X-Square Alternative Dividend Alpha Fund

A hedge fund that provides investors with a targeted 6.5% tax-free dividend yield, with equity-like appreciation.

Investment Objective

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The Fund’s investment objective is to provide investors with a high level of current income sourced from an equity portfolio. Thus, investors can also benefit from the market appreciation and maximize Puerto Rico tax advantages.

Why QFAXQ?

This fund qualifies as an alternative investment for both high-net-worth individuals and institutions. The fund offers investors a hedge against macroeconomic uncertainty – in case of lower rates, the investor will receive equity appreciation. In the case of higher rates, the investor will continue to receive a high-yield dividend without a collapse in bond portfolio value.portfolio

High Yield:

QFAXQ provides a targeted 6.5% annual dividend yield.

Equity Portfolio

The majority of the portfolio consists of forty US equity positions.

Puerto Rico Registration

The fund’s dividend yield is tax-exempt for PR-based investors. For reference, the tax-equivalent yield is 8.28% for qualified investors and 10.50% for non-qualified investors.
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Disclosures:

Normally, the Fund will target a 60% allocation towards U.S. equity securities and a 40% allocation towards fixed income securities, including, but not limited to, investment-grade corporate debt, U.S. agency securities, and U.S. mortgage-backed securities and related derivatives. The Fund may also invest in securities of foreign issuers. Although the Fund focuses on investments in larger capitalization companies, the Fund’s investments are not limited to a capitalization size. The Fund may also hold cash or money market instruments, including commercial paper and short-term securities. The percentage of the Fund’s assets invested in such holdings varies and depends on various factors, including market conditions and purchases and redemptions of Fund shares.

The Adviser may determine that it is appropriate to invest a substantial portion of the Fund’s assets in such instruments in response to certain circumstances, such as periods of market turmoil. The Fund may invest without limitation in such instruments for temporary defensive purposes. The Fund may engage in active and frequent trading of portfolio securities, which may also result in higher short-term capital gains that are taxable to shareholders. For a more complete description of which securities the Fund can invest in and securities ratings, see the SAI.

As with all mutual funds, investing in the Fund involves certain risks. There is no guarantee that the Fund will meet its investment objective, and there is never any assurance that the Fund will perform as it has in the past. You can lose money by investing in the Fund. The Fund may use various investment techniques, some of which involve greater amounts of risk than others. To reduce risk, the Fund is subject to certain limitations and restrictions on its investments, which are described in more detail in the SAI.

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