The Fund is an actively managed exchange-traded fund (“ETF”) that seeks high income while providing exposure to the price returns of select U.S. listed equity securities, subject to a dampening of potential investment gains, while also seeking to hedge against significant market downturns. The Fund’s strategy involves two components: (1) purchasing a portfolio of equity securities either directly, or “synthetically” by using options to gain exposure to one or more equity securities (each, an “Underlying Security”) (the “Equity Strategy”); and (2) generating high income while hedging against very large stock market declines through an options portfolio (the “Options Strategies”), each as described below. The Fund’s strategies are overseen by the Adviser and the Fund’s sub-adviser, Nest Egg ETFs, LLC (“Nest Egg” or the “Sub-Adviser”). Nest Egg selects the equity securities for the Fund’s Equity Strategy, and the Adviser is responsible for implementing the Fund’s options holdings for both the Equity Strategy and the Options Strategies, with occasional input from Nest Egg.  

Additionally, the Fund will maintain a minor allocation to cash or U.S. Treasuries overseen by the Adviser, not exceeding ten percent of its total assets.

Equity Strategy

The Fund invests in equity securities selected by Nest Egg either directly or indirectly (synthetically). The Fund seeks to replicate the share price movements of Underlying Securities through a combination of direct ownership and options contracts. When the Fund invests synthetically in an Underlying Security, the options will generate income; however, they will cap the Fund’s participation in potential gains experienced by that Underlying Security.

Nest Egg identifies the companies in which the Fund will invest (directly and/or synthetically). Nest Egg first screens a universe of U.S. listed large-capitalization companies using a quantitative approach. This process takes into account various financial metrics, such as market capitalization, market share, projected revenue growth, earnings per share growth, price to equity ratio, profit margin, and capital expenditures. Through this quantitative process, Nest Egg identifies 25 companies eligible for further consideration.

Nest Egg then conducts a qualitative analysis of these 25 companies to identify, in its view, the best investment opportunities. This qualitative analysis considers various factors such as a company’s overall business model, its competitive and economic advantages versus industry peers, its industry positioning, its innovation and research and development, its brand strength and reputation, and its management team. Based on this qualitative evaluation, certain companies may be removed from consideration. As a result, Nest Egg typically selects between 10 and 25 companies for inclusion in the Fund’s Equity Strategy portfolio. Nest Egg reallocates this portfolio quarterly, with each company receiving an allocation based on its investment conviction. However, the portfolio is consistently monitored, and companies can be added, removed, or replaced at any time.

The Fund’s allocation is determined through a proprietary methodology that emphasizes earnings growth as a key factor. The portfolio management team employs a dynamic approach, incorporating various financial and market-based metrics to evaluate companies’ earnings potential. While earnings growth serves as a primary input, other qualitative and quantitative factors also influence the weighting of individual holdings. To reflect the highest conviction investments, companies that demonstrate the strongest combination of earnings growth and fundamental strength may receive the largest allocations. This strategy allows the management team to adjust allocations as market conditions evolve, ensuring the Fund remains aligned with its investment objective while capitalizing on emerging opportunities.

Equities Direct Holdings

The Fund will invest directly in the Underlying Securities selected by Nest Egg (by purchasing their shares).

Equities Indirect (Synthetic) Exposure

The Fund will also seek indirect, synthetic exposure to the Underlying Securities (selected by Nest Egg) through options contracts (implemented by the Adviser). Via this synthetic approach, the Fund obtains indirect investment exposure approximately equal to 100% of an Underlying Security’s value during the options period, while also generating premium income.

From time to time the Fund may seek to increase indirect investment exposure to an Underlying Security without necessarily generating additional premium income. In seeking to do so, the Fund will purchase a long call option while at the same time selling a put option, each on the Underlying Security.

Options Strategies

The Fund uses options strategies to seek to (i) generate high income, and (ii) hedge against very large declines in the U.S. equity markets. The Fund will use covered calls based on market conditions. The Fund will generally use covered calls when there is a general consensus that the market is stable or slightly bullish to generate income. In addition, the Fund will consistently use long put options on an equity index (e.g., NASDAQ Composite, Index, S&P 500 Index, etc.) and/or Underlying Securities held either directly or indirectly (i.e., synthetically) to attempt to hedge against significant market declines, regardless of current conditions. The Fund may also purchase out-of-the-money long call options, which may be uncovered, on companies that the Sub-Adviser believes may have potential for near term price appreciation. Companies are selected based on the same approach used by the Sub-Adviser to select the Fund’s equity portfolio.

The Adviser evaluates a variety of data to make its market assessments, including economic indicators such as interest rates and inflation, technical factors like price trends and volatility measures.

Covered Calls – Income Generation

For Underlying Securities the Fund holds directly (not synthetically), the Fund may employ covered calls on all or a portion of the equity securities held directly to seek to generate income. This strategy involves the sale of call options on the Underlying Securities in exchange for premium (income generation). However, if the market price of the Underlying Securities exceeds the strike price of the sold call options, the Fund will become obligated to sell the securities at the strike price, capping its upside. While the Fund gains from the premium received, it forgoes any additional potential profits beyond the strike price.

For Underlying Securities the Fund holds synthetically (not directly), the Fund may sell in-the-money put options on all or a portion of the synthetically held equity securities to replicate the covered call strategy. By doing so, the Fund seeks to generate income through the premium received from the sale of the put options. However, if the market price of the Underlying Securities falls below the strike price of the sold put options, the Fund may be required to purchase the securities at the strike price, resulting in potential losses. This strategy, while still generating income from premiums, similarly limits the Fund’s potential upside, as it would be exposed to losses on the underlying position if prices decline further. The Fund may also seek to generate income through call spreads, which involves selling a call option on an Underlying Security while simultaneously buying a call option on the Underlying Security with a higher strike price, both with the same expiration date. By writing a call spread, the Fund can potentially offset losses incurred from its short call position if the Underlying Security’s share price rises above the strike price.

Options and Option Spreads – Hedging

The Fund will use long put options on an equity index (e.g., the NASDAQ Composite Index, S&P 500 Index, etc.) and/or Underlying Securities held either directly or indirectly (i.e., synthetically) by the Fund to seek to protect against significant market downturns. Put options are designed to increase in value when the underlying reference asset experiences moderate to major declines. The Fund’s long put options strategy is intended to help reduce potential losses in a declining market. In a flat or rising market, the Fund will likely experience a drag on performance due to the cost of maintaining this hedge. The Fund may exercise its long put options should they appreciate during significant market declines.

Additionally, rather than using stand-alone put option contracts, the Fund may purchase call or put spreads, commonly known as “debit spreads” and/or write (sell) call or put spreads, commonly known as “credit spreads” on an equity index (e.g., S&P 500 Index, NASDAQ Composite Index, etc.) and/or Underlying Securities held either directly or indirectly (i.e., synthetically) by the Fund. The Fund will generally seek to use such transactions for hedging purposes or to offset margin requirements. In addition, the Fund may “leg into” spreads by entering a spread in stages, starting with an initial position and later adding the second leg. For example, the Fund may use debit spreads instead of covering a worthless call. In this case, the Fund would enter a call spread with a lower strike call, thereby increasing the Fund’s potential for gains while maintaining the cost efficiency of the position.

Treasuries

In addition, the Fund will hold cash or short-term U.S. Treasury securities. These securities serve a dual purpose: providing collateral for the Options Strategies and contributing to the Fund’s income generation.

Why invest in the Fund?

Portfolio Characteristics

The Fund is classified as “non-diversified” under the 1940 Act.

The Fund’s investment strategy is expected to result in high portfolio turnover on an annual basis.