0001648403 2025-07-09 2025-07-09 0001648403 igy:S000093603Member 2025-07-09 2025-07-09 0001648403 igy:C000261994Member 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:MbsAndAbsRisksMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:Rule144ASecuritiesRiskMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:CloRiskMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:RisksOfInvestingInPrivateCreditClosMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:DebtSecuritiesRisksMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:CreditRisksMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:InterestRateRisksMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:LiquidityRiskMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:MaturityRiskMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:YieldCurveRiskMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:PrepaymentRisksMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:IncomeRiskMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:CovenantLiteLoansRiskMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:SectorFocusRiskMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:ForeignSecuritiesRiskMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:USGovernmentSecuritiesRiskMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:JunkBondsOrHighYieldSecuritiesRiskMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:DerivativesRiskMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:MiddleMarketLoanRiskMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:CashTransactionRiskMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member oef:RiskNondiversifiedStatusMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:IssuerRiskMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:MarketRiskMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:ManagementRiskMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:EtfRisksMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:AuthorizedParticipantRiskMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:CostsOfBuyingOrSellingSharesMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:FluctuationOfNavUnitPremiumsAndDiscountsMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:NoAssuranceOfActiveTradingMarketRiskMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:FundSharesLiquidityRiskMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member igy:SmallFundRiskMember 2025-07-09 2025-07-09 0001648403 igy:S000093603Member oef:RiskLoseMoneyMember 2025-07-09 2025-07-09 iso4217:USD shares iso4217:USD shares pure false 485BPOS 0001648403 2025-07-09 N-1A Virtus ETF Trust II 2025-07-09 RISK/RETURN SUMMARY INFORMATION INVESTMENT OBJECTIVE The Virtus IG Public & Private Credit ETF (the “Fund”) seeks to provide a high level of current income, with capital appreciation as a secondary goal. FEES AND EXPENSES OF THE FUND This table describes the fees and expenses that you may pay if you buy, hold and sell shares of the Fund (“Shares”). You may incur customary brokerage commissions, and may pay other fees to financial intermediaries, when buying or selling Shares of the Fund, which are not reflected in the table or example set forth below. Shareholder Fees (fees paid directly from your investment): None <div id="xdx_A83_eoef--AnnualFundOperatingExpensesTableTextBlock_zalRSluUOryk"></div> <table cellpadding="0" cellspacing="0" id="xdx_A53_dU_zvFCzp2E8lj2" style="font: 10pt Times New Roman, Times, Serif; margin-left: auto; width: 80%; border-collapse: collapse; margin-right: auto" summary="xdx: Disclosure - Annual Fund Operating Expenses"> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"> <td id="xdx_989_eoef--OperatingExpensesCaption_c20250709__20250709__dei--LegalEntityAxis__custom--S000093603Member_zBaCqVy6ilth" style="font: 10pt Times New Roman, Times, Serif; width: 79%">Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment):</td> <td style="font: 10pt Times New Roman, Times, Serif; width: 1%"> </td> <td id="xdx_49D_20250709__20250709__oef--ClassAxis__custom--C000261994Member_zdntXOSjZDPf" style="font: 10pt Times New Roman, Times, Serif; width: 20%"> </td></tr> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"> <td style="font: 10pt Times New Roman, Times, Serif"> </td> <td style="font: 10pt Times New Roman, Times, Serif"> </td> <td style="font: 10pt Times New Roman, Times, Serif"> </td></tr> <tr id="xdx_40B_eoef--ManagementFeesOverAssets_dpn_z8zq2nLTtJO1" style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"> <td style="font: 10pt Times New Roman, Times, Serif">Management Fee1</td> <td style="font: 10pt Times New Roman, Times, Serif"> </td> <td style="font: 10pt Times New Roman, Times, Serif">0.45%</td></tr> <tr id="xdx_401_eoef--OtherExpensesOverAssets_dpn_zZ0vgqAnm3rl" style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"> <td style="font: 10pt Times New Roman, Times, Serif">Other Expenses2</td> <td style="font: 10pt Times New Roman, Times, Serif"> </td> <td style="font: 10pt Times New Roman, Times, Serif">0.00%</td></tr> <tr id="xdx_405_eoef--ExpensesOverAssets_dpn_zySnnUpIcin7" style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"> <td style="font: 10pt Times New Roman, Times, Serif">Total Annual Fund Operating Expenses </td> <td style="font: 10pt Times New Roman, Times, Serif"> </td> <td style="font: 10pt Times New Roman, Times, Serif">0.45%</td></tr> </table> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif; width: 1px"> </td> <td style="font: 10pt Times New Roman, Times, Serif; width: 60px">(1)</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">The management fee is structured as a “unified fee,” out of which the Fund’s investment adviser pays all of the ordinary operating expenses of the Fund, except for the following expenses, each of which is paid by the Fund: the Fund’s management fee; payments under any 12b-1 plan; taxes and other governmental fees; brokerage fees, commissions and other transaction expenses; interest and other costs of borrowing; litigation or arbitration expenses; acquired fund fees and expenses; and extraordinary or other non-routine expenses of the Fund.</td></tr> </table> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif; width: 1px"> </td> <td style="font: 10pt Times New Roman, Times, Serif; width: 60px">(2)</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">“Other Expenses” are based on estimated amounts for the current fiscal year.</td></tr> </table> Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment): 0.0045 0.0000 0.0045 “Other Expenses” are based on estimated amounts for the current fiscal year. 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 sell 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 at current levels. Although your actual costs may be higher or lower, based on these assumptions your costs would be: <div id="xdx_A8C_eoef--ExpenseExampleWithRedemptionTableTextBlock_zkGPmgFvRNih"></div> <table cellpadding="0" cellspacing="0" id="xdx_A5D_dU_zxHtbqbtgIof" style="font: 10pt Times New Roman, Times, Serif; margin-left: auto; width: 30%; border-collapse: collapse; margin-right: auto" summary="xdx: Disclosure - Expense Example"> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"> <td id="xdx_486_eoef--ExpenseExampleYear01_zXzKmUHqPjn" style="border-bottom: black 1pt solid; font: 10pt Times New Roman, Times, Serif; width: 14%; text-align: center">1 Year</td> <td style="font: 10pt Times New Roman, Times, Serif; width: 2%; text-align: center"> </td> <td id="xdx_487_eoef--ExpenseExampleYear03_z4XFaJMdTZbc" style="border-bottom: black 1pt solid; font: 10pt Times New Roman, Times, Serif; width: 14%; text-align: center">3 Years</td></tr> <tr id="xdx_417_20250709__20250709__oef--ClassAxis__custom--C000261994Member_zeIabBwF12if" style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"> <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">$47</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"> </td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">$148</td></tr> </table> 47 148 PORTFOLIO TURNOVER The Fund pays transaction costs, such as commissions, when it buys and sells securities or other instruments (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. The Fund is newly organized, and, as of the date of this Prospectus, has not had any portfolio turnover. PRINCIPAL INVESTMENT STRATEGY The Fund employs a multi-sector approach, seeking to generate total return from both current income and capital appreciation by applying fundamental credit research and active sector rotation to capitalize on opportunities across undervalued areas of the debt securities markets. The sub-adviser seeks to provide diversification by allocating the Fund’s investments among various sectors of these markets, including, without limitation: investment grade corporate bonds; mortgage-backed securities (“MBS”), including commercial MBS and residential MBS; asset-backed securities (“ABS”); and collateralized loan obligations (“CLOs”), including private credit. The Fund anticipates that no more than 25% of the Fund’s investment will be allocated to the private credit sector. Private credit is associated with funding that is lent to private companies through a loan that is not sourced from public markets (such as proceeds raised from the sale of listed equities and publicly traded bonds). Under normal circumstances, the Fund will invest at least 80% of its net assets (plus the amount of any borrowings for investment purposes) in investment grade debt securities, including a combination of public and private credit debt securities. Investment grade debt securities are those with credit ratings within the four highest rating categories of a nationally recognized statistical rating organization (“NRSRO”) at the time of purchase, or, if unrated, determined to be of comparable quality by the Fund’s sub-adviser. The types of ABS in which the Fund may invest include those backed by auto loans, timeshare receivables, consumer loans, equipment leases, rentals, whole business securitizations, credit card receivables, and student loans, as well as other types of ABS that the sub-adviser determines are appropriate for investment. The ABS and MBS in which the Fund invests are generally purchased pursuant to Rule 144A under the Securities Act of 1933 and are therefore subject to certain resale restrictions. A CLO is a type of asset backed security supported by interest and principal payments generated from a pool of loans, which may include, among others, U.S. and non-U.S. senior secured loans (including those issued or offered as “covenant lite” loans, which have no financial maintenance covenants) and subordinated corporate loans and privately placed loans. Private credit CLOs are CLOs composed of loans that are not sourced from public markets (such as proceeds raised from the sale of listed equities and publicly traded bonds), typically issued to private companies, and may include nonbank lenders. The underlying loan may be of any size, including loans to middle market companies, which is defined as companies with annual revenues of $10 million to $1 billion at the time of investment. Other debt securities the Fund may invest in include, but are not limited to, broadly syndicated CLOs, variable-and floating-rate debt obligations, exchange traded funds; treasury notes and bonds issued or guaranteed as to principal and interest by the U.S. Government, its agencies, authorities or instrumentalities; and bonds issued by foreign issuers, including foreign governments and their political subdivisions and companies incorporated outside of the U.S. Any fixed income debt obligations in which the Fund invests that are rated below investment grade at the time of purchase (also known as “junk” bonds) will be limited to 20% of the Fund’s net assets. The Fund may continue to hold a fixed income debt obligation notwithstanding any change to its credit rating. The Fund may use derivatives, such as credit default swaps, to increase or hedge (decrease) investment exposure to various fixed income sectors and instruments. While the sub-adviser will normally seek to maintain an average portfolio duration for the Fund of between three and seven years, the Fund’s average portfolio duration may be outside that range and the Fund may invest in securities of any duration and maturity. Duration is a measure of a bond's interest rate risk, reflecting how much a bond's price will change in response to a change in interest rates. The Fund is an actively managed ETF and, thus, does not seek to replicate the performance of a specified index of securities. Instead, it uses an active investment strategy that seeks to meet its investment objective. In addition, from time to time the Fund may focus its investments (i.e., invest more than 15% of its total assets) in one or more particular sectors. As of the date of this Prospectus, the Fund focused its investments in the financial and real estate sectors. The Fund is non-diversified, which means that it can invest a greater percentage of its assets in any one issuer than a diversified fund can. Under normal circumstances, the Fund will invest at least 80% of its net assets (plus the amount of any borrowings for investment purposes) in investment grade debt securities, including a combination of public and private credit debt securities. An investment in the Fund is subject to investment risks; therefore, you may lose money by investing in the Fund. MBS and ABS Risks. Changes in interest rates may cause both extension and prepayment risks for MBS and ABS. These securities are also subject to risks associated with the non-repayment of underlying collateral, including losses to the Fund. Rule 144A Securities Risk. Investing in Rule 144A securities may reduce the liquidity of the Fund’s investments, and the Fund may be unable to sell the security at the desired time or price, if at all. CLO Risk. The risks of investing in CLOs include both the economic risks of the underlying loans, which are rated below investment grade (i.e., junk bonds), combined with the risks associated with the CLO structure governing the priority of payments. The degree of such risk will generally correspond to the specific tranche in which the Fund is invested. The Fund intends to invest in the rated debt tranches of CLOs; however, any such ratings do not constitute a guarantee, may be downgraded, and in stressed market environments it is possible that even senior CLO tranches could experience losses due to actual defaults, increased sensitivity to defaults due to collateral default and the disappearance of the subordinated/equity tranches, market anticipation of defaults, as well as negative market sentiment with respect to CLO securities as an asset class. The sub-adviser may not be able to accurately predict how specific CLOs or the portfolio of underlying loans for such CLOs will react to changes or stresses in the market, including changes in interest rates. Generally, the underlying loans in private credit CLOs have ratings from at least one rating agency. The most common risks associated with investing in CLOs are liquidity risk, interest rate risk, credit risk, prepayment risk, and the risk of default of the underlying asset, among others. Risks of Investing in Private Credit CLOs. There are certain risks inherent in investing in CLOs that provide exposure to private credit, in particular the risks of their underlying investments, which include liquidity risk, industry risk, foreign security risk, currency risk, valuation risk and credit risk. Private credit securities also carry risks associated with unclear ownership. Debt Securities Risks. Debt securities are subject to credit risk, interest rate risk, liquidity risk, maturity risk, yield curve risk and prepayment risk. These risks could affect the value of investments in which the Fund invests, possibly causing the Fund’s share price and total return to be reduced and fluctuate more than other types of investments. <div id="xdx_A8F_eoef--RiskTextBlock_hoef--RiskAxis__custom--CreditRisksMember_zeyTw8WhfG6l"></div> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif; width: 60px"> </td> <td style="font: 10pt Times New Roman, Times, Serif; width: 60px; text-align: justify">•</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">Credit Risk. If the issuer of a debt instrument fails to pay interest or principal in a timely manner, or negative perceptions exist in the market of the issuer’s ability to make such payments, the price of the security may decline.</td></tr> </table> <div id="xdx_A8B_eoef--RiskTextBlock_hoef--RiskAxis__custom--InterestRateRisksMember_zCMMmWN3slf4"></div> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif; width: 60px"> </td> <td style="font: 10pt Times New Roman, Times, Serif; width: 60px; text-align: justify">•</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">Interest Rate Risk. The value of debt securities may rise or fall in response to changes in interest rates, and this risk may be enhanced for securities with longer maturities. Adjustable rate instruments also react to interest rate changes in a similar manner, although generally to a lesser degree (depending, however, on the characteristics of the reset terms, including the index chosen, frequency of reset and reset caps or floors, among other factors).</td></tr> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif"> </td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"> </td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"> </td></tr> </table> <div id="xdx_A8D_eoef--RiskTextBlock_hoef--RiskAxis__custom--LiquidityRiskMember_zb7XzZiuu3E9"></div> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif; width: 60px"> </td> <td style="font: 10pt Times New Roman, Times, Serif; width: 60px; text-align: justify">•</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">Liquidity Risk. Debt securities may be difficult to sell at an advantageous time or price due to limited market demand (resulting from a downgrade, a decline in price, or adverse conditions within the relevant market).</td></tr> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif"> </td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"> </td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"> </td></tr> </table> <div id="xdx_A87_eoef--RiskTextBlock_hoef--RiskAxis__custom--MaturityRiskMember_zotOrq89JaUk"></div> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif; width: 60px"> </td> <td style="font: 10pt Times New Roman, Times, Serif; width: 60px; text-align: justify">•</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">Maturity Risk. The value of debt securities is dependent on their maturity. Generally, the longer the maturity of a debt security, the greater its sensitivity to changes in interest rates.</td></tr> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif"> </td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"> </td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"> </td></tr> </table> <div id="xdx_A85_eoef--RiskTextBlock_hoef--RiskAxis__custom--YieldCurveRiskMember_zAgbAf37CRl3"></div> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif; width: 60px"> </td> <td style="font: 10pt Times New Roman, Times, Serif; width: 60px; text-align: justify">•</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">Yield Curve Risk. Yield curve risk refers to the risk that changes in interest rates may affect yields of debt securities differently for securities with different maturities. If the yield curve flattens, then the spread between long- and short-term yields narrows and if the yield curve steepens, then the spread between long- and short-term yields increases.</td></tr> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif"> </td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"> </td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"> </td></tr> </table> <div id="xdx_A8F_eoef--RiskTextBlock_hoef--RiskAxis__custom--PrepaymentRisksMember_zx409G9j0rqc"></div> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif; width: 60px"> </td> <td style="font: 10pt Times New Roman, Times, Serif; width: 60px">•</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">Prepayment Risk. Issuers may prepay or call their fixed rate obligations when interest rates fall, forcing the Fund to reinvest in obligations with lower interest rates and the Fund may not benefit fully from the increase in value that other fixed income investments experience when interest rates decline.</td></tr> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif"> </td> <td style="font: 10pt Times New Roman, Times, Serif"> </td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"> </td></tr> </table> Income Risk. Income received from the Fund may vary widely over the short- and long-term and/or be less than anticipated if the proceeds from maturing securities in the Fund are reinvested in lower-yielding securities. Covenant Lite Loans Risk. Certain of the underlying loans in which a CLO may invest may be issued or offered as “covenant lite” loans, which have few or no financial maintenance covenants that would require a borrower to maintain certain financial metrics. A CLO may be delayed in enforcing its interests in covenant lite loans, which may result in losses. Sector Focus Risk. To the extent the Fund focuses its investments in one or more sectors, this may make the Fund particularly susceptible to adverse economic, political or regulatory occurrences and changes affecting companies in those sectors. As the Fund’s investments in a sector increase, so does the potential for fluctuation in the net asset value (“NAV”) of the Fund. Foreign Securities Risk. Having exposure to foreign securities subjects the Fund to additional risks such as increased volatility; currency fluctuations; less liquidity; less publicly available information about the foreign investment; and political, regulatory, economic, and market risk. Additionally, to the extent that the reference assets of the Fund’s derivative investments trade on an exchange that is closed when the Exchange is open, there are likely to be deviations between current pricing of a reference asset and stale asset pricing (i.e., the last quote from the foreign exchange market), resulting in premiums or discounts to NAV that are greater than those experienced by other ETFs. U.S. Government Securities Risk. U.S. Government securities may be subject to price fluctuations. An agency may default on an obligation not backed by the full faith and credit of the United States. Any guarantee on U.S. government securities does not apply to the value of the Shares. Junk Bonds or High Yield Securities Risk. There is a greater risk of issuer default, less liquidity, and increased price volatility related to high-yield securities than investment grade securities. Derivatives Risk. Derivatives may include, among other things, futures, options, forwards and swap agreements and may be used in order to hedge portfolio risks, create leverage or attempt to increase returns. Investments in derivatives may result in increased volatility and the Fund may incur a loss greater than its principal investment. Middle Market Loan Risk. Investment in middle market companies involves a number of significant risks. Generally, little public information exists about these companies, and the Fund is required to rely on the ability of the sub-adviser’s investment professionals to obtain adequate information to evaluate the potential returns from investing in these companies. If the sub-adviser’s are unable to uncover all material information about these companies, it may not be able to make a fully informed investment decision, and the Fund may lose money on its investments. Cash Transaction Risk. Unlike other ETFs, the Fund expects to effect its creations and redemptions at least partially for cash, rather than wholly for in-kind securities, because of the nature of the Fund’s investments. Therefore, it may be required to sell portfolio securities and subsequently incur brokerage costs and/or recognize gains or losses on such sales that the Fund might not have recognized if it were to distribute portfolio securities in kind. As such, investments in the Fund’s shares may be less tax-efficient than an investment in a conventional ETF. Transaction costs, including brokerage costs, will decrease the Fund’s net asset value to the extent not offset by the transaction fee payable by an Authorized Participant (as defined herein). Non-Diversified Fund Risk. The Fund is considered non-diversified and may be more susceptible to factors negatively impacting its holdings to the extent the Fund invests more of its assets in the securities of fewer issuers than would a diversified fund. Issuer Risk. The performance of the Fund depends on the performance of the issuers of the individual securities in which Fund invests. Poor performance by any issuer may cause the value of its securities, and the value of the Shares, to decline. Market Risk. The value of the securities in the Fund may go up or down (sometimes significantly) in response to the prospects of individual companies and/or general economic conditions, including local, regional or global events. Management Risk. The sub-adviser’s judgments about the attractiveness and potential appreciation of a security or other asset may prove to be inaccurate and may not produce the desired results. ETF Risks. The Fund is an ETF and, as a result of this structure, is exposed to the following risks, among others: <div id="xdx_A8F_eoef--RiskTextBlock_hoef--RiskAxis__custom--AuthorizedParticipantRiskMember_z96MYkV5GHle"></div> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif; width: 60px"> </td> <td style="font: 10pt Times New Roman, Times, Serif; width: 60px; text-align: justify">•</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">Authorized Participant Risk. The Fund has a limited number of financial institutions that may act as Authorized Participants, none of which are obligated to engage in creation or redemption transactions. To the extent these Authorized Participants exit the business or are unable or unwilling to process creation and/or redemption orders (either because of valuation difficulties or for other reasons), and no other Authorized Participant is able or willing to step forward to process creation and/or redemption orders, in either of these cases, Shares of the Fund may trade at a discount to net asset value (“NAV”) and possibly face delisting.</td></tr> </table> <div id="xdx_A81_eoef--RiskTextBlock_hoef--RiskAxis__custom--CostsOfBuyingOrSellingSharesMember_z91YmmCNmCD9"></div> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif; width: 60px"> </td> <td style="font: 10pt Times New Roman, Times, Serif; width: 60px; text-align: justify">•</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">Costs of Buying or Selling Shares. Due to the costs of buying or selling Shares, including brokerage commissions 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.</td></tr> </table> <div id="xdx_A8C_eoef--RiskTextBlock_hoef--RiskAxis__custom--FluctuationOfNavUnitPremiumsAndDiscountsMember_zaYam8mgWdtf"></div> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif; width: 60px"> </td> <td style="font: 10pt Times New Roman, Times, Serif; width: 60px; text-align: justify">•</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">Fluctuation of NAV; Unit Premiums and Discounts. The NAV of the Shares will generally fluctuate with changes in the market value of the Fund’s securities holdings, and it cannot be predicted whether Shares will trade below, at or above their NAV. If an investor purchases Shares at a time when the market price is at a premium to the NAV of the Shares or sells at a time when the market price is at a discount to the NAV of the Shares, then the investor may sustain losses that are in addition to any losses caused by a decrease in NAV.</td></tr> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif"> </td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"> </td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"> </td></tr> </table> <div id="xdx_A88_eoef--RiskTextBlock_hoef--RiskAxis__custom--NoAssuranceOfActiveTradingMarketRiskMember_zLxnG7bQRble"></div> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif; width: 60px"> </td> <td style="font: 10pt Times New Roman, Times, Serif; width: 60px; text-align: justify">•</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">No Assurance of Active Trading Market Risk. Although the Shares in the Fund are approved for listing on the Exchange, there can be no assurance that an active trading market will develop and be maintained for the Shares of the Fund. In times of market stress, market makers or Authorized Participants may step away from their respective roles in making a market in the Fund’s Shares, which could lead to wider bid/ ask spreads and variances between the market price of the Fund’s Shares and their underlying value.</td></tr> </table> <div id="xdx_A8A_eoef--RiskTextBlock_hoef--RiskAxis__custom--FundSharesLiquidityRiskMember_z7ObUJpj01Q4"></div> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif; width: 60px"> </td> <td style="font: 10pt Times New Roman, Times, Serif; width: 60px; text-align: justify">•</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">Fund Shares Liquidity Risk. In stressed market conditions, the market for an ETF’s shares may become less liquid in response to deteriorating liquidity in the markets for the ETF’s underlying portfolio holdings, which can result in wider bid/ask spreads and differences between the ETF’s NAV and market price.</td></tr> </table> Small Fund Risk. The Fund may experience low trading volume and wide bid/ask spreads, and may be delisted if it does not meet certain conditions of the Exchange, which could negatively impact the value of the Fund. PERFORMANCE INFORMATION The Fund is new and therefore does not have a performance history for a full calendar year. Performance information for the Fund will be provided once it has annual returns for a full calendar year. The Fund’s past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. The Fund is new and therefore does not have a performance history for a full calendar year. The Fund’s past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. The management fee is structured as a “unified fee,” out of which the Fund’s investment adviser pays all of the ordinary operating expenses of the Fund, except for the following expenses, each of which is paid by the Fund: the Fund’s management fee; payments under any 12b-1 plan; taxes and other governmental fees; brokerage fees, commissions and other transaction expenses; interest and other costs of borrowing; litigation or arbitration expenses; acquired fund fees and expenses; and extraordinary or other non-routine expenses of the Fund. “Other Expenses” are based on estimated amounts for the current fiscal year.