QAI

About QAI

TheFund is a “fund of funds” which means it invests, under normal circumstances,at least 80% of its net assets, plus the amount of any borrowings for investmentpurposes, in the investments included in its Underlying Index, which includes underlying funds. The Advisor is the index provider forthe Underlying Index. The Underlying Index consists of a number of components (“UnderlyingIndex Components”) selected in accordance with its rules-based methodology. Such UnderlyingIndex Components will include primarily ETFs and/or other exchange-traded vehicles issuingequity securities organized in the U.S., such as exchange-traded commodity pools(“ETVs”),and may include exchange-traded notes (“ETNs”) (such ETFs, ETVs and ETNs are referred to collectively as “exchange-tradedproducts” or “ETPs”). The Fund may also invest in one or more financialinstruments, including but not limited to futures contracts and swap agreements (collectively, “FinancialInstruments”).TheFund employs a “passive management” — or indexing — investment approach designed to track the performance of theUnderlying Index. The Underlying Index generally is based on the premise that aggregated returns of hedge funds in a broad hedge funduniverse display, over time, significant exposures to a set of common asset classes. The Underlying Index seeks to achieve performancesimilar to the overall hedge fund universe by replicating the “beta” portion ofthe hedge fund return characteristics (i.e., that portion of the returns that are non-idiosyncratic,or unrelated to manager skill) over longer term periods and not on a daily basis (the “Strategy”). The Underlying Index doesnot seek to replicate the “alpha” portion of the return characteristics of the overall hedge fund universe. In addition, theFund does not invest in hedge funds, and the Underlying Index does not include hedge funds as Underlying Index Components. The Fund isnot a fund of hedge funds. Managers included in the broad hedge fund universe may employ investment styles, including but not limitedto:•Equitystrategies, including long-only, long bias, long/short, market neutral and dedicated shortstrategies;•Fixedincome strategies, including long-only and long/short credit strategies, high yield, asset-backed, and convertible bondstrategies;•Emergingmarket strategies, including global and region- and country-specific strategies;•Sectorstrategies, including healthcare and biotechnology, technology, real estate, energy, financials and natural resources strategies;and•Specializedand alternative strategies, including multi-strategy, balanced, global macro, event-driven, options, merger arbitrage, and managed futuresstrategies. The Underlying Index may include both long and short positions in ETFs and ETVs.As opposed to taking long positions in which an investor seeks to profit from increases in the price of a security, short selling (or“selling short”) is a technique used by the Fund to try and profit from the fallingprice of a security. Short selling involves selling a security that has been borrowed froma third party with the intention of buying the identical security back at a later date to return to that third party. The basic principleof short selling is that one can profit by selling a security now at a high price and later buying it back at a lower price. The shortseller hopes to profit from a decline in the price of the security between the sale and therepurchase, as the seller will pay less to buy the security than it received on selling thesecurity.TheUnderlying Index Components of this Strategy generally provide exposures to:•Commodities;•Emergingmarket equity, debt and sovereign debt, including small-capitalizationequity;•Foreigncurrencies and currency futures;•Foreignsovereign debt and equity, including small-capitalization equity;•Municipalbonds;•Theimplied volatility of the S&P 500®Index;•U.S.and foreign preferred securities;•U.S.and foreign real estate investment trusts;•U.S.bank loans;•U.S.convertible debt;•U.S.floating rate bank loans;•U.S.floating rate bond;•U.S.government short-term, intermediate-term and long-term maturitybond;•U.S.growth equity;•U.S.low volatility equity;•U.S.momentum equity;•U.S.high yield (or “junk”) debt;•U.S.investment grade corporate debt;•U.S.large-capitalization equity;•U.S.mortgage-backed debt;•U.S.small-capitalization equity;•U.S.Treasury Inflation Protection Securities (“TIPS”);•U.S.value equity; and•Alternativestrategies including merger arbitrage, market neutral, long/short, options, private equity replication, and managedfutures.TheUnderlying Index is unlike traditional market-oriented indexes like the Standard & Poor’s 500®Composite Stock Total Return Index (the “S&P 500 Index”). Instead of tracking the performance of publicly-traded issuersrepresenting a market or industry sector, the Underlying Index seeks to track the returns of distinct hedgefund investment styles.TheUnderlying Index may include as a component one or more ETFs advised by the Advisor (“Affiliated ETFs”) and the Fund willtypically invest in any Affiliated ETF included in the Underlying Index. The Fund also mayinvest in Affiliated ETFs that are not components of the index if such an investment will help the Fund track the UnderlyingIndex.Theweights of the Underlying Index Components are rebalanced on a quarterly basis. Annually, the Advisor conducts a review process pursuantto which it may reconstitute the Underlying Indexes by adding or subtracting Underlying Index Components according to the Advisor’srules-based process.