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What are some of the key differences between Wealthfront Risk Parity Fund and AQR Risk Parity Fund?


The AQR Risk Parity Fund (AQRIX) may differ from the Wealthfront Risk Parity Fund in important respects. Although both funds’ investment objectives seek total return that consists of capital appreciation and income, the implementation of each fund’s investment strategies may differ greatly. The AQR Risk Parity Fund pursues its investment objectives by allocating assets among major liquid asset classes including global developed and emerging market equities, global nominal and inflation-linked government bonds, emerging market fixed income, sovereign debt, the credit spreads of corporate and sovereign debt, developed and emerging market currencies, and commodities. The AQR Risk Parity Fund gains exposure to these asset classes by investing in many different types of instruments including, but not limited to: equity securities, equity futures, equity swaps, currency forwards, currency futures, commodity futures, commodity forwards, commodity swaps, U.S. and foreign government bonds (including inflation-linked bonds), cash and cash equivalents including but not limited to money market fund shares. The AQR Risk Parity Fund’s use of futures contracts, forward contracts, swaps and certain other instruments will have the economic effect of financial leverage. Financial leverage magnifies exposure to the swings in prices of an asset class underlying an Instrument and results in increased volatility, which means the Fund will have the potential for greater gains, as well as the potential for greater losses, than if the Fund does not use Instruments that have a leveraging effect. The AQR Risk Parity Fund will target an annualized volatility for the Fund of 10%. The AQR Risk Parity Fund may also make investments through a wholly-owned and controlled subsidiary of the Fund, organized under the laws of the Cayman Islands as an exempt company. Generally, the subsidiary will invest primarily in commodity futures, forwards and swaps but it may also invest in financial futures, option and swap contracts, fixed income securities, pooled investment vehicles, and other investments. The Wealthfront Risk Parity Fund seeks to achieve its investment objective by allocating its assets among a broad range of asset classes including but not limited to global developed and emerging market equities, global developed and emerging markets fixed income, real estate investment trusts (REITs) and commodities. The Fund’s exposure to these asset classes will be achieved principally through investments in derivative instruments such as total return swaps, and to a lesser extent by investing in forward and futures contracts. Through the use of derivatives that have the effect of leverage, the Wealthfront Risk Parity Fund will have the potential for greater gains, as well as the potential for greater losses, than if the Fund did not use derivatives or other instruments that have an economic leveraging effect. The Wealthfront Risk Parity Fund will target an annualized volatility for the Fund of 12%. Unlike the AQR Risk Parity Fund, the Wealthfront Risk Parity Fund will not make investments through a wholly-owned and controlled subsidiary of the Fund, organized under the laws of the Cayman Islands. Investments in both the AQR Risk Parity Fund and the Wealthfront Risk Parity Fund will subject an investor to derivatives risk, counterparty risk, leverage risk, commodities risk, market risk, credit risk, among other risks. However, investments in the AQR Risk Parity Fund would further subject an investor to the following risks: Credit Default Swap Agreements Risk, which involve special risks because they may be difficult to value, are highly susceptible to liquidity and credit risk, and generally pay a return to the party that has paid the premium only in the event of an actual default by the issuer of the underlying obligation (as opposed to a credit downgrade or other indication of financial difficulty); Currency Risk, which is the risk that changes in currency exchange rates will negatively affect securities denominated in, and/or receiving revenues in, foreign currencies. The liquidity and trading value of foreign currencies could be affected by global economic factors, such as inflation, interest rate levels, and trade balances among countries, as well as the actions of sovereign governments and central banks. Adverse changes in currency exchange rates (relative to the U.S. dollar) may erode or reverse any potential gains from the fund’s investments in securities denominated in a foreign currency or may widen existing losses; Short Sale Risk, which involves the risk of a theoretically unlimited increase in the value of the underlying instrument, which could cause the Fund to suffer a (potentially unlimited) loss. Short sales also involve transaction and financing costs that will reduce potential fund gains and increase potential fund losses; and Subsidiary Risk, which would indirectly expose the fund to the risks associated with the subsidiary’s investments. The commodity-related instruments held by the subsidiary are generally similar to those that are permitted to be held by the fund and are subject to the same risks that apply to similar investments if held directly by the fund. There can be no assurance that the investment objective of the subsidiary will be achieved. For more detailed information regarding the investment strategies and risks of each respective fund, please review each Fund’s respective prospectus: Wealthfront Risk Parity Fund Prospectus; AQR Risk Parity Fund Prospectus.

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The Wealthfront Risk Parity Fund (the “Fund”) is managed by WFAS LLC, a registered investment adviser and a wholly owned subsidiary of Wealthfront, Inc. WFAS LLC receives an annual management fee equal to 0.50% of the Fund’s average daily net assets. Northern Lights Distributors LLC a member FINRA/ SIPC serves as the principal distributor for the Fund.

Before investing in the Wealthfront Risk Parity Fund, you should carefully consider the Fund's investment objectives, risks, fees and expenses. This and other information can be found in the Fund’s prospectus. Please read the fund prospectus or summary prospectus carefully before investing. In order to add the Wealthfront Risk Parity Fund, we must rebalance your portfolio. As part of this process, if we sell positions at a gain, and you do not have sufficient harvested losses to offset those gains, you’ll pay taxes on the net gain.

There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.

3142-NLD-2/1/2018