Filed Pursuant to Rule 497(e)
1933 Act File No. 333-179562
1940 Act File No. 811-22668
DEEP VALUE ETF
(the “Fund”)
Supplement dated June 5, 2020 to the
Prospectus dated December 31, 2019
THIS SUPPLEMENT CONTAINS IMPORTANT INFORMATION ABOUT CHANGES TO THE FUND’S OBJECTIVE, NAME, TICKER SYMBOL, FEES, AND INVESTMENT POLICIES EFFECTIVE JUNE 22, 2020, AS DESCRIBED BELOW.
Changes to the Fund’s Name, Ticker Symbol, Investment Objective, and Website
Effective June 22, 2020, the Fund’s name, ticker symbol, investment objective, and website will change as follows:
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Current
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New (effective June 22, 2020)
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Fund Name
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Deep Value ETF
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Roundhill Acquirers Deep Value ETF
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Ticker Symbol
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DVP
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DEEP
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Investment Objective
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The Fund seeks to track the price and total return performance, before fees and expenses, of the Deep Value Index.
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The Fund seeks to track the performance, before fees and expenses, of the Acquirers Deep Value Index (the “Index”).
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Website
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www.dvpfund.com
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www.roundhillinvestments.com/etf/deep
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The Fund’s Investment Strategy
The Fund attempts to invest all, or substantially all, of its assets in the component securities that make up the Index. Under normal circumstances, at least 80% of the Fund’s total assets (exclusive of any collateral held from securities lending) will be invested in the component securities of the Index. Exchange Traded Concepts, LLC (“ETC” or the “Adviser”), the Fund’s investment adviser, expects that, over time, the correlation between the Fund’s performance and that of the Index, before fees and expenses, will be 95% or better.
The Fund will generally use a “replication” strategy to achieve its investment objective, meaning the Fund will generally invest in all of the component securities of the Index in the same approximate proportions as in the Index. However, the Fund may use a “representative sampling” strategy, meaning it may invest in a sample of the securities in the Index whose risk, return, and other characteristics closely resemble the risk, return, and other characteristics of the Index as a whole, when the Adviser believes it is in the best interests of the Fund (e.g., when replicating the Index involves practical difficulties or substantial costs, an Index constituent becomes temporarily illiquid, unavailable, or less liquid, or as a result of legal restrictions or limitations that apply to the Fund but not to the Index).
The Fund generally may invest up to 20% of its total assets (exclusive of any collateral held from securities lending) in securities or other investments not included in the Index, but which the Adviser believes will help the Fund track the Index. For example, the Fund may invest in securities that are not components of the Index to reflect various corporate actions and other changes to the Index (such as reconstitutions, additions, and deletions).
To the extent the Index concentrates (i.e., holds more than 25% of its total assets) in the securities of a particular industry or group of related industries, the Fund will concentrate its investments to approximately the same extent as the Index.
Additionally, effective June 22, 2020, the section of the Prospectus entitled “Additional Information About the Index” is deleted, and references to the Index Provider on the back cover of the Prospectus are revised to read “Acquirers Funds, LLC, 21515 Hawthorne Boulevard, Suite 200 PMB#82, Torrance, California 90503”.
Changes to the Fund’s Fees and Expenses
Also effective June 22, 2020, with the consent of the Fund’s Board of Trustees, the Adviser’s contractual fee waiver will be terminated, and references to the fee waiver in the Prospectus should be disregarded. In conjunction with such change, the following information will replace the sections entitled “Fees and Expenses of the Fund” and “Example” on page 3 of the Prospectus:
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”). This table and the Example below do not include the brokerage commissions that investors may pay on their purchases and sales of Shares.
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Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
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Management Fees
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0.80%
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Distribution and/or Service (12b-1) Fees
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0.00%
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Other Expenses
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0.00%
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Total Annual Fund Operating Expenses
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0.80%
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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:
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1 Year
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3 Years
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5 Years
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10 Years
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$82
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$255
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$444
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$990
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Changes to the Fund’s Principal Investment Risks
Also effective June 22, 2020, the following information supplements the section entitled “Principal Investment Risks” on pages 5–6 of the Prospectus:
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•
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Models and Data Risk. The Index relies heavily on proprietary quantitative models as well as information and data supplied by third parties (“Models and Data”). Because the Index is composed based on such Models and Data, when such Models and Data prove to be incorrect or incomplete, the Index and the Fund may not perform as expected.
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Fund Sponsor
Effective June 22, 2020, the following sub-section supplements the “Management” section of the Prospectus on pages 10–11:
Fund Sponsor
Roundhill Financial Inc. (the “Sponsor”), has licensed the Index from the Index Provider and entered into a sub-licensing and expense reimbursement agreement with the Adviser, pursuant to which the Sponsor agrees to sub-license the use of the Index to the Adviser for the Fund. The Sponsor also provides marketing support for the Fund including, but not limited to, distributing the Fund’s materials and providing the Fund with access to and the use of the Sponsor’s other marketing capabilities, including communications through print and electronic media discussing the Index. The Sponsor is a registered investment adviser that provides advisory services to ETFs, but does not act as an investment adviser or otherwise provide investment advice to the Fund. Additionally, the Sponsor is not involved in the maintenance of the Index and does not otherwise act in the capacity of an index provider.
Distribution
In each place where it appears, the address of the Fund’s Distributor, Quasar Distributors, LLC, is revised to read 111 East Kilbourn Avenue, Suite 1250, Milwaukee, Wisconsin 53202.
Please retain this Supplement with your Prospectus for future reference.
DEEP VALUE ETF
(the “Fund”)
Supplement dated June 5, 2020 to the
Statement of Additional Information (“SAI”) dated December 31, 2019
THIS SUPPLEMENT CONTAINS IMPORTANT INFORMATION ABOUT CHANGES TO THE FUND, AS DESCRIBED BELOW.
Changes to the Fund’s Name, Ticker Symbol, and Website
Effective June 22, 2020, the Fund’s name, ticker symbol, and website will change as follows:
|
|
|
|
|
|
|
|
Current
|
New (effective June 22, 2020)
|
|
Fund Name
|
Deep Value ETF
|
Roundhill Acquirers Deep Value ETF
|
|
Ticker Symbol
|
DVP
|
DEEP
|
|
Website
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www.dvpfund.com
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www.roundhillinvestments.com/etf/deep
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Recent Events
The following supplements the “Additional Information About Investment Objectives, Policies, and Related Risks” section on page 2 of the SAI:
Recent Events. 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 result in disruptions in the trading markets, increased premiums or discounts to the Fund’s NAV, and adverse effects on Fund performance.
Investment Adviser
Effective June 22, 2020, with the consent of the Fund’s Board of Trustees, the Adviser’s contractual fee waiver will be terminated, and consequently, the last two sentences of the second paragraph of the “Investment Adviser” section are deleted.
The Distributor
The following replaces the first paragraph of the section entitled “The Distributor” on page 15 of the SAI:
The Trust, the Adviser, and Quasar Distributors, LLC (the “Distributor”), a subsidiary of Foreside Financial Group, LLC, are parties to a distribution agreement (“Distribution Agreement”), whereby the Distributor acts as principal underwriter for the Fund and distributes Shares. Shares are continuously offered for sale by the Distributor only in Creation Units. The Distributor will not distribute Shares in amounts less than a Creation Unit and does not maintain a secondary market in Shares. The principal business address of the Distributor is 111 East Kilbourn Avenue, Suite 1250, Milwaukee, Wisconsin 53202.
Please retain this Supplement with your SAI for future reference.
DEEP VALUE ETF
(the “Fund”)
June 5, 2020
Supplement to the
Summary Prospectus dated December 31, 2019
THIS SUPPLEMENT CONTAINS IMPORTANT INFORMATION ABOUT CHANGES TO THE FUND’S NAME, TICKER SYMBOL, FEES, AND INVESTMENT POLICIES EFFECTIVE JUNE 22, 2020, AS DESCRIBED BELOW.
Changes to the Fund’s Name, Ticker Symbol, Investment Objective, and Website
Effective June 22, 2020, the Fund’s name, ticker symbol, investment objective, and website will change as follows:
|
|
|
|
|
|
|
|
Current
|
New (effective June 22, 2020)
|
|
Fund Name
|
Deep Value ETF
|
Roundhill Acquirers Deep Value ETF
|
|
Ticker Symbol
|
DVP
|
DEEP
|
|
Investment Objective
|
The Fund seeks to track the price and total return performance, before fees and expenses, of the Deep Value Index.
|
The Fund seeks to track the performance, before fees and expenses, of the Acquirers Deep Value Index (the “Index”).
|
|
Website
|
www.dvpfund.com
|
www.roundhillinvestments.com/etf/deep
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Changes to the Fund’s Principal Investment Strategies
In conjunction with the change to the Fund’s investment objective, effective June 22, 2020, the section entitled “Principal Investment Strategies” on page 2 of the Summary Prospectus will be replaced with the following:
Principal Investment Strategy
The Fund uses a “passive management” (or indexing) approach to track the performance, before fees and expenses, of the Index.
Acquirers Deep Value Index
The Index was established in 2020 by Acquirers Funds LLC (the “Index Provider”) and tracks the performance of a portfolio of 20 of the most undervalued, fundamentally strong stocks drawn from the largest 500 stocks listed in the United States meeting certain liquidity thresholds. The Index identifies potentially undervalued stocks by using The Acquirer’s Multiple®, which is a valuation metric developed and published in 2014 by Tobias Carlisle, Managing Member of the Index Provider. The initial universe of stocks is then valued holistically—assets, earnings, and cash flows are examined—in accordance with the Index methodology to understand the economic reality of each stock. Each stock is then ranked on the basis of such valuation. Potential components are further evaluated using statistical measures of fraud, earnings manipulation, and financial distress. Each potential component is then examined for a margin of safety in three ways: (a) a wide discount to a conservative valuation, (b) a strong, liquid balance sheet, and (c) a robust business capable of generating free cash flows. Finally, a forensic-accounting due diligence review is performed, in accordance with the Index methodology, with respect to each remaining potential component’s financial statements, particularly with respect to the notes and management’s discussion and analysis. The Index is formed from the 20 highest ranked components that pass each stage. Each stock will be weighted to approximately 5% of the Index value at the time of each quarterly reconstitution of the Index.
The Index is reconstituted and rebalanced quarterly after the close of business on the third Friday of March, June, September, and December each year based on data as of the fourth business day prior to such reconstitution. With each reconstitution of the Index, stocks are removed from the Index that no longer meet the fundamental requirements of the criteria and are replaced with stocks that meet that criteria. The Index methodology utilizes a buffer for certain criteria to minimize the turnover of Index components that might otherwise be frequently added to or removed from the Index.
The Fund’s Investment Strategy
The Fund attempts to invest all, or substantially all, of its assets in the component securities that make up the Index. Under normal circumstances, at least 80% of the Fund’s total assets (exclusive of any collateral held from securities
lending) will be invested in the component securities of the Index. Exchange Traded Concepts, LLC (“ETC” or the “Adviser”), the Fund’s investment adviser, expects that, over time, the correlation between the Fund’s performance and that of the Index, before fees and expenses, will be 95% or better.
The Fund will generally use a “replication” strategy to achieve its investment objective, meaning the Fund will generally invest in all of the component securities of the Index in the same approximate proportions as in the Index. However, the Fund may use a “representative sampling” strategy, meaning it may invest in a sample of the securities in the Index whose risk, return, and other characteristics closely resemble the risk, return, and other characteristics of the Index as a whole, when the Adviser believes it is in the best interests of the Fund (e.g., when replicating the Index involves practical difficulties or substantial costs, an Index constituent becomes temporarily illiquid, unavailable, or less liquid, or as a result of legal restrictions or limitations that apply to the Fund but not to the Index).
The Fund generally may invest up to 20% of its total assets (exclusive of any collateral held from securities lending) in securities or other investments not included in the Index, but which the Adviser believes will help the Fund track the Index. For example, the Fund may invest in securities that are not components of the Index to reflect various corporate actions and other changes to the Index (such as reconstitutions, additions, and deletions).
To the extent the Index concentrates (i.e., holds more than 25% of its total assets) in the securities of a particular industry or group of related industries, the Fund will concentrate its investments to approximately the same extent as the Index.
Changes to the Fund’s Fees and Expenses
Also effective June 22, 2020, with the consent of the Fund’s Board of Trustees, the Adviser’s contractual fee waiver will be terminated. In conjunction with such change, the following information will replace the sections entitled “Fees and Expenses of the Fund” and “Example” on page 1 of the Summary Prospectus:
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”). This table and the Example below do not include the brokerage commissions that investors may pay on their purchases and sales of Shares.
|
|
|
|
|
|
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
|
|
|
|
|
Management Fees
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0.80%
|
|
Distribution and/or Service (12b-1) Fees
|
0.00%
|
|
Other Expenses
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0.00%
|
|
Total Annual Fund Operating Expenses
|
0.80%
|
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
|
|
$82
|
$255
|
$444
|
$990
|
Changes to the Fund’s Principal Investment Risks
Also effective June 22, 2020, the following information supplements the section entitled “Principal Investment Risks” on pages 3–4 of the Summary Prospectus:
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|
|
|
•
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Models and Data Risk. The Index relies heavily on proprietary quantitative models as well as information and data supplied by third parties (“Models and Data”). Because the Index is composed based on such Models and Data, when such Models and Data prove to be incorrect or incomplete, the Index and the Fund may not perform as expected.
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Please retain this Supplement with your Summary Prospectus for future reference.
