withdrawal penalties.

The commercial paper obligations,
which the Fund may buy are unsecured and may include variable rate notes. The nature and terms of a variable rate note (i.e., a
"Master Note") permit the Fund to invest fluctuating amounts at varying rates of interest pursuant to a direct arrangement
between the Fund as lender, and the issuer, as borrower. It permits daily changes in the amounts borrowed. The Fund has the right
at any time to increase, up to the full amount stated in the note agreement, or to decrease the amount outstanding under the note.
The issuer may prepay at any time and without penalty any part of or the full amount of the note. The note may or may not be backed
by one or more bank letters of credit. Because these notes are direct lending arrangements between the Fund and the issuer, it
is not generally contemplated that they will be traded; moreover, there is currently no secondary market for them. Except as specifically
provided in the Prospectus, there is no limitation on the type of issuer from whom these notes may be purchased; however, in connection
with such purchase and on an ongoing basis, the Fund’s Adviser will consider the earning power, cash flow and other liquidity
ratios of the issuer, and its ability to pay principal and interest on demand, including a situation in which all holders of such
notes made demand simultaneously. Variable rate notes are subject to the Fund’s investment restriction on illiquid securities
unless such notes can be put back to the issuer on demand within seven days.

Insured Bank Obligations

The Fund may invest in insured
bank obligations. The Federal Deposit Insurance Corporation ("FDIC") insures the deposits of federally insured banks
and savings and loan associations (collectively referred to as "banks") up to $250,000. The Fund may purchase bank obligations
that are fully insured as to principal by the FDIC. Currently, to remain fully insured as to principal, these investments must
be limited to $250,000 per bank; if the principal amount and accrued interest together exceed $250,000, the excess principal and
accrued interest will not be insured. Insured bank obligations may have limited marketability.

High Yield Securities

The Fund may invest in high
yield securities. High yield, high risk bonds are securities that are generally rated below investment grade by the primary rating
agencies (BB+ or lower by S&P and Ba1 or lower by Moody's). Other terms used to describe such securities include "lower
rated bonds," "non-investment grade bonds," "below investment grade bonds," and "junk bonds."
These securities are considered to be high-risk investments. The risks include the following:

Greater Risk of Loss.
These securities are regarded as predominately speculative. There is a greater risk that issuers of lower rated securities will
default than issuers of higher rated securities. Issuers of lower rated securities generally are less creditworthy and may be highly
indebted, financially distressed, or bankrupt. These issuers are more vulnerable to real or perceived economic changes, political
changes or adverse industry developments. In addition, high yield securities are frequently subordinated to the prior payment of
senior indebtedness. If an issuer fails to pay principal or interest, the Funds would experience a decrease in income and a decline
in the market value of its investments.

Sensitivity to
Interest Rate and Economic Changes.
The income and market value of lower-rated securities may fluctuate more than higher rated
securities. Although non-investment grade securities tend to be less sensitive to interest rate changes than investment grade securities,
non-investment grade securities are more sensitive to short-term corporate, economic and market developments. During periods of
economic uncertainty and change, the market price of the investments in lower-rated securities may be volatile. The default rate
for high yield bonds tends to be cyclical, with defaults rising in periods of economic downturn.

Valuation Difficulties.
It is often more difficult to value lower rated securities than higher rated securities. If an issuer's financial condition deteriorates,
accurate financial and business information may be limited or unavailable. In addition, the lower rated investments may be thinly
traded and there may be no established secondary market. Because of the lack of market pricing and current information for investments
in lower rated securities, valuation of such investments is much more dependent on judgment than is the case with higher rated
securities.

Liquidity.
There may be no established secondary or public market for investments in lower rated securities. Such securities are frequently
traded in markets that may be relatively less liquid than the market for higher rated securities. In addition, relatively few institutional
purchasers may hold a major portion of an issue of lower-rated securities at times. As a result, the Fund may be required to sell
investments at substantial losses or retain them indefinitely when an issuer's financial condition is deteriorating.

Credit Quality.
Credit quality of non-investment grade securities can change suddenly and unexpectedly, and even recently-issued credit ratings
may not fully reflect the actual risks posed by a particular high-yield security.

New Legislation.
Future legislation may have a possible negative impact on the market for high yield, high risk bonds. As an example, in the late
1980s, legislation required federally-insured savings and loan associations to divest their investments in high yield, high risk
bonds. New legislation, if enacted, could have a material negative effect on the Fund’s investments in lower rated securities.

High yield, high
risk investments may include the following:

Straight Fixed-income
Debt Securities.
These include bonds and other debt obligations that bear a fixed or variable rate of interest payable at regular
intervals and have a fixed or resettable maturity date. The particular terms of such securities vary and may include features such
as call provisions and sinking Fund.

Zero-coupon Debt
Securities.
These do not pay periodic interest but are issued at a discount from their value at maturity. When held to maturity,
their entire return equals the difference between their issue price and their maturity value.

Zero-fixed-coupon
Debt Securities.
These are zero-coupon debt securities that convert on a specified date to periodic interest-paying debt securities.

Pay-in-kind Bonds.
These are bonds which allow the issuer, at its option, to make current interest payments on the bonds either in cash or in additional
bonds. These are bonds are typically sold without registration under the Securities Act of 1933, as amended ("Securities Act"),
usually to a relatively small number of institutional investors.

Convertible Securities.
These are bonds or preferred stock that may be converted to common stock.

Preferred Stock.
These are stocks that generally pay a dividend at a specified rate and have preference over common stock in the payment of dividends
and in liquidation.

Loan Participations
and Assignments.
These are participations in, or assignments of all or a portion of loans to corporations or to governments,
including governments of less developed countries.

Securities issued in
connection with Reorganizations and Corporate Restructurings.
In connection with reorganizing or restructuring of an issuer,
an issuer may issue common stock or other securities to holders of its debt securities. The Fund may hold such common stock and
other securities even if they do not invest in such securities.

Municipal Government Obligations

In general, municipal obligations
are debt obligations issued by or on behalf of states, territories and possessions of the United States (including the District
of Columbia) and their political subdivisions, agencies and instrumentalities.  Municipal

obligations generally include debt obligations issued to
obtain Fund’s for various public purposes.  Certain types of municipal obligations are issued in whole or in part
to obtain funding for privately operated facilities or projects.  Municipal
obligations include general obligation bonds, revenue bonds, industrial development bonds, notes and municipal lease obligations.  Municipal
obligations also include additional obligations, the interest on which is exempt from federal income tax, that may become available
in the future as long as the Board of the Fund determines that an investment in any such type of obligation is consistent with
the Fund’s investment objectives.  Municipal obligations may be fully or partially backed by local government,
the credit of a private issuer, current or anticipated revenues from a specific project or specific assets or domestic or foreign
entities providing credit support such as letters of credit, guarantees or insurance.

Bonds and Notes.
General obligation bonds are secured by the issuer's pledge of its full faith, credit and taxing power for the payment of interest
and principal.  Revenue bonds are payable only from the revenues derived from a project or facility or from the proceeds
of a specified revenue source.  Industrial development bonds are generally revenue bonds secured by payments from and
the credit of private users.  Municipal notes are issued to meet the short-term requirements of state, regional and local
governments.  Municipal notes include tax anticipation notes, bond anticipation notes, revenue anticipation notes, tax
and revenue anticipation notes, construction loan notes, short-term discount notes, tax-exempt commercial paper, demand notes and
similar instruments.

Municipal Lease Obligations.
Municipal lease obligations may take the form of a lease, an installment purchase or a conditional sales contract.  They
are issued by state and local governments and authorities to acquire land, equipment and facilities, such as vehicles, telecommunications
and computer equipment and other capital assets.  The Fund may invest in funds that purchase these lease obligations
directly, or it may purchase participation interests in such lease obligations. States have different requirements for issuing
municipal debt and issuing municipal leases.  Municipal leases are generally subject to greater risks than general obligation
or revenue bonds because they usually contain a "non-appropriation" clause, which provides that the issuer is not obligated
to make payments on the obligation in future years unless funds have been appropriated for this purpose each year.  Such
non-appropriation clauses are required to avoid the municipal lease obligations from being treated as debt for state debt restriction
purposes.  Accordingly, such obligations are subject to "non-appropriation" risk.  Municipal leases
may be secured by the underlying capital asset and it may be difficult to dispose of any such asset in the event of non-appropriation
or other default.

United States Government Obligations

These consist of various
types of marketable securities issued by the United States Treasury, i.e., bills, notes and bonds. Such securities are direct obligations
of the United States government and differ mainly in the length of their maturity. Treasury bills, the most frequently issued marketable
government security, have a maturity of up to

one year and are issued on a discount basis.
The Fund may also invest in Treasury Inflation-Protected Securities (“TIPS”).  TIPS are special types of treasury
bonds that were created in order to offer bond investors protection from inflation. The values of the TIPS are automatically adjusted
to the inflation rate as measured by the Consumer Price Index (“CPI”). If the CPI goes up by half a percent, the value
of the bond (the TIPS) would also go up by half a percent. If the CPI falls, the value of the bond does not fall because the government
guarantees that the original investment will stay the same. TIPS decline in value when real interest rates rise. However, in certain
interest rate environments, such as when real interest rates are rising faster than nominal interest rates, TIPS may experience
greater losses than other fixed income securities with similar duration.

United States Government Agency Obligations

These consist of debt securities
issued by agencies and instrumentalities of the United States government, including the various types of instruments currently
outstanding or which may be offered in the future. Agencies include, among others, the Federal Housing Administration, Government
National Mortgage Association ("Ginnie Mae"), Farmer's Home Administration, Export-Import Bank of the United States,
Maritime Administration, and General Services Administration. Instrumentalities include, for example, each of the Federal Home
Loan Banks, the National Bank for Cooperatives, the Federal Home Loan Mortgage Corporation ("Freddie Mac"), the Farm
Credit Banks, the Federal National Mortgage Association ("Fannie Mae"), and the United States Postal Service. These securities
are either: (i) backed by the full faith and credit of the United States government (e.g., United States Treasury Bills); (ii)
guaranteed by the United States Treasury (e.g., Ginnie Mae mortgage-backed securities); (iii) supported by the issuing agency's
or instrumentality's right to borrow from the United States Treasury (e.g., Fannie Mae Discount Notes); or (iv) supported only
by the issuing agency's or instrumentality's own credit (e.g., Tennessee Valley Association). On September 7, 2008, the U.S. Treasury
Department and the Federal Housing Finance Authority (the "FHFA") announced that Fannie Mae and Freddie Mac had been
placed into conservatorship, a statutory process designed to stabilize a troubled institution with the objective of returning the
entity to normal business operations.  The U.S. Treasury Department and the FHFA at the same time established a secured lending
facility and a Secured Stock Purchase Agreement with both Fannie Mae and Freddie Mac to ensure that each entity had the ability
to fulfill its financial obligations.  The FHFA announced that it does not anticipate any disruption in pattern of payments
or ongoing business operations of Fannie Mae and Freddie Mac.

Government-related guarantors
(i.e. not backed by the full faith and credit of the United States Government) include Fannie Mae and Freddie Mac. Fannie Mae is
a government-sponsored corporation owned by stockholders. It is subject to general regulation by the Secretary of Housing and Urban
Development. Fannie Mae purchases conventional (i.e., not insured or guaranteed by any government agency) residential mortgages
from a list of approved seller/servicers which include state and federally chartered savings and loan associations, mutual savings
banks, commercial banks and

credit unions and mortgage bankers. Pass-through
securities issued by Fannie Mae are guaranteed as to timely payment of principal and interest by Fannie Mae but are not backed
by the full faith and credit of the United States Government.

Freddie Mac was created
by Congress in 1970 for the purpose of increasing the availability of mortgage credit for residential housing. It is a government-sponsored
corporation formerly owned by the twelve Federal Home Loan Banks and now owned by stockholders. Freddie Mac issues participation
certificates ("PCs"), which represent interests in conventional mortgages from Freddie Mac's national portfolio. Freddie
Mac guarantees the timely payment of interest and ultimate collection of principal, but PCs are not backed by the full faith and
credit of the United States Government. Commercial banks, savings and loan institutions, private mortgage insurance companies,
mortgage bankers and other secondary market issuers also create pass-through pools of conventional residential mortgage loans.
Such issuers may, in addition, be the originators and/or servicers of the underlying mortgage loans as well as the guarantors of
the mortgage-related securities. Pools created by such nongovernmental issuers generally offer a higher rate of interest than government
and government-related pools because there are no direct or indirect government or agency guarantees of payments in the former
pools. However, timely payment of interest and principal of these pools may be supported by various forms of insurance or guarantees,
including individual loan, title, pool and hazard insurance and letters of credit. The insurance and guarantees are issued by governmental
entities, private insurers and the mortgage poolers.

Mortgage Pass-Through Securities

Interests in pools of mortgage
pass-through securities differ from other forms of debt securities (which normally provide periodic payments of interest in fixed
amounts and the payment of principal in a lump sum at maturity or on specified call dates). Instead, mortgage pass-through securities
provide monthly payments consisting of both interest and principal payments. In effect, these payments are a "pass-through"
of the monthly payments made by the individual borrowers on the underlying residential mortgage loans, net of any fees paid to
the issuer or guarantor of such securities. Unscheduled payments of principal may be made if the underlying mortgage loans are
repaid or refinanced or the underlying properties are foreclosed, thereby shortening the securities' weighted average life. Some
mortgage pass-through securities (such as securities guaranteed by Ginnie Mae) are described as "modified pass-through securities."
These securities entitle the holder to receive all interest and principal payments owed on the mortgage pool, net of certain fees,
on the scheduled payment dates regardless of whether the mortgagor actually makes the payment.

The principal governmental
guarantor of mortgage pass-through securities is Ginnie Mae. Ginnie Mae is authorized to guarantee, with the full faith and credit
of the U.S. Treasury, the timely payment of principal and interest on securities issued by lending institutions approved by Ginnie
Mae (such as savings and loan institutions, commercial banks and mortgage bankers) and backed by pools of mortgage loans.

These mortgage loans are either insured by
the Federal Housing Administration or guaranteed by the Veterans Administration. A "pool" or group of such mortgage loans
is assembled and after being approved by Ginnie Mae, is offered to investors through securities dealers.

Government-related guarantors
of mortgage pass-through securities (i.e., not backed by the full faith and credit of the U.S. Treasury) include Fannie Mae and
Freddie Mac. Fannie Mae is subject to general regulation by the Secretary of Housing and Urban Development. Fannie Mae purchases
conventional (i.e., not insured or guaranteed by any government agency) residential mortgages from a list of approved sellers/servicers
which include state and federally chartered savings and loan associations, mutual savings banks, commercial banks and credit unions
and mortgage bankers. Mortgage pass-through securities issued by Fannie Mae are guaranteed as to timely payment of principal and
interest by Fannie Mae but are not backed by the full faith and credit of the U.S. Treasury.

Resets. The interest
rates paid on the Adjustable Rate Mortgage Securities ("ARMs") in which the Fund may invest generally are readjusted
or reset at intervals of one year or less to an increment over some predetermined interest rate index. There are two main categories
of indices: those based on U.S. Treasury securities and those derived from a calculated measure, such as a cost of funds index
or a moving average of mortgage rates. Commonly utilized indices include the one-year and five-year constant maturity Treasury
Note rates, the three-month Treasury Bill rate, the 180-day Treasury Bill rate, rates on longer-term Treasury securities, the National
Median Cost of Funds, the one-month or three-month London Interbank Offered Rate (“LIBOR”), the prime rate of a specific
bank, or commercial paper rates. Some indices, such as the one-year constant maturity Treasury Note rate, closely mirror changes
in market interest rate levels. Others tend to lag changes in market rate levels and tend to be somewhat less volatile.

Caps and Floors. The
underlying mortgages which collateralize the ARMs in which the Fund may invest will frequently have caps and floors which limit
the maximum amount by which the loan rate to the residential borrower may change up or down: (1) per reset or adjustment interval,
and (2) over the life of the loan. Some residential mortgage loans restrict periodic adjustments by limiting changes in the borrower's
monthly principal and interest payments rather than limiting interest rate changes. These payment caps may result in negative amortization.
The value of mortgage securities in which the Fund may invest may be affected if market interest rates rise or fall faster and
farther than the allowable caps or floors on the underlying residential mortgage loans. Additionally, even though the interest
rates on the underlying residential mortgages are adjustable, amortization and prepayments may occur, thereby causing the effective
maturities of the mortgage securities in which the Fund may invest to be shorter than the maturities stated in the underlying mortgages.

Preferred Stock

The Fund defines preferred
stock as form of fixed income security because it has similar features to other forms of fixed income securities. Preferred stocks
are securities that have characteristics of both common stocks and corporate bonds. Preferred stocks may receive dividends but
payment is not guaranteed as with a bond. These securities may be undervalued because of a lack of analyst coverage resulting in
a high dividend yield or yield to maturity.  The risks of preferred stocks include a lack of voting rights and the Fund’s
Adviser may incorrectly analyze the security, resulting in a loss to the Fund.  Furthermore, preferred stock dividends are
not guaranteed and management can elect to forego the preferred dividend, resulting in a loss to the Fund. Preferred stock may
also be convertible in the common stock of the issuer.  Convertible securities may be exchanged or converted into a predetermined
number of shares of the issuer's underlying common stock at the option of the holder during a specified period. Convertible securities
are senior to common stocks in an issuer's capital structure, but are usually subordinated to similar non-convertible securities.
A convertible security also gives an investor the opportunity, through its conversion feature, to participate in the capital appreciation
of the issuing company depending upon a market price advance in the convertible security's underlying common stock. In general,
preferred stocks generally pay a dividend at a specified rate and have preference over common stock in the payment of dividends
and in liquidation. The Fund may invest in preferred stock with any or no credit rating. Preferred stock is a class of stock having
a preference over common stock as to the payment of dividends and the recovery of investment should a company be liquidated, although
preferred stock is usually junior to the debt securities of the issuer. Preferred stock market value may change based on changes
in interest rates.

Exchange-Traded Notes and Structured Notes

The Fund may invest in exchange-traded
notes ("ETNs"), which are a type of debt security that is typically unsecured and unsubordinated. This type of debt security
differs from other types of bonds and notes because ETN returns are based upon the performance of a market index minus applicable
fees, and typically, no periodic coupon payments are distributed and no principal protections exists, even at maturity. But as
debt securities, ETNs do not own the underlying commodity or other index they are tracking. The purpose of ETNs is to create a
type of security that combines both the aspects of bonds and exchange-traded funds ("ETFs"). Similar to
ETFs, ETNs are traded on a major exchange, such as the New York Stock Exchange during normal trading hours. However, investors
such as the Fund can also hold the debt security until maturity. At that time, the issuer will pay the investor a cash amount that
would be equal to principal amount times the return of a benchmark index, less any fees or other reductions. Because fees
reduce the amount of return at maturity or upon redemption, if the value of the underlying decreases or does not increase significantly,
the Fund may receive less than the principal amount of investment at maturity or upon redemption.

The Fund may invest in structured
notes, which are a type of debt security that is typically unsecured and unsubordinated. These notes are typically issued by banks
or brokerage firms, and have interest and/or principal payments which are linked to changes in the price level of certain assets
or to the price performance of certain indices.  The value of a structured note will be influenced by time to maturity, level
of supply and demand for this type of note, interest rate and commodity market volatility, changes in the issuer's credit quality
rating, and economic, legal, political, or geographic events that affect the referenced commodity.  In addition, there may
be a lag between a change in the value of the underlying reference asset and the value of the structured note. The Fund may also
be exposed to increased transaction costs when it seeks to sell such notes in the secondary market.

Investment Companies

The Fund may invest
in investment companies such as open-end funds (mutual funds), closed-end funds, and ETFs (also referred to as "Underlying
Funds"). The 1940 Act provides that the mutual funds may not: (1) purchase more than 3% of an investment company's outstanding
shares, (2) invest more than 5% of its assets in any single such investment company (the "5% Limit"), and (3) invest
more than 10% of its assets in investment companies overall (the "10% Limit"), unless: (i) the underlying investment
company and/or the Fund has received an order for exemptive relief from such limitations from the Securities and Exchange Commission
("SEC"); and (ii) the underlying investment company and the Fund takes appropriate steps to comply with any conditions
in such order.

In addition, Section
12(d)(1)(F) of the 1940 Act, as amended, provides that the provisions of paragraph 12(d)(1) shall not apply to securities purchased
or otherwise acquired by the Fund if (i) immediately after such purchase or acquisition not more than 3% of the total outstanding
stock of such registered investment company is owned by the Fund and all affiliated persons of the Fund; and (ii) the Fund has
not, and are not proposing to offer or sell any security issued by it through a principal underwriter or otherwise at a public
or offering price which includes a sales load of more than 1 ½% percent. An investment company that issues shares to the
Fund pursuant to paragraph 12(d)(1)(F) shall not be required to redeem its shares in an amount exceeding 1% of such investment
company's total outstanding shares in any period of less than thirty days. The Fund (or the Adviser acting on behalf of the Fund)
must comply with the following voting restrictions: when the Fund exercise voting rights, by proxy or otherwise, with respect to
investment companies owned by the Fund, the Fund will either seek instruction from the Fund’s shareholders with regard to
the voting of all proxies and vote in accordance with such instructions, or vote the shares held by the Fund in the same proportion
as the vote of all other holders of such security.

Further, the Fund may rely
on Rule 12d1-3, which allows unaffiliated mutual funds to exceed the 5% Limit and the 10% Limit, provided the aggregate sales loads
any investor pays (i.e., the combined distribution expenses of both the acquiring funds and the acquired funds) does not exceed
the limits on sales loads established by Financial Industry Regulatory Authority, Inc. (“FINRA”) for funds of funds.

The Fund and any "affiliated
persons," as defined by the 1940 Act, may purchase in the aggregate only up to 3% of the total outstanding securities of any
Underlying Fund. Accordingly, when affiliated persons hold shares of any of the Underlying Funds, the Fund’s ability to invest
fully in shares of those funds is restricted, and the Adviser must then, in some instances, select alternative investments that
would not have been its first preference. The 1940 Act also provides that an Underlying Fund whose shares are purchased by the
Fund will be obligated to redeem shares held by the Fund only in an amount up to 1% of the Underlying Fund’s outstanding
securities during any period of less than 30 days. Shares held by the Fund in excess of 1% of an Underlying Fund’s outstanding
securities therefore, will be considered not readily marketable securities, which, together with other such securities, may not
exceed 15% of the Fund’s total assets.

Under certain circumstances
an Underlying Fund may determine to make payment of a redemption by the Fund wholly or partly by a distribution in kind of securities
from its portfolio, in lieu of cash, in conformity with the rules of the SEC. In such cases, the Fund may hold securities distributed
by an Underlying Fund until the Adviser determines that it is appropriate to dispose of such securities.

Investment decisions
by the investment advisors of the Underlying Fund are made independently of the Fund and the Adviser. Therefore, the investment
advisor of one Underlying Fund may be purchasing shares of the same issuer whose shares are being sold by the investment advisor
of another such fund. The result would be an indirect expense to the Fund without accomplishing any investment purpose. Because
other investment companies employ an investment adviser, such investments by the Fund may cause shareholders to bear duplicate
fees.

Closed-End Investment
Companies.
The Fund may invest its assets in closed-end investment companies (or "closed-end funds"), subject to
the investment restrictions set forth above. Shares of closed-end funds are typically offered to the public in a one-time initial
public offering by a group of underwriters who retain a spread or underwriting commission of between 4% or 6% of the initial public
offering price. Such securities are then listed for trading on the New York Stock Exchange, the National Association of Securities
Dealers Automated Quotation System (commonly known as "NASDAQ") or, in some cases, may be traded in other over-the-counter
markets. Because the shares of closed-end funds cannot be redeemed upon demand to the issuer like the shares of an open-end investment
company (such as the Fund), investors seek to buy and sell shares of closed-end funds in the secondary market.

The Fund generally will
purchase shares of closed-end funds only in the secondary market. The Fund will incur normal brokerage costs on such purchases
similar to the expenses the Fund would incur for the purchase of securities of any other type of issuer in the secondary market.
The Fund may, however, also purchase securities of a closed-end funds in an initial public offering when, in the opinion of the
Adviser, based on a consideration of the nature of the closed-end funds’ proposed investments, the prevailing market conditions
and the level of demand for such

securities, they represent an attractive opportunity
for growth of capital. The initial offering price typically will include a dealer spread, which may be higher than the applicable
brokerage cost if the Fund purchased such securities in the secondary market.

The shares of many closed-end
funds, after their initial public offering, frequently trade at a price per share that is less than the net asset value per share,
the difference representing the "market discount" of such shares. This market discount may be due in part to the investment
objective of long-term appreciation, which is sought by many closed-end funds, as well as to the fact that the shares of closed-end
funds are not redeemable by the holder upon demand to the issuer at the next determined net asset value but rather are subject
to the principles of supply and demand in the secondary market. A relative lack of secondary market purchasers of closed-end funds
shares also may contribute to such shares trading at a discount to their NAV.

The Fund may invest in shares
of closed-end funds that are trading at a discount to net asset value or at a premium to net asset value. There can be no assurance
that the market discount on shares of any closed-end funds purchased by the Fund will ever decrease. In fact, it is possible that
this market discount may increase and the Fund may suffer realized or unrealized capital losses due to further decline in the market
price of the securities of such closed-end funds, thereby adversely affecting the net asset value of the Fund’s shares. Similarly,
there can be no assurance that any shares of a closed-end fund purchased by the Fund at a premium will continue to trade at a premium
or that the premium will not decrease subsequent to a purchase of such shares by the Fund.

Closed-end funds may issue
senior securities (including preferred stock and debt obligations) for the purpose of leveraging the closed-end funds’ common
shares in an attempt to enhance the current return to such closed-end funds’ common shareholders. The Fund’s investment
in the common shares of closed-end funds that are financially leveraged may create an opportunity for greater total return on its
investment, but at the same time may be expected to exhibit more volatility in market price and net asset value than an investment
in shares of investment companies without a leveraged capital structure.

Exchange-Traded Fund.
ETFs are typically passive funds that track their related index and have the flexibility of trading like a security. They are managed
by professionals and provide the investor with diversification, cost and tax efficiency, liquidity, marginability, are useful for
hedging, have the ability to go long and short, and some provide quarterly dividends. Additionally, some ETFs are unit investment
trusts, which are unmanaged portfolios overseen by trustees and some ETFs may be grantor trusts. An ETF typically holds a portfolio
of securities or contracts designed to track a particular market segment or index. Some examples of ETFs are Rydex SharesTM,
ProShares®, SPDRs®, streetTRACKS, DIAMONDSSM, NASDAQ 100 Index Tracking StockSM ("QQQsSM"),
and iShares®. The Fund may use ETFs as part of an overall investment strategy and as part of a hedging strategy. To offset
the risk of declining

security prices, the Fund may invest in inverse
ETFs. Inverse ETFs are funds designed to rise in price when stock prices are falling. Additionally, inverse ETFs may employ leverage
which magnifies the changes in the underlying stock index upon which they are based. Inverse ETF index funds seek to provide investment
results that will match a certain percentage of the inverse of the performance of a specific benchmark on a daily basis. Par exemple,
if an inverse ETF's current benchmark is 200% of the inverse of the Russell 2000 Index and the ETF meets its objective, the value
of the ETF will tend to increase on a daily basis when the value of the underlying index decreases (e.g., if the Russell 2000 Index
goes down 5% then the inverse ETF's value should go up 10%). ETFs generally have two markets. The primary market is where institutions
swap "creation units" in block-multiples of 50,000 shares for in-kind securities and cash in the form of dividends. The
secondary market is where individual investors can trade as little as a single share during trading hours on the exchange. C'est tout
is different from open-ended mutual funds that are traded after hours once the NAV is calculated. ETFs share many similar risks
with open-end and closed-end funds.

There is a risk that an
ETF in which the Fund invest may terminate due to extraordinary events that may cause any of the service providers to the ETFs,
such as the trustee or sponsor, to close or otherwise fail to perform their obligations to the ETF. Also, because the ETFs in which
the Fund intends to invest may be granted licenses by agreement to use the indices as a basis for determining their compositions
and/or otherwise to use certain trade names, the ETFs may terminate if such license agreements are terminated. In addition, an
ETF may terminate if its entire net asset value falls below a certain amount. Although the Fund believes that, in the event of
the termination of an underlying ETF, they will be able to invest instead in shares of an alternate ETF tracking the same market
index or another market index with the same general market, there is no guarantee that shares of an alternate ETF would be available
for investment at that time. To the extent the Fund invests in a sector product, the Fund are subject to the risks associated with
that sector.

The Fund could also purchase
an ETF to temporarily gain exposure to a portion of the U.S. or foreign market while awaiting an opportunity to purchase securities
directly. The risks of owning an ETF generally reflect the risks of owning the underlying securities they are designed to track,
although lack of liquidity in an ETF could result in it being more volatile than the underlying portfolio of securities and ETFs
have management fees that increase their costs versus the costs of owning the underlying securities directly.

ETFs are listed on national
stock exchanges and are traded like stocks listed on an exchange. ETF shares may trade at a discount or a premium in market price
if there is a limited market in such shares. Investments in ETFs are subject to brokerage and other trading costs, which could
result in greater expenses to the Fund. ETFs also are subject to investment advisory and other expenses, which will be indirectly
paid by the Fund. As a result, your cost of investing in the Fund will be higher than the cost of investing directly in ETFs and
may be higher than other mutual Funds that invest exclusively in stocks and bonds. You will indirectly bear fees and expenses charged
auteur

the ETFs in addition to the Fund’s direct
fees and expenses. Finally, because the value of ETF shares depends on the demand in the market, the Adviser may not be able to
liquidate the Fund’s holdings at the most optimal time, adversely affecting the Fund’s performance.

ETFs may also include high
beta index funds ("HBIFs"), which track an index by investing in leveraged instruments such as equity index swaps, futures
contracts and options on securities, futures contracts, and stock indices. HBIFs are more volatile than the benchmark index they
track and typically don't invest directly in the securities included in the benchmark, or in the same proportion that those securities
are represented in that benchmark. On a day-to-day basis, HBIFs will target a volatility that is a specific percentage of the volatility
of the underlying index. HBIFs seek to provide investment results that will match a certain percentage greater than 100% of the
performance of a specific benchmark on a daily basis. For example, if a HBIF's current benchmark is 200% of the S&P 500 Index
and it meets its objective, the value of the HBIF will tend to increase on a daily basis 200% of any increase in the underlying
index (if the S&P 500 Index goes up 5% then the HBIF's value should go up 10%). When the value of the underlying index declines,
the value of the HBIF's shares should also decrease on a daily basis by 200% of the value of any decrease in the underlying index
(if the S&P 500 Index goes down 5% then the value of the HBIF should go down 10%).

Derivatives

Futures Contracts

A futures contract provides
for the future sale by one party and purchase by another party of a specified amount of a specific financial instrument (e.g.,
units of a stock index) for a specified price, date, time and place designated at the time the contract is made. Brokerage fees
are paid when a futures contract is bought or sold and margin deposits must be maintained. Entering into a contract to buy is commonly
referred to as buying or purchasing a contract or holding a long position. Entering into a contract to sell is commonly referred
to as selling a contract or holding a short position.

Unlike when the Fund purchases
or sell a security, no price would be paid or received by the Fund upon the purchase or sale of a futures contract. Upon entering
into a futures contract, and to maintain the Fund’s open positions in futures contracts, the Fund would be required to deposit
with a custodian or futures broker in a segregated account in the name of the futures broker an amount of cash, U.S. government
securities, suitable money market instruments, or other liquid securities, known as "initial margin." The margin required
for a particular futures contract is set by the exchange on which the contract is traded, and may be significantly modified from
time to time by the exchange during the term of the contract. Futures contracts are customarily purchased and sold on margins that
may range upward from less than 5% of the value of the contract being traded.

If the price of an open
futures contract changes (by increase in underlying instrument or index in the case of a sale or by decrease in the case of a purchase)
so that the loss on the futures contract reaches a point at which the margin on deposit does not satisfy margin requirements, the
broker will require an increase in the margin. However, if the value of a position increases because of favorable price changes
in the futures contract so that the margin deposit exceeds the required margin, the broker will pay the excess to the Fund.

These subsequent payments,
called "variation margin," to and from the futures broker, are made on a daily basis as the price of the underlying assets
fluctuate making the long and short positions in the futures contract more or less valuable, a process known as "marking to
the market." The Fund expects to earn interest income on margin deposits.

Although certain futures
contracts, by their terms, require actual future delivery of and payment for the underlying instruments, in practice most futures
contracts are usually closed out before the delivery date. Closing out an open futures contract purchase or sale is effected by
entering into an offsetting futures contract sale or purchase, respectively, for the same aggregate amount of the identical underlying
instrument or index and the same delivery date. If the offsetting purchase price is less than the original sale price, the Fund
realizes a gain; if it is more, the Fund realizes a loss. Conversely, if the offsetting sale price is more than the original purchase
price, the Fund realizes a gain; if it is less, the Fund realizes a loss. The transaction costs must also be included in these
calculations. There can be no assurance, however, that the Fund will be able to enter into an offsetting transaction with respect
to a particular futures contract at a particular time. If the Fund is not able to enter into an offsetting transaction, the Fund
will continue to be required to maintain the margin deposits on the futures contract.

For example, one contract
in the Financial Times Stock Exchange 100 Index future is a contract to buy 25 Pounds Sterling multiplied by the level of the UK
Financial Times 100 Share Index on a given future date. Settlement of a stock index futures contract may or may not be in the underlying
instrument or index. If not in the underlying instrument or index, then settlement will be made in cash, equivalent over time to
the difference between the contract price and the actual price of the underlying asset at the time the stock index futures contract
expires.

Options on Futures Contracts

The Fund may purchase and
sell options on the same types of futures in which they may invest. Options on futures are similar to options on underlying instruments
except that options on futures give the purchaser the right, in return for the premium paid, to assume a position in a futures
contract (a long position if the option is a call and a short position if the option is a put), rather than to purchase or sell
the futures contract, at a specified exercise price at any time during the period of the option. Upon exercise of the option, the
delivery of the futures position by the writer of the option to

the holder of the option will be accompanied
by the delivery of the accumulated balance in the writer's futures margin account which represents the amount by which the market
price of the futures contract, at exercise, exceeds (in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the futures contract. Purchasers of options who fail to exercise their options prior to the exercise date
suffer a loss of the premium paid.

Regulation as a Commodity Pool Operator

The Trust, on behalf of
the Fund, has filed with the National Futures Association, a notice claiming an exclusion from the definition of the term "commodity
pool operator" under the Commodity Exchange Act, as amended, (CEA”) and the rules of the Commodity Futures Trading Commission
(“CFTC”) promulgated thereunder, with respect to the Fund’s operations. Accordingly, the Fund is not subject
to registration or regulation as a commodity pool operator.

Options on Securities

The Fund may purchase
and write (i.e., sell) put and call options. Such options may relate to particular securities or stock indices, and may
or may not be listed on a domestic or foreign securities exchange and may or may not be issued by the Options Clearing Corporation.
Option trading is a highly specialized activity that entails greater than ordinary investment risk. Options may be more volatile
than the underlying instruments, and therefore, on a percentage basis, an investment in options may be subject to greater fluctuation
than an investment in the underlying instruments themselves.

A call option for
a particular security gives the purchaser of the option the right to buy, and the writer (seller) the obligation to sell, the underlying
security at the stated exercise price at any time prior to the expiration of the option, regardless of the market price of the
security. The premium paid to the writer is in consideration for undertaking the obligation under the option contract. A put option
for a particular security gives the purchaser the right to sell the security at the stated exercise price at any time prior to
the expiration date of the option, regardless of the market price of the security.

Stock index options
are put options and call options on various stock indices. In most respects, they are identical to listed options on common stocks.
The primary difference between stock options and index options occurs when index options are exercised. In the case of stock options,
the underlying security, common stock, is delivered. However, upon the exercise of an index option, settlement does not occur by
delivery of the securities comprising the index. The option holder who exercises the index option receives an amount of cash if
the closing level of the stock index upon which the option is based is greater than, in the case of a call, or less than, in the
case of a put, the exercise price of the option. This amount of cash is equal to the difference between the closing price of the
stock index and the exercise price of the option expressed in dollars times a specified multiple. A stock index fluctuates with
changes in the market value of the stocks included in the index. For example, some stock index

options are based on a broad market
index, such as the Standard & Poor's 500® Index or the Value Line Composite Index or a narrower market index, such as the
Standard & Poor's 100®. Indices may also be based on an industry or market segment, such as the NYSE Arca Oil and Gas Index
or the Business Equipment Quota Index. Options on stock indices are currently traded on the Chicago Board Options Exchange, the
New York Stock Exchange, and the NASDAQ PHLX.

The Fund’s
obligation to sell an instrument subject to a call option written by it, or to purchase an instrument subject to a put option written
by it, may be terminated prior to the expiration date of the option by the Fund’s execution of a closing purchase transaction,
which is effected by purchasing on an exchange an option of the same series (i.e., same underlying instrument, exercise
price and expiration date) as the option previously written. A closing purchase transaction will ordinarily be effected to realize
a profit on an outstanding option, to prevent an underlying instrument from being called, to permit the sale of the underlying
instrument or to permit the writing of a new option containing different terms on such underlying instrument. The cost of such
a liquidation purchase plus transactions costs may be greater than the premium received upon the original option, in which event
the Fund will have incurred a loss in the transaction. There is no assurance that a liquid secondary market will exist for any
particular option. An option writer unable to effect a closing purchase transaction will not be able to sell the underlying instrument
or liquidate the assets held in a segregated account, as described below, until the option expires or the optioned instrument is
delivered upon exercise. In such circumstances, the writer will be subject to the risk of market decline or appreciation in the
instrument during such period.

If an option purchased
by the Fund expires unexercised, the Fund realizes a loss equal to the premium paid. If the Fund enters into a closing sale transaction
on an option purchased by it, the Fund will realize a gain if the premium received by the Fund on the closing transaction is more
than the premium paid to purchase the option or a loss if it is less. If an option written by the Fund expires on the stipulated
expiration date or if the Fund enter into a closing purchase transaction, it will realize a gain (or loss if the cost of a closing
purchase transaction exceeds the net premium received when the option is sold). If an option written by the Fund is exercised,
the proceeds of the sale will be increased by the net premium originally received and the Fund will realize a gain or loss.

Certain Risks
Regarding Options.
There are several risks associated with transactions in options. For example, there are 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 objectives. In addition, a liquid secondary market for particular options, whether traded over-the-counter
or on an exchange, 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 or underlying securities or currencies;
unusual or unforeseen circumstances may interrupt normal operations on an exchange; the facilities of an

exchange or the Options Clearing Corporation
may not at all times be adequate to handle current trading value; 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 the Options Clearing Corporation as a result of trades on that exchange would continue to be exercisable
in accordance with their terms.

Successful use by
the Fund of options on stock indices will be subject to the ability of the Adviser to correctly predict movements in the directions
of the stock market. This requires different skills and techniques than predicting changes in the prices of individual securities.
In addition, the Fund’s ability to effectively hedge all or a portion of the securities in a portfolio, in anticipation of
or during a market decline, through transactions in put options on stock indices, depends on the degree to which price movements
in the underlying index correlate with the price movements of the securities held by the Fund. Inasmuch as the Fund’s securities
will not duplicate the components of an index, the correlation will not be perfect. Consequently, the Fund bear the risk that the
prices of its securities being hedged will not move in the same amount as the prices of its put options on the stock indices. C'est tout
is also possible that there may be a negative correlation between the index and the Fund’s securities that would result in
a loss on both such securities and the options on stock indices acquired by the Fund.

The hours of trading
for options may not conform to the hours during which the underlying securities are traded. To the extent that the options markets
close before the markets for the underlying securities, significant price and rate movements can take place in the underlying markets
that cannot be reflected in the options markets. The purchase of options is a highly specialized activity that involves investment
techniques and risks different from those associated with ordinary portfolio securities transactions. The purchase of stock index
options involves the risk that the premium and transaction costs paid by the Fund in purchasing an option will be lost as a result
of unanticipated movements in prices of the securities comprising the stock index on which the option is based.

There is no assurance
that a liquid secondary market on an options exchange will exist for any particular option, or at any particular time, and for
some options no secondary market on an exchange or elsewhere may exist. If the Fund is unable to close out a call option on securities
that it has written before the option is exercised, the Fund may be required to purchase the optioned securities in order to satisfy
its obligation under the option to deliver such securities. If the Fund was unable to effect a closing sale transaction with respect
to options on securities purchased, the Fund would have to exercise the option in order to realize any profit and would incur transaction
costs upon the purchase and sale of the underlying securities.

Cover for Options
Positions.
Transactions using options (other than options that the Fund have purchased) expose the Fund to an obligation to
another party. The Fund

will not enter into any such transactions
unless it owns either (i) an offsetting ("covered") position in securities or other options or (ii) cash or liquid securities
with a value sufficient at all times to cover its potential obligations not covered as provided in (i) above. The Fund will comply
with SEC guidelines regarding cover for these instruments and, if the guidelines so require, set aside cash or liquid securities
in a segregated account with the Custodian in the prescribed amount. Under current SEC guidelines, the Funds will segregate assets
to cover transactions in which the Fund write or sell options.

Assets used as cover
or held in a segregated account cannot be sold while the position in the corresponding option is open, unless they are replaced
with similar assets. As a result, the commitment of a large portion of the Fund’s assets to cover or segregated accounts
could impede portfolio management or the Fund’s ability to meet redemption requests or other current obligations.

Dealer Options. The
Fund may engage in transactions involving dealer options as well as exchange-traded options. Certain additional risks are specific
to dealer options. While the Fund might look to a clearing corporation to exercise exchange-traded options, if the Fund were to
purchase a dealer option it would need to rely on the dealer from which it purchased the option to perform if the option were 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.

Exchange-traded options
generally have a continuous liquid market while dealer options may not. Consequently, the Fund may generally be able to realize
the value of a dealer option it has purchased only by exercising or reselling the option to the dealer who issued it. Similarly,
when the Fund writes a dealer 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 dealer options only with dealers who will agree to and which 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 a dealer option at a favorable price
at any time prior to expiration. Unless the Fund, as a covered dealer 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 a dealer 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, because
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
that 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 Staff of the SEC has
taken the position that purchased dealer options are illiquid securities. The Fund may treat the cover used for written dealer
options as liquid if the dealer agrees that the Fund may repurchase the dealer option it has written for a maximum price to be
calculated by a predetermined formula. In such cases, the dealer

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
dealer options as subject to the Fund’s limitation on illiquid securities. If the SEC changes its position on the liquidity
of dealer options, the Fund will change treatment of such instruments accordingly.

Spread Transactions.
The Fund may purchase covered spread options from securities dealers. These covered spread options are not presently exchange-listed
or exchange-traded. The purchase of a spread option gives the Fund the right to put securities that it owns at a fixed dollar spread
or fixed yield spread in relationship to another security that the Fund do not own, but which is used as a benchmark. The risk
to the Fund, in addition to the risks of dealer options described above, is the cost of the premium paid as well as any transaction
costs. The purchase of spread options will be used to protect the Fund against adverse changes in prevailing credit quality spreads,
i.e., the yield spread between high quality and lower quality securities. This protection is provided only during the life
of the spread options.

Swap Agreements

The Fund may enter into
interest rate, index and currency exchange rate swap agreements in an attempt to obtain a particular desired return at a lower
cost to the Fund than if they had invested directly in an instrument that yielded that desired return. Swap agreements are two-party
contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than one year. In a standard
"swap" transaction, two parties agree to exchange the returns (or differentials in rates of returns) earned or realized
on particular predetermined investments or instruments. The gross returns to be exchanged or "swapped" between the parties
are calculated with respect to a "notional amount," i.e., the return on or increase in value of a particular dollar amount
invested at a particular interest rate, in a particular foreign currency, or in a "basket" of securities representing
a particular index. The "notional amount" of the swap agreement is only a fictive basis on which to calculate the obligations
the parties to a swap agreement have agreed to exchange. The Fund’s obligations (or rights) under a swap agreement will generally
be equal only to the amount to be paid or received under the agreement based on the relative values of the positions held by each
party to the agreement (the "net amount"). The Fund’s obligations under a swap agreement will be accrued daily
(offset against any amounts owing to the Fund) and any accrued but unpaid net amounts owed to a swap counterparty will be covered
by the maintenance of a segregated account consisting of cash, U.S. government securities, or other liquid securities, to avoid
leveraging of the Fund’s portfolios.

Whether the Fund’s
use of swap agreements enhance the Fund’s total return will depend on the Adviser's ability correctly to predict whether
certain types of investments are likely to produce greater returns than other investments. Because they are two-party contracts
and may have terms of greater than seven days, swap agreements may be considered to be illiquid. Moreover, the Fund bears the risk
of loss of the amount expected to be received under a swap agreement in the event of the default or

bankruptcy of a swap agreement counterparty.
The Fund’s Adviser will cause the Fund to enter into swap agreements only with counterparties that it deem creditworthy.
The swap market is a relatively new market and is largely unregulated. It is possible that developments in the swaps market, including
potential government regulation, could adversely affect the Fund’s ability to terminate existing swap agreements or to realize
amounts to be received under such agreements.

Certain swap agreements
are exempt from most provisions of the CEA and, therefore, are not regulated as futures or commodity option transactions under
the CEA, pursuant to regulations of the CFTC. To qualify for this exemption, a swap agreement must be entered into by "eligible
participants," which include the following, provided the participants' total assets exceed established levels: a bank or trust
company, savings association or credit union, insurance company, investment company subject to regulation under the 1940 Act, commodity
pool, corporation, partnership, proprietorship, organization, trust or other entity, employee benefit plan, governmental entity,
broker-dealer, futures commission merchant, natural person, or regulated foreign person. To be eligible, natural persons and most
other entities must have total assets exceeding $10 million; commodity pools and employees benefit plans must have assets exceeding
$5 million. In addition, an eligible swap transaction must meet three conditions. First, the swap agreement may not be part of
a fungible class of agreements that are standardized as to their material economic terms. Second, the creditworthiness of parties
with actual or potential obligations under the swap agreement must be a material consideration in entering into or determining
the terms of the swap agreement, including pricing, cost or credit enhancement terms. Third, swap agreements may not be entered
into and traded on or through a multilateral transaction execution facility.

Certain Investment Techniques and Derivatives
Risks

When the Adviser uses investment
techniques such as margin, leverage and short sales, and forms of financial derivatives, such as options and futures, an investment
in the Fund may be more volatile than investments in other mutual funds. Although the intention is to use such investment techniques
and derivatives to minimize risk to the Fund, as well as for speculative purposes, there is the possibility that improper implementation
of such techniques and derivative strategies or unusual market conditions could result in significant losses to the Fund. Derivatives
are used to limit risk in the Fund or to enhance investment return and have a return tied to a formula based upon an interest rate,
index, price of a security, or other measurement. Derivatives involve special risks, including: (1) the risk that interest rates,
securities prices and currency markets will not move in the direction that a portfolio manager anticipates; (2) imperfect correlation
between the price of derivative instruments and movements in the prices of the securities, interest rates or currencies being hedged;
(3) the fact that skills needed to use these strategies are different than those needed to select portfolio securities; (4) the
possible absence of a liquid secondary market for any particular instrument and possible exchange imposed price fluctuation limits,
either of which may make it difficult or impossible to close out a position when desired; (5) the risk that adverse price movements
in an instrument can result in a loss substantially

greater than the Fund’s initial investment
in that instrument (in some cases, the potential loss in unlimited); (6) particularly in the case of privately-negotiated instruments,
the risk that the counterparty will not perform its obligations, or that penalties could be incurred for positions held less than
the required minimum holding period, which could leave the Fund worse off than if it had not entered into the position; and (7)
the inability to close out certain hedged positions to avoid adverse tax consequences. In addition, the use of derivatives for
non-hedging purposes (that is, to seek to increase total return) is considered a speculative practice and may present an even greater
risk of loss than when used for hedging purposes.

Foreign Securities

The Fund may invest in securities
of foreign issuers and exchange-traded funds and other investment companies that hold a portfolio of foreign securities. Investing
in securities of foreign companies and countries involves certain considerations and risks that are not typically associated with
investing in U.S. government securities and securities of domestic companies. There may be less publicly available information
about a foreign issuer than a domestic one, and foreign companies are not generally subject to uniform accounting, auditing and
financial standards and requirements comparable to those applicable to U.S. companies. There may also be less government supervision
and regulation of foreign securities exchanges, brokers and listed companies than exists in the United States. Interest and dividends
paid by foreign issuers may be subject to withholding and other foreign taxes, which may decrease the net return on such investments
as compared to dividends and interest paid to the Fund by domestic companies or the U.S. government. There may be the possibility
of expropriations, seizure or nationalization of foreign deposits, confiscatory taxation, political, economic or social instability
or diplomatic developments that could affect assets of the Fund held in foreign countries. Finally, the establishment of exchange
controls or other foreign governmental laws or restrictions could adversely affect the payment of obligations.

To the extent the Fund’s
currency exchange transactions, if any, do not fully protect the Fund against adverse changes in currency exchange rates, decreases
in the value of currencies of the foreign countries in which the Fund will invest relative to the U.S. dollar will result in a
corresponding decrease in the U.S. dollar value of the Fund’s assets denominated in those currencies (and possibly a corresponding
increase in the amount of securities required to be liquidated to meet distribution requirements). Conversely, increases in the
value of currencies of the foreign countries in which the Fund invests relative to the U.S. dollar will result in a corresponding
increase in the U.S. dollar value of the Fund’s assets (and possibly a corresponding decrease in the amount of securities
to be liquidated).

Emerging Markets Securities.
The Fund may purchase securities of emerging market issuers and ETFs and other closed end funds that invest in emerging market
securities. Investing in emerging market securities imposes risks different from, or greater than, risks of investing in foreign
developed countries. These risks include:

smaller market capitalization of securities
markets, which may suffer periods of relative illiquidity; significant price volatility; restrictions on foreign investment; possible
repatriation of investment income and capital. In addition, foreign investors may be required to register the proceeds of sales;
future economic or political crises could lead to price controls, forced mergers, expropriation or confiscatory taxation, seizure,
nationalization, or creation of government monopolies. The currencies of emerging market countries may experience significant declines
against the U.S. dollar, and devaluation may occur subsequent to investments in these currencies by the Fund. Inflation and rapid
fluctuations in inflation rates have had, and may continue to have, negative effects on the economies and securities markets of
certain emerging market countries.

Additional risks of
emerging markets securities may include: greater social, economic and political uncertainty and instability; more substantial governmental
involvement in the economy; less governmental supervision and regulation; unavailability of currency hedging techniques; companies
that are newly organized and small; differences in auditing and financial reporting standards, which may result in unavailability
of material information about issuers; and less developed legal systems. In addition, emerging securities markets may have different
clearance and settlement procedures, which may be unable to keep pace with the volume of securities transactions or otherwise make
it difficult to engage in such transactions. Settlement problems may cause the Fund to miss attractive investment opportunities,
hold a portion of its assets in cash pending investment, or be delayed in disposing of a portfolio security. Such a delay could
result in possible liability to a purchaser of the security.

Depositary Receipts.
The Fund may invest in sponsored and unsponsored American Depositary Receipts ("ADRs"), which are receipts issued
by an American bank or trust company evidencing ownership of underlying securities issued by a foreign issuer. ADRs, in registered
form, are designed for use in U.S. securities markets. Unsponsored ADRs may be created without the participation of the foreign
issuer. Holders of these ADRs generally bear all the costs of the ADR facility, whereas foreign issuers typically bear certain
costs in a sponsored ADR. The bank or trust company depositary of an unsponsored ADR may be under no obligation to distribute shareholder
communications received from the foreign issuer or to pass through voting rights. Many of the risks described above regarding foreign
securities apply to investments in ADRs.

Illiquid and Restricted Securities

The Fund may invest up to
15% of its net assets in illiquid securities. Illiquid securities include securities subject to contractual or legal restrictions
on resale (e.g., because they have not been registered under the Securities Act) and securities that are otherwise not readily
marketable (e.g., because trading in the security is suspended or because market makers do not exist or will not entertain bids
or offers). Securities that have not been registered under the Securities Act are referred to as private placements or restricted
securities and are purchased directly from the issuer or in the secondary

market. Foreign securities that are freely
tradable in their principal markets are not considered to be illiquid.

Restricted and other illiquid
securities may be subject to the potential for delays on resale and uncertainty in valuation. The Fund might be unable to dispose
of illiquid securities promptly or at reasonable prices and might thereby experience difficulty in satisfying redemption requests
from shareholders. The Fund might have to register restricted securities in order to dispose of them, resulting in additional expense
and delay. Adverse market conditions could impede such a public offering of securities.

A large institutional market
exists for certain securities that are not registered under the Securities Act, including foreign securities. The fact that there
are contractual or legal restrictions on resale to the general public or to certain institutions may not be indicative of the liquidity
of such investments. Rule 144A under the Securities Act allows such a broader institutional trading market for securities otherwise
subject to restrictions on resale to the general public. Rule 144A establishes a "safe harbor" from the registration
requirements of the Securities Act for resale of certain securities to qualified institutional buyers. Rule 144A has produced enhanced
liquidity for many restricted securities, and market liquidity for such securities may continue to expand as a result of this regulation
and the consequent existence of the PORTAL system, which is an automated system for the trading, clearance and settlement of unregistered
securities of domestic and foreign issuers sponsored by NASDAQ.

Under guidelines adopted
by the Trust's Board, the Adviser of the Fund may determine that particular Rule 144A securities, and commercial paper issued in
reliance on the private placement exemption from registration afforded by Section 4(a)(2) of the Securities Act, are liquid even
though they are not registered. A determination of whether such a security is liquid or not is a question of fact. In making this
determination, the Adviser will consider, as it deems appropriate under the circumstances and among other factors: (1) the frequency
of trades and quotes for the security; (2) the number of dealers willing to purchase or sell the security; (3) the number of other
potential purchasers of the security; (4) dealer undertakings to make a market in the security; (5) the nature of the security
(e.g., debt or equity, date of maturity, terms of dividend or interest payments, and other material terms) and the nature of the
marketplace trades (e.g., the time needed to dispose of the security, the method of soliciting offers, and the mechanics of transfer);
and (6) the rating of the security and the financial condition and prospects of the issuer. In the case of commercial paper, the
Adviser will also determine that the paper (1) is not traded flat or in default as to principal and interest, (2) is rated in one
of the two highest rating categories by at least two National Statistical Rating Organization ("NRSRO") or, if only one
NRSRO rates the security, by that NRSRO, or, if the security is unrated, the Adviser determines that it is of equivalent quality,
and (3) the Adviser’s decision takes into account all relevant factors of the trading market for the specific security.

Rule 144A securities and
Section 4(a)(2) commercial paper that have been deemed liquid as described above will continue to be monitored by the Fund’s
Adviser

to determine if the security is no longer
liquid as the result of changed conditions. Investing in Rule 144A securities or Section 4(a)(2) commercial paper could have the
effect of increasing the amount of the Fund’s assets invested in illiquid securities if institutional buyers are unwilling
to purchase such securities.

Lending Portfolio Securities

For the purpose of achieving
income, the Fund may lend its portfolio securities, provided (1) the loan is secured continuously by collateral consisting of U.S.
Government securities or cash or cash equivalents (cash, U.S. Government securities, negotiable certificates of deposit, bankers'
acceptances or letters of credit) maintained on a daily mark-to-market basis in an amount at least equal to the current market
value of the securities loaned, (2) the Fund may at any time call the loan and obtain the return of securities loaned, (3) the
Fund will receive any interest or dividends received on the loaned securities, and (4) the aggregate value of the securities loaned
will not at any time exceed one-third of the total assets of the Fund.

Repurchase Agreements

The Fund may enter into
repurchase agreements. In a repurchase agreement, an investor (such as the Fund) purchases a security (known as the "underlying
security") from a securities dealer or bank. Any such dealer or bank must be deemed creditworthy by the Adviser. At that time,
the bank or securities dealer agrees to repurchase the underlying security at a mutually agreed upon price on a designated future
date. The repurchase price may be higher than the purchase price, the difference being income to the Fund, or the purchase and
repurchase prices may be the same, with interest at an agreed upon rate due to the Fund on repurchase. In either case, the income
to the Fund generally will be unrelated to the interest rate on the underlying securities. Repurchase agreements must be "fully
collateralized," in that the market value of the underlying securities (including accrued interest) must at all times be equal
to or greater than the repurchase price. Therefore, a repurchase agreement can be considered a loan collateralized by the underlying
securities.

Repurchase agreements are
generally for a short period of time, often less than a week, and will generally be used by the Fund to invest excess cash or as
part of a temporary defensive strategy. Repurchase agreements that do not provide for payment within seven days will be treated
as illiquid securities. In the event of a bankruptcy or other default by the seller of a repurchase agreement, the Fund could experience
both delays in liquidating the underlying security and losses. These losses could result from: (a) possible decline in the value
of the underlying security while the Fund is seeking to enforce its rights under the repurchase agreement; (b) possible reduced
levels of income or lack of access to income during this period; and (c) expenses of enforcing its rights.

Reverse Repurchase Agreements

In a reverse repurchase
agreement, the Fund sells portfolio securities to another party and agrees to repurchase the securities at an agreed-upon price
and date. Reverse repurchase agreements involve the risk that the other party will fail to return the securities in a timely manner,
or at all, which may result in losses to the Fund. The Fund could lose money if it is unable to recover the securities and the
value of the collateral held by the Fund is less than the value of the securities. These events could also trigger adverse tax
consequences to the Fund. Reverse repurchase agreements also involve the risk that the market value of the securities sold will
decline below the price at which the Fund is obligated to repurchase them. Reverse repurchase agreements may increase fluctuations
in the Fund’s NAV and may be viewed as a form of borrowing by the Fund.

Borrowing

In the event that the Fund
engages in any borrowings and such borrowings exceed the limits of Section 18 of the 1940 Act, the Fund will reduce its borrowings
within three days in order to comply with such limits.

When-Issued, Forward Commitments and Delayed
Settlements

The Fund may purchase and
sell securities on a when-issued, forward commitment or delayed settlement basis. In this event, the Custodian (as defined under
the section entitled "Custodian") will segregate liquid assets equal to the amount of the commitment in a separate account.
Normally, the Custodian will set aside portfolio securities to satisfy a purchase commitment. In such a case, the Fund may be required
subsequently to segregate additional assets in order to assure that the value of the account remains equal to the amount of the
Fund’s commitment. It may be expected that the Fund’s net assets will fluctuate to a greater degree when it sets aside
portfolio securities to cover such purchase commitments than when it sets aside cash.

The Fund does not engage
in these transactions for speculative purposes but only in furtherance of investment objectives. Because the Fund will segregate
liquid assets to satisfy its purchase commitments in the manner described, the Fund’s liquidity and the ability of the Adviser
to manage them may be affected in the event the Fund’s forward commitments, commitments to purchase when-issued securities
and delayed settlements ever exceeded 15% of the value of net assets.

The Fund purchases securities
on a when-issued, forward commitment or delayed settlement basis only with the intention of completing the transaction. If deemed
advisable as a matter of investment strategy, however, the Fund may dispose of or renegotiate a commitment after it is entered
into, and may sell securities committed to purchase before those securities are delivered to the Fund on the settlement date. In
these cases, the Fund may realize a taxable capital gain or loss. When the Fund engage in when-issued, forward commitment and delayed
settlement transactions, they

rely on the other party to consummate the trade.
Failure of such party to do so may result in the Fund incurring a loss or missing an opportunity to obtain a price credited to
be advantageous.

The market value of the
securities underlying a when-issued purchase, forward commitment to purchase, or a delayed settlement and any subsequent fluctuations
in market value is taken into account when determining the market value of the Fund starting on the day the Fund agrees to purchase
the securities. The Fund does not earn interest on the securities committed to purchase.

Short Sales

The Fund may sell securities
short. A short sale is a transaction in which the Fund sell a security it does not own or have the right to acquire (or that it
owns but does not wish to deliver) in anticipation that the market price of that security will decline.

When the Fund makes a short
sale, the broker-dealer through which the short sale is made must borrow the security sold short and deliver it to the party purchasing
the security. The Fund is required to make a margin deposit in connection with such short sales; the Fund may have to pay a fee
to borrow particular securities and will often be obligated to pay over any dividends and accrued interest on borrowed securities.

If the price of the security
sold short increases between the time of the short sale and the time the Fund covers a short position, 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 increased, by
the transaction costs described above. The successful use of short selling may be adversely affected by imperfect correlation between
movements in the price of the security sold short and the securities being hedged.

To the extent the Fund sell
securities short, they will provide collateral to the broker-dealer and (except in the case of short sales "against the box")
will maintain additional asset coverage in the form of cash, U.S. government securities or other liquid securities with its custodian
in a segregated account in an amount at least equal to the difference between the current market value of the securities sold short
and any amounts required to be deposited as collateral with the selling broker (not including the proceeds of the short sale).
The Fund does not intend to enter into short sales (other than short sales "against the box") if immediately after such
sales the aggregate of the value of all collateral plus the amount in such segregated account exceeds 50% of the value of the Fund’s
net assets. This percentage may be varied by action of the Board of Trustees. A short sale is "against the box" to the
extent the Fund contemporaneously owns, or has the right to obtain at no added cost, securities identical to those sold short.

INVESTMENT RESTRICTIONS


The Fund has adopted the
following investment restrictions that may not be changed without approval by a "majority of the outstanding shares"
of the Fund which, as used in this SAI, means the vote of the lesser of (a) 67% or more of the shares of the Fund represented at
a meeting, if the holders of more than 50% of the outstanding shares of the Fund present or represented by proxy, or (b) more than
50% of the outstanding shares of the Fund.

1. Borrowing Money.
The Fund will not borrow money, except: (a) from a bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all borrowings of the Fund; or (b) from a bank or other persons for temporary purposes only, provided that such temporary
borrowings are in an amount not exceeding 5% of the Fund’s total assets at the time when the borrowing is made.

2. Senior Securities.
The Fund will not issue senior securities. This limitation is not applicable to activities that may be deemed to involve the issuance
or sale of a senior security by the Fund, provided that the Fund’s engagement in such activities is consistent with or permitted
by the 1940 Act, as amended, the rules and regulations promulgated thereunder or interpretations of the SEC or its staff.

3. Underwriting.
The Fund will not act as underwriter of securities issued by other persons. This limitation is not applicable to the extent that,
in connection with the disposition of portfolio securities (including restricted securities), the Fund may be deemed an underwriter
under certain federal securities laws.

4. Real Estate. The
Fund will not purchase or sell real estate. This limitation is not applicable to investments in marketable securities that are
secured by or represent interests in real estate. This limitation does not preclude the Fund from investing in mortgage-related
securities or investing in companies engaged in the real estate business or that have a significant portion of their assets in
real estate (including real estate investment trusts).

5. Commodities. The
Fund will not purchase or sell commodities unless acquired as a result of ownership of securities or other investments. This limitation
does not preclude the Fund from purchasing or selling options or futures contracts, from investing in securities or other instruments
backed by commodities or from investing in companies which are engaged in a commodities business or have a significant portion
of their assets in commodities.

6e Loans. The Fund
will not make loans to other persons, except: (a) by loaning portfolio securities; (b) by engaging in repurchase agreements; or
(c) by purchasing nonpublicly offered debt securities. For purposes of this limitation, the term "loans" shall not include
the purchase of a portion of an issue of publicly distributed bonds, debentures or other securities.

7 Concentration.
The Fund will not invest 25% or more of its total assets in a particular industry or group of industries. The concentration limitation
is not applicable to investments in obligations issued or guaranteed by the U.S. government, its agencies and instrumentalities
or repurchase agreements with respect thereto.

THE FOLLOWING ARE ADDITIONAL INVESTMENT LIMITATIONS
OF THE FUND. THE FOLLOWING RESTRICTIONS ARE DESIGNATED AS NON-FUNDAMENTAL AND MAY BE CHANGED BY THE BOARD OF TRUSTEES OF THE TRUST
WITHOUT THE APPROVAL OF SHAREHOLDERS.

1. Pledging. The
Fund will not mortgage, pledge, hypothecate or in any manner transfer, as security for indebtedness, any assets of the Fund except
as may be necessary in connection with borrowings described in limitation (1) above.

2. Borrowing. The
Fund will not purchase any security while borrowings representing more than one third of its total assets are outstanding.

3. Margin Purchases.
The Fund will not purchase securities or evidences of interest thereon on "margin." This limitation is not applicable
to short-term credit obtained by the Fund for the clearance of purchases and sales or redemption of securities, or to arrangements
with respect to transactions involving options, futures contracts, short sales and other permitted investment techniques.

4. Illiquid Investments.
The Fund will not hold more than 15% of its net assets in securities for which there are legal or contractual restrictions on resale
and other illiquid securities.

If a restriction on the
Fund's investments is adhered to at the time an investment is made, a subsequent change in the percentage of Fund assets invested
in certain securities or other instruments, or change in average duration of the Fund’s investment portfolio, resulting from
changes in the value of the Fund’s total assets, will not be considered a violation of the restriction; provided, however,
that the asset coverage requirement applicable to borrowings shall be maintained in the manner contemplated by applicable law.

POLICIES AND PROCEDURES FOR

DISCLOSURE OF PORTFOLIO HOLDINGS


The Trust has adopted policies
and procedures that govern the disclosure of the Fund’s portfolio holdings. These policies and procedures are designed to
ensure that such disclosure is in the best interests of Fund shareholders.

It is the Trust's policy
to: (1) ensure that any disclosure of portfolio holdings information is in the best interest of Trust shareholders; (2) protect
the confidentiality of portfolio holdings information; (3) have procedures in place to guard against personal trading based on
the information; and (4) ensure that the disclosure of portfolio holdings information does not create conflicts between the interests
of the Trust's shareholders and those of the Trust's affiliates.

The Fund will disclose its
portfolio holdings by mailing its annual and semi-annual reports to shareholders approximately two months after the end of the
fiscal year and semi-annual period. The Fund may also disclose portfolio holdings by mailing a quarterly report to its shareholders.
In addition, the Fund will disclose portfolio holdings reports on Forms N-CSR and Form N-PORT two months after the end of each
quarter/semi-annual period.

The Fund may, from time
to time, make available portfolio holdings information on the website at www.patriotfund.com. If month-end portfolio holdings are
posted to the website, they are expected to be approximately 30 days old and remain available until new information for the next
month is posted.

The Fund may choose to make
available portfolio holdings information to rating agencies such as Lipper, Morningstar or Bloomberg more frequently on a confidential
basis.

Under limited circumstances,
as described below, the Fund’s portfolio holdings may be disclosed to, or known by, certain third parties in advance of their
filing with the Securities and Exchange Commission on Form N-CSR or Form N-PORT. In each case, a determination has been made that
such advance disclosure is supported by a legitimate business purpose and that the recipient is subject to a duty to keep the information
confidential and to not trade on any confidential information.

· The Adviser. Personnel of the Adviser,
including personnel responsible for managing the Fund’s portfolios, may have full daily access to Fund portfolio holdings
because that information is necessary in order for the Adviser to provide its management, administrative, and investment services
to the Fund. As required for purposes of analyzing the impact of existing and future market changes on the prices, availability,
demand and liquidity of such securities, as well as for the assistance of portfolio manager in the trading of such

securities, Adviser personnel
may also release and discuss certain portfolio holdings with various broker-dealers and research providers.

· Gemini Fund Services, LLC is the
transfer agent, fund accountant and administrator for the Fund; therefore, its personnel have full daily access to the Fund’s
portfolio holdings because that information is necessary in order for them to provide the agreed-upon services for the Trust.
· MUFG Union Bank, National Association
is the custodian for the Fund; therefore, its personnel have full daily access to the Fund’s portfolio holdings because
that information is necessary in order for them to provide the agreed-upon services for the Trust.
· BBD, LLP is the Fund’s independent
registered public accounting firm; therefore, its personnel have access to the Fund’s portfolio holdings in connection with
auditing of the Fund’s annual financial statements and providing assistance and consultation in connection with SEC filings.
· Counsel to the Trust and Counsel to
the Independent Trustees.
Counsel to the Trust, Counsel to the Independent Trustees and their respective personnel have access
to the Fund's portfolio holdings in connection with the review of the Fund's annual and semi-annual shareholder reports and SEC
filings.

Additions to List of
Approved Recipients.
The Trust’s Chief Compliance Officer is the person responsible, and whose prior approval is required,
for any disclosure of the Fund’s portfolio securities at any time or to any persons other than those described above. In
such cases, the recipient must have a legitimate business need for the information and must be subject to a duty to keep the information
confidential and to not trade on any confidential information. There are no ongoing arrangements in place with respect to the disclosure
of portfolio holdings. In no event shall the Fund, the Adviser or any other party receive any direct or indirect compensation in
connection with the disclosure of information about the Fund’s portfolio holdings.

Compliance with Portfolio
Holdings Disclosure Procedures.
The Trust’s Chief Compliance Officer will report periodically to the Board with respect
to compliance with the Fund’s portfolio holdings disclosure procedures, and from time to time will provide the Board any
updates to the portfolio holdings disclosure policies and procedures.

There is no assurance that
the Trust's policies on disclosure of portfolio holdings will protect the Fund from the potential misuse of holdings information
by individuals or firms in possession of that information.

MANAGEMENT


The business of the Trust
is managed under the direction of the Board in accordance with the Agreement and Declaration of Trust and the Trust's By-laws (the
"Governing Documents"), which have been filed with the SEC and are available upon request. The Board consists of six
(6) individuals, of whom are not "interested persons" (as defined under the 1940 Act) of the Trust and the Adviser ("Independent
Trustees"). Pursuant to the Governing Documents of the Trust, the Trustees shall elect officers including a President, a Secretary,
a Treasurer, a Principal Executive Officer and a Principal Accounting Officer. The Board retains the power to conduct, operate
and carry on the business of the Trust and has the power to incur and pay any expenses, which, in the opinion of the Board, are
necessary or incidental to carry out any of the Trust's purposes. The Trustees, officers, employees and agents of the Trust, when
acting in such capacities, shall not be subject to any personal liability except for his or her own bad faith, willful misfeasance,
gross negligence or reckless disregard of his or her duties. Following is a list of the Trustees and executive officers of the
Trust and their principal occupation over the last five years.

Board Leadership Structure

The Trust is led by Anthony
Hertl, an Independent Trustee, who has served as the Chairman of the Board since July 2013. The Board of Trustees is comprised
of Mr. Hertl and five (5) additional Independent Trustees. Additionally, under certain 1940 Act governance guidelines that apply
to the Trust, the Independent Trustees will meet in executive session, at least quarterly. Under the Trust’s Agreement and
Declaration of Trust and By-Laws, the Chairman of the Board is responsible for (a) presiding at board meetings, (b) calling special
meetings on an as-needed basis, (c) execution and administration of Trust policies including (i) setting the agendas for Board
meetings and (ii) providing information to Board members in advance of each Board meeting and between Board meetings. Generally,
the Trust believes it best to have a non-executive Chairman of the Board, who together with the President (principal executive
officer), are seen by its shareholders, business partners and other stakeholders as providing strong leadership. The Trust believes
that its Chairman, the independent chair of the Audit Committee, and, as an entity, the full Board of Trustees, provide effective
leadership that is in the best interests of the Trust, its Funds and each shareholder.

Board Risk Oversight

The Board of Trustees has
a standing independent Audit Committee with a separate chair, Mark H. Taylor. The Board is responsible for overseeing risk management,
and the full Board regularly engages in discussions of risk management and receives compliance reports that inform its oversight
of risk management from its Chief Compliance Officer at quarterly meetings and on an ad hoc basis, when and if necessary. The Audit
Committee considers financial and reporting risk within its area of responsibilities. Generally, the Board believes that its oversight
of material risks is

adequately maintained through the compliance-reporting
chain where the Chief Compliance Officer is the primary recipient and communicator of such risk-related information.

Trustee Qualifications

Generally, the Trust believes
that each Trustee is competent to serve because of their individual overall merits including: (i) experience, (ii) qualifications,
(iii) attributes and (iv) skills.

Anthony J. Hertl has over
20 years of business experience in the financial services industry and related fields including serving as chair of the finance
committee for the Borough of Interlaken, New Jersey and Vice President-Finance and Administration of Marymount College, holds a
Certified Public Accountant designation, serves or has served as a member of other mutual fund boards outside of the group of Funds
managed by the Advisor (the “Fund Complex”) and possesses a strong understanding of the regulatory framework under
which investment companies must operate based on his years of service to this Board and other fund boards.

Gary W. Lanzen has over
20 years of business experience in the financial services industry, holds a Master’s degree in Education Administration,
is a Certified Financial Planner, serves as a member of two other mutual fund boards outside of the Fund Complex and possesses
a strong understanding of the regulatory framework under which investment companies must operate based on his years of service
to this Board and other mutual fund boards.

Mark H. Taylor has over
two decades of academic and professional experience in the accounting and auditing areas, has Doctor of Philosophy, Master’s
and Bachelor’s degrees in Accounting, is a Certified Public Accountant and is a Director of the Lynn Pippenger School of
Accountancy at the Muma College of Business at the University of South Florida. He serves as a member of two other mutual fund
boards outside of the Fund Complex, has served a fellowship in the Office of the Chief Accountant at the headquarters of the United
States Securities Exchange Commission, served a three-year term on the AICPA Auditing Standards Board (2008-2011), and like the
other Board members, possesses a strong understanding of the regulatory framework under which investment companies must operate
based on his years of service to this Board and other mutual fund boards.

John V. Palancia has over
30 years of business experience in financial services industry including serving as the Director of Futures Operations for Merrill
Lynch, Pierce, Fenner & Smith, Inc. Mr. Palancia holds a Bachelor of Science degree in Economics. He also possesses a strong
understanding of risk management, balance sheet analysis and the regulatory framework under which regulated financial entities
must operate based on service to Merrill Lynch. Additionally, he is well versed in the regulatory framework under which investment
companies must operate and serves as a member of three other fund boards.

Mark D. Gersten has more
than 30 years of experience in the financial services industry, having served in executive roles at AllianceBernstein LP and holding
key industry positions at Prudential-Bache Securities and PriceWaterhouseCoopers. He also serves as a member of two other mutual
fund boards outside of the Fund Complex. Mr. Gersten is a certified public accountant and holds an MBA in accounting. Like other
Trustees, his experience has given him a strong understanding of the regulatory framework under which investment companies operate.

Mark S. Garbin has more
than 30 years of experience in corporate balance sheet and income statement risk management for large asset managers, serving as
Managing Principal of Coherent Capital Management LLC since 2007. Mr. Garbin has extensive derivatives experience and has provided
consulting services to alternative asset managers. He is both a Chartered Financial Analyst and Professional Risk Manager charterholder
and holds advanced degrees in international business. The Trust does not believe any one factor is determinative in assessing a
Trustee's qualifications, but that the collective experience of each Trustee makes them each highly qualified.

The Trustees and the executive
officers of the Trust are listed below with their present positions with the Trust and principal occupations over at least the
last five years. The business address of each Trustee and Officer is 225 Pictoria Drive, Suite 450, Cincinnati, OH 45246. All correspondence
to the Trustees and Officers should be directed to c/o Gemini Fund Services, LLC, P.O. Box 541150, Omaha, Nebraska 68154

Independent Trustees

Name, Address and Year of Birth Position/Term of Office* Principal Occupation During the Past Five Years Number of Portfolios in Fund Complex** Overseen by Trustee Other Directorships held by Trustee During the Past Five Years

Mark Garbin

Born in 1951

Trustee

Since 2013

Managing Principal, Coherent Capital Management LLC (since 2007).

3

Northern Lights Fund Trust (for series not affiliated with the Funds since 2013); Two Roads Shared Trust (since 2012); Forethought Variable Insurance Trust (since 2013); Northern Lights Variable Trust (since 2013); OHA Mortgage Strategies Fund (offshore), Ltd. (2014 – 2017); and Altegris KKR Commitments Master Fund (since 2014); and Carlyle Tactical Private Credit Fund (since March 2018)


Mark D. Gersten
Born in 1950

Trustee

Since 2013

Independent Consultant (since 2012). 3 Northern Lights Fund Trust (for series not affiliated with the Funds since 2013); Northern Lights Variable Trust (since 2013); Two Roads Shared Trust (since 2012); Altegris KKR Commitments Master Fund (since 2014); previously, Ramius Archview Credit and Distressed Fund (2015-2017); and Schroder Global Series Trust (2012 to 2017)

Anthony J. Hertl

Born in 1950

Trustee

Since 2005; Chairman of the Board since 2013

Retired, previously held several positions in a major Wall Street
        firm including Capital Markets Controller, Director of Global Taxation, and CFO of the Specialty Finance Group.

3 Northern Lights Fund Trust (for series not affiliated with the Funds since 2005); Northern Lights Variable Trust (since 2006); Alternative Strategies Fund (since 2010); Satuit Capital Management Trust (2007-2019).

Gary W. Lanzen

Born in 1954

Trustee

Since 2005

Retired (since 2012).  Formerly, Founder, President, and Chief Investment Officer, Orizon Investment Counsel, Inc. (2000-2012). 3 Northern Lights Fund Trust (for series not affiliated with the Funds since 2005) Northern Lights Variable Trust (since 2006); AdvisorOne Funds (since 2003); Alternative Strategies Fund (since 2010); and previously, CLA Strategic Allocation Fund (2014-2015)

John V. Palancia

Born in 1954

Trustee

Since 2011

Retired (since 2011). Formerly, Director of Futures Operations, Merrill Lynch, Pierce, Fenner & Smith Inc. (1975-2011). 3 Northern Lights Fund Trust (for series not affiliated with the Funds since 2011); Northern Lights Fund Trust III (since February 2012); Alternative Strategies Fund (since 2012) and Northern Lights Variable Trust (since 2011)

Mark H. Taylor

Born in 1964

Trustee

Since 2007; Chairman of the Audit Committee since 2013

Director, Lynn Pippenger School of Accountancy Muma College of Business (since 2019); Chair, Department of Accountancy and Andrew D. Braden Professor of Accounting and Auditing, Weatherhead School of Management, Case Western Reserve University (2009-2019); Vice President-Finance, American Accounting Association (2017-2020); President, Auditing Section of the American Accounting Association (2012-15). AICPA Auditing Standards Board Member (2009-2012). 3 Northern Lights Fund Trust (for series not affiliated with the Funds since 2007); Alternative Strategies Fund (since 2010); Northern Lights Fund Trust III (since 2012); and Northern Lights Variable Trust (since 2007)

Officers

Name and Year of Birth Position/Term of Office* Principal Occupation During the Past Five Years Number of Portfolios in Fund Complex** Overseen by Trustee Other Directorships held by Trustee During the Past Five Years
Kevin E. Wolf
Born in 1969

Le président

Since June 2017

Vice President, The Ultimus Group, LLC and Executive Vice President,
        Gemini Fund Services, LLC (since 2019); President, Gemini Fund Services, LLC (2012-2019)

Treasurer of the Trust
(2006-June 2017); Director of Fund Administration, Gemini Fund Services, LLC (2006 – 2012); and Vice-President, Blu Giant, LLC,
        (2004 -2013).

N/A N/A

Richard Malinowski

Born in 1983

Vice President

Since March 2018

Senior Vice President (since 2017);
        Vice President and Counsel (2016-2017) and Assistant V
ice President, Gemini Fund Services,
        LLC (2012-2016)

N/A N/A

James Colantino

Born in 1969

Treasurer

Since June 2017

Assistant Treasurer of the Trust (2006-June 2017); Senior Vice President
        – Fund Administration, Gemini Fund Services, LLC (since 2012).

N/A N/A
Stephanie Shearer
Born in 1979

Secretary
Since February 2017

Assistant Secretary of the Trust (2012-February 2017); Manager of Legal Administration, Gemini Fund Services, LLC (since 2018); Senior Paralegal, Gemini Fund Services, LLC (from 2013 – 2018); Paralegal, Gemini Fund Services, LLC (2010-2013). N/A

Lynn Bowley

Born in 1958

Chief Compliance Officer

Since 2007

Senior Compliance Officer of Northern Lights Compliance Services,
        LLC (since 2007).

N/A N/A

*The term of office for each Trustee and officer
listed above will continue indefinitely until the individual resigns or is removed.

**As of December 31, 2019, the Trust was comprised
of 74 active portfolios managed by unaffiliated investment advisers. The term “Fund Complex” applies only to the Funds
in the Trust advised by the Fund’s Adviser. The Funds do not hold themselves out as related to any other series within the
Trust that is not advised by the Fund’s Adviser.

Board Committees

Audit Committee

The Board has an Audit Committee
that consists of all the Trustees who are not "interested persons" of the Trust within the meaning of the 1940 Act. The
Audit Committee's responsibilities include: (i) recommending to the Board the selection, retention or termination of the Trust's
independent auditors; (ii) reviewing with the independent auditors the scope, performance and anticipated cost of their audit;
(iii) discussing with the independent auditors certain matters relating to the Trust's financial statements, including any adjustment
to such financial statements recommended by such independent auditors, or any other results of any audit; (iv) reviewing on a periodic
basis a formal written statement from the independent auditors with respect to their independence, discussing with the independent
auditors any relationships or services disclosed in the statement that may impact the objectivity and independence of the Trust's
independent auditors and recommending that the Board take appropriate action in response thereto to satisfy itself of the auditor's
independence; and (v) considering the comments of the independent auditors and management's responses thereto with respect to the
quality and adequacy of the Trust's accounting and financial reporting policies and practices and internal controls.  The
Audit Committee operates pursuant to an Audit Committee Charter.  During the past fiscal year, the Audit Committee held thirteen
meetings.

Compensation

Effective January 1, 2019,
each Trustee who is not affiliated with the Northern Lights Fund Trust and Northern Lights Variable Trust (the “Trusts”)
or an investment adviser to any series of the Trusts will receive a quarterly fee of $46,250, allocated among each of the various
portfolios comprising the Trust, for his attendance at the regularly scheduled meetings of the Board of Trustees, to be paid in
advance of each calendar quarter, as well as reimbursement for any reasonable expenses incurred. Previously, each Trustee who is
not affiliated with the Northern Lights Fund Trust or an investment adviser to any series of the Northern Lights Fund Trust received
a quarterly fee of $35,875. In addition to the quarterly fees and reimbursements, the Chairman of the Board receives a quarterly
fee of $11,250 and the Audit Committee Chairman receives a quarterly fee of $8,750.

Additionally, in the event
a meeting of the Board of Trustees other than its regularly scheduled meetings (a “Special Meeting”) is required, each
Independent Trustee will receive a fee of $2,500 per Special Meeting, as well as reimbursement for any reasonable expenses incurred,
to be paid by the relevant series of the Trust or its investment adviser depending on the circumstances necessitating the Special
Meeting.

The table below details
the amount of compensation the Trustees received from the Patriot Fund during the fiscal year ended September 30, 2019. Each Independent
Trustee attended all quarterly meetings during the period. The Trust does not have a bonus, profit sharing, pension or retirement
plan.


Name and Position

Ascendant Deep Value Bond Fund

Ascendant Tactical Yield Fund

Patriot Fund Pension or Retirement Benefits Accrued as Part of Fund Expenses Estimated Annual Benefits Upon Retirement Total Compensation From Fund Complex* Paid to Trustees
Anthony J. Hertl $2,243 $2,243 $2,243 None None $6,729
Gary Lanzen $1,889 $1,889 $1,889 None None $5,667
Mark Taylor $2,007 $2,007 $2,007 None None $6,021
John V. Palancia $1,889 $1,889 $1,889 None None $5,667
Mark D. Gersten $1,889 $1,889 $1,889 None None $5,667
Mark Garbin $1,878 $1,878 $1,878 None None $5,667

* The term “Fund Complex” includes
the Northern Lights Fund Trust (“NLFT”), and Northern Lights Variable Trust (“NLVT”) that are advised by
the adviser.

Trustee Ownership

The following table indicates
the dollar range of equity securities that each Trustee beneficially owned in the Fund as of December 31, 2019.

Name of Trustee

Dollar Range of Equity Securities in the Patriot Fund Aggregate Dollar Range of Equity Securities in All Registered Investment Companies Overseen by Trustee in Family of Investment Companies
Anthony J. Hertl None $50,000-$100,000
Gary Lanzen None None
John V. Palancia None None
Mark Taylor None None
Mark D. Gersten None $10,001-$50,000
Mark Garbin None None

Management Ownership

As of January 2, 2020, the
Trustees and officers, as a group, owned less than 1.00% of the Fund’s outstanding shares and less than 1.00% of the Fund
Complex’s outstanding shares.

CONTROL PERSONS AND PRINCIPAL HOLDERS


A principal shareholder
is any person who owns of record or beneficially 5% or more of the outstanding shares of the Fund. A control person is one who
owns beneficially or through controlled companies more than 25% of the voting securities of a company or acknowledges the existence
of control.

As of January 2, 2020, the
following shareholders of record owned 5% or more of the outstanding shares of the Fund.

The Patriot Fund

Class A
Name & Address Shares Percentage of Shares

PERSHING LLC

P. O. BOX 2052

JERSEY CITY, NJ 07303-9998

17,810 24.32%

PERSHING LLC

P. O. BOX 2052

JERSEY CITY, NJ 07303-9998

4,699 6.42%
Class C
Name & Address Shares Percentage of Shares

JULIE ROTERUS LEITER/TOD

ACCOUNT

1030 N PASEO DE GOLF

GREEN VALLEY AZ 85614-3602

4,349 19.01%

PERSHING LLC

P. O. BOX 2052

JERSEY CITY, NJ 07303-9998

1,942 8.49%

STIFEL NICOLAUS & CO

INC/A/C 2582-1984

Daniel F Lassus R/O IRA

STIFEL NICOLAUS CUSTODIAN

FOR

501 NORTH BROADWAY

ST LOUIS MO 63102

1,619 7.08%

PERSHING LLC

P. O. BOX 2052

JERSEY CITY, NJ 07303-9998

1,278 5.59%

INVESTMENT ADVISER


Ascendant Advisors, LLC,
located at Four Oaks Place, 1330 Post Oak Blvd., Suite 1550, Houston, TX 77056, serves as investment adviser to the Fund. The Adviser
was originally formed in 1970 and has operated continuously as a registered investment adviser since its inception. In 2009, the
Adviser was acquired by its current management and a group of investors, converted to a limited liability company and renamed Ascendant
Advisors, LLC. The Adviser also provides investment advisory services to individuals, corporations and pension plans. The Adviser
is wholly owned by Ascendant Advisors Group, LLC, a Delaware limited liability company. The fee
paid to the Adviser is governed by an investment advisory agreement ("Advisory Agreement") between the Trust, on behalf
of the Fund and the Adviser.

Under the Advisory Agreement,
the Adviser, under the oversight of the Board, agrees to invest the assets of the Fund in accordance with applicable law and the
investment objective, policies and restrictions set forth in the Fund’s current Prospectus and SAI, and subject to such further
limitations as the Trust may from time to time impose by written notice to the Adviser. The Adviser shall act as the investment
advisor to the Fund and, as such shall (i) obtain and evaluate such information relating to the economy, industries, business,
securities markets and securities as it may deem necessary or useful in discharging its responsibilities here under, (ii) formulate
a continuing program for the investment of the assets of the Fund in a manner consistent with its investment objective, policies
and restrictions, and (iii) determine from time to time securities to be purchased, sold, retained or lent by the Fund, and implement
those decisions, including the selection of entities with or through which such purchases, sales or loans are to be effected; provided,
that the Adviser will place orders pursuant to its investment determinations either directly with the issuer or with a broker or
dealer, and if with a broker or dealer, (a) will attempt to obtain the best price and execution of its orders, and (b) may nevertheless
in its discretion purchase and sell portfolio securities from and to brokers who provide the Adviser with research, analysis, advice
and similar services and pay such brokers in return a higher commission or spread than may be charged by other brokers. The Adviser
also provides the Fund with all necessary office facilities and personnel for servicing the Fund’s investments, compensates
all officers, Trustees and employees of the Trust who are officers, directors or employees of the Advisor, and all personnel of
the Fund or the Adviser performing services relating to research, statistical and investment activities. The Advisory Agreement
was approved by the Board, including by a majority of the Independent Trustees, at a meeting held on November 18, 2011 and most
recently renewed at a meeting held on December 11-12, 2019.

Pursuant to the Advisory
Agreement, the Adviser is entitled to receive, on a monthly basis, an annual advisory fee equal to 1.40% of the Patriot Fund’s
average daily net assets. During the fiscal year ended September 30, 2017, the Patriot Fund accrued $462,630 in advisory fees of
which none was waived. For the fiscal year ended September 30, 2017, the Patriot Fund also recouped previously waived advisory
fees equal to $50,343. During the fiscal year ended September 30, 2018, the Patriot Fund accrued $485,406 in advisory fees, and
recaptured fees of $46,005. During the fiscal year ended September 30, 2019, the Patriot Fund accrued $401,240 in advisory fees.

The Adviser has contractually
agreed to reduce its fees and/or absorb expenses of the Fund, until at least January 31, 2021 to ensure that Total Annual Fund
Operating Expenses After Fee Waiver and/or Reimbursement, excluding any front-end or contingent deferred loads; brokerage fees
and commissions, acquired fund fees and expenses, borrowing costs (such as interest and dividend expense on securities sold short),
taxes; and extraordinary expenses, such as litigation expenses (which may include indemnification of Fund officers and Trustees,
contractual indemnification of Fund service providers (other than the Adviser) will not exceed the following levels of the daily
average net assets attributable to each of the Class of shares, respectively, subject to possible recoupment from the Fund in future
years on a rolling three-year

basis (within the three years after the fees have been waived
or reimbursed) if such recoupment can be achieved within the following expense limits:

Fund Class A Class C Class I
The Patriot Fund 2.40% 3.15% 2.15%

Fee waiver and reimbursement
arrangements can decrease the Fund’s expenses and boost its performance. This agreement may be terminated only by the Fund’s
Board, on 60 days’ written notice to the Adviser.

Expenses not expressly assumed
by the Adviser under the Advisory Agreement are paid by the Fund.  Under the terms of the Advisory Agreement, the Fund are
responsible for the payment of the following expenses among others: (a) the fees payable to the Adviser, (b) the fees and expenses
of Trustees who are not affiliated persons of the Adviser (c) the fees and certain expenses of the Custodian and Transfer and Dividend
Disbursing Agent (as defined under the section entitled "Transfer Agent"), including the cost of maintaining certain
required records of the Fund and of pricing the Fund’s shares, (d) the charges and expenses of legal counsel and independent
accountants for the Fund, (e) brokerage commissions and any issue or transfer taxes chargeable to the Fund in connection with its
securities transactions, (f) all taxes and corporate fees payable by the Fund to governmental agencies, (g) the fees of any trade
association of which the Fund may be a member, (h) the cost of fidelity and liability insurance, (i) the fees and expenses involved
in registering and maintaining registration of the Fund and of its shares with the SEC, qualifying its shares under state securities
laws, including the preparation and printing of the Fund’s registration statement and prospectus for such purposes, (j) all
expenses of shareholders and Trustees' meetings (including travel expenses of Trustees and officers of the Fund who are directors,
officers or employees of the Adviser) and of preparing, printing and mailing reports, proxy statements and prospectuses to shareholders
in the amount necessary for distribution to the shareholders and (k) litigation and indemnification expenses and other extraordinary
expenses not incurred in the ordinary course of the Fund’s business.

The Advisory Agreement continued
in effect for two (2) years initially and thereafter continues from year to year provided such continuance is approved at least
annually by (a) a vote of the majority of the Independent Trustees, cast in person at a meeting specifically called for the purpose
of voting on such approval and by (b) the majority vote of either all of the Trustees or the vote of a majority of the outstanding
shares of the Fund. The Advisory Agreement may be terminated without penalty on 60 days' written notice by a vote of a majority
of the Trustees or by the Adviser, or by holders of a majority of that Trust's outstanding shares. The Advisory Agreement shall
terminate automatically in the event of its assignment.

Codes of Ethics

The Trust, the Adviser and
the Distributor (as defined under the section entitled (“Distribution of Shares”)) have each adopted respective codes
of ethics under Rule 17j-1 under the 1940 Act that govern the personal securities transactions of their board members, officers
and employees who may have access to current trading information of the Trust. Under the Trust’s code, the Trustees are permitted
to invest in securities that may also be purchased by the Fund.

In addition, the Trust has
adopted a separate code of ethics (the “Code”) that applies only to the Trust's executive officers to ensure that these
officers promote professional conduct in the practice of corporate governance and management. The purpose behind these guidelines
is to promote (i) honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between
personal and professional relationships; (ii) full, fair, accurate, timely, and understandable disclosure in reports and documents
that a registrant files with, or submits to, the SEC and in other public communications made by the Fund; (iii) compliance with
applicable governmental laws, rule and regulations; (iv) the prompt internal reporting of violations of this Code to an appropriate
person or persons identified in the Code; and (v) accountability for adherence to the Code.

Proxy Voting Policies

The Board has adopted Proxy
Voting Policies and Procedures ("Policies") on behalf of the Trust, which delegate the responsibility for voting proxies
of securities held by the Fund to the Adviser and responsibility for voting proxies of securities held by the Fund to the Adviser,
subject to the Board's continuing oversight. The Policies require that the Adviser vote proxies received in a manner consistent
with the best interests of the Fund and its shareholders. The Policies also require the Adviser to present to the Board, at least
annually, the Adviser's Proxy Policies and a record of each proxy voted by the Adviser on behalf of the Fund, including a report
on the resolution of all proxies identified by the Adviser as involving a conflict of interest. A copy of the Adviser's Proxy Voting
Policies is attached hereto as an Appendix.

More information.
Information regarding how the Fund voted proxies relating to portfolio securities held by the Fund during the most recent 12-month
period ending June 30 will be available (1) without charge, upon request, by calling the Fund at 1-855-527-2363; and (2) on the
SEC's website at http://www.sec.gov. In addition, a copy of the Fund’s proxy voting policies and procedures are also available
by calling 1-855-527-2363 and will be sent within three business days of receipt of a request.

DISTRIBUTION OF SHARES


Northern Lights Distributors,
LLC, (the "Distributor") located at 4221 North 203rd Street, Elkhorn, Suite 100, NE  68022 serves as
the principal underwriter and national distributor for the shares of the Fund pursuant to an Underwriting Agreement with the Trust
(the "Underwriting Agreement"). The Distributor is registered as a broker-dealer under the Securities Exchange Act of
1934 and each state's securities laws and is a member of FINRA. The offering of the Fund’s shares is continuous. The Underwriting
Agreement provides that the Distributor, as agent in connection with the distribution of Fund shares, will use reasonable efforts
to facilitate the sale of the Fund’s shares.

The Underwriting Agreement
provides that, unless sooner terminated, it will continue in effect for two years initially and thereafter shall continue from
year to year, subject to annual approval by (a) the Board or a vote of a majority of the outstanding shares, and (b) by a majority
of the Trustees who are not interested persons of the Trust or of the Distributor by vote cast in person at a meeting called for
the purpose of voting on such approval.

The Underwriting Agreement
may be terminated by the Fund at any time, without the payment of any penalty, by vote of a majority of the entire Board of the
Trust or by vote of a majority of the outstanding shares of the Fund on 60 days written notice to the Distributor, or by the Distributor
at any time, without the payment of any penalty, on 60 days written notice to the Fund. The Underwriting Agreement will automatically
terminate in the event of its assignment.

The Distributor may enter
into selling agreements with broker-dealers that solicit orders for the sale of shares of the Fund and may allow concessions to
dealers that sell shares of the Fund.

The following table sets forth the total
compensation received by the Distributor during the fiscal year ended September 30, 2017:



Fund
Net Underwriting Discounts and Commissions Compensation on Redemptions and Repurchases Brokerage Commissions Other Compensation
Patriot Fund $3,106 $0 $0 *

* The Distributor received $21,816 from the Adviser as compensation
for its distribution services to the Fund.

The Distributor also receives 12b-1 fees from the Fund as described
under the following section entitled “Rule 12b-1 Plan”.

The following table sets forth the total
compensation received by the Distributor during the fiscal year ended September 30, 2018:



Fund
Net Underwriting Discounts and Commissions Compensation on Redemptions and Repurchases Brokerage Commissions Other Compensation
Patriot Fund $1,282 $0 $0 *

* The Distributor received $29,277 from the
Adviser as compensation for its distribution services to the Fund.

The Distributor also receives
12b-1 fees from the Fund as described under the following section entitled “Rule 12b-1 Plan”.

The following table sets forth the total
compensation received by the Distributor during the fiscal year ended September 30, 2019:



Fund
Net Underwriting Discounts and Commissions Compensation on Redemptions and Repurchases Brokerage Commissions Other Compensation
Patriot Fund $493 $0 $0 *

* The Distributor received $33,555 from the
Adviser as compensation for its distribution services to the Fund.

The Distributor also receives
12b-1 fees from the Fund as described under the following section entitled “Rule 12b-1 Plan”.

Rule 12b-1 Plan

The Trust, with respect
to the Fund, has adopted the Trust’s Master Distribution and Shareholder Servicing Plans pursuant to Rule 12b-1 under the
1940 Act for each of the Fund’s Class A and Class C shares (the "Plans") pursuant to which the Fund are authorized
to pay the Distributor, as compensation for Distributor's account maintenance services under the respective Plans, a distribution
and shareholder servicing fee at the rate of up to 0.25% for Class A shares and up to 1.00% for Class C shares of the Fund’s
average daily net assets attributable to the relevant class. Such fees are to be paid by the Fund monthly, or at such other intervals
as the Board shall determine. There is no Plan for Class I shares. Such fees shall be based upon the Fund’s average daily
net assets during the preceding month, and shall be calculated and accrued daily. The Fund may pay fees to the Distributor at a
lesser rate, as agreed upon by the Board of Trustees of the Trust and the Distributor. The Plans authorize payments to the Distributor
as compensation for providing account maintenance services to Class A and Class C Fund shareholders, respectively, including arranging
for certain securities dealers or brokers, administrators and others ("Recipients") to provide these services and paying
compensation for these services. The Fund will bear its own costs of distribution with respect to its shares. The Fund may make
other payments, such as contingent deferred sales charges imposed on certain redemptions of shares, which are separate and apart
from payments made pursuant to the Plan.

The services to be provided
under the Plans by Recipients may include, but are not limited to, the following: assistance in the offering and sale of Class
A and Class C shares and in other aspects of the marketing of the shares to clients or prospective clients of the respective recipients;
answering routine inquiries concerning the Fund;

assisting in the establishment and maintenance
of accounts or sub-accounts in the Fund and in processing purchase and redemption transactions; making the Fund’s investment
plan and shareholder services available; and providing such other information and services to investors in shares of the Fund as
the Distributor or the Trust, on behalf of the Fund, may reasonably request. The distribution services shall also include any advertising
and marketing services provided by or arranged by the Distributor with respect to the Fund.

The Distributor is required
to provide a written report, at least quarterly to the Board, specifying in reasonable detail the amounts expended pursuant to
each of the Plans and the purposes for which such expenditures were made. Further, the Distributor will inform the Board of any
Rule 12b-1 fees to be paid by the Distributor to Recipients.

During the fiscal
Year ended September 30, 2017 the Patriot Fund paid $29,820, in distribution related fees pursuant to the Plan. For the fiscal
Year indicated below, the distribution fees were allocated as follows:

Actual 12b-1 Expenditures Paid by the Patriot Fund's Shares During the Fiscal Year Ended September 30, 2017
Total Dollars Allocated
Advertising/Marketing None
Printing/Postage None
Payment to distributor $51
Payment to dealers $29,769
Compensation to sales personnel None
Other $0
Total $29,820

During the fiscal Year ended
September 30, 2018 the Patriot Fund paid $21,283, in distribution related fees pursuant to the Plan. These fees were allocated
as follows:

Actual 12b-1 Expenditures Paid by the Patriot Fund’s Shares During the Fiscal Year Ended September 30, 2018
Total Dollars Allocated
Advertising/Marketing None
Printing/Postage None
Payment to distributor $63
Payment to dealers $21,220
Compensation to sales personnel None
Other $0
Total $21,283

During the fiscal Year ended
September 30, 2019 the Patriot Fund paid $11,405 in distribution related fees pursuant to the Plan. These fees were allocated as
follows:

Actual 12b-1 Expenditures Paid by the Patriot Fund’s Shares During the Fiscal Year Ended September 30, 2019
Total Dollars Allocated
Advertising/Marketing None
Printing/Postage None
Payment to distributor 34 $
Payment to dealers $11,371
Compensation to sales personnel None
Other $0
Total $11,405

The initial term of each
Plan is one year and will continue in effect from year to year thereafter, provided such continuance is specifically approved at
least annually by a majority of the Board and a majority of the Trustees who are not “interested persons” of the Trust
and do not have a direct or indirect financial interest in the Plan (“Rule 12b-1 Trustees”) by votes cast in person
at a meeting called for the purpose of voting on the Plan. Each Plan may be terminated at any time by the Trust or the Fund by
vote of a majority of the Rule 12b-1 Trustees or by vote of a majority of the outstanding voting shares of the applicable class
of the Fund.

Each of the Plans may not
be amended to increase materially the amount of the Distributor's compensation to be paid by the Fund, unless such amendment is
approved by the vote of a majority of the outstanding voting securities of the affected class of the Fund (as defined in the 1940
Act). All material amendments must be approved by a majority of the Board and a majority of the Rule 12b-1 Trustees by votes cast
in person at a meeting called for the purpose of voting on a Plan. During the term of the Plans, the selection and nomination of
non-interested Trustees of the Trust will be committed to the discretion of current non-interested Trustees. The Distributor will
preserve copies of the Plans, any related agreements, and all reports, for a period of not less than six years from the date of
such document and for at least the first two years in an easily accessible place.

Any agreement related to
the Plans will be in writing and provide that: (a) it may be terminated by the Trust or the Fund at any time upon sixty days written
notice, without the payment of any penalty, by vote of a majority of the respective Rule 12b-1 Trustees, or by vote of a majority
of the outstanding voting securities of the Trust or the Fund; (b) it will automatically terminate in the event of its assignment
(as defined in the 1940 Act); and (c) it will continue in effect for a period of more than one year from the date of its execution
or adoption only so long as such continuance is specifically approved at least annually by a majority of the Board and a majority
of the Rule 12b-1 Trustees by votes cast in person at a meeting called for the purpose of voting on such agreement.

PORTFOLIO MANAGER


The following table lists
the number and types of accounts managed by the Portfolio Manager, in addition to those of the Fund and assets under management
in those accounts as of September 30, 2019:

Total Other Accounts Managed

Portfolio Manager

Registered Investment Company Accounts
Assets
Managed
($ millions)
Pooled
Investment
Vehicle
Accounts

Assets
Managed

Other
Accounts

Assets Managed

James H. Lee 2 $79.1 0 0 59 $34.3 million

Other Accounts Managed
Subject to Performance-Based Fees

Portfolio Manager

Registered Investment Company Accounts
Assets
Managed
($ millions)
Pooled
Investment
Vehicle
Accounts

Assets
Managed

Other
Accounts

Assets Managed

James H. Lee 0 0 0 0 0 0

Conflicts of Interest

As indicated in the table
above, portfolio manager at the Adviser may manage numerous accounts for multiple clients. These accounts may include registered
investment companies, other types of pooled accounts (e.g., collective investment funds), and separate accounts (i.e., accounts
managed on behalf of individuals or public or private institutions). The portfolio manager makes investment decisions for each
account based on the investment objectives and policies and other relevant investment considerations applicable to that portfolio.

When a portfolio manager
has responsibility for managing more than one account, potential conflicts of interest may arise. Those conflicts could include
preferential treatment of one account over others in terms of allocation of resources or of investment opportunities. For instance,
the Adviser may receive fees from certain accounts that are higher than the fee it receives from the Fund, or it may receive a
performance-based fee on certain accounts. In those instances, the portfolio manager may have an incentive to favor the higher
and/or performance-based fee accounts over the Fund. The Adviser has adopted policies and procedures designed to address these
potential material conflicts. For instance, portfolio managers within the Adviser are normally responsible for all accounts within
a certain investment discipline, and do not, absent special circumstances, differentiate among the various accounts when allocating
resources. Additionally, the Adviser utilizes a system for allocating investment opportunities among portfolios that is designed
to provide a fair and equitable allocation.

The portfolio manager receives
a salary and may be eligible for a bonus based on the performance of the Adviser. Mr. Lee is also an equity owner of the Adviser,
and therefore may share in the Adviser's profits.

Ownership

The following table shows
the dollar range of equity securities beneficially owned by the portfolio manager in the Fund as of September 30, 2019.

James H. Lee:

Name of Fund

Dollar Range of Equity Securities in the Fund
Patriot Fund $100,001-$500,000

ALLOCATION OF PORTFOLIO BROKERAGE


Specific decisions to purchase
or sell securities for the Fund is made by the Fund’s portfolio manager, who is an employee of the Adviser. The Adviser is
authorized by the Trustees to allocate the orders placed on behalf of the Fund to brokers or dealers who may, but need not, provide
research or statistical material or other services to the Fund or the Adviser for the Fund’s use. Such allocation is to be
in such amounts and proportions as the Adviser may determine.

In selecting a broker or
dealer to execute each particular transaction, the Adviser will take the following into consideration:

·
the best net price available;

·
the reliability, integrity and financial condition of the broker
or dealer;

·
the size of and difficulty in executing the order; et

·
the value of the expected contribution of the broker or dealer to
the investment performance of the Fund on a continuing basis.

Brokers or dealers executing
a portfolio transaction on behalf of the Fund may receive a commission in excess of the amount of commission another broker or
dealer would have charged for executing the transaction if the Adviser determines in good faith that such commission is reasonable
in relation to the value of brokerage, research and other services provided to the Fund. In allocating portfolio brokerage, the
Adviser may select brokers or dealers who also provide brokerage, research and other services to other accounts over which the
Adviser exercises investment discretion. Some of the services received as the result of Fund transactions may primarily benefit
accounts other than the Fund, while services received as the result of portfolio transactions effected on behalf of those other
accounts may primarily benefit the Fund. For the fiscal year ended September 30, 2017, the Fund paid $14,521 in brokerage commissions.
For the fiscal year ended September 30, 2018, the Fund paid $20,617 in brokerage

commissions. For the fiscal year ended September
30, 2019, the Fund paid $20,750 in brokerage commissions.

The Fund has no obligation
to deal with any broker or dealer in the execution of its transactions. However, it is contemplated that AWM Services, LLC ("AWM")
located at 1330 Post Oak Boulevard, Suite 1550, Houston, TX 77056, in its capacity as a registered broker-dealer, will effect substantially
all securities transactions that are executed on a national securities exchange and over-the-counter transactions conducted on
an agency basis. For the fiscal year ended September 30, 2017, the Patriot Fund paid AWM commissions of $9,736 (67%) in brokerage
commissions. For the fiscal year ended September 30, 2018, the Fund paid AWM brokerage commissions of $18,496 (90%) of the Fund’s
total brokerage commissions. For the fiscal year ended September 30, 2019, the Fund paid AWM brokerage commissions of $20,750 (100%)
of the Fund’s total brokerage commissions.

Under 1940 Act, as amended,
persons affiliated with an affiliate of the Adviser (such as AWM) may be prohibited from dealing with the Fund as a principal in
the purchase and sale of securities. Therefore, AWM will not serve as the Fund’s dealer in connection with over-the-counter
transactions. However, AWM may serve as the Fund’s broker in over-the-counter transactions conducted on an agency basis and
will receive brokerage commissions in connection with such transactions.

The Adviser may select AWM
to execute portfolio transactions. In executing transactions through its affiliated broker/dealer, the Adviser will at all times
comply with SEC Rule 17e-1 under the 1940 Act. The Fund will not affect any brokerage transactions in its portfolio securities
with AWM or any affiliate if such transactions would be unfair or unreasonable to Fund shareholders, and the commissions will be
paid solely for the execution of trades and not for any other services. The brokerage agreement with AWM provides that affiliates
of affiliates of the Adviser may receive brokerage commissions in connection with effecting such transactions for the Fund. In
determining the commissions to be paid to AWM, it is the policy of the Fund that such commissions will, in the judgment of the
Board, be (i) at least as favorable to the Fund as those which would be charged by other qualified brokers having comparable execution
capability and (ii) at least as favorable to the Fund as commissions contemporaneously charged by AWM on comparable transactions
for its most favored unaffiliated customers, except for customers of AWM considered by a majority of the Trust’s disinterested
Trustees not to be comparable to the Fund. The Advisory Agreement does not provide for a reduction of the Adviser’s fee by
the amount of any profits earned by an affiliate from brokerage commissions generated from portfolio transactions of the Fund.
An affiliated broker-dealer will not receive reciprocal brokerage business as a result of the brokerage business placed by the
Fund with others. The brokerage commissions paid to AWM create a conflict of interest because the Adviser may be influenced by
such commission payments to select the affiliated broker over another broker. To insure the commissions charged are fair, and any
conflict of interest mitigated, the disinterested Trustees from time to time review, among other things, information relating to
the commissions charged by AWM to the Fund and

its other customers, and rates and other information
concerning the commissions charged by other qualified brokers on a quarterly basis.

The Advisory Agreement does
not provide for a reduction of the Adviser’s fee by the amount of any profits earned by AWM from brokerage commissions generated
from portfolio transactions of the Fund.

While the Fund contemplate
no ongoing arrangements with any other brokerage firms, brokerage business may be given from time to time to other firms. AWM will
not receive reciprocal brokerage business as a result of the brokerage business placed by the Fund with others.

PORTFOLIO TURNOVER


The Fund’s portfolio
turnover rate is calculated by dividing the lesser of purchases or sales of portfolio securities for the fiscal year by the monthly
average of the value of the portfolio securities owned by the Fund during the fiscal year. The calculation excludes from both the
numerator and the denominator securities with maturities at the time of acquisition of one year or less. High portfolio turnover
involves correspondingly greater brokerage commissions and other transaction costs, which will be borne directly by the Fund. Un
100% turnover rate would occur if all of the Fund’s portfolio securities were replaced once within a one-year period. For
the fiscal year ended September 30, 2018, the Fund’s portfolio turnover rate was 45%. For the fiscal year ended September
30, 2019, the Fund’s portfolio turnover rate was 48%.

OTHER SERVICE PROVIDERS

Fund Administration, Fund
Accounting and Transfer Agent Services

Gemini
Fund Services, LLC (“GFS”), which has its principal office at 80 Arkay Drive, Suite 110, Hauppauge, New York 11788,
serves as administrator, fund accountant and transfer agent for the Fund pursuant to a Fund Services Agreement (the “Agreement”)
with the Fund and subject to the supervision of the Board. GFS is primarily in the business of providing administrative, fund accounting
and transfer agent services to retail and institutional mutual funds. GFS is an affiliate of the Distributor. GFS may also provide
persons to serve as officers of the Fund. Such officers may be directors, officers or employees of GFS or its affiliates.

Effective February 1, 2019,
NorthStar Financial Services Group, LLC, the parent company of GFS and its affiliated companies including Northern Lights Distributors,
LLC and Northern Lights Compliance Services, LLC (collectively, the “Gemini Companies”), sold its interest in the Gemini
Companies to a third party private equity firm that contemporaneously acquired Ultimus Fund Solutions, LLC (an independent mutual
fund

administration firm) and its affiliates (collectively,
the “Ultimus Companies”).  As a result of these separate transactions, the Gemini Companies and the Ultimus Companies
are now indirectly owned through a common parent entity, The Ultimus Group, LLC.

The Agreement became effective
on June 22, 2011 and remained in effect for two years from the applicable effective date for the Fund, and continues in effect
for successive twelve-month periods provided that such continuance is specifically approved at least annually by a majority of
the Board. The Agreement is terminable by the Board or GFS on 90 days’ written notice and may be assigned by either party,
provided the Trust may not assign this agreement without prior written consent of GFS. This Agreement provides that GFS shall be
without liability for any action reasonably taken or omitted to the Agreement.

Under the Agreement, GFS
performs administrative services, including: (1) monitoring the performance of administrative and professional services rendered
to the Trust by others service providers; (2) monitoring Fund holdings and operations for post-trade compliance with the Fund’s
registration statement and applicable laws and rules; (3) preparing and coordinating the printing of semi-annual and annual financial
statements; (4) preparing selected management reports for performance and compliance analyses; (5) preparing and disseminating
materials for and attending and participating in meetings of the Board; (6) determining income and capital gains available for
distribution and calculating distributions required to meet regulatory, income, and excise tax requirements; (7) reviewing the
Trust's federal, state, and local tax returns as prepared and signed by the Trust's independent public accountants; (8) preparing
and maintaining the Trust's operating expense budget to determine proper expense accruals to be charged to each Fund to calculate
its daily NAV; (9) assisting in and monitoring the preparation, filing, printing and where applicable, dissemination to shareholders
of amendments to the Trust’s Registration Statement on Form N-1A, periodic reports to the Trustees, shareholders and the
SEC, notices pursuant to Rule 24f-2, proxy materials and reports to the SEC on Forms N-SAR, N-CSR, N-PORT and N-PX; (10) coordinating
the Trust's audits and examinations by assisting each Fund’s independent public accountants; (11) determining, in consultation
with others, the jurisdictions in which shares of the Trust shall be registered or qualified for sale and facilitating such registration
or qualification; (12) monitoring sales of shares and ensure that the shares are properly and duly registered with the SEC; (13)
monitoring the calculation of performance data for the Fund; (14) preparing, or cause to be prepared, expense and financial reports;
(15) preparing authorizations for the payment of Trust expenses and pay, from Trust assets, all bills of the Trust; (16) providing
information typically supplied in the investment company industry to companies that track or report price, performance or other
information with respect to investment companies; (17) upon request, assisting each Fund in the evaluation and selection of other
service providers, such as independent public accountants, printers, EDGAR providers and proxy solicitors (such parties may be
affiliates of GFS); and (18) performing other services, recordkeeping and assistance relating to the affairs of the Trust as the
Trust may, from time to time, reasonably request.

GFS also provides the Fund
with accounting services, including: (i) daily computation of net asset value; (ii) maintenance of security ledgers and books and
records as required by the 1940 Act; (iii) production of the Fund’s listing of portfolio securities and general ledger reports;
(iv) reconciliation of accounting records; (v) calculation of yield and total return for the Fund; (vi) maintaining certain books
and records described in Rule 31a-1 under the 1940 Act, and reconciling account information and balances among the Fund’s
custodian and Adviser; and (vii) monitoring and evaluating daily income and expense accruals, and sales and redemptions of shares
of the Fund.

The fund accounting fees
for the Fund are combined with the fund administration fees under this Agreement. For such services rendered to the Fund under
the Agreement, the Fund pay GFS the greater of an annual minimum fee or an asset based fee, which scales downward based upon net
assets. The Fund also pay GFS for any out-of-pocket expenses. For the fiscal year ended September 30, 2017, the Fund paid $60,910
in combined administrative fees and accounting fees. For the fiscal year ended September 30, 2018, the Fund paid $61,672 in combined
administrative fees and accounting fees. For the fiscal year ended September 30, 2019, the Fund paid $60,689 in combined administrative
fees and accounting fees.

GFS also acts as transfer,
dividend disbursing, and shareholder servicing agent for the Fund pursuant to the Agreement. Under the Agreement, GFS is responsible
for administering and performing transfer agent functions, dividend distribution, shareholder administration, and maintaining necessary
records in accordance with applicable rules and regulations.

For these services rendered
to the Fund under the Agreement the Fund pays GFS the greater of an annual minimum fee or an asset based fee, which scales downward
based upon net assets The Fund also pay GFS for any out-of-pocket expenses. For the fiscal year ended September 30, 2017, the Fund
paid $18,312 in transfer agency fees. For the fiscal year ended September 30, 2018, the Fund paid $23,130 in transfer agency fees.
For the fiscal year ended September 30, 2019, the Fund paid $18,055 in transfer agency fees.

Custodian

MUFG Union Bank, National
Association, (the “Custodian”) 400 California Street, San Francisco, California 94104, serves as the custodian of the
Fund’s assets pursuant to a Custody Agreement by and between the Custodian and the Trust on behalf of the Fund.  The
Custodian's responsibilities include safeguarding and controlling the Fund’s cash and securities, handling the receipt and
delivery of securities, and collecting interest and dividends on the Fund’s investments. Pursuant to the Custody Agreement,
the Custodian also maintains original entry documents and books of record and general ledgers; posts cash receipts and disbursements;
and records purchases and sales based upon communications from the Adviser. The Fund may employ foreign sub-custodians that are
approved by the Board to hold foreign assets.

Compliance
Les services

Northern Lights Compliance
Services, LLC (“NLCS”), 4221 North 203rd Street, Suite 100, Elkhorn, Nebraska 68022-3474, an affiliate of GFS
and the Distributor, provides a Chief Compliance Officer to the Trust as well as related compliance services pursuant to a consulting
agreement between NLCS and the Trust. NLCS’s compliance services consist primarily of reviewing and assessing the policies
and procedures of the Trust and its service providers pertaining to compliance with applicable federal securities laws, including
Rule 38a-1 under the 1940 Act. For the compliance services rendered to the Fund, the Fund pays NLCS an annual fixed fee and an
asset based fee, which scales downward based upon the Fund’s net assets. The Fund also pay NLCS for any out-of-pocket expenses.
For the fiscal year ended September 30, 2017, the Fund paid $10,738 compliance service fees. For the fiscal year ended September
30, 2018, the Fund paid $10,988 in compliance service fees. For the fiscal year ended September 30, 2019, the Fund paid $11,719
in compliance service fees.

DESCRIPTION OF SHARES


Each share of beneficial
interest of the Trust has one vote in the election of Trustees. Cumulative voting is not authorized for the Trust. Cela signifie que
the holders of more than 50% of the shares voting for the election of Trustees can elect 100% of the Trustees if they choose to
do so, and, in that event, the holders of the remaining shares will be unable to elect any Trustees.

Shareholders of the Trust
and any other future series of the Trust will vote in the aggregate and not by series except as otherwise required by law or when
the Board determines that the matter to be voted upon affects only the interest of the shareholders of a particular series. Matters
such as ratification of the independent public accountants and election of Trustees are not subject to separate voting requirements
and may be acted upon by shareholders of the Trust voting without regard to series.

The Trust is authorized
to issue an unlimited number of shares of beneficial interest. Each share has equal dividend, distribution and liquidation rights.
There are no conversion or preemptive rights applicable to any shares of the Fund. All shares issued are fully paid and non-assessable.

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"). To ensure compliance
with this law, the Trust's Program provides for the development 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 Fund’s Distributor and Transfer Agent have established
proper anti-money laundering procedures, reported suspicious and/or fraudulent activity 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.

As a result of the Program,
the Trust may be required to "freeze" the account of a shareholder if the shareholder appears to be involved in suspicious
activity or if certain account information matches information on government lists of known terrorists or other suspicious persons,
or the Trust may be required to transfer the account or proceeds of the account to a governmental agency.

PURCHASE, REDEMPTION AND PRICING OF SHARES


Calculation of Share Price

As indicated in the Prospectus
under the heading "How Shares are Priced," the NAV of the Fund’s shares, by class, is determined by dividing the
total value of the Fund’s portfolio investments and other assets, less any liabilities, by the total number of shares outstanding
of the Fund, by class.

Generally, the Fund’s
domestic securities (including underlying ETFs which hold portfolio securities primarily listed on foreign (non-U.S.) exchanges)
are valued each day at the last quoted sales price on each security’s primary exchange. Securities traded or dealt in upon
one or more securities exchanges for which market quotations are readily available and not subject to restrictions against resale
shall be valued at the last quoted sales price on the primary exchange or, in the absence of a sale on the primary exchange, at
the mean between the current bid and ask prices on such exchange. Securities primarily traded in the National Association of Securities
Dealers’ Automated Quotation System (“NASDAQ”) National Market System for which market quotations are readily
available shall be valued using the NASDAQ Official Closing Price. If market quotations are not readily available, securities will
be valued at their fair

market value as determined in good faith by
the Fund’s fair value committee in accordance with procedures approved by the Board and as further described below. Securities
that are not traded or dealt in any securities exchange (whether domestic or foreign) and for which over-the-counter market quotations
are readily available generally shall be valued at the last sale price or, in the absence of a sale, at the mean between the current
bid and ask price on such over-the-counter market.

Certain securities or investments
for which daily market quotes are not readily available may be valued, pursuant to guidelines established by the Board, with reference
to other securities or indices. Debt securities not traded on an exchange may be valued at prices supplied by a pricing agent(s)
based on broker or dealer supplied valuations or matrix pricing, a method of valuing securities by reference to the value of other
securities with similar characteristics, such as rating, interest rate and maturity. Short-term investments having a maturity of
60 days or less are generally valued at amortized cost.

Exchange traded options
are valued at the last quoted sales price or, in the absence of a sale, at the mean between the current bid and ask prices on the
exchange on which such options are traded. Futures and options on futures are valued at the settlement price determined by the
exchange. Other securities for which market quotes are not readily available are valued at fair value as determined in good faith
by the Board or persons acting at their direction. Swap agreements and other derivatives are generally valued daily based upon
quotations from market makers or by a pricing service in accordance with the valuation procedures approved by the Board.

Under certain circumstances,
the Fund may use an independent pricing service to calculate the fair market value of foreign equity securities on a daily basis
by applying valuation factors to the last sale price or the mean price as noted above. The fair market values supplied by the independent
pricing service will generally reflect market trading that occurs after the close of the applicable foreign markets of comparable
securities or the value of other instruments that have a strong correlation to the fair-valued securities. The independent pricing
service will also take into account the current relevant currency exchange rate. A security that is fair valued may be valued at
a price higher or lower than actual market quotations or the value determined by other funds using their own fair valuation procedures.
Because foreign securities may trade on days when Fund shares are not priced, the value of securities held by the Fund can change
on days when Fund shares cannot be redeemed or purchased. In the event that a foreign security’s market quotations are not
readily available or are deemed unreliable (for reasons other than because the foreign exchange on which it trades closed before
the Fund’s calculation of NAV), the security will be valued at its fair market value as determined in good faith by the Fund’s
fair value committee in accordance with procedures approved by the Board as discussed below. Without fair valuation, it is possible
that short-term traders could take advantage of the arbitrage opportunity and dilute the NAV of long-term investors. Fair valuation
of the Fund’s portfolio securities can serve to reduce arbitrage opportunities available to short-term traders, but there
is no assurance that it will prevent dilution of the Fund’s NAV by short-term traders. In

addition, because the Fund may invest in underlying
ETFs which hold portfolio securities primarily listed on foreign (non-U.S.) exchanges, and these exchanges may trade on weekends
or other days when the underlying ETFs do not price their shares, the value of these portfolio securities may change on days when
you may not be able to buy or sell Fund shares.

Investments initially valued
in currencies other than the U.S. dollar are converted to U.S. dollars using exchange rates obtained from pricing services. As
a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar.
The value of securities traded in markets outside the United States or denominated in currencies other than the U.S. dollar may
be affected significantly on a day that the New York Stock Exchange is closed and an investor is not able to purchase, redeem or
exchange shares.

Fund shares are valued at
the close of regular trading on the New York Stock Exchange (“NYSE”) (normally 4:00 p.m., Eastern Time) (the "NYSE
Close") on each day that the New York Stock Exchange is open. For purposes of calculating the NAV, the Fund normally use pricing
data for domestic equity securities received shortly after the NYSE Close and does not normally take into account trading, clearances
or settlements that take place after the NYSE Close. Domestic fixed income and foreign securities are normally priced using data
reflecting the earlier closing of the principal markets for those securities. Information that becomes known to the Fund or its
agents after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the price of the
security or the NAV determined earlier that day.

When market quotations are
insufficient or not readily available, the Fund may value securities at fair value or estimate at value as determined in good faith
by the Board or its designees, pursuant to procedures approved by the Board. Fair valuation may also be used by the Board if extraordinary
events occur after the close of the relevant market but prior to the NYSE Close.

The Fund may hold securities,
such as private placements, interests in commodity pools, other non-traded securities or temporarily illiquid securities, for which
market quotations are not readily available or are determined to be unreliable. These securities will be valued at their fair market
value as determined using the “fair value” procedures approved by the Board. The Board has delegated execution of these
procedures to a fair value team composed of one of more representatives from each of the (i) Trust, (ii) administrator, and (iii)
Adviser. The team may also enlist third party consultants such as an audit firm or financial officer of a security issuer on an
as-needed basis to assist in determining a security-specific fair value. The Board reviews and ratifies the execution of this process
and the resultant fair value prices at least quarterly to assure the process produces reliable results.

Fair Value Committee
and Valuation Process.
This committee is composed of one or more representatives from each of the (i) Trust, (ii) administrator,
and (iii) Adviser. The applicable investments are valued collectively via inputs from each of

these groups. For example, fair value determinations
are required for the following securities: (i) securities for which market quotations are insufficient or not readily available
on a particular business day (including securities for which there is a short and temporary lapse in the provision of a price by
the regular pricing source), (ii) securities for which, in the judgment of the adviser, the prices or values available do not represent
the fair value of the instrument. Factors which may cause the adviser to make such a judgment include, but are not limited to,
the following: only a bid price or an asked price is available; the spread between bid and asked prices is substantial; the frequency
of sales; the thinness of the market; the size of reported trades; and actions of the securities markets, such as the suspension
or limitation of trading; (iii) securities determined to be illiquid; (iv) securities with respect to which an event that will
affect the value thereof has occurred (a “significant event”) since the closing prices were established on the principal
exchange on which they are traded, but prior to a Fund’s calculation of its NAV. Specifically, interests in commodity pools
or managed futures pools are valued on a daily basis by reference to the closing market prices of each futures contract or other
asset held by a pool, as adjusted for pool expenses. Restricted or illiquid securities, such as private placements or non-traded
securities are valued via inputs from the adviser valuation based upon the current bid for the security from two or more independent
dealers or other parties reasonably familiar with the facts and circumstances of the security (who should take into consideration
all relevant factors as may be appropriate under the circumstances). If the adviser is unable to obtain a current bid from such
independent dealers or other independent parties, the fair value team shall determine the fair value of such security using the
following factors: (i) the type of security; (ii) the cost at date of purchase; (iii) the size and nature of the Fund's holdings;
(iv) the discount from market value of unrestricted securities of the same class at the time of purchase and subsequent thereto;
(v) information as to any transactions or offers with respect to the security; (vi) the nature and duration of restrictions on
disposition of the security and the existence of any registration rights; (vii) how the yield of the security compares to similar
securities of companies of similar or equal creditworthiness; (viii) the level of recent trades of similar or comparable securities;
(ix) the liquidity characteristics of the security; (x) current market conditions; and (xi) the market value of any securities
into which the security is convertible or exchangeable.

Standards For Fair Value
Determinations.
As a general principle, the fair value of a security is the amount that a Fund might reasonably expect to realize
upon its current sale. The Trust has adopted Financial Accounting Standards Board Statement of Financial Accounting Standards Codification
Topic 820, Fair Value Measurements and Disclosures ("ASC 820"). In accordance with ASC 820, fair value is defined as
the price that the Fund would receive upon selling an investment in a timely transaction to an independent buyer in the principal
or most advantageous market of the investment. ASC 820 establishes a three-tier hierarchy to maximize the use of observable market
data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes.
Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions
about risk, for example, the risk inherent in a particular valuation technique used to measure fair value including such a pricing
model and/or the risk inherent in the inputs

to the valuation technique. Inputs may be observable
or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or
liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs
that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or
liability, developed based on the best information available under the circumstances.

Various inputs are used
in determining the value of the Fund’s investments relating to ASC 820. These inputs are summarized in the three broad levels
listed below.

Level 1 – quoted prices
in active markets for identical securities.

Level 2 – other significant
observable inputs. (including quoted prices for similar

securities, interest
rates, prepayment speeds, credit risk, etc.)

Level 3 – significant
unobservable inputs (including a Fund’s own assumptions in

determining the fair value
of investments).

The fair value committe
takes into account the relevant factors and surrounding circumstances, which may include: (i) the nature and pricing history (if
any) of the security; (ii) whether any dealer quotations for the security are available; (iii) possible valuation methodologies
that could be used to determine the fair value of the security; (iv) the recommendation of a portfolio manager of the Fund with
respect to the valuation of the security; (v) whether the same or similar securities are held by other funds managed by the Adviser
or other funds and the method used to price the security in those funds; (vi) the extent to which the fair value to be determined
for the security will result from the use of data or formulae produced by independent third parties; and (vii) the liquidity or
illiquidity of the market for the security.

Board of Trustees Determination.
The Board meets at least quarterly to consider the valuations provided by the fair value committee and to ratify the valuations
made for the applicable securities. The Board considers the reports provided by the fair value committee, including follow up studies
of subsequent market-provided prices when available, in reviewing and determining in good faith the fair value of the applicable
portfolio securities.

The Trust expects that the
New York Stock Exchange will be closed on 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.

Purchase of Shares

Orders for shares received
by the Fund in good order prior to the close of business on the NYSE on each day during such periods that the NYSE is open for
trading are priced at NAV per share computed as of the close of the regular session of trading on the NYSE. Orders received in
good order after the close of the NYSE, or on a day it is not open for trading, are priced at the close of such NYSE on the next
day on which it is open for trading at the next determined NAV or offering price per share.

Notice to Texas Shareholders

Under section 72.1021(a)
of the Texas Property Code, initial investors in a Fund who are Texas residents may designate a representative to receive notices
of abandoned property in connection with Fund shares. Texas shareholders who wish to appoint a representative should notify the
Trust’s Transfer Agent by writing to the address below to obtain a form for providing written notice to the Trust:

Patriot Fund

c/o Gemini Fund Services, LLC

P.O. Box 541150

Omaha, Nebraska 68154

or overnight to

4221 North 203rd Street, Suite 100

Elkhorn, Nebraska 68022-3474

Redemption of Shares

The Fund will redeem all
or any portion of a shareholder's shares in the Fund when requested in accordance with the procedures set forth in the "How
to Redeem Shares" section of the Prospectus. Under the 1940 Act, a shareholder's right to redeem shares and to receive payment
therefore may be suspended at times:

(a) when the NYSE is
closed, other than customary weekend and holiday

closings;

(b) when trading on
that exchange is restricted for any reason;

(c) when an emergency
exists as a result of which disposal by the Fund of

securities owned by it is not reasonably
practicable or it is not

reasonably practicable for the
Fund to fairly determine the value of its net

assets, provided that applicable
rules and regulations of the SEC (or any

succeeding governmental authority)
will govern as to whether the

conditions prescribed in (b) or (c)
exist; or

(d) when the SEC by
order permits a suspension of the right to redemption or a

postponement
of the date of payment on redemption.

In case of suspension of
the right of redemption, payment of a redemption request will be made based on the NAV next determined after the termination of
the suspension.

The Fund may purchase shares
of Underlying Funds which charge a redemption fee to shareholders (such as the Fund) that redeem shares of the Underlying Fund
within a certain period of time (such as one year). The fee is payable to the Underlying Fund. Accordingly, if the Fund were to
invest in an Underlying Fund and incur a redemption fee as a result of redeeming shares in such Underlying Fund, the Fund would
bear such redemption fee.

Supporting documents in
addition to those listed under "Redemptions" in the Prospectus will be required from executors, administrators, Trustees,
or if redemption is requested by someone other than the shareholder of record. Such documents include, but are not restricted to,
stock powers, Trust instruments, certificates of death, appointments as executor, certificates of corporate authority and waiver
of tax required in some states when settling estates.

TAX STATUS


The following discussion
is general in nature and should not be regarded as an exhaustive presentation of all possible tax ramifications. All shareholders
should consult a qualified tax advisor regarding their investment in the Fund.

The Fund intends to qualify
and have elected to be treated as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"), which requires compliance with certain requirements concerning the sources of its income, diversification
of its assets, and the amount and timing of its distributions to shareholders. Such qualification does not involve supervision
of management or investment practices or policies by any government agency or bureau. By so qualifying, the Fund should not be
subject to federal income or excise tax on its net investment income or net capital gain, which are distributed to shareholders
in accordance with the applicable timing requirements. Net investment income and net capital gain of the Fund will be computed
in accordance with Section 852 of the Code.

Net investment income is
made up of dividends and interest less expenses. Net capital gain for a fiscal year is computed by taking into account any capital
loss carryforward of the Fund. Capital losses incurred in tax years beginning after December 22, 2010 may now be carried forward
indefinitely and retain the character of the original loss. Under previously enacted laws, capital losses could be carried forward
to offset any capital gains for only eight years, and carried forward as short-term capital losses, irrespective of the character
of the original loss. Capital loss carryforwards are available to offset future realized capital gains. To the extent that these
carryforwards are used to

offset future capital gains it is probable
that the amount offset will not be distributed to shareholders.

The Fund intends to distribute
all of its net investment income, any excess of net short-term capital gains over net long-term capital losses, and any excess
of net long-term capital gains over net short-term capital losses in accordance with the timing requirements imposed by the Code
and therefore should not be required to pay any federal income or excise taxes. Distributions of net investment income and net
capital gain will be made after the end of each fiscal year, and no later than December 31 of each year. Both types of distributions
will be in shares of the Fund unless a shareholder elects to receive cash.

To be treated as a regulated
investment company under Subchapter M of the Code, the Fund must also (a) derive at least 90% of gross income from dividends, interest,
payments with respect to securities loans, net income from certain publicly traded partnerships and gains from the sale or other
disposition of securities or foreign currencies, or other income (including, but not limited to, gains from options, futures or
forward contracts) derived with respect to the business of investing in such securities or currencies, and (b) diversify its holding
so that, at the end of each fiscal quarter, (i) at least 50% of the market value of the Fund's assets is represented by cash, U.S.
government securities and securities of other regulated investment companies, and other securities (for purposes of this calculation,
generally limited in respect of any one issuer, to an amount not greater than 5% of the market value of the Fund's assets and 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
of (other than U.S. government securities or the securities of other regulated investment companies) any one issuer, two or more
issuers which the Fund control and which are determined to be engaged in the same or similar trades or businesses, or the securities
of certain publicly traded partnerships.

If the Fund fails to qualify
as a regulated investment company under Subchapter M in any fiscal year, they will be treated as a corporation for federal income
tax purposes. As such the Fund would be required to pay income taxes on its net investment income and net realized capital gains,
if any, at the rates generally applicable to corporations. Shareholders of the Fund generally would not be liable for income tax
on the Fund’s net investment income or net realized capital gains in their individual capacities. Distributions to shareholders,
whether from the Fund’s net investment income or net realized capital gains, would be treated as taxable dividends to the
extent of current or accumulated earnings and profits of the Fund.

The Fund is subject to a
4% nondeductible excise tax on certain undistributed amounts of ordinary income and capital gain under a prescribed formula contained
in Section 4982 of the Code. The formula requires payment to shareholders during a calendar year of distributions representing
at least 98% of the Fund’s ordinary income for the calendar year and at least 98.2% of its capital gain net income (i.e.,
the excess of its capital gains over capital losses) realized during the one-year period ending

October 31 during such year plus 100% of any
income that was neither distributed nor taxed to the Fund during the preceding calendar year. Under ordinary circumstances, the
Fund expects to time its distributions so as to avoid liability for this tax.

The following discussion
of tax consequences is for the general information of shareholders that are subject to tax. Shareholders that are IRAs or other
qualified retirement plans are exempt from income taxation under the Code.

Distributions of taxable
net investment income and the excess of net short-term capital gain over net long-term capital loss are taxable to shareholders
as ordinary income. In most cases the Fund will hold shares in Underlying Funds for less than 12 months, such that its sales of
such shares from time to time will not qualify as long-term capital gains for those investors who hold shares of the Fund in taxable
accounts.

Distributions of net capital
gain ("capital gain dividends") generally are taxable to shareholders as short-term capital gain; regardless of the length
of time the shares of the Trust have been held by such shareholders.

For taxable years beginning
after December 31, 2012, certain U.S. shareholders, including individuals and estates and trusts, will be subject to an additional
3.8% Medicare tax on all or a portion of their “net investment income,” which should include dividends from the Fund
and net gains from the disposition of shares of the Fund. U.S. Shareholders are urged to consult their own tax advisers regarding
the implications of the additional Medicare tax resulting from an investment in the Fund.

Redemption of Fund shares
by a shareholder will result in the recognition of taxable gain or loss in an amount equal to the difference between the amount
realized and the shareholder's tax basis in his or her Fund shares. Such gain or loss is treated as a capital gain or loss if the
shares are held as capital assets. However, any loss realized upon the redemption of shares within six months from the date of
their purchase will be treated as a long-term capital loss to the extent of any amounts treated as capital gain dividends during
such six-month period. All or a portion of any loss realized upon the redemption of shares may be disallowed to the extent shares
are purchased (including shares acquired by means of reinvested dividends) within 30 days before or after such redemption.

Distributions of taxable
net investment income and net capital gain will be taxable as described above, whether received in additional cash or shares. Shareholders
electing to reinvest distributions in the form of additional shares will have a cost basis for federal income tax purposes in each
share so received equal to the net asset value of a share on the reinvestment date.

All distributions of taxable
net investment income and net capital gain, whether received in shares or in cash, must be reported by each taxable shareholder
on his or her federal income tax return. Dividends or distributions declared in October, November or December as of a record date
in such a month, if any, will be deemed to have been

received by shareholders on December 31, if
paid during January of the following year. Redemptions of shares may result in tax consequences (gain or loss) to the shareholder
and are also subject to these reporting requirements.

Under the Code, the Fund
will be required to report to the Internal Revenue Service all distributions of taxable income and capital gains as well as gross
proceeds from the redemption or exchange of Fund shares, except in the case of certain exempt shareholders. Under the backup withholding
provisions of Section 3406 of the Code, distributions of taxable net investment income and net capital gain and proceeds from the
redemption or exchange of the shares of a regulated investment company may be subject to withholding of federal income tax in the
case of non-exempt shareholders who fail to furnish the investment company with their taxpayer identification numbers and with
required certifications regarding their status under the federal income tax law, or if a Fund is notified by the IRS or a broker
that withholding is required due to an incorrect TIN or a previous failure to report taxable interest or dividends. If the withholding
provisions are applicable, any such distributions and proceeds, whether taken in cash or reinvested in additional shares, will
be reduced by the amounts required to be withheld.

Other Reporting and Withholding Requirements

Payments to a shareholder
that is either a foreign financial institution (“FFI”) or a non-financial foreign entity (“NFFE”) within
the meaning of the Foreign Account Tax Compliance Act (“FATCA”) may be subject to a generally nonrefundable 30% withholding
tax on: (a) income dividends paid by the Fund after June 30, 2014 and (b) certain capital gain distributions and the proceeds arising
from the sale of Fund shares paid by the Fund after December 31, 2016. FATCA withholding tax generally can be avoided: (a) by an
FFI, subject to any applicable intergovernmental agreement or other exemption, if it enters into a valid agreement with the IRS
to, among other requirements, report required information about certain direct and indirect ownership of foreign financial accounts
held by U.S. persons with the FFI and (b) by an NFFE, if it: (i) certifies that it has no substantial U.S. persons as owners or
(ii) if it does have such owners, reports information relating to them. The Fund may disclose the information that is received
from its shareholders to the IRS, non-U.S. taxing authorities or other parties as necessary to comply with FATCA. Withholding also
may be required if a foreign entity that is a shareholder of one of the Fund fails to provide the Fund with appropriate certifications
or other documentation concerning its status under FATCA.

Options, Futures, Forward Contracts and Swap
Agreements

To the extent such investments
are permissible for the Fund, the Fund’s transactions in options, futures contracts, hedging transactions, forward contracts,
straddles and foreign currencies will be subject to special tax rules (including mark-to-market, constructive sale, straddle, wash
sale and short sale rules), the effect of which may be to accelerate income to the Fund, defer losses to the Fund, cause adjustments

in the holding periods of the Fund’s
securities, convert long-term capital gains into short-term capital gains and convert short-term capital losses into long-term
capital losses. These rules could therefore affect the amount, timing and character of distributions to shareholders.

To the extent such investments
are permissible, certain of the Fund’s hedging activities (including its transactions, if any, in foreign currencies or foreign
currency-denominated instruments) are likely to produce a difference between its book income and its taxable income. If the Fund’s
book income exceeds its taxable income, the distribution (if any) of such excess book income will be treated as (i) a dividend
to the extent of the Fund’s remaining earnings and profits (including earnings and profits arising from tax-exempt income),
(ii) thereafter, as a return of capital to the extent of the recipient's basis in the shares, and (iii) thereafter, as gain from
the sale or exchange of a capital asset. If the Fund’s book income is less than taxable income, the Fund could be required
to make distributions exceeding book income to qualify as a regulated investment company that is accorded special tax treatment.

Passive Foreign Investment
Companies

Investment by the Fund in
certain passive foreign investment companies ("PFICs") could subject the Fund to a U.S. federal income tax (including
interest charges) on distributions received from the company or on proceeds received from the disposition of shares in the company,
which tax cannot be eliminated by making distributions to Fund’s shareholders. However, the Fund may elect to treat a PFIC
as a qualified electing fund ("QEF"), in which case the Fund will be required to include its share of the company's income
and net capital gains annually, regardless of whether it receives any distribution from the company.

The Fund also may make an
election to mark the gains (and to a limited extent losses) in such holdings "to the market" as though they had sold
and repurchased holdings in those PFICs on the last day of the Fund’s taxable year. Such gains and losses are treated as
ordinary income and loss. The QEF and mark-to-market elections may accelerate the recognition of income (without the receipt of
cash) and increase the amount required to be distributed for the Fund to avoid taxation. Making either of these elections therefore
may require the Fund to liquidate other investments (including when it is not advantageous to do so) to meet its distribution requirement,
which also may accelerate the recognition of gain and affect the Fund’s total return.

Foreign Currency Transactions

The Fund’s transactions
in foreign currencies, foreign currency-denominated debt securities and certain foreign currency options, futures contracts and
forward contracts (and similar instruments) may give rise to ordinary income or loss to the extent such income or loss results
from fluctuations in the value of the foreign currency concerned.

Foreign Taxation

Income received by the Fund
from sources within foreign countries may be subject to withholding and other taxes imposed by such countries. Tax treaties and
conventions between certain countries and the U.S. may reduce or eliminate such taxes. If more than 50% of the value of the Fund’s
total assets at the close of its taxable year consists of securities of foreign corporations, the Fund may be able to elect to
"pass through" to its shareholders the amount of eligible foreign income and similar taxes paid by the Funds. If this
election is made, a shareholder generally subject to tax will be required to include in gross income (in addition to taxable dividends
actually received) his or her pro rata share of the foreign taxes paid by the Funds, and may be entitled either to deduct (as an
itemized deduction) his or her pro rata share of foreign taxes in computing his or her taxable income or to use it as a foreign
tax credit against his or her U.S. federal income tax liability, subject to certain limitations. In particular, a shareholder must
hold his or her shares (without protection from risk of loss) on the ex-dividend date and for at least 15 more days during the
30-day period surrounding the ex-dividend date to be eligible to claim a foreign tax credit with respect to a gain dividend. No
deduction for foreign taxes may be claimed by a shareholder who does not itemize deductions. Each shareholder will be notified
within 60 days after the close of the Fund’s taxable year whether the foreign taxes paid by the Fund will "pass through"
for that year.

Generally, a credit for
foreign taxes is subject to the limitation that it may not exceed the shareholder's U.S. tax attributable to his or her total foreign
source taxable income. For this purpose, if the pass-through election is made, the source of the Fund’s income will flow
through to shareholders of the Fund. With respect to the Funds, gains from the sale of securities will be treated as derived from
U.S. sources and certain currency fluctuation gains, including fluctuation gains from foreign currency-denominated debt securities,
receivables and payables will be treated as ordinary income derived from U.S. sources. The limitation on the foreign tax credit
is applied separately to foreign source passive income, and to certain other types of income. A shareholder may be unable to claim
a credit for the full amount of his or her proportionate share of the foreign taxes paid by the Funds. The foreign tax credit can
be used to offset only 90% of the revised alternative minimum tax imposed on corporations and individuals and foreign taxes generally
are not deductible in computing alternative minimum taxable income.

Original Issue Discount
and Pay-In-Kind Securities

Current federal tax law
requires the holder of a U.S. Treasury or other fixed income zero coupon security to accrue as income each year a portion of the
discount at which the security was purchased, even though the holder receives no interest payment in cash on the security during
the year. In addition, pay-in-kind securities will give rise to income, which is required to be distributed and is taxable even
though the Funds

holding the security receives no interest payment
in cash on the security during the year.

Some of the debt securities
(with a fixed maturity date of more than one year from the date of issuance) that may be acquired by the Funds may be treated as
debt securities that are issued originally at a discount. Generally, the amount of the original issue discount ("OID")
is treated as interest income and is included in income over the term of the debt security, even though payment of that amount
is not received until a later time, usually when the debt security matures. A portion of the OID includable in income with respect
to certain high-yield corporate debt securities (including certain pay-in-kind securities) may be treated as a dividend for U.S.
federal income tax purposes.

Some of the debt securities
(with a fixed maturity date of more than one year from the date of issuance) that may be acquired by the Funds in the secondary
market may be treated as having market discount. Generally, any gain recognized on the disposition of, and any partial payment
of principal on, a debt security having market discount is treated as ordinary income to the extent the gain, or principal payment,
does not exceed the "accrued market discount" on such debt security. Market discount generally accrues in equal daily
installments. The Funds may make one or more of the elections applicable to debt securities having market discount, which could
affect the character and timing of recognition of income.

Some debt securities (with
a fixed maturity date of one year or less from the date of issuance) that may be acquired by the Funds may be treated as having
acquisition discount, or OID in the case of certain types of debt securities. Generally, the Fund will be required to include the
acquisition discount, or OID, in income over the term of the debt security, even though payment of that amount is not received
until a later time, usually when the debt security matures. The Fund may make one or more of the elections applicable to debt securities
having acquisition discount, or OID, which could affect the character and timing of recognition of income.

If the Fund holds the foregoing
kinds of securities, it may be required to pay out as an income distribution each year an amount that is greater than the total
amount of cash interest the Fund actually received. Such distributions may be made from the cash assets of the Fund or by liquidation
of portfolio securities, if necessary (including when it is not advantageous to do so). The Fund may realize gains or losses from
such liquidations. In the event the Fund realizes net capital gains from such transactions, its shareholders may receive a larger
capital gain distribution, if any, than they would in the absence of such transactions.

Shareholders of the Fund
may be subject to state and local taxes on distributions received from the Fund and on redemptions of the Fund shares. A brief
explanation of the form and character of the distribution accompany each distribution. In January of each year the Fund issues
to each shareholder a statement of the federal income tax status of all distributions. Shareholders should consult their tax advisors
about the application of federal, state and local and foreign tax law in light of their particular situation.

INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

BBD, LLP, located
at 1835 Market Street, 3rd Floor, Philadelphia, PA 19103, served as the Fund’s independent registered public accounting
firm for the current fiscal year. The firm provides services including (1) audit of annual financial statements, and (2) assistance
and consultation in connection with SEC filings.

LEGAL COUNSEL


Thompson Hine LLP, 41 South
High Street, Suite 1700, Columbus, Ohio 43215 serves as the Trust's legal counsel.

FINANCIAL STATEMENTS


The financial statements
and report of the independent registered public accounting firm required to be included in this SAI are hereby incorporated by
reference to the Annual Report for the Fund for the fiscal period ended September 30, 2019. You can obtain a copy of the Annual
Report without charge by calling the Fund at 1-855-527-2363.

Ascendant Advisors, LLC Proxy Voting Policy

AA, as a matter of policy and as a fiduciary,
has responsibility for voting proxies for portfolio securities consistent with the best economic interests of the Fund, Portfolios
and clients. Our firm maintains written policies and procedures as to the handling, research, voting and reporting of proxy voting
and makes appropriate disclosures about our firm’s proxy policies and practices. Our policy and practice includes the responsibility
to monitor corporate actions, receive and vote client proxies and disclose any potential conflicts of interest as well as making
information available to clients about the voting of proxies for their portfolio securities and maintaining relevant and required
records.

AA has retained a third party research provider,
Glass Lewis, to provide recommendations regarding proxy voting. AA has also retained a third-party proxy administration service,
ProxyEdge, to collect the Glass Lewis research and to then vote all proxies held by clients. The CCO will conduct quarterly tests
to insure all proxies have been voted appropriately. A record of all voting activity is retained on the ProxyEdge system and is
available for client review if requested.

AA serves as investment adviser to certain investment
companies under the Northern Lights Fund Trust. These funds invest in other investment companies that are not affiliated (“Underlying
Funds”) and are required by the Investment Company Act of 1940, as amended (the “1940 Act”) Act to handle proxies
received from Underlying Funds in a certain manner. Notwithstanding the guidelines provided in these procedures, it is the policy
of AA to vote all proxies received from the Underlying Funds in the same proportion that all shares of the Underlying Funds are
voted, or in accordance with instructions received from fund shareholders, pursuant to Section 12(d)(1)(F) of the 1940 Act. After
properly voted, the proxy materials are placed in a file maintained by the CCO for future reference.

+++++++++++++++++++

PROXY VOTING GUIDELINES FOR GLASS LEWIS’&
CO

A Board of Directors that Serves the Interests
of Shareholders

ELECTION OF DIRECTORS

The purpose of Glass Lewis’
proxy research and advice is to facilitate shareholder voting in favor of governance structures that will drive performance,
create shareholder value and maintain a proper tone at the top. Glass Lewis looks for talented boards with a record of protecting
shareholders and delivering value over the medium- and long-term. We believe that a board can best protect and enhance the interests
of shareholders if it is sufficiently independent, has a record of positive performance, and consists of individuals with diverse
backgrounds and a breadth and depth of relevant experience.

INDEPENDENCE

The independence of directors,
or lack thereof, is ultimately demonstrated through the decisions they make. In assessing the independence of directors, we will
take into consideration, when appropriate, whether a director has a track record indicative of making objective decisions. Likewise,
when assessing the independence of directors we will also examine when a director’s track record on multiple boards indicates
a lack of objective decision-making. Ultimately, we believe the determination of whether a director is independent or not must
take into consideration both compliance with the applicable independence listing requirements as well as judgments made by the
director.

We look at each director nominee
to examine the director’s relationships with the company, the company’s executives, and other directors. We do this
to evaluate whether personal, familial, or financial relationships (not including director compensation) may impact the director’s
decisions. We believe that such relationships make it difficult for a director to put shareholders’ interests above the director’s
or the related party’s interests. We also believe that a director who owns more than 20% of a company can exert disproportionate
influence on the board, and therefore believe such a director’s independence may be hampered, in particular when serving
on the audit committee.

Thus, we put directors into three
categories based on an examination of the type of relationship they have with the company:

Independent
Le directeur
— An independent director has no material financial, familial or other current relationships with the
company, its executives, or other board members, except for board service and standard fees paid for that service. Relationships
that existed within three to five years1 before the inquiry are usually considered
“current” for purposes of this test.

Affiliated
Le directeur
— An affiliated director has, (or within the past three years, had) a material finan- cial, familial
or other relationship with the company or its executives, but is not an employee of the company.2
This includes directors whose employers have a material financial relationship with the

____________________________

1
NASDAQ originally proposed a five-year look-back period but both it
and the NYSE ultimately settled on a three-year look-back prior to finalizing their rules. A five-year standard is more appropriate,
in our view, because we believe that the unwinding of conflicting relationships between former management and board members is
more likely to be complete and final after five years. However, Glass Lewis does not apply the five-year look-back period to directors
who have previously served as executives of the company on an interim basis for less than one year.

2 If a company does not consider a non-employee director to be independent,
Glass Lewis will classify that director as an affiliate.

company.3
In addition, we view a director who either owns or controls 20% or more of the company’s voting stock, or is
an employee or affiliate of an entity that controls such amount, as an affiliate.4

We view 20% shareholders as affiliates
because they typically have access to and involvement with the management of a company that is fundamentally different from that
of ordinary shareholders. More importantly, 20% holders may have interests that diverge from those of ordinary holders, for reasons
such as the liquidity (or lack thereof) of their holdings, personal tax issues, etc.

Glass Lewis applies a three-year
look back period to all directors who have an affiliation with the company other than former employment, for which we apply a five-year
look back.

Definition of “Material”:
A material relationship is one in which the dollar value exceeds:

$50,000 (or where no amount is disclosed) for directors who are paid for
a service they have agreed to perform for the company, outside of their service as a director, including professional or other
services; or

$120,000
                                         (or where no amount is disclosed) for those directors employed by a professional services
                                         firm such as a law firm, investment bank, or consulting firm and the company pays the
                                         firm, not the individual, for services.5

This dollar limit would also apply to charitable contributions to schools where a board
                                         member is a professor; or charities where a director serves on the board or is an executive;6
and any aircraft and real estate dealings between the company and the director’s
                                         firm; or

1% of
                                         either company’s consolidated gross revenue for other business relationships (e.g.,
                                         where the director is an executive officer of a company that provides services or products
                                         to or receives services or products from the company).7

Definition of “Familial”

— Familial relationships include a person’s spouse, parents, children, siblings, grand- parents, uncles, aunts, cousins,
nieces, nephews, in-laws, and anyone (other than domestic employees) who shares such person’s home. A director is an affiliate
if: i) he or she has a family member who is employed by the company and receives more than $120,000 in annual compensation; or,
ii) he or she has a family member who is employed by the company and the company does not disclose this individual’s compensation.

Definition of “Company”

— A company includes any parent or subsidiary in a group with the company or any entity that merged with, was acquired by,
or acquired the company.

Inside
Le directeur
— An inside director simultaneously serves as a director and as an employee of the company. This category
may include a board chair who acts as an employee of the company or is paid as an employee of the company. In our view, an inside
director who derives a greater amount of income as a result of affiliated transactions with the company rather than through compensation
paid by the company (i.e., salary, bonus, etc. as a company employee) faces a conflict between making decisions that are in the
best interests of the company versus those in the director’s own best interests. Therefore, we will recommend voting against
such a director.

____________________________

3
We allow a five-year grace period for former executives of the company
or merged companies who have consulting agreements with the surviving company. (We do not automatically recommend voting against
directors in such cases for the first five years.) If the consulting agreement persists after this five-year grace period, we apply
the materiality thresholds outlined in the definition of “material.”

4
This includes a director who serves on a board as a representative
(as part of his or her basic responsibilities) of an investment firm with greater than 20% ownership. However, while we will generally
consider him/her to be affiliated, we will not recommend voting against unless (i) the investment firm has disproportionate board
representation or (ii) the director serves on the audit committee.

5
We may deem such a transaction to be immaterial where the amount represents
less than 1% of the firm’s annual revenues and the board provides a compelling rationale as to why the director’s independence
is not affected by the relationship.

6
We will generally take into consideration the size and nature of such
charitable entities in relation to the company’s size and industry along with any other relevant factors such as the director’s
role at the charity. However, unlike for other types of related party transactions, Glass Lewis generally does not apply a look-back
period to affiliated relationships involving charitable contributions; if the relationship between the director and the school
or charity ceases, or if the company discontinues its donations to the entity, we will consider the director to be independent.

7
This includes cases where a director is employed by, or closely affiliated
with, a private equity firm that profits from an acquisition made by the company. Unless disclosure suggests otherwise, we presume
the director is affiliated.

Additionally, we believe
a director who is currently serving in an interim management position should be considered an insider, while a director who previously
served in an interim management position for less than one year and is no longer serving in such capacity is considered independent.
Moreover, a director who previously served in an interim management position for over one year and is no longer serving in such
capacity is considered an affiliate for five years following the date of his/her resignation or departure from the interim management
position.

VOTING RECOMMENDATIONS
ON THE BASIS OF BOARD INDEPENDENCE

Glass Lewis believes a board
will be most effective in protecting shareholders’ interests if it is at least two- thirds independent. We note that each
of the Business Roundtable, the Conference Board, and the Council of Institutional Investors advocates that two-thirds of the
board be independent. Where more than one-third of the members are affiliated or inside directors, we typically8
recommend voting against some of the inside and/ or affiliated directors in order to satisfy the two-thirds threshold.

In the case of a less than two-thirds
independent board, Glass Lewis strongly supports the existence of a presiding or lead director with authority to set the meeting
agendas and to lead sessions outside the insider chair’s presence.

In addition, we scrutinize avowedly
“independent” chairs and lead directors. We believe that they should be unquestionably independent or the company should
not tout them as such.

COMMITTEE INDEPENDENCE

We believe that only independent
directors should serve on a company’s audit, compensation, nominating, and governance committees.9e
We typically recommend that shareholders vote against any affiliated or inside director seeking appointment to an
audit, compensation, nominating, or governance committee, or who has served in that capacity in the past year.

Pursuant to Section 952 of the
Dodd-Frank Act, as of January 11, 2013, the SEC approved new listing requirements for both the NYSE and NASDAQ which require
that boards apply enhanced standards of independence when making an affirmative determination of the independence of compensation
committee members. Specifically, when making this determination, in addition to the factors considered when assessing general
director independence, the board’s considerations must include: (i) the source of compensation of the director, including
any consulting, advisory or other compensatory fee paid by the listed company to the director (the “Fees Factor”);
and (ii) whether the director is affiliated with the listing company, its subsidiaries, or affiliates of its subsidiaries (the
“Affiliation Factor”).

Glass Lewis believes it is important
for boards to consider these enhanced independence factors when assessing compensation committee members. However, as discussed
above in the section titled Independence, we apply our own standards when assessing the independence of directors, and these standards
also take into account consulting and advisory fees paid to the director, as well as the director’s affiliations with the
company and its subsidiaries and affiliates. We may recommend voting against compensation committee members who are not independent
based on our standards.

____________________________

8
With a staggered board, if the affiliates or insiders that we believe
should not be on the board are not up for election, we will express our concern regarding those directors, but we will not recommend
voting against the other affiliates or insiders who are up for election just to achieve two-thirds independence. However, we will
consider recommending voting against the directors subject to our concern at their next election if the issue giving rise to the
concern is not resolved.

9e
We will recommend voting against an audit committee member who owns 20%
or more of the company’s stock, and we believe that there should be a maximum of one director (or no directors
if the committee is comprised of less than three directors) who owns 20% or more of the company’s stock on the compensation,
nominating, and governance committees.

INDEPENDENT CHAIR

Glass Lewis believes that separating
the roles of CEO (or, more rarely, another executive position) and chair creates a better governance structure than a combined
CEO/chair position. An executive manages the business according to a course the board charts. Executives should report to the
board regarding their performance in achieving goals set by the board. This is needlessly complicated when a CEO chairs the board,
since a CEO/chair presumably will have a significant influence over the board.

While many companies have an
independent lead or presiding director who performs many of the same functions of an independent chair (e.g., setting the board
meeting agenda), we do not believe this alternate form of independent board leadership provides as robust protection for shareholders
as an independent chair.

It can become difficult for a
board to fulfill its role of overseer and policy setter when a CEO/chair controls the agenda and the boardroom discussion. Such
control can allow a CEO to have an entrenched position, leading to longer-than-optimal terms, fewer checks on management, less
scrutiny of the business operation, and limitations on independent, shareholder-focused, goal-setting by the board.

A CEO should set the strategic
course for the company, with the board’s approval, and the board should enable the CEO to carry out the CEO’s vision
for accomplishing the board’s objectives. Failure to achieve the board’s objectives should lead the board to replace
that CEO with someone in whom the board has confidence.

Likewise, an independent chair
can better oversee executives and set a pro-shareholder agenda without the management conflicts that a CEO and other executive
insiders often face. Such oversight and concern for shareholders allows for a more proactive and effective board of directors that
is better able to look out for the interests of shareholders.

Further, it is the board’s
responsibility to select a chief executive who can best serve a company and its share- holders and to replace this person when
his or her duties have not been appropriately fulfilled. Such a replacement becomes more difficult and happens less frequently
when the chief executive is also in the position of overseeing the board.

Glass Lewis believes that the
installation of an independent chair is almost always a positive step from a corporate governance perspective and promotes the
best interests of shareholders. Further, the presence of an independent chair fosters the creation of a thoughtful and dynamic
board, not dominated by the views of senior management. Encouragingly, many companies appear to be moving in this direction —
one study indicates that only 10 percent of incoming CEOs in 2014 were awarded the chair title, versus 48 percent in 2002.10e
Another study finds that 50 percent of S&P 500 boards now separate the CEO and chair roles, up from 37 percent in 2009,
although the same study found that only 30 percent of S&P 500 boards have truly independent chairs.11e

We do not recommend that shareholders
vote against CEOs who chair the board. However, we typically recommend that our clients support separating the roles of chair
and CEO whenever that question is posed in a proxy (typically in the form of a shareholder proposal), as we believe that it is
in the long-term best interests of the company and its shareholders.

Further, where the company has
neither an independent chair nor independent lead director, we will recommend voting against the chair of the governance committee.

____________________________ 

10e Ken Favaro, Per-Ola Karlsson and Gary L. Nelson. “The $112 Billion
CEO Succession Problem.” (Strategy+Business, Issue 79, Summer 2015).
11e Spencer Stuart Board Index, 2018, p. 21.

PERFORMANCE

The most crucial test of a board’s
commitment to the company and its shareholders lies in the actions of the board and its members. We look at the performance of
these individuals as directors and executives of the company and of other companies where they have served.

We find that a director’s
past conduct is often indicative of future conduct and performance. We often find directors with a history of overpaying executives
or of serving on boards where avoidable disasters have occurred serving on the boards of companies with similar problems. Glass
Lewis has a proprietary database of directors serving at over 8,000 of the most widely held U.S. companies. We use this database
to track the performance of directors across companies.

VOTING RECOMMENDATIONS
ON THE BASIS OF PERFORMANCE

We typically recommend that shareholders
vote against directors who have served on boards or as executives of companies with records of poor performance, inadequate risk
oversight, excessive compensation, audit- or accounting-related issues, and/or other indicators of mismanagement or actions against
the interests of shareholders. We will reevaluate such directors based on, among other factors, the length of time passed since
the incident giving rise to the concern, shareholder support for the director, the severity of the issue, the director’s
role (e.g., committee membership), director tenure at the subject company, whether ethical lapses accompanied the oversight lapse,
and evidence of strong oversight at other companies.

Likewise, we examine the backgrounds
of those who serve on key board committees to ensure that they have the required skills and diverse backgrounds to make informed
judgments about the subject matter for which the committee is responsible.

We believe shareholders should
avoid electing directors who have a record of not fulfilling their responsibilities to shareholders at any company where they have
held a board or executive position. We typically recommend voting against:

1. A director
                                         who fails to attend a minimum of 75% of board and applicable committee meetings, calculated
                                         in the aggregate.12e

2. A director who belatedly filed a significant form(s) 4 or 5, or who has a
pattern of late filings if the late filing was the director’s fault (we look at these late filing situations on a case-by-case
basis).

3. A director who is also the CEO of a company where a serious and material
restatement has occurred after the CEO had previously certified the pre-restatement financial statements.

4. A director who has received two against recommendations from Glass Lewis
for identical reasons within the prior year at different companies (the same situation must also apply at the company be- ing analyzed).

Furthermore, with consideration
given to the company’s overall corporate governance, pay-for-performance alignment and board responsiveness to shareholders,
we may recommend voting against directors who served throughout a period in which the company performed significantly worse than
peers and the directors have not taken reasonable steps to address the poor performance.

____________________________

12e
However, where a director has served for less than one full year, we
will typically not recommend voting against for failure to attend 75% of meetings. Rather, we will note the poor attendance with
a recommendation to track this issue going forward. We will also refrain from recommending to vote against directors when the proxy
discloses that the director missed the meetings due to serious illness or other extenuating circumstances.

BOARD RESPONSIVENESS

Glass Lewis believes that any
time 20% or more of shareholders vote contrary to the recommendation of management, the board should, depending on the issue, demonstrate
some level of responsiveness to address the concerns of shareholders. These include instances when 20% or more of shareholders
(excluding abstentions and broker non-votes): WITHHOLD votes from (or vote AGAINST) a director nominee, vote AGAINST a management-sponsored
proposal, or vote FOR a shareholder proposal. In our view, a 20% threshold is significant enough to warrant a close examination
of the underlying issues and an evaluation of whether or not a board response was warranted and, if so, whether the board responded
appropriately following the vote, particularly in the case of a compensation or director election proposal. While the 20% threshold
alone will not automatically generate a negative vote recommendation from Glass Lewis on a future proposal (e.g., to recommend
against a director nominee, against a say-on-pay proposal, etc.), it may be a contributing factor to our recommendation to vote
against management’s recommendation in the event we determine that the board did not respond appropriately.

With regards to companies where
voting control is held through a dual-class share structure with disproportionate voting and economic rights, we will carefully
examine the level of approval or disapproval attributed to unaffiliated shareholders when determining whether board responsiveness
is warranted. Where vote results indicate that a majority of unaffiliated shareholders supported a shareholder proposal or opposed
a management proposal, we believe the board should demonstrate an appropriate level of responsiveness.

As a general framework, our evaluation
of board responsiveness involves a review of publicly available disclosures (e.g., the proxy statement, annual report, 8-Ks,
company website, etc.) released following the date of the company’s last annual meeting up through the publication date of
our most current Proxy Paper. Depending on the specific issue, our focus typically includes, but is not limited to, the following:

At the board level, any changes in directorships, committee memberships,
disclosure of related party transactions, meeting attendance, or other responsibilities;

Any revisions made to the company’s articles of incorporation, bylaws
or other governance documents;

Any press or news releases indicating changes in, or the adoption of, new
company policies, business practices or special reports; et

Any modifications made to the design and structure of the company’s
compensation program, as well as an assessment of the company’s engagement with shareholders on compensation issues as discussed
in the CD&A, particularly following a material vote against a company’s say-on-pay.

Our Proxy Paper analysis will
include a case-by-case assessment of the specific elements of board responsiveness that we examined along with an explanation
of how that assessment impacts our current voting recommendations.

THE ROLE OF A COMMITTEE
CHAIR

Glass Lewis believes that a designated
committee chair maintains primary responsibility for the actions of his or her respective committee. As such, many of our committee-specific
voting recommendations are against the applicable committee chair rather than the entire committee (depending on the seriousness
of the issue). However, in cases where we would ordinarily recommend voting against a committee chair but the chair is not specified,
we apply the following general rules, which apply throughout our guidelines:

If there is no committee chair, we recommend voting against the longest-serving
committee member or, if the longest-serving committee member cannot be determined, the longest-serving board member serving on
the committee (i.e., in either case, the “senior director”); et

If there is no committee chair, but multiple senior directors serving on the committee, we recommend voting against both (or all) such senior directors.

In our view, companies should
provide clear disclosure of which director is charged with overseeing each committee. In cases where that simple framework is
ignored and a reasonable analysis cannot determine which committee member is the designated leader, we believe shareholder action
against the longest serving committee member(s) is warranted. Again, this only applies if we would ordinarily recommend voting
against the committee chair but there is either no such position or no designated director in such role.

On the contrary, in cases where
there is a designated committee chair and the recommendation is to vote against the committee chair, but the chair is not up for
election because the board is staggered, we do not recommend voting against any members of the committee who are up for election;
rather, we will note the concern with regard to the committee chair.

AUDIT COMMITTEES AND
PERFORMANCE

Audit committees play an integral
role in overseeing the financial reporting process because stable capital markets depend on reliable, transparent, and objective
financial information to support an efficient and effective capital market process. Audit committees play a vital role in providing
this disclosure to shareholders.

When assessing an audit committee’s
performance, we are aware that an audit committee does not prepare financial statements, is not responsible for making the key
judgments and assumptions that affect the financial statements, and does not audit the numbers or the disclosures provided to investors.
Rather, an audit commit- tee member monitors and oversees the process and procedures that management and auditors perform. The
1999 Report and Recommendations of the Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees stated
it best:

A proper and
well-functioning system exists, therefore, when the three main groups responsible for financial reporting — the full board
including the audit committee, financial management including the internal auditors, and the outside auditors — form a ‘three
legged stool’ that sup- ports responsible financial disclosure and active participatory oversight. However, in the view of
the Committee, the audit committee must be ‘first among equals’ in this process, since the audit committee is an extension
of the full board and hence the ultimate monitor of the process.

STANDARDS FOR ASSESSING
THE AUDIT COMMITTEE

For an audit committee to function
effectively on investors’ behalf, it must include members with sufficient knowledge to diligently carry out their responsibilities.
In its audit and accounting recommendations, the Conference Board Commission on Public Trust and Private Enterprise said “members
of the audit committee must be independent and have both knowledge and experience in auditing financial matters.”13

We are skeptical of audit committees
where there are members that lack expertise as a Certified Public Accountant (CPA), Chief Financial Officer (CFO) or corporate
controller, or similar experience. While we will not necessarily recommend voting against members of an audit committee when such
expertise is lacking, we are more likely to recommend voting against committee members when a problem such as a restatement occurs
and such expertise is lacking.

Glass Lewis generally assesses
audit committees against the decisions they make with respect to their over- sight and monitoring role. The quality and integrity
of the financial statements and earnings reports, the completeness of disclosures necessary for investors to make informed decisions,
and the effectiveness of the internal controls should provide reasonable assurance that the financial statements are materially
free from errors. The independence of the external auditors and the results of their work all provide useful information by which
to assess the audit committee.

____________________________

13 Commission on Public Trust and Private Enterprise. The Conference Board.
2003.

When assessing the decisions
and actions of the audit committee, we typically defer to its judgment and generally recommend voting in favor of its members.
However, we will consider recommending that shareholders vote against the following:14

1. All members of the audit committee when options were backdated, there is
a lack of adequate controls in place, there was a resulting restatement, and disclosures indicate there was a lack of documentation
with respect to the option grants.

2. The audit committee chair, if the audit committee does not have a financial
expert or the commit- tee’s financial expert does not have a demonstrable financial background sufficient to understand the
financial issues unique to public companies.

3. The audit committee chair, if the audit committee did not meet at least four times during the year.

4. The audit committee chair, if the committee has less than three members.

5. Any audit committee
                                         member who sits on more than three public company audit committees, unless the audit
                                         committee member is a retired CPA, CFO, controller or has similar experience, in which
                                         case the limit shall be four committees, taking time and availability into consideration
                                         including a review of the audit committee member’s attendance at all board and
                                         committee meetings.15

6e All members of an audit committee who are up for election and who served
on the committee at the time of the audit, if audit and audit-related fees total one-third or less of the total fees billed by
the auditor.

7 The audit committee chair when tax and/or other fees are greater than audit
and audit-related fees paid to the auditor for more than one year in a row (in which case we also recommend against ratification
of the auditor).

8e The audit committee chair when fees paid to the auditor are not disclosed.

9e All members of an audit committee where non-audit fees include fees for tax
services (including, but not limited to, such things as tax avoidance or shelter schemes) for senior executives of the company.
Such services are prohibited by the Public Company Accounting Oversight Board (“PCAOB”).

10e All members of an audit committee that reappointed an auditor that we no
longer consider to be independent for reasons unrelated to fee proportions.

11e All members of an audit committee when audit fees are excessively low, especially
when compared with other companies in the same industry.

12e The audit
                                         committee chair16 if the committee failed
                                         to put auditor ratification on the ballot for share- holder approval. However, if the
                                         non-audit fees or tax fees exceed audit plus audit-related fees in either the current
                                         or the prior year, then Glass Lewis will recommend voting against the entire audit committee.

____________________________

14
As discussed under the section labeled “Committee Chair,”
where the recommendation is to vote against the committee chair but the chair is not up for election because the board is staggered,
we do not recommend voting against the members of the committee who are up for election; rather, we will note the concern with
regard to the committee chair.

15
Glass Lewis may exempt certain audit committee members from the above
threshold if, upon further analysis of relevant factors such as the director’s experience, the size, industry-mix and location
of the companies involved and the director’s attendance at all the companies, we can reasonably determine that the audit
committee member is likely not hindered by multiple audit committee commitments.

16
As discussed under the section labeled “Committee Chair,”
in all cases, if the chair of the committee is not specified, we recommend voting against the director who has been on the committee
the longest.

13e All members
                                         of an audit committee where the auditor has resigned and reported that a section 10A17
letter has been issued.

14e All members
                                         of an audit committee at a time when material accounting fraud occurred at the company.18

15e All members of an audit committee at a time when annual and/or multiple
quarterly financial statements had to be restated, and any of the following factors apply:

The restatement involves fraud or manipulation by insiders;

The restatement is accompanied by an SEC inquiry or investigation;

The restatement involves revenue recognition;

The restatement results in a greater than 5% adjustment to costs of goods sold, operating expense, or operating cash flows; or

The restatement results in a greater than 5% adjustment to net income, 10% adjustment to as-
sets or shareholders equity, or cash flows from financing or investing activities.

16e All members of an audit committee if the company repeatedly fails to file
its financial reports in a timely fashion. For example, the company has filed two or more quarterly or annual financial statements late within the last five quarters.

17e All members of an audit committee when it has been disclosed that a law
enforcement agency has charged the company and/or its employees with a violation of the Foreign Corrupt Practices Act (FCPA).

18. All members of an audit committee when the company has aggressive accounting
policies and/or poor disclosure or lack of sufficient transparency in its financial statements.

19. All members of the audit committee when there is a disagreement with the
auditor and the auditor resigns or is dismissed (e.g., the company receives an adverse opinion on its financial statements from
the auditor).

20. All members
                                         of the audit committee if the contract with the auditor specifically limits the auditor’s
                                         liability to the company for damages.19

21. All members of the audit committee who served since the date of the company’s
last annual meeting, and when, since the last annual meeting, the company has reported a material weakness that has not yet been
corrected, or, when the company has an ongoing material weakness from a prior year that has not yet been corrected.

We also take a dim view of audit
committee reports that are boilerplate, and which provide little or no information or transparency to investors. When a problem
such as a material weakness, restatement or late filings occurs, we take into consideration, in forming our judgment with respect
to the audit committee, the transparency of the audit committee report.

____________________________

17
Auditors are required to report all potential illegal acts to management
and the audit committee unless they are clearly inconsequential in nature. If the audit committee or the board fails to take appropriate
action on an act that has been determined to be a violation of the law, the independent auditor is required to send a section 10A
letter to the SEC. Such letters are rare and therefore we believe should be taken seriously.

18
Research indicates that revenue fraud now accounts for over 60% of
SEC fraud cases, and that companies that engage in fraud experience significant negative abnormal stock price declines—facing
bankruptcy, delisting, and material asset sales at much higher rates than do non-fraud firms (Committee of Sponsoring Organizations
of the Treadway Commission. “Fraudulent Financial Reporting: 1998-2007.” May 2010).

19
The Council of Institutional Investors. “Corporate Governance
Policies,” p. 4, April 5, 2006; and “Letter from Council of Institutional Investors to the AICPA,” November 8,
2006.

COMPENSATION COMMITTEE
PERFORMANCE

Compensation committees have
a critical role in determining the compensation of executives. This includes deciding the basis on which compensation is determined,
as well as the amounts and types of compensation

to be paid. This process begins
with the hiring and initial establishment of employment agreements, including the terms for such items as pay, pensions and severance
arrangements. It is important in establishing compensation arrangements that compensation be consistent with, and based on the
long-term economic performance of, the business’s long-term shareholders returns.

Compensation committees are also
responsible for the oversight of the transparency of compensation. This oversight includes disclosure of compensation arrangements,
the matrix used in assessing pay for performance, and the use of compensation consultants. In order to ensure the independence
of the board’s compensation consultant, we believe the compensation committee should only engage a compensation consultant
that is not also providing any services to the company or management apart from their contract with the compensation committee.
It is important to investors that they have clear and complete disclosure of all the significant terms of compensation arrangements
in order to make informed decisions with respect to the oversight and decisions of the compensation committee.

Finally, compensation committees
are responsible for oversight of internal controls over the executive compensation process. This includes controls over gathering
information used to determine compensation, establishment of equity award plans, and granting of equity awards. Par exemple,
the use of a compensation consultant who maintains a business relationship with company management may cause the committee to
make decisions based on information that is compromised by the consultant’s conflict of interests. Lax controls can also
contribute to improper awards of compensation such as through granting of backdated or spring-loaded options, or granting of bonuses
when triggers for bonus payments have not been met.

Central to understanding the
actions of a compensation committee is a careful review of the Compensation Discussion and Analysis (“CD&A”)
report included in each company’s proxy. We review the CD&A in our evaluation of the overall compensation practices of
a company, as overseen by the compensation commit- tee. The CD&A is also integral to the evaluation of compensation proposals
at companies, such as advisory votes on executive compensation, which allow shareholders to vote on the compensation paid to a
company’s top executives.

When assessing the performance
of compensation committees, we will consider recommending that share- holders vote against the following:20e

1. All members of a compensation committee during whose tenure the committee
failed to address shareholder concerns following majority shareholder rejection of the say-on-pay proposal in the previous year.
Where the proposal was approved but there was a significant shareholder vote (i.e., greater than 20% of votes cast) against the
say-on-pay proposal in the prior year, if the board did not respond sufficiently to the vote including actively engaging shareholders
on this issue, we will also consider recommending voting against the chair of the compensation committee or all members of the
compensation committee, depending on the severity and history of the compensation problems and the level of shareholder opposition.

2. All members of the compensation committee who are up for election and served
when the company failed to align pay with performance if shareholders are not provided with an advisory vote on execu-

____________________________

20e
As discussed under the section labeled “Committee Chair,”
where the recommendation is to vote against the committee chair and the chair is not up for election because the board is staggered,
we do not recommend voting against any members of the committee who are up for election; rather, we will note the concern with
regard to the committee chair.

tive compensation at the annual meeting.21

3. Any member of the compensation committee who has served on the compensation
committee of at least two other public companies that have consistently failed to align pay with performance and whose oversight
of compensation at the company in question is suspect.

4. All members of the compensation committee (during the relevant time period)
if the company entered into excessive employment agreements and/or severance agreements.

5. All members of the compensation committee when performance goals were changed
(i.e., lowered) when employees failed or were unlikely to meet original goals, or performance-based compensation was paid despite
goals not being attained.

6e All members of the compensation committee if excessive employee perquisites
and benefits were allowed.

7 The compensation committee chair if the compensation committee did not meet during the year.

8e All members of the compensation committee when the company repriced options
or completed a “self tender offer” without shareholder approval within the past two years.

9e All members of the compensation committee when vesting of in-the-money options is accelerated.

10e All members of the compensation committee when option exercise prices were
backdated. Glass Lewis will recommend voting against an executive director who played a role in and participated in option backdating.

11e All members of the compensation committee when option exercise prices were
spring-loaded or otherwise timed around the release of material information.

12e All members of the compensation committee when a new employment contract
is given to an executive that does not include a clawback provision and the company had a material restatement, especially if
the restatement was due to fraud.

13e The chair of the compensation committee where the CD&A provides insufficient
or unclear information about performance metrics and goals, where the CD&A indicates that pay is not tied to performance,
or where the compensation committee or management has excessive discretion to alter performance terms or increase amounts of awards
in contravention of previously defined targets.

14e All members
                                         of the compensation committee during whose tenure the committee failed to implement a
                                         shareholder proposal regarding a compensation-related issue, where the proposal received
                                         the affirmative vote of a majority of the voting shares at a shareholder meeting, and
                                         when a reasonable analysis suggests that the compensation committee (rather than the
                                         governance committee) should have taken steps to implement the request.22e

15e All members of the compensation committee when the board has materially
decreased proxy statement disclosure regarding executive compensation policies and procedures in a manner which substantially
impacts shareholders’ ability to make an informed assessment of the company’s executive pay practices.

____________________________

21
If a company provides shareholders with a say-on-pay proposal, we will
initially only recommend voting against the company’s say-on-pay proposal and will not recommend voting against the members
of the compensation committee unless there is a pattern of failing to align pay and performance and/or the company exhibits egregious
compensation practices. However, if the company repeatedly fails to align pay and performance, we will then recommend against the
members of the compensation committee in addition to recommending voting against the say-on-pay proposal. For cases in which the
disconnect between pay and performance is marginal and the company has outperformed its peers, we will consider not recommending
against compensation committee members. In addition, if a company provides shareholders with a say-on-pay proposal, we will initially
only recommend voting against the company’s say-on-pay proposal and will not recommend voting against the members of the
compensation committee unless there is a pattern of failing to align pay and performance and/or the company exhibits egregious
compensation practices. However, if the company repeatedly fails to align pay and performance, we will then recommend against the
members of the compensation committee in addition to recommending voting against the say- on-pay proposal.

22e
In all other instances (i.e., a non-compensation-related shareholder
proposal should have been implemented) we recommend that shareholders vote against the members of the governance committee.

16e All members of the compensation committee when new excise tax gross-up provisions
are adopted in employment agreements with executives, particularly in cases where the company previously committed not to provide
any such entitlements in the future.

17e All members of the compensation committee when the board adopts a frequency
for future advisory votes on executive compensation that differs from the frequency approved by shareholders.

NOMINATING AND GOVERNANCE
COMMITTEE PERFORMANCE

The nominating and governance
committee, as an agent for the shareholders, is responsible for the governance by the board of the company and its executives.
In performing this role, the committee is responsible and accountable for selection of objective and competent board members. C'est tout
is also responsible for providing leadership on governance policies adopted by the company, such as decisions to implement shareholder
proposals that have received a majority vote. (At most companies, a single committee is charged with these oversight functions;
at others, the governance and nominating responsibilities are apportioned among two separate committees.)

Consistent with Glass Lewis’
philosophy that boards should have diverse backgrounds and members with a breadth and depth of relevant experience, we believe
that nominating and governance committees should consider diversity when making director nominations within the context of each
specific company and its industry. In our view, shareholders are best served when boards make an effort to ensure a constituency
that is not only reasonably diverse on the basis of age, race, gender and ethnicity, but also on the basis of geographic knowledge,
industry experience, board tenure and culture.

Regarding the committee responsible
for governance, we will consider recommending that shareholders vote against the following:23e

1. All members
                                         of the governance committee24 during
                                         whose tenure a shareholder proposal relating to important shareholder rights received
                                         support from a majority of the votes cast (excluding abstentions and broker non-votes)
                                         and the board has not begun to implement or enact the proposal’s subject matter.25
Examples of such shareholder proposals include those seeking a declassified
                                         board structure, a majority vote standard for director elections, or a right to call
                                         a special meeting. In determining whether a board has sufficiently implemented such
                                         a proposal, we will examine the quality of the right enacted or proffered by the board
                                         for any conditions that may unreasonably interfere with the shareholders’ ability
                                         to exercise the right (e.g., overly restrictive procedural requirements for calling a
                                         special meeting).

2. All members of the governance committee when a shareholder resolution is
excluded from the meeting agenda but the SEC has declined to state a view on whether such resolution should be excluded, or when
the SEC has verbally permitted a company to exclude a shareholder proposal but there is no written record provided by the SEC about
such determination and the Company has not provided any disclosure concerning this no-action relief.

3. The governance committee chair,26e when the chair is not independent and an independent
lead or

____________________________

23e
As discussed in the guidelines section labeled “Committee Chair,”
where we would recommend to vote against the committee chair but the chair is not up for election because the board is staggered,
we do not recommend voting against any members of the committee who are up for election; rather, we will note the concern with
regard to the committee chair.

24
If the board does not have a committee responsible for governance oversight
and the board did not implement a shareholder proposal that received the requisite support, we will recommend voting against the
entire board. If the shareholder proposal at issue requested that the board adopt a declassified structure, we will recommend voting
against all director nominees up for election.

25
Where a compensation-related shareholder proposal should have been
implemented, and when a reasonable analysis suggests that the members of the compensation committee (rather than the governance
committee) bear the responsibility for failing to implement the request, we recommend that shareholders only vote against members
of the compensation committee.

26e
As discussed in the guidelines section labeled “Committee Chair,”
if the committee chair is not specified, we recommend voting against the director who has been on the committee the longest. If
the longest-serving committee member cannot be determined, we will recommend voting against the

presiding director has not been appointed.27

4. In the absence of a nominating committee, the governance committee
                                                            chair when there are less than five or the whole nominating committee when there are more than 20 members on the board. The
                                                            governance committee chair, when the committee fails to meet at all during the year.

5. The governance committee chair, when for two consecutive years the company
provides what we consider to be “inadequate” related party transaction disclosure (i.e., the nature of such transactions
and/or the monetary amounts involved are unclear or excessively vague, thereby preventing a share- holder from being able to reasonably
interpret the independence status of multiple directors above and beyond what the company maintains is compliant with SEC or applicable
stock exchange listing requirements).

6e The governance
                                         committee chair, when during the past year the board adopted a forum selection clause
                                         (i.e., an exclusive forum provision)28

without shareholder approval29, or if
                                         the board is currently seeking shareholder approval of a forum selection clause pursuant
                                         to a bundled bylaw amendment rather than as a separate proposal.

7 All members of the governance committee during whose tenure the board adopted,
without share- holder approval, provisions in its charter or bylaws that, through rules on director compensation, may inhibit the
ability of shareholders to nominate directors.

8e The governance committee chair when the board takes actions to limit shareholders’
ability to vote on matters material to shareholder rights (e.g., through the practice of excluding a shareholder proposal by
means of ratifying a management proposal that is materially different from the shareholder proposal).

9e The governance committee chair when directors’ records for board and
committee meeting attendance are not disclosed, or when it is indicated that a director attended less than 75% of board and committee
meetings but disclosure is sufficiently vague that it is not possible to determine which specific director’s attendance was
lacking.

In addition, we may recommend
that shareholders vote against the chair of the governance committee, or the entire committee, where the board has amended the
company’s governing documents to reduce or remove important shareholder rights, or to otherwise impede the ability of shareholders
to exercise such right, and has done so without seeking shareholder approval. Examples of board actions that may cause such a recommendation include: the elimination of the ability of shareholders to call a special meeting or to act by written consent; an increase
to the ownership threshold required for shareholders to call a special meeting; an in- crease to vote requirements for charter
or bylaw amendments; the adoption of provisions that limit the ability of shareholders to pursue full legal recourse — such
as bylaws that require arbitration of shareholder claims or that require shareholder plaintiffs to pay the company’s legal
expenses in the absence of a court victory (i.e., “fee-shifting” or “loser pays” bylaws); the adoption
of a classified board structure; and the elimination of the ability of shareholders to remove a director without cause.

Regarding the nominating committee, we will consider
recommending that shareholders vote against the following:30

____________________________

27
We believe that one independent individual should be appointed to serve
as the lead or presiding director. When such a position is rotated among directors from meeting to meeting, we will recommend voting
against the governance committee chair as we believe the lack of fixed lead or presiding director means that, effectively, the
board does not have an independent board leader.

28
A forum selection clause is a bylaw provision stipulating that a certain
state, typically where the company is incorporated, which is most often Delaware, shall be the exclusive forum for all intracorporate
disputes (e.g., shareholder derivative actions, assertions of claims of a breach of fiduciary duty, etc.). Such a clause effectively
limits a shareholder’s legal remedy regarding appropriate choice of venue and related relief offered under that state’s
laws and rulings.

29
Glass Lewis will evaluate the circumstances surrounding the adoption
of any forum selection clause as well as the general provisions contained therein. Where it can be reasonably determined that a
forum selection clause is narrowly crafted to suit the particular circumstances facing the company and/or a reasonable sunset provision
is included, we may make an exception to this policy.

30
As discussed in the guidelines section labeled “Committee Chair,”
where we would recommend to vote against the committee chair but the chair is not up for election because the board is staggered,
we do not recommend voting against any members of the committee who are up for election; rather, we

1. All members of the nominating committee, when the committee nominated or
renominated an individual who had a significant conflict of interest or whose past actions demonstrated a lack of integrity or
inability to represent shareholder interests.

2. The nominating committee chair, if the nominating committee did not meet during the year.

3. In the absence
                                         of a governance committee, the nominating committee chair31
when the chair is not independent, and an independent lead or presiding
                                         director has not been appointed.32

4. The nominating
                                         committee chair, when there are less than five or the whole nominating committee when
                                         there are more than 20 members on the board.33

5. The nominating
                                         committee chair, when a director received a greater than 50% against vote the prior year
                                         and not only was the director not removed, but the issues that raised shareholder concern
                                         were not corrected.34

6e The nominating committee chair when the board has no female directors and
has not provided sufficient rationale or disclosed a plan to address the lack of diversity on the board.

In addition, we may consider
recommending shareholders vote against the chair of the nominating committee where the board’s failure to ensure the board
has directors with relevant experience, either through periodic director assessment or board refreshment, has contributed to a
company’s poor performance.

BOARD-LEVEL RISK MANAGEMENT
OVERSIGHT

Glass Lewis evaluates the risk
management function of a public company board on a strictly case-by-case basis. Sound risk management, while necessary at all companies,
is particularly important at financial firms which inherently maintain significant exposure to financial risk. We believe such
financial firms should have a chief risk officer reporting directly to the board and a dedicated risk committee or a committee
of the board charged with risk oversight. Moreover, many non-financial firms maintain strategies which involve a high level of
exposure to financial risk. Similarly, since many non-financial firms have complex hedging or trading strategies, those firms
should also have a chief risk officer and a risk committee.

Our views on risk oversight are
consistent with those expressed by various regulatory bodies. In its December 2009 Final Rule release on Proxy Disclosure Enhancements,
the SEC noted that risk oversight is a key competence of the board and that additional disclosures would improve investor and
shareholder understanding of the role of the board in the organization’s risk management practices. The final rules, which
became effective on February 28, 2010, now explicitly require companies and mutual funds to describe (while allowing for some degree
of flexibility) the board’s role in the oversight of risk.

When analyzing the risk management
practices of public companies, we take note of any significant losses or writedowns on financial assets and/or structured transactions.
In cases where a company has disclosed a sizable loss or writedown, and where we find that the company’s board-level risk
committee’s poor oversight contributed to the loss, we will recommend that shareholders vote against such committee members
on that basis. In addition, in cases where a company maintains a significant level of financial risk exposure but fails to

____________________________

31
As discussed under the section labeled “Committee Chair,”
if the committee chair is not specified, we will recommend voting against the director who has been on the committee the longest.
If the longest-serving committee member cannot be determined, we will recommend voting against the longest- serving board member
on the committee.

32
In the absence of both a governance and a nominating committee, we
will recommend voting against the board chair on this basis, unless if the chair also serves as the CEO, in which case we will
recommend voting against the longest-serving director.

33
In the absence of both a governance and a nominating committee, we
will recommend voting against the board chair on this basis, unless if the chair also serves as the CEO, in which case we will
recommend voting against the the longest-serving director.

34
Considering that shareholder discontent clearly relates to the director
who received a greater than 50% against vote rather than the nominating chair, we review the severity of the issue(s) that initially
raised shareholder concern as well as company responsiveness to such matters, and will only recommend voting against the nominating
chair if a reasonable analysis suggests that it would be most appropriate. In rare cases, we will consider recommending against
the nominating chair when a director receives a substantial (i.e., 20% or more) vote against based on the same analysis.

disclose any explicit
form of board-level risk oversight (committee or otherwise)35,
we will consider recommending to vote against the board chair on that basis. However, we generally would not recommend voting
against a combined chair/CEO, except in egregious cases.

ENVIRONMENTAL AND
SOCIAL RISK OVERSIGHT

Glass Lewis understands the
importance of ensuring the sustainability of companies’ operations. We believe that an inattention to material environmental
and social issues can present direct legal, financial, regulatory and reputational risks that could serve to harm shareholder interests.
Therefore, we believe that these issues should be carefully monitored and managed by companies, and that companies should have
an appropriate oversight structure in place to ensure that they are mitigating attendant risks and capitalizing on related opportunities to the best extent possible.

Glass Lewis believes that companies
should ensure appropriate board-level oversight of material risks to their operations, including those that are environmental and
social in nature. Accordingly, for large cap companies and in instances where we identify material oversight issues, Glass Lewis
will review a company’s overall governance practices and identify which directors or board-level committees have been charged
with oversight of environmental and/or social issues. Glass Lewis will also note instances where such oversight has not been clearly
defined by companies in their governance documents.

Where it is clear that a company
has not properly managed or mitigated environmental or social risks to the detriment of shareholder value, or when such mismanagement
has threatened shareholder value, Glass Lewis may consider recommending that shareholders vote against members of the board who
are responsible for oversight of environmental and social risks. In the absence of explicit board oversight of environmental and
social issues, Glass Lewis may recommend that shareholders vote against members of the audit committee. In making these determinations,
Glass Lewis will carefully review the situation, its effect on shareholder value, as well as any corrective action or other response
made by the company.

DIRECTOR COMMITMENTS

We believe that directors should
have the necessary time to fulfill their duties to shareholders. In our view, an overcommitted director can pose a material risk
to a company’s shareholders, particularly during periods of crisis. In addition, recent research indicates that the time
commitment associated with being a director has been on a significant upward trend in the past decade.36
As a result, we generally recommend that shareholders vote against a director who serves as an executive officer
of any public company while serving on more than two public company boards and any other director who serves on more than five
public company boards.

Because we believe that executives
will primarily devote their attention to executive duties, we generally will not recommend that shareholders vote against overcommitted
directors at the companies where they serve as an executive.

When determining whether a director’s
service on an excessive number of boards may limit the ability of the director to devote sufficient time to board duties, we may
consider relevant factors such as the size and location of the other companies where the director serves on the board, the director’s
board roles at the companies in question, whether the director serves on the board of any large privately-held companies, the
director’s tenure on the boards in question, and the director’s attendance record at all companies. In the case of
directors who serve in executive roles other than CEO (e.g., executive chair), we will evaluate the specific duties and responsibilities
of that role in determining whether an exception is warranted.

We may also refrain from recommending
against certain directors if the company provides sufficient rationale

____________________________

35
A committee responsible for risk management could be a dedicated risk
committee, the audit committee, or the finance committee, depending on a given company’s board structure and method of disclosure.
At some companies, the entire board is charged with risk management.

36
For example, the 2015-2016 NACD Public Company Governance Survey states
that, on average, directors spent a total of 248.2 hours annual on board-related matters during the past year, which it describes
as a “historically high level” that is significantly above the average hours recorded in 2006. Additionally, the 2015
Spencer Stuart Board Index indicates that the average number of outside board seats held by CEOs of S&P 500 companies is 0.6,
down from 0.7 in 2009 and 0.9 in 2004.

for their continued board
service. The rationale should allow shareholders to evaluate the scope of the directors’ other commitments, as well as
their contributions to the board including specialized knowledge of the company’s industry, strategy or key markets, the
diversity of skills, perspective and background they provide, and other relevant factors. We will also generally refrain from recommending
to vote against a director who serves on an excessive number of boards within a consolidated group of companies or a director that
represents a firm whose sole purpose is to manage a portfolio of investments which include the company.

OTHER CONSIDERATIONS

In addition to the three key
characteristics — independence, performance, experience — that we use to evaluate board members, we consider conflict-of-interest
issues as well as the size of the board of directors when making voting recommendations.

Conflicts of Interest

We believe board members should
be wholly free of identifiable and substantial conflicts of interest, regard- less of the overall level of independent directors
on the board. Accordingly, we recommend that shareholders vote against the following types of directors:

1. A CFO who is on the board: In our view, the CFO holds a unique position
relative to financial reporting and disclosure to shareholders. Due to the critical importance of financial disclosure and reporting, we believe the CFO should report to the board and not be a member of it.

2. A director
                                         who provides — or a director who has an immediate family member who provides —
                                         material consulting or other material professional services to the company. These services
                                         may include legal, consulting,37 or financial
                                         services. We question the need for the company to have consulting relationships with
                                         its directors. We view such relationships as creating conflicts for directors, since
                                         they may be forced to weigh their own interests against shareholder interests when making
                                         board decisions. In addition, a company’s decisions regarding where to turn for
                                         the best professional services may be compromised when doing business with the professional
                                         services firm of one of the company’s directors.

3. A director, or a director who has an immediate family member, engaging in
airplane, real estate, or similar deals, including perquisite-type grants from the company, amounting to more than $50,000. Directors
who receive these sorts of payments from the company will have to make unnecessarily complicated decisions that may pit their interests
against shareholder interests.

4. Interlocking
                                         directorships: CEOs or other top executives who serve on each other’s boards create
                                         an interlock that poses conflicts that should be avoided to ensure the promotion of shareholder
                                         interests above all else.38

5. All board members
                                         who served at a time when a poison pill with a term of longer than one year was adopted
                                         without shareholder approval within the prior twelve months.39
In the event a board is classified and shareholders are therefore unable
                                         to vote against all directors, we will recommend voting against the remaining directors
                                         the next year they are up for a shareholder vote. If a poison pill with a term of one
                                         year or less was adopted without shareholder approval, and without adequate justification, we will consider recommending that shareholders vote against all members of the
                                         governance committee. If the board has, without seeking shareholder approval, and without
                                         adequate justification, extended the term of a poison pill by one year or less in two
                                         consecutive years, we will consider recommending that shareholders vote against the entire
                                         board.

____________________________

37
We will generally refrain from recommending against a director who
provides consulting services for the company if the director is excluded from membership on the board’s key committees and
we have not identified significant governance concerns with the board.

38
We do not apply a look-back period for this situation. The interlock
policy applies to both public and private companies. We will also evaluate multiple board interlocks among non-insiders (i.e.,
multiple directors serving on the same boards at other companies), for evidence of a pattern of poor oversight.

39
Refer to Section V. Governance Structure and the Shareholder Franchise
for further discussion of our policies regarding anti-takeover measures, including poison pills.

Size of the Board
of Directors

While we do not believe there
is a universally applicable optimum board size, we do believe boards should have at least five directors to ensure sufficient diversity
in decision-making and to enable the formation of key board committees with independent directors. Conversely, we believe that
boards with more than 20 members will typically suffer under the weight of “too many cooks in the kitchen” and have
difficulty reaching consensus and making timely decisions. Sometimes the presence of too many voices can make it difficult to draw
on the wisdom and experience in the room by virtue of the need to limit the discussion so that each voice may be heard.

To that end, we typically recommend
voting against the chair of the nominating committee (or the governance committee, in the absence of a nominating committee) at
a board with fewer than five directors or more than 20 directors.

CONTROLLED COMPANIES

We believe controlled companies
warrant certain exceptions to our independence standards. The board’s function is to protect shareholder interests; however,
when an individual, entity (or group of shareholders party to a formal agreement) owns more than 50% of the voting shares, the
interests of the majority of shareholders are the interests of that entity or individual. Consequently, Glass Lewis does not apply
our usual two-thirds board independence rule and therefore we will not recommend voting against boards whose composition reflects
the makeup of the shareholder population.

Independence Exceptions

The independence exceptions that we
make for controlled companies are as follows:

1. We do not require that controlled companies have boards that are at least
two-thirds independent. So long as the insiders and/or affiliates are connected with the controlling entity, we accept the presence of non-independent board members.

2. The compensation committee and nominating and governance committees do not
need to consist solely of independent directors.

We believe that standing nominating and corporate governance committees
at controlled companies are unnecessary. Although having a committee charged with the duties of searching for, selecting, and
nominating independent directors can be beneficial, the unique composition of a controlled company’s shareholder base makes
such committees weak and irrelevant.

Likewise, we believe that independent compensation committees at controlled
companies are unnecessary. Although independent directors are the best choice for approving and monitoring senior executives’
pay, controlled companies serve a unique shareholder population whose voting power ensures the protection of its interests. As
such, we believe that having affiliated directors on a controlled company’s compensation committee is acceptable. However,
given that a controlled company has certain obligations to minority shareholders we feel that an insider should not serve on the
compensation committee. Therefore, Glass Lewis will recommend voting against any insider (the CEO or otherwise) serving on the
compensation committee.

3. Controlled companies do not need an independent chair or an independent
lead or presiding director. Although an independent director in a position of authority on the board — such as chair or
presiding director — can best carry out the board’s duties, controlled companies serve a unique shareholder population
whose voting power ensures the protection of its interests.

Size of the Board
of Directors

We have no board size requirements
for controlled companies.

Audit Committee
Independence

Despite a controlled company’s
status, unlike for the other key committees, we nevertheless believe that audit committees should consist solely of independent
directors. Regardless of a company’s controlled status, the interests of all shareholders must be protected by ensuring the
integrity and accuracy of the company’s financial statements. Allowing affiliated directors to oversee the preparation of
financial reports could create an insurmountable conflict of interest.

Board Responsiveness
at Dual-Class Companies

With regards to companies where
voting control is held through a dual-class share structure with dispropor- tionate voting and economic rights, we will carefully
examine the level of approval or disapproval attributed to unaffiliated shareholders when determining whether board responsiveness
is warranted. Where vote results indicate that a majority of unaffiliated shareholders supported a shareholder proposal or opposed
a management proposal, we believe the board should demonstrate an appropriate level of responsiveness.

SIGNIFICANT SHAREHOLDERS

Where an individual or entity
holds between 20-50% of a company’s voting power, we believe it is reasonable to allow proportional representation on the
board and committees (excluding the audit committee) based on the individual or entity’s percentage of ownership.

GOVERNANCE FOLLOWING
AN IPO OR SPIN-OFF

We believe companies that have
recently completed an initial public offering (“IPO”) or spin-off should be allowed adequate time to fully comply with
marketplace listing requirements and meet basic corporate governance standards. Generally speaking, Glass Lewis refrains from
making recommendations on the basis of governance standards (e.g., board independence, committee membership and structure, meeting
attendance, etc.) during the one-year period following an IPO.

However, some cases warrant shareholder
action against the board of a company that have completed an IPO or spin-off within the past year. When evaluating companies that
have recently gone public, Glass Lewis will review the terms of the applicable governing documents in order to determine whether
shareholder rights are being severely restricted indefinitely. We believe boards that approve highly restrictive governing documents
have demonstrated that they may subvert shareholder interests following the IPO. In conducting this evaluation, Glass Lewis will
consider:

1. The adoption of anti-takeover provisions such as a poison pill or classified board

2. Supermajority vote requirements to amend governing documents

3. The presence of exclusive forum or fee-shifting provisions

4. Whether shareholders can call special meetings or act by written consent

5. The voting standard provided for the election of directors

6e The ability of shareholders to remove directors without cause

7 The presence of evergreen provisions in the Company’s equity compensation arrangements

8e The presence of a dual-class share structure which does not afford common shareholders voting
power that is aligned with their economic interest

In cases where a board adopts
an anti-takeover provision preceding an IPO, we will consider recommending to vote against the members of the board who served
when it was adopted if the board: (i) did not also commit to submit the anti-takeover provision to a shareholder vote at the
company’s first shareholder meeting following the IPO; or (ii) did not provide a sound rationale or sunset provision for
adopting the anti-takeover provision in question.

In our view, adopting an anti-takeover
device unfairly penalizes future shareholders who (except for electing to buy or sell the stock) are unable to weigh in on a matter
that could potentially negatively impact their owner- ship interest. This notion is strengthened when a board adopts a classified
board with an infinite duration or a poison pill with a five- to ten-year term immediately prior to going public, thereby insulated
management for a substantial amount of time.

In addition, shareholders should
also be wary of companies that adopt supermajority voting requirements be- fore their IPO. Absent explicit provisions in the articles
or bylaws stipulating that certain policies will be phased out over a certain period of time, long-term shareholders could find
themselves in the predicament of having to attain a supermajority vote to approve future proposals seeking to eliminate such policies.

DUAL-LISTED OR FOREIGN-INCORPORATED
COMPANIES

For companies that trade on multiple
exchanges or are incorporated in foreign jurisdictions but trade only in the U.S., we will apply the governance standard most relevant
in each situation. We will consider a number of factors in determining which Glass Lewis country-specific policy to apply, including
but not limited to: (i) the corporate governance structure and features of the company including whether the board structure is
unique to a particular market; (ii) the nature of the proposals; (iii) the location of the company’s primary listing, if
one can be determined; (iv) the regulatory/governance regime that the board is reporting against; and (v) the availability and
completeness of the company’s SEC filings.

OTC-LISTED COMPANIES

Companies trading on the OTC
Bulletin Board are not considered “listed companies” under SEC rules and therefore not subject to the same governance
standards as listed companies. However, we believe that more stringent corporate governance standards should be applied to these
companies given that their shares are still publicly traded.

When reviewing OTC companies,
Glass Lewis will review the available disclosure relating to the shareholder meeting to determine whether shareholders are able
to evaluate several key pieces of information, including:

(i) the composition of the board’s
key committees, if any; (ii) the level of share ownership of company insiders or directors; (iii) the board meeting attendance
record of directors; (iv) executive and non-employee director compensation; (v) related-party transactions conducted during the
past year; and (vi) the board’s leadership structure and determinations regarding director independence.

We are particularly concerned
when company disclosure lacks any information regarding the board’s key committees. We believe that committees of the board
are an essential tool for clarifying how the responsibilities of the board are being delegated, and specifically for indicating
which directors are accountable for ensuring:

(i)
the independence and quality of directors, and the transparency and integrity of the nominating process;

(ii)
compensation programs that are fair and appropriate; (iii) proper oversight of the company’s accounting, financial
reporting, and internal and external audits; and (iv) general adherence to principles of good corpo-

rate governance.

In cases where shareholders are
unable to identify which board members are responsible for ensuring over- sight of the above-mentioned responsibilities, we may
consider recommending against certain members of the board. Ordinarily, we believe it is the responsibility of the corporate governance
committee to provide thorough disclosure of the board’s governance practices. In the absence of such a committee, we believe
it is appropriate to hold the board’s chair or, if such individual is an executive of the company, the longest-serving non-executive
board member accountable.

MUTUAL FUND BOARDS

Mutual funds, or investment companies,
are structured differently from regular public companies (i.e., operating companies). Typically, members of a fund’s advisor
are on the board and management takes on a different role from that of regular public companies. Thus, we focus on a short list
of requirements, although many of our guidelines remain the same.

The following mutual fund policies
are similar to the policies for regular public companies:

1. Size of the board of directors
The board should be made up of between five and twenty directors.

2. The CFO on the
board
— Neither the CFO of the fund nor the CFO of the fund’s registered investment advisor should serve
on the board.

3. Independence of
the audit committee
— The audit committee should consist
solely of independent directors.

4. Audit committee
financial expert
— At least one member of the audit committee
should be designated as the audit committee financial expert.

The following differences from regular
public companies apply at mutual funds:

1. Independence of
the board
— We believe that three-fourths of an investment company’s board should be made up of independent
directors. This is consistent with a proposed SEC rule on investment company boards. The Investment Company Act requires 40%
of the board to be independent, but in 2001, the SEC amended the Exemptive Rules to require that a majority of a mutual fund board
be independent. In 2005, the SEC proposed increasing the independence threshold to 75%. In 2006, a federal appeals court ordered
that this rule amendment be put back out for public comment, putting it back into “proposed rule” status. Since mutual
fund boards play a vital role in overseeing the relationship between the fund and its investment manager, there is greater need
for independent oversight than there is for an operating company board.

2. When the auditor
is not up for ratification
— We do not recommend voting against the audit commit- tee if the auditor is not up
for ratification. Due to the different legal structure of an investment company compared to an operating company, the auditor
for the investment company (i.e., mutual fund) does not conduct the same level of financial review for each investment company
as for an operating company.

3. Non-independent
chair
— The SEC has proposed that the chair of the fund board be independent. We agree that the roles of a mutual
fund’s chair and CEO should be separate. Although we believe this would be best at all companies, we recommend voting against
the chair of an investment company’s nominating committee as well as the board chair if the chair and CEO of a mutual fund
are the same person and the fund does not have an independent lead or presiding director. Seven former SEC commissioners support
the appointment of an independent chair and we agree with them that “an independent board chair would be better able to create
conditions favoring the long-term interests of fund shareholders than would a chair who is an executive of the advisor.”
(See the comment

letter sent to the SEC in support
of the proposed rule at
http://www.sec.gov/news/studies/indchair. pdf.)

4. Multiple funds
overseen by the same director
— Unlike service on a public company board, mutual fund boards require much less
of a time commitment. Mutual fund directors typically serve on dozens of other mutual fund boards, often within the same fund complex.
The Investment Company Institute’s (“ICI”) Overview of Fund Governance Practices, 1994-2012, indicates that
the average number of funds served by an independent director in 2012 was 53. Absent evidence that a specific director is hindered
from being an effective board member at a fund due to service on other funds’ boards, we refrain from maintaining a cap on
the number of outside mutual fund boards that we believe a director can serve on.

DECLASSIFIED BOARDS

Glass Lewis favors the repeal
of staggered boards and the annual election of directors. We believe staggered boards are less accountable to shareholders than
boards that are elected annually. Furthermore, we feel the annual election of directors encourages board members to focus on shareholder
interests.

Empirical studies have shown: (i)
staggered boards are associated with a reduction in a firm’s valuation; et

(ii) in the context of hostile
takeovers, staggered boards operate as a takeover defense, which entrenches management, discourages potential acquirers, and delivers
a lower return to target shareholders.

In our view, there is no evidence
to demonstrate that staggered boards improve shareholder returns in a take- over context. Some research has indicated that shareholders
are worse off when a staggered board blocks a transaction; further, when a staggered board negotiates a friendly transaction,
no statistically significant difference in premium occurs.40 Additional research
found that charter-based staggered boards “reduce the market value of a firm by 4% to 6% of its market capitalization”
and that “staggered boards bring about and not merely reflect this reduction in market value.”41
A subsequent study reaffirmed that classified boards re- duce shareholder value, finding “that the ongoing
process of dismantling staggered boards, encouraged by institutional investors, could well contribute to increasing shareholder
wealth.”42

Shareholders have increasingly
come to agree with this view. In 2016, 92% of S&P 500 companies had declassified boards, up from approximately 40% a decade
ago.43 Management proposals to declassify boards are approved with near unanimity
and shareholder proposals on the topic also receive strong shareholder support; in 2014, shareholder proposals requesting that
companies declassify their boards received average support of 84% (excluding abstentions and broker non-votes), whereas in 1987,
only 16.4% of votes cast favored board declassification.44 Further, a growing
number of companies, nearly half of all those targeted by shareholder proposals requesting that all directors stand for election
annually, either recommended shareholders support the proposal or made no recommendation, a departure from the more traditional
management recommendation to vote against shareholder proposals.

Given our belief that declassified
boards promote director accountability, the empirical evidence suggesting staggered boards reduce a company’s value and the
established shareholder opposition to such a structure, Glass Lewis supports the declassification of boards and the annual election
of directors.

BOARD COMPOSITION
AND REFRESHMENT

Glass Lewis strongly supports
routine director evaluation, including independent external reviews, and period- ic board refreshment to foster the sharing of
diverse perspectives in the boardroom and the generation of new ideas and business strategies. Further, we believe the board
should evaluate the need for changes to board

____________________________

40
Lucian Bebchuk, John Coates IV, Guhan Subramanian, “The Powerful
Antitakeover Force of Staggered Boards: Further Findings and a Reply to Symposium Participants,” 55 Stanford Law Review 885-917
(2002).

41 Lucian Bebchuk, Alma Cohen, “The Costs
of Entrenched Boards” (2004).

42
Lucian Bebchuk, Alma Cohen and Charles C.Y. Wang, “Staggered
Boards and the Wealth of Shareholders: Evidence from a Natural Experiment,” SSRN:
http://ssrn.com/abstract=1706806
(2010), p. 26e

43 Spencer Stuart Board Index, 2016, p. 14e
44 Lucian Bebchuk, John Coates IV and Guhan Subramanian,
“The Powerful Antitakeover Force of Staggered Boards: Theory, Evidence, and Policy”.

composition based on an
analysis of skills and experience necessary for the company, as well as the results of the director evaluations, as opposed
to relying solely on age or tenure limits. When necessary, shareholders can address concerns regarding proper board
composition through director elections.

In our view, a director’s
experience can be a valuable asset to shareholders because of the complex, critical is- sues that boards face. This said, we recognize
that in rare circumstances, a lack of refreshment can contribute to a lack of board responsiveness to poor company performance.

On occasion, age or term limits
can be used as a means to remove a director for boards that are unwilling to police their membership and enforce turnover. Some
shareholders support term limits as a way to force change in such circumstances.

While we understand that age
limits can aid board succession planning, the long-term impact of age limits restricts experienced and potentially valuable board
members from service through an arbitrary means. We believe that shareholders are better off monitoring the board’s overall
composition, including the diversity of its members, the alignment of the board’s areas of expertise with a company’s
strategy, the board’s approach to corporate governance, and its stewardship of company performance, rather than imposing
inflexible rules that don’t necessarily correlate with returns or benefits for shareholders.

However, if a board adopts term/age
limits, it should follow through and not waive such limits. If the board waives its term/age limits, Glass Lewis will consider
recommending shareholders vote against the nominating and/or governance committees, unless the rule was waived with sufficient
explanation, such as consummation of a corporate transaction like a merger.

BOARD DIVERSITY

Glass Lewis recognizes the importance
of ensuring that the board is comprised of directors who have a diversity of skills, thought and experience, as such diversity
benefits companies by providing a broad range of perspectives and insights.45

Glass Lewis closely reviews the composition of the board for representation of diverse director candidates and will generally
recommend against the nominating committee chair of a board that has no female members.

Depending on other factors, including
the size of the company, the industry in which the company operates, the state in which the company is headquartered, and the governance
profile of the company, we may extend this recommendation to vote against other nominating committee members. When making these
voting recommendations, we will carefully review a company’s disclosure of its diversity considerations and may refrain
from recommending shareholders vote against directors of companies outside the Russell 3000 index, or when boards have provided
a sufficient rationale for not having any female board members. Such rationale may include, but is not limited to, a disclosed
timetable for addressing the lack of diversity on the board and any notable restrictions in place regarding the board’s composition,
such as director nomination agreements with significant investors.

In September 2018, California
Governor Jerry Brown signed into law Senate Bill 826, which requires all companies headquartered in the state to have one woman
on their board by the end of 2019. In addition, by the end of 2021, companies must have at least two women on boards of five members
and at least three women on boards with six or more directors. Accordingly, during the 2020 proxy season, if a company headquartered
in California does not have at least one woman on its board, we will generally recommend voting against the chair of the nominating
committee unless the company has disclosed a clear plan for how they intend to ad- dress this issue.

PROXY ACCESS

____________________________

45 http://www.glasslewis.com/wp-content/uploads/2017/03/2017-In-Depth-Report-Gender-Diversity.pdf.

In lieu of running their
own contested election, proxy access would not only allow certain shareholders to nominate directors to company boards but the
shareholder nominees would be included on the company’s ballot, significantly enhancing the ability of shareholders to play
a meaningful role in selecting their representatives. Glass Lewis generally supports affording shareholders the right to nominate
director candidates to management’s proxy as a means to ensure that significant, long-term shareholders have an ability to
nominate candidates to the board.

Companies generally seek shareholder
approval to amend company bylaws to adopt proxy access in response to shareholder engagement or pressure, usually in the form of
a shareholder proposal requesting proxy access, although some companies may adopt some elements of proxy access without prompting.
Glass Lewis considers several factors when evaluating whether to support proposals for companies to adopt proxy access including
the specified minimum ownership and holding requirement for shareholders to nominate one or more directors, as well as company
size, performance and responsiveness to shareholders.

For a discussion
of recent regulatory events in this area, along with a detailed overview of the Glass Lewis approach to Shareholder Proposals regarding
Proxy Access, refer to Glass Lewis’ Proxy Paper Guidelines for Shareholder Initiatives, available at
www.glasslewis.com.

MAJORITY VOTE FOR
THE ELECTION OF DIRECTORS

Majority voting for the election
of directors is fast becoming the de facto standard in corporate board elections. In our view, the majority voting proposals
are an effort to make the case for shareholder impact on director elections on a company-specific basis.

While this proposal would not
give shareholders the opportunity to nominate directors or lead to elections where shareholders have a choice among director candidates,
if implemented, the proposal would allow share- holders to have a voice in determining whether the nominees proposed by the board
should actually serve as the overseer-representatives of shareholders in the boardroom. We believe this would be a favorable outcome
for shareholders.

The number of shareholder proposals
requesting that companies adopt a majority voting standard has declined significantly during the past decade, largely as a result
of widespread adoption of majority voting or director resignation policies at U.S. companies. In 2017, 89% of the S&P 500 Index
had implemented a resignation policy for directors failing to receive majority shareholder support, compared to 56% in 2008.46

THE PLURALITY VOTE
STANDARD

Today, most US companies still
elect directors by a plurality vote standard. Under that standard, if one share- holder holding only one share votes in favor of
a nominee (including that director, if the director is a share- holder), that nominee “wins” the election and assumes
a seat on the board. The common concern among companies with a plurality voting standard is the possibility that one or more directors
would not receive a majority of votes, resulting in “failed elections.”

ADVANTAGES OF A MAJORITY
VOTE STANDARD

If a majority vote standard were
implemented, a nominee would have to receive the support of a majority of the shares voted in order to be elected. Thus, shareholders
could collectively vote to reject a director they believe will not pursue their best interests. Given that so few directors (less
than 100 a year) do not receive majority support from shareholders, we think that a majority vote standard is reasonable since
it will neither result in many failed director elections nor reduce the willingness of qualified, shareholder-focused directors
to serve in the future. Further, most directors who fail to receive a majority shareholder vote in favor of their election do not
step down, underscoring the need for true majority voting.

We believe that a majority vote standard
will likely lead to more attentive directors. Although shareholders

____________________________

46 Spencer Stuart Board Index, 2018, p. 15e

only rarely fail to support
directors, the occasional majority vote against a director’s election will likely deter the election of directors with a
record of ignoring shareholder interests. Glass Lewis will therefore generally support proposals calling for the election of directors
by a majority vote, excepting contested director elections.

In response to the high level
of support majority voting has garnered, many companies have voluntarily taken steps to implement majority voting or modified approaches
to majority voting. These steps range from a modified approach requiring directors that receive a majority of withheld votes to
resign (i.e., a resignation policy) to actually requiring a majority vote of outstanding shares to elect directors.

We feel that the modified approach
does not go far enough because requiring a director to resign is not the same as requiring a majority vote to elect a director
and does not allow shareholders a definitive voice in the election process. Further, under the modified approach, the corporate
governance committee could reject a resignation and, even if it accepts the resignation, the corporate governance committee decides
on the director’s replacement. And since the modified approach is usually adopted as a policy by the board or a board committee,
it could be altered by the same board or committee at any time.

CONFLICTING AND EXCLUDED
PROPOSALS

SEC Rule 14a-8(i)(9) allows companies
to exclude shareholder proposals “if the proposal directly conflicts with one of the company’s own proposals to be
submitted to shareholders at the same meeting.” On October 22, 2015, the SEC issued Staff Legal Bulletin No. 14H (“SLB
14H”) clarifying its rule concerning the exclusion of certain shareholder proposals when similar items are also on the ballot.
SLB 14H increased the burden on companies to prove to SEC staff that a conflict exists; therefore, many companies still chose to
place management proposals alongside similar shareholder proposals in many cases.

During the 2018 proxy season,
a new trend in the SEC’s interpretation of this rule emerged. Upon submission of shareholder proposals requesting that companies
adopt a lower special meeting threshold, several companies petitioned the SEC for no-action relief under the premise that the
shareholder proposals conflicted with management’s own special meeting proposals, even though the management proposals set
a higher threshold than those requested by the proponent. No-action relief was granted to these companies; however, the SEC stipulated
that the companies must state in the rationale for the management proposals that a vote in favor of management’s proposal
was tantamount to a vote against the adoption of a lower special meeting threshold. In certain instances, shareholder proposals
to lower an existing special meeting right threshold were excluded on the basis that they conflicted with management proposals
seeking to ratify the existing special meeting rights. We find the exclusion of these shareholder proposals to be especially problematic
as, in these instances, shareholders are not offered any enhanced shareholder right, nor would the approval (or rejection) of the
ratification proposal initiate any type of meaningful change to shareholders’ rights.

In instances where companies
have excluded shareholder proposals, such as those instances where special meeting shareholder proposals are excluded as a result
of “conflicting” management proposals, Glass Lewis will take a case-by-case approach, taking into account the following
issues:

The threshold proposed by the shareholder resolution;

The threshold proposed or established by management and the attendant rationale for the thresh-
old;

Whether management’s proposal is seeking to ratify an existing special meeting right or
adopt a bylaw that would establish a special meeting right; et

The company’s overall governance profile, including its overall responsiveness to and engagement
with shareholders.

Glass Lewis generally favors
a 10-15% special meeting right. Accordingly, Glass Lewis will generally recommend voting for management or shareholder proposals
that fall within this range. When faced with conflicting proposals, Glass Lewis will generally recommend in favor of the lower
special meeting right and will recommend voting against the proposal with the higher threshold. However, in instances where there
are conflicting management and shareholder proposals and a company has not established a special meeting right, Glass Lewis may
recommend that shareholders vote in favor of the shareholder proposal and that they abstain from a management-proposed bylaw amendment
seeking to establish a special meeting right. We believe that an abstention is appropriate in this instance in order to ensure
that shareholders are sending a clear signal regarding their preference for the appropriate threshold for a special meeting right,
while not directly opposing the establishment of such a right.

In cases where the company excludes
a shareholder proposal seeking a reduced special meeting right by means of ratifying a management proposal that is materially different
from the shareholder proposal, we will generally recommend voting against the chair or members of the governance committee.

In other instances of conflicting
management and shareholder proposals, Glass Lewis will consider the following:

The nature of the underlying issue;

The benefit to shareholders of implementing the proposal;

The materiality of the differences between the terms of the shareholder
proposal and management proposal;

The context of a company’s shareholder base, corporate structure and
other relevant circumstances; et

A company’s overall governance profile and, specifically, its responsiveness
to shareholders as evidenced by a company’s response to previous shareholder proposals and its adoption of progressive shareholder
rights provisions.

In recent years, we have seen
the dynamic nature of the considerations given by the SEC when determining whether companies may exclude certain shareholder proposals.
We understand that not all shareholder proposals serve the long-term interests of shareholders, and value and respect the limitations
placed on share- holder proponents, as certain shareholder proposals can unduly burden companies. However, Glass Lewis believes
that shareholders should be able to vote on issues of material importance.

We view the shareholder proposal
process as an important part of advancing shareholder rights and encouraging responsible and financially sustainable business
practices. While recognizing that certain proposals cross the line between the purview of shareholders and that of the board, we
generally believe that companies should not limit investors’ ability to vote on shareholder proposals that advance certain
rights or promote beneficial disclosure. Accordingly, Glass Lewis will make note of instances where a company has successfully
petitioned the SEC to exclude shareholder proposals. If after review we believe that the exclusion of a share- holder proposal
is detrimental to shareholders, we may, in certain very limited circumstances, recommend against members of the governance committee.

Transparency and Integrity
in Financial Reporting

AUDITOR RATIFICATION

The auditor’s role as gatekeeper
is crucial in ensuring the integrity and transparency of the financial information necessary for protecting shareholder value.
Shareholders rely on the auditor to ask tough questions and to do a thorough analysis of a company’s books to ensure that
the information provided to shareholders is complete, accurate, fair, and that it is a reasonable representation of a company’s
financial position. The only way shareholders can make rational investment decisions is if the market is equipped with accurate
information about a company’s fiscal health. As stated in the October 6, 2008 Final Report of the Advisory Committee on
the Auditing Profession to the U.S. Department of the Treasury:

“The auditor
is expected to offer critical and objective judgment on the financial matters under consideration, and actual and perceived absence
of conflicts is critical to that expectation. The Committee believes that auditors, investors, public companies, and other market
participants must understand the independence requirements and their objectives, and that auditors must adopt a mindset of skepticism
when facing situations that may compromise their independence.”

As such, shareholders should
demand an objective, competent and diligent auditor who performs at or above professional standards at every company in which
the investors hold an interest. Like directors, auditors should be free from conflicts of interest and should avoid situations
requiring a choice between the auditor’s interests and the public’s interests. Almost without exception, shareholders
should be able to annually review an auditor’s performance and to annually ratify a board’s auditor selection. Moreover,
in October 2008, the Advisory Committee on the Auditing Profession went even further, and recommended that “to further enhance
audit committee oversight and auditor accountability … disclosure in the company proxy statement regarding share- holder ratification
(should) include the name(s) of the senior auditing partner(s) staffed on the engagement.”47

On August 16, 2011, the PCAOB
issued a Concept Release seeking public comment on ways that auditor independence, objectivity and professional skepticism could
be enhanced, with a specific emphasis on mandatory audit firm rotation. The PCAOB convened several public roundtable meetings during
2012 to further discuss such matters. Glass Lewis believes auditor rotation can ensure both the independence of the auditor and
the integrity of the audit; we will typically recommend supporting proposals to require auditor rotation when the proposal uses
a reasonable period of time (usually not less than 5-7 years), particularly at companies with a history of accounting problems.

On June 1, 2017, the PCAOB adopted
new standards to enhance auditor reports by providing additional important information to investors. For companies with fiscal
year end dates on or after December 15, 2017, reports were required to include the year in which the auditor began serving consecutively
as the company’s auditor. For large accelerated filers with fiscal year ends of June 30, 2019 or later, and for all other
companies with fiscal year ends of December 15, 2020 or later, communication of critical audit matters (“CAMs”) will
also be required. CAMs are matters that have been communicated to the audit committee, are related to accounts or disclosures that
are material to the financial statements, and involve especially challenging, subjective, or complex auditor judgment.

Glass Lewis believes the additional
reporting requirements are beneficial for investors. The additional disclosures can provide investors with information that is
critical to making an informed judgment about an auditor’s

____________________________

47 “Final Report of the Advisory Committee on the Auditing Profession
to the U.S. Department of the Treasury.” p. VIII:20, October 6, 2008.

independence and performance.
Furthermore, we believe the additional requirements are an important step toward enhancing the relevance and usefulness of auditor
reports, which too often are seen as boilerplate compliance documents that lack the relevant details to provide meaningful insight
into a particular audit.

VOTING RECOMMENDATIONS
ON AUDITOR RATIFICATION

We generally support management’s
choice of auditor except when we believe the auditor’s independence or audit integrity has been compromised. Where a board
has not allowed shareholders to review and ratify an auditor, we typically recommend voting against the audit committee chair.
When there have been material re- statements of annual financial statements or material weaknesses in internal controls, we usually
recommend voting against the entire audit committee.

Reasons why we may not recommend ratification
of an auditor include:

1. When audit fees plus audit-related fees total less than the tax fees and/or other non-audit fees.

2. Recent material
                                         restatements of annual financial statements, including those resulting in the reporting
                                         of material weaknesses in internal controls and including late filings by the company
                                         where the auditor bears some responsibility for the restatement or late filing.48

3. When the auditor performs prohibited services such as tax-shelter work,
tax services for the CEO or CFO, or contingent-fee work, such as a fee based on a percentage of economic benefit to the company.

4. When audit fees are excessively low, especially when compared with other
companies in the same industry.

5. When the company has aggressive accounting policies.

6e When the company has poor disclosure or lack of transparency in its financial statements.

7 Where the auditor limited its liability through its contract with the company
or the audit contract requires the corporation to use alternative dispute resolution procedures without adequate justification.

8e We also look for other relationships or concerns with the auditor that might
suggest a conflict between the auditor’s interests and shareholder interests.

9e In determining whether shareholders would benefit from rotating the company’s
auditor, where relevant we will consider factors that may call into question an auditor’s effectiveness, including auditor
tenure, a pattern of inaccurate audits, and any ongoing litigation or significant controversies.

PENSION ACCOUNTING
ISSUES

A pension accounting question
occasionally raised in proxy proposals is what effect, if any, projected returns on employee pension assets should have on a company’s
net income. This issue often arises in the executive- compensation context in a discussion of the extent to which pension accounting
should be reflected in business performance for purposes of calculating payments to executives.

Glass Lewis believes that pension
credits should not be included in measuring income that is used to award performance-based compensation. Because many of the assumptions
used in accounting for retirement plans are subject to the company’s discretion, management would have an obvious conflict
of interest if pay were tied to pension income. In our view, projected income from pensions does not truly reflect a company’s
performance.

____________________________

48
An auditor does not audit interim financial statements. Thus, we generally
do not believe that an auditor should be opposed due to a restatement of interim financial statements unless the nature of the
misstatement is clear from a reading of the incorrect financial statements.

The Link Between Compensation
and Performance

Glass Lewis carefully reviews
the compensation awarded to senior executives, as we believe that this is an important area in which the board’s priorities
are revealed. Glass Lewis strongly believes executive compensation should be linked directly with the performance of the business
the executive is charged with managing. We believe the most effective compensation arrangements provide for an appropriate mix
of performance-based short- and long-term incentives in addition to fixed pay elements while promoting a prudent and sustainable
level of risk-taking.

Glass Lewis believes that comprehensive,
timely and transparent disclosure of executive pay is critical to allowing shareholders to evaluate the extent to which pay is
aligned with company performance. When reviewing proxy materials, Glass Lewis examines whether the company discloses the performance
metrics used to determine executive compensation. We recognize performance metrics must necessarily vary depending on the company
and industry, among other factors, and may include a wide variety of financial measures as well as industry-specific performance
indicators. However, we believe companies should disclose why the specific performance metrics were selected and how the actions
they are designed to incentivize will lead to better corporate performance.

Moreover, it is rarely in shareholders’
interests to disclose competitive data about individual salaries below the senior executive level. Such disclosure could create
internal personnel discord that would be counterproductive for the company and its shareholders. While we favor full disclosure
for senior executives and we view pay disclosure at the aggregate level (e.g., the number of employees being paid over a certain
amount or in certain categories) as potentially useful, we do not believe shareholders need or will benefit from detailed reports
about individual management employees other than the most senior executives.

ADVISORY VOTE ON EXECUTIVE
COMPENSATION (“SAY-ON-PAY”)

The Dodd-Frank Wall Street Reform
and Consumer Protection Act (the “Dodd-Frank Act”) required companies to hold an advisory vote on executive compensation
at the first shareholder meeting that occurs six months after enactment of the bill (January 21, 2011).

This practice of allowing shareholders
a non-binding vote on a company’s compensation report is standard practice in many non-US countries, and has been a requirement
for most companies in the United Kingdom since 2003 and in Australia since 2005. Although say-on-pay proposals are non-binding,
a high level of “against” or “abstain” votes indicates substantial shareholder concern about a company’s
compensation policies and procedures.

Given the complexity of most companies’
compensation programs, Glass Lewis applies a highly nuanced approach when analyzing advisory votes on executive compensation.
We review each company’s compensation on a case-by-case basis, recognizing that each company must be examined in the context
of industry, size, maturity, performance, financial condition, its historic pay for performance practices, and any other relevant
internal or external factors.

We believe that each company
should design and apply specific compensation policies and practices that are appropriate to the circumstances of the company and,
in particular, will attract and retain competent executives and other staff, while motivating them to grow the company’s
long-term shareholder value.

Where we find those specific
policies and practices serve to reasonably align compensation with performance, and such practices are adequately disclosed,
Glass Lewis will recommend supporting the company’s approach. If, however, those specific policies and practices fail to
demonstrably link compensation with performance, Glass Lewis will generally recommend voting against the say-on-pay proposal.

Glass Lewis reviews say-on-pay
proposals on both a qualitative basis and a quantitative basis, with a focus on several main areas:

The overall design and structure of the company’s executive compensation programs including
selection and challenging nature of performance metrics;

The implementation and effectiveness of the company’s executive compensation programs including pay mix and use of performance metrics in determining pay levels;

The quality and content of the company’s disclosure;

The quantum paid to executives; et

The link between compensation and performance as indicated by the company’s current and
past pay-for-performance grades.

We also review any significant
changes or modifications, including post fiscal year end changes and one-time awards, particularly where the changes touch upon
issues that are material to Glass Lewis recommendations.

SAY-ON-PAY VOTING
RECOMMENDATIONS

In cases where we find deficiencies
in a company’s compensation program’s design, implementation or management, we will recommend that shareholders vote
against the say-on-pay proposal. Generally such in- stances include evidence of a pattern of poor pay-for-performance practices
(i.e., deficient or failing pay-for- performance grades), unclear or questionable disclosure regarding the overall compensation
structure (e.g., limited information regarding benchmarking processes, limited rationale for bonus performance metrics and targets,
etc.), questionable adjustments to certain aspects of the overall compensation structure (e.g., limited rationale for significant
changes to performance targets or metrics, the payout of guaranteed bonuses or sizable retention grants, etc.), and/or other
egregious compensation practices.

Although not an exhaustive
list, the following issues when weighed together may cause Glass Lewis to recommend voting against a say-on-pay vote:

Inappropriate or outsized peer groups and/or benchmarking issues such as compensation targets
set well above peers;

Egregious or excessive bonuses, equity awards or severance payments, including golden handshakes
and golden parachutes;

Insufficient response to low shareholder support;

Problematic contractual payments, such as guaranteed bonuses;

Targeting overall levels of compensation at higher than median without adequate justification;

Performance targets not sufficiently challenging, and/or providing for high potential payouts;

Performance targets lowered without justification;

Discretionary bonuses paid when short- or long-term incentive plan targets were not met;

Executive pay high relative to peers not justified by outstanding company performance; et

The terms of the long-term incentive plans are inappropriate (please see “Long-Term Incentives”).

The aforementioned issues may
also influence Glass Lewis’ assessment of the structure of a company’s compensation program. We evaluate structure
on a “Good, Fair, Poor” rating scale whereby a “Good” rating represents a compensation program with little
to no concerns, a “Fair” rating represents a compensation program with some concerns and a “Poor” rating
represents a compensation program that deviates significantly from best practice or contains one or more egregious compensation
practices.

We believe that it is important
for companies to provide investors with clear and complete disclosure of all the significant terms of compensation arrangements.
Similar to structure, we evaluate disclosure on a “Good, Fair, Poor” rating scale whereby a “Good” rating
represents a thorough discussion of all elements of compensation, a “Fair” rating represents an adequate discussion
of all or most elements of compensation and a “Poor” rating represents an incomplete or absent discussion of compensation.
In instances where a company has simply failed to provide sufficient disclosure of its policies, we may recommend shareholders
vote against this proposal solely on this basis, regardless of the appropriateness of compensation levels.

In general, most companies will
fall within the “Fair” range for both structure and disclosure, and Glass Lewis largely uses the “Good”
and “Poor” ratings to highlight outliers.

Where we identify egregious compensation
practices, we may also recommend voting against the compensation committee based on the practices or actions of its members during
the year. Such practices may include: approving large one-off payments, the inappropriate, unjustified use of discretion, or sustained
poor pay for performance practices.

COMPANY RESPONSIVENESS

For companies that receive a
significant level of shareholder opposition (20% or greater) to the say-on-pay proposal at the previous annual meeting, we believe
the board should demonstrate some level of engagement and responsiveness to the shareholder concerns behind the discontent, particularly
in response to shareholder feedback.

While we recognize that sweeping
changes cannot be made to a compensation program without due con- sideration, and that often a majority of shareholders may have
voted in favor of the proposal, given that the average approval rate for say-on-pay proposals is about 90%, we believe the compensation
committee should provide some level of response to a significant vote against. In general, our expectations regarding the minimum
appropriate levels of responsiveness will correspond with the level of shareholder opposition, as ex- pressed both through the
magnitude of opposition in a single year, and through the persistence of shareholder discontent over time.

Responses we consider appropriate
include engaging with large shareholders to identify their concerns, and, where reasonable, implementing changes that directly
address those concerns within the company’s compensation program. In the absence of any evidence that the board is actively
engaging shareholders on these issues and responding accordingly, we may recommend holding compensation committee members account-
able for failing to adequately respond to shareholder opposition. Regarding such recommendations, careful consideration will be
given to the level of shareholder protest and the severity and history of compensation.

PAY FOR PERFORMANCE

Glass Lewis believes an integral
part of a well-structured compensation package is a successful link between pay and performance. Our proprietary pay-for-performance
model was developed to better evaluate the link between pay and performance. Generally, compensation and performance are measured
against a peer group

of appropriate companies
that may overlap, to a certain extent, with a company’s self-disclosed peers. This quantitative analysis provides a consistent
framework and historical context for our clients to determine how well companies link executive compensation to relative performance.
Companies that demonstrate a weaker link are more likely to receive a negative recommendation; however, other qualitative factors
such as overall incentive structure, significant forthcoming changes to the compensation program or reasonable long-term payout
levels may mitigate our concerns to a certain extent.

While we assign companies a
letter grade of A, B, C, D or F based on the alignment between pay and performance, the grades derived from the Glass Lewis pay-for-performance
analysis do not follow the traditional U.S. school letter grade system. Rather, the grades are generally interpreted as follows:

A. The company’s percentile rank for pay is significantly less than its percentile rank for performance

B. The company’s percentile rank for pay is moderately less than its percentile rank for performance

C. The company’s percentile rank for pay is approximately aligned with its percentile rank for performance

D. The company’s percentile rank for pay is higher than its percentile rank for performance

F. The company’s percentile rank for pay is significantly higher than its percentile rank for performance

For the avoidance of confusion,
the above grades encompass the relationship between a company’s percentile rank for pay and its percentile rank in performance.
Separately, a specific comparison between the company’s executive pay and its peers’ executive pay levels is discussed
in the analysis for additional insight into the grade. Likewise, a specific comparison between the company’s performance
and its peers’ performance is reflected in the analysis for further context.

We also use this analysis to
inform our voting decisions on say-on-pay proposals. As such, if a company receives a “D” or “F” from our
proprietary model, we are more likely to recommend that shareholders vote against the say-on-pay proposal. However, other qualitative
factors such as an effective overall incentive struc- ture, the relevance of selected performance metrics, significant forthcoming
enhancements or reasonable long-term payout levels may give us cause to recommend in favor of a proposal even when we have identified
a disconnect between pay and performance.

SHORT-TERM INCENTIVES

A short-term bonus or incentive
(“STI”) should be demonstrably tied to performance. Whenever possible, we believe a mix of corporate and individual
performance measures is appropriate. We would normally expect performance measures for STIs to be based on company-wide or divisional
financial measures as well as non- financial factors such as those related to safety, environmental issues, and customer satisfaction.
While we recognize that companies operating in different sectors or markets may seek to utilize a wide range of metrics, we expect
such measures to be appropriately tied to a company’s business drivers.

Further, the threshold, target
and potential maximum awards that can be achieved under STI awards should be disclosed. Shareholders should expect stretching performance
targets for the maximum award to be achieved. Any increase in the potential target and maximum award should be clearly justified
to shareholders.

Glass Lewis recognizes that
disclosure of some measures or performance targets may include commercially confidential information. Therefore, we believe it
may be reasonable to exclude such information in some cases as long as the company provides sufficient justification for non-disclosure.
However, where a short-term bonus has been paid, companies should disclose the extent to which performance has been achieved against
relevant targets, including disclosure of the actual target achieved.

Where management has received
significant STIs but short-term performance over the previous year prima facie appears to be poor or negative, we believe the company
should provide a clear explanation of why these

significant short-term payments
were made. Further, where a Company has applied upward discretion, which includes lowering goals mid-year or increasing calculated
payouts, we expect a robust discussion of why the decision was necessary. In addition, we believe that where companies use non-GAAP
or bespoke metrics, clear reconciliations between these figures and GAAP figures in audited financial statement should be provided.

Given the pervasiveness of non-formulaic
plans in this market, we do not generally recommend against a pay program on this basis alone. If a company has chosen to rely
primarily on a subjective assessment or the board’s discretion in determining short-term bonuses, we believe that the proxy
statement should provide a meaningful discussion of the board’s rationale in determining the bonuses paid as well as a rationale
for the use of a non-formulaic mechanism. Particularly where the aforementioned disclosures are substantial and satisfactory, such
a structure will not provoke serious concern in our analysis on its own. However, in conjunc- tion with other significant issues
in a program’s design or operation, such as a disconnect between pay and performance, the absence of a cap on payouts, or
a lack of performance-based long-term awards, the use of a non-formulaic bonus may help drive a negative recommendation.

LONG-TERM INCENTIVES

Glass Lewis recognizes the value
of equity-based incentive programs, which are often the primary long-term incentive for executives. When used appropriately, they
can provide a vehicle for linking an executive’s pay to company performance, thereby aligning their interests with those
of shareholders. In addition, equity-based compensation can be an effective way to attract, retain and motivate key employees.

There are certain elements that
Glass Lewis believes are common to most well-structured long-term incentive (“LTI”) plans. These include:

No re-testing or lowering of performance conditions;

Performance metrics that cannot be easily manipulated by management;

Two or more performance metrics;

At least one relative performance metric that compares the company’s performance to a relevant
peer group or index;

Performance periods of at least three years;

Stretching metrics that incentivize executives to strive for outstanding performance while not
encouraging excessive risk-taking; et

Individual limits expressed as a percentage of base salary.

Performance measures should be
carefully selected and should relate to the specific business/industry in which the company operates and, especially, the key value
drivers of the company’s business. As with short- term incentive plans, the basis for any adjustments to metrics or results
should be clearly explained.

While cognizant of the inherent
complexity of certain performance metrics, Glass Lewis generally believes that measuring a company’s performance with multiple
metrics serves to provide a more complete picture of the company’s performance than a single metric; further, reliance on
just one metric may focus too much management attention on a single target and is therefore more susceptible to manipulation. When
utilized for relative measurements, external benchmarks such as a sector index or peer group should be disclosed and transparent.
The rationale behind the selection of a specific index or peer group should also be disclosed. Internal benchmarks should also
be disclosed and transparent, unless a cogent case for confidentiality is made and fully explained. Similarly, actual performance
and vesting levels for previous grants earned during the fiscal year should be disclosed.

We also believe shareholders
should evaluate the relative success of a company’s compensation programs, particularly with regard to existing equity-based
incentive plans, in linking pay and performance when evaluating new LTI plans to determine the impact of additional stock awards.
We will therefore review the company’s pay-for-performance grade (see below for more information) and specifically the proportion
of total compensation that is stock-based.

GRANTS OF FRONT-LOADED
AWARDS

Many U.S. companies have chosen
to provide large grants, usually in the form of equity awards, that are in- tended to serve as compensation for multiple years.
This practice, often called front-loading, is taken up either in the regular course of business or as a response to specific business
conditions and with a predetermined objective. We believe shareholders should generally be wary of this approach, and we accordingly
weigh these grants with particular scrutiny.

While the use of front-loaded
awards is intended to lock-in executive service and incentives, the same rigidity also raises the risk of effectively tying the
hands of the compensation committee. As compared with a more responsive annual granting schedule program, front-loaded awards may
preclude improvements or changes to reflect evolving business strategies. The considerable emphasis on a single grant can place
intense pressures on every facet of its design, amplifying any potential perverse incentives and creating greater room for unintended
consequences. In particular, provisions around changes of control or separations of service must ensure that executives do not
receive excessive payouts that do not reflect shareholder experience or company performance.

We consider a company’s
rationale for granting awards under this structure and also expect any front-loaded awards to include a firm commitment not to
grant additional awards for a defined period, as is commonly associated with this practice. Even when such a commitment is provided,
unexpected circumstances may lead the board to make additional payments or awards for retention purposes, or to incentivize management
towards more realistic goals or a revised strategy. If a company breaks its commitment not to grant further awards, we may recommend
against the pay program unless a convincing rationale is provided.

The multiyear nature of these
awards generally lends itself to significantly higher compensation figures in the year of grant than might otherwise be expected.
In analyzing the grant of front-loaded awards to executives, Glass Lewis considers the quantum of the award on an annualized basis,
rather than the lump sum, and may compare this result to prior practice and peer data, among other benchmarks.

ONE-TIME AWARDS

Glass Lewis believes shareholders
should generally be wary of awards granted outside of the standard incentive schemes, as such awards have the potential to undermine
the integrity of a company’s regular incentive plans or the link between pay and performance, or both. We generally believe
that if the existing incentive programs fail to provide adequate incentives to executives, companies should redesign their compensation
programs rather than make additional grants.

However, we recognize that in
certain circumstances, additional incentives may be appropriate. In these cases, companies should provide a thorough description
of the awards, including a cogent and convincing explanation of their necessity and why existing awards do not provide sufficient
motivation. Further, such awards should be tied to future service and performance whenever possible.

Additionally, we believe companies
making supplemental or one-time awards should also describe if and how the regular compensation arrangements will be affected by
these additional grants. In reviewing a company’s use of supplemental awards, Glass Lewis will evaluate the terms and size
of the grants in the context of the company’s overall incentive strategy and granting practices, as well as the current operating
environment.

CONTRACTUAL PAYMENTS
AND ARRANGEMENTS

Beyond the quantum of contractual
payments, Glass Lewis will also consider the design of any entitlements. Certain executive employment terms may help to drive a
negative recommendation, including, but not limited to:

Excessively broad change in control triggers;

Inappropriate severance entitlements;

Inadequately explained or excessive sign-on arrangements;

Guaranteed bonuses (especially as a multiyear occurrence); et

Failure to address any concerning practices in amended employment agreements.

In general, we are wary of terms
that are excessively restrictive in favor of the executive, or that could potentially incentivize behaviors that are not in a
company’s best interest.

SIGN-ON AWARDS AND
SEVERANCE BENEFITS

We acknowledge that there may
be certain costs associated with transitions at the executive level. In evaluating the size of severance and sign-on arrangements,
we may consider the executive’s regular target compensation level, or the sums paid to other executives (including the
recipient’s predecessor, where applicable) in evaluating the appropriateness of such an arrangement.

We believe sign-on arrangements
should be clearly disclosed and accompanied by a meaningful explanation of the payments and the process by which the amounts were
reached. Further, the details of and basis for any “make-whole” payments (paid as compensation for awards forfeited
from a previous employer) should be provided.

With respect to severance, we
believe companies should abide by predetermined payouts in most circumstances. While in limited circumstances some deviations
may not be inappropriate, we believe shareholders should be provided with a meaningful explanation of any additional or increased
benefits agreed upon outside of regular arrangements.

In the U.S. market, most companies
maintain severance entitlements based on a multiple of salary and, in many cases, bonus. In almost all instances we see, the relevant
multiple is three or less, even in the case of a change in control. We believe the basis and total value of severance should be
reasonable and should not exceed the upper limit of general market practice. We consider the inclusion of long-term incentives
in cash severance calculations to be inappropriate, particularly given the commonality of accelerated vesting and the proportional
weight of long-term incentives as a component of total pay. Additional considerations, however, will be accounted for when reviewing
atypically structured compensation approaches.

CHANGE IN CONTROL

Glass Lewis considers double-trigger
change in control arrangements, which require both a change in control and termination or constructive termination, to be best
practice. Any arrangement that is not explicitly double-trigger may be considered a single-trigger or modified single-trigger arrangement.

Further, we believe that excessively
broad definitions of change in control are potentially problematic as they may lead to situations where executives receive additional
compensation where no meaningful change in status or duties has occurred.

EXCISE TAX GROSS-UPS

Among other entitlements, Glass
Lewis is strongly opposed to excise tax gross-ups related to IRC § 4999 and their expansion, especially where no consideration
is given to the safe harbor limit. We believe that under no normal circumstance is the inclusion of excise tax gross-up provisions
in new agreements or the addition of such provisions to amended agreements acceptable. In consideration of the fact that minor
increases in change-in-control payments can lead to disproportionately large excise taxes, the potential negative impact of tax
gross-ups far outweighs any retentive benefit. Depending on the circumstances, the addition of new gross-ups around this excise
tax particularly may lead to negative recommendations for a company’s say-on- pay proposal, the chair of the compensation
committee, or the entire committee, particularly in cases where a company had committed not to provide any such entitlements in
the future.

AMENDED EMPLOYMENT
AGREEMENTS

Any contractual arrangements
providing for problematic pay practices which are not addressed in materially amended employment agreements will potentially be
viewed by Glass Lewis as a missed opportunity on the part of the company to align its policies with current best practices. Such
problematic pay practices include, but are not limited to, excessive change in control entitlements, modified single-trigger change
in control entitlements, excise tax gross-ups, and multi-year guaranteed awards.

RECOUPMENT PROVISIONS
(“CLAWBACKS”)

Section 954 of the Dodd-Frank
Act requires the SEC to create a rule requiring listed companies to adopt policies for recouping certain compensation during
a three-year look-back period. The rule is more stringent than Section 304 of the Sarbanes-Oxley Act and applies to incentive-based
compensation paid to current or former executives in the case of a financial restatement — specifically, the recoupment
provision applies in cases where the company is required to prepare an accounting restatement due to erroneous data resulting from
material non-compliance with any financial reporting requirements under the securities laws. Although the SEC has yet to finalize
the relevant rules, we believe it is prudent for boards to adopt detailed bonus recoupment policies that go beyond Section 304
of the Sarbanes-Oxley Act to prevent executives from retaining performance-based awards that were not truly earned.

We are increasingly focusing
attention on the specific terms of recoupment policies beyond whether a company maintains a clawback that simply satisfies the
minimum legal requirements. We believe that clawbacks should be triggered, at a minimum, in the event of a restatement of financial
results or similar revision of performance indicators upon which bonuses were based. Such policies allow the board to review
all performance- related bonuses and awards made to senior executives during a specified lookback period and, to the extent feasible,
allow the company to recoup such bonuses where appropriate. Notwithstanding the foregoing, in cases where a company maintains only
a bare-minimum clawback, the absence of more expansive recoupment tools may inform our overall view of the compensation program.

HEDGING OF STOCK

Glass Lewis believes that the
hedging of shares by executives in the shares of the companies where they are employed severs the alignment of interests of the
executive with shareholders. We believe companies should adopt strict policies to prohibit executives from hedging the economic
risk associated with their share owner- ship in the company.

PLEDGING OF STOCK

Glass Lewis believes that shareholders
should examine the facts and circumstances of each company rather than apply a one-size-fits-all policy regarding employee stock
pledging. Glass Lewis believes that sharehold- ers benefit when employees, particularly senior executives have “skin-in-the-game”
and therefore recognizes the benefits of measures designed to encourage employees to both buy shares out of their own pocket and
to retain shares they have been granted; blanket policies prohibiting stock pledging may discourage executives

and employees from doing either.

However, we also recognize that
the pledging of shares can present a risk that, depending on a host of factors, an executive with significant pledged shares and
limited other assets may have an incentive to take steps to avoid a forced sale of shares in the face of a rapid stock price decline.
Therefore, to avoid substantial losses from a forced sale to meet the terms of the loan, the executive may have an incentive to
boost the stock price in the short term in a manner that is unsustainable, thus hurting shareholders in the long-term. We also
recognize concerns regarding pledging may not apply to less senior employees, given the latter group’s significantly more
limited influence over a company’s stock price. Therefore, we believe that the issue of pledging shares should be reviewed
in that context, as should polices that distinguish between the two groups.

Glass Lewis believes that the
benefits of stock ownership by executives and employees may outweigh the risks of stock pledging, depending on many factors. As
such, Glass Lewis reviews all relevant factors in evaluating proposed policies, limitations and prohibitions on pledging stock,
including:

The number of shares pledged;

The percentage executives’ pledged shares are of outstanding shares;

The percentage executives’ pledged shares are of each executive’s shares and total assets;

Whether the pledged shares were purchased by the employee or granted by the company;

Whether there are different policies for purchased and granted shares;

Whether the granted shares were time-based or performance-based;

The overall governance profile of the company;

The volatility of the company’s stock (in order to determine the likelihood of a sudden
stock price drop);

The nature and cyclicality, if applicable, of the company’s industry;

The participation and eligibility of executives and employees in pledging;

The company’s current policies regarding pledging and any waiver from these policies for
employees and executives; et

Disclosure of the extent of any pledging, particularly among senior executives.

COMPENSATION CONSULTANT
INDEPENDENCE

As mandated by Section
952 of the Dodd-Frank Act, as of January 11, 2013, the SEC approved new listing requirements for both the NYSE and NASDAQ which
require compensation committees to consider six factors (
https://www.sec.gov/rules/final/2012/33-9330.pdf,
p.31-32) in assessing compensation advisor independence. According to the SEC, “no one factor should be viewed as a determinative
factor.” Glass Lewis believes this six-factor assessment is an important process for every compensation committee to undertake
but believes companies employing a consultant for board compensation, consulting and other corporate services should provide
clear disclosure beyond just a reference to examining the six points, in order to allow share- holders to review the specific aspects
of the various consultant relationships.

We believe compensation consultants
are engaged to provide objective, disinterested, expert advice to the compensation committee. When the consultant or its affiliates
receive substantial income from providing other services to the company, we believe the potential for a conflict of interest
arises and the independence of

the consultant may be jeopardized.
Therefore, Glass Lewis will, when relevant, note the potential for a conflict of interest when the fees paid to the advisor or
its affiliates for other services exceeds those paid for compensation consulting.

CEO PAY RATIO

As mandated by Section 953(b)
of the Dodd-Frank Wall Street Consumer and Protection Act, beginning in 2018, issuers will be required to disclose the median annual
total compensation of all employees except the CEO, the total annual compensation of the CEO or equivalent position, and the ratio
between the two amounts. Glass Lewis will display the pay ratio as a data point in our Proxy Papers, as available. While we recognize
that the pay ratio has the potential to provide additional insight when assessing a company’s pay practices, at this time
it will not be a determinative factor in our voting recommendations.

FREQUENCY OF SAY-ON-PAY

The Dodd-Frank Act also requires
companies to allow shareholders a non-binding vote on the frequency of say-on-pay votes, i.e. every one, two or three years. Additionally,
Dodd-Frank requires companies to hold such votes on the frequency of say-on-pay votes at least once every six years.

We believe companies should submit
say-on-pay votes to shareholders every year. We believe that the time and financial burdens to a company with regard to an annual
vote are relatively small and incremental and are outweighed by the benefits to shareholders through more frequent accountability.
Implementing biannual or triennial votes on executive compensation limits shareholders’ ability to hold the board accountable
for its compensation practices through means other than voting against the compensation committee. Unless a company provides a
compelling rationale or unique circumstances for say-on-pay votes less frequent than annually, we will generally recommend that
shareholders support annual votes on compensation.

VOTE ON GOLDEN PARACHUTE
ARRANGEMENTS

The Dodd-Frank Act also requires
companies to provide shareholders with a separate non-binding vote on approval of golden parachute compensation arrangements in
connection with certain change-in-control trans- actions. However, if the golden parachute arrangements have previously been subject
to a say-on-pay vote which shareholders approved, then this required vote is waived.

Glass Lewis believes the narrative
and tabular disclosure of golden parachute arrangements benefits all share- holders. Glass Lewis analyzes each golden parachute
arrangement on a case-by-case basis, taking into ac- count, among other items: the nature of the change-in-control transaction,
the ultimate value of the payments particularly compared to the value of the transaction, any excise tax gross-up obligations,
the tenure and position of the executives in question before and after the transaction, any new or amended employment agreements entered into in connection with the transaction, and the type of triggers involved (i.e., single vs. double).

EQUITY-BASED COMPENSATION
PLAN PROPOSALS

We believe that equity compensation
awards, when not abused, are useful for retaining employees and providing an incentive for them to act in a way that will improve
company performance. Glass Lewis recognizes that equity-based compensation plans are critical components of a company’s overall
compensation program and we analyze such plans accordingly based on both quantitative and qualitative factors.

Our quantitative analysis assesses
the plan’s cost and the company’s pace of granting utilizing a number of different analyses, comparing the program
with absolute limits we believe are key to equity value creation and with a carefully chosen peer group. In general, our model
seeks to determine whether the proposed plan is either absolutely excessive or is more than one standard deviation away from the
average plan for the peer group on a range of criteria, including dilution to shareholders and the projected annual cost relative
to the company’s financial performance. Each of the analyses (and their constituent parts) is weighted and the plan is scored
in accordance with that weight.

We compare the program’s
expected annual expense with the business’s operating metrics to help determine whether the plan is excessive in light of
company performance. We also compare the plan’s expected annual cost to the enterprise value of the firm rather than to market
capitalization because the employees, managers and directors of the firm contribute to the creation of enterprise value but not
necessarily market capitalization (the biggest difference is seen where cash represents the vast majority of market capitalization).
Finally, we do not rely exclusively on relative comparisons with averages because, in addition to creeping averages serving to
inflate compensation, we believe that some absolute limits are warranted.

We then consider qualitative
aspects of the plan such as plan administration, the method and terms of exercise, repricing history, express or implied rights
to reprice, and the presence of evergreen provisions. We also closely review the choice and use of, and difficulty in meeting,
the awards’ performance metrics and targets, if any. We believe significant changes to the terms of a plan should be explained
for shareholders and clearly indicated. Other factors such as a company’s size and operating environment may also be relevant
in assessing the severity of concerns or the benefits of certain changes. Finally, we may consider a company’s executive
compensation practices in certain situations, as applicable.

We evaluate equity plans based on
certain overarching principles:

Companies should seek more shares only when needed;

Requested share amounts should be small enough that companies seek shareholder approval every
three to four years (or more frequently);

If a plan is relatively expensive, it should not grant options solely to senior executives and
board members;

Dilution of annual net share count or voting power, along with the “overhang” of incentive
plans, should be limited;

Annual cost of the plan (especially if not shown on the income statement) should be reasonable
as a percentage of financial results and should be in line with the peer group;

The expected annual cost of the plan should be proportional to the business’s value;

The intrinsic value that option grantees received in the past should be reasonable compared with
the business’s financial results;

Plans should not permit re-pricing of stock options;

Plans should not contain excessively liberal administrative or payment terms;

Plans should not count shares in ways that understate the potential dilution, or cost, to common
shareholders. This refers to “inverse” full-value award multipliers;

Selected performance metrics should be challenging and appropriate, and should be subject to
relative performance measurements; et

Stock grants should be subject to minimum vesting and/or holding periods sufficient to ensure
sustainable performance and promote retention.

OPTION EXCHANGES
AND REPRICING

Glass Lewis is firmly opposed to the repricing
of employee and director options regardless of how it is accomplished. Employees should have some downside risk in their equity-based
compensation program and repricing eliminates any such risk. As shareholders have substantial risk in owning stock, we believe
that the equity compensation of employees and directors should be similarly situated to align their interests with those of shareholders.
We believe this will facilitate appropriate risk- and opportunity-taking for the company by employees.

We are concerned that option
grantees who believe they will be “rescued” from underwater options will be more inclined to take unjustifiable risks.
Moreover, a predictable pattern of repricing or exchanges substantially alters a stock option’s value because options that
will practically never expire deeply out of the money are worth far more than options that carry a risk of expiration.

In short, repricings and option exchange
programs change the bargain between shareholders and employees after the bargain has been struck.

There is one circumstance in which a repricing
or option exchange program may be acceptable: if macroeconomic or industry trends, rather than specific company issues, cause
a stock’s value to decline dramatically and the repricing is necessary to motivate and retain employees. In this circumstance,
we think it fair to conclude that option grantees may be suffering from a risk that was not foreseeable when the original “bargain”
was struck. In such a circumstance, we will recommend supporting a repricing if the following conditions are true:

Officers and board members cannot participate in the program;

The stock decline mirrors the market or industry price decline in terms
of timing and approximates the decline in magnitude;

The exchange is value-neutral or value-creative to shareholders using very
conservative assumptions and with a recognition of the adverse selection problems inherent in voluntary programs;

The vesting requirements on exchanged or repriced options are extended beyond one year;

Shares reserved for options that are reacquired in an option exchange will
permanently retire (i.e., will not be available for future grants) so as to prevent additional shareholder dilution in the future;
et

Management and the board make a cogent case for needing to motivate and
retain existing employees, such as being in a competitive employment market.

OPTION BACKDATING,
SPRING-LOADING AND BULLET-DODGING

Glass Lewis views option backdating, and
the related practices of spring-loading and bullet-dodging, as egregious actions that warrant holding the appropriate management
and board members responsible. These practices are similar to re-pricing options and eliminate much of the downside risk inherent
in an option grant that is designed to induce recipients to maximize shareholder return.

Backdating an option is the act of changing
an option’s grant date from the actual grant date to an earlier date when the market price of the underlying stock was lower,
resulting in a lower exercise price for the option. Since 2006, Glass Lewis has identified over 270 companies that have disclosed
internal or government investigations into their past stock-option grants.

Spring-loading is granting stock
options while in possession of material, positive information that has not been disclosed publicly. Bullet-dodging is delaying
the grants of stock options until after the release of mate-

rial, negative information.
This can allow option grants to be made at a lower price either before the release of positive news or following the release of
negative news, assuming the stock’s price will move up or down in response to the information. This raises a concern similar
to that of insider trading, or the trading on material non-public information.

The exercise price for an option
is determined on the day of grant, providing the recipient with the same market risk as an investor who bought shares on that
date. However, where options were backdated, the executive or the board (or the compensation committee) changed the grant date
retroactively. The new date may be at or near the lowest price for the year or period. This would be like allowing an investor
to look back and select the lowest price of the year at which to buy shares.

A 2006 study of option grants
made between 1996 and 2005 at 8,000 companies found that option back- dating can be an indication of poor internal controls. The
study found that option backdating was more likely to occur at companies without a majority independent board and with a long-serving
CEO; both factors, the study concluded, were associated with greater CEO influence on the company’s compensation and governance
practices.49

Where a company granted backdated
options to an executive who is also a director, Glass Lewis will recommend voting against that executive/director, regardless
of who decided to make the award. In addition, Glass Lewis will recommend voting against those directors who either approved or
allowed the backdating. Glass Lewis feels that executives and directors who either benefited from backdated options or authorized
the practice have breached their fiduciary responsibility to shareholders.

Given the severe tax and legal
liabilities to the company from backdating, Glass Lewis will consider recommending voting against members of the audit committee
who served when options were backdated, a restatement occurs, material weaknesses in internal controls exist and disclosures
indicate there was a lack of documentation. These committee members failed in their responsibility to ensure the integrity of
the company’s financial reports.

When a company has engaged in
spring-loading or bullet-dodging, Glass Lewis will consider recommending voting against the compensation committee members where
there has been a pattern of granting options at or near historic lows. Glass Lewis will also recommend voting against executives
serving on the board who benefited from the spring-loading or bullet-dodging.

DIRECTOR COMPENSATION
PLANS

Glass Lewis believes that non-employee
directors should receive reasonable and appropriate compensation for the time and effort they spend serving on the board and its
committees. However, a balance is required. Fees should be competitive in order to retain and attract qualified individuals, but
excessive fees represent a financial cost to the company and potentially compromise the objectivity and independence of non-employee
directors. We will consider recommending support for compensation plans that include option grants or other equity-based awards
that help to align the interests of outside directors with those of shareholders. However, to ensure directors are not incentivized
in the same manner as executives but rather serve as a check on imprudent risk-taking in executive compensation plan design,
equity grants to directors should not be perfor- mance-based. Where an equity plan exclusively or primarily covers non-employee
directors as participants, we do not believe that the plan should provide for performance-based awards in any capacity.

When non-employee director equity
grants are covered by the same equity plan that applies to a company’s broader employee base, we will use our propriety model
and analyst review of this model to guide our voting recommendations. If such a plan broadly allows for performance-based awards
to directors or explicitly provides for such grants, we may recommend against the overall plan on this basis, particularly if
the company has granted performance-based awards to directors in past.

____________________________

49 Lucian Bebchuk, Yaniv Grinstein and Urs Peyer. “LUCKY CEOs.”
November, 2006.

EMPLOYEE STOCK
PURCHASE PLANS

Glass Lewis believes that employee
stock purchase plans (“ESPPs”) can provide employees with a sense of ownership in their company and help strengthen
the alignment between the interests of employees and share- holders. We evaluate ESPPs by assessing the expected discount, purchase
period, expected purchase activity (if previous activity has been disclosed) and whether the plan has a “lookback”
feature. Except for the most extreme cases, Glass Lewis will generally support these plans given the regulatory purchase limit
of $25,000 per employee per year, which we believe is reasonable. We also look at the number of shares requested to see if a ESPP
will significantly contribute to overall shareholder dilution or if shareholders will not have a chance to approve the program
for an excessive period of time. As such, we will generally recommend against ESPPs that contain “evergreen” provisions
that automatically increase the number of shares available under the ESPP each year.

EXECUTIVE COMPENSATION
TAX DEDUCTIBILITY — AMENDMENT TO IRS 162(M)

The “Tax Cut and Jobs Act”
had significant implications on Section 162(m) of the Internal Revenue Code, a pro- vision that allowed companies to deduct compensation
in excess of $1 million for the CEO and the next three most highly compensated executive officers, excluding the CFO, if the compensation
is performance-based and is paid under shareholder-approved plans. Glass Lewis does not generally view amendments to equity plans
and changes to compensation programs in response to the elimination of tax deductions under 162(m) as problematic. This specifically
holds true if such modifications contribute to the maintenance of a sound performance-based compensation program.

As grandfathered contracts may
continue to be eligible for tax deductions under the transition rule for Section 162(m), companies may therefore submit incentive
plans for shareholder approval to take of advantage of the tax deductibility afforded under 162(m) for certain types of compensation.

We believe the best practice for
companies is to provide robust disclosure to shareholders so that they can make fully-informed judgments about the reasonableness
of the proposed compensation plan. To allow for meaningful shareholder review, we prefer that disclosure should include specific
performance metrics, a maximum award pool, and a maximum award amount per employee. We also believe it is important to analyze
the estimated grants to see if they are reasonable and in line with the company’s peers.

We typically recommend voting
against a 162(m) proposal where: (i) a company fails to provide at least a list of performance targets; (ii) a company fails to
provide one of either a total maximum or an individual maximum; or (iii) the proposed plan or individual maximum award limit
is excessive when compared with the plans of the company’s peers.

The company’s record of
aligning pay with performance (as evaluated using our proprietary pay-for-performance model) also plays a role in our recommendation.
Where a company has a record of setting reason- able pay relative to business performance, we generally recommend voting in favor
of a plan even if the plan caps seem large relative to peers because we recognize the value in special pay arrangements for continued
exceptional performance.

As with all other issues we review,
our goal is to provide consistent but contextual advice given the specifics of the company and ongoing performance. Overall, we
recognize that it is generally not in shareholders’ best interests to vote against such a plan and forgo the potential tax
benefit since shareholder rejection of such plans will not curtail the awards; it will only prevent the tax deduction associated
with them.

Governance Structure and the Shareholder
Franchise

ANTI-TAKEOVER MEASURES

POISON PILLS (SHAREHOLDER
RIGHTS PLANS)

Glass Lewis believes that poison
pill plans are not generally in shareholders’ best interests. They can reduce management accountability by substantially
limiting opportunities for corporate takeovers. Rights plans can thus prevent shareholders from receiving a buy-out premium for
their stock. Typically we recommend that shareholders vote against these plans to protect their financial interests and ensure
that they have an opportunity to consider any offer for their shares, especially those at a premium.

We believe boards should be given
wide latitude in directing company activities and in charting the company’s course. However, on an issue such as this, where
the link between the shareholders’ financial interests and their right to consider and accept buyout offers is substantial,
we believe that shareholders should be allowed to vote on whether they support such a plan’s implementation. This issue is
different from other matters that are typically left to board discretion. Its potential impact on and relation to shareholders
is direct and substantial. It is also an issue in which management interests may be different from those of shareholders; thus,
ensuring that shareholders have a voice is the only way to safeguard their interests.

In certain circumstances, we will
support a poison pill that is limited in scope to accomplish a particular objective, such as the closing of an important merger,
or a pill that contains what we believe to be a reasonable qualifying offer clause. We will consider supporting a poison pill plan
if the qualifying offer clause includes each of the following attributes:

The form of offer is not required to be an all-cash transaction;

The offer is not required to remain open for more than 90 business days;

The offeror is permitted to amend the offer, reduce the offer, or otherwise change the terms;

There is no fairness opinion requirement; et

There is a low to no premium requirement.

Where these requirements are
met, we typically feel comfortable that shareholders will have the opportunity to voice their opinion on any legitimate offer.

NOL POISON PILLS

Similarly, Glass Lewis may consider
supporting a limited poison pill in the event that a company seeks share- holder approval of a rights plan for the express purpose
of preserving Net Operating Losses (NOLs). While companies with NOLs can generally carry these losses forward to offset future
taxable income, Section 382

of the Internal Revenue
Code limits companies’ ability to use NOLs in the event of a “change of ownership.”50
In this case, a company may adopt or amend a poison pill (“NOL pill”) in order to prevent an inadvertent change of
ownership by multiple investors purchasing small chunks of stock at the same time, and thereby preserve the ability to carry the
NOLs forward. Often such NOL pills have trigger thresholds much lower than the common 15% or 20% thresholds, with some NOL pill
triggers as low as 5%.

Glass Lewis evaluates NOL pills
on a strictly case-by-case basis taking into consideration, among other factors, the value of the NOLs to the company, the likelihood
of a change of ownership based on the size of the holding and the nature of the larger shareholders, the trigger threshold and
whether the term of the plan is limited in duration (i.e., whether it contains a reasonable “sunset” provision) or
is subject to periodic board review and/ or shareholder ratification. In many cases, companies will propose the adoption of bylaw
amendments specifically restricting certain share transfers, in addition to proposing the adoption of a NOL pill. In general,
if we support the terms of a particular NOL pill, we will generally support the additional protective amendment in the absence
of significant concerns with the specific terms of that proposal.

Furthermore, we believe that
shareholders should be offered the opportunity to vote on any adoption or renewal of a NOL pill regardless of any potential tax
benefit that it offers a company. As such, we will consider recommending voting against those members of the board who served at
the time when an NOL pill was ad- opted without shareholder approval within the prior twelve months and where the NOL pill is not
subject to shareholder ratification.

FAIR PRICE PROVISIONS

Fair price provisions, which
are rare, require that certain minimum price and procedural requirements be observed by any party that acquires more than a specified
percentage of a corporation’s common stock. The provision is intended to protect minority shareholder value when an acquirer
seeks to accomplish a merger or other transaction which would eliminate or change the interests of the minority shareholders. The
provision is generally applied against the acquirer unless the takeover is approved by a majority of ”continuing directors”
and holders of a majority, in some cases a supermajority as high as 80%, of the combined voting power of all stock entitled to
vote to alter, amend, or repeal the above provisions.

The effect of a fair price provision
is to require approval of any merger or business combination with an “interested shareholder” by 51% of the voting
stock of the company, excluding the shares held by the interested shareholder. An interested shareholder is generally considered
to be a holder of 10% or more of the company’s outstanding stock, but the trigger can vary.

Generally, provisions are put
in place for the ostensible purpose of preventing a back-end merger where the interested shareholder would be able to pay a lower
price for the remaining shares of the company than he or she paid to gain control. The effect of a fair price provision on shareholders,
however, is to limit their ability to gain a premium for their shares through a partial tender offer or open market acquisition
which typically raise the share price, often significantly. A fair price provision discourages such transactions because of the
potential costs of seeking shareholder approval and because of the restrictions on purchase price for completing a merger or
other transaction at a later time.

Glass Lewis believes that fair
price provisions, while sometimes protecting shareholders from abuse in a take- over situation, more often act as an impediment
to takeovers, potentially limiting gains to shareholders from a variety of transactions that could significantly increase share
price. In some cases, even the independent directors of the board cannot make exceptions when such exceptions may be in the best
interests of shareholders. Given the existence of state law protections for minority shareholders such as Section 203 of the Delaware
Corporations Code, we believe it is in the best interests of shareholders to remove fair price provisions.

____________________________

50
Section 382 of the Internal Revenue Code refers to a “change
of ownership” of more than 50 percentage points by one or more 5% shareholders within a three-year period. The statute is
intended to deter the “trafficking” of net operating losses.

QUORUM REQUIREMENTS

Glass Lewis believes that a company’s
quorum requirement should be set at a level high enough to ensure that a broad range of shareholders are represented in person
or by proxy, but low enough that the company can transact necessary business. Companies in the U.S. are generally subject to quorum
requirements under the laws of their specific state of incorporation. Additionally, those companies listed on the NASDAQ Stock
Market are required to specify a quorum in their bylaws, provided however that such quorum may not be less than one-third of outstanding
shares. Prior to 2013, the New York Stock Exchange required a quorum of 50% for listed companies, although this requirement was
dropped in recognition of individual state requirements and potential confusion for issuers. Delaware, for example, required companies
to provide for a quorum of no less than one-third of outstanding shares; otherwise such quorum shall default to a majority.

We generally believe a majority
of outstanding shares entitled to vote is an appropriate quorum for the transaction of business at shareholder meetings. However,
should a company seek shareholder approval of a lower quorum requirement we will generally support a reduced quorum of at least
one-third of shares entitled to vote, either in person or by proxy. When evaluating such proposals, we also consider the specific
facts and circumstances of the company, such as size and shareholder base.

DIRECTOR AND OFFICER
INDEMNIFICATION

While Glass Lewis strongly believes
that directors and officers should be held to the highest standard when carrying out their duties to shareholders, some protection
from liability is reasonable to protect them against certain suits so that these officers feel comfortable taking measured risks
that may benefit shareholders. As such, we find it appropriate for a company to provide indemnification and/or enroll in liability
insurance to cover its directors and officers so long as the terms of such agreements are reasonable.

REINCORPORATION

In general, Glass Lewis believes
that the board is in the best position to determine the appropriate jurisdiction of incorporation for the company. When examining
a management proposal to reincorporate to a different state or country, we review the relevant financial benefits, generally related
to improved corporate tax treatment, as well as changes in corporate governance provisions, especially those relating to shareholder
rights, resulting from the change in domicile. Where the financial benefits are de minimis and there is a decrease in shareholder
rights, we will recommend voting against the transaction.

However, costly, shareholder-initiated
reincorporations are typically not the best route to achieve the furtherance of shareholder rights. We believe shareholders are
generally better served by proposing specific share- holder resolutions addressing pertinent issues which may be implemented at
a lower cost, and perhaps even with board approval. However, when shareholders propose a shift into a jurisdiction with enhanced
share- holder rights, Glass Lewis examines the significant ways would the company benefit from shifting jurisdictions including
the following:

Is the board sufficiently independent?

Does the company have anti-takeover protections such as a poison pill or classified board in place?

Has the board been previously unresponsive to shareholders (such as failing to implement a share-
holder proposal that received majority shareholder support)?

Do shareholders have the right to call special meetings of shareholders?

Are there other material governance issues of concern at the company?

Has the company’s performance matched or exceeded its peers in the past one and three years?

How has the company ranked in Glass Lewis’ pay-for-performance analysis
during the last three years?

Does the company have an independent chair?

We note, however, that we will
only support shareholder proposals to change a company’s place of incorporation in exceptional circumstances.

EXCLUSIVE FORUM AND
FEE-SHIFTING BYLAW PROVISIONS

Glass Lewis recognizes that companies
may be subject to frivolous and opportunistic lawsuits, particularly in conjunction with a merger or acquisition, that are expensive
and distracting. In response, companies have sought ways to prevent or limit the risk of such suits by adopting bylaws regarding
where the suits must be brought or shifting the burden of the legal expenses to the plaintiff, if unsuccessful at trial.

Glass Lewis believes that charter
or bylaw provisions limiting a shareholder’s choice of legal venue are not in the best interests of shareholders. Such clauses
may effectively discourage the use of shareholder claims by increasing their associated costs and making them more difficult to
pursue. As such, shareholders should be wary about approving any limitation on their legal recourse including limiting themselves
to a single jurisdiction (e.g., Delaware) without compelling evidence that it will benefit shareholders.

For this reason, we recommend
that shareholders vote against any bylaw or charter amendment seeking to adopt an exclusive forum provision unless the company:
(i) provides a compelling argument on why the provision would directly benefit shareholders; (ii) provides evidence of abuse
of legal process in other, non-favored jurisdictions; (iii) narrowly tailors such provision to the risks involved; and (iv) maintains
a strong record of good corporate governance practices.

Moreover, in the event a board
seeks shareholder approval of a forum selection clause pursuant to a bundled bylaw amendment rather than as a separate proposal,
we will weigh the importance of the other bundled pro- visions when determining the vote recommendation on the proposal. We will
nonetheless recommend voting against the chair of the governance committee for bundling disparate proposals into a single proposal
(refer to our discussion of nominating and governance committee performance in Section I of the guidelines).

Similarly, some companies have
adopted bylaws requiring plaintiffs who sue the company and fail to receive a judgment in their favor pay the legal expenses of
the company. These bylaws, also known as “fee-shifting” or “loser pays” bylaws, will likely have a chilling
effect on even meritorious shareholder lawsuits as shareholders would face an strong financial disincentive not to sue a company.
Glass Lewis therefore strongly opposes the adoption of such fee-shifting bylaws and, if adopted without shareholder approval, will
recommend voting against the governance committee. While we note that in June of 2015 the State of Delaware banned the adoption
of fee-shifting bylaws, such provisions could still be adopted by companies incorporated in other states.

AUTHORIZED SHARES

Glass Lewis believes that adequate
capital stock is important to a company’s operation. When analyzing a request for additional shares, we typically review
four common reasons why a company might need additional capital stock:

1. Stock Split

— We typically consider three metrics when evaluating whether we think a stock split is likely or necessary: The historical
stock pre-split price, if any; the current price relative to the company’s most common trading price over the past 52 weeks;
and some absolute limits on stock price that, in our view, either always make a stock split appropriate if desired by management
or would almost never be a reasonable price at which to split a stock.

2. Shareholder Defenses
Additional authorized shares could be used to bolster takeover defenses

such as a poison pill.
Proxy filings often discuss the usefulness of additional shares in defending against or discouraging a hostile takeover as a reason
for a requested increase. Glass Lewis is typically against such defenses and will oppose actions intended to bolster such defenses.

3. Financing for
Acquisitions
— We look at whether the company has a history of using stock for acquisitions and attempt to determine
what levels of stock have typically been required to accomplish such transactions. Likewise, we look to see whether this is discussed
as a reason for additional shares in the proxy.

4. Financing for
Operations
— We review the company’s cash position and its ability to secure financing through borrowing
or other means. We look at the company’s history of capitalization and whether the company has had to use stock in the recent
past as a means of raising capital.

Issuing additional shares generally
dilutes existing holders in most circumstances. Further, the availability of additional shares, where the board has discretion
to implement a poison pill, can often serve as a deter- rent to interested suitors. Accordingly, where we find that the company
has not detailed a plan for use of the proposed shares, or where the number of shares far exceeds those needed to accomplish a
detailed plan, we typically recommend against the authorization of additional shares. Similar concerns may also lead us to recommend against a proposal to conduct a reverse stock split if the board does not state that it will reduce the number of authorized
common shares in a ratio proportionate to the split.

While we think that having adequate
shares to allow management to make quick decisions and effectively operate the business is critical, we prefer that, for significant
transactions, management come to shareholders to justify their use of additional shares rather than providing a blank check in
the form of a large pool of unallocated shares available for any purpose.

ADVANCE NOTICE REQUIREMENTS

We typically recommend that shareholders
vote against proposals that would require advance notice of share- holder proposals or of director nominees.

These proposals typically attempt
to require a certain amount of notice before shareholders are allowed to place proposals on the ballot. Notice requirements typically
range between three to six months prior to the annual meeting. Advance notice requirements typically make it impossible for a shareholder
who misses the deadline to present a shareholder proposal or a director nominee that might be in the best interests of the company
and its shareholders.

We believe shareholders should
be able to review and vote on all proposals and director nominees. Shareholders can always vote against proposals that appear
with little prior notice. Shareholders, as owners of a business, are capable of identifying issues on which they have sufficient
information and ignoring issues on which they have insufficient information. Setting arbitrary notice restrictions limits the opportunity
for shareholders to raise issues that may come up after the window closes.

VIRTUAL SHAREHOLDER
MEETINGS

A relatively small but growing
contingent of companies have elected to hold shareholder meetings by virtual means only. Glass Lewis believes that virtual meeting
technology can be a useful complement to a traditional, in-person shareholder meeting by expanding participation of shareholders
who are unable to attend a share- holder meeting in person (i.e. a “hybrid meeting”). However, we also believe that
virtual-only meetings have the potential to curb the ability of a company’s shareholders to meaningfully communicate with
the company’s management.

Prominent shareholder rights
advocates, including the Council of Institutional Investors, have expressed concerns that such virtual-only meetings do not approximate
an in-person experience and may serve to reduce the board’s accountability to shareholders. When analyzing the governance
profile of companies that choose

to hold virtual-only meetings,
we look for robust disclosure in a company’s proxy statement which assures shareholders that they will be afforded the same
rights and opportunities to participate as they would at an in-person meeting.

Examples of effective disclosure
include: (i) addressing the ability of shareholders to ask questions during the meeting, including time guidelines for shareholder
questions, rules around what types of questions are allowed, and rules for how questions and comments will be recognized and
disclosed to meeting participants;

(ii)
procedures, if any, for posting appropriate questions received during the meeting and the company’s answers, on
the investor page of their website as soon as is practical after the meeting; (iii) addressing technical and logistical issues
related to accessing the virtual meeting platform; and (iv) procedures for accessing technical support to assist in the event of
any difficulties accessing the virtual meeting.

We will generally recommend voting
against members of the governance committee where the board is planning to hold a virtual-only shareholder meeting and the company
does not provide such disclosure.

VOTING STRUCTURE

DUAL-CLASS SHARE STRUCTURES

Glass Lewis believes dual-class
voting structures are typically not in the best interests of common shareholders. Allowing one vote per share generally operates
as a safeguard for common shareholders by ensuring that those who hold a significant minority of shares are able to weigh in on
issues set forth by the board.

Furthermore, we believe that
the economic stake of each shareholder should match their voting power and that no small group of shareholders, family or otherwise,
should have voting rights different from those of other shareholders. On matters of governance and shareholder rights, we believe
shareholders should have the power to speak and the opportunity to effect change. That power should not be concentrated in the
hands of a few for reasons other than economic stake.

We generally consider a dual-class
share structure to reflect negatively on a company’s overall corporate governance. Because we believe that companies should
have share capital structures that protect the interests of non-controlling shareholders as well as any controlling entity, we
typically recommend that shareholders vote in favor of recapitalization proposals to eliminate dual-class share structures. Similarly,
we will generally recommend against proposals to adopt a new class of common stock.

With regards to our evaluation
of corporate governance following an IPO or spin-off within the past year, we will now include the presence of dual-class share
structures as an additional factor in determining whether shareholder rights are being severely restricted indefinitely.

When analyzing voting results
from meetings of shareholders at companies controlled through dual-class structures, we will carefully examine the level of approval
or disapproval attributed to unaffiliated shareholders when determining whether board responsiveness is warranted. Where vote results
indicate that a majority of unaffiliated shareholders supported a shareholder proposal or opposed a management proposal, we believe
the board should demonstrate an appropriate level of responsiveness.

CUMULATIVE VOTING

Cumulative voting increases the
ability of minority shareholders to elect a director by allowing shareholders to cast as many shares of the stock they own multiplied
by the number of directors to be elected. As companies generally have multiple nominees up for election, cumulative voting allows
shareholders to cast all of their votes for a single nominee, or a smaller number of nominees than up for election, thereby raising
the likelihood of electing one or more of their preferred nominees to the board. It can be important when a board is controlled
by insiders or affiliates and where the company’s ownership structure includes one or more share- holders who control a majority-voting
block of company stock.

Glass Lewis believes that
cumulative voting generally acts as a safeguard for shareholders by ensuring that those who hold a significant minority of shares
can elect a candidate of their choosing to the board. This allows the creation of boards that are responsive to the interests of
all shareholders rather than just a small group of large holders.

We review cumulative voting proposals
on a case-by-case basis, factoring in the independence of the board and the status of the company’s governance structure.
But we typically find these proposals on ballots at companies where independence is lacking and where the appropriate checks
and balances favoring shareholders are not in place. In those instances we typically recommend in favor of cumulative voting.

Where a company has adopted a
true majority vote standard (i.e., where a director must receive a majority of votes cast to be elected, as opposed to a modified
policy indicated by a resignation policy only), Glass Lewis will recommend voting against cumulative voting proposals due to the
incompatibility of the two election methods. For companies that have not adopted a true majority voting standard but have adopted
some form of majority voting, Glass Lewis will also generally recommend voting against cumulative voting proposals if the company
has not adopted anti-takeover protections and has been responsive to shareholders.

Where a company has not adopted
a majority voting standard and is facing both a shareholder proposal to adopt majority voting and a shareholder proposal to adopt
cumulative voting, Glass Lewis will support only the majority voting proposal. When a company has both majority voting and cumulative
voting in place, there is a higher likelihood of one or more directors not being elected as a result of not receiving a majority
vote. This is because shareholders exercising the right to cumulate their votes could unintentionally cause the failed election
of one or more directors for whom shareholders do not cumulate votes.

SUPERMAJORITY VOTE
REQUIREMENTS

Glass Lewis believes that supermajority
vote requirements impede shareholder action on ballot items critical to shareholder interests. An example is in the takeover context,
where supermajority vote requirements can strongly limit the voice of shareholders in making decisions on such crucial matters
as selling the business. This in turn degrades share value and can limit the possibility of buyout premiums to shareholders. Moreover,
we believe that a supermajority vote requirement can enable a small group of shareholders to overrule the will of the majority
shareholders. We believe that a simple majority is appropriate to approve all matters presented to shareholders.

TRANSACTION OF OTHER
BUSINESS

We typically recommend that shareholders
not give their proxy to management to vote on any other business items that may properly come before an annual or special meeting.
In our opinion, granting unfettered discretion is unwise.

ANTI-GREENMAIL PROPOSALS

Glass Lewis will support proposals
to adopt a provision preventing the payment of greenmail, which would serve to prevent companies from buying back company stock
at significant premiums from a certain share- holder. Since a large or majority shareholder could attempt to compel a board into
purchasing its shares at a large premium, the anti-greenmail provision would generally require that a majority of shareholders
other than the majority shareholder approve the buyback.

MUTUAL FUNDS: INVESTMENT
POLICIES AND ADVISORY AGREEMENTS

Glass Lewis believes that decisions
about a fund’s structure and/or a fund’s relationship with its investment advisor or sub-advisors are generally best
left to management and the members of the board, absent a showing of egregious or illegal conduct that might threaten shareholder
value. As such, we focus our analyses of such proposals on the following main areas:

The terms of any amended advisory or sub-advisory agreement;

Any changes in the fee structure paid to the investment advisor; et

Any material changes to the fund’s investment objective or strategy.

We generally support amendments
to a fund’s investment advisory agreement absent a material change that is not in the best interests of shareholders. A significant
increase in the fees paid to an investment advisor would be reason for us to consider recommending voting against a proposed amendment
to an investment advisory agreement or fund reorganization. However, in certain cases, we are more inclined to support an increase
in advisory fees if such increases result from being performance-based rather than asset-based. Furthermore, we generally support
sub-advisory agreements between a fund’s advisor and sub-advisor, primarily because the fees received by the sub-advisor
are paid by the advisor, and not by the fund.

In matters pertaining to a fund’s
investment objective or strategy, we believe shareholders are best served when a fund’s objective or strategy closely resembles
the investment discipline shareholders understood and selected when they initially bought into the fund. As such, we generally
recommend voting against amendments to a fund’s investment objective or strategy when the proposed changes would leave
shareholders with stakes in a fund that is noticeably different than when originally purchased, and which could therefore potentially negatively impact some investors’ diversification strategies.

REAL ESTATE INVESTMENT
TRUSTS

The complex organizational, operational,
tax and compliance requirements of Real Estate Investment Trusts (“REITs”) provide for a unique shareholder evaluation.
In simple terms, a REIT must have a minimum of 100 shareholders (the “100 Shareholder Test”) and no more than 50% of
the value of its shares can be held by five or fewer individuals (the “5/50 Test”). At least 75% of a REITs’
assets must be in real estate, it must derive 75% of its gross income from rents or mortgage interest, and it must pay out 90%
of its taxable earnings as dividends. In addition, as a publicly traded security listed on a stock exchange, a REIT must comply
with the same general listing requirements as a publicly traded equity.

In order to comply with such
requirements, REITs typically include percentage ownership limitations in their organizational documents, usually in the range
of 5% to 10% of the REITs outstanding shares. Given the complexities of REITs as an asset class, Glass Lewis applies a highly
nuanced approach in our evaluation of REIT proposals, especially regarding changes in authorized share capital, including preferred
stock.

PREFERRED STOCK ISSUANCES
AT REITS

Glass Lewis is generally against
the authorization of preferred shares that allows the board to determine the preferences, limitations and rights of the preferred
shares (known as “blank-check preferred stock”). We believe that granting such broad discretion should be of concern
to common shareholders, since blank-check preferred stock could be used as an antitakeover device or in some other fashion that
adversely affects the voting power or financial interests of common shareholders. However, given the requirement that a REIT must
distribute 90% of its net income annually, it is inhibited from retaining capital to make investments in its business. As such,
we recognize that equity financing likely plays a key role in a REIT’s growth and creation of shareholder value. Moreover,
shareholder concern regarding the use of preferred stock as an anti-takeover mechanism may be allayed by the fact that most REITs
maintain ownership limitations in their certificates of incorporation. For these reasons, along with the fact that REITs typically
do not engage in private placements of preferred stock (which result in the rights of common shareholders being adversely impacted),
we may sup- port requests to authorize shares of blank-check preferred stock at REITs.

BUSINESS DEVELOPMENT
COMPANIES

Business Development Companies
(“BDCs”) were created by the U.S. Congress in 1980; they are regulated under the Investment Company Act of 1940 and
are taxed as regulated investment companies (“RICs”) under the Internal Revenue Code. BDCs typically operate as publicly
traded private equity firms that invest in early stage to mature private companies as well as small public companies. BDCs realize
operating income when their investments are sold off, and therefore maintain complex organizational, operational, tax and compliance
requirements that are similar to those of REITs—the most evident of which is that BDCs must distribute at least 90% of their
taxable earnings as dividends.

AUTHORIZATION TO SELL
SHARES AT A PRICE BELOW NET ASSET VALUE

Considering that BDCs are required
to distribute nearly all their earnings to shareholders, they sometimes need to offer additional shares of common stock in the
public markets to finance operations and acquisitions. However, shareholder approval is required in order for a BDC to sell shares
of common stock at a price below Net Asset Value (“NAV”). Glass Lewis evaluates these proposals using a case-by-case
approach, but will recommend supporting such requests if the following conditions are met:

The authorization to allow share issuances below NAV has an expiration date of one year or less
from the date that shareholders approve the underlying proposal (i.e. the meeting date);

The proposed discount below NAV is minimal (ideally no greater than 20%);

The board specifies that the issuance will have a minimal or modest dilutive effect (ideally
no greater than 25% of the company’s then-outstanding common stock prior to the issuance); et

A majority of the company’s independent directors who do not have a financial interest
in the issuance approve the sale.

In short, we believe BDCs should
demonstrate a responsible approach to issuing shares below NAV, by proactively addressing shareholder concerns regarding the
potential dilution of the requested share issuance, and explaining if and how the company’s past below-NAV share issuances
have benefitted the company.

AUDITOR RATIFICATION
AND BELOW-NAV ISSUANCES

When a BDC submits a below-NAV
issuance for shareholder approval, we will refrain from recommending against the audit committee chair for not including auditor
ratification on the same ballot. Because of the unique way these proposals interact, votes may be tabulated in a manner that is
not in shareholders’ interests. In cases where these proposals appear on the same ballot, auditor ratification is generally
the only “routine proposal,” the presence of which triggers a scenario where broker non-votes may be counted toward
share- holder quorum, with unintended consequences.

Under the 1940 Act, below-NAV
issuance proposals require relatively high shareholder approval. Specifically, these proposals must be approved by the lesser of:
(i) 67% of votes cast if a majority of shares are represented at the meeting; or (ii) a majority of outstanding shares. En attendant
any broker non-votes counted toward quorum will automatically be registered as “against” votes for purposes of this
proposal. The unintended result can be a case where the issuance proposal is not approved, despite sufficient voting shares being
cast in favor. Because broker non-votes result from a lack of voting instruction by the shareholder, we do not believe shareholders’
ability to weigh in on the selection of auditor outweighs the consequences of failing to approve an issuance proposal due to such
technicality.

Shareholder Initiatives

Glass Lewis generally believes
decisions regarding day-to-day management and policy decisions, including those related to social, environmental or political issues,
are best left to management and the board as they in almost all cases have more and better information about company strategy and
risk. However, when there is a clear link between the subject of a shareholder proposal and value enhancement or risk mitigation,
Glass Lewis will recommend in favor of a reasonable, well-crafted shareholder proposal where the company has failed to or inadequately
addressed the issue.

We believe that shareholders
should not attempt to micromanage a company, its businesses or its executives through the shareholder initiative process. Rather,
we believe shareholders should use their influence to push for governance structures that protect shareholders and promote director
accountability. Shareholders should then put in place a board they can trust to make informed decisions that are in the best interests
of the business and its owners, and hold directors accountable for management and policy decisions through board elections.
However, we recognize that support of appropriately crafted shareholder initiatives may at times serve to promote or protect shareholder
value.

To this end, Glass Lewis evaluates
shareholder proposals on a case-by-case basis. We generally recommend supporting shareholder proposals calling for the elimination
of, as well as to require shareholder approval of, antitakeover devices such as poison pills and classified boards. We generally
recommend supporting proposals likely to increase and/or protect shareholder value and also those that promote the furtherance
of shareholder rights. In addition, we also generally recommend supporting proposals that promote director accountability and
those that seek to improve compensation practices, especially those promoting a closer link between compensation and performance,
as well as those that promote more and better disclosure of relevant risk factors where such disclosure is lacking or inadequate.

ENVIRONMENTAL, SOCIAL
& GOVERNANCE INITIATIVES

For a
detailed review of our policies concerning compensation, environmental, social and governance share- holder initiatives, please
refer to our comprehensive Proxy Paper Guidelines for Shareholder Initiatives, avail- able at
www.glasslewis.com.

DISCLAIMER

This document
is intended to provide an overview of Glass Lewis’ proxy voting policies and guidelines. It is not intended to be exhaustive
and does not address all potential voting issues. Additionally, none of the information contained herein should be relied upon
as investment advice. The content of this document has been developed based on Glass Lewis’ experience with proxy voting
and corporate governance issues, engagement with clients and issuers and review of relevant studies and surveys, and has not been
tailored to any specific person.

No representations
or warranties express or implied, are made as to the accuracy or completeness of any information included herein. In addition,
Glass Lewis shall not be liable for any losses or damages arising from or in connection with the information contained herein or
the use, reliance on or inability to use any such information. Glass Lewis expects its subscribers possess sufficient experience
and knowledge to make their own decisions entirely independent of any information contained in this document.

All information
contained in this report is protected by law, including but not limited to, copyright law, and none of such information may be
copied or otherwise reproduced, repackaged, further transmitted, transferred, disseminated, redistributed or resold, or stored
for subsequent use for any such purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person without
Glass Lewis’ prior written consent.

© 2019 Glass,
Lewis & Co., Glass Lewis Europe, Ltd., and CGI Glass Lewis Pty Ltd. (collectively, “Glass Lewis”). All Rights Reserved.

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