Acacia Asset Management LLC: investment adviser

agency mortgage backed securities, and loans guaranteed by the Small Business Administration, among other fixed income securities, including use of repurchase and reverse-repurchase agreements (“repo”). Acacia provides advisory services to a private funding vehicle, organized as a limited liability company. The private funding vehicle serves as a ‘seed capital’ incubator/aggregator prior to the establishment of a series of actively managed exchange-traded funds (the “Incubator Fund”). It is anticipated that each such exchange-traded fund will be organized as an open-end registered investment company under the Investment Company Act of 1940 (the “IC Act”). For clarity, the Incubator Fund is not registered as an investment company under the IC Act. As of December 31, 2018, Acacia managed $100 million of assets and met the requirements to be registered as an investment adviser with the SEC.

Acacia periodically reviews trading frequency and portfolio turnover rates to identify possible patterns of “window dressing,” “portfolio churning,” or any intent to manipulate trading to boost performance near the reporting period.

Acacia educates our employees regarding the responsibilities of a fiduciary, including the need for having a reasonable and independent basis for the investment advice provided to clients and equitable treatment of all clients, regardless of the fee arrangement.

Acacia will maintain internal controls, guidelines, and eligibility requirements addressing financing counterparty credit ratings, exposure limits, risk limitations. Investment Risks The following is a discussion of certain risks involved in carrying out Acacia’s investment strategies on behalf of the Incubator Fund and does not represent a full accounting of all risks. Investors in the Incubator Fund should review the fund’s governing documents to understand all risks and potential conflicts of interest. All investment involves the risk of loss.

Liquidity Risk : Liquidity risk exists when particular investments are difficult to purchase or sell. Liquidity risk may also apply to collateral held on certain investments. This can reduce a portfolio’s returns because the portfolio may be unable to transact at advantageous times or prices.

Management Risk : The investment strategies, techniques and risk analyses employed, while designed to enhance returns, may not produce the desired results. The assessment of a particular security or assessment of market, interest rate or other trends could be incorrect, which can result in losses.

Counterparty Risk : A transaction entered into directly with a counterparty is subject to the risk that the counterparty will not settle the transaction in accordance with the agreed terms and conditions. A counterparty may become bankrupt or otherwise fail to perform its obligations due to financial difficulties, resulting in significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding or no recovery in such circumstances.

Lack of Operating Hist ory : Although Acacia’s investment personnel have prior experience with the instruments anticipated to be purchased for the Incubator Fund, the Incubator Fund has no operating history and no basis upon which an evaluation of its prospects can be made.

No Assurance of Returns : There is no assurance that the Incubator Fund will be able to generate returns for its investors or that the returns will be commensurate with the risks of investing in the types of companies and transactions described herein. There can be no assurance that the Incubator Fund’s investment objectives will be achieved or that there will be any return of capital. Therefore, an investor should only invest if the investor can withstand a total loss of its investment. The past investment performance of the investment person cannot be taken to guarantee future results of any investment in the Incubator Fund.

Fixed Income Securities : Fixed income securities are subject to interest rate risk and credit risk. Fixed income investments are subject to price fluctuations resulting from various factors, including rising or declining interest rates (interest rate risk). The value of a client account’s investments (other than an interest-only class of a collateralized obligation) tends to decrease when interest rates rise and tends to increase when interest rates fall. In addition, investments with longer maturities, which typically provide better yields, may subject an account to increased price changes resulting from market yield fluctuations. The value of fixed income securities is subject to the ability of the issuers of such securities to make payment at maturity (credit risk).

Income Risk : Acacia’s investment income may decline when interest rates fall because of its exposure to short duration securities.

Income Accumulation Risk : The instruments in which Acacia will invest are expected to pay interest income daily which Acacia will distribute monthly. Accordingly, during each calendar month, income will accrue. On the first day of each month, such interest income will be distributed by Acacia to investors. Acacia’s investments may not be appropriate for investors, who, for tax or other reasons, wish to avoid earning income.

Employees must have written clearance for transactions involving initial public offerings or limited offerings (i.e., private placements) before completing the transactions. Employees are prohibited from transacting in the purchase then subsequent sale, or sale then subsequent purchase, of the same (or similar) securities, or derivatives thereon, generally purchased by client accounts within 30 calendar days. Such limitation would include other mutual funds, closed-end funds, and/or exchange-traded funds that are similar in nature to Acacia’s investment strategy. Employees are required to quarterly report personal securities transactions and initially upon employment and annually thereafter all holdings in which the Employee maintains a beneficial interest. Employees are required to promptly report Code violations to the Acacia’s Chief Compliance Officer (“CCO”). Acacia endeavors to maintain current and accurate records of all personal securities accounts of its Employees in an effort to monitor all such activity. Certain transactions in which Acacia engages may require, for either business or legal reasons that no Employees trade in the subject securities for specified time periods. Such securities will appear on a list (the “Restricted List”) that will be circulated to all Employees. No Employee may engage in any sort of trading activity with respect to a security or a derivative thereof on the Restricted List without obtaining prior written approval from the CCO. A copy of the Code is available upon request by contacting the CCO listed on the cover page.

transactions. The criteria Acacia considers include counterparty risk, the broker-dealer’s record of timely and proper delivery of securities and payment for trades and the broker-dealer’s expertise in the types of securities traded. Soft Dollars Acacia does not participate in any soft dollar arrangements outside of receiving research available to other institutional investors. Research services received from brokers-dealers are supplemental to Acacia’s own research effort. To the best of Acacia’s knowledge, these services are generally made available to all institutional investors doing business with such broker-dealers. Acacia does not separately compensate such broker-dealers for the research and does not believe that it “paysup” for such broker-dealers’ services due to the difficulty associated with the broker-dealers not breaking out the costs for such services. Referrals Acacia will not consider whether we, or any of our related persons, receive referrals from a broker-dealer before selecting that broker-dealer to execute client transactions. Allocation and Aggregation Acacia seeks to allocate investment opportunities that it believes are appropriate for one or more of its clients equitably and consistent with the best interests of all clients involved, in light of each client’s general investment strategy and guidelines, including whether the client’s investment mandate specifically focuses on the type of investment opportunity presented, and any applicable regulatory considerations, as well as the nature of the investment opportunities. Acacia has adopted policies and procedures designed to ensure the fair and equitable allocation of such opportunities. Generally, Acacia will allocate investment opportunities based on a pro rata basis as determined by committed capital, with an allowance for available cash. Cross Trades Acacia may use an unaffiliated broker-dealer or custodian to cross investments and/or cash between clients when such a transaction is advantageous for each participant. However, no client accounts subject to ERISA may be included in any cross trade.

individually, as Acacia determines in its sole and absolute discretion. Acacia may refrain from voting if doing so would be in the client’s best interest. These circumstances may arise, for example, when the expected cost of voting exceeds the expected benefits of voting, (e.g., when exercising the vote results in the imposition of trading or other restrictions). In the event a client believes that its other interests require a different vote, Acacia will vote as the client clearly instructs, provided Acacia receives such instructions in time to act accordingly. As it pertains to proxy voting, a material conflict of interest is a relationship or activity engaged in by Acacia, an Acacia affiliate, or an Acacia associate that creates an incentive (or appearance thereof) to favor the interests of Acacia, the affiliate, or associate, rather than the clients’ interests. For example, Acacia may have a conflict of interest if either Acacia has a significant business relationship with a company that is soliciting a proxy, or if an Acacia associate involved in the proxy voting decision-making process has a significant personal or family relationship with the particular company. A conflict of interest is considered to be “material” to the extent that a reasonable person could expect the conflict to influence Acacia’s decision on the particular vote at issue. In all cases where there is deemed to be a material conflict of interest, Acacia will seek to resolve it in the clients’ best interests. Acacia seeks to avoid the occurrence of actual or apparent material conflicts of interest in the proxy voting process by voting in accordance with predetermined voting guidelines and observing other procedures that are intended to guard against and manage conflicts of interest. A copy of Acacia’s written proxy voting policies and procedures, as well as a record of how Acacia has voted in the past for the Incubator Fund, will be maintained and available for review upon written request. Acacia may determine whether clients will participate in a recovery achieve through a class action or opt out of the class action and separately pursue their own remedy. However, Acacia does not generally serve as the lead plaintiff in class actions.