Infinity Q Capital Management (“Infinity Q”) is not expected to be involved in the distribution process. Infinity Q’s involvement in the liquidation of the Fund’s portfolio has been subject to direct oversight, including by a third-party adviser, as described further below.

The order issued by the Securities and Exchange Commission (“SEC”) on February 22, 2021 (the “Order”) directed the liquidation of the Fund. In response to the Order, several of the counterparties to the Fund’s bilateral OTC positions issued notices of intent to terminate those positions immediately. These notices created a substantial risk that the counterparties would terminate the bilateral OTC positions involuntarily and in short order, and potentially cause the Fund to owe money to the counterparties on those positions based on prices dictated by the counterparties. Because of this risk, the Fund’s Board of Trustees (the “Board”) decided to take immediate steps to preserve the Fund’s assets in the best interests of shareholders and to the extent possible. Under the circumstances, it was neither feasible nor practical for the Fund to retain an investment adviser to completely replace Infinity Q in the management of the liquidation process.

As a result of these factors and given Infinity Q’s familiarity with the Fund’s complex holdings, Infinity Q’s involvement in the liquidation was appropriate, but only under the strict terms established by the Board and the Order. The Order prohibits Infinity Q from engaging in any transactions on behalf of the Fund without the prior written approval of the Board or its designee. The Board also noted that Infinity Q placed its former Chief Investment Officer, who was implicated in the valuation-related conduct that led to the Order, on administrative leave and that he would take no part in Infinity Q’s operations.

Further, immediately after the Order was issued on February 22, the Fund began the process of seeking a third-party investment adviser to advise the Board in connection with the Fund’s liquidation and to act as its designee. On February 26, the Board retained Russell Investments Implementation Services (“RIIS”), an affiliate of Russell Investments, a leading global institutional asset manager with significant multi-asset class trading experience including derivatives. The Board retained RIIS to advise it with respect to the Fund’s liquidation, to act as its designee, and to work with Infinity Q on all Fund transactions. Since RIIS’s engagement, Infinity Q has been required to present all potential Fund transactions to RIIS and the Board for review and consideration. RIIS also monitored Infinity Q’s daily activity as the liquidation occurred, and discussed that activity regularly with the Board.

As described in the Shareholder Update on March 26, 2021, the liquidation of the Fund’s portfolio is complete and the proceeds are now being held in cash and cash equivalents at the Fund’s custodian. Infinity Q is not expected to have any further involvement in the Fund’s liquidation.

Under the terms of the Investment Advisory Agreement (“IAA”) between Infinity Q and the Fund dated September 23, 2014, Infinity Q is responsible for paying any costs of liquidating the Fund. Pursuant to that provision, the Fund is tracking all liquidation expenses so they can be charged to Infinity Q, and has demanded that Infinity Q agree to pay those expenses. To date, Infinity Q has not responded to the Fund’s demand. However, as of February 18, the last day the Fund calculated a net asset value (“NAV”), the Fund had accrued approximately $1.8 million in Infinity Q management fees. The Fund has informed Infinity Q that the Fund will not be paying those fees to Infinity Q. Although those fees may be adjusted following any recalculation of the Fund’s NAV, the Fund intends to offset expenses associated with the liquidation and other expenses, including legal fees, against any unpaid management fees. In addition to payment of liquidation expenses, the Fund has also reserved the right to recoup any overpayment of prior management fees, and the Fund expects to seek such recoupment from Infinity Q in the event that the Fund determines in a recalculation of its NAV that Infinity Q was not entitled to some or all of the management fees it previously received.

Under the IAA, Infinity Q is also responsible for indemnifying the Fund for all losses the Fund may sustain, including legal fees, arising from Infinity Q’s willful misfeasance, bad faith, gross negligence or reckless disregard of the obligations or duties under the IAA. The Fund has provided notice to Infinity Q that it intends to seek indemnification from Infinity Q for all legal fees and other expenses arising from the issues addressed in the Order. The Fund is reserving all rights and taking appropriate steps to protect the Fund’s and shareholders’ interests with respect to potential claims against Infinity Q while the nature, extent, and consequences of the conduct at issue are being determined.

To date, Infinity Q has not agreed to reimburse or advance the Fund for any of these amounts or any future amounts. Further, the Fund anticipates that the approximately $1.8 million in accrued management fees, even if not adjusted downward based on any NAV restatement, will be insufficient to pay for either the liquidation costs or the losses the Fund incurs based on Infinity Q’s conduct. The Fund has informed Infinity Q that the Fund reserves all rights to seek to recover all fees and expenses from Infinity Q.

Following is a list of the civil actions filed against Infinity Q or its personnel, and/or the Fund, and a summary of their status as of June 4, 2024:

  • Settled Class Actions: Putative securities class action complaints were filed by purchasers of shares of the Fund in state and federal court in New York in 2021 and 2022, captioned In re Infinity Q Diversified Alpha Fund Securities Litigation, Index No. 651295/2021 and Dominus Multimanager Fund, Ltd. v. Infinity Q Capital Management LLC, et al., Index No. 652906/2022 before the Supreme Court of the State of New York, New York County, Commercial Division (together the “State Action”), and In re Infinity Q Diversified Alpha Fund and Infinity Q Volatility Alpha Fund Securities Litigation (formerly known as Yang v. Trust for Advised Portfolios, et al.), Case No. 1:21-cv-01047-FB-MMH, before the United States District Court for the Eastern District of New York (the “Federal Action”). The defendants named in one or more of these suits (together, the “Settled Class Actions”) were Infinity Q, James Velissaris, Leonard Potter, Scott Lindell, Bonderman Family Limited Partnership, LP, Infinity Q Management Equity, LLC, EisnerAmper LLP, U.S. Bancorp Fund Services, LLC (“USBFS”); the Fund, Christopher E. Kashmerick, John C. Chrystal, Albert J. DiUlio, S.J., Harry E. Resis, Russell B. Simon, Steven J. Jensen, Quasar Distributors, and Infinity Q Volatility Alpha Fund, L.P. and Infinity Q Volatility Alpha Offshore Fund, Ltd. (the “Infinity Q Hedge Fund”). The courts appointed Scott+Scott, Attorneys at Law, LLP and The Rosen Law Firm, P.A. as Co-Lead Counsel in the State Action and Robbins Geller Rudman & Dowd LLP and Boies Schiller Flexner LLP as lead counsel in the Federal Action. The Court in the State Action certified a class of purchasers of Fund shares and a separate class of purchasers of shares in the Infinity Q Hedge Fund for settlement purposes, and approved the settlement of both the State Actions and the Federal Action on December 21, 2023. Following the settlement approval, the Federal Action was dismissed on February 15, 2024. The Stipulation of Settlement, which is available here, provides for a total settlement fund of up to $48 million (none of which was paid from the Fund’s assets). The Fund is not involved in the administration of that settlement, which is ongoing under supervision of the Court in the State Action. For more information regarding the Settled Class Actions, shareholders should contact the settlement administrator, Gilardi & Co., which has established a website here, or the Plaintiffs’ counsel.

  • Dismissed Actions: On February 23, 2022, an individual shareholder of the Fund filed a derivative action purportedly on behalf of the Fund in the Chancery Court in the State of Delaware against Infinity Q, USBFS, and certain of the Fund’s trustees and officers, captioned Todd Rowan v. Infinity Q Capital Management, LLC, et al., Index No. 2022-0176. This shareholder derivative action asserted claims for breach of contract against Infinity Q and USBFS and claims for breach of fiduciary duty against Infinity Q and the trustees and officers of the Fund. The plaintiffs’ attorneys in that case were Bernstein Litowitz Berger & Grossman LLP and Morris Kandinov LLP. The case was dismissed on November 21, 2023.

On February 9, 2022, a shareholder of the Fund filed a putative securities class action complaint against USBFS in the Circuit Court of Milwaukee County in the State of Wisconsin. The complaint asserted claims under the Securities Act of 1933. Sherck v. U.S. Bancorp Fund Services, LLC; Case No. 2022-cv-000846. The plaintiffs’ attorneys in that case were Mallery S.C. and Morris Kandinov LLP. The Fund and its trustees and officers were not parties to this case. The case was dismissed on February 29, 2024.

On June 8, 2021, a shareholder of the Fund filed an individual securities complaint against the Fund, its officers and trustees, Infinity Q, and others asserting securities and common-law claims in the United States District Court for the Eastern District of New York, captioned Oak Financial Group v. Infinity Q Diversified Alpha Fund, No. 21-cv-3249. The case was dismissed on March 20, 2024.

• Pending Opt-Out Actions: On December 19 and 20, 2022, three actions were filed in New York Supreme Court by purchasers of Fund shares who elected not to participate in the Settled Class Actions described above, captioned The Glenmede Trust Company, N.A. v. Infinity Q Capital Management LLC, et al., Index No. 160830/2022; Flint Hills Diversified Strategies L.P. v. Infinity Q Capital Management LLC, et al., Index No. 160964/2022); and Carson Family 2013 Dynasty Trust v. Infinity Q Capital Management LLC, et al., Index No. 160834/2022 (the “Opt-Out Actions”). The complaints in the Opt-Out Actions assert claims under the Securities Act of 1933 against the same defendants named in the Settled Class Actions. These actions have been stayed as to the Fund and its trustees and officers; have been temporarily stayed as to USBFS and Quasar Distributors LLC; have been dismissed as to certain other defendants; and are ongoing as to EisnerAmper LLP.

• Pending Hedge Fund Action: On June 2, 2023, shareholders of the Infinity Q Hedge Fund who elected not to participate in the Settled Class Actions described above filed a lawsuit in New York Supreme Court captioned A Participations, Ltd. et al. v. Infinity Q Capital Management LLC, Index No. 652720/2023, naming as defendants Infinity Q, James Velissaris, Leonard Potter, Scott Lindell, Bonderman Family Limited Partnership, LP, Infinity Q Management Equity, LLC, Wildcat Capital Management, LLC, EisnerAmper LLP, and USBFS. This action is ongoing. The court has dismissed the claims against EisnerAmper LLP and USBFS. The Fund and its trustees and officers are not parties to this case.

• Settled SEC Action Against the Fund: The SEC filed a settled action against the Fund on November 10, 2022 alleging violations of the pricing provisions of Rule 22c-1 of the Investment Company Act of 1940, captioned SEC v. Infinity Q Diversified Alpha Fund, No. 22-cv-09608, in the United States District Court for the Southern District of New York. The Fund consented to a judgment permanently enjoining future violations and appointing a Special Master to oversee expenses paid from the Fund and to administer the process of returning the remaining assets in the Fund to shareholders. The SEC’s press release and complaint regarding the case are available here. The Court’s Amended Order appointing a Special Master is available here. Subject to that Order and the Court’s approval, the Special Master is overseeing the Fund’s payment of expenses and the administration of distributions to Fund shareholders.

• SEC Actions Against Infinity Q: The SEC filed a settled action against Infinity Q on June 16, 2023, captioned SEC v. Infinity Q Capital Management, LLC, No. 23-cv-05081, in the United States District Court for the Southern District of New York. The SEC’s complaint alleged violations by Infinity Q of the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; the antifraud, books and records, and reporting provisions of Sections 204(a), 206(1), 206(2), 206(4) and 207 of the Investment Advisers Act of 1940 and Rules 204-2(a), 206(4)-7, and 206(4)-8 thereunder; and the reporting provisions of Section 34(b) of the Investment Company Act of 1940, as well as aiding and abetting the Fund’s violation of the pricing provisions of Rule 22c-1 under that Act. Infinity Q consented to a judgment permanently enjoining future violations and appointing a monitor to oversee the return of funds in the Infinity Q Hedge Fund to investors. The SEC’s press release regarding the case is available here and its complaint available here.

On February 17, 2022, the SEC filed suit against James Velissaris, the former Chief Investment Officer of Infinity Q, for alleged violations of the antifraud provisions of the federal securities laws in connection with the Fund and the Infinity Q Hedge Fund, in an action captioned SEC v. Velissaris, No. 22-cv-01346, in the United States District Court for the Southern District of New York. The SEC’s press release and complaint regarding the case are available here.

On September 30, 2022, the SEC filed suit against Scott Lindell, a former officer of Infinity Q, for alleged violations of the antifraud provisions of the federal securities laws in connection with the Fund and the Infinity Q Hedge Fund, in an action captioned SEC v. Lindell, No. 22-cv-08368, in the United States District Court for the Southern District of New York. The SEC’s press release and complaint regarding the filing of the case are available here, and the SEC’s press release regarding the settlement of and final judgment in that action on April 12, 2024 is available here.

Yes. As described in the Distribution Plan, the Fund retained Alvarez & Marsal (“A&M”) to revalue the Fund’s Bilateral OTC Positions. A&M initially evaluated the Fund’s Bilateral OTC Positions as of February 18, 2021. As reported in the Distribution Plan, A&M concluded that the valuations applied to most of the Fund’s Bilateral OTC Positions were materially overstated as of February 18, 2021. A&M then revalued the Fund’s Bilateral OTC Positions that were held as of each month-end business day. A&M recently finalized its evaluation of the extent to which the Fund’s Bilateral OTC Positions were overstated in prior month-end periods and the effect on the Fund’s NAV for prior month-end periods. Based on A&M’s independent valuation, A&M concluded that the Fund’s Bilateral OTC Positions were overstated at each month-end date from February 2017 through January 31, 2021. When A&M’s valuations are used for calculation of the Fund’s NAV, the Fund’s reported month-end NAV was overstated by less than 10% prior to October 31, 2019, by more than 10% from October 31, 2019 through January 31, 2021, and for most months in 2020 more than 30% overstated. The Fund has provided the A&M revaluation results to the SLC for its use in its investigation and pursuit of potential claims on behalf of the Fund.

To date, the Fund has made four interim distributions to shareholders – the first in December 2021, the second in April 2022, the third in December 2023, and the fourth in April 2024. The Fund’s ability to make future interim distributions depends on whether it becomes possible to adjust the Special Reserve. That reserve is necessary to provide for projected potential liabilities of the Fund. The Fund will make a final distribution of any remaining assets once all potential liabilities and recoveries are resolved. Since January 2023, the Court-appointed Special Master oversees payment of Fund’s expenses, adjustments to the Special Reserve, and distributions of assets to shareholders, subject to Court approval. It is currently unknown when the Fund will be able to make a final liquidating distribution.

Although the Fund maintains insurance that covers its trustees and certain officers with respect to particular losses, including legal fees and other expenses resulting from civil litigation involving the Fund and its trustees and officers, certain of the expenses and liabilities that the Fund has incurred and anticipates incurring in connection with its liquidation and other matters discussed in the Order are not covered by any available insurance. These costs include expenses associated with the liquidation, expenses associated with the investigation and pursuit of affirmative claims on behalf of the Fund and its shareholders, other expenses associated with any government investigations, and certain expenses, including legal fees, incurred by service providers and others who are indemnified by the Fund. The Fund must establish a reserve to fund these expenses and liabilities.

The Order prohibits the Fund from redeeming shares. Therefore, the Fund is unable to purchase shares from shareholders.

The Plan treats (i) current shareholders as equity owners of the Fund’s assets; and (ii) former shareholders, to the extent they have claims against the Fund’s assets, and shareholders who submitted redemption requests on or before February 18, 2021 that were not satisfied by the Fund, as creditors who may have claims against the Fund. Claims of creditors are considered liabilities of the Fund. Although there is overlap of identity between current shareholders and those who have sued or become members of classes alleging damages claims against the Fund’s assets, there have also been former shareholders and class members alleging damages claims who are not current shareholders. So, not all plaintiffs or class members are entitled to distribution as equity holders. And even if there were identity between shareholders and the plaintiffs or class members, the method by which payments are to be distributed among plaintiffs or class members in a litigation would be net of payment of their attorneys’ fees and expenses and would be different from the pro rata methodology for distributing to equity holders set forth in the Plan. And, even if those serious distinctions did not exist, the fact is the Fund does not have the power to end the pending litigation unilaterally, even by distributing reserved amounts.

Since the establishment of the Special Reserve in 2021, the Fund has reduced the Special Reserve to address reductions in the estimated scope of the Fund’s remaining potential liabilities. In April 2022, the Fund’s Board of Trustees approved a $170 million reduction of the Special Reserve, enabling the Second Interim Distribution. Most recently, following court approval of the settlement of the class actions (described in FAQ 1.3, above), the Special Master recommended and the court overseeing further distributions from the Fund approved a reduction of the Special Reserve to $100 million in March 2024. As a result of these reductions in the Special Reserve, the Fund has been able to approve distributions of $657,384,067 (less distribution expenses) through June 2024.

Former shareholders who have claims against the Fund are treated as creditors, not as shareholders. So, there is no provision for making a distribution to a former shareholder. Also, bear in mind that if a former shareholder was overpaid in a redemption, the Fund may assert a claim against that former shareholder and will reduce any payment to that shareholder on account of the Fund’s claim.

The Plan of Distribution provides for a straightforward and expedient interim distribution of the Fund’s assets (net of the Special Reserve) to current shareholders. The Board determined that re-striking the NAV and recalculating the number of shares held by each shareholder at the relevant time would require a difficult, time-consuming, fact-intensive and expensive inquiry. Moreover, at the end of that exercise, issues concerning why certain investors chose not to redeem while others did would remain. Given the number of variables involved with re-striking the Fund’s NAV and the uncertainty around making assumptions about what a shareholder might have done in the past had the NAV been different, the results would be speculative at best and could not be said to be fairer and more equitable to all shareholders than pro rata distribution of the Fund’s assets to current shareholders based on the Fund’s holdings as of 8:00 a.m. Eastern Time on February 19, 2021.

Delaware statutory trust law (12 Del. C. § 3808) and the Plan of Liquidation require the Board to reserve for all of the Fund’s debts, obligations and liabilities, whether contingent, conditional, unmatured, known or unknown. As a general matter, such claims against the Fund arising from debts, obligations and liabilities of the Fund have priority to the claims of current shareholders, who are equity holders in the Fund and not creditors of the Fund. Examples of creditors who may have claims against the Fund include the Fund’s service providers, parties seeking indemnification from the Fund pursuant to indemnification agreements, and plaintiffs in the litigations asserting damages claims and seeking recovery from the Fund’s assets. The Board has undertaken a process to evaluate and estimate the Fund’s potential expenses and liabilities and has determined that a substantial reserve is required to ensure the Fund has sufficient assets to meet those expenses and liabilities. By reserving for potential liabilities and other claims creditors may make against the Fund, the Board makes no admission that any damages are or will be owed and does not agree that there is any legal or factual basis for any claim or damages amount.

Institutional and individual shareholders are treated equally under the Plan, regardless of which class of Fund shares they own. Each of the shareholders in each of the two classes will receive a pro rata distribution based on the number of shares held in the class as of 8:00 a.m. on February 19, 2021 as a fraction of the total shares outstanding in the class. There is no preference or priority for one class or the other.

No. Pursuant to the Order of the federal court in the Settled SEC action against the Fund (described above), the Special Master made recommendations to the federal court for amendments to the Plan’s distribution plan, including the timing and amount of distributions from the Special Reserve, following final approval of the Stipulation of Settlement that resolved the Settled Class Actions. The March 26, 2024 Order approving the Special Master’s amended distribution plan can be found here. The Special Master will make recommendations to the federal court for any future interim and final distributions of assets to shareholders.

The main reason is that the Special Reserve includes an additional amount for uncertainty, in order to minimize the risk that the amount the Fund pays out in interim distributions leaves the Fund unable to pay all of its liabilities and expenses (which would cause the Fund to have to seek returns from recipients). There are many unknowns about the total amount of the Fund’s liabilities and expenses. And once money is paid out, the Board believes there is a substantial risk it could not be recovered if it turns out there was an overdistribution. It is also true that the Special Reserve includes amounts for projected professional fees and expenses, but those amounts represent a small fraction of the total Special Reserve. Since its establishment, the Special Reserve has been reduced twice (enabling interim distributions to shareholders) and stands at $99,682,599 as of May 31, 2024.

Yes, if the Fund is required to pay money to satisfy a judgment or settlement to resolve any of the remaining litigation claims against the Fund or its indemnitees. The Special Reserve may be required to cover substantially all of the amounts necessary to pay for the defense and resolution of all litigation brought by current and former shareholders. If plaintiffs do not prevail or such litigation is otherwise resolved at a lower cost to the Fund than anticipated by the Special Reserve, the Special Master may be able to reduce the size of the Special Reserve and make additional distributions, subject to the approval of the Court presiding over the Settled SEC Action against the Fund.

As of 8:00 a.m. ET on February 19, 2021, the Fund had the following shares outstanding:

Investor Class 4,662,375.287
Institutional Class 129,867,832.617

The Fund is unable to distribute all of its assets to current shareholders and then declare bankruptcy because it is required by law to pay, or to provide sufficient reserve for, all its liabilities before equity holders receive a distribution. Even though some of the potential liability claims the Fund faces are held by current and former shareholders, those claims must be resolved or fully provided for before the Fund can legally make a distribution to current shareholders. For this reason, current shareholders could receive a distribution through the Plan based on their equity interests, and a separate payment from the reserve to resolve any claims related to pending or future legal actions. A bankruptcy proceeding would also add to the expenses of the Fund and delay distributions.

U.S. shareholders are strongly urged to consult their own tax advisors regarding the availability and timing of recognizing a tax loss, as the Fund (like other mutual funds) does not provide tax advice.

The Interim Distributions are cash liquidating distribution with respect to shares held in each shareholder account. Accordingly, the amounts of the Interim Distributions (together with the aggregate amounts received from the series of liquidating distributions of which the Interim Distributions are a part) should be applied against the shareholder’s aggregate basis in all their shares in the Fund to determine gain or loss. A shareholder generally can only recognize a loss following the final liquidating distribution of the Fund if the total of all liquidating distributions received are less than the shareholder’s aggregate basis in all their shares of the Fund.

See also FAQ 4.1.

The Interim Distributions did not result in a partial redemption of shares or other reduction of the total number of shares held by each shareholder.

As of June 27, 2024, the Fund has made four interim distributions to shareholders: the first in December 2021, the second in April 2022, the third in December 2023, and the fourth in April 2024. If you are a current shareholder of the Fund and you did not receive one or more of the interim distributions, it may be for one or more of the following reasons:

• ACCOUNTS WITH HOLDBACKS FOR NET GAINS. There are a small number of current shareholder accounts for which the Fund is not making one or more interim distributions based on amounts previously received by that shareholder on one or more redemptions of Fund shares prior to February 18, 2021 pursuant to a NAV that the Fund has determined was overstated. The intermediaries and custodians have the list of accounts that did not receive interim distributions and can advise you if that is the reason you did not receive any interim distributions.
• PRIOR REDEMPTIONS. If a shareholder submitted a request to redeem shares on or before 4:00 p.m. EST on February 18, 2021 that was not paid in February 2021, the Plan of Distribution treated that shareholder as having a “Redemption Claim” and such shareholder did not receive an interim distribution with respect to those shares. Such Redemption Claims were paid separately. Please view the Plan for more information for treatment of “Redemption Claims” as defined in the Plan of Distribution.
• TRANSFERS.. If after February 18, 2021, you transferred your shares to an account at a different bank or institution, your distribution was sent to the bank or institution where your shares resided as of February 18, 2021 and the prior institution will transfer your payment to the current institution. Contact your current institution so it can coordinate with your prior institution to obtain your funds.

The dollar amount of $3.7197 per share for Institutional Shares (IDQNX) and $3.6676 per share for Investor Shares (IDDAX), was determined by dividing the $500 million interim distribution by the number of Institutional Shares and Investor Shares outstanding as of February 18, 2021 that were eligible for an initial distribution. For more information, please see Shareholder Notice Regarding the Interim Distribution.

Yes, the Fund has posted an IRS Form 8937 for the four interim distributions to date. They can be accessed in the “Important Documents” tab or HERE (initial interim distribution), HERE (second interim distribution), HERE (third interim distribution), and HERE (fourth interim distribution).

If a shareholder holds their shares directly with the Fund (not through an intermediary or custodian), then the shareholder can expect to receive an IRS Form 1099-DIV from the Fund.  The vast majority of Shareholders hold their shares through an intermediary or custodian and that party will send an IRS Form 1099-DIV for the Interim Distributions. 

The second interim distribution is being made on a pro rata basis to those shareholders that owned shares as of February 18, 2021 (at end of day) and the per share amount is as follows: 

IQDNX (Institutional Shares):      $1.2647 per share
IQDAX (Investor Shares):            $1.2470 per share

However, each shareholder account will not necessarily receive the full amount per share.  In calculating each shareholder’s pro rata share, the Fund will also make offsets based on that shareholder’s net gains from prior acquisitions and redemptions of Fund shares (before February 19, 2021) pursuant to NAVs that the Fund determined were overstated.  Similarly, there are a number of current shareholder accounts for which the Fund is holding back the entire second interim distribution based on amounts previously received by that shareholder on one or more prior purchases and redemptions of Fund shares pursuant to a NAV that the Fund has determined was overstated.  The Fund provided to each intermediary or custodian the precise dollar amount per share and dollar amount of the second interim distribution for any shareholder account that received less than the full per share amount referenced above. Shareholders who were subject to an offset may request a calculation of their offset by asking their intermediary or custodian to obtain it from the Fund.  For more information, please see Shareholder Notice Regarding the Second Interim Distribution.  In addition, with respect to all intermediaries and custodians that the Fund has paid the second interim distribution, as of June 29, 2022, the Fund has distributed to the intermediaries and custodians individualized offset calculations for any shareholder account that was subject to an offset in the second interim distribution.  Thus, if you did not receive a second interim distribution or received only a partial distribution you may ask your intermediary or custodian to provide a copy of the offset calculation for your specific account(s).

If you have not received an interim distribution, please check to see if your intermediary or custodian has finished allocating its distributions to customer accounts. If your intermediary or custodian has indicated that you were subject to an offset, you may request a calculation of your offset by asking your intermediary or custodian to obtain your offset calculation from the Fund. The Fund does not have the names or addresses of shareholders who hold their shares through intermediaries or custodians, so shareholder requests by account number must be submitted to the Fund through your intermediary or custodian. With respect to all intermediaries and custodians that the Fund has paid the interim distributions, as of June 27, 2024, the Fund has distributed to the intermediaries and custodians individualized offset calculations for any shareholder account that was subject to an offset in the four interim distributions to date. Thus, if you did not receive an interim distribution or received only a partial distribution, you may ask your intermediary or custodian to provide a copy of the offset calculation for your specific account(s). 

Shareholders or their beneficiaries may submit updated account and contact information to the custodian or the intermediary of the initial shareholder.  The Fund makes distributions to the record shareholders as of February 18, 2021 notwithstanding any subsequent transfers.

On November 1, 2023, the Special Master filed an application seeking approval of a proposed plan of distribution of Fund income. The application can be found here. The Fund's assets have generated investment income during 2023 of at least $24 million and the Special Master seeks to make a distribution of such funds to shareholders, as set forth in his application. On November 30, 2023, the Court approved the application for distribution of Fund income. The Fund has issued a Notice to Shareholders, dated December 5, 2023, regarding this distribution which will be in the amount of $25 million. The notice can be found here.  The distribution of net income was paid on December 15, 2023 to intermediaries and custodians and it will take them some time to allocate the funds to shareholder accounts. 

The third interim distribution was made on a pro rata basis to those shareholders that owned shares as of February 18, 2021 (at end of day) and the per share amount is as follows: 

IQDNX (Institutional Shares):      $0.1860 per share
IQDAX (Investor Shares):            $0.1834 per share

However, each shareholder account will not necessarily receive the full amount per share.  In calculating each shareholder’s pro rata share, the Fund will also make offsets based on that shareholder’s net gains from prior acquisitions and redemptions of Fund shares (before February 19, 2021) pursuant to NAVs that the Fund determined were overstated.  Similarly, there are a number of current shareholder accounts for which the Fund is holding back the entire third interim distribution based on amounts previously received by that shareholder on one or more prior purchases and redemptions of Fund shares pursuant to a NAV that the Fund has determined was overstated.  The Fund provided to each intermediary or custodian the precise dollar amount per share and dollar amount of the third interim distribution for any shareholder account that received less than the full per share amount referenced above. Shareholders who were subject to an offset may request a calculation of their offset by asking their intermediary or custodian to obtain it from the Fund.  For more information, please see Shareholder Notice Regarding the Third Interim Distribution.

On February 26, 2024, the Special Master filed an application seeking approval of a proposed amended plan of distribution of Fund assets. The application can be found here. On March 26, 2024, the Court approved the Special Master’s application for distribution of Fund assets. The Fund has issued a Notice to Shareholders, dated April 4, 2024, regarding this distribution which will be in the amount of $487,384,067 (less distribution expenses). The notice can be found here.  The distribution of assets was paid on April 9, 2024 to intermediaries and custodians and it will take them some time to allocate the funds to shareholder accounts.

The fourth interim distribution was made on a pro rata basis to those shareholders that owned shares as of February 18, 2021 (at end of day) and the per share amount is as follows:

IQDNX (Institutional Shares):      $3.6232 per share

IQDAX (Investor Shares):            $3.5724 per share

However, each shareholder account will not necessarily receive the full amount per share.  In calculating each shareholder’s pro rata share, the Fund will also make offsets based on that shareholder’s net gains from prior acquisitions and redemptions of Fund shares (before February 19, 2021) pursuant to NAVs that the Fund determined were overstated.  Similarly, there are a number of current shareholder accounts for which the Fund is holding back the entire fourth interim distribution based on amounts previously received by that shareholder on one or more prior purchases and redemptions of Fund shares pursuant to a NAV that the Fund has determined was overstated.  The Fund provided to each intermediary or custodian the precise dollar amount per share and dollar amount of the fourth interim distribution for any shareholder account that received less than the full per share amount referenced above. Shareholders who were subject to an offset may request a calculation of their offset by asking their intermediary or custodian to obtain it from the Fund.  For more information, please see Shareholder Notice Regarding the Fourth Interim Distribution.

Immediately upon learning of the SEC Staff’s allegations involving Infinity Q, the Board focused on protecting the Fund’s assets and liquidating the Fund’s portfolio in the best interests of shareholders. Once the Fund’s assets were fully liquidated, the Fund began to analyze any potential claims it may have, including against service providers to the Fund and former shareholders. The Fund provided notices to certain service providers reflecting that the Fund reserves all of its rights as it explores potential claims, and sought agreements with certain service providers to toll the statute of limitations with respect to any potential claims the Fund may have.

On December 20, 2021, the Board approved the creation of a Special Litigation Committee (the “SLC”) for the purpose of investigating and pursuing potential claims on behalf of the Fund. The SLC will carry forward the Fund’s investigation and prosecution of potential claims against service providers to or former shareholders of the Fund. An announcement relating to the SLC can be found here.

The Fund is reserving all rights and taking appropriate steps to protect its and shareholders’ interests with respect to potential claims the Fund may have while the nature, extent, and consequences of the conduct at issue are being determined.

An essential first step of the assessment of potential claims the Fund may possess was to determine the extent of any misvaluation of the Fund’s assets over time. Based on A&M’s independent valuation, A&M concluded that the Fund’s Bilateral OTC Positions were overstated at each month-end date from February 2017 through January 31, 2021. When A&M’s valuations are used for calculation of the Fund’s NAV, the Fund’s reported month-end NAV was materially overstated by less than 10% prior to October 31, 2019, by more than 10% from October 31, 2019 through January 31, 2021, and for most months in 2020 it was more than 30% overstated. The Fund provided the A&M revaluation results to the SLC for its investigation and pursuit of potential claims on behalf of the Fund.

In connection with the federal securities fraud case brought by the U.S. Department of Justice against James Velissaris, the SLC submitted a request on behalf of the Fund for restitution based upon certain losses suffered by the Fund as a result of Velissaris’ fraudulent misvaluation of the Fund’s portfolio. On August 3, 2023, the U.S. District Court for the Southern District of New York granted the Fund’s request and entered an order requiring Velissaris to pay $59,152,425 in restitution to the Fund.

The Fund has also initiated litigation against certain services providers. See FAQ 3.3.

The Fund has initiated litigation against certain service providers. See FAQ 3.3.

The Board created the Special Litigation Committee (the “SLC”) specifically for the purpose of investigating and pursuing potential claims on behalf of the Fund. The SLC investigated the facts, evaluated potential claims, and considered the most effective and efficient way to assert those claims, including whether the Fund should initiate litigation or other dispute resolution mechanisms. The SLC determined that the Fund should pursue the litigation described in FAQ 3.3. The SLC continues to evaluate additional potential claims against other third parties.

Prior to the creation of the SLC, the Board had sought tolling agreements with persons and entities against which the Fund may have claims. These agreements generally tolled the running of any statutes of limitations for a period of time and preserved the Fund’s (and the SLC’s) ability to assert claims in the future. The Board timely sought and obtained extensions of any tolling agreements that were due to expire so that the Fund, and the SLC in particular, would have sufficient time to investigate and pursue potential claims. No such tolling agreements expired, and the SLC after its creation secured extensions of such tolling agreements to the extent necessary to preserve such claims while the SLC’s investigation was ongoing.

Based upon its investigation, the SLC determined that the Fund should pursue litigation against U.S. Bancorp Fund Services, LLC (“USBFS”) and EisnerAmper LLP. Accordingly, at the direction of the SLC, the Fund filed suit against those parties on April 26, 2024 in an action captioned Trust for Advised Portfolios, on behalf of the Infinity Q Diversified Alpha Fund v. U.S. Bancorp Fund Services, LLC, et al., Index No. 652179/2024, in New York Supreme Court. The Fund’s complaint, a copy of which is available here, alleges claims for breach of contract and contractual indemnification against USBFS and for breach of contract and negligent misrepresentation against EisnerAmper LLP. This case is ongoing.

U.S. shareholders are strongly urged to consult their own tax advisors regarding the availability and timing of recognizing a tax loss, as the Fund (like other mutual funds) does not provide tax advice.

In those consultations, U.S. shareholders and their tax advisors may wish to consider that the Fund is taxed as a “regulated investment company” under the Internal Revenue Code of 1986, as amended (the “Code”), and consequently any losses incurred by the Fund do not pass through to shareholders. Any such loss by the Fund, however, would be expected to reduce the net asset value of the Fund and accordingly also reduce the price of the shares of the Fund. A U.S. shareholder of the Fund generally only recognizes a loss when they dispose of their shares in the Fund either by sale, redemption, or upon a final liquidating distribution of the Fund or when they have satisfied the requirements under Section 165(g) of the Code and the accompanying regulations (which generally require the shares of the Fund to have become wholly worthless or for a shareholder to have abandoned their interest in the Fund). The deductibility of capital losses is subject to limitations. A final liquidating distribution was not made in 2021, 2022 or 2023, and a final liquidating distribution cannot be made until a variety of events occur, including the Fund's distribution to shareholders of the Special Reserve which currently holds more than $500 million.

The Trust maintained liability insurance which provides coverage for the Fund, its trustees and officers. The policy had a total aggregate limit of less than $10 million. The Trust, trustees and officers also had coverage under policies maintained by Infinity Q, which had a total aggregate limit of $20 million. The insurance available under the policies maintained by the Trust and Infinity Q was eroded by defense costs for covered claims. When they entered into the then- proposed settlement of the Settled Class Actions, the Trust and other insureds agreed to contribute most of the remaining available insurance coverage towards that settlement; that contribution became final when that settlement was approved in December 2023. Thus, the coverage available under those policies has been exhausted. A portion of the remaining coverage available under Infinity Q’s policies was disputed and was the subject of a lawsuit against the insurers in Delaware. On August 15, 2022, the Delaware court presiding over the insurance dispute concerning coverage under Infinity Q’s policies ruled in favor of the insurers and against the insureds (including the Fund), finding that the insurers had no obligation to pay under the Infinity Q policies. The insureds appealed, but the Delaware Supreme Court affirmed that decision on May 2, 2023. As a result, there is no further insurance coverage available for the Fund, its trustees and officers with respect to any of the claims that remain pending.

Until January 2023, before the Court appointed a Special Master, the Fund's Board of Trustees exercised oversight over the Fund's expenses, including professional and shareholder servicing fees. As of the date the Special Master was appointed, the Special Master oversees the Fund's expenses, subject to the Court's approval in accordance with the orders governing the Special Master's role. Generally, the viability of Fund expenses is dependent on the amount of services rendered in each particular month and the timing of the Special Master's review of invoices. Because the Fund generally pays invoiced in arrears, Fund expenses in a particular month were for services rendered in prior months.

As of March 19, 2021, the Fund’s portfolio has been entirely liquidated to cash or cash equivalents pursuant to the Fund’s Asset Liquidation Plan, which became effective on February 25, 2021. Until the Fund distributes all of its assets, the Fund will continue to maintain its status as a regulated investment company.

Pending distribution, the Fund’s assets are invested in the same money market fund utilized by the Fund before the SEC’s Order was issued. The accrued interest or dividends earned by the Fund each month can be found in the monthly reports published by the Fund, which can be found here. Please note that Condition 4 of the SEC’s Order limits the types of investments the Fund can make to U.S. government securities, cash equivalents, and securities eligible for purchase by a registered money market fund with legal maturities not in excess of 90 days.

U.S. shareholders are strongly urged to consult their own tax advisors regarding implications to required minimum distributions, as the Fund (like other mutual funds) does not provide tax advice.

The Fund published an updated NAV on December 30, 2021 in order to reflect the result of the Interim Distribution. Prior to December 30, 2021, the Fund had not published an NAV since February 18, 2021. An explanation of the changes in the Fund’s assets since February 18, 2021 and how the updated NAV was calculated appears below.

It is important for shareholders to understand how the Special Reserve affects the published NAV and future distributions to shareholders under the Plan of Distribution. For purposes of calculating the Fund’s updated NAV, the full amount of the Special Reserve is treated as a liability of the Fund, meaning that the amount of the Fund’s assets subject to the Special Reserve is fully offset by the Special Reserve. Nearly all of the Fund’s assets as of December 1, 2021 in excess of the Special Reserve were distributed to shareholders in the Interim Distribution. The result of those two things—treatment of the Special Reserve as a liability and the distribution of substantially all the Fund’s assets not subject to the Special Reserve—is a NAV of $0.0250 per share for Institutional Class shares and a NAV of $0.0250 per share for Investor Class shares.

This does not mean, however, that going forward shareholders will receive $0.0250 or less per share in further distributions on their shares in the Fund. The amount of any additional distributions of equity interests in the Fund depends on the resolution of the Fund’s potential liabilities, which are provided for in the Special Reserve. As stated in the Plan of Distribution, the Fund is working to resolve the securities litigation and other potential liabilities for which the Special Reserve was established. As those liabilities are resolved by fixing their amount, the Board may be in a position to decrease the Special Reserve, which could permit additional distributions and would affect the amount of future distributions.

Following is a summary of the changes in the Fund’s assets during the relevant period and how the updated NAV per share for each class was calculated:

• The Fund reported net assets as of the close of trading on February 18, 2021 of $1,727,194,949.

• The Fund’s portfolio was fully liquidated as of March 19, 2021, resulting in total assets as of March 25, 2021 of $1,249,485,022 (not including outstanding close-out payments from certain derivatives counterparties).

• As of June 30, 2021, the end of the month in which the Fund submitted its Plan of Distribution to the SEC staff, the total assets of the Fund were $1,248,095,070 and the Special Reserve was $748,699,193. This resulted in the Fund having net assets of $499,395,877.

• As of November 30, 2021, the total assets of the Fund were $1,243,903,362 and the Special Reserve was $744,455,220, resulting in the Fund having net assets of $499,448,142. These reductions in the Fund’s total assets and the Special Reserve are reflected in the Month End Reports posted in the “Shareholder Updates” section of the Fund’s website. The total assets of the Fund also include earnings it receives from the cash-equivalent investments in which the assets are held.

• On December 3, 2021, the Fund commenced making the Interim Distribution in accordance with the Plan of Distribution, and to date has distributed $496,179,609 of the Interim Distribution.

• As of December 30, 2021, the total assets of the Fund were $746,532,717, and the Special Reserve was $743,234,675, resulting in net assets of $3,357,326, which includes $2,804,954 that may be needed to complete the Interim Distribution.

• The net assets of the Fund, $3,357,326, are divided by the total shares outstanding to determine the NAV of $0.0250 as of December 30, 2021.

The Fund continues to provide monthly reports of the Fund’s total assets, monthly expenses, and the remaining Special Reserve amount, which can be found here. The Fund does not anticipate publishing an updated NAV again in the near future.

No.  Pursuant to an SEC Order dated February 22, 2021, all redemptions are suspended. 

Yes. As the Fund does not have the ability to redirect distributions to new accounts, all distributions are made to the custodian or intermediary that held the shares as of February 18, 2021. However, the Fund understands that Charles Schwab has been routing, and will continue to route, any distributions made to legacy TD Ameritrade accounts to the corresponding accounts now maintained by Schwab. The Fund encourages investors who held their IDQNX or IDDAX shares in TD Ameritrade accounts as of February 18, 2021 to contact their account representative at Schwab for additional information.