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Certain Risks of Investing in Next Edge Theta Yield Fund
There are risks associated with an investment in the Fund, as a result of, among other considerations, the nature and operations of the Fund. An investment in Units should only be made after consulting with independent qualified sources of investment and tax advice. The following does not purport to be a complete summary of all the risks associated with an investment in the Fund. Depository Receipt Risk Banks or other financial institutions, known as depositories, issue depository receipts that represent the value of securities issued by foreign companies. These receipts are most often known as ADRs (American Depository Receipts), GDRs (Global Depository Receipts), or EDRs (European Depository Receipts), depending on the location of the depository. A mutual fund may invest in depository receipts to indirectly own foreign securities without having to trade on the local markets. There is a risk that the value of the depository receipts may be less than the value of the foreign securities. This difference can result from several factors: fees and expenses related to the depository receipts; fluctuations in the exchange rate between the currency of the depository receipts and the currency of the foreign securities; differences in taxes between the jurisdiction of the depository receipts and that of the issuer of the foreign securities; and the impact of the tax treaty, if any, between the depository receipts and the foreign securities’ jurisdictions. Also, a fund faces the risks that depository receipts may be less liquid, that the holders of depository receipts may have fewer legal rights than if they held the foreign securities directly, and that the depository may change the terms of a depository receipt, including terminating the depository receipt, in such a way that a fund is forced to sell at an inopportune time. Derivatives Risk A derivative is a contract between two parties. The value of the contract is “derived” from the market price or value of an underlying asset, like currency or stock, or an economic indicator such as interest rates or stock market indices. ETF Risk A Fund may be exposed, either directly or indirectly, to exchange-traded funds (“ETFs”) that issue index participation units (each an “IPU”), as such term is defined by applicable mutual fund legislation. Generally, an ETF aims to track or replicate an index and such index may be based on equities, futures, bonds, commodities or currencies. The securities of ETFs are traded on a national securities
- exchange. ETFs do not sell individual securities directly to investors and generally will only issue their securities in large blocks known as “creation units.” The investor purchasing a creation unit may sell
the individual securities on a secondary market. Therefore, the liquidity of ETFs depends on the adequacy of the secondary market. There can be no assurance that an ETF’s investment objective will be achieved, as ETFs based on an index may not replicate and maintain exactly the composition and relative weightings of securities in the index. ETFs are subject to the risks of investing in the underlying
- securities. If an investment in an ETF is made, the applicable Fund, as a holder of the securities of the ETF, will bear its pro rata portion of the ETF’s expenses, including advisory fees. These expenses
are in addition to the direct expenses of the Fund’s own operations. FATCA Risk; Pursuant to the U.S. Foreign Account Tax Compliance Act (“FATCA”) and the Canada-US Intergovernmental Agreement (“IGA”), the Funds may be subject to a special U.S. withholding tax being imposed on U.S. and certain non-U.S. source income or on certain amounts paid by the Fund to certain unitholders. A Fund will not be subject to such taxes if the Fund registers with the U.S. Internal Revenue Agency and provides certain identity and residency information obtained from unitholders to the Canada Revenue Agency, which will in turn provide such information to the U.S. Internal Revenue Agency. No reporting is required in respect of Units held in a Registered Plan (defined below). If a Fund fails to comply with the information reporting requirements, it will be subject to the penalty provisions of the Tax Act (defined below). Any potential taxes or penalties associated with such reporting requirements and administrative costs arising from compliance with these rules may reduce the Fund’s returns to unitholders. Foreign Currency Risk A mutual fund, such as the Funds, that invest in foreign securities is vulnerable to foreign currency risk, which is the risk that the value of the Canadian dollar will change as measured against a foreign
- currency. For example, a security traded in U.S. dollars will fall in value, in Canadian dollar terms, if the U.S. dollar declines in value relative to the Canadian dollar, even though there is no change to the
U.S. dollar value of the security. Conversely, if the Canadian dollar falls in value relative to the U.S. dollar, there will be a corresponding gain in the value of the security due to the change in the exchange rate. These are only some of the risks of investing in Next Edge Theta Yield Fund. Please review the “Risk Factors” section of the Prospectus for a more complete description of the risks.
