ck0001540305-20210430
Aptus Drawdown Managed Equity ETF
(ADME)
Aptus Collared Income Opportunity
ETF (ACIO)
Aptus Defined Risk ETF
(DRSK)
Opus Small Cap Value ETF
(OSCV)
Listed
on Cboe BZX Exchange, Inc.
PROSPECTUS
August 31,
2021
The
U.S. Securities and Exchange Commission (“SEC”) has not approved or disapproved
of these securities or passed upon the accuracy or adequacy of this Prospectus.
Any representation to the contrary is a criminal offense.
|
|
|
APTUS
DRAWDOWN MANAGED EQUITY ETF FUND
SUMMARY |
Investment Objective
The Aptus Drawdown Managed
Equity ETF (the “Fund”) seeks capital appreciation with downside
protection.
Fees and Expenses of the
Fund
The
following table describes the fees and expenses you may pay if you buy, hold,
and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and Example
below.
|
|
|
|
|
|
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment) |
Management
Fees |
0.79% |
Distribution
and/or Service (12b-1) Fees |
0.00% |
Other
Expenses |
0.00% |
|
|
Total
Annual Fund Operating Expenses |
0.79% |
|
|
Expense Example
This Example is
intended to help you compare the cost of investing in the Fund with the cost of
investing in other funds. The Example assumes that you invest $10,000 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. Although your actual costs may be higher
or lower, based on these assumptions your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
1
Year |
3
Years |
5
Years |
10
Years |
$81 |
$252 |
$439 |
$978 |
Portfolio Turnover
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
Example, affect the Fund’s performance. For the fiscal year ended April 30,
2021, the Fund’s portfolio turnover rate was 48% of the average value of its
portfolio.
Principal Investment Strategy
The
Fund is an actively managed exchange-traded fund (“ETF”) that seeks to achieve
its objective principally by investing in a portfolio of U.S.-listed equity
securities, while limiting downside risk by purchasing exchange-listed put
options on one or more of such equity securities or on broad-based indexes or
ETFs that track the performance of the U.S. equity market. Under normal
circumstances, at least 80% of the Fund’s net assets (plus borrowings for
investment purposes) will be invested in equity securities.
The
equity component of the Fund’s portfolio is comprised of large, mid, or
small-capitalization U.S.-listed common stocks, real estate investment trusts
(“REITs”), and American Depository Receipts (“ADRs”). Aptus Capital Advisors,
LLC, the Fund’s investment adviser (“Aptus” or the “Adviser”), generally selects
the equity securities for the Fund based on an analysis of each company’s
fundamental and momentum characteristics to try to identify attractive
opportunities for growth. The Adviser’s proprietary analysis is built from a
“yield plus growth” framework, which takes into account fundamental
characteristics such as yield, growth, and valuation, along with momentum, to
identify attractive securities. Typically, such securities will have either an
attractive combination of yield plus growth relative to the overall market
and/or strong momentum relative to the overall market.
The
Adviser seeks to limit the Fund’s exposure to equity market declines primarily
by purchasing exchange-listed put options on individual equity securities or on
one or more equity indexes or ETFs (each, a “reference asset”) that track a
portfolio of U.S. equity securities (“Equity Puts”). A put option gives the
purchaser the right to sell shares of the reference asset at a specified price
(“strike price”) prior to a specified date (“expiration date”). The purchaser
pays a cost (premium) to purchase the put option. In the event the reference
asset declines in value below the strike price and the holder exercises its put
option, the holder will be entitled to receive the difference between the value
of the reference asset and the strike price (which gain is offset by the premium
originally paid by the holder), and in the event the reference asset closes
above the strike price as of the expiration date, the put option may end up
worthless and the holder’s loss is limited to the amount of premium it paid. The
Adviser may purchase Equity Puts that are at-the-money, near-the-money, or
out-of-the-money (also known as a “tail hedge”), and the Adviser will actively
manage the Fund’s Equity Puts as markets move or events occur (e.g.,
earnings announcements) to roll forward expiration dates or to increase or
decrease market exposure. The Adviser generally expects to invest less than 5%
of the Fund’s net assets in Equity Puts at the time of
investment.
In
addition to purchasing Equity Puts, the Adviser may write (sell) Equity Puts. A
written (sold) put option gives the seller the obligation to buy shares of the
reference asset at a strike price until the expiration date. The writer (seller)
of the put option receives an amount (premium) for writing (selling) the option.
In the event the reference asset declines in value below the strike price and
the holder exercises the put option, the writer (seller) of the put option will
have to pay the difference between the value of the reference asset and the
strike price or deliver the reference asset (which loss is offset by the premium
initially received), and in the event the reference asset appreciates in value,
the put option may end up worthless and the writer (seller) of the put option
retains the premium.
In
addition to or in lieu of such Equity Puts, the Adviser may purchase call
options on the Cboe Volatility Index® (the “VIX® Index”). The VIX Index reflects
a calculation designed to produce a measure of constant, 30-day expected
volatility of the U.S. stock market, derived from real-time, mid-quote prices of
S&P 500® Index call and put options. A call option gives the purchaser the
right to purchase shares of the reference asset at a specified strike price
prior to a specified expiration date. The purchaser pays a cost (premium) to
purchase the call option. In the event the reference asset appreciates in value,
the value of the call option will generally increase, and in the event the
reference asset declines in value, the call option may end up worthless and the
premium may be lost. The Adviser generally expects to invest less than 1% of the
Fund’s net assets in VIX Index call options at the time of
investment.
The
Fund may purchase call options or a combination of purchased and written (sold)
call options (known as a “spread”) on individual equity securities or on one or
more equity indexes or ETFs. A call option gives the purchaser the right to
purchase shares of the reference asset at a specified strike price prior to a
specified expiration date. The purchaser pays a cost (premium) to purchase the
call option. In the event the reference asset appreciates in value, the value of
the call option will generally increase, and in the event the reference asset
declines in value, the call option may end up worthless and the premium may be
lost.
A
written (sold) call option gives the seller the obligation to sell shares of the
reference asset at a strike price until the expiration date. The writer (seller)
of the call option receives an amount (premium) for writing (selling) the
option. In the event the reference asset appreciates above the strike price and
the holder exercises the call option, the writer (seller) of the call option
will have to pay the difference between the value of the reference asset and the
strike price or deliver the reference asset (which loss is offset by the premium
initially received), and in the event the reference asset declines in value, the
call option may end up worthless and the writer (seller) of the call option
retains the premium.
As of July 30, 2021, the Fund invested a
significant portion of its assets in the information technology
sector.
Principal Investment Risks
The
principal risks of investing in the Fund are summarized below. The principal
risks are presented in alphabetical order to facilitate finding particular risks
and comparing them with other funds. Each risk summarized below is considered a
“principal risk” of investing in the Fund, regardless of the order in which it
appears. As with any investment, there is a risk that you could
lose all or a portion of your investment in the Fund. Some or
all of these risks may adversely affect the Fund’s net asset value per share
(“NAV”), trading price, yield, total return and/or ability to meet its
objectives. For more information about the risks of investing in the Fund, see
the section in the Fund’s Prospectus titled “Additional Information About the
Funds.”
•Depositary
Receipt Risk. Depositary
Receipts involve risks similar to those associated with investments in foreign
securities, such as changes in political or economic conditions of other
countries and changes in the exchange rates of foreign currencies. Depositary
Receipts listed on U.S. exchanges are issued by banks or trust companies and
entitle the holder to all dividends and capital gains that are paid out on the
underlying foreign shares (“Underlying Shares”). When the Fund invests in
Depositary Receipts as a substitute for an investment directly in the Underlying
Shares, the Fund is exposed to the risk that the Depositary Receipts may not
provide a return that corresponds precisely with that of the Underlying Shares.
•Derivative
Securities Risk. The
Fund invests in options that derive their performance from the performance of an
underlying reference asset. Derivatives, such as the options in which the Fund
invests, can be volatile and involve various types and degrees of risks,
depending upon the characteristics of a particular derivative. Derivatives may
entail investment exposures that are greater than their cost would suggest,
meaning that a small investment in a derivative could have a substantial impact
on the performance of the Fund. The Fund could experience a loss if its
derivatives do not perform as anticipated, the derivatives are not correlated
with the performance of their reference asset, or if the Fund is unable to
purchase or liquidate a position because of an illiquid secondary market. The
market for many derivatives is, or suddenly can become, illiquid. Changes in
liquidity may result in significant, rapid, and unpredictable changes in the
prices for derivatives.
•Equity
Market Risk. The
equity securities held in the Fund’s portfolio may experience sudden,
unpredictable drops in value or long periods of decline in value. This may occur
because of factors that affect securities markets generally or factors affecting
specific issuers, industries, or sectors in which the Fund invests. Common
stocks are generally exposed to greater risk than other types of securities,
such as preferred stock and debt obligations, because common stockholders
generally have inferior rights to receive payment from issuers. In addition,
local, regional or global events such as war, acts of terrorism, spread of
infectious diseases or other public health issues, recessions, or other events
could have a significant negative impact on the Fund and its investments. For
example, the global pandemic caused by COVID-19, a novel coronavirus, and the
aggressive responses taken by many governments, including closing borders,
restricting international and domestic travel, and the imposition of prolonged
quarantines or similar restrictions, has had negative impacts, and in many cases
severe
impacts,
on markets worldwide. The COVID-19 pandemic has caused prolonged disruptions to
the normal business operations of companies around the world and the impact of
such disruptions is hard to predict. Such events may affect certain geographic
regions, countries, sectors and industries more significantly than others. Such
events could adversely affect the prices and liquidity of the Fund’s portfolio
securities or other instruments and could result in disruptions in the trading
markets.
•ETF
Risks. The
Fund is an ETF, and, as a result of an ETF’s structure, it is exposed to the
following risks:
◦Authorized
Participants, Market Makers, and Liquidity Providers Concentration
Risk. The
Fund has a limited number of financial institutions that may act as Authorized
Participants (“APs”). In addition, there may be a limited number of market
makers and/or liquidity providers in the marketplace. To the extent either of
the following events occur, Shares may trade at a material discount to NAV and
possibly face delisting: (i) APs exit the business or otherwise become
unable to process creation and/or redemption orders and no other APs step
forward to perform these services, or (ii) market makers and/or liquidity
providers exit the business or significantly reduce their business activities
and no other entities step forward to perform their functions.
◦Costs
of Buying or Selling Shares.
Due to the costs of buying or selling Shares, including brokerage commissions
imposed by brokers and bid-ask spreads, frequent trading of Shares may
significantly reduce investment results and an investment in Shares may not be
advisable for investors who anticipate regularly making small investments.
◦Shares
May Trade at Prices Other Than NAV. As
with all ETFs, Shares may be bought and sold in the secondary market at market
prices. Although it is expected that the market price of Shares will approximate
the Fund’s NAV, there may be times when the market price of Shares is more than
the NAV intra-day (premium) or less than the NAV intra-day (discount) due to
supply and demand of Shares or during periods of market volatility. This risk is
heightened in times of market volatility, periods of steep market declines, and
periods when there is limited trading activity for Shares in the secondary
market, in which case such premiums or discounts may be significant.
◦Trading. Although
Shares are listed for trading on Cboe BZX Exchange, Inc. (the “Exchange”)
and may be traded on U.S. exchanges other than the Exchange, there can be no
assurance that Shares will trade with any volume, or at all, on any stock
exchange. In stressed market conditions, the liquidity of Shares may begin to
mirror the liquidity of the Fund’s underlying portfolio holdings, which can be
significantly less liquid than Shares, and this could lead to differences
between the market price of the Shares and the underlying value of those
Shares.
•Foreign
Investment Risk. Because
of the Fund’s investment in ADRs, changes in foreign economies and political
climates are more likely to affect the Fund than a fund that invests exclusively
in U.S. companies. There may be less government supervision of foreign markets,
resulting in non-uniform accounting practices and less publicly available
information. The value of foreign investments may be affected by changes in
exchange control regulations, application of foreign tax laws (including
withholding tax), changes in governmental administration or economic or monetary
policy (in this country or abroad) or changed circumstances in dealings between
nations.
•High
Portfolio Turnover Risk.
The Fund may frequently buy and sell portfolio securities and other assets to
rebalance the Fund’s exposure to specific securities. Higher portfolio turnover
may result in the Fund paying higher levels of transaction costs and generating
greater tax liabilities for shareholders. Portfolio turnover risk may cause the
Fund’s performance to be less than you expect.
•Management
Risk. The
Fund is actively managed and may not meet its investment objective based on the
Adviser’s success or failure to implement investment strategies for the Fund.
•Market
Capitalization Risk.
◦Large-Capitalization
Investing.
The securities of large-capitalization companies may be relatively mature
compared to smaller companies and therefore subject to slower growth during
times of economic expansion. Large-capitalization companies may also be unable
to respond quickly to new competitive challenges, such as changes in technology
and consumer tastes.
◦Mid-Capitalization
Investing. The
securities of mid-capitalization companies may be more vulnerable to adverse
issuer, market, political, or economic developments than securities of
large-capitalization companies, but they may also be subject to slower growth
than small-capitalization companies during times of economic expansion. The
securities of mid-capitalization companies generally trade in lower volumes and
are subject to greater and more unpredictable price changes than large
capitalization stocks or the stock market as a whole, but they may also be
nimbler and more responsive to new challenges than large-capitalization
companies. Some mid-capitalization companies have limited product lines,
markets, financial resources, and management personnel and tend to concentrate
on fewer geographical markets relative to large-capitalization
companies.
◦Small-Capitalization
Investing. The
securities of small-capitalization companies may be more vulnerable to adverse
issuer, market, political, or economic developments than securities of
larger-capitalization companies. The securities of
small-capitalization
companies generally trade in lower volumes and are subject to greater and more
unpredictable price changes than larger capitalization stocks or the stock
market as a whole. Some small capitalization companies have limited product
lines, markets, and financial and managerial resources and tend to concentrate
on fewer geographical markets relative to larger capitalization companies. There
is typically less publicly available information concerning
smaller-capitalization companies than for larger, more established companies.
Small-capitalization companies also may be particularly sensitive to changes in
interest rates, government regulation, borrowing costs and earnings.
•Options
Risk.
Selling (writing) and buying options are speculative activities and entail
greater than ordinary investment risks. The Fund’s use of call and put options
can lead to losses because of adverse movements in the price or value of the
reference asset, which may be magnified by certain features of the options. When
selling a put option, the Fund will receive a premium; however, this premium may
not be enough to offset a loss incurred by the Fund if the price of the
underlying asset is below the strike price by an amount equal to or greater than
the premium. Purchasing of put or call options involves the payment of premiums,
which may adversely affect the Fund’s performance. Purchased put or call options
may expire worthless resulting in the Fund’s loss of the premium it paid for the
option.
•REIT
Investment Risk. Investments
in REITs involve unique risks. REITs may have limited financial resources, may
trade less frequently and in limited volume, and may be more volatile than other
securities. REITs may be affected by changes in the value of their underlying
properties or mortgages or by defaults by their borrowers or tenants.
Furthermore, these entities depend upon specialized management skills, have
limited diversification and are, therefore, subject to risks inherent in
financing a limited number of projects. In addition, the performance of a REIT
may be affected by changes in the tax laws or by its failure to qualify for
tax-free pass-through of income.
•Sector
Risk.
To the extent the Fund invests more heavily in particular sectors of the
economy, its performance will be especially sensitive to developments that
significantly affect those sectors.
◦Information
Technology Sector Risk. Market
or economic factors impacting information technology companies and companies
that rely heavily on technological advances could have a significant effect on
the value of the Fund’s investments. The value of stocks of information
technology companies and companies that rely heavily on technology is
particularly vulnerable to rapid changes in technology product cycles, rapid
product obsolescence, government regulation and competition, both domestically
and internationally, including competition from foreign competitors with lower
production costs. Stocks of information technology companies and companies that
rely heavily on technology, especially those of smaller, less-seasoned
companies, tend to be more volatile than the overall market. Information
technology companies are heavily dependent on patent and intellectual property
rights, the loss or impairment of which may adversely affect
profitability.
•Tail
Hedge Risk.
The Fund may purchase put options designed to mitigate the Fund’s exposure to
significant declines in the broader U.S. equity market. However, there is a risk
that the Fund will experience a loss as a result of engaging in such options
transactions. Moreover, there can be no assurance that the tail hedge will be
successful in protecting against all or any declines in the value of the Fund’s
portfolio because the amount of protection provided by the put options purchased
by the Fund and the price of such protection will be dictated by prevailing
market sentiment at the time the tail hedge is triggered. Additionally, the tail
hedge will not protect against declines in the value of the Fund’s portfolio
where such declines are based on factors other than general stock market
fluctuations.
•Tax
Risk. The Fund expects to generate premiums from
its sale of options. These premiums typically will result in short-term capital
gains for federal income tax purposes. In addition, equity securities that are
hedged with put options may not be eligible for long-term capital gains tax
treatment. The Fund is not designed for investors seeking a tax efficient
investment.
Performance
The following
performance information indicates some of the risks of investing in the
Fund. The bar chart shows the Fund’s performance for calendar
years ended December 31. The table illustrates how the Fund’s average annual
returns for the 1-year and since inception periods compare with those of a broad
measure of market performance. The Fund’s past performance,
before and after taxes, does not necessarily indicate how it will perform in the
future. Updated performance information is available on the
Fund’s website at www.aptusetfs.com/funds/adme.
Prior
to November 8, 2019, the Fund operated as an index-based ETF that sought to
track the performance of the Aptus Behavioral Momentum Index. Consequently,
performance for periods prior to November 8, 2019 does not reflect the Fund’s
current investment strategy as an actively-managed ETF. The Fund’s performance
may have differed if the Fund’s current strategy had been in
place.
Calendar Year Total Return
For the year-to-date period ended
June 30, 2021, the
Fund’s total return was 10.40%. During the period of time shown in the bar
chart, the Fund’s highest quarterly return
was 13.97% for the quarter ended June 30, 2020, and the
lowest quarterly return was
-22.83% for the quarter ended December 31,
2018.
Average Annual Total Returns for the Period
Ended December 31, 2020
|
|
|
|
|
|
|
|
|
Aptus
Drawdown Managed Equity ETF |
1
Year |
Since
Inception
(6/8/2016) |
Return Before
Taxes |
18.19% |
9.05% |
Return After Taxes on
Distributions |
18.06% |
8.88% |
Return After Taxes on Distributions and
Sale of Shares |
10.84% |
7.10% |
S&P
500® Index
(reflects no deduction for
fees, expenses, or taxes) |
18.40% |
15.61% |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates during the period covered by the table above 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. After-tax returns shown are
not relevant to investors who hold their Shares through tax-deferred
arrangements such as an individual retirement account (“IRA”) or other
tax-advantaged accounts.
Management
Investment
Adviser
Aptus
Capital Advisors, LLC serves as investment adviser to the Fund.
Portfolio
Managers
John
D. (“JD”) Gardner, CFA, Chief Investment Officer and Managing Member at the
Adviser, has been a portfolio manager of the Fund since August 2017.
John
Luke Tyner, CFA, Portfolio Manager and Analyst at the Adviser, has been a
portfolio manager of the Fund since August 2020.
David
Wagner III, CFA, Portfolio Manager and Analyst at the Adviser, has been a
portfolio manager of the Fund since August 2020.
Beckham
D. Wyrick, CFA, Portfolio Manager at the Adviser, has been a portfolio manager
of the Fund since August 2017.
Purchase
and Sale of Shares
Shares
are listed on the Exchange, and individual Shares may only be bought and sold in
the secondary market through brokers at market prices, rather than NAV. Because
Shares trade at market prices rather than NAV, Shares may trade at a price
greater than NAV (premium) or less than NAV (discount).
The
Fund issues and redeems Shares at NAV only in large blocks known as “Creation
Units,” which only APs (typically, broker-dealers) may purchase or redeem. The
Fund generally issues and redeems Creation Units in exchange for a portfolio of
securities and/or a designated amount of U.S. cash.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase Shares (bid) and the lowest price a seller is
willing to accept for Shares (ask) when buying or selling Shares in the
secondary market (the “bid-ask spread”). Recent information about the Fund,
including its NAV, market price, premiums and discounts, and bid-ask spreads is
available on the Fund’s website at www.aptusetfs.com/funds/adme.
Tax
Information
Fund
distributions are generally taxable as ordinary income, qualified dividend
income, or capital gains (or a combination), unless your investment is in an IRA
or other tax-advantaged account. Distributions on investments made through
tax-deferred arrangements may be taxed later upon withdrawal of assets from
those accounts.
Financial
Intermediary Compensation
If
you purchase Shares through a broker-dealer or other financial intermediary
(such as a bank) (an “Intermediary”), the Adviser or its affiliates may pay
Intermediaries for certain activities related to the Fund, including
participation in activities that are designed to make Intermediaries more
knowledgeable about exchange traded products, including the Fund, or for other
activities, such as marketing, educational training or other initiatives related
to the sale or promotion of Shares. These payments may create a conflict of
interest by influencing the Intermediary and your salesperson to recommend the
Fund over another investment. Any such arrangements do not result in increased
Fund expenses. Ask your salesperson or visit the Intermediary’s website for more
information.
|
|
|
APTUS
COLLARED INCOME OPPORTUNITY ETF FUND
SUMMARY |
Investment Objective
The
Aptus Collared Income Opportunity
ETF (the “Fund”) seeks current income and
capital appreciation.
Fees and Expenses of the Fund
The
following table describes the fees and expenses you may pay if you buy, hold,
and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and Example
below.
|
|
|
|
|
|
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment) |
Management
Fees |
0.79% |
Distribution
and/or Service (12b-1) Fees |
0.00% |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses |
0.79% |
|
|
Expense Example
This Example is
intended to help you compare the cost of investing in the Fund with the cost of
investing in other funds. The Example assumes that you invest $10,000 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. Although your actual costs may be higher
or lower, based on these assumptions your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
1
Year |
3
Years |
5
Years |
10
Years |
$81 |
$252 |
$439 |
$978 |
Portfolio Turnover
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
Example, affect the Fund’s performance. For the fiscal year ended April 30,
2021, the Fund’s portfolio turnover rate was 46% of the average value of its
portfolio.
Principal Investment Strategy
The
Fund is an actively managed exchange-traded fund (“ETF”) that seeks to achieve
its investment objective principally by investing in a portfolio of U.S.-listed
equity securities of any market capitalization and buying put options or an
options collar (i.e.,
a mix of written (sold) call options and long (bought) put options) on the same
underlying equity securities or on an index tracking a portfolio of U.S. equity
securities (a “U.S. Equity Index”). The U.S. Equity Index and the underlying
equity securities may be of any market capitalization. The equity securities and
options held by the Fund must be listed on a U.S.-exchange, and the equity
securities may include common stocks of U.S. companies, American Depositary
Receipts (“ADRs”) (i.e.,
receipts evidencing ownership of foreign equity securities), and real estate
investment trusts (“REITs”). The Fund will typically limit investments in ADRs
to approximately 20% of the Fund’s net assets.
Aptus
Capital Advisors, LLC, the Fund’s investment adviser (“Aptus” or the “Adviser”),
selects the Fund’s equity securities based on the Adviser’s assessment of the
likelihood that the dividends paid by the issuer will increase or remain stable
and based on the liquidity of the options available for such security. The
Adviser considers factors primarily related to yield, earnings growth, revenue
growth, and distribution history in assessing the likelihood that the dividends
paid by an issuer will increase or remain stable. No more than 30% of the Fund’s
net assets will typically be invested in companies in a single sector. The
Adviser may replace a security if it believes another security offers a better
value proposition, with a bias for low portfolio turnover.
The
Fund’s options collar strategy typically consists of two components: (i) selling
covered call options on up to 100% of the equity securities held by the Fund to
generate premium from such options, while (ii) simultaneously reinvesting a
portion of such premium to buy put options on the same underlying equity
securities or a U.S. Equity Index to “hedge” or mitigate the downside risk
associated with owning equity securities. The Fund seeks to generate income from
the combination of dividends received from the equity securities held by the
Fund and premiums received from the sale of options. Additionally, the Fund may
purchase put options or utilize a combination of purchased and written (sold)
put options (known as a “spread”) on one or more equity securities or a U.S.
Equity Index to “hedge” or mitigate the downside risk associated with owning
equity securities.
Call
Options.
A written (sold) call option gives the seller the obligation to sell shares of
the reference asset at a specified price (“strike price”) until a specified date
(“expiration date”). The writer (seller) of the call option receives an amount
(premium) for writing (selling) the option. In the event the reference asset
appreciates above the strike price and the holder exercises the call option, the
writer (seller) of the call option will have to pay the difference between the
value of the reference asset and the strike price or deliver the reference asset
(which loss is offset by the premium initially received), and in the event the
reference asset declines in value, the call option may end up worthless and the
writer (seller) of the call option retains the premium. The call options written
by the Fund are “covered” because the Fund owns the reference asset at the time
it sells the option.
Put
Options.
A put option gives the purchaser the right to sell shares of the reference asset
at a strike price prior to its expiration date. The purchaser pays a cost
(premium) to purchase the put option. In the event the reference asset declines
in value below the strike price and the holder exercises its put option, the
holder will be entitled to receive the difference between the value of the
reference asset and the strike price (which gain is offset by the premium
originally paid by the holder), and in the event the reference asset closes
above the strike price as of the expiration date, the put option may end up
worthless and the holder’s loss is limited to the amount of premium it paid.
A
written (sold) put option gives the seller the obligation to buy shares of the
reference asset at a strike price until its expiration date. The writer (seller)
of the put option receives an amount (premium) for writing (selling) the option.
In the event the reference asset declines in value below the strike price and
the holder exercises the put option, the writer (seller) of the put option will
have to pay the difference between the value of the reference asset and the
strike price or deliver the reference asset (which loss is offset by the premium
initially received), and in the event the reference asset appreciates in value,
the put option may end up worthless and the writer (seller) of the put option
retains the premium. The put options written by the Fund are considered
“covered” when the Fund owns at least an equivalent number of put options on the
same reference asset with the same expiration date and a higher strike price at
the time it sells the options.
The
Fund may write call options on up to 100% of each equity position held in the
portfolio and will use a portion of the premium received from writing such call
options to purchase put options. Call options written by the Fund will typically
have a strike price that is higher than the current price of the reference
asset, and put options purchased by the Fund will typically have a strike price
that is lower (in some cases, significantly lower) than the current price of the
reference asset. Options selected for the Fund will typically expire one week to
nine months from their purchase date and will be rolled periodically
(e.g.,
monthly) to continue generating income or to reflect the Adviser’s revised
outlook on the underlying portfolio security. When an option is rolled, the
Adviser simultaneously closes one option contract and opens another. The new
contract opened can have a further-dated expiration (i.e.,
the option would be rolled “out”), higher strike price (i.e.,
rolled “up”), lower strike price (i.e.,
rolled “down”), or a combination of both a different expiration and
strike.
In
addition to the options strategies discussed above, the Fund may utilize a “bull
call spread” options strategy. The Fund’s bull call spread strategy entails (i)
the purchase of at-the-money call options (i.e.,
call options with a strike price roughly equal to the current price of the
underlying asset) on an index or ETF tracking an index representing the U.S.
equity market and (ii) writing (selling) out-of-the-money call options
(i.e.,
call options with a strike price higher than the current price of the underlying
asset) on the same index or ETF. The bull call spread strategy is intended to
profit from moderate increases in the value of the reference asset (up to the
strike price of the written call options). The Fund may also purchase call
options on the securities held by the Fund to enable the Fund to further benefit
from an increase in the value of such securities.
The
Fund
is
considered
to
be
non-diversified,
which
means
that
it
may
invest
more
of
its
assets
in
the
securities
of
a
single
issuer
or a smaller number of issuers than if it were a diversified
fund.
As
of July 30, 2021, the Fund invested a significant portion of its assets in the
information technology sector.
Principal Investment Risks
The
principal risks of investing in the Fund are summarized below. The principal
risks are presented in alphabetical order to facilitate finding particular risks
and comparing them with other funds. Each risk summarized below is considered a
“principal risk” of investing in the Fund, regardless of the order in which it
appears. As with any investment, there is a risk that you could
lose all or a portion of your investment in the Fund. Some or
all of these risks may adversely affect the Fund’s net asset value per share
(“NAV”), trading price, yield, total return and/or ability to meet its
objectives. For more information about the risks of investing in the Fund, see
the section in the Fund’s Prospectus titled “Additional Information About the
Funds.”
•Collared
Options Strategy Risk.
Writing and buying options are speculative activities and entail greater than
ordinary investment risks. The Fund’s use of call and put options can lead to
losses because of adverse movements in the price or value of the underlying
security, which may be magnified by certain features of the options. When
selling a call option, the Fund will receive a premium; however, this premium
may not be enough to offset a loss incurred by the Fund if the price of the
underlying security is above the strike price by an amount equal to or greater
than the premium. The value of an option may be adversely affected if the market
for the option becomes less liquid or smaller, and will be affected by changes
in the value or yield of the option’s underlying security, an increase in
interest rates, a change in the actual or perceived volatility of the stock
market or the
underlying
security and the remaining time to expiration. Additionally, the value of an
option does not increase or decrease at the same rate as the underlying
security.
The
Fund’s use of options may reduce the Fund’s ability to profit from increases in
the value of the underlying securities.
If the price of the underlying security of a written call option rises above its
strike price, the value of the option and, consequently, the Fund may decline
significantly more than if the Fund invested solely in the underlying security
instead of using options. Similarly, if the price of the underlying security of
a purchased put option remains above its strike price, the option may become
worthless, and, consequently the value of the Fund may decline significantly
more than if the Fund invested solely in the underlying security instead of
using options.
•Depositary
Receipt Risk. Depositary
Receipts involve risks similar to those associated with investments in foreign
securities, such as changes in political or economic conditions of other
countries and changes in the exchange rates of foreign currencies. Depositary
Receipts listed on U.S. exchanges are issued by banks or trust companies and
entitle the holder to all dividends and capital gains that are paid out on the
underlying foreign shares (“Underlying Shares”). When the Fund invests in
Depositary Receipts as a substitute for an investment directly in the Underlying
Shares, the Fund is exposed to the risk that the Depositary Receipts may not
provide a return that corresponds precisely with that of the Underlying Shares.
•Derivative
Securities Risk. The
Fund invests in options that derive their performance from the performance of an
underlying reference asset. Derivatives, such as the options in which the Fund
invests, can be volatile and involve various types and degrees of risks,
depending upon the characteristics of a particular derivative. Derivatives may
entail investment exposures that are greater than their cost would suggest,
meaning that a small investment in a derivative could have a substantial impact
on the performance of the Fund. The Fund could experience a loss if its
derivatives do not perform as anticipated, the derivatives are not correlated
with the performance of their reference asset, or if the Fund is unable to
purchase or liquidate a position because of an illiquid secondary market. The
market for many derivatives is, or suddenly can become, illiquid. Changes in
liquidity may result in significant, rapid, and unpredictable changes in the
prices for derivatives.
•Equity
Market Risk. The
equity securities held in the Fund’s portfolio may experience sudden,
unpredictable drops in value or long periods of decline in value. This may occur
because of factors that affect securities markets generally or factors affecting
specific issuers, industries, or sectors in which the Fund invests. Common
stocks are generally exposed to greater risk than other types of securities,
such as preferred stock and debt obligations, because common stockholders
generally have inferior rights to receive payment from issuers. In addition,
local, regional or global events such as war, acts of terrorism, spread of
infectious diseases or other public health issues, recessions, or other events
could have a significant negative impact on the Fund and its investments. For
example, the global pandemic caused by COVID-19, a novel coronavirus, and the
aggressive responses taken by many governments, including closing borders,
restricting international and domestic travel, and the imposition of prolonged
quarantines or similar restrictions, has had negative impacts, and in many cases
severe impacts, on markets worldwide. The COVID-19 pandemic has caused prolonged
disruptions to the normal business operations of companies around the world and
the impact of such disruptions is hard to predict. Such events may affect
certain geographic regions, countries, sectors and industries more significantly
than others. Such events could adversely affect the prices and liquidity of the
Fund’s portfolio securities or other instruments and could result in disruptions
in the trading markets.
•ETF
Risks. The
Fund is an ETF, and, as a result of an ETF’s structure, it is exposed to the
following risks:
◦Authorized
Participants, Market Makers, and Liquidity Providers Concentration
Risk. The
Fund has a limited number of financial institutions that may act as Authorized
Participants (“APs”). In addition, there may be a limited number of market
makers and/or liquidity providers in the marketplace. To the extent either of
the following events occur, Shares may trade at a material discount to NAV and
possibly face delisting: (i) APs exit the business or otherwise become
unable to process creation and/or redemption orders and no other APs step
forward to perform these services, or (ii) market makers and/or liquidity
providers exit the business or significantly reduce their business activities
and no other entities step forward to perform their functions.
◦Costs
of Buying or Selling Shares.
Due to the costs of buying or selling Shares, including brokerage commissions
imposed by brokers and bid-ask spreads, frequent trading of Shares may
significantly reduce investment results and an investment in Shares may not be
advisable for investors who anticipate regularly making small investments.
◦Shares
May Trade at Prices Other Than NAV. As
with all ETFs, Shares may be bought and sold in the secondary market at market
prices. Although it is expected that the market price of Shares will approximate
the Fund’s NAV, there may be times when the market price of Shares is more than
the NAV intra-day (premium) or less than the NAV intra-day (discount) due to
supply and demand of Shares or during periods of market volatility. This risk is
heightened in times of market volatility, periods of steep market declines, and
periods when there is limited trading activity for Shares in the secondary
market, in which case such premiums or discounts may be significant.
◦Trading. Although
Shares are listed for trading on Cboe BZX Exchange, Inc. (the “Exchange”)
and may be traded on U.S. exchanges other than the Exchange, there can be no
assurance that Shares will trade with any volume, or at all, on any stock
exchange. In stressed market conditions, the liquidity of Shares may begin to
mirror the liquidity of the Fund’s underlying
portfolio
holdings, which can be significantly less liquid than Shares, and this could
lead to differences between the market price of the Shares and the underlying
value of those Shares.
•Foreign
Investment Risk. Because
of the Fund’s investment in ADRs, changes in foreign economies and political
climates are more likely to affect the Fund than a fund that invests exclusively
in U.S. companies. There may be less government supervision of foreign markets,
resulting in non-uniform accounting practices and less publicly available
information. The value of foreign investments may be affected by changes in
exchange control regulations, application of foreign tax laws (including
withholding tax), changes in governmental administration or economic or monetary
policy (in this country or abroad) or changed circumstances in dealings between
nations.
•High
Portfolio Turnover Risk.
The Fund may frequently buy and sell portfolio securities and other assets to
rebalance the Fund’s exposure to specific securities. Higher portfolio turnover
may result in the Fund paying higher levels of transaction costs and generating
greater tax liabilities for shareholders. Portfolio turnover risk may cause the
Fund’s performance to be less than you expect.
•Limited
Operating History. The
Fund is a recently organized investment company with a limited operating
history. As a result, prospective investors have a limited track record or
history on which to base their investment decision.
•Management
Risk. The
Fund is actively managed and may not meet its investment objective based on the
Adviser’s success or failure to implement investment strategies for the Fund.
•Market
Capitalization Risk.
◦Large-Capitalization
Investing.
The securities of large-capitalization companies may be relatively mature
compared to smaller companies and therefore subject to slower growth during
times of economic expansion. Large-capitalization companies may also be unable
to respond quickly to new competitive challenges, such as changes in technology
and consumer tastes.
◦Mid-Capitalization
Investing. The
securities of mid-capitalization companies may be more vulnerable to adverse
issuer, market, political, or economic developments than securities of
large-capitalization companies, but they may also be subject to slower growth
than small-capitalization companies during times of economic expansion. The
securities of mid-capitalization companies generally trade in lower volumes and
are subject to greater and more unpredictable price changes than large
capitalization stocks or the stock market as a whole, but they may also be
nimbler and more responsive to new challenges than large-capitalization
companies. Some mid-capitalization companies have limited product lines,
markets, financial resources, and management personnel and tend to concentrate
on fewer geographical markets relative to large-capitalization
companies.
◦Small-Capitalization
Investing. The
securities of small-capitalization companies may be more vulnerable to adverse
issuer, market, political, or economic developments than securities of
larger-capitalization companies. The securities of small-capitalization
companies generally trade in lower volumes and are subject to greater and more
unpredictable price changes than larger capitalization stocks or the stock
market as a whole. Some small capitalization companies have limited product
lines, markets, and financial and managerial resources and tend to concentrate
on fewer geographical markets relative to larger capitalization companies. There
is typically less publicly available information concerning
smaller-capitalization companies than for larger, more established companies.
Small-capitalization companies also may be particularly sensitive to changes in
interest rates, government regulation, borrowing costs and earnings.
•Non-Diversification
Risk. The Fund is considered to be non-diversified,
which means that it may invest more of its assets in the securities of a single
issuer or a smaller number of issuers than if it were a diversified fund. As a
result, the Fund may be more exposed to the risks associated with and
developments affecting an individual issuer or a smaller number of issuers than
a fund that invests more widely. This may increase the Fund’s volatility and
cause the performance of a relatively smaller number of issuers to have a
greater impact on the Fund’s performance.
•REIT
Investment Risk. Investments
in REITs involve unique risks. REITs may have limited financial resources, may
trade less frequently and in limited volume, and may be more volatile than other
securities. REITs may be affected by changes in the value of their underlying
properties or mortgages or by defaults by their borrowers or tenants.
Furthermore, these entities depend upon specialized management skills, have
limited diversification and are, therefore, subject to risks inherent in
financing a limited number of projects. In addition, the performance of a REIT
may be affected by changes in the tax laws or by its failure to qualify for
tax-free pass-through of income.
•Sector
Risk.
To the extent the Fund invests more heavily in particular sectors of the
economy, its performance will be especially sensitive to developments that
significantly affect those sectors.
◦Information
Technology Sector Risk. Market
or economic factors impacting information technology companies and companies
that rely heavily on technological advances could have a significant effect on
the value of the Fund’s investments. The value of stocks of information
technology companies and companies that rely heavily on technology is
particularly vulnerable to rapid changes in technology product cycles, rapid
product obsolescence, government regulation
and
competition, both domestically and internationally, including competition from
foreign competitors with lower production costs. Stocks of information
technology companies and companies that rely heavily on technology, especially
those of smaller, less-seasoned companies, tend to be more volatile than the
overall market. Information technology companies are heavily dependent on patent
and intellectual property rights, the loss or impairment of which may adversely
affect profitability.
•Tax
Risk. The Fund expects to generate premiums from
its sale of call options. These premiums typically will result in short-term
capital gains for federal income tax purposes. In addition, stocks that are
hedged with put options may not be eligible for long-term capital gains tax
treatment. The Fund is not designed for investors seeking a tax efficient
investment.
Performance
The following
performance information indicates some of the risks of investing in the
Fund. The bar chart shows the Fund’s performance for the
calendar year ended December 31. The table illustrates how the Fund’s average
annual returns for the 1-year and since inception periods compared with those of
a broad measure of market performance. The Fund’s past performance,
before and after taxes, does not necessarily indicate how it will perform in the
future. Updated performance information is also available on the
Fund’s website at www.aptusetfs.com/funds/acio.
Calendar Year Total Return
For the year-to-date period ended
June 30, 2021, the
Fund’s total return was 8.87%. During the period of time shown in the bar
chart, the Fund’s highest quarterly return
was 11.91% for the quarter ended June 30, 2020, and the
lowest quarterly return was
-11.47% for the quarter ended March 31,
2020.
Average Annual Total Returns for the Period
Ended December 31, 2020
|
|
|
|
|
|
|
|
|
Aptus
Collared Income Opportunity ETF |
1
Year |
Since
Inception
(7/9/2019) |
Return Before
Taxes |
9.66% |
9.18% |
Return After Taxes on
Distributions |
9.36% |
8.75% |
Return After Taxes on Distributions and
Sale of Shares |
5.89% |
6.98% |
S&P
500® Index
(reflects no deduction for
fees, expenses, or taxes) |
18.40% |
19.14% |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates during the period covered by the table above 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. After-tax returns shown are
not relevant to investors who hold their Shares through tax-deferred
arrangements such as an individual retirement account (“IRA”) or other
tax-advantaged accounts.
Management
Investment
Adviser
Aptus
Capital Advisors, LLC serves as investment adviser to the Fund.
Portfolio
Managers
John
D. (“JD”) Gardner, CFA, Chief Investment Officer and Managing Member at the
Adviser, has been a portfolio manager of the Fund since its inception in July
2019.
Beckham
D. Wyrick, CFA, Portfolio Manager at the Adviser, has been a portfolio manager
of the Fund since its inception in July 2019.
John
Luke Tyner, CFA, Portfolio Manager and Analyst at the Adviser, has been a
portfolio manager of the Fund since August 2020.
David
Wagner III, CFA, Portfolio Manager and Analyst at the Adviser, has been a
portfolio manager of the Fund since August 2020.
Purchase
and Sale of Shares
Shares
are listed on the Exchange, and individual Shares may only be bought and sold in
the secondary market through brokers at market prices, rather than NAV. Because
Shares trade at market prices rather than NAV, Shares may trade at a price
greater than NAV (premium) or less than NAV (discount).
The
Fund issues and redeems Shares at NAV only in large blocks known as “Creation
Units,” which only APs (typically, broker-dealers) may purchase or redeem. The
Fund generally issues and redeems Creation Units in exchange for a portfolio of
securities and/or a designated amount of U.S. cash.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase Shares (bid) and the lowest price a seller is
willing to accept for Shares (ask) when buying or selling Shares in the
secondary market (the “bid-ask spread”). Recent information about the Fund,
including its NAV, market price, premiums and discounts, and bid-ask spreads is
available on the Fund’s website at
www.aptusetfs.com/funds/acio.
Tax
Information
Fund
distributions are generally taxable as ordinary income, qualified dividend
income, or capital gains (or a combination), unless your investment is in an IRA
or other tax-advantaged account. Distributions on investments made through
tax-deferred arrangements may be taxed later upon withdrawal of assets from
those accounts.
Financial
Intermediary Compensation
If
you purchase Shares through a broker-dealer or other financial intermediary
(such as a bank) (an “Intermediary”), the Adviser or its affiliates may pay
Intermediaries for certain activities related to the Fund, including
participation in activities that are designed to make Intermediaries more
knowledgeable about exchange traded products, including the Fund, or for other
activities, such as marketing, educational training or other initiatives related
to the sale or promotion of Shares. These payments may create a conflict of
interest by influencing the Intermediary and your salesperson to recommend the
Fund over another investment. Any such arrangements do not result in increased
Fund expenses. Ask your salesperson or visit the Intermediary’s website for more
information.
|
|
|
APTUS
DEFINED RISK ETF FUND SUMMARY |
Investment Objective
The Aptus Defined Risk ETF
(the “Fund”) seeks current income and capital appreciation.
Fees and Expenses of the Fund
The
following table describes the fees and expenses you may pay if you buy, hold,
and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and Example
below.
|
|
|
|
|
|
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment) |
|
Management
Fees |
0.69% |
Distribution
and/or Service (12b-1) Fees |
0.00% |
Other
Expenses |
0.01% |
Acquired
Fund Fees and Expenses1 |
0.09% |
Total
Annual Fund Operating Expenses |
0.79% |
|
|
1
Acquired Fund Fees
and Expenses are the indirect costs of investing in other investment companies.
Total Annual Fund Operating Expenses do not correlate to the expense ratios in
the Fund’s Financial Highlights because the Financial Highlights include only
the direct operating expenses incurred by the Fund and exclude Acquired Fund
Fees and Expenses.
Expense Example
This Example is
intended to help you compare the cost of investing in the Fund with the cost of
investing in other funds. The Example assumes that you invest $10,000 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. Although your actual costs may be higher
or lower, based on these assumptions your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
1
Year |
3
Years |
5
Years |
10
Years |
$81 |
$252 |
$439 |
$978 |
Portfolio Turnover
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
Example, affect the Fund’s performance. For the fiscal year ended April 30,
2021, the Fund’s portfolio turnover rate was 28% 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 objective through a hybrid fixed income and equity strategy. The Fund
typically invests approximately 75% to 95% of its assets to obtain exposure to
investment-grade corporate bonds (the “Fixed Income Strategy”) and invests the
remainder of its assets to obtain exposure to U.S. stocks, while limiting
downside risk (the “Equity Strategy”).
Fixed
Income Strategy
The
Fund’s Fixed Income Strategy seeks exposure to U.S. dollar-denominated,
investment-grade corporate bonds of U.S. and non-U.S. issuers with maturities
between one and eight years (also known as a “bond ladder”). The Fund will
primarily obtain this exposure through investments in ETFs (“Underlying Bond
ETFs”) that each track the investment results of an index composed of such bonds
maturing in a specified year during that period (e.g.,
bonds maturing in 2023). The Underlying Bond ETFs are generally expected to make
monthly distributions of principal and interest received from their underlying
holdings, and each Underlying Bond ETF is expected to make a liquidating
distribution at the end of the calendar year in which its holdings mature. The
Fund generally reinvests the proceeds of such liquidating distributions into the
Underlying Bond ETF with the furthest away maturity date in the bond ladder.
While
the Fund’s Fixed Income Strategy is expected to obtain exposure to a diversified
array of corporate bonds regardless of the size of the Fund, a significant
portion of the Underlying Bond ETFs is generally expected to be represented by
securities of companies in the financial sector. The Fund will typically
rebalance its investments in Underlying Bond ETFs on a quarterly basis. The
Adviser may also decide to reallocate assets among the Equity Strategy and Fixed
Income Strategy outside of the normal rebalance activity if the Fund’s balance
of equity and fixed income exposure has shifted significantly during the
quarter.
Equity
Strategy
The
Fund’s Equity Strategy seeks exposure to small-, mid-, and large-capitalization
U.S. stocks by purchasing exchange-listed call options on approximately ten to
twenty individual stocks or depositary receipts (the “Underlying Individual
Equities”) or on one or more other ETFs that principally invest in U.S. equity
securities (the “Underlying Equity ETFs”). A call option gives the purchaser the
right to purchase shares of the underlying security at a specified price
(“strike price”) prior to a specified date (“expiration date”). The purchaser
pays a cost (premium) to purchase the call option. In the event the
underlying security appreciates in value, the value of the call option will
generally increase, and in the event the underlying security declines in value,
the call option may end up worthless and the premium may be lost.
Aptus
Capital Advisors, LLC, the Fund’s investment adviser (“Aptus” or the “Adviser”),
selects the Underlying Individual Equities based primarily on their momentum
(i.e.,
how close a stock is to its 52-week high), potential for growth, and correlation
to the broader U.S. equity market. Stocks selected as Underlying Individual
Equities by the Adviser must also have call options available for purchase that
meet the Fund’s minimum liquidity threshold for investibility. The Adviser seeks
to select Underlying Individual Equities to diversify exposure across a variety
of industries and to maximize the Fund’s equity exposure given the amount
allocated to the applicable options, as described below. Underlying Equity ETFs
may be selected in lieu of or in addition to Underlying Individual Equities to
adjust the balance of the Fund’s exposure across industries or to maintain the
Fund’s equity exposure when the Adviser believes they present a better risk
profile than Underlying Individual Equities.
The
Fund may utilize a combination of purchased and written (sold) call options
(known as a “spread”). A written (sold) call option gives the seller the
obligation to sell shares of the reference asset at the strike price until the
expiration date. The writer (seller) of the call option receives an amount
(premium) for writing (selling) the option. In the event the reference asset
appreciates above the strike price and the holder exercises the call option, the
writer (seller) of the call option will have to pay the difference between the
value of the reference asset and the strike price or deliver the reference asset
(which loss is offset by the premium initially received), and in the event the
reference asset declines in value, the call option may end up worthless and the
writer (seller) of the call option retains the premium.
Call
options purchased by the Fund typically have a time-to-expiration of one to six
months at the time of purchase and a strike price at or near the current market
price of the applicable Underlying Individual Equity or Underlying Equity ETF.
The Fund will generally turn over its options holdings to rebalance its Equity
Strategy investments on a monthly basis, at which time the Fund allocates
approximately 0.25% to 1.00% of its net assets to options on each of the
Underlying Individual Equities and may allocate up to approximately 5.00% to
options on each of the Underlying Equity ETFs selected. Each time the Fund
rebalances its Equity Strategy, the Fund will typically sell the options it
holds and purchase new ones as described above. To the extent the Fund sells
options tied to one individual stock or ETF and purchases new options tied to
the same individual stock or ETF, the rebalance will generally result in the
Fund owning options with a later expiration date than the previous set of
options. The Adviser will actively manage the Fund’s options as markets move or
events occur (e.g.,
earnings announcements) to roll forward expiration dates or to increase or
decrease market exposure to attempt to reduce the potential volatility inherent
in options where the price of the reference asset is significantly higher or
lower than the strike price.
Additionally,
the Adviser seeks to limit the Fund’s exposure to equity market declines by
purchasing exchange-listed put options on one or more broad-based indexes or
ETFs that track a portfolio of U.S. equity securities (“Broad Market Puts”). A
put option gives the purchaser the right to sell shares of the underlying
security at a strike price prior to its expiration date. The purchaser pays a
cost (premium) to purchase the put option. In the event the underlying security
depreciates in value, the value of the put option will generally increase, and
in the event the underlying security appreciates in value, the put option may
end up worthless and the premium may be lost.
Broad
Market Puts purchased by the Fund typically have a time-to-expiration of one to
six months at the time of purchase and a strike price at or near the current
market price of the applicable reference asset. Generally, each time the Fund
rebalances its Equity Strategy, the Fund allocates approximately 0.25% to 1.50%
of its net assets to Broad Market Puts and will sell the options it holds and
purchase new ones as described above.
Because the premiums for call and put
options purchased by the Fund will typically be a fraction of the value of the
underlying reference assets, the options enable the Fund to gain greater
exposure to the underlying reference assets than the amount invested in such
options. Consequently, the Fund seeks to have greater participation in the
appreciation (for call options) or depreciation (for put options) of the
applicable underlying reference assets than it would have by investing the same
amounts directly in such underlying reference assets, while limiting the maximum
loss from such options to the premiums paid.
Principal Investment Risks
The
principal risks of investing in the Fund are summarized below. The principal
risks are presented in alphabetical order to facilitate finding particular risks
and comparing them with other funds. Each risk summarized below is considered a
“principal risk” of investing in the Fund, regardless of the order in which it
appears. As with any investment, there is a risk that you could
lose all or a portion of your investment in the Fund. Some or
all of these risks may adversely affect the Fund’s net asset value per share
(“NAV”), trading price, yield, total return and/or ability to meet its
objectives. For more information about the risks of investing in the Fund, see
the section in the Fund’s Prospectus titled “Additional Information About the
Funds.”
•Depositary
Receipt Risk. Depositary
Receipts involve risks similar to those associated with investments in foreign
securities, such as changes in political or economic conditions of other
countries and changes in the exchange rates of foreign currencies. Depositary
Receipts listed on U.S. exchanges are issued by banks or trust companies and
entitle the holder to all dividends and capital gains that are paid out on the
underlying foreign shares (“Underlying Shares”). When the Fund invests in
Depositary Receipts as a substitute for an investment directly in the Underlying
Shares, the Fund is exposed to the risk that the Depositary Receipts may not
provide a return that corresponds precisely with that of the Underlying Shares.
•Derivative
Securities Risk. The
Fund invests in options that derive their performance from the performance of an
underlying reference asset. Derivatives, such as the options in which the Fund
invests, can be volatile and involve various types and degrees of risks,
depending upon the characteristics of a particular derivative. Derivatives may
entail investment exposures that are greater than their cost would suggest,
meaning that a small investment in a derivative could have a substantial impact
on the performance of the Fund. The Fund could experience a loss if its
derivatives do not perform as anticipated, the derivatives are not correlated
with the performance of their reference asset, or if the Fund is unable to
purchase or liquidate a position because of an illiquid secondary market. The
market for many derivatives is, or suddenly can become, illiquid. Changes in
liquidity may result in significant, rapid, and unpredictable changes in the
prices for derivatives.
•Equity
Market Risk. The
equity securities held in the Fund’s portfolio may experience sudden,
unpredictable drops in value or long periods of decline in value. This may occur
because of factors that affect securities markets generally or factors affecting
specific issuers, industries, or sectors in which the Fund invests. Common
stocks are generally exposed to greater risk than other types of securities,
such as preferred stock and debt obligations, because common stockholders
generally have inferior rights to receive payment from issuers. In addition,
local, regional or global events such as war, acts of terrorism, spread of
infectious diseases or other public health issues, recessions, or other events
could have a significant negative impact on the Fund and its investments. For
example, the global pandemic caused by COVID-19, a novel coronavirus, and the
aggressive responses taken by many governments, including closing borders,
restricting international and domestic travel, and the imposition of prolonged
quarantines or similar restrictions, has had negative impacts, and in many cases
severe impacts, on markets worldwide. The COVID-19 pandemic has caused prolonged
disruptions to the normal business operations of companies around the world and
the impact of such disruptions is hard to predict. Such events may affect
certain geographic regions, countries, sectors and industries more significantly
than others. Such events could adversely affect the prices and liquidity of the
Fund’s portfolio securities or other instruments and could result in disruptions
in the trading markets.
•ETF
Risks. The
Fund is an ETF, and, as a result of an ETF’s structure, it is exposed to the
following risks:
◦Authorized
Participants, Market Makers, and Liquidity Providers Concentration
Risk. The
Fund has a limited number of financial institutions that may act as Authorized
Participants (“APs”). In addition, there may be a limited number of market
makers and/or liquidity providers in the marketplace. To the extent either of
the following events occur, Shares may trade at a material discount to NAV and
possibly face delisting: (i) APs exit the business or otherwise become
unable to process creation and/or redemption orders and no other APs step
forward to perform these services, or (ii) market makers and/or liquidity
providers exit the business or significantly reduce their business activities
and no other entities step forward to perform their functions.
◦Costs
of Buying or Selling Shares.
Due to the costs of buying or selling Shares, including brokerage commissions
imposed by brokers and bid-ask spreads, frequent trading of Shares may
significantly reduce investment results and an investment in Shares may not be
advisable for investors who anticipate regularly making small investments.
◦Shares
May Trade at Prices Other Than NAV. As
with all ETFs, Shares may be bought and sold in the secondary market at market
prices. Although it is expected that the market price of Shares will approximate
the Fund’s NAV, there may be times when the market price of Shares is more than
the NAV intra-day (premium) or less than the NAV intra-day (discount) due to
supply and demand of Shares or during periods of market volatility. This risk is
heightened in times of market volatility, periods of steep market declines, and
periods when there is limited trading activity for Shares in the secondary
market, in which case such premiums or discounts may be significant.
◦Trading. Although
Shares are listed for trading on Cboe BZX Exchange, Inc. (the “Exchange”)
and may be traded on U.S. exchanges other than the Exchange, there can be no
assurance that Shares will trade with any volume, or at all, on any stock
exchange. In stressed market conditions, the liquidity of Shares may begin to
mirror the liquidity of the Fund’s
underlying
portfolio holdings, which can be significantly less liquid than Shares, and this
could lead to differences between the market price of the Shares and the
underlying value of those Shares.
•Fixed
Income Securities Risk.
The Fund invests indirectly in fixed income securities through investments in
Underlying Bond ETFs, which involve certain risks, including:
◦Credit
Risk. Credit
risk refers to the possibility that the issuer of a security will not be able to
make payments of interest and principal when due. Changes in an issuer’s credit
rating or the market’s perception of an issuer’s creditworthiness may also
affect the value of an investment in that issuer.
◦Event
Risk. Event
risk is the risk that corporate issuers may undergo restructurings, such as
mergers, leveraged buyouts, takeovers, or similar events financed by increased
debt. As a result of the added debt, the credit quality and market value of a
company’s bonds and/or other debt securities may decline significantly.
◦Extension
Risk. 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.
◦Interest
Rate Risk. Generally,
the value of fixed income securities will change inversely with changes in
interest rates. As interest rates rise, the market value of fixed income
securities tends to decrease. Conversely, as interest rates fall, the market
value of fixed income securities tends to increase. This risk will be greater
for long-term securities than for short-term securities. Changes in government
intervention may have adverse effects on investments, volatility, and
illiquidity in debt markets.
◦Prepayment
Risk. When
interest rates fall, certain obligations will be paid off by the obligor more
quickly than originally anticipated, and the proceeds may have to be invested in
securities with lower yields.
•Foreign
Securities Risk.
The Fund invests in Underlying Bond ETFs that may invest in U.S.
dollar-denominated, investment-grade corporate bonds of non-U.S. issuers.
Investments in foreign securities involve certain risks that may not be present
with investments in U.S. securities. For example, investments in foreign
securities may be subject to risk of loss due to differences in accounting,
auditing, and financial reporting standards, the possibility of expropriation or
confiscatory taxation, adverse changes in investment or exchange control
regulations, political instability, regulatory and economic differences, and
potential restrictions on the flow of international capital. Investments in
foreign securities also may be subject to withholding or other taxes and may be
subject to additional trading, settlement, custodial, and operational risks.
These and other factors can make investments in the Fund more volatile and
potentially less liquid than other types of investments.
•Management
Risk. The
Fund is actively managed and may not meet its investment objective based on the
Adviser’s success or failure to implement investment strategies for the Fund.
•Market
Risk.
The
trading prices of equity and debt securities and other instruments fluctuate in
response to a variety of factors. The Fund’s NAV and market price may fluctuate
significantly in response to these and other factors. As a result, an investor
could lose money over short or long periods of time.
•Options
Risk.
Options enable the Fund to purchase exposure that is significantly greater than
the premium paid. Consequently, the value of such options can be volatile, and a
small investment in options can have a large impact on the performance of the
Fund. The Fund risks losing all or part of the cash paid (premium) for
purchasing options. Because the Fund only purchases options (as opposed to
writing/selling options), the Fund’s losses from its exposure to options are
limited to the amount of premiums paid. However,
even a small decline in the value of a reference asset underlying call options
or a small increase in the value of a reference asset underlying put options can
result in the entire investment in such options being lost.
•Other
Investment Companies Risk. The
risks of investing in investment companies, such as the Underlying Bond ETFs,
typically reflect the risks of the types of instruments in which the investment
companies invest. By investing in another investment company, the Fund becomes a
shareholder of that investment company and bears its proportionate share of the
fees and expenses of the other investment company. The Fund may be subject to
statutory limits with respect to the amount it can invest in other ETFs, which
may adversely affect the Fund’s ability to achieve its investment objective.
Investments in ETFs are also subject to the “ETF Risks” described above.
•Sector
Risk. To the extent the Fund invests more
heavily in particular sectors of the economy, its performance will be especially
sensitive to developments that significantly affect those
sectors.
Performance
The following
performance information indicates some of the risks of investing in the
Fund. The bar chart shows the Fund’s performance for the
calendar year ended December 31. The table illustrates how the Fund’s average
annual returns for the 1-year and since inception periods compared with those of
a broad measure of market performance. The Fund’s past performance,
before and after taxes, does not necessarily indicate how it will perform in the
future. Updated performance information is also available on the
Fund’s website at www.aptusetfs.com/funds/drsk.
Calendar Year Total
Return
For
the year-to-date period ended
June 30, 2021, the
Fund’s total return was 1.14%. During the period of time shown in the bar
chart, the Fund’s highest quarterly return
was 7.86% for the quarter ended June 30, 2020, and the
lowest quarterly return was
0.18% for the quarter ended December 31,
2020.
Average Annual Total Returns for the Period
Ended December 31, 2020
|
|
|
|
|
|
|
|
|
Aptus
Defined Risk ETF
|
1
Year |
Since
Inception
(8/7/2018) |
Return Before
Taxes |
13.98% |
12.06% |
Return After Taxes on
Distributions |
11.54% |
10.00% |
Return After Taxes on Distributions and
Sale of Shares |
8.37% |
8.43% |
Bloomberg
US Aggregate Bond Index1
(reflects no deduction for
fees, expenses, or taxes) |
7.51% |
7.43% |
1
Formerly known as the
Bloomberg Barclays US Aggregate Bond Index.
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates during the period covered by the table above 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. After-tax returns shown are
not relevant to investors who hold their Shares through tax-deferred
arrangements such as an individual retirement account (“IRA”) or other
tax-advantaged accounts.
Management
Investment
Adviser
Aptus
Capital Advisors, LLC serves as investment adviser to the Fund.
Portfolio
Managers
John
D. (“JD”) Gardner, CFA, Chief Investment Officer and Managing Member at the
Adviser, has been a portfolio manager of the Fund since its inception in August
2018.
Beckham
D. Wyrick, CFA, Portfolio Manager at the Adviser, has been a portfolio manager
of the Fund since its inception in August 2018.
John
Luke Tyner, CFA, Portfolio Manager and Analyst at the Adviser, has been a
portfolio manager of the Fund since August 2020.
Mark
Callahan, Portfolio Manager and Head of Trading at the Adviser, has been a
portfolio manager of the Fund since August 2020.
Purchase
and Sale of Shares
Shares
are listed on the Exchange, and individual Shares may only be bought and sold in
the secondary market through brokers at market prices, rather than NAV. Because
Shares trade at market prices rather than NAV, Shares may trade at a price
greater than NAV (premium) or less than NAV (discount).
The
Fund issues and redeems Shares at NAV only in large blocks known as “Creation
Units,” which only APs (typically, broker-dealers) may purchase or redeem. The
Fund generally issues and redeems Creation Units in exchange for a portfolio of
securities and/or a designated amount of U.S. cash.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase Shares (bid) and the lowest price a seller is
willing to accept for Shares (ask) when buying or selling Shares in the
secondary market (the “bid-ask spread”). Recent information about the Fund,
including its NAV, market price, premiums and discounts, and bid-ask spreads is
available on the Fund’s website at www.aptusetfs.com/funds/drsk.
Tax
Information
Fund
distributions are generally taxable as ordinary income, qualified dividend
income, or capital gains (or a combination), unless your investment is in an IRA
or other tax-advantaged account. Distributions on investments made through
tax-deferred arrangements may be taxed later upon withdrawal of assets from
those accounts.
Financial
Intermediary Compensation
If
you purchase Shares through a broker-dealer or other financial intermediary
(such as a bank) (an “Intermediary”), the Adviser or its affiliates may pay
Intermediaries for certain activities related to the Fund, including
participation in activities that are designed to make Intermediaries more
knowledgeable about exchange traded products, including the Fund, or for other
activities, such as marketing, educational training or other initiatives related
to the sale or promotion of Shares. These payments may create a conflict of
interest by influencing the Intermediary and your salesperson to recommend the
Fund over another investment. Any such arrangements do not result in increased
Fund expenses. Ask your salesperson or visit the Intermediary’s website for more
information.
|
|
|
OPUS
SMALL
CAP
VALUE
ETF FUND
SUMMARY |
Investment Objective
The Opus Small Cap Value ETF
(the “Fund”) seeks capital appreciation.
Fees and Expenses of the Fund
The
following table describes the fees and expenses you may pay if you buy, hold,
and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and Example
below.
|
|
|
|
|
|
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment) |
Management
Fees |
0.79% |
Distribution
and/or Service (12b-1) Fees |
0.00% |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses |
0.79% |
|
|
Expense Example
This Example is
intended to help you compare the cost of investing in the Fund with the cost of
investing in other funds. The Example assumes that you invest $10,000 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. Although your actual costs may be higher
or lower, based on these assumptions your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
1 Year |
3
Years |
5
Years |
10
Years |
$81 |
$252 |
$439 |
$978 |
Portfolio Turnover
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
Example, affect the Fund’s performance. For the fiscal year ended April 30,
2021, the Fund’s portfolio turnover rate was 65% of the average value of its
portfolio.
Principal Investment Strategies
The
Fund is an actively managed exchange-traded fund (“ETF”) that invests under
normal circumstances at least 80% of its net assets (plus any borrowings for
investment purposes) in equity securities of small-capitalization U.S.
companies. The Fund defines a small-capitalization company as an issuer whose
market capitalization at the time of purchase is in the range of those found in
the Russell 2000®
Index. The Fund’s equity securities primarily include common stocks, real estate
investment trusts (“REITs”), and American Depositary Receipts (“ADRs”)
representing the stock of a foreign company. The Fund will generally limit its
investments in ADRs to 20% of its total assets. The Fund may invest in
securities offered in an initial public offering (“IPO”) or in companies that
have recently completed an IPO.
Aptus
Capital Advisors, LLC, the Fund’s investment adviser (“Aptus” or the “Adviser”),
selects stocks across a variety of sectors and industries for the Fund by
combining factor-based analysis with rigorous fundamental research to identify
high-quality, growing companies that the Adviser believes are undervalued. The
Adviser focuses on three core themes to identify companies for the Fund:
|
|
|
|
|
|
Higher
Quality |
Companies
with sound business models, higher returns on equity, strong balance
sheets, and shareholder-friendly management. |
Higher
Growth |
Companies
that are well-positioned to grow sales, earnings, cash flows, and
dividends. |
Lower
Valuation |
Companies
whose valuations reflect lower price-to-earnings and higher yields than
their peers. |
The
Adviser generally sells a stock for the Fund when the company is no longer
believed to be high quality, when its anticipated growth rate has significantly
declined, when it is no longer considered undervalued, or when it is no longer
considered a small-capitalization company after a significant period of time
(e.g.,
more than one year).
As of July 30, 2021, the Fund invested a
significant portion of its assets in the financial and information technology
sectors.
Principal Investment Risks
The
principal risks of investing in the Fund are summarized below. The principal
risks are presented in alphabetical order to facilitate finding particular risks
and comparing them with other funds. Each risk summarized below is considered a
“principal risk” of investing in the Fund, regardless of the order in which it
appears. As with any investment, there is a risk that you could
lose all or a portion of your investment in the Fund. Some or
all of these risks may adversely affect the Fund’s net asset value per share
(“NAV”), trading price, yield, total return and/or ability to meet its
objectives. For more information about the risks of investing in the Fund, see
the section in the Fund’s Prospectus titled “Additional Information About the
Funds.”
•Depositary
Receipt Risk. Depositary
Receipts involve risks similar to those associated with investments in foreign
securities, such as changes in political or economic conditions of other
countries and changes in the exchange rates of foreign currencies. Depositary
Receipts listed on U.S. exchanges are issued by banks or trust companies and
entitle the holder to all dividends and capital gains that are paid out on the
underlying foreign shares (“Underlying Shares”). When the Fund invests in
Depositary Receipts as a substitute for an investment directly in the Underlying
Shares, the Fund is exposed to the risk that the Depositary Receipts may not
provide a return that corresponds precisely with that of the Underlying Shares.
•Equity
Market Risk. The
equity securities held in the Fund’s portfolio may experience sudden,
unpredictable drops in value or long periods of decline in value. This may occur
because of factors that affect securities markets generally or factors affecting
specific issuers, industries, or sectors in which the Fund invests. Common
stocks are generally exposed to greater risk than other types of securities,
such as preferred stock and debt obligations, because common stockholders
generally have inferior rights to receive payment from issuers. In addition,
local, regional or global events such as war, acts of terrorism, spread of
infectious diseases or other public health issues, recessions, or other events
could have a significant negative impact on the Fund and its investments. For
example, the global pandemic caused by COVID-19, a novel coronavirus, and the
aggressive responses taken by many governments, including closing borders,
restricting international and domestic travel, and the imposition of prolonged
quarantines or similar restrictions, has had negative impacts, and in many cases
severe impacts, on markets worldwide. The COVID-19 pandemic has caused prolonged
disruptions to the normal business operations of companies around the world and
the impact of such disruptions is hard to predict. Such events may affect
certain geographic regions, countries, sectors and industries more significantly
than others. Such events could adversely affect the prices and liquidity of the
Fund’s portfolio securities or other instruments and could result in disruptions
in the trading markets.
•ETF
Risks. The
Fund is an ETF, and, as a result of an ETF’s structure, it is exposed to the
following risks:
◦Authorized
Participants, Market Makers, and Liquidity Providers Concentration
Risk. The
Fund has a limited number of financial institutions that may act as Authorized
Participants (“APs”). In addition, there may be a limited number of market
makers and/or liquidity providers in the marketplace. To the extent either of
the following events occur, Shares may trade at a material discount to NAV and
possibly face delisting: (i) APs exit the business or otherwise become
unable to process creation and/or redemption orders and no other APs step
forward to perform these services, or (ii) market makers and/or liquidity
providers exit the business or significantly reduce their business activities
and no other entities step forward to perform their functions.
◦Costs
of Buying or Selling Shares.
Due to the costs of buying or selling Shares, including brokerage commissions
imposed by brokers and bid-ask spreads, frequent trading of Shares may
significantly reduce investment results and an investment in Shares may not be
advisable for investors who anticipate regularly making small investments.
◦Shares
May Trade at Prices Other Than NAV. As
with all ETFs, Shares may be bought and sold in the secondary market at market
prices. Although it is expected that the market price of Shares will approximate
the Fund’s NAV, there may be times when the market price of Shares is more than
the NAV intra-day (premium) or less than the NAV intra-day (discount) due to
supply and demand of Shares or during periods of market volatility. This risk is
heightened in times of market volatility, periods of steep market declines, and
periods when there is limited trading activity for Shares in the secondary
market, in which case such premiums or discounts may be significant.
◦Trading. Although
Shares are listed for trading on Cboe BZX Exchange, Inc. (the “Exchange”)
and may be traded on U.S. exchanges other than the Exchange, there can be no
assurance that Shares will trade with any volume, or at all, on any stock
exchange. In stressed market conditions, the liquidity of Shares may begin to
mirror the liquidity of the Fund’s underlying portfolio holdings, which can be
significantly less liquid than Shares, and this could lead to differences
between the market price of the Shares and the underlying value of those
Shares.
•Foreign
Investment Risk. Because
of the Fund’s investment in ADRs, changes in foreign economies and political
climates are more likely to affect the Fund than a fund that invests exclusively
in U.S. companies. There may be less government supervision of foreign markets,
resulting in non-uniform accounting practices and less publicly available
information. The value of foreign investments may be affected by changes in
exchange control regulations, application of foreign tax laws (including
withholding tax), changes in governmental administration or economic or monetary
policy (in this country or abroad) or changed circumstances in dealings between
nations.
•IPO
Risk.
The Fund may invest in securities offered in an IPO or in companies that have
recently completed an IPO. The market value of IPO shares can have significant
volatility due to factors such as the absence of a prior public market,
unseasoned trading, a small number of shares available for trading and limited
information about the issuer. The purchase of IPO shares may involve high
transaction costs, and the Fund may lose money on an investment in such
securities.
•Management
Risk. The
Fund is actively managed and may not meet its investment objective based on the
Adviser’s success or failure to implement investment strategies for the Fund.
•REIT
Investment Risk. Investments
in REITs involve unique risks. REITs may have limited financial resources, may
trade less frequently and in limited volume, and may be more volatile than other
securities. REITs may be affected by changes in the value of their underlying
properties or mortgages or by defaults by their borrowers or tenants.
Furthermore, these entities depend upon specialized management skills, have
limited diversification and are, therefore, subject to risks inherent in
financing a limited number of projects. In addition, the performance of a REIT
may be affected by changes in the tax laws or by its failure to qualify for
tax-free pass-through of income.
•Sector
Risk.
To the extent the Fund invests more heavily in particular sectors of the
economy, its performance will be especially sensitive to developments that
significantly affect those sectors.
◦Financial
Sector Risk. This
sector can be significantly affected by changes in interest rates, government
regulation, the rate of defaults on corporate, consumer and government debt, the
availability and cost of capital, and fallout from the housing and sub-prime
mortgage crisis. Insurance companies, in particular, may be significantly
affected by changes in interest rates, catastrophic events, price and market
competition, the imposition of premium rate caps, or other changes in government
regulation or tax law and/or rate regulation, which may have an adverse impact
on their profitability. This sector has experienced significant losses in the
recent past, and the impact of more stringent capital requirements and of recent
or future regulation on any individual financial company or on the sector as a
whole cannot be predicted. In recent years, cyber attacks and technology
malfunctions and failures have become increasingly frequent in this sector and
have caused significant losses.
◦Information
Technology Sector Risk. Market
or economic factors impacting information technology companies and companies
that rely heavily on technological advances could have a significant effect on
the value of the Fund’s investments. The value of stocks of information
technology companies and companies that rely heavily on technology is
particularly vulnerable to rapid changes in technology product cycles, rapid
product obsolescence, government regulation and competition, both domestically
and internationally, including competition from foreign competitors with lower
production costs. Stocks of information technology companies and companies that
rely heavily on technology, especially those of smaller, less-seasoned
companies, tend to be more volatile than the overall market. Information
technology companies are heavily dependent on patent and intellectual property
rights, the loss or impairment of which may adversely affect
profitability.
•Small-Capitalization
Investing.
The Fund may invest in the securities of small-capitalization companies. As a
result, the Fund may be more volatile than funds that invest in larger, more
established companies. The securities of small-capitalization companies
generally trade in lower volumes and are subject to greater and more
unpredictable price changes than larger capitalization stocks or the stock
market as a whole. Small-capitalization companies may be particularly sensitive
to changes in interest rates, government regulation, borrowing costs and
earnings.
•Value-Style
Investing Risk. The value investing style may over time
go in and out of favor. At times when the value investing style is out of favor,
the Fund may underperform other funds that use different investing
styles.
Performance
The following
performance information indicates some of the risks of investing in the
Fund. The bar chart shows the Fund’s performance for the
calendar year ended December 31. The table illustrates how the Fund’s average
annual returns for the 1-year and since inception periods compared with those of
a broad measure of market performance. The Fund’s past performance,
before and after taxes, does not necessarily indicate how it will perform in the
future. Updated performance information is also available on the
Fund’s website at www.opusetfs.com.
Calendar Year Total
Return
For the year-to-date period ended
June 30, 2021, the
Fund’s total return was 16.99%. During the period of time shown in the bar
chart, the Fund’s highest quarterly return
was 21.02% for the quarter ended December 31, 2020, and
the lowest quarterly return was
-30.20% for the quarter ended March 31,
2020.
Average Annual Total Returns for the Period
Ended December 31, 2020
|
|
|
|
|
|
|
|
|
Opus
Small Cap Value ETF |
1
Year |
Since
Inception
(7/17/2018) |
Return Before
Taxes |
4.88% |
6.50% |
Return After Taxes on
Distributions |
4.58% |
6.07% |
Return After Taxes on Distributions and
Sale of Shares |
3.02% |
4.92% |
Russell
2000 Value Total Return
(reflects no deduction for
fees, expenses, or taxes) |
4.63% |
1.67% |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates during the period covered by the table above 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. After-tax returns shown are
not relevant to investors who hold their Shares through tax-deferred
arrangements such as an individual retirement account (“IRA”) or other
tax-advantaged accounts.
Management
Investment
Adviser
Aptus
Capital Advisors, LLC (the “Adviser”)
Portfolio
Managers
John
D. (“JD”) Gardner, CFA, Chief Investment Officer and Managing Member at the
Adviser, has been a portfolio manager of the Fund since November
2019.
Beckham
D. Wyrick, CFA, Portfolio Manager at the Adviser, has been a portfolio manager
of the Fund since November 2019.
Brad
Rapking, CFA, Portfolio Manager and Analyst at the Adviser, has been portfolio
manager of the Fund since August 2020.
David
Wagner III, CFA, Portfolio Manager and Analyst at the Adviser, has been a
portfolio manager of the Fund since August 2020.
Purchase
and Sale of Shares
Shares
are listed on the Exchange, and individual Shares may only be bought and sold in
the secondary market through brokers at market prices, rather than NAV. Because
Shares trade at market prices rather than NAV, Shares may trade at a price
greater than NAV (premium) or less than NAV (discount).
The
Fund issues and redeems Shares at NAV only in large blocks known as “Creation
Units,” which only APs (typically, broker-dealers) may purchase or redeem. The
Fund generally issues and redeems Creation Units in exchange for a portfolio of
securities and/or a designated amount of U.S. cash.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase Shares (bid) and the lowest price a seller is
willing to accept for Shares (ask) when buying or selling Shares in the
secondary market (the “bid-ask spread”). Recent information about the Fund,
including its NAV, market price, premiums and discounts, and bid-ask spreads is
available on the Fund’s website at
www.aptusetfs.com/funds/oscv.
Tax
Information
Fund
distributions are generally taxable as ordinary income, qualified dividend
income, or capital gains (or a combination), unless your investment is in an IRA
or other tax-advantaged account. Distributions on investments made through
tax-deferred arrangements may be taxed later upon withdrawal of assets from
those accounts.
Financial
Intermediary Compensation
If
you purchase Shares through a broker-dealer or other financial intermediary
(such as a bank) (an “Intermediary”), the Adviser or its affiliates may pay
Intermediaries for certain activities related to the Fund, including
participation in activities that are designed to make Intermediaries more
knowledgeable about exchange traded products, including the Fund, or for other
activities, such as marketing, educational training or other initiatives related
to the sale or promotion of Shares. These payments may create a conflict of
interest by influencing the Intermediary and your salesperson to recommend the
Fund over another investment. Any such arrangements do not result in increased
Fund expenses. Ask your salesperson or visit the Intermediary’s website for more
information.
ADDITIONAL
INFORMATION ABOUT THE FUNDS
Each
Fund’s ticker symbol appears on the cover of this Prospectus, and references to
specific Funds in the sections below will refer to such Funds by their ticker
symbol.
Investment
Objective. Each
Fund’s investment objective has been adopted as a non-fundamental investment
policy and may be changed without shareholder approval upon written notice to
shareholders.
Principal
Investment Strategies.
ADME and OSCV will provide at least 60 days’ prior written notice to
shareholders of a change in the applicable Fund’s policy of investing at least
80% of its net assets (plus any borrowings for investment purposes) in the type
of investments suggested by the Fund’s name.
Temporary
Defensive Positions. To
respond to adverse market, economic, political, or other conditions, each Fund
may invest up to 100% of its assets in a temporary defensive manner by holding
all or a substantial portion of its assets in cash, cash equivalents, or other
high quality short-term investments or in other ETFs that invest in such
instruments. The Adviser also may invest in these types of securities or hold
cash while looking for suitable investment opportunities or to maintain
liquidity. In these circumstances, a Fund may be unable to achieve its
investment objective.
Additional
Information about ADME
The
Fund will write call options only if they are “covered.” In the case of a call
option written on a security, the option is “covered” if the Fund owns the
security underlying the call or has an absolute and immediate right to acquire
that security without additional cash consideration (or, if additional cash
consideration is required, liquid assets in such amount are segregated) upon
conversion or exchange of other securities held by it. For a call option written
on an index, the option is covered if the Fund maintains with its custodian a
portfolio of securities substantially replicating the index or liquid assets
equal to the contract value. A call option also is covered if the Fund holds a
call on the same reference asset as the call written where the exercise price of
the call held is (i) equal to or less than the exercise price of the call
written, or (ii) greater than the exercise price of the call written, provided
the Fund segregates liquid assets in the amount of the difference.
All
put options written by the Fund will be covered, which means that the Fund will
segregate cash or liquid assets with a value at least equal to the exercise
price of the put option or will hold a put option on the same reference asset as
the option written where the exercise price of the option held is (i) equal to
or higher than the exercise price of the option written, or (ii) less than the
exercise price of the option written, provided the Fund segregates liquid assets
in the amount of the difference.
Additional
Information about OSCV
Investment
Process for the Fund
The
Fund’s portfolio managers lead a team constantly engaged in investment idea
generation. The team identifies companies with the characteristics they seek
using a variety of sources, including factor-based analysis, research on
competitors/suppliers, industry conferences, and conversations with company
management. While the portfolio managers’ investment approach is rooted in
fundamental research, and accordingly is bottom-up, the team maintains an
awareness of the impact of top-down factors (e.g.,
interest rates) and their effect on a given company, including any effect on the
valuation of a company.
The
portfolio managers’ approach seeks to assess each company’s ability to generate
growth in sales, earnings, cash flows, and dividends, as well as the
sustainability of its business model and potential risks. After the research
process concludes, portfolio managers engage in detailed and collegial
discussions, ranking each name being considered for purchase, then stating if
they are a buy or no buy, which helps form final consensus-based decisions.
Concurrent with buy decisions, sales are evaluated and ranked in a similar
fashion. The portfolio managers continuously monitor portfolio holdings for
relevant data that affects their evaluation of a given holding, and will sell
those holdings when the risk/return profile is no longer favorable.
Portfolio
Construction
Portfolio
manager collaboration leads to the construction of a diversified long-only
portfolio of 50–100 positions that manages risk at multiple levels for the Fund.
The Adviser anticipates turnover of approximately 50% under normal market
conditions. The Fund may have weightings that are significantly different from
those of the Fund’s primary benchmark, the Russell 2000 Value Index, as the
Fund’s sector allocations at the time of investment may fluctuate from 0% to the
greater of (i) 35% or (ii) the weight of such sector in the Fund’s benchmark
index. Individual securities are limited at the time of investment to no more
than a 3% weighting. Investments in other ETFs that have a policy of investing,
under normal circumstances, at least 80% of their net assets, plus borrowings
for investment purposes, in small-capitalization securities will count towards
the Fund’s 80% policy.
Additional
Information About Each Fund’s Principal Risks.
This section provides additional information regarding the principal risks
described in each Fund Summary. As in each Fund Summary, the principal risks
below are presented in alphabetical order to facilitate finding particular risks
and comparing them with other funds. Each risk described below is considered a
“principal risk” of investing in the applicable Fund, regardless of the order in
which it appears. Each of the factors below could have a negative impact on the
applicable Fund’s performance and trading prices. Each risk applies to one or
more Funds as indicated in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADME |
ACIO |
DRSK |
OSCV |
Collared
Options Strategy Risk |
|
X |
|
|
Depositary
Receipt Risk |
X |
X |
X |
X |
Derivative
Securities Risk |
X |
X |
X |
|
Equity
Market Risk |
X |
X |
X |
X |
ETF
Risks |
X |
X |
X |
X |
Fixed
Income Securities Risk |
|
|
X |
|
Foreign
Investment Risk |
X |
X |
|
X |
Foreign
Securities Risk |
|
|
X |
|
High
Portfolio Turnover Risk |
X |
X |
|
|
IPO
Risk |
|
|
|
X |
Limited
Operating History |
|
X |
|
|
Management
Risk |
X |
X |
X |
X |
Market
Capitalization Risk |
X |
X |
|
X |
Large-Capitalization
Investing |
X |
X |
|
|
Mid-Capitalization
Investing |
X |
X |
|
|
Small-Capitalization
Investing |
X |
X |
|
X |
Market
Risk |
|
|
X |
|
Non-Diversification
Risk |
|
X |
|
|
Options
Risk |
X |
|
X |
|
Other
Investment Companies Risk |
|
|
X |
|
REIT
Investment Risk |
X |
X |
|
X |
Sector
Risk |
X |
X |
X |
X |
Financial
Sector Risk |
|
|
|
X |
Information
Technology Sector Risk |
X |
X |
|
X |
Tail
Hedge Risk |
X |
|
|
|
Tax
Risk |
X |
X |
|
|
Value
Style Investing Risk |
|
|
|
X |
•Collared
Options Strategy Risk.
Writing and buying options are speculative activities and entail greater than
ordinary investment risks. The Fund’s use of call and put options can lead to
losses because of adverse movements in the price or value of the underlying
security, which may be magnified by certain features of the options. When
selling a call option, the Fund will receive a premium; however, this premium
may not be enough to offset a loss incurred by the Fund if the price of the
underlying security is above the strike price by an amount equal to or greater
than the premium. The value of an option may be adversely affected if the market
for the option becomes less liquid or smaller, and will be affected by changes
in the value or yield of the option’s underlying security, an increase in
interest rates, a change in the actual or perceived volatility of the stock
market or the underlying security and the remaining time to expiration.
Additionally, the value of an option does not increase or decrease at the same
rate as the underlying security.
The
Fund’s use of options may reduce the Fund’s ability to profit from increases in
the value of the underlying securities. If the price of the underlying security
of a written call option rises above its strike price, the value of the option
and, consequently, the Fund may decline significantly more than if the Fund
invested solely in the underlying security instead of using options. Similarly,
if the price of the underlying security of a purchased put option remains above
its strike price, the option may become worthless, and, consequently the value
of the Fund may decline significantly more than if the Fund invested solely in
the underlying security instead of using options.
•Depositary
Receipt Risk.
The Fund may hold the securities of non-U.S. companies in the form of ADRs. ADRs
are negotiable certificates issued by a U.S. financial institution that
represent a specified number of shares in a foreign stock and trade on a U.S.
national
securities exchange, such as the Exchange. Sponsored ADRs are issued with the
support of the issuer of the foreign stock underlying the ADRs and carry all of
the rights of common shares, including voting rights. The underlying issuers of
certain ADRs are under no obligation to distribute shareholder communications to
the holders of such receipts, or to pass through to them any voting rights with
respect to the deposited securities. The underlying securities of the ADRs in
the Fund’s portfolio are usually denominated or quoted in currencies other than
the U.S. dollar. As a result, changes in foreign currency exchange rates may
affect the value of the Fund’s portfolio. In addition, because the underlying
securities of ADRs trade on foreign exchanges at times when the U.S. markets are
not open for trading, the value of the securities underlying the ADRs may change
materially at times when the U.S. markets are not open for trading, regardless
of whether there is an active U.S. market for Shares.
•Derivative
Securities Risk. The
Fund invests in options that derive their performance from the performance of an
underlying reference asset. Derivatives, such as the options in which the Fund
invests, can be volatile and involve various types and degrees of risks,
depending upon the characteristics of a particular derivative. Derivatives may
entail investment exposures that are greater than their cost would suggest,
meaning that a small investment in a derivative could have a substantial impact
on the performance of the Fund. The Fund could experience a loss if its
derivatives do not perform as anticipated, the derivatives are not correlated
with the performance of their reference asset, or if the Fund is unable to
purchase or liquidate a position because of an illiquid secondary market. The
market for many derivatives is, or suddenly can become, illiquid. Changes in
liquidity may result in significant, rapid, and unpredictable changes in the
prices for derivatives.
•Equity
Market Risk.
Common stocks are susceptible to general stock market fluctuations and to
volatile increases and decreases in value as market confidence in and
perceptions of their issuers change. These investor perceptions are based on
various and unpredictable factors including: expectations regarding government,
economic, monetary and fiscal policies; inflation and interest rates; economic
expansion or contraction; and global or regional political, economic, public
health, and banking crises. If you held common stock, or common stock
equivalents, of any given issuer, you would generally be exposed to greater risk
than if you held preferred stocks and debt obligations of the issuer because
common stockholders, or holders of equivalent interests, generally have inferior
rights to receive payments from issuers in comparison with the rights of
preferred stockholders, bondholders, and other creditors of such issuers.
Beginning
in the first quarter of 2020, financial markets in the United States and around
the world experienced extreme and in many cases unprecedented volatility and
severe losses due to the global pandemic caused by COVID-19, a novel
coronavirus. The pandemic has resulted in a wide range of social and economic
disruptions, including closed borders, voluntary or compelled quarantines of
large populations, stressed healthcare systems, reduced or prohibited domestic
or international travel, supply chain disruptions, and so-called “stay-at-home”
orders throughout much of the United States and many other countries. The
fall-out from these disruptions has included the rapid closure of businesses
deemed “non-essential” by federal, state, or local governments and rapidly
increasing unemployment, as well as greatly reduced liquidity for certain
instruments at times. Some sectors of the economy and individual issuers have
experienced particularly large losses. Such disruptions may continue for an
extended period of time or reoccur in the future to a similar or greater extent.
In response, the U.S. government and the Federal Reserve have taken
extraordinary actions to support the domestic economy and financial markets,
resulting in very low interest rates and in some cases negative yields. It is
unknown how long circumstances related to the pandemic will persist, whether
they will reoccur in the future, whether efforts to support the economy and
financial markets will be successful, and what additional implications may
follow from the pandemic. The impact of these events and other epidemics or
pandemics in the future could adversely affect Fund performance.
•ETF
Risks. The
Fund is an ETF, and, as a result of an ETF’s structure, it is exposed to the
following risks:
•APs,
Market Makers, and Liquidity Providers Concentration Risk.
The Fund has a limited number of financial institutions that may act as APs. In
addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace. To the extent either of the following events
occur, Shares may trade at a material discount to NAV and possibly face
delisting: (i) APs exit the business or otherwise become unable to process
creation and/or redemption orders and no other APs step forward to perform these
services, or (ii) market makers and/or liquidity providers exit the business or
significantly reduce their business activities and no other entities step
forward to perform their functions.
•Costs
of Buying or Selling Shares.
Investors buying or selling Shares in the secondary market will pay brokerage
commissions or other charges imposed by brokers, as determined by that broker.
Brokerage commissions are often a fixed amount and may be a significant
proportional cost for investors seeking to buy or sell relatively small amounts
of Shares. In addition, secondary market investors will also incur the cost of
the difference between the price at which an investor is willing to buy Shares
(the “bid” price) and the price at which an investor is willing to sell Shares
(the “ask” price). This difference in bid and ask prices is often referred to as
the “spread” or “bid-ask spread.” The bid-ask spread varies over time for Shares
based on trading volume and market liquidity, and the spread is generally lower
if Shares have more trading volume and market liquidity and higher if Shares
have little trading volume and market liquidity. Further, a relatively small
investor base in the Fund, asset swings in the Fund, and/or increased market
volatility may cause increased bid-ask spreads. Due to the costs of buying or
selling Shares, including bid-ask spreads, frequent trading of Shares may
significantly reduce investment results and an investment in Shares may not be
advisable for investors who anticipate regularly making small
investments.
•Shares
May Trade at Prices Other Than NAV.
As with all ETFs, Shares may be bought and sold in the secondary market at
market prices. Although it is expected that the market price of Shares will
approximate the Fund’s NAV, there may be times when the market price of Shares
is more than the NAV intra-day (premium) or less than the NAV intra-day
(discount) due to supply and demand of Shares or during periods of market
volatility. This risk is heightened in times of market volatility, periods of
steep market declines, and periods when there is limited trading activity for
Shares in the secondary market, in which case such premiums or discounts may be
significant.
•Trading.
Although Shares are listed for trading on the Exchange and may be listed or
traded on U.S. and non-U.S. stock exchanges other than the Exchange, there can
be no assurance that an active trading market for such Shares will develop or be
maintained. Trading in Shares may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to Exchange “circuit breaker”
rules, which temporarily halt trading on the Exchange when a decline in the
S&P 500®
Index during a single day reaches certain thresholds (e.g.,
7%, 13%, and 20%). Additional rules applicable to the Exchange may halt trading
in Shares when extraordinary volatility causes sudden, significant swings in the
market price of Shares. There can be no assurance that Shares will trade with
any volume, or at all, on any stock exchange. In stressed market conditions, the
liquidity of Shares may begin to mirror the liquidity of the Fund’s underlying
portfolio holdings, which can be significantly less liquid than Shares, and this
could lead to differences between the market price of the Shares and the
underlying value of those Shares. Additionally, this adverse change in liquidity
could in turn lead to differences between the market price of Shares and the
underlying value of those Shares.
•Fixed
Income Securities Risk. The
Fund invests indirectly in fixed income securities through investments in
Underlying Bond ETFs, which involve certain risks, including:
◦Credit
Risk. Credit
risk refers to the possibility that the issuer of a security will not be able to
make principal and interest payments when due. Changes in an issuer’s credit
rating or the market’s perception of an issuer’s creditworthiness may also
affect the value of an Underlying Bond ETF’s investment in that issuer. The
degree of credit risk depends on both the financial condition of the issuer and
the terms of the obligation.
◦Event
Risk. Event
risk is the risk that corporate issuers may undergo restructurings, such as
mergers, leveraged buyouts, takeovers, or similar events financed by increased
debt. As a result of the added debt, the credit quality and market value of a
company’s bonds and/or other debt securities may decline
significantly.
◦Extension
Risk. 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 securities, making them more
sensitive to future changes in interest rates. The value of longer-term
securities generally changes more in response to changes in interest rates than
the value of shorter-term securities. As a result, in a period of rising
interest rates, securities may exhibit additional volatility and may lose
value.
◦Interest
Rate Risk. Generally,
the value of fixed income securities will change inversely with changes in
interest rates. As interest rates rise, the market value of fixed income
securities tends to decrease. Conversely, as interest rates fall, the market
value of fixed income securities tends to increase. This risk will be greater
for long-term securities than for short-term securities. An Underlying Bond ETF
may take steps to attempt to reduce the exposure of its portfolio to interest
rate changes; however, there can be no guarantee that the Fund will take such
actions or that the Fund will be successful in reducing the impact of interest
rate changes on the portfolio. Changes in government intervention may have
adverse effects on investments, volatility, and illiquidity in debt
markets.
◦Prepayment
Risk. When
interest rates fall, certain 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. 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 that
were prepaid. Prepayment reduces the yield to maturity and the average life of
the security.
•Foreign
Investment Risk. Because
of the Fund’s investment in ADRs, changes in foreign economies and political
climates are more likely to affect the Fund than a fund that invests exclusively
in U.S. companies. There may also be less government supervision of foreign
markets, resulting in non-uniform accounting practices and less publicly
available information. The value of foreign investments may be affected by
changes in exchange control regulations, application of foreign tax laws
(including withholding tax), changes in governmental administration or economic
or monetary policy (in this country or abroad) or changed circumstances in
dealings between nations. Investments in foreign issues could be affected by
other factors not present in the United States, including expropriation, armed
conflict, confiscatory taxation, and potential difficulties in enforcing
contractual obligations.
•Foreign
Securities Risk.
The
Fund invests in Underlying Bond ETFs that may invest in foreign securities.
Investments in foreign securities involve certain risks that may not be present
with investments in U.S. securities. There may be less information publicly
available
about a foreign issuer than a U.S. issuer. Foreign issuers may be subject to
different accounting, auditing, financial reporting and investor protection
standards than U.S. issuers. Investments in foreign securities may be subject to
withholding or other taxes and may be subject to additional trading, settlement,
custodial, and operational risks. With respect to certain countries, there is
the possibility of government intervention and expropriation or nationalization
of assets. Because legal systems differ, there is also the possibility that it
will be difficult to obtain or enforce legal judgments in certain countries.
Since foreign exchanges may be open on days when an Underlying Bond ETF does not
price its shares, the value of the securities in an Underlying Bond ETF’s
portfolio may change on days when shareholders will not be able to purchase or
sell the Underlying Bond ETF’s or the Fund’s shares. Conversely, the Underlying
Bond ETF’s and the Fund’s shares may trade on days when foreign exchanges are
closed. Each of these factors can make investments in the Fund more volatile and
potentially less liquid than other types of investments.
•High
Portfolio Turnover Risk. Because
the Fund may “turn over” some or all of its put options and equity securities as
frequently as monthly, the Fund may incur high levels of transaction costs from
commissions or mark-ups in the bid/offer spread. Higher portfolio turnover may
result in the Fund paying higher levels of transaction costs and generating
greater tax liabilities for shareholders. Portfolio turnover risk may cause the
Fund’s performance to be less than you expect. While the turnover of the put
options is not deemed “portfolio turnover” for accounting purposes, the economic
impact to the Fund is similar to what could occur if the Fund experienced high
portfolio turnover (e.g.,
in excess of 100% per year).
•IPO
Risk.
The Fund may invest in securities offered in an IPO or in companies that have
recently completed an IPO. The stocks of such companies are unseasoned equities
lacking a trading history, a track record of reporting to investors, and widely
available research coverage. IPOs are thus often subject to extreme price
volatility and speculative trading. These stocks may have above-average price
appreciation in connection with the IPO. In addition, IPOs share similar
illiquidity risks of private equity and venture capital. The free float shares
held by the public in an IPO are typically a small percentage of the market
capitalization. The ownership of many IPOs often include large holdings by
venture capital and private equity investors who seek to sell their shares in
the public market in the months following an IPO when shares restricted by
lock-up are released, causing greater volatility and possible downward pressure
during the time that locked-up shares are released.
•Limited
Operating History. The
Fund is a recently organized management investment company with a limited
operating history. As a result, prospective investors have a limited track
record or history on which to base their investment decision.
•Management
Risk. The
Fund is actively managed and may not meet its investment objective based on the
Adviser’s success or failure to implement investment strategies for the
Fund.
•Market
Capitalization Risk.
•Large-Capitalization
Investing.
The securities of large-capitalization companies may be relatively mature
compared to smaller companies and therefore subject to slower growth during
times of economic expansion. Large-capitalization companies may also be unable
to respond quickly to new competitive challenges, such as changes in technology
and consumer tastes.
•Mid-Capitalization
Investing. The
securities of mid-capitalization companies may be more vulnerable to adverse
issuer, market, political, or economic developments than securities of
large-capitalization companies, but they may also be subject to slower growth
than small-capitalization companies during times of economic expansion. The
securities of mid-capitalization companies generally trade in lower volumes and
are subject to greater and more unpredictable price changes than large
capitalization stocks or the stock market as a whole, but they may also be
nimbler and more responsive to new challenges than large-capitalization
companies. Some mid-capitalization companies have limited product lines,
markets, financial resources, and management personnel and tend to concentrate
on fewer geographical markets relative to large-capitalization
companies.
•Small-Capitalization
Investing. The
securities of small-capitalization companies may be more vulnerable to adverse
issuer, market, political, or economic developments than securities of
larger-capitalization companies. The securities of small-capitalization
companies generally trade in lower volumes and are subject to greater and more
unpredictable price changes than larger capitalization stocks or the stock
market as a whole. Some small capitalization companies have limited product
lines, markets, and financial and managerial resources and tend to concentrate
on fewer geographical markets relative to larger capitalization companies. There
is typically less publicly available information concerning
smaller-capitalization companies than for larger, more established companies.
Small-capitalization companies also may be particularly sensitive to changes in
interest rates, government regulation, borrowing costs and earnings.
•Market
Risk. The
trading prices of securities and other instruments fluctuate in response to a
variety of factors. These factors include events impacting the entire market or
specific market segments, such as political, market and economic developments,
as well as events that impact specific issuers. The Fund’s NAV and market price,
like security and commodity prices generally, may fluctuate significantly in
response to these and other factors. As a result, an investor could lose money
over short or long periods of time.
•Non-Diversification
Risk.
The
Fund is considered to be non-diversified, which means that it may invest more of
its assets in the securities of a single issuer or a smaller number of issuers
than if it were a diversified fund. As a result, the Fund may be more exposed to
the risks associated with and developments affecting an individual issuer or a
smaller number of issuers than a fund that invests more widely. This may
increase the Fund’s volatility and cause the performance of a relatively smaller
number of issuers to have a greater impact on the Fund’s
performance.
•Options
Risk.
Selling (writing) and buying options are speculative activities and entail
greater than ordinary investment risks. The Fund’s use of options can lead to
losses because of adverse movements in the price or value of the reference
asset, which may be magnified by certain features of the options. When selling a
put option, the Fund will receive a premium; however, this premium may not be
enough to offset a loss incurred by the Fund if the price of the underlying
asset is below the strike price by an amount equal to or greater than the
premium. Purchasing of put or call options involves the payment of premiums,
which may adversely affect the Fund’s performance. Purchased put or call options
may expire worthless resulting in the Fund’s loss of the premium it paid for the
option.
The
value of an option may be adversely affected if the market for the option
becomes less liquid or smaller, and will be affected by changes in the value or
yield of the option’s reference asset, an increase in interest rates, a change
in the actual or perceived volatility of the stock market or the reference asset
and the remaining time to expiration. Additionally, the value of an option does
not increase or decrease at the same rate as the reference asset. The Fund’s use
of options may reduce the Fund’s profit from its other holdings and may result
in a significantly greater decline in the value of the Fund than if it had
invested directly in the reference asset instead of using options. If the price
of the reference asset of a purchased put option remains above its strike price
or the price of the reference asset of a purchased call option remains below its
strike price, the option may become worthless, and, consequently the value of
the Fund may decline significantly more than if the Fund invested solely in the
reference asset instead of using options or did not invest in the options at
all.
•Other
Investment Companies Risk. The
Fund may invest in shares of other investment companies, such as ETFs. The risks
of investment in these securities typically reflect the risks of the types of
instruments in which the investment company invests. When the Fund invests in
investment company securities, shareholders of the Fund bear indirectly their
proportionate share of their fees and expenses, as well as their share of the
Fund’s fees and expenses. As a result, an investment by the Fund in an
investment company could cause the Fund’s operating expenses (taking into
account indirect expenses such as the fees and expenses of the investment
company) to be higher and, in turn, performance to be lower than if it were to
invest directly in the instruments underlying the investment company.
Additionally, there may not be an active trading market available for shares of
some ETFs. Shares of an ETF may also trade in the market at a premium or
discount to its NAV.
•REIT
Investment Risk.
Investments in REITs involve unique risks. REITs may have limited financial
resources, may trade less frequently and in limited volume, and may be more
volatile than other securities. In addition, to the extent a Fund holds
interests in REITs, it is expected that investors in a Fund will bear two layers
of asset-based management fees and expenses (directly at a Fund level and
indirectly at the REIT level). The risks of investing in REITs include certain
risks associated with the direct ownership of real estate and the real estate
industry in general. These include risks related to general, regional and local
economic conditions; fluctuations in interest rates and property tax rates;
shifts in zoning laws, environmental regulations and other governmental action
such as the exercise of eminent domain; cash flow dependency; increased
operating expenses; lack of availability of mortgage funds; losses due to
natural disasters; overbuilding; losses due to casualty or condemnation; changes
in property values and rental rates; and other factors.
In
addition to these risks, residential/diversified REITs and commercial equity
REITs may be affected by changes in the value of the underlying property owned
by the trusts, while mortgage REITs may be affected by the quality of any credit
extended. Further, REITs are dependent upon management skills and generally may
not be diversified. REITs are also subject to heavy cash flow dependency,
defaults by borrowers and self-liquidation. In addition, REITs could possibly
fail to qualify for the beneficial tax treatment available to REITs under the
Code, or to maintain their exemptions from registration under the Investment
Company Act of 1940, as amended (the “1940 Act”). A REIT that fails to
comply with such tax requirements may be subject to U.S. federal income
taxation, which may affect the value of the REIT and the characterization of the
REIT’s distributions. A REIT that successfully maintains its qualification may
still become subject to U.S. federal, state and local taxes, including excise,
penalty, franchise, payroll, mortgage recording, and transfer taxes, both
directly and indirectly through its subsidiaries.
•Sector
Risk.
Each Fund’s investing approach may result in an emphasis on certain sectors or
sub-sectors of the market at any given time. To the extent a Fund invests more
heavily in one sector or sub-sector of the market, it thereby presents a more
concentrated risk and its performance will be especially sensitive to
developments that significantly affect those sectors or sub-sectors. In
addition, the value of a Fund’s shares may change at different rates compared to
the value of shares of a fund with investments in a more diversified mix of
sectors and industries. An individual sector or sub-sector of the market may
have above-average performance during particular periods but may also move up
and down more than the broader market. The several industries that constitute a
sector may all react in the same way to economic, political or regulatory
events. A Fund’s performance could also be affected if the sectors or
sub-sectors do not perform as expected. Alternatively, the lack of exposure to
one or more sectors or sub-sectors may adversely affect performance.
◦Financial
Sector Risk.
Companies in the financial sector of an economy are often subject to extensive
governmental regulation and intervention, which may adversely affect the scope
of their activities, the prices they can charge and the amount of capital they
must maintain. Governmental regulation may change frequently and may have
significant adverse consequences for companies in the financial sector,
including effects not intended by such regulation. The impact of recent or
future regulation in various countries on any individual financial company or on
the sector as a whole cannot be predicted.
Certain
risks may impact the value of investments in the financial sector more severely
than those of investments outside this sector, including the risks associated
with companies that operate with substantial financial leverage. Companies in
the financial sector may also be adversely affected by increases in interest
rates and loan losses, decreases in the availability of money or asset
valuations, credit rating downgrades and adverse conditions in other related
markets.
Insurance
companies, in particular, may be subject to severe price competition and/or rate
regulation, which may have an adverse impact on their profitability. Insurance
companies are subject to extensive government regulation in some countries and
can be significantly affected by changes in interest rates, general economic
conditions, price and marketing competition, the imposition of premium rate
caps, or other changes in government regulation or tax law. Different segments
of the insurance industry can be significantly affected by mortality and
morbidity rates, environmental clean-up costs and catastrophic events such as
earthquakes, hurricanes and terrorist acts.
The
financial sector is also a target for cyber attacks and may experience
technology malfunctions and disruptions. In recent years, cyber attacks and
technology failures have become increasingly frequent and have caused
significant losses.
◦Information
Technology Sector Risk.
Market
or economic factors impacting information technology companies and companies
that rely heavily on technological advances could have a significant effect on
the value of the Fund’s investments. The value of stocks of information
technology companies and companies that rely heavily on technology is
particularly vulnerable to rapid changes in technology product cycles, rapid
product obsolescence, government regulation and competition, both domestically
and internationally, including competition from foreign competitors with lower
production costs. Stocks of information technology companies and companies that
rely heavily on technology, especially those of smaller, less-seasoned
companies, tend to be more volatile than the overall market. Information
technology companies are heavily dependent on patent and intellectual property
rights, the loss or impairment of which may adversely affect profitability.
Additionally, companies in the technology sector may face dramatic and often
unpredictable changes in growth rates and competition for the services of
qualified personnel.
•Tail
Hedge Risk.
When the Fund’s tail hedge is in effect, the Fund may purchase put options
designed to mitigate the Fund’s exposure to significant declines in the broader
U.S. equity market. However, there is a risk that the Fund will experience a
loss as a result of engaging in such options transactions. Moreover, there can
be no assurance that the tail hedge will be successful in protecting against all
or any declines in the value of the Fund’s portfolio because the amount of
protection provided by the put options purchased by the Fund and the price of
such protection will be dictated by prevailing market sentiment at the time the
tail hedge is triggered. Additionally, the tail hedge will not protect against
declines in the value of the Fund’s portfolio where such declines are based on
factors other than general stock market fluctuations.
•Tax
Risk.
The Fund expects to generate premiums from its sale of options. These premiums
typically will result in short-term capital gains for federal income tax
purposes. In addition, equity securities that are hedged with put options may
not be eligible for long-term capital gains tax treatment. The Fund is not
designed for investors seeking a tax efficient investment.
•Value
Style Investing Risk.
Certain equity securities (generally referred to as value securities) are
purchased primarily because they are selling at prices below what the Adviser
believes to be their fundamental value and not necessarily because the issuing
companies are expected to experience significant earnings growth. The Fund bears
the risk that the companies that issued these securities may not overcome the
adverse business developments or other factors causing their securities to be
perceived by the Adviser to be underpriced or that the market may never come to
recognize their fundamental value. A value stock may not increase in price, as
anticipated by the Adviser investing in such securities, if other investors fail
to recognize the company’s value and bid up the price or invest in markets
favoring faster growing companies. The Fund’s strategy of investing in value
stocks also carries the risk that in certain markets value stocks will
under-perform growth stocks.
PORTFOLIO
HOLDINGS INFORMATION
Information
about the Funds’ daily portfolio holdings is available at www.aptusetfs.com and
opusetfs.com. A description of the Funds’ policies and procedures with respect
to the disclosure of the Funds’ portfolio holdings is available in the Funds’
Statement of Additional Information (“SAI”).
MANAGEMENT
Investment
Adviser
Aptus
serves as the Funds’ investment adviser and has overall responsibility for the
general management and administration of the Funds. Aptus is a registered
investment adviser with offices located at 265 Young Street Fairhope, Alabama
36532. Aptus provides
investment
advisory services to separately managed accounts, as well as the Funds. Aptus
also arranges for transfer agency, custody, fund administration, and all other
related services necessary for the Funds to operate.
For
the services it provides to the Funds, each Fund pays the Adviser a unified
management fee, which is calculated daily and paid monthly, at an annual rate
based on the applicable Fund’s average daily net assets as set forth in the
table below.
|
|
|
|
|
|
Name
of Fund |
Management
Fee |
Aptus
Drawdown Managed Equity ETF (ADME) |
0.79% |
Aptus
Collared Income Opportunity ETF (ACIO) |
0.79% |
Aptus
Defined Risk ETF (DRSK) |
0.69% |
Opus
Small Cap Value ETF (OSCV) |
0.79% |
Under
the investment advisory agreement, the Adviser has agreed to pay all expenses
incurred by the Funds except for interest
charges
on any borrowings, taxes, brokerage commissions and other expenses incurred in
placing orders for the purchase and sale of securities and other investment
instruments, acquired fund fees and expenses, accrued deferred tax liability,
extraordinary expenses, distribution fees and expenses paid by the Funds under
any distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act, and the
unified management fee payable to the Adviser.
The
basis for the Board of Trustees’ (the “Board”) approval of the Investment
Advisory Agreement with respect to ADME, DRSK, ACIO, and OSCV is available in
the Funds’ Annual Report to Shareholders dated April 30, 2021.
Portfolio
Managers
Each
of ADME and ACIO is jointly and primarily managed by Messrs. Gardner, Tyner,
Wagner, and Wyrick. DRSK is jointly and primarily managed by Messrs. Callahan,
Gardner, Tyner, and Wyrick. OSCV is jointly and primarily managed by Messrs.
Gardner, Wyrick, Rapking, and Wagner.
Mark
Callahan is a Portfolio Manager and the Head of Trading at Aptus and has been
with Aptus since 2019. In his role as Portfolio Manager, Mr. Callahan has been
focused on derivative management, timing, hedging, and trading. Prior to joining
Aptus, Mr. Callahan enjoyed a nearly 12-year career on the Sell-Side as an
Institutional Equity and Derivatives Trader, as well as a Transition Manager.
Mr. Callahan holds a BBA in Finance from the University of Oklahoma, and a MSc.
of Real Estate from the University of Texas at Arlington.
JD
Gardner, CFA, CMT, is the Managing Member and Chief Investment Officer at Aptus
and has been with Aptus since founding the firm in 2013. Prior to Aptus, Mr.
Gardner was a research analyst at Cornerstone Investment Management and an
Associated Person for a commodity trading advisor. Mr. Gardner previously held
roles in wealth and asset management for UBS and Morgan Stanley.
Brad
Rapking, CFA, is a Portfolio Manager and Analyst at Aptus and joined the firm in
2020. In his role as Portfolio Manager, Mr. Rapking is focused on portfolio
construction, fundamental research, idea generation and buy/sell decisions. Mr.
Rapking graduated from Xavier University in 2015 with a BSBA in Finance. Mr.
Rapking is a CFA Charterholder and a member of the CFA Institute and CFA Society
of Alabama. Prior to joining Aptus, Mr. Rapking was an Equity Analyst for the
Driehaus Capital Value Equities team responsible for fundamental research and
idea generation in the Small Cap Value, Micro Cap Value, and International Small
Cap Value strategies. Mr. Rapking has more than five years of experience in
institutional equity research, trading and operations.
John
Luke Tyner, CFA, is a Portfolio Manager and Analyst at Aptus and he has been
with Aptus since 2019. In his role as Portfolio Manager, Mr. Tyner has been
focused on custom research, and he was heavily involved in the Fund’s strategy.
In addition, he also builds and maintains asset allocation models for individual
investors in separately managed accounts. Mr. Tyner is CFA Charterholder. Prior
to joining Aptus, Mr. Tyner worked in Industrial Sales at Duncan-Williams, Inc.
since 2015. He earned a B.A. in Accounting from the University of Memphis and
was a member of the golf team.
David
Wagner III, CFA, is a Portfolio Manager and Analyst at Aptus and joined the firm
in 2020. In his role as Portfolio Manager, he is responsible for portfolio
construction, risk management, and buy/sell decisions. Additionally, he is
responsible for implementation of the investment philosophy and idea generation,
as well as the evaluation of macro-level trends and the market environment.
Mr. Wagner began his career at Opus Capital Management in 2013 as an equity
research analyst. He was most recently employed by Driehaus Capital Management
as an Assistant Portfolio Manager where he was responsible for conducting
research and analysis for various small and microcap strategies. Mr. Wagner is a
CFA Charterholder and a member of the CFA Society of Cincinnati. He earned his
BS in Accounting and BBA in Finance from the University of Kentucky. He also
earned his MBA specialized in Finance from Xavier University in Cincinnati,
Ohio.
Beckham
Wyrick, CFA, is a Portfolio Manager and Analyst at Aptus and has been with Aptus
since 2016. In his role as Portfolio Manager, Mr. Wyrick has been focused on
custom research, and is heavily involved in the management and daily operations
of the Aptus Funds.
In
addition, he also builds and maintains asset allocation models for individual
investors in separately managed
accounts.
Mr. Wyrick is CFA Charterholder and is a member of the CFA Institute and CFA
Society of Alabama.
He
earned a B.A. in Finance from the University of North Carolina at
Wilmington.
The
Funds’ SAI provides additional information about the Portfolio Managers’
compensation structure, other accounts managed by the Portfolio Managers, and
the Portfolio Managers’ ownership of Shares.
HOW
TO BUY AND SELL SHARES
Each
Fund issues and redeems Shares at NAV only in Creation Units. Only APs may
acquire Shares directly from a Fund, and only APs may tender their Shares for
redemption directly to a Fund, at NAV. APs must be a member or participant of a
clearing agency registered with the SEC and must execute a Participant Agreement
that has been agreed to by the Distributor (defined below), and that has been
accepted by a Fund’s transfer agent, with respect to purchases and redemptions
of Creation Units. Once created, Shares trade in the secondary market in
quantities less than a Creation Unit.
Most
investors buy and sell Shares in secondary market transactions through brokers.
Shares are listed for trading on the secondary market on the Exchange and can be
bought and sold throughout the trading day like other publicly traded
securities.
When
buying or selling Shares through a broker, you will incur customary brokerage
commissions and charges, and you may pay some or all of the spread between the
bid and the offer price in the secondary market on each leg of a round trip
(purchase and sale) transaction. In addition, because secondary market
transactions occur at market prices, you may pay more than NAV when you buy
Shares and receive less than NAV when you sell those Shares.
Book
Entry
Shares
are held in book-entry form, which means that no stock certificates are issued.
The Depository Trust Company (“DTC”) or its nominee is the record owner of all
outstanding Shares.
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. DTC’s
participants include securities brokers and dealers, banks, trust companies,
clearing corporations and other institutions that directly or indirectly
maintain a custodial relationship with DTC. As a beneficial owner of Shares, you
are not entitled to receive physical delivery of stock certificates or to have
Shares registered in your name, and you are not considered a registered owner of
Shares. Therefore, to exercise any right as an owner of Shares, you must rely
upon the procedures of DTC and its participants. These procedures are the same
as those that apply to any other securities that you hold in book entry or
“street name” through your brokerage account.
Frequent
Purchases and Redemptions of Shares
The
Funds impose no restrictions on the frequency of purchases and redemptions of
Shares. In determining not to approve a written, established policy, the Board
evaluated the risks of market timing activities by Fund shareholders. Purchases
and redemptions by APs, who are the only parties that may purchase or redeem
Shares directly with a Fund, are an essential part of the ETF process and help
keep Share trading prices in line with NAV. As such, the Funds accommodate
frequent purchases and redemptions by APs. However, the Board has also
determined that frequent purchases and redemptions for cash may increase
tracking error and portfolio transaction costs and may lead to the realization
of capital gains. To minimize these potential consequences of frequent purchases
and redemptions, the Funds employ fair value pricing and may impose transaction
fees on purchases and redemptions of Creation Units to cover the custodial and
other costs incurred by a Fund in effecting trades. In addition, the Funds and
the Adviser reserve the right to reject any purchase order at any time.
Determination
of Net Asset Value (NAV)
Each
Fund’s NAV is calculated as of the scheduled close of regular trading on the New
York Stock Exchange (“NYSE”), generally 4:00 p.m. Eastern time, each day
the NYSE is open for business. Each NAV for a Fund is calculated by dividing the
applicable Fund’s net assets by its Shares outstanding.
In
calculating its NAV, each Fund generally values its assets on the basis of
market quotations, last sale prices, or estimates of value furnished by a
pricing service or brokers who make markets in such instruments. In particular,
each Fund generally values equity securities traded on any recognized U.S. or
non-U.S. exchange at the last sale price or official closing price on the
exchange or system on which they are principally traded. If such information is
not available for a security held by a Fund or is determined to be unreliable,
the security will be valued at fair value estimates under guidelines established
by the Board (as described below).
Fair
Value Pricing
The
Board has adopted procedures and methodologies to fair value Fund securities
whose market prices are not “readily available” or are deemed to be unreliable.
For example, such circumstances may arise when: (i) a security has been
de-listed or has had its trading halted or suspended; (ii) a security’s primary
pricing source is unable or unwilling to provide a price; (iii) a security’s
primary trading market is closed during regular market hours; or (iv) a
security’s value is materially affected by events occurring after the close of
the
security’s
primary trading market. Generally, when fair valuing a security, the Funds will
take into account all reasonably available information that may be relevant to a
particular valuation including, but not limited to, fundamental analytical data
regarding the issuer, information relating to the issuer’s business, recent
trades or offers of the security, general and/or specific market conditions and
the specific facts giving rise to the need to fair value the security. Fair
value determinations are made in good faith and in accordance with the fair
value methodologies included in the Board-adopted valuation procedures. Due to
the subjective and variable nature of fair value pricing, there can be no
assurance that the Adviser will be able to obtain the fair value assigned to the
security upon the sale of such security.
Investments
by Registered Investment Companies
Section 12(d)(1)
of the 1940 Act restricts investments by registered investment companies in the
securities of other investment companies, including Shares. Registered
investment companies are permitted to invest in the Fund beyond the limits set
forth in section 12(d)(1), subject to certain terms and conditions set forth in
an SEC exemptive order issued to the Adviser or rule under the 1940 Act,
including that such investment companies enter into an agreement with the Fund.
The relief from Section 12(d)(1), however, may not be available for investments
in a Fund if the Fund invests significantly in other ETFs. The relief from
Section 12(d)(1) is not expected to be available for DRSK.
Delivery
of Shareholder Documents – Householding
Householding
is an option available to certain investors of the Funds. Householding is a
method of delivery, based on the preference of the individual investor, in which
a single copy of certain shareholder documents can be delivered to investors who
share the same address, even if their accounts are registered under different
names. Householding for the Funds is available through certain broker-dealers.
If you are interested in enrolling in householding and receiving a single copy
of prospectuses and other shareholder documents, please contact your
broker-dealer. If you are currently enrolled in householding and wish to change
your householding status, please contact your broker-dealer.
DIVIDENDS,
DISTRIBUTIONS, AND TAXES
Dividends
and Distributions
Each
Fund intends to pay out dividends, if any, and distribute any net realized
capital gains to its shareholders at least annually. Each Fund will declare and
pay capital gain distributions in cash. Distributions in cash may be reinvested
automatically in additional whole Shares only if the broker through whom you
purchased Shares makes such option available. Your broker is responsible for
distributing the income and capital gain distributions to you.
Taxes
The
following discussion is a summary of some important U.S. federal income tax
considerations generally applicable to investments in a Fund. Your investment in
a Fund may have other tax implications. Please consult your tax advisor about
the tax consequences of an investment in Shares, including the possible
application of foreign, state, and local tax laws.
Each
Fund intends to elect and to qualify each year for treatment as a RIC. If a Fund
meets certain minimum distribution requirements, a RIC is not subject to tax at
the fund level on income and gains from investments that are timely distributed
to shareholders. However, a Fund’s failure to qualify as a RIC or to meet
minimum distribution requirements would result (if certain relief provisions
were not available) in fund-level taxation and, consequently, a reduction in
income available for distribution to shareholders.
Unless
your investment in Shares is made through a tax-exempt entity or tax-advantaged
account, such as an IRA plan, you need to be aware of the possible tax
consequences when a Fund makes distributions, when you sell your Shares listed
on the Exchange; and when you purchase or redeem Creation Units (APs only).
Taxes
on Distributions
Each
Fund intends to distribute, at least annually, substantially all of its net
investment income and net capital gains. For federal income tax purposes,
distributions of investment income are generally taxable as ordinary income or
qualified dividend income. Taxes on distributions of capital gains (if any) are
determined by how long a Fund owned the investments that generated them, rather
than how long a shareholder has owned his or her Shares. Sales of assets held by
a Fund for more than one year generally result in long-term capital gains and
losses, and sales of assets held by a Fund for one year or less generally result
in short-term capital gains and losses. Distributions of a Fund’s net capital
gain (the excess of net long-term capital gains over net short-term capital
losses) that are reported by such Fund as capital gain dividends (“Capital Gain
Dividends”) will be taxable as long-term capital gains, which for non-corporate
shareholders are subject to tax at reduced rates of up to 20% (lower rates apply
to individuals in lower tax brackets), provided that certain capital gain
dividends attributable to dividends the Fund receives from REITs (i.e.,
“unrecaptured section 1250 gain”) may be taxable to non-corporate shareholders
at a rate of 25%. Distributions of short-term capital gain will generally be
taxable as ordinary income. Dividends and distributions are generally taxable to
you whether you receive them in cash or reinvest them in additional Shares.
Distributions
reported by a Fund as “qualified dividend income” are generally taxed to
non-corporate shareholders at rates applicable to long-term capital gains,
provided holding period and other requirements are met. “Qualified dividend
income” generally is income derived from dividends paid by U.S. corporations or
certain foreign corporations that are either incorporated in a U.S. possession
or eligible for tax benefits under certain U.S. income tax treaties. In
addition, dividends that a Fund received in respect of stock of certain foreign
corporations may be qualified dividend income if that stock is readily tradable
on an established U.S. securities market. Dividends received by a Fund from an
ETF, an underlying fund taxable as a RIC, or from a REIT may be treated as
qualified dividend income generally only to the extent so reported by such ETF,
underlying fund, or REIT. Certain of the Funds’ investment strategies (including
the options collar strategy) may significantly reduce or eliminate a Fund’s
ability to make distributions eligible to be treated as qualified dividend
income or for the dividends-received deduction.
Shortly
after the close of each calendar year, you will be informed of the amount and
character of any distributions received from a Fund.
U.S.
individuals with income exceeding specified thresholds are subject to a 3.8% tax
on all or a portion of their “net investment income,” which includes interest,
dividends, and certain capital gains (generally including capital gains
distributions and capital gains realized on the sale of Shares). This 3.8% tax
also applies to all or a portion of the undistributed net investment income of
certain shareholders that are estates and trusts.
In
general, your distributions are subject to federal income tax for the year in
which they are paid. Certain distributions paid in January, however, may be
treated as paid on December 31 of the prior year. Distributions are generally
taxable even if they are paid from income or gains earned by a Fund before your
investment (and thus were included in the Shares’ NAV when you purchased your
Shares).
You
may wish to avoid investing in a Fund shortly before a dividend or other
distribution, because such a distribution will generally be taxable even though
it may economically represent a return of a portion of your investment.
If
a Fund’s distributions exceed its earnings and profits, all or a portion of the
distributions made for a taxable year may be recharacterized as a return of
capital to shareholders. A return of capital distribution will generally not be
taxable, but will reduce each shareholder’s cost basis in Shares and result in a
higher capital gain or lower capital loss when the Shares are sold. After a
shareholder’s basis in Shares has been reduced to zero, distributions in excess
of earnings and profits in respect of those Shares will be treated as gain from
the sale of the Shares.
If
you are neither a resident nor a citizen of the United States or if you are a
foreign entity, distributions (other than Capital Gain Dividends) paid to you by
a Fund will generally be subject to a U.S. withholding tax at the rate of 30%,
unless a lower treaty rate applies. Gains from the sale or other disposition of
your Shares generally are not subject to U.S. taxation, unless you are a
nonresident alien individual who is physically present in the U.S. for 183 days
or more per year. A Fund may, under certain circumstances, report all or a
portion of a dividend as an “interest-related dividend” or a “short-term capital
gain dividend,” which would generally be exempt from this 30% U.S. withholding
tax, provided certain other requirements are met. Different tax consequences may
result if you are a foreign shareholder engaged in a trade or business within
the United States or if a tax treaty applies.
Under
legislation generally known as “FATCA” (the Foreign Account Tax Compliance Act),
a Fund is required to withhold 30% of certain ordinary dividends it pays to
shareholders that are foreign entities and that fail to meet prescribed
information reporting or certification requirements.
Each
Fund (or a financial intermediary, such as a broker, through which a shareholder
owns Shares) generally is required to withhold and remit to the U.S. Treasury a
percentage of the taxable distributions and sale or redemption proceeds paid to
any shareholder who fails to properly furnish a correct taxpayer identification
number, who has underreported dividend or interest income, or who fails to
certify that he, she or it is not subject to such withholding.
Taxes
When Shares are Sold on the Exchange
Any
capital gain or loss realized upon a sale of Shares generally is treated as a
long-term capital gain or loss if Shares have been held for more than one year
and as a short-term capital gain or loss if Shares have been held for one year
or less. However, any capital loss on a sale of Shares held for six months or
less is treated as long-term capital loss to the extent of Capital Gain
Dividends paid with respect to such Shares. Any loss realized on a sale will be
disallowed to the extent Shares of a Fund are acquired, including through
reinvestment of dividends, within a 61-day period beginning 30 days before and
ending 30 days after the disposition of Shares. The ability to deduct capital
losses may be limited.
The
cost basis of Shares of a Fund acquired by purchase will generally be based on
the amount paid for the Shares and then may be subsequently adjusted for other
applicable transactions as required by the Code. The difference between the
selling price and the cost basis of Shares generally determines the amount of
the capital gain or loss realized on the sale or exchange of Shares. Contact the
broker through whom you purchased your Shares to obtain information with respect
to the available cost basis reporting methods and elections for your account.
Taxes
on Purchases and Redemptions of Creation Units
An
AP having the U.S. dollar as its functional currency for U.S. federal income tax
purposes who exchanges securities for Creation Units generally recognizes a gain
or a loss. The gain or loss will be equal to the difference between the value of
the Creation Units at the time of the exchange and the exchanging AP’s aggregate
basis in the securities delivered, plus the amount of any cash paid for the
Creation Units. An AP who exchanges Creation Units for securities will generally
recognize a gain or loss equal to the difference between the exchanging AP’s
basis in the Creation Units and the aggregate U.S. dollar market value of the
securities received, plus any cash received for such Creation Units. The
Internal Revenue Service may assert, however, that a loss that is realized upon
an exchange of securities for Creation Units may not be currently deducted under
the rules governing “wash sales” (for an AP who does not mark-to-market their
holdings), or on the basis that there has been no significant change in economic
position. APs exchanging securities should consult their own tax advisor with
respect to whether wash sale rules apply and when a loss might be deductible.
Any
capital gain or loss realized upon redemption of Creation Units is generally
treated as long-term capital gain or loss if Shares have been held for more than
one year and as a short-term capital gain or loss if Shares have been held for
one year or less.
Each
Fund may include a payment of cash in addition to, or in place of, the delivery
of a basket of securities upon the redemption of Creation Units. Such Fund may
sell portfolio securities to obtain the cash needed to distribute redemption
proceeds. This may cause such Fund to recognize investment income and/or capital
gains or losses that it might not have recognized if it had completely satisfied
the redemption in-kind. As a result, such Fund may be less tax efficient if it
includes such a cash payment in the proceeds paid upon the redemption of
Creation Units.
Taxation
of REIT Investments
A
Fund may invest in REITs. “Qualified REIT dividends” (i.e.,
ordinary REIT dividends other than capital gain dividends and portions of REIT
dividends designated as qualified dividend income eligible for capital gain tax
rates) are eligible for a 20% deduction by non-corporate taxpayers. This
deduction, if allowed in full, equates to a maximum effective tax rate of 29.6%
(37% top rate applied to income after 20% deduction). Distributions by a Fund to
its shareholders that are attributable to qualified REIT dividends received by
the Fund and which the Fund properly reports as “section 199A dividends,” are
treated as “qualified REIT dividends” in the hands of non-corporate
shareholders. A section 199A dividend is treated as a qualified REIT dividend
only if the shareholder receiving such dividend holds the dividend-paying RIC
shares for at least 46 days of the 91-day period beginning 45 days before the
shares become ex-dividend, and is not under an obligation to make related
payments with respect to a position in substantially similar or related
property. A Fund is permitted to report such part of its dividends as section
199A dividends as are eligible, but is not required to do so.
REITs
in which a Fund invests often do not provide complete and final tax information
to the Fund until after the time that the Fund issues a tax reporting statement.
As a result, a Fund may at times find it necessary to reclassify the amount and
character of its distributions to you after it issues your tax reporting
statement. When such reclassification is necessary, a Fund (or a financial
intermediary, such as a broker, through which a shareholder owns Shares) will
send you a corrected, final Form 1099-DIV to reflect the reclassified
information. If you receive a corrected Form 1099-DIV, use the information on
this corrected form, and not the information on the previously issued tax
reporting statement, in completing your tax returns.
Taxation
of Options Collar Strategy
If
positions held by a Fund were treated as “straddles” for federal income tax
purposes, or the Fund’s risk of loss with respect to a position was otherwise
diminished as set forth in Treasury Regulations, dividends on stocks that are a
part of such positions would not constitute qualified dividend income subject to
such favorable income tax treatment. In addition, generally, straddles are
subject to certain rules that may affect the amount, character and timing of a
Fund’s gains and losses with respect to straddle positions by requiring, among
other things, that: (1) any loss realized on disposition of one position of a
straddle may not be recognized to the extent that the Fund has unrealized gains
with respect to the other position in such straddle; (2) the Fund’s holding
period in straddle positions be suspended while the straddle exists (possibly
resulting in a gain being treated as short-term capital gain rather than
long-term capital gain); (3) the losses recognized with respect to certain
straddle positions that are part of a mixed straddle and that are not subject to
Section 1256 of the Code be treated as 60% long-term and 40% short-term capital
loss; (4) losses recognized with respect to certain straddle positions that
would otherwise constitute short-term capital losses be treated as long-term
capital losses; and (5) the deduction of interest and carrying charges
attributable to certain straddle positions may be deferred.
Foreign
Taxes
Dividends
and interest received by a Fund from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries. Tax treaties
between certain countries and the U.S. may reduce or eliminate such taxes.
Foreign tax credits, if any, received by a Fund as a result of an investment in
another RIC (including an ETF which is taxable as a RIC) will not be passed
through to you unless the Fund qualifies as a “qualified fund-of-funds” under
the Code. If a Fund is a “qualified fund-of-funds” it will be eligible to file
an election with the Internal Revenue Service that will enable the Fund to pass
along these foreign tax credits to its shareholders. A Fund will be treated as a
“qualified fund-of-funds” under the Code if at least 50% of the value of the
Fund’s total assets (at the close of each quarter of the Fund’s taxable year) is
represented by interests in other RICs. Each Fund does not expect to satisfy the
requirements for passing through to its shareholders any share of foreign taxes
paid by the Fund, with the result that
shareholders
will not include such taxes in their gross incomes and will not be entitled to a
tax deduction or credit for such taxes on their own tax returns.
The
foregoing discussion summarizes some of the possible consequences under current
federal tax law of an investment in each Fund. It is not a substitute for
personal tax advice. You also may be subject to state and local tax on Fund
distributions and sales of Shares. Consult your personal tax advisor about the
potential tax consequences of an investment in Shares
under
all applicable tax laws. For more information, please see the section entitled
“Federal Income Taxes” in the SAI.
DISTRIBUTION
The
Distributor, Quasar Distributors, LLC, is a broker-dealer registered with the
SEC. The Distributor distributes Creation Units for the Funds on an agency basis
and does not maintain a secondary market in Shares. The Distributor has no role
in determining the policies of the Funds or the securities that are purchased or
sold by the Funds. The Distributor’s principal address is 111 East Kilbourn
Avenue, Suite 2200, Milwaukee, Wisconsin 53202.
The
Board has adopted a Distribution and Service Plan (the “Plan”) pursuant to Rule
12b-1 under the 1940 Act. In accordance with the Plan, each Fund is authorized
to pay an amount up to 0.25% of its average daily net assets each year for
certain distribution-related activities and shareholder services.
No
Rule 12b-1 fees are currently paid by the Funds, and there are no plans to
impose these fees. However, in the event Rule 12b-1 fees are charged in the
future, because the fees are paid out of Fund assets, over time these fees will
increase the cost of your investment and may cost you more than certain other
types of sales charges.
PREMIUM/DISCOUNT
INFORMATION
Information
regarding how often Shares traded on the Exchange at a price above (i.e.,
at a premium) or below (i.e.,
at a discount) the NAV per Share is available, free of charge, on the Funds’
websites at www.aptusetfs.com or www.opusetfs.com, as applicable.
ADDITIONAL
NOTICES
Shares
are not sponsored, endorsed, or promoted by the Exchange. The Exchange is not
responsible for, nor has it participated in the determination of, the timing,
prices, or quantities of Shares to be issued, nor in the determination or
calculation of the equation by which Shares are redeemable. The Exchange has no
obligation or liability to owners of Shares in connection with the
administration, marketing, or trading of Shares.
Without
limiting any of the foregoing, in no event shall the Exchange have any liability
for any lost profits or indirect, punitive, special, or consequential damages
even if notified of the possibility thereof.
The
Adviser and the Funds make no representation or warranty, express or implied, to
the owners of Shares or any member of the public regarding the advisability of
investing in securities generally or in the Funds particularly.
FINANCIAL
HIGHLIGHTS
The
financial highlights tables are intended to help you understand each Fund’s
financial performance for each Fund’s five most recent fiscal years (or the life
of the Fund, if shorter). Certain information reflects financial results for a
single Share. The total returns in the tables represent the rate that an
investor would have earned or lost on an investment in a Fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Cohen & Company, Ltd., the Funds’ independent registered public
accounting firm, whose report, along with the Funds’ financial statements, is
included in the Funds’ annual report, which is available upon request.
Aptus
Drawdown Managed Equity ETF
FINANCIAL
HIGHLIGHTS
For
a capital share outstanding throughout each year/period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended April 30, 2021 |
|
Year
Ended April 30, 2020 |
|
Year
Ended April 30, 2019 |
|
Year
Ended April 30, 2018 |
|
Period
Ended
April
30, 2017(1) |
|
Net
asset value, beginning of year/period |
$ |
30.23 |
|
|
$ |
29.82 |
|
|
$ |
32.49 |
|
|
$ |
26.57 |
|
|
$ |
25.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME
(LOSS) FROM INVESTMENT OPERATIONS: |
|
|
|
|
|
|
|
|
|
|
Net
investment income (loss) (2) |
0.10 |
|
|
0.28 |
|
|
0.29 |
|
|
0.05 |
|
|
0.28 |
|
|
Net
realized and unrealized gain (loss) on investments |
8.52 |
|
|
0.39 |
|
|
(2.72) |
|
|
5.97 |
|
|
1.47 |
|
|
Total
from investment operations |
8.62 |
|
|
0.67 |
|
|
(2.43) |
|
|
6.02 |
|
|
1.75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
DISTRIBUTIONS
TO SHAREHOLDERS: |
|
|
|
|
|
|
|
|
|
|
Distributions
from: |
|
|
|
|
|
|
|
|
|
|
Net
investment income |
(0.12) |
|
|
(0.26) |
|
|
(0.24) |
|
|
(0.10) |
|
|
(0.18) |
|
|
Return
of capital |
(0.01) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Total
distributions |
(0.13) |
|
|
(0.26) |
|
|
(0.24) |
|
|
(0.10) |
|
|
(0.18) |
|
|
Net
asset value, end of year/period |
$ |
38.72 |
|
|
$ |
30.23 |
|
|
$ |
29.82 |
|
|
$ |
32.49 |
|
|
$ |
26.57 |
|
|
Total
return |
28.59 |
% |
|
2.27 |
% |
|
-7.46 |
% |
|
22.68 |
% |
|
7.01 |
% |
(3) |
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DATA: |
|
|
|
|
|
|
|
|
|
|
Net
assets at end of year/period (000’s) |
$ |
222,333 |
|
|
$ |
131,249 |
|
|
$ |
70,065 |
|
|
$ |
56,866 |
|
|
$ |
33,214 |
|
|
|
|
|
|
|
|
|
|
|
|
|
RATIOS
TO AVERAGE NET ASSETS: |
|
|
|
|
|
|
|
|
|
|
Expenses
to average net assets |
0.79 |
% |
|
0.79 |
% |
|
0.79 |
% |
|
0.79 |
% |
|
0.79 |
% |
(4) |
Net
investment income (loss) to average net assets |
0.29 |
% |
|
0.94 |
% |
|
0.91 |
% |
|
0.17 |
% |
|
1.21 |
% |
(4) |
Portfolio
turnover rate (5) |
48 |
% |
|
230 |
% |
|
321 |
% |
|
124 |
% |
|
144 |
% |
(3) |
(1)Commencement
of operations on June 8, 2016.
(2)Calculated
based on average shares outstanding during the year/period.
(3)Not
annualized.
(4)Annualized.
(5)Excludes
the impact of in-kind transactions.
Aptus
Collared Income Opportunity ETF
FINANCIAL
HIGHLIGHTS
For
a capital share outstanding throughout the year/period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended April 30, 2021 |
|
Period
Ended
April
30,
2020(1) |
|
Net
asset value, beginning of year/period |
$ |
24.04 |
|
|
$ |
25.00 |
|
|
|
|
|
|
|
INCOME
(LOSS) FROM INVESTMENT OPERATIONS: |
|
|
|
|
Net
investment income (loss) (2) |
0.27 |
|
|
0.49 |
|
|
Net
realized and unrealized gain (loss) on investments |
5.61 |
|
|
(1.01) |
|
|
Total
from investment operations |
5.88 |
|
|
(0.52) |
|
|
|
|
|
|
|
DISTRIBUTIONS
TO SHAREHOLDERS: |
|
|
|
|
Distributions
from: |
|
|
|
|
Net
investment income |
(0.25) |
|
|
(0.44) |
|
|
Total
distributions |
(0.25) |
|
|
(0.44) |
|
|
|
|
|
|
|
Net
asset value, end of year/period |
$ |
29.67 |
|
|
$ |
24.04 |
|
|
Total
return |
24.57 |
% |
|
-2.14 |
% |
(3) |
|
|
|
|
|
SUPPLEMENTAL
DATA: |
|
|
|
|
Net
assets at end of year/period (000’s) |
$ |
201,742 |
|
|
$ |
112,970 |
|
|
|
|
|
|
|
RATIOS
TO AVERAGE NET ASSETS: |
|
|
|
|
Expenses
to average net assets |
0.79 |
% |
|
0.79 |
% |
(4) |
Net
investment income (loss) to average net assets |
0.99 |
% |
|
2.46 |
% |
(4) |
Portfolio
turnover rate (5) |
46 |
% |
|
170 |
% |
(3) |
(1)Commencement
of operations on July 9, 2019.
(2)Calculated
based on average shares outstanding during the year/period.
(3)Not
annualized.
(4)Annualized.
(5)Excludes
the impact of in-kind transactions.
Aptus
Defined Risk ETF
FINANCIAL
HIGHLIGHTS
For
a capital share outstanding throughout the year/period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended April 30, 2021 |
|
Year
Ended April 30, 2020 |
|
Period
Ended
April
30, 2019(1) |
|
Net
asset value, beginning of year/period |
$ |
29.38 |
|
|
$ |
26.51 |
|
|
$ |
25.00 |
|
|
|
|
|
|
|
|
|
INCOME
(LOSS) FROM INVESTMENT OPERATIONS: |
|
|
|
|
|
|
Net
investment income (loss) (2)(3) |
0.32 |
|
|
0.55 |
|
|
0.35 |
|
|
Net
realized and unrealized gain (loss) on investments |
1.31 |
|
|
3.14 |
|
|
1.90 |
|
|
Total
from investment operations |
1.63 |
|
|
3.69 |
|
|
2.25 |
|
|
|
|
|
|
|
|
|
DISTRIBUTIONS
TO SHAREHOLDERS: |
|
|
|
|
|
|
Distributions
from: |
|
|
|
|
|
|
Net
investment income |
(0.33) |
|
|
(0.50) |
|
|
(0.27) |
|
|
Net
realized gain |
(1.31) |
|
|
(0.32) |
|
|
(0.47) |
|
|
Total
distributions |
(1.64) |
|
|
(0.82) |
|
|
(0.74) |
|
|
Net
asset value, end of year/period |
$ |
29.37 |
|
|
$ |
29.38 |
|
|
$ |
26.51 |
|
|
Total
return |
5.62 |
% |
|
14.12 |
% |
|
9.23 |
% |
(4) |
|
|
|
|
|
|
|
SUPPLEMENTAL
DATA: |
|
|
|
|
|
|
Net
assets at end of year/period (000’s) |
$ |
656,363 |
|
|
$ |
260,029 |
|
|
$ |
104,695 |
|
|
|
|
|
|
|
|
|
RATIOS
TO AVERAGE NET ASSETS: |
|
|
|
|
|
|
Expenses
to average net assets (5) |
0.70 |
% |
(6) |
0.69 |
% |
|
0.69 |
% |
(7) |
Net
investment income (loss) to average net assets (3) |
1.07 |
% |
|
1.97 |
% |
|
1.86 |
% |
(7) |
Portfolio
turnover rate (8) |
28 |
% |
|
78 |
% |
|
21 |
% |
(4) |
(1)Commencement
of operations on August 7, 2018.
(2)Calculated
based on average shares outstanding during the year/period.
(3)Recognition
of net investment income by the Fund is affected by the timing of the
declaration of dividends by the underlying investment companies in which the
Fund invests. The ratio does not include net investment income of the underlying
investment companies in which the Fund invests.
(4)Not
annualized.
(5)Does
not include expenses of the investment companies in which the Fund
invests.
(6)Includes
broker interest expense of 0.01%
(7)Annualized.
(8)Excludes
the impact of in-kind transactions.
Opus
Small Cap Value ETF
FINANCIAL
HIGHLIGHTS
For
a capital share outstanding throughout each year/period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended April 30, 2021 |
|
Year
Ended April 30, 2020 |
|
Period
Ended
April
30,
2019(1) |
|
Net
asset value, beginning of year/period |
$ |
20.41 |
|
|
$ |
25.00 |
|
|
$ |
25.00 |
|
|
|
|
|
|
|
|
|
INCOME
(LOSS) FROM INVESTMENT OPERATIONS: |
|
|
|
|
|
|
Net
investment income (loss) (2) |
0.21 |
|
|
0.48 |
|
|
0.38 |
|
|
Net
realized and unrealized gain (loss) on investments |
12.69 |
|
|
(4.53) |
|
|
(0.08) |
|
|
Total
from investment operations |
12.90 |
|
|
(4.05) |
|
|
0.30 |
|
|
|
|
|
|
|
|
|
DISTRIBUTIONS
TO SHAREHOLDERS: |
|
|
|
|
|
|
Distributions
from: |
|
|
|
|
|
|
Net
investment income |
(0.20) |
|
|
(0.49) |
|
|
(0.30) |
|
|
Return
of capital |
(0.04) |
|
|
(0.05) |
|
|
— |
|
|
Total
distributions |
(0.24) |
|
|
(0.54) |
|
|
(0.30) |
|
|
|
|
|
|
|
|
|
CAPITAL
SHARE TRANSACTIONS: |
|
|
|
|
|
|
Transaction
fees |
— |
|
|
0.00 |
|
(3) |
0.00 |
|
(3) |
|
|
|
|
|
|
|
Net
asset value, end of year/period |
$ |
33.07 |
|
|
$ |
20.41 |
|
|
$ |
25.00 |
|
|
Total
return |
63.49 |
% |
|
-16.46 |
% |
|
1.34 |
% |
(4) |
|
|
|
|
|
|
|
SUPPLEMENTAL
DATA: |
|
|
|
|
|
|
Net
assets at end of year/period (000’s) |
$ |
106,660 |
|
|
$ |
44,393 |
|
|
$ |
46,877 |
|
|
|
|
|
|
|
|
|
RATIOS
TO AVERAGE NET ASSETS: |
|
|
|
|
|
|
Expenses
to average net assets |
0.79 |
% |
|
0.79 |
% |
|
0.79 |
% |
(5) |
Net
investment income (loss) to average net assets |
0.77 |
% |
|
1.94 |
% |
|
2.01 |
% |
(5) |
Portfolio
turnover rate (6) |
65 |
% |
|
56 |
% |
|
31 |
% |
(4) |
(1)Commencement
of operations on July 17, 2018.
(2)Calculated
based on average shares outstanding during the year/period.
(3)Represents
less than $0.005.
(4)Not
annualized.
(5)Annualized.
(6)Excludes
the impact of in-kind transactions.
Aptus
Drawdown Managed Equity ETF
Aptus
Collared Income Opportunity ETF
Aptus
Defined Risk ETF
Opus
Small Cap Value ETF
|
|
|
|
|
|
|
|
|
|
|
|
Adviser |
Aptus
Capital Advisors, LLC
265
Young Street
Fairhope,
Alabama 36532 |
Custodian |
U.S.
Bank National Association
1555
North Rivercenter Drive, Suite 302
Milwaukee,
Wisconsin 53212 |
Administrator,
Fund Accountant, and Transfer Agent |
U.S.
Bancorp Fund Services, LLC
615
East Michigan Street
Milwaukee,
Wisconsin 53202 |
Distributor |
Quasar
Distributors, LLC
111
East Kilbourn Avenue, Suite 2200
Milwaukee,
Wisconsin 53202 |
Independent
Registered Public Accounting Firm |
Cohen
& Company, Ltd.
342
North Water Street, Suite 830
Milwaukee,
Wisconsin 53202
|
Legal
Counsel |
Morgan,
Lewis & Bockius LLP
1111
Pennsylvania Avenue, NW
Washington,
DC 20004-2541 |
Investors
may find more information about the Funds in the following documents:
Statement
of Additional Information: The
Funds’ SAI provides additional details about the investments and techniques of
the Funds and certain other additional information. A current SAI dated August
31, 2021 is on file with the SEC and is herein incorporated by reference into
this Prospectus. It is legally considered a part of this
Prospectus.
Annual/Semi-Annual
Reports: Additional
information about each Fund’s investments is available in the respective Fund’s
annual and semi-annual reports to shareholders. In the annual
report
you will find a discussion of the market conditions and investment strategies
that significantly affected each Fund’s performance.
You
can obtain free copies of these documents, request other information or make
general inquiries about the Fund by contacting the Funds at c/o U.S. Bank Global
Fund Services, P.O. Box 701, Milwaukee, Wisconsin 53201-0701 or by calling
1-800-617-0004.
Shareholder
reports and other information about the Funds are available:
•Free
of charge from the SEC’s EDGAR database on the SEC’s website at
http://www.sec.gov; or
•Free
of charge from the Funds’ Internet website at www.aptusetfs.com or
www.opusetfs.com; or
(SEC
Investment Company Act File No. 811-22668)