Common use of Leverage and Margin Clause in Contracts

Leverage and Margin. Our portfolios do not, under any circumstances, use leverage. In the process of executing its trades, the portfolio may technically use margin for a very brief period (on the order of seconds). This is because all trades – when switching from long to short, short to long, rebalancing, or going to cash -- are executed simultaneously at market open. While all of a particular days’ trades are being filled, the account will sometimes use its margin capacity. Account margin is not used under any other circumstances. Our passive portfolios are traded very infrequently, and only for the purpose of rebalancing them back to the initial portfolio target composition after their composition has drifted due to the price fluctuations of the underlying ETFs. This is triggered when the cumulative deviation of all ETFs in the portfolio from target composition is greater than 15%. This type of rebalancing we expect to happen once per year, on average. It can be more frequent in times of heightened volatility. For our active portfolios, we run our decision-making algorithms on a daily basis. During rising markets with low volatility, the portfolios can remain in the bullish positioning for several months, without trading. During rapidly falling markets, the portfolios can remain in the bearish positioning for several weeks at a time. During markets that are trading sideways or are transitioning, trading can sometimes be as frequent as once a day for several days at a time. On average, trading is expected to occur approximately 17 times per year, taking into account both the multi- year backtesting period studied to develop our signals, and their live trading periods. This discussion of trading frequency relates only to the MTUM ETF in the active risk-managed equities portfolios, and to the SVXY ETF in the active risk-managed derivatives portfolios. The other positions in these portfolios are maintained regardless of portfolio state, and therefore they only trade when rebalancing is required. Listed below are:

Leverage and Margin. Our portfolios do not, under any circumstances, use leverage. In the process of executing its trades, the portfolio may technically use margin for a very brief period (on the order of seconds). This is because all trades – when switching from long to short, short to long, rebalancing, or going to cash -- are executed simultaneously at market open. While all of a particular days’ trades are being filled, the account will sometimes use its margin capacity. Account margin is not used under any other circumstances. Our passive portfolios are traded very infrequently, and only for the purpose of rebalancing them back to the initial portfolio target composition after their composition has drifted due to the price fluctuations of the underlying ETFs. This is triggered when the cumulative deviation of all ETFs in the portfolio from target composition is greater than 15%. This type of rebalancing we expect to happen once per year, on average. It can be more frequent in times of heightened volatility. For our active portfolios, we run our decision-making algorithms on a daily basis. During rising markets with low volatility, the portfolios can remain in the bullish positioning for several months, without trading. During rapidly falling markets, the portfolios can remain in the bearish positioning for several weeks at a time. During markets that are trading sideways or are transitioning, trading can sometimes be as frequent as once a day for several days at a time. On average, trading is expected to occur approximately 17 times per year, taking into account both the multi- year backtesting period studied to develop our signals, and their live trading periods. This discussion of trading frequency relates only to the MTUM ETF in the active risk-managed equities portfolios, and to the SVXY ZIV ETF in the active risk-managed derivatives portfolios. The other positions in these portfolios are maintained regardless of portfolio state, and therefore they only trade when rebalancing is required. Listed below are: