Type 485APOS Arrow Investments Belief

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION

ON June 10, 2022

Securities Act Registration No. 333-178164

Investment Company Act Registration No. 811-22638

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

and/or

Approximate date of proposed public offering: As soon

as practicable after the effective date of the Registration Statement.

It is proposed that this filing will become effective:

If appropriate, check the following box:

The information in this prospectus

is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange

Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities

in any state where the offer or sale is not permitted.

ARROW DYNAMIC BITCOIN STRATEGY ETF

DBCS

PROSPECTUS

(___), 2022

1-877-ARROW-FD

(1-877-277-6933)

www.ArrowFunds.com

This Prospectus provides important information about

the Fund that you should know before investing. Please read it carefully and keep it for future reference.

The Securities and Exchange Commission has not approved

or disapproved of these securities or passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a

criminal offense.

Shares of the Fund are listed and traded on the Cboe

BZX Exchange, Inc. (the “Exchange”).

Table of Contents

FUND SUMMARY: ARROW DYNAMIC BITCOIN STRATEGY ETF

Investment Objective

Fees and Expenses of the Fund

Principal Investment Strategies of the Fund

Principal Risks of Investing in the Fund

Fund Performance

Investment Advisor

Purchase and Sale of Fund Shares

Tax Information

Payments to Broker-Dealers and Other Financial Intermediaries

ADDITIONAL INFORMATION ABOUT THE

PRINCIPAL INVESTMENT STRATEGIES AND RISKS

Investment Objective

Principal Investment Strategies

Principal Investment Risks

Portfolio Holdings Information

MANAGEMENT OF THE FUND

Investment Advisor

Portfolio Managers

Investment Subsidiary

NET ASSET VALUE

PREMIUM/DISCOUNT INFORMATION

HOW TO BUY AND SELL SHARES

Share Trading Prices

Book Entry

FREQUENT PURCHASES AND REDEMPTIONS OF SHARES

DISTRIBUTION AND SERVICE PLAN

DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES

FUND SERVICE PROVIDERS

OTHER INFORMATION

Investments by Investment Companies

Continous Offering

Householding

FINANCIAL HIGHLIGHTS

PRIVACY NOTICE

Fund

Summary: Arrow Dynamic Bitcoin Strategy ETF

Investment Objective

The Arrow Dynamic Bitcoin Strategy ETF (the “Fund”)

seeks to achieve income and long-term capital appreciation (greater than the stock market as a whole).

Fees and Expenses of the Fund

The table below describes the fees and expenses you

may pay if you buy, hold, and sell shares of the Fund. Investors may pay other fees, such as brokerage commissions and other fees to

financial intermediaries, on their purchases and sales of shares in the secondary market, which are not reflected in the table or the

example below.

Example

The following example is intended to help retail investors

compare the cost of investing in the Fund with the cost of investing in other funds. It illustrates the hypothetical expenses that such

investors would incur over various periods if they invest $10,000 in the Fund for the time periods indicated and then redeem all of the

shares at the end of those periods. This example assumes that the Fund provides a return of 5% a year and that operating expenses remain

the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

Portfolio Turnover

The Fund pays transaction costs, such as commissions,

when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction

costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund

operating expenses or in the Example, affect the Fund’s performance.

Principal Investment Strategies of the Fund

The advisor seeks to achieve the Fund’s investment

objective by dynamically allocating assets primarily among futures contracts and securities that have returns representative of three

asset classes:

The Fund does not invest in Bitcoin or gold directly.

The advisor uses a base allocation to cash plus three

proprietary quantitative models to generate daily allocations among the three asset classes. Using the models, the advisor seeks to capture

Bitcoin uptrends while incorporating dynamic exposure to gold and cash to reduce downside risk when compared to a standalone equity investment

(i.e., S&P 500 index). The advisor believes the Fund can offer returns with a low correlation to the returns of traditional assets,

such as stocks and bonds. These models employ a trend-following, rules-based methodology that largely depends on the relative performance

of Bitcoin and gold.

Bitcoin to Gold Model. When the relative

trends of Bitcoin compared to gold weaken, based on the model’s “Bitcoin to Gold Indicator,” the exposure to Bitcoin

is reduced and exposure to gold increased.

Bitcoin to Cash Model. When the relative

trends of Bitcoin compared to cash weaken, based on the model’s “Bitcoin to Cash Indicator,” the exposure to Bitcoin

is reduced and exposure to cash increased.

Gold to Cash Model. When the relative

trends of gold compared to cash weaken, based on the model’s “Gold to Cash Indicator,” the exposure to gold is reduced

and exposure to cash increased.

The advisor seeks to re-weight exposure to the three

models in manner similar to the AI Dynamic Bitcoin Index, a dynamic Bitcoin index created by the advisor (the “Index”). The

Index re-weights its exposure annually by allocating assets using the following model weights: Bitcoin to Gold Model 6%; Bitcoin to Cash

Model 9% and Gold to Cash Model 5% and a base allocation of 80% to Cash. After re-weighting its exposures, the Fund’s asset allocation

may be driven by any of the three quantitative models for an extended period of time based on such model’s overall relative strength.

Each model is independently driven by the trend-following methodology. The Fund’s portfolio will change its position based on the

indicators described above. Each position change will occur after the corresponding indicator triggers a change for each model.

Historically, including the effect of market price

changes, the Index has produced exposures within the following ranges.

However, under most market conditions, the advisor

expects the Fund’s portfolio to have its primary allocation to Bitcoin and gold through futures contracts.

Bitcoin and Bitcoin Futures Contracts

Bitcoin is a digital asset,

commonly referred to as a “cryptocurrency.” The ownership and operation of Bitcoin is determined by participants in an online,

peer-to-peer network commonly referred to as the “Bitcoin Network”. The Bitcoin Network connects computers that run publicly

accessible open-source software that follows the rules governing the Bitcoin Network. This is commonly referred to as the Bitcoin Protocol.

The value of Bitcoin is not backed by any government, corporation, or other entity. Rather, its value is determined by the supply and

demand in markets created to facilitate trading of Bitcoin. Ownership records and transaction records for Bitcoin are protected through

public-key cryptography. The supply of Bitcoin is determined by the “Bitcoin Protocol.” No single entity owns or operates

the Bitcoin Network. The Bitcoin Network is collectively maintained by (i) a decentralized group of participants running software that

results in the recording and validation of transactions (this group is commonly referred to as “miners”), (ii) software developers

who propose improvements to the Bitcoin Protocol and related software and (iii) users who choose which version of the Bitcoin software

to run. Occasionally, developers suggest changes to the Bitcoin software. If a sufficient number of users and miners elect not to adopt

the changes, a new digital asset, operating on the earlier version of the Bitcoin software, may be created. This is referred to as a “fork.”

The Fund achieves exposure to

Bitcoin through Bitcoin futures. Bitcoin futures are intended to track, although not lockstep, the price of Bitcoin. The Fund only invests

in standardized, cash-settled Bitcoin futures contracts traded on commodity exchanges registered with the Commodity Futures Trading Commission,

such as the Chicago Mercantile Exchange (the “CME”). As of the date of this prospectus, only the CME has such contracts. The

value of Bitcoin futures is determined by reference to the CME CF Bitcoin Reference Rate, which is designed to provide an indication of

the price of Bitcoin across certain cash Bitcoin exchanges. The advisor invests primarily in front-month Bitcoin futures. The Fund achieves

exposure to Bitcoin through Bitcoin futures. Bitcoin futures are intended to track, although not lockstep, the price of Bitcoin. The Fund

only invests in standardized, cash-settled Bitcoin futures contracts traded on commodity exchanges registered with the Commodity Futures

Trading Commission, such as the Chicago Mercantile Exchange (the “CME”). As of the date of this prospectus, only the CME has

such contracts. The value of Bitcoin futures is determined by reference to the CME CF Bitcoin Reference Rate, which is designed to provide

an indication of the price of Bitcoin across certain cash Bitcoin exchanges. The advisor invests primarily in front-month Bitcoin futures.

Front-month Bitcoin futures contracts are those contracts with the shortest time to maturity.

Gold and Gold Futures Contracts

The Fund achieves exposure to

gold through gold futures. Gold futures are intended to track, although not lockstep, the price of gold. The Fund invests in standardized

gold futures contracts traded on commodity exchanges registered with the Commodity Futures Trading Commission, such as the Commodity Exchange

Inc. (commonly known as COMEX), which is a part of the Chicago Mercantile Exchange Group. (The Fund may also trade in standardized gold

futures contracts traded on foreign exchanges that are subject to a regulatory regime that is similar to that in the U.S.) The value of

gold futures is determined by reference to 100 troy ounces of gold subject to an assay minimum of 995 fineness (i.e. 99.5% pure). The

advisor invests primarily in front-month gold futures. Front-month gold futures contracts are those contracts with the shortest time to

maturity.

Subsidiary

To achieve exposure to Bitcoin

futures and gold futures consistent with the limits of the U.S. federal tax law requirements applicable to registered investment companies,

the Fund employs a subsidiary. The Fund may invest up to 25% of its total assets in the Subsidiary. The Subsidiary invests primarily in

Bitcoin futures and gold futures, as well as fixed-income securities and cash equivalents, which are intended to serve as margin or collateral

for the Subsidiary’s investments in futures. When viewed on a consolidated basis, the Subsidiary is subject to the same investment

restrictions as the Fund. The Fund consolidates the Subsidiary for purposes of financial statements, leverage and concentration. The advisor

is solely responsible for managing the assets of the Subsidiary.

Cash Investments

The Fund invests in short-term cash instruments that

have a remaining maturity of 397 days or less and exhibit high quality credit profiles. For example: (i) U.S. Treasury Bills: U.S. government

securities that have initial maturities of one year or less, and are supported by the full faith and credit of the U.S. government; or

(ii) Repurchase Agreements: Contracts in which a seller of securities, usually U.S. government securities or other money market instruments,

agrees to buy the securities back at a specified time and price. Repurchase agreements are primarily used by the Fund as a short-term

investment vehicle for cash positions.

Borrowing

The Fund seeks to engage in reverse repurchase agreements

and use the proceeds for investment purposes. Reverse repurchase agreements are contracts in which the Fund is a seller of securities

under an agreement to buy the securities back at a specified time and price. Reverse repurchase agreements are used by the Fund as an

indirect means of borrowing.

Principal Risks of Investing in the Fund

As with all funds, there is the risk that you could

lose money through your investment in the Fund. Many factors affect the Fund’s net asset value (“NAV”), price of shares,

and performance. The following describes the risks the Fund bears with respect to its direct investments as well as indirectly through

investments in the Subsidiary. As with any fund, there is no guarantee that the Fund will achieve its objective.

The following risks apply to the Fund’s

investments:

The further development of the Bitcoin Network

and the acceptance and use of Bitcoin are subject to a variety of factors that are difficult to evaluate. The slowing, stopping or reversing

of the development of the Bitcoin Network or the acceptance of Bitcoin may adversely affect the price of Bitcoin. Bitcoin is subject to

the risk of fraud, theft, manipulation or security failures, operational or other problems that impact Bitcoin trading venues. Additionally,

if one or a coordinated group of miners were to gain control of 51% of the Bitcoin Network, they would have the ability to manipulate

transactions, halt payments and fraudulently obtain Bitcoin. A significant portion of Bitcoin is held by a small number of holders sometimes

referred to as “whales”. These holders have the ability to manipulate the price of Bitcoin.

Unlike the exchanges for more traditional

assets, such as equity securities and futures contracts, Bitcoin and Bitcoin trading venues are largely unregulated. As a result of the

lack of regulation, individuals or groups may engage in fraud or market manipulation (including using social media to promote Bitcoin

in a way that artificially increases the price of Bitcoin). Investors may be more exposed to the risk of theft, fraud and market manipulation

than when investing in more traditional asset classes. Over the past several years, a number of Bitcoin trading venues have been closed

due to fraud, failure or security breaches. Investors in Bitcoin may have little or no recourse should such theft, fraud or manipulation

occur and could suffer significant losses. Legal or regulatory changes may negatively impact the operation of the Bitcoin Network or restrict

the use of Bitcoin. Federal, state or foreign governments may restrict the use and exchange of Bitcoin, and regulation in the U.S. is

still developing. Increased regulation might tend to depress the price of Bitcoin. The creation of a “fork” (as described

above) or a substantial giveaway of Bitcoin (sometimes referred to as an “air drop”) may result in significant and unexpected

declines in the value of Bitcoin, Bitcoin futures, and the Fund.

The realization of any of these risks could

result in a decline in the acceptance of Bitcoin and consequently a reduction in the value of Bitcoin, Bitcoin futures, and the Fund.

o  

Bitcoin Futures Contract Risk. The market for

Bitcoin futures may be less developed, and potentially less liquid and more volatile, than more established futures markets. The successful

use of futures contracts draws upon the advisor’s skill and experience with respect to such instruments and are subject to special

risk considerations. The primary risks associated with the use of futures contracts are (a) the imperfect correlation between the change

in market value of the reference asset and the price of the futures contract; (b) possible lack of a liquid secondary market and the resulting

inability to close a futures contract when desired; (c) investments in futures contracts involves leverage, which means a small percentage

of assets in futures can have a disproportionately large impact on the Fund and the Fund can lose more than the principal amount invested;

(d) losses caused by unanticipated market movements, which are potentially unlimited; (e) if the Fund has insufficient cash, it may have

to sell securities from its portfolio to meet daily variation margin requirements, and the Fund may have to sell securities at a time

when it may be disadvantageous to do so. Bitcoin futures may trade at a price premium above Bitcoin. As a futures contract approaches

expiration, the price premium will tend to erode, which will result in losses to the Fund assuming other things equal.

• Gold Risk. The price of gold may be
  
  volatile and gold futures contracts may be highly sensitive to the price of gold. The price of gold can be significantly affected by international
  
  monetary and political developments such as currency devaluation or revaluation, central bank movements, economic and social conditions
  
  within a country, transactional or trade imbalances, or trade or currency restrictions between countries. Physical gold has sales commission,
  
  storage, insurance, and auditing expenses, which may tend to reduce trading and liquidity.
• Gold Futures Risk. Gold futures are
  
  subject to inherent leverage that magnifies Fund losses. Futures may not provide an effective substitute for gold because changes in futures
  
  prices may not track those of the underlying gold bullion. Lack of correlation (or tracking) may be due to factors unrelated to the value
  
  of gold, such as speculative or other pressures on the markets. Futures exchanges may impose daily or intra-day price change limits and/or
  
  limit the volume of trading. Additionally, government regulation may further reduce liquidity through similar trading restrictions.

o  

Not Individually Redeemable: Shares of the Fund

(“Shares”) are not individually redeemable and may be redeemed by the Fund at NAV only in large blocks known as “Creation

Units.” You may incur brokerage costs purchasing enough Shares to constitute a Creation Unit.

o  

Trading Issues: Trading in Shares on the Exchange

may be halted due to market conditions or for reasons that, in the view of the Exchange, make trading in Shares inadvisable, such as extraordinary

market volatility. There can be no assurance that Shares will continue to meet the listing requirements of the Exchange, which may result

in the Shares being delisted. An active trading market for the Shares may not be developed or maintained. If the securities in the Fund’s

portfolio are traded outside a collateralized settlement system, the number of financial institutions that can act as authorized participants

(“APs”) that can post collateral on an agency basis is limited, which may limit the market for the Shares.

o  

Market Price Variance Risk: The market prices

of Shares will fluctuate in response to changes in NAV and supply and demand for Shares and will include a “bid-ask spread”

charged by the exchange specialists, market makers or other participants that trade the particular security. There may be times when the

market price and the NAV vary significantly. This means that Shares may trade at a discount to NAV.

pay significantly more or significantly less

for Shares than the Fund’s NAV, which is reflected in the bid and ask price for Shares or in the closing price.

Management of the Fund

Investment Advisor. Arrow Investment Advisors, LLC

Portfolio Managers

Purchase and Sale of Fund Shares

The

Fund will issue and redeem Shares at NAV only in large blocks of (___) Shares (each block of Shares is called a “Creation Unit”)

and only to Authorized Participants that have entered into agreements with the Fund’s distributor. Creation Units are issued and

redeemed for cash and/or in-kind for securities. Individual Shares may only be purchased and sold in secondary market transactions through

brokers. Except when aggregated in Creation Units, the Shares are not redeemable securities of the Fund. Shares of the Fund are listed

for trading on the Exchange and trade at market prices rather than NAV. Shares of the Fund may trade at a price that is greater than,

at, or less than NAV. An investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to

purchase Shares of the Fund (bid) and the lowest price a seller is willing to accept for Shares of the Fund (ask) when buying or selling

Shares in the secondary market. Recent information on the Fund’s NAV, market price, premiums and discounts, and bid-ask spreads

is available at www.ArrowFunds.com.

Tax Information

The Fund’s distributions are generally taxable

as ordinary income or capital gains. A sale of Shares may result in capital gain or loss.

Payments to Broker-Dealers and Other Financial

Intermediaries

Investors purchasing Shares in the secondary market

through a brokerage account or with the assistance of a broker may be subject to brokerage commissions and charges. If you purchase Shares

through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary

for the sale of Shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other

intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s

website for more information.

Additional

Information About the Principal Investment Strategies and Risks

Investment Objective

The Fund seeks to achieve income and long-term capital

appreciation (greater than the stock market as a whole). The Fund’s investment objective is a non-fundamental policy and may be

changed without shareholder approval by the Trust’s Board of Trustees upon written notice to shareholders.

Principal Investment Strategies

The advisor seeks to achieve the Fund’s investment

objective by dynamically allocating assets primarily among futures contracts and securities that have returns representative of three

asset classes:

The Fund does not invest in Bitcoin or gold directly.

The advisor uses a base allocation to cash plus three

proprietary quantitative models to generate daily allocations among the three asset classes. Using the models, the advisor seeks to capture

Bitcoin uptrends while incorporating dynamic exposure to gold and cash to reduce downside risk when compared to a standalone equity investment

(i.e., S&P 500 index).The advisor believes the Fund can offer returns with a low correlation to the returns of traditional assets,

such as stocks and bonds. These models employ a trend-following, rules-based methodology that largely depends on the relative performance

of Bitcoin and gold.

Bitcoin to Gold Model. When the relative

trends of Bitcoin compared to gold weaken, based on the model’s “Bitcoin to Gold Indicator,” the exposure to Bitcoin

is reduced and exposure to gold increased. This model aims to mitigate, to some extent, the volatility of Bitcoin by investing in gold

(instead of Bitcoin) when bitcoin is in a negative trend. This shift will occur on the next business day following the change in the Bitcoin

to Gold Indicator.

Bitcoin to Cash Model. When the relative

trends of Bitcoin compared to cash weaken, based on the model’s “Bitcoin to Cash Indicator,” the exposure to Bitcoin

is reduced and exposure to cash increased. This model aims to mitigate, to some extent, the volatility of Bitcoin by investing in cash

(for example, by using 3-Month U.S. Treasury Bills) (instead of Bitcoin) when Bitcoin is in a negative trend. This shift will occur on

the next business day following the change in the Bitcoin to Cash Indicator.

Gold to Cash Model. When the relative

trends of gold compared to cash weaken, based on the model’s “Gold to Cash Indicator,” the exposure to gold is reduced

and exposure to cash increased. This model aims to mitigate, to some extent, the volatility of gold by investing in cash (for example,

by using 3-Month US Treasury bills) (instead of gold) when gold is in a negative trend. This shift will occur on the next business day

following the change in the Gold to Cash Indicator.

The advisor seeks to re-weight exposure to the three

models in manner similar to the AI Dynamic Bitcoin Index, a dynamic Bitcoin index created by the advisor (the “Index”). The

Index re-weights its exposure annually by allocating assets using the following model weights: Bitcoin to Gold Model 6%; Bitcoin to Cash

Model 9% and Gold to Cash Model 5% and a base allocation of 80% to Cash. After re-weighting its exposures, the Fund’s asset allocation

may be driven by any of the three quantitative models for an extended period of time based on such model’s overall relative strength.

Each model is independently driven by the trend-following methodology. The Fund’s portfolio will change its position based on the

indicators described above. Each position change will occur after the corresponding indicator triggers a change for each model.

Historically, including the effect of market price

changes, the Index has produced exposures within the following ranges.

However, under most market conditions, the advisor

expects the Fund’s portfolio to have a primary allocation to Bitcoin and gold through futures contracts.

Bitcoin and Bitcoin Futures Contracts

Bitcoin is a digital asset,

commonly referred to as a “cryptocurrency.” The ownership and operation of Bitcoin is determined by participants in an online,

peer-to-peer network commonly referred to as the “Bitcoin Network”. The Bitcoin Network connects computers that run publicly

accessible open-source software that follows the rules governing the Bitcoin Network. This is commonly referred to as the Bitcoin Protocol.

The value of Bitcoin is not backed by any government, corporation, or other entity. Rather, its value is determined by the supply and

demand in markets created to facilitate trading of Bitcoin. Ownership records and transaction records for Bitcoin are protected through

public-key cryptography. The supply of Bitcoin is determined by the “Bitcoin Protocol.” No single entity owns or operates

the Bitcoin Network. The Bitcoin Network is collectively maintained by (i) a decentralized group of participants running software that

results in the recording and validation of transactions (this group is commonly referred to as “miners”), (ii) software developers

who propose improvements to the Bitcoin Protocol and related software and (iii) users who choose which version of the Bitcoin software

to run. Occasionally, developers suggest changes to the Bitcoin software. If a sufficient number of users and miners elect not to adopt

the changes, a new digital asset, operating on the earlier version of the Bitcoin software, may be created. This is referred to as a “fork.”

The Fund achieves exposure to Bitcoin through

Bitcoin futures. Bitcoin futures are intended to track, although not lockstep, the price of Bitcoin. The Fund only invests in standardized,

cash-settled Bitcoin futures contracts traded on commodity exchanges registered with the Commodity Futures Trading Commission, such as

the Chicago Mercantile Exchange (the “CME”). As of the date of this prospectus, only the CME has such contracts. The value

of Bitcoin futures is determined by reference to the CME CF Bitcoin Reference Rate, which is designed to provide an indication of the

price of Bitcoin across certain cash Bitcoin exchanges. The advisor invests primarily in front-month Bitcoin futures. Front-The Fund achieves

exposure to Bitcoin through Bitcoin futures. Bitcoin futures are intended to track, although not lockstep, the price of Bitcoin. The Fund

only invests in standardized, cash-settled Bitcoin futures contracts traded on commodity exchanges registered with the Commodity Futures

Trading Commission, such as the Chicago Mercantile Exchange (the “CME”). As of the date of this prospectus, only the CME has

such contracts. The value of Bitcoin futures is determined by reference to the CME CF Bitcoin Reference Rate, which is designed to provide

an indication of the price of Bitcoin across certain cash Bitcoin exchanges. The advisor invests primarily in front-month Bitcoin futures.

Front-month Bitcoin futures contracts are those contracts with the shortest time to maturity.

Gold and Gold Futures Contracts

The Fund achieves exposure to gold through

gold futures. Gold futures are intended to track, although not lockstep, the price of gold. The Fund invests in standardized gold futures

contracts traded on commodity exchanges registered with the Commodity Futures Trading Commission, such as the Commodity Exchange Inc.

(commonly known as COMEX), which is a part of the Chicago Mercantile Exchange Group. The Fund may also trade in standardized gold futures

contracts traded on foreign

exchanges that are subject to a regulatory

regime that is similar to that in the U.S. The value of gold futures is determined by reference to 100 troy ounces of gold subject to

an assay minimum of 995 fineness (i.e. 99.5% pure). The advisor invests primarily in front-month gold futures. Front-month gold futures

contracts are those contracts with the shortest time to maturity.

Subsidiary

To achieve exposure to Bitcoin futures

and gold futures consistent with the limits of the U.S. federal tax law requirements applicable to registered investment companies, the

Fund employs a subsidiary. The Fund may invest up to 25% of its total assets in the Subsidiary. The Subsidiary invests primarily in Bitcoin

futures and gold futures, as well as fixed-income securities and cash equivalents, which are intended to serve as margin or collateral

for the Subsidiary’s investments in futures. When viewed on a consolidated basis, the Subsidiary is subject to the same investment

restrictions as the Fund. The Fund consolidates the Subsidiary for purposes of financial statements, leverage and concentration. The advisor

is solely responsible for managing the assets of the Subsidiary.

The principal investment strategies and

principal investment risks of the Subsidiary are also principal investment strategies and principal risks of the Fund and are reflected

in this Prospectus. The financial statements of the Subsidiary will be consolidated with those of the Fund. By investing in Bitcoin futures

and gold futures indirectly through the Subsidiary, the Fund intends to obtain exposure to Bitcoin and gold within the federal tax requirements

that apply to the Fund under federal tax requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

Subchapter M requires, among other things, that at least 90% of the Fund’s gross income be derived from certain qualifying sources,

such as dividends, interest, gains from the sale of stock or other securities, and certain other income derived from securities or derived

with respect to the Fund’s business of investing in securities (typically referred to as “qualifying income”). The Fund

will make investments in Bitcoin futures and gold futures through the Subsidiary because income from these derivatives is not treated

as “qualifying income” for purposes of the 90% gross income requirement if the Fund invests in these derivatives directly.

In the past, the Internal Revenue Service

(the “IRS”) issued a number of private letter rulings to other mutual funds (including other Arrow funds), which indicated

that certain income from a fund’s investment in a wholly-owned foreign subsidiary would constitute “qualifying income”

for purposes of Subchapter M. However, the Fund does not have a private letter ruling and the IRS no longer issues such private letter

rulings. Moreover, the IRS issued regulations that provide that the income which the Fund derives from its investment in the Subsidiary

in any taxable year would only be treated as “qualifying income” for purposes of the 90% gross income requirement of Subchapter

M to the extent that the Subsidiary makes certain dividend distributions to the Fund out of the Subsidiary’s earnings and profits

for that same taxable year. Therefore, the Subsidiary will, no less than annually, declare and may distribute a dividend to the Fund,

as the sole shareholder of the Subsidiary, in an amount approximately equal to the total amount of “Subpart F” income (as

defined in Section 951 of the Code) generated by or expected to be generated by the Subsidiary’s investments during the fiscal year.

Because the Fund may invest a substantial portion of its assets in the Subsidiary, which will hold some of the investments described in

this Prospectus,

the Fund is considered to be investing

indirectly in some of those investments through its Subsidiary. For that reason, some references to the Fund also include the Subsidiary.

The Subsidiary will be subject to the same

investment restrictions and limitations, and follow the same compliance policies and procedures, as the Fund. The Fund complies with the

provisions of the 1940 Act governing investment policies, capital structure and leverage on an aggregate basis with the Subsidiary. In

addition, the Subsidiary complies with the provisions of the 1940 Act relating to affiliated transactions and custody. The Fund’s

custodian also serves as the custodian to the Subsidiary. The investment advisor to the Subsidiary will also comply with the provisions

of the 1940 Act regarding investment advisory contracts.

Cash Investments

The Fund invests in short-term cash instruments that

have a remaining maturity of 397 days or less and exhibit high quality credit profiles. For example: (i) U.S. Treasury Bills: U.S. government

securities that have initial maturities of one year or less, and are supported by the full faith and credit of the U.S. government; or

(ii) Repurchase Agreements: Contracts in which a seller of securities, usually U.S. government securities or other money market instruments,

agrees to buy the securities back at a specified time and price. Repurchase agreements are primarily used by the Fund as a short-term

investment vehicle for cash positions.

Borrowing

The Fund seeks to engage in reverse repurchase agreements

and use the proceeds for investment purposes. Reverse repurchase agreements are contracts in which the Fund is a seller of securities

under an agreement to buy the securities back at a specified time and price. Reverse repurchase agreements are used by the Fund as an

indirect means of borrowing.

Principal Investment Risks

The following risks apply to the Fund’s direct investments

and investments in and through the Subsidiary:

The further development of the Bitcoin Network

and the acceptance and use of bitcoin are subject to a variety of factors that are difficult to evaluate. The slowing, stopping or reversing

of the development of the Bitcoin Network or the acceptance of Bitcoin may adversely affect the price of Bitcoin. Bitcoin is subject to

the risk of fraud, theft, manipulation or security failures, operational or other problems that impact Bitcoin trading venues. Additionally,

if one or a

coordinated group of miners were to gain

control of 51% of the Bitcoin Network, they would have the ability to manipulate transactions, halt payments and fraudulently obtain Bitcoin.

A significant portion of Bitcoin is held by a small number of holders sometimes referred to as “whales”. These holders have

the ability to manipulate the price of Bitcoin.

Unlike the exchanges for more traditional

assets, such as equity securities and futures contracts, Bitcoin and Bitcoin trading venues are largely unregulated. As a result of the

lack of regulation, individuals or groups may engage in fraud or market manipulation (including using social media to promote Bitcoin

in a way that artificially increases the price of Bitcoin). Investors may be more exposed to the risk of theft, fraud and market manipulation

than when investing in more traditional asset classes. Over the past several years, a number of Bitcoin trading venues have been closed

due to fraud, failure or security breaches. Investors in Bitcoin may have little or no recourse should such theft, fraud or manipulation

occur and could suffer significant losses. Legal or regulatory changes may negatively impact the operation of the Bitcoin Network or restrict

the use of Bitcoin. Federal, state or foreign governments may restrict the use and exchange of Bitcoin, and regulation in the U.S. is

still developing. Increased regulation might tend to depress the price of Bitcoin. The creation of a “fork” (as described

above) or a substantial giveaway of Bitcoin (sometimes referred to as an “air drop”) may result in significant and unexpected

declines in the value of Bitcoin, Bitcoin futures, and the Fund.

The price of Bitcoin may be impacted by

various additional factors, including:

The realization of any of these risks could

result in a decline in the acceptance of Bitcoin and consequently a reduction in the value of Bitcoin, Bitcoin futures, and the Fund.

Margin levels for Bitcoin futures contracts

are substantially higher than the margin requirements for more established futures contracts. Additionally, futures commission merchants

may impose margin requirements in addition to those imposed by the exchanges. Margin requirements are subject to change and may be raised

in the future by the exchange and the futures commission merchants. Higher margin requirements could adversely affect the Fund’s

ability to obtain sufficient Bitcoin futures to achieve its investment objective. The CME has established position limits on the maximum

number of contracts that may be held or controlled and accountability levels that may suppress participation by very large investors.

• Gold Risk. The price of gold may be
  
  volatile and gold futures contracts may be highly sensitive to the price of gold. The price of gold can be significantly affected by international
  
  monetary and political developments such as currency devaluation or revaluation, central bank movements, economic and social conditions
  
  within a country, transactional or trade imbalances, or trade or currency restrictions between countries. Physical gold has sales commission,
  
  storage, insurance, and auditing expenses, which may tend to reduce trading and liquidity.
• Gold Futures Risk. Gold futures are
  
  subject to inherent leverage that magnifies Fund losses. Futures may not provide an effective substitute for gold because changes in futures
  
  prices may not track those of the underlying gold bullion. Lack of correlation (or tracking) may be due to factors unrelated to the value
  
  of gold, such as speculative or other pressures on the markets. Futures exchanges may impose daily or intra-day price change limits and/or
  
  limit the volume of trading. Additionally, government regulation may further reduce liquidity through similar trading restrictions.

secondary market, and/or result in the

Fund being unable to trade certain securities or financial instruments at all. In these circumstances, the Fund may be unable to rebalance

its portfolio, may be unable to accurately price its investments, and/or may incur substantial trading losses. If trading in the Fund’s

Shares is halted, investors may be temporarily unable to trade Shares of the Fund.

or grow to or maintain a viable size,

that an active trading market for the Fund’s Shares will develop or be maintained, or that the Fund’s Shares’ listing

will continue unchanged.

Portfolio Holdings Information

Information about the Fund’s daily portfolio

holdings is available at www.ArrowFunds.com. In addition, the Fund discloses its complete portfolio holdings as of the end of its fiscal

year (January 31) and its second fiscal quarter (July 31) in its reports to shareholders. The Fund files its complete portfolio holdings

as of the end of its first and third fiscal quarters, respectively, with the SEC on Form N-PORT no later than 60 days after the relevant

fiscal period. You can find the SEC filings on the SEC’s website, www.sec.gov. A summarized description of the Fund’s policies

and procedures with respect to the disclosure of the Fund’s portfolio holdings is available in the Fund’s Statement of Additional

Information (“SAI”).

Cybersecurity: The computer systems, networks

and devices used by the Fund and its service providers to carry out routine business operations employ a variety of protections designed

to prevent damage or interruption from computer viruses, network failures, computer and telecommunication failures, infiltration by unauthorized

persons and security breaches. Despite the various protections utilized by the Fund and its service providers, systems, networks, or devices

potentially can be breached. The Fund and its shareholders could be negatively impacted as a result of a cybersecurity breach.

Cybersecurity breaches can include unauthorized access

to systems, networks, or devices; infection from computer viruses or other malicious software code; and attacks that shut down, disable,

slow, or otherwise disrupt operations, business processes, or website access or functionality. Cybersecurity breaches may cause disruptions

and impact the Fund’s business operations, potentially resulting in financial losses; interference with the Fund’s ability

to calculate its NAV; impediments to trading; the inability of the Fund, the Advisor, and other service providers to transact business;

violations of applicable privacy and other laws; regulatory fines, penalties, reputational damage, reimbursement or

other compensation costs, or additional compliance

costs; as well as the inadvertent release of confidential information.

Similar adverse consequences could result from cybersecurity

breaches affecting issuers of securities in which the Fund invests; counterparties with which the Fund engages in transactions; governmental

and other regulatory authorities; exchange and other financial market operators, banks, brokers, dealers, insurance companies, and other

financial institutions (including financial intermediaries and service providers for the Fund’s shareholders); and other parties.

In addition, substantial costs may be incurred by these entities in order to prevent any cybersecurity breaches in the future.

Management

of the Fund

Investment Advisor

Arrow Investment Advisors, LLC (the “Advisor”)

located at 6100 Chevy Chase Drive, Suite 100, Laurel, MD 20707, serves as the Fund’s investment advisor. Subject to the oversight

of the Board of Trustees, the Advisor is responsible for the overall management of the Fund’s business affairs. The Advisor is responsible

for selecting the Fund’s investments according to the Fund’s investment objective, policies and restrictions. The Advisor

was established in February 2006. The Advisor has approximately $300.5 million in assets under management as of December 31, 2021.

Pursuant to an investment advisory agreement (the

“Investment Advisory Agreement”), the Advisor is entitled to receive, on a monthly basis, an annual advisory fee equivalent

to (__)% of the Fund’s average daily net assets. The Advisor has contractually agreed to defer its fees and/or reimburse expenses

of the Fund until (___), 2023 to ensure that the Fund’s Total Annual Fund Operating Expenses After Fee Waiver and/or Reimbursement

(exclusive of any front-end or contingent deferred sales loads, taxes, leverage interest, brokerage commissions, expenses incurred in

connection with any merger or reorganization, dividend expense on securities sold short, underlying fund fees and expenses and extraordinary

expenses such as litigation ) will not exceed (__)%. This agreement may be terminated by the Fund’s Board of Trustees on 60 days

written notice. These fee waivers and expense reimbursements are subject to possible recoupment from the Fund in future years on a rolling

three-year basis (within the three years after the fees have been waived or reimbursed) if such recoupment can be achieved within the

foregoing expense limits.

In addition to investment advisory fees, the Fund

pays other expenses including costs incurred in connection with the maintenance of its securities law registration, printing and mailing

prospectuses and Statements of Additional Information to shareholders, financial accounting services, taxes or governmental fees, custodial,

transfer and shareholder servicing agent costs, expenses of outside counsel and independent accountants, preparation of shareholder reports

and expenses of trustee and shareholders meetings.

A discussion regarding the Board’s basis for

approving the Investment Advisory Agreement with respect to the Fund will be available in the Fund’s first annual or semi-annual

report to shareholders.

Portfolio Managers

The following individuals are primarily responsible

for the day-to-day management of the Fund’s portfolio:

Joseph Barrato, Chief Executive Officer

Joseph Barrato is a founding member of Arrow Investment

Advisors, LLC. He has over 25 years of experience in the investment management industry, including six years with Rydex Investments, where

he was responsible for the firm’s research and developed momentum models with the Rydex sector funds. Prior to Rydex, Mr. Barrato

spent 12 years at the Federal Reserve Board of Governors, as an analyst and senior financial examiner. He holds a bachelor’s degree

in business administration from The George Washington University, where he majored in finance and minored in accounting. Mr. Barrato’s

experience in the investment management industry gives him a strong understanding of the operational issues facing mutual funds and the

regulatory framework under which investment companies must operate. Mr. Barrato has served as an Interested Trustee and the Chairman of

the Board since the Trust was organized in August 2011.

Jonathan S. Guyer, Portfolio Manager

Jonathan Guyer joined Arrow Investment Advisors, LLC

in October 2013 after spending seven years with Longview Funds Management, LLC. During his tenure at Longview, he served the Principal,

Director of Research and Chief Investment Officer of the firm. Prior to Longview, Mr. Guyer spent seven years as the head of the Proprietary

Hedge Fund Group of Alex Brown & Sons, Inc., followed by five years serving as the head of Alternative Investment Product Development

for Legg Mason Wood Walker, Inc. Throughout his investment management career, he has had practical experience working with index design,

active portfolio management, trading, manager selection, due diligence, marketing and fund administration.

Prior to his career in investment management, Mr.

Guyer spent eight years in the audit industry, serving as a senior audit manager for commercial banks and trust companies. Mr. Guyer earned

his bachelor’s degree in Business Administration from the University of North Carolina-Wilmington.

Amit Gutt, Portfolio Manager

Mr. Gutt joined Arrow Investment Advisors, LLC in

August 2014 as an Investment Strategist. He is responsible for performing quantitative research, portfolio management and trading across

multiple asset classes. Prior to joining Arrow, he worked in emerging markets equity research at KAUST Investment Management, a multi-billion

dollar endowment, and at the United States Department of Commerce. He holds a B.S. in Financial Economics from University of Maryland

Baltimore County, a Master of Arts in Applied Economics from Johns Hopkins University and an MBA in Finance from the NYU Stern School

of Business. He is also a CFA charterholder.

The SAI provides additional information about each

portfolio manager’s compensation structure, other accounts managed by each portfolio manager and each portfolio manager’s

ownership of securities in the Fund.

Investment Subsidiary

The Fund may invest up to 25% of its total assets

in the Subsidiary. The Subsidiary is a company that is organized under the laws of the Cayman Islands, and is overseen by its own board

of directors. The Fund is the sole shareholder of its Subsidiary. It is not currently expected that shares of the Subsidiary will be sold

or offered to other investors. If, at any time, the Subsidiary proposes to offer or sell its shares to any investor other than the Fund,

shareholders will receive 60 days prior notice of such offer or sale.

As with the Fund, the Advisor is responsible for the

Subsidiary’s day-to-day business pursuant to a management agreement with the Subsidiary. Under the management agreement, the Advisor

will provide the Subsidiary with the same type of management services, under the same terms, as are provided to the Fund. The management

agreement of the Subsidiary provides for automatic termination upon the termination of the Investment Advisory Agreement with respect

to the Fund.

The Advisor has contractually agreed to waive any

advisory it receives from the Fund in an amount equal to the management fee paid to the Advisor by the Subsidiary. This undertaking will

continue in effect for so long as the Fund invests in the Subsidiary, and may not be terminated by the Advisor unless the Advisor first

obtains the prior approval of the Board of Trustees for such termination. The Subsidiary also bears the fees and expenses incurred in

connection with the custody, transfer agency and accounting services that it receives.

The Fund expects that the expenses borne by the Subsidiary

will not be material in relation to the value of the Fund’s assets. It is also anticipated that the Fund’s own expense will

be reduced to some extent as a result of the payment of such expenses at the Subsidiary level. It is therefore expected that any duplicative

fees for similar services provided to the Fund and the Subsidiary will not be material.

The Subsidiary will be managed pursuant to compliance

policies and procedures that are the same, in all material respects, as the policies and procedures adopted by the Fund. As a result,

the Advisor (when viewing the Subsidiary and the Fund on a consolidated basis) is subject to the same investment policies and restrictions

that apply to the management of the Fund, and, in particular, to the requirements relating to portfolio leverage, liquidity, brokerage,

and the timing and method of the valuation of the Subsidiary’s portfolio investments and shares of the Subsidiary. These policies

and restrictions are described in detail in the SAI. The Trust’s chief compliance officer oversees implementation of the Subsidiary’s

policies and procedures, and makes periodic reports to the Trust’s Board regarding the Subsidiary’s compliance with its policies

and procedures.

The financial statements of the Subsidiary will be

consolidated in the Fund’s financial statements, which are included in the Fund’s annual and semi-annual reports. The Fund’s

annual and semi-annual reports are distributed to shareholders, and copies of the reports are provided without charge upon request as

indicated on the back cover of this Prospectus. Please refer to the SAI for additional information about the organization and management

of the Subsidiary.

Net

Asset Value

Ultimus Fund Solutions, LLC, the Fund’s administrator,

calculates the Fund’s NAV at the close of regular trading (normally 4:00 p.m., Eastern Time) every day that the NYSE is open. NAV

is calculated by deducting all of the Fund’s liabilities from the total value of its assets and dividing the result by the number

of Shares outstanding, rounding to the nearest cent.

All valuations are subject to review by the Trust’s Board or its delegate.

In determining NAV, expenses are accrued and applied

daily and securities and other assets for which market quotations are readily available are valued at market value. Securities listed

or traded on an exchange are generally valued at the last sales price or official closing price of the exchange where the security is

primarily traded. The NAV for the Fund will be calculated and disseminated daily. The value of the Fund’s portfolio securities is

based on market value when market quotations are readily available. Money market securities maturing in 60 days or less may be valued

on the basis of amortized cost. Securities not listed or traded on an exchange for which over-the-counter market quotations are readily

available are generally valued at the mean of the current bid and ask prices. Debt securities are valued on the basis of prices provided

by independent pricing services. If a security’s market price is not readily available, the security will be valued at fair value

as determined by the Trust’s Fair Value Committee in accordance with the Trust’s valuation policies and procedures approved

by the Board. The values of assets denominated in foreign currencies are converted into U.S. dollars based on the mean of the current

bid and asked prices by major banking institutions and currency dealers.

Even when market quotations are available, they may

be stale or unreliable because the security is not traded frequently, trading on the security ceased before the close of the trading market

or issuer specific events occurred after the security ceased trading or because of the passage of time between the close of the market

on which the security trades and the close of NYSE and when the Fund calculates its NAV. Issuer-specific events may cause the last market

quotation to be unreliable. These events may include a merger or insolvency, events which affect a geographical area or an industry segment,

such as political events or natural disasters, or market events, such as a significant movement in the U.S. market. Where market quotations

are not readily available, including where the Advisor determines that the closing price of the security is unreliable, the Advisor will

value the security at fair value in good faith using procedures approved by the Board. Fair value pricing involves subjective judgments

and it is possible that a fair value determination for a security is materially different than the value that could be realized upon the

sale of the security.

Because foreign markets may be open on different days

than the days during which a shareholder may purchase Shares, the value of the Fund’s investments may change on days when shareholders

are not able to purchase Shares. Additionally, due to varying holiday schedules, redemption requests made on certain dates may result

in a settlement period exceeding seven calendar days.

Premium/Discount

Information

Most investors will buy and sell Shares in secondary

market transactions through brokers at market prices and the Shares will trade at market prices. The market price of Shares may be greater

than, equal to, or less than NAV. Market forces of supply and demand, economic conditions and other factors may affect the trading prices

of Shares of the Fund.

Information regarding how often the Shares traded

at a price above (at a premium to) or below (at a discount to) the NAV of the Fund during the past four calendar quarters, when available,

can be found at www.ArrowFunds.com.

How

to Buy and Sell Shares

Shares will be listed for trading on the Exchange

under the symbol TBCS. Share prices are reported in dollars and cents per Share. Shares can be bought and sold on the secondary market

throughout the trading day like other publicly traded shares, and Shares typically trade in blocks of less than a Creation Unit. There

is no minimum investment required. Shares may only be purchased and sold on the secondary market when the Exchange is open for trading.

The Exchange is open for trading Monday through Friday and is closed on weekends and the following holidays, as observed: New Year’s

Day, Martin Luther King, Jr. Day, Presidents’ Day, Good Friday, Memorial Day, Juneteenth Day, Independence Day, Labor Day, Thanksgiving

Day and Christmas Day.

When buying or selling Shares through a broker, you

will incur customary brokerage commissions and charges, and you may pay some or all of the spread between the bid and the offered price

in the secondary market on each leg of a round trip (purchase and sale) transaction.

APs may acquire Shares directly from the Fund, and

APs may tender their Shares for redemption directly to the Fund, at NAV per Share only in large blocks, or Creation Units, of (___) Shares

for cash and/or in-kind for securities. Purchases and redemptions with cash instead of in-kind securities could cause the Fund to incur

certain costs, which include brokerage costs, taxable gains or losses that it might not otherwise have incurred if it had been made by

a redemption in-kind. These costs could be imposed on the Fund and, thus, decrease the Fund’s NAV to the extent that the costs are

not offset by a transaction fee payable by an AP. Purchases and redemptions directly with the Fund must follow the Fund’s procedures,

which are described in the SAI.

The Fund may liquidate and terminate at any time without

shareholder approval.

Share Trading Prices

The approximate value of Shares, an amount representing

on a per share basis the sum of the current market price of the securities accepted by the Fund in exchange for Shares and an estimated

cash component may be disseminated every 15 seconds throughout the trading day through the facilities of the Consolidated Tape Association.

This approximate value should not be viewed as a “real-time” update of the NAV per Share because the approximate value may

not be calculated in the same manner as the NAV, which is computed once a day, generally at the end of the business day. The Fund is not

involved in, or responsible for, the calculation or dissemination of the approximate value of the Shares and the Fund does not make any

warranty as to the accuracy of these values.

Book Entry

Shares are held in book entry form, which means that

no stock certificates are issued. The Depository Trust Company (“DTC”) or its nominee is the record owner of all outstanding

Shares and is recognized as the owner of all Shares for all purposes.

Investors owning Shares are beneficial owners as shown

on the records of DTC or its participants. DTC serves as the securities depository for all Shares. Participants in DTC include securities

brokers and dealers, banks, trust companies, clearing corporations and other institutions that directly or indirectly maintain a

custodial relationship with DTC. As a beneficial

owner of Shares, you are not entitled to receive physical delivery of stock certificates or to have Shares registered in your name, and

you are not considered a registered owner of Shares. Therefore, to exercise any right as an owner of Shares, you must rely upon the procedures

of DTC and its participants. These procedures are the same as those that apply to any other securities that you hold in book entry or

“street name” form.

Frequent

Purchases and Redemptions of Shares

Shares can only be purchased and redeemed directly

from the Fund in Creation Units by APs, and the vast majority of trading in the Fund’s Shares occurs on the secondary market. Because

the secondary market trades do not directly involve the Fund, it is unlikely those trades would cause the harmful effects of market timing,

including dilution, disruption of portfolio management, increases in the Fund’s trading costs and the realization of capital gains.

With regard to the purchase or redemption of Creation Units directly with the Fund, to the extent effected in-kind (i.e., for securities),

those trades do not cause the harmful effects that may result from frequent cash trades. To the extent trades are effected in whole or

in part in cash, those trades could result in dilution to the Fund and increased transaction costs, which could negatively impact the

Fund’s ability to achieve its investment objective. However, direct trading by APs is critical to ensuring that Shares trade at

or close to NAV. The Fund also employs fair valuation pricing to minimize potential dilution from market timing. In addition, the Fund

imposes transaction fees on purchases and redemptions of Shares to cover the custodial and other costs incurred by the Fund in effecting

trades. These fees increase if an investor substitutes cash in part or in whole for securities, reflecting the fact that the Fund’s

trading costs increase in those circumstances. Given this structure, the Trust has determined that it is not necessary to adopt policies

and procedures to detect and deter market timing of the Shares.

Portfolio

Holdings

A description of the Trust’s policies and procedures

with respect to the disclosure of the Fund’s portfolio holdings is available in the SAI, which is available at www.ArrowFunds.com.

Distribution

and Service Plan

The Fund has adopted a distribution and service plan

(“Plan”) pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Fund is authorized to pay distribution fees to the

distributor and other firms that provide distribution and shareholder services (“Service Providers”). If a Service Provider

provides these services, the Fund may pay fees at an annual rate not to exceed 0.25% of average daily net assets, pursuant to Rule 12b-1

under the1940 Act.

No distribution or service fees are currently paid

by the Fund, and there are no current plans to impose these fees. In the event Rule 12b-1 fees were charged, over time they would increase

the cost of an investment in the Fund. Because these fees are paid out of the Fund’s assets on an on-going basis, over time these

fees will increase the cost of your investment and may cost you more than paying other types of sales charges.

Dividends,

Other Distributions and Taxes

Unlike interests in conventional mutual funds, which

typically are bought and sold from and to the fund only at closing NAVs, the Shares are traded throughout the day in the secondary market

on a national securities exchange on an intra-day basis and are created and redeemed in-kind and/or for cash in Creation Units at each

day’s next calculated NAV. In-kind arrangements are designed to protect ongoing shareholders from the adverse effects on the Fund’s

portfolio that could arise from frequent cash redemption transactions. In a conventional mutual fund, redemptions can have an adverse

tax impact on taxable shareholders if the mutual fund needs to sell portfolio securities to obtain cash to meet net fund redemptions.

These sales may generate taxable gains for the ongoing shareholders of the mutual fund, whereas the Shares’ in-kind redemption mechanism

generally will not lead to a tax event for the Fund or its ongoing shareholders.

Ordinarily, dividends from net investment income,

if any, are declared and paid (monthly) by the Fund. The Fund distributes its net realized capital gains, if any, to shareholders annually.

Distributions in cash may be reinvested automatically

in additional whole Shares only if the broker through whom you purchased Shares makes such option available.

Taxes

As with any investment, you should consider how your

investment in Shares will be taxed. The tax information in this Prospectus is provided as general information. You should consult your

own tax professional about the tax consequences of an investment in Shares.

Unless your investment in Shares is made through

a tax-exempt entity or tax-deferred retirement account, such as an individual retirement account, you need to be aware of the possible

tax consequences when:

Taxes on Distributions

As stated above, dividends from net investment income,

if any, ordinarily are declared and paid (monthly) by the Fund. The Fund may also pay a special distribution at the end of a calendar

year to comply with federal tax requirements. In general, your distributions are subject to federal income tax when they are paid, whether

you take them in cash or reinvest them in a Fund. Dividends paid out of a Fund’s income and net short-term capital gains, if any,

are taxable as ordinary income. Distributions of net long-term capital gains, if any, in excess of net short-term capital losses are taxable

as long-term capital gains, regardless of how long you have held the Shares. The maximum individual rate applicable to long-term capital

gains is either 15% or 20%, depending on whether the individual’s income exceeds certain threshold amounts. In addition, some ordinary

dividends declared and paid by a Fund to non-corporate shareholders may qualify for taxation at the lower reduced tax rates applicable

to long-term capital gains, provided that holding period and other requirements are met by the Fund and the shareholder. A part of the

Fund’s dividends also may be eligible for the dividends-received deduction allowed to corporations — the eligible portion may not

exceed the aggregate dividends the Fund receives from domestic corporations subject to federal income tax (excluding real estate

investment trusts (“REITs”)) and excludes

dividends from foreign corporations — subject to similar restrictions. However, dividends a corporate shareholder deducts pursuant to

that deduction are subject indirectly to the federal alternative minimum tax.

In general, your distributions are subject to federal

income tax when they are paid, whether you take them in cash or reinvest them in the Fund (if that option is available). Distributions

reinvested in additional Shares through the means of a dividend reinvestment service, if available, will be taxable to shareholders acquiring

the additional Shares to the same extent as if such distributions had been received in cash. Distributions of net long-term capital gains,

if any, in excess of net short-term capital losses are taxable as long-term capital gains, regardless of how long you have held the Shares.

Distributions in excess of the Fund’s current

and accumulated earnings and profits are treated as a tax-free return of capital to the extent of your basis in the Shares and as capital

gain thereafter. A distribution will reduce the Fund’s NAV per Share and may be taxable to you as ordinary income or capital gain

(as described above) even though, from an investment standpoint, the distribution may constitute a return of capital.

By law, the Fund is required to withhold 28% of your

distributions and redemption proceeds if you have not provided the Fund with a correct social security number or other taxpayer identification

number and in certain other situations.

Taxes on Exchange-Listed Share Sales

Any capital gain or loss realized upon a sale of Shares

is generally treated as long-term capital gain or loss if the Shares have been held for more than one year and as short-term capital gain

or loss if the Shares have been held for one year or less. The ability to deduct capital losses from sales of Shares may be limited.

Taxes on Purchase and Redemption of Creation Units

An AP who exchanges securities for Creation Units

generally will recognize a gain or a loss equal to the difference between the market value of the Creation Units at the time of the exchange

and the sum of the exchanger’s aggregate basis in the securities surrendered plus any Cash Component it pays. An AP who exchanges

Creation Units for securities will generally recognize a gain or loss equal to the difference between the exchanger’s basis in the

Creation Units and the sum of the aggregate market value of the securities received plus any cash equal to the difference between the

NAV of the Shares being redeemed and the value of the securities. The IRS, however, may assert that a loss realized upon an exchange of

securities for Creation Units cannot be deducted currently under the rules governing “wash sales” or for other reasons. Persons

exchanging securities should consult their own tax advisor with respect to whether wash sale rules apply and when a loss might be deductible.

Any capital gain or loss realized upon redemption

of Creation Units is generally treated as long-term capital gain or loss if the Shares have been held for more than one year and as short-term

capital gain or loss if the Shares have been held for one year or less.

If you purchase or redeem Creation Units, you will

be sent a confirmation statement showing how many Shares you purchased or sold and at what price. See “Tax Status” in the

SAI for a description of the newly effective requirement regarding basis determination methods applicable to Share redemptions and the

Fund’s obligation to report basis information to the IRS.

The foregoing discussion summarizes some of the possible

consequences under current federal tax law of an investment in the Fund. It is not a substitute for personal tax advice. Consult your

personal tax advisor about the potential tax consequences of an investment in the Shares under all applicable tax laws. See “Tax

Status” in the SAI for more information.

Fund

Service Providers

Ultimus Fund Solutions, LLC (the “Administrator”),

is the Fund’s administrator and fund accountant. It has its principal office at 17645 Wright Street, Suite 200, Omaha, NE 68130,

and is primarily in the business of providing administrative, fund accounting and transfer agent services to retail and institutional

mutual funds. It is an affiliate of the Northern Lights Distributors., LLC

Brown Brothers Harriman and Co., located at 450 Post

Office Square, Boston, Massachusetts 02110, is the Fund’s transfer agent and custodian.

The Fund has entered into an ETF Distribution Agreement

(the “Distribution Agreement”) with Northern Lights Distributors, LLC (the “Distributor”), 17645 Wright Street,

Suite 200, Omaha, NE 68130, to serve as the distributor for the Fund. Archer Distributors, LLC, an affiliate of the Advisor (“Archer”)

is also a party to the Distribution Agreement and provides marketing services to the Fund, including responsibility for all the Fund’s

marketing and advertising materials. Both the Distributor and Archer are registered broker-dealers and members of the Financial Industry

Regulatory Authority, Inc. (“FINRA”).

Thompson Hine LLP, 41 South High Street, Suite 1700,

Columbus, Ohio 43215, serves as legal counsel to the Trust.

BBD, LLP, located at 1835 Market Street, 3rd

Floor, Philadelphia, Pennsylvania 19103, serves as the Fund’s independent registered public accounting firm. The independent registered

public accounting firm is responsible for auditing the annual financial statements of the Fund.

Other

Information

Investments by Investment Companies

Section 12(d)(1) of the 1940 Act restricts investments

by investment companies in the securities of other investment companies, including the Shares. Registered investment companies are permitted

to invest in the Fund beyond the limits set forth in part of Section 12(d)(1) subject to certain terms and conditions; or as set forth

in Rule 12d1-4 under the 1940 Act, including that such investment companies enter into an investment agreement with the Trust on behalf

of the Fund.

Continuous Offering

The method by which Creation Units of Shares are created

and traded may raise certain issues under applicable securities laws. Because new Creation Units of Shares are issued and sold by the

Fund on an ongoing basis, a “distribution,” as such term is used in the Securities Act of 1933, as amended (the “Securities

Act”), may occur at any point. Broker-dealers and other persons are cautioned that some activities on their part may, depending

on the circumstances, result in their being deemed participants in a distribution in a manner which could render them statutory underwriters

and subject them to the prospectus delivery requirement and liability provisions of the Securities Act.

For example, a broker-dealer firm or its client may

be deemed a statutory underwriter if it takes Creation Units after placing an order with the Distributor, breaks them down into constituent

Shares and sells the Shares directly to customers or if it chooses to couple the creation of a supply of new Shares with an active selling

effort involving solicitation of secondary market demand for Shares. A determination of whether one is an underwriter for purposes of

the Securities Act must take into account all the facts and circumstances pertaining to the activities of the broker-dealer or its client

in the particular case, and the examples mentioned above should not be considered a complete description of all the activities that could

lead to a characterization as an underwriter.

Broker-dealer firms should also note that dealers

who are not “underwriters” but are effecting transactions in Shares, whether or not participating in the distribution of Shares,

are generally required to deliver a prospectus. This is because the prospectus delivery exemption in Section 4(3) of the Securities Act

is not available in respect of such transactions as a result of Section 24(d) of the 1940 Act. As a result, broker-dealer firms should

note that dealers who are not “underwriters” but are participating in a distribution (as contrasted with engaging in ordinary

secondary market transactions) and thus dealing with the Shares that are part of an overallotment within the meaning of Section 4(3)(C)

of the Securities Act, will be unable to take advantage of the prospectus delivery exemption provided by Section 4(3) of the Securities

Act. For delivery of prospectuses to exchange members, the prospectus delivery mechanism of Rule 153 under the Securities Act is only

available with respect to transactions on a national exchange.

Dealers effecting transactions in the Shares, whether

or not participating in this distribution, are generally required to deliver a Prospectus. This is in addition to any obligation of dealers

to deliver a Prospectus when acting as underwriters.

Householding

To reduce expenses, we mail only one copy of the Prospectus

or summary prospectus and each annual and semi-annual report to those addresses shared by two or more accounts. If you wish to receive

individual copies of these documents, please call the Fund at 1-877-277-6933 between the hours of 8:30 a.m. and 6:00 p.m. Eastern Time

on days the Fund is open for business or contact your financial institution. We will begin sending you individual copies thirty days after

receiving your request.

Because the Fund has only recently commenced investment

operations, no financial highlights are available for the Fund at this time. In the future, financial highlights will be presented in

this section of the Prospectus.

Privacy Notice

Rev. November 2011

ARROW DYNAMIC BITCOIN STRATEGY ETF

Additional information about the Fund, including the

Fund’s policies and procedures with respect to disclosure of the Fund’s portfolio holdings, is included in the Fund’s

SAI dated (____), 2022. The SAI provides more details about the Fund’s policies and management. The SAI is incorporated by reference

into this Prospectus (i.e., legally made a part of this Prospectus). Additional information about the Fund’s investments is available

in the Fund’s Annual and Semi-Annual Reports to Shareholders.

To obtain a free copy of the SAI, the annual report,

the semi-annual report, to request other information about the Fund, or to make shareholder inquiries about the Fund, please call 1-877-277-6933

or visit the Fund’s website, at www.ArrowFunds.com. You may also write to:

Reports and other information about the Fund are available

on the EDGAR Database on the SEC’s website at www.sec.gov. Copies of the information may be obtained, after paying a duplicating

fee, by electronic request at the following E-mail address: (email protected)

Investment Company Act File # 811-22624

The information in this Statement of

Additional Information is not complete and may be changed. We may not sell these securities until the registration statement filed with

the Securities and Exchange Commission is effective. This Statement of Additional Information is not an offer to sell these securities

and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

ARROW DYNAMIC BITCOIN STRATEGY ETF

DBCS

a series of Arrow Investments Trust

Listed and traded on:

Cboe BZX Exchange, Inc.

STATEMENT OF ADDITIONAL INFORMATION

(___), 2022

This Statement of Additional Information (“SAI”)

is not a prospectus and should be read in conjunction with the prospectus of the Arrow Dynamic Bitcoin Strategy ETF (the “Fund”)

dated (______), 2022. The Fund’s Prospectus is hereby incorporated by reference, which means it is legally part of this document.

You can obtain copies of the Fund’s Prospectus, and when issued, annual, or semi-annual reports without charge by contacting the

Fund’s Transfer Agent, Brown Brothers Harriman and Co., located at 50 Post Office Square, Boston, MA 02110 or by calling toll free

1-877-277-6933. You may also obtain a Prospectus, and when issued, the annual report, or semi-annual report by visiting our website at

www.ArrowFunds.com.

TABLE OF CONTENTS

THE FUND

The Arrow Dynamic Bitcoin Strategy ETF is a diversified

series of Arrow Investments Trust, a Delaware statutory trust organized on August 2, 2011 (the “Trust”). The Trust is registered

as an open-end management investment company. The Trust is governed by its Board of Trustees (the “Board” or “Trustees”).

Under the Trust’s Trust Instrument, each Trustee

will continue in office until the termination of the Trust or his/her earlier death, incapacity, resignation or removal. Shareholders

can remove a Trustee to the extent provided by the Investment Company Act of 1940, as amended (the “1940 Act”) and the rules

and regulations promulgated thereunder. Vacancies may be filled by a majority of the remaining Trustees, except insofar as the 1940 Act

may require the election by shareholders. As a result, normally no annual or regular meetings of shareholders will be held unless matters

arise requiring a vote of shareholders under the Trust Instrument or the 1940 Act.

The Fund’s investment objective is seeks to

achieve income and long-term capital appreciation (greater than the stock market as a whole). The Fund’s restrictions and policies

are more fully described here and in the Prospectus. The Board may start other series and offer shares of a new fund under the Trust at

any time. The Fund is managed by Arrow Investment Advisors, LLC (the “Advisor”).

The Fund issues and redeems shares (“Shares”)

at net asset value (“NAV”) only in aggregations of (___) Shares (each a “Creation Unit”). The Fund expects to

affect all of its creations and redemption in cash rather than in-kind. However, the Fund may issue and redeem Creation Units in exchange

for an in-kind deposit of a basket of designated securities (the “Deposit Securities”), together with the deposit of a specified

cash payment (the “Cash Component”), plus a transaction fee. The Fund is listed on the Cboe BZX Exchange, Inc. (the “Exchange”).

Shares trade on the Exchange at market prices that may be below, at, or above NAV. In the event of the liquidation of the Fund, a share

split, reverse split or similar event, the Trust may revise the number of Shares in a Creation Unit.

As noted above, the Fund reserves the right to offer

creations and redemptions of Shares for cash. In addition, Shares may be issued in advance of receipt of Deposit Securities subject to

various conditions, including a requirement to maintain on deposit with the Trust cash equal to up to 115% of the market value of the

missing Deposit Securities. In each instance of such cash creations or redemptions, transaction fees may be imposed and may be higher

than the transaction fees associated with in-kind creations or redemptions. See PURCHASE AND REDEMPTION OF CREATION UNITS below.

Exchange Listing and Trading

Shares are listed for trading on the Exchange and

trade throughout the day on the Exchange. In order to provide additional information regarding the indicative value of Shares of the Fund,

a market data vendor or other information provider may disseminate every 15 seconds through a data service or other widely disseminated

means an updated “Indicative Optimized Portfolio Value” (“IOPV”) for the Fund as calculated by an information

provider or market data vendor. The Trust is not involved in or responsible for any aspect of the calculation or dissemination of the

IOPV and makes no representation or warranty as to the accuracy of the IOPV.

The information provider or market data vendor calculates

the IOPV during hours of trading on the Exchange by dividing the “Estimated Fund Value” as of the time of the calculation

by the total number of outstanding Shares. “Estimated Fund Value” is the sum of the estimated amount of cash held in the Fund’s

portfolio, the estimated amount of accrued interest owing to the Fund and the estimated value of the securities held in the Fund’s

portfolio, minus the estimated amount of liabilities. The IOPV is calculated based on the same portfolio holdings disclosed on the Fund’s

website. In determining the estimated value for each of the component securities, the IOPV uses last sale, market prices or other methods

that would be considered appropriate for pricing equity securities held by registered investment companies.

The Exchange may, but is not required to, remove the

Shares of the Fund from listing if: (i) following the initial 12-month period beginning at the commencement of trading of the Fund, there

are fewer than 50 beneficial owners of Shares (specifically for each Cboe-listed Fund, there must be fewer than 50 beneficial owners for

at least 30 consecutive trading days); (ii) the Fund is no longer eligible to operate in reliance on Rule 6c-11 under the 1940 Act; (iii)

the Fund fails to meet certain continued listing standards of an Exchange; or (iv) such other event shall occur or condition shall exist

that, in the opinion of the Exchange, makes further dealings on the Exchange inadvisable. The Exchange will remove the Shares of the Fund

from listing and trading upon termination of the Fund.

TYPES OF INVESTMENTS

The investment objective of the Fund and a description

of its principal investment strategies are set forth under “Risk/Return Summary” in the Prospectus. The Fund’s investment

objective is not fundamental and may be changed without the approval of a majority of the Fund’s outstanding voting securities.

The following pages contain more detailed information about the types of instruments in which the Fund may invest, strategies the Advisor

may employ in pursuit of the Fund’s investment objective and a summary of related risks.

Security Ratings

Rated Securities. The Fund’s investments in

certain equity securities, such as preferred securities and convertible securities, and in debt securities are subject to the credit risk

relating to the financial condition of the issuers of the securities that the Fund holds. The Fund may invest in convertible and other

debt securities that are investment or non-investment grade. Investment grade means rated in the top four long-term rating categories,

or unrated and determined by the Advisor to be of comparable quality. The Fund may also purchase unrated securities if, at the time of

purchase, the Advisor believes that they are of comparable quality to rated securities that the Fund may purchase. Standard & Poor’s

Ratings Services (“S & P”), Moody’s Investors Service, Inc. (“Moody’s”) and other organizations

provide ratings of the credit quality of debt obligations, including convertible securities. A description of the range of ratings assigned

to various types of bonds and other securities is included in Appendix B to this SAI. The Fund may use these ratings to determine whether

to purchase, sell or hold a security. Because a ratings downgrade often results in a reduction in the market price of the security, sale

of a downgraded security may result in a loss. To the extent that a rating changes as a result of changes in an organization or its rating

systems, the Advisor may attempt to substitute comparable ratings or to use such information to determine whether the Fund should continue

to hold the obligation. Credit ratings attempt to evaluate the safety of principal and interest payments and do not evaluate the risks

of fluctuations in market value. Ratings are general and are not absolute standards of quality. The rating of an issuer is a view of potential

developments related to the issuer and may not necessarily reflect actual outcomes. An issuer’s current financial condition may

be better or worse than a rating indicates.

Unrated Securities. The Fund may also invest in unrated

debt and similar securities. Unrated debt, while not necessarily lower in quality than rated securities, may not be as actively traded

as rated securities. Because of the size and perceived demand for the issue, among other factors, certain issuers may decide not to pay

the cost of getting a rating for their bonds. The creditworthiness of the issuer, as well as any financial institution or other party

responsible for payments on the security, will be analyzed to determine whether to purchase unrated bonds.

Equity Securities

Equity securities in which the Fund invests include

common stocks, preferred stocks and securities convertible into common stocks, such as convertible bonds, warrants, rights and options.

The value of equity securities varies in response to many factors, including the activities and financial condition of individual companies,

the business market in which individual companies compete and general market and economic conditions. Equity securities fluctuate in value,

often based on factors unrelated to the value of the issuer of the securities, and such fluctuations can be significant.

Common Stock

Common stock represents an equity (ownership) interest

in a company, and usually possesses voting rights and earns dividends. Dividends on common stock are not fixed but are declared at the

discretion of the issuer. Common stock generally represents the riskiest investment in a company. In addition, common stock generally

has the greatest appreciation and depreciation potential because increases and decreases in earnings are usually reflected in a company’s

stock price.

Preferred Stock

The Fund may invest in preferred stock with a minimum

credit rating of investment grade. Preferred stock is a class of stock having a preference over common stock as to the payment of dividends

and the recovery of investment should a company be liquidated, although preferred stock is usually junior to the debt securities of the

issuer. Preferred stock typically does not possess voting rights and its market value may change based on changes in interest rates.

The Fund may also purchase trust preferred securities,

also known as “trust preferreds,” which are preferred stocks issued by a special purpose trust subsidiary backed by subordinated

debt of the corporate parent. An issuer creates trust preferred securities by creating a trust and issuing debt to the trust. The trust

in turn issues trust preferred securities. Trust preferred securities are hybrid securities with characteristics of both subordinated

debt and preferred stock. Such characteristics include long maturities (typically 30 years or more), early redemption by the issuer, periodic

fixed or variable interest payments, and maturities at face value. In addition, trust preferred securities issued by bank holding company

may allow deferral of interest payments for up to 5 years. Holders of trust preferred securities have limited voting rights to control

the activities of the trust, and no voting rights with respect to the parent company.

The fundamental risk of investing in common and preferred

stock is the risk that the value of the stock might decrease. Stock values fluctuate in response to the activities of an individual company

or in response to general market and/or economic conditions. Historically, common stocks have provided greater long-term returns and have

entailed greater short-term risks than preferred stocks, fixed-income securities and money market investments. The market value of all

securities, including common and preferred stocks, is based upon the market’s perception of value and not necessarily the book value

of an issuer or other objective measures of a company’s worth.

Convertible Securities

The Fund may invest in convertible securities with

a minimum credit rating of investment grade. Convertible securities include fixed income securities that may be exchanged or converted

into a predetermined number of shares of the issuer’s underlying common stock at the option of the holder during a specified period.

Convertible securities may take the form of convertible preferred stock, convertible bonds or debentures, units consisting of “usable”

bonds and warrants or a combination of the features of several of these securities. Convertible securities are senior to common stocks

in an issuer’s capital structure, but are usually subordinated to similar non-convertible securities.

While providing a fixed-income stream (generally higher

in yield than the income derivable from common stock but lower than that afforded by a similar nonconvertible security), a convertible

security also gives an investor the opportunity, through its conversion feature, to participate in the capital appreciation of the issuing

company depending upon a market price advance in the convertible security’s underlying common stock.

Warrants

The Fund may invest in warrants. Warrants are options

to purchase common stock at a specific price (usually at a premium above the market value of the optioned common stock at issuance) valid

for a specific period of time. Warrants may have a life ranging from less than one year to twenty years, or they may be perpetual. However,

most warrants have expiration dates after which they are worthless. In addition, a warrant is worthless if the market price of the common

stock does not exceed the warrant’s exercise price during the life of the warrant. Warrants have no voting rights, pay no dividends,

and have no rights with respect to the assets of the corporation issuing them. The percentage increase or decrease in the market price

of the warrant may tend to be greater than the percentage increase or decrease in the market price of the optioned common stock.

Foreign Securities

General. The Fund may invest in foreign securities

directly or through exchange traded funds (“ETFs”) and other investment companies that hold a portfolio of foreign securities.

Investing in securities of foreign companies and countries involves certain considerations and risks that are not typically associated

with investing in U.S. government securities and securities of domestic companies. There may be less publicly available information about

a foreign issuer than a domestic one, and foreign companies are not generally subject to uniform accounting, auditing and financial standards

and requirements comparable to those applicable to U.S. companies. There may also be less government supervision and regulation of foreign

securities exchanges, brokers and listed companies than exists in the United States. Interest and dividends paid by foreign issuers may

be subject to withholding and other foreign taxes, which may decrease the net return on such investments as compared to dividends and

interest paid to the Fund by domestic companies or the U.S. government. There may be the possibility of expropriations, seizure or nationalization

of foreign deposits, confiscatory taxation, political, economic or social instability or diplomatic developments that could affect assets

of the Fund held in foreign countries. Finally, the establishment of exchange controls or other foreign governmental laws or restrictions

could adversely affect the payment of obligations.

To the extent the Fund’s currency exchange transactions

do not fully protect the Fund against adverse changes in currency exchange rates, decreases in the value of currencies of the foreign

countries in which the Fund will invest relative to the U.S. dollar will result in a corresponding decrease in the U.S. dollar value of

the Fund’s assets denominated in those currencies (and possibly a corresponding increase in the amount of securities required to

be liquidated to meet distribution requirements). Conversely, increases in the value of currencies of the foreign countries in which the

Fund invests relative to the U.S. dollar will result in a corresponding increase in the U.S. dollar value of the Fund’s assets (and

possibly a corresponding decrease in the amount of securities to be liquidated).

Foreign Economy Risk

The economies of certain foreign markets often do

not compare favorably with that of the U.S. with respect to such issues as growth of gross domestic product, reinvestment of capital,

resources, and balance of payments positions. Certain foreign economies may rely heavily on particular industries or foreign capital and

are more vulnerable to diplomatic developments, the imposition of economic sanctions against a particular country or countries, changes

in international trading patterns, trade barriers, and other protectionist or retaliatory measures. Investments in foreign markets may

also be adversely affected by governmental actions such as the imposition of capital controls, nationalization of companies or industries,

expropriation of assets, or the imposition of punitive taxes. In addition, the governments of certain countries may prohibit or impose

substantial restrictions on foreign investing in their capital markets or in certain industries. Any of these actions could severely affect

security prices, impair the Fund’s ability to purchase or sell foreign securities, or transfer the Fund’s assets back into

the U.S., or otherwise adversely affect the Fund’s operations. Other foreign market risks include foreign exchange controls, difficulties

in pricing securities, defaults on foreign government securities, difficulties in enforcing favorable legal judgments in foreign courts,

and political and social instability. Legal remedies available to investors in certain foreign countries may be less extensive than those

available to investors in the U.S. or other foreign countries. Foreign corporate governance may not be as robust as in the U.S. As a result,

protections for minority investors may not be strong, which could affect security prices.

Currency Risk and Exchange Risk

Securities in which the Fund invests may be denominated

or quoted in currencies other than the U.S. dollar. Changes in foreign currency exchange rates will affect the value of these securities.

Generally, when the U.S. dollar rises in value against a foreign currency, an investment in a security denominated in that currency loses

value because the currency is worth fewer U.S. dollars. Similarly, when the U.S. dollar decreases in value against a foreign currency,

an investment in a security denominated in that currency gains value because the currency is worth more U.S. dollars. This risk is generally

known as “currency risk” which is the possibility that a stronger U.S. dollar will reduce returns for U.S. investors investing

overseas. Foreign currencies also involve the risk that they will be devalued or replaced, adversely affecting the Fund’s investments.

Governmental Supervision and Regulation/Accounting

Standards. Many foreign governments supervise and regulate stock exchanges, brokers and the sale of securities to a lesser extent than

the U.S. government. Some countries may not have laws to protect investors the way that the U.S. securities laws do. Accounting standards

in other countries are not necessarily the same as in the U.S. If the accounting standards in another country do not require as much disclosure

or detail as U.S. accounting standards, it may be harder to assess a company’s financial condition.

Certain Risks of Holding Fund Assets Outside the U.S.

Foreign securities in which the Fund invests are generally held outside the U.S. in foreign banks and securities depositories. The custodian

is the Fund’s “foreign custody manager” as provided in Rule 17f-5 under the 1940 Act. The “foreign custody manager”

is responsible for determining that the Fund’s directly-held foreign assets will be subject to reasonable care, based on standards

applicable to custodians in relevant foreign markets. However, certain foreign banks and securities depositories may be recently organized

or new to the foreign custody business. They may also have operations subject to limited or no regulatory oversight.

Also, the laws of certain countries may put limits

on the Fund’s ability to recover its assets if a foreign bank or depository or issuer of a security or an agent of any of the foregoing

goes bankrupt. In addition, it likely will be more expensive for the Fund to buy, sell and hold securities in certain foreign markets

than it is in the U.S. market due to higher brokerage, transaction, custody and/or other costs. The increased expense of investing in

foreign markets reduces the amount the Fund can earn on its investments. Settlement and clearance procedures in certain foreign markets

differ significantly from those in the U.S.

Foreign settlement and clearance procedures and trade

regulations also may involve certain risks (such as delays in payment for or delivery of securities) not typically involved with the settlement

of U.S. investments. Communications between the U.S. and emerging market countries may be unreliable, increasing the risk of delayed settlements

or losses of security certificates. Settlements in certain foreign countries at times have not kept pace with the number of securities

transactions. The problems may make it difficult for the Fund to carry out transactions. If the Fund cannot settle or is delayed in settling

a purchase of securities, the Fund may miss investment opportunities and certain of its assets may be uninvested with no return earned

thereon for some period. If the Fund cannot settle or is delayed in settling a sale of securities, directly or indirectly, it may lose

money if the value of the security then declines or, if it has contracted to sell the security to another party, the Fund could be liable

to that party for any losses incurred.

In addition, dividends payable on foreign securities

may be subject to foreign withholding taxes, thereby reducing the income available for distribution to shareholders. Some foreign brokerage

commissions and custody fees are higher than those in the United States.

Emerging Markets

If the Fund invests in emerging markets, markets that

can have more risk than investing in developed foreign markets, an investment in the Fund may have the following additional risks:

For these and other reasons, the prices of securities

in emerging markets can fluctuate more significantly than the prices of securities of companies in developed countries. The less developed

the country, the greater effect these risks may have on an investment in the Fund. As a result, an investment in the Fund may exhibit

a higher degree of volatility than either the general domestic securities market or the securities markets of developed foreign countries.

Depositary Receipts

To the extent the Fund invests in stocks of foreign

corporations, the Fund’s investment in such stocks may also be in the form of Depositary Receipts or other securities convertible

into securities of foreign issuers. Depositary Receipts may not necessarily be denominated in the same currency as the underlying securities

into which they may be converted. American Depositary Receipts (“ADRs”) are receipts typically issued by an American bank

or trust company that evidence ownership of underlying securities issued by a foreign corporation. European Depositary Receipts (“EDRs”)

are receipts issued in Europe that evidence a similar ownership arrangement. Global Depositary Receipts (“GDRs”) are receipts

issued throughout the world that evidence a similar arrangement. Generally, ADRs, in registered form, are designed for use in the U.S.

securities markets, and EDRs, in bearer form, are designed for use in European securities markets. GDRs are tradable both in the United

States and in Europe and are designed for use throughout the world. Depositary Receipts will not necessarily be denominated in the same

currency as their underlying securities.

The Fund will not invest in any unlisted Depositary

Receipts or any Depositary Receipt that the Advisor deems to be illiquid or for which pricing information is not readily available. In

addition, the Fund will generally invest in sponsored Depositary Receipts, but may invest in unsponsored Depositary Receipts from time

to time. The issuers of unsponsored Depositary Receipts are not obligated to disclose material information in the United States, and,

therefore, there may be less information available regarding such issuers and there may not be a correlation between such information

and the market value of the Depositary Receipts.

Real Estate Investment Trusts (“REITs”)

The Fund may purchase interests in REITs. A REIT is

a company that pools investor funds to invest primarily in income producing real estate or real estate related loans or interests. A REIT

is not taxed on income distributed to its shareholders if, among other things, it distributes substantially all of its taxable income

(other than net capital gain) for each taxable year.

Investment in REITs may be the most practical available

means for the Fund to invest in the real estate industry. As a shareholder in a REIT, the Fund would bear its ratable share of the REIT’s

expenses, including its advisory and administration fees. At the same time, the Fund would continue to pay its own investment advisory

fees and other expenses, as a result of which the Fund and its shareholders in effect would be absorbing duplicate levels of fees with

respect to investments in REITs. A REIT may focus on particular projects, such as apartment complexes, or geographic regions, such as

the southeastern United States, or both.

REITs generally can be classified as equity REITs,

mortgage REITs and hybrid REITs. Equity REITs generally invest a majority of their assets in income-producing real estate properties to

generate cash flow from rental income and gradual asset appreciation. The income-producing real estate properties in which equity REITs

invest typically include properties such as office, retail, industrial, hotel and apartment buildings, self-storage, specialty and diversified

and healthcare facilities. Equity REITs can realize capital gains by selling properties that have appreciated in value. Mortgage REITs

invest the majority of their assets in real estate mortgages and derive their income primarily from interest payments on the mortgages.

Hybrid REITs combine the characteristics of both equity REITs and mortgage REITs.

Because REITs have ongoing fees and expenses, which

may include management, operating and administration expenses, REIT shareholders, including the Fund, will indirectly bear a proportionate

share of those expenses in addition to the expenses of the Fund. However, such expenses are not considered to be Acquired Fund Fees and

Expenses and, therefore, are not reflected as such in the Fund’s fee table.

REITs can be listed and traded on national securities

exchanges or can be traded privately between individual owners. The Fund will generally invest only in publicly traded REITs. The Fund

conceivably could own real estate directly as a result of a default on the securities it owns.

Therefore, the Fund may be subject to certain risks

associated with the direct ownership of real estate, including difficulties in valuing

and trading real estate, declines in the values of

real estate, risks related to general and local economic conditions, adverse changes in the climate for real estate, environmental liability

risks, increases in property taxes and operated expenses, changes in zoning laws, casualty or condemnation losses, limitations on rents,

changes in neighborhood values, the appeal of properties to tenants and increases in interest rates.

In addition to the risks described above, equity REITs

may be affected by any changes in the value of the underlying property owned by the trusts, while mortgage REITs may be affected by the

quality of any credit extended. Equity and mortgage REITs depend upon management skill, are not diversified and therefore are subject

to the risk of financing single or a limited number of projects. Changes in interest rates also may affect the value of debt securities

held by the Fund. By investing in REITs indirectly through the Fund, a shareholder will bear not only his/her proportionate share of the

expenses of the Fund, but also, indirectly, similar expenses of the REITs. The Fund also may be subject to certain risks associated with

the direct investments of the REITs. REITs may be affected by changes in their underlying properties and by defaults by borrowers or tenants.

Mortgage REITs may be affected by the quality of the credit extended. Some REITs may have limited diversification and may be subject to

risks inherent in financing a limited number of properties. REITs depend generally on their ability to generate cash flow to make distributions

to shareholders or unitholders, and may be subject to defaults by borrowers and to self-liquidations. In addition, the performance of

a REIT may be affected by its failure to qualify for tax-free pass-through of income under the Internal Revenue Code or its failure to

maintain exemption from registration under the 1940 Act.

Royalty Trusts

A royalty trust is an entity that typically owns oil

or natural gas wells or the mineral rights of wells and of property, such as mines. Royalty trusts in which the Fund may invest primarily

will be organized in Canada. Royalty trusts commonly hold debt or equity securities in, or are entitled to receive royalties from, an

underlying active business. The royalty trust structure is typically adopted by businesses that require a limited amount of capital in

maintenance and that generate stable cash flows. The value of a royalty trust can rise or fall for the same reasons that affect equity

securities or because of changes in interest rates.

An investment in units of a royalty trust is not the

equivalent of owning shares in a corporation, as unitholders do not have the statutory rights normally associated with owning shares in

a corporation. Investments in royalty trusts will have varying degrees of risk depending on the sector and the underlying assets. They

will also be subject to general risks associated with business cycles, commodity prices, interest rates, and other economic factors.

Typically, royalty trusts are more volatile than fixed-income

securities and preferred shares. The value of royalty trust units may decline significantly if they are unable to meet distribution targets.

To the extent that claims against a royalty trust are not satisfied by the trust, investors in the trust (including the Fund if it is

an investor in the Trust) could be held responsible for those claims. Certain, but not all, jurisdictions have enacted legislation to

protect investors from some of this liability.

Royalty trusts may be subject to certain risks associated

with a decline in demand for crude oil, natural gas and refined petroleum products, which, in turn, could adversely affect income and

royalty trust revenues and cash flows. Factors that could lead to a decrease in market demand include a recession or other adverse economic

conditions, an increase in the market price of the underlying commodity, higher taxes or other regulatory actions that increase costs,

or a shift in consumer demand for such products. A rising interest rate environment could adversely impact the performance of royalty

trusts. Rising interest rates could limit the capital appreciation of royalty trusts because of the increased availability of alternative

investments at more competitive yields.

Because royalty trusts have ongoing fees and expenses,

which may include management, operating and administration expenses, royalty trust shareholders, including the Fund, will indirectly bear

a proportionate share of those expenses in addition to the expenses of the Fund. However, such expenses are not considered to be Acquired

Fund Fees and Expenses and, therefore, are not reflected as such in the Fund’s fee table.

Master Limited Partnerships (“MLPs”)

MLPs are limited partnerships (or similar entities)

in which the ownership units (e.g., limited partnership interests) are publicly traded. MLP units are registered with the Securities and

Exchange Commission (“SEC”) and are freely traded on a securities exchange or in the over-the-counter (“OTC”)

market. Many MLPs operate in the oil and gas related businesses, including energy processing and distribution. Many MLPs are pass-through

entities that generally are taxed at the unitholder level and are not subject to federal or state income tax at the entity level; annual

income, gains, losses, and deductions of such an MLP pass through directly to its unitholders. Distributions from an MLP may consist in

part of a return of capital. Generally, an MLP is operated under the supervision of one or more general partners, and limited partners

are not involved in the day-to-day management of the MLP.

Investing in MLPs involves certain risks related to

investing in the underlying assets of the MLPs and risks associated with pooled investment vehicles. MLPs holding credit-related investments

are subject to interest rate risk and the risk of default on payment obligations by debt issuers.

MLPs that concentrate in a particular industry or

a particular geographic region are subject to risks associated with that industry or

region. Investments held by MLPs may be relatively

illiquid, limiting their ability to vary their portfolios promptly in response to changes in economic or other conditions. MLPs may have

limited financial resources, their securities may trade infrequently and in limited volume, and they may be subject to more abrupt or

erratic price movements than securities of larger or more broadly based companies.

The risks of investing in an MLP are generally those

inherent in investing in a partnership as opposed to a corporation. For example, state law governing partnerships is often less restrictive

than state law governing corporations. Accordingly, there may be fewer protections afforded investors in an MLP than investors in a corporation.

Although unitholders of an MLP are generally limited in their liability, similar to a corporation’s shareholders, creditors typically

have the right to seek the return of distributions made to unitholders if the liability in question arose before the distributions were

paid. This liability may stay attached to the unitholder even after the units are sold. There are certain risks associated with the Fund’s

investments in MLPs, which are detailed below in “TAXES.”

Investment Companies and Other Pooled Vehicles

The Fund may invest in the securities of other investment

companies (including money market funds). Under the 1940 Act, the Fund’s investment in investment companies is limited to, subject

to certain exceptions, (i) 3% of the total outstanding voting stock of any one investment company, (ii) 5% of the Fund’s total assets

with respect to any one investment company and (iii) 10% of the Fund’s total assets of investment companies in the aggregate. The

Fund may invest in shares of open-end and closed-end investment companies, including other exchange-traded funds (“ETFs”)

and money market funds (including pending investment of cash balances). ETFs are investment companies whose shares are bought and sold

on a securities exchange. An ETF typically holds a portfolio of securities designed to track a particular market segment or index. Some

examples of ETFs are SPDRs®, NASDAQ 100 Index Tracking StockSM (“QQQs SM”) iShares® and VIPERs®. The Fund could

purchase an ETF to gain exposure to a portion of the U.S. or foreign market. The Fund may also invest in other investment companies pursuant

to Rule 12d1-4.

The Fund may invest in exchange traded notes (“ETNs”),

which are similar to ETFs in that they may be designed to provide returns that track an index; ETNs are different from ETFs, however,

in one important respect. They are not secured by an underlying pool of assets, but rather are notes (or debt securities) secured only

by the ability of the issuer to pay. As such, their shares are subject to the same risks described for “Corporate Debt Securities”

below.

The Fund may invest also in other exchange traded

products (“ETPs”) that, like an ETF, invest in a pool of assets and are traded on an exchange. ETPs, however, are generally

organized as commodity pools registered under the Commodity Exchange Act or as grantor trusts and are not registered as investment companies

under the 1940 Act. This is due to the fact that they invest in, for example, commodities or currencies rather than securities. The Fund,

as a shareholder of another investment company, ETF, ETN or ETP, will bear its pro rata portion of the entity’s fees and expenses,

in addition to its own fees and expenses. In addition, it will be exposed to the investment risks associated with the entity, which generally

reflect the risks of the entity’s underlying investments.

As a shareholder of an investment company, ETF, ETN

or ETP, the Fund must rely on the entity to achieve its investment objective. If it fails to achieve its investment objective, the Fund

may likewise fail to achieve its investment objective or otherwise be adversely affected.

Investments in ETFs, ETNs and ETPs are also subject

to brokerage and other trading costs, which could result in greater expenses to the Fund and lack of liquidity in an entity could result

in its market price being more volatile than the underlying portfolio of securities. In addition, because such entities are listed on

national stock exchanges and are traded like stocks listed on an exchange, their shares potentially may trade at a discount or a premium

to their NAV. Finally, because the value of ETF shares depends on the demand in the market, the Advisor may not be able to liquidate the

Fund’s holdings at the most optimal time, adversely affecting the Fund’s performance.

Fixed Income Securities.

The market value of the fixed income investments in

which the Fund may invest will change in response to interest rate changes and other factors. During periods of falling interest rates,

the values of outstanding fixed income securities generally rise. Conversely, during periods of rising interest rates, the values of such

securities generally decline. Moreover, while securities with longer maturities tend to produce higher yields, the prices of longer maturity

securities are also subject to greater market fluctuations as a result of changes in interest rates. Changes by recognized agencies in

the rating of any fixed income security and in the ability of an issuer to make payments of interest and principal also affect the value

of these investments. Changes in the value of these securities will not necessarily affect cash income derived from these securities but

will affect the Fund’s NAV. Additional information regarding fixed income securities is described below:

Duration. Duration is a measure of the expected

change in value of a fixed income security for a given change in interest rates. For example, if interest rates changed by one percent,

the value of a security having an effective duration of two years generally would vary by two percent. Duration takes the length of the

time intervals between the present time and time that the interest and principal

payments are scheduled, or in the case of a callable

bond, expected to be received, and weighs them by the present values of the cash to be received at each future point in time.

Variable and Floating Rate Securities

Variable and floating rate instruments involve certain

obligations that may carry variable or floating rates of interest, and may involve a conditional or unconditional demand feature. Such

instruments bear interest at rates which are not fixed, but which vary with changes in specified market rates or indices. The interest

rates on these securities may be reset daily, weekly, quarterly, or some other reset period, and may have a set floor or ceiling on interest

rate changes. There is a risk that the current interest rate on such obligations may not accurately reflect existing market interest rates.

A demand instrument with a demand notice exceeding seven days may be considered illiquid if there is no secondary market for such security.

Corporate Debt Securities

The Fund may seek investment in corporate debt securities

representative of one or more high yield bond or credit derivative indices, which may change from time to time. Selection will generally

be dependent on independent credit analysis or fundamental analysis performed by the Advisor. The Fund may invest in all grades of corporate

securities including below investment grade as discussed below. The Fund also may invest in unrated securities.

Corporate debt securities are typically fixed-income

securities issued by businesses to finance their operations. Notes, bonds, debentures and commercial paper are the most common types of

corporate debt securities. The primary differences between the different types of corporate debt securities are their maturities and secured

or un-secured status. Commercial paper has the shortest term and is usually unsecured. The broad category of corporate debt securities

includes debt issued by domestic or foreign companies of all kinds, including those with small-, mid- and large-capitalizations. Corporate

debt may be rated investment-grade or below investment-grade and may carry variable or floating rates of interest.

Because of the wide range of types, and maturities,

of corporate debt securities, as well as the range of creditworthiness of its issuers, corporate debt securities have widely varying potentials

for return and risk profiles. For example, commercial paper issued by a large established domestic corporation that is rated investment-grade

may have a modest return on principal, but carries relatively limited risk. On the other hand, a long-term corporate note issued by a

small foreign corporation from an emerging market country that has not been rated may have the potential for relatively large returns

on principal, but carries a relatively high degree of risk.

Corporate debt securities carry both credit risk and

interest rate risk. Credit risk is the risk that the Fund could lose money if the issuer of a corporate debt security is unable to pay

interest or repay principal when it is due. Some corporate debt securities that are rated below investment-grade are generally considered

speculative because they present a greater risk of loss, including default, than higher quality debt securities. The credit risk of a

particular issuer’s debt security may vary based on its priority for repayment. For example, higher ranking (senior) debt securities

have a higher priority than lower ranking (subordinated) securities. This means that the issuer might not make payments on subordinated

securities while continuing to make payments on senior securities. In addition, in the event of bankruptcy, holders of higher-ranking

senior securities may receive amounts otherwise payable to the holders of more junior securities. Interest rate risk is the risk that

the value of certain corporate debt securities will tend to fall when interest rates rise. In general, corporate debt securities with

longer terms tend to fall more in value when interest rates rise than corporate debt securities with shorter terms.

Non-Investment-Grade Debt Securities

The Fund may invest in non-investment-grade securities.

Non-investment-grade securities, also referred to as “high yield securities” or “junk bonds,” are debt securities

that are rated lower than the four highest rating categories by a Nationally Recognized Statistical Rating Organization (for example,

lower than Baa3 by Moody’s Investors Service, Inc. or lower than BBB- by Standard & Poor’s) or are determined to be of

comparable quality by the Fund’s Advisor. These securities are generally considered to be, on balance, highly speculative with respect

to capacity to pay interest and repay principal in accordance with the terms of the obligation and will generally involve more credit

risk than securities in the investment-grade categories. Investment in these securities generally provides greater income and increased

opportunity for capital appreciation than investments in higher quality securities, but they also typically entail greater price volatility

and principal and income risk.

Some high yield securities are issued by smaller,

less-seasoned companies, while others are issued as part of a corporate restructuring, such as an acquisition, merger, or leveraged buyout.

Companies that issue high yield securities are often highly leveraged and may not have available to them more traditional methods of financing.

Therefore, the risk associated with acquiring the securities of such issuers generally is greater than is the case with investment-grade

securities. Some high yield securities were once rated as investment-grade but have been downgraded to junk bond status because of financial

difficulties experienced by their issuers.

The market values of high yield securities tend to

reflect individual issuer developments to a greater extent than do investment-grade securities, which in general react to fluctuations

in the general level of interest rates. High yield securities also tend to be more sensitive to economic conditions than are investment-grade

securities. A projection of an economic downturn or of a period of rising

interest rates, for example, could cause a decline

in junk bond prices because the advent of a recession could lessen the ability of a highly leveraged company to make principal and interest

payments on its debt securities. If an issuer of high yield securities held by the Fund defaults, in addition to risking payment of all

or a portion of interest and principal, the Fund may incur additional expenses to seek recovery.

The secondary market on which high yield securities

are traded may be less liquid than the market for investment-grade securities. Less liquidity in the secondary trading market could adversely

affect the ability of the Fund to sell a high yield security or the price at which the Fund could sell a high yield security, and could

adversely affect the daily NAV of Shares. When secondary markets for high yield securities are less liquid than the market for investment-grade

securities, it may be more difficult to value the securities because such valuation may require more research, and elements of judgment

may play a greater role in the valuation because there is less reliable, objective data available.

The Fund will not necessarily dispose of a security

if a credit-rating agency downgrades the rating of the security below its rating at the time of purchase.

Sovereign Debt Obligations

Sovereign debt obligations are issued or guaranteed

by a foreign government or one of its agencies, authorities, instrumentalities or political subdivisions. Investments in sovereign debt

obligations involve special risks not present in corporate debt obligations. The issuer of the sovereign debt or the governmental authorities

that control the repayment of the debt may be unable or unwilling to repay principal or interest when due, and the Fund may have limited

recourse in the event of a default. During periods of economic uncertainty, the market prices of sovereign debt, and the Fund’s

NAV, may be more volatile than prices of U.S. debt obligations. In the past, certain non-U.S. markets have encountered difficulties in

servicing their debt obligations, withheld payments of principal and interest and declared moratoria on the payment of principal and interest

on their sovereign debts.

A sovereign debtor’s willingness or ability

to repay principal and pay interest in a timely manner may be affected by, among other factors, its cash flow situation, the extent of

its foreign currency reserves, the availability of sufficient foreign exchange, the relative size of the debt service burden, the sovereign

debtor’s policy toward principal international lenders and local political constraints. Sovereign debtors may also be dependent

on expected disbursements from foreign governments, multilateral agencies and other entities to reduce principal and interest arrearages

on their debt. The failure of a sovereign debtor to implement economic reforms, achieve specified levels of economic performance or repay

principal or interest when due may result in the cancellation of third-party commitments to lend funds to the sovereign debtor, which

may further impair such debtor’s ability or willingness to service its debts.

Lending Portfolio Securities

For the purpose of achieving income, the Fund may

lend its portfolio securities, provided (1) the loan is secured continuously by collateral consisting of U.S. Government securities or

cash or cash equivalents (cash, U.S. Government securities, negotiable certificates of deposit, bankers’ acceptances or letters

of credit) maintained on a daily mark-to-market basis in an amount at least equal to the current market value of the securities loaned,

(2) the Fund may at any time call the loan and obtain the return of securities loaned, (3) the Fund will receive any interest or dividends

received on the loaned securities, and (4) the aggregate value of the securities loaned will not at any time exceed one-third of the total

assets of the Fund.

Repurchase Agreements

The Fund may enter into repurchase agreements, which

are agreements pursuant to which the Fund acquires securities from a third party with the understanding that the seller will repurchase

them at a fixed price on an agreed date. These agreements may be made with respect to any of the portfolio securities in which the Fund

is authorized to invest. Repurchase agreements may be characterized as loans secured by the underlying securities. The Fund may enter

into repurchase agreements with (i) member banks of the Federal Reserve System having total assets in excess of $500 million and (ii)

securities dealers (“Qualified Institutions”). The Advisor will monitor the continued creditworthiness of Qualified Institutions.

The use of repurchase agreements involves certain

risks. For example, if the seller of securities under a repurchase agreement defaults on its obligation to repurchase the underlying securities,

as a result of its bankruptcy or otherwise, the Fund will seek to dispose of such securities, which could involve costs or delays. If

the seller becomes insolvent and subject to liquidation or reorganization under applicable bankruptcy or other laws, the Fund’s

ability to dispose of the underlying securities may be restricted. Finally, the Fund may not be able to substantiate its interest in the

underlying securities. To minimize this risk, the custodian will hold the securities underlying the repurchase agreement at all times

in an amount at least equal to the repurchase price, including accrued interest.

If the seller fails to repurchase the securities,

the Fund may suffer a loss to the extent proceeds from the sale of the underlying securities are less than the repurchase price. The resale

price reflects the purchase price plus an agreed upon market rate of interest. The collateral is marked-to-market daily.

Reverse Repurchase Agreements

The Fund may enter into reverse repurchase agreements,

which involve the sale of securities with an agreement to repurchase the securities at an agreed-upon price, date and interest payment

and have the characteristics of borrowing. The securities purchased with the funds obtained from the agreement and securities collateralizing

the agreement will have maturity dates no later than the repayment date.

Generally, the effect of such transactions is that

the Fund can recover all or most of the cash invested in the portfolio securities involved during the term of the reverse repurchase agreement,

while in many cases the Fund is able to keep some of the interest income associated with those securities. Such transactions are only

advantageous if the Fund has an opportunity to earn a greater rate of return on the cash derived from these transactions than the interest

cost of obtaining the same amount of cash. Opportunities to realize earnings from the use of the proceeds equal to or greater than the

interest required to be paid may not always be available and the Fund intends to use the reverse repurchase technique only when the Advisor

believes it will be advantageous to the Fund. The use of reverse repurchase agreements may exaggerate any interim increase or decrease

in the value of the Fund’s assets. The custodian bank will maintain a separate account for the Fund with securities having a value

equal to or greater than such commitments. Under the 1940 Act, reverse repurchase agreements are considered borrowings.

Illiquid and Restricted Securities

The Fund may invest up to 15% of its net assets in

illiquid securities. Illiquid securities include securities subject to contractual or legal restrictions on resale (e.g., because they

have not been registered under the Securities Act) and securities that are otherwise not readily marketable (e.g., because trading in

the security is suspended or because market makers do not exist or will not entertain bids or offers). Securities that have not been registered

under the Securities Act are referred to as private placements or restricted securities and are purchased directly from the issuer or

in the secondary market. Foreign securities that are freely tradable in their principal markets are not considered to be illiquid.

Restricted and other illiquid securities may be subject

to the potential for delays on resale and uncertainty in valuation. The Fund might be unable to dispose of illiquid securities promptly

or at reasonable prices and might thereby experience difficulty in satisfying redemption requests from shareholders. The Fund might have

to register restricted securities in order to dispose of them, resulting in additional expense and delay. Adverse market conditions could

impede such a public offering of securities.

A large institutional market exists for certain securities

that are not registered under the Securities Act, including foreign securities. The fact that there are contractual or legal restrictions

on resale to the general public or to certain institutions may not be indicative of the liquidity of such investments. Rule 144A under

the Securities Act allows such a broader institutional trading market for securities otherwise subject to restrictions on resale to the

general public.

Rule 144A establishes a “safe harbor”

from the registration requirements of the Securities Act for resale of certain securities to qualified institutional buyers. Rule 144A

has produced enhanced liquidity for many restricted securities, and market liquidity for such securities may continue to expand as a result

of this regulation and the consequent existence of the PORTAL system, which is an automated system for the trading, clearance and settlement

of unregistered securities of domestic and foreign issuers sponsored by the Financial Industry Regulatory Authority, Inc.

Under guidelines adopted by the Board, the Advisor

may determine that particular Rule 144A securities, and commercial paper issued in reliance on the private placement exemption from registration

afforded by Section 4(2) of the Securities Act, are liquid even though they are not registered. A determination of whether such a security

is liquid or not is a question of fact. In making this determination, the Advisor will consider, as it deems appropriate under the circumstances

and among other factors: (1) the frequency of trades and quotes for the security; (2) the number of dealers willing to purchase or sell

the security; (3) the number of other potential purchasers of the security; (4) dealer undertakings to make a market in the security;

(5) the nature of the security (e.g., debt or equity, date of maturity, terms of dividend or interest payments, and other material terms)

and the nature of the marketplace trades (e.g., the time needed to dispose of the security, the method of soliciting offers, and the mechanics

of transfer); and (6) the rating of the security and the financial condition and prospects of the issuer. In the case of commercial paper,

the Advisor will also determine that the paper (1) is not traded flat or in default as to principal and interest, and (2) is rated in

one of the two highest rating categories by at least two Nationally Recognized Statistical Rating Organizations (“NRSROs”)

or, if only one NRSRO rates the security, by that NRSRO, or, if the security is unrated, the Advisor determines that it is of equivalent

quality.

Rule 144A securities and Section 4(2) commercial paper

that have been deemed liquid as described above will continue to be monitored by the Advisor to determine if the security is no longer

liquid as the result of changed conditions. Investing in Rule 144A securities or Section 4(2) commercial paper could have the effect of

increasing the amount of the Fund’s assets invested in illiquid securities if institutional buyers are unwilling to purchase such

securities.

Borrowing

The Fund may borrow money from a bank or another person

to the extent permitted under the Investment Restrictions. Such borrowings may be utilized (i) for temporary or emergency purposes; (ii)

in anticipation of or in response to adverse market conditions; or, (iii) for cash management purposes. Borrowed money will cost the Fund

interest expense and/or other fees. The costs of borrowing may reduce the Fund’s return. To the extent that the Fund has outstanding

borrowings, it will be leveraged. Leveraging generally exaggerates the effect on NAV of any increase or decrease in the market value of

the Fund’s portfolio securities. All borrowings are limited to an amount not exceeding 33 1/3% of the Fund’s total assets

(including the amount borrowed) less liabilities (other than borrowings). Any borrowings that exceed this amount will be reduced within

three days (excluding Sundays and holidays) to the extent necessary to comply with the 33 1/3% limitation even if it is not advantageous

to sell securities at that time.

If there are unusually heavy redemptions, the Fund

may have to sell a portion of its investment portfolio at a time when it may not be advantageous to do so. Selling Fund securities under

these circumstances may result in a lower net asset value per share. The Advisor believes that, in the event of abnormally heavy redemption

requests, the Fund’s borrowing ability would help to mitigate any such effects and could make the forced sale of its portfolio securities

less likely.

Options

The Fund may enter into options contracts. The Fund

will not use options for speculative purposes.

A call option gives a holder the right to purchase

a specific security or an index at a specified price (“exercise price”) within a specified period of time. A put option gives

a holder the right to sell a specific security or an index at a specified price within a specified period of time. The initial purchaser

of a call option pays the “writer,” i.e., the party selling the option, a premium which is paid at the time of purchase and

is retained by the writer whether or not such option is exercised. The Fund may purchase put options to hedge its portfolio against the

risk of a decline in the market value of securities held and may purchase call options to hedge against an increase in the price of securities

it is committed to purchase. The Fund may write put and call options along with a long position in options to increase its ability to

hedge against a change in the market value of the securities it holds or is committed to purchase.

The Fund may purchase and sell derivative instruments

only to the extent that such activities are consistent with the requirements of the Commodity Exchange Act (“CEA”) and the

rules adopted by the Commodity Futures Trading Commission (“CFTC”) thereunder. Under CFTC rules, a registered investment company

that conducts more than a minimal amount of trading in futures, commodity options, swaps and other commodity interests is a commodity

pool and its adviser must register as a commodity pool operator (“CPO”). The Advisor, with respect to the Fund, has filed

with the National Futures Association, a notice claiming an exclusion from the definition of the term “commodity pool operator”

under the Commodity Exchange Act, as amended (“CEA”), and the rules of the Commodity Futures Trading Commission (CFTC”)

promulgated thereunder (i.e. Rule 4.5), with respect to the Fund’s operations. Accordingly, the Fund nor the Advisor are currently

subject to registration or regulation as a commodity pool operator with respect to the Fund.

Swap Agreements

The Fund may enter into interest rate, index and currency

exchange rate swap agreements in an attempt to obtain a particular desired return at a lower cost to the Fund than if the Fund has invested

directly in an instrument that yielded that desired return. Swap agreements are two-party contracts entered into primarily by institutional

investors for periods ranging from a few weeks to more than one year. In a standard “swap” transaction, two parties agree

to exchange the returns (or differentials in rates of returns) earned or realized on particular predetermined investments or instruments.

The gross returns to be exchanged or “swapped” between the parties are calculated with respect to a “notional amount,”

i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate, in a particular foreign

currency, or in a “basket” of securities representing a particular index. The “notional amount” of the swap agreement

is only a fictive basis on which to calculate the obligations the parties to a swap agreement have agreed to exchange. The Fund’s

obligations (or rights) under a swap agreement will generally be equal only to the amount to be paid or received under the agreement based

on the relative values of the positions held by each party to the agreement (the “net amount”). The Fund’s obligations

under a swap agreement will be accrued daily (offset against any amounts owing to the Fund) and any accrued but unpaid net amounts owed

to a swap counterparty will be covered by the maintenance of a segregated account consisting of cash, U.S. government securities, or other

liquid securities, to avoid leveraging of the Fund’s portfolio. The Fund will not enter into a swap agreement with any single party

if the net amount owed or to be received under existing contracts with that party would exceed 5% of the Fund’s assets.

Whether the Fund’s use of swap agreements enhance

the Fund’s total return will depend on the Advisor’s ability correctly to predict whether certain types of investments are

likely to produce greater returns than other investments. Because they are two-party contracts and may have terms of greater than seven

days, swap agreements may be considered to be illiquid. Moreover, the Fund bears the risk of loss of the amount expected to be received

under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty. The Advisor will cause the Fund to

enter into swap agreements only with counterparties that would be eligible for consideration as repurchase agreement counterparties under

the Fund’s repurchase agreement guidelines. The swap market is a relatively new market and is largely unregulated. It is possible

that developments in the swaps market, including potential government regulation, could adversely affect the Fund’s ability to terminate

existing swap agreements or to realize amounts to be received under

such agreements.

Certain swap agreements are exempt from most provisions

of the CEA and, therefore, are not regulated as futures or commodity option transactions under the CEA, pursuant to regulations of the

CFTC. To qualify for this exemption, a swap agreement must be entered into by “eligible participants,” which include the following,

provided the participants’ total assets exceed established levels: a bank or trust company, savings association or credit union,

insurance company, investment company subject to regulation under the 1940 Act, commodity pool, corporation, partnership, proprietorship,

organization, trust or other entity, employee benefit plan, governmental entity, broker-dealer, futures commission merchant, natural person,

or regulated foreign person. To be eligible, natural persons and most other entities must have total assets exceeding $10 million; commodity

pools and employees benefit plans must have assets exceeding $5 million. In addition, an eligible swap transaction must meet three conditions.

First, the swap agreement may not be part of a fungible class of agreements that are standardized as to their material economic terms.

Second, the creditworthiness of parties with actual or potential obligations under the swap agreement must be a material consideration

in entering into or determining the terms of the swap agreement, including pricing, cost or credit enhancement terms. Third, swap agreements

may not be entered into and traded on or through a multilateral transaction execution facility.

Currency Transactions

The Fund may enter into foreign currency forward contracts

to facilitate local securities settlements or to protect against currency exposure in connection with distributions to shareholders. The

Fund does not expect to engage in currency transactions for the purpose of hedging against declines in the value of the Fund’s assets

that are denominated in one or more foreign currencies. The Fund may invest in various types of currency contracts to hedge against changes

in the value of the U.S. dollar against specified non-U.S. currencies.

Forward Foreign Currency Contracts

A forward foreign currency exchange contract (“forward

contract”) involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days

from the date of the contract agreed upon by the parties, at a price set at the time of the contract. These contracts are principally

traded in the interbank market conducted directly between currency traders (usually large commercial banks) and their customers. A forward

contract generally has no margin deposit requirement, and no commissions are charged at any stage for trades.

A non-deliverable forward contract is a forward contract

where there is no physical settlement of two currencies at maturity. Non-deliverable forward contracts are contracts between parties in

which one party agrees to make a payment to the other party (the “Counterparty”) based on the change in market value or level

of a specified currency. In return, the Counterparty agrees to make payment to the first party based on the return of a different specified

currency. Non-deliverable forward contracts will usually be done on a net basis, with the Fund receiving or paying only the net amount

of the two payments. The net amount of the excess, if any, of the Fund’s obligations over its entitlements with respect to each

non-deliverable forward contract is accrued on a daily basis and an amount of cash or highly liquid securities having an aggregate value

at least equal to the accrued excess is maintained in an account at the Trust’s custodian bank. The risk of loss with respect to

non-deliverable forward contracts generally is limited to the net amount of payments that the Fund is contractually obligated to make

or receive.

Short Sales

A short sale is a transaction in which the Fund sells

a security it does not own. To complete such a transaction, the Fund must borrow the security to make delivery to the buyer. The Fund

is then obligated to replace the security borrowed by borrowing the same security from another lender, purchasing it at the market price

at the time of replacement or paying the lender an amount equal to the cost of purchasing the security. The price at such time may be

more or less than the price at which the security was sold by the Fund. Until the security is replaced, the Fund is required to repay

the lender any dividends it receives, or interest which accrues, during the period of the loan. To borrow the security, the Fund also

may be required to pay a premium, which would increase the cost of the security sold. The net proceeds of the short sale will be retained

by the broker, to the extent necessary to meet margin requirements, until the short position is closed out. The Fund also will incur transaction

costs in effecting short sales.

The Fund may make short sales “against the box,”

i.e., when a security identical to or convertible or exchangeable into one owned by the Fund is borrowed and sold short. Whenever the

Fund engages in short sales, it earmarks or segregates liquid securities or cash in an amount that, when combined with the amount of collateral

deposited with the broker in connection with the short sale (other than the proceeds of the short sale), equals the current market value

of the security sold short. The earmarked or segregated assets are marked-to-market daily.

The Fund will incur a loss as a result of a short

sale if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security.

The Fund will realize a gain if the price of the security declines in price between those dates. The amount of any gain will be decreased,

and the amount of any loss increased, by the amount of the premium, dividends or interest the Fund may be required to pay, if any, in

connection with a short sale. Short sales may be subject to unlimited losses as

the price of a security can rise infinitely.

Wholly-Owned Subsidiary

The Fund invests in a wholly-owned and controlled

Cayman Islands subsidiary (the “Subsidiary”), which is expected to invest primarily in one or more of the following: gold

and Bitcoin futures; as well as in fixed income securities and other investments intended to serve as margin or collateral for the Subsidiary’s

derivatives positions. As a result, the Fund may be considered to be investing indirectly in these investments through its Subsidiary.

For that reason, and for the sake of convenience, references in this Statement of Additional Information to the Fund may also include

its Subsidiary.

The Subsidiary will not be registered under the 1940

Act but, will be subject to certain of the investor protections of that Act, as noted in this Statement of Additional Information. The

Fund, as the sole shareholder of its Subsidiary, will not have all of the protections offered to investors in registered investment companies.

However, since the Fund wholly owns and controls its

Subsidiary, and the Fund and Subsidiary are managed by the Advisor, it is unlikely that the Subsidiary will take action contrary to the

interests of the Fund or their shareholders. The Board has oversight responsibility for the investment activities of the Fund, including

its investment in its Subsidiary, and the Fund’s role as the sole shareholder of its Subsidiary. Also, in managing the Subsidiary’s

portfolio, the Advisor will be subject to the same investment restrictions (when viewing the Subsidiary and the Fund on a consolidated

basis) and operational guidelines that apply to the management of the Fund, including any collateral or segregation requirements in connection

with various investment strategies.

Changes in the laws of the United States and/or the

Cayman Islands, under which the Fund and the Subsidiary, respectively, are organized, could result in the inability of the Fund and/or

its Subsidiary to operate as described in this SAI and could negatively affect the Fund and its shareholders. For example, the Cayman

Islands does not currently impose any income, corporate or capital gains tax, estate duty, inheritance tax, gift tax or withholding tax

on the Subsidiary. If Cayman Islands law changes such that the Subsidiary must pay Cayman Islands taxes, Fund shareholders would likely

suffer decreased investment returns.

INVESTMENT RESTRICTIONS

The Fund has adopted certain investment restrictions

as fundamental policies which cannot be changed without the approval of the holders of a “majority” of the outstanding voting

securities of the Fund, as that term is defined in the 1940 Act. As defined in the 1940 Act, the vote of a “majority” of the

outstanding voting securities means the lesser of: (i) 67% or more of the voting securities of the series present at a duly called meeting

of shareholders, if the holders of more than 50% of the outstanding voting securities of the Fund are present or represented by proxy;

or (ii) more than 50% of the outstanding voting securities of the series. (All policies of the Fund not specifically identified in this

SAI or the Prospectus as fundamental may be changed without a vote of the shareholders of the Fund, upon approval of a majority of the

Trustees.) For purposes of the following limitations, all percentage limitations apply immediately after a purchase or initial investment.

If a restriction on the Fund’s investments is

adhered to at the time an investment is made, a subsequent change in the percentage of Fund assets invested in certain securities or other

instruments, or change in average duration of the Fund’s investment portfolio, resulting from changes in the value of the Fund’s

total assets, will not be considered a violation of the restriction; provided, however, that the asset coverage requirement applicable

to borrowings shall be maintained in the manner contemplated by applicable law.

The Fund is “diversified” as defined in

the 1940 Act. This means that at least 75% of the value of the Fund’s total assets is represented by cash and cash items (including

receivables), government securities, securities of other investment companies, and securities of other issuers, which for purposes of

this calculation, are limited in respect of any one issuer to an amount not greater in value than 5% of the Fund’s total assets

and to not more than 10% of the outstanding voting securities of such issuer. The Fund may not change from “diversified” to

“non-diversified” without the approval of the holders of a “majority” of the outstanding voting securities of

the Fund (as defined above).

For purposes of the limitation on industry concentration,

securities of the U.S. government (including its agencies and instrumentalities) and tax-free securities of state or municipal governments

and their political subdivisions (and repurchase agreements collateralized by government securities) are not considered to be issued by

members of any industry.

POLICIES AND PROCEDURES FOR

DISCLOSURE OF PORTFOLIO HOLDINGS

The Trust has adopted a policy regarding the disclosure

of information about the Fund’s portfolio holdings. The Fund and its service providers may not receive compensation or any other

consideration (which includes any agreement to maintain assets in the Fund or in other investment companies or accounts managed by the

Advisor or any affiliated person of the Advisor) in connection with the disclosure of portfolio holdings information of the Fund. The

Trust’s policy is implemented and overseen by the Chief Compliance Officer of the Trust, subject to the oversight of the Board.

Periodic reports regarding these procedures will be provided to the Board. The Trust, the Advisor and Northern Lights Distributors, LLC

(the “Distributor”) will not disseminate non-public information concerning the Trust. The Board must approve all material

amendments to this policy.

Each business day, the Fund’s portfolio holdings

information will generally be provided for dissemination through the facilities of the National Securities Clearing Corporation (“NSCC”)

and/or other fee-based subscription services to NSCC members and/or subscribers to those other fee-based subscription services, including

Authorized Participants (as defined below), and to entities that publish and/or analyze such information in connection with the process

of purchasing or redeeming Creation Units or trading shares of the Fund in the secondary market. This information typically reflects the

Fund’s anticipated holdings as of the next Business Day (as defined below).

Access to information concerning the Fund’s

portfolio holdings may be permitted to personnel of third party service providers, including the custodian, transfer agent, auditors and

counsel, as may be necessary to conduct business in the ordinary course in a manner consistent with such service providers’ agreements

with the Trust on behalf of the Fund.

The Fund discloses on the Advisor’s website

at www.ArrowFunds.com at the start of each Business Day the identities and quantities of the securities and other assets held by

the Fund that will form the basis of the Fund’s calculation of its NAV on that Business Day. The portfolio holdings so disclosed

will be based on information as of the close of business on the prior Business Day and/or trades that have been completed prior to the

opening of business on that Business Day and that are expected to settle on that Business Day. The Fund may also concurrently disclose

this portfolio holdings information directly to ratings agencies on a daily basis.

Quarterly Portfolio Schedule. The Trust is

required to disclose, after its first and third fiscal quarters, the complete schedule of the Fund’s monthly portfolio holdings

with the SEC on Form N-PORT. The Trust will also disclose a complete schedule of the Fund’s portfolio holdings with the SEC on Form

N-CSR after its second and fourth quarters.

Form N-PORT and Form N-CSR for the Fund will be available

on the SEC’s website at www.sec.gov. The Fund’s Form N-PORT and Form N-CSR will be available without charge, upon request,

by calling 1-877-277-6933 or by writing to: Arrow Dynamic Bitcoin Strategy ETF, c/o Ultimus Fund Solutions, LLC, 4221 North 203rd Street,

Suite 100, Elkhorn, Nebraska 68022-3474.

MANAGEMENT

The business of the Trust is managed by the Advisor

under the direction of the Board in accordance with the Trust Instrument and the Trust’s By-laws (the “Governing Documents”),

which have been filed with the SEC and are available upon request. The Board consists of four (4) individuals, three (3) of whom are not

“interested persons” (as defined under the 1940 Act) of the Trust or the Advisor (“Independent Trustees”). Pursuant

to the Governing Documents, the Trustees shall elect officers including, but not limited to, a President, a Treasurer, a Secretary, and

a Chief Compliance Officer.

The Board retains the power to conduct, operate and

carry on the business of the Trust and has the power to incur and pay any expenses, which, in the judgment of the Board, are necessary

or incidental to carry out any of the Trust’s purposes. The Trustees, officers and agents of the Trust, when acting in such capacities,

shall not be subject to any personal liability except for his or her own willful misfeasance, bad faith, gross negligence or reckless

disregard of his or her duties.

Board Leadership Structure

Board members who are Independent Trustees currently

constitute three-quarters of the Board. Joseph Barrato is considered an interested Trustee, and serves as Chairman of the Board. The Chairman’s

responsibilities include: setting an agenda for each meeting of the Board; presiding at all meetings of the Board; and serving as a liaison

between the other Trustees, Trust officers, management personnel and counsel.

The Board believes that having an interested Chairman,

who is familiar with the Advisor and its operations, while also having three-quarters of the Board composed of Independent Trustees, strikes

an appropriate balance that allows the Board to benefit from the insights and perspective of a representative of management while empowering

the Independent Trustees with the ultimate decision-making authority. The Board does not believe that an independent Chairman would enhance

the Board’s effectiveness, as the relatively small size of the Board allows for diverse viewpoints to be shared and for effective

communications between and among Independent Trustees and management so that meetings proceed efficiently. Independent Trustees have effective

control over the Board’s agenda because they form a majority of the Board and can request presentations and agenda topics at Board

meetings. For these reasons, the Board also determined not to appoint a lead Independent Trustee.

The Trustees discharge their responsibilities collectively

as a Board, as well as through Board committees, each of which operates pursuant to a charter or procedures approved by the Board that

delineates the specific responsibilities of that committee. The Board has established one standing committee: the Audit Committee. The

members and responsibilities of the Audit Committee are summarized below.

The Board holds four regularly scheduled in-person

or telephonic meetings each year. The Board may hold special meetings, as needed, either in person or by telephone, to address matters

arising between regular meetings. The Independent Trustees also hold at least one in-person meeting each year during a portion of which

management is not present and may hold special meetings, as needed, either in person or by telephone.

Board Risk Oversight

The Board is responsible for overseeing risk management

and the full Board regularly engages in discussions of risk management and receives compliance reports that inform its oversight of risk

management from its Chief Compliance Officer at quarterly meetings and on an ad hoc basis, when and if necessary.

The Audit Committee considers financial and reporting

risk within its area of responsibilities. Generally, the Board believes that its oversight of material risks is adequately maintained

through the compliance-reporting chain where the Chief Compliance Officer is the primary recipient and communicator of such risk-related

information.

Trustee Qualifications

Generally, the Trust believes that each Trustee is

competent to serve because of their individual overall merits including: (i) experience, (ii) qualifications, (iii) attributes and (iv)

skills.

Mr. Barrato is a founding member of Arrow Investment

Advisors, LLC, the advisor to the Fund. He has over 25 years of experience in the investment management industry, including six years

with Rydex Investments, where he was responsible for the firm’s research and developed momentum models with the Rydex sector funds.

Prior to Rydex, Mr. Barrato spent 12 years at the Federal Reserve Board of Governors, as an analyst and senior financial examiner. He

holds a bachelor’s degree in business administration from The George Washington University, where he majored in finance and minored

in accounting. Mr. Barrato’s experience in the investment management industry gives him a strong understanding of the operational

issues facing mutual funds and the regulatory framework under which investment companies must operate.

Robert Andrialis has more than 50 years of experience

in the financial services and business management. He served as a president and senior executive of various organizations in the financial

services industry and founded Berwick Capital. Mr. Andrialis’ experience in the financial services industry, coupled with his extensive

leadership experience, gives him a strong understanding of the operational and management issues facing mutual funds and makes him well

qualified to serve as a Trustee to the Trust.

Paul Montgomery is the principal owner and managing

member of Theta Investment Research, LLC, an independent research firm focused on the management of alternative investments. He has nearly

ten years of experience in the investment management industry. Mr. Montgomery holds a bachelor of art degree in psychology from The King’s

College. Mr. Montgomery’s experience in the

investment management industry gives him a strong

understanding of the operational issues facing mutual funds and the regulatory framework under which investment companies must operate.

Thomas Sarkany is qualified to serve as a Trustee

based on his experience in various business and consulting positions, and through his experience from service as a board member of the

Trust and other investment companies. His ability to perform his duties effectively also has been enhanced by his educational background

and professional training. In addition to his service as a Trustee of the Trust, Mr. Sarkany serves as a trustee of other registered mutual

fund trusts and has previously served as a director of certain public companies.

The Trust does not believe any one factor is determinative

in assessing a Trustee’s qualifications, but that the collective experience of each Trustee makes them each highly qualified. Unless

otherwise noted, the address of each Trustee and Officer is 6100 Chevy Chase Drive, Suite 100, Laurel, MD 20707. The following individuals

serve as Trustees and officers of the Trust:

Independent Trustees:

(1)       The

term of office for each Trustee will continue indefinitely until the individual resigns or is removed.

(2)        The

“Fund Complex” includes Arrow Investments Trust, a registered management investment company, in addition to the Trust.

Interested Trustee and Officers:

Board Committees

Audit Committee

The Board has an Audit Committee that consists of

all the Trustees who are not “interested persons” of the Trust within the meaning of the 1940 Act. The Audit Committee’s

responsibilities include: (i) recommending to the Board the selection, retention or termination of the Trust’s independent auditors;

(ii) reviewing with the independent auditors the scope, performance and anticipated cost of their audit; (iii) discussing with the independent

auditors certain matters relating to the Trust’s financial statements, including any adjustment to such financial statements recommended

by such independent auditors, or any other results of any audit; (iv) reviewing on a periodic basis a formal written statement from the

independent auditors with respect to their independence, discussing with the independent auditors any relationships or services disclosed

in the statement that may impact the objectivity and independence of the Trust’s independent auditors and recommending that the

Board take appropriate action in response thereto to satisfy itself of the auditor’s independence; and (v) considering the comments

of the independent auditors and management’s responses thereto with respect to the quality and adequacy of the Trust’s accounting

and financial reporting policies and practices and internal controls. The Audit Committee operates pursuant to an Audit Committee Charter.

During the fiscal year ended January 31, 2022, the Audit Committee held two meetings.

Trustee Compensation

Each Trustee who is not an interested person of the

Trust or Advisor receives a quarterly fee of $4,166 from the Fund Complex (defined below) for his service as a Trustee of the Board of

Trustees, as well as reimbursement for any reasonable expenses incurred attending the meetings of the Board of Trustees. The “interested

persons” who serve as Trustees of the Trust receive no compensation for their services as Trustees. None of the executive officers

receive compensation from the Trust.

The table below details the amount of compensation

the Trustees received from the Trust during the fiscal year ended January 31, 2022. The Trust does not have a bonus, profit sharing, pension

or retirement plan.

Trustee Ownership

The following table indicates the dollar range of

equity securities that each Trustee beneficially owned in the Fund as of December 31, 2021.

interest holder of the investment Advisor

to the Fund, Arrow Investment Advisors, LLC.

Management Ownership

As of (___), 2022, the Trustees and officers, as a

group, owned less than 1% of the Fund’s outstanding shares.

CONTROL PERSONS AND PRINCIPAL

HOLDERS

A principal shareholder is any person who owns (either

of record or beneficially) 5% or more of the outstanding shares of a fund. A control person is one who owns, either directly or indirectly

more than 25% of the voting securities of a company or acknowledges the existence of control. A shareholder owning of record or beneficially

more than 25% of a Fund’s outstanding shares may be considered a controlling person. That shareholder’s vote could have more

significant effect on matters presented at a shareholder’s meeting than votes of other shareholders.

The Trust does not have information concerning the

beneficial ownership of shares held.

INVESTMENT ADVISOR

Investment Advisor and Investment Advisory Agreement

The Advisor for the Fund is Arrow Investment Advisors,

LLC, located at 6100 Chevy Chase Drive, Suite 100, Laurel, MD 20707. Mr. Jacob Griffith and Mr. Joseph Barrato are the controlling shareholders

of the Advisor.

Pursuant to the investment advisory agreement (the

“Advisory Agreement”) with the Trust, on behalf of the Fund, the Advisor, subject to the supervision of the Board, and in

conformity with the stated policies of the Fund, manages the operations of the Fund.

Under the Advisory Agreement, the Advisor, under the

supervision of the Board, agrees to invest the assets of the Fund in accordance with applicable law and the investment objective, policies

and restrictions set forth in the Fund’s current Prospectus and SAI, and subject to such further limitations as the Trust may from

time to time impose by written notice to the Advisor. The Advisor shall act as the investment advisor to the Fund and, as such shall (i)

obtain and evaluate such information relating to the economy, industries, business, securities markets and securities as it may deem necessary

or useful in discharging its responsibilities here under, (ii) formulate a continuing program for the investment of the assets of the

Fund in a manner consistent with its investment objective, policies and restrictions, and (iii) determine from time to time securities

to be purchased, sold, retained or lent by the Fund, and implement those decisions, including the selection of entities with or through

which such purchases, sales or loans are to be effected; provided, that the Advisor will place orders pursuant to its investment determinations

either directly with the issuer or with a broker or dealer, and if with a broker or dealer, (a) will attempt to obtain the best price

and execution of its orders, and (b) may nevertheless in its discretion purchase and sell portfolio securities from and to brokers who

provide the Advisor with research, analysis, advice and similar services and pay such brokers in return a higher commission or spread

than may be charged by other brokers. The Advisor also provides the Fund with all necessary office facilities and personnel for servicing

the Fund’s investments, compensates all officers, Trustees and employees of the Trust who are officers, directors or employees of

the Advisor, and all personnel of the Fund or the Advisor performing services relating to research, statistical and investment activities.

A summary of the Board of Trustees deliberations in

approving the Advisory Agreement will be included in the Fund’s annual report to shareholders for the fiscal year ended January

31, 2023.

Pursuant to the Advisory Agreement, the Advisor is

entitled to receive, on a monthly basis, (__)% of the Fund’s average daily net assets. Expenses not expressly assumed by the Advisor

under the Advisory Agreement are paid by the Trust. Under the terms of the Advisory Agreement, the Trust is responsible for the payment

of the following expenses among others: (a) the fees payable to the Advisor, (b) the fees and expenses of Trustees who are not affiliated

persons of the Advisor or Distributor (as defined under the section entitled (“The Distributor”) (c) the fees and certain

expenses of the Custodian (as defined under the section entitled “Custodian”) and Transfer and Dividend Disbursing Agent (as

defined under the section entitled “Transfer Agent”), including the cost of maintaining certain required records of the Trust

and of pricing the Trust’s shares, (d) the charges and expenses of legal counsel and independent accountants for the Trust, (e)

brokerage commissions and any issue or transfer taxes chargeable to the Trust in connection with its securities transactions, (f) all

taxes and corporate fees payable by the Trust to governmental agencies, (g) the fees of any trade association of which the Trust may be

a member, (h) the cost of share certificates representing shares of the Trust, (i) the cost of fidelity and liability insurance, (j) the

fees and expenses involved in registering and maintaining registration of the Trust and of its shares with the SEC, qualifying its shares

under state securities laws, including the preparation and printing of the Trust’s registration statements and prospectuses for

such purposes, (k) all expenses of shareholders and Trustees’ meetings (including travel expenses of trustees and officers of the

Trust who are directors, officers or employees of the Advisor) and of preparing, printing and mailing reports, proxy statements and prospectuses

to shareholders in the amount necessary for distribution to the shareholders and (l) litigation and indemnification expenses and other

extraordinary expenses not incurred in the ordinary course of the Trust’s business.

The Advisor has contractually agreed to waive its

fees and/or reimburse expenses of the Fund until (___), 2023 to ensure that the Fund’s Total Annual Fund Operating Expenses After

Fee Waiver and/or Reimbursement (exclusive of any front-end or contingent deferred sales loads, taxes, leverage interest, brokerage commissions,

expenses incurred in connection with any merger or reorganization, dividend expense on securities sold short, underlying fund fees and

expenses, foreign custody transaction costs and foreign account set up fees, and extraordinary expenses such, as litigation) will not

exceed (__)% of its net assets.

In addition, as described below under “Organization

and Management of Wholly-Owned Subsidiary,” the Subsidiary has entered into a separate contract with the Advisor for the management

of the Subsidiary’s portfolio. The Advisor has contractually agreed to waive the management fee it receives from the Fund in an

amount equal to any management fee paid to the Advisor by the Subsidiary. This undertaking will continue in effect for so long as the

Fund invests in its Subsidiary, and may not be terminated by the Advisor unless the Advisor first obtains the prior approval of the Fund’s

Board for such termination.

The Advisory Agreements (for the Fund and Subsidiary)

continue in effect for two (2) years initially and thereafter continues from year to year provided such continuance is approved at least

annually by (a) a vote of the majority of the Independent Trustees, cast in person at a meeting specifically called for the purpose of

voting on such approval and by (b) the majority vote of either all of the Trustees or the vote of a majority of the outstanding shares

of the Fund. The Advisory Agreements may be terminated without penalty on 60 days’ written notice by a vote of a majority of the

Trustees or by the Advisor, or by holders of a majority of that Trust’s outstanding shares. The Advisory Agreement shall terminate

automatically in the event of its assignment.

Codes of Ethics

The Trust, the Advisor, and the Distributor each have

adopted codes of ethics under Rule 17j-1 under the 1940 Act that governs the personal securities transactions of their respective board

members, officers, and employees who may have access to current trading information of the Trust. Under the code of ethics adopted by

the Trust the Trustees are permitted to invest in securities that may also be purchased by the Fund.

In addition, the Trust has adopted a code of ethics

that applies to the Trust’s principal executive and senior officers (the “Code”) to ensure that these officers promote

professional conduct in the practice of corporate governance and management. The purpose behind these guidelines is to promote i) honest

and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

ii) full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to,

the SEC and in other public communications made by the Fund; iii) compliance with applicable governmental laws, rule and regulations;

iv) the prompt internal reporting of violations of this Code to an appropriate person or persons identified in the Code; and v) accountability

for adherence to the Code.

Proxy Voting Policies

The Board has adopted Proxy Voting Policies and Procedures

(“Policies”) on behalf of the Trust, which delegate the responsibility for voting proxies of securities held by the Fund to

the Advisor or its designee, subject to the Board’s continuing oversight. The Policies require that the Advisor or its designee

vote proxies received in a manner consistent with the best interests of the Fund and its shareholders. The Policies also require the Advisor

or its designee to present to the Board, at least annually, the Advisor’s or its designee’s Proxy Policies and a record of

each proxy voted by the Advisor or its designee on behalf of the Fund, including a report on the resolution of all proxies identified

by the Advisor or its designee as involving a conflict of interest. A copy of the Advisor’s Proxy Voting Policies is attached hereto

as Appendix A.

More information. Information regarding how

the Fund voted proxies relating to portfolio securities held by the Fund during the most recent 12-month period ending June 30 will be

available (1) without charge, upon request, by calling the Fund at 1-877-277-6933; and (2) on the SEC’s website at www.sec.gov.

In addition, a copy of the Fund’s proxy voting policies and procedures are also available by calling 1-877-277-6933 and will be

sent within three business days of receipt of a request.

PORTFOLIO MANAGERS

Security selections for the Fund are made by a team

that consists of the portfolio managers and analysts. The members of the team who are jointly and primarily responsible for the day-to-day

management of the Fund are Joseph Barrato, Jonathan S. Guyer, and Amit Gutt. As of (____), 2022, each was responsible for the management

of the following types of accounts. None of the accounts are subject to performance based fees.

Conflicts of Interest

As the portfolio managers for multiple registered

investment company accounts, the portfolio managers make investment decisions for each account based on the investment objectives and

policies and other relevant investment considerations applicable to that portfolio. When a portfolio manager has responsibility for managing

more than one account, potential conflicts of interest may arise. Those conflicts could include preferential treatment of one account

over others in terms of allocation of resources or of investment opportunities. For instance, the Advisor may receive fees from certain

accounts that are higher than the fee it receives from the Fund, or it may receive a performance-based fee on certain accounts. In those

instances, the portfolio managers may have an incentive to favor the higher fee accounts over the Fund.

When allocating investments among client accounts,

the portfolio managers have the fiduciary obligation to treat each client equally, regardless of account size or fees paid. All clients

at the same custodian (or trading desk) receive the same average price for each transaction. When multiple trading desks or custodians

are used to execute transactions, the portfolio managers execute the trades in such a fashion as to ensure no client grouping consistently

receives preferential treatment. When trades in the same security must be executed over multiple days, the portfolio managers execute

the trades in a random order to ensure no client grouping consistently receives preferential treatment.

“Cross trades” in which a portfolio manager

sells a particular security held by the Fund to another account managed by the Advisor (potentially saving transaction costs for both

accounts), could involve a potential conflict of interest if, for example, a portfolio manager is permitted to sell a security from one

account to another account at a higher price than the independent third party would pay. The Advisor and the Fund have adopted compliance

procedures that provide that any transactions between the Fund and another account managed by the Advisor are to be made at an independent

current market price, consistent with applicable laws and regulation.

Compensation

As the Chief Executive Officer and Portfolio Manager,

Mr. Barrato receives a fixed base salary and discretionary bonus. Mr. Guyer and Mr. Gutt both receive a fixed base salary and discretionary

bonus from the Advisor.

Ownership

The following table shows the dollar range of equity

securities beneficially owned by the portfolio managers in the Fund as of (____, 2022.

ORGANIZATION AND MANAGEMENT OF WHOLLY-OWNED

SUBSIDIARY

The Fund invests in a Subsidiary. The Subsidiary is

expected to invest primarily in one or a combination of: gold and Bitcoin futures; as well as fixed income securities and other investments

intended to serve as margin or collateral for the Subsidiary’s derivatives positions. The Subsidiary is a company organized under

the laws of the Cayman Islands, whose registered office is located at the offices of c/o Maples and Calder, PO Box 309, Ugland House,

South Church Street, George Town, Grand Cayman KY1-1104, Cayman Islands. Unless otherwise noted, the address of each Director is 6100

Chevy Chase Drive, Suite 100, Laurel, MD 20707. The Subsidiary’s affairs are overseen by the Trust’s Independent Trustees

consisting of the following directors:

Directors-Subsidiary

The Subsidiary has entered into separate contracts

with the Advisor for the management of the Subsidiary’s portfolio. The Subsidiary has also entered into arrangements with the Fund’s

custodian to serve as the Subsidiary’s custodian, and with the Fund’s transfer agent to serve as the Subsidiary’s transfer

agent. The Subsidiary will bear the fees and expenses incurred in connection with the custody, transfer agency, and audit services that

it receives. The Fund expects that the expenses borne by its Subsidiary will not be material in relation to the value of the Fund’s

assets. It is also anticipated that the Fund’s own expense will be reduced to some extent as a result of the payment of such expenses

at the Subsidiary level. It is therefore expected that the Fund’s investment in its Subsidiary will not result in the Fund paying

duplicative fees for similar services provided to the Fund and its Subsidiary.

Please refer to the section in this Statement of Additional

Information titled “Tax Status — Investment in Wholly- Owned Subsidiary” for information about certain tax aspects of

the Funds’ investment in the Subsidiary.

DISTRIBUTION OF SHARES

Northern Lights Distributors, LLC, located at 4221

North 203rd Street, Suite 100, Elkhorn, Nebraska 68022-3474 serves as the distributor for the Fund pursuant to an ETF Distribution Agreement

with the Fund (the “Distribution Agreement”). Archer Distributors, LLC, an affiliate of the Fund’s Investment Advisor

(“Archer”) is also a party to the Distribution Agreement and provides marketing services to the Fund, including responsibility

for all the Fund’s marketing and advertising materials. The Distributor and Archer are each registered as a broker-dealer under

the Securities Exchange Act of 1934 and each state’s securities laws and are members of the Financial Industry Regulatory Authority,

Inc. (“FINRA”). The offering of the Fund’s Shares is continuous, and the Distributor acts as an agent for the Fund.

The Distributor will deliver a Prospectus to persons purchasing Shares in Creation Units and will maintain records of both orders placed

with it and confirmations of acceptance furnished by it. The Distributor has no role in determining the investments or investment policies

of the Fund.

The Distribution Agreement provides that, unless sooner

terminated, it continues in effect for two years initially from the date of the agreement and thereafter shall continue from year to year,

subject to annual approval by (a) the Board or a vote of a majority of the outstanding shares, and (b) by a majority of the Trustees who

are not parties to the Distribution Agreement or the Trust’s distribution plan or interested persons of the Trust or of the Distributor

by vote cast in person at a meeting called for the purpose of voting on such

approval.

The Distribution Agreement may at any time be terminated,

without penalty by the Trust, by vote of a majority of the Independent Trustees or by vote of a majority of the outstanding shares of

the Trust on 60 days’ written notice to the other party. The Distribution Agreement will automatically terminate in the event of

its assignment. The Fund does not pay the Distributor any fees under the Distribution Agreement. However, the Advisor pays an annual fee

to the Distributor plus reasonable out-of-pocket expenses incurred by Distributor in connection with activities performed for the Fund,

including, without limitation, printing and distribution of prospectuses and shareholder reports, out of its own resources.

Rule 12b-1 Plan

The Board has adopted a Distribution and Service Plan

pursuant to Rule 12b-1 under the 1940 Act (“Plan”). In accordance with its Plan, the Fund is authorized to pay an amount up

to 0.25% of its average daily net assets each year for certain distribution-related activities. In addition, if the payment of management

fees by the Fund is deemed to be indirect financing by the Fund of the distribution of its Shares, such payment is authorized by the Plan.

The Plan specifically recognizes that the Advisor and other persons may use management fee revenue, as well as past profits or other resources,

to pay for expenses incurred in connection with providing services intended to result in the sale of Shares. The Advisor and such other

persons, as well as their affiliates, may pay amounts to third parties for distribution or marketing services on behalf of the Fund. The

making of the types of payments described in this paragraph could create a conflict of interest for the party receiving such payments.

The Plan was adopted in order to permit the implementation of the Fund’s method of distribution. No fees are currently paid by the

Fund under the Plan, and there are no current plans to impose such fees. In the event such fees were to be charged, over time they would

increase the cost of an investment in the Fund.

Under the Plan, the Trustees would receive and review

at the end of each quarter a written report provided by the Distributor of the amounts expended under the Plan, if made, and the purpose

for which such expenditures were made. The Plan will remain in effect for a period of one year and is renewable from year to year with

respect to the Fund, so long as its continuance is approved at least annually (1) by the vote of a majority of the Trustees and (2) by

a vote of the majority of those Independent Trustees who have no direct or indirect financial interest in the Plan (“Rule 12b-1

Trustees”), cast in person at a meeting called for the purpose of voting on such approval. The Plan may not be amended to increase

materially the amount of fees paid by the Fund unless such amendment is approved by a 1940 Act majority vote of the outstanding Shares

and by the Fund Trustees in the manner described above. The Plan is terminable with respect to the Fund at any time by a vote of a majority

of the Rule 12b-1 Trustees or by a 1940 Act majority vote of the outstanding shares.

ALLOCATION OF PORTFOLIO BROKERAGE

Portfolio changes will generally be implemented through

in-kind transactions for Creation Units, however the Advisor may execute brokerage transactions for the Fund and the Fund may incur brokerage

commissions. Also, the Fund may accept cash as part or all of an in-kind creation or redemption of a Creation Unit, in which case the

Advisor may need to execute brokerage transactions for the Fund. The policy of the Advisor regarding purchases and sales of securities

is that primary consideration will be given to obtaining the most favorable prices and efficient executions of transactions under the

circumstances.

Consistent with this policy, when securities transactions

are effected on a stock exchange, the Advisor’s policy is to pay commissions that are considered fair and reasonable without necessarily

determining that the lowest possible commissions are paid in all circumstances. In seeking to determine the reasonableness of brokerage

commissions paid in any transaction, the Advisor relies upon its experience and knowledge regarding commissions generally charged by various

brokers. The sale of Shares by a broker-dealer is not a factor in the selection of broker-dealers.

In seeking to implement its policies, the Advisor

effects transactions with those brokers and dealers that the Advisor believes provide the most favorable prices and are capable of providing

efficient executions. The Advisor and its affiliates do not currently participate in soft dollar arrangements.

The Advisor assumes general supervision over placing

orders on behalf of the Fund for the purchase or sale of portfolio securities. If purchases or sales of portfolio securities by the Fund

and one or more other investment companies or clients supervised by the Advisor are considered at or about the same time, transactions

in such securities are allocated among the Fund, the several investment companies and clients in a manner deemed equitable to all by the

Advisor. In some cases, this procedure could have a detrimental effect on the price or volume of the security as far as the Fund is concerned.

However, in other cases, it is possible that the ability

to participate in volume transactions and to negotiate lower brokerage commissions will be beneficial to the Fund. The primary consideration

is prompt execution of orders at the most favorable net price under the circumstances.

Purchases and sales of fixed-income securities for

the Fund usually are principal transactions and ordinarily are purchased directly from the issuer or from an underwriter or broker-dealer.

The Fund does not usually pay brokerage commissions in connection with

such purchases and sales, although purchases of new

issues from underwriters of securities typically include a commission or concession paid by the issuer to the underwriter, and purchases

from dealers serving as market-makers typically include a dealer’s mark-up (i.e., a spread between the bid and the ask prices).

PORTFOLIO TURNOVER

The Fund’s portfolio turnover rate is calculated

by dividing the lesser of purchases or sales of portfolio securities for the fiscal year by the monthly average of the value of the portfolio

securities owned by the Fund during the fiscal year. The calculation excludes from both the numerator and the denominator securities with

at the time of acquisition of one year or less. High portfolio turnover involves correspondingly greater brokerage commissions and other

transaction costs, which will be borne directly by the Fund. A 100% turnover rate would occur if all of the Fund’s portfolio securities

were replaced once within a one-year period. The Portfolio may engage in active trading to achieve its investment objectives and may experience

episodes of substantial portfolio turnover.

OTHER SERVICE PROVIDERS

Fund Administration and Fund Accounting

The Administrator for the Fund is Ultimus Fund Solutions,

LLC (the “Administrator”), which has its principal office at 4221 North 203rd Street, Suite 100, Elkhorn, Nebraska 68022-3474,

and is primarily in the business of providing administrative, fund accounting and transfer agent services to retail and institutional

mutual funds. The Administrator is an affiliate of the Distributor.

Pursuant to a Fund Services Agreement with the Trust,

on behalf of the Fund, the Administrator provides administrative services to the Fund, subject to the supervision of the Board. The Administrator

may provide persons to serve as officers of the Trust. Such officers may be directors, officers, or employees of Administrator or its

affiliates.

The Fund Services Agreement is dated (____), 2022.

The Fund Services Agreement remained in effect for two years from the date of its initial approval and will remain in effect subject to

annual approval of the Board for one-year periods thereafter. The Fund Services Agreement is terminable by the Board or the Administrator

on 90 days’ written notice and may be assigned provided the non-assigning party provides prior written consent. The Fund Services

Agreement provides that in the absence of willful misfeasance, bad faith, or gross negligence on the part of the Administrator or reckless

disregard of its obligations thereunder, the Administrator shall not be liable for any action or failure to act in accordance with its

duties thereunder.

Under the Fund Services Agreement, the Administrator

provides facilitating administrative services, including: (i) providing services of persons competent to perform such administrative and

clerical functions as are necessary to provide effective administration of the Fund; (ii) facilitating the performance of administrative

and professional services to the Fund by others, including the custodian; (iii) preparing, but not paying for, the periodic updating of

the Fund’s Registration Statement, Prospectus and Statement of Additional Information in conjunction with Trust counsel, including

the printing of such documents for the purpose of filings with the SEC and state securities administrators, and preparing reports to the

Fund’s shareholders and the SEC;(iv) preparing in conjunction with Trust counsel, but not paying for, all filings under the securities

or “Blue Sky” laws of such states or countries as are designated by the Distributor, if any; (v) in consultation with Trust

counsel, the Advisor, officers of the Trust and other relevant parties, preparing notices and agendas for meetings of the Board and minutes

of such meetings in all matters required by the 1940 Act to be acted upon by the Board; and (vi) monitoring daily and periodic compliance

with respect to all requirements and restrictions of the 1940 Act, the Internal Revenue Code and the Prospectus.

The Administrator also provides the Fund with accounting

services, including: (i) daily computation of net asset value; (ii) maintenance of security ledgers and books and records as required

by the 1940 Act; (iii) production of the Fund’s listing of portfolio securities and general ledger reports; (iv) reconciliation

of accounting records; (v) calculation of yield and total return for the Fund; (vi) maintenance of certain books and records described

in Rule 31a-1 under the 1940 Act, and reconciliation of account information and balances among the custodian and Advisor; and (vii) monitoring

and evaluation daily income and expense accruals, and sales and redemptions of shares of the Fund.

For the services rendered to the Fund under the Fund

Services Agreement, the Administrator receives the greater of an annual minimum fee or an asset based fee, which scales downward based

upon net assets for fund administration and fund accounting. The Fund also reimburses the Administrator for any out-of-pocket expenses.

Transfer Agent and Custodian

Brown Brothers Harriman & Co. (“BBH”),

which has a principal office at 50 Post Office Square, Boston, MA 02110, acts as transfer, dividend disbursing, and shareholder servicing

agent for the Fund and also serves as the custodian of the Fund’s assets pursuant to a Custodian and Transfer Agent Agreement by

and between BBH and the Trust on behalf of the Fund. Under the Custodian and Transfer Agent Agreement, BBH, acting as the Fund’s

transfer agent, is responsible for administering and performing transfer agent functions, dividend distribution, and maintaining necessary

records in accordance with applicable rules and regulations. Additionally,

acting as the Fund’s custodian, BBH’s

responsibilities include safeguarding and controlling the Fund’s cash and securities, handling the receipt and delivery of securities,

collecting interest and dividends on the Fund’s investments, maintaining original entry documents and books of record and general

ledgers; postings cash receipts and disbursements; and maintaining records of purchases and sales based upon communications from the Advisor.

The Fund may employ foreign sub-custodians that are approved by the Board to hold foreign assets. As compensation for these services,

the Transfer Agent receives certain out-of-pocket costs, transaction fees and asset-based fees.

DESCRIPTION OF SHARES

Each share of beneficial interest of the Trust has

one vote in the election of Trustees. Cumulative voting is not authorized for the Trust. This means that the holders of more than 50%

of the shares voting for the election of Trustees can elect 100% of the Trustees if they choose to do so, and, in that event, the holders

of the remaining shares will be unable to elect any Trustees.

Shareholders of the Trust and any other future series

of the Trust will vote in the aggregate and not by series except as otherwise required by law or when the Board determines that the matter

to be voted upon affects only the interest of the shareholders of a particular series or classes. Matters such as election of Trustees

are not subject to separate voting requirements and may be acted upon by shareholders of the Trust voting without regard to series. Each

class of shares of the Fund may vote separately on matters related to its Rule 12b-1 Plan.

The Trust is authorized to issue an unlimited number

of shares of beneficial interest. Each share has equal dividend, distribution and liquidation rights. There are no conversion or preemptive

rights applicable to any shares of the Fund. All shares issued are fully paid and non-assessable.

BOOK ENTRY ONLY SYSTEM

The following information supplements and should be

read in conjunction with the section in the Prospectus entitled “Book Entry.”

DTC Acts as Securities Depository for Shares. Shares

of the Fund are represented by securities registered in the name of DTC or its nominee and deposited with, or on behalf of, DTC.

DTC, a limited purpose trust company, was created

to hold securities of its participants (the “DTC Participants”) and to facilitate the clearance and settlement of securities

transactions among the DTC Participants in such securities through electronic book entry changes in accounts of the DTC Participants,

thereby eliminating the need for physical movement of securities certificates. DTC Participants include securities brokers and dealers,

banks, trust companies, clearing corporations and certain other organizations, some of whom (and/or their representatives) own DTC. More

specifically, DTC is owned by a number of its DTC Participants and by New York Stock Exchange, Inc. (“NYSE”) and FINRA. Access

to the DTC system is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial

relationship with a DTC Participant, either directly or indirectly (the “Indirect Participants”).

Beneficial ownership of Shares is limited to DTC Participants,

Indirect Participants and persons holding interests through DTC Participants and Indirect Participants. Ownership of beneficial interests

in Shares (owners of such beneficial interests are referred to herein as “Beneficial Owners”) is shown on, and the transfer

of ownership is effected only through, records maintained by DTC (with respect to DTC Participants) and on the records of DTC Participants

(with respect to Indirect Participants and Beneficial Owners that are not DTC Participants). Beneficial Owners will receive from or through

the DTC Participant a written confirmation relating to their purchase and sale of Shares.

Conveyance of all notices, statements and other communications

to Beneficial Owners is effected as follows. Pursuant to the Depositary Agreement between the Trust and DTC, DTC is required to make available

to the Trust upon request and for a fee to be charged to the Trust a listing of the Shares of the Fund held by each DTC Participant. The

Trust shall inquire of each such DTC Participant as to the number of Beneficial Owners holding Shares, directly or indirectly, through

such DTC Participant. The Trust shall provide each such DTC Participant with copies of such notice, statement or other communication,

in such form, number and at such place as such DTC Participant may reasonably request, in order that such notice, statement or communication

may be transmitted by such DTC Participant, directly or indirectly, to such Beneficial Owners.

In addition, the Trust shall pay to each such DTC

Participant a fair and reasonable amount as reimbursement for the expenses attendant to such transmittal, all subject to applicable statutory

and regulatory requirements. Fund distributions shall be made to DTC or its nominee, Cede & Co., as the registered holder of all Shares.

DTC or its nominee, upon receipt of any such distributions, shall immediately credit DTC Participants’ accounts with payments in

amounts proportionate to their respective beneficial interests in Shares of the Fund as shown on the records of DTC or its nominee. Payments

by DTC Participants to Indirect Participants and Beneficial Owners of Shares held through such DTC Participants will be governed by standing

instructions and customary practices, and will be the responsibility of such DTC Participants.

The Trust has no responsibility or liability for any

aspect of the records relating to or notices to Beneficial Owners, or payments made

on account of beneficial ownership interests in such

Shares, or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests, or for any other aspect

of the relationship between DTC and the DTC Participants or the relationship between such DTC Participants and the Indirect Participants

and Beneficial Owners owning through such DTC Participants. DTC may decide to discontinue providing its service with respect to Shares

at any time by giving reasonable notice to the Trust and discharging its responsibilities with respect thereto under applicable law. Under

such circumstances, the Trust shall take action to find a replacement for DTC to perform its functions at a comparable cost.

ANTI-MONEY LAUNDERING PROGRAM

The Trust has established an Anti-Money Laundering

Compliance Program (the “Program”) as required by Section 352 the Uniting and Strengthening America by Providing Appropriate

Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA PATRIOT Act”). To ensure compliance with this law, the

Trust’s Program is written and has been approved by the Board of Trustees. The Program provides for the development of policies,

procedures and internal controls reasonably designed to prevent laundering, the designation of an anti-money laundering compliance officer

who is responsible for implementing and monitoring the Program, ongoing anti-money laundering training for appropriate persons and an

independent audit function to determine the effectiveness of the Program.

Procedures to implement the Program include, but are

not limited to, determining that the Fund’s Distributor and Transfer Agent have established reasonable anti-money laundering procedures,

have reported suspicious and/or fraudulent activity and have completed thorough reviews of all new opening account applications. The Trust

will not transact business with any person or entity whose identity cannot be adequately verified under the provisions of the USA PATRIOT

Act.

Broker-dealers and other financial intermediaries

operate pursuant to their own Anti-Money Laundering programs, and as a result of such program, a broker or financial intermediary may

be required to “freeze” the account of a shareholder if the shareholder appears to be involved in suspicious activity or if

certain account information matches information on government lists of known terrorists or other suspicious persons.

PURCHASE, REDEMPTION AND PRICING

OF SHARES

Calculation of Share Price

As indicated in the Prospectus under the heading “Net

Asset Value,” net asset value of the Fund’s shares is determined by dividing the total value of the Fund’s portfolio

investments and other assets, less any liabilities, by the total number of shares outstanding of the Fund.

Generally, the Fund’s domestic securities (including

underlying ETFs which hold portfolio securities primarily listed on foreign (non-U.S.) exchanges) are valued each day at the last quoted

sales price on each security’s primary exchange. Securities traded or dealt in upon one or more securities exchanges for which market

quotations are readily available and not subject to restrictions against resale shall be valued at the last quoted sales price on the

primary exchange or, in the absence of a sale on the primary exchange, at the current bid price on such exchange.

If market quotations are not readily available, securities

will be valued at their fair market value as determined in good faith by the Fund’s fair value committee in accordance with procedures

approved by the Board and as further described below. Securities that are not traded or dealt in any securities exchange (whether domestic

or foreign) and for which over-the-counter market quotations are readily available generally shall be valued at the last sale price or,

in the absence of a sale, at the mean between the current bid price on such over-the- counter market.

Certain securities or investments for which daily

market quotes are not readily available may be valued, pursuant to guidelines established by the Board, with reference to other securities

or indices. Debt securities not traded on an exchange may be valued at prices supplied by a pricing agent(s) based on broker or dealer

supplied valuations or matrix pricing, a method of valuing securities by reference to the value of other securities with similar characteristics,

such as rating, interest rate and maturity. Short-term investments having a maturity of 60 days or less may be generally valued at amortized

cost when it approximated fair value.

Exchange traded options are valued at the last quoted

sales price or, in the absence of a sale, at the mean between the current bid and ask prices on the exchange on which such options are

traded. If an acceptable quotation is unavailable for a particular contract, that contract will be priced at the mean of the valuations

of the two most widely accepted and well documented methods for deriving prices for option contracts, the Black-Scholes model and the

binomial model, as of the stock market close. Other securities for which market quotes are not readily available are valued at fair value

as determined in good faith by the Board or persons acting at their direction. Swap agreements and other derivatives are generally valued

daily based upon quotations from market makers or by a pricing service in accordance with the valuation procedures approved by the Board.

Securities traded on a foreign exchange which has

not closed by the close of regular trading on the Exchange (normally 4:00 p.m., Eastern time) (the “Exchange Close”)or for

which the official closing prices are not available at the time the NAV is determined may

use alternative market prices provided by a pricing

service. The Fund may use an independent pricing service to calculate the fair market value of foreign equity securities on a daily basis

by applying valuation factors to the last sale price or the mean price as noted above. The fair market values supplied by the independent

pricing service will generally reflect market trading that occurs after the close of the applicable foreign markets of comparable securities

or the value of other instruments that have a strong correlation to the fair-valued securities. The independent pricing service will also

take into account the current relevant currency exchange rate. A security that is fair valued may be valued at a price higher or lower

than actual market quotations or the value determined by other funds using their own fair valuation procedures. Because foreign securities

may trade on days when Fund shares are not priced, the value of securities held by the Fund can change on days when Fund shares cannot

be redeemed or purchased.

In the event that a foreign security’s market

quotations are not readily available or are deemed unreliable (for reasons other than because the foreign exchange on which it trades

closed before the Fund’s calculation of NAV), the security will be valued at its fair market value as determined in good faith by

the Fund’s fair value committee in accordance with procedures approved by the Board as discussed below. Without fair valuation,

it is possible that short-term traders could take advantage of the arbitrage opportunity and dilute the NAV of long-term investors. Fair

valuation of the Fund’s portfolio securities can serve to reduce arbitrage opportunities available to short-term traders, but there

is no assurance that it will prevent dilution of the Fund’s NAV by short-term traders. In addition, because the Fund may invest

in underlying ETFs which hold portfolio securities primarily listed on foreign (non-U.S.) exchanges, and these exchanges may trade on

weekends or other days when the underlying ETFs do not price their shares, the value of these portfolio securities may change on days

when you may not be able to buy or sell Fund shares.

Investments initially valued in currencies other than

the U.S. dollar are converted to U.S. dollars using exchange rates obtained from pricing services. As a result, the NAV of the Fund’s

shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of securities traded in markets

outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the New

York Stock Exchange is closed and an investor is not able to purchase, redeem or exchange shares.

Fund shares are valued at the Exchange Close on each

day that the Exchange is open. For purposes of calculating the NAV, the Fund normally use pricing data for domestic equity securities

received shortly after the Exchange Close and does not normally take into account trading, clearances or settlements that take place after

the Exchange Close. Domestic fixed income and foreign securities are normally priced using data reflecting the earlier closing of the

principal markets for those securities. Information that becomes known to the Fund or its agents after the NAV has been calculated on

a particular day will not generally be used to retroactively adjust the price of the security or the NAV determined earlier that day.

When market quotations are insufficient or not readily

available, the Fund may value securities at fair value or estimate their value as determined in good faith by the Board or its designees,

pursuant to procedures approved by the Board. Fair valuation may also be used by the Board if extraordinary events occur after the close

of the relevant market but prior to the NYSE Close.

Creation Units

The Fund sells and redeems Shares in Creation Units

on a continuous basis through the Distributor, without a sales load, at the NAV next determined after receipt of an order in proper form

on any Business Day. A “Business Day” is any day on which the NYSE is open for business. As of the date of this SAI, the NYSE

observes the following holidays: New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Good Friday, Memorial Day,

Juneteenth National Independence Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

A Creation Unit is an aggregation of (____) Shares.

The Board may declare a split or a consolidation in the number of Shares outstanding of the Fund or Trust, and make a corresponding change

in the number of Shares in a Creation Unit.

Authorized Participants

To purchase or redeem any Creation Units, you must

be, or transact through, an Authorized Participant. In order to be an Authorized Participant, you must be either a broker-dealer or other

participant (“Participating Party”) in the Continuous Net Settlement System (“Clearing Process”) of the NSCC or

a participant in DTC with access to the DTC system (“DTC Participant”), and you must execute an agreement (“Participant

Agreement”) with the Distributor that governs transactions in the Fund’s Creation Units.

Investors who are not Authorized Participants but

want to transact in Creation Units may contact the Distributor for the names of Authorized Participants. An Authorized Participant may

require investors to enter into a separate agreement to transact through it for Creation Units and may require orders for purchases of

shares placed with it to be in a particular form. Investors transacting through a broker that is not itself an Authorized Participant

and therefore must still transact through an Authorized Participant may incur additional charges. There are expected to be a limited number

of Authorized Participants at any one time.

Orders must be transmitted by an Authorized Participant

by telephone or other transmission method acceptable to the Distributor. Market disruptions and telephone or other communication failures

may impede the transmission of orders.

Transaction Fees

A fixed fee payable to the Custodian is imposed on

each creation and redemption transaction regardless of the number of Creation Units involved in the transaction (“Fixed Fee”).

Purchases and redemptions of Creation Units for cash or involving cash-in-lieu (as defined below) are required to pay an additional variable

charge to compensate the Fund and its ongoing shareholders for brokerage and market impact expenses relating to Creation Unit transactions

(“Variable Charge,” and together with the Fixed Fee, the “Transaction Fees”). With the approval of the Board,

the Advisor may waive or adjust the Transaction Fees, including the Fixed Fee and/or Variable Charge (shown in the table below), from

time to time. In such cases, the Authorized Participant will reimburse the Fund for, among other things, any difference between the market

value at which the securities and/or financial instruments were purchased by the Fund and the cash-in-lieu amount, applicable registration

fees, brokerage commissions and certain taxes. In addition, purchasers of Creation Units are responsible for the costs of transferring

the Deposit Securities to the account of the Fund.

Investors who use the services of a broker, or other

such intermediary may be charged a fee for such services. The Transaction Fees for the Fund are listed in the table below.

* As a percentage

of the amount invested.

The Clearing Process

Transactions by an Authorized Participant that is

a Participating Party using the NSCC system are referred to as transactions “through the Clearing Process.” Transactions by

an Authorized Participant that is a DTC Participant using the DTC system are referred to as transactions “outside the Clearing Process.”

The Clearing Process is an enhanced clearing process that is available only for certain securities and only to DTC participants that are

also participants in the Continuous Net Settlement System of the NSCC. In-kind (portions of) purchase orders not subject to the Clearing

Process will go through a manual clearing process run by DTC. Portfolio Deposits that include government securities must be delivered

through the Federal Reserve Bank wire transfer system (“Federal Reserve System”). Fund Deposits that include cash may be delivered

through the Clearing Process or the Federal Reserve System. In-kind deposits of securities for orders outside the Clearing Process must

be delivered through the Federal Reserve System (for government securities) or through DTC (for corporate securities).

Foreign Securities

Because the portfolio securities of the Fund may trade

on days that the Exchange is closed or are otherwise not Business Days for the Fund, shareholders may not be able to redeem their shares

of the Fund, or to purchase or sell shares of the Fund on the Exchange, on days when the NAV of the Fund could be significantly affected

by events in the relevant foreign markets.

Purchasing Creation Units

Portfolio Deposit. The consideration for a

Creation Unit generally consists of the Deposit Securities and a Cash Component. Together, the Deposit Securities and the Cash Component

constitute the “Portfolio Deposit.” The Cash Component serves the function of compensating for any differences between the

net asset value per Creation Unit and the Deposit Securities. Thus, the Cash Component is equal to the difference between (x) the net

asset value per Creation Unit of the Fund and (y) the market value of the Deposit Securities. If (x) is more than (y), the Authorized

Participant will pay the Cash Component to the Fund. If (x) is less than (y), the Authorized Participant will receive the Cash Component

from the Fund.

On each Business Day, prior to the opening of business

on the Exchange (currently 9:30 a.m., Eastern Time), the Advisor through the Custodian makes available through NSCC the name and amount

of each Deposit Security in the current Portfolio Deposit (based on information at the end of the previous Business Day) for the Fund

and the (estimated) Cash Component, effective through and including the previous Business Day, per Creation Unit. The Deposit Securities

announced are applicable, subject to any adjustments as described below, to purchases of Creation Units until the next announcement of

Deposit Securities. Payment of any stamp duty or the like shall be the sole responsibility of the Authorized Participant purchasing a

Creation Unit. The Authorized Participant must ensure that all Deposit Securities properly denote change in beneficial ownership.

Custom Orders and Cash-in-Lieu. The Fund may,

in its sole discretion, permit or require the substitution of an amount of cash (“cash-in-lieu”) to be added to the Cash Component

to replace any Deposit Security. The Fund may permit or require cash-in-lieu when, for example, a Deposit Security may not be available

in sufficient quantity for delivery or may not be eligible for transfer through the systems of DTC or the Clearing Process. Similarly,

the Fund may permit or require cash-in-lieu of Deposit Securities when, for example, the Authorized Participant or its underlying investor

is restricted under U.S. or local securities laws or policies from transacting in one or more Deposit Securities. The Fund will comply

with the federal securities laws in accepting Deposit Securities including that the Deposit Securities are sold in transactions that would

be exempt from registration under the Securities Act. All

orders involving cash-in-lieu are considered to be

“Custom Orders.”

Purchase Orders. To order a Creation Unit,

an Authorized Participant must submit an irrevocable purchase order to the Distributor.

Timing of Submission of Purchase Orders

An Authorized Participant must submit an irrevocable

purchase order no later than the earlier of (i) 4:00 p.m. Eastern Time or (ii) the closing time of the bond markets and/or the trading

session on the Exchange, on any Business Day in order to receive that Business Day’s NAV (“Cut-off Time”). The Cut-off

Time for Custom Orders is generally two hours earlier. The Business Day the order is deemed received by the Distributor is referred to

as the “Transmittal Date.” An order to create Creation Units is deemed received on a Business Day if (i) such order is received

by the Distributor by the Cut-off Time on such day and (ii) all other procedures set forth in the Participant Agreement are properly followed.

Persons placing or effectuating custom orders and/or orders involving cash should be mindful of time deadlines imposed by intermediaries,

such as DTC and/or the Federal Reserve Bank wire system, which may impact the successful processing of such orders to ensure that cash

and securities are transferred by the “Settlement Date,” which is generally the Business Day immediately following the Transmittal

Date (“T+1”) for cash and the second Business Day following the Transmittal Date for securities (“T+2”).

Orders Using the Clearing Process

If available, (portions of) orders may be settled

through the Clearing Process. In connection with such orders, the Distributor transmits, on behalf of the Authorized Participant, such

trade instructions as are necessary to effect the creation order. Pursuant to such trade instructions, the Authorized Participant agrees

to deliver the requisite Portfolio Deposit to the Fund, together with such additional information as may be required by the Distributor.

Cash Components will be delivered using either the Clearing Process or the Federal Reserve System.

Orders Outside the Clearing Process

If the Clearing Process is not available for (portions

of) an order, Portfolio Deposits will be made outside the Clearing Process. Orders outside the Clearing Process must state that the DTC

Participant is not using the Clearing Process and that the creation of Creation Units will be effected through DTC. The Portfolio Deposit

transfer must be ordered by the DTC Participant on the Transmittal Date in a timely fashion so as to ensure the delivery of Deposit Securities

(whether standard or custom) through DTC to the Fund account by 11:00 a.m., Eastern time, on T+1. The Cash Component, along with any cash-in-lieu

and Transaction Fee, must be transferred directly to the Custodian through the Federal Reserve System in a timely manner so as to be received

by the Custodian no later than 12:00 p.m., Eastern Time, on T+1. If the Custodian does not receive both the Deposit Securities and the

cash by the appointed time, the order may be canceled. A canceled order may be resubmitted the following Business Day but must conform

to that Business Day’s Portfolio Deposit. Authorized Participants that submit a canceled order will be liable to the Fund for any

losses incurred by the Fund in connection therewith.

Orders involving foreign Deposit Securities are expected

to be settled outside the Clearing Process. Thus, upon receipt of an irrevocable purchase order, the Distributor will notify the Advisor

and the Custodian of such order. The Custodian, who will have caused the appropriate local sub-custodian(s) of the Fund to maintain an

account into which an Authorized Participant may deliver Deposit Securities (or cash-in-lieu), with adjustments determined by the Fund,

will then provide information of the order to such local sub-custodian(s). The ordering Authorized Participant will then deliver the Deposit

Securities (and any cash-in-lieu) to the Fund’s n account at the applicable local sub-custodian. The Authorized Participant must

also make available on or before the contractual settlement date, by means satisfactory to the Fund, immediately available or same day

funds in U.S. dollars estimated by the Fund to be sufficient to pay the Cash Component and Transaction Fee.

When a relevant local market is closed due to local

market holidays, the local market settlement process will not commence until the end of the local holiday period. Settlement must occur

by 2:00 p.m., Eastern Time, on the contractual settlement date.

Acceptance of Purchase Order

All questions as to the number of shares of each security

in the Deposit Securities and the validity, form, eligibility and acceptance for deposit of any securities to be delivered shall be determined

by the Fund. The Fund’s determination shall be final and binding. The Fund reserves the absolute right to reject or revoke acceptance

of a purchase order transmitted to it by the Distributor if (a) the order is not in proper form; (b) the investor(s), upon obtaining the

shares ordered, would own 80% or more of the currently outstanding shares of the Fund; (c) the Deposit Securities delivered do not conform

to the Deposit Securities for the applicable date; (d) acceptance of the Deposit Securities would have certain adverse tax consequences

to the Fund; (e) the acceptance of the Portfolio Deposit would, in the opinion of counsel, be unlawful; (f) the acceptance of the Portfolio

Deposit would otherwise, in the discretion of the Trust, Fund or the Advisor, have an adverse effect on the Trust, Fund or the rights

of beneficial owners; or (g) in the event that circumstances outside the control of the Trust, the Distributor and the Advisor make it

for all practical purposes impossible to process purchase orders. Examples of such circumstances include acts of God; public service or

utility problems resulting in telephone, telecopy or computer

failures; fires, floods or extreme weather conditions;

market conditions or activities causing trading halts; systems failures involving computer or other informational systems affecting the

Trust, the Distributor, DTC, NSCC, the Advisor, the Custodian, a sub-custodian or any other participant in the creation process; and similar

extraordinary events. The Distributor shall notify an Authorized Participant of its rejection of the order. The Fund, the Custodian, any

sub-custodian and the Distributor are under no duty, however, to give notification of any defects or irregularities in the delivery of

Portfolio Deposits, and they shall not incur any liability for the failure to give any such notification.

Issuance of a Creation Unit.

Once the Fund has accepted an order, upon next determination

of the Fund’s NAV, the Fund will confirm the issuance of a Creation Unit, against receipt of payment, at such NAV. The Distributor

will transmit a confirmation of acceptance to the Authorized Participant that placed the order.

Except as provided below, a Creation Unit will not

be issued until the Fund obtains good title to the Deposit Securities and the Cash Component, along with any cash-in-lieu and Transaction

Fee. Except as provided below under “Delivery of Redemption Basket”, the delivery of Creation Units will generally occur no

later than T+2. In certain cases, Authorized Participants will create and redeem Creation Units on the same trade date. In these instances,

the Trust reserves the right to settle these transactions on a net basis.

With respect to orders involving foreign Deposit Securities,

when the applicable local sub-custodian(s) have confirmed to the Custodian that the Deposit Securities (or cash-in-lieu) have been delivered

to the Fund’s account at the applicable local sub-custodian(s), the Distributor and the Advisor shall be notified of such delivery,

and the Fund will issue and cause the delivery of the Creation Unit.

While, as stated above, Creation Units are generally

delivered on T+2 , as discussed below under “Delivery of Redemption Basket” the Fund may settle Creation Unit transactions

on a basis other than T+2 in order to accommodate foreign market holiday schedules, to account for different treatment among foreign and

U.S. markets of dividend record dates and ex-dividend dates (that is the last day the holder of a security can sell the security and still

receive dividends payable on the security), and in certain other circumstances.

The Fund may issue a Creation Unit prior to receiving

good title to the Deposit Securities, under the following circumstances. Pursuant to the applicable Participant Agreement, the Fund may

issue a Creation Unit notwithstanding that (certain) Deposit Securities have not been delivered, in reliance on an undertaking by the

relevant Authorized Participant to deliver the missing Deposit Securities as soon as possible, which undertaking is secured by such Authorized

Participant’s delivery to and maintenance with the Custodian of collateral having a value equal to at least 105% of the value of

the missing Deposit Securities (“Collateral”), as adjusted by time to time by the Advisor. Such Collateral will have a value

greater than the NAV of the Creation Unit on the date the order is placed. Such collateral must be delivered no later than 2:00 p.m.,

Eastern Time, on T+1. The only Collateral that is acceptable to the Fund is cash in U.S. Dollars.

While (certain) Deposit Securities remain undelivered,

the Collateral shall at all times have a value equal to at least 105% (as adjusted by the Advisor) of the daily marked-to-market value

of the missing Deposit Securities. At any time, the Fund may use the Collateral to purchase the missing securities, and the Authorized

Participant will be liable to the Fund for any costs incurred thereby or losses resulting therefrom, whether or not they exceed the amount

of the Collateral, including any Transaction Fee, any amount by which the purchase price of the missing Deposit Securities exceeds the

market value of such securities on the Transmittal Date, brokerage and other transaction costs. The Trust will return any unused Collateral

once all of the missing securities have been received by the Fund. More information regarding the Fund’s current procedures for

collateralization is available from the Distributor.

Cash Purchase Method

When cash purchases of Creation Units are available

or specified for the Fund, they will be effected in essentially the same manner as in-kind purchases. In the case of a cash purchase,

the investor must pay the cash equivalent of the Portfolio Deposit. In addition, cash purchases will be subject to Transaction Fees, as

described above.

Notice to Texas Shareholders

Under section 72.1021(a) of the Texas Property Code,

initial investors in a Fund who are Texas residents may designate a representative to receive notices of abandoned property in connection

with Shares. Texas shareholders who wish to appoint a representative should notify the Trust by writing to the address below to obtain

a form for providing written notice to the Trust:

Arrow Funds

Arrow Dynamic Bitcoin Strategy

ETF

c/o Ultimus Fund Solutions, LLC

4221 North 203rd Street, Suite

100

Elkhorn, Nebraska 68022-3474

Redeeming a Creation Unit

Redemption Basket. The consideration received

in connection with the redemption of a Creation Unit generally consists of an in-kind basket of designated securities (“Redemption

Securities”) and an amount of cash in U.S. dollars (“Cash Component”). Together, the Redemption Securities and the Cash

Component constitute the “Redemption Basket.” There can be no assurance that there will be sufficient liquidity in Shares

in the secondary market to permit assembly of a Creation Unit. In addition, investors may incur brokerage and other costs in connection

with assembling a Creation Unit.

The Cash Component serves the function of compensating

for any differences between the net asset value per Creation Unit and the Redemption Securities. Thus, the Cash Component is equal to

the difference between (x) the net asset value per Creation Unit of the Fund and (y) the market value of the Redemption Securities. If

(x) is more than (y), the Authorized Participant will receive the Cash Component from the Fund. If (x) is less than (y), the Authorized

Participant will pay the Cash Component to the Fund.

If the Redemption Securities on a Business Day are

different from the Deposit Securities, prior to the opening of business on the Exchange (currently 9:30 a.m., Eastern Time), the Advisor

through the Custodian makes available through NSCC the name and amount of each Redemption Security in the current Redemption Basket (based

on information at the end of the previous Business Day) for the Fund and the (estimated) Cash Component, effective through and including

the previous Business Day, per Creation Unit. If the Redemption Securities on a Business Day are different from the Deposit Securities,

all redemption requests that day will be processed outside the Clearing Process.

The right of redemption may be suspended or the date

of payment postponed: (i) for any period during which the NYSE is closed (other than customary weekend and holiday closings); (ii) for

any period during which trading on the NYSE is suspended or restricted; (iii) for any period during which an emergency exists as a result

of which disposal of the Shares or determination of the Fund’s NAV is not reasonably practicable; or (iv) in such other circumstances

as permitted by the SEC, including as described below.

Custom Redemptions and Cash-in-Lieu. The Fund

may, in its sole discretion, permit or require the substitution of an amount of cash (“cash-in-lieu”) to be added to the Cash

Component to replace any Redemption Security. The Fund may permit or require cash-in-lieu when, for example, a Redemption Security may

not be available in sufficient quantity for delivery or may not be eligible for transfer through the systems of DTC or the Clearing Process.

Similarly, the Fund may permit or require cash-in-lieu of Redemption Securities when, for example, the Authorized Participant or its underlying

investor is restricted under U.S. or local securities law or policies from transacting in one or more Redemption Securities. The Fund

will comply with the federal securities laws in satisfying redemptions with Redemption Securities, including that the Redemption Securities

are sold in transactions that would be exempt from registration under the Securities Act. All redemption requests involving cash-in-lieu

are considered to be “Custom Redemptions.”

Redemption Requests. To redeem a Creation Unit,

an Authorized Participant must submit an irrevocable redemption request to the Distributor. An Authorized Participant submitting a redemption

request is deemed to represent to the Fund that it or, if applicable, the investor on whose behalf it is acting, (i) owns outright or

has full legal authority and legal beneficial right to tender for redemption the Creation Unit to be redeemed and can receive the entire

proceeds of the redemption, and (ii) all of the Shares there are in the Creation Unit to be redeemed have not been borrowed, loaned or

pledged to another party nor are they the subject of a repurchase agreement, securities lending agreement or such other arrangement which

would preclude the delivery of such Shares to the Fund. The Fund reserves the absolute right, in its sole discretion, to verify these

representations, but will typically require verification in connection with higher levels of redemption activity and/or short interest

in the Fund. If the Authorized Participant, upon receipt of a verification request, does not provide sufficient verification of the requested

representations, the redemption request will not be considered to be in proper form and may be rejected by the Fund.

Timing of Submission of Redemption Requests.

An Authorized Participant must submit an irrevocable redemption order no later than the earlier of (i) 4:00 p.m., Eastern Time or (ii)

the closing time of the bond markets and/or the trading session on the Exchange, on any Business Day in order to receive that Business

Day’s NAV. (“Cut-off Time”). The Cut-off Time for Custom Orders is generally two hours earlier. The Business Day the

order is deemed received by the Distributor is referred to as the “Transmittal Date.” A redemption request is deemed received

if (i) such order is received by the Distributor by the Cut-off Time on such day and (ii) all other procedures set forth in the Participant

Agreement are properly followed. Persons placing or effectuating Custom Redemptions and/or orders involving cash should be mindful of

time deadlines imposed by intermediaries, such as DTC and/or the Federal Reserve System, which may impact the successful processing of

such orders to ensure that cash and securities are transferred by the Settlement Date, as defined above.

Requests Using the Clearing Process. If available,

(portions of) redemption requests may be settled through the Clearing Process. In connection with such orders, the Distributor transmits

on behalf of the Authorized Participant, such trade instructions as are necessary to effect the redemption. Pursuant to such trade instructions,

the Authorized Participant agrees to deliver the requisite Creation Unit(s) to the Fund, together with such additional information as

may be required by the Distributor. Cash Components will be delivered using either the Clearing Process or the Federal Reserve System,

as described above.

Requests Outside the Clearing Process. If the

Clearing Process is not available for (portions of) an order, Redemption Baskets will be delivered outside the Clearing Process. Orders

outside the Clearing Process must state that the DTC Participant is not using the Clearing Process and that the redemption will be effected

through DTC.

The Authorized Participant must transfer or cause

to be transferred the Creation Unit(s) of shares being redeemed through the book-entry system of DTC so as to be delivered through DTC

to the Custodian by 10:00 a.m., Eastern Time, on received T+1. In addition, the Cash Component must be received by the Custodian by 12:00

p.m., Eastern Time, on T+1. If the Custodian does not receive the Creation Unit(s) and Cash Component by the appointed times on T+1, the

redemption will be rejected, except in the circumstances described below. A rejected redemption request may be resubmitted the following

Business Day.

Orders involving foreign Redemption Securities are

expected to be settled outside the Clearing Process. Thus, upon receipt of an irrevocable redemption request, the Distributor will notify

the Advisor and the Custodian. The Custodian will then provide information of the redemption to the Fund’s local sub-custodian(s).

The redeeming Authorized Participant, or the investor on whose behalf is acting, will have established appropriate arrangements with a

broker-dealer, bank or other custody provider in each jurisdiction in which the Redemption Securities are customarily traded and to which

such Redemption Securities (and any cash-in-lieu) can be delivered from the Fund’s accounts at the applicable local sub-custodian(s).

Acceptance of Redemption Requests. All questions

as to the number of shares of each security in the Deposit Securities and the validity, form, eligibility and acceptance for deposit of

any securities to be delivered shall be determined by the Trust. The Trust’s determination shall be final and binding.

Delivery of Redemption Basket. Once the Fund

has accepted a redemption request, upon next determination of the Fund’s NAV, the Fund will confirm the issuance of a Redemption

Basket, against receipt of the Creation Unit(s) at such NAV, any cash-in-lieu and Transaction Fee. A Creation Unit tendered for redemption

and the payment of the Cash Component, any cash-in-lieu and Transaction Fee will be effected through DTC. The Authorized Participant,

or the investor on whose behalf it is acting, will be recorded on the book-entry system of DTC.

The Redemption Basket will generally be delivered

to the redeeming Authorized Participant within T+2. Except under the circumstances described below, however, a Redemption Basket generally

will not be issued until the Creation Unit(s) are delivered to the Fund, along with the Cash Component, any cash-in-lieu and Transaction

Fee. In certain cases, Authorized Participants will create and redeem Creation Units on the same trade date. In these instances, the Trust

reserves the right to settle these transactions on a net basis.

With respect to orders involving foreign Redemption

Securities, the Fund may settle Creation Unit transactions on a basis other than T+2 in order to accommodate foreign market holiday schedules,

to account for different treatment among foreign and U.S. markets of dividend record dates and ex-dividend dates (that is the last day

the holder of a security can sell the security and still receive dividends payable on the security), and in certain other circumstances.

When a relevant local market is closed due to local market holidays, the local market settlement process will not commence until the end

of the local holiday period.

Cash Redemption Method

When cash redemptions of Creation Units are available

or specified for the Fund, they will be effected in essentially the same manner as in-kind redemptions. In the case of a cash redemption,

the investor will receive the cash equivalent of the Redemption Basket minus any Transaction Fees, as described above.

TAX STATUS

The following discussion is general in nature and

should not be regarded as an exhaustive presentation of all possible tax ramifications. All shareholders should consult a qualified tax

advisor regarding their investment in the Fund. The Fund is treated as a separate corporation for federal tax purposes. The Fund, therefore,

is considered to be a separate entity in determining its treatment under the rules for RICs described below and in the Prospectus. Losses

realized by the Fund will not offset gains realized by any other series of the Trust, and the requirements (other than certain organizational

requirements) for qualifying for RIC status are determined at the Fund level rather than the Trust level.

The Fund intends to qualify and has elected to be

treated as a regulated investment company under Subchapter M of Chapter 1 of Subtitle A of the Internal Revenue Code (a “RIC”).

If the Fund qualifies for that treatment, the Fund will not be subject to federal

income tax on the portion of its investment company

taxable income (which includes dividends, interest, the excess of net short-term capital gain over net long-term capital loss (“net

short-term capital gain”) and net gains and losses from certain foreign currency transactions, if any) and net capital gain (i.e.,

the excess of net long-term capital gain over net short-term capital loss) that it distributes to its shareholders. To qualify for that

treatment, the Fund must annually distribute at least 90% of its investment company taxable income (“Distribution Requirement”)

and must meet requirements relating to the source and nature of its income (“Income Requirement”) and the diversification

of its assets, among other things.

If the Fund fails to qualify for any taxable year

for treatment as a RIC, all of its taxable income would be subject to tax at regular corporate income tax rates without any deduction

for distributions to shareholders, and such distributions (including distributions of net capital gain) generally would be taxable to

shareholders as ordinary dividends to the extent of the Fund’s current and accumulated earnings and profits (except that, (1) for

individual shareholders, the part thereof that is “qualified dividend income,” as described in the Prospectus, would be subject

to federal income tax at the rate for long -term capital gain — a maximum of 20%, and (2) a part of those distributions would

be eligible for the dividends-received deduction available to corporations under certain circumstances). Furthermore, the Fund could be

required to recognize unrealized gains, pay substantial taxes and interest and make substantial distributions before requalifying for

RIC treatment.

The Fund will be subject to a nondeductible 4% federal

excise tax (“Excise Tax”) to the extent it does not distribute to its shareholders in any calendar year at least 98% of its

ordinary income for the year plus 98.2% of its capital gain net income for the twelve months ended October 31 of such year. The Fund intends

to declare and distribute dividends and other distributions in the amounts and at the times necessary to avoid the application of the

Excise Tax.

The Trust, on behalf of the Fund, has the right to

reject an order to purchase Shares if (1) the purchaser (or group of purchasers) would, upon obtaining the ordered Shares, own 80% or

more of the outstanding Shares and (2) pursuant to Section 351 of the Internal Revenue Code, the Fund would have a basis in the Deposit

Securities exchanged therefor different from the market value of such securities on the date of deposit. The Trust also has the right

to require information necessary to determine beneficial Share ownership for purposes of making the 80% determination.

Taxation of the Fund’s Investments and Activities.

The Fund’s use of hedging strategies, such as entering into forward contracts, involves complex rules that will determine for income

tax purposes the amount, character and timing of recognition of the gains and losses the Fund realizes in connection therewith. Gains

from the disposition of foreign currencies (except certain gains therefrom that may be excluded by future regulations), and gains from

options, forward contracts the Fund derives with respect to its business of investing in securities or foreign currencies, will be treated

as qualifying income under the Income Requirement. The Fund will monitor its transactions, make appropriate tax elections and make appropriate

entries in its books and records when it acquires any foreign currency, forward contract or hedged investment to mitigate the effect of

these rules, prevent its disqualification as a RIC and minimize the imposition of federal income and excise taxes.

Certain foreign currency contracts and options (i.e.,

certain listed options, such as those on a “broad-based” securities index) in which the Fund may invest may be subject to

Internal Revenue Code section 1256 (collectively, “section 1256 contracts”). Generally, any section 1256 contracts the Fund

holds at the end of its taxable year (and generally for purposes of the Excise Tax, on October 31 of each year) generally must be “marked

to market” (that is, treated as having been sold at that time for their fair market value) for federal income tax purposes, with

the result that unrealized gains or losses will be treated as though they were realized. Sixty percent of any net gain or loss recognized

on these deemed sales, and 60% of any net realized gain or loss from any actual sales of section 1256 contracts, will be treated as long-term

capital gain or loss, and the balance will be treated as short-term capital gain or loss; however, certain foreign currency gains or losses

arising from section 1256 contracts will be treated as ordinary income or loss.

These rules may operate to increase the amount that

the Fund must distribute to satisfy the Distribution Requirement (i.e., with respect to the portion treated as short-term capital gain,

which will be includible in investment company taxable income and thus taxable to its shareholders as ordinary income when distributed

to them), and to increase the net capital gain the Fund recognizes, even though the Fund may not have closed the transactions and received

cash to pay the distributions. Section 1256 contracts also are marked to market for purposes of the Excise Tax.

Section 988 of the Internal Revenue Code also may

apply to forward contracts on foreign currencies. Under that section, each foreign currency gain or loss generally is computed separately

and treated as ordinary income or loss. In the case of overlap between sections 1256 and 988, special provisions determine the character

and timing of any income, gain or loss. If the Fund’s section 988 losses exceed other investment company taxable income for a taxable

year, it would not be able to distribute any dividends, and any distributions made during that year before the losses were realized would

be re-characterized as a return of capital to shareholders, rather than as a dividend, thereby reducing each shareholder’s basis

in his or her Shares.

The premium the Fund receives for writing (selling)

a put or call option is not included in income at the time of receipt. When a covered call option written by the Fund expires, however,

it will realize a short-term capital gain equal to the amount of the premium it received for writing the option. When the Fund terminates

its obligations under such an option by entering into a closing transaction, it will realize a short-term capital gain (or loss), depending

on whether the cost of the closing transaction is less (or more) than the

premium it received when it wrote the option.

When a covered call option written by the Fund is

exercised, it will be treated as having sold the underlying security, producing long-term or short-term capital gain or loss, depending

on the holding period of the underlying security and whether the sum of the option price it receives on the exercise plus the premium

it received when it wrote the option is more or less than the underlying security’s basis.

If the Fund has an “appreciated financial position”—generally,

an interest (including an interest through a forward contract or short sale) with respect to any stock, debt instrument (other than “straight

debt”) or partnership interest the fair market value of which exceeds its adjusted basis—and enters into a “constructive

sale” of the position, the Fund will be treated as having made an actual sale thereof, with the result that it will recognize gain

at that time. A constructive sale generally consists of a short sale, an offsetting notional principal contract or a forward contract

the Fund or a related person enters into with respect to the same or substantially identical property. In addition, if the appreciated

financial position is itself a short sale or such a contract, acquisition of the underlying property or substantially identical property

will be deemed a constructive sale. The foregoing will not apply, however, to any Fund transaction during any taxable year that otherwise

would be treated as a constructive sale if the transaction is closed within 30 days after the end of that year and the Fund holds the

appreciated financial position unhedged for 60 days after that closing (i.e., at no time during that 60-day period is the Fund’s

risk of loss regarding that position reduced by reason of certain specified transactions with respect to substantially identical or related

property, such as having an option to sell, being contractually obligated to sell, making a short sale of or granting an option to buy

substantially identical stock or securities).

Any market discount recognized by the Fund on a bond

is taxable as ordinary income. A market discount bond is a bond acquired in the secondary market at a price below its principal amount

or adjusted issue price if issued with original issue discount. Absent an election by the Fund to include the market discount in income

as it accrues, gain on the Fund’s disposition of such an obligation will be treated as ordinary income rather than capital gain

to the extent of the accrued market discount.

Dividends and interest the Fund receives, and gains

it realizes, on foreign securities may be subject to income, withholding or other taxes foreign countries and U.S. possessions impose

that would reduce the yield and/or total return on its investments. Tax conventions between certain countries and the United States may

reduce or eliminate those taxes, however, and many foreign countries do not impose taxes on capital gains in respect of investments by

foreign investors.

The Fund may invest in the stock of passive foreign

investment companies (“PFICs”). A PFIC is any foreign corporation (with certain exceptions) that, in general, meets either

of the following tests: (1) at least 75% of its gross income for the taxable year is passive or (2) an average of at least 50% of its

assets produce, or are held for the production of, passive income. The determination whether a foreign corporation is a PFIC is a fact-intensive

determination that is based on various facts and circumstances and thus is subject to change, and the principles and methodology used

in determining whether a foreign corporation is a PFIC are subject to interpretation. Investors should be aware that the Fund may not

be able, at the time it acquires a foreign corporation’s shares, to ascertain whether the corporation is a PFIC and that a foreign

corporation may become a PFIC after the Fund acquires shares therein.

Under certain circumstances, the Fund will be subject

to federal income tax on a portion of any “excess distribution” it receives on the stock of a PFIC or of any gain on its disposition

of that stock (collectively, “PFIC income”), plus interest thereon, even if the Fund distributes the PFIC income as a dividend

to its shareholders. The balance of the PFIC income will be included in the Fund’s investment company taxable income and, accordingly,

will not be taxable to it to the extent it distributes that income to its shareholders. Fund distributions thereof will not be eligible

for the 20% maximum federal income tax rate on individuals’ “qualified dividend income.”

If the Fund invests in a PFIC and elects to treat

the PFIC as a qualified electing fund (“QEF”), then in lieu of the foregoing tax and interest obligation, the Fund would be

required to include in income each taxable year its pro rata share of the QEF’s annual ordinary earnings and net capital gain –

which the Fund likely would have to distribute to satisfy the Distribution Requirement and avoid imposition of the Excise Tax – even

if the QEF did not distribute those earnings and gain to the Fund. In most instances it will be very difficult, if not impossible, to

make this election because of certain requirements thereof.

The Fund may elect to “mark to market”

any stock in a PFIC it owns at the end of its taxable year. “Marking-to-market,” in this context, means including in gross

income each taxable year (and treating as ordinary income) the excess, if any, of the fair market value of the stock over the Fund’s

adjusted basis therein (including mark-to-market gain for each prior year for which an election was in effect) as of the end of that year.

Pursuant to the election, the Fund also may deduct (as an ordinary, not a capital, loss) the excess, if any, of its adjusted basis in

PFIC stock over the fair market value thereof as of the taxable year-end, but only to the extent of any net mark-to-market gains with

respect to that stock the Fund included in income for prior taxable years under the election; any such deduction would reduce the Fund’s

adjusted basis in the PFIC stock.

Pursuant to recently enacted legislation U.S. shareholders

of a PFIC must file an annual report containing information the Internal Revenue Service (“Service”) requires. The Service

has announced that it is developing guidance regarding those reporting obligations and, in the meantime, persons that were required to

file Form 8621 before the new section’s enactment must continue to file that form

as provided in the instructions thereto (e.g., on

disposition of PFIC stock or with respect to a QEF). The Fund may invest in units of Canadian royalty trusts. The tax consequences to

the Fund of an investment in such a trust depend on the trust’s classification for federal tax purposes, which generally is a corporation

or a partnership.

The Fund may invest in ownership units (i.e., limited

partnership interests) in MLPs, which generally are classified as partnerships for federal tax purposes. Most MLPs in which the Fund may

invest are expected to be QPTPs, all the net income from which (regardless of source) would be qualifying income to the Fund under the

Income Requirement, but the Fund’s investments therein generally may not exceed 25% of the value of its total assets. If the Fund

invests in an MLP that is not a QPTP, the net income the Fund earns therefrom would be treated as qualifying income under the Income Requirement

only to the extent it would be qualifying income if realized directly by the Fund in the same manner as realized by the MLP.

Taxation of the Fund’s Shareholders.

Dividends and other distributions declared by the Fund in October, November or December and paid to shareholders of record in such a month

during the following January will be treated as having been received by such shareholders on December 31 of the year in which the distributions

were declared.

If a shareholder sells Shares at a loss and acquires

other Shares (whether through purchase, the automatic reinvestment of distributions, if available, or otherwise) within 30 days before

or after the sale, all or part of that loss will not be deductible and instead will increase the basis in the newly purchased shares.

Any loss on the sale or exchange of Shares held for six months or less will be treated as long-term capital loss to the extent of any

capital gain distributions received on those Shares.

Investors should be aware that the price of Shares

at any time may reflect the amount of a forthcoming dividend or other distribution, so if they purchase Shares shortly before the record

date for a distribution, they will pay full price for the shares and receive some portion of the price back as a taxable distribution

even though it represents a partial return of invested capital.

A Fund shareholder who wants to use the average basis

method for determining basis in Fund shares he or she acquires after December 31, 2011 (“Covered Shares”), must elect to do

so in writing (which may be electronic). If a Fund shareholder fails to affirmatively elect the average basis method, then basis determination

will be made in accordance with the Fund’s default method, which might be a method other than average basis. If, however, the Fund’s

default method is average basis and a Fund shareholder wishes to use a different acceptable method for basis determination (e.g., a specific

identification method), the shareholder may elect to do so. The basis determination method a Fund shareholder elects may not be changed

with respect to a redemption of Covered Shares after the settlement date of the redemption.

In addition to the current requirement to report the

gross proceeds from the redemption of shares, the Fund (or its administrative agent) must report to the Service and furnish to its shareholders

the basis information for Covered Shares and indicate whether they had a short-term or long-term holding period. Fund shareholders should

consult with their tax advisors to determine the best Service-accepted basis determination method for their tax situation and to obtain

more information about how the basis reporting law will apply to them.

The Health Care Reform and Education Reconciliation

Act of 2010 requires an individual to pay a 3.8% tax on the lesser of (1) the individual’s “net investment income,”

which generally includes dividends, interest and net gains from the disposition of investment property (including certain dividends and

capital gain distributions paid by the Fund), or (2) the excess of the individual’s “modified

adjusted gross income” over a threshold amount

($250,000 for married persons filing jointly and $200,000 for single taxpayers), for taxable years beginning after December 31, 2012.

This tax is in addition to any other taxes due on that income. A similar tax will apply for those years to estates and trusts. Shareholders

should consult their own tax advisers regarding the effect, if any, this provision may have on their investment in Shares.

Distributions of ordinary income and net capital gains

may also be subject to state and local income taxes. Income dividends the Fund pays to a nonresident alien individual, foreign corporation

or partnership, or foreign trust or estate (each, a “Non-U.S. Shareholder”), other than (1) dividends paid to a Non-U.S. Shareholder

whose ownership of Shares is effectively connected with a trade or business within the United States the shareholder conducts (“effectively

connected”) and (2) capital gain distributions paid to a nonresident alien individual who is physically present in the United States

for no more than 182 days during the taxable year, generally will be subject to a federal withholding tax of 30% (or lower treaty rate).

A Non-U.S. Shareholder will generally not be subject

to federal withholding or income tax on gains, if any, realized on the sale of Shares unless (1) the gain is effectively connected or

(2) in the case of an individual shareholder, he or she is present in the United States for no more than 182 days during the taxable year

of the sale and certain other conditions are met. Gains on the sale of Shares and income dividends that are effectively connected will

generally be subject to federal income tax at regular income tax rates. Non-U.S. Shareholders are urged to consult their own tax advisors

concerning the applicability of federal income tax or withholding tax to their investment in the Fund.

The foregoing discussion is a summary only and is

not intended as a substitute for careful tax planning. Purchasers of Shares should consult their own tax advisors as to the tax consequences

of investing in Shares, including under federal, state, local and foreign tax laws. Finally, the foregoing discussion is based on applicable

provisions of the Internal Revenue Code and regulations, judicial authority and administrative interpretations in effect on the date hereof;

changes in any applicable authority, which often occur, could materially affect the conclusions discussed above.

Foreign Account Tax Compliance Act. Payments

to a shareholder that is either a foreign financial institution (“FFI”) or a non-financial foreign entity (“NFFE”)

within the meaning of the Foreign Account Tax Compliance Act (“FATCA”) may be subject to a generally nonrefundable 30% withholding

tax on: (a) income dividends paid by the Fund after June 30, 2014 and (b) certain capital gain distributions and the proceeds arising

from the sale of Fund shares paid by the Fund after December 31, 2016. FATCA withholding tax generally can be avoided: (a) by an FFI,

subject to any applicable intergovernmental agreement or other exemption, if it enters into a valid agreement with the IRS to, among other

requirements, report required information about certain direct and indirect ownership of foreign financial accounts held by U.S. persons

with the FFI and (b) by an NFFE, if it: (i) certifies that it has no substantial U.S. persons as owners or (ii) if it does have such owners,

reports information relating to them. The Fund may disclose the information that it receives from its shareholders to the IRS, non-U.S.

taxing authorities or other parties as necessary to comply with FATCA. Withholding also may be required if a foreign entity that is a

shareholder of the Fund fails to provide the Fund with appropriate certifications or other documentation concerning its status under FATCA.

Wholly Owned Subsidiary

The Fund invests a portion of its assets in its Subsidiary,

which will be classified as a corporation for U.S. federal income tax purposes. A foreign corporation, such as a Subsidiary, will generally

not be subject to U.S. federal income taxation unless it is deemed to be engaged in a U.S. trade or business. It is expected that the

Subsidiary will conduct its activities in a manner so as to meet the requirements of a safe harbor under Section 864(b)(2) of the Internal

Revenue Code (the “Safe Harbor”) pursuant to which the Subsidiary, provided it is not a dealer in stocks, securities or commodities,

may engage in the following activities without being deemed to be engaged in a U.S. trade or business: (1) trading in stocks or securities

(including contracts or options to buy or sell securities) for its own account; and (2) trading, for its own account, in commodities that

are “of a kind customarily dealt in on an organized commodity exchange” if the transaction is of a kind customarily consummated

at such place. Thus, the Subsidiary’s securities and futures trading activities should not constitute a U.S. trade or business.

However, if certain of the Subsidiary’s activities were determined not to be of the type described in the Safe Harbor or if the

Subsidiary’s gains are attributable to investments in securities that constitute U.S. real property interests (which is not expected),

then the activities of the Subsidiary may constitute a U.S. trade or business, or be taxed as such.

In general, a foreign corporation that does not conduct

a U.S. trade or business is nonetheless subject to tax at a flat rate of 30 percent (or lower tax treaty rate), generally payable through

withholding, on the gross amount of certain U.S.-source income that is not effectively connected with a U.S. trade or business. There

is presently no tax treaty in force between the U.S. and the Cayman Islands that would reduce this rate of withholding tax. Income subject

to such a flat tax includes dividends and certain interest income. The 30 percent tax does not apply to U.S.-source capital gains (whether

long-term or short-term) or to interest paid to a foreign corporation on its deposits with U.S. banks. The 30 percent tax also does not

apply to interest which qualifies as “portfolio interest.” The term “portfolio interest” generally includes interest

(including original issue discount) on an obligation in registered form which has been issued after July 18, 1984 and with respect to

which the person, who would otherwise be required to deduct and withhold the 30 percent tax, received the required statement that the

beneficial owner of the obligation is not a U.S. person within the meaning of the Internal Revenue Code. Under certain circumstances,

interest on bearer obligations may also be considered portfolio interest.

The Subsidiary is wholly-owned by the Fund. A U.S.

person who owns (directly, indirectly or constructively) 10 percent or more of the total combined voting power of all classes of stock

of a foreign corporation is a “U.S. Shareholder” for purposes of the controlled foreign corporation (“CFC”) provisions

of the Internal Revenue Code. A foreign corporation is a CFC if, on any day of its taxable year, more than 50 percent of the voting power

or value of its stock is owned (directly, indirectly or constructively) by “U.S. Shareholders.” Because the Fund is a U.S.

person that will own all of the stock of its Subsidiary, the Fund will be a “U.S. Shareholder” and its Subsidiary will be

a CFC. As a “U.S. Shareholder,” the Fund will be required to include in gross income for United States federal income tax

purposes all of its Subsidiary’s “subpart F income” (defined, in part, below), whether or not such income is distributed

by the Subsidiary. It is expected that all of the Subsidiary’s income will be “subpart F income.” “Subpart F income”

generally includes interest, original issue discount, dividends, net gains from the disposition of stocks or securities, receipts with

respect to securities loans and net payments received with respect to swaps and similar derivatives. “Subpart F income” also

includes the excess of gains over losses from transactions (including futures, forward and similar transactions) in any commodities. The

Fund’s recognition of the Subsidiary’s “subpart F income” will increase the Fund’s tax basis in the Subsidiary.

Distributions by the Subsidiary to the Fund will be tax-free, to the extent of its previously undistributed “subpart F income,”

and will correspondingly reduce the Fund’s tax basis in the Subsidiary. “Subpart F income” is generally treated as ordinary

income, regardless of the character of the Subsidiary’s underlying income.

In general, each “U.S. Shareholder” is

required to file IRS Form 5471 with its U.S. federal income tax (or information) returns providing information about its ownership of

a CFC and the CFC. In addition, a “U.S. Shareholder” may in certain circumstances be required to report a disposition of shares

in its Subsidiary by attaching IRS Form 5471 to its U.S. federal income tax (or information) return that it would normally file for the

taxable year in which the disposition occurs. In general, these filing requirements will apply to investors of a fund if the investor

is a U.S. person who owns directly, indirectly or constructively (within the meaning of Sections 958(a) and (b) of the Internal Revenue

Code) 10 percent or more of the total combined voting power of all classes of voting stock of a foreign corporation that is a CFC for

an uninterrupted period of 30 days or more during any tax year of the foreign corporation, and who owned that stock on the last day of

that year.

Dividends and Other Distributions

The following information supplements and should be

read in conjunction with the section in the Prospectus entitled “Dividends, Other Distributions and Taxes.”

General Policies. Ordinarily, dividends from

net investment income, if any, are declared and paid (monthly). Distributions of net realized securities gains, if any, generally are

declared and paid once a year, but the Trust may make distributions on a more frequent basis. The Trust reserves the right to declare

special distributions if, in its reasonable discretion, such action is necessary or advisable to preserve the status of the Fund as a

RIC or to avoid imposition of income or excise taxes on undistributed income. Dividends and other distributions on Shares are distributed,

as described below, on a pro rata basis to Beneficial Owners of the Shares. Dividend payments are made through DTC Participants and Indirect

Participants to Beneficial Owners then of record with proceeds received from the Fund.

Dividend Reinvestment Service. No reinvestment

service is provided by the Trust. Broker-dealers may make available the DTC book entry Dividend Reinvestment Service for use by Beneficial

Owners of the Fund for reinvestment of their dividend distributions. Beneficial Owners should contact their broker to determine the availability

and costs of the service and the details of participation therein. Brokers may require Beneficial Owners to adhere to specific procedures

and timetables.

INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

BBD, LLP, located at 1835 Market Street, 3rd

Floor, Philadelphia, PA 19103 serves as the Fund’s independent registered public accounting firm providing services including (1)

audit of annual financial statements, and (2) assistance and consultation in connection with SEC filings.

LEGAL COUNSEL

Thompson Hine LLP, located at 41 South High Street,

Suite 1700, Columbus, OH 43215, serves as the Trust’s legal counsel.

FINANCIAL STATEMENTS

The Fund has not yet commenced operations and, therefore,

has not produced financial statements. When issued, you may obtain a copy of the Fund’s annual report or semi-annual report without

charge by calling 1-877-277-6933, or by visiting the Fund’s website at www.ArrowFunds.com.

APPENDIX A

PROXY VOTING POLICIES AND PROCEDURES

OF ARROW INVESTMENT ADVISORS, LLC

Arrow Investment Advisors, LLC (“Arrow”)

votes (or refrains from voting) proxies for a client in a manner that Arrow, in the exercise of its independent business judgment, concludes

are in the best economic interests of such client. In some cases, Arrow may determine that it is in the best economic interests of a client

to refrain from exercising the fund’s proxy voting rights (such as, for example, proxies on certain non-U.S. securities that might

impose costly or time-consuming in-person voting requirements). With regard to the relationship between securities lending and proxy voting,

Arrow’s approach is also driven by our clients’ economic interests. The evaluation of the economic desirability of recalling

loans involves balancing the revenue producing value of loans against the likely economic value of casting votes. Based on our evaluation

of this relationship, we believe that the likely economic value of casting a vote generally is less than the securities lending income,

either because the votes will not have significant economic consequences or because the outcome of the vote would not be affected by Arrow

recalling loaned securities in order to ensure they are voted. Periodically, Arrow analyzes the process and benefits of voting proxies

for securities on loan, and will consider whether any modification of its proxy voting policies or procedures are necessary in light of

any regulatory changes. Arrow will normally vote on specific proxy issues in accordance with its proxy voting guidelines. Arrow’s

proxy voting guidelines provide detailed guidance as to how to vote proxies on certain important or commonly raised issues. Arrow may,

in the exercise of its business judgment, conclude that the proxy voting guidelines do not cover the specific matter upon which a proxy

vote is requested, or that an exception to the proxy voting guidelines would be in the best economic interests of a client. Arrow votes

(or refrains from voting) proxies without regard to the relationship of the issuer of the proxy (or any shareholder of such issuer) to

the client, the client’s affiliates (if any), Arrow or Arrow’s affiliates. When voting proxies, Arrow attempts to encourage

companies to follow practices that enhance shareholder value and increase transparency and allow the market to place a proper value on

their assets. With respect to certain specific issues:

·Arrow generally supports the board’s

nominees in the election of directors and generally supports proposals that strengthen the independence of boards of directors;

·Arrow generally does not support proposals

on social issues that lack a demonstrable economic benefit to the issuer and a Fund investing in such issuer; and

·Arrow generally votes against anti-takeover

proposals and proposals that would create additional barriers or costs to corporate transactions that are likely to deliver a premium

to shareholders.

When Arrow exercises voting rights, by proxy

or otherwise, with respect to investment companies owned by the funds, Arrow will vote the shares held by the client in the same proportion

as the votes of all other holders of such security.

Arrow may conclude that the best interest of

the firm’s client requires that a proxy be voted in a manner that differs from the predetermined proxy voting policy. In this situation,

Arrow may vote the proxy other than according to such policy.

Information with respect to how Arrow voted

Fund proxies relating to portfolio securities during the most recent 12-month period is available: (i) without charge, upon request, by

calling 1-877-277-6933 or through the Fund’s website at www.ArrowFunds.com and (ii) on the SEC’s website at www.sec.gov.

APPENDIX B

The Nationally Recognized Statistical Rating Organizations

(individually, an “NRSROs”) that may be utilized by the Advisor with regard to portfolio investments for the Fund include

Moody’s Investors Service, Inc. (“Moody’s”), Standard & Poor’s Ratings Services (“S&P”),

and Fitch Investors Service, Inc. (“Fitch”). Set forth below is a description of the relevant ratings of each such NRSRO.

The NRSROs that may be utilized by the Advisor and the description of each NRSRO’s ratings is as of the date of this SAI, and may

subsequently change.

PART C

OTHER INFORMATION

Item 28. EXHIBITS.