PRINCIPAL INVESTMENT STRATEGIES
The Fund will normally
invest at least 80% of its total assets in securities of the Index. Because the Index is comprised of securities issued by other
investment companies (as opposed to operating companies), the Fund operates in a manner that is commonly referred to as a “fund
of funds,” meaning that it invests its assets in shares of funds included in the Index. The Index seeks to measure the performance
of the top 30 U.S. exchange-listed closed-end funds (the “Underlying Funds”), as selected and ranked according to factors
employed by the Index methodology that are designed to result in a portfolio that produces high current income (the “Methodology”).
The Index universe
is not limited by the types of securities or other instruments in which an Underlying Fund may invest, nor the investment strategy
an Underlying Fund may employ. Thus, the Underlying Funds may invest in a variety of securities including, but not limited to,
equity securities (both dividend and non-dividend paying), foreign securities (including depositary receipts), taxable investment
grade fixed income securities, investment grade municipal securities, taxable high yield fixed income securities and high yield
municipal securities (commonly referred to as “junk bonds”), preferred securities, convertible securities, commodities,
real-estate related securities, including real estate investment trusts (“REITs”), and derivatives. The Underlying
Funds may employ different investment strategies including, but not limited to, dividend strategies, global and international strategies,
covered call option strategies, balanced strategies, limited duration strategies, tax and risk-managed strategies, sector strategies,
real estate, energy, utility, commodity, natural resources and other equity or income-oriented strategies.
Constituent securities
of the Index are selected from all closed-end funds which are organized in the United States and whose shares are listed and trade
on a U.S. securities exchange. The only type of security issued by an Underlying Fund that will be considered for inclusion in
the Index is common stock (or its equivalent). Eligible constituents must have a market capitalization of at least $500 million
and a six month daily average value traded of at least $1 million to be included in the Index. Each eligible Index constituent
is then ranked and ordered according to the following factors:
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by fund yield (the total income return of a fund, which takes into account all distributions made
by a closed-end fund, including return of capital) with funds with larger fund yields ranked more highly;
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by share price premium/discount to net asset value (“NAV”) on the Index rebalancing
date with funds with a premium or smaller discount ranked more highly than those with a larger discount; and
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by fund average daily value of shares traded over the six month period prior to the Index rebalancing
date, with higher shares traded ranked more highly.
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An overall rank for
each eligible Index constituent is then calculated in accordance with the methodology and constituents are ranked from lowest to
highest. The top 30 ranked Underlying Funds are then included in the Index. Index constituents are weighted according to a “modified”
linear weighted methodology, meaning that the top-ranked Index constituent will receive the greatest weighting and will be equal
to the multiple of the smallest weighting (i.e., in an index with 30 constituents, the top weighted constituent’s weighting
will be 30 times that of the weighting of the lowest weighted constituent). Constituent weightings are “modified” in
that each constituent weighting is capped at 4.25% of the Index at rebalancing, regardless of this linear scheme. In addition,
constituents are subject to liquidity screenings before the weightings are finalized. The Index is rebalanced annually, but may
be adjusted more frequently for specific corporate events, as detailed in the Methodology. The Index is unmanaged and cannot be
invested in directly.
The Fund employs a
“passive management” investment strategy in seeking to achieve its investment objective. The Fund generally will use
a replication methodology, meaning it will invest in all of the Underlying Funds comprising the Index in proportion to the weightings
in the Index. However, the Fund may utilize a sampling methodology under various circumstances where it may not be possible or
practicable to purchase all of the Underlying Funds in the Index. Amplify Investments LLC (the “Adviser”) expects that
over time, if the Fund has sufficient assets, the correlation between the Fund’s performance, before fees and expenses, and
that of the Index will be 95% or better. A figure of 100% would indicate perfect correlation.
The Fund will concentrate
its investments (i.e., invest more than 25% of its total assets) in a particular industry or group of industries to approximately
the same extent that the Index concentrates in an industry or group of industries. In addition, in replicating the Index, the Fund
may from time to time invest a significant portion of its assets in securities of companies in one or more sectors.
PRINCIPAL RISKS OF INVESTING IN THE FUND
As with all funds,
a shareholder is subject to the risk that his or her investment could lose money. An investment in the Fund is not a bank deposit
and is not insured or guaranteed by the FDIC or any government agency. The principal risks affecting shareholders’ investments
in the Fund are set forth below:
Early Close/Trading
Halt Risk. An exchange or market may close or issue trading halts on specific securities, or the ability to buy or sell certain
securities or financial instruments may be restricted, which may result in the Fund being unable to buy or sell certain securities
or financial instruments. In such circumstances, the Fund may be unable to rebalance its portfolio, may be unable to accurately
price its investments and/or may incur substantial trading losses.
Fund of Funds Risk.
Because the Fund is a fund of funds, its investment performance largely depends on the investment performance of the Underlying
Funds in which it invests. An investment in the Fund is subject to the risks associated with the Underlying Funds that comprise
the Index. The Fund will pay indirectly a proportional share of the fees and expenses of the Underlying Funds in which it invests,
including their investment advisory and administration fees, in addition to its own fees and expenses. In addition, at times certain
segments of the market represented by constituent Underlying Funds may be out of favor and underperform other segments.
Index Tracking
Risk. The Fund’s return may not match or achieve a high degree of correlation with the return of the Index. To the extent
the Fund utilizes a sampling approach, it may experience tracking error to a greater extent than if the Fund sought to replicate
the Index.
Industry Concentration
Risk. Because the Fund’s assets will be concentrated in an industry or group of industries to the extent that the Index
concentrates in a particular industry or group of industries, the Fund is subject to loss due to adverse occurrences that may affect
that industry or group of industries
Issuer-Specific
Risk. The value of an Underlying Fund may be more volatile than the market as a whole and may perform differently from the
value of the market as a whole.
Limited Authorized
Participants, Market Makers and Liquidity Providers Risk. Because the Fund is an exchange-traded fund (“ETF”),
only a limited number of institutional investors (known as “Authorized Participants”) are authorized to purchase
and redeem shares directly from the Fund. In addition, there may be a limited number or market makers and/or liquidity providers
in the marketplace. To the extent either of the following events occur, shares of the Fund may trade at a material discount to
NAV and possibly face delisting: (i) Authorized Participants exit the business or otherwise become unable to process creation and/or
redemption orders and no other Authorized Participants step forward to perform these services, or (ii) market makers and/or liquidity
providers exit the business or significantly reduce their business activities and no other entities step forward to perform their
functions.
Management Risk.
Because the Fund may not fully replicate the Index and may hold fewer than the total number of securities in the Index and
may hold securities not included in the Index, the Fund is subject to management risk. This is the risk that the Sub-Adviser’s
security selection process, which is subject to a number of constraints, may not produce the intended results.
Market Risk.
The market price of a security or instrument could decline, sometimes rapidly or unpredictably, due to general market conditions
that are not specifically related to a particular company, such as real or perceived adverse economic or political conditions throughout
the world, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment
generally. The market value of a security may also decline because of factors that affect a particular industry or industries,
such as labor shortages or increased production costs and competitive conditions within an industry.
Operational Risk.
The Fund and its service providers may experience disruptions that arise from human error, processing and communications errors,
counterparty or third-party errors, technology or systems failures, any of which may have an adverse impact on the Fund.
Passive Investment
Risk. The Fund is not actively managed and therefore the Fund would not sell a security due to current or projected underperformance
of the security, industry or sector, unless that security is removed from the Index or selling security is otherwise required upon
a rebalancing of the Index.
Risks of Investing
in Closed-End Funds. The Fund may be subject to the following risks as a result of its investment in the Underlying Funds:
Anti-Takeover
Provision Risk. The organizational documents of certain of the Underlying Funds include provisions that could limit the ability
of other entities or persons to acquire control of the Underlying Fund or to change the composition of its board, which could limit
the ability of shareholders to sell their shares at a premium over prevailing market prices by discouraging a third party from
seeking to obtain control of the Underlying Fund.
Leverage
Risk. The Underlying Funds in which the Fund may invest may be leveraged. As a result, the Fund may be exposed indirectly
to leverage through investment in the Underlying Funds. An investment in securities of Underlying Funds that use leverage may expose
the Fund to higher volatility in the market value of such securities and the possibility that the Fund’s long-term returns
on such securities (and, indirectly, the long-term returns of the shares) will be diminished.
Risk of
Market Price Discount from/Premium to Net Asset Value. The shares of the Underlying Funds may trade at a discount or premium
to their NAV. This characteristic is a risk separate and distinct from the risk that an Underlying Fund’s NAV could decrease
as a result of investment activities. Whether investors, such as the Fund, will realize gains or losses upon the sale of shares
will depend not on the Underlying Funds’ NAVs, but entirely upon whether the market price of the Underlying Funds’
shares at the time of sale is above or below an investor’s purchase price for shares.
Risks of Investments
and Strategies of the Underlying Funds. The Fund may be subject to the following risks as a result of investments and strategies
pursued by the Underlying Funds:
Convertible
Securities Risk. Convertible securities are bonds, debentures, notes, preferred securities or other securities that may be
converted or exchanged (by the holder or the issuer) into shares of the underlying common stock (or cash or securities of equivalent
value), either at a stated price or stated rate. Convertible securities have characteristics similar to both fixed income and equity
securities. Convertible securities generally are subordinated to other similar but non-convertible securities of the same issuer,
although convertible bonds, as corporate debt obligations, enjoy seniority in right of payment to all equity securities, and convertible
preferred stock is senior to common stock, of the same issuer. Because of the subordination feature, however, convertible securities
typically are considered to be lower quality than similar non-convertible securities.
Counterparty
Risk. To the extent that an Underlying Fund engages in derivative transactions, it will be subject to credit risk with respect
to the counterparties. The Underlying Fund may obtain only a limited or no recovery or may experience significant delays in obtaining
recovery under derivative contracts if a counterparty experiences financial difficulties and becomes bankrupt or otherwise fails
to perform its obligations under a derivative contract.
Covered
Call Writing Risk. The Fund may invest in Underlying Funds that engage in a strategy known as “covered call option writing,”
which is designed to produce income from option premiums and offset a portion of a market decline in the underlying security. The
writer (seller) of a covered call option forgoes, during the option’s life, the opportunity to profit from increases in the
market value of the security covering the call option above the sum of the premium and the strike price of the call, but has retained
the risk of loss should the price of the underlying security decline. The writer of an option has no control over the time when
it may be required to fulfill its obligation as a writer of the option. Once an option writer has received an exercise notice,
it cannot effect a closing purchase transaction in order to terminate its obligation under the option and must deliver the underlying
security at the exercise price.
Credit
Risk. Issuers or guarantors of debt instruments or the counterparty to a derivatives contract, repurchase agreement or loan
of portfolio securities may be unable or unwilling to make timely interest and/or principal payments or to otherwise honor its
obligations. Debt instruments are subject to varying degrees of credit risk, which may be reflected in credit ratings. There is
the chance that any of an Underlying Fund’s portfolio holdings will have its credit ratings downgraded or will default (fail
to make scheduled interest or principal payments), potentially reducing the Underlying Fund’s income level and share price.
Currency
Risk. An Underlying Fund may invest in non-U.S. dollar denominated securities of foreign issuers. Because an Underlying Fund’s
NAV is determined in U.S. dollars, the Underlying Fund’s NAV could decline if the currency of the non-U.S. market in which
an Underlying Fund invests depreciates against the U.S. dollar, even if the value of the Underlying Fund’s holdings, measured
in the foreign currency, increases. Among the factors that may affect currency values are trade balances, the level of short-term
interest rates, differences in relative values of similar assets in different currencies, long-term opportunities for investment
and capital appreciation and political developments.
Deflation
Risk. Prices throughout the economy may decline over time, which may have an adverse effect on the market valuation of companies,
their assets and revenues. In addition, deflation may have an adverse effect on the creditworthiness of issuers and may make issuer
default more likely, which may result in a decline in the value of an Underlying Fund’s portfolio.
Derivatives
Risk. A derivative instrument often has risks similar to its underlying instrument and may have additional risks, including
imperfect correlation between the value of the derivative and the underlying instrument, risks of default by the counterparty to
certain derivative transactions, magnification of losses incurred due to changes in the market value of the securities, instruments,
indices or interest rates to which the derivative relates, and risks that the derivative instruments may not be liquid. The SEC
has proposed a rule to regulate the use of derivatives by registered investment companies, such as the Fund. Whether and when this
proposed rule will be adopted and its potential effects on the Fund are unclear as of the date of this Prospectus.
Dividend
Risk. An issuer of a security is unwilling or unable to pay income on a security. Common stocks do not assure dividend payments.
Common stockholders have a right to receive dividends only after the company has provided for payment of its creditors, bondholders
and preferred stockholders. Dividends are paid only when declared by an issuer’s board of directors, and the amount of any
dividend may vary over time.
Equity
Securities Risk. Common stock holds the lowest priority in the capital structure of a company, and therefore takes the largest
share of the company’s risk and its accompanying volatility. An adverse event, such as an unfavorable earnings report, may
depress the value of a particular common stock. Also, prices of common stocks are sensitive to general market movements.
Foreign
and Emerging Markets Securities Risk. Fluctuations in the value of the U.S. dollar relative to the values of other currencies
may adversely affect investments in foreign and emerging market securities. Foreign and emerging market securities may have relatively
low market liquidity, decreased publicly available information about issuers, and inconsistent and potentially less stringent accounting,
auditing and financial reporting requirements and standards of practice comparable to those applicable to domestic issuers. Foreign
and emerging market securities may be subject to the risks of expropriation, nationalization or other adverse political or economic
developments and the difficulty of enforcing obligations in other countries. Investments in foreign and emerging market securities
also may be subject to dividend withholding or confiscatory taxes, currency blockage and/or transfer restrictions. Emerging markets
may be subject to greater market volatility, lower trading volume, political and economic instability, uncertainty regarding the
existence of trading markets and more governmental limitations on foreign investment than more developed markets. In addition,
securities in emerging markets may be subject to greater price fluctuations than securities in more developed markets. An Underlying
Fund’s investment in securities of foreign companies may be in the form of depositary receipts or other securities convertible
into securities of foreign issuers. Depositary receipts generally must be sponsored, but may be unsponsored. Sponsored depositary
receipts are established jointly by a depositary and the underlying issuer, whereas unsponsored depositary receipts may be established
by a depositary without participation by the underlying issuer. Holders of an unsponsored depositary receipt generally bear all
the costs associated with establishing the unsponsored depositary receipt. In addition, the issuers of the securities underlying
unsponsored depositary receipts are not obligated to disclose material information in the United States and, therefore, there may
be less information available regarding such issuers and there may not be a correlation between such information and the market
value of the depositary receipts.
High Yield
or Non-Investment Grade Securities Risk. High yield or non-investment grade securities (commonly referred to as “junk
bonds”) and unrated securities of comparable credit quality are subject to the increased risk of an issuer’s inability
to meet principal and interest payment obligations and are generally considered to be speculative. These securities may be subject
to greater price volatility due to such factors as specific corporate developments, interest rate sensitivity, negative perceptions
of the non-investment grade securities markets generally, real or perceived adverse economic and competitive industry conditions
and less secondary market liquidity. If the issuer of non-investment grade securities defaults, an Underlying Fund may incur additional
expenses to seek recovery.
Illiquid
Securities Risk. Closed-end funds are not limited in their ability to invest in illiquid securities. Securities with reduced
liquidity involve greater risk than securities with more liquid markets. Market quotations for securities not traded on national
exchanges may vary over time, and if the credit quality of a fixed-income security unexpectedly declines, secondary trading of
that security may decline for a period of time. In the event that an Underlying Fund voluntarily or involuntarily liquidates portfolio
assets during periods of infrequent trading, it may not receive full value for those assets.
Industry
and Sector Concentration Risk. An Underlying Fund from time to time may be concentrated to a significant degree in a single
industry, group of industries, or a sector. To the extent that the Underlying Funds concentrate in the securities of issuers in
a particular industry or sector, such as real estate, energy, utilities, natural resources or basic materials, the Fund may face
more risks than if it were diversified more broadly over numerous industries or sectors. Such industry-based risks, any of which
may adversely affect the Underlying Funds in which the Fund invests may include, but are not limited to, the following: general
economic conditions or cyclical market patterns that could negatively affect supply and demand in a particular industry; competition
for resources, adverse labor relations, political or world events; obsolescence of technologies; and increased competition or new
product introductions that may affect the profitability or viability of companies in an industry. In addition, at times, an industry
or sector may be out of favor and underperform other industries or the market as a whole. The Underlying Funds’ sector and
industry exposure is expected to vary over time based on the composition of the Index, and should not be viewed as limited to the
aforementioned industries and sectors.
Inflation
Risk. The value of assets or income from an investment will be worth less in the future as inflation decreases the value of
money.
Interest
Rate Risk. Fixed-income securities’ prices generally fall as interest rates rise; conversely, fixed-income securities’
prices generally rise as interest rates fall.
Large-Capitalization
Risk. Returns on investments in securities of large companies could trail the returns on investments in securities of smaller
and mid-sized companies.
Leverage
Risk. Leverage may result from ordinary borrowings, or may be inherent in the structure of certain Underlying Fund investments
such as derivatives. If the prices of those investments decrease, or if the cost of borrowing exceeds any increase in the prices
of those investments, the NAV of the Underlying Fund’s Shares will decrease faster than if the Underlying Fund had not used
leverage. To repay borrowings, an Underlying Fund may have to sell investments at a time and at a price that is unfavorable to
the Underlying Fund. Interest on borrowings is an expense the Underlying Fund would not otherwise incur. Leverage magnifies the
potential for gain and the risk of loss. If an Underlying Fund uses leverage, there can be no assurance that the Underlying Fund’s
leverage strategy will be successful.
LIBOR
Risk. Certain financial instruments in which an Underlying Fund may invest may pay interest based on, or otherwise have payments
tied to, the London Inter-bank Offered Rate (“LIBOR”). Due to the uncertainty regarding the future utilization
of LIBOR and the nature of any replacement rate, the potential effect of a transition away from LIBOR on an Underlying Fund or
the financial instruments in which the Underlying Fund invests cannot yet be determined.
Mortgage-Backed
and Asset-Backed Securities Risk. Investments in mortgage- and asset-backed securities are subject to prepayment or call risk,
which is the risk that payments from the borrower may be received earlier than expected due to changes in the rate at which the
underlying loans are prepaid. Securities may be prepaid at a price less than the original purchase value.
Municipal
Securities Risk. Municipal securities are debt obligations issued by states or by political subdivisions or authorities of
states. Municipal securities are typically designated as general obligation bonds, which are general obligations of a governmental
entity that are backed by the taxing power of such entity, or revenue bonds, which are payable from the income of a specific project
or authority and are not supported by the issuer’s power to levy taxes. Lower-quality revenue bonds and other credit-sensitive
municipal securities carry higher risks of default than general obligation bonds. Litigation, legislation or other political events,
local business or economic conditions or the bankruptcy of the issuer could have a significant effect on the ability of an issuer
of municipal securities to make payments of principal and/or interest. Political changes and uncertainties in the municipal market
related to taxation, legislative changes or the rights of municipal security holders can significantly affect municipal securities.
Because many municipal securities are issued to finance similar projects, especially those related to education, health care, transportation
and utilities, conditions in those sectors can affect the overall municipal market. In addition, changes in the financial condition
of an individual municipal issuer can affect the overall municipal market. If the Internal Revenue Service (the “IRS”)
determines that an issuer of a municipal security has not complied with applicable tax requirements, interest from the security
could become taxable and the security could significantly decline in value.
Preferred
Securities Risk. Preferred securities are subordinated to bonds and other debt instruments in a company’s capital structure
and therefore will be subject to greater credit risk than those debt instruments. In addition, preferred securities are subject
to other risks, such as having no or limited voting rights, being subject to special redemption rights, having distributions deferred
or skipped, having limited liquidity, changing tax treatments and possibly being in heavily regulated industries.
REIT Risk.
Adverse economic, business or political developments affecting real estate could have a major effect on the value of an Underlying
Fund’s investments in REITs. Investing in REITs may subject an Underlying Fund to risks associated with the direct ownership
of real estate, such as decreases in real estate values, overbuilding, increased competition and other risks related to local or
general economic conditions, increases in operating costs and property taxes, changes in zoning laws, casualty or condemnation
losses, possible environmental liabilities, regulatory limitations on rent and fluctuations in rental income. In addition, REITs
are subject to the possibility of failing to qualify for the favorable U.S. federal income tax treatment generally available to
them under the Internal Revenue Code of 1986, as amended (the “Code”), and failing to maintain exemption from the registration
requirements of the Investment Company Act of 1940, as amended (the “1940 Act”).
Senior
Loans Risk. Investments in senior loans typically are below investment grade and are considered speculative because of the
credit risk of their issuers. Such companies are more likely to default on their payments of interest and principal owed, and such
defaults could reduce an Underlying Fund’s NAV and income distributions. In addition, an Underlying Fund may have to sell
securities at lower prices than it otherwise would to meet cash needs or it may have to maintain a greater portion of its assets
in cash equivalents than it otherwise would because of impairments and limited liquidity of the collateral supporting a senior
loan, which could negatively affect the Underlying Fund’s performance.
Small-
and Mid-Capitalization Risk. The small- and mid-capitalization companies in which Underlying Funds may invest may be more vulnerable
to adverse business or economic events than larger, more established companies, and may underperform other segments of the market
or the equity market as a whole.
Sector Focus Risk.
The Fund may invest a significant portion of its assets in one or more sectors and thus will be more susceptible to the risks
affecting those sectors.
Trading Risk.
Shares of the Fund may trade on NYSE Arca, Inc. above or below their NAV. The NAV of shares of the Fund will fluctuate with changes
in the market value of the Fund’s holdings. In addition, although the Fund’s shares are currently listed on the Exchange,
there can be no assurance that an active trading market for shares will develop or be maintained. Trading in shares may be halted
due to market conditions or for reasons that, in the view of the Exchange, make trading in shares inadvisable.
The Shares will
change in value, and you could lose money by investing in the Fund. The Fund may not achieve its investment objective.