UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.)
Filed by the Registrant x
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| [ ] | Preliminary Proxy Statement. |
| [ ] | Confidential, for use of the Commission Only (as permitted by Rule 14a-6(e)(2)). |
| [X] | Definitive Proxy Statement. |
| [ ] | Definitive Additional Materials. |
| [ ] | Soliciting Material Pursuant to § 240.14a-12. |
ETF SERIES SOLUTIONS
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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AAM S&P 500 HIGH DIVIDEND VALUE
VIDENT U.S. BOND STRATEGY ETF™ (VBND)
VIDENT U.S. EQUITY STRATEGY ETF™ (VUSE)
VIDENT INTERNATIONAL EQUITY STRATEGY ETF™ (VIDI)
U.S. DIVERSIFIED REAL ESTATE ETF (SPDV)(PPTY)
AAM S&P EMERGING MARKETS HIGH DIVIDEND VALUE ETF (EEMD)
AAM S&P DEVELOPED MARKETS HIGH DIVIDEND VALUE ETF (DMDV)
AAM LOW DURATION PREFERRED AND INCOME SECURITIES ETF (PFLD)
AAM TRANSFORMERS ETF (TRFM)
AAM BAHL & GAYNOR SMALL/MID CAP INCOME GROWTH ETF (SMIG)
each a series of ETF Series Solutions
615 East Michigan Street, Milwaukee, Wisconsin 53202
November 25, 2022
May 15, 2023
Dear Shareholder:
I am writing to inform you about an upcoming special meeting (the “Special Meeting”) of the shareholders of the AAM S&P 500 High Dividend Value ETF, AAM S&P Emerging Markets High Dividend Value ETF, AAM S&P Developed Markets High Dividend Value ETF, AAM Low Duration PreferredVident U.S. Bond Strategy ETF™, Vident U.S. Equity Strategy ETF™, Vident International Equity Strategy ETF™, and Income Securities ETF, AAM Transformers ETF, and AAM Bahl & Gaynor Small/Mid Cap Income GrowthU.S. Diversified Real Estate ETF (each, a “Fund,” and collectively, the “Funds”), each a series of ETF Series Solutions (the “Trust”). The Special Meeting is being held to seek shareholder approval of the proposalsProposal (the “Proposals”“Proposal”) discussed below and in the accompanying Proxy Statement:
PROPOSAL 1: For shareholders of each Fund, separately, to approve a new investment advisory agreement between the Trust, on behalf of such Fund, and Advisors Asset Management, Inc. (“AAM”
| PROPOSAL: | For shareholders of each Fund, separately, to approve a new investment advisory agreement between the Trust, on behalf of such Fund, and Vident Advisory, LLC (d/b/a Vident Asset Management) (“VA” or the “Adviser”) (the “New Advisory Agreement”). No increase in shareholder fees or expenses is being proposed. PROPOSAL 2: For shareholders of each of SPDV, EEMD, DMDV, PFLD, and TRFM, separately, to approve a new investment sub-advisory agreement among the Adviser, Vident Investment Advisory, LLC (“VIA”), and the Trust, on behalf of SPDV, EEMD, DMDV, PFLD, and TRFM, respectively (the “New VIA Sub-Advisory Agreement”). No increase in shareholder fees or expenses is being proposed.
PROPOSAL 3: For shareholders of SMIG, to approve a new investment sub-advisory agreement among the Adviser, Bahl & Gaynor, Inc. (“Bahl & Gaynor”), and the Trust, on behalf of SMIG (the “New Bahl & Gaynor Sub-Advisory Agreement”). No increase in shareholder fees or expenses is being proposed.
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Enclosed you will find a notice of the Special Meeting, a Proxy Statement with additional information about the Proposals,Proposal, and a proxy card with instructions for voting. Following this letter, you will find questions and answers regarding the Proxy Statement that are designed to help you understand the Proxy Statement and how to cast your votes. These questions and answers are being provided as a supplement to, not a substitute for, the Proxy Statement, which we urge you to review carefully.
The Board of Trustees of the Trust believes that eachthe Proposal is in the best interest of the relevant Fund(s) and its shareholders and recommends that you vote “FOR” the relevant Proposals. Proposal. Importantly, approval of eachthe Proposal will not result in any increase in shareholder fees or expenses.
The Special Meeting is scheduled to be held at 11:00 a.m. Central time on January 19,June 9, 2023, at the offices of U.S. Bank Global Fund Services, 615 East Michigan Street, Milwaukee, Wisconsin 53202. If you are a shareholder of record as of the close of business on October 21, 2022,May 9, 2023, you are entitled to vote at the Special Meeting and at any adjournment thereof. Your vote is extremely important. While you are welcome to join us at the Special Meeting, most shareholders will cast their votes by filling out, signing, and returning the enclosed proxy card, voting by telephone, or voting using the internet.
We intend to hold the Special Meeting in person. However, we are sensitive to the public health and travel concerns our shareholders may have and recommendations that public health officials may issue in light of the evolving COVID-19 pandemic. As a result, we may impose additional procedures or limitations on Special Meeting attendees or may decide to hold the Special Meeting in a different location or solely by means of remote communication. We plan to announce any such updates on our proxy website www.proxyvote.com,www.videntam.com, and we encourage you to check this website prior to the Special Meeting if you plan to attend. We also encourage you to consider your options to vote by internet, telephone, or mail, as discussed in the enclosed proxy card, in advance of the Special Meeting in the event that, as of January 19,June 9, 2023, in-person attendance at
the Special Meeting is either prohibited under a federal, state, or local order or contrary to the advice of public health care officials.
If you have any questions regarding the ProposalsProposal or Proxy Statement, please do not hesitate to call toll-free 800-690-6903.866-839-1852. Representatives will be available Monday through Friday, 9 a.m. to 10 p.m. Eastern time. Thank you for taking the time to consider these important proposalsProposal and for your continuing investment in the Fund(s).
Sincerely,
Isabella K. Zoller/s/ Joshua Hinderliter
Joshua J. Hinderliter
Secretary
ETF Series Solutions
AAM S&P 500 HIGH DIVIDEND VALUEVIDENT U.S. BOND STRATEGY ETF™ (VBND)
VIDENT U.S. EQUITY STRATEGY ETF™ (VUSE)
VIDENT INTERNATIONAL EQUITY STRATEGY ETF™ (VIDI)
U.S. DIVERSIFIED REAL ESTATE ETF (SPDV)(PPTY)
AAM S&P EMERGING MARKETS HIGH DIVIDEND VALUE ETF (EEMD)
AAM S&P DEVELOPED MARKETS HIGH DIVIDEND VALUE ETF (DMDV)
AAM LOW DURATION PREFERRED AND INCOME SECURITIES ETF (PFLD)
AAM TRANSFORMERS ETF (TRFM)
AAM BAHL & GAYNOR SMALL/MID CAP INCOME GROWTH ETF (SMIG)
each a series of ETF Series Solutions
615 East Michigan Street, Milwaukee, Wisconsin 53202
NOTICE OF SPECIAL MEETING
TO BE HELD ON January 19,JUNE 9, 2023
A special meeting of shareholders (the “Special Meeting”) of the AAM S&P 500 High Dividend ValueVident U.S. Bond Strategy ETF™, Vident U.S. Equity Strategy ETF™, Vident International Equity Strategy ETF™, and U.S. Diversified Real Estate ETF AAM S&P Emerging Markets High Dividend Value ETF, AAM S&P Developed Markets High Dividend Value ETF, AAM Low Duration Preferred and Income Securities ETF, AAM Transformers ETF, and AAM Bahl & Gaynor Small/Mid Cap Income Growth ETF(each,(each, a “Fund,” and collectively, the “Funds”), each a series of ETF Series Solutions (the “Trust”), will be held at 11:00 a.m. Central time on January 19,June 9, 2023, at the offices of U.S. Bank Global Fund Services, 615 East Michigan Street, Milwaukee, Wisconsin 53202. At the Special Meeting, shareholders of the Funds will be asked to act upon the following proposals:Proposal:
PROPOSAL 1: For shareholders of each Fund, separately, to approve a new investment advisory agreement between the Trust, on behalf of such Fund, and Advisors Asset Management, Inc. (“AAM” or the “Adviser”) (the “New Advisory Agreement”). No increase in shareholder fees or expenses is being proposed.
PROPOSAL 2: For shareholders of each of SPDV, EEMD, DMDV, PFLD, and TRFM, separately, to approve a new investment sub-advisory agreement among the Adviser, Vident Investment | PROPOSAL: | For shareholders of each Fund, separately, to approve a new investment advisory agreement between the Trust, on behalf of such Fund, and Vident Advisory, LLC (d/b/a Vident Asset Management) (“VA” or the “Adviser”) (the “New Advisory LLC (“VIA”), and the Trust, on behalf of SPDV, EEMD, DMDV, PFLD, and TRFM, respectively (the “New VIA Sub-Advisory Agreement”). No increase in shareholder fees or expenses is being proposed. |
PROPOSAL 3: For shareholders of SMIG, to approve a new investment sub-advisory agreement among the Adviser, Bahl & Gaynor, Inc. (“Bahl & Gaynor”), and the Trust, on behalf of SMIG (the “New Bahl & Gaynor Sub-Advisory Agreement”). No increase in shareholder fees or expenses is being proposed.
THE BOARD OF TRUSTEES, INCLUDING ALL OF THE INDEPENDENT TRUSTEES,
RECOMMENDS THAT YOU VOTE “FOR” EACHTHE PROPOSAL.
The Trust’s Board of Trustees has fixed the close of business on October 21, 2022,May 9, 2023, as the record dateRecord Date for the determination of the shareholders entitled to notice of, and to vote at, the Special Meeting and any adjournments thereof.
Please read the accompanying Proxy Statement. Your vote is very important to us regardless of the number of shares you hold.Shareholders who do not expect to attend the Special Meeting are requested tocomplete, sign, and promptly return the enclosed proxy cardso that a quorum will be present and a maximum number of shares may be voted for the applicable Fund. In the alternative, please call the toll-free number on your proxy card to vote by telephone or go to the website shown on your proxy card to vote over the internet. Proxies may be revoked prior to the Special Meeting by giving written notice of such revocation to the Secretary of the Trust prior to the Special Meeting, delivering a subsequently dated proxy card by any of the methods described above, or by voting in person at the Special Meeting.
We intend to hold the Special Meeting in person. However, we are sensitive to the public health and travel concerns our shareholders may have and recommendations that public health officials may issue in light of the evolving COVID-19 pandemic. As a result, we may impose additional procedures or limitations on Special Meeting attendees or may decide to hold the Special Meeting in a different location or solely by means of remote communication. We plan to announce any such updates on our proxy website www.proxyvote.com,www.videntam.com, and we encourage you to check this website prior to the Special Meeting if you plan to attend. We also encourage you to consider your options to vote by internet, telephone, or mail, as discussed in the enclosed proxy card, in advance of the Special Meeting in the event that, as of January 19,June 9, 2023, in-person attendance at
the Special Meeting is either prohibited under a federal, state, or local order or contrary to the advice of public health care officials.
By Order of the Board of Trustees
Isabella K. Zoller/s/ Joshua Hinderliter
Joshua J. Hinderliter
Secretary
ETF Series Solutions
November 25, 2022
May 15, 2023
IMPORTANT INFORMATION TO HELP YOU UNDERSTAND THE PROPOSALSPROPOSAL
Below is a brief overview of the matter being submitted to a shareholder vote at the special meeting of shareholders (the “Special Meeting”) to be held on January 19,June 9, 2023. Your vote is important, no matter how large or small your holdings may be. Please read the full text of the proxy statement (“Proxy Statement”), which contains additional information about eachthe proposal (each, a(the “Proposal” and collectively the “Proposals”), and keep it for future reference.
QUESTIONS AND ANSWERS
Q. Why are you sending me this information?
A. You are receiving these proxy materials because on October 21, 2022May 9, 2023 (the “Record Date”) you owned shares of AAM S&P 500 High Dividend Value ETFVident U.S. Bond Strategy ETF™ (“SPDV”VBND”), AAM S&P Emerging Markets High Dividend Value ETFVident U.S. Equity Strategy ETF™ (“EEMD”VUSE”), AAM S&P Developed Markets High Dividend Value ETFVident International Equity Strategy ETF™ (“DMDV”), AAM Low Duration Preferred and Income Securities ETF (“PFLD”), AAM Transformers ETF (“TRFM”VIDI”), and/or AAM Bahl & Gaynor Small/Mid Cap Income GrowthU.S. Diversified Real Estate ETF (“SMIG”PPTY”) (each, a “Fund,” and collectively, the “Funds”) and, as a result, you have the right to vote on the Proposal(s)Proposal and are entitled to be present at and to vote at the Special Meeting. Each share of a Fund is entitled to one vote on the applicable Proposals.Proposal.
Q. What areis the ProposalsProposal being considered at the Special Meeting?
A. You are being asked to vote on the following proposal(s):
PROPOSAL 1: For shareholders of each Fund, separately, to approve a new investment advisory agreement between the Trust, on behalf of such Fund, and Advisors Asset Management, Inc. (“AAM”
| PROPOSAL: | For shareholders of each Fund, separately, to approve a new investment advisory agreement between the Trust, on behalf of such Fund, and Vident Advisory, LLC (d/b/a Vident Asset Management) (“VA” or the “Adviser”) (the “New Advisory Agreement”). No increase in shareholder fees or expenses is being proposed. PROPOSAL 2: For shareholders of each of SPDV, EEMD, DMDV, PFLD, and TRFM, separately, to approve a new investment sub-advisory agreement among the Adviser, Vident Investment Advisory, LLC (“VIA”), and the Trust, on behalf of SPDV, EEMD, DMDV, PFLD, and TRFM, respectively (the “New VIA Sub-Advisory Agreement”). No increase in shareholder fees or expenses is being proposed.
PROPOSAL 3: For shareholders of SMIG, to approve a new investment sub-advisory agreement among the Adviser, Bahl & Gaynor, Inc. (“Bahl & Gaynor”), and the Trust, on behalf of SMIG (the “New Bahl & Gaynor Sub-Advisory Agreement”). No increase in shareholder fees or expenses is being proposed.
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Q. Will the ProposalsProposal affect the investments made by the Funds?
A. No. Approval of the ProposalsProposal by each Fund’s shareholders will not have any effect on the relevant Fund’s investment policies, strategies, and risks.
Q. Will the ProposalsProposal result in any change in the fees or expenses payable by the Funds?
A. No. Approval of the ProposalsProposal by each Fund’s shareholders will not affect the fees or expenses payable by each Fund. If the New Advisory Agreement is approved by each Fund’s shareholders, each Fund will pay AAMVA a management fee equal to the management fee currently being paid by such Fund to AAM. Under the New VIA Sub-Advisory Agreement, VIA will continue to be compensated by AAM, and not by SPDV, EEMD, DMDV, PFLD, and TRFM. Under the New Bahl & Gaynor Sub-Advisory Agreement, Bahl & Gaynor will continue to be compensated by AAM and not SMIG.VA.
Q. Why am I being asked to approve a new investment advisory agreement with AAM?VA?
A. Pursuant to a mergerpurchase agreement signed on September 1, 2022,March 24, 2023, Vident Capital Holdings, LLC, a subsidiary of Sun Life Financial Inc. (“Sun Life”MM VAM, LLC(“VA Holdings”), is expected to acquire a majority interest in AAM Holdings, Inc. (“AAM Holdings”), AAM’s parent companyVA on or around June 30, 2023 (the “Transaction”). In addition, Sun Life will receive annually recurring call options to acquire the remaining interests in AAM Holdings, beginning approximately five years from the closingMM VAM, LLC is an entity controlled by Casey Crawford. As of the Transaction, and if Sun Life does not exercise such call options, the other stockholders of AAM HoldingsClosing Date, Mr. Crawford will have annually recurring put options to sell the remaining interests in AAM Holdings to Sun Life.effectively control VA. The Transaction is expected to be completed during the first half ofon or around June 30, 2023 (the “Closing Date”), subject to the satisfaction of customary closing conditions, including obtaining necessary Fund and client consents and receipt of customary regulatory approvals. The Transaction will constitute an “assignment” under the Investment Company Act of 1940, as amended (the “1940 Act”), which will result in the automatic termination of the current investment advisory agreement between the Trust, on behalf of the Funds, and AAM.VA and the current investment sub-advisory agreement among the Trust, on behalf of the Funds, VA and Vident Investment Advisory, LLC (“VIA”). On the Closing Date, VIA will no longer serve as sub-adviser to the Funds and VA will perform all portfolio management and trading responsibility on behalf of the Funds.
To enable AAMVA to continue serving as investment adviser to the Funds after the close of the Transaction, at a meeting of the Board held on October 7, 2022,April 20, 2023, the Board, including a majority of the Trustees who are not “interested persons” (as that term is defined in the 1940 Act (the “Independent Trustees”), approved a new investment advisory agreement between the Trust, on behalf of the Funds, and the Adviser. Under the 1940 Act, the approval of the Funds’ new investment advisory agreement also requires the affirmative vote of a “majority of the outstanding voting securities” of each Fund.
If eacha Fund’s shareholders approve the New Advisory Agreement, AAMVA will continue to serve as the Funds’ investment adviser effective upon the closing of the Transaction.
Q. Why am I not being asked to approve a new investment sub-advisory agreement with VIA?
A. IfAt the Closing Date, VIA will seek to move all its current personnel and clients to VA and wind down operations. For this reason, you are a shareholder of SPDV, EEMD, DMDV, PFLD, and/or TRFM, you arenot being asked to approve a new investment sub-advisory agreement with VIA because as a result of the Transaction and the termination of the current investment advisory agreement with AAM, the current sub-advisory agreement with VIA with respect to SPDV, EEMD, DMDV, PFLD, and TRFM will automatically terminate.VIA.
If the shareholders of each of SPDV, EEMD, DMDV, PFLD, and TRFM approve the New VIA Sub-Advisory Agreement, VIA will continue to serve as such Funds’ sub-adviser effective upon the closing of the Transaction.
Q. Why am I being asked to approve a new investment sub-advisory agreement with Bahl & Gaynor?
A. If you are a shareholder of SMIG, you are being asked to approve a new investment sub-advisory agreement with Bahl & Gaynor because as a result of the Transaction and the termination of the current investment advisory agreement with AAM, the current sub-advisory agreement with Bahl & Gaynor with respect to SMIG will automatically terminate.
If the shareholders of SMIG approve the New Bahl & Gaynor Sub-Advisory Agreement, Bahl & Gaynor will continue to serve as the Fund’s sub-adviser effective upon the closing of the Transaction.
Q. Will there be any changes in the services provided to the Funds under the new agreements?
A. No.Yes. Under the New Advisory Agreement, AAMnot only will VA continue to have overall responsibility for the general management and administration of the Funds, and to provide oversightbut it will also assume all of the responsibilities that were previously assumed by VIA (e.g., day-to-day portfolio management and Bahl & Gaynor, monitor each sub-adviser’sservices such as buying and selling ofportfolio securities for each Fund, as applicable, and review the performance of each of VIA and Bahl & Gaynor.Fund).
Under the New VIA Sub-Advisory Agreement, VIA will continue to provide the same day-to-day portfolio management services to SPDV, EEMD, DMDV, PFLD, and TRFM as it currently provides. With respect to SPDV, EEMD, DMDV, PFLD, and TRFM, VIA is responsible for trading portfolio securities on behalf of the Funds, including selecting broker-dealers to execute purchase and sale transactions as instructed by the Adviser or in connection with any rebalancing or reconstitution of a Fund’s respective Index, subject to the supervision of the Adviser and the Board.
Likewise, under the New Bahl & Gaynor Sub-Advisory Agreement, Bahl & Gaynor will continue to provide the same day-to-day portfolio management services to SMIG as it currently provides. With respect to SMIG, Bahl & Gaynor is responsible for trading portfolio securities for the Fund, including selecting broker-dealers to execute purchase and sale transactions, subject to the supervision of the Adviser and the Board.
Q. Will there be any changes to the portfolio management team for SPDV, EEMD, DMDV, PFLD, and TRFM?any of the Funds?
A. No. The portfolio management team for SPDV, EEMD, DMDV, PFLD, and TRFMeach Fund will not change if shareholders of eacha Fund approve Proposals 1 and 2.the Proposal.
Q. Will there be any changes to the portfolio management team for SMIG?
A. No. The portfolio management team for SMIG will not change if shareholders of the Fund approve Proposals 1 and 3.
Q. What will happen if Funda Fund’s shareholders do not approve the Proposals?Proposal?
A. The Transaction is subject to customary closing conditions, including obtainingconditions. One condition is that VA must obtain the approval of alla certain percentage of client accounts for closing to take place. As closing is not predicated on a single fund it is possible that the new agreements byTransaction could close without a Funds approval. In the event a Fund is not able to obtain shareholder approval prior to the Closing Date, the Board, of Trusteesincluding a majority of the Independent Trustees, also approved an interim investment advisory agreement (the “Interim Advisory Agreement”) between the Trust on behalf of the Fund and VA, so that VA could continue managing the Fund after the change of control. Pursuant to Rule 15a‑4 under the 1940 Act, the Interim Investment Advisory Agreement will allow the Fund an additional 150 days to obtain shareholder approval of the New Advisory Agreement. The terms of the Interim Investment Advisory Agreement are substantially identical to the terms of the prior investment advisory agreement and prior sub-advisory agreement, except for the term and escrow provisions, and the addition of the sub-advisory services set forth in the prior sub-advisory agreement. Additionally, under the Interim Investment Advisory Agreement, management fees earned by VA would be held in an interest-bearing escrow account until shareholders of each applicableapprove the New Advisory Agreement with VA with respect to its Fund. Shareholder approval would need to be obtained within 150 days from the Closing Date.
If thea Fund’s shareholders of any Fund do not approve the New Investment Advisory Agreement, then the Board will have to consider other alternatives for the Fund upon the expiration of the prior advisory agreement and the New VIA Sub-Advisory Agreement or New Bahl & Gaynor Sub-Advisory Agreement, as applicable for such Fund, at the Special Meeting,Interim Investment Advisory Agreement. As a condition to the closingresult of the Transaction will not be satisfied and AAM will continue to serve as the investment adviser to each Fund and VIA and Bahl & Gaynor will continue to serve as the investment sub-adviser to each corresponding Fund pursuant to the Current Advisory Agreement, Current VIAand Sub-Advisory Agreement and Current Bahl & Gaynor Sub-Advisory Agreement, as applicable. Accordingly, if the Proposals are not approved by each Fund’s shareholders, as applicable,will automatically terminate at the Special Meeting,close of the Transaction. In such a situation, the Board willwould take such action as it deems necessary and in the best interests of each Fund and its respective shareholders, which may include further solicitation of a
that Fund’s shareholders with respect to the Proposals,Proposal, solicitation of the approval of a different proposals,Proposal, or the liquidation of one or more Funds.
Q. How does the Board recommend that I vote in connection with the Proposals?Proposal?
A. The Board recommends that you vote “FOR” the approval of eachthe Proposal described in the Proxy Statement.
OTHER MATTERS
Q. Will my Fund(s) pay for this proxy solicitation?
A. No. The AdviserVA or its affiliates will pay for the costs of this proxy solicitation, including the printing and mailing of the Proxy Statement and related materials. Under the terms of the Transaction, VA Holdings has agreed to reimburse VA for certain expenses related to obtaining new advisory agreements for each Fund.
Q. How can I vote my shares?
A. For your convenience, there are several ways you can vote:
By Mail: Complete, sign and return the enclosed proxy card(s) in the enclosed self-addressed, postage-paid envelope;
By Telephone: Call the number printed on the enclosed proxy card(s) and use the control number provided;
By Internet: Access the website address printed on the enclosed proxy card(s) and use the control number provided; or
In Person: Attend the Special Meeting as described in the Proxy Statement.
We intend to hold the Special Meeting in person. However, we are sensitive to the public health and travel concerns our shareholders may have and recommendations that public health officials may issue in light of the evolving COVID-19 pandemic. As a result, we may impose additional procedures or limitations on Special Meeting attendees or may decide to hold the Special Meeting in a different location or solely by means of remote communication. We plan to announce any such updates on our proxy website www.proxyvote.com,www.videntam.com, and we encourage you to check this website prior to the Special Meeting if you plan to attend. We also encourage you to consider your options to vote by internet, telephone, or mail, as discussed above, in advance of the Special Meeting in the event that, as of January 19,June 9, 2023, in-person attendance at the Special Meeting is either prohibited under a federal, state, or local order or contrary to the advice of public health care officials.
Q. How may I revoke my proxy?
A. Any proxy may be revoked at any time prior to its use by written notification received by the Trust’s Secretary, by the execution and delivery of a later-dated proxy, or by attending the Special Meeting and voting in person. Shareholders whose shares are held in “street name” through their broker will need to obtain a legal proxy from their broker and present it at the Special Meeting in order to vote in person. Any letter of revocation or later-dated proxy must be received by the appropriate Fund prior to the Special Meeting and must indicate your name and account number to be effective. Proxies voted by telephone or Internet may be revoked at any time before they are voted at the Special Meeting in the same manner that proxies voted by mail may be revoked.
Q. What vote is required to approve eachthe Proposal?
A. The New Advisory Agreement must be approved by a vote of a majority of the outstanding voting securities of eacha Fund. The New VIA Sub-Advisory Agreement must be approved by a vote of a majority of the outstanding voting securities of each of SPDV, EEMD, DMDV, PFLD, and TRFM. The New Bahl & Gaynor Sub-Advisory Agreement must be approved by a vote of a majority of the outstanding voting securities of SMIG. The “vote of the majority of the outstanding voting securities” is defined in the 1940 Act as the lesser of the vote of (i) 67% or more of the voting securities of the applicable Fund present at the Special Meeting or represented by proxy if holders of more than 50% of such Fund’s outstanding voting securities are present or represented by proxy; or (ii) more than 50% of the outstanding voting securities of the applicable Fund.
Q. Where can I obtain additional information about this Proxy Statement?
A. If you need any assistance, or have any questions regarding the ProposalsProposal or how to vote your shares, please call our proxy solicitor, Broadridge FinancialMorrow Sodali Fund Solutions, Inc.,LLC, at 800-690-6903.866-839-1852. Representatives are available to assist you Monday through Friday, 9:00 a.m. to 10:00 p.m. Eastern time.
AAM S&P 500 HIGH DIVIDEND VALUEVIDENT U.S. BOND STRATEGY ETF™ (VBND)
VIDENT U.S. EQUITY STRATEGY ETF™ (VUSE)
VIDENT INTERNATIONAL EQUITY STRATEGY ETF™ (VIDI)
U.S. DIVERSIFIED REAL ESTATE ETF (SPDV)(PPTY)
AAM S&P EMERGING MARKETS HIGH DIVIDEND VALUE ETF (EEMD)
AAM S&P DEVELOPED MARKETS HIGH DIVIDEND VALUE ETF (DMDV)
AAM LOW DURATION PREFERRED AND INCOME SECURITIES ETF (PFLD)
AAM TRANSFORMERS ETF (TRFM)
AAM BAHL & GAYNOR SMALL/MID CAP INCOME GROWTH ETF (SMIG)
each a series of ETF Series Solutions
615 East Michigan Street
Milwaukee, Wisconsin 53202
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PROXY STATEMENT November 25, 2022May 15, 2023
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This Proxy Statement is being furnished to the shareholders of AAM S&P 500 High Dividend Value ETF, AAM S&P Emerging Markets High Dividend Value ETF, AAM S&P Developed Markets High Dividend Value ETF, AAM Low Duration PreferredVident U.S. Bond Strategy ETF™, Vident U.S. Equity Strategy ETF™, Vident International Equity Strategy ETF™, and Income Securities ETF, AAM Transformers ETF, and AAM Bahl & Gaynor Small/Mid Cap Income GrowthU.S. Diversified Real Estate ETF (each, a “Fund,” and collectively, the “Funds”), each a series of ETF Series Solutions (the “Trust”), an open-end management investment company, on behalf of the Trust’s Board of Trustees (the “Board”) in connection with each Fund’s solicitation of its shareholders’ proxies for use at a special meeting of shareholders of the Funds (the “Special Meeting”) to be held on January 19,June 9, 2023, at 11:00 a.m. Central time at the offices of the Funds’ administrator, U.S. Bank Global Fund Services, 615 East Michigan Street, Milwaukee, Wisconsin 53202, for the purposes set forth below and in the accompanying Notice of Special Meeting.
Shareholders of record at the close of business on the record date, established as October 21, 2022May 9, 2023 (the “Record Date”), are entitled to notice of, and to vote at, the Special Meeting. The approximate mailing date of this Proxy Statement and the enclosed proxy card(s) to shareholders is December 6, 2022.May 16, 2023. The Special Meeting will be held to obtain shareholder approval for the following proposals (each, aProposal (the “Proposal” and collectively the “Proposals”):
PROPOSAL 1: For shareholders of each Fund, separately, to approve a new investment advisory agreement between the Trust, on behalf of such Fund, and Advisors Asset Management, Inc. (“AAM”
| PROPOSAL: | For shareholders of each Fund, separately, to approve a new investment advisory agreement between the Trust, on behalf of such Fund, and Vident Advisory, LLC (d/b/a Vident Asset Management) (“VA” or the “Adviser”) (the “New Advisory Agreement”). No increase in shareholder fees or expenses is being proposed. PROPOSAL 2: For shareholders of each of SPDV, EEMD, DMDV, PFLD, and TRFM, separately, to approve a new investment sub-advisory agreement among the Adviser, Vident Investment Advisory, LLC (“VIA”), and the Trust, on behalf of SPDV, EEMD, DMDV, PFLD, and TRFM, respectively (the “New VIA Sub-Advisory Agreement”). No increase in shareholder fees or expenses is being proposed.
PROPOSAL 3: For shareholders of SMIG, to approve a new investment sub-advisory agreement among the Adviser, Bahl & Gaynor, Inc. (“Bahl & Gaynor”), and the Trust, on behalf of SMIG (the “New Bahl & Gaynor Sub-Advisory Agreement”). No increase in shareholder fees or expenses is being proposed.
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At your request, the Trust will send you a free copy of the most recent audited annual report for the relevant Fund or its current prospectus and statement of additional information (“SAI”). Please call the Funds at 1-800-617-0004 or write to the Funds, c/o U.S. Bank Global Fund Services, P.O. Box 701, Milwaukee, Wisconsin 53201-0701, to request an annual report, prospectus, or SAI, or with any questions you may have relating to this Proxy Statement.
Background. Advisors Asset Management, Inc., VA, the Funds’ current investment adviser, located at 18925 Base Camp Road,1125 Sanctuary Parkway, Suite 203, Monument, Colorado 80132,515, Alpharetta, Georgia 30009, is an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”) and has provided investment advisory services to the Funds since each Fund’s inception.2019.
Pursuant to a sub-advisory agreement, VIA,Vident Investment Advisory, LLC, (“VIA”) located at 1125 Sanctuary Parkway, Suite 515, Alpharetta, Georgia 30009, is responsible for trading portfolio securities on behalf of SPDV, EEMD, DMDV, PFLD, and TRFM,each Fund, including selecting broker-dealers to execute purchase and sale transactions as instructed by the Adviser or in connection with any rebalancing or reconstitution of a Fund’s respective Index, subject to the supervision of the Adviser and the Board.
In addition, pursuant to a separate sub-advisory agreement, Bahl & Gaynor, located at 255 East Fifth Street, Suite 2700, Cincinnati, Ohio 45202, is responsible for trading portfolio securities for SMIG, including selecting broker-dealers to execute purchase and sale transactions, subject VIA has provided investment advisory services to the supervision of AAMVident U.S. Bond Strategy ETF™ (“VBND”) since April 15, 2015, Vident U.S. Equity Strategy ETF™ (“VUSE”) since December 9, 2014, Vident International Equity Strategy ETF™ (“VIDI”) since April 8, 2015, and U.S. Diversified Real Estate ETF since inception on March 27, 2018.
VA was formed in 2016 and commenced operations and registered with the Board.
AAMSEC as an investment adviser in 2019, and is a wholly-owned subsidiary of AAM Holdings, Inc.Vident Financial, LLC (“AAM Holdings”Vident Financial”), which. VIA was formed in 2014 and provides investment advisory services to ETFs, including the Funds. VIA is controlled indirectly by Scott Colyer, the Adviser’s Chairmanalso a wholly-owned subsidiary of Vident Financial. Vident Financial was formed in 2013 to develop and license investment market solutions (indices and funds) based on strategies that combine sophisticated risk-balancing methodologies, economic freedom metrics, valuation, and investor behavior. Vident Financial is a wholly-owned subsidiary of the board of directorsVident Investors’ Oversight Trust. Vince L. Birley, Mohammad Baki, and Chief Executive Officer, and Lisa Colyer, a directorW. Baker Crow serve as the trustees of the Adviser and the Adviser’s Executive Vice President, Operations, through their roles with entities that own directly and indirectly over 25% of AAM Holdings’ outstanding capital stock. Vident Investors’ Oversight Trust.
Pursuant to a mergerpurchase agreement signed on September 1, 2022,March 24, 2023, Vident Capital Holdings, LLC, a subsidiary of Sun Life Financial Inc. (“Sun Life”)MM VAM, LLC is expected to acquire a majority interest in AAM HoldingsVA (the “Transaction”). In addition, Sun Life will receive annually recurring call options to acquire the remaining interests in AAM Holdings, beginning approximately five years from the closing of the Transaction, and if Sun Life does not exercise such call options, the other stockholders of AAM Holdings will have annually recurring put options to sell the remaining interests in AAM Holdings to Sun Life.MM VAM, LLC is an entity controlled by Casey Crawford. The Transaction is expected to be completed during the first half ofon or around June 30, 2023 (the “Closing Date”), subject to the satisfaction of customary closing conditions, including obtaining necessarycertain Fund and client consents and receipt of customary regulatory approvals. Upon the closeAs of the Transaction, pursuantClosing Date, Mr. Crawford will effectively control VA. Pursuant to the Investment Company Act of 1940, as amended (the “1940 Act”), the investment advisory agreement between the Trust, on behalf of the Funds and the AdviserVA (the “Current Advisory Agreement”) will automatically terminate. As a result ofterminate on the termination of theClosing Date. The Current AdvisorySub-Advisory Agreement the investment sub-advisory agreement among the Adviser, VIA, and the Trust, on behalf of SPDV, EEMD, DMDV, PFLD, and TRFMthe Funds (the “Current VIA Sub-Advisory Agreement”) will also automatically terminate andon the investment sub-advisory agreement among the Adviser, Bahl & Gaynor, and the Trust, on behalf of SMIG (the “Current Bahl & Gaynor Sub-Advisory Agreement”) will also automatically terminate.Closing Date.
At a meeting of the Board, held on October 7, 2022April 20, 2023 (the “Meeting”), the Adviser requested, and the Board, including a majority of the Trustees who are not interested persons of the Trust (as defined by the 1940 Act) (the “Independent Trustees”), approved (i) a new investment advisory agreement between the Trust, on behalf of the Funds, and the Adviser (the “New Advisory Agreement”); and (ii) a new sub-advisoryan interim advisory agreement among the Adviser, VIA, andbetween the Trust, on behalf of SPDV, EEMD, DMDV, PFLD,the Funds, and TRFM (the “New VIA Sub-Advisory Agreement”); and (iii) a new sub-advisory agreement among the Adviser Bahl & Gaynor, and the Trust, on behalf of SMIG (the “New Bahl & Gaynor Sub-Advisory“Interim Agreement”).
Under the 1940 Act, the approval of the New Advisory Agreement, the New VIA Sub-Advisory Agreement, and the New Bahl & Gaynor Sub-Advisory Agreement requires the affirmative vote of a “majority of the outstanding voting securities” of each applicable Fund. The “vote of the holders of a majority of the outstanding voting securities” is defined in the 1940 Act as the lesser of the vote of shareholders holding (i) 67% or more of the voting securities of a Fund present at the Special Meeting or represented by proxy if holders of more than 50% of such Fund’s outstanding voting securities are present or represented by proxy; or (ii) more than 50% of the outstanding voting securities of a Fund. Shareholders will have equal voting rights (i.e., one vote per share). Abstentions and “broker non-votes” (i.e., shares held by brokers or nominees as to which (i) instructions have not been received from the beneficial owner or the persons entitled to vote and (ii) the broker does not have discretionary voting power on a particular matter) will have the same effect as votes against the Proposal. Accordingly, you are being asked to approve: for SPDV, EEMD, DMDV, PFLD, and TRFM,approve the New Advisory Agreement and the New VIA Sub-Advisory Agreement; and/or for SMIG, the New Advisory Agreement and the New Bahl & Gaynor Sub-Advisory Agreement.
The Board believes the Proposals areProposal is in the best interests of each applicable Fund and its shareholders and recommends that you vote “FOR” the Proposals.Proposal. Importantly, approval of the ProposalsProposal will not result in any increase in shareholder fees or expenses.
PROPOSAL 1:
PROPOSAL: APPROVAL OF NEW INVESTMENT ADVISORY AGREEMENT
The Adviser, located at 18925 Base Camp Road,1125 Sanctuary Parkway, Suite 203, Monument, Colorado 80132,515, Alpharetta, Georgia 30009, is a registered investment adviser that, as of the Closing Date, provides portfolio supervisory and evaluation services to AAM-sponsored unit investment trusts registered under the 1940 Act and provides investment advisorymanagement services to separately managed accounts, mutual funds,ETFs, and the Funds. Currently, AAM is a wholly-owned subsidiary of AAM Holdings, which is controlled indirectly by Scott Colyer, the Adviser’s Chairman of the board of directors and Chief Executive Officer, and Lisa Colyer, a director of the Adviser and the Adviser’s Executive Vice President, Operations, through their roles with entities that own directly and indirectly over 25% of AAM Holdings’ outstanding capital stock. After the closeAs part of the Transaction Sun Life Financial Inc., through its subsidiaries,the Adviser will ownassume all responsibilities of VIA. The Adviser will be responsible for trading portfolio securities on behalf of each Fund, including selecting broker-dealers to execute purchase and sale transactions or in connection with any rebalancing or reconstitution of a majority stake in AAM Holdings.Fund’s respective Index, subject to the supervision of the Board.
At the Meeting, the Board, including the majority of the Independent Trustees, determined that the approval of AAMVA to continue serving as the Funds’ investment adviser, and assume all duties of VIA, the current sub-adviser, was in the best interest of each Fund and its respective shareholders, approved the New Advisory Agreement, and recommended that it be submitted to the Funds’ shareholders for approval.
The Current Advisory Agreement was most recently approved by the Board, including a majority of the Independent Trustees, on October 7, 2022,January 11-12, 2023, and by the initial shareholdershareholders of each Fund as follows:on March 28, 2019.
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AAM S&P 500 High Dividend Value ETF | November 2, 2017 |
AAM S&P Emerging Markets High Dividend Value ETF | November 2, 2017 |
AAM S&P Developed Markets High Dividend Value ETF | November 26, 2018 |
AAM Low Duration Preferred and Income Securities ETF | November 14, 2019 |
AAM Transformers ETF | July 8, 2022 |
AAM Bahl & Gaynor Small/Mid Cap Income Growth ETF | August 24, 2021 |
The Current Advisory Agreement and Current Sub-Advisory Agreement are collectively materially identical to the New Advisory Agreement are identical in all material respects, except for their effective and termination dates.
If the Proposal 1 is approved by eacha Fund’s shareholders, the New Advisory Agreement is expected to become effective upon the closing of the Transaction. The Transaction is subject to customary closing conditions, including obtaining approval of alla certain number of the new agreements by the Board of Trustees of the Trust and shareholders of each applicable Fund. If the shareholders of anya Fund do not approve the Proposal 1 and Proposal 2 or 3, as applicable, at the Special Meeting, it is possible that a condition to the closing of the Transaction will not be satisfied and AAMVA will continue to serve as the investment adviser to each Fund and VIA and Bahl & Gaynor will continue to serve as the investment sub-adviser to each corresponding Fund pursuant to the Current Advisory Agreement and Current VIA Sub-Advisory Agreement, and Current Bahl & Gaynor Sub-Advisory Agreement, as applicable.respectively. Accordingly, if the Proposals areProposal is not approved by eacha Fund’s shareholders, as applicable, at the Special Meeting, the Board will take such action as it deems necessary and in the best interests of eachthe Fund and its respective shareholders, which may include further solicitation of a Fund’s shareholders with respect to the Proposals,Proposal, solicitation of the approval of a different proposals,Proposal, or the liquidation of one or more Funds.
Summary of the New Advisory Agreement. A copy of the form of New Advisory Agreement is attached to this Proxy Statement as Exhibit A. The following description of the material terms of the New Advisory Agreement is only a summary and is qualified in its entirety by reference to Exhibit A. References to the “Current Agreements” is inclusive of the Current Advisory Agreement and Current Sub-Advisory Agreement.
majority
Duration and Termination. The New Advisory Agreement, like the Current Advisory Agreement, will remain in effect for an initial period of two years, unless sooner terminated. After the initial two-year period, continuation of the New Advisory Agreement from year to year is subject to annual approval by the Board, including at least a majority of the Independent Trustees.
Both the Current Advisory Agreement and the New Advisory Agreement may be terminated without penalty (i) by vote of a majority of the Board, (ii) by vote of a majority of the outstanding voting securities of the Fund, or (iii) by the Adviser upon one-hundred twenty (120) days’ written notice to the Trust.
Advisory Services. Both the The Current Advisory Agreement and the New Advisory Agreement require that the Adviser regularly provide theeach Fund with investment research, advice and supervision and continuously furnish an investment program for the Funds, consistent with the respective investment objectives and policies of each Fund. Under both advisory agreements,the Current Agreements, the Adviser is responsible for determining theeach Fund’s assets to be purchased or sold by the Fund and has the authority to select and retain a sub-adviser to perform some or all of the services for which the Adviser is responsible. In addition, the New Advisory Agreement requires the Adviser to perform services set forth in the Current Sub-Advisory Agreement, such as determining the portfolio assets to be purchased or sold by a Fund, in accordance with such Fund’s investment objective, guidelines, policies and restrictions, and selecting broker-dealers to execute purchase and sale transactions, subject to the supervision of the Adviser and the Board.
Management Fees. Each Fund’s advisory fee will not change as a result of the approval of the Proposal. Both the Current Advisory Agreement and the New Advisory Agreement provide that for the services AAMVA provides to the Funds, each of the FundsFund pays AAMVA 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. For theeach Fund’s most recent fiscal year (ended August 31, 2022 for VBND, VUSE, and VIDI and ended October 31, 2021,February 28, 2023 for PPTY) each Fund paid advisory fees under the Current Advisory Agreement as set forth in the table below.
| Name of Fund | Management Fee | Advisory Fees paid by each Fund to the Adviser | Advisory Fees Paid by each Fund to the Adviser |
| Vident U.S. Bond Strategy ETF™ | 0.41% | 0.41% | $1,626,266 |
| Vident U.S. Equity Strategy ETF™ | 0.50% | 0.50% | $2,285,277 |
| Vident International Equity Strategy ETF™ | 0.61% | 0.61% | $2,549,776 |
| U.S. Diversified Real Estate ETF | 0.53% | 0.49% | $631,6801 |
1Vident Advisory, LLC contractually agreed to waive four basis points (0.04%) of its unified management fee until June 30, 2023. The fee waiver agreement will automatically terminate on June 30, 2023. Without the fee waiver total fees would have been $683,246.
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| Name of Fund | Management Fee | Advisory Fees paid by each Fund to the Adviser |
| AAM S&P 500 High Dividend Value ETF | 0.29 | % | $103,293 |
| AAM S&P Emerging Markets High Dividend Value ETF | 0.49 | % | $31,494 |
| AAM S&P Developed Markets High Dividend Value ETF | 0.39 | % | $9,307 |
| AAM Low Duration Preferred and Income Securities ETF | 0.45 | % | $147,387 |
| AAM Transformers ETF | 0.49 | % | N/A(1) |
| AAM Bahl & Gaynor Small/Mid Cap Income Growth ETF | 0.60 | % | $5,887(2) |
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(1) The Fund had not commenced investment operations as of October 31, 2021. |
(2) For the fiscal period August 25, 2021 (commencement of operations) through October 31, 2021. |
Brokerage Policies. Both the The Current Advisory AgreementAgreements and the New Advisory Agreement authorize the Funds’ Adviser to select the brokers or dealers that will execute the purchases and sales of securities of the Funds and direct the Adviser to seek for each Fund the most favorable execution and net price available under the circumstances. The Adviser may cause a Fund to pay a broker a commission more than that which another broker might have charged for effecting the same transaction, in recognition of the value of the brokerage and research and other services provided by the broker to the Adviser.
The table below shows brokerage commissions paid in the aggregate amount by each Fund for theits most recent fiscal year (ended August 31, 2022 for VBND, VUSE, and VIDI and ended October 31.February 28, 2023 for PPTY).
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| Name of Fund | 2021FYE $ |
AAM S&P 500 High Dividend ValueVident U.S. Bond Strategy ETF™ | $0 |
| Vident U.S. Equity Strategy ETF™ | $234,849 |
| Vident International Equity Strategy ETF™ | $358,647 |
| U.S. Diversified Real Estate ETF | $12,494 |
AAM S&P Emerging Markets High Dividend Value ETF | $16,764 |
AAM S&P Developed Markets High Dividend Value ETF | $2,299 |
AAM Low Duration Preferred and Income Securities ETF | $48,812 |
AAM Transformers ETF | N/A(1)
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AAM Bahl & Gaynor Small/Mid Cap Income Growth ETF | $551(2)
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(1) The Fund had not commenced investment operations as of October 31, 2021.
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(2) For the fiscal period August 25, 2021 (commencement of operations) through October 31, 2021.
44,359 |
During theits most recent fiscal year ended October 31, 2021, the Funds did not payno Fund paid brokerage commissions to any registered broker-dealer affiliates of the Funds or the Adviser, VIA, or Bahl & Gaynor.Adviser. The Funds did not hold any securities of “regular broker dealers” as of October 31, 2021.its most recent fiscal year end.
Payment of Expenses. Both the Current Advisory Agreement and the New Advisory Agreement provide that the Adviser will pay all of the costs and expenses incurred by it in connection with the advisory services provided for the Funds. The Adviser will not be required to pay the costs and expenses associated with purchasing securities, commodities, and other investments for the Funds (including brokerage commissions and other transaction or custodial charges). Additionally, both the Current Advisory Agreement and the New Advisory Agreement state that the Adviser agrees to pay all expenses incurred by the Funds except for the management feesfee paid to the Adviser pursuant to the applicable advisory agreement,this Agreement, interest charges on any borrowings, dividends and other expenses on securities sold short, 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, and distribution fees and expenses paid by the Trust under any distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act.
Other Provisions. Both the Current Advisory Agreement and the New Advisory Agreement provide that the Adviser shall indemnify and hold harmless the Trust and itsall affiliated persons (within the meaning of Section 2(a)(3) of the 1940 Act) and all controlling persons (as described in Section 15 of the Securities Act of 1933, as amended (the “1933 Act”)) thereof (collectively, the “Trust Indemnitees”) against any and all losses, claims, damages, liabilities or litigation to the extent that a Trust Indemnitee incurs actual losses, damages, or liabilities (including reasonable legal and other expenses) by reason of or arising out of the Adviser’s willful misfeasance, bad faith, or gross negligence in the performance of its duties under the agreement or by reason of its reckless disregard of its obligations and duties under the agreement.
Portfolio Managers. Austin Wen, CFA, Portfolio Manager for VIA, and Rafael Zayas, CFA, SVP, Head of Portfolio Management and Trading for VIA, and Ryan Dofflemeyer, Senior Portfolio Manager for VIA, are jointly responsible for the day-to-day management of VUSE, VIDI, and PPTY. Messrs. Wen, Zayas, and Dofflemyer will contine to be responsible for the management of VUSE, VIDI, and PPTY after the close of the Transaction.
Jeff Kernagis, CFA, Senior Portfolio Manager for VIA, and Jim Iredale, CFA, Senior Portfolio Manager for VIA, are jointly responsible for the day-to-day management of VBND. Messrs. Kernagis and Iredale will continue to be responsible for the management of VBND after the close of the Transaction.
Mr. Wen serves as Portfolio Manager for VIA. Mr. Wen has been a Portfolio Manager of VIA since 2016 and has over eight years of investment management experience. His focus at VIA is on portfolio management and trading, risk monitoring and investment analysis. Previously, he was an analyst for Vident Financial, beginning in 2014, working on the development and review of investment solutions. He began his career in 2011 as a State Examiner for the Georgia Department of Banking and Finance. Mr. Wen obtained a BA in Finance from the University of Georgia and holds the Chartered Financial Analyst (“CFA”) designation.
Mr. Zayas serves as Portfolio Manager for VIA. Mr. Zayas has over 15 years of trading and portfolio management experience in global equity products and ETFs. He is SVP, Head of Portfolio Management and Trading. Mr. Zayas specializes in managing and trading of developed, emerging, and frontier market portfolios. Prior to joining VIA in 2017, he was a Portfolio Manager at Russell Investments for over $5 billion in quantitative strategies across global markets, including emerging, developed, and frontier markets and listed alternatives. Before that, he was an equity Portfolio Manager at BNY Mellon Asset Management, where he was responsible for $150 million in internationally listed global equity ETFs and assisted in managing $3 billion of global ETF assets. Mr. Zayas holds a BS in Electrical Engineering from Cornell University. He also holds the Chartered Financial Analyst designation.
Mr. Dofflemeyer serves as Portfolio Manager for VIA. Mr. Dofflemeyer has over 16 years of trading and portfolio management experience across various asset classes including both ETFs and mutual funds. He is Senior Portfolio Manager for VIA, specializing in managing and trading of global equity and multi-asset portfolios. Prior to joining VIA in August 2020, he was a Senior Portfolio Manager at ProShare Advisors LLC (“ProShare”) for over $3 billion in ETF assets across global equities, commodities, and volatility strategies. Mr. Dofflemeyer held various positions with ProShare from October 2003 until August 2020. From 2001 to 2003, he was a Research Analyst at the Investment Company Institute in Washington DC. Mr. Dofflemeyer holds a BA from the University of Virginia and an MBA from the University of Maryland.
Mr. Kernagis serves as a Portfolio Manager for VIA. Mr. Kernagis has 32 years of investment experience. Prior to joining VIA in 2022, Mr. Kernagis was a Senior Vice President at Northern Trust Asset Management. Before that, Mr. Kernagis spent almost 14 years at Invesco/PowerShares, whereas Senior Portfolio Manager he directed the fixed income ETF PM team and helped grow assets to $40 billion in bond ETFs globally. Mr. Kernagis was also a PM at Claymore (Guggenheim) Securities where he managed both equity ETFs and bond Unit Investment Trusts. In addition, he was a senior bond trader at Mid-States (Alloya) Corporate Federal Credit Union. Prior to working in investment management, Mr. Kernagis held institutional derivative sales positions at ABN Amro, Bear Stearns, and Prudential Securities. Mr. Kernagis earned a BBA degree from the University of Notre Dame and an MBA from DePaul University. He also holds the CFA designation.
Mr. Iredale serves as a Portfolio Manager for VIA. Mr. Iredale became a Senior Portfolio Manager – Fixed Income at VIA in 2015 and has over 15 years of experience managing fixed income products. Prior to joining VIA, Mr. Iredale was a Manager – Fixed Income with Ronald Blue & Co., one of the largest independent wealth management firms in the U.S., where he started in 1999. Mr. Iredale graduated with a BBA from the University of Georgia, Terry College of Business and obtained his JD from the University of Georgia School of Law. He holds the CFA designation.
Executive Officers and Directors of AAM.VA. Information regarding the principal executive officers and directors of AAMVA is set forth below. The address of AAMVA and its executive officers and directors is 18925 Base Camp Road,1125 Sanctuary Parkway, Suite 203, Monument, Colorado 80132.515, Alpharetta, Georgia 30009. The following individuals are the executive officers and directors of AAM:VA:
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| Name | Principal OccupationPosition with VA |
Scott ColyerDeborah Kimery | Chairman, Chief Executive Officer and Director |
Lisa ColyerErik Olsen | Executive Vice President and Director |
James Costas | Executive Vice President and Director |
John Galvin | Executive Vice President and Director |
Jeffrey Opie | Executive Vice President and Chief Financial Officer |
Timothy Stoklosa | Executive Vice President and Chief Operating Officer |
Richard Stewart | Executive Vice President |
Charles Sickles | Executive Vice President |
Marilee Ferone | Executive Vice President |
John Webber | Senior Vice President, Chief Compliance Officer and Secretary |
Alex Meitzner | Senior Vice President |
Brian Gilbert | Senior Vice President |
Christopher Genovese | Managing Director and Director |
Clifford Corso | President and Chief Investment Officer |
Matthew Lloyd | Chief Investment Strategist |
Bart Daniel | Chief Technology Officer and Director |
No Trustee or officer of the Trust currently holds any position with AAMVA or its affiliated persons. No Trustee or officer of the Trust holds any position with Sun LifeVident Capital Holdings, LLC or its affiliated persons.
Required Vote.Approval of the Proposal 1 requires the affirmative “vote of the holders of a majority of the outstanding voting securities” of eacha Fund. Under the 1940 Act, the “vote of the holders of a majority of the outstanding voting securities” means the affirmative vote of the lesser of (a) 67% or more of the shares of a Fund present or represented by proxy at the Special Meeting if the holders of more than 50% of the outstanding shares are present or represented by proxy at the Special Meeting, or (b) more than 50% of the outstanding shares of a Fund. If the Proposal 1 is approved by eacha Fund’s shareholders, the New Advisory Agreement is expected to become effective upon the closing of the Transaction. The Transaction is subject to customary closing conditions, including obtaining approval of alla certain number of the new agreements by the Board of Trustees of the Trust and shareholders of each applicable Fund. If the shareholders of anya Fund do not approve the Proposal 1 and Proposal 2 or 3, as applicable, at the Special Meeting, a condition to the closing of the Transaction willmay not be satisfied and AAMVA will continue to serve as the investment adviser to eachthe Fund and VIA and Bahl & Gaynor will continue to serve as the investment sub-adviser to each correspondingthe Fund pursuant to the Current Advisory Agreement Current VIA Sub-Advisory Agreement, and Current Bahl & Gaynor Sub-Advisory Agreement, as applicable.Agreement. Accordingly, if the Proposals areProposal is not approved by each Fund’s shareholders, as applicable, at the Special Meeting, the Board will take such action as it deems necessary and in the best interests of each Fund and its respective shareholders, which may include further solicitation of a Fund’s shareholders with respect to the Proposals,Proposal, solicitation of the approval of a different proposals,Proposal, or the liquidation of one or more Funds.
Recommendation of the Board of Trustees. The Board believes that the terms and conditions of the New Advisory Agreement are fair to, and in the best interests of, each Fund and its shareholders. The Board believes that, upon shareholder approval of the Proposal, 1, the Adviser will provide at least the same level of services that it and its affiliate VIA currently providesprovide each Fund under the Current Advisory Agreement.Agreements. The Board was presented with information demonstrating that the New Advisory Agreement would enable the Funds’ shareholders to continue to obtain quality services at a cost that is fair and reasonable. At the Meeting, the Board, including all the Independent Trustees, approved the New Advisory Agreement and recommends that shareholders of each Fund approve the Proposal.
In considering the New Advisory Agreement, the Board focused on the effect that the Transaction could be expected to have on the Adviser’s business and operations as they relate to the Funds and also took into consideration (i) the nature, extent, and quality of the services provided, and to be provided, by AAM;VA; (ii) the historical performance of each Fund; (iii) the cost of the services provided and the profits realized by AAMVA or its affiliates from services rendered to the Funds as well as the estimated cost of the services to be provided by AAMVA and the profits expected to be realized by AAMVA from providing such services, including any other financial benefits enjoyed by AAMVA or its affiliates; (iv) comparative fee and expense data for the Funds and other investment companies with similar investment objectives, including a report prepared by Barrington Partners, an independent third party, that compares each Fund’s investment performance, fees and expenses to relevant market benchmarks and peer groups (the “Barrington Report”); (v) the extent to which any economies of scale realized by AAMVA in connection with its services to the Funds are, or will be, shared with Fund shareholders; and (vi) other factors the Board deemed to be relevant.
The Board also considered that the Adviser and its affiliate VIA, along with other service providers of the Funds, had provided written and oral updates on the firm over the course of the year with respect to its role as investment adviser and sub-adviser to the Funds, and the Board considered that information alongside the written materials presented at the Meeting, as well as the quarterly Board meeting held on April 5-6, 2023, in its consideration of whether the New Advisory Agreement should be approved. Among other things,In addition, the Board took into consideration performance and due diligence information related to VA, including the Barrington Report, that was provided to the Board in advance of its annual review of the Funds’ Current Advisory Agreement at its January 11-12, 2023 quarterly meeting. At both the Meeting and the April 5-6 meeting, representatives from the AdviserVA provided an overview of the Transaction and the effect it would have on the management of the Funds. Additionally, representativesRepresentatives from the Adviser also provided an oral overview of the Funds’ strategies, the services provided to each Fund by the Adviser, and additional information about the Adviser’s personnel and business
operations. Further, subsequent to the April 5-6 meeting, at the Board’s request, VA representatives provided additional information about the Transaction and discussed this information with Fund counsel prior to the Meeting. The Board then met with representatives of the Adviser at the Meeting to further discuss the Transaction and the additional information the Adviser had provided. The Adviser confirmed that the Transaction would not result in changes to Funds’ fees and expenses or the nature, extent and quality of services provided to the Funds, including their day-to-day management, or the personnel providing these services. The Board then discussed the materials and the Adviser’s oral presentationpresentations that itthe Board had received and any other information that the Board received at the Meeting and at prior meetings, and deliberated on the approval of the New Advisory Agreement in light of this information. In its deliberations, the Board did not identify any single piece of information discussed below that was all-important or controlling.
Nature, Extent, and Quality of Services Provided. The Trustees considered the scope of services provided under the New Advisory Agreement, noting that the Adviser had provided and would continue to provide investment management services to the Funds. The Trustees also considered that the services to be provided under the New Advisory Agreement were identical in all material respects to those services provided under the Current Advisory Agreement.Agreements. The Trustees noted that although VIA will cease to exist upon the close of the Transaction, VIA personnel will become Adviser personnel at such time and continue to provide services to the Funds on behalf of the Adviser. In considering the nature, extent, and quality of the services provided by the Adviser, the Board considered the quality of the Adviser’s compliance program and past reports from the Trust’s Chief Compliance Officer (“CCO”) regarding the CCO’s review of the Adviser’s compliance program. The Board also considered its previous experience with the Adviser providing investment management services to the Funds. The Board noted that it had received a copy of the Adviser’s registration form and financial statements, as well as the Adviser’s response to a detailed series of questions that included, among other things, information about the Adviser’s decision-making process, the background and experience of the firm’s key personnel, and the firm’s compliance policies, marketing practices, and brokerage information. The Board also considered the Adviser’s statements that the scope and quality of services provided to the Funds by the Adviser would not diminish as a result of the Transaction.
The Board also considered other services provided by the Adviser to the Funds, including oversight of the Sub-Advisers, monitoring each Fund’s adherence to its investment restrictions and compliance with the Funds’ policies and procedures and applicable securities regulations, as well as monitoring the extent to which a Fund achieves its investment objective as a passively managed fund. Additionally, the Board considered that each Fund tracks an index fund or ascreated and owned by an actively managed fund, as applicable.affiliate of the Adviser. The Board also tooknoted the Adviser’s belief that shareholders invest in a Fund based on the investment principles incorporated into consideration the business, litigation,index methodology of such Fund and regulatory risks to whichthe expectation that the Adviser is subject as investment adviserwill provide advisory services to each Fund.such Fund based on its index methodology.
Historical Performance. The Trustees next considered each Fund’s performance.performance, noting that it had recently undertaken a comprehensive review of such matters at its January 11-12, 2023 meeting. The Board observed that additional information regarding each Fund’s past investment performance, for periods ended JuneSeptember 30, 2022, had been included in the Meetingwritten materials previously provided to the Board, including the Barrington Report, which compared the performance results of each Fund with the returns of a group of ETFs selected by Barrington Partners as most comparable (the “Peer Group”) as well as with funds in theeach Fund’s Morningstar category (the– US Fund Real Estate, US Fund Intermediate Core-Plus Bond, US Fund Foreign Large Value, and US Fund Mid-Cap Value, respectively (each, a “Category Peer Group”). Additionally, at the Board’s request, the Adviser identified the funds the Adviser considered to be each Fund’s most direct competitors (each, a “Selected Peer Group”) and provided the Selected Peer Group’s performance results.
AAM S&P 500 High Dividend Value ETF: The
In addition, the Board noted that, for each of the one-year, three-year, and since inception periodsapplicable period ended JuneSeptember 30, 2022, theeach Fund’s performance on a gross of fees basis (i.e., excluding the effect of fees and expenses on Fund performance) was generally consistent with the performance of its underlying index, indicating that theeach Fund tracked its underlying index closely and in an appropriate manner.
U.S. Diversified Real Estate ETF: The Board also noted that the Fund outperformedunderperformed its broad-based benchmark, the S&P 500MSCI US REIT Gross Index, for each of the one-year, period, but the Fund underperformed the same benchmark for the three-year, and since inception periods. The benchmark indexMSCI US REIT Gross Index provides an indication of the performance of the U.S. large-cap companies.REIT market. In comparing the Fund’s performance to that of the benchmark, the Board noted that the Fund, unlike its benchmark, screens out companies that are externally managed and companies that derive at least 85% of their income from ownership or management of real property.
The Board then noted that, for the one-year, three-year, and since inception periods ended JuneSeptember 30, 2022, the Fund outperformed the median return of its Category Peer Group, (US Fund Large Value) but underperformed its Peer Group, and, for the three-year period, the Fund underperformed bothonly outperformed the median return of its Category Peer Group over the since inception period. The Board took into consideration that the Peer Group includes a mix of U.S. real estate and Peer Group.global real estate ETFs. The Board also noted that the Fund generally performed within the range of returns forfunds in the Selected Peer Group for the one-year and three-year periods ended September 30, 2022. The Board considered that the funds included in the Selected Peer Group were described by the Adviser as funds with a similar investment universe, investment exposure, REIT sector exposure, and number of holdings.
Vident U.S. Bond Strategy ETF: The Board noted that the Fund underperformed its broad-based benchmark, the FTSE Broad Investment Grade Bond Index, for the one-year, three-year, five-year, and since inception periods. The FTSE Broad Investment Grade Bond Index tracks the performance of the U.S. Dollar-denominated bonds issued in the U.S. investment-grade bond market. In comparing the Fund’s performance to that of the benchmark, the Board noted that the Fund provides more diversified exposure to the U.S. bond market, including exposure to non-investment grade bonds excluded from the benchmark.
The Board then noted that, for the one-year, three-year, five-year, and since inception periods ended September 30, 2022, the Fund slightly underperformed the median return of its Peer Group and Category Peer Group. The Board took into consideration that only a small percentage of the ETFs in the Peer Group have the flexibility, like the Fund, to invest in non-core fixed income sectors, such as high-yield corporate bonds (also known as “junk bonds”) and Treasury Inflation-Protected Securities (“TIPS”). The Board also noted that the Fund generally performed within the range of funds in the Selected Peer Group for the one-year, three-year and five-year periods ended September 30, 2022. The Board considered that the funds included in the Selected Peer Group were described by the Adviser as funds with similar objectives, investment universes, sector exposure, and average maturity.
Vident International Equity Strategy ETF: The Board noted that the Fund outperformed its broad-based benchmark, the Morningstar Global Markets ex-US Index, for the one-year period ended September 30, 2022, but the Fund underperformed its benchmark for each of the three-year, five-year, and since inception periods. The Morningstar Global Markets ex-US Index provides exposure to the top 97% market capitalization in each of two economic segments, developed markets, excluding the United States, and emerging markets. In comparing the Fund’s performance to that of the benchmark, the Board noted that the Fund, unlike the benchmark, invests in companies in emerging markets.
The Board noted that, for the one-year, three-year, five-year and since inception periods ended September 30, 2022, the Fund underperformed the median return of its Category Peer Group, but slightly outperformed its Peer Group over the one-year and three-year periods. The Board also noted that the Fund generally performed within the range of funds in the Selected Peer Group for the one-year and five-year periods and outperformed all of the funds from the Selected Peer Group over the one-yearthree-year period ended JuneSeptember 30, 2022. The Board considered that the funds included by the Adviser in the Selected Peer Group include domestic, largewere described by the Adviser as funds with similar objectives, investment universes, and average market capitalization dividend funds.capitalizations.
AAM S&P Emerging Markets High Dividend Value
Vident U.S. Equity Strategy ETF: The Board noted that, for each of the one-year, three-year, and since inception periods ended June 30, 2022, the Fund’s performance on a gross of fees basis (i.e., excluding the effect of fees and expenses on Fund performance) was generally consistent with the performance of its underlying index, indicating that the Fund tracked its underlying index closely and in an appropriate manner. The Board also noted that the Fund outperformed its broad-based benchmark, the Morningstar U.S. Market Total Return Index, for the one-year and three-year periods ended September 30, 2022, but the Fund underperformed this benchmark for the five-year and since inception periods. With respect to the Fund’s second benchmark, the S&P Emerging Plus LargeMidCap Index,500, the Board noted that the Fund outperformed the S&P 500 for the one-year period, but the Fund underperformed the same benchmarkS&P 500 for the three-year, five-year, and since inception periods. The benchmark index is designed to measureMorningstar U.S. Market Total Return Index measures the performance of large-U.S. securities and mid-cap securities in emerging markets, including South Korea.targets 97% market capitalization coverage of the investable universe. The S&P 500 Index provides an indication of the performance of U.S. large-cap companies
The Board noted that, for the one-year periodand three-year periods ended JuneSeptember 30, 2022, the Fund outperformed the median return of its Peer Group, and Category Peer Group (US Fund Diversified Emerging Markets), and, for the three-year and since inception periods, the Fund performed in line withoutperformed the median return of its Peer Group and Category Peer Group. The Board also noted that the Fund generally performed within the range of the Selected Peer Group for the one- and three-year periods ended June 30, 2022. The funds included by the Adviser in the Selected Peer Group include emerging market dividend funds with management fees under 65 basis points.
AAM S&P Developed Markets High Dividend Value ETF: The Board noted that, for each of the one-year, three-year, and since inception periods ended June 30, 2022, the Fund’s performance on a gross of fees basis (i.e., excluding the effect of fees and expenses on Fund performance) was generally consistent with the performance of its underlying index, indicating that the Fund tracked its underlying index closely and in an appropriate manner. The Board also noted that the Fund outperformed its broad-based
benchmark, the S&P Developed BMI Ex-U.S. & Korea LargeMidCap Index, for the one-year period, but the Fund underperformed the same benchmark for the three-year and since inception periods. The benchmark index is designed to measure the performance of large- and mid-cap securities in developed markets, excluding the U.S. and Korea.
The Board noted that, for the one-year period ended June 30, 2022, the Fund performed in line with the median return of its Peer Group and Category Peer Group (US Fund Foreign Large Value), butover the Fund underperformed its Peer Group and Category Peer Group for the three-year, five-year, and since inception periods. The Board also noted that the Fund generally performed within the range of the Selected Peer Group for the one-year period but underperformed each of the funds from the Selected Peer Group over the three-year period ended June 30, 2022. The funds included by the Adviser in the Selected Peer Group include passively managed, international dividend funds.
AAM Low Duration Preferred and Income Securities ETF: The Board noted that, for each of the one-year and since inception periods ended June 30, 2022, the Fund’s performance on a gross of fees basis (i.e., excluding the effect of fees and expenses on Fund performance) was generally consistent with the performance of its underlying index, indicating that the Fund tracked its underlying index closely and in an appropriate manner. The Board also noted that the Fund outperformed its broad-based benchmark, the ICE Exchange-Listed Preferred & Hybrid Securities Index, for the one-year period, but the Fund underperformed the same benchmark for the since inception period. The benchmark index measures the performance of a select group of exchange-listed, U.S. dollar denominated preferred securities, hybrid securities and convertible preferred securities.
The Board noted that, for the one-year and since inception periods ended June 30, 2022, the Fund outperformed the median return of its Peer Group and Category Peer Group (US Fund Preferred Stock). The Board also noted that the Fund outperformed each of the funds in the Selected Peer Group for the one-year, periodthree-year, and five-year periods ended JuneSeptember 30, 2022. The Board considered that the funds included by the Adviser in the Selected Peer Group include ETFs that invest in preferred securities.
The Board also considered that the Fund commenced operations on November 19, 2019, and thus had been operating for less than three years as of June 30, 2022, which was a relatively short period of time over which to evaluate the Fund’s performance and draw meaningful conclusions.
AAM Transformers ETF: The Board noted that the Fund commenced operations on July 11, 2022, and thus had not commenced operations prior to June 30, 2022. In addition, because the Fund did not have performance returns as of June 30, 2022, the Board did not evaluate the Fund’s returns relative to those of the Fund’s Peer Group, Category Peer Group or Selected Peer Group, but the Board did consider the overall performance of the Selected Peer Group over the last five years. The funds includedwere described by the Adviser in the Selected Peer Group include passively managed ETFs that provide exposureas funds with similar objectives, investment universes, and quantitative approaches to companies driving innovation and transforming the global economy through the use of emerging technologies, automation and artificial intelligence.security selection.
AAM Bahl & Gaynor Small/Mid Cap Income Growth ETF: The Board noted that, for the since inception period ended June 30, 2022, the Fund, which is actively managed, outperformed its broad-based benchmark, the Russell 2500 Index. The benchmark index measures the performance of small- to mid-cap companies in the U.S. equity market.
The Board also considered that the Fund commenced operations on August 25, 2021, and thus had been operating for slightly less than one year as of June 30, 2022, which was a relatively short period of time over which to evaluate the Fund’s performance and draw meaningful conclusions. Because the Fund did not have performance returns for a full one-year period, the Board did not evaluate the Fund’s returns relative to those of its Peer Group, Category Peer Group (US Fund Mid-Cap Blend) and Selected Peer Group, but the Board did consider the overall performance of the Peer Group, Category Peer Group and Selected Peer Group over the last five years. The funds included by the Adviser in the Selected Peer Group include small- and mid-cap dividend funds that focus on growth factors.
Cost of Services Provided and Economies of Scale.The Board thenobserved that the Transaction would not result in an increase in the level of the advisory fee paid by each Fund to the Adviser. In this regard, the Board reviewed each Fund’s fees and expenses, noting that the advisory fees to be paid to the Adviser for its services to the Funds under the New Advisory Agreement were identical to those in the Current Advisory Agreement. In addition, the Board took into consideration that the Adviser had charged, and would continue to charge, a “unified fee,” meaning each Fund pays no expenses other than the advisory fee and, if applicable, certain other costs such as interest, brokerage, acquired fund fees and expenses, extraordinary expenses, and, to the extent it is implemented, fees pursuant to a Distribution and/or Shareholder Servicing (12b‑1) Plan. The Board noted that the Adviser had been and would continue to be responsible for compensating the Trust’s other service providers and paying the Funds’ other expenses out of the Adviser’s own fee and resources.
The Board also noted that each Fund’s net expense ratio was equal to its unified fee (described above), except that the U.S. Diversified Real Estate ETF has a fee waiver of four basis points and, as a result, its net expense ratio is less than its unified fee.
The fee waiver would terminate effective June 30, 2023. The Board comparedtook into consideration that it had recently evaluated a comparison of each Fund’s net expense ratio to its Peer Group and Category Peer Group, as shown in the Barrington Report, and its Selected Peer Group.
AAM S&P 500 High Dividend Value
U.S. Diversified Real Estate ETF: The Board noted that the Fund’s net expense ratio was lower than the median net expense ratio of the funds in the Peer Group and Category Peer Group. In addition, the Board noted that the Fund’s net expense ratio was within the range of net expense ratios of the funds in its Selected Peer Group.
AAM S&P Emerging Markets High Dividend Value ETF: The Board noted that the Fund’s net expense ratio was lower than the median net expense ratio of the funds in the Peer Group and Category Peer Group. In addition, the Board noted that the Fund’s net expense ratio was within the range of net expense ratios of the funds in its Selected Peer Group.
AAM S&P Developed Markets High Dividend Value ETF: The Board noted that the Fund’s net expense ratio was lower than the median net expense ratio of the funds in the Peer Group and Category Peer Group. In addition, the Board noted that the Fund’s net expense ratio was within the range of net expense ratios of the funds in its Selected Peer Group.
AAM Low Duration Preferred and Income Securities ETF: The Board noted that the Fund’s net expense ratio was higher than the median net expense ratio, but within the range, of the funds in the Peer Group and lower than the median net expense ratio of funds in the Category Peer Group. In addition, the Board noted that the Fund’s net expense ratio was within the range of net expense ratios of the funds in its Selected Peer Group.
AAM Transformers
Vident U.S. Bond Strategy ETF: The Board noted that the Fund’s net expense ratio was higher than the median net expense ratio, but within the range, of the funds in the Peer Group. In addition, the Board noted that the Fund’s net expense ratio wasGroup and lower than the median net expense ratio of the funds in its Selected Peer Group. Because the Fund commenced operations on July 11, 2022, and thus had not commenced operations prior to June 30, 2022, the Fund had not been assigned a Category Peer Group to be used for comparative purposes.
AAM Bahl & Gaynor Small/Mid Cap Income Growth ETF: The Board noted that the Fund’s net expense ratio was lower than the median net expense ratio of the Peer Group and Category Peer Group. In addition, the Board noted that the Fund’s net expense ratio was higher thanwithin the range of net expense ratios of the two funds in its Selected Peer Group.
Vident International Equity Strategy ETF: The Board noted that the Fund’s net expense ratio was higher than the median net expense ratio, but within the range, of the funds in the Peer Group and lower than the median net expense ratio of funds in the Category Peer Group. In addition, the Board noted that the Fund’s net expense ratio was slightly higher than the highest net expense ratio of the other funds in its Selected Peer Group.
Vident U.S. Equity Strategy ETF: The Board noted that the Fund’s net expense ratio was higher than the median net expense ratio, but within the range, of the funds in the Peer Group and lower than the median net expense ratio of funds in the Category Peer Group. In addition, the Board noted that the Fund’s net expense ratio was within the range of net expense ratios of funds in its Selected Peer Group.
The Board then considered the Adviser’s financial resources and information regarding the Adviser’s ability to support its management of the Funds and obligations under the unified fee arrangement, noting that the Adviser had provided its financial statements for the Board’s review. The Board also evaluated the compensation and benefits received, and expected to be received, by the Adviser from its relationship with the Funds, taking into account an analysis of the Adviser’s profitability, and expected profitability, with respect to each Fund at various actual and projected Fund asset levels. In evaluating these matters, the Board considered the resources that would become available to the Adviser as a result of the Transaction.
The Board expressed the view that it currently appeared that the Adviser might realize economies of scale in managing the Funds as assets grow in size. The Board noted that, should the Adviser realize economies of scale in the future, the Board would evaluate whether those economies were appropriately shared with Fund shareholders, whether through the structure and amount of the fee or by other means.
Conclusion. No single factor was determinative of the Board’s decision to approve the New Advisory Agreement; rather, the Board based its determination on the total mix of information available to it. Based on a consideration of all the factors in their totality, the Board, including the Independent Trustees, determined that the New Advisory Agreement, including the compensation payable under the agreement, was fair and reasonable to each Fund. The Board, including the Independent Trustees, determined that the approval of the New Advisory Agreement was in the best interests of each Fund and its shareholders.
Expenses Related to Proposal 1.the Proposal. All expenses associated with the Proposal 1 will be borne by the Adviser or its affiliates and not by the Funds.
THE BOARD RECOMMENDS THAT SHAREHOLDERS OF EACH FUND VOTE “FOR” PROPOSAL 1.THE PROPOSAL.
PROPOSAL 2: APPROVAL OF NEW INVESTMENT SUB-ADVISORY AGREEMENT WITH VIA
VIA, located at 1125 Sanctuary Parkway, Suite 515, Alpharetta, Georgia 30009, was formed in 2014 and provides investment advisory services to ETFs, including SPDV, EEMD, DMDV, PFLD, and TRFM. VIA is a limited liability company and a wholly-owned subsidiary of Vident Financial, LLC. Vident Financial, LLC is a wholly-owned subsidiaryOTHER INFORMATION
Section 15(f) of the Vident Investors’ Oversight Trust. Vince L. Birley, Brian Shepler, and Mohammad Baki serve as1940 Act.Because the trusteesTransaction may be considered to result in a change of control of the Vident Investors’ Oversight Trust. Vident Financial, LLC and Vident Investors’ Oversight Trust are located atAdviser under the same address as VIA.
At1940 Act resulting in the Meeting, the Board, including a majorityassignment of the Independent Trustees, determined thatFormer Advisory Agreement, the approval of VIAAdviser intends for the Transaction to continue serving ascome within the sub-adviser to SPDV, EEMD, DMDV, PFLD, and TRFM was in the best interest of such Funds and its respective shareholders, approved the New VIA Sub-Advisory Agreement, and recommended that it be submitted to the shareholders of each of SPDV, EEMD, DMDV, PFLD, and TRFM for approval.
The Current VIA Sub-Advisory Agreement was most recently approvedsafe harbor provided by the Board, including a majoritySection 15(f) of the Independent Trustees, on April 21-22, 2022, and by the initial shareholder1940 Act, which permits an investment adviser of each Fund, as follows:
| | | | | |
AAM S&P 500 High Dividend Value ETF | November 2, 2017 |
AAM S&P Emerging Markets High Dividend Value ETF | November 2, 2017 |
AAM S&P Developed Markets High Dividend Value ETF | November 26, 2018 |
AAM Low Duration Preferred and Income Securities ETF | November 14, 2019 |
AAM Transformers ETF | July 8, 2022 |
Except for the term and datesa registered investment company (or any affiliated persons of the VIA sub-advisory agreements, the Current VIA Sub-Advisory Agreement and the New VIA Sub-Advisory Agreement are identicalinvestment adviser) to receive any amount or benefit in all material respects.
If Proposal 2 is approved by the shareholdersconnection with a sale of each of SPDV, EEMD, DMDV, PFLD, and TRFM, the New VIA Sub-Advisory Agreement is expected to become effective upon the closing of the Transaction. The Transaction is subject to customary closing conditions, including obtaining approval of all the new agreements by the Board of Trustees of the Trust and shareholders of each applicable Fund. If the shareholders of any Fund do not approve Proposal 1 and Proposal 2, as applicable, at the Special Meeting, a condition to the closing of the Transaction will not be satisfied and AAM will continue to serve asan interest in the investment adviser to each Fund and VIA will continue to serve asthat results in an assignment of an investment advisory contract, provided that the following two conditions are satisfied.
First, an “unfair burden” may not be imposed on the investment sub-adviser to each of SPDV, EEMD, DMDV, PFLD, and TRFM pursuant to the Current Advisory Agreement and Current VIA Sub-Advisory Agreement, as applicable. Accordingly, if the Proposals are not approved by each Fund’s shareholders, as applicable, at the Special Meeting, the Board will take such action as it deems necessary and in the best interests of each Fund and its respective shareholders, which may include further solicitation of a Fund’s shareholders with respect to the Proposals, solicitation of the approval of different proposals, or the liquidation of one or more Funds.
Summary of the New VIA Sub-Advisory Agreement. A copy of the form of New VIA Sub-Advisory Agreement is attached to this Proxy Statement as Exhibit B. The following description of the material terms of the New VIA Sub-Advisory Agreement is only a summary and is qualified in its entirety by reference to Exhibit B.
Duration and Termination. The New VIA Sub-Advisory Agreement, like the Current VIA Sub-Advisory Agreement, will remain in effect for an initial period of two years, unless sooner terminated. After the initial two-year period, continuation of the New VIA Sub-Advisory Agreement from year to year is subject to annual approval by the Board, including at least a majority of the Independent Trustees.
Both the Current VIA Sub-Advisory Agreement and the New VIA Sub-Advisory Agreement may be terminated without penalty (i) by vote of a majority of the Board, (ii) by vote of a majority of the outstanding voting securities of each Fund, (iii) by the Adviser upon sixty (60) days’ written notice to VIA, or (iv) by VIA upon ninety (90) days’ written notice to the Adviser and the Board.
Sub-Advisory Services. Both the Current VIA Sub-Advisory Agreement and the New VIA Sub-Advisory Agreement require that the sub-adviser manage all of the securities and other assets of the Fund, including the purchase, retention and disposition of Fund assets, in accordance with each Fund’s investment objective, guidelines, policies and restrictions, subject to the supervision of the Adviser and the Board. Under each sub-advisory agreement, VIA determines the portfolio assets to be purchased or sold by each Fund and places orders with or through broker dealers selected by VIA.
Management Fees. Each Fund’s sub-advisory fee will not changecompany as a result of the approvalsale of Proposal 2. Both the Current VIA Sub-Advisory Agreement andinterest, or any express or implied terms, conditions or understandings applicable to the New VIA Sub-Advisory Agreement provide that for VIA’s services, VIA is paid a fee bysale of the Adviser, which is calculated daily and paid monthly, at an annual rate based on the average daily net assets of each Fund, and subject to a minimum annual feeinterest. The term “unfair burden,” as set forthdefined in the table below. For1940 Act, includes any arrangement during the fiscal year October 31, 2021,two-year period following the Adviser paid sub-advisory fees to VIA for each Fund as set forthtransaction whereby the investment adviser (or predecessor or successor adviser), or any “interested person” of the adviser (as defined in the table below:
| | | | | | | | | | | |
| Name of Fund | Sub-Advisory Fee | Minimum Annual Fee under the VIA Sub-Advisory Agreement | Fees earned by VIA for the services provided to each Fund |
| AAM S&P 500 High Dividend Value ETF | 0.04% on the first $250 million; 0.03% on the next $250 million; and 0.02% on net assets in excess of $500 million | $12,000 | $13,932 |
| AAM S&P Emerging Markets High Dividend Value ETF | 0.06% on the first $250 million; 0.05% on the next $250 million; and 0.04% on net assets in excess of $500 million | $25,000 | $25,000 |
| AAM S&P Developed Markets High Dividend Value ETF | 0.05% on the first $250 million in net assets; 0.04% on the next $250 million in net assets; and 0.03% on net assets in excess of $500 million | $18,000 | $18,000 |
| AAM Low Duration Preferred and Income Securities ETF | 0.04% on the first $250 million;
0.03% on the next $250 million; and
0.02% on net assets in excess of $500 million | $20,000 | $22,660 |
| AAM Transformers ETF | 0.055% on the first $250 million; 0.045% on the next $250 million; and 0.035% on net assets in excess of $500 million, | $30,000 | N/A(1) |
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(1) The Fund had not commenced investment operations as of October 31, 2021. | |
Brokerage Policies. Both1940 Act), receives or is entitled to receive any compensation, directly or indirectly, from the Current VIA Sub-Advisory Agreement and the New VIA Sub-Advisory Agreement authorize VIA to select the brokersinvestment company or dealers that will execute the purchases and sales of securities of each Fund and direct VIA to seekits security holders (other than fees for the Funds the most favorable execution and net price available under the circumstances. VIA may cause a Fund to pay a broker a commission more than that which another broker might have charged for effecting the same transaction, in recognition of the value of the brokerage and research andbona fide investment advisory or other services provided by the broker to the Sub-Adviser. For the fiscal year ended October 31, 2021, the Funds did not pay commissions on portfolio brokerage transactions to brokers who may be deemed to be affiliated persons of the Funds, the Funds’ distributor, VIA,services), or from any affiliated persons of such persons.
Payment of Expenses. Both the Current VIA Sub-Advisory Agreement and the New VIA Sub-Advisory Agreement provide that VIA will pay all of the costs and expenses incurred by itperson in connection with the sub-advisory services provided for the Funds. VIA will not be required to pay the costs and expenses associated with purchasing securities, commodities, and other investments for the Fund (including brokerage commissions and other transaction or custodial charges).
Other Provisions. Both the Current VIA Sub-Advisory Agreement and the New VIA Sub-Advisory Agreement provide that in the absence of willful misfeasance, fraud, bad faith, or gross negligence in the performance of its duties, or by reason of the reckless disregard of its duties under the agreement on the part of VIA, VIA shall not be subject to liability to the Trust or the Funds or to any shareholder of the Fund for any act or omission in the course of, or connected with, rendering services under the agreement or for any losses that may be sustained in the purchase holding or sale of any security bysecurities or other property to, from or on behalf of the Funds.
Portfolio Managers. Austin Wen, CFA, Portfolio Managerinvestment company (other than ordinary fees for VIA, and Rafael Zayas, CFA, SVP, Head of Portfolio Management and Trading for VIA, are jointly responsiblebona fide principal underwriting services). The Adviser has confirmed for the day-to-day management of SPDV, EEMD, DMDV, PFLD, and TRFM under the Current VIA Sub-Advisory Agreement, and upon shareholder approval of Proposal 2, Messrs. Wen and Zayas will continue to be responsible for the management of the portfolios for such Funds.
Mr. Wen serves as Portfolio Manager for VIA. Mr. Wen has been a Portfolio Manager of VIA since 2016 and has eight years of investment management experience. His focus at VIA is on portfolio management and trading, risk monitoring and investment analysis. Previously, he was an analyst for Vident Financial, LLC of VIA, beginning in 2014, working on the development and review of investment solutions. He began his career in 2011 as a State Examiner for the Georgia Department of Banking and Finance. Mr. Wen obtained a BA in Finance from the University of Georgia and holds the CFA designation.
Mr. Zayas serves as Portfolio Manager for VIA. Mr. Zayas has over 15 years of trading and portfolio management experience in global equity products and ETFs. He is SVP, Head of Portfolio Management and Trading. Mr. Zayas specializes in managing and trading of developed, emerging, and frontier market portfolios. Prior to joining VIA in 2017, he was a Portfolio Manager at Russell Investments for over $5 billion in quantitative strategies across global markets, including emerging, developed, and frontier markets and listed alternatives. BeforeBoard that he was an equity Portfolio Manager at BNY Mellon Asset Management, where he was responsible for $150 million in internationally listed global equity ETFs and assisted in managing $3 billion of global ETF assets. Mr. Zayas holds a BS in Electrical Engineering from Cornell University. He also holds the Chartered Financial Analyst designation.
Executive Officers and Directors of VIA. Information regarding the principal executive officers and directors of VIA is set forth below. The address of VIA and its executive officers and directors is 1125 Sanctuary Parkway, Suite 515, Alpharetta, Georgia 30009. The following individuals are the executive officers and directors of VIA:
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Name | Position with VIA |
Amrita Nandakumar | President |
Erik Olsen | Chief Compliance Officer |
No Trustee or officer of the Trust currently holds any position with VIA or its affiliated persons.
Required Vote. Approval of Proposal 2 requires the affirmative “vote of the holders of a majority of the outstanding voting securities” of each of SPDV, EEMD, DMDV, PFLD, and TRFM. Under the 1940 Act, the “vote of the holders of a majority of the outstanding voting securities” means the affirmative vote of the lesser of (a) 67% or more of the shares of a Fund present or represented by proxy at the Special Meeting if the holders of more than 50% of the outstanding shares are present or represented by proxy at the Special Meeting, or (b) more than 50% of the outstanding shares of a Fund. If Proposal 2 is approved by such Fund’s shareholders, the New VIA Sub-Advisory Agreement is expected to become effective upon the closing of the Transaction. The Transaction is subject to customary closing conditions, including obtaining approval of all the new agreements by the Board of Trustees of the Trust and shareholders of each applicable Fund. If the shareholders of any Fund do not approve Proposal 1 and Proposal 2, as applicable, at the Special Meeting, a condition to the closing of the Transaction will not be satisfied and AAM will continue to serve asimpose an unfair burden on the Fund within the meaning of Section 15(f) of the 1940 Act.
Second, during the three-year period following the Transaction, at least 75% of the members of the investment adviser to each Fund and VIA will continue to serve as the investment sub-adviser to eachcompany’s board of SPDV, EEMD, DMDV, PFLD, and TRFM pursuant to the Current Advisory Agreement and Current VIA Sub-Advisory Agreement, as applicable. Accordingly, if the Proposals are not approved by each Fund’s shareholders, as applicable, at the Special Meeting, the Board will take such action as it deems necessary andtrustees cannot be “interested persons” (as defined in the best interests of each Fund and its respective shareholders, which may include further solicitation of a Fund’s shareholders with respect to the Proposals, solicitation1940 Act) of the approval of different proposals, orsub-adviser (or predecessor sub-adviser). At the liquidation of one or more Funds.
Recommendationpresent time, 75% of the Board of Trustees. The Board believes that the terms and conditions of the New VIA Sub-Advisory AgreementTrustees are fair to, and in the best interests of, SPDV, EEMD, DMDV, PFLD, and TRFM and each Fund’s shareholders. The Board believes that, upon shareholder approval of Proposal 2, VIA will provide at least the same level of services that it currently provides under the Current VIA Sub-Advisory Agreement. The Board was presented with information demonstrating that the New VIA Sub-Advisory Agreement would enable each Fund’s shareholders to continue to obtain quality services at a cost that is fair and reasonable.
In considering the New VIA Sub-Advisory Agreement, the Board took into consideration (i) the nature, extent, and quality of the services provided, and to be provided, by VIA; (ii) the historical performance of each Fund; (iii) the cost of the services provided and the profits realized by VIA or its affiliates from services rendered to the Fundsclassified as well as the estimated cost of the services to be provided by VIA and the profits expected to be realized by VIA from providing such services, including any other financial benefits enjoyed by VIA or its affiliates; (iv) the extent to which any economies of scale realized by VIA in connection with its services to the Funds are, or will be, shared with Fund shareholders; and (v) other factors the Board deemed to be relevant.
The Board also considered that VIA, along with other service providers of the Funds, had provided written and oral updates on the firm over the course of the year with respect to its role as investment adviser to the Funds, and the Board considered that information alongside the written materials presented at the Meeting in its consideration of whether the New VIA Sub-Advisory Agreement should be approved. The Board then discussed the materials, as well as any other relevant information received by the Board at the Meeting and at prior meetings, including VIA’s 15(c) presentation at the July 21, 2022, quarterly Board meeting, and deliberated on the approval of the New VIA Sub-Advisory Agreement in light of this information. In its deliberations, the Board didIndependent Trustees; i.e., not identify any single piece of information discussed below that was all-important or controlling.
Nature, Extent, and Quality of Services Provided. The Trustees considered the scope of services provided under the New Sub-Advisory Agreement, noting that VIA had provided and would continue to provide investment management services to SPDV, EEMD, DMDV, PFLD, and TRFM. In considering the nature, extent, and quality of the services provided by VIA, the Board considered the quality of VIA’s compliance program and past reports from the Trust’s CCO regarding the CCO’s review of VIA’s compliance program. The Board also considered its previous experience with VIA providing investment management services to the Funds as well as other seriesinterested persons of the Trust. The Board notedhas committed to ensuring that it had received a copyat least 75% of the VIA registration form and financial statements, as well as VIA’s response to a detailed series of questions that included, among other things, information about VIA’s decision-making process, the background and experience of the firm’s key personnel, and the firm’s compliance policies, and marketing practices.
The Board noted the responsibilities that VIA has as the Funds’ investment sub-adviser, including: responsibility for the general management of the day-to-day investment and reinvestment of the assets of the Funds; determining the daily basket of deposit securities and cash components; executing portfolio security trades for purchases and redemptions of the Funds’ shares conducted on a cash-in-lieu basis; oversight of general portfolio compliance with applicable securities laws, regulations, and investment restrictions; responsibility for quarterly reporting to the Board; and implementation of Board directives as they relate to the Funds. The Board also considered VIA’s resources and capacity with respect to portfolio management, compliance, and operations given the number of funds and/or accounts for which it provides sub-advisory services. The Board also took into consideration the business, litigation, and regulatory risks to which VIA is subject as investment sub-adviser to the applicable Fund.
Historical Performance. The Trustees next reviewed each Fund’s performance, except that of AAM Transformers ETF, which had not commenced operations as of June 30, 2022, noting that each Fund is passively managed and VIA’s portfolio managers attempt to track the total return performance of the Funds’ underlying indices. The Board considered the same performance information that it reviewed as part of its due diligence with respect to the Adviser’s performance. In particular, the Board considered the Barrington Report, which compared each Fund’s performance with the returns of the Peer Group and the Category Peer Group for the periods ended June 30, 2022, as applicable, as well as other relevant information contained in the Meeting materials, including a comparison of each Fund’s performance with the returns of the Selected Peer Group, as applicable. The Board considered the Sub-Adviser’s performance with respect to each Fund’s past investment performance in light of these reports.
The Board also noted that PFLD commenced operations less than three years before June 30, 2022, which was a relatively short period of time over which to evaluate the Fund’s performance and draw meaningful conclusions about its management.
Cost of Services Provided and Economies of Scale. The Board reviewed the sub-advisory fees paid by the Adviser to VIA for its services to the Funds. The Board considered that the fees paid to VIA are paid by the Adviser and noted that the fee reflected an arm’s-length negotiation between the Adviser and VIA. The Board further determined that the fees reflected an appropriate allocation of the advisory fee paid to each firm given the work performed, and the responsibilities and obligations assumed, by each firm and noted that the fees were generally lower than or in line with those charged by VIA in connection with other exchange-traded funds managed by VIA. The Board also evaluated the compensation and benefits received by VIA from its relationship with the Funds, taking into account an analysis of VIA’s profitability with respect to the Funds at various actual and projected Fund asset levels.
The Board expressed the view that it currently appeared that VIA might realize economies of scale in managing the Funds as assets grow in size, noting that the Funds’ sub-advisory fee rates increase when Fund assets under management rise above specified levels. As a result, any benefits from the existing sub-advisory fee schedule would accrue to VIA; whereas, if the sub-advisory fee
schedule included breakpoints, any benefits from an increase in assets under management would accrue to the Adviser due to its unified fee. Consequently, the Board determined that it would monitor advisory and sub-advisory fees as the Funds grow to determine whether economies of scale were being effectively shared with the Funds and their shareholders.
Conclusion. No single factor was determinative of the Board’s decision to approve the New VIA Sub-Advisory Agreement; rather, the Board based its determination on the total mix of information available to it. Based on a consideration of all the factors in their totality, the Board, including the Independent Trustees, determined that the New VIA Sub-Advisory Agreement, including the compensation payable under the agreement, was fair and reasonable to the Funds. The Board, including the Independent Trustees, determined that the approval of the New VIA Sub-Advisory Agreement was in the best interests of the Funds and its shareholders.
Expenses Related to Proposal 2. All expenses associated with Proposal 2 will be borne by the Adviser or its affiliates and not by the SPDV, EEMD, DMDV, PFLD, and TRFM.
THE BOARD RECOMMENDS THAT SHAREHOLDERS OF EACH OF SPDV, EEMD, DMDV, PFLD, and TRFM VOTE “FOR” PROPOSAL 2.
PROPOSAL 3: APPROVAL OF NEW INVESTMENT SUB-ADVISORY AGREEMENT WITH BAHL & GAYNOR
Bahl & Gaynor, located at 255 East Fifth Street, Suite 2700, Cincinnati, Ohio 45202, was formed in 1990 and provides investment advisory services to institutional clients, high net worth individuals, mutual funds, and SMIG.
At the Meeting, the Board, including a majority of the Independent Trustees, determined that the approval of Bahl & Gaynor to continue serving as the sub-adviser to SMIG was in the best interest of the Fund and its shareholders, approved the New Bahl & Gaynor Sub-Advisory Agreement, and recommended that it be submitted to the shareholders of SMIG for approval.
The Current Bahl & Gaynor Sub-Advisory Agreement was most recently approved by the Board, including a majority of the Independent Trustees, on October 7, 2022, and by the initial shareholder of SMIG on August 24, 2021.
Except for the term and dates of the Bahl & Gaynor sub-advisory agreements, the Current Bahl & Gaynor Sub-Advisory Agreement and the New Bahl & Gaynor Sub-Advisory Agreement are identical in all material respects.
If Proposal 3 is approved by the shareholders of SMIG, the New Bahl & Gaynor Sub-Advisory Agreement is expected to become effective upon the closing of the Transaction. The Transaction is subject to customary closing conditions, including obtaining approval of all the new agreements by the Board of Trustees of the Trust and shareholders of each applicable Fund. If the shareholders of any Fund do not approve Proposal 1 and Proposal 3, as applicable, at the Special Meeting, a condition to the closing of the Transaction will not be satisfied and AAM will continue to serve as the investment adviser to each Fund and Bahl & Gaynor will continue to serve as the investment sub-adviser to SMIG pursuant to the Current Advisory Agreement and Current Bahl & Gaynor Sub-Advisory Agreement, as applicable. Accordingly, if the Proposals are not approved by each Fund’s shareholders, as applicable, at the Special Meeting, the Board will take such action as it deems necessary and in the best interests of each Fund and its respective shareholders, which may include further solicitation of a Fund’s shareholders with respect to the Proposals, solicitation“interested persons” of the approval of different proposals, or the liquidation of one or more Funds.
Summary of the New Bahl & Gaynor Sub-Advisory Agreement. A copy of the form of New Bahl & Gaynor Sub-Advisory Agreement is attached to this Proxy Statement as Exhibit C. The following description of the material terms of the New Bahl & Gaynor Sub-Advisory Agreement is onlySub-Adviser for a summary and is qualified in its entirety by reference to Exhibit C.
Duration and Termination. The New Bahl & Gaynor Sub-Advisory Agreement, like the Current Bahl & Gaynor Sub-Advisory Agreement, will remain in effect for an initial period of twothree years unless sooner terminated. Afterafter the initial two-year period, continuation of the New Bahl & Gaynor Sub-Advisory Agreement from year to year is subject to annual approval by the Board, including at least a majority of the Independent Trustees.Transaction.
Both the Current Bahl & Gaynor Sub-Advisory Agreement and the New Bahl & Gaynor Sub-Advisory Agreement may be terminated without penalty (i) by vote of a majority of the Board, (ii) by vote of a majority of the outstanding voting securities of the Fund, (iii) by the Adviser upon sixty (60) days’ written notice to Bahl & Gaynor, or (iv) by Bahl & Gaynor upon ninety (90) days’ written notice to the Adviser and the Board.
Sub-Advisory Services. Both the Current Bahl & Gaynor Sub-Advisory Agreement and the New Bahl & Gaynor Sub-Advisory Agreement require that the sub-adviser manage all of the securities and other assets of the Fund, including the purchase, retention and disposition of Fund assets, in accordance with each Fund’s investment objective, guidelines, policies and restrictions, subject to the supervision of the Adviser and the Board. Under each sub-advisory agreement, Bahl & Gaynor determines the portfolio assets to be purchased or sold by the Fund and places orders with or through broker dealers selected by Bahl & Gaynor.
Management Fees. SMIG’s sub-advisory fee will not change as a result of Proposal 3. Both the Current Bahl & Gaynor Sub-Advisory Agreement and the New Bahl & Gaynor Sub-Advisory Agreement provide that with respect to net assets of SMIG excluding shares of SMIG held in accounts where the Sub-Adviser has an investment management agreement directly with the owner of the account (the “B&G Account Assets”), Bahl & Gaynor is paid a fee by the Adviser at an annual rate based on the average daily net assets of SMIG of 0.23% on the first $300 million of net assets and 0.28% on net assets in excess of $300 million.
Pursuant to an advisory fee agreement between the Adviser and Bahl & Gaynor (the “Bahl & Gaynor Advisory Fee Agreement”), with respect to the B&G Account Assets, in lieu of the foregoing sub-advisory fee, Bahl & Gaynor is paid a fee by the Adviser equal to (a) 0.60% (the management fee rate paid by SMIG to the Adviser) multiplied by the average net asset value of the B&G Account Assets, minus (b) SMIG’s total administration, accounting, transfer agency, custody, distributor, and Rule 24f-2 costs, fees, or expenses paid by the Adviser pursuant to the Advisory Agreement (collectively, the “Fund Expenses”), plus (c) the Fund Expenses calculated as if the Fund’s average daily net asset value was reduced by the average net asset value of the B&G Account Assets. The Bahl & Gaynor Advisory Fee Agreement will also automatically terminate upon the termination of the Current Advisory Agreement. The Board has approved a new advisory fee agreement that will be in effect upon approval of Proposal 3.
Brokerage Policies. Both the Current Bahl & Gaynor Sub-Advisory Agreement and the New Bahl & Gaynor Sub-Advisory Agreement authorize Bahl & Gaynor to select the brokers or dealers that will execute the purchases and sales of securities of SMIG and direct Bahl & Gaynor to seek for SMIG the most favorable execution and net price available under the circumstances. Bahl & Gaynor may cause the Fund to pay a broker a commission more than that which another broker might have charged for effecting the same transaction, in recognition of the value of the brokerage and research and other services provided by the broker to the Sub-Adviser. For the fiscal year ended October 31, 2021, the Fund did not pay commissions on portfolio brokerage transactions to brokers who may be deemed to be affiliated persons of the Fund, the Fund’s distributor, Bahl & Gaynor, or any affiliated persons of such persons.
Payment of Expenses. Both the Current Bahl & Gaynor Sub-Advisory Agreement and the New Bahl & Gaynor Sub-Advisory Agreement provide that Bahl & Gaynor will pay all of the costs and expenses incurred by it in connection with the sub-advisory services provided for the Fund. Bahl & Gaynor will not be required to pay the costs and expenses associated with purchasing securities, commodities, and other investments for the Fund (including brokerage commissions and other transaction or custodial charges).
Other Provisions. Both the Current Bahl & Gaynor Sub-Advisory Agreement and the New Bahl & Gaynor Sub-Advisory Agreement provide that in the absence of willful misfeasance, fraud, bad faith, or gross negligence in the performance of its duties, or by reason of the reckless disregard of its duties under the agreement on the part of Bahl & Gaynor, Bahl & Gaynor shall not be subject to liability to the Trust or the Fund or to any shareholder of the Fund for any act or omission in the course of, or connected with, rendering services under the agreement or for any losses that may be sustained in the purchase, holding or sale of any security by the Fund.
Portfolio Managers. Scott D. Rodes, CFA, CIC, Vice President and Principal of Bahl & Gaynor, and Robert S. Groenke, Vice President and Principal of Bahl & Gaynor, are jointly and primarily responsible for the day-to-day management of SMIG.
Scott D. Rodes, CFA, CIC is Vice President, Principal, and Portfolio Manager of Bahl & Gaynor. Mr. Rodes is responsible for portfolio management, investment research, and client service. Prior to joining Bahl & Gaynor in 2001, Mr. Rodes was a Vice President and Senior Portfolio Manager for Northern Trust in Chicago. Prior to joining Northern Trust in 1998, Mr. Rodes was a research analyst for Waddell & Reed in Kansas City. From 1989 through 1997, Mr. Rodes was an Assistant Vice President and Senior Portfolio Manager for Fifth Third Bank in Cincinnati. Mr. Rodes earned an M.B.A. from Xavier University and a B.E.M.E. from Vanderbilt University.
Robert S. Groenke is Vice President, Principal, and Portfolio Manager of Bahl & Gaynor. Mr. Groenke is responsible for portfolio management, investment research, and client service. Prior to joining Bahl & Gaynor in 2019, Mr. Groenke was Vice President and Research Analyst with Franklin Templeton Investments. Prior to joining Franklin Templeton in 2012, he served as Private Equity Associate with Industrial Growth Partners. Prior to joining Industrial Growth Partners in 2008, Mr. Groenke worked as an Investment Banking Analyst within the Technology Group at Thomas Wiesel Partners in New York. Mr. Groenke earned an M.B.A, with honors, from the University of Chicago and a B.A. from the University of Michigan.
Executive Officers and Directors of Bahl & Gaynor. Information regarding the principal executive officers and directors of Bahl & Gaynor is set forth below. The address of Bahl & Gaynor and its executive officers and directors is 255 East Fifth Street, Suite 2700, Cincinnati, Ohio 45202. The following individuals are the executive officers and directors of Bahl & Gaynor:
| | | | | |
Name | Position with Bahl & Gaynor |
Robert S. Groenke | President and CEO |
No Trustee or officer of the Trust currently holds any position with Bahl & Gaynor or its affiliated persons.
Required Vote. Approval of Proposal 3 requires the affirmative “vote of the holders of a majority of the outstanding voting securities” of SMIG. Under the 1940 Act, the “vote of the holders of a majority of the outstanding voting securities” means the affirmative vote of the lesser of (a) 67% or more of the shares of the Fund entitled to vote and present or represented by proxy at the Special Meeting if the holders of more than 50% of the outstanding shares are present or represented by proxy at the Special Meeting, or (b) more than 50% of the outstanding shares of the Fund entitled to vote at the Special Meeting. If Proposal 3 is approved by the Fund’s shareholders, the New Bahl & Gaynor Sub-Advisory Agreement is expected to become effective upon the closing of the Transaction. The Transaction is subject to customary closing conditions, including obtaining approval of all the new agreements by the
Board of Trustees of the Trust and shareholders of each applicable Fund. If the shareholders of any Fund do not approve Proposal 1 and Proposal 3, as applicable, at the Special Meeting, a condition to the closing of the Transaction will not be satisfied and AAM will continue to serve as the investment adviser to each Fund and Bahl & Gaynor will continue to serve as the investment sub-adviser to SMIG pursuant to the Current Advisory Agreement and Current Bahl & Gaynor Sub-Advisory Agreement, as applicable. Accordingly, if the Proposals are not approved by each Fund’s shareholders, as applicable, at the Special Meeting, the Board will take such action as it deems necessary and in the best interests of each Fund and its respective shareholders, which may include further solicitation of a Fund’s shareholders with respect to the Proposals, solicitation of the approval of different proposals, or the liquidation of one or more Funds.
Recommendation of the Board of Trustees. The Board believes that the terms and conditions of the New Bahl & Gaynor Sub-Advisory Agreement are fair to, and in the best interests of, SMIG and its shareholders. The Board believes that, upon shareholder approval of Proposal 3, Bahl & Gaynor will provide at least the same level of services that it currently provides under the Current Bahl & Gaynor Sub-Advisory Agreement. The Board was presented with information demonstrating that the New Bahl & Gaynor Sub-Advisory Agreement would enable the Fund’s shareholders to continue to obtain quality services at a cost that is fair and reasonable.
In considering the New Bahl & Gaynor Sub-Advisory Agreement, the Board took into consideration (i) the nature, extent, and quality of the services provided, and to be provided, by Bahl & Gaynor; (ii) the historical performance of the Fund; (iii) the cost of the services provided and the profits realized by Bahl & Gaynor or its affiliates from services rendered to the Fund as well as the estimated cost of the services to be provided by Bahl & Gaynor and the profits expected to be realized by Bahl & Gaynor from providing such services, including any other financial benefits enjoyed by Bahl & Gaynor or its affiliates; (iv) the extent to which any economies of scale realized by Bahl & Gaynor in connection with its services to the Fund are, or will be, shared with the Fund’s shareholders; and (v) other factors the Board deemed to be relevant.
The Board also considered that Bahl & Gaynor, along with other service providers of the Funds, had provided written and oral updates on the firm over the course of the year with respect to its role as investment adviser to the Fund, and the Board considered that information alongside the written materials presented at the Meeting in its consideration of whether the New Bahl & Gaynor Sub-Advisory Agreement should be approved. The Board then discussed the materials, as well as any other relevant information received by the Board at the Meeting and at prior meetings, and deliberated on the approval of the New Bahl & Gaynor Sub-Advisory Agreement in light of this information. In its deliberations, the Board did not identify any single piece of information discussed below that was all-important or controlling.
Nature, Extent, and Quality of Services Provided. The Trustees considered the scope of services provided under the New Bahl & Gaynor Sub-Advisory Agreement, noting that Bahl & Gaynor had provided and would continue to provide investment management services to SMIG. In considering the nature, extent, and quality of the services provided by Bahl & Gaynor, the Board considered the quality of Bahl & Gaynor’s compliance program and past reports from the Trust’s CCO regarding the CCO’s review of Bahl & Gaynor’s compliance program. The Board also considered its previous experience with Bahl & Gaynor providing investment management services to the Fund. The Board noted that it had received a copy of the Bahl & Gaynor registration form and financial statements, as well as Bahl & Gaynor’s response to a detailed series of questions that included, among other things, information about Bahl & Gaynor’s decision-making process, the background and experience of the firm’s key personnel, and the firm’s compliance policies, and marketing practices.
The Board noted the responsibilities that Bahl & Gaynor has as the Fund’s investment sub-adviser, including: responsibility for the general management of the day-to-day investment and reinvestment of the assets of the Fund; determining the daily basket of deposit securities and cash components; executing portfolio security trades for purchases and redemptions of the Fund’s shares conducted on a cash-in-lieu basis; oversight of general portfolio compliance with applicable securities laws, regulations, and investment restrictions; responsibility for quarterly reporting to the Board; and implementation of Board directives as they relate to the Fund. The Board also considered Bahl & Gaynor’s resources and capacity with respect to portfolio management, compliance, and operations given the number of funds and/or accounts for which it provides sub-advisory services. The Board also took into consideration the business, litigation, and regulatory risks to which Bahl & Gaynor is subject as investment sub-adviser to the Fund.
Historical Performance. The Trustees next reviewed the Fund’s performance, noting that Bahl & Gaynor’s portfolio managers actively manage the Fund’s investments. The Board considered the same performance information that it reviewed as part of its due diligence with respect to the Adviser’s performance, noting that the Fund commenced operations slightly less than one year before June 30, 2022, which was a relatively short period of time over which to evaluate the Fund’s performance and draw meaningful conclusions about its management.
Cost of Services Provided and Economies of Scale. The Board reviewed the sub-advisory fees paid by the Adviser to Bahl & Gaynor for its services to the Fund. The Board considered that the fees paid to Bahl & Gaynor are paid by the Adviser and noted that the fee reflected an arm’s-length negotiation between the Adviser and Bahl & Gaynor. The Board further determined that the fees reflected an appropriate allocation of the advisory fee paid to each firm given the work performed, and the responsibilities and obligations assumed, by each firm and noted that the fees were generally lower than or in line with those charged by Bahl & Gaynor in connection with other exchange-traded funds managed by Bahl & Gaynor. The Board also evaluated the compensation and benefits
received by Bahl & Gaynor from its relationship with the Fund, taking into account an analysis of Bahl & Gaynor’s profitability with respect to the Fund at various actual and projected Fund asset levels.
The Board expressed the view that it currently appeared that Bahl & Gaynor might realize economies of scale in managing the Fund as assets grow in size, noting that the Fund’s sub-advisory fee rate increases when Fund assets under management rise above specified levels. As a result, any benefits from the existing sub-advisory fee schedule would accrue to Bahl & Gaynor; whereas, if the sub-advisory fee schedule included breakpoints, any benefits from an increase in assets under management would accrue to the Adviser due to its unified fee. Consequently, the Board determined that it would monitor advisory and sub-advisory fees as the Fund grows to determine whether economies of scale were being effectively shared with the Fund and its shareholders.
Conclusion. No single factor was determinative of the Board’s decision to approve the New Bahl & Gaynor Sub-Advisory Agreement; rather, the Board based its determination on the total mix of information available to it. Based on a consideration of all the factors in their totality, the Board, including the Independent Trustees, determined that the New Bahl & Gaynor Sub-Advisory Agreement, including the compensation payable under the agreement, was fair and reasonable to the Fund. The Board, including the Independent Trustees, determined that the approval of the New Bahl & Gaynor Sub-Advisory Agreement was in the best interests of SMIG and its shareholders.
Expenses Related to Proposal 3. All expenses associated with Proposal 3 will be borne by the Adviser or its affiliates and not by SMIG.
THE BOARD RECOMMENDS THAT SHAREHOLDERS OF SMIG VOTE “FOR” PROPOSAL 3.
OTHER INFORMATION
Record Date/Shareholders Entitled to Vote.Each Fund is a separate series, or portfolio, of the Trust, a Delaware statutory trust and registered investment company under the 1940 Act. The record holders of outstanding shares of each Fund are entitled to vote one vote per share (and a fractional vote per fractional share) on all matters presented at the Special Meeting with respect to each Fund, including the Proposals.Proposal.
Shareholders of each Fund at the close of business on October 21, 2022,May 9, 2023, the Record Date, will be entitled to be present and vote at the Special Meeting. As of the close of business on the Record Date, the following shares of each Fund were issued and outstanding:
| Vident U.S. Bond Strategy ETF™ | | | | | 8,800,000 |
AAM S&P 500 High Dividend ValueVident U.S. Equity Strategy ETF™ | 11,300,000 |
| Vident International Equity Strategy ETF™ | 15,700,000 |
| U.S. Diversified Real Estate ETF | 2,375,000 |
AAM S&P Emerging Markets High Dividend Value ETF | 375,000 |
AAM S&P Developed Markets High Dividend Value ETF | 100,000 |
AAM Low Duration Preferred and Income Securities ETF | 7,600,000 |
AAM Transformers ETF | 200,000 |
AAM Bahl & Gaynor Small/Mid Cap Income Growth ETF | 5,800,0004,200,000 |
Voting Proxies. You should read the entire Proxy Statement before voting. If you have any questions regarding the Proxy Statement, please call toll-free 800-690-6903.866-839-1852. If you sign and return the accompanying proxy card, you may revoke it by giving written notice of such revocation to the Secretary of the Trust prior to the Special Meeting or by delivering a subsequently dated proxy card or by attending and voting at the Special Meeting in person. Proxies voted by telephone or internet may be revoked at any time before they are voted by proxy voting again through the website or toll-free number listed in the enclosed proxy card. Properly executed proxies will be voted, as you instruct, by the persons named in the accompanying proxy card. In the absence of such direction, however, the persons named in the accompanying proxy card intend to vote “FOR” eachthe Proposal and may vote at their discretion with respect to other matters not now known to the Board that may be presented at the Special Meeting. Attendance by a shareholder at the Special Meeting does not, in itself, revoke a proxy.
If sufficient votes are not received for eachthe Proposal by the date of the Special Meeting, the Special Meeting may be adjourned with respect to such Proposal, once or more, by motion of the chair of the Special Meeting or by the vote of the holders of a majority of a Fund’s shares present at the Special Meeting in person or by proxy to permit further solicitation of proxies. If there is a vote to adjourn, persons named as proxies will vote all proxies in favor of adjournment that voted in favor of eachthe Proposal and vote against adjournment all proxies that voted against eachthe Proposal.
Quorum Required. Each Fund must have a quorum of shares represented at the Special Meeting, in person or by proxy, to take action on any matter relating to such Fund. Under the Trust’s Agreement and Declaration of Trust, as amended, a quorum is constituted by the presence in person or by proxy of at least one-third of the outstanding shares of a Fund entitled to vote at the Special Meeting.
Abstentions and broker non-votes (i.e., proxies from brokers or nominees indicating that they have not received instructions from the beneficial owners on an item for which the brokers or nominees do not have discretionary power to vote) will be treated as present for determining whether a quorum is present with respect to a particular matter. However, abstentions and broker non-votes will have the effect of a vote AGAINST the ProposalsProposal and any other matter that requires the affirmative vote of a Fund’s outstanding shares for approval. Abstentions and broker non-votes will not be counted as voting on any other matter at the Special Meeting when the voting requirement is based on achieving a plurality or percentage of the “voting securities present.”
If a quorum is not present at the Special Meeting, or a quorum is present at the Special Meeting but sufficient votes to approve a Proposal areis not received, the chair of the Special Meeting or the holders of a majority of a Fund’s shares present at the Special Meeting, in person or by proxy, may adjourn the Special Meeting with respect to such Proposal to permit further solicitation of proxies.
Method and Cost of Proxy Solicitation. Proxies will be solicited by the Trust, the Adviser, and/or Broadridge FinancialMorrow Sodali Fund Solutions, Inc.,LLC, a professional proxy solicitor (the “Proxy Solicitor”), primarily by mail. The solicitation may also include telephone, facsimile, electronic or oral communications by certain officers or employees of the Trust or the Adviser, none of whom will be paid for these services, or by the Proxy Solicitor. The Adviser will pay the costs of the Special Meeting and the expenses incurred in connection with the solicitation of proxies, including any expenses associated with the services of the Proxy Solicitor. The Trust may also request broker-dealer firms, custodians, nominees and fiduciaries to forward proxy materials to the beneficial owners of the shares of the Funds held of record by such persons. The estimated cost of the Proxy Solicitor for their services soliciting proxies from brokers, banks and other nominee holders is approximately $5,000 per Fund. The Adviser may reimburse such broker-dealer firms, custodians, nominees, and fiduciaries for their reasonable expenses incurred in connection with such proxy solicitation, including reasonable expenses in communicating with persons for whom they hold shares of a Fund.
Meeting Venue.We intend to hold the Special Meeting in person at the offices of U.S. Bank Global Fund Services, 615 East Michigan Street, Milwaukee, Wisconsin 53202. However, we are sensitive to the public health and travel concerns our shareholders may have and recommendations that public health officials may issue in light of the evolving COVID-19 pandemic. As a result, we may impose additional procedures or limitations on Special Meeting attendees or may decide to hold the Special Meeting in a different location or solely by means of remote communication. We plan to announce any such updates on our proxy website www.proxyvote.com,www.videntam.com, and we encourage you to check this website prior to the Special Meeting if you plan to attend. We also encourage you to consider your options to vote by internet, telephone, or mail, as discussed in the enclosed proxy card, in advance of the Special Meeting in the event that, as of January 19,June 9, 2023, in-person attendance at the Special Meeting is either prohibited under a federal, state, or local order or contrary to the advice of public health care officials.
Distributor, Administrator and Transfer Agent. The Funds’ distributor and principal underwriter is QuasarALPS Distributors, LLC,Inc., located at 111 East Kilbourn Avenue,1290 Broadway, Suite 2200, Milwaukee, Wisconsin 53202.1000, Denver, Colorado 80203. U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services, located at 615 East Michigan Street, Milwaukee, Wisconsin 53202, serves as the Funds’ transfer agent and administrator.
Share Ownership.To the knowledge of the Trust’s management, as of the close of business on October 21, 2022,May 9, 2023, the officers and Trustees of the Trust, as a group, beneficially owned less than one percent of each Fund’s outstanding shares and less than one percent of the Trust’s outstanding shares. To the knowledge of the Trust’s management, as of the close of business on October 21, 2022,May 9, 2023, persons owning of record more than 5% of the outstanding shares of a Fund are as listed in the table below. The Trust believes that most of the shares referred to below were held by the persons indicated in accounts for their fiduciary, agency or custodial customers. Any shareholder listed below as owning 25% or more of the outstanding shares of a Fund may be presumed to “control” (as that term is defined in the 1940 Act) the applicable Fund. Shareholders controlling a Fund could have the ability to vote a majority of the shares of the applicable Fund on any matter requiring the approval of that Fund’s shareholders.
Vident U.S. Bond Strategy ETF™AAM S&P 500 High Dividend Value ETF
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Name and Address | % Ownership | Type of Ownership |
National Financial Services, LLC
200 Liberty Street
New York, NY 10281 | 25.77%97.83% | Record |
LPLRonald Blue Trust 1000 Health Park Drive, Suite 180 Brentwood, TN 37027 | 92.90%* | Beneficial |
*This figure is based on information reported on Form 13F as of March 31, 2023, the Trust believes Ronald Blue Trust owns a majority of the Fund’s shares as of Record Date.
Vident U.S. Equity Strategy ETF™
Name and Address | % Ownership | Type of Ownership |
National Financial
75 State Services, LLC 200 Liberty Street 22nd Floor
Boston, MA 02109 New York, NY 10281 | 15.98%96.86% | Record |
PershingRonald Blue Trust 1000 Health Park Drive, Suite 180 Brentwood, TN 37027 | 89.94%* | Beneficial |
*This figure is based on information reported on Form 13F as of March 31, 2023, the Trust believes Ronald Blue Trust owns a majority of the Fund’s shares as of Record Date.
Vident International Equity Strategy ETF™
Name and Address | % Ownership | Type of Ownership |
National Financial Services, LLC
One Pershing Plaza
Jersey City, NJ 07399 200 Liberty Street New York, NY 10281 | 13.07%94.30% | Record |
Ronald Blue Trust 1000 Health Park Drive, Suite 180 Brentwood, TN 37027 | 91.65%* | Beneficial |
*This figure is based on information reported on Form 13F as of March 31, 2023, the Trust believes Ronald Blue Trust owns a majority of the Fund’s shares as of Record Date.
U.S. Diversified Real Estate ETF
Name and Address | % Ownership | Type of Ownership |
National Financial Services, LLC 200 Liberty Street New York, NY 10281 | 85.01% | Record |
Ronald Blue Trust 1000 Health Park Drive, Suite 180 Brentwood, TN 37027 | 73.59%* | Beneficial |
Charles Schwab & Co., Inc.
211 Main Street
San Francisco, CA 94105-190594105 | 10.84%6.62% | Record |
Vanguard Brokerage Services |
P.O. Box 1110
Valley Forge, PA 19482-1110
7.43% | Record | Stifel Nicolaus & Co Inc
501 North Broadway
St Louis, MO 63102-2188 | 5.63% | Record |
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AAM S&P Emerging Markets High Dividend Value ETF*This figure is based on information reported on Form 13F as of March 31, 2023, the Trust believes Ronald Blue Trust owns a majority of the each Fund’s shares as of Record Date.
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Name and Address | % Ownership | Type of Ownership |
Goldman Sachs & Co., LLC
200 West Street
New York, NY 10282 | 23.63% | Record |
Pershing LLC
One Pershing Plaza
Jersey City, NJ 07399 | 21.28% | Record |
National Financial Services, LLC
200 Liberty Street
New York, NY 10281 | 10.23% | Record |
Charles Schwab & Co., Inc.
211 Main Street
San Francisco, CA 94105-1905 | 9.78% | Record |
TD Ameritrade, Inc.
200 South 108th Avenue
Omaha, NE 68103-2226 | 9.47% | Record |
J.P. Morgan Securities LLC
383 Madison Avenue
New York, NY 10179 | 5.55% | Record |
E*TRADE Securities LLC
Harborside 2
200 Hudson Street, Suite 501
Jersey City, NJ 07311 | 5.29% | Record |
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AAM S&P Developed Markets High Dividend Value ETF
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Name and Address | % Ownership | Type of Ownership |
Charles Schwab & Co., Inc.
211 Main Street
San Francisco, CA 94105-1905 | 23.80% | Record |
Goldman Sachs & Co., LLC
200 West Street
New York, NY 10282 | 17.52% | Record |
J.P. Morgan Securities LLC
383 Madison Avenue
New York, NY 10179 | 15.91% | Record |
Pershing LLC
One Pershing Plaza
Jersey City, NJ 07399 | 13.91% | Record |
National Financial Services, LLC
200 Liberty Street
New York, NY 10281 | 10.34% | Record |
Vanguard Brokerage Services
P.O. Box 1110
Valley Forge, PA 19482-1110 | 5.70% | Record |
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AAM Low Duration Preferred and Income Securities ETF
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Name and Address | % Ownership | Type of Ownership |
National Financial Services, LLC
200 Liberty Street
New York, NY 10281 | 20.80% | Record |
Morgan Stanley Smith Barney, LLC
Harborside Financial Center Plaza, 23rd Floor
Jersey City NJ 07311 | 14.81% | Record |
Pershing LLC
One Pershing Plaza
Jersey City, NJ 07399 | 14.56% | Record |
Charles Schwab & Co., Inc.
211 Main Street
San Francisco, CA 94105-1905 | 13.78% | Record |
Stifel Nicolaus & Co Inc
501 North Broadway
St Louis, MO 63102-2188 | 11.80% | Record |
LPL Financial
75 State Street, 22nd Floor
Boston, MA 02109 | 7.88% | Record |
Raymond James Financial, Inc.
880 Carillon Parkway
St. Petersburg, FL 33716 | 7.18% | Record |
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AAM Transformers ETF
| | | | | | | | |
Name and Address | % Ownership | Type of Ownership |
LPL Financial
75 State Street, 22nd Floor
Boston, MA 02109 | 63.67% | Record |
Goldman Sachs & Co., LLC
200 West Street
New York, NY 10282 | 32.50% | Record |
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AAM Bahl & Gaynor Small/Mid Cap Income Growth ETF
| | | | | | | | |
Name and Address | % Ownership | Type of Ownership |
Charles Schwab & Co., Inc.
211 Main Street
San Francisco, CA 94105-1905 | 40.65% | Record |
Fifth Third Bank
Fifth Third Center
38 Fountain Square Plaza
Cincinnati, OH 45263 | 15.88% | Record |
U.S. Bank
60 Livingston Avenue
Saint Paul, MN 55107 | 10.48% | Record |
RBC Capital Markets
200 Vesey Street, 9th Floor
New York, NY 10281 | 8.19% | Record |
National Financial Services, LLC
200 Liberty Street
New York, NY 10281 | 5.02% | Record |
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Reports to Shareholders. Copies of the Funds’ most recent annual and semi-annual reports may be requested without charge by writing to the Funds, c/o U.S. Bank Global Fund Services, 615 East Michigan Street, Milwaukee, Wisconsin 53202 or by calling toll-free 1-800-617-0004.
Other Matters to Come Before the Special Meeting. The Trust’s management does not know of any matters to be presented at the Special Meeting other than the ProposalsProposal described above. If other business should properly come before the Special Meeting, the proxy holders will vote thereon in accordance with their best judgment.
Shareholder Proposals. Proposal.The Agreement and Declaration of Trust, as amended, and the Amended and Restated By-laws of the Trust do not provide for annual meetings of shareholders, and the Trust does not currently intend to hold such meetings in the future. Shareholder proposalsproposal for inclusion in a proxy statement for any subsequent meeting of the Trust’s shareholders must be received by the Trust a reasonable period of time prior to any such meeting.
Householding. If possible, depending on shareholder registration and address information, and unless you have otherwise opted out, only one copy of this Proxy Statement will be sent to shareholders at the same address. However, each shareholder will receive separate proxy cards. If you would like to receive a separate copy of the Proxy Statement, please call 800-690-6903.866-839-1852. If you currently receive multiple copies of Proxy Statements or shareholder reports and would like to request to receive a single copy of documents in the future, please call 1-800-617-0004 or write to the Funds, c/o U.S. Bank Global Fund Services at 615 East Michigan Street, Milwaukee, Wisconsin 53202.
Important Notice Regarding the Availability of Proxy Materials for the Special Meeting.
This Proxy Statement is available on the internet at www.proxyvote.com.https://proxyvotinginfo.com/p/videntetfs2023. Use the control number on your proxy card to vote by internet or by telephone. You may request a copy by mail (AAM(Vident Funds, c/o U.S. Bank Global Fund Services, P.O. Box 701, Milwaukee, WI 53201-0701) or by telephone at 800-690-6903.866-839-1852. You may also call for information on how to obtain directions to be able to attend the Special Meeting and vote in person.
EXHIBIT A
FORM OF ETF SERIES SOLUTIONS
INVESTMENT ADVISORY AGREEMENT
with
Advisors Asset Management, Inc.
Vident Advisory, LLC
This INVESTMENT ADVISORY AGREEMENT (the “Agreement”) is made as of this [ ]6th day of [ ],April, 2023 by and between ETF SERIES SOLUTIONS (the “Trust”), a Delaware statutory trust, and Advisors Asset Management, Inc.,VIDENT ADVISORY, LLC, a Delaware corporationlimited liability company with its principal place of business at 18925 Base Camp Road,1125 Sanctuary Parkway, Suite 203, Monument, Colorado 80132515, Alpharetta, Georgia 30009 (the “Adviser”).
W I T N E S S E T HWITNESSETH
WHEREAS, the Trust is an open-end management investment company and is registered as such under the Investment Company Act of 1940, as amended (the “1940 Act”); and
WHEREAS, the Adviser is registered as an investment adviser under the Investment Advisers Act of 1940 (the “Advisers Act”) and is engaged in the business of supplying investment advice as an independent contractor; and
WHEREAS, the Adviser anticipates undergoing a change-in-control as a result of a change-in-control of its parent company (the “Transaction”); and
WHEREAS, the Board of Trustees (the “Board”) of the Trust has selecteddesires to appoint the Adviser to actserve as the investment adviser with respect to each series of the Trust on behalf of the series set forth on Schedule A to this Agreement (each a “Fund” and, collectively, the “Funds”), as such Schedule may be amended from time to time upon mutual agreement of;
WHEREAS, the parties, andAdviser is willing to provide certain relatedmanagement and investment advisory services as more fully set forth below, and to perform such services underthe Funds on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and benefitsagreements set forth herein,out in this Agreement, the Trust and the Adviser do hereby agree as follows:
1.The Adviser’s Services.| 1. | Investment Description; Appointment |
(a)a. Investment Description. Each Fund will invest and reinvest its assets in accordance with the investment objective(s), policies and limitations specified in the prospectus and statement of additional information (the “Prospectus”) relating to such Fund filed with the SEC as part of the Trust’s Registration Statement on Form N-1A, as it may be periodically amended or supplemented and in accordance with exemptive orders and no-action letters issued to the Trust by the SEC and its staff.
Discretionary Investment Management Servicesb. Appointment of Adviser. The Trust, on behalf of each Fund, hereby appoints the Adviser shallto act as the investment adviser of each Fund and to furnish, or arrange for its affiliates or Sub-Advisers to furnish, the investment advisory services described below, subject to the policies of, review by and overall control of the Board of Trustees of the Trust (the “Board” or the “Trustees”), for the period and on the terms and conditions set forth in this Agreement. The Adviser hereby accepts such appointment and agrees during such period, at its own expense, to render, or arrange for the rendering of, such services and to assume the obligations set out in this Agreement for the compensation provided for herein. The Adviser and its affiliates for all purposes herein shall be deemed to be independent contractors and, unless otherwise expressly provided or authorized, shall have no authority to act for or represent the Funds in any way or otherwise be deemed agents of the Funds.
a. Subject to the supervision, direction and approval of the Board, the Adviser will conduct, or cause to be conducted, a continual program of investment, evaluation, sale, and reinvestment of each Fund’s assets. Subject to paragraph (c) below, the Adviser is authorized, in its sole discretion, to: (i) obtain and evaluate pertinent economic, financial, and other information affecting each Fund and its investment assets as such information relates to securities or other financial instruments that are purchased for or considered for purchase by the Funds; (ii) make investment decisions for the Funds; (iii) place purchase and sale orders for portfolio transactions on behalf of the Funds and manage otherwise uninvested cash assets of the Funds; (iv) arrange for the pricing of Fund securities and other financial instruments; (v) execute account documentation, agreements, contracts and other documents as may be requested by brokers, dealers, counterparties and other persons in connection with the Adviser’s management of the assets of the Funds (in such respect, and only for this limited purpose, the Adviser will act as the Funds’ agent and attorney-in-fact); (vi) employ professional portfolio managers and analysts who provide research and other services to the Funds; and (vii) make decisions with respect to the Funds. In such capacity, the Adviser shall, subject to the supervision of the Board, regularly provideuse by the Funds withof borrowing for leverage or other investment research, advice and supervision and shall continuously furnish an investment program for the Funds,purposes as consistent with the respectiveFund’s investment objectivesobjective(s) and policies ofpolicies. The Adviser will in general take such action as is appropriate to effectively manage each Fund.Fund’s investment practices.
b. The Adviser shall determine,provide office space, facilities, equipment and necessary personnel and such other services as the Adviser, subject to review by the Board, from time to time what securities or other assets shall be purchased for the Funds, what securities or other assets shall be held or sold by the Funds and what portion of the Funds’ assets shall be held uninvested in cash, subject alwaysdetermine to the provisions of the Trust’s Agreement and Declaration of Trust, Amended and Restated By-Laws and its registration statement on Form N-1A (the “Registration Statement”) under the 1940 Act and under the Securities Act of 1933, as amended (the “1933 Act”), covering Fund shares, as filed with the U.S. Securities and Exchange Commission (the “Commission”), and to the investment objectives, policies and restrictions of the Funds, as from time to time in effect. To carry out such obligations, the Adviser shall exercise full discretion and act for the Funds in the same manner and with the same force and effect as the Funds themselves might or could do with respect to purchases, sales or other transactions, as well as with respect to all other such thingsbe necessary or incidental to the furtherance or conduct of such purchases, sales or other transactions. No reference in this Agreement to the Adviser having full discretionary authority over each Fund’s investments shall in any way limit the right of the Board, in its sole discretion, to establish or revise policies in connection with the management of a Fund’s assets or to otherwise exercise its right to control the overall management of a Fund.
(b) Selection of Sub-Adviser(s). The Adviser shall have the authority hereunder to select and retain sub-advisers, including an affiliated person (as defined under the 1940 Act) of the Adviser (each a “Sub-Adviser”), for each of the Funds referenced in Schedule Auseful to perform some or all of the services for which the Adviser is responsible pursuant toits obligations under this Agreement. The Adviser generally shall supervisemonitor each Fund’s compliance with its investment policies and restrictions as set forth in filings made by the activitiesTrust, with respect to such Fund, under the federal securities laws. The Adviser shall make reports to the Board of its performance of obligations hereunder and furnish advice and recommendations with respect to such other aspects of the sub-adviser(s),business and the retentionaffairs of a sub-adviser by the Advisereach Fund as it shall not relieve the Adviser of its responsibilities under this Agreement. Any such sub-adviser shalldetermine to be registered and in good standing with the Commission and capable of performing its sub- advisory duties pursuant to a sub-advisory agreement approved by the Trust’s Board of Trustees and, except as otherwise permitted by the 1940 Act or by rule or regulation, a vote of a majority of the outstanding voting securities of the applicable Fund.desirable.
c. The Adviser will compensatemaintain and preserve the sub-adviser for its servicesrecords specified in Section 17 of this Agreement and any other records related to the Funds.
(c) Compliance. The Adviser agrees to comply with the requirements ofeach Fund’s transactions as are required under any applicable federal securities law or regulation, including: the 1940 Act, the Advisers Act, the 1933 Act,CEA, the Securities Exchange Act of 1934, as amended (the “1934“Exchange Act”), the Commodity Exchange Act and the respective rules and regulations thereunder,Investment Advisers Act of 1940, as applicable, as well as with all other applicable federal and state laws, rules, regulations and case law that relate to the services and relationships described hereunder and to the conduct of its business as a registered investment adviser.amended (the “Advisers Act”).
d. The Adviser also agrees towill comply with the objectives, policies and restrictions set forth in the Registration Statement, as amended or supplemented,procedures of the Funds, and with any policies, guidelines, instructions and procedures approved by the Board and(“Board Procedures”) provided to the Adviser. In selecting each Fund’s portfolio securities and performing the Adviser’s obligations hereunder, the Adviser shall cause each Fund to comply with the diversification and source of income requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), for qualification as a regulated investment company if the Fund has elected to be treated as a regulated investment company under the Code. The Adviser shall maintain compliance procedures that it reasonably believes are adequate to ensure its compliance with the foregoing. No supervisory activity undertaken by the Board shall limit the Adviser’s full responsibility for any of the foregoing.
(d) Proxy Voting. The Board has the authority to determine how proxies with respect to securities that are held by the Funds shall be voted, and the Board has initially determined to delegate the authority and responsibility to vote proxies for each Fund’s securities to the Adviser. So long as proxy voting authority for a Fund has been delegated to the Adviser, the Adviser shall exercise its proxy voting responsibilities. The Adviser shall carry out such responsibility in accordance with any instructions that the Board shall provide from time to time, and at all times in a manner consistent with Rule 206(4)-6 under the Advisers Act and its fiduciary responsibilities to the Trust. The Adviser shall provide periodic reports and keep records relating to proxy voting as the Board may reasonably request or as may be necessary for the Funds to comply with the 1940 Act and other applicable law. Any such delegation of proxy voting responsibility to the Adviser may be revoked or modified by the Board at any time. The Trust acknowledges and agrees that the Adviser may delegate its responsibility to vote proxies for a Fund to the Fund’s Sub-Adviser(s). The Adviser may, to the extent consistent with its fiduciary duty towill notify the Trust and with Rule 206(4)-6 under the Advisers Act, employ a third-party firm that specializes in corporate governance research and advising on proxy voting to assist the Adviser, subject to the Adviser’s oversight, in exercising the Adviser’s proxy voting responsibilities. The Trust further acknowledges that, to the extent consistent with its fiduciary duty to the Trust and with Rule 206(4)-6 under the Advisers Act, the Adviser may vote proxies for securities held by the Trust differently than it votes proxies for the same securities held by otheras soon as reasonably practicable upon detection of the Adviser’s clients.
(e) Recordkeeping. The Adviser shall not be responsible for the provisionany material breach of administrative, bookkeeping or accounting services to the Funds, except as otherwise provided herein or as may be necessary for the Adviser to supply to the Trust or itssuch Board the information required to be supplied under this Agreement.
The Adviser shall maintain separate books and detailed records of all matters pertaining to Fund assets advised by the Adviser required by Rule 31a-1 under the 1940 Act (other than those records being maintained by any administrator, custodian or transfer agent appointed by the Funds) relating to its responsibilities provided hereunderProcedures with respect to the Funds, and shall preserve such records for the periods and in a manner prescribed therefore by Rule 31a-2 under the 1940 Act (the “Funds’ Books and Records”). The Funds’ Books and Records shall be available to the Board at any time upon request, shall be delivered to the Trust upon the termination of this Agreement and shall be available without delay during any day the Trust is open for business.Fund.
(f) e. Holdings Information and Pricing. The Adviser shall provide regular reports regarding Fund holdings, and shall, on its own initiative, furnish the Trust and its Board from time to time with whatever information the Adviser believes is appropriate for this purpose. The Adviser agrees to immediately notify the Trust if the Adviser reasonably believes that the value of any security held by a Fund may not reflect its fair value. The Adviser agrees to provide any pricing information of which the Adviser is aware to the Trust, its Board and/or any Fund pricing agent to assist in the determination of the fair value of any Fund holdings for which market quotations are not readily available or as otherwise required in accordance with the 1940 Act or the Trust’s valuation procedures for the purpose of calculating each Fund’s net asset value in accordance with procedures and methods established by the Board.
(g) Cooperation with Agents of the Trust. The Adviser agrees to cooperate with and provide reasonable assistance to the Trust, any Trust custodian or foreign sub-custodians, any Trust pricing agents and all other agents and representatives of the Trust, such information with respect to the Funds as they may reasonably request from time to time in the performance of their obligations, provide prompt responses to reasonable requests made by such persons and establish appropriate interfaces with each so as to promote the efficient exchange of information and compliance with applicable laws and regulations.
(h) Adviser Liability for Purchase and Sale Decisions. The Adviser shall not be liable for any loss sustained by reason of the purchase, sale or retention of any asset, whether or not such purchase, sale or retention shall have been based upon the investigation and research made by any other individual, firm or corporation, if such recommendation shall have been selected with due care and in good faith, except loss resulting from willful
misfeasance, bad faith, or gross negligence on the part of the Adviser in the performance of its obligations and duties, or by reason of its reckless disregard of its obligations and duties under this Agreement.
(i) Other Activities of the Adviser. The Trust acknowledges that the Adviser intends in the future to act as an investment adviser to other managed accounts and as investment adviser or sub investment adviser to one or more other investment companies that are not a series of the Trust. In addition, the Trust acknowledges that the persons employed by the Adviser to assist in the Adviser’s duties under this Agreement will not devote their full time to such efforts. It is also agreed that the Adviser may use any supplemental research obtained for the benefit of the Trust in providing investment advice to its other investment advisory accounts and for managing its own accounts.
2.Code of Ethics. The Adviser represents that it has adoptedmaintain a written code of ethics (the “Code of Ethics”) that it reasonably believes complies with the requirements of Rule 17j-1 under the 1940 Act (“Rule 17j-1”), a copy of which will be provided to the Trust, and will institute procedures reasonably designed to prevent any “Access Person” (as defined in Rule 17j-1) from violating its Code of Ethics. The Adviser will follow such Code of Ethics in performing its services under this Agreement. Further, the Adviser represents that it will maintain policies and procedures regarding the detection and prevention of the misuse of material, nonpublic information by the Adviser and its employees, a copy of which it will provide to the Trust. TheTrust upon any reasonable request.
3. Sub-Advisers. In carrying out its responsibilities hereunder, the Adviser shall ensure thatmay, in its Access Persons (as defined insole discretion to the extent permitted by applicable law, any exemptive orders issued by the SEC applicable to the Funds or any SEC or CFTC staff no-action or interpretive letter applicable to the Funds, employ, retain or otherwise avail itself of the services of other persons or entities (a “Sub-Adviser”) at the Adviser’s Codeown cost and expense, including without limitation, affiliates of Ethics) comply in all material respects with the Adviser’s Code of Ethics,Adviser, on such terms as in effect from time to time. Upon request, the Adviser shall providedetermine to be necessary, desirable or appropriate. Retention of one or more Sub-Advisers, or the Trustemployment or retention of other persons or entities to perform services, shall in no way reduce the responsibilities or obligations of the Adviser under this Agreement in connection with a (i) a copythe performance of the Adviser’s current Codeduties hereunder.
| 4. | Information and Reports |
a. The Adviser will keep the Trust informed of Ethics,developments relating to its duties as in effect from time to time, and (ii) certification that it has adopted procedures reasonably necessary to prevent Access Persons from engaging in any conduct prohibited by the Adviser’s Codeinvestment adviser of Ethics. Annually,which the Adviser shall furnish a written report, which complies withhas knowledge that would materially affect the requirements of Rule 17j-1, concerningFunds. In this regard, the Adviser’s Code of Ethics to the Trust. The Adviser shall respond to requests for information from the Trust as to violations of the Code of Ethics by Access Persons and the sanctions imposed by the Adviser. The Adviser shall promptly notify the Trust of any material violation of the Code of Ethics, whether or not such violation relates to a security held by any Fund.
3.Information and Reporting. The Adviser shallwill provide the Trust and its respective officers with such periodic reports concerning the obligations the Adviser has assumed under this Agreement as the Trust may from time to time reasonably request.
(a)Notification Additionally, upon the request of Breach / Compliance Reports. Thethe Board, the Adviser shall notifywill provide the Trust immediately upon detectionBoard, or cause any Sub-Adviser to provide the Board, with reports regarding the management of (i) any material failure to manage anythe Funds during the most recently completed quarter, including certifications that each Fund is in accordancecompliance with its respective investment objectives and policies or any applicable law; or (ii) any material breach of any of the Funds’ or the Adviser’s policies, guidelines or procedures. In addition, the Adviser shall provide a quarterly report regarding each Fund’s compliance with its investment objectives and policies, applicable law, including, but not limited topractices, the 1940 Act and applicable rules and regulations thereunder, and the requirements of Subchapter M of the Code, asif applicable, and other information in such form as may be mutually agreed upon by the Fund’s policies, guidelines or procedures as applicableAdviser and the Trust. The Adviser also will certify quarterly to the Adviser’s obligations under this Agreement. The Adviser agrees to correct any such failure promptlyTrust that it and to take any action thatits Advisory Persons have complied materially with the Board may reasonably request in connection with any such breach. Upon request,requirements of Rule 17j-1 during the previous quarter or, if not, explain what the Adviser shall also providehas done to seek to ensure such compliance in the officersfuture. Annually, the Adviser will furnish a written report, which complies with the requirements of Rule 17j-1 and Rule 38a-1 under the 1940 Act and Rule 206(4)-7 under the Advisers Act, concerning the Adviser’s Code of Ethics and compliance program, respectively, to the Trust. Upon written request of the Fund with respect to violations of the Code of Ethics directly affecting any Fund, the Adviser will permit representatives of the Trust with supporting certifications in connection with such certificationsto examine reports (or summaries of Fund financial statements and disclosure controls pursuantthe reports) required to be made by Rule 17j-1 (d)(1) relating to enforcement of the Sarbanes-Oxley Act.Code of Ethics.
b. The Adviser will promptly notify the Trust in the event (i) the Adviser is served or otherwise receives notice of any action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board, or body, involving the affairs of the Trust (excluding class action suits in which a Fund is a member of the plaintiff class by reason of the Fund’s ownership of shares in the defendant) or the compliance by the Adviser with the federal or state securities laws or (ii) an actual change in control of the Adviser resulting in an “assignment” (as defined in the 1940 Act) has occurred or is otherwise proposed to occur.
(b) Board and Filings Information. The Adviser will also provide the Trust with any information reasonably requested regarding its management of the Funds required for any meeting of the Board, or for any shareholder report, amended registration statement, proxy statement, or prospectus supplement to be filed by the Trust with the Commission.appropriate regulators. The Adviser will make its officers and employees availablepromptly inform the Trust if any information it has provided to meet with the BoardTrust to be included in a Fund’s Prospectus or Statement of Additional Information, as amended from time to time on due notice to review its investment management services(“SAI”), to the Funds in lightAdviser’s knowledge is (or will become) inaccurate or incomplete.
| 5. | Adviser’s Duties Regarding Fund Transactions |
a. Placement of current and prospective economic and market conditions and shall furnish to the Board such information as may reasonably be necessary in order for the Board to evaluate this Agreement or any proposed amendments thereto.
(c) Transaction InformationOrders. The Adviser shall furnishwill take, or cause to the Trust such information concerning portfolio transactions as may be taken, all actions that it considers necessary to enableimplement the Trust or its designated agent to perform such compliance testing oninvestment policies of the Funds, and, the Adviser’s services as the Trust may, in its sole discretion, determineparticular, to be appropriate. The provision of such information by the Adviser to the Trust or its designated agent in no way relieves the Adviser of its own responsibilities under this Agreement.
4.Brokerage.
(a) Principal Transactions. In connection with purchases or sales of securities for the account of a Fund, neither the Adviser nor any of its directors, officers or employees will act as a principal or agent or receive any commission except as permitted by the 1940 Act.
(b) Placement of Orders. The Adviser shall arrange for the placing ofplace all orders for the purchase and sale of securities for a Fund’s account with brokers or dealers selected by the Adviser. In the selection of such brokers or dealers and the placing of such orders, the Adviser is directed at all times to seek for each Fund the most favorable execution and net price available under the circumstances. It is also understood that it is desirable for the Funds that the Adviser have access to brokerage and research services provided by brokers who may execute brokerage transactions at a higher cost to the Funds than may result when allocating brokerage to other brokers, consistent with section 28(e) of the 1934 Act and any Commission staff interpretations thereof. Therefore, the Adviser is authorized to place orders for the purchase and sale of securities for a Fund with such brokers, subject to review by the Board from time to time with respect to the extent and continuation of this practice. It is understood that the services provided by such brokers may be useful to the Adviser in connection with its or its affiliates’ services to other clients.
(c) Aggregated Transactions. On occasions when the Adviser deems the purchase or sale of a security to be in the best interest of a Fund as well as other clients of the Adviser, the Adviser may, to the extent permitted by applicable law and regulations, aggregate the order for securities to be sold or purchased. In such event, the Adviser will allocate securities or futures contracts so purchased or sold, as well as the expenses incurred in the transaction, in the manner the Adviser reasonably considers to be equitable and consistent with its fiduciary obligations to the Fund and to such other clients under the circumstances.
(d) Affiliated Brokers. The Adviser or any of its affiliates may act as broker in connection with the purchase or sale of securities or other investments for a Fund, subject to: (i) the requirementFunds with brokers, dealers or other persons that the Adviser, in its sole discretion, selects. To that end, the Adviser is authorized as the Funds’ agent to give instructions to the Funds’ custodian as to deliveries of securities or other investments and payments of cash for the Funds’ account. In connection with the selection of brokers or dealers and the placement of purchase and sale orders, the Adviser is subject to the supervision of the Board and is directed at all times to seek to obtain best execution and price within the policy guidelines determined by the Board and set forthout in theeach Fund’s current prospectusProspectus or SAI, subject to provisions (b), (c) and SAI; (ii)(d) of this Section 5.
b. Selection of Brokers and Dealers. To the provisions of the 1940 Act; (iii) the provisions of the Advisers Act; (iv) the provisions of the 1934 Act; and (v) other provisions of applicable law. These brokerage services are not within the scope of the duties of the Adviser under this Agreement. Subject to the requirements of applicable law and any procedures adoptedextent permitted by the Board, the Adviserpolicy guidelines set out in each Fund’s current Prospectus or its affiliates may receive brokerage commissions, fees or other remuneration from a Fund for these services in addition to the Adviser’s fees for services under this Agreement.
5.Custody. Nothing in this Agreement shall permit the Adviser to take or receive physical possession of cash, securities or other investments of a Fund.
6.Allocation of Charges and Expenses. The Adviser will bear its own costs of providing services hereunder. The Adviser agrees to pay all expenses incurred by the Funds except for the fee paid to the Adviser pursuant to this Agreement, interest charges on any borrowings, dividends and other expenses on securities sold short, 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, and distribution fees and expenses paid by the Trust under any distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act (collectively, “Excluded Expenses”).
The Trust acknowledges and agrees that the Adviser may delegate its responsibility to pay some or all expenses incurred by the Funds, except for Excluded Expenses, to one or more third parties, including but not limited to, Sub-Advisers.
7.Representations, Warranties and Covenants.
(a) Properly Registered. The Adviser is registered as an investment adviser under the Advisers Act, and will remain so registered for the duration of this Agreement. The Adviser is not prohibited by the Advisers Act or the 1940 Act from performing the services contemplated by this Agreement, and to the best knowledge of the Adviser, there is no proceeding or investigation that is reasonably likely to result in the Adviser being prohibited from performing the services contemplated by this Agreement. The Adviser agrees to promptly notify the Trust of the occurrence of any event that would disqualify the Adviser from serving as an investment adviser to an investment company. The Adviser is in compliance in all material respects with all applicable federal and state law in connection with its investment management operations.
(b)ADV Disclosure. The Adviser has provided the Trust with a copy of its Form ADV as most recently filed with the Commission and will, promptly after filing any amendment to its Form ADV with the Commission, furnish a copy of such amendments to the Trust. The information contained in the Adviser’s Form ADV is accurate
and complete in all material respects and does not omit to state any material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.
(c)Fund Disclosure Documents. The Adviser has reviewed and will in the future review, the Registration Statement, and any amendments or supplements thereto, the annual or semi-annual reports to shareholders, other reports filed with the Commission and any marketing material of a Fund (collectively the “Disclosure Documents”) and represents and warrants that with respect to disclosure about the Adviser, the manner in which the Adviser manages the Fund or information relating directly or indirectly to the Adviser, such Disclosure Documents contain or will contain, as of the date thereof, no untrue statement of any material fact and does not omit any statement of material fact which was required to be stated therein or necessary to make the statements contained therein not misleading.
(d)Use of the Name “AAM.” The Adviser has the right to use the name “AAM” in connection with its services to the Trust and that, subject to the terms set forth in Section 8 of this Agreement, the Trust shall have the right to use the name “AAM”SAI, in connection with the Adviser’s managementselection of brokers and dealers to execute portfolio transactions, the Adviser is authorized to consider not only the available prices and rates of brokerage commissions, but also other relevant factors, which may include, without limitation: the execution capabilities of the Funds. Thebrokers and dealers; the research, custody, and other services provided by the brokers and dealers that the Adviser believes will enhance its general portfolio management capabilities; the size of the transaction; the difficulty of execution; the operational facilities of these brokers and dealers; the risk to a broker or dealer of positioning a block of securities; and the overall quality of brokerage and research services provided by the brokers and dealers. In connection with the foregoing, the Adviser is not aware of any threatened or existing actions, claims, litigation or proceedings that would adversely affect or prejudice the rights ofspecifically authorized to pay those brokers and dealers who provide brokerage and research services to the Adviser or the Trust to use the name “AAM.”
(e)Insurance. The Adviser maintains errorsa higher commission than that charged by other brokers and omissions insurance coverage in an appropriate amount and shall provide prior written notice to the Trust (i) of any material changes in its insurance policies or insurance coverage; or (ii)dealers if any material claims will be made on its insurance policies. Furthermore, the Adviser shall upon reasonable request provide the Trust with any information it may reasonably require concerningdetermines in good faith that the amount of or scope of such insurance.
(f)No Detrimental Agreement. The Adviser represents and warrants that it has no arrangement or understanding with any party, other than the Trust, that would influencecommission is reasonable in relation to the decisionvalue of the Adviserservices in terms of either the particular transaction or in terms of the Adviser’s overall responsibilities with respect to its selectionthe Funds and to any other client accounts or portfolios that the Adviser advises. The execution of securitiessuch transactions will not be considered to represent an unlawful breach of any duty created by this Agreement or otherwise.
c. Soft Dollar Arrangements. On an ongoing basis, but not less often than annually, the Adviser will identify and provide a written description to the Board of all “soft dollar” arrangements that the Adviser maintains with respect to the Funds or with brokers or dealers that execute transactions for the Funds, if any, and of all research and other services provided to the Adviser by a broker or dealer (whether prepared by such broker or dealer or by a third party), if any, as a result, in whole or in part, of the direction of Fund and that all selections shalltransactions to the broker or dealer.
d. Aggregated Transactions. On occasions when the Adviser deems the purchase or sale of a security or other financial instrument to be done in accordance with what is in the best interest of a Fund, as well as other clients, the Fund.
(g)Conflicts. The Adviser shall act honestly, in good faithis authorized, but not required, to aggregate purchase and in the best interests of the Trust including requiring any of its personnel with knowledge of Fund activitiessale orders for securities or other financial instruments held (or to place the interest ofbe held) by the Fund first, ahead of their own interests, inwith similar orders being made on the same day for other client accounts or portfolios that the Adviser manages. When an order is so aggregated, the Adviser may allocate the recommendations or transactions among all personal trading scenariosaccounts and portfolios for whom the recommendation is made or transaction is effected on a basis that may involve a conflict of interest with the Funds,Adviser reasonably considers equitable and consistent with its fiduciary duties under applicable law.
(h)Representations.obligations to the Fund and its other clients. The representationsAdviser and warrantiesthe Funds recognize that in some cases this Section 7 shall be deemed to be made onprocedure may adversely affect the date this Agreement is executed and at the time of deliverysize of the quarterly compliance report required by Section 3(a), whether or not specifically referenced in such report.position obtainable for a Fund.
8.6. The Name “AAM Compensation. .” The Adviser grants to the Trust a sublicense to use the name “AAM” (the “Name”) as part of the name of any Fund. The foregoing authorization by the Adviser to the Trust to use the Name as part of the name of any Fund is not exclusive of the right of the Adviser itself to use, or to authorize others to use, the Name; the Trust acknowledges and agrees that, as between the Trust and the Adviser, the Adviser has the right to use, or authorize others to use, the Name. The Trust shall (1) only use the Name in a manner consistent with uses approved by the Adviser; (2) use its best efforts to maintain the quality of the services offered using the Name; and (3) adhere to such other specific quality control standards as the Adviser may from time to time promulgate. At the request of the Adviser, the Trust will (a) submit to Adviser representative samples of any promotional materials using the Name; and (b) change the name of any Fund within three months of its receipt of the Adviser’s request, or such other shorter time period as may be required under the terms of a settlement agreement or court order, so as to eliminate all reference to the Name and will not thereafter transact any business using the Name in the name of any Fund; provided, however, that the Trust may continue to use beyond such date any supplies of prospectuses, marketing materials and similar documents that the Trust had on the date of such name change in quantities not exceeding those historically produced and used in connection with such Fund.
9.Adviser’s Compensation. The Funds shall pay to the Adviser, as compensation for the Adviser’s services hereunder, a fee, determined as described in Schedule A that is attached hereto and made a part hereof. Such fee shall be computed daily and paid not less than monthly in arrears by the Funds.
The method for determining net assets of a Fund for purposes hereof shall be the same as the method for determining net assets for purposes of establishing the offering and redemption prices of Fund shares as described in the Fund’s prospectus. In the event of termination of this Agreement, the fee provided in this Section shall be computed on the basis of the period ending on the last business day on which this Agreement is in effect subject to a pro rata adjustment based on the number of days elapsed in the current month as a percentage of the total number of days in such month.
Except as may otherwise be prohibited by law or regulation (including any then current CommissionSEC staff interpretations), the Adviser may, in its sole discretion and from time to time, waive a portion of its fee.
7. Allocation and Charges of Expenses. The Adviser will bear its own costs of providing services hereunder. The Adviser agrees to pay all expenses incurred by the Funds except for the fee paid to the Adviser pursuant to this Agreement, interest charges on any borrowings, dividends and other expenses on securities sold short, 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, and distribution fees and expenses paid by the Trust under any distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act (collectively, “Excluded Expenses”). The Trust acknowledges and agrees that the Adviser may delegate its responsibility to pay some or all expenses incurred by the Funds, except for Excluded Expenses, to one or more third parties, including but not limited to, Sub-Advisers.
10.8. Independent Contractor Services to Other Companies and Accounts. . InThe Trust understands that the Adviser and its affiliates now act, will continue to act and may act in the future as investment manager or adviser to fiduciary and other managed accounts, and as an investment manager or adviser to other investment companies or to commodity pools, including any offshore entities or private accounts. The Funds have no objection to the Adviser and its affiliates so acting. The Funds recognize that in some cases this procedure may adversely affect the size of the position obtainable for the Funds and understand that the persons employed by the Adviser to assist in the performance of itsthe Adviser’s duties hereunder, the Adviser isunder this Agreement may not devote their full time to such service, and shall be an independent contractor and, unless otherwise expressly provided herein or otherwise authorizedthat nothing contained in writing, shall have no authority to act for or represent the Trust or any Fund in any way or otherwisethis Agreement will be deemed to be an agentlimit or restrict the right of the TrustAdviser to engage in and devote time and attention to other businesses or any Fund. If any occasion should arise in which the Adviser gives any advice to its clients concerning the sharesrender services of a Fund, the Adviserwhatever kind or nature. This Agreement will act solely as investment counsel for such clients and not in any way on behalflimit or restrict the Adviser or any of the Fund.
11.Assignment. Except as permitted by the 1940 Act, the rules and regulations thereunder,its directors, officers, employees, or no-action, interpretiveagents from buying, selling or trading any securities, commodities or other guidance issued byinvestment instruments for its or their own account or for the Commissionaccount of others for whom it or its staff, this Agreement shall automatically terminate, without the payment of any penalty, in the event of its assignment (as defined in section 2(a)(4) of the 1940 Act);they may be acting, provided that such termination shallactivities will not relieveadversely affect or otherwise impair the Adviser of any liability incurred hereunder.
12.Entire Agreement and Amendments. This Agreement represents the entire agreement among the parties with regard to the investment management matters described herein and may not be added to or changed orally and may not be modified or rescinded except by a writing signedperformance by the parties hereto except as otherwise noted herein.
13.Duration and Termination. The effectiveness and termination dates of this Agreement shall be determined separately for each Fund as described below. This Agreement shall become effective with respect to a Fund upon the latest of (i) the effectiveness of the Transaction; (ii) the approval of this Agreement by the affirmative vote of a majority of the outstanding voting securities of the Fund, and (iii) the commencement of operations of the Fund. This Agreement shall remain in full force and effect continually thereafter, subject to renewal as provided in subparagraph (c) of this section and unless terminated automatically as set forth in Section 11 hereof or until terminated as follows:
(a)The Trust may cause this Agreement to terminate either (i) by vote of its Board or (ii) with respect to any Fund, upon the affirmative vote of a majority of the outstanding voting securities of the Fund; or
(b)The Adviser may at any time terminate this Agreement by not less than one-hundred twenty (120) days’ written notice delivered or mailed by registered mail, postage prepaid, to the Trust; or
(c)This Agreement shall automatically terminate two years from the date of its execution unless its renewal is specifically approved at least annually thereafter by (i) a majority vote of the Trustees, including a majority vote of such Trustees who are not interested persons of the Trust or the Adviser, at a meeting called for the purpose of voting on such approval; or (ii) the vote of a majority of the outstanding voting securities of each Fund; provided, however, that if the continuance of this Agreement is submitted to the shareholders of the Funds for their approval and such shareholders fail to approve such continuance of this Agreement as provided herein, the Adviser may continue to serve hereunder as to the Funds in a manner consistent with the 1940 Act and the rules and regulations thereunder.
Termination of this Agreement pursuant to this Section shall be without payment of any penalty.
In the event of termination of this Agreement for any reason, the Adviser shall, immediately upon notice of termination or on such later date as may be specified in such notice, cease all activity on behalf of the Fund and with respect to any of the assets, except as otherwise required by any fiduciary duties of the Adviser under applicable law. In addition, the Adviser shall deliver the Fund Books and Records to the Trust by such means and in accordance with such schedule as the Trust shall direct and shall otherwise cooperate, as reasonably directed by the Trust, in the transition of portfolio asset management to any successor of the Adviser.
14.Certain Definitions. For the purposes of this Agreement:
(a) “Affirmative vote of a majority of the outstanding voting securities of the Fund” shall have the meaning as set forth in the 1940 Act, subject, however, to such exemptions as may be granted by the Commission under the 1940 Act or any interpretations of the Commission staff.
(b) “Interested persons” and “Assignment” shall have their respective meanings as set forth in the 1940 Act, subject, however, to such exemptions as may be granted by the Commission under the 1940 Act or any interpretations of the Commission staff.
15.Liability of the Adviser. The Adviser shall indemnify and hold harmless the Trust and all affiliated persons thereof (within the meaning of Section 2(a)(3) of the 1940 Act) and all controlling persons (as described in Section 15 of the 1933 Act) (collectively, the “Adviser Indemnitees”) against any and all losses, claims, damages,
liabilities or litigation (including reasonable legal and other expenses) by reason of or arising out of the Adviser’s willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder or its reckless disregard of its obligations and duties under this Agreement.
16.Enforceability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms or provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction.
17.Limitation of Liability. The parties to this Agreement acknowledge and agree that all litigation arising hereunder, whether direct or indirect, and of any and every nature whatsoever shall be satisfied solely out of the assets of the affected Fund and that no Trustee, officer or holder of shares of beneficial interest of the Fund shall be personally liable for any of the foregoing liabilities. The Trust’s Certificate of Trust, as amended from time to time, is on file in the Office of the Secretary of State of the State of Delaware. Such Certificate of Trust and the Trust’s Agreement and Declaration of Trust describe in detail the respective responsibilities and limitations on liability of the Trustees, officers, and holders of shares of beneficial interest.
18.Jurisdiction. This Agreement shall be governed by and construed in accordance with the substantive laws of the state of Delaware and the Adviser consents to the jurisdiction of courts, both state or federal, in Delaware, with respect to any dispute under this Agreement.
19.Paragraph Headings. The headings of paragraphs contained in this Agreement are provided for convenience only, form no part of this Agreement and shall not affect its construction.
20.Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be signed on their behalf by their duly authorized officers as of the date first above written.
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ETF SERIES SOLUTIONS
on behalf of the series listed on Schedule A
| | ADVISORS ASSET MANAGEMENT, INC. |
| | |
By: | | By: |
Name: Isabella K. Zoller | | Name: |
Title: Secretary | | Title: |
| | |
SCHEDULE A
to the
INVESTMENT ADVISORY AGREEMENT
Dated [ ] [ ], 2023 between
ETF SERIES SOLUTIONS
and
ADVISORS ASSET MANAGEMENT, INC.
The Trust will pay to the Adviser as compensation for the Adviser’s services rendered, a fee, computed daily at an annual rate based on the average daily net assets of the respective Fund in accordance with the following fee schedule:
| | | | | |
Fund | Rate |
AAM S&P 500 High Dividend Value ETF | 0.29% |
AAM S&P Emerging Markets High Dividend Value ETF | 0.49% |
AAM S&P Developed Markets High Dividend Value ETF | 0.39% |
AAM Low Duration Preferred and Income Securities ETF | 0.45% |
AAM Bahl & Gaynor Small/Mid Cap Income Growth ETF | 0.60% |
AAM Transformers ETF | 0.49% |
Schedule A to Investment Advisory Agreement
Exhibit B
FORM OF INVESTMENT SUB-ADVISORY AGREEMENT
between
Advisors Asset Management, Inc. and Vident Investment Advisory, LLC and ETF Series Solutions
This INVESTMENT SUB-ADVISORY AGREEMENT (the “Agreement”) is made as of this [ ]th day of [ ], 2023 by and between Advisors Asset Management, Inc., a Delaware corporationwith its principal place of business at 18925 Base Camp Road, Suite 203, Monument, Colorado 80132 (the “Adviser”), ETF Series Solutions (the “Trust”), and Vident Investment Advisory, LLC, a Delaware limited liability company with its principal place of business located at 1125 Sanctuary Parkway, Suite 515, Alpharetta, Georgia 30009 (the “Sub-Adviser”).
W I T N E S S E T H
WHEREAS, the Trust is an open-end management investment company, registered as such under the Investment Company Act of 1940, as amended (the “1940 Act”); and
WHEREAS, the Adviser is registered as an investment adviser under the Investment Advisers Act of 1940 (the “Advisers Act”); and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement dated [ ], 2023, as amended to add additional series, with the Trust; and
WHEREAS, the Adviser anticipates undergoing a change-in-control as a result of a change-in-control of its parent company (the “Transaction”); and
WHEREAS, the Sub-Adviser is registered as an investment adviser under the Investment Advisers Act of 1940 (the “Advisers Act”) and is engaged in the business of supplying investment advice as an independent contractor; and
WHEREAS, the Investment Advisory Agreement contemplates that the Adviser may appoint a sub-adviser to perform some or all of the services for which the Adviser is responsible; and
WHEREAS, the Sub-Adviser is willing to furnish such services to the Adviser and each Fund listed in Schedule A to this Agreement (each a “Fund” and, collectively, the “Funds”), as such Schedule may be amended from time to time upon mutual agreement of the parties.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual covenants and benefits set forth herein, the parties do hereby agree as follows:
1.Duties of the Sub-Adviser. Subject to supervision and oversight of the Adviser and the Board of Trustees (the “Board”), and in accordance with the terms and conditions of the Agreement, the Sub-Adviser shall manage all of the securities and other assets of the Funds entrusted to it hereunder (the “Assets”), including the purchase, retention and disposition of the Assets, in accordance with the Declaration of Trust and By-Laws (as defined herein), the Funds’ respective investment objectives, guidelines, policies and restrictions as stated in each Fund’s registration statement on Form N-1A including its prospectus and statement of additional information, as currently in effect and as amended or supplemented from time to time (referred to collectively as the “Prospectus”), all applicable fiduciary duties it may have to the Fund and subject to the following:
(a) The Sub-Adviser shall, subject to subparagraph (b), determine from time to time what Assets will be purchased, retained or sold by the Funds, and what portion of the Assets will be invested or held uninvested in cash as is permissible.
(b) In the performance of its duties and obligations under this Agreement the Sub-Adviser shall act in conformity with the Prospectus, the written instructions and directions of the such activities are not otherwise prohibited by applicable law.
9. Affiliated Brokers. Adviser and of the Board, the terms and conditions of exemptive and no-action relief granted to the Trust as amended from time to time and provided to the Sub-Adviser and the Trust’s policies and procedures and Declaration of Trust and By-Laws (as defined herein) provided to the Sub-Adviser, all applicable fiduciary duties it may have to the Funds and will conform to and comply with the requirements of the 1940 Act, the Advisers Act, the Commodity Exchange Act, the Internal Revenue Code of 1986, as amended (the “Code”), and all other applicable federal and state laws, rules, regulations and case law that relate to the services and relationships described hereunder and to the conductor any of its businessaffiliates may act as a registered investment adviser, as each is amended from time to time. In selecting each Fund’s portfolio securities and performing the Sub-Adviser’s obligations hereunder, the Sub-Adviser shall cause each Fund to comply with the diversification and source of income requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), for qualification as a regulated investment company if the Fund has elected to be treated as a regulated investment company under the Code.
(c) The Sub-Adviser shall determine the Assets to be purchased or sold by the Funds as provided in subparagraph (a) and will place orders with or through such persons, brokers or dealers to carry out the policy with respect to brokerage set forth in aFund’s Prospectus or as the Board or the Adviser may direct in writing from time to time, in conformity with all federal securities laws. In executing Fund transactions and selecting brokers or dealers and the placing of such orders, the Sub-Adviser will at all times seek on behalf of each Fund the most favorable execution and net price available under the circumstances. In assessing the best overall terms available for any transaction, the Sub-Adviser shall consider all factors that it deems relevant, including the breadth of the market in the security, the price of the security, the financial condition and execution capability of the broker or dealer, and the reasonableness of the commission, if any, both for the specific transaction and on a continuing basis. In evaluating the best overall terms available, andagent in selecting the broker-dealer to execute a particular transaction, the Sub-Adviser may also consider the brokerage and research services provided (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)). Consistentconnection with any guidelines established by the Board and Section 28(e) of the Exchange Act, as amended, the Sub-Adviser is authorized to pay to a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for a Fund which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if, but only if, the Sub-Adviser determines in good faith that such commission was reasonable in relation to the value of the brokerage and research services provided by such broker or dealer viewed in terms of that particular transaction or in terms of the overall responsibilities of the Sub-Adviser to its discretionary clients, including the Fund. In addition, the Sub-Adviser is authorized to allocate purchase and sale orders for securities to brokers or dealers (including brokers and dealers that are affiliated with the Adviser, Sub-Adviser or the Trust’s principal underwriter) if the Sub-Adviser believes that the quality of the transaction and the commission are comparable to what they would be with other qualified firms. In no instance, however, will theAssets be purchased from or sold to the Adviser, Sub-Adviser, the Trust’s principal underwriter, or any affiliated person of the Trust, Adviser, the Sub-Adviser or the principal underwriter, acting as principal in the transaction, except to the extent permitted by the U.S. Securities and Exchange Commission (“SEC”) and the 1940 Act.
(d) The Sub-Adviser shall maintain all books and records with respect to transactions involving the Assets required by subparagraphs (b)(1), (5), (6), (7), (8), (9) and (10) and paragraph (f) of Rule 31a-1 under the 1940 Act. The Sub-Adviser shall keep the books and records relating to the Assets required to be maintained by the Sub-Adviser under this Agreement and shall timely furnish to the Adviser all information relating to the Sub-Adviser’s services under this Agreement needed by the Adviser to keep the other books and records of the Fund required by Rule 31a-1 under the 1940 Act, as requested by the Adviser. The Sub-Adviser agrees that all records that it maintains on behalf of a Fund are property of the Fund and the Sub-Adviser will surrender promptly to the Fund any of such records upon the Fund’s request; provided, however, that the Sub-Adviser may retain a copy of such records. In addition, for the duration of this Agreement, the Sub-Adviser shall preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any such records as are required to be maintained by it pursuant to this Agreement, and shall transfer said records to any successor sub-adviser upon the termination of this Agreement (or, if there is no successor sub-adviser, to the Adviser).
(e) The Sub-Adviser shall provide the Fund’s custodian on each business day with information relating to all transactions concerning the Assets and shall provide the Adviser with such
information upon request of the Adviser and shall otherwise cooperate with and provide reasonable assistance to the Adviser, the Trust’s administrator, the Trust’s custodian and foreign custodians, the Trust’s transfer agent and pricing agents and all other agents and representatives of the Trust.
(f) The Adviser acknowledges that the Sub-Adviser performs investment advisory services for various other clients in addition to the Funds and, to the extent it is consistent with applicable law and the Sub-Adviser’s fiduciary obligations, the Sub-Adviser may give advice and take action with respect to any of those other clients that may differ from the advice given or the timing or nature of action taken for a particular Fund.
(g) The Sub-Adviser shall promptly notify the Adviser of any financial condition that is reasonably and foreseeably likely to impair the Sub-Adviser’s ability to fulfill its commitment under this Agreement.
(h)The Sub-Adviser will have no obligation to advise, initiate or take any other action on behalf of the Adviser, the Funds or the Assets in any legal proceedings (including, without limitation, class actions and bankruptcies) relating to the securities comprising the Assets or any other matter. Sub-Adviser will not file proofs of claims relating to the securities comprising the Assets or any other matter and will not notify the Adviser, the Funds or the Trust’s custodian of class action settlements or bankruptcies relating to the Assets.
(i) In performance of its duties and obligations under this Agreement, the Sub-Adviser shall not consult with any other sub-adviser to the Funds or a sub-adviser to a portfolio that is under common control with the Funds concerning the Assets, except as permitted by the policies and procedures of the Funds. The Sub-Adviser shall not provide investment advice to any assets of the Funds other than the Assets which it sub-advises.
(j) On occasions when the Sub-Adviser deems the purchase or sale of a security to be in the best interest ofsecurities, commodities or other investments for the Funds, as well as other clients ofsubject to: (i) the Sub-Adviser,requirement that the Sub-Adviser may,Adviser seek to obtain best execution and price within the extent permittedpolicy guidelines determined by applicable law and regulations, aggregate the order for securities to be sold or purchased. In such event, the Sub-Adviser will allocate securities so purchased or sold, as well as the expenses incurred in the transaction, in a manner the Sub-Adviser reasonably considers to be equitable and consistent with its fiduciary obligations to the Fund and to such other clients under the circumstances.
(k) The Sub-Adviser shall maintain books and records with respect to the Funds’ securities transactions and keep the Board and the Adviser fully informed on an ongoing basis as agreed by the Adviser and the Sub-Adviser of all material facts concerning the Sub-Adviser and its key investment personnel providing services with respect to the Funds and the investment and the reinvestment of the Assets of the Funds. The Sub-Adviser shall furnish to the Adviser or the Board such reasonably requested regular, periodic and special reports, balance sheets or financial information, and such other information with regard to its affairs as the Adviser or Board may reasonably request and the Sub-Adviser will attend meetings with the Adviser and/or the Trustees, as reasonably requested, to discuss the foregoing. Upon the request of the Adviser, the Sub-Adviser shall also furnish to the Adviser any other information relating to the Assets that is required to be filed by the Adviser or the Trust with the SEC or sent to shareholders under the 1940 Act (including the rules adopted thereunder) or any exemptive or other relief that the Adviser or the Trust obtains from the SEC.
(l) The fair valuation of securitiesset out in a Fund may be required when the Adviser becomes aware of significant events that may affect the pricing of all or a portion of a Fund’s portfolio. The Sub-Adviser will provide assistance in determining the fair value of the Assets, as necessary and reasonably requested by the Adviser or its agent, and use reasonable efforts to arrange for the provision of valuation information or a price(s) from a party(ies) independent of the Sub-Adviser if market prices are not readily available, it being understood that the Sub-Adviser will not be responsible for determining the value of any such security. The Sub-Adviser agrees to immediately notify the Adviser if the Sub-Adviser reasonably believes that the value of any security held by a Fund may not reflect its fair value. The Sub-Adviser agrees to provide any pricing information of which the Sub-Adviser is aware to the Adviser and/or any Fund pricing agent to assist in the determination of the fair value of any Fund holdings for which market quotations are not readily available or as otherwise required in accordance with the 1940 Act or the Trust’s valuation procedures for the purpose of calculating each Fund’s net asset value in accordance with procedures and methods established bycurrent Prospectus or SAI; (ii) the Board.
2.Duties of the Adviser. The Adviser shall continue to have responsibility for all services to be provided to the Funds pursuant to the Advisory Agreement and shall oversee and review the Sub-Adviser’s performance of its duties under this Agreement; provided, however, that in connection with its management of the Assets, nothing herein shall be construed to relieve the Sub-Adviser of responsibility for compliance with the Prospectus, the Statement of Additional Information, the written instructions and directions of the Board, the requirementsprovisions of the 1940 Act, CEA and the Code, and all other applicable federal laws and regulations,Advisers Act, as each is amended from time to time.
3.Delivery of Documents. The Adviser will furnishapplicable; (iii) the Sub-Adviser with copies of eachprovisions of the following documents:
(a)The Trust’s AgreementExchange Act, including, but not limited to, Section 11(a) thereof; and Declaration(iv) other provisions of Trust (such Agreement and Declaration of Trust, as in effect onapplicable law. These brokerage services are not within the date of this Agreement and as amended from time to time, herein called the “Declaration of Trust”);
(b)Amended and Restated By-Lawsscope of the Trust (such By-Laws, as in effect on the date of this Agreement and as amended from time to time, are herein called the “By-Laws”);
(c)Prospectus and Statement of Additional Informationduties of the Funds, as amended from time to time;
(d)Resolutions of the Board approving the engagement of the Sub-Adviser as a sub-adviserAdviser under this Agreement. Subject to the Funds;
(e)Resolutions, policiesrequirements of applicable law and any procedures adopted by the Board, with respect to the Assets to the extent such resolutions, policies and procedures may affect the duties of the Sub-Adviser hereunder;
(f)A list of the Trust’s principal underwriter and each affiliated person of the Adviser the Trust or the principal underwriter; and
(g)The terms and conditions of exemptive and no-action relief granted to the Trust, as amended from time to time.
The Adviser shall promptly furnish the Sub-Adviser from time to time with copies of all amendments of or supplements to the foregoing. Until so provided, the Sub-Adviser may continue to rely on those documents previously provided. The Adviser shall not, and shall not permit any of the Funds to use the Sub-Adviser’s name or make representations regarding Sub-Adviser or its affiliates without prior written consent of Sub-Adviser, such consent not to be unreasonably withheld. Notwithstandingmay receive brokerage commissions, fees or other remuneration from the foregoing, the Sub-Adviser’s approval is not required when the information regarding the Sub-Adviser used by the Adviser or the Fund is limited to information disclosedFunds for these services in materials provided by the Sub-Adviseraddition to the Adviser in writing specificallyAdviser’s fees for use in the Fund’s registration statement, as amended or supplemented from time to time, or in Fund shareholder reports or proxy statements and the information is used (a) as required by applicable law, rule or regulation, in the Prospectus of the Fund or in Fund shareholder reports or proxy statements; or (b) as may be otherwise specifically approved in writing by the Sub-Adviser prior to use.
4.Compensation to the Sub-Adviser. For the services to be provided by the Sub-Adviser pursuant to this Agreement, the Adviser will pay the Sub-Adviser, and the Sub-Adviser agrees to accept as full compensation therefore, a sub-advisory fee for each Fund at the “Rate” specified in Schedule A which is attached hereto and made part of this Agreement. The fee will be calculated based on the daily net value of the Assetsunder the Sub-Adviser’s management (as calculated as described in the Fund’s registration statement), shall be computed daily, and will be paid to the Sub-Adviser not less than monthly in arrears. Except as may otherwise be prohibited by law or regulation (including any then current SEC staff interpretations), the Sub-Adviser may, in its sole discretion and from time to time, waive a portion of its fee. After the end of each month, the Adviser will pay the Sub-Adviser an amount equal to the greater of the annual “Minimum Fee” specified in Schedule A with respect to each Fund, prorated for the number of days in the month as a portion of the calendar year, or the variable fee specified in Schedule A with respect to each Fund. Such Minimum Fee will be prorated for periods less than a full calendar month based on the number of days such Fund was in existence with the Sub-Adviser acting as sub-adviser during such calendar month except as provided in the following paragraph.
In the event of termination of this Agreement, the fee provided in this Section shall be computed on the basis of the period ending on the last business day on which this Agreement is in effect; provided, however that, if this Agreement is terminated with respect to a Fund within twelve (12) months of its inception under this Agreement, an amount shall be paid by the Adviser to Sub-Adviser equal to the Minimum Fee specified in Schedule A (without prorating) minus any sub-advisory fees (including any Minimum Fee amounts related to a prior calendar year end, if any) already paid during such period.
5.Expenses. The Sub-Adviser will furnish and be responsible for all expenses incurred by it in connection with its activities under this Agreement other than the cost of securities and other assets (including brokerage commissions, if any) purchased for the fund, including but not limited to all necessary facilities and personnel, including personnel compensation, expenses and fees required for the Sub-Adviser to perform its duties under this Agreement; administrative facilities, including operations and bookkeeping, and all equipment necessary for the efficient conduct of the Sub-Adviser’s duties under this Agreement. The Sub-Adviser may enter into an agreement with the Funds to limit the operating expenses of the Fund.
6.Indemnification. The Sub-Adviser shall indemnify and hold harmless the Adviser, the Trust, all affiliated persons thereof (within the meaning of Section 2(a)(3) of the Investment Company Act) and all controlling persons (as described in Section 15 of the Securities Act of 1933, as amended) from and against any and all claims, losses, liabilities or damages (including reasonable attorney’s fees and other related expenses) however arising from or in connection with the performance of the Sub-Adviser’s obligations under this Agreement to the extent resulting from or relating to Sub-Adviser’s own willful misfeasance, fraud, bad faith or gross negligence, or to the reckless disregard of its duties under this Agreement.
The Adviser shall indemnify and hold harmless the Sub-Adviser and all affiliated persons thereof from and against any and all claims, losses, liabilities or damages (including reasonable attorney’s fees and other related expenses) however arising from or in connection with the performance of the Sub-Adviser’s obligations under this Agreement to the extent resulting from or relating to Sub-Adviser’s own willful misfeasance, fraud, bad faith or gross negligence, or to the reckless disregard of its duties under this Agreement; provided, however, that the Adviser’s obligation under this Section 6 shall be reduced to the extent that the claim against, or the loss, liability or damage experienced by the Sub-Adviser, is caused by or is otherwise directly related to the Sub-Adviser’s own willful misfeasance, fraud, bad faith or gross negligence, or to the reckless disregard of its duties under this Agreement.
The provisions of this Section shall survive the termination of this Agreement.
7.Representations and Warranties of Sub-Adviser. The Sub-Adviser represents and warrants to the Adviser and the Trust as follows:| 10. | Custody. Nothing in this Agreement shall permit the Adviser to take or receive physical possession of cash, securities or other investments of a Fund. |
(a)The Sub-Adviser is registered with the U.S. Securities and Exchange Commission as an investment adviser under the Advisers Act and will continue to be so registered so long as this Agreement remains in effect;
(b)The Sub-Adviser will immediately notify the Adviser of the occurrence of any event that would substantially impair the Sub-Adviser’s ability to fulfill its commitment under this Agreement or disqualify the Sub-Adviser from serving as an investment adviser of an investment company pursuant to Section 9(a) of the 1940 Act. The Sub-Adviser will promptly notify the Adviser and the Trust in the event (i) the Sub-Adviser, a member of its executive management, or portfolio manager| 11. | Term of Agreement; Termination of Agreement; Amendment of Agreement |
for the Assets is served or otherwise receives notice of any action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, self-regulatory organization, public board, or body, involving the affairs of the Trust (excluding class action suits in which a Fund is a member of the plaintiff class by reason of the Fund’s ownership of shares in the defendant) or the compliance by the Sub-Adviser with the federal or state securities laws or (ii) an actual change in control of the Sub-Adviser resulting in an “assignment” (as defined in the 1940 Act) has occurred or is otherwise proposed to occur. The Sub-Adviser will also notify the Adviser immediately upon detection of (i) any material failure to manage any Fund in accordance with its investment objectives and policies or any applicable law; or (ii) any material breach of any of the Funds’, the Adviser’s or the Sub-Adviser’s policies, guidelines or procedures. In addition, the Sub-Adviser shall provide a quarterly report regarding each Fund’s compliance with its investment objectives and policies, applicable law, including, but not limited to the 1940 Act and Subchapter M of the Code, as applicable, and the Fund’s policies, guidelines or procedures as applicable to the Sub-Adviser’s obligations under this Agreement. The Sub-Adviser agrees to correct any such failure promptly and to take any action that the Adviser may reasonably request in connection with any such breach. Upon request, the Sub-Adviser shall also provide Adviser with supporting certifications in connection with such certifications of Fund financial statements and disclosure controls pursuant to the Sarbanes-Oxley Act;
(c)The Sub-Adviser will notify the Adviser immediately upon detection of (a) any failure to manage the Fund(s) in accordance with the Fund(s)’ stated investment objectives, guidelines and policies or any applicable law or regulation; or (b) any breach of any of the Fund(s)’ or the Sub-Adviser’s policies, guidelines or procedures relating to the Funds.
(d)The Sub-Adviser is fully authorized under all applicable law and regulation to enter into this Agreement and serve as Sub-Adviser to the Funds and to perform the services described under this Agreement;
(e)The Sub-Adviser is a limited liability company duly organized and validly existing under the laws of the state of Delaware with the power to own and possess its assets and carry on its business as it is now being conducted;
(f)The execution, delivery and performance by the Sub-Adviser of this Agreement are within the Sub-Adviser’s powers and have been duly authorized by all necessary action on the part of its corporate members or board, and no action by or in respect of, or filing with, any governmental body, agency or official is required on the part of the Sub-Adviser for the execution, delivery and performance by the Sub-Adviser of this Agreement, and the execution, delivery and performance by the Sub-Adviser of this Agreement do not contravene or constitute a default under (i) any provision of applicable law, rule or regulation, (ii) the Sub-Adviser’s governing instruments, or (iii) any agreement, judgment, injunction, order, decree or other instrument binding upon the Sub-Adviser;
(g)This Agreement is a valid and binding agreement of the Sub-Adviser;
(h)The Form ADV of the Sub-Adviser previously provided to the Adviser is a true and complete copy of the form filed with the SEC and the information contained therein is accurate, current and complete in all material respects as of its filing date, and does not omit to state any material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading;
(i)The Sub-Adviser shall not divert any Fund’s portfolio securities transactions to a broker or dealer in consideration of such broker or dealer’s promotion or sales of shares of the Fund, any other series of the Trust, or any other registered investment company.
(j)The Sub-Adviser agrees to maintain an appropriate level of errors and omissions or professional liability insurance coverage.
8.Duration and Termination. The effectiveness and termination dates of this Agreement shall be determined separately for each Fund as described below.
(a)DurationTerm. This Agreement shall become effective with respect to a Fund upon the latest of (i) the approval by a vote of a majority of those Trustees of the Trust who are not parties to this Agreement or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval; (ii) the approval of a majority of the Fund’s outstanding voting securities, if required by the 1940 Act; and (iii) the commencement of the Sub-Adviser’sAdviser’s management of the Fund.
This With respect to a Fund, this Agreement shall continue in effect for a period of two years from the effective date described in this sub-paragraph, subject thereafter to being continued in force and effect from year to year if specifically approved each year by the Board or by the vote of a majority of the Fund’s outstanding voting securities. In addition to the foregoing, each renewal of this Agreement must be approved by the vote of a majority of the Board who are not parties to this Agreement or interested persons (as defined by the 1940 Act) of any such party, cast in person at a meeting called for the purpose of voting on such approval. Prior to voting on the renewal of this Agreement, the Board may request and evaluate, and the Sub-AdviserAdviser shall furnish, such information as may reasonably be necessary to enable the Board to evaluate the terms of this Agreement.
(b)b. Termination. Notwithstanding whatever may be provided herein to the contrary, thisThis Agreement may be terminated, at any timewithout penalty, with respect to aany Fund without payment of any penalty:
(i)By vote of a majority of by the Board or by vote of holders of a majority of the outstanding voting securitiesshares of the Funds, or by the Adviser, in each case,Fund upon sixty (60) days’ written notice to the Sub-Adviser;
Adviser, and (ii)By by the Adviser upon breach by the Sub-Adviser of any representation or warranty contained in Section 7 and Section 9 hereof, which shall not have been cured within twenty (20) days of the Sub-Adviser’s receipt of written notice of such breach;
(iii)By the Adviser immediately upon written notice to the Sub-Adviser if the Sub-Adviser becomes unable to discharge its duties and obligations under this Agreement; or
(iv)By the Sub-Adviser upon ninety (90)sixty (60) days’ written notice to the Adviser andTrust in respect of the Board.
Fund. This Agreement shallalso will terminate automatically and immediately in the event of its assignment, or inassignment.
c. Amendment. This Agreement may be amended by the eventparties only if the amendment is specifically approved by: (i) a majority of a terminationthose Trustees of the AdvisoryTrust who are not parties to this Agreement withor “interested persons” of any party cast in person at a meeting called for the Trust upon notice topurpose of voting on the Sub-Adviser. As used in this Section 8,Agreement’s approval; and (ii) if required by applicable law, the terms “assignment” and “votevote of a majority of the outstanding voting securities” shallshares of the Fund.
| 12. | Representations and Covenants of the Trust. The Trust represents and covenants to the Adviser as follows: |
a. The Trust is a trust that is validly existing and in good standing under the laws of the State of Delaware. Each Fund is a duly established, separate series of the Trust. The Trust is duly authorized to transact business in the State of Delaware and is qualified to do business in all jurisdictions in which it is required to be so qualified, except jurisdictions in which the failure to so qualify would not have a material adverse effect on the respective meanings set forth inTrust or any Fund. The Trust is registered as an open-end management investment company under the 1940 Act, and the rules and regulations thereunder, subject to such exceptions as may be granted byits registration with the SEC as an investment company under the 1940 Act.Act is in full force and effect, and each Fund’s shares are (or will be prior to commencing operations with respect to any Additional Funds) registered under the Securities Act of 1933, as amended, and under any applicable state securities laws.
9.b. Regulatory Compliance Program The execution, delivery and performance by the Trust, on behalf of the Sub-Adviser. The Sub-Adviser hereby representsFunds, of this Agreement are within the Trust’s powers and warrants that:
(a)in accordance with Rule 206(4)-7 underhave been duly authorized by all necessary actions of the Advisers Act,Board, and the Sub-Adviser has adoptedexecution, delivery and implemented and will maintain written policies and procedures reasonably designed to prevent violationperformance of this Agreement by the Sub-Adviser and its supervised persons (as such termparties to this Agreement do not contravene or constitute a default under (i) any provision of applicable law, rule or regulation, (ii) the Trust’s governing instruments, or (iii) any agreement, judgment, injunction, order, decree or other instruments binding upon the Trust or any Fund.
| 13. | Representations and Covenants of the Adviser. The Adviser represents and covenants to the Trust as follows: |
| a. | It is duly organized and validly existing under the laws of the state of its organization or incorporation with the power to own and possess its assets and carry on its business as this business is now being conducted. |
b. Each Fund is an “eligible contract participant” as defined in the Advisers Act)Section 1a(18) of the AdvisersU.S. Commodity Exchange Act (the “CEA”) and the rules the SEC has adopted under the Advisers Act;U.S. Commodity Futures Trading Commission (“CFTC”) Rule 1.3(m) thereunder and
(b)the Sub-Adviser has adopted and implemented and will maintain written policies and procedures that are reasonably designed to prevent violation of the “federal securities laws” (as such term is a “qualified eligible person” as defined in Rule 38a-14.7 of the CFTC. The Adviser consents to each Fund being treated as an exempt account under Rule 4.7 of the 1940 Act)CFTC.
| c. | The Adviser is registered with the National Futures Association as a commodity pool operator or commodity trading advisor or is not required to be registered. |
d. The execution, delivery and performance by the FundsAdviser of this Agreement are within the Adviser’s powers and have been duly authorized by all necessary action on the part of its board of directors, and no action by or in respect of, or filing with, any governmental body, agency or official is required on the part of the Adviser for the execution, delivery and performance of this Agreement by the parties to this Agreement, and the Sub-Adviser (the policiesexecution, delivery and procedures referredperformance of this Agreement by the parties to in this Agreement does not contravene or constitute a default under (i) any provision of applicable law, rule or regulation, (ii) the Adviser’s governing instruments, or (iii) any agreement, judgment, injunction, order, decree or other instruments binding upon the Adviser.
| e. | It is not prohibited by the 1940 Act or the Advisers Act from performing the services contemplated by this Agreement. |
f. Section 9(b), along It will maintain registration with the policies and procedures referred to in Section 9(a), are referred to hereinSEC as the Sub-Adviser’s “Compliance Program”).
(c)it has adopted a written code of ethics that complies with the requirements of Rule 204A-1an investment adviser under the Advisers Act and Rule 17j-1 underwill promptly notify the Trust of the occurrence of any event that would disqualify it from serving as an investment adviser to an investment company pursuant to Section 9(a) of the 1940 Act, which itAct.
| g. | It has provided the Trust with a copy of its Form ADV and will, promptly after making any amendment to its Form ADV, furnish a copy of such amendment to the Trust. |
h. It will providecarry out its responsibilities under this Agreement subject to the Adviser(i) federal and the Trust. The Sub-Adviser shall ensure thatstate law, including securities laws, governing its Access Persons (as definedprovision of advisory services under this Agreement; (ii) each Fund’s investment objective, policies, and restrictions, as set out in the Adviser’s Code of Ethics) comply in all material respects with the Sub-Adviser’s Code of Ethics,Prospectus and SAI, as in effectamended from time to time. Upon request,time; (iii) the Adviser shall provideapplicable exemptive orders or no-action letters issued by the Adviser andSEC or the CFTC or their respective staff governing the Funds, as such orders or letters may be amended from time to time; (iv) the provisions of the governing documents of the Trust, with a (i) a copy ofas such documents are amended from time to time; and (v) any policies or directives as the Sub-Adviser’s current Code of Ethics, as in effectBoard may from time to time establish or issue and (ii) certification that it has adopted procedures reasonably necessary to prevent Access Persons from engaging in any conduct prohibited by the Sub-Adviser’s Code of Ethics. Annually, the Sub-Adviser shall furnish a written report, which complies with the requirements of Rule 204A-1 and Rule 17j-1, concerning the Sub-Adviser’s Code of Ethicscommunicate to the Adviser and the Trust.in writing. The Sub-Adviser shall respond to requests for information from the Adviser and Trust, as to violationson behalf of the Code of Ethics by Access Persons and the sanctions imposed by the Sub-Adviser. The Sub-Adviser shallFunds, will promptly notify the Adviser in writing of changes to (ii), (iii), (iv) or (v) above.
i. It will treat confidentially and the Trust of any material violationas proprietary information of the Code of Ethics, whether or not such violation relates to a security held by any Fund.
10.Confidentiality. Subject to the duty of the Adviser or Sub-Adviser to comply with applicable lawFunds all records and regulation, including any demand or request of any regulatory, governmental or tax authority having jurisdiction, the parties hereto shall treat as confidential all non-publicother information
pertaining relative to the Funds, and the actions of the Sub-AdviserFunds’ prior, current or potential shareholders, and the Funds in respect thereof. It is understood thatwill not use such records and information for any information or recommendation supplied by the Sub-Adviser in connection with thepurpose other than performance of its obligationsresponsibilities and duties hereunder, isexcept after prior notification to and approval in writing by each Fund, which approval shall not be regarded as confidentialunreasonably withheld and for use only by the Adviser, the Funds, the Board, or such persons asmay not be withheld where the Adviser may designate in connection withbe exposed to civil or criminal contempt proceedings for failure to comply, when requested to divulge such information by duly constituted authorities, or when so requested by the Funds.
j. It is also understood thatnot the subject of any information suppliedproceeding, investigation or inquiry brought by the SEC, CFTC, Financial Industry Regulatory Authority (“FINRA”) (or any other self-regulatory organization) or any other federal or state regulator with respect to the Sub-Adviser in connection withtypes of services for which it is being appointed herein or which could have a material impact on its ability to fully perform any of the performance of its obligations hereunder isservices to be regarded as confidentialrendered hereunder.
k. It maintains errors and for use only byomissions insurance coverage in an appropriate amount and shall provide prior written notice to the Sub-Adviser,Trust (i) of any material changes in its affiliates and agents in connectioninsurance policies or insurance coverage; or (ii) if any material claims will be made on its insurance policies with its obligationrespect to provide investment advice and otherproviding advisory services to the FundsFunds. Furthermore, the Adviser shall upon reasonable request provide the Trust with information it may reasonably require concerning the amount of or scope of such insurance.
| 14. | Indemnification and Limitation of Liability |
a. The Adviser shall indemnify and hold harmless the Trust and all affiliated persons (within the meaning of Section 2(a)(3) of the 1940 Act) and all controlling persons (as described in Section 15 of the 1933 Act) thereof (collectively, the “Trust Indemnitees”) against any and all losses, claims, damages, liabilities or litigation to assistthe extent that a Trust Indemnitee incurs actual losses, damages, or enable the effective managementliabilities (including reasonable legal and other expenses) by reason of or arising out of the Adviser’s and the Funds’ overall relationship with the Sub-Adviser and its affiliates. The parties acknowledge and agree that all nonpublic personal information with regard to shareholders in the Funds shall be deemed proprietary and confidential information of the Adviser, and that the Sub-Adviser shall use that information solelywillful misfeasance, bad faith, or gross negligence in the performance of its duties hereunder or its reckless disregard of its obligations and duties under this Agreement. The Adviser shall have no responsibility or liability for the accuracy or completeness of sections of the Trust’s registration statement under the 1940 Act or the 1933 Act that directly relate to Items 11-13, 17-18, 22-30, and 32-35 of Form N-1A, except for information provided by the Adviser for inclusion therein.
b. The Trust agrees to indemnify and hold harmless the Adviser and all affiliated persons (within the meaning of Section 2(a)(3) of the 1940 Act) and all controlling persons (as described in Section 15 of the 1933 Act) thereof (collectively, the “Adviser Indemnitees”) against any and all losses, claims, damages, liabilities or litigation to the extent that an Adviser Indemnitee incurs actual losses, damages, or liabilities (including reasonable legal and other expenses) by reason of or arising out of the Trust’s willful misfeasance, bad faith, or gross negligence in the performance of its duties hereunder or its reckless disregard of its obligations and duties under this Agreement, andprovided that any such indemnification by the Trust shall take reasonable stepsbe no greater than that permitted by the Trust’s Declaration of Trust or other organizational documents.
c. Neither the Adviser nor its directors, officers, employees, agents or controlling persons or assigns shall be liable for any error of judgment or mistake of law or for any loss suffered by the Trust, any Fund or its shareholders in connection with the matters to safeguardwhich this Agreement relates; provided, however, that no provision of this Agreement shall be deemed to protect the confidentiality of that information. Further,Adviser against any liability to the Sub-Adviser shall maintain and enforce adequate security and oversight procedures with respectTrust, any Fund or its shareholders to all materials, records, documents and data relating to anywhich it might otherwise be subject directly arising from or based upon the Adviser’s own willful misfeasance, bad faith or gross negligence in the performance of its responsibilities pursuantduties or the reckless disregard of its obligations and duties under this Agreement.
d. Notwithstanding anything to the contrary contained herein, no party to this Agreement nor its affiliates or its affiliated persons shall be responsible or liable for its failure to perform under this Agreement or for any losses to a Fund’s assets resulting from any event beyond the reasonable control of such party or its agents, including, all meansbut not limited to, nationalization, expropriation, devaluation, seizure or similar action by any governmental authority, de facto or de jure; or enactment, promulgation, imposition or enforcement by any such governmental authority of currency restrictions, exchange controls, levies or other charges affecting a Fund’s assets; or the breakdown, failure or malfunction of any utilities or telecommunications systems; or any order or regulation of any banking or securities industry including changes in market rules and market conditions affecting the execution or settlement of transactions; or acts or war, terrorism, insurrection or revolution; or acts of God, or any other similar event. In no event, shall any party be responsible for incidental, consequential or punitive damages hereunder.
| e. | The provisions of this Section shall survive the termination of this Agreement. |
15. No Liability for Other Funds. This Agreement is made by the Trust, on behalf of its Funds, pursuant to authority granted by the Trustees, and the obligations created hereby are not binding on any of the Trustees or shareholders of the Funds individually, but bind only the property of that Fund and no other Funds of the Trust.
| 16. | Cooperation with Regulatory Authorities or Other Actions. The parties to this Agreement each agree to cooperate in a reasonable manner with each other in the event that any of them should become involved in a legal, administrative, judicial or regulatory action, claim, or suit as a result of performing its obligations under this Agreement.
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a. Maintenance of Records. The Adviser hereby undertakes and agrees to maintain for the effecting of investment transactions.
11.Reporting of Compliance Matters.
(a)The Sub-Adviser shall promptly provide toTrust, in the Trust’s Chief Compliance Officer (“CCO”)form and for the following:
(i)a report of any material violations of the Sub-Adviser’s Compliance Program or any “material compliance matters” (as such term is defined inperiod required by Rule 38a-131a-2 under the 1940 Act)Act, all records relating to the Funds’ investments that have occurredare required to be maintained by the Funds pursuant to the 1940 Act with respect to the Sub-Adviser’s Compliance Program;Adviser’s responsibilities under this Agreement (the “Funds’ Books and Records”).
(ii)b. on a quarterly basis, a reportOwnership of Records. The Adviser agrees that the Funds’ Books and Records are the Trust’s property and further agrees to provide them promptly to the Trust upon the request of the Trust; provided, however, that the Adviser may retain copies of the Funds’ Books and Records at its own cost. Upon request of the Trust, the Funds’ Books and Records will be made available as soon as reasonably practicable, or as otherwise mutually agreed by the Trust and the Adviser, to the Funds’ accountants or auditors during regular business hours at the Adviser’s offices or another designated location as mutually agreed by the Trust and the Adviser. The Trust or its authorized representatives will have the right to copy any material changesrecords in the Adviser’s possession that pertain to any Fund. These books, records, information, or reports will be made available to properly authorized government representatives consistent with federal law and/or regulations. In the event of the termination of this Agreement, the Funds’ Books and Records will be returned to the Trust. The Adviser agrees that the policies and procedures that composeit has established for managing the Sub-Adviser’s Compliance Program;Funds, including, but not limited to, all policies and procedures designed to comply with federal securities laws governing the provision of advisory services to the Funds, will be made available for inspection by the Fund or its authorized representatives upon reasonable written request as soon as reasonably practicable or as otherwise mutually agreed by the Trust and the Adviser.
(iii)18. a copyUse of the Sub-Adviser’s chief compliance officer’s report (or similar document(s) which serve the same purpose) regarding his or her annual review of the Sub-Adviser’s Compliance Program, as required by Rule 206(4)-7 under the Advisers Act; and“Vident” Name.
(iv)an annual (or more frequently as the Trust’s CCO may reasonably request) representation regarding the Sub-Adviser’s compliance with Section 7 and Section 9 of this Agreement.
(b) The Sub-Adviser shall also provide the Trust’s CCO with reasonable access, during normal business hours, to the Sub-Adviser’s facilities for the purpose of conducting pre-arranged on-site compliance related due diligence meetings with personnel of the Sub-Adviser.
12.Index Data. The Adviser has obtained all licensesconsented to the use by the Trust of the name or identifying word “Vident” in the name of certain Funds. Such consent is conditioned upon the employment of the Adviser or an affiliate of the Adviser as the investment adviser to the Fund. The Adviser may require the Trust to cease using “Vident” in the name of a Fund if the Fund ceases to employ, for any reason, the Adviser, any successor thereto or any affiliate thereof as investment adviser of the Fund.
| 19. | Use of Trust and Fund Name. The Adviser is authorized to disclose the Trust and the Fund’s identities as clients of the Adviser in any representative client list prepared by the Adviser for use in marketing materials. |
20. Survival. All representations and permissions necessary for the Sub-Adviser to use any index data provided to itwarranties made by the Adviser or Adviser’s agent underand the Trust, on behalf of the Funds, in this Agreement will survive for the duration of this Agreement and the Sub-Adviser is not requiredparties to obtainthis Agreement will notify each other in writing promptly upon becoming aware that any such licenses or permissions itself.of the foregoing representations and warranties are no longer true.
13.21. Governing Law.This Agreement shall be governed by and construed in accordance with the substantive laws of the Statestate of Delaware without regardand the Trust and the Adviser consent to conflictthe jurisdiction of law principles; provided, however, that nothing herein shall be construed as being inconsistentcourts, both state or federal, in Delaware, with respect to any dispute under this Agreement.
| 22. | Severability. If any provision of this Agreement is held or made invalid by a court decision, statute, rule, or otherwise, the remainder of this Agreement shall not be affected thereby. |
23. Definitions. The terms “assignment,” “affiliated person,” and “interested person,” when used in this Agreement, will have the respective meanings specified in Section 2(a) of the 1940 Act.
14.Severability. Should any part of this Agreement be held invalid by a court decision, statute, regulation, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit The term “majority of the parties hereto and their respective successors.outstanding shares” means the lesser of (a) sixty-seven percent (67%) or more of the shares present at a meeting if more than fifty percent (50%) of these shares are present or represented by proxy, or (b) more than fifty percent (50%) of the outstanding shares. The term “including” means “including without limitation.”
15.Notice.24. Notice. Any notice, advice, document, report or other client communication to be given pursuant to this Agreement shall be deemed sufficient if delivered or mailed by registered, certified or overnight mail, postage prepaid or electronically addressed by the party giving notice to the other party at the last address furnished by the other party. By consenting to the electronic delivery of any notice, advice, document, report or other client communication in respect of this Agreement or as required pursuant to applicable law, the AdviserTrust authorizes the Sub-AdviserAdviser to deliver all communications by email or other electronic means.
| | | | | |
| To the Adviser at: | Advisors Asset Management, Inc.
300 Carnegie Center,Vident Advisory, LLC
|
| | 1125 Sanctuary Parkway, Suite 300Princeton, NJ 08540
Attention: Andrew Williams
Email: awilliams@aam.us.com
515, |
| | Alpharetta, Georgia 30009 Attention: Deborah Kimery |
| | Email: dkimery@videntfinancial.com |
| | |
| | |
| To the Trust at: | ETF Series Solutions |
| | c/o U.S. BancorpBank Global Fund Services LLC615 East Michigan Street |
| | MK--T10F |
| | Milwaukee, Wisconsin 53202 Attention: Isabella K. Zoller, Secretary
Email: isabella.zoller@usbank.com
|
To the Sub-Adviser at: | Vident Investment Advisory, LLC
1125 Sanctuary Parkway, Suite 515
Alpharetta, Georgia 30009
| Attention: Amrita Nandakumar |
| | Email: anandakumar@videntinvestmentadvisory.com |
16.[Reserved]
17.Amendment | 25. | Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed an original, and all of such counterparts together will constitute one and the same instrument. |
[The Remainder of Agreement.This Agreement may be amended only by written agreement of the Adviser, the Sub-Adviser and the Trust, and only in accordance with the provisions of the 1940 Act and the rules and regulations promulgated thereunder.Page Is Intentionally Left Blank]
18.Representations and Warranties of the Adviser.
(a)Each Fund is an “eligible contract participant” as defined in Section 1a(18) of the U.S. Commodity Exchange Act (the “CEA”) and U.S. Commodity Futures Trading Commission (“CFTC”) Rule 1.3(m) thereunder and a “qualified eligible person” as defined in Rule 4.7 of the CFTC. The Adviser consents to each Fund being treated as an exempt account under Rule 4.7 of the CFTC;
(c)The execution, delivery and performance by the Adviser and the Funds of this Agreement have been duly authorized by all necessary action on the part of the Adviser and the Board (including full authority to bind the Funds to the terms of this Agreement); and
(d)The Adviser will promptly notify the Sub-Adviser if any of the above representations in this Section are no longer true and accurate.
19.Entire Agreement. This Agreement embodies the entire agreement and understanding betweenIN WITNESS WHEREOF, the parties hereto and supersedes all prior agreements and understandings relating tohave caused this Agreement’s subject matter. This Agreement may be executed in any number of counterparts, each of which shall be deemedinstrument to be an original, but such counterparts shall, together, constitute only one instrument.
20.Interpretation. Any questionsigned on their behalf by their duly authorized officers as of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or provision of the 1940 Act will be resolved by reference to such term or provision of the 1940 Act and to interpretations thereof, if any, by the United States courts or, in the absence of any controlling decision of any such court, by rules, regulations or orders of the SEC validly issued pursuant to the 1940 Act. Specifically, the terms “vote of a majority of the outstanding voting securities,” “interested persons,” “assignment,” and “affiliated persons,” as used herein will have the meanings assigned to them by Section 2(a) of the 1940 Act. In addition, where the effect of a requirement of the 1940 Act reflected in any provision of this Agreement is
relaxed by a rule, regulation or order of the SEC, whether of special or of general application, such provision will be deemed to incorporate the effect of such rule, regulation or order.
21.Headings. The headings in the sections of this Agreement are inserted for convenience of reference only and will not constitute a part hereof.
In the event the terms of this Agreement are applicable to more than one Fund of the Trust as specified in Schedule A attached hereto, the Adviser is entering into this Agreement with the Sub-Adviser on behalf of the respective Funds severally and not jointly, with the express intention that the provisions contained in each numbered paragraph hereof shall be understood as applying separately with respect to each Fund as if contained in separate agreements between the Adviser and Sub-Adviser for each such Fund. In the event that this Agreement is made applicable to any additional Funds by way of a Schedule executed subsequent to the date first indicated above provisions of such Schedule shall be deemed to be incorporated into this Agreement as it relates to such Fund so that, for example, the execution date for purposes of Section 8 of this Agreement with respect to such Fund shall be the execution date of the relevant Schedule.written.
22.Miscellaneous.
(a)The Trust represents and warrants that a copy of the Certificate of Trust is on file with the Secretary of State of Delaware, and notice is hereby given that the obligations of this instrument are not binding upon any of the Trustees, officers or shareholders of the Fund or the Trust.
(b)Where the effect of a requirement of the 1940 Act or Advisers Act reflected in any provision of this Agreement is altered by a rule, regulation or order of the SEC, whether of special or general application, such provision shall be deemed to incorporate the effect of such rule, regulation or order.
PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADING COMMISSION IN CONNECTION WITH ACCOUNTS OF QUALIFIED ELIGIBLE PERSONS, THIS BROCHURE OR ACCOUNT DOCUMENT IS NOT REQUIRED TO BE, AND HAS NOT BEEN, FILED WITH THE COMMISSION. THE COMMODITY FUTURES TRADING COMMISSION DOES NOT PASS UPON THE MERITS OF PARTICIPATING IN A TRADING PROGRAM OR UPON THE ADEQUACY OR ACCURACY OF COMMODITY TRADING ADVISOR DISCLOSURE. CONSEQUENTLY, THE COMMODITY FUTURES TRADING COMMISSION HAS NOT REVIEWED OR APPROVED THIS TRADING PROGRAM OR THIS BROCHURE OR ACCOUNT DOCUMENT.
[Signature page follows]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day first set forth above.
| ETF SERIES SOLUTIONS | Vident Advisory, LLC |
| on behalf of the series listed on Schedule A | |
| |
ADVISORS ASSET MANAGEMENT, INC.By:
| By: Name: Lance McGray
Title: MD, Head of ETF Product
|
VIDENT INVESTMENT ADVISORY, LLC
By:
Name: Amrita Nandakumar
Title: President
| |
ETF SERIES SOLUTIONS
By:
Name: Isabella K. Zoller Joshua Hinderliter | Name: Deborah Kimery |
| |
| Title: Secretary | Title: Chief Executive Officer |
Signature Page to Investment Advisory Agreement
SCHEDULE A
to the
INVESTMENT SUB-ADVISORYADVISORY AGREEMENT
Dated [ ],April 6, 2023 between
ADVISORS ASSET MANAGEMENT, INC.
and
VIDENT INVESTMENT ADVISORY, LLC
and
ETF SERIES SOLUTIONS
| | | | | | | | |
Fund | Minimum Fee | Rate |
AAM S&P 500 High Dividend Value ETF | $12,000 | 0.04% on the first $250 million;
0.03% on the next $250 million; and
0.02% on net assets in excess of $500 million
|
AAM S&P Emerging Markets High Dividend Value ETF | $25,000 | 0.06% on the first $250 million;
0.05% on the next $250 million; and
0.04% on net assets in excess of $500 million
|
AAM S&P Developed Markets High Dividend Value ETF | $18,000 | 0.05% on the first $250 million;
0.04% on the next $250 million; and
0.03% on net assets in excess of $500 million
|
AAM Low Duration Preferred and Income Securities ETF | $20,000 | 0.04% on the first $250 million;
0.03% on the next $250 million; and
0.02% on net assets in excess of $500 million
|
AAM Transformers ETF | $30,000 | 0.055% on the first $250 million;
0.045% on the next $250 million; and
0.035% on net assets in excess of $500 million
|
Exhibit C
FORM OF INVESTMENT SUB-ADVISORY AGREEMENT
among
Advisors Asset Management, Inc., Bahl & Gaynor, Inc., and ETF Series Solutions
This INVESTMENT SUB-ADVISORY AGREEMENT (the “Agreement”) is made as of this [ ]th day of [ ], 2023 by and between Advisors Asset Management, Inc., a Delaware corporationwith its principal place of business at 18925 Base Camp Road, Suite 203, Monument, Colorado 80132 (the “Adviser”), ETF Series Solutions (the “Trust”), and Bahl & Gaynor, Inc., an Ohio corporation with its principal place of business located at 255 East Fifth Street, Suite 2700, Cincinnati, Ohio 45202 (the “Sub-Adviser”).
W I T N E S S E T H
WHEREAS, the Trust is an open-end management investment company, registered as such under the Investment Company Act of 1940, as amended (the “1940 Act”); and
WHEREAS, the Adviser is registered as an investment adviser under the Investment Advisers Act of 1940 (the “Advisers Act”); and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement dated [ ], 2023, as amended to add additional series, with the Trust; andVIDENT ADVISORY, LLC
WHEREAS, the Adviser anticipates undergoing a change-in-control as a result of a change-in-control of its parent company (the “Transaction”); and
WHEREAS, the Sub-Adviser is registered as an investment adviser under the Advisers Act and is engaged in the business of supplying investment advice as an independent contractor; and
WHEREAS, the Investment Advisory Agreement contemplates that the Adviser may appoint a sub-adviser to perform some or all of the services for which the Adviser is responsible; and
WHEREAS, the Adviser and Sub-Adviser have entered into an Advisory Fee Agreement dated [ ], 2023 (the “Advisory Fee Agreement") contemporaneously with the execution of this Agreement, the terms and conditions of which are incorporated herein by reference and
WHEREAS, the Sub-Adviser is willing to furnish such servicesThe Trust will pay to the Adviser and each Fund listed in Schedule A to this Agreement (eachas compensation for the Adviser’s services rendered, a “Fund” and, collectively,fee, computed daily at an annual rate based on the “Funds”), as such Schedule may be amended from time to time upon mutual agreementaverage daily net assets of the parties.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual covenants and benefits set forth herein, the parties do hereby agree as follows:
1.Duties of the Sub-Adviser. Subject to supervision and oversight of the Adviser and the Board of Trustees (the “Board”), andrespective Fund in accordance with the terms and conditions of the Agreement, the Sub-Adviser shall manage all of the securities and other assets of the Funds entrusted to it hereunder as specified in Schedule A (the “Assets”), including the purchase, retention and disposition of the Assets, in accordance with the Declaration of Trust and By-Laws (as defined herein), the Funds’ respective investment objectives, guidelines, policies and restrictions as stated in each Fund’s registration statement on Form N-1A including its prospectus and statement of additional information, as currently in effect andfollowing fee schedule:
as amended or supplemented from time to time (referred to collectively as the “Prospectus”), all applicable fiduciary duties it may have to the Fund and subject to the following:
(a)The Sub-Adviser shall, subject to subparagraph (b), determine from time to time what Assets will be purchased, retained or sold by the Funds, and what portion of the Assets will be invested or held uninvested in cash as is permissible. The Sub-Adviser shall provide advice only with respect to the Assets, including additions, substitutions and proceeds, and shall have no responsibility for the actions or non-actions of the Adviser or any other assets of the Trust.
(b)In the performance of its duties and obligations under this Agreement, the Sub-Adviser shall act in conformity with the Prospectus, the written instructions and directions of the Adviser and of the Board, the terms and conditions of exemptive and no-action relief granted to the Trust as amended from time to time and provided to the Sub-Adviser and the Trust’s policies and procedures and Declaration of Trust and By-Laws (as defined herein) provided to the Sub-Adviser, all applicable fiduciary duties it may have to the Funds and will conform to and comply with the requirements of the 1940 Act, the Advisers Act, the Commodity Exchange Act, the Internal Revenue Code of 1986, as amended (the “Code”), and all other applicable federal and state laws, rules, regulations and case law that relate to the services and relationships described hereunder and to the conduct of its business as a registered investment adviser, as each is amended from time to time. In selecting each Fund’s portfolio securities and performing the Sub-Adviser’s obligations hereunder, the Sub-Adviser shall cause each Fund to comply with the diversification and source of income requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), for qualification as a regulated investment company if the Fund has elected to be treated as a regulated investment company under the Code.
(c)The Sub-Adviser shall determine the Assets to be purchased or sold by the Funds as provided in subparagraph (a) and will place orders with or through such persons, brokers or dealers to carry out the policy with respect to brokerage set forth in aFund’s Prospectus or as the Board or the Adviser may direct in writing from time to time, in conformity with all federal securities laws. In executing Fund transactions and selecting brokers or dealers and the placing of such orders, the Sub-Adviser will at all times seek on behalf of each Fund the most favorable execution and net price available under the circumstances. In assessing the best overall terms available for any transaction, the Sub-Adviser shall consider all factors that it deems relevant, including the breadth of the market in the security, the price of the security, the financial condition and execution capability of the broker or dealer, and the reasonableness of the commission, if any, both for the specific transaction and on a continuing basis. In evaluating the best overall terms available, and in selecting the broker-dealer to execute a particular transaction, the Sub-Adviser may also consider the brokerage and research services provided (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)). Consistent with any guidelines established by the Board and Section 28(e) of the Exchange Act, as amended, the Sub-Adviser is authorized to pay to a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for a Fund which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if, but only if, the Sub-Adviser determines in good faith that such commission was reasonable in relation to the value of the brokerage and research services provided by such broker or dealer viewed in terms of that particular transaction or in terms of the overall responsibilities of the Sub-Adviser to its discretionary clients, including the Fund. In addition, the Sub-Adviser is authorized to allocate purchase and sale orders for securities to brokers or dealers (including brokers and dealers that are affiliated with the Adviser, Sub-Adviser or the Trust’s principal underwriter) if the Sub-Adviser believes that the quality of the transaction and the commission are comparable to what they would be with other qualified firms. In no instance, however, will theAssets be purchased from or sold to the Adviser, Sub-Adviser, the Trust’s principal underwriter, or any affiliated person of the Trust, Adviser, the Sub-Adviser or the principal underwriter, acting as principal in the transaction, except to the extent permitted by the U.S. Securities and Exchange Commission (“SEC”) and the 1940 Act.
(d)The Sub-Adviser shall maintain all books and records with respect to transactions involving the Assets required by subparagraphs (b)(1), (5), (6), (7), (8), (9) and (10) and paragraph (f) of Rule 31a-1 under the 1940 Act. The Sub-Adviser shall keep the books and records relating to the Assets required to be maintained by the Sub-Adviser under this Agreement and shall timely furnish to the Adviser all information relating to the Sub-Adviser’s services under this Agreement needed by the Adviser to keep the other books and records of the Fund required by Rule 31a-1 under the 1940 Act, as requested by the Adviser. The Sub-Adviser agrees that all records that it maintains on behalf of a Fund
are property of the Fund and the Sub-Adviser will surrender promptly to the Fund any of such records upon the Fund’s request; provided, however, that the Sub-Adviser may retain a copy of such records. In addition, for the duration of this Agreement, the Sub-Adviser shall preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any such records as are required to be maintained by it pursuant to this Agreement, and shall transfer said records to any successor sub-adviser upon the termination of this Agreement (or, if there is no successor sub-adviser, to the Adviser).
(e)The Sub-Adviser shall provide the Fund’s custodian on each business day with information relating to all transactions concerning the Assets and shall provide the Adviser with such information upon request of the Adviser and shall otherwise cooperate with and provide reasonable assistance to the Adviser, the Trust’s administrator, the Trust’s custodian and foreign custodians, the Trust’s transfer agent and pricing agents and all other agents and representatives of the Trust.
(f)The Adviser acknowledges that the Sub-Adviser performs investment advisory services for various other clients in addition to the Funds and, to the extent it is consistent with applicable law and the Sub-Adviser’s fiduciary obligations, the Sub-Adviser may give advice and take action with respect to any of those other clients that may differ from the advice given or the timing or nature of action taken for a particular Fund.
(g)The Sub-Adviser shall promptly notify the Adviser of any financial condition that is reasonably and foreseeably likely to impair the Sub-Adviser’s ability to fulfill its commitment under this Agreement.
(h)The Sub-Adviser will have no obligation to advise, initiate or take any other action on behalf of the Adviser, the Funds or the Assets in any legal proceedings (including, without limitation, class actions and bankruptcies) relating to the securities comprising the Assets or any other matter. Sub-Adviser will not file proofs of claims relating to the securities comprising the Assets or any other matter.
(i)In performance of its duties and obligations under this Agreement, the Sub-Adviser shall not consult with any other sub-adviser to the Funds or a sub-adviser to a portfolio that is under common control with the Funds concerning the Assets, except as permitted by the policies and procedures of the Funds. The Sub-Adviser shall not provide investment advice to any assets of the Funds other than the Assets which it sub-advises.
(j)On occasions when the Sub-Adviser deems the purchase or sale of a security to be in the best interest of the Funds as well as other clients of the Sub-Adviser, the Sub-Adviser may, to the extent permitted by applicable law and regulations, aggregate the order for securities to be sold or purchased. In such event, the Sub-Adviser will allocate securities so purchased or sold, as well as the expenses incurred in the transaction, in a manner the Sub-Adviser reasonably considers to be equitable and consistent with its fiduciary obligations to the Fund and to such other clients under the circumstances.
(k)The Sub-Adviser shall maintain books and records with respect to the Funds’ securities transactions and keep the Board and the Adviser fully informed on an ongoing basis as agreed by the Adviser and the Sub-Adviser of all material facts concerning the Sub-Adviser and its key investment personnel providing services with respect to the Funds and the investment and the reinvestment of the Assets of the Funds. The Sub-Adviser shall furnish to the Adviser or the Board such reasonably requested regular, periodic and special reports, balance sheets or financial information, and such other information with regard to its management of the Assets as the Adviser or Board may reasonably request and the Sub-Adviser will attend meetings with the Adviser and/or the Trustees, as reasonably requested, to discuss the foregoing. Upon the request of the Adviser, the Sub-Adviser shall also furnish to the Adviser any other information relating to the Assets that is required to be filed by the Adviser or the Trust with the SEC or sent to shareholders under the 1940 Act (including the rules adopted thereunder) or any exemptive or other relief that the Adviser or the Trust obtains from the SEC.
(l)The fair valuation of securities in a Fund may be required when the Adviser becomes aware of significant events that may affect the pricing of all or a portion of a Fund’s portfolio. The Sub-Adviser will provide assistance in determining the fair value of the Assets, as necessary and reasonably requested by the Adviser or its agent, and use reasonable efforts to arrange for the provision of valuation information or a price(s) from a party(ies) independent of the Sub-Adviser if market prices are not readily available, it being understood that the Sub-Adviser will not be responsible for determining the
value of any such security. The Sub-Adviser agrees to immediately notify the Adviser if the Sub-Adviser reasonably believes that the value of any security held by a Fund may not reflect its fair value.
(m)The Adviser hereby delegates to the Sub-Adviser the Adviser’s discretionary authority to exercise voting rights with respect to the securities and other investments in the Assets. The Sub-Adviser agrees to carry out such responsibility in accordance with any instructions that the Adviser and/or the Board provide from time to time, in accordance with Sub-Adviser’s proxy voting policy and at all times in a manner consistent with Rule 206(4)-6 under the Advisers Act, other applicable laws and its fiduciary responsibilities to the Trust. Sub-Adviser has provided Adviser and the Trust with a copy of its proxy voting policy and will promptly notify the Adviser and the Trust of any material change to its proxy voting policy. The Sub-Adviser shall provide periodic reports and keep records relating to proxy voting as the Adviser or the Board may reasonably request or as may be necessary for the Funds to comply with the 1940 Act and other applicable law. Any delegation of proxy voting responsibility to the Sub-Adviser may be revoked or modified by the Board or Adviser at any time. The Sub-Adviser may, to the extent consistent with its fiduciary duty to the Trust and with Rule 206(4)-6 under the Advisers Act, employ a third party firm that specializes in corporate governance research and advising on proxy voting to assist the Sub-Adviser, subject to the Sub-Adviser’s oversight and with the Sub-Adviser remaining liable for proxy voting decisions, in exercising the Sub-Adviser’s proxy voting responsibilities. The Trust and the Adviser further acknowledge that, to the extent consistent with its fiduciary duty to the Trust and with Rule 206(4)-6 under the Advisers Act, the Sub-Adviser may vote proxies for securities held by the Trust differently than it votes proxies for the same securities held by other of the Sub-Adviser’s clients. The Adviser agrees to instruct the Fund’s custodian to forward copies of all proxy materials and related shareholder communications to Sub-Adviser’s designee promptly upon receipt.
2.Duties of the Adviser. The Adviser shall continue to have responsibility for all services to be provided to the Funds pursuant to the Advisory Agreement and shall oversee and review the Sub-Adviser’s performance of its duties under this Agreement; provided, however, that in connection with its management of the Assets, nothing herein shall be construed to relieve the Sub-Adviser of responsibility for compliance with the Prospectus, the written instructions and directions of the Board, the requirements of the 1940 Act, the Code, and all other applicable federal laws and regulations, as each is amended from time to time.
3.Delivery of Documents. The Adviser will furnish the Sub-Adviser with copies of each of the following documents:
(a)The Trust’s Agreement and Declaration of Trust (such Agreement and Declaration of Trust, as in effect on the date of this Agreement and as amended from time to time, herein called the “Declaration of Trust”);
(b)Amended and Restated By-Laws of the Trust (such By-Laws, as in effect on the date of this Agreement and as amended from time to time, are herein called the “By-Laws”);
(c)Prospectus and Statement of Additional Information of the Funds, as amended from time to time;
(d)Resolutions of the Board approving the engagement of the Sub-Adviser as a sub-adviser to the Funds;
(e)Resolutions, policies and procedures adopted by the Board with respect to the Assets to the extent such resolutions, policies and procedures may affect the duties of the Sub-Adviser hereunder;
(f)A list of the Trust’s principal underwriter and each affiliated person of the Adviser, the Trust or the principal underwriter; and
(g)The terms and conditions of exemptive and no-action relief granted to the Trust, as amended from time to time.
The Adviser shall promptly furnish the Sub-Adviser from time to time with copies of all amendments of or supplements to the foregoing. Until so provided, the Sub-Adviser may continue to rely on those documents previously provided.
4.Use of the Sub-Adviser’s Name. The parties agree that the name of the Sub-Adviser, the names of any affiliates of the Sub-Adviser and any derivative or logo or trademark or service mark or trade name are the valuable property of the Sub-Adviser and its affiliates. The Adviser and the Trust shall have the right to use such name(s), derivatives, logos, trademarks or service marks or trade names with respect to the Fund only with the prior written approval of the Sub-Adviser, which approval is given herein. The Adviser shall not, and shall not permit any of the Funds to make representations regarding Sub-Adviser or its affiliates without prior written consent of Sub-Adviser, such consent not to be unreasonably withheld. Notwithstanding the foregoing, the Sub-Adviser’s approval is not required when the information regarding the Sub-Adviser used by the Adviser or the Fund is limited to information disclosed in materials provided by the Sub-Adviser to the Adviser in writing specifically for use in the Fund’s registration statement, as amended or supplemented from time to time, or in Fund shareholder reports or proxy statements and the information is used (a) as required by applicable law, rule or regulation, in the Prospectus of the Fund or in Fund shareholder reports or proxy statements; or (b) as may be otherwise specifically approved in writing by the Sub-Adviser prior to use. If the Adviser or the Trust makes any unauthorized use of the Sub-Adviser's names, derivatives, logos, trademarks or service marks or trade names, the parties acknowledge that the Sub- Adviser shall suffer irreparable harm for which monetary damages may be inadequate and thus, the Sub- Adviser shall be entitled to injunctive relief, as well as any other remedy available under law. Upon termination of this Agreement, the Adviser and the Trust shall forthwith cease to use such name(s), derivatives, logos, trademarks or service marks or trade names.
5.Compensation to the Sub-Adviser. For the services to be provided by the Sub-Adviser pursuant to this Agreement, the Adviser will pay the Sub-Adviser, and the Sub-Adviser agrees to accept as compensation therefore, a sub-advisory fee for each Fund at the “Rate” specified in Schedule A which is attached hereto and made part of this Agreement; except as provided in the Advisory Fee Agreement. The fee will be calculated based on the daily net value of the Assetsunder the Sub-Adviser’s management (as calculated as described in the Fund’s registration statement), shall be computed daily, and will be paid to the Sub-Adviser monthly in arrears within a reasonable time following the end of each month. Except as may otherwise be prohibited by law or regulation (including any then current SEC staff interpretations), the Sub-Adviser may, in its sole discretion and from time to time, waive a portion of its fee. In the event of termination of this Agreement, the fee provided in this Section shall be computed on the basis of the period ending on the last business day on which this Agreement is in effect.
6.Expenses. The Sub-Adviser will furnish and be responsible for all expenses incurred by it in connection with its activities under this Agreement other than the cost of securities and other assets purchased for the Funds (including interest charges on borrowings, dividends and other expenses on securities sold short, taxes, brokerage commissions, if any, and other expenses incurred in placing orders for the purchase and sale of securities and other investment instruments), including but not limited to all necessary facilities and personnel, including personnel compensation, expenses and fees required for the Sub-Adviser to perform its duties under this Agreement; administrative facilities, including operations and bookkeeping, and all equipment necessary for the efficient conduct of the Sub-Adviser’s duties under this Agreement.
7.Indemnification. The Sub-Adviser shall indemnify and hold harmless the Adviser, the Trust, all affiliated persons thereof (within the meaning of Section 2(a)(3) of the 1940 Act) and all controlling persons (as described in Section 15 of the Securities Act of 1933, as amended) from and against any and all claims, losses, liabilities or damages (including reasonable attorney’s fees and other related expenses) however arising from or in connection with the performance of the Sub-Adviser’s obligations under this Agreement to the extent resulting from or relating to Sub-Adviser’s own willful misfeasance, fraud, bad faith or gross negligence, or to the reckless disregard of its duties under this Agreement; provided, however, that the Sub-Adviser’s obligation under this Section 7 shall be reduced to the extent that the claim against, or the loss, liability or damage experienced by the Adviser, is caused by or is otherwise directly related to the Adviser’s own willful misfeasance, fraud, bad faith or gross negligence, or to the reckless disregard of its duties under this Agreement .
The Adviser shall indemnify and hold harmless the Sub-Adviser, the Trust and all affiliated persons thereof (within the meaning of Section 2(a)(3) of the 1940 Act) and all controlling persons (as described in Section 15 of the Securities Act of 1933, as amended) from and against any and all claims, losses, liabilities or damages (including reasonable attorney’s fees and other related expenses)
however arising from or in connection with the performance of the Adviser’s obligations under this Agreement to the extent resulting from or relating to Adviser’s own willful misfeasance, fraud, bad faith or gross negligence, or to the reckless disregard of its duties under this Agreement; provided, however, that the Adviser’s obligation under this Section 7 shall be reduced to the extent that the claim against, or the loss, liability or damage experienced by the Sub-Adviser, is caused by or is otherwise directly related to the Sub-Adviser’s own willful misfeasance, fraud, bad faith or gross negligence, or to the reckless disregard of its duties under this Agreement.
Notwithstanding anything to the contrary contained herein, no party to this Agreement shall be responsible or liable for its failure to perform under this Agreement or for any losses to the Assets resulting from any event beyond the reasonable control of such party or its agents, including, but not limited to, nationalization, expropriation, devaluation, seizure or similar action by any governmental authority, de facto or de jure; or enactment, promulgation, imposition or enforcement by any such governmental authority of currency restrictions, exchange controls, levies or other charges affecting the Assets; or the breakdown, failure or malfunction of any utilities or telecommunications systems; or any order or regulation of any banking or securities industry including changes in market rules and market conditions affecting the execution or settlement of transactions; or acts or war, terrorism, insurrection or revolution; or acts of God, or any other similar event. In no event, shall any party be responsible for incidental, consequential or punitive damages hereunder.
The provisions of this Section shall survive the termination of this Agreement.
8.Representations and Warranties of Sub-Adviser. The Sub-Adviser represents and warrants to the Adviser and the Trust as follows:
(a)The Sub-Adviser is registered with the U.S. Securities and Exchange Commission as an investment adviser under the Advisers Act and will continue to be so registered so long as this Agreement remains in effect;
(b)The Sub-Adviser will immediately notify the Adviser of the occurrence of any event that would substantially impair the Sub-Adviser’s ability to fulfill its commitment under this Agreement or disqualify the Sub-Adviser from serving as an investment adviser of an investment company pursuant to Section 9(a) of the 1940 Act. The Sub-Adviser will promptly notify the Adviser and the Trust in the event (i) the Sub-Adviser, a member of its executive management, or portfolio manager for the Assets is served or otherwise receives notice of any action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, self-regulatory organization, public board, or body, involving the affairs of the Trust (excluding class action suits in which a Fund is a member of the plaintiff class by reason of the Fund’s ownership of shares in the defendant) or the compliance by the Sub-Adviser with the federal or state securities laws or (ii) an actual change in control of the Sub-Adviser resulting in an “assignment” (as defined in the 1940 Act) has occurred or is otherwise proposed to occur. The Sub-Adviser will also notify the Adviser immediately upon detection of (i) any material failure to manage any Fund in accordance with its investment objectives and policies or any applicable law; or (ii) any material breach of any of the Funds’, the Adviser’s or the Sub-Adviser’s policies, guidelines or procedures. In addition, the Sub-Adviser shall provide a quarterly report regarding each Fund’s compliance with its investment objectives and policies, applicable law, including, but not limited to the 1940 Act and Subchapter M of the Code, as applicable, and the Fund’s policies, guidelines or procedures as applicable to the Sub-Adviser’s obligations under this Agreement. The Sub-Adviser agrees to correct any such failure promptly and to take any action that the Adviser may reasonably request in connection with any such breach. Upon request, the Sub-Adviser shall also provide Adviser with supporting certifications in connection with such certifications of Fund financial statements and disclosure controls pursuant to the Sarbanes-Oxley Act;
(c)The Sub-Adviser will notify the Adviser immediately upon detection of (a) any failure to manage the Fund(s) in accordance with the Fund(s)’ stated investment objectives, guidelines and policies or any applicable law or regulation; or (b) any breach of any of the Fund(s)’ or the Sub-Adviser’s policies, guidelines or procedures relating to the Funds.
(d)The Sub-Adviser is fully authorized under all applicable law and regulation to enter into this Agreement and serve as Sub-Adviser to the Funds and to perform the services described under this Agreement;
(e)The Sub-Adviser is a corporation duly organized and validly existing under the laws of the state of Ohio with the power to own and possess its assets and carry on its business as it is now being conducted;
(f)The execution, delivery and performance by the Sub-Adviser of this Agreement are within the Sub-Adviser’s powers and have been duly authorized by all necessary action on the part of its corporate members or board, and no action by or in respect of, or filing with, any governmental body, agency or official is required on the part of the Sub-Adviser for the execution, delivery and performance by the Sub-Adviser of this Agreement, and the execution, delivery and performance by the Sub-Adviser of this Agreement do not contravene or constitute a default under (i) any provision of applicable law, rule or regulation, (ii) the Sub-Adviser’s governing instruments, or (iii) any agreement, judgment, injunction, order, decree or other instrument binding upon the Sub-Adviser;
(g)This Agreement is a valid and binding agreement of the Sub-Adviser;
(h)The Form ADV of the Sub-Adviser previously provided to the Adviser is a true and complete copy of the form filed with the SEC and the information contained therein is accurate, current and complete in all material respects as of its filing date, and does not omit to state any material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading;
(i)The Sub-Adviser shall not divert any Fund’s portfolio securities transactions to a broker or dealer in consideration of such broker or dealer’s promotion or sales of shares of the Fund, any other series of the Trust, or any other registered investment company.
(j)The Sub-Adviser agrees to maintain an appropriate level of errors and omissions or professional liability insurance coverage.
9.Duration and Termination. The effectiveness and termination dates of this Agreement shall be determined separately for each Fund as described below.
(a)Duration. This Agreement shall become effective with respect to a Fund upon the latest of (i) the approval by a vote of a majority of those Trustees of the Trust who are not parties to this Agreement or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval; (ii) the approval of a majority of the Fund’s outstanding voting securities, if required by the 1940 Act; and (iii) the commencement of the Sub-Adviser’s management of the Fund. This Agreement shall continue in effect for a period of two years from the effective date described in this sub-paragraph, subject thereafter to being continued in force and effect from year to year if specifically approved each year by the Board or by the vote of a majority of the Fund’s outstanding voting securities. In addition to the foregoing, each renewal of this Agreement must be approved by the vote of a majority of the Board who are not parties to this Agreement or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval. Prior to voting on the renewal of this Agreement, the Board may request and evaluate, and the Sub-Adviser shall furnish, such information as may reasonably be necessary to enable the Board to evaluate the terms of this Agreement.
(b)Termination. Notwithstanding whatever may be provided herein to the contrary, this Agreement may be terminated at any time with respect to a Fund, without payment of any penalty:
(i)By vote of a majority of the Board, or by vote of a majority of the outstanding voting securities of the Funds, or by the Adviser, in each case, upon sixty (60) days’ written notice to the Sub-Adviser;
(ii)By the Adviser upon breach by the Sub-Adviser of any representation or warranty contained in Section 8 and Section 10 hereof, which shall not have been cured within twenty (20) days of the Sub-Adviser’s receipt of written notice of such breach;
(iii)By the Adviser immediately upon written notice to the Sub-Adviser if the Sub-Adviser becomes unable to discharge its duties and obligations under this Agreement; or
(iv)By the Sub-Adviser upon ninety (90) days’ written notice to the Adviser and the Board.
This Agreement shall terminate automatically and immediately in the event of its assignment, or in the event of a termination of the Advisory Agreement with the Trust upon notice to the Sub-Adviser.
As used in this Section 9, the terms “assignment” and “vote of a majority of the outstanding voting securities” shall have the respective meanings set forth in the 1940 Act and the rules and regulations thereunder, subject to such exceptions as may be granted by the SEC under the 1940 Act.
10.Regulatory Compliance Program of the Sub-Adviser. The Sub-Adviser hereby represents and warrants that:
(a)in accordance with Rule 206(4)-7 under the Advisers Act, the Sub-Adviser has adopted and implemented and will maintain written policies and procedures reasonably designed to prevent violation by the Sub-Adviser and its supervised persons (as such term is defined in the Advisers Act) of the Advisers Act and the rules the SEC has adopted under the Advisers Act; and
(b)the Sub-Adviser has adopted and implemented and will maintain written policies and procedures that are reasonably designed to prevent violation of the “federal securities laws” (as such term is defined in Rule 38a-1 under the 1940 Act) by the Sub-Adviser (the policies and procedures referred to in this Section 10(b), along with the policies and procedures referred to in Section 10(a), are referred to herein as the Sub-Adviser’s “Compliance Program”).
(c) it has adopted a written code of ethics that complies with the requirements of Rule 204A-1 under the Advisers Act and Rule 17j-1 under the 1940 Act, which it will provide to the Adviser and the Trust. The Sub-Adviser shall ensure that its Access Persons (as defined in the Sub-Adviser’s Code of Ethics) comply in all material respects with the Sub-Adviser’s Code of Ethics, as in effect from time to time. Upon request, the Adviser shall provide the Adviser and the Trust with a (i) a copy of the Sub-Adviser’s current Code of Ethics, as in effect from time to time, and (ii) certification that it has adopted procedures reasonably necessary to prevent Access Persons from engaging in any conduct prohibited by the Sub-Adviser’s Code of Ethics. Annually, the Sub-Adviser shall furnish a written report, which complies with the requirements of Rule 204A-1 and Rule 17j-1, concerning the Sub-Adviser’s Code of Ethics to the Adviser and the Trust. The Sub-Adviser shall respond to requests for information from the Adviser and Trust as to violations of the Code of Ethics by Access Persons and the sanctions imposed by the Sub-Adviser. The Sub-Adviser shall promptly notify the Adviser and the Trust of any material violation of the Code of Ethics, whether or not such violation relates to a security held by any Fund.
11.Confidentiality. Subject to the duty of the Adviser or Sub-Adviser to comply with applicable law and regulation, including any demand or request of any regulatory, governmental or tax authority having jurisdiction, the parties hereto shall treat as confidential all non-public information pertaining to the Funds and the actions of the Sub-Adviser and the Funds in respect thereof. It is understood that any information or recommendation supplied by the Sub-Adviser in connection with the performance of its obligations hereunder is to be regarded as confidential and for use only by the Adviser, the Funds, the Board, or such persons as the Adviser may designate in connection with the Funds. It is also understood that any information supplied to the Sub-Adviser in connection with the performance of its obligations hereunder is to be regarded as confidential and for use only by the Sub-Adviser, its affiliates and agents in connection with its obligation to provide investment advice and other services to the Funds and to assist or enable the effective management of the Adviser’s and the Funds’ overall relationship with the Sub-Adviser and its affiliates. The parties acknowledge and agree that all nonpublic personal information with regard to shareholders in the Funds other than Sub-Adviser’s clients shall be deemed proprietary and confidential information of the Adviser, and that the Sub-Adviser shall use that information solely in the performance of its duties and obligations under this Agreement and shall take reasonable steps to safeguard the confidentiality of that information. Subject to the duty of the Adviser and Trust to comply with applicable law and regulation, including any demand or request of any regulatory, governmental or tax authority having jurisdiction, the parties further acknowledge and agree that all nonpublic personal information with regard to shareholders in the Funds who are direct clients of the Sub-Adviser shall be deemed proprietary and confidential information of the Sub-Adviser, and that the Adviser shall use that information solely in the performance of its duties and obligations under this Agreement and shall take reasonable steps to safeguard the confidentiality of that information. Further, the Sub-Adviser shall maintain and enforce adequate security and oversight procedures with respect to all materials, records, documents and data relating to any of its responsibilities pursuant to this Agreement including all means for the effecting of investment transactions.
12.Reporting of Compliance Matters.
(a)The Sub-Adviser shall provide to the Trust’s Chief Compliance Officer (“CCO”) the following:
(i)on a quarterly basis a report of any material violations of the Sub-Adviser’s Compliance Program or any “material compliance matters” (as such term is defined in Rule 38a-1 under the 1940 Act) that have occurred with respect to the Sub-Adviser’s Compliance Program; provided however, that material violations related to the Sub-Adviser’s management of the Assets shall be reported to the CCO and Adviser promptly.
(ii)on a quarterly basis, a report of any material changes to the policies and procedures that compose the Sub-Adviser’s Compliance Program;
(iii) a copy of the Sub-Adviser’s chief compliance officer’s report (or similar document(s) which serve the same purpose) regarding his or her annual review of the Sub-Adviser’s Compliance Program, as required by Rule 206(4)-7 under the Advisers Act; and
(iv)an annual (or more frequently as the Trust’s CCO may reasonably request) representation regarding the Sub-Adviser’s compliance with Section 8 and Section 10 of this Agreement.
(b) The Sub-Adviser shall also provide the Trust’s CCO with reasonable access, during normal business hours, to the Sub-Adviser’s facilities for the purpose of conducting pre-arranged on-site compliance related due diligence meetings with personnel of the Sub-Adviser.
13.Index Data. The Adviser has obtained all licenses and permissions necessary for the Sub-Adviser to use any index data provided to it by the Adviser or Adviser’s agent under this Agreement and the Sub-Adviser is not required to obtain any such licenses or permissions itself.
14.Governing Law. This Agreement shall be governed by the laws of the State of Delaware, without regard to conflict of law principles; provided, however, that nothing herein shall be construed as being inconsistent with the 1940 Act.
15.Severability. Should any part of this Agreement be held invalid by a court decision, statute, regulation, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors.
16.Notice. Any notice, advice, document, report or other client communication to be given pursuant to this Agreement shall be deemed sufficient if delivered or mailed by registered, certified or overnight mail, postage prepaid or electronically addressed by the party giving notice to the other party at the last address furnished by the other party. By consenting to the electronic delivery of any notice, advice, document, report or other client communication in respect of this Agreement or as required pursuant to applicable law, the Adviser authorizes the Sub-Adviser to deliver all communications by email or other electronic means.
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To the Adviser at:Fund | Advisors Asset Management, Inc.
300 Carnegie Center, Suite 300
Princeton, NJ 08540
Attention: John Galvin
Email: jgalvin@aam.us.com
With a copy to:
Advisors Asset Management, Inc.
18925 Base Camp Road, Suite 203
Monument, CO 80132
Attention: Legal Department
|
To the Trust at: | ETF Series Solutions
c/o U.S. Bancorp Fund Services, LLC
615 East Michigan Street
Milwaukee, Wisconsin 53202
Attention: Isabella K. Zoller, Secretary
Email: isabella.zoller @usbank.com
|
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To the Sub-Adviser at: | Bahl & Gaynor Inc.
255 East Fifth Street, Suite 2700
Cincinnati, Ohio 45202
|
17.Amendment of Agreement. This Agreement may be amended only by written agreement of the Adviser, the Sub-Adviser and the Trust, and only in accordance with the provisions of the 1940 Act and the rules and regulations promulgated thereunder.
18.Representations and Warranties of the Adviser.
(a)Each Fund is an “eligible contract participant” as defined in Section 1a(18) of the U.S. Commodity Exchange Act (the “CEA”) and U.S. Commodity Futures Trading Commission (“CFTC”) Rule 1.3(m) thereunder and a “qualified eligible person” as defined in Rule 4.7 of the CFTC. The Adviser consents to each Fund being treated as an exempt account under Rule 4.7 of the CFTC;
(b)The Adviser is not registered with the National Futures Association as a commodity pool operator or commodity trading adviser because it does not engage in any activities requiring such registration;
(c)The execution, delivery and performance by the Adviser and the Funds of this Agreement have been duly authorized by all necessary action on the part of the Adviser and the Board (including full authority to bind the Funds to the terms of this Agreement); and
(d)The Adviser will promptly notify the Sub-Adviser if any of the above representations in this Section are no longer true and accurate.
19.Entire Agreement. This Agreement together with the Advisory Fee Agreement embody the entire agreement and understanding between the parties hereto, and supersede all prior agreements and understandings relating to this Agreement’s subject matter. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts shall, together, constitute only one instrument.
20.Interpretation. Any question of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or provision of the 1940 Act will be resolved by reference to such term or provision of the 1940 Act and to interpretations thereof, if any, by the United States courts or, in the absence of any controlling decision of any such court, by rules,
regulations or orders of the SEC validly issued pursuant to the 1940 Act. Specifically, the terms “vote of a majority of the outstanding voting securities,” “interested persons,” “assignment,” and “affiliated persons,” as used herein will have the meanings assigned to them by Section 2(a) of the 1940 Act. In addition, where the effect of a requirement of the 1940 Act reflected in any provision of this Agreement is altered by a rule, regulation or order of the SEC, whether of special or of general application, such provision will be deemed to incorporate the effect of such rule, regulation or order.
21.Headings. The headings in the sections of this Agreement are inserted for convenience of reference only and will not constitute a part hereof.
In the event the terms of this Agreement are applicable to more than one Fund of the Trust as specified in Schedule A attached hereto, the Adviser is entering into this Agreement with the Sub-Adviser on behalf of the respective Funds severally and not jointly, with the express intention that the provisions contained in each numbered paragraph hereof shall be understood as applying separately with respect to each Fund as if contained in separate agreements between the Adviser and Sub-Adviser for each such Fund. In the event that this Agreement is made applicable to any additional Funds by way of a Schedule executed subsequent to the date first indicated above, provisions of such Schedule shall be deemed to be incorporated into this Agreement as it relates to such Fund so that, for example, the execution date for purposes of Section 9 of this Agreement with respect to such Fund shall be the execution date of the relevant Schedule.
22.Miscellaneous.
(a)The Trust represents and warrants that a copy of the Certificate of Trust is on file with the Secretary of State of Delaware, and notice is hereby given that the obligations of this instrument are not binding upon any of the Trustees, officers or shareholders of the Fund or the Trust.
(b)Where the effect of a requirement of the 1940 Act or Advisers Act reflected in any provision of this Agreement is altered by a rule, regulation or order of the SEC, whether of special or general application, such provision shall be deemed to incorporate the effect of such rule, regulation or order.
PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADING COMMISSION IN CONNECTION WITH ACCOUNTS OF QUALIFIED ELIGIBLE PERSONS, THIS BROCHURE OR ACCOUNT DOCUMENT IS NOT REQUIRED TO BE, AND HAS NOT BEEN, FILED WITH THE COMMISSION. THE COMMODITY FUTURES TRADING COMMISSION DOES NOT PASS UPON THE MERITS OF PARTICIPATING IN A TRADING PROGRAM OR UPON THE ADEQUACY OR ACCURACY OF COMMODITY TRADING ADVISOR DISCLOSURE. CONSEQUENTLY, THE COMMODITY FUTURES TRADING COMMISSION HAS NOT REVIEWED OR APPROVED THIS TRADING PROGRAM OR THIS BROCHURE OR ACCOUNT DOCUMENT.
[Signature page follows]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day first set forth above.
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ADVISORS ASSET MANAGEMENT, INC.
By:
Name: Lance McGray
Title: MD, Head of ETF ProductRate
|
Vident International Equity Strategy ETF
BAHL & GAYNOR, INC.
By:
Name:
Title:
| 0.61% |
Vident U.S. Equity Strategy ETF SERIES SOLUTIONS
By:
Name: Isabella K. Zoller
Title: Secretary
|
SCHEDULE A
to the
INVESTMENT SUB-ADVISORY AGREEMENT
Dated [ ], 2023 between
ADVISORS ASSET MANAGEMENT, INC.
and
BAHL & GAYNOR INC.
and
ETF SERIES SOLUTIONS
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Fund | Rate |
AAM Bahl & Gaynor Small/Mid Cap Income Growth ETF | 0.23% on the net asset value of the first $300 million of Assets excluding shares of the Fund held in accounts where Sub-Adviser has an investment management agreement directly with the owner of an account (“B&G House ETF Assets”) and 0.28% on the net asset value of the Assets excluding B&G House ETF Assets in excess of $300 million |
| | | | | | | | 0.50% |
Vote by Telephone
1.Read the proxy statement and have the proxy card at hand.
2.Call toll-free 1-800-690-6903.
3.Follow the simple instructions.Vident U.S. Bond Strategy ETF
| Vote Online
1.Read the proxy statement and have the proxy card at hand.
2.Go to www.proxyvote.com
3.Follow the simple instructions.
| Vote by Mail
1.Read the proxy statement.
2.Check the appropriate box(es) on the reverse side.
3.Sign, date and return the proxy card in the envelope provided.
|
AAM S&P 500 High Dividend Value ETF
IN CONNECTION WITH THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 19, 2023
The undersigned hereby appoints each of Michael A. Castino, Kristina R. Nelson, Kristen M. Weitzel, and Alyssa M. Bernard, as Proxy of the undersigned, with full power of substitution, and hereby authorizes any of them to vote on behalf of the undersigned all shares of the Fund that the undersigned is entitled to vote at the Special Meeting of Shareholders of the Fund to be held at 11:00 a.m. Central time, on January 19, 2023, at the offices of U.S. Bank Global Fund Services, 615 East Michigan Street, Milwaukee, Wisconsin 53202 and at any postponements or adjournments thereof, as fully as the undersigned would be entitled to vote if personally present. This proxy will be governed by and construed in accordance with the laws of the State of Delaware and applicable federal securities laws. The execution of this proxy is not intended to, and does not, revoke any prior proxies or powers of attorney other than the revocation, in accordance with the laws of the State of Delaware and applicable federal securities laws, of any proxy previously granted specifically in connection with the voting of the shares subject hereto. This proxy may be revoked at any time prior to the exercise of the powers conferred thereby.
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| | AUTHORIZED SIGNATURE(S) |
| This section must be completed for your vote to be counted. |
| Please complete, sign and return this card as soon as possible. Date _____________ |
| |
| Signature(s) and Title(s), if applicable (Sign in the box) |
| Note: Please sign exactly as your name(s) appear(s) on this proxy card, and date it. If shares are held jointly, one or more owners should sign personally. When signing as attorney, executor, administrator, trustee, officer of corporation or other entity or in another representative capacity, please give the full title under the signature. |
EVERY SHAREHOLDER’S VOTE IS IMPORTANT
This proxy is solicited on behalf of the Board of Trustees of ETF Series Solutions (the “Trust”), and each Proposal has been approved by the Board of Trustees and recommended for approval by shareholders. This proxy when properly executed will be voted in the manner directed herein by the undersigned shareholder. If no direction is made, this proxy will be voted FOR each Proposal. In his or her discretion, the Proxy is authorized to vote upon such other matters as may properly come before the meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT YOU VOTE “FOR” THE PROPOSALS.
TO VOTE – Mark boxes below in blue or black ink as shown in this example:
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| | FOR | AGAINST | ABSTAIN |
1. | To approve a new investment advisory agreement between the Trust, on behalf of AAM S&P 500 High Dividend Value ETF (the “Fund”), and Advisors Asset Management, Inc. (the “Adviser”). No increase in shareholder fees or expenses is being proposed.
| ○ | ○ | ○ |
2. | To approve a new investment sub-advisory agreement among the Adviser, Vident Investment Advisory, LLC, and the Trust, on behalf of the Fund. No increase in shareholder fees or expenses is being proposed.
| ○ | ○ | ○ |
THANK YOU FOR VOTING
| | | | | | | | 0.41% |
Vote by Telephone
1.Read the proxy statement and have the proxy card at hand.
2.Call toll-free 1-800-690-6903.
3.Follow the simple instructions.U.S. Diversified Real Estate ETF
| Vote Online
1.Read the proxy statement and have the proxy card at hand.
2.Go to www.proxyvote.com
3.Follow the simple instructions.
| Vote by Mail
1.Read the proxy statement.
2.Check the appropriate box(es) on the reverse side.
3.Sign, date and return the proxy card in the envelope provided.
0.53% |
AAM Emerging Markets High Dividend Value ETF
IN CONNECTION WITH THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 19, 2023
The undersigned hereby appoints each of Michael A. Castino, Kristina R. Nelson, Kristen M. Weitzel, and Alyssa M. Bernard, as Proxy of the undersigned, with full power of substitution, and hereby authorizes any of them to vote on behalf of the undersigned all shares of the Fund that the undersigned is entitled to vote at the Special Meeting of Shareholders of the Fund to be held at 11:00 a.m. Central time, on January 19, 2023, at the offices of U.S. Bank Global Fund Services, 615 East Michigan Street, Milwaukee, Wisconsin 53202 and at any postponements or adjournments thereof, as fully as the undersigned would be entitled to vote if personally present. This proxy will be governed by and construed in accordance with the laws of the State of Delaware and applicable federal securities laws. The execution of this proxy is not intended to, and does not, revoke any prior proxies or powers of attorney other than the revocation, in accordance with the laws of the State of Delaware and applicable federal securities laws, of any proxy previously granted specifically in connection with the voting of the shares subject hereto. This proxy may be revoked at any time prior to the exercise of the powers conferred thereby.
| | | | | | | | |
| | AUTHORIZED SIGNATURE(S) |
| This section must be completed for your vote to be counted. |
| Please complete, sign and return this card as soon as possible. Date _____________ |
| |
| Signature(s) and Title(s), if applicable (Sign in the box) |
| Note: Please sign exactly as your name(s) appear(s) on this proxy card, and date it. If shares are held jointly, one or more owners should sign personally. When signing as attorney, executor, administrator, trustee, officer of corporation or other entity or in another representative capacity, please give the full title under the signature. |
EVERY SHAREHOLDER’S VOTE IS IMPORTANT
This proxy is solicited on behalf of the Board of Trustees of ETF Series Solutions (the “Trust”), and each Proposal has been approved by the Board of Trustees and recommended for approval by shareholders. This proxy when properly executed will be voted in the manner directed herein by the undersigned shareholder. If no direction is made, this proxy will be voted FOR each Proposal. In his or her discretion, the Proxy is authorized to vote upon such other matters as may properly come before the meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT YOU VOTE “FOR” THE PROPOSALS.
TO VOTE – Mark boxes below in blue or black ink as shown in this example:
| | | | | | | | | | | | | | |
| | | | |
| | FOR | AGAINST | ABSTAIN |
1. | To approve a new investment advisory agreement between the Trust, on behalf of AAM Emerging Markets High Dividend Value ETF (the “Fund”), and Advisors Asset Management, Inc. (the “Adviser”). No increase in shareholder fees or expenses is being proposed.
| ○ | ○ | ○ |
2. | To approve a new investment sub-advisory agreement among the Adviser, Vident Investment Advisory, LLC, and the Trust, on behalf of the Fund. No increase in shareholder fees or expenses is being proposed.
| ○ | ○ | ○ |
THANK YOU FOR VOTING
| | | | | | | | |
Vote by Telephone
1.Read the proxy statement and have the proxy card at hand.
2.Call toll-free 1-800-690-6903.
3.Follow the simple instructions.
| Vote Online
1.Read the proxy statement and have the proxy card at hand.
2.Go to www.proxyvote.com
3.Follow the simple instructions.
| Vote by Mail
1.Read the proxy statement.
2.Check the appropriate box(es) on the reverse side.
3.Sign, date and return the proxy card in the envelope provided.
|
AAM Developed Markets High Dividend Value ETF
IN CONNECTION WITH THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 19, 2023
The undersigned hereby appoints each of Michael A. Castino, Kristina R. Nelson, Kristen M. Weitzel, and Alyssa M. Bernard, as Proxy of the undersigned, with full power of substitution, and hereby authorizes any of them to vote on behalf of the undersigned all shares of the Fund that the undersigned is entitled to vote at the Special Meeting of Shareholders of the Fund to be held at 11:00 a.m. Central time, on January 19, 2023, at the offices of U.S. Bank Global Fund Services, 615 East Michigan Street, Milwaukee, Wisconsin 53202 and at any postponements or adjournments thereof, as fully as the undersigned would be entitled to vote if personally present. This proxy will be governed by and construed in accordance with the laws of the State of Delaware and applicable federal securities laws. The execution of this proxy is not intended to, and does not, revoke any prior proxies or powers of attorney other than the revocation, in accordance with the laws of the State of Delaware and applicable federal securities laws, of any proxy previously granted specifically in connection with the voting of the shares subject hereto. This proxy may be revoked at any time prior to the exercise of the powers conferred thereby.
| | | | | | | | |
| | AUTHORIZED SIGNATURE(S) |
| This section must be completed for your vote to be counted. |
| Please complete, sign and return this card as soon as possible. Date _____________ |
| |
| Signature(s) and Title(s), if applicable (Sign in the box) |
| Note: Please sign exactly as your name(s) appear(s) on this proxy card, and date it. If shares are held jointly, one or more owners should sign personally. When signing as attorney, executor, administrator, trustee, officer of corporation or other entity or in another representative capacity, please give the full title under the signature. |
EVERY SHAREHOLDER’S VOTE IS IMPORTANT
This proxy is solicited on behalf of the Board of Trustees of ETF Series Solutions (the “Trust”), and each Proposal has been approved by the Board of Trustees and recommended for approval by shareholders. This proxy when properly executed will be voted in the manner directed herein by the undersigned shareholder. If no direction is made, this proxy will be voted FOR each Proposal. In his or her discretion, the Proxy is authorized to vote upon such other matters as may properly come before the meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT YOU VOTE “FOR” THE PROPOSALS.
TO VOTE – Mark boxes below in blue or black ink as shown in this example:
| | | | | | | | | | | | | | |
| | | | |
| | FOR | AGAINST | ABSTAIN |
1. | To approve a new investment advisory agreement between the Trust, on behalf of AAM Developed Markets High Dividend Value ETF (the “Fund”), and Advisors Asset Management, Inc. (the “Adviser”). No increase in shareholder fees or expenses is being proposed.
| ○ | ○ | ○ |
2. | To approve a new investment sub-advisory agreement among the Adviser, Vident Investment Advisory, LLC, and the Trust, on behalf of the Fund. No increase in shareholder fees or expenses is being proposed.
| ○ | ○ | ○ |
THANK YOU FOR VOTING
| | | | | | | | |
Vote by Telephone
1.Read the proxy statement and have the proxy card at hand.
2.Call toll-free 1-800-690-6903.
3.Follow the simple instructions.
| Vote Online
1.Read the proxy statement and have the proxy card at hand.
2.Go to www.proxyvote.com
3.Follow the simple instructions.
| Vote by Mail
1.Read the proxy statement.
2.Check the appropriate box(es) on the reverse side.
3.Sign, date and return the proxy card in the envelope provided.
|
AAM Low Duration Preferred and Income Securities ETF
IN CONNECTION WITH THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 19, 2023
The undersigned hereby appoints each of Michael A. Castino, Kristina R. Nelson, Kristen M. Weitzel, and Alyssa M. Bernard, as Proxy of the undersigned, with full power of substitution, and hereby authorizes any of them to vote on behalf of the undersigned all shares of the Fund that the undersigned is entitled to vote at the Special Meeting of Shareholders of the Fund to be held at 11:00 a.m. Central time, on January 19, 2023, at the offices of U.S. Bank Global Fund Services, 615 East Michigan Street, Milwaukee, Wisconsin 53202 and at any postponements or adjournments thereof, as fully as the undersigned would be entitled to vote if personally present. This proxy will be governed by and construed in accordance with the laws of the State of Delaware and applicable federal securities laws. The execution of this proxy is not intended to, and does not, revoke any prior proxies or powers of attorney other than the revocation, in accordance with the laws of the State of Delaware and applicable federal securities laws, of any proxy previously granted specifically in connection with the voting of the shares subject hereto. This proxy may be revoked at any time prior to the exercise of the powers conferred thereby.
| | | | | | | | |
| | AUTHORIZED SIGNATURE(S) |
| This section must be completed for your vote to be counted. |
| Please complete, sign and return this card as soon as possible. Date _____________ |
| |
| Signature(s) and Title(s), if applicable (Sign in the box) |
| Note: Please sign exactly as your name(s) appear(s) on this proxy card, and date it. If shares are held jointly, one or more owners should sign personally. When signing as attorney, executor, administrator, trustee, officer of corporation or other entity or in another representative capacity, please give the full title under the signature. |
EVERY SHAREHOLDER’S VOTE IS IMPORTANT
This proxy is solicited on behalf of the Board of Trustees of ETF Series Solutions (the “Trust”), and each Proposal has been approved by the Board of Trustees and recommended for approval by shareholders. This proxy when properly executed will be voted in the manner directed herein by the undersigned shareholder. If no direction is made, this proxy will be voted FOR each Proposal. In his or her discretion, the Proxy is authorized to vote upon such other matters as may properly come before the meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT YOU VOTE “FOR” THE PROPOSALS.
TO VOTE – Mark boxes below in blue or black ink as shown in this example:
| | | | | | | | | | | | | | |
| | | | |
| | FOR | AGAINST | ABSTAIN |
1. | To approve a new investment advisory agreement between the Trust, on behalf of AAM Low Duration Preferred and Income Securities ETF (the “Fund”), and Advisors Asset Management, Inc. (the “Adviser”). No increase in shareholder fees or expenses is being proposed.
| ○ | ○ | ○ |
2. | To approve a new investment sub-advisory agreement among the Adviser, Vident Investment Advisory, LLC, and the Trust, on behalf of the Fund. No increase in shareholder fees or expenses is being proposed.
| ○ | ○ | ○ |
THANK YOU FOR VOTING
| | | | | | | | |
Vote by Telephone
1.Read the proxy statement and have the proxy card at hand.
2.Call toll-free 1-800-690-6903.
3.Follow the simple instructions.
| Vote Online
1.Read the proxy statement and have the proxy card at hand.
2.Go to www.proxyvote.com
3.Follow the simple instructions.
| Vote by Mail
1.Read the proxy statement.
2.Check the appropriate box(es) on the reverse side.
3.Sign, date and return the proxy card in the envelope provided.
|
AAM Transformers ETF
IN CONNECTION WITH THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 19, 2023
The undersigned hereby appoints each of Michael A. Castino, Kristina R. Nelson, Kristen M. Weitzel, and Alyssa M. Bernard, as Proxy of the undersigned, with full power of substitution, and hereby authorizes any of them to vote on behalf of the undersigned all shares of the Fund that the undersigned is entitled to vote at the Special Meeting of Shareholders of the Fund to be held at 11:00 a.m. Central time, on January 19, 2023, at the offices of U.S. Bank Global Fund Services, 615 East Michigan Street, Milwaukee, Wisconsin 53202 and at any postponements or adjournments thereof, as fully as the undersigned would be entitled to vote if personally present. This proxy will be governed by and construed in accordance with the laws of the State of Delaware and applicable federal securities laws. The execution of this proxy is not intended to, and does not, revoke any prior proxies or powers of attorney other than the revocation, in accordance with the laws of the State of Delaware and applicable federal securities laws, of any proxy previously granted specifically in connection with the voting of the shares subject hereto. This proxy may be revoked at any time prior to the exercise of the powers conferred thereby.
| | | | | | | | |
| | AUTHORIZED SIGNATURE(S) |
| This section must be completed for your vote to be counted. |
| Please complete, sign and return this card as soon as possible. Date _____________ |
| |
| Signature(s) and Title(s), if applicable (Sign in the box) |
| Note: Please sign exactly as your name(s) appear(s) on this proxy card, and date it. If shares are held jointly, one or more owners should sign personally. When signing as attorney, executor, administrator, trustee, officer of corporation or other entity or in another representative capacity, please give the full title under the signature. |
EVERY SHAREHOLDER’S VOTE IS IMPORTANT
This proxy is solicited on behalf of the Board of Trustees of ETF Series Solutions (the “Trust”), and each Proposal has been approved by the Board of Trustees and recommended for approval by shareholders. This proxy when properly executed will be voted in the manner directed herein by the undersigned shareholder. If no direction is made, this proxy will be voted FOR each Proposal. In his or her discretion, the Proxy is authorized to vote upon such other matters as may properly come before the meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT YOU VOTE “FOR” THE PROPOSALS.
TO VOTE – Mark boxes below in blue or black ink as shown in this example:
| | | | | | | | | | | | | | |
| | | | |
| | FOR | AGAINST | ABSTAIN |
1. | To approve a new investment advisory agreement between the Trust, on behalf of AAM Transformers ETF (the “Fund”), and Advisors Asset Management, Inc. (the “Adviser”). No increase in shareholder fees or expenses is being proposed.
| ○ | ○ | ○ |
2. | To approve a new investment sub-advisory agreement among the Adviser, Vident Investment Advisory, LLC, and the Trust, on behalf of the Fund. No increase in shareholder fees or expenses is being proposed.
| ○ | ○ | ○ |
THANK YOU FOR VOTING
| | | | | | | | |
Vote by Telephone
1.Read the proxy statement and have the proxy card at hand.
2.Call toll-free 1-800-690-6903.
3.Follow the simple instructions.
| Vote Online
1.Read the proxy statement and have the proxy card at hand.
2.Go to www.proxyvote.com
3.Follow the simple instructions.
| Vote by Mail
1.Read the proxy statement.
2.Check the appropriate box(es) on the reverse side.
3.Sign, date and return the proxy card in the envelope provided.
|
AAM Bahl & Gaynor Small/Mid Cap Income Growth ETF
IN CONNECTION WITH THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 19, 2023
The undersigned hereby appoints each of Michael A. Castino, Kristina R. Nelson, Kristen M. Weitzel, and Alyssa M. Bernard, as Proxy of the undersigned, with full power of substitution, and hereby authorizes any of them to vote on behalf of the undersigned all shares of the Fund that the undersigned is entitled to vote at the Special Meeting of Shareholders of the Fund to be held at 11:00 a.m. Central time, on January 19, 2023, at the offices of U.S. Bank Global Fund Services, 615 East Michigan Street, Milwaukee, Wisconsin 53202 and at any postponements or adjournments thereof, as fully as the undersigned would be entitled to vote if personally present. This proxy will be governed by and construed in accordance with the laws of the State of Delaware and applicable federal securities laws. The execution of this proxy is not intended to, and does not, revoke any prior proxies or powers of attorney other than the revocation, in accordance with the laws of the State of Delaware and applicable federal securities laws, of any proxy previously granted specifically in connection with the voting of the shares subject hereto. This proxy may be revoked at any time prior to the exercise of the powers conferred thereby.
| | | | | | | | |
| | AUTHORIZED SIGNATURE(S) |
| This section must be completed for your vote to be counted. |
| Please complete, sign and return this card as soon as possible. Date _____________ |
| |
| Signature(s) and Title(s), if applicable (Sign in the box) |
| Note: Please sign exactly as your name(s) appear(s) on this proxy card, and date it. If shares are held jointly, one or more owners should sign personally. When signing as attorney, executor, administrator, trustee, officer of corporation or other entity or in another representative capacity, please give the full title under the signature. |
EVERY SHAREHOLDER’S VOTE IS IMPORTANT
This proxy is solicited on behalf of the Board of Trustees of ETF Series Solutions (the “Trust”), and each Proposal has been approved by the Board of Trustees and recommended for approval by shareholders. This proxy when properly executed will be voted in the manner directed herein by the undersigned shareholder. If no direction is made, this proxy will be voted FOR each Proposal. In his or her discretion, the Proxy is authorized to vote upon such other matters as may properly come before the meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT YOU VOTE “FOR” THE PROPOSALS.
TO VOTE – Mark boxes below in blue or black ink as shown in this example:
| | | | | | | | | | | | | | |
| | | | |
| | FOR | AGAINST | ABSTAIN |
1. | To approve a new investment advisory agreement between the Trust, on behalf of AAM Bahl & Gaynor Small/Mid Cap Income Growth ETF (the “Fund”), and Advisors Asset Management, Inc. (the “Adviser”). No increase in shareholder fees or expenses is being proposed.
| ○ | ○ | ○ |
2. | To approve a new investment sub-advisory agreement among the Adviser, Bahl & Gaynor, Inc., and the Trust, on behalf of the Fund. No increase in shareholder fees or expenses is being proposed.
| ○ | ○ | ○ |
THANK YOU FOR VOTING