STATEMENT OF ADDITIONAL INFORMATION (“SAI”) … · 2020. 9. 29. · Effective September 29,...

PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION (“SAI”) SUPPLEMENT

NORTHERN FUNDSGLOBAL TACTICAL ASSET ALLOCATION FUND

SUPPLEMENT DATED MAY 14, 2021 TOPROSPECTUS AND SAI DATED JULY 31, 2020,AS SUPPLEMENTED

Effective June 1, 2021, the portfolio managers for the Global TacticalAsset Allocation Fund (the “Fund”) are James D. McDonald,Executive Vice President of Northern Trust Investments, Inc.(“NTI”) and Daniel J. Phillips, CFA, Senior Vice President of NTI,who have been managers of the Fund (including the PredecessorFund) since July 2014 and April 2011, respectively.

Please retain this supplement with your Prospectus and SAI for future reference.

50 South LaSalle Street

P.O. Box 75986

Chicago, Illinois 60675-5986

800-595-9111

northerntrust.com/funds

MANAGED BY NF SPT GTAA PRO-SAI

(05/21)

STATEMENT OF ADDITIONAL INFORMATION (“SAI”) SUPPLEMENT

NORTHERN FUNDSFIXED INCOME FUNDS

SUPPLEMENT DATED MARCH 25, 2021 TOSAI DATED JULY 31, 2020, AS SUPPLEMENTED

Brandon P. Ferguson is no longer a portfolio manager of the Bond Index Fund and U.S.Treasury Index Fund (together, the “Funds”). Chaitanya Mandavakuriti, CFA, will joinKevin J. O’Shaughnessy, CFA, as a portfolio manager of the Bond Index Fund.Daniel J. Personette will join Michael R. Chico as a portfolio manager of the U.S. TreasuryIndex Fund. All references to Brandon P. Ferguson in the SAI are hereby deleted.Accordingly, the SAI is amended as follows:

1. The information for the Bond Index Fund and U.S. Treasury Index Fund in the tableunder the section entitled “PORTFOLIO MANAGERS” beginning on page 118 of theSAI is replaced with the following:

Portfolio Manager(s)

Bond Index Fund Kevin J. O’Shaughnessy and Chaitanya MandavakuritiU.S. Treasury Index Fund Michael R. Chico and Daniel J. Personette

2. The following information, as of February 28, 2021, with respect to Mr. Mandavakuriti isadded under the section entitled “PORTFOLIO MANAGERS – Accounts Managed by thePortfolio Managers” beginning on page 119 of the SAI:

The table below discloses the accounts within each type of category listed below forwhich Chaitanya Mandavakuriti* was jointly and primarily responsible for day-to-dayportfolio management as of February 28, 2021.

Type of Accounts

TotalNumber ofAccountsManaged

Total Assets(in Millions)

Number of AccountsManaged withAdvisory Fee

Based onPerformance

Total Assets withAdvisory Fee

Based onPerformance(in Millions)

Northern Funds: 0 $ 0 0 $0Other Registered Investment Companies: 0 0 0 0Other Pooled Investment Vehicles: 17 50,524 0 0Other Accounts: 6 2,092 0 0

* Mr. Mandavakuriti became a Portfolio Manager of the Bond Index Fund effective March 25, 2021.

3. The following information, as of February 28, 2021, with respect to Mr. Personettereplaces the previous disclosure under the section entitled “PORTFOLIO MANAGERS –Accounts Managed by the Portfolio Managers” on page 125:

The table below discloses the accounts within each type of category listed below forwhich Daniel J. Personette* was jointly and primarily responsible for day-to-dayportfolio management as of February 28, 2021.

Type of Accounts




Based onPerformance

Total Assets withAdvisory Fee

Based onPerformance(in Millions)

Northern Funds: 4 $1,198 0 $0Other Registered Investment Companies: 3 2,067 0 0Other Pooled Investment Vehicles: 4 7,395 0 0Other Accounts: 31 5,016 0 0

* Mr. Personette became a Portfolio Manager of the U.S. Treasury Index Fund effective March 25, 2021.

4. The following information, as of February 28, 2021, is added in the table under thesection entitled “PORTFOLIO MANAGERS – Disclosure of Securities Ownership”beginning on page 131:

Shares Beneficially Owned by Fund

Dollar ($) Range of Shares BeneficiallyOwned by Portfolio Manager Because

of Direct or Indirect Pecuniary Interest

Chaitanya Mandavakuriti† Bond Index Fund NoneDaniel J. Personette†† U.S. Treasury Index Fund None

† Mr. Mandavakuriti became a Portfolio Manager of the Bond Index Fund effective March 2021. Informationis shown as of February 28, 2021.

†† Mr. Personette became a Portfolio Manager of the U.S. Treasury Index Fund effective March 2021.Information is shown as of February 28, 2021.

Please retain this Supplement with your SAI for future reference.

50 South LaSalle StreetP.O. Box 75986Chicago, Illinois 60675-5986800-595-9111northerntrust.com/funds

MANAGED BY NF SPT SAI FIX (03/21)

STATEMENT OF ADDITIONAL INFORMATION (“SAI”) SUPPLEMENTNORTHERN FUNDSFIXED INCOME FUNDS

SUPPLEMENT DATED SEPTEMBER 29, 2020 TOSAI DATED JULY 31, 2020, AS SUPPLEMENTED

This supplement supersedes the SAI supplement dated September 18, 2020.

Effective September 29, 2020, Morten Olsen will join Daniel J. Personette as a portfoliomanager of the Core Bond Fund and Fixed Income Fund, and Benjamin J. McCubbin, CFAwill join Eric R. Williams as a portfolio manager of the High Yield Fixed Income Fund.Accordingly, the SAI is amended as follows:

1. The information for the Core Bond Fund, Fixed Income Fund and High Yield FixedIncome Fund in the table under the section entitled “PORTFOLIO MANAGERS”beginning on page 118 of the SAI is replaced with the following:

Portfolio Manager(s)

Core Bond Fund Daniel J. Personette and Morten OlsenFixed Income Fund Daniel J. Personette and Morten OlsenHigh Yield Fixed Income Fund Eric R. Williams and Benjamin J. McCubbin

2. The following information, as of August 31, 2020, with respect to Mr. McCubbin isadded under the section entitled “PORTFOLIO MANAGERS – Accounts Managed bythe Portfolio Managers” on page 119:

The table below discloses the accounts within each type of category listed below forwhich Benjamin J. McCubbin* was jointly and primarily responsible for day-to-dayportfolio management as of August 31, 2020.

Type of Accounts




Based onPerformance

Total Assetswith

Advisory FeeBased on

Performance(in Millions)

Northern Funds: 0 $0 0 $0Other Registered Investment Companies: 0 $0 0 $0Other Pooled Investment Vehicles: 0 $0 0 $0Other Accounts: 0 $0 0 $0

* Mr. McCubbin became a Portfolio Manager of the High Yield Fixed Income Fund effectiveSeptember 2020.

3. The following information, as of August 31, 2020, with respect to Mr. Olsen replaces theprevious disclosure under the section entitled “PORTFOLIO MANAGERS – AccountsManaged by the Portfolio Managers” on page 124:

The table below discloses the accounts within each type of category listed below forwhich Morten Olsen* was jointly and primarily responsible for day-to-day portfoliomanagement as of August 31, 2020.

Type of Accounts




Based onPerformance

Total Assetswith

Advisory FeeBased on

Performance(in Millions)

Northern Funds: 1 $3,248 0 $0Other Registered Investment Companies: 0 $ 0 0 $0Other Pooled Investment Vehicles: 0 $ 0 0 $0Other Accounts: 13 $3,162 0 $0

* Mr. Olsen became a Portfolio Manager of the Core Bond Fund and Fixed Income Fundeffective September 2020.

4. The following information is added in the table under the section entitled “PORTFOLIOMANAGERS – Disclosure of Securities Ownership” beginning on page 131:

Shares Beneficially Owned by

Dollar ($) Range of Shares BeneficiallyOwned by Portfolio Manager Because

of Direct or Indirect Pecuniary Interest

Benjamin J. McCubbin*** High Yield Fixed Income Fund NoneMorten Olsen**** Core Bond Fund NoneMorten Olsen**** Fixed Income Fund None

*** Mr. McCubbin became a Portfolio Manager of the High Yield Fixed Income Fundeffective September 2020. Information is shown as of August 31, 2020.

**** Mr. Olsen became a Portfolio Manager of the Core Bond Fund and Fixed Income Fundeffective September 2020. Information is shown as of August 31, 2020.

Please retain this Supplement with your SAI for future reference.

50 South LaSalle StreetP.O. Box 75986Chicago, Illinois 60675-5986800-595-9111northerntrust.com/funds

MANAGED BY NF SPT SAI FIX (9/20)

NORTHERN FUNDS

(THE “TRUST”)

PART B

STATEMENT OF ADDITIONAL INFORMATION

July 31, 2020

EQUITY FUNDSGLOBAL TACTICAL ASSET ALLOCATION FUND (BBALX)INCOME EQUITY FUND (NOIEX)INTERNATIONAL EQUITY FUND (NOIGX)LARGE CAP CORE FUND (NOLCX)LARGE CAP VALUE FUND (NOLVX)SMALL CAP VALUE FUND (NOSGX)

EQUITY INDEX FUNDSEMERGING MARKETS EQUITY INDEX FUND (NOEMX)GLOBAL REAL ESTATE INDEX FUND (NGREX)INTERNATIONAL EQUITY INDEX FUND (NOINX)MID CAP INDEX FUND (NOMIX)SMALL CAP INDEX FUND (NSIDX)STOCK INDEX FUND (NOSIX)

FIXED INCOME FUNDSBOND INDEX FUND (NOBOX)CORE BOND FUND (NOCBX)FIXED INCOME FUND (NOFIX)HIGH YIELD FIXED INCOME FUND (NHFIX)SHORT BOND FUND (BSBAX)SHORT-INTERMEDIATE U.S. GOVERNMENT FUND (NSIUX)TAX-ADVANTAGED ULTRA-SHORT FIXED INCOME FUND (NTAUX)ULTRA-SHORT FIXED INCOME FUND (NUSFX)U.S. GOVERNMENT FUND (NOUGX)U.S. TREASURY INDEX FUND (BTIAX)

TAX-EXEMPT FIXED INCOME FUNDSARIZONA TAX-EXEMPT FUND (NOAZX)CALIFORNIA INTERMEDIATE TAX-EXEMPT FUND (NCITX)CALIFORNIA TAX-EXEMPT FUND (NCATX)HIGH YIELD MUNICIPAL FUND (NHYMX)INTERMEDIATE TAX-EXEMPT FUND (NOITX)SHORT-INTERMEDIATE TAX-EXEMPT FUND (NSITX)TAX-EXEMPT FUND (NOTEX)

This Statement of Additional Information dated July 31, 2020 (the “SAI”) is not a prospectus. This SAIshould be read in conjunction with the Prospectuses dated July 31, 2020, as amended or supplemented from timeto time (the “Prospectuses”), for the Arizona Tax-Exempt Fund, Bond Index Fund, California IntermediateTax-Exempt Fund, California Tax-Exempt Fund, Core Bond Fund, Emerging Markets Equity Index Fund, FixedIncome Fund, Global Real Estate Index Fund, Global Tactical Asset Allocation Fund, High Yield Fixed IncomeFund, High Yield Municipal Fund, Income Equity Fund, International Equity Index Fund, IntermediateTax-Exempt Fund, International Equity Fund, Large Cap Core Fund, Large Cap Value Fund, Mid Cap IndexFund, Short Bond Fund, Short-Intermediate Tax-Exempt Fund, Short-Intermediate U.S. Government Fund, SmallCap Index Fund, Small Cap Value Fund, Stock Index Fund, Tax-Advantaged Ultra-Short Fixed Income Fund,Tax-Exempt Fund, Ultra-Short Fixed Income Fund, U.S. Government Fund and U.S. Treasury Index Fund (eacha “Fund” and collectively, the “Funds”) of Northern Funds. Copies of the Prospectuses may be obtained withoutcharge from the Trust’s transfer agent, The Northern Trust Company (in such capacity, the “Transfer Agent”) bywriting to the Northern Funds Center, P.O. Box 75986, Chicago, Illinois 60675-5986 or by calling 800-595-9111.Capitalized terms not otherwise defined have the same meaning as in the Prospectuses.

The audited financial statements for the Funds and related reports of Deloitte & Touche LLP, anindependent registered public accounting firm, contained in the annual reports to the Funds’ shareholders for thefiscal year ended March 31, 2020, are incorporated herein by reference in the section entitled “FinancialStatements.” No other parts of the annual reports are incorporated by reference herein. Copies of the annual andsemi-annual reports may be obtained upon request and without charge by calling 800-595-9111 (toll-free).

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANYREPRESENTATIONS NOT CONTAINED IN THIS SAI OR IN THE PROSPECTUSES IN CONNECTIONWITH THE OFFERING MADE BY THE PROSPECTUSES AND, IF GIVEN OR MADE, SUCHINFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEENAUTHORIZED BY THE TRUST OR ITS DISTRIBUTOR. THE PROSPECTUSES DO NOT CONSTITUTEAN OFFERING BY THE TRUST OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCHOFFERING MAY NOT LAWFULLY BE MADE.

An investment in a Fund is not a deposit of any bank and is not insured or guaranteed by the Federal DepositInsurance Corporation (“FDIC”), any other government agency or The Northern Trust Company (“TNTC”), itsaffiliates, subsidiaries or any other bank. An investment in a Fund involves investment risks, including possibleloss of principal.

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INDEX

Page

ADDITIONAL INVESTMENT INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Classification and History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Investment Objectives and Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Special Risk Factors and Considerations Relating to California Municipal Instruments and Arizona

Municipal Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65California Municipal Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66Arizona Municipal Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74Other Information on California and Arizona Municipal Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . 76Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76Disclosure of Portfolio Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

ADDITIONAL TRUST INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82Trustees and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82Leadership Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89Risk Oversight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90Trustee Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91Standing Board Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93Trustee Ownership of Fund Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94Trustee and Officer Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95Code of Ethics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98Investment Adviser, Transfer Agent and Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98Brokerage Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107Portfolio Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118Proxy Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135Service Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135Counsel and Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136In-Kind Purchases and Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137Redemption Fees and Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137Automatic Investing Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137Directed Reinvestments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137Redemptions and Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138Retirement Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138

PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143

NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147

TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149Federal—General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149Federal—Tax-Exempt Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151State and Local Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152Special State Tax Considerations Pertaining to the California Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . 153Special State Tax Considerations Pertaining to the Arizona Tax-Exempt Fund . . . . . . . . . . . . . . . . . . . 154Foreign Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154Qualified Dividend Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155Corporate Dividends Received Deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155Taxation of Income from Certain Financial Instruments and PFICs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155Investments in Real Estate Investment Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155Taxation of Non-U.S. Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157

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Page

DESCRIPTION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166

OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167

APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

APPENDIX B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1

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ADDITIONAL INVESTMENT INFORMATION

CLASSIFICATION AND HISTORY

The Trust is an open-end management investment company. Each Fund is classified as diversified under theInvestment Company Act of 1940, as amended (the “1940 Act”), except the Arizona Tax-Exempt Fund,California Intermediate Tax-Exempt Fund and California Tax-Exempt Fund, which are classified asnon-diversified.

Each Fund is a series of the Trust that was formed as a Delaware statutory trust on February 7, 2000 underan Agreement and Declaration of Trust, as amended (the “Trust Agreement”). The Trust also offers other funds,including multi-manager and money market funds, which are not described in this SAI.

INVESTMENT OBJECTIVES AND STRATEGIES

The following supplements the investment objectives, strategies and risks of the Funds as set forth in theProspectuses. The investment objective of each Fund may be changed by the Board of Trustees of the Trust (the“Board”) without shareholder approval. Except as expressly noted below, each Fund’s investment strategies maybe changed without shareholder approval. In addition to the instruments discussed below and in the Prospectuses,each Fund may purchase other types of financial instruments, however designated, whose investment and creditquality characteristics are determined by Northern Trust Investments, Inc. (“NTI” or the “Investment Adviser,”and collectively with TNTC, “Northern Trust”) to be substantially similar to those of any other investmentotherwise permitted by a Fund’s investment strategies.

With respect to the Income Equity Fund, International Equity Fund, Large Cap Core Fund, Large Cap ValueFund, Small Cap Value Fund, Emerging Markets Equity Index Fund, Global Real Estate Index Fund, InternationalEquity Index Fund, Mid Cap Index Fund, Small Cap Index Fund, Stock Index Fund, Bond Index Fund, Core BondFund, Fixed Income Fund, High Yield Fixed Income Fund, Short Bond Fund, Short-Intermediate U.S.Government Fund, Tax-Advantaged Ultra-Short Fixed Income Fund, Ultra-Short Fixed Income Fund, U.S.Government Fund and U.S. Treasury Index Fund, to the extent required by Securities and Exchange Commission(“SEC”) regulations, shareholders of each Fund will be provided with sixty days’ notice in the manner prescribedby the SEC before any change in a Fund’s policy stated in the respective Prospectus to invest at least 80% of itsnet assets in the particular type of investment suggested by its name. With respect to the Arizona Tax-ExemptFund, California Intermediate Tax-Exempt Fund, California Tax-Exempt Fund, High Yield Municipal Fund,Intermediate Tax-Exempt Fund, Short-Intermediate Tax-Exempt Fund and Tax-Exempt Fund, each such Fund’spolicy to invest at least 80% of its net assets in tax-exempt investments as described are fundamental policies thatmay not be changed without shareholder approval. For these purposes, “net assets” include the amount of anyborrowings for investment purposes and the amount of “net assets” is measured at the time of purchase.

EQUITY FUNDS—Global Tactical Asset Allocation Fund, Income Equity Fund, International EquityFund, Large Cap Core Fund, Large Cap Value Fund and Small Cap Value Fund (collectively, the “Equity Funds”and each an “Equity Fund”)

Global Tactical Asset Allocation Fund invests primarily in shares of a combination of underlying mutualfunds and exchange-traded funds (“ETFs”) to which NTI, the Fund’s investment adviser, or an affiliate acts as aninvestment adviser. The Fund also may invest in other unaffiliated mutual funds and ETFs (together, withaffiliated underlying funds and ETFs, the “Underlying Funds”), and other securities and investments not issuedby mutual funds. Unless otherwise noted, any reference to the Global Tactical Asset Allocation Fund or to theFunds generally shall be inclusive of both the Global Tactical Asset Allocation Fund and Underlying Funds.

The Global Tactical Asset Allocation Fund will be diversified among a number of asset classes, and itsallocation will be based on an asset allocation framework developed by the Investment Policy Committee of

5

Northern Trust. The Fund intends to invest indirectly, through Underlying Funds, in equity and fixed-incomesecurities of both U.S. and non-U.S. corporate and governmental issuers. The asset classes in which the Fundinvests include but are not limited to small-, mid- and large-capitalization common stocks; real estate securities;commodity-related securities; securities of foreign issuers, including emerging markets; and fixed-incomesecurities, including high yield securities and money market instruments. The Fund also may invest directly inequity and fixed-income securities and money market instruments. In addition, the Fund also may invest directlyin derivatives, including but not limited to forward currency exchange contracts, futures contracts and options onfutures contracts, for hedging purposes.

Under normal market conditions, the Global Tactical Asset Allocation Fund will invest significantly infunds that invest in companies that are located, headquartered, incorporated or otherwise organized outside of theUnited States as represented in either the MSCI EAFESM Index, MSCI Emerging Markets® Index or otherdiversified foreign indices. The Fund expects its foreign investments to be allocated among Underlying Fundsthat are diversified among various regions, countries, including the United States (but in no less than threedifferent countries), industries and capitalization ranges. The Fund may invest in Underlying Funds that invest inequity and debt of issuers in both developed and emerging markets.

Income Equity Fund seeks to achieve its investment objective by investing, under normal circumstances, atleast 80% of its net assets in income-producing equity securities, including dividend-paying common andpreferred stocks and convertible securities. The Income Equity Fund also may invest up to 20% of its net assetsin a broad range of non-convertible fixed-income securities without limitation as to maturity. The Income EquityFund seeks to provide a high level of current income relative to other mutual funds that invest in equitysecurities.

International Equity Fund seeks to achieve its investment objective by investing, under normalcircumstances, at least 80% of its net assets in equity securities. The International Equity Fund intends to investin the securities of companies located in a number of countries throughout the world. These companies generallyhave market capitalizations in excess of $1 billion.

Large Cap Core Fund seeks to achieve its investment objective by investing, under normal circumstances, atleast 80% of its net assets in a broadly diversified portfolio of equity securities in large capitalization U.S.companies, including foreign issuers that are traded in the U.S. Large capitalization companies generally areconsidered to be those whose market capitalization is, at the time the Fund makes an investment, within the rangeof the market capitalization of the companies in the Russell 1000® Index.

Large Cap Value Fund seeks to achieve its investment objective by investing, under normal circumstances,at least 80% of its net assets in equity securities of large capitalization companies. Large capitalizationcompanies generally are considered to be those whose market capitalization is, at the time the Fund makes aninvestment, within the range of the market capitalization of the companies in the Russell 1000® Value Index.

Small Cap Value Fund seeks to achieve its investment objective by investing, under normal circumstances,at least 80% of its net assets in equity securities of small capitalization companies. Small capitalizationcompanies generally are considered to be those whose market capitalization is, at the time the Fund makes aninvestment, within the range of the market capitalization of companies in the Russell 2000® Value Index.

EQUITY INDEX FUNDS—Emerging Markets Equity Index Fund, Global Real Estate Index Fund,International Equity Index Fund, Mid Cap Index Fund, Small Cap Index Fund and Stock Index Fund(collectively, the “Equity Index Funds” and each an “Equity Index Fund”)

Emerging Markets Equity Index Fund seeks to achieve its investment objective by investing, under normalcircumstances, substantially all (and at least 80%) of its net assets in equity securities, in weightings thatapproximate the relative composition of the securities included in the MSCI Emerging Markets® Index, in

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American Depository Receipts (“ADRs”), European Depository Receipts (“EDRs”), and Global DepositoryReceipts (“GDRs”) representing such securities, and in MSCI Emerging Markets Index futures approved by theCommodity Futures Trading Commission (“CFTC”).

Global Real Estate Index Fund seeks to achieve its investment objective by investing, under normalcircumstances, substantially all (and at least 80%) of its net assets in equity securities included in the MSCI®

ACWI® IMI Core Real Estate Index, in weightings that approximate the relative composition of the securitiescontained in the MSCI® ACWI® IMI Core Real Estate Index. Companies included in the MSCI® ACWI® IMICore Real Estate Index, are engaged principally in real estate activities, including ownership, development andmanagement of specific core property type real estate.

International Equity Index Fund seeks to achieve its investment objective by investing, under normalcircumstances, substantially all (and at least 80%) of its net assets in equity securities included in the MSCIEAFE® Index, in weightings that approximate the relative composition of the securities contained in the MSCIEAFE Index, and in MSCI EAFE Index futures approved by the CFTC.

Mid Cap Index Fund seeks to achieve its investment objective by investing, under normal circumstances,substantially all (and at least 80%) of its net assets in equity securities included in the Standard & Poor’s MidCap400® Composite Stock Price Index (“S&P MidCap 400 Index”), in weightings that approximate the relativecomposition of securities contained in the S&P MidCap 400 Index, and in S&P MidCap 400 Index futuresapproved by the CFTC.

Small Cap Index Fund seeks to achieve its investment objective by investing, under normal circumstances,substantially all (and at least 80%) of its net assets in equity securities included in the Russell 2000® Index, inweightings that approximate the relative composition of securities contained in the Russell 2000 Index, and inRussell 2000 Index futures approved by the CFTC.

Stock Index Fund seeks to achieve its investment objective by investing, under normal circumstances,substantially all (and at least 80%) of its net assets in equity securities included in the Standard & Poor’s 500®

Index (“S&P 500 Index”), in weightings that approximate the relative composition of the securities contained inthe S&P 500 Index, and in S&P 500 Index futures approved by the CFTC.

FIXED INCOME FUNDS—Bond Index Fund, Core Bond Fund, Fixed Income Fund, High Yield FixedIncome Fund, Short Bond Fund, Short-Intermediate U.S. Government Fund, Tax-Advantaged Ultra-Short FixedIncome Fund, Ultra-Short Fixed Income Fund, U.S. Government Fund and U.S. Treasury Index Fund(collectively, the “Fixed Income Funds” and each a “Fixed Income Fund”)

Bond Index Fund seeks to achieve its investment objective by investing, under normal circumstances,substantially all (and at least 80%) of its net assets in bonds and other fixed-income securities included in theBloomberg Barclays U.S. Aggregate Bond Index in weightings that approximate the relative composition ofsecurities contained in the Index. The Fund will maintain a dollar-weighted average maturity consistent with theIndex, which currently has a range of between five to ten years.

Core Bond Fund seeks to achieve its investment objective by investing, under normal circumstances, at least80% of its net assets in bonds and other fixed-income securities. The Fund’s dollar-weighted average maturity,under normal circumstances, will range between three and fifteen years.

Fixed Income Fund seeks to achieve its investment objective by investing, under normal circumstances, atleast 80% of its net assets in bonds and other fixed-income securities. The Fund’s dollar-weighted averagematurity, under normal circumstances, will range between three and fifteen years.

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High Yield Fixed Income Fund seeks to achieve its investment objective by investing, under normalcircumstances, at least 80% of its net assets in lower quality bonds and other fixed-income securities (commonlyreferred to as “junk bonds”).

Short Bond Fund seeks to achieve its investment objective by investing, under normal circumstances, atleast 80% of its net assets in bonds and other fixed-income securities. The Fund’s dollar-weighted averagematurity, under normal circumstances, will range between one and three years.

Short-Intermediate U.S. Government Fund seeks to achieve its investment objective by investing, undernormal circumstances, at least 80% of its net assets in securities issued or guaranteed by the U.S. government orby its agencies, instrumentalities or sponsored enterprises and repurchase agreements relating to such securities.The Fund’s dollar-weighted average maturity, under normal circumstances, will range between two and five years.

Tax-Advantaged Ultra-Short Fixed Income Fund seeks to achieve its investment objective by investingprimarily (and not less than 80% of its net assets) in fixed-income securities. The Fund’s dollar-weighted averagematurity, under normal circumstances, will range between six and eighteen months.

Ultra-Short Fixed Income Fund seeks to achieve its investment objective by investing primarily (and notless than 80% of its net assets) in fixed-income securities. The Fund’s dollar-weighted average maturity, undernormal circumstances, will range between six and eighteen months.

U.S. Government Fund seeks to achieve its investment objective by investing, under normal circumstances,at least 80% of its net assets in securities issued or guaranteed by the U.S. government or by its agencies,instrumentalities or sponsored enterprises and repurchase agreements relating to such securities. The Fund’sdollar-weighted average maturity, under normal circumstances, will range between one and ten years.

U.S. Treasury Index Fund seeks to achieve its investment objective by investing, under normalcircumstances, substantially all (and at least 80%) of its net assets in a representative sample of the U.S. Treasuryobligations included in the Bloomberg Barclays U.S. Treasury Index. The Fund will buy and sell securities withthe goal of achieving an overall duration and total return similar to that of the Bloomberg Barclays U.S. TreasuryIndex.

TAX-EXEMPT FUNDS—Arizona Tax-Exempt Fund, California Intermediate Tax-Exempt Fund,California Tax-Exempt Fund, High Yield Municipal Fund, Intermediate Tax-Exempt Fund, Short-IntermediateTax-Exempt Fund and Tax-Exempt Fund (collectively, the “Tax-Exempt Funds” and each a “Tax-ExemptFund”)

Arizona Tax-Exempt Fund seeks to achieve its investment objective by investing in municipal instruments.A municipal instrument is a fixed-income obligation issued by a state, territory and possession of the UnitedStates (including the District of Columbia) or a political subdivision, agency and instrumentality thereof. Interestincome received by holders of municipal instruments is often exempt from the federal income tax and from theincome tax of the state in which they are issued, although municipal instruments issued for certain purposes maynot be tax exempt. The Fund’s dollar-weighted average maturity, under normal circumstances, will rangebetween ten and thirty years.

California Intermediate Tax-Exempt Fund seeks to achieve its investment objective by investing inmunicipal instruments. A municipal instrument is a fixed-income obligation issued by a state, territory andpossession of the United States (including the District of Columbia) or a political subdivision, agency andinstrumentality thereof. Interest income received by holders of municipal instruments is often exempt from thefederal income tax and from the income tax of the state in which they are issued, although municipal instrumentsissued for certain purposes may not be tax exempt. The Fund’s dollar-weighted average maturity, under normalcircumstances, will range between three and ten years.

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California Tax-Exempt Fund seeks to achieve its investment objective by investing in municipalinstruments. A municipal instrument is a fixed-income obligation issued by a state, territory and possession of theUnited States (including the District of Columbia) or a political subdivision, agency and instrumentality thereof.Interest income received by holders of municipal instruments is often exempt from the federal income tax andfrom the income tax of the state in which they are issued, although municipal instruments issued for certainpurposes may not be tax exempt. The Fund’s dollar-weighted average maturity, under normal circumstances, willrange between ten and thirty years.

High Yield Municipal Fund seeks to achieve its investment objective by investing, under normalcircumstances, at least 65% of its net assets in rated and unrated municipal instruments that are of low quality(commonly referred to as “junk bonds”) or medium or upper medium quality. A municipal instrument is a fixed-income obligation issued by a state, territory and possession of the United States (including the District ofColumbia) or a political subdivision, agency and instrumentality thereof. Interest income received by holders ofmunicipal instruments is often exempt from the federal income tax and from the income tax of the state in whichthey are issued, although municipal instruments issued for certain purposes may not be tax exempt.

Intermediate Tax-Exempt Fund seeks to achieve its investment objective by investing in municipalinstruments. A municipal instrument is a fixed-income obligation issued by a state, territory and possession of theUnited States (including the District of Columbia) or a political subdivision, agency and instrumentality thereof.Interest income received by holders of municipal instruments is often exempt from the federal income tax andfrom the income tax of the state in which they are issued, although municipal instruments issued for certainpurposes may not be tax exempt. The Fund’s dollar-weighted average maturity, under normal circumstances, willrange between three and ten years.

Short-Intermediate Tax-Exempt Fund seeks to achieve its investment objective by investing in municipalinstruments. A municipal instrument is a fixed-income obligation issued by a state, territory and possession of theUnited States (including the District of Columbia) or a political subdivision, agency and instrumentality thereof.Interest income received by holders of municipal instruments is often exempt from the federal income tax andfrom the income tax of the state in which they are issued, although municipal instruments issued for certainpurposes may not be tax exempt. The Fund’s dollar-weighted average maturity, under normal circumstances, willrange from at least one year to less than six years.

Tax-Exempt Fund seeks to achieve its investment objective by investing in a broad range of municipalinstruments. A municipal instrument is a fixed-income obligation issued by a state, territory and possession of theUnited States (including the District of Columbia) or a political subdivision, agency and instrumentality thereof.Interest income received by holders of municipal instruments is often exempt from the federal income tax andfrom the income tax of the state in which they are issued, although municipal instruments issued for certainpurposes may not be tax exempt. The Fund’s dollar-weighted average maturity, under normal circumstances, willrange between ten and thirty years.

With respect to the municipal instruments held by any of the Tax-Exempt Funds, it should be noted that onDecember 22, 2017, the President signed into law H.R. 1, originally known as the “Tax Cuts and Jobs Act” (the“2017 Act”). Under the 2017 Act, the rules related to credit tax bonds and the exclusion from gross income forinterest on a bond issued to advance refund another bond were repealed and related interest will not be exemptfrom federal income tax for such bonds issued after December 31, 2017.

ASSET-BACKED (INCLUDING MORTGAGE-BACKED) SECURITIES. To the extent consistentwith their investment objectives and strategies, the Funds may purchase asset-backed securities, which aresecurities backed by mortgages, installment contracts, credit card receivables, municipal securities or otherfinancial assets. The investment characteristics of asset-backed securities differ from those of traditional fixed-income securities. Asset-backed securities represent interests in “pools” of assets in which payments of bothinterest and principal on the securities are made periodically, thus in effect “passing through” such payments

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made by the individual borrowers on the assets that underlie the securities, net of any fees paid to the issuer orguarantor of the securities. The average life of asset-backed securities varies with the maturities of the underlyinginstruments, and the average life of a mortgage-backed instrument, in particular, is likely to be substantially lessthan the original maturity of the mortgage pools underlying the securities as a result of mortgage prepayments.For this and other reasons, an asset-backed security normally is subject to both call risk and extension risk, andan asset-backed security’s stated maturity may be shortened. In addition, the security’s total return may bedifficult to predict precisely. These differences can result in significantly greater price and yield volatility than isthe case with traditional fixed-income securities.

If an asset-backed security is purchased at a premium, a prepayment rate that is faster than expected willreduce yield to maturity, while a prepayment rate that is slower than expected will have the opposite effect ofincreasing yield to maturity.

Conversely, if an asset-backed security is purchased at a discount, faster than expected prepayments willincrease, while slower than expected prepayments will decrease, yield to maturity. In calculating a Fixed IncomeFund’s average weighted maturity, the maturity of asset-backed securities will be based on estimates of averagelife. Prepayments on asset-backed securities generally increase with falling interest rates and decrease with risinginterest rates; furthermore, prepayment rates are influenced by a variety of economic and social factors. Ingeneral, the collateral supporting non-mortgage asset-backed securities is of shorter maturity than mortgage loansand is less likely to experience substantial prepayments.

Asset-backed securities acquired by certain Funds may include collateralized mortgage obligations(“CMOs”). CMOs provide the holder with a specified interest in the cash flow of a pool of underlying mortgagesor other mortgage-backed securities. Issuers of CMOs ordinarily elect to be taxed as pass-through entities knownas real estate mortgage investment conduits (“REMICs”). CMOs are issued in multiple classes, each with aspecified fixed or floating interest rate and a final distribution date. The relative payment rights of the variousCMO classes may be structured in a variety of ways, and normally are considered derivative securities. In somecases, CMOs may be highly leveraged and very speculative. While the Funds will not purchase “residual” CMOinterests, which normally exhibit greater price volatility, unaffiliated Underlying Funds held by the GlobalTactical Asset Allocation Fund may purchase “residual” CMO interests.

There are a number of important differences among the agencies, instrumentalities and sponsoredenterprises of the U.S. government that issue mortgage-related securities and among the securities that they issue.Mortgage-related securities guaranteed by the Government National Mortgage Association (“Ginnie Mae”)include Ginnie Mae Mortgage Pass-Through Certificates, which are guaranteed as to the timely payment ofprincipal and interest by Ginnie Mae and backed by the full faith and credit of the United States, which meansthat the U.S. government guarantees that the interest and principal will be paid when due. Ginnie Mae is awholly-owned U.S. government corporation within the Department of Housing and Urban Development. GinnieMae certificates also are supported by the authority of Ginnie Mae to borrow funds from the U.S. Treasury tomake payments under its guarantee.

Mortgage-backed securities issued by the Federal National Mortgage Association (“Fannie Mae”) includeFannie Mae Guaranteed Mortgage Pass-Through Certificates, which are solely the obligations of Fannie Mae andare not backed by or entitled to the full faith and credit of the United States, except as described below, but aresupported by the right of the issuer to borrow from the U.S. Treasury. Fannie Mae is a stockholder-ownedcorporation chartered under an Act of the U.S. Congress. Fannie Mae certificates are guaranteed as to timelypayment of the principal and interest by Fannie Mae. Mortgage-related securities issued by the Federal HomeLoan Mortgage Corporation (“Freddie Mac”) include Freddie Mac Mortgage Participation Certificates. FreddieMac is a corporate instrumentality of the United States, created pursuant to an Act of Congress. Freddie Maccertificates are not guaranteed by the United States or by any Federal Home Loan Banks and do not constitute adebt or obligation of the United States or of any Federal Home Loan Bank. Freddie Mac certificates entitle theholder to timely payment of interest, which is guaranteed by Freddie Mac. Freddie Mac guarantees either

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ultimate collection or timely payment of all principal payments on the underlying mortgage loans. When FreddieMac does not guarantee timely payment of principal, Freddie Mac may remit the amount due on account of itsguarantee of ultimate payment of principal after default.

From time to time, proposals have been introduced before Congress for the purpose of restricting oreliminating federal sponsorship of Fannie Mae and Freddie Mac. The Trust cannot predict what legislation, ifany, may be proposed in the future in Congress with regard to such sponsorship or which proposals, if any, mightbe enacted. Such proposals, if enacted, might materially and adversely affect the availability of governmentguaranteed mortgage-backed securities and the Funds’ liquidity and value.

There is risk that the U.S. government will not provide financial support to its agencies, authorities,instrumentalities or sponsored enterprises. A Fund may purchase U.S. government securities that are not backedby the full faith and credit of the United States, such as those issued by Fannie Mae and Freddie Mac. Themaximum potential liability of the issuers of some U.S. government securities held by a Fund may greatly exceedtheir current resources, including their legal right to support from the U.S. Treasury. It is possible that theseissuers will not have the funds to meet their payment obligations in the future.

The volatility and disruption that impacted the capital and credit markets during late 2008 and into 2009have led to increased market concerns about Freddie Mac’s and Fannie Mae’s ability to withstand future creditlosses associated with securities held in their investment portfolios, and on which they provide guarantees,without the direct support of the federal government. On September 7, 2008, both Freddie Mac and Fannie Maewere placed under the conservatorship of the Federal Housing Finance Agency (“FHFA”).

Under the plan of conservatorship, the FHFA has assumed control of, and generally has the power to direct,the operations of Freddie Mac and Fannie Mae, and is empowered to exercise all powers collectively held bytheir respective shareholders, directors and officers, including the power to: (1) take over the assets of andoperate Freddie Mac and Fannie Mae with all the powers of the shareholders, the directors, and the officers ofFreddie Mac and Fannie Mae and conduct all business of Freddie Mac and Fannie Mae; (2) collect all obligationsand money due to Freddie Mac and Fannie Mae; (3) perform all functions of Freddie Mac and Fannie Mae thatare consistent with the conservator’s appointment; (4) preserve and conserve the assets and property of FreddieMac and Fannie Mae; and (5) contract for assistance in fulfilling any function, activity, action or duty of theconservator. In addition, in connection with the actions taken by the FHFA, the U.S. Treasury Department (the“Treasury”) entered into certain preferred stock purchase agreements with each of Freddie Mac and Fannie Mae,which established the Treasury as the holder of a new class of senior preferred stock in each of Freddie Mac andFannie Mae, which stock was issued in connection with financial contributions from the Treasury to Freddie Macand Fannie Mae.

The conditions attached to the financial contribution made by the Treasury to Freddie Mac and Fannie Maeand the issuance of this senior preferred stock placed significant restrictions on the activities of Freddie Mac andFannie Mae. Freddie Mac and Fannie Mae must obtain the consent of the Treasury to, among other things:(i) make any payment to purchase or redeem its capital stock or pay any dividend other than in respect of thesenior preferred stock issued to the Treasury, (ii) issue capital stock of any kind, (iii) terminate theconservatorship of the FHFA except in connection with a receivership, or (iv) increase its debt beyond certainspecified levels. In addition, significant restrictions were placed on the maximum size of each of Freddie Mac’sand Fannie Mae’s respective portfolios of mortgages and mortgage-backed securities, and the purchaseagreements entered into by Freddie Mac and Fannie Mae provide that the maximum size of their portfolios ofthese assets must decrease by a specified percentage each year. The future status and role of Freddie Mac andFannie Mae could be impacted by (among other things): the actions taken and restrictions placed on Freddie Macand Fannie Mae by the FHFA in its role as conservator; the restrictions placed on Freddie Mac’s and FannieMae’s operations and activities as a result of the senior preferred stock investment made by the Treasury; marketresponses to developments at Freddie Mac and Fannie Mae; and future legislative and regulatory action that

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alters the operations, ownership, structure and/or mission of these institutions, each of which may, in turn, impactthe value of, and cash flows on, any mortgage-backed securities guaranteed by Freddie Mac and Fannie Mae,including any such mortgage-backed securities held by the Funds.

Under the FHFA’s “Single Security Initiative,” Fannie Mae and Freddie Mac have entered into a jointinitiative to develop a common securitization platform for the issuance of Uniform Mortgage-Backed Securities(“UMBS”), which would generally align the characteristics of Fannie Mae and Freddie Mac participationcertificates. In June 2019 Fannie Mae and Freddie Mac began issuing UMBS in place of their current offerings of“to be announced”-eligible mortgage-backed securities. The effect of the issuance of UMBS on the market formortgage-backed securities is uncertain.

Mortgage- and asset-backed securities are also subject to the risk of default on the underlying mortgage orasset, particularly during periods of economic downturn. Any economic downturn could increase the risk thatsuch assets underlying asset-backed securities purchased by the Funds will also suffer greater levels of defaultthan were historically experienced.

In addition, privately issued mortgage-backed securities (as well as other types of asset-backed securities)do not have the backing of any U.S. government agency, instrumentality or sponsored enterprise. The seller orservicer of the underlying mortgage obligations generally will make representations and warranties to certificate-holders as to certain characteristics of the mortgage loans and as to the accuracy of certain information furnishedto the trustee in respect of each such mortgage loan. Upon a breach of any representation or warranty thatmaterially and adversely affects the interests of the related certificate-holders in a mortgage loan, the seller orservicer generally will be obligated either to cure the breach in all material respects, to repurchase the mortgageloan or, if the related agreement so provides, to substitute in its place a mortgage loan pursuant to the conditionsset forth therein. Such a repurchase or substitution obligation may constitute the sole remedy available to therelated certificate-holders or the trustee for the material breach of any such representation or warranty by theseller or servicer. To provide additional investor protection, some mortgage-backed securities may have varioustypes of credit enhancements, reserve funds, subordination provisions or other features.

Non-mortgage asset-backed securities involve certain risks that are not presented by mortgage-backedsecurities. Primarily, these securities do not have the benefit of the same security interest in the underlyingcollateral. Credit card receivables generally are unsecured and the debtors are entitled to the protection of anumber of state and federal consumer credit laws, many of which have given debtors the right to set off certainamounts owed on the credit cards, thereby reducing the balance due. Most issuers of automobile receivablespermit the servicers to retain possession of the underlying obligations. If the servicer were to sell theseobligations to another party, there is a risk that the purchaser would acquire an interest superior to that of theholders of the related automobile receivables. In addition, because of the large number of vehicles involved in atypical issuance and technical requirements under state laws, the trustee for the holders of the automobilereceivables may not have an effective security interest in all of the obligations backing such receivables.Therefore, there is a possibility that recoveries on repossessed collateral may not, in some cases, be able tosupport payments on these securities.

Asset-backed securities acquired by the Funds may also include collateralized debt obligations (“CDOs”).CDOs include collateralized bond obligations (“CBOs”) and collateralized loan obligations (“CLOs”) and othersimilarly structured securities.

A CBO is a trust or other special purpose entity (“SPE”) that is typically backed by a diversified pool offixed-income securities (which may include high risk, below investment grade securities). A CLO is a trust orother SPE that is typically collateralized by a pool of loans, which may include, among others, domestic andnon-U.S. senior secured loans, senior unsecured loans, and subordinate corporate loans, including loans that maybe rated below investment grade or equivalent unrated loans. Investments in CLOs organized outside of theUnited States may not be deemed to be foreign securities if a CLO is collateralized by a pool of loans, a

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substantial portion of which are U.S. loans. Although certain CDOs may receive credit enhancement in the formof a senior-subordinate structure, over-collateralization or bond insurance, such enhancement may not always bepresent and may fail to protect a Fund against the risk of loss on default of the collateral. Certain CDOs may usederivatives contracts to create “synthetic” exposure to assets rather than holding such assets directly, whichentails the risks of derivative instruments described elsewhere in this SAI. CDOs may charge management feesand administrative expenses, which are in addition to those of a Fund.

For both CBOs and CLOs, the cash flows from the SPE are split into two or more portions, called tranches,varying in risk and yield. The riskiest portion is the “equity” tranche, which bears the first loss from defaultsfrom the bonds or loans in the SPE and serves to protect the other, more senior tranches from default (thoughsuch protection is not complete). Since it is partially protected from defaults, a senior tranche from a CBO orCLO typically has higher ratings and lower yields than its underlying securities, and may be rated investmentgrade. Despite the protection from the equity tranche, CBO or CLO tranches can experience substantial lossesdue to actual defaults, increased sensitivity to defaults due to collateral default and disappearance of protectingtranches, market anticipation of defaults, as well as investor aversion to CBO or CLO securities as a class.Interest on certain tranches of a CDO may be paid in kind (paid in the form of obligations of the same type ratherthan cash), which involves continued exposure to default risk with respect to such payments.

The risks of an investment in a CDO depend largely on the type of the collateral securities and the class ofthe CDO in which a Fund invests. Normally, CBOs, CLOs and other CDOs are privately offered and sold, andthus are not registered under the securities laws. As a result, investments in CDOs may be characterized by aFund as illiquid investments. However, an active dealer market may exist for CDOs, allowing a CDO to qualifyfor Rule 144A transactions. In addition to the normal risks associated with fixed-income securities and asset-backed securities generally discussed elsewhere in this SAI, CDOs carry additional risks including, but notlimited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest orother payments; (ii) the quality of the collateral may decline in value or default; (iii) a Fund may invest intranches of CDOs that are subordinate to other tranches; (iv) the complex structure of the security may not befully understood at the time of investment and may produce disputes with the issuer or unexpected investmentresults; and (v) the CDO’s manager may perform poorly or default.

BANK LOANS. To the extent consistent with their investment objectives and strategies, the Funds, exceptfor the Global Tactical Asset Allocation Fund, may invest in loans. Certain of the Underlying Funds may alsoinvest in loans. The primary risk in an investment in loans is that borrowers may be unable to meet their interestand/or principal payment obligations. Loans in which a Fund invests may be made to finance highly leveragedborrowers, which may make such loans especially vulnerable to adverse changes in economic or marketconditions. Loans in which a Fund may invest may be either collateralized or uncollateralized and senior orsubordinate. Investments in uncollateralized and/or subordinate loans entail a greater risk of nonpayment than doinvestments in loans that hold a more senior position in the borrower’s capital structure and/or are secured withcollateral. If they do provide collateral, the value of the collateral may not completely cover the borrower’sobligations at the time of a default. If a borrower files for protection from its creditors under the U.S. bankruptcylaws, these laws may limit a Fund’s rights to its collateral. In addition, the value of collateral may erode during abankruptcy case. In the event of a bankruptcy, the holder of a loan may not recover its principal, may experiencea long delay in recovering its investment and may not receive interest during the delay. In addition, loans aregenerally subject to liquidity risk. The Funds may acquire interests in loans by purchasing participations in and/or assignments of portions of loans from third parties or by investing in pools of loans, such as collateralized debtobligations (see “Asset-Backed (including Mortgage-Backed) Securities” on page 9). Transactions in loans maysettle on a delayed basis. As a result, the proceeds from the sale of a loan may not be available to make additionalinvestments or to meet a Fund’s redemption obligations. A Fund may have difficulty disposing of its investmentsin loans, and the market for such instruments may lack sufficient liquidity.

In certain circumstances, loans may not be deemed to be securities under certain federal securities laws.Therefore, in the event of fraud or misrepresentation by a borrower or an arranger, lenders and purchasers of

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interests in loans, such as a Fund, may not have the protection of the anti-fraud provisions of the federalsecurities laws as would otherwise be available for bonds or stocks. Instead, in such cases, parties generallywould rely on the contractual provisions in the loan agreement itself and common-law fraud protections underapplicable state law.

BORROWINGS. The Funds may engage in borrowing transactions as a means of raising cash to satisfyredemption requests, for other temporary or emergency purposes or, to the extent permitted by their investmentpolicies, to raise additional cash to be invested in other securities or instruments in an effort to increase theFunds’ investment returns. Reverse repurchase agreements may be considered to be a type of borrowing.

When the Funds invest borrowing proceeds in other securities, the Funds will be at risk for any fluctuations inthe market value of the securities in which the proceeds are invested. Like other leveraging risks, this makes thevalue of an investment in the Funds more volatile and increases the Funds’ overall investment exposure. In addition,if a Fund’s return on its investment of the borrowing proceeds does not equal or exceed the interest that the Fund isobligated to pay under the terms of a borrowing, engaging in these transactions will lower the Fund’s return.

The Funds may be required to liquidate portfolio securities at a time when it would be disadvantageous todo so in order to make payments with respect to their borrowing obligations. This could adversely affect a Fund’sstrategy and result in lower returns. Interest on any borrowings will be a Fund expense and will reduce the valueof the Funds’ shares. The Funds may borrow on a secured or on an unsecured basis. If a Fund enters into asecured borrowing arrangement, a portion of the Fund’s assets will be used as collateral. During the term of theborrowing, the Funds will remain at risk for any fluctuations in the market value of these assets in addition to anysecurities purchased with the proceeds of the loan. In addition, the Funds may be unable to sell the collateral at atime when it would be advantageous to do so, which could adversely affect the Funds’ strategy and result inlower returns. The Funds would also be subject to the risk that the lender may file for bankruptcy, becomeinsolvent, or otherwise default on its obligations to return the collateral to the Funds. In the event of a default bythe lender, there may be delays, costs and risks of loss involved in a Fund’s exercising its rights with respect tothe collateral or those rights may be limited by other contractual agreements or obligations or by applicable law.

CALCULATION OF PORTFOLIO TURNOVER RATE. The portfolio turnover rate for a Fund iscalculated by dividing the lesser of purchases or sales of portfolio investments for the reporting period by themonthly average value of the portfolio investments owned during the reporting period. The calculation excludesall securities, including options, whose maturities or expiration dates at the time of acquisition are one year orless. Portfolio turnover may vary from year to year as well as within a particular year, and may be affected bychanges in the holdings of specific issuers, changes in country and currency weightings, cash requirements forredemption of shares and by requirements that enable the Funds to receive favorable tax treatment.

The portfolio turnover rate for the California Tax-Exempt Fund was significantly higher for the fiscal yearended March 31, 2020 than for the prior year. The increase in the portfolio turnover rate was primarily due toincreased investment in new bond issuances.

The portfolio turnover rate for the Core Bond Fund was significantly higher for the fiscal year endedMarch 31, 2020 than for the prior year. The increase in the portfolio turnover rate was primarily due to a changein investment outlook, market conditions, and security valuations.

The portfolio turnover rate for the Fixed Income Fund was significantly higher for the fiscal year endedMarch 31, 2020 than for the prior year. The increase in the portfolio turnover rate was primarily due to a changein investment outlook, market conditions, and security valuations.

The portfolio turnover rate for the Global Tactical Asset Allocation Fund was significantly lower for thefiscal year ended March 31, 2020 than for the prior year. The decrease in the portfolio turnover rate wasprimarily due to a reduction in asset allocation changes between asset classes.

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The portfolio turnover rate for the Income Equity Fund was significantly higher for the fiscal year endedMarch 31, 2020 than for the prior year. The increase in the portfolio turnover rate was primarily due to increasedmarket volatility and tax loss harvesting.

The portfolio turnover rate for the Short-Intermediate U.S. Government Fund was significantly higher forthe fiscal year ended March 31, 2020 than for the prior year. The increase in the portfolio turnover rate wasprimarily due to increased trading of short maturity treasury securities.

The portfolio turnover rate for the U.S. Government Fund was significantly lower for the fiscal year endedMarch 31, 2020 than for the prior year. The decrease in the portfolio turnover rate was primarily due to allocationchanges in mortgage-backed securities and a decrease in trading in longer maturity treasuries.

The Funds are not restricted by policy with regard to portfolio turnover and will make changes in theirinvestment portfolios from time to time as business and economic conditions as well as market prices maydictate. Please see the Financial Highlights tables in the Funds’ Prospectuses for the Funds’ portfolio turnoverrates for the fiscal year ended March 31, 2020.

COMMERCIAL PAPER, BANKERS’ ACCEPTANCES, CERTIFICATES OF DEPOSIT, TIMEDEPOSITS AND BANK NOTES. To the extent consistent with their respective investment objectives andstrategies, the Funds and Underlying Funds may invest in commercial paper. Commercial paper represents short-term unsecured promissory notes issued in bearer form by banks or bank holding companies, corporations andfinance companies. Certificates of deposit are negotiable certificates issued against funds deposited in acommercial bank for a definite period of time and earning a specified return. Bankers’ acceptances are negotiabledrafts or bills of exchange, normally drawn by an importer or exporter to pay for specific merchandise, which are“accepted” by a bank, meaning, in effect, that the bank unconditionally agrees to pay the face value of theinstrument on maturity. Fixed time deposits are bank obligations payable at a stated maturity date and bearinginterest at a fixed rate. Fixed time deposits may be withdrawn on demand by the investor, but may be subject toearly withdrawal penalties that vary depending upon market conditions and the remaining maturity of theobligation. There are no contractual restrictions on the right to transfer a beneficial interest in a fixed time depositto a third party. Bank notes generally rank junior to deposit liabilities of banks and pari passu with other senior,unsecured obligations of the bank. Bank notes are classified as “other borrowings” on a bank’s balance sheet,while deposit notes and certificates of deposit are classified as deposits. Bank notes are not insured by the FDICor any other insurer. Deposit notes are insured by the FDIC only to the extent of $250,000 per depositor per bank.

Each Fund (and with respect to the Core Bond Fund, to the extent such obligations are U.S. dollar-denominated) may invest a portion of its assets in the obligations of foreign banks and foreign branches ofdomestic banks. Such obligations include Eurodollar Certificates of Deposit (“ECDs”), which are U.S. dollar-denominated certificates of deposit issued by offices of foreign and domestic banks located outside the UnitedStates; Eurodollar Time Deposits (“ETDs”), which are U.S. dollar-denominated deposits in a foreign branch of aU.S. bank or a foreign bank; Canadian Time Deposits (“CTDs”), which are essentially the same as ETDs exceptthey are issued by Canadian offices of major Canadian banks; Schedule Bs, which are obligations issued byCanadian branches of foreign or domestic banks; Yankee Certificates of Deposit (“Yankee CDs”), which areU.S. dollar-denominated certificates of deposit issued by a U.S. branch of a foreign bank and held in the UnitedStates; and Yankee Bankers’ Acceptances (“Yankee BAs”), which are U.S. dollar-denominated bankers’acceptances issued by a U.S. branch of a foreign bank and held in the United States.

Commercial paper is generally unsecured and usually discounted from its value at maturity. The value ofcommercial paper may be affected by changes in the credit rating or financial condition of the issuing entities andwill tend to fall when interest rates rise and rise when interest rates fall. Investments in commercial paper aresubject to the risk that the issuer cannot issue enough new commercial paper to satisfy its obligations with respectto its outstanding commercial paper, also known as rollover risk. Commercial paper is also susceptible tochanges in the issuer’s financial condition or credit quality. In addition, under certain circumstances commercial

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paper may become illiquid or may suffer from reduced liquidity. Commercial paper purchased by certain Fundsmay include asset-backed commercial paper. Asset-backed commercial paper is issued by a SPE that is organizedto issue the commercial paper and to purchase trade receivables or other financial assets. The credit quality ofasset-backed commercial paper depends primarily on the quality of these assets and the level of any additionalcredit support. The repayment of asset-backed commercial paper depends primarily on the cash collectionsreceived from such an issuer’s underlying asset portfolio and the issuer’s ability to issue new asset-backedcommercial paper.

Since certain Funds may hold investments in non-U.S. bank obligations, an investment in the Funds involvescertain additional risks. Such investment risks include future political and economic developments, the possibleimposition of non-U.S. withholding taxes on interest income payable on such obligations held by the Funds, thepossible seizure or nationalization of non-U.S. deposits and the possible establishment of exchange controls orother non-U.S. governmental laws or restrictions applicable to the payment of the principal of and interest oncertificates of deposit or fixed time deposits that might affect adversely such payment on such obligations held bythe Funds. Additionally, there may be less public information available about non-U.S. entities. Non-U.S. issuersmay be subject to less governmental regulation and supervision than U.S. issuers. Non-U.S. issuers also generallyare not bound by uniform accounting, auditing and financial reporting requirements comparable to thoseapplicable to U.S. issuers. See also “Foreign Investments—General” on page 23.

COMMODITY-LINKED SECURITIES. The Underlying Funds in which the Global Tactical AssetAllocation Fund invests may seek to provide exposure to the investment returns of real assets that trade in thecommodity markets through investments in commodity-linked derivative securities, which are designed toprovide this exposure without direct investment in physical commodities or commodities futures contracts. Realassets are assets such as oil, gas, industrial and precious metals, livestock, and agricultural or meat products, orother items that have tangible properties, as compared to stocks or bonds, which are financial instruments. Inchoosing Underlying Funds, the Investment Adviser seeks to provide exposure to various commodities andcommodity sectors. The value of commodity-linked derivative securities may be affected by a variety of factors,including, but not limited to, overall market movements and economic and other events (whether real orperceived) affecting the value of particular industries or commodities.

The commodities that underlie commodity futures contracts and commodity swaps may be subject toadditional economic and non-economic variables, such as drought, floods, weather, livestock disease, embargoes,tariffs, and international economic, political and regulatory developments. Unlike the financial futures markets,in the commodity futures markets there are costs of physical storage associated with purchasing the underlyingcommodity. The price of the commodity futures contract will reflect the storage costs of purchasing the physicalcommodity, including the time value of money invested in the physical commodity. To the extent that the storagecosts for an underlying commodity change while a Fund is invested in futures contracts on that commodity, thevalue of the futures contract may change proportionately.

In the commodity futures markets, producers of the underlying commodity may decide to hedge the pricerisk of selling the commodity by selling futures contracts today to lock in the price of the commodity at deliverytomorrow. In order to induce speculators to purchase the other side of the same futures contract, the commodityproducer generally must sell the futures contract at a lower price than the expected future spot price. Conversely,if most hedgers in the futures market are purchasing futures contracts to hedge against a rise in prices, thenspeculators will only sell the other side of the futures contract at a higher futures price than the expected futurespot price of the commodity. The changing nature of the hedgers and speculators in the commodity markets willinfluence whether futures prices are above or below the expected future spot price, which can have significantimplications for the Fund. If the nature of hedgers and speculators in futures markets has shifted when it is timefor the Fund to reinvest the proceeds of a maturing contract in a new futures contract, the Fund might reinvest athigher or lower futures prices, or choose to pursue other investments.

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The prices of commodity-linked derivative securities may move in different directions than investments intraditional equity and debt securities when the value of those traditional securities is declining due to adverseeconomic conditions. As an example, during periods of rising inflation, debt securities have historically tended todecline in value due to the general increase in prevailing interest rates. Conversely, during those same periods ofrising inflation, the prices of certain commodities, such as oil and metals, have historically tended to increase. Ofcourse, there cannot be any guarantee that these investments will perform in that manner in the future, and atcertain times the price movements of commodity-linked instruments have been parallel to those of debt andequity securities. Commodities have historically tended to increase and decrease in value during different parts ofthe business cycle than financial assets. Nevertheless, at various times, commodities prices may move in tandemwith the prices of financial assets and thus may not provide overall portfolio diversification benefits.

CONVERTIBLE SECURITIES. To the extent consistent with their investment objectives and strategies,the Funds (except the Short-Intermediate Tax-Exempt Fund, Bond Index Fund, Short-Intermediate U.S.Government Fund and U.S. Government Fund) and, with respect to the Global Tactical Asset Allocation Fund,the Underlying Funds may invest in convertible securities. Convertible securities entitle the holder to receiveinterest paid or accrued on debt or the dividend paid on preferred stock until the convertible securities mature orare redeemed, converted or exchanged. Prior to conversion, convertible securities have characteristics similar toordinary debt securities in that they normally provide a stable stream of income with generally higher yields thanthose of common stock of the same or similar issuers. Convertible securities are usually subordinated tocomparable-tier non-convertible securities but rank senior to common stock in a corporation’s capital structureand, therefore, generally entail less risk than the corporation’s common stock, although the extent to which suchrisk is reduced depends in large measure upon the degree to which the convertible security sells above its valueas a fixed-income security.

In selecting convertible securities, the Investment Adviser may consider, among other factors: an evaluationof the creditworthiness of the issuers of the securities; the interest or dividend income generated by the securities;the potential for capital appreciation of the securities and the underlying common stocks; the prices of thesecurities relative to other comparable securities and to the underlying common stocks; whether the securities areentitled to the benefits of sinking funds or other protective conditions; diversification of portfolio securities as toissuers; and whether the securities are rated by a rating agency and, if so, the ratings assigned.

The value of convertible securities is a function of their investment value (determined by yield incomparison with the yields of other securities of comparable maturity and quality that do not have a conversionprivilege) and their conversion value (their worth, at market value, if converted into the underlying commonstock). The investment value of convertible securities is influenced by changes in interest rates, with investmentvalue declining as interest rates increase and increasing as interest rates decline, and by the credit standing of theissuer and other factors. The conversion value of convertible securities is determined by the market price of theunderlying common stock, and may vary in price in response to changes in the price of the underlying commonstock, with greater volatility. If the conversion value is low relative to the investment value, the price of theconvertible securities is governed principally by their investment value. To the extent the market price of theunderlying common stock approaches or exceeds the conversion price, the price of the convertible securities willbe increasingly influenced by their conversion value. In addition, convertible securities generally sell at apremium over their conversion value determined by the extent to which investors place value on the right toacquire the underlying common stock while holding fixed-income securities.

In addition, a convertible security may be subject to redemption at the option of the issuer at a priceestablished in the convertible security’s governing instrument. If a convertible security held by a Fund is calledfor redemption, the Fund would be required to (i) permit the issuer to redeem the security, (ii) convert it into theunderlying common stock or (iii) sell it to a third party. Any of the actions could have an adverse effect on aFund’s ability to achieve its investment objective.

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In general, investments in lower quality convertible securities are subject to a significant risk of a change inthe credit rating or financial condition of the issuing entity. Investments in convertible securities of medium orlower quality also are likely to be subject to greater market fluctuation and to greater risk of loss of income andprincipal due to default than investments of higher quality fixed-income securities. Such lower quality securitiesgenerally tend to reflect short-term corporate and market developments to a greater extent than higher qualitysecurities, which react more to fluctuations in the general level of interest rates. A Fund that invests inconvertible securities generally will seek to reduce risk to the investor by diversification, credit analysis andattention to current developments in trends of both the economy and financial markets. However, whilediversification reduces the effect on a Fund of any single investment, it does not reduce the overall risk ofinvesting in lower quality securities.

CUSTODIAL RECEIPTS FOR TREASURY SECURITIES. To the extent consistent with theirinvestment objectives and strategies, the Funds may acquire U.S. government obligations and their unmaturedinterest coupons that have been separated (“stripped”) by their holder, typically a custodian bank or investmentbrokerage firm. Having separated the interest coupons from the underlying principal of the U.S. governmentobligations, the holder will resell the stripped securities in custodial receipt programs with a number of differentnames, such as TIGRs (Treasury Income Growth Receipts) and CATS (Certificates of Accrual on TreasurySecurities). The stripped coupons are sold separately from the underlying principal, which usually is sold at adeep discount because the buyer receives only the right to receive a future fixed payment on the security and doesnot receive any rights to periodic interest (cash) payments. The underlying U.S. Treasury bonds and notesthemselves are held in book-entry form at the Federal Reserve Bank or, in the case of bearer securities (i.e.,unregistered securities, which are ostensibly owned by the bearer or holder), in trust on behalf of the owners.Counsel to the underwriters of these certificates or other evidences of ownership of U.S. Treasury securities havestated that, in their opinion, purchasers of the stripped securities most likely will be deemed the beneficialholders of the underlying U.S. government obligations for federal tax purposes. The Trust is unaware of anybinding legislative, judicial or administrative authority on this issue. Custodial receipts may not be consideredobligations of the U.S. government or other issuer of the security held by the custodian for the purposes of thesecurities laws. If for tax purposes a Fund is not considered to be the owner of the securities held in theunderlying trust or custodial account, the Fund may suffer adverse tax consequences. As a holder of custodialreceipts, a Fund will bear its proportionate share of the fees or expenses charged to the custodial account.

CYBERSECURITY RISK. With the increased use of technologies such as mobile devices and Web-basedor “cloud” applications, and the dependence on the Internet and computer systems to conduct business, the Fundsare susceptible to operational, information security and related risks. In general, cybersecurity incidents canresult from deliberate attacks or unintentional events (arising from external or internal sources) that may causethe Funds to lose proprietary information, suffer data corruption, physical damage to a computer or networksystem or lose operational capacity. Cybersecurity attacks include, but are not limited to, infection by malicioussoftware, such as malware or computer viruses or gaining unauthorized access to digital systems, networks ordevices that are used to service the Funds’ operations (e.g., through “hacking,” “phishing” or malicious softwarecoding) or other means for purposes of misappropriating assets or sensitive information, corrupting data, orcausing operational disruption. Cybersecurity attacks may also be carried out in a manner that does not requiregaining unauthorized access, such as causing denial-of-service attacks on the Funds’ websites (i.e., efforts tomake network services unavailable to intended users). In addition, authorized persons could inadvertently orintentionally release confidential or proprietary information stored on the Funds’ systems.

Cybersecurity incidents affecting the Investment Adviser, other service providers (including, but not limitedto, the sub-administrator, custodian, sub-custodians, transfer agent and financial intermediaries) or the Funds’shareholders have the ability to cause disruptions and impact business operations, potentially resulting infinancial losses to both the Funds and their shareholders, interference with the Funds’ ability to calculate their netasset values (“NAV”), impediments to trading, the inability of Fund shareholders to transact business and theFunds to process transactions (including fulfillment of Fund share purchases and redemptions), violations ofapplicable privacy and other laws (including the release of private shareholder information) and attendant breach

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notification and credit monitoring costs, regulatory fines, penalties, litigation costs, reputational damage,reimbursement or other compensation costs, forensic investigation and remediation costs, and/or additionalcompliance costs. Similar adverse consequences could result from cybersecurity incidents affecting issuers ofsecurities in which the Funds invest, counterparties with which the Funds engage in transactions, governmentaland other regulatory authorities, exchange and other financial market operators, banks, brokers, dealers,insurance companies and other financial institutions (including financial intermediaries and other serviceproviders) and other parties. In addition, substantial costs may be incurred in order to safeguard against andreduce the risk of any cybersecurity incidents in the future. In addition to administrative, technological andprocedural safeguards, the Investment Adviser has established business continuity plans in the event of, and riskmanagement systems to prevent or reduce the impact of, such cybersecurity incidents. However, there areinherent limitations in such plans and systems, including the possibility that certain risks have not beenidentified, as well as the rapid development of new threats. Furthermore, the Funds have limited ability toprevent or mitigate cybersecurity incidents affecting third-party service providers, and such third-party serviceproviders may have limited indemnification obligations to the Funds or their investment adviser, and the Fundscannot control the cybersecurity plans and systems put in place by their service providers or any other thirdparties whose operations may affect the Funds or their shareholders. The Funds and their shareholders could benegatively impacted as a result. Cybersecurity risk is also present for the Underlying Funds and for issuers ofother securities or other instruments in which the Global Tactical Asset Allocation Fund invests, which couldresult in material adverse consequences for such Underlying Funds or issuers, and may cause the Fund’sinvestment in such Underlying Funds or issuers to lose value.

DEMAND FEATURES AND GUARANTEES. To the extent consistent with their investment objectivesand strategies, the Fixed Income Funds and Tax-Exempt Funds, may invest a significant percentage of theirassets in securities that have demand features, guarantees or similar credit and liquidity enhancements. TheGlobal Tactical Asset Allocation Fund may invest in such securities to the extent consistent with its investmentobjective and strategies. A demand feature permits the holder of the security to sell the security within a specifiedperiod of time at a stated exercise price and entitles the holder of the security to receive an amount equal to theapproximate amortized cost of the security plus accrued interest. A guarantee permits the holder of the security toreceive, upon presentment to the guarantor, the principal amount of the underlying security plus accrued interestwhen due or upon default. A guarantee is the unconditional obligation of an entity other than the issuer of thesecurity. Demand features and guarantees can effectively:

• shorten the maturity of a variable or floating rate security;• enhance the security’s credit quality; and•

STATEMENT OF ADDITIONAL INFORMATION (“SAI”) … · 2020. 9. 29. · Effective September 29,...

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Transcript of STATEMENT OF ADDITIONAL INFORMATION (“SAI”) … · 2020. 9. 29. · Effective September 29,...