UVA
Unconstrained Medium-Term Fixed Income ETF
PROSPECTUS
November
1, 2023
This
prospectus contains information about the UVA
Unconstrained Medium-Term Fixed Income ETF that you should know before
investing. You should read this prospectus carefully before you invest or send
money and keep it for future reference. For questions or for Shareholder
Services, please call 1-800-773-3863.
Shares
of the Fund are listed and traded on NYSE Arca (“Exchange”)
The
securities offered by this prospectus have not been approved or
disapproved by the Securities and Exchange Commission, nor has the
Securities and Exchange Commission passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal
offense. |
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Back
Cover |
UVA
Unconstrained Medium-Term Fixed Income ETF
Investment
Objective
The
UVA Unconstrained Medium-Term Fixed Income
ETF (the “Fund”) seeks current income with limited risk to
principal.
Fees
and Expenses of the Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund (“Shares”). Investors purchasing or selling Shares in
the secondary market may be subject to costs (including customary brokerage
commissions) charged by their broker. These costs are not included in the
expense example below.
Annual Fund Operating
Expenses (ongoing expenses that you pay
each year as a percentage of the value of your
investment) |
Management
Fees |
0.25% |
Other
Expenses |
0.38% |
Acquired
Fund Fees and Expenses1 |
0.04% |
Total
Annual Fund Operating Expenses |
0.67% |
Fee
Waiver and/or Expense Limitation2 |
(0.13)% |
Net Annual Fund Operating Expenses2 |
0.54% |
1.
“Acquired Fund Fees and Expenses” are the indirect costs of investing in other
investment companies. The operating expenses in this fee table will not
correlate to the expense ratio in the Fund’s financial statements because the
financial statements include only the direct operating expenses incurred by the
Fund.
2.
Universal Value Advisers (the “Sub-Adviser”) has entered into an expense
limitation agreement with the Fund under which it has agreed to waive or reduce
its fees and to assume other expenses of the Fund, if necessary, in an amount
that limits the Fund’s annual operating expenses (exclusive of (i) any front-end
or contingent deferred loads; (ii) brokerage fees and commissions, (iii)
acquired fund fees and expenses; (iv) fees and expenses associated with
investments in other collective investment vehicles or derivative instruments
(including for example option and swap fees and expenses); (v) borrowing costs
(such as interest and dividend expense on securities sold short); (vi) taxes;
and (vii) extraordinary expenses, such as litigation expenses (which may include
indemnification of Fund officers and Trustees and contractual indemnification of
Fund service providers (other than the Adviser or Sub-Adviser) to not more than
0.50% of the average daily net assets of the Fund through October 31, 2024, and
may be terminated by the Board of Trustees at any time. The Sub-Adviser cannot
recoup from the Fund any amounts paid by the Sub-Adviser under the expense
limitation agreement. Further, net annual operating expenses for the Fund may
exceed those contemplated by the waiver due to expenses that are not waived
under the expense limitation agreement.
Example. You may also incur usual and customary
brokerage commissions and other charges when buying or selling shares of the
Fund, which are not reflected in the example that follows. The Example is
intended to help you compare the cost of investing in the Fund with the costs of
investing in other funds. The Example assumes that you invest $10,000 in the
Fund for the time periods indicated and then redeem all of your Shares at the
end of those periods. The Example also assumes that your investment has a 5%
return each year and that the Fund’s operating expenses remain the same. The
Example includes the Fund’s contractual expense limitation through October 31,
2023. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
One
Year |
Three
Years |
Five
Years |
Ten
Years |
$55 |
$201 |
$360 |
$822 |
Portfolio Turnover.
The Fund may pay transaction costs, such as commissions, when it
purchases 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, may affect
the Fund’s performance. For the fiscal year ended June 30, 2023, the Fund’s
portfolio turnover rate was 8.92% of the average value of its portfolio.
Principal
Investment Strategies
The
Fund is an actively managed exchange-traded fund (“ETF”) that seeks to achieve
its investment objective of current income by investing principally in fixed
income securities of any kind with a dollar-weighted average effective duration
of between three and nine years, under normal circumstances. Under normal market
conditions, the Fund intends to invest at least 80% of its net assets (plus the
amount of borrowings for investment purposes) in such securities. Fixed income
securities include bonds, debt securities, and income-producing instruments of
any kind issued by governmental or private-sector entities.
The
fixed income and other income-producing instruments in which the Fund invests
will typically be investment grade (rated BBB or better by either Moody’s
Investors Services, Inc. (“Moody’s”) or Standard & Poor’s (“S&P”) and
unrated securities considered by the Sub-Adviser to be of comparable credit
quality). The Sub-Adviser considers all mortgage-backed securities to be
eligible for purchase regardless of their credit rating or lack thereof, and
such securities, if present in the Fund, are not considered by the Sub-Adviser
to be below investment grade.
The
Fund may invest in mortgage-backed securities of any maturity or type, including
those guaranteed by, or secured by collateral that is guaranteed by, the United
States Government, its agencies, instrumentalities, or sponsored corporations,
as well as those of private issuers not subject to any guarantee.
Mortgage-backed securities include, among others, government mortgage
pass-through securities, collateralized mortgage obligations (“CMOs”),
multiclass pass-through securities, and private mortgage pass-through
securities. The Fund may also invest in corporate debt obligations, asset-backed
securities, foreign securities (corporate and government), inflation-indexed
bonds, and preferred securities.
The
average maturity or duration of the Fund’s portfolio of fixed income securities
will vary based on the Sub-Adviser’s assessment of economic and market
conditions, as well as current and anticipated changes in interest rates. The
Fund may invest in individual securities of any maturity or duration.
Principal
Risks of Investing in the Fund
Risk
is inherent in all investing. The loss of your money is a principal risk of
investing in the Fund. Investors should consider the following risk factors and
special considerations associated with investing in the Fund, which may cause
you to lose money. The following principal risk factors have been identified for
the Fund. There can be no assurance that the Fund will be successful in meeting
its investment objective. See also the sections “Additional Information about
the Fund’s Principal Investment Risks” and “Additional Risk Considerations” for
additional information about the Fund’s risk factors.
Call/Prepayment Risk. During periods of falling interest rates, an
issuer of a callable bond may exercise its right to pay principal on an
obligation earlier than expected. This may result in the Fund reinvesting
proceeds at lower interest rates, resulting in a decline in the Fund’s
income.
Interest Rate Risk. As interest rates rise, the value of fixed
income securities held by the Fund are likely to decrease. Securities with
longer durations tend to be more sensitive to interest rate changes, making them
more volatile than securities with shorter durations. Interest rates in the
United States are near historic lows, which may increase the Fund’s exposure to
risks associated with rising rates. A wide variety of market factors can cause
interest rates to rise, including central bank monetary policy (including the
Federal Reserve ending its “quantitative easing” policy of purchasing large
quantities of securities issued or guaranteed by the U.S. government), rising
inflation, and changes in general economic conditions. Interest rate changes can
be sudden and unpredictable. Moreover, rising interest rates may lead to
decreased liquidity in the bond markets, making it more difficult for the Fund
to value or sell some or all of its bond investments at any given time.
Changes
in interest rates may also affect the Fund’s share price; for example, a sharp
rise in interest rates could cause the Fund’s share price to fall. Securities
with longer durations tend to be more sensitive to interest rate changes, making
them more volatile than securities with shorter durations. Duration is an
estimate of a security’s sensitivity to changes in prevailing interest rates
that is based on certain factors that may prove to be incorrect. It is therefore
not an exact measurement and may not be able to reliably predict a particular
security’s price sensitivity to changes in interest rates.
Fixed Income Risk. When the
Fund invests in fixed income securities, the value of your investment in the
Fund will fluctuate with changes in interest rates. Typically, a rise in
interest rates causes a decline in the value of fixed income securities owned by
the Fund. In general, the market price of fixed income securities with longer
maturities will increase or decrease more in response to changes in interest
rates than shorter-term securities. Other risk factors include credit risk (the
debtor may default), extension risk (an issuer may exercise its right to repay
principal on a fixed rate obligation held by the Fund later than expected), and
prepayment risk (the debtor may pay its obligation early, reducing the amount of
interest payments). These risks could affect the value of a particular
investment by the Fund, possibly causing the Fund’s share price and total return
to be reduced and fluctuate more than other types of investments.
Authorized Participant Risk:
Only an authorized participant (“Authorized Participant” or “AP”) may
engage in creation or redemption transactions directly with the Fund. The Fund
has a limited number of institutions that may act as Authorized Participants on
an agency basis (i.e., on behalf of other market participants). Authorized
Participant concentration risk may be heightened for exchange-traded funds
(ETFs), such as the Fund, that invest in securities issued by non-U.S. issuers
or other securities or instruments that have lower trading volumes.
ETF Structure Risks: The Fund is structured as an ETF and as
a result is subject to the special risks, including:
o |
Not Individually Redeemable.
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. An active trading
market for the Fund’s shares may not be developed or maintained. 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. If the Fund’s shares are traded outside a
collateralized settlement system, the number of financial institutions
that can act as authorized participants that can post collateral on an
agency basis is limited, which may limit the market for the Fund’s
shares. |
o |
Cash Purchases and Redemptions. To the
extent Creation Units are purchased or redeemed by Authorized Participants
in cash instead of in-kind, the Fund will incur certain costs such as
brokerage expenses and taxable gains and losses. These costs could be
imposed on the Fund and impact the Fund’s NAV if not fully offset by
transaction fees paid by the Authorized
Participants. |
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. |
•
|
In
times of market stress, market makers may step away from their role market
making in shares of ETFs and in executing trades, which can lead to
differences between the market value of Fund shares and the Fund’s net
asset value. |
•
|
To
the extent Authorized Participants exit the business or are unable to
process creations or redemptions and no other Authorized Participant can
step in to do so, there may be a significantly reduced trading market in
the Fund’s shares, which can lead to differences between the market value
of Fund shares and the Fund’s net asset
value. |
•
|
The
market price for the Fund’s shares may deviate from the Fund’s net asset
value, particularly during times of market stress, with the result that
investors may pay significantly more or receive significantly less for
Fund shares than the Fund’s net asset value, which is reflected in the bid
and ask price for Fund shares or in the closing
price. |
•
|
When
all or a portion of an ETFs underlying securities trade in a market that
is closed when the market for the Fund’s shares is open, there may be
changes from the last quote of the closed market and the quote from the
Fund’s domestic trading day, which could lead to differences between the
market value of the Fund’s shares and the Fund’s net asset
value. |
•
|
In
stressed market conditions, the market for the Fund’s shares may become
less liquid in response to the deteriorating liquidity of the Fund’s
portfolio. This adverse effect on the liquidity of the Fund’s shares
may, in turn, lead to differences between the market value of the Fund’s
shares and the Fund’s net asset value. |
Management Risk. The Fund is subject to management risk
because it is an actively managed portfolio. In managing the Fund’s portfolio
securities, the Sub-Adviser will apply investment techniques and risk analyses
in making investment decisions for the Fund, but there can be no guarantee that
these will produce the desired results. The Sub-Adviser’s decisions relating to
the Fund’s duration will also affect the Fund’s yield, and in unusual
circumstances will affect its share price. To the extent that the Sub-Adviser
anticipates interest rates imprecisely, the Fund’s yield at times could lag
those of other similarly managed funds.
Preferred Securities Risk.
Investing in preferred stock involves the following risks: (i) certain preferred
stocks contain provisions that allow an issuer under certain conditions to skip
or defer distributions; (ii) preferred stocks may be subject to redemption,
including at the issuer’s call, and, in the event of redemption, the Fund may
not be able to reinvest the proceeds at comparable or favorable rates of return;
(iii) preferred stocks are generally subordinated to bonds and other debt
securities in an issuer’s capital structure in terms of priority for corporate
income and liquidation payments; and (iv) preferred stocks may trade less
frequently and in a more limited volume and may be subject to more abrupt or
erratic price movements than many other securities.
Credit/Default Risk. Credit risk is the risk that issuers or
guarantors of debt instruments or the counterparty to a derivatives contract,
repurchase agreement, or loan of portfolio securities is unable or unwilling to
make timely interest and/or principal payments or otherwise honor its
obligations. Changes in the financial condition of an issuer or counterparty,
changes in specific economic, social or political conditions that affect a
particular type of security or other instrument or an issuer, and changes in
economic, social, or political conditions generally can increase the risk of
default by an issuer or counterparty, which can affect a security’s or other
instrument’s credit quality or value and an issuer’s or counterparty’s ability
to pay interest and principal when due. Debt instruments are subject to varying
degrees of credit risk, which may be reflected in credit ratings. Securities
issued by the U.S. government have limited credit risk. Credit rating downgrades
and defaults (failure to make interest or principal payment) may potentially
reduce the Fund’s income and Share price.
Foreign Securities Risk.
Investments in securities of non-U.S. issuers are subject to risks not usually
associated with owning securities of U.S. issuers. There is generally less
publicly available information about foreign companies, particularly those not
subject to the disclosure and reporting requirements of U.S. securities laws.
Foreign issuers are generally not bound by uniform accounting, auditing, and
financial reporting requirements and standards of practice comparable to those
applicable to domestic issuers. Investments in foreign securities also involve
the risk of possible adverse changes in investment or exchange control
regulations or currency exchange rates, expropriation or confiscatory taxation,
limitation on the removal of cash or other assets of the Fund from foreign
markets, political or financial instability, or diplomatic and other
developments which could affect such investments. Further, economies of
particular countries or areas of the world may differ favorably or unfavorably
from the economy of the United States. Foreign securities often trade with less
frequency and volume than domestic securities and therefore may exhibit greater
price volatility. Investments in
foreign markets also involve currency risk, which is the risk that the values of
the Fund’s investments denominated in foreign currencies will decrease due to
adverse changes in the value of the U.S. dollar relative to the value of foreign
currencies.
Pandemic Risk. There is an
ongoing global outbreak of COVID-19, which has spread to over 200 countries and
territories, including the United States. The general uncertainty surrounding
the dangers and impact of COVID-19 has created significant disruption in global
supply chains and economic activity, increasing rates of unemployment and
adversely impacting many industries. The outbreak could have a continued adverse
impact on economic and market conditions and trigger a period of global economic
slowdown. The outbreak of the COVID-19 pandemic has, at times, had, and is
expected to continue to pose a risk of having, a material adverse impact on the
Fund’s market price, NAV and portfolio liquidity among other factors. These
impacts will likely continue to some extent as the outbreak persists and
potentially even longer. The rapid development and fluidity of this situation
precludes any prediction as to the ultimate adverse impact of COVID-19 on
economic and market conditions, and, as a result, present material uncertainty
and risk with respect to the Fund and the performance of its investments.
COVID-19 and the current financial, economic and capital markets environment,
and future developments in these and other areas present uncertainty and risk
with respect to the Fund’s performance, portfolio liquidity, ability to pay
distributions and make share repurchases.
Early Close/Trading Halt
Risk: An exchange or market may close or issue trading halts on specific
securities, or the ability to buy or sell certain securities or financial
instruments may be restricted, which may prevent the Fund from buying or selling
certain securities or financial instruments. In these circumstances, the Fund
may be unable to rebalance its portfolio, may be unable to accurately price its
investments and may incur.
Cybersecurity
Risk. As part
of its business, the Advisor processes, stores, and transmits large amounts of
electronic information, including information relating to the transactions of
the Fund. The Advisor and the Fund are therefore susceptible to cybersecurity risk. Cybersecurity failures or
breaches of the Fund or its service providers have the ability to cause
disruptions and impact business operations, potentially resulting in financial
losses, the inability of Fund shareholders to transact business, violations of
applicable privacy and other laws, regulatory fines, penalties, and/or
reputational damage. The Fund and its shareholders could be negatively impacted
as a result.
Inflation-Indexed Bond
Risk. Inflation-indexed bonds may
change in value in response to actual or anticipated changes in inflation rates
in a manner unanticipated by the Fund’s portfolio management team or investors
generally. Inflation-indexed bonds are subject to debt securities risks.
Mortgage- and Asset-Backed
Securities Risk. In addition to
other risks commonly associated with investing in debt securities,
mortgage-backed securities (“MBS”) are subject to “prepayment risk” and
“extension risk.” Prepayment risk is the risk that, when interest rates fall,
certain types of obligations will be paid off by the obligor more quickly than
originally anticipated, and the Fund may have to invest the proceeds in
securities with lower yields. MBS are priced with an expectation of some
anticipated level of prepayment of principal. Extension risk is the risk that,
when interest rates rise, certain obligations will be paid off by the obligor
more slowly than anticipated causing the value of these securities to fall. MBS
are also subject to the risk of default on the underlying mortgages,
particularly during periods of economic downturn. Reduced investor demand for
mortgage loans and mortgage- related securities may adversely affect the
liquidity and market value of MBS. The risks associated with investing in
asset-backed securities (“ABS”) are similar to those associated with investing
in MBS. ABS also entail certain risks not presented by MBS, including the risk
that in certain states it may be difficult to perfect the liens securing the
collateral backing certain ABS. In addition, certain ABS are based on loans that
are unsecured, which means that there is no collateral to seize if the
underlying borrower defaults.
U.S. Government Securities
Risk. Debt securities issued or
guaranteed by certain U.S. Government agencies, instrumentalities, and sponsored
enterprises are not supported by the full faith and credit of the U.S.
Government, so investments in their securities or obligations issued by them
involve credit risk greater than investments in other types of U.S. Government
securities.
Fund
Performance
The
following bar chart and tables provide an indication of the risks of investing
in the Fund by showing changes in the Fund’s performance from year to year and
by showing how the average annual total returns compared to that of a
broad-based securities market index. The Fund’s past performance is not
necessarily an indication of how the Fund will perform in the future. Updated
performance information on the Fund’s results can be obtained by visiting
https://etfpages.com/FFIU.
Calendar
Year Returns
During
the periods shown in the bar chart above, the Fund’s highest quarterly return
was 4.96% (quarter ended June 30, 2020) and the Fund’s lowest quarterly return
was -7.48% (quarter ended June 30, 2022). The year-to-date return for the most
recent quarter ended June 30, 2023, was 3.02%
Average Annual Total Returns Period
Ended December 31,
2022 |
Past 1
Year |
Past 5
Years |
Since Inception1 |
Institutional
Class Shares
Before
taxes After taxes on
distributions After taxes on distributions and sale
of shares |
-14.95% -16.01% -8.83% |
0.02% -1.11% -0.39%
|
-0.01% -1.12% -0.41% |
Bloomberg
US Aggregate Bond TR (reflects no deductions for fees and
expenses) |
-13.01%
|
0.02%
|
0.08%
|
1 The
Fund commenced operations on August 18, 2017.
After-tax
returns are calculated using the historical highest individual federal marginal
income tax rates and do not reflect the impact of state and local taxes. Actual
after-tax returns depend on an investor’s tax situation and may differ from
those shown and are not applicable to investors who hold Fund shares through
tax-deferred arrangements such as a 401(k) plan or an individual retirement
account (IRA).
Management
Investment Adviser. OBP Capital, LLC, is the
investment adviser to the Fund (“OBP” or the “Adviser”).
Investment Sub-Adviser. Universal Value
Advisors is the Sub-Adviser to the Fund.
Portfolio Managers. Robert Barone and Joshua
Barone are the Fund’s portfolio managers and are jointly and primarily
responsible for the day-to-day management of the Fund’s portfolio.
Messers. Barone have managed the Fund since its inception in August 2017.
Purchase
and Sale of Fund Shares
The
Fund will issue and redeem Shares at NAV only in large blocks of 50,000
shares (each block of shares called a “Creation Unit”). Creation Units are
issued and redeemed for cash and/or in-kind for securities. Except when
aggregated in Creation Units in transactions with APs, the shares are not
redeemable securities of the Fund.
Individual
shares of the Fund may only be bought and sold in the secondary market through a
broker or dealer at a market price. Because ETF shares trade at market prices
rather than NAV, shares may trade at a price greater than NAV (premium) or less
than NAV (discount). An investor may incur costs attributable to the difference
between the highest price a buyer is willing to pay to purchase shares of a Fund
(bid) and the lowest price a seller is willing to accept for shares of a Fund
(ask) when buying or selling shares in the secondary market (the “bid-ask
spread”). You may access recent information, including information on the Fund’s
NAV, market price, premiums and discounts, and bid-ask spreads, on the Fund’s
website at https://etfpages.com/FFIU.
Tax
Information
Fund
distributions are generally taxable to you as ordinary income or capital gains,
unless you are investing through a tax deferred arrangement, such as a 401(k)
plan or an individual retirement account (IRA). Distributions on investments
made through tax deferred arrangements will generally be taxed later upon
withdrawal of assets from those accounts.
The
Fund typically earns interest from debt securities. These amounts, net of
expenses, are passed along to Fund shareholders as “income dividend
distributions.” The Fund realizes capital gains or losses whenever it sells
securities. Net long-term capital gains are distributed to shareholders as
“capital gain distributions.”
Payments
to 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
or 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.
The
Fund’s investment objective is to seek current income with limited risk to
principal. This investment objective is not fundamental policies and can
be changed without shareholder approval by a vote of the Board. Shareholders
will receive 60 days’ prior written notice before a change to an investment
objective takes effect. There is no guarantee that the Fund will achieve its
investment objectives.
The
Fund is an actively managed ETF that seeks to achieve its investment objective
of current income by investing principally in fixed income securities of any
kind with a dollar-weighted average effective duration of between three and
seven years, under normal circumstances Under normal market conditions, the Fund
intends to invest at least 80% of its net assets (plus the amount of borrowings
for investment purposes) in such securities. Fixed income securities include
bonds, debt securities, and income-producing instruments of any kind issued by
governmental or private-sector entities.
The
fixed income and other income-producing instruments in which the Fund invests
will typically be investment grade (rated BBB or better by either Moody’s
Investors Services, Inc. (“Moody’s”) or Standard & Poor’s (“S&P”) and
unrated securities considered by the Sub-Adviser to be of comparable credit
quality). The Sub-Adviser considers all mortgage-backed securities to be
eligible for purchase regardless of their credit rating or lack thereof, and
such securities, if present in the Fund, are not considered by the Sub-Adviser
to be below investment grade.
The
Fund may invest in mortgage-backed securities of any maturity or type, including
those guaranteed by, or secured by collateral that is guaranteed by, the United
States Government, its agencies, instrumentalities, or sponsored corporations,
as well as those of private issuers not subject to any guarantee.
Mortgage-backed securities include, among others, government mortgage
pass-through securities, collateralized mortgage obligations (“CMOs”),
multiclass pass-through securities, and private mortgage pass-through
securities. The Fund may also invest in corporate debt obligations, asset-backed
securities, foreign securities (corporate and government), inflation-indexed
bonds, and preferred securities.
The
average maturity or duration of the Fund’s portfolio of fixed income securities
will vary based on the Sub-Adviser’s assessment of economic and market
conditions, as well as current and anticipated changes in interest rates;
however, the Sub-Adviser intends to manage the Fund’s portfolio so that it has a
dollar-weighted average effective duration of between three and seven years,
under normal circumstances. The Fund may invest in individual securities of
any.
Investors
should consider the following risk factors and special considerations associated
with investing in the Fund, which may cause you to lose money. The following
principal risk factors have been identified for the Fund. See also the sections
“Additional Information about the Fund’s Principal Investment Risks” and
“Additional Risk
Authorized Participant Risk:
Only an Authorized Participant may engage in creation or redemption
transactions directly with the Fund. The Fund has a limited number of
institutions that may act as Authorized Participants on an agency basis (i.e.,
on behalf of other market participants). Authorized Participant concentration
risk may be heightened for exchange-traded funds (ETFs), such as the Fund, that
invest in securities issued by non-U.S. issuers or other securities or
instruments that have lower trading volumes.
Call/Prepayment Risk. During periods of falling interest rates, an
issuer of a callable bond may exercise its right to pay principal on an
obligation earlier than expected. This may result in the Fund reinvesting
proceeds at lower interest rates, resulting in a decline in the Fund’s
income.
Credit/Default Risk. Credit risk is the risk that issuers or
guarantors of debt instruments or the counterparty to a derivatives contract,
repurchase agreement or loan of portfolio securities is unable or unwilling to
make timely interest and/or principal payments or otherwise honor its
obligations. Changes in the financial condition of an issuer or counterparty,
changes in specific economic, social or political conditions that affect a
particular type of security or other instrument or an issuer, and changes in
economic, social, or political conditions generally can increase the risk of
default by an issuer or counterparty, which can affect a security’s or other
instrument’s credit quality or value and an issuer’s or counterparty’s ability
to pay interest and principal when due. Debt instruments are subject to varying
degrees of credit risk, which may be reflected in credit ratings. Securities
issued by the U.S. government have limited credit risk. Credit rating downgrades
and defaults (failure to make interest or principal payment) may potentially
reduce the Fund’s income and Share price.
Cybersecurity Risk. As part of its business, the Advisor
processes, stores, and transmits large amounts of electronic information,
including information relating to the transactions of the Fund. The Advisor and
the Fund are therefore susceptible to cybersecurity risk. Cyber-attacks include,
among other behaviors, stealing or corrupting data maintained online or
digitally, denial of service attacks on websites, the unauthorized release of
confidential information and causing operational disruption. Successful
cyber-attacks against, or security breakdowns of, the Fund or its advisor,
custodians, fund accountant, fund administrator, transfer agent, pricing vendors
and/or other third-party service providers may adversely impact the Fund and its
shareholders. For instance, cyber-attacks may interfere with the processing of
shareholder transactions, impact the Fund’s ability to calculate its NAV, cause
the release of private shareholder information or confidential Fund information,
impede trading, cause reputational damage, and subject the Fund to regulatory
fines, penalties or financial losses, reimbursement or other compensation costs,
and/or additional compliance costs. The Fund also may incur substantial costs
for cybersecurity risk management in order to guard against any cyber incidents
in the future. The Fund and its shareholders could be negatively impacted as a
result.
Early Close/Trading Halt
Risk: An exchange or market may close or issue trading halts on specific
securities, or the ability to buy or sell certain securities or financial
instruments may be restricted, which may prevent the Fund from buying or selling
certain securities or financial instruments. In these circumstances, the Fund
may be unable to rebalance its portfolio, may be unable to accurately price its
investments and may incur substantial trading losses.
ETF Structure Risk. The
Fund is structured as an ETF and as a result is subject to the special risks,
including:
o |
Not Individually Redeemable.
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. An active trading market for the Fund’s shares may not be
developed or maintained. If the Fund’s shares are traded outside a
collateralized settlement system, the number of financial institutions
that can act as authorized participants that can post collateral on an
agency basis is limited, which may limit the market for the Fund’s
shares. |
o |
Cash Purchases and Redemptions. To the
extent Creation Units are purchased or redeemed by Authorized Participants
in cash instead of in-kind, the Fund will incur certain costs such as
brokerage expenses and taxable gains and losses. These costs could be
imposed on the Fund and impact the Fund’s NAV if not fully offset by
transaction fees paid by the Authorized
Participants. |
o |
Market Price Variance Risk.
Individual Shares of the Fund that are listed for trading on the Exchange
can be bought and sold in the secondary market at market prices. The
market prices of Shares will fluctuate in response to changes in NAV and
supply and demand for Shares. There may be times when the market
price and the NAV vary significantly and you may pay more than NAV when
buying Shares on the secondary market, and you may receive less than NAV
when you sell those Shares. The market price of Shares, like the
price of any exchange-traded security, includes a “bid-ask spread” charged
by the exchange specialists, market makers or other participants that
trade the particular security. In times of severe market disruption,
the bid-ask spread often increases significantly. This means that
Shares may trade at a discount to NAV and the discount is likely to be
greatest when the price of Shares is falling fastest, which may be the
time that you most want to sell your Shares. The Fund’s investment results
are measured based upon the daily NAV of the Fund over a period of
time. Investors purchasing and selling Shares in the secondary
market may not experience investment results consistent with those
experienced by those creating and redeeming directly with the
Fund. |
•
|
In
times of market stress, market makers may step away from their role market
making in shares of ETFs and in executing trades, which can lead to
differences between the market value of Fund shares and the Fund’s net
asset value. |
•
|
To
the extent authorized participants exit the business or are unable to
process creations or redemptions and no other A can step in to do so,
there may be a significantly reduced trading market in the Fund’s shares,
which can lead to differences between the market value of Fund shares and
the Fund’s net asset value. |
•
|
The
market price for the Fund’s shares may deviate from the Fund’s net asset
value, particularly during times of market stress, with the result that
investors may pay significantly more or significantly less for Fund shares
than the Fund’s net asset value, which is reflected in the bid and ask
price for Fund shares or in the closing
price. |
•
|
When
all or a portion of an ETFs underlying securities trade in a market that
is closed when the market for the Fund’s shares is open, there may be
changes from the last quote of the closed market and the quote from the
Fund’s domestic trading day, which could lead to differences between the
market value of the Fund’s shares and the Fund’s net asset
value. |
•
|
In
stressed market conditions, the market for the Fund’s shares may become
less liquid in response to the deteriorating liquidity of the Fund’s
portfolio. This adverse effect on the liquidity of the Fund’s shares
may, in turn, lead to differences between the market value of the Fund’s
shares and the Fund’s net asset value. |
Fixed Income Risk. Fixed
income risk factors include credit risk (the debtor may default) and prepayment
risk (the debtor may pay its obligation early or later than expected,
potentially reducing the amount of interest payments or extending time to
principal repayment). These risks could affect the value of a particular
investment possibly causing the Fund’s share price and total return to be
reduced and fluctuate more than other types of investments. When the Fund
invests in fixed income securities the value of your investment in the Fund will
fluctuate with changes in interest rates. Typically, a rise in interest
rates causes a decline in the value of fixed income securities. In
general, the market price of debt securities with longer maturities will
increase or decrease more in response to changes in interest rates than
shorter-term securities. If the U.S. Federal Reserve’s Federal Open Market
Committee (“FOMC”) raises the federal funds interest rate target, interest rates
across the U.S. financial system may rise. However, the magnitude of rate
changes across maturities and borrower sectors is uncertain. Rising rates may
decrease liquidity and increase volatility, which may make portfolio management
more difficult and costly to the Fund and its shareholders. Additionally,
default risk increases if issuers must borrow at higher rates. Generally, these
changing market conditions may cause the Fund’s share price to fluctuate or
decline more than other types of equity investments
Foreign Securities Risk.
Investments in securities of non-U.S. issuers are subject to risks not usually
associated with owning securities of U.S. issuers. There is generally less
publicly available information about foreign companies, particularly those not
subject to the disclosure and reporting requirements of U.S. securities laws.
Foreign issuers are generally not bound by uniform accounting, auditing, and
financial reporting requirements and standards of practice comparable to those
applicable to domestic issuers. Investments in foreign securities also involve
the risk of possible adverse changes in investment or exchange control
regulations or currency exchange rates, expropriation or confiscatory taxation,
limitation on the removal of cash or other assets of the Fund from foreign
markets, political or financial instability, or diplomatic and other
developments which could affect such investments. Further, economies of
particular countries or areas of the world may differ favorably or unfavorably
from the economy of the United States. Foreign securities often trade with less
frequency and volume than domestic securities and therefore may exhibit greater
price volatility. Investments in
foreign markets also involve currency risk, which is the risk that the values of
the Fund’s investments denominated in foreign currencies will decrease due to
adverse changes in the value of the U.S. dollar relative to the value of foreign
currencies.
Inflation-Indexed Bond
Risk. Inflation-indexed bonds may
change in value in response to actual or anticipated changes in inflation rates
in a manner unanticipated by the Fund’s portfolio management team or investors
generally. Inflation-indexed bonds are subject to debt securities risks.
Interest Rate Risk. As interest rates rise, the value of fixed
income securities held by a Fund are likely to decrease. Securities with longer
durations tend to be more sensitive to interest rate changes, making them more
volatile than securities with shorter durations. Interest rates in the United
States are near historic lows, which may increase a Fund’s exposure to risks
associated with rising rates. A wide variety of market factors can cause
interest rates to rise, including central bank monetary policy (including the
Federal Reserve ending its “quantitative easing” policy of purchasing large
quantities of securities issued or guaranteed by the U.S. government), rising
inflation, and changes in general economic conditions. Interest rate changes can
be sudden and unpredictable. Moreover, rising interest rates may lead to
decreased liquidity in the bond markets, making it more difficult for a Fund to
value or sell some or all of its bond investments at any given time. Changes in
interest rates may also affect a Fund’s share price; a sharp rise in interest
rates could cause a Fund’s share price to fall.
The
average duration of a Fund’s portfolio of fixed income securities will vary
based on the Sub-Adviser’s assessment of economic and market conditions, as well
as current and anticipated changes in interest rates; however, the Sub-Adviser
intends to manage the UVA Unconstrained Medium-Term Fixed Income ETF portfolio
so that it has an average duration of between four and seven years under normal
circumstances. Duration measures the price sensitivity of a security to interest
rate changes and is typically expressed as a period of time. Duration differs
from maturity, which is the time until a fixed income security’s issuer is
obligated to pay the principal due on such security; however, a fixed income
security’s duration increases as its maturity increases and decreases as its
maturity decreases, meaning longer-maturity securities have higher durations
than those with shorter maturity. The longer the duration of the securities held
in a Fund’s portfolio, the more sensitive a Fund’s portfolio will be to a change
in interest rates. As the value of a security changes over time, so will its
duration, which in turn will affect the Fund’s duration. A 1% change in interest
rates is typically estimated to change the price of a fixed income security by
1% for each year of the security’s duration. For example, if a fixed income
security has a duration of three years, a 1% rise in interest rates would
typically be expected to reduce the price of the security by approximately 3%.
Similar estimates would typically apply to a portfolio of fixed income
securities, such as the UVA Unconstrained Medium-Term Fixed Income ETF, based on
the portfolio’s average duration. Accordingly, securities with longer durations
tend to be more sensitive to interest rate changes, making them more volatile
than securities with shorter durations. Duration is an estimate of a security’s
sensitivity to changes in prevailing interest rates that is based on certain
factors that may prove to be incorrect. It is therefore not an exact measurement
and may not be able to reliably predict a particular security’s price
sensitivity to changes in interest rates.
Management Risk. The Fund
is subject to management risk because it does not seek to replicate the
performance of a specified index. The portfolio managers will utilize
proprietary investment processes, techniques, and risk analyses in making
investment decisions for the Fund, but there can be no guarantee that these
decisions will produce the desired results. In addition, legislative,
regulatory, or tax developments may affect the investment techniques available
to the portfolio managers in connection with managing the Fund and may also
adversely affect the ability of the Fund to achieve its investment
objective.
Mortgage- and Asset-Backed
Securities Risks. MBS (residential and commercial) and asset-backed
securities represent interests in “pools” of mortgages or other assets,
including consumer loans or receivables held in trust. The characteristics of
these MBS and asset-backed securities differ from traditional fixed income
securities. Like traditional fixed income securities, the value of MBS or
asset-backed securities typically increases when interest rates fall and
decreases when interest rates rise. However, a main difference is that the
principal on MBS or asset-backed securities may normally be prepaid at any time,
which will reduce the yield and market value of these securities. Therefore, MBS
and asset-backed backed securities are subject to “prepayment risk” and
“extension risk.” Because of prepayment risk and extension risk, mortgage-backed
securities react differently to changes in interest rates than other fixed
income securities.
Prepayment
risk is the risk that, when interest rates fall, certain types of obligations
will be paid off by the obligor more quickly than originally anticipated and a
Fund may have to invest the proceeds in securities with lower yields. In periods
of falling interest rates, the rate of prepayments tends to increase (as does
price fluctuation) as borrowers are motivated to pay off debt and refinance at
new lower rates. During such periods, reinvestment of the prepayment proceeds by
the management team will generally be at lower rates of return than the return
on the assets which were prepaid. Prepayment reduces the yield to maturity and
the average life of the MBS or asset-backed securities. The maturity of certain
securities, such as MBS and ABS, is calculated using the security’s
weighted-average life. Estimated prepayment rates for these securities are used
in this calculation. If actual prepayment rates differ from the estimates used
in calculating the weighted-average life, the Fund’s yield and/or share price
could be negatively affected.
Extension
risk is the risk that, when interest rates rise, certain obligations will be
paid off by the obligor more slowly than anticipated causing the value of these
securities to fall. Rising interest rates tend to extend the duration of MBS and
asset-backed securities, making them more sensitive to changes in interest
rates. The value of longer-term securities generally changes more in response to
changes in interest rates than shorter term securities. As a result, in a
period of rising interest rates, MBS and asset-backed securities may exhibit
additional volatility and may lose value.
Small
movements in interest rates (both increases and decreases) may quickly and
significantly reduce the value of certain MBS. In addition, because prepayment
rates of individual mortgage pools vary widely, the maturity of a particular
pool cannot be predicted precisely. A Fund’s investments in asset-backed
securities are subject to risks similar to those associated with MBS, as well as
additional risks associated with the nature of the assets and the servicing of
those assets. These securities also are subject to the risk of default on the
underlying mortgage or assets, particularly during periods of economic
downturn.
MBS
may be either pass-through securities or CMOs. Pass-through securities represent
a right to receive principal and interest payments collected on a pool of
mortgages, which are passed through to security holders. CMOs are created by
dividing the principal and interest payments collected on a pool of mortgages
into several revenue streams (tranches) with different priority rights to
portions of the underlying mortgage payments. The Fund will not invest in CMO
tranches which represent a right to receive interest only (“Ios”), principal
only (“Pos”), or an amount that remains after other floating-rate tranches are
paid (an inverse floater). If a Fund invests in CMO tranches (including CMO
tranches issued by government agencies) and interest rates move in a manner not
anticipated by Fund management, it is possible that such Fund could lose all or
substantially all of its investment.
Ongoing
developments in the residential mortgage market may have additional consequences
to the market for mortgage-backed securities. In past years, delinquencies and
losses generally increased with respect to securitizations involving residential
mortgage loans and potentially could begin increasing again as a result of a
weakening housing market and the seasoning of securitized pools of mortgage
loans. Many so-called sub-prime mortgage pools are currently distressed and may
be trading at significant discounts to their face value.
Additionally,
mortgage lenders have adjusted their loan programs and underwriting standards,
which has reduced the availability of mortgage credit to prospective mortgagors.
This has resulted in reduced availability of financing alternatives for
mortgagors seeking to refinance their mortgage loans. The reduced availability
of refinancing options for mortgagors has resulted in higher rates of
delinquencies, defaults, and losses on mortgage loans, particularly in the case
of, but not limited to, mortgagors with adjustable rate mortgage loans or
interest-only mortgage loans that experience significant increases in their
monthly payments following the adjustment date or the end of the interest-only
period. These events, alone or in combination with each other and with
deteriorating economic conditions in the general economy, may continue to
contribute to higher delinquency and default rates on mortgage loans. The
tighter underwriting guidelines for residential mortgage loans, together with
lower levels of home sales and reduced refinance activity, also may have
contributed to a reduction in the prepayment rate for mortgage loans generally
and this may continue. The values of mortgage-backed securities may be
substantially dependent on the servicing of the underlying mortgage pools, and
therefore are subject to risks associated with the negligence or malfeasance by
their servicers and to the credit risk of their servicers. In certain
circumstances, the mishandling of related documentation also may affect the
rights of security holders in and to the underlying collateral.
The
U.S. Government conservatorship of Federal Home Loan Mortgage Corporation
(“Freddie Mac”) and the Federal National Mortgage Corporation (“Fannie Mae”) in
September 2008 and its ultimate resolution may adversely affect the real estate
market, the value of real estate-related assets generally, and markets
generally. In addition, there may be proposals from the U.S. Congress or other
branches of the U.S. Government regarding the conservatorship, including
regarding reforming Fannie Mae and Freddie Mac or winding down their operations,
which may or may not come to fruition. There can be no assurance that such
proposals, even those that are not adopted, will not adversely affect the values
of the Fund’s assets.
The
Federal Housing Finance Agent (“FHFA”), as conservator or receiver of Fannie Mae
and Freddie Mac, has the power to repudiate any contract entered into by Fannie
Mae or Freddie Mac prior to its appointment if it determines that performance of
the contract is burdensome, and repudiation of the contract promotes the orderly
administration of Fannie Mae’s or Freddie Mac’s affairs. In the event the
guaranty obligations of Fannie Mae or Freddie Mac are repudiated, the payments
of interest to holders of Fannie Mae or Freddie Mac mortgage-backed securities
would be reduced if payments on the mortgage loans represented in the mortgage
loan groups related to such mortgage-backed securities are not made by the
borrowers or advanced by the servicer. Any actual direct compensatory damages
for repudiating these guaranty obligations may not be sufficient to offset any
shortfalls experienced by such mortgage-backed security holders.
Further,
in its capacity as conservator or receiver, FHFA has the right to transfer or
sell any asset or liability of Fannie Mae or Freddie Mac without any approval,
assignment or consent. If FHFA were to transfer any such guaranty obligation to
another party, holders of Fannie Mae or Freddie Mac mortgage-backed securities
would have to rely on that party for satisfaction of the guaranty obligation and
would be exposed to the credit risk of that party.
Pandemic Risk. There is an ongoing global outbreak of
COVID-19, which has spread to over 200 countries and territories, including the
United States. The general uncertainty surrounding the dangers and impact of
COVID-19 has created significant disruption in global supply chains and economic
activity, increasing rates of unemployment and adversely impacting many
industries. The outbreak could have a continued adverse impact on economic and
market conditions and trigger a period of global economic slowdown. The outbreak
of the COVID-19 pandemic has, at times, had, and is expected to continue to pose
a risk of having, a material adverse impact on the Fund’s market price, NAV and
portfolio liquidity among other factors. These impacts will likely continue to
some extent as the outbreak persists and potentially even longer. The rapid
development and fluidity of this situation precludes any prediction as to the
ultimate adverse impact of COVID-19 on economic and market conditions, and, as a
result, present material uncertainty and risk with respect to the Fund and the
performance of its investments. COVID-19 and the current financial, economic and
capital markets environment, and future developments in these and other areas
present uncertainty and risk with respect to the Fund’s performance, portfolio
liquidity, ability to pay distributions and make share repurchases.
Preferred Securities Risk.
Investing in preferred stock involves the following risks: (i) certain preferred
stocks contain provisions that allow an issuer under certain conditions to skip
or defer distributions; (ii) preferred stocks may be subject to redemption,
including at the issuer’s call, and, in the event of redemption, the Fund may
not be able to reinvest the proceeds at comparable or favorable rates of return;
(iii) preferred stocks are generally subordinated to bonds and other debt
securities in an issuer’s capital structure in terms of priority for corporate
income and liquidation payments; and (iv) preferred stocks may trade less
frequently and in a more limited volume and may be subject to more abrupt or
erratic price movements than many other securities.
U.S. Government Securities
Risk. Debt securities issued or
guaranteed by certain U.S. Government agencies, instrumentalities, and sponsored
enterprises are not supported by the full faith and credit of the U.S.
Government, so investments in their securities or obligations issued by them
involve credit risk greater than investments in other types of U.S. Government
securities.
OBP
Capital, LLC (“OBP” or the “Adviser”), acts as the Fund’s investment adviser
pursuant to an advisory agreement with the Trust on behalf of the Fund (the
“Advisory Agreement”). As Adviser, OBP has overall responsibility for the
general management and administration of the Fund. The Adviser, located at 116
S. Franklin Street, Rocky Mount, North Carolina 27802, is registered with the
Securities and Exchange Commission as an investment adviser. Pursuant to the
Advisory Agreement, the Adviser manages the investment and reinvestment of the
Fund’s assets and administers the affairs of the Fund to the extent requested by
the Board of Trustees.
Adviser Compensation. As full compensation for
the investment advisory services provided to the Fund, the Adviser receives
annual compensation based on the Fund’s average daily net assets at the annual
rates set forth below. For the fiscal year ended June 30, 2023, the Adviser
earned advisory fees after waivers and reimbursements in the amounts set forth
below.
Fund |
Management Fee |
Net Advisory Fee1 |
UVA
Unconstrained Medium-Term Fixed Income ETF |
0.25% |
0.05% |
1.
The Net Advisory Fee provided is after payments to the Sub-Advisor and
reimbursements to the Fund.
Universal
Value Advisors (“UVA” or a “Sub-Adviser”) acts as the Sub-Adviser for the Fund
pursuant to a sub-advisory agreement with the Trust and OBP (the “Sub-Advisory
Agreement”). UVA, established in 2005, is located at 1 E. Liberty St. #406,
Reno, Nevada 89501. UVA provides discretionary and non-discretionary asset
management services to high net worth individuals and institutions using stocks,
bonds, and ETFs.
Pursuant
to the Sub-Advisory Agreement, UVA furnishes an investment program for the Fund
and manages the investment operations and composition of the Fund.
Sub-Adviser Compensation. Pursuant to the
Sub-Advisory Agreement, the Adviser pays the Sub-Adviser a sub-advisory fee out
of the Adviser’s advisory fee for the services it provides, payable on a monthly
basis, as a percentage of the Fund’s average daily net assets as set forth
below:
Fund |
Sub-Advisory
Fee |
UVA
Unconstrained Medium-Term Fixed Income ETF |
0.20% |
Expense Limitation Agreement. In
the interest of limiting expenses of the Fund, the Sub-Adviser has entered into
an expense limitation agreement with the Trust, pursuant to which the
Sub-Advisor has agreed to waive or reduce its management fees and assume other
expenses of the Fund, if necessary, in an amount that limits the Fund’s annual
operating expenses (exclusive of (i) any front-end or contingent deferred loads;
(ii) brokerage fees and commissions, (iii) acquired fund fees and expenses; (iv)
fees and expenses associated with investments in other collective investment
vehicles or derivative instruments (including, for example, option and swap fees
and expenses); (v) borrowing costs (such as interest and dividend expense on
securities sold short); (vi) taxes; and (vii) extraordinary expenses, such as
litigation expenses (which may include indemnification of Fund officers and
Trustees and contractual indemnification of Fund service providers (other than
the Adviser or Sub-Adviser)) to not more than 0.50%. Net annual operating
expenses for the Fund may exceed these limits to the extent that each incurs
expenses enumerated above as exclusions. The expense limitation agreement runs
through October 31, 2024, and may be terminated by the Board at any time. The
Sub-Adviser cannot recoup from the Fund any amounts paid by the Sub-Adviser
under the expense limitation agreement.
Disclosure Regarding Approval of Advisory Agreement
and Sub-Advisory Agreement. A discussion regarding the basis for the
Board’s approval of the Advisory Agreement and Sub-Advisory Agreement is
available in the Fund’s annual report to shareholders for the period ended June
30, 2023.
Portfolio Management. The portfolio managers
are primarily responsible for the day-to-day operation of the Fund. The
portfolio managers of the Sub-Adviser are Robert Barone and Joshua Barone.
Messrs. Barone and Barone have provided services to the Fund since its inception
in August 2017.
Robert
Barone has been the co-founder of Universal Value Advisors (UVA) since
2005. He has also been UVA’s economist as well as a wealth and portfolio
manager since 2005. Mr. Barone holds a Ph.D. in economics (Georgetown
University) and is nationally known for his blogs, many of which are posted at
Forbes. In his career, he has been a professor of finance (University of Nevada
– 1979-1984), a community bank CEO (Comstock Bancorp – 1984-1999), a director of
the Federal Home Loan Bank of San Francisco where he served as its Chair in
2004, and a director of CSAA Insurance Company (a AAA Insurance Company) where
he chaired the Finance and Investment Committee. In 2007-2009 he served as
chairman of the board for that entity. Currently, Mr. Barone is a director of
Mountain West Group (AAA Northern California, Nevada, and Utah) and a director
of Allied Mineral Products, LLC.
Joshua
Barone has been the managing member of Universal Value Advisors (UVA) since its
inception in 2005. In that capacity, he is responsible for the company’s day to
day operations and is a major contributor to the company’s strategic vision.
Prior to forming UVA, along with Robert Barone, he co-founded Adagio Trust
Company in 2000.
The
Statement of Additional Information provides additional information about the
portfolio managers’ compensation structure, other accounts managed by the
portfolio managers and the portfolio managers’ ownership of securities of the
Fund.
Shares
of the Fund may be acquired or redeemed directly from the Fund at NAV only in
Creation Units or multiples thereof, as discussed in the “How to Buy and Sell
Shares” section of this prospectus. Only an Authorized Participant may engage in
creation or redemption transactions directly with a Fund. Once created, shares
of the Fund generally trade in the secondary market in amounts less than a
Creation Unit. Individual Fund shares may only be bought and sold in the
secondary market through a broker or dealer at market price.
Shares
of the Fund are listed for trading in the secondary market on the NYSE Arca.
Shares can be bought and sold throughout the trading day like other publicly
traded shares. When buying or selling Shares through a broker, you will incur
customary brokerage commissions and other charges. In addition, you may incur
the costs attributable to the difference between the highest price a buyer is
willing to pay to purchase shares of a Fund (bid) and the lowest price a seller
is willing to accept for shares of a Fund (ask) when buying or selling shares in
the secondary market (the “bid-ask spread”). Because the Shares trade at market
prices rather than net asset value, the price you pay or receive for the Shares
may be greater than NAV (premium) or less than NAV (discount) of such
shares.
The
Fund trades under the NYSE Arca ticker symbol FFIU.
You
can access recent information, including information on the Fund’s NAV, market
price, premiums and discounts, and bid-ask spreads, on the Fund’s websites
listed below.
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, and hold legal title to, all
outstanding Shares of a Fund and is recognized as the owner of all outstanding
Shares of the Fund.
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 stocks that you hold in
book- entry or “street name” form.
Pricing Fund Shares. The trading price of a
Fund’s Shares on the NYSE Arca is based on the market price, not the Fund’s NAV,
so it may differ from a Fund’s daily NAV and can be affected by market forces of
supply and demand, economic conditions and other factors. Information
regarding the number of days the market price of a Fund’s Shares was greater
than the Fund’s NAV and the number of days it was less than a Fund’s NAV (i.e.,
premium or discount) for the most recently completed calendar year, and the most
recently completed calendar quarter is available on the Fund’s website at
https://etfpages.com/FFIU.
Determination of Net Asset Value. The NAV per
Share for a Fund is determined once daily as of the close of the New York Stock
Exchange (“NYSE”), usually 4:00 p.m. Eastern time, each day the NYSE is open for
trading, provided that (a) any assets or liabilities denominated in currencies
other than the U.S. dollar shall be translated into U.S. dollars at the
prevailing market rates on the date of valuation as quoted by one or more major
banks or dealers that makes a two-way market in such currencies (or a data
service provider based on quotations received from such banks or dealers); and
(b) U.S. fixed income assets may be valued as of the announced closing time for
trading in fixed income instruments on any day that the Securities Industry and
Financial Markets Association announces an early closing time. NAV per Share is
determined by dividing the value of a Fund’s portfolio securities, cash, and
other assets (including accrued interest), less all liabilities (including
accrued expenses), by the total number of Shares outstanding.
A
Fund’s debt securities are valued at market value. Market value generally means
a valuation (i) obtained from an exchange, a pricing service or a major market
maker (or dealer), (ii) based on a price quotation or other equivalent
indication of value supplied by an exchange, a pricing service or a major market
maker (or dealer), or (iii) based on amortized cost. A Fund’s debt securities
are thus valued by reference to a combination of transactions and quotations for
the same or other securities believed to be comparable in quality, coupon,
maturity, type of issue, call provisions, trading characteristics and other
features deemed to be relevant. To the extent a Fund’s debt securities are
valued based on price quotations or other equivalent indications of value
provided by a third-party pricing service, any such third-party pricing service
may use a variety of methodologies to value some or all of a Fund’s debt
securities to determine the market price. For example, the prices of
securities with characteristics similar to those held by a Fund may be used to
assist with the pricing process. In addition, the pricing service may use
proprietary pricing models. Equity securities are valued at the last
reported sale price on the principal exchange on which such securities are
traded, as of the close of regular trading on the NYSE Arca on the day the
securities are being valued or, if there are no sales, at the mean of the most
recent bid and asked prices. Equity securities that are traded in
over-the-counter markets are valued at the NASDAQ Official Closing Price as of
the close of regular trading on the NYSE Arca on the day the securities are
valued or, if there are no sales, at the mean of the most recent bid and asked
prices. Securities for which market quotations (or other market valuations
such as those obtained from a pricing service) are not readily available,
including restricted securities, are valued by a method that the Trustees
believe accurately reflects fair value. Securities will be valued at fair
value when market quotations (or other market valuations such as those obtained
from a pricing service) are not readily available or are deemed unreliable, such
as when a security’s value or meaningful portion of a Fund’s portfolio is
believed to have been materially affected by a significant event. Such
events may include a natural disaster, an economic event like a bankruptcy
filing, a trading halt in a security, an unscheduled early market close or a
substantial fluctuation in domestic and foreign markets that has occurred
between the close of the principal exchange and the NYSE Arca. In such a
case, the value for a security is likely to be different from the last quoted
market price. In addition, due to the subjective and variable nature of
fair market value pricing, it is possible that the value determined for a
particular asset may be materially different from the value realized upon such
asset’s sale.
Trading
in securities on many foreign securities exchanges and over-the-counter markets
is normally completed before the close of business on each U.S. business day. In
addition, securities trading in a particular country or countries may not take
place on all U.S. business days or may take place on days that are not U.S.
business days. Changes in valuations on certain securities may occur at times or
on days on which a Fund’s net asset value is not calculated and on which a Fund
does not effect sales, redemptions and exchanges of its Shares.
Creation Units. Investors such as market
makers, large investors, and institutions who wish to deal in Creation Units
directly with a Fund must have entered into an authorized participant agreement
with Capital Investment Group, Inc. (the “Distributor”), and be accepted by the
transfer agent, or purchase through a dealer that has entered into such an
agreement. Set forth below is a brief description of the procedures applicable
to purchase and redemption of Creation Units. For more detailed information, see
“Creation and Redemption of Creation Unit Aggregations” in the Statement of
Additional Information.
Buying Creation Units. In order to purchase
Creation Units of a Fund, an investor must generally deposit a designated
portfolio of securities (the “Deposit Securities”) (and/or an amount in cash in
lieu of some or all of the Deposit Securities) and generally make a cash payment
referred to as the “Cash Component.” For those APs that are not eligible for
trading a Deposit Security, and in such other circumstances as the Sub-Adviser
believes are in the best interests of a Fund, custom orders are available. The
list of the names and the amounts of the deposit Securities is made available by
a Fund’s custodian through the facilities of the NSCC immediately prior to the
opening of business each day of the NYSE Arca. The Cash Component represents the
difference between the NAV of a Creation Unit and the market value of the
Deposit Securities. In the case of custom orders, cash- in-lieu may be added to
the Cash Component to replace any Deposit Securities that either the AP may not
be eligible to trade or the Sub-Adviser believes are in the best interests of a
Fund not to accept in kind.
Orders
must be placed in proper form by or through an AP that is a participant of the
DTC (“DTC Participant”). All standard orders must be placed for one or more
whole Creation Units of Shares of a Fund and must be received by the Distributor
in proper form no later than the close of regular trading on the NYSE
(ordinarily 4:00 p.m. Eastern time) (“Closing Time”) in order to receive that
day’s closing NAV per Share. In the case of custom orders, the order must be
received by the Distributor no later than one hour prior to Closing Time in
order to receive that day’s closing NAV per Share. A custom order may be placed
by an AP in the event that the Trust permits or requires the substitution of an
amount of cash to be added to the Cash Component to replace any Deposit Security
which may not be available in sufficient quantity for delivery or which may not
be eligible for trading by such AP or the investor for which it is acting or any
other relevant reason. A fixed creation transaction fee of $500 per transaction
(the “Creation Transaction Fee”) is applicable to each transaction regardless of
the number of Creation Units purchased in the transaction. An additional
variable charge for cash creations or partial cash creations may also be imposed
to compensate the Fund for the costs associated with buying the applicable
securities. A Fund may adjust these fees from time to time based on actual
experience. The price for each Creation Unit will equal the daily Fund’s NAV per
Share times the number of Shares in a Creation Unit plus the fees described
above and, if applicable, any transfer taxes.
Shares
of a Fund may be issued in advance of receipt of all Deposit Securities subject
to various conditions, including a requirement to maintain cash at least equal
to at least 105% and up to 115% of the market value of the missing Deposit
Securities on deposit with the Trust.
For
more detailed information, see “Creation and Redemption of Creation Unit
Aggregations” in the Statement of Additional Information.
Legal Restrictions on Transactions in Certain
Securities. An investor subject to a legal restriction with respect to a
particular security required to be deposited in connection with the purchase of
a Creation Unit may, at the Fund’s discretion, be permitted to deposit an
equivalent amount of cash in substitution for any security which would otherwise
be included in the Deposit Securities applicable to the purchase of a Creation
Unit. For more detailed information, see “Creation and Redemption of Creation
Unit Aggregations” in the Statement of Additional Information.
Redemption of Creation Units. Shares may be
redeemed only in Creation Units at their NAV and only on a day the NYSE Arca is
open for business. The Fund’s custodian makes available immediately prior to the
opening of business each day of the NYSE Arca, through the facilities of the
NSCC, the list of the names and the amounts of the Fund’s portfolio securities
that will be applicable that day to redemption requests in proper form
(“Redemption Securities”). Redemption Securities received on redemption may not
be identical to Deposit Securities, which are applicable to purchases of
Creation Units. Unless cash redemptions or partial cash redemptions are
available or specified for a Fund as set forth below, the redemption proceeds
consist of the Redemption Securities, plus cash in an amount equal to the
difference between the NAV of Shares being redeemed as next determined after
receipt by the transfer agent of a redemption request in proper form, and the
value of the Redemption Securities (the “Cash Redemption Amount”), less the
applicable redemption fee and, if applicable, any transfer taxes. Should the
Redemption Securities have a value greater than the NAV of Shares being
redeemed, a compensating cash payment to the Fund equal to the differential,
plus the applicable redemption fee and, if applicable, any transfer taxes will
be required to be arranged for, by or on behalf of the redeeming
shareholder.
An
order to redeem Creation Units of the Fund may only be effected by or through an
Authorized Participant. An order to redeem must be placed for one or more whole
Creation Units and must be received by the transfer agent in proper form no
later than the close of regular trading on the NYSE (normally 4:00 p.m. Eastern
time) in order to receive that day’s closing NAV per Share. In the case of
custom orders, as further described in the Statement of Additional Information,
the order must be received by the transfer agent no later than 3:00 p.m. Eastern
time.
A
0.50% redemption transaction fee per transaction (the “Redemption Transaction
Fee”) is applicable to each redemption transaction in which the Creation Units
have been held for less than ninety (90) days, regardless of the number of
Creation Units redeemed in the transaction. An additional variable charge for
cash redemptions or partial cash redemptions may also be imposed to compensate
the Fund for the costs associated with selling the applicable securities. The
Fund may adjust these fees from time to time based on actual experience. The
Fund reserves the right to effect redemptions wholly or partially in cash. A
shareholder may request a cash redemption or partial cash redemption in lieu of
securities, however, the Fund may, in its discretion, reject any such
request.
For
more detailed information, see “Creation and Redemption of Creation Unit
Aggregations” in the Statement of Additional Information.
Distributions. Fund shareholders are entitled
to their share of the Fund’s income and net realized gains on its investments.
The Fund pays out substantially all of its net earnings to its shareholders as
“distributions.” Income dividends, if any, are distributed to shareholders
monthly. Net capital gains are distributed annually. Dividends may be declared
and paid more frequently to comply with the distribution requirements of the
Internal Revenue Code of 1986, as amended (the “Code”). Some portion of each
distribution may result in a return of capital (which is a return of the
shareholder’s investment in the Fund). Fund shareholders will be notified
regarding the portion of the distribution that represents a return of
capital.
Distributions
in cash may be reinvested automatically in additional whole Shares only if the
broker through which the Shares were purchased makes such option
available.
Shares
can only be purchased and redeemed directly from the Fund 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 a 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 the Fund’s Shares trade at or close to NAV. The
Fund also employs fair valuation pricing to minimize potential dilutions form
market timing. In addition, the Fund imposes fixed and variable transaction fees
on purchases and redemptions of Fund 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 and deter market timing of the Fund’s shares.
Administrator. The Trust has entered into a Fund Accounting
and Administration Service Agreement with The Nottingham Company
(“Administrator”), located at 116 South Franklin Street, Rocky Mount, North
Carolina 27804. Under the Fund Accountant and Administration Service Agreement,
The Nottingham Company serves as the accounting agent and administrator for the
Fund.
Custodians. ClearStreet, LLC (“ClearStreet”), located at
55 Broadway, New York, NY 10006 serves as a custodian for the Fund. ClearStreet
is primarily responsible for depositing and withdrawing ETF shares with DTC
and making available a list of the names and the amounts of the Deposit
Securities through the facilities of the NSCC. To the extent necessary to
provide that service, ClearStreet maintains an account in the name of the
Fund.
UMB
Bank, n.a., (“UMB”) located at located at 1010 Grand Blvd, Kansas City, Missouri
64106 also serves as a custodian for the Fund. UMB is responsible for holding
all cash assets and all portfolio securities of the Fund, releasing and
delivering such securities as directed by the Fund, maintaining bank accounts in
the names of the Fund, receiving for deposit into such accounts payments for
Shares, collecting income and other payments due to the Fund with respect to
portfolio securities, and paying out monies of the Fund.
Transfer Agent. Nottingham Shareholder Services (“Transfer
Agent”), located at 116 South Franklin Street, Rocky Mount, North Carolina
27804, is the transfer agent for the Fund (the “Transfer Agent”) and also serves
as the dividend disbursing agent for the Fund.
Distributor. Capital
Investment Group, Inc. is the distributor for the Shares (the “Distributor”).
The Distributor is a registered broker-dealer and member of the Financial
Industry Regulatory Authority, Inc. (“FINRA”).
Counsel. Greenberg Traurig LLP is counsel to the
Trust.
Independent Registered Public
Accounting Firm. Cohen &
Company, Ltd., located at 1835 Market Street, Suite 310, Philadelphia, PA 19103,
serves as the Fund’s independent registered public accounting firm. They audit
the Fund’s financial statements and perform other related audit services.
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 the 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:
• |
The Fund makes distributions; |
• |
You sell your Shares listed on the NYSE Arca;
and |
• |
You purchase or redeem Creation
Units |
Distributions
from the Fund’s net investment income (other than qualified dividend income),
including distributions of income from securities lending and distributions out
of the Fund’s net short-term capital gains, if any, are taxable to you as
ordinary income. Distributions by the Funds of net long-term capital gains in
excess of net short-term capital losses (capital gain dividends) are taxable to
you as long-term capital gains, regardless of how long you have held the Fund’s
shares. Distributions by the Fund that qualify as qualified dividend income are
taxable to you at long-term capital gain rates. Long-term capital gains and
qualified dividend income are generally eligible for taxation at a maximum rate
of 15% for non-corporate shareholders with incomes below approximately $400,000
($450,000 if married and filing jointly), amounts adjusted annually for
inflation, and 20% for individuals with any income above these amounts that is
net long-term capital gain or qualified dividend income. In addition, a 3.8%
U.S. federal Medicare contribution tax is imposed on “net investment income,”
including, but not limited to, interest, dividends, and net gain, of U.S.
individuals with income exceeding $200,000 (or $250,000 if married and filing
jointly) and of estates and trusts.
Dividends
will be qualified dividend income to you if they are attributable to qualified
dividend income received by the Fund. Generally, qualified dividend income
includes dividend income from taxable U.S. corporations, provided that the Fund
satisfies certain holding period requirements in respect of the stock of such
corporations and has not hedged its position in the stock in certain ways.
Substitute dividends received by the Fund with respect to dividends paid on
securities lent out will not be qualified dividend income. For this purpose, a
qualified non-U.S. corporation means any non-U.S. corporation that is eligible
for benefits under a comprehensive income tax treaty with the United States,
which includes an exchange of information program or if the stock with respect
to which the dividend was paid is readily tradable on an established United
States securities market. The term excludes a corporation that is a passive
foreign investment company.
Dividends
received by the Fund from a real estate investment trust (“REIT”) or another RIC
generally are qualified dividend income only to the extent the dividend
distributions are made out of qualified dividend income received by such REIT or
RIC. It is expected that dividends received by the Fund from a REIT and
distributed to a shareholder generally will be taxable to the shareholder as
ordinary income.
For
a dividend to be treated as qualified dividend income, the dividend must be
received with respect to a share of stock held without being hedged by the Fund,
and with respect to a share of the Fund held without being hedged by you, for 61
days during the 121-day period beginning at the date which is 60 days before the
date on which such share becomes ex-dividend with respect to such dividend or,
in the case of certain preferred stock, 91 days during the 181-day period
beginning 90 days before such date.
If
your Fund shares are loaned out pursuant to a securities lending arrangement,
you may lose the ability to treat Fund dividends paid while the shares are held
by the borrower as qualified dividend income. In addition, you may lose the
ability to use foreign tax credits passed through by the Fund if your Fund
shares are loaned out pursuant to a securities lending agreement.
In
general, your distributions are subject to U.S. federal income tax for the year
when they are paid. Certain distributions paid in January, however, may be
treated as paid on December 31 of the prior year.
If
the Fund’s distributions exceed current and accumulated earnings and profits,
all or a portion of the distributions made in the taxable year may be
recharacterized as a return of capital to shareholders. Distributions in excess
of the Fund’s minimum distribution requirements, but not in excess of the Fund’s
earnings and profits, will be taxable to shareholders and will not constitute
nontaxable returns of capital. A return of capital distribution generally will
not be taxable but will reduce the shareholder’s cost basis and result in a
higher capital gain or lower capital loss when those shares on which the
distribution was received are sold. Once a shareholder’s cost basis is reduced
to zero, further distributions will be treated as capital gain, if the
shareholder holds shares of the Fund as capital assets.
If
you are neither a resident nor a citizen of the United States or if you are a
non-U.S. entity, the Fund’s ordinary income dividends (which include
distributions of net short-term capital gains) will generally be subject to a
30% U.S. withholding tax, unless a lower treaty rate applies, provided that
withholding tax will generally not apply to any gain or income realized by a
non-U.S. shareholder in respect of any distributions of long-term capital gains
or upon the sale or other disposition of shares of the Fund.
A
30% withholding tax is currently imposed on U.S.-source dividends, interest and
other income items, and will be imposed on proceeds from the sale of property
producing U.S.-source dividends and interest paid after December 31, 2018, to
(i) foreign financial institutions including non-U.S. investment funds unless
they agree to collect and disclose to the Internal Revenue Service (“IRS”)
information regarding their direct and indirect U.S. account holders and (ii)
certain other foreign entities, unless they certify certain information
regarding their direct and indirect U.S. owners. To avoid withholding, foreign
financial institutions will need to (i) enter into agreements with the IRS that
state that they will provide the IRS information, including the names,
addresses, and taxpayer identification numbers of direct and indirect U.S.
account holders, comply with due diligence procedures with respect to the
identification of U.S. accounts, report to the IRS certain information with
respect to U.S. accounts maintained, agree to withhold tax on certain payments
made to non-compliant foreign financial institutions or to account holders who
fail to provide the required information, and determine certain other
information as to their account holders, or (ii) in the event that an applicable
intergovernmental agreement and implementing legislation are adopted, provide
local revenue authorities with similar account holder information. Other foreign
entities will need to provide the name, address, and taxpayer identification
number of each substantial U.S. owner or certifications of no substantial U.S.
ownership unless certain exceptions apply or agree to provide certain
information to other revenue authorities for transmittal to the IRS.
Dividends,
interest, and capital gains earned by the Fund, with respect to non-U.S.
securities, may give rise to withholding, capital gains and other taxes imposed
by non-U.S. countries. Tax conventions between certain countries and the United
States may reduce or eliminate such taxes. If more than 50% of the total assets
of the Fund at the close of a year consists of non-U.S. stocks or securities
(generally, for this purpose, depositary receipts, no matter where traded, of
non-U.S. companies are treated as “non-U.S.”), the Fund may “pass through” to
you certain non-U.S. income taxes (including withholding taxes) paid by the
Fund. This means that you would be considered to have received as an additional
dividend your share of such non-U.S. taxes, but you may be entitled to either a
corresponding tax deduction in calculating your taxable income, or, subject to
certain limitations, a credit in calculating your U.S. federal income tax.
For
purposes of foreign tax credits for U.S. shareholders of the Fund, foreign
capital gains taxes may not produce associated foreign source income, thereby
limiting a U.S. person’s ability to use such credits.
If
you are a resident or a citizen of the United States, by law, back-up
withholding at a 28% rate will apply to your distributions and proceeds if you
have not provided a taxpayer identification number or social security number and
made other required certifications.
Currently,
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 may be limited.
An
Authorized Participant 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 the
exchange and the exchanger’s aggregate basis in the securities surrendered and
the Cash Component paid. A person who exchanges Creation Units for equity
securities will generally 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 Redemption Amount. The Internal
Revenue Service, 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 adviser 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
you purchase or redeem Creation Units, you will be sent a confirmation statement
showing how many and at what price you purchased or sold Shares.
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. You may also be subject to state and local taxation on Fund
distributions, and sales of Fund Shares. Consult your personal tax adviser about
the potential tax consequences of an investment in Fund Shares under all
applicable tax laws.
For
purposes of the 1940 Act, a Fund is treated as a registered investment company.
Section 12(d)(1) of the 1940 Act restricts investments by investment companies
in the securities of other investment companies, including Shares of the Fund.
The SEC has issued an exemptive order to the Trust permitting registered
investment companies to invest in the exchange-traded funds offered by the Trust
beyond the limits of Section 12(d)(1) subject to certain terms and conditions
set forth in an SEC exemptive order issued to the Trust, including that such
registered investment companies enter into an agreement with the Trust.
Portfolio Holdings Information. A description
of the Fund’s policies and procedures with respect to the disclosure of their
portfolio securities is available in the Fund’s Statement of Additional
Information (“SAI”). On each business day, before commencement of trading on
NYSE Arca, the Fund will disclose the identities and quantities of the Fund’s
portfolio holdings that will form the basis for the Fund’s calculation of NAV at
the end of the business day. These disclosures can be found at
https://etfpages.com/FFIU.
Fund
fact sheets provide information regarding the Fund’s top holdings and may be
requested by calling 1-800-773-3863.
Premium/Discount Information. Information
regarding how often the Shares of the Fund traded on the Exchange at a price
above (i.e., at a premium) or below (i.e., at a discount) the NAV of the Fund
during the prior calendar year and subsequent quarters, when available, will be
available at https://etfpages.com/FFIU.
The
Financial Highlights table is intended to help you understand the Fund’s
financial performance since its inception. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned or lost on an investment
in the Fund (assuming reinvestment of all dividends and distributions). The
financial data in the table, for the fiscal year ended June 30, 2023, has been
audited by the independent registered public accounting firm Cohen &
Company, Ltd. The financial data in the table, prior to the fiscal year ended
June 30, 2023, was audited by another independent registered public accounting
firm. This information should be read in conjunction with the Fund’s latest
audited annual financial statements and notes thereto, which are also
incorporated by reference into the Statement of Additional Information and are
included in the annual report which are available upon request. Further
information about the performance of the Fund is contained in the Annual Report
of the Fund, a copy of which may also be obtained at no charge by calling the
Fund at 1-800-773-3863.
UVA
Unconstrained Medium-Term Fixed Income ETF
|
June
30, |
For
a share outstanding during the fiscal years ended |
2023 |
|
2022 |
|
2021 |
|
2020 |
|
2019 |
|
Net
Asset Value, Beginning of Year |
$
22.25 |
|
$
26.53 |
|
$
26.14 |
|
$
25.28 |
|
$
24.30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (a) |
0.75 |
|
0.64 |
|
0.64 |
|
0.71 |
|
0.70 |
|
|
Net
realized and unrealized gain (loss) on investments |
(0.52) |
|
(4.08) |
|
0.47 |
|
0.86 |
|
0.98 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
from Investment Operations |
0.23 |
|
(3.44) |
|
1.11 |
|
1.57 |
|
1.68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Less
Distributions From: |
|
|
|
|
|
|
|
|
|
|
|
Net
investment income |
(0.76) |
|
(0.64) |
|
(0.64) |
|
(0.71) |
|
(0.70) |
|
|
Net
realized gains |
- |
|
(0.20) |
|
(0.08) |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Distributions |
(0.76) |
|
(0.84) |
|
(0.72) |
|
(0.71) |
|
(0.70) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Asset Value, End of Year |
$
21.72 |
|
$
22.25 |
|
$
26.53 |
|
$
26.14 |
|
$
25.28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Return (b) |
1.06% |
|
(13.29)% |
|
4.30% |
|
6.29% |
|
7.05% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Assets, End of Year (in thousands) (c) |
$61,888 |
|
$68,981 |
|
$80,914 |
|
$61,426 |
|
$45,502 |
|
Ratios
of: |
|
|
|
|
|
|
|
|
|
|
Gross
Expenses to Average Net Assets (d) |
0.63% |
|
0.62% |
|
0.65% |
|
0.73% |
|
0.76% |
|
Net
Expenses to Average Net Assets (d) |
0.50% |
|
0.50% |
|
0.50% |
|
0.50% |
|
0.45% |
|
Net
Investment Income to Average Net Assets (d)(e) |
3.45% |
|
2.58% |
|
2.47% |
|
2.75% |
|
2.88% |
|
Portfolio
turnover rate |
8.92% |
|
20.17% |
|
30.49% |
|
21.28% |
|
49.44% |
|
(a) |
Calculated
using the average shares method. |
(b) |
Includes
adjustments in accordance with accounting principles generally accepted in
the United States of America and, consequently, the net asset values for
financial reporting purposes and the returns based upon those net asset
values may differ from the net asset values and returns for shareholder
transactions. |
(c) |
Net
asset value total return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period and
redemption on the last day of the period at net asset value. |
(d) |
Does
not include expenses of the investment companies in which the Fund
invests. |
(e) |
Recognition
of net investment income (loss) by the Fund is affected by the timing of
the declaration of dividends by the underlying investment companies in
which the Fund invests. |
UVA
Unconstrained Medium-Term Fixed Income ETF
For
more information visit the Fund’s websites listed below or call
1-800-773-3863
Additional
information about the Fund is available in the Fund’s Statement of Additional
Information, which is incorporated by reference into this prospectus. Additional
information about the Fund’s investments is also available in the annual and
semi-annual reports to shareholders. The annual report includes a discussion of
market conditions and investment strategies that significantly affected the
Fund’s performance during its last fiscal year.
The
Fund’s Statement of Additional Information and the annual and semi-annual repots
are available, free of charge, on the websites listed below and upon request by
contacting the Fund (you may also request other information about the Fund or
make shareholder inquiries) as follows:
|
Call: |
1-800-773-3863
(toll free)
Monday
through Friday, 8:30 a.m. to 5:00 p.m. (Eastern time)
|
|
Email: |
|
|
Write: |
UVA Unconstrained Medium-Term Fixed Income
ETF 116 South Franklin Street Post Office Box 4365 Rocky
Mount, North Carolina 27803-0365 |
|
Online: |
https://etfpages.com/FFIU
|
Reports
and other information about the Fund are available on the EDGAR database on the
SEC’s website at www.sec.gov, and copies of this information may be obtained,
after paying a duplicating fee, by electronic request at the following e-mail
address:
[email protected].
Investment
Company Act File No.: 811-22398