ck0001592900-20230731
Altrius
Global Dividend ETF
Ticker
Symbol: DIVD
Prospectus
November 30,
2023
Listed
on The Nasdaq Stock Market®
These
securities have not been approved or disapproved by the Securities and Exchange
Commission nor has the Securities and Exchange Commission passed upon the
accuracy or adequacy of this Prospectus. Any representation to the contrary is a
criminal offense.
ALTRIUS
GLOBAL
DIVIDEND
ETF
INVESTMENT
OBJECTIVE
Altrius Global Dividend ETF (the
“Fund”) seeks long-term capital growth of capital and
income.
FEES
AND
EXPENSES
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund (“Shares”). You may also pay brokerage commissions on
the purchase and sale of Shares, which are not reflected in the table or
example.
ANNUAL
FUND
OPERATING
EXPENSES
(EXPENSES
THAT YOU PAY EACH YEAR AS A PERCENTAGE OF THE VALUE OF YOUR
INVESTMENT)1
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Management
Fee1 |
0.49 |
% |
Distribution
and/or Service (12b-1) Fees |
None |
Other
Expenses |
0.00 |
% |
Total
Annual Fund Operating Expenses |
0.49 |
% |
1.The Fund’s
investment advisory agreement provides that the Fund’s investment adviser will
pay substantially all expenses of the Fund, except for the fee payment under the
Fund’s Investment Advisory Agreement, payments under the Fund’s Rule 12b-1
Distribution and Service Plan, brokerage expenses, acquired fund fees and
expenses, taxes, interest (including borrowing costs), litigation expense and
other non-routine or extraordinary expenses. Additionally, the Fund shall be
responsible for its non-operating expenses, and fees and expenses associated
with the Fund’s securities lending program, if
applicable.
EXAMPLE
The following example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other funds. The example
assumes that you invest $10,000 for the time periods indicated and then redeem
all of your Shares at the end of those periods. The example also assumes that
the Fund provides a return of 5% a year and that operating expenses remain the
same. You may also pay brokerage commissions on the purchase and sale of Shares,
which are not reflected in the example. Although your actual
costs may be higher or lower, based on these assumptions your costs would
be:
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One
Year: |
Three
Years: |
Five
Years: |
Ten
Years: |
$50 |
$157 |
$274 |
$616 |
PORTFOLIO
TURNOVER
The
Fund may pay transaction costs, including 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 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. For the
fiscal period ended July 31, 2023, the portfolio turnover rate for the Fund was
13% of the average
value of its portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
To
pursue its objective, the Fund will invest at least 90% of its net assets, plus
the amount of any borrowings for investment purposes, in dividend-paying equity
securities. The principal type of equity security in which the Fund will invest
is common stock. The Fund invests primarily in the securities of issuers that
the Sub-Adviser believes to have attractive valuations, potential for long-term
growth, sustainable dividends, and other attractive financial characteristics.
The Fund’s portfolio is composed of approximately 45 to 100 stocks (including
American Depositary Receipts or “ADRs”). Under normal market conditions, at
least 30% of the Fund’s assets will be invested outside the United States. The
majority of the stocks normally will have market capitalizations greater than $1
billion at the time of purchase by the Fund.
The
Fund intends to diversify its investments across different countries, and the
percentage of the Fund’s assets invested in particular countries or regions will
change from time to time based on the Sub-Adviser’s judgment (as described
below). The Fund intends to invest in the securities of companies located in
developed countries and, to a lesser extent, those located in emerging markets.
The Fund may consider investments in companies in any of the world’s developed
stock markets, such as the United States or the United Kingdom and stock markets
in the European Union or Asia Pacific. The Fund may invest up to 20% of the
Fund’s total assets in emerging market companies, however it is expected that
emerging market investments will generally be less than 5% of the
portfolio.
The
Sub-Adviser employs the following three-step approach starting with a global
macro (top down) approach, further refined by bottom-up value investment
analysis, and finalized by the selection of companies that have been paying and
show a commitment, to increasing their dividend.
Step
1: The Sub-Adviser first considers its global macro views and identifies sectors
consistent with those views based on positive demographics and durable
businesses (as defined by the issuer’s market capitalization) with an emphasis
on demand changes. Positive demographics include developed, stabilized and
growing economies, which are evaluated based on national GDP growth. Sectors are
selected based on the Sub-Adviser’s global macro views of the sectors that it
believes will benefit from global macro conditions over a minimum of the next
five years.
Once
the global macro sectors are identified, individual securities are evaluated
based on their total return (projected dividends plus anticipated capital
appreciation), and then evaluated through fundamental analysis.
Step
2: From a total return perspective, the Sub-Adviser identifies all sources of a
company’s returns, including dividends, which are often overlooked by investors,
dividend growth and expected capital appreciation. The Sub-Adviser seeks to
identify companies that pay higher than average dividends as compared to the
S&P 500 Index or MSCI EAFE Index, and companies that have generally
increased their dividends over the last 15 years. The Sub-Adviser considers a
company’s balance sheet and cashflow statements to determine how a company has
historically grown earnings and how the earnings growth has impacted future
dividend payment. The Sub-Adviser may also invest in companies that have shorter
histories of dividends if such dividends are stable.
Step
3: From a value perspective the Sub-Adviser focuses on above average yielding,
durable businesses that it believes are trading below their intrinsic value. The
Sub-Adviser in particular considers businesses that have price to cash flow and
price to earnings ratios generally below 15x. The Sub-Adviser defines value in
three subcategories; (1) classic value – companies selling at valuations
relative to their earning power, (2) persistent earners – well established
companies that have dependable revenue growth, reliable earnings, and a history
(generally over 15 years) of healthy dividend appreciation, and (3)
distressed/contrarian – companies that are selling at significant discounts to
their intrinsic value due to market inefficiencies driven by irrational sell
offs.
The
Fund is diversified by issuer, industry, and country. The Fund is further
diversified in that at least 75% of its total net assets will be invested in
companies that each represent less than 5% of the Fund’s total net assets. In
addition, the Sub-Adviser will periodically rebalance its holdings, based on the
performance of each security, at which time no one portfolio asset will
represent more than 10% of the Fund’s total net assets. The Fund may also invest
up to 10% of its assets in cash and cash equivalents as well as securities and
other instruments.
The
Sub-Adviser will generally sell a portfolio investment if an issuer cuts or
eliminates its dividend, a company’s valuation exceeds certain metrics, such as
the Sub-Adviser’s price targets, price to earnings and/or price to cash flow,
which make the security, in the Sub-Adviser’s view,
overvalued.
PRINCIPAL
RISKS
An
investment in the Fund involves risk, including those described below.
There
is no assurance that the Fund will achieve its investment objective.
An
investor may lose money by investing in the Fund. An investment in
the Fund is not a bank deposit and is not insured or guaranteed by the FDIC or
any government agency. More complete risk descriptions are set
forth below under the heading “Additional
Information About the Fund’s Principal Risks”.
Dividend-Paying
Common Equity Security Risk. In
selecting common equity securities in which the Fund will invest, the
Sub-Adviser will consider the issuer’s history of paying regular periodic
dividends to its common equity holders. Such dividends are not fixed but are
paid periodically at the discretion of the issuer’s board of directors.
Companies that have historically paid dividends are not required to continue to
pay dividends and could reduce or eliminate the payment of dividends in the
future.
Growth
Stock Investment Risk. Growth-oriented
common stocks may involve larger price swings and greater potential for loss
than other types of investments. Growth stocks tend to trade at a premium when
analyzed using traditional valuation metrics such as price-to-earnings ratio and
price-to-book ratio. Due to this premium valuation, growth stocks tend to be
more susceptible to big price swings. In bull markets, they tend to rise at a
much faster pace than the overall market, and they tend to decline at a more
rapid rate in bear markets.
Value
Investing Risk. The
Sub-Adviser may be wrong in its assessment of a company’s value, and the stocks
the Fund owns may not reach what the Sub-Adviser believes are their true or
intrinsic values. The market may not favor value-oriented stocks and may not
favor equities at all, which may cause the Fund’s relative performance to
suffer.
There
may be periods during which the Fund is unable to find securities that meet its
value investment criteria. If the Fund is selling investments or experiencing
net subscriptions during those periods, the Fund could have a significant cash
position, which could adversely impact the Fund’s performance under certain
market conditions and could make it more difficult for the Fund to achieve its
investment objective.
Depositary
Receipts.
In addition to the risk of foreign investments applicable to the underlying
securities, unsponsored depositary receipts may also be subject to the risks
that the foreign issuer may not be obligated to cooperate with the U.S.
depository, may not provide additional financial and other information to the
depository or the investor, or that such information in the U.S. market may not
be current.
Foreign
Investment Risk. Returns
on investments in foreign securities could be more volatile than, or trail the
returns on, investments in U.S. securities. Investments in or exposures to
foreign securities are subject to special risks, including risks associated with
foreign securities generally. Those special risks may arise due to differences
in information available about issuers of securities and investor protection
standards applicable in other jurisdictions; capital controls risks, including
the risk of a foreign jurisdiction imposing restrictions on the ability to
repatriate or transfer currency or other assets; currency risks; political,
diplomatic and economic risks; regulatory risks; and foreign market and trading
risks, including the costs of trading and risks of settlement in foreign
jurisdictions.
Emerging
Markets Risk.
The Fund may invest in companies organized in emerging market nations.
Investments in securities and instruments traded in developing or emerging
markets, or that provide exposure to those securities or markets, can involve
additional risks relating to political, economic, or regulatory conditions not
associated with investments in U.S. securities and instruments or investments in
more developed international markets. Those conditions may impact the ability of
the Fund to buy, sell or otherwise transfer securities, adversely affect the
trading market and price for Fund shares and cause the Fund to decline in
value.
Small-
and Mid-Capitalization Company Risk. Investing
in securities of small- and mid-capitalization companies involves greater risk
than customarily is associated with investing in larger, more established
companies. These companies’ securities may be more volatile and less liquid than
those of more established companies. Often small- and mid-capitalization
companies and the industries in which they focus are still evolving and, as a
result, they may be more sensitive to changing market
conditions.
Investment
Risk. When
you sell your Shares of the Fund, they could be worth less than what you paid
for them. The Fund could lose money due to short-term market movements and over
longer periods during market downturns. Securities may decline in value due to
factors affecting securities markets generally or particular
asset classes or industries represented in the markets. The value of a
security may decline due to general market conditions, economic trends or events
that are not specifically related to the issuer of the security or to factors
that affect a particular industry or group of industries. During a general
downturn in the securities markets, multiple asset classes may be negatively
affected. Therefore, you may lose money by investing in the
Fund.
Equity
Investing Risk. An
investment in the Fund involves risks similar to those of investing in any fund
holding equity securities, such as market fluctuations, changes in interest
rates and perceived trends in stock prices. The values of equity securities
could decline generally or could underperform other investments. In addition,
securities may decline in value due to factors affecting a specific issuer,
market or securities markets generally.
Management
Risk.
The Fund is actively managed and may not meet its investment objective based on
the Adviser’s or Sub-Adviser’s success or failure to implement investment
strategies for the Fund. The Sub-Adviser’s evaluations and assumptions regarding
investments may not successfully achieve the Fund’s investment objective given
actual market trends. In addition, there is the risk that the Sub-Adviser’s
investment process, techniques and analyses will not produce the desired
investment results and the Fund may lose value as a result. Absent unusual
circumstances (e.g., the Adviser determines a different security has higher
liquidity but offers a similar investment profile as a recommended security),
the Adviser will generally follow Sub-Adviser’s investment recommendations to
buy, hold, and sell securities and financial instruments. However, the Adviser
may deviate from Sub-Adviser recommendations due to a clear error in a
particular recommendation, compliance concerns (e.g., concentration limits),
liquidity concerns, authorized participant-related concerns, or due to
regulatory requirements.
ETF
Risks
•Authorized
Participants, Market Makers and Liquidity Providers Concentration
Risk.
The Fund has a limited number of financial institutions that may act as
Authorized Participants (“APs”). In addition, there may be a limited number of
market makers and/or liquidity providers in the marketplace. To the extent
either of the following events occur, Shares may trade at a material discount to
NAV and possibly face delisting: (i) APs exit the business or otherwise become
unable to process creation and/or redemption orders and no other APs step
forward to perform these services, or (ii) market makers and/or liquidity
providers exit the business or significantly reduce their business activities
and no other entities step forward to perform their
functions.
•Premium-Discount
Risk.
The Shares may trade above or below their net asset value (“NAV”). The market
prices of Shares will generally fluctuate in accordance with changes in NAV as
well as the relative supply of, and demand for, Shares on the The Nasdaq Stock
Market® (the “Exchange”) or other securities exchanges. The existence of
significant market volatility, disruptions to creations and redemptions, or
potential lack of an active trading market for Fund Shares (including through a
trading halt), among other factors, may result in the Shares trading
significantly above (at a premium) or below (at a discount) to NAV. If you buy
Fund Shares when their market price is at a premium or sell the Fund Shares when
their market price is at a discount, you may pay more than, or receive less
than, NAV, respectively.
•Cost
of Trading Risk. Investors
buying or selling Shares in the secondary market will pay brokerage commissions
or other charges imposed by brokers as determined by that broker. Brokerage
commissions are often a fixed amount and may be a significant proportional cost
for investors seeking to buy or sell relatively small amounts of
Shares.
•Trading
Risk. Although
the Shares are listed on the Exchange, there can be no assurance that an active
or liquid trading market for them will develop or be maintained. In addition,
trading in Shares on the Exchange may be halted. In stressed market conditions,
the liquidity of the Fund’s Shares may begin to mirror the liquidity of its
underlying portfolio holdings, which can be significantly less liquid than the
Fund’s Shares, potentially causing the market price of the Fund’s Shares to
deviate from its NAV. When buying or selling Shares of the Fund in the secondary
market, you will likely incur brokerage commission or other charges. In
addition, you may incur the cost of the “spread” also known as the bid-ask
spread, which is the difference between what investors are willing to pay for
Fund Shares (the “bid” price) and the price at which they are willing to sell
Fund Shares (the “ask” price). The bid-ask spread varies over time based on,
among other things, trading volume, market liquidity and market
volatility. Because of the costs inherent
in buying or selling Fund Shares, frequent trading may detract significantly
from investment results and an investment in Fund Shares may not be advisable
for investors who anticipate regularly making small investments due to the
associated trading costs.
New
Fund Risk. The
Fund is a recently organized management investment company with limited
operating history. As a result, prospective investors have a limited track
record or history on which to base their investment decision. There can be no
assurance that the Fund will grow to or maintain an economically viable
size.
Geopolitical/Natural
Disaster Risks. The
Fund’s investments are subject to geopolitical and natural disaster risks, such
as war, terrorism, trade disputes, political or economic dysfunction within some
nations, public health crises and related geopolitical events, as well as
environmental disasters, epidemics and/or pandemics, which may add to
instability in world economies and volatility in markets. The impact may be
short-term or may last for extended periods.
PERFORMANCE
Performance information is not provided below
because the Fund has not yet been in operation for one full calendar
year. When provided, the information will provide some
indication of the risks of investing in the Fund by showing how the Fund’s
average annual returns compare with a broad measure of market performance.
Past performance does not
necessarily indicate how the Fund will perform in the future.
Performance information is available on the Fund’s website at www.altriusfunds.com
or by calling the Fund at (215)
882-9983.
INVESTMENT
ADVISER
& INVESTMENT
SUB-ADVISER
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Investment
Adviser: |
Empowered
Funds, LLC dba EA Advisers (“Adviser”) |
Investment
Sub-Adviser: |
Altrius
Capital Management, Inc. (“Sub-Adviser”) |
PORTFOLIO
MANAGERS
James
M. Russo, Founder and Chief Investment Strategist of the Sub-Adviser, and Anu
Prabhu, CFA, Portfolio Manager of the Sub-Adviser, are jointly and primarily
responsible for the day-to-day management of the Fund. Mr. Russo has served as a
portfolio manager of the Fund since September 2022; Ms. Prabhu has served as a
portfolio manager of the Fund since May 2023.
Mr.
Russo and Ms. Prabhu provide their recommendations to Messrs. Richard Shaner and
Wm. Joshua Russell, Portfolio Managers of the Adviser. Mr. Shaner has served as
a portfolio manager of the Fund since September 2022; Mr. Russell has served as
portfolio manager of the Fund since January 2023.
SUMMARY
INFORMATION
ABOUT
PURCHASES,
SALES,
TAXES,
AND
FINANCIAL
INTERMEDIARY
COMPENSATION
PURCHASE
AND
SALE
OF
FUND
SHARES
The
Fund issues and redeems Shares on a continuous basis only in large blocks of
Shares, typically 10,000 Shares, called “Creation Units,” and only APs
(typically, broker-dealers) may purchase or redeem Creation Units. Creation
Units generally are issued and redeemed ‘in-kind’ for securities and partially
in cash. Individual Shares may only be purchased and sold in secondary market
transactions through brokers. Once created, individual Shares generally trade in
the secondary market at market prices that change throughout the day. Market
prices of Shares may be greater or less than their NAV. Except
when aggregated in Creation Units, the Fund’s shares are not redeemable
securities.
TAX
INFORMATION
The
Fund’s distributions generally are taxable to you as ordinary income, capital
gain, or some combination of both, unless your investment is in an Individual
Retirement Account (“IRA”) or other tax-advantaged account. However, subsequent
withdrawals from such a tax-advantaged account may be subject to federal income
tax. You should consult your tax advisor about your specific tax
situation.
PURCHASES
THROUGH
BROKER-DEALERS
AND
OTHER
FINANCIAL
INTERMEDIARIES
If
you purchase Shares through a broker-dealer or other financial intermediary, 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 Shares over another investment. Ask your salesperson or visit your
financial intermediary’s website for more information.
ADDITIONAL
INFORMATION
ABOUT
THE
FUND
How
is the Fund Different from a Mutual Fund?
Redeemability.
Mutual
fund shares may be bought from, and redeemed with, the issuing fund for cash at
NAV typically calculated once at the end of the business day. Shares of the
Fund, by contrast, cannot be purchased from or redeemed with the Fund except by
or through APs (typically, broker-dealers), and then principally for an in-kind
basket of securities (and a limited cash amount). In addition, the Fund issues
and redeems Shares on a continuous basis only in large blocks of Shares,
typically 10,000 Shares, called “Creation Units.”
Exchange
Listing. Unlike
mutual fund shares, Shares of the Fund will be listed for trading on the
Exchange. Investors can purchase and sell Shares on the secondary market through
a broker. 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. Secondary-market transactions do not occur at NAV, but
at market prices that change throughout the day, based on the supply of, and
demand for, Shares and on changes in the prices of the Fund’s portfolio
holdings. The market price of Shares may differ from the NAV of the Fund. The
difference between market price of Shares and the NAV of the Fund is called a
premium when the market price is above the reported NAV and called a discount
when the market price is below the reported NAV, and the difference is expected
to be small most of the time, though it may be significant, especially in times
of extreme market volatility.
Tax
Treatment. The
Fund and the Shares have been designed to be tax-efficient. Specifically, the
in-kind creation and redemption feature has been designed to protect Fund
shareholders from adverse tax consequences applicable to non-ETF registered
investment companies as a result of cash transactions in the non-ETF registered
investment company’s shares, including cash redemptions. Nevertheless, to the
extent redemptions from the Fund are paid in cash, the Fund may realize capital
gains or losses, including in some cases short-term capital gains, upon the sale
of portfolio securities to generate the cash to satisfy the
redemption.
Transparency.
The
Fund’s portfolio holdings are disclosed on its website daily after the close of
trading on the Exchange and prior to the opening of trading on the Exchange the
following day. A 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”).
Premium/Discount
Information. Information
about the premiums and discounts at which the Fund’s Shares have traded is
available at www.altriusfunds.com.
ADDITIONAL
INFORMATION
ABOUT
THE
FUND’S
INVESTMENT
OBJECTIVE
AND
PRINCIPAL
STRATEGIES
The
Fund is an actively managed ETF that is designed to provide capital appreciation
and income by identifying dividend paying companies with attractive valuations
and other financial characteristics. Altrius Capital Management, Inc. (the
“Sub-Adviser”) is responsible for the Fund’s security investment
recommendations. The Sub-Adviser acts as a non-discretionary sub-adviser and
provides its investment recommendations to Empowered Funds, LLC dba EA Advisers
(the “Adviser”). In turn, the Adviser makes the corresponding
trades.
To
pursue its objective, the Fund will invest at least 90% of its net assets, plus
the amount of any borrowings for investment purposes, in dividend-paying equity
securities. The principal type of equity security in which the Fund will invest
is common stock. The Fund invests primarily in the securities of issuers that
the Sub-Adviser believes to have attractive valuations, potential for long-term
growth, sustainable dividends, and other attractive financial characteristics.
The Fund’s portfolio is composed of approximately 45 to 100 stocks (including
American Depositary Receipts or “ADRs”). Under normal market conditions, at
least 30% of the Fund’s assets will be invested outside the United States. The
majority of the stocks normally will have market capitalizations greater than $1
billion at the time of purchase by the Fund.
The
Fund intends to diversify its investments across different countries, and the
percentage of the Fund’s assets invested in particular countries or regions will
change from time to time based on the Sub-Adviser’s judgment (as described
below). The Fund intends to invest in the securities of companies located in
developed countries and, to a lesser extent, those located in emerging markets.
The Fund may consider investments in companies in any of the world’s developed
stock markets, such as the United States or the United Kingdom and stock markets
in the European Union or Asia Pacific. The Fund may invest up to 20% of the
Fund’s total assets in emerging
market
companies, however it is expected that emerging market investments will
generally be less than 5% of the portfolio.
The
Sub-Adviser employs the following three-step approach starting with a global
macro (top down) approach, further refined by bottom-up value investment
analysis, and finalized by the selection of companies that have been paying and
show a commitment, to increasing their dividend.
Step
1: The Sub-Adviser first considers its global macro views and identifies sectors
consistent with those views based on positive demographics and durable
businesses (as defined by the issuer’s market capitalization) with an emphasis
on demand changes. Positive demographics include developed, stabilized and
growing economies, which are evaluated based on national GDP growth. Sectors are
selected based on the Sub-Adviser’s global macro views of the sectors that it
believes will benefit from global macro conditions over a minimum of the next
five years.
Once
the global macro sectors are identified, individual securities are evaluated
based on their total return (projected dividends plus anticipated capital
appreciation), and then evaluated through fundamental analysis.
Step
2: From a total return perspective, the Sub-Adviser identifies all sources of a
company’s returns, including dividends, which are often overlooked by investors,
dividend growth and expected capital appreciation. The Sub-Adviser seeks to
identify companies that pay higher than average dividends as compared to the
S&P 500 Index or MSCI EAFE Index, and companies that have generally
increased their dividends over the last 15 years. The Sub-Adviser considers a
company’s balance sheet and cashflow statements to determine how a company has
historically grown earnings and how the earnings growth has impacted future
dividend payment. The Sub-Adviser may also invest in companies that have shorter
histories of dividends if such dividends are stable.
Step
3: From a value perspective the Sub-Adviser focuses on above average yielding,
durable businesses that it believes are trading below their intrinsic value. The
Sub-Adviser in particular considers businesses that have price to cash flow and
price to earnings ratios generally below 15x. The Sub-Adviser defines value in
three subcategories; (1) classic value – companies selling at valuations
relative to their earning power, (2) persistent earners – well established
companies that have dependable revenue growth, reliable earnings, and a history
(generally over 15 years) of healthy dividend appreciation, and (3)
distressed/contrarian – companies that are selling at significant discounts to
their intrinsic value due to market inefficiencies driven by irrational sell
offs.
The
Fund is diversified by issuer, industry, and country. The Fund is further
diversified in that at least 75% of its total net assets will be invested in
companies that each represent less than 5% of the Fund’s total net assets. In
addition, the Sub-Adviser will periodically rebalance its holdings, based on the
performance of each security, at which time no one portfolio asset will
represent more than 10% of the Fund’s total net assets. The Fund may also invest
up to 10% of its assets in cash and cash equivalents as well as securities and
other instruments.
The
Sub-Adviser will generally sell a portfolio investment if an issuer cuts or
eliminates its dividend, a company’s valuation exceeds certain metrics, such as
the Sub-Adviser’s price targets, price to earnings and/or price to cash flow,
which make the security, in the Sub-Adviser’s view, overvalued.
ADDITIONAL
INFORMATION
ABOUT
THE
FUND’S
PRINCIPAL
RISKS
The
following information is in addition to, and should be read along with, the
description of the Fund’s principal investment risks in the sections titled
“Fund Summary—Principal Investment Risks” above.
Dividend-Paying
Common Equity Security Risk.
The Fund will normally receive income from dividends that are paid by issuers of
the Fund’s investments. The amount of the dividend payments may vary and depends
on performance and decisions of the issuer. Poor performance by the issuer or
other factors may cause the issuer to lower or eliminate dividend payments to
investors, including the Fund. Additionally, these types of securities may fall
out of favor with investors and underperform the broader market. Depending upon
market conditions, dividend-paying securities that meet the Fund’s investment
criteria may not be widely available or may be highly concentrated in only a few
market sectors.
Emerging
Markets Risk. Investments
in securities and instruments traded in developing or emerging markets, or that
provide exposure to those securities or markets, can involve additional risks
relating to political, economic, or regulatory conditions not associated with
investments in U.S. securities and instruments. For example, developing and
emerging markets may be subject to (i) greater market volatility, (ii) lower
trading
volume
and liquidity, (iii) greater social, political and economic uncertainty, (iv)
governmental controls on foreign investments and limitations on repatriation of
invested capital, (v) lower disclosure, corporate governance, auditing and
financial reporting standards, (vi) fewer protections of property rights, (vii)
restrictions on the transfer of securities or currency, and (viii) settlement
and trading practices that differ from those in U.S. markets. Each of these
factors may impact the ability of the Fund to buy, sell or otherwise transfer
securities, adversely affect the trading market and price for Shares and cause
the Fund to decline in value.
Equity
Investing Risk. An
investment in the Fund involves risks similar to those of investing in any fund
holding equity securities, such as market fluctuations, changes in interest
rates and perceived trends in stock prices. The values of equity securities
could decline generally or could underperform other investments. Different types
of equity securities tend to go through cycles of outperformance and
underperformance in comparison to the general securities markets. In addition,
securities may decline in value due to factors affecting a specific issuer,
market or securities markets generally. Recent turbulence in financial markets
and reduced liquidity in credit and fixed income markets may negatively affect
many issuers worldwide, which may have an adverse effect on the
Fund.
ETF
Risks.
•APs,
Market Makers, and Liquidity Providers Concentration Risk.
The Fund has a limited number of financial institutions that may act as APs. In
addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace. To the extent either of the following events
occur, Shares may trade at a material discount to NAV and possibly face
delisting: (i) APs exit the business or otherwise become unable to process
creation and/or redemption orders and no other APs step forward to perform these
services, or (ii) market makers and/or liquidity providers exit the business or
significantly reduce their business activities and no other entities step
forward to perform their functions.
•Cost
of Trading Risk. Investors
buying or selling Shares in the secondary market pay brokerage commissions or
other charges imposed by brokers as determined by that broker. Brokerage
commissions are often a fixed amount and may be a significant proportional cost
for investors seeking to buy or sell relatively small amounts of Shares. In
addition, secondary market investors also incur the cost of the difference
between the price that an investor is willing to pay for Shares (the “bid”
price) and the price at which an investor is willing to sell Shares (the “ask”
price). This difference in bid and ask prices is often referred to as the
“spread” or “bid/ask spread.” The bid/ask spread varies over time for Shares
based on trading volume and market liquidity, and is generally lower if the
Fund’s Shares have more trading volume and market liquidity and higher if the
Fund’s Shares have little trading volume and market liquidity. Further,
increased market volatility may cause increased bid/ask spreads.
•Premium-Discount
Risk. The
Shares may trade above or below their NAV. The NAV of the Fund will generally
fluctuate with changes in the market value of the Fund’s holdings. The market
prices of Shares, however, will generally fluctuate in accordance with changes
in NAV as well as the relative supply of, and demand for, Shares on the Exchange
and other securities exchanges. The existence of significant market volatility,
disruptions to creations and redemptions, or potential lack of an active trading
market for Fund Shares (including through a trading halt), among other factors,
may result in the Shares trading significantly above (at a premium) or below (at
a discount) to NAV. If you buy Fund Shares when their market price is at a
premium or sell the Fund Shares when their market price is at a discount, you
may pay more than, or receive less than, NAV, respectively. The Adviser cannot
predict whether Shares will trade below, at or above their NAV. Price
differences may be due, in large part, to the fact that supply and demand forces
at work in the secondary trading market for Shares will be closely related to,
but not identical to, the same forces influencing the prices of the securities
held by the Fund. However, given that Shares can be purchased and redeemed in
large blocks of Shares, called Creation Units (unlike shares of closed-end
funds, which frequently trade at appreciable discounts from, and sometimes at
premiums to, their NAV), and the Fund’s portfolio holdings are fully disclosed
on a daily basis, the Adviser believes that large discounts or premiums to the
NAV of Shares should not be sustained, but that may not be the
case.
•Trading
Risk. Although
the Shares are listed on the Exchange, there can be no assurance that an active
or liquid trading market for them will be maintained. In addition, 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. Further, trading in Shares on the Exchange is subject to
trading halts caused by extraordinary market volatility pursuant to the Exchange
“circuit breaker” rules, which temporarily halt trading on the Exchange when a
decline in the S&P 500 Index during a single day reaches certain thresholds
(e.g., 7%, 13% and 20%). There can be no assurance that the requirements of the
Exchange necessary to maintain the listing of the Fund will continue to be met
or will remain unchanged. When buying or selling Shares of the Fund in the
secondary market, you will likely incur brokerage commission or other charges.
In addition, you may incur the cost of the “spread” also known as the bid-ask
spread, which is the difference between what investors are willing to pay for
Fund Shares (the “bid” price) and the price at which they are willing to sell
Fund Shares (the “ask” price). The bid-ask spread varies over time based on,
among other things, trading volume, market liquidity and market volatility.
Because of the costs inherent in buying or selling Fund Shares, frequent trading
may detract significantly from investment results and an investment in Fund
Shares may not be advisable for investors who anticipate regularly making small
investments due to the associated trading costs.
Foreign
Investment Risk.
The Fund may invest in foreign securities, including non-U.S. dollar-denominated
securities traded outside of the United States and U.S. dollar-denominated
securities of foreign issuers traded in the United States. Returns on
investments in foreign securities could be more volatile than, or trail the
returns on, investments in U.S. securities. Investments in foreign securities,
including investments in American Depositary Receipts (ADRs), European
Depositary Receipts (EDRs) and Global Depositary Receipts (GDRs), are subject to
special risks, including the following:
•Foreign
Securities Risk.
Investments in non-U.S. securities involve risks that may not be present with
investments in U.S. securities. For example, investments in non-U.S. securities
may be subject to risk of loss due to foreign currency fluctuations or to
political or economic instability. There may be less information publicly
available about a non-U.S. issuer than a U.S. issuer. Non-U.S. issuers may be
subject to different accounting, auditing, financial reporting and investor
protection standards than U.S. issuers. Changes to the financial condition or
credit rating of foreign issuers may also adversely affect the value of the
Fund’s securities. Investments in non-U.S. securities may be subject to
withholding or other taxes and may be subject to additional trading, settlement,
custodial, and operational risks. Because legal systems differ, there is also
the possibility that it will be difficult to obtain or enforce legal judgments
in some countries. Since foreign exchanges may be open on days when the Fund
does not price its Shares, the value of the securities in the Fund’s portfolio
may change on days when shareholders will not be able to purchase or sell the
Fund’s Shares. Conversely, Shares may trade on days when foreign exchanges are
closed. Investment in foreign securities may involve higher costs than
investment in U.S. securities, including higher transaction and custody costs as
well as the imposition of additional taxes by foreign governments. Each of these
factors can make investments in the Fund more volatile and potentially less
liquid than other types of investments.
•Capital
Controls Risk.
Economic conditions, such as volatile currency exchange rates and interest
rates, political events and other conditions may, without prior warning, lead to
government intervention and the imposition of “capital controls” or
expropriation or nationalization of assets. The possible establishment of
exchange controls or freezes on the convertibility of currency, or the adoption
of other governmental restrictions, might adversely affect an investment in
foreign securities. Capital controls include the prohibition of, or restrictions
on, the ability to transfer currency, securities or other assets within or out
of a jurisdiction. Levies may be placed on profits repatriated by foreign
entities (such as the Fund). Capital controls may impact the ability of the Fund
to buy, sell or otherwise transfer securities or currency, may adversely affect
the trading market and price for Shares of the Fund, and may cause the Fund to
decline in value.
•Depositary
Receipt Risk.
The Fund’s investments in foreign companies may be in the form of depositary
receipts, including ADRs, EDRs, and GDRs. ADRs, EDRs, and GDRs are generally
subject to the risks of investing directly in foreign securities and, in some
cases, there may be less information available about the underlying issuers than
would be the case with a direct investment in the foreign issuer. ADRs are U.S.
dollar-denominated receipts representing shares of foreign-based corporations.
GDRs are similar to ADRs but are shares of foreign-based corporations generally
issued by international banks in one or more markets around the world.
Investment in ADRs and GDRs may be more or less liquid than the underlying
shares in their primary trading market and GDRs may be more volatile. Depositary
receipts may be “sponsored” or “unsponsored” and may be unregistered and
unlisted. Sponsored depositary receipts are established jointly by a depositary
and the underlying
issuer,
whereas unsponsored depositary receipts may be established by a depositary
without participation by the underlying issuer. Holders of an unsponsored
depositary receipt generally bear all the costs associated with establishing the
unsponsored depositary receipt. In addition, the issuers of the securities
underlying unsponsored depositary receipts are not obligated to disclose
material information in the United States and, therefore, there may be less
information available regarding those issuers and there may not be a correlation
between that information and the market value of the depositary receipts. In
general, ADRs must be sponsored, but the Fund may invest in unsponsored ADRs
under various limited circumstances. It is expected that not more than 10% of
the net assets of the Fund will be invested in unsponsored ADRs. The Fund’s
investments may also include ADRs and GDRs that are not purchased in the public
markets and are restricted securities that can be offered and sold only to
“qualified institutional buyers” under Rule 144A of the Securities Act of
1933, as amended (the “Securities Act”). The Sub-Adviser will determine the
liquidity of these investments pursuant to guidelines established by the Board.
If a particular investment in ADRs or GDRs is deemed illiquid, that investment
will be included within the Fund’s limitation on investment in illiquid
securities. Moreover, if adverse market conditions were to develop during the
period between the Fund’s decision to sell these types of ADRs or GDRs and the
point at which the Fund is permitted or able to sell the security, the Fund
might obtain a price less favorable than the price that prevailed when it
decided to sell.
•Currency
Risk.
The Fund’s NAV is determined on the basis of U.S. dollars; therefore, the Fund
may lose value if the local currency of a foreign market depreciates against the
U.S. dollar, even if the local currency value of the Fund’s holdings goes up.
Currency exchange rates may fluctuate significantly over short periods of time.
Currency exchange rates also can be affected unpredictably by intervention; by
failure to intervene by U.S. or foreign governments or central banks; or by
currency controls or political developments in the U.S. or abroad. Changes in
foreign currency exchange rates may affect the NAV of the Fund and the price of
the Fund’s Shares. Devaluation of a currency by a country’s government or
banking authority would have a significant impact on the value of any
investments denominated in that currency.
•Political
and Economic Risk.
The Fund is subject to foreign political and economic risk not associated with
U.S. investments, meaning that political events (civil unrest, national
elections, changes in political conditions and foreign relations, imposition of
exchange controls and repatriation restrictions), social and economic events
(labor strikes, rising inflation) and natural disasters occurring in a foreign
country could cause the Fund’s investments to experience gains or losses. The
Fund also could be unable to enforce its ownership rights or pursue legal
remedies in countries where it invests.
•Foreign
Market and Trading Risk.
The trading markets for many foreign securities are not as active as U.S.
markets and may have less governmental regulation and oversight. Foreign markets
also may have clearance and settlement procedures that make it difficult for the
Fund to buy and sell securities. The procedures and rules governing foreign
transactions and custody (holding of the Fund’s assets) also may involve delays
in payment, delivery or recovery of money or investments. These factors could
result in a loss to the Fund by causing the Fund to be unable to dispose of an
investment or to miss an attractive investment opportunity, or by causing Fund
assets to be uninvested for some period of time.
Geopolitical/Natural
Disaster Risks. The
Fund’s investments are subject to geopolitical and natural disaster risks, such
as war, terrorism, trade disputes, political or economic dysfunction within some
nations, public health crises and related geopolitical events, as well as
environmental disasters, epidemics and/or pandemics, which may add to
instability in world economies and volatility in markets. The impact may be
short-term or may last for extended periods.
The
respiratory illness COVID-19 caused by a novel coronavirus has resulted in a
global pandemic and major disruption to economies and markets around the world,
including the United States. Financial markets have experienced extreme
volatility and severe losses, and trading in many instruments has been
disrupted. Liquidity for many instruments has been greatly reduced for periods
of time. Some sectors of the economy and individual issuers have experienced
particularly large losses. For some companies, dividend payments have been
delayed, reduced, or rescinded. These circumstances may continue for an extended
period of time, and may affect adversely the value and liquidity of the Fund’s
investments.
Growth-Style
Investing Risk.
Stocks of companies the Sub-Adviser believes are fast-growing may trade at a
higher multiple of current earnings than other stocks. If the Sub-Adviser’s
assessment of a company’s prospects for earnings growth, or how other investors
will value the company’s earnings growth, is incorrect, the price of the stock
may fall or may never reach the value the Sub-Adviser has placed on it. Growth
stock prices tend to fluctuate more dramatically than the overall stock market
and growth stocks may fall out of favor with investors for extended periods of
time.
Management
Risk.
The Fund is actively managed and may not meet its investment objective based on
the Adviser’s or Sub-Adviser’s success or failure to implement investment
strategies for the Fund. The Sub-Adviser’s evaluations and assumptions regarding
investments may not successfully achieve the Fund’s investment objective given
actual market trends. In addition, there is the risk that the Sub-Adviser’s
investment process, techniques and analyses will not produce the desired
investment results and the Fund may lose value as a result. Absent unusual
circumstances (e.g., the Adviser determines a different security has higher
liquidity but offers a similar investment profile as a recommended security),
the Adviser will generally follow Sub-Adviser’s investment recommendations to
buy, hold, and sell securities and financial instruments. However, the Adviser
may deviate from Sub-Adviser recommendations due to a clear error in a
particular recommendation, compliance concerns (e.g., concentration limits),
liquidity concerns, authorized participant-related concerns, or due to
regulatory requirements.
New
Fund Risk. The
Fund is a recently organized management investment company with a limited
operating history. As a result, prospective investors have a limited track
record or history on which to base their investment decision. There can be no
assurance that the Fund will grow to or maintain an economically viable
size.
Small-
and Mid-Capitalization Company Risk. Investing
in securities of small- and mid-capitalization companies involves greater risk
than customarily is associated with investing in larger, more established
companies. These companies’ securities may be more volatile and less liquid than
those of more established companies. Often small- and mid-capitalization
companies and the industries in which they focus are still evolving and, as a
result, they may be more sensitive to changing market conditions.
Value-Style
Investing Risk.
Value stocks can perform differently from the market as a whole and from other
types of stocks. Value stocks may be purchased based upon the Sub-Adviser’s
belief that the stock may be out of favor. Value investing seeks to identify
stocks that have depressed valuations, based upon a number of factors which are
thought to be temporary in nature, and to sell them at superior profits should
their prices rise in response to resolution of the issues which caused the
valuation of the stock to be depressed. While certain value stocks may increase
in value more quickly during periods of anticipated economic upturn, they may
also lose value more quickly in periods of anticipated economic downturn.
Furthermore, there is the risk that the factors which caused the depressed
valuations are longer term or even permanent in nature, and that their
valuations may fall or never rise. Finally, there is the increased risk in such
situations that such companies may not have sufficient resources to continue as
ongoing businesses, which would result in the stock of such companies
potentially becoming worthless. The market may not agree with the Sub-Adviser’s
assessment of a stock’s intrinsic value, and value stocks may fall out of favor
with investors for extended periods of time.
FUND
MANAGEMENT
Investment
Adviser
Empowered
Funds, LLC, dba EA Advisers, acts as the Fund’s investment adviser. The Adviser
is located at 19 East Eagle Road Havertown, PA 19083 and is wholly-owned by
Alpha Architect LLC. The Adviser is registered with the Securities and Exchange
Commission (“SEC”) under the Investment Advisers Act of 1940 and provides
investment advisory services solely to the Fund and other exchange-traded funds.
The Adviser was founded in October 2013.
The
Adviser is responsible for overseeing the management and business affairs of the
Fund, and has discretion to purchase and sell securities in accordance with the
Fund’s objectives, policies and restrictions. The Adviser continuously reviews,
supervises and administers the Fund’s investment programs pursuant to the terms
of investment advisory agreement (the “Advisory Agreement”) between the Trust
and the Adviser. Because the Fund has not commenced operations prior to the date
of this Prospectus, the Adviser did not receive a fee during the last fiscal
year. The Adviser is entitled to receive the following Advisory Fee: 0.49%,
which is shown as an
annual
rate as a percentage of the Fund’s average daily net assets. During the fiscal
period ended July 31, 2023, the aggregate advisory fee paid to the Adviser was
$15,565.
The
Adviser (or an affiliate of the Adviser) bears all of the Adviser’s own costs
associated with providing these advisory services and all expenses of the Fund,
except for the fee payment under the Advisory Agreement, payments under the
Fund’s Rule 12b-1 Distribution and Service Plan (the “Plan”), brokerage
expenses, acquired fund fees and expenses, taxes (including tax-related
services), interest (including borrowing costs), litigation expense (including
class action-related services) and other non-routine or extraordinary
expenses.
The
Advisory Agreement for the Fund provides that it may be terminated at any time,
without the payment of any penalty, by the Board or, with respect to the Fund,
by a majority of the outstanding shares of the Fund, on 60 days’ written notice
to the Adviser, and by the Adviser upon 60 days’ written notice, and that it
shall be automatically terminated if it is assigned.
Investment
Sub-Adviser
Sub-Adviser:
The Adviser has retained Altrius Capital Management, Inc., a corporation
organized under the laws of North Carolina and an investment adviser registered
with the SEC, to provide sub-advisory services for the Fund. The principal
offices of the Sub-Adviser are located at 1323 Commerce Drive, New Bern, NC
28562. The Sub-Adviser was formed in 1997, and provides investment management
services to a broad range of clients. As of July 31, 2023, the Sub-Adviser
had approximately $459 million in total assets under management.
The
Sub-Adviser is responsible for recommending the investments for the Fund,
subject to the overall supervision and oversight of the Adviser and the Board.
The Sub-Adviser will perform its services as a non-discretionary sub-adviser,
which means that the Sub-Adviser will not be responsible for selecting brokers
or placing the Fund’s trades. Rather, the Sub-Adviser will provide trade
recommendations to the Adviser and, in turn, the Adviser will be responsible for
selecting brokers and placing the Fund’s trades. It is anticipated that the
Adviser will generally adhere to the Sub-Adviser’s recommendations.
For
its services, the Adviser pays the Sub-Adviser a fee, which is calculated daily
and paid monthly, at an annual rate based on the Fund’s average daily net assets
as follows: 0.25%, which is shown at an annual rate as a percentage of the
Fund’s average daily net assets.
Fund
Sponsor
The
Adviser has entered into a fund sponsorship agreement with the Sub-Adviser
pursuant to which the Sub-Adviser is also the sponsor of the Fund (“Fund
Sponsor”). Under this arrangement, the Fund Sponsor has agreed to provide
financial support to the Fund (as described below) and, in turn, the Adviser has
agreed to share with the Fund Sponsor a portion of profits, if any, generated by
the Fund’s Advisory Fee (also as described below). Every month, the Advisory
Fee, which is a unitary management fee, is calculated and paid to the
Adviser.
If
the amount of the unitary management fee exceeds the Fund’s operating expenses
and the Adviser-retained amount, the Adviser pays the net total to the Fund
Sponsor. The amount paid to the Fund Sponsor represents both the sub-advisory
fee and any remaining profits from the Advisory Fee. During months where there
are no profits or the funds are not sufficient to cover the entire sub-advisory
fee, the sub-advisory fee is automatically waived.
If
the amount of the unitary management fee is less than the Fund’s operating
expenses and the Adviser-retained amount, Fund Sponsor is obligated to reimburse
the Adviser for the shortfall.
APPROVAL
OF
ADVISORY
AGREEMENT
& INVESTMENT
SUB-ADVISORY
AGREEMENT
A
discussion regarding the basis for the Board’s approval of the advisory
agreement and the sub-advisory agreement with respect to the Fund is available
in the Fund’s semi-annual report
dated January 31, 2023.
PORTFOLIO
MANAGERS
The
portfolio managers are jointly and primarily responsible for various functions
related to portfolio management, including, but not limited to, making
recommendations (or implementing) with respect to the
following:
investing cash inflows, implementing investment strategy, researching and
reviewing investment strategy, and overseeing members of the portfolio
management team with more limited responsibilities.
Mr.
James M. Russo has been a portfolio manager of the Fund since September 2022.
Mr. Russo is the founder and Chief Investment Strategist of the Sub-Adviser,
which he founded in 1997. He has been the portfolio manager for each of the
Sub-Adviser’s equity strategies since their inception. Mr. Russo has published a
book on the firm’s value-driven, income-focused investment process titled
“Invest Like an Aardvark”. Mr. Russo received a Bachelor of Science in Economics
from the United States Naval Academy, was captain of the Academy’s boxing team
and named a two-time NCBA All-American. Upon graduating from the U.S. Naval
Academy in 1991, Mr. Russo served as a Naval Aviator in the United States Marine
Corps until leaving the service honorably in 1999 at the rank of Captain. Mr.
Russo holds the Series 65 license.
Ms.
Anu Prabhu, CFA joined the Sub-Adviser as a Portfolio Manager in 2021. She has
been a portfolio manager of the Fund since May 2023. She is a member of the
Sub-Adviser’s Investment Committee and is responsible for conducting fundamental
research, security analysis, and portfolio monitoring. Prior to joining the
Sub-Adviser, Ms. Prabhu was a Vice President at Wright Investors’ Service for 17
years where she was a member of the equity portfolio management team. Prior to
Wright, Ms. Prabhu was an investment analyst for the private banking divisions
at ICICI Bank, India, and BNP Paribas, India. Ms. Prabhu received a Bachelors in
Accounting and Taxation, and Masters in Business Administration with a
concentration in Finance from Mumbai University. Ms. Prabhu is a CFA
Charterholder and a member of the CFA Society of New York.
Mr.
Wm. Joshua Russell, PhD, CFA has been a Senior Portfolio Manager with the
Adviser since October 2022 and a portfolio manager of the Fund since January
2023. Prior to this he was a Portfolio Manager at Carson Group where he was
responsible for approximately $1.7 billion in assets. He has also served in
quant research roles as VP, Sr. Research Analyst at Franklin Templeton and
Senior Quantitative Strategist at WisdomTree. Prior to entering the industry,
Dr. Russell was a PhD candidate where he conducted research on large-scale
distributed systems for the US Army, the US Air Force, and NASA. He earned a PhD
in Electrical and Computer Engineering, a Masters in Economics, and a Masters in
Electrical and Computer Engineering at the University of California, Santa
Barbara. He earned a Bachelor of Science in Electrical Engineering from the
University of Washington and is a CFA Charterholder.
Mr.
Richard Shaner has been portfolio manager of the Fund since September 2022. Mr.
Shaner has advised on trading and execution matters for the Adviser since
January 2021, where he supports trading operations and assists in
quantitative research. Prior to Mr. Shaner’s tenure with the Adviser, Mr. Shaner
executed various trading strategies for a private family office. Mr. Shaner has
a B.Sc in Kinesiology and Applied Physiology from the University of Colorado. He
is also a CFA Charterholder.
Messrs.
Russell and Shaner are responsible for implementing the Fund’s investment
strategies as recommended by Mr. Russo and Ms. Prabhu.
The
Fund’s SAI provides additional information about the portfolio managers,
including other accounts managed, ownership in the Fund, and
compensation.
OTHER
SERVICE
PROVIDERS
Quasar
Distributors, LLC (“Distributor”) serves as the distributor of Creation Units
(defined above) for the Fund on an agency basis. The Distributor does not
maintain a secondary market in Shares.
U.S.
Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services, is
the administrator, fund accountant, and transfer agent for the
Fund.
U.S.
Bank National Association is the custodian for the Fund.
Practus,
LLP, 11300 Tomahawk Creek Parkway, Suite 310, Leawood, Kansas 66211, serves as
legal counsel to the Trust.
Tait,
Weller & Baker, LLP, 50 South 16th
Street, Suite 2900, Philadelphia, PA 19102, 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.
THE
EXCHANGE
Shares of the Fund are not sponsored, endorsed or promoted by the
Exchange. The Exchange is not responsible for, nor has it participated, in
the determination of the timing of, prices of, or quantities of Shares of the
Fund to be issued, nor in the determination or calculation of the equation by
which the Shares are redeemable. The Exchange has no obligation or liability to
owners of the Shares of the Fund in connection with the administration,
marketing or trading of the Shares of the Fund. Without limiting any of the
foregoing, in no event shall the Exchange have any liability for any direct,
indirect, special, punitive, consequential or any other damages (including lost
profits) even if notified of the possibility of such damages.
BUYING
AND
SELLING
FUND
SHARES
Shares
will be issued or redeemed by the Fund at NAV per Share only in Creation Units
of 10,000 Shares. Creation Units are generally issued and redeemed only in-kind
for securities although a portion may be in cash.
Shares
will trade on the secondary market, however, which is where most retail
investors will buy and sell Shares. It is expected that only a limited number of
institutional investors, called Authorized Participants or “APs,” will purchase
and redeem Shares directly from the Fund. 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. Purchases and
redemptions directly with the Fund must follow the Fund’s procedures, which are
described in the SAI.
Except
when aggregated in Creation Units, Shares are not redeemable with the
Fund.
BUYING
AND
SELLING
SHARES
ON
THE
SECONDARY
MARKET
Most
investors will buy and sell Shares in secondary market transactions through
brokers and, therefore, must have a brokerage account to buy and sell Shares.
Shares can be bought or sold through your broker throughout the trading day like
shares of any publicly traded issuer. The Trust does not impose any redemption
fees or restrictions on redemptions of Shares in the secondary market. 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 prices in the secondary market for Shares. The price at
which you buy or sell Shares (i.e.,
the market price) may be more or less than the NAV of the Shares. Unless imposed
by your broker, there is no minimum dollar amount you must invest in the Fund
and no minimum number of Shares you must buy.
Shares
of the Fund are listed on the Exchange under the following symbol:
|
|
|
|
| |
Fund |
Trading
Symbol |
Altrius
Global Dividend ETF |
DIVD |
The
Exchange is generally open Monday through Friday and is closed for weekends and
the following holidays: New Year’s Day, Martin Luther King, Jr. Day,
Washington’s Birthday, Good Friday, Memorial Day, Juneteenth Independence Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
For
information about buying and selling Shares on the Exchange or in the secondary
markets, please contact your broker or dealer.
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, will be the registered
owner of all outstanding Shares of the Fund and is recognized as the owner of
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 on the procedures of DTC and its participants. These
procedures are the same as those that apply to any stocks that you hold in book
entry or “street name” through your brokerage account. Your account information
will be maintained by your broker, which will provide you with account
statements, confirmations of your purchases and sales of Shares,
and
tax information. Your broker also will be responsible for distributing income
dividends and capital gain distributions and for ensuring that you receive
shareholder reports and other communications from the Fund.
Share
Trading Prices. The
trading prices of the Fund’s Shares may differ from the Fund’s daily NAV and can
be affected by market forces of supply and demand for the Fund’s Shares, the
prices of the Fund’s portfolio securities, economic conditions and other
factors.
The
Exchange through the facilities of the Consolidated Tape Association or another
market information provider intends to disseminate the approximate value of the
Fund’s portfolio every fifteen seconds during regular U.S. trading hours. This
approximate value should not be viewed as a “real-time” update of the NAV of the
Fund because the approximate value may not be calculated in the same manner as
the NAV, which is computed once a day. The quotations for certain investments
may not be updated during U.S. trading hours if such holdings do not trade in
the U.S., except such quotations may be updated to reflect currency
fluctuations. The Fund is not involved in, or responsible for, the calculation
or dissemination of the approximate values and makes no warranty as to the
accuracy of these values.
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, 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 requirements 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(a)(3) of the Securities Act is
not available in respect of such transactions as a result of Section 24(d)
of the Investment Company Act of 1940, as amended (the “Investment Company
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(a)(3)(C) of the Securities Act, will be unable to take advantage
of the prospectus delivery exemption provided by Section 4(a)(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.
ACTIVE
INVESTORS
AND
MARKET
TIMING
The
Board has evaluated the risks of market timing activities by the Fund’s
shareholders. The Board noted that the Fund’s Shares can be purchased and
redeemed directly from the Fund only in Creation Units by APs and that 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), the Board noted that those trades do not cause the harmful
effects (as previously noted) that may result from frequent cash trades. To the
extent trades are effected in whole or in part in cash, the Board noted that
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, although in certain circumstances (e.g., in conjunction
with a reallocation of the Fund’s investments), such trades may benefit Fund
shareholders by increasing the tax efficiency of the Fund. The Board also noted
that direct trading by APs is critical to ensuring that the Fund’s Shares trade
at or close to NAV. In addition, the Fund will impose transaction fees on
purchases and redemptions of Shares to cover the custodial and other costs
incurred by the
Fund
in effecting trades. Given this structure, the Board determined that it is not
necessary to adopt policies and procedures to detect and deter market timing of
the Fund’s Shares.
DISTRIBUTION
AND
SERVICE
PLAN
The
Fund has adopted the Plan pursuant to Rule 12b-1 under the Investment
Company Act. Under the Plan, the Fund may be authorized to pay distribution fees
of up to 0.25% of its average daily net assets each year to the Distributor and
other firms that provide distribution and shareholder services (“Service
Providers”). As of the date of this Prospectus, the maximum amount payable under
the Plan is set at 0% until further action by the Board. In the event 12b-1 fees
are charged, over time they would increase the cost of an investment in the Fund
because they would be paid on an ongoing basis.
NET
ASSET
VALUE
The
NAV of Shares is calculated each business day as of the close of regular trading
on the New York Stock Exchange (“NYSE”), generally 4:00 p.m., Eastern
time.
The
Fund calculates its NAV per Share by:
•Taking
the current market value of its total assets,
•Subtracting
any liabilities, and
•Dividing
that amount by the total number of Shares owned by shareholders.
If
you buy or sell Shares on the secondary market, you will pay or receive the
market price, which may be higher or lower than NAV. Your transaction will be
priced at NAV only if you purchase or redeem your Shares in Creation
Units.
Because
securities listed on foreign exchanges may trade on weekends or other days when
the Fund does not price its Shares, the NAV of the Fund, to the extent it may
hold foreign securities, may change on days when shareholders will not be able
to purchase or sell Shares. In particular, where all or a portion of the Fund’s
underlying securities trade in a market that is closed when the market in which
the Fund’s shares are listed and trading in that market is open, there may be
changes between the last quote from its closed foreign market and the value of
such security during the Fund’s domestic trading day. In addition, please note
that this in turn could lead to differences between the market price of the
Fund’s shares and the underlying value of those shares.
Equity
securities that are traded on a national securities exchange, except those
listed on the NASDAQ Global Market®
(“NASDAQ”) are valued at the last reported sale price on the exchange on which
the security is principally traded. Securities traded on NASDAQ will be valued
at the NASDAQ Official Closing Price (“NOCP”). If, on a particular day, an
exchange-traded or NASDAQ security does not trade, then the most recent quoted
bid for exchange traded or the mean between the most recent quoted bid and ask
price for NASDAQ securities will be used. Equity securities that are not traded
on a listed exchange are generally valued at the last sale price in the
over-the-counter market. If a nonexchange traded security does not trade on a
particular day, then the mean between the last quoted closing bid and asked
price will be used.
The
value of assets denominated in foreign currencies is converted into U.S. dollars
using exchange rates deemed appropriate by the Fund.
If
a market price is not readily available or is deemed not to reflect market
value, the Fund will determine the price of the security held by the Fund based
on a determination of the security’s fair value pursuant to policies and
procedures approved by the Board.
To
the extent the Fund holds securities that may trade infrequently, fair valuation
may be used more frequently. Fair valuation may have the effect of reducing
stale pricing arbitrage opportunities presented by the pricing of Shares.
However, when the Fund uses fair valuation to price securities, it may value
those securities higher or
lower
than another fund would have priced the security. Also, the use of fair
valuation may cause the Shares’ NAV performance to diverge from the Shares’
market price and from the performance of various benchmarks used to compare the
Fund’s performance because benchmarks generally do not use fair valuation
techniques. Because of the judgment involved in fair valuation decisions, there
can be no assurance that the value ascribed to a particular security is
accurate.
FUND
WEBSITE
AND
DISCLOSURE
OF
PORTFOLIO
HOLDINGS
The
Trust maintains a website for the Fund at www.altriusfunds.com. Among other
things, the website includes this Prospectus and the SAI, the Fund’s holdings,
and the Fund’s last annual
and semi-annual
reports. The website shows the Fund’s daily NAV per share, market price, and
premium or discount, each as of the prior business day. The website shows the
extent and frequency of the Fund’s premiums and discounts. Further, the website
includes the Fund’s median bid-ask spread over the most recent thirty calendar
days.
Each
day the Fund is open for business, the Trust publicly disseminates the Fund’s
full portfolio holdings as of the close of the previous day through its website
at www.altriusfunds.com. A description of the Trust’s policies and procedures
with respect to the disclosure of the Fund’s portfolio holdings is available in
the Fund’s SAI.
INVESTMENTS
BY
OTHER
INVESTMENT
COMPANIES
For
purposes of the Investment Company Act, Shares are issued by a registered
investment company and purchases of such Shares by registered investment
companies and companies relying on Section 3(c)(1) or 3(c)(7) of the
Investment Company Act are subject to the restrictions set forth in
Section 12(d)(1) of the Investment Company Act, except as permitted by
Rule 6c-11, Rule 12d1-4, or an exemptive order of the
SEC.
DIVIDENDS,
DISTRIBUTIONS,
AND
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 IRA plan, you need to be aware of the possible
tax consequences when:
•Your
Fund makes distributions,
•You
sell your Shares listed on the Exchange, and
•You
purchase or redeem Creation Units.
Dividends
and Distributions
Dividends
and Distributions.
The Fund intends to qualify each year as a regulated investment company under
the Internal Revenue Code of 1986, as amended. As a regulated investment
company, the Fund generally pays no federal income tax on the income and gains
it distributes to you. The Fund expects to declare and to distribute all of its
net investment income, if any, to shareholders as dividends on a monthly basis.
The Fund will distribute net realized capital gains, if any, at least annually.
The Fund may distribute such income dividends and capital gains more frequently,
if necessary, in order to reduce or eliminate federal excise or income taxes on
the Fund. The amount of any distribution will vary, and there is no guarantee
the Fund will pay either an income dividend or a capital gains distribution.
Distributions may be reinvested automatically in additional whole Shares only if
the broker through whom you purchased Shares makes such option
available.
Avoid
“Buying a Dividend.”
At the time you purchase Shares of the Fund, the Fund’s NAV may reflect
undistributed income, undistributed capital gains, or net unrealized
appreciation in value of portfolio securities held by the Fund. For taxable
investors, a subsequent distribution to you of such amounts, although
constituting a return of your investment, would be taxable. Buying Shares in the
Fund just before it declares an income dividend or capital gains distribution is
sometimes known as “buying a dividend.”
Taxes
Tax
Considerations.
The Fund expects, based on its investment objective and strategies, that its
distributions, if any, will be taxable as ordinary income, capital gain, or some
combination of both. This is true whether you
reinvest
your distributions in additional Shares or receive them in cash. For federal
income tax purposes, Fund distributions of short-term capital gains are taxable
to you as ordinary income. Fund distributions of long-term capital gains are
taxable to you as long-term capital gain no matter how long you have owned your
Shares. A portion of income dividends reported by the Fund may be qualified
dividend income eligible for taxation by individual shareholders at long-term
capital gain rates provided certain holding period requirements are
met.
Taxes
on Sales of Shares.
A sale or exchange of Shares is a taxable event and, accordingly, a capital gain
or loss may be recognized. Currently, any capital gain or loss realized upon a
sale of Shares generally is 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 may be limited.
Medicare
Tax.
An additional 3.8% Medicare tax is imposed on certain net investment income
(including ordinary dividends and capital gain distributions received from the
Fund and net gains from redemptions or other taxable dispositions of Shares) of
U.S. individuals, estates and trusts to the extent that such person’s “modified
adjusted gross income” (in the case of an individual) or “adjusted gross income”
(in the case of an estate or trust) exceeds a threshold amount. This Medicare
tax, if applicable, is reported by you on, and paid with, your federal income
tax return.
Backup
Withholding.
By law, if you do not provide the Fund with your proper taxpayer identification
number and certain required certifications, you may be subject to backup
withholding on any distributions of income, capital gains or proceeds from the
sale of your Shares. The Fund also must withhold if the Internal Revenue Service
(“IRS”) instructs it to do so. When withholding is required, the amount will be
24% of any distributions or proceeds paid.
State
and Local Taxes.
Fund distributions and gains from the sale or exchange of your Shares generally
are subject to state and local taxes.
Taxes
on Purchase and Redemption of Creation Units.
An AP who exchanges equity securities for Creation Units generally will
recognize a gain or a loss. The gain or loss will be equal to the difference
between the market value of the Creation Units at the time of purchase and the
exchanger’s aggregate basis in the securities surrendered and the cash amount
paid. A person who exchanges Creation Units for equity securities generally will
recognize a gain or loss equal to the difference between the exchanger’s basis
in the Creation Units and the aggregate market value of the securities received
and the cash amount received. 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 on the basis that there has been no
significant change in economic position. Persons exchanging securities should
consult their own tax advisor with respect to whether the wash sale rules apply
and when a loss might be deductible.
Under
current federal tax laws, 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 a short-term capital gain or
loss if the Shares have been held for one year or less.
If
the Fund redeems Creation Units in cash, it may recognize more capital gains
than it will if it redeems Creation Units in-kind.
Non-U.S.
Investors.
Non-U.S. investors may be subject to U.S. withholding tax at a 30% or lower
treaty rate and U.S. estate tax and are subject to special U.S. tax
certification requirements to avoid backup withholding and claim any treaty
benefits. An exemption from U.S. withholding tax is provided for capital gain
dividends paid by the Fund from long-term capital gains, if any. The exemptions
from U.S. withholding for interest-related dividends paid by the Fund from its
qualified net interest income from U.S. sources and short-term capital gain
dividends have expired for taxable years of the Fund that begin on or after
January 1, 2014. It is unclear as of the date of this prospectus whether
Congress will reinstate the exemptions for interest-related and short-term
capital gain dividends or, if reinstated, whether such exemptions would have
retroactive effect. However, notwithstanding such exemptions from U.S.
withholding at the source, any such dividends and distributions of income and
capital gains will be subject to backup withholding at a rate of 24% if you fail
to properly certify that you are not a U.S. person.
Other
Reporting and Withholding Requirements.
Under the Foreign Account Tax Compliance Act (FATCA), the Fund will be required
to withhold a 30% tax on (a) income dividends paid by the Fund, and (b) certain
capital
gain distributions and the proceeds arising from the sale of Shares paid by the
Fund, to certain foreign entities, referred to as foreign financial institutions
or non-financial foreign entities, that fail to comply (or be deemed compliant)
with extensive new reporting and withholding requirements designed to inform the
U.S. Department of the Treasury of U.S.-owned foreign investment accounts. 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.
Possible
Tax Law Changes.
At the time that this prospectus is being prepared, various administrative and
legislative changes to the federal tax laws are under consideration, but it is
not possible at this time to determine whether any of these changes will be made
or what the changes might entail.
This
discussion of “Dividends, Distributions and Taxes” is not intended or written to
be used as tax advice. Because everyone’s tax situation is unique, you should
consult your tax professional about federal, state, local or foreign tax
consequences before making an investment in the Fund.
FINANCIAL
HIGHLIGHTS
ALTRIUS
GLOBAL DIVIDEND ETF
For
the Period Ended July 31, 2023
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Net Asset Value, Beginning of
Period |
|
Net
Investment
Income(1) |
|
Net Realized and Unrealized Gains on Investments |
|
Net Increase (Decrease) in
Net Asset Value Resulting from Operations |
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Distributions from
Net Investment Income |
|
Total Distributions |
|
Net Asset
Value, End of Period |
|
Total
Return(2) |
|
Net
Assets, End of Period (000’s) |
|
Net
Expenses(3) |
|
Net
Investment
Income(3) |
|
Portfolio
Turnover
Rate(4)(6) |
Altrius
Global Dividend ETF ETF |
September
30, 2022(5)
to July 31, 2023 |
| $24.62 |
| 0.95 |
| 6.33 |
| 7.28 |
| (0.75) |
| (0.75) |
| $31.15 |
| 29.83% |
| $7,164 |
| 0.49% |
| 3.88% |
| 13% |
(1)Net
investment income per share represents net investment income divided by the
daily average shares of beneficial interest outstanding throughout the
period.
(2)All
returns reflect reinvested dividends, if any, but do not reflect the impact of
taxes. Total return for a period of less than one year is not
annualized.
(3)For
periods of less than one year, these ratios are annualized.
(4)Portfolio
turnover is not annualized and is calculated without regard to short-term
securities having a maturity of less than one year.
(5)Commencement
of operations.
(6)Excludes
the impact of in‐kind transactions.
ANNUAL/SEMI-ANNUAL
REPORTS
TO
SHAREHOLDERS
Additional
information about the Fund is available in its annual
and semi-annual
reports to shareholders. In the annual report, you will find a discussion of the
market conditions and investment strategies that affected the Fund’s
performance.
STATEMENT
OF
ADDITIONAL
INFORMATION
The
SAI dated November 30, 2023, which contains more details about the Fund, is
incorporated by reference in its entirety into this Prospectus, which means that
it is legally part of this Prospectus.
To
receive a free copy of the latest annual or semi-annual report or the SAI, or to
request additional information about the Fund, please contact us as
follows:
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Call: |
(215)
882-9983 |
| |
Write: |
19
East Eagle Road |
| Havertown,
PA 19083 |
| |
Visit: |
www.altriusfunds.com |
PAPER
COPIES
Please
note that paper copies of the Fund’s shareholder reports will generally not be
sent, unless you specifically request paper copies of the Fund’s reports from
your financial intermediary, such as a broker-dealer or bank. Instead, the
reports will be made available on the Fund’s website, and you will be notified
by mail each time a report is posted and provided with a website link to access
the report.
You
may elect to receive all future Fund reports in paper free of charge. Please
contact your financial intermediary to inform them that you wish to continue
receiving paper copies of Fund shareholder reports and for details about whether
your election to receive reports in paper will apply to all funds held with your
financial intermediary.
INFORMATION
PROVIDED
BY
THE
SECURITIES
AND
EXCHANGE
COMMISSION
Information
about the Fund, including its reports and the SAI, has been filed with the SEC.
It can be reviewed on the EDGAR database on the SEC’s internet site
(http://www.sec.gov). You can also request copies of these materials, upon
payment of a duplicating fee, by electronic request at the SEC’s e-mail address
(publicinfo@sec.gov) or by calling the SEC at (202) 551-8090.
Investment
Company Act File No. 811-22961