FQ Global Alternatives Fund

First Quadrant seeks to deliver a consistent stream of alpha - excess return above the benchmark.

Market inefficiencies go through phases of expansion and contraction. To address this, portfolio managers of the Managers AMG First Quadrant Global Alternatives Fund have developed a multi-layered investment approach.

Investment Process Chart

Portfolio Construction

1. Focuses on four independent sources of return. First Quadrant analyzes each of these sources independently to pinpoint which types of investments will provide the greatest opportunity for return. These four sources of return are:
   • Global asset class selection
   • Equity country selection
   • Bond country selection
   • Currency selection
2. Builds breadth by identifying a range of market inefficiencies through developing a wide array of uncorrelated sources of profit investors can expect to deliver alpha consistently. Models are built upon 21 uncorrelated market inefficiencies across more than two dozen distinct stock, bond, and currency markets.
3. Directs the tactical allocation towards those market inefficiencies where the opportunities are large and away from those where they are small. These signals are fed into an optimization process, which distributes allocations to the trading desk via First Quadrant's internal modeling, risk management and trading system.
4. Researches new market inefficiencies that will expand the breadth of opportunities in order to replace those inefficiencies that may have shrunk or disappeared. Because inefficiencies in the market are constantly changing, current inefficiencies are constantly re-evaluated for their predictive power, and new inefficiencies are developed to replace those that have become less effective. This dynamic process is designed to identify and exploit emerging inefficiencies before the broader market becomes aware of them.

The Portfolio

• Exchange-traded stock index futures and bond futures
• Exchange-traded stock index options
• Sovereign debt options
• Exchange-traded currency futures
• Over-the-Counter (OTC) currency forwards

Risk

• Strategically allocates risk according to a long-term view of how much active risk should be devoted to each of the four return categories
• Tactically allocates risk on a month-to-month and day-to-day basis to optimize the portfolio within the strategic constraints and long term risk targets
• Employs risk control overlays that define the overall risk profile of the portfolio

Investors should carefully consider the fund's investment objectives, risks, charges, and expenses before investing. For this and other information, please call 800.835.3879 or download a free prospectus. Read it carefully before investing or sending money.

The performance shown represents past performance and is not a guarantee of future results. Current performance may be lower or higher than the performance data quoted. The investment return and the principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. From time to time the advisor has waived fees or reimbursed expenses, which may have resulted in higher returns. The listed returns and yields on the Fund are net of expenses and the returns and yields on the indices exclude expenses. Current performance of the Fund may be lower or higher than the performance quoted.

The Fund may use derivative instruments for hedging purposes or as part of its investment strategy.  There is a risk that a derivative intended as a hedge may not perform as expected.  The main risk with derivatives is that some types can amplify a gain or loss, potentially earning or losing substantially more money than the actual cost of the derivative or that the counterparty may fail to honor its contract terms, causing a loss for the Fund.  Use of these instruments may also involve certain costs and risks such as liquidity risk, interest rate risk, market risk, credit risk, management risk and the risk that a fund could not close out a position when it would be most advantageous to do so.

There is no guarantee that these investment strategies will work under all market conditions, and each investor should evaluate their ability to invest for a long-term, especially during periods of downturns in the market.

The investment return and the principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.