The Fund is an actively managed ETF. The Fund has adopted a non-fundamental investment policy that, under normal circumstances, the Fund will invest at least 80% of its net assets (plus any borrowings for investment purposes) in fixed rate callable bonds. The Fund defines “fixed rate” as a set coupon, a fixed-to-floating rate coupon, a coupon that may step up from its initial rate, zero coupon, and a contingent payment coupon.

The Fund defines “callable” as any right of an issuer to repay principal prior to maturity. The Fund defines “bonds” as bills, commercial paper, certificates of deposit, notes, bonds, and any other evidence of indebtedness. The Fund may invest in non-callable bonds outside of its 80% investment policy.

As a fundamental policy, the Fund concentrates (i.e. invests more than 25% of the value of its net assets) in the securities of companies in the group of industries comprising the financial sector. The Fund’s concentration policy may not be changed without shareholder approval. The Fund defines companies within the financial sector, as U.S. companies classified under the Global Industry Classification Standard (“GICS”) within the financials sector as well as foreign issuers that are primarily engaged in the financial sector as described under the GICS classification method. The GICS classification method places an issuer in a sector based on the majority of its revenues. The GICS financial sector includes companies commonly known as: (i) banks, (ii) thrifts & mortgage finance companies (also known as savings & loans), (iii) diversified financial services companies, (iv) consumer finance companies (v) insurance companies, (vi) capital markets companies (e.g. broker-dealers), and (vii) REITs.

The Fund invests in bonds of any maturity, any issuer type, but restricts credit quality to investment grade. The Fund defines investment grade as a credit rating of at least Baa3 by Moody’s Investors Service, Inc., BBB- by Standard & Poor’s Ratings Group, or BBB- by Fitch Ratings, Inc., or determined by the adviser to be of equivalent credit quality. The Fund invests primarily in U.S. dollar denominated debt and is expected to have significant exposure to bonds issued by U.S. and non-U.S. banks and financial services companies.

The adviser uses a research-driven, bottom-up process to select securities from the “Eligible Universe,” seeking what it believes to be the most attractive risk-adjusted income opportunities.

Eligible Universe

A debt security is considered eligible for inclusion in the Fund’s investment universe by the adviser if, at the time of purchase, it satisfies some of the following criteria:

The adviser’s selection process considers: (i) issuer credit quality, (ii) call structure, (iii) coupon, (iv) maturity, (v) relative value versus comparable non-callable bonds, (vi) expected reinvestment profile, (vii) liquidity, (viii) sector, and (ix) issuer diversification. Using these inputs, the adviser seeks what it believes to be the most attractive risk-adjusted income opportunities.

The Fund may sell a security when, in the adviser’s view, its fundamentals deteriorate, it no longer meets the adviser’s eligibility criteria, its call profile makes continued holding unattractive, or a more attractive opportunity becomes available.

Supplemental Strategy

The adviser may use swaps, options, and forward contracts linked to fixed rate callable bonds as substitutes for fixed rate callable bonds. The adviser uses these derivatives, when it believes they offer more economically efficient exposure to fixed rate callable bonds. The Fund includes swaps, options, and forward contracts linked to fixed rate callable bonds for purposes of its 80% investment policy and its 25% investment concentration policy. Through a swap agreement, the Fund and a financial institution agree to exchange the return (or differentials in rates of return) earned or realized on a reference asset or assets. The gross return to be exchanged or “swapped” between the parties is calculated with respect to a “notional amount,” e.g., the return on or change in value of a particular dollar amount representing a reference asset or assets. A call option contract gives the purchaser of the option, in return for a premium, the right to buy from the seller of the option the reference asset or assets. A forward contract is an obligation to purchase or sell a specific asset or assets on a future date (settlement date) for a fixed price set on the date of the contract (trade date). Additionally, the adviser may use debt-linked futures contracts to adjust portfolio interest rate risk. The Fund may close out a derivative position when, in the adviser’s view, direct ownership of fixed rate callable bonds is more efficient; or when the refence asset fundamentals deteriorate, it no longer meets the adviser’s eligibility criteria, its call profile makes continued holding unattractive, or a more attractive opportunity becomes available.

The adviser seeks to preserve capital by reducing portfolio maturity and/or reducing interest rate risk when it believes interest rates will be rising.

Because the Fund’s supplemental derivatives strategy may require only a small initial or no initial investment, the Fund may invest in cash equivalents such as short-term U.S. government securities, money market funds, or ETFs that hold short-term U.S. government securities; as well as invest in U.S. Treasury securities with remaining maturities of one year or less. The Fund is classified as a “non-diversified” investment company under the Investment Company Act of 1940, as amended (the “1940 Act”) and, therefore, may invest a greater percentage of its assets in a particular issuer than a diversified fund. The Fund is not managed to track any index.