# EDGAR Filing Document

**Accession Number:** 0001612930
**File Stem:** 0000894189-26-016738
**Filing Date:** 2026-5
**Character Count:** 1691203
**Document Hash:** fb4a2f61189af269aef2c14e68b65e65
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000894189-26-016738.hdr.sgml**: 20260529

**ACCESSION NUMBER**: 0000894189-26-016738

**CONFORMED SUBMISSION TYPE**: 485BPOS

**PUBLIC DOCUMENT COUNT**: 45

**FILED AS OF DATE**: 20260529

**DATE AS OF CHANGE**: 20260529

**EFFECTIVENESS DATE**: 20260531

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Angel Oak Funds Trust
- **CENTRAL INDEX KEY:** 0001612930

**ORGANIZATION NAME:**
- **EIN:** 000000000
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 0131

**FILING VALUES:**
- **FORM TYPE:** 485BPOS
- **SEC ACT:** 1940 Act
- **SEC FILE NUMBER:** 811-22980
- **FILM NUMBER:** 261045772

**BUSINESS ADDRESS:**
- **STREET 1:** ANGEL OAK CAPITAL ADVISORS, LLC
- **STREET 2:** 980 HAMMOND DRIVE, SUITE 200
- **CITY:** ATLANTA
- **STATE:** GA
- **ZIP:** 30328
- **BUSINESS PHONE:** 404-953-4900

**MAIL ADDRESS:**
- **STREET 1:** ANGEL OAK CAPITAL ADVISORS, LLC
- **STREET 2:** 980 HAMMOND DRIVE, SUITE 200
- **CITY:** ATLANTA
- **STATE:** GA
- **ZIP:** 30328
**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Angel Oak Funds Trust
- **CENTRAL INDEX KEY:** 0001612930

**ORGANIZATION NAME:**
- **EIN:** 000000000
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 0131

**FILING VALUES:**
- **FORM TYPE:** 485BPOS
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 333-197427
- **FILM NUMBER:** 261045771

**BUSINESS ADDRESS:**
- **STREET 1:** ANGEL OAK CAPITAL ADVISORS, LLC
- **STREET 2:** 980 HAMMOND DRIVE, SUITE 200
- **CITY:** ATLANTA
- **STATE:** GA
- **ZIP:** 30328
- **BUSINESS PHONE:** 404-953-4900

**MAIL ADDRESS:**
- **STREET 1:** ANGEL OAK CAPITAL ADVISORS, LLC
- **STREET 2:** 980 HAMMOND DRIVE, SUITE 200
- **CITY:** ATLANTA
- **STATE:** GA
- **ZIP:** 30328

## Series and Classes Contracts Data

### Angel Oak Multi-Strategy Income Fund (Series ID: S000048360)

| Class ID   | Class Name          | Ticker Symbol   |
|:---|:---|:---|
| C000152733 | Class A             | ANGLX           |
| C000152734 | Institutional Class | ANGIX           |
| C000159180 | Class C             | ANGCX           |

### Angel Oak UltraShort Income Fund (Series ID: S000061509)

| Class ID   | Class Name          | Ticker Symbol   |
|:---|:---|:---|
| C000199192 | Class A             | AOUAX           |
| C000199193 | Institutional Class | AOUIX           |
| C000199194 | Class A1            | AOUNX           |

### Angel Oak Income ETF (Series ID: S000077753)

| Class ID   | Class Name           | Ticker Symbol   |
|:---|:---|:---|
| C000238279 | Angel Oak Income ETF | CARY            |

### Angel Oak UltraShort Income ETF (Series ID: S000077754)

| Class ID   | Class Name                      | Ticker Symbol   |
|:---|:---|:---|
| C000238280 | Angel Oak UltraShort Income ETF | UYLD            |

### Angel Oak High Yield Opportunities ETF (Series ID: S000083812)

| Class ID   | Class Name                             | Ticker Symbol   |
|:---|:---|:---|
| C000247829 | Angel Oak High Yield Opportunities ETF | AOHY            |

### Angel Oak Mortgage-Backed Securities ETF (Series ID: S000083813)

| Class ID   | Class Name                               | Ticker Symbol   |
|:---|:---|:---|
| C000247830 | Angel Oak Mortgage-Backed Securities ETF | MBS             |

?xml version='1.0' encoding='ASCII'? ck0001612930-20260529

Filed with the U.S. Securities and Exchange Commission on May 29, 2026

1933 Act Registration File No. 333-197427

1940 Act File No. 811-22980

**U.S. SECURITIES AND EXCHANGE COMMISSION**

Washington, D.C. 20549

**FORM N-1A**

---

| | | | | |
|:---|:---|:---|:---|:---|
| REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 | REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 | [ | X | ] |
| Pre-Effective Amendment No. | | [ | | ] |
| Post-Effective Amendment No. | 64 | [ | X | ] |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| | and | | | |
| REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 | REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 | [ | X | ] |
| Amendment No. | 65 | [ | X | ] |

---

(Check appropriate box or boxes.)

**<u>ANGEL OAK FUNDS TRUST</u>**

(Exact Name of Registrant as Specified in Charter)

980 Hammond Drive, Suite 200

Atlanta, Georgia 30328

(Address of Principal Executive Offices, including Zip Code)

Registrant's Telephone Number, including Area Code: (404) 953-4900

---

| |
|:---|
| Ward Bortz, President |
| c/o Angel Oak Capital Advisors, LLC |
| 980 Hammond Drive, Suite 200 |
| Atlanta, GA 30328 |

---

(Name and Address of Agent for Service)

Copy to:

---

| |
|:---|
| Douglas P. Dick |
| Stephen T. Cohen |
| Dechert LLP |
| 1900 K Street NW |
| Washington, DC 20006 |

---

Approximate date of proposed public offering: As soon as practicable after the effective date of the Registration Statement.

It is proposed that this filing will become effective:

☐ immediately upon filing pursuant to paragraph (b)

☒ on May 31, 2026 pursuant to paragraph (b)

☐ 60 days after filing pursuant to paragraph (a)(1)

☐ on __________ pursuant to paragraph (a)(1)

☐ 75 days after filing pursuant to paragraph (a)(2)

☐ on __________ pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:

[ ]&nbsp;&nbsp;&nbsp;&nbsp;this post-effective amendment designates a new effective date for a previously filed post-effective amendment.

**Explanatory Note:** This Post-Effective Amendment No. 64 to the Registration Statement of Angel Oak Funds Trust (the "Trust") is being filed to add the audited financial statements and certain related financial information for the fiscal year ended January 31, 2026, for the Trust's series: Angel Oak Multi-Strategy Income Fund, Angel Oak UltraShort Income Fund, Angel Oak Income ETF, Angel Oak UltraShort Income ETF, Angel Oak High Yield Opportunities ETF and Angel Oak Mortgage-Backed Securities ETF.

------

![AO Mutual Fund Prospectus Cover.jpg](ck0001612930-20260529_g1.jpg)

------

**TABLE OF CONTENTS**

---

| | |
|:---|:---|
| **[Angel Oak Multi-Strategy Income Fund Summary](#ica7a21ae2cdb41e2a7920b906e54145a_10)** | &nbsp;&nbsp;**[2](#ica7a21ae2cdb41e2a7920b906e54145a_10)** |
| **[Angel Oak UltraShort Income Fund Summary](#ica7a21ae2cdb41e2a7920b906e54145a_28)** | &nbsp;&nbsp;**[12](#ica7a21ae2cdb41e2a7920b906e54145a_28)** |
| **[Additional Information about the Funds' Objectives, Principal Investment Strategies, and Principal Investment Risks](#ica7a21ae2cdb41e2a7920b906e54145a_34)** | &nbsp;&nbsp;**[21](#ica7a21ae2cdb41e2a7920b906e54145a_34)** |
| **[Management of the Funds](#ica7a21ae2cdb41e2a7920b906e54145a_37)** | **[39](#ica7a21ae2cdb41e2a7920b906e54145a_37)** |
| **[Portfolio Managers](#ica7a21ae2cdb41e2a7920b906e54145a_40)** | &nbsp;&nbsp;**[40](#ica7a21ae2cdb41e2a7920b906e54145a_40)** |
| **[Choosing a Share Class](#ica7a21ae2cdb41e2a7920b906e54145a_43)** | &nbsp;&nbsp;**[41](#ica7a21ae2cdb41e2a7920b906e54145a_43)** |
| **[Distribution Plan](#ica7a21ae2cdb41e2a7920b906e54145a_46)** | &nbsp;&nbsp;**[42](#ica7a21ae2cdb41e2a7920b906e54145a_46)** |
| **[Sales Charges – Class A Shares](#ica7a21ae2cdb41e2a7920b906e54145a_49)** | &nbsp;&nbsp;**[42](#ica7a21ae2cdb41e2a7920b906e54145a_49)** |
| **Sales Charges – Class A1 Shares** | &nbsp;&nbsp;**[43](#ica7a21ae2cdb41e2a7920b906e54145a_800)** |
| **Sales Charge Reductions and Waivers** | &nbsp;&nbsp;**[43](#ica7a21ae2cdb41e2a7920b906e54145a_807)** |
| **Contingent Deferred Sales Charge – Class C Shares** | &nbsp;&nbsp;**[45](#ica7a21ae2cdb41e2a7920b906e54145a_832)** |
| **Contingent Deferred Sales Charge Waivers – Class A Shares, Class A1 Shares and Class C Shares** | &nbsp;&nbsp;**[45](#ica7a21ae2cdb41e2a7920b906e54145a_855)** |
| **[Additional Payments to Dealers](#ica7a21ae2cdb41e2a7920b906e54145a_55)** | &nbsp;&nbsp;**[46](#ica7a21ae2cdb41e2a7920b906e54145a_55)** |
| **[How to Buy Shares](#ica7a21ae2cdb41e2a7920b906e54145a_58)** | &nbsp;&nbsp;**[47](#ica7a21ae2cdb41e2a7920b906e54145a_58)** |
| **[How to Sell Shares](#ica7a21ae2cdb41e2a7920b906e54145a_61)** | &nbsp;&nbsp;**[50](#ica7a21ae2cdb41e2a7920b906e54145a_61)** |
| **[Account and Transaction Policies](#ica7a21ae2cdb41e2a7920b906e54145a_64)** | &nbsp;&nbsp;**[52](#ica7a21ae2cdb41e2a7920b906e54145a_64)** |
| **[Determination of Net Asset Value](#ica7a21ae2cdb41e2a7920b906e54145a_67)** | &nbsp;&nbsp;**[55](#ica7a21ae2cdb41e2a7920b906e54145a_67)** |
| **[Dividends, Distributions, and Taxes](#ica7a21ae2cdb41e2a7920b906e54145a_70)** | &nbsp;&nbsp;**[56](#ica7a21ae2cdb41e2a7920b906e54145a_70)** |
| **[Appendix A—Waivers and Discounts Available from Intermediaries](#ica7a21ae2cdb41e2a7920b906e54145a_76)** | &nbsp;&nbsp;**A-[1](#ica7a21ae2cdb41e2a7920b906e54145a_76)** |
| **[Financial Highlights](#ica7a21ae2cdb41e2a7920b906e54145a_73)** | &nbsp;&nbsp;**A-[12](#ica7a21ae2cdb41e2a7920b906e54145a_73)** |
| **[For More Information](#ica7a21ae2cdb41e2a7920b906e54145a_79)** | **[Back Cover](#ica7a21ae2cdb41e2a7920b906e54145a_79)** |

---

------

**ANGEL OAK MULTI-STRATEGY INCOME FUND SUMMARY**<br>

**Investment Objective** 

The investment objective of the Angel Oak Multi-Strategy Income Fund (the "Fund") is current income.

**Fees and Expenses of the Fund** 

This table describes the fees and expenses that you may pay if you buy, hold and sell shares of the Fund. **You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and examples below.** You may qualify for sales charge discounts or waivers if you and your family invest, or agree to invest in the future, at least $100,000 in Class A shares of the Fund. More information about these and other discounts or waivers is available from your financial professional, in the sections "Sales Charges—Class A Shares" on page 42 of the Prospectus, and in "Appendix A—Waivers and Discounts Available from Intermediaries."

---

| | | | |
|:---|:---|:---|:---|
| **Shareholder fees (fees paid directly from your investment)** | **Class A** | **Class C** | **Institutional Class** |
| Maximum Sales Charge (Load) Imposed on Purchases (as a % of the offering price) | 2.25% |  |  |
| Maximum Deferred Sales Charge (Load) (as a % of amount redeemed) | None ¹ | 1.00% ² |  |

---

**Annual Fund Operating Expenses (expenses that you pay each year as a** 

**percentage of the value of your investment)** 

---

| | | | |
|:---|:---|:---|:---|
| Management Fees | 0.89% | 0.89% | 0.89% |
| Distribution and Service (12b-1) Fees | 0.25% | 1.00% | 0.00% |
| Other Expenses<sup>3</sup> | 0.44% | 0.44% | 0.44% |
| Total Annual Fund Operating Expenses | 1.58% | 2.33% | 1.33% |
| Less Fee Waiver/Expense Reimbursement<sup>4,5</sup> | <u>-0.01%</u> | <u>-0.01%</u> | <u>-0.01%</u> |
| Total Annual Fund Operating Expenses After Fee Waiver/Expense Reimbursement<sup>5</sup> | 1.57% | 2.32% | 1.32% |

---

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;There is no initial sales charge on purchases of Class A shares of $500,000 or more, however, a contingent deferred sales charge of up to 1.00% will be imposed if such Class A shares are redeemed within twelve (12) months of their purchase.

<sup>2</sup>&nbsp;&nbsp;&nbsp;&nbsp;The Fund charges this fee on Class C shares redeemed within one year of purchase.

<sup>3</sup>&nbsp;&nbsp;&nbsp;&nbsp;"Other Expenses" include interest expense of 0.33% for each of Class A, Class C, and Institutional Class shares, 0.01% of acquired fund fees and expenses ("AFFE"), and reflects less than 0.01% of Angel Oak Capital Advisors, LLC's (the "Adviser") recoupment of fees previously waived. Interest expense and AFFE are borne by the Fund separately from the management fees paid to the Adviser. Excluding interest expense of the Fund, Total Annual Fund Operating Expenses After Fee Waiver are 1.24%, 1.99% and 0.99% for Class A, Class C, and Institutional Class shares, respectively. "Other Expenses" in the table above do not correlate to the Ratio of Expenses to Average Net Assets found within the "Financial Highlights" section of the Prospectus, which reflects the actual operating expenses of the Fund for the fiscal year ended January 31, 2026 and does note include AFFE.

<sup>4</sup>&nbsp;&nbsp;&nbsp;&nbsp;The Adviser has contractually agreed to waive its fees through at least September 30, 2027 to the extent necessary to offset the proportionate share of the management fees incurred by the Fund through its investment in an underlying fund for which the Adviser also serves as investment adviser. This arrangement may only be changed or eliminated by the Board of Trustees upon 60 days' written notice to the Adviser.

<sup>5</sup>&nbsp;&nbsp;&nbsp;&nbsp;The Adviser has contractually agreed to waive its fees and/or reimburse certain expenses (exclusive of any front-end sales loads, taxes, interest expenses, dividend and interest expenses related to short sales, brokerage commissions, 12b-1 fees, AFFE, expenses incurred in connection with any merger or reorganization, any transaction-related expenses and fees arising out of transactions effected on behalf of the Fund, litigation and potential litigation expenses, expenses of shareholder proposals, contested elections, or non-routine shareholder meetings, and other non-routine expenses or extraordinary expenses not incurred in the ordinary course of the Fund's business) to limit the Total Annual Fund Operating Expenses After Fee Waiver/Expense Reimbursement to 0.99% of the Fund's average daily net assets (the "Expense Limit") through September 30, 2027. The contractual arrangement may only be changed or eliminated by the Board of Trustees upon 60 days' written notice to the Adviser. The Adviser may recoup from the Fund any waived amount or reimbursed expenses pursuant to this agreement if such recoupment does not cause the Fund's Total Annual Fund Operating Expenses after such recoupment to exceed the lesser of (i) the Expense Limit in effect at the time of the waiver or reimbursement and (ii) the Expense Limit in effect at the time of recoupment and the recoupment is made within three years after the end of the month in which the Adviser incurred the expense.

**Expense Example** 

The following examples are intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The examples assume that you invest $10,000 in the Fund for the time periods indicated and then redeem or continue to hold all of your shares at the end of those periods. The examples also assume that your investment has a 5% return each year and that the Fund's operating expenses remain the same. The expenses below reflect any applicable expense limit and/or fee waiver for the first

Angel Oak Multi-Strategy Income Fund&nbsp;&nbsp;&nbsp;&nbsp;2

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year only. Although your actual costs may be higher or lower and the Fund's actual return may be greater or less than the hypothetical 5%, based on these assumptions your costs would be:

**If you redeem your shares at the end of each period:** 

---

| | | | | |
|:---|:---|:---|:---|:---|
| | <u>One Year</u> | <u>Three Years</u> | <u>Five Years</u> | <u>Ten Years</u> |
| Class A shares | $381 | $712 | $1065 | $2060 |
| Class C shares | $338 | $726 | $1244 | $2665 |
| Institutional Class shares | $134 | $420 | $728 | $1601 |

---

**If you do not redeem your shares:** 

---

| | | | | |
|:---|:---|:---|:---|:---|
| | <u>One Year</u> | <u>Three Years</u> | <u>Five Years</u> | <u>Ten Years</u> |
| Class A shares | $381 | $712 | $1065 | $2060 |
| Class C shares | $235 | $726 | $1244 | $2665 |
| Institutional Class shares | $134 | $420 | $728 | $1601 |

---

**Portfolio Turnover** 

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual operating expenses or in the example above, affect the Fund's performance. During the most recent fiscal year ended January 31, 2026, the portfolio turnover rate for the Fund was 75% of the average value of its portfolio.

**Principal Investment Strategies** 

The Fund invests primarily in agency and non-agency residential mortgage-backed securities ("RMBS") and commercial mortgage-backed securities ("CMBS"), collateralized loan obligations ("CLOs"), collateralized debt obligations ("CDOs"), collateralized mortgage obligations ("CMOs"), collateralized bond obligations ("CBOs"), asset-backed securities ("ABS"), including securities backed by assets such as unsecured consumer loans, credit card receivables, student loans, automobile loans, loans financing solar energy systems, and residential and commercial real estate, and other debt securitizations (collectively, "Structured Products"); mortgage loans, secured and unsecured consumer loans, commercial loans and pools of such loans (collectively, "Loans"); corporate debt, including bank-issued subordinated debt; equity securities of banks, real estate investment trusts, or other issuers; and U.S. Treasury and U.S. government agency securities.

The Fund may invest up to 20% of its net assets in CLOs, which are backed by a pool of loans, as well as CDOs, which may be backed by a pool of debt. CLOs and CDOs are similar to CMOs, but differ as to the type of underlying loan or debt.

The Fund may invest in the securities of other investment companies, including those that are part of the same group of investment companies as the Fund, that pursue an investment strategy that supports the Fund's investment objective.

The Fund will concentrate its investments in agency and non-agency RMBS and CMBS (collectively, "MBS"). This means that, under normal circumstances, the Fund will invest more than 25% of its total assets in MBS (measured at the time of purchase). The Fund will not concentrate its investments in any other group of industries. The Fund's policy to concentrate its investments in MBS is fundamental and may not be changed without shareholder approval.

The fixed income instruments in which the Fund invests may include those of issuers from the United States and other countries. The Fund's investments in foreign debt securities will typically be denominated in U.S. dollars.

The Fund may invest up to 15% of its net assets in investments that are deemed to be illiquid, which may include private placements, certain Rule 144A securities (which are subject to resale restrictions), and securities of issuers that are bankrupt or in default.

The Fund may invest, without limitation, in securities of any maturity and duration. Maturity refers to the length of time until a debt security's principal is repaid with interest. Duration is a measure used to determine the sensitivity of a security's price to changes in interest rates that incorporates a security's yield, coupon, final maturity and call and put features and prepayment exposure into one measure with a higher duration indicating greater sensitivity to interest rates. For example, if a portfolio has a duration of two years, and interest rates increase (fall) by 1%, the portfolio would decline (increase) in value by approximately 2%. However, duration may not accurately reflect the true interest rate sensitivity of instruments held by the Fund and, therefore the Fund's exposure to changes in interest rates.

The Fund's investments in RMBS and ABS will span a broad segment of consumer creditworthiness segments, which will include exposure to prime, near-prime, and subprime consumers.

Angel Oak Multi-Strategy Income Fund&nbsp;&nbsp;&nbsp;&nbsp;3

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The Fund may invest in high-yield securities and securities that are not rated by any rating agencies. These "high-yield" securities (also known as "junk bonds") will be rated BB+ or lower by S&P Global Ratings or will be of equivalent quality rating from another Nationally Recognized Statistical Ratings Organization. If a bond is unrated, the Adviser may determine whether it is of comparable quality and therefore eligible for the Fund's investment. Although the Fund will not acquire investments of issuers that are in default at the time of investment, the Fund may hold such securities if an investment subsequently defaults.

The Fund may implement its strategy by making investments directly or through a wholly-owned and controlled subsidiary of the Fund organized as a statutory trust under the laws of the state of Delaware (each, a "Subsidiary"). The Subsidiary may invest in loans, including residential and commercial real estate whole loans, participations in such loans or instruments representing the right to receive interest payments and principal due on such loans. The Subsidiary may invest in residential and commercial real estate loans of any credit rating or no credit rating, including without limit in loans that are rated below investment grade. The principal risks of investments in the Subsidiary are the same as those relating to residential loans and mortgages. The allocation of the Fund's investments, if any, in the Subsidiary will vary over time, and the Subsidiary's investments will also vary and may not include all of the types of investments described above. In the future, the Fund may form one or more additional wholly-owned and controlled subsidiaries.

In pursuing its investment objectives or for hedging purposes, the Fund may utilize short selling, borrowing and various types of derivative instruments, including swaps, futures contracts, and options, although not all such derivatives will be used at all times. Such derivatives may trade over-the-counter or on an exchange and may principally be used for one or more of the following purposes: speculation, currency hedging, duration management, credit deterioration hedging, hedges against broad market movements, or to pursue the Fund's investment objective. The Fund may borrow to the maximum extent permitted by applicable law. The Fund may also invest in repurchase agreements and borrow through reverse repurchase agreements.

The Fund's allocation of its assets into various asset classes within its investment strategy will depend on the views of the Adviser as to the best value relative to what is currently presented in the marketplace. Investment decisions are made based on fundamental research and analysis to identify issuers with the ability to improve their credit profile over time with attractive valuations, resulting in both income and potential capital appreciation. In selecting investments, the Adviser may consider maturity, yield and ratings information and opportunities for price appreciation among other criteria. The Adviser also analyzes a variety of factors when selecting investments for the Fund, such as collateral quality, credit support, structure and market conditions. The Adviser attempts to diversify risks that arise from position sizes, geography, ratings, duration, deal structure and collateral values. The Adviser will also seek to invest in securities that have relatively low volatility. The Adviser seeks to limit risk of principal by targeting assets that it considers undervalued. From time to time, the Fund may allocate its assets so as to focus on particular types of securities. As part of its investment process, the Adviser also considers certain environmental, social and governance ("ESG") and sustainability factors that it believes could have a material impact on certain securities in which the Fund may invest. These determinations may not be conclusive, and securities that may be negatively impacted by such factors may be purchased and retained by the Fund while the Fund may divest or not invest in securities that may be positively impacted by such factors.

**Principal Risks** 

The principal risks of investing in the Fund are summarized below. You should carefully consider the Fund's investment risks before deciding whether to invest in the Fund. There may be circumstances that could prevent the Fund from achieving its investment objective and you may lose money by investing in the Fund. An investment in the Fund is not a deposit at a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

&nbsp;&nbsp;&nbsp;&nbsp;**• Fixed-Income Instruments Risks.** The Fund will invest in fixed-income instruments and securities. Such investments may be secured, partially secured or unsecured and may be unrated, and whether or not rated, may have speculative characteristics. The market price of the Fund's investments will change in response to changes in interest rates and other factors. Generally, when interest rates rise, the values of fixed-income instruments fall, and vice versa. In typical interest rate environments, the prices of longer-term fixed-income instruments generally fluctuate more than the prices of shorter-term fixed-income instruments as interest rates change. In addition, a fund with a longer average portfolio duration will be more sensitive to changes in interest rates than a fund with a shorter average portfolio duration. A fund with a negative average portfolio duration may decline in value as interest rates decrease. Most high yield investments pay a fixed rate of interest and are therefore vulnerable to inflation risk (inflation rates are currently elevated relative to normal conditions). The obligor of a fixed-income instrument may not be able or willing to pay interest or to repay principal when due in accordance with the terms of the associated agreement.

&nbsp;&nbsp;&nbsp;&nbsp;**• General Market Risk.** The capital markets may experience periods of disruption, instability and volatility. Political, geopolitical, natural and other events, including war, terrorism, trade disputes, tariffs and other trade barriers, government shutdowns, market closures, natural and environmental disasters, epidemics, pandemics and other public health crises and related events have led, and in the future may lead, to economic uncertainty, decreased economic activity, increased market volatility and other disruptive effects on U.S. and global economies and markets. Such conditions may materially and adversely affect the markets globally and in the jurisdictions in which the Fund invests, which may have a negative impact on

Angel Oak Multi-Strategy Income Fund&nbsp;&nbsp;&nbsp;&nbsp;4

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the Fund's performance. The Fund's net asset value ("NAV") and investment return will fluctuate based upon changes in the value of its portfolio securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• Credit Risk.** Credit risk is the risk that the Fund could lose money if the issuer or guarantor of a fixed income security, or the counterparty to a derivative contract, is unable or unwilling to meet its financial obligations.

&nbsp;&nbsp;&nbsp;&nbsp;**• Interest Rate Risk.** The Fund is exposed to risks associated with changes in interest rates, including the possibility that, in a period of rising interest rates, securities may exhibit additional volatility and may lose value.

&nbsp;&nbsp;&nbsp;&nbsp;**• Prepayment Risk.** When interest rates decline, fixed income securities with stated interest rates may have the principal paid earlier than expected, requiring the Fund to invest the proceeds at generally lower interest rates.

&nbsp;&nbsp;&nbsp;&nbsp;**• Structured Products Risks.** The Fund may invest in Structured Products, including CLOs, CDOs, CMOs, CBOs, and other asset-backed securities and debt securitizations. Some Structured Products have credit ratings, but are typically issued in various classes with various priorities. Normally, Structured Products are privately offered and sold (that is, they are not registered under the securities laws), which means less information about the security may be available as compared to publicly offered securities and only certain institutions may buy and sell them. As a result, investments in Structured Products may be characterized by the Fund as illiquid securities. An active dealer market may exist for Structured Products that qualify for Rule 144A transactions, but there can be no assurance that such a market will exist or will be active enough for the Fund to sell such securities. In addition to the typical risks associated with fixed-income securities and asset-backed securities, CLOs and CDOs carry additional risks including, but not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii) the risk that the collateral may default, decline in value or quality or be downgraded by a rating agency; (iii) the Fund may invest in tranches of Structured Products that are subordinate to other tranches; (iv) the structure and complexity of the transaction and the legal documents could lead to disputes among investors regarding the characterization of proceeds; (v) risk of forced "fire sale" liquidation due to technical defaults such as coverage test failures; and (vi) the Structured Product's manager may perform poorly. The senior and junior tranches of Structured Products may have floating or variable interest rates and are subject to the risks associated with securities tied to floating or variable interest rates. The Fund may also invest in the equity tranches of a Structured Product, which typically represent the first loss position in the Structured Product, are unrated and are subject to higher risks. Equity tranches of Structured Products typically do not have a fixed coupon and payments on equity tranches will be based on the income received from the underlying collateral and the payments made to the senior tranches, both of which may be based on floating rates.

&nbsp;&nbsp;&nbsp;&nbsp;**• Borrowing Risks and Leverage Risks.** Borrowing for investment purposes creates leverage, which will exaggerate the effect of any change in the value of securities in the Fund's portfolio on the Fund's NAV and, therefore, may increase the volatility of the Fund. Money borrowed will be subject to interest and other costs (including commitment fees and/or the cost of maintaining minimum average balances). Unless the income and capital appreciation, if any, on securities acquired with borrowed funds exceed the cost of borrowing, the use of leverage will diminish the investment performance of the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;**• Extension Risk**. An issuer could exercise its right to pay principal on an obligation held by the Fund (such as a mortgage-backed security) later than expected. This may happen when there is a rise in interest rates. Under these circumstances, the value of the obligation will decrease, and the Fund will also suffer from the inability to reinvest in higher yielding securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• Concentration in Certain Mortgage-Backed Securities Risk.** The risks of concentrating in residential mortgage-backed securities (agency and non-agency) and commercial mortgage-backed securities include susceptibility to changes in lending standards, interest rates and lending rates, and the risks associated with the market's perception of issuers, the creditworthiness of the parties involved and investing in real estate securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• U.S. Government Securities Risks.** U.S. government securities are not guaranteed against price movement and may decrease in value. Some U.S. government securities are supported by the full faith and credit of the U.S. Treasury, while others may be supported only by the discretionary authority of the U.S. government to purchase certain obligations of a federal agency or U.S. government sponsored enterprise ("GSE") or only by the right of the issuer to borrow from the U.S. Treasury. While the U.S. government provides financial support to such agencies and GSEs, no assurance can be given that the U.S. government will always do so. Other obligations are backed solely by the GSE's own resources. Investments in securities issued by GSEs that are not backed by the U.S. Treasury are subject to higher credit risk than those that are backed by the U.S. Treasury.

&nbsp;&nbsp;&nbsp;&nbsp;**• Mortgage-Backed and Asset-Backed Securities Risks.** Mortgage-backed and other asset-backed securities are subject to the risks of traditional fixed-income instruments. However, they are also subject to prepayment risk and extension risk, meaning that if interest rates fall, the underlying debt may be repaid ahead of schedule, reducing the value of the Fund's investments and if interest rates rise, there may be fewer prepayments, which would cause the average bond maturity to rise, increasing the potential for the Fund to lose money. Mortgage-backed and other asset-backed securities are also susceptible to changes in lending standards and lending rates. In addition, mortgage-backed securities comprised of subprime mortgages and investments in other asset-backed securities collateralized by subprime loans may be subject to a higher degree of credit risk

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and valuation risk. Additionally, such securities may be subject to a higher degree of liquidity risk, because the liquidity of such investments may vary dramatically over time.

Certain mortgage-backed securities may be secured by pools of mortgages on single-family, multi-family properties, as well as commercial properties. Similarly, asset-backed securities may be secured by pools of loans, such as corporate loans, student loans, automobile loans and credit card receivables. The credit risk on such securities is affected by homeowners or borrowers defaulting on their loans. The values of assets underlying mortgage-backed and asset-backed securities may decline and therefore may not be adequate to cover underlying investors. Some mortgage-backed and asset-backed securities have experienced extraordinary weakness and volatility in recent years. Possible legislation in the area of residential mortgages, credit cards, corporate loans and other loans that may collateralize the securities in which the Fund may invest could negatively impact the value of the Fund's investments. To the extent the Fund focuses its investments in particular types of mortgage-backed or asset-backed securities, the Fund may be more susceptible to risk factors affecting such types of securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• Unrated Securities Risks.** Unrated securities may be less liquid than comparable rated securities and involve the risk that Angel Oak may not accurately evaluate the security's comparative credit rating.

&nbsp;&nbsp;&nbsp;&nbsp;**• Residential Loans and Mortgages Risk.** In addition to interest rate, default and other risks of fixed income securities, investments in whole loans and debt instruments backed by residential loans or mortgages, (or pools of loans or mortgages) carry additional risks, including the possibility that the quality of the collateral may decline in value and the potential for the liquidity of residential loans and mortgages to vary over time. These risks are greater for subprime residential and mortgage loans. Because they do not trade in a liquid market, residential loans typically can only be sold to a limited universe of institutional investors and may be difficult for the Fund to value. In addition, in the event that a loan is foreclosed on, the Fund could become the owner (in whole or in part) of any collateral, which may include, among other things, real estate or other real or personal property, and the Fund would bear the costs and liabilities of owning, holding or disposing of such property.

&nbsp;&nbsp;&nbsp;&nbsp;• **Commercial and Construction Loan Risk.** In addition to interest rate, default and other risks of fixed income securities, investments in commercial loans secured by income-producing commercial real estate carry additional risks arising from dependence on the cash flow of the underlying property and potential concentrations in particular property types or geographies. In addition, investments in ground-up construction loans present heightened risks including the possibility that a project is not completed on time or within budget and that collateral under construction may generate little or no income to service the debt during the construction period.

&nbsp;&nbsp;&nbsp;&nbsp;**• Management Risk.** The Fund may not meet its investment objective based on the Adviser's success or failure to implement investment strategies for the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;**• Sector Risk**. To the extent the Fund invests more heavily in particular sectors of the economy, its performance will be especially sensitive to developments that significantly affect those sectors.

&nbsp;&nbsp;&nbsp;&nbsp;**• Floating or Variable Rate Securities Risk.** Floating or variable rate securities pay interest at rates that adjust in response to changes in a specified interest rate or reset at predetermined dates (such as the end of a calendar quarter). Securities with floating or variable interest rates are generally less sensitive to interest rate changes than securities with fixed interest rates, but may decline in value if their interest rates do not rise as much, or as quickly, as comparable market interest rates. Although floating or variable rate securities are generally less sensitive to interest rate risk than fixed rate securities, they are subject to credit, liquidity and default risk and may be subject to legal or contractual restrictions on resale, which could impair their value.

Instruments in which the Fund invests may pay interest at floating rates or may be subject to interest caps or floors tied to floating rates, such as the Secured Overnight Financing Rate. The Fund and issuers of instruments in which the Fund invests may also obtain financing at floating rates. Derivative instruments utilized by the Fund and/or issuers of instruments in which the Fund may invest may also reference floating rates. The Fund also may utilize leverage or borrowings primarily based on floating rates.

&nbsp;&nbsp;&nbsp;&nbsp;**• Liquidity and Valuation Risks.** It may be difficult for the Fund to purchase and sell particular investments within a reasonable time at a fair price, or the price at which it has been valued for purposes of the Fund's NAV, causing the Fund to be less liquid and unable to sell securities for what the Adviser believes is the appropriate price of the investment. Valuation of portfolio investments may be difficult, such as during periods of market turmoil or reduced liquidity and for investments that trade infrequently or irregularly. In these and other circumstances, an investment may be valued using fair value methodologies, which are inherently subjective, reflect good faith judgments based on available information and may not accurately estimate the price at which the Fund could sell the investment at that time. Based on its investment strategies, a significant portion of the Fund's investments can be difficult to value and potentially less liquid and therefore particularly prone to these risks.

&nbsp;&nbsp;&nbsp;&nbsp;**• Other Investment Companies Risks.** The Fund will incur higher and duplicative expenses when it invests in mutual funds, exchange-traded funds ("ETFs"), and other investment companies, which may include those that are part of the same group of

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investment companies as the Fund ("affiliated underlying funds"). There is also the risk that the Fund may suffer losses due to the investment practices of the underlying funds. When the Fund invests in other investment companies, the Fund will be subject to substantially the same risks as those associated with the direct ownership of securities held by such investment companies. ETFs may be less liquid than other investments, and thus their share values more volatile than the values of the investments they hold. Investments in ETFs are also subject to the following risks: (i) the market price of an ETF's shares may trade above or below their NAV; (ii) an active trading market for an ETF's shares may not develop or be maintained; and (iii) trading of an ETF's shares may be halted for a number of reasons.

The Adviser may be subject to potential conflicts of interest in allocating the Fund's assets to underlying funds, such as a potential conflict in selecting affiliated underlying funds over unaffiliated underlying funds. In addition, the Fund's portfolio managers may be subject to potential conflicts of interest in allocating the Fund's assets among underlying funds, as certain of the Fund's portfolio managers may also manage an affiliated underlying fund in which the Fund may invest. Both the Adviser and the Fund's portfolio managers have a fiduciary duty to the Fund to act in the Fund's best interest when selecting underlying funds. Under the oversight of the Board of Trustees, the Adviser will carefully analyze any such potential conflicts of interest and will take steps to minimize and, where possible, eliminate them.

&nbsp;&nbsp;&nbsp;&nbsp;**• Bank Subordinated Debt Risks.** Banks may issue subordinated debt securities, which have a lower priority to full payment behind other more senior debt securities. In addition to the risks generally associated with fixed income instruments (e.g., interest rate risk, credit risk, etc.), bank subordinated debt is also subject to risks inherent to banks. Because banks are highly regulated and operate in a highly competitive environment, it may be difficult for a bank to meet its debt obligations. Banks also may be affected by changes in legislation and regulations applicable to the financial markets. Bank subordinated debt is often issued by smaller community banks that may be overly concentrated in a specific geographic region, lack the capacity to comply with new regulatory requirements or lack adequate capital. Subordinated debt, senior debt and preferred securities of banks and diversified financials companies are subject to the risks generally associated with the financials sector. See "Financials Sector Risk."

&nbsp;&nbsp;&nbsp;&nbsp;**• Financials Sector Risk**. The Fund may invest in companies in the financials sector, and therefore the performance of the Fund could be negatively impacted by events affecting this sector. This sector can be significantly affected by changes in interest rates, government regulation, the rate of defaults on corporate, consumer and government debt, the availability and cost of capital, and fallout from the housing and sub-prime mortgage crisis that began in 2007. This sector has experienced significant losses in the past, and the impact of more stringent capital requirements and of past or future regulation on any individual financial company or on the sector as a whole cannot be predicted. In recent years, cyber attacks and technology malfunctions and failures have become increasingly frequent in this sector and have caused significant losses.

&nbsp;&nbsp;&nbsp;&nbsp;**• Rating Agencies Risks.** Ratings are not an absolute standard of quality, but rather general indicators that reflect only the view of the originating rating agencies from which an explanation of the significance of such ratings may be obtained. There is no assurance that a particular rating will continue for any given period of time or that any such rating will not be revised downward or withdrawn entirely. Such changes may negatively affect the liquidity or market price of the securities in which the Fund invests. The ratings of Structured Products may not adequately reflect the credit risk of those assets due to their structure.

&nbsp;&nbsp;&nbsp;&nbsp;**• Large Shareholder Transactions Risk.** Shares of the Fund are offered to certain other investment companies, large retirement plans and other large investors. As a result, the Fund is subject to the risk that those shareholders may purchase or redeem a large amount of shares of the Fund. To satisfy such large shareholder redemptions, the Fund may have to sell portfolio securities at times when it would not otherwise do so, which may negatively impact the Fund's NAV and liquidity. In addition, large purchases of Fund shares could adversely affect the Fund's performance to the extent that the Fund does not immediately invest cash it receives and therefore holds more cash than it ordinarily would. Large shareholder activity could also generate increased transaction costs and cause adverse tax consequences.

&nbsp;&nbsp;&nbsp;&nbsp;**• Illiquid Investments Risks.** The Fund may, at times, hold illiquid investments, by virtue of the absence of a readily available market for certain of its investments, or because of legal or contractual restrictions on sales. The Fund could lose money if it is unable to dispose of an investment at a time or price that is most beneficial to the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;**• Regulatory and Legal Risks.** U.S. and non-U.S. government agencies and other regulators regularly adopt new regulations and legislatures enact new statutes that affect the investments held by the Fund, the strategies used by the Fund or the level of regulation or taxation that applies to the Fund. These statutes and regulations may impact the investment strategies, performance, costs and operations of the Fund or the taxation of its shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;**• Community Bank Risks.** The Fund's investments in community banks may make the Fund more economically vulnerable in the event of a downturn in the banking industry, including economic downturns impacting a particular region. Community banks may also be subject to greater lending risks than larger banks, including the risks associated with mortgage loans, and may have fewer resources to devote towards employing and retaining strong management employees and implementing a thorough compliance program. Additionally, community banks are subject to substantial regulations that could adversely affect their ability to operate and the value of the Fund investments, including from future banking regulations.

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&nbsp;&nbsp;&nbsp;&nbsp;**• High-Yield Securities Risks.** High-yield securities (also known as junk bonds) carry a greater degree of risk and are more volatile than investment grade securities and are considered speculative. High-yield securities may be issued by companies that are restructuring, are smaller and less creditworthy, or are more highly indebted than other companies. This means that they may have more difficulty making scheduled payments of principal and interest. Changes in the value of high-yield securities are influenced more by changes in the financial and business position of the issuing company than by changes in interest rates when compared to investment grade securities. The Fund's investments in high-yield securities expose it to a substantial degree of credit risk.

&nbsp;&nbsp;&nbsp;&nbsp;**• Reverse Repurchase Agreement Risks.** A reverse repurchase agreement is the sale by the Fund of a debt obligation to a party for a specified price, with the simultaneous agreement by the Fund to repurchase that debt obligation from that party on a future date at a higher price. Similar to borrowing, reverse repurchase agreements provide the Fund with cash for investment purposes, which creates leverage and subjects the Fund to the risks of leverage. Reverse repurchase agreements also involve the risk that the other party may fail to return the securities in a timely manner or at all. The Fund could lose money if it is unable to recover the securities and/or if the value of collateral held by the Fund, including the value of the investments made with cash collateral, is less than the value of securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• Derivatives Risks.** The Fund's derivatives and other similar instruments (collectively referred to in this section as "derivatives" or "derivative instruments") have risks, including the imperfect correlation between the value of such instruments and the underlying assets, rate or index; the loss of principal, including the potential loss of amounts greater than the initial amount invested in the derivative instrument; the possible default of the other party to the transaction; and illiquidity of the derivative investments. Changes in the value of a derivative may also create margin delivery or settlement payment obligations for the Fund. If a counterparty becomes bankrupt or otherwise fails to perform its obligations under a derivative contract due to financial difficulties, the Fund may experience significant delays in obtaining any recovery under the derivative contract in a bankruptcy or other reorganization proceeding. Certain derivatives may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. The use of derivatives is also subject to operational risk, which refers to risk related to potential operational issues, including documentation issues, settlement issues, system failures, inadequate controls, and human error, as well as legal risk, which refers to the risk of loss resulting from insufficient documentation, insufficient capacity or authority of counterparty, or legality or enforceability of a contract. Derivatives are also subject to market risk, which refers to the risk that markets could experience a change in volatility that adversely impacts fund returns and the fund's obligations and exposures. Certain of the Fund's transactions in derivatives could also affect the amount, timing and character of distributions to shareholders, which may result in the Fund realizing more short-term capital gain and ordinary income subject to tax at ordinary income tax rates than it would if it did not engage in such transactions, which may adversely impact the Fund's after-tax returns.

The derivative instruments and techniques that the Fund may principally use include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Futures.* A futures contract is a standardized agreement to buy or sell a specific quantity of an underlying instrument at a specific price at a specific future time. A decision as to whether, when and how to use futures involves the exercise of skill and judgment and even a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures can be highly volatile, using futures can lower total return, and the potential loss from futures can exceed the Fund's initial investment in such contracts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Options*. If the Fund buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreed-upon price typically in exchange for a premium paid by the Fund. If the Fund sells an option, it sells to another person the right to buy from or sell to the Fund a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreed-upon price typically in exchange for a premium received by the Fund. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Swaps.* A swap contract is an agreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indexes, reference rates, currencies or other instruments. Swap agreements are particularly subject to counterparty credit, liquidity, valuation, correlation, leverage, operational and legal risk. Swaps could result in losses if interest rate or foreign currency exchange rates or credit quality changes are not correctly anticipated by the Fund or if the reference index, security or investments do not perform as expected. The use of credit default swaps can result in losses if the Fund's assumptions regarding the creditworthiness of the underlying obligation prove to be incorrect.

&nbsp;&nbsp;&nbsp;&nbsp;**• RIC-Related Risks of Investments Generating Non-Cash Taxable Income.** Certain of the Fund's investments, particularly, debt obligations, such as zero coupon bonds, that will be treated as having "market discount" and/or original issue discount

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("OID") for U.S. federal income tax purposes and certain CLOs that may be considered passive foreign investment companies or controlled foreign corporations, will require the Fund to recognize taxable income in excess of the cash generated on those investments in that tax year, which could cause the Fund to have difficulty satisfying the annual distribution requirements applicable to regulated investment companies ("RICs") and avoiding Fund-level U.S. federal income and/or excise taxes.

&nbsp;&nbsp;&nbsp;&nbsp;**• Risks Relating to Fund's RIC Status.** To qualify and remain eligible for the special tax treatment accorded to a RIC and its shareholders under the Internal Revenue Code of 1986, as amended (the "Code"), the Fund must meet certain source-of-income, asset diversification and annual distribution requirements. If the Fund fails to qualify as a RIC for any reason and becomes subject to corporate tax, the resulting corporate taxes could substantially reduce its net assets, the amount of income available for distribution and the amount of its distributions.

&nbsp;&nbsp;&nbsp;&nbsp;**• Short Sales Risks.** The Fund may make short sales of securities, which involves selling a security it does not own in anticipation that the price of the security will decline. Short sales may involve substantial risk and leverage. Short sales expose the Fund to the risk that it will be required to buy the security sold short when the security has appreciated in value or is unavailable, thus resulting in a loss to the Fund. Short sales also involve the risk that losses may exceed the amount invested and may be unlimited.

&nbsp;&nbsp;&nbsp;&nbsp;**• Uncertain Tax Treatment.** Below investment grade instruments may present special tax issues for the Fund. U.S. federal income tax rules are not entirely clear about issues such as when the Fund may cease accruing interest, OID or market discount, when and to what extent deductions may be taken for bad debts or worthless instruments, how payments received on obligations in default should be allocated between principal and income and whether exchanges of debt obligations in a bankruptcy or workout context are taxable, which may make it difficult for the Fund to satisfy the annual distribution requirements applicable to RICs.

&nbsp;&nbsp;&nbsp;&nbsp;**• Equity Market Risk.** Equity securities are susceptible to general stock market fluctuations and to volatile increases and decreases in value. The equity market may experience declines, and companies whose equity securities are in the Fund's portfolio may not increase their earnings at the rate anticipated. The Fund's NAV and investment return will fluctuate based upon changes in the value of its portfolio securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• Subsidiary Risk.** To the extent the Fund invests through the Subsidiary, it will be exposed to the risks associated with the Subsidiary's investments. The Subsidiary is not registered as an investment company under the 1940 Act and, therefore, will not be subject to the investor protections and substantive regulation of the 1940 Act, although the Subsidiary will be managed pursuant to all applicable 1940 Act compliance policies and procedures of the Fund. Changes in the laws of the United States and/or the jurisdiction in which the Subsidiary is organized could result in the inability of the Fund and/or the Subsidiary to operate as described in this Prospectus and could adversely affect the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;**• Repurchase Agreement Risks.** Repurchase agreements typically involve the acquisition by the Fund of fixed-income securities from a selling financial institution such as a bank or broker-dealer. The Fund may incur a loss if the other party to a repurchase agreement is unwilling or unable to fulfill its contractual obligations to repurchase the underlying security.

**Performance** 

The following performance information provides some indication of the risks of investing in the Fund. The bar chart shows changes in the performance of the Class A shares of the Fund from year-to-year. The table below shows how the average annual total returns of the Fund's Class A, Class C, and Institutional Class shares compare over time to those of a broad-based securities market index.

The Fund is the successor to the investment performance of the Angel Oak Multi-Strategy Income Fund (the "Predecessor Multi-Strategy Income Fund") as a result of the reorganization of the Predecessor Multi-Strategy Income Fund into the Fund on April 10, 2015. Accordingly, the performance information shown below for periods prior to April 10, 2015 is that of the Predecessor Multi-Strategy Income Fund. The Predecessor Multi-Strategy Income Fund was also advised by the Adviser and had the same investment objective, policies, and strategies as the Fund.

Performance information represents only past performance, before and after taxes, and does not necessarily indicate future results. Updated performance information is available online at www.angeloakcapital.com or by calling (855) 751-4324 (toll free).

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**Annual Total Returns for Class A Shares**

(for years ended December 31<sup>st</sup>)

![12852](ck0001612930-20260529_g2.jpg)

Sales loads are not reflected in the bar chart. If these amounts were reflected, returns would be less than those shown.

The calendar year-to-date total return as of March 31, 2026 for the Fund's Class A shares was 0.94%. During the periods shown in the chart, the highest quarterly return was 7.25% (for the quarter ended June 30, 2020) and the lowest quarterly return was -12.68% (for the quarter ended March 31, 2020).

**Angel Oak Multi-Strategy Income Fund** 

**Average Annual Total Returns** 

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **For the period ended December 31, 2025** | **1 Year** | **5 Years** | **10 Years** | **Since Inception**<br>**(6/28/11)** | **Since Inception**<br>**(8/16/12)** | **Since Inception**<br>**(8/4/15)** |
| **Class A** | | | | | | |
| – Return Before Taxes | 4.99% | 1.51% | 2.22% | 4.21% | N/A | N/A |
| – Return After Taxes on Distributions<sup>1</sup> | 2.69% | -0.65% | 0.08% | 2.01% | N/A | N/A |
| – Return After Taxes on Distributions and Sale of Fund Shares<sup>1</sup> | 2.91% | 0.19% | 0.74% | 2.30% | N/A | N/A |
| **Class C** |  |  |  |  |  |  |
| – Return Before Taxes | 5.61% | 1.19% | 1.69 | N/A | N/A | 1.46% |
| **Institutional Class** |  |  |  |  |  |  |
| – Return Before Taxes | 7.71% | 2.22% | 2.70% | N/A | 3.33% | N/A |
| **Bloomberg U.S. Aggregate Bond Index**<br>(reflects no deduction for fees, expenses, and taxes) | 7.30% | -0.36% | 2.01% | 2.30% | 1.94% | 1.93% |

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NOTE: Class A shares commenced operations on June 28, 2011 as part of the Predecessor Multi-Strategy Income Fund and Institutional Class shares commenced operations on August 16, 2012 as part of the Predecessor Multi-Strategy Income Fund.

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. In certain cases, the figure representing "Return After Taxes on Distributions and Sale of Fund Shares" may be higher than the other return figures for the same period, since a higher after-tax return results when a capital loss occurs upon redemption and provides an assumed tax deduction that benefits the investor. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns are shown for Class A only, and after-tax returns for other classes will vary.

**Portfolio Management** 

***Investment Adviser.*** Angel Oak Capital Advisors, LLC.

***Portfolio Managers.*** 

Kin Lee, Senior Portfolio Manager of the Adviser, has been a portfolio manager of the Fund since 2016.

Sreeniwas (Sreeni) V. Prabhu, Managing Partner, Co-CEO, and Group Chief Investment Officer of the Adviser, has been a portfolio manager of the Fund since 2015.

Namit Sinha, Chief Investment Officer of the Adviser, has been a portfolio manager of the Fund since 2024.

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Clayton Triick, CFA®, Head of Portfolio Management, Public Strategies of the Adviser, has been a portfolio manager of the Fund since 2019.

**Purchase and Sale of Fund Shares**

You may purchase or redeem Class A, Class C, and Institutional Class shares of the Fund on any business day by written request via mail (Angel Oak Multi-Strategy Income Fund, c/o U.S. Bank Global Fund Services, PO Box 219252, Kansas City, MO 64121-9252), by wire transfer, or by telephone at (855) 751-4324 (toll free) or through certain financial intermediaries. Investors who wish to purchase or redeem Fund shares through a financial intermediary should contact the financial intermediary directly. The minimum initial and subsequent investment amounts for each class of shares are shown below.

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| | | |
|:---|:---|:---|
| **Share Class** | **Minimum Initial Investment** | **Minimum Additional Investment** |
| **Class A Shares—**All account types | $1000 | $100 |
| **Class C Shares—**All account types | $1000 | $100 |
| **Institutional Class Shares—**All account types | $500000 | $100 |

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**Tax Information** 

The Fund's distributions are taxed as ordinary income or capital gains, unless you are investing through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.

**Payments to Broker-Dealers and Other Financial Intermediaries** 

If you purchase Fund shares through a broker-dealer or other financial intermediary (such as a bank or trust company), the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create conflicts of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary's website for more information.

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**ANGEL OAK ULTRASHORT INCOME FUND SUMMARY**<br>

**Investment Objective** 

The Angel Oak UltraShort Income Fund (the "Fund") seeks to provide current income while seeking to minimize price volatility and maintain liquidity.

**Fees and Expenses of the Fund** 

This table describes the fees and expenses that you may pay if you buy, hold and sell shares of the Fund. **You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and examples below.** You may qualify for sales charge discounts or waivers if you and your family invest, or agree to invest in the future, at least $100,000 in Class A1 shares of the Fund. More information about these and other discounts or waivers is available from your financial professional, in the sections "Sales Charges—Class A1 Shares" on page 43 of the Prospectus, and in "Appendix A—Waivers and Discounts Available from Intermediaries."

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| | | | |
|:---|:---|:---|:---|
| **Shareholder fees (fees paid directly from your investment)** | **Class A** | **Class A1** | **Institutional Class** |
| Maximum Sales Charge (Load) Imposed on Purchases (as a % of the offering price) |  | 1.50% |  |
| Maximum Deferred Sales Charge (Load) (as a % of amount redeemed) |  | 0.50% ¹ |  |

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**Annual Fund Operating Expenses (expenses that you pay each year as a** 

**percentage of the value of your investment)** 

---

| | | |
|:---|:---|:---|
| Management Fees | 0.44% | 0.44% |
| Distribution and Service (12b-1) Fees | 0.25% | 0.00% |
| Other Expenses | <u>0.11%</u> | <u>0.11%</u> |
| Total Annual Fund Operating Expenses | 0.80% | 0.55% |
| Less Fee Waiver/Expense Reimbursement<sup>2</sup> | <u>-0.20%</u> | <u>-0.20%</u> |
| Total Annual Fund Operating Expenses After Fee Waiver/Expense Reimbursement<sup>2</sup> | 0.60% | 0.35% |

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<sup>1&nbsp;&nbsp;&nbsp;&nbsp;</sup>There is no initial sales charge on purchases of Class A1 shares of $250,000 or more, however, a contingent deferred sales charge of up to 0.50% will be imposed if such Class A1 shares are redeemed within twelve (12) months of their purchase.

<sup>2</sup>&nbsp;&nbsp;&nbsp;&nbsp;Angel Oak Capital Advisors, LLC (the "Adviser") has contractually agreed to waive its fees and/or reimburse certain expenses (exclusive of any front-end sales loads, taxes, interest expenses, dividend and interest expenses related to short sales, brokerage commissions, 12b-1 fees, acquired fund fees and expenses, expenses incurred in connection with any merger or reorganization, any transaction-related expenses and fees arising out of transactions effected on behalf of the Fund, litigation and potential litigation expenses, expenses of shareholder proposals, contested elections, or non-routine shareholder meetings, and other non-routine expenses or extraordinary expenses not incurred in the ordinary course of the Fund's business) to limit the Total Annual Fund Operating Expenses After Fee Waiver/Expense Reimbursement to 0.35% of the Fund's average daily net assets (the "Expense Limit") through September 30, 2027. The contractual arrangement may only be changed or eliminated by the Board of Trustees upon 60 days' written notice to the Adviser. The Adviser may recoup from the Fund any waived amount or reimbursed expenses pursuant to this agreement if such recoupment does not cause the Fund's Total Annual Fund Operating Expenses after such recoupment to exceed the lesser of (i) the Expense Limit in effect at the time of the waiver or reimbursement and (ii) the Expense Limit in effect at the time of recoupment and the recoupment is made within three years after the end of the month in which the Adviser incurred the expense.

**Expense Example** 

The following examples are intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The examples assume that you invest $10,000 in the Fund for the time periods indicated and then redeem or continue to hold all of your shares at the end of those periods. The examples also assume that your investment has a 5% return each year and that the Fund's operating expenses remain the same. The expenses below reflect the Expense Limit for the first year only. Although your actual costs may be higher or lower and the Fund's actual return may be greater or less than the hypothetical 5%, based on these assumptions your costs would be:

**If you redeem your shares at the end of each period:** 

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| | | | | |
|:---|:---|:---|:---|:---|
| | <u>One Year</u> | <u>Three Years</u> | <u>Five Years</u> | <u>Ten Years</u> |
| Class A shares | $61 | $235 | $425 | $971 |
| Class A1 shares | $330 | $569 | $880 | $1764 |
| Institutional Class shares | $36 | $156 | $287 | $670 |

---

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**If you do not redeem your shares:** 

---

| | | | | |
|:---|:---|:---|:---|:---|
| | <u>One Year</u> | <u>Three Years</u> | <u>Five Years</u> | <u>Ten Years</u> |
| Class A shares | $61 | $235 | $425 | $971 |
| Class A1 shares | $278 | $569 | $880 | $1764 |
| Institutional Class shares | $36 | $156 | $287 | $670 |

---

**Portfolio Turnover** 

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual operating expenses or in the example above, affect the Fund's performance. During the most recent fiscal year ended January 31, 2026, the portfolio turnover rate for the Fund was 76% of the average value of its portfolio.

**Principal Investment Strategies** 

In pursuing its investment objective, the Fund will, under normal circumstances, invest in securities which cause the Fund to have a dollar-weighted average maturity of less than two years and a dollar-weighted average duration of less than one year.

The Fund invests primarily in agency and non-agency residential mortgage-backed securities ("RMBS"), asset-backed securities ("ABS"), including securities backed by assets such as credit card receivables, student loans, automobile loans, and residential and commercial real estate, collateralized loan obligations ("CLOs"), collateralized debt obligations ("CDOs"), collateralized mortgage obligations ("CMOs"), and other debt securitizations (collectively, "Structured Products"); corporate debt and other debt securities; and U.S. Treasury and U.S. government agency securities.

The Fund may invest up to 30% of its net assets in CLOs.

The Fund may invest in the securities of other investment companies (including those that are part of the same group of investment companies as the Fund) that pursue an investment strategy that supports the Fund's investment objective.

The Fund will concentrate its investments in agency and non-agency RMBS and commercial mortgage-backed securities ("CMBS") (collectively, "MBS"). This means that, under normal circumstances, the Fund will invest more than 25% of its total assets in MBS (measured at the time of purchase). The Fund will not concentrate its investments in any other group of industries. The Fund's policy to concentrate its investments in MBS is fundamental and may not be changed without shareholder approval.

The Fund may invest up to 15% of its net assets in investments that are deemed to be illiquid, which may include private placements, certain Rule 144A securities (which are subject to resale restrictions), and securities of issuers that are bankrupt or in default.

The Fund is not a money market fund and does not seek to maintain a stable net asset value ("NAV").

The Fund may engage in active and frequent trading of its portfolio securities.

The Fund may invest, without limitation, in securities of any maturity and duration, but, under normal circumstances, the Fund will have a dollar-weighted average maturity of less than two years and a dollar-weighted average duration of less than one year. Maturity refers to the length of time until a debt security's principal is repaid with interest. Duration is a measure used to determine the sensitivity of a security's price to changes in interest rates. Duration incorporates a security's yield, coupon, final maturity, call and put features and prepayment exposure into one measure, with a higher duration indicating greater sensitivity to interest rates. For example, if a portfolio has a duration of two years, and interest rates increase (fall) by 1%, the portfolio would decline (increase) in value by approximately 2%. However, duration may not accurately reflect the true interest rate sensitivity of instruments held by the Fund and, therefore the Fund's exposure to changes in interest rates.

The Fund's investments in RMBS and ABS will span a broad segment of consumer creditworthiness segments, which will include exposure to prime, near-prime, and subprime consumers.

The Fund may invest in high-yield securities and securities that are not rated by any rating agencies. These "high-yield" securities (also known as "junk bonds") will be rated BB+ or lower by S&P Global Ratings or will be of equivalent quality rating from another Nationally Recognized Statistical Ratings Organization. If a bond is unrated, the Adviser may determine whether it is of comparable quality and therefore eligible for the Fund's investment. Although the Fund will not acquire investments of issuers that are in default at the time of investment, the Fund may hold such securities if an investment subsequently defaults.

In pursuing its investment objective or for hedging purposes, the Fund may utilize short selling, borrowing, and various types of derivative instruments, including structured products, swaps, futures contracts, and options, although the Adviser expects that not all such derivatives will be used at all times. Such derivatives may trade over-the-counter or on an exchange and may principally be used for one or more of the following purposes: speculation, currency hedging, duration management, credit deterioration hedging,

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hedges against broad market movements, or to pursue the Fund's investment objective. The Fund may borrow to the maximum extent permitted by applicable law. The Fund may also invest in reverse repurchase agreements.

The Fund's allocation of its assets into various asset classes within its investment strategy will depend on the views of the Adviser as to the best value relative to what is currently available in the marketplace. Investment decisions are made based on fundamental research and analysis to identify issuers with the ability to improve their credit profile over time with attractive valuations, resulting in both income and potential capital appreciation. In selecting investments, the Adviser may consider maturity, yield, and ratings information and opportunities for price appreciation among other criteria. The Adviser also analyzes a variety of factors when selecting investments for the Fund, such as collateral quality, credit support, structure and market conditions. The Adviser attempts to diversify risks that arise from position sizes, geography, ratings, duration, deal structure and collateral values. The Adviser will also seek to invest in securities that have relatively low volatility. The Adviser seeks to limit risk of principal by targeting assets that it considers undervalued. From time to time, the Fund may allocate its assets so as to focus on particular types of securities. As part of its investment process, the Adviser also considers certain environmental, social and governance ("ESG") and sustainability factors that it believes could have a material impact on certain securities in which the Fund may invest. These determinations may not be conclusive, and securities that may be negatively impacted by such factors may be purchased and retained by the Fund while the Fund may divest or not invest in securities that may be positively impacted by such factors.

**Principal Risks** 

The principal risks of investing in the Fund are summarized below. You should carefully consider the Fund's investment risks before deciding whether to invest in the Fund. There may be circumstances that could prevent the Fund from achieving its investment objective and you may lose money by investing in the Fund. An investment in the Fund is not a deposit at a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

&nbsp;&nbsp;&nbsp;&nbsp;**• Fixed-Income Instruments Risks.** The Fund will invest in fixed-income instruments and securities. Such investments may be secured, partially secured or unsecured and may be unrated, and whether or not rated, may have speculative characteristics. The market price of the Fund's investments will change in response to changes in interest rates and other factors. Generally, when interest rates rise, the values of fixed-income instruments fall, and vice versa. In typical interest rate environments, the prices of longer-term fixed-income instruments generally fluctuate more than the prices of shorter-term fixed-income instruments as interest rates change. In addition, a fund with a longer average portfolio duration will be more sensitive to changes in interest rates than a fund with a shorter average portfolio duration. A fund with a negative average portfolio duration may decline in value as interest rates decrease. Most high yield investments pay a fixed rate of interest and are therefore vulnerable to inflation risk (inflation rates are currently elevated relative to normal conditions). The obligor of a fixed-income instrument may not be able or willing to pay interest or to repay principal when due in accordance with the terms of the associated agreement.

&nbsp;&nbsp;&nbsp;&nbsp;**• General Market Risk.** The capital markets may experience periods of disruption, instability and volatility. Political, geopolitical, natural and other events, including war, terrorism, trade disputes, tariffs and other trade barriers, government shutdowns, market closures, natural and environmental disasters, epidemics, pandemics and other public health crises and related events have led, and in the future may lead, to economic uncertainty, decreased economic activity, increased market volatility and other disruptive effects on U.S. and global economies and markets. Such conditions may materially and adversely affect the markets globally and in the jurisdictions in which the Fund invests, which may have a negative impact on the Fund's performance. The Fund's net asset value ("NAV") and investment return will fluctuate based upon changes in the value of its portfolio securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• Credit Risk.** Credit risk is the risk that the Fund could lose money if the issuer or guarantor of a fixed income security, or the counterparty to a derivative contract, is unable or unwilling to meet its financial obligations.

&nbsp;&nbsp;&nbsp;&nbsp;**• Interest Rate Risk.** The Fund is exposed to risks associated with changes in interest rates, including the possibility that, in a period of rising interest rates, securities may exhibit additional volatility and may lose value.

&nbsp;&nbsp;&nbsp;&nbsp;**• Prepayment Risk.** When interest rates decline, fixed income securities with stated interest rates may have the principal paid earlier than expected, requiring the Fund to invest the proceeds at generally lower interest rates.

&nbsp;&nbsp;&nbsp;&nbsp;**• Structured Products Risks.** The Fund may invest in Structured Products, including CLOs, CDOs, CMOs, and other asset-backed securities and debt securitizations. Some Structured Products have credit ratings, but are typically issued in various classes with various priorities. Normally, Structured Products are privately offered and sold (that is, they are not registered under the securities laws), which means less information about the security may be available as compared to publicly offered securities and only certain institutions may buy and sell them. As a result, investments in Structured Products may be characterized by the Fund as illiquid securities. An active dealer market may exist for Structured Products that qualify for Rule 144A transactions, but there can be no assurance that such a market will exist or will be active enough for the Fund to sell such securities. In addition to the typical risks associated with fixed-income securities and asset-backed securities, CLOs and CDOs carry additional risks including, but not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii) the risk that the collateral may default, decline in value or quality or be

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downgraded by a rating agency; (iii) the Fund may invest in tranches of Structured Products that are subordinate to other tranches; (iv) the structure and complexity of the transaction and the legal documents could lead to disputes among investors regarding the characterization of proceeds; (v) risk of forced "fire sale" liquidation due to technical defaults such as coverage test failures; and (vi) the Structured Product's manager may perform poorly. The senior and junior tranches of Structured Products may have floating or variable interest rates and are subject to the risks associated with securities tied to floating or variable interest rates. The Fund may also invest in the equity tranches of a Structured Product, which typically represent the first loss position in the Structured Product, are unrated and are subject to higher risks. Equity tranches of Structured Products typically do not have a fixed coupon and payments on equity tranches will be based on the income received from the underlying collateral and the payments made to the senior tranches, both of which may be based on floating rates.

&nbsp;&nbsp;&nbsp;&nbsp;**• Borrowing Risks and Leverage Risks.** Borrowing for investment purposes creates leverage, which will exaggerate the effect of any change in the value of securities in the Fund's portfolio on the Fund's NAV and, therefore, may increase the volatility of the Fund. Money borrowed will be subject to interest and other costs (including commitment fees and/or the cost of maintaining minimum average balances). Unless the income and capital appreciation, if any, on securities acquired with borrowed funds exceed the cost of borrowing, the use of leverage will diminish the investment performance of the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;**• Extension Risk**. An issuer could exercise its right to pay principal on an obligation held by the Fund (such as a mortgage-backed security) later than expected. This may happen when there is a rise in interest rates. Under these circumstances, the value of the obligation will decrease, and the Fund will also suffer from the inability to reinvest in higher yielding securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• Concentration in Certain Mortgage-Backed Securities Risk.** The risks of concentrating in residential mortgage-backed securities (agency and non-agency) and commercial mortgage-backed securities include susceptibility to changes in lending standards, interest rates and lending rates, and the risks associated with the market's perception of issuers, the creditworthiness of the parties involved and investing in real estate securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• U.S. Government Securities Risks.** U.S. government securities are not guaranteed against price movement and may decrease in value. Some U.S. government securities are supported by the full faith and credit of the U.S. Treasury, while others may be supported only by the discretionary authority of the U.S. government to purchase certain obligations of a federal agency or U.S. government sponsored enterprise ("GSE") or only by the right of the issuer to borrow from the U.S. Treasury. While the U.S. government provides financial support to such agencies and GSEs, no assurance can be given that the U.S. government will always do so. Other obligations are backed solely by the GSE's own resources. Investments in securities issued by GSEs that are not backed by the U.S. Treasury are subject to higher credit risk than those that are backed by the U.S. Treasury.

&nbsp;&nbsp;&nbsp;&nbsp;**• Unrated Securities Risks.** Unrated securities may be less liquid than comparable rated securities and involve the risk that Angel Oak may not accurately evaluate the security's comparative credit rating.

&nbsp;&nbsp;&nbsp;&nbsp;**• Mortgage-Backed and Asset-Backed Securities Risks.** Mortgage-backed and other asset-backed securities are subject to the risks of traditional fixed-income instruments. However, they are also subject to prepayment risk and extension risk, meaning that if interest rates fall, the underlying debt may be repaid ahead of schedule, reducing the value of the Fund's investments and if interest rates rise, there may be fewer prepayments, which would cause the average bond maturity to rise, increasing the potential for the Fund to lose money. Mortgage-backed and other asset-backed securities are also susceptible to changes in lending standards and lending rates. In addition, mortgage-backed securities comprised of subprime mortgages and investments in other asset-backed securities collateralized by subprime loans may be subject to a higher degree of credit risk and valuation risk. Additionally, such securities may be subject to a higher degree of liquidity risk, because the liquidity of such investments may vary dramatically over time.

Certain mortgage-backed securities may be secured by pools of mortgages on single-family, multi-family properties, as well as commercial properties. Similarly, asset-backed securities may be secured by pools of loans, such as corporate loans, student loans, automobile loans and credit card receivables. The credit risk on such securities is affected by homeowners or borrowers defaulting on their loans. The values of assets underlying mortgage-backed and asset-backed securities may decline and therefore may not be adequate to cover underlying investors. Some mortgage-backed and asset-backed securities have experienced extraordinary weakness and volatility in recent years. Possible legislation in the area of residential mortgages, credit cards, corporate loans and other loans that may collateralize the securities in which the Fund may invest could negatively impact the value of the Fund's investments. To the extent the Fund focuses its investments in particular types of mortgage-backed or asset-backed securities, the Fund may be more susceptible to risk factors affecting such types of securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• Management Risk.** The Fund may not meet its investment objective based on the Adviser's success or failure to implement investment strategies for the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;**• Sector Risk**. To the extent the Fund invests more heavily in particular sectors of the economy, its performance will be especially sensitive to developments that significantly affect those sectors.

&nbsp;&nbsp;&nbsp;&nbsp;**• Floating or Variable Rate Securities Risk.** Floating or variable rate securities pay interest at rates that adjust in response to changes in a specified interest rate or reset at predetermined dates (such as the end of a calendar quarter). Securities with

Angel Oak UltraShort Income Fund&nbsp;&nbsp;&nbsp;&nbsp;15

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floating or variable interest rates are generally less sensitive to interest rate changes than securities with fixed interest rates, but may decline in value if their interest rates do not rise as much, or as quickly, as comparable market interest rates. Although floating or variable rate securities are generally less sensitive to interest rate risk than fixed rate securities, they are subject to credit, liquidity and default risk and may be subject to legal or contractual restrictions on resale, which could impair their value.

Instruments in which the Fund invests may pay interest at floating rates or may be subject to interest caps or floors tied to floating rates, such as the Secured Overnight Financing Rate. The Fund and issuers of instruments in which the Fund invests may also obtain financing at floating rates. Derivative instruments utilized by the Fund and/or issuers of instruments in which the Fund may invest may also reference floating rates. The Fund also may utilize leverage or borrowings primarily based on floating rates.

&nbsp;&nbsp;&nbsp;&nbsp;**• Liquidity and Valuation Risks.** It may be difficult for the Fund to purchase and sell particular investments within a reasonable time at a fair price, or the price at which it has been valued for purposes of the Fund's NAV, causing the Fund to be less liquid and unable to sell securities for what the Adviser believes is the appropriate price of the investment. Valuation of portfolio investments may be difficult, such as during periods of market turmoil or reduced liquidity and for investments that trade infrequently or irregularly. In these and other circumstances, an investment may be valued using fair value methodologies, which are inherently subjective, reflect good faith judgments based on available information and may not accurately estimate the price at which the Fund could sell the investment at that time. Based on its investment strategies, a significant portion of the Fund's investments can be difficult to value and potentially less liquid and therefore particularly prone to these risks.

&nbsp;&nbsp;&nbsp;&nbsp;**• Portfolio Turnover Risk.** Frequent trading increases the Fund's portfolio turnover rate and may increase transaction costs, such as brokerage commissions, dealer mark-ups and may result in higher taxes when Fund shares are held in a taxable account. Increased transaction costs could detract from the Fund's performance.

&nbsp;&nbsp;&nbsp;&nbsp;**• Other Investment Companies Risks.** The Fund will incur higher and duplicative expenses when it invests in mutual funds, exchange-traded funds ("ETFs"), and other investment companies, which may include those that are part of the same group of investment companies as the Fund ("affiliated underlying funds"). There is also the risk that the Fund may suffer losses due to the investment practices of the underlying funds. When the Fund invests in other investment companies, the Fund will be subject to substantially the same risks as those associated with the direct ownership of securities held by such investment companies. ETFs may be less liquid than other investments, and thus their share values more volatile than the values of the investments they hold. Investments in ETFs are also subject to the following risks: (i) the market price of an ETF's shares may trade above or below their NAV; (ii) an active trading market for an ETF's shares may not develop or be maintained; and (iii) trading of an ETF's shares may be halted for a number of reasons.

The Adviser may be subject to potential conflicts of interest in allocating the Fund's assets to underlying funds, such as a potential conflict in selecting affiliated underlying funds over unaffiliated underlying funds. In addition, the Fund's portfolio managers may be subject to potential conflicts of interest in allocating the Fund's assets among underlying funds, as certain of the Fund's portfolio managers may also manage an affiliated underlying fund in which the Fund may invest. Both the Adviser and the Fund's portfolio managers have a fiduciary duty to the Fund to act in the Fund's best interest when selecting underlying funds. Under the oversight of the Board of Trustees, the Adviser will carefully analyze any such potential conflicts of interest and will take steps to minimize and, where possible, eliminate them.

&nbsp;&nbsp;&nbsp;&nbsp;**• Rating Agencies Risks.** Ratings are not an absolute standard of quality, but rather general indicators that reflect only the view of the originating rating agencies from which an explanation of the significance of such ratings may be obtained. There is no assurance that a particular rating will continue for any given period of time or that any such rating will not be revised downward or withdrawn entirely. Such changes may negatively affect the liquidity or market price of the securities in which the Fund invests. The ratings of Structured Products may not adequately reflect the credit risk of those assets due to their structure.

&nbsp;&nbsp;&nbsp;&nbsp;**• Large Shareholder Transactions Risk.** Shares of the Fund are offered to certain other investment companies, large retirement plans and other large investors. As a result, the Fund is subject to the risk that those shareholders may purchase or redeem a large amount of shares of the Fund. To satisfy such large shareholder redemptions, the Fund may have to sell portfolio securities at times when it would not otherwise do so, which may negatively impact the Fund's NAV and liquidity. In addition, large purchases of Fund shares could adversely affect the Fund's performance to the extent that the Fund does not immediately invest cash it receives and therefore holds more cash than it ordinarily would. Large shareholder activity could also generate increased transaction costs and cause adverse tax consequences.

&nbsp;&nbsp;&nbsp;&nbsp;**• Illiquid Investments Risks.** The Fund may, at times, hold illiquid investments, by virtue of the absence of a readily available market for certain of its investments, or because of legal or contractual restrictions on sales. The Fund could lose money if it is unable to dispose of an investment at a time or price that is most beneficial to the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;**• NAV Risk.** The Fund is not a money market fund, does not attempt to maintain a stable NAV, and is not subject to the rules that govern the quality, maturity, liquidity and other features of securities that money market funds may purchase. Under normal

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conditions, the Fund's investment may be more susceptible than a money market fund to interest rate risk, valuation risk, credit risk, and other risks relevant to the Fund's investments. The Fund's NAV per share will fluctuate.

&nbsp;&nbsp;&nbsp;&nbsp;**• Regulatory and Legal Risks.** U.S. and non-U.S. government agencies and other regulators regularly adopt new regulations and legislatures enact new statutes that affect the investments held by the Fund, the strategies used by the Fund or the level of regulation or taxation that applies to the Fund. These statutes and regulations may impact the investment strategies, performance, costs and operations of the Fund or the taxation of its shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;**• High-Yield Securities Risks.** High-yield securities (also known as junk bonds) carry a greater degree of risk and are more volatile than investment grade securities and are considered speculative. High-yield securities may be issued by companies that are restructuring, are smaller and less creditworthy, or are more highly indebted than other companies. This means that they may have more difficulty making scheduled payments of principal and interest. Changes in the value of high-yield securities are influenced more by changes in the financial and business position of the issuing company than by changes in interest rates when compared to investment grade securities. The Fund's investments in high-yield securities expose it to a substantial degree of credit risk.

&nbsp;&nbsp;&nbsp;&nbsp;**• Reverse Repurchase Agreement Risks.** A reverse repurchase agreement is the sale by the Fund of a debt obligation to a party for a specified price, with the simultaneous agreement by the Fund to repurchase that debt obligation from that party on a future date at a higher price. Similar to borrowing, reverse repurchase agreements provide the Fund with cash for investment purposes, which creates leverage and subjects the Fund to the risks of leverage. Reverse repurchase agreements also involve the risk that the other party may fail to return the securities in a timely manner or at all. The Fund could lose money if it is unable to recover the securities and/or if the value of collateral held by the Fund, including the value of the investments made with cash collateral, is less than the value of securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• Derivatives Risks.** The Fund's derivatives and other similar instruments (collectively referred to in this section as "derivatives" or "derivative instruments") have risks, including the imperfect correlation between the value of such instruments and the underlying assets, rate or index; the loss of principal, including the potential loss of amounts greater than the initial amount invested in the derivative instrument; the possible default of the other party to the transaction; and illiquidity of the derivative investments. Changes in the value of a derivative may also create margin delivery or settlement payment obligations for the Fund. If a counterparty becomes bankrupt or otherwise fails to perform its obligations under a derivative contract due to financial difficulties, the Fund may experience significant delays in obtaining any recovery under the derivative contract in a bankruptcy or other reorganization proceeding. Certain derivatives may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. The use of derivatives is also subject to operational risk, which refers to risk related to potential operational issues, including documentation issues, settlement issues, system failures, inadequate controls, and human error, as well as legal risk, which refers to the risk of loss resulting from insufficient documentation, insufficient capacity or authority of counterparty, or legality or enforceability of a contract. Derivatives are also subject to market risk, which refers to the risk that markets could experience a change in volatility that adversely impacts fund returns and the fund's obligations and exposures. Certain of the Fund's transactions in derivatives could also affect the amount, timing and character of distributions to shareholders, which may result in the Fund realizing more short-term capital gain and ordinary income subject to tax at ordinary income tax rates than it would if it did not engage in such transactions, which may adversely impact the Fund's after-tax returns.

The derivative instruments and techniques that the Fund may principally use include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Futures.* A futures contract is a standardized agreement to buy or sell a specific quantity of an underlying instrument at a specific price at a specific future time. A decision as to whether, when and how to use futures involves the exercise of skill and judgment and even a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures can be highly volatile, using futures can lower total return, and the potential loss from futures can exceed the Fund's initial investment in such contracts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Options*. If the Fund buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreed-upon price typically in exchange for a premium paid by the Fund. If the Fund sells an option, it sells to another person the right to buy from or sell to the Fund a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreed-upon price typically in exchange for a premium received by the Fund. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Swaps.* A swap contract is an agreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indexes, reference rates, currencies or other instruments. Swap agreements are particularly subject to counterparty credit, liquidity, valuation, correlation, leverage, operational and legal risk. Swaps could result in

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losses if interest rate or foreign currency exchange rates or credit quality changes are not correctly anticipated by the Fund or if the reference index, security or investments do not perform as expected. The use of credit default swaps can result in losses if the Fund's assumptions regarding the creditworthiness of the underlying obligation prove to be incorrect.

&nbsp;&nbsp;&nbsp;&nbsp;**• RIC-Related Risks of Investments Generating Non-Cash Taxable Income.** Certain of the Fund's investments, particularly, debt obligations, such as zero coupon bonds, that will be treated as having "market discount" and/or original issue discount ("OID") for U.S. federal income tax purposes and certain CLOs that may be considered passive foreign investment companies or controlled foreign corporations, will require the Fund to recognize taxable income in excess of the cash generated on those investments in that tax year, which could cause the Fund to have difficulty satisfying the annual distribution requirements applicable to regulated investment companies ("RICs") and avoiding Fund-level U.S. federal income and/or excise taxes.

&nbsp;&nbsp;&nbsp;&nbsp;**• Risks Relating to Fund's RIC Status.** To qualify and remain eligible for the special tax treatment accorded to a RIC and its shareholders under the Internal Revenue Code of 1986, as amended (the "Code"), the Fund must meet certain source-of-income, asset diversification and annual distribution requirements. If the Fund fails to qualify as a RIC for any reason and becomes subject to corporate tax, the resulting corporate taxes could substantially reduce its net assets, the amount of income available for distribution and the amount of its distributions.

&nbsp;&nbsp;&nbsp;&nbsp;**• Short Sales Risks.** The Fund may make short sales of securities, which involves selling a security it does not own in anticipation that the price of the security will decline. Short sales may involve substantial risk and leverage. Short sales expose the Fund to the risk that it will be required to buy the security sold short when the security has appreciated in value or is unavailable, thus resulting in a loss to the Fund. Short sales also involve the risk that losses may exceed the amount invested and may be unlimited.

&nbsp;&nbsp;&nbsp;&nbsp;**• Uncertain Tax Treatment.** Below investment grade instruments may present special tax issues for the Fund. U.S. federal income tax rules are not entirely clear about issues such as when the Fund may cease accruing interest, OID or market discount, when and to what extent deductions may be taken for bad debts or worthless instruments, how payments received on obligations in default should be allocated between principal and income and whether exchanges of debt obligations in a bankruptcy or workout context are taxable, which may make it difficult for the Fund to satisfy the annual distribution requirements applicable to RICs.

&nbsp;&nbsp;&nbsp;&nbsp;**• Repurchase Agreement Risks.** Repurchase agreements typically involve the acquisition by the Fund of fixed-income securities from a selling financial institution such as a bank or broker-dealer. The Fund may incur a loss if the other party to a repurchase agreement is unwilling or unable to fulfill its contractual obligations to repurchase the underlying security.

**Performance** 

The following performance information provides some indication of the risks of investing in the Fund. The bar chart shows changes in the performance of the Institutional Class shares of the Fund from year-to-year. The table below shows how the average annual total returns of the Fund's Class A, Class A1, and Institutional Class compare over time to those of three indexes. The Bloomberg US Aggregate Bond Index serves as the Fund's regulatory index and provides a broad measure of market performance. The Bloomberg Short Treasury 9-12 Months Index and the Bloomberg Short Term Government/Corporate Index are the Fund's additional indexes and are more representative of the Fund's investment universe than the regulatory index.

Performance information represents only past performance, before and after taxes, and does not necessarily indicate future results. Updated performance information is available online at www.angeloakcapital.com or by calling (855) 751-4324 (toll free).

Angel Oak UltraShort Income Fund&nbsp;&nbsp;&nbsp;&nbsp;18

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**Annual Total Returns for Institutional Class Shares**

(for years ended December 31<sup>st</sup>)

![13668](ck0001612930-20260529_g3.jpg)

The calendar year-to-date total return as of March 31, 2026 for the Fund's Institutional Class shares was 0.86%. During the period shown in the chart, the highest quarterly return was 4.11% (for the quarter ended June 30, 2020) and the lowest quarterly return was -3.72% (for the quarter ended March 31, 2020).

**Angel Oak UltraShort Income Fund** 

**Average Annual Total Returns** 

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **For the period ended December 31, 2025** | **1 Year** | **5 Year** | **Since Inception**<br>**(4/02/18)** | **Since Inception (4/30/18)** | **Since Inception (7/22/22)** |
| **Institutional Class** | | | | | |
| – Return Before Taxes | 5.60% | 3.33% | 3.22% | N/A | N/A |
| – Return After Taxes on Distributions<sup>1</sup> | 3.45% | 1.80% | 1.83% | N/A | N/A |
| – Return After Taxes on Distributions and Sale of Fund Shares<sup>1</sup> | 3.29% | 1.88% | 1.86% | N/A | N/A |
| **Class A** |  |  |  |  |  |
| – Return Before Taxes | 5.34% | 3.08% | N/A | 2.95% | N/A |
| **Class A1** |  |  |  |  |  |
| – Return Before Taxes | 3.28% | N/A | N/A | N/A | 4.52% |
| **Bloomberg U.S. Aggregate Bond Index**<br>(reflects no deduction for fees, expenses, and taxes) | 7.30% | -0.36% | 1.98% | 2.11% | 2.61% |
| **Bloomberg Short Treasury: 9-12 Months Index** <br>(reflects no deduction for fees, expenses, and taxes) | 4.40% | 2.78% | 2.59% | 2.61% | 4.33% |
| **Bloomberg Short-Term Government/Corporate Index**<br>(reflects no deduction for fees, expenses, and taxes) | 4.46% | 3.12% | 2.74% | 2.75% | 4.62% |

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<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. In certain cases, the figure representing "Return After Taxes on Distributions and Sale of Fund Shares" may be higher than the other return figures for the same period, since a higher after-tax return results when a capital loss occurs upon redemption and provides an assumed tax deduction that benefits the investor. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns are shown for Institutional Class only, and after-tax returns for other classes will vary.

**Portfolio Management**

***Investment Adviser.*** Angel Oak Capital Advisors, LLC.

***Portfolio Managers.*** 

Sreeniwas (Sreeni) V. Prabhu, Managing Partner, Co-CEO, and Group Chief Investment Officer of the Adviser, has been a portfolio manager of the Fund since its inception in 2018.

Namit Sinha, Chief Investment Officer of the Adviser, has been a portfolio manager of the Fund since 2024.

Angel Oak UltraShort Income Fund&nbsp;&nbsp;&nbsp;&nbsp;19

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Clayton Triick, CFA, Head of Portfolio Management, Public Strategies of the Adviser, has been a portfolio manager of the Fund since its inception in 2018.

**Purchase and Sale of Fund Shares** 

You may purchase or redeem Class A, Class A1, and Institutional Class shares of the Fund on any business day by written request via mail (Angel Oak UltraShort Income Fund, c/o U.S. Bank Global Fund Services, PO Box 219252, Kansas City, MO 64121-9252), by wire transfer, or by telephone at (855) 751-4324 (toll free) or through certain financial intermediaries. Investors who wish to purchase or redeem Fund shares through a financial intermediary should contact the financial intermediary directly. The minimum initial and subsequent investment amounts for each class of shares are shown below.

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| | | |
|:---|:---|:---|
| **Share Class** | **Minimum Initial Investment** | **Minimum Additional Investment** |
| **Class A Shares—**All account types | $1000 | $100 |
| **Class A1 Shares—**All account types | $1000 | $100 |
| **Institutional Class Shares—**All account types | $500000 | $100 |

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**Tax Information** 

The Fund's distributions are taxed as ordinary income or capital gains, unless you are investing through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.

**Payments to Broker-Dealers and Other Financial Intermediaries** 

If you purchase Fund shares through a broker-dealer or other financial intermediary (such as a bank or trust company), the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create conflicts of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary's website for more information.

Angel Oak UltraShort Income Fund&nbsp;&nbsp;&nbsp;&nbsp;20

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**ADDITIONAL INFORMATION ABOUT THE FUNDS' OBJECTIVES,** 

**PRINCIPAL INVESTMENT STRATEGIES, AND PRINCIPAL INVESTMENT RISKS**

*The following information is in addition to, and should be read along with, the description of the Angel Oak Multi-Strategy Income Fund's (the "Multi-Strategy Income Fund") and the Angel Oak UltraShort Income Fund's (the "UltraShort Income Fund") (each a "Fund" and together, the "Funds") investment objectives, principal investment strategies and principal investment risks in the summary sections above.*

**Investment Objective**

Each Fund's investment objective is not fundamental and may be changed without shareholder approval. Each Fund will provide 60 days' advance notice of any change in its investment objective.

**Principal Investment Strategies of the Multi-Strategy Income Fund**

The Fund invests primarily in agency and non-agency residential mortgage-backed securities ("RMBS"), commercial mortgage-backed securities ("CMBS"), collateralized loan obligations ("CLOs"), collateralized debt obligations ("CDOs"), collateralized mortgage obligations ("CMOs"), collateralized bond obligations ("CBOs"), asset-backed securities ("ABS"), including securities backed by assets such as unsecured consumer loans, credit card receivables, student loans, automobile loans, loans financing solar energy systems, and residential and commercial real estate, and other debt securitizations (collectively, "Structured Products"); mortgage loans, secured and unsecured consumer loans, commercial loans and pools of such loans (collectively, "Loans"); corporate debt, including bank-issued subordinated debt; equity securities of banks, real estate investment trusts, or other issuers; and U.S. Treasury and U.S. government agency securities.

The Fund will concentrate its investment in agency and non-agency residential mortgage-backed securities ("RMBS") and commercial mortgage-backed securities ("CMBS") (collectively, "MBS"). This means that, under normal circumstances, the Fund will invest more than 25% of its total assets in MBS (measured at the time of purchase). The Fund will not concentrate its investments in any other group of industries. The Fund's policy to concentrate its investments in MBS is fundamental and may not be changed without shareholder approval.

The Fund may make direct investments in mortgage loans, and the Adviser has the sole discretion to select the mortgage loans in which the Fund will invest.

The Fund may invest in other investment companies, including closed-end investment companies and open-end investment companies, which may operate as traditional mutual funds, exchange-traded funds ("ETFs"), or business development companies ("BDCs"). The other investment companies in which the Fund invests may be part of the same group of investment companies as the Fund.

The Fund may invest, without constraint, in a variety of instruments that are not limited with respect to their issuer, quality, maturity, currency, structure, yield, duration, or any other characteristic. The Fund's investments in RMBS and ABS will span a broad segment of consumer creditworthiness segments, which will include exposure to prime, near-prime, and subprime consumers.

The Fund's portfolio may include significant investments in high-yield securities and fixed-income securities that are not rated by any rating agencies. Such bonds, if rated, will be in the lower rating categories of the major rating agencies (BB+ or lower by S&P Global Ratings or an equivalent rating from another Nationally Recognized Statistical Ratings Organization) or will be determined by the Adviser to be of similar quality.

The fixed income instruments in which the Fund invests may include those of issuers from the United States and other countries. The Fund's investments in foreign debt securities will typically be denominated in U.S. dollars.

The Fund may invest up to 15% of its net assets in investments that are deemed to be illiquid, which may include private placements, certain Rule 144A securities (which are subject to resale restrictions), and securities of issuers that are bankrupt or in default.

The Fund may implement its strategy by making investments directly or through one or more wholly-owned and controlled subsidiaries formed by the Fund and organized in the United States (each, a "Subsidiary"). A Subsidiary may invest in residential and commercial real estate whole loans (including second lien loans such as home equity line of credit ("HELOC") loans) and consumer loans, as well as participations in such loans or instruments representing the right to receive interest payments and principal due on such loans. The Subsidiary may invest in residential and commercial real estate loans of any credit rating or no credit rating, including without limit in loans that are rated below investment grade. The principal risks of investments in the Subsidiary are the same as those relating to residential loans and mortgages, second lien loans and consumer loans. See "Residential Loans and Mortgages Risk," "Second Lien Risk" and "Consumer Loans Risk." The allocation of the Fund's investments, if any, in a Subsidiary will vary over time, and a Subsidiary's investments will also vary and may not include all of the types of investments described above.

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The Fund's use of borrowing, short sales, derivatives and reverse repurchase agreements may be deemed to create leverage, which can increase the Fund's volatility and the effect, positive or negative, of the Fund's investments on its NAV. The 1940 Act generally limits the extent to which the Fund may utilize bank borrowings to one-third of the Fund's total assets at the time utilized. The Fund's use of derivatives and other similar instruments is subject to a value-at-risk leverage limit, certain derivatives risk management program, and reporting requirements under Rule 18f-4. In the future, the Fund could qualify as a "limited derivatives user" as defined in Rule 18f-4 (or its use of derivatives and other similar instruments could satisfy the conditions of certain exemptions from the rule), in which case the Fund would not be required to comply with such requirements.

Derivatives, which are instruments that have a value based on another instrument, exchange rate or index, may be used as substitutes for securities in which the Fund can invest. The Fund uses derivatives to gain or adjust exposure to markets, sectors, securities and currencies and to manage exposure to risks relating to creditworthiness, interest rate spreads, volatility and changes in yield curves. In certain market environments, the Fund may use interest rate swaps and futures contracts to help protect its portfolio from interest rate risk. The Fund may also utilize foreign currency transactions, including currency options and forward currency contracts, to hedge non-U.S. Dollar investments or to establish or adjust exposure to particular foreign securities, markets or currencies. The Fund's hedging strategies may include the use of derivatives with underlying instruments that are not specified in the Fund's principal investment strategies (for example, the Fund may invest in total return swaps on the S&P 500 Index to hedge against broad market exposure).

The Fund's portfolio of fixed-income instruments will depend on the views of the Adviser as to the best value relative to what is currently presented in the marketplace. The Fund's portfolio managers lead a team of sector specialists responsible for researching opportunities within their sector and making recommendations to the Fund's portfolio managers. In selecting investments, the Adviser may consider maturity, yield and ratings information and opportunities for price appreciation among other criteria.

As part of its investment process, the Adviser also considers certain environmental, social and governance ("ESG") and sustainability factors that it believes could have a material impact on certain securities in which the Fund may invest. Examples of the types of factors the Adviser may consider include, without limitation: environmental issues, such as carbon emissions and energy efficiency; social issues, such as affordable housing and community investment; and corporate governance issues, such as board independence. These determinations may not be conclusive, and securities that may be negatively impacted by such factors may be purchased and retained by the Fund while the Fund may divest or not invest in securities that may be positively impacted by such factors. ESG and sustainability factors will not be considered with respect to investments in U.S. Treasury and U.S. government agency securities, money market instruments, and derivatives.

**Principal Investment Strategies of the UltraShort Income Fund**

In pursuing its objective, the Fund will, under normal circumstances, invest in securities which cause the Fund to have a dollar-weighted average maturity of less than two years and a dollar-weighted average duration of less than one year.

The Fund invests primarily in agency and non-agency residential mortgage-backed securities ("RMBS"), asset-backed securities ("ABS"), including securities backed by assets such as unsecured consumer loans, credit card receivables, student loans, automobile loans, loans financing solar energy systems, and residential and commercial real estate, collateralized loan obligations ("CLOs"), collateralized debt obligations ("CDOs"), collateralized mortgage obligations ("CMOs"), and other debt securitizations (collectively, "Structured Products"); corporate debt and other debt securities; and U.S. Treasury and U.S. government agency securities.

The Fund will concentrate its investments in agency and non-agency residential mortgage-backed securities ("RMBS") and commercial mortgage-backed securities ("CMBS") (collectively, "MBS"). This means that, under normal circumstances, the Fund will invest more than 25% of its total assets in MBS (measured at the time of purchase). The Fund will not concentrate its investments in any other group of industries. The Fund's policy to concentrate its investments in MBS is fundamental and may not be changed without shareholder approval.

The Fund may invest in other investment companies, including closed-end investment companies and open-end investment companies, which may operate as traditional mutual funds, exchange-traded funds ("ETFs") or business development companies ("BDCs"). The other investment companies in which the Fund invests may be part of the same group of investment companies as the Fund.

The Fund may invest, without constraint, in a variety of instruments that are not limited with respect to their issuer, quality, currency, structure, yield, or any other characteristic. The Fund's investments in RMBS and ABS will span a broad segment of consumer creditworthiness segments, which will include exposure to prime, near-prime, and subprime consumers.

The fixed income instruments in which the Fund invests may include those of issuers from the United States and other countries. The Fund's investments in foreign debt securities will typically be denominated in U.S. dollars.

The Fund may invest up to 15% of its net assets in investments that are deemed to be illiquid, which may include private placements, certain Rule 144A securities (which are subject to resale restrictions), and securities of issuers that are bankrupt or in default.

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The Fund may engage in active and frequent trading of its portfolio securities which may result in higher portfolio turnover. Higher portfolio turnover may result in the Fund paying higher levels of transaction costs and generating greater tax liabilities for shareholders.

The Fund's use of borrowing, short sales, derivatives, and reverse repurchase agreements may be deemed to create leverage, which can increase the Fund's volatility and the effect, positive or negative, of the Fund's investments on its NAV. The 1940 Act generally limits the extent to which the Fund may utilize bank borrowings to one-third of the Fund's total assets at the time utilized. The Fund's use of derivatives and other similar instruments is subject to a value-at-risk leverage limit, certain derivatives risk management program, and reporting requirements under Rule 18f-4. In the future, the Fund could qualify as a "limited derivatives user" as defined in Rule 18f-4 (or its use of derivatives and other similar instruments could satisfy the conditions of certain exemptions from the rule), in which case the Fund would not be required to comply with such requirements.

Derivatives, which are instruments that have a value based on another instrument, exchange rate or index, may be used as substitutes for securities in which the Fund can invest. The Fund uses derivatives to gain or adjust exposure to markets, sectors, securities, and currencies and to manage exposure to risks relating to creditworthiness, interest rate spreads, volatility, and changes in yield curves. In certain market environments, the Fund may use interest rate swaps and futures contracts to help protect its portfolio from interest rate risk. The Fund may also utilize foreign currency transactions, including currency options and forward currency contracts, to hedge non-U.S. Dollar investments or to establish or adjust exposure to particular foreign securities, markets or currencies. The Fund's hedging strategies may include the use of derivatives with underlying instruments that are not specified in the Fund's principal investment strategies (for example, the Fund may invest in total return swaps on the S&P 500 Index to hedge against broad market exposure).

The Fund's portfolio of fixed-income instruments will depend on the views of the Adviser as to the best value relative to what is currently presented in the marketplace. The Fund's portfolio managers lead a team of sector specialists responsible for researching opportunities within their sector and making recommendations to the Fund's portfolio managers. In selecting investments, the Adviser may consider maturity, yield and ratings information and opportunities for price appreciation among other criteria.

As part of its investment process, the Adviser also considers certain environmental, social and governance ("ESG") and sustainability factors that it believes could have a material impact on certain securities in which the Fund may invest. Examples of the types of factors the Adviser may consider include, without limitation: environmental issues, such as carbon emissions and energy efficiency; social issues, such as affordable housing and community investment; and corporate governance issues, such as board independence. These determinations may not be conclusive, and securities that may be negatively impacted by such factors may be purchased and retained by the Fund while the Fund may divest or not invest in securities that may be positively impacted by such factors. ESG and sustainability factors will not be considered with respect to investments in U.S. Treasury and U.S. government agency securities, money market instruments, and derivatives.

**Temporary Defensive Positions**

From time to time, each Fund may take temporary defensive positions that are inconsistent with its principal investment strategies, in attempting to respond to adverse market, economic, political or other conditions. In such instances, a Fund may hold up to 100% of its assets in cash; short-term U.S. government securities and government agency securities; investment grade money market instruments; investment grade fixed-income securities; repurchase agreements; commercial paper and cash equivalents. Each Fund may invest in the securities described above at any time to maintain liquidity, pending selection of investments by the Adviser, or if the Adviser believes that sufficient investment opportunities that meet the Fund's investment criteria are not available. By keeping cash on hand, a Fund may be able to meet shareholder redemptions without selling securities and realizing gains and losses. As a result of engaging in these temporary measures, the applicable Fund may not achieve its investment objective.

**Principal Risks of Investing in the Funds**

The principal risks of investing in the Funds are summarized below. You should carefully consider a Fund's investment risks before deciding whether to invest in the Fund. There may be circumstances that could prevent a Fund from achieving its investment objective and you may lose money by investing in the Fund. An investment in a Fund is not a deposit at a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

**• Bank Subordinated Debt Risk** *(Multi-Strategy Income Fund only)*.** Banks may issue subordinated debt securities, which have a lower priority to full payment behind other more senior debt securities. This means, for example, that if the issuing bank were to become insolvent, subordinated debt holders may not receive a full return of their principal because the bank would have to satisfy the claims of senior debt holders first. In addition to the risks generally associated with fixed income instruments (e.g., interest rate risk, credit risk, etc.), bank subordinated debt is also subject to risks inherent to banks. Because banks are highly regulated and operate in a highly competitive environment, it may be difficult for a bank to meet its debt obligations. Banks also may be affected by changes in legislation and regulations applicable to the financial markets. This is especially true in light of the large amount of regulatory developments in recent years. Bank subordinated debt is often issued by smaller community banks that may be overly concentrated in a specific geographic region, lack the capacity to comply with new regulatory

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requirements or lack adequate capital. Smaller banks may also have a lower capacity to withstand negative developments in the market in general. If any of these or other factors were to negatively affect a bank's operations, the bank could fail to make payments on its debt obligations, which would hurt a Fund's bank subordinated debt investments. Subordinated debt, senior debt and preferred securities of banks and diversified financials companies are subject to the risks generally associated with the financials sector. See "Financials Sector Risk."

**• Borrowing Risks and Leverage Risks.** Borrowing for investment purposes creates leverage, which will exaggerate the effect of any change in the value of securities in the Fund's portfolio on the Fund's net asset value ("NAV") and, therefore, may increase the volatility of the Fund. Money borrowed will be subject to interest and other costs (including commitment fees and/or the cost of maintaining minimum average balances). Unless the income and capital appreciation, if any, on securities acquired with borrowed funds exceed the cost of borrowing, the use of leverage will diminish the investment performance of the Fund. In addition, pursuant to an exemptive order from the U.S. Securities and Exchange Commission ("SEC"), a Fund may borrow from another Fund for temporary purposes, to the extent such participation is consistent with the Fund's and the lending Fund's investment objective and investment policies.

**• Commercial and Construction Loan Risk** (*Multi-Strategy Income Fund only*)**.** In addition to interest rate, default and other risks of fixed income securities, investments in commercial loans secured by income-producing commercial real estate carry additional risks arising from dependence on the cash flow of the underlying property and potential concentrations in particular property types or geographies. In addition, investments in ground-up construction loans present heightened risks including the possibility that a project is not completed on time or within budget and that collateral under construction may generate little or no income to service the debt during the construction period.

**• Community Bank Risks** (*Multi-Strategy Income Fund only*)**.** A Fund's investments in community banks may make the Fund more economically vulnerable in the event of a downturn in the banking industry. Community banks may face heightened risks of failure during times of economic downturns, including those impacting a particular region, than larger banks. Community banks may also be subject to greater lending risks than larger banks, including the risks associated with mortgage loans. The ability of management of financial institutions to identify, measure, monitor and control the risks of an institution's activities and to ensure a financial institution's safe, sound and efficient operation in compliance with applicable laws and regulations are critical. Community banks may have fewer resources to devote towards employing and retaining strong management employees and implementing a thorough compliance program. Additionally, banking institutions are subject to substantial regulations that could adversely affect their ability to operate and the value of a Fund's investments, including from future banking regulations. Ownership of the stock of certain types of regulated banking institutions may subject the Fund to additional regulations. Investments in banking institutions and transactions related to Fund investments may require approval from one or more regulatory authorities. If a Fund were deemed to be a bank holding company or thrift holding company, bank holding companies or thrift holding companies that invest in the Fund would be subject to certain restrictions and regulations.

**• Concentration in Certain Mortgage-Backed Securities Risk.** Concentration risk results from maintaining exposure to the performance of the residential and commercial mortgages held in the mortgage-backed securities in which a Fund will invest. The risk of concentrating in these types of investments is that a Fund will be susceptible to the risks associated with mortgage-backed securities as discussed below, changes in lending standards, interest rates and lending rates, and the risks associated with the market's perception of issuers, the creditworthiness of the parties involved and investing in real estate securities.

**• Consumer Loans Risk** *(Multi-Strategy Income Fund only)*.** Investments in consumer loans expose the Fund to additional risks beyond those normally associated with more traditional debt instruments. The Fund's ability to receive payments in connection with a consumer loan depends primarily on the financial condition of the borrower. The consumer loans the Fund may invest in will generally not be secured by collateral. Unsecured loans are subject to greater risk of nonpayment in the event of default than secured loans since they do not afford the lender recourse to collateral. In addition, consumer loans often have contractual restrictions on resale, which can delay the sale and adversely impact the sale price. The absence of a liquid market for consumer loans could adversely impact their value and may inhibit the Fund's ability to dispose of them at times when it would be desirable to do so. Transactions involving consumer loans may have significantly longer settlement periods than more traditional investments (settlement can take longer than 7 days) and often involve borrowers whose financial condition is troubled or highly leveraged, which increases the risk that the Fund may not receive its proceeds in a timely manner.

In addition, when acquiring consumer loans, the Fund relies on third-party loan originators to originate consumer loans that comply with applicable law. Consumer loan originators and brokers are subject to strict and evolving consumer protection laws and other legal obligations with respect to the origination of consumer loans. These laws may be highly subjective and open to interpretation and, as a result, a regulator or court may determine that that there has been a violation where an originator or servicer of consumer loans reasonably believed that the law or requirement had been satisfied. Failure or alleged failure of originators or servicers to comply with these laws and regulations could subject the Fund, as an assignee or purchaser of these loans or securities backed by these loans, to, among other things, delays in foreclosure proceedings, increased litigation expenses, monetary penalties and defenses to foreclosure, including by recoupment or setoff of finance charges and fees collected, and in some cases could also result in rescission of the affected consumer loans, which could adversely impact the Fund's business and financial results. While some of these laws may not explicitly hold the Fund responsible for the legal

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violations of these third parties, federal and state agencies and private litigants have increasingly sought to impose such liability. Various regulators and plaintiffs' lawyers have also sought to hold assignees of consumer loans liable for the alleged violations of the originating lender under theories of express or implied assignee liability. Accordingly, the Fund may be subject to fines, penalties or civil liability based upon the conduct of the lenders that originated the consumer loans the Fund holds.

**• Covenant Lite Loan Risk.** A Fund may obtain exposure to "covenant lite" loans. Covenants contained in loan documentation are intended to protect lenders by imposing certain restrictions and other limitations on a borrower's operations or assets and by providing certain information and consent rights to lenders. Covenant lite loans may lack financial maintenance covenants that in certain situations can allow lenders to claim a default on the loan to seek to protect the interests of the lenders. The absence of financial maintenance covenants in a covenant lite loan might result in a lower recovery in the event of a default by the borrower. Covenant lite loans have become much more prevalent in recent years.

**• Credit Risk.** A Fund could lose money if the issuer or guarantor of a fixed income security, or the counterparty to a derivatives contract or repurchase agreement, is unable or unwilling, or is perceived (whether by market participants, rating agencies, pricing services or otherwise) as unable or unwilling, to make timely principal and/or interest payments, or to otherwise honor its obligations. The downgrade of the credit of a security held by a Fund may decrease its value. Securities are subject to varying degrees of credit risk, which are often reflected in credit ratings. Measures such as average credit quality may not accurately reflect the true credit risk of a Fund. This is especially the case if a Fund consists of securities with widely varying credit ratings. Therefore, if a Fund has an average credit rating that suggests a certain credit quality, the Fund may in fact be subject to greater credit risk than the average would suggest. This risk is greater to the extent a Fund uses leverage or derivatives in connection with the management of the Fund. In addition, under current conditions, there is an increasing amount of issuers that are unprofitable, have little cash on hand and/or are unable to pay the interest owed on their debt obligations and the number of such issuers may increase if demand for their goods and services falls, borrowing costs rise due to governmental action or inaction or other reasons. Also, the issuer, guarantor or counterparty may suffer adverse changes in its financial condition or reduced demand for its goods and services or be adversely affected by economic, political, public health or social conditions that could lower the credit quality (or the market's perception of the credit quality) of the issuer or instrument, leading to greater volatility in the price of the instrument and in shares of a Fund.

If an issuer, guarantor or counterparty declares bankruptcy or is declared bankrupt, a Fund would likely be adversely affected in its ability to receive principal or interest owed or otherwise to enforce the financial obligations of the other party. A Fund may be subject to increased costs associated with the bankruptcy process and experience losses as a result of the deterioration of the financial condition of the issuer, guarantor or counterparty. The risks to a Fund related to such bankruptcies are elevated given the currently distressed economic, market, labor and public health conditions.

**• Cybersecurity Risk.** With the increased use of technologies such as the Internet and the dependence on computer systems to perform business and operational functions, funds (such as a Fund) and their service providers may be prone to operational and information security risks resulting from cyberattacks and/or technological malfunctions. In general, cyberattacks are deliberate, but unintentional events may have similar effects. Cyberattacks include, among others, stealing or corrupting data maintained online or digitally, preventing legitimate users from accessing information or services on a website, releasing confidential information without authorization, and causing operational disruption. Cybersecurity incidents may allow an unauthorized party to gain access to Fund assets or proprietary information, or cause a Fund, the Adviser, and/or other service providers (including custodians and financial intermediaries) to suffer data breaches or data corruption. Additionally, cybersecurity failures or breaches of the electronic systems of a Fund, the Adviser, or such Fund's other service providers, market makers, Authorized Participants or the issuers of securities in which the Fund invests have the ability to cause disruptions and negatively impact the Fund's business operations, potentially resulting in financial losses to the Fund and its respective shareholders. For instance, cyberattacks or technical malfunctions may interfere with the processing of shareholder or other transactions, affect a Fund's ability to calculate its NAV, cause the release of private shareholder information or confidential Fund information, impede trading, cause reputational damage, and subject such Fund to regulatory fines, penalties or financial losses, reimbursement or other compensation costs, and additional compliance costs. Cyberattacks or technical malfunctions may render records of Fund assets and transactions, shareholder ownership of Fund Shares, and other data integral to the functioning of the Fund inaccessible or inaccurate or incomplete. A Fund may also incur substantial costs for cybersecurity risk management in order to prevent cyber incidents in the future. A Fund and its shareholders could be negatively impacted as a result.

**• Derivatives Risks.** A Fund's derivatives and other similar investments (referred to collectively in this section as "derivatives" or "derivative investments") have risks similar to their underlying instruments and may have additional risks, including the imperfect correlation between the value of such instruments and the underlying instrument, rate or index, which creates the possibility that the loss on such instruments may be greater than the gain in the value of the underlying instrument, rate or index; the loss of principal; the possible default of the other party to the transaction; illiquidity of the derivative investments; risks arising from margin requirements and settlement payment obligations; and risks arising from mispricing or valuation complexity. The use of derivatives is also subject to operational risk which refers to risk related to potential operational issues, including documentation issues, settlement issues, system failures, inadequate controls, and human error, as well as legal risk

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which refers to the risk of loss resulting from insufficient documentation, insufficient capacity or authority of counterparty, or legality or enforceability of a contract. Derivatives are also subject to market risk, which refers to the risk that markets could experience a change in volatility that adversely impacts fund returns and the fund's obligations and exposures. If a counterparty becomes bankrupt or otherwise fails to perform its obligations under a derivative contract due to financial difficulties, a Fund may experience significant delays in obtaining any recovery under the derivative contract in a bankruptcy or other reorganization proceeding, or may not recover at all. In addition, in the event of the insolvency of a counterparty to a derivative transaction, the derivative contract would typically be terminated at its fair market value. If a Fund is owed this fair market value in the termination of the derivative contract and its claim is unsecured, the Fund will be treated as a general creditor of such counterparty, and will not have any claim with respect to the underlying instrument. Certain of the derivative investments in which a Fund may invest may, in certain circumstances, give rise to a form of financial leverage, which may magnify the risk of owning such instruments. The ability to successfully use derivative investments depends on the ability of the Adviser to predict pertinent market movements, which cannot be assured. In addition, amounts paid by a Fund as premiums and cash or other assets held in margin accounts with respect to the Fund's derivative investments would not be available to the Fund for other investment purposes, which may result in lost opportunities for gain.

Regulation of the derivatives market presents additional risks to a Fund and may limit the ability of a Fund to use, and the availability or performance of, such instruments.

The derivative instruments and techniques that a Fund may principally use include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Futures.* A futures contract is a standardized agreement to buy or sell a specific quantity of an underlying instrument at a specific price at a specific future time. The value of a futures contract tends to increase and decrease in tandem with the value of the underlying instrument. Depending on the terms of the particular contract, futures contracts are settled through either physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. A decision as to whether, when and how to use futures involves the exercise of skill and judgment and even a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures can be highly volatile, using futures can lower total return, and the potential loss from futures can exceed a Fund's initial investment in such contracts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Options*. If a Fund buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreed-upon price typically in exchange for a premium paid by the Fund. If a Fund sells an option, it sells to another person the right to buy from or sell to the Fund a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreed-upon price typically in exchange for a premium received by the Fund. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Swaps.* A swap contract is an agreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indexes, reference rates, currencies or other instruments. Most swap agreements provide that when the period payment dates for both parties are the same, the payments are made on a net basis (i.e., the two payment streams are netted out, with only the net amount paid by one party to the other). A Fund's obligations or rights under a swap contract entered into on a net basis will generally be equal only to the net amount to be paid or received under the agreement, based on the relative values of the positions held by each counterparty. Swap agreements are particularly subject to counterparty credit, liquidity, valuation, correlation, leverage, operational and legal risk. Certain standardized swaps are now subject to mandatory central clearing requirements and are required to be exchange-traded. While central clearing and exchange-trading are intended to reduce counterparty and liquidity risk, they do not make swap transactions risk-free. Swaps could result in losses if interest rate or foreign currency exchange rates or credit quality changes are not correctly anticipated by a Fund or if the reference index, security or investments do not perform as expected. A Fund's use of swaps may include those based on the credit of an underlying investment, commonly referred to as "credit default swaps." Where a Fund is the buyer of a credit default swap contract, it would be entitled to receive the par (or other agreed-upon) value of a referenced debt obligation from the counterparty to the contract only in the event of a default or similar event by a third party on the debt obligation. If no default occurs, a Fund would have paid to the counterparty a periodic stream of payments over the term of the contract and received no benefit from the contract. When a Fund is the seller of a credit default swap contract, it receives the stream of payments but is obligated to pay an amount equal to the par (or other agreed-upon) value of a referenced debt obligation upon the default or similar event of that obligation. The use of credit default swaps can result in losses if a Fund's assumptions regarding the creditworthiness of the underlying obligation prove to be incorrect. Periodically, the CFTC and exchanges change the position limits to which futures, options on futures and some swaps are subject. To the extent these contracts are traded, the Fund may be constrained by how many contracts it may trade. The Commodity

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Futures Trading Commission in October 2020 adopted amendments to its position limits rules that establish certain new and amended position limits for 25 specified physical commodity futures and related options contracts traded on exchanges, other futures contracts and related options directly or indirectly linked to such 25 specified contracts, and any over the counter transactions that are economically equivalent to the 25 specified contracts. The Adviser will need to consider whether the exposure created under these contracts might exceed the new and amended limits in anticipation of the applicable compliance dates, and the limits may constrain the ability of a Fund to use such contracts.

**• Equity Market Risk** *(Multi-Strategy Income Fund only)*.** A Fund's investments in equity securities may subject the Fund to volatility and the following risks: (i) prices of stock may fall over short or extended periods of time; (ii) cyclical movements of the equity market may cause the value of the Fund's securities to fluctuate drastically from day to day; and (iii) individual companies may report poor results or be negatively affected by industry and or economic trends and developments.

**• Extension Risk.** An issuer could exercise its right to pay principal on an obligation held by a Fund (such as a mortgage-backed security) later than expected. This may happen when there is a rise in interest rates. Under these circumstances, the value of the obligation will decrease, and a Fund will also suffer from the inability to reinvest in higher yielding securities.

**• Financials Sector Risk** *(Multi-Strategy Income Fund only)*.** Companies in the group of industries related to banks and diversified financials are often subject to extensive governmental regulation and intervention, which may adversely affect the scope of their activities, the prices they can charge and the amount of capital they must maintain. Governmental regulation may change frequently and may have significant adverse consequences for companies in the group of industries related to banks and diversified financials, including effects not intended by such regulation. The impact of past or future regulation in various countries on any individual financial company or on the industries as a whole cannot be predicted. The Fund's emphasis on community banks may make a Fund more economically vulnerable in the event of a downturn in the banking industry. Community banks may face heightened risks of failure during times of economic downturns than larger banks. Community banks may also be subject to greater lending risks than larger banks.

Certain risks may impact the value of investments in the group of industries related to banks and diversified financials more severely than those of investments outside these industries, including the risks associated with companies that operate with substantial financial leverage. Companies in the group of industries related to banks and diversified financials may also be adversely affected by increases in interest rates and loan losses, decreases in the availability of money or asset valuations, credit rating downgrades and adverse conditions in other related markets.

Insurance companies are subject to extensive government regulation in some countries and can be significantly affected by changes in interest rates, general economic conditions, price and marketing competition, the imposition of premium rate caps or other changes in government regulation or tax law. Different segments of the insurance industry can be significantly affected by mortality and morbidity rates, environmental clean-up costs and catastrophic events such as earthquakes, hurricanes and terrorist acts.

During the financial crisis that began in 2007, the deterioration of the credit markets impacted a broad range of mortgage, asset-backed, auction rate, sovereign debt and other markets, including U.S. and non-U.S. credit and interbank money markets, thereby affecting a wide range of financial institutions and markets. A number of large financial institutions failed during that time, merged with stronger institutions or had significant government infusions of capital. Instability in the financial markets caused certain financial companies to incur large losses. Some financial companies experienced declines in the valuations of their assets, took actions to raise capital (such as the issuance of debt or equity securities), or even ceased operations. Some financial companies borrowed significant amounts of capital from government sources and may face future government-imposed restrictions on their businesses or increased government intervention. Those actions caused the securities of many financial companies to decline in value.

The group of industries related to banks and diversified financials is also a target for cyber attacks and may experience technology malfunctions and disruptions. In recent years, cyber attacks and technology failures have become increasingly frequent and have caused significant losses.

Risks specific to the bank and diversified financial group of industries also may include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Asset Quality and Credit Risk.* When financial institutions loan money, commit to loan money or enter into a letter of credit or other contract with a counterparty, they incur credit risk, or the risk of losses if their borrowers do not repay their loans or their counterparties fail to perform according to the terms of their contract. The companies in which a Fund will invest offer a number of products which expose them to credit risk, including loans, leases and lending commitments, derivatives, trading account assets and assets held-for-sale. Financial institutions allow for and create loss reserves against credit risks based on an assessment of credit losses inherent in their credit exposure (including unfunded credit commitments). This process, which is critical to their financial results and condition, requires difficult, subjective and complex judgments, including forecasts of economic conditions and how these economic predictions might impair the ability of their borrowers to repay their loans. As is the case with any such assessments, there is

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always the chance that the financial institutions in which a Fund invests will fail to identify the proper factors or that they will fail to accurately estimate the impacts of factors that they identify. Failure to identify credit risk factors or the impact of credit factors may result in increased non-performing assets, which will result in increased loss reserve provisioning and reduction in earnings. Poor asset quality can also affect earnings through reduced interest income which can impair a bank's ability to service debt obligations or to generate sufficient income for equity holders. Bank failure may result due to inadequate loss reserves, inadequate capital to sustain credit losses or reduced earnings due to non-performing assets. A Fund will not have control over the asset quality of the financial institutions in which the Fund will invest, and these institutions may experience substantial increases in the level of their non-performing assets which may have a material adverse impact on the Fund's investments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Capital Risk.* A bank's capital position is extremely important to its overall financial condition and serves as a cushion against losses. U.S. banking regulators have established specific capital requirements for regulated banks. Federal banking regulators proposed amended regulatory capital regulations in response to the Dodd-Frank Act and the international capital and liquidity requirements set forth by the Basel Committee on Banking Supervision ("Basel III") protocols which would impose even more stringent capital requirements. In the event that a regulated bank falls below certain capital adequacy standards, it may become subject to regulatory intervention including, but not limited to, being placed into a FDIC-administered receivership or conservatorship. The regulatory provisions under which the regulatory authorities act are intended to protect depositors. The deposit insurance fund and the banking system are not intended to protect shareholders or other investors in other securities issued by a bank or its holding company. The effect of inadequate capital can have a potentially adverse consequence on the institution's financial condition, its ability to operate as a going concern and its ability to operate as a regulated financial institution and may have a material adverse impact on a Fund's investments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Earnings Risk.* Earnings are the primary means for financial institutions to generate capital to support asset growth, to provide for loan losses and to support their ability to pay dividends to shareholders. The quantity as well as the quality of earnings can be affected by excessive or inadequately managed credit risk that may result in losses and require additions to loss reserves, or by high levels of market risk that may unduly expose an institution's earnings to volatility in interest rates. The quality of earnings may also be diminished by undue reliance on extraordinary gains, nonrecurring events, or favorable tax effects. Future earnings may be adversely affected by an inability to forecast or control funding and operating expenses, net interest margin compression improperly executed or ill-advised business strategies, or poorly managed or uncontrolled exposure to other risks. Deficient earnings can result in inadequate capital resources to support asset growth or insufficient cash flow to meet the financial institution's near term obligations. Under certain circumstances, this may result in the financial institution being required to suspend operations or the imposition of a cease-and-desist order by regulators which could potentially impair a Fund's investments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Management Risk.* The ability of management to identify, measure, monitor and control the risks of an institution's activities and to ensure a financial institution's safe, sound and efficient operation in compliance with applicable laws and regulations are critical. Depending on the nature and scope of an institution's activities, management practices may need to address some or all of the following risks: credit, market, operating, reputation, strategic, compliance, legal, liquidity and other risks. A Fund will not have direct or indirect control over the management of the financial institutions in which the Fund will invest and, given the Fund's long-term investment strategy, it is likely that the management teams and their policies may change. The inability of management to operate their financial institution in a safe, sound and efficient manner in compliance with applicable laws and regulations, or changes in management of financial institutions in which a Fund invests, may have an adverse impact on the Fund's investment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Litigation Risk.* Financial institutions face significant legal risks in their businesses, and the volume of claims and amount of damages and penalties claimed in litigation and regulatory proceedings against financial institutions remain high. Substantial legal liability or significant regulatory action against the companies in which a Fund invests could have material adverse financial effects or cause significant reputational harm to these companies, which in turn could seriously harm their business prospects. Legal liability or regulatory action against the companies in which a Fund invests could have material adverse financial effects on the Fund and adversely affect the Fund's earnings and book value.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Market Risk.* The financial institutions in which a Fund will invest are directly and indirectly affected by changes in market conditions. Market risk generally represents the risk that values of assets and liabilities or revenues will be adversely affected by changes in market conditions. Market risk is inherent in the financial instruments associated with the operations and activities including loans, deposits, securities, short-term borrowings, long-term debt, trading account assets and liabilities, and derivatives of the financial institutions in which a Fund will invest. Market risk includes, but is not limited to, fluctuations in interest rates, equity and futures prices, changes in the implied volatility of interest rates, equity and futures prices and price deterioration or changes in value due to changes in market perception or actual credit quality of the issuer. Accordingly, depending on the instruments or activities impacted,

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market risks can have wide ranging, complex adverse effects on the operations and overall financial condition of the financial institutions in which a Fund will invest as well as adverse effects on the Fund's results from operations and overall financial condition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Monetary Policy Risk.* Monetary policies have had, and will continue to have, significant effects on the operations and results of financial institutions. There can be no assurance that a particular financial institution will not experience a material adverse effect on its net interest income in a changing interest rate environment. Factors such as the liquidity of the global financial markets, and the availability and cost of credit may significantly affect the activity levels of customers with respect to the size, number and timing of transactions. Fluctuation in interest rates, which affect the value of assets and the cost of funding liabilities, are not predictable or controllable, may vary and may impact economic activity in various regions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Competition.* The group of industries related to banks and diversified financials, including the banking sector, is extremely competitive, and it is expected that the competitive pressures will increase. Merger activity in the financial services industry has resulted in and is expected to continue to result in, larger institutions with greater financial and other resources that are capable of offering a wider array of financial products and services. The group of industries related to banks and diversified financials has become considerably more concentrated as numerous financial institutions have been acquired by or merged into other institutions. The majority of financial institutions in which a Fund will invest will be relatively small with significantly fewer resources and capabilities than larger institutions; this size differential puts them at a competitive disadvantage in terms of product offering and access to capital. Technological advances and the growth of e-commerce have made it possible for non-financial institutions and non-bank financial institutions to offer products and services that have traditionally been offered by banking and other financial institutions. It is expected that the cross-industry competition and inter-industry competition will continue to intensify and may be adverse to the financial institutions in which a Fund invests.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Regulatory Risk.* Financial institutions, including community banks, are subject to various state and federal banking regulations that impact how they conduct business, including but not limited to how they obtain funding, their ability to operate, and the value of a Fund's investments. Changes to these regulations could have an adverse effect on their operations and operating results and a Fund's investments. The Funds expect to make long-term investments in financial institutions that are subject to various state and federal regulations and oversight. Congress, state legislatures and the various bank regulatory agencies frequently introduce proposals to change the laws and regulations governing the banking industry in response to the Dodd-Frank Act, Consumer Financial Protection Bureau (the "CFPB") rulemaking or otherwise. The likelihood and timing of any proposals or legislation and the impact they might have on the Fund's investments in financial institutions affected by such changes cannot be determined and any such changes may be adverse to a Fund's investments. Ownership of the stock of certain types of regulated banking institutions may subject a Fund to additional regulations. Investments in banking institutions and transactions related to a Fund's investments may require approval from one or more regulatory authorities. If a Fund were deemed to be a bank holding company or thrift holding company, bank holding companies or thrift holding companies that invest in the Fund would be subject to certain restrictions and regulations.

**• Fixed-Income Instruments Risks.** Changes in interest rates generally will cause the value of fixed-income instruments held by a Fund to vary inversely to such changes. Prices of longer-term fixed-income instruments generally fluctuate more than the prices of shorter-term fixed income instruments as interest rates change. In addition, a fund with a longer average portfolio duration will be more sensitive to changes in interest rates than a fund with a shorter average portfolio duration. Duration is a measure used to determine the sensitivity of a security's price to changes in interest rates that incorporates a security's yield, coupon, final maturity and call features, among other characteristics. However, duration may not accurately reflect the true interest rate sensitivity of instruments held by a Fund and, therefore the Fund's exposure to changes in interest rates. If an issuer calls or redeems an instrument held by a Fund during a time of declining interest rates, a Fund might need to reinvest the proceeds in an investment offering a lower yield, and therefore may not benefit from any increase in value as a result of declining interest rates.

Fixed-income instruments that are fixed-rate are generally more susceptible than floating rate instruments to price volatility related to changes in prevailing interest rates. The prices of floating rate fixed-income instruments tend to have less fluctuation in response to changes in interest rates, but will have some fluctuation, particularly when the next interest rate adjustment on such security is further away in time or adjustments are limited in amount over time. A Fund may invest in short-term securities that, when interest rates decline, affect the Fund's yield as these securities mature or are sold and the Fund purchases new short-term securities with lower yields. Subordinated debt securities that receive payments of interest and principal after other more senior security holders are paid carry the risk that the issuer will not be able to meet its obligations and that the subordinated investments may lose value. An obligor's willingness and ability to pay interest or to repay principal due in a timely manner may be affected by its cash flow.

Fixed-income and debt market conditions are highly unpredictable and some parts of the market are subject to dislocations. In response to serious economic disruptions, governmental authorities and regulators may enact significant fiscal and monetary

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policy changes, including providing direct capital infusions into companies, creating new monetary programs and lowering interest rates considerably. These actions can present heightened risks to fixed-income and debt instruments, and such risks could be even further heightened if these actions are reversed or are ineffective in achieving their desired outcomes. Low or negative interest rates magnify the Fund's susceptibility to interest rate risk and diminishing yield and performance. Fluctuations in interest rates expose fixed-income and debt markets to significant volatility and reduced liquidity for the Fund's investments.

**• Floating or Variable Rate Securities Risk.** Floating or variable rate securities pay interest at rates that adjust in response to changes in a specified interest rate or reset at predetermined dates (such as the end of a calendar quarter). Securities with floating or variable interest rates are generally less sensitive to interest rate changes than securities with fixed interest rates, but may decline in value if their interest rates do not rise as much, or as quickly, as comparable market interest rates. Conversely, floating or variable rate securities will not generally increase in value if interest rates decline. The impact of interest rate changes on floating or variable rate securities is typically mitigated by the periodic interest rate reset of the investments. Floating or variable rate securities can be rated below investment grade or unrated; therefore, a Fund relies heavily on the analytical ability of the Adviser. Lower-rated floating or variable rate securities are subject to many of the same risks as high yield securities, although these risks are reduced when the instruments are senior and secured as opposed to many high yield securities that are junior and unsecured. Floating or variable rate securities are often subject to restrictions on resale, which can result in reduced liquidity.

Instruments in which a Fund invests may pay interest at floating rates or may be subject to interest caps or floors tied to floating rates, such as Secured Overnight Financing Rate. A Fund and issuers of instruments in which a Fund invests may also obtain financing at floating rates. Derivative instruments utilized by a Fund and/or issuers of instruments in which a Fund may invest may also reference floating rates. A Fund also may utilize leverage or borrowings primarily based on floating rates.

**• Foreign Securities Risks*.*** Certain foreign countries may impose exchange control regulations, restrictions on repatriation of profit on investments or of capital invested, local taxes on investments, and restrictions on the ability of issuers of non-U.S. securities to make payments of principal and interest to investors located outside the country, whether from currency blockage or otherwise. In addition, the Funds will be subject to risks associated with adverse political and economic developments in foreign countries, including seizure or nationalization of foreign deposits, the imposition of economic or trade sanctions, different legal systems and laws relating to bankruptcy and creditors' rights and the potential inability to enforce legal judgments, all of which could cause a Fund to lose money on its investments in non-U.S. securities. The type and severity of sanctions and other similar measures, including counter sanctions and other retaliatory actions, that may be imposed could vary broadly in scope, and their impact is difficult to ascertain. These types of measures may include, but are not limited to, banning a sanctioned country or certain persons or entities associated with such country from global payment systems that facilitate cross-border payments, restricting the settlement of securities transactions by certain investors, and freezing the assets of particular countries, entities or persons. The imposition of sanctions and other similar measures could, among other things, result in a decline in the value and/or liquidity of securities issued by the sanctioned country or companies located in or economically tied to the sanctioned country, downgrades in the credit ratings of the sanctioned country's securities or those of companies located in or economically tied to the sanctioned country, currency devaluation or volatility, and increased market volatility and disruption in the sanctioned country and throughout the world. Sanctions and other similar measures could directly or indirectly limit or prevent a Fund from buying and selling securities (in the sanctioned country and other markets), significantly delay or prevent the settlement of securities transactions, and adversely impact a Fund's liquidity and performance. The cost of servicing external debt will also generally be adversely affected by rising international interest rates, as many external debt obligations bear interest at rates which are adjusted based upon international interest rates. Because non-U.S. securities may trade on days when a Fund's shares are not priced, NAV may change at times when the Fund's shares cannot be sold.

Foreign banks and securities depositories at which a Fund holds its foreign securities and cash may be recently organized or new to the foreign custody business and may be subject to only limited or no regulatory oversight. Additionally, many foreign governments do not supervise and regulate stock exchanges, brokers and the sale of securities to the same extent as does the United States and may not have laws to protect investors that are comparable to U.S. securities laws. Settlement and clearance procedures in certain foreign markets may result in delays in payment for or delivery of securities not typically associated with settlement and clearance of U.S. investments.

Less information may be publicly available with respect to foreign issuers than is available with respect to U.S. companies. Accounting standards in non-U.S. countries may differ from U.S. accounting standards. If the accounting standards in another country do not require as much detail as U.S. accounting standards, it may be more difficult to completely and accurately assess a company's financial condition. The volume of transactions on foreign stock exchanges is generally lower than the volume of transactions on U.S. exchanges. Therefore, the market for securities that trade on foreign stock exchanges may be less liquid and their prices may be more volatile than securities that trade on U.S. securities.

In recent years, the European financial markets have experienced volatility and adverse trends due to concerns about economic downturns in, or rising government debt levels of, several European countries. These events may spread to other countries in

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Europe, including countries that do not use the Euro. These events may affect the value and liquidity of certain of the Fund's investments.

**• General Market Risk.** The capital markets may experience periods of disruption, instability and volatility due to, among other things, social, political, economic and other conditions and events such as natural disasters, terrorism, epidemics and pandemics. Such conditions may materially and adversely affect the markets globally and the issuers, industries, governments and jurisdictions in which a Fund invests, which may have a negative impact on a Fund's performance. These impacts can be exacerbated by failures of governments and societies to adequately respond to an emerging event or threat.

The NAV of a Fund and investment return will fluctuate based upon changes in the value of its portfolio securities. The market value of securities in which a Fund invests is based upon the market's perception of value and is not necessarily an objective measure of the securities' value. Other general market risks include: (i) the market may not recognize what the Adviser believes to be the true value or growth potential of the securities held by the Fund; (ii) the earnings of the companies in which a Fund invests will not continue to grow at expected rates, thus causing the price of the underlying securities to decline; (iii) the smaller a company's market capitalization, the greater the potential for price fluctuations and volatility of its securities due to lower trading volume for the securities, less publicly available information about the company and less liquidity in the market for the security; (iv) the potential for price fluctuations in the security of a medium capitalization company may be greater than that of a large capitalization company; (v) the Adviser's judgment as to the growth potential or value of a security may prove to be wrong; and (vi) a decline in investor demand for the securities held by a Fund also may adversely affect the value of the securities.

In addition, securities in a Fund's portfolio may cause a Fund to lose value and/or underperform in comparison to securities in general financial markets, a particular financial market or other asset classes due to a number of factors, including inflation (or expectations for inflation), deflation (or expectations for deflation), interest rates, global demand for particular products or resources, market instability, debt crises and downgrades, embargoes, tariffs, sanctions and other trade barriers, regulatory events, other governmental trade or market control programs and related geopolitical events. In addition, the value of a Fund's investments may be negatively affected by the occurrence of global events, such as war, terrorism, environmental disasters, natural disasters or events, country instability, and infectious disease epidemics/pandemics. These events could reduce consumer demand or economic output, result in market closures, travel restrictions or quarantines, and significantly adversely impact the economy. Governmental and quasi-governmental authorities and regulators throughout the world have previously responded to serious economic disruptions with a variety of significant fiscal and monetary policy changes, including but not limited to, direct capital infusions into companies, new monetary programs and dramatically lower interest rates. An unexpected or sudden reversal of these policies, or the ineffectiveness of these policies, could increase volatility in securities markets, which could adversely affect a Fund's investments. Any market disruptions could also prevent a Fund from executing advantageous investment decisions in a timely manner. Increasing interconnectivity between global economies and financial markets can lead to events or conditions in one country, region or financial market adversely impacting a different country, region or financial market. Thus, investors should closely monitor current market conditions to determine whether a Fund meets their individual financial needs and tolerance for risk.

**• High-Yield Securities Risks.** Below investment grade instruments are commonly referred to as "junk" or high-yield instruments and are regarded as predominantly speculative with respect to the issuer's capacity to pay interest and repay principal. Lower grade instruments may be particularly susceptible to economic downturns. It is likely that a prolonged or deepening economic recession could adversely affect the ability of the issuers of such instruments to repay principal and pay interest thereon, increase the incidence of default for such instruments and severely disrupt the market value of such instruments.

Lower grade instruments, though higher yielding, are characterized by higher risk. The retail secondary market for lower grade instruments, which are often thinly traded or subject to irregular trading, may be less liquid than that for higher rated instruments. Such instruments can be more difficult to sell and to value than higher rated instruments because there is generally less public information available about such securities. As a result, subjective judgment may play a greater role in valuing such instruments. Adverse conditions could make it difficult at times for a Fund to sell certain instruments or could result in lower prices than those used in calculating the Fund's NAV. Because of the substantial risks associated with investments in lower grade instruments, investors could lose money on their investment in the Fund, both in the short-term and the long-term.

**• Illiquid Investments Risks.** A Fund may invest up to 15% of its net assets in illiquid investments. A Fund may also invest in restricted securities. Investments in restricted securities could have the effect of increasing the amount of a Fund's assets invested in illiquid investments if qualified institutional buyers are unwilling to purchase these securities.

Illiquid and restricted investments may be difficult to dispose of at a fair price at the times when a Fund believes it is desirable to do so. The market price of illiquid and restricted investments generally is more volatile than that of more liquid investments, which may adversely affect the price that a Fund pays for or recovers upon the sale of such investments. Illiquid and restricted investments are also more difficult to value, especially in challenging markets. The Adviser's judgment may play a greater role in the valuation process. Investment of a Fund's assets in illiquid and restricted securities may restrict the Fund's ability to take

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advantage of market opportunities. To dispose of an unregistered security, a Fund, where it has contractual rights to do so, may have to cause such security to be registered. A considerable period may elapse between the time the decision is made to sell the security and the time the security is registered, thereby enabling a Fund to sell it. Contractual restrictions on the resale of securities vary in length and scope and are generally the result of a negotiation between the issuer and acquirer of the securities. In either case, a Fund would bear market risks during that period. Liquidity risk may impact a Fund's ability to meet shareholder redemptions and as a result, the Fund may be forced to sell securities at inopportune prices.

Certain fixed-income instruments are not readily marketable and may be subject to restrictions on resale. Fixed-income instruments may not be listed on any national securities exchange and no active trading market may exist for certain of the fixed-income instruments in which a Fund will invest. Where a secondary market exists, the market for some fixed-income instruments may be subject to irregular trading activity, wide bid/ask spreads and extended trade settlement periods. Trade settlement periods may take longer than seven days for transactions of leveraged loans, meaning it could take the Fund significant time to receive money after selling its investments. In addition, dealer inventories of certain securities are at historic lows in relation to market size, which indicates a potential for reduced liquidity as dealers may be less able to "make markets" for certain fixed-income securities.

Certain Structured Products, including CLOs, CDOs, CMOs, CBOs, and other asset-backed securities and debt securitizations, may be thinly traded or have a limited trading market. Structured Products are typically privately offered and sold, and thus, are not registered under the securities laws, which means less information about the security may be available as compared to publicly offered securities and only certain institutions may buy and sell them. As a result, investments in Structured Products may be characterized by a Fund as illiquid securities.

**• Interest Rate Risk.** Rising interest rates tend to extend the duration of securities, making them more sensitive to changes in interest rates. The value of longer-term securities generally changes more in response to changes in interest rates than shorter-term securities. As a result, in a period of rising interest rates, securities may exhibit additional volatility and may lose value. Changing interest rates, including rates that fall below zero, may have unpredictable effects on markets, including market volatility, and may adversely affect the Fund's performance. A change in interest rates may be sudden and significant, with unpredictable effects on the financial markets and the Fund's investments. Should interest rates decrease, the Fund's investments in certain variable-rate and fixed rate debt securities may be adversely affected.

**• Large Shareholder Transactions Risk.** Shares of the Funds are offered to certain other investment companies, large retirement plans and other large investors. As a result, a Fund is subject to the risk that those shareholders may purchase or redeem a large amount of shares of the Fund. To satisfy such large shareholder redemptions, a Fund may have to sell portfolio securities at times when it would not otherwise do so, which may negatively impact the Fund's NAV and liquidity. In addition, large purchases of Fund shares could adversely affect a Fund's performance to the extent that the Fund does not immediately invest cash it receives and therefore holds more cash than it ordinarily would. Large shareholder activity could also generate increased transaction costs and cause adverse tax consequences. For example, the sale of portfolio securities will accelerate the realization of taxable capital gains or losses for the Fund, which may increase taxable distributions to shareholders, and purchases or redemptions of a large number of Fund shares relative to the size of the Fund will have adverse tax consequences limiting the use of any capital loss carryforwards and certain other losses to offset any future realized capital gains.

**• Liquidity and Valuation Risks.** It may be difficult for a Fund to purchase and sell particular investments within a reasonable time at a favorable price. The capacity of traditional fixed-income market makers has not kept pace with the consistent growth in the fixed-income markets in recent years, which has led to reductions in the capacity of such market makers to engage in fixed-income trading and, as a result, dealer inventories of corporate fixed-income and floating rate instruments are at or near historic lows relative to market size. These concerns may be more pronounced in the case of high yield fixed-income and floating rate instruments than higher quality fixed-income instruments. Market makers tend to provide stability and liquidity to debt-securities markets through their intermediary services, and their reduced capacity and number could lead to diminished liquidity and increased volatility in the fixed-income markets. As a result, a Fund could be unable to pay redemption proceeds within the allowable time period due to adverse market conditions, an unusually high volume of redemption requests or other reasons, unless it sells other portfolio investments under unfavorable conditions, thereby adversely affecting the Fund. In addition, a Fund's ability to sell an instrument under favorable conditions may also be negatively impacted by, among other things, the sale of the same or similar instruments by other market participants at the same time.

To the extent that there is not an established liquid market for instruments in which a Fund invests, or there is a reduced number or capacity of traditional market makers with respect to certain instruments, trading in such instruments may be relatively inactive or irregular. In addition, during periods of reduced market liquidity or market turmoil, or in the absence of readily accessible market quotations for an investment in a Fund's portfolio, the ability of the Fund to assign an accurate daily value to that investment may be limited and the Adviser, on behalf of the Fund, may be required to perform a fair valuation of the instrument. Fair value determinations are inherently subjective and reflect good faith judgments based on available information. Accordingly, there can be no assurance that the determination of an instrument's fair value, conducted in accordance with the valuation procedures, will in fact approximate the price at which a Fund could sell that instrument at the time of the fair valuation. The Funds rely on various sources of information to value investments and calculate NAV. The Funds

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may obtain pricing information from third parties that are believed to be reliable. In certain cases, this information may be unavailable or this information may be inaccurate because of errors by the third parties, technological issues, absence of current or reliable market data or otherwise, which could impact a Fund's ability to accurately value its investments or calculate its NAV.

Investors who purchase or redeem shares of a Fund on days when the Fund is holding instruments that have been fair valued may receive fewer or more shares or lower or higher redemption proceeds than they would have received if the instruments had not been fair valued or if the Fund had employed an alternative valuation methodology. Such risks may be more pronounced in a rising interest rate environment, and, to the extent the Fund that holds a significant percentage of fair valued or otherwise difficult to value securities, it may be particularly susceptible to the risks associated with valuation. For additional information about valuation determinations, see "Determination of Net Asset Value" below. Portions of a Fund's portfolio that are fair valued or difficult to value vary from time to time. A Fund's shareholder reports contain detailed information about a Fund's holdings that are fair valued or difficult to value, including values of such holdings as of the dates of the reports.

**• Management Risk.** Each Fund is actively managed and its performance may reflect the Adviser's ability to make decisions which are suited to achieving a Fund's investment objective. Additionally, the Adviser's consideration of certain ESG and sustainability factors when making investment decisions may affect a Fund's performance relative to that of funds that do not consider ESG and sustainability factors. Due to its active management, a Fund could underperform other funds with a similar investment objective.

**• Mortgage-Backed and Asset-Backed Securities Risks.** The price paid by a Fund for asset-backed securities, the yield the Fund expects to receive from such securities and the average life of such securities are based on a number of factors, including the anticipated rate of prepayment of the underlying assets. The value of these securities may be significantly affected by changes in lending standards, interest rates and lending rates, and the risks associated with the market's perception of issuers, the creditworthiness of the parties involved, and investing in real estate securities. The foregoing risks or similar developments may adversely impact the default risk for the properties and loans underlying mortgage-backed securities investments, the value of and income generated by these investments, and could also result in reduced mortgage-backed securities liquidity. The foregoing risks or similar developments may adversely impact the default risk for the properties and loans underlying mortgage-backed securities investments, the value of and income generated by these investments, and could also result in reduced mortgage-backed securities liquidity.

The ability of a Fund to successfully utilize these instruments may depend on the ability of the Fund's Adviser to forecast interest rates and other economic factors correctly. These securities may have a structure that makes their reaction to interest rate changes and other factors difficult to predict, making their value highly volatile.

In addition to the risks associated with other asset-backed securities as described above, mortgage-backed securities are subject to the general risks associated with investing in real estate securities; that is, they may lose value if the value of the underlying real estate to which a pool of mortgages relates declines. In addition, mortgage-backed securities comprised of subprime mortgages and investments in other asset-backed securities collateralized by subprime loans may be subject to a higher degree of credit risk and valuation risk. Additionally, such securities may be subject to a higher degree of liquidity risk, because the liquidity of such investments may vary dramatically over time.

In addition, CMOs, which are mortgage-backed securities that are typically collateralized by mortgage loans or mortgage pass-through securities, and multi-class pass-through securities, are commonly structured as equity interests in a trust composed of mortgage loans or other mortgage-backed securities. CMOs are usually issued in multiple classes, often referred to as "tranches," with each tranche having a specific fixed or floating coupon rate and stated maturity or final distribution date. Under the traditional CMO structure, the cash flows generated by the mortgages or mortgage pass-through securities in the collateral pool are used to first pay interest and then pay principal to the holders of the CMOs. Subject to the provisions of individual CMO issues, the cash flow generated by the underlying collateral (to the extent it exceeds the amount required to pay the stated interest) is used to retire the bonds. As a result of these and other structural characteristics, CMOs entail greater market, prepayment and liquidity risks than other mortgage-backed securities, and may be more volatile or less liquid than other mortgage-backed securities.

Mortgage-backed securities may be issued by governments or their agencies and instrumentalities, such as, in the United States, Ginnie Mae, Fannie Mae and Freddie Mac. They may also be issued by private issuers but represent an interest in or are collateralized by pass-through securities issued or guaranteed by a government or one of its agencies or instrumentalities. In addition, mortgage-backed securities may be issued by private issuers and be collateralized by securities without a government guarantee. Such securities usually have some form of private credit enhancement.

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private issuers are likely to have some exposure to subprime loans as well as to the mortgage and credit markets generally. In addition, such securities are not subject to the underwriting requirements for the underlying mortgages that would generally apply to securities that have a government or government-sponsored entity guarantee, thereby increasing their credit risk. The risk of non-payment is greater for mortgage-related securities that are backed by mortgage pools that contain subprime loans, but a level of risk exists for all loans. Market factors adversely affecting mortgage loan repayments may include a general economic downturn, high unemployment, a general slowdown in the real estate market, a drop in the market prices of real estate, or an increase in interest rates resulting in higher mortgage payments by holders of adjustable rate mortgages.

**• NAV Risk** *(UltraShort Income Fund only)*.** The Fund is not a money market fund, does not attempt to maintain a stable NAV, and is not subject to the rules that govern the quality, maturity, liquidity and other features of securities that money market funds may purchase. Under normal conditions, the Fund's investment may be more susceptible than a money market fund to interest rate risk, valuation risk, credit risk, and other risks relevant to the Fund's investments. The Fund's NAV per share will fluctuate.

**• Other Investment Companies Risks.** Because the Funds generally invest in other investment companies (including those that are part of the same group of investment companies as the Funds ("affiliated underlying funds")) that invest in fixed-income securities, risks associated with investments in other investment companies will include fixed-income securities risks. In addition to the brokerage costs associated with a Fund's purchase and sale of the underlying securities, ETFs and mutual funds incur fees that are separate from those of a Fund. As a result, a Fund's shareholders will indirectly bear a proportionate share of the operating expenses of the ETFs and mutual funds, in addition to Fund expenses. Because a Fund is not required to hold shares of underlying funds for any minimum period, it may be subject to, and may have to pay, short-term redemption fees imposed by the underlying funds. ETFs are subject to additional risks such as the fact that the market price of its shares may trade above or below its NAV or an active market may not develop. A Fund has no control over the investments and related risks taken by the underlying funds in which it invests.

In addition to risks generally associated with investments in investment company securities, ETFs are subject to the following risks that do not apply to traditional mutual funds: (i) the market price of an ETF's shares may be above or below its NAV; (ii) an active trading market for an ETF's shares may not develop or be maintained; (iii) the ETF may employ an investment strategy that utilizes high leverage ratios; (iv) trading of an ETF's shares may be halted if the listing exchange's officials deem such action appropriate; and (v) underlying ETF shares may be de-listed from the exchange or the activation of market-wide "circuit breakers" (which are tied to large decreases in stock prices) may temporarily stop stock trading.

A Fund's investments in other investment companies may include investments in closed-end funds ("CEFs"). Shares of CEFs frequently trade at a price per share that is less than a fund's NAV. There can be no assurance that the market discount on shares of any CEF purchased by a Fund will ever decrease or that when the Fund seeks to sell shares of a CEF it can receive the NAV of those shares. CEFs have lower levels of daily volume when compared to open-end companies. There are greater risks involved in investing in securities with limited market liquidity.

The Adviser may be subject to potential conflicts of interest in allocating a Fund's assets to underlying funds, such as a potential conflict in selecting affiliated underlying funds over unaffiliated underlying funds. In addition, a Fund's portfolio managers may be subject to potential conflicts of interest in allocating the Fund's assets among underlying funds, as certain of the Fund's portfolio managers may also manage an affiliated underlying fund in which the Fund may invest. Both the Adviser and a Fund's portfolio managers have a fiduciary duty to a Fund to act in the Fund's best interest when selecting underlying funds. Under the oversight of the Board of Trustees, the Adviser will carefully analyze any such potential conflicts of interest and will take steps to minimize and, where possible, eliminate them.

Additionally, to the extent that a Fund serves as an "acquired fund" to another affiliated or unaffiliated investment company, the Fund's ability to invest in other investment companies and private funds may be limited and, under these circumstances, the Fund's investments in other investment companies and private funds will be consistent with applicable law and/or exemptive rules adopted by or exemptive orders obtained from the SEC. For example, to the extent the Fund serves as an acquired fund in a fund of funds arrangement in reliance on Rule 12d1-4 under the Investment Company Act, the Fund would be prohibited from purchasing or otherwise acquiring the securities of an investment company or private fund if, after such purchase or acquisition, the aggregate value of the Fund's investments in such investment companies and private funds would exceed 10% of the value of the Fund's total assets, subject to limited exceptions (including for investments in money market funds).

**• Portfolio Turnover Risk.** A Fund's annual portfolio turnover rate may vary greatly from year to year, as well as within a given year. The portfolio turnover rate is not considered a limiting factor in the execution of investment decisions for a Fund. High portfolio turnover may result in the realization of net short-term capital gains by a Fund which, when distributed to shareholders, will be taxable as ordinary income. A high portfolio turnover may increase a Fund's current and accumulated earnings and profits, resulting in a greater portion of the Fund's distributions being treated as a dividend to the Fund's shareholders. In addition, a higher portfolio turnover rate results in correspondingly greater brokerage and other transactional expenses that are borne by a Fund.

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**• Prepayment Risk.** When interest rates decline, fixed income securities with stated interest rates may have their principal paid earlier than expected. This may result in a Fund having to reinvest that money at lower prevailing interest rates, which can reduce the returns of the Fund.

**• Rating Agencies Risk.** Rating agencies may fail to make timely changes in credit ratings and an issuer's current financial condition may be better or worse than a rating indicates. In addition, rating agencies are subject to an inherent conflict of interest because they are often compensated by the same issuers whose securities they grade.

**• Regulatory and Legal Risks.** U.S. and non-U.S. government agencies and other regulators regularly adopt new regulations and legislatures enact new statutes that affect the investments held by the Fund, the strategies used by the Fund or the level of regulation or taxation that applies to the Fund. These statutes and regulations and any future statutes and regulations may impact the investment strategies, performance, costs and operations of the Fund or the taxation of its shareholders. Changes in government legislation, regulation and/or intervention may change the way the Adviser or the Fund is regulated, affect the expenses incurred directly by the Fund and the value of its investments and limit and/or preclude the Fund's ability to implement, or increase the Fund's costs associated with implementing, its investments strategies. Changes to tax laws and regulations may also result in certain tax consequences for the Fund and/or investors. Government regulation may change frequently and may have significant adverse consequences. Moreover, government regulation may have unpredictable and unintended effects. In addition to exposing the Fund to potential new costs and expenses, additional regulation or changes to existing regulation may also require changes to the Fund's investment practices. The Adviser cannot predict the effects of any new governmental regulation that may be implemented, and there can be no assurance that any new governmental regulation will not adversely affect the Fund's ability to achieve its respective investment objective.

**• REIT Risk** (*Multi-Strategy Income Fund only*)**.** Investments in REITs involve unique risks. REITs may have limited financial resources, may trade less frequently and in limited volume, and may be more volatile than other securities. The value of a REIT may also rise and fall in response to the management skill and creditworthiness of the issuer. In addition, to the extent the Fund holds interests in REITs, it is expected that investors in the Fund will bear two layers of asset-based management fees and expenses (directly at the Fund level and indirectly at the REIT level). The risks of investing in REITs include certain risks associated with the direct ownership of real estate and the real estate industry in general. These include risks related to general, regional and local economic conditions; fluctuations in interest rates and property tax rates; shifts in zoning laws, environmental regulations and other governmental action such as the exercise of eminent domain; cash flow dependency; increased operating expenses; lack of availability of mortgage funds; losses due to natural disasters; overbuilding; losses due to casualty or condemnation; changes in property values and rental rates; the management or development of properties, which may be subject to mortgage loans that are subject to the risk of default; and other factors.

**• Repurchase Agreement Risks.** Repurchase agreements typically involve the acquisition by a Fund of fixed-income securities from a selling financial institution such as a bank or broker-dealer. The agreement provides that a Fund will sell the securities back to the institution at a fixed time in the future. Repurchase agreements involve the risk that a seller will become subject to bankruptcy or other insolvency proceedings or fail to repurchase a security from a Fund. In such situations, a Fund may incur losses including as a result of (i) a possible decline in the value of the underlying security during the period while a Fund seeks to enforce its rights thereto, (ii) a possible lack of access to income on the underlying security during this period, and (iii) expenses of enforcing its rights.

**• Residential Loans and Mortgages Risk** (*Multi-Strategy Income Fund only*)**.** A Fund may acquire residential loans and mortgages (including through participations, assignments and whole loans) from third-party mortgage originators. In addition to interest rate, default and other risks of fixed income securities, residential loans and mortgages carry additional risks, including the possibility that the quality of the collateral may decline in value and the potential for the liquidity of residential loans and mortgages to vary over time. In addition, in the event that a loan is foreclosed on, a Fund could become the owner (in whole or in part) of any collateral, which may include, among other things, real estate or other real or personal property, and the Fund would bear the costs and liabilities of owning, holding or disposing of such property. These risks are greater for subprime residential and mortgage loans.

A Fund may also experience difficulty disposing of loans, which do not trade in a liquid market and typically can only be sold to a limited number of institutional investors. The absence of a liquid market for these instruments could adversely impact their value and may inhibit a Fund's ability to dispose of them at times when it would be desirable to do so, including in response to particular economic events, such as a deterioration in the creditworthiness of the borrower. Because they do not trade in a liquid market residential loans may also be difficult for a Fund to value.

Investing in loans may subject a Fund to greater levels of credit risk, call risk, settlement risk and liquidity risk than other types of fixed income instruments. Transactions involving loans may also involve greater costs than transactions involving more actively traded securities. In addition, a number of factors, including restrictions on transfers, irregular trading activity and wide bid/ask spreads, and extended trade settlement periods may make it more difficult for a Fund to acquire, dispose of or accurately price such instruments relative to other types of investments. As a result, a Fund may not be able to realize the full value for loans and there may be extended delays in the Fund's receipt of proceeds from the sale of a loan, which could

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adversely impact the Fund's performance. Because transactions in many loans are subject to extended trade settlement periods, proceeds from the sale of a loan may not be immediately available to a Fund. As a result, proceeds related to the sale of loans may not be available to make additional investments or to meet a Fund's repurchase obligations for a period after the sale of the loans, and, as a result, the Fund may have to sell other investments or engage in borrowing transactions if necessary to raise cash to meet its obligations.

When acquiring residential loans, a Fund relies on third-party mortgage originators to originate mortgage loans that comply with applicable law. Mortgage loan originators and brokers are subject to strict and evolving consumer protection laws and other legal obligations with respect to the origination of residential mortgage loans. These laws may be highly subjective and open to interpretation and, as a result, a regulator or court may determine that that there has been a violation where an originator or servicer of mortgage loans reasonably believed that the law or requirement had been satisfied. Failure or alleged failure of originators or servicers to comply with these laws and regulations could subject a Fund, as an assignee or purchaser of these loans or securities backed by these loans, to, among other things, delays in foreclosure proceedings, increased litigation expenses, monetary penalties and defenses to foreclosure, including by recoupment or setoff of finance charges and fees collected, and in some cases could also result in rescission of the affected residential mortgage loans, which could adversely impact a Fund's business and financial results. While some of these laws may not explicitly hold a Fund responsible for the legal violations of these third parties, federal and state agencies and private litigants have increasingly sought to impose such liability. Various regulators and plaintiffs' lawyers have also sought to hold assignees of mortgage loans liable for the alleged violations of the originating lender under theories of express or implied assignee liability. Accordingly, a Fund may be subject to fines, penalties or civil liability based upon the conduct of the mortgage lenders that originated the mortgage loans such Fund holds.

Despite a Fund's efforts to manage credit risk related to the residential mortgage loans the Fund acquires, there are many aspects of credit risk that the Fund cannot control. A Fund's due diligence process may not be effective at preventing or limiting compliance violations or borrower delinquencies and defaults, and the loan servicing companies that service the mortgage loans may not comply with applicable servicing regulations or investor requirements. Prior to acquiring loans, a Fund will perform due diligence and the Fund will rely on resources and data available to it from the seller, which may be limited. A Fund's due diligence efforts may not detect matters that could lead to losses. If a Fund's due diligence processes are not adequate, and the Fund fails to detect certain loan defects or compliance issues related to origination, the Fund may incur losses. A Fund could also incur losses if a counterparty that sold the Fund a loan is unwilling or unable (e.g., due to its financial condition) to repurchase that loan or asset or pay damages to the Fund if the Fund determines subsequent to purchase that one or more of the representations or warranties made to the Fund in connection with the sale was inaccurate. There may be less readily available information about loans and their underlying borrowers than is the case for other types of investments and issuers. In addition, because loans may not be considered "securities," investors in loans, such as a Fund, may not be entitled to rely on the anti-fraud protections of the federal securities laws, although they may be entitled to certain contractual remedies.

The mortgage loans that a Fund purchases, and in which the Fund directly and indirectly invests through RMBS, CMBS or other investments, may be concentrated in a specific state or states. Weak economic conditions in these locations or any other location (which may or may not affect real property values), may affect the ability of borrowers to repay their mortgage loans on time. Properties in certain jurisdictions may be more susceptible than homes located in other parts of the country to certain types of uninsurable hazards, such as earthquakes, floods, hurricanes, wildfires and other natural disasters. Declines in the residential real estate market of a particular jurisdiction may reduce the values of properties located in that jurisdiction, which would result in an increase in the loan-to-value ratios. Any increase in the market value of properties located in a particular jurisdiction would reduce the loan-to-value ratios of the mortgage loans and could, therefore, make alternative sources of financing available to the borrowers at lower interest rates, which could result in an increased rate of prepayment of the mortgage loans.

**• Reverse Repurchase Agreement Risks.** A reverse repurchase agreement is the sale by a Fund of a debt obligation to a party for a specified price, with the simultaneous agreement by the Fund to repurchase that debt obligation from that party on a future date at a higher price. Similar to borrowing, reverse repurchase agreements provide a Fund with cash for investment purposes, which creates leverage and subjects a Fund to the risks of leverage, including increased volatility. Reverse repurchase agreements also involve the risk that the other party may fail to return the securities in a timely manner or at all. A Fund could lose money if it is unable to recover the securities and the value of collateral held by the Fund, including the value of the investments made with cash collateral, is less than the value of securities. Reverse repurchase agreements also create Fund expenses and require that a Fund have sufficient cash available to purchase the debt obligations when required. Reverse repurchase agreements also involve the risk that the market value of the debt obligation that is the subject of the reverse repurchase agreement could decline significantly below the price at which a Fund is obligated to repurchase the security. In the event the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, a Fund's use of the proceeds from the sale of the securities may be restricted pending a determination by the other party, or its trustee or receiver, whether to enforce a Fund's obligations to repurchase the securities. Reverse repurchase agreements also may be viewed as borrowings made by the Fund and are a form of leverage which also may increase the volatility of the Fund.

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**• RIC-Related Risks of Investments Generating Non-Cash Taxable Income.** Certain of a Fund's investments, particularly, debt obligations, such as zero coupon bonds, that will be treated as having "market discount" and/or original issue discount ("OID") for U.S. federal income tax purposes and certain CLOs that may be considered passive foreign investment companies or controlled foreign corporations, will require the Fund to recognize taxable income in a taxable year in excess of the cash generated on those investments during that year. In particular, a Fund expects to invest in debt obligations that will be treated as having "market discount" and/or OID for U.S. federal income tax purposes. Additionally, some of the structured products or issuers in which a Fund invests may be considered passive foreign investment companies, or under certain circumstances, controlled foreign corporations. Because a Fund may be required to recognize income in respect of these investments before, or without receiving, cash representing such income, the Fund may have difficulty satisfying the annual distribution requirements applicable to RICs and avoiding Fund-level U.S. federal income and/or excise taxes. Accordingly, a Fund may be required to sell assets, including at potentially disadvantageous times or prices, raise additional debt or equity capital, make taxable distributions of its shares or debt securities, or reduce new investments, to obtain the cash needed to make these income distributions. If a Fund liquidates assets to raise cash, the Fund may realize gain or loss on such liquidations; in the event the Fund realizes net capital gains from such liquidation transactions, the Fund shareholders may receive larger capital gain distributions than they would in the absence of such transactions.

**• Risks Relating to a Fund's RIC Status.** To qualify and remain eligible for the special tax treatment accorded to a RIC and its shareholders under the Code, a Fund must meet certain source-of-income, asset diversification and annual distribution requirements. Very generally, to qualify as a RIC, a Fund must derive at least 90% of its gross income for each taxable year from dividends, interest, payments with respect to certain securities loans, gains from the sale or other disposition of stock, securities or foreign currencies, net income from certain publicly traded partnerships or other income derived with respect to its business of investing in stock or other securities. A Fund must also meet certain asset diversification requirements at the end of each quarter of each of its taxable years. Failure to meet these diversification requirements on the last day of a quarter may result in a Fund having to dispose of certain investments quickly to prevent the loss of RIC status. Any such dispositions could be made at disadvantageous prices or times, and may result in substantial losses to a Fund. In addition, to be eligible for the special tax treatment accorded RICs, a Fund must meet the annual distribution requirement, requiring it to distribute with respect to each taxable year an amount at least equal to 90% of the sum of its "investment company taxable income" (generally its taxable ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, and determined without regard to any deduction for dividends paid) and its net tax-exempt income (if any), to its shareholders. If a Fund fails to qualify as a RIC for any reason and becomes subject to corporate tax, the resulting corporate taxes could substantially reduce its net assets, the amount of income available for distribution and the amount of its distributions. Such a failure would have a material adverse effect on a Fund and its shareholders. In addition, a Fund could be required to recognize unrealized gains, pay substantial taxes and interest and make substantial distributions to re-qualify as a RIC.

**• Second Lien Risk** *(Multi-Strategy Income Fund only)*.** Second lien loans, such as HELOC loans, are generally subject to similar drivers of delinquency and default as those associated with investments in senior loans. However, the risk of loss associated with second lien loans are higher than the risks of loans with first priority over the collateral because in the event of default on a second lien loan, the first priority lien holder has first claim to the underlying collateral of the loan. It is possible that no collateral value would remain for the second priority lien holder and therefore result in a loss of investment to the Fund. Second lien loans also generally have greater price volatility than senior loans and may be less liquid. Second lien loans are generally of below investment grade quality, and therefore share the same risks as other below investment grade securities.

**• Sector Risk.** To the extent a Fund invests more heavily in particular sectors of the economy, its performance will be especially sensitive to developments that significantly affect those sectors.

**• Short Sales Risks*.*** If a security sold short increases in price, a Fund will incur a loss. Short sales involve the risk that losses may exceed the amount invested and may be unlimited. A Fund will ordinarily engage in short sales where it does not own or have the immediate right to acquire the security sold short, and as such must borrow those securities to make delivery to the buyer under the short sale transaction. A Fund may not be able to borrow a security that it needs to deliver or it may not be able to close out a short position at an acceptable price and may have to sell related long positions earlier than it had expected. Thus, a Fund may not be able to successfully implement its short sale strategy due to limited availability of desired securities or for other reasons. Also, there is the risk that the counterparty to a short sale may fail to honor its contractual terms, causing a loss to a Fund.

In times of unusual or adverse market, economic, regulatory or political conditions, a Fund may not be able, fully or partially, to implement its short selling strategy. Periods of unusual or adverse market, economic, regulatory or political conditions generally may exist for as long as six months and, in some cases, much longer.

**• Structured Products Risks*.*** A Fund may invest in Structured Products, including CLOs, CDOs, CMOs, CBOs, and other asset-backed securities and debt securitizations. Structured Products are subject to the normal interest rate, default and other risks associated with fixed-income securities and asset-backed securities. Additionally, the risks of an investment in a Structured Product depend largely on the type of the collateral securities and the class of the Structured Product or other asset-backed

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security in which a Fund invests. A Fund generally may have the right to receive payments only from the Structured Product, and generally does not have direct rights against the issuer or the entity that sold the underlying collateral assets. Such collateral may be insufficient to meet payment obligations and the quality of the collateral may decline in value or default. Also, the class of the Structured Product may be subordinate to other classes, values may be volatile, and disputes with the issuer may produce unexpected investment results.

The ability of the Structured Product to make distributions will be subject to various limitations, including the terms and covenants of the debt it issues. For example, performance tests (based on interest coverage or other financial ratios or other criteria) may restrict a Fund's ability, as holder of the equity interests in a Structured Product, to receive cash flow from these investments. There is no assurance any such performance tests will be satisfied. Also, a Structured Product may take actions that delay distributions in order to preserve ratings and to keep the cost of present and future financings lower or the Structured Product may be obligated to retain cash or other assets to satisfy over-collateralization requirements commonly provided for holders of the Structured Product's debt. As a result, there may be a lag, which could be significant, between the repayment or other realization on a loan or other assets in, and the distribution of cash out of, a Structured Product, or cash flow may be completely restricted for the life of the Structured Product. If a Fund does not receive cash flow from any such Structured Product that is necessary to satisfy the annual distribution requirement for maintaining a Fund's RIC status, and a Fund is unable to obtain cash from other sources necessary to satisfy this requirement, a Fund could fail to maintain its status as a RIC, which would have a material adverse effect on a Fund's financial performance.

Structured Products are typically privately offered and sold, and thus, are not registered under the securities laws, which means less information about the security may be available as compared to publicly offered securities and only certain institutions may buy and sell them. As a result, investments in certain Structured Products or other asset-backed securities may be characterized by a Fund as illiquid securities. An active dealer market may exist for Structured Products that can be resold in Rule 144A transactions, but there can be no assurance that such a market will exist or will be active enough for a Fund to sell such securities. A Fund may invest in any tranche of a Structured Product, including the subordinated/equity tranches. If applicable accounting pronouncements or SEC staff guidance require a Fund to consolidate the Structured Product's financial statements with a Fund's financial statements, any debt issued by the Structured Product would be generally treated as if it were issued by a Fund. Further, there can be no assurance that a bankruptcy court, in the exercise of its broad equitable powers, would not order that a Fund's assets and liabilities be substantively consolidated with those of a Structured Product, rather than kept separate, and that creditors of the Structured Product would have claims against the consolidated bankruptcy estate (including a Fund's assets). If a Structured Product is not consolidated with a Fund, a Fund's only interest in the Structured Product will be the value of its retained subordinated interest and the income allocated to it, which may be more or less than the cash a Fund received from the Structured Product, and none of the Structured Product's liabilities would be reflected as a Fund's liabilities. If the assets of a Structured Product are not consolidated with a Fund's assets and liabilities, then the leverage incurred by such Structured Product may or may not be treated as borrowings by a Fund for purposes applicable limitations on a Fund's ability to issue debt.

In addition to the general risks associated with fixed-income securities discussed herein, Structured Products carry additional risks, including, but not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii) the quality of the collateral may default, decline in value or quality or be downgraded by a rating agency; (iii) the possibility that the investments in Structured Products are subordinate to other classes or tranches thereof; (iv) the complex structure of the security may not be fully understood at the time of investment and may produce disputes among investors or with the issuer or unexpected investment results; and (v) a forced "fire sale" liquidation may occur due to technical defaults such as coverage test failures.

The activities of the issuers of certain Structured Products will generally be directed by a collateral manager. In a Fund's capacity as holder of interests in such a Structured Product, a Fund is generally not able to make decisions with respect to the management, disposition or other realization of any investment, or other decisions regarding the business and affairs, of the Structured Product. Consequently, the success of the securitizations in will depend, in part, on the financial and managerial expertise of the collateral manager.

To the extent that an affiliate of the Adviser serves as the sponsor and/or collateral manager of a Structured Product in which a Fund invests, or the Adviser or its affiliates hold other interests in Structured Products in which a Fund invests, a Fund may be limited in its ability to participate in certain transactions with the Structured Product and may not be able to dispose of its interests in the Structured Product if no secondary market exists for the interests. Even if a secondary market exists, the Adviser or its affiliates at times may possess material non-public information that may restrict a Fund's ability to dispose of its interests in the Structured Product. A Fund does not currently contemplate making investments in any specific investments sponsored by the Adviser or an affiliate; however, to the extent a Fund does, it will do so only as permitted under the 1940 Act and the rules thereunder.

To the extent the Fund invests in the equity tranches of a Structured Product, such investments typically represent the first loss position, are unrated and are subject to greater risk. To the extent that any losses are incurred by the Structured Product in respect of any collateral, such losses will be borne first by the owners of the equity interests, which may include the Fund. Any

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equity interests that a Fund holds in a Structured Product will not be secured by the assets of the Structured Product or guaranteed by any party, and a Fund will rank behind all creditors of the Structured Product, including the holders of the secured notes issued by the Structured Product. Equity interests are typically subject to certain payment restrictions in the indenture governing the senior tranches. Accordingly, equity interests may not be paid in full, may be adversely impacted by defaults by a relatively small number of underlying assets held by the Structured Product and may be subject to up to 100% loss. Structured Products may be highly levered, and therefore equity interests may be subject to a higher risk of loss, including the potential for total loss. The market value of equity interests may be significantly affected by a variety of factors, including changes in interest rates, changes in the market value of the collateral held by the securitization, defaults and recoveries on that collateral and other risks associated with that collateral. The leveraged nature of equity interest is likely to magnify these impacts. Equity interests typically do not have a fixed coupon and payments on equity interests will be based on the income received from the underlying collateral and the payments made to the senior tranches, both of which may be based on floating rates. While the payments on equity interest will be variable, equity interests may not offer the same level of protection against changes in interest rates as other floating rate instruments. Equity interests are typically illiquid investments and subject to extensive transfer restrictions, and no party is under any obligation to make a market for equity interests. At times, there may be no market for equity interests, and a Fund may not be able to sell or otherwise transfer equity interests at their fair value, or at all, in the event that it determines to sell them.

**• Subsidiary Risk** *(Multi-Strategy Income Fund only)*.** To the extent the Fund invests through a Subsidiary, it will be exposed to the risks associated with the Subsidiary's investments. Subsidiaries will not be registered as investment companies under the 1940 Act and, therefore, will not be subject to the investor protections and substantive regulation of the 1940 Act, although any Subsidiary will be managed pursuant all applicable 1940 Act compliance policies and procedures of the Fund. Changes in the laws of the United States and/or the jurisdiction in which a Subsidiary is organized could result in the inability of the Fund and/or the Subsidiary to operate as described in this prospectus and could adversely affect the Fund.

**• Uncertain Tax Treatment.** A Fund may invest a portion of its net assets in below investment grade instruments. Investments in these types of instruments and certain other instruments may present special tax issues for the Fund. U.S. federal income tax rules are not entirely clear about issues such as when the Fund may cease accruing interest, OID or market discount, when and to what extent deductions may be taken for bad debts or worthless instruments, how payments received on obligations in default should be allocated between principal and income and whether exchanges of debt obligations in a bankruptcy or workout context are taxable. Although a Fund will seek to address these and other issues to the extent necessary to seek to ensure that it distributes sufficient income that it does not become subject to U.S. federal income or excise tax, no assurances can be given that the Fund will not be adversely affected as a result of such issues.

**• Unrated Securities Risks.** A Fund may purchase unrated securities which are not rated by a rating agency if the Adviser determines that the security is of comparable quality to a rated security that the Fund may purchase. Unrated securities may be less liquid than comparable rated securities and involve the risk that the Adviser may not accurately evaluate the security's comparative credit rating. Analysis of creditworthiness of issuers of high yield securities may be more complex than for issuers of higher-quality debt securities. To the extent that a Fund purchases unrated securities, the Fund's success in achieving its investment objective may depend more heavily on the Adviser's creditworthiness analysis than if the Fund invested exclusively in rated securities.

**• U.S. Government Securities Risks.** Some obligations issued or guaranteed by U.S. government agencies, instrumentalities or GSEs, including, for example, pass-through certificates issued by Ginnie Mae, are supported by the full faith and credit of the U.S. Treasury. Other obligations issued by or guaranteed by federal agencies or GSEs, such as securities issued by Fannie Mae or Freddie Mac, are supported by the discretionary authority of the U.S. government to purchase certain obligations of the federal agency or GSE, while other obligations issued by or guaranteed by federal agencies or GSEs, such as those of the Federal Home Loan Banks, are supported by the right of the issuer to borrow from the U.S. Treasury. The maximum potential liability of the issuers of some U.S. government securities held by a Fund may greatly exceed their current resources, including their legal right to support from the U.S. Treasury. It is possible that these issuers will not have the funds to meet their payment obligations in the future.

**Disclosure of Portfolio Holdings**

Information about the Funds' policies and procedures with respect to disclosure of the Funds' portfolio holdings is included in the Statement of Additional Information ("SAI").

**MANAGEMENT OF THE FUNDS**

**Adviser.** Angel Oak Capital Advisors, LLC ("the Adviser"), 980 Hammond Drive, Suite 200, Atlanta, Georgia 30328, serves as investment adviser to the Funds. The Adviser has overall supervisory management responsibility for the general management and investment of each Fund's portfolio. The Adviser was formed in 2009 and provides advisory services to registered investment companies, unregistered funds, institutions, and other investors. As of January 31, 2026, the Adviser had assets under management of approximately $11 billion. The Adviser is wholly-owned by Angel Oak Asset Management Holdings, LLC. On October 1, 2025,

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Brookfield Asset Management Ltd. acquired a majority of Angel Oak Companies, LP, the parent of Angel Oak Asset Management Holdings, LLC, itself the parent of the Adviser.

The Multi-Strategy Income Fund is required to pay the Adviser a fee equal to 0.89% of the Fund's average daily net assets. The UltraShort Income Fund is required to pay the Adviser a fee equal to 0.44% of the Fund's average daily net assets. A discussion of the factors that the Board of Trustees considered in approving the Funds' advisory agreement is available in the Funds' <u>[semi-annual report on Form N-CSR](https://www.sec.gov/ix?doc=/Archives/edgar/data/1612930/000113322825010505/afot-efp17668_ncsrs.htm)</u> for the fiscal period ended July 31, 2025.

The Adviser has contractually agreed to waive its fees and/or reimburse certain expenses (exclusive of any front-end sales loads, taxes, interest expenses, dividend and interest expenses related to short sales, brokerage commissions, 12b-1 fees, acquired fund fees and expenses, expenses incurred in connection with any merger or reorganization, any transaction-related expenses and fees arising out of transactions effected on behalf of a Fund, litigation and potential litigation expenses, expenses of shareholder proposals, contested elections, or non-routine shareholder meetings, and other non-routine expenses or extraordinary expenses not incurred in the ordinary course of a Fund's business) to limit the Total Annual Fund Operating Expenses after Fee Waiver/Expense Reimbursement to 0.99% of the Multi-Strategy Income Fund's average daily net assets and 0.35% of the UltraShort Income Fund's average daily net assets (the "Expense Limits") through September 30, 2027. The Expense Limits exclude certain expenses (e.g., 12b-1 fees), and consequently, each Fund's Total Annual Fund Operating Expenses after Fee Waiver/Expense Reimbursement may be higher than such Fund's Expense Limit. The contractual fee waivers and expense reimbursements may be changed or eliminated at any time by the Board of Trustees, on behalf of a Fund, upon 60 days' written notice to the Adviser. The contractual fee waivers and expense reimbursements may not be terminated by the Adviser without the consent of the Board of Trustees. The Adviser may recoup from a Fund any waived amount or reimbursed expenses with respect to the Fund pursuant to this agreement if such recoupment does not cause the Fund to exceed the current Expense Limit or the Expense Limit in place at the time of the waiver or reimbursement (whichever is lower) and the recoupment is made within three years after the end of the month in which the Adviser incurred the expense.

In addition, the Adviser has contractually agreed through at least September 30, 2027 to waive the amount of each Fund's management fee to the extent necessary to offset the proportionate share of the management fees incurred by the Fund through its investment in an underlying fund for which the Adviser also serves as investment adviser. This arrangement may only be changed or eliminated by the Board of Trustees upon 60 days' written notice to the Adviser.

After fee waivers, expense reimbursements, and recoupments, the advisory fee paid to the Adviser for the fiscal year ended January 31, 2026 was equal to 0.89% of the Multi-Strategy Income Fund's average daily net assets and 0.24% of the UltraShort Income Fund's average daily net assets.

If you invest in a Fund through an investment adviser, bank, broker-dealer, 401(k) plan, trust company or other financial intermediary, the policies and fees for transacting business may be different than those described in this Prospectus. Some financial intermediaries may charge transaction fees and may set different minimum investments or limitations on buying or selling shares. Some financial intermediaries do not charge a direct transaction fee, but instead charge a fee for services such as sub-transfer agency, accounting and/or shareholder services that the financial intermediary provides on a Fund's behalf. This fee may be based on the number of accounts or may be a percentage of the average value of a Fund's shareholder accounts for which the financial intermediary provides services. The applicable Fund may pay a portion of this fee, which is intended to compensate the financial intermediary for providing the same services that would otherwise be provided by the Fund's transfer agent (the "Transfer Agent") or other service providers if the shares were purchased directly from the Fund. To the extent that these fees are not paid by the applicable Fund, the Adviser may pay a fee to financial intermediaries for such services.

**Management of any Subadviser to a Fund.** The Funds, the Trust and the Adviser have obtained an exemptive order with respect to the Funds that permits the Funds to operate in a "manager of managers" structure whereby the Adviser, subject to certain conditions, can hire new subadvisers for the Funds, and materially amend the terms of subadvisory agreements with subadvisers, each subject to Board approval but without obtaining prior shareholder approval. Consequently, under the exemptive order, the Adviser has the ultimate responsibility (subject to oversight by the Board) to oversee the subadvisers and recommend their hiring, termination, and replacement. Within 90 days of retaining a new subadviser, shareholders of the Fund(s) will receive notification of the change. The manager of managers structure enables the Funds to operate with greater efficiency and without incurring the expense and delays associated with obtaining shareholder approval of subadvisory agreements. The structure does not permit investment advisory fees paid by the Funds to be increased or change the Adviser's obligations under its investment advisory agreement with the Trust. Furthermore, any subadvisory agreements with affiliates of the Funds or the Adviser will require shareholder approval.

**PORTFOLIO MANAGERS**

The Adviser's investment team includes:

Kin Lee is a Senior Portfolio Manager of the Adviser and a Portfolio Manager of the Multi-Strategy Income Fund. He focuses on building and managing strategies within the commercial mortgage-backed securities (CMBS) market and commercial real-estate related investment activities. Kin began his career more than three decades ago and most recently served as Executive Director at Nomura Securities International. Previously, he was Head of CMBS Trading for both Mizuho Securities and RBS Greenwich Capital.

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Kin also worked in CMBS trading with Credit Suisse and Donaldson, Lufkin, & Jenrette. Kin holds a B.S. degree in Industrial Management and Economics from Carnegie Mellon University.

Sreeniwas (Sreeni) V. Prabhu is Managing Partner, Co-CEO and Group Chief Investment Officer of the Adviser and a Portfolio Manager of each Fund. Prior to co-founding the Adviser in 2009, Sreeni was the Chief Investment Officer of the investment portfolio at Washington Mutual Bank in Seattle where he managed a $25 billion portfolio. He was also part of the macro asset strategy team at the bank. Sreeni previously worked for six years at SunTrust Bank in Atlanta, where he was responsible for investment strategies and served as Head Portfolio Manager for the $3 billion commercial mortgage-backed securities portfolio. He began his career at SunTrust in 1998 as a Bank Analyst focused on asset/liability management and liquidity strategies. Sreeni holds a B.B.A. degree in Economics from Georgia College and State University and an M.B.A. in Finance from Georgia State University.

Namit Sinha is Chief Investment Officer of the Adviser and a Portfolio Manager of each Fund. He has extensive mortgage-credit expertise and focuses on managing non-qualified mortgage and commercial investment strategies. Namit also focuses on opportunities in other areas such as prime jumbo mortgages, reperforming loan strategies, and mortgage servicing rights. He has over 20 years of experience in fixed income products including structured credit. Prior to Angel Oak, Namit spent four years as Senior Vice President at Canyon Capital and established the residential loan trading business in addition to covering its structured products operations. Prior to joining Canyon, Namit worked at Nomura as Executive Director of Mortgage Trading and was involved in the acquisition and financing of non-performing loans, reperforming loans, non-qualified mortgages, and prime jumbo loans. Prior to that, Namit worked at both Lehman Brothers and Barclays as a non-agency whole loan trader. Namit holds an M.S. from Rutgers University and a B. Tech degree from the Indian Institute of Technology Bombay in Mumbai, India.

Clayton Triick, CFA®, is Head of Portfolio Management, Public Strategies of the Adviser and a Portfolio Manager of each Fund. In this role, he leads the overall investment framework, including asset allocation, sector positioning, and duration management for the firm's public mutual funds, exchange-traded funds, and related SMAs. He heads the Public Strategies Investment Committee and is responsible for overseeing all aspects of portfolio management for the Public Strategies, which are primarily comprised of multi-sector portfolios. Prior to joining Angel Oak in 2011, Clayton worked for YieldQuest Advisors, where he was a member of the investment committee focusing on interest rate and currency risk management of the mutual funds alongside directly managing the closed-end fund allocations within YieldQuest portfolios and individual accounts. Clayton holds a B.B.A. in Finance from the Farmer School of Business at Miami University. He also holds the Chartered Financial Analyst (CFA®) designation.

The Funds' SAI provides additional information about each Fund's portfolio managers, including their compensation structure, other accounts managed, and ownership of shares of the Funds.

**CHOOSING A SHARE CLASS**

Each Fund offers three classes of shares. The Multi-Strategy Income Fund offers Class A, Class C and Institutional Class shares. The UltraShort Income Fund offers Class A, Class A1 and Institutional Class shares. Each class of shares is designed for specific types of investors and has its own fee structure, allowing you to choose the class that best meets your situation. The class that may be best for you depends on a number of factors, including the amount and the length of time that you expect to invest. Not all financial intermediaries make all classes of shares available to their clients. Third parties making Fund shares available to their clients determine which share class(es) to make available.

Class A shares are available through registered broker-dealers, banks, advisers and other financial institutions. Class A shares of the Multi-Strategy Income Fund are purchased at net asset value, plus an initial sales charge and subject to 12b-1 fees. For the Multi-Strategy Income Fund, there is no initial sales charge on purchases of Class A shares of $500,000 or more; however, a contingent deferred sales charge ("CDSC") of up to 1.00% will be imposed if such Class A shares are redeemed within twelve (12) months of their purchase. Class A shares of the UltraShort Income Fund are purchased at net asset value without any initial sales charge or CDSC and are subject to 12b-1 fees. Class A shares are intended for (i) investors who meet the investment minimum for Class A shares, (ii) investors investing through omnibus accounts held by financial intermediaries that charge transaction fees and have entered into arrangements with the Fund's distributor to offer Class A shares and (iii) retirement plans whose sponsors or administrators have entered into arrangements with the Fund's distributor.

Class A1 shares are available through registered broker-dealers, banks, advisers and other financial institutions. Class A1 shares of the UltraShort Income Fund are purchased at net asset value, plus an initial sales charge and subject to 12b-1 fees. There is no initial sales charge on purchases of Class A1 shares of $250,000 or more; however, a CDSC of up to 0.50% will be imposed if such Class A1 shares are redeemed within twelve (12) months of their purchase. Class A1 shares are intended for (i) investors who meet the investment minimum for Class A1 shares, (ii) investors investing through omnibus accounts held by financial intermediaries that charge transaction fees and have entered into arrangements with the Fund's distributor to offer Class A1 shares and (iii) retirement plans whose sponsors or administrators have entered into arrangements with the Fund's distributor.

Class C shares are available through registered broker-dealers, banks, advisers and other financial institutions. Class C shares are purchased at net asset value without deducting a sales charge and are subject to 12b-1 fees. You do not pay an initial sales charge on purchases of Class C shares, and all of your purchase payment is immediately invested in the applicable Fund. If you redeem your Class C shares within 12 months of purchase, you will be subject to a 1.00% CDSC, based on the lower of the shares' net asset value

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at the time of purchase or current net asset value. Any shares acquired by reinvestment of distributions will be redeemed without a CDSC. Class C shares are intended for (i) investors who meet the investment minimum for Class C shares and (ii) investors seeking the advice and assistance of a financial adviser, who will typically receive compensation for those services. Class C shares are not intended for investors investing at least $500,000 in a Fund.

The Distributor generally will pay the dealer of record selling Class C shares up to 1.00% of the purchase price of the Class C shares it sells, consisting of a sales commission of 0.75% of the purchase price plus an advance of the first year shareholder servicing fee of 0.25% for such shares. The Distributor will retain all payments received by it relating to Class C shares for the first year after they are purchased. The portion of the payments to the Distributor that constitutes a sales commission of up to 0.75% of the purchase price is intended in part to permit the Distributor to recoup a portion of the sales commissions to dealers plus financing costs, if any. After the first full year, the Distributor will make quarterly payments to dealers and institutions based on the average net asset value of Class C shares that are attributable to shareholders for whom the dealers and institutions are designated as dealers of record. These payments will consist of a sales commission of 0.75% and a shareholder servicing fee of 0.25%.

Institutional Class shares are purchased at net asset value and are not subject to any 12b-1 fees. Institutional Class shares can be purchased directly through the distributor or other financial institutions, which may charge transaction fees with respect to your purchase. Institutional Class shares are intended for (i) investors who meet the investment minimum for Institutional Class shares; (ii) institutional investors (e.g., financial institutions, corporations, trusts, foundations); (iii) funds of funds; (iv) pension plans whose sponsors or administrators have entered into arrangements with the Funds' distributor; (v) investors investing through omnibus accounts held by financial intermediaries that charge transaction fees and have entered into arrangements with the Funds' distributor to offer Institutional Class shares; (vi) current and former trustees of the Funds; and (vii) other investors that have been approved by the applicable Fund or the Adviser.

The minimum initial investment in a Fund is $1,000 for all account types for Class A, Class A1, and Class C shares and $500,000 for all account types for Institutional Class shares. The Adviser may, in its sole discretion, waive these minimums for accounts participating in an automatic investment program and in certain other circumstances. A Fund may waive or lower investment minimums for investors who invest in the Fund through an asset-based fee program made available through a financial intermediary. If your investment is aggregated into an omnibus account established by an investment adviser, broker or other intermediary, the account minimums apply to the omnibus account, not to your individual investment. The financial intermediary may also impose minimum requirements that are different from those set forth in this Prospectus. If you choose to purchase or redeem shares directly from a Fund, you will not incur charges on purchases and redemptions. However, if you purchase or redeem shares through a broker-dealer or another intermediary, you may be charged a fee by that intermediary.

Information about sales charges, including applicable waivers, breakpoints, and discounts to the sales charges, is fully disclosed in this Prospectus, which is available, free of charge, on the Funds' website at www.angeloakcapital.com. The Funds believe that it is very important that an investor fully consider all aspects of their investment and be able to access all relevant information in one location. Therefore, the Funds do not make the sales charge information available to investors on the website independent of the Prospectus.

**DISTRIBUTION PLAN**

The Funds have adopted a plan under Rule 12b-1 of the 1940 Act with respect to Class A, Class A1, and Class C shares, as applicable (the "Plan").

The Plan provides that each Fund will pay a distribution fee of 0.25% of the average daily net assets of the Class A and Class A1 shares of the applicable Fund in connection with the distribution of such class's shares or the provision of personal services to such class's shareholders, including, but not necessarily limited to, compensation to underwriters, dealers and selling personnel, the printing and mailing prospectuses to other than current Fund shareholders, the printing and mailing of sales literature. The Plan allows each Fund to pay a fee of 1.00% of the average daily net assets of the Class C shares of the applicable Fund (0.75% to help defray the cost of distributing Class C shares and 0.25% for servicing Class C shareholders) in connection with 12b-1 Expenses. The Class A and A1 distribution fee may include up to 0.25% of the average daily net assets of the Fund's applicable Class A and Class A1 shares for shareholder services. The Distributor may pay all or a portion of these fees to any registered securities dealer, financial institution or any other person who renders assistance in distributing or promoting the sale of such class's shares, or who provides certain shareholder services, pursuant to a written agreement.

Over time, 12b-1 fees will increase the cost of your investment and may cost you more than paying other types of sales charges because these fees are paid out of each Fund's assets on an on-going basis.

**SALES CHARGES – CLASS A SHARES**

Class A shares of each Fund are purchased at the public offering price. For the Multi-Strategy Income Fund, the public offering price is the next determined NAV per share plus a sales charge as shown in the table below. The UltraShort Income Fund does not impose a sales charge on its Class A Shares. Certain persons may be entitled to purchase Class A shares of a Fund without paying a sales

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charge. See "Waivers of Sales Charge – Class A Shares and Class A1 Shares." The table below also shows the portion of the sales charge that may be paid to the broker-dealer or financial intermediary through whom you purchased your Class A shares.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Sales Charge as a % of:** | **Sales Charge as a % of:** | **Sales Charge as a % of:** | | |
|<br>**Amount of Investment** | **Public <br>Offering <br>Price** | | **Net <br>Amount <br>Invested** | |<br>**Dealer Concession As a% of Public Offering <br>Price** |
| Less than $100,000 | 2.25% |  | 2.30% |  | 2.25% |
| $100,000 but less than $250,000 | 1.75% |  | 1.78% |  | 1.75% |
| $250,000 but less than $500,000 | 1.25% |  | 1.27% |  | 1.25% |
| $500,000 or more |  | <sup>\*</sup> |  | <sup>\*</sup> | 1.00% |

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\*A maximum CDSC of up to 1.00% will be imposed on redemptions of these shares (exclusive of shares purchased with reinvested dividends and/or distributions) within the first 12 months after the initial sale. The UltraShort Income Fund does not impose a CDSC on its Class A Shares. The Adviser intends to pay a 1.00% concession to financial advisers who place an order of $500,000 or more for a single purchaser.

**SALES CHARGES – CLASS A1 SHARES**

Class A1 shares of the UltraShort Income Fund are purchased at the public offering price. The public offering price is the next determined NAV per share plus a sales charge as shown in the table below. Certain persons may be entitled to purchase Class A1 shares of a Fund without paying a sales charge. See "Waivers of Sales Charge – Class A Shares and Class A1 Shares." The table below also shows the portion of the sales charge that may be paid to the broker-dealer or financial intermediary through whom you purchased your Class A1 shares.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Sales Charge as a % of:** | **Sales Charge as a % of:** | **Sales Charge as a % of:** | | |
|<br>**Amount of Investment** | **Public <br>Offering <br>Price** | | **Net <br>Amount <br>Invested** | |<br>**Dealer Concession As a% of Public Offering <br>Price** |
| Less than $100,000 | 1.50% |  | 1.52% |  | 1.50% |
| $100,000 but less than $250,000 | 1.00% |  | 1.01% |  | 1.00% |
| $250,000 or more |  | <sup>\*</sup> |  | <sup>\*</sup> | 0.50% |

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\*A maximum CDSC of up to 0.50% will be imposed on redemptions of these shares (exclusive of shares purchased with reinvested dividends and/or distributions) within the first 12 months after the initial sale. The Adviser intends to pay a 0.50% concession to financial advisers who place an order of $250,000 or more for a single purchaser.

**SALES CHARGE REDUCTIONS AND WAIVERS**

The following sections discuss ways to obtain discounts on purchases and waivers of the CDSC for Class A shares of the Multi-Strategy Income Fund and Class A1 shares of the UltraShort Income Fund.

**The availability of sales charge waivers and discounts may depend on the particular financial intermediary or type of account through which you purchase or hold Fund shares. The Funds' sales charge waivers and discounts described in this Prospectus are available for Fund share purchases made directly from the Fund (or the Distributor) and are generally available through financial intermediaries. The sales charge waivers and discounts available through certain other financial intermediaries are set forth in "Appendix A-Waivers and Discounts Available from Intermediaries" attached to this Prospectus, which may differ from the sales charge waivers and discounts available for purchases made directly from the Fund (or the Distributor). Please contact your financial intermediary for information about which classes of shares of the Funds they offer and to take advantage of the sales charge waivers and discounts described in this Prospectus or in Appendix A.**

**Rights of Accumulation – Class A Shares and Class A1 Shares.** Any "purchaser" (as defined below) may buy Class A and Class A1 shares of a Fund, as applicable, at a reduced sales charge by aggregating the dollar amount of the new purchase and the total net amount invested in all Class A, Class A1 and Class C shares of the Funds (including the Class A and Class A1 Shares of the UltraShort Income Fund) then held by the purchaser and applying the sales charge applicable to such aggregate. To obtain such discount, the purchaser must provide sufficient information at the time of purchase to permit verification that the purchase qualifies for the reduced sales charge. The rights of accumulation is subject to modification or discontinuance at any time with respect to all shares purchased thereafter.

For purposes of determining the applicable sales charge discount, a "purchaser" includes an individual, the individual's spouse and the individual's children under the age of 21, purchasing Class A shares and/or Class A1 shares for the individual's own account or account with the individual's spouse and/or children; or a trustee or other fiduciary purchasing Class A shares and/or Class A1 shares for a single fiduciary account although more than one beneficiary may be involved; or employees of a common employer, provided that purchases are aggregated and submitted by a single source and quarterly confirmation of such purchases can be provided to that single source; or an organized group, provided that the purchases are made through a central administrator, or a single dealer.

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**Letter of Intent – Class A Shares and Class A1 Shares.** A Letter of Intent (the "LOI") provides an opportunity for an investor to obtain a reduced sales charge by aggregating investments over a 13-month period, provided that the investor refers to such LOI when placing orders. For purposes of an LOI, the "Amount of Investment" as referred to in the preceding sales charge tables includes all purchases of Class A shares of a Fund (including the Class A Shares of the UltraShort Income Fund) and Class A1 Shares of the UltraShort Income Fund over the 13-month period plus the value of all shares previously purchased and still owned. The 13-month period may begin up to 90 days before the date of execution of an LOI. Each investment made during the period receives the reduced sales charge applicable to the total amount of the investment goal. The LOI imposes no obligation to purchase or sell additional shares and provides for a price adjustment depending upon the actual amount purchased within such period. The LOI provides that the first purchase following execution of the LOI must be at least 2.25% (or 1.50% for Class A1 shares of the UltraShort Income Fund) of the amount of the intended overall purchase, and that 2.25% (or 1.50% for Class A1 shares of the UltraShort Income Fund) of the amount of the intended purchase normally will be held in escrow in the form of shares pending completion of the intended purchase. If the total investments under the LOI are less than the intended amount and thereby qualify for a higher sales charge than actually paid, the appropriate number of escrowed shares is redeemed and the proceeds are used towards satisfaction of the obligation to pay the increased sales charge. If a redemption order is received for an account prior to the satisfaction of the LOI, any shares not held in escrow will be redeemed first. Shares held in escrow will then be redeemed and a portion of the proceeds will be used to satisfy the obligation to pay the higher sales charge. Please contact the Funds' Transfer Agent to obtain an LOI application at (855) 751-4324.

**Shareholder's Responsibility With Respect to Breakpoint Discounts.** To obtain any of the Class A or Class A1 sales charge discounts set forth above, you must inform your financial adviser of the existence of any eligible amounts under any Rights of Accumulation or LOI, in accounts held by family members at the time of purchase. You must inform your financial adviser of all shares of the Funds held (i) in your account(s) at the financial adviser, (ii) in your account(s) by another financial intermediary, and (iii) in any other accounts held at any financial intermediary belonging to family members. IF YOU FAIL TO INFORM YOUR FINANCIAL ADVISER OR THE FUNDS OF ALL ELIGIBLE HOLDINGS OR PLANNED PURCHASES, YOU MAY NOT RECEIVE A SALES CHARGE DISCOUNT TO WHICH YOU WOULD OTHERWISE BE ENTITLED. The Funds will require the names and account numbers of all accounts claimed in connection with a request for a sales charge discount. You may also be required to provide verification of holdings (such as account statements and/or copies of documents that reflect the original purchase cost of your holdings) that qualify you for a sales charge reduction. **As such, it is very important that you retain all records that may be needed to substantiate an original purchase price of your holdings, as the Funds, the Transfer Agent, and financial intermediaries may not maintain this information.**

**Waivers of Sales Charge – Class A Shares and Class A1 Shares.** Class A and Class A1 shares of a Fund, as applicable, may be purchased at NAV under the following circumstances, provided that you notify the applicable Fund in advance that the trade qualifies for this privilege. The Funds reserve the right to modify or terminate these arrangements at any time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Purchases by: (i) current and former officers, Trustees/Directors, and employees of the Funds, the Adviser, or any of the Adviser's current affiliates and those that may in the future be created, (ii) legal counsel to the Funds. At the direction of such persons, their family members (regardless of age), and any employee benefit plan established by any of the foregoing entities may also purchase shares at NAV.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Purchases by bank employees who provide services in connection with agreements between the bank and unaffiliated brokers or dealers concerning sales of shares of the Funds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Purchases by financial institutions, acting as a fiduciary, investing for the accounts of their customers if they are not eligible to purchase shares of the applicable Fund's Institutional Class.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Purchases made directly with a Fund where no financial intermediary is specified.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Investments made by plan level and/or participant retirement accounts that are for the purpose of repaying a loan taken from such accounts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Purchases resulting from the reinvestment of a distribution.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Purchases through eligible Retirement Plans.

**Retirement Plans**

"Retirement Plans" include 401(k) plans, 457 plans, employer-sponsored 403(b) plans, rabbi trusts, profit-sharing plans, non-qualified deferred compensation plans and other similar employer-sponsored retirement plans. Retirement Plans do not include individual retirement vehicles, such as traditional and Roth individual retirement accounts, Coverdell education savings accounts, individual 403(b)(7) custodial accounts, Keogh plans, SEPs, SARSEPs, SIMPLE IRAs or similar accounts.

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**Contingent Deferred Sales Charge and Dealer Concession – Class A Shares.** There is no initial sales charge on purchases of Class A shares of $500,000 or more, however, a CDSC of up to 1.00% will be imposed if such Class A shares are redeemed within twelve (12) months of their purchase, based on the lower of the shares' NAV at the time of purchase or current NAV.

Any Class A shares acquired by reinvestment of distributions and dividends will be redeemed without a CDSC.

The UltraShort Income Fund does not impose a CDSC on its Class A Shares.

The Distributor may pay a concession of up to 1.00% to a dealer of record for purchase amounts of $500,000 or more. In such cases, starting in the thirteenth month after purchase, the dealer of record will also receive an annual distribution and/or shareholder servicing fee of up to 0.25% of the average daily net assets represented by the Class A shares held by its clients. Prior to the thirteenth month, the Distributor will retain this fee. Where the dealer of record does not receive the payment of this commission, the dealer of record will instead receive the annual distribution and/or shareholder servicing fee starting immediately after purchase. Please contact your dealer of record for more information.

**Contingent Deferred Sales Charge and Dealer Concession – Class A1 Shares.** There is no initial sales charge on purchases of Class A1 shares of $250,000 or more, however, a CDSC of up to 0.50% will be imposed if such Class A1 shares are redeemed within twelve (12) months of their purchase, based on the lower of the shares' NAV at the time of purchase or current NAV.

Any Class A1 shares acquired by reinvestment of distributions and dividends will be redeemed without a CDSC.

The Distributor may pay a concession of up to 0.50% to a dealer of record for purchase amounts of $250,000 or more. In such cases, starting in the thirteenth month after purchase, the dealer of record will also receive an annual distribution and/or shareholder servicing fee of up to 0.25% of the average daily net assets represented by the Class A1 shares held by its clients. Prior to the thirteenth month, the Distributor will retain this fee. Where the dealer of record does not receive the payment of this commission, the dealer of record will instead receive the annual distribution and/or shareholder servicing fee starting immediately after purchase. Please contact your dealer of record for more information.

**CONTINGENT DEFERRED SALES CHARGE – CLASS C SHARES**

Class C shares are subject to a CDSC of 1.00% if you redeem your shares within twelve (12) months of purchase, based on the lower of the shares' NAV at time of purchase or current NAV. Any Class C shares acquired by reinvestment of distributions will be redeemed without a CDSC.

**CONTINGENT DEFERRED SALES CHARGE WAIVERS – CLASS A SHARES, CLASS A1 SHARES, AND CLASS C SHARES**

In determining whether a CDSC is payable, a Fund will first redeem shares of the applicable share class not subject to any charge. The Funds' Distributor receives the entire amount of any CDSC you pay. No CDSC is applied in the following instances:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The redemption is due to the death or post-purchase disability of a shareholder or settlor of a living trust account.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Redemptions from retirement plans qualified under Section 401 of the Code. The CDSC will be waived for benefit payments made directly to plan participants. Benefit payments will include, but are not limited to, payments resulting from death, disability, retirement, separation from service, required minimum distributions (as described under Section 401(a)(9) of the Code), in-service distributions, hardships, loans, and qualified domestic relations orders. The CDSC waiver will not apply in the event of termination of the plan or transfer of the plan to another financial intermediary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Shares sold as part of a required minimum distribution for IRA and retirement accounts pursuant to the Internal Revenue Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In the case of a divorce, where there exists a court decree that requires redemption of the shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• When shares are involuntarily redeemed due to low balance or other reasons.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• When shares are redeemed in accordance with the applicable Fund's Systematic Withdrawal Program ("SWP").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Circumstances that the officers of the Fund, in their discretion, deem to warrant a waiver of the CDSC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• For Class A and Class A1 shares, the redemption relates to shares for which no commission was paid to the dealer of record (as described above).

Documentation may be required prior to the waiver of the CDSC, including death certificates, physicians' certificates, etc., in applicable instances.

Under certain circumstances, the Funds' Distributor may change the concession to dealers and may also compensate dealers out of its own assets. Dealers engaged in the sale of shares of the Funds may be deemed to be underwriters under the Securities Act of 1933. The Funds' Distributor retains the entire sales charge on all direct initial investments in the Funds and on all investments in

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accounts with no designated dealer of record and any portion of a sales charge that is not re-allowed to a broker-dealer or financial intermediary.

**CDSC waivers and discounts available through certain financial intermediaries are set forth in <u>Appendix A—Waivers and Discounts Available from Intermediaries</u>, attached to this Prospectus, which may differ from the CDSC waivers and discounts available for purchases made directly from a Fund (or the Distributor), as described in this Prospectus.**

The sales charge you pay may be higher or lower than the percentages described in the table above due to rounding. This is because the dollar amount of the sales charge is determined by subtracting the NAV of the shares purchased from the offering price, which is calculated to two decimal places using standard rounding criteria. The impact of rounding may vary with the size of the investment and the NAV of the shares.

**ADDITIONAL PAYMENTS TO DEALERS**

In addition to dealer concessions and payments made by the Distributor for distribution and shareholder servicing, the Adviser or its affiliates, at their own expense and out of their own assets, may make additional payments ("Additional Payments") to, or enter into arrangements with, financial intermediaries or other persons in consideration of services, arrangements, significant investments in Fund shares or other activities that the Adviser and its affiliates believe may, among other things, benefit a Fund's business, facilitate investment in Fund shares or otherwise benefit the Fund's shareholders. Additional Payments include payments to certain selling or shareholder servicing agents for the Funds, which includes broker-dealers. These Additional Payments are made in connection with the sale and distribution of shares of the Funds or for services to the Funds and their shareholders. These Additional Payments, which may be significant, are paid by the Adviser or its affiliates, out of their own resources, which may include profits derived from servicing the Funds. Such payments by such parties may create an incentive for these financial institutions to recommend that you purchase Fund shares. Payments of the type described above are sometimes referred to as revenue sharing payments.

In return for these Additional Payments, the Adviser expects to receive certain marketing or servicing advantages that are not generally available to mutual funds that do not make such payments. Such advantages are expected to include, without limitation, significant investments in the Fund; placement of the Funds on a list of mutual funds offered as investment options to the selling agent's clients (sometimes referred to as "Shelf Space"); access to the selling agent's registered representatives; and the ability to assist in training and educating the selling agent's registered representatives.

Certain selling or shareholder servicing agents receive these Additional Payments to supplement amounts payable by the Funds under their distribution plan pursuant to Rule 12b-1 under the 1940 Act (described below). In exchange, these agents provide services including, but not limited to, establishing and maintaining accounts and records; answering inquiries regarding purchases, exchanges and redemptions; processing and verifying purchase, redemption and exchange transactions; furnishing account statements and confirmations of transactions; processing and mailing monthly statements, prospectuses, shareholder reports and other SEC-required communications; and providing the types of services that might typically be provided by the Transfer Agent (e.g., the maintenance of omnibus or omnibus-like accounts, the use of the National Securities Clearing Corporation for the transmission of transaction information and the transmission of shareholder mailings) or other service providers.

The Additional Payments may create potential conflicts of interests between an investor and a selling agent who is recommending a particular mutual fund over other mutual funds. Before investing, you should consult with your financial consultant and review carefully any disclosure by the selling agent as to what monies they receive from mutual fund advisers and distributors, as well as how your financial consultant is compensated.

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**HOW TO BUY SHARES**

This section explains how you can purchase shares of the Funds. If you are opening a new account, an account application is available online at www.angeloakcapital.com or by calling (855) 751-4324. For Fund shares held through brokerage and other types of accounts, please consult your Financial Intermediary.

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| | | |
|:---|:---|:---|
| **Buying Shares** | **Opening an Account** | **Adding to an Account** |
| Through a Financial Intermediary | Contact your Financial Intermediary | Contact your Financial Intermediary |
| By Mail (with Check) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Mail your completed application (along with other required documents) and a check to:<br>(Fund Name)<br>c/o U.S. Bank Global Fund Services<br>PO Box 219252<br>Kansas City, MO 64121-9252 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Write your account number on your check<br>&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Send your check with (a) a completed investment slip from a prior statement or confirmation or (b) letter of instruction to:<br>(Fund Name)<br>c/o U.S. Bank Global Fund Services<br>PO Box 219252<br>Kansas City, MO 64121-9252 |
| By Wire | &nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Submit your completed application (along with other required documents as specified in the application). An account will be established for you and you will be contacted with the account number.<br>&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Instruct your financial institution to wire your money using the instructions found in the "Purchase by Wire" section of this Prospectus. | &nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Call to notify us of your incoming wire<br>&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Instruct your financial institution to wire your money using the instructions found in the "Purchase by Wire" section of this Prospectus. |
| By Telephone | &nbsp;&nbsp;&nbsp;Not accepted for initial purchases | &nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;If you have telephone purchase privileges on the account, you may purchase additional shares using the bank account on record by calling (855) 751-4324. |
| By Automatic Investment Plan | &nbsp;&nbsp;&nbsp;Not accepted for initial purchases | &nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Complete the Automatic Investment Plan section of the application or submit a letter of instruction if your account was opened without this being done.<br>&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Attach a voided check or savings deposit slip to your application or letter of instruction.<br>&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Mail the completed application or letter and voided check or savings deposit slip.<br>&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Your purchase will be electronically debited from the bank account on record as directed in your request. |

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**General Notes for Buying Shares**

Unless purchased through a Financial Intermediary, all investments must be made by check, ACH, or wire. All purchase checks must be in U.S. dollars drawn on a domestic financial institution. The Funds will not accept payment in cash or money orders. To prevent check fraud, the Funds will not accept third party checks, Treasury checks, credit card checks, traveler's checks or starter checks for the purchase of shares. The Funds are unable to accept post-dated checks or any conditional order or payment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**• Checks** for all accounts, including individual, sole proprietorship, joint, Uniform Gifts to Minors Act ("UGMA") or Uniform Transfers to Minors Act ("UTMA") accounts, the check must be made payable to the name of the Fund. A $25 charge may be imposed on any returned payment; you will also be responsible for any losses suffered by the Funds as a result.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**• ACH** refers to the "Automated Clearing House" System maintained by the Federal Reserve Bank, which allows banks to process checks, transfer funds and perform other tasks. Your financial institution may charge you a fee for this service. A $25 charge may be imposed on any rejected transfers; you will also be responsible for any losses suffered by the Funds as a result.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**• Wires** instruct your financial institution with whom you have an account to make a Federal Funds wire payment to us. Your financial institution may charge you a fee for this service.

**Purchase through Financial Intermediaries.** You may buy, sell and exchange shares of the Funds through certain financial intermediaries and their agents and other authorized designees that have made arrangements with the Funds and are authorized to buy, sell and exchange shares of the Funds (collectively, "Financial Intermediaries"). When placing an order through a Financial

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Intermediary, your order is deemed to be received by the Funds when the Financial Intermediary receives the order and will be priced at the applicable Fund's NAV next computed after the order is received by a Financial Intermediary. A Financial Intermediary may hold your shares in an omnibus account in the Financial Intermediary's name and the Financial Intermediary may maintain your individual ownership records. The applicable Fund may pay the Financial Intermediary for maintaining individual ownership records as well as providing other shareholder services. Financial Intermediaries may charge fees for the services they provide to you in connection with processing your transaction order or maintaining your account with them. Financial Intermediaries are responsible for placing your order correctly and promptly with the Funds, forwarding payment promptly, as well as ensuring that you receive copies of the Funds' Prospectus. If you transmit your order with these Financial Intermediaries before the close of a Fund (generally 4:00 p.m., Eastern Time) on a day that the New York Stock Exchange ("NYSE") is open for business, your order will be priced at the applicable Fund's NAV next computed after it is received by the Financial Intermediary. Investors should check with their Financial Intermediary to determine if it is subject to these arrangements.

**Purchase by Mail.** Follow the instructions outlined in the table above. Only actual receipt by the Transfer Agent (i.e., having physically retrieved delivered materials from a delivery service or post office box) of materials mailed constitutes receipt by the Transfer Agent. The Funds do not consider the U.S. Postal Service or other independent delivery services to be their agents. Therefore, deposits in the mail or with such services, or receipt at the Transfer Agent's post office box of purchase orders or redemption requests, do not constitute receipt by the Transfer Agent.

**Purchase by Wire.** If you are making your first investment in the Funds, before you wire funds, please contact the Transfer Agent by phone to make arrangements with a telephone service representative to submit your completed Account Application via mail, overnight delivery or facsimile. Upon receipt of your completed Account Application, your account will be established and a service representative will contact you to provide your new account number and wiring instructions. If you do not receive this information within one business day, you may call the Transfer Agent at (855) 751-4324.

For either initial or subsequent investments, prior to sending the wire, please call the Transfer Agent at (855) 751-4324 to advise the Transfer Agent of your wire to ensure proper credit upon receipt. Your bank must include the name of the Fund, your name and account number so that your wire can be correctly applied.

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| |
|:---|
| **Instruct your bank to send the wire to:** |
| U.S. Bank, N.A.<br>777 East Wisconsin Avenue<br>Milwaukee, Wisconsin 53202<br>ABA #075000022<br>Credit: U.S. Bancorp Fund Services, LLC<br>Account #112-952-137<br>Further Credit: (Fund Name and Class)<br>(Shareholder Name, Shareholder Account #) |

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Your bank may impose a fee for investments by wire. Wired funds must be received prior to the close of a Fund (generally, 4:00 p.m., Eastern Time) to be eligible for same day pricing. The Funds and the Transfer Agent are not responsible for the consequences of delays resulting from the banking or Federal Reserve wire system or from incomplete wiring instructions. If you have questions about how to invest by wire, you may call the Funds at (855) 751-4324.

**Purchase by Telephone.** If you did not decline telephone options on your Account Application and your account has been open for 7 business days, you may purchase additional shares from your bank account upon request by telephoning the Transfer Agent toll free at (855) 751-4324. You may not make your initial purchase of Fund shares by telephone. Telephone orders will be accepted via electronic funds transfer from your pre-designated bank account through the Automated Clearing House ("ACH") network. You must have banking information established on your account prior to making a purchase. Only bank accounts held at domestic institutions that are ACH members may be used for telephone transactions. If your order is received prior to the close of a Fund (generally, 4:00 p.m. Eastern Time), shares will be purchased at the price next calculated. Once you place a telephone request, it cannot be canceled or modified after the close of regular trading on the NYSE (generally, 4:00 p.m., Eastern time). For security reasons, requests by telephone may be recorded.

**Automatic Investment Plan.** For your convenience, the Funds offer an Automatic Investment Plan ("AIP"). Under the AIP, after you make your initial investment, you may authorize the Funds to withdraw automatically from your personal checking or savings account an amount that you wish to invest, which must be at least $100 on a monthly or quarterly basis. If you wish to enroll in the AIP, complete the "Automatic Investment Plan" section in the Account Application or call the Transfer Agent at (855) 751-4324 for additional information. To participate in the AIP, your bank or financial institution must be a member of the ACH network. The Funds may terminate or modify this privilege at any time. You may terminate your participation in the AIP at any time by notifying the Transfer Agent at least five days prior to the effective date. A fee ($25) will be charged if your bank does not honor the AIP draft for any reason.

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The AIP is a method of using dollar cost averaging as an investment strategy that involves investing a fixed amount of money at regular time intervals. However, a program of regular investment cannot ensure a profit or protect against a loss as a result of declining markets. By continually investing the same amount, you will be purchasing more shares when the price is low and fewer shares when the price is high. Please call (855) 751-4324 for additional information regarding the Funds' AIP.

**Tax-Sheltered Retirement Plans.** Shares of the Funds may be an appropriate investment for tax-sheltered retirement plans, including: individual retirement plans (IRAs); simplified employee pension plans (SEPs); 401(k) plans; qualified corporate pension and profit-sharing plans (for employees); tax-deferred investment plans (for employees of public school systems and certain types of charitable organizations); and other qualified retirement plans. You should contact the Transfer Agent at (855) 751-4324 to obtain the procedure to open an IRA or SEP plan, as well as more specific information regarding these retirement plan options. Please consult with an attorney or tax adviser regarding these plans. You must pay custodial fees for your IRA by redemption of sufficient shares of the Funds from the IRA unless you pay the fees directly to the IRA custodian. Call the Transfer Agent about the IRA custodial fees at (855) 751-4324.

**Purchases-In-Kind.** Under certain circumstances, you may purchase shares of a Fund by transferring securities to the Fund in exchange for Fund shares ("in-kind purchase"). In-kind purchases may be made only upon the approval of the Adviser and upon the determination that the securities are acceptable investments for the Fund and are purchased consistent with the Fund's procedures relating to in-kind purchases. The Funds reserve the right to amend or terminate this practice at any time. Please contact the Funds at (855) 751-4324 before sending any securities. Please see the SAI for additional details.

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**HOW TO SELL SHARES**

The Funds process redemption orders received in good order, promptly. "Good Order" means your redemption request includes: (1) the name of the Fund, (2) the number of shares or dollar amount to be redeemed, (3) the account number, and (4) signatures by all of the shareholders whose names appear on the account registration. Proceeds will generally be sent no later than seven calendar days after a Fund receives your redemption request. If a Fund class has not yet collected payment for the shares you are selling, it may delay sending redemption proceeds until it receives payment, which may be up to 15 calendar days. This delay will not apply if you purchased your shares via wire payment.

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| | |
|:---|:---|
| **Selling Shares** | |
| Through a Financial Intermediary | &nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Contact your Financial Intermediary |
| By Mail | &nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Prepare a written request including:<br>&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Your name(s) and signature(s)<br>&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Your account number<br>&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;The Fund name and class<br>&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;The dollar amount or number of shares you want to sell<br>&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;How and where to send the redemption proceeds<br>&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Obtain a signature guarantee (if required) (See "Signature Guarantee Requirements below")<br>&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Obtain other documentation (if required)<br>&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Mail us your request and documentation. |
| By Wire | &nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Wire redemptions are only available if your redemption is for $2,500 or more and you provided a voided check or saving deposit slip to establish bank instructions on your account application. <br>&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Call us with your request (unless you declined telephone redemption privileges on your account application) (See "Telephone or Wire Redemption") or<br>&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Mail us your request (See "By Mail"). |
| By Telephone | &nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Call us with your request (unless you declined telephone redemption privileges on your account application)<br>&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Provide the following information:<br>&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Your account number<br>&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Exact name(s) in which the account is registered<br>&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Additional form of identification<br>&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Redemption proceeds will be:<br>&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Mailed to you or<br>&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Electronically credited to your account at the financial institution identified on your account application. |
| Systematically | &nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Complete the systematic withdrawal program section of the application<br>&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Attach a voided check or savings deposit slip to your application<br>&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Mail us your completed application<br>&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;Redemption proceeds will be electronically credited to your account at the financial institution identified on your account application or sent by check to your address of record. |

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**General Notes for Selling Shares**

In general, orders to sell or "redeem" shares may be placed either directly with the Funds, the Transfer Agent or with your Financial Intermediary. You may redeem part or all of your Fund shares at the next determined NAV after a Fund receives your order. You should request your redemption prior to the close of a Fund, generally 4:00 p.m., Eastern Time, to obtain that day's closing NAV. Redemption requests received after the close of a Fund will be treated as though received on the next business day.

The Fund typically expects to send redemption proceeds on the next business day (a day when the NYSE is open for normal business) after the redemption request is received in good order and prior to market close, regardless of whether the redemption proceeds are sent via check, wire, or ACH transfer. Under unusual circumstances, the Fund may suspend redemptions, or postpone payment for up to seven days, as permitted by federal securities law. If you did not purchase your shares via wire, the Fund may delay payment of your redemption proceeds for up to 15 calendar days from date of purchase or until your purchase amount has cleared, whichever occurs first.

The Fund typically expects to meet redemption requests by paying out proceeds from cash or cash equivalent portfolio holdings, or by selling portfolio holdings or using the proceeds from maturing securities. In stressed market conditions, redemption methods may include paying redemption proceeds to you in whole or in part by a distribution of securities from the Fund's portfolio (a "redemption in-kind"). If the Fund pays your redemption proceeds by a distribution of securities, you could incur brokerage or other charges in converting the securities to cash and will bear any market risks associated with such securities until they are converted

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into cash. For federal income tax purposes, redemptions paid in securities are taxed in the same manner as redemptions paid in cash.

**Through a Financial Intermediary.** You may redeem Fund shares through your Financial Intermediary. In addition to the Funds' redemption procedures, redemptions made through a Financial Intermediary may be subject to procedures established by that institution. Your Financial Intermediary is responsible for sending your order to the Funds and for crediting your account with the proceeds. For redemption through Financial Intermediaries, orders will be processed at the NAV per share next effective after receipt of the order by the Financial Intermediary. Please keep in mind that your Financial Intermediary may charge additional fees for its services. Investors should check with their Financial Intermediary to determine if it is subject to these arrangements.

**By Mail.** You may redeem Fund shares by simply sending a written request to the Transfer Agent. Please provide the name of the Fund, account number and state the number of shares or dollar amount you would like redeemed. The letter should be signed by all shareholders whose names appear on the account registration. Redemption requests will not become effective until all documents have been received in good form by the Funds. Additional documents are required for certain types of shareholders, such as corporations, partnerships, executors, trustees, administrators, or guardians (*i.e.*, corporate resolutions, or trust documents indicating proper authorization). Shareholders should contact the Funds for further information concerning documentation required for redemption of Fund shares.

Shareholders who have an IRA or other retirement plan must indicate on their written redemption request whether or not to withhold federal income tax. Redemption requests failing to indicate an election not to have tax withheld will generally be subject to a 10% withholding tax. Shares held in IRA and other retirement accounts may be redeemed by telephone at (855) 751-4324. Investors will be asked whether or not to withhold taxes from any distribution.

**Telephone or Wire Redemption.** You may redeem Fund shares by telephone unless you declined telephone redemption privileges on your Account Application. You may also request telephone redemption privileges after your account is opened by calling the Transfer Agent at (855) 751-4324 for additional information. A signature guarantee or a signature verification from a Signature Verification Program member or other acceptable form of authentication from a financial institution source will be required of shareholders to qualify for or to change telephone redemption privileges on an existing account. During periods of high market activity, you may encounter higher than usual wait times. Please allow sufficient time to ensure that you will be able to complete your telephone transaction prior to market close. If you are unable to contact the Transfer Agent by telephone, you may also mail the requests to the Funds at the address listed above. Once a telephone transaction has been placed, it cannot be canceled or modified after the close of regular trading on the NYSE (generally, 4:00 p.m., Eastern Time).

You may redeem up to $100,000 in shares by calling the Transfer Agent at (855) 751-4324 prior to the close of a Fund, generally 4:00 p.m., Eastern Time. Redemption proceeds will be sent on the next business day to the mailing address that appears on the Funds' records. Per your request, redemption proceeds may be wired or may be sent by electronic funds transfer via the ACH network to your pre-designated bank account. The minimum amount that may be wired is $2,500. The Transfer Agent will charge a $15 wire fee from your redemption proceeds from any complete share redemption or share specific redemptions. For partial redemptions, any wire fee will be deducted from your remaining account balance. You will not incur any charge when proceeds are sent via the ACH network; however, most ACH transfers require two days for the bank account to receive credit. Telephone redemptions cannot be made if you notify the Transfer Agent of a change of address within 30 days before the redemption request.

Prior to executing instructions received to redeem shares by telephone, the Funds will use reasonable procedures to confirm that the telephone instructions are genuine. The telephone call may be recorded and the caller may be asked to verify certain personal identification information. If an account has more than one owner or authorized person, the Funds will accept telephone instructions from any one owner or authorized person. If the Funds or their agents follow these procedures, they cannot be held liable for any loss, expense, or cost arising out of any telephone redemption request that is reasonably believed to be genuine. This includes any fraudulent or unauthorized request. The Funds may change, modify or terminate these privileges at any time upon at least a 60-day notice to shareholders.

**Systematic Withdrawal Program.** The Funds offer a SWP whereby shareholders or their representatives may request a redemption in a predetermined amount each month or calendar quarter. Proceeds can be sent via check to the address on the account or proceeds can be sent by electronic funds transfer via the ACH network to a designated bank account. To start this program, your account must have Fund shares with a value of at least $2,500, and the minimum amount that may be withdrawn each month or quarter is $250. This program may be terminated or modified by a shareholder or the Funds at any time without charge or penalty. You may also elect to terminate your participation in this Plan at any time by contacting the Transfer Agent at least five calendar days prior to the next withdrawal.

A withdrawal under the SWP involves a redemption of Fund shares, and may result in a gain or loss for federal income tax purposes. In addition, if the amount withdrawn exceeds the dividends credited to your account, the account ultimately may be depleted. To establish the SWP, complete the SWP section of the Account Application. Please call (855) 751-4324 for additional information regarding the SWP.

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**ACCOUNT AND TRANSACTION POLICIES**

**Exchange Privilege.** Except as described below, you may exchange all or a portion of your shares in a Fund for shares in an identically registered account of the same class of another Angel Oak mutual fund, and you may exchange all or a portion of your Class A1 shares of the UltraShort Income Fund for Class A shares of another Angel Oak mutual fund. Additionally, except as described below, you may convert your shares in a Fund for shares of another class of the same Fund if you meet the minimum investment requirements for the class into which you would like to convert. Any new account established through an exchange will be subject to the minimum investment requirements applicable to the shares acquired. Exchanges will be executed on the basis of the relative NAV of the shares exchanged. Consequently, you may receive fewer shares or more shares than originally owned, depending on that day's net asset values. Your total value of the initially held shares, however, will equal the total value of the converted shares. The exchange privilege may be exercised only in those states where the class of shares of the fund being acquired legally may be sold. Be sure to read the current Prospectus for the fund into which you are exchanging.

You may not exchange Class A shares of the UltraShort Income Fund for shares of any other Angel Oak mutual fund. Additionally, you may not exchange Class A shares of the UltraShort Income Fund for shares of another class of the UltraShort Income Fund or of any other Angel Oak mutual fund.

Sales loads (including contingent deferred sales loads) and redemption fees are not applied to any exchange of all or a portion of your shares in the Fund for shares of another Angel Oak mutual fund.

An exchange of shares in a Fund for shares of another fund is considered to be a sale of shares for federal income tax purposes on which you may realize a taxable capital gain or loss unless you are a tax-exempt investor or hold your shares through a tax-deferred account such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements. A conversion of shares of one class to shares of a different class within the same Fund is generally not a taxable transaction for federal income tax purposes.

**Conversion of Class C Shares.** All Class C shares of a Fund held in accounts directly with the Fund's transfer agent will automatically convert to Class A shares of the same Fund on or about the third calendar day of the month following the eight-year anniversary of purchase. If the third calendar day falls on a non-business day, the conversion(s) will occur on the next business day. All Class C shares of a Fund held through a financial intermediary (subject to the exceptions noted below) will automatically convert to Class A shares of the same Fund following the eight-year anniversary of purchase. Although the timing of this conversion may differ from the timing stated above, it is expected to occur during the month following the eight-year anniversary of purchase. Such conversions will be affected on the basis of the relative net asset values of the Class C and Class A shares involved in the conversion. When Class C shares convert, any other Class C shares that were acquired by the shareholder by the reinvestment of dividends or distributions will also convert to Class A shares on a pro rata basis. Class C shares held through a financial intermediary in an omnibus account will be converted into Class A shares only if the intermediary can document that the shareholder has met the required holding period. It is the financial intermediary's (and not the Funds') responsibility to keep records and to ensure that the shareholder is credited with the proper holding period. Not all financial intermediaries are able to track purchases to credit individual shareholders' holding periods. In particular, group retirement plans held through third party intermediaries that hold Class C shares in an omnibus account in certain instances do not track participant level share lot aging. Please consult with your financial intermediary about your eligibility to exercise this conversion privilege.

**Frequent Purchases and Redemptions of Shares of the UltraShort Income Fund.** The UltraShort Income Fund does not impose restrictions on the frequency of purchases and redemptions of shares of the Fund. The Fund is expected to appeal to investors seeking short-term investments, and such frequent purchases and redemptions of Fund shares are not expected to harm other shareholders of the Fund, although they may result in additional costs for the Fund. Because the Fund is designed to accommodate frequent purchases and sales of Fund shares, the Board has determined not to approve a written, established policy to prevent such frequent transactions, although it reserves the right to adopt such a policy in the future if it determines that such policy is necessary for the protection of existing shareholders.

Additionally, in an effort to discourage abusive trading practices and minimize harm to the UltraShort Income Fund and its shareholders, the Fund reserves the right, in its sole discretion, to reject any purchase order (including those as part of an exchange), in whole or in part, for any reason (including, without limitation, purchases by persons whose trading activity in Fund shares is believed by the Adviser to be harmful to the Fund) and without prior notice.

**Tools to Combat Frequent Transactions of the Multi-Strategy Income Fund.** The Multi-Strategy Income Fund is intended for long-term investors and does not accommodate frequent transactions. Short-term "market-timers" who engage in frequent purchases, redemptions or exchanges can disrupt the Fund's investment program and create additional transaction costs that are borne by all of the Fund's shareholders. The Board has adopted policies and procedures that are designed to discourage excessive, short-term trading and other abusive trading practices that may disrupt portfolio management strategies and harm performance. In addition, the Multi-Strategy Income Fund discourages excessive, short-term trading and other abusive trading practices and may use a variety of techniques to monitor trading activity and detect abusive trading practices. These steps may include, among other things, the imposition of redemption fees, if necessary, monitoring trading activity, or using fair value pricing when appropriate, under

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procedures as adopted by the Fund's Board of Trustees when the Adviser determines current market prices are not readily available. As approved by the Board, these techniques may change from time to time as determined by the Fund in its sole discretion.

In an effort to discourage abusive trading practices and minimize harm to the Fund and its shareholders, the Fund reserves the right, in its sole discretion, to reject any purchase order (including those as part of an exchange), in whole or in part, for any reason (including, without limitation, purchases by persons whose trading activity in Fund shares is believed by the Adviser to be harmful to the Fund) and without prior notice. The Fund may decide to restrict purchase, sale and exchange activity in its shares based on various factors, including whether frequent purchase, sale or exchange activity will disrupt portfolio management strategies and adversely affect the Fund's performance. Although these efforts are designed to discourage abusive trading practices, these tools cannot eliminate the possibility that such activity will occur. The Fund seeks to exercise its judgment in implementing these tools to the best of its ability in a manner that it believes is consistent with shareholder interests.

**Identifying Abusive Trading Activity**. Due to the complexity and subjectivity involved in identifying abusive trading activity and the volume of shareholder transactions the Funds handle, there can be no assurance that the Funds' efforts will identify all trades or trading practices that may be considered abusive. In particular, since the Funds receive purchase, sale and exchange orders through Financial Intermediaries that use group or omnibus accounts, the Funds cannot always detect frequent trading. However, the Funds will work with Financial Intermediaries as necessary to discourage shareholders from engaging in abusive trading practices and, except for the UltraShort Income Fund, to impose restrictions on excessive trades. In this regard, the Funds have entered into information sharing agreements with Financial Intermediaries pursuant to which these intermediaries are required to provide to the Funds, at the Funds' request, certain information relating to their customers investing in the Funds through non-disclosed or omnibus accounts. The Funds will use this information to attempt to identify abusive trading practices. Financial Intermediaries are contractually required to follow any instructions from the Funds to restrict or prohibit future purchases from shareholders that are found to have engaged in abusive trading in violation of the Funds' policies. However, the Funds cannot guarantee the accuracy of the information provided to them from Financial Intermediaries and cannot ensure that they will always be able to detect abusive trading practices that occur through non-disclosed and omnibus accounts. As a consequence, the Funds' ability to monitor and discourage abusive trading practices in omnibus accounts may be limited.

**Proceeds.** Proceeds will generally be sent no later than seven calendar days after the applicable Fund receives your redemption request. If elected on your account application, you may have the proceeds of the redemption request sent by check to your address of record, by wire to a pre-determined bank, or by electronic funds transfer via the ACH network to the bank account designated by you on your fund account application. When proceeds are sent via the ACH network, the funds are usually available in your bank account in 2-3 business days.

**Check Clearance.** The proceeds from a redemption request may be delayed up to 15 calendar days from the date of the receipt of a purchase by check or electronic funds transfer through the ACH network until the payment for the purchase clears. If the payment does not clear, you will be responsible for any losses suffered by the applicable Fund as well as a $25 service charge imposed by the Transfer Agent. This delay can be avoided by purchasing shares by wire.

**Suspension of Redemptions.** We may temporarily suspend the right of redemption or postpone payments under certain emergency circumstances or when the SEC orders a suspension.

**Signature Guarantees.** The Transfer Agent may require a signature guarantee for certain requests. A signature guarantee assures that your signature is genuine and protects you from unauthorized transactions. A signature guarantee, from either a Medallion program member or a non-Medallion program member, is required in the following situations:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• For all redemption requests in excess of $100,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• When a redemption is received by the Transfer Agent and the account address has changed within the last 30 calendar days;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• When requesting a change in ownership on your account; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• When redemption proceeds are payable or sent to any person, address or bank account not on record.

In addition to the situations described above, the Funds and/or the Transfer Agent may require a signature guarantee in other instances based on the circumstances relative to the particular situation. Non-financial transactions including establishing or modifying certain services on an account may require a signature guarantee, signature verification from a Signature Validation Program member, or other acceptable form of authentication from a financial institution source. Signature guarantees will generally be accepted from domestic banks, brokers, dealers, credit unions, national securities exchanges, registered securities associations, clearing agencies and savings associations, as well as from participants in the New York Stock Exchange Medallion Signature Program and the Securities Transfer Agents Medallion Program ("STAMP"). A notary public is not an acceptable signature guarantor. The Funds reserve the right to waive any signature requirement at their discretion.

**Customer Identification Program.** Please note that, in compliance with the USA PATRIOT Act of 2001, the Transfer Agent will verify certain information on your account application as part of the Funds' Anti-Money Laundering Program. As requested on the Account Application, you must supply your full name, date of birth, social security number and permanent street address. If you are opening the account in the name of a legal entity (*e.g.*, partnership, limited liability company, business trust, corporation, etc.), you must also supply the identity of the beneficial owners. Mailing addresses containing only a P.O. Box will not be accepted. If you do not

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supply the necessary information, the Transfer Agent may not be able to open your account. Please contact the Transfer Agent at (855) 751-4324 if you need additional assistance when completing your application. If the Transfer Agent is unable to verify your identity or that of another person authorized to act on your behalf, or if it believes it has identified potentially criminal activity, the Funds reserve the right to temporarily limit additional share purchases, close your account or take any other action they deem reasonable or required by law.

**No Certificates.** The Funds do not issue share certificates.

**Right to Reject Purchases.** The Funds reserve the right to restrict, reject, or cancel within one business day, without any prior notice, any purchase order, including transactions that, in the judgment of the Adviser, represent excessive trading, may be disruptive to the management of a Fund's portfolio, may increase a Fund's transaction costs, administrative costs or taxes, and those that may otherwise be detrimental to the interests of a Fund and its shareholders. The purpose of such action is to limit increased Fund expenses incurred when certain investors buy and sell shares of the Funds for the short-term when the markets are highly volatile. The Funds' right to cancel or revoke such purchase orders would be limited to within one business day following receipt by the Funds of such purchase orders.

**Redemption In-Kind.** The Funds generally pay redemption proceeds in cash. However, each Fund reserves the right to pay redemption proceeds to you by a distribution of liquid securities from the Fund's portfolio (a "redemption in-kind"). It is not expected that the Funds would do so except during unusual market conditions. If a Fund pays your redemption proceeds by a distribution of liquid securities, you could incur brokerage or other charges in subsequently converting the securities to cash and will bear any market risks associated with such securities until they are converted into cash. A redemption in-kind is treated as a taxable transaction and a sale of the redeemed shares, generally resulting in capital gain or loss to you, subject to certain loss limitation rules.

**Small Accounts.** To reduce our expenses, if the value of your account falls below $1,000, the Funds may ask you to increase your balance. If after 30 days, the account value is still below $1,000, the Funds may close your account and send you the proceeds. The Funds will not close your account if it falls below these amounts solely as a result of a reduction in your account's market value.

**Confirmations.** If you purchase shares directly from the Funds, you will receive monthly statements detailing Fund balances and all transactions completed during the prior month and a confirmation of each transaction. Automatic reinvestments of distributions and systematic investments/withdrawals may be confirmed only by monthly statement. You should verify the accuracy of all transactions in your account as soon as you receive your confirmations and monthly statements.

**Policy on Prohibition of Foreign Shareholders**. Shares of the Funds have not been registered for sale outside of the United States. Accordingly, the Funds generally require that all shareholders must be U.S. persons with a valid U.S. taxpayer identification number to open an account with the Funds. The Funds generally do not sell shares to investors residing outside the United States, even if they are United States citizens or lawful permanent residents, except to investors with United States military APO or FPO addresses or other investors meeting eligibility requirements as determined by the Adviser. The Funds reserve the right to close the account within 5 business days if clarifying information or documentation is not received.

**Canceled or Failed Payments.** The Funds accept checks and ACH transfers at full value subject to collection. If the Funds do not receive your payment for shares or you pay with a check or ACH transfer that does not clear, your purchase will be canceled within 2 business days of bank notification. You will be responsible for any actual losses or expenses incurred by the Funds or the Transfer Agent as a result of the cancellation, and the Funds may redeem shares you own in the account (or another identically registered account that you maintain with the Transfer Agent) as reimbursement. The Funds and their agents have the right to reject or cancel any purchase or exchange (purchase side only) due to nonpayment.

**Lost Accounts.** The Transfer Agent may consider your account "lost" if correspondence to your address of record is returned as undeliverable on two consecutive occasions, unless the Transfer Agent receives your new address. When an account is "lost," all distributions on the account will be reinvested in additional Fund shares. In addition, the amount of any outstanding cash distribution checks (unpaid for six months or more) or checks that have been returned to the Transfer Agent will be reinvested at the then-current NAV and the checks will be canceled. However, checks will not be reinvested into accounts with a zero balance.

**Unclaimed Property.** Your mutual fund account may be transferred to your state of residence if no activity occurs within your account during the "inactivity period" specified in your state's abandoned property laws. Investors with a state of residence in Texas have the ability to designate a representative to receive legislatively required unclaimed property due diligence notifications. Please contact the Texas Comptroller of Public Accounts for further information.

**Other.** To the extent authorized by law, each Fund reserves the right to discontinue offering shares at any time, to merge or reorganize itself or a class of shares, or to cease operations and liquidate at any time. A liquidation may have adverse tax consequences to shareholders. If a Fund were to liquidate, shareholders will receive a liquidating distribution in cash or in-kind equal to their proportionate interest in the Fund. A liquidating distribution would generally be a taxable event to shareholders, resulting in a gain or loss for tax purposes, depending upon a shareholder's basis in his or her shares of the Fund. A shareholder would not be entitled to any refund or reimbursement of expenses borne, directly or indirectly, by the shareholder (such as sales loads, account fees, or fund expenses), and a shareholder may receive an amount in liquidation less than their original investment.

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**Lost Shareholder.** It is important that the Funds maintain a correct address for each investor. An incorrect address may cause an investor's account statements and other mailings to be returned to the Funds. Based upon statutory requirements for returned mail, the Funds will attempt to locate the investor or rightful owner of the account. If the Funds are unable to locate the investor, then they will determine whether the investor's account can legally be considered abandoned. The Funds are legally obligated to escheat (or transfer) abandoned property to the appropriate state's unclaimed property administrator in accordance with statutory requirements. The investor's last known address of record determines which state has jurisdiction. For IRA accounts escheated to a state under these abandoned property laws, the escheatment will generally be treated as a taxable distribution to you; federal and any applicable state income tax will be withheld.

**DETERMINATION OF NET ASSET VALUE**

The price you pay for your shares is based on the applicable Fund's NAV, plus any applicable sales charge. Each Fund's NAV is calculated at the close of trading (normally 4:00 p.m. Eastern Time) on each day the NYSE is open for business (the NYSE is closed on weekends, most federal holidays and Good Friday). Each Fund's NAV is calculated by dividing the value of the Fund's total assets (including interest and dividends accrued but not yet received) minus liabilities (including accrued expenses) by the total number of shares outstanding. Requests to purchase and sell shares are processed at the NAV next calculated after the Funds receive your order in proper form. If the NYSE is closed due to inclement weather, technology problems or any other reason on a day it would normally be open for business, or the NYSE has an unscheduled early closing on a day it has opened for business, each Fund reserves the right to treat such day as a business day and accept purchase and redemption orders until, and calculate a Fund's NAV as of, the normally scheduled close of regular trading on the NYSE for that day, so long as Fund management believes there remains an adequate market to meet purchase and redemption orders for that day.

In the event a Fund holds portfolio securities that trade in foreign markets or that are primarily listed on foreign exchanges that trade on weekends or other days when the Fund does not price its shares, the NAV of the Fund's shares may change on days when shareholders will not be able to purchase or redeem the Fund's shares.

In calculating a Fund's NAV, portfolio investments for which market quotations are readily available are valued at market value, which is ordinarily determined based on official closing prices or the last reported sale prices of an instrument. Where no such closing price or sale price is reported, market value is determined based on quotes obtained from market makers or prices supplied by one or more third-party pricing source ("Pricing Services"), which may include evaluated prices. The types of investments in which the Funds typically invest are generally valued on the basis of evaluated prices provided by Pricing Services. Such prices may be based on a number of factors, including, among other things, information obtained from market makers and estimates based on recent market prices for investments with similar characteristics. If market or evaluated prices are not readily available (including when they are not reliable), or if an event occurs after the close of the trading market but before the calculation of the applicable NAV that materially affects the values, assets may be valued at a fair value, pursuant to guidelines established by the Adviser as the Fund's valuation designee. For example, the Funds may be obligated to fair value a foreign security because many foreign markets operate at times that do not coincide with those of the major U.S. markets. Events that could affect the values of foreign portfolio holdings may occur between the close of the foreign market and the time of determining the NAV, and would not otherwise be reflected in the NAV. When pricing securities using the fair value guidelines, the Adviser (with the assistance of their Pricing Services and other service providers) seek to assign the value that represents the amount that a Fund might reasonably expect to receive upon a current sale of the securities. The fair value guidelines include the consideration of pricing information from one or more Pricing Service, which information is monitored by the Adviser daily. The Board of Trustees oversees the Adviser's implementation of the fair value guidelines.

Notwithstanding the foregoing, given the subjectivity inherent in fair valuation and the fact that events could occur after NAV calculation, the actual market prices for a security may differ from the fair value of that security as determined by the Funds at the time of NAV calculation. Thus, discrepancies between fair values and actual market prices may occur on a regular and recurring basis. These discrepancies do not necessarily indicate that the fair value methodology is inappropriate. The Adviser will adjust the fair values assigned to securities in the Funds' portfolios, to the extent necessary, as soon as market prices become available. The Adviser (and the Funds' service providers) continually monitor and evaluate the appropriateness of their fair value methodologies through systematic comparisons of fair values to the actual next available market prices of securities contained in the Funds' portfolios. To the extent a Fund invests in other mutual funds, the Fund's NAV is calculated based, in part, upon the NAVs of such mutual funds; the prospectuses for those mutual funds in which the Funds will invest describe the circumstances under which those mutual funds will use fair value pricing, which, in turn, affects their NAVs.

Because the Funds rely on various sources to calculate their NAVs, the Funds are subject to certain operational risks associated with reliance on the Pricing Services and other third-party service providers and data sources. A Fund's NAV calculation may be impacted by operational risks arising from factors such as failures in systems and technology. Such failures may result in delays in the calculation of a Fund's NAV and/or the inability to calculate NAV over extended time periods. The Funds may be unable to recover any losses associated with such failures.

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**DIVIDENDS, DISTRIBUTIONS, AND TAXES**

**Dividends and Distributions.** Each Fund typically distributes to its shareholders as dividends all or substantially all of its net investment income and any realized net capital gains. These distributions are automatically reinvested in the applicable Fund unless you request cash distributions on your application or through a written request to the Funds. Class A shares of a Fund and Class A1 shares of the UltraShort Income Fund received as a result of the automatic reinvestment of a distribution are not subject to a sales charge. The Funds expect that their distributions will consist primarily of income and net realized capital gains. Distributions from each Fund's net investment income are accrued daily and typically paid monthly. Net investment income distributed by the Funds generally will consist of interest income, if any, and dividends received on investments, less expenses. The dividends you receive, whether or not reinvested, generally will be subject to tax as ordinary income except as described below.

The dividend distributions described above may result in the payment of approximately the same amount or percentage to a Fund's shareholders each quarter. Section 19(a) of the 1940 Act and Rule 19a-1 thereunder require the Funds to provide a written statement accompanying any such payment that adequately discloses its source or sources. Thus, if the source of the dividend or other distribution were the original capital contribution of the shareholder, and the payment amounted to a return of capital, the Fund would be required to provide written disclosure to that effect. Please refer to the Funds' most recent Section 19(a) notice, available at www.angeloakfunds.com, for additional information regarding the composition of distributions. Nevertheless, persons who periodically receive the payment of a dividend or other distribution may be under the impression that they are receiving net profits when they are not. Shareholders should read any written disclosure provided pursuant to Section 19(a) and Rule 19a-1 carefully and should not assume that the source of any distribution from the Fund is net profit.

All distributions will be reinvested in the shares of the applicable Fund unless you choose one of the following options: (1) receive dividends in cash while reinvesting capital gain distributions in additional shares; (2) reinvest dividends in additional shares and receive capital gains in cash; or (3) receive all distributions in cash. Dividends are taxable whether reinvested in additional shares or received in cash. The Funds will send dividends and capital gain distributions elected to be received as cash to the address of record or bank of record on the applicable account. If you wish to change your distribution option, write or call the Transfer Agent at (855) 751-4324 at least five calendar days prior to the record date of the distribution. Your distribution option will automatically be converted to having all dividends and other distributions reinvested in additional shares if any of the following occur:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Postal or other delivery service is unable to deliver checks to the address of record; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Dividend and capital gain distribution checks are not cashed within 180 days.

Dividend and capital gain distribution checks issued by a Fund that are not cashed within 180 days will be reinvested in the Fund at the current day's NAV. When reinvested, those amounts are subject to risk of loss like any other investment in the Funds.

Selling shares (including redemptions) and receiving distributions (whether reinvested or taken in cash) usually are taxable events to Fund shareholders. These transactions typically create the following tax liabilities for taxable accounts:

**Summary of Certain Federal Income Tax Consequences.** Each Fund has elected and intends to qualify each tax year to be subject to tax as a RIC under Subchapter M of the Code. As a RIC, each Fund generally will not be subject to federal income tax if it distributes its income as required by the tax law and satisfies certain other requirements that are described in the SAI.

Each Fund generally intends to operate in a manner such that it will not be liable for federal income or excise taxes.

You will generally be subject to tax on a Fund's taxable distributions, regardless of whether you reinvest them or receive them in cash. The Funds' taxable distributions of net investment income (including short-term capital gains) are generally characterized as ordinary income. The Funds' distributions of long-term capital gains, if any, are generally characterized as long-term capital gains, regardless of how long you have held your shares. Distributions may also be subject to certain state and local taxes. Some Fund distributions may also include nontaxable returns of capital. Return of capital distributions reduce your tax basis in your Fund shares, thereby resulting in a higher capital gain or lower capital loss when the Fund shares are sold, and are treated as gain from the sale of the shares to the extent your basis would be reduced below zero.

The maximum U.S. federal income tax rate for individual taxpayers applicable to long-term capital gains and income from certain qualifying dividends on certain corporate stock is generally either 15% or 20%, depending on whether the individual's income exceeds certain threshold amounts. A shareholder will also have to satisfy a more than 60-day holding period for the Fund shares with respect to any distributions of qualifying dividends to obtain the benefit of the lower tax rates. These rate reductions do not apply to corporate taxpayers. Given the investment strategies of the Funds, it is not anticipated that a significant portion of a Fund's dividends will be eligible for the benefit of the lower tax rates described above.

An additional 3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends and capital gain distributions received from the Funds and net gains from redemptions or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts to the extent that such person's "modified adjusted gross income" (in the case of an individual) or "adjusted gross income" (in the case of an estate or trust) exceeds certain threshold amounts.

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Distributions of capital gain and distributions of net investment income reduce the NAV of the applicable Fund's shares by the amount of the distribution. If you purchase shares prior to these distributions, you are subject to tax on the distributions even though the distributions represent a return of your investment.

The sale of Fund shares or exchange of Fund shares for shares of another series of Angel Oak Funds Trust is a taxable transaction for federal income tax purposes. You will recognize a gain or loss on such transactions equal to the difference, if any, between the amount of your net sales proceeds and your tax basis in the Fund shares. Such gain or loss will be capital gain or loss if you held your Fund shares as capital assets. Any capital gain or loss will generally be treated as long-term capital gain or loss if you held the Fund shares for more than one year at the time of the sale or exchange, and otherwise as short-term capital gain.

The Funds may be required to withhold federal income tax at the federal backup withholding rate (currently, 24%) on all taxable distributions and redemption proceeds otherwise payable to you if you fail to provide the Funds with your correct taxpayer identification number or to make required certifications, or if you have been notified by the Internal Revenue Service ("IRS") that you are subject to backup withholding. Backup withholding is not an additional tax. Rather, any amounts withheld may be credited against your federal income tax liability, so long as you provide the required information or certification.

Investment income received by a Fund from sources within foreign countries may be subject to foreign income taxes withheld at the source. Tax conventions between certain countries and the United States may reduce or eliminate such taxes in some cases.

After December 31 of each year, the Funds will mail you reports containing information about the income tax classification of distributions paid during the year.

Federal law requires that mutual fund companies report their shareholders' cost basis, gain/loss, and holding period to the IRS on each Fund's shareholders' Form 1099-B. Each Fund has chosen "average cost" as the standing (default) tax lot identification method for all shareholders. A tax lot identification method is the way the Funds will determine which specific shares are deemed to be sold when there are multiple purchases on different dates at differing NAVs, and the entire position is not sold at one time. Each Fund's standing tax lot identification method is the method covered shares will be reported on your Form 1099-B if you do not select a specific tax lot identification method. You may choose a method different than the Funds' standing method and will be able to do so at the time of your purchase or upon the sale of covered shares. Please refer to the appropriate IRS regulations or consult your tax advisor with regard to your personal circumstances.

Shareholders other than U.S. persons may be subject to a different U.S. federal income tax treatment, including withholding tax at the rate of 30% on amounts treated as ordinary dividends from the Funds, as discussed in more detail in the SAI.

For further information about the tax effects of investing in the Funds, including state and local tax matters, please see the SAI and consult your tax advisor.

**THE TRUST**

Each Fund is a series of the Angel Oak Funds Trust (the "Trust"). The Trust's Declaration of Trust (the "Declaration of Trust") provides for indemnification and reimbursement of expenses out of a Fund's assets for any shareholder held personally liable for obligations of the Fund or the Trust. The Declaration of Trust provides that the Trust shall, upon request, assume the defense of any claim made against any shareholder for any act or obligation of a Fund or the Trust and satisfy any judgment thereon. All such rights are limited to the assets of the applicable Fund(s). The Declaration of Trust further provides that the Trust may maintain appropriate insurance (for example, fidelity bonding and errors and omissions insurance) for the protection of the Trust, its shareholders, trustees, officers, employees and agents to cover possible tort and other liabilities. However, the activities of the Trust as an investment company would not likely give rise to liabilities in excess of the Trust's total assets. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which both inadequate insurance exists and the applicable Funds are unable to meet their obligations. The Declaration of Trust also provides that shareholders of the Trust may not bring derivative actions, unless certain conditions are met, including, among other conditions: (i) shareholders make a pre-suit written demand upon the Board to bring the action, (ii) shareholders owning shares representing at least a majority of the outstanding applicable shares join the derivative action (except with respect to claims arising under the federal securities laws), and (iii) the Board is given a 30-day period to consider and investigate the request. In addition, if the Board determines that such an action is not in the best interest of the Trust or of a particular Fund or class, as applicable, then (except with respect to claims arising under the federal securities laws) the complaining shareholders may not bring the derivative action. In the event that the Board determines that the action should be brought, such action shall be brought directly by the Trust and not as a derivative action.

The Declaration of Trust also provides that the Trust shall not in any way be limited by any present or future law or custom in regard to investment by fiduciaries. However, nothing in the Declaration of Trust that modifies or restricts the duties or liabilities of the Trust's trustees shall apply to, or in any way limit, their duties, including the state law fiduciary duties of loyalty and care, or liabilities with respect to matters arising under the federal securities laws.

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**APPENDIX A—WAIVERS AND DISCOUNTS AVAILABLE FROM INTERMEDIARIES** 

**(not applicable to the UltraShort Income Fund)**

The availability of certain sales charge waivers and discounts will depend on whether you purchase your shares directly with a Fund or through a financial intermediary. Intermediaries may have different policies and procedures regarding the availability of front-end sales load waivers or contingent deferred (back-end) sales load ("CDSC") waivers, which are discussed below. In all instances, it is the purchaser's responsibility to notify a Fund or the purchaser's financial intermediary at the time of purchase of any relationship or other facts qualifying the purchaser for sales charge waivers or discounts. The availability of certain initial or deferred sales charge waivers and discounts may depend on the particular financial intermediary or type of account through which you purchase or hold Fund shares. For waivers or discounts not available through a particular financial intermediary described in this <u>Appendix A</u>, investors will have to purchase Fund shares directly from the Funds (or the Distributor) or through another intermediary to receive these waivers or discounts.

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***Janney Montgomery Scott LLC ("Janney")***

Effective May 1, 2020, shareholders purchasing fund shares through a Janney Montgomery Scott LLC ("Janney") account will be eligible only for the following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this fund's Prospectus or SAI.

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| &nbsp;&nbsp;**Front-end Sales Load Waivers on Class A Shares available at Janney** |
| &nbsp;&nbsp;Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family). |
| &nbsp;&nbsp;Shares purchased by employees and registered representatives of Janney or its affiliates and their family members as designated by Janney. |
| &nbsp;&nbsp;Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within ninety (90) days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (i.e., right of reinstatement). |
| &nbsp;&nbsp;Class C shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same fund pursuant to Janney's policies and procedures. |

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|:---|
| &nbsp;&nbsp;**Sales Charge Waivers on Classes A and C Shares available at Janney** |
| &nbsp;&nbsp;Shares sold upon the death or disability of the shareholder. |
| &nbsp;&nbsp;Shares sold as part of a systematic withdrawal plan as described in the fund's Prospectus. |
| &nbsp;&nbsp;Shares purchased in connection with a return of excess contributions from an IRA account. |
| &nbsp;&nbsp;Shares sold as part of a required minimum distribution for IRA and other retirement accounts due to the shareholder reaching the qualified age based on applicable Internal Revenue Service regulations as described in the Fund's Prospectus. |
| &nbsp;&nbsp;Shares sold to pay Janney fees but only if the transaction is initiated by Janney. |
| &nbsp;&nbsp;Shares acquired through a right of reinstatement. |

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|:---|
| &nbsp;&nbsp;**Front-end Sales Load Discounts available at Janney: Breakpoints and/or Rights of Accumulation** |
| &nbsp;&nbsp;Breakpoints as described in the Fund's Prospectus. |
| &nbsp;&nbsp;Rights of accumulation ("ROA"), which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser's household at Janney. Eligible fund family assets not held at Janney may be included in the ROA calculation only if the shareholder notifies his or her financial advisor about such assets. |

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***J.P. Morgan Securities LLC***

If you purchase or hold fund shares through an applicable J.P. Morgan Securities LLC brokerage account, you will be eligible for the following sales charge waivers (front-end sales charge waivers and contingent deferred sales charge ("CDSC"), or back-end sales charge, waivers), share class conversion policy and discounts, which may differ from those disclosed elsewhere in this fund's prospectus or Statement of Additional Information ("SAI").

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|:---|
| &nbsp;&nbsp;**Front-end sales charge waivers on Class A shares available at J.P. Morgan Securities LLC** |
| &nbsp;&nbsp;Shares exchanged from Class C (i.e., level-load) shares that are no longer subject to a CDSC and are exchanged into Class A shares of the same fund pursuant to J.P. Morgan Securities LLC's share class exchange policy. |
| &nbsp;&nbsp;Qualified employer-sponsored defined contribution and defined benefit retirement plans, nonqualified deferred compensation plans, other employee benefit plans and trusts used to fund those plans. For purposes of this provision, such plans do not include SEP IRAs, SIMPLE IRAs, SAR-SEPs or 501(c)(3) accounts. |
| &nbsp;&nbsp;Shares of funds purchased through J.P. Morgan Securities LLC Self-Directed Investing accounts. |
| &nbsp;&nbsp;Shares purchased through rights of reinstatement. |
| &nbsp;&nbsp;Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family). |
| &nbsp;&nbsp;Shares purchased by employees and registered representatives of J.P. Morgan Securities LLC or its affiliates and their spouse or financial dependent as defined by J.P. Morgan Securities LLC. |

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|:---|
| &nbsp;&nbsp;**Class C to Class A share conversion** |
| &nbsp;&nbsp;A shareholder in the fund's Class C shares will have their shares converted by J.P. Morgan Securities LLC to Class A shares (or the appropriate share class) of the same fund if the shares are no longer subject to a CDSC and the conversion is consistent with J.P. Morgan Securities LLC's policies and procedures. |

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|:---|
| &nbsp;&nbsp;**CDSC waivers on Class A and C shares available at J.P. Morgan Securities LLC** |
| &nbsp;&nbsp;Shares sold upon the death or disability of the shareholder. |
| &nbsp;&nbsp;Shares sold as part of a systematic withdrawal plan as described in the fund's prospectus. |
| &nbsp;&nbsp;Shares purchased in connection with a return of excess contributions from an IRA account. |
| &nbsp;&nbsp;Shares sold as part of a required minimum distribution for IRA and retirement accounts pursuant to the Internal Revenue Code. |
| &nbsp;&nbsp;Shares acquired through a right of reinstatement. |

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|:---|
| &nbsp;&nbsp;**Front-end load discounts available at J.P. Morgan Securities LLC: breakpoints, rights of accumulation & letters of intent** |
| &nbsp;&nbsp;Breakpoints, as described in the prospectus. |
| &nbsp;&nbsp;Rights of Accumulation ("ROA") which entitle shareholders to breakpoint discounts as described in the fund's prospectus will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser's household at J.P. Morgan Securities LLC. Eligible fund family assets not held at J.P. Morgan Securities LLC (including 529 program holdings, where applicable) may be included in the ROA calculation only if the shareholder notifies their financial advisor about such assets. |
| &nbsp;&nbsp;Letters of Intent ("LOI") which allow for breakpoint discounts based on anticipated purchases within a fund family, through J.P. Morgan Securities LLC, over a 13-month period of time (if applicable). |

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***Merrill Lynch***

Purchases or sales of front-end (for example, Class A) or level-load (for example, Class C) mutual fund shares through a Merrill platform or account will be eligible only for the following sales load waivers (front-end, contingent deferred, or back-end waivers) and discounts, which differ from those disclosed elsewhere in this Fund's prospectus. Purchasers will have to buy mutual fund shares directly from the mutual fund company or through another intermediary to be eligible for waivers or discounts not listed below.

It is the client's responsibility to notify Merrill at the time of purchase or sale of any relationship or other facts that qualify the transaction for a waiver or discount. A Merrill representative may ask for reasonable documentation of such facts and Merrill may condition the granting of a waiver or discount on the timely receipt of such documentation.

Additional information on waivers, discounts, and share class exchanges is available in the Merrill Sales Load Waiver and Discounts Supplement (the "Merrill SLWD Supplement") and in the Mutual Fund Investing at Merrill pamphlet at ml.com/funds. Clients are encouraged to review these documents and speak with their financial advisor to determine whether a transaction is eligible for a waiver or discount.

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|:---|
| &nbsp;&nbsp;**Front-end Load Waivers Available at Merrill** |
| &nbsp;&nbsp;Shares of mutual funds available for purchase by employer-sponsored retirement, deferred compensation, and employee benefit plans (including health savings accounts) and trusts used to fund those plans provided the shares are not held in a commission-based brokerage account and shares are held for the benefit of the plan. For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs, SAR-SEPs or Keogh plans |
| &nbsp;&nbsp;Shares purchased through a Merrill investment advisory program |
| &nbsp;&nbsp;Brokerage class shares exchanged from advisory class shares due to the holdings moving from a Merrill investment advisory program to a Merrill brokerage account |
| &nbsp;&nbsp;Shares purchased through the Merrill Edge Self-Directed platform |
| &nbsp;&nbsp;Shares purchased through the systematic reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same mutual fund in the same account |
| &nbsp;&nbsp;Shares exchanged from level-load shares to front-end load shares of the same mutual fund in accordance with the description in the Merrill SLWD Supplement |
| &nbsp;&nbsp;Shares purchased by eligible employees of Merrill or its affiliates and their family members who purchase shares in accounts within the employee's Merrill Household (as defined in the Merrill SLWD Supplement) |
| &nbsp;&nbsp;Shares purchased by eligible persons associated with the fund as defined in this prospectus (e.g. the fund's officers or trustees) |
| &nbsp;&nbsp;Shares purchased from the proceeds of a mutual fund redemption in front-end load shares provided (1) the repurchase is in a mutual fund within the same fund family; (2) the repurchase occurs within 90 calendar days from the redemption trade date, and (3) the redemption and purchase occur in the same account (known as Rights of Reinstatement). Automated transactions (i.e. systematic purchases and withdrawals) and purchases made after shares are automatically sold to pay Merrill's account maintenance fees are not eligible for Rights of Reinstatement |

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|:---|
| &nbsp;&nbsp;**Contingent Deferred Sales Charge ("CDSC") Waivers on Front-end, Back-end, and Level Load Shares Available at Merrill** |
| &nbsp;&nbsp;Shares sold due to the client's death or disability (as defined by Internal Revenue Code Section 22(e)(3)) |
| &nbsp;&nbsp;Shares sold pursuant to a systematic withdrawal program subject to Merrill's maximum systematic withdrawal limits as described in the Merrill SLWD Supplement |
| &nbsp;&nbsp;Shares sold due to return of excess contributions from an IRA account |
| &nbsp;&nbsp;Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the investor reaching the qualified age based on applicable IRS regulation |
| &nbsp;&nbsp;Front-end or level-load shares held in commission-based, non-taxable retirement brokerage accounts (e.g. traditional, Roth, rollover, SEP IRAs, Simple IRAs, SAR-SEPs or Keogh plans) that are transferred to fee-based accounts or platforms and exchanged for a lower cost share class of the same mutual fund |

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| |
|:---|
| &nbsp;&nbsp;**Front-end Load Discounts Available at Merrill: Breakpoints, Rights of Accumulation & Letters of Intent** |
| &nbsp;&nbsp;Breakpoint discounts, as described in this prospectus, where the sales load is at or below the maximum sales load that Merrill permits to be assessed to a front-end load purchase, as described in the Merrill SLWD Supplement |
| &nbsp;&nbsp;Rights of Accumulation (ROA), as described in the Merrill SLWD Supplement, which entitle clients to breakpoint discounts based on the aggregated holdings of mutual fund family assets held in accounts in their Merrill Household<br>On or about May 1, 2026, assets not held at Merrill will no longer be included in the ROA calculation. For more detail on the timing and calculation, please refer to the Merrill SLWD Supplement. |
| &nbsp;&nbsp;Letters of Intent (LOI), which allow for breakpoint discounts on eligible new purchases based on anticipated future eligible purchases within a fund family at Merrill, in accounts within your Merrill Household, as further described in the Merrill SLWD Supplement<br>On or about May 1, 2026, Merrill will no longer accept new LOIs. For more detail on the timing, please refer to the Merrill SLWD Supplement. |

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***Morgan Stanley Wealth Management***

Effective July 1, 2018, shareholders purchasing Fund shares through a Morgan Stanley Wealth Management transactional brokerage account will be eligible only for the following front-end sales charge waivers with respect to Class A shares, which may differ from and may be more limited than those disclosed elsewhere in the Funds' Prospectus or SAI.

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| |
|:---|
| &nbsp;&nbsp;**Front-end Sales Load Waivers on Class A Shares available at Morgan Stanley Wealth Management** |
| &nbsp;&nbsp;Employer-sponsored retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans, and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs, SAR-SEPs, or Keogh plans. |
| &nbsp;&nbsp;Morgan Stanley employee and employee-related accounts according to Morgan Stanley's account linking rules. |
| &nbsp;&nbsp;Shares purchased through reinvestment of dividends and capital gains distributions when purchasing shares of the same Fund. |
| &nbsp;&nbsp;Shares purchased through a Morgan Stanley self-directed brokerage account. |
| &nbsp;&nbsp;Class C (i.e., level-load) shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same Fund pursuant to Morgan Stanley Wealth Management's share class conversion program. |
| &nbsp;&nbsp;Shares purchased from the proceeds of redemptions within the same fund family, provided (i) the repurchase occurs within 90 days following the redemption, (ii) the redemption and purchase occur in the same account, and (iii) redeemed shares were subject to a front-end or deferred sales charge. |

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***Oppenheimer & Co. Inc. ("OPCO")***

Effective May 31, 2021, shareholders purchasing Fund shares through an Oppenheimer & Co. Inc. ("OPCO") platform or account are eligible only for the following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this Fund's prospectus or SAI.

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|:---|
| &nbsp;&nbsp;**Front-end Sales Load Waivers on Class A Shares available at OPCO** |
| &nbsp;&nbsp;Employer-sponsored retirement, deferred compensation and employee benefit plans (including health savings accounts) and trusts used to fund those plans, provided that the shares are not held in a commission-based brokerage account and shares are held for the benefit of the plan. |
| &nbsp;&nbsp;Shares purchased by or through a 529 Plan. |
| &nbsp;&nbsp;Shares purchased through an OPCO affiliated investment advisory program.  |
| &nbsp;&nbsp;Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family).  |
| &nbsp;&nbsp;Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Restatement).  |
| &nbsp;&nbsp;A shareholder in the Fund's Class C Shares will have their shares converted at net asset value to Class A Shares (or the appropriate share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures of OPCO.  |
| &nbsp;&nbsp;Employees and registered representatives of OPCO or its affiliates and their family members.  |
| &nbsp;&nbsp;Directors or Trustees of the Fund, and employees of the Fund's investment adviser or any of its affiliates, as described in this prospectus.  |

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|:---|
| &nbsp;&nbsp;**CDSC Waivers on A, B and C Shares available at OPCO** |
| &nbsp;&nbsp;Death or disability of the shareholder. |
| &nbsp;&nbsp;Shares sold as part of a systematic withdrawal plan as described in the Fund's Prospectus. |
| &nbsp;&nbsp;Return of excess contributions from an IRA account. |
| &nbsp;&nbsp;Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based on applicable IRS regulations as described in the Prospectus. |
| &nbsp;&nbsp;Shares sold to pay OPCO fees but only if the transaction is initiated by OPCO. |
| &nbsp;&nbsp;Shares acquired through a right of reinstatement. |

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| |
|:---|
| &nbsp;&nbsp;**Front-end Load Discounts available at OPCO: Breakpoints, Rights of Accumulation & Letter of Intent** |
| &nbsp;&nbsp;Breakpoints as described in this Prospectus. |
| &nbsp;&nbsp;Rights of Accumulation (ROA) which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser's household at OPCO. Eligible fund family assets not held at OPCO may be included in the ROA calculation only if the shareholder notifies his or her financial advisor about such assets. |

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***Raymond James & Associates, Inc., Raymond James Financial Services, Inc. and each entity's affiliates ("Raymond James")***

Effective March 1, 2019, shareholders purchasing fund shares through a Raymond James platform or account, or through an introducing broker-dealer or independent registered investment adviser for which Raymond James provides trade execution, clearance, and/or custody services, will be eligible only for the following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in the Funds' Prospectus or SAI.

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| &nbsp;&nbsp;**Front-end Sales Load Waivers on Class A Shares available at Raymond James** |
| &nbsp;&nbsp;Shares purchased in an investment advisory program. |
| &nbsp;&nbsp;Shares purchased within the same fund family through a systematic reinvestment of capital gains and dividend distributions. |
| &nbsp;&nbsp;Employees and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James. |
| &nbsp;&nbsp;Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Reinstatement). |
| &nbsp;&nbsp;A shareholder in the Fund's Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures of Raymond James. |

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| &nbsp;&nbsp;**CDSC Waivers on Classes A, B and C Shares available at Raymond James** |
| &nbsp;&nbsp;Death or disability of the shareholder. |
| &nbsp;&nbsp;Shares sold as part of a systematic withdrawal plan as described in the Funds' Prospectus. |
| &nbsp;&nbsp;Return of excess contributions from an IRA Account. |
| &nbsp;&nbsp;Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based on applicable IRS regulations as described in the fund's prospectus. |
| &nbsp;&nbsp;Shares sold to pay Raymond James fees but only if the transaction is initiated by Raymond James. |
| &nbsp;&nbsp;Shares acquired through a right of reinstatement. |

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| |
|:---|
| &nbsp;&nbsp;**Front-end Sales Load Discounts available at Raymond James: Breakpoints, Rights of Accumulation, and/or Letters of Intent** |
| &nbsp;&nbsp;Breakpoints as described in this prospectus. |
| &nbsp;&nbsp;Rights of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser's household at Raymond James. Eligible fund family assets not held at Raymond James may be included in the calculation of rights of accumulation only if the shareholder notifies his or her financial advisor about such assets. |
| &nbsp;&nbsp;Letters of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible fund family assets not held at Raymond James may be included in the calculation of letters of intent only if the shareholder notifies his or her financial advisor about such assets. |

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***Robert W. Baird & Co. ("Baird")***

Effective January 1, 2026, shareholders purchasing fund shares through a Baird platform or account will only be eligible for the following sales charge waivers (front-end sales charge waivers and CDSC waivers) and discounts, which may differ from those disclosed elsewhere in this prospectus or the SAI

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| &nbsp;&nbsp;**Front-End Sales Charge Waivers on Class A shares Available at Baird** |
| &nbsp;&nbsp;Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund |
| &nbsp;&nbsp;Shares purchased by employees and registered representatives of Baird or its affiliates and their family members as designated by Baird |
| &nbsp;&nbsp;Shares purchased within 90 days following a redemption from an Angel Oak Fund, provided (1) the redemption and purchase occur within the purchaser's Baird household and (2) the redeemed shares were subject to a front-end or deferred sales charge (known as rights of reinstatement) |
| &nbsp;&nbsp;A shareholder in the Fund's Investor C Shares will have their share converted at net asset value to Investor A shares of the same fund if the shares are no longer subject to CDSC and the conversion is in line with the policies and procedures of Baird |
| &nbsp;&nbsp;Employer-sponsored retirement plans or charitable accounts in a transactional brokerage account at Baird, including 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit plans. For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs |

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| &nbsp;&nbsp;**CDSC Waivers on Class A and C shares Available at Baird** |
| &nbsp;&nbsp;Shares sold due to death or disability of the shareholder |
| &nbsp;&nbsp;Shares sold as part of a systematic withdrawal plan as described in the Fund's Prospectus |
| &nbsp;&nbsp;Shares bought due to returns of excess contributions from an IRA Account |
| &nbsp;&nbsp;Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based on applicable Internal Revenue Service regulations as described in the Fund's prospectus |
| &nbsp;&nbsp;Shares sold to pay Baird fees but only if the transaction is initiated by Baird |
| &nbsp;&nbsp;Shares acquired through a right of reinstatement |

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| &nbsp;&nbsp;**Front-End Sales Charge Discounts Available at Baird: Breakpoints and/or Rights of Accumulation** |
| &nbsp;&nbsp;Breakpoints as described in this prospectus  |
| &nbsp;&nbsp;Rights of accumulations which entitles shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of Angel Oak assets held by accounts within the purchaser's household at Baird. Eligible Angel Oak assets not held at Baird may be included in the rights of accumulations calculation only if the shareholder notifies his or her financial advisor about such assets |
| &nbsp;&nbsp;Letters of Intent (LOI) allow for breakpoint discounts based on anticipated purchases of Angel Oak through Baird, over a 13-month period of time |

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***Stifel, Nicolaus & Company, Incorporated ("Stifel")***

Effective May 31, 2026, shareholders purchasing or holding fund shares, including existing fund shareholders, through a Stifel or affiliated platform that provides trade execution, clearance, and/or custody services, will be eligible for the following sales charge load waivers (including front-end sales charge waivers and contingent deferred, or back-end, (CDSC) sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this prospectus or the Fund's SAI.

**CLASS A SHARES**

As described elsewhere in this prospectus, Stifel may receive compensation out of the front-end sales charge if you purchase Class A shares through Stifel.

**Rights of accumulation**

Rights of accumulation (ROA) that entitle shareholders to breakpoint discounts on front-end sales charges will be calculated by Stifel based on the aggregated holding of eligible assets in the fund held by accounts within the purchaser's household at Stifel. Ineligible assets include class A Money Market Funds not assessed a sales charge. Fund Family assets not held at Stifel may be included in the calculation of ROA only if the shareholder notifies his or her financial advisor about such assets.

The employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to establish or change ROA for the IRA accounts associated with the plan to a plan-level grouping as opposed to including all share classes at a shareholder or pricing group level.

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| &nbsp;&nbsp;**Front-end sales charge waivers on Class A shares available at Stifel** |
| &nbsp;&nbsp;Class C shares that have been held for more than seven (7) years may be converted to Class A shares or other front-end share class(es) of the same fund pursuant to Stifel's policies and procedures. To the extent that this prospectus elsewhere provides for a waiver with respect to the exchange or conversion of such shares following a shorter holding period, those provisions shall continue to apply. |
| &nbsp;&nbsp;Shares purchased by employees and registered representatives of Stifel or its affiliates and their family members as designated by Stifel. |
| &nbsp;&nbsp;Shares purchased in a Stifel fee-based advisory program, often referred to as a "wrap" program. |
| &nbsp;&nbsp;Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same or other fund within Angel Oak Funds Trust. |
| &nbsp;&nbsp;Shares purchased from the proceeds of redeemed shares of Angel Oak Funds so long as the proceeds are from the sale of shares from an account with the same owner/beneficiary within 90 days of the purchase. For the absence of doubt, automated transactions (i.e. systematic purchases, including salary deferral transactions and withdrawals) and purchases made after shares are sold to cover Stifel Nicolaus' account maintenance fees are not eligible for rights of reinstatement. |
| &nbsp;&nbsp;Shares from rollovers into Stifel from retirement plans to IRAs. |
| &nbsp;&nbsp;Shares exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the direction of Stifel. Stifel is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject to the applicable sales charge as disclosed in this prospectus. |
| &nbsp;&nbsp;Purchases of Class 529-A shares through a rollover from another 529 plan. |
| &nbsp;&nbsp;Purchases of Class 529-A shares made for reinvestment of refunded amounts. |
| &nbsp;&nbsp;Employer-sponsored retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit plans). For purposes of this provision, employer sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs. |
| &nbsp;&nbsp;Charitable organizations and foundations, notably 501(c)(3) organizations. |

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| &nbsp;&nbsp;**Contingent Deferred Sales Charges Waivers on Class A and C Shares** |
| &nbsp;&nbsp;Death or disability of the shareholder or, in the case of 529 plans, the account beneficiary. |
| &nbsp;&nbsp;Shares sold as part of a systematic withdrawal plan not to exceed 12% annually. |
| &nbsp;&nbsp;Return of excess contributions from an IRA Account. |
| &nbsp;&nbsp;Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based on applicable IRS regulations. |
| &nbsp;&nbsp;Shares acquired through a right of reinstatement. |
| &nbsp;&nbsp;Shares sold to pay Stifel fees or costs in such cases where the transaction is initiated by Stifel. |
| &nbsp;&nbsp;Shares exchanged or sold in a Stifel fee-based program. |

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| |
|:---|
| &nbsp;&nbsp;**Share Class Conversions in Advisory Accounts** |
| &nbsp;&nbsp;Stifel continually looks to provide our clients with the lowest cost share class available based on account type. Stifel reserves the right to convert shares to the lowest cost share class available at Stifel upon transfer of shares into an advisory program. |

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***Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC (collectively, "Wells Fargo Advisors")***

***Wells Fargo Clearing Services, LLC operates a First Clearing business, but these rules are not intended to include First Clearing firms.***

Effective April 1, 2026, Clients of Wells Fargo Advisors purchasing fund shares through Wells Fargo Advisors are eligible for the following sales charge discounts (also referred to as "breakpoints") and waivers, which can differ from discounts and waivers described elsewhere in the prospectus or statement of additional information ("SAI"). In all instances, it is the investor's responsibility to inform Wells Fargo Advisors at the time of purchase of any relationship, holdings, or other facts qualifying the investor for discounts or waivers. Wells Fargo Advisors can ask for documentation supporting the qualification.

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| &nbsp;&nbsp;**Wells Fargo Advisors Class A share front-end sales charge waivers information.** |
| &nbsp;&nbsp;Wells Fargo Advisors clients purchasing or converting to Class A shares of the fund in a Wells Fargo Advisors brokerage account are entitled to a waiver of the front-end load in the following circumstances: |
| &nbsp;&nbsp;Wells Fargo Advisors employee and employee-related accounts according to Wells Fargo Advisor's employee account linking rules. Legacy accounts and positions receiving affiliate discounts prior to the effective date will continue to receive discounts. Going forward employees of affiliate businesses will not be offered NAV. |
| &nbsp;&nbsp;Shares purchased through reinvestment of dividends and capital gains distributions when purchasing shares of the same fund. |
| &nbsp;&nbsp;WellsTrade, the firm's online self-directed brokerage account, generally offers no-load share classes but there could be instances where a Class A share is offered without a front-end sales charge. |

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|:---|
| &nbsp;&nbsp;**Wells Fargo Advisors Class 529-A share front-end sales charge waivers information.** |
| &nbsp;&nbsp;Wells Fargo Advisors clients purchasing or converting to Class 529-A shares of the fund through Wells Fargo Advisors transactional brokerage accounts are entitled to a waiver of the front-end load in the following circumstances: |
| &nbsp;&nbsp;Shares purchased through a rollover from another 529 plan. |
| &nbsp;&nbsp;Recontribution(s) of distributed funds are only allowed during the NAV reinstatement period as dictated by the sponsor's specifications outlined by the plan.  |
| &nbsp;&nbsp;Wells Fargo Advisors is not able to apply the NAV Reinstatement privilege for 529 Plan account purchases placed directly at the fund company. Investors wishing to utilize this privilege outside of Wells Fargo systems will need to do so directly with the Plan or a financial intermediary that supports this feature. |
| &nbsp;&nbsp;Unless specifically described above, other front-end load waivers are not available on mutual fund purchases through Wells Fargo Advisors. |

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| &nbsp;&nbsp;**Wells Fargo Advisors Contingent Deferred Sales Charge information.** |
| &nbsp;&nbsp;Contingent deferred sales charges (CDSC) imposed on fund redemptions will not be rebated based on future purchases. |

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| |
|:---|
| &nbsp;&nbsp;**Wells Fargo Advisors Class A front-end load discounts** |
| &nbsp;&nbsp;Wells Fargo Advisors Clients purchasing Class A shares of the fund through Wells Fargo Advisors brokerage accounts will follow the following aggregation rules for breakpoint discounts: |
| &nbsp;&nbsp;Effective April 1, 2026, SEP or SIMPLE IRAs will not be aggregated as a group plan. They will aggregate with the client's personal accounts based on Social Security Number. Previously established SEP and SIMPLE IRAs may still be aggregated as a group plan. |
| &nbsp;&nbsp;Effective April 1, 2026, Employer-sponsored retirement plan (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit plans) accounts will aggregate with other plan accounts under the same Tax ID and will not be aggregated with other retirement plan accounts under a different Tax ID or personal accounts. For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, SIMPLE IRAs, SAR-SEPs or Keogh plans. |
| &nbsp;&nbsp;Gift of shares will not be considered when determining breakpoint discounts |

---

------

**FINANCIAL HIGHLIGHTS**

The financial highlights tables are intended to help you understand the financial performance of each Fund for the past 5 years or for the period of the Fund's operations if less than 5 years by showing the financial performance of each available class of each Fund. Certain information reflects financial results for a single Fund share. The financial highlights tables on the following pages reflect selected per share data and ratios for a share outstanding of the Fund throughout each period.

The total returns in the tables represent the rate that an investor would have earned (or lost) on an investment in the applicable Fund, assuming reinvestment of all dividends and distributions. The information presented in the tables below with respect to the Multi-Strategy Income Fund and UltraShort Income Fund for the fiscal periods or years ended January 31 has been audited by Cohen & Company, Ltd., an independent registered public accounting firm, whose report, along with each such Fund's financial statements, are included in the annual report of the Funds on <u>[Form N-CS](https://www.sec.gov/ix?doc=/Archives/edgar/data/1612930/000113322826004853/aafs-efp23015_ncsr.htm)[R](https://www.sec.gov/ix?doc=/Archives/edgar/data/1612930/000113322826004853/aafs-efp23015_ncsr.htm)</u>, which is available upon request.

------

**Angel Oak Multi-Strategy Income Fund – Class A** 

**Consolidated Financial Highlights (a)** 

**(For a share outstanding during each year)** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **For the Year Ended January 31,** | **For the Year Ended January 31,** | **For the Year Ended January 31,** | **For the Year Ended January 31,** | **For the Year Ended January 31,** |
| | **2026** | **2025** | **2024** | **2023** | **2022** |
| **Selected Per Share Data:** |  |  |  |  |  |
| Net asset value, beginning of year | $8.62 | $8.51 | $8.63 | $10.24 | $10.43 |
| **Income from investment operations:** |  |  |  |  |  |
| Net investment income (loss) | 0.48 | 0.51 | 0.49 | 0.48 | 0.47 |
| Net realized and unrealized gain (loss) on investments <sup>(b)</sup> | 0.15 | 0.10 | (0.13) | (1.62) | (0.19) |
| **Total from investment operations** | 0.63 | 0.61 | 0.36 | (1.14) | 0.28 |
| **Less distributions to shareholders:** |  |  |  |  |  |
| From net investment income | (0.47) | (0.50) | (0.48) | (0.47) | (0.47) |
| **Total distributions** | (0.47) | (0.50) | (0.48) | (0.47) | (0.47) |
| **Net asset value, end of year** | $8.78 | $8.62 | $8.51 | $8.63 | $10.24 |
| Total return <sup>(c)(d)</sup> | 7.44% | 7.36% | 4.38% | -11.28% | 2.71% |
| **Ratios and Supplemental Data:** |  |  |  |  |  |
| Net assets, end of year (000's omitted) | $152007 | $145599 | $133198 | $150450 | $335439 |
| Ratio of expenses to average net assets before waiver and reimbursement/recoupment<sup>(e)</sup> | 1.56% | 1.64% | 2.13% | 1.79% | 1.29% |
| Ratio of expenses to average net assets before waiver and reimbursement/recoupment excluding interest expense<sup>(e)</sup> | 1.23% | 1.26% | 1.26% | 1.23% | 1.20% |
| Ratio of expenses to average net assets after waiver and reimbursement/recoupment<sup>(e)</sup> | 1.56% | 1.62% | 2.11% | 1.77% | 1.28% |
| Ratio of expenses to average net assets after waiver and reimbursement/recoupment excluding interest expense<sup>(e)</sup> | 1.23% | 1.24% | 1.24% | 1.21% | 1.19% |
| Ratio of net investment income (loss) to average net assets before waiver and reimbursement/recoupment<sup>(e)</sup> | 5.44% | 5.90% | 5.78% | 4.83% | 4.42% |
| Ratio of net investment income (loss) to average net assets after waiver and reimbursement/recoupment<sup>(e)</sup> | 5.44% | 5.92% | 5.80% | 4.85% | 4.43% |
| Portfolio turnover rate <sup>(d)(f)</sup> | 75% | 60% | 32% | 14% | 56% |
| (a) Financial Highlights have been consolidated. | (a) Financial Highlights have been consolidated. | (a) Financial Highlights have been consolidated. | (a) Financial Highlights have been consolidated. | (a) Financial Highlights have been consolidated. | (a) Financial Highlights have been consolidated. |
| (b) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (b) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (b) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (b) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (b) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (b) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. |
| (c) Total return does not include the effect of sales charges. | (c) Total return does not include the effect of sales charges. | (c) Total return does not include the effect of sales charges. | (c) Total return does not include the effect of sales charges. | (c) Total return does not include the effect of sales charges. | (c) Total return does not include the effect of sales charges. |
| (d) Not annualized for periods less than one year. | (d) Not annualized for periods less than one year. | (d) Not annualized for periods less than one year. | (d) Not annualized for periods less than one year. | (d) Not annualized for periods less than one year. | (d) Not annualized for periods less than one year. |
| (e) Annualized for periods less than one year. | (e) Annualized for periods less than one year. | (e) Annualized for periods less than one year. | (e) Annualized for periods less than one year. | (e) Annualized for periods less than one year. | (e) Annualized for periods less than one year. |
| (f) Portfolio turnover rate excludes in-kind transactions. | (f) Portfolio turnover rate excludes in-kind transactions. | (f) Portfolio turnover rate excludes in-kind transactions. | (f) Portfolio turnover rate excludes in-kind transactions. | (f) Portfolio turnover rate excludes in-kind transactions. | (f) Portfolio turnover rate excludes in-kind transactions. |

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------

**Angel Oak Multi-Strategy Income Fund – Class C** 

**Consolidated Financial Highlights (a)**

**(For a share outstanding during each year)** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **For the Year Ended January 31,** | **For the Year Ended January 31,** | **For the Year Ended January 31,** | **For the Year Ended January 31,** | **For the Year Ended January 31,** |
| | **2026** | **2025** | **2024** | **2023** | **2022** |
| **Selected Per Share Data:** |  |  |  |  |  |
| Net asset value, beginning of year | $8.52 | $8.41 | $8.54 | $10.13 | $10.34 |
| **Income from investment operations:** |  |  |  |  |  |
| Net investment income (loss) | 0.41 | 0.44 | 0.43 | 0.39 | 0.38 |
| Net realized and unrealized gain (loss) on investments<sup>(b)</sup> | 0.14 | 0.11 | (0.14) | (1.58) | (0.20) |
| **Total from investment operations** | 0.55 | 0.55 | 0.29 | (1.19) | 0.18 |
| **Less distributions to shareholders:** |  |  |  |  |  |
| From net investment income | (0.40) | (0.44) | (0.42) | (0.40) | (0.39) |
| **Total distributions** | (0.40) | (0.44) | (0.42) | (0.40) | (0.39) |
| **Net asset value, end of year** | $8.67 | $8.52 | $8.41 | $8.54 | $10.13 |
| Total return<sup>(c)(d)</sup> | 6.62% | 6.66% | 3.51% | -11.88% | 1.78% |
| **Ratios and Supplemental Data:** |  |  |  |  |  |
| Net assets, end of year (000's omitted) | $25061 | $33373 | $33868 | $46512 | $71445 |
| Ratio of expenses to average net assets before waiver and reimbursement/recoupment<sup>(e)</sup> | 2.31% | 2.39% | 2.88% | 2.54% | 2.04% |
| Ratio of expenses to average net assets before waiver and reimbursement/recoupment excluding interest expense<sup>(e)</sup> | 1.98% | 2.01% | 2.01% | 1.98% | 1.95% |
| Ratio of expenses to average net assets after waiver and reimbursement/recoupment<sup>(e)</sup> | 2.31% | 2.37% | 2.86% | 2.52% | 2.03% |
| Ratio of expenses to average net assets after waiver and reimbursement/recoupment excluding interest expense<sup>(e)</sup> | 1.98% | 1.99% | 1.99% | 1.96% | 1.94% |
| Ratio of net investment income (loss) to average net assets before waiver and reimbursement/recoupment<sup>(e)</sup> | 4.69% | 5.15% | 5.03% | 4.17% | 3.69% |
| Ratio of net investment income (loss) to average net assets after waiver and reimbursement/recoupment<sup>(e)</sup> | 4.69% | 5.17% | 5.05% | 4.19% | 3.70% |
| Portfolio turnover rate<sup>(d)(f)</sup> | 75% | 60% | 32% | 14% | 56% |
| (a) Financial Highlights have been consolidated. | (a) Financial Highlights have been consolidated. | (a) Financial Highlights have been consolidated. | (a) Financial Highlights have been consolidated. | (a) Financial Highlights have been consolidated. | (a) Financial Highlights have been consolidated. |
| (b) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (b) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (b) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (b) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (b) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (b) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. |
| (c) Total return does not include the effect of sales charges. | (c) Total return does not include the effect of sales charges. | (c) Total return does not include the effect of sales charges. | (c) Total return does not include the effect of sales charges. | (c) Total return does not include the effect of sales charges. | (c) Total return does not include the effect of sales charges. |
| (d) Not annualized for periods less than one year. | (d) Not annualized for periods less than one year. | (d) Not annualized for periods less than one year. | (d) Not annualized for periods less than one year. | (d) Not annualized for periods less than one year. | (d) Not annualized for periods less than one year. |
| (e) Annualized for periods less than one year. | (e) Annualized for periods less than one year. | (e) Annualized for periods less than one year. | (e) Annualized for periods less than one year. | (e) Annualized for periods less than one year. | (e) Annualized for periods less than one year. |
| (f) Portfolio turnover rate excludes in-kind transactions. | (f) Portfolio turnover rate excludes in-kind transactions. | (f) Portfolio turnover rate excludes in-kind transactions. | (f) Portfolio turnover rate excludes in-kind transactions. | (f) Portfolio turnover rate excludes in-kind transactions. | (f) Portfolio turnover rate excludes in-kind transactions. |

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------

**Angel Oak Multi-Strategy Income Fund – Institutional Class** 

**Consolidated Financial Highlights (a)**

**(For a share outstanding during each year)** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **For the Year Ended January 31,** | **For the Year Ended January 31,** | **For the Year Ended January 31,** | **For the Year Ended January 31,** | **For the Year Ended January 31,** |
| | **2026** | **2025** | **2024** | **2023** | **2022** |
| **Selected Per Share Data:** |  |  |  |  |  |
| Net asset value, beginning of year | $8.59 | $8.48 | $8.61 | $10.21 | $10.41 |
| **Income from investment operations:** |  |  |  |  |  |
| Net investment income (loss) | 0.50 | 0.53 | 0.51 | 0.49 | 0.49 |
| Net realized and unrealized gain (loss) on investments<sup>(b)</sup> | 0.16 | 0.10 | (0.14) | (1.59) | (0.19) |
| **Total from investment operations** | 0.66 | 0.63 | 0.37 | (1.10) | 0.30 |
| **Less distributions to shareholders:** |  |  |  |  |  |
| From net investment income | (0.49) | (0.52) | (0.50) | (0.50) | (0.50) |
| **Total distributions** | (0.49) | (0.52) | (0.50) | (0.50) | (0.50) |
| **Net asset value, end of year** | $8.76 | $8.59 | $8.48 | $8.61 | $10.21 |
| Total return<sup>(c)</sup> | 7.85% | 7.65% | 4.54% | -10.98% | 2.87% |
| **Ratios and Supplemental Data:** |  |  |  |  |  |
| Net assets, end of year (000's omitted) | $2465448 | $2612598 | $2533096 | $2793964 | $6820115 |
| Ratio of expenses to average net assets before waiver and reimbursement/recoupment<sup>(d)</sup> | 1.31% | 1.39% | 1.88% | 1.54% | 1.04% |
| Ratio of expenses to average net assets before waiver and reimbursement/recoupment excluding interest expense<sup>(d)</sup> | 0.98% | 1.01% | 1.01% | 0.98% | 0.95% |
| Ratio of expenses to average net assets after waiver and reimbursement/recoupment<sup>(d)</sup> | 1.31% | 1.37% | 1.86% | 1.52% | 1.03% |
| Ratio of expenses to average net assets after waiver and reimbursement/recoupment excluding interest expense<sup>(d)</sup> | 0.98% | 0.99% | 0.99% | 0.96% | 0.94% |
| Ratio of net investment income (loss) to average net assets before waiver and reimbursement/recoupment<sup>(d)</sup> | 5.69% | 6.15% | 6.01% | 5.03% | 4.69% |
| Ratio of net investment income (loss) to average net assets after waiver and reimbursement/recoupment<sup>(d)</sup> | 5.69% | 6.17% | 6.03% | 5.05% | 4.70% |
| Portfolio turnover rate<sup>(c)(e)</sup> | 75% | 60% | 32% | 14% | 56% |
| (a) Financial Highlights have been consolidated. | (a) Financial Highlights have been consolidated. | (a) Financial Highlights have been consolidated. | (a) Financial Highlights have been consolidated. | (a) Financial Highlights have been consolidated. | (a) Financial Highlights have been consolidated. |
| (b) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (b) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (b) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (b) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (b) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (b) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. |
| (c) Not annualized for periods less than one year. | (c) Not annualized for periods less than one year. | (c) Not annualized for periods less than one year. | (c) Not annualized for periods less than one year. | (c) Not annualized for periods less than one year. | (c) Not annualized for periods less than one year. |
| (d) Annualized for periods less than one year. | (d) Annualized for periods less than one year. | (d) Annualized for periods less than one year. | (d) Annualized for periods less than one year. | (d) Annualized for periods less than one year. | (d) Annualized for periods less than one year. |
| (e) Portfolio turnover rate excludes in-kind transactions. | (e) Portfolio turnover rate excludes in-kind transactions. | (e) Portfolio turnover rate excludes in-kind transactions. | (e) Portfolio turnover rate excludes in-kind transactions. | (e) Portfolio turnover rate excludes in-kind transactions. | (e) Portfolio turnover rate excludes in-kind transactions. |

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------

**Angel Oak UltraShort Income Fund – Class A**

**Financial Highlights**

**(For a share outstanding during each year)**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **For the Year Ended January 31,** | **For the Year Ended January 31,** | **For the Year Ended January 31,** | **For the Year Ended January 31,** | **For the Year Ended January 31,** |
| | **2026** | **2025** | **2024** | **2023** | **2022** |
| **Selected Per Share Data:** |  |  |  |  |  |
| Net asset value, beginning of year | $9.85 | $9.74 | $9.56 | $10.00 | $10.08 |
| **Income from investment operations:** |  |  |  |  |  |
| Net investment income (loss) | 0.47 | 0.49 | 0.36 | 0.12 | 0.08 |
| Net realized and unrealized gain (loss) on investments<sup>(a)</sup> | 0.02 | 0.12 | 0.24 | (0.36) | (0.05) |
| **Total from investment operations** | 0.49 | 0.61 | 0.60 | (0.24) | 0.03 |
| **Less distributions to shareholders:** |  |  |  |  |  |
| From net investment income | (0.46) | (0.50) | (0.42) | (0.20) | (0.11) |
| **Total distributions** | (0.46) | (0.50) | (0.42) | (0.20) | (0.11) |
| **Net asset value, end of year** | $9.88 | $9.85 | $9.74 | $9.56 | $10.00 |
| Total return<sup>(b)</sup> | 5.13% | 6.39% | 6.36% | -2.42% | 0.27% |
| **Ratios and Supplemental Data:** |  |  |  |  |  |
| Net assets, end of year (000's omitted) | $28375 | $25425 | $25439 | $39536 | $171328 |
| Ratio of expenses to average net assets before waiver and reimbursement/recoupment<sup>(c)</sup> | 0.80% | 0.84% | 0.84% | 0.79% | 0.78% |
| Ratio of expenses to average net assets after waiver and reimbursement/recoupment<sup>(c)</sup> | 0.60% | 0.60% | 0.60% | 0.60% | 0.56% |
| Ratio of net investment income (loss) to average net assets before waiver and reimbursement/recoupment<sup>(c)</sup> | 4.39% | 4.78% | 4.01% | 1.51% | 0.56% |
| Ratio of net investment income (loss) to average net assets after waiver and reimbursement/recoupment<sup>(c)</sup> | 4.59% | 5.02% | 4.25% | 1.70% | 0.78% |
| Portfolio turnover rate<sup>(b)</sup> | 76% | 92% | 46% | 31% | 92% |
| (a) Net realized and unrealized gain (loss) per share includes balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (a) Net realized and unrealized gain (loss) per share includes balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (a) Net realized and unrealized gain (loss) per share includes balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (a) Net realized and unrealized gain (loss) per share includes balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (a) Net realized and unrealized gain (loss) per share includes balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (a) Net realized and unrealized gain (loss) per share includes balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. |
| (b) Not annualized for periods less than one year. | (b) Not annualized for periods less than one year. | (b) Not annualized for periods less than one year. | (b) Not annualized for periods less than one year. | (b) Not annualized for periods less than one year. |  |
| (c) Annualized for periods less than one year. |  |  |  |  |  |

---

------

**Angel Oak UltraShort Income Fund – Class A1**

**Financial Highlights**

**(For a share outstanding during each year or period)** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **For the Year or Period Ended January 31,** | **For the Year or Period Ended January 31,** | **For the Year or Period Ended January 31,** | **For the Year or Period Ended January 31,** | **For the Year or Period Ended January 31,** |
| | **2026** | **2025** | **2024** | **2023**<sup>(a)</sup> | **2023**<sup>(a)</sup> |
| **Selected Per Share Data:** |  |  |  |  |  |
| Net asset value, beginning of year or period | $9.83 | $9.72 | $9.55 | $| 9.70 |
| **Income from investment operations:** |  |  |  |  |  |
| Net investment income (loss) | 0.44 | 0.50 | 0.42 | 0.13 | 0.13 |
| Net realized and unrealized gain (loss) on investments<sup>(b)</sup> | 0.05 | 0.11 | 0.17 | (0.14) | (0.14) |
| **Total from investment operations** | 0.49 | 0.61 | 0.59 | (0.01) | (0.01) |
| **Less distributions to shareholders:** |  |  |  |  |  |
| From net investment income | (0.46) | (0.50) | (0.42) | (0.14) | (0.14) |
| **Total distributions** | (0.46) | (0.50) | (0.42) | (0.14) | (0.14) |
| **Net asset value, end of year or period** | $9.86 | $9.83 | $9.72 | $| 9.55 |
| Total return<sup>(c)(d)</sup> | 5.14% | 6.40% | 6.27% | -0.25 | -0.25% |
| **Ratios and Supplemental Data:** |  |  |  |  |  |
| Net assets, end of year or period (000's omitted) | $871 | $1127 | $546 | $| 513 |
| Ratio of expenses to average net assets before waiver and reimbursement/recoupment<sup>(e)</sup> | 0.80% | 0.84% | 0.84% | 0.79 | 0.79% |
| Ratio of expenses to average net assets after waiver and reimbursement/recoupment<sup>(e)</sup> | 0.60% | 0.60% | 0.60% | 0.60 | 0.60% |
| Ratio of net investment income (loss) to average net assets before waiver and reimbursement/recoupment<sup>(e)</sup> | 4.37% | 4.81% | 4.08% | 2.32 | 2.32% |
| Ratio of net investment income (loss) to average net assets after waiver and reimbursement/recoupment<sup>(e)</sup> | 4.57% | 5.05% | 4.32% | 2.51 | 2.51% |
| Portfolio turnover rate<sup>(d)</sup> | 76% | 92% | 46% | 31%<sup>(f)</sup> | 31%<sup>(f)</sup> |
| (a) Class commenced operations on July 22, 2022. |  |  |  |  |  |
| (b) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. | (b) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. | (b) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. | (b) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. | (b) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. | (b) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. |
| (c) Total return does not include the effect of sales charges. | (c) Total return does not include the effect of sales charges. | (c) Total return does not include the effect of sales charges. | (c) Total return does not include the effect of sales charges. | (c) Total return does not include the effect of sales charges. | (c) Total return does not include the effect of sales charges. |
| (d) Not annualized for periods less than one year. | (d) Not annualized for periods less than one year. | (d) Not annualized for periods less than one year. | (d) Not annualized for periods less than one year. | (d) Not annualized for periods less than one year. | (d) Not annualized for periods less than one year. |
| (e) Annualized for periods less than one year. | (e) Annualized for periods less than one year. | (e) Annualized for periods less than one year. | (e) Annualized for periods less than one year. | (e) Annualized for periods less than one year. | (e) Annualized for periods less than one year. |
| (f) Figure presented represents turnover for the Fund as a whole for the entire fiscal period. | (f) Figure presented represents turnover for the Fund as a whole for the entire fiscal period. | (f) Figure presented represents turnover for the Fund as a whole for the entire fiscal period. | (f) Figure presented represents turnover for the Fund as a whole for the entire fiscal period. | (f) Figure presented represents turnover for the Fund as a whole for the entire fiscal period. | (f) Figure presented represents turnover for the Fund as a whole for the entire fiscal period. |

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**Angel Oak UltraShort Income Fund – Institutional Class**

**Financial Highlights**

**(For a share outstanding during each year)** 

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **For the Year Ended January 31,** | **For the Year Ended January 31,** | **For the Year Ended January 31,** | **For the Year Ended January 31,** | **For the Year Ended January 31,** | **For the Year Ended January 31,** |
| | **2026** | | **2025** | **2024** | **2023** | **2022** |
| **Selected Per Share Data:** |  |  |  |  |  |  |
| Net asset value, beginning of year | $9.85 |  | $9.74 | $9.56 | $10.01 | $10.09 |
| **Income from investment operations:** |  |  |  |  |  |  |
| Net investment income (loss) | 0.52 |  | 0.52 | 0.40 | 0.19 | 0.11 |
| Net realized and unrealized gain (loss) on investments<sup>(a)</sup> |  | <sup>(b)</sup> | 0.11 | 0.22 | (0.41) | (0.06) |
| **Total from investment operations** | 0.52 |  | 0.63 | 0.62 | (0.22) | 0.05 |
| **Less distributions to shareholders:** |  |  |  |  |  |  |
| From net investment income | (0.49) |  | (0.52) | (0.44) | (0.23) | (0.13) |
| **Total distributions** | (0.49) |  | (0.52) | (0.44) | (0.23) | (0.13) |
| **Net asset value, end of year** | $9.88 |  | $9.85 | $9.74 | $9.56 | $10.01 |
| Total return<sup>(c)</sup> | 5.39% |  | 6.66% | 6.64% | -2.24% | 0.51% |
| **Ratios and Supplemental Data:** |  |  |  |  |  |  |
| Net assets, end of year (000's omitted) | $775887 |  | $453868 | $428899 | $653848 | $1492542 |
| Ratio of expenses to average net assets before waiver and reimbursement/recoupment<sup>(d)</sup> | 0.55% |  | 0.59% | 0.59% | 0.54% | 0.53% |
| Ratio of expenses to average net assets after waiver and reimbursement/recoupment<sup>(d)</sup> | 0.35% |  | 0.35% | 0.35% | 0.35% | 0.31% |
| &nbsp;&nbsp;&nbsp;Ratio of net investment income (loss) to average net assets before waiver and reimbursement/recoupment<sup>(d)</sup> | 4.63% |  | 5.03% | 4.27% | 1.82% | 0.82% |
| &nbsp;&nbsp;&nbsp;Ratio of net investment income (loss) to average net assets after waiver and reimbursement/recoupment<sup>(d)</sup> | 4.83% |  | 5.27% | 4.51% | 2.01% | 1.04% |
| Portfolio turnover rate<sup>(c)</sup> | 76% |  | 92% | 46% | 31% | 92% |
| (a) Net realized and unrealized gain (loss) per share includes balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (a) Net realized and unrealized gain (loss) per share includes balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (a) Net realized and unrealized gain (loss) per share includes balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (a) Net realized and unrealized gain (loss) per share includes balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (a) Net realized and unrealized gain (loss) per share includes balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (a) Net realized and unrealized gain (loss) per share includes balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (a) Net realized and unrealized gain (loss) per share includes balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. |
| (b) Less than $0.005. | (b) Less than $0.005. | (b) Less than $0.005. | (b) Less than $0.005. | (b) Less than $0.005. | (b) Less than $0.005. | (b) Less than $0.005. |
| (c) Not annualized for periods less than one year. | (c) Not annualized for periods less than one year. | (c) Not annualized for periods less than one year. | (c) Not annualized for periods less than one year. | (c) Not annualized for periods less than one year. | (c) Not annualized for periods less than one year. | (c) Not annualized for periods less than one year. |
| (d) Annualized for periods less than one year. | (d) Annualized for periods less than one year. | (d) Annualized for periods less than one year. | (d) Annualized for periods less than one year. | (d) Annualized for periods less than one year. | (d) Annualized for periods less than one year. | (d) Annualized for periods less than one year. |

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**FOR MORE INFORMATION**

You can find additional information about the Funds in the following documents:

**Annual and Semi-Annual Reports and Form N-CSR:** While this Prospectus describes the Funds' potential investments, the Annual and Semi-Annual Reports (when available), and Form N-CSR, detail the Funds' actual investments as of their report dates. The <u>[Annual Report](https://www.sec.gov/ix?doc=/Archives/edgar/data/1612930/000113322826004853/aafs-efp23015_ncsr.htm)</u> includes a discussion by Fund management of recent market conditions, economic trends, and investment strategies that significantly affected Fund performance during the reporting period. In <u>[Form N-CSR](https://www.sec.gov/ix?doc=/Archives/edgar/data/1612930/000113322826004853/aafs-efp23015_ncsr.htm)</u>, you will find the Funds' annual and semi-annual financial statements.

**Statement of Additional Information (SAI):** The SAI supplements the Prospectus and contains detailed information about the Funds and their investment restrictions, risks, policies, and operations, including the Funds' policies and procedures relating to the disclosure of portfolio holdings by the Funds' affiliates. A current SAI for the Funds is on file with SEC and is incorporated into this Prospectus by reference, which means it is considered part of this Prospectus.

**How to Obtain Copies of Other Fund Documents**

You can obtain free copies of the current SAI and the Funds' Annual and Semi-Annual Reports (when available) and request other information about the Funds or make shareholder inquiries, in any of the following ways:

You can get free copies of the current Annual and Semi-Annual Reports (when available), as well as the SAI, by contacting the Funds at (855) 751-4324 or obtain a copy online at www.angeloakcapital.com. You may also request other information about the Funds and make shareholder inquiries. The requested documents will be sent within three business days of receipt of the request.

You may also obtain reports and other information about the Funds on the EDGAR Database on the SEC's website at <u>http://www.sec.gov</u>, and copies of this information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: <u>publicinfo@sec.gov</u>.

Investment Company Act No. 811-22980

Back Cover

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![AO Mutual Fund SAI Cover.jpg](ck0001612930-20260529_g4.jpg)

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**TABLE OF CONTENTS** 

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| | |
|:---|:---|
| [THE TRUST](#ic7050f6eedee432da472e11ef4d94486_7) | [2](#ic7050f6eedee432da472e11ef4d94486_7) |
| [INVESTMENT POLICIES AND RISKS](#ic7050f6eedee432da472e11ef4d94486_10) | [2](#ic7050f6eedee432da472e11ef4d94486_10) |
| [PORTFOLIO TURNOVER](#ic7050f6eedee432da472e11ef4d94486_13) | [24](#ic7050f6eedee432da472e11ef4d94486_13) |
| [INVESTMENT POLICIES](#ic7050f6eedee432da472e11ef4d94486_16) | [24](#ic7050f6eedee432da472e11ef4d94486_16) |
| [MANAGEMENT](#ic7050f6eedee432da472e11ef4d94486_19) | [27](#ic7050f6eedee432da472e11ef4d94486_19) |
| [CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES](#ic7050f6eedee432da472e11ef4d94486_22) | [35](#ic7050f6eedee432da472e11ef4d94486_22) |
| [PORTFOLIO TRANSACTIONS](#ic7050f6eedee432da472e11ef4d94486_25) | [39](#ic7050f6eedee432da472e11ef4d94486_25) |
| [DISCLOSURE OF PORTFOLIO HOLDINGS](#ic7050f6eedee432da472e11ef4d94486_28) | [41](#ic7050f6eedee432da472e11ef4d94486_28) |
| [PROXY VOTING POLICY](#ic7050f6eedee432da472e11ef4d94486_31) | [42](#ic7050f6eedee432da472e11ef4d94486_31) |
| [ADDITIONAL PURCHASE AND REDEMPTION INFORMATION](#ic7050f6eedee432da472e11ef4d94486_34) | [42](#ic7050f6eedee432da472e11ef4d94486_34) |
| [TAXATION](#ic7050f6eedee432da472e11ef4d94486_37) | [44](#ic7050f6eedee432da472e11ef4d94486_37) |
| [OTHER FUND SERVICE PROVIDERS](#ic7050f6eedee432da472e11ef4d94486_40) | [51](#ic7050f6eedee432da472e11ef4d94486_40) |
| [DISTRIBUTOR](#ic7050f6eedee432da472e11ef4d94486_43) | [52](#ic7050f6eedee432da472e11ef4d94486_43) |
| [DISTRIBUTION PLAN](#ic7050f6eedee432da472e11ef4d94486_46) | [53](#ic7050f6eedee432da472e11ef4d94486_46) |
| [OTHER MATTERS](#ic7050f6eedee432da472e11ef4d94486_49) | [53](#ic7050f6eedee432da472e11ef4d94486_49) |
| [FINANCIAL STATEMENTS](#ic7050f6eedee432da472e11ef4d94486_52) | [54](#ic7050f6eedee432da472e11ef4d94486_52) |
| [APPENDIX A – DESCRIPTION OF SECURITIES RATINGS](#ic7050f6eedee432da472e11ef4d94486_55) | A-[1](#ic7050f6eedee432da472e11ef4d94486_55) |

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**THE TRUST**

Angel Oak Funds Trust (the "Trust") is a Delaware statutory trust organized on June 20, 2014 and registered with the U.S. Securities and Exchange Commission (the "SEC") as an open-end management investment company. The Trust's Declaration of Trust (the "Declaration of Trust") permits the Trust's Board of Trustees (the "Board") to issue an unlimited number of full and fractional shares of beneficial interest, without par value, which may be issued in any number of series. The Board may from time to time issue other series, the assets and liabilities of which will be separate and distinct from any other series. This SAI relates to the Class A, Class A1, Class C, and Institutional Class shares of the Funds (as applicable), each a series of the Trust.

The Declaration of Trust also provides for indemnification and reimbursement of expenses out of a Fund's assets for any shareholder held personally liable for obligations of the Fund or the Trust. The Declaration of Trust provides that the Trust shall, upon request, assume the defense of any claim made against any shareholder for any act or obligation of a Fund or the Trust and satisfy any judgment thereon. All such rights are limited to the assets of the applicable Fund(s). The Declaration of Trust further provides that the Trust may maintain appropriate insurance (for example, fidelity bonding and errors and omissions insurance) for the protection of the Trust, its shareholders, trustees, officers, employees and agents to cover possible tort and other liabilities. However, the activities of the Trust as an investment company would not likely give rise to liabilities in excess of the Trust's total assets. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which both inadequate insurance exists and the applicable Funds are unable to meet their obligations. The Declaration of Trust also provides that shareholders of the Trust may not bring derivative actions, unless certain conditions are met, including, among other conditions: (i) shareholders make a pre-suit written demand upon the Board to bring the action, (ii) shareholders owning shares representing at least a majority of the outstanding applicable shares join the derivative action (except with respect to claims arising under the federal securities laws), and (iii) the Board is given a 30-day period to consider and investigate the request. In addition, if the Board determines that such an action is not in the best interest of the Trust or of a particular Fund or class, as applicable, then (except with respect to claims arising under the federal securities laws) the complaining shareholders may not bring the derivative action. In the event that the Board determines that the action should be brought, such action shall be brought directly by the Trust and not as a derivative action.

The Declaration of Trust also provides that the Trust shall not in any way be limited by any present or future law or custom in regard to investment by fiduciaries. However, nothing in the Declaration of Trust that modifies or restricts the duties or liabilities of the Trust's trustees shall apply to, or in any way limit, their duties or liabilities with respect to matters arising under the federal securities laws.

The Multi-Strategy Income Fund and UltraShort Income Fund are each diversified series of the Trust. Please see the Prospectus for a discussion of the principal investment policies and risks of investing in the Funds.

The Multi-Strategy Income Fund is the successor in interest to a fund having the same name and investment objective that was included as a series (the "Predecessor Multi-Strategy Income Fund") of another investment company, Valued Advisers Trust (the "VAT Trust"), and that was also advised by the Fund's investment adviser, Angel Oak Capital Advisors, LLC. On March 26, 2015, the shareholders of the Predecessor Multi-Strategy Income Fund approved the reorganization of the Class A and Institutional Class shares of the Predecessor Multi-Strategy Income Fund with and into the Class A and Institutional Class shares of the Multi-Strategy Income Fund, respectively, and effective as of the close of business on April 10, 2015, the assets and liabilities of the Class A and Institutional Class shares of the Predecessor Multi-Strategy Income Fund were transferred to the Trust in exchange for the Class A and Institutional Class shares of the Multi-Strategy Income Fund.

The Funds' Prospectus and this SAI are a part of the Trust's Registration Statement filed with the SEC. Copies of the Trust's complete Registration Statement may be obtained from the SEC upon payment of the prescribed fee or may be accessed free of charge at the SEC's website at www.sec.gov.

**INVESTMENT POLICIES AND RISKS**

The Funds' principal investment strategies and the risks associated with the same are described in the "Fund Summary" and "Additional Information About the Funds' Objectives, Principal Investment Strategies, and Principal Investment Risks" sections of the Prospectus. The following discussion provides additional information about those principal investment strategies and related risks, as well as information about investment strategies (and related risks) that the Funds may utilize, even though they are not considered to be "principal" investment strategies. Accordingly, an investment strategy (and related risk) that is described below, but which is not described in the Prospectus with respect to a Fund, should not be considered to be a principal strategy (or related risk) applicable to the Fund.

**<u>Corporate Debt Securities</u>.** Corporate debt securities are long- and short-term debt obligations issued by companies (such as publicly issued and privately placed bonds, notes and commercial paper). The Funds' investment adviser, Angel Oak Capital Advisors, LLC ("Angel Oak" or the "Adviser"), considers corporate debt securities to be of investment grade quality if they are

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rated BBB- or higher by S&P Global Ratings ("S&P") or an equivalent rating from another Nationally Recognized Statistical Ratings Organization, or if unrated, determined by the Adviser to be of comparable quality. Investment grade debt securities generally have adequate to strong protection of principal and interest payments. In the lower end of this category, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal than in higher rated categories. For additional information about these rating rankings, see Appendix A - Description of Securities Ratings.

**<u>Mortgage-Backed and Asset-Backed Securities</u>.** The Funds may invest in mortgage-backed and asset-backed securities. Mortgage-backed securities are mortgage-related securities issued or guaranteed by the U.S. government, its agencies and instrumentalities, or issued by non-government entities. Mortgage-related securities represent ownership in pools of mortgage loans assembled for sale to investors by various government agencies such as the Government National Mortgage Association ("GNMA") and government-related organizations such as the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation ("FHLMC"), as well as by nongovernment issuers such as commercial banks, savings and loan institutions, mortgage bankers and private mortgage insurance companies. Although certain mortgage-related securities are guaranteed by a third party or otherwise similarly secured, the market value of the security, which may fluctuate, is not so secured. These securities differ from conventional bonds in that the principal is paid back to the investor as payments are made on the underlying mortgages in the pool. Accordingly, the Funds receive monthly scheduled payments of principal and interest along with any unscheduled principal prepayments on the underlying mortgages. Because these scheduled and unscheduled principal payments must be reinvested at prevailing interest rates, mortgage-backed securities do not provide an effective means of locking in long-term interest rates for the investor.

In addition, there are a number of important differences among the agencies and instrumentalities of the U.S. government that issue mortgage-related securities and among the securities they issue. Mortgage-related securities issued by GNMA include GNMA Mortgage Pass-Through Certificates (also known as Ginnie Maes) which are guaranteed as to the timely payment of principal and interest. That guarantee is backed by the full faith and credit of the U.S. Treasury. GNMA is a corporation wholly owned by the U.S. government within the Department of Housing and Urban Development. Mortgage-related securities issued by FNMA include FNMA Guaranteed Mortgage Pass-Through Certificates (also known as Fannie Maes) and are guaranteed as to payment of principal and interest by FNMA itself and backed by a line of credit with the U.S. Treasury. FNMA is a government-sponsored entity wholly owned by public stockholders. Mortgage-related securities issued by FHLMC include FHLMC Mortgage Participation Certificates (also known as Freddie Macs) guaranteed as to payment of principal and interest by FHLMC itself and backed by a line of credit with the U.S. Treasury. FHLMC is a government-sponsored entity wholly owned by public stockholders.

In September 2008, the Federal Housing Finance Agency ("FHFA") placed Fannie Mae and Freddie Mac into conservatorship. As the conservator, FHFA succeeded to all rights, titles, powers and privileges of Fannie Mae and Freddie Mac and of any stockholder, officer or director of Fannie Mae and Freddie Mac with respect to Fannie Mae and Freddie Mac and the assets of Fannie Mae and Freddie Mac. In connection with the conservatorship, the U.S. Treasury entered into a Senior Preferred Stock Purchase Agreement (SPA) with each of Fannie Mae and Freddie Mac pursuant to which the U.S. Treasury agreed to purchase up to 1,000,000 shares of senior preferred stock with an aggregate initial liquidation preference of $1 billion and obtained warrants and options for the purchase of common stock of each of Fannie Mae and Freddie Mac. Under the SPAs as currently amended, the U.S. Treasury has pledged to provide financial support to a government-sponsored enterprise ("GSE") in any quarter in which the GSE has a net worth deficit as defined in the respective SPA.

The conditions attached to entering into the SPAs place significant restrictions on the activities of Freddie Mac and Fannie Mae. Freddie Mac and Fannie Mae must obtain the consent of the U.S. 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 the senior preferred stock, (ii) issue capital stock of any kind, (iii) terminate the conservatorship of the FHFA except in connection with a receivership, or (iv) increase its debt beyond certain specified levels. Under a letter agreement entered into in January 2021, each enterprise is permitted to retain earnings and raise private capital to enable them to meet the minimum capital requirements under the FHFA's Enterprise Regulatory Capital Framework ("ERCF"). The letter agreement also permits each enterprise to develop a plan to exit conservatorship, but may not do so until litigation involving the conservatorships is resolved and each enterprise has the minimum capital required by FHFA's rules. In addition, significant restrictions are placed on the maximum size of each of Freddie Mac's and Fannie Mae's respective portfolios of mortgages and mortgage-backed securities, and the purchase agreements entered into by Freddie Mac and Fannie Mae provide that the maximum size of their portfolios of these assets must decrease by a specified percentage each year. The future status and role of Freddie Mac and Fannie Mae could be impacted by (among other things) the actions taken and restrictions placed on Freddie Mac and Fannie Mae by the FHFA in its role as conservator, the restrictions placed on Freddie Mac's and Fannie Mae's operations and activities as a result of the senior preferred stock investment made by the U.S. Treasury, market responses to developments at Freddie Mac and Fannie Mae, and future legislative and regulatory action that alters the operations, ownership, structure and/or mission of these institutions, each of which may, in turn, impact the 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 a Fund.

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Fannie Mae and Freddie Mac are continuing to operate as going concerns while in conservatorship and each remain liable for all of its obligations, including its guaranty obligations, associated with its mortgage-backed securities. The SPAs are intended to enhance each of Fannie Mae's and Freddie Mac's ability to meet its obligations. The FHFA has indicated that the conservatorship of each enterprise will end when the director of the FHFA determines that the FHFA's plan to restore the enterprise to a safe and solvent condition has been completed. Under amendments to the ERCF, Fannie Mae and Freddie Mac have published capital disclosures which provide additional information about their capital position and capital requirements on a quarterly basis since the first quarter of 2023 and delivered their first capital plans to FHFA in May 2023. The FHFA finalized amendments to certain provisions of the ERCF in November 2023 that modify various capital requirements for Freddie Mac and Fannie Mae. Should Fannie Mae and Freddie Mac be taken out of conservatorship, it is unclear whether the U.S. Treasury would continue to enforce its rights or perform its obligations under the SPAs. It is also unclear how the capital structure of Fannie Mae and Freddie Mac would be constructed post-conservatorship, and what effects, if any, the privatization of Fannie Mae and Freddie Mac will have on their creditworthiness and guarantees of certain mortgage-backed securities. The ERCF requires Fannie Mae and Freddie Mac, upon exit from conservatorship, to maintain higher levels of capital than prior to conservatorship to satisfy their risk-based capital requirements, leverage ratio requirements and prescribed buffer amounts. Accordingly, should the FHFA take Fannie Mae and Freddie Mac out of conservatorship, there could be an adverse impact on the value of their securities which could cause the Funds' investments to lose value.

Asset-backed securities are structured like mortgage-backed securities, but instead of mortgage loans or interests in mortgage loans, the underlying assets may include such items as motor vehicle installment sales contracts or installment loan contracts, leases of various types of real and personal property, and receivables from credit card agreements and from sales of personal property. Regular payments received on asset-backed securities include both interest and principal. Asset-backed securities typically have no U.S. government backing. Additionally, the ability of an issuer of asset-backed securities to enforce its security interest in the underlying assets may be limited.

If the Funds purchase a mortgage-backed or other asset-backed security at a premium, the premium may be lost if there is a decline in the market value of the security whether resulting from changes in interest rates or prepayments in the underlying collateral. As with other interest-bearing securities, the prices of such securities are inversely affected by changes in interest rates. Although the value of a mortgage-backed or other asset-backed security may decline when interest rates rise, the converse is not necessarily true, since in periods of declining interest rates the mortgages and loans underlying the securities are prone to prepayment, thereby shortening the average life of the security and shortening the period of time over which income at the higher rate is received. When interest rates are rising, the rate of prepayment tends to decrease, thereby lengthening the period of time over which income at the lower rate is received. For these and other reasons, a mortgage-backed or other asset-backed security's average maturity may be shortened or lengthened as a result of interest rate fluctuations and, therefore, it is not possible to predict accurately the security's return. In addition, while the trading market for short-term mortgages and asset-backed securities is ordinarily quite liquid, in times of financial stress the trading market for these securities may become restricted.

**<u>Collateralized Mortgage Obligations ("CMOs")</u>.** The Funds may invest in CMOs. A CMO is a hybrid between a mortgage-backed bond and a mortgage pass-through security. A CMO is a type of mortgage-backed security that creates separate classes with varying maturities and interest rates, called tranches. Similar to a bond, interest and prepaid principal is paid, in most cases, semiannually. CMOs may be collateralized by whole mortgage loans, but are more typically collateralized by portfolios of mortgage pass-through securities guaranteed by GNMA, FHLMC, or FNMA, and their income streams.

CMOs are structured into multiple classes, each bearing a different fixed or floating interest rate and stated maturity. Actual maturity and average life will depend upon the prepayment experience of the collateral. CMOs provide for a modified form of call protection through a de facto breakdown of the underlying pool of mortgages according to how quickly the loans are repaid. Monthly payment of principal received from the pool of underlying mortgages, including prepayments, is first returned to investors holding the shortest maturity class. Investors holding the longer maturity classes receive principal only after the first class has been retired. An investor is partially guarded against a sooner than desired return of principal because of the sequential payments.

In a typical CMO transaction, a corporation (issuer) issues multiple series (e.g., Series A, B, C and Z) of CMO bonds (Bonds). Proceeds of the Bond offering are used to purchase mortgages or mortgage pass-through certificates (Collateral). The Collateral is pledged to a third party trustee as security for the Bonds. Principal and interest payments from the Collateral are used to pay principal on the Bonds in the following order: Series A, B, C and Z. The Series A, B, and C Bonds all bear current interest. Interest on a Series Z Bond is accrued and added to principal and a like amount is paid as principal on the Series A, B, or C Bond currently being paid off. Only after the Series A, B, and C Bonds are paid in full does the Series Z Bond begin to receive payment. With some CMOs, the issuer serves as a conduit to allow loan originators (primarily builders or savings and loan associations) to borrow against their loan portfolios.

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CMOs that are issued or guaranteed by the U.S. government or by any of its agencies or instrumentalities will be considered U.S. government securities by the Funds, while other CMOs, even if collateralized by U.S. government securities, will have the same status as other privately issued securities for purposes of applying the Funds' diversification tests.

FHLMC CMOs are debt obligations of FHLMC issued in multiple classes having different maturity dates which are secured by the pledge of a pool of conventional mortgage loans purchased by FHLMC. Payments of principal and interest on the FHLMC CMOs are made semiannually. The amount of principal payable on each semiannual payment date is determined in accordance with FHLMC's mandatory sinking fund schedule, which, in turn, is equal to approximately 100% of FHA prepayment experience applied to the mortgage collateral pool. All sinking fund payments in the FHLMC CMOs are allocated to the retirement of the individual classes of bonds in the order of their stated maturities. Payment of principal on the mortgage loans in the collateral pool in excess of the amount of FHLMC's minimum sinking fund obligation for any payment date are paid to the holders of the FHLMC CMOs as additional sinking fund payments. Because of the "pass-through" nature of all principal payments received on the collateral pool in excess of FHLMC's minimum sinking fund requirement, the rate at which principal of the FHLMC CMOs is actually repaid is likely to be such that each class of bonds will be retired in advance of its scheduled maturity date. If collection of principal (including prepayments) on the mortgage loans during any semiannual payment period is not sufficient to meet FHLMC CMO's minimum sinking fund obligation on the next sinking fund payment date, FHLMC agrees to make up the deficiency from its general funds.

Classes of CMOs may also include interest only ("IOs") and principal only ("POs"). IOs and POs are stripped mortgage-backed securities representing interests in a pool of mortgages the cash flow from which has been separated into interest and principal components. IOs (interest only securities) receive the interest portion of the cash flow while POs (principal only securities) receive the principal portion. IOs and POs can be extremely volatile in response to changes in interest rates. As interest rates rise and fall, the value of IOs tends to move in the same direction as interest rates. POs perform best when prepayments on the underlying mortgages rise since this increases the rate at which the investment is returned and the yield to maturity on the PO. When payments on mortgages underlying a PO are slow, the life of the PO is lengthened and the yield to maturity is reduced.

CMOs are generally subject to the same risks as mortgage-backed securities. In addition, CMOs may be subject to credit risk because the issuer or credit enhancer has defaulted on its obligations and the Funds may not receive all or part of its principal. Obligations issued by U.S. government-related entities are guaranteed as to the payment of principal and interest, but are not backed by the full faith and credit of the U.S. government. The performance of private label mortgage-backed securities, issued by private institutions, is based on the financial health of those institutions. Although GNMA guarantees timely payment of GNMA certificates even if homeowners delay or default, tracking the "pass-through" payments may, at times, be difficult.

**<u>Collateralized Debt Obligations ("CDOs")</u>.** The Funds may invest in CDOs. A CDO is a security backed by a pool of bonds, loans and other debt obligations. CDOs are not limited to investing in one type of debt and accordingly, a CDO may own corporate bonds, commercial loans, asset-backed securities, residential mortgage-backed securities, commercial mortgage-backed securities, and emerging market debt. The CDO's securities are typically divided into several classes, or bond tranches, that have differing levels of investment grade or credit tolerances. Most CDO issues are structured in a way that enables the senior bond classes and mezzanine classes to receive investment-grade credit ratings. Credit risk is shifted to the most junior class of securities. If any defaults occur in the assets backing a CDO, the senior bond classes are first in line to receive principal and interest payments, followed by the mezzanine classes and finally by the lowest rated (or non-rated) class, which is known as the equity tranche. Similar in structure to a collateralized mortgage obligation (described above) CDOs are unique in that they represent different types of debt and credit risk.

**<u>Collateralized Loan Obligations ("CLOs")</u>.** The Funds may invest in CLOs, which are debt instruments typically backed by a pool of loans. The risks of an investment in a CLO depend largely on the type of the collateral securities and the class of the CLO in which the Funds invest. Some CLOs have credit ratings, but are typically issued in various classes with various priorities. Normally, CLOs are privately offered and sold (that is, they are not registered under the securities laws) and may be characterized by the Funds as illiquid investments; however, an active dealer market may exist for CLOs that qualify for Rule 144A transactions. In addition to the normal interest rate, default and other risks of fixed income securities, CLOs carry additional risks, including the possibility that distributions from collateral securities will not be adequate to make interest or other payments, the quality of the collateral may decline in value or default, the Funds may invest in CLOs that are subordinate to other classes, values may be volatile, and disputes with the issuer may produce unexpected investment results.

**<u>Collateralized Fund Obligations ("CFOs")</u>** (*Multi-Strategy Income Fund only*). The Fund may invest in CFOs. A CFO is a security that is collateralized by private fund interests and other assets. A CFO issuer's securities are typically divided into several classes, or tranches. The most senior tranche of notes will have the highest rating. Each successive tranche (other than the most junior tranche) will correspond to notes that are more junior to, and lower rated than, the immediately prior (i.e., more senior) tranche. The most subordinated tranche will be an equity tranche. Accordingly, the returns on tranches, in turn, can vary in line with gains or losses on the underlying investments. This tranched capital structure allows the investors in a CFO issuer to

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determine their preferred risk/return investments. Since many private fund interests do not have specified or consistent periodic payments, the timing of payments to investors in a CFO can be difficult to predict. CFOs are also generally subject to the same risks as the underlying private funds and other assets.

**<u>ESG Integration</u>**. As part of its investment process, the Adviser also considers certain environmental, social and governance ("ESG") and sustainability factors that it believes could have a material impact on certain securities in which the Funds may invest. These determinations may not be conclusive, and securities that may be negatively impacted by such factors may be purchased and retained by the Funds while the Funds may divest or not invest in securities that may be positively impacted by such factors.

In evaluating a security's ESG and sustainability factors, the Adviser will use its own proprietary assessments of such factors and may also reference standards as set forth by recognized global organizations, including the United Nations' Sustainable Development Goals ("UN SDGs") and the United Nations' Principles for Responsible Investing ("UN PRI"). Examples of the types of factors the Adviser may consider include, without limitation: environmental issues, such as carbon emissions and energy efficiency; social issues, such as affordable housing and community investment; and corporate governance issues, such as board independence. The Funds may also invest in other investment companies that focus on ESG and sustainability factors. ESG and sustainability factors will not be considered with respect to investments in U.S. Treasury and U.S. government agency securities, money market instruments, and derivatives. The Adviser's consideration of certain ESG and sustainability factors when making investment decisions may affect a Fund's performance relative to that of funds that do not consider ESG and sustainability factors.

**<u>Banks and Diversified Financials Risk</u>.** Companies in the group of industries related to banks and diversified financials are often subject to extensive governmental regulation and intervention, which may adversely affect the scope of their activities, the prices they can charge and the amount of capital they must maintain. Governmental regulation may change frequently and may have significant adverse consequences for companies in the group of industries related to banks and diversified financials, including effects not intended by such regulation. The impact of recent or future regulation in various countries on any individual financial company or on the industries as a whole cannot be predicted. A Fund's emphasis on community banks may make the Fund more economically vulnerable in the event of a downturn in the banking industry. Community banks may face heightened risks of failure during times of economic downturns than larger banks. Community banks may also be subject to greater lending risks than larger banks.

Certain risks may impact the value of investments in the group of industries related to banks and diversified financials more severely than those of investments outside these industries, including the risks associated with companies that operate with substantial financial leverage. Companies in the group of industries related to banks and diversified financials may also be adversely affected by increases in interest rates and loan losses, decreases in the availability of money or asset valuations, credit rating downgrades and adverse conditions in other related markets.

Insurance companies, in particular, may be subject to severe price competition and/or rate regulation, which may have an adverse impact on their profitability. Insurance companies are subject to extensive government regulation in some countries and can be significantly affected by changes in interest rates, general economic conditions, price and marketing competition, the imposition of premium rate caps, or other changes in government regulation or tax law. Different segments of the insurance industry can be significantly affected by mortality and morbidity rates, environmental clean-up costs and catastrophic events such as earthquakes, hurricanes and terrorist acts.

During the financial crisis that began in 2007, the deterioration of the credit markets impacted a broad range of mortgage, asset-backed, auction rate, sovereign debt and other markets, including U.S. and non-U.S. credit and interbank money markets, thereby affecting a wide range of financial institutions and markets. A number of large financial institutions failed during that time, merged with stronger institutions or had significant government infusions of capital. Instability in the financial markets caused certain financial companies to incur large losses. Some financial companies experienced declines in the valuations of their assets, took actions to raise capital (such as the issuance of debt or equity securities), or even ceased operations. Some financial companies borrowed significant amounts of capital from government sources and may face future government-imposed restrictions on their businesses or increased government intervention. Those actions caused the securities of many financial companies to decline in value.

The group of industries related to banks and diversified financials is also a target for cyber attacks and may experience technology malfunctions and disruptions. In recent years, cyber attacks and technology failures have become increasingly frequent and have caused significant losses.

Risks specific to the bank and diversified financial group of industries also may include:

***Asset Quality and Credit Risk.*** When financial institutions loan money, commit to loan money or enter into a letter of credit or other contract with a counterparty, they incur credit risk, or the risk of losses if their borrowers do not repay their

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loans or their counterparties fail to perform according to the terms of their contract. The financial companies in which a Fund will invest offer a number of products which expose them to credit risk, including loans, leases and lending commitments, derivatives, trading account assets and assets held-for-sale. Financial institutions allow for and create loss reserves against credit risks based on an assessment of credit losses inherent in their credit exposure (including unfunded credit commitments). This process, which is critical to their financial results and condition, requires difficult, subjective and complex judgments, including forecasts of economic conditions and how these economic predictions might impair the ability of their borrowers to repay their loans. As is the case with any such assessments, there is always the chance that the financial institutions in which a Fund invests will fail to identify the proper factors or that they will fail to accurately estimate the impacts of factors that they identify. Failure to identify credit risk factors or the impact of credit factors may result in increased non-performing assets, which will result in increased loss reserve provisioning and reduction in earnings. Poor asset quality can also affect earnings through reduced interest income which can impair a bank's ability to service debt obligations or to generate sufficient income for equity holders. Bank failure may result due to inadequate loss reserves, inadequate capital to sustain credit losses or reduced earnings due to non-performing assets. A Fund will not have control over the asset quality of the financial institutions in which the Fund will invest, and these institutions may experience substantial increases in the level of their non-performing assets which may have a material adverse impact on the Fund's investments.

***Capital Risk.*** A bank's capital position is extremely important to its overall financial condition and serves as a cushion against losses. U.S. banking regulators have established specific capital requirements for regulated banks. Federal banking regulators proposed amended regulatory capital regulations in response to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") and the international capital and liquidity requirements set forth by the Basel Committee on Banking Supervision ("Basel III") protocols which would impose even more stringent capital requirements. In the event that a regulated bank falls below certain capital adequacy standards, it may become subject to regulatory intervention including, but not limited to, being placed into a FDIC-administered receivership or conservatorship. The regulatory provisions under which the regulatory authorities act are intended to protect depositors. The deposit insurance fund and the banking system are not intended to protect stockholders or other investors in other securities issued by a bank or its holding company. The effect of inadequate capital can have a potentially adverse consequence on the institution's financial condition, its ability to operate as a going concern and its ability to operate as a regulated financial institution and may have a material adverse impact on a Fund's investments.

***Earnings Risk.*** Earnings are the primary means for financial institutions to generate capital to support asset growth, to provide for loan losses and to support their ability to pay dividends to stockholders. The quantity as well as the quality of earnings can be affected by excessive or inadequately managed credit risk that may result in losses and require additions to loss reserves, or by high levels of market risk that may unduly expose an institution's earnings to volatility in interest rates. The quality of earnings may also be diminished by undue reliance on extraordinary gains, nonrecurring events, or favorable tax effects. Future earnings may be adversely affected by an inability to forecast or control funding and operating expenses, net interest margin compression improperly executed or ill-advised business strategies, or poorly managed or uncontrolled exposure to other risks. Deficient earnings can result in inadequate capital resources to support asset growth or insufficient cash flow to meet the financial institution's near term obligations. Under certain circumstances, this may result in the financial institution being required to suspend operations or the imposition of a cease-and-desist order by regulators which could potentially impair a Fund's investments.

***Management Risk.*** The ability of management to identify, measure, monitor and control the risks of an institution's activities and to ensure a financial institution's safe, sound and efficient operation in compliance with applicable laws and regulations are critical. Depending on the nature and scope of an institution's activities, management practices may need to address some or all of the following risks: credit, market, operating, reputation, strategic, compliance, legal, liquidity and other risks. A Fund will not have direct or indirect control over the management of the financial institutions in which the Fund will invest and, given the Funds' long-term investment strategies, it is likely that the management teams and their policies may change. The inability of management to operate their financial institution in a safe, sound and efficient manner in compliance with applicable laws and regulations, or changes in management of financial institutions in which a Fund invests, may have an adverse impact on the Fund's investment.

***Litigation Risk.*** Financial institutions face significant legal risks in their businesses, and the volume of claims and amount of damages and penalties claimed in litigation and regulatory proceedings against financial institutions remain high. Substantial legal liability or significant regulatory action against the companies in which a Fund invests could have material adverse financial effects or cause significant reputational harm to these companies, which in turn could seriously harm their business prospects. Legal liability or regulatory action against the companies in which a Fund invests could have material adverse financial effects on the Fund and adversely affect the Fund's earnings and book value.

***Market Risk.*** The financial institutions in which a Fund may invest are directly and indirectly affected by changes in market conditions. Market risk generally represents the risk that values of assets and liabilities or revenues will be adversely affected by changes in market conditions. Market risk is inherent in the financial instruments associated with the operations

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and activities including loans, deposits, securities, short-term borrowings, long-term debt, trading account assets and liabilities, and derivatives of the financial institutions in which a Fund may invest. Market risk includes, but is not limited to, fluctuations in interest rates, equity and futures prices, changes in the implied volatility of interest rates, equity and futures prices and price deterioration or changes in value due to changes in market perception or actual credit quality of the issuer. Accordingly, depending on the instruments or activities impacted, market risks can have wide ranging, complex adverse effects on the operations and overall financial condition of the financial institutions in which a Fund may invest as well as adverse effects on the Fund's results from operations and overall financial condition.

***Monetary Policy Risk.*** Monetary policies have had, and will continue to have, significant effects on the operations and results of financial institutions. There can be no assurance that a particular financial institution will not experience a material adverse effect on its net interest income in a changing interest rate environment. Factors such as the liquidity of the global financial markets, and the availability and cost of credit may significantly affect the activity levels of customers with respect to the size, number and timing of transactions. Fluctuation in interest rates, which affect the value of assets and the cost of funding liabilities, are not predictable or controllable, may vary and may impact economic activity in various regions.

***Competition.*** The group of industries related to banks and diversified financials, including the banking sector, is extremely competitive, and it is expected that the competitive pressures will increase. Merger activity in the financial services industry has resulted in, and is expected to continue to result in, larger institutions with greater financial and other resources that are capable of offering a wider array of financial products and services. The group of industries related to banks and diversified financials has become considerably more concentrated as numerous financial institutions have been acquired by or merged into other institutions. The majority of financial institutions in which a Fund may invest will be relatively small with significantly fewer resources and capabilities than larger institutions; this size differential puts them at a competitive disadvantage in terms of product offering and access to capital. Technological advances and the growth of e-commerce have made it possible for non-financial institutions and non-bank financial institutions to offer products and services that have traditionally been offered by banking and other financial institutions. It is expected that the cross-industry competition and inter-industry competition will continue to intensify and may be adverse to the financial institutions in which the Funds may invest.

***Regulatory Risk.*** Financial institutions, including community banks, are subject to various state and federal banking regulations that impact how they conduct business, including but not limited to how they obtain funding, their ability to operate, and the value of a Fund's investments. Changes to these regulations could have an adverse effect on their operations and operating results and the Funds' investments. The Funds expect to make long-term investments in financial institutions that are subject to various state and federal regulations and oversight. Congress, state legislatures and the various bank regulatory agencies frequently introduce proposals to change the laws and regulations governing the banking industry in response to the Dodd-Frank Act, Consumer Financial Protection Bureau ("CFPB") rulemaking or otherwise. The likelihood and timing of any proposals or legislation and the impact they might have on a Fund's investments in financial institutions affected by such changes cannot be determined and any such changes may be adverse to the Fund's investments. Ownership of the stock of certain types of regulated banking institutions may subject a Fund to additional regulations. Investments in banking institutions and transactions related to the Fund's investments may require approval from one or more regulatory authorities. If a Fund were deemed to be a bank holding company or thrift holding company, bank holding companies or thrift holding companies that invest in the Fund would be subject to certain restrictions and regulations.

**<u>Certificates of Deposit ("CDs").</u>** The Funds may invest in CDs. CDs are negotiable certificates issued against funds deposited in a commercial bank for a definite period of time and earn a specified return. CDs are subject to inflation, liquidity, and interest rate risks. CDs are also subject to the risk of incurring monetary penalties if withdrawn within a certain period of time. CDs are also subject to the risk of the failure of the issuing bank.

**<u>Credit Linked Notes ("CLNs")</u>.** The Funds may invest in CLNs. A CLN is a security with an embedded credit default swap allowing the issuer to transfer a specific credit risk to credit investors.

**<u>Commercial Real Estate Risk</u>** (*Multi-Strategy Income Fund only*). Exposure to commercial real estate comes with a variety of risks, including declines in the value of (or income generated by) real estate, risks related to general and local economic conditions, possible lack of availability of mortgage funds or other limits to accessing the credit or capital markets, defaults by borrowers or tenants (particularly during an economic downturn), and changes in interest rates. Any of these situations may result in extended periods during which there is a significant decline in the revenues and net income (or no revenues or net income) generated by a property. If this occurred, it could adversely affect the Fund's performance.

**<u>Convertible Securities</u>.** The Funds may invest in convertible securities which are preferred stocks or bonds that pay a fixed dividend or interest payment and are convertible into common stock or other equity interests at a specified price or conversion ratio during a specified period. Although convertible bonds, convertible preferred stocks, and other securities convertible into equity securities may have some attributes of income securities or debt securities, the Funds generally treat such securities as

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equity securities. By investing in convertible securities, the Funds may seek income, and may also seek the opportunity, through the conversion feature, to participate in the capital appreciation of the common stock or other interests into which the securities are convertible, while potentially earning a higher fixed rate of return than is ordinarily available in common stocks. While the value of convertible securities depends in part on interest rate changes and the credit quality of the issuers, the value of these securities will also change based on changes in the value of the underlying stock. Income paid by a convertible security may provide a limited cushion against a decline in the price of the security; however, convertible securities generally have less potential for gain than common stocks. Also, convertible bonds generally pay less income than non-convertible bonds.

The Funds may invest in contingent securities structured as contingent convertible securities, also known as "CoCos." Contingent convertible securities are hybrid debt securities typically issued by non-U.S. banks and are designed to behave like bonds in times of economic health and either convert into equity at a predetermined share price or are written down in value based on the specific terms of the individual security if a pre-specified trigger event occurs. Unlike traditional convertible securities, the conversion of a contingent convertible security from debt to equity is "contingent" and will occur only in the case of a trigger event. Trigger events vary by instrument and are defined by the documents governing the contingent convertible security. Trigger events may include a decline in the issuer's capital below a specified threshold level, increase in the issuer's risk weighted assets, the share price of the issuer falling to a particular level for a certain period of time and certain regulatory events.

Contingent convertible securities are subject to the credit, interest rate, high yield security, foreign security and markets risks associated with bonds and equities, and to the risks specific to convertible securities in general. Contingent convertible securities are also subject to additional risks specific to their structure including conversion risk. Because trigger events are not consistently defined among contingent convertible securities, this risk is greater for contingent convertible securities that are issued by banks with capital ratios close to the level specified in the trigger event.

In addition, coupon payments on contingent convertible securities are discretionary and may be cancelled by the issuer at any point, for any reason, and for any length of time. Due to the uncertainty surrounding coupon payments, contingent convertible securities may be volatile and their price may decline rapidly in the event that coupon payments are suspended.

Convertible contingent securities are a newer form of instrument and the regulatory environment for these instruments continues to evolve. Because the market for contingent convertible securities is evolving, it is uncertain how the larger market for contingent convertible securities would react to a trigger event or coupon suspension applicable to a single issuer.

**<u>Foreign Securities</u>*.*** The Funds may invest directly in foreign securities. Investing in securities of foreign companies and countries involves certain considerations and risks that are not typically associated with investing in U.S. government securities and securities of domestic companies. There may be less publicly available information about a foreign issuer than a domestic one, and foreign companies are not generally subject to uniform accounting, auditing and financial standards and requirements comparable to those applicable to U.S. companies. There may also be less government supervision and regulation of foreign securities exchanges, brokers and listed companies than exists in the United States. Interest and dividends paid by foreign issuers as well as gains or proceeds realized from the sale or other disposition of foreign securities may be subject to withholding and other foreign taxes, which may decrease the net return on such investments as compared to dividends and interest paid to the Funds by domestic companies or the U.S. government. There may be the possibility of expropriations, seizure or nationalization of foreign deposits, the imposition of economic sanctions and other similar measures, confiscatory taxation, political, economic or social instability or diplomatic developments that could affect assets of the Funds held in foreign countries. The type and severity of sanctions and other similar measures, including counter sanctions and other retaliatory actions, that may be imposed could vary broadly in scope, and their impact is difficult to ascertain. These types of measures may include, but are not limited to, banning a sanctioned country or certain persons or entities associated with such country from global payment systems that facilitate cross-border payments, restricting the settlement of securities transactions by certain investors, and freezing the assets of particular countries, entities or persons. The imposition of sanctions and other similar measures could, among other things, result in a decline in the value and/or liquidity of securities issued by the sanctioned country or companies located in or economically tied to the sanctioned country, downgrades in the credit ratings of the sanctioned country's securities or those of companies located in or economically tied to the sanctioned country, currency devaluation or volatility, and increased market volatility and disruption in the sanctioned country and throughout the world. Sanctions and other similar measures could directly or indirectly limit or prevent a Fund from buying and selling securities (in the sanctioned country and other markets), significantly delay or prevent the settlement of securities transactions, and adversely impact a Fund's liquidity and performance. In addition, investing in foreign securities will generally result in higher commissions than investing in similar domestic securities.

Decreases in the value of currencies of the foreign countries in which the Funds will invest relative to the U.S. dollar will result in a corresponding decrease in the U.S. dollar value of the Funds' assets denominated in those currencies (and possibly a corresponding increase in the amount of securities required to be liquidated to meet distribution requirements). Conversely, increases in the value of currencies of the foreign countries in which the Funds invest relative to the U.S. dollar will result in a

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corresponding increase in the U.S. dollar value of the Funds' assets (and possibly a corresponding decrease in the amount of securities to be liquidated).

Investing in emerging markets can have more risk than investing in developed foreign markets. The risks of investing in these markets may be exacerbated relative to investments in foreign markets. Governments of developing and emerging market countries may be more unstable as compared to more developed countries. Developing and emerging market countries may have less developed securities markets or exchanges, and legal and accounting systems. It may be more difficult to sell securities at acceptable prices and security prices may be more volatile than in countries with more mature markets. Currency values may fluctuate more in developing or emerging markets. Developing or emerging market countries may be more likely to impose government restrictions, including confiscatory taxation, expropriation or nationalization of a company's assets, and restrictions on foreign ownership of local companies. In addition, emerging markets may impose restrictions on the Funds' ability to repatriate investment income or capital and thus, may adversely affect the operations of the Funds. Certain emerging markets may impose constraints on currency exchange and some currencies in emerging markets may have been devalued significantly against the U.S. Dollar. For these and other reasons, the prices of securities in emerging markets can fluctuate more significantly than the prices of securities of companies in developed countries. The less developed the country, the greater effect these risks may have on the Funds.

International trade tensions may arise from time to time which could result in trade tariffs, embargos or other restrictions or limitations on trade. The imposition of any actions on trade could trigger a significant reduction in international trade, an oversupply of certain manufactured goods, substantial price reductions of goods, possible failure of individual companies or industries, slower economic growth or recession, inflation, increased unemployment or market volatility, any of which could have a negative impact on a Fund's performance. An increase in tariffs or trade restrictions, or even the threat of such developments, could lead to retaliatory actions by other countries and an escalation of trade barriers, and could heighten the aforementioned risks to the Funds. Events such as these are difficult to predict and may or may not occur in the future.

**<u>European Securities</u>.** European countries can be significantly affected by the actions of their own individual governments as well as the actions of other European institutions, such as the European Union ("EU"), the European Economic and Monetary Union ("EMU") and the European Central Bank. The EU is an intergovernmental and supranational union consisting of 27 member states. One of the key responsibilities of the EU is to create and administer a unified trade policy. The member states created the EMU that established different stages and commitments that member states need to follow to achieve greater economic policy coordination and monetary cooperation. Member states relinquish their monetary control to the European Central Bank and use a single unified currency, the euro.

Investments in Europe are also subject to currency risks. Further, because many countries are dependent on foreign exports, any fluctuations in the euro exchange rate could have a negative effect on an issuer's profitability and performance.

The EU has been extending its influence to the east as it has accepted several new Eastern European countries as members. Some of the new members remain burdened by the inherited inefficiencies of centrally planned economies. Additionally, these countries are dependent on Western Europe for trade and credit. Russia has attempted, and may attempt in the future, to assert its influence in Eastern Europe through economic or military measures. In February 2022, Russia invaded Ukraine, which amplified existing geopolitical tensions. The current and future status of the EU continues to be the subject of political and regulatory controversy, with widely differing views both within and between member countries.

The European financial markets have experienced uncertainty over the past few years, largely because of concerns about rising government debt levels and increased budget deficits. Political and regulatory responses to address structural and policy issues have created even greater instability throughout the region. The high levels of public debt increases the likelihood that certain European issuers will either default or restructure their debt obligations, which would have a negative effect on asset values. The use of austerity measures in countries such as Spain, Italy, Greece, Portugal and Ireland during times in which the Eurozone has high levels of unemployment has limited economic growth. European countries can be adversely affected by the tight fiscal and monetary controls that the EMU requires its members to comply with.

**<u>Market Disruptions Risk</u>.** The Funds are subject to investment and operational risks associated with financial, economic and other global market developments and disruptions, including those arising from, but not limited to, war; terrorism; market manipulation; government interventions, defaults and shutdowns; political changes or diplomatic developments; embargoes, tariffs, sanctions and other trade barriers; public health emergencies (such as the spread of infectious diseases, pandemics and epidemics); and natural/environmental disasters. Any of these events could negatively impact the securities markets and cause a Fund to lose value. These events can also impair the technology and other operational systems upon which the Funds' service providers, including Angel Oak as the Funds' investment adviser, rely, and could otherwise disrupt the Funds' service providers' ability to fulfill their obligations to the Funds.

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In addition, U.S. and global markets recently have experienced increased volatility, including as a result of the recent failures of certain U.S. and non-U.S. banks, which could be harmful to a Fund and issuers in which it invests. For example, if a bank in which the Fund or an issuer has an account fails, any cash or other assets in bank accounts may be temporarily inaccessible or permanently lost by the Fund or issuer. If a bank that provides a subscription line credit facility, asset-based facility, other credit facility and/or other services to an issuer fails, the issuer could be unable to draw funds under its credit facilities or obtain replacement credit facilities or other services from other lending institutions with similar terms. Even if banks used by issuers in which a Fund invests remain solvent, continued volatility in the banking sector could cause or intensify an economic recession, increase the costs of banking services or result in the issuers being unable to obtain or refinance indebtedness at all or on as favorable terms as could otherwise have been obtained. Conditions in the banking sector are evolving, and the scope of any potential impacts to a Fund and issuers, both from market conditions and also potential legislative or regulatory responses, are uncertain.

The foregoing could lead to a significant economic downturn or recession, increased market volatility, a greater number of market closures, higher default rates and adverse effects on the values and liquidity of securities or other assets. Such impacts, which may vary across asset classes, may adversely affect the performance of the Funds. In certain cases, an exchange or market may close or issue trading halts on specific securities or even the entire market, which may result in the Funds being, among other things, unable to buy or sell certain securities or financial instruments or to accurately price their investments.

To satisfy any shareholder redemption requests during periods of extreme volatility, it is more likely the Funds may be required to dispose of portfolio investments at unfavorable prices compared to their intrinsic value.

**<u>Exchange-Traded Notes ("ETNs")</u>.** The Funds may invest in ETNs. ETNs are a type of senior, unsecured, unsubordinated debt security issued by financial institutions that combines aspects of both bonds and exchange traded funds ("ETFs"). An ETN's returns are based on the performance of a market index minus fees and expenses. Similar to ETFs, ETNs are listed on an exchange and traded in the secondary market. However, unlike an ETF, an ETN can be held until the ETN's maturity, at which time the issuer will pay a return linked to the performance of the market index to which the ETN is linked minus certain fees.

Unlike regular bonds, ETNs do not make periodic interest payments and principal is not protected. ETNs are subject to credit risk and the value of an ETN may drop due to a downgrade in the issuer's credit rating, despite the underlying market benchmark or strategy remaining unchanged. The value of an ETN may also be influenced by time to maturity, level of supply and demand for the ETN, volatility and lack of liquidity in underlying assets, changes in the applicable interest rates, changes in the issuer's credit rating, and economic, legal, political, or geographic events that affect the referenced underlying asset. When a Fund invests in ETNs it will bear its proportionate share of any fees and expenses borne by the ETN. A Fund's decision to sell its ETN holdings may be limited by the availability of a secondary market. In addition, although an ETN may be listed on an exchange, the issuer may not be required to maintain the listing and there can be no assurance that a secondary market will exist for an ETN.

ETNs are also subject to tax risk. No assurance can be given that the U.S. Internal Revenue Service ("IRS") will accept, or a court will uphold, how the Funds characterize and treat ETNs for tax purposes. Further, the IRS and Congress have considered proposals that would change the timing and character of income and gains from ETNs.

An ETN that is tied to a specific market benchmark or strategy may not be able to replicate and maintain exactly the composition and relative weighting of securities, commodities or other components in the applicable market benchmark or strategy. Some ETNs that use leverage can, at times, be relatively illiquid and, thus, they may be difficult to purchase or sell at a fair price. Leveraged ETNs are subject to the same risk as other instruments that use leverage in any form.

The market value of ETN shares may differ from their market benchmark or strategy. This difference in price may be due to the fact that the supply and demand in the market for ETN shares at any point in time is not always identical to the supply and demand in the market for the securities, commodities or other components underlying the market benchmark or strategy that the ETN seeks to track. As a result, there may be times when an ETN share trades at a premium or discount to its market benchmark or strategy.

**<u>Fixed Income Securities</u>*.*** The Funds may invest in fixed income securities. Even though interest-bearing securities are investments that promise a stable stream of income, the prices of such securities are affected by changes in interest rates. In general, fixed income security prices rise when interest rates fall and fall when interest rates rise. Securities with shorter maturities, while offering lower yields, generally provide greater price stability than longer term securities and are less affected by changes in interest rates. The values of fixed income securities also may be affected by changes in the credit rating or financial condition of the issuing entities. Once the rating of a portfolio security has been changed, the Funds will consider all circumstances deemed relevant in determining whether to continue to hold the security. A Fund with a negative average portfolio duration may increase in value when interest rates rise, and generally incurs a loss when interest rates decline. If an issuer calls or redeems an instrument held by the Fund during a time of declining interest rates, the Fund might need to reinvest

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the proceeds in an investment offering a lower yield, and therefore may not benefit from any increase in value as a result of declining interest rates. A Fund with a negative average portfolio duration may decline in value as interest rates decrease.

Fixed income investments bear certain risks, including credit risk, or the ability of an issuer to pay interest and principal as they become due. Generally, higher yielding bonds are subject to more credit risk than lower yielding bonds. Interest rate risk refers to the fluctuations in value of fixed income securities resulting from the inverse relationship between the market value of outstanding fixed income securities and changes in interest rates. An increase in interest rates will generally reduce the market value of fixed income investments and a decline in interest rates will tend to increase their value.

Call risk is the risk that an issuer will pay principal on an obligation earlier than scheduled or expected, which would accelerate cash flows from, and shorten the average life of, the security. Bonds are typically called when interest rates have declined. In the event of a bond being called, a Fund may have to reinvest the proceeds in lower yielding securities to the detriment of the Fund.

Extension risk is the risk that an issuer may pay principal on an obligation slower than expected, having the effect of extending the average life and duration of the obligation. This typically happens when interest rates have increased.

A number of factors, including changes in a central bank's monetary policies or general improvements in the economy, may cause interest rates to rise. Fixed income securities with longer durations are more sensitive to interest rate changes than securities with shorter durations, making them more volatile. This means their prices are more likely to experience a considerable reduction in response to a rise in interest rates.

**<u>High Yield Securities</u>.** When investing in fixed income securities, the Funds may purchase securities regardless of their rating, including fixed income securities rated below investment grade. Securities rated below investment grade are often referred to as high yield securities or "junk bonds." Investments in securities rated below investment grade that are eligible for purchase by a Fund are described as "speculative" by Moody's Investors Service, Inc. ("Moody's"), S&P and Fitch Ratings Inc. ("Fitch"). Investments in lower rated corporate debt securities generally provide greater income and increased opportunity for capital appreciation than investments in higher quality securities, but they also typically entail greater price volatility and principal and income risk. These high yield securities are regarded as predominantly speculative with respect to the issuer's continuing ability to meet principal and interest payments. Analysis of the creditworthiness of issuers of debt securities that are high yield may be more complex than for issuers of higher quality debt securities.

High yield securities may be more susceptible to real or perceived adverse economic and competitive industry conditions than investment grade securities. The prices of high yield securities have been found to be more sensitive to adverse economic downturns or individual corporate developments. A projection of an economic downturn or of a period of rising interest rates, for example, could cause a decline in high yield security prices because the advent of a recession could lessen the ability of a highly leveraged company to make principal and interest payments on its debt securities. If an issuer of high yield securities defaults, in addition to risking payment of all or a portion of interest and principal, the Fund by investing in such securities may incur additional expenses to obtain recovery. In the case of high yield securities structured as zero-coupon or pay-in-kind securities, their market prices are affected to a greater extent by interest rate changes, and therefore tend to be more volatile than securities that pay interest periodically and in cash.

The secondary market on which high yield securities are traded may be less liquid than the market for higher grade securities. Less liquidity in the secondary trading market could adversely affect the price at which the Fund could sell a high yield security, and could adversely affect the daily net asset value ("NAV") of the shares. Adverse publicity and investor perceptions, whether or not based on fundamental analysis, may decrease the values and liquidity of high yield securities, especially in a thinly-traded market. When secondary markets for high yield securities are less liquid than the market for higher grade securities, it may be more difficult to value the securities because such valuation may require more research, and elements of judgment may play a greater role in the valuation because there is less reliable, objective data available.

The use of credit ratings to evaluate high yield securities can involve certain risks. For example, credit ratings evaluate the safety of principal and interest payments, not the market value risk of high yield securities. Also, credit rating agencies may fail to change credit ratings in a timely fashion to reflect events since the security was last rated. The Adviser does not rely solely on credit ratings when selecting securities for the Fund, and develops its own analysis of issuer credit quality. If a credit rating agency changes the rating of a portfolio security held by the Fund, the Fund may retain the security if the Adviser deems it in the best interest of shareholders.

**<u>U.S. Government Obligations</u>.** U.S. government securities include direct obligations issued by the United States Treasury, such as U.S. Treasury bills (maturities of one year or less), U.S. Treasury notes (maturities of one to ten years) and U.S. Treasury bonds (generally maturities of greater than ten years). They also include U.S. government agencies and instrumentalities that issue or guarantee securities, such as the Federal Home Loan Banks, FNMA and the Student Loan Marketing Association. Except

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for U.S. Treasury securities, obligations of U.S. government agencies and instrumentalities may or may not be supported by the full faith and credit of the United States. Some, such as those of the Federal Home Loan Banks, are backed by the right of the issuer to borrow from the U.S. Treasury, others by discretionary authority of the U.S. government to purchase the agencies' obligations, while still others, such as the Student Loan Marketing Association, are supported only by the credit of the instrumentality. In the case of securities not backed by the full faith and credit of the United States, the investor must look principally to the agency issuing or guaranteeing the obligation for ultimate repayment and may not be able to assess a claim against the United States itself in the event the agency or instrumentality does not meet its commitment.

The total public debt of the United States as a percentage of gross domestic product has grown rapidly since the beginning of the 2008–2009 financial downturn. Although high debt levels do not necessarily indicate or cause economic problems, they may create certain systemic risks if sound debt management practices are not implemented. A high national debt can raise concerns that the U.S. government will not be able to make principal or interest payments when they are due. This increase has also necessitated the need for the U.S. Congress to negotiate adjustments to the statutory debt limit to increase the cap on the amount the U.S. government is permitted to borrow to meet its existing obligations and finance current budget deficits. In August 2011, S&P lowered its long term sovereign credit rating of the U.S. government. In explaining the downgrade at that time, S&P cited, among other reasons, controversy over raising the statutory debt limit and growth in public spending. More recently, in August 2023 and again in May 2025, the long term sovereign credit rating of the U.S. government was downgraded by Fitch and Moody's, respectively, due to a combination of expected fiscal deterioration, a high and growing government debt burden, rising interest costs, and an erosion of governance relative to peers. Further downgrades in the future could increase volatility in domestic and foreign financial markets, result in higher interest rates, lower prices of U.S. Treasury securities and increase the costs of different kinds of debt. Any controversy or ongoing uncertainty regarding the statutory debt limit negotiations may impact the U.S. long term sovereign credit rating and may cause market uncertainty. As a result, market prices and yields of securities supported by the full faith and credit of the U.S. government may be adversely affected.

**<u>Investment Company Securities</u>.** The Funds may invest in the securities of other investment companies, including ETFs, closed-end funds and open-end (mutual) funds (also called "underlying funds"). The Funds may invest in inverse ETFs, including leveraged ETFs. Inverse ETFs seek to provide investment results that match a certain percentage of the inverse of the results of a specific index on a daily or monthly basis.

To the extent such underlying funds are index-based, these underlying funds will generally attempt to replicate the performance of a particular index. An underlying fund may not always hold all of the same securities as the index it attempts to track. An underlying fund may use statistical sampling techniques to attempt to replicate the returns of an index. Statistical sampling techniques attempt to match the investment characteristics of the index and the fund by taking into account such factors as capitalization, industry exposures, dividend yield, price/earnings ("P/E") ratio, price/book ("P/B") ratio, and earnings growth. An underlying fund may not track the index perfectly because differences between the index and the fund's portfolio can cause differences in performance. In addition, expenses and transaction costs, the size and frequency of cash flow into and out of the fund, and differences between how and when the fund and the index are valued can cause differences in performance.

When a Fund invests in underlying funds it will indirectly bear its proportionate share of any fees and expenses payable directly by the underlying fund. In connection with its investments in other investment companies, a Fund will incur higher expenses, many of which may be duplicative. Furthermore, because the Funds invest in shares of ETFs and underlying funds their performances are directly related to the ability of the ETFs and underlying funds to meet their respective investment objectives, as well as the allocation of each Fund's assets among the ETFs and underlying funds by the Adviser. Accordingly, the Funds' investment performance will be influenced by the investment strategies of and risks associated with the ETFs and underlying funds in direct proportion to the amount of assets the Funds allocate to the ETFs and underlying funds utilizing such strategies.

Investments in ETFs involve certain inherent risks generally associated with investments in a broadly-based portfolio of stocks, including risks that: (1) the general level of stock prices may decline, thereby adversely affecting the value of each unit of the ETF or other instrument; (2) an ETF, to the extent such ETF is index-based, may not fully replicate the performance of its benchmark index because of the temporary unavailability of certain index securities in the secondary market or discrepancies between the ETF and the index with respect to the weightings of securities or number of stocks held; (3) an ETF may also be adversely affected by the performance of the specific index, market sector or group of industries on which it is based; and (4) an ETF, to the extent such ETF is index-based, may not track an index as well as a traditional index mutual fund because ETFs are valued by the market and, therefore, there may be a difference between the market value and the ETF's NAV. Additionally, investments in fixed income ETFs involve certain inherent risks generally associated with investments in fixed income securities, including the risk of fluctuation in market value based on interest rates rising or declining and risks of a decrease in liquidity, such that no assurances can be made that an active trading market for underlying ETFs will be maintained.

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There is also a risk that the underlying funds or ETFs may terminate due to extraordinary events. For example, any of the service providers to the underlying fund or ETF, such as the trustee or sponsor, may close or otherwise fail to perform their obligations to the underlying fund or ETF, and the underlying fund or ETF may not be able to find a substitute service provider. Also, the underlying fund or ETF may be dependent upon licenses to use the various indices as a basis for determining their compositions and/or otherwise to use certain trade names. If these licenses are terminated, the respective underlying fund or ETF may also terminate. In addition, an underlying fund or ETF may terminate if its net assets fall below a certain amount. Although the Funds believe that in the event of the termination of an underlying fund or ETF, the applicable Fund will be able to invest instead in shares of an alternate underlying fund or ETF tracking the same market index or another index covering the same general market, there can be no assurance that shares of an alternate underlying fund or ETF would be available for investment at that time.

Inverse and leveraged ETFs are subject to additional risks not generally associated with traditional ETFs. To the extent that a Fund invests in inverse ETFs, the value of the Fund's investments will decrease when the index underlying the ETF's benchmark rises, a result that is the opposite from traditional equity or bond funds. The NAV and market price of leveraged or inverse ETFs are usually more volatile than the value of the tracked index or of other ETFs that do not use leverage. This is because inverse and leveraged ETFs use investment techniques and financial instruments that may be considered aggressive, including the use of derivative transactions and short selling techniques. The use of these techniques may cause the inverse or leveraged ETFs to lose more money in market environments that are adverse to their investment strategies than other funds that do not use such techniques.

Generally, under the 1940 Act, a Fund may not acquire shares of another investment company (including ETFs) if, immediately after such acquisition, (i) such fund would hold more than 3% of the other investment company's total outstanding shares, (ii) if such fund's investment in securities of the other investment company would be more than 5% of the value of the total assets of the fund, or (iii) if more than 10% of such fund's total assets would be invested in investment companies. In accordance with Section 12(d)(1)(F) of the 1940 Act, the Funds may invest in underlying funds in excess of the 5% and 10% limits described above as long as the Funds (and all of their affiliated persons, including the Adviser) do not acquire more than 3% of the total outstanding stock of such underlying fund. If a Fund seeks to redeem shares of an underlying fund purchased in reliance on Section 12(d)(1)(F), the underlying fund is not obligated to redeem an amount exceeding 1% of the underlying fund's outstanding shares during a period of less than 30 days.

In addition, Rule 12d1-4 under the 1940 Act allows a fund to acquire shares of an underlying fund in excess of the limits described above. Fund of funds arrangements relying on Rule 12d1-4 are subject to several conditions, certain of which are specific to a fund's position in the arrangement (i.e., as an acquiring or acquired fund). Notable conditions include those relating to: (i) control and voting that prohibit an acquiring fund, its investment adviser (or a subadviser) and their respective affiliates from beneficially owning more than 25% of the outstanding voting securities of an unaffiliated acquired fund; (ii) certain required findings relating to complexity, fees and undue influence (among other things); (iii) fund of funds investment agreements; and (iv) general limitations on an acquired fund's investments in other investment companies and private funds to no more than 10% of the acquired fund's assets, except in certain circumstances. To the extent a Fund is an acquired fund in reliance on Rule 12d1-4, the limitations placed on acquired funds under Rule 12d1-4 may limit or restrict the Fund's ability to acquire certain investments.

**Leveraged Loan Risk.** The Fund may invest in leveraged loans. Leveraged loans carry significant credit risk. Borrowers in the leveraged loan market are typically highly indebted companies with below investment-grade credit profiles, and the risk of default on scheduled principal and interest payments is meaningfully elevated compared to investment-grade debt. An economic downturn may accelerate default rates, and a loan may lose substantial value even before a formal default occurs.

The leveraged loan market presents distinct liquidity challenges. Unlike publicly traded securities, leveraged loans are privately negotiated instruments that may trade infrequently or not at all, and their valuation can be difficult to determine with precision. Settlement of leveraged loan transactions may take longer than that of other securities, potentially exceeding seven days, which may constrain the Fund's ability to manage its portfolio efficiently.

The terms governing leveraged loans have in many cases become more borrower-friendly over time. So-called "covenant lite" loans omit or significantly limit the financial maintenance covenants that traditionally gave lenders ongoing oversight of a borrower's financial health. This reduces the Fund's ability to detect early signs of credit deterioration or to take protective action before a borrower's condition worsens materially. Even where collateral secures a loan, there is no guarantee that such collateral will retain sufficient value to cover the borrower's obligations or that it can be liquidated in a timely manner. In addition, courts may in certain circumstances subordinate senior loans to other creditors' claims.

**<u>Money Market Funds</u>.** A Fund may invest in underlying money market funds that either seek to maintain a stable $1 NAV ("stable NAV money market funds") or that have a share price that fluctuates ("variable NAV money market funds"). Although an underlying stable NAV money market fund seeks to maintain a stable $1 NAV, it is possible for a Fund to lose money by investing in such a money market fund. Because the share price of an underlying variable NAV money market fund will fluctuate, when a

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Fund sells the shares it owns they may be worth more or less than what the Fund originally paid for them. In addition, neither type of money market fund is designed to offer capital appreciation. Certain underlying money market funds may impose a fee upon the sale of shares.

**<u>Illiquid Investments</u>.** The Funds may invest in illiquid investments (i.e., investments that are not readily marketable). Illiquid investments may include, but are not limited to, certain restricted investments (investments the disposition of which is restricted under the federal securities laws), investments that may only be resold pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"); and repurchase agreements with maturities in excess of seven days. However, a Fund will not acquire illiquid investments if, as a result, such investments would comprise more than 15% of the value of the Fund's net assets. The Funds have implemented a written liquidity risk management program and related procedures in accordance with SEC requirements (the "Liquidity Program") that is reasonably designed to assess and manage the Funds' "liquidity risk" (defined by the SEC as the risk that a Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interest in the Fund). Liquidity classifications will be made after reasonable inquiry and taking into account, among other things, market, trading and investment-specific considerations deemed to be relevant to the liquidity classification of the Funds' investments in accordance with the Liquidity Program.

An institutional market has developed for certain restricted investments. Accordingly, contractual or legal restrictions on the resale of a security may not be indicative of the liquidity classification of the security.

Restricted investments may be sold only in privately negotiated transactions or in a public offering with respect to which a registration statement is in effect under the Securities Act. Where registration is required, the applicable Fund may be obligated to pay all or part of the registration expenses and a considerable period may elapse between the time of the decision to sell and the time the Fund may be permitted to sell a security under an effective registration statement. If, during such a period, adverse market conditions were to develop, the Fund might obtain a less favorable price than that which prevailed when it decided to sell.

Illiquid investments will be priced at fair value as determined in good faith under procedures approved by the Board of Trustees. If, through the appreciation of illiquid investments or the depreciation of liquid investments, a Fund should be in a position where more than 15% of the value of its net assets are invested in illiquid investments, the Fund will take appropriate steps to bring its illiquid investments to or below 15% of its net assets within a reasonable period of time.

**<u>Borrowing</u>.** The Funds may borrow for investment purposes and for other purposes permitted by the 1940 Act. Under current law as interpreted by the SEC and its staff, the Fund may borrow money in the amount of up to one-third of the Fund's total assets for any purpose and up to 5% of the Fund's total assets from banks or other lenders for temporary purposes. The Fund's total assets include the amounts being borrowed. Under the 1940 Act, a Fund is required to maintain continuous asset coverage of 300% with respect to permitted borrowings. Borrowing subjects a Fund to costs in the form of interest, which the Fund may not recover through investment earnings. A Fund may also be required to maintain minimum average balances in connection with a borrowing or to pay a commitment or other fee to maintain a line of credit. These types of requirements would increase the cost of borrowing to the Fund over the stated interest rate.

Pursuant to an exemptive order issued by the SEC on April 25, 2017, a Fund may engage in interfund lending transactions, to the extent such participation is consistent with the Fund's investment objective and investment policies. As part of the interfund lending program, the Funds will have the ability to lend to each other, as detailed in the exemptive relief (the "InterFund Lending Program"). Any loan made through the InterFund Lending Program always would be more beneficial to a borrowing Fund (i.e., at a lower interest rate) than borrowing from a bank and more beneficial to a lending Fund (i.e., at a higher rate of return) than an alternative short-term investment. The term of an interfund loan is limited to the time required to receive payment for securities sold, but in no event more than seven days. In addition, an interfund loan is callable with one business day's notice. All loans are for temporary cash management purposes and the interest rates to be charged will be the average of the overnight repurchase agreement rate and the bank loan rate.

The limitations detailed above and the other conditions of the SEC exemptive order permitting interfund lending are designed to minimize the risks associated with interfund lending for both the lending Fund and the borrowing Fund. No Fund may borrow more than the amount permitted by its investment limitations and all loans are subject to numerous conditions designed to ensure fair and equitable treatment of all participating Funds. The interfund lending facility is subject to the oversight and periodic review of the Board.

No borrowing or lending activity is without risk. When a Fund borrows money from another Fund, there is a risk that the interfund loan could be called on one business day's notice or not renewed, in which case the Fund may have to borrow from a bank at higher rates if an interfund loan is not available. If a borrowing Fund is unable to repay the loan when due, a delay in repayment to the lending Fund could result in a lost investment opportunity for the lending Fund.

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**<u>Repurchase Agreements</u>.** Each Fund may engage in repurchase agreement transactions involving the type of securities in which it is permitted to invest. Repurchase agreements are transactions by which a Fund purchases a security and simultaneously commits to resell that security to the seller (a bank or securities dealer) at an agreed upon price on an agreed upon date (usually within seven days of purchase). The resale price reflects the purchase price plus an agreed upon market rate of interest which is unrelated to the coupon rate or date of maturity of the purchased security. Repurchase agreements involve certain risks not associated with direct investments in the underlying securities. In the event of a default or bankruptcy by the seller, the applicable Fund will seek to liquidate such collateral. The exercise of a Fund's right to liquidate such collateral could involve certain costs or delays and, to the extent that proceeds from any sale upon a default of the obligation to repurchase were less than the repurchase price, the Fund could suffer a loss. Repurchase agreements are considered to be loans by an investment company under the 1940 Act. Each Fund will not invest more than 33 1/3% of its net assets in repurchase agreements.

The use of repurchase agreements involves certain risks. For example, if the seller of the agreements defaults on its obligation to repurchase the underlying securities at a time when the value of these securities has declined, the applicable Fund may incur a loss upon disposition of them. If the seller of the agreement becomes insolvent and subject to liquidation or reorganization under the Bankruptcy Code or other laws, a bankruptcy court may determine that the underlying securities are collateral not within the control of the Funds and therefore subject to sale by the trustee in bankruptcy. Finally, it is possible that the Funds may not be able to substantiate their interest in the underlying securities. While the management of the Trust acknowledges these risks, it is expected that they can be controlled through stringent security selection criteria and careful monitoring procedures.

**<u>Reverse Repurchase Agreements</u>.** The Funds may engage in reverse repurchase agreements. Reverse repurchase agreements are agreements that involve the sale of securities held by a Fund to financial institutions such as banks and broker-dealers, with an agreement that the Fund will repurchase the securities at an agreed upon price and date. During the reverse repurchase agreement period, the applicable Fund continues to receive interest and principal payments on the securities sold. The Funds may employ reverse repurchase agreements (i) for temporary emergency purposes or to meet repurchase requests so as to avoid liquidating other portfolio securities during unfavorable market conditions; (ii) to cover short-term cash requirements resulting from the timing of trade settlements; or (iii) to take advantage of market situations where the interest income to be earned from the investment of the proceeds of the transaction is greater than the interest expense of the transaction.

Reverse repurchase agreements involve the risk that the market value of securities to be purchased by a Fund may decline below the price at which the Fund is obligated to repurchase the securities, or that the other party may default on its obligation, so that the Fund is delayed or prevented from completing the transaction. In the event the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, the Fund's use of the proceeds from the sale of the securities may be restricted pending a determination by the other party, or its trustee or receiver, whether to enforce the Fund's obligations to repurchase the securities.

**<u>Hybrid Securities</u>.** Preferred stock, including trust-preferred stocks, has a preference in liquidation (and, generally dividends) over common stock but is subordinated in liquidation to debt. As a general rule the market value of preferred stocks with fixed dividend rates and no conversion rights varies inversely with interest rates and perceived credit risk, with the price determined by the dividend rate. Some preferred stocks are convertible into other securities (for example, common stock) at a fixed price and ratio or upon the occurrence of certain events. The market price of convertible preferred stocks generally reflects an element of conversion value. Because many preferred stocks lack a fixed maturity date, these securities generally fluctuate substantially in value when interest rates change; such fluctuations often exceed those of long-term bonds of the same issuer. Some preferred stocks pay an adjustable dividend that may be based on an index, formula, auction procedure or other dividend rate reset mechanism. In the absence of credit deterioration, adjustable rate preferred stocks tend to have more stable market values than fixed rate preferred stocks. All preferred stocks are also subject to the same types of credit risks of the issuer as corporate bonds. In addition, because preferred stock is junior to debt securities and other obligations of an issuer, deterioration in the credit rating of the issuer will cause greater changes in the value of a preferred stock than in a more senior debt security with similar yield characteristics. Preferred stocks may be rated by S&P and Moody's although there is no minimum rating which a preferred stock must have (and a preferred stock may not be rated) to be an eligible investment for the Funds. The Adviser expects, however, that generally the preferred stocks in which the Funds invest will be rated at least CCC by S&P or Caa by Moody's or, if unrated, of comparable quality in the opinion of the Adviser. Preferred stocks rated CCC by S&P are regarded as predominantly speculative with respect to the issuer's capacity to pay preferred stock obligations and represent the highest degree of speculation among securities rated between BB and CCC; preferred stocks rated Caa by Moody's are likely to be in arrears on dividend payments. Moody's rating with respect to preferred stocks does not purport to indicate the future status of payments of dividends.

**<u>Derivative Instruments</u>.** The Funds' derivatives and other similar instruments (collectively referred to in this section as "derivatives" or "derivative investments") have risks, including the leverage, market, counterparty, liquidity, operational, and legal risks. They also involve the risk of imperfect correlation between the value of such instruments and the underlying assets

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of the applicable Fund, which creates the possibility that the loss on such instruments may be greater than the gain in the value of the underlying assets in the Fund's portfolio; the loss of principal; the possible default of the other party to the transaction; and illiquidity of the derivative investments. If a counterparty becomes bankrupt or otherwise fails to perform its obligations under a derivative contract due to financial difficulties, the applicable Fund may experience significant delays in obtaining any recovery under the derivative contract in a bankruptcy or other reorganization proceeding. Counterparty risk also includes the risks of having concentrated exposure to a counterparty. In addition, in the event of the insolvency of a counterparty to a derivative transaction, the derivative contract would typically be terminated at its fair market value. If a Fund is owed this fair market value in the termination of the derivative contract and its claim is unsecured, the Fund will be treated as a general creditor of such counterparty, and will not have any claim with respect to the underlying security. Using derivatives is also subject to operational and legal risks. Operational risk generally refers to risk related to potential operational issues, including documentation issues, settlement issues, systems failures, inadequate controls, and human error. Legal risk generally refers to insufficient documentation, insufficient capacity or authority of counterparty, or legality or enforceability of a contract.

The counterparty risk for cleared derivative transactions is generally lower than for uncleared over-the-counter (OTC) derivatives because generally a clearing organization becomes substituted for each counterparty to a cleared derivative contract and, in effect, guarantees the parties' performance under the contract as each party to a trade looks only to the clearing house for performance of financial obligations. However, there can be no assurance that the clearing house, or its members, will satisfy its obligations to the Funds.

Certain of the derivative investments in which the Funds may invest may, in certain circumstances, give rise to a form of financial leverage, which may magnify a Fund's gains or losses and the risk of owning such instruments. Like most other investments, derivatives are subject to the risk that the market value of the instrument will change in a way detrimental to a Fund's interest. The ability to successfully use derivative investments depends on the ability of the Adviser to predict pertinent market movements, which cannot be assured. In addition, amounts paid by the Funds as premiums and cash or other assets held in margin accounts with respect to the Funds' derivative investments would not be available to the Funds for other investment purposes, which may result in lost opportunities for gain.

The use of derivatives may also subject a Fund to liquidity risk which generally refers to risk involving the liquidity demands that derivatives can create to make payments of margin, collateral, or settlement payments to counterparties. Liquidity risk also refers to the risk that a Fund may be required to hold additional cash or sell other investments in order to obtain cash to close out derivatives or meet the liquidity demands noted above. A Fund may have to sell a security at a disadvantageous time or price to meet such obligations. OTC derivatives may be more difficult to purchase, sell or value than other investments. Although both OTC and exchange-traded derivatives markets may experience a lack of liquidity, OTC non-standardized derivative transactions are generally less liquid than exchange-traded instruments. The illiquidity of the derivatives markets may be due to various factors, including congestion, disorderly markets, limitations on deliverable supplies, the participation of speculators, government regulation and intervention, and technical and operational or system failures. In addition, the liquidity of a secondary market in an exchange-traded derivative contract may be adversely affected by "daily price fluctuation limits" established by the exchanges which limit the amount of fluctuation in an exchange-traded contract price during a single trading day. Once the daily limit has been reached in the contract, no trades may be entered into at a price beyond the limit, thus preventing the liquidation of open positions. Prices have in the past moved beyond the daily limit on a number of consecutive trading days. If it is not possible to close an open derivative position entered into by a Fund, the Fund would continue to be required to make cash payments of variation (or mark-to-market) margin in the event of adverse price movements. In such a situation, if the Fund has insufficient cash, it may have to sell portfolio securities to meet variation margin requirements at a time when it may be disadvantageous to do so. The absence of liquidity may also make it more difficult for a Fund to ascertain a market value for such instruments. The inability to close derivatives transactions positions also could have an adverse impact on a Fund's ability to effectively hedge its portfolio. OTC derivatives that are not cleared are also subject to counterparty risk, which is the risk that the other party to the contract will not fulfill its contractual obligation to complete the transaction with a Fund. If a counterparty were to default on its obligations, a Fund's contractual remedies against such counterparty may be subject to bankruptcy and insolvency laws, which could affect the Fund's rights as a creditor (e.g., the Fund may not receive the net amount of payments that it is contractually entitled to receive). In addition, the use of certain derivatives may cause the Funds to realize higher amounts of income or short-term capital gains (generally taxed at ordinary income tax rates).

The Adviser, with respect to the Funds, has filed a notice of eligibility with the National Futures Association ("NFA") claiming an exclusion from the definition of the term Commodity Pool Operator ("CPO") pursuant to Commodity Futures Trading Commission ("CFTC") Regulation 4.5, as promulgated under the Commodity Exchange Act, as amended ("CEA"), with respect to the Funds' operations. Therefore, neither the Funds nor the Adviser (with respect to the Funds) is subject to registration or regulation as a commodity pool or CPO under the CEA. If the Adviser or a Fund becomes subject to these requirements, as well as related NFA rules, the Funds may incur additional compliance and other expenses.

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The derivatives markets have become subject to comprehensive statutes, regulations and margin requirements. In particular, in the United States the Dodd-Frank Act regulates the OTC derivatives market by, among other things, requiring many derivative transactions to be cleared and traded on an exchange, expanding entity registration requirements, imposing business conduct requirements on dealers and requiring banks to move some derivatives trading units to a non-guaranteed affiliate separate from the deposit-taking bank or divest them altogether. Rulemaking proposed or implemented under the Dodd-Frank Act could potentially limit or completely restrict the ability of the Funds to use these instruments as a part of their investment strategies, increase the costs of using these instruments or make them less effective. Limits or restrictions applicable to the counterparties with which the Funds engage in derivative transactions could also prevent the Funds from using these instruments or affect the pricing or other factors relating to these instruments, or may change availability of certain investments.

Regulation of the derivatives market presents additional risks to the Fund and may limit the ability of the Fund to use, and the availability or performance of such instruments. Pursuant to Rule 18f-4 under the 1940 Act, a fund's derivatives exposure is limited through a value-at-risk ("VaR") test and requires the adoption and implementation of a derivatives risk management program for certain derivatives users. However, subject to certain conditions, funds that do not invest heavily in derivatives may be deemed limited derivatives users (as defined in Rule 18f-4) and would not be subject to the full requirements of Rule 18f-4. When the Fund trades reverse repurchase agreements or similar financing transactions, including certain tender option bonds, it needs to aggregate the amount of indebtedness associated with the reverse repurchase agreements or similar financing transactions with the aggregate amount of any other senior securities representing indebtedness (e.g., bank borrowings, if applicable) when calculating the Fund's asset coverage ratio or treat all such transactions as derivatives transactions. Reverse repurchase agreements or similar financing transactions aggregated with other indebtedness do not need to be included in the calculation of whether a fund satisfies the limited derivatives users exception, but for funds subject to the VaR testing requirement, reverse repurchase agreements and similar financing transactions must be included for purposes of such testing whether treated as derivatives transactions or not. In addition, Rule 18f-4 could limit the Fund's ability to engage in certain derivatives and other transactions.

The Funds' investments in regulated derivatives instruments, such as swaps, futures and options, will be subject to maximum position limits established by the U.S. Commodity Futures Trading Commission (the "CFTC") and U.S. and foreign futures exchanges. Under the exchange rules all accounts owned or managed by advisers, such as Angel Oak, their principals and affiliates would be combined for position limit purposes. To comply with the position limits established by the CFTC and the relevant exchanges, the Adviser may in the future reduce the size of positions that would otherwise be taken for a Fund or not trade in certain markets on behalf of the Fund to avoid exceeding such limits. A violation of position limits by the Adviser could lead to regulatory action resulting in mandatory liquidation of certain positions held by the Adviser on behalf of the Funds. There can be no assurance that the Adviser will liquidate positions held on behalf of all the Adviser's accounts in a proportionate manner or at favorable prices, which may result in substantial losses to the Funds. Such policies could affect the nature and extent of derivatives use by the Funds.

***Swaps.*** The Funds may invest in credit default swaps, total return swaps, interest rate swaps, equity swaps, currency swaps and other types of swaps. Such transactions are subject to market risk, liquidity risk, risk of default by the other party to the transaction, known as "counterparty risk," regulatory risk and risk of imperfect correlation between the value of such instruments and the underlying assets and may involve commissions or other costs.

A credit default swap agreement may reference one or more debt securities or obligations that are not currently held by the Funds. The Funds are permitted to enter into a credit default swap as either the protection buyer or seller in the discretion of the Adviser. When buying protection under a credit default swap, the Fund is generally obligated to pay the protection seller an upfront or periodic stream of payments over the term of the contract until a credit event occurs, such as a default of the reference obligation. If no credit event occurs, the Fund may recover nothing if the swap is held through the termination date. However, if a credit event does occur, the Fund may receive the full notional value of the swap in exchange for the face amount of the obligations underlying the swap, the value of which may have significantly decreased. When selling protection under a credit default swap, the Fund receives an upfront or periodic stream of payments over the term of the contract provided that a credit event does not occur. However, as the seller of protection, the Fund effectively adds leverage to its portfolio because it gains exposure to the notional amount of the swap. Entering into a credit default swap may subject a Fund to greater risk than if the Fund had invested in the reference obligation directly. In addition to general market risks, credit default swaps also involve illiquidity risk, counter-party risk (for OTC swaps) and credit risk.

Swap agreements are primarily entered into by institutional investors and the value of such agreements may be extremely volatile. Certain swap agreements are traded OTC between two parties, while other more standardized swaps must be transacted through a Futures Commission Merchant and centrally cleared and exchange-traded. While central clearing and exchange-trading are intended to reduce counterparty credit and liquidity risk, they do not make a swap transaction risk-free. The current regulatory environment regarding swap agreements is subject to change. The Adviser will continue to monitor these developments, particularly to the extent regulatory changes affect the Funds' ability to enter into swap agreements.

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The swap market has matured in recent years with a large number of banks and investment banking firms acting both as principals and as agents utilizing standardized swap documentation. As a result, the swap market has become relatively liquid; however there is no guarantee that the swap market will continue to provide liquidity and may be subject to liquidity risk, which exists when a particular swap is difficult to purchase or sell. The absence of liquidity may also make it more difficult for a Fund to ascertain a market value for such instruments. The inability to close derivative positions also could have an adverse impact on a Fund's ability to effectively hedge its portfolio. If the Adviser is incorrect in its forecasts of market values, interest rates or currency exchange rates, the investment performance of the applicable Fund would be less favorable than it would have been if these investment techniques were not used. In a total return swap, a Fund pays the counterparty a floating short-term interest rate and receives in exchange the total return of underlying loans or debt securities. The Fund bears the risk of default on the underlying loans or debt securities, based on the notional amount of the swap and, therefore, incurs a form of leverage. The Fund would typically have to post collateral to cover this potential obligation.

***Options and Futures Risk.*** The Funds may utilize options and futures contracts and so-called "synthetic" options or other derivatives written by broker-dealers or other permissible financial intermediaries. Options transactions may be effected on securities exchanges or in the OTC market. When options are purchased OTC, the applicable Fund's portfolio bears the risk that the counterparty that wrote the option will be unable or unwilling to perform its obligations under the option contract. Options may also be illiquid and, in such cases, a Fund may have difficulty closing out its position. OTC options also may include options on baskets of specific securities.

A Fund may purchase call and put options on specific securities in pursuing its investment objectives. A put option gives the purchaser of the option the right to sell, and obligates the writer to buy, the underlying security at a stated exercise price, typically at any time prior to the expiration of the option for American options or only at expiration for European options. A call option gives the purchaser of the option the right to buy, and obligates the writer to sell, the underlying security at a stated exercise price, typically at any time prior to the expiration of the option.

A Fund may close out a position when writing options by purchasing an option on the same underlying security with the same exercise price and expiration date as the option that it has previously written on the security. In such a case, the applicable Fund will realize a profit or loss if the amount paid to purchase an option is less or more than the amount received from the sale of the option.

Engaging in transactions in futures contracts and options involves risk of loss to a Fund. No assurance can be given that a liquid market will exist for any particular futures contract or option at any particular time. Many futures exchanges and boards of trade limit the amount of fluctuation permitted in futures contract prices during a single trading day. Once the daily limit has been reached in a particular contract, no trades may be made that day at a price beyond that limit or trading may be suspended for specified periods during the trading day. Futures contract prices could move to the limit for several consecutive trading days with little or no trading, preventing prompt liquidation of futures positions and potentially subjecting the applicable Fund to substantial losses.

A market could become unavailable if one or more exchanges were to stop trading options or it could become unavailable with respect to options on a particular underlying security if the exchanges stopped trading options on that security. In addition, a market could become temporarily unavailable if unusual events (e.g., volume exceeds clearing capability) were to interrupt normal exchange operations. If an options market were to become illiquid or otherwise unavailable, an option holder would be able to realize profits or limit losses only by exercising and an options seller or writer would remain obligated until it is assigned an exercise or until the option expires.

If trading is interrupted in an underlying security, the trading of options on that security is usually halted as well. Holders and writers of options will then be unable to close out their positions until options trading resumes, and they may be faced with considerable losses if the security reopens at a substantially different price. Even if options trading is halted, holders of options will generally be able to exercise them. However, if trading has also been halted in the underlying security, option holders face the risk of exercising options without knowing the security's current market value. If exercises do occur when trading of the underlying security is halted, the party required to deliver the underlying security may be unable to obtain it, which may necessitate a postponed settlement and/or the fixing of cash settlement prices.

***Structured Notes.*** Structured notes are derivative debt securities, the interest rate and/or principal of which is determined by an unrelated indicator. The value of the principal of and/or interest on structured notes is determined by reference to changes in the return, interest rate or value at maturity of a specific asset, reference rate or index (the "reference instrument") or the relative change in two or more reference instruments. The interest rate or the principal amount payable upon maturity or redemption may be increased or decreased, depending upon changes in the applicable reference instruments. Structured notes may be positively or negatively indexed, so that an increase in value of the reference instrument may produce an increase or a decrease in the interest rate or value of the structured note at maturity. In addition, changes in the interest rate or the value of the structured note at maturity may be calculated as a specified multiple of the change in the value of the

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reference; therefore, the value of such note may be very volatile. Structured notes may entail a greater degree of market risk than other types of debt securities because the investor bears the risk of the reference instrument. Structured notes may also be more volatile, less liquid and more difficult to accurately price than less complex securities or more traditional debt securities.

**<u>Cash Investments</u>.** When the Adviser believes market, economic or political conditions are unfavorable for investors, the Adviser may invest up to 100% of a Fund's net assets in cash, cash equivalents or other short-term investments. Unfavorable market or economic conditions may include excessive volatility or a prolonged general decline in the securities markets, or the U.S. economy. The Adviser also may invest in these types of securities or hold cash while looking for suitable investment opportunities or to maintain liquidity.

**<u>Restricted Securities</u>.** Within its limitation on investment in illiquid investments, a Fund may purchase restricted securities that generally can be sold in privately negotiated transactions, pursuant to an exemption from registration under the federal securities laws, or in a registered public offering. Where registration is required, a Fund may be obligated to pay all or part of the registration expense and a considerable period may elapse between the time it decides to seek registration and the time the Fund may be permitted to sell a security under an effective registration statement. If during such a period adverse market conditions were to develop, the Fund might obtain a less favorable price than prevailed when it decided to seek registration of the security. Restricted securities that can be offered and sold to qualified institutional buyers under Rule 144A of the Securities Act ("144A Securities") and are determined to be liquid are not subject to the limitations on illiquid investments.

**<u>Short Sales</u>.** A Fund may make short sales as part of its overall portfolio management strategies or to offset a potential decline in value of a security. The Funds may engage in short sales with respect to stocks, ETFs and other securities. A short sale involves the sale of a security that is borrowed from a broker or other institution to complete the sale. The Funds may engage in short sales with respect to securities they own, as well as securities that they do not own. Short sales expose a Fund to the risk that it will be required to acquire, convert or exchange securities to replace the borrowed security at a time when the security sold short has appreciated in value, thus resulting in a loss to the Fund. A Fund's investment performance may also suffer if the Fund is required to close out a short position earlier than it had intended. In addition, the Funds may be subject to expenses related to short sales that are not typically associated with investing in securities directly, such as costs of borrowing and margin account maintenance costs associated with the applicable Fund's open short positions. These types of short sales expenses are sometimes referred to as the "negative cost of carry," and will tend to cause a Fund to lose money on a short sale even in instances where the price of the security sold short does not change over the duration of the short sale. Dividend expenses on securities sold short are not covered under the Adviser's expense limitation agreements with the Funds and, therefore, these expenses will be borne by the shareholders of the applicable Fund.

**<u>Variable and Floating Rate Securities</u>.** The Funds may invest in variable and floating rate securities. Fixed Income securities that have variable or floating rates of interest may, under certain limited circumstances, have varying principal amounts. These securities pay interest at rates that are adjusted periodically according to a specified formula, usually with reference to one or more interest rate indices or market interest rates (the "underlying index"). The interest paid on these securities is a function primarily of the underlying index upon which the interest rate adjustments are based. These adjustments minimize changes in the market value of the obligation. Similar to fixed rate debt instruments, variable and floating rate instruments are subject to changes in value based on changes in market interest rates or changes in the issuer's creditworthiness. The rate of interest on securities may be tied to U.S. government securities or indices on those securities as well as any other rate of interest or index.

Variable and floating rate demand notes of corporations are redeemable upon a specified period of notice. These obligations include master demand notes that permit investment of fluctuating amounts at varying interest rates under direct arrangements with the issuer of the instrument. The issuer of these obligations often has the right, after a given period, to prepay the outstanding principal amount of the obligations upon a specified number of days' notice.

Certain securities may have an initial principal amount that varies over time based on an interest rate index, and, accordingly, a Fund might be entitled to less than the initial principal amount of the security upon the security's maturity. The Funds intend to purchase these securities only when the Adviser believes the interest income from the instrument justifies any principal risks associated with the instrument. The Adviser may attempt to limit any potential loss of principal by purchasing similar instruments that are intended to provide an offsetting increase in principal. There can be no assurance that the Adviser will be able to limit the effects of principal fluctuations and, accordingly, a Fund may incur losses on those securities even if held to maturity without issuer default.

There may not be an active secondary market for any particular floating or variable rate instruments, which could make it difficult for a Fund to dispose of the instrument during periods that the Fund is not entitled to exercise any demand rights it may have. The Fund could, for this or other reasons, suffer a loss with respect to those instruments. The Adviser monitors the liquidity of the Funds' investments in variable and floating rate instruments, but there can be no guarantee that an active secondary market will exist.

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**<u>Zero-Coupon, Delayed Interest, Pay-In-Kind, and Capital Appreciation Securities</u>.** Zero-coupon, delayed interest, pay-in-kind ("PIK") and capital appreciation securities are securities that make no periodic interest payments, but are sold at a discount from their face value. The buyer recognizes a rate of return determined by the gradual appreciation of the security, which is redeemed at face value on a specified maturity date. The discount varies depending on the time remaining until maturity, as well as market interest rates, liquidity of the security, and the issuer's perceived credit quality. The discount, in the absence of financial difficulties of the issuer, typically decreases as the final maturity date approaches. If the issuer defaults, a Fund may not receive any return on its investment. Because such securities bear no interest and generally compound periodically at the rate fixed at the time of issuance, their value generally is more volatile than the value of other fixed income securities. Since such bondholders do not receive interest payments, when interest rates rise, zero-coupon, delayed interest and capital appreciation securities fall more dramatically in value than bonds paying interest on a current basis. When interest rates fall, zero-coupon, delayed interest and capital appreciation securities rise more rapidly in value because the bonds reflect a fixed rate of return. An investment in zero-coupon, delayed interest and capital appreciation securities may cause a Fund to recognize income and make distributions to shareholders before it receives any cash payments on its investment. To generate cash to satisfy distribution requirements, a Fund may have to sell portfolio securities that it otherwise would have continued to hold or to use cash flows from other sources such as the sale of Fund shares.

PIK securities may be debt obligations or preferred shares that provide the issuer with the option of paying interest or dividends on such obligations in cash or in the form of additional securities rather than cash. Similar to zero-coupon bonds and delayed interest securities, PIK securities are designed to give an issuer flexibility in managing cash flow. PIK securities that are debt securities can be either senior or subordinated debt and generally trade flat (i.e., without interest). The trading price of PIK debt securities generally reflects the market value of the underlying debt plus an amount representing accrued interest since the last interest payment.

**<u>Municipal Securities</u>.** The Funds may invest in municipal securities, such as industrial development bonds that are backed only by the assets and revenues of the non-governmental user (such as hospitals and airports). Municipal securities are issued to obtain funds for a variety of public purposes, including general financing for state and local governments, or financing for specific projects or public facilities.

The two principal classifications of municipal securities are "general obligations" and "revenue obligations." General obligations are secured by the issuer's pledge of its full faith and credit for the payment of principal and interest, although the characteristics and enforcement of general obligations may vary according to the law applicable to the particular issuer. Revenue obligations, which include, but are not limited to, private activity bonds, resource recovery bonds, certificates of participation and certain municipal notes, are not backed by the credit and taxing authority of the issuer, and are payable solely from the revenues derived from a particular facility or class of facilities or, in some cases, from the proceeds of a special excise or other specific revenue source. Nevertheless, the obligations of the issuer of a revenue obligation may be backed by a letter of credit, guarantee or insurance. General obligations and revenue obligations may be issued in a variety of forms, including commercial paper, fixed, variable and floating rate securities, tender option bonds, auction rate bonds, zero coupon bonds, deferred interest bonds and capital appreciation bonds. Private activity bonds and industrial revenue bonds do not carry the pledge of the credit of the issuing municipality, but generally are guaranteed by the corporate entity on whose behalf they are issued.

Municipal leases are entered into by state and local governments and authorities to acquire equipment and facilities such as fire and sanitation vehicles, telecommunications equipment, and other assets. Municipal leases (which normally provide for title to the leased assets to pass eventually to the government issuer) have evolved as a means for governmental issuers to acquire property and equipment without meeting the constitutional and statutory requirements for the issuance of debt. The debt-issuance limitations of many state constitutions and statutes are deemed to be inapplicable because of the inclusion in many leases or contracts of "non-appropriation" clauses that provide that the governmental issuer has no obligation to make future payments under the lease or contract unless money is appropriated for such purpose by the appropriate legislative body on a yearly or periodic basis.

The marketability, valuation or liquidity of municipal securities may be negatively affected in the event that states, localities or their authorities default on their debt obligations or other market events arise, which in turn may negatively affect fund performance, sometimes substantially. A credit rating downgrade relating to, default by, or insolvency or bankruptcy of, one or several municipal issuers of a particular state, territory, commonwealth, or possession could affect the market value or marketability of any one or all such states, territories, commonwealths, or possessions.

The value of municipal securities may also be affected by uncertainties with respect to the rights of holders of municipal securities in the event of bankruptcy or the taxation of municipal securities as a result of legislation or litigation. The obligations of the issuer to pay the principal of and interest on municipal securities are subject to the provisions of bankruptcy, insolvency and other laws affecting the rights and remedies of creditors, such as the Federal Bankruptcy Code, and laws, if any, that may be enacted by Congress or state legislatures extending the time for payment of principal or interest or imposing other

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constraints upon the enforcement of such obligations. There is also the possibility that, as a result of litigation or other conditions, the power or ability of the issuer to pay when due principal of or interest on a municipal security may be materially affected.

**<u>Securities Lending</u>.** Each Fund may lend portfolio securities in an amount up to one-third of its total assets to brokers, dealers and other financial institutions. In a portfolio securities lending transaction, a Fund receives from the borrower an amount equal to the interest paid or the dividends declared on the loaned securities during the term of the loan as well as the interest on the collateral securities, less any fees (such as finders or administrative fees) the Fund pays in arranging the loan. The terms of each Fund's loans permit each Fund to reacquire loaned securities upon demand within a customary settlement period. Loans are subject to termination at the option of the applicable Fund or borrower at any time, and the borrowed securities must be returned when the loan is terminated. The Funds may pay fees to arrange for securities loans.

The SEC currently requires that the following conditions must be met whenever a Fund's portfolio securities are loaned: (1) the Fund must receive at least 100% collateral from the borrower; (2) the borrower must increase such collateral whenever the market value of the securities rises above the level of such collateral; (3) the Fund must be able to terminate the loan at any time; (4) the Fund must receive reasonable interest on the loan, as well as any dividends, interest or other distributions on the loaned securities, and any increase in market value; (5) the Fund may pay only reasonable custodian fees approved by the Board in connection with the loan; and (6) while voting rights on the loaned securities may pass to the borrower, the Board must terminate the loan and regain the right to vote the securities if a material event adversely affecting the investment occurs. These conditions may be subject to future modification. Such loans will be terminable at any time upon specified notice. A Fund might experience the risk of loss if the institution with which it has engaged in a portfolio loan transaction breaches its agreement with the Fund. In addition, the Funds will not enter into any portfolio security lending arrangement having a duration of longer than one year. The principal risk of portfolio lending is potential default or insolvency of the borrower. In either of these cases, a Fund could experience delays in recovering securities or collateral or could lose all or part of the value of the loaned securities. As part of participating in a lending program, the applicable Fund may be required to invest in securities that bear the risk of loss of principal. In addition, all investments made with the collateral received are subject to the risks associated with such investments. If such investments lose value, a Fund will have to cover the loss when repaying the collateral.

Any loans of portfolio securities are fully collateralized based on values that are marked-to-market daily. Any securities that a Fund may receive as collateral will not become part of the Fund's investment portfolio at the time of the loan and, in the event of a default by the borrower, the Fund will, if permitted by law, dispose of such collateral except for such part thereof that is a security in which the Fund is permitted to invest. During the time securities are on loan, the borrower will pay a Fund any accrued income on those securities, and the Fund may invest the cash collateral and earn income or receive an agreed-upon fee from a borrower that has delivered cash-equivalent collateral.

**<u>Subordinated Debt Securities</u>.** Subordinated debt securities, sometimes also called "junior debt" are debt securities for which the issuer's obligations to make principal and interest payment are secondary to the issuer's payment obligations to more senior debt securities. Subordinated debt securities are subject to the same risks as other fixed income securities and are also subject to increased credit risk because the issuer, by definition, has issued other, more senior debt securities. The Funds may invest in subordinated debt securities, including those issued by banks.

**<u>When-Issued Securities and Forward Commitments</u>.** The Funds may purchase securities offered on a "when-issued" and "forward commitment" basis (including a delayed delivery basis). Securities purchased on a "when-issued" or "forward commitment basis" are securities not available for immediate delivery despite the fact that a market exists for those securities. A purchase is made on a "delayed delivery" basis when the transaction is structured to occur sometime in the future.

When these transactions are negotiated, the price, which is generally expressed in yield terms, is fixed at the time the commitment is made, but delivery and payment for the securities take place at a later date. Normally, the settlement date occurs within two months after the transaction, but delayed settlements beyond two months may be negotiated. During the period between a commitment and settlement, no payment is made for the securities purchased by the purchaser and, thus, no interest accrues to the purchaser from the transaction. At the time a Fund makes the commitment to purchase securities on a when-issued basis or forward commitment, the Fund will record the transaction as a purchase and thereafter reflect the value each day of such securities in determining its NAV.

**<u>Dollar Rolls</u>.** A dollar roll transaction involves a sale by a Fund of a security concurrently with an agreement by the Fund to repurchase a similar security at a later date at an agreed-upon price. A dollar roll may be considered a borrowing giving rise to leverage. The securities that are repurchased will bear the same interest rate and a similar maturity as those sold, but the assets collateralizing these securities may have different prepayment histories than those sold. During the period between the sale and repurchase, the applicable Fund will not be entitled to receive interest and principal payments on the securities sold. Proceeds of the sale will be invested in additional investments, and the income from these investments will generate income for the Fund.

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If such income does not exceed the income, capital appreciation and gain or loss that would have been realized on the securities sold as part of the dollar roll, the use of this technique will diminish the investment performance of a Fund compared with what the performance would have been without the use of dollar rolls. Dollar rolls involve the risk that the market value of the securities subject to a Fund's forward purchase commitment may decline below, or the market value of the securities subject to a Fund's forward sale commitment may increase above, the exercise price of the forward commitment. In the event the buyer of the securities files for bankruptcy or becomes insolvent, a Fund's use of the proceeds of the current sale portion of the transaction may be restricted.

**<u>Equit</u><u>y Securities</u>.** 

***Common and Preferred Stock.*** The Funds may invest in common stock. Common stock represents an equity (ownership) interest in a company, and usually possesses voting rights and earns dividends. Dividends on common stock are not fixed but are declared at the discretion of the issuer. Common stock generally represents the riskiest investment in a company. In addition, common stock generally has the greatest appreciation and depreciation potential because increases and decreases in earnings are usually reflected in a company's stock price.

The Funds may invest in preferred stock. Preferred stock is a class of stock having a preference over common stock as to the payment of dividends and the recovery of investment should a company be liquidated, although preferred stock is usually junior to the debt securities of the issuer. Preferred stock typically does not possess voting rights and its market value may change based on changes in interest rates.

A risk of investing in common and preferred stock is that the value of the stock might decrease. Stock values fluctuate in response to the activities of an individual company or in response to general market and/or economic conditions. Historically, common stocks have provided greater long-term returns and have entailed greater short-term risks than preferred stocks, fixed-income and money market investments. The market value of all securities, including common and preferred stocks, is based upon the market's perception of value and not necessarily the book value of an issuer or other objective measures of a company's worth. If you invest in the Fund, you should be willing to accept the risks of the stock market and should consider an investment in the Fund only as a part of your overall investment portfolio.

***Warrants.*** The Funds may invest in warrants. Warrants are securities, typically issued with preferred stock or bonds that give the holder the right to purchase a given number of shares of common stock at a specified price and time. The price of the warrant usually represents a premium over the applicable market value of the common stock at the time of the warrant's issuance. Warrants have no voting rights with respect to the common stock, receive no dividends and have no rights with respect to the assets of the issuer. Investments in warrants involve certain risks, including the possible lack of a liquid market for the resale of the warrants, potential price fluctuations due to adverse market conditions or other factors and failure of the price of the common stock to rise. If the warrant is not exercised within the specified time period, it becomes worthless.

***Depositary Receipts.*** The Funds may invest in sponsored and unsponsored American Depositary Receipts ("ADR"), European Depositary Receipts ("EDRs"), Global Depositary Receipts ("GDRs"), Holding Company Depositary Receipts ("HOLDRs"), New York Registered Shares ("NYRs") or American Depositary Shares ("ADSs"). ADRs typically are issued by a U.S. bank or trust company, evidence ownership of underlying securities issued by a foreign company, and are designed for use in U.S. securities markets. EDRs are issued by European financial institutions and typically trade in Europe and GDRs are issued by European financial institutions and typically trade in both Europe and the United States. HOLDRs trade on the American Stock Exchange and are fixed baskets of U.S. or foreign stocks that give an investor an ownership interest in each of the underlying stocks. NYRs, also known as Guilder Shares since most of the issuing companies are Dutch, are dollar-denominated certificates issued by foreign companies specifically for the U.S. market. ADSs are shares issued under a deposit agreement that represents an underlying security in the issuer's home country. (An ADS is the actual share trading, while an ADR represents a bundle of ADSs.) The Funds invest in depositary receipts to obtain exposure to foreign securities markets. For purposes of the Funds' investment policies, the Funds' investments in an ADR will be considered an investment in the underlying securities of the applicable foreign company.

Unsponsored depositary receipts may be created without the participation of the foreign issuer. Holders of these receipts generally bear all the costs of the depositary receipt facility, whereas foreign issuers typically bear certain costs of a sponsored depositary receipt. The bank or trust company depositary of an unsponsored depositary receipt may be under no obligation to distribute shareholder communications received from the foreign issuer or to pass through voting rights. Accordingly, available information concerning the issuer may not be current and the prices of unsponsored depositary receipts may be more volatile than the prices of sponsored depositary receipts.

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**<u>General Risk.</u>** The value of a Fund's portfolio securities may fluctuate with changes in the financial condition of an issuer or counterparty, changes in specific economic or political conditions that affect a particular security or issuer and changes in general economic or political conditions. An investor in a Fund could lose money over short or long periods of time.

There can be no guarantee that a liquid market for the securities held by a Fund will be maintained. The existence of a liquid trading market for certain securities may depend on whether dealers will make a market in such securities. There can be no assurance that a market will be made or maintained or that any such market will be or remain liquid. The price at which securities may be sold and the value of a Fund will be adversely affected if trading markets for a Fund's portfolio securities are limited or absent, or if bid/ask spreads are wide.

**<u>Operational and Reputational Risk</u>.** An investment in the Funds involves operational risk arising from factors such as processing errors, human errors, inadequate or failed internal or external processes, failures in systems and technology, changes in personnel and errors caused by third-party service providers. Any of these errors, failures or breaches could result in a loss of information, regulatory scrutiny, reputational damage or other events, any of which could have a materially adverse effect on a Fund. While the Funds seek to minimize such events through controls and oversight, there is no guarantee that a Fund will not suffer losses due to operational risk.

The Funds may be adversely affected if the reputation of the Adviser, its affiliates, or counterparties with whom the Funds associate is harmed. Reputational harm could result from, among other things: real or perceived legal or regulatory violations; failure in performance, risk management, governance, technology, or operations; or claims related to employee misconduct, allegations of employee wrongful termination, conflict of interests, ethical issues, or failure to protect private information. Similarly, market rumors and actual or perceived association with counterparties whose own reputations may become under question could ultimately harm the Funds as well. These harms could include, for example, large redemptions of shares of a Fund, a negative effect on the Funds' ability to conduct business with counterparties, or hindering of the Adviser's abilities to attract and/or retain personnel, including key personnel.

**<u>Cyber Security Risk</u>.** As technology becomes more integrated into the Funds' operations, the Funds will face greater operational risks through breaches in cyber security. A breach in cyber security refers to both intentional and unintentional events that may cause a Fund to lose proprietary information, suffer data corruption, or lose operational capacity. This in turn could cause the Fund to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures, and/or financial loss. Cyber security threats may result from unauthorized access to a Fund's digital information systems (e.g., through "hacking" or malicious software coding), but may also result from outside attacks such as denial-of-service attacks (i.e., efforts to make network services unavailable to intended users). In addition, because each Fund works closely with third-party service providers (e.g., administrators, transfer agents, and custodians), cyber security breaches at such third-party service providers may subject a Fund to many of the same risks associated with direct cyber security breaches. The same is true for cyber security breaches at any of the issuers in which a Fund may invest. While the Funds have established risk management systems designed to reduce the risks associated with cyber security, there can be no assurance that such measures will succeed.

**PORTFOLIO TURNOVER**

The frequency of portfolio transactions of each Fund (the portfolio turnover rate) will vary from year to year depending on many factors. From time to time, each Fund may engage in active short-term trading to take advantage of price movements affecting individual issues, groups of issues or markets. An annual portfolio turnover rate of 100% would occur if all the securities in a Fund were replaced once in a period of one year. Higher portfolio turnover rates (more than 100%) may result in increased brokerage costs to the applicable Fund and a possible increase in short-term capital gains or losses.

Portfolio turnover for the Funds during the fiscal periods ended January 31 is shown in the table below.

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| **Fiscal Years Ended January 31,** | **2026** | **2025** |
| Multi-Strategy Income Fund | 75% | 60% |
| UltraShort Income Fund | 76% | 92% |

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**INVESTMENT POLICIES**

<u>Fundamental</u>. The investment policies described below have been adopted by the Trust with respect to each Fund and are fundamental (<u>i.e.</u>, they may not be changed without the affirmative vote of a majority of the outstanding shares of the applicable Fund). As used in the Prospectus and this SAI, the term "majority of the outstanding shares of the Fund" means the lesser of: (1) 67% or more of the outstanding shares of the Fund present at a meeting, if the holders of more than 50% of the outstanding shares of the Fund are present or represented at such meeting; or (2) more than 50% of the outstanding shares of the Fund.

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Except for those investment policies specifically identified as fundamental in the Prospectus and this SAI, each Fund's investment objective as described in the Prospectus and all other investment policies and practices described in the Prospectus and this SAI are non-fundamental and may be changed by the Board without the approval of shareholders.

The fundamental policies adopted with respect to each of the Funds are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.<u>Borrowing Money</u>. The Fund will not borrow money, except to the extent permitted under the 1940 Act, as such may be interpreted or modified by regulatory authorities having jurisdiction, from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.<u>Senior Securities</u>. The Fund will not issue senior securities, except to the extent permitted under the 1940 Act, as such may be interpreted or modified by regulatory authorities having jurisdiction, from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.<u>Underwriting</u>. The Fund will not act as an underwriter of securities within the meaning of the Securities Act of 1933, except to the extent permitted under the 1940 Act, as such may be interpreted or modified by regulatory authorities having jurisdiction, from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.<u>Real Estate</u>. The Fund will not purchase or sell real estate, except to the extent permitted under the 1940 Act, as such may be interpreted or modified by regulatory authorities having jurisdiction, from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.<u>Commodities</u>. The Fund will not purchase or sell commodities, except to the extent permitted under the 1940 Act, as such may be interpreted or modified by regulatory authorities having jurisdiction, from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.<u>Loans</u>. The Fund will not make loans to other persons, except to the extent permitted under the 1940 Act, as such may be interpreted or modified by regulatory authorities having jurisdiction, from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.<u>Concentration</u>. Each of the Multi-Strategy Income Fund and UltraShort Income Fund will concentrate its respective investments in residential mortgage-backed securities (agency and non-agency) and commercial mortgage-backed securities.

The following are interpretations of the fundamental investment policies of the Funds and may be revised without shareholder approval, consistent with current laws and regulations as such may be interpreted or modified by regulatory authorities having jurisdiction, from time to time:

<u>Borrowing Money</u>. Under current law as interpreted by the SEC and its staff, a Fund may borrow from: (a) a bank, provided that immediately after such borrowing there is an asset coverage of 300% for all borrowings of the Fund; or (b) a bank or other persons for temporary purposes only, provided that such temporary borrowings are in an amount not exceeding 5% of the Fund's total assets at the time when the borrowing is made. This limitation does not preclude the Fund from entering into reverse repurchase transactions, provided that the Fund, in accordance with Rule 18f-4, aggregates the amount of indebtedness associated with the reverse repurchase agreements or similar financing transactions with the aggregate amount of any other senior securities representing indebtedness when calculating the Fund's asset coverage ratio or treats all such transactions as derivatives transactions.

<u>Senior Securities</u>. Senior securities may include any obligation or instrument issued by an investment company evidencing indebtedness. The Fund's limitation with respect to issuing senior securities is not applicable to activities that may be deemed to involve the issuance or sale of a senior security by the Fund, provided that the Fund's engagement in such activities is consistent with or permitted by the 1940 Act, the rules and regulations promulgated thereunder. The SEC adopted Rule 18f-4 related to the use of derivatives and other similar transactions by an investment company. The Fund's trading of derivatives and other similar transactions that create future payment or delivery obligations is generally subject to value-at-risk leverage limits, derivatives risk management program and reporting requirements, unless the Fund satisfies a "limited derivatives users" exception that is included in the rule.

<u>Underwriting</u>. Under the 1940 Act, underwriting securities generally involves an investment company purchasing securities directly from an issuer for the purpose of selling (distributing) them or participating in any such activity either directly or indirectly. The Fund's limitation with respect to underwriting securities is not applicable to the extent that, in connection with the disposition of portfolio securities (including restricted securities), the Fund may be deemed an underwriter under certain federal securities laws.

<u>Real Estate</u>. The 1940 Act does not directly restrict an investment company's ability to invest in real estate, but does require that every investment company have a fundamental investment policy governing such investments. The Fund's limitation with respect to investing in real estate is not applicable to investments in securities or mortgages or loans that are secured by or represent interests in real estate. This limitation does not preclude the Fund from purchasing or selling mortgage-related securities or securities of companies engaged in the real estate business or that have a significant portion of their assets

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in real estate (including real estate investment trusts). In addition, this limitation does not preclude the Fund from holding or selling real estate acquired as a result of ownership through securities or other instruments.

<u>Commodities</u>. The 1940 Act does not directly restrict an investment company's ability to invest in commodities, but does require that every investment company have a fundamental investment policy governing such investments. The Fund may hold commodities acquired as a result of ownership of securities or other investments. This limitation does not preclude the Fund from purchasing or selling options or futures contracts, from investing in securities or other instruments backed by commodities or from investing in companies that are engaged in a commodities business or have a significant portion of their assets in commodities.

<u>Loans</u>. Under current law as interpreted by the SEC and its staff, the Fund may not lend any security or make any other loan if, as a result, more than 33 1/3% of its total assets would be lent to other parties (this restriction does not apply to purchases of debt securities or repurchase agreements). Subject to this limitation, the Fund may make loans, for example: (a) by loaning portfolio securities; (b) by engaging in repurchase agreements; (c) by making loans secured by real estate; (d) by making loans to affiliated funds as permitted by the SEC; or (e) by purchasing non-publicly offered debt securities. For purposes of this limitation, the term "loans" shall not include the purchase of a portion of an issue of publicly distributed bonds, debentures or other securities.

<u>Concentration</u>. Under current SEC and SEC staff interpretation, the Fund would "concentrate" its investments if more than 25% of the Fund's total assets would be invested in securities of issuers conducting their principal business activities in the same industry. For purposes of this limitation, there is no limit on: (1) investments in U.S. government securities, in repurchase agreements collateralized by U.S. government securities, or in tax-exempt securities issued by the states, territories, or possessions of the United States ("municipal securities"), excluding private activity municipal securities whose principal and interest payments are derived principally from the assets and revenues of a non-governmental entity; (2) investments in issuers domiciled in a single jurisdiction provided that the Fund does not invest greater than 25% in a particular industry; or (3) certain asset-backed securities that are backed by a pool of loans issued to companies in a wide variety of industries unrelated to each other such that the economic characteristics of such a security are not predominantly related to a single industry to the extent permitted by the 1940 Act. The residential mortgage-backed securities (agency and non-agency) and commercial mortgage-backed securities in which each of the Multi-Strategy Income Fund and the UltraShort Income Fund invests, under normal circumstances, more than 25% of its respective total assets (measured at the time of purchase) represent investments in the real estate industry. Notwithstanding anything to the contrary, to the extent permitted by the 1940 Act, the Fund may invest in one or more investment companies; provided that, except to the extent the Fund invests in other investment companies pursuant to Section 12(d)(1)(A) or (F) of the 1940 Act, the Fund treats the assets of the investment companies in which it invests as its own for purposes of this policy.

With respect to the percentages adopted by the Trust as maximum limitations on its investment policies and limitations, an excess above the fixed percentage will not be a violation of the policy or limitation unless the excess results immediately and directly from the acquisition of any security or the action taken. This paragraph does not apply to fundamental policy 1 for the Funds set forth above.

Notwithstanding any of the foregoing policies, any investment company, whether organized as a trust, association or corporation, or a personal holding company, may be merged or consolidated with or acquired by the Trust, provided that if such merger, consolidation or acquisition results in an investment in the securities of any issuer prohibited by said paragraphs, the Trust shall, within 90 days after the consummation of such merger, consolidation or acquisition, dispose of all of the securities of such issuer so acquired or such portion thereof as shall bring the total investment therein within the limitations imposed by said paragraphs above as of the date of consummation.

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**MANAGEMENT**

**<u>Trustees and Officers</u>**

The Board is responsible for the overall management of the Trust, including general supervision and review of the investment activities of the Funds. The Board, in turn, elects the officers of the Trust, who are responsible for administering the day-to-day operations of the Trust and the Funds. Unless otherwise indicated in the table below, the address of each Trustee and officer of the Trust is c/o Angel Oak Capital Advisors, LLC, 980 Hammond Drive, Suite 200, Atlanta, Georgia 30328. Additional information about the Trustees and officers of the Trust is provided in the following table.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name and <br>Year of Birth** | **Position with the Trust** | **Term of Office and Length of Time Served** | **Principal Occupation(s) During Past 5 Years** | **Number of Portfolios in Fund Complex**<sup>(1)</sup> **Overseen by Trustee** | **Other Directorships Held <br>During the Past 5 Years** |
| **Independent Trustees of the Trust**<sup>(2)</sup> | **Independent Trustees of the Trust**<sup>(2)</sup> | **Independent Trustees of the Trust**<sup>(2)</sup> | **Independent Trustees of the Trust**<sup>(2)</sup> | **Independent Trustees of the Trust**<sup>(2)</sup> | **Independent Trustees of the Trust**<sup>(2)</sup> |
| Ira P. Cohen<br>1959 | Independent<br>Trustee, Chair | Trustee since 2014, Chair since 2017; indefinite terms | Independent financial services consultant (since 2005). | 10 | Trustee, Valued Advisers Trust (since 2010); Trustee, Apollo Diversified Real Estate Fund (formerly, Griffin Institutional Access Real Estate Fund) (since 2014); Trustee, Angel Oak Strategic Credit Fund (since 2017); Trustee, Angel Oak Financial Strategies Income Term Trust (since 2018); Trustee and Chair, U.S. Fixed Income Trust (Trustee since 2019, Chair since 2025); Trustee, Angel Oak Credit Opportunities Term Trust (since 2021); Trustee, CRM Mutual Fund Trust (since 2025); Trustee, Angel Oak Dynamic Financial Strategies Income Term Trust (2019-2022); Trustee, Apollo Credit Fund (formerly, Griffin Institutional Access Credit Fund) (2017-2022). |
| Alvin R. Albe, Jr.<br>1953 | Independent Trustee | Since 2014; indefinite term | Retired. | 10 | Trustee, Angel Oak Strategic Credit Fund (since 2017); Trustee, Angel Oak Financial Strategies Income Term Trust (since 2018); Trustee, Angel Oak Credit Opportunities Term Trust (since 2021); Trustee, Angel Oak Dynamic Financial Strategies Income Term Trust (2019-2022). |
| Keith M. Schappert<br>1951 | Independent Trustee | Since 2014; indefinite term | President, Schappert Consulting LLC (since 2008); Retired, President and CEO of JP Morgan Investment Management. | 10 | Trustee, Angel Oak Strategic Credit Fund (since 2017); Trustee, Angel Oak Financial Strategies Income Term Trust (since 2018); Trustee, Angel Oak Credit Opportunities Term Trust (since 2021); Trustee, Angel Oak Dynamic Financial Strategies Income Term Trust (2019-2022); Director, Commonfund Capital, Inc. (2015-2022); Trustee, Mirae Asset Discovery Funds (2010-2023). |
| Andrea N. Mullins<br>1967 | Independent Trustee | Since 2019; indefinite term | Private Investor; Independent Contractor, SWM Advisors (since 2014). | 10 | Trustee and Audit Committee Chair, Valued Advisers Trust (since 2013, Chair since 2017); Trustee, Angel Oak Strategic Credit Fund (since 2019); Trustee, Angel Oak Financial Strategies Income Term Trust (since 2019); Trustee, Angel Oak Credit Opportunities Term Trust (since 2021); Trustee and Audit Committee Chair, NXG Cushing Midstream Energy Fund (formerly, Cushing MLP & Infrastructure Fund)(since 2021); Trustee and Audit Committee Chair, NXG NextGen Infrastructure Income Fund (formerly, Cushing NextGen Infrastructure Income Fund) (since 2021); Trustee, Chair, and Audit Committee Chair, CRM Mutual Fund Trust (since 2025); Trustee, Angel Oak Dynamic Financial Strategies Income Term Trust (2019-2022); Trustee and Audit Committee Chair, Cushing Mutual Funds Trust (2021-2023). |
| **Interested Trustee of the Trust** | **Interested Trustee of the Trust** | **Interested Trustee of the Trust** | **Interested Trustee of the Trust** | **Interested Trustee of the Trust** | **Interested Trustee of the Trust** |
| Clayton Triick<br>1986 | Interested Trustee | Since 2024, indefinite term | Head of Portfolio Management, Public Strategies, Angel Oak Capital Advisors, LLC (since 2024); Senior Portfolio Manager, Angel Oak Capital Advisors, LLC (since 2011). | 9 | Trustee, Angel Oak Strategic Credit Fund (since 2024); Trustee, Angel Oak Credit Opportunities Term Trust (since 2024); Trustee, Angel Oak Financial Strategies Income Term Trust (2024-2025). |

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<sup>(1)</sup> The Fund Complex includes each series of the Trust, and Angel Oak Strategic Credit Fund, Angel Oak Financial Strategies Income Term Trust, and Angel Oak Credit Opportunities Term Trust, affiliated registrants not discussed in this SAI.

<sup>(2)</sup> The Trustees of the Trust who are not "interested persons" of the Trust as defined in the 1940 Act ("Independent Trustees").

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| | | | |
|:---|:---|:---|:---|
| **Name and <br>Year of Birth** | **Position with the Trust** | **Term of Office and Length of Time Served** | **Principal Occupation(s) During Past 5 Years** |
| **Officers of the Trust** | **Officers of the Trust** | **Officers of the Trust** | |
| Ward Bortz<br>1983 | President | Since 2025; indefinite term | Head of U.S. Wealth and ETF Portfolio Manager, Angel Oak Capital Advisors, LLC (since 2022); Head of ETFs and Senior Researcher, Angel Oak Capital Advisors, LLC (2022); Client Portfolio Manager, Fixed Income Factors, Invesco (2019-2022). |
| Michael Colombo<br>1984 | Secretary | Since 2023; indefinite term | Chief Risk Officer, Angel Oak Capital Advisors, LLC (since 2023); Director of Valuation, Angel Oak Capital Advisors, LLC (2022-2023); Director of Trade Operations, Intercontinental Exchange, Inc. (2022); Manager of Trade Operations, Intercontinental Exchange, Inc. (2019-2022). |
| Nilesh Likhite<br>1984 | Treasurer | Since 2025; indefinite term | Fund Controller, Angel Oak Capital Advisors, LLC (since 2025); Fund Controller, Warren Equity Partners (2023-2025); Senior Manager, Ernst & Young LLP (2019-2023). |
| Chase Eldredge<br>1989 | Chief Compliance Officer | Since 2022; indefinite term | Chief Compliance Officer, Angel Oak Capital Advisors, LLC (since 2022); Chief Compliance Officer of Falcons I, LLC (since 2022); Chief Compliance Officer, Angel Oak Strategic Credit Fund (since 2022); Chief Compliance Officer, Angel Oak Financial Strategies Income Term Trust (since 2022); Chief Compliance Officer, Angel Oak Credit Opportunities Term Trust (since 2022); Senior Compliance Officer, Angel Oak Capital Advisors, LLC (2020-2022); Compliance Officer, Angel Oak Capital Advisors, LLC (2017-2020). |

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**<u>Additional Information Concerning the Board of Trustees.</u>**

*The Role of the Board*

The Board oversees the management and operations of the Trust. Like most registered investment companies, the day-to-day management and operation of the Trust is the responsibility of the various service providers to the Trust, such as the Adviser, the distributor, administrator, the custodian and the transfer agent, each of whom are discussed in greater detail in this SAI. The Board has appointed various senior employees of the Adviser as officers of the Trust, with responsibility to monitor and report to the Board on the Trust's operations. In conducting this oversight, the Board receives regular reports from these officers and the service providers. For example, the Treasurer reports as to financial reporting matters. In addition, the Adviser provides regular reports on the investment strategy and performance of the Funds. The Board has appointed a Chief Compliance Officer ("CCO") who administers the Trust's compliance program and regularly reports to the Board as to compliance matters. These reports are provided as part of the Board's regular Board Meetings, which are typically held quarterly, and involve the Board's review of recent operations. While Angel Oak compensates the CCO for his services to the Trust, the Funds reimburse Angel Oak for a portion of the CCO's salary.

*Board Structure, Leadership*

The Board has structured itself in a manner that it believes allows it to perform its oversight function effectively. It has established four standing committees—an Audit, Financial and Administrative Oversight Committee, a Nominating and Governance Committee, a Compliance Oversight Committee and a Valuation and Risk Management Oversight Committee—that are discussed in greater detail below under "Board Committees." At least a majority of the Board is comprised of Independent Trustees who are not affiliated with the Adviser, the principal underwriter, or their affiliates. The Committees are each comprised entirely of Independent Trustees.

The Board has an Independent Chair. Except for any duties specified herein or pursuant to the Trust's Declaration of Trust and By-Laws, the designation of Chair does not impose on Mr. Cohen any duties, obligations or liability that are greater than the duties, obligations or liability imposed on such person as a member of the Board. As Chair, Mr. Cohen acts as a spokesperson for the Trustees in between meetings of the Board, serves as a liaison for the Trustees with the Trust's service providers, officers, and legal counsel to discuss ideas informally, and participates in setting the agenda for meetings of the Board and separate meetings or executive sessions of the Independent Trustees. As noted, the majority of the Board is comprised of Independent Trustees, and the Board believes that maintaining a Board that has a majority of Independent Trustees allows the Board to operate in a manner that provides for an appropriate level of independent oversight and action. In accordance with applicable regulations regarding the governance of the Trust, the Independent Trustees have an opportunity to meet in a separate quarterly executive session in conjunction with each quarterly meeting of the Board during which they may review matters relating to their independent oversight of the Trust.

The Board reviews annually the structure and operation of the Board and its committees. The Board has determined that the composition of the Board and the function and composition of its various committees provide the appropriate means and communication channels to address any potential conflicts of interest that may arise.

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*Board Oversight of Risk Management*

As part of its oversight function, the Board receives and reviews various risk management reports and discusses these matters with appropriate management and other personnel. Because risk management is a broad concept comprised of many elements (e.g., investment risk, issuer and counterparty risk, compliance risk, operational risks, business continuity risks), the oversight of different types of risks is handled in different ways. For example, the Audit, Financial and Administrative Oversight Committee meets with the Treasurer and the Trust's independent registered public accounting firm to discuss, among other things, the internal control structure of the Trust's financial reporting function. The Board meets regularly with the Chief Compliance Officer and the Chief Operating Officer to discuss compliance and operational risks and how they are managed. The Board also receives reports from the Adviser and its Chief Risk Officer as to investment and other risks of the Funds.

With respect to liquidity, the Trust has implemented a liquidity risk management program on behalf of the Funds (the "Liquidity Program") that is designed to assess and manage each Fund's liquidity risk. The Board has designated the Adviser to administer the Liquidity Program. Under the Liquidity Program the Board will review periodic reports concerning Fund liquidity and review, no less frequently than annually, a written report prepared by the Adviser that addresses the operation of the Liquidity Program and assesses its adequacy and effectiveness.

*Information about Each Trustee's Qualification, Experience, Attributes or Skills* 

The Board believes that each of the Trustees has the qualifications, experience, attributes and skills ("Trustee Attributes") appropriate to their continued service as Trustees of the Trust in light of the Trust's business and structure. In addition to a demonstrated record of business and/or professional accomplishment, each of the Trustees has demonstrated a commitment to discharging their oversight duties as trustees in the interests of shareholders. The Board annually conducts a "self-assessment" wherein the effectiveness of the Board is reviewed.

In addition to the information provided in the table above, certain additional information concerning each particular Trustee and his or her Trustee Attributes is provided below.

*Mr. Cohen's Trustee Attributes.* 

Mr. Cohen has over 44 years of experience in the financial services industry. He served as Executive Vice President of Recognos Financial, a premier provider of semantic data analysis for the financial services industry, from 2015 to 2021 and he has been an independent financial services consultant since 2005. Mr. Cohen has served a variety of management roles for various financial and investment companies throughout his career. Additionally, Mr. Cohen serves as an independent trustee of the trust in which the Adviser's first mutual fund was launched. Mr. Cohen also serves as a trustee for other fund complexes. The Board believes that Mr. Cohen's experience, qualifications, attributes and skills on an individual basis and in combination with those of the other Trustees lead to the conclusion that he possesses the requisite skills and attributes as a Trustee to carry out oversight responsibilities with respect to the Trust.

*Mr. Albe's Trustee Attributes*.

Mr. Albe has over 40 years of experience in the investment management industry, including having served as executive management for a large asset management firm and its affiliated investment companies. Mr. Albe is a Certified Public Accountant (non-practicing) and has past experience as a member of the board and audit committee of a publicly held company. Mr. Albe is an audit committee financial expert of the Trust. The Board believes that Mr. Albe's experience, qualifications, attributes and skills on an individual basis and in combination with those of the other Trustees lead to the conclusion that he possesses the requisite skills and attributes as a Trustee to carry out oversight responsibilities with respect to the Trust.

*Mr. Schappert's Trustee Attributes*.

Mr. Schappert has over 50 years of experience in the investment management industry. He has been an independent financial services consultant for his own consulting business, Schappert Consulting, LLC, since 2008 and has served a variety of management roles for various financial and investment companies throughout his career, including as President and CEO of J.P. Morgan Investment Management, President and CEO of Federated Investment Advisory Companies, and Vice Chairman of the Americas for Credit Suisse. The Board believes that Mr. Schappert's experience, qualifications, attributes and skills on an individual basis and in combination with those of the other Trustees lead to the conclusion that he possesses the requisite skills and attributes as a Trustee to carry out oversight responsibilities with respect to the Trust.

*Ms. Mullins' Trustee Attributes.*

Ms. Mullins worked in the Asset Management and Mutual Funds industry at Raymond James from 1990-2010 and her experience includes accounting, compliance, and operations. Ms. Mullins retired as Chief Financial Officer of Eagle Family of

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Funds (now Carillon Family of Funds) in 2010. From 2014-2022, Ms. Mullins was an independent contractor and CCO with SWM Advisors. She remains an independent contractor with SWM Advisors. Ms. Mullins also serves as a trustee for other fund complexes. In addition to this experience, Ms. Mullins also has experience serving as a trustee for Valued Advisers Trust since 2013 and as its Chairperson since 2017. Ms. Mullins is also an independent trustee for The Cushing Family of Funds. The Board believes that Ms. Mullins' experience, qualifications, attributes and skills on an individual basis and in combination with those of the other Trustees lead to the conclusion that she possesses the requisite skills and attributes as a Trustee to carry out oversight responsibilities with respect to the Trust.

*Mr. Triick's Trustee Attributes.*

Mr. Triick has served in various portfolio management capacities for Angel Oak since 2011. In his current role, he leads the overall investment framework, including asset allocation, sector positioning, and duration management for the firm's public mutual funds, exchange-traded funds, and related SMAs. He heads the Public Strategies Investment Committee and is responsible for overseeing all aspects of portfolio management for the Public Strategies, which are primarily comprised of multi-sector portfolios. Prior to joining Angel Oak in 2011, Clayton worked for YieldQuest Advisors, where he was a member of the investment committee focusing on interest rate and currency risk management of the mutual funds alongside directly managing the closed-end fund allocations within YieldQuest portfolios and individual accounts. The Board believes that Mr. Triick's experience, qualifications, attributes and skills on an individual basis and in combination with those of the other Trustees lead to the conclusion that he possesses the requisite skills and attributes as a Trustee to carry out oversight responsibilities with respect to the Trust.

**<u>Board Committees</u>**

The Board has four standing committees: the Audit, Financial, and Administrative Oversight Committee; the Nominating and Governance Committee; the Compliance Oversight Committee; and the Valuation and Risk Management Oversight Committee.

The Audit, Financial and Administrative Oversight Committee is comprised of all of the Independent Trustees. The function of the Committee is to review the scope and results of the annual audit of the Funds and any matters bearing on the audit or the Funds' financial statements and to ensure the integrity of the Funds' financial reporting. The Committee also recommends to the Board of Trustees the annual selection of the independent registered public accounting firm for the Funds and it reviews and pre-approves audit and certain non-audit services to be provided by the independent registered public accounting firm. The Committee also assists the Board in overseeing the review of financial and administrative reports and discussing with the Trust's management financial and administrative matters relating to the Funds. For the fiscal year ended January 31, 2026, the Audit, Financial and Administrative Oversight Committee met four times.

The Nominating and Governance Committee, comprised of all the Independent Trustees, is responsible for seeking and reviewing candidates for consideration as nominees for Trustees. The Committee has a policy in place for considering Trustee candidates recommended by shareholders. Nomination submissions must be accompanied by all information relating to the recommended nominee that is required to be disclosed in solicitations or proxy statements for the election of Trustees, as well as information sufficient to evaluate the individual's qualifications. Nomination submissions must be accompanied by a written consent of the individual to stand for election if nominated by the Board and to serve if elected by the shareholders. In addition, a nominee must provide such additional information as reasonably requested by the Committee. The Committee will consider recommendations by shareholders for up to one year from receipt. Nomination submissions should be sent to:

Secretary, Angel Oak Funds Trust

c/o Angel Oak Capital Advisors, LLC

980 Hammond Drive, Suite 200

Atlanta, GA 30328

The Committee meets at least annually. For the fiscal year ended January 31, 2026, the Committee met four times.

The Compliance Oversight Committee, comprised of all the Independent Trustees, assists the full Board in connection with matters relating to the compliance of the Trust and its service providers with applicable laws. The Committee coordinates the Board's oversight of the implementation and administration of the Fund's compliance program through the periodic review of reports and discussions with appropriate management of the Adviser, including the CCO, and other service providers. The Committee reviews and makes recommendations to the Board regarding the Fund's compliance matters such as compliance with and any proposed changes to the Fund's compliance program and the Codes of Ethics of the Fund and Adviser. The Committee meets at least annually. For the fiscal year ended January 31, 2026, the Compliance Oversight Committee met four times.

The Valuation and Risk Management Oversight Committee, comprised of all the Independent Trustees, oversees valuation matters of the Trust delegated to the Adviser's Valuation Committee, including the fair valuation determinations and methodologies proposed and utilized by the Adviser's Valuation Committee, reviews the Trust's valuation procedures and their

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application by the Adviser's Valuation Committee, reviews pricing errors and procedures for calculation of NAV of each series of the Trust and responds to other matters deemed appropriate by the Board. The Committee also oversees the policies, procedures, practices and systems relating to identifying and managing the various risks that are or may be applicable to the Trust. The Committee does not assume any day-to-day risk management functions or activities. The Adviser and other service providers are responsible for the day-to-day implementation, maintenance, and administration of policies, procedures, systems and practices designed to identify, monitor and control risks to which the Trust is or may be exposed. The Chief Risk Officer of the Adviser oversees the execution of its risk management responsibilities. The actions of the Committee are reviewed and ratified by the Board. The Committee meets at least annually. For the fiscal year ended January 31, 2026, the Valuation and Risk Management Oversight Committee met four times.

**<u>Trustee Ownership of Fund Shares and Other Interests</u>**

The table below shows, for each Trustee, the amount of the Funds' equity securities beneficially owned by each Trustee, and the aggregate value of all investments in equity securities of the Trust, as of December 31, 2025 and stated as one of the following ranges: A = None; B = $1-$10,000; C = $10,001-$50,000; D = $50,001-$100,000; and E = over $100,000.

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| | | | |
|:---|:---|:---|:---|
| | **Dollar Range of Equity <br>Securities in the:** | **Dollar Range of Equity <br>Securities in the:** | **Aggregate Dollar Range of Equity Securities in all Registered Investment Companies Overseen by the Trustees in Family of Investment Companies** |
|<br>**Name of Trustee** | **Multi-Strategy Income Fund** | **UltraShort Income Fund** | **Aggregate Dollar Range of Equity Securities in all Registered Investment Companies Overseen by the Trustees in Family of Investment Companies** |
| **Non-Interested Trustees** | | | |
| Alvin R. Albe, Jr. | E | A | E |
| Ira P. Cohen | A | A | A |
| Keith M. Schappert | A | A | E |
| Andrea N. Mullins | A | A | E |
| **Interested Trustee** | | | |
| Clayton Triick | C | D | E |

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Furthermore, neither the Independent Trustees nor members of their immediate family own securities beneficially or of record in the Adviser, the Funds' principal underwriter, or any of their affiliates. Accordingly, during the two most recently completed calendar years, neither the Independent Trustees nor members of their immediate family, have had a direct or indirect interest, the value of which exceeds $120,000, in the Adviser, the Trust's principal underwriter or any of its affiliates.

**<u>Compensation</u>**

Each Trustee who is not an "interested person" (i.e., an "Independent Trustee") of the Fund Complex (which includes affiliated registrants not disclosed in this report) receives an annual retainer of $95,000 ($75,000 prior to November 1, 2025) (pro-rated for any periods less than one year) paid quarterly as well as $12,000 for attending each regularly scheduled meeting in connection with his or her service on the Board of the Fund Complex. In addition, each Committee Chair receives additional annual compensation of $12,000 (pro-rated for any periods less than one year), and the Chair of the Board receives an additional $27,000 ($17,000 prior to November 1, 2025). Independent Trustees are eligible for reimbursement of out-of-pocket expenses incurred in connection with attendance at meetings and applicable industry conferences when in line with applicable expense policy.

The Trust does not have any pension or retirement plans. For the fiscal year ended January 31, 2026, the following compensation was paid to the Trustees by the Funds:

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| | | | |
|:---|:---|:---|:---|
| | **Aggregate Compensation from the:** | **Aggregate Compensation from the:** | **Total Compensation from the Funds and Fund Complex**<sup>(1)</sup> **Paid to Trustees** |
|<br>**Name of Person/Position** | **Multi-Strategy Income Fund** | **UltraShort Income Fund** | **Total Compensation from the Funds and Fund Complex**<sup>(1)</sup> **Paid to Trustees** |
| **Non-Interested Trustees** | | | |
| Alvin R. Albe, Jr., Trustee | $43576 | $16280 | $140000 |
| Ira P. Cohen, Trustee, Chair | $49686 | $18553 | $159500 |
| Keith M. Schappert, Trustee | $43576 | $16280 | $140000 |
| Andrea N. Mullins, Trustee | $43576 | $16280 | $140000 |
| **Interested Trustee**<sup>(2)</sup> |  |  |  |
| Clayton Triick, Trustee | $0 | $0 | $0 |

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<sup>(1)</sup> The Fund Complex includes each series of the Trust, and Angel Oak Strategic Credit Fund, Angel Oak Financial Strategies Income Term Trust, and Angel Oak Credit Opportunities Term Trust, affiliated registrants not discussed in this SAI.

<sup>(2)</sup> As an Interested Trustee, Mr. Triick does not receive compensation from the Fund Complex.

**<u>Investment Adviser</u>**

The Funds' Adviser is Angel Oak Capital Advisors, LLC, 980 Hammond Drive, Suite 200, Atlanta, Georgia 30328. Angel Oak Capital Advisors, LLC was formed in 2009 by the Managing Partners of the Adviser, Michael A. Fierman, and Sreeniwas (Sreeni) V. Prabhu. The Adviser is wholly-owned by Angel Oak Asset Management Holdings, LLC. On October 1, 2025, Brookfield Asset Management Ltd. acquired a majority of Angel Oak Companies, LP, the parent of Angel Oak Asset Management Holdings, LLC, itself the parent of the Adviser.

Under the terms of the investment advisory agreement (the "Agreement"), the Adviser manages the Funds' investments subject to oversight by the Board of Trustees. As compensation for its management services, the Multi-Strategy Income Fund is obligated to pay the Adviser a fee computed and accrued daily and paid monthly at an annual rate of 0.89% of the average daily net assets of the Fund, and the UltraShort Income Fund is obligated to pay the Adviser a fee computed and accrued daily and paid monthly at an annual rate of 0.44% of the average daily net assets of the Fund.

The Adviser has contractually agreed to waive its fees and/or reimburse certain expenses (exclusive of any front-end sales loads, taxes, interest expenses, dividend and interest expenses related to short sales, brokerage commissions, 12b-1 fees, acquired fund fees and expenses, expenses incurred in connection with any merger or reorganization, any transaction-related expenses and fees arising out of transactions effected on behalf of a Fund, litigation and potential litigation expenses, expenses of shareholder proposals, contested elections, or non-routine shareholder meetings, and other non-routine expenses or extraordinary expenses not incurred in the ordinary course of a Fund's business) to limit the Total Annual Fund Operating Expenses after Fee Waiver/Expense Reimbursement to 0.99% of the Multi-Strategy Income Fund's average daily net assets, and 0.35% of the UltraShort Income Fund's average daily net assets (each the "Expense Limit") through September 30, 2027. The Total Annual Fund Operating Expenses after Fee Waiver/Expense Reimbursement may be higher than the Expense Limit as a result of any acquired fund fees and expenses or other expenses that are excluded from the calculation. The contractual waivers and expense reimbursements may be changed or eliminated at any time by the Board of Trustees, on behalf of the Fund, upon 60 days' written notice to the Adviser. The contractual waivers and expense reimbursements may not be terminated by the Adviser without the consent of the Board of Trustees. The Adviser may recoup from the Fund any waived amount or reimbursed expenses with respect to the Fund pursuant to this agreement if such recoupment does not cause the Fund to exceed the current Expense Limit or the Expense Limit in place at the time of the waiver or reimbursement (whichever is lower) and the recoupment is made within three years after the end of month in which the Adviser incurred the expense.

In addition, the Adviser has contractually agreed through at least September 30, 2027 to waive the amount of each Fund's management fee to the extent necessary to offset the proportionate share of the management fees incurred by the Fund through its investment in an underlying fund for which the Adviser also serves as investment adviser. This arrangement may only be changed or eliminated by the Board of Trustees upon 60 days' written notice to the Adviser.

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The following table describes the advisory fees paid to the Adviser by the Multi-Strategy Income Fund for the periods indicated.

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| | | | | |
|:---|:---|:---|:---|:---|
| **Fiscal Year Ended** | **Advisory Fees <br>Accrued** | **Fee Waiver/<br>Expense Reimbursement** | **Advisory Fees Recouped** | **Net Advisory Fees Paid <br>(or Expenses Reimbursed)** |
| January 31, 2026 | $24314948 | ($174052) | $54590 | $24195486 |
| January 31, 2025 | $24043302 | ($568797) | $90599 | $23565104 |
| January 31, 2024 | $24846902 | ($788267) | $66743 | $24125378 |

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The following table describes the advisory fees paid to the Adviser by the UltraShort Income Fund for the periods indicated.

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| | | | |
|:---|:---|:---|:---|
| **Fiscal Year Ended** | **Advisory Fees** <br>**Accrued**  | **Fee Waiver/<br>Expense Reimbursement** | **Net Advisory Fees Paid<br>(or Expenses Reimbursed)** |
| January 31, 2026 | $2961098 | ($1368024) | $1593074 |
| January 31, 2025 | $1966703 | ($1082264) | $884439 |
| January 31, 2024 | $2479980 | ($1346741) | $1133239 |

---

The Adviser retains the right to use the name "Angel Oak" in connection with another investment company or business enterprise with which the Adviser is or may become associated. The Trust's right to use the name "Angel Oak" automatically ceases 90 days after termination of the Agreement and may be withdrawn by the Adviser on 90 days' written notice.

The Adviser may make payments to banks or other financial institutions that provide shareholder services and administer shareholder accounts. If a bank or other financial institution were prohibited from continuing to perform all or a part of such services, management of the Funds believes that there would be no material impact on the Funds or shareholders. Banks and other financial institutions may charge their customers fees for offering these services to the extent permitted by applicable regulatory authorities, and the overall return to those shareholders availing themselves of the bank services will be lower than to those shareholders who do not. The Funds may from time to time purchase securities issued by banks and other financial institutions that provide such services; however, in selecting investments for the Funds, no preference will be shown for such securities.

**About the Portfolio Managers** 

&nbsp;&nbsp;&nbsp;&nbsp;The following table shows which Portfolio Managers have the primary responsibility for the day-to-day management of each Fund.

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| | | |
|:---|:---|:---|
| **Name of Portfolio Manager** | **Multi-Strategy**<br>**Income Fund** | **UltraShort** <br>**Income Fund** |
| &nbsp;&nbsp;&nbsp;&nbsp;Kin Lee | X | |
| &nbsp;&nbsp;&nbsp;&nbsp;Sreeniwas (Sreeni) V. Prabhu | X | X |
| &nbsp;&nbsp;&nbsp;&nbsp;Namit Sinha | X | X |
| &nbsp;&nbsp;&nbsp;&nbsp;Clayton Triick | X | X |

---

As of January 31, 2026, the Portfolio Managers were responsible for managing the following types of accounts for the Adviser, other than the Fund(s) for which they serve as a portfolio manager:

**<u>Kin Lee</u>**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Number and Assets of Other Accounts** | **Number and Assets of Other Accounts** | **Number and Assets of Other Accounts** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** |
| Registered Investment Companies | Other Pooled Investment Vehicles | Other Accounts | Registered Investment Companies | Other Pooled Investment Vehicles | Other Accounts |
| 0 | 3 | 0 | 0 | 3 | 0 |
| $0 | $38061297 | $0 | $0 | $38061297 | $0 |

---

------

**<u>Sreeniwas (Sreeni) V. Prabhu</u>**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Number and Assets of Other Accounts** | **Number and Assets of Other Accounts** | **Number and Assets of Other Accounts** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** |
| Registered Investment Companies | Other Pooled Investment Vehicles | Other Accounts | Registered Investment Companies | Other Pooled Investment Vehicles | Other Accounts |
| 4 | 15 | 0 | 0 | 14 | 0 |
| $1984429214 | $2005357855 | $0 | $0 | $1938389544 | $0 |

---

**<u>Namit Sinha</u>**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Number and Assets of Other Accounts** | **Number and Assets of Other Accounts** | **Number and Assets of Other Accounts** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** |
| Registered Investment Companies | Other Pooled Investment Vehicles | Other Accounts | Registered Investment Companies | Other Pooled Investment Vehicles | Other Accounts |
| 6 | 17 | 2 | 0 | 15 | 0 |
| $2534988279 | $2064234508 | $457033866 | $0 | $1977676357 | $0 |

---

**<u>Clayton Triick</u>**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Number and Assets of Other Accounts** | **Number and Assets of Other Accounts** | **Number and Assets of Other Accounts** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** |
| Registered Investment Companies | Other Pooled Investment Vehicles | Other Accounts | Registered Investment Companies | Other Pooled Investment Vehicles | Other Accounts |
| 8 | 1 | 2 | 0 | 1 | 0 |
| $3043554154 | $3645541 | $184410674 | $0 | $3645541 | $0 |

---

<u>Compensation</u>: The Portfolio Managers receive an annual base salary from the Adviser. Each of the Portfolio Managers is eligible to receive a discretionary bonus, which is based on: profitability of the Adviser; assets under management; investment performance of managed accounts; compliance with the Adviser's policies and procedures; contribution to the Adviser's goals and objectives; anticipated compensation levels of competitor firms; effective research; role and responsibilities; client satisfaction; asset retention; teamwork; leadership; and risk management. Mr. Prabhu has an ownership interest in the Adviser's ultimate parent company and may receive distributions from the Adviser's ultimate parent company, which may come from profits generated by the Adviser. Portfolio Managers may have membership or profit sharing interests in the Adviser's ultimate parent company in addition to their salary, bonus, and benefits package.

<u>Potential Conflicts of Interest</u>: Actual or apparent conflicts of interest may arise when a portfolio manager has day-to-day management responsibilities with respect to more than one fund or other account. More specifically, portfolio managers who manage multiple funds and/or other accounts may experience the following potential conflicts: The management of multiple accounts may result in a portfolio manager devoting unequal time and attention to the management of each account. Investment decisions for client accounts are also made consistent with a client's individual investment objective and needs. Accordingly, there may be circumstances when purchases or sales of securities for one or more client accounts will have an adverse effect on other clients. The Adviser may seek to manage such competing interests by: (1) having a portfolio manager focus on a particular investment discipline; (2) utilizing a quantitative model in managing accounts; and/or (3) reviewing performance differences between similarly managed accounts on a periodic basis to ensure that any such differences are attributable by differences in investment guidelines and timing of cash flows. The Adviser also maintains a Code of Ethics to establish standards and procedures for the detection and prevention of activities by which persons having knowledge of the investments and investment intentions of the Funds may abuse their fiduciary duties to the Funds.

If a portfolio manager identifies a limited investment opportunity that may be suitable for more than one client, the Funds may not be able to take full advantage of that opportunity due to an allocation of filled purchase or sale orders across all eligible accounts. To deal with these situations, the Adviser has adopted procedures for allocating portfolio transactions across multiple accounts.

With respect to securities transactions for clients, the Adviser determines which broker to use to execute each order. However, the Adviser may direct securities transactions to a particular broker/dealer for various reasons including receipt of research or participation interests in initial public offerings that may or may not benefit the Funds. To deal with these situations, the Adviser has adopted procedures to help ensure best execution of all client transactions.

------

From time to time, the Adviser may make investments at different levels of an issuer's or borrower's capital structure (including but not limited to investments in debt versus equity). In managing such investments, the Adviser will consider the interests of the Fund's shareholders in deciding what actions to take with respect to a given issuer or borrower. These potential conflicts of interests may become more pronounced in situations in which an issuer or borrower experiences financial or operational challenges, or as a result of a Fund's use of certain investment strategies, including small capitalization, emerging market, distressed or less liquid strategies.

Finally, the appearance of a conflict of interest may arise where the Adviser has an incentive, such as a performance-based management fee, which relates to the management of one but not all accounts for which a portfolio manager has day-to-day management responsibilities.

<u>Potential Restrictions and Issues Related to Material Non-Public Information</u>: The Adviser and its affiliates may acquire confidential or material non-public information, and as a result, the Adviser may be restricted from trading in certain securities and instruments. The Adviser will not be free to divulge, or to act upon, any such confidential or material non-public information and, due to these restrictions, the Adviser may be unable to initiate a transaction for a Fund's account that it otherwise might have initiated. As a result, a Fund may be frozen in an investment position that it otherwise might have liquidated or closed out or may not be able to acquire a position that it might otherwise have acquired.

The Funds are required to show the dollar amount ranges of the portfolio managers' beneficial ownership of shares of the Fund(s) they manage as of the fiscal year ended January 31, 2026.

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| | | |
|:---|:---|:---|
| **Portfolio Manager** | &nbsp;&nbsp;**Dollar Range of Equity Securities in the** | &nbsp;&nbsp;**Dollar Range of Equity Securities in the** |
| **Portfolio Manager** | &nbsp;&nbsp;**Multi-Strategy Income Fund** | &nbsp;&nbsp;**UltraShort** <br>**Income Fund** |
| Kin Lee | $10001-$50000 | N/A |
| Sreeni V. Prabhu |  |  |
| Namit Sinha |  |  |
| Clayton Triick | $10001-$50000 | $50001-$100000 |

---

**CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES** 

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

As a controlling shareholder, each of these persons could control the outcome of any proposal submitted to the shareholders for approval, including changes to a Fund's fundamental policies or the terms of the management agreement with the Adviser. To the best knowledge of the Trust, the names and addresses of the record and beneficial holders of 5% or more of the outstanding Class A, Class C, Class A1 and Institutional Class shares, as applicable, of the Funds' voting securities and the percentage of the outstanding Class A, Class C, Class A1 and Institutional Class shares held by such holders as of April 30, 2026 are set forth below. Unless otherwise indicated below, the Trust has no knowledge as to whether all or any portion of the shares owned of record are also owned beneficially.

As of May 1, 2026, the Trustees and officers of the Trust, as a group, owned of record and beneficially less than 1% of the outstanding Class A, Class A1, Class C, and Institutional Class shares, as applicable, of each Fund.

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**Angel Oak Multi-Strategy Income Fund - Class A Principal Shareholders**

---

| | | |
|:---|:---|:---|
| **Name and Address** | **% Ownership** | **Type of Ownership** |
| **<u>Record Owners</u>** | | |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Morgan Stanley Smith Barney LLC<br>For the Exclusive Benefit of its Customers<br>1 New York Plaza, Fl 12<br>New York, NY 10004-1965 | 27.92% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wells Fargo Clearing Services LLC<br>Special Custody Acct for the <br>Exclusive Benefit of Customers<br>2801 Market St.<br>Saint Louis, MO 63103-2523 | 23.72% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Merrill Lynch Pierce Fenner & Smith<br>For the Sole Benefit of its Customers<br>4800 Deer Lake Dr. East<br>Jacksonville, FL 32246-6484 | 13.63% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Charles Schwab & Co, Inc.<br>Special Custody A/C FBO Customers<br>Attn: Mutual Funds<br>211 Main St.<br>San Francisco, CA 94105-1901 | 9.92% | Record |
| **<u>Beneficial Owner</u>** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Marital Trust U/W/O<br>Edwin H. Wegman DTD 8/10/06<br>Toby Wegman & Mark N. Wegman Trustees<br>980 Hammond Drive, Suite 200<br>Atlanta, GA 30328 | 7.06% | Beneficial |

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**Angel Oak Multi-Strategy Income Fund - Class C Principal Shareholders**

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| | | |
|:---|:---|:---|
| **Name and Address** | **% Ownership** | **Type of Ownership** |
| **<u>Record Owners</u>** | | |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wells Fargo Clearing LLC<br>1 N. Jefferson Avenue MSC MO3970<br>Saint Louis, MO 63103-2254 | 40.66% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Morgan Stanley Smith Barney LLC<br>For the Exclusive Benefit of its Customers <br>1 New York Plaza, Fl 12<br>New York, NY 10004-1965 | 26.44% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Merrill Lynch Pierce Fenner & Smith<br>For the Sole Benefit of its Customers<br>4800 Deer Lake Dr. East<br>Jacksonville, FL 32246-6484 | 9.65% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;UBS WM USA<br>SPEC CDY A/C EBOC UBSFSI<br>1000 Harbor Blvd.<br>Weehawken, NJ 07086-6761 | 7.87% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ameriprise Financial Services LLC<br>707 2nd Ave. S. <br>Minneapolis, MN 55402-2405 | 5.33% | Record |

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**Angel Oak Multi-Strategy Income Fund - Institutional Class Principal Shareholders**

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| | | |
|:---|:---|:---|
| **Name and Address** | **% Ownership** | **Type of Ownership** |
| **<u>Record Owners</u>** | | |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Merrill Lynch Pierce Fenner & Smith<br>For the Sole Benefit of its Customers<br>4800 Deer Lake Dr. East<br>Jacksonville, FL 32246-6484 | 14.62% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;UBS WM USA<br>SPEC CDY A/C EBOC UBSFSI<br>1000 Harbor Blvd.<br>Weehawken, NJ 07086-6761 | 13.93% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Morgan Stanley Smith Barney LLC<br>For the Exclusive Benefit of its Customers<br>1 New York Plaza, Fl 12<br>New York, NY 10004-1965 | 12.48% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;National Financial Services LLC<br>499 Washington Blvd. Fl 4<br>Jersey City, NJ 07310-2010 | 10.76% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Band & Co. c/o U.S. Bank NA<br>1555 N. RiverCenter Drive, Suite 302<br>Milwaukee, WI 53212-3958 | 10.61% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Charles Schwab & Co, Inc.<br>Special Custody A/C FBO Customers<br>Attn: Mutual Funds<br>211 Main St.<br>San Francisco, CA 94105-1901 | 8.75% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SEI Private Trust Company<br>C/O BMO Harris Swp<br>1 Freedom Valley Drive<br>Oaks, PA 19456-9989 | 7.43% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wells Fargo Clearing Services LLC<br>Special Custody Acct for the<br>Exclusive Benefit of Customer<br>2801 Market St.<br>Saint Louis, MO 63103-2523 | 5.95% | Record |

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**Angel Oak UltraShort Income Fund – Class A Principal Shareholders**

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| | | |
|:---|:---|:---|
| **Name and Address** | **% Ownership** | **Type of Ownership** |
| **<u>Record Owners</u>** | | |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Charles Schwab & Co, Inc.<br>Special Custody A/C FBO Customers<br>Attn: Mutual Funds<br>211 Main St.<br>San Francisco, CA 94105-1901 | 31.43% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;RBC Capital Markets LLC<br>Mutual Fund Omnibus Processing<br>Attn: Mutual Fund Ops Manager<br>250 Nicollett Mall Ste 1200 Ste 1800<br>Minneapolis, MN 55401-7554 | 15.65% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;LPL Financial<br>Omnibus Customer Account<br>Attn: Lindsay O'Toole<br>4707 Executive Dr<br>San Diego, CA 92121-3091 | 13.78% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;UBS WM USA<br>SPEC CDY A/C EBOC UBSFSI<br>1000 Harbor Blvd.<br>Weehawken, NJ 07086-6761 | 8.74% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;National Financial Services LLC<br>499 Washington Blvd, Fl 4th<br>Jersey City, NJ 07310-2010 | 7.88% | Record |
| **<u>Beneficial Owner</u>** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Marital Trust U/W/O<br>Edwin H. Wegman DTD 8/10/06<br>Toby Wegman & Mark N. Wegman Trustees<br>980 Hammond Drive, Suite 200<br>Atlanta, GA 30328 | 13.88% | Beneficial |

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**Angel Oak UltraShort Income Fund – Class A1 Principal Shareholders**

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| | | |
|:---|:---|:---|
| **Name and Address** | **% Ownership** | **Type of Ownership** |
| **<u>Record Owners</u>** | | |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wells Fargo Clearing Services LLC<br>1 N Jefferson Ave MSC MO3970<br>Saint Louis, MO 63103-2254 | 100.00% | Record |

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**Angel Oak UltraShort Income Fund – Institutional Class Principal Shareholders**

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| | | |
|:---|:---|:---|
| **Name and Address** | **% Ownership** | **Type of Ownership** |
| **<u>Record Owners</u>** | | |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;National Financial Services LLC<br>499 Washington Blvd Fl 4th<br>Jersey City NJ 07310-2010 | 43.84% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;UBS WM USA<br>SPEC CDY A/C EBOC UBSFSI<br>1000 Harbor Blvd.<br>Weehawken, NJ 07086-6761 | 18.93% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Charles Schwab & Co, Inc.<br>Special Custody A/C FBO Customers<br>Attn: Mutual Funds<br>211 Main St.<br>San Francisco, CA 94105-1901 | 12.97% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Attn: Mutual Funds<br>SEI Private Trust Company<br>One Freedom Valley Drive<br>Oaks, PA 19456-9989 | 10.75% | Record |

---

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**PORTFOLIO TRANSACTIONS**

**<u>How Securities are Purchased and Sold</u>** 

Purchases and sales of portfolio securities that are fixed income securities (for instance, money market instruments and bonds, notes and bills) usually are principal transactions. In a principal transaction, the party from whom a Fund purchases or to whom the Fund sells is acting on their own behalf (and not as the agent of some other party such as its customers). These securities normally are purchased directly from the issuer or from an underwriter or market maker for the securities. There usually are no brokerage commissions paid for these securities.

Purchases and sales of portfolio securities that are equity securities (for instance common stock and preferred stock) are generally effected: (1) if the security is traded on an exchange, through brokers who charge commissions; and (2) if the security is traded in the "over-the-counter" markets, in a principal transaction directly from a market maker. In transactions on stock exchanges, commissions are negotiated. When transactions are executed in an over-the-counter market, the Adviser will seek to deal with the primary market makers; but when necessary to obtain best execution, the Adviser will utilize the services of others.

The price of securities purchased from underwriters includes a disclosed fixed commission or concession paid by the issuer to the underwriter, and prices of securities purchased from dealers serving as market makers reflects the spread between the bid and asked price.

In the case of fixed income and equity securities traded in the over-the-counter markets, there is generally no stated commission, but the price usually includes an undisclosed commission or markup.

**<u>Commissions Paid</u>** 

The following table sets forth the brokerage commissions paid by the Funds on portfolio brokerage transactions during the periods shown:

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| | | |
|:---|:---|:---|
| **Fiscal Year Ended** | **Multi-Strategy**<br>**Income Fund**<sup>1</sup> | **UltraShort**<br>**Income Fund**<sup>2</sup> |
| January 31, 2026 | $35602 | $7413 |
| January 31, 2025 | $46975 | $1652 |
| January 31, 2024 | $23699 | $1479 |

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<sup>1</sup> The significant increase in aggregate brokerage commissions paid by the Multi-Strategy Income Fund for the fiscal year ended January 31, 2025 was due to an increase in the Fund's trading of securities that are subject to brokerage commissions.

<sup>2</sup> The aggregate brokerage commissions paid by the UltraShort Income Fund significantly increased during the fiscal year ended January 31, 2026 due to an increase in the Fund's trading of securities that are subject to brokerage commissions.

**<u>Adviser Responsibility for Purchases and Sales</u>** 

The Adviser places orders for the purchase and sale of securities with broker-dealers selected by and in the discretion of the Adviser. The Funds do not have any obligation to deal with a specific broker or dealer in the execution of portfolio transactions. Allocations of transactions to brokers and dealers and the frequency of transactions are determined by the Adviser in its best judgment and in a manner deemed to be in the best interest of the applicable Fund rather than by any formula.

The Adviser seeks "best execution" for all portfolio transactions. This means that the Adviser seeks the most favorable price and execution available. The Adviser's primary consideration in executing transactions for a Fund is prompt execution of orders in an effective manner and at the most favorable price available.

**<u>Choosing Broker-Dealers</u>** 

The Funds may not always pay the lowest commission or spread available. Rather, in determining the amount of commissions (including certain dealer spreads) paid in connection with securities transactions, the Adviser takes into account factors such as size of the order, difficulty of execution, efficiency of the executing broker's facilities (including the research services described below) and any risk assumed by the executing broker.

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Consistent with applicable rules and the Adviser's duties, the Adviser may consider payments made by brokers effecting transactions for a Fund. These payments may be made to the Fund or to other persons on behalf of the Fund for services provided to the Fund for which those other persons would be obligated to pay.

The Adviser may also utilize a broker and pay a slightly higher commission if, for example, the broker has specific expertise in a particular type of transaction (due to factors such as size or difficulty), or it is efficient in trade execution.

**<u>Securities of Regular Broker-Dealers</u>** 

From time to time, a Fund may acquire and hold securities issued by its "regular brokers and dealers" or the parents of those brokers and dealers. For this purpose, regular brokers and dealers are the 10 brokers or dealers that: (1) received the greatest amount of brokerage commissions during the Fund's last fiscal year; (2) engaged in the largest amount of principal transactions for portfolio transactions of the Fund during the Fund's last fiscal year; or (3) sold the largest amount of the Fund's shares during the Fund's last fiscal year.

During the fiscal year ended January 31, 2026, the Multi-Strategy Income Fund and UltraShort Income Fund each acquired securities of its regular brokers or dealers (as defined in Rule 10b-1 under the 1940 Act) listed below.

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| | | |
|:---|:---|:---|
| **Fund** | **Regular Broker or <br>Dealer (or Parent) Issuer** | **Value of Securities <br>Owned (as of 1/31/26)** |
| Multi-Strategy Income Fund | Jane Street Group/ JSG Finance, Inc. | $2091623 |
| UltraShort Income Fund | Citigroup, Inc. | $1000572 |

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**<u>Obtaining Research from Brokers</u>**

The Adviser has full brokerage discretion. The Adviser evaluates the range and quality of a broker's services in placing trades such as securing best price, confidentiality, clearance and settlement capabilities, promptness of execution and the financial stability of the broker-dealer. The Adviser may give consideration to research services furnished by brokers to the Adviser for its use and may cause the Funds to pay these brokers a higher amount of commission than may be charged by other brokers. This research is designed to augment the Adviser's own internal research and investment strategy capabilities. This research may include reports that are common in the industry such as industry research reports and periodicals, quotation systems, software for portfolio management and formal databases. Typically, the research will be used to service all of the Adviser accounts, although a particular client may not benefit from all the research received on each occasion. The Adviser fees are not reduced by reason of receipt of research services. Most of the brokerage commissions for research are for investment research on specific companies or industries. And, because the Adviser will follow a limited number of securities most of the commission dollars spent on research will directly benefit clients and the Funds' investors.

**<u>Counterparty Risk</u>** 

The Adviser monitors the creditworthiness of counterparties to the Funds' transactions and intends to enter into a transaction only when it believes that the counterparty presents minimal and appropriate credit risks.

**<u>Transactions through Affiliates</u>** 

The Adviser may effect brokerage transactions through affiliates of the Adviser (or affiliates of those persons) pursuant to procedures adopted by the Trust.

**<u>Other Accounts of the Adviser</u>**

Investment decisions for each Fund are made independently from those for any other account or investment company that is or may in the future become advised by the Adviser or its respective affiliates. Investment decisions are the product of many factors, including basic suitability for the particular client involved. Likewise, a particular security may be bought or sold for certain clients even though it could have been bought or sold for other clients at the same time. Likewise, a particular security may be bought for one or more clients when one or more clients are selling the security. In some instances, one client may sell a particular security to another client. In addition, two or more clients may simultaneously purchase or sell the same security, in which event, each day's transactions in such security are, insofar as is possible, averaged as to price and allocated between such clients in a manner which, in the Adviser's opinion, is in the best interest of the affected accounts and is equitable to each and in accordance with the amount being purchased or sold by each. There may be circumstances when purchases or sales of a portfolio security for one client could have an adverse effect on another client that has a position in that security. In addition, when purchases or sales of the same security for a Fund and other client accounts managed by the Adviser occurs

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contemporaneously, the purchase or sale orders may be aggregated to obtain any price advantages available to large denomination purchases or sales.

**DISCLOSURE OF PORTFOLIO HOLDINGS**

The Trust, on behalf of the Funds, has adopted a portfolio holdings disclosure policy that governs the timing and circumstances of disclosure of portfolio holdings of the Funds. Information about the Funds' portfolio holdings will not be distributed to any third party except in accordance with the portfolio holdings policies and the Adviser's Policy (the "Disclosure Policies"). The Adviser and the Board considered the circumstances under which the Funds' portfolio holdings may be disclosed under the Disclosure Policies and the actual and potential material conflicts that could arise in such circumstances between the interests of the Funds' shareholders and the interests of the Adviser, distributor or any other affiliated person of the Funds. After due consideration, the Adviser and the Board determined that the Funds have a legitimate business purpose for disclosing portfolio holdings to persons described in the Disclosure Policies, including mutual fund rating or statistical agencies, or persons performing similar functions, and internal parties involved in the investment process, administration or custody of the Funds. Pursuant to the Disclosure Policies, the Trust's CCO is authorized to consider and authorize dissemination of portfolio holdings information to additional third parties, after considering whether the disclosure is for a legitimate business purpose and is in the best interests of the Funds' shareholders. The Adviser has also adopted a policy with respect to disclosure of portfolio holdings of the Funds (the "Adviser's Policy"). The Adviser's Policy is consistent with the Trust's portfolio holdings disclosure policy and is used in furtherance of the Trust's policy.

The Board exercises continuing oversight of the disclosure of the Funds' portfolio holdings by (1) overseeing the implementation and enforcement of the Disclosure Policies, Codes of Ethics and other relevant policies of the Funds and their service providers by the Trust's CCO, (2) by considering reports and recommendations by the Trust's CCO concerning any material compliance matters (as defined in Rule 38a-1 under the 1940 Act), and (3) by considering to approve any amendment to the Disclosure Policies. The Board reserves the right to amend the Disclosure Policies at any time without prior notice to shareholders in its sole discretion.

Disclosure of the Funds' complete holdings is required to be made after the periods covered by the Funds' Annual Report and Semi-Annual Report to Fund shareholders and in the quarterly holdings report on Form N-PORT. These reports are available, free of charge, on the EDGAR database on the SEC's website at www.sec.gov.

Generally, between the 5th and 10th business day of the month following each month (or quarter) end, the Funds may provide, at the Adviser's discretion, their portfolio holdings to various databases, including, but not limited to, eVest, Lipper (a Thompson Reuters company), Morningstar, Inc., and Bloomberg L.P. The timing, frequency and type (i.e., ratings/rankings/holdings) of disclosure may change at the Adviser's discretion, as well as whether to post to the Funds' website. The Board has also approved the dissemination of each Form N-PORT filed with the SEC, including non-public data, to the Investment Company Institute.

In the event of a conflict between the interests of a Fund and the interests of the Adviser or an affiliated person of the Adviser, the CCO of the Adviser, in consultation with the Trust's CCO, shall make a determination in the best interests of the Fund, and shall report such determination to the Board at the end of the quarter in which such determination was made. Any employee of the Adviser who suspects a breach of this obligation must report the matter immediately to the Adviser's CCO or to his or her supervisor.

In addition, material non-public holdings information may be provided without lag as part of the normal investment activities of the Funds to each of the following entities, which, by explicit agreement or by virtue of their respective duties to the Funds, are required to maintain the confidentiality of the information disclosed, including a duty not to trade on non-public information: the fund administrator, fund accountant, custodian, transfer agent, auditors, counsel to the Funds or the Board, broker-dealers (in connection with the purchase or sale of securities or requests for price quotations or bids on one or more securities) and regulatory authorities. Portfolio holdings information not publicly available with the SEC or through the Funds' website may only be provided to additional third parties, including mutual fund ratings or statistical agencies, in accordance with the Disclosure Policies, when the Funds have a legitimate business purpose and the third party recipient is subject to a confidentiality agreement that includes a duty not to trade on non-public information.

Service providers are subject to a duty of confidentiality pursuant to contract, applicable policies and procedures, or professional code and may not disclose non-public portfolio holdings information unless specifically authorized. In some cases, a service provider may be required to execute a non-disclosure agreement. Non-disclosure agreements include the following provisions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**•** The recipient agrees to keep confidential any portfolio holdings information received.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**•** The recipient agrees not to trade on the non-public information received.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**•** The recipient agrees to refresh its representation as to confidentiality and abstention from trading upon request from the Adviser.

Information about a Fund's portfolio holdings may be distributed to institutional consultants evaluating a particular Fund on behalf of potential investors.

Portfolio holdings disclosure may also be made pursuant to prior written approval by the CCO. Prior to approving any such disclosure, the CCO will ensure that procedures, processes and agreements are in place to provide reasonable assurance that the portfolio holdings information will only be used in accordance with the objectives of the Disclosure Policies.

In no event shall the Adviser, its affiliates or employees, the Funds, or any other party receive any direct or indirect compensation in connection with the disclosure of information about the Funds' portfolio holdings.

There can be no assurance that the Disclosure Policies will protect the Funds from potential misuse of portfolio holdings information by individuals or entities to which it is disclosed.

From time to time, the Adviser may make additional disclosure of the Funds' portfolio holdings on the Funds' website. Shareholders can access the Funds' website at www.angeloakcapital.com for additional information about the Funds, including, without limitation, the periodic disclosure of their portfolio holdings.

**PROXY VOTING POLICY** 

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

In its role as investment adviser to the Funds, the Adviser has adopted those proxy voting policies adopted by the Trust. To the extent that the Trust's policies do not cover potential voting issues with respect to proxies received by the Funds, the Fund has delegated to the Adviser the authority to act on its behalf to promote each Fund's investment objective, subject to the provisions of the Trust's policies regarding resolution of a conflict of interest with respect to the Adviser.

The Adviser will vote proxies in the best interests of the applicable Fund. The Adviser will generally vote in favor of routine corporate housekeeping proposals such as the election of directors and the selection of auditors, absent conflicts of interest (e.g., an auditor's provision of non-audit services). The Adviser will generally vote against proposals that cause board members to become entrenched or cause unequal voting rights. In reviewing proposals, the Adviser may also consider the opinion of management, the effect on management, the effect on shareholder value and the issuer's business practices.

The Adviser recognizes that under certain circumstances it may have a conflict of interest in voting proxies on behalf of a Fund. A "conflict of interest," means any circumstance when the Adviser (including officers, directors, agents and employees) knowingly does business with, receives compensation from, or sits on the board of, a particular issuer or closely affiliated entity, and, therefore, may appear to have a conflict of interest between its own interests and the interests of fund shareholders in how proxies of that issuer are voted. The Adviser has adopted the Trust's procedures as they relate to the resolution of conflicts of interest with respect to voting shares of the Funds.

The Trust will file a Form N-PX, with the Funds' complete proxy voting record for the 12 months ended June 30, no later than August 31st of each year. Form N-PX for the Funds will be available without charge, upon request, by calling toll-free (855) 751-4324 and on the SEC's website at www.sec.gov.

**ADDITIONAL PURCHASE AND REDEMPTION INFORMATION**

The information provided below supplements the information contained in the Prospectus regarding the purchase and redemption of each Fund's shares.

**How to Buy or Exchange Shares**

In addition to purchasing or exchanging shares directly from a Fund, you may purchase or exchange shares of a Fund through certain financial intermediaries and their agents and other authorized designees that have made arrangements with the Fund and are authorized to buy and exchange shares of the Fund (collectively, "Financial Intermediaries"). Investors should

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contact their Financial Intermediary directly for appropriate instructions, as well as information pertaining to accounts and any service or transaction fees that may be charged. If you transmit your order to these Financial Intermediaries before the close of a Fund (generally 4:00 p.m., Eastern Time) on a day that the NYSE is open for business, your order will be priced based on the applicable Fund's NAV next computed after it is received by the Financial Intermediary. Investors should check with their Financial Intermediary to determine if it participates in these arrangements. A Fund will be deemed to have received a purchase, redemption or exchange order when the Financial Intermediary receives the order.

Shares are priced at the applicable Fund's NAV plus any applicable sales charge next determined after U.S. Bancorp Fund Services, LLC, doing business as, U.S. Bank Global Fund Services ("Fund Services") receives your order in proper form, as discussed in the Funds' Prospectus. To receive the applicable price at that day's NAV, Fund Services must receive your order in proper form before the close of the applicable Fund, generally 4:00 p.m., Eastern Time.

The Trust reserves the right in its sole discretion (i) to suspend the continued offering of Fund shares, (ii) to reject purchase or exchange orders in whole or in part when in the judgment of the Adviser or the distributor such rejection is in the best interest of the applicable Fund, and (iii) to reduce or waive the minimum for initial and subsequent investments for certain fiduciary accounts or under circumstances where certain economies can be achieved in sales of Fund shares.

In addition to cash purchases, Fund shares may be purchased by tendering payment in-kind in the form of shares of stock, bonds or other securities. Any securities used to buy Fund shares must be readily marketable, their acquisition consistent with the applicable Fund's objective and otherwise acceptable to the Adviser and the Board. Please see "Purchases In-Kind" below for more information.

**Automatic Investment Plan**

As discussed in the Prospectus, each Fund provides an Automatic Investment Plan ("AIP") for the convenience of investors who wish to purchase shares of the Fund on a regular basis. All record keeping and custodial costs of the AIP are paid by the applicable Fund. The market value of Fund shares is subject to fluctuation. Prior to participating in the AIP the investor should keep in mind that this plan does not assure a profit nor protect against depreciation in declining markets.

**How to Sell Shares and Delivery of Redemption Proceeds**

You can sell your Fund shares any day the NYSE is open for regular trading, either directly to the Fund or through your Financial Intermediary.

Payments to shareholders for Fund shares redeemed directly from the Fund will be made as promptly as possible, but no later than seven days after receipt by the Funds' transfer agent of the written request in proper form, with the appropriate documentation as stated in the Prospectus, except that a Fund may suspend the right of redemption or postpone the date of payment during any period when (a) trading on the NYSE is restricted as determined by the SEC or the NYSE is closed for other than weekends and holidays; (b) an emergency exists as determined by the SEC making disposal of portfolio securities or valuation of net assets of the Fund not reasonably practicable; or (c) for such other period as the SEC may permit for the protection of the Fund's shareholders. Under unusual circumstances, a Fund may suspend redemptions, or postpone payment for more than seven days, but only as authorized by SEC rules.

The value of shares on redemption or repurchase may be more or less than the investor's cost, depending upon the market value of the applicable Fund's portfolio securities at the time of redemption or repurchase.

**Telephone Redemptions**

Shareholders with telephone transaction privileges established on their account may redeem Fund shares by telephone. Upon receipt of any instructions or inquiries by telephone from the shareholder, the applicable Fund or its authorized agents may carry out the instructions and/or to respond to the inquiry consistent with the shareholder's previously established account service options. For joint accounts, instructions or inquiries from either party will be carried out without prior notice to the other account owners. In acting upon telephone instructions, each Fund and its agents use procedures that are reasonably designed to ensure that such instructions are genuine. These include recording all telephone calls, requiring pertinent information about the account and sending written confirmation of each transaction to the registered owner.

Fund Services will employ reasonable procedures to confirm that instructions communicated by telephone are genuine. If Fund Services fails to employ reasonable procedures, the applicable Fund and Fund Services may be liable for any losses due to unauthorized or fraudulent instructions. If these procedures are followed, however, to the extent permitted by applicable law, neither the Funds nor their agents will be liable for any loss, liability, cost or expense arising out of any redemption request, including any fraudulent or unauthorized request. For additional information, contact Fund Services.

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**Redemptions In-Kind**

Each Fund has reserved the right to pay the redemption price of its shares, either totally or partially, by a distribution in-kind of portfolio securities (instead of cash). The securities so distributed would be valued at the same amount as that assigned to them in calculating the NAV for the shares being sold. If a shareholder receives a distribution in-kind, the shareholder could incur subsequent brokerage or other charges in converting the securities to cash and will bear any market risks associated with such securities until they are converted into cash. A redemption in-kind is treated as a taxable transaction and a sale of the redeemed shares, generally resulting in capital gain or loss to you, subject to certain loss limitation rules. Shareholders' ability to liquidate securities distributed in-kind may be restricted by resale limitations or substantial restrictions on transfer imposed by the issuers of the securities or by law. Shareholders may only be able to liquidate securities distributed in-kind at a substantial discount from their value, and there may be higher brokerage costs associated with any subsequent disposition of these securities by the recipient.

**Purchases In-Kind**

Securities received by a Fund in connection with an in-kind purchase will be valued in accordance with the Fund's valuation procedures as of the time of the next-determined NAV per share of the Fund following receipt in good form of the order. In situations where the purchase is made by an affiliate of a Fund with securities received by the affiliate through a redemption in-kind from another fund, the redemption in-kind and purchase in-kind must be effected simultaneously, the Fund and the redeeming fund must have the same procedures for determining their NAVs, and the Fund and the redeeming fund must ascribe the same value to the securities. Please call (855) 751-4324 before attempting to purchase shares in-kind. The Funds reserve the right to amend or terminate this practice at any time.

**Distributions** 

Distributions of net investment income will be reinvested at the applicable Fund's NAV (unless you elect to receive distributions in cash) as of the payment date. Distributions of capital gain will be reinvested at the NAV of the applicable Fund (unless you elect to receive distributions in cash) on the payment date for the distribution. Cash payments may be made more than seven days following the date on which distributions would otherwise be reinvested.

**TAXATION**

The tax information set forth in the Prospectus and the information in this section relates solely to U.S. federal income tax law and assumes that each Fund qualifies as a regulated investment company (as discussed below). Such information is only a summary of certain key U.S. federal income tax considerations affecting each Fund and its shareholders and is in addition to the information provided in the Prospectus. No attempt has been made to present a complete explanation of the Federal tax treatment of each Fund or the tax implications to shareholders. The discussions here and in the Prospectus are not intended as substitutes for careful tax planning.

This "Taxation" section is based on the Internal Revenue Code of 1986, as amended (the "Code") and applicable regulations in effect on the date of the Prospectus. Future legislative or administrative changes or court decisions may significantly change the tax rules applicable to the Fund and its shareholders. Any of these changes or court decisions may have a retroactive effect.

*All investors should consult their own tax advisors as to the Federal, state, local and foreign tax consequences of an investment in a Fund.* 

**<u>Qualification as a Regulated Investment Company</u>**

Each Fund intends, for each tax year, to qualify as a "regulated investment company" under the Code.

**U.S. Federal Income Tax Consequences of Qualification**

As a regulated investment company, each Fund will not be subject to U.S. federal income tax on the portion of its investment company taxable income (that is, taxable interest, dividends, net short-term capital gains and other taxable ordinary income, net of expenses) and net capital gain (that is, the excess of net long-term capital gains over net short-term capital losses) that it distributes to shareholders. To be subject to tax as a regulated investment company, generally a Fund must satisfy the following requirements:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Fund must distribute an amount at least equal to the sum of 90% of its investment company taxable income, determined without regard to any deduction for dividends paid, and 90% of its net tax-exempt interest, if any,

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each tax year (certain distributions made by the Fund after the close of its tax year are considered distributions attributable to the previous tax year for purposes of satisfying this requirement ("Distribution Requirement")).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Fund must derive at least 90% of its gross income each tax year from dividends, interest, payments with respect to securities loans, and gains from the sale or other disposition of securities, or other income (including gains from options and futures contracts) derived from its business of investing in securities and net income derived from interests in qualified publicly traded partnerships.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Fund must satisfy the following asset diversification test at the close of each quarter of the Fund's tax year: (1) at least 50% of the value of the Fund's assets must consist of cash, cash items, U.S. government securities, securities of other regulated investment companies, and securities of other issuers (as to which the Fund has not invested more than 5% of the value of the Fund's total assets in securities of an issuer and as to which the Fund does not hold more than 10% of the outstanding voting securities of the issuer); and (2) no more than 25% of the value of the Fund's total assets may be invested in the securities of any one issuer (other than U.S. government securities and securities of other regulated investment companies), or in two or more issuers which the Fund controls and which are engaged in the same or similar trades or businesses or in the securities of one or more qualified publicly traded partnerships.

While each Fund presently intends to make cash distributions (including distributions reinvested in Fund shares) for each tax year in an aggregate amount sufficient to satisfy the Distribution Requirement and eliminate U.S. federal income tax, a Fund may use "equalization accounting" (in lieu of making some or all cash distributions) for those purposes. To the extent that a Fund uses equalization accounting it will allocate a portion of its undistributed investment company taxable income and net capital gain to redemptions of Fund shares and will correspondingly reduce the amount of such income and gain that it distributes in cash. If the IRS determines that the Fund's allocation is improper and that a Fund has under-distributed its income and gain for any tax year, the Fund may be liable for U.S. federal income and/or excise tax, and, if the Distribution Requirement has not been met, may also be unable to continue to qualify for treatment as a regulated investment company (see discussion below on what happens if a Fund fails to qualify for that treatment).

If a Fund retains any net capital gains for reinvestment, it may elect to treat such capital gains as having been distributed to shareholders. If the Fund makes such an election, each shareholder will be required to report its share of such undistributed net capital gains attributed to the Fund as long-term capital gain and will be entitled to claim its share of the U.S. federal income taxes paid by the Fund on such undistributed net capital gains as a credit against its own U.S. federal income tax liability, if any, and to claim a refund on a properly-filed U.S. federal income tax return to the extent that the credit exceeds such liability. In addition, each shareholder will be entitled to increase the adjusted tax basis of its Shares by the difference between its share of such undistributed net capital gain and the related credit. There can be no assurance that the Fund will make this election if it retains all or a portion of its net capital gain for a tax year.

A Fund is permitted to carry forward a net capital loss to offset its capital gain indefinitely. The excess of a Fund's net short-term capital loss over its net long-term capital gain is treated as a short-term capital loss arising on the first day of the Fund's next taxable year and the excess of a Fund's net long-term capital loss over its net short-term capital gain is treated as a long-term capital loss arising on the first day of the Fund's next taxable year. If future capital gain is offset by carried-forward capital losses, such future capital gain is not subject to fund-level U.S. federal income tax, regardless of whether it is distributed to shareholders. Accordingly, the Funds do not expect to distribute any such offsetting capital gain. In the event that a Fund were to experience an ownership change as defined under the Code, the capital loss carryforwards and other favorable tax attributes of the Fund, if any, may be subject to limitation. The Funds cannot carry back or carry forward any net operating losses.

As of the most recent fiscal year end, the Funds had capital loss carry-forwards approximating the amount indicated for U.S. federal income tax purposes, expiring in the year indicated (if applicable):

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| | | |
|:---|:---|:---|
| | **Multi-Strategy Income Fund** | **UltraShort Income Fund** |
| No expiration short-term | $499150193 | $29631880 |
| No expiration long-term | $1249304620 | $20163649 |
| Total | $1748454813 | $49795529 |

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**<u>Failure to Qualify</u>**

If for any tax year a Fund does not qualify as a regulated investment company, all of its taxable income (including its net capital gain) will be subject to tax at regular corporate rates without any deduction for dividends paid to shareholders, and the dividends will generally be taxable to the shareholders as ordinary income to the extent of the Fund's current and accumulated

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earnings and profits. In addition, a Fund could be required to recognize unrealized gains, pay taxes and make distributions (any of which could be subject to interest charges) before re-qualifying for taxation as a regulated investment company. If a Fund fails to satisfy either the income test or asset diversification test described above, in certain cases, however, the Fund may be able to avoid losing its status as a regulated investment company by timely providing notice of such failure to the IRS, curing such failure and possibly paying an additional tax or penalty.

Failure to qualify as a regulated investment company would thus have a negative impact on a Fund's income and performance. It is possible that a Fund will not qualify as a regulated investment company in any given tax year.

**<u>Fund Distributions</u>**

Each Fund anticipates distributing substantially all of its investment company taxable income and net tax-exempt interest (if any) for each tax year. Distributions paid to you out of such income generally would be characterized as ordinary income. A portion of these distributions may qualify for the dividends-received deduction when paid to certain corporate shareholders to the extent that the applicable Fund receives dividend income from taxable domestic corporations, provided that holding period and other requirements are met by the Fund and the shareholder.

A portion of a Fund's distributions paid to individuals may be treated as "qualified dividend income," and may be subject to a maximum U.S. federal income tax rate of either 15% or 20% (depending on whether the individual's income exceeds certain threshold amounts). A distribution is treated as qualified dividend income to the extent that the applicable Fund receives dividend income from taxable domestic corporations and certain qualified foreign corporations, provided that holding period and other requirements are met by the Fund and the shareholder. To the extent a Fund's distributions are attributable to other sources, such as interest or capital gains, such distributions are not treated as qualified dividend income.

Given each Fund's investment strategies, it is not expected that a significant portion of any Fund's dividends will be eligible to be reported as qualified dividend income or as eligible for the dividends-received deduction.

Individuals (and certain other non-corporate entities) are generally eligible for a 20% deduction with respect to taxable ordinary dividends from real estate investment trusts ("REITs"). IRS regulations allow a regulated investment company to pass through to its shareholders such taxable ordinary REIT dividends. Accordingly, individual (and certain other non-corporate) shareholders of a Fund that has received taxable ordinary REIT dividends may be able to take advantage of this 20% deduction with respect to any such amounts passed through.

Certain distributions reported by a Fund as Section 163(j) interest dividends may be treated as interest income by shareholders for purposes of the tax rules applicable to interest expense limitations under Section 163(j) of the Code. Such treatment by the shareholder is generally subject to holding period requirements and other potential limitations, although the holding period requirements are generally not applicable to dividends declared by money market funds and certain other funds that declare dividends daily and pay such dividends on a monthly or more frequent basis. The amount that a Fund is eligible to report as a Section 163(j) dividend for a tax year is generally limited to the excess of the Fund's business interest income over the sum of the Fund's (i) business interest expense and (ii) other deductions properly allocable to the Fund's business interest income.

An additional 3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends and capital gain distributions received from a Fund and net gains from redemptions or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts to the extent that such person's "modified adjusted gross income" (in the case of an individual) or "adjusted gross income" (in the case of an estate or trust) exceeds certain threshold amounts.

Each Fund anticipates distributing substantially all of its net capital gain for each tax year. These distributions generally are made only once a year, usually in November or December, but a Fund may make additional distributions of net capital gain at any time during the year. These distributions to you generally would be characterized as long-term capital gain, regardless of how long you have held shares. These distributions do not qualify for the dividends-received deduction.

Each Fund intends to operate, each year, using a fiscal and taxable year ending January 31.

Distributions by a Fund that exceed its earnings and profits will be treated as a return of capital. Return of capital distributions reduce your tax basis in the shares and are treated as gain from the sale of the shares to the extent your basis would be reduced below zero.

All distributions by a Fund will be treated in the manner described above regardless of whether the distribution is paid in cash or reinvested in additional shares of the Fund (or of another fund). If you receive distributions in the form of additional shares, you will be treated as receiving a distribution in an amount equal to the amount of cash that could have been received instead of shares.

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You may purchase shares with a NAV at the time of purchase that reflects undistributed net investment income or recognized capital gain, or unrealized appreciation in the value of the assets of the applicable Fund. Distributions of these amounts are taxable to you in the manner described above, although the distribution economically constitutes a return of capital to you.

Ordinarily, you are required to take distributions by a Fund into account in the year in which they are made. A distribution declared in October, November or December of any calendar year and payable to shareholders of record on a specified date in those months, however, is deemed to be paid by a Fund and received by you on December 31 of that calendar year if the distribution is actually paid in January of the following year.

The Funds will send you information annually as to the U.S. federal income tax consequences of distributions made (or deemed made) during the year.

**<u>Certain Tax Rules Applicable to Fund Transactions</u>**

For U.S. federal income tax purposes, when put and call options purchased by a Fund expire unexercised, the premiums paid by the Fund give rise to short- or long-term capital losses at the time of expiration (depending on the length of the respective exercise periods for the options). When put and call options written by a Fund expire unexercised, the premiums received by the Fund give rise to short-term capital gains at the time of expiration. When a Fund exercises a call, the purchase price of the underlying security is increased by the amount of the premium paid by the Fund. When a Fund exercises a put, the proceeds from the sale of the underlying security are decreased by the premium paid. When a put or call written by a Fund is exercised, the purchase price (selling price in the case of a call) of the underlying security is decreased (increased in the case of a call) for tax purposes by the premium received.

Some of the debt securities that may be acquired by a Fund may be treated as debt securities that are issued with original issue discount ("OID"). Generally, the amount of the OID is treated as interest income and is included in income over the term of the debt security, even though payment of that amount is not received until a later time, usually when the debt security matures. Additionally, some of the debt securities that may be acquired by a Fund in the secondary market may be treated as having market discount. Generally, any gain recognized on the disposition of, and any partial payment of principal on, a debt security having market discount is treated as ordinary income to the extent the gain, or principal payment, does not exceed the "accrued market discount" on such debt security. A Fund may make one or more of the elections applicable to debt securities having market discount, which could affect the character and timing of recognition of income. A Fund generally will be required to distribute dividends to shareholders representing discount on debt securities that is currently includable in income, even though cash representing such income may not have been received by the Fund. Cash to pay such dividends may be obtained from sales proceeds of securities held by the Fund.

Each Fund may invest a portion of its net assets in below investment grade instruments. Investments in these types of instruments may present special tax issues for a Fund. U.S. federal income tax rules are not entirely clear about issues such as when a Fund may cease accruing interest, OID or market discount, when and to what extent deductions may be taken for bad debts or worthless instruments, how payments received on obligations in default should be allocated between principal and income and whether exchanges of debt obligations in a bankruptcy or workout context are taxable. These and other issues will be addressed by each Fund to the extent necessary to seek to ensure that it distributes sufficient income that it does not become subject to U.S. federal income or excise tax.

Certain listed options, regulated futures contracts and forward currency contracts are considered "Section 1256 contracts" for U.S. federal income tax purposes. Section 1256 contracts held by a Fund at the end of each tax year are "marked to market" and treated for U.S. federal income tax purposes as though sold for fair market value on the last business day of the tax year. Gains or losses realized by a Fund on Section 1256 contracts generally are considered 60% long-term and 40% short-term capital gains or losses. A Fund can elect to exempt its Section 1256 contracts that are part of a "mixed straddle" (as described below) from the application of Section 1256 of the Code.

Any option, futures contract or other position entered into or held by a Fund in conjunction with any other position held by the Fund may constitute a "straddle" for U.S. federal income tax purposes. A straddle of which at least one, but not all, the positions are Section 1256 contracts, may constitute a "mixed straddle." In general, straddles are subject to certain rules that may affect the character and timing of a Fund's gains and losses with respect to straddle positions by requiring, among other things, that: (1) the loss realized on disposition of one position of a straddle may not be recognized to the extent that the Fund has unrealized gains with respect to the other position in such straddle; (2) the Fund's holding period in straddle positions being suspended while the straddle exists (possibly resulting in a gain being treated as short-term capital gain rather than long-term capital gain); (3) the losses recognized with respect to certain straddle positions which are part of a mixed straddle and which are non-Section 1256 contracts being treated as 60% long-term and 40% short-term capital loss; (4) losses recognized with respect to certain straddle positions which would otherwise constitute short-term capital losses be treated as long-term

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capital losses; and (5) the deduction of interest and carrying charges attributable to certain straddle positions may be deferred. Various elections are available to a Fund, which may mitigate the effects of the straddle rules, particularly with respect to mixed straddles. In general, the straddle rules described above do not apply to any straddles held by a Fund if all of the offsetting positions consist of Section 1256 contracts.

Under the Code, gains or losses attributable to fluctuations in exchange rates which occur between the time a Fund accrues interest or other receivables or accrues expenses or other liabilities denominated in a foreign currency and the time a Fund actually collects such receivables or pays such liabilities are treated as ordinary income or ordinary loss. Similarly, gains or losses from the disposition of foreign currencies, from the disposition of debt securities denominated in a foreign currency, or from the disposition of a forward contract, futures contract or similar financial instrument denominated in a foreign currency which are attributable to fluctuations in the value of the foreign currency between the date of acquisition of the asset and the date of disposition also are treated as ordinary income or loss. These gains or losses, referred to under the Code as "Section 988" gains or losses, increase or decrease the amount of the applicable Fund's investment company taxable income available to be distributed to its shareholders as ordinary income, rather than increasing or decreasing the amount of a Fund's net capital gain.

The Funds may invest in shares of foreign corporations (including equity interests in certain CLOs) which may be treated as passive foreign investment companies ("PFICs") under the Code. In general, a foreign corporation is treated as a PFIC if at least one-half of its assets constitute investment-type assets or 75% or more of its gross income is investment-type income. If a Fund receives a so-called "excess distribution" with respect to PFIC stock, the Fund itself may be subject to a tax on a portion of the excess distribution, whether or not the corresponding income is distributed by the Fund to shareholders. In general, under the PFIC rules, an excess distribution is treated as having been realized ratably over the period during which a Fund held the PFIC shares. A Fund itself will be subject to tax on the portion, if any, of an excess distribution that is so allocated to prior Fund tax years and an interest factor will be added to the tax, as if the tax had been payable in such prior tax years. Certain distributions from a PFIC as well as gain from the sale of PFIC shares are treated as excess distributions. Excess distributions are characterized as ordinary income even though, absent application of the PFIC rules, certain excess distributions might have been characterized as capital gain.

A Fund may be eligible to elect alternative tax treatment with respect to PFIC shares. Under an election that currently is available in some circumstances (a qualified electing fund, or "QEF", election), a Fund generally would be required to include in its gross income its share of the earnings of a PFIC on a current basis, regardless of whether distributions are received from the PFIC in a given tax year. If this election were made, the special rules, discussed above, relating to the taxation of excess distributions, would not apply.

Alternatively, a Fund may elect to mark-to-market its PFIC shares at the end of each taxable year, with the result that unrealized gains would be treated as though they were realized and reported as ordinary income. Any mark-to-market losses would be deductible as ordinary losses to the extent of any net mark-to-market gains included in income in prior tax years.

Because the application of the PFIC rules may affect, among other things, the character of gains, the amount of gain or loss and the timing of the recognition of income with respect to PFIC shares, as well as subject a Fund itself to tax on certain income from PFIC shares, the amount that must be distributed to shareholders, and which will be taxed to shareholders as ordinary income or long-term capital gain, may be increased or decreased substantially as compared to a fund that did not invest in PFIC shares. A Fund's income inclusion with respect to a PFIC with respect to which the Fund has made a qualified electing fund, or "QEF", election, is generally treated as qualifying income for purposes of determining the Fund's ability to be subject to tax as a regulated investment company if (A) there is a current distribution out of the earnings and profits of the PFIC that are attributable to such income inclusion or (B) such inclusion is derived with respect to the Fund's business of investing in stock, securities, or currencies.

If a Fund holds 10% or more of the interests treated as equity for U.S. federal income tax purposes in a foreign corporation that is treated as a controlled foreign corporation ("CFC") (including equity tranche investments and certain debt tranche investments in a CLO treated as CFC), the Fund may be treated as receiving a deemed distribution (taxable as ordinary income) each tax year from such foreign corporation in an amount equal to the Fund's pro rata share of the corporation's income for the tax year (including both ordinary earnings and capital gains), whether or not the corporation makes an actual distribution during such year. In general, a foreign corporation will be classified as a CFC if more than 50% of the shares of the corporation, measured by reference to combined voting power or value, is owned (directly, indirectly or by attribution) by U.S. Shareholders. A "U.S. Shareholder," for this purpose, is any U.S. person that possesses (actually or constructively) 10% or more of the combined value or voting power of all classes of shares of a corporation. If a Fund is treated as receiving a deemed distribution from a CFC, the Fund will be required to include such distribution in the Fund's investment company taxable income regardless of whether the Fund receives any actual distributions from such CFC, and the Fund must distribute such income to satisfy the distribution requirements applicable to regulated investment companies. A Fund's income inclusion with respect to a CFC is generally treated as qualifying income for purposes of determining the Fund's ability to be subject to tax as a regulated

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investment company either if (A) there is a current distribution out of the earnings and profits of the CFC that are attributable to such income inclusion or (B) such inclusion is derived with respect to the Fund's business of investing in stock, securities, or currencies.

The Funds might invest directly or indirectly in residual interests in real estate mortgage investment conduits ("REMICs") or equity interests in taxable mortgage pools ("TMPs"). Under a notice issued by the IRS in October 2006 and Treasury regulations that have not yet been issued (but may apply with retroactive effect) a portion of a Fund's income from a REIT that is attributable to the REIT's residual interest in a REMIC or a TMP (referred to in the Code as an "excess inclusion") will be subject to U.S. federal income tax in all events. This notice also provides, and the regulations are expected to provide, that excess inclusion income of a regulated investment company, such as a Fund, will generally be allocated to shareholders of the regulated investment company in proportion to the dividends received by such shareholders, with the same consequences as if the shareholders held the related REMIC or TMP residual interest directly.

In general, excess inclusion income allocated to shareholders (i) cannot be offset by net operating losses (subject to a limited exception for certain thrift institutions) and (ii) will constitute unrelated business taxable income ("UBTI") to entities (including a qualified pension plan, an individual retirement account, a 401(k) plan, a Keogh plan or other tax-exempt entity) subject to tax on UBTI, thereby potentially requiring such an entity that is allocated excess inclusion income, and otherwise might not be required to file a tax return, to file a tax return and pay tax on such income. In addition, because the Code provides that excess inclusion income is ineligible for treaty benefits, a regulated investment company must withhold tax on excess inclusions attributable to its foreign shareholders at a 30% rate of withholding, regardless of any treaty benefits for which a shareholder is otherwise eligible.

Any investment in residual interests of a CMO that has elected to be treated as a REMIC can create complex tax problems, especially if a Fund has state or local governments or other tax-exempt organizations as shareholders. Under current law, a Fund serves to block UBTI from being realized by its tax-exempt shareholders. Notwithstanding the foregoing, a tax-exempt shareholder will recognize UBTI by virtue of its investment in a Fund if shares in the Fund constitute debt-financed property in the hands of the tax-exempt shareholder within the meaning of Section 514(b) of the Code. Furthermore, a tax-exempt shareholder may recognize UBTI if a Fund recognizes "excess inclusion income" derived from direct or indirect investments in REMIC residual interests or TMPs if the amount of such income recognized by the Fund exceeds the Fund's investment company taxable income (after taking into account deductions for dividends paid by the Fund).

In addition, special tax consequences apply to charitable remainder trusts ("CRTs") that invest in regulated investment companies that invest directly or indirectly in residual interests in REMICs or in TMPs. Under legislation enacted in December 2006, a CRT, as defined in Section 664 of the Code, that realizes UBTI for a tax year is subject to an excise tax annually of an amount equal to such UBTI. Under IRS guidance issued in October 2006, a CRT will not recognize UBTI solely as a result of investing in a Fund that recognizes "excess inclusion income." Rather, if at any time during any tax year a CRT (or one of certain other tax-exempt shareholders, such as the U.S., a state or political subdivision, or an agency or instrumentality thereof, and certain energy cooperatives) is a record holder of a share in a Fund that recognizes "excess inclusion income," then the Fund will be subject to a tax on that portion of its "excess inclusion income" for the tax year that is allocable to such shareholders at the highest federal corporate income tax rate. The extent to which this IRS guidance remains applicable in light of the December 2006 legislation is unclear. To the extent permitted under the 1940 Act, a Fund may elect to specially allocate any such tax to the applicable CRT, or other shareholder, and thus reduce such shareholder's distributions for the tax year by the amount of the tax that relates to such shareholder's interest in the Fund. Each Fund has not yet determined whether such an election will be made. CRTs are urged to consult their tax advisors concerning the consequences of investing in a Fund.

**<u>Federal Excise Tax</u>**

A 4% nondeductible excise tax is imposed on a regulated investment company that fails to distribute in each calendar year an amount at least equal to the sum of: (1) 98% of its ordinary taxable income (taking into account certain deferrals and elections) for the calendar year; (2) 98.2% of its capital gain net income (adjusted for certain ordinary losses) for the one-year period ended on October 31 of the calendar year; and (3) all ordinary taxable income and capital gains for previous years that were not distributed or taxed during such years and on which the regulated investment company did not incur any U.S. federal income tax. The balance of a Fund's income must be distributed during the next calendar year. Each Fund will be treated as having distributed any amount on which it is subject to income tax for any tax year ending in the calendar year.

For purposes of calculating the excise tax, each Fund is generally required to: (1) reduce its capital gain net income (but not below its net capital gain) by the amount of any net ordinary loss for the calendar year; and (2) exclude foreign currency gains and losses (and certain other ordinary gains and losses) incurred after October 31 of any tax year in determining the amount of ordinary taxable income for the current calendar year. Each Fund will include such gains and losses incurred after October 31 in determining ordinary taxable income for the succeeding calendar year.

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Each Fund intends to make sufficient distributions of its ordinary taxable income and capital gain net income prior to the end of each calendar year to avoid liability for the excise tax. Investors should note, however, that a Fund might in certain circumstances be required to liquidate portfolio investments to make sufficient distributions to avoid the imposition of any excise tax liability.

**<u>Sale, Exchange or Redemption of Shares</u>**

In general, you will recognize gain or loss on the sale, exchange or redemption of Fund shares in an amount equal to the difference between the proceeds of the sale, exchange or redemption and your adjusted tax basis in the shares. All or a portion of any loss so recognized may be disallowed if you purchase (for example, by reinvesting dividends) shares of the same Fund within 30 days before or after the sale, exchange or redemption (a "wash sale"). If disallowed, the loss will be reflected in an upward adjustment to the basis of the shares purchased. In general, any gain or loss arising from the sale, exchange or redemption of Fund shares will be considered capital gain or loss and will be long-term capital gain or loss if the shares were held for longer than one year. Any capital loss arising from the sale, exchange or redemption of shares held for six months or less, however, will be treated as a long-term capital loss to the extent of the amount of distributions of net capital gain received on such shares. In determining the holding period of such shares for this purpose, any period during which your risk of loss is offset by means of options, short sales or similar transactions is not counted. Capital losses in any tax year are deductible only to the extent of capital gains plus, in the case of a non-corporate taxpayer, $3,000 of ordinary income.

Each Fund (or its administrative agent) is required to report to the IRS and furnish to shareholders the cost basis information for sale transactions of shares. Shareholders may elect to have one of several cost basis methods applied to their account when calculating the cost basis of shares sold, including average cost, FIFO ("first-in, first-out") or some other specific identification method. Unless you instruct otherwise, each Fund will use average cost as its default cost basis method. The cost basis method a shareholder elects may not be changed with respect to a redemption of shares after the settlement date of the redemption. Shareholders should consult with their tax advisors to determine the best cost basis method for their tax situation. Shareholders that hold their shares through a financial intermediary should contact such financial intermediary with respect to reporting of cost basis and available elections for their accounts.

**<u>Backup Withholding</u>**

Each Fund will be required in certain cases to withhold and remit to the U.S. Treasury at a rate under current law of 24% of taxable distributions and the proceeds of redemptions of shares paid to you if you: (1) have failed to provide your correct taxpayer identification number; (2) are otherwise subject to backup withholding by the IRS for failure to report the receipt of interest or dividend income properly; or (3) have failed to certify to the Fund that you are not subject to backup withholding or that you are a C corporation or other "exempt recipient." Backup withholding is not an additional tax; rather any amounts so withheld may be credited against your U.S. federal income tax liability or refunded if proper documentation is provided.

**<u>State and Local Taxes</u>**

The tax rules of the various states of the U.S. and their local jurisdictions with respect to an investment in a Fund can differ from the U.S. federal income taxation rules described above. These state and local rules are not discussed herein. You are urged to consult your tax advisor as to the consequences of state and local tax rules with respect to an investment in a Fund.

**<u>Foreign Income Tax</u>**

Investment income received by a Fund from sources within foreign countries as well as gains or the proceeds from the sale or other disposition of foreign securities may be subject to foreign income taxes withheld at the source. The United States has entered into tax treaties with many foreign countries that may entitle the Funds to a reduced rate of such taxes or exemption from taxes on such income. It is impossible to know the effective rate of foreign tax in advance since the amount of a Fund's assets to be invested within various countries cannot be determined. If more than 50% of the value of a Fund's total assets at the close of its tax year consists of stocks or securities of foreign corporations, the Fund will be eligible and intends to file an election with the IRS to pass through to its shareholders the amount of foreign taxes paid by the Fund subject to certain exceptions. However, there can be no assurance that a Fund will be able to do so. Pursuant to this election, you will be required to: (1) include in gross income (in addition to taxable dividends actually received) your pro rata share of foreign taxes paid by the Fund; (2) treat your pro rata share of such foreign taxes as having been paid by you and (3) either deduct such pro rata share of foreign taxes in computing your taxable income or treat such foreign taxes as a credit against U.S. federal income taxes. You may be subject to rules which limit or reduce your ability to fully deduct, or claim a credit for, your pro rata share of the foreign taxes paid by a Fund.

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**<u>Foreign Shareholders</u>**

The foregoing discussion relates only to U.S. federal income tax law as applicable to U.S. persons (i.e., U.S. citizens and residents and U.S. domestic corporations, partnerships, trusts and estates). Shareholders who are not U.S. persons ("foreign shareholders") should consult their tax advisers regarding U.S. and foreign tax consequences of ownership of shares of a Fund including the likelihood that taxable distributions to them would be subject to withholding of U.S. tax at a rate of 30% (or a lower treaty rate for eligible investors). In general, U.S. withholding tax will not apply to any gain or income realized by a foreign shareholder in respect of any distributions of net long-term capital gains over net short-term capital losses or upon the sale or other disposition of Fund shares. An investment in a Fund may also be included in determining a foreign shareholder's U.S. estate tax liability.

Properly reported dividends received by a foreign shareholder from a regulated investment company are generally exempt from U.S. Federal withholding tax when they (i) are paid in respect of the regulated investment company's "qualified net interest income" (generally, the regulated investment company's U.S. source interest income, reduced by expenses that are allocable to such income), or (ii) are paid in connection with the regulated investment company's "qualified short-term capital gains" (generally, the excess of the regulated investment company's net short-term capital gain over the regulated investment company's long-term capital loss for such taxable year). A Fund may report all, some or none of the Fund's potentially eligible dividends as derived from such qualified net interest income or as qualified short-term capital gains, and a portion of the Fund's distributions (e.g. interest from non-U.S. sources or any foreign currency gains) would be ineligible for this potential exemption from withholding. Furthermore, in the case of Fund shares held through an intermediary, the intermediary may have withheld U.S. federal income tax, even if a Fund reported all or a portion of such potentially eligible dividends as having been derived from qualified net interest or income or from qualified short-term capital gains.

In order to qualify for any reduction or exemption from U.S. withholding tax, a foreign shareholder must comply with applicable certification requirements relating to its non-U.S. status (including, in general, furnishing an IRS Form W-8BEN, IRS Form W-8BEN-E, IRS Form W-8ECI, IRS Form W-8IMY or IRS Form W-8EXP, or an acceptable substitute or successor form).

Each Fund is required to withhold U.S. tax (at a 30% rate) on payments of taxable dividends and made to certain non-U.S. entities that fail to comply (or be deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned foreign investment accounts. The information required to be reported includes the identity and taxpayer identification number of each account holder and transaction activity within the holder's account. Shareholders may be requested to provide additional information to the Funds to enable the Funds to determine whether withholding is required.

**OTHER FUND SERVICE PROVIDERS** 

**<u>Administrator and Transfer Agent</u>**

U.S. Bancorp Fund Services, LLC, doing business as, U.S. Bank Global Fund Services ("Fund Services"), 615 East Michigan Street, Milwaukee, Wisconsin 53202, acts as administrator, fund accountant and transfer agent to the Funds pursuant to respective agreements. Fund Services provides certain administrative services to the Funds, including, among other responsibilities, coordinating the negotiation of contracts and fees with, and the monitoring of performance and billing of, the Funds' independent contractors and agents; preparation for signature by an officer of the Trust of all documents required to be filed for compliance by the Trust and the Funds with applicable laws and regulations excluding those of the securities laws of various states; arranging for the computation of performance data, including NAV and yield; responding to shareholder inquiries; and arranging for the maintenance of books and records of the Funds, and providing, at its own expense, office facilities, equipment and personnel necessary to carry out its duties. In this capacity, Fund Services does not have any responsibility or authority for the management of the Funds, the determination of investment policy, or for any matter pertaining to the distribution of Fund shares.

Pursuant to the Funds' administration agreement with Fund Services, the administrator will receive a portion of fees from the Funds as part of a bundled-fees agreement for services performed as administrator, transfer agent and fund accountant. The administrator expects to receive a fee based on the average daily net assets of the Funds, subject to an annual minimum amount.

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The following table provides information regarding fees paid by the Multi-Strategy Income Fund to Fund Services and its affiliates during the periods indicated below:

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| | |
|:---|:---|
| **Fiscal Period Ended** | **Fees Paid for <br>Administrative Services** |
| January 31, 2026 | $1411673 |
| January 31, 2025 | $1619126 |
| January 31, 2024 | $1949413 |

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The following table provides information regarding fees paid by the UltraShort Income Fund to Fund Services and its affiliates during the periods indicated below.

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| | |
|:---|:---|
| **Fiscal Period Ended** | **Fees Paid for <br>Administrative Services** |
| January 31, 2026 | $373115 |
| January 31, 2025 | $328902 |
| January 31, 2024 | $423036 |

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In addition, the Adviser serves as the administrator to a wholly-owned and controlled subsidiary of the Multi-Strategy Income Fund organized as a statutory trust under the laws of the State of Delaware (the "Subsidiary") pursuant to the terms of a Trust Agreement by and among the Subsidiary, U.S. Bank National Association (as trustee of the Subsidiary), the Multi-Strategy Income Fund and the Adviser (the "Trust Agreement"). In its capacity as administrator of the Subsidiary, the Adviser manages and administers the business and affairs of the Subsidiary in accordance with the Trust Agreement. The Adviser receives no compensation for these services.

**<u>Custodian</u>**

U.S. Bank National Association (the "Custodian") is the Custodian for the Funds and safeguards and controls the Funds' cash and securities, determines income and collects interest on Fund investments. The Custodian's address is 1555 North River Center Drive, Suite 302, Milwaukee, Wisconsin 53212. The Custodian does not participate in decisions relating to the purchase and sale of securities by the Fund. Fund Services and the Custodian, are affiliated entities under the common control of U.S. Bancorp. The Custodian and its affiliates may participate in revenue sharing arrangements with the service providers of mutual funds in which a Fund may invest.

U.S. Bank National Association also serves as the trustee of the Subsidiary pursuant to the terms of the Trust Agreement. In addition, the Custodian serves as the custodian of the Subsidiary pursuant to the terms of a Custody Agreement between the Custodian and the Subsidiary.

**<u>Independent Registered Public Accounting Firm</u>**

Cohen & Company, Ltd., 875 East Wisconsin Ave., Suite 210, Milwaukee, WI 53202, serves as the independent registered public accounting firm for the Funds. Its services include auditing the Funds' financial statements. Cohen & Co Advisory, LLC, an affiliate of Cohen & Company, Ltd., provides tax services as requested.

**<u>Legal Counsel</u>**

Dechert LLP, located at 1900 K Street NW, Washington, DC 20006, serves as legal counsel to the Trust.

**DISTRIBUTOR** 

Quasar Distributors, LLC, (the "Distributor" or "Quasar"), a wholly owned subsidiary of Foreside Financial Group, LLC (dba ACA Group), is located at 190 Middle Street, Suite 301, Portland, ME 04101, serves as the Funds' principal underwriter in a continuous public offering of the Funds' shares. Pursuant to a distribution agreement between the Funds and Quasar (the "Distribution Agreement"), Quasar acts as the Funds' principal underwriter and distributor and provides certain administration services and promotes and arranges for the sale of the Funds' shares. Quasar is a registered broker-dealer under the Securities Exchange Act of 1934, as amended, and is a member of the Financial Industry Regulatory Authority ("FINRA").

The Distribution Agreement between the Funds and Quasar had an initial term of two years and subsequently will continue in effect only if such continuance is specifically approved at least annually by the Board or by vote of a majority of the applicable Fund's outstanding voting securities and, in either case, by a majority of the Independent Trustees. The Distribution

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Agreement is terminable without penalty by the Trust on behalf of the Funds upon a 60-day written notice when authorized either by a majority vote of the applicable Fund's shareholders or by vote of a majority of the Board, including a majority of the Independent Trustees, or by Quasar upon a 60-day written notice, and will automatically terminate in the event of its "assignment" (as defined in the 1940 Act).

Pursuant to the Funds' agreement with the Distributor, the Distributor will receive fees from the Funds for services performed as the distributor of Shares.

**DISTRIBUTION PLAN**

The Funds have adopted a distribution plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act with respect to their Class A, Class A1, and Class C shares (as applicable), respectively. The Plan was approved by a majority of the Board of Trustees of the Trust, including a majority of the Trustees who are not interested persons of the Trust or the Funds, and who have no direct or indirect financial interest in the operation of the Plan or in any other Rule 12b-1 agreement.

The Plan provides that each Fund will pay the Distributor and/or any registered securities dealer, financial institution or any other person (the "Recipient") a shareholder servicing fee of 0.25% of the average daily net assets of the Class A shares of the applicable Fund in connection with the promotion and distribution of such class's shares or the provision of personal services to such class's shareholders, including, but not necessarily limited to, advertising, compensation to underwriters, dealers and selling personnel, the printing and mailing of prospectuses to other than current Fund shareholders, the printing and mailing of sales literature and servicing such class's shareholder accounts ("12b-1 Expenses"). The Plan provides that the UltraShort Income Fund will pay the Recipient a shareholder servicing fee of 0.25% of the average daily net assets of the Class A1 shares of the UltraShort Income Fund in connection with 12b-1 Expenses. The Plan allows each Fund (except the UltraShort Income Fund) to pay a fee of 1.00% of the applicable Fund's Class C average daily net assets (0.75% to help defray the cost of distributing Class C shares and 0.25% for servicing Class C shareholders) in connection with 12b-1 Expenses. The applicable Fund or the Adviser may pay all or a portion of these fees to any Recipient who renders assistance in distributing or promoting the sale of such class's shares, or who provides certain shareholder services, pursuant to a written agreement.

The Plan is a compensation plan, which means that compensation is provided regardless of 12b-1 Expenses actually incurred. It is anticipated that the Plan will benefit each Fund's shareholders because an effective sales program typically is necessary for the Funds to reach and maintain a sufficient size to achieve efficiently their investment objectives and to realize economies of scale.

For the fiscal year ended January 31, 2026, the following 12b-1 Expenses were incurred by the Funds:

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| | | |
|:---|:---|:---|
| | **Multi-Strategy Income Fund** | **UltraShort Income Fund** |
| Advertising/Mailing |  |  |
| Printing/Mailing |  |  |
| Compensation to Underwriter | $10907 | $4323 |
| Compensation to Broker-Dealer | $614445 | $59103 |
| Compensation to Sales Personnel |  |  |
| Interest, carrying or other financing charges |  |  |
| Other |  |  |
| **Total** | $625352 | $63426 |

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For the fiscal year ended January 31, 2026, the following unreimbursed expenses were incurred under the Plan and may be carried over to future years:

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| | | |
|:---|:---|:---|
| **Fund** | **Aggregate Amount**  | **Aggregate Amount as a % of Net Assets** |
| **Multi-Strategy Income Fund** | $54357 | 0.00% |
| **UltraShort Income Fund** | $5914 | 0.00% |

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**OTHER MATTERS**

**<u>Code of Ethics</u>**

The Trust, the Adviser and the Distributor have each adopted a code of ethics under Rule 17j-1 of the 1940 Act, which are designed to eliminate conflicts of interest between the Funds and personnel of the Trust, the Adviser and the Distributor. The

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codes permit such personnel to invest in securities, including securities that may be purchased or held by the Funds, subject to certain limitations.

**<u>Registration Statement</u>**

This SAI and the Prospectus do not contain all the information included in the Trust's registration statement filed with the SEC under the Securities Act with respect to the securities offered hereby. The registration statement, including the exhibits filed therewith, are available on the SEC's website at www.sec.gov or may be examined at the office of the SEC in Washington, D.C.

Statements contained herein and in the Prospectus as to the contents of any contract or other documents are not necessarily complete, and, in each instance, are qualified by, reference to the copy of such contract or other documents filed as exhibits to the registration statement.

**FINANCIAL STATEMENTS**

The <u>[a](https://www.sec.gov/ix?doc=/Archives/edgar/data/1612930/000113322826004853/aafs-efp23015_ncsr.htm)[nnual report](https://www.sec.gov/ix?doc=/Archives/edgar/data/1612930/000113322826004853/aafs-efp23015_ncsr.htm)[on Form N-CSR](https://www.sec.gov/ix?doc=/Archives/edgar/data/1612930/000113322826004853/aafs-efp23015_ncsr.htm)</u> for the Funds for the fiscal year ended January 31, 2026 is a separate document, and the financial statements, accompanying notes, and report of the independent registered public accounting firm appearing therein are incorporated by reference into this SAI.

The annual report for the Funds is available without charge upon request by calling (855) 751-4324 or through the Funds' website at www.angeloakcapital.com.

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**APPENDIX A – DESCRIPTION OF SECURITIES RATINGS**

**A. Long-Term Ratings**

**1. Moody's Investors Service – Long-Term Corporate Obligation Ratings**

Moody's long-term obligation ratings are opinions of the relative credit risk of fixed-income obligations with an original maturity of one year or more. They address the possibility that a financial obligation will not be honored as promised. Such ratings use Moody's Global Scale and reflect both the likelihood of default and any financial loss suffered in the event of default.

**Aaa**&nbsp;&nbsp;&nbsp;&nbsp;Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk.

**Aa**&nbsp;&nbsp;&nbsp;&nbsp;Obligations rated Aa are judged to be of high quality and are subject to very low credit risk.

**A**&nbsp;&nbsp;&nbsp;&nbsp;Obligations rated A are judged to be upper-medium grade and are subject to low credit risk.

**Baa**&nbsp;&nbsp;&nbsp;&nbsp;Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics.

**Ba**&nbsp;&nbsp;&nbsp;&nbsp;Obligations rated Ba are judged to be speculative and are subject to substantial credit risk.

**B**&nbsp;&nbsp;&nbsp;&nbsp;Obligations rated B are considered speculative and are subject to high credit risk.

**Caa**&nbsp;&nbsp;&nbsp;&nbsp;Obligations rated Caa are judged to speculative be of poor standing and are subject to very high credit risk.

**Ca**&nbsp;&nbsp;&nbsp;&nbsp;Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest.

**C**&nbsp;&nbsp;&nbsp;&nbsp;Obligations rated C are the lowest rated and are typically in default, with little prospect for recovery of principal or interest.

**Note** Moody's appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category.

**2. Standard and Poor's – Long-Term Issue Credit Ratings (including Preferred Stock)**

Issue credit ratings are based, in varying degrees, on the following considerations:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Likelihood of payment—capacity and willingness of the obligor to meet its financial commitments on an obligation in accordance with the terms of the obligation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Nature and provisions of the financial obligation and the promise S&P imputes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Protection afforded by, and relative position of, the financial obligation in the event of a bankruptcy, reorganization, or other arrangement under the laws of bankruptcy and other laws affecting creditors' rights.

Issue ratings are an assessment of default risk, but may incorporate an assessment of relative seniority or ultimate recovery in the event of default. Junior obligations are typically rated lower than senior obligations, to reflect the lower priority in bankruptcy, as noted above. (Such differentiation may apply when an entity has both senior and subordinated obligations, secured and unsecured obligations, or operating company and holding company obligations.)

**AAA**&nbsp;&nbsp;&nbsp;&nbsp;An obligation rated 'AAA' has the highest rating assigned by Standard & Poor's. The obligor's capacity to meet its financial commitments on the obligation is extremely strong.

**AA**&nbsp;&nbsp;&nbsp;&nbsp;An obligation rated 'AA' differs from the highest-rated obligations only to a small degree. The obligor's capacity to meet its financial commitments on the obligation is very strong.

**A**&nbsp;&nbsp;&nbsp;&nbsp;An obligation rated 'A' is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor's capacity to meet its financial commitments on the obligation is still strong.

**BBB**&nbsp;&nbsp;&nbsp;&nbsp;An obligation rated 'BBB' exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more weaken the obligor's capacity to meet its financial commitments on the obligation.

------

**Note**&nbsp;&nbsp;&nbsp;&nbsp;Obligations rated 'BB', 'B', 'CCC', 'CC', and 'C' are regarded as having significant speculative characteristics. 'BB' indicates the least degree of speculation and 'C' the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposure to adverse conditions.

**BB**&nbsp;&nbsp;&nbsp;&nbsp;An obligation rated 'BB' is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions that could lead to the obligor's inadequate capacity to meet its financial commitments on the obligation.

**B**&nbsp;&nbsp;&nbsp;&nbsp;An obligation rated 'B' is more vulnerable to nonpayment than obligations rated 'BB', but the obligor currently has the capacity to meet its financial commitments on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitments on the obligation.

**CCC&nbsp;&nbsp;&nbsp;&nbsp;**An obligation rated 'CCC' is currently vulnerable to nonpayment, and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitments on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation.

**CC&nbsp;&nbsp;&nbsp;&nbsp;**An obligation rated 'CC' is currently highly vulnerable to nonpayment. The 'CC' rating is used when a default has not yet occurred, but S&P expects default to be a virtual certainty, regardless of the anticipated time to default.

**C**&nbsp;&nbsp;&nbsp;&nbsp;An obligation rated 'C' is currently highly vulnerable to nonpayment, and the obligation is expected to have lower relative seniority or lower ultimate recovery compared with obligations that are rated higher.

**D**&nbsp;&nbsp;&nbsp;&nbsp;An obligation rated 'D' is in default or in breach of an imputed promise. For non-hybrid capital instruments, the 'D' rating category is used when payments on an obligation are not made on the date due, unless S&P believes that such payments will be made within five business days in the absence of a stated grace period or within the earlier of the stated grace period or 30 calendar days. The 'D' rating also will be used upon the filing of a bankruptcy petition or the taking of similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. A rating on an obligation is lowered to 'D' if it is subject to a distressed debt restructuring.

**Note**&nbsp;&nbsp;&nbsp;&nbsp;Plus (+) or minus (-). The ratings from 'AA' to 'CCC' may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.

**NR**&nbsp;&nbsp;&nbsp;&nbsp;This indicates that no rating has been requested, that there is insufficient information on which to base a rating, or that Standard & Poor's does not rate a particular obligation as a matter of policy.

**3. Fitch – International Long-Term Credit Ratings**

International Long-Term Credit Ratings (LTCR) may also be referred to as Long-Term Ratings. When assigned to most issuers, it is used as a benchmark measure of probability of default and is formally described as an Issuer Default Rating (IDR). The major exception is within Public Finance, where IDRs will not be assigned as market convention has always focused on timeliness and does not draw analytical distinctions between issuers and their underlying obligations. When applied to issues or securities, the LTCR may be higher or lower than the issuer rating (IDR) to reflect relative differences in recovery expectations.

The following rating scale applies to foreign currency and local currency ratings:

**Investment Grade**

**AAA**&nbsp;&nbsp;&nbsp;&nbsp;Highest credit quality. 'AAA' ratings denote the lowest expectation of credit risk. They are assigned only in case of exceptionally strong capacity for payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events.

**AA&nbsp;&nbsp;&nbsp;&nbsp;**Very high credit quality. 'AA' ratings denote expectations of very low credit risk. They indicate very strong capacity for payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.

**A**&nbsp;&nbsp;&nbsp;&nbsp;High credit quality. 'A' ratings denote expectations of low credit risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to changes in circumstances or in economic conditions than is the case for higher ratings.

**BBB**&nbsp;&nbsp;&nbsp;&nbsp;Good credit quality. 'BBB' ratings indicate that there are currently expectations of low credit risk. The capacity for payment of financial commitments is considered adequate but adverse changes in circumstances and economic conditions are more likely to impair this capacity. This is the lowest investment grade category.

------

**Speculative Grade**

**BB&nbsp;&nbsp;&nbsp;&nbsp;**Speculative. 'BB' ratings indicate that there is a possibility of credit risk developing, particularly as the result of adverse economic change over time; however, business or financial alternatives may be available to allow financial commitments to be met. Securities rated in this category are not investment grade.

**B&nbsp;&nbsp;&nbsp;&nbsp;**Highly speculative. 'B' ratings indicate that significant credit risk is present, but a limited margin of safety remains. Financial commitments are currently being met; however, capacity for continued payment is contingent upon a sustained, favorable business and economic environment.

**CCC&nbsp;&nbsp;&nbsp;&nbsp;**Default is a real possibility. Capacity for meeting financial commitments is solely reliant upon sustained, favorable business or economic conditions.

**CC&nbsp;&nbsp;&nbsp;&nbsp;**Default of some kind appears probable.

**C&nbsp;&nbsp;&nbsp;&nbsp;**Default is imminent.

**RD&nbsp;&nbsp;&nbsp;&nbsp;**Indicates an entity that has failed to make due payments (within the applicable grace period) on some but not all material financial obligations, but continues to honor other classes of obligations.

**D&nbsp;&nbsp;&nbsp;&nbsp;**Indicates an entity or sovereign that has defaulted on all of its financial obligations. Default generally is defined as one of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Failure of an obligor to make timely payment of principal and/or interest under the contractual terms of any financial obligation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The bankruptcy filings, administration, receivership, liquidation or other winding-up or cessation of business of an obligor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The distressed or other coercive exchange of an obligation, where creditors were offered securities with diminished structural or economic terms compared with the existing obligation.

Default ratings are not assigned prospectively; within this context, non-payment on an instrument that contains a deferral feature or grace period will not be considered a default until after the expiration of the deferral or grace period.

Issuers will be rated 'D' upon a default. Defaulted and distressed obligations typically are rated along the continuum of 'C' to 'B' ratings categories, depending upon their recovery prospects and other relevant characteristics. Additionally, in structured finance transactions, where analysis indicates that an instrument is irrevocably impaired such that it is not expected to meet pay interest and/or principal in full in accordance with the terms of the obligation's documentation during the life of the transaction, but where no payment default in accordance with the terms of the documentation is imminent, the obligation may be rated in the 'B' or 'CCC-C' categories.

Default is determined by reference to the terms of the obligations' documentation. Fitch will assign default ratings where it has reasonably determined that payment has not been made on a material obligation in accordance with the requirements of the obligation's documentation, or where it believes that default ratings consistent with Fitch's published definition of default are the most appropriate ratings to assign.

**Note&nbsp;&nbsp;&nbsp;&nbsp;**The modifiers "+" or "-" may be appended to a rating to denote relative status within major rating categories. Such suffixes are not added to the 'AAA' Long-term rating category, to categories below 'CCC', or to Short-term ratings other than 'F1'. (The +/- modifiers are only used to denote issues within the CCC category, whereas issuers are only rated CCC without the use of modifiers.)

**B. Preferred Stock Ratings**

**1. Moody's Investors Service**

**Aaa**&nbsp;&nbsp;&nbsp;&nbsp;An issue which is rated "aaa" is considered to be a top-quality preferred stock. This rating indicates good asset protection and the least risk of dividend impairment within the universe of preferred stocks.

**Aa&nbsp;&nbsp;&nbsp;&nbsp;**An issue which is rated "aa" is considered a high-grade preferred stock. This rating indicates that there is a reasonable assurance the earnings and asset protection will remain relatively well-maintained in the foreseeable future.

------

**A&nbsp;&nbsp;&nbsp;&nbsp;**An issue which is rated "a" is considered to be an upper-medium grade preferred stock. While risks are judged to be somewhat greater than in the "aaa" and "aa" classification, earnings and asset protection are, nevertheless, expected to be maintained at adequate levels.

**Baa&nbsp;&nbsp;&nbsp;&nbsp;**An issue which is rated "baa" is considered to be a medium-grade preferred stock, neither highly protected nor poorly secured. Earnings and asset protection appear adequate at present but may be questionable over any great length of time.

**Ba&nbsp;&nbsp;&nbsp;&nbsp;**An issue which is rated "ba" is considered to have speculative elements and its future cannot be considered well assured. Earnings and asset protection may be very moderate and not well safeguarded during adverse periods. Uncertainty of position characterizes preferred stocks in this class.

**B&nbsp;&nbsp;&nbsp;&nbsp;**An issue which is rated "b" generally lacks the characteristics of a desirable investment. Assurance of dividend payments and maintenance of other terms of the issue over any long period of time may be small.

**Caa&nbsp;&nbsp;&nbsp;&nbsp;**An issue which is rated "caa" is likely to be in arrears on dividend payments. This rating designation does not purport to indicate the future status of payments.

**Ca&nbsp;&nbsp;&nbsp;&nbsp;**An issue which is rated "ca" is speculative in a high degree and is likely to be in arrears on dividends with little likelihood of eventual payments.

**C&nbsp;&nbsp;&nbsp;&nbsp;**This is the lowest rated class of preferred or preference stock. Issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

**Note&nbsp;&nbsp;&nbsp;&nbsp;**Moody's applies numerical modifiers 1, 2, and 3 in each rating classification; The modifier 1 indicates that the security ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking and the modifier 3 indicates that the issue ranks in the lower end of its generic rating category.

**C. Short Term Ratings**

**1. Moody's Investors Service**

Moody's short-term ratings are opinions of the ability of issuers to honor short-term financial obligations. Ratings may be assigned to issuers, short-term programs or to individual short-term debt instruments. Such obligations generally have an original maturity not exceeding thirteen months, unless explicitly noted.

Moody's employs the following designations to indicate the relative repayment ability of rated issuers:

**P-1&nbsp;&nbsp;&nbsp;&nbsp;**Issuers (or supporting institutions) rated Prime-1 have a superior ability to repay short-term debt obligations.

**P-2&nbsp;&nbsp;&nbsp;&nbsp;**Issuers (or supporting institutions) rated Prime-2 have a strong ability to repay short-term debt obligations.

**P-3&nbsp;&nbsp;&nbsp;&nbsp;**Issuers (or supporting institutions) rated Prime-3 have an acceptable ability to repay short-term debt obligations.

**NP&nbsp;&nbsp;&nbsp;&nbsp;**Issuers (or supporting institutions) rated Not Prime do not fall within any of the Prime rating categories.

**Note&nbsp;&nbsp;&nbsp;&nbsp;**Canadian issuers rated P-1 or P-2 have their short-term ratings enhanced by the senior-most long-term rating of the issuer, its guarantor or support-provider.

**2. Standard and Poor's**

**A-1&nbsp;&nbsp;&nbsp;&nbsp;**A short-term obligation rated 'A-1' is rated in the highest category by Standard & Poor's. The obligor's capacity to meet its financial commitment on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor's capacity to meet its financial commitment on these obligations is extremely strong.

**A-2&nbsp;&nbsp;&nbsp;&nbsp;**A short-term obligation rated 'A-2' is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor's capacity to meet its financial commitment on the obligation is satisfactory.

**A-3&nbsp;&nbsp;&nbsp;&nbsp;**A short-term obligation rated 'A-3' exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.

------

**B&nbsp;&nbsp;&nbsp;&nbsp;**A short-term obligation rated 'B' is regarded as having significant speculative characteristics. Ratings of 'B-1', 'B-2', and 'B-3' may be assigned to indicate finer distinctions within the 'B' category. The obligor currently has the capacity to meet its financial commitment on the obligation; however, it faces major ongoing uncertainties which could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation.

**B-1&nbsp;&nbsp;&nbsp;&nbsp;**A short-term obligation rated 'B-1' is regarded as having significant speculative characteristics, but the obligor has a relatively stronger capacity to meet its financial commitments over the short-term compared to other speculative-grade obligors.

**B-2&nbsp;&nbsp;&nbsp;&nbsp;**A short-term obligation rated 'B-2' is regarded as having significant speculative characteristics, and the obligor has an average speculative-grade capacity to meet its financial commitments over the short-term compared to other speculative-grade obligors.

**B-3&nbsp;&nbsp;&nbsp;&nbsp;**A short-term obligation rated 'B-3' is regarded as having significant speculative characteristics, and the obligor has a relatively weaker capacity to meet its financial commitments over the short-term compared to other speculative-grade obligors.

**C&nbsp;&nbsp;&nbsp;&nbsp;**A short-term obligation rated 'C' is currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation.

**D&nbsp;&nbsp;&nbsp;&nbsp;**A short-term obligation rated 'D' is in payment default. The 'D' rating category is used when payments on an obligation are not made on the date due even if the applicable grace period has not expired, unless Standard & Poor's believes that such payments will be made during such grace period. The 'D' rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized.

**Note&nbsp;&nbsp;&nbsp;&nbsp;**Dual Ratings. Standard & Poor's assigns "dual" ratings to all debt issues that have a put option or demand feature as part of their structure. The first rating addresses the likelihood of repayment of principal and interest as due, and the second rating addresses only the demand feature. The long-term rating symbols are used for bonds to denote the long-term maturity and the short-term rating symbols for the put option (for example, 'AAA/A-1+'). With U.S. municipal short-term demand debt, note rating symbols are used with the short-term issue credit rating symbols (for example, 'SP-1+/A-1+').

**3. Fitch**

The following ratings scale applies to foreign currency and local currency ratings. A Short-term rating has a time horizon of less than 13 months for most obligations, or up to three years for US public finance, in line with industry standards, to reflect unique risk characteristics of bond, tax, and revenue anticipation notes that are commonly issued with terms up to three years. Short-term ratings thus place greater emphasis on the liquidity necessary to meet financial commitments in a timely manner.

**F1&nbsp;&nbsp;&nbsp;&nbsp;**Highest credit quality. Indicates the strongest capacity for timely payment of financial commitments; may have an added "+" to denote any exceptionally strong credit feature.

**F2&nbsp;&nbsp;&nbsp;&nbsp;**Good credit quality. A satisfactory capacity for timely payment of financial commitments, but the margin of safety is not as great as in the case of the higher ratings.

**F3&nbsp;&nbsp;&nbsp;&nbsp;**Fair credit quality. The capacity for timely payment of financial commitments is adequate; however, near term adverse changes could result in a reduction to non-investment grade.

**B&nbsp;&nbsp;&nbsp;&nbsp;**Speculative. Minimal capacity for timely payment of financial commitments, plus vulnerability to near term adverse changes in financial and economic conditions.

**C&nbsp;&nbsp;&nbsp;&nbsp;**High default risk. Default is a real possibility. Capacity for meeting financial commitments is solely reliant upon a sustained, favorable business and economic environment.

**D&nbsp;&nbsp;&nbsp;&nbsp;**Indicates an entity or sovereign that has defaulted on all of its financial obligations.

**Note&nbsp;&nbsp;&nbsp;&nbsp;**The modifiers "+" or "-" may be appended to a rating to denote relative status within major rating categories. Such suffixes are not added to the 'AAA' Long-term rating category, to categories below 'CCC', or to Short-term ratings other than 'F1'. (The +/- modifiers are only used to denote issues within the CCC category, whereas issuers are only rated CCC without the use of modifiers.)

------

![AO ETF Prospectus Cover.jpg](ck0001612930-20260529_g5.jpg)

------

**TABLE OF CONTENTS**

---

| | |
|:---|:---|
| **Angel Oak Income ETF[Summary](#i37e4eee60a074f20a21334a32b315779_34)** | &nbsp;&nbsp;**[2](#i37e4eee60a074f20a21334a32b315779_34)** |
| **Angel Oak UltraShort Income ETF[Summary](#i37e4eee60a074f20a21334a32b315779_43)** | &nbsp;&nbsp;**[12](#i37e4eee60a074f20a21334a32b315779_43)** |
| **[Angel Oak High Yield Opportunities ETF Summary](#i37e4eee60a074f20a21334a32b315779_1760)** | &nbsp;&nbsp;**[21](#i37e4eee60a074f20a21334a32b315779_1760)** |
| **[Angel Oak Mortgage-Backed Securities ETF Summary](#i37e4eee60a074f20a21334a32b315779_2066)** | &nbsp;&nbsp;**[30](#i37e4eee60a074f20a21334a32b315779_2066)** |
| **[Additional Information about the Funds' Objectives, Principal Investment Strategies, and Principal Investment Risks](#i37e4eee60a074f20a21334a32b315779_52)** | &nbsp;&nbsp;**[40](#i37e4eee60a074f20a21334a32b315779_52)** |
| **[Portfolio Holdings Information](#i37e4eee60a074f20a21334a32b315779_1528)** | &nbsp;&nbsp;**[62](#i37e4eee60a074f20a21334a32b315779_1528)** |
| **[Management of the Funds](#i37e4eee60a074f20a21334a32b315779_55)** | **[62](#i37e4eee60a074f20a21334a32b315779_55)** |
| **[Portfolio Managers](#i37e4eee60a074f20a21334a32b315779_58)** | &nbsp;&nbsp;**[63](#i37e4eee60a074f20a21334a32b315779_58)** |
| **[Additional Payments to Dealers](#i37e4eee60a074f20a21334a32b315779_1742)** | &nbsp;&nbsp;**[64](#i37e4eee60a074f20a21334a32b315779_1742)** |
| **[How to Buy and Sell Shares](#i37e4eee60a074f20a21334a32b315779_61)** | &nbsp;&nbsp;**[65](#i37e4eee60a074f20a21334a32b315779_61)** |
| **[Dividends, Distribution, and Taxes](#i37e4eee60a074f20a21334a32b315779_67)** | &nbsp;&nbsp;**[66](#i37e4eee60a074f20a21334a32b315779_67)** |
| **[Distribution](#i37e4eee60a074f20a21334a32b315779_70)** | &nbsp;&nbsp;**[68](#i37e4eee60a074f20a21334a32b315779_70)** |
| **[Premium/Discount Information](#i37e4eee60a074f20a21334a32b315779_73)** | &nbsp;&nbsp;**[68](#i37e4eee60a074f20a21334a32b315779_73)** |
| **[Additional Notices](#i37e4eee60a074f20a21334a32b315779_76)** | &nbsp;&nbsp;**[68](#i37e4eee60a074f20a21334a32b315779_76)** |
| **[The Trust](#i37e4eee60a074f20a21334a32b315779_2367)** | &nbsp;&nbsp;**[69](#i37e4eee60a074f20a21334a32b315779_2367)** |
| **[Financial Highlights](#i37e4eee60a074f20a21334a32b315779_1691)** | &nbsp;&nbsp;**[69](#i37e4eee60a074f20a21334a32b315779_1691)** |
| **[For More Information](#i37e4eee60a074f20a21334a32b315779_106)** | **[Back Cover](#i37e4eee60a074f20a21334a32b315779_106)** |

---

------

**ANGEL OAK INCOME ETF SUMMARY**<br>

**Investment Objective** 

The investment objective of the Angel Oak Income ETF (the "Fund") is current income.

**Fees and Expenses of the Fund** 

The following table describes the fees and expenses you may pay if you buy, hold, and sell shares of the Fund ("Shares"). **You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and Example below.** 

**Annual Fund Operating Expenses (expenses that you pay each year as a** 

**percentage of the value of your investment)** 

---

| | |
|:---|:---|
| Management Fees | 0.99% |
| Other Expenses<sup>1</sup> | <u>0.01%</u> |
| Total Annual Fund Operating Expenses | 1.00% |
| Less Fee Waiver/Expense Reimbursement<sup>2</sup> | <u>-0.20%</u> |
| Total Annual Fund Operating Expenses After Fee Waiver/Expense Reimbursement<sup>2</sup> | 0.80% |

---

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Angel Oak Capital Advisors, LLC (the "Adviser") receives a "unitary fee" pursuant to which it is responsible for substantially all the expenses of the Fund (including expenses of the Trust relating to the Fund), except for the advisory fees, payments under the Fund's 12b-1 plan (if any), interest expenses, dividend and interest expenses related to short sales, taxes, acquired fund fees and expenses (other than fees for funds advised by the Adviser and/or its affiliates), brokers' commissions and any other transaction-related expenses and fees arising out of transactions effected on behalf of the Fund, litigation and potential litigation and other extraordinary expenses not incurred in the ordinary course of the Fund's business. Other Expenses consists of 0.01% of acquired fund fees and expenses ("AFFE"). AFFE is borne by the Fund separately from the management fees paid to the Adviser.

<sup>2</sup>&nbsp;&nbsp;&nbsp;&nbsp;The Adviser has contractually agreed to waive its fees and/or reimburse certain expenses (exclusive of interest expenses, dividend and interest expenses related to short sales, taxes, acquired fund fees and expenses (other than fees for funds advised by the Adviser which are waived), brokers' commissions and any other transaction related expenses and fees arising out of transactions effected on behalf of the Fund, expenses, expenses of shareholder proposals, contested elections, or non-routine shareholder meetings, and other non-routine expenses or extraordinary expenses not incurred in the ordinary course of the Fund's business) to limit the Total Annual Fund Operating Expenses After Fee Waiver/Expense Reimbursement to 0.79% of the Fund's average daily net assets (the "Expense Limit") through September 30, 2027. The contractual arrangement may only be changed or eliminated by the Board of Trustees upon 60 days' written notice to the Adviser. The Adviser may recoup from the Fund any waived amount or reimbursed expenses pursuant to this agreement if such recoupment does not cause the Fund's Total Annual Fund Operating Expenses after such recoupment to exceed the lesser of (i) the Expense Limit in effect at the time of the waiver or reimbursement and (ii) the Expense Limit in effect at the time of recoupment and the recoupment is made within three years after the end of the month in which the Adviser incurred the expense.

**Expense Example** 

The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then continue to hold or sell all of your Shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. The example does not take into account brokerage commissions that you may pay on your purchases and sales of Shares. The fee waiver and expense reimbursement discussed in the table above is reflected only for the first year. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

---

| | | | |
|:---|:---|:---|:---|
| <u>One Year</u> | <u>Three Years</u> | <u>Five Years</u> | <u>Ten Years</u> |
| $82 | $298 | $533 | $1206 |

---

**Portfolio Turnover** 

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example above, affect the Fund's performance. During the most recent fiscal year ended January 31, 2026, the portfolio turnover rate for the Fund was 85% of the average value of its portfolio.

Angel Oak Income ETF&nbsp;&nbsp;&nbsp;&nbsp;2

------

**Principal Investment Strategies** 

The Fund invests primarily in agency and non-agency residential mortgage-backed securities ("RMBS"), commercial mortgage-backed securities ("CMBS"), collateralized loan obligations ("CLOs"), collateralized debt obligations ("CDOs"), collateralized mortgage obligations ("CMOs"), collateralized bond obligations ("CBOs"), asset-backed securities ("ABS"), including securities or securitizations backed by assets such as unsecured consumer loans, credit card receivables, student loans, automobile loans, loans financing solar energy systems, and residential and commercial real estate, and other debt securitizations (collectively, "Structured Products"); mortgage loans, secured and unsecured consumer loans, commercial loans and pools of such loans (collectively, "Loans"); corporate debt, including bank-issued subordinated debt; equity securities of banks, real estate investment trusts ("REITs"), or other issuers; and U.S. Treasury and U.S. government agency securities.

The Fund may invest up to: (i) 80% of its net assets in non-agency RMBS, (ii) 50% of its net assets in ABS, and (iii) 50% of its net assets in corporate debt. The Fund will invest at least 10% of its net assets in U.S. Treasury securities, agency RMBS, and agency CMBS, collectively.

The Fund may invest up to 25% of its net assets in CLOs and CDOs, which are backed by a pool of loans or a pool of debt, respectively. CLOs and CDOs are similar to CMOs, but differ as to the type of underlying loan or debt.

The Fund may invest in the securities of other investment companies, including closed-end investment companies and open-end investment companies, which may operate as traditional mutual funds, ETFs or business development companies ("BDCs"). The other investment companies in which the Fund invests may be part of the same group of investment companies as the Fund.

The Fund will concentrate its investments in agency and non-agency RMBS and CMBS (collectively, "MBS"). This means that, under normal circumstances, the Fund will invest more than 25% of its total assets in MBS (measured at the time of purchase). The Fund will not concentrate its investments in any other group of industries. The Fund's policy to concentrate its investments in MBS is fundamental and may not be changed without shareholder approval.

The fixed income instruments in which the Fund invests may include those of issuers from the United States and other countries. The Fund's investments in foreign debt securities will typically be denominated in U.S. dollars.

The Fund may invest up to 15% of its net assets in investments that are deemed to be illiquid, which may include private placements, certain Rule 144A securities (which are subject to resale restrictions), and securities of issuers that are bankrupt or in default.

The Fund may invest, without limitation, in securities of any maturity and duration. Maturity refers to the length of time until a debt security's principal is repaid with interest. Duration is a measure used to determine the sensitivity of a security's price to changes in interest rates that incorporates a security's yield, coupon, final maturity and call and put features and prepayment exposure into one measure with a higher duration indicating greater sensitivity to interest rates. For example, if a portfolio has a duration of two years, and interest rates increase (fall) by 1%, the portfolio would decline (increase) in value by approximately 2%. However, duration may not accurately reflect the true interest rate sensitivity of instruments held by the Fund and, therefore the Fund's exposure to changes in interest rates.

The Fund's investments in RMBS and ABS will span a broad segment of consumer creditworthiness segments, which will include exposure to prime, near-prime, and subprime consumers.

The Fund may invest in high-yield securities and securities that are not rated by any rating agencies. These "high-yield" securities (also known as "junk bonds") will be rated BB+ or lower by S&P Global Ratings or will be of equivalent quality rating from another Nationally Recognized Statistical Ratings Organization. If a bond is unrated, the Adviser may determine whether it is of comparable quality and therefore eligible for the Fund's investment. Although the Fund will not acquire investments of issuers that are in default at the time of investment, the Fund may hold such securities if an investment subsequently defaults.

In pursuing its investment objectives or for hedging purposes, the Fund may utilize borrowing and various types of derivative instruments, including swaps, futures contracts, and options, although not all such derivatives will be used at all times. Such derivatives may trade over-the-counter or on an exchange and may principally be used for one or more of the following purposes: speculation, currency hedging, duration management, credit deterioration hedging, hedges against broad market movements, or to pursue the Fund's investment objective. The Fund may borrow to the maximum extent permitted by applicable law, which generally means that the Fund may borrow up to one-third of its total assets. The Fund may also invest in repurchase agreements and borrow through reverse repurchase agreements.

The Fund is an actively managed ETF, which is a fund that trades like other publicly-traded securities. The Fund is not an index fund and does not seek to replicate the performance of a specified index.

The Fund's allocation of its assets into various asset classes within its investment strategy will depend on the views of the Adviser as to the best value relative to what is currently presented in the marketplace. Investment decisions are made based on fundamental research and analysis to identify issuers with the ability to improve their credit profile over time with attractive valuations, resulting in both income and potential capital appreciation. In selecting investments, including Structured Products, the Adviser may

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consider maturity, yield and ratings information and opportunities for price appreciation among other criteria. The Adviser also analyzes a variety of factors when selecting investments for the Fund, such as collateral quality, credit support, structure and market conditions. The Adviser attempts to diversify risks that arise from position sizes, geography, ratings, duration, deal structure and collateral values. The Adviser will also seek to invest in securities that have relatively low volatility. The Adviser seeks to limit risk of principal by targeting assets that it considers undervalued. From time to time, the Fund may allocate its assets so as to focus on particular types of securities. As part of its investment process, the Adviser also considers certain environmental, social and governance ("ESG") and sustainability factors that it believes could have a material impact on certain securities in which the Fund may invest. These determinations may not be conclusive, and securities that may be negatively impacted by such factors may be purchased and retained by the Fund while the Fund may divest or not invest in securities that may be positively impacted by such factors.

**Principal Risks** 

The principal risks of investing in the Fund are summarized below. You should carefully consider the Fund's investment risks before deciding whether to invest in the Fund. There may be circumstances that could prevent the Fund from achieving its investment objective and you may lose money by investing in the Fund. An investment in the Fund is not a deposit at a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

&nbsp;&nbsp;&nbsp;&nbsp;**• Fixed-Income Instruments Risks.** The Fund will invest in fixed-income instruments and securities. Such investments may be secured, partially secured or unsecured and may be unrated, and whether or not rated, may have speculative characteristics. The market price of the Fund's investments will change in response to changes in interest rates and other factors. Generally, when interest rates rise, the values of fixed-income instruments fall, and vice versa. In typical interest rate environments, the prices of longer-term fixed-income instruments generally fluctuate more than the prices of shorter-term fixed-income instruments as interest rates change. In addition, a fund with a longer average portfolio duration will be more sensitive to changes in interest rates than a fund with a shorter average portfolio duration. A fund with a negative average portfolio duration may decline in value as interest rates decrease. Most high yield investments pay a fixed rate of interest and are therefore vulnerable to inflation risk (inflation rates are currently elevated relative to normal conditions). The obligor of a fixed-income instrument may not be able or willing to pay interest or to repay principal when due in accordance with the terms of the associated agreement.

&nbsp;&nbsp;&nbsp;&nbsp;**• General Market Risk.** The capital markets may experience periods of disruption, instability and volatility. Political, geopolitical, natural and other events, including war, terrorism, trade disputes, tariffs and other trade barriers, government shutdowns, market closures, natural and environmental disasters, epidemics, pandemics and other public health crises and related events have led, and in the future may lead, to economic uncertainty, decreased economic activity, increased market volatility and other disruptive effects on U.S. and global economies and markets. Such conditions may materially and adversely affect the markets globally and in the jurisdictions in which the Fund invests, which may have a negative impact on the Fund's performance. The Fund's net asset value ("NAV") and investment return will fluctuate based upon changes in the value of its portfolio securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• Credit Risk.** Credit risk is the risk that the Fund could lose money if the issuer or guarantor of a fixed income security, or the counterparty to a derivative contract, is unable or unwilling to meet its financial obligations.

&nbsp;&nbsp;&nbsp;&nbsp;**• Interest Rate Risk.** The Fund is exposed to risks associated with changes in interest rates, including the possibility that, in a period of rising interest rates, securities may exhibit additional volatility and may lose value.

&nbsp;&nbsp;&nbsp;&nbsp;**• Prepayment Risk.** When interest rates decline, fixed income securities with stated interest rates may have the principal paid earlier than expected, requiring the Fund to invest the proceeds at generally lower interest rates.

&nbsp;&nbsp;&nbsp;&nbsp;**• Structured Products Risks.** The Fund may invest in Structured Products, including CLOs, CDOs, CMOs, CBOs, and other asset-backed securities and debt securitizations. Some Structured Products have credit ratings, but are typically issued in various classes with various priorities. Normally, Structured Products are privately offered and sold (that is, they are not registered under the securities laws), which means less information about the security may be available as compared to publicly offered securities and only certain institutions may buy and sell them. As a result, investments in Structured Products may be characterized by the Fund as illiquid securities. An active dealer market may exist for Structured Products that qualify for Rule 144A transactions, but there can be no assurance that such a market will exist or will be active enough for the Fund to sell such securities. In addition to the typical risks associated with fixed-income securities and asset-backed securities, CLOs and CDOs carry additional risks including, but not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii) the risk that the collateral may default, decline in value or quality or be downgraded by a rating agency; (iii) the Fund may invest in tranches of Structured Products that are subordinate to other tranches; (iv) the structure and complexity of the transaction and the legal documents could lead to disputes among investors regarding the characterization of proceeds; (v) risk of forced "fire sale" liquidation due to technical defaults such as coverage test failures; and (vi) the Structured Product's manager may perform poorly. The senior and junior tranches of Structured Products may have floating or variable interest rates and are subject to the risks associated with securities tied to

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floating or variable interest rates. The Fund may also invest in the equity tranches of a Structured Product, which typically represent the first loss position in the Structured Product, are unrated and are subject to higher risks. Equity tranches of Structured Products typically do not have a fixed coupon and payments on equity tranches will be based on the income received from the underlying collateral and the payments made to the senior tranches, both of which may be based on floating rates.

&nbsp;&nbsp;&nbsp;&nbsp;**• Borrowing Risks and Leverage Risks.** Borrowing for investment purposes creates leverage, which will exaggerate the effect of any change in the value of securities in the Fund's portfolio on the Fund's NAV and, therefore, may increase the volatility of the Fund. Money borrowed will be subject to interest and other costs (including commitment fees and/or the cost of maintaining minimum average balances). Unless the income and capital appreciation, if any, on securities acquired with borrowed funds exceed the cost of borrowing, the use of leverage will diminish the investment performance of the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;**• Extension Risk**. An issuer could exercise its right to pay principal on an obligation held by the Fund (such as a mortgage-backed security) later than expected. This may happen when there is a rise in interest rates. Under these circumstances, the value of the obligation will decrease, and the Fund will also suffer from the inability to reinvest in higher yielding securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• Concentration in Certain Mortgage-Backed Securities Risk.** The risks of concentrating in residential mortgage-backed securities (agency and non-agency) and commercial mortgage-backed securities include susceptibility to changes in lending standards, interest rates and lending rates, and the risks associated with the market's perception of issuers, the creditworthiness of the parties involved and investing in real estate securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• U.S. Government Securities Risks.** U.S. government securities are not guaranteed against price movement and may decrease in value. Some U.S. government securities are supported by the full faith and credit of the U.S. Treasury, while others may be supported only by the discretionary authority of the U.S. government to purchase certain obligations of a federal agency or U.S. government sponsored enterprise ("GSE") or only by the right of the issuer to borrow from the U.S. Treasury. While the U.S. government provides financial support to such agencies and GSEs, no assurance can be given that the U.S. government will always do so. Other obligations are backed solely by the GSE's own resources. Investments in securities issued by GSEs that are not backed by the U.S. Treasury are subject to higher credit risk than those that are backed by the U.S. Treasury.

&nbsp;&nbsp;&nbsp;&nbsp;**• Mortgage-Backed and Asset-Backed Securities Risks.** Mortgage-backed and other asset-backed securities are subject to the risks of traditional fixed-income instruments. However, they are also subject to prepayment risk and extension risk, meaning that if interest rates fall, the underlying debt may be repaid ahead of schedule, reducing the value of the Fund's investments and if interest rates rise, there may be fewer prepayments, which would cause the average bond maturity to rise, increasing the potential for the Fund to lose money. Mortgage-backed and other asset-backed securities are also susceptible to changes in lending standards and lending rates. In addition, mortgage-backed securities comprised of subprime mortgages and investments in other asset-backed securities collateralized by subprime loans may be subject to a higher degree of credit risk and valuation risk. Additionally, such securities may be subject to a higher degree of liquidity risk, because the liquidity of such investments may vary dramatically over time.

Certain mortgage-backed securities may be secured by pools of mortgages on single-family, multi-family properties, as well as commercial properties. Similarly, asset-backed securities may be secured by pools of loans, such as corporate loans, student loans, automobile loans and credit card receivables. The credit risk on such securities is affected by homeowners or borrowers defaulting on their loans. The values of assets underlying mortgage-backed and asset-backed securities may decline and therefore may not be adequate to cover underlying investors. Some mortgage-backed and asset-backed securities have experienced extraordinary weakness and volatility in recent years. Possible legislation in the area of residential mortgages, credit cards, corporate loans and other loans that may collateralize the securities in which the Fund may invest could negatively impact the value of the Fund's investments. To the extent the Fund focuses its investments in particular types of mortgage-backed or asset-backed securities, the Fund may be more susceptible to risk factors affecting such types of securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• Unrated Securities Risks.** Unrated securities may be less liquid than comparable rated securities and involve the risk that Angel Oak may not accurately evaluate the security's comparative credit rating.

&nbsp;&nbsp;&nbsp;&nbsp;**• Residential Loans and Mortgages Risk.** In addition to interest rate, default and other risks of fixed income securities, investments in whole loans and debt instruments backed by residential loans or mortgages, (or pools of loans or mortgages) carry additional risks, including the possibility that the quality of the collateral may decline in value and the potential for the liquidity of residential loans and mortgages to vary over time. These risks are greater for subprime residential and mortgage loans. Because they do not trade in a liquid market, residential loans typically can only be sold to a limited universe of institutional investors and may be difficult for the Fund to value. In addition, in the event that a loan is foreclosed on, the Fund could become the owner (in whole or in part) of any collateral, which may include, among other things, real estate or other real or personal property, and the Fund would bear the costs and liabilities of owning, holding or disposing of such property.

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&nbsp;&nbsp;&nbsp;&nbsp;• **REIT Risk.** A REIT is a company that owns or finances income-producing real estate. Through its investments in REITs, the Fund is subject to the risks of investing in the real estate market, including decreases in property revenues, increases in interest rates, increases in property taxes and operating expenses, legal and regulatory changes, a lack of credit or capital, defaults by borrowers or tenants, environmental problems and natural disasters. The value of a REIT may also be affected by the management or development of underlying properties, which may also be subject to mortgage loans, and the underlying mortgage loans may be subject to the risk of default.

&nbsp;&nbsp;&nbsp;&nbsp;**• ETF Risks.** The Fund is an ETF and may invest in other ETFs, and, as a result of this structure, is exposed directly or indirectly to the following risks:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Authorized Participants, Market Makers, and Liquidity Providers Concentration Risk.* The Fund has a limited number of financial institutions that may act as Authorized Participants ("APs"). In addition, there may be a limited number of market makers and/or liquidity providers in the marketplace. To the extent either of the following events occur, Shares may trade at a material discount to NAV, which may also lead to a widening of bid/ask spreads quoted for Shares, and possibly face delisting: (i) APs exit the business or otherwise become unable to process creation and/or redemption orders and no other APs step forward to perform these services, or (ii) market makers and/or liquidity providers exit the business or significantly reduce their business activities and no other entities step forward to perform their functions. Authorized Participant concentration risk may be heightened for ETFs, such as the Fund, that invest in securities issued by non-U.S. issuers or other securities or instruments that have lower trading volumes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*◦ Costs of Buying or Selling Shares.* Due to the costs of buying or selling Shares, including brokerage commissions imposed by brokers and bid/ask spreads, frequent trading of Shares may significantly reduce investment results and an investment in Shares may not be advisable for investors who anticipate regularly making small investments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Shares May Trade at Prices Other Than NAV.* As with all ETFs, Shares may be bought and sold in the secondary market at market prices. Although it is expected that the market price of Shares will approximate the Fund's NAV, there may be times when the market price of Shares is more than the NAV intra-day (premium) or less than the NAV intra-day (discount) due to supply and demand of Shares or during periods of market volatility. This risk is heightened in times of market volatility, periods of steep market declines, and periods when there is limited trading activity for Shares in the secondary market, in which case such premiums or discounts may be significant. If a shareholder purchases Shares at a time when the market price is at a premium to the NAV or sells Shares at a time when the market price is at a discount to the NAV, the shareholder may sustain losses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*◦ Trading*. Although Shares are listed for trading on the Nasdaq Stock Market LLC (the "Exchange") and may be traded on U.S. exchanges other than the Exchange, there can be no assurance that Shares will trade with any volume, or at all, on any stock exchange. In stressed market conditions, the liquidity of Shares may begin to mirror the liquidity of the Fund's underlying portfolio holdings, which can be significantly less liquid than Shares, and may lead to a widening of bid/ask spreads quoted for Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Cash Transactions Risk*. Unlike certain ETFs, the Fund may effect creations and redemptions in cash or partially in cash. Therefore, it may be required to sell portfolio securities and subsequently recognize gains on such sales that the Fund might not have recognized if it were to distribute portfolio securities in-kind. As such, investments in Shares may be less tax-efficient than an investment in an ETF that distributes portfolio securities entirely in-kind.

&nbsp;&nbsp;&nbsp;&nbsp;**• Foreign Securities Risks**. Investments in securities or other instruments of non-U.S. issuers involve certain risks not involved in domestic investments and may experience more rapid and extreme changes in value than investments in securities of U.S. companies. Financial markets in foreign countries often are not as developed, efficient or liquid as financial markets in the United States, and therefore, the prices of non-U.S. securities and instruments can be more volatile. In addition, the Fund will be subject to risks associated with adverse political and economic developments in foreign countries, which may include the imposition of economic sanctions or other similar measures. Generally, there is less readily available and reliable information about non-U.S. issuers due to less rigorous disclosure or accounting standards and regulatory practices.

&nbsp;&nbsp;&nbsp;&nbsp;**• Bank Subordinated Debt Risks.** Banks may issue subordinated debt securities, which have a lower priority to full payment behind other more senior debt securities. In addition to the risks generally associated with fixed income instruments (e.g., interest rate risk, counterparty risk, credit risk, etc.), bank subordinated debt is also subject to risks inherent to banks. Because banks are highly regulated and operate in a highly competitive environment, it may be difficult for a bank to meet its debt obligations. Banks also may be affected by changes in legislation and regulations applicable to the financial markets. Bank subordinated debt is often issued by smaller community banks that may be overly concentrated in a specific geographic region, lack the capacity to comply with new regulatory requirements or lack adequate capital.

Subordinated debt, senior debt and preferred securities of banks and diversified financials companies are subject to the risks generally associated with the financials sector. See "Financials Sector Risk."

&nbsp;&nbsp;&nbsp;&nbsp;**• Financials Sector Risk.** The Fund may invest in companies in the financials sector, and therefore the performance of the Fund could be negatively impacted by events affecting this sector. This sector can be significantly affected by changes in interest

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rates, government regulation, the rate of defaults on corporate, consumer and government debt, the availability and cost of capital, and fallout from the housing and sub-prime mortgage crisis that began in 2007. This sector has experienced significant losses in the past, and the impact of more stringent capital requirements and of past or future regulation on any individual financial company or on the sector as a whole cannot be predicted. In recent years, cyber attacks and technology malfunctions and failures have become increasingly frequent in this sector and have caused significant losses.

&nbsp;&nbsp;&nbsp;&nbsp;**• Management Risk.** The Fund may not meet its investment objective based on the Adviser's success or failure to implement investment strategies for the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;**• Cybersecurity Risk.** Cybersecurity incidents may allow an unauthorized party to gain access to Fund assets or proprietary information, or cause the Fund, the Adviser, and/or other service providers (including custodians and financial intermediaries) to suffer data breaches or data corruption. Additionally, cybersecurity failures or breaches of the electronic systems of the Fund, the Adviser, or the Fund's other service providers, market makers, Authorized Participants or the issuers of securities in which the Fund invests have the ability to cause disruptions and negatively impact the Fund's business operations, potentially resulting in financial losses to the Fund and its shareholders. In an extreme case, a shareholder's ability to transact in Fund shares may be affected.

&nbsp;&nbsp;&nbsp;&nbsp;**• Sector Risk**. To the extent the Fund invests more heavily in particular sectors of the economy, its performance will be especially sensitive to developments that significantly affect those sectors.

&nbsp;&nbsp;&nbsp;&nbsp;**• Floating or Variable Rate Securities Risk.** Floating or variable rate securities pay interest at rates that adjust in response to changes in a specified interest rate or reset at predetermined dates (such as the end of a calendar quarter). Securities with floating or variable interest rates are generally less sensitive to interest rate changes than securities with fixed interest rates, but may decline in value if their interest rates do not rise as much, or as quickly, as comparable market interest rates. Although floating or variable rate securities are generally less sensitive to interest rate risk than fixed rate securities, they are subject to credit, liquidity and default risk and may be subject to legal or contractual restrictions on resale, which could impair their value.

Instruments in which the Fund invests may pay interest at floating rates or may be subject to interest caps or floors tied to floating rates, such as the Secured Overnight Financing Rate. The Fund and issuers of instruments in which the Fund invests may also obtain financing at floating rates. Derivative instruments utilized by the Fund and/or issuers of instruments in which the Fund may invest may also reference floating rates. The Fund also may utilize leverage or borrowings primarily based on floating rates.

&nbsp;&nbsp;&nbsp;&nbsp;**• Liquidity and Valuation Risks.** It may be difficult for the Fund to purchase and sell particular investments within a reasonable time at a fair price, or the price at which it has been valued for purposes of the Fund's NAV, causing the Fund to be less liquid and unable to sell securities for what the Adviser believes is the appropriate price of the investment. Valuation of portfolio investments may be difficult, such as during periods of market turmoil or reduced liquidity and for investments that trade infrequently or irregularly. In these and other circumstances, an investment may be valued using fair value methodologies, which are inherently subjective, reflect good faith judgments based on available information and may not accurately estimate the price at which the Fund could sell the investment at that time. Based on its investment strategies, a significant portion of the Fund's investments can be difficult to value and potentially less liquid and therefore particularly prone to these risks.

&nbsp;&nbsp;&nbsp;&nbsp;**• Other Investment Companies Risks.** The Fund will incur higher and duplicative expenses when it invests in mutual funds, ETFs, and other investment companies, which may include those that are part of the same group of investment companies as the Fund ("affiliated underlying funds"). There is also the risk that the Fund may suffer losses due to the investment practices of the underlying funds. When the Fund invests in other investment companies, the Fund will be subject to substantially the same risks as those associated with the direct ownership of securities held by such investment companies. ETFs may be less liquid than other investments, and thus their share values more volatile than the values of the investments they hold. Investments in ETFs are also subject to the following risks: (i) the market price of an ETF's shares may trade above or below their net asset value; (ii) an active trading market for an ETF's shares may not develop or be maintained; and (iii) trading of an ETF's shares may be halted for a number of reasons.

The Adviser may be subject to potential conflicts of interest in allocating the Fund's assets to underlying funds, such as a potential conflict in selecting affiliated underlying funds over unaffiliated underlying funds. In addition, the Fund's portfolio managers may be subject to potential conflicts of interest in allocating the Fund's assets among underlying funds, as certain of the Fund's portfolio managers may also manage an affiliated underlying fund in which the Fund may invest. Both the Adviser and the Fund's portfolio managers have a fiduciary duty to the Fund to act in the Fund's best interest when selecting underlying funds. Under the oversight of the Board of Trustees, the Adviser will carefully analyze any such potential conflicts of interest and will take steps to minimize and, where possible, eliminate them.

&nbsp;&nbsp;&nbsp;&nbsp;**• Rating Agencies Risks.** Ratings are not an absolute standard of quality, but rather general indicators that reflect only the view of the originating rating agencies from which an explanation of the significance of such ratings may be obtained. There is no assurance that a particular rating will continue for any given period of time or that any such rating will not be revised

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downward or withdrawn entirely. Such changes may negatively affect the liquidity or market price of the securities in which the Fund invests. The ratings of Structured Products may not adequately reflect the credit risk of those assets due to their structure.

&nbsp;&nbsp;&nbsp;&nbsp;**• Large Shareholder Transactions Risk.** Shares of the Fund are offered to certain other investment companies, large retirement plans and other large investors. In addition, a third party investor, the Adviser or an affiliate of the Adviser, an AP, a market maker, or another entity may invest in the Fund and hold its investment for a limited period of time. As a result, the Fund is subject to the risk that shareholders may purchase or redeem a large amount of shares of the Fund. To satisfy such large shareholder redemptions, the Fund may have to sell portfolio securities at times when it would not otherwise do so, which may negatively impact the Fund's NAV and liquidity. In addition, large purchases of Fund shares could adversely affect the Fund's performance to the extent that the Fund does not immediately invest cash it receives and therefore holds more cash than it ordinarily would. Large shareholder activity could also generate increased transaction costs and cause adverse tax consequences. In addition, transactions by large shareholders may account for a large percentage of the trading volume on the Exchange and may, therefore, have a material effect on the market price of the Shares.

&nbsp;&nbsp;&nbsp;&nbsp;**• Illiquid Investments Risks.** The Fund may, at times, hold illiquid investments, by virtue of the absence of a readily available market for certain of its investments, or because of legal or contractual restrictions on sales. The Fund could lose money if it is unable to dispose of an investment at a time or price that is most beneficial to the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;**• Regulatory and Legal Risks.** U.S. and non-U.S. government agencies and other regulators regularly adopt new regulations and legislatures enact new statutes that affect the investments held by the Fund, the strategies used by the Fund or the level of regulation or taxation that applies to the Fund. These statutes and regulations may impact the investment strategies, performance, costs and operations of the Fund or the taxation of its shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;**• Community Bank Risks.** The Fund's investments in community banks may make the Fund more economically vulnerable in the event of a downturn in the banking industry, including economic downturns impacting a particular region. Community banks may also be subject to greater lending risks than larger banks, including the risks associated with mortgage loans, and may have fewer resources to devote towards employing and retaining strong management employees and implementing a thorough compliance program. Additionally, community banks are subject to substantial regulations that could adversely affect their ability to operate and the value of the Fund investments, including from future banking regulations.

&nbsp;&nbsp;&nbsp;&nbsp;**• High-Yield Securities Risks.** High-yield securities (also known as junk bonds) carry a greater degree of risk and are more volatile than investment grade securities and are considered speculative. High-yield securities may be issued by companies that are restructuring, are smaller and less creditworthy, or are more highly indebted than other companies. This means that they may have more difficulty making scheduled payments of principal and interest. Changes in the value of high-yield securities are influenced more by changes in the financial and business position of the issuing company than by changes in interest rates when compared to investment grade securities. The Fund's investments in high-yield securities expose it to a substantial degree of credit risk.

&nbsp;&nbsp;&nbsp;&nbsp;**• Reverse Repurchase Agreement Risks.** A reverse repurchase agreement is the sale by the Fund of a debt obligation to a party for a specified price, with the simultaneous agreement by the Fund to repurchase that debt obligation from that party on a future date at a higher price. Similar to borrowing, reverse repurchase agreements provide the Fund with cash for investment purposes, which creates leverage and subjects the Fund to the risks of leverage. Reverse repurchase agreements also involve the risk that the other party may fail to return the securities in a timely manner or at all. The Fund could lose money if it is unable to recover the securities and/or if the value of collateral held by the Fund, including the value of the investments made with cash collateral, is less than the value of securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• Derivatives Risks.** The Fund's derivatives and other similar instruments (collectively referred to in this section as "derivatives" or "derivative instruments") have risks, including the imperfect correlation between the value of such instruments and the underlying assets, rate or index; the loss of principal, including the potential loss of amounts greater than the initial amount invested in the derivative instrument; the possible default of the other party to the transaction; and illiquidity of the derivative investments. Changes in the value of a derivative may also create margin delivery or settlement payment obligations for the Fund. If a counterparty becomes bankrupt or otherwise fails to perform its obligations under a derivative contract due to financial difficulties, the Fund may experience significant delays in obtaining any recovery under the derivative contract in a bankruptcy or other reorganization proceeding. Certain derivatives may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. The use of derivatives is also subject to operational risk, which refers to risk related to potential operational issues, including documentation issues, settlement issues, system failures, inadequate controls, and human error, as well as legal risk, which refers to the risk of loss resulting from insufficient documentation, insufficient capacity or authority of counterparty, or legality or enforceability of a contract. Derivatives are also subject to market risk, which refers to the risk that markets could experience a change in volatility that adversely impacts fund returns and the fund's obligations and exposures. Certain of the Fund's transactions in derivatives could also affect the amount, timing and character of distributions to shareholders, which may result in the Fund realizing more short-term capital

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gain and ordinary income subject to tax at ordinary income tax rates than it would if it did not engage in such transactions, which may adversely impact the Fund's after-tax returns.

The derivative instruments and techniques that the Fund may principally use include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*◦ Futures.* A futures contract is a standardized agreement to buy or sell a specific quantity of an underlying instrument at a specific price at a specific future time. A decision as to whether, when and how to use futures involves the exercise of skill and judgment and even a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures can be highly volatile, using futures can lower total return, and the potential loss from futures can exceed the Fund's initial investment in such contracts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*◦ Options*. If the Fund buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreed-upon price typically in exchange for a premium paid by the Fund. If the Fund sells an option, it sells to another person the right to buy from or sell to the Fund a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreed-upon price typically in exchange for a premium received by the Fund. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Swaps.* A swap contract is an agreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indexes, reference rates, currencies or other instruments. Swap agreements are particularly subject to counterparty credit, liquidity, valuation, correlation, leverage, operational and legal risk. Swaps could result in losses if interest rate or foreign currency exchange rates or credit quality changes are not correctly anticipated by the Fund or if the reference index, security or investments do not perform as expected. The use of credit default swaps can result in losses if the Fund's assumptions regarding the creditworthiness of the underlying obligation prove to be incorrect.

&nbsp;&nbsp;&nbsp;&nbsp;**• Risks Relating to Fund's RIC Status.** To qualify and remain eligible for the special tax treatment accorded to a regulated investment company ("RIC") and its shareholders under the Internal Revenue Code of 1986, as amended, the Fund must meet certain source-of-income, asset diversification and annual distribution requirements. If the Fund fails to qualify as a RIC for any reason and becomes subject to corporate tax, the resulting corporate taxes could substantially reduce its net assets, the amount of income available for distribution and the amount of its distributions.

&nbsp;&nbsp;&nbsp;&nbsp;**• Uncertain Tax Treatment.** Below investment grade instruments may present special tax issues for the Fund. U.S. federal income tax rules are not entirely clear about issues such as when the Fund may cease accruing interest, original issue discount ("OID") or market discount, when and to what extent deductions may be taken for bad debts or worthless instruments, how payments received on obligations in default should be allocated between principal and income and whether exchanges of debt obligations in a bankruptcy or workout context are taxable, which may make it difficult for the Fund to satisfy the annual distribution requirements applicable to RICs.

&nbsp;&nbsp;&nbsp;&nbsp;**• Equity Market Risk.** Equity securities are susceptible to general stock market fluctuations and to volatile increases and decreases in value. The equity market may experience declines, and companies whose equity securities are in the Fund's portfolio may not increase their earnings at the rate anticipated. The Fund's NAV and investment return will fluctuate based upon changes in the value of its portfolio securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• Repurchase Agreement Risks.** Repurchase agreements typically involve the acquisition by the Fund of fixed-income securities from a selling financial institution such as a bank or broker-dealer. The Fund may incur a loss if the other party to a repurchase agreement is unwilling or unable to fulfill its contractual obligations to repurchase the underlying security.

**Performance**

The following performance information indicates some of the risks of investing in the Fund. The bar chart shows the Fund's performance for the calendar year ended December 31. The table illustrates how the Fund's average annual total returns compare over time to those of a broad-based securities market index. The Fund's past performance, before and after taxes, does not necessarily indicate how it will perform in the future. Updated performance information is also available on the Fund's website at www.angeloakcapital.com or by calling (855) 751-4324 (toll free).

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**Annual Total Returns** 

(for years ended December 31<sup>st</sup>)

![13743895459582](ck0001612930-20260529_g6.jpg)

The calendar year-to-date total return as of March 31, 2026 was 0.91%. During the periods shown in the chart, the highest quarterly return was 4.33% (for the quarter ended September 30, 2024) and the lowest quarterly return was -0.76% (for the quarter ended December 31, 2024).

**Angel Oak Income ETF** 

**Average Annual Total Returns** 

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| | | |
|:---|:---|:---|
| **For the period ended December 31, 2025** | **1 Year** | **Since Inception**<br>**(11/7/22)** |
| Return Before Taxes | 7.78% | 7.84% |
| Return After Taxes on Distributions<sup>1</sup> | 5.13% | 5.12% |
| Return After Taxes on Distributions and Sale of Fund Shares<sup>1</sup> | 4.57% | 4.83% |
| **Bloomberg U.S. Aggregate Bond Index**<br>(reflects no deduction for fees, expenses, and taxes) | 7.30% | 5.71% |

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<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. In certain cases, the figure representing "Return After Taxes on Distributions and Sale of Fund Shares" may be higher than the other return figures for the same period, since a higher after-tax return results when a capital loss occurs upon redemption and provides an assumed tax deduction that benefits the investor. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts.

**Portfolio Management** 

***Investment Adviser.*** Angel Oak Capital Advisors, LLC.

***Portfolio Managers.*** 

Ward Bortz, ETF Portfolio Manager of the Adviser, has been a portfolio manager of the Fund since its inception in October 2022.

Namit Sinha, Chief Investment Officer of the Adviser, has been a portfolio manager of the Fund since 2024.

Clayton Triick, CFA®, Head of Portfolio Management, Public Strategies of the Adviser, has been a portfolio manager of the Fund since its inception in October 2022.

**Purchase and Sale of Fund Shares** 

The Fund issues and redeems Shares at NAV only in large blocks known as "Creation Units," which only Authorized Participants ("APs") (typically, broker-dealers) may purchase or redeem. The Fund generally issues and redeems Creation Units in exchange for a portfolio of securities and/or a designated amount of U.S. cash.

Shares are listed on the Exchange, and individual Shares may only be bought and sold in the secondary market through a broker or dealer at market prices, rather than NAV. Because Shares trade at market prices rather than NAV, Shares may trade at a price greater than NAV (premium) or less than NAV (discount).

An investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase Shares (the "bid" price) and the lowest price a seller is willing to accept for Shares (the "ask" price) when buying or selling Shares in the secondary market. The difference in the bid and ask prices is referred to as the "bid-ask spread."

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Recent information regarding the Fund's NAV, market price, how often Shares traded on the Exchange at a premium or discount, and bid-ask spreads can be found on the Fund's website at www.angeloakcapital.com.

**Tax Information** 

The Fund's distributions are generally taxable as ordinary income, qualified dividend income, or capital gains (or a combination), unless your investment is in an individual retirement account ("IRA") or other tax-advantaged account. Distributions on investments made through tax-deferred arrangements may be taxed later upon withdrawal of assets from those accounts.

**Financial Intermediary Compensation** 

If you purchase Shares through a broker-dealer or other financial intermediary (such as a bank) (an "Intermediary"), the Adviser or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary's website for more information.

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**ANGEL OAK ULTRASHORT INCOME ETF SUMMARY**<br>

**Investment Objective** 

The Angel Oak UltraShort Income ETF (the "Fund") seeks to provide current income while seeking to minimize price volatility and maintain liquidity.

**Fees and Expenses of the Fund** 

The following table describes the fees and expenses you may pay if you buy, hold, and sell shares of the Fund ("Shares"). **You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and Example below.** 

**Annual Fund Operating Expenses (expenses that you pay each year as a** 

**percentage of the value of your investment)** 

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| | |
|:---|:---|
| Management Fees | 0.55% |
| Other Expenses<sup>1</sup> | <u>0.01%</u> |
| Total Annual Fund Operating Expenses | 0.56% |
| Less Fee Waiver/Expense Reimbursement<sup>2</sup> | <u>-0.21%</u> |
| Total Annual Fund Operating Expenses After Fee Waiver/Expense Reimbursement<sup>2</sup> | 0.35% |

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<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Angel Oak Capital Advisors, LLC (the "Adviser") receives a "unitary fee" pursuant to which it is responsible for substantially all the expenses of the Fund (including expenses of the Trust relating to the Fund), except for the advisory fees, payments under the Fund's 12b-1 plan (if any), interest expenses, dividend and interest expenses related to short sales, taxes, acquired fund fees and expenses (other than fees for funds advised by the Adviser and/or its affiliates), brokers' commissions and any other transaction related expenses and fees arising out of transactions effected on behalf of the Fund, and litigation and potential litigation and other extraordinary expenses not incurred in the ordinary course of the Fund's business. Other Expenses consists of 0.01% of acquired fund fees and expenses ("AFFE"). AFFE is borne by the Fund separately from the management fees paid to the Adviser.

<sup>2</sup>&nbsp;&nbsp;&nbsp;&nbsp;The Adviser has contractually agreed to waive its fees and/or reimburse certain expenses (exclusive of interest expenses, dividend and interest expenses related to short sales, taxes, acquired fund fees and expenses (other than fees for funds advised by the Adviser which are waived), brokers' commissions and any other transaction related expenses and fees arising out of transactions effected on behalf of the Fund, expenses, expenses of shareholder proposals, contested elections, or non-routine shareholder meetings, and other non-routine expenses or extraordinary expenses not incurred in the ordinary course of the Fund's business) to limit the Total Annual Fund Operating Expenses After Fee Waiver/Expense Reimbursement to 0.34% of the Fund's average daily net assets (the "Expense Limit") through September 30, 2027. The contractual arrangement may only be changed or eliminated by the Board of Trustees upon 60 days' written notice to the Adviser. The Adviser may recoup from the Fund any waived amount or reimbursed expenses pursuant to this agreement if such recoupment does not cause the Fund's Total Annual Fund Operating Expenses after such recoupment to exceed the lesser of (i) the Expense Limit in effect at the time of the waiver or reimbursement and (ii) the Expense Limit in effect at the time of recoupment and the recoupment is made within three years after the end of the month in which the Adviser incurred the expense. Fee Waiver/Expense Reimbursement and Total Annual Fund Operating Expenses After Fee Waiver/Expense Reimbursement have been restated to reflect the current expense limitation arrangement.

**Expense Example** 

The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then continue to hold or sell all of your Shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. The example does not take into account brokerage commissions that you may pay on your purchases and sales of Shares. The fee waiver and expense reimbursement discussed in the table above is reflected only for the first year. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

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| | | | |
|:---|:---|:---|:---|
| <u>One Year</u> | <u>Three Years</u> | <u>Five Years</u> | <u>Ten Years</u> |
| $36 | $158 | $292 | $681 |

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**Portfolio Turnover** 

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example above, affect the Fund's performance. During the most recent fiscal year ended January 31, 2026, the portfolio turnover rate for the Fund was 87% of the average value of its portfolio.

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**Principal Investment Strategies** 

In pursuing its investment objective, the Fund will, under normal circumstances, invest in securities which cause the Fund to have a dollar-weighted average maturity of less than two years and a dollar-weighted average duration of less than one year.

The Fund invests primarily in agency and non-agency residential mortgage-backed securities ("RMBS"), asset-backed securities ("ABS"), including securities or securitizations backed by assets such as credit card receivables, student loans, automobile loans, and residential and commercial real estate, collateralized loan obligations ("CLOs"), collateralized debt obligations ("CDOs"), collateralized mortgage obligations ("CMOs"), and other debt securitizations (collectively, "Structured Products"); corporate debt and other debt securities; and U.S. Treasury and U.S. government agency securities.

The Fund may invest up to: (i) 50% of its net assets in non-agency RMBS, and (ii) 50% of its net assets in corporate debt. The Fund will invest at least: (i) 15% of its net assets in ABS, and (ii) 10% of its net assets in U.S. Treasury securities, agency RMBS, and agency commercial mortgage-backed securities ("CMBS"), collectively.

The Fund may invest up to 25% of its net assets in CLOs.

The Fund may invest in other investment companies, including closed-end investment companies and open-end investment companies, which may operate as traditional mutual funds, exchange-traded funds ("ETFs") or business development companies ("BDCs"). The other investment companies in which the Fund invests may be part of the same group of investment companies as the Fund.

The Fund will concentrate its investments in agency and non-agency RMBS and CMBS (collectively, "MBS"). This means that, under normal circumstances, the Fund will invest more than 25% of its total assets in MBS (measured at the time of purchase). The Fund will not concentrate its investments in any other group of industries. The Fund's policy to concentrate its investments in MBS is fundamental and may not be changed without shareholder approval.

The fixed income instruments in which the Fund invests may include those of issuers from the United States and other countries. The Fund's investments in foreign debt securities will typically be denominated in U.S. dollars.

The Fund may invest up to 15% of its net assets in investments that are deemed to be illiquid, which may include private placements, certain Rule 144A securities (which are subject to resale restrictions), and securities of issuers that are bankrupt or in default.

The Fund is not a money market fund and does not seek to maintain a stable net asset value ("NAV").

The Fund may engage in active and frequent trading of its portfolio securities.

The Fund may invest, without limitation, in securities of any maturity and duration, but, under normal circumstances, the Fund will have a dollar-weighted average maturity of less than two years and a dollar-weighted average duration of less than one year. Maturity refers to the length of time until a debt security's principal is repaid with interest. Duration is a measure used to determine the sensitivity of a security's price to changes in interest rates. Duration incorporates a security's yield, coupon, final maturity, call and put features and prepayment exposure into one measure, with a higher duration indicating greater sensitivity to interest rates. For example, if a portfolio has a duration of two years, and interest rates increase (fall) by 1%, the portfolio would decline (increase) in value by approximately 2%. However, duration may not accurately reflect the true interest rate sensitivity of instruments held by the Fund and, therefore the Fund's exposure to changes in interest rates.

The Fund's investments in RMBS and ABS will span a broad segment of consumer creditworthiness segments, which will include exposure to prime, near-prime, and subprime consumers.

The Fund may invest in high-yield securities and securities that are not rated by any rating agencies. These "high-yield" securities (also known as "junk bonds") will be rated BB+ or lower by S&P Global Ratings or will be of equivalent quality rating from another Nationally Recognized Statistical Ratings Organization. If a bond is unrated, the Adviser may determine whether it is of comparable quality and therefore eligible for the Fund's investment. Although the Fund will not acquire investments of issuers that are in default at the time of investment, the Fund may hold such securities if an investment subsequently defaults.

In pursuing its investment objective or for hedging purposes, the Fund may utilize borrowing, and various types of derivative instruments, including structured products, swaps, futures contracts, and options, although the Adviser expects that not all such derivatives will be used at all times. Such derivatives may trade over-the-counter or on an exchange and may principally be used for one or more of the following purposes: speculation, currency hedging, duration management, credit deterioration hedging, hedges against broad market movements, or to pursue the Fund's investment objective. The Fund may borrow to the maximum extent permitted by applicable law, which generally means that the Fund may borrow up to one-third of its total assets. The Fund may also invest in reverse repurchase agreements.

The Fund's allocation of its assets into various asset classes within its investment strategy will depend on the views of the Adviser as to the best value relative to what is currently available in the marketplace. Investment decisions are made based on fundamental research and analysis to identify issuers with the ability to improve their credit profile over time with attractive valuations, resulting

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in both income and potential capital appreciation. In selecting investments, including Structured Products, the Adviser may consider maturity, yield, and ratings information and opportunities for price appreciation among other criteria. The Adviser also analyzes a variety of factors when selecting investments for the Fund, such as collateral quality, credit support, structure and market conditions. The Adviser attempts to diversify risks that arise from position sizes, geography, ratings, duration, deal structure and collateral values. The Adviser will also seek to invest in securities that have relatively low volatility. The Adviser seeks to limit risk of principal by targeting assets that it considers undervalued. From time to time, the Fund may allocate its assets so as to focus on particular types of securities. As part of its investment process, the Adviser also considers certain environmental, social and governance ("ESG") and sustainability factors that it believes could have a material impact on certain securities in which the Fund may invest. These determinations may not be conclusive, and securities that may be negatively impacted by such factors may be purchased and retained by the Fund while the Fund may divest or not invest in securities that may be positively impacted by such factors.

The Fund is an actively managed ETF, which is a fund that trades like other publicly-traded securities. The Fund is not an index fund and does not seek to replicate the performance of a specified index.

**Principal Risks** 

The principal risks of investing in the Fund are summarized below. You should carefully consider the Fund's investment risks before deciding whether to invest in the Fund. There may be circumstances that could prevent the Fund from achieving its investment objective and you may lose money by investing in the Fund. An investment in the Fund is not a deposit at a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

&nbsp;&nbsp;&nbsp;&nbsp;**• Fixed-Income Instruments Risks.** The Fund will invest in fixed-income instruments and securities. Such investments may be secured, partially secured or unsecured and may be unrated, and whether or not rated, may have speculative characteristics. The market price of the Fund's investments will change in response to changes in interest rates and other factors. Generally, when interest rates rise, the values of fixed-income instruments fall, and vice versa. In typical interest rate environments, the prices of longer-term fixed-income instruments generally fluctuate more than the prices of shorter-term fixed-income instruments as interest rates change. In addition, a fund with a longer average portfolio duration will be more sensitive to changes in interest rates than a fund with a shorter average portfolio duration. A fund with a negative average portfolio duration may decline in value as interest rates decrease. Most high yield investments pay a fixed rate of interest and are therefore vulnerable to inflation risk (inflation rates are currently elevated relative to normal conditions). The obligor of a fixed-income instrument may not be able or willing to pay interest or to repay principal when due in accordance with the terms of the associated agreement.

&nbsp;&nbsp;&nbsp;&nbsp;**• General Market Risk.** The capital markets may experience periods of disruption, instability and volatility. Political, geopolitical, natural and other events, including war, terrorism, trade disputes, tariffs and other trade barriers, government shutdowns, market closures, natural and environmental disasters, epidemics, pandemics and other public health crises and related events have led, and in the future may lead, to economic uncertainty, decreased economic activity, increased market volatility and other disruptive effects on U.S. and global economies and markets. Such conditions may materially and adversely affect the markets globally and in the jurisdictions in which the Fund invests, which may have a negative impact on the Fund's performance. The Fund's net asset value ("NAV") and investment return will fluctuate based upon changes in the value of its portfolio securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• Credit Risk.** Credit risk is the risk that the Fund could lose money if the issuer or guarantor of a fixed income security, or the counterparty to a derivative contract, is unable or unwilling to meet its financial obligations.

&nbsp;&nbsp;&nbsp;&nbsp;**• Interest Rate Risk.** The Fund is exposed to risks associated with changes in interest rates, including the possibility that, in a period of rising interest rates, securities may exhibit additional volatility and may lose value.

&nbsp;&nbsp;&nbsp;&nbsp;**• Prepayment Risk.** When interest rates decline, fixed income securities with stated interest rates may have the principal paid earlier than expected, requiring the Fund to invest the proceeds at generally lower interest rates.

&nbsp;&nbsp;&nbsp;&nbsp;**• Structured Products Risks.** The Fund may invest in Structured Products, including CLOs, CDOs, CMOs, and other asset-backed securities and debt securitizations. Some Structured Products have credit ratings, but are typically issued in various classes with various priorities. Normally, Structured Products are privately offered and sold (that is, they are not registered under the securities laws), which means less information about the security may be available as compared to publicly offered securities and only certain institutions may buy and sell them. As a result, investments in Structured Products may be characterized by the Fund as illiquid securities. An active dealer market may exist for Structured Products that qualify for Rule 144A transactions, but there can be no assurance that such a market will exist or will be active enough for the Fund to sell such securities. In addition to the typical risks associated with fixed-income securities and asset-backed securities, CLOs and CDOs carry additional risks including, but not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii) the risk that the collateral may default, decline in value or quality or be downgraded by a rating agency; (iii) the Fund may invest in tranches of Structured Products that are subordinate to other tranches; (iv) the structure and complexity of the transaction and the legal documents could lead to disputes among investors

Angel Oak UltraShort Income ETF&nbsp;&nbsp;&nbsp;&nbsp;14

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regarding the characterization of proceeds; (v) risk of forced "fire sale" liquidation due to technical defaults such as coverage test failures; and (vi) the Structured Product's manager may perform poorly. The senior and junior tranches of Structured Products may have floating or variable interest rates and are subject to the risks associated with securities tied to floating or variable interest rates. The Fund may also invest in the equity tranches of a Structured Product, which typically represent the first loss position in the Structured Product, are unrated and are subject to higher risks. Equity tranches of Structured Products typically do not have a fixed coupon and payments on equity tranches will be based on the income received from the underlying collateral and the payments made to the senior tranches, both of which may be based on floating rates.

&nbsp;&nbsp;&nbsp;&nbsp;**• Borrowing Risks and Leverage Risks.** Borrowing for investment purposes creates leverage, which will exaggerate the effect of any change in the value of securities in the Fund's portfolio on the Fund's NAV and, therefore, may increase the volatility of the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;**• Extension Risk**. An issuer could exercise its right to pay principal on an obligation held by the Fund (such as a mortgage-backed security) later than expected. This may happen when there is a rise in interest rates. Under these circumstances, the value of the obligation will decrease, and the Fund will also suffer from the inability to reinvest in higher yielding securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• Concentration in Certain Mortgage-Backed Securities Risk.** The risks of concentrating in residential mortgage-backed securities (agency and non-agency) and commercial mortgage-backed securities include susceptibility to changes in lending standards, interest rates and lending rates, and the risks associated with the market's perception of issuers, the creditworthiness of the parties involved and investing in real estate securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• U.S. Government Securities Risks.** U.S. government securities are not guaranteed against price movement and may decrease in value. Some U.S. government securities are supported by the full faith and credit of the U.S. Treasury, while others may be supported only by the discretionary authority of the U.S. government to purchase certain obligations of a federal agency or U.S. government sponsored enterprise ("GSE") or only by the right of the issuer to borrow from the U.S. Treasury. While the U.S. government provides financial support to such agencies and GSEs, no assurance can be given that the U.S. government will always do so. Other obligations are backed solely by the GSE's own resources. Investments in securities issued by GSEs that are not backed by the U.S. Treasury are subject to higher credit risk than those that are backed by the U.S. Treasury.

&nbsp;&nbsp;&nbsp;&nbsp;**• Unrated Securities Risks.** Unrated securities may be less liquid than comparable rated securities and involve the risk that Angel Oak may not accurately evaluate the security's comparative credit rating.

&nbsp;&nbsp;&nbsp;&nbsp;**• Mortgage-Backed and Asset-Backed Securities Risks.** Mortgage-backed and other asset-backed securities are subject to the risks of traditional fixed-income instruments. However, they are also subject to prepayment risk and extension risk, meaning that if interest rates fall, the underlying debt may be repaid ahead of schedule, reducing the value of the Fund's investments and if interest rates rise, there may be fewer prepayments, which would cause the average bond maturity to rise, increasing the potential for the Fund to lose money. Mortgage-backed and other asset-backed securities are also susceptible to changes in lending standards and lending rates. In addition, mortgage-backed securities comprised of subprime mortgages and investments in other asset-backed securities collateralized by subprime loans may be subject to a higher degree of credit risk and valuation risk. Additionally, such securities may be subject to a higher degree of liquidity risk, because the liquidity of such investments may vary dramatically over time.

Certain mortgage-backed securities may be secured by pools of mortgages on single-family, multi-family properties, as well as commercial properties. Similarly, asset-backed securities may be secured by pools of loans, such as corporate loans, student loans, automobile loans and credit card receivables. The credit risk on such securities is affected by homeowners or borrowers defaulting on their loans. The values of assets underlying mortgage-backed and asset-backed securities may decline and therefore may not be adequate to cover underlying investors. Some mortgage-backed and asset-backed securities have experienced extraordinary weakness and volatility in recent years. Possible legislation in the area of residential mortgages, credit cards, corporate loans and other loans that may collateralize the securities in which the Fund may invest could negatively impact the value of the Fund's investments. To the extent the Fund focuses its investments in particular types of mortgage-backed or asset-backed securities, the Fund may be more susceptible to risk factors affecting such types of securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**• ETF Risks.** The Fund is an ETF and may invest in other ETFs, and, as a result of this structure, is exposed directly or indirectly to the following risks:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Authorized Participants, Market Makers, and Liquidity Providers Concentration Risk.* The Fund has a limited number of financial institutions that may act as Authorized Participants ("APs"). In addition, there may be a limited number of market makers and/or liquidity providers in the marketplace. To the extent either of the following events occur, Shares may trade at a material discount to NAV, which may also lead to a widening of bid/ask spreads quoted for Shares, and possibly face delisting: (i) APs exit the business or otherwise become unable to process creation and/or redemption orders and no other APs step forward to perform these services, or (ii) market makers and/or liquidity providers exit the business or significantly reduce their business activities and no other entities step forward to perform their

Angel Oak UltraShort Income ETF&nbsp;&nbsp;&nbsp;&nbsp;15

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functions. Authorized Participant concentration risk may be heightened for ETFs, such as the Fund, that invest in securities issued by non-U.S. issuers or other securities or instruments that have lower trading volumes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*◦ Costs of Buying or Selling Shares.* Due to the costs of buying or selling Shares, including brokerage commissions imposed by brokers and bid/ask spreads, frequent trading of Shares may significantly reduce investment results and an investment in Shares may not be advisable for investors who anticipate regularly making small investments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Shares May Trade at Prices Other Than NAV.* As with all ETFs, Shares may be bought and sold in the secondary market at market prices. Although it is expected that the market price of Shares will approximate the Fund's NAV, there may be times when the market price of Shares is more than the NAV intra-day (premium) or less than the NAV intra-day (discount) due to supply and demand of Shares or during periods of market volatility. This risk is heightened in times of market volatility, periods of steep market declines, and periods when there is limited trading activity for Shares in the secondary market, in which case such premiums or discounts may be significant. Because securities held by the Fund may trade on foreign exchanges that are closed when the Fund's primary listing exchange is open, the Fund is likely to experience premiums or discounts greater than those of domestic ETFs. If a shareholder purchases Shares at a time when the market price is at a premium to the NAV or sells Shares at a time when the market price is at a discount to the NAV, the shareholder may sustain losses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*◦ Trading*. Although Shares are listed for trading on the Nasdaq Stock Market LLC (the "Exchange") and may be traded on U.S. exchanges other than the Exchange, there can be no assurance that Shares will trade with any volume, or at all, on any stock exchange. In stressed market conditions, the liquidity of Shares may begin to mirror the liquidity of the Fund's underlying portfolio holdings, which can be significantly less liquid than Shares, and may lead to a widening of bid/ask spreads quoted for Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Cash Transactions Risk*. Unlike certain ETFs, the Fund may effect creations and redemptions in cash or partially in cash. Therefore, it may be required to sell portfolio securities and subsequently recognize gains on such sales that the Fund might not have recognized if it were to distribute portfolio securities in-kind. As such, investments in Shares may be less tax-efficient than an investment in an ETF that distributes portfolio securities entirely in-kind.

&nbsp;&nbsp;&nbsp;&nbsp;**• Foreign Securities Risks**. Investments in securities or other instruments of non-U.S. issuers involve certain risks not involved in domestic investments and may experience more rapid and extreme changes in value than investments in securities of U.S. companies. Financial markets in foreign countries often are not as developed, efficient or liquid as financial markets in the United States, and therefore, the prices of non-U.S. securities and instruments can be more volatile. In addition, the Fund will be subject to risks associated with adverse political and economic developments in foreign countries, which may include the imposition of economic sanctions or other similar measures. Generally, there is less readily available and reliable information about non-U.S. issuers due to less rigorous disclosure or accounting standards and regulatory practices.

&nbsp;&nbsp;&nbsp;&nbsp;**• Management Risk.** The Fund may not meet its investment objective based on the Adviser's success or failure to implement investment strategies for the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;**• Cybersecurity Risk.** Cybersecurity incidents may allow an unauthorized party to gain access to Fund assets or proprietary information, or cause the Fund, the Adviser, and/or other service providers (including custodians and financial intermediaries) to suffer data breaches or data corruption. Additionally, cybersecurity failures or breaches of the electronic systems of the Fund, the Adviser, or the Fund's other service providers, market makers, Authorized Participants or the issuers of securities in which the Fund invests have the ability to cause disruptions and negatively impact the Fund's business operations, potentially resulting in financial losses to the Fund and its shareholders. In an extreme case, a shareholder's ability to transact in Fund shares may be affected.

&nbsp;&nbsp;&nbsp;&nbsp;**• Sector Risk**. To the extent the Fund invests more heavily in particular sectors of the economy, its performance will be especially sensitive to developments that significantly affect those sectors.

&nbsp;&nbsp;&nbsp;&nbsp;**• Floating or Variable Rate Securities Risk.** Floating or variable rate securities pay interest at rates that adjust in response to changes in a specified interest rate or reset at predetermined dates (such as the end of a calendar quarter). Securities with floating or variable interest rates are generally less sensitive to interest rate changes than securities with fixed interest rates, but may decline in value if their interest rates do not rise as much, or as quickly, as comparable market interest rates. Although floating or variable rate securities are generally less sensitive to interest rate risk than fixed rate securities, they are subject to credit, liquidity and default risk and may be subject to legal or contractual restrictions on resale, which could impair their value.

Instruments in which the Fund invests may pay interest at floating rates or may be subject to interest caps or floors tied to floating rates, such as the Secured Overnight Financing Rate. The Fund and issuers of instruments in which the Fund invests may also obtain financing at floating rates. Derivative instruments utilized by the Fund and/or issuers of instruments in which the Fund may invest may also reference floating rates. The Fund also may utilize leverage or borrowings primarily based on floating rates.

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&nbsp;&nbsp;&nbsp;&nbsp;**• Liquidity and Valuation Risks.** It may be difficult for the Fund to purchase and sell particular investments within a reasonable time at a fair price, or the price at which it has been valued for purposes of the Fund's NAV, causing the Fund to be less liquid and unable to sell securities for what the Adviser believes is the appropriate price of the investment. Valuation of portfolio investments may be difficult, such as during periods of market turmoil or reduced liquidity and for investments that trade infrequently or irregularly. In these and other circumstances, an investment may be valued using fair value methodologies, which are inherently subjective, reflect good faith judgments based on available information and may not accurately estimate the price at which the Fund could sell the investment at that time. Based on its investment strategies, a significant portion of the Fund's investments can be difficult to value and potentially less liquid and therefore particularly prone to these risks.

&nbsp;&nbsp;&nbsp;&nbsp;**• Portfolio Turnover Risk.** Frequent trading increases the Fund's portfolio turnover rate and may increase transaction costs, such as brokerage commissions, dealer mark-ups and may result in higher taxes when Fund shares are held in a taxable account. Increased transaction costs could detract from the Fund's performance.

&nbsp;&nbsp;&nbsp;&nbsp;**• Other Investment Companies Risks.** The Fund will incur higher and duplicative expenses when it invests in mutual funds, ETFs, and other investment companies, which may include those that are part of the same group of investment companies as the Fund ("affiliated underlying funds"). There is also the risk that the Fund may suffer losses due to the investment practices of the underlying funds. When the Fund invests in other investment companies, the Fund will be subject to substantially the same risks as those associated with the direct ownership of securities held by such investment companies. ETFs may be less liquid than other investments, and thus their share values more volatile than the values of the investments they hold. Investments in ETFs are also subject to the following risks: (i) the market price of an ETF's shares may trade above or below their net asset value; (ii) an active trading market for an ETF's shares may not develop or be maintained; and (iii) trading of an ETF's shares may be halted for a number of reasons.

The Adviser may be subject to potential conflicts of interest in allocating the Fund's assets to underlying funds, such as a potential conflict in selecting affiliated underlying funds over unaffiliated underlying funds. In addition, the Fund's portfolio managers may be subject to potential conflicts of interest in allocating the Fund's assets among underlying funds, as certain of the Fund's portfolio managers may also manage an affiliated underlying fund in which the Fund may invest. Both the Adviser and the Fund's portfolio managers have a fiduciary duty to the Fund to act in the Fund's best interest when selecting underlying funds. Under the oversight of the Board of Trustees, the Adviser will carefully analyze any such potential conflicts of interest and will take steps to minimize and, where possible, eliminate them.

&nbsp;&nbsp;&nbsp;&nbsp;**• Rating Agencies Risks.** Ratings are not an absolute standard of quality, but rather general indicators that reflect only the view of the originating rating agencies from which an explanation of the significance of such ratings may be obtained. There is no assurance that a particular rating will continue for any given period of time or that any such rating will not be revised downward or withdrawn entirely. Such changes may negatively affect the liquidity or market price of the securities in which the Fund invests. The ratings of Structured Products may not adequately reflect the credit risk of those assets due to their structure.

&nbsp;&nbsp;&nbsp;&nbsp;**• Large Shareholder Transactions Risk.** Shares of the Fund are offered to certain other investment companies, large retirement plans and other large investors. In addition, a third party investor, the Adviser or an affiliate of the Adviser, an AP, a market maker, or another entity may invest in the Fund and hold its investment for a limited period of time. As a result, the Fund is subject to the risk that shareholders may purchase or redeem a large amount of shares of the Fund. To satisfy such large shareholder redemptions, the Fund may have to sell portfolio securities at times when it would not otherwise do so, which may negatively impact the Fund's NAV and liquidity. In addition, large purchases of Fund shares could adversely affect the Fund's performance to the extent that the Fund does not immediately invest cash it receives and therefore holds more cash than it ordinarily would. Large shareholder activity could also generate increased transaction costs and cause adverse tax consequences. In addition, transactions by large shareholders may account for a large percentage of the trading volume on the Exchange and may, therefore, have a material effect on the market price of the Shares.

&nbsp;&nbsp;&nbsp;&nbsp;**• Illiquid Investments Risks.** The Fund may, at times, hold illiquid investments, by virtue of the absence of a readily available market for certain of its investments, or because of legal or contractual restrictions on sales. The Fund could lose money if it is unable to dispose of an investment at a time or price that is most beneficial to the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;**• NAV Risk.** The Fund is not a money market fund, does not attempt to maintain a stable NAV, and is not subject to the rules that govern the quality, maturity, liquidity and other features of securities that money market funds may purchase. Under normal conditions, the Fund's investment may be more susceptible than a money market fund to interest rate risk, valuation risk, credit risk, and other risks relevant to the Fund's investments. The Fund's NAV per share will fluctuate.

&nbsp;&nbsp;&nbsp;&nbsp;**• Regulatory and Legal Risks.** U.S. and non-U.S. government agencies and other regulators regularly adopt new regulations and legislatures enact new statutes that affect the investments held by the Fund, the strategies used by the Fund or the level of regulation or taxation that applies to the Fund. These statutes and regulations may impact the investment strategies, performance, costs and operations of the Fund or the taxation of its shareholders.

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&nbsp;&nbsp;&nbsp;&nbsp;**• High-Yield Securities Risks.** High-yield securities (also known as junk bonds) carry a greater degree of risk and are more volatile than investment grade securities and are considered speculative. High-yield securities may be issued by companies that are restructuring, are smaller and less creditworthy, or are more highly indebted than other companies. This means that they may have more difficulty making scheduled payments of principal and interest. Changes in the value of high-yield securities are influenced more by changes in the financial and business position of the issuing company than by changes in interest rates when compared to investment grade securities. The Fund's investments in high-yield securities expose it to a substantial degree of credit risk.

&nbsp;&nbsp;&nbsp;&nbsp;**• Reverse Repurchase Agreement Risks.** A reverse repurchase agreement is the sale by the Fund of a debt obligation to a party for a specified price, with the simultaneous agreement by the Fund to repurchase that debt obligation from that party on a future date at a higher price. Similar to borrowing, reverse repurchase agreements provide the Fund with cash for investment purposes, which creates leverage and subjects the Fund to the risks of leverage. Reverse repurchase agreements also involve the risk that the other party may fail to return the securities in a timely manner or at all. The Fund could lose money if it is unable to recover the securities and/or if the value of collateral held by the Fund, including the value of the investments made with cash collateral, is less than the value of securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• Derivatives Risks.** The Fund's derivatives and other similar instruments (collectively referred to in this section as "derivatives" or "derivative instruments") have risks, including the imperfect correlation between the value of such instruments and the underlying assets, rate or index; the loss of principal, including the potential loss of amounts greater than the initial amount invested in the derivative instrument; the possible default of the other party to the transaction; and illiquidity of the derivative investments. Changes in the value of a derivative may also create margin delivery or settlement payment obligations for the Fund. If a counterparty becomes bankrupt or otherwise fails to perform its obligations under a derivative contract due to financial difficulties, the Fund may experience significant delays in obtaining any recovery under the derivative contract in a bankruptcy or other reorganization proceeding. Certain derivatives may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. The use of derivatives is also subject to operational risk, which refers to risk related to potential operational issues, including documentation issues, settlement issues, system failures, inadequate controls, and human error, as well as legal risk, which refers to the risk of loss resulting from insufficient documentation, insufficient capacity or authority of counterparty, or legality or enforceability of a contract. Derivatives are also subject to market risk, which refers to the risk that markets could experience a change in volatility that adversely impacts fund returns and the fund's obligations and exposures. Certain of the Fund's transactions in derivatives could also affect the amount, timing and character of distributions to shareholders, which may result in the Fund realizing more short-term capital gain and ordinary income subject to tax at ordinary income tax rates than it would if it did not engage in such transactions, which may adversely impact the Fund's after-tax returns.

The derivative instruments and techniques that the Fund may principally use include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Futures.* A futures contract is a standardized agreement to buy or sell a specific quantity of an underlying instrument at a specific price at a specific future time. A decision as to whether, when and how to use futures involves the exercise of skill and judgment and even a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures can be highly volatile, using futures can lower total return, and the potential loss from futures can exceed the Fund's initial investment in such contracts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Options*. If the Fund buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreed-upon price typically in exchange for a premium paid by the Fund. If the Fund sells an option, it sells to another person the right to buy from or sell to the Fund a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreed-upon price typically in exchange for a premium received by the Fund. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Swaps.* A swap contract is an agreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indexes, reference rates, currencies or other instruments. Swap agreements are particularly subject to counterparty credit, liquidity, valuation, correlation, leverage, operational and legal risk. Swaps could result in losses if interest rate or foreign currency exchange rates or credit quality changes are not correctly anticipated by the Fund or if the reference index, security or investments do not perform as expected. The use of credit default swaps can result in losses if the Fund's assumptions regarding the creditworthiness of the underlying obligation prove to be incorrect.

&nbsp;&nbsp;&nbsp;&nbsp;**• Risks Relating to Fund's RIC Status.** To qualify and remain eligible for the special tax treatment accorded to a regulated investment company ("RIC") and its shareholders under the Internal Revenue Code of 1986, as amended, the Fund must meet certain source-of-income, asset diversification and annual distribution requirements. If the Fund fails to qualify as a RIC for

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any reason and becomes subject to corporate tax, the resulting corporate taxes could substantially reduce its net assets, the amount of income available for distribution and the amount of its distributions.

&nbsp;&nbsp;&nbsp;&nbsp;**• Uncertain Tax Treatment.** Below investment grade instruments may present special tax issues for the Fund. U.S. federal income tax rules are not entirely clear about issues such as when the Fund may cease accruing interest, original issue discount ("OID") or market discount, when and to what extent deductions may be taken for bad debts or worthless instruments, how payments received on obligations in default should be allocated between principal and income and whether exchanges of debt obligations in a bankruptcy or workout context are taxable, which may make it difficult for the Fund to satisfy the annual distribution requirements applicable to RICs.

&nbsp;&nbsp;&nbsp;&nbsp;**• Repurchase Agreement Risks.** Repurchase agreements typically involve the acquisition by the Fund of fixed-income securities from a selling financial institution such as a bank or broker-dealer. The Fund may incur a loss if the other party to a repurchase agreement is unwilling or unable to fulfill its contractual obligations to repurchase the underlying security.

**Performance** 

The following performance information indicates some of the risks of investing in the Fund. The bar chart shows the Fund's performance for the calendar year ended December 31. The table illustrates how the Fund's average annual total returns compare over time to those of three indexes. The Bloomberg US Aggregate Bond Index serves as the Fund's regulatory index and provides a broad measure of market performance. The Bloomberg Short Term Government/Corporate Index and the Bloomberg US Treasury Bills Index are the Fund's additional indexes and are more representative of the Fund's investment universe than the regulatory index. The Fund's past performance, before and after taxes, does not necessarily indicate how it will perform in the future. Updated performance information is also available on the Fund's website at www.angeloakcapital.com or by calling (855) 751-4324 (toll free).

**Annual Total Returns** 

(for years ended December 31<sup>st</sup>)

![13743895465712](ck0001612930-20260529_g7.jpg)

The calendar year-to-date total return as of March 31, 2026 was 0.90%. During the periods shown in the chart, the highest quarterly return was 2.04% (for the quarter ended December 31, 2023) and the lowest quarterly return was 1.07% (for the quarter ended June 30, 2023).

**Angel Oak UltraShort Income ETF** 

**Average Annual Total Returns** 

---

| | | |
|:---|:---|:---|
| **For the period ended December 31, 2025** | **1 Year** | **Since Inception**<br>**(10/24/22)** |
| Return Before Taxes | 5.38% | 6.29% |
| Return After Taxes on Distributions<sup>1</sup> | 3.23% | 3.97% |
| Return After Taxes on Distributions and Sale of Fund Shares<sup>1</sup> | 3.15% | 3.81% |
| **Bloomberg U.S. Aggregate Bond Index**<br>(reflects no deduction for fees, expenses, and taxes) | 7.30% | 5.86% |
| **Bloomberg Short-Term Government/Corporate Index**<br>(reflects no deduction for fees, expenses, and taxes) | 4.46% | 4.95% |
| **Bloomberg U.S. Treasury Bills Index**<br> (reflects no deduction for fees, expenses, and taxes) | 4.30% | 4.86% |

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<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. In certain cases, the figure representing "Return After Taxes on Distributions and Sale of Fund Shares" may be higher than the other return figures for the same period,

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since a higher after-tax return results when a capital loss occurs upon redemption and provides an assumed tax deduction that benefits the investor. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts.

**Portfolio Management** 

***Investment Adviser.*** Angel Oak Capital Advisors, LLC.

***Portfolio Managers.*** 

Ward Bortz, ETF Portfolio Manager of the Adviser, has been a portfolio manager of the Fund since its inception in October 2022.

Sreeni Prabhu, Managing Partner, Co-CEO, and Group Chief Investment Officer of the Adviser, has been a portfolio manager of the Fund since 2024.

Namit Sinha, Chief Investment Officer of the Adviser, has been a portfolio manager of the Fund since 2024.

Clayton Triick, CFA®, Head of Portfolio Management, Public Strategies of the Adviser, has been a portfolio manager of the Fund since its inception in October 2022.

**Purchase and Sale of Fund Shares** 

The Fund issues and redeems Shares at NAV only in large blocks known as "Creation Units," which only APs (typically, broker-dealers) may purchase or redeem. The Fund generally issues and redeems Creation Units in exchange for a portfolio of securities and/or a designated amount of U.S. cash.

Shares are listed on the Exchange, and individual Shares may only be bought and sold in the secondary market through a broker or dealer at market prices, rather than NAV. Because Shares trade at market prices rather than NAV, Shares may trade at a price greater than NAV (premium) or less than NAV (discount).

An investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase Shares (the "bid" price) and the lowest price a seller is willing to accept for Shares (the "ask" price) when buying or selling Shares in the secondary market. The difference in the bid and ask prices is referred to as the "bid-ask spread."

Recent information regarding the Fund's NAV, market price, how often Shares traded on the Exchange at a premium or discount, and bid-ask spreads can be found on the Fund's website at www.angeloakcapital.com.

**Tax Information** 

The Fund's distributions are generally taxable as ordinary income, qualified dividend income, or capital gains (or a combination), unless your investment is in an individual retirement account ("IRA") or other tax-advantaged account. Distributions on investments made through tax-deferred arrangements may be taxed later upon withdrawal of assets from those accounts.

**Financial Intermediary Compensation** 

If you purchase Shares through a broker-dealer or other financial intermediary (such as a bank) (an "Intermediary"), the Adviser or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary's website for more information.

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**ANGEL OAK HIGH YIELD OPPORTUNITIES ETF SUMMARY**<br>

**Investment Objective** 

The investment objective of the Angel Oak High Yield Opportunities ETF (the "Fund") is to earn a high level of current income with a secondary objective of capital appreciation.

**Fees and Expenses of the Fund** 

The following table describes the fees and expenses you may pay if you buy, hold, and sell shares of the Fund ("Shares"). **You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and Example below.** 

**Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)** 

---

| | |
|:---|:---|
| Management Fees | 0.55% |
| Other Expenses | <u>0.00%</u> |
| Total Annual Fund Operating Expenses<sup>1</sup> | 0.55% |

---

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Angel Oak Capital Advisors, LLC (the "Adviser") receives a "unitary fee" pursuant to which it is responsible for substantially all the expenses of the Fund (including expenses of the Trust relating to the Fund), except for the advisory fees, payments under the Fund's 12b-1 plan (if any), interest expenses, dividend and interest expenses related to short sales, taxes, acquired fund fees and expenses ("AFFE") (other than fees for funds advised by the Adviser and/or its affiliates), brokers' commissions and any other transaction related expenses and fees arising out of transactions effected on behalf of the Fund, litigation and potential litigation and other extraordinary expenses not incurred in the ordinary course of the Fund's business.

**Expense Example** 

The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then continue to hold or sell all of your Shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. The example does not take into account brokerage commissions that you may pay on your purchases and sales of Shares. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

---

| | | | |
|:---|:---|:---|:---|
| <u>One Year</u> | <u>Three Years</u> | <u>Five Years</u> | <u>Ten Years</u> |
| $56 | $176 | $307 | $689 |

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**Portfolio Turnover** 

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example above, affect the Fund's performance. During the most recent fiscal year ended January 31, 2026, the portfolio turnover rate for the Angel Oak High Yield Opportunities Fund (the "Predecessor High Yield Fund") was 58% of the average value of its portfolio.

**Principal Investment Strategies** 

In pursuing its investment objective, the Fund will, under normal circumstances, invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in securities rated below investment grade (measured at the time of purchase). These securities may include domestic and foreign corporate debt securities, including bank-issued subordinated debt, fixed and floating rate bonds, and zero coupon bonds; and various forms of debt securitizations, including agency and non-agency residential mortgage-backed securities ("RMBS"), commercial mortgage-backed securities ("CMBS"); collateralized loan obligations ("CLOs"), collateralized debt obligations ("CDOs"), collateralized mortgage obligations ("CMOs"), asset-backed securities ("ABS"), including securities or securitizations backed by assets such as credit card receivables, student loans, automobile loans, and residential and commercial real estate, and other debt securitizations ("Structured Products"); and derivative instruments that invest substantially all of their assets in, are linked to, or otherwise provide investment exposure to, securities rated below investment grade. The Fund may purchase corporate securities issued by companies of any size – small cap, medium cap or large cap.

The Fund may invest, without limitation, in securities of any quality and maturity, including high-yield securities (also known as "junk bonds"), and securities that are not rated by any rating agencies. These high-yield securities will be rated BB+ or lower by S&P Global Ratings or will be of equivalent quality rating from another Nationally Recognized Statistical Ratings Organization. If a security is unrated, the Adviser may determine whether it is of comparable quality and therefore eligible for the Fund's investment. The Fund intends to focus primarily on securities with credit ratings (or equivalent quality) between the range of BB+ and B- of the

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high-yield market. However, the Fund may invest in or continue to hold securities that have credit ratings lower than B, are bankrupt, or are in default.

The Fund will, under normal circumstances, invest at least 5% of its net assets, plus the amount of any borrowings for investment purposes, in Structured Products.

The Fund may also invest up to 20% of its assets in investment grade securities, including U.S. Treasury and U.S. government agency securities.

The Fund may invest up to 15% of its net assets in equity securities such as common stock, preferred stock, warrants, rights and exchange-traded funds ("ETFs") that invest in equity securities or that track an index of equity securities.

The Fund may invest, without limitation, in the securities of other investment companies, including closed-end investment companies, ETFs or business development companies ("BDCs"). The other investment companies in which the Fund invests may be part of the same group of investment companies as the Fund.

The Fund may invest up to 25% of its assets in foreign debt securities, including corporate fixed income securities registered and sold in the United States by foreign issuers (commonly known as "Yankee" bonds).

The Fund may invest up to 15% of its net assets in investments that are deemed to be illiquid, which may include private placements, certain Rule 144A securities (which are subject to resale restrictions), and securities of issuers that are bankrupt or in default.

The Fund may invest, without limitation, in securities of any maturity and duration, but, under normal circumstances, the Fund will have a dollar-weighted average maturity between two and fifteen years. The average maturity may be less than two years if the Adviser believes a temporary defensive posture is appropriate. Maturity refers to the length of time until a debt security's principal is repaid with interest. Duration is a measure used to determine the sensitivity of a security's price to changes in interest rates that incorporates a security's yield, coupon, final maturity and call and put features and prepayment exposure into one measure with a higher duration indicating greater sensitivity to interest rates. For example, if a portfolio has a duration of two years, and interest rates increase (fall) by 1%, the portfolio would decline (increase) in value by approximately 2%. However, duration may not accurately reflect the true interest rate sensitivity of instruments held by the Fund and, therefore the Fund's exposure to changes in interest rates.

In pursuing its investment objectives or for hedging purposes, the Fund may utilize borrowing and various types of derivative instruments, including swaps, futures contracts, and options, although not all such derivatives will be used at all times. Such derivatives may trade over-the-counter or on an exchange and may principally be used for one or more of the following purposes: speculation, currency hedging, duration management, credit deterioration hedging, hedges against broad market movements, or to pursue the Fund's investment objective. The Fund may borrow to the maximum extent permitted by applicable law. The Fund may also invest in repurchase agreements and borrow through reverse repurchase agreements.

The Fund's allocation of its assets into various asset classes within its investment strategy will depend on the views of the Adviser as to the best value relative to what is currently presented in the marketplace. Within the Structured Products allocation, the Adviser analyzes a variety of factors when selecting investments for the Fund, such as collateral quality, credit support, structure and market conditions. Within the corporate credit allocation, investment decisions are made based on fundamental research and analysis to identify issuers with the ability to improve their credit profile over time with attractive valuations, resulting in both income and potential capital appreciation. Across all allocations, the Adviser may consider maturity, yield and ratings information and opportunities for price appreciation among other criteria. The Adviser attempts to diversify risks that arise from position sizes, geography, ratings, duration, deal structure and collateral values. The Adviser seeks to limit risk of principal by targeting assets that it considers undervalued. From time to time, the Fund may allocate its assets so as to focus on particular types of securities. As part of its investment process, the Adviser also considers certain environmental, social and governance ("ESG") and sustainability factors that it believes could have a material impact on certain securities in which the Fund may invest. These determinations may not be conclusive, and securities that may be negatively impacted by such factors may be purchased and retained by the Fund while the Fund may divest or not invest in securities that may be positively impacted by such factors.

The Fund is an actively managed ETF, which is a fund that trades like other publicly-traded securities. The Fund is not an index fund and does not seek to replicate the performance of a specified index.

**Principal Risks** 

The principal risks of investing in the Fund are summarized below. You should carefully consider the Fund's investment risks before deciding whether to invest in the Fund. There may be circumstances that could prevent the Fund from achieving its investment objective and you may lose money by investing in the Fund. An investment in the Fund is not a deposit at a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

&nbsp;&nbsp;&nbsp;&nbsp;**• High-Yield Securities Risks.** High-yield securities (also known as "junk bonds") carry a greater degree of risk and are more volatile than investment grade securities and are considered speculative. High-yield securities may be issued by companies

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that are restructuring, are smaller and less creditworthy, or are more highly indebted than other companies. This means that they may have more difficulty making scheduled payments of principal and interest. Changes in the value of high-yield securities are influenced more by changes in the financial and business position of the issuing company than by changes in interest rates when compared to investment grade securities. The Fund's investments in high-yield securities expose it to a substantial degree of credit risk.

&nbsp;&nbsp;&nbsp;&nbsp;**• Fixed-Income Instruments Risks.** The Fund will invest in fixed-income instruments and securities. Such investments may be secured, partially secured or unsecured and may be unrated, and whether or not rated, may have speculative characteristics. The market price of the Fund's investments will change in response to changes in interest rates and other factors. Generally, when interest rates rise, the values of fixed-income instruments fall, and vice versa. In typical interest rate environments, the prices of longer-term fixed-income instruments generally fluctuate more than the prices of shorter-term fixed-income instruments as interest rates change. In addition, a fund with a longer average portfolio duration will be more sensitive to changes in interest rates than a fund with a shorter average portfolio duration. A fund with a negative average portfolio duration may decline in value as interest rates decrease. Most high yield investments pay a fixed rate of interest and are therefore vulnerable to inflation risk (inflation rates are currently elevated relative to normal conditions). The obligor of a fixed-income instrument may not be able or willing to pay interest or to repay principal when due in accordance with the terms of the associated agreement.

&nbsp;&nbsp;&nbsp;&nbsp;**• General Market Risk.** The capital markets may experience periods of disruption, instability and volatility. Political, geopolitical, natural and other events, including war, terrorism, trade disputes, tariffs and other trade barriers, government shutdowns, market closures, natural and environmental disasters, epidemics, pandemics and other public health crises and related events have led, and in the future may lead, to economic uncertainty, decreased economic activity, increased market volatility and other disruptive effects on U.S. and global economies and markets. Such conditions may materially and adversely affect the markets globally and in the jurisdictions in which the Fund invests, which may have a negative impact on the Fund's performance. The Fund's NAV and investment return will fluctuate based upon changes in the value of its portfolio securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• Credit Risk.** Credit risk is the risk that the Fund could lose money if the issuer or guarantor of a fixed income security, or the counterparty to a derivative contract, is unable or unwilling to meet its financial obligations.

&nbsp;&nbsp;&nbsp;&nbsp;**• Interest Rate Risk.** The Fund is exposed to risks associated with changes in interest rates, including the possibility that, in a period of rising interest rates, securities may exhibit additional volatility and may lose value.

&nbsp;&nbsp;&nbsp;&nbsp;**• Structured Products Risks.** The Fund may invest in Structured Products, including CLOs, CDOs, CMOs, and other asset-backed securities and debt securitizations. Some Structured Products have credit ratings, but are typically issued in various classes with various priorities. Normally, Structured Products are privately offered and sold (that is, they are not registered under the securities laws) and may be characterized by the Fund as illiquid securities; however, an active dealer market may exist for Structured Products that qualify for Rule 144A transactions. The senior and junior tranches of Structured Products may have floating or variable interest rates and are subject to the risks associated with securities tied to floating or variable interest rates. The Fund may also invest in the equity tranches of a Structured Product, which typically represent the first loss position in the Structured Product, are unrated and are subject to higher risks. Equity tranches of Structured Products typically do not have a fixed coupon and payments on equity tranches will be based on the income received from the underlying collateral and the payments made to the senior tranches, both of which may be based on floating rates.

&nbsp;&nbsp;&nbsp;&nbsp;**• Extension Risk**. An issuer could exercise its right to pay principal on an obligation held by the Fund (such as a mortgage-backed security) later than expected. This may happen when there is a rise in interest rates. Under these circumstances, the value of the obligation will decrease, and the Fund will also suffer from the inability to reinvest in higher yielding securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• Prepayment Risk.** When interest rates decline, fixed income securities with stated interest rates may have the principal paid earlier than expected, requiring the Fund to invest the proceeds at generally lower interest rates.

&nbsp;&nbsp;&nbsp;&nbsp;**• Mortgage-Backed and Asset-Backed Securities Risks.** Mortgage-backed and other asset-backed securities are subject to the risks of traditional fixed-income instruments. However, they are also subject to prepayment risk and extension risk, meaning that if interest rates fall, the underlying debt may be repaid ahead of schedule, reducing the value of the Fund's investments and if interest rates rise, there may be fewer prepayments, which would cause the average bond maturity to rise, increasing the potential for the Fund to lose money. Mortgage-backed and other asset-backed securities are also susceptible to changes in lending standards and lending rates.

Certain mortgage-backed securities may be secured by pools of mortgages on single-family, multi-family properties, as well as commercial properties. Similarly, asset-backed securities may be secured by pools of loans, such as corporate loans, student loans, automobile loans and credit card receivables. The credit risk on such securities is affected by homeowners or borrowers defaulting on their loans. The values of assets underlying mortgage-backed and asset-backed securities, including CLOs, may decline and therefore may not be adequate to cover underlying investors. Some mortgage-backed and asset-backed securities have experienced extraordinary weakness and volatility in recent years. Possible legislation in the area of residential

Angel Oak High Yield Opportunities ETF&nbsp;&nbsp;&nbsp;&nbsp;23

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mortgages, credit cards, corporate loans and other loans that may collateralize the securities in which the Fund may invest could negatively impact the value of the Fund's investments. To the extent the Fund focuses its investments in particular types of mortgage-backed or asset-backed securities, including CLOs, the Fund may be more susceptible to risk factors affecting such types of securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• Borrowing Risks and Leverage Risks.** Borrowing for investment purposes creates leverage, which will exaggerate the effect of any change in the value of securities in the Fund's portfolio on the Fund's net asset value ("NAV") and, therefore, may increase the volatility of the Fund. Money borrowed will be subject to interest and other costs (including commitment fees and/or the cost of maintaining minimum average balances). Unless the income and capital appreciation, if any, on securities acquired with borrowed funds exceed the cost of borrowing, the use of leverage will diminish the investment performance of the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;**• Management Risk.** The Fund may not meet its investment objective based on the Adviser's success or failure to implement investment strategies for the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;**• Floating or Variable Rate Securities Risk.** Floating or variable rate securities pay interest at rates that adjust in response to changes in a specified interest rate or reset at predetermined dates (such as the end of a calendar quarter). Securities with floating or variable interest rates are generally less sensitive to interest rate changes than securities with fixed interest rates, but may decline in value if their interest rates do not rise as much, or as quickly, as comparable market interest rates. Although floating or variable rate securities are generally less sensitive to interest rate risk than fixed rate securities, they are subject to credit, liquidity and default risk and may be subject to legal or contractual restrictions on resale, which could impair their value.

Instruments in which the Fund invests may pay interest at floating rates or may be subject to interest caps or floors tied to floating rates, such as the Secured Overnight Financing Rate. The Fund and issuers of instruments in which the Fund invests may also obtain financing at floating rates. Derivative instruments utilized by the Fund and/or issuers of instruments in which the Fund may invest may also reference floating rates. The Fund also may utilize leverage or borrowings primarily based on floating rates.

&nbsp;&nbsp;&nbsp;&nbsp;**• ETF Risks.** The Fund is an ETF and may invest in other ETFs, and, as a result of this structure, is exposed directly or indirectly to the following risks:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Authorized Participants, Market Makers, and Liquidity Providers Concentration Risk.* The Fund has a limited number of financial institutions that may act as Authorized Participants ("APs"). In addition, there may be a limited number of market makers and/or liquidity providers in the marketplace. To the extent either of the following events occur, Shares may trade at a material discount to NAV, which may also lead to a widening of bid/ask spreads quoted for Shares, and possibly face delisting: (i) APs exit the business or otherwise become unable to process creation and/or redemption orders and no other APs step forward to perform these services, or (ii) market makers and/or liquidity providers exit the business or significantly reduce their business activities and no other entities step forward to perform their functions. Authorized Participant concentration risk may be heightened for ETFs, such as the Fund, that invest in securities issued by non-U.S. issuers or other securities or instruments that have lower trading volumes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*◦ Costs of Buying or Selling Shares.* Due to the costs of buying or selling Shares, including brokerage commissions imposed by brokers and bid/ask spreads, frequent trading of Shares may significantly reduce investment results and an investment in Shares may not be advisable for investors who anticipate regularly making small investments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Shares May Trade at Prices Other Than NAV.* As with all ETFs, Shares may be bought and sold in the secondary market at market prices. Although it is expected that the market price of Shares will approximate the Fund's NAV, there may be times when the market price of Shares is more than the NAV intra-day (premium) or less than the NAV intra-day (discount) due to supply and demand of Shares or during periods of market volatility. This risk is heightened in times of market volatility, periods of steep market declines, and periods when there is limited trading activity for Shares in the secondary market, in which case such premiums or discounts may be significant. If a shareholder purchases Shares at a time when the market price is at a premium to the NAV or sells Shares at a time when the market price is at a discount to the NAV, the shareholder may sustain losses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*◦ Trading*. Although Shares are listed for trading on the Nasdaq Stock Market LLC (the "Exchange") and may be traded on U.S. exchanges other than the Exchange, there can be no assurance that Shares will trade with any volume, or at all, on any stock exchange. In stressed market conditions, the liquidity of Shares may begin to mirror the liquidity of the Fund's underlying portfolio holdings, which can be significantly less liquid than Shares, and may lead to a widening of bid/ask spreads quoted for Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Cash Transactions Risk*. Unlike certain ETFs, the Fund may effect creations and redemptions in cash or partially in cash. Therefore, it may be required to sell portfolio securities and subsequently recognize gains on such sales that the Fund might not have recognized if it were to distribute portfolio securities in-kind. As such, investments in Shares may be less tax-efficient than an investment in an ETF that distributes portfolio securities entirely in-kind.

Angel Oak High Yield Opportunities ETF&nbsp;&nbsp;&nbsp;&nbsp;24

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&nbsp;&nbsp;&nbsp;&nbsp;**• Liquidity and Valuation Risks.** It may be difficult for the Fund to purchase and sell particular investments within a reasonable time at a fair price, or the price at which it has been valued for purposes of the Fund's net asset value, causing the Fund to be less liquid and unable to sell securities for what the Adviser believes is the appropriate price of the investment. Valuation of portfolio investments may be difficult, such as during periods of market turmoil or reduced liquidity and for investments that trade infrequently or irregularly. In these and other circumstances, an investment may be valued using fair value methodologies, which are inherently subjective, reflect good faith judgments based on available information and may not accurately estimate the price at which the Fund could sell the investment at that time. Based on its investment strategies, a significant portion of the Fund's investments can be difficult to value and potentially less liquid and therefore particularly prone to these risks.

&nbsp;&nbsp;&nbsp;&nbsp;**• Rating Agencies Risks.** Ratings are not an absolute standard of quality, but rather general indicators that reflect only the view of the originating rating agencies from which an explanation of the significance of such ratings may be obtained. There is no assurance that a particular rating will continue for any given period of time or that any such rating will not be revised downward or withdrawn entirely. Such changes may negatively affect the liquidity or market price of the securities in which the Fund invests. The ratings of Structured Products may not adequately reflect the credit risk of those assets due to their structure.

&nbsp;&nbsp;&nbsp;&nbsp;**• Unrated Securities Risks.** Unrated securities may be less liquid than comparable rated securities and involve the risk that Angel Oak may not accurately evaluate the security's comparative credit rating.

&nbsp;&nbsp;&nbsp;&nbsp;**• Reverse Repurchase Agreement Risks.** A reverse repurchase agreement is the sale by the Fund of a debt obligation to a party for a specified price, with the simultaneous agreement by the Fund to repurchase that debt obligation from that party on a future date at a higher price. Similar to borrowing, reverse repurchase agreements provide the Fund with cash for investment purposes, which creates leverage and subjects the Fund to the risks of leverage. Reverse repurchase agreements also involve the risk that the other party may fail to return the securities in a timely manner or at all. The Fund could lose money if it is unable to recover the securities and/or if the value of collateral held by the Fund, including the value of the investments made with cash collateral, is less than the value of securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• Large Shareholder Transactions Risk.** Shares of the Fund are offered to certain other investment companies (including those that are part of the same group of investment companies as the Fund), large retirement plans and other large investors. In addition, a third party investor, the Adviser or an affiliate of the Adviser, an AP, a market maker, or another entity may invest in the Fund and hold its investment for a limited period of time. As a result, the Fund is subject to the risk that those shareholders may purchase or redeem a large amount of shares of the Fund. To satisfy such large shareholder redemptions, the Fund may have to sell portfolio securities at times when it would not otherwise do so, which may negatively impact the Fund's NAV and liquidity. In addition, large purchases of Fund shares could adversely affect the Fund's performance to the extent that the Fund does not immediately invest cash it receives and therefore holds more cash than it ordinarily would. Large shareholder activity could also generate increased transaction costs and cause adverse tax consequences. In addition, transactions by large shareholders may account for a large percentage of the trading volume on the Exchange and may, therefore, have a material effect on the market price of the Shares.

&nbsp;&nbsp;&nbsp;&nbsp;**• Illiquid Investments Risks.** The Fund may, at times, hold illiquid investments, by virtue of the absence of a readily available market for certain of its investments, or because of legal or contractual restrictions on sales. The Fund could lose money if it is unable to dispose of an investment at a time or price that is most beneficial to the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;**• Regulatory and Legal Risks.** U.S. and non-U.S. government agencies and other regulators regularly adopt new regulations and legislatures enact new statutes that affect the investments held by the Fund, the strategies used by the Fund or the level of regulation or taxation that applies to the Fund. These statutes and regulations may impact the investment strategies, performance, costs and operations of the Fund or the taxation of its shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;**• RIC-Related Risks of Investments Generating Non-Cash Taxable Income.** Certain of the Fund's investments, particularly, debt obligations, such as zero coupon bonds, that will be treated as having "market discount" and/or original issue discount ("OID") for U.S. federal income tax purposes and certain CLOs that may be considered passive foreign investment companies or controlled foreign corporations, will require the Fund to recognize taxable income in excess of the cash generated on those investments in that tax year, which could cause the Fund to have difficulty satisfying the annual distribution requirements applicable to regulated investment companies ("RICs") and avoiding Fund-level U.S. federal income and/or excise taxes.

&nbsp;&nbsp;&nbsp;&nbsp;**• Risks Relating to Fund's RIC Status.** To qualify and remain eligible for the special tax treatment accorded to a RIC and its shareholders under the Internal Revenue Code of 1986, as amended (the "Code"), the Fund must meet certain source-of-income, asset diversification and annual distribution requirements. If the Fund fails to qualify as a RIC for any reason and becomes subject to corporate tax, the resulting corporate taxes could substantially reduce its net assets, the amount of income available for distribution and the amount of its distributions.

&nbsp;&nbsp;&nbsp;&nbsp;**• Uncertain Tax Treatment.** Below investment grade instruments may present special tax issues for the Fund. U.S. federal income tax rules are not entirely clear about issues such as when the Fund may cease accruing interest, OID or market

Angel Oak High Yield Opportunities ETF&nbsp;&nbsp;&nbsp;&nbsp;25

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discount, when and to what extent deductions may be taken for bad debts or worthless instruments, how payments received on obligations in default should be allocated between principal and income and whether exchanges of debt obligations in a bankruptcy or workout context are taxable, which may make it difficult for the Fund to satisfy the annual distribution requirements applicable to RICs.

&nbsp;&nbsp;&nbsp;&nbsp;**• Sector Risk**. To the extent the Fund invests more heavily in particular sectors of the economy, its performance will be especially sensitive to developments that significantly affect those sectors.

&nbsp;&nbsp;&nbsp;&nbsp;**• Bank Subordinated Debt Risks.** Banks may issue subordinated debt securities, which have a lower priority to full payment behind other more senior debt securities. In addition to the risks generally associated with fixed income instruments (e.g., interest rate risk, credit risk, etc.), bank subordinated debt is also subject to risks inherent to banks. Because banks are highly regulated and operate in a highly competitive environment, it may be difficult for a bank to meet its debt obligations. Banks also may be affected by changes in legislation and regulations applicable to the financial markets. Bank subordinated debt is often issued by smaller community banks that may be overly concentrated in a specific geographic region, lack the capacity to comply with new regulatory requirements or lack adequate capital.

&nbsp;&nbsp;&nbsp;&nbsp;**• Preferred Securities Risk.** Preferred securities may pay fixed or adjustable rates of return and are subject to many of the risks associated with debt securities (e.g., interest rate risk, call risk and extension risk). In addition, preferred securities are subject to issuer-specific and market risks applicable generally to equity securities. Because many preferred securities allow the issuer to convert their preferred stock into common stock, preferred securities are often sensitive to declining common stock values. A company's preferred securities generally pay dividends only after the company makes required payments to holders of its bonds and other debt. For this reason, the value of preferred securities will usually react more strongly than bonds and other debt to actual or perceived changes in the company's financial condition or prospects. Preferred securities of smaller companies may be more vulnerable to adverse developments than preferred stock of larger companies.

&nbsp;&nbsp;&nbsp;&nbsp;**• U.S. Government Securities Risks.** U.S. government securities are not guaranteed against price movement and may decrease in value. Some U.S. government securities are supported by the full faith and credit of the U.S. Treasury, while others may be supported only by the discretionary authority of the U.S. government to purchase certain obligations of a federal agency or U.S. government sponsored enterprise ("GSE") or only by the right of the issuer to borrow from the U.S. Treasury. While the U.S. government provides financial support to such agencies and GSEs, no assurance can be given that the U.S. government will always do so. Other obligations are backed solely by the GSE's own resources. Investments in securities issued by GSEs that are not backed by the U.S. Treasury are subject to higher credit risk than those that are backed by the U.S. Treasury.

&nbsp;&nbsp;&nbsp;&nbsp;**• Repurchase Agreement Risks.** Repurchase agreements typically involve the acquisition by the Fund of fixed-income securities from a selling financial institution such as a bank or broker-dealer. The Fund may incur a loss if the other party to a repurchase agreement is unwilling or unable to fulfill its contractual obligations to repurchase the underlying security.

&nbsp;&nbsp;&nbsp;&nbsp;**• Equity Market Risk.** Equity securities are susceptible to general stock market fluctuations and to volatile increases and decreases in value. The equity market may experience declines, and companies whose equity securities are in the Fund's portfolio may not increase their earnings at the rate anticipated. The Fund's net asset value and investment return will fluctuate based upon changes in the value of its portfolio securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• Other Investment Companies Risks.** The Fund will incur higher and duplicative expenses when it invests in ETFs and other investment companies. There is also the risk that the Fund may suffer losses due to the investment practices of the underlying funds. When the Fund invests in other investment companies, the Fund will be subject to substantially the same risks as those associated with the direct ownership of securities held by such investment companies. ETFs may be less liquid than other investments, and thus their share values more volatile than the values of the investments they hold. Investments in ETFs are also subject to the following risks: (i) the market price of an ETF's shares may trade above or below their net asset value; (ii) an active trading market for an ETF's shares may not develop or be maintained; and (iii) trading of an ETF's shares may be halted for a number of reasons.

The Adviser may be subject to potential conflicts of interest in allocating the Fund's assets to underlying funds, such as a potential conflict in selecting affiliated underlying funds over unaffiliated underlying funds. In addition, the Fund's portfolio managers may be subject to potential conflicts of interest in allocating the Fund's assets among underlying funds, as certain of the Fund's portfolio managers may also manage an affiliated underlying fund in which the Fund may invest. Both the Adviser and the Fund's portfolio managers have a fiduciary duty to the Fund to act in the Fund's best interest when selecting underlying funds. Under the oversight of the Board of Trustees, the Adviser will carefully analyze any such potential conflicts of interest and will take steps to minimize and, where possible, eliminate them.

&nbsp;&nbsp;&nbsp;&nbsp;**• Derivatives Risks.** The Fund's derivatives and other similar instruments (collectively referred to in this section as "derivatives" or "derivative instruments") have risks, including the imperfect correlation between the value of such instruments and the underlying assets, rate or index; the loss of principal, including the potential loss of amounts greater than the initial amount invested in the derivative instrument; the possible default of the other party to the transaction; and illiquidity of the derivative investments. Changes in the value of a derivative may also create margin delivery or settlement

Angel Oak High Yield Opportunities ETF&nbsp;&nbsp;&nbsp;&nbsp;26

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payment obligations for the Fund. If a counterparty becomes bankrupt or otherwise fails to perform its obligations under a derivative contract due to financial difficulties, the Fund may experience significant delays in obtaining any recovery under the derivative contract in a bankruptcy or other reorganization proceeding. Certain derivatives may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. The use of derivatives is also subject to operational risk which refers to risk related to potential operational issues, including documentation issues, settlement issues, system failures, inadequate controls, and human error, as well as legal risk which refers to the risk of loss resulting from insufficient documentation, insufficient capacity or authority of counterparty, or legality or enforceability of a contract. Derivatives are also subject to market risk which refers to the risk that markets could experience a change in volatility that adversely impacts fund returns and the fund's obligations and exposures. Certain of the Fund's transactions in derivatives could also affect the amount, timing and character of distributions to shareholders, which may result in the Fund realizing more short-term capital gain and ordinary income subject to tax at ordinary income tax rates than it would if it did not engage in such transactions, which may adversely impact the Fund's after-tax returns.

The derivative instruments and techniques that the Fund may principally use include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*◦ Futures.* A futures contract is a standardized agreement to buy or sell a specific quantity of an underlying instrument at a specific price at a specific future time. A decision as to whether, when and how to use futures involves the exercise of skill and judgment and even a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures can be highly volatile, using futures can lower total return, and the potential loss from futures can exceed the Fund's initial investment in such contracts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*◦ Options*. If the Fund buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreed-upon price typically in exchange for a premium paid by the Fund. If the Fund sells an option, it sells to another person the right to buy from or sell to the Fund a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreed-upon price typically in exchange for a premium received by the Fund. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*◦ Swaps.* A swap contract is an agreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indexes, reference rates, currencies or other instruments. Swap agreements are particularly subject to counterparty credit, liquidity, valuation, correlation, leverage, operational and legal risk. Swaps could result in losses if interest rate or foreign currency exchange rates or credit quality changes are not correctly anticipated by the Fund or if the reference index, security or investments do not perform as expected. The use of credit default swaps can result in losses if the Fund's assumptions regarding the creditworthiness of the underlying obligation prove to be incorrect.

&nbsp;&nbsp;&nbsp;&nbsp;**• Foreign Securities Risks**. Investments in securities or other instruments of non-U.S. issuers involve certain risks not involved in domestic investments and may experience more rapid and extreme changes in value than investments in securities of U.S. companies. Financial markets in foreign countries often are not as developed, efficient or liquid as financial markets in the United States, and therefore, the prices of non-U.S. securities and instruments can be more volatile. In addition, the Fund will be subject to risks associated with adverse political and economic developments in foreign countries, which may include the imposition of economic sanctions or other similar measures. Generally, there is less readily available and reliable information about non-U.S. issuers due to less rigorous disclosure or accounting standards and regulatory practices.

**Performance**

The following performance information indicates some of the risks of investing in the Fund. The bar chart shows the Fund's performance for the calendar years ended December 31. The table illustrates how the average annual total returns of the Fund compare over time to those of two indexes. The Bloomberg US Aggregate Bond Index serves as the Fund's regulatory index and provides a broad measure of market performance. The Bloomberg US Corporate High Yield Index is the Fund's additional index and is more representative of the Fund's investment universe than the regulatory index. Performance information represents only past performance, before and after taxes, and does not necessarily indicate future results. Past performance may have been different if the Fund's current fee structure had been in place during the periods. Updated performance information is available online at www.angeloakcapital.com or by calling (855) 751-4324 (toll free).

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The Fund is the successor to the investment performance of the Predecessor High Yield Fund as a result of the reorganization of the Predecessor High Yield Fund into the Fund on February 16, 2024. The Predecessor High Yield Fund, in turn, is the successor to the investment performance of the Rainier High Yield Fund as a result of the reorganization of the Rainier High Yield Fund into the Predecessor High Yield Fund on April 15, 2016. Accordingly, the performance information shown below for periods prior to April 15, 2016 is that of the Rainer High Yield Fund's Institutional Shares, and the performance information following such date until February 16, 2024 is that of the Predecessor High Yield Fund's Institutional Shares.

On December 31, 2022, changes were made to the Predecessor High Yield Fund's investment strategies. As a result, the Predecessor High Yield Fund's performance during periods prior to this date may have differed had the Predecessor High Yield Fund's investment policies and strategies in effect prior to the reorganization been in place at those times. Additionally, the Predecessor High Yield Fund's performance may have differed had it been structured as an ETF. The Fund has the same investment objectives, policies and strategies as the Predecessor High Yield Fund has had since December 31, 2022.

**Annual Total Returns**

(for years ended December 31<sup>st</sup>)

![13743895446859](ck0001612930-20260529_g8.jpg)

The calendar year-to-date total return as of March 31, 2026 was -0.15%. During the periods shown in the chart, the highest quarterly return was 11.57% (for the quarter ended June 30, 2020) and the lowest quarterly return was -15.13% (for the quarter ended March 31, 2020).

**Angel Oak High Yield Opportunities ETF** 

**Average Annual Total Returns** 

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| | | | | |
|:---|:---|:---|:---|:---|
| **For the period ended December 31, 2025** | **1 Year** | **5 Years** | **10 Years** | **Since Inception (3/31/09)** |
| Return Before Taxes | 7.81% | 5.19% | 6.56% | 7.65% |
| Return After Taxes on Distributions<sup>1</sup> | 4.97% | 2.61% | 3.95% | 4.86% |
| Return After Taxes on Distributions and Sale of Fund Shares<sup>1</sup> | 4.57% | 2.82% | 3.90% | 4.81% |
| **Bloomberg U.S. Aggregate Bond Index**<br>(reflects no deduction for fees, expenses, and taxes) | 7.30% | -0.36% | 2.01% | 2.90% |
| **Bloomberg U.S. Corporate High Yield Index** <br>(reflects no deduction for fees, expenses, and taxes) | 8.62% | 4.51% | 6.53% | 8.84% |

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<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. In certain cases, the figure representing "Return After Taxes on Distributions and Sale of Fund Shares" may be higher than the other return figures for the same period, since a higher after-tax return results when a capital loss occurs upon redemption and provides an assumed tax deduction that benefits the investor. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts.

**Portfolio Management** 

***Investment Adviser.*** Angel Oak Capital Advisors, LLC.

***Portfolio Managers.*** The portfolio managers listed below are jointly and primarily responsible for the day-to-day management of the Fund.

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Ward Bortz, ETF Portfolio Manager of the Adviser, has been a portfolio manager of the Fund since its inception in 2024.

Nichole Hammond, CFA®, Senior Portfolio Manager of the Adviser, has been a portfolio manager of the Fund since its inception in 2024 and the Predecessor High Yield Fund since 2017.

Matthew R. Kennedy, CFA®, Senior Portfolio Manager of the Adviser, has been a portfolio manager of the Fund since its inception in 2024, the Predecessor High Yield Fund since 2016, and the Rainier High Yield Fund since 2009.

Sreeniwas (Sreeni) V. Prabhu, Managing Partner, Co-CEO, and Group Chief Investment Officer of the Adviser, has been a portfolio manager of the Fund since its inception in 2024 and the Predecessor High Yield Fund since 2016.

Namit Sinha, Chief Investment Officer of the Adviser, has been a portfolio manager of the Fund since its inception in 2024.

Clayton Triick, CFA®, Head of Portfolio Management, Public Strategies of the Adviser, has been a portfolio manager of the Fund since its inception in 2024 and the Predecessor High Yield Fund since 2023.

**Purchase and Sale of Fund Shares** 

The Fund issues and redeems Shares at NAV only in large blocks known as "Creation Units," which only Authorized Participants ("APs") (typically, broker-dealers) may purchase or redeem. The Fund generally issues and redeems Creation Units in exchange for a portfolio of securities and/or a designated amount of U.S. cash.

Shares are listed on the Exchange, and individual Shares may only be bought and sold in the secondary market through a broker or dealer at market prices, rather than NAV. Because Shares trade at market prices rather than NAV, Shares may trade at a price greater than NAV (premium) or less than NAV (discount).

An investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase Shares (the "bid" price) and the lowest price a seller is willing to accept for Shares (the "ask" price) when buying or selling Shares in the secondary market. The difference in the bid and ask prices is referred to as the "bid-ask spread."

Recent information regarding the Fund's NAV, market price, how often Shares traded on the Exchange at a premium or discount, and bid-ask spreads can be found on the Fund's website at www.angeloakcapital.com.

**Tax Information** 

The Fund's distributions are generally taxable as ordinary income, qualified dividend income, or capital gains (or a combination), unless your investment is in an individual retirement account ("IRA") or other tax-advantaged account. Distributions on investments made through tax-deferred arrangements may be taxed later upon withdrawal of assets from those accounts.

**Financial Intermediary Compensation** 

If you purchase Shares through a broker-dealer or other financial intermediary (such as a bank) (an "Intermediary"), the Adviser or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary's website for more information.

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**ANGEL OAK MORTGAGE-BACKED SECURITIES ETF SUMMARY**<br>

**Investment Objective** 

The Angel Oak Mortgage-Backed Securities ETF (the "Fund") seeks total return.

**Fees and Expenses of the Fund** 

The following table describes the fees and expenses you may pay if you buy, hold, and sell shares of the Fund ("Shares"). **You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and Example below.** 

**Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)** 

---

| | |
|:---|:---|
| Management Fees | 0.79% |
| Other Expenses<sup>1</sup> | <u>0.00%</u> |
| Total Annual Fund Operating Expenses | 0.79% |
| &nbsp;&nbsp;&nbsp;Less Fee Waiver and/or Expense Reimbursement<sup>2</sup> | <u>-0.30%</u> |
| Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursements | 0.49% |

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<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Angel Oak Capital Advisors, LLC (the "Adviser") receives a "unitary fee" pursuant to which it is responsible for substantially all the expenses of the Fund (including expenses of the Trust relating to the Fund), except for the advisory fees, payments under the Fund's 12b-1 plan (if any), interest expenses, dividend and interest expenses related to short sales, taxes, acquired fund fees and expenses (other than fees for funds advised by the Adviser and/or its affiliates), brokers' commissions and any other transaction related expenses and fees arising out of transactions effected on behalf of the Fund, and litigation and potential litigation and other extraordinary expenses not incurred in the ordinary course of the Fund's business.

<sup>2</sup>&nbsp;&nbsp;&nbsp;&nbsp;The Adviser has contractually agreed to waive its fees and/or reimburse certain expenses (exclusive of interest expenses, dividend and interest expenses related to short sales, taxes, acquired fund fees and expenses (other than fees for funds advised by the Adviser which are waived), brokers' commissions and any other transaction related expenses and fees arising out of transactions effected on behalf of the Fund, expenses, expenses of shareholder proposals, contested elections, or non-routine shareholder meetings, and other non-routine expenses or extraordinary expenses not incurred in the ordinary course of the Fund's business) to limit the Total Annual Fund Operating Expenses After Fee Waiver/Expense Reimbursement to 0.49% of the Fund's average daily net assets (the "Expense Limit") through September 30, 2027. The contractual arrangement may only be changed or eliminated by the Board of Trustees upon 60 days' written notice to the Adviser. The Adviser may recoup from the Fund any waived amount or reimbursed expenses pursuant to this agreement if such recoupment does not cause the Fund's Total Annual Fund Operating Expenses after such recoupment to exceed the lesser of (i) the Expense Limit in effect at the time of the waiver or reimbursement and (ii) the Expense Limit in effect at the time of recoupment and the recoupment is made within three years after the end of the month in which the Adviser incurred the expense.

**Expense Example** 

The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then continue to hold or sell all of your Shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same (taking into account the Expense Cap only in the first year). The example does not take into account brokerage commissions that you may pay on your purchases and sales of Shares. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

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| | | | |
|:---|:---|:---|:---|
| <u>One Year</u> | <u>Three Years</u> | <u>Five Years</u> | <u>Ten Years</u> |
| $50 | $222 | $409 | $950 |

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**Portfolio Turnover** 

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example above, affect the Fund's performance. During the most recent fiscal year ended January 31, 2026, the portfolio turnover rate for the Angel Oak Total Return Bond Fund (the "Predecessor Total Return Fund") was 97% of the average value of its portfolio.

**Principal Investment Strategies** 

The Fund will, under normal circumstances, invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in mortgage-backed securities ("MBS"). For purposes of this 80% investment policy, the Adviser will select the Fund's investments in mortgage-backed securities within a range of instruments across various asset classes, including: agency and non-

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agency residential mortgage-backed securities ("RMBS"), agency and non-agency commercial mortgage-backed securities ("CMBS"), collateralized debt obligations ("CDOs") that include a significant majority of residential or commercial mortgages; and collateralized mortgage obligations ("CMOs").

The Fund may invest up to 20% of its net assets in a variety of asset classes, including: asset-backed securities ("ABS"), including securities or securitizations backed by assets such as credit card receivables, student loans, automobile loans, and residential and commercial real estate, and other debt securitizations (collectively with CDOs and CMOs, "Structured Products"); secured and unsecured consumer loans, commercial loans and pools of such loans (collectively, "Loans"); corporate debt, including bank-issued subordinated debt; municipal securities; U.S. Treasury and U.S. government agency securities; and derivative instruments that invest substantially all of their assets in, are linked to, or otherwise provide investment exposure to, bonds.

The Fund may invest in the securities of other investment companies, including closed-end investment companies, exchange-traded funds ("ETFs") or business development companies ("BDCs"). The other investment companies in which the Fund invests may be part of the same group of investment companies as the Fund.

The Fund will concentrate its investments in agency and non-agency RMBS and CMBS and mortgage loans ("Mortgage Related Instruments"), which are credit instruments that are backed by real estate and, consequently, subject to some of the same risks as those associated with the real estate industry. This means that, under normal circumstances, the Fund will invest more than 25% of its assets in Mortgage Related Instruments (measured at the time of purchase). The Fund will not concentrate its investments in any other group of industries. The Fund's policy to concentrate its investments in Mortgage Related Instruments is fundamental and may not be changed without shareholder approval.

The Fund is classified as a non-diversified portfolio under the Investment Company Act of 1940, as amended (the "1940 Act"), meaning it may invest a greater percentage of its assets in a single or limited number of issuers than a diversified fund.

The fixed income instruments in which the Fund invests may include those of issuers from the United States and other countries, without limitation. The Fund's investments in foreign debt securities will typically be denominated in U.S. dollars.

The Fund may invest up to 15% of its net assets in investments that are deemed to be illiquid, which may include private placements, certain Rule 144A securities (which are subject to resale restrictions), and securities of issuers that are bankrupt or in default.

The Fund may invest in securities of any maturity and duration. Under normal market conditions, the Fund's target portfolio duration is two to eight years, and the target weighted average maturity of the Fund's portfolio is two to fifteen years. Maturity refers to the length of time until a debt security's principal is repaid with interest. Duration is a measure used to determine the sensitivity of a security's price to changes in interest rates. Duration incorporates a security's yield, coupon, final maturity, call and put features, and prepayment exposure into one measure with a higher duration indicating greater sensitivity to interest rates. For example, if a portfolio has a duration of two years, and interest rates increase (fall) by 1%, the portfolio would decline (increase) in value by approximately 2%. However, duration may not accurately reflect the true interest rate sensitivity of instruments held by the Fund and, therefore the Fund's exposure to changes in interest rates.

The Fund may invest, without limitation, in securities of any quality and maturity, including high-yield securities (also known as "junk bonds"), and securities that are not rated by any rating agencies. Under normal market conditions, the Fund will not invest more than 30% of its total assets in high-yield securities. These high-yield securities will be rated BB+ or lower by S&P Global Ratings or will be of equivalent quality rating from another Nationally Recognized Statistical Ratings Organization ("NRSRO"). If a security is unrated, the Adviser may determine whether it is of comparable quality and therefore eligible for the Fund's investment.

In pursuing its investment objective or for hedging purposes, the Fund may utilize borrowing and various types of derivative instruments, including swaps, futures contracts, and options, although not all such derivatives will be used at all times. Such derivatives may trade over-the-counter or on an exchange and may principally be used for one or more of the following purposes: speculation, currency hedging, duration management, credit deterioration hedging, hedges against broad market movements, or to pursue the Fund's investment objective. The Fund may borrow to the maximum extent permitted by applicable law. The Fund may also invest in repurchase agreements and borrow through reverse repurchase agreements.

The Fund's allocation of its assets into various asset classes within its investment strategy will depend on the views of the Adviser as to the best value relative to what is currently presented in the marketplace.

Investment decisions are made based on fundamental research and analysis to identify issuers with the ability to improve their credit profile over time with attractive valuations, resulting in both income and potential capital appreciation. In selecting investments, including Structured Products, the Adviser may consider maturity, yield and ratings information and opportunities for price appreciation among other criteria. The Adviser also analyzes a variety of factors when selecting investments for the Fund, such as collateral quality, credit support, structure and market conditions. The Adviser attempts to diversify risks that arise from position sizes, geography, ratings, duration, deal structure and collateral values. The Adviser seeks to limit risk of principal by targeting assets that it considers undervalued. As part of its investment process, the Adviser also considers certain environmental, social and governance ("ESG") and sustainability factors that it believes could have a material impact on certain securities in which the Fund

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may invest. These determinations may not be conclusive, and securities that may be negatively impacted by such factors may be purchased and retained by the Fund while the Fund may divest or not invest in securities that may be positively impacted by such factors.

The Fund is an actively managed ETF, which is a fund that trades like other publicly-traded securities. The Fund is not an index fund and does not seek to replicate the performance of a specified index.

**Principal Risks** 

The principal risks of investing in the Fund are summarized below. You should carefully consider the Fund's investment risks before deciding whether to invest in the Fund. There may be circumstances that could prevent the Fund from achieving its investment objective and you may lose money by investing in the Fund. An investment in the Fund is not a deposit at a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

&nbsp;&nbsp;&nbsp;&nbsp;**• Fixed-Income Instruments Risks.** The Fund will invest in fixed-income instruments and securities. Such investments may be secured, partially secured or unsecured and may be unrated, and whether or not rated, may have speculative characteristics. The market price of the Fund's investments will change in response to changes in interest rates and other factors. Generally, when interest rates rise, the values of fixed-income instruments fall, and vice versa. In typical interest rate environments, the prices of longer-term fixed-income instruments generally fluctuate more than the prices of shorter-term fixed-income instruments as interest rates change. In addition, a fund with a longer average portfolio duration will be more sensitive to changes in interest rates than a fund with a shorter average portfolio duration. A fund with a negative average portfolio duration may decline in value as interest rates decrease. Most high yield investments pay a fixed rate of interest and are therefore vulnerable to inflation risk (inflation rates are currently elevated relative to normal conditions). The obligor of a fixed-income instrument may not be able or willing to pay interest or to repay principal when due in accordance with the terms of the associated agreement.

&nbsp;&nbsp;&nbsp;&nbsp;**• General Market Risk.** The capital markets may experience periods of disruption, instability and volatility. Political, geopolitical, natural and other events, including war, terrorism, trade disputes, tariffs and other trade barriers, government shutdowns, market closures, natural and environmental disasters, epidemics, pandemics and other public health crises and related events have led, and in the future may lead, to economic uncertainty, decreased economic activity, increased market volatility and other disruptive effects on U.S. and global economies and markets. Such conditions may materially and adversely affect the markets globally and in the jurisdictions in which the Fund invests, which may have a negative impact on the Fund's performance. The Fund's net asset value ("NAV") and investment return will fluctuate based upon changes in the value of its portfolio securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• Credit Risk.** Credit risk is the risk that the Fund could lose money if the issuer or guarantor of a fixed income security, or the counterparty to a derivative contract, is unable or unwilling to meet its financial obligations.

&nbsp;&nbsp;&nbsp;&nbsp;**• Interest Rate Risk.** The Fund is exposed to risks associated with changes in interest rates, including the possibility that, in a period of rising interest rates, securities may exhibit additional volatility and may lose value.

&nbsp;&nbsp;&nbsp;&nbsp;**• Extension Risk**. An issuer could exercise its right to pay principal on an obligation held by the Fund (such as a mortgage-backed security) later than expected. This may happen when there is a rise in interest rates. Under these circumstances, the value of the obligation will decrease, and the Fund will also suffer from the inability to reinvest in higher yielding securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• Prepayment Risk.** When interest rates decline, fixed income securities with stated interest rates may have the principal paid earlier than expected, requiring the Fund to invest the proceeds at generally lower interest rates.

&nbsp;&nbsp;&nbsp;&nbsp;**• Mortgage-Backed and Asset-Backed Securities Risks.** Mortgage-backed and other asset-backed securities are subject to the risks of traditional fixed-income instruments. However, they are also subject to prepayment risk and extension risk, meaning that if interest rates fall, the underlying debt may be repaid ahead of schedule, reducing the value of the Fund's investments and if interest rates rise, there may be fewer prepayments, which would cause the average bond maturity to rise, increasing the potential for the Fund to lose money. Mortgage-backed and other asset-backed securities are also susceptible to changes in lending standards and lending rates.

Certain mortgage-backed securities may be secured by pools of mortgages on single-family, multi-family properties, as well as commercial properties. Similarly, asset-backed securities may be secured by pools of loans, such as corporate loans, student loans, automobile loans and credit card receivables. The credit risk on such securities is affected by homeowners or borrowers defaulting on their loans. The values of assets underlying mortgage-backed and asset-backed securities may decline and therefore may not be adequate to cover underlying investors. Some mortgage-backed and asset-backed securities have experienced extraordinary weakness and volatility in recent years. Possible legislation in the area of residential mortgages, credit cards, corporate loans and other loans that may collateralize the securities in which the Fund may invest could negatively impact the value of the Fund's investments. To the extent the Fund focuses its investments in particular types of

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mortgage-backed or asset-backed securities, the Fund may be more susceptible to risk factors affecting such types of securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**• ETF Risks.** The Fund is an ETF and may invest in other ETFs, and, as a result of this structure, is exposed directly or indirectly to the following risks:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Authorized Participants, Market Makers, and Liquidity Providers Concentration Risk.* The Fund has a limited number of financial institutions that may act as Authorized Participants ("APs"). In addition, there may be a limited number of market makers and/or liquidity providers in the marketplace. To the extent either of the following events occur, Shares may trade at a material discount to NAV, which may also lead to a widening of bid/ask spreads quoted for Shares, and possibly face delisting: (i) APs exit the business or otherwise become unable to process creation and/or redemption orders and no other APs step forward to perform these services, or (ii) market makers and/or liquidity providers exit the business or significantly reduce their business activities and no other entities step forward to perform their functions. Authorized Participant concentration risk may be heightened for ETFs, such as the Fund, that invest in securities issued by non-U.S. issuers or other securities or instruments that have lower trading volumes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*◦ Costs of Buying or Selling Shares.* Due to the costs of buying or selling Shares, including brokerage commissions imposed by brokers and bid/ask spreads, frequent trading of Shares may significantly reduce investment results and an investment in Shares may not be advisable for investors who anticipate regularly making small investments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Shares May Trade at Prices Other Than NAV.* As with all ETFs, Shares may be bought and sold in the secondary market at market prices. Although it is expected that the market price of Shares will approximate the Fund's NAV, there may be times when the market price of Shares is more than the NAV intra-day (premium) or less than the NAV intra-day (discount) due to supply and demand of Shares or during periods of market volatility. This risk is heightened in times of market volatility, periods of steep market declines, and periods when there is limited trading activity for Shares in the secondary market, in which case such premiums or discounts may be significant. Because securities held by the Fund may trade on foreign exchanges that are closed when the Fund's primary listing exchange is open, the Fund is likely to experience premiums or discounts greater than those of domestic ETFs. If a shareholder purchases Shares at a time when the market price is at a premium to the NAV or sells Shares at a time when the market price is at a discount to the NAV, the shareholder may sustain losses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*◦ Trading*. Although Shares are listed for trading on the Nasdaq Stock Market LLC (the "Exchange") and may be traded on U.S. exchanges other than the Exchange, there can be no assurance that Shares will trade with any volume, or at all, on any stock exchange. In stressed market conditions, the liquidity of Shares may begin to mirror the liquidity of the Fund's underlying portfolio holdings, which can be significantly less liquid than Shares, and may lead to a widening of bid/ask spreads quoted for Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Cash Transactions Risk*. Unlike certain ETFs, the Fund may effect creations and redemptions in cash or partially in cash. Therefore, it may be required to sell portfolio securities and subsequently recognize gains on such sales that the Fund might not have recognized if it were to distribute portfolio securities in-kind. As such, investments in Shares may be less tax-efficient than an investment in an ETF that distributes portfolio securities entirely in-kind.

&nbsp;&nbsp;&nbsp;&nbsp;**• Municipal Securities Risk.** The yields on municipal bonds are dependent on a variety of factors, including prevailing interest rates and the condition of the general money market and the municipal bond market, the size of a particular offering, the maturity of the obligation and the rating of the issuer. The market value of municipal bonds will vary with changes in interest rate levels and as a result of changing evaluations of the ability of bond issuers to meet interest and principal payments.

The amount of public information available about the municipal securities is generally less than that for corporate bonds and certain other securities. The secondary market for municipal securities also tends to be less well-developed or liquid than many other securities markets. In addition, certain state and municipal governments that issue securities may be under significant economic and financial stress and may not be able to satisfy their obligations. In addition, issuers of municipal securities might seek protection under the bankruptcy laws, and holders of municipal bonds could experience delays in collecting principal and interest and may be unable to collect all principal and interest to which they are entitled.

&nbsp;&nbsp;&nbsp;&nbsp;**• Structured Products Risks.** The Fund may invest in Structured Products, including CLOs, CDOs, CMOs, and other asset-backed securities and debt securitizations. Some Structured Products have credit ratings, but are typically issued in various classes with various priorities. Normally, Structured Products are privately offered and sold (that is, they are not registered under the securities laws), which means less information about the security may be available as compared to publicly offered securities and only certain institutions may buy and sell them. As a result, investments in Structured Products may be characterized by the Fund as illiquid securities. An active dealer market may exist for Structured Products that qualify for Rule 144A transactions, but there can be no assurance that such a market will exist or will be active enough for the Fund to sell such securities. In addition to the typical risks associated with fixed-income securities and asset-backed securities, CLOs and CDOs carry additional risks including, but not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii) the risk that the collateral may default, decline in value or quality or be

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downgraded by a rating agency; (iii) the Fund may invest in tranches of Structured Products that are subordinate to other tranches; (iv) the structure and complexity of the transaction and the legal documents could lead to disputes among investors regarding the characterization of proceeds; (v) risk of forced "fire sale" liquidation due to technical defaults such as coverage test failures; and (vi) the Structured Product's manager may perform poorly. The senior and junior tranches of Structured Products may have floating or variable interest rates and are subject to the risks associated with securities tied to floating or variable interest rates. The Fund may also invest in the equity tranches of a Structured Product, which typically represent the first loss position in the Structured Product, are unrated and are subject to higher risks. Equity tranches of Structured Products typically do not have a fixed coupon and payments on equity tranches will be based on the income received from the underlying collateral and the payments made to the senior tranches, both of which may be based on floating rates.

&nbsp;&nbsp;&nbsp;&nbsp;**• Borrowing Risks and Leverage Risks.** Borrowing for investment purposes creates leverage, which will exaggerate the effect of any change in the value of securities in the Fund's portfolio on the Fund's NAV and, therefore, may increase the volatility of the Fund. Money borrowed will be subject to interest and other costs (including commitment fees and/or the cost of maintaining minimum average balances). Unless the income and capital appreciation, if any, on securities acquired with borrowed funds exceed the cost of borrowing, the use of leverage will diminish the investment performance of the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;**• Concentration in Mortgage Loans, RMBS and CMBS Risk.** The Fund's assets will be concentrated in mortgage loans, RMBS (agency and non-agency) and CMBS, which are credit instruments that are backed by real estate and, consequently, subject to some of the same risks as those associated with the real estate industry. The Fund's concentration in such instruments potentially exposes the Fund to greater risks than companies that invest in multiple sectors. The risks of concentrating in mortgage loans, RMBS (agency and non-agency) and CMBS include susceptibility to changes in lending standards, interest rates and lending rates, the risks associated with the market's perception of issuers, the creditworthiness of the parties involved and investing in real estate securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• Management Risk.** The Fund may not meet its investment objective based on the Adviser's success or failure to implement investment strategies for the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;**• Non-Diversification Risk.** The Fund is classified as "non-diversified" under the 1940 Act. As a result, it can invest a greater portion of its assets in obligations of a single issuer than a "diversified" fund. The Fund may therefore be more susceptible than a diversified fund to being adversely affected by a single corporate, economic, political or regulatory occurrence.

&nbsp;&nbsp;&nbsp;&nbsp;**• Residential Loans and Mortgages Risk.** In addition to interest rate, default and other risks of fixed income securities, investments in whole loans and debt instruments backed by residential loans or mortgages, (or pools of loans or mortgages) carry additional risks, including the possibility that the quality of the collateral may decline in value and the potential for the liquidity of residential loans and mortgages to vary over time. Because they do not trade in a liquid market, residential loans typically can only be sold to a limited universe of institutional investors and may be difficult for the Fund to value. In addition, in the event that a loan is foreclosed on, the Fund could become the owner (in whole or in part) of any collateral, which may include, among other things, real estate or other real or personal property, and the Fund would bear the costs and liabilities of owning, holding or disposing of such property.

&nbsp;&nbsp;&nbsp;&nbsp;**• U.S. Government Securities Risks.** U.S. government securities are not guaranteed against price movement and may decrease in value. Some U.S. government securities are supported by the full faith and credit of the U.S. Treasury, while others may be supported only by the discretionary authority of the U.S. government to purchase certain obligations of a federal agency or U.S. government sponsored enterprise ("GSE") or only by the right of the issuer to borrow from the U.S. Treasury. While the U.S. government provides financial support to such agencies and GSEs, no assurance can be given that the U.S. government will always do so. Other obligations are backed solely by the GSE's own resources. Investments in securities issued by GSEs that are not backed by the U.S. Treasury are subject to higher credit risk than those that are backed by the U.S. Treasury.

&nbsp;&nbsp;&nbsp;&nbsp;**• Floating or Variable Rate Securities Risk.** Floating or variable rate securities pay interest at rates that adjust in response to changes in a specified interest rate or reset at predetermined dates (such as the end of a calendar quarter). Securities with floating or variable interest rates are generally less sensitive to interest rate changes than securities with fixed interest rates, but may decline in value if their interest rates do not rise as much, or as quickly, as comparable market interest rates. Although floating or variable rate securities are generally less sensitive to interest rate risk than fixed rate securities, they are subject to credit, liquidity and default risk and may be subject to legal or contractual restrictions on resale, which could impair their value.

Instruments in which the Fund invests may pay interest at floating rates or may be subject to interest caps or floors tied to floating rates, such as the Secured Overnight Financing Rate. The Fund and issuers of instruments in which the Fund invests may also obtain financing at floating rates. Derivative instruments utilized by the Fund and/or issuers of instruments in which the Fund may invest may also reference floating rates. The Fund also may utilize leverage or borrowings primarily based on floating rates.

&nbsp;&nbsp;&nbsp;&nbsp;**• Derivatives Risks.** The Fund's derivatives and other similar instruments (collectively referred to in this section as "derivatives" or "derivative instruments") have risks, including the imperfect correlation between the value of such

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instruments and the underlying assets, rate or index; the loss of principal, including the potential loss of amounts greater than the initial amount invested in the derivative instrument; the possible default of the other party to the transaction; and illiquidity of the derivative investments. Changes in the value of a derivative may also create margin delivery or settlement payment obligations for the Fund. If a counterparty becomes bankrupt or otherwise fails to perform its obligations under a derivative contract due to financial difficulties, the Fund may experience significant delays in obtaining any recovery under the derivative contract in a bankruptcy or other reorganization proceeding. Certain derivatives may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. The use of derivatives is also subject to operational risk which refers to risk related to potential operational issues, including documentation issues, settlement issues, system failures, inadequate controls, and human error, as well as legal risk which refers to the risk of loss resulting from insufficient documentation, insufficient capacity or authority of counterparty, or legality or enforceability of a contract. Derivatives are also subject to market risk which refers to the risk that markets could experience a change in volatility that adversely impacts fund returns and the fund's obligations and exposures. Certain of the Fund's transactions in derivatives could also affect the amount, timing and character of distributions to shareholders, which may result in the Fund realizing more short-term capital gain and ordinary income subject to tax at ordinary income tax rates than it would if it did not engage in such transactions, which may adversely impact the Fund's after-tax returns.

The derivative instruments and techniques that the Fund may principally use include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*◦ Futures.* A futures contract is a standardized agreement to buy or sell a specific quantity of an underlying instrument at a specific price at a specific future time. A decision as to whether, when and how to use futures involves the exercise of skill and judgment and even a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures can be highly volatile, using futures can lower total return, and the potential loss from futures can exceed the Fund's initial investment in such contracts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*◦ Options*. If the Fund buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreed-upon price typically in exchange for a premium paid by the Fund. If the Fund sells an option, it sells to another person the right to buy from or sell to the Fund a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreed-upon price typically in exchange for a premium received by the Fund. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*◦ Swaps.* A swap contract is an agreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indexes, reference rates, currencies or other instruments. Swap agreements are particularly subject to counterparty credit, liquidity, valuation, correlation, leverage, operational and legal risk. Swaps could result in losses if interest rate or foreign currency exchange rates or credit quality changes are not correctly anticipated by the Fund or if the reference index, security or investments do not perform as expected. The use of credit default swaps can result in losses if the Fund's assumptions regarding the creditworthiness of the underlying obligation prove to be incorrect.

&nbsp;&nbsp;&nbsp;&nbsp;**• Regulatory and Legal Risks.** U.S. and non-U.S. government agencies and other regulators regularly adopt new regulations and legislatures enact new statutes that affect the investments held by the Fund, the strategies used by the Fund or the level of regulation or taxation that applies to the Fund. These statutes and regulations may impact the investment strategies, performance, costs and operations of the Fund or the taxation of its shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;**• High-Yield Securities Risks.** High-yield securities (also known as junk bonds) carry a greater degree of risk and are more volatile than investment grade securities and are considered speculative. High-yield securities may be issued by companies that are restructuring, are smaller and less creditworthy, or are more highly indebted than other companies. This means that they may have more difficulty making scheduled payments of principal and interest. Changes in the value of high-yield securities are influenced more by changes in the financial and business position of the issuing company than by changes in interest rates when compared to investment grade securities. The Fund's investments in high-yield securities expose it to a substantial degree of credit risk.

&nbsp;&nbsp;&nbsp;&nbsp;**• Illiquid Investments Risks.** The Fund may, at times, hold illiquid investments, by virtue of the absence of a readily available market for certain of its investments, or because of legal or contractual restrictions on sales. The Fund could lose money if it is unable to dispose of an investment at a time or price that is most beneficial to the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;**• Liquidity and Valuation Risks.** It may be difficult for the Fund to purchase and sell particular investments within a reasonable time at a fair price, or the price at which it has been valued for purposes of the Fund's NAV, causing the Fund to be less liquid and unable to sell securities for what the Adviser believes is the appropriate price of the investment. Valuation of portfolio investments may be difficult, such as during periods of market turmoil or reduced liquidity and for investments that trade infrequently or irregularly. In these and other circumstances, an investment may be valued using fair value methodologies,

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which are inherently subjective, reflect good faith judgments based on available information and may not accurately estimate the price at which the Fund could sell the investment at that time. Based on its investment strategies, a significant portion of the Fund's investments can be difficult to value and potentially less liquid and therefore particularly prone to these risks.

&nbsp;&nbsp;&nbsp;&nbsp;**• Other Investment Companies Risks.** The Fund will incur higher and duplicative expenses when it invests in exchange-traded funds ("ETFs") and other investment companies, which may include those that are part of the same group of investment companies as the Fund ("affiliated underlying funds"). There is also the risk that the Fund may suffer losses due to the investment practices of the underlying funds. When the Fund invests in other investment companies, the Fund will be subject to substantially the same risks as those associated with the direct ownership of securities held by such investment companies. ETFs may be less liquid than other investments, and thus their share values more volatile than the values of the investments they hold. Investments in ETFs are also subject to the following risks: (i) the market price of an ETF's shares may trade above or below their net asset value; (ii) an active trading market for an ETF's shares may not develop or be maintained; and (iii) trading of an ETF's shares may be halted for a number of reasons.

The Adviser may be subject to potential conflicts of interest in allocating the Fund's assets to underlying funds, such as a potential conflict in selecting affiliated underlying funds over unaffiliated underlying funds. In addition, the Fund's portfolio managers may be subject to potential conflicts of interest in allocating the Fund's assets among underlying funds, as certain of the Fund's portfolio managers may also manage an affiliated underlying fund in which the Fund may invest. Both the Adviser and the Fund's portfolio managers have a fiduciary duty to the Fund to act in the Fund's best interest when selecting underlying funds. Under the oversight of the Board of Trustees, the Adviser will carefully analyze any such potential conflicts of interest and will take steps to minimize and, where possible, eliminate them.

&nbsp;&nbsp;&nbsp;&nbsp;**• Rating Agencies Risks.** Ratings are not an absolute standard of quality, but rather general indicators that reflect only the view of the originating rating agencies from which an explanation of the significance of such ratings may be obtained. There is no assurance that a particular rating will continue for any given period of time or that any such rating will not be revised downward or withdrawn entirely. Such changes may negatively affect the liquidity or market price of the securities in which the Fund invests. The ratings of Structured Products may not adequately reflect the credit risk of those assets due to their structure.

&nbsp;&nbsp;&nbsp;&nbsp;**• Repurchase Agreement Risks.** Repurchase agreements typically involve the acquisition by the Fund of fixed-income securities from a selling financial institution such as a bank or broker-dealer. The Fund may incur a loss if the other party to a repurchase agreement is unwilling or unable to fulfill its contractual obligations to repurchase the underlying security.

&nbsp;&nbsp;&nbsp;&nbsp;**• Reverse Repurchase Agreement Risks.** A reverse repurchase agreement is the sale by the Fund of a debt obligation to a party for a specified price, with the simultaneous agreement by the Fund to repurchase that debt obligation from that party on a future date at a higher price. Similar to borrowing, reverse repurchase agreements provide the Fund with cash for investment purposes, which creates leverage and subjects the Fund to the risks of leverage. Reverse repurchase agreements also involve the risk that the other party may fail to return the securities in a timely manner or at all. The Fund could lose money if it is unable to recover the securities and/or if the value of collateral held by the Fund, including the value of the investments made with cash collateral, is less than the value of securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• Large Shareholder Transactions Risk.** Shares of the Fund are offered to certain other investment companies, large retirement plans and other large investors. In addition, a third party investor, the Adviser or an affiliate of the Adviser, an AP, a market maker, or another entity may invest in the Fund and hold its investment for a limited period of time. As a result, the Fund is subject to the risk that those shareholders may purchase or redeem a large amount of shares of the Fund. To satisfy such large shareholder redemptions, the Fund may have to sell portfolio securities at times when it would not otherwise do so, which may negatively impact the Fund's NAV and liquidity. In addition, large purchases of Fund shares could adversely affect the Fund's performance to the extent that the Fund does not immediately invest cash it receives and therefore holds more cash than it ordinarily would. Large shareholder activity could also generate increased transaction costs and cause adverse tax consequences. In addition, transactions by large shareholders may account for a large percentage of the trading volume on the Exchange and may, therefore, have a material effect on the market price of the Shares.

&nbsp;&nbsp;&nbsp;&nbsp;**• RIC-Related Risks of Investments Generating Non-Cash Taxable Income.** Certain of the Fund's investments, particularly, debt obligations, such as zero coupon bonds, that will be treated as having "market discount" and/or original issue discount ("OID") for U.S. federal income tax purposes and certain CLOs that may be considered passive foreign investment companies or controlled foreign corporations, will require the Fund to recognize taxable income in excess of the cash generated on those investments in that tax year, which could cause the Fund to have difficulty satisfying the annual distribution requirements applicable to regulated investment companies ("RICs") and avoiding Fund-level U.S. federal income and/or excise taxes.

&nbsp;&nbsp;&nbsp;&nbsp;**• Sector Risk**. To the extent the Fund invests more heavily in particular sectors of the economy, its performance will be especially sensitive to developments that significantly affect those sectors.

&nbsp;&nbsp;&nbsp;&nbsp;**• Risks Relating to Fund's RIC Status.** To qualify and remain eligible for the special tax treatment accorded to a RIC and its shareholders under the Internal Revenue Code of 1986, as amended (the "Code"), the Fund must meet certain source-of-

Angel Oak Mortgage-Backed Securities ETF&nbsp;&nbsp;&nbsp;&nbsp;36

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income, asset diversification and annual distribution requirements. If the Fund fails to qualify as a RIC for any reason and becomes subject to corporate tax, the resulting corporate taxes could substantially reduce its net assets, the amount of income available for distribution and the amount of its distributions.

&nbsp;&nbsp;&nbsp;&nbsp;**• Uncertain Tax Treatment.** Below investment grade instruments may present special tax issues for the Fund. U.S. federal income tax rules are not entirely clear about issues such as when the Fund may cease accruing interest, OID or market discount, when and to what extent deductions may be taken for bad debts or worthless instruments, how payments received on obligations in default should be allocated between principal and income and whether exchanges of debt obligations in a bankruptcy or workout context are taxable, which may make it difficult for the Fund to satisfy the annual distribution requirements applicable to RICs.

&nbsp;&nbsp;&nbsp;&nbsp;**• Foreign Securities Risks.** Investments in securities or other instruments of non-U.S. issuers involve certain risks not involved in domestic investments and may experience more rapid and extreme changes in value than investments in securities of U.S. companies. Financial markets in foreign countries often are not as developed, efficient or liquid as financial markets in the United States, and therefore, the prices of non-U.S. securities and instruments can be more volatile. In addition, the Fund will be subject to risks associated with adverse political and economic developments in foreign countries, which may include the imposition of economic sanctions or other similar measures. Generally, there is less readily available and reliable information about non-U.S. issuers due to less rigorous disclosure or accounting standards and regulatory practices.

&nbsp;&nbsp;&nbsp;&nbsp;**• Unrated Securities Risks.** The Fund may purchase unrated securities which are not rated by a rating agency if the Adviser determines that the security is of comparable quality to a rated security that the Fund may purchase. Unrated securities may be less liquid than comparable rated securities and involve the risk that the Adviser may not accurately evaluate the security's comparative credit rating. Analysis of creditworthiness of issuers of high yield securities may be more complex than for issuers of higher-quality debt securities. To the extent that the Fund purchases unrated securities, the Fund's success in achieving its investment objective may depend more heavily on the Adviser's creditworthiness analysis than if the Fund invested exclusively in rated securities.

&nbsp;&nbsp;&nbsp;&nbsp;**• Bank Subordinated Debt Risks.** Banks may issue subordinated debt securities, which have a lower priority to full payment behind other more senior debt securities. In addition to the risks generally associated with fixed income instruments (e.g., interest rate risk, counterparty risk, credit risk, etc.), bank subordinated debt is also subject to risks inherent to banks. Because banks are highly regulated and operate in a highly competitive environment, it may be difficult for a bank to meet its debt obligations. Banks also may be affected by changes in legislation and regulations applicable to the financial markets. Bank subordinated debt is often issued by smaller community banks that may be overly concentrated in a specific geographic region, lack the capacity to comply with new regulatory requirements or lack adequate capital.

Subordinated debt and senior debt of banks and diversified financials companies are subject to the risks generally associated with the financials sector.

**Performance** 

The following performance information indicates some of the risks of investing in the Fund. The bar chart shows the Fund's performance for the calendar years ended December 31. The table illustrates how the average annual total returns of the Fund compare over time to those of two indexes. The Bloomberg US Aggregate Bond Index serves as the Fund's regulatory index and provides a broad measure of market performance. The Bloomberg US Mortgage-Backed Securities Index is the Fund's additional index and is more representative of the Fund's investment universe than the regulatory index. Performance information represents only past performance, before and after taxes, and does not necessarily indicate future results. Updated performance information is available online at www.angeloakcapital.com or by calling (855) 751-4324 (toll free).

The Fund is the successor to the investment performance of the Predecessor Total Return Fund as a result of the reorganization of the Predecessor Total Return Fund into the Fund on February 16, 2024. Accordingly, the performance information shown below for periods prior to such date is that of the Predecessor Total Return Fund's Institutional Shares.

On December 31, 2022, changes were made to the Predecessor Total Return Fund's investment strategies. As a result, the Predecessor Total Return Fund's performance during periods prior to this date may have differed had the Predecessor Total Return Fund's current investment policies and strategies been in place at those times or had it been structured as an ETF. The Fund has a higher management fee than the Predecessor Total Return Fund, and consequently, the performance of the Predecessor Total Return Fund would have been lower if the higher fee had been in effect.

Angel Oak Mortgage-Backed Securities ETF&nbsp;&nbsp;&nbsp;&nbsp;37

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**Annual Total Returns**

(for years ended December 31<sup>st</sup>)

![13743895456695](ck0001612930-20260529_g9.jpg)

The calendar year-to-date total return as of March 31, 2026 was 0.74%. During the period shown in the chart, the highest quarterly return was 6.25% (for the quarter ended December 31, 2023) and the lowest quarterly return was -4.42% (for the quarter ended June 30, 2022).

**Angel Oak Mortgage-Backed Securities ETF** 

**Average Annual Total Returns** 

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| | | |
|:---|:---|:---|
| **For the period ended December 31, 2025** | **1 Year** | **Since Inception (6/4/21)** |
| Return Before Taxes | 8.22% | 1.02% |
| Return After Taxes on Distributions<sup>1</sup> | 5.89% | -0.61% |
| Return After Taxes on Distributions and Sale of Fund Shares<sup>1</sup> | 4.82% | 0.06% |
| **Bloomberg U.S. Aggregate Bond Index**<br>(reflects no deduction for fees, expenses, and taxes) | 7.30% | 0.08% |
| **Bloomberg U.S. Mortgage-Backed Securities Index** <br>(reflects no deduction for fees, expenses, and taxes) | 8.58% | 0.32% |

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<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. In certain cases, the figure representing "Return After Taxes on Distributions and Sale of Fund Shares" may be higher than the other return figures for the same period, since a higher after-tax return results when a capital loss occurs upon redemption and provides an assumed tax deduction that benefits the investor. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts.

**Portfolio Management** 

***Investment Adviser.*** Angel Oak Capital Advisors, LLC.

***Portfolio Managers.*** The portfolio managers listed below are jointly and primarily responsible for the day-to-day management of the Fund.

Ward Bortz, ETF Portfolio Manager of the Adviser, has been a portfolio manager of the Fund since its inception in 2024.

Namit Sinha, Chief Investment Officer of the Adviser, has been a portfolio manager of the Fund since its inception in 2024.

Clayton Triick, CFA®, Head of Portfolio Management, Public Strategies of the Adviser, has been a portfolio manager of the Fund since its inception in 2024 and the Predecessor Total Return Fund since 2021.

**Purchase and Sale of Fund Shares** 

The Fund issues and redeems Shares at NAV only in large blocks known as "Creation Units," which only APs (typically, broker-dealers) may purchase or redeem. The Fund generally issues and redeems Creation Units in exchange for a portfolio of securities and/or a designated amount of U.S. cash.

Shares are listed on the Exchange, and individual Shares may only be bought and sold in the secondary market through a broker or dealer at market prices, rather than NAV. Because Shares trade at market prices rather than NAV, Shares may trade at a price greater than NAV (premium) or less than NAV (discount).

Angel Oak Mortgage-Backed Securities ETF&nbsp;&nbsp;&nbsp;&nbsp;38

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An investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase Shares (the "bid" price) and the lowest price a seller is willing to accept for Shares (the "ask" price) when buying or selling Shares in the secondary market. The difference in the bid and ask prices is referred to as the "bid-ask spread."

Recent information regarding the Fund's NAV, market price, how often Shares traded on the Exchange at a premium or discount, and bid-ask spreads can be found on the Fund's website at www.angeloakcapital.com.

**Tax Information** 

The Fund's distributions are generally taxable as ordinary income, qualified dividend income, or capital gains (or a combination), unless your investment is in an individual retirement account ("IRA") or other tax-advantaged account. Distributions on investments made through tax-deferred arrangements may be taxed later upon withdrawal of assets from those accounts.

**Financial Intermediary Compensation** 

If you purchase Shares through a broker-dealer or other financial intermediary (such as a bank) (an "Intermediary"), the Adviser or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary's website for more information.

Angel Oak Mortgage-Backed Securities ETF&nbsp;&nbsp;&nbsp;&nbsp;39

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**ADDITIONAL INFORMATION ABOUT THE FUNDS' OBJECTIVES,** 

**PRINCIPAL INVESTMENT STRATEGIES, AND PRINCIPAL INVESTMENT RISKS**

*The following information is in addition to, and should be read along with, the description of the Angel Oak Income ETF's (the "Income ETF"), the Angel Oak UltraShort Income ETF's (the "UltraShort Income ETF"), the Angel Oak High Yield Opportunities ETF's (the "High Yield ETF"), and the Angel Oak Mortgage-Backed Securities ETF's (the "MBS ETF") (each a "Fund" and together, the "Funds") investment objectives, principal investment strategies and principal investment risks in the summary sections above.*

Each Fund is an ETF, which is a fund that trades like other publicly-traded securities. Each Fund is not an index fund. Each Fund is actively managed and does not seek to replicate the performance of a specified index.

The name, investment objective and policies of some of the Funds are similar to other funds advised by the Adviser. However, the investment results of a Fund may be higher or lower than, and there is no guarantee that the investment results of the Fund will be comparable to, any other of these funds.

**Investment Objective**

Each Fund's investment objective is not fundamental and may be changed without shareholder approval. Each Fund will provide 60 days' advance notice of any change in its investment objective.

**Principal Investment Strategies of the Income ETF**

The Fund invests primarily in agency and non-agency residential mortgage-backed securities ("RMBS"), commercial mortgage-backed securities ("CMBS"), collateralized loan obligations ("CLOs"), collateralized debt obligations ("CDOs"), collateralized mortgage obligations ("CMOs"), collateralized bond obligations ("CBOs"), asset-backed securities ("ABS"), including securities or securitizations backed by assets such as unsecured consumer loans, credit card receivables, student loans, automobile loans, loans financing solar energy systems, and residential and commercial real estate, and other debt securitizations (collectively, "Structured Products"); mortgage loans, secured and unsecured consumer loans, commercial loans and pools of such loans (collectively, "Loans"); corporate debt, including bank-issued subordinated debt; equity securities of banks, real estate investment trusts, or other issuers; and U.S. Treasury and U.S. government agency securities.

The Fund may invest up to: (i) 80% of its net assets in non-agency RMBS, (ii) 50% of its net assets in ABS, and (iii) 50% of its net assets in corporate debt. The Fund will invest at least 10% of its net assets in U.S. Treasury securities, agency RMBS, and agency CMBS, collectively.

The Fund will concentrate its investment in agency and non-agency residential mortgage-backed securities ("RMBS") and commercial mortgage-backed securities ("CMBS") (collectively, "MBS"). This means that, under normal circumstances, the Fund will invest more than 25% of its total assets in MBS (measured at the time of purchase). The Fund will not concentrate its investments in any other group of industries. The Fund's policy to concentrate its investments in MBS is fundamental and may not be changed without shareholder approval.

The Fund may make direct investments in mortgage loans.

The Fund may invest in other investment companies, including closed-end investment companies and open-end investment companies, which may operate as traditional mutual funds, exchange-traded funds ("ETFs"), or business development companies ("BDCs"). The other investment companies in which the Fund invests may be part of the same group of investment companies as the Fund.

Except as otherwise discussed herein, the Fund may invest, without constraint, in a variety of instruments that are not limited with respect to their issuer, quality, maturity, currency, structure, yield, duration, or any other characteristic. The Fund's investments in RMBS and ABS will span a broad segment of consumer creditworthiness segments, which will include exposure to prime, near-prime, and subprime consumers.

The Fund's portfolio may include significant investments in high-yield securities and fixed-income securities that are not rated by any rating agencies. Such bonds, if rated, will be in the lower rating categories of the major rating agencies (BB+ or lower by S&P Global Ratings or an equivalent rating from another Nationally Recognized Statistical Ratings Organization ("NRSRO")) or will be determined by the Adviser to be of similar quality.

The fixed income instruments in which the Fund invests may include those of issuers from the United States and other countries. The Fund's investments in foreign debt securities will typically be denominated in U.S. dollars.

The Fund may invest up to 15% of its net assets in investments that are deemed to be illiquid, which may include private placements, certain Rule 144A securities (which are subject to resale restrictions), and securities of issuers that are bankrupt or in default.

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The Fund's use of borrowing, derivatives and reverse repurchase agreements may be deemed to create leverage, which can increase the Fund's volatility and the effect, positive or negative, of the Fund's investments on its NAV. The 1940 Act generally limits the extent to which the Fund may utilize borrowings to one-third of the Fund's total assets at the time utilized. The Fund's use of derivatives and other similar instruments is subject to a value-at-risk leverage limit, certain derivatives risk management program, and reporting requirements under Rule 18f-4. In the future, the Fund could qualify as a "limited derivatives user" as defined in Rule 18f-4 (or its use of derivatives and other similar instruments could satisfy the conditions of certain exemptions from the rule), in which case the Fund would not be required to comply with such requirements.

Derivatives, which are instruments that have a value based on another instrument, exchange rate or index, may be used as substitutes for securities in which the Fund can invest. The Fund uses derivatives to gain or adjust exposure to markets, sectors, securities and currencies and to manage exposure to risks relating to creditworthiness, interest rate spreads, volatility and changes in yield curves. In certain market environments, the Fund may use interest rate swaps and futures contracts to help protect its portfolio from interest rate risk. The Fund's hedging strategies may include the use of derivatives with underlying instruments that are not specified in the Fund's principal investment strategies (for example, the Fund may invest in total return swaps on the S&P 500 Index to hedge against broad market exposure).

The Fund is an actively managed ETF, which is a fund that trades like other publicly-traded securities. The Fund is not an index fund and does not seek to replicate the performance of a specified index.

The Fund's portfolio of fixed-income instruments will depend on the views of the Adviser as to the best value relative to what is currently presented in the marketplace. The Fund's portfolio managers lead a team of sector specialists responsible for researching opportunities within their sector and making recommendations to the Fund's portfolio managers.

Investment decisions are made based on fundamental research and analysis to identify issuers with the ability to improve their credit profile over time with attractive valuations, resulting in both income and potential capital appreciation. In selecting investments, including Structured Products, the Adviser may consider maturity, yield and ratings information and opportunities for price appreciation among other criteria. The Adviser also analyzes a variety of factors when selecting investments for the Fund, such as collateral quality, credit support, structure and market conditions. The Adviser attempts to diversify risks that arise from position sizes, geography, ratings, duration, deal structure and collateral values. The Adviser will also seek to invest in securities that have relatively low volatility. The Adviser seeks to limit risk of principal by targeting assets that it considers undervalued. From time to time, the Fund may allocate its assets so as to focus on particular types of securities.

As part of its investment process, the Adviser also considers certain environmental, social and governance ("ESG") and sustainability factors that it believes could have a material impact on certain securities in which the Fund may invest. Examples of the types of factors the Adviser may consider include, without limitation: environmental issues, such as carbon emissions and energy efficiency; social issues, such as affordable housing and community investment; and corporate governance issues, such as board independence. These determinations may not be conclusive, and securities that may be negatively impacted by such factors may be purchased and retained by the Fund while the Fund may divest or not invest in securities that may be positively impacted by such factors. ESG and sustainability factors will not be considered with respect to investments in U.S. Treasury and U.S. government agency securities, money market instruments, and derivatives.

**Principal Investment Strategies of the UltraShort Income ETF**

In pursuing its objective, the Fund will, under normal circumstances, invest in securities which cause the Fund to have a dollar-weighted average maturity of less than two years and a dollar-weighted average duration of less than one year.

The Fund invests primarily in agency and non-agency residential mortgage-backed securities ("RMBS"), asset-backed securities ("ABS"), including securities or securitizations backed by assets such as unsecured consumer loans, credit card receivables, student loans, automobile loans, loans financing solar energy systems, and residential and commercial real estate, collateralized loan obligations ("CLOs"), collateralized debt obligations ("CDOs"), collateralized mortgage obligations ("CMOs"), and other debt securitizations (collectively, "Structured Products"); corporate debt and other debt securities; and U.S. Treasury and U.S. government agency securities.

The Fund may invest up to: (i) 50% of its net assets in non-agency RMBS, and (ii) 50% of its net assets in corporate debt. The Fund will invest at least: (i) 15% of its net assets in ABS, and (ii) 10% of its net assets in U.S. Treasury securities, agency RMBS, and agency commercial mortgage-backed securities ("CMBS"), collectively.

The Fund will concentrate its investments in agency and non-agency RMBS and CMBS (collectively, "MBS"). This means that, under normal circumstances, the Fund will invest more than 25% of its total assets in MBS (measured at the time of purchase). The Fund will not concentrate its investments in any other group of industries. The Fund's policy to concentrate its investments in MBS is fundamental and may not be changed without shareholder approval.

The Fund may make direct investments in mortgage loans.

The Fund may invest in other investment companies, including closed-end investment companies and open-end investment companies, which may operate as traditional mutual funds, exchange-traded funds ("ETFs") or business development companies

------

("BDCs"). The other investment companies in which the Fund invests may be part of the same group of investment companies as the Fund.

Except as otherwise discussed herein, the Fund may invest, without constraint, in a variety of instruments that are not limited with respect to their issuer, quality, currency, structure, yield, or any other characteristic. The Fund's investments in RMBS and ABS will span a broad segment of consumer creditworthiness segments, which will include exposure to prime, near-prime, and subprime consumers.

The fixed income instruments in which the Fund invests may include those of issuers from the United States and other countries. The Fund's investments in foreign debt securities will typically be denominated in U.S. dollars.

The Fund may invest up to 15% of its net assets in investments that are deemed to be illiquid, which may include private placements, certain Rule 144A securities (which are subject to resale restrictions), and securities of issuers that are bankrupt or in default.

The Fund may engage in active and frequent trading of its portfolio securities which may result in higher portfolio turnover. Higher portfolio turnover may result in the Fund paying higher levels of transaction costs and generating greater tax liabilities for shareholders.

The Fund's use of borrowing, derivatives, and reverse repurchase agreements may be deemed to create leverage, which can increase the Fund's volatility and the effect, positive or negative, of the Fund's investments on its NAV. The 1940 Act generally limits the extent to which the Fund may utilize borrowings to one-third of the Fund's total assets at the time utilized. The Fund's use of derivatives and other similar instruments is subject to a value-at-risk leverage limit, certain derivatives risk management program, and reporting requirements under Rule 18f-4. In the future, the Fund could qualify as a "limited derivatives user" as defined in Rule 18f-4 (or its use of derivatives and other similar instruments could satisfy the conditions of certain exemptions from the rule), in which case the Fund would not be required to comply with such requirements.

Derivatives, which are instruments that have a value based on another instrument, exchange rate or index, may be used as substitutes for securities in which the Fund can invest. The Fund uses derivatives to gain or adjust exposure to markets, sectors, securities, and currencies and to manage exposure to risks relating to creditworthiness, interest rate spreads, volatility, and changes in yield curves. In certain market environments, the Fund may use interest rate swaps and futures contracts to help protect its portfolio from interest rate risk. The Fund's hedging strategies may include the use of derivatives with underlying instruments that are not specified in the Fund's principal investment strategies (for example, the Fund may invest in total return swaps on the S&P 500 Index to hedge against broad market exposure).

The Fund is an actively managed ETF, which is a fund that trades like other publicly-traded securities. The Fund is not an index fund and does not seek to replicate the performance of a specified index.

The Fund's portfolio of fixed-income instruments will depend on the views of the Adviser as to the best value relative to what is currently presented in the marketplace. The Fund's portfolio managers lead a team of sector specialists responsible for researching opportunities within their sector and making recommendations to the Fund's portfolio managers.

Investment decisions are made based on fundamental research and analysis to identify issuers with the ability to improve their credit profile over time with attractive valuations, resulting in both income and potential capital appreciation. In selecting investments, including Structured Products, the Adviser may consider maturity, yield and ratings information and opportunities for price appreciation among other criteria. The Adviser also analyzes a variety of factors when selecting investments for the Fund, such as collateral quality, credit support, structure and market conditions. The Adviser attempts to diversify risks that arise from position sizes, geography, ratings, duration, deal structure and collateral values. The Adviser will also seek to invest in securities that have relatively low volatility. The Adviser seeks to limit risk of principal by targeting assets that it considers undervalued. From time to time, the Fund may allocate its assets so as to focus on particular types of securities.

As part of its investment process, the Adviser also considers certain ESG and sustainability factors that it believes could have a material impact on certain securities in which the Fund may invest. Examples of the types of factors the Adviser may consider include, without limitation: environmental issues, such as carbon emissions and energy efficiency; social issues, such as affordable housing and community investment; and corporate governance issues, such as board independence. These determinations may not be conclusive, and securities that may be negatively impacted by such factors may be purchased and retained by the Fund while the Fund may divest or not invest in securities that may be positively impacted by such factors. ESG and sustainability factors will not be considered with respect to investments in U.S. Treasury and U.S. government agency securities, money market instruments, and derivatives.

**Principal Investment Strategies of the High Yield ETF**

In pursuing its investment objective, the Fund will, under normal circumstances, invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in securities rated below investment grade (measured at the time of purchase). These securities may include domestic and foreign corporate debt securities, including bank-issued subordinated debt, fixed and

------

floating rate bonds, and zero coupon bonds; and various forms of debt securitizations, including agency and non-agency RMBS, CMBS, CLOs, CDOs, CMOs, ABS, including securities or securitizations backed by assets such as credit card receivables, student loans, automobile loans, and residential and commercial real estate, and other Structured Products; and derivative instruments that invest substantially all of their assets in, are linked to, or otherwise provide investment exposure to, securities rated below investment grade. The Fund will value any derivative instruments in which it invests on a mark-to-market basis for purposes of determining compliance with this 80% investment policy. The Fund has adopted a policy to provide the Fund's shareholders with at least 60 days' prior written notice of any changes in this non-fundamental 80% investment policy. The Fund may purchase corporate securities issued by companies of any size – small cap, medium cap or large cap.

These "high-yield" securities (also known as "junk bonds") will be rated BB+ or lower by S&P or will be of equivalent quality rating from another NRSRO. If a security is unrated, the Adviser may determine whether it is of comparable quality and therefore eligible for the Fund's investment. The Fund intends to focus primarily on securities with credit ratings (or equivalent quality) between the range of BB+ and B- of the high-yield market. However, the Fund may invest in or continue to hold securities that have credit ratings lower than B, are bankrupt, or are in default.

The Fund will, under normal circumstances, invest at least 5% of its net assets, plus the amount of any borrowings for investment purposes, in Structured Products.

The Fund may invest up to 20% of its assets in investment grade securities, including U.S. Treasury and U.S. government agency securities.

The Fund may invest up to 15% of its net assets in equity securities such as common stock, preferred stock, warrants, rights and ETFs that invest in equity securities or that track an index of equity securities.

The Fund may invest, without limitation, in the securities of other investment companies, including closed-end investment companies, ETFs or BDCs. The other investment companies in which the Fund invests may be part of the same group of investment companies as the Fund.

Except as otherwise discussed herein, the Fund may invest, without constraint, in a variety of instruments that are not limited with respect to their issuer, maturity, currency, structure, yield, duration, or any other characteristic.

The Fund's portfolio will include significant investments in high-yield securities and fixed-income securities that are not rated by any rating agencies. Such bonds, if rated, will be in the lower rating categories of the major rating agencies (BB+ or lower by S&P) or an equivalent rating from another NRSRO) or will be determined by the Adviser to be of similar quality.

The fixed income instruments in which the Fund invests may include those of issuers from the United States and other countries. The Fund's investments in foreign debt securities will typically be denominated in U.S. dollars.

The Fund may invest up to 15% of its net assets in investments that are deemed to be illiquid, which may include private placements, certain Rule 144A securities (which are subject to resale restrictions), and securities of issuers that are bankrupt or in default.

The Fund's use of borrowing, derivatives, and reverse repurchase agreements may be deemed to create leverage, which can increase the Fund's volatility and the effect, positive or negative, of the Fund's investments on its NAV. The 1940 Act generally limits the extent to which the Fund may utilize bank borrowings to one-third of the Fund's total assets at the time utilized. The Fund currently qualifies as a "limited derivatives user" as defined in Rule 18f-4. If the Fund were to cease to qualify as a "limited derivatives user" and its use of derivatives and other similar instruments did not satisfy the conditions of certain exemptions under Rule 18f-4, the Fund would become subject to a value-at-risk leverage limit, certain derivatives risk management program, and reporting requirements under the rule.

Derivatives, which are instruments that have a value based on another instrument, exchange rate or index, may be used as substitutes for securities in which the Fund can invest. The Fund uses derivatives to gain or adjust exposure to markets, sectors, securities and currencies and to manage exposure to risks relating to creditworthiness, interest rate spreads, volatility and changes in yield curves. In certain market environments, the Fund may use interest rate swaps and futures contracts to help protect its portfolio from interest rate risk. The Fund may also utilize foreign currency transactions, including currency options and forward currency contracts, to hedge non-U.S. Dollar investments or to establish or adjust exposure to particular foreign securities, markets or currencies. The Fund's hedging strategies may include the use of derivatives with underlying instruments that are not specified in the Fund's principal investment strategies (for example, the Fund may invest in total return swaps on the S&P 500 Index to hedge against broad market exposure).

The Fund's portfolio of fixed-income instruments will depend on the views of the Adviser as to the best value relative to what is currently presented in the marketplace. In selecting investments, the Adviser may consider maturity, yield and ratings information and opportunities for price appreciation among other criteria.

As part of its investment process, the Adviser also considers certain ESG and sustainability factors that it believes could have a material impact on certain securities in which the Fund may invest. Examples of the types of factors the Adviser may consider

------

include, without limitation: environmental issues, such as carbon emissions and energy efficiency; social issues, such as affordable housing and community investment; and corporate governance issues, such as board independence. These determinations may not be conclusive, and securities that may be negatively impacted by such factors may be purchased and retained by the Fund while the Fund may divest or not invest in securities that may be positively impacted by such factors. ESG and sustainability factors will not be considered with respect to investments in U.S. Treasury and U.S. government agency securities, money market instruments, and derivatives.

**Principal Investment Strategies of the MBS ETF**

The Fund will, under normal circumstances, invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in MBS. For purposes of this 80% investment policy, the Adviser will select the Fund's investments in MBS within a range of instruments across various asset classes, including: agency and non-agency RMBS and agency and non-agency CMBS; CDOs that include a significant majority of residential or commercial mortgages, and CMOs.

The Fund may invest up to 20% of its net assets in a variety of asset classes, including: ABS, including securities or securitizations backed by assets such as credit card receivables, student loans, automobile loans, and residential and commercial real estate, and other Structured Products; secured and unsecured Loans; corporate debt, including bank-issued subordinated debt; municipal securities; U.S. Treasury and U.S. government agency securities; and derivative instruments that invest substantially all of their assets in, are linked to, or otherwise provide investment exposure to, bonds. The Fund will value any derivative instruments in which it invests on a mark-to-market basis for purposes of determining compliance with this 80% investment policy. The Fund has adopted a policy to provide the Fund's shareholders with at least 60 days' prior written notice of any changes in this non-fundamental 80% investment policy.

The Fund may invest in the securities of other investment companies, including closed-end investment companies, ETFs or BDCs. The other investment companies in which the Fund invests may be part of the same group of investment companies as the Fund.

The Fund will concentrate its investment in Mortgage Related Instruments. This means that, under normal circumstances, the Fund will invest more than 25% of its assets in Mortgage Related Instruments (measured at the time of purchase). The Fund will not concentrate its investments in any other group of industries. The Fund's policy to concentrate its investments in Mortgage Related Instruments is fundamental and may not be changed without shareholder approval.

The Fund is classified as a non-diversified portfolio under the Investment Company Act of 1940, as amended (the "1940 Act"), meaning it may invest a greater percentage of its assets in a single or limited number of issuers than a diversified fund.

Except as discussed herein, the Fund may invest, without constraints, in a variety of instruments that are not limited with respect to their issuer, quality, maturity, currency, structure, yield, duration, or any other characteristic. Under normal market conditions, the Fund's target portfolio duration is two to eight years, and the target weighted average maturity of the Fund's portfolio is two to fifteen years.

The Fund's portfolio may include significant investments in high-yield securities and fixed income securities that are not rated by any rating agencies. Under normal market conditions, the Fund will not invest more than 30% of its total assets in high-yield securities. Such bonds, if rated, will be in the lower rating categories of the major rating agencies (BB+ or lower by S&P or an equivalent rating from another NRSRO) or will be determined by the Adviser to be of similar quality.

The fixed income instruments in which the Fund invests may include those of issuers from the United States and other countries, without limitation. The Fund's investments in foreign debt securities will typically be denominated in U.S. dollars.

The Fund may invest up to 15% of its net assets in investments that are deemed to be illiquid, which may include private placements, certain Rule 144A securities (which are subject to resale restrictions), and securities of issuers that are bankrupt or in default.

The Fund's use of borrowing, derivatives and reverse repurchase agreements may be deemed to create leverage, which can increase the Fund's volatility and the effect, positive or negative, of the Fund's investments on its NAV. The 1940 Act generally limits the extent to which the Fund may utilize bank borrowings to one-third of the Fund's total assets at the time utilized. The Fund's use of derivatives and other similar instruments is subject to a value-at-risk leverage limit, certain derivatives risk management program, and reporting requirements under Rule 18f-4. In the future, the Fund could qualify as a "limited derivatives user" as defined in Rule 18f-4 (or its use of derivatives and other similar instruments could satisfy the conditions of certain exemptions from the rule), in which case the Fund would not be required to comply with such requirements.

Derivatives, which are instruments that have a value based on another instrument, exchange rate or index, may be used as substitutes for securities in which the Fund can invest. The Fund uses derivatives to gain or adjust exposure to markets, sectors, securities and currencies and to manage exposure to risks relating to creditworthiness, interest rate spreads, volatility and changes in yield curves. In certain market environments, the Fund may use interest rate swaps and futures contracts to help protect its portfolio from interest rate risk. The Fund may also utilize foreign currency transactions, including currency options and forward currency contracts, to hedge non-U.S. Dollar investments or to establish or adjust exposure to particular foreign securities, markets or currencies. The Fund's hedging strategies may include the use of derivatives with underlying instruments that are not specified in

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the Fund's principal investment strategies (for example, the Fund may invest in total return swaps on the S&P 500 Index to hedge against broad market exposure).

The Fund's portfolio of fixed-income instruments will depend on the views of the Adviser as to the best value relative to what is currently presented in the marketplace. The Fund's portfolio managers lead a team of sector specialists responsible for researching opportunities within their sector and making recommendations to the Fund's portfolio managers. In selecting investments, the Adviser may consider maturity, yield and ratings information and opportunities for price appreciation among other criteria.

As part of its investment process, the Adviser also considers certain ESG and sustainability factors that it believes could have a material impact on certain securities in which the Fund may invest. Examples of the types of factors the Adviser may consider include, without limitation: environmental issues, such as carbon emissions and energy efficiency; social issues, such as affordable housing and community investment; and corporate governance issues, such as board independence. These determinations may not be conclusive, and securities that may be negatively impacted by such factors may be purchased and retained by the Fund while the Fund may divest or not invest in securities that may be positively impacted by such factors. ESG and sustainability factors will not be considered with respect to investments in U.S. Treasury and U.S. government agency securities, money market instruments, and derivatives.

**Temporary Defensive Positions**

From time to time, each Fund may take temporary defensive positions that are inconsistent with its principal investment strategies, in attempting to respond to adverse market, economic, political or other conditions. In such instances, a Fund may hold up to 100% of its assets in cash; short-term U.S. government securities and government agency securities; investment grade money market instruments; investment grade fixed-income securities; repurchase agreements; commercial paper and cash equivalents. Each Fund may invest in the securities described above at any time to maintain liquidity, pending selection of investments by the Adviser, or if the Adviser believes that sufficient investment opportunities that meet the Fund's investment criteria are not available. By keeping cash on hand, a Fund may be able to meet shareholder redemptions without selling securities and realizing gains and losses. As a result of engaging in these temporary measures, the applicable Fund may not achieve its investment objective.

**Principal Risks of Investing in the Funds**

The principal risks of investing in the Funds are summarized below. You should carefully consider a Fund's investment risks before deciding whether to invest in the Fund. There may be circumstances that could prevent a Fund from achieving its investment objective and you may lose money by investing in the Fund. An investment in a Fund is not a deposit at a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

***•* Bank Subordinated Debt Risk** *(Income ETF, High Yield ETF and MBS ETF only)*.** Banks may issue subordinated debt securities, which have a lower priority to full payment behind other more senior debt securities. This means, for example, that if the issuing bank were to become insolvent, subordinated debt holders may not receive a full return of their principal because the bank would have to satisfy the claims of senior debt holders first. In addition to the risks generally associated with fixed income instruments (e.g., interest rate risk, credit risk, etc.), bank subordinated debt is also subject to risks inherent to banks. Because banks are highly regulated and operate in a highly competitive environment, it may be difficult for a bank to meet its debt obligations. Banks also may be affected by changes in legislation and regulations applicable to the financial markets. This is especially true in light of the large amount of regulatory developments in recent years. Bank subordinated debt is often issued by smaller community banks that may be overly concentrated in a specific geographic region, lack the capacity to comply with new regulatory requirements or lack adequate capital. Smaller banks may also have a lower capacity to withstand negative developments in the market in general. If any of these or other factors were to negatively affect a bank's operations, the bank could fail to make payments on its debt obligations, which would hurt a Fund's bank subordinated debt investments. Subordinated debt, senior debt and preferred securities of banks and diversified financials companies are subject to the risks generally associated with the financials sector. See "Financials Sector Risk."

**• Borrowing Risks and Leverage Risks.** Borrowing for investment purposes creates leverage, which will exaggerate the effect of any change in the value of securities in the Fund's portfolio on the Fund's net asset value ("NAV") and, therefore, may increase the volatility of the Fund. Money borrowed will be subject to interest and other costs (including commitment fees and/or the cost of maintaining minimum average balances). Unless the income and capital appreciation, if any, on securities acquired with borrowed funds exceed the cost of borrowing, the use of leverage will diminish the investment performance of the Fund. In addition, pursuant to an exemptive order from the U.S. Securities and Exchange Commission ("SEC"), a Fund may borrow from another Fund for temporary purposes, to the extent such participation is consistent with the Fund's and the lending Fund's investment objective and investment policies.

***•* Concentration in Mortgage Loans, RMBS and CMBS Risk** (*MBS ETF only*). The Fund's assets will be concentrated in mortgage loans, RMBS (agency and non-agency) and CMBS, which are credit instruments that are backed by real estate and, consequently, subject to the same risks as those associated with the real estate industry. The Fund's concentration in such instruments potentially exposes the Fund to greater risks than funds that invest in multiple sectors. The risks of concentrating in mortgage

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loans, RMBS (agency and non-agency) and CMBS include susceptibility to the risks associated with mortgage loans and mortgage-backed securities as discussed below, changes in lending standards, interest rates and lending rates, and the risks associated with the market's perception of issuers, the creditworthiness of the parties involved and investing in real estate securities.

**• Community Bank Risks** *(Income ETF only)*.** A Fund's investments in community banks may make the Fund more economically vulnerable in the event of a downturn in the banking industry. Community banks may face heightened risks of failure during times of economic downturns, including those impacting a particular region, than larger banks. Community banks may also be subject to greater lending risks than larger banks, including the risks associated with mortgage loans. The ability of management of financial institutions to identify, measure, monitor and control the risks of an institution's activities and to ensure a financial institution's safe, sound and efficient operation in compliance with applicable laws and regulations are critical. Community banks may have fewer resources to devote towards employing and retaining strong management employees and implementing a thorough compliance program. Additionally, banking institutions are subject to substantial regulations that could adversely affect their ability to operate and the value of a Fund's investments, including from future banking regulations. Ownership of the stock of certain types of regulated banking institutions may subject the Fund to additional regulations. Investments in banking institutions and transactions related to Fund investments may require approval from one or more regulatory authorities. If a Fund were deemed to be a bank holding company or thrift holding company, bank holding companies or thrift holding companies that invest in the Fund would be subject to certain restrictions and regulations.

**• Concentration in Certain Mortgage-Backed Securities Risk** *(Income ETF and UltraShort Income ETF only)*.** Concentration risk results from maintaining exposure to the performance of the residential and commercial mortgages held in the mortgage-backed securities in which a Fund will invest. The risk of concentrating in these types of investments is that a Fund will be susceptible to the risks associated with mortgage-backed securities as discussed below, changes in lending standards, interest rates and lending rates, and the risks associated with the market's perception of issuers, the creditworthiness of the parties involved and investing in real estate securities.

**• Covenant Lite Loan Risk** *(Income ETF and UltraShort Income ETF only)*.** The Fund may obtain exposure to "covenant lite" loans. Covenants contained in loan documentation are intended to protect lenders by imposing certain restrictions and other limitations on a borrower's operations or assets and by providing certain information and consent rights to lenders. Covenant lite loans may lack financial maintenance covenants that in certain situations can allow lenders to claim a default on the loan to seek to protect the interests of the lenders. The absence of financial maintenance covenants in a covenant lite loan might result in a lower recovery in the event of a default by the borrower. Covenant lite loans have become much more prevalent in recent years.

**• Credit Risk.** A Fund could lose money if the issuer or guarantor of a fixed income security, or the counterparty to a derivatives contract or repurchase agreement, is unable or unwilling, or is perceived (whether by market participants, rating agencies, pricing services or otherwise) as unable or unwilling, to make timely principal and/or interest payments, or to otherwise honor its obligations. The downgrade of the credit of a security held by a Fund may decrease its value. Securities are subject to varying degrees of credit risk, which are often reflected in credit ratings. Measures such as average credit quality may not accurately reflect the true credit risk of a Fund. This is especially the case if a Fund consists of securities with widely varying credit ratings. Therefore, if a Fund has an average credit rating that suggests a certain credit quality, the Fund may in fact be subject to greater credit risk than the average would suggest. This risk is greater to the extent a Fund uses leverage or derivatives in connection with the management of the Fund. In addition, under current conditions, there is an increasing amount of issuers that are unprofitable, have little cash on hand and/or are unable to pay the interest owed on their debt obligations and the number of such issuers may increase if demand for their goods and services falls, borrowing costs rise due to governmental action or inaction or other reasons. Also, the issuer, guarantor or counterparty may suffer adverse changes in its financial condition or reduced demand for its goods and services or be adversely affected by economic, political, public health or social conditions that could lower the credit quality (or the market's perception of the credit quality) of the issuer or instrument, leading to greater volatility in the price of the instrument and in shares of a Fund.

If an issuer, guarantor or counterparty declares bankruptcy or is declared bankrupt, a Fund would likely be adversely affected in its ability to receive principal or interest owed or otherwise to enforce the financial obligations of the other party. A Fund may be subject to increased costs associated with the bankruptcy process and experience losses as a result of the deterioration of the financial condition of the issuer, guarantor or counterparty. The risks to a Fund related to such bankruptcies are elevated given the currently distressed economic, market, labor and public health conditions.

**• Cybersecurity Risk.** With the increased use of technologies such as the Internet and the dependence on computer systems to perform business and operational functions, funds (such as a Fund) and their service providers may be prone to operational and information security risks resulting from cyberattacks and/or technological malfunctions. In general, cyberattacks are deliberate, but unintentional events may have similar effects. Cyberattacks include, among others, stealing or corrupting data maintained online or digitally, preventing legitimate users from accessing information or services on a website, releasing confidential information without authorization, and causing operational disruption. Cybersecurity incidents may allow an unauthorized party to gain access to Fund assets or proprietary information, or cause a Fund, the Adviser, and/or other service

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providers (including custodians and financial intermediaries) to suffer data breaches or data corruption. Additionally, cybersecurity failures or breaches of the electronic systems of a Fund, the Adviser, or such Fund's other service providers, market makers, Authorized Participants or the issuers of securities in which the Fund invests have the ability to cause disruptions and negatively impact the Fund's business operations, potentially resulting in financial losses to the Fund and its respective shareholders. For instance, cyberattacks or technical malfunctions may interfere with the processing of shareholder or other transactions, affect a Fund's ability to calculate its NAV, cause the release of private shareholder information or confidential Fund information, impede trading, cause reputational damage, and subject such Fund to regulatory fines, penalties or financial losses, reimbursement or other compensation costs, and additional compliance costs. Cyberattacks or technical malfunctions may render records of Fund assets and transactions, shareholder ownership of Fund Shares, and other data integral to the functioning of the Fund inaccessible or inaccurate or incomplete. A Fund may also incur substantial costs for cybersecurity risk management in order to prevent cyber incidents in the future. A Fund and its shareholders could be negatively impacted as a result.

**• Derivatives Risks.** A Fund's derivatives and other similar investments (referred to collectively in this section as "derivatives" or "derivative investments") have risks similar to their underlying instruments and may have additional risks, including the imperfect correlation between the value of such instruments and the underlying instrument, rate or index, which creates the possibility that the loss on such instruments may be greater than the gain in the value of the underlying instrument, rate or index; the loss of principal; the possible default of the other party to the transaction; illiquidity of the derivative investments; risks arising from margin requirements and settlement payment obligations; and risks arising from mispricing or valuation complexity. The use of derivatives is also subject to operational risk which refers to risk related to potential operational issues, including documentation issues, settlement issues, system failures, inadequate controls, and human error, as well as legal risk which refers to the risk of loss resulting from insufficient documentation, insufficient capacity or authority of counterparty, or legality or enforceability of a contract. Derivatives are also subject to market risk, which refers to the risk that markets could experience a change in volatility that adversely impacts fund returns and the fund's obligations and exposures. If a counterparty becomes bankrupt or otherwise fails to perform its obligations under a derivative contract due to financial difficulties, a Fund may experience significant delays in obtaining any recovery under the derivative contract in a bankruptcy or other reorganization proceeding, or may not recover at all. In addition, in the event of the insolvency of a counterparty to a derivative transaction, the derivative contract would typically be terminated at its fair market value. If a Fund is owed this fair market value in the termination of the derivative contract and its claim is unsecured, the Fund will be treated as a general creditor of such counterparty, and will not have any claim with respect to the underlying instrument. Certain of the derivative investments in which a Fund may invest may, in certain circumstances, give rise to a form of financial leverage, which may magnify the risk of owning such instruments. The ability to successfully use derivative investments depends on the ability of the Adviser to predict pertinent market movements, which cannot be assured. In addition, amounts paid by a Fund as premiums and cash or other assets held in margin accounts with respect to the Fund's derivative investments would not be available to the Fund for other investment purposes, which may result in lost opportunities for gain.

Regulation of the derivatives market presents additional risks to a Fund and may limit the ability of a Fund to use, and the availability or performance of, such instruments.

The derivative instruments and techniques that a Fund may principally use include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*◦ Futures.* A futures contract is a standardized agreement to buy or sell a specific quantity of an underlying instrument at a specific price at a specific future time. The value of a futures contract tends to increase and decrease in tandem with the value of the underlying instrument. Depending on the terms of the particular contract, futures contracts are settled through either physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. A decision as to whether, when and how to use futures involves the exercise of skill and judgment and even a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures can be highly volatile, using futures can lower total return, and the potential loss from futures can exceed a Fund's initial investment in such contracts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*◦ Options*. If a Fund buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreed-upon price typically in exchange for a premium paid by the Fund. If a Fund sells an option, it sells to another person the right to buy from or sell to the Fund a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreed-upon price typically in exchange for a premium received by the Fund. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*◦ Swaps.* A swap contract is an agreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indexes, reference rates, currencies or other instruments. Most swap agreements provide that when the

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period payment dates for both parties are the same, the payments are made on a net basis (i.e., the two payment streams are netted out, with only the net amount paid by one party to the other). A Fund's obligations or rights under a swap contract entered into on a net basis will generally be equal only to the net amount to be paid or received under the agreement, based on the relative values of the positions held by each counterparty. Swap agreements are particularly subject to counterparty credit, liquidity, valuation, correlation, leverage, operational and legal risk. Certain standardized swaps are now subject to mandatory central clearing requirements and are required to be exchange-traded. While central clearing and exchange-trading are intended to reduce counterparty and liquidity risk, they do not make swap transactions risk-free. Swaps could result in losses if interest rate or foreign currency exchange rates or credit quality changes are not correctly anticipated by a Fund or if the reference index, security or investments do not perform as expected. A Fund's use of swaps may include those based on the credit of an underlying investment, commonly referred to as "credit default swaps." Where a Fund is the buyer of a credit default swap contract, it would be entitled to receive the par (or other agreed-upon) value of a referenced debt obligation from the counterparty to the contract only in the event of a default or similar event by a third party on the debt obligation. If no default occurs, a Fund would have paid to the counterparty a periodic stream of payments over the term of the contract and received no benefit from the contract. When a Fund is the seller of a credit default swap contract, it receives the stream of payments but is obligated to pay an amount equal to the par (or other agreed-upon) value of a referenced debt obligation upon the default or similar event of that obligation. The use of credit default swaps can result in losses if a Fund's assumptions regarding the creditworthiness of the underlying obligation prove to be incorrect. Periodically, the CFTC and exchanges change the position limits to which futures, options on futures and some swaps are subject. To the extent these contracts are traded, the Fund may be constrained by how many contracts it may trade. The Commodity Futures Trading Commission in October 2020 adopted amendments to its position limits rules that establish certain new and amended position limits for 25 specified physical commodity futures and related options contracts traded on exchanges, other futures contracts and related options directly or indirectly linked to such 25 specified contracts, and any over the counter transactions that are economically equivalent to the 25 specified contracts. The Adviser will need to consider whether the exposure created under these contracts might exceed the new and amended limits in anticipation of the applicable compliance dates, and the limits may constrain the ability of a Fund to use such contracts.

***•* Equity Market Risk** *(Income ETF and High Yield ETF only)*.** A Fund's investments in equity securities may subject the Fund to volatility and the following risks: (i) prices of stock may fall over short or extended periods of time; (ii) cyclical movements of the equity market may cause the value of the Fund's securities to fluctuate drastically from day to day; and (iii) individual companies may report poor results or be negatively affected by industry and or economic trends and developments.

**• ETF Risks.** Each Fund is an ETF and they may invest in other ETFs, and, as a result of the structure, is exposed directly or indirectly to the following risks:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*◦ Authorized Participants, Market Makers, and Liquidity Providers Concentration Risk.* The Fund has a limited number of financial institutions that may act as APs. In addition, there may be a limited number of market makers and/or liquidity providers in the marketplace. To the extent either of the following events occur, Shares may trade at a material discount to NAV, which may also lead to a widening of bid/ask spreads quoted for Shares, and possibly face delisting: (i) APs exit the business or otherwise become unable to process creation and/or redemption orders and no other APs step forward to perform these services, or (ii) market makers and/or liquidity providers exit the business or significantly reduce their business activities and no other entities step forward to perform their functions. Authorized Participant concentration risk may be heightened for ETFs, such as the Funds, that invest in securities issued by non-U.S. issuers or other securities or instruments that have lower trading volumes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*◦ Costs of Buying or Selling Shares.* Investors buying or selling Shares in the secondary market will pay brokerage commissions or other charges imposed by brokers, as determined by that broker. Brokerage commissions are often a fixed amount and may be a significant proportional cost for investors seeking to buy or sell relatively small amounts of Shares. In addition, secondary market investors will also incur the cost of the difference between the price at which an investor is willing to buy Shares (the "bid" price) and the price at which an investor is willing to sell Shares (the "ask" price). This difference in bid and ask prices is often referred to as the "spread" or "bid/ask spread." The bid/ask spread varies over time for Shares based on trading volume and market liquidity, and is generally lower if Shares have more trading volume and market liquidity and higher if Shares have little trading volume and market liquidity. Further, a relatively small investor base in the Fund, asset swings in the Fund and/or increased market volatility may cause increased bid/ask spreads. Due to the costs of buying or selling Shares, including bid/ask spreads, frequent trading of Shares may significantly reduce investment results and an investment in Shares may not be advisable for investors who anticipate regularly making small investments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Shares May Trade at Prices Other Than NAV.* As with all ETFs, Shares may be bought and sold in the secondary market at market prices. Although it is expected that the market price of Shares will approximate the Fund's NAV, there may be times when the market price of Shares is more than the NAV intra-day (premium) or less than the NAV intra-day

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(discount) due to supply and demand of Shares or during periods of market volatility. This risk is heightened in times of market volatility or periods of steep market declines and periods when there is limited trading activity for Shares in the secondary market, in which case such premiums or discounts may be significant. The market price of Shares during the trading day, like the price of any exchange-traded security, includes a "bid/ask" spread charged by the exchange specialist, market makers or other participants that trade Shares. In times of severe market disruption, the bid/ask spread can increase significantly. At those times, Shares are most likely to be traded at a discount to NAV, and the discount is likely to be greatest when the price of Shares is falling fastest, which may be the time that you most want to sell your Shares. The Adviser believes that, under normal market conditions, large market price discounts or premiums to NAV will not be sustained because of arbitrage opportunities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*◦ Trading*. Although Shares are listed for trading on the Exchange and may be listed or traded on U.S. and non-U.S. stock exchanges other than the Exchange, there can be no assurance that an active trading market for such Shares will develop or be maintained. Trading in Shares may be halted due to market conditions or for reasons that, in the view of the Exchange, make trading in Shares inadvisable. In addition, trading in Shares on the Exchange is subject to trading halts caused by extraordinary market volatility pursuant to Exchange "circuit breaker" rules, which temporarily halt trading on the Exchange when a decline in the S&P 500 Index during a single day reaches certain thresholds (e.g., 7%, 13%, and 20%). Additional rules applicable to the Exchange may halt trading in Shares when extraordinary volatility causes sudden, significant swings in the market price of Shares. There can be no assurance that Shares will trade with any volume, or at all, on any stock exchange. In stressed market conditions, the liquidity of Shares may begin to mirror the liquidity of the Fund's underlying portfolio holdings, which can be significantly less liquid than Shares, and may lead to a widening of bid/ask spreads quoted for Shares. There can be no assurance that the requirements of the Exchange necessary to maintain the listing of the Fund's Shares will continue to be met or will remain unchanged.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Cash Transactions*. Unlike certain ETFs, a Fund may effect its creations and redemptions in cash or partially in cash. As a result, an investment in a Fund may be less tax-efficient than an investment in such ETFs. Other ETFs generally are able to make in-kind redemptions and avoid realizing gains in connection with transactions designed to raise cash to meet redemption requests. If a Fund effects a portion of redemptions for cash, it may be required to sell portfolio securities in order to obtain the cash needed to distribute redemption proceeds, which may involve transaction costs. If a Fund recognizes gain on these sales, this generally will cause a Fund to recognize gain it might not otherwise have recognized if it were to distribute portfolio securities in-kind, or to recognize such gain sooner than would otherwise be required. A Fund generally intends to distribute these gains to shareholders to avoid being taxed on this gain at the Fund level and otherwise comply with applicable tax rules. This strategy may cause shareholders to be subject to tax on gains they would not otherwise be subject to, or at an earlier date than, if they had made an investment in a different ETF.

**• Extension Risk.** An issuer could exercise its right to pay principal on an obligation held by a Fund (such as a mortgage-backed security) later than expected. This may happen when there is a rise in interest rates. Under these circumstances, the value of the obligation will decrease, and a Fund will also suffer from the inability to reinvest in higher yielding securities.

**• Financials Sector Risk** *(Income ETF only)*.** Companies in the group of industries related to banks and diversified financials are often subject to extensive governmental regulation and intervention, which may adversely affect the scope of their activities, the prices they can charge and the amount of capital they must maintain. Governmental regulation may change frequently and may have significant adverse consequences for companies in the group of industries related to banks and diversified financials, including effects not intended by such regulation. The impact of past or future regulation in various countries on any individual financial company or on the industries as a whole cannot be predicted. The Fund's emphasis on community banks may make a Fund more economically vulnerable in the event of a downturn in the banking industry. Community banks may face heightened risks of failure during times of economic downturns than larger banks. Community banks may also be subject to greater lending risks than larger banks.

Certain risks may impact the value of investments in the group of industries related to banks and diversified financials more severely than those of investments outside these industries, including the risks associated with companies that operate with substantial financial leverage. Companies in the group of industries related to banks and diversified financials may also be adversely affected by increases in interest rates and loan losses, decreases in the availability of money or asset valuations, credit rating downgrades and adverse conditions in other related markets.

Insurance companies are subject to extensive government regulation in some countries and can be significantly affected by changes in interest rates, general economic conditions, price and marketing competition, the imposition of premium rate caps or other changes in government regulation or tax law. Different segments of the insurance industry can be significantly affected by mortality and morbidity rates, environmental clean-up costs and catastrophic events such as earthquakes, hurricanes and terrorist acts.

During the financial crisis that began in 2007, the deterioration of the credit markets impacted a broad range of mortgage, asset-backed, auction rate, sovereign debt and other markets, including U.S. and non-U.S. credit and interbank money markets,

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thereby affecting a wide range of financial institutions and markets. A number of large financial institutions failed during that time, merged with stronger institutions or had significant government infusions of capital. Instability in the financial markets caused certain financial companies to incur large losses. Some financial companies experienced declines in the valuations of their assets, took actions to raise capital (such as the issuance of debt or equity securities), or even ceased operations. Some financial companies borrowed significant amounts of capital from government sources and may face future government-imposed restrictions on their businesses or increased government intervention. Those actions caused the securities of many financial companies to decline in value.

The group of industries related to banks and diversified financials is also a target for cyber attacks and may experience technology malfunctions and disruptions. In recent years, cyber attacks and technology failures have become increasingly frequent and have caused significant losses.

Risks specific to the bank and diversified financial group of industries also may include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Asset Quality and Credit Risk.* When financial institutions loan money, commit to loan money or enter into a letter of credit or other contract with a counterparty, they incur credit risk, or the risk of losses if their borrowers do not repay their loans or their counterparties fail to perform according to the terms of their contract. The companies in which a Fund will invest offer a number of products which expose them to credit risk, including loans, leases and lending commitments, derivatives, trading account assets and assets held-for-sale. Financial institutions allow for and create loss reserves against credit risks based on an assessment of credit losses inherent in their credit exposure (including unfunded credit commitments). This process, which is critical to their financial results and condition, requires difficult, subjective and complex judgments, including forecasts of economic conditions and how these economic predictions might impair the ability of their borrowers to repay their loans. As is the case with any such assessments, there is always the chance that the financial institutions in which a Fund invests will fail to identify the proper factors or that they will fail to accurately estimate the impacts of factors that they identify. Failure to identify credit risk factors or the impact of credit factors may result in increased non-performing assets, which will result in increased loss reserve provisioning and reduction in earnings. Poor asset quality can also affect earnings through reduced interest income which can impair a bank's ability to service debt obligations or to generate sufficient income for equity holders. Bank failure may result due to inadequate loss reserves, inadequate capital to sustain credit losses or reduced earnings due to non-performing assets. A Fund will not have control over the asset quality of the financial institutions in which the Fund will invest, and these institutions may experience substantial increases in the level of their non-performing assets which may have a material adverse impact on the Fund's investments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Capital Risk.* A bank's capital position is extremely important to its overall financial condition and serves as a cushion against losses. U.S. banking regulators have established specific capital requirements for regulated banks. Federal banking regulators proposed amended regulatory capital regulations in response to the Dodd-Frank Act and the international capital and liquidity requirements set forth by the Basel Committee on Banking Supervision ("Basel III") protocols which would impose even more stringent capital requirements. In the event that a regulated bank falls below certain capital adequacy standards, it may become subject to regulatory intervention including, but not limited to, being placed into a FDIC-administered receivership or conservatorship. The regulatory provisions under which the regulatory authorities act are intended to protect depositors. The deposit insurance fund and the banking system are not intended to protect shareholders or other investors in other securities issued by a bank or its holding company. The effect of inadequate capital can have a potentially adverse consequence on the institution's financial condition, its ability to operate as a going concern and its ability to operate as a regulated financial institution and may have a material adverse impact on a Fund's investments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Earnings Risk.* Earnings are the primary means for financial institutions to generate capital to support asset growth, to provide for loan losses and to support their ability to pay dividends to shareholders. The quantity as well as the quality of earnings can be affected by excessive or inadequately managed credit risk that may result in losses and require additions to loss reserves, or by high levels of market risk that may unduly expose an institution's earnings to volatility in interest rates. The quality of earnings may also be diminished by undue reliance on extraordinary gains, nonrecurring events, or favorable tax effects. Future earnings may be adversely affected by an inability to forecast or control funding and operating expenses, net interest margin compression improperly executed or ill-advised business strategies, or poorly managed or uncontrolled exposure to other risks. Deficient earnings can result in inadequate capital resources to support asset growth or insufficient cash flow to meet the financial institution's near term obligations. Under certain circumstances, this may result in the financial institution being required to suspend operations or the imposition of a cease-and-desist order by regulators which could potentially impair a Fund's investments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Management Risk.* The ability of management to identify, measure, monitor and control the risks of an institution's activities and to ensure a financial institution's safe, sound and efficient operation in compliance with applicable laws and regulations are critical. Depending on the nature and scope of an institution's activities, management practices may need to address some or all of the following risks: credit, market, operating, reputation, strategic, compliance,

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legal, liquidity and other risks. A Fund will not have direct or indirect control over the management of the financial institutions in which the Fund will invest and, given the Fund's long-term investment strategy, it is likely that the management teams and their policies may change. The inability of management to operate their financial institution in a safe, sound and efficient manner in compliance with applicable laws and regulations, or changes in management of financial institutions in which a Fund invests, may have an adverse impact on the Fund's investment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Litigation Risk.* Financial institutions face significant legal risks in their businesses, and the volume of claims and amount of damages and penalties claimed in litigation and regulatory proceedings against financial institutions remain high. Substantial legal liability or significant regulatory action against the companies in which a Fund invests could have material adverse financial effects or cause significant reputational harm to these companies, which in turn could seriously harm their business prospects. Legal liability or regulatory action against the companies in which a Fund invests could have material adverse financial effects on the Fund and adversely affect the Fund's earnings and book value.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Market Risk.* The financial institutions in which a Fund will invest are directly and indirectly affected by changes in market conditions. Market risk generally represents the risk that values of assets and liabilities or revenues will be adversely affected by changes in market conditions. Market risk is inherent in the financial instruments associated with the operations and activities including loans, deposits, securities, short-term borrowings, long-term debt, trading account assets and liabilities, and derivatives of the financial institutions in which a Fund will invest. Market risk includes, but is not limited to, fluctuations in interest rates, equity and futures prices, changes in the implied volatility of interest rates, equity and futures prices and price deterioration or changes in value due to changes in market perception or actual credit quality of the issuer. Accordingly, depending on the instruments or activities impacted, market risks can have wide ranging, complex adverse effects on the operations and overall financial condition of the financial institutions in which a Fund will invest as well as adverse effects on the Fund's results from operations and overall financial condition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Monetary Policy Risk.* Monetary policies have had, and will continue to have, significant effects on the operations and results of financial institutions. There can be no assurance that a particular financial institution will not experience a material adverse effect on its net interest income in a changing interest rate environment. Factors such as the liquidity of the global financial markets, and the availability and cost of credit may significantly affect the activity levels of customers with respect to the size, number and timing of transactions. Fluctuation in interest rates, which affect the value of assets and the cost of funding liabilities, are not predictable or controllable, may vary and may impact economic activity in various regions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Competition.* The group of industries related to banks and diversified financials, including the banking sector, is extremely competitive, and it is expected that the competitive pressures will increase. Merger activity in the financial services industry has resulted in and is expected to continue to result in, larger institutions with greater financial and other resources that are capable of offering a wider array of financial products and services. The group of industries related to banks and diversified financials has become considerably more concentrated as numerous financial institutions have been acquired by or merged into other institutions. The majority of financial institutions in which a Fund will invest will be relatively small with significantly fewer resources and capabilities than larger institutions; this size differential puts them at a competitive disadvantage in terms of product offering and access to capital. Technological advances and the growth of e-commerce have made it possible for non-financial institutions and non-bank financial institutions to offer products and services that have traditionally been offered by banking and other financial institutions. It is expected that the cross-industry competition and inter-industry competition will continue to intensify and may be adverse to the financial institutions in which a Fund invests.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ *Regulatory Risk.* Financial institutions, including community banks, are subject to various state and federal banking regulations that impact how they conduct business, including but not limited to how they obtain funding, their ability to operate, and the value of a Fund's investments. Changes to these regulations could have an adverse effect on their operations and operating results and a Fund's investments. The Funds expect to make long-term investments in financial institutions that are subject to various state and federal regulations and oversight. Congress, state legislatures and the various bank regulatory agencies frequently introduce proposals to change the laws and regulations governing the banking industry in response to the Dodd-Frank Act, Consumer Financial Protection Bureau (the "CFPB") rulemaking or otherwise. The likelihood and timing of any proposals or legislation and the impact they might have on the Fund's investments in financial institutions affected by such changes cannot be determined and any such changes may be adverse to a Fund's investments. Ownership of the stock of certain types of regulated banking institutions may subject a Fund to additional regulations. Investments in banking institutions and transactions related to a Fund's investments may require approval from one or more regulatory authorities. If a Fund were deemed to be a bank holding company or thrift holding company, bank holding companies or thrift holding companies that invest in the Fund would be subject to certain restrictions and regulations.

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**• Fixed-Income Instruments Risks.** Changes in interest rates generally will cause the value of fixed-income instruments held by a Fund to vary inversely to such changes. Prices of longer-term fixed-income instruments generally fluctuate more than the prices of shorter-term fixed income instruments as interest rates change. In addition, a fund with a longer average portfolio duration will be more sensitive to changes in interest rates than a fund with a shorter average portfolio duration. Duration is a measure used to determine the sensitivity of a security's price to changes in interest rates that incorporates a security's yield, coupon, final maturity and call features, among other characteristics. However, duration may not accurately reflect the true interest rate sensitivity of instruments held by a Fund and, therefore the Fund's exposure to changes in interest rates. If an issuer calls or redeems an instrument held by a Fund during a time of declining interest rates, a Fund might need to reinvest the proceeds in an investment offering a lower yield, and therefore may not benefit from any increase in value as a result of declining interest rates.

Fixed-income instruments that are fixed-rate are generally more susceptible than floating rate instruments to price volatility related to changes in prevailing interest rates. The prices of floating rate fixed-income instruments tend to have less fluctuation in response to changes in interest rates, but will have some fluctuation, particularly when the next interest rate adjustment on such security is further away in time or adjustments are limited in amount over time. A Fund may invest in short-term securities that, when interest rates decline, affect the Fund's yield as these securities mature or are sold and the Fund purchases new short-term securities with lower yields. Subordinated debt securities that receive payments of interest and principal after other more senior security holders are paid carry the risk that the issuer will not be able to meet its obligations and that the subordinated investments may lose value. An obligor's willingness and ability to pay interest or to repay principal due in a timely manner may be affected by its cash flow.

Fixed-income and debt market conditions are highly unpredictable and some parts of the market are subject to dislocations. In response to serious economic disruptions, governmental authorities and regulators may enact significant fiscal and monetary policy changes, including providing direct capital infusions into companies, creating new monetary programs and lowering interest rates considerably. These actions can present heightened risks to fixed-income and debt instruments, and such risks could be even further heightened if these actions are reversed or are ineffective in achieving their desired outcomes. Low or negative interest rates magnify the Fund's susceptibility to interest rate risk and diminishing yield and performance. Fluctuations in interest rates expose fixed-income and debt markets to significant volatility and reduced liquidity for the Fund's investments.

**• Floating or Variable Rate Securities Risk.** Floating or variable rate securities pay interest at rates that adjust in response to changes in a specified interest rate or reset at predetermined dates (such as the end of a calendar quarter). Securities with floating or variable interest rates are generally less sensitive to interest rate changes than securities with fixed interest rates, but may decline in value if their interest rates do not rise as much, or as quickly, as comparable market interest rates. Conversely, floating or variable rate securities will not generally increase in value if interest rates decline. The impact of interest rate changes on floating or variable rate securities is typically mitigated by the periodic interest rate reset of the investments. Floating or variable rate securities can be rated below investment grade or unrated; therefore, a Fund relies heavily on the analytical ability of the Adviser. Lower-rated floating or variable rate securities are subject to many of the same risks as high yield securities, although these risks are reduced when the instruments are senior and secured as opposed to many high yield securities that are junior and unsecured. Floating or variable rate securities are often subject to restrictions on resale, which can result in reduced liquidity.

Instruments in which a Fund invests may pay interest at floating rates or may be subject to interest caps or floors tied to floating rates, such as the Secured Overnight Financing Rate. A Fund and issuers of instruments in which a Fund invests may also obtain financing at floating rates. Derivative instruments utilized by a Fund and/or issuers of instruments in which a Fund may invest may also reference floating rates. A Fund also may utilize leverage or borrowings primarily based on floating rates.

**• Foreign Securities Risks*.*** Certain foreign countries may impose exchange control regulations, restrictions on repatriation of profit on investments or of capital invested, local taxes on investments, and restrictions on the ability of issuers of non-U.S. securities to make payments of principal and interest to investors located outside the country, whether from currency blockage or otherwise. In addition, the Funds will be subject to risks associated with adverse political and economic developments in foreign countries, including seizure or nationalization of foreign deposits, the imposition of economic or trade sanctions, different legal systems and laws relating to bankruptcy and creditors' rights and the potential inability to enforce legal judgments, all of which could cause a Fund to lose money on its investments in non-U.S. securities. The type and severity of sanctions and other similar measures, including counter sanctions and other retaliatory actions, that may be imposed could vary broadly in scope, and their impact is difficult to ascertain. These types of measures may include, but are not limited to, banning a sanctioned country or certain persons or entities associated with such country from global payment systems that facilitate cross-border payments, restricting the settlement of securities transactions by certain investors, and freezing the assets of particular countries, entities or persons. The imposition of sanctions and other similar measures could, among other things, result in a decline in the value and/or liquidity of securities issued by the sanctioned country or companies located in or economically tied to the sanctioned country, downgrades in the credit ratings of the sanctioned country's securities or those of companies located in or economically tied to the sanctioned country, currency devaluation or volatility, and increased market

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volatility and disruption in the sanctioned country and throughout the world. Sanctions and other similar measures could directly or indirectly limit or prevent a Fund from buying and selling securities (in the sanctioned country and other markets), significantly delay or prevent the settlement of securities transactions, and adversely impact a Fund's liquidity and performance. The cost of servicing external debt will also generally be adversely affected by rising international interest rates, as many external debt obligations bear interest at rates which are adjusted based upon international interest rates. Because non-U.S. securities may trade on days when a Fund's shares are not priced, NAV may change at times when the Fund's shares cannot be sold.

Foreign banks and securities depositories at which a Fund holds its foreign securities and cash may be recently organized or new to the foreign custody business and may be subject to only limited or no regulatory oversight. Additionally, many foreign governments do not supervise and regulate stock exchanges, brokers and the sale of securities to the same extent as does the United States and may not have laws to protect investors that are comparable to U.S. securities laws. Settlement and clearance procedures in certain foreign markets may result in delays in payment for or delivery of securities not typically associated with settlement and clearance of U.S. investments.

Less information may be publicly available with respect to foreign issuers than is available with respect to U.S. companies. Accounting standards in non-U.S. countries may differ from U.S. accounting standards. If the accounting standards in another country do not require as much detail as U.S. accounting standards, it may be more difficult to completely and accurately assess a company's financial condition. The volume of transactions on foreign stock exchanges is generally lower than the volume of transactions on U.S. exchanges. Therefore, the market for securities that trade on foreign stock exchanges may be less liquid and their prices may be more volatile than securities that trade on U.S. securities.

In recent years, the European financial markets have experienced volatility and adverse trends due to concerns about economic downturns in, or rising government debt levels of, several European countries. These events may spread to other countries in Europe, including countries that do not use the Euro. These events may affect the value and liquidity of certain of the Fund's investments.

**• General Market Risk.** The capital markets may experience periods of disruption, instability and volatility due to, among other things, social, political, economic and other conditions and events such as natural disasters, terrorism, epidemics and pandemics. Such conditions may materially and adversely affect the markets globally and the issuers, industries, governments and jurisdictions in which a Fund invests, which may have a negative impact on a Fund's performance. These impacts can be exacerbated by failures of governments and societies to adequately respond to an emerging event or threat.

The NAV of a Fund and investment return will fluctuate based upon changes in the value of its portfolio securities. The market value of securities in which a Fund invests is based upon the market's perception of value and is not necessarily an objective measure of the securities' value. Other general market risks include: (i) the market may not recognize what the Adviser believes to be the true value or growth potential of the securities held by the Fund; (ii) the earnings of the companies in which a Fund invests will not continue to grow at expected rates, thus causing the price of the underlying securities to decline; (iii) the smaller a company's market capitalization, the greater the potential for price fluctuations and volatility of its securities due to lower trading volume for the securities, less publicly available information about the company and less liquidity in the market for the security; (iv) the potential for price fluctuations in the security of a medium capitalization company may be greater than that of a large capitalization company; (v) the Adviser's judgment as to the growth potential or value of a security may prove to be wrong; and (vi) a decline in investor demand for the securities held by a Fund also may adversely affect the value of the securities.

In addition, securities in a Fund's portfolio may cause a Fund to lose value and/or underperform in comparison to securities in general financial markets, a particular financial market or other asset classes due to a number of factors, including inflation (or expectations for inflation), deflation (or expectations for deflation), interest rates, global demand for particular products or resources, market instability, debt crises and downgrades, embargoes, tariffs, sanctions and other trade barriers, regulatory events, other governmental trade or market control programs and related geopolitical events. In addition, the value of a Fund's investments may be negatively affected by the occurrence of global events, such as war, terrorism, environmental disasters, natural disasters or events, country instability, and infectious disease epidemics/pandemics. These events could reduce consumer demand or economic output, result in market closures, travel restrictions or quarantines, and significantly adversely impact the economy. Governmental and quasi-governmental authorities and regulators throughout the world have previously responded to serious economic disruptions with a variety of significant fiscal and monetary policy changes, including but not limited to, direct capital infusions into companies, new monetary programs and dramatically lower interest rates. An unexpected or sudden reversal of these policies, or the ineffectiveness of these policies, could increase volatility in securities markets, which could adversely affect a Fund's investments. Any market disruptions could also prevent a Fund from executing advantageous investment decisions in a timely manner. Increasing interconnectivity between global economies and financial markets can lead to events or conditions in one country, region or financial market adversely impacting a different country, region or financial market. Thus, investors should closely monitor current market conditions to determine whether a Fund meets their individual financial needs and tolerance for risk.

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**• High-Yield Securities Risks.** Below investment grade instruments are commonly referred to as "junk" or high-yield instruments and are regarded as predominantly speculative with respect to the issuer's capacity to pay interest and repay principal. Lower grade instruments may be particularly susceptible to economic downturns. It is likely that a prolonged or deepening economic recession could adversely affect the ability of the issuers of such instruments to repay principal and pay interest thereon, increase the incidence of default for such instruments and severely disrupt the market value of such instruments.

Lower grade instruments, though higher yielding, are characterized by higher risk. The retail secondary market for lower grade instruments, which are often thinly traded or subject to irregular trading, may be less liquid than that for higher rated instruments. Such instruments can be more difficult to sell and to value than higher rated instruments because there is generally less public information available about such securities. As a result, subjective judgment may play a greater role in valuing such instruments. Adverse conditions could make it difficult at times for a Fund to sell certain instruments or could result in lower prices than those used in calculating the Fund's NAV. Because of the substantial risks associated with investments in lower grade instruments, investors could lose money on their investment in the Fund, both in the short-term and the long-term.

**• Illiquid Investments Risks.** A Fund may invest up to 15% of its net assets in illiquid investments. A Fund may also invest in restricted securities. Investments in restricted securities could have the effect of increasing the amount of a Fund's assets invested in illiquid investments if qualified institutional buyers are unwilling to purchase these securities.

Illiquid and restricted investments may be difficult to dispose of at a fair price at the times when a Fund believes it is desirable to do so. The market price of illiquid and restricted investments generally is more volatile than that of more liquid investments, which may adversely affect the price that a Fund pays for or recovers upon the sale of such investments. Illiquid and restricted investments are also more difficult to value, especially in challenging markets. The Adviser's judgment may play a greater role in the valuation process. Investment of a Fund's assets in illiquid and restricted securities may restrict the Fund's ability to take advantage of market opportunities. To dispose of an unregistered security, a Fund, where it has contractual rights to do so, may have to cause such security to be registered. A considerable period may elapse between the time the decision is made to sell the security and the time the security is registered, thereby enabling a Fund to sell it. Contractual restrictions on the resale of securities vary in length and scope and are generally the result of a negotiation between the issuer and acquirer of the securities. In either case, a Fund would bear market risks during that period. Liquidity risk may impact a Fund's ability to meet shareholder redemptions and as a result, the Fund may be forced to sell securities at inopportune prices.

Certain fixed-income instruments are not readily marketable and may be subject to restrictions on resale. Fixed-income instruments may not be listed on any national securities exchange and no active trading market may exist for certain of the fixed-income instruments in which a Fund will invest. Where a secondary market exists, the market for some fixed-income instruments may be subject to irregular trading activity, wide bid/ask spreads and extended trade settlement periods. Trade settlement periods may take longer than seven days for transactions of leveraged loans, meaning it could take the Fund significant time to receive money after selling its investments. In addition, dealer inventories of certain securities are at historic lows in relation to market size, which indicates a potential for reduced liquidity as dealers may be less able to "make markets" for certain fixed-income securities.

Certain Structured Products, including CLOs, CDOs, CMOs, CBOs, and other asset-backed securities and debt securitizations, may be thinly traded or have a limited trading market. Structured Products are typically privately offered and sold, and thus, are not registered under the securities laws, which means less information about the security may be available as compared to publicly offered securities and only certain institutions may buy and sell them. As a result, investments in Structured Products may be characterized by a Fund as illiquid securities.

**• Interest Rate Risk.** Rising interest rates tend to extend the duration of securities, making them more sensitive to changes in interest rates. The value of longer-term securities generally changes more in response to changes in interest rates than shorter-term securities. As a result, in a period of rising interest rates, securities may exhibit additional volatility and may lose value. Changing interest rates, including rates that fall below zero, may have unpredictable effects on markets, including market volatility, and may adversely affect the Fund's performance. A change in interest rates may be sudden and significant, with unpredictable effects on the financial markets and the Fund's investments. Should interest rates decrease, the Fund's investments in certain variable-rate and fixed rate debt securities may be adversely affected.

**• Large Shareholder Transactions Risk.** Shares of the Funds are offered to certain other investment companies, large retirement plans and other large investors. In addition, a third party investor, the Adviser or an affiliate of the Adviser, an AP, a market maker, or another entity may invest in the Fund and hold its investment for a limited period of time. As a result, a Fund is subject to the risk that shareholders may purchase or redeem a large amount of shares of the Fund. To satisfy such large shareholder redemptions, a Fund may have to sell portfolio securities at times when it would not otherwise do so, which may negatively impact the Fund's NAV and liquidity. In addition, large purchases of Fund shares could adversely affect a Fund's performance to the extent that the Fund does not immediately invest cash it receives and therefore holds more cash than it ordinarily would. Large shareholder activity could also generate increased transaction costs and cause adverse tax

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consequences. In addition, transactions by large shareholders may account for a large percentage of the trading volume on the Exchange and may, therefore, have a material effect on the market price of the Shares.

For example, the sale of portfolio securities will accelerate the realization of taxable capital gains or losses for the Fund, which may increase taxable distributions to shareholders, and purchases or redemptions of a large number of Fund shares relative to the size of the Fund will have adverse tax consequences limiting the use of any capital loss carryforwards and certain other losses to offset any future realized capital gains.

**• Liquidity and Valuation Risks.** It may be difficult for a Fund to purchase and sell particular investments within a reasonable time at a favorable price. The capacity of traditional fixed-income market makers has not kept pace with the consistent growth in the fixed-income markets in recent years, which has led to reductions in the capacity of such market makers to engage in fixed-income trading and, as a result, dealer inventories of corporate fixed-income and floating rate instruments are at or near historic lows relative to market size. These concerns may be more pronounced in the case of high yield fixed-income and floating rate instruments than higher quality fixed-income instruments. Market makers tend to provide stability and liquidity to debt-securities markets through their intermediary services, and their reduced capacity and number could lead to diminished liquidity and increased volatility in the fixed-income markets. As a result, a Fund could be unable to pay redemption proceeds within the allowable time period due to adverse market conditions, an unusually high volume of redemption requests or other reasons, unless it sells other portfolio investments under unfavorable conditions, thereby adversely affecting the Fund. In addition, a Fund's ability to sell an instrument under favorable conditions may also be negatively impacted by, among other things, the sale of the same or similar instruments by other market participants at the same time.

To the extent that there is not an established liquid market for instruments in which a Fund invests, or there is a reduced number or capacity of traditional market makers with respect to certain instruments, trading in such instruments may be relatively inactive or irregular. In addition, during periods of reduced market liquidity or market turmoil, or in the absence of readily accessible market quotations for an investment in a Fund's portfolio, the ability of the Fund to assign an accurate daily value to that investment may be limited and the Adviser, on behalf of the Fund, may be required to perform a fair valuation of the instrument. Fair value determinations are inherently subjective and reflect good faith judgments based on available information. Accordingly, there can be no assurance that the determination of an instrument's fair value, conducted in accordance with the valuation procedures, will in fact approximate the price at which a Fund could sell that instrument at the time of the fair valuation. The Funds rely on various sources of information to value investments and calculate NAV. The Funds may obtain pricing information from third parties that are believed to be reliable. In certain cases, this information may be unavailable or this information may be inaccurate because of errors by the third parties, technological issues, absence of current or reliable market data or otherwise, which could impact a Fund's ability to accurately value its investments or calculate its NAV.

Investors who purchase or redeem shares of a Fund on days when the Fund is holding instruments that have been fair valued may receive fewer or more shares or lower or higher redemption proceeds than they would have received if the instruments had not been fair valued or if the Fund had employed an alternative valuation methodology. Such risks may be more pronounced in a rising interest rate environment, and, to the extent the Fund that holds a significant percentage of fair valued or otherwise difficult to value securities, it may be particularly susceptible to the risks associated with valuation. For additional information about valuation determinations, see "Determination of Net Asset Value" below. Portions of a Fund's portfolio that are fair valued or difficult to value vary from time to time. A Fund's shareholder reports contain detailed information about a Fund's holdings that are fair valued or difficult to value, including values of such holdings as of the dates of the reports.

**• Management Risk.** Each Fund is actively managed and its performance may reflect the Adviser's ability to make decisions which are suited to achieving a Fund's investment objective. Additionally, the Adviser's consideration of certain ESG and sustainability factors when making investment decisions may affect a Fund's performance relative to that of funds that do not consider ESG and sustainability factors. Due to its active management, a Fund could underperform other funds with a similar investment objective.

**• Mortgage-Backed and Asset-Backed Securities Risks.** The price paid by a Fund for asset-backed securities, the yield the Fund expects to receive from such securities and the average life of such securities are based on a number of factors, including the anticipated rate of prepayment of the underlying assets. The value of these securities may be significantly affected by changes in lending standards, interest rates and lending rates, and the risks associated with the market's perception of issuers, the creditworthiness of the parties involved, and investing in real estate securities. The foregoing risks or similar developments may adversely impact the default risk for the properties and loans underlying mortgage-backed securities investments, the value of and income generated by these investments, and could also result in reduced mortgage-backed securities liquidity. The foregoing risks or similar developments may adversely impact the default risk for the properties and loans underlying mortgage-backed securities investments, the value of and income generated by these investments, and could also result in reduced mortgage-backed securities liquidity.

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The ability of a Fund to successfully utilize these instruments may depend on the ability of the Fund's Adviser to forecast interest rates and other economic factors correctly. These securities may have a structure that makes their reaction to interest rate changes and other factors difficult to predict, making their value highly volatile.

In addition to the risks associated with other asset-backed securities as described above, mortgage-backed securities are subject to the general risks associated with investing in real estate securities; that is, they may lose value if the value of the underlying real estate to which a pool of mortgages relates declines. In addition, mortgage-backed securities comprised of subprime mortgages and investments in other asset-backed securities collateralized by subprime loans may be subject to a higher degree of credit risk and valuation risk. Additionally, such securities may be subject to a higher degree of liquidity risk, because the liquidity of such investments may vary dramatically over time.

In addition, CMOs, which are mortgage-backed securities that are typically collateralized by mortgage loans or mortgage pass-through securities, and multi-class pass-through securities, are commonly structured as equity interests in a trust composed of mortgage loans or other mortgage-backed securities. CMOs are usually issued in multiple classes, often referred to as "tranches," with each tranche having a specific fixed or floating coupon rate and stated maturity or final distribution date. Under the traditional CMO structure, the cash flows generated by the mortgages or mortgage pass-through securities in the collateral pool are used to first pay interest and then pay principal to the holders of the CMOs. Subject to the provisions of individual CMO issues, the cash flow generated by the underlying collateral (to the extent it exceeds the amount required to pay the stated interest) is used to retire the bonds. As a result of these and other structural characteristics, CMOs entail greater market, prepayment and liquidity risks than other mortgage-backed securities, and may be more volatile or less liquid than other mortgage-backed securities.

Mortgage-backed securities may be issued by governments or their agencies and instrumentalities, such as, in the United States, Ginnie Mae, Fannie Mae and Freddie Mac. They may also be issued by private issuers but represent an interest in or are collateralized by pass-through securities issued or guaranteed by a government or one of its agencies or instrumentalities. In addition, mortgage-backed securities may be issued by private issuers and be collateralized by securities without a government guarantee. Such securities usually have some form of private credit enhancement.

**• Municipal Securities Risk** *(MBS ETF only).* Municipal securities may be general obligation or revenue bonds and typically are issued to finance public projects, such as roads or public buildings, to pay general operating expenses or to refinance outstanding debt. Municipal securities may also be issued for private activities, such as housing, medical and educational facility construction or for privately owned industrial development and pollution control projects. General obligation bonds are backed by the full faith and credit and taxing authority of the issuer and may be repaid from any revenue source. Revenue bonds may be repaid only from the revenues of a specific facility or source. The Fund also may purchase municipal securities that represent lease obligations. These carry special risks because the issuer of the bonds may not be obligated to appropriate money annually to make payments under the lease. The yields on municipal bonds are dependent on a variety of factors, including prevailing interest rates and the condition of the general money market and the municipal bond market, the size of a particular offering, the maturity of the obligation and the rating of the issuer. The market value of municipal bonds will vary with changes in interest rate levels and as a result of changing evaluations of the ability of bond issuers to meet interest and principal payments.

Certain municipal securities may not be registered with the SEC or any state securities commission and will not be listed on any national securities exchange. The amount of public information available about the municipal securities to which the Fund may be economically exposed is generally less than that for corporate bonds and certain other securities, and the investment performance of the Fund's investments in municipal securities may therefore be dependent on the analytical abilities of the Adviser. The secondary market for municipal securities, particularly non-investment grade bonds, also tends to be less well-developed or liquid than many other securities markets, which may adversely affect the Fund's ability to sell such securities at attractive prices.

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In addition, certain state and municipal governments that issue securities may be under significant economic and financial stress and may not be able to satisfy their obligations. The ability of municipal issuers to make timely payments of interest and principal may be diminished during general economic downturns and as governmental cost burdens are reallocated among Federal, state and local governments. The taxing power of any governmental entity may be limited by provisions of state constitutions or laws and an entity's credit generally will depend on many factors, including the entity's tax base, the extent to which the entity relies on Federal or state aid, and other factors which are beyond the entity's control.

In addition, issuers of municipal securities might seek protection under the bankruptcy laws. In the event of bankruptcy of such an issuer, holders of municipal bonds could experience delays in collecting principal and interest and such holders may not, in all circumstances, be able to collect all principal and interest to which they are entitled. To enforce its rights in the event of a default in the payment of interest or repayment of principal, or both, the Fund may take possession of and manage the assets securing the issuer's obligations on such securities, which may increase the Fund's operating expenses.

**• NAV Risk** *(UltraShort Income ETF only)*.** The Fund is not a money market fund, does not attempt to maintain a stable NAV, and is not subject to the rules that govern the quality, maturity, liquidity and other features of securities that money market funds may purchase. Under normal conditions, the Fund's investment may be more susceptible than a money market fund to interest rate risk, valuation risk, credit risk, and other risks relevant to the Fund's investments. The Fund's NAV per share will fluctuate.

**• Non-Diversification Risk** *(MBS ETF only)*.** The Fund is classified as "non-diversified" under the 1940 Act. A non-diversified fund is not limited by the 1940 Act with regard to the percentage of its assets that may be invested in the securities of a single issuer. Consequently, the securities of a particular issuer or a small number of issuers may constitute a significant portion of the Fund's investment portfolio. This may adversely affect the Fund's performance or subject the Fund's shares to greater price volatility than that experienced by more diversified investment companies.

**• Other Investment Companies Risks.** Because the Funds generally invest in other investment companies (including those that are part of the same group of investment companies as the Funds ("affiliated underlying funds")) that invest in fixed-income securities, risks associated with investments in other investment companies will include fixed-income securities risks. In addition to the brokerage costs associated with a Fund's purchase and sale of the underlying securities, ETFs and mutual funds incur fees that are separate from those of a Fund. As a result, a Fund's shareholders will indirectly bear a proportionate share of the operating expenses of the ETFs and mutual funds, in addition to Fund expenses. Because a Fund is not required to hold shares of underlying funds for any minimum period, it may be subject to, and may have to pay, short-term redemption fees imposed by the underlying funds. ETFs are subject to additional risks such as the fact that the market price of its shares may trade above or below its NAV or an active market may not develop. A Fund has no control over the investments and related risks taken by the underlying funds in which it invests.

In addition to risks generally associated with investments in investment company securities, ETFs are subject to the following risks that do not apply to traditional mutual funds: (i) the market price of an ETF's shares may be above or below its NAV; (ii) an active trading market for an ETF's shares may not develop or be maintained; (iii) the ETF may employ an investment strategy that utilizes high leverage ratios; (iv) trading of an ETF's shares may be halted if the listing exchange's officials deem such action appropriate; and (v) underlying ETF shares may be de-listed from the exchange or the activation of market-wide "circuit breakers" (which are tied to large decreases in stock prices) may temporarily stop stock trading.

A Fund's investments in other investment companies may include investments in closed-end funds ("CEFs"). Shares of CEFs frequently trade at a price per share that is less than a fund's NAV. There can be no assurance that the market discount on shares of any CEF purchased by a Fund will ever decrease or that when the Fund seeks to sell shares of a CEF it can receive the NAV of those shares. CEFs have lower levels of daily volume when compared to open-end companies. There are greater risks involved in investing in securities with limited market liquidity.

The Adviser may be subject to potential conflicts of interest in allocating a Fund's assets to underlying funds, such as a potential conflict in selecting affiliated underlying funds over unaffiliated underlying funds. In addition, a Fund's portfolio managers may be subject to potential conflicts of interest in allocating the Fund's assets among underlying funds, as certain of the Fund's portfolio managers may also manage an affiliated underlying fund in which the Fund may invest. Both the Adviser and a Fund's portfolio managers have a fiduciary duty to a Fund to act in the Fund's best interest when selecting underlying funds. Under the oversight of the Board of Trustees, the Adviser will carefully analyze any such potential conflicts of interest and will take steps to minimize and, where possible, eliminate them.

Additionally, to the extent that a Fund serves as an "acquired fund" to another affiliated or unaffiliated investment company, the Fund's ability to invest in other investment companies and private funds may be limited and, under these circumstances, the Fund's investments in other investment companies and private funds will be consistent with applicable law and/or exemptive rules adopted by or exemptive orders obtained from the SEC. For example, to the extent the Fund serves as an acquired fund in a fund of funds arrangement in reliance on Rule 12d1-4 under the Investment Company Act, the Fund would be prohibited from purchasing or otherwise acquiring the securities of an investment company or private fund if, after such purchase or acquisition, the aggregate value of the Fund's investments in such investment companies and private funds would exceed 10% of the value of the Fund's total assets, subject to limited exceptions (including for investments in money market funds).

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***•* Portfolio Turnover Risk.** The Fund's annual portfolio turnover rate may vary greatly from year to year, as well as within a given year. The portfolio turnover rate is not considered a limiting factor in the execution of investment decisions for the Fund. High portfolio turnover may result in the realization of net short-term capital gains by the Fund which, when distributed to shareholders, will be taxable as ordinary income. A high portfolio turnover may increase the Fund's current and accumulated earnings and profits, resulting in a greater portion of the Fund's distributions being treated as a dividend to the Fund's shareholders. In addition, a higher portfolio turnover rate results in correspondingly greater brokerage and other transactional expenses that are borne by the Fund.

**• Preferred Securities Risk** *(High Yield ETF only)*.** Preferred securities are subject to risks associated with both equity and debt instruments. Because many preferred securities allow the issuer to convert its preferred stock into common stock, preferred securities are often sensitive to declining common stock values. In addition, certain preferred securities contain provisions that allow an issuer to skip or defer distributions, which may be more likely when the issuer is less able to make dividend payments as a result of financial difficulties. Preferred securities can also be affected by changes in interest rates, especially if dividends are paid at a fixed rate, and may also include call features in favor of the issuer. In the event of redemptions by the issuer, the Fund may not be able to reinvest the proceeds at comparable or favorable rates of return. Preferred securities are generally subordinated to bonds and other debt securities in an issuer's capital structure in terms of priority for corporate income and liquidation payments, and may trade less frequently and in a more limited volume and may be subject to more abrupt or erratic price movements than many other securities.

**• Prepayment Risk.** When interest rates decline, fixed income securities with stated interest rates may have their principal paid earlier than expected. This may result in a Fund having to reinvest that money at lower prevailing interest rates, which can reduce the returns of the Fund.

**• Rating Agencies Risk.** Rating agencies may fail to make timely changes in credit ratings and an issuer's current financial condition may be better or worse than a rating indicates. In addition, rating agencies are subject to an inherent conflict of interest because they are often compensated by the same issuers whose securities they grade.

**• Regulatory and Legal Risks.** U.S. and non-U.S. government agencies and other regulators regularly adopt new regulations and legislatures enact new statutes that affect the investments held by a Fund, the strategies used by a Fund or the level of regulation or taxation that applies to a Fund. These statutes and regulations and any future statutes and regulations may impact the investment strategies, performance, costs and operations of a Fund or the taxation of its shareholders. Changes in government legislation, regulation and/or intervention may change the way the Adviser or a Fund is regulated, affect the expenses incurred directly by a Fund and the value of its investments and limit and/or preclude a Fund's ability to implement, or increase a Fund's costs associated with implementing, its investments strategies. Changes to tax laws and regulations may also result in certain tax consequences for a Fund and/or investors. Government regulation may change frequently and may have significant adverse consequences. Moreover, government regulation may have unpredictable and unintended effects. In addition to exposing a Fund to potential new costs and expenses, additional regulation or changes to existing regulation may also require changes to a Fund's investment practices. The Adviser cannot predict the effects of any new governmental regulation that may be implemented, and there can be no assurance that any new governmental regulation will not adversely affect a Fund's ability to achieve its respective investment objective.

**• REIT Risk** *(Income ETF only)*.** Investments in REITs involve unique risks. REITs may have limited financial resources, may trade less frequently and in limited volume, and may be more volatile than other securities. The value of a REIT may also rise and fall in response to the management skill and creditworthiness of the issuer. In addition, to the extent the Fund holds interests in REITs, it is expected that investors in the Fund will bear two layers of asset-based management fees and expenses (directly at the Fund level and indirectly at the REIT level). The risks of investing in REITs include certain risks associated with the direct ownership of real estate and the real estate industry in general. These include risks related to general, regional and local economic conditions; fluctuations in interest rates and property tax rates; shifts in zoning laws, environmental regulations and other governmental action such as the exercise of eminent domain; cash flow dependency; increased operating expenses; lack of availability of mortgage funds; losses due to natural disasters; overbuilding; losses due to casualty or condemnation; changes in property values and rental rates; the management or development of properties, which may be subject to mortgage loans that are subject to the risk of default; and other factors.

**• Repurchase Agreement Risks.** Repurchase agreements typically involve the acquisition by a Fund of fixed-income securities from a selling financial institution such as a bank or broker-dealer. The agreement provides that a Fund will sell the securities back to the institution at a fixed time in the future. Repurchase agreements involve the risk that a seller will become subject to bankruptcy or other insolvency proceedings or fail to repurchase a security from a Fund. In such situations, a Fund may incur losses including as a result of (i) a possible decline in the value of the underlying security during the period while a Fund seeks to enforce its rights thereto, (ii) a possible lack of access to income on the underlying security during this period, and (iii) expenses of enforcing its rights.

**• Residential Loans and Mortgages Risk** *(Income ETF and MBS ETF only)*.** The Fund may acquire residential loans and mortgages (including through participations, assignments and whole loans) from third-party mortgage originators. In addition to interest

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rate, default and other risks of fixed income securities, residential loans and mortgages carry additional risks, including the possibility that the quality of the collateral may decline in value and the potential for the liquidity of residential loans and mortgages to vary over time. In addition, in the event that a loan is foreclosed on, the Fund could become the owner (in whole or in part) of any collateral, which may include, among other things, real estate or other real or personal property, and the Fund would bear the costs and liabilities of owning, holding or disposing of such property. These risks are greater for subprime residential and mortgage loans.

The Fund may also experience difficulty disposing of loans, which do not trade in a liquid market and typically can only be sold to a limited number of institutional investors. The absence of a liquid market for these instruments could adversely impact their value and may inhibit the Fund's ability to dispose of them at times when it would be desirable to do so, including in response to particular economic events, such as a deterioration in the creditworthiness of the borrower. Because they do not trade in a liquid market residential loans may also be difficult for the Fund to value.

Investing in loans may subject the Fund to greater levels of credit risk, call risk, settlement risk and liquidity risk than other types of fixed income instruments. Transactions involving loans may also involve greater costs than transactions involving more actively traded securities. In addition, a number of factors, including restrictions on transfers, irregular trading activity and wide bid/ask spreads, and extended trade settlement periods may make it more difficult for the Fund to acquire, dispose of or accurately price such instruments relative to other types of investments. As a result, the Fund may not be able to realize the full value for loans and there may be extended delays in the Fund's receipt of proceeds from the sale of a loan, which could adversely impact the Fund's performance. Because transactions in many loans are subject to extended trade settlement periods, proceeds from the sale of a loan may not be immediately available to the Fund. As a result, proceeds related to the sale of loans may not be available to make additional investments or to meet the Fund's repurchase obligations for a period after the sale of the loans, and, as a result, the Fund may have to sell other investments or engage in borrowing transactions if necessary to raise cash to meet its obligations.

When acquiring residential loans, the Fund relies on third-party mortgage originators to originate mortgage loans that comply with applicable law. Mortgage loan originators and brokers are subject to strict and evolving consumer protection laws and other legal obligations with respect to the origination of residential mortgage loans. These laws may be highly subjective and open to interpretation and, as a result, a regulator or court may determine that that there has been a violation where an originator or servicer of mortgage loans reasonably believed that the law or requirement had been satisfied. Failure or alleged failure of originators or servicers to comply with these laws and regulations could subject the Fund, as an assignee or purchaser of these loans or securities backed by these loans, to, among other things, delays in foreclosure proceedings, increased litigation expenses, monetary penalties and defenses to foreclosure, including by recoupment or setoff of finance charges and fees collected, and in some cases could also result in rescission of the affected residential mortgage loans, which could adversely impact the Fund's business and financial results. While some of these laws may not explicitly hold the Fund responsible for the legal violations of these third parties, federal and state agencies and private litigants have increasingly sought to impose such liability. Various regulators and plaintiffs' lawyers have also sought to hold assignees of mortgage loans liable for the alleged violations of the originating lender under theories of express or implied assignee liability. Accordingly, the Fund may be subject to fines, penalties or civil liability based upon the conduct of the mortgage lenders that originated the mortgage loans such Fund holds.

Despite the Fund's efforts to manage credit risk related to the residential mortgage loans the Fund acquires, there are many aspects of credit risk that the Fund cannot control. The Fund's due diligence process may not be effective at preventing or limiting compliance violations or borrower delinquencies and defaults, and the loan servicing companies that service the mortgage loans may not comply with applicable servicing regulations or investor requirements. Prior to acquiring loans, the Fund will perform due diligence and the Fund will rely on resources and data available to it from the seller, which may be limited. The Fund's due diligence efforts may not detect matters that could lead to losses. If the Fund's due diligence processes are not adequate, and the Fund fails to detect certain loan defects or compliance issues related to origination, the Fund may incur losses. The Fund could also incur losses if a counterparty that sold the Fund a loan is unwilling or unable (e.g., due to its financial condition) to repurchase that loan or asset or pay damages to the Fund if the Fund determines subsequent to purchase that one or more of the representations or warranties made to the Fund in connection with the sale was inaccurate. There may be less readily available information about loans and their underlying borrowers than is the case for other types of investments and issuers. In addition, because loans may not be considered "securities," investors in loans, such as the Fund, may not be entitled to rely on the anti-fraud protections of the federal securities laws, although they may be entitled to certain contractual remedies.

The mortgage loans that the Fund purchases, and in which the Fund directly and indirectly invests through RMBS, CMBS or other investments, may be concentrated in a specific state or states. Weak economic conditions in these locations or any other location (which may or may not affect real property values), may affect the ability of borrowers to repay their mortgage loans on time. Properties in certain jurisdictions may be more susceptible than homes located in other parts of the country to certain types of uninsurable hazards, such as earthquakes, floods, hurricanes, wildfires and other natural disasters. Declines in the residential real estate market of a particular jurisdiction may reduce the values of properties located in that jurisdiction, which

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would result in an increase in the loan-to-value ratios. Any increase in the market value of properties located in a particular jurisdiction would reduce the loan-to-value ratios of the mortgage loans and could, therefore, make alternative sources of financing available to the borrowers at lower interest rates, which could result in an increased rate of prepayment of the mortgage loans.

**• Reverse Repurchase Agreement Risks.** A reverse repurchase agreement is the sale by a Fund of a debt obligation to a party for a specified price, with the simultaneous agreement by the Fund to repurchase that debt obligation from that party on a future date at a higher price. Similar to borrowing, reverse repurchase agreements provide a Fund with cash for investment purposes, which creates leverage and subjects a Fund to the risks of leverage, including increased volatility. Reverse repurchase agreements also involve the risk that the other party may fail to return the securities in a timely manner or at all. A Fund could lose money if it is unable to recover the securities and the value of collateral held by the Fund, including the value of the investments made with cash collateral, is less than the value of securities. Reverse repurchase agreements also create Fund expenses and require that a Fund have sufficient cash available to purchase the debt obligations when required. Reverse repurchase agreements also involve the risk that the market value of the debt obligation that is the subject of the reverse repurchase agreement could decline significantly below the price at which a Fund is obligated to repurchase the security. In the event the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, a Fund's use of the proceeds from the sale of the securities may be restricted pending a determination by the other party, or its trustee or receiver, whether to enforce a Fund's obligations to repurchase the securities. Reverse repurchase agreements also may be viewed as borrowings made by the Fund and are a form of leverage which also may increase the volatility of the Fund.

**• RIC-Related Risks of Investments Generating Non-Cash Taxable Income** *(High Yield ETF and MBS ETF only)*. Certain of a Fund's investments, particularly, debt obligations, such as zero coupon bonds, that will be treated as having "market discount" and/or original issue discount ("OID") for U.S. federal income tax purposes and certain CLOs that may be considered passive foreign investment companies or controlled foreign corporations, will require the Fund to recognize taxable income in a taxable year in excess of the cash generated on those investments during that year. In particular, a Fund expects to invest in debt obligations that will be treated as having "market discount" and/or OID for U.S. federal income tax purposes. Additionally, some of the structured products or issuers in which a Fund invests may be considered passive foreign investment companies, or under certain circumstances, controlled foreign corporations. Because a Fund may be required to recognize income in respect of these investments before, or without receiving, cash representing such income, the Fund may have difficulty satisfying the annual distribution requirements applicable to RICs and avoiding Fund-level U.S. federal income and/or excise taxes. Accordingly, a Fund may be required to sell assets, including at potentially disadvantageous times or prices, raise additional debt or equity capital, make taxable distributions of its shares or debt securities, or reduce new investments, to obtain the cash needed to make these income distributions. If a Fund liquidates assets to raise cash, the Fund may realize gain or loss on such liquidations; in the event the Fund realizes net capital gains from such liquidation transactions, the Fund shareholders may receive larger capital gain distributions than they would in the absence of such transactions.

**• Risks Relating to a Fund's RIC Status.** To qualify and remain eligible for the special tax treatment accorded to a RIC and its shareholders under the Code, a Fund must meet certain source-of-income, asset diversification and annual distribution requirements. Very generally, to qualify as a RIC, a Fund must derive at least 90% of its gross income for each taxable year from dividends, interest, payments with respect to certain securities loans, gains from the sale or other disposition of stock, securities or foreign currencies, net income from certain publicly traded partnerships or other income derived with respect to its business of investing in stock or other securities. A Fund must also meet certain asset diversification requirements at the end of each quarter of each of its taxable years. Failure to meet these diversification requirements on the last day of a quarter may result in a Fund having to dispose of certain investments quickly to prevent the loss of RIC status. Any such dispositions could be made at disadvantageous prices or times, and may result in substantial losses to a Fund. In addition, to be eligible for the special tax treatment accorded RICs, a Fund must meet the annual distribution requirement, requiring it to distribute with respect to each taxable year an amount at least equal to 90% of the sum of its "investment company taxable income" (generally its taxable ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, and determined without regard to any deduction for dividends paid) and its net tax-exempt income (if any), to its shareholders. If a Fund fails to qualify as a RIC for any reason and becomes subject to corporate tax, the resulting corporate taxes could substantially reduce its net assets, the amount of income available for distribution and the amount of its distributions. Such a failure would have a material adverse effect on a Fund and its shareholders. In addition, a Fund could be required to recognize unrealized gains, pay substantial taxes and interest and make substantial distributions to re-qualify as a RIC.

**• Sector Risk.** To the extent a Fund invests more heavily in particular sectors of the economy, its performance will be especially sensitive to developments that significantly affect those sectors.

***•* Structured Products Risks*.*** A Fund may invest in Structured Products, including CLOs, CDOs, CMOs, CBOs, and other asset-backed securities and debt securitizations. Structured Products are subject to the normal interest rate, default and other risks associated with fixed-income securities and asset-backed securities. Additionally, the risks of an investment in a Structured Product depend largely on the type of the collateral securities and the class of the Structured Product or other asset-backed security in which a Fund invests. A Fund generally may have the right to receive payments only from the Structured Product, and

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generally does not have direct rights against the issuer or the entity that sold the underlying collateral assets. Such collateral may be insufficient to meet payment obligations and the quality of the collateral may decline in value or default. Also, the class of the Structured Product may be subordinate to other classes, values may be volatile, and disputes with the issuer may produce unexpected investment results.

The ability of the Structured Product to make distributions will be subject to various limitations, including the terms and covenants of the debt it issues. For example, performance tests (based on interest coverage or other financial ratios or other criteria) may restrict a Fund's ability, as holder of the equity interests in a Structured Product, to receive cash flow from these investments. There is no assurance any such performance tests will be satisfied. Also, a Structured Product may take actions that delay distributions in order to preserve ratings and to keep the cost of present and future financings lower or the Structured Product may be obligated to retain cash or other assets to satisfy over-collateralization requirements commonly provided for holders of the Structured Product's debt. As a result, there may be a lag, which could be significant, between the repayment or other realization on a loan or other assets in, and the distribution of cash out of, a Structured Product, or cash flow may be completely restricted for the life of the Structured Product. If a Fund does not receive cash flow from any such Structured Product that is necessary to satisfy the annual distribution requirement for maintaining a Fund's RIC status, and a Fund is unable to obtain cash from other sources necessary to satisfy this requirement, a Fund could fail to maintain its status as a RIC, which would have a material adverse effect on a Fund's financial performance.

Structured Products are typically privately offered and sold, and thus, are not registered under the securities laws, which means less information about the security may be available as compared to publicly offered securities and only certain institutions may buy and sell them. As a result, investments in certain Structured Products or other asset-backed securities may be characterized by a Fund as illiquid securities. An active dealer market may exist for Structured Products that can be resold in Rule 144A transactions, but there can be no assurance that such a market will exist or will be active enough for a Fund to sell such securities. A Fund may invest in any tranche of a Structured Product, including the subordinated/equity tranches. If applicable accounting pronouncements or SEC staff guidance require a Fund to consolidate the Structured Product's financial statements with a Fund's financial statements, any debt issued by the Structured Product would be generally treated as if it were issued by a Fund. Further, there can be no assurance that a bankruptcy court, in the exercise of its broad equitable powers, would not order that a Fund's assets and liabilities be substantively consolidated with those of a Structured Product, rather than kept separate, and that creditors of the Structured Product would have claims against the consolidated bankruptcy estate (including a Fund's assets). If a Structured Product is not consolidated with a Fund, a Fund's only interest in the Structured Product will be the value of its retained subordinated interest and the income allocated to it, which may be more or less than the cash a Fund received from the Structured Product, and none of the Structured Product's liabilities would be reflected as a Fund's liabilities. If the assets of a Structured Product are not consolidated with a Fund's assets and liabilities, then the leverage incurred by such Structured Product may or may not be treated as borrowings by a Fund for purposes applicable limitations on a Fund's ability to issue debt.

In addition to the general risks associated with fixed-income securities discussed herein, Structured Products carry additional risks, including, but not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii) the quality of the collateral may default, decline in value or quality or be downgraded by a rating agency; (iii) the possibility that the investments in Structured Products are subordinate to other classes or tranches thereof; (iv) the complex structure of the security may not be fully understood at the time of investment and may produce disputes among investors or with the issuer or unexpected investment results; and (v) a forced "fire sale" liquidation may occur due to technical defaults such as coverage test failures.

The activities of the issuers of certain Structured Products will generally be directed by a collateral manager. In a Fund's capacity as holder of interests in such a Structured Product, a Fund is generally not able to make decisions with respect to the management, disposition or other realization of any investment, or other decisions regarding the business and affairs, of the Structured Product. Consequently, the success of the securitizations in will depend, in part, on the financial and managerial expertise of the collateral manager.

To the extent that an affiliate of the Adviser serves as the sponsor and/or collateral manager of a Structured Product in which a Fund invests, or the Adviser or its affiliates hold other interests in Structured Products in which a Fund invests, a Fund may be limited in its ability to participate in certain transactions with the Structured Product and may not be able to dispose of its interests in the Structured Product if no secondary market exists for the interests. Even if a secondary market exists, the Adviser or its affiliates at times may possess material non-public information that may restrict a Fund's ability to dispose of its interests in the Structured Product. A Fund does not currently contemplate making investments in any specific investments sponsored by the Adviser or an affiliate; however, to the extent a Fund does, it will do so only as permitted under the 1940 Act and the rules thereunder.

To the extent the Fund invests in the equity tranches of a Structured Product, such investments typically represent the first loss position, are unrated and are subject to greater risk. To the extent that any losses are incurred by the Structured Product in respect of any collateral, such losses will be borne first by the owners of the equity interests, which may include the Fund. Any equity interests that a Fund holds in a Structured Product will not be secured by the assets of the Structured Product or

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guaranteed by any party, and a Fund will rank behind all creditors of the Structured Product, including the holders of the secured notes issued by the Structured Product. Equity interests are typically subject to certain payment restrictions in the indenture governing the senior tranches. Accordingly, equity interests may not be paid in full, may be adversely impacted by defaults by a relatively small number of underlying assets held by the Structured Product and may be subject to up to 100% loss. Structured Products may be highly levered, and therefore equity interests may be subject to a higher risk of loss, including the potential for total loss. The market value of equity interests may be significantly affected by a variety of factors, including changes in interest rates, changes in the market value of the collateral held by the securitization, defaults and recoveries on that collateral and other risks associated with that collateral. The leveraged nature of equity interest is likely to magnify these impacts. Equity interests typically do not have a fixed coupon and payments on equity interests will be based on the income received from the underlying collateral and the payments made to the senior tranches, both of which may be based on floating rates. While the payments on equity interest will be variable, equity interests may not offer the same level of protection against changes in interest rates as other floating rate instruments. Equity interests are typically illiquid investments and subject to extensive transfer restrictions, and no party is under any obligation to make a market for equity interests. At times, there may be no market for equity interests, and a Fund may not be able to sell or otherwise transfer equity interests at their fair value, or at all, in the event that it determines to sell them.

**• Uncertain Tax Treatment.** A Fund may invest a portion of its net assets in below investment grade instruments. Investments in these types of instruments and certain other instruments may present special tax issues for the Fund. U.S. federal income tax rules are not entirely clear about issues such as when the Fund may cease accruing interest, OID or market discount, when and to what extent deductions may be taken for bad debts or worthless instruments, how payments received on obligations in default should be allocated between principal and income and whether exchanges of debt obligations in a bankruptcy or workout context are taxable. Although a Fund will seek to address these and other issues to the extent necessary to seek to ensure that it distributes sufficient income that it does not become subject to U.S. federal income or excise tax, no assurances can be given that the Fund will not be adversely affected as a result of such issues.

**• Unrated Securities Risks.** The Fund may purchase unrated securities which are not rated by a rating agency if the Adviser determines that the security is of comparable quality to a rated security that the Fund may purchase. Unrated securities may be less liquid than comparable rated securities and involve the risk that the Adviser may not accurately evaluate the security's comparative credit rating. Analysis of creditworthiness of issuers of high yield securities may be more complex than for issuers of higher-quality debt securities. To the extent that the Fund purchases unrated securities, the Fund's success in achieving its investment objective may depend more heavily on the Adviser's creditworthiness analysis than if the Fund invested exclusively in rated securities.

**• U.S. Government Securities Risks.** Some obligations issued or guaranteed by U.S. government agencies, instrumentalities or GSEs, including, for example, pass-through certificates issued by Ginnie Mae, are supported by the full faith and credit of the U.S. Treasury. Other obligations issued by or guaranteed by federal agencies or GSEs, such as securities issued by Fannie Mae or Freddie Mac, are supported by the discretionary authority of the U.S. government to purchase certain obligations of the federal agency or GSE, while other obligations issued by or guaranteed by federal agencies or GSEs, such as those of the Federal Home Loan Banks, are supported by the right of the issuer to borrow from the U.S. Treasury. The maximum potential liability of the issuers of some U.S. government securities held by a Fund may greatly exceed their current resources, including their legal right to support from the U.S. Treasury. It is possible that these issuers will not have the funds to meet their payment obligations in the future.

**PORTFOLIO HOLDINGS INFORMATION**

Information about the Funds' daily portfolio holdings is available at www.angeloakcapital.com. A description of the Funds' policies and procedures with respect to the disclosure of the Funds' portfolio holdings is available in the Funds' Statement of Additional Information ("SAI").

**MANAGEMENT OF THE FUNDS**

**Adviser.** Angel Oak Capital Advisors, LLC ("the Adviser"), 980 Hammond Drive, Suite 200, Atlanta, Georgia 30328, serves as investment adviser to the Funds. The Adviser has overall supervisory management responsibility for the general management and investment of each Fund's portfolio. The Adviser was formed in 2009 and provides advisory services to registered investment companies, unregistered funds, institutions, and other investors. As of January 31, 2026, the Adviser had assets under management of approximately $11 billion. The Adviser is wholly-owned by Angel Oak Asset Management Holdings, LLC. On October 1, 2025, Brookfield Asset Management Ltd. acquired a majority of Angel Oak Companies, LP, the parent of Angel Oak Asset Management Holdings, LLC, itself the parent of the Adviser. A discussion of the factors that the Board of Trustees considered in approving the Funds' advisory agreement is available in the Funds' <u>[semi-annual report on Form N-CSR](https://www.sec.gov/ix?doc=/Archives/edgar/data/1612930/000113322825010505/afot-efp17668_ncsrs.htm)</u> for the period ended July 31, 2025.

The Income ETF is required to pay the Adviser a fee equal to 0.99% of the Fund's average daily net assets. The UltraShort Income ETF is required to pay the Adviser a fee equal to 0.55% of the Fund's average daily net assets. The High Yield ETF is required to pay

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the Adviser a fee equal to 0.55% of the Fund's average daily net assets. The MBS ETF is required to pay the Adviser a fee equal to 0.79% of the Fund's average daily net assets. Under the advisory agreement, the Adviser is responsible for substantially all the expenses of the Funds (including expenses of the Trust relating to the Funds), except for the advisory fees, payments under a Fund's 12b-1 plan (if any), interest expenses, dividend and interest expenses related to short sales, taxes, acquired fund fees and expenses (other than fees for funds advised by the Adviser and/or its affiliates), and litigation and potential litigation and other extraordinary expenses not incurred in the ordinary course of a Fund's business.

The Adviser has contractually agreed to waive its fees and/or reimburse certain expenses (exclusive of interest expenses, dividend and interest expenses related to short sales, taxes, acquired fund fees and expenses (other than fees for funds advised by the Adviser which are waived), brokers' commissions and any other transaction related expenses and fees arising out of transactions effected on behalf of the Fund, expenses, expenses of shareholder proposals, contested elections, or non-routine shareholder meetings, and other non-routine expenses or other extraordinary expenses not incurred in the ordinary course of the Fund's business) to limit the Total Annual Fund Operating Expenses after Fee Waiver/Expense Reimbursement to 0.79% of the Income ETF's average daily net assets, 0.49% of the MBS ETF's average daily net assets, and 0.34% of the UltraShort Income ETF's average daily net assets (the "Expense Limits"), through September 30, 2027. The Expense Limits exclude certain expenses (e.g., interest on borrowings), and consequently, each Fund's Total Annual Fund Operating Expenses after Fee Waiver/Expense Reimbursement may be higher than such Fund's Expense Limit. The contractual waivers and expense reimbursements may be changed or eliminated at any time by the Board of Trustees, on behalf of a Fund, upon 60 days' written notice to the Adviser. The contractual waivers and expense reimbursements may not be terminated by the Adviser without the consent of the Board of Trustees. The Adviser may recoup from a Fund any waived amount or reimbursed expenses with respect to the Fund pursuant to this agreement if such recoupment does not cause the Fund to exceed the current Expense Limit or the Expense Limit in place at the time of the waiver or reimbursement (whichever is lower) and the recoupment is made within three years after the end of the month in which the Adviser incurred the expense.

After fee waivers, expense reimbursements, and recoupments, the advisory fee paid to the Adviser for the fiscal year ended January 31, 2026 was equal to 0.79% of the Income ETF's average daily net assets, 0.34% of the UltraShort Income ETF's average daily net assets, 0.55% of the High Yield ETF's average daily net assets, and 0.49% of the MBS ETF's average daily net assets.

In addition, the Adviser has contractually agreed through at least September 30, 2027 to waive the amount of a Fund's management fee to the extent necessary to offset the proportionate share of the management fees incurred by a Fund through its investment in an underlying fund for which the Adviser also serves as investment adviser. This arrangement may only be changed or eliminated by the Board of Trustees upon 60 days' written notice to the Adviser.

**Management of any Subadviser to a Fund.** The Funds, the Trust and the Adviser have obtained an exemptive order with respect to the Funds that permits the Funds to operate in a "manager of managers" structure whereby the Adviser, subject to certain conditions, can hire new subadvisers for the Funds, and materially amend the terms of subadvisory agreements with subadvisers, each subject to Board approval but without obtaining prior shareholder approval. Consequently, under the exemptive order, the Adviser has the ultimate responsibility (subject to oversight by the Board) to oversee the subadvisers and recommend their hiring, termination, and replacement. Within 90 days of retaining a new subadviser, shareholders of the Fund(s) will receive notification of the change. The manager of managers structure enables the Funds to operate with greater efficiency and without incurring the expense and delays associated with obtaining shareholder approval of subadvisory agreements. The structure does not permit investment advisory fees paid by the Funds to be increased or change the Adviser's obligations under its investment advisory agreement with the Trust. Furthermore, any subadvisory agreements with affiliates of the Funds or the Adviser will require shareholder approval.

**PORTFOLIO MANAGERS**

The Adviser's investment team includes:

Ward Bortz is an ETF Portfolio Manager at Angel Oak Capital and a Portfolio Manager of each Fund. Ward's portfolio management responsibilities are focused on the firm's ETFs, asset allocation across the Adviser's fund complex, and strategy design. He has been in the financial services industry since 2006. Before joining the Adviser, Ward was a senior investment professional at some of the largest asset managers in the world, including Invesco, BlackRock, and Dimensional Fund Advisors. He worked in a variety of roles including portfolio management, research, trading and strategy across fixed income, equities, and alternatives. Ward holds a B.A. degree in Economics from the University of Chicago and an M.B.A. focused on finance and asset pricing from Columbia Business School.

Nichole Hammond, CFA<sup>®</sup>, is a Senior Portfolio Manager of the Adviser and a Portfolio Manager of the High Yield ETF. She has over two decades of experience in the corporate bond market across multiple industrial and financial subsectors. Prior to joining Angel Oak Capital, Nichole was a Senior Analyst for Allspring Global Investments' Core Fixed Income team, responsible for research and investment strategy in the corporate bond portfolio with a focus on global financials. Previously, she was a research analyst and made investment recommendations for the investment grade portfolio at GE Financial Assurance in Seattle, where she began her investment career in 2000. Nichole holds a B.A. degree in Business Administration, specializing in Finance, from the University of Washington. She also holds the Chartered Financial Analyst (CFA®) designation and is a member of the CFA Institute.

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Matthew R. Kennedy, CFA<sup>®</sup>, is a Senior Portfolio Manager of the Adviser and a Portfolio Manager of the High Yield ETF. Prior to Angel Oak, Matthew was the Director of Rainier Investment Management's fixed income management team and served as a Portfolio Manager and Analyst. Previously, he was a Senior Analyst and made investment recommendations for investment grade, high yield, and private placement portfolios at GE Financial Assurance in Seattle, where he began his investment career in 1995. From 1991 to 1994, he was a CPA and auditor with Deloitte & Touche. Matthew holds a B.A. degree in Business Administration, with specializations in Finance and Accounting from Washington State University. He also holds the Chartered Financial Analyst (CFA®) designation and is a member of the CFA Institute and the Seattle Society of Financial Analysts.

Namit Sinha is Chief Investment Officer of the Adviser and a Portfolio Manager of each Fund. He has extensive mortgage-credit expertise and focuses on managing non-qualified mortgage and commercial investment strategies. Namit also focuses on opportunities in other areas such as prime jumbo mortgages, reperforming loan strategies, and mortgage servicing rights. He has over 20 years of experience in fixed income products including structured credit. Prior to Angel Oak, Namit spent four years as Senior Vice President at Canyon Capital and established the residential loan trading business in addition to covering its structured products operations. Prior to joining Canyon, Namit worked at Nomura as Executive Director of Mortgage Trading and was involved in the acquisition and financing of non-performing loans, reperforming loans, non-qualified mortgages, and prime jumbo loans. Prior to that, Namit worked at both Lehman Brothers and Barclays as a non-agency whole loan trader. Namit holds an M.S. from Rutgers University and a B. Tech degree from the Indian Institute of Technology Bombay in Mumbai, India.

Clayton Triick, CFA<sup>®</sup>, is Head of Portfolio Management, Public Strategies of the Adviser and a Portfolio Manager of each Fund. In this role, he leads the overall investment framework, including asset allocation, sector positioning, and duration management for the firm's public mutual funds, exchange-traded funds, and related SMAs. He heads the Public Strategies Investment Committee and is responsible for overseeing all aspects of portfolio management for the Public Strategies, which are primarily comprised of multi-sector portfolios. Prior to joining Angel Oak in 2011, Clayton worked for YieldQuest Advisors, where he was a member of the investment committee focusing on interest rate and currency risk management of the mutual funds alongside directly managing the closed-end fund allocations within YieldQuest portfolios and individual accounts. Clayton holds a B.B.A. in Finance from the Farmer School of Business at Miami University. He also holds the Chartered Financial Analyst (CFA®) designation.

Sreeniwas (Sreeni) V. Prabhu is Managing Partner, Co-CEO, and Group Chief Investment Officer of the Adviser and a Portfolio Manager of the High Yield ETF and the UltraShort Income ETF. Prior to co-founding the Adviser in 2009, Sreeni was the Chief Investment Officer of the investment portfolio at Washington Mutual Bank in Seattle where he managed a $25 billion portfolio. He was also part of the macro asset strategy team at the bank. Sreeni previously worked for six years at SunTrust Bank in Atlanta, where he was responsible for investment strategies and served as Head Portfolio Manager for the $3 billion commercial mortgage-backed securities portfolio. He began his career at SunTrust in 1998 as a Bank Analyst focused on asset/liability management and liquidity strategies. Sreeni holds a B.B.A. degree in Economics from Georgia College and State University and an M.B.A. in Finance from Georgia State University.

The Funds' SAI provides additional information about the portfolio managers, including their compensation structure, other accounts managed, and ownership of shares of the Funds.

**ADDITIONAL PAYMENTS TO DEALERS**

In addition to dealer concessions and payments made by the Distributor for distribution and shareholder servicing, the Adviser or its affiliates, at their own expense and out of their own assets, may make additional payments ("Additional Payments") to, or enter into arrangements with, financial intermediaries or other persons in consideration of services, arrangements, significant investments in Fund shares or other activities that the Adviser and its affiliates believe may, among other things, benefit a Fund's business, facilitate investment in Fund shares or otherwise benefit the Fund's shareholders. Additional Payments include payments to certain selling or shareholder servicing agents for the Funds, which includes broker-dealers. These Additional Payments are made in connection with the sale and distribution of shares of the Funds or for services to the Funds and their shareholders. These Additional Payments, which may be significant, are paid by the Adviser or its affiliates, out of their own resources, which may include profits derived from servicing the Funds. Such payments by such parties may create an incentive for these financial institutions to recommend that you purchase Fund shares. Payments of the type described above are sometimes referred to as revenue sharing payments.

In return for these Additional Payments, the Adviser expects to receive certain marketing or servicing advantages that are not generally available to funds that do not make such payments. Such advantages are expected to include, without limitation, significant investments in the Fund; placement of the Funds on a list of funds offered as investment options to the selling agent's clients (sometimes referred to as "Shelf Space"); access to the selling agent's registered representatives; and the ability to assist in training and educating the selling agent's registered representatives.

The Additional Payments may create potential conflicts of interests between an investor and a selling agent who is recommending a particular fund over other funds. Before investing, you should consult with your financial consultant and review carefully any disclosure by the selling agent as to what monies they receive from fund advisers and distributors, as well as how your financial consultant is compensated.

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**HOW TO BUY AND SELL SHARES**

Each Fund issues and redeems Shares at NAV only in Creation Units. Only APs may acquire Shares directly from a Fund, and only APs may tender their Shares for redemption directly to a Fund, at NAV. APs must be a member or participant of a clearing agency registered with the SEC and must execute a Participant Agreement that has been agreed to by the Distributor (defined below), and that has been accepted by a Fund's transfer agent, with respect to purchases and redemptions of Creation Units. Once created, Shares trade in the secondary market in quantities less than a Creation Unit.

Most investors buy and sell Shares in secondary market transactions through brokers. Shares are listed for trading on the secondary market on the Exchange and can be bought and sold throughout the trading day like other publicly traded securities.

When buying or selling Shares through a broker, you will incur customary brokerage commissions and charges, and you may pay some or all of the spread between the bid and the offer price in the secondary market on each leg of a round trip (purchase and sale) transaction. In addition, because secondary market transactions occur at market prices, you may pay more than NAV when you buy Shares and receive less than NAV when you sell those Shares.

In addition, certain affiliates of the Fund and the Adviser may purchase and resell Shares of the Funds pursuant to this Prospectus.

**Book Entry**

Shares are held in book-entry form, which means that no stock certificates are issued. The Depository Trust Company ("DTC") or its nominee is the record owner of all outstanding Shares.

Investors owning Shares are beneficial owners as shown on the records of DTC or its participants. DTC serves as the securities depository for all Shares. DTC's participants include securities brokers and dealers, banks, trust companies, clearing corporations and other institutions that directly or indirectly maintain a custodial relationship with DTC. As a beneficial owner of Shares, you are not entitled to receive physical delivery of stock certificates or to have Shares registered in your name, and you are not considered a registered owner of Shares. Therefore, to exercise any right as an owner of Shares, you must rely upon the procedures of DTC and its participants. These procedures are the same as those that apply to any other securities that you hold in book entry or "street name" through your brokerage account.

**Frequent Purchases and Redemptions of Shares**

The Funds impose no restrictions on the frequency of purchases and redemptions of Shares. In determining not to approve a written, established policy, the Board evaluated the risks of market timing activities by Fund shareholders. Purchases and redemptions by APs, who are the only parties that may purchase or redeem Shares directly with a Fund, are an essential part of the ETF process and help keep Share trading prices in line with NAV. As such, the Funds accommodate frequent purchases and redemptions by APs. However, the Board has also determined that frequent purchases and redemptions for cash may increase tracking error and portfolio transaction costs and may lead to the realization of capital gains. To minimize these potential consequences of frequent purchases and redemptions, the Funds employ fair value pricing and may impose transaction fees on purchases and redemptions of Creation Units to cover the custodial and other costs incurred by a Fund in effecting trades. In addition, the Funds and the Adviser reserve the right to reject any purchase order at any time.

**Determination of NAV** 

The price you pay for your shares is based on the applicable Fund's NAV. Each Fund's NAV is calculated at the close of trading (normally 4:00 p.m. Eastern Time) on each day the NYSE is open for business (the NYSE is closed on weekends, most federal holidays and Good Friday). Each Fund's NAV is calculated by dividing the value of the Fund's total assets (including interest and dividends accrued but not yet received) minus liabilities (including accrued expenses) by the total number of shares outstanding.

In the event a Fund holds portfolio securities that trade in foreign markets or that are primarily listed on foreign exchanges that trade on weekends or other days when the Fund does not price its shares, the NAV of the Fund's shares may change on days when shareholders will not be able to purchase or sell the Fund's shares.

In calculating a Fund's NAV, portfolio investments for which market quotations are readily available are valued at market value, which is ordinarily determined based on official closing prices or the last reported sale prices of an instrument. Where no such closing price or sale price is reported, market value is determined based on quotes obtained from market makers or prices supplied by one or more third-party pricing source ("Pricing Services"), which may include evaluated prices. The types of investments in which the Funds typically invest are generally valued on the basis of evaluated prices provided by Pricing Services. Such prices may be based on a number of factors, including, among other things, information obtained from market makers and estimates based on recent market prices for investments with similar characteristics. If market or evaluated prices are not readily available (including when they are not reliable), or if an event occurs after the close of the trading market but before the calculation of the applicable NAV that materially affects the values, assets may be valued at a fair value, pursuant to guidelines established by the Adviser as the Funds' valuation designee. For example, the Funds may be obligated to fair value a foreign security because many foreign markets operate at times that do not coincide with those of the major U.S. markets. Events that could affect the values of foreign portfolio holdings may occur between the close of the foreign market and the time of determining the NAV, and would not otherwise be

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reflected in the NAV. When pricing securities using the fair value guidelines, the Adviser (with the assistance of the Funds' Pricing Services and other service providers) seek to assign the value that represents the amount that a Fund might reasonably expect to receive upon a current sale of the securities. The fair value guidelines include the consideration of pricing information from one or more Pricing Service, which information is monitored by the Adviser daily. The Board of Trustees oversees the Adviser's implementation of the fair value guidelines.

Notwithstanding the foregoing, given the subjectivity inherent in fair valuation and the fact that events could occur after NAV calculation, the actual market prices for a security may differ from the fair value of that security as determined by the Funds at the time of NAV calculation. Thus, discrepancies between fair values and actual market prices may occur on a regular and recurring basis. These discrepancies do not necessarily indicate that the fair value methodology is inappropriate. The Adviser will adjust the fair values assigned to securities in the Funds' portfolios, to the extent necessary, as soon as market prices become available. The Adviser (and the Funds' service providers) continually monitor and evaluate the appropriateness of their fair value methodologies through systematic comparisons of fair values to the actual next available market prices of securities contained in the Funds' portfolios. To the extent a Fund invests in other mutual funds, the Fund's NAV is calculated based, in part, upon the NAVs of such mutual funds; the prospectuses for those mutual funds in which the Funds will invest describe the circumstances under which those mutual funds will use fair value pricing, which, in turn, affects their NAVs.

Because the Funds rely on various sources to calculate their NAVs, the Funds are subject to certain operational risks associated with reliance on the Pricing Services and other third-party service providers and data sources. A Fund's NAV calculation may be impacted by operational risks arising from factors such as failures in systems and technology. Such failures may result in delays in the calculation of a Fund's NAV and/or the inability to calculate NAV over extended time periods. The Funds may be unable to recover any losses associated with such failures.

**Delivery of Shareholder Documents – Householding**

Householding is an option available to certain investors of the Funds. Householding is a method of delivery, based on the preference of the individual investor, in which a single copy of certain shareholder documents can be delivered to investors who share the same address, even if their accounts are registered under different names. Householding for the Funds is available through certain broker-dealers. If you are interested in enrolling in householding and receiving a single copy of prospectuses and other shareholder documents, please contact your broker-dealer. If you are currently enrolled in householding and wish to change your householding status, please contact your broker-dealer.

**DIVIDENDS, DISTRIBUTIONS, AND TAXES**

**Dividends and Distributions**

Each Fund typically distributes to its shareholders net investment income, if any, on a monthly basis and distributes any net realized capital gains to its shareholders at least annually. Each Fund will declare and pay net investment income and capital gain distributions in cash, if any. Distributions in cash may be reinvested automatically in additional whole Shares only if the broker through whom you purchased Shares makes such option available. Your broker is responsible for distributing the income and capital gain distributions to you.

**Taxes**

The following discussion is a summary of some important U.S. federal income tax considerations generally applicable to investments in the Funds. Your investment in a Fund may have other tax implications. Please consult your tax advisor about the tax consequences of an investment in Shares, including the possible application of foreign, state, and local tax laws.

Each Fund has elected or intends to elect and intends to qualify each year for treatment as a RIC. If a Fund meets certain minimum distribution requirements, a RIC is not subject to tax at the fund level on income and gains from investments that are timely distributed to shareholders. However, a Fund's failure to qualify as a RIC or to meet minimum distribution requirements would result (if certain relief provisions were not available) in fund-level taxation and, consequently, a reduction in income available for distribution to shareholders.

Unless your investment in Shares is made through a tax-exempt entity or tax-advantaged account, such as an IRA plan, you need to be aware of the possible tax consequences when a Fund makes distributions, when you sell your Shares listed on the Exchange, and when you purchase or redeem Creation Units (APs only).

**Taxes on Distributions**

Each Fund intends to distribute, at least annually, substantially all of its net investment income and net capital gains. For federal income tax purposes, distributions of investment income are generally taxable as ordinary income or qualified dividend income. Taxes on distributions of capital gains (if any) are determined by how long a Fund owned the investments that generated them, rather than how long a shareholder has owned his or her Shares. Sales of assets held by a Fund for more than one year generally result in long-term capital gains and losses, and sales of assets held by a Fund for one year or less generally result in short-term capital gains and losses. Distributions of a Fund's net capital gain (the excess of net long-term capital gains over net short-term

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capital losses) that are reported by such Fund as capital gain dividends ("Capital Gain Dividends") will be taxable as long-term capital gains, which for non-corporate shareholders are subject to tax at reduced rates of up to 20% (lower rates apply to individuals in lower tax brackets). Distributions of short-term capital gain will generally be taxable as ordinary income. Dividends and distributions are generally taxable to you whether you receive them in cash or reinvest them in additional Shares.

Distributions reported by a Fund as "qualified dividend income" are generally taxed to non-corporate shareholders at rates applicable to long-term capital gains, provided holding period and other requirements are met. "Qualified dividend income" generally is income derived from dividends paid by U.S. corporations or certain foreign corporations that are either incorporated in a U.S. possession or eligible for tax benefits under certain U.S. income tax treaties. In addition, dividends that a Fund received in respect of stock of certain foreign corporations may be qualified dividend income if that stock is readily tradable on an established U.S. securities market. Dividends received by a Fund from an ETF or underlying fund taxable as a RIC may be treated as qualified dividend income generally only to the extent so reported by such ETF or underlying fund. Corporate shareholders may be entitled to a dividends received deduction for the portion of dividends they receive from a Fund that are attributable to dividends received by the Fund from U.S. corporations, subject to certain limitations. Given the investment strategies of the Funds, it is not anticipated that a significant portion of a Fund's dividends will be eligible for the reduced rates applicable to qualified dividend income or for the corporate dividends-received deduction.

Shortly after the close of each calendar year, you will be informed of the amount and character of any distributions received from a Fund.

U.S. individuals with income exceeding specified thresholds are subject to a 3.8% tax on all or a portion of their "net investment income," which includes interest, dividends, and certain capital gains (generally including capital gains distributions and capital gains realized on the sale of Shares). This 3.8% tax also applies to all or a portion of the undistributed net investment income of certain shareholders that are estates and trusts.

In general, your distributions are subject to federal income tax for the year in which they are paid. Certain distributions paid in January, however, may be treated as paid on December 31 of the prior year. Distributions are generally taxable even if they are paid from income or gains earned by a Fund before your investment (and thus were included in the Shares' NAV when you purchased your Shares).

You may wish to avoid investing in a Fund before a dividend or other distribution, because such a distribution will generally be taxable even though it may economically represent a return of a portion of your investment.

If a Fund's distributions exceed its earnings and profits, all or a portion of the distributions made for a taxable year may be recharacterized as a return of capital to shareholders. A return of capital distribution will generally not be taxable, but will reduce each shareholder's cost basis in Shares and result in a higher capital gain or lower capital loss when the Shares are sold. After a shareholder's basis in Shares has been reduced to zero, distributions in excess of earnings and profits in respect of those Shares will be treated as gain from the sale of the Shares.

If you are neither a resident nor a citizen of the United States or if you are a foreign entity, distributions (other than Capital Gain Dividends) paid to you by a Fund will generally be subject to a U.S. withholding tax at the rate of 30%, unless a lower treaty rate applies. Gains from the sale or other disposition of Shares by non-U.S. shareholders generally are not subject to U.S. taxation, unless you are a nonresident alien individual who is physically present in the U.S. for 183 days or more per year. A Fund may, under certain circumstances, report all or a portion of a dividend as an "interest-related dividend" or a "short-term capital gain dividend," which would generally be exempt from this 30% U.S. withholding tax, provided certain other requirements are met. Different tax consequences may result if you are a foreign shareholder engaged in a trade or business within the United States or if a tax treaty applies.

Under legislation generally known as "FATCA" (the Foreign Account Tax Compliance Act), a Fund is required to withhold 30% of certain ordinary dividends it pays to shareholders that are foreign entities and that fail to meet prescribed information reporting or certification requirements.

Each Fund (or a financial intermediary, such as a broker, through which a shareholder owns Shares) generally is required to withhold and remit to the U.S. Treasury a percentage of the taxable distributions and sale or redemption proceeds paid to any shareholder who fails to properly furnish a correct taxpayer identification number, who has underreported dividend or interest income, or who fails to certify that the shareholder is not subject to such withholding.

**Taxes When Shares are Sold on the Exchange**

Any capital gain or loss realized upon a sale of Shares generally is treated as a long-term capital gain or loss if Shares have been held for more than one year and as a short-term capital gain or loss if Shares have been held for one year or less. However, any capital loss on a sale of Shares held for six months or less is treated as long-term capital loss to the extent of Capital Gain Dividends paid with respect to such Shares. Any loss realized on a sale will be disallowed to the extent Shares of a Fund are acquired, including through reinvestment of dividends, within a 61-day period beginning 30 days before and ending 30 days after the disposition of Shares. The ability to deduct capital losses may be limited.

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The cost basis of Shares of a Fund acquired by purchase will generally be based on the amount paid for the Shares and then may be subsequently adjusted for other applicable transactions as required by the Code. The difference between the selling price and the cost basis of Shares generally determines the amount of the capital gain or loss realized on the sale or exchange of Shares. Federal law requires reporting of cost basis gain/loss, and holding period to you and the Internal Revenue Service on Form 1099-B. Contact the broker through whom you purchased your Shares to obtain information with respect to the available cost basis reporting methods and elections for your account.

**Taxes on Purchases and Redemptions of Creation Units**

An AP who exchanges securities for Creation Units generally recognizes a gain or a loss. The gain or loss will be equal to the difference between the value of the Creation Units at the time of the exchange and the exchanging AP's aggregate basis in the securities delivered, plus the amount of any cash paid for the Creation Units. An AP who exchanges Creation Units for securities will generally recognize a gain or loss equal to the difference between the exchanging AP's basis in the Creation Units and the aggregate market value of the securities received, plus any cash received for such Creation Units. The Internal Revenue Service may assert, however, that a loss that is realized upon an exchange of securities for Creation Units may not be currently deducted under the rules governing "wash sales" (for an AP who does not mark-to-market its holdings), or on the basis that there has been no significant change in economic position. APs exchanging securities should consult their own tax advisor with respect to whether wash sale rules apply and when a loss might be deductible.

Any gain or loss realized upon a creation or redemption of Creation Units will be treated as capital or ordinary gain or loss, depending on the circumstances. Any capital gain or loss realized upon redemption of Creation Units is generally treated as long-term capital gain or loss if Shares have been held for more than one year and as a short-term capital gain or loss if Shares have been held for one year or less.

A Fund may include a payment of cash in addition to, or in place of, the delivery of a basket of securities upon the redemption of Creation Units. Such Fund may sell portfolio securities to obtain the cash needed to distribute redemption proceeds. This may cause such Fund to recognize investment income and/or capital gains or losses that it might not have recognized if it had completely satisfied the redemption in-kind. As a result, such Fund may be less tax efficient if it includes such a cash payment in the proceeds paid upon the redemption of Creation Units.

**Foreign Investments by the Funds** 

To the extent a Fund invests in foreign securities, it may be subject to foreign withholding taxes with respect to dividends or interest such Fund received from sources in foreign countries. Tax conventions between certain countries and the United States may reduce or eliminate such taxes in some cases.

*The foregoing discussion summarizes some of the possible consequences under current federal tax law of an investment in each Fund. It is not a substitute for personal tax advice. You also may be subject to state and local tax on Fund distributions and sales of Shares. Consult your personal tax advisor about the potential tax consequences of an investment in Shares under all applicable tax laws. For more information, please see the section entitled "Taxation" in the SAI.* 

**DISTRIBUTION**

The Distributor, Quasar Distributors, LLC, is a broker-dealer registered with the SEC. The Distributor distributes Creation Units for the Funds on an agency basis and does not maintain a secondary market in Shares. The Distributor has no role in determining the policies of the Funds or the securities that are purchased or sold by the Funds. The Distributor's principal address is 190 Middle Street, Suite 301, Portland, Maine 04101.

The Board has adopted a Distribution and Service Plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. In accordance with the Plan, each Fund (except for the High Yield ETF) is authorized to pay an amount up to 0.25% of its average daily net assets each year for certain distribution-related activities and shareholder services.

No Rule 12b-1 fees are currently paid by the Funds, and there are no plans to impose these fees. However, in the event Rule 12b-1 fees are charged in the future, because the fees are paid out of Fund assets, over time these fees will increase the cost of your investment and may cost you more than certain other types of sales charges.

**PREMIUM/DISCOUNT INFORMATION**

Information regarding how often Shares traded on the Exchange at a price above (i.e., at a premium) or below (i.e., at a discount) the NAV of each Fund is available on the Funds' website at www.angeloakcapital.com.

**ADDITIONAL NOTICES**

Shares are not sponsored, endorsed, or promoted by the Exchange. The Exchange is not responsible for, nor has it participated in the determination of, the timing, prices, or quantities of Shares to be issued, nor in the determination or calculation of the equation

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by which Shares are redeemable. The Exchange has no obligation or liability to owners of Shares in connection with the administration, marketing, or trading of Shares.

Without limiting any of the foregoing, in no event shall the Exchange have any liability for any lost profits or indirect, punitive, special, or consequential damages even if notified of the possibility thereof.

The Adviser and the Funds make no representation or warranty, express or implied, to the owners of Shares or any member of the public regarding the advisability of investing in securities generally or in the Funds particularly.

**THE TRUST**

Each Fund is a series of the Angel Oak Funds Trust (the "Trust"). The Trust's Declaration of Trust (the "Declaration of Trust") provides for indemnification and reimbursement of expenses out of a Fund's assets for any shareholder held personally liable for obligations of the Fund or the Trust. The Declaration of Trust provides that the Trust shall, upon request, assume the defense of any claim made against any shareholder for any act or obligation of a Fund or the Trust and satisfy any judgment thereon. All such rights are limited to the assets of the applicable Fund(s). The Declaration of Trust further provides that the Trust may maintain appropriate insurance (for example, fidelity bonding and errors and omissions insurance) for the protection of the Trust, its shareholders, trustees, officers, employees and agents to cover possible tort and other liabilities. However, the activities of the Trust as an investment company would not likely give rise to liabilities in excess of the Trust's total assets. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which both inadequate insurance exists and the applicable Funds are unable to meet their obligations. The Declaration of Trust also provides that shareholders of the Trust may not bring derivative actions, unless certain conditions are met, including, among other conditions: (i) shareholders make a pre-suit written demand upon the Board to bring the action, (ii) shareholders owning shares representing at least a majority of the outstanding applicable shares join the derivative action (except with respect to claims arising under the federal securities laws), and (iii) the Board is given a 30-day period to consider and investigate the request. In addition, if the Board determines that such an action is not in the best interest of the Trust or of a particular Fund or class, as applicable, then (except with respect to claims arising under the federal securities laws) the complaining shareholders may not bring the derivative action. In the event that the Board determines that the action should be brought, such action shall be brought directly by the Trust and not as a derivative action.

The Declaration of Trust also provides that the Trust shall not in any way be limited by any present or future law or custom in regard to investment by fiduciaries. However, nothing in the Declaration of Trust that modifies or restricts the duties or liabilities of the Trust's trustees shall apply to, or in any way limit, their duties, including the state law fiduciary duties of loyalty and care, or liabilities with respect to matters arising under the federal securities laws.

**FINANCIAL HIGHLIGHTS**

As of the close of business on February 16, 2024, the High Yield ETF and MBS ETF each acquired all of the assets and liabilities of the applicable predecessor fund in exchange for shares of beneficial interest of the respective Fund. As a result of the reorganization, each Fund adopted the financial and performance history of the applicable predecessor fund.

The financial highlights tables are intended to help you understand each Fund's financial performance (or the performance of the Institutional Shares of the applicable predecessor fund) for the past five years or for the period of each Fund's operations. Certain information reflects financial results for a single Share. The total returns in the tables represent the rate that an investor would have earned or lost on an investment in a Fund (or predecessor fund) (assuming reinvestment of all dividends and distributions). This information has been audited by Cohen & Company, Ltd., the predecessor funds' and the Funds' independent registered public accounting firm, whose report, along with the predecessor funds' and the Funds' financial statements, is included in the Funds' <u>[annual report](https://www.sec.gov/ix?doc=/Archives/edgar/data/1612930/000113322826004853/aafs-efp23015_ncsr.htm)[on Form N-CSR](https://www.sec.gov/ix?doc=/Archives/edgar/data/1612930/000113322826004853/aafs-efp23015_ncsr.htm)</u>, which is available upon request.

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**Angel Oak Income ETF**

**Financial Highlights**

**(For a share outstanding during each year or period)** 

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **For the Year or Period Ended January 31,** | **For the Year or Period Ended January 31,** | **For the Year or Period Ended January 31,** | **For the Year or Period Ended January 31,** | **For the Year or Period Ended January 31,** |
| | **2026** | | **2025** | **2024** | **2023(a)** |
| **Selected Per Share Data:** |  |  |  |  |  |
| Net asset value, beginning of year or period | $20.58 |  | $20.52 | $20.39 | $20.00 |
| **Income from investment operations:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net investment income (loss)(b) | 1.26 |  | 1.34 | 1.40 | 0.26 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net realized and unrealized gain (loss) on investments(c) | 0.32 |  | 0.08 | 0.15 | 0.23 |
| **Total from investment operations** | 1.58 |  | 1.42 | 1.55 | 0.49 |
| **Less distributions to shareholders:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From net investment income | (1.21) |  | (1.27) | (1.41) | (0.10) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From net realized gain | (0.05) |  | (0.09) | (0.01) |  |
| **Total distributions** | (1.26) |  | (1.36) | (1.42) | (0.10) |
| ETF transaction fees per share(d) |  | (e) |  |  |  |
| **Net asset value, end of year or period** | $20.90 |  | $20.58 | $20.52 | $20.39 |
| Total return on net asset value(f)(g) | 7.87% |  | 7.10% | 7.95% | 2.41% |
| Total return on market value(f)(h) | 7.62% |  | 7.56% | 7.61% | 2.49% |
| **Ratios and Supplemental Data:** |  |  |  |  |  |
| Net assets, end of year or period (000's omitted) | $827919 |  | $368104 | $105865 | $33636 |
| Ratio of expenses to average net assets before waiver and reimbursement/recoupment(i) | 0.99% |  | 0.99% | 0.99% | 0.99% |
| Ratio of expenses to average net assets after waiver and reimbursement/recoupment(i) | 0.79% |  | 0.79% | 0.79% | 0.79% |
| Ratio of net investment income (loss) to average net assets before waiver and reimbursement/recoupment(i) | 5.84% |  | 6.27% | 6.71% | 5.44% |
| Ratio of net investment income (loss) to average net assets after waiver and reimbursement/recoupment(i) | 6.04% |  | 6.47% | 6.91% | 5.64% |
| Portfolio turnover rate(f)(j) | 85% |  | 77% | 43% | 59% |
| (a) Fund commenced operations on November 7, 2022. | (a) Fund commenced operations on November 7, 2022. | (a) Fund commenced operations on November 7, 2022. | (a) Fund commenced operations on November 7, 2022. | (a) Fund commenced operations on November 7, 2022. | (a) Fund commenced operations on November 7, 2022. |
| (b) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year or period. | (b) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year or period. | (b) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year or period. | (b) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year or period. | (b) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year or period. | (b) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year or period. |
| (c) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. | (c) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. | (c) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. | (c) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. | (c) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. | (c) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. |
| (d) Calculated using average shares method. | (d) Calculated using average shares method. | (d) Calculated using average shares method. | (d) Calculated using average shares method. | (d) Calculated using average shares method. | (d) Calculated using average shares method. |
| (e) Less than $0.005 per share. | (e) Less than $0.005 per share. | (e) Less than $0.005 per share. | (e) Less than $0.005 per share. | (e) Less than $0.005 per share. | (e) Less than $0.005 per share. |
| (f) Not annualized for periods less than one year. | (f) Not annualized for periods less than one year. | (f) Not annualized for periods less than one year. | (f) Not annualized for periods less than one year. | (f) Not annualized for periods less than one year. | (f) Not annualized for periods less than one year. |
| (g) Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year or period. Dividends and distributions are assumed to be reinvested. | (g) Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year or period. Dividends and distributions are assumed to be reinvested. | (g) Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year or period. Dividends and distributions are assumed to be reinvested. | (g) Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year or period. Dividends and distributions are assumed to be reinvested. | (g) Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year or period. Dividends and distributions are assumed to be reinvested. | (g) Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year or period. Dividends and distributions are assumed to be reinvested. |
| (h) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (h) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (h) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (h) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (h) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (h) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. |
| (i) Annualized for periods less than one year. | (i) Annualized for periods less than one year. | (i) Annualized for periods less than one year. | (i) Annualized for periods less than one year. | (i) Annualized for periods less than one year. | (i) Annualized for periods less than one year. |
| (j) Portfolio turnover rate excludes in-kind transactions. | (j) Portfolio turnover rate excludes in-kind transactions. | (j) Portfolio turnover rate excludes in-kind transactions. | (j) Portfolio turnover rate excludes in-kind transactions. | (j) Portfolio turnover rate excludes in-kind transactions. | (j) Portfolio turnover rate excludes in-kind transactions. |

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**Angel Oak UltraShort Income ETF**

**Financial Highlights**

**(For a share outstanding during each year or period)** 

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| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **For the Year or Period Ended January 31,** | **For the Year or Period Ended January 31,** | **For the Year or Period Ended January 31,** | **For the Year or Period Ended January 31,** | **For the Year or Period Ended January 31,** | **For the Year or Period Ended January 31,** | **For the Year or Period Ended January 31,** | **For the Year or Period Ended January 31,** | **For the Year or Period Ended January 31,** | **For the Year or Period Ended January 31,** |
| | **2026** | **2026** | | **2025** | **2025** | | **2024** | **2024** | **2023 (a)** | **2023 (a)** |
| **Selected Per Share Data:** |  |  |  |  |  |  |  |  |  |  |
| Net asset value, beginning of year or period | $| 51.06 |  | $| 50.67 |  | $| 50.58 | $| 50.00 |
| **Income from investment operations:** |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net investment income (loss)(b) | 2.54 | 2.54 |  | 2.99 | 2.99 |  | 3.16 | 3.16 | 0.69 | 0.69 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net realized and unrealized gain (loss) on investments(c) | 0.10 | 0.10 |  | 0.18 | 0.18 |  | 0.15 | 0.15 | 0.27 | 0.27 |
| **Total from investment operations** | 2.64 | 2.64 |  | 3.17 | 3.17 |  | 3.31 | 3.31 | 0.96 | 0.96 |
| **Less distributions to shareholders:** |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From net investment income | (2.56) | (2.56) |  | (2.78) | (2.78) |  | (3.19) | (3.19) | (0.38) | (0.38) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From net realized gain |  |  | (d) |  |  | (d) | (0.03) | (0.03) |  |  |
| **Total distributions** | (2.56) | (2.56) |  | (2.78) | (2.78) |  | (3.22) | (3.22) | (0.38) | (0.38) |
| ETF transaction fees per share(e) |  |  | (d) |  |  |  |  |  |  |  |
| **Net asset value, end of year or period** | $| 51.14 |  | $| 51.06 |  | $| 50.67 | $| 50.58 |
| Total return on net asset value (f)(g) | 5.29 | 5.29% |  | 6.43 | 6.43% |  | 6.78 | 6.78% | 1.92 | 1.92% |
| Total return on market value(f)(h) | 5.23 | 5.23% |  | 6.49 | 6.49% |  | 6.84 | 6.84% | 1.90 | 1.90% |
| **Ratios and Supplemental Data:** |  |  |  |  |  |  |  |  |  |  |
| Net assets, end of year or period (000's omitted) | $| 1315509 |  | $| 733492 |  | $| 122831 | $| 46534 |
| Ratio of expenses to average net assets before waiver and reimbursement/recoupment(i) | 0.55 | 0.55% |  | 0.55 | 0.55% |  | 0.55 | 0.55% | 0.55 | 0.55% |
| Ratio of expenses to average net assets after waiver and reimbursement/recoupment(i) | 0.34 | 0.34% | (j) | 0.29 | 0.29% |  | 0.29 | 0.29% | 0.29 | 0.29% |
| Ratio of net investment income (loss) to average net assets before waiver and reimbursement/recoupment(i) | 4.76 | 4.76% |  | 5.59 | 5.59% |  | 6.00 | 6.00% | 4.80 | 4.80% |
| Ratio of net investment income (loss) to average net assets after waiver and reimbursement/recoupment(i) | 4.97 | 4.97% |  | 5.85 | 5.85% |  | 6.26 | 6.26% | 5.06 | 5.06% |
| Portfolio turnover rate(f)(k) | 87 | 87% |  | 91 | 91% |  | 75 | 75% | 23 | 23% |
| (a) Fund commenced operations on October 24, 2022. | (a) Fund commenced operations on October 24, 2022. | (a) Fund commenced operations on October 24, 2022. | (a) Fund commenced operations on October 24, 2022. | (a) Fund commenced operations on October 24, 2022. | (a) Fund commenced operations on October 24, 2022. | (a) Fund commenced operations on October 24, 2022. | (a) Fund commenced operations on October 24, 2022. | (a) Fund commenced operations on October 24, 2022. | (a) Fund commenced operations on October 24, 2022. | (a) Fund commenced operations on October 24, 2022. |
| (b) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year or period. | (b) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year or period. | (b) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year or period. | (b) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year or period. | (b) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year or period. | (b) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year or period. | (b) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year or period. | (b) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year or period. | (b) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year or period. | (b) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year or period. | (b) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year or period. |
| (c) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. | (c) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. | (c) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. | (c) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. | (c) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. | (c) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. | (c) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. | (c) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. | (c) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. | (c) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. | (c) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. |
| (d) Less than (0.005). | (d) Less than (0.005). | (d) Less than (0.005). | (d) Less than (0.005). | (d) Less than (0.005). | (d) Less than (0.005). | (d) Less than (0.005). | (d) Less than (0.005). | (d) Less than (0.005). | (d) Less than (0.005). | (d) Less than (0.005). |
| (e) Calculated using average shares method. |  |  |  |  |  |  |  |  |  |  |
| (f) Not annualized for periods less than one year. | (f) Not annualized for periods less than one year. | (f) Not annualized for periods less than one year. | (f) Not annualized for periods less than one year. | (f) Not annualized for periods less than one year. | (f) Not annualized for periods less than one year. | (f) Not annualized for periods less than one year. | (f) Not annualized for periods less than one year. | (f) Not annualized for periods less than one year. | (f) Not annualized for periods less than one year. | (f) Not annualized for periods less than one year. |
| (g)&nbsp;&nbsp;&nbsp;&nbsp;Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year or period. Dividends and distributions are assumed to be reinvested. | (g)&nbsp;&nbsp;&nbsp;&nbsp;Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year or period. Dividends and distributions are assumed to be reinvested. | (g)&nbsp;&nbsp;&nbsp;&nbsp;Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year or period. Dividends and distributions are assumed to be reinvested. | (g)&nbsp;&nbsp;&nbsp;&nbsp;Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year or period. Dividends and distributions are assumed to be reinvested. | (g)&nbsp;&nbsp;&nbsp;&nbsp;Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year or period. Dividends and distributions are assumed to be reinvested. | (g)&nbsp;&nbsp;&nbsp;&nbsp;Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year or period. Dividends and distributions are assumed to be reinvested. | (g)&nbsp;&nbsp;&nbsp;&nbsp;Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year or period. Dividends and distributions are assumed to be reinvested. | (g)&nbsp;&nbsp;&nbsp;&nbsp;Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year or period. Dividends and distributions are assumed to be reinvested. | (g)&nbsp;&nbsp;&nbsp;&nbsp;Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year or period. Dividends and distributions are assumed to be reinvested. | (g)&nbsp;&nbsp;&nbsp;&nbsp;Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year or period. Dividends and distributions are assumed to be reinvested. | (g)&nbsp;&nbsp;&nbsp;&nbsp;Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year or period. Dividends and distributions are assumed to be reinvested. |
| (h) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (h) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (h) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (h) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (h) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (h) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (h) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (h) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (h) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (h) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (h) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. |
| (i) Annualized for periods less than one year. | (i) Annualized for periods less than one year. | (i) Annualized for periods less than one year. | (i) Annualized for periods less than one year. | (i) Annualized for periods less than one year. | (i) Annualized for periods less than one year. | (i) Annualized for periods less than one year. | (i) Annualized for periods less than one year. | (i) Annualized for periods less than one year. | (i) Annualized for periods less than one year. | (i) Annualized for periods less than one year. |
| (j) Effective February 1, 2025, the Board of Trustees approved an amendment to the contractual expense limitation with the Adviser to increase the Fund's expense limit from 0.29% to 0.34% of the Fund's average daily net assets through September 30, 2027. | (j) Effective February 1, 2025, the Board of Trustees approved an amendment to the contractual expense limitation with the Adviser to increase the Fund's expense limit from 0.29% to 0.34% of the Fund's average daily net assets through September 30, 2027. | (j) Effective February 1, 2025, the Board of Trustees approved an amendment to the contractual expense limitation with the Adviser to increase the Fund's expense limit from 0.29% to 0.34% of the Fund's average daily net assets through September 30, 2027. | (j) Effective February 1, 2025, the Board of Trustees approved an amendment to the contractual expense limitation with the Adviser to increase the Fund's expense limit from 0.29% to 0.34% of the Fund's average daily net assets through September 30, 2027. | (j) Effective February 1, 2025, the Board of Trustees approved an amendment to the contractual expense limitation with the Adviser to increase the Fund's expense limit from 0.29% to 0.34% of the Fund's average daily net assets through September 30, 2027. | (j) Effective February 1, 2025, the Board of Trustees approved an amendment to the contractual expense limitation with the Adviser to increase the Fund's expense limit from 0.29% to 0.34% of the Fund's average daily net assets through September 30, 2027. | (j) Effective February 1, 2025, the Board of Trustees approved an amendment to the contractual expense limitation with the Adviser to increase the Fund's expense limit from 0.29% to 0.34% of the Fund's average daily net assets through September 30, 2027. | (j) Effective February 1, 2025, the Board of Trustees approved an amendment to the contractual expense limitation with the Adviser to increase the Fund's expense limit from 0.29% to 0.34% of the Fund's average daily net assets through September 30, 2027. | (j) Effective February 1, 2025, the Board of Trustees approved an amendment to the contractual expense limitation with the Adviser to increase the Fund's expense limit from 0.29% to 0.34% of the Fund's average daily net assets through September 30, 2027. | (j) Effective February 1, 2025, the Board of Trustees approved an amendment to the contractual expense limitation with the Adviser to increase the Fund's expense limit from 0.29% to 0.34% of the Fund's average daily net assets through September 30, 2027. | (j) Effective February 1, 2025, the Board of Trustees approved an amendment to the contractual expense limitation with the Adviser to increase the Fund's expense limit from 0.29% to 0.34% of the Fund's average daily net assets through September 30, 2027. |
| (k) Portfolio turnover rate excludes in-kind transactions. | (k) Portfolio turnover rate excludes in-kind transactions. | (k) Portfolio turnover rate excludes in-kind transactions. | (k) Portfolio turnover rate excludes in-kind transactions. | (k) Portfolio turnover rate excludes in-kind transactions. | (k) Portfolio turnover rate excludes in-kind transactions. | (k) Portfolio turnover rate excludes in-kind transactions. | (k) Portfolio turnover rate excludes in-kind transactions. | (k) Portfolio turnover rate excludes in-kind transactions. | (k) Portfolio turnover rate excludes in-kind transactions. | (k) Portfolio turnover rate excludes in-kind transactions. |

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**Angel Oak High Yield Opportunities ETF successor to: Angel Oak High Yield Opportunities Fund - Institutional Class (a)**

**Financial Highlights** 

**(For a share outstanding during each year)** 

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **For the Year Ended January 31,** | **For the Year Ended January 31,** | **For the Year Ended January 31,** | **For the Year Ended January 31,** | **For the Year Ended January 31,** | **For the Year Ended January 31,** | **For the Year Ended January 31,** |
| | **2026** | | **2025** | | **2024** | **2023** | **2022** |
| **Selected Per Share Data:** |  |  |  |  |  |  |  |
| Net asset value, beginning of year | $11.08 |  | $10.85 |  | $10.58 | $11.54 | $11.73 |
| **Income from investment operations:** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net investment income (loss) | 0.73 | (b) | 0.72 | (b) | 0.72 | 0.60 | 0.60 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net realized and unrealized gain (loss) on investments(c) | 0.04 |  | 0.22 |  | 0.27 | (0.95) | (0.18) |
| **Total from investment operations** | 0.77 |  | 0.94 |  | 0.99 | (0.35) | 0.42 |
| **Less distributions to shareholders:** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;From net investment income | (0.73) |  | (0.71) |  | (0.72) | (0.61) | (0.61) |
| **Total distributions** | (0.73) |  | (0.71) |  | (0.72) | (0.61) | (0.61) |
| **Net asset value, end of year** | $11.12 |  | $11.08 |  | $10.85 | $10.58 | $11.54 |
| Total return on net asset value(d)(e) | 7.14% |  | 9.00% |  | 9.77% | -2.89% | 3.62% |
| Total return on market value(d)(f) | 7.30% |  | 9.04% |  | N/A | N/A | N/A |
| **Ratios and Supplemental Data:** |  |  |  |  |  |  |  |
| Net assets, end of year (000's omitted) | $122735 |  | $115669 |  | $72035 | $59694 | $69503 |
| Ratio of expenses to average net assets before waiver and reimbursement/recoupment(g) | 0.55% |  | 0.58% |  | 0.93% | 0.98% | 0.89% |
| Ratio of expenses to average net assets after waiver and reimbursement/recoupment(g) | 0.55% |  | 0.55% |  | 0.55% | 0.64% | 0.65% |
| Ratio of net investment income (loss) to average net assets before waiver and reimbursement/recoupment(g) | 6.56% |  | 6.55% |  | 6.48% | 5.30% | 4.86% |
| Ratio of net investment income (loss) to average net assets after waiver and reimbursement/recoupment(g) | 6.56% |  | 6.58% |  | 6.86% | 5.64% | 5.10% |
| Portfolio turnover rate(d)(h) | 58% |  | 37% |  | 20% | 33% | 38% |
| (a) Effective as of the close of business on February 16, 2024, the Angel Oak High Yield Opportunities Fund was reorganized into the Angel Oak High Yield Opportunities ETF pursuant to an Agreement and Plan of Reorganization. The Angel Oak High Yield Opportunities Fund's performance and financial history, inclusive of expense limitations, has been adopted by the Angel Oak High Yield Opportunities ETF and will be used going forward. As a result, the information prior to February 16, 2024, reflects that of the Angel Oak High Yield Opportunities Fund's Institutional Shares inclusive of expense limitations. | (a) Effective as of the close of business on February 16, 2024, the Angel Oak High Yield Opportunities Fund was reorganized into the Angel Oak High Yield Opportunities ETF pursuant to an Agreement and Plan of Reorganization. The Angel Oak High Yield Opportunities Fund's performance and financial history, inclusive of expense limitations, has been adopted by the Angel Oak High Yield Opportunities ETF and will be used going forward. As a result, the information prior to February 16, 2024, reflects that of the Angel Oak High Yield Opportunities Fund's Institutional Shares inclusive of expense limitations. | (a) Effective as of the close of business on February 16, 2024, the Angel Oak High Yield Opportunities Fund was reorganized into the Angel Oak High Yield Opportunities ETF pursuant to an Agreement and Plan of Reorganization. The Angel Oak High Yield Opportunities Fund's performance and financial history, inclusive of expense limitations, has been adopted by the Angel Oak High Yield Opportunities ETF and will be used going forward. As a result, the information prior to February 16, 2024, reflects that of the Angel Oak High Yield Opportunities Fund's Institutional Shares inclusive of expense limitations. | (a) Effective as of the close of business on February 16, 2024, the Angel Oak High Yield Opportunities Fund was reorganized into the Angel Oak High Yield Opportunities ETF pursuant to an Agreement and Plan of Reorganization. The Angel Oak High Yield Opportunities Fund's performance and financial history, inclusive of expense limitations, has been adopted by the Angel Oak High Yield Opportunities ETF and will be used going forward. As a result, the information prior to February 16, 2024, reflects that of the Angel Oak High Yield Opportunities Fund's Institutional Shares inclusive of expense limitations. | (a) Effective as of the close of business on February 16, 2024, the Angel Oak High Yield Opportunities Fund was reorganized into the Angel Oak High Yield Opportunities ETF pursuant to an Agreement and Plan of Reorganization. The Angel Oak High Yield Opportunities Fund's performance and financial history, inclusive of expense limitations, has been adopted by the Angel Oak High Yield Opportunities ETF and will be used going forward. As a result, the information prior to February 16, 2024, reflects that of the Angel Oak High Yield Opportunities Fund's Institutional Shares inclusive of expense limitations. | (a) Effective as of the close of business on February 16, 2024, the Angel Oak High Yield Opportunities Fund was reorganized into the Angel Oak High Yield Opportunities ETF pursuant to an Agreement and Plan of Reorganization. The Angel Oak High Yield Opportunities Fund's performance and financial history, inclusive of expense limitations, has been adopted by the Angel Oak High Yield Opportunities ETF and will be used going forward. As a result, the information prior to February 16, 2024, reflects that of the Angel Oak High Yield Opportunities Fund's Institutional Shares inclusive of expense limitations. | (a) Effective as of the close of business on February 16, 2024, the Angel Oak High Yield Opportunities Fund was reorganized into the Angel Oak High Yield Opportunities ETF pursuant to an Agreement and Plan of Reorganization. The Angel Oak High Yield Opportunities Fund's performance and financial history, inclusive of expense limitations, has been adopted by the Angel Oak High Yield Opportunities ETF and will be used going forward. As a result, the information prior to February 16, 2024, reflects that of the Angel Oak High Yield Opportunities Fund's Institutional Shares inclusive of expense limitations. | (a) Effective as of the close of business on February 16, 2024, the Angel Oak High Yield Opportunities Fund was reorganized into the Angel Oak High Yield Opportunities ETF pursuant to an Agreement and Plan of Reorganization. The Angel Oak High Yield Opportunities Fund's performance and financial history, inclusive of expense limitations, has been adopted by the Angel Oak High Yield Opportunities ETF and will be used going forward. As a result, the information prior to February 16, 2024, reflects that of the Angel Oak High Yield Opportunities Fund's Institutional Shares inclusive of expense limitations. |
| (b) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year. | (b) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year. | (b) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year. | (b) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year. | (b) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year. | (b) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year. | (b) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year. | (b) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year. |
| (c) Net realized and unrealized gain (loss) per share includes balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (c) Net realized and unrealized gain (loss) per share includes balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (c) Net realized and unrealized gain (loss) per share includes balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (c) Net realized and unrealized gain (loss) per share includes balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (c) Net realized and unrealized gain (loss) per share includes balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (c) Net realized and unrealized gain (loss) per share includes balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (c) Net realized and unrealized gain (loss) per share includes balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. | (c) Net realized and unrealized gain (loss) per share includes balancing amounts necessary to reconcile the change in net asset value per share for the year, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year. |
| (d) Not annualized for periods less than one year. | (d) Not annualized for periods less than one year. | (d) Not annualized for periods less than one year. | (d) Not annualized for periods less than one year. | (d) Not annualized for periods less than one year. | (d) Not annualized for periods less than one year. | (d) Not annualized for periods less than one year. | (d) Not annualized for periods less than one year. |
| (e) Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year. Dividends and distributions are assumed to be reinvested. | (e) Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year. Dividends and distributions are assumed to be reinvested. | (e) Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year. Dividends and distributions are assumed to be reinvested. | (e) Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year. Dividends and distributions are assumed to be reinvested. | (e) Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year. Dividends and distributions are assumed to be reinvested. | (e) Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year. Dividends and distributions are assumed to be reinvested. | (e) Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year. Dividends and distributions are assumed to be reinvested. | (e) Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year. Dividends and distributions are assumed to be reinvested. |
| (f) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (f) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (f) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (f) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (f) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (f) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (f) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (f) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. |
| (g) Annualized for periods less than one year. | (g) Annualized for periods less than one year. | (g) Annualized for periods less than one year. | (g) Annualized for periods less than one year. | (g) Annualized for periods less than one year. | (g) Annualized for periods less than one year. | (g) Annualized for periods less than one year. | (g) Annualized for periods less than one year. |
| (h) Portfolio turnover rate excludes in-kind transactions. | (h) Portfolio turnover rate excludes in-kind transactions. | (h) Portfolio turnover rate excludes in-kind transactions. | (h) Portfolio turnover rate excludes in-kind transactions. | (h) Portfolio turnover rate excludes in-kind transactions. | (h) Portfolio turnover rate excludes in-kind transactions. | (h) Portfolio turnover rate excludes in-kind transactions. | (h) Portfolio turnover rate excludes in-kind transactions. |

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**Angel Oak Mortgage-Backed Securities ETF successor to: Angel Oak Total Return Bond Fund - Institutional Class (a)**

**Financial Highlights**

**(For a share outstanding during each year or period)**

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **For the Year or Period Ended January 31,** | **For the Year or Period Ended January 31,** | **For the Year or Period Ended January 31,** | **For the Year or Period Ended January 31,** | **For the Year or Period Ended January 31,** | **For the Year or Period Ended January 31,** | **For the Year or Period Ended January 31,** |
| | **2026** | | **2025** | | **2024** | **2023** | **2022(b)** |
| **Selected Per Share Data:** |  |  |  |  |  |  |  |
| Net asset value, beginning of year or period | $8.51 |  | $8.51 |  | $8.71 | $9.77 | $10.00 |
| **Income from investment operations:** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net investment income (loss) | 0.46 | (c) | 0.45 | (c) | 0.38 | 0.24 | 0.09 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net realized and unrealized gain (loss) on investments(d) | 0.24 |  | (0.04) |  | (0.20) | (1.05) | (0.22) |
| **Total from investment operations** | 0.70 |  | 0.41 |  | 0.18 | (0.81) | (0.13) |
| **Less distributions to shareholders:** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From net investment income | (0.47) |  | (0.41) |  | (0.38) | (0.25) | (0.10) |
| **Total distributions** | (0.47) |  | (0.41) |  | (0.38) | (0.25) | (0.10) |
| **Net asset value, end of year or period** | $8.74 |  | $8.51 |  | $8.51 | $8.71 | $9.77 |
| Total return on net asset value(e)(f) | 8.41% |  | 4.98% |  | 2.24% | -8.32% | -1.28% |
| Total return on market value(e)(g) | 8.27% |  | 5.17% |  | N/A | N/A | N/A |
| **Ratios and Supplemental Data:** |  |  |  |  |  |  |  |
| Net assets, end of year or period (000's omitted) | $168604 |  | $171598 |  | $30919 | $34786 | $39133 |
| Ratio of expenses to average net assets before waiver and reimbursement/recoupment(h) | 0.79% |  | 0.82% |  | 1.10% | 1.17% | 0.97% |
| Ratio of expenses to average net assets after waiver and reimbursement/recoupment(h) | 0.49% |  | 0.49% |  | 0.44% | 0.58% | 0.59% |
| Ratio of net investment income (loss) to average net assets before waiver and reimbursement/recoupment(h) | 4.99% |  | 4.91% |  | 3.87% | 2.08% | 1.06% |
| Ratio of net investment income (loss) to average net assets after waiver and reimbursement/recoupment(h) | 5.29% |  | 5.24% |  | 4.53% | 2.67% | 1.44% |
| Portfolio turnover rate(e)(i) | 97% |  | 113% |  | 60% | 53% | 22% |
| (a)<sup> </sup>Effective as of the close of business on February 16, 2024, the Angel Oak Total return Bond Fund was reorganized into the Angel Oak Mortgage-Backed Securities ETF pursuant to an Agreement and Plan of Reorganization. The Angel Oak Total return Bond Fund's performance and financial history, inclusive of expense limitations, has been adopted by the Angel Oak Mortgage-Backed Securities ETF and will be used going forward. As a result, the information prior to February 16, 2024, reflects that of the Angel Oak Total return Bond Fund's Institutional Shares inclusive of expense limitations.  | (a) Effective as of the close of business on February 16, 2024, the Angel Oak Total return Bond Fund was reorganized into the Angel Oak Mortgage-Backed Securities ETF pursuant to an Agreement and Plan of Reorganization. The Angel Oak Total return Bond Fund's performance and financial history, inclusive of expense limitations, has been adopted by the Angel Oak Mortgage-Backed Securities ETF and will be used going forward. As a result, the information prior to February 16, 2024, reflects that of the Angel Oak Total return Bond Fund's Institutional Shares inclusive of expense limitations.  | (a) Effective as of the close of business on February 16, 2024, the Angel Oak Total return Bond Fund was reorganized into the Angel Oak Mortgage-Backed Securities ETF pursuant to an Agreement and Plan of Reorganization. The Angel Oak Total return Bond Fund's performance and financial history, inclusive of expense limitations, has been adopted by the Angel Oak Mortgage-Backed Securities ETF and will be used going forward. As a result, the information prior to February 16, 2024, reflects that of the Angel Oak Total return Bond Fund's Institutional Shares inclusive of expense limitations.  | (a) Effective as of the close of business on February 16, 2024, the Angel Oak Total return Bond Fund was reorganized into the Angel Oak Mortgage-Backed Securities ETF pursuant to an Agreement and Plan of Reorganization. The Angel Oak Total return Bond Fund's performance and financial history, inclusive of expense limitations, has been adopted by the Angel Oak Mortgage-Backed Securities ETF and will be used going forward. As a result, the information prior to February 16, 2024, reflects that of the Angel Oak Total return Bond Fund's Institutional Shares inclusive of expense limitations.  | (a) Effective as of the close of business on February 16, 2024, the Angel Oak Total return Bond Fund was reorganized into the Angel Oak Mortgage-Backed Securities ETF pursuant to an Agreement and Plan of Reorganization. The Angel Oak Total return Bond Fund's performance and financial history, inclusive of expense limitations, has been adopted by the Angel Oak Mortgage-Backed Securities ETF and will be used going forward. As a result, the information prior to February 16, 2024, reflects that of the Angel Oak Total return Bond Fund's Institutional Shares inclusive of expense limitations.  | (a) Effective as of the close of business on February 16, 2024, the Angel Oak Total return Bond Fund was reorganized into the Angel Oak Mortgage-Backed Securities ETF pursuant to an Agreement and Plan of Reorganization. The Angel Oak Total return Bond Fund's performance and financial history, inclusive of expense limitations, has been adopted by the Angel Oak Mortgage-Backed Securities ETF and will be used going forward. As a result, the information prior to February 16, 2024, reflects that of the Angel Oak Total return Bond Fund's Institutional Shares inclusive of expense limitations.  | (a) Effective as of the close of business on February 16, 2024, the Angel Oak Total return Bond Fund was reorganized into the Angel Oak Mortgage-Backed Securities ETF pursuant to an Agreement and Plan of Reorganization. The Angel Oak Total return Bond Fund's performance and financial history, inclusive of expense limitations, has been adopted by the Angel Oak Mortgage-Backed Securities ETF and will be used going forward. As a result, the information prior to February 16, 2024, reflects that of the Angel Oak Total return Bond Fund's Institutional Shares inclusive of expense limitations.  | (a) Effective as of the close of business on February 16, 2024, the Angel Oak Total return Bond Fund was reorganized into the Angel Oak Mortgage-Backed Securities ETF pursuant to an Agreement and Plan of Reorganization. The Angel Oak Total return Bond Fund's performance and financial history, inclusive of expense limitations, has been adopted by the Angel Oak Mortgage-Backed Securities ETF and will be used going forward. As a result, the information prior to February 16, 2024, reflects that of the Angel Oak Total return Bond Fund's Institutional Shares inclusive of expense limitations.  |
| (b)<sup> </sup>Fund commenced operations on June 4, 2021. | (b) Fund commenced operations on June 4, 2021. | (b) Fund commenced operations on June 4, 2021. | (b) Fund commenced operations on June 4, 2021. | (b) Fund commenced operations on June 4, 2021. | (b) Fund commenced operations on June 4, 2021. | (b) Fund commenced operations on June 4, 2021. | (b) Fund commenced operations on June 4, 2021. |
| (c)<sup> </sup>Net investment income/(loss) per share has been calculated based on average shares outstanding during the year or period. | (c) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year or period. | (c) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year or period. | (c) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year or period. | (c) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year or period. | (c) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year or period. | (c) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year or period. | (c) Net investment income/(loss) per share has been calculated based on average shares outstanding during the year or period. |
| (d)<sup> </sup>Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. | (d) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. | (d) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. | (d) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. | (d) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. | (d) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. | (d) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. | (d) Net realized and unrealized gain (loss) per share may include balancing amounts necessary to reconcile the change in net asset value per share for the year or period, and may not reconcile with the aggregate gain/(loss) in the Statements of Operations due to share transactions for the year or period. |
| (e) Not annualized for periods less than one year. | (e) Not annualized for periods less than one year. | (e) Not annualized for periods less than one year. | (e) Not annualized for periods less than one year. | (e) Not annualized for periods less than one year. | (e) Not annualized for periods less than one year. | (e) Not annualized for periods less than one year. | (e) Not annualized for periods less than one year. |
| (f)<sup> </sup>Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year or period. Dividends and distributions are assumed to be reinvested. | (f) Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year or period. Dividends and distributions are assumed to be reinvested. | (f) Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year or period. Dividends and distributions are assumed to be reinvested. | (f) Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year or period. Dividends and distributions are assumed to be reinvested. | (f) Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year or period. Dividends and distributions are assumed to be reinvested. | (f) Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year or period. Dividends and distributions are assumed to be reinvested. | (f) Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year or period. Dividends and distributions are assumed to be reinvested. | (f) Total return on net asset value is computed based upon the net asset value of common stock on the first business day and the closing net asset value on the last business day of the year or period. Dividends and distributions are assumed to be reinvested. |
| (g)<sup> </sup>Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (g) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (g) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (g) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (g) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (g) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (g) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. | (g) Total return on market value is computed based upon the Nasdaq Stock Exchange market price of the Fund's shares and excludes the effect of brokerage commissions. Dividends and distributions are assumed to be reinvested. |
| (h) Annualized for periods less than one year. | (h) Annualized for periods less than one year. | (h) Annualized for periods less than one year. | (h) Annualized for periods less than one year. | (h) Annualized for periods less than one year. | (h) Annualized for periods less than one year. | (h) Annualized for periods less than one year. | (h) Annualized for periods less than one year. |
| (i) Portfolio turnover rate excludes in-kind transactions. | (i) Portfolio turnover rate excludes in-kind transactions. | (i) Portfolio turnover rate excludes in-kind transactions. | (i) Portfolio turnover rate excludes in-kind transactions. | (i) Portfolio turnover rate excludes in-kind transactions. | (i) Portfolio turnover rate excludes in-kind transactions. | (i) Portfolio turnover rate excludes in-kind transactions. | (i) Portfolio turnover rate excludes in-kind transactions. |

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**FOR MORE INFORMATION**

You can find additional information about the Funds in the following documents:

**Annual and Semi-Annual Reports and Form N-CSR:** While this Prospectus describes the Funds' potential investments, the Annual and Semi-Annual Reports (when available), and Form N-CSR detail the Funds' actual investments as of their report dates. In the <u>[a](https://www.sec.gov/ix?doc=/Archives/edgar/data/1612930/000113322826004853/aafs-efp23015_ncsr.htm)[nnual](https://www.sec.gov/ix?doc=/Archives/edgar/data/1612930/000113322826004853/aafs-efp23015_ncsr.htm)[r](https://www.sec.gov/ix?doc=/Archives/edgar/data/1612930/000113322826004853/aafs-efp23015_ncsr.htm)[eport](https://www.sec.gov/ix?doc=/Archives/edgar/data/1612930/000113322826004853/aafs-efp23015_ncsr.htm)</u>, you will find a discussion by Fund management of recent market conditions, economic trends, and investment strategies that significantly affected each Fund's performance. In <u>[Form N-CSR](https://www.sec.gov/ix?doc=/Archives/edgar/data/1612930/000113322826004853/aafs-efp23015_ncsr.htm)</u>, you will find the Funds' annual and semi-annual financial statements.

**Statement of Additional Information (SAI):** The SAI supplements the Prospectus and contains detailed information about the Funds and their investment restrictions, risks, policies, and operations, including the Funds' policies and procedures relating to the disclosure of portfolio holdings by the Funds' affiliates. A current SAI for the Funds is on file with SEC and is incorporated into this Prospectus by reference, which means it is considered part of this Prospectus.

**How to Obtain Copies of Other Fund Documents**

You can obtain free copies of the current SAI and the Funds' Annual and Semi-Annual Reports (when available) and request other information about the Funds or make shareholder inquiries, in any of the following ways:

You can get free copies of the current Annual and Semi-Annual Reports (when available), as well as the SAI, by contacting the Funds at (800) 617-0004 or obtain a copy online at www.angeloakcapital.com. You may also request other information about the Funds and make shareholder inquiries. The requested documents will be sent within three business days of receipt of the request.

You may also obtain reports and other information about the Funds on the EDGAR Database on the SEC's website at <u>http://www.sec.gov</u>, and copies of this information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: <u>publicinfo@sec.gov</u>.

Investment Company Act No. 811-22980

Back Cover

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![AO ETF SAI Cover.jpg](ck0001612930-20260529_g10.jpg)

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**TABLE OF CONTENTS**

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| | |
|:---|:---|
| [THE TRUST](#iefb4524f28764dd4b15912191d56ca4e_7) | [2](#iefb4524f28764dd4b15912191d56ca4e_7) |
| NON-DIVERSIFICATION | [3](#iefb4524f28764dd4b15912191d56ca4e_530) |
| [INVESTMENT POLICIES AND RISKS](#iefb4524f28764dd4b15912191d56ca4e_10) | [3](#iefb4524f28764dd4b15912191d56ca4e_10) |
| EXCHANGE LISTING AND TRADING | [24](#iefb4524f28764dd4b15912191d56ca4e_506) |
| [PORTFOLIO TURNOVER](#iefb4524f28764dd4b15912191d56ca4e_13) | [24](#iefb4524f28764dd4b15912191d56ca4e_13) |
| [INVESTMENT POLICIES](#iefb4524f28764dd4b15912191d56ca4e_16) | [24](#iefb4524f28764dd4b15912191d56ca4e_16) |
| [MANAGEMENT](#iefb4524f28764dd4b15912191d56ca4e_19) | [26](#iefb4524f28764dd4b15912191d56ca4e_19) |
| [CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES](#iefb4524f28764dd4b15912191d56ca4e_22) | [36](#iefb4524f28764dd4b15912191d56ca4e_22) |
| PROXY VOTING POLICY | [37](#iefb4524f28764dd4b15912191d56ca4e_31) |
| [DISCLOSURE OF PORTFOLIO HOLDINGS](#iefb4524f28764dd4b15912191d56ca4e_28) | [38](#iefb4524f28764dd4b15912191d56ca4e_28) |
| DESCRIPTION OF SHARES | [38](#iefb4524f28764dd4b15912191d56ca4e_34) |
| PORTFOLIO TRANSACTIONS | [38](#iefb4524f28764dd4b15912191d56ca4e_559) |
| BOOK ENTRY SYSTEM | [41](#iefb4524f28764dd4b15912191d56ca4e_584) |
| PURCHASE AND REDEMPTION OF CREATION UNITS | [42](#iefb4524f28764dd4b15912191d56ca4e_608) |
| DETERMINATION OF NET ASSET VALUE | [48](#iefb4524f28764dd4b15912191d56ca4e_633) |
| [TAXATION](#iefb4524f28764dd4b15912191d56ca4e_37) | [48](#iefb4524f28764dd4b15912191d56ca4e_37) |
| [OTHER FUND SERVICE PROVIDERS](#iefb4524f28764dd4b15912191d56ca4e_40) | [55](#iefb4524f28764dd4b15912191d56ca4e_40) |
| [DISTRIBUTOR](#iefb4524f28764dd4b15912191d56ca4e_43) | [57](#iefb4524f28764dd4b15912191d56ca4e_43) |
| [DISTRIBUTION PLAN](#iefb4524f28764dd4b15912191d56ca4e_46) | [57](#iefb4524f28764dd4b15912191d56ca4e_46) |
| [OTHER MATTERS](#iefb4524f28764dd4b15912191d56ca4e_49) | [58](#iefb4524f28764dd4b15912191d56ca4e_49) |
| [FINANCIAL STATEMENTS](#iefb4524f28764dd4b15912191d56ca4e_52) | [58](#iefb4524f28764dd4b15912191d56ca4e_52) |
| [APPENDIX A – DESCRIPTION OF SECURITIES RATINGS](#iefb4524f28764dd4b15912191d56ca4e_55) | A-[1](#iefb4524f28764dd4b15912191d56ca4e_55) |

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**THE TRUST**

Angel Oak Funds Trust (the "Trust") is a Delaware statutory trust organized on June 20, 2014 and registered with the U.S. Securities and Exchange Commission (the "SEC") as an open-end management investment company. The Trust's Declaration of Trust (the "Declaration of Trust") permits the Trust's Board of Trustees (the "Board") to issue an unlimited number of full and fractional shares of beneficial interest, without par value, which may be issued in any number of series. The Board may from time to time issue other series, the assets and liabilities of which will be separate and distinct from any other series. This SAI relates to the Angel Oak Income ETF (the "Income ETF"), Angel Oak UltraShort Income ETF (the "UltraShort Income ETF"), Angel Oak High Yield Opportunities ETF (the "High Yield ETF") and Angel Oak Mortgage-Backed Securities ETF (the "MBS ETF"), each a series of the Trust.

The MBS ETF is a non-diversified series of the Trust, and the Income ETF, UltraShort Income ETF and High Yield ETF are each a diversified series of the Trust. Please see the Prospectus for a discussion of the principal investment policies and risks of investing in the Funds.

The High Yield ETF is the successor in interest to the Predecessor High Yield Fund, a mutual fund with the same investment objective and the same investment strategy as the Fund, as a result of the reorganization of the Predecessor High Yield Fund into the High Yield ETF on February 16, 2024. The Predecessor High Yield Fund, in turn, is the successor in interest to the Rainier High Yield Fund (the "Rainier High Yield Fund"), a series of Rainier Investment Management Mutual Funds (the "Rainier Trust"), which had the same investment objective as the Predecessor High Yield Fund, as a result of the reorganization of the Rainier High Yield Fund into the Predecessor High Yield Fund on April 15, 2016. The Rainier High Yield Fund was advised by Rainier Investment Management, LLC and managed by one of the portfolio managers of the Predecessor High Yield Fund. On April 15, 2016, the shareholders of the Rainier High Yield Fund approved the reorganization of the Original Shares and Institutional Shares of the Rainier High Yield Fund with and into the Class A and Institutional Class shares of the Predecessor High Yield Fund, respectively, and effective as of the close of business on April 15, 2016, the assets and liabilities of the Original Shares and Institutional Shares of the Rainier High Yield Fund were transferred to the Trust in exchange for the Class A and Institutional Class shares of the Predecessor High Yield Fund. The Rainier High Yield Fund had a fiscal year end date of March 31. Following the reorganization of the Rainier High Yield Fund with and into the Predecessor High Yield Fund, the Predecessor High Yield Fund's fiscal year end was changed to January 31. On December 31, 2022, changes were made to the Predecessor High Yield Fund's investment strategies. As a result, the Predecessor High Yield Fund's performance during periods prior to this date may have differed had the Fund's current investment policies and strategies been in place at those times.

The MBS ETF is the successor in interest to the Predecessor Total Return Fund, a mutual fund with the same investment objective but a different investment strategy as the Fund, as a result of the reorganization of the Predecessor Total Return Fund into the MBS ETF on February 16, 2024. The Predecessor Total Return Fund commenced operations on June 4, 2021 under the name "Angel Oak Core Impact Fund." On December 31, 2022, the Fund's name was changed to the "Angel Oak Total Return Bond Fund," and the Fund adopted a new investment policy pursuant to Rule 35d-1 under the Investment Company Act of 1940, as amended (the "1940 Act"), and certain other changes were made to the Predecessor Total Return Fund's investment strategies. As a result, the Predecessor Total Return Fund's performance during periods prior to this date may have differed had the Fund's current investment policies and strategies been in place at those times.

The Declaration of Trust also provides for indemnification and reimbursement of expenses out of a Fund's assets for any shareholder held personally liable for obligations of the Fund or the Trust. The Declaration of Trust provides that the Trust shall, upon request, assume the defense of any claim made against any shareholder for any act or obligation of a Fund or the Trust and satisfy any judgment thereon. All such rights are limited to the assets of the applicable Fund(s). The Declaration of Trust further provides that the Trust may maintain appropriate insurance (for example, fidelity bonding and errors and omissions insurance) for the protection of the Trust, its shareholders, trustees, officers, employees and agents to cover possible tort and other liabilities. However, the activities of the Trust as an investment company would not likely give rise to liabilities in excess of the Trust's total assets. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which both inadequate insurance exists and the applicable Funds are unable to meet their obligations. The Declaration of Trust also provides that shareholders of the Trust may not bring derivative actions, unless certain conditions are met, including, among other conditions: (i) shareholders make a pre-suit written demand upon the Board to bring the action, (ii) shareholders owning shares representing at least a majority of the outstanding applicable shares join the derivative action (except with respect to claims arising under the federal securities laws), and (iii) the Board is given a 30-day period to consider and investigate the request. In addition, if the Board determines that such an action is not in the best interest of the Trust or of a particular Fund or class, as applicable, then (except with respect to claims arising under the federal securities laws) the complaining shareholders may not bring the derivative action. In the event that the Board determines that the action should be brought, such action shall be brought directly by the Trust and not as a derivative action.

The Declaration of Trust also provides that the Trust shall not in any way be limited by any present or future law or custom in regard to investment by fiduciaries. However, nothing in the Declaration of Trust that modifies or restricts the duties or

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liabilities of the Trust's trustees shall apply to, or in any way limit, their duties or liabilities with respect to matters arising under the federal securities laws.

The Funds' Prospectus and this SAI are a part of the Trust's Registration Statement filed with the SEC. Copies of the Trust's complete Registration Statement may be obtained from the SEC upon payment of the prescribed fee or may be accessed free of charge at the SEC's website at www.sec.gov.

**NON-DIVERSIFICATION**

The MBS ETF is classified as a non-diversified investment company under the 1940 Act. A "non-diversified" classification means that a Fund is not limited by the 1940 Act with regard to the percentage of its total assets that may be invested in the securities of a single issuer. This means that a Fund may invest a greater portion of its total assets in the securities of a single issuer or a small number of issuers than if it was a diversified fund. This may have an adverse effect on a Fund's performance or subject Shares to greater price volatility than more diversified investment companies. Moreover, in pursuing its objective, a Fund may hold the securities of a single issuer in an amount exceeding 10% of the value of the outstanding securities of the issuer, subject to restrictions imposed by the Internal Revenue Code of 1986, as amended (the "Code").

Although the MBS ETF is non-diversified for purposes of the 1940 Act, the Fund intends to maintain the required level of diversification and otherwise conduct its operations so as to qualify as a "regulated investment company" for purposes of the Code. Compliance with the diversification requirements of the Code may limit the investment flexibility of a Fund and may make it less likely that a Fund will meet its investment objectives. For additional information about the diversification requirements applicable to regulated investment companies under the Code, see the section titled "Taxation - Qualification as a Regulated Investment Company" in this SAI.

**INVESTMENT POLICIES AND RISKS**

The Funds' principal investment strategies and the risks associated with the same are described in the "Fund Summary" and "Additional Information About the Funds' Objectives, Principal Investment Strategies, and Principal Investment Risks" sections of the Prospectus. The following discussion provides additional information about those principal investment strategies and related risks, as well as information about investment strategies (and related risks) that the Funds may utilize, even though they are not considered to be "principal" investment strategies. Accordingly, an investment strategy (and related risk) that is described below, but which is not described in the Prospectus with respect to a Fund, should not be considered to be a principal strategy (or related risk) applicable to the Fund.

**<u>Corporate Debt Securities</u>.** Corporate debt securities are long- and short-term debt obligations issued by companies (such as publicly issued and privately placed bonds, notes and commercial paper). The Funds' investment adviser, Angel Oak Capital Advisors, LLC ("Angel Oak" or the "Adviser"), considers corporate debt securities to be of investment grade quality if they are rated BBB- or higher by S&P Global Ratings ("S&P") or an equivalent rating from another Nationally Recognized Statistical Ratings Organization, or if unrated, determined by the Adviser to be of comparable quality. Investment grade debt securities generally have adequate to strong protection of principal and interest payments. In the lower end of this category, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal than in higher rated categories. For additional information about these rating rankings, see Appendix A - Description of Securities Ratings.

**<u>Mortgage-Backed and Asset-Backed Securities</u>.** The Funds may invest in mortgage-backed and asset-backed securities. Mortgage-backed securities are mortgage-related securities issued or guaranteed by the U.S. government, its agencies and instrumentalities, or issued by non-government entities. Mortgage-related securities represent ownership in pools of mortgage loans assembled for sale to investors by various government agencies such as the Government National Mortgage Association ("GNMA") and government-related organizations such as the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation ("FHLMC"), as well as by nongovernment issuers such as commercial banks, savings and loan institutions, mortgage bankers and private mortgage insurance companies. Although certain mortgage-related securities are guaranteed by a third party or otherwise similarly secured, the market value of the security, which may fluctuate, is not so secured. These securities differ from conventional bonds in that the principal is paid back to the investor as payments are made on the underlying mortgages in the pool. Accordingly, the Funds receive monthly scheduled payments of principal and interest along with any unscheduled principal prepayments on the underlying mortgages. Because these scheduled and unscheduled principal payments must be reinvested at prevailing interest rates, mortgage-backed securities do not provide an effective means of locking in long-term interest rates for the investor.

In addition, there are a number of important differences among the agencies and instrumentalities of the U.S. government that issue mortgage-related securities and among the securities they issue. Mortgage-related securities issued by GNMA include GNMA Mortgage Pass-Through Certificates (also known as Ginnie Maes) which are guaranteed as to the timely payment of principal and interest. That guarantee is backed by the full faith and credit of the U.S. Treasury. GNMA is a corporation wholly owned by the U.S. government within the Department of Housing and Urban Development. Mortgage-related securities issued by

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FNMA include FNMA Guaranteed Mortgage Pass-Through Certificates (also known as Fannie Maes) and are guaranteed as to payment of principal and interest by FNMA itself and backed by a line of credit with the U.S. Treasury. FNMA is a government-sponsored entity wholly owned by public stockholders. Mortgage-related securities issued by FHLMC include FHLMC Mortgage Participation Certificates (also known as Freddie Macs) guaranteed as to payment of principal and interest by FHLMC itself and backed by a line of credit with the U.S. Treasury. FHLMC is a government-sponsored entity wholly owned by public stockholders.

In September 2008, the Federal Housing Finance Agency ("FHFA") placed Fannie Mae and Freddie Mac into conservatorship. As the conservator, FHFA succeeded to all rights, titles, powers and privileges of Fannie Mae and Freddie Mac and of any stockholder, officer or director of Fannie Mae and Freddie Mac with respect to Fannie Mae and Freddie Mac and the assets of Fannie Mae and Freddie Mac. In connection with the conservatorship, the U.S. Treasury entered into a Senior Preferred Stock Purchase Agreement (SPA) with each of Fannie Mae and Freddie Mac pursuant to which the U.S. Treasury agreed to purchase up to 1,000,000 shares of senior preferred stock with an aggregate initial liquidation preference of $1 billion and obtained warrants and options for the purchase of common stock of each of Fannie Mae and Freddie Mac. Under the SPAs as currently amended, the U.S. Treasury has pledged to provide financial support to a government-sponsored enterprise ("GSE") in any quarter in which the GSE has a net worth deficit as defined in the respective SPA.

The conditions attached to entering into the SPAs place significant restrictions on the activities of Freddie Mac and Fannie Mae. Freddie Mac and Fannie Mae must obtain the consent of the U.S. 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 the senior preferred stock, (ii) issue capital stock of any kind, (iii) terminate the conservatorship of the FHFA except in connection with a receivership, or (iv) increase its debt beyond certain specified levels. Under a letter agreement entered into in January 2021, each enterprise is permitted to retain earnings and raise private capital to enable them to meet the minimum capital requirements under the FHFA's Enterprise Regulatory Capital Framework ("ERCF"). The letter agreement also permits each enterprise to develop a plan to exit conservatorship, but may not do so until litigation involving the conservatorships is resolved and each enterprise has the minimum capital required by FHFA's rules. In addition, significant restrictions are placed on the maximum size of each of Freddie Mac's and Fannie Mae's respective portfolios of mortgages and mortgage-backed securities, and the purchase agreements entered into by Freddie Mac and Fannie Mae provide that the maximum size of their portfolios of these assets must decrease by a specified percentage each year. The future status and role of Freddie Mac and Fannie Mae could be impacted by (among other things) the actions taken and restrictions placed on Freddie Mac and Fannie Mae by the FHFA in its role as conservator, the restrictions placed on Freddie Mac's and Fannie Mae's operations and activities as a result of the senior preferred stock investment made by the U.S. Treasury, market responses to developments at Freddie Mac and Fannie Mae, and future legislative and regulatory action that alters the operations, ownership, structure and/or mission of these institutions, each of which may, in turn, impact the 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 a Fund.

Fannie Mae and Freddie Mac are continuing to operate as going concerns while in conservatorship and each remain liable for all of its obligations, including its guaranty obligations, associated with its mortgage-backed securities. The SPAs are intended to enhance each of Fannie Mae's and Freddie Mac's ability to meet its obligations. The FHFA has indicated that the conservatorship of each enterprise will end when the director of the FHFA determines that the FHFA's plan to restore the enterprise to a safe and solvent condition has been completed. Under amendments to the ERCF, Fannie Mae and Freddie Mac have published capital disclosures which provide additional information about their capital position and capital requirements on a quarterly basis since the first quarter of 2023 and delivered their first capital plans to FHFA in May 2023. The FHFA finalized amendments to certain provisions of the ERCF in November 2023 that modify various capital requirements for Freddie Mac and Fannie Mae. Should Fannie Mae and Freddie Mac be taken out of conservatorship, it is unclear whether the U.S. Treasury would continue to enforce its rights or perform its obligations under the SPAs. It is also unclear how the capital structure of Fannie Mae and Freddie Mac would be constructed post-conservatorship, and what effects, if any, the privatization of Fannie Mae and Freddie Mac will have on their creditworthiness and guarantees of certain mortgage-backed securities. The ERCF requires Fannie Mae and Freddie Mac, upon exit from conservatorship, to maintain higher levels of capital than prior to conservatorship to satisfy their risk-based capital requirements, leverage ratio requirements and prescribed buffer amounts. Accordingly, should the FHFA take Fannie Mae and Freddie Mac out of conservatorship, there could be an adverse impact on the value of their securities which could cause the Funds' investments to lose value.

Asset-backed securities are structured like mortgage-backed securities, but instead of mortgage loans or interests in mortgage loans, the underlying assets may include such items as motor vehicle installment sales contracts or installment loan contracts, leases of various types of real and personal property, and receivables from credit card agreements and from sales of personal property. Regular payments received on asset-backed securities include both interest and principal. Asset-backed securities typically have no U.S. government backing. Additionally, the ability of an issuer of asset-backed securities to enforce its security interest in the underlying assets may be limited.

If the Funds purchase a mortgage-backed or other asset-backed security at a premium, the premium may be lost if there is a decline in the market value of the security whether resulting from changes in interest rates or prepayments in the underlying collateral. As with other interest-bearing securities, the prices of such securities are inversely affected by changes in interest

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rates. Although the value of a mortgage-backed or other asset-backed security may decline when interest rates rise, the converse is not necessarily true, since in periods of declining interest rates the mortgages and loans underlying the securities are prone to prepayment, thereby shortening the average life of the security and shortening the period of time over which income at the higher rate is received. When interest rates are rising, the rate of prepayment tends to decrease, thereby lengthening the period of time over which income at the lower rate is received. For these and other reasons, a mortgage-backed or other asset-backed security's average maturity may be shortened or lengthened as a result of interest rate fluctuations and, therefore, it is not possible to predict accurately the security's return. In addition, while the trading market for short-term mortgages and asset-backed securities is ordinarily quite liquid, in times of financial stress the trading market for these securities may become restricted.

**<u>Collateralized Mortgage Obligations ("CMOs")</u>.** The Funds may invest in CMOs. A CMO is a hybrid between a mortgage-backed bond and a mortgage pass-through security. A CMO is a type of mortgage-backed security that creates separate classes with varying maturities and interest rates, called tranches. Similar to a bond, interest and prepaid principal is paid, in most cases, semiannually. CMOs may be collateralized by whole mortgage loans, but are more typically collateralized by portfolios of mortgage pass-through securities guaranteed by GNMA, FHLMC, or FNMA, and their income streams.

CMOs are structured into multiple classes, each bearing a different fixed or floating interest rate and stated maturity. Actual maturity and average life will depend upon the prepayment experience of the collateral. CMOs provide for a modified form of call protection through a de facto breakdown of the underlying pool of mortgages according to how quickly the loans are repaid. Monthly payment of principal received from the pool of underlying mortgages, including prepayments, is first returned to investors holding the shortest maturity class. Investors holding the longer maturity classes receive principal only after the first class has been retired. An investor is partially guarded against a sooner than desired return of principal because of the sequential payments.

In a typical CMO transaction, a corporation (issuer) issues multiple series (e.g., Series A, B, C and Z) of CMO bonds (Bonds). Proceeds of the Bond offering are used to purchase mortgages or mortgage pass-through certificates (Collateral). The Collateral is pledged to a third party trustee as security for the Bonds. Principal and interest payments from the Collateral are used to pay principal on the Bonds in the following order: Series A, B, C and Z. The Series A, B, and C Bonds all bear current interest. Interest on a Series Z Bond is accrued and added to principal and a like amount is paid as principal on the Series A, B, or C Bond currently being paid off. Only after the Series A, B, and C Bonds are paid in full does the Series Z Bond begin to receive payment. With some CMOs, the issuer serves as a conduit to allow loan originators (primarily builders or savings and loan associations) to borrow against their loan portfolios.

CMOs that are issued or guaranteed by the U.S. government or by any of its agencies or instrumentalities will be considered U.S. government securities by the Funds, while other CMOs, even if collateralized by U.S. government securities, will have the same status as other privately issued securities for purposes of applying the Funds' diversification tests.

FHLMC CMOs are debt obligations of FHLMC issued in multiple classes having different maturity dates which are secured by the pledge of a pool of conventional mortgage loans purchased by FHLMC. Payments of principal and interest on the FHLMC CMOs are made semiannually. The amount of principal payable on each semiannual payment date is determined in accordance with FHLMC's mandatory sinking fund schedule, which, in turn, is equal to approximately 100% of FHA prepayment experience applied to the mortgage collateral pool. All sinking fund payments in the FHLMC CMOs are allocated to the retirement of the individual classes of bonds in the order of their stated maturities. Payment of principal on the mortgage loans in the collateral pool in excess of the amount of FHLMC's minimum sinking fund obligation for any payment date are paid to the holders of the FHLMC CMOs as additional sinking fund payments. Because of the "pass-through" nature of all principal payments received on the collateral pool in excess of FHLMC's minimum sinking fund requirement, the rate at which principal of the FHLMC CMOs is actually repaid is likely to be such that each class of bonds will be retired in advance of its scheduled maturity date. If collection of principal (including prepayments) on the mortgage loans during any semiannual payment period is not sufficient to meet FHLMC CMO's minimum sinking fund obligation on the next sinking fund payment date, FHLMC agrees to make up the deficiency from its general funds.

Classes of CMOs may also include interest only ("IOs") and principal only ("POs"). IOs and POs are stripped mortgage-backed securities representing interests in a pool of mortgages the cash flow from which has been separated into interest and principal components. IOs (interest only securities) receive the interest portion of the cash flow while POs (principal only securities) receive the principal portion. IOs and POs can be extremely volatile in response to changes in interest rates. As interest rates rise and fall, the value of IOs tends to move in the same direction as interest rates. POs perform best when prepayments on the underlying mortgages rise since this increases the rate at which the investment is returned and the yield to maturity on the PO. When payments on mortgages underlying a PO are slow, the life of the PO is lengthened and the yield to maturity is reduced.

CMOs are generally subject to the same risks as mortgage-backed securities. In addition, CMOs may be subject to credit risk because the issuer or credit enhancer has defaulted on its obligations and the Funds may not receive all or part of its principal. Obligations issued by U.S. government-related entities are guaranteed as to the payment of principal and interest, but are not

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backed by the full faith and credit of the U.S. government. The performance of private label mortgage-backed securities, issued by private institutions, is based on the financial health of those institutions. Although GNMA guarantees timely payment of GNMA certificates even if homeowners delay or default, tracking the "pass-through" payments may, at times, be difficult.

**<u>Collateralized Debt Obligations ("CDOs")</u>.** The Funds may invest in CDOs. A CDO is a security backed by a pool of bonds, loans and other debt obligations. CDOs are not limited to investing in one type of debt and accordingly, a CDO may own corporate bonds, commercial loans, asset-backed securities, residential mortgage-backed securities, commercial mortgage-backed securities, and emerging market debt. The CDO's securities are typically divided into several classes, or bond tranches, that have differing levels of investment grade or credit tolerances. Most CDO issues are structured in a way that enables the senior bond classes and mezzanine classes to receive investment-grade credit ratings. Credit risk is shifted to the most junior class of securities. If any defaults occur in the assets backing a CDO, the senior bond classes are first in line to receive principal and interest payments, followed by the mezzanine classes and finally by the lowest rated (or non-rated) class, which is known as the equity tranche. Similar in structure to a collateralized mortgage obligation (described above) CDOs are unique in that they represent different types of debt and credit risk.

**<u>Collateralized Loan Obligations ("CLOs")</u>.** The Funds may invest in CLOs, which are debt instruments typically backed by a pool of loans. The risks of an investment in a CLO depend largely on the type of the collateral securities and the class of the CLO in which the Funds invest. Some CLOs have credit ratings, but are typically issued in various classes with various priorities. Normally, CLOs are privately offered and sold (that is, they are not registered under the securities laws) and may be characterized by the Funds as illiquid investments; however, an active dealer market may exist for CLOs that qualify for Rule 144A transactions. In addition to the normal interest rate, default and other risks of fixed income securities, CLOs carry additional risks, including the possibility that distributions from collateral securities will not be adequate to make interest or other payments, the quality of the collateral may decline in value or default, the Funds may invest in CLOs that are subordinate to other classes, values may be volatile, and disputes with the issuer may produce unexpected investment results.

**<u>Collateralized Fund Obligations ("CFOs")</u>** (*Income ETF only*). The Fund may invest in CFOs. A CFO is a security that is collateralized by private fund interests and other assets. A CFO issuer's securities are typically divided into several classes, or tranches. The most senior tranche of notes will have the highest rating. Each successive tranche (other than the most junior tranche) will correspond to notes that are more junior to, and lower rated than, the immediately prior (i.e., more senior) tranche. The most subordinated tranche will be an equity tranche. Accordingly, the returns on tranches, in turn, can vary in line with gains or losses on the underlying investments. This tranched capital structure allows the investors in a CFO issuer to determine their preferred risk/return investments. Since many private fund interests do not have specified or consistent periodic payments, the timing of payments to investors in a CFO can be difficult to predict. CFOs are also generally subject to the same risks as the underlying private funds and other assets.

**<u>ESG Integration</u>**. As part of its investment process, the Adviser also considers certain environmental, social and governance ("ESG") and sustainability factors that it believes could have a material impact on certain securities in which the Funds may invest. These determinations may not be conclusive, and securities that may be negatively impacted by such factors may be purchased and retained by the Funds while the Funds may divest or not invest in securities that may be positively impacted by such factors.

In evaluating a security's ESG and sustainability factors, the Adviser will use its own proprietary assessments of such factors and may also reference standards as set forth by recognized global organizations, including the United Nations' Sustainable Development Goals ("UN SDGs") and the United Nations' Principles for Responsible Investing ("UN PRI"). Examples of the types of factors the Adviser may consider include, without limitation: environmental issues, such as carbon emissions and energy efficiency; social issues, such as affordable housing and community investment; and corporate governance issues, such as board independence. The Funds may also invest in other investment companies that focus on ESG and sustainability factors. ESG and sustainability factors will not be considered with respect to investments in U.S. Treasury and U.S. government agency securities, money market instruments, and derivatives. The Adviser's consideration of certain ESG and sustainability factors when making investment decisions may affect a Fund's performance relative to that of funds that do not consider ESG and sustainability factors.

**<u>Banks and Diversified Financials Risk</u>.** Companies in the group of industries related to banks and diversified financials are often subject to extensive governmental regulation and intervention, which may adversely affect the scope of their activities, the prices they can charge and the amount of capital they must maintain. Governmental regulation may change frequently and may have significant adverse consequences for companies in the group of industries related to banks and diversified financials, including effects not intended by such regulation. The impact of recent or future regulation in various countries on any individual financial company or on the industries as a whole cannot be predicted. A Fund's emphasis on community banks may make the Fund more economically vulnerable in the event of a downturn in the banking industry. Community banks may face heightened risks of failure during times of economic downturns than larger banks. Community banks may also be subject to greater lending risks than larger banks.

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Certain risks may impact the value of investments in the group of industries related to banks and diversified financials more severely than those of investments outside these industries, including the risks associated with companies that operate with substantial financial leverage. Companies in the group of industries related to banks and diversified financials may also be adversely affected by increases in interest rates and loan losses, decreases in the availability of money or asset valuations, credit rating downgrades and adverse conditions in other related markets.

Insurance companies, in particular, may be subject to severe price competition and/or rate regulation, which may have an adverse impact on their profitability. Insurance companies are subject to extensive government regulation in some countries and can be significantly affected by changes in interest rates, general economic conditions, price and marketing competition, the imposition of premium rate caps, or other changes in government regulation or tax law. Different segments of the insurance industry can be significantly affected by mortality and morbidity rates, environmental clean-up costs and catastrophic events such as earthquakes, hurricanes and terrorist acts.

During the financial crisis that began in 2007, the deterioration of the credit markets impacted a broad range of mortgage, asset-backed, auction rate, sovereign debt and other markets, including U.S. and non-U.S. credit and interbank money markets, thereby affecting a wide range of financial institutions and markets. A number of large financial institutions failed during that time, merged with stronger institutions or had significant government infusions of capital. Instability in the financial markets caused certain financial companies to incur large losses. Some financial companies experienced declines in the valuations of their assets, took actions to raise capital (such as the issuance of debt or equity securities), or even ceased operations. Some financial companies borrowed significant amounts of capital from government sources and may face future government-imposed restrictions on their businesses or increased government intervention. Those actions caused the securities of many financial companies to decline in value.

The group of industries related to banks and diversified financials is also a target for cyber attacks and may experience technology malfunctions and disruptions. In recent years, cyber attacks and technology failures have become increasingly frequent and have caused significant losses.

Risks specific to the bank and diversified financial group of industries also may include:

***Asset Quality and Credit Risk.*** When financial institutions loan money, commit to loan money or enter into a letter of credit or other contract with a counterparty, they incur credit risk, or the risk of losses if their borrowers do not repay their loans or their counterparties fail to perform according to the terms of their contract. The financial companies in which a Fund will invest offer a number of products which expose them to credit risk, including loans, leases and lending commitments, derivatives, trading account assets and assets held-for-sale. Financial institutions allow for and create loss reserves against credit risks based on an assessment of credit losses inherent in their credit exposure (including unfunded credit commitments). This process, which is critical to their financial results and condition, requires difficult, subjective and complex judgments, including forecasts of economic conditions and how these economic predictions might impair the ability of their borrowers to repay their loans. As is the case with any such assessments, there is always the chance that the financial institutions in which a Fund invests will fail to identify the proper factors or that they will fail to accurately estimate the impacts of factors that they identify. Failure to identify credit risk factors or the impact of credit factors may result in increased non-performing assets, which will result in increased loss reserve provisioning and reduction in earnings. Poor asset quality can also affect earnings through reduced interest income which can impair a bank's ability to service debt obligations or to generate sufficient income for equity holders. Bank failure may result due to inadequate loss reserves, inadequate capital to sustain credit losses or reduced earnings due to non-performing assets. A Fund will not have control over the asset quality of the financial institutions in which the Fund will invest, and these institutions may experience substantial increases in the level of their non-performing assets which may have a material adverse impact on the Fund's investments.

***Capital Risk.*** A bank's capital position is extremely important to its overall financial condition and serves as a cushion against losses. U.S. banking regulators have established specific capital requirements for regulated banks. Federal banking regulators proposed amended regulatory capital regulations in response to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") and the international capital and liquidity requirements set forth by the Basel Committee on Banking Supervision ("Basel III") protocols which would impose even more stringent capital requirements. In the event that a regulated bank falls below certain capital adequacy standards, it may become subject to regulatory intervention including, but not limited to, being placed into a FDIC-administered receivership or conservatorship. The regulatory provisions under which the regulatory authorities act are intended to protect depositors. The deposit insurance fund and the banking system are not intended to protect stockholders or other investors in other securities issued by a bank or its holding company. The effect of inadequate capital can have a potentially adverse consequence on the institution's financial condition, its ability to operate as a going concern and its ability to operate as a regulated financial institution and may have a material adverse impact on a Fund's investments.

***Earnings Risk.*** Earnings are the primary means for financial institutions to generate capital to support asset growth, to provide for loan losses and to support their ability to pay dividends to stockholders. The quantity as well as the quality of earnings can be affected by excessive or inadequately managed credit risk that may result in losses and require additions to

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loss reserves, or by high levels of market risk that may unduly expose an institution's earnings to volatility in interest rates. The quality of earnings may also be diminished by undue reliance on extraordinary gains, nonrecurring events, or favorable tax effects. Future earnings may be adversely affected by an inability to forecast or control funding and operating expenses, net interest margin compression improperly executed or ill-advised business strategies, or poorly managed or uncontrolled exposure to other risks. Deficient earnings can result in inadequate capital resources to support asset growth or insufficient cash flow to meet the financial institution's near term obligations. Under certain circumstances, this may result in the financial institution being required to suspend operations or the imposition of a cease-and-desist order by regulators which could potentially impair a Fund's investments.

***Management Risk.*** The ability of management to identify, measure, monitor and control the risks of an institution's activities and to ensure a financial institution's safe, sound and efficient operation in compliance with applicable laws and regulations are critical. Depending on the nature and scope of an institution's activities, management practices may need to address some or all of the following risks: credit, market, operating, reputation, strategic, compliance, legal, liquidity and other risks. A Fund will not have direct or indirect control over the management of the financial institutions in which the Fund will invest and, given the Funds' long-term investment strategies, it is likely that the management teams and their policies may change. The inability of management to operate their financial institution in a safe, sound and efficient manner in compliance with applicable laws and regulations, or changes in management of financial institutions in which a Fund invests, may have an adverse impact on the Fund's investment.

***Litigation Risk.*** Financial institutions face significant legal risks in their businesses, and the volume of claims and amount of damages and penalties claimed in litigation and regulatory proceedings against financial institutions remain high. Substantial legal liability or significant regulatory action against the companies in which a Fund invests could have material adverse financial effects or cause significant reputational harm to these companies, which in turn could seriously harm their business prospects. Legal liability or regulatory action against the companies in which a Fund invests could have material adverse financial effects on the Fund and adversely affect the Fund's earnings and book value.

***Market Risk.*** The financial institutions in which a Fund may invest are directly and indirectly affected by changes in market conditions. Market risk generally represents the risk that values of assets and liabilities or revenues will be adversely affected by changes in market conditions. Market risk is inherent in the financial instruments associated with the operations and activities including loans, deposits, securities, short-term borrowings, long-term debt, trading account assets and liabilities, and derivatives of the financial institutions in which a Fund may invest. Market risk includes, but is not limited to, fluctuations in interest rates, equity and futures prices, changes in the implied volatility of interest rates, equity and futures prices and price deterioration or changes in value due to changes in market perception or actual credit quality of the issuer. Accordingly, depending on the instruments or activities impacted, market risks can have wide ranging, complex adverse effects on the operations and overall financial condition of the financial institutions in which a Fund may invest as well as adverse effects on the Fund's results from operations and overall financial condition.

***Monetary Policy Risk.*** Monetary policies have had, and will continue to have, significant effects on the operations and results of financial institutions. There can be no assurance that a particular financial institution will not experience a material adverse effect on its net interest income in a changing interest rate environment. Factors such as the liquidity of the global financial markets, and the availability and cost of credit may significantly affect the activity levels of customers with respect to the size, number and timing of transactions. Fluctuation in interest rates, which affect the value of assets and the cost of funding liabilities, are not predictable or controllable, may vary and may impact economic activity in various regions.

***Competition.*** The group of industries related to banks and diversified financials, including the banking sector, is extremely competitive, and it is expected that the competitive pressures will increase. Merger activity in the financial services industry has resulted in, and is expected to continue to result in, larger institutions with greater financial and other resources that are capable of offering a wider array of financial products and services. The group of industries related to banks and diversified financials has become considerably more concentrated as numerous financial institutions have been acquired by or merged into other institutions. The majority of financial institutions in which a Fund may invest will be relatively small with significantly fewer resources and capabilities than larger institutions; this size differential puts them at a competitive disadvantage in terms of product offering and access to capital. Technological advances and the growth of e-commerce have made it possible for non-financial institutions and non-bank financial institutions to offer products and services that have traditionally been offered by banking and other financial institutions. It is expected that the cross-industry competition and inter-industry competition will continue to intensify and may be adverse to the financial institutions in which the Funds may invest.

***Regulatory Risk.*** Financial institutions, including community banks, are subject to various state and federal banking regulations that impact how they conduct business, including but not limited to how they obtain funding, their ability to operate, and the value of a Fund's investments. Changes to these regulations could have an adverse effect on their operations and operating results and the Funds' investments. The Funds expect to make long-term investments in financial institutions that are subject to various state and federal regulations and oversight. Congress, state legislatures and the various bank regulatory agencies frequently introduce proposals to change the laws and regulations governing the banking industry in response to the

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Dodd-Frank Act, Consumer Financial Protection Bureau ("CFPB") rulemaking or otherwise. The likelihood and timing of any proposals or legislation and the impact they might have on a Fund's investments in financial institutions affected by such changes cannot be determined and any such changes may be adverse to the Fund's investments. Ownership of the stock of certain types of regulated banking institutions may subject a Fund to additional regulations. Investments in banking institutions and transactions related to the Fund's investments may require approval from one or more regulatory authorities. If a Fund were deemed to be a bank holding company or thrift holding company, bank holding companies or thrift holding companies that invest in the Fund would be subject to certain restrictions and regulations.

**<u>Credit Linked Notes ("CLNs")</u>.** The Funds may invest in CLNs. A CLN is a security with an embedded credit default swap allowing the issuer to transfer a specific credit risk to credit investors.

**<u>Convertible Securities</u>.** The Funds may invest in convertible securities which are preferred stocks or bonds that pay a fixed dividend or interest payment and are convertible into common stock or other equity interests at a specified price or conversion ratio during a specified period. Although convertible bonds, convertible preferred stocks, and other securities convertible into equity securities may have some attributes of income securities or debt securities, the Funds generally treat such securities as equity securities. By investing in convertible securities, the Funds may seek income, and may also seek the opportunity, through the conversion feature, to participate in the capital appreciation of the common stock or other interests into which the securities are convertible, while potentially earning a higher fixed rate of return than is ordinarily available in common stocks. While the value of convertible securities depends in part on interest rate changes and the credit quality of the issuers, the value of these securities will also change based on changes in the value of the underlying stock. Income paid by a convertible security may provide a limited cushion against a decline in the price of the security; however, convertible securities generally have less potential for gain than common stocks. Also, convertible bonds generally pay less income than non-convertible bonds.

The Funds may invest in contingent securities structured as contingent convertible securities, also known as "CoCos." Contingent convertible securities are hybrid debt securities typically issued by non-U.S. banks and are designed to behave like bonds in times of economic health and either convert into equity at a predetermined share price or are written down in value based on the specific terms of the individual security if a pre-specified trigger event occurs. Unlike traditional convertible securities, the conversion of a contingent convertible security from debt to equity is "contingent" and will occur only in the case of a trigger event. Trigger events vary by instrument and are defined by the documents governing the contingent convertible security. Trigger events may include a decline in the issuer's capital below a specified threshold level, increase in the issuer's risk weighted assets, the share price of the issuer falling to a particular level for a certain period of time and certain regulatory events.

Contingent convertible securities are subject to the credit, interest rate, high yield security, foreign security and markets risks associated with bonds and equities, and to the risks specific to convertible securities in general. Contingent convertible securities are also subject to additional risks specific to their structure including conversion risk. Because trigger events are not consistently defined among contingent convertible securities, this risk is greater for contingent convertible securities that are issued by banks with capital ratios close to the level specified in the trigger event.

In addition, coupon payments on contingent convertible securities are discretionary and may be cancelled by the issuer at any point, for any reason, and for any length of time. Due to the uncertainty surrounding coupon payments, contingent convertible securities may be volatile and their price may decline rapidly in the event that coupon payments are suspended.

Convertible contingent securities are a newer form of instrument and the regulatory environment for these instruments continues to evolve. Because the market for contingent convertible securities is evolving, it is uncertain how the larger market for contingent convertible securities would react to a trigger event or coupon suspension applicable to a single issuer.

**<u>Foreign Securities</u>*.*** The Funds may invest directly in foreign securities. Investing in securities of foreign companies and countries involves certain considerations and risks that are not typically associated with investing in U.S. government securities and securities of domestic companies. There may be less publicly available information about a foreign issuer than a domestic one, and foreign companies are not generally subject to uniform accounting, auditing and financial standards and requirements comparable to those applicable to U.S. companies. There may also be less government supervision and regulation of foreign securities exchanges, brokers and listed companies than exists in the United States. Interest and dividends paid by foreign issuers as well as gains or proceeds realized from the sale or other disposition of foreign securities may be subject to withholding and other foreign taxes, which may decrease the net return on such investments as compared to dividends and interest paid to the Funds by domestic companies or the U.S. government. There may be the possibility of expropriations, seizure or nationalization of foreign deposits, the imposition of economic sanctions and other similar measures, confiscatory taxation, political, economic or social instability or diplomatic developments that could affect assets of the Funds held in foreign countries. The type and severity of sanctions and other similar measures, including counter sanctions and other retaliatory actions, that may be imposed could vary broadly in scope, and their impact is difficult to ascertain. These types of measures may include, but are not limited to, banning a sanctioned country or certain persons or entities associated with such country from global payment systems that facilitate cross-border payments, restricting the settlement of securities transactions by certain investors, and freezing the assets of particular countries, entities or persons. The imposition of sanctions and other

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similar measures could, among other things, result in a decline in the value and/or liquidity of securities issued by the sanctioned country or companies located in or economically tied to the sanctioned country, downgrades in the credit ratings of the sanctioned country's securities or those of companies located in or economically tied to the sanctioned country, currency devaluation or volatility, and increased market volatility and disruption in the sanctioned country and throughout the world. Sanctions and other similar measures could directly or indirectly limit or prevent a Fund from buying and selling securities (in the sanctioned country and other markets), significantly delay or prevent the settlement of securities transactions, and adversely impact a Fund's liquidity and performance. In addition, investing in foreign securities will generally result in higher commissions than investing in similar domestic securities.

Decreases in the value of currencies of the foreign countries in which the Funds will invest relative to the U.S. dollar will result in a corresponding decrease in the U.S. dollar value of the Funds' assets denominated in those currencies (and possibly a corresponding increase in the amount of securities required to be liquidated to meet distribution requirements). Conversely, increases in the value of currencies of the foreign countries in which the Funds invest relative to the U.S. dollar will result in a corresponding increase in the U.S. dollar value of the Funds' assets (and possibly a corresponding decrease in the amount of securities to be liquidated).

Investing in emerging markets can have more risk than investing in developed foreign markets. The risks of investing in these markets may be exacerbated relative to investments in foreign markets. Governments of developing and emerging market countries may be more unstable as compared to more developed countries. Developing and emerging market countries may have less developed securities markets or exchanges, and legal and accounting systems. It may be more difficult to sell securities at acceptable prices and security prices may be more volatile than in countries with more mature markets. Currency values may fluctuate more in developing or emerging markets. Developing or emerging market countries may be more likely to impose government restrictions, including confiscatory taxation, expropriation or nationalization of a company's assets, and restrictions on foreign ownership of local companies. In addition, emerging markets may impose restrictions on the Funds' ability to repatriate investment income or capital and thus, may adversely affect the operations of the Funds. Certain emerging markets may impose constraints on currency exchange and some currencies in emerging markets may have been devalued significantly against the U.S. Dollar. For these and other reasons, the prices of securities in emerging markets can fluctuate more significantly than the prices of securities of companies in developed countries. The less developed the country, the greater effect these risks may have on the Funds.

International trade tensions may arise from time to time which could result in trade tariffs, embargos or other restrictions or limitations on trade. The imposition of any actions on trade could trigger a significant reduction in international trade, an oversupply of certain manufactured goods, substantial price reductions of goods, possible failure of individual companies or industries, slower economic growth or recession, inflation, increased unemployment or market volatility, any of which could have a negative impact on a Fund's performance. An increase in tariffs or trade restrictions, or even the threat of such developments, could lead to retaliatory actions by other countries and an escalation of trade barriers, and could heighten the aforementioned risks to the Funds. Events such as these are difficult to predict and may or may not occur in the future.

**<u>European Securities</u>.** European countries can be significantly affected by the actions of their own individual governments as well as the actions of other European institutions, such as the European Union ("EU"), the European Economic and Monetary Union ("EMU") and the European Central Bank. The EU is an intergovernmental and supranational union consisting of 27 member states. One of the key responsibilities of the EU is to create and administer a unified trade policy. The member states created the EMU that established different stages and commitments that member states need to follow to achieve greater economic policy coordination and monetary cooperation. Member states relinquish their monetary control to the European Central Bank and use a single unified currency, the euro.

Investments in Europe are also subject to currency risks. Further, because many countries are dependent on foreign exports, any fluctuations in the euro exchange rate could have a negative effect on an issuer's profitability and performance.

The EU has been extending its influence to the east as it has accepted several new Eastern European countries as members. Some of the new members remain burdened by the inherited inefficiencies of centrally planned economies. Additionally, these countries are dependent on Western Europe for trade and credit. Russia has attempted, and may attempt in the future, to assert its influence in Eastern Europe through economic or military measures. In February 2022, Russia invaded Ukraine, which amplified existing geopolitical tensions. The current and future status of the EU continues to be the subject of political and regulatory controversy, with widely differing views both within and between member countries.

The European financial markets have experienced uncertainty over the past few years, largely because of concerns about rising government debt levels and increased budget deficits. Political and regulatory responses to address structural and policy issues have created even greater instability throughout the region. The high levels of public debt increases the likelihood that certain European issuers will either default or restructure their debt obligations, which would have a negative effect on asset values. The use of austerity measures in countries such as Spain, Italy, Greece, Portugal and Ireland during times in which the Eurozone has high levels of unemployment has limited economic growth. European countries can be adversely affected by the tight fiscal and monetary controls that the EMU requires its members to comply with.

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**<u>Market Disruptions Risk</u>.** The Funds are subject to investment and operational risks associated with financial, economic and other global market developments and disruptions, including those arising from, but not limited to, war; terrorism; market manipulation; government interventions, defaults and shutdowns; political changes or diplomatic developments; embargoes, tariffs, sanctions and other trade barriers; public health emergencies (such as the spread of infectious diseases, pandemics and epidemics); and natural/environmental disasters. Any of these events could negatively impact the securities markets and cause a Fund to lose value. These events can also impair the technology and other operational systems upon which the Funds' service providers, including Angel Oak as the Funds' investment adviser, rely, and could otherwise disrupt the Funds' service providers' ability to fulfill their obligations to the Funds.

In addition, U.S. and global markets recently have experienced increased volatility, including as a result of the recent failures of certain U.S. and non-U.S. banks, which could be harmful to a Fund and issuers in which it invests. For example, if a bank in which the Fund or an issuer has an account fails, any cash or other assets in bank accounts may be temporarily inaccessible or permanently lost by the Fund or issuer. If a bank that provides a subscription line credit facility, asset-based facility, other credit facility and/or other services to an issuer fails, the issuer could be unable to draw funds under its credit facilities or obtain replacement credit facilities or other services from other lending institutions with similar terms. Even if banks used by issuers in which a Fund invests remain solvent, continued volatility in the banking sector could cause or intensify an economic recession, increase the costs of banking services or result in the issuers being unable to obtain or refinance indebtedness at all or on as favorable terms as could otherwise have been obtained. Conditions in the banking sector are evolving, and the scope of any potential impacts to a Fund and issuers, both from market conditions and also potential legislative or regulatory responses, are uncertain.

The foregoing could lead to a significant economic downturn or recession, increased market volatility, a greater number of market closures, higher default rates and adverse effects on the values and liquidity of securities or other assets. Such impacts, which may vary across asset classes, may adversely affect the performance of the Funds. In certain cases, an exchange or market may close or issue trading halts on specific securities or even the entire market, which may result in the Funds being, among other things, unable to buy or sell certain securities or financial instruments or to accurately price their investments.

To satisfy any shareholder redemption requests during periods of extreme volatility, it is more likely the Funds may be required to dispose of portfolio investments at unfavorable prices compared to their intrinsic value.

**<u>Exchange-Traded Notes ("ETNs")</u>.** The Funds may invest in ETNs. ETNs are a type of senior, unsecured, unsubordinated debt security issued by financial institutions that combines aspects of both bonds and exchange traded funds ("ETFs"). An ETN's returns are based on the performance of a market index minus fees and expenses. Similar to ETFs, ETNs are listed on an exchange and traded in the secondary market. However, unlike an ETF, an ETN can be held until the ETN's maturity, at which time the issuer will pay a return linked to the performance of the market index to which the ETN is linked minus certain fees.

Unlike regular bonds, ETNs do not make periodic interest payments and principal is not protected. ETNs are subject to credit risk and the value of an ETN may drop due to a downgrade in the issuer's credit rating, despite the underlying market benchmark or strategy remaining unchanged. The value of an ETN may also be influenced by time to maturity, level of supply and demand for the ETN, volatility and lack of liquidity in underlying assets, changes in the applicable interest rates, changes in the issuer's credit rating, and economic, legal, political, or geographic events that affect the referenced underlying asset. When a Fund invests in ETNs it will bear its proportionate share of any fees and expenses borne by the ETN. A Fund's decision to sell its ETN holdings may be limited by the availability of a secondary market. In addition, although an ETN may be listed on an exchange, the issuer may not be required to maintain the listing and there can be no assurance that a secondary market will exist for an ETN.

ETNs are also subject to tax risk. No assurance can be given that the U.S. Internal Revenue Service ("IRS") will accept, or a court will uphold, how the Funds characterize and treat ETNs for tax purposes. Further, the IRS and Congress have considered proposals that would change the timing and character of income and gains from ETNs.

An ETN that is tied to a specific market benchmark or strategy may not be able to replicate and maintain exactly the composition and relative weighting of securities, commodities or other components in the applicable market benchmark or strategy. Some ETNs that use leverage can, at times, be relatively illiquid and, thus, they may be difficult to purchase or sell at a fair price. Leveraged ETNs are subject to the same risk as other instruments that use leverage in any form.

The market value of ETN shares may differ from their market benchmark or strategy. This difference in price may be due to the fact that the supply and demand in the market for ETN shares at any point in time is not always identical to the supply and demand in the market for the securities, commodities or other components underlying the market benchmark or strategy that the ETN seeks to track. As a result, there may be times when an ETN share trades at a premium or discount to its market benchmark or strategy.

**<u>Fixed Income Securities</u>*.*** The Funds may invest in fixed income securities. Even though interest-bearing securities are investments that promise a stable stream of income, the prices of such securities are affected by changes in interest rates. In general, fixed income security prices rise when interest rates fall and fall when interest rates rise. Securities with shorter

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maturities, while offering lower yields, generally provide greater price stability than longer term securities and are less affected by changes in interest rates. The values of fixed income securities also may be affected by changes in the credit rating or financial condition of the issuing entities. Once the rating of a portfolio security has been changed, the Funds will consider all circumstances deemed relevant in determining whether to continue to hold the security. A Fund with a negative average portfolio duration may increase in value when interest rates rise, and generally incurs a loss when interest rates decline. If an issuer calls or redeems an instrument held by the Fund during a time of declining interest rates, the Fund might need to reinvest the proceeds in an investment offering a lower yield, and therefore may not benefit from any increase in value as a result of declining interest rates. A Fund with a negative average portfolio duration may decline in value as interest rates decrease.

Fixed income investments bear certain risks, including credit risk, or the ability of an issuer to pay interest and principal as they become due. Generally, higher yielding bonds are subject to more credit risk than lower yielding bonds. Interest rate risk refers to the fluctuations in value of fixed income securities resulting from the inverse relationship between the market value of outstanding fixed income securities and changes in interest rates. An increase in interest rates will generally reduce the market value of fixed income investments and a decline in interest rates will tend to increase their value.

Call risk is the risk that an issuer will pay principal on an obligation earlier than scheduled or expected, which would accelerate cash flows from, and shorten the average life of, the security. Bonds are typically called when interest rates have declined. In the event of a bond being called, a Fund may have to reinvest the proceeds in lower yielding securities to the detriment of the Fund.

Extension risk is the risk that an issuer may pay principal on an obligation slower than expected, having the effect of extending the average life and duration of the obligation. This typically happens when interest rates have increased.

A number of factors, including changes in a central bank's monetary policies or general improvements in the economy, may cause interest rates to rise. Fixed income securities with longer durations are more sensitive to interest rate changes than securities with shorter durations, making them more volatile. This means their prices are more likely to experience a considerable reduction in response to a rise in interest rates.

**<u>High Yield Securities</u>.** When investing in fixed income securities, the Funds may purchase securities regardless of their rating, including fixed income securities rated below investment grade. Securities rated below investment grade are often referred to as high yield securities or "junk bonds." Investments in securities rated below investment grade that are eligible for purchase by a Fund are described as "speculative" by Moody's Investors Service, Inc. ("Moody's"), S&P and Fitch Ratings Inc. ("Fitch"). Investments in lower rated corporate debt securities generally provide greater income and increased opportunity for capital appreciation than investments in higher quality securities, but they also typically entail greater price volatility and principal and income risk. These high yield securities are regarded as predominantly speculative with respect to the issuer's continuing ability to meet principal and interest payments. Analysis of the creditworthiness of issuers of debt securities that are high yield may be more complex than for issuers of higher quality debt securities.

High yield securities may be more susceptible to real or perceived adverse economic and competitive industry conditions than investment grade securities. The prices of high yield securities have been found to be more sensitive to adverse economic downturns or individual corporate developments. A projection of an economic downturn or of a period of rising interest rates, for example, could cause a decline in high yield security prices because the advent of a recession could lessen the ability of a highly leveraged company to make principal and interest payments on its debt securities. If an issuer of high yield securities defaults, in addition to risking payment of all or a portion of interest and principal, the Fund by investing in such securities may incur additional expenses to obtain recovery. In the case of high yield securities structured as zero-coupon or pay-in-kind securities, their market prices are affected to a greater extent by interest rate changes, and therefore tend to be more volatile than securities that pay interest periodically and in cash.

The secondary market on which high yield securities are traded may be less liquid than the market for higher grade securities. Less liquidity in the secondary trading market could adversely affect the price at which the Fund could sell a high yield security, and could adversely affect the daily net asset value ("NAV") of the shares. Adverse publicity and investor perceptions, whether or not based on fundamental analysis, may decrease the values and liquidity of high yield securities, especially in a thinly-traded market. When secondary markets for high yield securities are less liquid than the market for higher grade securities, it may be more difficult to value the securities because such valuation may require more research, and elements of judgment may play a greater role in the valuation because there is less reliable, objective data available.

The use of credit ratings to evaluate high yield securities can involve certain risks. For example, credit ratings evaluate the safety of principal and interest payments, not the market value risk of high yield securities. Also, credit rating agencies may fail to change credit ratings in a timely fashion to reflect events since the security was last rated. The Adviser does not rely solely on credit ratings when selecting securities for the Fund, and develops its own analysis of issuer credit quality. If a credit rating agency changes the rating of a portfolio security held by the Fund, the Fund may retain the security if the Adviser deems it in the best interest of shareholders.

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**<u>U.S. Government Obligations</u>.** U.S. government securities include direct obligations issued by the United States Treasury, such as U.S. Treasury bills (maturities of one year or less), U.S. Treasury notes (maturities of one to ten years) and U.S. Treasury bonds (generally maturities of greater than ten years). They also include U.S. government agencies and instrumentalities that issue or guarantee securities, such as the Federal Home Loan Banks, FNMA and the Student Loan Marketing Association. Except for U.S. Treasury securities, obligations of U.S. government agencies and instrumentalities may or may not be supported by the full faith and credit of the United States. Some, such as those of the Federal Home Loan Banks, are backed by the right of the issuer to borrow from the U.S. Treasury, others by discretionary authority of the U.S. government to purchase the agencies' obligations, while still others, such as the Student Loan Marketing Association, are supported only by the credit of the instrumentality. In the case of securities not backed by the full faith and credit of the United States, the investor must look principally to the agency issuing or guaranteeing the obligation for ultimate repayment and may not be able to assess a claim against the United States itself in the event the agency or instrumentality does not meet its commitment.

The total public debt of the United States as a percentage of gross domestic product has grown rapidly since the beginning of the 2008–2009 financial downturn. Although high debt levels do not necessarily indicate or cause economic problems, they may create certain systemic risks if sound debt management practices are not implemented. A high national debt can raise concerns that the U.S. government will not be able to make principal or interest payments when they are due. This increase has also necessitated the need for the U.S. Congress to negotiate adjustments to the statutory debt limit to increase the cap on the amount the U.S. government is permitted to borrow to meet its existing obligations and finance current budget deficits. In August 2011, S&P lowered its long term sovereign credit rating of the U.S. government. In explaining the downgrade at that time, S&P cited, among other reasons, controversy over raising the statutory debt limit and growth in public spending. More recently, in August 2023 and again in May 2025, the long term sovereign credit rating of the U.S. government was downgraded by Fitch and Moody's, respectively, due to a combination of expected fiscal deterioration, a high and growing government debt burden, rising interest costs, and an erosion of governance relative to peers. Further downgrades in the future could increase volatility in domestic and foreign financial markets, result in higher interest rates, lower prices of U.S. Treasury securities and increase the costs of different kinds of debt. Any controversy or ongoing uncertainty regarding the statutory debt limit negotiations may impact the U.S. long term sovereign credit rating and may cause market uncertainty. As a result, market prices and yields of securities supported by the full faith and credit of the U.S. government may be adversely affected.

**<u>Investment Company Securities</u>.** The Funds may invest in the securities of other investment companies, including ETFs, closed-end funds and open-end (mutual) funds (also called "underlying funds"). The Funds may invest in inverse ETFs, including leveraged ETFs. Inverse ETFs seek to provide investment results that match a certain percentage of the inverse of the results of a specific index on a daily or monthly basis.

To the extent such underlying funds are index-based, these underlying funds will generally attempt to replicate the performance of a particular index. An underlying fund may not always hold all of the same securities as the index it attempts to track. An underlying fund may use statistical sampling techniques to attempt to replicate the returns of an index. Statistical sampling techniques attempt to match the investment characteristics of the index and the fund by taking into account such factors as capitalization, industry exposures, dividend yield, price/earnings ("P/E") ratio, price/book ("P/B") ratio, and earnings growth. An underlying fund may not track the index perfectly because differences between the index and the fund's portfolio can cause differences in performance. In addition, expenses and transaction costs, the size and frequency of cash flow into and out of the fund, and differences between how and when the fund and the index are valued can cause differences in performance.

When a Fund invests in underlying funds it will indirectly bear its proportionate share of any fees and expenses payable directly by the underlying fund. In connection with its investments in other investment companies, a Fund will incur higher expenses, many of which may be duplicative. Furthermore, because the Funds invest in shares of ETFs and underlying funds their performances are directly related to the ability of the ETFs and underlying funds to meet their respective investment objectives, as well as the allocation of each Fund's assets among the ETFs and underlying funds by the Adviser. Accordingly, the Funds' investment performance will be influenced by the investment strategies of and risks associated with the ETFs and underlying funds in direct proportion to the amount of assets the Funds allocate to the ETFs and underlying funds utilizing such strategies.

Investments in ETFs involve certain inherent risks generally associated with investments in a broadly-based portfolio of stocks, including risks that: (1) the general level of stock prices may decline, thereby adversely affecting the value of each unit of the ETF or other instrument; (2) an ETF, to the extent such ETF is index-based, may not fully replicate the performance of its benchmark index because of the temporary unavailability of certain index securities in the secondary market or discrepancies between the ETF and the index with respect to the weightings of securities or number of stocks held; (3) an ETF may also be adversely affected by the performance of the specific index, market sector or group of industries on which it is based; and (4) an ETF, to the extent such ETF is index-based, may not track an index as well as a traditional index mutual fund because ETFs are valued by the market and, therefore, there may be a difference between the market value and the ETF's NAV. Additionally, investments in fixed income ETFs involve certain inherent risks generally associated with investments in fixed income

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securities, including the risk of fluctuation in market value based on interest rates rising or declining and risks of a decrease in liquidity, such that no assurances can be made that an active trading market for underlying ETFs will be maintained.

There is also a risk that the underlying funds or ETFs may terminate due to extraordinary events. For example, any of the service providers to the underlying fund or ETF, such as the trustee or sponsor, may close or otherwise fail to perform their obligations to the underlying fund or ETF, and the underlying fund or ETF may not be able to find a substitute service provider. Also, the underlying fund or ETF may be dependent upon licenses to use the various indices as a basis for determining their compositions and/or otherwise to use certain trade names. If these licenses are terminated, the respective underlying fund or ETF may also terminate. In addition, an underlying fund or ETF may terminate if its net assets fall below a certain amount. Although the Funds believe that in the event of the termination of an underlying fund or ETF, the applicable Fund will be able to invest instead in shares of an alternate underlying fund or ETF tracking the same market index or another index covering the same general market, there can be no assurance that shares of an alternate underlying fund or ETF would be available for investment at that time.

Inverse and leveraged ETFs are subject to additional risks not generally associated with traditional ETFs. To the extent that a Fund invests in inverse ETFs, the value of the Fund's investments will decrease when the index underlying the ETF's benchmark rises, a result that is the opposite from traditional equity or bond funds. The NAV and market price of leveraged or inverse ETFs are usually more volatile than the value of the tracked index or of other ETFs that do not use leverage. This is because inverse and leveraged ETFs use investment techniques and financial instruments that may be considered aggressive, including the use of derivative transactions and short selling techniques. The use of these techniques may cause the inverse or leveraged ETFs to lose more money in market environments that are adverse to their investment strategies than other funds that do not use such techniques.

Generally, under the 1940 Act, a Fund may not acquire shares of another investment company (including ETFs) if, immediately after such acquisition, (i) such fund would hold more than 3% of the other investment company's total outstanding shares, (ii) if such fund's investment in securities of the other investment company would be more than 5% of the value of the total assets of the fund, or (iii) if more than 10% of such fund's total assets would be invested in investment companies. In accordance with Section 12(d)(1)(F) of the 1940 Act, the Funds may invest in underlying funds in excess of the 5% and 10% limits described above as long as the Funds (and all of their affiliated persons, including the Adviser) do not acquire more than 3% of the total outstanding stock of such underlying fund. If a Fund seeks to redeem shares of an underlying fund purchased in reliance on Section 12(d)(1)(F), the underlying fund is not obligated to redeem an amount exceeding 1% of the underlying fund's outstanding shares during a period of less than 30 days.

In addition, Rule 12d1-4 under the 1940 Act allows a fund to acquire shares of an underlying fund in excess of the limits described above. Fund of funds arrangements relying on Rule 12d1-4 are subject to several conditions, certain of which are specific to a fund's position in the arrangement (i.e., as an acquiring or acquired fund). Notable conditions include those relating to: (i) control and voting that prohibit an acquiring fund, its investment adviser (or a subadviser) and their respective affiliates from beneficially owning more than 25% of the outstanding voting securities of an unaffiliated acquired fund; (ii) certain required findings relating to complexity, fees and undue influence (among other things); (iii) fund of funds investment agreements; and (iv) general limitations on an acquired fund's investments in other investment companies and private funds to no more than 10% of the acquired fund's assets, except in certain circumstances. To the extent a Fund is an acquired fund in reliance on Rule 12d1-4, the limitations placed on acquired funds under Rule 12d1-4 may limit or restrict the Fund's ability to acquire certain investments.

**Leveraged Loan Risk.** The Fund may invest in leveraged loans. Leveraged loans carry significant credit risk. Borrowers in the leveraged loan market are typically highly indebted companies with below investment-grade credit profiles, and the risk of default on scheduled principal and interest payments is meaningfully elevated compared to investment-grade debt. An economic downturn may accelerate default rates, and a loan may lose substantial value even before a formal default occurs.

The leveraged loan market presents distinct liquidity challenges. Unlike publicly traded securities, leveraged loans are privately negotiated instruments that may trade infrequently or not at all, and their valuation can be difficult to determine with precision. Settlement of leveraged loan transactions may take longer than that of other securities, potentially exceeding seven days, which may constrain the Fund's ability to manage its portfolio efficiently.

The terms governing leveraged loans have in many cases become more borrower-friendly over time. So-called "covenant lite" loans omit or significantly limit the financial maintenance covenants that traditionally gave lenders ongoing oversight of a borrower's financial health. This reduces the Fund's ability to detect early signs of credit deterioration or to take protective action before a borrower's condition worsens materially. Even where collateral secures a loan, there is no guarantee that such collateral will retain sufficient value to cover the borrower's obligations or that it can be liquidated in a timely manner. In addition, courts may in certain circumstances subordinate senior loans to other creditors' claims.

**<u>Money Market Funds</u>.** A Fund may invest in underlying money market funds that either seek to maintain a stable $1 NAV ("stable NAV money market funds") or that have a share price that fluctuates ("variable NAV money market funds"). Although an underlying stable NAV money market fund seeks to maintain a stable $1 NAV, it is possible for a Fund to lose money by investing

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in such a money market fund. Because the share price of an underlying variable NAV money market fund will fluctuate, when a Fund sells the shares it owns they may be worth more or less than what the Fund originally paid for them. In addition, neither type of money market fund is designed to offer capital appreciation. Certain underlying money market funds may impose a fee upon the sale of shares.

**<u>Illiquid Investments</u>.** The Funds may invest in illiquid investments (i.e., investments that are not readily marketable). Illiquid investments may include, but are not limited to, certain restricted investments (investments the disposition of which is restricted under the federal securities laws), investments that may only be resold pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"); and repurchase agreements with maturities in excess of seven days. However, a Fund will not acquire illiquid investments if, as a result, such investments would comprise more than 15% of the value of the Fund's net assets. The Funds have implemented a written liquidity risk management program and related procedures in accordance with SEC requirements (the "Liquidity Program") that is reasonably designed to assess and manage the Funds' "liquidity risk" (defined by the SEC as the risk that a Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interest in the Fund). Liquidity classifications will be made after reasonable inquiry and taking into account, among other things, market, trading and investment-specific considerations deemed to be relevant to the liquidity classification of the Funds' investments in accordance with the Liquidity Program.

An institutional market has developed for certain restricted investments. Accordingly, contractual or legal restrictions on the resale of a security may not be indicative of the liquidity classification of the security.

Restricted investments may be sold only in privately negotiated transactions or in a public offering with respect to which a registration statement is in effect under the Securities Act. Where registration is required, the applicable Fund may be obligated to pay all or part of the registration expenses and a considerable period may elapse between the time of the decision to sell and the time the Fund may be permitted to sell a security under an effective registration statement. If, during such a period, adverse market conditions were to develop, the Fund might obtain a less favorable price than that which prevailed when it decided to sell.

Illiquid investments will be priced at fair value as determined in good faith under procedures approved by the Board of Trustees. If, through the appreciation of illiquid investments or the depreciation of liquid investments, a Fund should be in a position where more than 15% of the value of its net assets are invested in illiquid investments, the Fund will take appropriate steps to bring its illiquid investments to or below 15% of its net assets within a reasonable period of time.

**<u>Borrowing</u>.** The Funds may borrow for investment purposes and for other purposes permitted by the 1940 Act. Under current law as interpreted by the SEC and its staff, the Fund may borrow money in the amount of up to one-third of the Fund's total assets for any purpose and up to 5% of the Fund's total assets from banks or other lenders for temporary purposes. The Fund's total assets include the amounts being borrowed. Under the 1940 Act, a Fund is required to maintain continuous asset coverage of 300% with respect to permitted borrowings. Borrowing subjects a Fund to costs in the form of interest, which the Fund may not recover through investment earnings. A Fund may also be required to maintain minimum average balances in connection with a borrowing or to pay a commitment or other fee to maintain a line of credit. These types of requirements would increase the cost of borrowing to the Fund over the stated interest rate.

Pursuant to an exemptive order issued by the SEC on April 25, 2017, a Fund may engage in interfund lending transactions, to the extent such participation is consistent with the Fund's investment objective and investment policies. As part of the interfund lending program, the Funds will have the ability to lend to each other, as detailed in the exemptive relief (the "InterFund Lending Program"). Any loan made through the InterFund Lending Program always would be more beneficial to a borrowing Fund (i.e., at a lower interest rate) than borrowing from a bank and more beneficial to a lending Fund (i.e., at a higher rate of return) than an alternative short-term investment. The term of an interfund loan is limited to the time required to receive payment for securities sold, but in no event more than seven days. In addition, an interfund loan is callable with one business day's notice. All loans are for temporary cash management purposes and the interest rates to be charged will be the average of the overnight repurchase agreement rate and the bank loan rate.

The limitations detailed above and the other conditions of the SEC exemptive order permitting interfund lending are designed to minimize the risks associated with interfund lending for both the lending Fund and the borrowing Fund. No Fund may borrow more than the amount permitted by its investment limitations and all loans are subject to numerous conditions designed to ensure fair and equitable treatment of all participating Funds. The interfund lending facility is subject to the oversight and periodic review of the Board.

No borrowing or lending activity is without risk. When a Fund borrows money from another Fund, there is a risk that the interfund loan could be called on one business day's notice or not renewed, in which case the Fund may have to borrow from a bank at higher rates if an interfund loan is not available. If a borrowing Fund is unable to repay the loan when due, a delay in repayment to the lending Fund could result in a lost investment opportunity for the lending Fund.

**<u>Repurchase Agreements</u>.** Each Fund may engage in repurchase agreement transactions involving the type of securities in which it is permitted to invest. Repurchase agreements are transactions by which a Fund purchases a security and

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simultaneously commits to resell that security to the seller (a bank or securities dealer) at an agreed upon price on an agreed upon date (usually within seven days of purchase). The resale price reflects the purchase price plus an agreed upon market rate of interest which is unrelated to the coupon rate or date of maturity of the purchased security. Repurchase agreements involve certain risks not associated with direct investments in the underlying securities. In the event of a default or bankruptcy by the seller, the applicable Fund will seek to liquidate such collateral. The exercise of a Fund's right to liquidate such collateral could involve certain costs or delays and, to the extent that proceeds from any sale upon a default of the obligation to repurchase were less than the repurchase price, the Fund could suffer a loss. Repurchase agreements are considered to be loans by an investment company under the 1940 Act. Each Fund will not invest more than 33 1/3% of its net assets in repurchase agreements.

The use of repurchase agreements involves certain risks. For example, if the seller of the agreements defaults on its obligation to repurchase the underlying securities at a time when the value of these securities has declined, the applicable Fund may incur a loss upon disposition of them. If the seller of the agreement becomes insolvent and subject to liquidation or reorganization under the Bankruptcy Code or other laws, a bankruptcy court may determine that the underlying securities are collateral not within the control of the Funds and therefore subject to sale by the trustee in bankruptcy. Finally, it is possible that the Funds may not be able to substantiate their interest in the underlying securities. While the management of the Trust acknowledges these risks, it is expected that they can be controlled through stringent security selection criteria and careful monitoring procedures.

**<u>Reverse Repurchase Agreements</u>.** The Funds may engage in reverse repurchase agreements. Reverse repurchase agreements are agreements that involve the sale of securities held by a Fund to financial institutions such as banks and broker-dealers, with an agreement that the Fund will repurchase the securities at an agreed upon price and date. During the reverse repurchase agreement period, the applicable Fund continues to receive interest and principal payments on the securities sold. The Funds may employ reverse repurchase agreements (i) for temporary emergency purposes or to meet repurchase requests so as to avoid liquidating other portfolio securities during unfavorable market conditions; (ii) to cover short-term cash requirements resulting from the timing of trade settlements; or (iii) to take advantage of market situations where the interest income to be earned from the investment of the proceeds of the transaction is greater than the interest expense of the transaction.

Reverse repurchase agreements involve the risk that the market value of securities to be purchased by a Fund may decline below the price at which the Fund is obligated to repurchase the securities, or that the other party may default on its obligation, so that the Fund is delayed or prevented from completing the transaction. In the event the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, the Fund's use of the proceeds from the sale of the securities may be restricted pending a determination by the other party, or its trustee or receiver, whether to enforce the Fund's obligations to repurchase the securities.

**<u>Hybrid Securities</u>.** Preferred stock, including trust-preferred stocks, has a preference in liquidation (and, generally dividends) over common stock but is subordinated in liquidation to debt. As a general rule the market value of preferred stocks with fixed dividend rates and no conversion rights varies inversely with interest rates and perceived credit risk, with the price determined by the dividend rate. Some preferred stocks are convertible into other securities (for example, common stock) at a fixed price and ratio or upon the occurrence of certain events. The market price of convertible preferred stocks generally reflects an element of conversion value. Because many preferred stocks lack a fixed maturity date, these securities generally fluctuate substantially in value when interest rates change; such fluctuations often exceed those of long-term bonds of the same issuer. Some preferred stocks pay an adjustable dividend that may be based on an index, formula, auction procedure or other dividend rate reset mechanism. In the absence of credit deterioration, adjustable rate preferred stocks tend to have more stable market values than fixed rate preferred stocks. All preferred stocks are also subject to the same types of credit risks of the issuer as corporate bonds. In addition, because preferred stock is junior to debt securities and other obligations of an issuer, deterioration in the credit rating of the issuer will cause greater changes in the value of a preferred stock than in a more senior debt security with similar yield characteristics. Preferred stocks may be rated by S&P and Moody's although there is no minimum rating which a preferred stock must have (and a preferred stock may not be rated) to be an eligible investment for the Funds. The Adviser expects, however, that generally the preferred stocks in which the Funds invest will be rated at least CCC by S&P or Caa by Moody's or, if unrated, of comparable quality in the opinion of the Adviser. Preferred stocks rated CCC by S&P are regarded as predominantly speculative with respect to the issuer's capacity to pay preferred stock obligations and represent the highest degree of speculation among securities rated between BB and CCC; preferred stocks rated Caa by Moody's are likely to be in arrears on dividend payments. Moody's rating with respect to preferred stocks does not purport to indicate the future status of payments of dividends.

**<u>Derivative Instruments</u>.** The Funds' derivatives and other similar instruments (collectively referred to in this section as "derivatives" or "derivative investments") have risks, including the leverage, market, counterparty, liquidity, operational, and legal risks. They also involve the risk of imperfect correlation between the value of such instruments and the underlying assets of the applicable Fund, which creates the possibility that the loss on such instruments may be greater than the gain in the value of the underlying assets in the Fund's portfolio; the loss of principal; the possible default of the other party to the transaction; and illiquidity of the derivative investments. If a counterparty becomes bankrupt or otherwise fails to perform its obligations

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under a derivative contract due to financial difficulties, the applicable Fund may experience significant delays in obtaining any recovery under the derivative contract in a bankruptcy or other reorganization proceeding. Counterparty risk also includes the risks of having concentrated exposure to a counterparty. In addition, in the event of the insolvency of a counterparty to a derivative transaction, the derivative contract would typically be terminated at its fair market value. If a Fund is owed this fair market value in the termination of the derivative contract and its claim is unsecured, the Fund will be treated as a general creditor of such counterparty, and will not have any claim with respect to the underlying security. Using derivatives is also subject to operational and legal risks. Operational risk generally refers to risk related to potential operational issues, including documentation issues, settlement issues, systems failures, inadequate controls, and human error. Legal risk generally refers to insufficient documentation, insufficient capacity or authority of counterparty, or legality or enforceability of a contract.

The counterparty risk for cleared derivative transactions is generally lower than for uncleared over-the-counter (OTC) derivatives because generally a clearing organization becomes substituted for each counterparty to a cleared derivative contract and, in effect, guarantees the parties' performance under the contract as each party to a trade looks only to the clearing house for performance of financial obligations. However, there can be no assurance that the clearing house, or its members, will satisfy its obligations to the Funds.

Certain of the derivative investments in which the Funds may invest may, in certain circumstances, give rise to a form of financial leverage, which may magnify a Fund's gains or losses and the risk of owning such instruments. Like most other investments, derivatives are subject to the risk that the market value of the instrument will change in a way detrimental to a Fund's interest. The ability to successfully use derivative investments depends on the ability of the Adviser to predict pertinent market movements, which cannot be assured. In addition, amounts paid by the Funds as premiums and cash or other assets held in margin accounts with respect to the Funds' derivative investments would not be available to the Funds for other investment purposes, which may result in lost opportunities for gain.

The use of derivatives may also subject a Fund to liquidity risk which generally refers to risk involving the liquidity demands that derivatives can create to make payments of margin, collateral, or settlement payments to counterparties. Liquidity risk also refers to the risk that a Fund may be required to hold additional cash or sell other investments in order to obtain cash to close out derivatives or meet the liquidity demands noted above. A Fund may have to sell a security at a disadvantageous time or price to meet such obligations. OTC derivatives may be more difficult to purchase, sell or value than other investments. Although both OTC and exchange-traded derivatives markets may experience a lack of liquidity, OTC non-standardized derivative transactions are generally less liquid than exchange-traded instruments. The illiquidity of the derivatives markets may be due to various factors, including congestion, disorderly markets, limitations on deliverable supplies, the participation of speculators, government regulation and intervention, and technical and operational or system failures. In addition, the liquidity of a secondary market in an exchange-traded derivative contract may be adversely affected by "daily price fluctuation limits" established by the exchanges which limit the amount of fluctuation in an exchange-traded contract price during a single trading day. Once the daily limit has been reached in the contract, no trades may be entered into at a price beyond the limit, thus preventing the liquidation of open positions. Prices have in the past moved beyond the daily limit on a number of consecutive trading days. If it is not possible to close an open derivative position entered into by a Fund, the Fund would continue to be required to make cash payments of variation (or mark-to-market) margin in the event of adverse price movements. In such a situation, if the Fund has insufficient cash, it may have to sell portfolio securities to meet variation margin requirements at a time when it may be disadvantageous to do so. The absence of liquidity may also make it more difficult for a Fund to ascertain a market value for such instruments. The inability to close derivatives transactions positions also could have an adverse impact on a Fund's ability to effectively hedge its portfolio. OTC derivatives that are not cleared are also subject to counterparty risk, which is the risk that the other party to the contract will not fulfill its contractual obligation to complete the transaction with a Fund. If a counterparty were to default on its obligations, a Fund's contractual remedies against such counterparty may be subject to bankruptcy and insolvency laws, which could affect the Fund's rights as a creditor (e.g., the Fund may not receive the net amount of payments that it is contractually entitled to receive). In addition, the use of certain derivatives may cause the Funds to realize higher amounts of income or short-term capital gains (generally taxed at ordinary income tax rates).

The Adviser, with respect to the Funds, has filed a notice of eligibility with the National Futures Association ("NFA") claiming an exclusion from the definition of the term Commodity Pool Operator ("CPO") pursuant to Commodity Futures Trading Commission ("CFTC") Regulation 4.5, as promulgated under the Commodity Exchange Act, as amended ("CEA"), with respect to the Funds' operations. Therefore, neither the Funds nor the Adviser (with respect to the Funds) is subject to registration or regulation as a commodity pool or CPO under the CEA. If the Adviser or a Fund becomes subject to these requirements, as well as related NFA rules, the Funds may incur additional compliance and other expenses.

The derivatives markets have become subject to comprehensive statutes, regulations and margin requirements. In particular, in the United States the Dodd-Frank Act regulates the OTC derivatives market by, among other things, requiring many derivative transactions to be cleared and traded on an exchange, expanding entity registration requirements, imposing business conduct requirements on dealers and requiring banks to move some derivatives trading units to a non-guaranteed affiliate separate from the deposit-taking bank or divest them altogether. Rulemaking proposed or implemented under the Dodd-Frank

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Act could potentially limit or completely restrict the ability of the Funds to use these instruments as a part of their investment strategies, increase the costs of using these instruments or make them less effective. Limits or restrictions applicable to the counterparties with which the Funds engage in derivative transactions could also prevent the Funds from using these instruments or affect the pricing or other factors relating to these instruments, or may change availability of certain investments.

Regulation of the derivatives market presents additional risks to the Fund and may limit the ability of the Fund to use, and the availability or performance of such instruments. Pursuant to Rule 18f-4 under the 1940 Act, a fund's derivatives exposure is limited through a value-at-risk ("VaR") test and requires the adoption and implementation of a derivatives risk management program for certain derivatives users. However, subject to certain conditions, funds that do not invest heavily in derivatives may be deemed limited derivatives users (as defined in Rule 18f-4) and would not be subject to the full requirements of Rule 18f-4. When the Fund trades reverse repurchase agreements or similar financing transactions, including certain tender option bonds, it needs to aggregate the amount of indebtedness associated with the reverse repurchase agreements or similar financing transactions with the aggregate amount of any other senior securities representing indebtedness (e.g., bank borrowings, if applicable) when calculating the Fund's asset coverage ratio or treat all such transactions as derivatives transactions. Reverse repurchase agreements or similar financing transactions aggregated with other indebtedness do not need to be included in the calculation of whether a fund satisfies the limited derivatives users exception, but for funds subject to the VaR testing requirement, reverse repurchase agreements and similar financing transactions must be included for purposes of such testing whether treated as derivatives transactions or not. In addition, Rule 18f-4 could limit the Fund's ability to engage in certain derivatives and other transactions.

The Funds' investments in regulated derivatives instruments, such as swaps, futures and options, will be subject to maximum position limits established by the U.S. Commodity Futures Trading Commission (the "CFTC") and U.S. and foreign futures exchanges. Under the exchange rules all accounts owned or managed by advisers, such as Angel Oak, their principals and affiliates would be combined for position limit purposes. To comply with the position limits established by the CFTC and the relevant exchanges, the Adviser may in the future reduce the size of positions that would otherwise be taken for a Fund or not trade in certain markets on behalf of the Fund to avoid exceeding such limits. A violation of position limits by the Adviser could lead to regulatory action resulting in mandatory liquidation of certain positions held by the Adviser on behalf of the Funds. There can be no assurance that the Adviser will liquidate positions held on behalf of all the Adviser's accounts in a proportionate manner or at favorable prices, which may result in substantial losses to the Funds. Such policies could affect the nature and extent of derivatives use by the Funds.

***Swaps.*** The Funds may invest in credit default swaps, total return swaps, interest rate swaps, equity swaps, currency swaps and other types of swaps. Such transactions are subject to market risk, liquidity risk, risk of default by the other party to the transaction, known as "counterparty risk," regulatory risk and risk of imperfect correlation between the value of such instruments and the underlying assets and may involve commissions or other costs.

A credit default swap agreement may reference one or more debt securities or obligations that are not currently held by the Funds. The Funds are permitted to enter into a credit default swap as either the protection buyer or seller in the discretion of the Adviser. When buying protection under a credit default swap, the Fund is generally obligated to pay the protection seller an upfront or periodic stream of payments over the term of the contract until a credit event occurs, such as a default of the reference obligation. If no credit event occurs, the Fund may recover nothing if the swap is held through the termination date. However, if a credit event does occur, the Fund may receive the full notional value of the swap in exchange for the face amount of the obligations underlying the swap, the value of which may have significantly decreased. When selling protection under a credit default swap, the Fund receives an upfront or periodic stream of payments over the term of the contract provided that a credit event does not occur. However, as the seller of protection, the Fund effectively adds leverage to its portfolio because it gains exposure to the notional amount of the swap. Entering into a credit default swap may subject a Fund to greater risk than if the Fund had invested in the reference obligation directly. In addition to general market risks, credit default swaps also involve illiquidity risk, counter-party risk (for OTC swaps) and credit risk.

Swap agreements are primarily entered into by institutional investors and the value of such agreements may be extremely volatile. Certain swap agreements are traded OTC between two parties, while other more standardized swaps must be transacted through a Futures Commission Merchant and centrally cleared and exchange-traded. While central clearing and exchange-trading are intended to reduce counterparty credit and liquidity risk, they do not make a swap transaction risk-free. The current regulatory environment regarding swap agreements is subject to change. The Adviser will continue to monitor these developments, particularly to the extent regulatory changes affect the Funds' ability to enter into swap agreements.

The swap market has matured in recent years with a large number of banks and investment banking firms acting both as principals and as agents utilizing standardized swap documentation. As a result, the swap market has become relatively liquid; however there is no guarantee that the swap market will continue to provide liquidity and may be subject to liquidity risk, which exists when a particular swap is difficult to purchase or sell. The absence of liquidity may also make it more difficult for a Fund to ascertain a market value for such instruments. The inability to close derivative positions also could have an adverse impact on a Fund's ability to effectively hedge its portfolio. If the Adviser is incorrect in its forecasts of market values, interest

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rates or currency exchange rates, the investment performance of the applicable Fund would be less favorable than it would have been if these investment techniques were not used. In a total return swap, a Fund pays the counterparty a floating short-term interest rate and receives in exchange the total return of underlying loans or debt securities. The Fund bears the risk of default on the underlying loans or debt securities, based on the notional amount of the swap and, therefore, incurs a form of leverage. The Fund would typically have to post collateral to cover this potential obligation.

***Options and Futures Risk.*** The Funds may utilize options and futures contracts and so-called "synthetic" options or other derivatives written by broker-dealers or other permissible financial intermediaries. Options transactions may be effected on securities exchanges or in the OTC market. When options are purchased OTC, the applicable Fund's portfolio bears the risk that the counterparty that wrote the option will be unable or unwilling to perform its obligations under the option contract. Options may also be illiquid and, in such cases, a Fund may have difficulty closing out its position. OTC options also may include options on baskets of specific securities.

A Fund may purchase call and put options on specific securities in pursuing its investment objectives. A put option gives the purchaser of the option the right to sell, and obligates the writer to buy, the underlying security at a stated exercise price, typically at any time prior to the expiration of the option for American options or only at expiration for European options. A call option gives the purchaser of the option the right to buy, and obligates the writer to sell, the underlying security at a stated exercise price, typically at any time prior to the expiration of the option.

A Fund may close out a position when writing options by purchasing an option on the same underlying security with the same exercise price and expiration date as the option that it has previously written on the security. In such a case, the applicable Fund will realize a profit or loss if the amount paid to purchase an option is less or more than the amount received from the sale of the option.

Engaging in transactions in futures contracts and options involves risk of loss to a Fund. No assurance can be given that a liquid market will exist for any particular futures contract or option at any particular time. Many futures exchanges and boards of trade limit the amount of fluctuation permitted in futures contract prices during a single trading day. Once the daily limit has been reached in a particular contract, no trades may be made that day at a price beyond that limit or trading may be suspended for specified periods during the trading day. Futures contract prices could move to the limit for several consecutive trading days with little or no trading, preventing prompt liquidation of futures positions and potentially subjecting the applicable Fund to substantial losses.

A market could become unavailable if one or more exchanges were to stop trading options or it could become unavailable with respect to options on a particular underlying security if the exchanges stopped trading options on that security. In addition, a market could become temporarily unavailable if unusual events (e.g., volume exceeds clearing capability) were to interrupt normal exchange operations. If an options market were to become illiquid or otherwise unavailable, an option holder would be able to realize profits or limit losses only by exercising and an options seller or writer would remain obligated until it is assigned an exercise or until the option expires.

If trading is interrupted in an underlying security, the trading of options on that security is usually halted as well. Holders and writers of options will then be unable to close out their positions until options trading resumes, and they may be faced with considerable losses if the security reopens at a substantially different price. Even if options trading is halted, holders of options will generally be able to exercise them. However, if trading has also been halted in the underlying security, option holders face the risk of exercising options without knowing the security's current market value. If exercises do occur when trading of the underlying security is halted, the party required to deliver the underlying security may be unable to obtain it, which may necessitate a postponed settlement and/or the fixing of cash settlement prices.

***Structured Notes.*** Structured notes are derivative debt securities, the interest rate and/or principal of which is determined by an unrelated indicator. The value of the principal of and/or interest on structured notes is determined by reference to changes in the return, interest rate or value at maturity of a specific asset, reference rate or index (the "reference instrument") or the relative change in two or more reference instruments. The interest rate or the principal amount payable upon maturity or redemption may be increased or decreased, depending upon changes in the applicable reference instruments. Structured notes may be positively or negatively indexed, so that an increase in value of the reference instrument may produce an increase or a decrease in the interest rate or value of the structured note at maturity. In addition, changes in the interest rate or the value of the structured note at maturity may be calculated as a specified multiple of the change in the value of the reference; therefore, the value of such note may be very volatile. Structured notes may entail a greater degree of market risk than other types of debt securities because the investor bears the risk of the reference instrument. Structured notes may also be more volatile, less liquid and more difficult to accurately price than less complex securities or more traditional debt securities.

**<u>Cash Investments</u>.** When the Adviser believes market, economic or political conditions are unfavorable for investors, the Adviser may invest up to 100% of a Fund's net assets in cash, cash equivalents or other short-term investments. Unfavorable market or economic conditions may include excessive volatility or a prolonged general decline in the securities markets, or the U.S. economy. The Adviser also may invest in these types of securities or hold cash while looking for suitable investment opportunities or to maintain liquidity.

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**<u>Restricted Securities</u>.** Within its limitation on investment in illiquid investments, a Fund may purchase restricted securities that generally can be sold in privately negotiated transactions, pursuant to an exemption from registration under the federal securities laws, or in a registered public offering. Where registration is required, a Fund may be obligated to pay all or part of the registration expense and a considerable period may elapse between the time it decides to seek registration and the time the Fund may be permitted to sell a security under an effective registration statement. If during such a period adverse market conditions were to develop, the Fund might obtain a less favorable price than prevailed when it decided to seek registration of the security. Restricted securities that can be offered and sold to qualified institutional buyers under Rule 144A of the Securities Act ("144A Securities") and are determined to be liquid are not subject to the limitations on illiquid investments.

**<u>Variable and Floating Rate Securities</u>.** The Funds may invest in variable and floating rate securities. Fixed Income securities that have variable or floating rates of interest may, under certain limited circumstances, have varying principal amounts. These securities pay interest at rates that are adjusted periodically according to a specified formula, usually with reference to one or more interest rate indices or market interest rates (the "underlying index"). The interest paid on these securities is a function primarily of the underlying index upon which the interest rate adjustments are based. These adjustments minimize changes in the market value of the obligation. Similar to fixed rate debt instruments, variable and floating rate instruments are subject to changes in value based on changes in market interest rates or changes in the issuer's creditworthiness. The rate of interest on securities may be tied to U.S. government securities or indices on those securities as well as any other rate of interest or index.

Variable and floating rate demand notes of corporations are redeemable upon a specified period of notice. These obligations include master demand notes that permit investment of fluctuating amounts at varying interest rates under direct arrangements with the issuer of the instrument. The issuer of these obligations often has the right, after a given period, to prepay the outstanding principal amount of the obligations upon a specified number of days' notice.

Certain securities may have an initial principal amount that varies over time based on an interest rate index, and, accordingly, a Fund might be entitled to less than the initial principal amount of the security upon the security's maturity. The Funds intend to purchase these securities only when the Adviser believes the interest income from the instrument justifies any principal risks associated with the instrument. The Adviser may attempt to limit any potential loss of principal by purchasing similar instruments that are intended to provide an offsetting increase in principal. There can be no assurance that the Adviser will be able to limit the effects of principal fluctuations and, accordingly, a Fund may incur losses on those securities even if held to maturity without issuer default.

There may not be an active secondary market for any particular floating or variable rate instruments, which could make it difficult for a Fund to dispose of the instrument during periods that the Fund is not entitled to exercise any demand rights it may have. The Fund could, for this or other reasons, suffer a loss with respect to those instruments. The Adviser monitors the liquidity of the Funds' investments in variable and floating rate instruments, but there can be no guarantee that an active secondary market will exist.

**<u>Zero-Coupon, Delayed Interest, Pay-In-Kind, and Capital Appreciation Securities</u>.** Zero-coupon, delayed interest, pay-in-kind ("PIK") and capital appreciation securities are securities that make no periodic interest payments, but are sold at a discount from their face value. The buyer recognizes a rate of return determined by the gradual appreciation of the security, which is redeemed at face value on a specified maturity date. The discount varies depending on the time remaining until maturity, as well as market interest rates, liquidity of the security, and the issuer's perceived credit quality. The discount, in the absence of financial difficulties of the issuer, typically decreases as the final maturity date approaches. If the issuer defaults, a Fund may not receive any return on its investment. Because such securities bear no interest and generally compound periodically at the rate fixed at the time of issuance, their value generally is more volatile than the value of other fixed income securities. Since such bondholders do not receive interest payments, when interest rates rise, zero-coupon, delayed interest and capital appreciation securities fall more dramatically in value than bonds paying interest on a current basis. When interest rates fall, zero-coupon, delayed interest and capital appreciation securities rise more rapidly in value because the bonds reflect a fixed rate of return. An investment in zero-coupon, delayed interest and capital appreciation securities may cause a Fund to recognize income and make distributions to shareholders before it receives any cash payments on its investment. To generate cash to satisfy distribution requirements, a Fund may have to sell portfolio securities that it otherwise would have continued to hold or to use cash flows from other sources such as the sale of Fund shares.

PIK securities may be debt obligations or preferred shares that provide the issuer with the option of paying interest or dividends on such obligations in cash or in the form of additional securities rather than cash. Similar to zero-coupon bonds and delayed interest securities, PIK securities are designed to give an issuer flexibility in managing cash flow. PIK securities that are debt securities can be either senior or subordinated debt and generally trade flat (i.e., without interest). The trading price of PIK debt securities generally reflects the market value of the underlying debt plus an amount representing accrued interest since the last interest payment.

**<u>Municipal Securities</u>.** The Funds may invest in municipal securities, such as industrial development bonds that are backed only by the assets and revenues of the non-governmental user (such as hospitals and airports). Municipal securities are issued

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to obtain funds for a variety of public purposes, including general financing for state and local governments, or financing for specific projects or public facilities.

The two principal classifications of municipal securities are "general obligations" and "revenue obligations." General obligations are secured by the issuer's pledge of its full faith and credit for the payment of principal and interest, although the characteristics and enforcement of general obligations may vary according to the law applicable to the particular issuer. Revenue obligations, which include, but are not limited to, private activity bonds, resource recovery bonds, certificates of participation and certain municipal notes, are not backed by the credit and taxing authority of the issuer, and are payable solely from the revenues derived from a particular facility or class of facilities or, in some cases, from the proceeds of a special excise or other specific revenue source. Nevertheless, the obligations of the issuer of a revenue obligation may be backed by a letter of credit, guarantee or insurance. General obligations and revenue obligations may be issued in a variety of forms, including commercial paper, fixed, variable and floating rate securities, tender option bonds, auction rate bonds, zero coupon bonds, deferred interest bonds and capital appreciation bonds. Private activity bonds and industrial revenue bonds do not carry the pledge of the credit of the issuing municipality, but generally are guaranteed by the corporate entity on whose behalf they are issued.

Municipal leases are entered into by state and local governments and authorities to acquire equipment and facilities such as fire and sanitation vehicles, telecommunications equipment, and other assets. Municipal leases (which normally provide for title to the leased assets to pass eventually to the government issuer) have evolved as a means for governmental issuers to acquire property and equipment without meeting the constitutional and statutory requirements for the issuance of debt. The debt-issuance limitations of many state constitutions and statutes are deemed to be inapplicable because of the inclusion in many leases or contracts of "non-appropriation" clauses that provide that the governmental issuer has no obligation to make future payments under the lease or contract unless money is appropriated for such purpose by the appropriate legislative body on a yearly or periodic basis.

The marketability, valuation or liquidity of municipal securities may be negatively affected in the event that states, localities or their authorities default on their debt obligations or other market events arise, which in turn may negatively affect fund performance, sometimes substantially. A credit rating downgrade relating to, default by, or insolvency or bankruptcy of, one or several municipal issuers of a particular state, territory, commonwealth, or possession could affect the market value or marketability of any one or all such states, territories, commonwealths, or possessions.

The value of municipal securities may also be affected by uncertainties with respect to the rights of holders of municipal securities in the event of bankruptcy or the taxation of municipal securities as a result of legislation or litigation. The obligations of the issuer to pay the principal of and interest on municipal securities are subject to the provisions of bankruptcy, insolvency and other laws affecting the rights and remedies of creditors, such as the Federal Bankruptcy Code, and laws, if any, that may be enacted by Congress or state legislatures extending the time for payment of principal or interest or imposing other constraints upon the enforcement of such obligations. There is also the possibility that, as a result of litigation or other conditions, the power or ability of the issuer to pay when due principal of or interest on a municipal security may be materially affected.

**<u>Securities Lending</u>.** Each Fund may lend portfolio securities in an amount up to one-third of its total assets to brokers, dealers and other financial institutions. In a portfolio securities lending transaction, a Fund receives from the borrower an amount equal to the interest paid or the dividends declared on the loaned securities during the term of the loan as well as the interest on the collateral securities, less any fees (such as finders or administrative fees) the Fund pays in arranging the loan. The terms of each Fund's loans permit each Fund to reacquire loaned securities upon demand within a customary settlement period. Loans are subject to termination at the option of the applicable Fund or borrower at any time, and the borrowed securities must be returned when the loan is terminated. The Funds may pay fees to arrange for securities loans.

The SEC currently requires that the following conditions must be met whenever a Fund's portfolio securities are loaned: (1) the Fund must receive at least 100% collateral from the borrower; (2) the borrower must increase such collateral whenever the market value of the securities rises above the level of such collateral; (3) the Fund must be able to terminate the loan at any time; (4) the Fund must receive reasonable interest on the loan, as well as any dividends, interest or other distributions on the loaned securities, and any increase in market value; (5) the Fund may pay only reasonable custodian fees approved by the Board in connection with the loan; and (6) while voting rights on the loaned securities may pass to the borrower, the Board must terminate the loan and regain the right to vote the securities if a material event adversely affecting the investment occurs. These conditions may be subject to future modification. Such loans will be terminable at any time upon specified notice. A Fund might experience the risk of loss if the institution with which it has engaged in a portfolio loan transaction breaches its agreement with the Fund. In addition, the Funds will not enter into any portfolio security lending arrangement having a duration of longer than one year. The principal risk of portfolio lending is potential default or insolvency of the borrower. In either of these cases, a Fund could experience delays in recovering securities or collateral or could lose all or part of the value of the loaned securities. As part of participating in a lending program, the applicable Fund may be required to invest in securities that bear the risk of loss of principal. In addition, all investments made with the collateral received are subject to the risks

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associated with such investments. If such investments lose value, a Fund will have to cover the loss when repaying the collateral.

Any loans of portfolio securities are fully collateralized based on values that are marked-to-market daily. Any securities that a Fund may receive as collateral will not become part of the Fund's investment portfolio at the time of the loan and, in the event of a default by the borrower, the Fund will, if permitted by law, dispose of such collateral except for such part thereof that is a security in which the Fund is permitted to invest. During the time securities are on loan, the borrower will pay a Fund any accrued income on those securities, and the Fund may invest the cash collateral and earn income or receive an agreed-upon fee from a borrower that has delivered cash-equivalent collateral.

**<u>Subordinated Debt Securities</u>.** Subordinated debt securities, sometimes also called "junior debt" are debt securities for which the issuer's obligations to make principal and interest payment are secondary to the issuer's payment obligations to more senior debt securities. Subordinated debt securities are subject to the same risks as other fixed income securities and are also subject to increased credit risk because the issuer, by definition, has issued other, more senior debt securities. The Funds may invest in subordinated debt securities, including those issued by banks.

**<u>When-Issued Securities and Forward Commitments</u>.** The Funds may purchase securities offered on a "when-issued" and "forward commitment" basis (including a delayed delivery basis). Securities purchased on a "when-issued" or "forward commitment basis" are securities not available for immediate delivery despite the fact that a market exists for those securities. A purchase is made on a "delayed delivery" basis when the transaction is structured to occur sometime in the future.

When these transactions are negotiated, the price, which is generally expressed in yield terms, is fixed at the time the commitment is made, but delivery and payment for the securities take place at a later date. Normally, the settlement date occurs within two months after the transaction, but delayed settlements beyond two months may be negotiated. During the period between a commitment and settlement, no payment is made for the securities purchased by the purchaser and, thus, no interest accrues to the purchaser from the transaction. At the time a Fund makes the commitment to purchase securities on a when-issued basis or forward commitment, the Fund will record the transaction as a purchase and thereafter reflect the value each day of such securities in determining its NAV.

**<u>Dollar Rolls</u>.** A dollar roll transaction involves a sale by a Fund of a security concurrently with an agreement by the Fund to repurchase a similar security at a later date at an agreed-upon price. A dollar roll may be considered a borrowing giving rise to leverage. The securities that are repurchased will bear the same interest rate and a similar maturity as those sold, but the assets collateralizing these securities may have different prepayment histories than those sold. During the period between the sale and repurchase, the applicable Fund will not be entitled to receive interest and principal payments on the securities sold. Proceeds of the sale will be invested in additional investments, and the income from these investments will generate income for the Fund. If such income does not exceed the income, capital appreciation and gain or loss that would have been realized on the securities sold as part of the dollar roll, the use of this technique will diminish the investment performance of a Fund compared with what the performance would have been without the use of dollar rolls. Dollar rolls involve the risk that the market value of the securities subject to a Fund's forward purchase commitment may decline below, or the market value of the securities subject to a Fund's forward sale commitment may increase above, the exercise price of the forward commitment. In the event the buyer of the securities files for bankruptcy or becomes insolvent, a Fund's use of the proceeds of the current sale portion of the transaction may be restricted.

**<u>Equit</u><u>y Securities</u>.** 

***Common and Preferred Stock.*** The Funds may invest in common stock. Common stock represents an equity (ownership) interest in a company, and usually possesses voting rights and earns dividends. Dividends on common stock are not fixed but are declared at the discretion of the issuer. Common stock generally represents the riskiest investment in a company. In addition, common stock generally has the greatest appreciation and depreciation potential because increases and decreases in earnings are usually reflected in a company's stock price.

The Funds may invest in preferred stock. Preferred stock is a class of stock having a preference over common stock as to the payment of dividends and the recovery of investment should a company be liquidated, although preferred stock is usually junior to the debt securities of the issuer. Preferred stock typically does not possess voting rights and its market value may change based on changes in interest rates.

A risk of investing in common and preferred stock is that the value of the stock might decrease. Stock values fluctuate in response to the activities of an individual company or in response to general market and/or economic conditions. Historically, common stocks have provided greater long-term returns and have entailed greater short-term risks than preferred stocks, fixed-income and money market investments. The market value of all securities, including common and preferred stocks, is based upon the market's perception of value and not necessarily the book value of an issuer or other objective measures of a company's worth. If you invest in the Fund, you should be willing to accept the risks of the stock market and should consider an investment in the Fund only as a part of your overall investment portfolio.

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***Warrants.*** The Funds may invest in warrants. Warrants are securities, typically issued with preferred stock or bonds that give the holder the right to purchase a given number of shares of common stock at a specified price and time. The price of the warrant usually represents a premium over the applicable market value of the common stock at the time of the warrant's issuance. Warrants have no voting rights with respect to the common stock, receive no dividends and have no rights with respect to the assets of the issuer. Investments in warrants involve certain risks, including the possible lack of a liquid market for the resale of the warrants, potential price fluctuations due to adverse market conditions or other factors and failure of the price of the common stock to rise. If the warrant is not exercised within the specified time period, it becomes worthless.

***Depositary Receipts.*** The Funds may invest in sponsored and unsponsored American Depositary Receipts ("ADR"), European Depositary Receipts ("EDRs"), Global Depositary Receipts ("GDRs"), Holding Company Depositary Receipts ("HOLDRs"), New York Registered Shares ("NYRs") or American Depositary Shares ("ADSs"). ADRs typically are issued by a U.S. bank or trust company, evidence ownership of underlying securities issued by a foreign company, and are designed for use in U.S. securities markets. EDRs are issued by European financial institutions and typically trade in Europe and GDRs are issued by European financial institutions and typically trade in both Europe and the United States. HOLDRs trade on the American Stock Exchange and are fixed baskets of U.S. or foreign stocks that give an investor an ownership interest in each of the underlying stocks. NYRs, also known as Guilder Shares since most of the issuing companies are Dutch, are dollar-denominated certificates issued by foreign companies specifically for the U.S. market. ADSs are shares issued under a deposit agreement that represents an underlying security in the issuer's home country. (An ADS is the actual share trading, while an ADR represents a bundle of ADSs.) The Funds invest in depositary receipts to obtain exposure to foreign securities markets. For purposes of the Funds' investment policies, the Funds' investments in an ADR will be considered an investment in the underlying securities of the applicable foreign company.

Unsponsored depositary receipts may be created without the participation of the foreign issuer. Holders of these receipts generally bear all the costs of the depositary receipt facility, whereas foreign issuers typically bear certain costs of a sponsored depositary receipt. The bank or trust company depositary of an unsponsored depositary receipt may be under no obligation to distribute shareholder communications received from the foreign issuer or to pass through voting rights. Accordingly, available information concerning the issuer may not be current and the prices of unsponsored depositary receipts may be more volatile than the prices of sponsored depositary receipts.

**<u>General Risk.</u>** The value of a Fund's portfolio securities may fluctuate with changes in the financial condition of an issuer or counterparty, changes in specific economic or political conditions that affect a particular security or issuer and changes in general economic or political conditions. An investor in a Fund could lose money over short or long periods of time.

There can be no guarantee that a liquid market for the securities held by a Fund will be maintained. The existence of a liquid trading market for certain securities may depend on whether dealers will make a market in such securities. There can be no assurance that a market will be made or maintained or that any such market will be or remain liquid. The price at which securities may be sold and the value of Shares will be adversely affected if trading markets for a Fund's portfolio securities are limited or absent, or if bid/ask spreads are wide.

**<u>Operational and Reputational Risk</u>.** An investment in the Funds involves operational risk arising from factors such as processing errors, human errors, inadequate or failed internal or external processes, failures in systems and technology, changes in personnel and errors caused by third-party service providers. Any of these errors, failures or breaches could result in a loss of information, regulatory scrutiny, reputational damage or other events, any of which could have a materially adverse effect on a Fund. While the Funds seek to minimize such events through controls and oversight, there is no guarantee that a Fund will not suffer losses due to operational risk.

The Funds may be adversely affected if the reputation of the Adviser, its affiliates, or counterparties with whom the Funds associate is harmed. Reputational harm could result from, among other things: real or perceived legal or regulatory violations; failure in performance, risk management, governance, technology, or operations; or claims related to employee misconduct, allegations of employee wrongful termination, conflict of interests, ethical issues, or failure to protect private information. Similarly, market rumors and actual or perceived association with counterparties whose own reputations may become under question could ultimately harm the Funds as well. These harms could include, for example, large redemptions of shares of a Fund, a negative effect on the Funds' ability to conduct business with counterparties, or hindering of the Adviser's abilities to attract and/or retain personnel, including key personnel.

**<u>Cyber Security Risk</u>.** As technology becomes more integrated into the Funds' operations, the Funds will face greater operational risks through breaches in cyber security. A breach in cyber security refers to both intentional and unintentional events that may cause a Fund to lose proprietary information, suffer data corruption, or lose operational capacity. This in turn could cause the Fund to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures, and/or financial loss. Cyber security threats may result from unauthorized access to a Fund's digital information systems (e.g., through "hacking" or malicious software coding), but may also result from outside attacks such as denial-of-service attacks (i.e., efforts to make network services unavailable to intended users). In addition, because each Fund works closely with third-party service providers (e.g., administrators, transfer agents, and custodians), cyber security breaches at such

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third-party service providers may subject a Fund to many of the same risks associated with direct cyber security breaches. The same is true for cyber security breaches at any of the issuers in which a Fund may invest. While the Funds have established risk management systems designed to reduce the risks associated with cyber security, there can be no assurance that such measures will succeed.

**EXCHANGE LISTING AND TRADING**

Shares are listed for trading and trade throughout the day on the Nasdaq Stock Market LLC (the "Exchange").

There can be no assurance that a Fund will continue to meet the requirements of the Exchange necessary to maintain the listing of Shares. The Exchange will consider the suspension of trading in, and will initiate delisting proceedings of, the Shares under any of the following circumstances: (i) if any of the requirements set forth in the Exchange rules are not continuously maintained, including compliance with Rule 6c-11(c) under the 1940 Act; (ii) if, following the initial 12-month period beginning at the commencement of trading of a Fund, there are fewer than 50 beneficial owners of the Shares of such Fund; or (iii) a Fund no longer complies with certain listing exchange rules; or (iv) if such other event shall occur or condition shall exist that, in the opinion of the Exchange, makes further dealings on the Exchange inadvisable. The Exchange will remove the Shares of a Fund from listing and trading upon termination of such Fund.

The Trust reserves the right to adjust the price levels of Shares in the future to help maintain convenient trading ranges for investors. Any adjustments would be accomplished through stock splits or reverse stock splits, which would have no effect on the net assets of the applicable Fund.

**PORTFOLIO TURNOVER** 

The frequency of portfolio transactions of each Fund (the portfolio turnover rate) will vary from year to year depending on many factors. From time to time, each Fund may engage in active short-term trading to take advantage of price movements affecting individual issues, groups of issues or markets. An annual portfolio turnover rate of 100% would occur if all the securities in a Fund were replaced once in a period of one year. Higher portfolio turnover rates (more than 100%) may result in increased brokerage costs to the applicable Fund and a possible increase in short-term capital gains or losses.

Portfolio turnover for the Funds for the fiscal period ended January 31, is shown in the table below.

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| | | |
|:---|:---|:---|
| | **2026** | **2025** |
| Income ETF  | 85% | 77% |
| UltraShort Income ETF  | 87% | 91% |
| High Yield Opportunities ETF | 58% | 37% |
| Mortgage-Backed Securities ETF | 97% | 113% |

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**INVESTMENT POLICIES**

<u>Fundamental</u>. The investment policies described below have been adopted by the Trust with respect to each Fund and are fundamental (i.e., they may not be changed without the affirmative vote of a majority of the outstanding shares of the applicable Fund). As used in the Prospectus and this SAI, the term "majority of the outstanding shares of the Fund" means the lesser of: (1) 67% or more of the outstanding shares of the Fund present at a meeting, if the holders of more than 50% of the outstanding shares of the Fund are present or represented at such meeting; or (2) more than 50% of the outstanding shares of the Fund. Except for those investment policies specifically identified as fundamental in the Prospectus and this SAI, each Fund's investment objective as described in the Prospectus and all other investment policies and practices described in the Prospectus and this SAI are non-fundamental and may be changed by the Board without the approval of shareholders.

The fundamental policies adopted with respect to each of the Funds are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.<u>Borrowing Money</u>. The Fund will not borrow money, except to the extent permitted under the 1940 Act, as such may be interpreted or modified by regulatory authorities having jurisdiction, from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.<u>Senior Securities</u>. The Fund will not issue senior securities, except to the extent permitted under the 1940 Act, as such may be interpreted or modified by regulatory authorities having jurisdiction, from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.<u>Underwriting</u>. The Fund will not act as an underwriter of securities within the meaning of the Securities Act of 1933, except to the extent permitted under the 1940 Act, as such may be interpreted or modified by regulatory authorities having jurisdiction, from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.<u>Real Estate</u>. The Fund will not purchase or sell real estate, except to the extent permitted under the 1940 Act, as such may be interpreted or modified by regulatory authorities having jurisdiction, from time to time.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.<u>Commodities</u>. The Fund will not purchase or sell commodities, except to the extent permitted under the 1940 Act, as such may be interpreted or modified by regulatory authorities having jurisdiction, from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.<u>Loans</u>. The Fund will not make loans to other persons, except to the extent permitted under the 1940 Act, as such may be interpreted or modified by regulatory authorities having jurisdiction, from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.<u>Concentration</u>. Each of the Income ETF and UltraShort Income ETF will concentrate its respective investments in residential mortgage-backed securities (agency and non-agency) and commercial mortgage-backed securities. The High Yield ETF will not "concentrate" its investments in an industry or group of industries, except to the extent permitted under the 1940 Act, as such may be interpreted or modified by regulatory authorities having jurisdiction, from time to time. Under normal circumstances, the MBS ETF will invest more than 25% of its total assets (measured at the time of purchase) in mortgage loans, residential mortgage-backed securities (agency and non-agency) and commercial mortgage-backed securities.

The following are interpretations of the fundamental investment policies of the Funds and may be revised without shareholder approval, consistent with current laws and regulations as such may be interpreted or modified by regulatory authorities having jurisdiction, from time to time:

<u>Borrowing Money</u>. Under current law as interpreted by the SEC and its staff, a Fund may borrow from: (a) a bank, provided that immediately after such borrowing there is an asset coverage of 300% for all borrowings of the Fund; or (b) a bank or other persons for temporary purposes only, provided that such temporary borrowings are in an amount not exceeding 5% of the Fund's total assets at the time when the borrowing is made. This limitation does not preclude the Fund from entering into reverse repurchase transactions, provided that the Fund, in accordance with Rule 18f-4, aggregates the amount of indebtedness associated with the reverse repurchase agreements or similar financing transactions with the aggregate amount of any other senior securities representing indebtedness when calculating the Fund's asset coverage ratio or treats all such transactions as derivatives transactions.

<u>Senior Securities</u>. Senior securities may include any obligation or instrument issued by an investment company evidencing indebtedness. The Fund's limitation with respect to issuing senior securities is not applicable to activities that may be deemed to involve the issuance or sale of a senior security by the Fund, provided that the Fund's engagement in such activities is consistent with or permitted by the 1940 Act, the rules and regulations promulgated thereunder or interpretations of the SEC or its staff. The SEC adopted Rule 18f-4 related to the use of derivatives and other similar transactions by an investment company. The Fund's trading of derivatives and other similar transactions that create future payment or delivery obligations is generally subject to value-at-risk leverage limits, derivatives risk management program and reporting requirements, unless the Fund satisfies a "limited derivatives users" exception that is included in the rule.

<u>Underwriting</u>. Under the 1940 Act, underwriting securities generally involves an investment company purchasing securities directly from an issuer for the purpose of selling (distributing) them or participating in any such activity either directly or indirectly. The Fund's limitation with respect to underwriting securities is not applicable to the extent that, in connection with the disposition of portfolio securities (including restricted securities), the Fund may be deemed an underwriter under certain federal securities laws.

<u>Real Estate</u>. The 1940 Act does not directly restrict an investment company's ability to invest in real estate, but does require that every investment company have a fundamental investment policy governing such investments. The Fund's limitation with respect to investing in real estate is not applicable to investments in securities or mortgages or loans that are secured by or represent interests in real estate. This limitation does not preclude the Fund from purchasing or selling mortgage-related securities or securities of companies engaged in the real estate business or that have a significant portion of their assets in real estate (including real estate investment trusts). In addition, this limitation does not preclude the Fund from holding or selling real estate acquired as a result of ownership through securities or other instruments.

<u>Commodities</u>. The 1940 Act does not directly restrict an investment company's ability to invest in commodities, but does require that every investment company have a fundamental investment policy governing such investments. The Fund may hold commodities acquired as a result of ownership of securities or other investments. This limitation does not preclude the Fund from purchasing or selling options or futures contracts, from investing in securities or other instruments backed by commodities or from investing in companies that are engaged in a commodities business or have a significant portion of their assets in commodities.

<u>Loans</u>. Under current law as interpreted by the SEC and its staff, the Fund may not lend any security or make any other loan if, as a result, more than 33 1/3% of its total assets would be lent to other parties (this restriction does not apply to purchases of debt securities or repurchase agreements). Subject to this limitation, the Fund may make loans, for example: (a) by loaning portfolio securities; (b) by engaging in repurchase agreements; (c) by making loans secured by real estate; (d) by making loans to affiliated funds as permitted by the SEC; or (e) by purchasing non-publicly offered debt securities. For purposes of this limitation, the term "loans" shall not include the purchase of a portion of an issue of publicly distributed bonds, debentures or other securities.

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<u>Concentration</u>. Under current SEC and SEC staff interpretation, the Fund would "concentrate" its investments if more than 25% of the Fund's total assets would be invested in securities of issuers conducting their principal business activities in the same industry or group of industries. For purposes of this limitation, there is no limit on: (1) investments in U.S. government securities, in repurchase agreements collateralized by U.S. government securities, or in tax-exempt securities issued by the states, territories, or possessions of the United States ("municipal securities"), excluding private activity municipal securities whose principal and interest payments are derived principally from the assets and revenues of a non-governmental entity, or; (2) investments in issuers domiciled in a single jurisdiction (other than investments in a single foreign-government issuer) provided that the Fund does not invest greater than 25% in a particular industry or group of industries. The residential mortgage-backed securities (agency and non-agency), commercial mortgage-backed securities and mortgage loans in which the MBS ETF invests, under normal circumstances, more than 25% of its total net assets (measured at the time of purchase) are credit instruments that are backed by real estate and, consequently, are considered part of the real estate industry. Notwithstanding anything to the contrary, to the extent permitted by the 1940 Act, the Fund may invest in one or more investment companies; provided that, except to the extent the Fund invests in other investment companies pursuant to Section 12(d)(1)(A) or (F) of the 1940 Act, the Fund treats the assets of the investment companies in which it invests as its own for purposes of this policy.

With respect to the percentages adopted by the Trust as maximum limitations on its investment policies and limitations, an excess above the fixed percentage will not be a violation of the policy or limitation unless the excess results immediately and directly from the acquisition of any security or the action taken. This paragraph does not apply to fundamental policy 1 for the Funds set forth above.

Notwithstanding any of the foregoing policies, any investment company, whether organized as a trust, association or corporation, or a personal holding company, may be merged or consolidated with or acquired by the Trust, provided that if such merger, consolidation or acquisition results in an investment in the securities of any issuer prohibited by said paragraphs, the Trust shall, within 90 days after the consummation of such merger, consolidation or acquisition, dispose of all of the securities of such issuer so acquired or such portion thereof as shall bring the total investment therein within the limitations imposed by said paragraphs above as of the date of consummation.

**MANAGEMENT**

**<u>Trustees and Officers</u>**

The Board is responsible for the overall management of the Trust, including general supervision and review of the investment activities of the Funds. The Board, in turn, elects the officers of the Trust, who are responsible for administering the day-to-day operations of the Trust and the Funds. Unless otherwise indicated in the table below, the address of each Trustee and officer of the Trust is c/o Angel Oak Capital Advisors, LLC, 980 Hammond Drive, Suite 200, Atlanta, Georgia 30328. Additional information about the Trustees and officers of the Trust is provided in the following table.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name and <br>Year of Birth** | **Position with the Trust** | **Term of Office and Length of Time Served** | **Principal Occupation(s) During Past 5 Years** | **Number of Portfolios in Fund Complex**<sup>(1)</sup> **Overseen by Trustee** | **Other Directorships Held <br>During the Past 5 Years** |
| **Independent Trustees of the Trust**<sup>(2)</sup> | **Independent Trustees of the Trust**<sup>(2)</sup> | **Independent Trustees of the Trust**<sup>(2)</sup> | **Independent Trustees of the Trust**<sup>(2)</sup> | **Independent Trustees of the Trust**<sup>(2)</sup> | **Independent Trustees of the Trust**<sup>(2)</sup> |
| Ira P. Cohen<br>1959 | Independent<br>Trustee, Chair | Trustee since 2014, Chair since 2017; indefinite terms | Independent financial services consultant (since 2005). | 10 | Trustee, Valued Advisers Trust (since 2010); Trustee, Apollo Diversified Real Estate Fund (formerly, Griffin Institutional Access Real Estate Fund) (since 2014); Trustee, Angel Oak Strategic Credit Fund (since 2017); Trustee, Angel Oak Financial Strategies Income Term Trust (since 2018); Trustee and Chair, U.S. Fixed Income Trust (Trustee since 2019, Chair since 2025); Trustee, Angel Oak Credit Opportunities Term Trust (since 2021); Trustee, CRM Mutual Fund Trust (since 2025); Trustee, Angel Oak Dynamic Financial Strategies Income Term Trust (2019-2022); Trustee, Apollo Credit Fund (formerly, Griffin Institutional Access Credit Fund) (2017-2022). |
| Alvin R. Albe, Jr.<br>1953 | Independent Trustee | Since 2014; indefinite term | Retired. | 10 | Trustee, Angel Oak Strategic Credit Fund (since 2017); Trustee, Angel Oak Financial Strategies Income Term Trust (since 2018); Trustee, Angel Oak Credit Opportunities Term Trust (since 2021); Trustee, Angel Oak Dynamic Financial Strategies Income Term Trust (2019-2022). |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name and <br>Year of Birth** | **Position with the Trust** | **Term of Office and Length of Time Served** | **Principal Occupation(s) During Past 5 Years** | **Number of Portfolios in Fund Complex**<sup>(1)</sup> **Overseen by Trustee** | **Other Directorships Held <br>During the Past 5 Years** |
| Keith M. Schappert<br>1951 | Independent Trustee | Since 2014; indefinite term | President, Schappert Consulting LLC (since 2008); Retired, President and CEO of JP Morgan Investment Management. | 10 | Trustee, Angel Oak Strategic Credit Fund (since 2017); Trustee, Angel Oak Financial Strategies Income Term Trust (since 2018); Trustee, Angel Oak Credit Opportunities Term Trust (since 2021); Trustee, Angel Oak Dynamic Financial Strategies Income Term Trust (2019-2022); Director, Commonfund Capital, Inc. (2015-2022); Trustee, Mirae Asset Discovery Funds (2010-2023). |
| Andrea N. Mullins<br>1967 | Independent Trustee | Since 2019; indefinite term | Private Investor; Independent Contractor, SWM Advisors (since 2014). | 10 | Trustee and Audit Committee Chair, Valued Advisers Trust (since 2013, Chair since 2017); Trustee, Angel Oak Strategic Credit Fund (since 2019); Trustee, Angel Oak Financial Strategies Income Term Trust (since 2019); Trustee, Angel Oak Credit Opportunities Term Trust (since 2021); Trustee and Audit Committee Chair, NXG Cushing Midstream Energy Fund (formerly, Cushing MLP & Infrastructure Fund)(since 2021); Trustee and Audit Committee Chair, NXG NextGen Infrastructure Income Fund (formerly, Cushing NextGen Infrastructure Income Fund) (since 2021); Trustee, Chair, and Audit Committee Chair, CRM Mutual Fund Trust (since 2025); Trustee, Angel Oak Dynamic Financial Strategies Income Term Trust (2019-2022); Trustee and Audit Committee Chair, Cushing Mutual Funds Trust (2021-2023). |
| **Interested Trustee of the Trust** | **Interested Trustee of the Trust** | **Interested Trustee of the Trust** | **Interested Trustee of the Trust** | **Interested Trustee of the Trust** | **Interested Trustee of the Trust** |
| Clayton Triick<br>1986 | Interested Trustee | Since 2024, indefinite term | Head of Portfolio Management, Public Strategies, Angel Oak Capital Advisors, LLC (since 2024); Senior Portfolio Manager, Angel Oak Capital Advisors, LLC (since 2011). | 9 | Trustee, Angel Oak Strategic Credit Fund (since 2024); Trustee, Angel Oak Credit Opportunities Term Trust (since 2024); Trustee, Angel Oak Financial Strategies Income Term Trust (2024-2025). |

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(1)The Fund Complex includes each series of the Trust, and Angel Oak Strategic Credit Fund, Angel Oak Financial Strategies Income Term Trust, and Angel Oak Credit Opportunities Term Trust, affiliated registrants not discussed in this SAI.

(2)The Trustees of the Trust who are not "interested persons" of the Trust as defined in the 1940 Act ("Independent Trustees").

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| | | | |
|:---|:---|:---|:---|
| **Name and <br>Year of Birth** | **Position with the Trust** | **Term of Office and Length of Time Served** | **Principal Occupation(s) During Past 5 Years** |
| **Officers of the Trust** | **Officers of the Trust** | | |
| Ward Bortz<br>1983 | President | Since 2025; indefinite term | Head of U.S. Wealth and ETF Portfolio Manager, Angel Oak Capital Advisors, LLC (since 2022); Head of ETFs and Senior Researcher, Angel Oak Capital Advisors, LLC (2022); Client Portfolio Manager, Fixed Income Factors, Invesco (2019-2022). |
| Michael Colombo<br>1984 | Secretary | Since 2023; indefinite term | Chief Risk Officer, Angel Oak Capital Advisors, LLC (since 2023); Director of Valuation, Angel Oak Capital Advisors, LLC (2022-2023); Director of Trade Operations, Intercontinental Exchange, Inc. (2022); Manager of Trade Operations, Intercontinental Exchange, Inc. (2019-2022). |
| Nilesh Likhite<br>1984 | Treasurer | Since 2025; indefinite term | Fund Controller, Angel Oak Capital Advisors, LLC (since 2025); Fund Controller, Warren Equity Partners (2023-2025); Senior Manager, Ernst & Young LLP (2019-2023). |
| Chase Eldredge<br>1989 | Chief Compliance Officer | Since 2022; indefinite term | Chief Compliance Officer, Angel Oak Capital Advisors, LLC (since 2022); Chief Compliance Officer of Falcons I, LLC (since 2022); Chief Compliance Officer, Angel Oak Strategic Credit Fund (since 2022); Chief Compliance Officer, Angel Oak Financial Strategies Income Term Trust (since 2022); Chief Compliance Officer, Angel Oak Credit Opportunities Term Trust (since 2022); Senior Compliance Officer, Angel Oak Capital Advisors, LLC (2020-2022); Compliance Officer, Angel Oak Capital Advisors, LLC (2017-2020). |

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**<u>Additional Information Concerning the Board of Trustees.</u>**

*The Role of the Board*

The Board oversees the management and operations of the Trust. Like most registered investment companies, the day-to-day management and operation of the Trust is the responsibility of the various service providers to the Trust, such as the Adviser, the distributor, administrator, the custodian and the transfer agent, each of whom are discussed in greater detail in this SAI. The Board has appointed various senior employees of the Adviser as officers of the Trust, with responsibility to monitor and report to the Board on the Trust's operations. In conducting this oversight, the Board receives regular reports from these officers and the service providers. For example, the Treasurer reports as to financial reporting matters. In addition, the Adviser provides regular reports on the investment strategy and performance of the Funds. The Board has appointed a Chief Compliance Officer ("CCO") who administers the Trust's compliance program and regularly reports to the Board as to compliance matters. These reports are provided as part of the Board's regular Board Meetings, which are typically held quarterly, and involve the Board's review of recent operations. While Angel Oak compensates the CCO for his services to the Trust, the Funds reimburse Angel Oak for a portion of the CCO's salary.

*Board Structure, Leadership*

The Board has structured itself in a manner that it believes allows it to perform its oversight function effectively. It has established four standing committees—an Audit, Financial and Administrative Oversight Committee, a Nominating and Governance Committee, a Compliance Oversight Committee and a Valuation and Risk Management Oversight Committee—that are discussed in greater detail below under "Board Committees." At least a majority of the Board is comprised of Independent Trustees who are not affiliated with the Adviser, the principal underwriter, or their affiliates. The Committees are each comprised entirely of Independent Trustees.

The Board has an Independent Chair. Except for any duties specified herein or pursuant to the Trust's Declaration of Trust and By-Laws, the designation of Chair does not impose on Mr. Cohen any duties, obligations or liability that are greater than the duties, obligations or liability imposed on such person as a member of the Board. As Chair, Mr. Cohen acts as a spokesperson for the Trustees in between meetings of the Board, serves as a liaison for the Trustees with the Trust's service providers, officers, and legal counsel to discuss ideas informally, and participates in setting the agenda for meetings of the Board and separate meetings or executive sessions of the Independent Trustees. As noted, the majority of the Board is comprised of Independent Trustees, and the Board believes that maintaining a Board that has a majority of Independent Trustees allows the Board to operate in a manner that provides for an appropriate level of independent oversight and action. In accordance with applicable regulations regarding the governance of the Trust, the Independent Trustees have an opportunity to meet in a separate quarterly executive session in conjunction with each quarterly meeting of the Board during which they may review matters relating to their independent oversight of the Trust.

The Board reviews annually the structure and operation of the Board and its committees. The Board has determined that the composition of the Board and the function and composition of its various committees provide the appropriate means and communication channels to address any potential conflicts of interest that may arise.

*Board Oversight of Risk Management*

As part of its oversight function, the Board receives and reviews various risk management reports and discusses these matters with appropriate management and other personnel. Because risk management is a broad concept comprised of many elements (e.g., investment risk, issuer and counterparty risk, compliance risk, operational risks, business continuity risks), the oversight of different types of risks is handled in different ways. For example, the Audit, Financial and Administrative Oversight Committee meets with the Treasurer and the Trust's independent registered public accounting firm to discuss, among other things, the internal control structure of the Trust's financial reporting function. The Board meets regularly with the Chief Compliance Officer and the Chief Operating Officer to discuss compliance and operational risks and how they are managed. The Board also receives reports from the Adviser and its Chief Risk Officer as to investment and other risks of the Funds.

With respect to liquidity, the Trust has implemented a liquidity risk management program on behalf of the Funds (the "Liquidity Program") that is designed to assess and manage each Fund's liquidity risk. The Board has designated the Adviser to administer the Liquidity Program. Under the Liquidity Program the Board will review periodic reports concerning Fund liquidity and review, no less frequently than annually, a written report prepared by the Adviser that addresses the operation of the Liquidity Program and assesses its adequacy and effectiveness.

*Information about Each Trustee's Qualification, Experience, Attributes or Skills* 

The Board believes that each of the Trustees has the qualifications, experience, attributes and skills ("Trustee Attributes") appropriate to their continued service as Trustees of the Trust in light of the Trust's business and structure. In addition to a demonstrated record of business and/or professional accomplishment, each of the Trustees has demonstrated a commitment to

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discharging their oversight duties as trustees in the interests of shareholders. The Board annually conducts a "self-assessment" wherein the effectiveness of the Board is reviewed.

In addition to the information provided in the table above, certain additional information concerning each particular Trustee and his or her Trustee Attributes is provided below.

*Mr. Cohen's Trustee Attributes.* 

Mr. Cohen has over 44 years of experience in the financial services industry. He served as Executive Vice President of Recognos Financial, a premier provider of semantic data analysis for the financial services industry, from 2015 to 2021 and he has been an independent financial services consultant since 2005. Mr. Cohen has served a variety of management roles for various financial and investment companies throughout his career. Additionally, Mr. Cohen serves as an independent trustee of the trust in which the Adviser's first mutual fund was launched. Mr. Cohen also serves as a trustee for other fund complexes. The Board believes that Mr. Cohen's experience, qualifications, attributes and skills on an individual basis and in combination with those of the other Trustees lead to the conclusion that he possesses the requisite skills and attributes as a Trustee to carry out oversight responsibilities with respect to the Trust.

*Mr. Albe's Trustee Attributes*.

Mr. Albe has over 40 years of experience in the investment management industry, including having served as executive management for a large asset management firm and its affiliated investment companies. Mr. Albe is a Certified Public Accountant (non-practicing) and has past experience as a member of the board and audit committee of a publicly held company. Mr. Albe is an audit committee financial expert of the Trust. The Board believes that Mr. Albe's experience, qualifications, attributes and skills on an individual basis and in combination with those of the other Trustees lead to the conclusion that he possesses the requisite skills and attributes as a Trustee to carry out oversight responsibilities with respect to the Trust.

*Mr. Schappert's Trustee Attributes*.

Mr. Schappert has over 50 years of experience in the investment management industry. He has been an independent financial services consultant for his own consulting business, Schappert Consulting, LLC, since 2008 and has served a variety of management roles for various financial and investment companies throughout his career, including as President and CEO of J.P. Morgan Investment Management, President and CEO of Federated Investment Advisory Companies, and Vice Chairman of the Americas for Credit Suisse. The Board believes that Mr. Schappert's experience, qualifications, attributes and skills on an individual basis and in combination with those of the other Trustees lead to the conclusion that he possesses the requisite skills and attributes as a Trustee to carry out oversight responsibilities with respect to the Trust.

*Ms. Mullins' Trustee Attributes.*

Ms. Mullins worked in the Asset Management and Mutual Funds industry at Raymond James from 1990-2010 and her experience includes accounting, compliance, and operations. Ms. Mullins retired as Chief Financial Officer of Eagle Family of Funds (now Carillon Family of Funds) in 2010. From 2014-2022, Ms. Mullins was an independent contractor and CCO with SWM Advisors. She remains an independent contractor with SWM Advisors. Ms. Mullins also serves as a trustee for other fund complexes. In addition to this experience, Ms. Mullins also has experience serving as a trustee for Valued Advisers Trust since 2013 and as its Chairperson since 2017. Ms. Mullins is also an independent trustee for The Cushing Family of Funds. The Board believes that Ms. Mullins' experience, qualifications, attributes and skills on an individual basis and in combination with those of the other Trustees lead to the conclusion that she possesses the requisite skills and attributes as a Trustee to carry out oversight responsibilities with respect to the Trust.

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*Mr. Triick's Trustee Attributes.*

Mr. Triick has served in various portfolio management capacities for Angel Oak since 2011. In his current role, he leads the overall investment framework, including asset allocation, sector positioning, and duration management for the firm's public mutual funds, exchange-traded funds, and related SMAs. He heads the Public Strategies Investment Committee and is responsible for overseeing all aspects of portfolio management for the Public Strategies, which are primarily comprised of multi-sector portfolios. Prior to joining Angel Oak in 2011, Clayton worked for YieldQuest Advisors, where he was a member of the investment committee focusing on interest rate and currency risk management of the mutual funds alongside directly managing the closed-end fund allocations within YieldQuest portfolios and individual accounts. The Board believes that Mr. Triick's experience, qualifications, attributes and skills on an individual basis and in combination with those of the other Trustees lead to the conclusion that he possesses the requisite skills and attributes as a Trustee to carry out oversight responsibilities with respect to the Trust.

**<u>Board Committees</u>**

The Board has four standing committees: the Audit, Financial, and Administrative Oversight Committee; the Nominating and Governance Committee; the Compliance Oversight Committee; and the Valuation and Risk Management Oversight Committee.

The Audit, Financial and Administrative Oversight Committee is comprised of all of the Independent Trustees. The function of the Committee is to review the scope and results of the annual audit of the Funds and any matters bearing on the audit or the Funds' financial statements and to ensure the integrity of the Funds' financial reporting. The Committee also recommends to the Board of Trustees the annual selection of the independent registered public accounting firm for the Funds and it reviews and pre-approves audit and certain non-audit services to be provided by the independent registered public accounting firm. The Committee also assists the Board in overseeing the review of financial and administrative reports and discussing with the Trust's management financial and administrative matters relating to the Funds. For the fiscal year ended January 31, 2026, the Audit, Financial and Administrative Oversight Committee met four times.

The Nominating and Governance Committee, comprised of all the Independent Trustees, is responsible for seeking and reviewing candidates for consideration as nominees for Trustees. The Committee has a policy in place for considering Trustee candidates recommended by shareholders. Nomination submissions must be accompanied by all information relating to the recommended nominee that is required to be disclosed in solicitations or proxy statements for the election of Trustees, as well as information sufficient to evaluate the individual's qualifications. Nomination submissions must be accompanied by a written consent of the individual to stand for election if nominated by the Board and to serve if elected by the shareholders. In addition, a nominee must provide such additional information as reasonably requested by the Committee. The Committee will consider recommendations by shareholders for up to one year from receipt. Nomination submissions should be sent to:

Secretary, Angel Oak Funds Trust

c/o Angel Oak Capital Advisors, LLC

980 Hammond Drive, Suite 200

Atlanta, GA 30328

The Committee meets at least annually. For the fiscal year ended January 31, 2026, the Committee met four times.

The Compliance Oversight Committee, comprised of all the Independent Trustees, assists the full Board in connection with matters relating to the compliance of the Trust and its service providers with applicable laws. The Committee coordinates the Board's oversight of the implementation and administration of the Fund's compliance program through the periodic review of reports and discussions with appropriate management of the Adviser, including the CCO, and other service providers. The Committee reviews and makes recommendations to the Board regarding the Fund's compliance matters such as compliance with and any proposed changes to the Fund's compliance program and the Codes of Ethics of the Fund and Adviser. The Committee meets at least annually. For the fiscal year ended January 31, 2026, the Compliance Oversight Committee met four times.

The Valuation and Risk Management Oversight Committee, comprised of all the Independent Trustees, oversees valuation matters of the Trust delegated to the Adviser's Valuation Committee, including the fair valuation determinations and methodologies proposed and utilized by the Adviser's Valuation Committee, reviews the Trust's valuation procedures and their application by the Adviser's Valuation Committee, reviews pricing errors and procedures for calculation of NAV of each series of the Trust and responds to other matters deemed appropriate by the Board.

The Committee also oversees the policies, procedures, practices and systems relating to identifying and managing the various risks that are or may be applicable to the Trust. The Committee does not assume any day-to-day risk management functions or activities. The Adviser and other service providers are responsible for the day-to-day implementation, maintenance, and administration of policies, procedures, systems and practices designed to identify, monitor and control risks to which the Trust is or may be exposed. The Chief Risk Officer of the Adviser oversees the execution of its risk management responsibilities. The actions of the Committee are reviewed and ratified by the Board. The Committee meets at least annually. For the fiscal year ended January 31, 2026, the Valuation and Risk Management Oversight Committee met four times.

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**<u>Trustee Ownership of Fund Shares and Other Interests</u>**

The table below shows, for each Trustee, the amount of the Funds' equity securities beneficially owned by each Trustee, and the aggregate value of all investments in equity securities of the Trust, as of December 31, 2025 and stated as one of the following ranges: A = None; B = $1-$10,000; C = $10,001-$50,000; D = $50,001-$100,000; and E = over $100,000.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Dollar Range of Equity Securities in the:** | **Dollar Range of Equity Securities in the:** | **Dollar Range of Equity Securities in the:** | **Dollar Range of Equity Securities in the:** | **Aggregate Dollar Range of Equity Securities in all Registered Investment Companies Overseen by the Trustees in Family of Investment Companies** |
|<br>**Name of Trustee** | **Income ETF** | **UltraShort** <br>**Income ETF**  | **High Yield Opportunities ETF** | **Mortgage-Backed Securities ETF** | **Aggregate Dollar Range of Equity Securities in all Registered Investment Companies Overseen by the Trustees in Family of Investment Companies** |
| **Non-Interested Trustees** | | | | | |
| &nbsp;&nbsp;&nbsp;&nbsp;Alvin R. Albe, Jr. | A | A | A | E | E |
| &nbsp;&nbsp;&nbsp;&nbsp;Ira P. Cohen | A | A | A | A | A |
| &nbsp;&nbsp;&nbsp;&nbsp;Keith M. Schappert | E | A | A | E | E |
| &nbsp;&nbsp;&nbsp;&nbsp;Andrea N. Mullins | A | A | E | A | E |
| **Interested Trustees** | | | | | |
| &nbsp;&nbsp;&nbsp;&nbsp;Clayton Triick | D | C | C | C | E |

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Furthermore, neither the Independent Trustees nor members of their immediate family own securities beneficially or of record in the Adviser, the Funds' principal underwriter, or any of their affiliates. Accordingly, during the two most recently completed calendar years, neither the Independent Trustees nor members of their immediate family, have had a direct or indirect interest, the value of which exceeds $120,000, in the Adviser, the Trust's principal underwriter or any of its affiliates.

**<u>Compensation</u>**

Each Trustee who is not an "interested person" (i.e., an "Independent Trustee") of the Fund Complex (which includes affiliated registrants not disclosed in this report) receives an annual retainer of $95,000 ($75,000 prior to November 1, 2025) (pro-rated for any periods less than one year) paid quarterly as well as $12,000 for attending each regularly scheduled meeting in connection with his or her service on the Board of the Fund Complex. In addition, each Committee Chair receives additional annual compensation of $12,000 (pro-rated for any periods less than one year), and the Chair of the Board receives an additional $27,000 ($17,000 prior to November 1, 2025). Independent Trustees are eligible for reimbursement of out-of-pocket expenses incurred in connection with attendance at meetings and applicable industry conferences when in line with applicable expense policy.

The Trust does not have any pension or retirement plans. For the fiscal year ended January 31, 2026, the following compensation was paid to the Trustees:

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| | | |
|:---|:---|:---|
| **Name of Person/Position** | **Aggregate Compensation**<br>**from the Funds**<sup>1</sup> | **Total Compensation from the Funds**<br>**and Fund Complex**<sup>2</sup> **Paid to Trustees** |
| **Non-Interested Trustees** | | |
| Alvin R. Albe, Jr., Trustee | $0 | $140000 |
| Ira P. Cohen, Trustee, Chair | $0 | $159500 |
| Keith M. Schappert, Trustee | $0 | $140000 |
| Andrea N. Mullins, Trustee | $0 | $140000 |
| **Interested Trustees**<sup>3</sup> |  |  |
| Clayton Triick, Trustee | $0 | $0 |

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<sup>(1)</sup> Because Trustee compensation is covered by the unitary fee paid by each Fund, the Adviser, and not the Funds, is responsible for compensating the Trustees with respect to the Funds.

<sup>(2)</sup> The Fund Complex consists of Angel Oak Funds Trust and Angel Oak Strategic Credit Fund, Angel Oak Financial Strategies Income Term Trust, and Angel Oak Credit Opportunities Term Trust, affiliated registrants not discussed in this SAI.

<sup>(3)</sup> As an Interested Trustee, Mr. Triick does not receive compensation from the Fund Complex.

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**<u>Investment Adviser</u>**

The Funds' Adviser is Angel Oak Capital Advisors, LLC, 980 Hammond Drive, Suite 200, Atlanta, Georgia 30328. Angel Oak Capital Advisors, LLC was formed in 2009 by the Managing Partners of the Adviser, Michael A. Fierman, and Sreeniwas (Sreeni) V. Prabhu. The Adviser is wholly-owned by Angel Oak Asset Management Holdings, LLC. On October 1, 2025, Brookfield Asset Management Ltd. acquired a majority of Angel Oak Companies, LP, the parent of Angel Oak Asset Management Holdings, LLC, itself the parent of the Adviser.

Under the terms of the investment advisory agreement (the "Agreement"), the Adviser manages the Funds' investments subject to oversight by the Board of Trustees. As compensation for its management services, the Income ETF is obligated to pay the Adviser a fee computed and accrued daily and paid monthly at an annual rate of 0.99% of the average daily net assets of the Fund, the UltraShort Income ETF is obligated to pay the Adviser a fee computed and accrued daily and paid monthly at an annual rate of 0.55% of the average daily net assets of the Fund, the High Yield ETF is obligated to pay the Adviser a fee computed and accrued daily and paid monthly at an annual rate of 0.55% of the average daily net assets of the Fund, and the MBS ETF is obligated to pay the Adviser a fee computed and accrued daily and paid monthly at an annual rate of 0.79% of the average daily net assets of the Fund.

Under the advisory agreement, the Adviser receives a "unitary fee" pursuant to which it is responsible for substantially all the expenses of the Funds (including expenses of the Trust relating to the Funds), except for the advisory fees, payments under a Fund's 12b-1 plan (if any), interest expenses, dividend and interest expenses related to short sales, taxes, acquired fund fees and expenses (other than fees for funds advised by the Adviser and/or its affiliates), brokers' commissions and any other transaction-related expenses and fees arising out of transactions effected on behalf of a Fund, and litigation and potential litigation and other extraordinary expenses not incurred in the ordinary course of a Fund's business.

The Adviser has contractually agreed to waive its fees and/or reimburse certain expenses (exclusive of any interest expenses, dividend and interest expenses related to short sales, taxes, acquired fund fees and expenses (other than fees for funds advised by the Adviser which are waived), brokers' commissions and any other transaction related expenses and fees arising out of transactions effected on behalf of the Funds, expenses, expenses of shareholder proposals, contested elections, or non-routine shareholder meetings, and other non-routine expenses or other extraordinary expenses not incurred in the ordinary course of the Fund's business) to limit the Total Annual Fund Operating Expenses after Fee Waiver/Expense Reimbursement to 0.79% of the Income ETF's average daily net assets, 0.49% of the MBS ETF's average daily net assets, and 0.34% of the UltraShort Income ETF's average daily net assets (each the "Expense Limit"), through September 30, 2027. The Total Annual Fund Operating Expenses after Fee Waiver/Expense Reimbursement may be higher than the Expense Limit as a result of any acquired fund fees and expenses or other expenses that are excluded from the calculation. The contractual waivers and expense reimbursements may be changed or eliminated at any time by the Board of Trustees, on behalf of the Fund, upon 60 days' written notice to the Adviser. The contractual waivers and expense reimbursements may not be terminated by the Adviser without the consent of the Board of Trustees. The Adviser may recoup from the Fund any waived amount or reimbursed expenses with respect to the Fund pursuant to this agreement if such recoupment does not cause the Fund to exceed the current Expense Limit or the Expense Limit in place at the time of the waiver or reimbursement (whichever is lower) and the recoupment is made within three years after the end of month in which the Adviser incurred the expense. Prior to February 1, 2025, the Expense Limit for the UltraShort Income ETF was 0.29% of the Fund's average daily net assets.

In addition, the Adviser has contractually agreed through at least September 30, 2027 to waive the amount of each Fund's management fee to the extent necessary to offset the proportionate share of the management fees incurred by the Fund through its investment in an underlying fund for which the Adviser also serves as investment adviser. This arrangement may only be changed or eliminated by the Board of Trustees upon 60 days' written notice to the Adviser.

The following table describes the advisory fees paid to the Adviser by the Income ETF for the periods indicated.

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| | | | |
|:---|:---|:---|:---|
| **Fiscal Period Ended** | **Advisory Fees <br>Accrued** | **Fee Waiver/<br>Expense Reimbursement** | **Net Advisory Fees Paid <br>(or Expenses Reimbursed)** |
| January 31, 2026 | $5645680 | $(1140542) | $4505138 |
| January 31, 2025 | $2386544 | $(482130) | $1904414 |
| January 31, 2024 | $541982 | $(109491) | $432491 |

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The following table describes the advisory fees paid to the Adviser by the UltraShort Income ETF for the periods indicated.

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| | | | |
|:---|:---|:---|:---|
| **Fiscal Period Ended** | **Advisory Fees** <br>**Accrued**  | **Fee Waiver/<br>Expense Reimbursement** | **Net Advisory Fees Paid <br>(or Expenses Reimbursed)** |
| January 31, 2026 | $5575843 | $(2128958) | $3446885 |
| January 31, 2025 | $2777384 | $(1312945) | $1464439 |
| January 31, 2024 | $442775 | $(209312) | $233463 |

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The following table describes the advisory fees paid to the Adviser by the High Yield ETF for the periods indicated.

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| | | | |
|:---|:---|:---|:---|
| **Fiscal Year Ended** | **Advisory Fees <br>Accrued** | **Fee Waiver/<br>Expense Reimbursement** | **Net Advisory Fees Paid <br>(or Expenses Reimbursed)** |
| January 31, 2026 | $665361 | $0 | $665361 |
| January 31, 2025 | $506499 | $(31638)<sup>(1)</sup> | $474861 |
| January 31, 2024<sup>(1)</sup> | $366429 | $(251693) | $114736 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<sup>(1)</sup> Information is for the Predecessor High Yield Fund.

The following table describes the advisory fees paid to the Adviser by the MBS ETF for the periods indicated.

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| | | | |
|:---|:---|:---|:---|
| **Fiscal Year Ended** | **Advisory Fees** <br>**Accrued**  | **Fee Waiver/<br>Expense Reimbursement** | **Net Advisory Fees Paid <br>(or Expenses Reimbursed)** |
| January 31, 2026 | $1292921 | $(490983) | $801938 |
| January 31, 2025 | $528940 | $(221542)<sup>(1)</sup> | $307398 |
| January 31, 2024<sup>(2)</sup> | $165799 | $(220127) | $(54328) |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<sup>(1)</sup> $23,752 of the total $221,542 waived relates to the Predecessor Total Return Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<sup>(2)</sup> Information is for the Predecessor Total Return Fund.

The Adviser retains the right to use the name "Angel Oak" in connection with another investment company or business enterprise with which the Adviser is or may become associated. The Trust's right to use the name "Angel Oak" automatically ceases 90 days after termination of the Agreement and may be withdrawn by the Adviser on 90 days' written notice.

The Adviser may make payments to banks or other financial institutions that provide shareholder services and administer shareholder accounts. If a bank or other financial institution were prohibited from continuing to perform all or a part of such services, management of the Funds believes that there would be no material impact on the Funds or shareholders. Banks and other financial institutions may charge their customers fees for offering these services to the extent permitted by applicable regulatory authorities, and the overall return to those shareholders availing themselves of the bank services will be lower than to those shareholders who do not. The Funds may from time to time purchase securities issued by banks and other financial institutions that provide such services; however, in selecting investments for the Funds, no preference will be shown for such securities.

**About the Portfolio Managers** 

&nbsp;&nbsp;&nbsp;&nbsp;The following table shows which Portfolio Managers have the primary responsibility for the day-to-day management of each Fund.

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| | | | | |
|:---|:---|:---|:---|:---|
| **Portfolio Manager** | **Income ETF**  | **UltraShort Income ETF** | **High Yield <br>Opportunities ETF** | **Mortgage-Backed Securities ETF** |
| Ward Bortz | X | X | X | X |
| Nichole Hammond | | | X | |
| Matthew R. Kennedy | | | X | |
| Sreeni V. Prabhu | | X | X | |
| Namit Sinha | X | X | X | X |
| Clayton Triick | X | X | X | X |

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As of January 31, 2026, the Portfolio Managers were responsible for managing the following types of accounts for the Adviser, other than the Fund(s) for which they serve as a portfolio manager:

**<u>Ward Bortz</u>**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Number and Assets of Other Accounts** | **Number and Assets of Other Accounts** | **Number and Assets of Other Accounts** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** |
| **Registered Investment Companies** | **Other Pooled Investment Vehicles** | **Other Accounts** | **Registered Investment Companies** | **Other Pooled Investment Vehicles** | **Other Accounts** |
| 3 | 0 | 0 | 0 | 0 | 0 |
| $529544130 | $0 | $0 | $0 | $0 | $0 |

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**<u>Nichole Hammond</u>**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Number and Assets of Other Accounts** | **Number and Assets of Other Accounts** | **Number and Assets of Other Accounts** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** |
| **Registered Investment Companies** | **Other Pooled Investment Vehicles** | **Other Accounts** | **Registered Investment Companies** | **Other Pooled Investment Vehicles** | **Other Accounts** |
| 0 | 0 | 0 | 0 | 0 | 0 |
| $0 | $0 | $0 | $0 | $0 | $0 |

---

**<u>Matthew Kennedy</u>**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Number and Assets of Other Accounts** | **Number and Assets of Other Accounts** | **Number and Assets of Other Accounts** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** |
| **Registered Investment Companies** | **Other Pooled Investment Vehicles** | **Other Accounts** | **Registered Investment Companies** | **Other Pooled Investment Vehicles** | **Other Accounts** |
| 1 | 1 | 0 | 0 | 1 | 0 |
| $86715652 | $3645541 | $0 | $0 | $3645541 | $0 |

---

**<u>Sreeni Prabhu</u>**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Number and Assets of Other Accounts** | **Number and Assets of Other Accounts** | **Number and Assets of Other Accounts** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** |
| **Registered Investment Companies** | **Other Pooled Investment Vehicles** | **Other Accounts** | **Registered Investment Companies** | **Other Pooled Investment Vehicles** | **Other Accounts** |
| 4 | 15 | 0 | 0 | 14 | 0 |
| $3997161326 | $2005357855 | $0 | $0 | $1938389544 | $0 |

---

**<u>Namit Sinha</u>**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Number and Assets of Other Accounts** | **Number and Assets of Other Accounts** | **Number and Assets of Other Accounts** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** |
| **Registered Investment Companies** | **Other Pooled Investment Vehicles** | **Other Accounts** | **Registered Investment Companies** | **Other Pooled Investment Vehicles** | **Other Accounts** |
| 4 | 17 | 2 | 0 | 15 | 0 |
| $3552948 | $2064234508 | $457033866 | $0 | $1977676357 | $0 |

---

**<u>Clayton Triick</u>**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Number and Assets of Other Accounts** | **Number and Assets of Other Accounts** | **Number and Assets of Other Accounts** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** | **Number and Assets of Accounts for which Advisory Fee is Performance Based** |
| **Registered Investment Companies** | **Other Pooled Investment Vehicles** | **Other Accounts** | **Registered Investment Companies** | **Other Pooled Investment Vehicles** | **Other Accounts** |
| 6 | 1 | 2 | 0 | 1 | 0 |
| $4061514194 | $3645541 | $184410674 | $0 | $3645541 | $0 |

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<u>Compensation</u>: The Portfolio Managers receive an annual base salary from the Adviser. Each of the Portfolio Managers is eligible to receive a discretionary bonus as well, which is based on a combination of: profitability of the Adviser; assets under management; investment performance of managed accounts; compliance with the Adviser's policies and procedures; contribution to the Adviser's goals and objectives; anticipated compensation levels of competitor firms; effective research; role and responsibilities; client satisfaction; asset retention; teamwork; leadership; and risk management. Mr. Prabhu has an

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ownership interest in the Adviser's ultimate parent company and may receive distributions from the Adviser's ultimate parent company, which may come from profits generated by the Adviser. Portfolio Managers may have membership or profit sharing interests in the Adviser's ultimate parent company in addition to their salary, bonus, and benefits package.

<u>Potential Conflicts of Interest</u>: Actual or apparent conflicts of interest may arise when a portfolio manager has day-to-day management responsibilities with respect to more than one fund or other account. More specifically, portfolio managers who manage multiple funds and/or other accounts may experience the following potential conflicts: The management of multiple accounts may result in a portfolio manager devoting unequal time and attention to the management of each account. Investment decisions for client accounts are also made consistent with a client's individual investment objective and needs. Accordingly, there may be circumstances when purchases or sales of securities for one or more client accounts will have an adverse effect on other clients. The Adviser may seek to manage such competing interests by: (1) having a portfolio manager focus on a particular investment discipline; (2) utilizing a quantitative model in managing accounts; and/or (3) reviewing performance differences between similarly managed accounts on a periodic basis to ensure that any such differences are attributable by differences in investment guidelines and timing of cash flows. The Adviser also maintains a Code of Ethics to establish standards and procedures for the detection and prevention of activities by which persons having knowledge of the investments and investment intentions of the Funds may abuse their fiduciary duties to the Funds.

If a portfolio manager identifies a limited investment opportunity that may be suitable for more than one client, the Funds may not be able to take full advantage of that opportunity due to an allocation of filled purchase or sale orders across all eligible accounts. To deal with these situations, the Adviser has adopted procedures for allocating portfolio transactions across multiple accounts.

With respect to securities transactions for clients, the Adviser determines which broker to use to execute each order. However, the Adviser may direct securities transactions to a particular broker/dealer for various reasons including receipt of research or participation interests in initial public offerings that may or may not benefit the Funds. To deal with these situations, the Adviser has adopted procedures to help ensure best execution of all client transactions.

From time to time, the Adviser may make investments at different levels of an issuer's or borrower's capital structure (including but not limited to investments in debt versus equity). In managing such investments, the Adviser will consider the interests of the Fund's shareholders in deciding what actions to take with respect to a given issuer or borrower. These potential conflicts of interests may become more pronounced in situations in which an issuer or borrower experiences financial or operational challenges, or as a result of a Fund's use of certain investment strategies, including small capitalization, emerging market, distressed or less liquid strategies.

Finally, the appearance of a conflict of interest may arise where the Adviser has an incentive, such as a performance-based management fee, which relates to the management of one but not all accounts for which a portfolio manager has day-to-day management responsibilities.

<u>Potential Restrictions and Issues Related to Material Non-Public Information</u>: The Adviser and its affiliates may acquire confidential or material non-public information, and as a result, the Adviser may be restricted from trading in certain securities and instruments. The Adviser will not be free to divulge, or to act upon, any such confidential or material non-public information and, due to these restrictions, the Adviser may be unable to initiate a transaction for a Fund's account that it otherwise might have initiated. As a result, a Fund may be frozen in an investment position that it otherwise might have liquidated or closed out or may not be able to acquire a position that it might otherwise have acquired.

The Funds are required to show the dollar amount ranges of the portfolio managers' beneficial ownership of shares of the Fund(s) they manage as of the fiscal year ended January 31, 2026.

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| | | | | |
|:---|:---|:---|:---|:---|
| **Portfolio Manager** | **Dollar Range of Equity Shares in the** | **Dollar Range of Equity Shares in the** | **Dollar Range of Equity Shares in the** | **Dollar Range of Equity Shares in the** |
| **Portfolio Manager** | **Income ETF**  | **UltraShort Income ETF** | **High Yield <br>Opportunities ETF** | **Mortgage-Backed Securities ETF** |
| Ward Bortz | $10001 - $50000 | $10001 - $50000 | $10001 - $50000 | $10001 - $50000 |
| Nichole Hammond | N/A | N/A | $10001 - $50000 | N/A |
| Matthew R. Kennedy | N/A | N/A | $10001 - $50000 | N/A |
| Sreeni V. Prabhu | N/A | $10001 - $50000 | $100001 - $500000 | N/A |
| Namit Sinha | $10001 - $50000 | $10001 - $50000 | $10001 - $50000 | $10001 - $50000 |
| Clayton Triick | $50001-$100000 | $50001-$100000 | $10001 - $50000 | $10001 - $50000 |

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**CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES** 

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

As a controlling shareholder, each of these persons could control the outcome of any proposal submitted to the shareholders for approval, including changes to a Fund's fundamental policies or the terms of the management agreement with the Adviser. To the best knowledge of the Trust, the names and addresses of the record and beneficial holders of 5% or more of the outstanding shares of the Funds' voting securities and the percentage of the outstanding shares as of April 30, 2026, are set forth below. As of May 1, 2026, the Trustees and officers of the Trust as a group beneficially owned 2.27% of the outstanding shares of the MBS ETF and less than 1% of the outstanding shares of the Income ETF, the UltraShort Income ETF, and the High Yield ETF.

**Angel Oak Income ETF**

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| | | |
|:---|:---|:---|
| **Name and Address** | **% Ownership** | **Type of Ownership** |
| **<u>Record Owners</u>** | | |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wells Fargo Clearing Services, LLC<br>2801 Market Street<br>St. Louis, MO 63103-2523 | 20.76% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Charles Schwab & Co., Inc.<br>211 Main Street<br>San Francisco, CA 94105-1905 | 16.29% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Morgan Stanley Smith Barney LLC<br>Harborside Financial Center Plaza, 23rd Floor<br>Jersey City, NJ 07311 | 15.94% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Merrill Lynch, Pierce, Fenner & Smith Inc.<br>4800 Deer Lake Dr. E.<br>Jacksonville, FL 32246-6484 | 13.17% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;National Financial Services, LLC<br>499 Washington Boulevard<br>Jersey City, NJ 17310-1995 | 11.60% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;UBS Financial Services Inc.<br>1000 Harbor Boulevard<br>Weehawken, NJ 07086-6727 | 6.26% | Record |

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**Angel Oak UltraShort Income ETF**

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| | | |
|:---|:---|:---|
| **Name and Address** | **% Ownership** | **Type of Ownership** |
| **<u>Record Owners</u>** | | |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Charles Schwab & Co., Inc.<br>211 Main Street<br>San Francisco, CA 94105-1905 | 53.48% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;National Financial Services, LLC<br>499 Washington Boulevard<br>Jersey City, NJ 17310-1995 | 21.37% | Record |

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**Angel Oak High Yield Opportunities ETF**

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| | | |
|:---|:---|:---|
| **Name and Address** | **% Ownership** | **Type of Ownership** |
| **<u>Record Owners</u>** | | |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;National Financial Services, LLC<br>499 Washington Boulevard<br>Jersey City, NJ 17310-1995 | 45.30% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Charles Schwab & Co., Inc.<br>211 Main Street<br>San Francisco, CA 94105-1905 | 24.02% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. Bank N.A. <br>800 Nicollet Mall<br>Minneapolis, MN 55402-2511 | 5.56% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;LPL Financial LLC<br>75 State Street, 22nd Floor<br>Boston, MA 02109 | 5.45% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;UBS Financial Services Inc.<br>1000 Harbor Boulevard<br>Weehawken, NJ 07086-6727 | 5.39% | Record |

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**Angel Oak Mortgage-Backed Securities ETF**

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| | | |
|:---|:---|:---|
| **Name and Address** | **% Ownership** | **Type of Ownership** |
| **<u>Record Owners</u>** | | |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Charles Schwab & Co., Inc.<br>211 Main Street<br>San Francisco, CA 94105-1905 | 42.12% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;National Financial Services, LLC<br>499 Washington Boulevard<br>Jersey City, NJ 17310-1995 | 30.44% | Record |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;UBS Financial Services Inc.<br>1000 Harbor Boulevard<br>Weehawken, NJ 07086-6727 | 6.29% | Record |

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**PROXY VOTING POLICY**

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

In its role as investment adviser to the Funds, the Adviser has adopted those proxy voting policies adopted by the Trust. To the extent that the Trust's policies do not cover potential voting issues with respect to proxies received by the Funds, the Fund has delegated to the Adviser the authority to act on its behalf to promote each Fund's investment objective, subject to the provisions of the Trust's policies regarding resolution of a conflict of interest with respect to the Adviser.

The Adviser will vote proxies in the best interests of the applicable Fund. The Adviser will generally vote in favor of routine corporate housekeeping proposals such as the election of directors and the selection of auditors, absent conflicts of interest (e.g., an auditor's provision of non-audit services). The Adviser will generally vote against proposals that cause board members to become entrenched or cause unequal voting rights. In reviewing proposals, the Adviser may also consider the opinion of management, the effect on management, the effect on shareholder value and the issuer's business practices.

The Adviser recognizes that under certain circumstances it may have a conflict of interest in voting proxies on behalf of a Fund. A "conflict of interest," means any circumstance when the Adviser (including officers, directors, agents and employees) knowingly does business with, receives compensation from, or sits on the board of, a particular issuer or closely affiliated entity, and, therefore, may appear to have a conflict of interest between its own interests and the interests of fund shareholders

------

in how proxies of that issuer are voted. The Adviser has adopted the Trust's procedures as they relate to the resolution of conflicts of interest with respect to voting shares of the Funds.

The Trust will file a Form N-PX, with the Funds' complete proxy voting record for the 12 months ended June 30, no later than August 31st of each year. Form N-PX for the Funds will be available without charge, upon request, by calling toll-free (800) 617-0004 and on the SEC's website at www.sec.gov.

**DISCLOSURE OF PORTFOLIO HOLDINGS** 

The Board has adopted a policy regarding the disclosure of information about each Fund's security holdings. Each Fund's entire portfolio holdings are publicly disseminated each day a Fund is open for business and may be available through financial reporting and news services, including publicly available internet web sites. In addition, the composition of the Deposit Securities is publicly disseminated daily prior to the opening of the Exchange via the facilities of the National Securities Clearing Corporation ("NSCC").

**DESCRIPTION OF SHARES**

The Declaration of Trust authorizes the issuance of an unlimited number of funds and shares. Each share represents an equal proportionate interest in the applicable Fund with each other share. Shares are entitled upon liquidation to a pro rata share in the net assets of the applicable Fund. Shareholders have no preemptive rights. The Declaration of Trust provides that the Trustees may create additional series or classes of shares. All consideration received by the Trust for shares of any additional funds and all assets in which such consideration is invested would belong to that fund and would be subject to the liabilities related thereto. Share certificates representing Shares will not be issued. Shares, when issued, are fully paid and non-assessable.

Each Share has one vote with respect to matters upon which a shareholder vote is required, consistent with the requirements of the 1940 Act and the rules promulgated thereunder. Shares of all funds in the Trust vote together as a single class, except that if the matter being voted on affects only a particular fund it will be voted on only by that fund and if a matter affects a particular fund differently from other funds, that fund will vote separately on such matter. As a Delaware statutory trust, the Trust is not required, and does not intend, to hold annual meetings of shareholders. Approval of shareholders will be sought, however, for certain changes in the operation of the Trust and for the election of Trustees under certain circumstances. Upon the written request of shareholders owning at least 10% of the Trust's shares, the Trust will call for a meeting of shareholders to consider the removal of one or more Trustees and other certain matters. In the event that such a meeting is requested, the Trust will provide appropriate assistance and information to the shareholders requesting the meeting.

Under the Declaration of Trust, the Trustees have the power to liquidate a Fund without shareholder approval. While the Trustees have no present intention of exercising this power, they may do so if a Fund fails to reach a viable size within a reasonable amount of time or for such other reasons as may be determined by the Board.

**PORTFOLIO TRANSACTIONS**

**<u>How Securities are Purchased and Sold</u>** 

Purchases and sales of portfolio securities that are fixed income securities (for instance, money market instruments and bonds, notes and bills) usually are principal transactions. In a principal transaction, the party from whom a Fund purchases or to whom the Fund sells is acting on their own behalf (and not as the agent of some other party such as its customers). These securities normally are purchased directly from the issuer or from an underwriter or market maker for the securities. There usually are no brokerage commissions paid for these securities.

Purchases and sales of portfolio securities that are equity securities (for instance common stock and preferred stock) are generally effected: (1) if the security is traded on an exchange, through brokers who charge commissions; and (2) if the security is traded in the "over-the-counter" markets, in a principal transaction directly from a market maker. In transactions on stock exchanges, commissions are negotiated. When transactions are executed in an over-the-counter market, the Adviser will seek to deal with the primary market makers; but when necessary to obtain best execution, the Adviser will utilize the services of others.

The price of securities purchased from underwriters includes a disclosed fixed commission or concession paid by the issuer to the underwriter, and prices of securities purchased from dealers serving as market makers reflects the spread between the bid and asked price.

In the case of fixed income and equity securities traded in the over-the-counter markets, there is generally no stated commission, but the price usually includes an undisclosed commission or markup.

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**<u>Commissions Paid</u>** 

The following table sets forth the brokerage commissions paid by the Funds on portfolio brokerage transactions during the periods shown below:

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| | | | | |
|:---|:---|:---|:---|:---|
| **Fiscal Period Ended** | **Income ETF** | **UltraShort Income ETF** | **High Yield Opportunities ETF**<sup>(1)</sup> | **Mortgage-Backed Securities ETF**<sup>(2)</sup> |
| January 31, 2026 | $28585<sup>(3)</sup> | $9457<sup>(5)</sup> | $875 | $10700 |
| January 31, 2025 | $14280<sup>(3)</sup> | $0 | $1951 | $11232<sup>(4)</sup> |
| January 31, 2024 | $3311 | $0 | $880 | $1718 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<sup>(1)</sup> Information prior to February 16, 2024 is for the Predecessor High Yield Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<sup>(2)</sup> Information prior to February 16, 2024 is for the Predecessor Total Return Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<sup>(3)</sup> The significant increase in aggregate brokerage commissions paid by the Income ETF for the fiscal years ended January 31, 2025 and January 31, 2026 was due to an increase in the Fund's trading of securities that are subject to brokerage commissions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<sup>(4)</sup> The significant increase in aggregate brokerage commissions paid by the MBS ETF for the fiscal year ended January 31, 2025 was due to an increase in the Fund's trading of securities that are subject to brokerage commissions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<sup>(5)</sup> The significant increase in aggregate brokerage commissions paid by the UltraShort Income ETF for the fiscal year ended January 31, 2026 was due to an increase in the Fund's trading of securities that are subject to brokerage commissions.

**<u>Adviser Responsibility for Purchases and Sales</u>** 

The Adviser places orders for the purchase and sale of securities with broker-dealers selected by and in the discretion of the Adviser. The Funds do not have any obligation to deal with a specific broker or dealer in the execution of portfolio transactions. Allocations of transactions to brokers and dealers and the frequency of transactions are determined by the Adviser in its best judgment and in a manner deemed to be in the best interest of the applicable Fund rather than by any formula.

The Adviser seeks "best execution" for all portfolio transactions. This means that the Adviser seeks the most favorable price and execution available. The Adviser's primary consideration in executing transactions for a Fund is prompt execution of orders in an effective manner and at the most favorable price available.

**<u>Choosing Broker-Dealers</u>** 

The Funds may not always pay the lowest commission or spread available. Rather, in determining the amount of commissions (including certain dealer spreads) paid in connection with securities transactions, the Adviser takes into account factors such as size of the order, difficulty of execution, efficiency of the executing broker's facilities (including the research services described below) and any risk assumed by the executing broker.

Consistent with applicable rules and the Adviser's duties, the Adviser may consider payments made by brokers effecting transactions for a Fund. These payments may be made to the Fund or to other persons on behalf of the Fund for services provided to the Fund for which those other persons would be obligated to pay.

The Adviser may also utilize a broker and pay a slightly higher commission if, for example, the broker has specific expertise in a particular type of transaction (due to factors such as size or difficulty), or it is efficient in trade execution.

Subject to the foregoing policies, brokers or dealers selected to execute a Fund's portfolio transactions may include such Fund's Authorized Participants (as discussed in "Procedures for Purchase of Creation Units" below) or their affiliates. An Authorized Participant or its affiliates may be selected to execute a Fund's portfolio transactions in conjunction with an all-cash creation unit order or an order including "cash-in-lieu" (as described below under "Purchase and Redemption of Shares in Creation Units"), so long as such selection is in keeping with the foregoing policies. As described below under "Purchase and Redemption of Shares in Creation Units— Creation Transaction Fee" and "—Redemption Transaction Fee", each Fund may determine to not charge a variable fee on certain orders when the Adviser has determined that doing so is in the best interests of Fund shareholders, e.g., for creation orders that facilitate the rebalance of the applicable Fund's portfolio in a more tax efficient manner than could be achieved without such order, even if the decision to not charge a variable fee could be viewed as benefiting the Authorized Participant or its affiliate selected to execute a Fund's portfolio transactions in connection with such orders.

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**<u>Portfolio Trading by Authorized Participants</u>**

When creation or redemption transactions consist of cash, the transactions may require a Fund to contemporaneously transact with broker-dealers for purchases or sales of portfolio securities, as applicable. Depending on the timing of the transactions and certain other factors, such transactions may be placed with the purchasing or redeeming Authorized Participant in its capacity as a broker-dealer or with its affiliated broker-dealer and conditioned upon an agreement with the Authorized Participant or its affiliated broker-dealer to transact at guaranteed prices in order to reduce transaction costs incurred as a consequence of settling creations or redemptions in cash rather than in-kind.

Specifically, following a Fund's receipt of a creation or redemption order, to the extent such purchases or redemptions consist of a cash portion, the Fund may enter an order with the Authorized Participant or its affiliated broker-dealer to purchase or sell the portfolio securities, as applicable. Such Authorized Participant or its affiliated broker-dealer will be required to guarantee that the Fund will achieve execution of its order at a price at least as favorable to the Fund as the Fund's valuation of the portfolio securities used for purposes of calculating the NAV applied to the creation or redemption transaction giving rise to the order. Whether the execution of the order is at a price at least as favorable to the Fund will depend on the results achieved by the executing firm and will vary depending on market activity, timing and a variety of other factors.

An Authorized Participant is required to deposit an amount with the Fund in order to ensure that the execution of the order on the terms noted above will be honored on orders arising from creation transactions executed by an Authorized Participant or its affiliate as broker-dealer. If the broker-dealer executing the order achieves executions in market transactions at a price equal to or more favorable than a Fund's valuation of the portfolio securities, the Fund receives the benefit of the favorable executions and the deposit is returned to the Authorized Participant. If, however, the broker-dealer executing the order is unable to achieve a price at least equal to a Fund's valuation of the securities, the Fund retains the portion of the deposit equal to the full amount of the execution shortfall (including any taxes, brokerage commissions or other costs) and may require the Authorized Participant to deposit any additional amount required to cover the full amount of the actual execution transaction.

An Authorized Participant agrees to pay the shortfall amount in order to ensure that a guarantee on execution will be honored for brokerage orders arising from redemption transactions executed by an Authorized Participant or its affiliate as broker-dealer. If the broker-dealer executing the order achieves executions in market transactions at a price equal to or more favorable than the Fund's valuation of the portfolio securities, the Fund receives the benefit of the favorable executions. If, however, the broker-dealer is unable to achieve executions in market transactions at a price at least equal to the Fund's valuation of the securities, the Fund will be entitled to the portion of the offset equal to the full amount of the execution shortfall (including any taxes, brokerage commissions or other costs).

**<u>Securities of Regular Broker-Dealers</u>** 

From time to time, a Fund may acquire and hold securities issued by its "regular brokers and dealers" or the parents of those brokers and dealers. For this purpose, regular brokers and dealers are the 10 brokers or dealers that: (1) received the greatest amount of brokerage commissions during the Fund's last fiscal year; (2) engaged in the largest amount of principal transactions for portfolio transactions of the Fund during the Fund's last fiscal year; or (3) sold the largest amount of the Fund's shares during the Fund's last fiscal year.

During the fiscal year ended January 31, 2026, the Funds acquired securities of their regular brokers or dealers (as defined in Rule 10b-1 under the 1940 Act) listed below.

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| | | |
|:---|:---|:---|
| **Fund** | **Regular Broker or**<br>**Dealer (or Parent) Issuer** | **Value of Securities**<br>**Owned (as of 1/31/26)** |
| Income ETF | Jane Street Group/JSG Finance, Inc. | $822081 |
|  | Bank of America Corp. | $465264 |
|  | Jefferies Finance, LLC/JFIN Co.-Issuer Corp. | $416541 |
|  | Morgan Stanley | $413286 |
|  | Goldman Sachs Group, Inc. | $411898 |
|  | JP Morgan Chase & Co. | $517352 |
|  | Wells Fargo & Co. | $411769 |
| High Yield ETF | Jane Street Group/JSG Finance, Inc. | $1051015 |
|  | Jefferies Finance, LLC/JFIN Co-Issuer Corp | $595059 |

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The UltraShort Income ETF and the MBS ETF did not acquire securities of their regular brokers or dealers during the fiscal year ended January 31, 2026.

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**<u>Obtaining Research from Brokers</u>**

The Adviser has full brokerage discretion. The Adviser evaluates the range and quality of a broker's services in placing trades such as securing best price, confidentiality, clearance and settlement capabilities, promptness of execution and the financial stability of the broker-dealer. The Adviser may give consideration to research services furnished by brokers to the Adviser for its use and may cause the Funds to pay these brokers a higher amount of commission than may be charged by other brokers. This research is designed to augment the Adviser's own internal research and investment strategy capabilities. This research may include reports that are common in the industry such as industry research reports and periodicals, quotation systems, software for portfolio management and formal databases. Typically, the research will be used to service all of the Adviser accounts, although a particular client may not benefit from all the research received on each occasion. The Adviser fees are not reduced by reason of receipt of research services. Most of the brokerage commissions for research are for investment research on specific companies or industries. And, because the Adviser will follow a limited number of securities most of the commission dollars spent on research will directly benefit clients and the Funds' investors.

**<u>Counterparty Risk</u>** 

The Adviser monitors the creditworthiness of counterparties to the Funds' transactions and intends to enter into a transaction only when it believes that the counterparty presents minimal and appropriate credit risks.

**<u>Transactions through Affiliates</u>** 

The Adviser may effect brokerage transactions through affiliates of the Adviser (or affiliates of those persons) pursuant to procedures adopted by the Trust.

**<u>Other Accounts of the Adviser</u>**

Investment decisions for each Fund are made independently from those for any other account or investment company that is or may in the future become advised by the Adviser or its respective affiliates. Investment decisions are the product of many factors, including basic suitability for the particular client involved. Likewise, a particular security may be bought or sold for certain clients even though it could have been bought or sold for other clients at the same time. Likewise, a particular security may be bought for one or more clients when one or more clients are selling the security. In some instances, one client may sell a particular security to another client. In addition, two or more clients may simultaneously purchase or sell the same security, in which event, each day's transactions in such security are, insofar as is possible, averaged as to price and allocated between such clients in a manner which, in the Adviser's opinion, is in the best interest of the affected accounts and is equitable to each and in accordance with the amount being purchased or sold by each. There may be circumstances when purchases or sales of a portfolio security for one client could have an adverse effect on another client that has a position in that security. In addition, when purchases or sales of the same security for a Fund and other client accounts managed by the Adviser occurs contemporaneously, the purchase or sale orders may be aggregated to obtain any price advantages available to large denomination purchases or sales.

**BOOK ENTRY ONLY SYSTEM**

The Depository Trust Company ("DTC") acts as securities depositary for Shares. Shares are represented by securities registered in the name of DTC or its nominee, Cede & Co., and deposited with, or on behalf of, DTC. Except in limited circumstances set forth below, certificates will not be issued for Shares.

DTC is a limited-purpose trust company that was created to hold securities of its participants (the "DTC Participants") and to facilitate the clearance and settlement of securities transactions among the DTC Participants in such securities through electronic book-entry changes in accounts of the DTC Participants, thereby eliminating the need for physical movement of securities certificates. DTC Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations, some of whom (and/or their representatives) own DTC. More specifically, DTC is owned by a number of its DTC Participants and by the New York Stock Exchange ("NYSE") and FINRA. Access to the DTC system is also available to others such as banks, brokers, dealers, and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly (the "Indirect Participants").

Beneficial ownership of Shares is limited to DTC Participants, Indirect Participants, and persons holding interests through DTC Participants and Indirect Participants. Ownership of beneficial interests in Shares (owners of such beneficial interests are referred to in this SAI as "Beneficial Owners") is shown on, and the transfer of ownership is effected only through, records maintained by DTC (with respect to DTC Participants) and on the records of DTC Participants (with respect to Indirect Participants and Beneficial Owners that are not DTC Participants). Beneficial Owners will receive from or through the DTC Participant a written confirmation relating to their purchase of Shares. The Trust recognizes DTC or its nominee as the record owner of all Shares for all purposes. Beneficial Owners of Shares are not entitled to have Shares registered in their names, and will not receive or be entitled to physical delivery of Share certificates. Each Beneficial Owner must rely on the procedures of

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DTC and any DTC Participant and/or Indirect Participant through which such Beneficial Owner holds its interests, to exercise any rights of a holder of Shares.

Conveyance of all notices, statements, and other communications to Beneficial Owners is effected as follows. DTC will make available to the Trust upon request and for a fee a listing of Shares held by each DTC Participant. The Trust shall obtain from each such DTC Participant the number of Beneficial Owners holding Shares, directly or indirectly, through such DTC Participant. The Trust shall provide each such DTC Participant with copies of such notice, statement, or other communication, in such form, number and at such place as such DTC Participant may reasonably request, in order that such notice, statement or communication may be transmitted by such DTC Participant, directly or indirectly, to such Beneficial Owners. In addition, the Trust shall pay to each such DTC Participant a fair and reasonable amount as reimbursement for the expenses attendant to such transmittal, all subject to applicable statutory and regulatory requirements.

Share distributions shall be made to DTC or its nominee, Cede & Co., as the registered holder of all Shares. DTC or its nominee, upon receipt of any such distributions, shall credit immediately DTC Participants' accounts with payments in amounts proportionate to their respective beneficial interests in a Fund as shown on the records of DTC or its nominee. Payments by DTC Participants to Indirect Participants and Beneficial Owners of Shares held through such DTC Participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in a "street name," and will be the responsibility of such DTC Participants.

The Trust has no responsibility or liability for any aspect of the records relating to or notices to Beneficial Owners, or payments made on account of beneficial ownership interests in Shares, or for maintaining, supervising, or reviewing any records relating to such beneficial ownership interests, or for any other aspect of the relationship between DTC and the DTC Participants or the relationship between such DTC Participants and the Indirect Participants and Beneficial Owners owning through such DTC Participants.

DTC may determine to discontinue providing its service with respect to a Fund at any time by giving reasonable notice to the Fund and discharging its responsibilities with respect thereto under applicable law. Under such circumstances, the applicable Fund shall act either to find a replacement for DTC to perform its functions at a comparable cost or, if such replacement is unavailable, to issue and deliver printed certificates representing ownership of Shares, unless the Trust makes other arrangements with respect thereto satisfactory to the Exchange.

Dividends and other distributions on Shares are distributed on a pro rata basis to Beneficial Owners of such Shares. Dividend payments are made through DTC Participants and Indirect Participants to Beneficial Owners then of record with proceeds received from the Trust.

Each Fund makes additional distributions to the extent necessary (i) to distribute the entire annual taxable income of the applicable Fund, plus any net capital gains and (ii) to avoid imposition of the excise tax imposed by Section 4982 of the Code. Management of the Trust reserves the right to declare special dividends if, in its reasonable discretion, such action is necessary or advisable to preserve a Fund's eligibility for treatment as a RIC or to avoid imposition of income or excise taxes on undistributed income.

**Dividend Reinvestment Service.** The Trust will not make the DTC book-entry dividend reinvestment service available for use by Beneficial Owners for reinvestment of their cash proceeds, but certain individual broker-dealers may make available the DTC book-entry Dividend Reinvestment Service for use by Beneficial Owners of the Funds through DTC Participants for reinvestment of their dividend distributions. Investors should contact their brokers to ascertain the availability and description of these services. Beneficial Owners should be aware that each broker may require investors to adhere to specific procedures and timetables to participate in the dividend reinvestment service and investors should ascertain from their brokers such necessary details. If this service is available and used, dividend distributions of both income and realized gains will be automatically reinvested in additional whole Shares issued by the Trust of the applicable Fund at NAV per Share. Distributions reinvested in additional Shares will nevertheless be taxable to Beneficial Owners acquiring such additional Shares to the same extent as if such distributions had been received in cash.

**PURCHASE AND REDEMPTION OF CREATION UNITS**

A Fund issues and redeems its shares on a continuous basis, at NAV, only in a large specified number of shares called a "Creation Unit," either principally in-kind for securities and/or in cash for the value of such securities. The NAV of a Fund's shares is determined once each Business Day, as described below under "<u>Determination of Net Asset Value</u>." The Creation Unit size may change. Authorized Participants will be notified of such change.

**Purchase (Creation).** The Trust issues and sells Shares only in Creation Units on a continuous basis through the Distributor, without a sales load (but subject to transaction fees, if applicable), at their NAV per share next determined after receipt, on any Business Day, of an order in proper form. The NAV of Shares is calculated each Business Day as of the scheduled close of regular trading on the NYSE, generally 4:00 p.m., Eastern time. The Funds will not issue fractional Creation Units. A "Business Day" is any day on which the NYSE is open for business. As of the date of this SAI, the NYSE observes the following holidays: New Year's

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Day, Martin Luther King, Jr. Day, President's Day (Washington's Birthday), Good Friday, Memorial Day (observed), Juneteenth Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

**Fund Deposit.** Each Fund has adopted policies and procedures governing the process of constructing baskets of Deposit Securities (defined below), Fund Securities (defined below) and/or cash, and acceptance of the same (the "Basket Procedures"). The consideration for purchase of a Creation Unit of a Fund generally consists of either: (i) the in-kind deposit of a designated portfolio of securities (the "Deposit Securities") per each Creation Unit, constituting a substantial replication, or a portfolio sampling representation, of the securities included in a Fund's portfolio and the Cash Component (defined below), computed as described below, or (ii) the cash value of the Deposit Securities ("Deposit Cash") and the Cash Component to replace any Deposit Security. When accepting purchases of Creation Units for cash, a Fund may incur additional costs associated with the acquisition of Deposit Securities that would otherwise be provided by an in-kind purchaser. These additional costs may be recoverable from the purchaser of Creation Units.

Together, the Deposit Securities or Deposit Cash, as applicable, and the Cash Component constitute the "Fund Deposit," which represents the minimum initial and subsequent investment amount for a Creation Unit of a Fund. The "Cash Component" is an amount equal to the difference between the NAV of Shares (per Creation Unit) and the market value of the Deposit Securities or Deposit Cash, as applicable. If the Cash Component is a positive number (i.e., the NAV per Creation Unit exceeds the value of the Deposit Securities or Deposit Cash, as applicable), the Cash Component shall be such positive amount. If the Cash Component is a negative number (i.e., the NAV per Creation Unit is less than the value of the Deposit Securities or Deposit Cash, as applicable), the Cash Component shall be such negative amount and the creator will be entitled to receive cash in an amount equal to the Cash Component. The Cash Component serves the function of compensating for any differences between the NAV per Creation Unit and the market value of the Deposit Securities or Deposit Cash, as applicable. Computation of the Cash Component excludes any stamp duty or other similar fees and expenses payable upon transfer of beneficial ownership of the Deposit Securities, if applicable, which shall be the sole responsibility of the Authorized Participant (as defined below).

The Funds, through NSCC, makes available on each Business Day, prior to the opening of business on the Exchange (currently 9:30 a.m., Eastern time), the list of the names and the required number of Shares of each Deposit Security or the required amount of Deposit Cash, as applicable, to be included in the current Fund Deposit (based on information at the end of the previous Business Day) for a Fund. Such Fund Deposit is subject to any applicable adjustments as described below, in order to effect purchases of Creation Units of a Fund until such time as the next-announced composition of the Deposit Securities or the required amount of Deposit Cash, as applicable, is made available.

The identity and number of Shares of the Deposit Securities or the amount of Deposit Cash, as applicable, required for a Fund Deposit for a Fund may be changed from time to time by the Sub-Adviser, in accordance with the Basket Procedures, with a view to the investment objective of such Fund. Information regarding the Fund Deposit necessary for the purchase of a Creation Unit is made available to Authorized Participants and other market participants seeking to transact in Creation Unit aggregations. The composition of the Deposit Securities may also change in response to portfolio adjustments, interest payments and corporate action events.

The Trust reserves the right to permit or require the substitution of Deposit Cash to replace any Deposit Security, which shall be added to the Cash Component, including, without limitation, in situations where the Deposit Security: (i) may not be available in sufficient quantity for delivery; (ii) may not be eligible for transfer through the systems of DTC for corporate securities and municipal securities; (iii) may not be eligible for trading by an Authorized Participant or the investor for which it is acting; (iv) would be restricted under the securities laws or where the delivery of the Deposit Security to the Authorized Participant would result in the disposition of the Deposit Security by the Authorized Participant becoming restricted under the securities laws; or (v) in certain other situations (collectively, "custom orders"). The Trust also reserves the right to permit or require the substitution of Deposit Securities in lieu of Deposit Cash.

**Cash Purchase.** The Trust may at its discretion permit full or partial cash purchases of Creation Units of a Fund. When full or partial cash purchases of Creation Units are available or specified for a Fund, they will be effected in essentially the same manner as in-kind purchases thereof. In the case of a full or partial cash purchase, the Authorized Participant must pay the cash equivalent of the Deposit Securities it would otherwise be required to provide through an in-kind purchase, plus the same Cash Component required to be paid by an in-kind purchaser together with a creation transaction fee and non-standard charges, as may be applicable.

**Procedures for Purchase of Creation Units.** To be eligible to place orders with the Distributor to purchase a Creation Unit of a Fund, an entity must be (i) a "Participating Party" (i.e., a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the NSCC (the "Clearing Process")), a clearing agency that is registered with the SEC; or (ii) a DTC Participant (see "<u>Book Entry Only System</u>"). In addition, each Participating Party or DTC Participant (each, an "Authorized Participant") must execute a Participant Agreement that has been agreed to by the Distributor, and that has been accepted by the Transfer Agent, with respect to purchases and redemptions of Creation Units. Each Authorized Participant will agree, pursuant to the terms of a Participant Agreement, on behalf of itself or any investor on whose behalf it will act, to certain

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conditions, including that it will pay to the Trust, an amount of cash sufficient to pay the Cash Component together with the creation transaction fee (described below), if applicable, and any other applicable fees and taxes.

All orders to purchase Shares directly from a Fund, including custom orders, must be placed for one or more Creation Units and in the manner and by the time set forth in the Participant Agreement and/or applicable order form. With respect to the Funds, the order cut-off time for orders to purchase Creation Units is the time disclosed in the Participant Agreement and/or applicable order form. The date on which an order to purchase Creation Units (or an order to redeem Creation Units, as set forth below) is received and accepted is referred to as the "Order Placement Date."

An Authorized Participant may require an investor to make certain representations or enter into agreements with respect to the order (e.g., to provide for payments of cash, when required). Investors should be aware that their particular broker may not have executed a Participant Agreement and that, therefore, orders to purchase Shares directly from a Fund in Creation Units have to be placed by the investor's broker through an Authorized Participant that has executed a Participant Agreement. In such cases there may be additional charges to such investor. At any given time, there may be only a limited number of broker-dealers that have executed a Participant Agreement and only a small number of such Authorized Participants may have international capabilities.

On days when the Exchange closes earlier than normal, the Funds may require orders to create Creation Units to be placed earlier in the day. In addition, if a market or markets on which a Fund's investments are primarily traded is closed, such Fund will also generally not accept orders on such day(s). Orders must be transmitted by an Authorized Participant by telephone or other transmission method acceptable to the Transfer Agent pursuant to procedures set forth in the Participant Agreement and in accordance with the applicable order form. On behalf of the Funds, the Transfer Agent will notify the Custodian of such order. The Custodian will then provide such information to the appropriate local sub-custodian(s). Those placing orders through an Authorized Participant should allow sufficient time to permit proper submission of the purchase order to the Transfer Agent by the cut-off time on such Business Day. Economic or market disruptions or changes, or telephone or other communication failure may impede the ability to reach the Transfer Agent or an Authorized Participant.

Fund Deposits must be delivered by an Authorized Participant through the Federal Reserve System (for cash) or through DTC (for corporate securities), through a subcustody agent (for foreign securities) and/or through such other arrangements allowed by the Trust or its agents. With respect to foreign Deposit Securities, the Custodian shall cause the subcustodian of the applicable Fund to maintain an account into which the Authorized Participant shall deliver, on behalf of itself or the party on whose behalf it is acting, such Deposit Securities (or Deposit Cash for all or a part of such securities, as permitted or required), with any appropriate adjustments as advised by the Trust. Foreign Deposit Securities must be delivered to an account maintained at the applicable local subcustodian. A Fund Deposit transfer must be ordered by the Authorized Participant in a timely fashion to ensure the delivery of the requisite number of Deposit Securities or Deposit Cash, as applicable, to the account of the applicable Fund or its agents by no later than 12:00 p.m. Eastern time (or such other time as specified by the Trust) on the Settlement Date. If a Fund or its agents do not receive all of the Deposit Securities, or the required Deposit Cash in lieu thereof, by such time, then the order may be deemed rejected and the Authorized Participant shall be liable to such Fund for losses, if any, resulting therefrom. The "Settlement Date" for a Fund is generally the Business Day after the Order Placement Date. All questions as to the number of Deposit Securities or Deposit Cash to be delivered, as applicable, and the validity, form and eligibility (including time of receipt) for the deposit of any tendered securities or cash, as applicable, will be determined by the Trust, whose determination shall be final and binding. The amount of cash represented by the Cash Component must be transferred directly to the Custodian through the Federal Reserve Bank wire transfer system in a timely manner to be received by the Custodian no later than the Settlement Date. If the Cash Component and the Deposit Securities or Deposit Cash, as applicable, are not received by the Custodian in a timely manner by the Settlement Date, the creation order may be cancelled. Upon written notice to the Transfer Agent, such canceled order may be resubmitted the following Business Day using a Fund Deposit as newly constituted to reflect the then current NAV of the applicable Fund.

The order shall be deemed to be received on the Business Day on which the order is placed provided that the order is placed in proper form prior to the applicable cut-off time and the federal funds in the appropriate amount are deposited with the Custodian on the Settlement Date. If the order is not placed in proper form as required, or federal funds in the appropriate amount are not received on the Settlement Date, then the order may be deemed to be rejected and the Authorized Participant shall be liable to the applicable Fund for losses, if any, resulting therefrom. A creation request is in "proper form" if all procedures set forth in the Participant Agreement, order form and this SAI are properly followed.

**Issuance of a Creation Unit.** Except as provided in this SAI, Creation Units will not be issued until the transfer of good title to the Trust of the Deposit Securities or payment of Deposit Cash, as applicable, and the payment of the Cash Component have been completed. When the subcustodian has confirmed to the Custodian that the required Deposit Securities (or the cash value thereof) have been delivered to the account of the relevant subcustodian or subcustodians, the Distributor and the Adviser shall be notified of such delivery, and the Trust will issue and cause the delivery of the Creation Units. The delivery of Creation Units so created generally will occur no later than the second Business Day following the day on which the purchase order is deemed received by the Transfer Agent. The Authorized Participant shall be liable to the applicable Fund for losses, if any, resulting from unsettled orders.

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In instances where the Trust accepts Deposit Securities for the purchase of a Creation Unit, the Creation Units may be purchased in advance of receipt by the Trust of all or a portion of the applicable Deposit Securities as described below. In these circumstances, the initial deposit will have a value greater than the NAV of Shares on the date the order is placed in proper form since, in addition to available Deposit Securities, cash must be deposited in an amount equal to the sum of (i) the Cash Component, plus (ii) an additional amount of cash equal to a percentage of the value as set forth in the Participant Agreement, of the undelivered Deposit Securities (the "Additional Cash Deposit"), which shall be maintained in a separate non-interest bearing collateral account. The Authorized Participant must deposit with the Custodian the Additional Cash Deposit, as applicable, by 12:00 p.m. Eastern time (or such other time as specified by the Trust) on the Settlement Date. If a Fund or its agents do not receive the Additional Cash Deposit in the appropriate amount, by such time, then the order may be deemed rejected and the Authorized Participant shall be liable to the applicable Fund for losses, if any, resulting therefrom. An additional amount of cash shall be required to be deposited with the Trust, pending delivery of the missing Deposit Securities to the extent necessary to maintain the Additional Cash Deposit with the Trust in an amount at least equal to the applicable percentage, as set forth in the Participant Agreement, of the daily market value of the missing Deposit Securities. The Participant Agreement will permit the Trust to buy the missing Deposit Securities at any time. Authorized Participants will be liable to the Trust for the costs incurred by the Trust in connection with any such purchases. These costs will be deemed to include the amount by which the actual purchase price of the Deposit Securities exceeds the value of such Deposit Securities on the day the purchase order was deemed received by the Transfer Agent plus the brokerage and related transaction costs associated with such purchases. The Trust will return any unused portion of the Additional Cash Deposit once all of the missing Deposit Securities have been properly received by the Custodian or purchased by the Trust and deposited into the Trust. In addition, a transaction fee, as described below under "Creation Transaction Fee," may be charged. The delivery of Creation Units so created generally will occur no later than the Settlement Date.

**Acceptance of Orders of Creation Units.** The Trust reserves the right to reject an order for Creation Units transmitted in respect of a Fund at its discretion, including, without limitation, if (a) the order is not in proper form; (b) the investor(s), upon obtaining the Shares ordered, would own 80% or more of the currently outstanding Shares of the Fund; (c) the acceptance of the Fund Deposit would, in the opinion of counsel, be unlawful; or (d) in the event that circumstances outside the control of the Trust, the Custodian, the Transfer Agent and/or the Adviser make it for all practical purposes not feasible to process orders for Creation Units, provided that such actions do not result in a suspension of sales of Creation Units in contravention of Rule 6c-11 and the SEC's positions thereunder. Examples of such circumstances include acts of God or public service or utility problems such as fires, floods, extreme weather conditions and power outages resulting in telephone, telecopy and computer failures; market conditions or activities causing trading halts; systems failures involving computer or other information systems affecting the Trust, the Distributor, the Custodian, the Transfer Agent, DTC, NSCC, Federal Reserve System, or any other participant in the creation process, and other extraordinary events. The Trust or its agents shall communicate to the Authorized Participant its rejection of an order. The Trust, the Transfer Agent, the Custodian and the Distributor are under no duty, however, to give notification of any defects or irregularities in the delivery of Fund Deposits nor shall either of them incur any liability for the failure to give any such notification. The Trust, the Transfer Agent, the Custodian and the Distributor shall not be liable for the rejection of any purchase order for Creation Units provided that such actions do not result in a suspension of sales of Creation Units in contravention of Rule 6c-11 and the SEC's positions thereunder.

All questions as to the number of shares of each security in the Deposit Securities and the validity form, eligibility and acceptance for deposit of any securities to be delivered shall be determined by the Trust, and the Trust's determination shall be final and binding.

**Creation Unit Transaction Fee.** A fixed purchase (i.e., creation) transaction fee, payable to the Funds' custodian, may be imposed for the transfer and other transaction costs associated with the purchase of Creation Units ("Creation Order Costs"). The standard fixed creation unit transaction fee for each Fund, regardless of the number of Creation Units created in the transaction, can be found in the table below. Each Fund may adjust the standard fixed creation unit transaction fee from time to time. The fixed creation unit transaction fee may be waived on certain orders if the applicable Fund's custodian has determined to waive some or all of the Creation Order Costs associated with the order or another party, such as the Adviser, has agreed to pay such fee.

In addition, a variable fee, payable to the Funds, of up to the maximum percentage listed in the table below of the value of the Creation Units subject to the transaction may be imposed for cash purchases, non-standard orders, or partial cash purchases of Creation Units. The variable charge is primarily designed to cover additional costs (e.g., brokerage, taxes) involved with buying the securities with cash. Each Fund may determine to not charge a variable fee on certain orders when the Adviser has determined that doing so is in the best interests of Fund shareholders, e.g., for creation orders that facilitate the rebalance of the applicable Fund's portfolio in a more tax efficient manner than could be achieved without such order.

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| | | |
|:---|:---|:---|
| **Name of Fund** | **Fixed Creation Unit Transaction Fee** | **Maximum Variable Transaction Fee** |
| Income ETF | $300 | 2% |
| UltraShort Income ETF  | $300 | 2% |
| High Yield Opportunities ETF | $300 | 2% |
| Mortgage-Backed Securities ETF | $300 | 2% |

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Investors who use the services of a broker or other such intermediary may be charged a fee for such services. Investors are responsible for the fixed costs of transferring the Fund Securities from the Trust to their account or on their order.

**Risks of Purchasing Creation Units.** There are certain legal risks unique to investors purchasing Creation Units directly from a Fund. Because Shares may be issued on an ongoing basis, a "distribution" of Shares could be occurring at any time. Certain activities that a shareholder performs as a dealer could, depending on the circumstances, result in the shareholder being deemed a participant in the distribution in a manner that could render the shareholder a statutory underwriter and subject to the prospectus delivery and liability provisions of the Securities Act. For example, a shareholder could be deemed a statutory underwriter if it purchases Creation Units from a Fund, breaks them down into the constituent Shares, and sells those Shares directly to customers, or if a shareholder chooses to couple the creation of a supply of new Shares with an active selling effort involving solicitation of secondary-market demand for Shares. Whether a person is an underwriter depends upon all of the facts and circumstances pertaining to that person's activities, and the examples mentioned here should not be considered a complete description of all the activities that could cause you to be deemed an underwriter.

Dealers who are not "underwriters" but are participating in a distribution (as opposed to engaging in ordinary secondary-market transactions), and thus dealing with Shares as part of an "unsold allotment" within the meaning of Section 4(a)(3)(C) of the Securities Act, will be unable to take advantage of the prospectus delivery exemption provided by Section 4(a)(3) of the Securities Act.

**Redemption.** Shares may be redeemed only in Creation Units at their NAV next determined after receipt of a redemption request in proper form by a Fund through the Transfer Agent and only on a Business Day. EXCEPT UPON LIQUIDATION OF A FUND, THE TRUST WILL NOT REDEEM SHARES IN AMOUNTS LESS THAN CREATION UNITS. Investors must accumulate enough Shares in the secondary market to constitute a Creation Unit in order to have such Shares redeemed by the Trust. There can be no assurance, however, that there will be sufficient liquidity in the public trading market at any time to permit assembly of a Creation Unit. Investors should expect to incur brokerage and other costs in connection with assembling a sufficient number of Shares to constitute a redeemable Creation Unit.

With respect to the Funds, the Custodian, through the NSCC, makes available prior to the opening of business on the Exchange (currently 9:30 a.m., Eastern time) on each Business Day, the list of the names and Share quantities of each Fund's portfolio securities that will be applicable (subject to possible amendment or correction) to redemption requests received in proper form (as defined below) on that day ("Fund Securities"). Fund Securities received on redemption may not be identical to Deposit Securities.

Redemption proceeds for a Creation Unit are paid either in-kind and/or in cash, or a combination thereof, as determined by the Trust in accordance with the Basket Procedures. With respect to in-kind redemptions of a Fund, redemption proceeds for a Creation Unit will consist of Fund Securities—as announced by the Custodian on the Business Day of the request for redemption received in proper form plus cash in an amount equal to the difference between the NAV of Shares being redeemed, as next determined after a receipt of a request in proper form, and the value of the Fund Securities (the "Cash Redemption Amount"), less a fixed redemption transaction fee, as applicable, as set forth below. In the event that the Fund Securities have a value greater than the NAV of Shares, a compensating cash payment equal to the differential is required to be made by or through an Authorized Participant by the redeeming shareholder. Notwithstanding the foregoing, at the Trust's discretion, an Authorized Participant may receive the corresponding cash value of the securities in lieu of the in-kind securities value representing one or more Fund Securities.

**Cash Redemption.** Full or partial cash redemptions of Creation Units will be effected in essentially the same manner as in-kind redemptions thereof. In the case of full or partial cash redemptions, the Authorized Participant receives the cash equivalent of the Fund Securities it would otherwise receive through an in-kind redemption, plus the same Cash Redemption Amount to be paid to an in-kind redeemer.

**Redemption Transaction Fee.** A fixed redemption transaction fee, payable to the Funds; custodian, may be imposed for the transfer and other transaction costs associated with the redemption of Creation Units ("Redemption Order Costs"). The standard fixed redemption transaction fee for the Fund, regardless of the number of Creation Units redeemed in the transaction, can be found in the table below. Each Fund may adjust the redemption transaction fee from time to time. The fixed redemption fee may be waived on certain orders if the applicable Fund's custodian has determined to waive some or all of the Redemption Order Costs associated with the order or another party, such as the Adviser, has agreed to pay such fee.

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In addition, a variable fee, payable to the Funds, of up to the maximum percentage listed in the table below of the value of the Creation Units subject to the transaction may be imposed for cash redemptions, non-standard orders, or partial cash redemptions (when cash redemptions are available) of Creation Units. The variable charge is primarily designed to cover additional costs (e.g., brokerage, taxes) involved with selling portfolio securities to satisfy a cash redemption. Each Fund may determine to not charge a variable fee on certain orders when the Adviser has determined that doing so is in the best interests of Fund shareholders, e.g., for redemption orders that facilitate the rebalance of the Funds' portfolio in a more tax efficient manner than could be achieved without such order.

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| | | |
|:---|:---|:---|
| **Name of Fund** | **Fixed Redemption Transaction Fee** | **Maximum Variable Transaction Fee** |
| Income ETF | $300 | 2% |
| UltraShort Income ETF  | $300 | 2% |
| High Yield Opportunities ETF | $300 | 2% |
| Mortgage-Backed Securities ETF | $300 | 2% |

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Investors who use the services of a broker or other such intermediary may be charged a fee for such services. Investors are responsible for the fixed costs of transferring the Fund Securities from the Trust to their account or on their order.

**Procedures for Redemption of Creation Units.** Orders to redeem Creation Units of a Fund must be submitted in proper form to the Transfer Agent prior to the time disclosed in the Participant Agreement and/or applicable order form. A redemption request is considered to be in "proper form" if (i) an Authorized Participant has transferred or caused to be transferred to the Trust's Transfer Agent the Creation Unit(s) being redeemed through the book-entry system of DTC so as to be effective by the time as set forth in the Participant Agreement and (ii) a request in form satisfactory to the Trust is received by the Transfer Agent from the Authorized Participant on behalf of itself or another redeeming investor within the time periods specified in the Participant Agreement. If the Transfer Agent does not receive the investor's Shares through DTC's facilities by the times and pursuant to the other terms and conditions set forth in the Participant Agreement, the redemption request shall be rejected.

The Authorized Participant must transmit the request for redemption, in the form required by the Trust, to the Transfer Agent in accordance with procedures set forth in the Authorized Participant Agreement. Investors should be aware that their particular broker may not have executed an Authorized Participant Agreement, and that, therefore, requests to redeem Creation Units may have to be placed by the investor's broker through an Authorized Participant who has executed an Authorized Participant Agreement. Investors making a redemption request should be aware that such request must be in the form specified by such Authorized Participant. Investors making a request to redeem Creation Units should allow sufficient time to permit proper submission of the request by an Authorized Participant and transfer of the Shares to the Transfer Agent; such investors should allow for the additional time that may be required to effect redemptions through their banks, brokers or other financial intermediaries if such intermediaries are not Authorized Participants.

An Authorized Participant submitting a redemption request is deemed to represent to the Trust that it (or its client) (i) owns outright or has full legal authority and legal beneficial right to tender for redemption the requisite number of Shares to be redeemed and can receive the entire proceeds of the redemption, and (ii) the Shares to be redeemed have not been loaned or pledged to another party nor are they the subject of a repurchase agreement, securities lending agreement or such other arrangement which would preclude the delivery of such Shares to the Trust. The Trust reserves the right to verify these representations at its discretion, but will typically require verification with respect to a redemption request from a Fund in connection with higher levels of redemption activity and/or short interest in the Fund. If the Authorized Participant, upon receipt of a verification request, does not provide sufficient verification of its representations as determined by the Trust, the redemption request will not be considered to have been received in proper form and may be rejected by the Trust.

**Additional Redemption Procedures.** In connection with taking delivery of Shares of Fund Securities upon redemption of Creation Units, a redeeming shareholder or Authorized Participant acting on behalf of such shareholder must maintain appropriate custody arrangements with a qualified broker-dealer, bank, or other custody providers in each jurisdiction in which any of the Fund Securities are customarily traded, to which account such Fund Securities will be delivered. Deliveries of redemption proceeds generally will be made within one business day of the trade date.

The Trust may, in its discretion and in accordance with the Basket Procedures, exercise its option to redeem such Shares in cash, and the redeeming investor will be required to receive its redemption proceeds in cash. In addition, an investor may request a redemption in cash that a Fund may, in its sole discretion, permit. In either case, the investor will receive a cash payment equal to the NAV of its Shares based on the NAV of Shares of the applicable Fund next determined after the redemption request is received in proper form (minus a redemption transaction fee, if applicable, and additional charge for requested cash redemptions specified above, to offset the Trust's brokerage and other transaction costs associated with the disposition of Fund Securities). A Fund may also, in its sole discretion, and in accordance with the Basket Procedures, upon request of a shareholder, provide such redeemer a portfolio of securities that differs from the exact composition of the Fund Securities but does not differ in NAV.

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Redemptions of Shares for Fund Securities will be subject to compliance with applicable federal and state securities laws and the Funds (whether or not it otherwise permits cash redemptions) reserves the right to redeem Creation Units for cash to the extent that the Trust could not lawfully deliver specific Fund Securities upon redemptions or could not do so without first registering the Fund Securities under such laws. An Authorized Participant or an investor for which it is acting subject to a legal restriction with respect to a particular security included in the Fund Securities applicable to the redemption of Creation Units may be paid an equivalent amount of cash. The Authorized Participant may request the redeeming investor of the Shares to complete an order form or to enter into agreements with respect to such matters as compensating cash payment. Further, an Authorized Participant that is not a "qualified institutional buyer," ("QIB") as such term is defined under Rule 144A of the Securities Act, will not be able to receive Fund Securities that are restricted securities eligible for resale under Rule 144A. An Authorized Participant may be required by the Trust to provide a written confirmation with respect to QIB status to receive Fund Securities.

Because the portfolio securities of the Funds may trade on other exchanges on days that the Exchange is closed or are otherwise not Business Days for such Fund, shareholders may not be able to redeem their Shares, or to purchase or sell Shares on the Exchange, on days when the NAV of the applicable Fund could be significantly affecting by events in the relevant foreign markets.

The right of redemption may be suspended or the date of payment postponed for more than seven days with respect to a Fund (1) for any period during which the Exchange is closed (other than customary weekend and holiday closings); (2) for any period during which trading on the Exchange is suspended or restricted; (3) for any period during which the SEC has declared a market emergency; or (4) in such other circumstance as is permitted by the SEC.

**DETERMINATION OF NET ASSET VALUE**

NAV per Share for a Fund is computed by dividing the value of the net assets of the applicable Fund (i.e., the value of its total assets less total liabilities) by the total number of Shares outstanding, rounded to the nearest cent. Expenses and fees, including the management fees, are accrued daily and taken into account for purposes of determining NAV. The NAV of each Fund is calculated by Fund Services and determined at the scheduled close of the regular trading session on the NYSE (ordinarily 4:00 p.m., Eastern Time) on each day that the NYSE is open, provided that fixed-income assets may be valued as of the announced closing time for trading in fixed-income instruments on any day that the Securities Industry and Financial Markets Association ("SIFMA") announces an early closing time.

In calculating each Fund's NAV per Share, the Funds' investments are generally valued using market valuations. A market valuation generally means a valuation (i) obtained from an exchange, a pricing service, or a major market maker (or dealer), (ii) based on a price quotation or other equivalent indication of value supplied by an exchange, a pricing service, or a major market maker (or dealer) or (iii) based on amortized cost. In the case of shares of other funds that are not traded on an exchange, a market valuation means such fund's published NAV per share. The Funds may use various pricing services, or discontinue the use of any pricing service, as approved by the Board from time to time. A price obtained from a pricing service based on such pricing service's valuation matrix may be considered a market valuation. Any assets or liabilities denominated in currencies other than the U.S. dollar are converted into U.S. dollars at the current market rates on the date of valuation as quoted by one or more sources.

**TAXATION**

The tax information set forth in the Prospectus and the information in this section relates solely to U.S. federal income tax law and assumes that each Fund qualifies as a regulated investment company (as discussed below). Such information is only a summary of certain key U.S. federal income tax considerations affecting each Fund and its shareholders and is in addition to the information provided in the Prospectus. No attempt has been made to present a complete explanation of the Federal tax treatment of each Fund or the tax implications to shareholders. The discussions here and in the Prospectus are not intended as substitutes for careful tax planning.

This "Taxation" section is based on the Code and applicable regulations in effect on the date of the Prospectus. Future legislative or administrative changes or court decisions may significantly change the tax rules applicable to the Fund and its shareholders. Any of these changes or court decisions may have a retroactive effect.

*All investors should consult their own tax advisors as to the Federal, state, local and foreign tax consequences of an investment in a Fund.* 

**<u>Qualification as a Regulated Investment Company</u>**

Each Fund intends, for each tax year, to qualify as a "regulated investment company" under the Code.

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**U.S. Federal Income Tax Consequences of Qualification**

As a regulated investment company, each Fund will not be subject to U.S. federal income tax on the portion of its investment company taxable income (that is, taxable interest, dividends, net short-term capital gains and other taxable ordinary income, net of expenses) and net capital gain (that is, the excess of net long-term capital gains over net short-term capital losses) that it distributes to shareholders. To be subject to tax as a regulated investment company, generally a Fund must satisfy the following requirements:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Fund must distribute an amount at least equal to the sum of 90% of its investment company taxable income, determined without regard to any deduction for dividends paid, and 90% of its net tax-exempt interest, if any, each tax year (certain distributions made by the Fund after the close of its tax year are considered distributions attributable to the previous tax year for purposes of satisfying this requirement ("Distribution Requirement")).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Fund must derive at least 90% of its gross income each tax year from dividends, interest, payments with respect to securities loans, and gains from the sale or other disposition of securities, or other income (including gains from options and futures contracts) derived from its business of investing in securities and net income derived from interests in qualified publicly traded partnerships.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Fund must satisfy the following asset diversification test at the close of each quarter of the Fund's tax year: (1) at least 50% of the value of the Fund's assets must consist of cash, cash items, U.S. government securities, securities of other regulated investment companies, and securities of other issuers (as to which the Fund has not invested more than 5% of the value of the Fund's total assets in securities of an issuer and as to which the Fund does not hold more than 10% of the outstanding voting securities of the issuer); and (2) no more than 25% of the value of the Fund's total assets may be invested in the securities of any one issuer (other than U.S. government securities and securities of other regulated investment companies), or in two or more issuers which the Fund controls and which are engaged in the same or similar trades or businesses or in the securities of one or more qualified publicly traded partnerships.

While each Fund presently intends to make cash distributions (including distributions reinvested in Fund shares) for each tax year in an aggregate amount sufficient to satisfy the Distribution Requirement and eliminate U.S. federal income tax, a Fund may use "equalization accounting" (in lieu of making some or all cash distributions) for those purposes. To the extent that a Fund uses equalization accounting it will allocate a portion of its undistributed investment company taxable income and net capital gain to redemptions of Fund shares and will correspondingly reduce the amount of such income and gain that it distributes in cash. If the IRS determines that the Fund's allocation is improper and that a Fund has under-distributed its income and gain for any tax year, the Fund may be liable for U.S. federal income and/or excise tax, and, if the Distribution Requirement has not been met, may also be unable to continue to qualify for treatment as a regulated investment company (see discussion below on what happens if a Fund fails to qualify for that treatment).

If a Fund retains any net capital gains for reinvestment, it may elect to treat such capital gains as having been distributed to shareholders. If the Fund makes such an election, each shareholder will be required to report its share of such undistributed net capital gains attributed to the Fund as long-term capital gain and will be entitled to claim its share of the U.S. federal income taxes paid by the Fund on such undistributed net capital gains as a credit against its own U.S. federal income tax liability, if any, and to claim a refund on a properly-filed U.S. federal income tax return to the extent that the credit exceeds such liability. In addition, each shareholder will be entitled to increase the adjusted tax basis of its Shares by the difference between its share of such undistributed net capital gain and the related credit. There can be no assurance that the Fund will make this election if it retains all or a portion of its net capital gain for a tax year.

A Fund is permitted to carry forward a net capital loss to offset its capital gain indefinitely. The excess of a Fund's net short-term capital loss over its net long-term capital gain is treated as a short-term capital loss arising on the first day of the Fund's next taxable year and the excess of a Fund's net long-term capital loss over its net short-term capital gain is treated as a long-term capital loss arising on the first day of the Fund's next taxable year. If future capital gain is offset by carried-forward capital losses, such future capital gain is not subject to fund-level U.S. federal income tax, regardless of whether it is distributed to shareholders. Accordingly, the Funds do not expect to distribute any such offsetting capital gain. In the event that a Fund were to experience an ownership change as defined under the Code, the capital loss carryforwards and other favorable tax attributes of the Fund, if any, may be subject to limitation. The Funds cannot carry back or carry forward any net operating losses.

As of the most recent fiscal year end, the Funds had capital loss carry-forwards approximating the amount indicated for U.S. federal income tax purposes, expiring in the year indicated (if applicable):

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Income ETF**  | **UltraShort Income ETF**  | **High Yield Opportunities ETF** | **Mortgage-Backed Securities ETF** |
| No expiration short-term | $0 | $300692 | $902060 | $0 |
| No expiration long-term | $0 | $0 | $3956610 | $3135700 |
| Total | $0 | $300692 | $4858670 | $3135700 |

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**<u>Failure to Qualify</u>**

If for any tax year a Fund does not qualify as a regulated investment company, all of its taxable income (including its net capital gain) will be subject to tax at regular corporate rates without any deduction for dividends paid to shareholders, and the dividends will generally be taxable to the shareholders as ordinary income to the extent of the Fund's current and accumulated earnings and profits. In addition, a Fund could be required to recognize unrealized gains, pay taxes and make distributions (any of which could be subject to interest charges) before re-qualifying for taxation as a regulated investment company. If a Fund fails to satisfy either the income test or asset diversification test described above, in certain cases, however, the Fund may be able to avoid losing its status as a regulated investment company by timely providing notice of such failure to the IRS, curing such failure and possibly paying an additional tax or penalty.

Failure to qualify as a regulated investment company would thus have a negative impact on a Fund's income and performance. It is possible that a Fund will not qualify as a regulated investment company in any given tax year.

**<u>Fund Distributions</u>**

Each Fund anticipates distributing substantially all of its investment company taxable income and net tax-exempt interest (if any) for each tax year. Distributions paid to you out of such income generally would be characterized as ordinary income. A portion of these distributions may qualify for the dividends-received deduction when paid to certain corporate shareholders to the extent that the applicable Fund receives dividend income from taxable domestic corporations, provided that holding period and other requirements are met by the Fund and the shareholder.

A portion of a Fund's distributions paid to individuals may be treated as "qualified dividend income," and may be subject to a maximum U.S. federal income tax rate of either 15% or 20% (depending on whether the individual's income exceeds certain threshold amounts). A distribution is treated as qualified dividend income to the extent that the applicable Fund receives dividend income from taxable domestic corporations and certain qualified foreign corporations, provided that holding period and other requirements are met by the Fund and the shareholder. To the extent a Fund's distributions are attributable to other sources, such as interest or capital gains, such distributions are not treated as qualified dividend income.

Given each Fund's investment strategies, it is not expected that a significant portion of any Fund's dividends will be eligible to be reported as qualified dividend income or as eligible for the dividends-received deduction.

Individuals (and certain other non-corporate entities) are generally eligible for a 20% deduction with respect to taxable ordinary dividends from real estate investment trusts ("REITs"). IRS regulations allow a regulated investment company to pass through to its shareholders such taxable ordinary REIT dividends. Accordingly, individual (and certain other non-corporate) shareholders of a Fund that has received taxable ordinary REIT dividends may be able to take advantage of this 20% deduction with respect to any such amounts passed through.

Certain distributions reported by a Fund as Section 163(j) interest dividends may be treated as interest income by shareholders for purposes of the tax rules applicable to interest expense limitations under Section 163(j) of the Code. Such treatment by the shareholder is generally subject to holding period requirements and other potential limitations, although the holding period requirements are generally not applicable to dividends declared by money market funds and certain other funds that declare dividends daily and pay such dividends on a monthly or more frequent basis. The amount that a Fund is eligible to report as a Section 163(j) dividend for a tax year is generally limited to the excess of the Fund's business interest income over the sum of the Fund's (i) business interest expense and (ii) other deductions properly allocable to the Fund's business interest income.

An additional 3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends and capital gain distributions received from a Fund and net gains from redemptions or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts to the extent that such person's "modified adjusted gross income" (in the case of an individual) or "adjusted gross income" (in the case of an estate or trust) exceeds certain threshold amounts.

Each Fund anticipates distributing substantially all of its net capital gain for each tax year. These distributions generally are made only once a year, usually in November or December, but a Fund may make additional distributions of net capital gain at any time during the year. These distributions to you generally would be characterized as long-term capital gain, regardless of how long you have held shares. These distributions do not qualify for the dividends-received deduction.

Each Fund intends to operate, each year, using a fiscal and taxable year ending January 31.

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Distributions by a Fund that exceed its earnings and profits will be treated as a return of capital. Return of capital distributions reduce your tax basis in the shares and are treated as gain from the sale of the shares to the extent your basis would be reduced below zero.

All distributions by a Fund will be treated in the manner described above regardless of whether the distribution is paid in cash or reinvested in additional shares of the Fund (or of another fund). If you receive distributions in the form of additional shares, you will be treated as receiving a distribution in an amount equal to the amount of cash that could have been received instead of shares.

You may purchase shares with a NAV at the time of purchase that reflects undistributed net investment income or recognized capital gain, or unrealized appreciation in the value of the assets of the applicable Fund. Distributions of these amounts are taxable to you in the manner described above, although the distribution economically constitutes a return of capital to you.

Ordinarily, you are required to take distributions by a Fund into account in the year in which they are made. A distribution declared in October, November or December of any calendar year and payable to shareholders of record on a specified date in those months, however, is deemed to be paid by a Fund and received by you on December 31 of that calendar year if the distribution is actually paid in January of the following year.

The Funds will send you information annually as to the U.S. federal income tax consequences of distributions made (or deemed made) during the year.

**<u>Certain Tax Rules Applicable to Fund Transactions</u>**

For U.S. federal income tax purposes, when put and call options purchased by a Fund expire unexercised, the premiums paid by the Fund give rise to short- or long-term capital losses at the time of expiration (depending on the length of the respective exercise periods for the options). When put and call options written by a Fund expire unexercised, the premiums received by the Fund give rise to short-term capital gains at the time of expiration. When a Fund exercises a call, the purchase price of the underlying security is increased by the amount of the premium paid by the Fund. When a Fund exercises a put, the proceeds from the sale of the underlying security are decreased by the premium paid. When a put or call written by a Fund is exercised, the purchase price (selling price in the case of a call) of the underlying security is decreased (increased in the case of a call) for tax purposes by the premium received.

Some of the debt securities that may be acquired by a Fund may be treated as debt securities that are issued with original issue discount ("OID"). Generally, the amount of the OID is treated as interest income and is included in income over the term of the debt security, even though payment of that amount is not received until a later time, usually when the debt security matures. Additionally, some of the debt securities that may be acquired by a Fund in the secondary market may be treated as having market discount. Generally, any gain recognized on the disposition of, and any partial payment of principal on, a debt security having market discount is treated as ordinary income to the extent the gain, or principal payment, does not exceed the "accrued market discount" on such debt security. A Fund may make one or more of the elections applicable to debt securities having market discount, which could affect the character and timing of recognition of income. A Fund generally will be required to distribute dividends to shareholders representing discount on debt securities that is currently includable in income, even though cash representing such income may not have been received by the Fund. Cash to pay such dividends may be obtained from sales proceeds of securities held by the Fund.

Each Fund may invest a portion of its net assets in below investment grade instruments. Investments in these types of instruments may present special tax issues for a Fund. U.S. federal income tax rules are not entirely clear about issues such as when a Fund may cease accruing interest, OID or market discount, when and to what extent deductions may be taken for bad debts or worthless instruments, how payments received on obligations in default should be allocated between principal and income and whether exchanges of debt obligations in a bankruptcy or workout context are taxable. These and other issues will be addressed by each Fund to the extent necessary to seek to ensure that it distributes sufficient income that it does not become subject to U.S. federal income or excise tax.

Certain listed options, regulated futures contracts and forward currency contracts are considered "Section 1256 contracts" for U.S. federal income tax purposes. Section 1256 contracts held by a Fund at the end of each tax year are "marked to market" and treated for U.S. federal income tax purposes as though sold for fair market value on the last business day of the tax year. Gains or losses realized by a Fund on Section 1256 contracts generally are considered 60% long-term and 40% short-term capital gains or losses. A Fund can elect to exempt its Section 1256 contracts that are part of a "mixed straddle" (as described below) from the application of Section 1256 of the Code.

Any option, futures contract or other position entered into or held by a Fund in conjunction with any other position held by the Fund may constitute a "straddle" for U.S. federal income tax purposes. A straddle of which at least one, but not all, the positions are Section 1256 contracts, may constitute a "mixed straddle." In general, straddles are subject to certain rules that may affect the character and timing of a Fund's gains and losses with respect to straddle positions by requiring, among other things, that: (1) the loss realized on disposition of one position of a straddle may not be recognized to the extent that the Fund

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has unrealized gains with respect to the other position in such straddle; (2) the Fund's holding period in straddle positions being suspended while the straddle exists (possibly resulting in a gain being treated as short-term capital gain rather than long-term capital gain); (3) the losses recognized with respect to certain straddle positions which are part of a mixed straddle and which are non-Section 1256 contracts being treated as 60% long-term and 40% short-term capital loss; (4) losses recognized with respect to certain straddle positions which would otherwise constitute short-term capital losses be treated as long-term capital losses; and (5) the deduction of interest and carrying charges attributable to certain straddle positions may be deferred. Various elections are available to a Fund, which may mitigate the effects of the straddle rules, particularly with respect to mixed straddles. In general, the straddle rules described above do not apply to any straddles held by a Fund if all of the offsetting positions consist of Section 1256 contracts.

Under the Code, gains or losses attributable to fluctuations in exchange rates which occur between the time a Fund accrues interest or other receivables or accrues expenses or other liabilities denominated in a foreign currency and the time a Fund actually collects such receivables or pays such liabilities are treated as ordinary income or ordinary loss. Similarly, gains or losses from the disposition of foreign currencies, from the disposition of debt securities denominated in a foreign currency, or from the disposition of a forward contract, futures contract or similar financial instrument denominated in a foreign currency which are attributable to fluctuations in the value of the foreign currency between the date of acquisition of the asset and the date of disposition also are treated as ordinary income or loss. These gains or losses, referred to under the Code as "Section 988" gains or losses, increase or decrease the amount of the applicable Fund's investment company taxable income available to be distributed to its shareholders as ordinary income, rather than increasing or decreasing the amount of a Fund's net capital gain.

The Funds may invest in shares of foreign corporations (including equity interests in certain CLOs) which may be treated as passive foreign investment companies ("PFICs") under the Code. In general, a foreign corporation is treated as a PFIC if at least one-half of its assets constitute investment-type assets or 75% or more of its gross income is investment-type income. If a Fund receives a so-called "excess distribution" with respect to PFIC stock, the Fund itself may be subject to a tax on a portion of the excess distribution, whether or not the corresponding income is distributed by the Fund to shareholders. In general, under the PFIC rules, an excess distribution is treated as having been realized ratably over the period during which a Fund held the PFIC shares. A Fund itself will be subject to tax on the portion, if any, of an excess distribution that is so allocated to prior Fund tax years and an interest factor will be added to the tax, as if the tax had been payable in such prior tax years. Certain distributions from a PFIC as well as gain from the sale of PFIC shares are treated as excess distributions. Excess distributions are characterized as ordinary income even though, absent application of the PFIC rules, certain excess distributions might have been characterized as capital gain.

A Fund may be eligible to elect alternative tax treatment with respect to PFIC shares. Under an election that currently is available in some circumstances (a qualified electing fund, or "QEF", election), a Fund generally would be required to include in its gross income its share of the earnings of a PFIC on a current basis, regardless of whether distributions are received from the PFIC in a given tax year. If this election were made, the special rules, discussed above, relating to the taxation of excess distributions, would not apply.

Alternatively, a Fund may elect to mark-to-market its PFIC shares at the end of each taxable year, with the result that unrealized gains would be treated as though they were realized and reported as ordinary income. Any mark-to-market losses would be deductible as ordinary losses to the extent of any net mark-to-market gains included in income in prior tax years.

Because the application of the PFIC rules may affect, among other things, the character of gains, the amount of gain or loss and the timing of the recognition of income with respect to PFIC shares, as well as subject a Fund itself to tax on certain income from PFIC shares, the amount that must be distributed to shareholders, and which will be taxed to shareholders as ordinary income or long-term capital gain, may be increased or decreased substantially as compared to a fund that did not invest in PFIC shares. A Fund's income inclusion with respect to a PFIC with respect to which the Fund has made a qualified electing fund, or "QEF", election, is generally treated as qualifying income for purposes of determining the Fund's ability to be subject to tax as a regulated investment company if (A) there is a current distribution out of the earnings and profits of the PFIC that are attributable to such income inclusion or (B) such inclusion is derived with respect to the Fund's business of investing in stock, securities, or currencies.

If a Fund holds 10% or more of the interests treated as equity for U.S. federal income tax purposes in a foreign corporation that is treated as a controlled foreign corporation ("CFC") (including equity tranche investments and certain debt tranche investments in a CLO treated as CFC), the Fund may be treated as receiving a deemed distribution (taxable as ordinary income) each tax year from such foreign corporation in an amount equal to the Fund's pro rata share of the corporation's income for the tax year (including both ordinary earnings and capital gains), whether or not the corporation makes an actual distribution during such year. In general, a foreign corporation will be classified as a CFC if more than 50% of the shares of the corporation, measured by reference to combined voting power or value, is owned (directly, indirectly or by attribution) by U.S. Shareholders. A "U.S. Shareholder," for this purpose, is any U.S. person that possesses (actually or constructively) 10% or more of the combined value or voting power of all classes of shares of a corporation. If a Fund is treated as receiving a deemed distribution from a CFC, the Fund will be required to include such distribution in the Fund's investment company taxable income regardless

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of whether the Fund receives any actual distributions from such CFC, and the Fund must distribute such income to satisfy the distribution requirements applicable to regulated investment companies. A Fund's income inclusion with respect to a CFC is generally treated as qualifying income for purposes of determining the Fund's ability to be subject to tax as a regulated investment company either if (A) there is a current distribution out of the earnings and profits of the CFC that are attributable to such income inclusion or (B) such inclusion is derived with respect to the Fund's business of investing in stock, securities, or currencies.

The Funds might invest directly or indirectly in residual interests in real estate mortgage investment conduits ("REMICs") or equity interests in taxable mortgage pools ("TMPs"). Under a notice issued by the IRS in October 2006 and Treasury regulations that have not yet been issued (but may apply with retroactive effect) a portion of a Fund's income from a REIT that is attributable to the REIT's residual interest in a REMIC or a TMP (referred to in the Code as an "excess inclusion") will be subject to U.S. federal income tax in all events. This notice also provides, and the regulations are expected to provide, that excess inclusion income of a regulated investment company, such as a Fund, will generally be allocated to shareholders of the regulated investment company in proportion to the dividends received by such shareholders, with the same consequences as if the shareholders held the related REMIC or TMP residual interest directly.

In general, excess inclusion income allocated to shareholders (i) cannot be offset by net operating losses (subject to a limited exception for certain thrift institutions) and (ii) will constitute unrelated business taxable income ("UBTI") to entities (including a qualified pension plan, an individual retirement account, a 401(k) plan, a Keogh plan or other tax-exempt entity) subject to tax on UBTI, thereby potentially requiring such an entity that is allocated excess inclusion income, and otherwise might not be required to file a tax return, to file a tax return and pay tax on such income. In addition, because the Code provides that excess inclusion income is ineligible for treaty benefits, a regulated investment company must withhold tax on excess inclusions attributable to its foreign shareholders at a 30% rate of withholding, regardless of any treaty benefits for which a shareholder is otherwise eligible.

Any investment in residual interests of a CMO that has elected to be treated as a REMIC can create complex tax problems, especially if a Fund has state or local governments or other tax-exempt organizations as shareholders. Under current law, a Fund serves to block UBTI from being realized by its tax-exempt shareholders. Notwithstanding the foregoing, a tax-exempt shareholder will recognize UBTI by virtue of its investment in a Fund if shares in the Fund constitute debt-financed property in the hands of the tax-exempt shareholder within the meaning of Section 514(b) of the Code. Furthermore, a tax-exempt shareholder may recognize UBTI if a Fund recognizes "excess inclusion income" derived from direct or indirect investments in REMIC residual interests or TMPs if the amount of such income recognized by the Fund exceeds the Fund's investment company taxable income (after taking into account deductions for dividends paid by the Fund).

In addition, special tax consequences apply to charitable remainder trusts ("CRTs") that invest in regulated investment companies that invest directly or indirectly in residual interests in REMICs or in TMPs. Under legislation enacted in December 2006, a CRT, as defined in Section 664 of the Code, that realizes UBTI for a tax year is subject to an excise tax annually of an amount equal to such UBTI. Under IRS guidance issued in October 2006, a CRT will not recognize UBTI solely as a result of investing in a Fund that recognizes "excess inclusion income." Rather, if at any time during any tax year a CRT (or one of certain other tax-exempt shareholders, such as the U.S., a state or political subdivision, or an agency or instrumentality thereof, and certain energy cooperatives) is a record holder of a share in a Fund that recognizes "excess inclusion income," then the Fund will be subject to a tax on that portion of its "excess inclusion income" for the tax year that is allocable to such shareholders at the highest federal corporate income tax rate. The extent to which this IRS guidance remains applicable in light of the December 2006 legislation is unclear. To the extent permitted under the 1940 Act, a Fund may elect to specially allocate any such tax to the applicable CRT, or other shareholder, and thus reduce such shareholder's distributions for the tax year by the amount of the tax that relates to such shareholder's interest in the Fund. Each Fund has not yet determined whether such an election will be made. CRTs are urged to consult their tax advisors concerning the consequences of investing in a Fund.

**<u>Federal Excise Tax</u>**

A 4% nondeductible excise tax is imposed on a regulated investment company that fails to distribute in each calendar year an amount at least equal to the sum of: (1) 98% of its ordinary taxable income (taking into account certain deferrals and elections) for the calendar year; (2) 98.2% of its capital gain net income (adjusted for certain ordinary losses) for the one-year period ended on October 31 of the calendar year; and (3) all ordinary taxable income and capital gains for previous years that were not distributed or taxed during such years and on which the regulated investment company did not incur any U.S. federal income tax. The balance of a Fund's income must be distributed during the next calendar year. Each Fund will be treated as having distributed any amount on which it is subject to income tax for any tax year ending in the calendar year.

For purposes of calculating the excise tax, each Fund is generally required to: (1) reduce its capital gain net income (but not below its net capital gain) by the amount of any net ordinary loss for the calendar year; and (2) exclude foreign currency gains and losses (and certain other ordinary gains and losses) incurred after October 31 of any tax year in determining the amount of ordinary taxable income for the current calendar year. Each Fund will include such gains and losses incurred after October 31 in determining ordinary taxable income for the succeeding calendar year.

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Each Fund intends to make sufficient distributions of its ordinary taxable income and capital gain net income prior to the end of each calendar year to avoid liability for the excise tax. Investors should note, however, that a Fund might in certain circumstances be required to liquidate portfolio investments to make sufficient distributions to avoid the imposition of any excise tax liability.

**<u>Sale or Redemption of Shares</u>**

In general, you will recognize gain or loss on the sale or redemption of Fund shares in an amount equal to the difference between the proceeds of the sale or redemption and your adjusted tax basis in the shares. All or a portion of any loss so recognized may be disallowed if you purchase (for example, by reinvesting dividends) shares of the same Fund within 30 days before or after the sale or redemption (a "wash sale"). If disallowed, the loss will be reflected in an upward adjustment to the basis of the shares purchased. In general, any gain or loss arising from the sale or redemption of Fund shares will be considered capital gain or loss and will be long-term capital gain or loss if the shares were held for longer than one year. Any capital loss arising from the sale or redemption of shares held for six months or less, however, will be treated as a long-term capital loss to the extent of the amount of distributions of net capital gain received on such shares. In determining the holding period of such shares for this purpose, any period during which your risk of loss is offset by means of options, short sales or similar transactions is not counted. Capital losses in any tax year are deductible only to the extent of capital gains plus, in the case of a non-corporate taxpayer, $3,000 of ordinary income.

Each Fund (or its administrative agent) is required to report to the IRS and furnish to shareholders the cost basis information for sale transactions of shares. Shareholders may elect to have one of several cost basis methods applied to their account when calculating the cost basis of shares sold, including average cost, FIFO ("first-in, first-out") or some other specific identification method. Unless you instruct otherwise, each Fund will use average cost as its default cost basis method. The cost basis method a shareholder elects may not be changed with respect to a redemption of shares after the settlement date of the redemption. Shareholders should consult with their tax advisors to determine the best cost basis method for their tax situation. Shareholders that hold their shares through a financial intermediary should contact such financial intermediary with respect to reporting of cost basis and available elections for their accounts.

**<u>Backup Withholding</u>**

Each Fund will be required in certain cases to withhold and remit to the U.S. Treasury at a rate under current law of 24% of taxable distributions and the proceeds of redemptions of shares paid to you if you: (1) have failed to provide your correct taxpayer identification number; (2) are otherwise subject to backup withholding by the IRS for failure to report the receipt of interest or dividend income properly; or (3) have failed to certify to the Fund that you are not subject to backup withholding or that you are a C corporation or other "exempt recipient." Backup withholding is not an additional tax; rather any amounts so withheld may be credited against your U.S. federal income tax liability or refunded if proper documentation is provided.

**<u>Creation Units</u>**

As a result of U.S. federal income tax requirements, the Trust on behalf of a Fund, has the right to reject an order for a creation of shares if the creator (or group of creators) would, upon obtaining the shares so ordered, own 80% or more of the outstanding shares of the Fund and if, pursuant to Section 351 of the Code, the Fund would have a basis in the Deposit Securities different from the market value of such securities on the date of deposit. The Trust also has the right to require information necessary to determine beneficial share ownership for purposes of the 80% determination. See "Purchase and Redemption of Creation Units."

**<u>State and Local Taxes</u>**

The tax rules of the various states of the U.S. and their local jurisdictions with respect to an investment in a Fund can differ from the U.S. federal income taxation rules described above. These state and local rules are not discussed herein. You are urged to consult your tax advisor as to the consequences of state and local tax rules with respect to an investment in a Fund.

**<u>Foreign Income Tax</u>**

Investment income received by a Fund from sources within foreign countries as well as gains or the proceeds from the sale or other disposition of foreign securities may be subject to foreign income taxes withheld at the source. The United States has entered into tax treaties with many foreign countries that may entitle the Funds to a reduced rate of such taxes or exemption from taxes on such income. It is impossible to know the effective rate of foreign tax in advance since the amount of a Fund's assets to be invested within various countries cannot be determined. If more than 50% of the value of a Fund's total assets at the close of its tax year consists of stocks or securities of foreign corporations, the Fund will be eligible and intends to file an election with the IRS to pass through to its shareholders the amount of foreign taxes paid by the Fund subject to certain exceptions. However, there can be no assurance that a Fund will be able to do so. Pursuant to this election, you will be required to: (1) include in gross income (in addition to taxable dividends actually received) your pro rata share of foreign taxes paid by the Fund; (2) treat your pro rata share of such foreign taxes as having been paid by you and (3) either deduct such pro rata share of foreign taxes in computing your taxable income or treat such foreign taxes as a credit against U.S. federal income taxes. You

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may be subject to rules which limit or reduce your ability to fully deduct, or claim a credit for, your pro rata share of the foreign taxes paid by a Fund.

**<u>Foreign Shareholders</u>**

The foregoing discussion relates only to U.S. federal income tax law as applicable to U.S. persons (i.e., U.S. citizens and residents and U.S. domestic corporations, partnerships, trusts and estates). Shareholders who are not U.S. persons ("foreign shareholders") should consult their tax advisers regarding U.S. and foreign tax consequences of ownership of shares of a Fund including the likelihood that taxable distributions to them would be subject to withholding of U.S. tax at a rate of 30% (or a lower treaty rate for eligible investors). In general, U.S. withholding tax will not apply to any gain or income realized by a foreign shareholder in respect of any distributions of net long-term capital gains over net short-term capital losses or upon the sale or other disposition of Fund shares. An investment in a Fund may also be included in determining a foreign shareholder's U.S. estate tax liability.

Properly reported dividends received by a foreign shareholder from a regulated investment company are generally exempt from U.S. Federal withholding tax when they (i) are paid in respect of the regulated investment company's "qualified net interest income" (generally, the regulated investment company's U.S. source interest income, reduced by expenses that are allocable to such income), or (ii) are paid in connection with the regulated investment company's "qualified short-term capital gains" (generally, the excess of the regulated investment company's net short-term capital gain over the regulated investment company's long-term capital loss for such taxable year). A Fund may report all, some or none of the Fund's potentially eligible dividends as derived from such qualified net interest income or as qualified short-term capital gains, and a portion of the Fund's distributions (e.g. interest from non-U.S. sources or any foreign currency gains) would be ineligible for this potential exemption from withholding. Furthermore, in the case of Fund shares held through an intermediary, the intermediary may have withheld U.S. federal income tax, even if a Fund reported all or a portion of such potentially eligible dividends as having been derived from qualified net interest or income or from qualified short-term capital gains.

In order to qualify for any reduction or exemption from U.S. withholding tax, a foreign shareholder must comply with applicable certification requirements relating to its non-U.S. status (including, in general, furnishing an IRS Form W-8BEN, IRS Form W-8BEN-E, IRS Form W-8ECI, IRS Form W-8IMY or IRS Form W-8EXP, or an acceptable substitute or successor form).

Each Fund is required to withhold U.S. tax (at a 30% rate) on payments of taxable dividends and made to certain non-U.S. entities that fail to comply (or be deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned foreign investment accounts. The information required to be reported includes the identity and taxpayer identification number of each account holder and transaction activity within the holder's account. Shareholders may be requested to provide additional information to the Funds to enable the Funds to determine whether withholding is required.

**OTHER FUND SERVICE PROVIDERS**

**<u>Administrator and Transfer Agent</u>**

U.S. Bancorp Fund Services, LLC, doing business as, U.S. Bank Global Fund Services ("Fund Services"), 615 East Michigan Street, Milwaukee, Wisconsin 53202, acts as administrator, fund accountant and transfer agent to the Funds pursuant to respective agreements. Fund Services provides certain administrative services to the Funds, including, among other responsibilities, coordinating the negotiation of contracts and fees with, and the monitoring of performance and billing of, the Funds' independent contractors and agents; preparation for signature by an officer of the Trust of all documents required to be filed for compliance by the Trust and the Funds with applicable laws and regulations excluding those of the securities laws of various states; arranging for the computation of performance data, including NAV and yield; responding to shareholder inquiries; and arranging for the maintenance of books and records of the Funds, and providing, at its own expense, office facilities, equipment and personnel necessary to carry out its duties. In this capacity, Fund Services does not have any responsibility or authority for the management of the Funds, the determination of investment policy, or for any matter pertaining to the distribution of Fund shares.

Pursuant to the Funds' administration agreement with Fund Services, the administrator will receive a portion of fees from the Funds as part of a bundled-fees agreement for services performed as administrator, transfer agent and fund accountant. The administrator expects to receive a fee based on the average daily net assets of the Funds, subject to an annual minimum amount.

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The following table provides information regarding fees paid by the Income ETF to Fund Services and its affiliates during the periods indicated below:

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| | |
|:---|:---|
| **Fiscal Period Ended** | **Fees Paid for<br>Administrative Services** |
| January 31, 2026 | $186995 |
| January 31, 2025 | $189678 |
| January 31, 2024 | $64018 |

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The following table provides information regarding fees paid by the UltraShort Income ETF to Fund Services and its affiliates during the periods indicated below:

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| | |
|:---|:---|
| **Fiscal Period Ended** | **Fees Paid for<br>Administrative Services** |
| January 31, 2026 | $239064 |
| January 31, 2025 | $254686 |
| January 31, 2024 | $78916 |

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The following table provides information regarding fees paid by the High Yield ETF to Fund Services and its affiliates during the periods indicated below:

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| | |
|:---|:---|
| **Fiscal Period Ended** | **Fees Paid for<br>Administrative Services** |
| January 31, 2026 | $71104 |
| January 31, 2025 | $136925 |
| January 31, 2024<sup>(1)</sup> | $104134 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<sup>(1)</sup> Information is for the Predecessor High Yield Fund.

The following table provides information regarding fees paid by the MBS ETF to Fund Services and its affiliates during the periods indicated below:

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| | |
|:---|:---|
| **Fiscal Period Ended** | **Fees Paid for<br>Administrative Services** |
| January 31, 2026 | $55525 |
| January 31, 2025 | $95245 |
| January 31, 2024<sup>(1)</sup> | $60054 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<sup>(1)</sup> Information is for the Predecessor Total Return Fund.

**<u>Custodian</u>**

U.S. Bank National Association (the "Custodian") is the Custodian for the Funds and safeguards and controls the Funds' cash and securities, determines income and collects interest on Fund investments. The Custodian's address is 1555 North River Center Drive, Suite 302, Milwaukee, Wisconsin 53212. The Custodian does not participate in decisions relating to the purchase and sale of securities by the Fund. Fund Services and the Custodian, are affiliated entities under the common control of U.S. Bancorp. The Custodian and its affiliates may participate in revenue sharing arrangements with the service providers of mutual funds in which a Fund may invest.

**<u>Independent Registered Public Accounting Firm</u>**

Cohen & Company, Ltd., 875 East Wisconsin Ave., Suite 210, Milwaukee, WI 53202, serves as the independent registered public accounting firm for the Funds. Its services include auditing the Funds' financial statements. Cohen & Co Advisory, LLC, an affiliate of Cohen & Company, Ltd., provides tax services as requested.

**<u>Legal Counsel</u>**

Dechert LLP, located at 1900 K Street NW, Washington, DC 20006, serves as legal counsel to the Trust.

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**DISTRIBUTOR** 

The Trust and Quasar Distributors, LLC (the "Distributor"), a wholly owned subsidiary of Foreside Financial Group, LLC (dba ACA Group), are parties to a distribution agreement ("Distribution Agreement"), whereby the Distributor acts as principal underwriter for the Trust and distributes Shares. Shares are continuously offered for sale by the Distributor only in Creation Units. The Distributor will not distribute Shares in amounts less than a Creation Unit and does not maintain a secondary market in Shares. The principal business address of the Distributor is 190 Middle Street, Suite 301, Portland, Maine 04101.

Under the Distribution Agreement, the Distributor, as agent for the Trust, will receive orders for the purchase and redemption of Creation Units, provided that any subscriptions and orders will not be binding on the Trust until accepted by the Trust. The Distributor is a broker-dealer registered under the Securities Exchange Act of 1934 (the "Exchange Act") and a member of FINRA.

The Distributor may also enter into agreements with securities dealers ("Soliciting Dealers") who will solicit purchases of Creation Units of Shares. Such Soliciting Dealers may also be Authorized Participants (as discussed in "<u>Procedures for Purchase of Creation Units</u>" below) or DTC participants (as defined below).

The Distribution Agreement will continue for two years from its effective date and is renewable annually thereafter. The continuance of the Distribution Agreement must be specifically approved at least annually (i) by the vote of the Trustees or by a vote of the shareholders of a Fund and (ii) by the vote of a majority of the Independent Trustees who have no direct or indirect financial interest in the operations of the Distribution Agreement or any related agreement, cast in person at a meeting called for the purpose of voting on such approval. The Distribution Agreement is terminable without penalty by the Trust on 60 days' written notice when authorized either by majority vote of its outstanding voting Shares or by a vote of a majority of its Board (including a majority of the Independent Trustees), or by the Distributor on 60 days' written notice, and will automatically terminate in the event of its assignment. The Distribution Agreement provides that in the absence of willful misfeasance, bad faith or gross negligence on the part of the Distributor, or reckless disregard by it of its obligations thereunder, the Distributor shall not be liable for any action or failure to act in accordance with its duties thereunder.

***Intermediary Compensation.*** The Adviser, or its affiliates, out of their own resources and not out of Fund assets (i.e., without additional cost to a Fund or its shareholders), may pay certain broker dealers, banks and other financial intermediaries ("Intermediaries") for certain activities related to a Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange traded products, including the Fund, or for other activities, such as marketing and educational training or support. These arrangements are not financed by a Fund and, thus, do not result in increased Fund expenses. They are not reflected in the fees and expenses listed in the fees and expenses sections of a Fund's Prospectus and they do not change the price paid by investors for the purchase of Shares or the amount received by a shareholder as proceeds from the redemption of Shares.

Intermediary information is current only as of the date of this SAI. Please contact your adviser, broker, or other investment professional for more information regarding any payments his or her Intermediary firm may receive. Any payments made by the Adviser or its affiliates to an Intermediary may create the incentive for an Intermediary to encourage customers to buy Shares.

If you have any additional questions, please call (855) 751-4324.

**DISTRIBUTION PLAN**

The Funds (except for the High Yield ETF) have adopted a distribution plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act with respect to Funds. The Plan was approved by a majority of the Board of Trustees of the Trust, including a majority of the Trustees who are not interested persons of the Trust or the Funds, and who have no direct or indirect financial interest in the operation of the Plan or in any other Rule 12b-1 agreement.

The Plan provides that each Fund (except for the High Yield ETF) is authorized to pay the Distributor and/or any registered securities dealer, financial institution or any other person (the "Recipient") a shareholder servicing fee of up to 0.25% of the average daily net assets of the applicable Fund in connection with the promotion and distribution of such Fund's shares or the provision of personal services to such Fund's shareholders, including, but not necessarily limited to, advertising, compensation to underwriters, dealers and selling personnel, the printing and mailing of prospectuses to other than current Fund shareholders, the printing and mailing of sales literature and servicing such Fund's shareholder accounts ("12b-1 Expenses"). The applicable Fund or the Adviser may pay all or a portion of these fees to any Recipient who renders assistance in distributing or promoting the sale of such Fund's shares, or who provides certain shareholder services, pursuant to a written agreement.

The Plan is a compensation plan, which means that compensation is provided regardless of 12b-1 Expenses actually incurred. It is anticipated that the Plan will benefit each Fund's shareholders because an effective sales program typically is necessary for the Funds to reach and maintain a sufficient size to achieve efficiently their investment objectives and to realize economies of scale.

No Rule 12b-1 fees are currently paid by the Funds, and there are no plans to impose these fees.

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**OTHER MATTERS**

**<u>Code of Ethics</u>**

The Trust, the Adviser and the Distributor have each adopted a code of ethics under Rule 17j-1 of the 1940 Act, which are designed to eliminate conflicts of interest between the Funds and personnel of the Trust, the Adviser and the Distributor. The codes permit such personnel to invest in securities, including securities that may be purchased or held by the Funds, subject to certain limitations.

**<u>Registration Statement</u>**

This SAI and the Prospectus do not contain all the information included in the Trust's registration statement filed with the SEC under the Securities Act with respect to the securities offered hereby. The registration statement, including the exhibits filed therewith, are available on the SEC's website at www.sec.gov or may be examined at the office of the SEC in Washington, D.C.

Statements contained herein and in the Prospectus as to the contents of any contract or other documents are not necessarily complete, and, in each instance, are qualified by, reference to the copy of such contract or other documents filed as exhibits to the registration statement.

**FINANCIAL STATEMENTS**

The <u>[annual report](https://www.sec.gov/ix?doc=/Archives/edgar/data/1612930/000113322826004853/aafs-efp23015_ncsr.htm)[on Form N-CSR](https://www.sec.gov/ix?doc=/Archives/edgar/data/1612930/000113322826004853/aafs-efp23015_ncsr.htm)</u> for the Funds for the fiscal period ended January 31, 2026 is a separate document, and the financial statements, accompanying notes, and report of the independent registered public accounting firm appearing therein are incorporated by reference into this SAI. You may request a copy of the Funds' Annual Report at no charge by calling (800) 617-0004, or through the Funds' website at www.angeloakcapital.com.

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**APPENDIX A – DESCRIPTION OF SECURITIES RATINGS**

**A. Long-Term Ratings**

**1. Moody's Investors Service – Long-Term Corporate Obligation Ratings**

Moody's long-term obligation ratings are opinions of the relative credit risk of fixed-income obligations with an original maturity of one year or more. They address the possibility that a financial obligation will not be honored as promised. Such ratings use Moody's Global Scale and reflect both the likelihood of default and any financial loss suffered in the event of default.

**Aaa**&nbsp;&nbsp;&nbsp;&nbsp;Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk.

**Aa**&nbsp;&nbsp;&nbsp;&nbsp;Obligations rated Aa are judged to be of high quality and are subject to very low credit risk.

**A**&nbsp;&nbsp;&nbsp;&nbsp;Obligations rated A are judged to be upper-medium grade and are subject to low credit risk.

**Baa**&nbsp;&nbsp;&nbsp;&nbsp;Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics.

**Ba**&nbsp;&nbsp;&nbsp;&nbsp;Obligations rated Ba are judged to be speculative and are subject to substantial credit risk.

**B**&nbsp;&nbsp;&nbsp;&nbsp;Obligations rated B are considered speculative and are subject to high credit risk.

**Caa**&nbsp;&nbsp;&nbsp;&nbsp;Obligations rated Caa are judged to speculative be of poor standing and are subject to very high credit risk.

**Ca**&nbsp;&nbsp;&nbsp;&nbsp;Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest.

**C**&nbsp;&nbsp;&nbsp;&nbsp;Obligations rated C are the lowest rated and are typically in default, with little prospect for recovery of principal or interest.

**Note** Moody's appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category.

**2. Standard and Poor's – Long-Term Issue Credit Ratings (including Preferred Stock)**

Issue credit ratings are based, in varying degrees, on the following considerations:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Likelihood of payment—capacity and willingness of the obligor to meet its financial commitments on an obligation in accordance with the terms of the obligation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Nature and provisions of the financial obligation and the promise S&P imputes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Protection afforded by, and relative position of, the financial obligation in the event of a bankruptcy, reorganization, or other arrangement under the laws of bankruptcy and other laws affecting creditors' rights.

Issue ratings are an assessment of default risk, but may incorporate an assessment of relative seniority or ultimate recovery in the event of default. Junior obligations are typically rated lower than senior obligations, to reflect the lower priority in bankruptcy, as noted above. (Such differentiation may apply when an entity has both senior and subordinated obligations, secured and unsecured obligations, or operating company and holding company obligations.)

**AAA**&nbsp;&nbsp;&nbsp;&nbsp;An obligation rated 'AAA' has the highest rating assigned by Standard & Poor's. The obligor's capacity to meet its financial commitments on the obligation is extremely strong.

**AA**&nbsp;&nbsp;&nbsp;&nbsp;An obligation rated 'AA' differs from the highest-rated obligations only to a small degree. The obligor's capacity to meet its financial commitments on the obligation is very strong.

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**A**&nbsp;&nbsp;&nbsp;&nbsp;An obligation rated 'A' is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor's capacity to meet its financial commitments on the obligation is still strong.

**BBB**&nbsp;&nbsp;&nbsp;&nbsp;An obligation rated 'BBB' exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more weaken the obligor's capacity to meet its financial commitments on the obligation.

**Note**&nbsp;&nbsp;&nbsp;&nbsp;Obligations rated 'BB', 'B', 'CCC', 'CC', and 'C' are regarded as having significant speculative characteristics. 'BB' indicates the least degree of speculation and 'C' the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposure to adverse conditions.

**BB**&nbsp;&nbsp;&nbsp;&nbsp;An obligation rated 'BB' is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions that could lead to the obligor's inadequate capacity to meet its financial commitments on the obligation.

**B**&nbsp;&nbsp;&nbsp;&nbsp;An obligation rated 'B' is more vulnerable to nonpayment than obligations rated 'BB', but the obligor currently has the capacity to meet its financial commitments on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitments on the obligation.

**CCC&nbsp;&nbsp;&nbsp;&nbsp;**An obligation rated 'CCC' is currently vulnerable to nonpayment, and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitments on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation.

**CC&nbsp;&nbsp;&nbsp;&nbsp;**An obligation rated 'CC' is currently highly vulnerable to nonpayment. The 'CC' rating is used when a default has not yet occurred, but S&P expects default to be a virtual certainty, regardless of the anticipated time to default.

**C**&nbsp;&nbsp;&nbsp;&nbsp;An obligation rated 'C' is currently highly vulnerable to nonpayment, and the obligation is expected to have lower relative seniority or lower ultimate recovery compared with obligations that are rated higher.

**D**&nbsp;&nbsp;&nbsp;&nbsp;An obligation rated 'D' is in default or in breach of an imputed promise. For non-hybrid capital instruments, the 'D' rating category is used when payments on an obligation are not made on the date due, unless S&P believes that such payments will be made within five business days in the absence of a stated grace period or within the earlier of the stated grace period or 30 calendar days. The 'D' rating also will be used upon the filing of a bankruptcy petition or the taking of similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. A rating on an obligation is lowered to 'D' if it is subject to a distressed debt restructuring.

**Note**&nbsp;&nbsp;&nbsp;&nbsp;Plus (+) or minus (-). The ratings from 'AA' to 'CCC' may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.

**NR** &nbsp;&nbsp;&nbsp;&nbsp;This indicates that no rating has been requested, that there is insufficient information on which to base a rating, or that Standard & Poor's does not rate a particular obligation as a matter of policy.

**3. Fitch – International Long-Term Credit Ratings**

International Long-Term Credit Ratings (LTCR) may also be referred to as Long-Term Ratings. When assigned to most issuers, it is used as a benchmark measure of probability of default and is formally described as an Issuer Default Rating (IDR). The major exception is within Public Finance, where IDRs will not be assigned as market convention has always focused on timeliness and does not draw analytical distinctions between issuers and their underlying obligations. When applied to issues or securities, the LTCR may be higher or lower than the issuer rating (IDR) to reflect relative differences in recovery expectations.

The following rating scale applies to foreign currency and local currency ratings:

**Investment Grade**

**AAA**&nbsp;&nbsp;&nbsp;&nbsp;Highest credit quality. 'AAA' ratings denote the lowest expectation of credit risk. They are assigned only in case of exceptionally strong capacity for payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events.

------

**AA&nbsp;&nbsp;&nbsp;&nbsp;**Very high credit quality. 'AA' ratings denote expectations of very low credit risk. They indicate very strong capacity for payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.

**A**&nbsp;&nbsp;&nbsp;&nbsp;High credit quality. 'A' ratings denote expectations of low credit risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to changes in circumstances or in economic conditions than is the case for higher ratings.

**BBB**&nbsp;&nbsp;&nbsp;&nbsp;Good credit quality. 'BBB' ratings indicate that there are currently expectations of low credit risk. The capacity for payment of financial commitments is considered adequate but adverse changes in circumstances and economic conditions are more likely to impair this capacity. This is the lowest investment grade category.

**Speculative Grade**

**BB&nbsp;&nbsp;&nbsp;&nbsp;**Speculative. 'BB' ratings indicate that there is a possibility of credit risk developing, particularly as the result of adverse economic change over time; however, business or financial alternatives may be available to allow financial commitments to be met. Securities rated in this category are not investment grade.

**B&nbsp;&nbsp;&nbsp;&nbsp;**Highly speculative. 'B' ratings indicate that significant credit risk is present, but a limited margin of safety remains. Financial commitments are currently being met; however, capacity for continued payment is contingent upon a sustained, favorable business and economic environment.

**CCC&nbsp;&nbsp;&nbsp;&nbsp;**Default is a real possibility. Capacity for meeting financial commitments is solely reliant upon sustained, favorable business or economic conditions.

**CC&nbsp;&nbsp;&nbsp;&nbsp;**Default of some kind appears probable.

**C&nbsp;&nbsp;&nbsp;&nbsp;**Default is imminent.

**RD&nbsp;&nbsp;&nbsp;&nbsp;**Indicates an entity that has failed to make due payments (within the applicable grace period) on some but not all material financial obligations, but continues to honor other classes of obligations.

**D&nbsp;&nbsp;&nbsp;&nbsp;**Indicates an entity or sovereign that has defaulted on all of its financial obligations. Default generally is defined as one of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Failure of an obligor to make timely payment of principal and/or interest under the contractual terms of any financial obligation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The bankruptcy filings, administration, receivership, liquidation or other winding-up or cessation of business of an obligor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The distressed or other coercive exchange of an obligation, where creditors were offered securities with diminished structural or economic terms compared with the existing obligation.

Default ratings are not assigned prospectively; within this context, non-payment on an instrument that contains a deferral feature or grace period will not be considered a default until after the expiration of the deferral or grace period.

Issuers will be rated 'D' upon a default. Defaulted and distressed obligations typically are rated along the continuum of 'C' to 'B' ratings categories, depending upon their recovery prospects and other relevant characteristics. Additionally, in structured finance transactions, where analysis indicates that an instrument is irrevocably impaired such that it is not expected to meet pay interest and/or principal in full in accordance with the terms of the obligation's documentation during the life of the transaction, but where no payment default in accordance with the terms of the documentation is imminent, the obligation may be rated in the 'B' or 'CCC-C' categories.

Default is determined by reference to the terms of the obligations' documentation. Fitch will assign default ratings where it has reasonably determined that payment has not been made on a material obligation in accordance with the requirements of the obligation's documentation, or where it believes that default ratings consistent with Fitch's published definition of default are the most appropriate ratings to assign.

------

**Note&nbsp;&nbsp;&nbsp;&nbsp;**The modifiers "+" or "-" may be appended to a rating to denote relative status within major rating categories. Such suffixes are not added to the 'AAA' Long-term rating category, to categories below 'CCC', or to Short-term ratings other than 'F1'. (The +/- modifiers are only used to denote issues within the CCC category, whereas issuers are only rated CCC without the use of modifiers.)

**B. Preferred Stock Ratings**

**1. Moody's Investors Service**

**Aaa**&nbsp;&nbsp;&nbsp;&nbsp;An issue which is rated "aaa" is considered to be a top-quality preferred stock. This rating indicates good asset protection and the least risk of dividend impairment within the universe of preferred stocks.

**Aa&nbsp;&nbsp;&nbsp;&nbsp;**An issue which is rated "aa" is considered a high-grade preferred stock. This rating indicates that there is a reasonable assurance the earnings and asset protection will remain relatively well-maintained in the foreseeable future.

**A&nbsp;&nbsp;&nbsp;&nbsp;**An issue which is rated "a" is considered to be an upper-medium grade preferred stock. While risks are judged to be somewhat greater than in the "aaa" and "aa" classification, earnings and asset protection are, nevertheless, expected to be maintained at adequate levels.

**Baa&nbsp;&nbsp;&nbsp;&nbsp;**An issue which is rated "baa" is considered to be a medium-grade preferred stock, neither highly protected nor poorly secured. Earnings and asset protection appear adequate at present but may be questionable over any great length of time.

**Ba&nbsp;&nbsp;&nbsp;&nbsp;**An issue which is rated "ba" is considered to have speculative elements and its future cannot be considered well assured. Earnings and asset protection may be very moderate and not well safeguarded during adverse periods. Uncertainty of position characterizes preferred stocks in this class.

**B&nbsp;&nbsp;&nbsp;&nbsp;**An issue which is rated "b" generally lacks the characteristics of a desirable investment. Assurance of dividend payments and maintenance of other terms of the issue over any long period of time may be small.

**Caa&nbsp;&nbsp;&nbsp;&nbsp;**An issue which is rated "caa" is likely to be in arrears on dividend payments. This rating designation does not purport to indicate the future status of payments.

**Ca&nbsp;&nbsp;&nbsp;&nbsp;**An issue which is rated "ca" is speculative in a high degree and is likely to be in arrears on dividends with little likelihood of eventual payments.

**C&nbsp;&nbsp;&nbsp;&nbsp;**This is the lowest rated class of preferred or preference stock. Issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

**Note&nbsp;&nbsp;&nbsp;&nbsp;**Moody's applies numerical modifiers 1, 2, and 3 in each rating classification; The modifier 1 indicates that the security ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking and the modifier 3 indicates that the issue ranks in the lower end of its generic rating category.

**C. Short Term Ratings**

**1. Moody's Investors Service**

Moody's short-term ratings are opinions of the ability of issuers to honor short-term financial obligations. Ratings may be assigned to issuers, short-term programs or to individual short-term debt instruments. Such obligations generally have an original maturity not exceeding thirteen months, unless explicitly noted.

Moody's employs the following designations to indicate the relative repayment ability of rated issuers:

**P-1&nbsp;&nbsp;&nbsp;&nbsp;**Issuers (or supporting institutions) rated Prime-1 have a superior ability to repay short-term debt obligations.

**P-2&nbsp;&nbsp;&nbsp;&nbsp;**Issuers (or supporting institutions) rated Prime-2 have a strong ability to repay short-term debt obligations.

**P-3&nbsp;&nbsp;&nbsp;&nbsp;**Issuers (or supporting institutions) rated Prime-3 have an acceptable ability to repay short-term debt obligations.

------

**NP&nbsp;&nbsp;&nbsp;&nbsp;**Issuers (or supporting institutions) rated Not Prime do not fall within any of the Prime rating categories.

**Note&nbsp;&nbsp;&nbsp;&nbsp;**Canadian issuers rated P-1 or P-2 have their short-term ratings enhanced by the senior-most long-term rating of the issuer, its guarantor or support-provider.

**2. Standard and Poor's**

**A-1&nbsp;&nbsp;&nbsp;&nbsp;**A short-term obligation rated 'A-1' is rated in the highest category by Standard & Poor's. The obligor's capacity to meet its financial commitment on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor's capacity to meet its financial commitment on these obligations is extremely strong.

**A-2&nbsp;&nbsp;&nbsp;&nbsp;**A short-term obligation rated 'A-2' is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor's capacity to meet its financial commitment on the obligation is satisfactory.

**A-3&nbsp;&nbsp;&nbsp;&nbsp;**A short-term obligation rated 'A-3' exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.

**B&nbsp;&nbsp;&nbsp;&nbsp;**A short-term obligation rated 'B' is regarded as having significant speculative characteristics. Ratings of 'B-1', 'B-2', and 'B-3' may be assigned to indicate finer distinctions within the 'B' category. The obligor currently has the capacity to meet its financial commitment on the obligation; however, it faces major ongoing uncertainties which could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation.

**B-1&nbsp;&nbsp;&nbsp;&nbsp;**A short-term obligation rated 'B-1' is regarded as having significant speculative characteristics, but the obligor has a relatively stronger capacity to meet its financial commitments over the short-term compared to other speculative-grade obligors.

**B-2&nbsp;&nbsp;&nbsp;&nbsp;**A short-term obligation rated 'B-2' is regarded as having significant speculative characteristics, and the obligor has an average speculative-grade capacity to meet its financial commitments over the short-term compared to other speculative-grade obligors.

**B-3&nbsp;&nbsp;&nbsp;&nbsp;**A short-term obligation rated 'B-3' is regarded as having significant speculative characteristics, and the obligor has a relatively weaker capacity to meet its financial commitments over the short-term compared to other speculative-grade obligors.

**C&nbsp;&nbsp;&nbsp;&nbsp;**A short-term obligation rated 'C' is currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation.

**D&nbsp;&nbsp;&nbsp;&nbsp;**A short-term obligation rated 'D' is in payment default. The 'D' rating category is used when payments on an obligation are not made on the date due even if the applicable grace period has not expired, unless Standard & Poor's believes that such payments will be made during such grace period. The 'D' rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized.

**Note&nbsp;&nbsp;&nbsp;&nbsp;**Dual Ratings. Standard & Poor's assigns "dual" ratings to all debt issues that have a put option or demand feature as part of their structure. The first rating addresses the likelihood of repayment of principal and interest as due, and the second rating addresses only the demand feature. The long-term rating symbols are used for bonds to denote the long-term maturity and the short-term rating symbols for the put option (for example, 'AAA/A-1+'). With U.S. municipal short-term demand debt, note rating symbols are used with the short-term issue credit rating symbols (for example, 'SP-1+/A-1+').

**3. Fitch**

The following ratings scale applies to foreign currency and local currency ratings. A Short-term rating has a time horizon of less than 13 months for most obligations, or up to three years for US public finance, in line with industry standards, to reflect unique risk characteristics of bond, tax, and revenue anticipation notes that are commonly issued with terms up to three years. Short-term ratings thus place greater emphasis on the liquidity necessary to meet financial commitments in a timely manner.

------

**F1&nbsp;&nbsp;&nbsp;&nbsp;**Highest credit quality. Indicates the strongest capacity for timely payment of financial commitments; may have an added "+" to denote any exceptionally strong credit feature.

**F2&nbsp;&nbsp;&nbsp;&nbsp;**Good credit quality. A satisfactory capacity for timely payment of financial commitments, but the margin of safety is not as great as in the case of the higher ratings.

**F3&nbsp;&nbsp;&nbsp;&nbsp;**Fair credit quality. The capacity for timely payment of financial commitments is adequate; however, near term adverse changes could result in a reduction to non-investment grade.

**B&nbsp;&nbsp;&nbsp;&nbsp;**Speculative. Minimal capacity for timely payment of financial commitments, plus vulnerability to near term adverse changes in financial and economic conditions.

**C&nbsp;&nbsp;&nbsp;&nbsp;**High default risk. Default is a real possibility. Capacity for meeting financial commitments is solely reliant upon a sustained, favorable business and economic environment.

**D&nbsp;&nbsp;&nbsp;&nbsp;**Indicates an entity or sovereign that has defaulted on all of its financial obligations.

**Note&nbsp;&nbsp;&nbsp;&nbsp;**The modifiers "+" or "-" may be appended to a rating to denote relative status within major rating categories. Such suffixes are not added to the 'AAA' Long-term rating category, to categories below 'CCC', or to Short-term ratings other than 'F1'. (The +/- modifiers are only used to denote issues within the CCC category, whereas issuers are only rated CCC without the use of modifiers.)

------

**ANGEL OAK FUNDS TRUST**

**PART C**

**OTHER INFORMATION**

**Item 28. Exhibits.**

---

| | | | |
|:---|:---|:---|:---|
| (a) | (1) |  | <u>[Certificate of Trust was previously filed with the Registrant's Initial Registration Statement on Form N-1A on July 15, 2014 and is incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1612930/000089418914003159/certificate.htm)</u> |
|  | (2) |  | <u>[Amended and Restated Declaration of Trust dated July 22, 2022 was previously filed with the Registrant's Registration Statement on Form N-1A on December 30, 2022 and is incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1612930/000089418922009487/exha2-angeloakfundstrustxa.htm)</u> |
| (b) |  |  | <u>[By-Laws were previously filed with the Registrant's Initial Registration Statement on Form N-1A on July 15, 2014 and are incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1612930/000089418914003159/by-laws.htm)</u> |
| (c) |  |  | Instruments Defining Rights of Security Holders—See relevant portions of <u>[Certificate of Trust](https://www.sec.gov/Archives/edgar/data/1612930/000089418914003159/certificate.htm)</u>, <u>[Amended and Restated Declaration of Trust](https://www.sec.gov/Archives/edgar/data/1612930/000089418922009487/exha2-angeloakfundstrustxa.htm)</u> and <u>[By-Laws](https://www.sec.gov/Archives/edgar/data/1612930/000089418914003159/by-laws.htm)</u>. |
| (d) | (1) |  | <u>[Investment Advisory Agreement](d1invadvagmtmutualfunds10-.htm)[dated October 1, 2025](d1invadvagmtmutualfunds10-.htm)[between the Registrant and Angel Oak Capital Advisors, LLC](d1invadvagmtmutualfunds10-.htm)[on beha](d1invadvagmtmutualfunds10-.htm)[lf of the Ang](d1invadvagmtmutualfunds10-.htm)[el Oak m](d1invadvagmtmutualfunds10-.htm)[utual f](d1invadvagmtmutualfunds10-.htm)[unds](d1invadvagmtmutualfunds10-.htm)</u>**<u>[– filed herewith.](d1invadvagmtmutualfunds10-.htm)</u>** |
|  | (2) |  | <u>[Investment Advisory Agreement dated December 19, 2025 between the Registrant and Angel Oak Capital Advisors, LLC on behalf of the Angel Oak ETFs](d2invadvagmtetfs12-2025.htm)</u>**<u>[– filed herewith.](d2invadvagmtetfs12-2025.htm)</u>** |
|  | (3) |  | <u>[Investment Sub-Advisory Agreement between Angel Oak Capital Advisors, LLC and Brookfield Public Securities Group LLC, with respect to the Angel Oak Total Return ETF, was previously filed with Post-Effective Amendment No. 63 to the Registrant's Registration Statement on Form N-1A on April 17, 2026.](https://www.sec.gov/Archives/edgar/data/1612930/000089418926012212/trbf-psgsubadvisoryagreeme.htm)</u> |
| (e) | (1) | (i) | <u>[Novation Agreement dated March 31, 2020 was previously filed with Post-Effective Amendment No. 33 to the Registrant's Registration Statement on Form N-1A on May 29, 2020 and is incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1612930/000089418920004215/novationagreement.htm)</u> |
|  |  | (ii) | <u>[Distribution Agreement between the Registrant and Quasar Distributors, LLC was previously filed with Pre-Effective Amendment No. 1 to the Registrant's Registration Statement on Form N-1A on October 27, 2014 and is incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1612930/000089418914005129/dist_agmnt.htm)</u> |
|  |  | (iii) | <u>[Amendment to the Distribution Agreement was previously filed with Post-Effective Amendment No.](https://www.sec.gov/Archives/edgar/data/1612930/000089418921003368/angeloakfundstrust-qddaame.htm)[37](https://www.sec.gov/Archives/edgar/data/1612930/000089418921003368/angeloakfundstrust-qddaame.htm)[to the Registrant's Registration Statement on Form N-1A on](https://www.sec.gov/Archives/edgar/data/1612930/000089418921003368/angeloakfundstrust-qddaame.htm)[May 28](https://www.sec.gov/Archives/edgar/data/1612930/000089418921003368/angeloakfundstrust-qddaame.htm)[, 2021](https://www.sec.gov/Archives/edgar/data/1612930/000089418921003368/angeloakfundstrust-qddaame.htm)[and is incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1612930/000089418921003368/angeloakfundstrust-qddaame.htm)</u> |
|  | (2) | (i) | <u>[ETF Distribution Agreement between the Registrant and Quasar Distributors, LLC with respect to Angel Oak Income ETF and Angel Oak UltraShort Income ETF was previously filed with Post-Effective Amendment No. 44 to the Registrant's Registration Statement on Form N-1A on October 20, 2022 and is incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1612930/000089418922007640/exhe2-aoftetfsdistribution.htm)</u> |
|  |  | (ii) | <u>[Form of Amendment to the ETF Distribution Agreement with respect to the Angel Oak High Yield Opportunities ETF and Angel Oak Mortgage-Backed Securities ETF was previously filed with Post- Effective Amendment No. 50 to the Registrant's Registration Statement on Form N-1A on January 19, 2024 and is incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1612930/000089418924000317/aofirstamendtoetfdistagmt.htm)</u> |
|  |  | (iii) | <u>[Second Amendment to the ETF Distribution Agreement was previously filed with Post-Effective Amendment No. 58 to the Registrant's Registration Statement on Form N-1A on October 3, 2025 and is incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1612930/000089418925010710/aoftetfamenddistributionag.htm)</u>  |
|  | (3) |  | <u>[Form of Authorized Participant Agreement was previously filed with Post-Effective Amendment No. 44 to the Registrant's Registration Statement on Form N-1A on October 20, 2022 and is incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1612930/000089418922007640/exhe3-formofapagreement.htm)</u> |
| (f) |  |  | Bonus, profit sharing contracts—None. |
| (g) | (1) | (i) | <u>[Amended and Restated Custody Agreement between the Registrant and U.S. Bank National Association was previously filed with Post-Effective Amendment No. 36 to the Registrant's Registration Statement on Form N-1A on May 28, 2021 and is incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1612930/000089418921003365/aoft-mastercustodyagrmt.htm)</u> |
|  |  | (ii) | <u>[Second Amendment to the Amended and Restated Custody Agreement was previously filed with Post-Effective Amendment No. 44 to the Registrant's Registration Statement on Form N-1A on October 20, 2022 and is incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1612930/000089418922007640/exhg1ii-2ndamendtocustodya.htm)</u> |
|  |  | (iii) | <u>[Form of Third Amendment to the Amended and Restated Custody Agreement with respect to the Angel Oak High Yield Opportunities ETF and Angel Oak Mortgage-Backed Securities ETF was previously filed with Post- Effective Amendment No. 50 to the Registrant's Registration Statement on Form N-1A on January 19, 2024 and is incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1612930/000089418924000317/ao-arcustodyagmtxamend3x12.htm)</u> |
|  |  | (iv) | <u>[Amendment to the Amended and Restated Custody Agreement was previously filed with Post-Effective Amendment No. 58 to the Registrant's Registration Statement on Form N-1A on October 3, 2025 and is incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1612930/000089418925010710/angeloakarcustodyagreement.htm)</u>  |
| (h) | (1) | (i) | <u>[Amended and Restated Master Servicing Agreement between the Registrant and U.S. Bancorp Fund Services, LLC was previously filed with Post-Effective Amendment No. 44 to the Registrant's Registration Statement on Form N-1A on October 20, 2022 and is incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1612930/000089418922007640/exhh1-armasterservicingagr.htm)</u> |
|  |  | (ii) | <u>[Form of Amendment to the Master Servicing Agreement with respect to the Angel Oak High Yield Opportunities ETF and Angel Oak Mortgage-Backed Securities ETF was previously filed with Post- Effective Amendment No. 50 to the Registrant's Registration Statement on Form N-1A on January 19, 2024 and is incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1612930/000089418924000317/ao-arservicingagmtxamend1x.htm)</u> |

---

------

---

| | | | |
|:---|:---|:---|:---|
| | | (iii) | <u>[Amendment to the Amended and Restated Master Servicing Agreement was previously filed with Post-Effective Amendment No. 58 to the Registrant's Registration Statement on Form N-1A on October 3, 2025 and is incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1612930/000089418925010710/angeloakarmasterservicesag.htm)</u>  |
| | (2) | | <u>[Fee Waiver Agreement](h2feewaiveragreement.htm)[dated October 1, 2025](h2feewaiveragreement.htm)[between the Registrant and Angel Oak Capital Advisors, LLC](h2feewaiveragreement.htm)</u>**<u>[– filed herewith.](h2feewaiveragreement.htm)</u>** |
| | (3) | | <u>[Amended and Restated](h3arexplimitagmtmutualfund.htm)[Operating](h3arexplimitagmtmutualfund.htm)[Expense Limitation Agreement](h3arexplimitagmtmutualfund.htm)[dated Feb](h3arexplimitagmtmutualfund.htm)[ruary 1, 2026](h3arexplimitagmtmutualfund.htm)[between the Registrant and Angel Oak Capital Advisors, LLC on behalf of the Angel Oak Mutual Funds](h3arexplimitagmtmutualfund.htm)</u>**<u>[– filed herewith.](h3arexplimitagmtmutualfund.htm)</u>** |
| | (4) | | <u>[Amended and Restated Operating Expense Limitation Agreement dated February 1, 2026](h4arexplimitagmtetfs2-2026.htm)[between the Registrant and Angel Oak Capital Advisors, LLC on behalf of the Angel Oak ETFs](h4arexplimitagmtetfs2-2026.htm)</u>**<u>[– filed herewith.](h4arexplimitagmtetfs2-2026.htm)</u>** |
| | (5) | | <u>[Form of Fund of Funds Investment Agreement](h5formoffundoffundsinvestm.htm)</u>**<u>[– filed herewith.](h5formoffundoffundsinvestm.htm)</u>** |
| (i) |  |  | <u>[Opinion and Consent of Counsel](aoftdechertopinionandconse.htm)</u>**<u>[–](aoftdechertopinionandconse.htm)[filed](aoftdechertopinionandconse.htm)[herewith](aoftdechertopinionandconse.htm)[.](aoftdechertopinionandconse.htm)</u>** |
| (j) |  |  | <u>[Consent of Independent Registered Public Accounting Firm](angeloakauditorconsent5-20.htm)</u>**<u>[– filed herewith.](angeloakauditorconsent5-20.htm)</u>**  |
| (k) |  |  | Financial statements omitted from prospectus—None. |
| (l) |  |  | <u>[Initial Capital Agreement was previously filed with Pre-Effective Amendment No. 1 to the Registrant's Registration Statement on Form N-1A on October 27, 2014 and is incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1612930/000089418914005129/initial-capital_agmnt.htm)</u> |
| (m) | (1) |  | <u>[Amended & Restated Distribution and Shareholder Servicing Plan pursuant to Rule 12b-1 was previously filed with Post-Effective Amendment No. 37 to the Registrant's Registration Statement on Form N-1A on May 28, 2021 and is incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1612930/000089418921003368/angeloakfundstrust-rule12b.htm)</u> |
|  | (2) |  | <u>[Amended & Restated Distribution and Shareholder Servicing Plan pursuant to Rule 12b-1 with respect to the Angel Oak ETFs was previously filed with Post-Effective Amendment No. 58 to the Registrant's Registration Statement on Form N-1A on October 3, 2025 and is incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1612930/000089418925010710/ao12b1planetfs9-2025.htm)</u>  |
| (n) |  |  | <u>[Amended & Restated Rule 18f-3 Multiple Class Plan was previously filed with Post-Effective Amendment No. 37 to the Registrant's Registration Statement on Form N-1A on May 28, 2021 and is incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1612930/000089418921003368/angeloakfundstrust-rule18f.htm)</u> |
| (o) |  |  | Reserved. |
| (p) | (1) |  | <u>[Code of Ethics of Angel Oak Funds Trust was previously filed with Pre-Effective Amendment No. 1 to the Registrant's Registration Statement on Form N-1A on October 27, 2014 and is incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1612930/000089418914005129/coe_trust.htm)</u> |
|  | (2) |  | <u>[Code of Ethics of Angel Oak Capital Advisors, LLC was previously filed with Pre-Effective Amendment No. 1 to the Registrant's Registration Statement on Form N-1A on October 27, 2014 and is incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1612930/000089418914005129/coe_angel-oaks.htm)</u> |
|  | (3) |  | <u>[Code of Ethics of Brookfield Public Securities Group LLC was previously filed with Post-Effective Amendment No. 61 to the Registrant's Registration Statement on Form N-1A on January 20, 2026 and is incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1612930/000089418926000908/brookfieldcodeofethics2025.htm)</u> |
|  | (4) |  | <u>[Powers of Attorney (November 2022) were previously filed with Post-Effective Amendment No. 46 to the Registrant's Registration Statement on Form N-1A on December 30, 2022 and are incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1612930/000089418922009487/exhp3-angeloakfundstrustpo.htm)</u> |
|  | (5) |  | <u>[Power of Attorney (May 2024) was previously filed with Post-Effective Amendment No. 51 to the Registrant's Registration Statement on Form N-1A on May 30, 2024 and is incorporated herein by reference.](https://www.sec.gov/Archives/edgar/data/1612930/000089418924003453/angeloakpoa5-2024.htm)</u> |

---

**Item 29. Persons Controlled by or Under Common Control with Registrant**

None.

**Item 30. Indemnification**

Reference is made to Article VII, Section III of the Registrant's Declaration of Trust (incorporated herein by reference), with respect to the Registrant. The general effect of this provision is to indemnify the Trustees, officers, employees and other agents of the Trust who are parties pursuant to any proceeding by reason of their actions performed in their scope of service on behalf of the Trust.

Pursuant to Rule 484 under the Securities Act of 1933, as amended (the "Securities Act"), the Registrant furnishes the following undertaking: "Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that, in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such trustee, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue."

------

**Item 31. Business and Other Connections of Investment Adviser**

Incorporated by reference to the Statement of Additional Information pursuant to Rule 411 under the Securities Act.

**Item 32. Principal Underwriter.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Quasar Distributors, LLC, the Registrant's principal underwriter, acts as principal underwriter for the following investment companies:

&nbsp;&nbsp;&nbsp;&nbsp;1. Abacus FCF ETF Trust

&nbsp;&nbsp;&nbsp;&nbsp;2. Advisor Managed Portfolios

&nbsp;&nbsp;&nbsp;&nbsp;3. Antares Private Credit Fund

&nbsp;&nbsp;&nbsp;&nbsp;4. Capital Advisors Growth Fund, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;5. Chase Growth Fund, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;6. Davidson Multi-Cap Equity Fund, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;7. Edgar Lomax Value Fund, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;8. Huber Large Cap Value Fund, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;9. Huber Mid Cap Value Fund, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;10. Huber Select Large Cap Value Fund, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;11. Huber Small Cap Value Fund, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;12. Logan Capital Broad Innovative Growth ETF, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;13. Medalist Partners MBS Total Return Fund, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;14. Medalist Partners Short Duration Fund, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;15. O'Shaughnessy Market Leaders Value Fund, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;16. PIA BBB Bond Fund, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;17. PIA High Yield (MACS) Fund, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;18. PIA High Yield Fund, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;19. PIA MBS Bond Fund, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;20. PIA Short-Term Securities Fund, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;21. Poplar Forest Cornerstone Fund, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;22. Poplar Forest Partners Fund, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;23. Pzena Emerging Markets Value Fund, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;24. Pzena International Small Cap Value Fund, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;25. Pzena International Value ETF, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;26. Pzena International Value Fund, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;27. Pzena Mid Cap Value Fund, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;28. Pzena Small Cap Value Fund, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;29. Pzena U.S. Large Cap Value ETF, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;30. Vox populi ETF, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;31. Scharf ETF, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;32. Scharf Global Opportunity ETF, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;33. Scharf Multi-Asset Opportunity Fund, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;34. Shenkman Capital Floating Rate High Income Fund, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;35. Shenkman Capital Short Duration High Income Fund, Series of Advisors Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;36. The Aegis Funds

&nbsp;&nbsp;&nbsp;&nbsp;37. Allied Asset Advisors Funds

&nbsp;&nbsp;&nbsp;&nbsp;38. Angel Oak Funds Trust

&nbsp;&nbsp;&nbsp;&nbsp;39. Angel Oak Strategic Credit Fund

&nbsp;&nbsp;&nbsp;&nbsp;40. Brookfield Infrastructure Income Fund Inc.

&nbsp;&nbsp;&nbsp;&nbsp;41. Brookfield Investment Funds

&nbsp;&nbsp;&nbsp;&nbsp;42. Buffalo Funds

&nbsp;&nbsp;&nbsp;&nbsp;43. RJ Eagle GCM Dividend Select Income ETF, Series of Carillon Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;44. RJ Eagle Municipal Income ETF, Series of Carillon Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;45. RJ Eagle Vertical Income ETF, Series of Carillon Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;46. DoubleLine Funds Trust

&nbsp;&nbsp;&nbsp;&nbsp;47. AAM Bahl & Gaynor Small/Mid Cap Income Growth ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;48. AAM Brentview Dividend Growth ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;49. AAM Crescent CLO ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;50. AAM Low Duration Preferred and Income Securities ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;51. AAM S&P 500 High Dividend Value ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;52. AAM Sawgrass U.S. Large Cap Quality Growth ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;53. AAM Sawgrass U.S. Small Cap Quality Growth ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;54. AAM SLC Low Duration Income ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;55. AAM Todd International Intrinsic Value ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;56. AAM Transformers ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;57. Acquirers Small and Micro Deep Value ETF, Series of ETF Series Solutions

------

&nbsp;&nbsp;&nbsp;&nbsp;58. Aptus April Buffer, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;59. Aptus Collared Investment Opportunity ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;60. Aptus Deferred Income ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;61. Aptus Defined Risk ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;62. Aptus Drawdown Managed Equity ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;63. Aptus Enhanced Yield ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;64. Aptus International Enhanced Yield ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;65. Aptus January Buffer ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;66. Aptus July Buffer ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;67. Aptus Laddered Buffer ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;68. Aptus Large Cap Enhanced Yield ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;69. Aptus Large Cap Upside ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;70. Aptus October Buffer ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;71. Bahl & Gaynor Dividend ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;72. Bahl & Gaynor Income Growth ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;73. Bahl & Gaynor Small Cap Dividend ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;74. BTD Capital Fund, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;75. Carbon Strategy ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;76. ClearShares OCIO ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;77. ClearShares Piton Intermediate Fixed Income Fund, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;78. ClearShares Ultra-Short Maturity ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;79. Colterpoint Net Lease Real Estate ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;80. Distillate International Fundamental Stability & Value ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;81. Distillate Small/Mid Cash Flow ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;82. Distillate U.S. Fundamental Stability & Value ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;83. ETFB Green SRI REITs ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;84. Hoya Capital High Dividend Yield ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;85. Hoya Capital Housing ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;86. LHA Market State Tactical Beta ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;87. LHA Market State Tactical Q ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;88. LHA Risk-Managed Income ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;89. McElhenny Sheffield Managed Risk ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;90. Opus Small Cap Value ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;91. The Acquirers Fund, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;92. The Brinsmere Fund - Conservative ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;93. The Brinsmere Fund - Growth ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;94. U.S. Global GO GOLD and Precious Metal Miners ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;95. U.S. Global JETS ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;96. U.S. Global Sea to Sky Cargo ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;97. U.S. Global Technology and Aerospace & Defense ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;98. US Vegan Climate ETF, Series of ETF Series Solutions

&nbsp;&nbsp;&nbsp;&nbsp;99. First American Funds Trust

&nbsp;&nbsp;&nbsp;&nbsp;100. FundX Investment Trust

&nbsp;&nbsp;&nbsp;&nbsp;101. The Glenmede Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;102. The GoodHaven Funds Trust

&nbsp;&nbsp;&nbsp;&nbsp;103. Harding, Loevner Funds, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;104. Hennessy Funds Trust

&nbsp;&nbsp;&nbsp;&nbsp;105. Horizon Funds

&nbsp;&nbsp;&nbsp;&nbsp;106. Hotchkis & Wiley Funds

&nbsp;&nbsp;&nbsp;&nbsp;107. Intrepid Capital Management Funds Trust

&nbsp;&nbsp;&nbsp;&nbsp;108. Jacob Funds Inc.

&nbsp;&nbsp;&nbsp;&nbsp;109. The Jensen Quality Growth Fund Inc.

&nbsp;&nbsp;&nbsp;&nbsp;110. Kirr, Marbach Partners Funds, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;111. Core Alternative ETF, Series of Listed Funds Trust

&nbsp;&nbsp;&nbsp;&nbsp;112. Optimized Equity Income ETF, Series of Listed Funds Trust

&nbsp;&nbsp;&nbsp;&nbsp;113. Wahed Dow Jones Islamic World ETF, Series of Listed Funds Trust

&nbsp;&nbsp;&nbsp;&nbsp;114. Wahed FTSE USA Shariah ETF, Series of Listed Funds Trust

&nbsp;&nbsp;&nbsp;&nbsp;115. LKCM Funds

&nbsp;&nbsp;&nbsp;&nbsp;116. LoCorr Investment Trust

&nbsp;&nbsp;&nbsp;&nbsp;117. MainGate Trust

&nbsp;&nbsp;&nbsp;&nbsp;118. ATAC Rotation Fund, Series of Managed Portfolio Series

&nbsp;&nbsp;&nbsp;&nbsp;119. Kensington Active Advantage Fund, Series of Managed Portfolio Series

&nbsp;&nbsp;&nbsp;&nbsp;120. Kensington Credit Opportunities ETF, Series of Managed Portfolio Series

&nbsp;&nbsp;&nbsp;&nbsp;121. Kensington Defender Fund, Series of Managed Portfolio Series

------

&nbsp;&nbsp;&nbsp;&nbsp;122. Kensington Dynamic Allocation Fund, Series of Managed Portfolio Series

&nbsp;&nbsp;&nbsp;&nbsp;123. Kensington Hedged Premium Income ETF, Series of Managed Portfolio Series

&nbsp;&nbsp;&nbsp;&nbsp;124. Kensington Managed Income Fund, Series of Managed Portfolio Series

&nbsp;&nbsp;&nbsp;&nbsp;125. LK Balanced Fund, Series of Managed Portfolio Series

&nbsp;&nbsp;&nbsp;&nbsp;126. Leuthold Core ETF, Series of Managed Portfolio Series

&nbsp;&nbsp;&nbsp;&nbsp;127. Leuthold Core Investment Fund, Series of Managed Portfolio Series

&nbsp;&nbsp;&nbsp;&nbsp;128. Leuthold Global Fund, Series of Managed Portfolio Series

&nbsp;&nbsp;&nbsp;&nbsp;129. Leuthold Grizzly Short Fund, Series of Managed Portfolio Series

&nbsp;&nbsp;&nbsp;&nbsp;130. Leuthold Select Industries ETF, Series of Managed Portfolio Series

&nbsp;&nbsp;&nbsp;&nbsp;131. Muhlenkamp Fund, Series of Managed Portfolio Series

&nbsp;&nbsp;&nbsp;&nbsp;132. Nuance Concentrated Value Fund, Series of Managed Portfolio Series

&nbsp;&nbsp;&nbsp;&nbsp;133. Nuance Mid Cap Value Fund, Series of Managed Portfolio Series

&nbsp;&nbsp;&nbsp;&nbsp;134. Olstein All Cap Value Fund, Series of Managed Portfolio Series

&nbsp;&nbsp;&nbsp;&nbsp;135. Olstein Strategic Opportunities Fund, Series of Managed Portfolio Series

&nbsp;&nbsp;&nbsp;&nbsp;136. Port Street Quality Growth Fund, Series of Managed Portfolio Series

&nbsp;&nbsp;&nbsp;&nbsp;137. Reinhart Genesis PMV Fund, Series of Managed Portfolio Series

&nbsp;&nbsp;&nbsp;&nbsp;138. Reinhart International PMV Fund, Series of Managed Portfolio Series

&nbsp;&nbsp;&nbsp;&nbsp;139. Reinhart Mid Cap PMV Fund, Series of Managed Portfolio Series

&nbsp;&nbsp;&nbsp;&nbsp;140. Tremblant Global ETF, Series of Managed Portfolio Series

&nbsp;&nbsp;&nbsp;&nbsp;141. Greenspring Income Opportunities Fund, Series of Manager Directed Portfolios

&nbsp;&nbsp;&nbsp;&nbsp;142. Hood River Emerging Markets Fund, Series of Manager Directed Portfolios

&nbsp;&nbsp;&nbsp;&nbsp;143. Hood River International Opportunity Fund, Series of Manager Directed Portfolios

&nbsp;&nbsp;&nbsp;&nbsp;144. Hood River New Opportunities Fund, Series of Manager Directed Portfolios

&nbsp;&nbsp;&nbsp;&nbsp;145. Hood River Small-Cap Growth Fund, Series of Manager Directed Portfolios

&nbsp;&nbsp;&nbsp;&nbsp;146. SanJac Alpha Core Plus Bond ETF, Series of Manager Directed Portfolios

&nbsp;&nbsp;&nbsp;&nbsp;147. SanJac Alpha Low Duration ETF, Series of Manager Directed Portfolios

&nbsp;&nbsp;&nbsp;&nbsp;148. SWP Growth & Income ETF, Series of Manager Directed Portfolios

&nbsp;&nbsp;&nbsp;&nbsp;149. Vert Global Sustainable Real Estate ETF, Series of Manager Directed Portfolios

&nbsp;&nbsp;&nbsp;&nbsp;150. Mason Capital Fund Trust

&nbsp;&nbsp;&nbsp;&nbsp;151. Matrix Advisors Funds Trust

&nbsp;&nbsp;&nbsp;&nbsp;152. Monetta Trust

&nbsp;&nbsp;&nbsp;&nbsp;153. Nicholas Equity Income Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;154. Nicholas Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;155. Nicholas II, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;156. Nicholas Limited Edition, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;157. Oaktree Asset-Backed Income Fund Inc.

&nbsp;&nbsp;&nbsp;&nbsp;158. Oaktree Diversified Income Fund Inc.

&nbsp;&nbsp;&nbsp;&nbsp;159. Permanent Portfolio Family of Funds

&nbsp;&nbsp;&nbsp;&nbsp;160. Procure ETF Trust II

&nbsp;&nbsp;&nbsp;&nbsp;161. Professionally Managed Portfolios

&nbsp;&nbsp;&nbsp;&nbsp;162. Provident Mutual Funds, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;163. Abbey Capital Futures Strategy Fund, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;164. Abbey Capital Multi-Asset Fund, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;165. Adara Smaller Companies Fund, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;166. Aquarius International Fund, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;167. Boston Partners All Cap Value Fund, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;168. Boston Partners Global Equity Fund, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;169. Boston Partners Long/Short Equity Fund, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;170. Boston Partners Long/Short Research Fund, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;171. Boston Partners Small Cap Value Fund II, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;172. Campbell Systematic Macro Fund, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;173. F/m 10-Year Investment Grade Corporate Bond ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;174. F/m 2-Year Investment Grade Corporate Bond ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;175. F/m 3-Year Investment Grade Corporate Bond ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;176. F/m Callable Tax-Free Municipal ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;177. F/m Compoundr High Yield Bond ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;178. F/m Compoundr U.S. Aggregate Bond ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;179. F/m Emerald Life Sciences Innovation ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;180. F/m Emerald Special Situations ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;181. F/m High Yield 100 ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;182. F/m Investments Large Cap Focused Fund Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;183. F/m Opportunistic Income ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;184. F/m Ultrashort Treasury Inflation-Protected Security (TIPS) ETF Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;185. F/m US Treasury 10 Year Note ETF, Series of The RBB Fund, Inc.

------

&nbsp;&nbsp;&nbsp;&nbsp;186. F/m US Treasury 12 Month Bill ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;187. F/m US Treasury 2 Year Note ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;188. F/m US Treasury 20 Year Bond ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;189. F/m US Treasury 3 Month Bill ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;190. F/m US Treasury 3 Year Note ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;191. F/m US Treasury 30 Year Bond ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;192. F/m US Treasury 5 Year Note ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;193. F/m US Treasury 6 Month Bill ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;194. F/m US Treasury 7 Year Note ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;195. Motley Fool 100 Index ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;196. Motley Fool Capital Efficiency 100 Index ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;197. Motley Fool Global Opportunities ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;198. Motley Fool Innovative Growth Factor ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;199. Motley Fool Mid-Cap Growth ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;200. Motley Fool Momentum Factor ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;201. Motley Fool Next Index ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;202. Motley Fool Small-Cap Growth ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;203. Motley Fool Value Factor ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;204. MUFG Japan Small Cap Active ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;205. Oakhurst Fixed Income Fund, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;206. SGI Dynamic Tactical ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;207. SGI Enhanced Core ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;208. SGI Enhanced Global Income ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;209. SGI Enhanced Market Leaders ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;210. SGI Global Equity Fund, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;211. SGI Peak Growth Fund, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;212. SGI Prudent Growth Fund, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;213. SGI Small Cap Core Fund, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;214. SGI U.S. Large Cap Core ETF, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;215. SGI U.S. Large Cap Equity Fund, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;216. WPG Partners Select Small Cap Value Fund, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;217. WPG Partners Small Cap Value Diversified Fund, Series of The RBB Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;218. The RBB Fund Trust

&nbsp;&nbsp;&nbsp;&nbsp;219. RBC Funds Trust

&nbsp;&nbsp;&nbsp;&nbsp;220. Rockefeller Municipal Opportunities Fund

&nbsp;&nbsp;&nbsp;&nbsp;221. SEG Partners Long/Short Equity Fund

&nbsp;&nbsp;&nbsp;&nbsp;222. Series Portfolios Trust

&nbsp;&nbsp;&nbsp;&nbsp;223. Thompson IM Funds, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;224. Tortoise Capital Series Trust

&nbsp;&nbsp;&nbsp;&nbsp;225. Bright Rock Mid Cap Growth Fund, Series of Trust for Professional Managers

&nbsp;&nbsp;&nbsp;&nbsp;226. Bright Rock Quality Large Cap Fund, Series of Trust for Professional Managers

&nbsp;&nbsp;&nbsp;&nbsp;227. CrossingBridge Low Duration High Income Fund, Series of Trust for Professional Managers

&nbsp;&nbsp;&nbsp;&nbsp;228. CrossingBridge Nordic High Income Bond Fund, Series of Trust for Professional Managers

&nbsp;&nbsp;&nbsp;&nbsp;229. CrossingBridge Responsible Credit Fund, Series of Trust for Professional Managers

&nbsp;&nbsp;&nbsp;&nbsp;230. CrossingBridge Ultra-Short Duration Fund, Series of Trust for Professional Managers

&nbsp;&nbsp;&nbsp;&nbsp;231. RiverPark Strategic Income Fund, Series of Trust for Professional Managers

&nbsp;&nbsp;&nbsp;&nbsp;232. Dearborn Partners Rising Dividend Fund, Series of Trust for Professional Managers

&nbsp;&nbsp;&nbsp;&nbsp;233. Jensen Global Quality Growth Fund, Series of Trust for Professional Managers

&nbsp;&nbsp;&nbsp;&nbsp;234. Jensen Quality MidCap Fund, Series of Trust for Professional Managers

&nbsp;&nbsp;&nbsp;&nbsp;235. Rockefeller Climate Solutions Fund, Series of Trust for Professional Managers

&nbsp;&nbsp;&nbsp;&nbsp;236. Rockefeller US Small Cap Core Fund, Series of Trust for Professional Managers

&nbsp;&nbsp;&nbsp;&nbsp;237. Wall Street EWM Funds Trust

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;To the best of Registrant's knowledge, the directors and executive officers of Quasar Distributors, LLC are as follows:

---

| | | |
|:---|:---|:---|
| **Name** | **Address** | **Position with Quasar** |
| Teresa Cowan | 190 Middle Street, Suite 301, Portland, Maine 04101 | President/Manager |
| Chris Lanza | 190 Middle Street, Suite 301, Portland, Maine 04101 | Vice President |
| Kate Macchia | 190 Middle Street, Suite 301, Portland, Maine 04101 | Vice President |
| Susan L. LaFond | 190 Middle Street, Suite 301, Portland, Maine 04101 | Vice President and Chief Compliance Officer and Treasurer |
| Gabriel E. Edelman | 190 Middle Street, Suite 301, Portland, Maine 04101 | Secretary |
| Weston Sommers | 190 Middle Street, Suite 301, Portland, Maine 04101 | Financial and Operations Principal and Chief Financial Officer |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.

**Item 33. Location of Accounts and Records**

The books, accounts and other documents required by Section 31(a) under the Investment Company Act of 1940, as amended, and the rules promulgated thereunder will be maintained at the offices of:

Angel Oak Capital Advisors, LLC, 980 Hammond Drive, Suite 200, Atlanta, Georgia 30328 (records relating to its function as investment adviser to the series of the Trust).

U.S. Bancorp Fund Services, LLC, d/b/a U.S. Bank Global Fund Services, 615 East Michigan Street, Milwaukee, Wisconsin 53202 (records relating to its function as administrator, transfer agent and dividend disbursing agent).

U.S. Bank National Association, 1555 North River Center Drive, Suite 302, Milwaukee, Wisconsin, 53212 (records relating to its function as custodian).

**Item 34. Management Services**

Not applicable.

**Item 35. Undertakings**

None.

------

**SIGNATURES**

Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this registration statement under rule 485(b) under the Securities Act and has duly caused this Registration Statement to be signed below on its behalf by the undersigned, duly authorized, in the City of Atlanta and the State of Georgia on May 29, 2026.

**Angel Oak Funds Trust**

By:&nbsp;&nbsp;&nbsp;&nbsp;<u>/s/ Ward Bortz&nbsp;&nbsp;&nbsp;&nbsp;</u> 

&nbsp;&nbsp;&nbsp;&nbsp;Ward Bortz

&nbsp;&nbsp;&nbsp;&nbsp;President

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities indicated as of May 29, 2026.

---

| | |
|:---|:---|
| <u>Signature</u> | <u>Title</u> |
| Alvin R. Albe, Jr.\* | Trustee |
| Alvin R. Albe, Jr. |  |
| Ira P. Cohen\* | Trustee |
| Ira P. Cohen |  |
| Keith M. Schappert\* | Trustee |
| Keith M. Schappert |  |
| Andrea N. Mullins\* | Trustee |
| Andrea N. Mullins |  |
| Clayton Triick\* | Trustee |
| Clayton Triick |  |
| /s/ Ward Bortz | President and Principal Executive Officer |
| Ward Bortz |  |
| /s/ Nilesh Likhite | Treasurer, Principal Financial Officer and Principal Accounting Officer |
| Nilesh Likhite |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;\*By: <u>/s/ Matthew Barsamian</u>&nbsp;&nbsp;&nbsp;&nbsp;<br>Matthew Barsamian<br>Attorney-in-Fact pursuant to <br>Powers of Attorney | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;\*By: <u>/s/ Matthew Barsamian</u>&nbsp;&nbsp;&nbsp;&nbsp;<br>Matthew Barsamian<br>Attorney-in-Fact pursuant to <br>Powers of Attorney |

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**Index to Exhibits**

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| | |
|:---|:---|
| **<u>Exhibit No.</u>** | **<u>Description</u>** |
| (d)(1) | <u>[Investment Advisory Agreement (mutual funds)](d1invadvagmtmutualfunds10-.htm)</u> |
| (d)(2) | <u>[Investment Advisory Agreement (ETFs)](d2invadvagmtetfs12-2025.htm)</u> |
| (h)(2) | <u>[Fee Waiver Agreement](h2feewaiveragreement.htm)</u> |
| (h)(3) | <u>[Amended and Restated Operating Expense Limitation Agreement (mutual funds)](h3arexplimitagmtmutualfund.htm)</u> |
| (h)(4) | <u>[Amended and Restated Operating Expense Limitation Agreement (ETFs)](h4arexplimitagmtetfs2-2026.htm)</u> |
| (h)(5) | <u>[Form of Fund of Funds Investment Agreement](h5formoffundoffundsinvestm.htm)</u> |
| (i) | <u>[Opinion and Consent of Counsel](aoftdechertopinionandconse.htm)</u> |
| (j) | <u>[Consent of Independent Registered Public Accounting Firm](angeloakauditorconsent5-20.htm)</u> |

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## Ex-99.(D)(1)

**ANGEL OAK FUNDS TRUST INVESTMENT ADVISORY AGREEMENT**

**with**

**ANGEL OAK CAPITAL ADVISORS, LLC**

**THIS INVESTMENT ADVISORY AGREEMENT** is made as of the 1st day of October, 2025 by and between Angel Oak Funds Trust, a Delaware statutory trust (hereinafter called the "Trust"), on behalf of the series of the Trust indicated on Schedule A, which may be amended from time to time, (each a "Fund", and together the "Funds") and Angel Oak Capital Advisors, LLC, a Delaware limited liability corporation (hereinafter called the "Adviser").

**WITNESSETH:**

**WHEREAS,** the Trust is an open-end management investment company and will be registered as such under the Investment Company Act of 1940, as amended (the "Investment Company Act"), prior to the commencement of operations of the Funds; and

**WHEREAS,** each Fund is a series of the Trust having separate assets and liabilities; and

**WHEREAS,** the Adviser is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the "Advisers Act") and is engaged in the business of supplying investment advice as an independent contractor; and

**WHEREAS,** the Trust desires to retain the Adviser to render certain investment management and services to the Funds pursuant to the terms and provisions of this Agreement, and the Adviser desires to furnish said advice and services; and

**WHEREAS,** the Adviser may retain sub-advisers (the "Sub-Advisers") to render portfolio management services to any of the Funds pursuant to Investment Sub-Advisory Agreements between the Adviser and each Sub-Adviser.

**NOW, THEREFORE,** in consideration of the covenants and the mutual promises hereinafter set forth, the parties to this Agreement, intending to be legally bound hereby, mutually agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;**1.APPOINTMENT OF ADVISER.** The Trust hereby employs the Adviser and the Adviser hereby accepts such employment, to render investment advice and related services, including the oversight of the portfolio management services to be rendered by any Sub-Advisers and the purchase and sale of securities held in the portfolios of the Funds, with respect to the assets of the Funds for the period and on the terms set forth in this Agreement, subject to the supervision and direction of the Trust's Board of Trustees (the "Board of Trustees" or "Trustees").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.DUTIES OF ADVISER**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;**GENERAL DUTIES.** The Adviser shall act as investment adviser to the Funds and shall supervise investments of the Funds on behalf of the Funds in accordance with the investment objectives, policies and restrictions of the Funds as set forth in the Funds' and Trust's governing documents, including, without limitation, the Trust's Declaration of Trust and By-Laws; the Funds' prospectus, statement of additional information and undertakings; and such other limitations, policies and procedures

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as the Trustees may impose from time to time in writing to the Adviser (collectively, the "Investment Policies"). In providing such services, the Adviser may also manage and oversee delegated sub-advisory services to be rendered by the Sub- Advisers to any of the Funds and shall at all times adhere to the provisions and restrictions contained in the federal securities laws, applicable state securities laws, the Internal Revenue Code, the Uniform Commercial Code and other applicable law.

Without limiting the generality of the foregoing, the Adviser shall: (i) furnish the Funds with advice and recommendations with respect to the investment of the Funds' assets and the purchase and sale of portfolio securities for the Funds, including the taking of such steps as may be necessary to implement such advice and recommendations *(i.e.,* placing the orders); (ii) manage and oversee the investments of the Funds, subject to the ultimate supervision and direction of the Trust's Board of Trustees; (iii) vote proxies for the Funds, file ownership reports under Section 13 of the Securities Exchange Act of 1934 (the "1934 Act") for the Funds, and take other actions on behalf of the Funds; (iv) maintain the books and records required to be maintained by the Funds except to the extent arrangements have been made for such books and records to be maintained by the administrator or another agent of the Funds; (v) furnish reports, statements and other data on securities, economic conditions and other matters related to the investment of the Funds' assets which the Funds' administrator or distributor or the officers of the Trust may reasonably request; (vi) render to the Trust's Board of Trustees such periodic and special reports with respect to each Fund's investment activities as the Board may reasonably request; and (vii) subject to the authority of the Trust, shareholder approval and exemptive relief sought from the U.S. Securities and Exchange Commission under Section 15(a) and Rule 18f-2 of the Investment Company Act, have full authority to retain Sub-Advisers to provide certain investment advisory services to the Funds noted herein, and may delegate certain of its duties hereunder to a Sub-Adviser and pay the Sub-Adviser a portion of the compensation received by the Adviser hereunder; provided, however, that the Adviser shall remain fully liable for all of its obligations under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;**BROKERAGE.** The Adviser shall be responsible for, but may delegate, decisions to buy and sell securities for the Funds, for broker-dealer selection, and for negotiation of brokerage commission rates, provided that the Adviser shall not direct orders to an affiliated person of the Adviser without general prior authorization to use such affiliated broker or dealer from the Trust's Board of Trustees. In selecting a broker-dealer to execute each particular transaction, the Adviser may rely on a list of Adviser-approved brokers or dealers selected based on criteria, including: the broker's integrity, ethics and trustworthiness regarding any relations and agreements with the Adviser and its clients; the broker's ability to generate investment ideas that consistently lead to value creation for the Adviser's clients; the broker's speed and quality of trade execution to minimize market price impact and maximize value for the Adviser's clients; the broker's capability to provide services at the lowest possible cost to the Adviser's clients; availability of and the Adviser's direct access to broker research analysts and strategists; sufficient, competent broker personnel and support staff; the quality, depth and effectiveness of the broker's investment research; the quality and effectiveness of trading ideas and their evaluation after-the-fact; the timely acknowledgement and correction of trade errors; the efficient clearance and settlement of trades; and the broker's overall ability to provide best execution for the Adviser's clients. The price to the Funds in any transaction may be less favorable than that available from another broker-dealer if the difference is reasonably justified by other aspects of the portfolio execution services offered.

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good faith that such amount of commission was reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or the Adviser's overall responsibilities with respect to the Trust. Subject to the same policies and legal provisions, the Adviser is further authorized to allocate the orders placed by it on behalf of the Funds to such brokers or dealers who also provide research or statistical material, or other services, to the Trust, the Adviser, or any affiliate of either. Such allocation shall be in such amounts and proportions as the Adviser shall dete1mine, and the Adviser shall report on such allocations regularly to the Trust, indicating the broker-dealers to whom such allocations have been made and the basis therefore.

On occasions when the Adviser deems the purchase or sale of a security to be in the best interest of a Fund as well as of other clients, the Adviser, to the extent permitted by applicable laws and regulations, may aggregate the securities to be so purchased or sold in order to obtain the most favorable price or lower brokerage commissions and the most efficient execution. In such event, allocation of the securities so purchased or sold, as well as the expenses incurred in the transaction, will be made by the Adviser in the manner it considers to be the most equitable and consistent with its fiduciary obligations to the Fund and to such other clients.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.REPRESENTATIONS OF THE ADVISER**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)The Adviser shall use its best judgment and efforts in rendering the advice and services to the Funds as contemplated by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)The Adviser shall maintain all licenses and registrations necessary to perform its duties hereunder in good order.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)The Adviser shall conduct its operations at all times in conformance with the Advisers Act, the Investment Company Act, and any other applicable state and/or self-regulatory organization regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)The Adviser shall maintain errors and omissions insurance in an amount at least equal to that disclosed to the Board of Trustees in connection with their approval of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.INDEPENDENT CONTRACTOR.** The Adviser shall, for all purposes herein, be deemed to be an independent contractor, and shall, unless otherwise expressly provided and authorized to do so, have no authority to act for or represent the Trust or the Funds in any way, or in any way be deemed an agent for the Trust or for the Funds. It is expressly understood and agreed that the services to be rendered by the Adviser to the Funds under the provisions of this Agreement are not to be deemed exclusive, and the Adviser shall be free to render similar or different services to others so long as its ability to render the services provided for in this Agreement shall not be impaired thereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.ADVISER'S PERSONNEL**

&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;The Adviser shall, at its own expense, maintain such staff and employ or retain such personnel and consult with such other persons as it shall from time to time dete1mine to be necessary to the performance of its obligations under this Agreement. Without limiting the generality of the foregoing, the staff and personnel of the Adviser shall be deemed to include persons employed or retained by the Adviser to furnish statistical information, research, and other factual information, advice regarding economic factors and trends, information with respect to technical and scientific developments, and such other information, advice and assistance as the Adviser or the Trust's Board of Trustees may desire and reasonably request and any compliance staff and personnel required by the Adviser.

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&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;As stated above, at its own expense, the Adviser may carry out any of its obligations under this Agreement by retaining, subject to the direction and control of the Board, one or more Sub- Advisers. The Adviser may with respect to a Fund: (i) evaluate, select, and recommend Sub- Advisers to manage all or a portion of the Fund's assets; (ii) allocate and, when appropriate, reallocate the Fund's assets among multiple Sub-Advisers; (iii) terminate any Fund Sub-Adviser; (iv) monitor and evaluate each Sub-Adviser's performance; and (v) implement procedures reasonably designed to seek to ensure that Sub-Advisers comply with the Fund's investment objective, policies, and restrictions. Despite the Adviser's ability to retain Sub-Advisers to perform certain duties set forth in Section 2 of this Agreement, the Adviser shall retain overall responsibility for the general management and investment of each Fund's assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.EXPENSES**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)With respect to the operation of the Funds, the Adviser shall be responsible for: (i) providing the personnel, office space and equipment reasonably necessary for the operation of the Fund; (ii) the expenses of printing and distributing extra copies of each Fund's prospectus, statement of additional information, and sales and advertising materials (but not the legal, auditing or accounting fees attendant thereto) to prospective investors (but not to existing shareholders) to the extent such expenses are not covered by any applicable plan adopted pursuant to Rule 12b-1 under the Investment Company Act (each, a "12b-1 Plan"); (iii) the costs of any special Board of Trustees meetings or shareholder meetings convened for the primary benefit of the Adviser; (iv) the fees of any Sub-Advisers; and (v) any costs of liquidating or reorganizing a Fund (unless such cost is otherwise allocated by the Board of Trustees). If the Adviser has agreed to limit the operating expenses of a Fund, the Adviser also shall be responsible on a monthly basis for any operating expenses that exceed the agreed upon expense limit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Each Fund is responsible for and has assumed the obligation for payment of all of its expenses, other than as stated in Subparagraph 6(a) above, including but not limited to: fees and expenses incurred in connection with the issuance, registration and transfer of its shares; brokerage and commission expenses; all expenses of transfer, receipt, safekeeping, servicing and accounting for the cash, securities and other property of the Trust for the benefit of each Fund including all fees and expenses of its custodian, shareholder services agent and accounting services agent; interest charges on any borrowings; costs and expenses of pricing and calculating its daily net asset value and of maintaining its books of account required under the Investment Company Act; taxes, if any; a pro rata portion of expenditures in connection with meetings of the Fund's shareholders and the Trust's Board of Trustees that are properly payable by a Fund; salaries and expenses of officers of the Trust, including without limitation the Trust's Chief Compliance Officer, and fees and expenses of members of the Trust's Board of Trustees or members of any advisory board or committee who are not members of, affiliated with or interested persons of the Adviser; insurance premiums on property or personnel of each Fund which inure to its benefit, including liability and fidelity bond insurance; the cost of preparing and printing reports, proxy statements, prospectuses and statements of additional information of the Funds or other communications for distribution to existing shareholders which are covered by any 12b-1 Plan; legal, auditing and accounting fees; all or any portion of trade association dues or educational program expenses determined appropriate by the Board of Trustees; fees and expenses (including legal fees) of registering and maintaining registration of its shares for sale under federal and applicable state and foreign securities laws; all expenses of maintaining and servicing shareholder accounts, including all charges for transfer, shareholder recordkeeping, dividend disbursing, redemption, and other agents for the benefit of the Funds, if any; and all other charges and costs of its operation plus any extraordinary and non-recurring expenses, except as herein otherwise prescribed.

&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;The Adviser may voluntarily or contractually absorb certain Fund expenses.

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&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;To the extent the Adviser incurs any costs by assuming expenses which are an obligation of a Fund's as set forth herein, the Fund shall promptly reimburse the Adviser for such costs and expenses, except to the extent the Adviser has otherwise agreed to bear such expenses. To the extent the services for which a Fund is obligated to pay are performed by the Adviser, the Adviser shall be entitled to recover from such Fund to the extent of the Adviser's actual costs for providing such services. In determining the Adviser's actual costs, the Adviser may take into account an allocated portion of the salaries and overhead of personnel performing such services.

&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;The Adviser may not pay fees in addition to any Fund distribution or servicing fees to financial intermediaries, including without limitation banks, broker-dealers, financial advisors, or pension administrators, for sub-administration, sub-transfer agency or any other shareholder servicing or distribution services associated with shareholders whose shares are held in omnibus or other group accounts, except with the prior authorization of the Trust's Board of Trustees. Where such arrangements are authorized by the Trust's Board of Trustees, the Adviser shall report regularly to the Trust on the amounts paid and the relevant financial institutions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.INVESTMENT ADVISORY AND MANAGEMENT FEE**

&nbsp;&nbsp;&nbsp;&nbsp;(a)Each Fund shall pay to the Adviser, and the Adviser agrees to accept, as full compensation for all services furnished or provided to such Fund pursuant to this Agreement, an annual management fee at the rate set forth in Schedule A to this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)The management fee shall be accrued daily by the Fund and paid to the Adviser on the first business day of the succeeding month.

&nbsp;&nbsp;&nbsp;&nbsp;(c)The initial fee under this Agreement shall be payable on the first business day of the first month following the effective date of this Agreement and shall be prorated as set forth below. If this Agreement is terminated prior to the end of any month, the fee to the Adviser shall be prorated for the portion of any month in which this Agreement is in effect which is not a complete month according to the proportion which the number of calendar days in the month during which the Agreement is in effect bears to the number of calendar days in the month, and shall be payable within ten (10) days after the date of termination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)The fee payable to the Adviser under this Agreement will be reduced to the extent of any receivable owed by the Adviser to the Fund and as required under any expense limitation applicable to a Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)The Adviser voluntarily may reduce any portion of the compensation or reimbursement of expenses due to it pursuant to this Agreement and may agree to make payments to limit the expenses which are the responsibility of a Fund under this Agreement. Any such reduction or payment shall be applicable only to such specific reduction or payment and shall not constitute an agreement to reduce any future compensation or reimbursement due to the Adviser hereunder or to continue future payments. Any such reduction will be agreed to prior to accrual of the related expense or fee and will be estimated daily and reconciled and paid on a monthly basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <br>

Any such reimbursement is also contingent upon Board of Trustees review and approval at time the reimbursement is made. Such reimbursement may not be paid prior to the Fund's payment of current ordinary operating expenses.

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&nbsp;&nbsp;&nbsp;&nbsp;(g)The Adviser may agree not to require payment of any portion of the compensation or reimbursement of expenses otherwise due to it pursuant to this Agreement. Any such agreement shall be applicable only with respect to the specific items covered thereby and shall not constitute an agreement not to require payment of any future compensation or reimbursement due to the Adviser hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.NO SHORTING; NO BORROWING.** The Adviser agrees that neither it nor any of its officers or employees shall take any short position in the shares of any Fund. This prohibition shall not prevent the purchase of such shares by any of the officers or employees of the Adviser or any trust, pension, profit-sharing or other benefit plan for such persons or affiliates thereof, at a price not less than the net asset value thereof at the time of purchase, as allowed pursuant to rules promulgated under the Investment Company Act. The Adviser agrees that neither it nor any of its officers or employees shall borrow from a Fund or pledge or use a Fund's assets in connection with any borrowing not directly for the Fund's benefit. For this purpose, failure to pay any amount due and payable to the Fund for a period of more than thirty (30) days shall constitute a borrowing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.CONFLICTS WITH TRUST'S GOVERNING DOCUMENTS AND APPLICABLE**

**LAWS.** Nothing herein contained shall be deemed to require the Trust or a Fund to take any action contrary to the Trust's Declaration of Trust, By-Laws, or any applicable statute or regulation, or to relieve or deprive the Board of Trustees of the Trust of its responsibility for and control of the conduct of the affairs of the Trust and the Funds. In this connection, the Adviser acknowledges that the Trustees retain ultimate plenary authority over the Funds and may take any and all actions necessary and reasonable to protect the interests of shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.REPORTS AND ACCESS.** The Adviser agrees to supply such information to the Funds' administrator and to permit such compliance inspections by the Funds' administrator as shall be reasonably necessary to permit the administrator to satisfy its obligations and respond to the reasonable requests of the Board of Trustees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**11.ADVISER'S LIABILITIES AND INDEMNIFICATION**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)The Adviser shall have responsibility for the accuracy and completeness (and liability for the lack thereof) of the statements in the Funds' offering materials (including the prospectus, the statement of additional information, advertising and sales materials), except for information supplied by the administrator or the Trust or another third party for inclusion therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)The Adviser shall be liable to the Funds for any loss (including brokerage charges) incurred by a Fund as a result of any improper investment made by the Adviser in contradiction of the Investment Policies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)In the absence of willful misfeasance, bad faith, gross negligence, or reckless disregard of the obligations or duties hereunder on the part of the Adviser, the Adviser shall not be subject to liability to the Trust or the Funds or to any shareholder of the Funds for any act or omission in the course of, or connected with, rendering services hereunder or for any losses that may be sustained in the purchase, holding or sale of any security by the Funds. Notwithstanding the foregoing, federal securities laws and certain state laws impose liabilities under certain circumstances on persons who have acted in good faith, and therefore nothing herein shall in any way constitute a waiver or limitation of any rights which the Trust, the Funds or any shareholder of the Funds may have under any federal securities law or state law.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)Each party to this Agreement shall indemnify and hold harmless the other party and the shareholders, directors, officers and employees of the other party (any such person, an "Indemnified Party") against any loss, liability, claim, damage or expense (including the reasonable cost of investigating and defending any alleged loss, liability, claim, damage or expenses and reasonable counsel fees incurred in connection therewith) arising out of the Indemnified Party's performance or non-performance of any duties under this Agreement provided, however, that nothing herein shall be deemed to protect any Indemnified Party against any liability to which such Indemnified Party would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of duties hereunder or by reason of reckless disregard of obligations and duties under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)No provision of this Agreement shall be construed to protect any Trustee or officer of the Trust, or officer of the Adviser, from liability in violation of Sections 17(h) and (i) of the Investment Company Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**12.NON-EXCLUSIVITY; TRADING FOR ADVISER'S OWN ACCOUNT.** The Trust's

employment of the Adviser is not an exclusive arrangement. The Trust may from time to time employ other individuals or entities to furnish it with the services provided for herein. Likewise, the Adviser may act as investment adviser for any other person, and shall not in any way be limited or restricted from buying, se11ing or trading any securities for its or their own accounts or the accounts of others for whom it or they may be acting, provided, however, that the Adviser expressly represents that it will undertake no activities which will adversely affect the performance of its obligations to the Funds under this Agreement; and provided further that the Adviser will adhere to a code of ethics governing employee trading and trading for proprietary accounts that conforms to the requirements of the Investment Company Act and the Advisers Act and has been approved by the Trust's Board of Trustees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.TRANSACTIONS WITH OTHER INVESTMENT ADVISERS.** The Adviser is not an

affiliated person of any investment adviser responsible for providing advice with respect to any other series of the Trust, or of any promoter, underwriter, officer, director, member of an advisory board or employee of any other series of the Trust. The Adviser shall not consult with the investment adviser of any other series of the Trust concerning transactions for the Funds or any other series of the Trust.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**14.TERM**

This Agreement shall become effective with respect to a Fund on such date indicated on Schedule A and shall remain in effect with respect to such Fund for a period of two (2) years, unless sooner terminated as hereinafter provided. This Agreement shall continue in effect thereafter for additional periods not exceeding one year so long as such continuation is approved at least annually by: (i) the Board of Trustees of the Trust or by the vote of a majority of the outstanding voting securities of each Fund and (ii) the vote of a majority of the Trustees of the Trust who are not parties to this Agreement nor interested persons thereof, cast in person at a meeting called for the purpose of voting on such approval. The terms "majority of the outstanding voting securities" and "interested persons" shall have the meanings as set forth in the Investment Company Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**15.RIGHT TO USE NAME**

The Adviser warrants that the Funds' names are not deceptive or misleading and that the Adviser has rights to any distinctive names used by each Fund. Each Fund acknowledges that its use of any distinctive name is derivative of its relationship with the Adviser and/or Sub-Adviser as the case may be. Each Fund may

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use the name connected with the Adviser or Sub-Adviser or any name derived from or using the name of the Adviser or Sub-Adviser only for so long as this Agreement or any extension, renewal or amendment hereof remains in effect. Within 60 days from such time as this Agreement shall no longer be in effect, the Funds shall cease to use such names or any other name connected with the Adviser or Sub-Adviser.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**16.TERMINATION; NO ASSIGNMENT**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)This Agreement may be terminated by the Trust on behalf of a Fund at any time without payment of any penalty, by the Board of Trustees of the Trust or by vote of a majority of the outstanding voting securities of a Fund, upon 60 days' written notice to the Adviser, and by the Adviser upon 60 days' written notice to the Fund. In the event of a termination, the Adviser shall cooperate in the orderly transfer of the Funds' affairs and, at the request of the Board of Trustees, transfer any and all books and records of the Fund maintained by the Adviser on behalf of the Funds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)This Agreement shall terminate automatically in the event of any transfer or assignment thereof, as defined in the Investment Company Act.

&nbsp;&nbsp;&nbsp;&nbsp;**17.NONPUBLIC PERSONAL INFORMATION.** Notwithstanding any prov1s10n herein to the contrary, the Adviser agrees on behalf of itself and its managers, members, officers, and employees: (1) to treat confidentially and as proprietary information of the Trust (a) all records and other information relative to the Funds' prior, present, or potential shareholders (and clients of said shareholders) and (b) any Nonpublic Personal Information, as defined under Section 248.3(t) of Regulation S-P ("Regulation S-P"), promulgated under the Gramm-Leach- Bliley Act (the "G-L-B Act"); and (2) except after prior notification to and approval in writing by the Trust, not to use such records and information for any purpose other than the performance of its responsibilities and duties hereunder, or as otherwise permitted by Regulation S-P or the G-L-B Act, and if in compliance therewith, the privacy policies adopted by the Trust and communicated in writing to the Adviser. Such written approval shall not be unreasonably withheld by the Trust and may not be withheld where the Adviser may be exposed to civil or criminal contempt or other proceedings for failure to comply after being requested to divulge such information by duly constituted authorities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**18.ANTI-MONEY LAUNDERING COMPLIANCE.** The Adviser acknowledges that, in compliance with the Bank Secrecy Act, as amended, the USA PATRIOT Act, and any implementing regulations thereunder (together, "AML Laws"), the Trust has adopted an Anti-Money Laundering Policy. The Adviser agrees to comply with the Trust's Anti-Money Laundering Policy and the AML Laws, as the same may apply to the Adviser, now and in the future. The Adviser further agrees to provide to the Trust and/or the administrator such reports, certifications and contractual assurances as may be reasonably requested by the Trust. The Trust may disclose information regarding the Adviser to governmental and/or regulatory or self-regulatory authorities to the extent required by applicable law or regulation and may file reports with such authorities as may be required by applicable law or regulation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**19.CERTIFICATIONS; DISCLOSURE CONTROLS AND PROCEDURES.** The Adviser

acknowledges that, in compliance with the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), and the implementing regulations promulgated there under, the Trust and the Funds are required to make certain certifications and have adopted disclosure controls and procedures. To the extent reasonably requested by the Trust, the Adviser agrees to use its best efforts to assist the Trust and the Funds in complying with the Sarbanes-Oxley Act and implementing the Trust's disclosure controls and procedures. The Adviser agrees to infom1 the Trust of any material development related to the Funds that the Adviser reasonably believes is relevant to the Funds' certification obligations under the Sarbanes-Oxley Act.

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&nbsp;&nbsp;&nbsp;&nbsp;**20.SEVERABILITY.** If any provision of this Agreement shall be held or made invalid by a court decision, statute or rule, or shall be otherwise rendered invalid, the remainder of this Agreement shall not be affected thereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**21.CAPTIONS.** The captions in this Agreement are included for convenience of reference only and in no way define or limit any of the provisions hereof or otherwise affect their construction or effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**22.GOVERNING LAW.** This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware without giving effect to the conflict of laws principles thereof; provided that nothing herein shall be construed to preempt, or to be inconsistent with, any federal law, regulation or rule, including the Investment Company Act and the Advisers Act and any rules and regulations promulgated thereunder.

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**IN WITNESS WHEREOF,** the parties hereto have caused this Agreement to be duly executed by their duly authorized officers, all on the day and year first above written.

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| | |
|:---|:---|
| **ANGEL OAK FUNDS TRUST**<br>on behalf of each series of the Trust listed on Schedule A | **ANGEL OAK CAPITAL ADVISORS, LLC** |
| By: <u>/s/ Chase Eldredge</u> | By: <u>/s/ Chase Eldredge</u> |
| Name: <u>Chase Eldredge</u> | Name: <u>Chase Eldredge</u> |
| Title: <u>Chief Compliance Officer</u> | Title: <u>Chief Compliance Officer</u> |

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**SCHEDULE A**

**Advisory Fee Schedule**

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| | | |
|:---|:---|:---|
| **Fund** | **Annual Advisory Fee** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Effective Date** |
| Angel Oak Multi-Strategy Income Fund | 0.89% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;October 1, 2025 |
| Angel Oak UltraShort Income Fund | 0.44% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;October 1, 2025 |

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## Ex-99.(D)(2)

**ANGEL OAK FUNDS TRUST INVESTMENT ADVISORY AGREEMENT**

**with**

**ANGEL OAK CAPITAL ADVISORS, LLC**

**THIS INVESTMENT ADVISORY AGREEMENT** is made as of the 19th day of December, 2025 by and between Angel Oak Funds Trust, a Delaware statutory trust (hereinafter called the "Trust"), on behalf of the series of the Trust indicated on Schedule A, which may be amended from time to time (each a "Fund", and together the "Funds"), and Angel Oak Capital Advisors, LLC, a Delaware limited liability corporation (hereinafter called the "Adviser").

**WITNESSETH:**

**WHEREAS,** the Trust is an open-end management investment company and was registered as such under the Investment Company Act of 1940, as amended (the "Investment Company Act"), prior to the commencement of operations of the Funds; and

**WHEREAS,** each Fund is a series of the Trust having separate assets and liabilities; and

**WHEREAS,** the Adviser is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and is engaged in the business of supplying investment advice as an independent contractor; and

**WHEREAS,** the Trust desires to retain the Adviser to render certain investment management and services to the Funds pursuant to the terms and provisions of this Agreement, and the Adviser desires to furnish said advice and services;

**WHEREAS,** the Adviser agrees to assume certain additional expenses of the Funds pursuant to the Agreement; and

**WHEREAS**, the Adviser may retain sub-advisers (the "Sub-Advisers") to render portfolio management services to any of the Funds pursuant to Investment Sub-Advisory Agreements between the Adviser and each Sub-Adviser.

**NOW, THEREFORE,** in consideration of the covenants and the mutual promises hereinafter set forth, the parties to this Agreement, intending to be legally bound hereby, mutually agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;**1.APPOINTMENT OF ADVISER.** The Trust hereby employs the Adviser and the Adviser hereby accepts such employment, to render investment advice and related services, including the oversight of the portfolio management services to be rendered by any Sub-Advisers and the purchase and sale of securities held in the portfolios of the Funds, with respect to the assets of the Funds for the period and on the terms set forth in this Agreement, subject to the supervision and direction of the Trust's Board of Trustees (the "Board of Trustees" or "Trustees").

&nbsp;&nbsp;&nbsp;&nbsp;**2.DUTIES OF ADVISER**

&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;GENERAL DUTIES.** The Adviser shall act as investment adviser to the Funds and shall supervise investments of the Funds on behalf of the Funds in accordance with the investment objectives, policies and restrictions of the Funds as set forth in the Funds' and Trust's governing documents,

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including, without limitation, the Trust's Declaration of Trust and By-Laws; the Funds' prospectus, statement of additional information and undertakings; and such other limitations, policies and procedures as the Trustees may impose from time to time in writing to the Adviser (collectively, the "Investment Policies"). In providing such services, the Adviser may also manage and oversee delegated sub-advisory services to be rendered by the Sub-Advisers to any of the Funds and shall at all times adhere to the provisions and restrictions contained in the federal securities laws, applicable state securities laws, the Internal Revenue Code, the Uniform Commercial Code and other applicable law.

Without limiting the generality of the foregoing, the Adviser shall: (i) furnish the Funds with advice and recommendations with respect to the investment of the Funds' assets and the purchase and sale of portfolio securities for the Funds, including the taking of such steps as may be necessary to implement such advice and recommendations (*i.e.*, placing the orders); (ii) manage and oversee the investments of the Funds, subject to the ultimate supervision and direction of the Trust's Board of Trustees; (iii) vote proxies for the Funds, file ownership reports under Section 13 of the Securities Exchange Act of 1934 (the "1934 Act") for the Funds, and take other actions on behalf of the Funds; (iv) maintain the books and records required to be maintained by the Funds except to the extent arrangements have been made for such books and records to be maintained by the administrator or another agent of the Funds; (v) furnish reports, statements and other data on securities, economic conditions and other matters related to the investment of the Funds' assets which the Funds' administrator or distributor or the officers of the Trust may reasonably request;

&nbsp;&nbsp;&nbsp;&nbsp;(vi) render to the Trust's Board of Trustees such periodic and special reports with respect to each Fund's investment activities as the Board may reasonably request; and (vii) subject to the authority of the Trust, shareholder approval and exemptive relief sought from the U.S. Securities and Exchange Commission under Section 15(a) and Rule 18f-2 of the Investment Company Act, have full authority to retain Sub-Advisers to provide certain investment advisory services to the Funds noted herein, and may delegate certain of its duties hereunder to a Sub-Adviser and pay the Sub-Adviser a portion of the compensation received by the Adviser hereunder; provided, however, that the Adviser shall remain fully liable for all of its obligations under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;BROKERAGE.** The Adviser shall be responsible for, but may delegate, decisions to buy and sell securities for the Funds, for broker-dealer selection, and for negotiation of brokerage commission rates, provided that the Adviser shall not direct orders to an affiliated person of the Adviser without general prior authorization to use such affiliated broker or dealer from the Trust's Board of Trustees. In selecting a broker-dealer to execute each particular transaction, the Adviser may rely on a list of Adviser-approved brokers or dealers selected based on criteria, including: the broker's integrity, ethics and trustworthiness regarding any relations and agreements with the Adviser and its clients; the broker's ability to generate investment ideas that consistently lead to value creation for the Adviser's clients; the broker's speed and quality of trade execution to minimize market price impact and maximize value for the Adviser's clients; the broker's capability to provide services at the lowest possible cost to the Adviser's clients; availability of and the Adviser's direct access to broker research analysts and strategists; sufficient, competent broker personnel and support staff; the quality, depth and effectiveness of the broker's investment research; the quality and effectiveness of trading ideas and their evaluation after-the-fact; the timely acknowledgement and correction of trade errors; the efficient clearance and settlement of trades; and the broker's overall ability to provide best execution for the Adviser's clients. The price to the Funds in any transaction may be less favorable than that available from another broker-dealer if the difference is reasonably justified by other aspects of the portfolio execution services offered.

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commission for effecting a portfolio transaction in excess of the amount of commission another broker or dealer would have charged for effecting that transaction, if the Adviser determines in good faith that such amount of commission was reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or the Adviser's overall responsibilities with respect to the Trust. Subject to the same policies and legal provisions, the Adviser is further authorized to allocate the orders placed by it on behalf of the Funds to such brokers or dealers who also provide research or statistical material, or other services, to the Trust, the Adviser, or any affiliate of either. Such allocation shall be in such amounts and proportions as the Adviser shall determine, and the Adviser shall report on such allocations regularly to the Trust, indicating the broker-dealers to whom such allocations have been made and the basis therefore.

On occasions when the Adviser deems the purchase or sale of a security to be in the best interest of a Fund as well as of other clients, the Adviser, to the extent permitted by applicable laws and regulations, may aggregate the securities to be so purchased or sold in order to obtain the most favorable price or lower brokerage commissions and the most efficient execution. In such event, allocation of the securities so purchased or sold, as well as the expenses incurred in the transaction, will be made by the Adviser in the manner it considers to be the most equitable and consistent with its fiduciary obligations to the Fund and to such other clients.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.REPRESENTATIONS OF THE ADVISER**

&nbsp;&nbsp;&nbsp;&nbsp;**(a)**The Adviser shall use its best judgment and efforts in rendering the advice and services to the Fuxnds as contemplated by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;**(b)**The Adviser shall maintain all licenses and registrations necessary to perform its duties hereunder in good order.

&nbsp;&nbsp;&nbsp;&nbsp;**(c)**The Adviser shall conduct its operations at all times in conformance with the Advisers Act, the Investment Company Act, and any other applicable state and/or self-regulatory organization regulations.

&nbsp;&nbsp;&nbsp;&nbsp;**(d)**The Adviser shall maintain errors and omissions insurance in an amount at least equal to that disclosed to the Board of Trustees in connection with their approval of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;**4.INDEPENDENT CONTRACTOR.** The Adviser shall, for all purposes herein, be deemed to be an independent contractor, and shall, unless otherwise expressly provided and authorized to do so, have no authority to act for or represent the Trust or the Funds in any way, or in any way be deemed an agent for the Trust or for the Funds. It is expressly understood and agreed that the services to be rendered by the Adviser to the Funds under the provisions of this Agreement are not to be deemed exclusive, and the Adviser shall be free to render similar or different services to others so long as its ability to render the services provided for in this Agreement shall not be impaired thereby.

&nbsp;&nbsp;&nbsp;&nbsp;**5.ADVISER'S PERSONNEL**

&nbsp;&nbsp;&nbsp;&nbsp;**(a)**&nbsp;&nbsp;&nbsp;&nbsp;The Adviser shall, at its own expense, maintain such staff and employ or retain such personnel and consult with such other persons as it shall from time to time determine to be necessary to the performance of its obligations under this Agreement. Without limiting the generality of the foregoing, the staff and personnel of the Adviser shall be deemed to include persons employed or retained by the Adviser to furnish statistical information, research, and other factual information, advice regarding economic factors and trends, information with respect to technical and scientific developments, and such other information, advice and assistance as the Adviser or the Trust's Board of Trustees may desire and reasonably request and any compliance staff and personnel required by the Adviser.

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&nbsp;&nbsp;&nbsp;&nbsp;**(b)**&nbsp;&nbsp;&nbsp;&nbsp;As stated above, at its own expense, the Adviser may carry out any of its obligations under this Agreement by retaining, subject to the direction and control of the Board, one or more Sub-Advisers. The Adviser may with respect to a Fund: (i) evaluate, select, and recommend Sub-Advisers to manage all or a portion of the Fund's assets; (ii) allocate and, when appropriate, reallocate the Fund's assets among multiple Sub-Advisers; (iii) terminate any Fund Sub-Adviser; (iv) monitor and evaluate each Sub-Adviser's performance; and (v) implement procedures reasonably designed to seek to ensure that Sub-Advisers comply with the Fund's investment objective, policies, and restrictions. Despite the Adviser's ability to retain Sub-Advisers to perform certain duties set forth in Section 2 of this Agreement, the Adviser shall retain overall responsibility for the general management and investment of each Fund's assets.

&nbsp;&nbsp;&nbsp;&nbsp;**6.EXPENSES**

&nbsp;&nbsp;&nbsp;&nbsp;**(a)**During the term of this Agreement, the Adviser will pay all expenses incurred by it in connection with its activities under this Agreement, other than the cost of securities and investments purchased for a Fund (including taxes and brokerage commissions, if any). The Adviser shall pay, among other things, (i) all expenses relating to its registration under the Advisers Act; and (ii) all other general business overhead expenses incurred in connection with the services provided to the Trust, including office space, equipment, and personnel as may be necessary or convenient to provide the services.

During the term of this Agreement, the Adviser will pay all of the expenses of the Trust relating to each Fund covered by this Agreement and each Fund (inclusive of any expenses of a wholly-owned subsidiary of a Fund), except for (i) the fee payment under this Agreement as described in paragraph 7, (ii) payments under the Fund's 12b-1 plan (if any), (iii) interest expenses, (iv) dividend and interest expenses related to short sales, (v) taxes, (vi) acquired fund fees and expenses other than fees for funds advised by the Adviser and/or its affiliates, (vii) brokers' commissions and any other transaction-related expenses and fees arising out of transactions effected on behalf of the Fund, and (viii) litigation and potential litigation and other extraordinary expenses not incurred in the ordinary course of the Fund's business. For the avoidance of doubt, the Adviser's payment of such expenses may be accomplished through the Fund's payment of such expenses and a corresponding reduction in the fee payable to the Adviser pursuant to paragraph 7 hereof; provided, however, that if the amount of expenses paid by the Fund exceeds the fee payable to the Adviser pursuant to paragraph 7 hereof, the Adviser will reimburse the Fund for such excess amount.

&nbsp;&nbsp;&nbsp;&nbsp;**(b)**The Adviser may voluntarily or contractually absorb other Fund expenses.

&nbsp;&nbsp;&nbsp;&nbsp;**7.INVESTMENT ADVISORY AND MANAGEMENT FEE**

&nbsp;&nbsp;&nbsp;&nbsp;**(a)**Each Fund shall pay to the Adviser, and the Adviser agrees to accept, as full compensation for all services furnished or provided to such Fund pursuant to this Agreement, an annual management fee at the rate set forth in Schedule A to this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;**(b)**The management fee shall be accrued daily by the Fund and paid to the Adviser on the first business day of the succeeding month.

&nbsp;&nbsp;&nbsp;&nbsp;**(c)**The initial fee under this Agreement shall be payable on the first business day of the first month following the effective date of this Agreement and shall be prorated as set forth below. If this Agreement is terminated prior to the end of any month, the fee to the Adviser shall be prorated for the portion of any month in which this Agreement is in effect which is not a complete month according to the proportion which the number of calendar days in the month during which the Agreement is in effect bears to the number of calendar days in the month, and shall be payable within ten (10) days after the date of termination.

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&nbsp;&nbsp;&nbsp;&nbsp;**(d)**The fee payable to the Adviser under this Agreement will be reduced to the extent of any receivable owed by the Adviser to the Fund and as required under any expense limitation applicable to a Fund.

&nbsp;&nbsp;&nbsp;&nbsp;**(e)**The Adviser voluntarily may reduce any portion of the compensation or reimbursement of expenses due to it pursuant to this Agreement and may agree to make payments to limit the expenses which are the responsibility of a Fund under this Agreement. Any such reduction or payment shall be applicable only to such specific reduction or payment and shall not constitute an agreement to reduce any future compensation or reimbursement due to the Adviser hereunder or to continue future payments. Any such reduction will be agreed to prior to accrual of the related expense or fee and will be estimated daily and reconciled and paid on a monthly basis.

&nbsp;&nbsp;&nbsp;&nbsp;**(f)**Any such reductions made by the Adviser in its fees or payment of expenses which are a Fund's obligation are subject to reimbursement by the Fund to the Adviser, if so requested by the Adviser, in subsequent fiscal years if the aggregate amount actually paid by the Fund toward the operating expenses for such fiscal year (taking into account the reimbursement) does not exceed the applicable limitation on Fund expenses. Under the expense limitation agreement, the Adviser may recoup reimbursements made in any fiscal year of the Fund over the following three fiscal years. Any such reimbursement is also contingent upon Board of Trustees review and approval at time the reimbursement is made. Such reimbursement may not be paid prior to the Fund's payment of current ordinary operating expenses.

&nbsp;&nbsp;&nbsp;&nbsp;**(g)**The Adviser may agree not to require payment of any portion of the compensation or reimbursement of expenses otherwise due to it pursuant to this Agreement. Any such agreement shall be applicable only with respect to the specific items covered thereby and shall not constitute an agreement not to require payment of any future compensation or reimbursement due to the Adviser hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;**8.NO SHORTING; NO BORROWING.** The Adviser agrees that neither it nor any of its officers or employees shall take any short position in the shares of any Fund. This prohibition shall not prevent the purchase of such shares by any of the officers or employees of the Adviser or any trust, pension, profit-sharing or other benefit plan for such persons or affiliates thereof, at a price not less than the net asset value thereof at the time of purchase, as allowed pursuant to rules promulgated under the Investment Company Act. The Adviser agrees that neither it nor any of its officers or employees shall borrow from a Fund or pledge or use a Fund's assets in connection with any borrowing not directly for the Fund's benefit. For this purpose, failure to pay any amount due and payable to the Fund for a period of more than thirty (30) days shall constitute a borrowing.

&nbsp;&nbsp;&nbsp;&nbsp;**9.CONFLICTS WITH TRUST'S GOVERNING DOCUMENTS AND APPLICABLE**

**LAWS.** Nothing herein contained shall be deemed to require the Trust or a Fund to take any action contrary to the Trust's Declaration of Trust, By-Laws, or any applicable statute or regulation, or to relieve or deprive the Board of Trustees of the Trust of its responsibility for and control of the conduct of the affairs of the Trust and the Funds. In this connection, the Adviser acknowledges that the Trustees retain ultimate plenary authority over the Funds and may take any and all actions necessary and reasonable to protect the interests of shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;**10.REPORTS AND ACCESS.** The Adviser agrees to supply such information to the Funds' administrator and to permit such compliance inspections by the Funds' administrator as shall be reasonably necessary to permit the administrator to satisfy its obligations and respond to the reasonable requests of the Board of Trustees.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**11.ADVISER'S LIABILITIES AND INDEMNIFICATION**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)**The Adviser shall have responsibility for the accuracy and completeness (and liability for the lack thereof) of the statements in the Funds' offering materials (including the prospectus, the statement of additional information, advertising and sales materials), except for information supplied by the administrator or the Trust or another third party for inclusion therein.

&nbsp;&nbsp;&nbsp;&nbsp;**(b)**The Adviser shall be liable to the Funds for any loss (including brokerage charges) incurred by a Fund as a result of any improper investment made by the Adviser in contradiction of the Investment Policies.

&nbsp;&nbsp;&nbsp;&nbsp;**(c)**In the absence of willful misfeasance, bad faith, gross negligence, or reckless disregard of the obligations or duties hereunder on the part of the Adviser, the Adviser shall not be subject to liability to the Trust or the Funds or to any shareholder of the Funds for any act or omission in the course of, or connected with, rendering services hereunder or for any losses that may be sustained in the purchase, holding or sale of any security by the Funds. Notwithstanding the foregoing, federal securities laws and certain state laws impose liabilities under certain circumstances on persons who have acted in good faith, and therefore nothing herein shall in any way constitute a waiver or limitation of any rights which the Trust, the Funds or any shareholder of the Funds may have under any federal securities law or state law.

&nbsp;&nbsp;&nbsp;&nbsp;**(d)**Each party to this Agreement shall indemnify and hold harmless the other party and the shareholders, directors, officers and employees of the other party (any such person, an "Indemnified Party") against any loss, liability, claim, damage or expense (including the reasonable cost of investigating and defending any alleged loss, liability, claim, damage or expenses and reasonable counsel fees incurred in connection therewith) arising out of the Indemnified Party's performance or non-performance of any duties under this Agreement provided, however, that nothing herein shall be deemed to protect any Indemnified Party against any liability to which such Indemnified Party would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of duties hereunder or by reason of reckless disregard of obligations and duties under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;**(e)**No provision of this Agreement shall be construed to protect any Trustee or officer of the Trust, or officer of the Adviser, from liability in violation of Sections 17(h) and (i) of the Investment Company Act.

&nbsp;&nbsp;&nbsp;&nbsp;**12.NON-EXCLUSIVITY; TRADING FOR ADVISER'S OWN ACCOUNT.** The Trust's

employment of the Adviser is not an exclusive arrangement. The Trust may from time to time employ other individuals or entities to furnish it with the services provided for herein. Likewise, the Adviser may act as investment adviser for any other person, and shall not in any way be limited or restricted from buying, selling or trading any securities for its or their own accounts or the accounts of others for whom it or they may be acting, provided, however, that the Adviser expressly represents that it will undertake no activities which will adversely affect the performance of its obligations to the Funds under this Agreement; and provided further that the Adviser will adhere to a code of ethics governing employee trading and trading for proprietary accounts that conforms to the requirements of the Investment Company Act and the Advisers Act and has been approved by the Trust's Board of Trustees.

&nbsp;&nbsp;&nbsp;&nbsp;**13.TRANSACTIONS WITH OTHER INVESTMENT ADVISERS.** The Adviser is not an affiliated person of any investment adviser responsible for providing advice with respect to any other series of the Trust, or of any promoter, underwriter, officer, director, member of an advisory board or employee of any other series of the Trust. The Adviser shall not consult with the investment adviser of any other series of the Trust concerning transactions for the Funds or any other series of the Trust.

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&nbsp;&nbsp;&nbsp;&nbsp;**14.TERM.** This Agreement shall become effective with respect to a Fund on such date indicated in Exhibit A and shall remain in effect with respect to such Fund for a period of two (2) years, unless sooner terminated as hereinafter provided. This Agreement shall continue in effect thereafter for additional periods not exceeding one year so long as such continuation is approved at least annually by: (i) the Board of Trustees of the Trust or by the vote of a majority of the outstanding voting securities of each Fund and (ii) the vote of a majority of the Trustees of the Trust who are not parties to this Agreement nor interested persons thereof, cast in person at a meeting called for the purpose of voting on such approval or as otherwise required under the Investment Company Act as modified by or interpreted by any applicable order or orders of the Securities and Exchange Commission or any rules or regulations adopted by, or interpretative releases or no-action letters of, the Securities and Exchange Commission or its staff. The terms "majority of the outstanding voting securities" and "interested persons" shall have the meanings as set forth in the Investment Company Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**15.RIGHT TO USE NAME.** The Adviser warrants that the Funds' names are not deceptive or misleading and that the Adviser has rights to any distinctive names used by each Fund. Each Fund acknowledges that its use of any distinctive name is derivative of its relationship with the Adviser and/or Sub-Adviser as the case may be. Each Fund may use the name connected with the Adviser or Sub-Adviser or any name derived from or using the name of the Adviser or Sub-Adviser only for so long as this Agreement or any extension, renewal or amendment hereof remains in effect. Within 60 days from such time as this Agreement shall no longer be in effect, the Funds shall cease to use such names or any other name connected with the Adviser or Sub-Adviser.

&nbsp;&nbsp;&nbsp;&nbsp;**16.TERMINATION; NO ASSIGNMENT**

&nbsp;&nbsp;&nbsp;&nbsp;**(a)**This Agreement may be terminated by the Trust on behalf of a Fund at any time without payment of any penalty, by the Board of Trustees of the Trust or by vote of a majority of the outstanding voting securities of a Fund, upon 60 days' written notice to the Adviser, and by the Adviser upon 60 days' written notice to the Fund. In the event of a termination, the Adviser shall cooperate in the orderly transfer of the Funds' affairs and, at the request of the Board of Trustees, transfer any and all books and records of the Fund maintained by the Adviser on behalf of the Funds.

&nbsp;&nbsp;&nbsp;&nbsp;**(b)**This Agreement shall terminate automatically in the event of any transfer or assignment thereof, as defined in the Investment Company Act.

&nbsp;&nbsp;&nbsp;&nbsp;**17.NONPUBLIC PERSONAL INFORMATION.** Notwithstanding any provision herein to the contrary, the Adviser agrees on behalf of itself and its managers, members, officers, and employees: (1) to treat confidentially and as proprietary information of the Trust (a) all records and other information relative to the Funds' prior, present, or potential shareholders (and clients of said shareholders) and (b) any Nonpublic Personal Information, as defined under Section 248.3(t) of Regulation S-P ("Regulation S-P"), promulgated under the Gramm-Leach-Bliley Act (the "G-L-B Act"); and (2) except after prior notification to and approval in writing by the Trust, not to use such records and information for any purpose other than the performance of its responsibilities and duties hereunder, or as otherwise permitted by Regulation S-P or the G-L-B Act, and if in compliance therewith, the privacy policies adopted by the Trust and communicated in writing to the Adviser. Such written approval shall not be unreasonably withheld by the Trust and may not be withheld where the Adviser may be exposed to civil or criminal contempt or other proceedings for failure to comply after being requested to divulge such information by duly constituted authorities.

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&nbsp;&nbsp;&nbsp;&nbsp;**18.ANTI-MONEY LAUNDERING COMPLIANCE.** The Adviser acknowledges that, in compliance with the Bank Secrecy Act, as amended, the USA PATRIOT Act, and any implementing regulations thereunder (together, "AML Laws"), the Trust has adopted an Anti-Money Laundering Policy.

The Adviser agrees to comply with the Trust's Anti-Money Laundering Policy and the AML Laws, as the same may apply to the Adviser, now and in the future. The Adviser further agrees to provide to the Trust and/or the administrator such reports, certifications and contractual assurances as may be reasonably requested by the Trust. The Trust may disclose information regarding the Adviser to governmental and/or regulatory or self-regulatory authorities to the extent required by applicable law or regulation and may file reports with such authorities as may be required by applicable law or regulation.

&nbsp;&nbsp;&nbsp;&nbsp;**19.CERTIFICATIONS; DISCLOSURE CONTROLS AND PROCEDURES.** The Adviser

acknowledges that, in compliance with the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), and the implementing regulations promulgated there under, the Trust and the Funds are required to make certain certifications and have adopted disclosure controls and procedures. To the extent reasonably requested by the Trust, the Adviser agrees to use its best efforts to assist the Trust and the Funds in complying with the Sarbanes-Oxley Act and implementing the Trust's disclosure controls and procedures. The Adviser agrees to inform the Trust of any material development related to the Funds that the Adviser reasonably believes is relevant to the Funds' certification obligations under the Sarbanes-Oxley Act.

&nbsp;&nbsp;&nbsp;&nbsp;**20.SEVERABILITY.** If any provision of this Agreement shall be held or made invalid by a court decision, statute or rule, or shall be otherwise rendered invalid, the remainder of this Agreement shall not be affected thereby.

&nbsp;&nbsp;&nbsp;&nbsp;**21.CAPTIONS.** The captions in this Agreement are included for convenience of reference only and in no way define or limit any of the provisions hereof or otherwise affect their construction or effect.

&nbsp;&nbsp;&nbsp;&nbsp;**22.GOVERNING LAW.** This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware without giving effect to the conflict of laws principles thereof; provided that nothing herein shall be construed to preempt, or to be inconsistent with, any federal law, regulation or rule, including the Investment Company Act and the Advisers Act and any rules and regulations promulgated thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;**23.OTHER.** Any reference to the Investment Company Act, Advisers Act, or other in any provision of this Agreement shall include any rules or regulations thereunder, as amended from time to time, and in accordance with any applicable exemptive orders or similar relief granted by the Securities and Exchange Commission or other competent regulatory authority. To the extent any of the foregoing is relaxed by a competent court or rule, regulation, order, release, guidance or no-action position of the Securities and Exchange Commission or its staff or other competent regulatory authority, whether of special or general application, such provision shall be deemed to incorporate the effect of such court decision, rule, regulation, order, release, guidance or no-action position.

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**IN WITNESS WHEREOF**, the parties hereto have caused this Agreement to be duly executed by their duly authorized officers, all on the day and year first above written.

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| | |
|:---|:---|
| **ANGEL OAK FUNDS TRUST**<br>on behalf of each series of the Trust listed on Schedule A | **ANGEL OAK CAPITAL ADVISORS, LLC** |
| By: <u>/s/ Chase Eldredge</u> | By: <u>/s/ Chase Eldredge</u> |
| Name: <u>Chase Eldredge</u> | Name: <u>Chase Eldredge</u> |
| Title: <u>Chief Compliance Officer</u> | Title: <u>Chief Compliance Officer</u> |

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**SCHEDULE A**

**Advisory Fee Schedule**

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| | | |
|:---|:---|:---|
| **Fund** | **Annual Advisory Fee** | **Effective Date** |
| Angel Oak Income ETF | 0.99% | October 1, 2025 |
| Angel Oak High Yield Opportunities ETF | 0.55% | October 1, 2025 |
| Angel Oak Mortgage-Backed Securities ETF | 0.79% | October 1, 2025 |
| Angel Oak Total Return ETF | 0.59% | October 1, 2025 |
| Angel Oak UltraShort Income ETF | 0.55% | December 19, 2025 |
| Whiplight ETF | 0.99% | October 1, 2025 |

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## Ex-99.(H)(2)

**ANGEL OAK FUNDS TRUST** 

**ANGEL OAK STRATEGIC CREDIT FUND**

**ANGEL OAK FINANCIAL STRATEGIES INCOME TERM TRUST** 

**FEE WAIVER AGREEMENT**

**THIS FEE WAIVER AGREEMENT,** dated as of October 1, 2025, is made and entered into by and between each of Angel Oak Funds Trust, a Delaware statutory trust ("AOFT"), on behalf of each of its series, Angel Oak Financial Strategies Income Term Trust and Angel Oak Strategic Credit Fund, (each, a "Trust" and, collectively with the series of AOFT, the "Funds") and Angel Oak Capital Advisors, LLC (the "Adviser").

**WHEREAS**, each Trust has entered into an Investment Advisory Agreement between the Trust and the Adviser (each an "Advisory Agreement") pursuant to which the Adviser has been appointed the investment adviser of each Fund; and

**WHEREAS**, each Fund, and its respective classes, as applicable, are responsible for, and have assumed the obligation for, payment of certain expenses pursuant to the respective Advisory Agreement (the "Advisory Fee") that have not been assumed by the Adviser; and

**WHEREAS,** each Fund, in accordance with its investment objectives and restrictions, as specified in such Fund's prospectus, may invest a portion of its assets in other investment companies for which the Adviser serves as investment adviser (each an "Underlying Fund"); and

**WHEREAS,** pursuant to the respective Advisory Agreement, each Underlying Fund pays to the Adviser a separate advisory fee for investment advisory services provided by the Adviser (the "Underlying Fund Fee"); and

**WHEREAS,** each Fund indirectly pays its proportionate share of the Underlying Fund Fee charged by the Adviser to each Underlying Fund;

**NOW THEREFORE**, in consideration of the covenants and the mutual promises hereinafter set forth, the parties, intending to be legally bound hereby, mutually agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.**UNDERLYING FUND FEE WAIVER.** In consideration of any Underlying Fund Fee indirectly paid by a Fund, each day the Adviser agrees to waive all or any portion of the Advisory Fee that would otherwise be borne by such Fund to the Adviser in an amount equal to the amount of the Underlying Fund Fee, if any, indirectly borne by such Fund in connection with its investment in an Underlying Fund. In no event will the Adviser be required to reimburse a Fund for any amount in excess of the Fund's accrued Advisory Fees attributable to any day.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.**TERM**. This Agreement shall become effective on the date specified herein and shall remain in effect indefinitely and for a period of not less than one year, unless sooner terminated as provided in Section 3 of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.**TERMINATION**. This Agreement may be terminated with respect to a Fund at any time, and without payment of any penalty, by the Board of Trustees of the respective Trust,

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on behalf of its series, as applicable, upon sixty (60) days' written notice to the Adviser. This Agreement may not be terminated by the Adviser without the consent of the Board of Trustees of the relevant Trust, which consent will not be unreasonably withheld. This Agreement will automatically terminate with respect to a Trust (or a series of a Trust, if applicable) if the applicable Advisory Agreement is terminated, with such termination effective upon the effective date of the Advisory Agreement's termination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.**ASSIGNMENT**. This Agreement and all rights and obligations hereunder may not be assigned without the written consent of the other party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.**SEVERABILITY**. If any provision of this Agreement shall be held or made invalid by a court decision, statute or rule, or shall be otherwise rendered invalid, the remainder of this Agreement shall not be affected thereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.**GOVERNING LAW**. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to the conflict of laws principles thereof; provided that nothing herein shall be construed to preempt, or to be inconsistent with, any federal law, regulation or rule, including, without limitation, the Investment Company Act of 1940 and the Investment Advisers Act of 1940, and any rules and regulations promulgated thereunder.

**IN WITNESS WHEREOF**, the parties hereto have executed this Agreement as of the date first above written.

**ANGEL OAK FUNDS TRUST**

By: <u>s/</u> <u>Chase</u> <u>Eldredge</u><u>&nbsp;&nbsp;&nbsp;&nbsp;</u>

Name: <u>Chase</u> <u>Eldredge</u><u>&nbsp;&nbsp;&nbsp;&nbsp;</u>

Title: <u>Chief</u> <u>Compliance</u> <u>Officer</u><u>&nbsp;&nbsp;&nbsp;&nbsp;</u>

**ANGEL OAK FINANCIAL STRATEGIES INCOME TERM TRUST**

By:<u>&nbsp;&nbsp;&nbsp;&nbsp;s/</u> <u>Chase</u> <u>Eldredge</u><u>&nbsp;&nbsp;&nbsp;&nbsp;</u>

Name: <u>Chase</u> <u>Eldredge</u><u>&nbsp;&nbsp;&nbsp;&nbsp;</u>

- 2 -

------

Title: <u>Chief</u> <u>Compliance</u> <u>Officer</u><u>&nbsp;&nbsp;&nbsp;&nbsp;</u>

**ANGEL OAK STRATEGIC CREDIT FUND**

By:<u>&nbsp;&nbsp;&nbsp;&nbsp;s/</u> <u>Chase</u> <u>Eldredge</u><u>&nbsp;&nbsp;&nbsp;&nbsp;</u>

Name: <u>Chase</u> <u>Eldredge</u><u>&nbsp;&nbsp;&nbsp;&nbsp;</u>

Title: <u>Chief</u> <u>Compliance</u> <u>Officer</u><u>&nbsp;&nbsp;&nbsp;&nbsp;</u>

**ANGEL OAK CAPITAL ADVISORS, LLC**

By:<u>&nbsp;&nbsp;&nbsp;&nbsp;s/</u> <u>Chase</u> <u>Eldredge</u><u>&nbsp;&nbsp;&nbsp;&nbsp;</u>

Name: <u>Chase</u> <u>Eldredge</u><u>&nbsp;&nbsp;&nbsp;&nbsp;</u>

Title: <u>Chief</u> <u>Compliance</u> <u>Officer</u><u>&nbsp;&nbsp;&nbsp;&nbsp;</u>

- 3 -

## Ex-99.(H)(3)

**ANGEL OAK FUNDS TRUST**

**AMENDED AND RESTATED OPERATING EXPENSE LIMITATION AGREEMENT**

**THIS OPERATING EXPENSE LIMITATION AGREEMENT,** dated as of October 1, 2025,

as amended and restated February 1, 2026, is made and entered into by and between the Angel Oak Funds Trust, a Delaware statutory trust (the "Trust"), on behalf of each series of the Trust set forth on Schedule A attached hereto, which may be amended from time to time (the "Funds"), and Angel Oak Capital Advisors, LLC (the "Adviser").

**WHEREAS**, the Adviser has been appointed the investment adviser of each of the Funds pursuant to an Investment Advisory Agreement between the Trust, on behalf of the Funds, and the Adviser (the "Advisory Agreement"); and

**WHEREAS**, the Funds, and each of their respective classes, are responsible for, and have assumed the obligation for, payment of certain expenses pursuant to the Advisory Agreement that have not been assumed by the Adviser; and

**WHEREAS**, the Adviser desires to limit each Fund's Operating Expenses (as that term is defined in Paragraph 2 of this Agreement) pursuant to the terms and provisions of this Agreement, and the Trust (on behalf of the Funds) desires to allow the Adviser to implement those limits;

**NOW THEREFORE**, in consideration of the covenants and the mutual promises hereinafter set forth, the parties, intending to be legally bound hereby, mutually agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;**LIMIT ON OPERATING EXPENSES**. The Adviser hereby agrees, subject to Section 2 hereof, to reduce the fees payable to it under the Advisory Agreement between the Trust and the Adviser, and/or reimburse other expenses of the Funds, until the applicable date listed on Schedule A attached hereto, to the extent necessary to limit the current operating expenses of each class of shares of each Fund (exclusive of any front-end sales loads, taxes, interest expenses, dividend and interest expenses related to short sales, brokerage commissions, 12b-1 fees, acquired fund fees and expenses, expenses incurred in connection with any merger or reorganization, any transaction-related expenses and fees arising out of transactions effected on behalf of a Fund, litigation and potential litigation expenses, expenses of shareholder proposals, contested elections, or non-routine shareholder meetings, and other non-routine expenses or extraordinary expenses not incurred in the ordinary course of a Fund's business (collectively, the "Excluded Expenses")), to the amount of the "Maximum Operating Expense Limit" applicable to each Fund on the attached Schedule A. In the event that the current operating expenses of a Fund, as accrued each month, exceed its Maximum Operating Expense Limit, the Adviser will reduce the fees payable to it and/or pay to that Fund, on a monthly basis, the excess expense within 15 calendar days, or such other period as determined by the Board of Trustees of the Trust, of being notified that an excess payment is due. In the event that the Board of Trustees of the Trust determines that an excess expense payment due date be other than 15 calendar days, the Trust will provide the Adviser with ten (10) calendar days' written notice prior to the implementation of such other excess expense payment due date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;**DEFINITION**. For purposes of this Agreement, the term "Operating Expenses" with respect to each class of the Funds, is defined to include all expenses necessary or appropriate for the operation of the Funds and each of its classes, including the Adviser's investment advisory or management fee detailed in the Advisory Agreement between the Trust and the Adviser, any Rule 12b-1 fees and other expenses described in the Advisory Agreement, but it does not include any Excluded Expenses.

- 1 -

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;**REIMBURSEMENT OF FEES AND EXPENSES**. Each Fund agrees to pay to the Adviser the amount of fees (including any amounts foregone through limitation or reimbursed pursuant to Section 1 hereof) that, but for Section 1 hereof, would have been payable by the Fund to the Adviser pursuant to the Advisory Agreement or which have been reimbursed in accordance with Section 1 (the "Deferred Fees"), subject to the limitations provided in this Section. Such repayment shall be made monthly, but only if the operating expenses of the Fund (exclusive of any Excluded Expenses), without regard to such repayment, are at an annual rate (as a percentage of the average daily net assets of the Fund) equal to or less than the "Maximum Operating Expense Limit" for each respective class of shares of the Fund, as set forth on Schedule A. Furthermore, the amount of Deferred Fees paid by a Fund in any month shall be limited so that the sum of: (a) the amount of such payment and (b) the other operating expenses of the Fund (exclusive of any Excluded Expenses) do not exceed the above-referenced "Maximum Operating Expense Limit" for each respective class of shares of a Fund.

Deferred Fees with respect to any month of a Fund shall not be payable by the Fund to the extent that the amounts payable by the Fund pursuant to the preceding paragraph during the period ending three years after the end of such month in which the Adviser incurred the expense are not sufficient to pay such Deferred Fees. In no event will a Fund be obligated to pay any fees waived or deferred by the Adviser with respect to any other series of the Trust.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;**TERM**. This Agreement shall become effective with respect to a Fund on such date indicated on Schedule A and shall remain in effect indefinitely and for a period ending no sooner than the applicable date listed on Schedule A attached hereto, unless sooner terminated as provided in Section 5 of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;**TERMINATION**. This Agreement may be terminated at any time, and without payment of any penalty, by the Board of Trustees of the Trust, on behalf of the Funds, upon sixty (60) days' written notice to the Adviser. This Agreement may not be terminated by the Adviser without the consent of the Board of Trustees of the Trust, which consent will not be unreasonably withheld. This Agreement will automatically terminate if the Advisory Agreement is terminated, with such termination effective upon the effective date of the Advisory Agreement's termination. A Fund's obligation to pay to the Adviser any Deferred Fees, subject to the terms and provisions provided in Section 3 of this Agreement, shall survive the termination of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;**ASSIGNMENT**. This Agreement and all rights and obligations hereunder may not be assigned without the written consent of the other party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;&nbsp;&nbsp;&nbsp;**SEVERABILITY**. If any provision of this Agreement shall be held or made invalid by a court decision, statute or rule, or shall be otherwise rendered invalid, the remainder of this Agreement shall not be affected thereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;&nbsp;&nbsp;&nbsp;**GOVERNING LAW**. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to the conflict of laws principles thereof; provided that nothing herein shall be construed to preempt, or to be inconsistent with, any federal law, regulation or rule, including the Investment Company Act of 1940, and the Investment Advisers Act of 1940, and any rules and regulations promulgated thereunder.

- 2 -

------

**IN WITNESS WHEREOF**, the parties hereto have executed this Agreement as of the date first above written.

---

| | |
|:---|:---|
| **ANGEL OAK FUNDS TRUST**<br>on behalf of each series of the Trust listed on Schedule A | **ANGEL OAK CAPITAL ADVISORS, LLC** |
| By: <u>/s/ Chase Eldredge</u> | By: <u>/s/ Chase Eldredge</u> |
| Name: Chase Eldredge | Name: Chase Eldredge |
| Title: Chief Compliance Officer | Title: Chief Compliance Officer |

---

- 3 -

------

**SCHEDULE A**

**Operating Expense Limits**

as of October 1, 2025

---

| | | | |
|:---|:---|:---|:---|
| <br>**Fund** | **Maximum Operating**<br>**Expense Limit** <sup>1</sup> | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Effective Date** | &nbsp;&nbsp;&nbsp;&nbsp;**Termination Date** |
| Angel Oak Multi-Strategy Income Fund | 0.99% | October 1, 2025 | September 30, 2027 |
| Angel Oak UltraShort Income Fund | 0.35% | October 1, 2025 | September 30, 2027 |

---

- 4 -

## Ex-99.(H)(4)

**ANGEL OAK FUNDS TRUST**

**AMENDED AND RESTATED OPERATING EXPENSE LIMITATION AGREEMENT**

**THIS OPERATING EXPENSE LIMITATION AGREEMENT,** dated as of December 19,

2025, as amended and restated February 1, 2026, is made and entered into by and between the Angel Oak Funds Trust, a Delaware statutory trust (the "Trust"), on behalf of each series of the Trust set forth on Schedule A attached hereto, which may be amended from time to time (the "Funds"), and Angel Oak Capital Advisors, LLC (the "Adviser").

**WHEREAS**, the Adviser has been appointed the investment adviser of each of the Funds pursuant to an Investment Advisory Agreement between the Trust, on behalf of the Funds, and the Adviser (the "Advisory Agreement"); and

**WHEREAS**, the Funds are responsible for, and have assumed the obligation for, payment of certain expenses pursuant to the Advisory Agreement that have not been assumed by the Adviser; and

**WHEREAS**, the Adviser desires to limit each Fund's Operating Expenses (as that term is defined in Paragraph 2 of this Agreement) pursuant to the terms and provisions of this Agreement, and the Trust (on behalf of the Funds) desires to allow the Adviser to implement those limits;

**NOW THEREFORE**, in consideration of the covenants and the mutual promises hereinafter set forth, the parties, intending to be legally bound hereby, mutually agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;**LIMIT ON OPERATING EXPENSES**. The Adviser hereby agrees, subject to Section 2 hereof, to reduce the fees payable to it under the Advisory Agreement between the Trust and the Adviser, and/or reimburse other expenses of the Funds, until the applicable date listed on Schedule A attached hereto, to the extent necessary to limit the current operating expenses of each Fund (exclusive of interest expenses, dividend and interest expenses related to short sales, taxes, acquired fund fees and expenses other than fees for funds advised by the Adviser and/or its affiliates, brokers' commissions and any other transaction-related expenses and fees arising out of transactions effected on behalf of a Fund, litigation and potential litigation expenses, expenses of shareholder proposals, contested elections, or non-routine shareholder meetings, and other non-routine expenses or extraordinary expenses not incurred in the ordinary course of a Fund's business (collectively, the "Excluded Expenses")), to the amount of the "Maximum Operating Expense Limit" applicable to each Fund on the attached Schedule A. In the event that the current operating expenses of a Fund, as accrued each month, exceed its Maximum Operating Expense Limit, the Adviser will reduce the fees payable to it and/or pay to that Fund, on a monthly basis, the excess expense within 15 calendar days, or such other period as determined by the Board of Trustees of the Trust, of being notified that an excess payment is due. In the event that the Board of Trustees of the Trust determines that an excess expense payment due date be other than 15 calendar days, the Trust will provide the Adviser with ten (10) calendar days' written notice prior to the implementation of such other excess expense payment due date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;**DEFINITION**. For purposes of this Agreement, the term "Operating Expenses" with respect to each Fund, is defined to include all expenses necessary or appropriate for the operation of the Funds, including the Adviser's investment advisory or management fee detailed in the Advisory Agreement between the Trust and the Adviser, any Rule 12b-1 fees and other expenses described in the Advisory Agreement, but it does not include any Excluded Expenses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;**REIMBURSEMENT OF FEES AND EXPENSES**. Each Fund agrees to pay to the Adviser the amount of fees (including any amounts foregone through limitation or reimbursed pursuant to

- 1 -

------

Section 1 hereof) that, but for Section 1 hereof, would have been payable by the Fund to the Adviser pursuant to the Advisory Agreement or which have been reimbursed in accordance with Section 1 (the "Deferred Fees"), subject to the limitations provided in this Section. Such repayment shall be made monthly, but only if the operating expenses of the Fund (exclusive of any Excluded Expenses), without regard to such repayment, are at an annual rate (as a percentage of the average daily net assets of the Fund) equal to or less than the "Maximum Operating Expense Limit" for the Fund, as set forth on Schedule A. Furthermore, the amount of Deferred Fees paid by a Fund in any month shall be limited so that the sum of:

&nbsp;&nbsp;&nbsp;&nbsp;(a) the amount of such payment and (b) the other operating expenses of the Fund (exclusive of any Excluded Expenses) do not exceed the above-referenced "Maximum Operating Expense Limit" for each Fund.

Deferred Fees with respect to any fiscal year of a Fund shall not be payable by the Fund to the extent that the amounts payable by the Fund pursuant to the preceding paragraph during the period ending three years after the end of such fiscal year are not sufficient to pay such Deferred Fees. In no event will a Fund be obligated to pay any fees waived or deferred by the Adviser with respect to any other series of the Trust.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;**TERM**. This Agreement shall become effective with respect to a Fund on such date indicated in Schedule A and shall remain in effect for a period ending no sooner than the applicable date listed on Schedule A attached hereto, unless sooner terminated as provided in Section 5 of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;**TERMINATION**. This Agreement may be terminated at any time, and without payment of any penalty, by the Board of Trustees of the Trust, on behalf of the Funds, upon sixty (60) days' written notice to the Adviser. This Agreement may not be terminated by the Adviser without the consent of the Board of Trustees of the Trust, which consent will not be unreasonably withheld. This Agreement will automatically terminate if the Advisory Agreement is terminated, with such termination effective upon the effective date of the Advisory Agreement's termination. A Fund's obligation to pay to the Adviser any Deferred Fees, subject to the terms and provisions provided in Section 3 of this Agreement, shall survive the termination of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;**ASSIGNMENT**. This Agreement and all rights and obligations hereunder may not be assigned without the written consent of the other party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;&nbsp;&nbsp;&nbsp;**SEVERABILITY**. If any provision of this Agreement shall be held or made invalid by a court decision, statute or rule, or shall be otherwise rendered invalid, the remainder of this Agreement shall not be affected thereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;&nbsp;&nbsp;&nbsp;**GOVERNING LAW**. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to the conflict of laws principles thereof; provided that nothing herein shall be construed to preempt, or to be inconsistent with, any federal law, regulation or rule, including the Investment Company Act of 1940, and the Investment Advisers Act of 1940, and any rules and regulations promulgated thereunder.

- 2 -

------

**IN WITNESS WHEREOF**, the parties hereto have executed this Agreement as of the date first above written.

---

| | |
|:---|:---|
| **ANGEL OAK FUNDS TRUST**<br>on behalf of each series of the Trust listed on Schedule A | **ANGEL OAK CAPITAL ADVISORS, LLC** |
| By: <u>/s/ Chase Eldredge&nbsp;&nbsp;&nbsp;&nbsp;</u> | By: <u>/s/ Chase Eldredge&nbsp;&nbsp;&nbsp;&nbsp;</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;Chase Eldredge | &nbsp;&nbsp;&nbsp;&nbsp;Chase Eldredge |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chief Compliance Officer | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chief Compliance Officer |

---

- 3 -

------

**SCHEDULE A**

**Operating Expense Limits**

as of December 19, 2025

**Maximum Operating**

---

| | | | |
|:---|:---|:---|:---|
| <br>**Fund** | **Maximum Operating**<br>**Expense Limit** <sup>1</sup> | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Effective Date** | &nbsp;&nbsp;&nbsp;&nbsp;**Termination Date** |
| Angel Oak Income ETF | 0.79% | October 1, 2025 | September 30, 2027 |
| Angel Oak Mortgage-Backed Securities ETF | 0.49% | October 1, 2025 | September 30, 2027 |
| Angel Oak Total Return ETF | 0.44% | October 1, 2025 | September 30, 2027 |
| Angel Oak UltraShort Income ETF | 0.34% | December 19, 2025 | September 30, 2027 |

---

<sup>1</sup> Expressed as a percentage of a Fund's average daily net assets.

- 4 -

## Ex-99.(H)(5)

**FORM OF FUND OF FUNDS INVESTMENT AGREEMENT**

THIS AGREEMENT, dated as of ____________, between [the/each] Acquiring Fund(s), severally and not jointly (each, an "**Acquiring Fund**"), and [the/each] Acquired Fund(s), severally and not jointly (each, an "**Acquired Fund**" and together with the Acquiring Fund[s], the "**Funds**"), listed on Schedule A.

WHEREAS, each Fund is registered with the U.S. Securities and Exchange Commission ("**SEC**") as an investment company under the Investment Company Act of 1940, as amended, (the "**1940 Act**");

WHEREAS, Section 12(d)(1)(A) of the 1940 Act limits the extent to which a registered investment company may invest in shares of other registered investment companies, Section 12(d)(1)(B) limits the extent to which a registered investment company, its principal underwriter or registered brokers or dealers may knowingly sell shares of such registered investment company to other investment companies, and Section 12(d)(1)(C) limits the extent to which an investment company may invest in the shares of a registered closed-end investment company;

WHEREAS, Rule 12d1-4 under the 1940 Act (the "**Rule**") permits registered investment companies, such as the Acquiring Funds, to invest in shares of other registered investment companies, such as the Acquired Funds, in excess of the limits of Section 12(d)(1) of the 1940 Act subject to compliance with the conditions of the Rule; and

WHEREAS, an Acquiring Fund may, from time to time, invest in shares of one or more Acquired Funds in excess of the limitations of Section 12(d)(1)(A) in reliance on the Rule.

NOW THEREFORE, in accordance with the Rule, the Acquiring Fund[s] and the Acquired Fund[s] desire to set forth the following terms pursuant to which the Acquiring Fund[s] may invest in the Acquired Fund[s] in reliance on the Rule.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.Terms of Investment**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)In order to help reasonably address the risk of undue influence on an Acquired Fund by an Acquiring Fund, and to assist the Acquired Fund's investment adviser with making the required findings under the Rule each Acquiring Fund and each Acquired Fund agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) &nbsp;&nbsp;&nbsp;&nbsp;[*In-kind redemptions*. The Acquiring Fund acknowledges and agrees that, if and to the extent consistent with the Acquired Fund's registration statement, as amended from time to time, and Rule 6c-11, the Acquired Fund may honor any redemption request [from the Authorized Participant acting as an intermediary to execute the Acquiring Fund's transaction] partially or wholly in-kind.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) &nbsp;&nbsp;&nbsp;&nbsp;[*Timing/advance notice of redemptions*. The Acquiring Fund will use reasonable efforts to spread large redemption requests (greater than [ ]% of the Acquired Fund's total outstanding shares) over multiple days or to provide advance notification of redemption requests to the Acquired Fund(s) whenever practicable and only if consistent with the Acquiring Fund's and its shareholders' best interests. [The Acquired Fund acknowledges and agrees that any notification provided pursuant to the foregoing is not a commitment to redeem and constitutes an estimate that may differ materially from the amount, timing and manner in which a redemption request is submitted, if any.]]

[(iii) &nbsp;&nbsp;&nbsp;&nbsp;*Scale of investment.* Upon a reasonable request by an Acquired Fund, the Acquiring Fund will provide summary information regarding the anticipated timeline of its investment in the Acquired Fund and the scale of its contemplated investments in the Acquired Fund.]

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)In order to assist the Acquiring Fund's investment adviser with evaluating the complexity of the structure and fees and expenses associated with an investment in an Acquired Fund, each Acquired

------

Fund shall provide each Acquiring Fund with information on the fees and expenses of the Acquired Fund reasonably requested by the Acquiring Fund with reference to the Rule.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.Representations of the Acquired Funds.**

In connection with any investment by an Acquiring Fund in an Acquired Fund in excess of the limitations in Section 12(d)(1)(A), the Acquired Fund agrees to: (i) comply with all conditions of the Rule, as interpreted or modified by the SEC or its Staff from time to time, applicable to Acquired Funds; (ii) comply with its obligations under this Agreement; and (iii) promptly notify the Acquiring Fund if such Acquired Fund fails to comply with the Rule with respect to an investment by the Acquiring Fund, as interpreted or modified by the SEC or its Staff from time to time, or this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.Representations of the Acquiring Funds.**

In connection with any investment by an Acquiring Fund in an Acquired Fund in excess of the limitations in Section 12(d)(1)(A), the Acquiring Fund agrees to: (i) comply with all conditions of the Rule, as interpreted or modified by the SEC or its Staff from time to time, applicable to Acquiring Funds; (ii) comply with its obligations under this Agreement; and (iii) promptly notify the Acquired Fund if such Acquiring Fund fails to comply with the Rule with respect to its investment in such Acquired Fund, as interpreted or modified by the SEC or its Staff from time to time, or this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.Notices**

All notices, including all information that either party is required to provide under the terms of this Agreement and the Rule, shall be in writing and shall be delivered by registered or overnight mail, facsimile, or electronic mail to the address for each party specified below.

---

| | |
|:---|:---|
| If to the Acquiring Fund: | If to the Acquired Fund: |
| [Name] | [Name] |
| c/o [Company] | c/o [Company] |
| [Address] | [Address] |
| [City, State, Zip] | [City, State, Zip] |
| Email: | Email: |
| With a copy to: | With a copy to: |
| [Name] | [Name] |
| Attn: Legal Dept. | Attn: Legal Dept. |
| [Address] | [Address] |
| [City, State, Zip] | [City, State, Zip] |
| Email: | Email: |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.Term and Termination; Assignment; Amendment**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)This Agreement shall be effective for the duration of the Acquired Funds' and the Acquiring Funds' reliance on the Rule, as interpreted or modified by the SEC or its Staff from time to time. While the terms of the Agreement shall only be applicable to investments in Funds made in reliance on the Rule, as interpreted or modified by the SEC or its Staff from time to time, the Agreement shall continue in effect until terminated pursuant to Section 5(b).

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)This Agreement shall continue until terminated in writing by either party upon 60 days' notice to the other party. Upon termination of this Agreement, the Acquiring Fund may not purchase additional shares of the Acquired Fund beyond the Section 12(d)(1)(A) limits in reliance on the Rule.

[(c)This Agreement may not be assigned by either party without the prior written consent of the other.]

[(d)This Agreement may be amended only by a writing that is signed by each affected party.]

[(e)In any action involving the Acquiring Funds under this Agreement, each Acquired Fund agrees to look solely to the individual Acquiring Fund(s) that [is/are] involved in the matter in controversy and not to any other series of the Acquiring Funds.]

[(f)In any action involving the Acquired Funds under this Agreement, each Acquiring Fund agrees to look solely to the individual Acquired Fund(s) that [is/are] involved in the matter in controversy and not to any other series of the Acquired Funds.]

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

---

| | |
|:---|:---|
| **[Acquired Fund]** | **[Acquiring Fund]** |
| [Name of Authorized Signer]<br>[Title] | [Name of Authorized Signer]<br>[Title] |

---

------

**SCHEDULE A**

**List of Funds to Which the Agreement Applies**

---

| | |
|:---|:---|
| **Acquiring Funds** | **Acquired Funds** |

---

## Ex-99.(I)

---

| | |
|:---|:---|
| ![dechertlogo25a.jpg](dechertlogo25a.jpg) | 1900 K Street, N.W.<br>Washington, DC 20006<br>+1 202 261 3300 Main<br>+1 202 261 3333 Fax<br>www.dechert.com<br>_______________________________ |

---

May 29, 2026

Angel Oak Funds Trust

980 Hammond Drive, Suite 200

Atlanta, Georgia 30328

Dear Ladies and Gentlemen:

We have acted as counsel for Angel Oak Funds Trust (the "Registrant") and its investment series, Angel Oak Multi-Strategy Income Fund, Angel Oak UltraShort Income Fund, Angel Oak Income ETF, Angel Oak UltraShort Income ETF, Angel Oak High Yield Opportunities ETF, and Angel Oak Mortgage-Backed Securities ETF (the "Funds"), and are familiar with the Registrant's registration statement with respect to the Funds under the Investment Company Act of 1940, as amended, and with the registration statement relating to its shares under the Securities Act of 1933, as amended (collectively, the "Registration Statement"). The Registrant is organized as a statutory trust under the laws of the State of Delaware.

We have examined such governmental and corporate certificates and records as we deemed necessary to render this opinion, and we are familiar with the Trust's Amended and Restated Declaration of Trust and its By-Laws.

Based upon the foregoing, we are of the opinion that each Fund's shares proposed to be sold pursuant to the Registration Statement, when they are made effective by the Securities and Exchange Commission, will have been validly authorized and, when sold in accordance with the terms of such Registration Statement and the requirements of applicable federal and state law and delivered by the Registrant against receipt of the net asset value of the shares of the respective Fund, as described in the Registration Statement, will have been legally and validly issued and will be fully paid and non-assessable by the Registrant.

We hereby consent to the filing of this opinion as an exhibit to Post-Effective Amendment No. 64 to the Registration Statement, to be filed with the Securities and Exchange Commission in connection with the continuous offering of the Registrant's shares of beneficial interest, as indicated above, and to the reference to our firm, as counsel to the Registrant, in the Statement of Additional Information forming a part of the Registration Statement and in any amended versions thereof, until such time as we revoke such consent. In giving such consent, we do not admit that we are within the category of persons whose consent is required by Section 7 of the Securities Act of 1933, as amended, and the rules and regulations thereunder.

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| Very truly yours, |
| <br><u>/s/ Dechert LLP</u><br>Dechert LLP |

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## Ex-99.(J)

![cohenlogo.jpg](cohenlogo.jpg)

**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

We hereby consent to the incorporation by reference in this Registration Statement on Form N-1A of our report dated April 1, 2026, relating to the financial statements and financial highlights of Angel Oak Multi-Strategy Income Fund and Angel Oak UltraShort Income Fund, each series of Angel Oak Funds Trust, which are included in Form N-CSR for the year ended January 31, 2026, and to the references to our firm under the headings "Financial Highlights" in the Prospectus and "Other Fund Service Providers" in the Statement of Additional Information.

![cohensignature.jpg](cohensignature.jpg)

COHEN & COMPANY, LTD.

Milwaukee, Wisconsin

May 29, 2026

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![cohenlogo.jpg](cohenlogo.jpg)

**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

We hereby consent to the incorporation by reference in this Registration Statement on Form N-1A of our report dated April 1, 2026, relating to the financial statements and financial highlights of Angel Oak Income ETF, Angel Oak Ultrashort Income ETF, Angel Oak High Yield Opportunities ETF, and Angel Oak Mortgage-Backed Securities ETF, each series of Angel Oak Funds Trust, which are included in Form N-CSR for the year ended January 31, 2026, and to the references to our firm under the headings "Financial Highlights" in the Prospectus and "Other Fund Service Providers" in the Statement of Additional Information.

![cohensignature.jpg](cohensignature.jpg)

COHEN & COMPANY, LTD.

Milwaukee, Wisconsin

May 29, 2026

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